| • ongoing conflict between Russia and Ukraine and the resultant sanctions on Russia and Belarus;
• business strategy;
• financial performance;
• Company culture and ongoing integration and restructuring efforts;
| 26
| | |  l• executive compensation;
• financial impacts from lower carload volumes;
• status/impact of Erie strikes;
• acquisition contributions to 2023 financials;
• order pipeline and cadence of multi- year backlog;
• operating leverage in Freight and Transit segments;
• capital allocation; | | | • corporate governance practices;
• next generation technology (hydrogen/ battery locomotives);
• impact from regulations and potential emission changes in California;
• Board composition; and
• other topics, including climate-related risks and opportunities. |
| Following our Annual Meeting, our engagement efforts continue so that we may follow up on matters brought to our attention and/or discuss new issues of interest. We also respond routinely to individual stockholders and other stakeholders who inquire about our business. Input from our stockholders helps us formulate an appropriate action plan for addressing certain issues. |
Communication with the Board The Board provides a process for interested parties to send communications to the Board or any of the directors of Wabtec. Communications to the Board or any director should be sent c/o the Secretary of Wabtec, 30 Isabella Street, Pittsburgh, PA 15212. All such communications except for spam, junk mail, mass mailings, solicitations, resumes, job inquiries, surveys or other matters unrelated to the Company, will be compiled by the Secretary of Wabtec and submitted to the Board or the individual director at the next regularly scheduled meeting of the Board. Interested parties may also communicate directly with the Lead Independent Director at the email address nonmanagementdirectors@wabtec.com. Governance Policies and Practices Corporate Governance Guidelines, Code of Conduct and Business Ethics and Compliance Program Charter Wabtec has adopted Corporate Governance Guidelines and a Code of Conduct and Business Ethics that are applicable to all directors, officers and employees, each of which includes the provisions required under applicable SEC and NYSE regulations. Copies of our Corporate Governance Guidelines and Code of Conduct and Business Ethics are posted on our website at http://www.wabteccorp.com -> investor relations -> corporate governance. 34 | | / | 2024 Proxy Statement for 2022 Annual Meeting |
TABLE OF CONTENTS Business Relationships and Related Party Transactions Pre-existing Relationships Pursuant to the terms of Wabtec’s amended and restated by-laws, William E. Kassling will be nominated to be a member of the Board so long as he is able and willing to serve and beneficially owns a certain percentage of Wabtec common stock. Related Party Transaction Approval Policy Our Board has adopted a written policy regarding related party transactions, a copy of which is available on Wabtec’s website at http://www.wabteccorp.com. Under this policy, the Governance Committee must review and approve in advance all related party transactions that are required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC. If advance approval is not feasible, the Governance Committee must approve or ratify the transaction at its next scheduled meeting. Transactions required to be disclosed pursuant to Item 404 include any transaction or series of similar transactions, arrangements or relationships in which Wabtec or any of its subsidiaries was, is, or will be a participant, the amount involved exceeds $120,000 and in which any of the following persons had, has or will have a direct or indirect material interest: any director, director nominee, or executive officer of Wabtec; any holder of more than five percent of Wabtec’s common stock; any Immediate Family Member (as defined in the policy) of any of the foregoing persons; and any entity which is controlled by someone listed above. In reviewing related party transactions, the Governance Committee evaluates all material facts about the transaction, including the nature of the transaction, the benefit provided to Wabtec, whether the transaction is on commercially reasonable terms that would have been available from an unrelated third-party and any other factors necessary to its determination that the transaction is fair to Wabtec. 2023 Related Party Transactions During 2023, Wabtec sourced approximately $23 million worth of goods from Dana Incorporated. One of our directors, Mr. Foster, currently serves as an executive officer of Dana Incorporated and his interest in this transaction is limited to such capacity. The Board’s Governance Committee has reviewed and approved this transaction. During 2023, Wabtec sourced approximately $32 million worth of goods from Parker-Hannifin Corporation. One of our directors, Mr. Banks served as an executive officer of Parker-Hannifin Corporation and his interest in this transaction is limited to such capacity. The Board’s Governance Committee has reviewed and approved this transaction. TABLE OF CONTENTS At Wabtec, we are committed to a strong environmental, social, and governance framework that ensures not only our own long-term success, but also leads our industry and stakeholders to a sustainable, cleaner, safer, and more inclusive transportation future. To that end, our sustainability priorities are embedded into our governance framework, stakeholder engagement, strategic decision making, and our evolving portfolio of products and services that we deliver for customers. This commitment starts at the top of the organization as both our Board of Directors and executive leadership team are actively engaged in Wabtec’s ESG strategy development and oversight. This commitment helps to shape Wabtec’s sustainability vision: Wabtec is committed to sustainable value creation. Our strategy is to contribute to a better, more sustainable world through our unique business offerings, leading technologies, and sustainable business practices. These help us capitalize on market opportunities and reduce safety and environmental risks, while creating value for our customers, employees, and other stakeholders. Oversight of Sustainability Our ESG governance framework starts with our Board of Directors, who oversee the execution of the Company’s ESG strategy within their oversight of Wabtec’s overall business, risks and opportunities. The Board, under the leadership of the Governance Committee and its ESG Subcommittee, oversees our sustainability strategy and execution against our ESG goals; reviews climate-related risks and opportunities; enhances enterprise risk strategy and management systems; addresses Environmental, Health, and Safety (EHS) matters; and shapes public policy and advocacy efforts. In 2023, Wabtec elevated our commitment by creating a new role — Chief Strategy and Sustainability Officer who manages the Company’s overall strategic sustainable efforts. 36 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Internally, the Wabtec Sustainability Task Force meets quarterly to advance the Company’s sustainability strategy. This team is comprised of leaders across all functions and business segments, including EHS, Operations, Engineering, Finance, Sourcing, Legal, and Human Resources. They are responsible for implementing actions within those functions that support Wabtec’s ESG framework and strategy. These processes complement, and are complemented by, our broader ERM process, which is our primary vehicle for assessing and managing operational, strategic, financial, and compliance risk. Guarding against ESG risks is a critical risk area evaluated as part of this process. Sustainability Highlights Wabtec continues to make progress delivering on its sustainability goals: Created new executive role, Chief Strategy and Sustainability Officer. Joined the United Nations Global Compact in 2022 demonstrating our existing and ongoing commitment to universal sustainability principles. Set new near-term absolute greenhouse gas (GHG) reduction goal to reduce our Scope 1 and 2 emissions by 50% by 2030, from a 2019 baseline. Disclosed Wabtec’s Scope 3 greenhouse gas emissions across our full value chain for the first time. Partnered with the rail industry to accelerate the development, validation, and adoption of lower carbon fuels and alternative clean energy technologies. Largely on-track to achieve Wabtec’s 2030 sustainability goals. TABLE OF CONTENTS Progress Drives Performance Wabtec is committed to continued progress on the sustainability areas we believe are critical to long-term success. The recent publication of our 2023 Sustainability Report reflects our efforts to enhance our sustainability reporting and transparency. Our reporting process not only helps us manage and measure our progress, but also helps us engage with internal and external stakeholders around the world.
More than 24,000 locomotives globally traveled over 1.8 billion miles and helped end customers eliminate over 138 million metric tons of GHG emissions by choosing rail over truck transportation. Approximately 336 million pounds of end-of-life material was sent back to global remanufacturing facilities, with 82% being reused or remanufactured and 18% recycled, leaving less than 1% waste. Reduced fine particulate matter emissions by up to 90% with our Transit Green Friction product deployed on metro train braking systems. Awarded Norfolk Southern’s inaugural Thoroughbred Sustainability Partner Award, recognizing partner companies who are leaders in the categories of energy efficiency, innovation, and environmental stewardship. 35% reduction in Scope 1 and 2 GHG emissions compared to 2019 baseline, on track toward our 2030 goal of 50% reduction. 18% reduction in water consumption compared to 2019 baseline. 20% reduction in the total recordable injury and illness rate compared to 2019 baseline.
Significant year-over-year progress on all diversity, equity, and inclusion targets. 11% increase in female representation globally. 2023 Best Place to work for Disability Inclusion: Disability Equality Index 38 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Elements of Director Compensation
Each director is paid a cash retainer of $125,000 and an annual stock retainer of $180,000. In addition, each director serving in certain positions receives additional cash retainers as detailed below. $200,000 | | | $35,000 | | | $25,000 | | | $25,000 | | | $20,000 |
2023 Director Compensation The following table provides information concerning the compensation of our non-employee directors for the period January 1, 2023 through December 31, 2023: Albert J. Neupaver, Chair | | | $325,000 | | | $180,013 | | | $505,013 | Beverley A. Babcock | | | $125,000 | | | $180,013 | | | $305,013 | Lee C. Banks | | | $125,000 | | | $180,013 | | | $305,013 | Byron S. Foster | | | $125,000 | | | $180,013 | | | $305,013 | Linda A. Harty | | | $180,000 | | | $180,013 | | | $360,013 | William E. Kassling | | | $125,000 | | | $180,013 | | | $305,013 | Brian P. Hehir | | | $150,000 | | | $180,013 | | | $330,013 | Ann R. Klee | | | $150,000 | | | $180,013 | | | $330,013 |
1
| Reflects the aggregate grant date fair value dollar amount calculated in accordance with ASC 718 related to the awards of stock to the non-employee directors under the 1995 Non-Employee Directors’ Fee and Stock Option Plan. |
2
| The annual award of the $180,013 stock retainer was made on May 16, 2023, with each non-employee director being granted 1,857 restricted shares of Wabtec common stock with a grant date fair market value of $96.94 per share. Such restricted shares generally vest 12 months from the date of grant. If a director voluntarily resigns or is otherwise terminated within 12 months from the grant date of the restricted shares, the director will forfeit the restricted shares. See “Common Stock Ownership” for a description of outstanding awards held by the non-employee directors. |
TABLE OF CONTENTS All directors are reimbursed for their out of pocket expenses incurred in connection with attendance at meetings and other activities related to the Board or its Committees. The Company offers a Deferred Compensation Plan for non-employee directors. Under the terms of the plan, eligible directors may defer the annual stock and/or cash retainer, provided that any deferral of the stock retainer will be subject to the same vesting and forfeiture conditions as if the stock retainer had not been deferred. Deferred amounts, including any applicable earnings credited on the deferrals, will be paid out to the director following his termination of service with the Board. Ms. Babcock has deferred 1550 shares. The Compensation Committee reviews director compensation on an annual basis. At the May Compensation Committee meeting, the Board’s external compensation consultant provides the Compensation Committee with a market analysis detailing: i) cash retainers, ii) equity compensation, and iii) Board leadership retainers. The market analysis provides market data, trends and findings from both peer group and general industry data. Upon review and discussion of the data, the Compensation Committee recommends and the Board approves the compensation cash retainer, Board leadership retainers, and equity compensation for the upcoming year. Director Compensation Policies and Practices Stock Ownership Guidelines
Wabtec has established stock ownership guidelines to encourage Board members to own and retain shares of stock.
Non-employee Board members are required to accumulate shares having a value equal to six times their cash retainer.
Directors are given five years to satisfy these guidelines. Shares that count toward the holding requirement include any shares owned by the director in Wabtec’s share administration platform, the deferred compensation plan, personal accounts, or any unvested restricted shares. All directors except for Mr. Foster and Ms. Babcock have met the ownership guidelines. Mr. Foster and Ms. Babcock are within the 5-year compliance period and are on-track to meet the compliance requirement. 40 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Proposal
2 | Proposal 2—Advisory (Non-Binding) Resolution Relating to the Approval of 2021Vote To Approve Compensation Of Our Named
Executive Officer CompensationOfficers | |
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd- Frank Act”), we are providing our stockholders with the opportunity to cast a non-binding vote to approve our executive compensation programs and arrangements in accordance with Section 14A of the Exchange Act. In 2017,2023, our shareholdersstockholders indicated their approval of the Board of Directors’ recommendation that we solicit an advisory vote such as this on an annual basis. Our Board of Directors has adopted a policy that is consistent with that preference and, accordingly, we are providing our stockholders with an opportunity to vote on this proposal at this Annual Meeting. A “say on-frequency” vote is required every six years, and as such, our next say-on-frequency vote is expected to occur in 2023. As described in greater detail under the heading “Compensation Discussion and Analysis,” on page 2943 we seek to closely align the interests of our named executive officers with the interests of our stockholders. Our compensation programs are designed to reward our named executive officers for the achievement of short-term and long-term strategic and operational goals and the achievement of increased total stockholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. The overall objectives of our executive compensation program are to (i) enable us to attract, motivate and retain key executive talent essential to the achievement of our short-term and long-term business objectives; (ii) provide compensation competitive with others in our industry; (iii) reward senior executive officers in a “pay for performance” manner for accomplishment of pre-defined business goals and objectives; and (iv) align the interests of our executives with those of our stockholders. A significant portion of total executive compensation is variable compensation linked to corporate, business unit and individual performance. Our objective is to provide a significant portion of an executive’s total compensation in a form that is contingent upon achieving established performance goals that are intended to align the executives’ interests with those of our stockholders. In regard to compensation based on long-term performance, our objective is to provide a significant portion of such compensation in the form of equity awards. Pursuant to the SEC rules, we are asking you to approve the 2021 compensation of the named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K of the SEC, including the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures.
