| | • | | | Foster our Purpose and Values to the impact of the Merger on scope of responsibility, Mr. Kini’s year-over-year salary increase primarily reflects the significant expansion in his responsibilities in connection with his promotion from Vice President, Financial Planning & Analysisbuild teams that think and Investor Relations to Senior Vice President and Chief Financial Officer, effective June 15, 2020.act like owners The Committee viewed 2020 as an extraordinary year in which it was necessary to recalibrate pay levels to reflect the Company’s new business and size profile after the Merger and the accompanying expansion in oversight and responsibilities for each of our NEOs. In the future, the Committee does not anticipate granting salary increases of this magnitude other than in exceptional circumstances (for example, in connection with a promotion involving a significant increase in responsibilities).
As a result of the COVID-19 downturn, in an effort to preserve cash in the interest of the long-term health and sustainability of the Company, our executive officers (including each of our NEOs) and members of our Board of Directors volunteered to temporarily reduce their base salaries and cash director fees, respectively, by 15% from April 1, 2020 through the end of 2020.
The following table reflects the unadjusted base salary rates of our NEOs as of December 31, 2020 (other than Ms. Weaver who was no longer employed by the Company on that date) as well as the reduced base salary rates in effect from April 1, 2020 to December 31, 2020:
Vicente Reynal | | | $843,150 | | | $1,000,000 | | | 19% | | | $850,000 | Vikram Kini(3) | | | $272,121 | | | $450,000 | | | 65% | | | $382,500 | Andrew Schiesl | | | $460,000 | | | $500,000 | | | 9% | | | $425,000 | Enrique Miñarro Viseras(4) | | | $369,413 | | | $440,000 | | | 23% | | | $374,000 | Michael Weatherred | | | $351,900 | | | $415,000 | | | 18% | | | $352,750 |
(1)
| Reflects annual salary rates approved by the Committee during 2020, absent the impact of COVID-19 related reductions. | |
(2)
| Unless otherwise noted, reflects reduced annual salary rates in effect from April 1, 2020 through December 31, 2020.The following charts illustrate that a majority of NEO annual target total direct compensation (“TDC”) is performance-based. For our CEO, 89% of TDC is at risk with the vast majority delivered through long-term incentives. On average, at risk compensation for our other NEOs represents 76% of TDC. Compensation Governance Practices and Policies The Compensation Committee has adopted the following practices and policies reflecting what it believes to be a best practices approach to executive compensation. | | | | | Significant Portion of Pay Focused on Long-Term Value Creation (72% for CEO, 56% for NEOs) | | | | | | No Guaranteed Bonuses | | | | | | | 50% of Annual Long-Term Incentive Compensation in Performance-Vesting Equity Awards | | | | | | No Tax Gross-Ups in Connection with Change-in-Control Severance | | | | | | | Incentive Plan Goals Aligned with Stockholder Interests | | | | | | No Executive Pensions | | | | | | | Minimum one-year vesting on all equity awards | | | | | | No Fixed-Term Employment Agreements | |
(3)
| Mr. Kini was promoted to Senior Vice President and Chief Financial Officer of the Company on June 15, 2020. Prior to his promotion, Mr. Kini’s salary rate was increased from $272,121 to $325,000, effective March 1, 2020. Upon his promotion, his salary rate was increased to $450,000. |
(4)
| Mr. Miñarro Viseras is based in Europe and compensated in Euros. We converted his 2019 base salary (which was €330,000 EUR) to U.S. dollars at an exchange rate of 1.1194, which was the average monthly translation rate for 2019. His 2020 base salary was approved by the Committee at a rate of $440,000 USD per year, which was translated to €406,000 EUR at the then-current exchange rate. The percent increase for Mr. Miñarro Viseras reflects the calculation in local currencies to mute the impact of exchange rate fluctuations. |
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| | | Market-Leading Stock Ownership and Retention Guidelines | | | | | | No Stock Option Repricing | | | | | | | Capped Incentive Opportunities | | | | | | No Hedging of their annual cash compensation to actual performance, each NEO is eligible for an annual cash bonus award under our Management Incentive Plan (“MIP”), based on the achievementCompany Stock | | | | | | | Mitigation of our financial goals for the Company and their respective business units.Risk Through Compensation Risk Assessments | | | | | | | | | | A target annual bonus opportunity, expressed as a percentage of an NEO’s unreduced base salary rate at year-end, is established annually and may be adjusted from time to time by the Committee in connection with a NEO’s promotion or performance. The table below shows the 2020 target annual cash bonus opportunities for each of the NEOs other than Ms. Weaver, who was not eligible to receive a payment in respect of the MIP due to her departure from the Company in June 2020.
Vicente Reynal
| | | 150%
| Vikram Kini(1)
| | | 75%
| Andrew Schiesl
| | | 75%
| Enrique Miñarro Viseras
| | | 85%
| Michael Weatherred
| | | 75%
|
(1)
| Effective with his promotion on June 15, 2020, Mr. Kini’s Target Bonus Opportunity was increased from 50% of salary to 75%. |
2020 Performance Measures. The MIP pays out to participants based on levels of performance against financial metrics established by the Committee. To be eligible for a payout, a participant must be employed by the Company through the payment date or have an Approved Retirement (as defined below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control―Treatment of Outstanding Equity Awards in the Event of Termination of Employment or Change in Control―Equity awards granted in 2020”) after the end of the year but before the payment date. To ensure the right level of accountability and line-of-sight, the performance measures vary depending upon the role and responsibility of the NEO. For 2020, annual cash bonus awards for Corporate NEOs (Messrs. Reynal, Kini, Schiesl, and Weatherred) were based on the achievement of overall corporate performance, as described below. Mr. Miñarro Viseras’ annual cash bonus award was based in part on the achievement of overall Industrial Technologies and Services (“ITS”) group performance (excluding the power tools division) and in part on the achievement of Industrials Technologies and Services EMEIA (“ITS EMEIA”) performance, as described below, to reflect his leadership of the Industrials EMEIA business unit and his ability to impact the overall Industrials Group. A detailed description of the 2020 MIP design and the calculation of the actual amounts paid to each of our NEOs is provided below.
For 2020, 100% of MIP payouts were based on Adjusted EBITDA performance. The Committee felt that a plan focused entirely on Adjusted EBITDA was appropriate following the Merger because it provides a reliable indicator of our strategic growth and the strength of our overall financial results. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, as further adjusted to exclude certain non-cash, nonrecurring and other adjustment items.
For our Corporate NEOs, Corporate performance against the Adjusted EBITDA metric is determined based on achievement against the Adjusted EBITDA targets for the Company. For our NEO at the ITS group level, Mr. Miñarro Viseras, performance against the Adjusted EBITDA metric is based 30% on the total ITS segment (excluding the power tools division), and 70% on the ITS EMEIA region business unit.
The following table details the payout percentage associated with a corresponding performance level against the Adjusted EBITDA targets for our NEOs at both the Corporate and ITS group level, with the payout percentage for performance between such levels determined on a linear basis:
Below Threshold | | | <90% | | | 0% | Threshold | | | 90% | | | 50% | Target | | | 100% | | | 100% | Maximum | | | 110% | | | 200% |
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Historically, the Committee approved performance metrics and goals for the MIP program at its February meeting. However, in light of preparations for the Merger with the Industrial segment of Ingersoll Rand and forecasting difficulties due to the Merger not yet being completed, the Committee approved the MIP performance metric in February, but did not approve goals until May 2020. In May, after the Merger, the Committee was able to consider both the pro-forma budget that each of the separate Gardner Denver and Ingersoll Rand Industrial Segment management teams had developed in February 2020 (prior to the completion of the Merger and prior to COVID-19-related shutdowns) (the, “Pre Merger Annual Operating Plan”, or “PAOP”) as well as a revised outlook established shortly after the Merger reflecting the first three months of actual 2020 performance plus the forecast for the final nine months of fiscal 2020 (the “3+9 Forecast”). This 3+9 Forecast included a more accurate understanding of the Company post-Merger given the newly-combined management team’s better access to financial data, and also included an estimate of the impact of COVID-19 on business operations.
In May 2020, based on its consideration of the PAOP and 3+9 Forecast, the Committee determined that the MIP program would be based on the PAOP developed in February 2020. However, the Committee reserved the ability to exercise discretion at year end to appropriately adjust final payouts based on performance against the 3+9 Forecast as well as an assessment of the evolving impact of COVID-19 on business operations. The Committee felt that adopting an approach grounded in the PAOP was the most prudent approach, but recognized that it might need to exercise its discretion given that the Company was simultaneously executing on a transformational merger and addressing the disruptions related to COVID-19. This approach was deemed to be reasonable given that the PAOP was impacted by forecasting difficulties that arose from the in-progress Merger and the fact that it was established before the start of the COVID-19 pandemic.
Adjusted EBITDA results are adjusted to the extent that actual foreign exchange rates by country differ by more than 5% of budgeted foreign exchange rates. In addition to setting Adjusted EBITDA targets for our business units, we set an annual corporate expense budget each year and any difference between actual and budgeted corporate expense may be allocated to the Adjusted EBITDA at our business units at the discretion of the Committee. While there are no individual goals for purposes of MIP award payments, the Committee, on the recommendation of Mr. Reynal, may adjust an incentive payment upward or downward for performance-related reasons for other NEOs. In addition, the Committee has discretion to adjust MIP award payments for unanticipated events.
In the first quarter of 2021, the Committee exercised its discretion in determining 2020 MIP payouts following a review of performance against the PAOP, the revised 3+9 Forecast and the evolving impact of COVID-19. It noted that the Company as a whole had performed better than the 3+9 Forecast. However, despite achievement vs. the 3+9 Forecast that would have resulted in above target MIP payouts for the NEOs at the Corporate level, the Committee determined that payouts to the NEOs should be capped at 100% of target in recognition of lack of achievement relative to the PAOP Target. In recognition of the more significant impact of COVID-19 on the Company’s European business, the Committee also determined to exercise its discretion to pay Mr. Miñarro Viseras his target bonus amount for 2020, notwithstanding below target achievement at the ITS group level.
The following table sets forth our actual performance in 2020 and the actual payout percentage achieved with respect to the Adjusted EBITDA metric applicable to our NEOs at the Corporate level (other than Ms. Weaver, who was not eligible to receive a payment under the MIP due to her departure from the Company in June 2020) under each of the PAOP and the 3+9 Forecast.
Corporate NEOs | | | 100% | | | $1,252 | | | $1,022 | | | $1,078 | | | 86% | | | 105% |
We believe the Adjusted EBITDA goals under the PAOP and the 3+9 Forecast provided extremely challenging goals for plan participants at the ITS group level, including Mr. Miñarro Viseras, given the 2020 business environment. At the ITS group level, actual performance against the Adjusted EBITDA metric under the PAOP was 85% of target for the total ITS segment and 77% of target for the ITS EMEIA region, resulting in a weighted payout percentage of 84% for Mr. Miñarro Viseras. Actual performance against the Adjusted EBITDA metric under the “3+9” forecast was 103% of target for the total ITS segment and 90% of target for the ITS EMEIA region, resulting in a weighted payout percentage of 94% for Mr. Miñarro Viseras.
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Based on the foregoing, the following table illustrates the calculation of the annual cash incentive awards payable to our NEOs (other than Ms. Weaver) under the 2020 MIP in light of these performance results and the Committee’s discretion.
Vicente Reynal | | | $1,000,000 | | | 150% | | | $1,500,000 | | | 86% | | | 0% | | | 105% | | | 150% | | | 100% | | | $1,500,000 | Vikram Kini(2) | | | $450,000 | | | 64% | | | $286,475 | | | 86% | | | 0% | | | 105% | | | 150% | | | 100% | | | $286,475 | Andrew Schiesl | | | $500,000 | | | 75% | | | $375,000 | | | 86% | | | 0% | | | 105% | | | 150% | | | 100% | | | $375,000 | Enrique Miñarro Viseras(3) | | | $463,368 | | | 85% | | | $393,863 | | | 77% | | | 0% | | | 94% | | | 70% | | | 100% | | | $393,863 | Michael Weatherred | | | $415,000 | | | 75% | | | $311,250 | | | 86% | | | 0% | | | 105% | | | 150% | | | 100% | | | $311,250 |
(1)
| For Messrs. Reynal, Kini, Schiesl, and Weatherred, reflects achievement and calculated payout factors vs. targets for the Company. For Mr. Miñarro Viseras, reflects achievement and calculated payouts factors based 30% on the total ITS segment (excluding the power tools division), and 70% on the ITS EMEIA region. |
(2)
| Target bonus reflects Mr. Kini’s pro-rated pre- and post-promotion target bonus percentages (50% and 75%, respectively). |
(3)
| Mr. Miñarro Viseras is based in Europe and compensated in Euros. Regardless of the prevailing exchange rate in effect at the actual time of payment, for consistency with the values reported in the “Summary Compensation Table”, all values have been converted to U.S. dollars at an exchange rate of 1.1413, which was the average monthly translation rate for 2020. |
One-Time Transformational Merger Bonuses
On February 27, 2020, in connection with the consummation of the Merger and after careful consideration over the course of two Committee meetings, the Committee awarded transaction bonuses to certain individuals (including each of the NEOs) who played a significant and integral role in bringing about, negotiating and consummating the Merger as well as the integration planning that resulted in 2020 annualized Merger integration cost synergies of ~$175 million and an overall three-year Merger related cost synergy target of $300 million.1 The transaction bonuses recognize the overwhelming stockholder support for the Merger and the extraordinary efforts of our management team in bringing the transformative Merger to completion and establishing an integration plan that resulted in obtaining these cost synergies and creating significant stockholder value since the date of the Merger.
The transaction bonus amounts awarded to each of the NEOs, as outlined in the table below, were set equal to 100% of their then current MIP target values. In determining to award the transaction bonuses in the amount of the NEOs’ MIP target values, the Committee took into consideration benchmarking data provided by Pearl Meyer and the instrumental role of the NEOs in bringing about, negotiating and consummating the Merger as well as the integration planning that resulted in stockholder value creation described above.
Vicente Reynal
| | | $843,150
| Vikram Kini
| | | $125,000
| Andrew Schiesl
| | | $375,000
| Enrique Miñarro Viseras(1)
| | | $388,430
| Michael Weatherred
| | | $311,000
| Emily Weaver
| | | $100,000
|
(1)
| Mr. Miñarro Viseras is based in Europe and compensated in Euros. Regardless of the prevailing exchange rate in effect at the actual time of payment, for consistency with the values reported in the “Summary Compensation Table”, bonus value has been converted to U.S. dollars at an exchange rate of 1.1413, which was the average monthly translation rate for 2020. |
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One-Time Merger-Related Relocation and Retention Bonus – Mr. Kini
In May 2019, after we had entered into the Merger Agreement, we entered into change in control severance agreements with certain key non-executive officer employees, including Mr. Kini, who was not an executive officer at that time, as part of a retention program to induce them to stay with the Company and remain focused on our business while the Merger transaction was pending. The arrangement originally provided for a payment in the amount of $244,901 for Mr. Kini if he remained employed by the Company through the completion of the Merger and his employment was subsequently terminated by the Company. In September 2019, we identified certain non-executive key employees who were part of this retention program (including Mr. Kini) whose contributions we determined would be critical to the Company’s continued success following the Merger, and converted their change in control severance arrangements into relocation and retention bonuses payable if they remained employed by the Company and relocated to the Charlotte, North Carolina area by September 1, 2020. In consideration of the impact of the COVID-19 pandemic, in May of 2020 we further amended the program to provide that certain participants (including Mr. Kini) would become entitled to 50% of the original bonus amount if they remained employed by the Company through September 1, 2020, and committed by such time to relocate to the Charlotte, North Carolina area. Under this amendment, they would then become entitled to the remaining 50% of the original bonus amount once they actually relocated to the Charlotte, North Carolina area (assuming they remained employed by the Company). The amount that became payable to Mr. Kini under this program in 2020 is reflected in the “Bonus” column of the SCT. Mr. Kini completed his relocation to the Charlotte, North Carolina area during the first quarter of 2021 and will be paid the remaining 50% of his original bonus amount at the end of April 2021.
Long-Term Equity Incentive Awards
Our long-term incentive awards, established through our Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan (our “2017 Omnibus Incentive Plan”), are intended to drive executives to deliver strong stock performance, align our executives’ experience with long-term stockholder value creation, and to attract and retain highly-qualified executives. The details of these awards are as follows:
50% in Performance Share Units (PSUs). The PSUs have a 3-year performance period that runs from January 1, 2020 through December 31, 2022 (the “Performance Period”) and performance is measured based on Relative TSR vs. S&P 500 as follows:
○ | Threshold Performance: 35th percentile positioning vs. index = 50% payout
|
○ | Target Performance: 55th percentile positioning vs. index = 100% payout
|
○ | Superior Performance: 75th (or greater) percentile positioning vs. index = 200% payout (capped)
|
The payout under the PSUs will be capped at 100% if the Company’s TSR is negative.
TSR is calculated as the appreciation in the price per share of a company’s common stock during the Performance Period (assuming any dividends or distributions are reinvested), expressed as a percentage, and Relative TSR is based on the percentile rank of the Company’s TSR against the TSRs of the companies and entities that, on January 1, 2020, comprised the S&P 500.1
25% in Time-Vesting Restricted Stock Units (RSUs). RSUs vest in equal, annual installments over a four-year period.
25% in Time-Vesting Stock Options. Stock Options vest in equal, annual installments over a four-year period, and expire 10 years from the grant date.
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Total target values for annual equity awards granted in 2020 for each NEO are shown below:
Vicente Reynal | | | $3,350,000 | | | $1,675,000 | | | $1,675,000 | Vikram Kini(1) | | | $500,000 | | | $250,000 | | | $250,000 | Andrew Schiesl | | | $475,000 | | | $237,500 | | | $237,500 | Enrique Miñarro Viseras | | | $500,000 | | | $250,000 | | | $250,000 | Michael Weatherred | | | $350,000 | | | $175,000 | | | $175,000 | Emily Weaver | | | $825,000 | | | $412,500 | | | $412,500 |
(1)
| Reflects total value of: (i) annual grants made on March 6, 2020, and (ii) supplemental promotion grants made on June 30, 2020. |
Target annual equity award values were determined based on our competitive market analysis and our compensation philosophy which calibrates award levels between market median and 75th percentile.
These grant amounts were translated into a target number of performance share units, shares of restricted stock and stock options by taking such dollar amount and dividing it by the per share or per option “fair value” that was used for reporting the compensation expense associated with the grant under applicable accounting guidance, which “fair value” was based in part on the per share closing price of our common stock on the NYSE on the date of grant.
Shift of Total Compensation Mix to be more Performance-Based and Resulting One-Time, Make Whole “Stub Period” RSUs
Prior to 2020, annual equity grants were delivered in an equal mix of RSUs and Stock Options, which vested in equal, annual increments over a four-year period. As a consequence of our efforts to enhance the annual equity incentive awards’ link to long-term performance, our movement from 100% time-vested equity to a majority performance-based program with the introduction of PSUs shifted 50% of the annual equity grants to a three-year cliff-vested vehicle. The resulting compensation structure is beneficial to our stockholders given that when combined with stock options, 75% of annual equity value is delivered in instruments directly tied to increasing stockholder value over the long-term. As a balance to the performance-oriented nature of our equity program, the remaining 25% is delivered in time-vested restricted stock.
However, absent intervention, this change in annual equity mix would have had the effect of creating a temporary annual vesting shortfall for legacy participants in the two years leading up to the inaugural PSU award vesting, thereby adversely impacting employee engagement as well as the retention value of the annual equity awards. To address this shortfall, participants were made whole with a supplemental one-time grant of “Stub Period” RSUs equal to 25% of their annual equity award target value. Stub Period RSUs vest in equal, annual increments over the two-year shortfall period.
Target values of the “Stub Period” RSUs granted in March 2020 for each NEO are shown below:
Vicente Reynal
| | | $1,675,000
| Vikram Kini
| | | $100,000
| Andrew Schiesl
| | | $237,500
| Enrique Miñarro Viseras
| | | $250,000
| Michael Weatherred
| | | $175,000
| Emily Weaver
| | | $412,500
|
Vesting of Equity Awards Made Prior to our Initial Public Offering
Prior to our initial public offering, in 2014, 2015, 2016 and 2017, we granted long-term equity awards pursuant to our 2013 Stock Incentive Plan for Key Employees of Ingersoll Rand Holdings, Inc. (our “2013 Stock Incentive Plan”) to our NEOs in the form of stock options, with 50% of each award vesting based on time-based vesting conditions (“Time Options”) and 50% of each award vesting based on performance-based vesting conditions (“Performance Options”). A portion of these Performance Options were eligible to vest on December 31, 2020 if and only to the extent that the Company achieved the annual adjusted EBITDA
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performance target for fiscal 2020 set by the Committee (where “adjusted EBITDA” refers to earnings before interest, taxes, depreciation and amortization plus transaction, management and/or similar fees paid to KKR and/or its affiliates). The fiscal 2020 adjusted EBITDA performance target was $630 million and our adjusted EBITDA performance for fiscal 2020 was $1.078 billion. Therefore, the portion of the Performance Options held by our NEOs that was eligible to vest based on the Company’s fiscal 2020 adjusted EBITDA performance vested.
Other Compensation Practices and Policies that Align Our NEOs to Our Stockholders
Stock Ownership and Retention Policy
To align the interests of our management and directors with those of our stockholders, the Board of Directors concluded that certain of our executives (the “Covered Executives”) and non-employee directors should have a significant financial stake in the Company’s stock. To further that goal, we implemented market-leading stock ownership guidelines (the “Guidelines”) in 2017, the year we completed our initial public offering. The Covered Executives and non-employee directors are required to hold a specific level of equity ownership as outlined below.
Covered Executives: The Guidelines apply to the Covered Executives in three tiers. The stock ownership levels under the Guidelines, expressed as a multiple of the Covered Executive’s annual base salary rate as of January 1st of the year, are as follows:
Tier One
| | | Chief Executive Officer
| | | 10x Salary
| Tier Two
| | | Chief Financial Officer and General Counsel
| | | 5x Salary
| Tier Three
| | | P&L and Corporate Leaders
| | | 3x Salary
|
Retention Requirement: There is no required time period within which a Covered Executive must attain the applicable stock ownership level under the Guidelines. However, until the applicable ownership level is achieved, Covered Executives must retain 75% of net shares granted to them. Once the ownership guideline is met, Covered Executives must retain 30% of net shares granted to them; however, this requirement drops to 20% for a Covered Executive upon the earlier of a (1) such Covered Executive reaching the age of 55 and (2) such covered executive achieving 10 years of service with the Company and terminates upon the earlier of (1) such Covered Executive reaching the age of 60 and (2) such covered executive achieving 15 years of service with the Company.
The shares counted toward these ownership requirements include shares owned outright and vested stock options. The retention requirement applies to all prior and future grants. These ownership requirements are set at levels that the Company believes are robust given the Covered Executives’ respective salaries and responsibilities.
Non-Employee Directors: Our non-employee directors are required to hold 75% of net shares granted to them under our benefit plans until they own equity equal to five times their annual cash retainers. Once the ownership guideline is met, directors must retain 30% of the net shares granted to them under our benefit plans until their retirement.
As of January 1, 2021, all our NEOs and then serving directors who were with the Company for at least one year were in compliance with the applicable stock ownership levels under the Guidelines.
Hedging and Pledging Policies
The Company’s Securities Trading Policy requires executive officers and directors to consult the Company’s General Counsel prior to engaging in transactions involving the Company’s securities. The Company’s Securities Trading Policy prohibits directors and executive officers from hedging or monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, variable forward contracts, equity swaps, puts, calls, and other derivative instruments, or through the establishment of a short position in the Company’s securities. The Company’s Securities Trading Policy limits the pledging of Company securities to those situations approved by the Company’s General Counsel.
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Incentive Compensation Clawback Policy | | | We have adopted a clawback policy for incentive compensation. The Committee determined that it may be appropriate to recover annual and/or long-term incentive compensation in specified situations. Under the policy, if the Committee determines that incentive compensation of its current and former Section 16 officers (or any other employee designated by the Board or the Committee) was overpaid, in whole or in part, as a result of a restatement of the reported financial results of the Company or any of its segments due to material non-compliance with financial reporting requirements (unless due to a change in accounting policy or applicable law), and such restatement was caused or contributed, directly or indirectly, by such employee’s fraud, willful misconduct or gross negligence, then the Committee will determine, in its discretion, whether to seek to recover or cancel any overpayment of incentive compensation paid or awarded during the three-year period preceding the date on which the Company is required to prepare the restatement.
| | | | | | | Other Benefits
| | | While our compensation philosophy is to focus on performance-based forms of compensation while providing only minimal executive benefits and perquisites, we provide to all our employees, including our NEOs, broad-based employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. These include:Independent Compensation Consultant
| | | a 401(k) savings plan;
| | | medical, dental, vision, life and disability insurance coverage; and
dependent care and healthcare flexible spending accounts.
| |
2022 Executive Compensation Program in Detail Base salary is the only fixed component of NEO cash compensation. An NEO’s base salary is commensurate with the individual’s level of responsibility and provides them with a level of cash income predictability and stability. The Compensation Committee believes that base salaries for executives should reflect competitive levels of pay and factors unique to each executive such as experience and breadth of responsibilities, performance, individual skill set, time in the role and internal pay parity. Base salaries are reviewed annually or at other times when appropriate (for example, promotions, changes in job scope and/or responsibilities, etc.) and may be increased from time to time pursuant to such review. Consistent with our philosophy to focus on long-term variable pay over fixed cash compensation, the Compensation Committee generally established 2022 base salary rates at or below the median of Peer Group salary levels. After maintaining base salaries for the majority of executive officers at 2020 rates in 2021 due to pandemic-related uncertainty, the Compensation Committee decided for 2022 to return to its normal course of market- and merit-based salary adjustments. The following table reflects the base salary rates of our NEOs as of December 31, 2022: Vicente Reynal | | | $1,000,000 | | | $1,100,000 | | | 10% | Vikram Kini | | | $500,000 | | | $525,000 | | | 5% | Enrique Miñarro Viseras(1) | | | $490,000 | | | $505,000 | | | 2% | Andrew Schiesl | | | $500,000 | | | $500,000 | | | —% | Michael Weatherred | | | $415,000 | | | $430,000 | | | 4% |
401(k) Plan
Our U.S. eligible employees, including our NEOs other than (1)
| Mr. Miñarro Viseras participateis based in Europe and compensated in Euros. His 2021 base salary was approved by the Ingersoll Rand Inc. Retirement Savings Plan (the “401(k) plan”),Compensation Committee at a rate of $490,000 USD per year, which, isin an effort to eliminate any extreme fluctuation in exchange rates, was translated to €432,125 EUR at the 5-year average exchange rate as of December 31, 2020. His 2022 base salary was approved by the Compensation Committee at a tax-qualified retirement savings plan. Eligible employees hired onrate of $505,000 USD per year and after January 1, 2014, are automatically enrolled inwas translated to €439,470 EUR at the 401(k) plan to make pre-tax salary contributions, unless they decline participation. Under the 401(k) plan, we match 100%5-year average exchange rate as of the first 6% of a participant’s eligible pre-tax and/or Roth salary contributions, subject to all IRS annual limits and plan limitations. Participants are 100% vested in employee salary contributions and Company matching contributions. 401(k) plan participants may elect to contribution up to 100% of their annual eligible compensation (either through pre-tax or Roth contributions), subject to annual IRS and plan limitations.Supplemental Excess Defined Contribution Plan
In addition to the 401(k) plan, U.S. employees with a salary grade of 20 or higher (generally senior managers and above), including the NEOs other thanDecember 31, 2021. The percent increase for Mr. Miñarro Viseras are eligiblereflects the calculation in local currencies to participate inmute the Ingersoll Rand, Inc. Supplemental Excess Defined Contribution Plan (the “Excess Contribution Plan”), which is fundedimpact of exchange rate fluctuations.