Under the Dodd-Frank Act and the related SEC rules, your vote on this resolution is an advisory or “non-binding” vote. This means that the purpose of the vote is to provide stockholders with a method to give their opinion to the Board of Directors of Wabtecthe Company about certain issues, like executive compensation. None of the Board, its committeesCommittees or Wabtecthe Company is required by law to take any action in response to the stockholder vote. However, the Board values our stockholders’ opinions, and the Board intends to evaluate the results of this year’s vote carefully when making future decisions regarding compensation of the named executive officers. The stockholder advisory vote in connection with our 20212023 annual meeting received over 90%approximately 93% approval by our stockholders, indicating support of our compensation programs and policies. We believe that providing our stockholders with the opportunity to cast an advisory vote on our executive compensation program on an annual basis will further enhance communication with our stockholders, and it meets our obligations under the Dodd-Frank Act and the SEC’s rules. We are required to seek a stockholder vote on the frequency of the advisory vote to approve our executive compensation programs and arrangements (the “SOP Frequency Vote”) every six years. As noted above, in 2023, we conducted a SOP Frequency Vote, and our stockholders indicated their approval of the Board’s recommendation that we solicit an advisory vote to approve named executive officer compensation on an annual basis. The next SOP Frequency Vote is expected to be held at our 2029 annual meeting of stockholders. l Proxy Statement for 2022 Annual Meeting | | | 27
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Vote Required This proposal is adopted if a majority of the shares present in person or by proxy vote for the proposal. Because the total shares voted “for,” “against,” or “abstain” are counted to determine the minimum votes required for approval, if you abstain from voting, it has the same legal effect as if you vote against. If a broker limits the number of shares voted on the proposal on its proxy card or indicates that the shares represented by the proxy card are not being voted on the proposal, it is considered a broker non-vote. Broker non-votes are not counted as a vote or used to determine the favorable votes required to approve the proposal. TABLE OF CONTENTS Proposal 2: Advisory Vote To Approve Compensation Of Our Named Executive Officers
The Board recommends that you approve the following resolution: RESOLVED, that the stockholders approve the 20212023 compensation of the named executive officers, as disclosed in this proxy statementProxy Statement pursuant to Item 402 of Regulation S-K of the SEC, including the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures. | ✔ | | | The Board recommends you vote FOR the approval of the 20212023 compensation of our named executive officers, as disclosed in this proxy statementProxy Statement pursuant to Regulation S-K of the SEC. | |
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TABLE OF CONTENTS Compensation Discussion and Analysis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2021, our named executive officers (“NEOs”) were:
Our named executive officers (“NEOs”) for 2023 are: | Name
| | | Title
| | | Rafael Santana
| | | | | | | | | | Rafael Santana
President and Chief Executive Officer | | | | John Olin
| | | Executive Vice President and Chief Financial Officer | | | | David L. DeNinno
Executive Vice
President, General
Counsel and Secretary | | | Executive Vice President, General Counsel and Secretary
| | | Pascal Schweitzer
President, Transit(1) | | | President, Freight Services Group
| | | Eric Gebhardt
| | | Executive Vice President and Chief Technology Officer |
(1)
| Pascal Schweitzer was named President, Transit in April 2023. Previously, Mr. Schweitzer served as President, Freight Services from February 2019 to April 2023. |
2024 Proxy Statement | Patrick Dugan /
| | | Former Executive Vice President and Chief Financial Officer43
| |
In connection with the termination of his employment, Mr. Dugan ceased being Executive Vice President
TABLE OF CONTENTS Compensation Discussion and Chief Financial Officer effective October 1, 2021. Mr. Olin became the Company’s Executive Vice President and Chief Financial Officer effective October 1, 2021. See “2021 Severance of Mr. Dugan” on page 50.Analysis
This Compensation Discussion and Analysis should be read in conjunction with the tabular and narrative disclosures beginning on page 2961 of this Proxy Statement. See “Executive Compensation“Compensation Philosophy and Objectives” on page 3246 and the tables that follow for more information regarding our executive compensation programs. Continued Impact of Covid-19 Pandemic
In 2023, the Company reviewed and set executive base salaries, modified its annual cash incentive plan design and issued equity under the Company’s long-term incentive plan.
2023 Performance Highlights In 2020, Wabtec implemented changes to our compensation programs2023, the Company delivered strong financial performance as a result of the Covid-19 pandemic (“COVID”). These included preliminarily freezing salaries for all salaried employees, subsequently paying meritevidenced by higher year-over-year increases in a lump sum,revenues, operating margin expansion and modifying the metrics and weightings associated with our Annual Cash Incentive Program. As Wabtec re-evaluated our compensation programs in 2021, the Company made the decision to re-implement the annual merit increase process for all employees, modified our Annual Cash Incentive Plan back to similar design and metrics utilized prior to the pandemic and made adjustments to our 2019 - 2021 long term incentive plan. The modifications included the following:
Annual Cash Incentive Plan
The weighting associated with the individual performance goals was reinstated, with individual performance being weighted at 20%;
Metrics were changed back to earnings per share growth. The Company had strong execution in a volatile environment with increased sales driven by strong Freight and earnings before interest and taxes;
Transit growth. The Company had strong cash flow from operations metric was not changed; Financial metrics were weighted at 80%; and
generation enabling investment for future growth while maximizing shareholder returns. | $9.68B | | | 13.1%
GAAP | | | $4.53
GAAP
| | | $1.2B
Operating cash flow driven by higher net income tempered by higher working capital to support strong sales growth across the portfolio | Up 15.7%
Year over Year
Increased sales were driven by strong growth across the Freight and Transit segments | | | 17.0%
Adjusted(1)
| | | $5.92
Adjusted(1)
GAAP EPS up 30.9% Year over Year
Adjusted EPS up 21.8% Year over Year from higher Freight and Transit sales | | | |
(1)
| Please refer to the Appendix to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures. |
44 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Compensation Discussion and Analysis
2023 Compensation Highlights Elements of Compensation The metrics were weighted as follows:
| | EPS - Corporate | | | 48.0% | | | 19.5% | | | | Cash from Operations - Corporate | | | 32.0% | | | 12.5% | | | | EBIT - Group | | | | | | 28.5% | | | | Cash from Operations - Group | | | | | | 19.5% | | | | Corporate (Total) | | | 80% | | | 80% | | | | Personal Performance | | | 20.0% | | | 20.0% | | | | Total | | | 100.0% | | | 100.0% | |
EPS means our “adjusted earnings per diluted share” as described in our 2021 year-end earnings release included with our Form 8-K filed on February 16, 2022. The amount is based on our GAAP earnings per diluted share, adjusted for amortization expense, certain restructuring costs and other non-recurring items detailed in the earnings release.
Cash from operations means our “adjusted cash flow” based on our GAAP cash flow from operations, adjusted for certain restructuring costs and other non-recurring items detailed in our earnings release included with our Form 8-K filed on February 16, 2022.
EBIT means our “adjusted earnings before interest and taxes” (as described in our 2021 year-end earnings release included with our Form 8-K filed on February 16, 2022). The amount is based on our GAAP income from operations, adjusted for amortization expense, certain restructuring costs and other non-recurring items detailed in the earnings release.
The modifications to our Annual Cash Incentive Plan are discussed in more detail below in the “Components of Compensation” beginning on page 35.For 2021, bonuses were earned under the plan at 144.81% of target for Mr. Santana, Mr. Olin, Mr. DeNinno, Mr. Gebhardt, and Mr. Dugan. Mr. Schweitzer’s bonus was earned at 137.52% of target.
2019 – 2021 Long-Term Incentive Program
In its deliberations, due to the impact of COVID on the business, the Compensation Committee also determined that modifications were necessary to the 2019 – 2021 long-term incentive program. Rather than having one three-year performance period, the Compensation Committee decided to split the performance periods into three separate periods: one for 2019, one for 2020 and one for 2021. The performance measurement of economic profit did not change. Performance for each period is measured separately, and the payout is determined by averaging the payout percentages of the three separate performance periods. The economic profit goal was achieved at target for 2019, but not achieved for 2020 or 2021. Therefore, payouts for the 2019 - 2021 performance period were earned at 33% of target on three-year economic profit goals established in February 2019. The modifications to our 2019 – 2021 long-term incentive program are discussed in more detail below in the “Components of Compensation” beginning on page 35. | 30
| | | l Proxy Statement for 2022 Weighting | | | 2023 Performance Metrics | Base Salary | | | | | | • Individual contribution to business results
• Tenure
• Capabilities and qualifications | Annual MeetingCash Incentive | | | | | | • Earnings per share (75%)
• Cash conversion (25%)
• Personal performance modifier (0%-120%)
| Long-Term Equity Incentives | | |
| | | • 60% performance units and 40% time-vesting restricted stock
For performance units:
* 3-year average annual return on invested capital (50%)
• 3-year average annual cash conversion (50%)
• Subject to relative total stockholder return (RTSR) modifier (+/- 20%) |
The Compensation Committee reviewed the results of the 2023 stockholder advisory vote on executive officer compensation and incorporated the results as one of the many factors considered in connection with the discharge of its responsibilities. At our 2023 annual meeting of Stockholders, approximately 93% of the votes cast approved the compensation program described in the Company’s 2023 proxy statement. The Compensation Committee interpreted this level of support as affirmation of the design and objectives of our executive compensation programs and therefore did not make any significant changes to such programs as a direct result of such vote. The Compensation Committee continues to monitor best practices among the Company’s peer group and industry standards related to executive compensation programs. | | | |
TABLE OF CONTENTS Compensation Discussion and Analysis
|
Compensation Governance Best Practices The Compensation Committee has implemented the following best practices with respect to the executive compensation program: ✔ Review the executive compensation programs each year and the Company’s long-term business strategy, the results of the most recent say-on-pay advisory vote and contemporary market practices as periodically provided by our independent consultant.
✔ Use the Company’s stock price and other value-creating financial metrics such as earnings before interest and taxes (EBIT) margin, earnings per share working capital,(EPS), cash flow,conversion, return on invested capital (ROIC) and relative total stockholder (RTSR) return in our executive incentive programs.
✔ Annually review the risks associated with our compensation programs and mitigate the risks by:
• capping incentive payouts earned under our annual cash incentive award plan and ourcapping the number of performance units earned under the long-term performance unit long-term incentive plan;
• maintaining stock ownership guidelines for executive management and non-employee directors;
directors;
• maintaining a recoupmentclawback policy that applies to our our cash and equity incentive awards;
• maintaining a policy that prohibits the pledging of of Company stock; and
• maintaining a policy that prohibits the hedging of of Company stock.
✔ Require both a qualified change in control and involuntary or “good reason” employment termination (double trigger) for any cash severance to be paid under our change in control agreements. | | | ✘ Gross-up for income or excise taxes on perquisites or severance benefits related to a change in control.
✘ Provide executives with an enhanced executive retirement program but rather provide a defined contribution or defined benefit plan similar to that provided to all employees in the country where such employees reside.
reside.
✘ Provide dividends or dividend equivalents on unearned performance shares.
✘ Re-price or backdate stock options. |
2021 Business Highlights
In 2021, Wabtec delivered strong financial performance driven by growth in both Freight and Transit segments. Sales increased 3.5 percent to $7.82 billion and cash flow from operations was a record $1.07 billion. We achieved an adjusted EBIT margin of 15.9 percent and ended the year with adjusted earnings per diluted share of $4.26, excluding certain expenses detailed later in this report.
We aggressively mitigated the impacts of escalating metals, labor and logistics costs; components shortages; and supply chain disruptions. Additionally, we accelerated integration synergies, achieving $250 million of run-rate synergies in the third quarter of 2021, more than one year earlier than forecasted. These actions continue to position the Company for long-term profitable growth.
Our balance sheet was strengthened by reducing debt by $181 million, while keeping a focus on our liquidity position, which at end of year stood at $1.67 billion in cash, cash equivalents, and available credit facilities. We executed on our strategic priorities and returned $392 million of capital to shareholders via dividends and share repurchases. Our multi-year backlog also remained strong at $22.17 billion, giving us good visibility into 2022 and beyond.
l Proxy Statement for 2022 Annual Meeting | | | 31
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Key business highlights include:
*
| See page 57 for reconciliation of GAAP to non-GAAP measures referenced in this section. |
Role of 2021 Advisory Vote on Executive Compensation in the Compensation Decision Process
The Compensation Committee reviewed the results of the 2021 stockholder advisory vote on executive officer compensation and incorporated the results as one of the many factors considered in connection with the discharge of its responsibilities. At our 2021 Annual Meeting of Stockholders, over 90% of the votes cast approved the compensation program described in our 2021 proxy statement. The Compensation Committee interpreted this level of support as affirmation of the design and objectives of our executive compensation programs; however, the Compensation Committee continues to monitor best practices and the practices of our peers to improve our compensation program.
Executive Compensation Philosophy and Objectives Overview.This compensation discussionCompensation Discussion and Analysis describes the material elements of compensation awarded to, earned by, or paid to each of our executive officers who served as named executive officers during 2021.2023. This discussion focuses primarily on the fiscal year 20212023 information contained in the following tables and related footnotes and narrative. We discuss compensation actions taken prior to 2021 or in 2022 if we believe it provides relevant information.
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The principal elements of our executive compensation program are base salary, annual cash incentives, and long-term equity incentives in the form of restricted stock awards and units, stock options and performance units. Our other benefits and perquisites consist of life and health insurance benefits, social and health club dues, and a qualified 401(k) savings plan (including company matching contributions). Our philosophy is to position the aggregate of these elements at approximately the median of that paid to executives of our Peer Group with similar responsibilities. To ensure that the Company is able to attract and retain highly talented and diverse executives, the Company benchmarks executive compensation using a reputable compensation survey of similar-sized companies and also uses available proxy disclosure compensation information of a group of similar-sized manufacturing companies. This group was reviewed and updated in late 2020. This peer group provided insights to the Compensation Committee as it made compensation decisions in 2021.
Our Peer Group represents a group of manufacturing companies who generally align with the following criteria:
Large industrial companies in Global Industry Classification Standard (“GICS”) sectors generally representing Machinery, Electrical Equipment, Auto Components, Aerospace and Defense and Road and Rail;
Revenues that range from approximately half to double that of the Company;
Market capitalization reasonably aligned with the Company; and
Capital intensive businesses.
This peer group was used for relative performance purposes for the Company’s 2021 long-term incentive plan and for use in making 2021 compensation decisions:
| AGCO Corporation
| | | Fortive Corporation
| | | Parker Hannifin Corporation
| | | AMETEK, Inc.
| | | Howmet Aerospace, Inc.
| | | Rockwell Automation, Inc.
| | | BorgWarner, Inc.
| | | Illinois Tool Works, Inc.
| | | Terex Corporation
| | | CSX Corporation
| | | Ingersoll Rand, Inc.
| | | Textron, Inc.
| | | Cummins, Inc.
| | | Navistar International Corporation
| | | The Greenbrier Companies, Inc.
| | | Dover Corporation
| | | Norfolk Southern Corporation
| | | Trinity Industries, Inc.
| | | Emerson Electric Co.
| | | Oshkosh Corporation
| | | Xylem, Inc.
| |
During fourth quarter of 2021, the Compensation Committee, with the assistance of its independent consultant, reviewed the peer group list. Twenty (20) of the 21 companies remained unchanged. The Compensation Committee removed Navistar as it was acquired in July 2021.
Objectives and Philosophy. The overall objectives of our executive compensation program are to (i) enable us to attract, motivate and retain key executive talent essential to the achievement of our short-term and long-term business objectives; (ii) provide compensation competitive with others in our industry; (iii) reward senior executive officers in a “pay for performance” manner for accomplishment of pre-defined business goals and objectives; and (iv) align the interests of our executives with those of our stockholders. A significant portion of total executive compensation is variable compensation linked to corporate, business unit and individual performance. Our objective is to provide a significant portion of an executive’s total compensation in a form that is contingent upon achieving established performance goals. In regardWith respect to compensation based on performance, our objective is to provide a significant portion of such compensation in the form of equity awards.
l Proxy Statement for 2022 Annual Meeting | | | 33
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In 2021, our named executive officers’ compensation, based on actual amounts awarded, was allocated as follows (excluding Mr. Dugan because he was terminated during the year):
In setting base salaries at the beginning of the year, the Compensation Committee generally reviews benchmark information about compensation levels in Wabtec’s industry and among its peer group based on the position and responsibility of the particular executive provided by the Compensation Committee’s independent consultant. The Compensation Committee 46 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Compensation Discussion and Analysis
uses benchmarking to establish base salaries as discussed below. The cash bonus for 20212023 is a cash award determined by the Compensation Committee and Board based on pre-established performance factors. These factors are established at the beginning of the year and include (i) a financial performance indicator measuring EPS EBIT, and cash from operations;conversion; and (ii) a modifier for personal performance indicator which measures whether the individual executive attained certain quantitativeobjectives based on EBIT Margin and measurable objectives which are tied to the overall company strategic objectives for that year.revenue growth (each, as defined below). Long-term incentives in the form of stock options, restricted stock restricted stock units and performance units are granted to provide the opportunity for long-term compensation based upon the performance of Wabtec and its ability to meet its long-term goals and objectives. Executive Compensation Process.Decision-Making Process Compensation Committee. Executive officer compensation is administered by the Compensation Committee. The Compensation Committee approved the 2021 compensation programs for executive officers, including base salaries, cash bonusesRoles and equity awards, described in this compensation discussion and analysis and recommended them to the full Board, which then approved them. Our Board of Directors delegates to the Compensation Committee the direct responsibility for, among other matters:Responsibilitiesreviewing and approving goals and objectives for the Chief Executive Officer and determining the Chief Executive Officer’s compensation;
reviewing and recommending compensation of all non-employee directors and executive officers; and
reviewing and recommending incentive compensation plans and equity-based plans.
| 34Compensation Committee
| | | lExecutive officer compensation is administered by the Compensation Committee. The Compensation Committee approved the 2023 compensation programs for executive officers, including base salaries, cash bonuses and equity awards described in this Compensation Discussion and Analysis and recommended them to the full Board, which then approved them. Our Board of Directors delegates to the Compensation Committee the direct responsibility for, among other matters:
• reviewing and approving goals and objectives for the Chief Executive Officer and recommending the Chief Executive Officer’s compensation to the Board for approval;
• reviewing and recommending compensation of all non-employee directors and executive officers; and
• reviewing and recommending incentive compensation plans and equity-based plans.
| Role of Compensation Experts | | | Pursuant to its charter, the Compensation Committee is authorized to engage compensation consultants to assist it with its duties. The Compensation Committee has the sole authority to engage any outside counsel or other experts or consultants to assist it in the evaluation of compensation of our directors and executive officers, including the sole authority to approve such consultants’ fees and other retention terms. The Compensation Committee may also obtain advice from legal, accounting, human resources and other advisors as it deems necessary. The Compensation Committee engaged the consulting firm of Pay Governance through August 2023 and Exequity for the remainder of 2023. During their engagements, Pay Governance or Exequity provided the following services: (i) reviewed and assessed the Company’s current compensation practices for executives; (ii) reviewed the current Peer Group and made recommendations to update the Peer Group; (iii) reviewed and provided a pay for performance assessment of the Chief Executive Officer compensation; (iv) provided plan design and performance metric benchmarking of the Peer Group and relevant industry data; (v) provided data and recommendations on changes to the annual cash incentive program; and (vi) provided data and recommendations associated with the long term incentive program. In 2023, Pay Governance reviewed and assessed the competitiveness of compensation provided to non-employee members of the Company’s Board of Directors. This review included benchmarking of the Peer Group and relevant industry data. The Committee has evaluated its relationship with each of Pay Governance and Exequity and has determined that no conflict of interest exists with respect to the services that either consultant provides. | Role of Our Executive Officers in the Compensation Process | | | The Chief Executive Officer and the Executive Vice President, Chief Human Resources Officer suggest guidelines in discussions with the Compensation Committee regarding executive compensation. They provide recommendations and information regarding the competitiveness of the industry, key employees, performance of individuals, succession plans and other relevant data to the Compensation Committee. Neither the Chief Executive Officer nor the Executive Vice President, Chief Human Resources Officer is present during any discussions concerning his or her own compensation. |
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Our philosophy is to position target total compensation opportunity within a reasonable range of Compensation Experts. Pursuantthe median of that paid to its charter,executives of our Peer Group with similar responsibilities. To ensure that the Company is able to attract and retain highly talented and diverse executives, the Company benchmarks executive compensation using a reputable compensation survey of similar-sized companies and also uses available proxy disclosure compensation information for a group of similar-sized manufacturing companies. This Peer Group provided insights to the Compensation Committee is authorizedas it made compensation decisions for 2023. Our Peer Group represents a group of manufacturing companies who generally align with the following criteria: large industrial companies in Global Industry Classification Standard (“GICS”) sectors generally representing machinery, electrical equipment, auto components, aerospace and defense, and road and rail; revenues that range from approximately 0.4 to engage2.5 times that of the Company; market capitalization of 0.25 to 4.0 times the Company; and capital intensive businesses. This Peer Group was used in making 2023 compensation consultantsdecisions: AGCO Corporation | | | Illinois Tool Works Inc. | | | Terex Corporation | AMETEK, Inc. | | | Ingersoll Rand, Inc. | | | Textron, Inc. | BorgWarner Inc. | | | Norfolk Southern Corporation | | | The Timken Company | CSX Corporation | | | Oshkosh Corporation | | | The TransDigm Group | Dover Corporation | | | Parker Hannifin Corporation | | | Xylem, Inc. | Eaton Corporation | | | Rockwell Automation, Inc. | | | | Emerson Electric Co. | | | Stanley Black & Decker, Inc. | | | |
Note that for the 2023-2025 performance units that were granted to assist itthe NEOs as part of the 2023 long-term incentive compensation awards, the Company utilized the XLI index and not its peer group (for previous cycles) for purposes of the relative total stockholder return portion of that award. See the Long-term Incentive Compensation section below for additional detail. Wabtec Peer Comparison The table below summarizes key scoping factors for the Company in relation to companies comprising the Peer Group. At the time the Compensation Committee reviewed comparative pay data in early December 2022, median trailing twelve month (“TTM”) revenues as of November 30, 2022 for this array of companies was $11.9 billion and median market capitalization as of November 30, 2022 was $21.9 billion, as compared to TTM revenues and market capitalization for Wabtec of $8.1 billion and $18.4 billion, respectively. Wabtec | | | $8,129 | | | $8,362 | | | $9,677 | | | $18,385 | | | $18,152 | | | $22,735 | Wabtec Percentile Rank | | | 42% | | | 41% | | | 44% | | | 37% | | | 38% | | | 40% | Peer Group 75th Percentile | | | $14,177 | | | $14,329 | | | $14,911 | | | $47,512 | | | $47,088 | | | $55,791 | Peer Group Median | | | $11,908 | | | $12,635 | | | $12,156 | | | $21,854 | | | $21,157 | | | $31,307 | Peer Group 25th Percentile | | | $5,870 | | | $6,033 | | | $7,120 | | | $11,022 | | | $10,730 | | | $12,066 |
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During the fourth quarter of 2023, the Compensation Committee, with the assistance of its duties.independent consultant, reviewed and amended the Peer Group. The Compensation Committee has the sole authority to engage any outside counsel or other experts or consultants to assist it in the evaluation of compensation of our directorsremoved BorgWarner, Inc. and executive officers, including the sole authority to approve such consultants’ fees and other retention terms.Terex Corporation. The Compensation Committee may also obtain adviceadded Jacobs Solutions, Inc. and Snap-on Incorporated. Changes to the Peer Group were made to better align with the criteria above and were primarily driven by industry alignment and financial comparability considerations. Compensation data from legal, accounting, human resources and other advisors as it deems necessary. The Compensation Committee engaged the consulting firm Pay Governance during 2021. During its engagement, Pay Governance provided the following services: (i) reviewed and assessed the Company’s current compensation practices for executives; (ii) reviewed the currentthis revised peer group and made recommendations to updatewill be considered for the peer group; (iii) reviewed and provided a pay for performance assessmentpurpose of the Chief Executive Officer compensation; (iv) provided benchmarking of peer group and relevant industry data; (v) provided data and recommendations associated with a review of the long term incentive program; and (vi) provided data and recommendations on changes to the annual cash incentive program. Role of Our Executive Officers in the Compensation Process. The Chief Executive Officer and the Executive Vice President, Chief Human Resources Officer suggest guidelines in discussions with the Compensation Committee regardingsetting 2024 target total executive compensation. They provide recommendations and information regarding the competitiveness of the industry, key employees, performance of individuals, succession and other relevant data to the Compensation Committee. The Chief Executive Officer is not present during any discussions concerning his own compensation.compensation opportunities.