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Annual Cash Bonus Opportunity To tie a significant portion of their annual cash compensation to actual performance, each NEO is eligible for an annual cash bonus award under our Management Incentive Plan (“MIP”) based on the achievement of our financial goals for the Company and their respective business units against preset goals. Our MIP covers all managers above a certain level (including our NEOs), which includes more than 1,450 employees world-wide. The MIP pays out to participants based on levels of performance against preset goals for financial metrics established by the Compensation Committee. To be eligible for a payout, a participant must be employed by the Company through the payment date or have an Approved Retirement (as defined below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control―Treatment of Outstanding Equity Awards in the Event of Termination of Employment or Change in Control―Equity awards granted 2018-2022”) on or after the end of the year but before the payment date. TABLE OF CONTENTS A target annual bonus opportunity, expressed as a percentage of an NEO’s base salary rate at year-end, is established annually and may be adjusted from time to time by the Compensation Committee in connection with a NEO’s promotion or performance. The table below shows the 2022 target annual cash bonus opportunities for each of the NEOs. Vicente Reynal | | | 150% | Vikram Kini | | | 85% | Enrique Miñarro Viseras | | | 85% | Andrew Schiesl | | | 75% | Michael Weatherred | | | 75% |
2022 Performance Measures. For 2022, annual cash bonus awards for Corporate NEOs (Messrs. Reynal, Kini, Schiesl, and Weatherred) were based on the achievement of overall corporate performance. Mr. Miñarro Viseras’ annual cash bonus award was based in part on the achievement of overall Industrial Technologies and Services (“ITS”) group performance (excluding the power tools division) and in part on the achievement of Industrial Technologies and Services EMEIA (“ITS EMEIA”) performance to reflect his leadership of the ITS EMEIA business unit in 2022 and his ability to impact the overall ITS segment. For 2022, 75% of our MIP structure was based on Adjusted EBITDA10 performance against preset goals that align with the Company’s budget. The Compensation Committee determined that an incentive design with a focus on Adjusted EBITDA was appropriate because it provides a reliable indicator of both our strategic growth and the strength of our overall financial results. As a balance to this profitability metric and in support of a focus on operational efficiency, the remaining 25% of the MIP structure was based on Net Operating Working Capital as a Percentage of Revenue.11 For our Corporate NEOs, 100% of the MIP structure is determined based on total Company performance against the respective goals for both financial metrics. For our NEO at the ITS EMEIA business unit, Mr. Miñarro Viseras, performance against the Adjusted EBITDA financial metric is based 30% on the total ITS segment (excluding the power tools division), and 70% on the ITS EMEIA business unit, and performance against the Net Operating Working Capital as a Percentage of Revenue financial metric is based 100% on the ITS EMEIA business unit. The following table details the MIP payout percentage associated with a corresponding performance level against the Adjusted EBITDA targets for our NEOs and against the Net Operating Working Capital as a Percentage of Revenue targets for our Corporate NEOs. The payout percentage for performance between such levels is determined on a linear basis: Below Threshold | | | <90% | | | >18.3% | | | 0% | Threshold | | | 90% | | | 18.3% | | | 50% | Target | | | 100% | | | 17.4% | | | 100% | Maximum | | | 110% | | | 16.3% | | | 200% |
*
| Goals reflect Total Company figures that applied to permit Company matching contributions on eligible compensation contributions in excess of the annual limitations imposed by the IRS on our tax-qualified 401(k) plan.Eligible employees may contribute to the Excess Contribution Plan when they exceed (i) the annual IRS pre-tax/Roth contribution limitsMessrs. Reynal, Kini, Schiesl, and the annual catch-up contribution limit for participants age 50 or over or (ii) the annual IRS compensation limit, under the 401(k) plan. Under the Excess Contribution Plan, we match 100% of the first 6% of a participant’s eligible salary contributions to the Excess Contribution Plan. Company matching contributions under the Excess Contribution Plan are contributed to the Rabbi Trust in the form of cash rather than our common stock. All employee and Company matching contributions are fully vested immediately.
Limited Perquisites
Executive perquisites are not part of our general compensation philosophy; however, we provide limited perquisites and personal benefits that are not generally available to all employees when necessary to attract top talent. These are typically set forth in the offer letters or employment agreements we enter into with our executive officers. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2020—Summary of NEO Offer Letters and Employment Agreements.”Weatherred. For example, in 2020 per his employment agreement, Mr. Miñarro Viseras was entitled to international school assistanceViseras’ business unit, threshold, target, and use of a company car.maximum goals were 24.5%, 23.3%, and 22.0%, respectively.
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TABLE OF CONTENTS As part of the terms of the MIP, the Compensation Committee has discretion to make plan adjustments to the MIP that can impact the award amount for some or all of the more than 1,450 participating employees. When such a plan adjustment is made, the impact of the adjustment is the same for all similarly situated participants including our NEOs. For 2022, the Compensation Committee did not make a plan adjustment to the calculated MIP result for the Adjusted EBITDA portion (75% of MIP) of our program. However, after significant deliberation of the factors described below, the Compensation Committee determined it was appropriate to make a plan adjustment to payouts based on the Net Operating Working Capital as a Percentage of Revenue metric (25% of the MIP payouts) for participating corporate and ITS EMEIA employees. The Compensation Committee also determined, for the reasons discussed below, it was appropriate to make an additional plan adjustment to the overall payout for participating ITS EMEIA business unit employees. The Company did not achieve threshold performance for the Net Operating Working Capital as a Percentage of Revenue metric for the Company or the ITS EMEIA business unit, and the formulaic payout factor in both cases was 0%. In reviewing whether this outcome was appropriate for all 563 participating corporate and ITS EMEIA employees, the Compensation Committee carefully considered multiple macroeconomic factors including extraordinary supply chain disruptions and the Company’s decision to increase inventory levels in order to successfully satisfy customer demand. The Compensation Committee also noted that these challenges were navigated while still generating positive free cash flow12 each quarter. Ultimately, the Compensation Committee determined it was appropriate to adjust payouts for this component of the MIP to the threshold payout level for all participating corporate and ITS EMEIA employees (including our NEOs) given these factors were entirely beyond the control of the MIP participants and in light of the Company’s overall strong financial performance and strategic achievements during the year. The Compensation Committee also determined that a further overall plan adjustment was appropriate for participating ITS EMEIA employees (including Mr. Miñarro Viseras) to reflect the extraordinary impacts on the region from the shutdown of our Russia-based operations as a fallout of the war in Ukraine. The Compensation Committee recognized that the ITS EMEIA business unit made the correct decision to exit Russia, which impacted overall ITS EMEIA performance disproportionally to the rest of the business. Prior to the plan adjustment for corporate participants, the actual calculated MIP payout for our corporate employees resulted in a formulaic payout factor of 106% of target. After the adjustment, the overall payout factor for all participating corporate employees (including our Corporate NEOs) increased to 119%. Prior to the plan adjustments for the ITS EMEIA participants, the actual calculated MIP payout for our ITS EMEIA employees resulted in a formulaic payout factor of 67% of target. After the adjustments, the overall payout factor for all participating ITS EMEIA employees (including Mr. Miñarro Viseras) was increased to 95%, maintaining a payout below target level. The Compensation Committee believes that these adjustments are consistent with our compensation philosophy and in the best interests of our stockholders. The following table sets forth our actual payout percentage with respect to each performance metric applicable to our NEOs and illustrates the annual cash incentive awards payable to our NEOs under the 2022 MIP in light of these performance results and the plan adjustments made by the Compensation Committee described above. Vicente Reynal | | | $1,100,000 | | | 150% | | | $1,650,000 | | | 104% | | | 142% | | | 19.8% | | | 0% | | | 106% | | | 119% | | | $1,963,500 | Vikram Kini | | | $525,000 | | | 85% | | | $446,250 | | | 104% | | | 142% | | | 19.8% | | | 0% | | | 106% | | | 119% | | | $531,038 | Enrique Miñarro Viseras(2) | | | $505,000 | | | 85% | | | $429,250 | | | 93% | | | 90% | | | 28.9% | | | 0% | | | 67% | | | 95% | | | $408,458 | Andrew Schiesl | | | $500,000 | | | 75% | | | $375,000 | | | 104% | | | 142% | | | 19.8% | | | 0% | | | 106% | | | 119% | | | $446,250 | Michael Weatherred | | | $430,000 | | | 75% | | | $322,500 | | | 104% | | | 142% | | | 19.8% | | | 0% | | | 106% | | | 119% | | | $383,775 |
TABLE OF CONTENTS Severance(1)
| For Messrs. Reynal, Kini, Schiesl, and ChangeWeatherred, reflects achievement and calculated payout factors vs. targets for the Company. For Mr. Miñarro Viseras, reflects achievement and calculated payouts factors based 30% on the total ITS segment (excluding the power tools division), and 70% on the ITS EMEIA region. |
(2)
| Mr. Miñarro Viseras is based in Control AgreementsThe Company believes that reasonableEurope and appropriate severance and changecompensated in control benefits are necessaryEuros. Regardless of the prevailing exchange rate in order to be competitiveeffect at the actual time of payment, for consistency with the values reported in the Company’s executive attraction“Summary Compensation Table,” all values have been converted to U.S. dollars at an exchange rate of 1.1491, which was the five-year average exchange rate as of December 31, 2021.
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Long-Term Equity Incentive Awards Annual PSU, RSU and Stock Option Awards Our long-term incentive awards, established through our 2017 Omnibus Incentive Plan, are intended to drive executives to deliver strong stock performance, align our executives’ compensation with long-term value creation, and to attract and retain highly-qualified executives. The details of these awards are as follows: | • | 50% in Performance Share Units (PSUs). The PSUs have a 3-year performance period that runs from January 1, 2022 through December 31, 2024 (the “Performance Period”) with the vesting of award based on Relative TSR vs. S&P 500 Industrials as follows: |
| ○ | Threshold Performance: 35th percentile ranking vs. index = 50% payout |
| ○ | Target Performance: 55th percentile ranking vs. index = 100% payout |
| ○ | Superior Performance: 75th (or greater) percentile ranking vs. index = 200% payout (capped) |
To ensure better alignment of payouts with stockholder value creation, even if relative performance would have resulted in a payout above target, the payout under the PSUs is capped at target if the Company’s absolute TSR is negative. TSR is calculated as the appreciation in the price per share of a company’s common stock during the Performance Period (assuming any dividends or distributions are reinvested), expressed as a percentage. Relative TSR is based on the percentile rank of the Company’s TSR against the TSRs of the companies and entities that, on January 1, 2022, comprised the S&P 500 Industrials.13 | • | 25% in Time-Vesting Restricted Stock Units (RSUs). RSUs vest in equal, annual installments over a four-year period. |
| • | 25% in Time-Vesting Stock Options. Stock Options vest in equal, annual installments over a four-year period, and retention efforts. As discussed below,expire 10 years from the offer letters we enter into with our NEOs provide for certain payments, rights and benefitsgrant date. |
Total target values for annual equity awards granted in 2022 for each NEO are shown below: Vicente Reynal | | | $3,500,000 | | | $1,750,000 | | | $1,750,000 | Vikram Kini | | | $700,000 | | | $350,000 | | | $350,000 | Enrique Miñarro Viseras | | | $587,500 | | | $293,750 | | | $293,750 | Andrew Schiesl | | | $550,000 | | | $275,000 | | | $275,000 | Michael Weatherred | | | $425,000 | | | $212,500 | | | $212,500 |
Target annual equity award values were determined based on our competitive market analysis and our compensation philosophy, which calibrates award levels between market median and 75th percentile. The awards do not vest until the vesting criteria and/or time periods are satisfied and actual value realized by executives is dependent on the stock price at the time of vesting thereby aligning payouts with the change in stockholder value. TABLE OF CONTENTS These grant amounts were translated into a target number of performance share units, restricted stock units and stock options by taking such dollar amount and dividing it by the per share or per option “fair value” that was used for reporting the compensation expense associated with the grant under applicable accounting guidance. This “fair value” was based in part on the per share closing price of our common stock on the NYSE on the date of grant. CEO Performance-Based Leadership Equity Incentive Award For a detailed discussion of the terms and conditions of the Performance-Based Award, please see “Compensation Discussion and Analysis – Executive Summary – Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement” above and “Compensation Discussion and Analysis – Treatment of Outstanding Equity Awards in the Event of Termination of Employment or Change in Control” below. 2023 Compensation Actions 2020-2022 PSU Award Certified in 2023 On February 13, 2023, the Compensation Committee certified that the TSR performance for the 2020-2022 performance period was 55%, which placed the Company in the 78th percentile of S&P 500 companies (which was the comparator group for TSR measurement approved at the time of grant), resulting in a maximum payout of 200% of target. The PSUs resulting from this performance vested on February 13, 2023 with respect to each NEO as shown below: Vicente Reynal | | | 120,546 | | | 200% | | | 241,092 | Vikram Kini | | | 17,864 | | | 200% | | | 35,728 | Enrique Miñarro Viseras | | | 17,992 | | | 200% | | | 35,984 | Andrew Schiesl | | | 17,092 | | | 200% | | | 34,184 | Michael Weatherred | | | 12,594 | | | 200% | | | 25,188 |
MIP Design Change For the year 2023, we made two changes to our MIP performance metrics. First, for corporate managers (including our corporate NEOs) we moved from Adjusted EBITDA as a metric (75% of total MIP opportunity for corporate managers) to adjusted earnings per share (“Adjusted EPS”). Adjusted EBITDA remained the earnings metric for business unit managers (including Mr. Miñarro Viseras). Second, the Net Working Capital Percent of Revenue metric (25% of the total MIP opportunity for all participating managers) was replaced with Free Cash Flow for corporate managers (including or corporate NEOs) and was replaced with “Business Operating Cash Flow” for business unit managers (including Mr. Miñarro Viseras). “Business Operating Cash Flow” is defined as Adjusted EBITDA less change in Net Working Capital less Capex. We believe these changes to our MIP better incentivize the activities by our managers that drive long-term shareholder value creation and better align our executives’ focus with those of our stockholders. New Miñarro Viseras Employment Agreement In connection with the change in his role to senior vice president & general manager, Global Precision and Science Technologies, in April 2023, we entered into a new employment agreement with Mr. Miñarro Viseras, effective April 3, 2023 (the “New Miñarro Viseras Employment Agreement”). The material terms of the New Miñarro Viseras Employment Agreement are described under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2022—Summary of NEO Offer Letters and Employment Agreements—Employment Agreements with Mr. Miñarro Viseras” below. CEO Performance-Conditioned Stock Options Certified in 2023 For fiscal year 2022, the Company achieved adjusted EPS (as defined in the Performance-Based Award) growth of more than 12% over such adjusted EPS in 2021. As a result, in February 2023 the Compensation Committee certified that the first tranche of the CEO’s performance-conditioned stock options had been earned, and on February 23, 2023, Mr. Reynal was awarded stock options to purchase 100,000 shares. These stock options cliff-vest on February 22, 2028, creating significant retention value. TABLE OF CONTENTS The Decision-Making Process The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee works closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. For additional information regarding the Compensation Committee, see “The Board of Directors and Certain Governance Matters―Board Committees and Meetings―Compensation Committee.” The Role of the Compensation Committee. The Compensation Committee ensures that the executive compensation program supports the Company’s business goals and aligns with stockholder interests. The Compensation Committee annually reviews NEO compensation levels by considering various factors, including: The relative importance of each NEO’s role and responsibilities How the NEO has performed relative to these roles and responsibilities Compensation practices of Peer Group companies (as defined below) Overall company performance Retention and succession considerations The Role of Management. Our CEO makes recommendations to the Compensation Committee regarding compensation for the executive officers other than himself. No member of management participates in discussions with the Compensation Committee regarding his or her own compensation. The Role of the Independent Consultant. The Compensation Committee has retained Pearl Meyer & Partners, LLC (“Pearl Meyer”), a compensation consulting firm, to assist it in evaluating the elements and levels of our executive compensation, including base salaries, annual cash incentive awards and equity-based incentives for our executive officers. In April 2023, the Compensation Committee determined that Pearl Meyer is independent from management and that Pearl Meyer’s work has not raised any conflicts of interest. Pearl Meyer reports directly to the Compensation Committee and the Compensation Committee has the sole authority to approve Pearl Meyer’s compensation and may terminate the relationship at any time. During 2022, the Compensation Committee directed Pearl Meyer to provide its expertise and analysis on a variety of topics, including competitive market assessment for executive and non-employee director compensation levels, compensation peer group review, review of governance matters pertaining to executive and employee compensation, the structure of short- and long-term incentive programs, and the development of Mr. Reynal’s Performance-Based Award. Peer Group. The Compensation Committee believes it is important to understand current trends in compensation practices and pay levels for companies that are comparable to Ingersoll Rand. To assist the Compensation Committee in this analysis, the Compensation Committee, together with its independent consultant and input from management, develops a compensation Peer Group of comparable companies against which it performs benchmarking (the “Peer Group”). The Compensation Committee, together with its independent compensation consultant and input from management, developed a compensation Peer Group of 13 companies. Companies chosen are comparable in revenue and enterprise value to the Company, as the Compensation Committee believes revenue and enterprise value are key determinants of compensation levels. Companies selected generally have revenue of 0.5x - 2x of Ingersoll Rand’s revenue and enterprise value. In addition to size, companies are in comparable industries where we compete for executive talent. After taking these considerations into account, the Compensation Committee decided to use the following Peer Group to help set compensation levels for 2022: | | AMETEK, Inc. | | | Avery Dennison Corporation | | | Celanese Corporation | | | | Dover Corporation | | | Flowserve Corporation | | | Fortive Corporation | | | | IDEX Corporation | | | Mettler-Toledo International, Inc. | | | Oshkosh Corporation | | | | Parker-Hannifin Corporation | | | Pentair Plc | | | Rockwell Automation, Inc. | | | | Xylem, Inc. | | | | | | | |
The Compensation Committee does not rely solely on data from the Peer Group in establishing compensation levels and practices, but uses it to support the implementation of the Company’s compensation TABLE OF CONTENTS philosophy and the application of the factors described above when setting executive compensation. Given the Company’s focus on delivering long-term value creation for our stockholders, the Compensation Committee generally targets cash compensation of the NEOs at or below the median of the Peer Group and long-term equity incentive compensation greater than the 50th percentile of the Peer Group. Additionally, the Compensation Committee may also consider survey compensation data based on companies of similar size to Ingersoll Rand. In 2022, during its annual review of the Peer Group, the Compensation Committee, using similar criteria as to what is highlighted above, adopted the following 12 company Peer Group for 2023 compensation actions: | | AMETEK, Inc. | | | Dover Corporation | | | Flowserve Corporation | | | | Fortive Corporation | | | IDEX Corporation | | | Illinois Tool Works* | | | | Mettler-Toledo International, Inc. | | | Nordson Corporation* | | | Parker-Hannifin Corporation | | | | Pentair Plc | | | Rockwell Automation, Inc. | | | Xylem, Inc. | |
*
| Added to the Peer Group in 2022. Avery Dennison Corporation, Celanese Corporation, and Oshkosh Corporation were removed. |
Other Compensation Practices and Policies that Align Our NEOs to Our Stockholders Stock Ownership and Retention Policy To align the interests of our management and directors with those of our long-term stockholders, the Board of Directors concluded that certain of our executives (the “Covered Executives”) and non-employee directors should have a significant financial stake in the Company’s stock. To further that goal, we implemented market-leading stock ownership guidelines (the “Guidelines”) in 2017, the year we completed our initial public offering. The Covered Executives and non-employee directors are required to hold a specific level of equity ownership as outlined below. Covered Executives: The Guidelines apply to the Covered Executives in three tiers. The stock ownership levels under the Guidelines, expressed as a multiple of the Covered Executive’s annual base salary rate as of January 1st of the year, are as follows: Tier One | | | Chief Executive Officer | | | 10x Salary | Tier Two | | | Chief Financial Officer and General Counsel | | | 5x Salary | Tier Three | | | P&L and Corporate Leaders | | | 3x Salary |
Retention Requirement: There is no required time period within which a Covered Executive must attain the applicable stock ownership level under the Guidelines. However, until the applicable ownership level is achieved, Covered Executives must retain 75% of net shares granted to them. Once the ownership guideline is met, Covered Executives must retain 30% of net shares granted to them. This requirement drops to 20% for a Covered Executive upon the earlier of a (1) such Covered Executive reaching the age of 55 and (2) such covered executive achieving 10 years of service with the Company. The requirement terminates upon the earlier of (1) such Covered Executive reaching the age of 60 and (2) such covered executive achieving 15 years of service with the Company. The shares counted toward these ownership requirements include shares owned outright and vested stock options. The retention requirement applies to all prior and future grants. These ownership requirements are set at levels that the Company believes are robust given the Covered Executives’ respective salaries and responsibilities. Non-Employee Directors: Our non-employee directors are required to hold 75% of net shares granted to them under our benefit plans until they own equity equal to five times their annual cash retainers. Once the ownership guideline is met, directors must retain 30% of the net shares granted to them under our benefit plans until their retirement. As of January 1, 2023, all of our NEOs and then serving directors who were with the Company for at least one year were in compliance with the applicable stock ownership requirements under the Guidelines. TABLE OF CONTENTS Hedging and Pledging Policies The Company’s Securities Trading Policy requires executive officers and directors to consult the Company’s General Counsel prior to engaging in transactions involving the Company’s securities. The Company’s Securities Trading Policy prohibits directors and executive officers from hedging or monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, variable forward contracts, equity swaps, puts, calls, and other derivative instruments, or through the establishment of a short position in the Company’s securities. The Company’s Securities Trading Policy limits the pledging of Company securities to those situations approved by the Company’s General Counsel. Incentive Compensation Clawback Policy We have adopted a clawback policy for incentive compensation. The Compensation Committee determined that it may be appropriate to recover annual and/or long-term incentive compensation in specified situations. Under the policy, if the Compensation Committee determines that incentive compensation of its current and former Section 16 officers (or any other employee designated by the Board or the Compensation Committee) was overpaid, in whole or in part, as a result of a restatement of the reported financial results of the Company or any of its segments due to material non-compliance with financial reporting requirements (unless due to a change in accounting policy or applicable law), then the Compensation Committee will determine, in its discretion, whether to seek to recover or cancel any overpayment of incentive compensation paid or awarded during the three-year period preceding the date on which the Company is required to prepare the restatement. While our compensation philosophy is to focus on performance-based forms of compensation while providing only minimal executive benefits and perquisites, we provide to all our employees, including our NEOs, broad-based employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. These include: a 401(k) savings plan; medical, dental, vision, life and disability insurance coverage; and dependent care and healthcare flexible spending accounts. 401(k) Plan Our U.S. eligible employees, including our NEOs other than Mr. Miñarro Viseras, participate in the Ingersoll Rand Retirement Savings Plan (the “401(k) plan”), which is a tax-qualified retirement savings plan. Eligible employees hired on and after January 1, 2014, are automatically enrolled in the 401(k) plan to make pre-tax salary contributions, unless they decline participation. Under the 401(k) plan, we match 100% of the first 6% of a participant’s eligible pre-tax and/or Roth salary contributions, subject to all IRS annual limits and plan limitations. Participants are 100% vested in employee salary contributions and Company matching contributions. 401(k) plan participants may elect to contribute up to 85% of their annual eligible compensation (either through pre-tax or Roth contributions), subject to annual IRS and plan limitations. Supplemental Defined Contribution Plan In addition to the 401(k) plan, U.S. employees with a salary band of 8 or higher (generally senior directors and above), including the NEOs other than Mr. Miñarro Viseras, are eligible to participate in the Ingersoll Rand Supplemental Defined Contribution Plan (the “Supplemental Contribution Plan”), which is funded through a Rabbi Trust. This Supplemental Contribution Plan is intended to permit Company matching contributions on eligible participant compensation contributions to the Supplemental Contribution Plan in excess of the annual limitations imposed by the IRS on our tax-qualified 401(k) plan. Eligible employees may contribute up to 50% of their salary and/or eligible annual bonus compensation to the Supplemental Contribution Plan. Under the Supplemental Contribution Plan, after an eligible employee exceeds the annual IRS pre-tax/Roth contribution limits and the annual catch up contribution limit for participants age 50 and older or compensation limit under the 401(k) plan, we match 100% of the first 6% of a TABLE OF CONTENTS participant’s further eligible contributions to the Supplemental Contribution Plan. Company matching contributions under the Supplemental Contribution Plan are contributed to the Rabbi Trust in the form of cash rather than our common stock. All employee and Company matching contributions under the Supplemental Contribution Plan are fully vested immediately. Limited Perquisites Executive perquisites are not part of our general compensation philosophy; however, we provide limited perquisites and personal benefits that are not generally available to all employees when necessary to attract top talent. For instance, beginning in 2021, certain of our senior executives, including each of the NEOs, are eligible for a tax and financial planning benefit, under which participating executives are reimbursed for qualified services (up to $10,000 per year) and participation in our executive physical program. In addition, from time to time, we may set forth additional perquisites in offer letters or employment agreements we enter into with our executive officers. These arrangements are discussed under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2022—Summary of NEO Offer Letters and Employment Agreements.” For example, in 2022, per their respective employment agreements, Mr. Reynal was entitled to limited personal use of Company-leased aircraft, and Mr. Miñarro Viseras was entitled to use of a company car. Severance and Change in Control Agreements The Company believes that reasonable and appropriate severance and change in control benefits are necessary in order to be competitive in the Company’s executive attraction and retention efforts. As discussed below, the offer letters we enter into with our NEOs provide for certain payments, rights and benefits to the NEOs upon an involuntary termination of employment without “cause” or a termination by the NEO for “good reason” (as such terms are defined in “Potential Payments to Named Executive Officers Upon Termination of Employment or Change in Control-Severance Arrangements and Restrictive Covenants” below). In addition, our equity award agreements provide for accelerated vesting upon a change in control in certain circumstances and upon certain qualifying terminations of employment, as more fully described above under “―Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2022―Terms of Equity Awards.” Risk Management and Mitigation of Compensation Policies and Practices The Compensation Committee has reviewed our incentive compensation programs, discussed the concept of risk as it relates to our compensation program, considered various mitigating factors, and reviewed these items with its independent consultant, Pearl Meyer. In addition, the Compensation Committee asked Pearl Meyer to conduct an independent risk assessment of our executive and other compensation programs. Based on these reviews and discussions, the Compensation Committee does not believe our compensation program creates risks that are reasonably likely to have a material adverse effect on our business. For the foregoing reasons, the Compensation Committee has concluded that the programs by which our executives are compensated strike an appropriate balance between short-term and long-term compensation and incentivize our executives to act in a manner that prudently manages enterprise risk. We entered into offer letters setting forth initial compensation and benefits, as well as severance terms, with Messrs. Reynal, Schiesl and Weatherred at the time of their initial employment. In addition, we entered into an employment agreement with Mr. Miñarro Viseras in October 2018 in connection with our competitive review of executive officer compensation. As previously noted, we entered into a new employment agreement with Mr. Reynal in September 2022. We also entered into a new employment agreement with Mr. Miñarro Viseras effective April 3, 2023 (the “New Miñarro Viseras Employment Agreement”). Full descriptions of the material terms of the employment agreement with Messrs. Reynal, the employment agreement with Mr. Miñarro Viseras in effect on December 31, 2022 and the New Miñarro Viseras Employment Agreement, and the offer letters with Messrs. Schiesl and Weatherred are presented below in “―Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2022.” TABLE OF CONTENTS Summary Compensation Table The following table provides summary information concerning compensation of our NEOs for services rendered to us during the years indicated. Vicente Reynal, Chairman, President and Chief Executive Officer | | | 2022 | | | 1,075,000 | | | ― | | | 49,547,938 | | | 1,749,996 | | | 1,963,500 | | | 169,523 | | | 54,505,957 | | | 2021 | | | 1,000,000 | | | ― | | | 5,779,046 | | | 1,674,995 | | | 2,730,000 | | | 183,524 | | | 11,367,565 | | | 2020 | | | 861,358 | | | 843,150 | | | 6,932,600 | | | 1,674,996 | | | 1,500,000 | | | 561,723 | | | 12,373,829 | Vikram Kini, SVP and Chief Financial Officer | | | 2022 | | | 518,750 | | | ― | | | 1,185,766 | | | 349,991 | | | 531,038 | | | 90,115 | | | 2,675,660 | | | 2021 | | | 487,500 | | | 122,455 | | | 948,750 | | | 274,995 | | | 773,500 | | | 119,806 | | | 2,727,006 | | | 2020 | | | 340,562 | | | 247,455 | | | 880,887 | | | 249,994 | | | 286,475 | | | 46,886 | | | 2,052,258 | Enrique Miñarro Viseras, SVP and GM, Global Precision and Science Technologies(7) | | | 2022 | | | 502,885 | | | ― | | | 995,221 | | | 293,747 | | | 408,458 | | | 30,414 | | | 2,230,725 | | | 2021 | | | 481,304 | | | ― | | | 948,750 | | | 274,995 | | | 538,123 | | | 78,026 | | | 2,321,198 | | | 2020 | | | 396,782 | | | 388,430 | | | 1,034,720 | | | 249,998 | | | 393,863 | | | 89,626 | | | 2,553,419 | Andrew Schiesl, SVP, General Counsel, Chief Compliance Officer and Secretary | | | 2022 | | | 500,000 | | | ― | | | 931,610 | | | 274,985 | | | 446,250 | | | 108,427 | | | 2,261,272 | | | 2021 | | | 500,000 | | | ― | | | 819,380 | | | 237,486 | | | 682,500 | | | 63,103 | | | 2,302,469 | | | 2020 | | | 437,083 | | | 375,000 | | | 982,961 | | | 237,493 | | | 375,000 | | | 1,026,939 | | | 3,434,476 | Michael Weatherred, SVP, IR Execution Excellence (IRX) and Business Excellence | | | 2022 | | | 426,250 | | | ― | | | 719,903 | | | 212,488 | | | 383,775 | | | 83,983 | | | 1,826,399 | | | 2021 | | | 415,000 | | | ― | | | 603,721 | | | 174,989 | | | 566,475 | | | 39,811 | | | 1,799,996 | | | 2020 | | | 357,796 | | | 311,000 | | | 724,281 | | | 174,999 | | | 311,250 | | | 86,799 | | | 1,966,125 |
(1)
| Reflects the salary amounts earned by our NEOs in the years indicated. |
(2)
| Amounts shown for 2020 reflect one-time bonuses made in recognition of extraordinary efforts related to the Merger and integration as discussed in last year’s proxy statement. In addition, with respect to Mr. Kini, the amount shown for 2021 reflects the portion of a retention and relocation bonus earned in 2021 that was awarded to him in 2019 to encourage him to relocate to the Charlotte area after the Merger. |
(3)
| Represents the aggregate grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“FASB ASC Topic 718”), using the assumptions discussed in Note 16: “Stock-Based Compensation Plans” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. Amounts presented in the Stock Awards column for 2021 and 2020 have been recalculated to conform to the methodology utilized in 2022. The maximum value as of the grant date of performance stock units awarded in 2022 is as follows: Mr. Reynal: $51,976,972 ($8,357,972 relates to Mr. Reynal’s annual PSU award, $7,334,000 relates to his special TSR PSU award and $36,285,000 relates to his special Adjusted EPS PSU award); Mr. Kini: $1,671,594; Mr. Miñarro Viseras: $1,402,947; Mr. Schiesl: $1,313,314; and Mr. Weatherred: $1,014,874. |
(4)
| For Mr. Reynal, the Stock Awards in 2022 include $43,619,000 in performance-based restricted stock units granted to him as part of the one-time Performance-Based Award, which vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award designed by the NEO for Good Reason (as defined in “Potential PaymentsCompensation Committee to Named Executive Officers Upon Termination(i) drive the creation of Employment or Change in Control-Severance Arrangements and Restrictive Covenants” below). In addition, our equity award agreements provide for accelerated vesting upon a change in control in certain circumstances and upon certain qualifying terminationslong-term stockholder value, (ii) further strengthen the alignment of employment, as more fully described above under “―Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2020―Terms of Equity Awards.”In April 2020, Messrs. Reynal and Schiesl proactively recommended to the Board that their respective offer letters should be amended to align their severance termsMr. Reynal’s interests with those of Ms. Weaverlong-term stockholders, and (iii) encourage the retention of Mr. Weatherred, andReynal for the next five to be more in keeping withten years.