Components of Compensation.2023 NEO CompensationOur 20212023 compensation program elements were primarily structured to reward our executive officers for achieving certain financial and business objectives. Wabtec’s philosophy is to position the aggregate of the compensation elements within a reasonable range of the median of that paid to executives in Wabtec’s peer group with similar responsibilities assuming target performance. Actual compensation earned will vary above or below target based on performance. The principal elements of our executive compensation program are base salary, annual cash incentives, and long-term equity incentives in the form of awards of restricted stock and performance units. Stock options were granted in prior years, but are no longer part of the long-term incentive design. Our other benefits and perquisites consist of life and health insurance benefits, social and health club dues, and a qualified 401(k) savings plan (including company matching contributions). Base salaries for our executive officers are reviewed annually and reflect the executive’s role and responsibility relative to the competitive market. In defining the competitive market, the Company uses two different benchmarks, compensation information representing our Peer Group and broader benchmark compensation data based on a survey of companies that are similarly sized in terms of revenue. Individual salaries may be above or below the competitive median based on the individual’s contribution to business results, length of time in role, capabilities and qualifications, potential and the importance of the individual’s position to our success. Due to the impacts of COVID, named executive officer base salaries were adjusted in December 2020 to reflect the base salary rates originally approved at the beginning of 2020 before the pandemic. None of Wabtec’s named executive officers were granted base salary increases in 2021. The Compensation Committee is dedicated to ensuring competitive compensation for each of Wabtec’s key employees and believes that current base salaries are in line with comparable industry practices. The base salaries and merit increases of our named executive officers for 2023 were as follows: Rafael Santana
President and Chief Executive Officer | | | $1,242,308 | | | $1,325,000 | | | 6% | John Olin
Executive Vice President and Chief Financial Officer | | | $750,000 | | | $765,000 | | | 2% | David L. Deninno
Executive Vice President, General Counsel and Secretary | | | $637,692 | | | $650,000 | | | 2% | Pascal Schweitzer
President, Transit | | | $537,692 | | | $614,5252 | | | 14% | Eric Gebhardt
Executive Vice President and Chief Technology Officer | | | $612,692 | | | $625,000 | | | 2% |
(1)
| Base salaries are reviewed annually for all of Wabtec’s named executive officers. Increases to base salary are awarded at the beginning of the pay period following review in February by the Compensation Committee. Base salary increases are awarded upon analysis of market data and the executive’s individual performance. Any increases are effective as of February 20, 2023. |
(2)
| Mr. Schweitzer started 2023 in the United States on a U.S. salary. In February 2023 his U.S. salary was increased to $550,000 annually. In April 2023 Mr. Schweitzer returned to Europe on a Swiss-based compensation package. His base salary was changed to 525,250 CHF. The 2023 salary for Mr. Schweitzer includes the combined salary in both locations. For Mr. Schweitzer, all compensation amounts paid in CHF were converted to U.S. dollars using the exchange rate in effect as of the last day of the fiscal year. |
TABLE OF CONTENTS Compensation Discussion and Analysis
Annual Cash Incentive Awards.CompensationOur annual incentive award plan is intended to: (i) compensate participants directly ifbased on the extent to which personal, strategic and financial performance targets are achieved and (ii) reward participants for performance on those activities that are most directly under their control and for which they are held accountable. Corporate, business unit and individual performance goals under the annual incentive plan are linked to our annual business plan and budget. The actual amount of cash bonuses is a function of the Company’s overall financial performance, the participant’s individual performance and Board approval. l Proxy Statement for 2022 Annual Meeting | | | 35
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The cash bonus targets for 2021table below shows the target amount for each of the named executive officersNEOs’ 2023 annual bonus opportunity expressed as a percentage of base salary were:(which percentages for each NEO remained the same as 2022) salary:  For 2021, Mr. DeNinno’s bonus target was increased from 70% of his base salary to 80% of his base salary to more closely align with market practice and his contributions to the business.
Overall, total target cash compensation (the sum of salary and target cash bonus) for our executive officers is intended to be competitive with market practice for similar executive positions in similar companies when performance goals under the annual cash bonus plan are achieved. Entering 2021,Cash bonuses are earned based on financial and personal performance in accordance with the following formula:
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For 2023, the Company re-evaluated the changes it had made toadjusted the cash bonus incentive program as a resultby changing the weightings of the impact of COVIDmetrics and the components which comprise the personal performance modifier. In addition, the Compensation Committee determined that Mr. Santana and the entire executive team continued to be measured on the business in 2020. After careful evaluation and review, design of the 2021 cash incentive program was reverted back to a plan design similar to what the Company had adopted at the beginning of 2020. 2021 cashsame goals. Cash bonuses arefor 2023 were based upon the following success of two factors: Financial Performance | EPS | | | 75% | | | Adjusted earnings per diluted share calculated as U.S. GAAP earnings per diluted share, adjusted for non-cash amortization expense and certain restructuring costs | | | | Cash Conversion | | | 25% | | | Cash conversion means (A) the Company’s cash from operations divided by (B) the sum of the Company’s net income plus depreciation and amortization adjusted for certain restructuring costs | | | | Personal Modifier | Personal Performance Modifier | | | 0%-120% modifier | | | The personal performance modifier serves as a multiplier to the financial performance constituting 80%results. The modifier may be based on individual goals such as goals related to EBIT, acquisitions, or other individual goals for the executive and can be achieved anywhere between 0% and 120% of the total payout opportunity, measured by adjusted earnings per share (“EPS”),financial performance result. The two goals used in the personal performance modifier for 2023 are EBIT Margin and revenue growth, each weighed equally.
EBIT Margin means our “adjusted earnings before interest and taxes (“EBIT”) and cashtaxes” calculated as our U.S. GAAP income from operations, (measured excluding extraordinary items relatedadjusted for non-cash amortization expense and certain restructuring costs, divided by consolidated revenue.
Revenue growth means the percentage increase in the Company’s gross revenues from fiscal year 2022 to transaction costs, restructuring, and debt refinancing costs); and |
(2)
2023. | personal performance constituting 20% of the total payout opportunity, measured by whether the executive attains certain goals agreed to by the executive, the executive’s supervisor, and the Board. | | |
The weighted average results of the two measurements are then combined and called the combined performance factor or “CPF”. The cash bonus formula is based on the product of the participant’s base salary, the participant’s target cash bonus percentage, financial performance and the CPF.personal modifier. If both the financial performance and the applicable personal performance results are achieved, the named executive officersNEOs will earn 100% of their target cash bonus. Each financial metric includes a threshold level of performance, (generally,generally, 80% of the target goal at which a minimum 25% payout will be made),made. Performance below whichthe threshold level would result in no payout will be made on the financial metric. Each financial metric also includes a maximum level of performance, (generally,generally 125% of the target goal),goal, at which a maximum 225% payout will be made on that financial metric. To calculate the payout percentages, the goal achievement percentage is first determined. Once the goal achievement percentage is determined, the actual payout percentage is calculated using linear interpolation. There are two payout lines: One for goal achievement between 80% and 100%, resulting in a payout between 25% and 100% and a second for goal achievement between 100% and 125%, resulting in a payout between 100% and 225%. The outcome of the financial metrics is then multiplied by the personal performance modifier. The personal modifier has a range 80% to 120%. The maximum payment under the plan including the personal performance modifier is 225%. We believe that this philosophy encourages Wabtec and our executives to establish ambitious goals and that the program promotes teamwork, productivity and profitability. Target cash bonuses and performance factors were approved by the Compensation Committee at its meeting in February 2021.2023.
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The table below provides both the 20212023 financial metricsperformance goals and our performance achieved in 2021with respect to adjusted EPS and Cash Conversion (adjusted for certain restructuring costs) for our corporate wide executives including Mr. Santana, Mr. Olin, Mr. DeNinno, and Mr. Gebhardt: | | Earnings Per Share | | | Financial | | | $3.28 | | | $4.10 | | | $5.13 | | | $4.26 | | | 48.00% | | | 56.78% | | | | Cash From Operations | | | Financial | | | $726
Million | | | $907
Million | | | $1.13
Billion | | | $1.119
Billion | | | 32.00% | | | 69.40% | | | | EBIT Margin % | | | Personal | | | 12.1% | | | 15.1% | | | 18.9% | | | 15.9% | | | 10.00% | | | 12.65% | | | | Acquisition Goal
| | | Personal | | | $280 M
| | | $350 M
| | | $437.5 M
| | | $312.5 M
| | | 10.00% | | | 5.98% | | | | | | | | | | | | | | | | | | | | | | Total | | | 144.81% | |
Mr. Schweitzer’s compensation included certain performance metricseach of the Freight Services Group. The metrics were established by the Compensation Committee. The table below provides the Corporate, Freight Services and individual metrics for Mr. Schweitzer.NEOs:
Financial | EPS(1) | | | | | | $5.92 | | | 158.49% | | | 118.87% | Cash Conversion | | |
| | | 91% | | | 107.41% | | | 26.85% | Total Financial | | | | | | | | | | | | 145.72% | Discretionary
Adjustment(2) | | | | | | | | | | | | | | | | | | (4.0%) | Overall Financial Result | | | | | | | | | | | | | | | | | | 141.72% | Personal | EBIT Margin(1) % | | | | | | 17% | | | 112.0% | | | 56.00% | Revenue Growth | | | | | | 15.7% | | | 120.0% | | | 60.00% | Individual Multiplier | | | | | | | | | | | | 116.00% | | | | | | | | | | Total | | | 164.40% |
1
| This is a non-GAAP financial measure. See page A-1 for a reconciliation to the most directly comparable financial measure calculated under GAAP. The actual 2023 bonus awards as a result of this performance for the NEOs are shown under the “Non-equity Incentive Plan Compensation” column of the Summary Compensation Table on page 61. |
2
| This discretionary adjustment was determined by the Compensation Committee based on its review of various market factors and Company-wide incentive compensation decisions. |
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| | Earnings Per Share | | | Financial | | | $3.28 | | | $4.10 | | | $5.13 | | | $4.26 | | | 19.50% | | | 23.06% | | | | Cash From Operations -
Corporate | | | Financial | | | $726
Million | | | $907
Million | | | $1.13
Billion | | | $1.119
Billion | | | 12.50% | | | 27.11% | | | | EBIT - Services | | | Financial | | | $719
Million | | | $899
Million | | | $1.124
Billion | | | $979
Million | | | 28.50% | | | 41.17% | | | | Cash from Operations -
Services | | | Financial | | | $653
Million | | | $816
Million | | | $1.020
Billion | | | $850
Million | | | 19.50% | | | 23.47% | | | | EBIT Margin % -
Services | | | Personal | | | 30.7% | | | 38.4% | | | 48.0% | | | 39.2% | | | 10.00% | | | 10.21% | | | | Tier 4 FL/Y <2.5
| | | Personal | | | <2.7 | | | 2.5 | | | <2.0 | | | <2.1 | | | 10.00% | | | 12.50% | | | | | | | | | | | | | | | | | | | | | | Total | | | 137.52% | |
EPS means our “adjusted earnings per diluted share” as described in our 2021 year-end earnings release included with our Form 8-K filed on February 16, 2021. The amount is based on our GAAP earnings per diluted share, adjusted for amortization expense, certain restructuring costs and other non-recurring items detailed in the earnings release.
Cash from operations means our “adjusted cash flow” based on our GAAP cash flow from operations, adjusted for certain restructuring costs and other non-recurring items detailed in our earnings release included with our Form 8-K filed on February 16, 2022.
EBIT means our “adjusted earnings before interest and taxes” (as described in our 2021 year-end earnings release included with our Form 8-K filed on February 16, 2022. The amount is based on our GAAP income from operations, adjusted for amortization expense, certain restructuring costs and other non-recurring items detailed in the earnings release).
EBIT Margin means our “adjusted earnings before interest and taxes” (as described in our 2021 year-end earnings release included with our Form 8-K filed on February 16, 2022, with the amount being based on our GAAP income from operations, adjusted for amortization expense, certain restructuring costs and other non-recurring items detailed in the earnings release) divided by consolidated revenue.
Acquisition Goal represents the summation of the average of the purchase price and annualized revenue for each acquisition completed in 2021.
Tier 4 FL/Y <2.5 is the weighted average calculating the number of times a Tier 4 locomotive is out of service or encounters an unscheduled maintenance service in a calendar year. <2.5 calculates to a locomotive failing less than 2.5 times a year. For this purpose, a Tier 4 locomotive is a locomotive that meets the Environmental Protection Agency (EPA) emission level standard.