|
(5)
| Amounts shown for 2022 reflect amounts earned under our 2022 MIP. |
(6)
| Amounts reported under All Other Compensation for 2022 reflect the Company’s compensation philosophy. Specifically, they recommended and agreed to reduce the amount of severance to which each of them is entitledfollowing: |
Vicente Reynal | | | 82,800 | | | 1,404 | | | 26,025 | | | 53,009 | | | 6,285 | | | 169,523 | Vikram Kini | | | 89,413 | | | 702 | | | ― | | | ― | | | ― | | | 90,115 | Enrique Miñarro Viseras | | | ― | | | 687 | | | 9,733 | | | ― | | | 19,994 | | | 30,414 | Andrew Schiesl | | | 97,725 | | | 702 | | | 10,000 | | | ― | | | ― | | | 108,427 | Michael Weatherred | | | 73,400 | | | 583 | | | 10,000 | | | ― | | | ― | | | 83,983 |
(a)
| Reflects Company matching contributions in the eventtax-qualified 401(k) Plan and the non-tax-qualified Supplemental Contribution Plan. |
(b)
| For Mr. Reynal, reflects reimbursement of executive physical expenses not covered by insurance. For Mr. Miñarro Viseras, reflects actual Company expenditures for use, including business use, of a qualifying terminationCompany car, including expenditures for the car lease and gas. |
(7)
| Mr. Miñarro Viseras served as senior vice president and general manager of the Industrial Technologies and Services, Europe, Middle East, India and Africa (EMEIA) business unit of the Company until April 10, 2023. Mr. Miñarro Viseras is based in Europe and compensated in Euros. We converted his 2022 cash compensation, his amounts earned under our 2022 MIP, and amounts shown in the “All Other Compensation” column for him to U.S. dollars at an exchange rate of 1.1491, which was the five-year average exchange rate as of December 31, 2021. |
TABLE OF CONTENTS Grants of Plan-Based Awards in 2022 Vicente Reynal | | | | | | 206,250 | | | 1,650,000 | | | 3,300,000 | | | | | | | | | | | | | | | | | | | | | | | | 2/22/22 | | | | | | | | | | | | 32,963 | | | 65,925 | | | 131,850 | | | | | | | | | | | | 4,178,986 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | 32,962 | | | | | | | | | 1,749,953 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 82,547 | | | $53.09 | | | 1,749,996 | | | 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 12,095,000 | | | 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 12,095,000 | | | 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 12,095,000 | | | 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 7,334,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vikram Kini | | | | | | 55,781 | | | 446,250 | | | 892,500 | | | | | | | | | | | | | | | | | | | | | | | | 2/22/22 | | | | | | | | | | | | 6,593 | | | 13,185 | | | 26,370 | | | | | | | | | | | | 835,797 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | 6,592 | | | | | | | | | 349,969 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 16,509 | | | $53.09 | | | 349,991 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Enrique Miñarro Viseras
| | | | | | 53,656 | | | 429,250 | | | 858,500 | | | | | | | | | | | | | | | | | | | | | | | | 2/22/22 | | | | | | | | | | | | 5,533 | | | 11,066 | | | 22,132 | | | | | | | | | | | | 701,474 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | 5,533 | | | | | | | | | 293,747 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 13,856 | | | $53.09 | | | 293,747 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Andrew Schiesl | | | | | | 46,875 | | | 375,000 | | | 750,000 | | | | | | | | | | | | | | | | | | | | | | | | 2/22/22 | | | | | | | | | | | | 5,180 | | | 10,359 | | | 20,718 | | | | | | | | | | | | 656,657 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | 5,179 | | | | | | | | | 274,953 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 12,971 | | | $53.09 | | | 274,985 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael Weatherred | | | | | | 40,313 | | | 322,500 | | | 645,000 | | | | | | | | | | | | | | | | | | | | | | | | 2/22/22 | | | | | | | | | | | | 4,003 | | | 8,005 | | | 16,010 | | | | | | | | | | | | 507,437 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | 4,002 | | | | | | | | | 212,466 | | | 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 10,023 | | | $53.09 | | | 212,488 |
(1)
| Reflects the possible payouts of cash incentive compensation under the 2022 MIP. The actual amounts earned are described in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” Mr. Miñarro Viseras is based in Europe and compensated in Euros. His Estimated Possible Non-Equity Incentive Plan Payout amounts were converted to U.S. dollars at an exchange rate of 1.1491, which was the 5-year average exchange rate as of December 31, 2021. |
(2)
| Reflects performance stock units granted under our 2017 Omnibus Incentive Plan. With respect to awards granted in February 2022, the actual earned award may range from (a)0% to 200% based on performance over a three-year performance period ending December 31, 2024. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards.” For Mr. Reynal, awards granted on September 1, 2022 reflect “Adjusted EPS PSUs” and “TSR PSUs,” respectively, as discussed in more detail under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - CEO Performance-Based Leadership Equity Incentive Award.” There are no threshold or maximum payout levels applicable to Mr. Reynal’s Performance-Based Award. |
(3)
| Reflects RSUs granted under our 2017 Omnibus Incentive Plan. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards.” |
(4)
| Reflects stock options granted under our 2017 Omnibus Incentive Plan. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards.” |
(5)
| Represents the grant date fair value of the awards computed in accordance with FASB ASC Topic 718, using the assumptions discussed in Note 16: “Stock-Based Compensation Plans” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The stock options have an amountexercise price per share equal to the sumclosing price of (x) his annual base salarythe Company's common stock as reported on the NYSE on the date of grant. |
(6)
| Represents performance-based restricted stock units granted to Mr. Reynal as part of the one-time Performance-Based Award, which vest only upon meeting certain performance criteria and (y)Mr. Reynal remaining with the annual incentiveCompany long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award underfor Mr. Reynal designed by the MIP, if any, earned in respectCompensation Committee to (i) drive the creation of our fiscal year precedinglong-term stockholder value, (ii) further strengthen the fiscal year in whichalignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the termination date occursretention of Mr. Reynal for the next five to (b) an amount equalten years. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2022 Summary of NEO Offer Letters and Employment Agreements In general, the Company historically has entered into offer letters with its executive officers in lieu of employment agreements. However, as previously discussed, we did enter into an employment agreement with Mr. Reynal in September 2022. We also entered into an employment agreement with Mr. Miñarro Viseras in TABLE OF CONTENTS October 2018, and a new employment agreement in April 2023. Descriptions of the offer letters we entered into with Messrs. Reynal, Schiesl, and Weatherred, and the employment agreement with Mr. Reynal and the employment agreements with Mr. Miñarro Viseras are provided below. Employment Agreement with Mr. Reynal Effective September 1, 2022, the Compensation Committee approved a new employment agreement with Mr. Reynal. The employment agreement, which supersedes Mr. Reynal’s prior offer letter with the Company (the “Prior Agreement”), provides for an initial term of five years (with automatic one-year renewals), an annual base salary of $1,100,000 (which is an increase of $100,000 from his annual base salary in 2021), an annual target bonus of 150% of annual base salary (which target bonus remains unchanged from the Prior Agreement) and eligibility for the performance-conditioned stock option grants described above under “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement.” Under the Employment Agreement, Mr. Reynal’s severance entitlements for a termination by the Company without “Cause” or his resignation for “Good Reason” (each as defined in the Employment Agreement) remain unchanged from the Prior Agreement and are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.” The Employment Agreement also provides that Mr. Reynal may make personal use of the aircraft leased by the Company for an amount of time that does not result in the Company incurring more than $200,000 in aggregate incremental costs per year. In addition, in exchange for entering into the Employment Agreement and receiving the Performance-Based Award, the post-termination non-competition, non-solicitation of clients and non-solicitation of employees covenants increased from 12 months under the Prior Agreement to 24 months. Employment Agreements with Mr. Miñarro Viseras The employment agreement the Company entered into with Mr. Miñarro Viseras on October 22, 2018 (the “Miñarro Viseras Employment Agreement”) provided that Mr. Miñarro Viseras was entitled to receive a base salary of €330,000, was eligible to participate in the annual MIP with an award opportunity of up to 45% of his base salary, and was eligible to participate in our Management Equity Program. In addition, under the Miñarro Viseras Employment Agreement, in 2022, Mr. Miñarro Viseras was entitled to use of a company car and was also covered under the standard group accident insurance of the Company. On April 10, 2023, we entered into the New Miñarro Viseras Employment Agreement, effective April 3, 2023, in connection with the appointment of Mr. Miñarro Viseras to the position of senior vice president and general manager, Global Precision and Science Technologies. Pursuant to the New Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras will receive a base salary of $540,000 and continued entitlement to use of a company car. Under the New Miñarro Viseras Employment Agreement, we are required to provide Mr. Miñarro Viseras with six months’ notice in the event of his termination, and we have the option to place him on garden leave during all or part of his notice period immediately until the date of termination provided we continue to pay him his full pay and benefits during such notice period. The New Miñarro Viseras Employment Agreement subjects Mr. Miñarro Viseras to non-competition, non-solicitation of clients and non-solicitation of employees covenants that apply during his employment, notice period, as well as for six months following termination of employment (or the start of garden leave, if sooner). Mr. Miñarro Viseras is entitled to continue to receive his base salary during the six-month post-termination restriction period as consideration for such covenants, which amount must be repaid by him if he violates the restrictive covenants. The New Miñarro Viseras Employment Agreement otherwise has terms that are materially consistent with his prior employment agreement. Offer Letter with Mr. Schiesl The Company entered into an offer letter with Mr. Schiesl, dated November 25, 2013 (the “Schiesl Offer Letter”). The Schiesl Offer Letter provides that Mr. Schiesl is entitled to receive a base salary of $450,000 and is eligible to participate in the annual MIP with a target award opportunity of 75% of his base salary. Mr. Schiesl is also eligible to participate in the Company’s 401(k), Supplemental Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program. The Schiesl Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.” TABLE OF CONTENTS Offer Letter with Mr. Weatherred The Company entered into an offer letter with Mr. Weatherred, dated April 30, 2018 (the “Weatherred Offer Letter”), in connection with his appointment as Vice President, Gardner Denver Operating System. The Weatherred Offer Letter provides that Mr. Weatherred is entitled to receive an annual base salary of $345,000, and to participate in the Company’s Management Incentive Plan with an annual target award opportunity of 50% of his annual base salary. Mr. Weatherred was eligible to participate in the Company’s long-term incentive plan with a target annual equity grant opportunity equal to $275,000. The Weatherred Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.” Outstanding Equity Awards at 2022 Fiscal Year End Vicente Reynal | | | 5/24/15 | | | 438,486 | | | ― | | | $10.61 | | | 5/24/25 | | | | | | | | | | | | | | | 5/24/15 | | | 258,488 | | | ― | | | $10.61 | | | 5/24/25 | | | | | | | | | | | | | | | 5/10/16 | | | 292,702 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 5/10/16 | | | 292,701 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 2/22/18 | | | 106,761 | | | 35,588 | | | $32.06 | | | 2/22/28 | | | 15,596 | | | $814,891 | | | | | | | | | 2/21/19 | | | 165,106 | | | 55,036 | | | $27.05 | | | 2/21/29 | | | 20,102 | | | $1,050,330 | | | | | | | | | 3/6/20 | | | 85,459 | | | 85,459 | | | $27.79 | | | 3/6/30 | | | 30,137 | | | $1,574,658 | | | 241,092(5) | | | $12,597,057 | | | 2/23/21 | | | 23,276 | | | 69,831 | | | $45.58 | | | 2/23/31 | | | 27,561 | | | $1,440,062 | | | 146,994(6) | | | $7,680,437 | | | 2/22/22 | | | ― | | | 82,547 | | | $53.09 | | | 2/22/32 | | | 32,962 | | | $1,722,265 | | | 131,850(7) | | | $6,889,163 | | | 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(8) | | | $13,062,500 | | | 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(8) | | | $13,062,500 | | | 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(8) | | | $13,062,500 | | | 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(9) | | | $13,062,500 | Vikram Kini | | | 3/19/14 | | | 84,576 | | | ― | | | $8.16 | | | 3/19/24 | | | | | | | | | | | | | | | 3/19/14 | | | 84,577 | | | ― | | | $8.16 | | | 3/19/24 | | | | | | | | | | | | | | | 12/9/16 | | | 7,066 | | | ― | | | $11.43 | | | 12/9/26 | | | | | | | | | | | | | | | 12/9/16 | | | 7,066 | | | ― | | | $11.43 | | | 12/9/26 | | | | | | | | | | | | | | | 2/22/18 | | | 10,676 | | | 3,559 | | | $32.06 | | | 2/22/28 | | | 1,560 | | | $81,510 | | | | | | | | | 2/21/19 | | | 15,182 | | | 5,061 | | | $27.05 | | | 2/21/29 | | | 1,849 | | | $96,610 | | | | | | | | | 3/6/20 | | | 5,102 | | | 5,102 | | | $27.79 | | | 3/6/30 | | | 1,799 | | | $93,998 | | | 14,392(5) | | | $751,982 | | | 6/30/20 | | | 6,660 | | | 6,661 | | | $28.12 | | | 6/30/30 | | | 2,667 | | | $139,351 | | | 21,336(5) | | | $1,114,806 | | | 2/23/21 | | | 3,821 | | | 11,465 | | | $45.58 | | | 2/23/31 | | | 4,525 | | | $236,431 | | | 24,132(6) | | | $1,260,897 | | | 2/22/22 | | | ― | | | 16,509 | | | $53.09 | | | 2/22/32 | | | 6,592 | | | $344,432 | | | 26,370(7) | | | $1,377,833 | Enrique Miñarro Viseras
| | | 5/10/16 | | | 13,607 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 5/10/16 | | | 68,037 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 2/22/18 | | | 13,345 | | | 4,449 | | | $32.06 | | | 2/22/28 | | | 1,950 | | | $101,888 | | | | | | | | | 9/11/18 | | | 22,361 | | | ― | | | $26.18 | | | 9/11/28 | | | | | | | | | | | | | | | 2/21/19 | | | 18,978 | | | 6,326 | | | $27.05 | | | 2/21/29 | | | 2,311 | | | $120,750 | | | | | | | | | 3/6/20 | | | 12,755 | | | 12,755 | | | $27.79 | | | 3/6/30 | | | 4,498 | | | $235,021 | | | 35,984(5) | | | $1,880,164 | | | 2/23/21 | | | 3,821 | | | 11,465 | | | $45.58 | | | 2/23/31 | | | 4,525 | | | $236,431 | | | 24,132(6) | | | $1,260,897 | | | 2/22/22 | | | ― | | | 13,856 | | | $53.09 | | | 2/22/32 | | | 5,533 | | | $289,099 | | | 22,132(7) | | | $1,156,397 | Andrew Schiesl | | | 2/22/18 | | | 18,015 | | | 6,006 | | | $32.06 | | | 2/22/28 | | | 2,632 | | | $137,522 | | | | | | | | | 2/21/19 | | | 27,517 | | | 9,173 | | | $27.05 | | | 2/21/29 | | | 3,351 | | | $175,090 | | | | | | | | | 3/6/20 | | | 12,117 | | | 12,117 | | | $27.79 | | | 3/6/30 | | | 4,273 | | | $223,264 | | | 34,184(5) | | | $1,786,114 | | | 2/23/21 | | | 3,300 | | | 9,901 | | | $45.58 | | | 2/23/31 | | | 3,908 | | | $204,193 | | | 20,842(6) | | | $1,088,995 | | | 2/22/22 | | | ― | | | 12,971 | | | $53.09 | | | 2/22/32 | | | 5,179 | | | $270,603 | | | 20,718(7) | | | $1,082,516 | Michael Weatherred | | | 5/14/18 | | | 9,800 | | | ― | | | $33.46 | | | 5/14/28 | | | | | | | | | | | | | | | 2/21/19 | | | 13,284 | | | 4,429 | | | $27.05 | | | 2/21/29 | | | 1,618 | | | $84,541 | | | | | | | | | 3/6/20 | | | 8,928 | | | 8,929 | | | $27.79 | | | 3/6/30 | | | 3,149 | | | $164,535 | | | 25,188(5) | | | $1,316,073 | | | 2/23/21 | | | 2,431 | | | 7,296 | | | $45.58 | | | 2/23/31 | | | 2,880 | | | $150,480 | | | 15,356(6) | | | $802,351 | | | 2/22/22 | | | ― | | | 10,023 | | | $53.09 | | | 2/22/32 | | | 4,002 | | | $209,105 | | | 16,010(7) | | | $836,523 |
Risk Management(1)
| Reflects vested and Mitigation of Compensation Policiesexercisable Time Options and PracticesThe Committee has reviewed our incentive compensation programs, discussed the concept of risk as it relatesPerformance Options granted pursuant to our compensation program, considered various mitigating factors,2013 Stock Incentive Plan and reviewed these items with its independent consultant, Pearl Meyer. In addition,2017 Omnibus Incentive Plan.
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(2)
| Reflects unvested stock options granted prior to our Committee asked Pearl Meyerinitial public offering pursuant to conduct an independent risk assessment of our executive compensation program. Based2013 Stock Incentive Plan and unvested stock options granted from 2018 through 2022 pursuant to our 2017 Omnibus Incentive Plan. Stock options granted to our NEOs on these reviewsFebruary 22, 2018 vest in equal installments on the second, third, fourth, and discussions, the Committee does not believe our compensation program creates risks that are reasonably likely to have a material adverse effect on our business.For the foregoing reasons, the Committee has concluded that the programs by which our executives are compensated strike an appropriate balance between short-term and long-term compensation and incentivize our executives to act in a manner that prudently manages enterprise risk.
Employment Agreements
We do not typically enter into employment agreements with our NEOs; however, we entered into an employment agreement with Mr. Miñarro Viseras when he joined the Company in 2016 and we entered into a new employment agreement with him in October 2018 in connection with our competitive review of executive officer compensation. In addition, we entered into offer letters setting forth initial compensation and benefits, as well as severance terms, for their service in substantially their current roles with Messrs. Reynal, Schiesl and Weatherred. Full descriptionsfifth anniversaries of the material termsgrant date. All other unvested stock options granted to our NEOs vest in equal installments on each of the employment agreements we entered into with Mr. Miñarro Viseras and the offer letters we entered into with Messrs. Reynal, Schiesl, and Weatherred are presented below in “―Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2020.”
Transition Agreement - Ms. Weaver
In June 2020, in connection with her separation from the Company, to secure her provision of transitional services to the Company and to induce her to enter into a release and waiver of claims in favorfirst four anniversaries of the Company, we entered into a transition agreement with Ms. Weaver. See “―Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2020” and “―Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
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TABLE OF CONTENTS Summary Compensation TableThe following table provides summary information concerning compensation of(3)
| Reflects unvested RSUs and PSUs granted pursuant to our 2017 Omnibus Incentive Plan. RSUs granted to our NEOs for services rendered to us duringon February 22, 2018 vest in equal installments on the years indicated.Vicente Reynal, Chief Executive Officer | | | 2020 | | | 861,358 | | | 843,150 | | | 6,699,947 | | | 1,674,996 | | | 1,500,000 | | | 561,723 | | | 12,141,175 | | | 2019 | | | 823,988 | | | ― | | | 2,175,009 | | | 2,175,003 | | | 269,808 | | | 91,703 | | | 5,535,511 | | | 2018 | | | 766,500 | | | ― | | | 1,999,999 | | | 2,000,003 | | | 528,885 | | | 409,961 | | | 5,705,349 |
| | | | | | | | | | | | | | | | | | | | | | | | | Vikram Kini, SVP, and Chief Financial Officer(6) | | | 2020 | | | 340,562 | | | 247,455 | | | 849,930 | | | 249,994 | | | 286,475 | | | 46,886 | | | 2,021,301 |
| | | | | | | | | | | | | | | | | | | | | | | | | Andrew Schiesl, SVP, General Counsel, Chief Compliance Officer and Secretary | | | 2020 | | | 437,083 | | | 375,000 | | | 949,973 | | | 237,493 | | | 375,000 | | | 1,026,939 | | | 3,401,488 | | | 2019 | | | 460,000 | | | ― | | | 362,497 | | | 362,497 | | | 110,400 | | | 40,921 | | | 1,336,315 | | | 2018 | | | 460,000 | | | ― | | | 337,496 | | | 337,495 | | | 238,050 | | | 42,954 | | | 1,415,995 |
| | | | | | | | | | | | | | | | | | | | | | | | | Enrique Miñarro Viseras, VP & GM, Industrial Technologies and Services, EMEIA(7) | | | 2020 | | | 396,782 | | | 388,430 | | | 999,995 | | | 249,998 | | | 393,863 | | | 89,626 | | | 2,518,695 | | | 2019 | | | 369,803 | | | ― | | | 249,996 | | | 250,004 | | | 237,163 | | | 234,140 | | | 1,341,105 | | | 2018 | | | 350,562 | | | ― | | | 499,997 | | | 500,002 | | | 249,950 | | | 213,203 | | | 1,813,714 |
| | | | | | | | | | | | | | | | | | | | | | | | | Michael Weatherred, SVP, IR Execution Excellence (IRX), Strategy & Business Development | | | 2020 | | | 357,796 | | | 311,000 | | | 699,975 | | | 174,999 | | | 311,250 | | | 86,799 | | | 1,941,818 | | | 2019 | | | 350,175 | | | ― | | | 175,014 | | | 175,004 | | | 56,304 | | | 33,842 | | | 790,338 |
| | | | | | | | | | | | | | | | | | | | | | | | | Emily Weaver, Former SVP, and CFO(8) | | | 2020 | | | 265,938 | | | 100,000 | | | 3,839,181 | | | 1,142,238 | | | ― | | | 694,666 | | | 3,130,390 | | | 2019 | | | 47,917 | | | 500,000 | | | 1,874,988 | | | 624,996 | | | 40,729 | | | 145 | | | 3,088,774 |
(1)
| The base salary of Messrs. Reynal, Kini, Schiesl, Miñarro Viseras and Weatherred were increased effective following the completion of the Merger on March 1, 2020 as follows: Mr. Reynal―from $843,150 to $1,000,000; Mr. Kini―from $272,121 to $325,000; Mr. Schiesl―from $460,000 to $500,000; Mr. Miñarro Viseras―from €330,000 to €406,000; and Mr. Weatherred from $351,900 to $415,000. Mr. Kini’s base salary was further increased to $450,000 effective upon his promotion to Senior Vice President and Chief Financial Officer on June 15, 2020. Each of our NEOs’ base salary was reduced by 15% from April 1, 2020 through December 31, 2020. |
(2)
| Amounts shown for 2020 reflect one-time bonuses made in recognition of extraordinary efforts related to the merger and integration as discussed under “Compensation Discussion and Analysis―2020 Executive Compensation Program in Detail―One-Time Transaction Bonuses.” In addition, with respect to Mr. Kini, the amount shown reflects the portion of his retention and relocation bonus earned in 2020 as discussed under “Compensation Discussion and Analysis―2020 Executive Compensation Program in Detail―One-Time Merger-Related Retention and Relocation Bonus―Mr. Kini.” |
(3)
| Represents the aggregate grant date fair value of the RSU, PSU and stock option awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“FASB ASC Topic 718”), using the assumptions discussed in Note 16: “Stock-Based Compensation Plans” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. The final value of the PSUs granted in fiscal 2020 will be determined subject to achievement under the relative total shareholder return measure. As the PSUs are only subject to market conditions and a service period requirement as defined under FASB ASC Topic 718, they have no maximum grant date fair values that differ from the fair values presented in the table. In addition, with respect to Ms. Weaver, the amounts shown in the “Stock Awards” and “Option Awards” columns also reflects the incremental fair value in connection with the modification of her outstanding options and RSUs granted in 2019 and 2020 as described under “Narrative to Summary Compensation Table and Grants of Plan-Based Awards in 2020―Summary of NEO Offer Letters and Employment Agreement―Transition Agreement with Ms. Weaver.” |
(4)
| Amounts shown for 2020 reflect amounts earned under our 2020 MIP. |
(5)
| Amounts reported under All Other Compensation for 2020 reflect the following: |
Vicente Reynal(f) | | | 186,978 | | | 272,551 | | | 93,733 | | | 1,746 | | | 6,715 | | | ― | | | ― | | | 561,723 | Vikram Kini | | | 45,733 | | | 519 | | | ― | | | 634 | | | ― | | | ― | | | ― | | | 46,886 | Andrew Schiesl | | | 66,599 | | | 853,176 | | | 106,043 | | | 1,121 | | | ― | | | ― | | | ― | | | 1,026,939 | Enrique Miñarro Viseras | | | ― | | | 21,414 | | | 17,439 | | | ― | | | 9,365 | | | ― | | | 41,408 | | | 89,626 | Michael Weatherred | | | 49,896 | | | 29,380 | | | 6,732 | | | 792 | | | ― | | | ― | | | ― | | | 86,799 | Emily Weaver | | | 24,400 | | | 262,836 | | | 85,300 | | | 792 | | | ― | | | 321,338 | | | ― | | | 694,666 |
(a)
| Reflects Company matching contributions in the tax-qualified 401(k) Plan and the non-tax-qualified Excess Contribution Plan. |
(b)
| For all executives other than Mr. Miñarro Viseras, reflects relocation assistance in connection with the move of our Corporate Headquarters from Milwaukee, WI to Davidson, NC. General services covered under this assistance included: (i) departure home sale, (ii) moving expenses, (iii) home finding and new home purchase assistance, and (iv) temporary housing. For Mr. Schiesl, |
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also includes loss on resale of his departure home. All such relocation assistance was part of our standard relocation benefits offered to executives generally when relocating. Such assistance was a one-time expense designed to retain our top talent in lightsecond, third, fourth, and fifth anniversaries of the fact that relocating themselves and their familiesgrant date. All other RSUs granted to Davidson, NC was a condition of continued employment. As to Mr. Miñarro Viseras, value primarily reflects reimbursement of lease cancellation fees related to a discontinued housing allowance.