TABLE OF CONTENTS Compensation Discussion and Analysis
Rafael Santana
President and Chief Executive Officer | | | 160% | | | $2,120,000 | | | 141.72% | | | $3,004,464 | | | 116.0% | | | $3,485,178 | John Olin
Executive Vice President and Chief Financial Officer | | | 100% | | | $765,000 | | | 141.72% | | | $1,084,158 | | | 116.0% | | | $1,257,623 | David L. Deninno
Executive Vice President, General Counsel and Secretary | | | 80% | | | $520,000 | | | 141.72% | | | $736,944 | | | 116.0% | | | $854,855 | Pascal Schweitzer
President, Transit | | | 100% | | | $623,9811 | | | 141.72% | | | $884,306 | | | 116.0% | | | $1,025,795 | Eric Gebhardt
Executive Vice President and Chief Technology Officer | | | 100% | | | $625,000 | | | 141.72% | | | $885,750 | | | 116.0% | | | $1,027,470 |
1
| Represents Mr. Schweitzer’s base salary as of 12/31/2023 converted to USD |
Long-Term Incentive Compensation.CompensationOur Compensation Committee administers our long-term incentive compensation throughunder our 2011 Stock Incentive Plan, underpursuant to which we grant stock options, restricted stock restricted stock units and performance units. Our long-term incentive compensation program seeks to align the interests of our executives with those of our stockholders. We have typically granted stock options and restricted stockour executives long term equity awards in February or March of the applicable year.year, which for 2023 consisted of performance units weighted 60% and restricted stock weighted 40%. We did not grant options in 2023, (similar to 2022), but in prior years we have l Proxy Statement for 2022 Annual Meeting | | | 37
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awarded options to purchase our common stock to executive officers at the fair market value (average of the high and low price) of our common stock at the grant date. We have not re-priced or back-dated any option awards. The vesting schedulegrant size of each NEO’s long-term incentive awards is based on the Compensation Committee’s judgment and assessment of various factors, including individual performance, the individual’s responsibilities and position with our Company, market practice and values for eachsimilar roles within our peer group and other general industries. The Compensation Committee’s external compensation consultant provides both management and the Compensation Committee a market analysis on an annual basis. The analysis is then reviewed by the CEO and Chief Human Resources Officer who subsequently recommend long-term incentive award grant of optionsvalues to the Compensation Committee. Awards are then reviewed and restricted stock is determinedultimately approved by the Compensation Committee. In recent years,Neither the Compensation Committee has provided thatCEO nor the Chief Human Resources Officer make recommendations to their own pay. Equity awards made in 2023 to the NEOs are detailed under the table “2023 Grants of Plan Based Awards” on page 62. For 2023, Wabtec changed the methodology used to calculate the number of restricted shares and target number of performance units. Previously, the Company divided the target value of the awards generally will vest in annual equal installments over three years. Inby our closing average price on the grant date, but for 2023, to avoid the impact of single-day stock price volatility, the Company divided the target value by the 30-day trailing average share price as of the date of grant. The following provides additional information about those awards.Restricted Stock (40%) On March 2021,2, 2023, we granted both restricted stock and stock options to all named executive officersNEOs as part of their long-term compensation with the Company, (except for Mr. Olin who joined the Companywhich vests in October 2021).equal installments over three years. The grant date fair value of those awards is reflected in the Summary Compensation Table on page 4261. The CompanyPerformance Units (60%)
On March 2, 2023, we also administers a rolling three-year long-term incentive program usinggranted performance units.units to all NEOs. A performance unit is equal to a share of Wabtec common stock. This program is designed to reward executives for meeting or exceeding pre-established, objective financial performance goals over a three-year performance period. The program is structured as a rolling three-year plan; each year starts a new three-year performance cycle with the most recently commenced cycle being 2022-2024. For awards made for the 2019-2021 performance period, the awards are earned based on economic profit growth goals. Economic profit is a measure of the extent to which the Company produces financial results in excess of its cost of capital. Payouts range from 25% of target (for performance at 50% of target) to 200% of target (for performance at or above 150% of target). Specific Economic Profit Goals for the 2019 to 2021 plan were as follows:
| | 2019 | | | $121,698 | | | $243,397 | | | $365,095 | | | | 2020 | | | $50,128 | | | $100,257 | | | $150,385 | | | | 2021 | | | $76,701 | | | $153,402 | | | $230,103 | | | | Total | | | $248,527 | | | $497,056 | | | $745,583 | |
While the award was originally intended to measure Economic Profit over a cumulative three-year period, the Compensation Committee decided in 2021 to split the performance periods into three one-year periods (2019, 2020 and 2021) and then take the average payout percentage of the three single periods. This approach allowed the Compensation Committee to recognize strong performance in 2019 prior to COVID, which included the efforts of new participants in the plan who formerly worked for GE Transportation, without having to adjust the target performance goals. Based on this approach the actual payout was 33.0%.
| | 2019 | | | $121,698 | | | $243,397 | | | $365,095 | | | $243,497 | | | 100% | | | | 2020 | | | $50,128 | | | $100,257 | | | $150,385 | | | ($72,510) | | | 0% | | | | 2021 | | | $76,701 | | | $153,402 | | | $230,103 | | | $2,147 | | | 0% | | | | Actual Payout | | | | | | | | | | | | | | | 33.0% | |
For the 2019-2021 performance period, the below named executive officers received the payouts as set forth below in March of 2022 which represented 33.0% of the target amount.
| Rafael Santana
| | | 4,620 shares of Wabtec common stock with a value at payout of $431,531
| | | David DeNinno
| | | 2,431 shares of Wabtec common stock with a value at payout of $246,589
| | | Pascal Schweitzer
| | | 990 shares of Wabtec common stock with a value at payout of $92,470
| | | Patrick Dugan
| | | 3,241 shares of Wabtec common stock with a value at payout of $339,060
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Mr. Olin and Mr. Gebhardt did not participate in the plan as they were not Wabtec employees at the time these awards were granted.
For the 2020-2022 and 2021–2023 awards, the Compensation Committee made adjustments to the long-term incentive plan program performance metrics reflecting the significant changes to the Company with the completion of the GE Transportation transaction. Rather than utilizing the single metric of Economic Profit, the Compensation Committee established the use of three metrics: 1) three-year average annual Return on Invested Capital (“ROIC”);2023-2025.
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2) three-year average annual Cumulative Cash Conversion (“CCC”);The performance unit awards for the 2023-2025 cycle, like the awards for the 2021-2023 and 3) Relative Total Stockholder Return (“RTSR”). 2022-2024, use three metrics:
ROIC and CCC results are each weighted at 50% respectively.. The combined results from the two goals are then subject to modification upward or downward (+/-10%) based on Wabtec’s RTSR results.results versus the defined Peer Group. For the 2023 – 2025 performance awards, the modifier was increased from +/-10% to +/-20%. For purposes of these awards: 1)
| ROIC means for a year (A) the Company’s Adjusted EBITDA after tax, divided by (B) the sum of the Company’s year-end net debt plus shareholders’ equity. For this purpose, Adjusted EBITDA means the Company’s income from operations plus other income plus depreciation and amortization, as adjusted for presentation to the Company’s investorsrestructuring costs and set forth in the Company’s annual earnings release. |
2)
| CCC means for a year (A) the Company’s cash from operations divided by (B) the sum of the Company’s net income plus depreciation and amortization.amortization, as adjusted for certain restructuring costs. |
3)
| RTSR measures the percentile ranking of the Company’s total stockholder return (changes((“TSR”) which means changes in stock price plus dividends) for the performance period against the total stockholder return of the Company’s compensation peer group described above.XLI Index for the 2023-2025 grant. The XLI Index mirrors the S&P 500 Industrials Index and is comprised of 72 companies, including Wabtec. The change was made to more accurately represent industry and investor peers. |
Beginning with the 2022 awards, ifIf Wabtec achieves the maximum three-year cumulative ROIC and CCC results, a participant can earn a maximum number (equalof performance units, equal to 200% of the target level) of performance units.level. The RTSR modifier cannot increase the payout above 200% of the target. If Wabtec achieves the threshold three-year ROIC and CCC cumulative goals, a participant can earn a threshold number (equalof performance units, equal to 25% of the target level) of performance unitslevel, which would be subject to modification up or down based on RTSR. Payouts wouldcalculated under the ROIC and CCC metrics range from 25% of target for actual performance at 75% of target to 200% of target for performance at or above 125% of target. No performance units would be earned for performance below the three-year cumulative ROIC and CCC and thresholds.
The long-term incentive program is intended to encourage the long-term stability of Wabtec’s management by establishing ambitious goals designed to promote the long-term productivity and profitability of the Company. If a program participant leaves the Company voluntarily, or is terminated for cause, they are not eligible to receive any performance units he or she may have earned under the program. If a program participant leaves the Company for death, disability, termination without cause, or retirement, their payout may be pro-rated in accordance with the amount of time they participated inawards continue to vest, subject to actual performance results for the program relative to thefull performance period. These goals were based on a range of considerations including expected demand in Wabtec’s key end userend-user markets, investor expectations and management’s business plan which includes year over year growth. Equity awards madeLong-Term Incentive Payouts (2021-2023 Performance Units)
Payouts under our 2021 — 2023 performance unit plan are summarized below. Actual Peer Group Total Stockholder Return over the three-year period ranged from 15.29% at the 25th Percentile to 39.10% at the 75th Percentile. The Company’s TSR of 69.10% over the same three-year period fell above the 75th Percentile resulting in a modification of +10.0%. Total Stockholder Return (“TSR”) | | | 15.29% | | | 17.07% | | | 25.66% | | | 26.91% | | | 34.31% | | | 39.10% | | | 69.10% |
Modifier | | | -10.0% | | | -7.5% | | | -5.0% | | | 0.0% | | | 5.0% | | | 7.5% | | | 10.0% | | | 10.0% |
54 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Compensation Discussion and Analysis
Actual ROIC and CCC performance for the 2021 to all named executive officers are detailed– 2023 performance period exceeded the target goals resulting in a payout under the table “2021 Grantsplan of Plan 132.0% of target. When applying the impact of the RTSR modifier at +10.0% (impact of +13.2%), a payout of 145.3% of target was earned under the plan. ROIC
(50% Weighting) | | | | | | 8.8 | | | 136% | | | 68.2% | CCC
(50% Weighting) | | | | | | 96.2 | | | 128% | | | 63.9% | Total Before Modifier | | | | | | 132.1% | Modifier (+10.0%) | | | | | | +13.2% | Total Payout | | | | | | 145.3% |
Based Awards” on page 44. Options and restricted stock are generally granted to employees, including our executive officers, each Februarythese results, for the 2021-2023 performance period, the NEOs received the payouts as partset forth below in March of their long-term compensation. 2024.Rafael Santana | | | 69,095 shares of Wabtec Common stock with a value at payout of $9,304,850 | David L. DeNinno | | | 11,755 shares of Wabtec Common stock with a value at payout of $1,583,016 | Pascal Schweitzer | | | 9,117 shares of Wabtec Common stock with a value at payout of $1,227,763 | Eric Gebhardt | | | 7,199 shares of Wabtec Common stock with a value at payout of $969,471 |
Mr. Olin did not receive grants in the 2021 fiscal year as he was not employed by the Company at that time. Additional Equity Award Policies Additional equity awards may be made throughout the year to new hires, current employees in connection with promotions, and key management obtained through acquisitions. For 2021, Mr. Olin received a new hire award of restricted shares on his hire date (vesting on the third anniversary of the grant date) and will begin participating in the regular long-term incentive compensation program in 2022. We vary the relative amounts of options and restricted stockequity granted in a given year based on a number of factors including the overall performance of the Company, the stock price and retention of key management. The primary purposes of the long-term incentive program are to align the interests of executive officers and other key employees with those of our stockholders, to attract and retain key executive talent and to provide an incentive to meet and exceed long-term financial goals. Employees eligible for the long-term incentive program include those who are determined by the Compensation Committee to be in key policy-setting and decision-making roles, and to have responsibilities that contribute significantly to achieving our earnings goals. The size of an individual’s long-term incentive award is based primarily on individual performance, the individual’s responsibilities and position with our Company. Long-term incentive award values generally are competitive with market practice among our Peer Group and other general industries reviewed by the Compensation Committee. Any awards made under the 2011 Stock Incentive Plan may be subject to forfeiture at the discretion of the Compensation Committee if between the date of grant and the third anniversary of any exercise, payment or vesting of the award, the participant: (i)