(c)
| For all executives other than Mr. Miñarro Viseras, reflects a tax equalization payment with respect to relocation payments. As with the relocation services, these items were a one-time item expense to ensure that we were able to retain our top talent, notwithstanding our relocation. As to Mr. Miñarro Viseras, value reflects a tax gross-up relating to reimbursement of school fees. |
(d)
| Reflects severance payments made pursuant to Ms. Weaver's transition agreement. |
(e)
| Reflects actual Company expenditures for use, including business use, of a Company car, including expenditures for the car lease and gas, and reimbursement of school fees for Mr. Miñarro Viseras' children. |
(f)
| In 2020, Mr. Reynal was permitted a one-time personal use of the company-leased aircraft at the height of the COVID-19 pandemic, for which he reimbursed the full incremental cost to the Company. The incremental cost reimbursed by Mr. Reynal to the Company for his one-time personal use of the Company-leased aircraft was calculated using the full actual operating costs for such flight charged by the leasing company, which includes an hourly use rate, fuel rate and other flight-related fees and expenses. |
(6)
| Mr. Kini was appointed Senior Vice President and Chief Financial Officer of the Company effective June 15, 2020. |
(7)
| Mr. Miñarro Viseras is based in Europe and compensated in Euros. We converted his 2020 cash compensation, his amounts earned under our 2020 MIP, and amounts shown in the “All Other Compensation” column for him to U.S. dollars at an exchange rate of 1.1413, which was the average monthly translation rate for 2020. |
(8)
| Ms. Weaver served as Senior Vice President and Chief Financial Officer of the Company until June 15, 2020. She left the Company on June 30, 2020. |
Grants of Plan-Based Awardsour NEOs vest in 2020
Vicente Reynal | | | | | | | | | 750,000 | | | 1,500,000 | | | 3,000,000 | | | | | | | | | | | | | | | | | | | | | | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | 60,273 | | | 120,546 | | | 241,092 | | | | | | | | | | | | 3,349,973 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 60,273 | | | | | | | | | 1,674,987 | | | 3/6/20(6) | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 60,273 | | | | | | | | | 1,674,987 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | | | | 170,918 | | | $27.79 | | | 1,674,996 | Vikram Kini | | | | | | | | | 143,238 | | | 286,475 | | | 572,950 | | | | | | | | | | | | | | | | | | | | | | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | 3,598 | | | 7,196 | | | 14,392 | | | | | | | | | | | | 199,977 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 3,598 | | | | | | | | | 99,988 | | | 3/6/20(6) | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 3,598 | | | | | | | | | 99,988 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | | | | 10,204 | | | $27.79 | | | 99,999 | | | 6/30/20(7) | | | 6/12/20 | | | | | | | | | | | | 5,334 | | | 10,668 | | | 21,336 | | | | | | | | | | | | 299,984 | | | 6/30/20(7) | | | 6/12/20 | | | | | | | | | | | | | | | | | | | | | 5,334 | | | | | | | | | 149,992 | | | 6/30/20(7) | | | 6/12/20 | | | | | | | | | | | | | | | | | | | | | | | | 13,321 | | | $28.12 | | | 149,994 | Andrew Schiesl | | | | | | | | | 187,500 | | | 375,000 | | | 750,000 | | | | | | | | | | | | | | | | | | | | | | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | 8,546 | | | 17,092 | | | 34,184 | | | | | | | | | | | | 474,987 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 8,546 | | | | | | | | | 237,493 | | | 3/6/20(6) | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 8,546 | | | | | | | | | 237,493 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | | | | 24,234 | | | $27.79 | | | 237,493 | Enrique Miñarro Viseras | | | | | | | | | 63,483 | | | 423,221 | | | 846,443 | | | | | | | | | | | | | | | | | | | | | | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | 8,996 | | | 17,992 | | | 35,984 | | | | | | | | | | | | 499,998 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 8,996 | | | | | | | | | 249,999 | | | 3/6/20(6) | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 8,996 | | | | | | | | | 249,999 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | | | | 25,510 | | | $27.79 | | | 249,998 | Michael Weatherred | | | | | | | | | 155,625 | | | 311,250 | | | 622,500 | | | | | | | | | | | | | | | | | | | | | | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | 6,297 | | | 12,594 | | | 25,188 | | | | | | | | | | | | 349,987 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 6,297 | | | | | | | | | 174,994 | | | 3/6/20(6) | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 6,297 | | | | | | | | | 174,994 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | | | | 17,857 | | | $27.79 | | | 174,999 |
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Emily Weaver | | | | | | | | | 122,188 | | | 244,375 | | | 488,750 | | | | | | | | | | | | | | | | | | | | | | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | 14,843 | | | 29,686 | | | 59,372 | | | | | | | | | | | | 824,974 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 14,843 | | | | | | | | | 412,487 | | | 3/6/20(6) | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | 14,843 | | | | | | | | | 412,487 | | | 3/6/20 | | | 2/13/20 | | | | | | | | | | | | | | | | | | | | | | | | 42,091 | | | $27.79 | | | 412,492 | | | 6/12/20(8) | | | | | | | | | | | | | | | | | | | | | | | | 56,171 | | | | | | | | | 1,644,141 | | | 6/12/20(8) | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,789 | | | $33.38 | | | 548,047 | | | 6/12/20(9) | | | | | | | | | | | | | | | | | | | | | | | | 7,421 | | | | | | | | | 181,697 | | | 6/12/20(9) | | | | | | | | | | | | | | | | | | | | | | | | 14,843 | | | | | | | | | 363,395 | | | 6/12/20(9) | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,045 | | | $27.79 | | | 181,700 |
(1)
| Reflects the possible payouts of cash incentive compensation under the 2020 MIP. The actual amounts earned are described in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” Mr. Miñarro Viseras is based in Europe and compensated in Euros. His Estimated Possible Non-Equity Incentive Plan Payout amounts were converted to U.S. dollars at an exchange rate of 1.1413, which was the average monthly translation rate for 2020. |
(2)
| Reflects performance stock units granted under our 2017 Omnibus Incentive Plan. Actual earned award may range from 0% to 200% basedequal installments on performance over a three-year performance period ending December 31, 2022. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards” and “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - 2020 Leadership and Compensation Developments.” |
(3)
| Reflects restricted stock units granted under our 2017 Omnibus Incentive Plan. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards” and “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - 2020 Leadership and Compensation Developments.” |
(4)
| Reflects stock options granted under our 2017 Omnibus Incentive Plan. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards” and “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - 2020 Leadership and Compensation Developments.” |
(5)
| Represents the grant date fair value, or incremental fair value, as applicable, of the awards computed in accordance with FASB ASC Topic 718, using the assumptions discussed in Note 16: “Stock-Based Compensation Plans” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. The stock options have an exercise price per share equal to the closing price of the Company's common stock as reported on the NYSE on the date of grant. |
(6)
| Reflects a one-time grant of RSUs intended to address the annual vesting shortfall created by the introduction of PSUs to the annual equity program. These grants are discussed in more detail above under “Compensation Discussion and Analysis - 2020 Executive Compensation Program in Detail - One-Time “Stub Period” RSUs Granted in 2020”. |
(7)
| Represents awards granted to Mr. Kini in connection with his promotion. |
(8)
| In connection with her separation, the terms of Ms. Weaver’s outstanding RSU and option awards granted to her in 2019 were modified so that the unvested portion of her awards remained outstanding following her termination and eligible to vest in accordance with their terms as if she had still been employed by the Company through each applicable vesting date. See “Narrative to Summary Compensation Table and Grants of Plan-Based Awards in 2020―Summary of NEO Offer Letters and Employment Agreement ― Transition Agreement with Ms. Weaver.” |
(9)
| In connection with her separation, the terms of Ms. Weaver’s outstanding RSU and option awards granted to her in 2020 were modified so that the unvested portion of her awards remained outstanding following her termination and eligible to vest in accordance with their terms as if she had still been employed by the Company through the next two vesting dates following her separation. See “Narrative to Summary Compensation Table and Grants of Plan-Based Awards in 2020―Summary of NEO Offer Letters and Employment Agreement ― Transition Agreement with Ms. Weaver.” |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2020
Summary of NEO Offer Letters and Employment Agreements
In general, the Company does not enter into employment agreements with employees, including our executive officers, however we do enter into offer letters with many of our executive officers. In addition, we did enter into an employment agreement with Mr. Miñarro Viseras in 2016 and a new employment agreement with him in October 2018. Descriptionsfirst four anniversaries of the offer letters we entered into with Messrs. Reynal, Schiesl, and Weatherred,grant date.
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(4)
| Values determined based on the transition agreement we entered into with Ms. Weaver and the employment agreement we entered into with Mr. Miñarro Viseras are provided below. All current NEOs serve at the will of our board of directors.TABLE OF CONTENTS
Offer Letter with Mr. Reynal
The Company entered into an offer letter with Mr. Reynal, dated April 17, 2015, which was modified by a letter, dated November 19, 2015, we entered into with Mr. Reynal in connection with his promotion to Chief Executive OfficerDecember 30, 2022 closing price of the Company (the offer letter, dated April 17, 2015, as so modified,Company’s common stock on the “Reynal Offer Letter”). The Reynal Offer Letter provides that, asNYSE of $52.25.
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(5)
| Represents the total number of PSUs earned under the 2020-2022 Performance Plan for the three-year performance period beginning on January 1, 2016, Mr. Reynal is entitled to receive a base salary of $750,000, which base salary was increased to $1,000,000 in March 2020 and that Mr. Reynal is entitled to participate in our annual MIP with a target award opportunity of 100% of his annual base salary, which target was increased to 150% of salary in March 2020.In addition, pursuant to the terms of the Reynal Offer Letter, Mr. Reynal was expected to invest a minimum of $2,000,000, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements.
Mr. Reynal is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.
The Reynal Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
Offer Letter with Mr. Schiesl
The Company entered into an offer letter with Mr. Schiesl, dated November 25, 2013 (the “Schiesl Offer Letter”). The Schiesl Offer Letter provides that Mr. Schiesl is entitled to receive a base salary of $450,000, which base salary was increased to $500,000 in March 2020, and is eligible to participate in the annual MIP with a target award opportunity of 75% of his base salary.
Mr. Schiesl is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.
The Schiesl Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
Employment Agreements with Mr. Miñarro Viseras
The employment agreement the Company entered into with Mr. Miñarro Viserasending on October 22, 2018 (the “Miñarro Viseras Employment Agreement”) provided that Mr. Miñarro Viseras was entitled to receive a base salary of €330,000, which base salary was increased to €406,000 in March 2020, was eligible to participate in the annual MIP with an award opportunity of up to 45% of his base salary, which target was increased to 85% of salary in March 2020, and was eligible to participate in our Management Equity Program.
Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is eligible for use of a company car, and international school assistance for his children for each year thereafter.
Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras was also covered under the standard group accident insurance of the Company.
Offer Letter with Mr. Weatherred
The Company entered into an offer letter with Mr. Weatherred, dated April 30, 2018 (the “Weatherred Offer Letter”), in connection with his appointment as Vice President, Gardner Denver Operating System. The Weatherred Offer Letter provides that Mr. Weatherred is entitled to receive an annual base salary of $345,000, which base salary was increased to $415,000 in March 2020, and to participate in the Company’s Management Incentive Plan with an annual target award opportunity of 50% of his annual base salary, which target was increased to 75% of salary in March 2020.
Mr. Weatherred was eligible to participate in the Company’s long-term incentive plan with a target annual equity grant opportunity equal to $275,000, which target annual equity grant opportunity was increased to $700,000 in March 2020.
The Weatherred Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
TABLE OF CONTENTS
Transition Agreement with Ms. Weaver
The Company entered into a transition agreement, dated June 12, 2020, with Emily Weaver (the “Weaver Transition Agreement”), the Company’s then Senior Vice President and Chief Financial Officer. Under the Transition Agreement, Ms. Weaver’s employment with the Company would terminate on June 30, 2020 (the “Termination Date”). From June 12, 2020 until Mr. Kini’s appointment as Chief Financial Officer on June 15, 2020, Ms. Weaver continued to serve as the Company’s Senior Vice President and Chief Financial Officer. From Mr. Kini’s appointment to that position on June 15, 2020, until the Termination Date (the “Transition Period”), Ms. Weaver served as an advisor to Mr. Kini, received her base salary at the rate of $575,000 per year, and participated in the Company’s employee benefit plans.
When Ms. Weaver’s employment terminated, she was entitled to receive (subject to her execution of a second release and compliance with the restrictive covenants and other obligations in the Transition Agreement): (a) a cash severance payment of $575,000, payable in bi-monthly installments over the one-year period after the Termination Date; (b) subject to her election to receive continued group health plan coverage under COBRA, continued coverage at active-employee rates for up to 18 months after the Termination Date; (c) executive outplacement services for up to 12 months after the Termination Date; (d) reimbursement of up to $50,000 for certain moving expenses if she relocates outside of the Charlotte, North Carolina metropolitan area by no later than December 31, 2022, (reduced by relocation benefits or expense reimbursements from a subsequent employer); (e) continued vesting of outstanding option and time-vesting RSU awards aswhich vested on February 13, 2023.
|
(6)
| Reflects PSUs that will vest, if she had remained an employeeat all, based on the Company’s achievement of the Company through (I)Relative TSR performance measure over the final vesting date, for the optionsperformance period beginning on January 1, 2021 and RSUs grantedending on December 4, 2019 (the “New Hire Grants”), and (II) the next two scheduled vesting dates for options and RSUs granted on March 6, 2020 (the “2020 Grants”); (f) the ability to exercise vested options until one year after the final tranche of a given grant vests as described in the forgoing sub clause (e); and (g) reimbursement of up to $10,000 of legal fees in connection with negotiating the Transition Agreement. These payments are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”31, 2023. The incremental compensation expense in connection with the modification of Ms. Weaver’s option and time-vesting RSU awards is included in the “Option Awards” and “Stock Awards” columns of the Summary Compensation Table and in the Grants of Plan-Based Awards in 2020 table. Outstanding Equity Awards at 2020 Fiscal Year End
Vicente Reynal | | | 5/24/15 | | | 438,486 | | | ― | | | 10.61 | | | 5/24/25 | | | | | | | | | | | | | | | 5/24/15 | | | 318,488 | | | ― | | | 10.61 | | | 5/24/25 | | | | | | | | | | | | | | | 5/10/16 | | | 292,702 | | | ― | | | 10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 5/10/16 | | | 292,701 | | | ― | | | 10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 2/22/18 | | | 35,587 | | | 106,762 | | | 32.06 | | | 2/22/28 | | | 46,788 | | | 2,131,661 | | | | | | | | | 2/21/19 | | | 55,035 | | | 165,107 | | | 27.05 | | | 2/21/29 | | | 60,306 | | | 2,747,541 | | | | | | | | | 3/6/20 | | | ― | | | 170,918 | | | 27.79 | | | 3/6/30 | | | 60,273 | | | 2,746,038 | | | 241,092 | | | 10,984,152 | | | 3/6/20 | | | | | | | | | | | | | | | 60,273 | | | 2,746,038 | | | | | | | Vikram Kini | | | 3/19/14 | | | 84,576 | | | ― | | | 8.16 | | | 3/19/24 | | | | | | | | | | | | | | | 3/19/14 | | | 84,577 | | | ― | | | 8.16 | | | 3/19/24 | | | | | | | | | | | | | | | 12/9/16 | | | 7,066 | | | ― | | | 11.43 | | | 12/9/26 | | | | | | | | | | | | | | | 12/9/16 | | | 7,066 | | | ― | | | 11.43 | | | 12/9/26 | | | | | | | | | | | | | | | 2/22/18 | | | 3,558 | | | 10,677 | | | 32.06 | | | 2/22/28 | | | 4,679 | | | 213,175 | | | | | | | | | 2/21/19 | | | 5,060 | | | 15,183 | | | 27.05 | | | 2/21/29 | | | 5,546 | | | 252,676 | | | | | | | | | 3/6/20 | | | ― | | | 10,204 | | | 27.79 | | | 3/6/30 | | | 3,598 | | | 163,925 | | | 14,392 | | | 655,700 | | | 3/6/20 | | | | | | | | | | | | | | | 3,598 | | | 163,925 | | | | | | | | | 6/30/20 | | | ― | | | 13,321 | | | 28.12 | | | 6/30/30 | | | 5,334 | | | 243,017 | | | 21,336 | | | 972,068 | Andrew Schiesl | | | 2/22/18 | | | 6,005 | | | 18,016 | | | 32.06 | | | 2/22/28 | | | 7,896 | | | 359,742 | | | | | | | | | 2/21/19 | | | 9,172 | | | 27,518 | | | 27.05 | | | 2/21/29 | | | 10,051 | | | 457,924 | | | | | | | | | 3/6/20 | | | ― | | | 24,234 | | | 27.79 | | | 3/6/30 | | | 8,546 | | | 389,356 | | | 34,184 | | | 1,557,423 | | | 3/6/20 | | | | | | | | | | | | | | | 8,546 | | | 389,356 | | | | | | |
TABLE OF CONTENTS
Enrique Miñarro Viseras | | | 5/10/16 | | | 13,607 | | | ― | | | 10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 5/10/16 | | | 68,037 | | | ― | | | 10.61 | | | 5/10/26 | | | | | | | | | | | | | | | 2/22/18 | | | 4,448 | | | 13,346 | | | 32.06 | | | 2/22/28 | | | 5,849 | | | 266,480 | | | | | | | | | 9/11/18 | | | 11,180 | | | 11,181 | | | 26.18 | | | 9/11/28 | | | 4,775 | | | 217,549 | | | | | | | | | 2/21/19 | | | 6,326 | | | 18,978 | | | 27.05 | | | 2/21/29 | | | 6,932 | | | 315,822 | | | | | | | | | 3/6/20 | | | ― | | | 25,510 | | | 27.79 | | | 3/6/30 | | | 8,996 | | | 409,858 | | | 35,984 | | | 1,639,431 | | | 3/6/20 | | | | | | | | | | | | | | | 8,996 | | | 409,858 | | | | | | | Michael Weatherred | | | 5/14/18 | | | 4,900 | | | 4,900 | | | 33.46 | | | 5/14/28 | | | 2,055 | | | 93,626 | | | | | | | | | 2/21/19 | | | 4,428 | | | 13,285 | | | 27.05 | | | 2/21/29 | | | 4,853 | | | 221,103 | | | | | | | | | 3/6/20 | | | ― | | | 17,857 | | | 27.79 | | | 3/6/30 | | | 6,297 | | | 286,891 | | | 25,188 | | | 1,147,565 | | | 3/6/20 | | | | | | | | | | | | | | | 6,297 | | | 286,891 | | | | | | | Emily Weaver | | | 12/4/19 | | | ― | | | 65,789 | | | 33.38 | | | 12/4/29 | | | 56,171 | | | 2,559,151 | | | | | | | | | 3/6/20 | | | ― | | | 21,045 | | | 27.79 | | | 3/6/30 | | | 7,421 | | | 338,101 | | | ― | | | ― | | | 3/6/20 | | | | | | | | | | | | | | | 14,843 | | | 676,247 | | | | | | |
(1)
| Reflects vested and exercisable Time Options and Performance Options granted pursuant to our 2013 Stock Incentive Plan and 2017 Omnibus Incentive Plan. |
(2)
| Reflects unvested stock options granted from 2018 through 2020 pursuant to our 2017 Omnibus Incentive Plan. The unvested stock options granted to Ms. Weaver on December 4, 2019 will vest in equal thirds on the second, third, and fourth anniversaries of the grant date. Stock options granted to our NEOs on February 22, 2018 vest in equal installments on the second, third, fourth, and fifth anniversaries of the grant date. All other unvested stock options granted to our NEOs vest in equal installments on each of the first four anniversaries of the grant date. Upon her termination, unvested stock options granted to Ms. Weaver were treated pursuant to her transition agreement. |
(3)
| Reflects unvested RSUs granted pursuant to our 2017 Omnibus Incentive Plan. The RSUs granted to Ms. Weaver on December 4, 2019 will vest in equal thirds on the second, third, and fourth anniversaries of the grant date. RSUs granted to our NEOs on February 22, 2018 vest in equal installments on the second, third, fourth, and fifth anniversaries of the grant date. All other RSUs granted to our NEOs vest in equal installments on the first four anniversaries of the grant date. Upon her termination, RSUs granted to Ms. Weaver were treated pursuant to her transition agreement. |
(4)
| Values determined based on the December 31, 2020 closing price of the Company's common stock on the NYSE of $45.56. |
(5)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of the Relative TSR performance measure over the performance period beginning on January 1, 2020 and ending on December 31, 2022. As of December 31, 2020, the achievement level with respect to Relative TSR was between target and maximum. Accordingly, the number of PSUs reported in the table reflects the amount that would be earned for maximum performance. The actual number of shares that will vest with respect to the PSUs is not yet determinable. |
Option Exercises(7)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of the Relative TSR performance measure over the performance period beginning on January 1, 2022 and Stock Vestedending on December 31, 2024. The number of PSUs reported in 2020the table reflects the amount that would be earned for maximum performance. The actual number of shares that will vest with respect to the PSUs is not yet determinable. |
(8)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of certain EPS growth goals over the performance period beginning on January 1, 2022 and ending on December 31, 2026. The number of PSUs reported in the table reflects the amount that would be earned for maximum performance. The actual number of shares that will vest with respect to the PSUs is not yet determinable. These PSUs were granted to Mr. Reynal as part of the one-time Performance-Based Award that vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award for Mr. Reynal designed by the Compensation Committee to (i) drive the creation of long-term stockholder value, (ii) further strengthen the alignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the retention of Mr. Reynal for the next five to ten years. |
(9)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of an $81.85 60-day volume-weighted average closing price of the common stock over the performance period beginning on September 1, 2022 and ending on September 1, 2027. As of the date of this Proxy Statement, such performance goal has not been achieved and whether or not the PSUs will ultimately vest is not yet determinable. These PSUs were granted to Mr. Reynal as part of the one-time Performance-Based Award that vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award for Mr. Reynal designed by the Compensation Committee to (i) drive the creation of long-term stockholder value, (ii) further strengthen the alignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the retention of Mr. Reynal for the next five to ten years |
Option Exercises and Stock Vested in 2022 The following table provides information regarding Options exercises and RSUs vested during fiscal 2022 for our NEOs. Vicente Reynal | | | ― | | | ― | | | 90,090 | | | 4,466,876 | Vikram Kini | | | ― | | | ― | | | 8,948 | | | 440,436 | Enrique Miñarro Viseras | | | ― | | | ― | | | 14,902 | | | 737,018 | Andrew Schiesl | | | ― | | | ― | | | 13,694 | | | 682,197 | Michael Weatherred | | | ― | | | ― | | | 8,327 | | | 399,371 |
(1)
| Value realized on exercise is based on the gain, if any, equal to the difference between the fair market value of the stock acquired upon exercise on the exercise date less the exercise price, multiplied by the number of options exercised. |
(2)
| The value realized on vesting is based on the closing price of our common stock on the NYSE on the vesting date. If vesting occurs on a day on which the NYSE is closed, the value realized on vesting is based on the closing price on the last trading day prior to the vesting date. |
TABLE OF CONTENTS Pension Benefits – Fiscal 2022 During 2022, no NEOs participated in either a tax-qualified or non-qualified defined benefit plan sponsored by the Company. Non-Qualified Deferred Compensation – Fiscal 2022 Vicente Reynal | | | 64,500 | | | 64,500 | | | (619,922) | | | ― | | | 3,266,313 | Vikram Kini | | | 204,321 | | | 71,113 | | | (251,633) | | | ― | | | 1,286,682 | Enrique Miñarro Viseras | | | ― | | | ― | | | ― | | | ― | | | ― | Andrew Schiesl | | | 56,775 | | | 79,425 | | | (164,588) | | | ― | | | 721,330 | Michael Weatherred | | | 29,893 | | | 55,100 | | | (35,582) | | | ― | | | 182,466 |
(1)
| The amounts in this column are reported as compensation for fiscal 2022 in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table. |
(2)
| Represents the amount of the matching contribution made by us in accordance with our Supplemental Contribution Plan. Matching contributions are reported for the year in which the compensation against which the applicable deferral election is applied has been earned (regardless of whether such matching contribution is actually credited to the NEO’s non-qualified deferred compensation account in that year or the following year). The amounts in this column are reported as compensation for fiscal 2022 in the “All Other Compensation” column of the Summary Compensation Table. |
(3)
| Amounts in this column are not reported as compensation for fiscal 2022 in the Summary Compensation Table since they do not reflect above-market or preferential earnings. |
(4)
| The amounts reported in this column include the following aggregate amounts for each of the following NEOs reported as compensation to such named executive officers for previous years in the “Base Salary,” “Non-Equity Incentive Plan Compensation” and “All Other Compensation” columns of the Summary Compensation Table: Mr. Reynal, $841,500 in fiscal 2016, $1,049,316 in fiscal 2017, $573,416 in fiscal 2018, $83,485 in fiscal 2019, $361,310 in fiscal 2020, for our NEOs.Vicente Reynal | | | 120,000 | | | 3,497,341 | | | 35,696 | | | 1,378,223 | Vikram Kini | | | ― | | | ― | | | 3,407 | | | 131,544 | Andrew Schiesl | | | 431,213 | | | 11,886,365 | | | 5,981 | | | 230,926 | Enrique Miñarro Viseras | | | 54,429 | | | 1,734,108 | | | 6,646 | | | 250,324 | Michael Weatherred | | | ― | | | ― | | | 2,644 | | | 89,864 | Emily Weaver | | | ― | | | ― | | | ― | | | ― |
(1)
| Value realized on exercise is based on the gain, if any, equal to the difference between the fair market value of the stock acquired upon exercise on the exercise date less the exercise price, multiplied by the number of options exercised.and $187,612 in fiscal 2021; Mr. Kini, $207,607 in fiscal 2020, and $286,810 in fiscal 2021; Mr. Schiesl, $65,536 in 2016, $114,162 in fiscal 2017, $50,766 in fiscal 2018, $46,000 in fiscal 2019, $98,998 in fiscal 2020, and $103,562 in fiscal 2021; and Mr. Weatherred, $20,994 in fiscal 2019, $65,422 in fiscal 2020, and $11,916 in fiscal 2021. |
(2)
| The value realized on vesting is based on the closing price of our common stock on the NYSE on the vesting date. If vesting occurs on a day on which the NYSE is closed, the value realized on vesting is based on the closing price on the last trading day prior to the vesting date. |
TABLE OF CONTENTS
Pension Benefits - Fiscal 2020
During 2020, no NEOs participated in either a tax-qualified or non-qualified defined benefit plan sponsored by the Company.