| engages in the operation or management of a business (whether as owner, partner, officer, director, employee or otherwise) which is in competition with the Company or any of its subsidiaries; |
l Proxy Statement for 2022 Annual Meeting | | | 39
| |
TABLE OF CONTENTS
(ii)
| induces or attempts to induce any customer, supplier, licensee or other individual, corporation or other business organization having a business relationship with the Company or any of its subsidiaries to cease doing business with the Company or any of its subsidiaries or in any way interferes with the relationship between any such customer, supplier, licensee or other person and the Company or any of its subsidiaries; |
(iii)
| solicits any employee of the Company or any of its subsidiaries to leave the employment thereof or in any way interferes with the relationship of such employee with the Company or any of its subsidiaries; or |
(iv)
| makes any statements or comments, orally or in writing, of a defamatory or disparaging nature regarding the Company or any of its subsidiaries (including but not limited to regarding any of their respective businesses, officers, directors, personnel, products or policies). |
TABLE OF CONTENTS Compensation Discussion and Analysis
Such forfeiture does not apply following the occurrence of a change of control event unless the award agreement specifically so provides or as required by applicable law. Additional Benefits and Perquisites Perquisites and Other Personal Benefits. Supplemental benefits are offered to select executive officers with the goal of attracting and retaining key executive talent. Those perquisites may include life and health insurance benefits, executive physicals, car and housing allowances, and social and health club dues. Retirement Benefits. Benefits The Company maintains a qualified defined contribution program which includes a Company match on participant contributions, which is provided to executives in the United States on the same basis as is provided to other salaried employees of the Company who reside in the United States. The Company also maintains various defined benefit plans which are provided to executives on the same basis as are provided to other employees of the Company who reside or work outside the United States. Deferred Compensation Plan.Plan The Company sponsors a deferred compensation plan for executive officers and non-employee directors. Under the terms of the plan, eligible employee executive officers may elect to defer their base salary, cash bonus and/or long-term incentive payout. The Deferred Compensation Plan was re-designed in 2023. During 2023, the plan was changed from crediting interest based on a fixed rate (for 2023) to participant-selected investment options that mirror those provided under the Company’s 401(k) plan (starting in 2024). Additional plan details are provided in the Deferred Compensation section. Mr. Olin elected to defer 15% of his base salary during 2023. No other NEOs deferred compensation for 2023. Post-Termination Compensation The Company has entered into Severance and Employment Continuation Agreements with each of the NEOs that include severance protection for certain types of involuntary termination of employment, including following a change in control. The Company entered into these agreements to provide our NEOs with a competitive compensation package and to ensure that management properly considers potential transactions that could result in their job loss. See “Potential Payments Upon Termination or Change in Control” for additional details about these agreements, as well as termination treatment provisions in our equity award agreements. Tax Implications of Executive Compensation Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the deductibility of compensation in excess of $1 million paid to certain covered employees (generally including the NEOs) in any calendar year. As a result, compensation during 2021 or any prior years.paid in excess of $1 million to our named executive officers generally will not be deductible. The Compensation Committee designs compensation programs that are intended to be in the best long-term interests of the Company and our stockholders, with deductibility of compensation being one of a variety of considerations taken into account. Accounting Considerations with Regard to Compensation Practices. The Compensation Committee reviews on an on-going basis the impact of our compensation programs on Wabtec’s financial statements, including the accounting treatment of equity-based compensation, and the Compensation Committee’s decisions may be influenced by such factors. 56 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Compensation Discussion and Analysis
In 2023, our NEO compensation, based on actual amounts awarded for salary, bonus, and grant values for restricted stock and performance units was allocated as follows (and as more fully set forth on the Summary Compensation Table on p. 61): Rafael Santana
President and Chief Executive Officer
2023 Performance and Compensation John Olin
Executive Vice President and Chief Financial Officer
2023 Performance and Compensation David L. DeNinno
Executive Vice President, General Counsel and Secretary
2023 Performance and Compensation
TABLE OF CONTENTS Compensation Discussion and Analysis
Pascal Schweitzer
President, Transit
2023 Performance and Compensation Eric Gebhardt
Executive Vice President and Chief Technology Officer
2023 Performance and Compensation
Other Compensation Policies and Practices Stock Ownership RequirementsGuidelinesWabtec has established stock ownership guidelines to encourage our key employees and Board members to own and retain shares of stock. The guidelines are as follows: President and CEO | | | 7x base salary | Other NEOs | | | 3x base salary | U.S. based senior leaders | | | ½x base salary | Non-U.S. based senior leaders | | | ¼x base salary |
The stock ownership guidelines include: (i) all vested shares held in personal accounts, (ii) any unvested restricted stock, (iii) shares held in retirement accounts, and CEO to accumulate shares having a value equal to seven times base salary; Executive officers to accumulate shares having a value equal to three times base salary;
Senior leaders within(iv) unvested restricted stock units for non U.S.-participants. Stock options or unvested performance units do not count towards the company having to accumulate shares having a value equal to one half to one and a half times base salary depending on their level; and
Non-employee Board members are required to accumulate shares having a value equal to six times their cash retainer.stock ownership guidelines.
The aforementioned employees and directors are given five years to satisfy these guidelines. The Compensation Committee is responsible for administering and monitoring compliance with this guideline, including establishing parameters for determination. As of December 31, 2021,2023, each of the named executive officers and non-employee board members has met their required stock ownership described above (including any shares deferred pursuant to the Deferred Compensation Plan)deferred compensation plan), except for those individuals within their first five years of service with the company,Company, all of whom are on track to meet their ownership guidelines. As of January 31, 2022,2024, our directors and executive officers as a group owned approximately 1%1.1% of our common stock. Recoupment Policy
In the event of a financial restatement or a determination by the Board of Directors that misconduct by a responsible party caused financial or reputational harm to the Company, the Compensation Committee reviews the circumstances and makes recommendations to the Board as to whether recoupment should be pursued. Misconduct shall include any intentional or reckless violation of Wabtec policies or any grossly negligent act or failure to act. The Compensation Committee also reviews all compensation that has been awarded to the responsible party and determines how such compensation may have been affected by the financial restatements or misconduct.
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TABLE OF CONTENTS Compensation Discussion and Analysis
|
Our Board of Directors maintains a Clawback Policy that is administered by the Compensation Committee. The Clawback Policy requires the Company to reasonably promptly recoup certain incentive-based compensation (without regard to taxes paid) that was erroneously awarded or paid to executive officers during the applicable three-year recovery period upon the Board, determine that recoupment is appropriate,a Committee of the Board, or the officers of the Company may recoup fromconcluding that the responsible partiesCompany is required to prepare an accounting restatement of the Company’s financials as a result of material noncompliance by the Company under applicable securities laws. Incentive-based compensation potentially subject to recovery under the mandatory accounting restatement provisions of the Clawback Policy is generally limited to any cash bonuses and equity awardscompensation granted, earned or vested based wholly or in reliancepart on the attainment of one or more financial statements that were restated or forreporting measures. The Clawback Policy does not condition such clawback on the yearfault of the executive officer, but the Company is not required to recover amounts in whichlimited circumstances set forth in the financial harm occurred as well as any gains realized from the exercise of options to the extentClawback Policy where the Compensation Committee determineshas made a determination that recovery would be impracticable. Operation of the gains were based onmandatory accounting restatement provisions of the Clawback Policy is subject to a brief phase-in process during the first few years after its effectiveness. The Company may not indemnify any such financial statements or resulted fromexecutive officer against the loss of such misconduct.recovered compensation in the event of a mandatory accounting restatement. The Clawback Policy is intended to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related SEC and NYSE implementing rules. The Company considers it improper and inappropriate for any of its directors and officers, including the named executive officers, to engage in short-term or speculative transactions in Wabtec securities or in other transactions that may (i) lead to inadvertent violations of insider trading laws, (ii) reduce an officer’s or director’s incentive to improve Wabtec’s performance, (iii) focus the officer’s or director’s attention on short-term performance at the expense of long-term objectives, or (iv) otherwise engage in transactions to hedge or offset any decrease in the market value of Wabtec’s stock. To that end, the Company has adopted and maintains a policy covering transactions involving all Wabtec stock held by its officers or directors, including but not limited to stock held directly or indirectly by such officer or director and stock or other equity granted to an officer or director as part of their compensation. The following transactions are prohibited
by Wabtec officers and directors: | | | During a quiet period and with the prior approval of the Wabtec Legal
Department, directors and officers are permitted to: | ✘ Short sales of Wabtec stock;
✘ Buying and selling publicly traded Wabtec options;
✘ Standing orders to buy or sell Wabtec stock;
✘ Hedging or monetization transactions such as zero cost collars, forward sale contracts involving Wabtec stock;
✘ Pledges of Wabtec stock as collateral for loans or margin accounts; or
✘ Enter into, amend, or terminate Rule 10b5-1 plans to buy or sell Wabtec stock during quiet periods or when in possession of material, non-public information. | | | ✔ Conduct cashless exercises of options if no Wabtec securities are sold in the market to fund such exercise;
exercise;
✔ Continue regular and matching contributions in benefit plans;
✔ Make gifts of Wabtec securities unless the recipient intends to sell the securities during the quiet period and the doneedonor has knowledge of such intent to sell during the quiet period; and
✔ Conduct transactions in previously approved and adopted Rule 10b5-1 plans. |
Post-Termination Compensation.
The Board of Directors has entered into employment continuation agreements with certain senior executive officers, including Messrs. Santana, Olin and DeNinno, as well as a Severance Agreement with Mr. Santana. These agreements are discussed in this Proxy Statement beginning on page 48. Also discussed below, certain of our benefit plans contain provisions that address termination of an individual or a change in control of the Company.Tax Implications of Executive Compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the deductibility of compensation in excess of $1 million paid to certain covered employees (generally including the NEOs) in any calendar year. As a result, compensation paid in excess of $1 million to our named executive officers generally will not be deductible. The Compensation Committee designs compensation programs that are intended to be in the best long-term interests of the Company and our stockholders, with deductibility of compensation being one of a variety of considerations taken into account.
Accounting Considerations with Regard to Compensation Practices. The Compensation Committee reviews on an on-going basis the impact of our compensation programs on Wabtec’s financial statements, including the accounting treatment of equity-based compensation, and the Compensation Committee’s decisions may be influenced by such factors.
l Proxy Statement for 2022 Annual Meeting | | | 41
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TABLE OF CONTENTS Compensation and Talent Management Committee Report The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included on pages 43 through 59 of this Proxy Statement with management. Based on this review and discussion, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement, and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. Respectfully submitted, Compensation and Talent Management Committee Ms. Klee (Chair)
Ms. Babcock
Mr. Banks
Mr. Hehir 60 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Executive Compensation Tables Summary Compensation Table This table shows the compensation for Wabtec’s named executive officers for the year indicated.