Non-Qualified Deferred Compensation - Fiscal 2020
Vicente Reynal | | | 180,655 | | | 180,655 | | | 453,065 | | | ― | | | 3,255,987 | Vikram Kini | | | 166,075 | | | 41,532 | | | 155,744 | | | ― | | | 1,020,123 | Andrew Schiesl | | | 49,499 | | | 49,499 | | | 133,246 | | | ― | | | 667,333 | Enrique Miñarro Viseras | | | ― | | | ― | | | ― | | | ― | | | ― | Michael Weatherred | | | 32,711 | | | 32,711 | | | 27,821 | | | ― | | | 115,289 | Emily Weaver | | | 7,300 | | | 7,300 | | | 1,833 | | | 16,433 | | | ― |
(1)
| The amounts in this column are reported as compensation for fiscal 2020 in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table. |
(2)
| Represents the amount of the matching contribution made by us in accordance with our Excess Contribution Plan. Matching contributions are reported for the year in which the compensation against which the applicable deferral election is applied has been earned (regardless of whether such matching contribution is actually credited to the NEO's non-qualified deferred compensation account in that year or the following year). The amounts in this column are reported as compensation for fiscal 2020 in the “All Other Compensation” column of the Summary Compensation Table. |
(3)
| Amounts in this column are not reported as compensation for fiscal 2020 in the Summary Compensation Table since they do not reflect above-market or preferential earnings. |
(4)
| The amounts reported in this column include the following aggregate amounts for each of the following NEOs reported as compensation to such named executive officers for previous years in the “Base Salary,” “Non-Equity Incentive Plan Compensation” and “All Other Compensation” columns of the Summary Compensation Table: Mr. Reynal, $841,500 in fiscal 2016, $1,049,316 in fiscal 2017, $573,416 in fiscal 2018 and $83,485 in fiscal 2019; Mr. Schiesl, $65,536 in 2016, $114,162 in fiscal 2017, $50,766 in fiscal 2018 and $46,000 in fiscal 2019; and Mr. Weatherred, $20,994 in fiscal 2019. |
Non-qualified Deferred Compensation Plan In addition to the 401(k) plan, U.S. employees with a salary grade of 20band 8 or higher (generally senior managersdirector and above) are eligible to participate in the ExcessSupplemental Contribution Plan. Once a participant in the Excess Contribution Plan reaches the IRS annual limits for the 401(k) plan, contributions will be made to the Excess Contribution Plan based on the salary deferral percentage elected by the participant under the 401(k) plan. The participant selects the deferral percentage for both the 401(k) plan and the ExcessSupplemental Contribution Plan at the time of initial enrollment in the ExcessSupplemental Contribution Plan or once per year in December for the following year. In December of each year, a participant may make a separate election to defer from the annual MIP award earned the following year and payable in the year thereafter. The Company matches each participant’s contributions to the ExcessSupplemental Contribution Plan with Company matching contributions. The Company match consists of $1 for each $1 the participant defers under the ExcessSupplemental Contribution Plan (up to the first 6% of a participant’s annual eligible compensation), less any matching contribution made to the 401(k) plan. The Company match is credited to the ExcessSupplemental Contribution Plan in the form of cash. Historically, the NEOs were also credited with a nonelective Company contribution of 12% of eligible compensation in excess of the IRS annual limit. The Company nonelective contributions were also contributed in cash and became fully vested after three years of employment. We discontinued the nonelective Company contributions effective January 1, 2015.
With respect to employee and Company matching contributions made to the ExcessSupplemental Contribution Plan on and after January 1, 2021, participants may elect to receive distributions related to each calendar year in a lump sum or 5-, 10-, or 15-year installments payable (i) when the participant separates from service with the Company or (ii) on a specific in-service date designated by the participant. For amounts deferred between January 1, 2019 and December 31, 2020, participants may elect to receive distributions in a lump sum or 5-, or 10-year installments payable (i) when the participant separates from service with the Company or (ii) on a specific in-service date designated by the participant. A participant makes thisthese distribution electionelections for the specific year’s contributions at the time the participant makes the salary and MIP deferral elections in December for the following year. For amounts deferred before January 1, 2019, participants in the ExcessSupplemental Contribution Plan may elect to receive distributions of their plan account in either a lump sum or 5- or 10-year installments payable when the participant separates from service with the Company, subject to the terms and conditions of the ExcessSupplemental Contribution Plan. Loans are not permitted under the ExcessSupplemental Contribution Plan. TABLE OF CONTENTS
The investment options available to participants, including the NEOs, under the ExcessSupplemental Contribution Plan are similar to those offered to all of the participants in the 401(k) plan. Because some specific investment TABLE OF CONTENTS options available under the 401(k) plan are not available under the ExcessSupplemental Contribution Plan, the Company has made similar investment options available to the ExcessSupplemental Contribution Plan participants. Our stock is not a permitted investment option under the ExcessSupplemental Contribution Plan. The table below shows the funds available under the Excess Contribution Plan and their annual rate of return for the calendar year ended December 31, 2020, as reported by the administrator of the plan. DODGE & COX STOCK
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| FID 500 INDEX
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| FID CONTRAFUND K6
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| FID TOTAL BOND K6
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Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control The following table describes the potential payments and benefits that would have been payable to our NEOs under existing plans and arrangements assuming a qualifying termination if a termination or change in control occurred on December 31, 2020,30, 2022, the last business day of our 20202022 fiscal year. A description of the provisions governing such payments under our agreements and any material conditions or obligations applicable to the receipt of payments is described below under “Severance Arrangements and Restrictive Covenants.” TABLE OF CONTENTS
The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the NEOs. These include accrued but unpaid salary and distributions of plan balances under our 401(k) savings plan. Name | | Cash
Severance
Payment
($)(1) | | Continuation
of Group
Health
Coverage
($)(2) | | Accrued
but
Unused
Vacation
($)(3) | | Value of
Stock Awards
and Stock
Option
Acceleration
($)(4) | | Total
($) | | Cash
Severance
Payment
($)(1) | | Continuation
of Group
Health Coverage
($)(2) | | Accrued
but
Unused
Vacation
($)(3) | | Value of
Stock Awards
and Stock
Option
Acceleration ($)(4) | | Total
($) | Vicente Reynal
| | | | | | | | | | | | | | | | | | | | | Qualifying Termination | | 1,000,000 | | 23,423 | | ― | | 5,944,312 | | 6,967,734 | | 1,100,000 | | 17,757 | | ― | | 6,868,922 | | 7,986,679 | Change in Control (“CIC”) | | ― | | ― | | ― | | 10,929,252 | | 10,929,252 | | ― | | ― | | ― | | 60,727,249 | | 60,727,249 | Qualifying Termination and CIC | | 1,000,000 | | 23,423 | | ― | | 28,835,161 | | 29,858,583 | | 1,100,000 | | 17,757 | | ― | | 85,053,483 | | 86,171,240 | Vikram Kini
| | | | | | | | | | | | | | | | | | | | | Qualifying Termination | | 325,000 | | 23,423 | | ― | | 584,007 | | 932,430 | | 525,000 | | 6,666 | | ― | | 827,280 | | 1,358,946 | Change in Control (“CIC”) | | ― | | ― | | ― | | 1,619,612 | | 1,619,612 | | ― | | ― | | ― | | 3,447,455 | | 3,447,455 | Qualifying Termination and CIC | | 325,000 | | 23,423 | | ― | | 3,495,150 | | 3,843,573 | | 525,000 | | 6,666 | | ― | | 5,001,177 | | 5,532,843 | Andrew Schiesl
| | | | | | | | | | | | Enrique Miñarro Viseras
| | | | | | | | | | | | Qualifying Termination | | 500,000 | | 23,423 | | ― | | 923,026 | | 1,446,448 | | 505,000 | | ― | | ― | | 921,917 | | 1,426,917 | Change in Control (“CIC”) | | ― | | ― | | ― | | 1,549,632 | | 1,549,632 | | ― | | ― | | ― | | 3,359,884 | | 3,359,884 | Qualifying Termination and CIC | | 500,000 | | 23,423 | | ― | | 4,329,221 | | 4,852,644 | | 505,000 | | ― | | ― | | 4,980,772 | | 5,485,772 | Enrique Miñarro Viseras
| | | | | | | | | | | | Andrew Schiesl
| | | | | | | | | | | | Qualifying Termination | | 463,368 | | ― | | ― | | 1,008,981 | | 1,472,349 | | 500,000 | | 17,277 | | ― | | 1,082,521 | | 1,599,798 | Change in Control (“CIC”) | | ― | | ― | | ― | | 1,631,230 | | 1,631,230 | | ― | | ― | | ― | | 3,102,292 | | 3,102,292 | Qualifying Termination and CIC | | 463,368 | | ― | | ― | | 4,452,251 | | 4,915,619 | | 500,000 | | 17,277 | | ― | | 4,827,805 | | 5,345,082 | Michael Weatherred
| | | | | | | | | | | | | | | | | | | | | Qualifying Termination | | 415,000 | | 23,423 | | ― | | 526,528 | | 964,950 | | 430,000 | | 11,757 | | ― | | 506,214 | | 947,971 | Change in Control (“CIC”) | | ― | | ― | | ― | | 1,141,825 | | 1,141,825 | | ― | | ― | | ― | | 2,303,546 | | 2,303,546 | Qualifying Termination and CIC | | 415,000 | | 23,423 | | ― | | 2,221,268 | | 2,659,691 | | 430,000 | | 11,757 | | ― | | 3,948,660 | | 4,390,417 | Emily Weaver(5)
| | | | | | | | | | | | Qualifying Termination | | 601,000 | | 35,134 | | — | | 2,918,980 | | 3,555,141 | |
(1)
| Cash severance payment includes the following: |
Mr.Messrs. Reynal, Kini, Schiesl, and Weatherred - continued payment in substantially equal monthly installments over a 12-month period of histheir respective annual base salary.
Mr. Kini - continued payment in substantially equal monthly installments over a 12-month period of his annual base salary.
Mr. Schiesl - continued payment in substantially equal monthly installments over a 12-month period of his annual base salary.salaries.
Mr. Miñarro Viseras - twelve months' notice in the event of his termination, with the option to terminate him immediately with a lump sum payment of twelve months' salary (for the purposes of this table, salary converted to U.S. dollars at an exchange rate of 1.1413, which was the average monthly translation rate for 2020). Mr. Weatherred - continued payment in substantially equal monthly installments over a 12-month period of his annual base salary.
Ms. Weaver - pursuant to the transition agreement entered into between the Company and Ms. Weaver: (i) a cash severance payment in the amount of $575,000 payable in bi-monthly installments over the one-year period after Ms. Weaver's termination date, (ii) executive outplacement services ($16,000), and (iii) reimbursement for legal fees in connection with negotiating the agreement ($10,000).
(2)
| With respect to Messrs. Reynal, Kini, Schiesl, and Weatherred, reflects the cost of providing continued group health coverage (on the same basis as actively employed employees of the Company), subject to the executive's electing to receive benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), for a period of 12 months, assuming 20202022 rates. For Ms. Weaver, reflects the actual value of 18 months of continued group health coverage available to Ms. Weaver upon her separation. Ms. Weaver’s COBRA coverage was canceled effective December 31, 2020 |
(3)
| Amounts reported in this column reflect zero accrued but unused vacation days for each of our NEOs. |
(4)
| Unvested PSUs, RSUs and Options granted to our NEOs in 2020since 2018 vest and, in the case of options, become immediately exercisable upon a termination without Cause (as defined below) within two years of a Change in Control. See “Treatment of Outstanding Equity Awards in the Event of Termination of Employment or Change in Control―Equity Awards Granted in 2020”awards granted 2018-2022” below. |
(5)
| Ms. Weaver left the Company on June 30, 2020. The values shown reflect For purposes of the amounts paidreported in this table in respect of Mr. Reynal’s Adjusted EPS PSU award, we have assumed that, as of December 30, 2022, there were four completed fiscal quarters during the EPS Performance Period applicable to Ms. Weaver following her separation, pursuant to her transition agreement.such award. |
TABLE OF CONTENTS Transition Agreement with Ms. Weaver
See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2020 — Summary of NEO Offer Letters and Employment Agreements — Transition Agreement with Ms. Weaver,” which description is incorporated herein by reference.
Severance Arrangements and Restrictive Covenants We entered into offer letters with each of our NEOs, other than Mr. Miñarro Viseras, that contain severance terms. In February 2018, we amendedUnder the terms of Mr. Miñarro Viseras’Reynal’s employment agreement, to increase his termination benefits,Messrs. Schiesl’s and in October 2018 we entered into a new employment agreement with Mr. Miñarro Viseras (which also includes such increase in termination benefits). His new employment agreement requires that we provide twelve months’ notice in the event of his termination, with the option to terminate him immediately with a lump sum payment of twelve months’ salary.
Messrs. Reynal and Schiesl
Under the terms of theirWeatherred’s offer letters, and the severance terms applicable to Mr. Kini, if the Company terminates either of Messrs. Reynal’s or Schiesl’stheir employment without Cause“cause” or any of them terminates their employment for “good reason” (as such terms are defined below)in the applicable employment agreement or either of Messrs. Reynal or Schiesl terminates his employment with us for Good Reason (as defined below)severance terms), subject in Mr. Reynal’s case to his continued compliance with the restrictive covenants in his management equity agreements, in Mr. Schiesl’s case to certain provisions in the Severance Plan,conditions and in either case to the NEO’s execution of a customary waiver and release agreement, heon-going commitments, they will be entitled to receive:
Continued payment over a 12-month period (the “Severance Period”) of the sum of (x) histheir then-current annual base salary, and (y) the annual incentive award under the MIP, if any, earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; and Continued group health coverage (on the same basis as actively employed employees of the Company), subject to the NEO’s electing to receive benefits under COBRA, for 12 months following the date his employment terminates (or, if earlier, through the date the NEO becomes employed by another employer and eligible for health insurance coverage at such employer). In April 2020, Messrs. Reynal and Schiesl proactively recommendedUnder the employment agreement with Mr. Miñarro Viseras that was in effect on December 30, 2022, we are required to provide him 12 months’ notice in the Board that their respective offer letters should be amended to align their severance terms with thoseevent of the other Named Executive Officers, and to be more in keepinghis termination, with the Company’s compensation philosophy. See “Compensation Discussion and Analysis―Other Compensation Practices and Policies that Align Our NEOsoption to Our Stockholders―Severance and Change in Control Agreements.”
Messrs. Kini and Weatherred
Under the terms of Mr. Weatherred's offer letter and severance terms applicable to Mr. Kini, if the Company terminates their employment without cause or they resign for good reason, then, subject to their continued complianceterminate him immediately with restrictive covenants and execution of a customary release, they will be entitled to receive:
continuedlump sum payment of their then-current annual base salary for a 12-month period;12 months’ salary. For more details of these agreements, see “Narrative Disclosure to Summary Compensation Table and
subject to their electing to receive benefits under COBRA, continued coverage under the Company’s group health plans at active-employee rates for up to 12 months after her termination date. Grants of Plan-Based Awards in 2022― Summary of NEO Offer Letters and Employment Agreements.”
In addition to the payments described above, each of our NEOs is entitled to receive a distribution of all vested amounts under our ExcessSupplemental Contribution Plan. See “―Non-Qualified Deferred Compensation Fiscal 2020.2022.” For purposes of each of the severance arrangements described above:
“Cause” means the occurrence of any of the following with respect to an NEO: (1) a material breach by the NEO of the terms of the Company’s policies, the terms of which have previously been provided to such NEO; (2) any act of theft, misappropriation, embezzlement, fraud or similar conduct by the NEO involving the Company or any of its affiliates; (3) the NEO’s failure to act in accordance with any specific lawful instructions given to the NEO by the board of directors (or any committee thereof) in connection with the performance of the NEO’s duties for the Company or any subsidiary of the Company, which continues beyond ten (10) business days after a written demand for substantial performance is delivered to the NEO by the Company (the “Cure
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Period”); (4) any damage of a material nature to the business or property of the Company or any affiliate caused by NEO’s willful or grossly negligent conduct which continues beyond the Cure Period (to the extent that, in the board of directors’ reasonable judgment, such breach can be cured); (5) any intentional misconduct by the NEO which is reasonably likely to be materially damaging to the Company without a reasonable good faith belief by the NEO that such conduct was in the best interests of the Company; (6) the conviction or the plea of nolo contendere or the equivalent in respect of any felony or a misdemeanor involving an act of dishonesty, moral turpitude, deceit, or fraud by the NEO; or (7) a knowing and material breach of any written agreement with the Company to which the NEO is a party, which continues beyond the Cure Period (to the extent that, in the board of directors’ reasonable judgment, such breach can be cured). A termination for Cause shall be effective when the Company has given the NEO written notice of its intention to terminate for Cause, describing those acts or omissions that are believed to constitute Cause, and has given the NEO the Cure Period within which to respond.
“Good Reason” means any of the following actions if taken without an NEO’s prior written consent (which will be deemed to have been given if the NEO does not provide written notification of an event described in clauses (1) and (2) within 90 days after the NEO knows or has reason to know of the occurrence of any such event): (1) a material adverse change in the NEO’s position causing it to be of materially less stature, responsibility, or authority or the assignment to the NEO of any material duties inconsistent with the customary duties of the NEO’s position, in each case without the NEO’s written consent (provided that if, after an initial public offering of equity securities of the Company, at a later date the Company or its successor entity ceases to be a publicly traded entity, such fact shall not constitute a change in the NEO’s existing position); (2) the relocation of the offices at which the NEO is principally employed to a location which is more than 50 miles from the offices at which the NEO is principally employed immediately prior to such relocation; or (3) a reduction, without the NEO’s written consent, in the NEO’s base salary or the target bonus amount the NEO is eligible to earn under the MIP; provided, however, that nothing herein shall be construed to guarantee the NEO’s MIP award payable for any fiscal year if the applicable performance targets are not met; and provided, further, that it shall not constitute Good Reason if the Company makes an appropriate pro rata adjustment to the applicable amount payable and targets under the MIP in the event of a change in the fiscal year.
Notwithstanding the foregoing, any event described in clauses (1) or (2) above must be an event that would result in a material negative change in the Executive’s employment relationship with the Company and thus effectively constitute an involuntary termination of employment for purposes of Section 409A of the Code.
In addition to the foregoing, Messrs. Reynal, Kini, Schiesl and Weatherred are entitled to a distribution of the amounts held under our Excess Contribution Plan in connection with any termination as disclosed above under “Non-Qualified Deferred Compensation - Fiscal 2020.”
Treatment of Outstanding Equity Awards in the Event of Termination of Employment or Change in Control The Time Option and Performance Option awards we granted to our NEOs prior to our initial public offering as well as theoutstanding RSU and option awards we have granted to our NEOs since 2018 provide for accelerated vesting in the event of certain qualifying terminations of employment as described below and/or, in certain circumstances described below, in connection with a change in control. Annual Equity awards granted prior to our initial public offeringAwards Effect of Change in Control on Vesting of Options. Immediately prior to any Change in Control (as defined below), any unvested portion of the Time Options shall vest and become immediately exercisable as to 100% of such Time Options. In addition, immediately prior to any Change in Control, the Performance Options shall vest and become immediately exercisable as to 100% of such Performance Options but only if, and to the extent that, as of such Change in Control, KKR achieves (x) a Sponsor IRR (as defined below) of 22.5% and (y) a Sponsor MOIC (as defined below) of 2.5x. No option will become exercisable as to any additional shares of the Company’s common stock following the termination of employment of an NEO for any reason and any option that is unexercisable as of the NEO’s termination of employment will immediately expire without payment.
For purposes of the foregoing:
“Sponsor IRR” means, as of a Change in Control, the cumulative internal rate of return of KKR, excluding any fees paid to KKR or expenses reimbursed to KKR from time to time (“Sponsor Fees”), on KKR’s aggregate investment in the Company determined on a fully diluted basis, assuming inclusion of all shares of the Company’s common stock underlying all then outstanding Time Options and Performance Options.
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“Sponsor MOIC” means, as of a Change in Control, the result obtained by dividing (i) the cash consideration received by KKR (other than any Sponsor Fees) as of the Change in Control by (ii) the aggregate amount of cash invested in (and the initial gross asset value of any property (other than money) contributed to) the Company by KKR, directly or indirectly, from time to time in respect of such investment.
A “Change in Control” means, (i) in one or a series of related transactions, the sale of all or substantially all of the assets of the Company to any person (or group of persons acting in concert), other than to (x) KKR or one or more of its controlled affiliates or (y) any employee benefit plan (or trust forming a part thereof) maintained by the Company or its controlled affiliates; or (ii) a merger, recapitalization, or other sale by the Company, KKR, or any of their respective affiliates, to a person (or group of persons acting in concert) of the Company’s common stock that results in more than 50% of the common stock of the Company (or any resulting company after a merger) being held by a person (or group of persons acting in concert) that does not include (x) KKR or its affiliates or (y) an employee benefit plan (or trust forming a part thereof) maintained by the Company or its controlled affiliates; and in any event of clause (i) or (ii), which results in KKR and its controlled affiliates or such employee benefit plan ceasing to hold the ability to elect a majority of the members of the Company’s board of directors.
Expiration of Vested Options. Except as provided in the Management Stockholder’s Agreement described below under “Transactions with Related Persons—Arrangements with Our Executive Officers, Directors and Advisors—Management, Director and Advisor Stockholder’s Agreements,” all vested options will expire upon the earliest to occur of the following events: (1) the tenth anniversary of the date such options were granted, so long as the NEO remains employed with the Company through such date; (2) the first anniversary of the termination of the NEO’s employment with the Company because of death or Disability (as defined in the option award agreement); (3) one hundred eighty (180) days after the termination of the NEO’s employment with the Company without Cause (as defined in the option award agreement) (except due to death or Disability) or the NEO’s resignation for Good Reason (as defined in the option award agreement); (4) the date the NEO’s employment is terminated by the Company for Cause; or (5) thirty (30) days after the NEO’s employment is terminated by the NEO without Good Reason. In addition, at the discretion of the Company, options may be cancelled at the effective date of a merger, consolidation, or other transaction or capital change of the Company, in accordance with the terms of the 2013 Stock Incentive Plan, in exchange for a payment (payable in cash or other consideration depending on the terms of the transaction) per share equal to the excess, if any, of (x) the per share consideration paid to stockholders of the Company in the transaction over (y) the exercise price of the option.
Equity awards granted since 2018
Effect of Qualifying Termination on Vesting of PSUs, RSUs, and Options. In the event of an NEO’s termination without Cause (as defined below) or Approved Retirement (as defined below), such NEO’s outstanding RSUs and options that would have vested on the first vesting date otherwise scheduled to occur immediately following the date of such termination without Cause or Approved Retirement will vest as of the date of such termination without Cause or Approved Retirement, as applicable. In the event of an NEO’s death or Disability (as defined in the 2017 Omnibus Incentive Plan), such NEO’s outstanding RSUs and options that would have vested on the first and second vesting date otherwise scheduled to occur immediately following the date of such death or Disability shall vest as of the date of death or Disability. Notwithstanding the foregoing, if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the NEO’s jurisdiction that would likely result in the favorable treatment that applies to the RSUs and options if the NEO’s termination occurs as a result of NEO’s Approved Retirement being deemed unlawful and/or discriminatory, the Company may determine that the NEO’s Retirement (as defined below) is no longer an Approved Retirement. In the event of an NEO’s termination without Cause, Approved Retirement or death or Disability occurring after the expiration of the Performance Period and before the vesting date, the PSUs that would have vested on the vesting date will vest on the vesting date. Effect of a Change in Control on Vesting of PSUs, RSUs, and Options. In the event of an NEO’s termination without Cause during the two-year period following a Change in Control (as defined in our 2017 Omnibus Incentive Plan), all of such NEO’s outstanding RSUs and options will immediately vest as of the date of such termination without Cause. TABLE OF CONTENTS
With respect to the PSUs, if a Change in Control occurs during the Performance Period, then the calculation of the number of PSUs that will vest is conducted as though (i) the last day of the Performance Period was the TABLE OF CONTENTS date of the Change in Control and (ii) the Company’s stock price at the end of the Performance Period was the price per share of the Company’s common stock payable in connection with such Change in Control. The number of PSUs resulting from such calculation will be the number that will vest upon the consummation of such Change in Control. For purposes of the foregoing: “Approved Retirement” means a “Approved Retirement, that occurs following” “Cause,” “Detrimental Activity,” and “Retirement” have the NEO’s receipt of written confirmation bydefinitions set forth in the Company that such Retirement will be designated as an “Approved Retirement” for purposes ofrelevant grant agreement or the 2017 Omnibus Incentive Plan.Plan, as applicable.
“Cause” means the NEO’s (A) willful neglect in the performanceCEO Performance-Based Leadership Equity Incentive Award
Effect of Qualifying Termination or Termination due to Death or Disability on Vesting of the NEO’s dutiesAdjusted EPS PSUs Vesting of the Adjusted EPS PSUs is subject to Mr. Reynal’s continued employment through December 31, 2026; however, if he is terminated by the Company without Cause or he resigns for Good Reason (each, a “Qualifying Termination” and as defined in his employment agreement) or he dies or becomes permanently disabled, in each case, after the expiration of the EPS Performance Period and before the date on which the Compensation Committee certifies the level of performance achieved (the “EPS PSU Vesting Date”), he remains entitled to receive the number of Adjusted EPS PSUs that the Compensation Committee certifies has become vested. If Mr. Reynal dies, becomes permanently disabled or experiences a Qualifying Termination prior to the end of the EPS Performance Period, the calculation to determine the number of Adjusted EPS PSUs, if any, that will become vested will be conducted as though (i) the last day of the EPS Performance Period was the date on which such termination occurs and (ii) the Company’s Adjusted EPS will be the Adjusted EPS for the Company or willful or repeated failure or refusal to perform such duties; (B) engagement in conduct in connection withlast four completed fiscal quarters during the NEO’s employment or service with the Company, which results in, or could reasonably be expected to result in, material harmEPS Performance Period prior to the business or reputationdate of such termination (or, if there are not four completed fiscal quarters at the time of such termination, then all of the Company or any other memberAdjusted EPS PSUs will be forfeited on the date of such termination) and, if the reason for such termination is a Qualifying Termination, the number of Adjusted EPS PSUs that will become vested will be prorated by the number of days Mr. Reynal was employed during the EPS Performance Period. Effect of a Change in Control on Vesting of the Company GroupAdjusted EPS PSUs If a change in control (as defined in the 2017 Omnibus Incentive Plan); (C) conviction occurs following the expiration of or plea of guilty or no contest to, (I) any felony; or (II) any other crime that results in, or could reasonably be expected to result in, material harmthe EPS Performance Period but prior to the business or reputationEPS PSU Vesting Date, then the Adjusted EPS PSUs will vest on the closing of such change in control based on the Company or any other memberachievement of the Company Group; (D) engagingAdjusted EPS in any act of moral turpitude, illegality or harassment, whether or not such act was committed in connectionaccordance with the NEO’s servicestable above under “Potential Payments to the Company Group; (E) material violationNamed Executive Officers upon Termination of the Company’s Code of ConductEmployment or any other written policies of the Company, including, but not limited to, those relating to sexual harassment or the disclosure or misuse of confidential information, or those set forthChange in the manuals or statements of policy of the Company; (F) fraud or misappropriation, embezzlement or misuse of funds or property belonging to the Company or any other member of the Company Group; or (G) act of personal dishonesty that involves personal profitControl” so long as Mr. Reynal has remained in connection with the NEO’s employment or service to the Company. “Detrimental Activity” means any of the following: (i) unauthorized disclosure of any confidential or proprietary information of any member of the Company Group; (ii) any activity that would be grounds to terminate the NEO’s employment or service with the Company for Cause; or (iii) a breach by the NEO of any restrictive covenant by which such NEO is bound, including, without limitation, the covenants contained in the applicable award agreement.
“Retirement” means the NEO’s termination ofcontinuous employment with the Company through such change in control.
If a change in control occurs during the EPS Performance Period and the award is not assumed, then the calculation to determine the number of Adjusted EPS PSUs that will become eligible to vest will be conducted as a resultthough (i) the last day of the NEO’s voluntary resignationEPS Performance Period was the date of the change in control and (ii) the Company’s Adjusted EPS will be measured based on the last four completed fiscal quarters (or, if there are not four completed fiscal quarters at the time of such change in control, then all of the Adjusted EPS PSUs will be forfeited upon the change in control). The number of Adjusted EPS PSUs, if any, resulting from such calculation will become vested on the closing of the change in control so long as Mr. Reynal has remained continuously employed through such change in control. If a change in control occurs prior to the expiration of the EPS Performance Period and the award is assumed by the successor to the Company, and Mr. Reynal is subsequently terminated due to death, permanent disability or aftera Qualifying Termination following such change in control but prior to the end of the EPS Performance Period, the Adjusted EPS PSUs will become vested in full on the date of such termination. Effect of Qualifying Termination or Termination due to Death or Disability on Vesting of the TSR PSUs If the TSR Target Price is achieved prior to the end of the TSR Performance Period and Mr. Reynal is terminated due to his death or permanent disability prior to the expiration of such performance period, then all of the TSR PSUs will vest upon such termination. If the TSR Target Price is achieved prior to the end of the TSR Performance Period and Mr. Reynal experiences a Qualifying Termination prior to the end of the TSR TABLE OF CONTENTS Performance Period, then he will vest pro-rata in a number of TSR PSUs based on the number of days he was employed with the Company during the TSR Performance Period. The TSR Target Price has not been achieved as of the date hereof so all the TSR PSUs would have been forfeited by Mr. Reynal if his employment had terminated due to one of the above-described events on December 30, 2022. Effect of a Change in Control on Vesting of the TSR PSUs If a change in control occurs following the date on which the NEO has reached age 62TSR Target Price is achieved, then all of the TSR PSUs will become fully vested immediately prior to such change in control subject to Mr. Reynal’s continued employment through such change in control. Subject to Mr. Reynal’s continued employment through such change in control, if a change in control occurs during the TSR Performance Period and has completed at least 10 years of service withprior to the date on which the TSR Target Price is achieved, and the award is not assumed by the successor to the Company, Group.then the TSR Performance Period will end on the date of the change in control and (i) if the sum of (A) the price per share of the Company’s common stock payable in connection with such change in control, plus (B) the cumulative value of any dividends paid during the TSR Performance Period through and including the date of the change in control equals or exceeds the TSR Target Price, the TSR PSUs will vest immediately prior to the closing of such change in control, and (ii) if such sum is less than the TSR Target Price, all of the TSR PSUs will automatically be forfeited immediately prior to the closing of such change in control. If a change in control had occurred on December 30, 2022 and the TSR PSUs were not assumed by the successor to the Company, no vesting of the TSR PSUs would have occurred based on the application of the above-described formula. If a change in control occurs prior to the date on which the TSR Target Price is achieved and the TSR PSUs are assumed by the successor to the Company and Mr. Reynal is terminated due to death, permanent disability or a Qualifying Termination following such change in control but prior to the end of the TSR Performance Period, the TSR PSUs will become fully vested on the date of such termination. Effect of Qualifying Termination on Vesting of the Performance-Conditioned Stock Option Grants If Mr. Reynal experiences a Qualifying Termination or he dies or becomes permanently disabled, the number of shares subject to the stock options that will become vested on the date of such termination will be determined as if the stock options had instead vested 20% per year over five years and, solely in the event of a termination due to his death or permanent disability, Mr. Reynal will become immediately vested in an additional 20% of the stock options. Effect of a Change in Control on Vesting of the Performance-Conditioned Stock Option Grants If a change in control occurs and the stock options are not assumed, then the stock options will become vested in full immediately prior to the change in control. If the stock options are assumed by the successor to the Company, and Mr. Reynal is subsequently terminated due to death, disability or a Qualifying Termination, the stock options will become fully vested on the date of such termination. TABLE OF CONTENTS Director Compensation in Fiscal 20202022Kirk E. Arnold(3) | | | 54,000 | | | 174,994 | | | ― | | | 228,994 | Brandon F. Brahm(4) | | | ― | | | ― | | | ― | | | ― | Elizabeth Centoni | | | 66,562 | | | 174,994 | | | ― | | | 241,556 | William P. Donnelly | | | 88,750 | | | 174,994 | | | (2) | | | 263,744 | Gary D. Forsee(3) | | | 61,200 | | | 174,994 | | | ― | | | 236,194 | John Humphrey | | | 88,750 | | | 174,994 | | | ― | | | 263,744 | Marc E. Jones | | | 66,562 | | | 174,994 | | | ― | | | 241,556 | William E. Kassling(4) | | | 12,375 | | | ― | | | (2) | | | 12,37 | Michael V. Marn(4) | | | ― | | | ― | | | (2) | | | ― | Peter M. Stavros | | | ― | | | ― | | | ― | | | ― | Nickolas Vande Steeg(4) | | | 12,375 | | | ― | | | (2) | | | 12,375 | Joshua T. Weisenbeck | | | ― | | | ― | | | ― | | | ― | Tony L. White(3) | | | 54,000 | | | 174,994 | | | ― | | | 228,994 |
Kirk E. Arnold | | | 75,000 | | | 190,000 | | | ― | | | 265,000 | Elizabeth Centoni(3) | | | 75,000 | | | 175,000 | | | ― | | | 250,000 | William P. Donnelly | | | 75,000 | | | 235,000 | | | (2) | | | 310,000 | Gary D. Forsee | | | 75,000 | | | 185,000 | | | ― | | | 260,000 | John Humphrey | | | 75,000 | | | 200,000 | | | ― | | | 275,000 | Marc E. Jones | | | 75,000 | | | 190,000 | | | ― | | | 265,000 | Vicente Reynal | | | ― | | | ― | | | ― | | | ― | Mark Stevenson | | | 37,500 | | | 87,500 | | | ― | | | 125,000 | Michael Stubblefield | | | 37,500 | | | 92,500 | | | ― | | | 130,000 | Tony L. White | | | 75,000 | | | 175,000 | | | ― | | | 250,000 |
(1)
| Represents the aggregate grant date fair value of stock awards granted during 20202022 computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)FASB ASC Topic 718. The aggregate number of restrictedRSUs outstanding as of December 31, 2022 for each director was as follows: Ms. Arnold: 3,578; Ms. Centoni: 3,296; Mr. Donnelly: 4,426; Mr. Forsee: 3,484; Mr. Humphrey: 3,767; Mr. Jones: 3,578; Mr. Stevenson: 1,757; Mr. Stubblefield: 1,857; and Mr. White: 3,296. The RSUs of Mses. Arnold and Centoni and Messrs. Donnelly, Forsee, Humphrey, Jones, and White vested in full on February 22, 2023. The RSUs of Messrs. Stevenson and Stubblefield are scheduled to vest in full on August 5, 2023. |
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stock units outstanding as of December 31, 2020 for each of Mses. Arnold and Centoni and Messrs. Donnelly, Forsee, Humphrey, Jones and White was 6,297. These restricted stock units vested in full on March 6, 2021.
(2)
| In May 2017, we granted 44,799 time-vesting options to Mr. Donnelly (the “Donnelly Time Options”) to purchase shares of our common stock at an exercise price of $20.00 per share. All of the Donnelly Time Options are fully vested and exercisable. In December 2013, we granted 57,534 time-vesting options (the “Director Time Options”) to purchase shares of our common stock at an exercise price of $8.16 per share to each non-employee director who was not associated with KKR: Messrs. Kassling, Marn and Vande Steeg. All of the Director Time Options are fully vested and exercisable. |
(3)
| Ms. Arnold and Messrs. Forsee and White joined our Board of Directors in February 2020 in connection with the closing of the Merger. |
(4)
| Messrs. Brahm, Kassling, Marn and Vande SteegCentoni resigned from our Board of Directors in February 2020 in connection with2023. Ms. Hartsock was appointed to the closingBoard of the Merger. In connection with their resignations, the Company agreed with eachDirectors, effective as of Messrs. Kassling and Vande Steeg that their Director Time Options would remain outstanding until the end of such Director Options’ 10-year term notwithstanding their retirement.January 2023. |
Description of Director Compensation This section contains a description of the material terms of our compensation arrangements for our non-employee directors in 2020.
Directors Associated with KKR
Our non-employee directors associated with KKR, including Messrs. Brahm, Stavros and Weisenbeck, received no compensation for their service on our Board of Directors in 2020.
Messrs. Donnelley, Forsee, Humphrey, Jones, Kassling, Marn, Vande Steeg and White and Mses. Arnold and Centoni
Following a competitive market assessment of non-employee director compensation conducted by Pearl Meyer in connection with the Merger, the Board adopted the following director compensation program beginning upon the completion of the Merger for each of our non-employee directors not associated with KKR:directors: Annual cash retainer of $75,000, payable quarterly in arrears and prorated for any partial year of service; Annual equity award having a fair market value of $175,000, payable in RSUs, which vests on the anniversary of the grant date; Additional annual cash retainerequity award having a fair market value of $25,000, payable quarterly in arrearsRSUs, which vests on the anniversary of the grant date, for serving as the chairperson of our Audit Committee and an additional annual equity award having a fair market value of $10,000, annual cash retainer payable quarterly in arrearsRSUs, which vests on the anniversary of the grant date, for serving as a member of such committee, prorated, in each case, for any partial year of service; Additional annual cash retainerequity award having a fair market value of $15,000, payable quarterly in arrearsRSUs, which vests on the anniversary of the grant date, for serving as the chairperson of our Compensation Committee, Nominating and Corporate Governance Committee or Nominating Governanceour Sustainability Committee, prorated, in each case, for any partial year of service; and AnAdditional annual equity award having a fair market value of $175,000$35,000, payable in restricted stock unitsRSUs, which vests on the anniversary of the grant date.
As discussed above under “Compensation Discussiondate, to compensate our Lead Director, if applicable, for the additional time and Analysis,” members of our Board of Directors volunteered to temporarily reduce their cash director fees by 15% from April 1, 2020 through the end of 2020.
Prior to the Merger in 2020, our director compensation program for our non-employee directors notresponsibilities associated with KKR was as follows:
Annual cash retainer of $75,000, payable quarterly in arrears and prorated for any partial year of service;
Additional annual cash retainer of $25,000 payable quarterly in arrears for serving as the chairperson of our Audit Committee or $12,500 payable quarterly in arrears for serving as the chairperson of our Compensation Committee, prorated, in each case, for any partial year of service; and
For such non-employee directors other than Mr. Marn, an annual equity award having a fair market value of $125,000 payable in restricted stock units which vests on the anniversary of the grant date.this role.
Our directors wereare not paid any fees for attending meetings, however, our directors are reimbursed for reasonable travel and related expenses associated with attendance at Board or committee meetings. We believe that an equity-focused compensation scheme for our directors strengthens the alignment of interests of our directors and stockholders. In connection with his election to our Board of Directors, Mr. Donnelly received the Donnelly Time Options, a grant of options under the 2013 Stock Incentive Plan with a fair value of $400,000, which vested and vesting and becomingbecame exercisable in equal parts on December 31, 2017 and December 31, 2018. TABLE OF CONTENTS In addition, in December 2013, we granted each of Messrs. Kassling, Marn and Vande Steeg 57,534 Director Time Options pursuant to the 2013 Stock Incentive Plan. Prior to our initial public offering, we also gave our non-employee directors not associated with KKR the opportunity to make investments in our common stock, subject to satisfaction of applicable securities law requirements, and each of Messrs. Marn and Vande Steeg did so.
The Director Time Options vested and became exercisable with respect to 20% of such Director Time Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to the director’s continued service through such date.
Vested Director Time Options and Donnelly Time Options expire upon the earliest to occur of the following events: (1) the tenth anniversary of the date such options were granted; (2) the first anniversary of the cessation of the director’sMr. Donnelly’s service to the Company because of death or Disability (as defined in the option award agreement); (3) one hundred eighty (180) days after the cessation of the director’sMr. Donnelly’s service to the Company without Cause (as defined in the option award agreement) (except due to death or Disability); (4) the date the director’sMr. Donnelly’s service is terminated by the Company for Cause; or (5) pursuant to the repurchase rights in the Director Stockholder’s Agreement described below. In addition, at the discretion of the Company, options may be cancelled at the effective date of a merger, consolidation, or other transaction or capital change of the Company, in accordance with the terms of the 2013 Stock Incentive Plan, in exchange for a payment (payable in cash or other consideration depending on the terms of the transaction) per share equal to the excess of (x) the per share consideration paid to stockholders of the Company in the transaction over (y) the exercise price of the option. In connection with their cessation of service in connection with the Merger, we modified the terms of the Director Time Options held by Messrs. Kassling and Vande Steeg so that such Director Time Options continue to remain outstanding until the tenth anniversary date of the date such options were granted, notwithstanding their cessation of service to the Company. In connection with theirhis option awards, each of Messrs.Mr. Donnelly Kassling, Marn and Vande Steeg became party to a Director Stockholder’s Agreement.
Under the Director Stockholder’s Agreement, shares of our common stock beneficially owned by our directors are generally nontransferable prior to the earlier of (i) a Change in Control or (ii) the fifth anniversary of the effective date of the applicable Director Stockholder’s Agreement. Our directors party to a Director Stockholder’s Agreement have limited “piggyback” registration rights with respect to shares of our common stock, provided that in lieu of piggyback rights where such rights would otherwise be available, our Board of Directors, in its sole discretion, may elect to waive the transfer restrictions (other than any such restrictions contained in an underwriters’ lock-up or in connection with a public offering) on the number of shares of Common Stock that would have been subject to such piggyback rights.
Pursuant to the terms of the Director Stockholder’s Agreement, the directors party to such agreement areMr. Donnelly is subject to covenants not to (1) disclose confidential information, (2) solicit customers and certain employees, consultants and independent contractors of the Company, (3) compete with the Company and (4) disparage the Company.
Stock Ownership and Retention Policy Our directors are also subject to the stock ownership guidelines and retention policy described under “Compensation Discussion and Analysis―Other Compensation Practices and Policies that Align Our NEOs to Our Stockholders―Stock Ownership and Retention Policy.” Compensation Committee Interlocks and Insider Participation During 2020,2022, each of Messrs. Stavros, Vande Steeg, Weisenbeck, Donnelly, Jones, Stevenson and JonesWhite and Ms. Arnold served on our Compensation Committee.Committee for at least a portion of the year. None of the current (including Ms. Hartsock), or in the case of Mr. Donnelly, former, members of our Compensation Committee has at any time been one of our executive officers or employees. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee. TABLE OF CONTENTS
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K (“Item 402(u)”), the Company is providing the following information regarding the relationship of the annual total compensation of Vicente Reynal, our Chief Executive Officer (“CEO”) to the median all of our employees (except Mr. Reynal), calculated in a manner consistent with Item 402(u). For 2020,2022, our last completed fiscal year: The median of the annual total compensation of all of our employees, excluding our CEO, was $53,770.$65,098. The annual total compensation of our CEO was $12,141,175.$54,505,957. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees except our CEO was 226:837:1. As noted earlier under “Compensation Discussion & Analysis – Certain Merger-Related and One-Time Compensation Elements in 2020”, Mr. Reynal’s 2020 compensation total included several one-time Merger-related items.
If we considered Mr. Reynal’s $9,200,000 “Target Total Direct Compensation” figurethe significant one-time impact of the CEO’s Performance-Based Award were removed from the supplemental table provided undercalculations: The annual total compensation of the same heading, which amount excludes certain one-time items and certain other elements as described therein,CEO would have been $10,886,957. The ratio of the annual total compensation of our CEO to the median employee pay ratioof the annual total compensation of all of our employees except our CEO would have been 171:167:1. The median employee identified for calculating the ratio of the CEO's annualized total compensation to that of all employees remains unchanged from the one disclosed in last year’s proxy statement. We are confident that no significant changes have been made to our employee population or compensation arrangements that would have a significant impact on our pay ratio disclosure. We determined that, as of December 31, 2020,2021, our employee population consisted of 15,67715,454 individuals, including full time, part time, and temporary employees. TABLE OF CONTENTS To identify our “median employee” from this employee population, we obtained annual base salary and target annual bonus information as of December 31, 20202021 from our internal payroll records for each employee in our employee population. We believe this consistently applied compensation measure reasonably reflects annual compensation across our employee base. Base salary amounts for employees located outside the United States and compensated in currencies other than U.S. dollars were converted to U.S. dollars based on the average annual exchange rate for 2020.2021. We then ranked the resulting annual base salary plus target annual bonus amounts for all of the employees in the employee population other than our CEO to determine our median employee. Once we identified our median employee, we combined all of the elements of such employee’s compensation for 20202022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K for the Summary Compensation Table. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table set forth above in this proxy statement.
Proxy Statement. TABLE OF CONTENTS PROPOSAL NO. 6a―ELECTION OF DIRECTORS IF PROPOSAL NO. 1 IS APPROVEDPay vs. Performance (“PvP”) Disclosure Upon the recommendation
As required by Section 953(a) of the NominatingDodd-Frank Wall Street Reform and Corporate Governance Committee,Consumer Protection Act, and Item 402(v) of Regulation S-K (“Item 402(v)”), the full Board of Directors has considered and nominatedCompany is providing the following slate of nominees to stand for re-election for a one-year term expiring atinformation regarding the 2022 Annual Meeting of Stockholders or until his or her successor is duly electedrelationship between the executive compensation actually paid by the Company and qualified if Proposal No. 1 is approved, and when the Declassification Charter Amendments are filed with the Secretary of Statefinancial performance of the State of Delaware atCompany over the Annual Meeting: Peter M. Stavros, Kirk E. Arnold, Elizabeth Centoni, William P. Donnelly, Gary D. Forsee, John Humphrey, Marc E. Jones, Vicente Reynal, Joshua T. Weisenbeck and Tony L. White. The Company’s stockholders will be asked to vote on this Nominee Alternative A Proposal only if the Declassification Charter Amendments in the Declassification Proposal are approved. If the Company’s stockholders approve Proposal No. 1, unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) attached to this proxy statement intend to vote the proxies held by them for the election of Peter M. Stavros, Kirk E. Arnold, Elizabeth Centoni, William P. Donnelly, Gary D. Forsee, John Humphrey, Marc E. Jones, Vicente Reynal, Joshua T. Weisenbeck and Tony L. White. If any of these ten nominees ceases to be a candidate for election by theapplicable time period of the Annual Meeting (a contingency whichdisclosure, calculated in a manner consistent with Item 402(v). Refer to the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation“Compensation Discussion and Analysis” section of the Board.
If the Company’s stockholders do not approve Proposal No. 1, however, then the Company will not file the Declassification Charter Amendments with the Secretary of State of the State of Delaware to effect the declassification of the Board during the Annual Meeting as described above under Proposal No. 1, and the stockholders will proceed to vote on Proposal 6b and not this Proposal 6a.
The biographies and qualifications of the ten director nominees in this Proposal No. 6a are set forth below under the heading “Director Biographies and Qualifications.”
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
TABLE OF CONTENTS
PROPOSAL NO. 6b ― ELECTION OF DIRECTORS IF PROPOSAL NO. 1 IS NOT APPROVEDCurrently, our Amended and Restated Certificate of Incorporation provides for a classified Board of Directors divided into three classes. Peter M. Stavros, Elizabeth Centoni, Gary D. Forsee and Tony L. White constitute a class with a term that expires at the Annual Meeting of Stockholders in 2021 (the “Class I Directors”); Vicente Reynal, John Humphrey and Joshua T. Weisenbeck constitute a class with a term that expires at the Annual Meeting of Stockholders in 2022 (the “Class II Directors”); and Kirk E. Arnold, William P. Donnelly and Marc E. Jones constitute a class with a term that expires at the Annual Meeting of Stockholders in 2023 (the “Class III Directors”).
Upon the recommendation of the Nominating and Corporate Governance Committee, the full Board of Directors has considered and nominated the following slate of nominees for a three-year term expiring in 2024: Peter M. Stavros, Elizabeth Centoni, Gary D. Forsee and Tony L. White. The Company’s stockholders will be asked to vote on this Nominee Alternative B Proposal only if the Declassification Charter Amendments in the Declassification Proposal are not approved. If the Company’s stockholders approve the Declassification Proposal, however, then the Company will file the Declassification Charter Amendment with the Secretary of State of the State of Delaware to effect the declassification of the Board during the Annual Meeting as described under the Declassification Proposal, and the stockholders will proceed to vote on the Nominee Alternative A Proposal and not this Nominee Alternative B Proposal.
If the Company’s stockholders do not approve Proposal No. 1 and therefore vote on this Proposal No. 6b, unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) attached to this Proxy Statement intend to votefor a discussion on how the proxies held by them for the election of Peter M. Stavros, Elizabeth Centoni, Gary D. Forsee and Tony L. White. If any of these four nominees ceases to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.Compensation Committee determines named executive officer pay.
2022 | | | $54,505,957 | | | $51,229,750 | | | $2,248,514 | | | $1,167,175 | | | $142.73 | | | $120.91 | | | $605 | | | $1,435 | | | $2.36 | 2021 | | | $11,367,565 | | | $26,768,202 | | | $2,287,667 | | | $4,355,177 | | | $168.73 | | | $130.16 | | | $563 | | | $1,192 | | | $2.09 | 2020 | | | $12,373,829 | | | $24,423,018 | | | $2,627,334 | | | $3,169,464 | | | $124.21 | | | $109.01 | | | ($33) | | | $934 | | | $1.28 |
(a)
| Deductions from, and additions to, total compensation in the Summary Compensation Table by year to calculate Compensation Actually Paid include: |
Summary Compensation Table (“SCT”) Total | | | $54,505,957 | | | $11,367,565 | | | $12,373,829 | | | $2,248,514 | | | $2,287,667 | | | $2,627,334 | Adjustments for Pension | | | | | | | | | | | | | | | | | | | Deduct: | | | Change in Pension Value reported in SCT | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | Add: | | | Amount added for current year service cost | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | Add: | | | Amount added for prior service cost impacting current year | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | Total Adjustments for Pension | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | Adjustments for Equity Awards | | | | | | | | | | | | | | | | | | | Deduct: | | | Grant date values in SCT | | | ($51,297,935) | | | ($7,454,041) | | | ($8,607,596) | | | ($1,240,928) | | | ($1,070,766) | | | ($1,943,350) | Add: | | | Year-end fair value of unvested awards granted in the current year | | | $55,421,266 | | | $11,389,717 | | | $17,782,559 | | | $1,150,403 | | | $1,636,124 | | | $2,178,885 | Add: | | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | | | ($4,849,563) | | | $11,342,130 | | | $2,711,819 | | | ($643,997) | | | $1,466,034 | | | $459,596 | Add: | | | Fair values at vest date for awards granted and vested in current year | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | Add: | | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | | | ($2,549,976) | | | $122,831 | | | $162,409 | | | ($346,817) | | | $36,118 | | | ($153,000) | Deduct: | | | Forfeitures during current year equal to prior year-end fair value | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | Add: | | | Dividends or dividend equivalents not otherwise included in total compensation | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | Total Adjustments for Equity Awards | | | ($3,276,208) | | | $15,400,636 | | | $12,049,190 | | | ($1,081,338) | | | $2,067,510 | | | $542,130 | Compensation Actually Paid | | | $51,229,750 | | | $26,768,202 | | | $24,423,018 | | | $1,167,175 | | | $4,355,177 | | | $3,169,464 |
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
TABLE OF CONTENTS
Director Biographies and QualificationsThe following information describes the offices held, other business directorships, the class and term of each director, as well as the experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to determine that the director nominee should serve as a director. Beneficial ownership of equity securities of the director nominees is shown under “Ownership of Securities” below.
14
| | | | | | Class I
| Peter M. Stavros
| | | 46
| | | Peter M. Stavros has been a member of our board of directors since July 2013. Mr. Stavros joined Kohlberg Kravis and Roberts & Co. L.P. (“KKR”) in 2005 and currentlyAdjusted EBITDA is a Partnernon-GAAP metric. For a reconciliation of the firmAdjusted EBITDA to Net Income (Loss), see Annex A to this Proxy Statement.
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Gary D. Forsee
| | | 71
| | | Gary D. Forsee joined our board of directors upon completion of the Merger. He served as President of the four-campus University of Missouri System from 2008 to 2011. He previously served as chairman of the board (from 2006 to 2007) and chief executive officer (from 2005 to 2007) of Sprint Nextel Corporation, and chairman of the board and chief executive officer of Sprint Corporation, a global telecommunications company located in Kansas City, Missouri, from 2003 to 2005. Mr. Forsee currently serves on the board of directors of Trane Technologies. Mr. Forsee previously served on the boards of Evergy, Inc., an investor-owned utility providing energy to customers in Kansas and Missouri, Great Plains Energy and KCP&L, which merged with Westar Energy to form Evergy, Inc., and DST Systems, Inc., an IT service management company. Mr. Forsee received his Bachelor of Science in engineering and an honorary engineering and doctorate from the Missouri University of Science and Technology (f/k/a University of Missouri-Rolla).
In addition to his broad operational and financial expertise, Mr. Forsee’s experience as chairman and chief executive officer with the third largest U.S. firm in the global telecommunications industry offers a deep understanding of the challenges and opportunities within markets experiencing significant technology-driven change.
| | | | | | | | Tony L. White
| | | 74
| | | Tony L. White joined our board of directors upon completion of the Merger. He served as Chairman of the Board, President and Chief Executive Officer of Applied Biosystems, Inc. (formerly Applera Corporation), a developer, manufacturer and marketer of life science systems and genomic information products, from September 1995 until his retirement in November 2007. Mr. White currently serves on the boards of directors of Trane and CVS Health Corp, a provider of health care services and formerly served on the board of directors of C.R. Bard, Inc., a company that designs, manufactures and sells medical, diagnostic and patient care devices. Mr. White received a bachelor of arts degree from Western Carolina University.