| | Name and Position | | Year | | Salary | | Stock
Awards (1) | | Option
Awards (2) | | Non-Equity
Incentive
Plan
Compensation (3) | | All
Other
Compensation (6) | | Total | | | | | Rafael Santana
President and Chief Executive Officer | | | 2021 | | td,200,000 | | $6,415,184 | | $786,364 | | td,606,580 | | $19,110 | | td1,027,238 | | | | | 2020 | | td,200,000 | | $5,248,659 | | $583,826 | | td,378,440 | | td,633,494 | | td1,044,419 | | | | | 2019 | | td,052,100 | | $5,003,742 | | td93,648 | | td,427,880 | | $9,466 | | $7,686,836 | | | | | John Olin (4)
Executive Vice President and Chief Financial Officer | | 2021 | | $259,615 | | $1,000,032 | | $0 | | $368,968 | | $115,957 | | $1,744,572 | | | | | David DeNinno
Executive Vice President, General Counsel and Secretary | | | 2021 | | $625,000 | | td,091,463 | | td33,804 | | $724,050 | | $48,769 | | $2,623,085 | | | | | 2020 | | $625,000 | | $990,717 | | $110,201 | | $335,038 | | $50,604 | | $2,111,560 | | | | | 2019 | | $602,100 | | td,196,749 | | $110,656 | | $568,155 | | $39,364 | | $3,517,024 | | | | | Pascal Schweitzer
President, Services Group | | | 2021 | | $525,000 | | $846,452 | | td03,766 | | $721,980 | | $174,419 | | $2,371,617 | | | | | 2020 | | $525,000 | | $678,573 | | $71,340 | | $428,190 | | $838,907 | | $2,542,010 | | | | | Eric Gebhardt
Executive Vice President and Chief Technology Officer | | 2021 | | $600,000 | | $668,277 | | $81,908 | | $868,860 | | $269,746 | | $2,488,791 | | | | | Patrick Dugan (5)
Former Executive Vice President and Chief Financial Officer | | | 2021 | | $700,000 | | $5,105,327 | | $557,903 | | $810,936 | | td,630,039 | | $9,804,205 | | | | | 2020 | | $700,000 | | td,446,833 | | td60,943 | | $428,848 | | $27,989 | | $2,764,613 | | | | | 2019 | | $677,100 | | td,733,575 | | td52,152 | | $668,320 | | $26,593 | | $4,257,740 | | | Name and Principal Position | | | Year | | Salary ($) | | Stock
Awards ($)1 | | Option
Awards
($) | | Non-Equity
Incentive Plan
Compensation
($)2 | | Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings3 | | All
Other
Compensation
($)5 | | Total ($) | Rafael Santana
President and Chief Executive Officer | | | | 2023 | | $1,325,000 | | td0,655,185 | | $0 | | $3,485,178 | | | | $27,877 | | td5,493,240 | | | 2022 | | $1,242,308 | | $8,200,042 | | $0 | | td,222,200 | | | | $20,922 | | $11,685,472 | | | 2021 | | td,200,000 | | $6,415,184 | | $786,364 | | td,606,580 | | | | $19,110 | | td1,027,238 | John Olin
Executive Vice President and Chief Financial Officer | | | | 2023 | | $765,000 | | $2,523,752 | | $0 | | $1,257,623 | | td,427 | | $30,597 | | $4,579,399 | | | 2022 | | $750,000 | | $2,000,056 | | $0 | | $833,325 | | | | $25,000 | | $3,608,381 | | | 2021 | | $259,615 | | $1,000,032 | | $0 | | $368,968 | | | | td15,957 | | $1,744,572 | David L. DeNinno
Executive Vice President, General Counsel and Secretary | | | | 2023 | | $650,000 | | $1,388,053 | | $0 | | $854,855 | | | | $56,846 | | $2,949,754 | | | 2022 | | $637,692 | | $1,249,965 | | $0 | | $568,883 | | | | $52,420 | | $2,508,960 | | | 2021 | | $625,000 | | $1,091,463 | | td33,804 | | $724,050 | | | | $48,769 | | $2,623,086 | Pascal Schweitzer(4)
President, Transit | | | | 2023 | | $614,525 | | $1,716,155 | | $0 | | $1,025,795 | | | | $398,159 | | $3,754,634 | | | 2022 | | $537,692 | | $1,000,028 | | $0 | | $599,994 | | | | td76,765 | | $2,314,479 | | | 2021 | | $525,000 | | $846,452 | | td03,766 | | $721,980 | | | | td74,419 | | $2,371,617 | Eric Gebhardt
Executive Vice President and Chief Technology Officer | | | | 2023 | | $625,000 | | $858,130 | | $0 | | td,027,470 | | | | $36,110 | | $2,546,710 | | | 2022 | | $612,692 | | $749,998 | | $0 | | $683,327 | | | | $40,506 | | $2,086,523 | | | 2021 | | $600,000 | | $668,277 | | $81,908 | | $868,860 | | | | td69,746 | | $2,488,791 |
(1)
1
| Reflects the aggregate grant date fair value dollar amount computed in accordance with FASB ASC Topic 718 which we refer to as “ASC(“ASC 718”), which for 2021 related to the awards of a) restricted stock made to the named executive officers in 2021March 2023 under the 2011 Stock Incentive Plan; and b) long-term incentive awardsperformance units granted to the named executive officers in 20212023 for the 2021-20232023-2025 performance period. For the assumptions used in the calculation of these amounts under ASC 718, see Note 13 of the Notes to the Consolidated Financial Statements in Wabtec’s Annual Report on Form 10-K for the year ended December 31, 2021. The value of the 2021 long term incentive award2023 performance units awards set forth in the table above is based on probable achievement of the applicable target performance goals. The value of that award based on achievement of maximum performance level would be: for Mr. Santana – $7,723,558;$12,786,222; for Mr. Dugan – $1,716,455;Olin - $3,028,460; for Mr. DeNinno – $1,313,978;$1,665,621; for Mr. Schweitzer – $1,019,023,- $2,463,237; and for Mr. Gebhardt – $804,629.- $1,029,588. |
(2)
| Reflects the aggregate grant date fair value dollar amount computed in accordance with ASC 718 related to the named executive officers that had stock options granted during the year. For the assumptions used in the calculation of this amount under ASC 718, see Note 13 of the Notes to the Consolidated Financial Statements in Wabtec’s Annual Report on Form 10-K for the year ended December 31, 2021. |
(3)
2
| Reflects amounts earned by the named executive officers for fiscal years 2021, 2020,2023, 2022, and 20192021 under Wabtec’s annual incentive award plan. Payment of bonuses earned for 20212023 performance was made in March 2022. Mr. Olin’s payment reflects a pro rata payment based on his time with the Company during 2021.2024. |
(4)
3
| Amount disclosed for Mr. Olin was appointed as Wabtec’s Executive Vice President and Chief Financial Officer effective October 1, 2021.represents the above-market earnings on his 2023 deferrals to the deferred compensation plan, which earned a return for the year based on the prime rate plus 1%, (total of 8.5%). |
(5)
4
| For Mr. Dugan ceased serving as Chief Financial Officer effective October 1, 2021 and his employment was terminated bySchweitzer, all compensation amounts paid in CHF were converted to U.S. dollars using the Company effectiveexchange rate in effect as of December 31, 2021 in accordance with a Transition Agreement dated September 9, 2021. See “2021 Severance of Mr. Dugan” on page 50 for additional details about that agreement. For purposes of this Summary Compensation Table: (i) “Stock Awards” includes, in addition to the grant date fair value of his regular annual restricted shares and performance units granted in February 2021, the aggregate incremental fair value of certain restricted share and performance unit awards that were modified by the Transition Agreement (including his February 2021 awards) to provide full vestinglast day of the restricted shares and permit continued, prorated vesting of the performance units (subject to actual performance results); (ii) “Option Awards” includes, in addition to the grant date fair value of his regular annual options granted in February 2021, the aggregate incremental fair value of certain option awards that were modified by the Transition Agreement (including his February 2021 award) to provide full vesting; and (iv) “All Other Compensation” includes a cash severance payment and the value of benefits continuation required by the Transition Agreement. fiscal year. |
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TABLE OF CONTENTS
(6)
5
| The following table sets forth a detailed breakdown of the items which compose “All Other Compensation”: for each named executive officer in 2023: |
Rafael Santana(a) | | | 2023 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $19,800 | | | $2,622 | | | $5,455 | John Olin | | | 2023 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $19,800 | | | $4,524 | | | $6,273 | David L. DeNinno | | | 2023 | | | $0 | | | $0 | | | $0 | | | $0 | | | $17,520 | | | $19,800 | | | $14,071 | | | $5,455 | Pascal Schweitzer(b) | | | 2023 | | | $ 62,121 | | | $25,061 | | | $153,312 | | | $135,936 | | | $21,355 | | | $0 | | | $374 | | | $0 | Eric Gebhardt | | | 2023 | | | $0 | | | $0 | | | $0 | | | $0 | | | $11,740 | | | $19,800 | | | $4,570 | | | $0 |
| | Rafael Santana | | | 2021 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $17,400 | | | $1,710 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John Olin (7) | | | 2021 | | | $0 | | | $0 | | | $0 | | | $98,930 | | | $0 | | | $14,712 | | | $2,315 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David DeNinno | | | 2021 | | | $0 | | | $0 | | | $0 | | | $0 | | | $17,836 | | | $17,400 | | | $13,533 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pascal Schweitzer (8) | | | 2021 | | | $0 | | | $0 | | | $66,193 | | | $98,198 | | | $0 | | | $8,700 | | | $1,328 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Eric Gebhardt (9) | | | 2021 | | | $0 | | | $250,000 | | | $0 | | | $0 | | | $0 | | | $17,400 | | | $2,346 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Patrick Dugan | | | 2021 | | | $2,599,050 | | | $0 | | | $0 | | | $0 | | | $8,687 | | | $17,400 | | | $4,902 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(7)
2024 Proxy Statement | / | | 61 |
TABLE OF CONTENTS Executive Compensation Tables
(a)
| The amountCompany leases a private jet primarily for business travel. During 2023, Mr. Olin representsSantana also had one personal flight on the private jet for which he reimbursed the Company the aggregate and incremental cost of the flight to the company of providing certain relocation benefits.Company, and as a result there is no compensation included above for that personal use. |
(8)
(b)
| Mr. Schweitzer iswas an expatriate and is therefore provided additional annual benefits tied to his assignment. Those benefits include housing and utilities in the host country and tax preparation. We also providedprovide Mr. Schweitzer with tax equalization payments to eliminate any adverse tax impact due to his overseas assignment. During 2023, Mr. Schweitzer moved back to Switzerland from the United States, The relocation amount detailed includes payments to a third party relocation provider for the movement of household goods and the payment of temporary housing related to the move. Also included is a one-time $20,000 relocation allowance paid to Mr. Schweitzer to cover any incidental expenses incurred as a result of his relocation. |
(9)
| The bonus for Mr. Gebhardt was paid on the basis of Mr. Gebhardt meeting two criteria: (i) assessing and structuring the company’s engineering team (including evaluating and identifying successors) and (ii) progressing green technologies (including the viability of battery electric technologies). |
l Proxy Statement for 2022 Annual Meeting | | | 43
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TABLE OF CONTENTS
This table shows the equity basedplan-based awards granted to the named executive officers in 2021.2023. | | | | | | Estimated Future
Payouts
Under Non-Equity
Incentive
Plan Awards ($)(1) | | Estimate Future
Payouts
Under Equity
Incentive
Plan Awards (#) (2) | | All Other
Stock
Awards:
Number of
Units
(#) (3)(6) | | All Other
Option
Awards:
Number of
Options
(#) (4) | | Exercise
Price of
Option Awards
($) | | Grant
Date
Fair
Value of
Stock
Awards
($) (5) | | | | | Name | | Grant
Date (6) | | Threshold | | Target | | Maximum | | 25%
Threshold | | Target | | 200%