Mr. White’s extensive management experience, including 13 years as chairman and chief executive officer of an advanced-technology life sciences firm, provides substantial expertise and guidance across all aspects of the Company’s operational and financial affairs.
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Vicente Reynal
| | | 46
| | | Vicente Reynal has served as our Chief Executive Officer since January 2016, and has also been a member of our board of directors since January 2016. Mr. Reynal is responsible for leading the Company and driving its overall growth and profitability as a global supplier of innovative and application-critical flow control products, services and solutions. Mr. Reynal joined Gardner Denver in May 2015 as the President of our Industrials segment. Before joining Gardner Denver, Mr. Reynal spent 11 years at Danaher Corporation, a designer and manufacturer of professional, medical, industrial and commercial products and services, where he most recently served as the Group President of Dental Technologies from December 2013 to May 2015, leading the KaVo Kerr Group. Mr. Reynal also held various other executive positions at Danaher Corporation, including as the President of the Ormco business from October 2011 to December 2013, President of the Pelton & Crane, KaVo business from 2007 to 2011 and Vice President of Global Operations for the Danaher Motion Platform from 2004 to 2007. Prior to joining Danaher, Mr. Reynal served in various operational and executive roles at Thermo Fisher Scientific and AlliedSignal Corp. (which merged with Honeywell, Inc. to become Honeywell International, Inc. in 1999). Mr. Reynal holds a Bachelor of Science degree in Mechanical Engineering from Georgia Institute of Technology and Master of Science degrees in both Mechanical Engineering and Technology & Policy from Massachusetts Institute of Technology.
Mr. Reynal has 22 years of experience in corporate strategy, new product development, general management processes and operations leadership with companies in the industrial, energy and medical industries.
| | | | | | | | John Humphrey
| | | 55
| | | John Humphrey has been a member of our board of directors since February 2018. In 2017, Mr. Humphrey retired from Roper Technologies, a company that designs and develops software and engineered products and solutions for healthcare, transportation, food, energy, water, education and other niche markets worldwide. At Roper, he served from 2011 to 2017, as Executive Vice President and Chief Financial Officer, and from 2006 to 2011, as Vice President and Chief Financial Officer. Prior to joining Roper, Mr. Humphrey spent 12 years with Honeywell International, Inc. and its predecessor company, AlliedSignal, in a variety of financial leadership positions. Mr. Humphrey’s earlier career included six years with Detroit Diesel Corporation, a manufacturer of heavy-duty engines, in a variety of engineering and manufacturing management positions. He is a member of the Board of Directors of EnPro Industries, Inc. and O-I Glass, Inc. Mr. Humphrey received a B.S. in Industrial Engineering from Purdue University and an M.B.A. from the University of Michigan.
Mr. Humphrey has many years of experience at manufacturing companies, including experience as the chief financial officer and board member of a publicly held company.
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TABLE OF CONTENTS (b)
| The following summarizes the valuation assumptions used for stock option awards included as part of Compensation Actually Paid: |
−
| | | | | Class II
| Joshua T. Weisenbeck
| | | 39
| | | Joshua T. Weisenbeck has been a memberExpected life of our board of directors since July 2013. Mr. Weisenbeck joined KKR in 2008, andeach stock option is a Partner at KKR and leadsbased on the Industrials investment team. Mr. Weisenbeck is also a member“simplified method” using an average of the Investment Committeeremaining vest and the Portfolio Management Committee within KKR’s Americas Private Equity platform, and a memberremaining term, as of the Global Conflictsvest/FYE date.
|
−
| Strike price is based on each grant date closing price and Compliance Committee of KKR. He has been actively involved with the investments in Gardner Denver, Capsugel, Capital Safety, Hyperion Materials & Technologies, Minnesota Rubber and Plastics, GeoStabilization International, and Novaria Group, as well as having portfolio company responsibility for BrightView. Prior to joining KKR, Mr. Weisenbeck was with Onex Corporation from 2006 to 2008, focusingasset price is based on Industrials private equity transactions, including Onex’s investment in Allison Transmission. Prior to Onex, he worked for Lazard from 2004 to 2006. Mr. Weisenbeck currently serveseach vest/FYE closing price. |
−
| Risk free rate is based on the boardsTreasury Constant Maturity rate closest to the remaining expected life as of directorsthe vest/FYE date. |
−
| Historical volatility is based on daily price history for each expected life (years) prior to each vest/FYE date. Closing prices provided by S&P Capital IQ are adjusted for dividends and splits. |
−
| Represents annual dividend yield on each vest/FYE date. |
(c)
| CEO Compensation Actually Paid in 2022 would have been $2,927,250 if Mr. Reynal’s special one-time Performance-Based Award was excluded from the calculation. We believe this is an appropriate alternative way to view Compensation Actually Paid in 2022 given the long-term nature of Hyperion Materials & Technologies, Minnesota Rubberthe award with vesting events occurring five to ten years after the grant date. In our view, including all of this long-term compensation as Compensation Actually Paid in a single year does not reflect the long-term nature of the award and Plastics, GeoStabilization International, BrightView, and Novaria Group, and formerly served onoverstates the boards of directors of Capsugel and Capital Safety. He holds a Bachelor of Arts with honors, magna cum laude, from Williams College.
actual compensation paid to Mr. Weisenbeck is a representative appointed by affiliates of KKR, one of our stockholders, and has significant financial, investment and operational experience from his involvementReynal in KKR’s investments in numerous portfolio companies and has played active roles in overseeing those businesses.2022. |
(d)
| For the non-CEO NEOs, the amounts in the table reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: |
2022: Vikram Kini, Andrew Schiesl, Enrique Minarro-Viseras, Michael Weatherred 2021: Vikram Kini, Andrew Schiesl, Enrique Minarro-Viseras, Michael Weatherred 2020: Vikram Kini, Andrew Schiesl, Enrique Minarro-Viseras, Michael Weatherred, Emily Weaver
Based on the PvP table above, the Compensation Actually Paid values for our CEO and non-CEO NEOs are directionally aligned with our stock price performance – i.e, in years where stock has appreciated, Compensation Actually Paid exceeds the values reported in the Summary Compensation Table, whereas in years where stock price depreciates, Compensation Actually Paid is lower than the amounts reported in the Summary Compensation Table. There would be an even clearer correlation if Mr. Reynal’s special one-time Performance-Based Award was not included in the 2022 Compensation Actually Paid calculation.
This is not an unexpected finding. As one of the key tenets of our compensation philosophy is to deliver the majority of compensation in long-term pay, each of our NEOs’ total pay packages are comprised primarily of equity awards. As such, the Compensation Actually Paid figures will generally move in tandem with TSR.
It is also worth noting that in each of the years disclosed in the table, our total return outpaced the S&P 500 Industrials’ return over the same measurement period.
As to the financial measures displayed in the table (Net Income, Adjusted EBITDA, and Adjusted EPS), the table demonstrates consistent year-over-year improvement for each of these performance measures. Over time, we would expect that continued strong execution on these financial measures would positively influence the TSR and increase Compensation Actually Paid, driving a result that is based on pay-for-performance. Tabular List of Financial Performance Measures Linked to Compensation Actually Paid
The following financial performance measures represent, in the Company’s view, the most important financial measures used to link Compensation Actually Paid to the NEOs in 2022 to Company performance: | | Adjusted EBITDA | | | | Adjusted EPS | | | | Class III
| | | AgeRelative TSR vs. S&P 500 Industrials
| | | Principal Occupation and Other Information
| Kirk E. Arnold
| | | 61
| | | Kirk E. Arnold joined our board of directors upon completion of the Merger (as defined below under “The Board of Directors and Certain Governance Matters―Merger”). She is currently an Executive in Residence at General Catalyst Ventures, where she works with management teams to help scale and drive growth by providing mentorship, operational and strategic support. She was previously chief executive officer of Data Intensity, a cloud based data, applications and analytics managed service provider from 2013 to 2017. Prior to that, Ms. Arnold was chief operating officer of Avid, a technology provider in the media industry, and chief executive officer and president of Keane, Inc., then a publicly traded global services provider. She has also held senior leadership roles at Computer Sciences Corp., Fidelity Investments and IBM. In addition, she was founder and chief executive officer of NerveWire, a management consulting and systems integration provider.
Ms. Arnold currently serves on the boards of directors of Trane Technologies, Thomson Reuters, and Epiphany Technology Acquisition Corp. and formerly served on the board of directors of EnerNoc, Inc. Ms. Arnold received a bachelor’s degree from Dartmouth College.
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TABLE OF CONTENTSWilliam P. Donnelly
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| | | William P. Donnelly has been a member of our board of directors since May 2017. Mr. Donnelly joined Mettler-Toledo International Inc. in 1997 and from 2014 until his retirement in December, 2018, was its Executive Vice President responsible for finance, investor relations, supply chain and information technology. From 1997 to 2002 and from 2004 to 2014, Mr. Donnelly served as Mettler-Toledo’s Chief Financial Officer. From 2002 to 2004, he served as division head of Mettler-Toledo’s product inspection and certain lab businesses. From 1993 to 1997, Mr. Donnelly served in various senior financial roles, including Chief Financial Officer, of Elsag Bailey Process Automation, NV and prior to that, he was an auditor with PricewaterhouseCoopers LLP from 1983 to 1993. Mr. Donnelly received a Bachelor of Science in Business Administration from John Carroll University.
Mr. Donnelly has many years of experience with publicly held company industrial and life science companies, including as chief financial officer and with leadership roles in strategy and operations.
| | | | | | | | Marc E. Jones
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| | | Marc E. Jones has been a member of our board of directors since December 2018. Mr. Jones has served as Chief Executive Officer and Chairman of Aeris Communications, Inc., a provider of machine to machine and Internet of Things communications services, since 2008. Before joining Aeris Communications, he served as President and Chief Executive Officer of Visionael Corporation, a network service business software and service provider, from 1998 to 2005, President and Chief Operating Officer of Madge Networks, a supplier of networking hardware, from 1994 to 1998, Senior Vice President, Integrated System Products of Chips and Technologies, Inc., one of the first fabless semiconductor companies, from 1987 to 1993, and Senior Vice President, Corporate Finance of LF Rothschild, Unterberg, Towbin, a merchant and investment banking firm, from 1985 to 1987. Mr. Jones currently serves as Vice Chair of the board of directors of Stanford Health Care. Mr. Jones began his career at the law firm Pillsbury, Madison & Sutro. Mr. Jones currently sits on the Board of Trustees of Stanford University and the Board of Stanford Healthcare. Mr. Jones holds both a Bachelor of Arts in Political Science and a Juris Doctor from Stanford University.
Mr. Jones has held senior leadership roles, including chief executive officer, at several technology companies and also has experience in senior financial leadership roles and a background in law.
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The following table and accompanying footnotes set forth information regarding the beneficial ownership of our common stock as of April 20, 20212023 by: (1) each person known to us to beneficially own more than 5% of our common stock, (2) each of the named executive officers, (3) each of our directors and (4) all of our directors and executive officers as a group. As of April 20, 2021,2023, there were 420,632,637404,677,854 shares of our common stock outstanding. Beneficial ownership is determined in accordance with the rules of the SEC, and includes common stock of which that person has the right to acquire beneficial ownership within 60 days of April 20, 2023. Beneficial Owners of More than 5%
| | | | | | | Investment funds affiliated with KKR(1) | | | 44,788,635 | | | 10.65% | The Vanguard Group(2) | | | 38,458,091 | | | 9.14% | T. Rowe Price(3) | | | 66,051,081 | | | 15.70% | Wellington Management Group(4) | | | 27,373,739 | | | 6.51% | BlackRock, Inc.(5) | | | 22,337,297 | | | 5.31% | Directors and Named Executive Officers:
| | | | | | | Vicente Reynal(6)(7) | | | 1,834,316 | | | * | Vikram Kini(6) | | | 217,092 | | | * | Emily A. Weaver(6) | | | — | | | — | Andrew Schiesl(6) | | | 139,274 | | | * | Enrique Miñarro Viseras(6) | | | 137,337 | | | * | Michael A. Weatherred(6) | | | 28,599 | | | * | Peter M. Stavros(8) | | | — | | | — | Kirk E. Arnold | | | 7,124 | | | * | Elizabeth Centoni | | | 10,918 | | | * | William P. Donnelly(6) | | | 98,359 | | | * | Gary D. Forsee | | | 30,578 | | | * | John Humphrey | | | 14,817 | | | * | Marc E. Jones | | | 10,918 | | | * | Joshua T. Weisenbeck(8) | | | — | | | — | Tony L. White | | | 30,099 | | | * | All directors and executive officers as a group (19 persons)(6) | | | 2,895,731.43 | | | * |
Beneficial Owners of More than 5%
| | | | | | | The Vanguard Group(1) | | | 45,406,196 | | | 11.22% | T. Rowe Price Investment Management, Inc.(2) | | | 50,820,205 | | | 12.56% | T. Rowe Price Associates, Inc.(3) | | | 30,462,884 | | | 7.53% | BlackRock, Inc.(4) | | | 32,108,452 | | | 7.93% | Directors and Named Executive Officers:
| | | | | | | Vicente Reynal(5)(6) | | | 2,210,593 | | | * | Vikram Kini(5) | | | 291,028 | | | * | Enrique Miñarro Viseras(5) | | | 209,113 | | | * | Andrew Schiesl(5) | | | 156,523 | | | * | Michael A. Weatherred(5) | | | 81,093 | | | * | Kirk E. Arnold | | | 14,541 | | | * | William P. Donnelly(5) | | | 106,624 | | | * | Gary D. Forsee | | | 37,901 | | | * | Jennifer Hartsock | | | — | | | — | John Humphrey | | | 22,423 | | | * | Marc E. Jones | | | 18,335 | | | * | Mark Stevenson | | | 2,488 | | | * | Michael Stubblefield | | | — | | | — | Tony L. White | | | 37,234 | | | * | All directors and executive officers as a group (17 persons(5)) | | | 3,368,315 | | | * |
(1)
| Includes 44,788,635 shares directly owned by KKR Renaissance Aggregator L.P. KKR Renaissance Aggregator GP LLC, as the general partner of KKR Renaissance Aggregator L.P., KKR North America Fund XI L.P., as the sole member of KKR Renaissance Aggregator GP LLC, KKR Associates North America XI L.P., as the general partner of KKR North America Fund XI L.P., KKR North America XI Limited, as the general partner of KKR Associates North America XI L.P., KKR Fund Holdings L.P., as the sole shareholder of KKR North America XI Limited, KKR Fund Holdings GP Limited, as a general partner of KKR Fund Holdings L.P., KKR Group Holdings L.P., as the sole shareholder of KKR Fund Holdings GP Limited and a general partner of KKR Fund Holdings L.P., KKR Group Limited, as the general partner of KKR Group Holdings L.P., KKR & Co. L.P., as the sole shareholder of KKR Group Limited, KKR Management LLC, as the general partner of KKR & Co. L.P., and Messrs. Henry R. Kravis and George R. Roberts, as the designated members of KKR Management LLC may be deemed to be the beneficial owners having shared voting and investment power with respect to the shares described in this footnote. The principal business address of each of the entities and persons identified in this paragraph, except Mr. Roberts, is c/o Kohlberg Kravis Roberts & Co. L.P., 30 Hudson Yards, New York, NY 10001. The principal business address for Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025. |
(2)
| Beneficial ownership information is based on information contained in the Schedule 13G/A filed on February 10, 20219, 2023 on behalf of The Vanguard Group and its subsidiaries, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia, Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited.Group. According to the schedule, included in the shares of our common stock listed above as beneficially owned by The Vanguard Group are 0 shares over which The Vanguard Group has sole voting power, 565,030566,936 shares over which The Vanguard Group has shared voting power, 37,094,02543,734,284 shares over which The Vanguard Group has sole dispositive power and 1,364,0661,671,912 shares over which The Vanguard Group has shared dispositive power. According to the schedule, The Vanguard Group’s clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities reported therein. No one other person’s interest in the securities reported is more than 5%. The address of the principal business office of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. |
(3)
(2)
| Beneficial ownership information is based on information contained in the Schedule 13G/A filed on February 16, 202114, 2023 on behalf of T. Rowe Price Associates,Investment Management, Inc. (“Price Associates”) and T. Rowe Price Mid-Cap Growth Fund, Inc. (“Price Growth Fund”IM”). According to the schedule, included in the shares of our common stock listed above as beneficially owned by T. Rowe IM, are 16,778,175 shares over which T. Rowe IM has sole voting power, 0 shares over which T. Rowe IM has shared voting power, 50,820,205 shares over which T. Rowe IM has sole dispositive power and 0 shares over which T. Rowe IM has shared dispositive power. According to the schedule, T. Rowe IM does not serve as custodian of the assets of any of its clients; accordingly, in each instance only the client or the client’s custodian or trustee bank has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities, is vested in the individual and institutional clients which T. Rowe IM serves as investment adviser. Any and all discretionary authority which has been delegated to T. Rowe IM may be revoked in whole or in part at any time. The principal business address of T. Rowe IM is 100 E. Pratt Street, Baltimore, MD 21202. |
(3)
| Beneficial ownership information is based on information contained in the Schedule 13G/A filed on February 14, 2023 on behalf of T. Rowe Price Associates, Inc. (“T. Rowe Associates”). According to the schedule, included in the shares of our common stock listed above as beneficially owned by T. Rowe, are 24,256,60111,474,551 shares over which T. Rowe Associates has sole voting power, 0 shares over which T. Rowe Associates has shared voting power, 30,462,884 shares over which T. Rowe Associates has sole dispositive power and |
TABLE OF CONTENTS over which Price Associates has sole voting power, 66,051,0810 shares over which PriceT. Rowe Associates has soleshared dispositive power and 14,000,000 shares over with Price Growth Fund has sole voting power. According to the schedule, PriceT. Rowe Associates does not serve as custodian of the assets of any of its clients; accordingly, in each instance only the client or the client’s custodian or trustee bank has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities, is vested in the individual and institutional clients which PriceT. Rowe Associates serves as investment adviser. Any and all discretionary authority which has been delegated to PriceT. Rowe Associates may be revoked in whole or in part at any time. According to the schedule, except as may be indicated if the filing is a joint filing with one of the registered investment companies sponsored by Price Associates which it also serves as an investment adviser not more than 5% of the class of such securities is owned by any one client subject to the investment advice of Price Associates. The principal business address of each of PriceT. Rowe Associates and Price Growth Fund is 100 E. Pratt Street, Baltimore, MD 21202.
(4)
| Beneficial ownership information is based on information contained in the Schedule 13G13G/A filed on February 4, 2021 on behalf of Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors LLP and Wellington Management Company LLP. According to the schedule each of Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors LLP has shared voting power over 23,541,432 shares and shared dispositive power over 27,373,739 shares and Wellington Management Company LLP has shared voting power over 21,303,325 shares and shared dispositive power over 23,641,813 shares. According to the schedule, the securities as to which the schedule is filed by Wellington Management Group LLP, as parent holding company of certain holding companies and the Wellington Investment Advisers, are owned of record by clients of one or more of the investment advisers identified in the schedule (the “Wellington Investment Advisers”). Those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such securities. No such client is known to have such right or power with respect to more than five percent of this class of securities. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. The principal business address of each of Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors LLP and Wellington Management Company LLP is c/o Wellington Management Company LLP, 280 Congress St., Boston, MA 02210. |
(5)
| Beneficial ownership information is based on information contained in the Schedule 13G filed on February 2, 20217, 2023 by BlackRock, Inc. in which BlackRock, Inc. reported that it has sole voting power over 19,620,72629,397,076 shares, andshared voting power over 0 shares, sole dispositive power over 22,337,29732,108,452 shares held byand shared dispositive power over 0 shares. BlackRock, Inc. indicated the following subsidiaries in the schedule: BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. The principal business address of BlackRock, Inc. is 55 East 52nd52nd St., New York, NY 10055.
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(6)
(5)
| The number of shares reported includes shares covered by options that are currently exercisable within 60 days and RSUs that vest within 60 days as follows: Mr. Reynal, 1,536,351;1,840,245; Mr. Gillespie, 111,961; Ms. Hepding, 7,983; Ms. Keene, 13,565; Mr. Kini, 203,074;243,846; Mr. Schiesl, 36,413;88,728; Mr. Miñarro Viseras, 120,750;177,342; Mr. Weatherred, 21,697;48,273; Mr. Donnelly, 44,799; all directors and executive officers as a group, 2,241,232. The number of shares reported for all directors and executive officers as a group includes 9,072.43 shares of common stock held through a 401(k) plan.2,576,742. |
(7)
(6)
| The number of shares reported includes 75,000 shares held in a trust for the benefit of Mr. Reynal’s descendants, 153,230171,802 shares held in a trust for the benefit of Mr. Reynal and his spouse and 22,500 shares held in a trust for the benefit of Mr. Reynal’s spouse and descendants. |
(8)
| The principal business address of each of Messrs. Stavros and Weisenbeck is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, New York 10019.
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DELINQUENT SECTION 16(a)16(A) REPORTS Section 16(a) of the 1934 Act requires the Company’s Directors and certain officers, as well as persons who beneficially own more than 10% of the outstanding shares of Common Stock, to file reports regarding their initial stock ownership and subsequent changes to their ownership with the SEC. Based solely on a review of the reports filed for fiscal year 20202022 and the period through the date hereof and related written representations and except as previously reported, we believe that all Section 16(a) reports were filed on a timely basis, except as follows: a late filing offor a Form 45 for Mr. Reynal relating to report the exercise of stock options and sale of the resulting shares by Enrique Miñarro Viseras in 2020 and thean estate planning transfer which was filed late filing of Form 4s to report the vesting of previously-granted performance-vesting stock options by Vikram Kini, Enrique Miñarro Viseras and Michael Scheske in 2021, in each case due to administrative oversight; holdings in an Executive Deferred Compensation Plan originally under-reported on a Form 4 by Todd D. Wyman and holdings in a Supplemental Savings Plan originally under-reported on a Form 4 by J. Craig Mundy, in each case filed in connection with the Merger in 2020; and the late filing of a Form 4 by Kirk A. Arnold in 2021 due to a change in EDGAR codes.Company administrative oversight. TABLE OF CONTENTS TRANSACTIONS WITH RELATED PERSONS Arrangements with Our Executive Officers, DirectorsSince January 1, 2022, there were no “related person transactions” requiring disclosure under SEC rules and Advisorsregulations.
We have entered into letter agreements with certain members of management, including each of our executive officers, and our directors and certain advisors, pursuant to which such individuals agreed to invest in our stock and/or through the purchase of our shares with cash. In addition, prior to or at the time of our initial public offering, our Board of Directors granted options to purchase shares of our common stock to certain members of management and key employees, including to our executive officers. In connection with the grants of new options described above, the participating members of our management, including our executive officers, were required to enter into a Management Stockholder’s Agreement as well as a stock option agreement, as applicable.
Below is a brief summary of the principal terms of the Management Stockholder’s Agreements, the Director Stockholder’s Agreements and the Advisor Stockholder’s Agreements, which are qualified in their entirety by reference to the agreements themselves, forms of which are filed as exhibits to our Annual Report on Form 10-K.
Management, Director and Advisor Stockholder’s Agreements
The Management Stockholder’s Agreements imposed significant restrictions on transfers of shares of our common stock. Generally, shares held by our management were nontransferable by any means at any time prior to the earlier of (i) the occurrence of a Change in Control (as defined in the Management Stockholder’s Agreements) or (ii) the later to occur of (a) the fifth anniversary of the execution of the applicable Management Stockholder’s Agreement or (b) the consummation of an Initial Public Offering (as defined in the Management Stockholder’s Agreements). These transfer restrictions were subject to certain exceptions, including transfers approved by our Board of Directors; transfers upon the death or Disability (as defined in the Management Stockholder’s Agreements) of the holder; transfers to immediate family members or estate planning vehicles, provided such transferees become party to the applicable Management Stockholder’s Agreement; or repurchases of such shares by the Company.
Additionally, management stockholders have limited “piggyback” registration rights with respect to certain registered offerings conducted by the Company. The maximum number of shares of common stock which a management stockholder may register is generally proportionate with the percentage of common stock being sold by certain affiliates of KKR (relative to their holdings thereof). The Management Stockholder’s Agreements also contain certain lock-up provisions in the event that any shares are offered to the public pursuant to an effective registration statement under the Securities Act.
The Director Stockholder’s Agreements and Advisor Stockholder’s Agreements are substantially similar to the Management Stockholder’s Agreements. In addition to certain exceptions to transfer restrictions related to piggyback rights available to Management Stockholders, the Director and Advisor Stockholder’s Agreements further provide that in lieu of piggyback registration rights in connection with a public offering in which such piggyback rights would otherwise be available, the Board of Directors may waive transfer restrictions with respect to the number of shares that would have been subject to such piggyback rights.
Arrangements with KKR
Stockholders Agreement
In connection with our initial public offering, we entered into a stockholders agreement with certain affiliates of KKR, which stockholders agreement was subsequently amended on April 30, 2019, in connection with the Merger. This agreement, as amended, grants affiliates of KKR the right to nominate to our Board of Directors a number of designees equal to: (i) 14% of the total number of directors so long as affiliates of KKR beneficially own 10% or more of the outstanding shares of our common stock and (ii) 10% of the total number of directors so long as affiliates of KKR beneficially own 5% or more, but less than 10%, of the outstanding shares of our common stock, in each case, rounded up to the nearest whole number of directors. Affiliates of KKR also agreed to certain covenants with respect to acquisitions of our common stock following the effective time of the Merger.
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Registration Rights Agreement
In connection with our acquisition by KKR on July 30, 2013 (the “KKR Transaction”), certain affiliates of KKR entered into a registration rights agreement with us. In connection with the completion of our initial public offering, we and KKR entered into an amended and restated registration rights agreement. The amended and restated registration rights agreement grants such affiliates of KKR the right to cause us to register shares of our common stock held by it under the Securities Act and, if requested, to use our reasonable best efforts (if we are not eligible to use an automatic shelf registration statement at the time of filing) to maintain a shelf registration statement effective with respect to such shares. Certain affiliates of KKR are also entitled to participate on a pro rata basis in any registration of our common stock under the Securities Act that we may undertake. The amended and restated registration rights agreement also provides that we will pay certain expenses relating to such registrations and indemnify certain affiliates of KKR and members of management participating in any offering against certain liabilities, which may arise under the Securities Act, the Exchange Act, any state securities law or any rule or regulation thereunder applicable to us.
Indemnification Agreement
In connection with the KKR Transaction, we also entered into a separate indemnification agreement with KKR and certain of its affiliates, which provides customary exculpation and indemnification provisions in favor of KKR and such affiliates in connection with the services provided to us under monitoring, transaction fee and syndication fee agreements we entered into with KKR or otherwise.
Relationship with KKR Capstone Americas LLC
We have utilized and may continue to utilize KKR Capstone Americas LLC and/or its affiliates (“KKR Capstone”), a consulting company that works exclusively with KKR’s portfolio companies, for consulting services, and have paid to KKR Capstone related fees and expenses. KKR Capstone is not a subsidiary or affiliate of KKR. KKR Capstone operates under several consulting agreements with KKR and uses the “KKR” name under license from KKR.
Relationship with KKR Credit
Since 2014, investment funds or accounts managed or advised by the global credit business of KKR (“KKR Credit”) were participating lenders under our existing credit agreements and holders of notes issued by us, and as of December 31, 2020, had received in aggregate principal payments of approximately $2.3 million and interest payments of approximately $9.1 million (in each case, converted from Euros to U.S. dollars at an exchange rate of 1.1409, which was the average monthly translation rate for 2020). As of December 31, 2020, investment funds or accounts managed or advised by KKR Credit held a position in the Company’s Euro Term Loan Facility of €43.3 million and in the Company’s Dollar Term Loan B of $39.7 million.
In addition, during the year ended December 31, 2020, certain affiliates of KKR served as commitment parties and lead arranger in connection with certain of our financing transactions for which they received fees of approximately $7.5 million.
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Policies and Procedures for Related Person Transactions Our Board of Directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our “related person transaction policy.” Our related person transaction policy requires that (a) any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) be approved or ratified by an approving body comprised of the disinterested members of our Board of Directors or any committee of the Board of Directors (provided that a majority of the members of the Board of Directors or such committee, respectively, are disinterested) and (b) any employment relationship or transaction involving an executive officer and any related compensation be approved by the Compensation Committee of the Board of Directors or recommended by the Compensation Committee to the Board of Directors for its approval. In connection with the review and approval or ratification of a related person transaction: management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction; management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of our agreements governing our material outstanding indebtedness that limit or restrict our ability to enter into a related person transaction; management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in our applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with such Acts and related rules; and management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act of 2002. In addition, the related person transaction policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee’s status as an “independent” or “non-employee” director, as applicable, under the rules and regulations of the SEC and the NYSE. TABLE OF CONTENTS STOCKHOLDER PROPOSALS FOR THE 20222024 ANNUAL MEETING If any stockholder wishes to propose a matter for consideration at our 20222023 Annual Meeting of Stockholders, the proposal should be mailed by certified mail return receipt requested, to our Corporate Secretary, Ingersoll Rand Inc., 800-A Beaty Street,525 Harbour Place Drive, Suite 600, Davidson, North Carolina 28036. To be eligible under the SEC’s stockholder proposal rule (Rule 14a-8(e) of the Exchange Act) for inclusion in our 20222023 Annual Meeting Proxy Statement and form of proxy, a proposal must be received by our Corporate Secretary on or before December 30, 2021.2023. Failure to deliver a proposal in accordance with this procedure may result in it not being deemed timely received. In addition, our Bylaws permit stockholders to nominate directors and present other business for consideration at our Annual Meeting of Stockholders. To make a director nomination or present other business for consideration at the Annual Meeting of Stockholders to be held in 2022,2024, you must submit a timely notice in accordance with the procedures described in our Bylaws. To be timely, a stockholder’s notice shall be delivered to the Corporate Secretary at the principal executive offices of our Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our Annual Meeting to be held in 2022,2024, such a proposal must be received on or after February 16, 2022,2024, but not later than March 18, 2022.17, 2024. In the event that the date of the Annual Meeting of Stockholders to be held in 20222024 is advanced by more than 30 days, or delayed by more than 70 days, from the anniversary date of this year’s Annual Meeting of Stockholders, such notice by the stockholder must be so received no earlier than 120 days prior to the Annual Meeting of Stockholders to be held in 20222024 and not later than the later of the 90th day prior to such Annual Meeting of Stockholders to be held in 20222024 or ten (10) calendar days following the day on which public announcement of the date of such Annual Meeting is first made. Any such proposal will be considered timely only if it is otherwise in compliance with the requirements set forth in our Bylaws. The proxy solicited by the Board for the 20222024 Annual Meeting of Stockholders will confer discretionary authority to vote as the proxy holders deem advisable on such stockholder proposals which are considered untimely. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 16, 2024. HOUSEHOLDING OF PROXY MATERIALS SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies by reducing printing and mailing costs and helps the environment by conserving natural resources. Some brokers household proxy materials, delivering a single proxy statement or notice to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will generally continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker. If your household received a single Notice of Internet Availability of Proxy Materials or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact Broadridge Householding Department, by calling their toll free number, 1-866-540-7095 or by writing to: Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. You will be removed from the householding program within 30 days of receipt of your instructions at which time you will then be sent separate copies of the documents. TABLE OF CONTENTS The Board does not know of any other matters to be brought before the meeting. If other matters are presented, the proxy holders have discretionary authority to vote all proxies in accordance with their best judgment. By Order of the Board of Directors,
Andrew Schiesl Corporate Secretary We make available, free of charge on our website, all of our filings that are made electronically with the SEC, including Forms 10-K, 10-Q and 8-K. To access these filings, go to our website (www.irco.com)(www.irco.com) and click on “Financials―SEC Filings” under the “Investors” heading. Copies of our Annual Report on Form 10-K for the year ended December 31, 2020,2022, including financial statements and schedules thereto, filed with the SEC, are also available without charge to stockholders upon written request addressed to: Corporate Secretary
Ingersoll Rand Inc.
800-A Beaty Street
525 Harbour Place Drive, Suite 600
Davidson, North Carolina 28036 TABLE OF CONTENTS ARTICLE VI
Reconciliation of GAAP Measures to Non-GAAP Measures
In addition to consolidated GAAP financial measures, Ingersoll Rand reviews various non-GAAP financial measures, including “Organic Revenue Growth,” “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Diluted EPS,” “Free Cash Flow,” “Adjusted Free Cash Flow,” “Supplemental Adjusted EBITDA,” “Supplemental Adjusted Revenue” and “Supplemental Adjusted Diluted EPS.”
BOARD OF DIRECTORSIngersoll Rand believes Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as they provide supplemental information about the Company’s financial performance on a combined basis as if the Merger had occurred on January 1, 2019. Ingersoll Rand believes Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as they exclude certain items that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of Ingersoll Rand’s business. Ingersoll Rand believes Organic Revenue Growth is a helpful supplemental measure to assist management and investors in evaluating the Company’s operating results as it excludes the impact of foreign currency and acquisitions on revenue growth. Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income including interest, depreciation and amortization of non-acquisition related intangible assets and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions. Organic Revenue Growth is defined as As Reported Revenue growth less the impacts of Foreign Currency and Acquisitions. Ingersoll Rand believes that the adjustments applied in presenting Adjusted EBITDA and Adjusted Net Income are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that the Company does not expect to continue at the same level in the future. Adjusted Diluted EPS is defined as Adjusted Net Income divided by Adjusted Diluted Average Shares Outstanding.
A. ExceptIngersoll Rand uses Free Cash Flow and Adjusted Free Cash Flow to review the liquidity of its operations. Ingersoll Rand measures Free Cash Flow as otherwisecash flows from operating activities less capital expenditures and Adjusted Free Cash Flow as cash flows from operating activities less capital expenditures and other adjustments. Ingersoll Rand believes Free Cash Flow and Adjusted Free Cash Flow are useful supplemental financial measures for management and investors in assessing the Company’s ability to pursue business opportunities and investments and to service its debt. Free Cash Flow and Adjusted Free Cash Flow are not measures of our liquidity under GAAP and should not be considered as an alternative to cash flows from operating activities.
Supplemental Adjusted EBITDA represents Adjusted EBITDA as if the Merger had occurred on January 1, 2019. Ingersoll Rand believes that the adjustments applied in presenting Adjusted EBITDA and Supplemental Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that the Company does not expect to continue at the same level in the future. Supplemental Adjusted Revenue represents revenue for the Company as if the Merger had occurred on January 1, 2019. Supplemental Adjusted Diluted EPS is defined as Adjusted Net Income divided by Adjusted Diluted Average Shares Outstanding as if the Merger had occurred on January 1, 2019. Management and Ingersoll Rand’s board of directors regularly use these measures as tools in evaluating the Company’s operating and financial performance and in establishing discretionary annual compensation. Such measures are provided in this Second Amendedaddition to, and Restated Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shallshould not be managed by or under the direction of the Board of Directors. Except as otherwise providedconsidered to be a substitute for, or fixed pursuantsuperior to, the provisions of Article IV (including any certificate of designation with respect to any series of Preferred Stock)comparable measures under GAAP. In addition, Ingersoll Rand believes that Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow and this Article VI relating to the rights of the holders of any series of Preferred Stock to elect additional directors, the total number of directors shall be determined from time to time exclusivelyAdjusted Free Cash Flow are frequently used by resolution adopted by the Board of Directors. The directors (other than those directors elected by the holders of any series of Preferred Stock, voting separately as a series or together with one or moreinvestors and other such series, as the case may be) shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of such directors. Class I directors shall initially serve for a term expiring at the first annual meeting of stockholders following the date the Common Stock is first publicly traded (the “IPO Date”), Class II directors shall initially serve for a term expiring at the second annual meeting of stockholders following the IPO Date and Class III directors shall initially serve for a term expiring at the third annual meeting of stockholders following the IPO Date. At each succeeding annual meeting, successors to the class of directors whose term expires at that annual meeting shall be elected for a term expiring at the third succeeding annual meeting of stockholders. If the number of such directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any such additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decreaseinterested parties in the numberevaluation of directors removeissuers, many of which also present Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow and Adjusted Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity. Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS should not be considered as alternatives to net income, diluted earnings per share or shorten the term of any incumbent director. Subject to the terms of the Stockholders Agreement (as defined below), any such directorEach director shall be elected at the annual meeting of stockholders and shall hold office until the following
annual meeting at which his or her term expiresof
stockholders
and until his or her successor shall be elected and qualified, or his or her death, resignation, retirement, disqualification or removal from office. The Board of Directors is authorized to assign members of the Board of Directors already in office to their respective class. B. Subject to the rights granted to the holders of any one or more series of Preferred Stock then outstanding or the rights granted pursuant to the Stockholders Agreement, dated as of May 17, 2017, by and among the Corporation and certain affiliates of Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates and subsidiaries and its and their successors and assigns (other than the Corporation and its subsidiaries), collectively, “KKR”) (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Stockholders Agreement”), any newly-created directorship on the Board of Directors that results from an increase in the number of directors and any vacancy occurring in the Board of Directors (whether by death, resignation, retirement, disqualification, removal or other cause) shall be filled by a majority of the directors then in office, although less than a quorum, by a sole remaining director or by the stockholders; provided, however, that at any time when KKR beneficially owns, in the aggregate, less than 40% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, any newly-created directorship on the Board of Directors that results from an increase in the number of directors and any vacancy occurring in the Board of Directors shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by the stockholders). Any director elected to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal.
C. Subject to rights granted to KKR under the Stockholders Agreement, any or all of the directors (other than the directors elected by the holders of any series of Preferred Stock of the Corporation, voting separately as a series or together with one or more other such series, as the case may be) may be removed at any time either with or without cause by the affirmative vote of a majority in voting power of all outstanding shares of stock of the Corporation entitled to vote thereon, voting as a single class; provided, however, that at any time when KKR beneficially owns, in the aggregate, less than 40% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, any such director or all such directors may be removed only forat any
TABLE OF CONTENTS time either with or without cause and only by the affirmative vote of the holders of at least 662∕3% in voting power of all the then-then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class. For the purposes of this Restated Certificate of Incorporation, beneficial ownership of shares shall be determinedother performance measure derived in accordance with Rule 13d-3 promulgatedGAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing Ingersoll Rand’s results as reported under GAAP.
Reconciliations of Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Diluted EPS to their most comparable U.S. GAAP financial metrics for historical periods are presented in the Securities Exchange Act of 1934, as amended (the “Exchange Act”).tables below. TABLE OF CONTENTS APPENDIX BINGERSOLL RAND INC. AND SUBSIDIARIES
ARTICLE V
ADJUSTED COMBINED FINANCIAL INFORMATION BY SEGMENT
(Unaudited; in millions, except per share amounts)
Ingersoll Rand
| | | | | | | Orders | | | $6,367.6 | | | $5,764.5 | Revenue | | | 5,916.3 | | | 5,152.4 | Adjusted EBITDA (non-GAAP) | | | 1,434.8 | | | 1,191.9 | Adjusted EBITDA Margin (non-GAAP) | | | 24.3% | | | 23.1% | Adjusted Diluted EPS (non-GAAP) | | | $2.36 | | | $2.09 | Free Cash Flow (non-GAAP) | | | 770.8 | | | 563.7 | Free Cash Flow Margin (non-GAAP) | | | 13.0% | | | 10.9% | | | | | | | | Industrial Technologies & Services
| | | | | | | Orders | | | $5,120.1 | | | $4,678.8 | Revenue | | | 4,705.1 | | | 4,161.0 | Segment Adjusted EBITDA | | | 1,214.0 | | | 1,033.7 | Segment Adjusted EBITDA Margin | | | 25.8% | | | 24.8% | | | | | | | | Precision & Science Technologies
| | | | | | | Orders | | | $1,247.5 | | | $1,085.7 | Revenue | | | 1,211.2 | | | 991.4 | Segment Adjusted EBITDA | | | 347.5 | | | 291.4 | Segment Adjusted EBITDA Margin | | | 28.7% | | | 29.4% |
AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BYLAWS
A. Notwithstanding anything contained in this Second Amended and Restated Certificate of Incorporation to the contrary, at any time when KKR (as defined below) beneficially owns, in the aggregate, less than 40% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, in addition to any vote required by applicable law, the following provisions in this Second Amended and Restated Certificate of Incorporation may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of at least 662∕3% in voting power of all the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class: this Article V, Article VI, Article VII, Article VIII, Article IX and Article X.For the purposes of thisSecond Amended andRestated Certificate of Incorporation, beneficial ownership of shares shall be determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
A-3
TABLE OF CONTENTS APPENDIX CINGERSOLL RAND INC. AND SUBSIDIARIES
B. The Board of Directors is expressly authorized to make, repeal, alter, amend and rescind,RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO FREE CASH FLOW
(Unaudited; in whole or in part, the bylaws of the Corporation (as in effect from time to time, the “Bylaws”) without the assent or vote of the stockholders in any manner not inconsistent with the laws of the State of Delaware or this Second Amended and Restated Certificate of Incorporation. Notwithstanding anything to the contrary contained in this Second Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote of the stockholders, at any time when KKR (as defined below) beneficially owns, in the aggregate, less than 40% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, in addition to any vote of the holders of any class or series of capital stock of the Corporation required herein (including any certificate of designation relating to any series of Preferred Stock), the Bylaws or applicable law, the affirmative vote of the holders of at least 662∕3%a majority in voting power of all the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required in order for the stockholders of the Corporation to alter, amend, repeal or rescind, in whole or in part, any provision of the Bylaws or to adopt any provision inconsistent therewith.millions) Net Income | | | $608.5 | | | $565.0 | Less: Income from discontinued operations | | | 0.5 | | | 121.0 | Less: Income tax benefit (provision) from discontinued operations | | | 14.7 | | | (79.4) | Income from Continuing Operations, Net of Tax | | | 593.3 | | | 523.4 | Plus:
| | | | | | | Interest expense | | | 103.2 | | | 87.7 | Provision (benefit) for income taxes | | | 149.6 | | | (21.8) | Depreciation expense | | | 81.8 | | | 85.1 | Amortization expense | | | 347.6 | | | 332.9 | Restructuring and related business transformation costs | | | 32.3 | | | 18.8 | Acquisition related expenses and non-cash charges | | | 40.7 | | | 65.2 | Stock-based compensation | | | 85.6 | | | 95.9 | Foreign currency transaction gains, net | | | (5.9) | | | (12.0) | Loss (income) on equity method investments | | | (0.7) | | | 11.4 | Loss on extinguishment of debt | | | 1.1 | | | 9.0 | Adjustments to LIFO inventories | | | 36.1 | | | 33.2 | Gain on settlement of post-acquisition contingencies | | | (6.2) | | | (30.1) | Other adjustments | | | (23.7) | | | (6.8) | Adjusted EBITDA | | | $1,434.8 | | | $1,191.9 | Minus:
| | | | | | | Interest expense | | | 103.2 | | | 87.7 | Income tax provision, as adjusted | | | 267.3 | | | 120.7 | Depreciation expense | | | 81.8 | | | 85.1 | Amortization of non-acquisition related intangible assets | | | 18.8 | | | 17.0 | Interest income on cash and cash equivalents | | | (8.0) | | | — | Adjusted Net Income | | | $971.7 | | | $881.4 | | | | | | | | Cash Flows from Operating Activities from Continuing Operations | | | 865.4 | | | 627.8 | Minus:
| | | | | | | Capital expenditures | | | 94.6 | | | 64.1 | Free Cash Flow | | | $770.8 | | | $563.7 | | | | | | | | Revenue | | | 5,916.3 | | | 5,152.4 | Free Cash Flow Margin | | | 13.0% | | | 10.9% |
TABLE OF CONTENTS 
RECONCILIATION OF DILUTED NET INCOME PER SHARE TO
ADJUSTED DILUTED EARNINGS PER SHARE
(Unaudited; in millions, except per share amounts) Diluted Net Income Per Share (As Reported)1 | | | $1.47 | | | $1.34 | Less: Diluted Net Income Per Share from Discontinued Operations (As Reported)1 | | | 0.04 | | | 0.10 | Diluted Net Income Per Share from Continuing Operations (As Reported)1 | | | 1.44 | | | 1.24 | Plus:
| | | | | | | Provision (benefit) for income taxes | | | 0.36 | | | (0.05) | Amortization of acquisition related intangible assets | | | 0.80 | | | 0.75 | Restructuring and related business transformation costs | | | 0.08 | | | 0.05 | Acquisition related expenses and non-cash charges | | | 0.10 | | | 0.15 | Stock-based compensation | | | 0.21 | | | 0.23 | Foreign currency transaction gains, net | | | (0.01) | | | (0.03) | Loss on equity method investments | | | — | | | 0.03 | Loss on extinguishment of debt | | | — | | | 0.02 | Adjustments to LIFO inventories | | | 0.09 | | | 0.08 | Gain on settlement of post-acquisition contingencies | | | (0.02) | | | (0.07) | Other adjustments | | | (0.06) | | | (0.02) | Minus:
| | | | | | | Income tax provision, as adjusted | | | 0.65 | | | 0.29 | Interest income on cash and cash equivalents | | | (0.02) | | | — | Adjusted Diluted Earnings Per Share2 | | | $2.36 | | | $2.09 | | | | | | | | Average shares outstanding:
| | | | | | | Basic, as reported | | | 405.3 | | | 414.8 | Diluted, as reported | | | 410.2 | | | 421.2 | Adjusted diluted2 | | | 410.2 | | | 421.2 |
1
| Basic and diluted earnings per share (as reported) are calculated by dividing net income attributable to Ingersoll Rand Inc. by the basic and diluted average shares outstanding for the respective periods. |
2
| Adjusted diluted share count and adjusted diluted earnings per share include incremental dilutive shares, using the treasury stock method, which are added to average shares outstanding. |
TABLE OF CONTENTS INGERSOLL RAND INC. AND SUBSIDIARIES
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO ADJUSTED CASH FLOW FROM OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
(Unaudited; in millions) Cash Flow from Operating Activities from Continuing Operations | | | $627.8 | Plus:
| | | | Synergy delivery and stand-up related costs | | | 31.3 | Cash taxes related to SVT and HPS divestitures | | | 253.7 | Settlement of post-acquisition contingencies | | | (49.5) | Adjusted Cash Flow from Operating Activities | | | 863.3 | Minus:
| | | | Capital expenditures | | | 64.1 | Adjusted Free Cash Flow | | | $799.2 | | | | | Revenue | | | $5,152.4 | Adjusted Free Cash Flow Margin | | | 15.5% |
TABLE OF CONTENTS INGERSOLL RAND INC. AND SUBSIDIARIES
REVENUE GROWTH BY SEGMENT(1)
(Unaudited) Ingersoll Rand
| | | | | | | Organic growth | | | 16.1% | | | 12.3% | Impact of foreign currency | | | (5.7%) | | | 2.6% | Impact of acquisitions | | | 4.4% | | | 3.7% | Total adjusted orders and revenue growth | | | 14.8% | | | 18.6% | | | | | | | | Industrial Technologies & Services
| | | | | | | Organic growth | | | 17.5% | | | 12.6% | Impact of foreign currency | | | (5.5%) | | | 2.7% | Impact of acquisitions | | | 1.1% | | | 2.2% | Total adjusted orders and revenue growth | | | 13.1% | | | 17.5% | | | | | | | | Precision & Science Technologies
| | | | | | | Organic growth | | | 10.3% | | | 10.9% | Impact of foreign currency | | | (6.4%) | | | 2.3% | Impact of acquisitions | | | 18.3% | | | 10.0% | Total adjusted orders and revenue growth | | | 22.2% | | | 23.2% |
(1)
| Organic growth, impact of foreign currency, and impact of acquisitions are non-GAAP measures. References to “impact of acquisitions” refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition. The portion of GAAP revenue attributable to currency translation is calculated as the difference between (a) the period-to-period change in revenue (excluding acquisition sales) and (b) the period-to-period change in revenue (excluding acquisition sales) after applying prior year foreign exchange rates to the current year period. |
TABLE OF CONTENTS INGERSOLL RAND INC. AND SUBSIDIARIES
SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION BY SEGMENT
(Unaudited; in millions) Ingersoll Rand
| | | | | | | Supplemental Adjusted Orders | | | $4,410.4 | | | $4,829.9 | Supplemental Adjusted Revenue (non-GAAP) | | | 4,344.4 | | | 4,907.8 | Supplemental Adjusted EBITDA (non-GAAP) | | | 933.9 | | | 960.2 | Supplemental Adjusted EBITDA Margin (non-GAAP) | | | 21.5% | | | 19.6% | | | | | | | | Industrial Technologies & Services
| | | | | | | Supplemental Adjusted Orders | | | $3,576.2 | | | $3,983.0 | Supplemental Adjusted Revenue (non-GAAP) | | | 3,540.0 | | | 4,057.5 | | | | | | | | Precision & Science Technologies
| | | | | | | Supplemental Adjusted Orders | | | $834.2 | | | $846.9 | Supplemental Adjusted Revenue (non-GAAP) | | | 804.4 | | | 850.3 |
TABLE OF CONTENTS INGERSOLL RAND INC. AND SUBSIDIARIES
SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF GAAP REVENUE TO SUPPLEMENTAL ADJUSTED REVENUE BY SEGMENT AND FOR THE COMPANY
(Unaudited; in millions) Segment
| | | | | | | | | | | | | | | | | | | Industrial Technologies & Services | | | $3,248.2 | | | $291.8 | | | $3,540.0 | | | $1,700.9 | | | $2,356.6 | | | $4,057.5 | Precision & Science Technologies | | | 725.0 | | | 79.4 | | | 804.4 | | | 316.6 | | | 533.7 | | | 850.3 | Total Company | | | $3,973.2 | | | $371.2 | | | $4,344.4 | | | $2,017.5 | | | $2,890.3 | | | $4,907.8 |
(1)
| For the year ended December 31, 2020, the “Adjustments” column represents the impact of two months (January and February of 2020) of standalone legacy Ingersoll Rand Industrial Segment activity. As it relates to adjustments to Segment Adjusted EBITDA, these amounts are impacted by the merged Company's corporate costs, a portion of which is allocated to the business segments. |
(2)
| For the year ended December 31, 2019, the “Adjustments” column represents the impact of one full year of 2019 standalone legacy Ingersoll Rand Industrial Segment activity. As it relates to adjustments to Segment Adjusted EBITDA, these amounts are impacted by the newly merged Company's corporate costs, a portion of which is allocated to the business segments. |
TABLE OF CONTENTS INGERSOLL RAND INC. AND SUBSIDIARIES
SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
AND SUPPLEMENTAL ADJUSTED EBITDA
(Unaudited; in millions) Net Income (Loss) (GAAP)
| | | $(32.4) | | | $159.1 | Less: Income from discontinued operations | | | 26.0 | | | 80.7 | Less: Income tax provision from discontinued operations | | | (1.6) | | | (18.9) | Income (loss) from continuing operations, net of tax | | | (56.8) | | | 97.3 | Plus(1):
| | | | | | | Interest expense | | | 111.1 | | | 88.4 | Provision for income taxes | | | 11.4 | | | 12.9 | Depreciation expense | | | 75.3 | | | 41.2 | Amortization expense | | | 335.1 | | | 105.3 | Impairment of intangible assets | | | 19.9 | | | — | Restructuring and related business transformation costs | | | 88.0 | | | 19.6 | Acquisition related expenses and non-cash charges | | | 181.5 | | | 54.6 | Stock-based compensation | | | 47.0 | | | 20.2 | Foreign currency transaction losses, net | | | 18.6 | | | 7.3 | Loss on extinguishment of debt | | | 2.0 | | | 0.2 | Shareholder litigation settlement recoveries | | | — | | | (6.0) | Adjustments to LIFO inventories | | | 39.8 | | | 0.2 | Other adjustments | | | 5.2 | | | 0.4 | Adjusted EBITDA(1) | | | 878.1 | | | 441.6 | Additional Segment Adjusted EBITDA Adjustments(2):
| | | | | | | Industrial Technologies & Services | | | $40.3 | | | $424.8 | Precision & Science Technologies | | | 20.4 | | | 140.2 | Incremental corporate expenses not allocated to segments | | | (4.9) | | | (46.4) | Supplemental Adjusted EBITDA | | | 933.9 | | | 960.2 |
(1)
| These amounts are reported in accordance with US GAAP and have not been adjusted to reflect the pro forma impact of a full quarter of the combined Ingersoll Rand. |
(2)
| These “Additional Segment Adjusted EBITDA Adjustments” represent the impact of two months (January and February of 2020) of standalone legacy Ingersoll Rand Industrial Segment activity in the twelve month period ended December 31, 2020 and a full year of standalone legacy Ingersoll Rand Industrial Segment activity in the twelve month period ended December 31, 2019. The incremental corporate expenses not allocated to segments represent additional corporate expenses incurred by the Company to operate the combined Ingersoll Rand. |
TABLE OF CONTENTS INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF GAAP DILUTED EARNINGS PER SHARE TO
SUPPLEMENTAL ADJUSTED DILUTED EARNINGS PER SHARE
(Unaudited; in millions, except per share amounts) Diluted Loss Per Share (GAAP) | | | $(0.09) | Diluted Earnings Per Share from Discontinued Operations (GAAP) | | | 0.06 | Diluted Loss Per Share from Continuing Operations (GAAP) | | | (0.15) | Plus: | | | | Effect of transaction(1) | | | 0.01 | Legacy Ingersoll Rand Industrial Segment's earnings(2) | | | 0.13 | Interest expense | | | 0.26 | Provision for income taxes | | | 0.03 | Depreciation expense | | | 0.18 | Amortization expense | | | 0.79 | Impairment of intangible assets | | | 0.05 | Restructuring and related business transformation costs | | | 0.21 | Acquisition related expenses and non-cash charges | | | 0.43 | Stock-based compensation | | | 0.11 | Foreign currency transaction losses, net | | | 0.04 | Shareholder litigation settlement recoveries | | | 0.09 | Other adjustments | | | 0.03 | Minus:
| | | | Adjusted interest expense | | | 0.28 | Adjusted income tax provision, as adjusted | | | 0.42 | Adjusted depreciation expense | | | 0.20 | Adjusted amortization of non-acquisition related intangible assets | | | 0.03 | Supplemental Adjusted Diluted Earnings Per Share | | | $1.28 | Supplemental Adjusted Diluted Shares Outstanding | | | 422.5 |
(1)
| This amount represents the impact of adjusting the GAAP weighted average shares outstanding for the period by the additional shares outstanding as if the acquisition of the Ingersoll Rand Industrial Segment was in effect for the entirety of the twelve month periods ended December 31, 2020. |
(2)
| The “Legacy Ingersoll Rand Industrial Segment's earnings” represent the impact of two months (January and February of 2020) of standalone legacy Ingersoll Rand Industrial Segment activity in the twelve month period ended December 31, 2020. This line is inclusive of incremental corporate expenses not allocated to segments which represent additional corporate expenses incurred by the Company to operate the combined Ingersoll Rand. |
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