Maximum | | | | | | | | | | | | | Mr. Santana | | | | | $0 | | $1,800,000 | | $4,050,000 | | | | | | | | | | | | | | | | | | | | | | 2/11/2021 | | | | | | | | 11,888 | | 47,553 | | 95,106 | | | | | | | | $3,861,779 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | 31,442 | | | | | | $2,553,405 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | | | 31,442 | | $81.21 | | $786,364 | | | | | | | 5/19/2021 | | | | | | | | | | | | | | 4,620 | | | | | | $431,531 | | | | | Mr. Olin | | | | | $0 | | $254,795 | | $573,288 | | | | | | | | | | | | | | | | | | | | | 8/30/2021 | | | | | | | | | | | | | | 11,109 | | | | | | $1,000,032 | | | | | Mr. DeNinno | | | | | $0 | | $500,000 | | $1,125,000 | | | | | | | | | | | | | | | | | | | | | | 2/11/2021 | | | | | | | | 2,023 | | 8,090 | | 16,180 | | | | | | | | $656,989 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | 5,350 | | | | | | $434,474 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | | | 5,350 | | $81.21 | | $133,804 | | | | | | | 5/19/2021 | | | | | | | | | | | | | | 2,431 | | | | | | $246,589 | | | | | Mr. Schweitzer | | | | | $0 | | $525,000 | | $1,181,250 | | | | | | | | | | | | | | | | | | | | | | 2/11/2021 | | | | | | | | 1,569 | | 6,274 | | 12,548 | | | | | | | | $509,512 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | 4,149 | | | | | | $336,940 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | | | 4,149 | | $81.21 | | $103,766 | | | | | | | 5/19/2021 | | | | | | | | | | | | | | 990 | | | | | | $92,470 | | | | | Mr. Gebhardt | | | | | $0 | | $600,000 | | $1,350,000 | | | | | | | | | | | | | | | | | | | | | | 2/11/2021 | | | | | | | | 1,239 | | 4,954 | | 9,908 | | | | | | | | $402,314 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | 3,275 | | | | | | $265,963 | | | | | | | 2/11/2021 | | | | | | | | | | | | | | | | 3,275 | | $81.21 | | $81,908 | | | | | Mr. Dugan (7) | | | | | $0 | | $560,000 | | $1,260,000 | | | | | | | | | | | | | | | | | | | | | | 2/11/2021 | | | | | | | | 2,642 | | 10,568 | | 21,136 | | | | | | | | $858,227 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | 6,987 | | | | | | $567,414 | | | | | | | | 2/11/2021 | | | | | | | | | | | | | | | | 6,987 | | $81.21 | | $174,745 | | | | | | | | 5/19/2021 | | | | | | | | | | | | | | 3,241 | | | | | | $339,060 | | | | | | | | 9/9/2021 | | | | | | | | 881 | | 3,523 | | 7,046 | | | | | | | | $315,238 | | | | | | | | 9/9/2021 | | | | | | | | 1,811 | | 7,244 | | 14,488 | | | | | | | | $648,193 | | | | | | | | 9/9/2021 | | | | | | | | 2,750 | | 11,000 | | 22,000 | | | | | | | | $984,280 | | | | | | | | 9/9/2021 | | | | | | | | | | | | | | 19,356 | | | | | | $1,731,975 | | | | | | | | 9/9/2021 | | | | | | | | | | | | | | | | 16,024 | | | | $383,158 | | | | | | | | | Estimated Possible
Payouts Under
Non-Equity Incentive
Plan Awards 1 | | | Estimated Future
Payouts Under
Equity Incentive
Plan Awards 2 | | | All Other
Stock
Awards:
Number of
Units
(#)3 | | Grant
Date
Fair
Value of
Stock
Awards
($)4 | Name | | | Grant
Date | | Threshold
($) | | Target
($) | | Maximum
($) | | 25%
Threshold
(#) | | Target
(#) | | 200%
Maximum
(#) | | Mr. Santana | | | | | | $0 | | td,120,000 | | $4,770,000 | | | | | | | | | | | | | 3/2/2023 | | | | | | | | 15,213 | | 60,852 | | 121,704 | | | | $6,393,111 | | | 3/2/2023 | | | | | | | | | | | | | | 40,568 | | $4,262,074 | Mr. Olin | | | | | | $0 | | $765,000 | | $1,721,250 | | | | | | | | | | | | | 3/2/2023 | | | | | | | | 3,603 | | 14,413 | | 28,826 | | | | $1,514,230 | | | 3/2/2023 | | | | | | | | | | | | | | 9,609 | | td,009,522 | Mr. DeNinno | | | | | | $0 | | $520,000 | | td,170,000 | | | | | | | | | | | | | 3/2/2023 | | | | | | | | 1,982 | | 7,927 | | 15,854 | | | | $832,811 | | | 3/2/2023 | | | | | | | | | | | | | | 5,285 | | $555,242 | Mr. Schweitzer | | | | | | $0 | | $623,981 | | $1,403,958 | | | | | | | | | | | | | 3/2/2023 | | | | | | | | 2,931 | | 11,723 | | 23,446 | | | | $1,231,618 | | | 3/2/2023 | | | | | | | | | | | | | | 4,612 | | $484,537 | Mr. Gebhardt | | | | | | $0 | | $625,000 | | $1,406,250 | | | | | | | | | | | | | 3/2/2023 | | | | | | | | 1,225 | | 4,900 | | 9,800 | | | | $514,794 | | | 3/2/2023 | | | | | | | | | | | | | | 3,268 | | $343,336 |
(1)
1
| Reflects the possible payments under Wabtec’s annual incentive award plan. Note that Mr. Olin’s annual cash incentive opportunity is pro-rated based on his start date during 2021. |
(2)
2
| Reflects the grant of performance units forwith the three-year performance period of 2021-20232023-2025 approved by the Compensation Committee in February 20212023 under Wabtec’s 2011 Stock Incentive Plan. These columns reflect the range of payouts possible for this grant. A performance unit is equal to a share of Wabtec common stock. If Wabtec achieves its three-year ROIC and CCC goals (with an RTSR modifier), then participants will earn the target number of performance units. If Wabtec achieves the maximum goal achievement, a participant will earn a maximum number (equal to 200% of the target level) of performance units. If Wabtec achieves the threshold goal achievement, a participant will earn a threshold number (equal to 25% of the target level) of performance units. No performance units will be earned for performance below the threshold and no additional performance units will be earned for performance exceeding the maximum. Payouts for these awards, if any, will be made by March 31, 2024. 2026. See the Compensation Discussion and Analysis, “Long-Term Incentive Compensation” for additional details on the performance goals. |
(3)
3
| The awards with a grant date of February 11, 2021 or (for Mr. Olin) August 30, 2021 reflectReflects the grant of restricted stock to the named executive officers during 2021on March 2, 2023 under Wabtec’s 2011 Stock Incentive Plan. One-third of the shares vested on March 1, 20222024 and the remaining shares will vest in one-thirdequal increments on March 1, 20232025 and March 1, 2024, except that the new hire award for Mr. Olin vests on the third anniversary of the grant date. |
| 44
| | | l Proxy Statement for 2022 Annual Meeting |
TABLE OF CONTENTS
(4)
| Reflects the grant of options to the named executive officers on February 11, 2021 under Wabtec’s 2011 Stock Incentive Plan. One-third of the options vested on March 1, 2022 and the remaining shares will vest in one-third increments on March 1, 2023 and March 1, 2024.2026. |
(5)
4
| Reflects the grant date fair value computed in accordance with ASC 718. |
(6)
| The awards with a grant date of May 19, 2021 are the previously granted 2019 performance units that were modified during 2021 to base performance718 based on the average payout percentages in 2019, 2020, and 2021 determined separately for each year, resulting in one-thirdclosing price of the original target award becoming earned based on 2019 performance, to vest at the end of 2021 based on continued employment. See the discussion under “Long Term Incentive Compensation” on page 37$105.06 as noted in the Compensation Discussion and Discussion Analysis, for additional details on the actions taken. |
(7)
| The awards with a grant datenumber of September 9, 2021, areshares was determined by dividing the previously granted performance units, restricted shares and options that were modified as a resulttarget value of the Transition Agreement between Wabtec and Mr. Duganawards by the 30-day trailing share price of the same date, which provided for (i) continued, prorated vesting of the performance units subject to actual performance results, and (ii) full vesting of all unvested restricted shares and options, all effective upon his separation date See “2021 Severance of Mr. Dugan” on page 50.$104.0727. |
62 | | / | 2024 Proxy Statement |
l Proxy Statement for 2022 Annual Meeting | | | 45
| |
TABLE OF CONTENTS Executive Compensation Tables
|
20212023 Outstanding Equity Awards at Fiscal Year-End This table provides information concerning unexercised options, unvested stock and equity incentive plan awards outstanding as of December 31, 20212023 for the named executive officers. All share and per share amounts below have been adjusted to reflect the two for one stock split (in the form of a 100% stock dividend) of Wabtec common stock effected on June 11, 2013. | | | | Option Awards | | Stock Awards | | | | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable (1) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | Market
Value of
Shares or
Units
That
Have Not
Vested | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (2) | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (2) | | | | | Rafael Santana | | 6,533 | | 3,267 | | $70.635 | | 3/6/2029 | | | 3,266(4) | | $300,423 | | 178,558 | | $16,424,658 | | | | | | | 9,197 | | 18,394 | | $78.33 | | 2/7/2030 | | | 14,156(6) | | $1,302,140 | | | | | | | | | | | 0 | | 31,442 | | $81.21 | | 2/11/2031 | | | 1,666(4) | | $153,247 | | | | | | | | | | | | | | | | | | | | 18,394(7) | | $1,691,972 | | | | | | | | | | | | | | | | | | | | 31,442(10) | | $2,892,192 | | | | | | | | | John Olin | | | | | | | | | | | 11,109(11) | | $1,021,861 | | 0 | | $0 | | | | | David DeNinno | | | | | | | | | | | | | | | | | | | | | | | | 875 | | 0 | | $87.03 | | 2/10/2025 | | | 1,050(3) | | $96,584 | | 33,700 | | $3,099,895 | | | | | | | 2,100 | | 0 | | $61.33 | | 2/9/2026 | | | 1,866(4) | | $171,644 | | | | | | | | | | | 2,625 | | 0 | | $87.05 | | 2/7/2027 | | | 3,333(5) | | $306,586 | | | | | | | | | | | 3,150 | | 1,050 | | $71.79 | | 2/6/2028 | | | 3,472(7) | | $319,372 | | | | | | | | | | | 3,733 | | 1,867 | | $70.635 | | 3/6/2029 | | | 5,350(10) | | $492,120 | | | | | | | | | | | 1,736 | | 3,472 | | $78.33 | | 2/7/2030 | | | | | | | | | | | | | | | | 0 | | 5,350 | | $81.21 | | 2/11/2031 | | | | | | | | | | | | | | Eric Gebhardt | | 0 | | 3,275 | | $81.21 | | 2/11/3031 | | | 3,275(10) | | $301,251 | | 9,908 | | $911,387 | | | | | | | | | | | | | | | | 15,000(9) | | $1,379,775 | | | | | | | | | Pascal Schweitzer | | 1,189 | | 2,378 | | $78.33 | | 2/7/2030 | | | 1,000(4) | | $91,985 | | 23,730 | | $2,182,804 | | | | | | | 0 | | 4,149 | | $81.21 | | 2/11/2031 | | | 1,666(8) | | $153,247 | | | | | | | | | | | | | | | | | | | | 2,378(7) | | $218,740 | | | | | | | | | | | | | | | | | | | | 4,149(10) | | $381,646 | | | | | | | | | Patrick Dugan | | | | | | | | | | | | | | | 25,164 | | $2,314,711 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 875 | | 0 | | $87.03 | | 2/10/2025 | | | | | | | | | | | | | | | | 2,100 | | 0 | | $61.33 | | 2/9/2026 | | | | | | | | | | | | | | | | 3,675 | | 0 | | $87.05 | | 2/7/2027 | | | | | | | | | | | | | | | | 5,600 | | 0 | | $71.79 | | 2/6/2028 | | | | | | | | | | | | | | | | 7,700 | | 0 | | $70.635 | | 3/6/2029 | | | | | | | | | | | | | | | | 7,606 | | 0 | | $78.33 | | 2/7/2030 | | | | | | | | | | | | | | | | 6,987 | | 0 | | $81.21 | | 2/11/2031 | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable1 | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested ($) | | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)2 | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)2 | Rafael
Santana | | | | 9,800 | | 0 | | $70.635 | | 3/6/2029 | | 10,4804 | | $1,329,912 | | 2021 | | 182,959 | | td3,217,435 | | | 27,591 | | 0 | | $78.33 | | 2/7/2030 | | 23,5606 | | $2,989,764 | | 2022 | | | | | | | 20,962 | | 10,480 | | $81.21 | | 2/11/2031 | | 40,5687 | | $5,148,079 | | 2023 | | | | | John Olin | | | | | | | | | | | | 11,1095 | | $1,409,732 | | 2021 | | 27,343 | | $3,469,827 | | | | | | | | | | | 5,7466 | | $729,167 | | 2022 | | | | | | | | | | | | | | | | 9,6097 | | $1,219,382 | | 2023 | | | | | David L. DeNinno | | | | 875 | | 0 | | $87.03 | | 2/10/2025 | | 1,7834 | | $226,263 | | 2021 | | 27,763 | | $3,253,096 | | | 2,100 | | 0 | | $61.33 | | 2/9/2026 | | 3,5916 | | $455,698 | | 2022 | | | | | | | 2,625 | | 0 | | $87.05 | | 2/7/2027 | | 5,2857 | | $670,667 | | 2023 | | | | | | | 4,200 | | 0 | | $71.79 | | 2/6/2028 | | | | | | | | | | | | | 5,600 | | 0 | | $70.635 | | 3/6/2029 | | | | | | | | | | | | | 5,208 | | 0 | | $78.33 | | 2/7/2030 | | | | | | | | | | | | | 3,567 | | 1,783 | | $81.21 | | 2/11/2031 | | | | | | | | | | | Pascal Schweitzer | | | | 3,567 | | 0 | | $78.33 | | 2/7/2030 | | 1,3834 | | $175,503 | | 2021 | | 27,305 | | $3,465,005 | | | 2,766 | | 1,383 | | $81.21 | | 2/11/2031 | | 2,873 | | $364,584 | | 2022 | | | | | | | | | | | | | | | 4,612 | | $585,263 | | 2023 | | | | | Eric Gebhardt | | | | 2,184 | | 1,091 | | $81.21 | | 2/11/3031 | | 1,0914 | | $138,448 | | 2021 | | 16,948 | | $2,150,701 | | | | | | | | | | | 15,0003 | | td,903,500 | | 2020 | | | | | | | | | | | | | | | 2,1546 | | $273,343 | | 2022 | | | | | | | | | | | | | | | 3,2687 | | $414,709 | | 2023 | | | | |
(1)
1
| Option awards granted to the NEOs prior to March 1, 2019 vest one-fourth per year beginning on March 1 of the year after the grant date. Option awards granted to the NEOs after March 1, 2019 vest one-third per year beginning on March 1 of the year after the grant date. |
(2)
2
| This represents the aggregate number of actual performance units earned forgranted relative to the 2019-20212021-2023 long-term incentive plan, based on actual performance results plus the number of thetarget performance units that would be paid out assuming maximum performance for bothupon the 2020-2022Company meeting financial goals relative to the 2022-2024 long-term incentive plan and the 2021-2023target performance units that would be paid out upon the Company meeting financial goals relative to the 2023-2025 long-term incentive plan multiplied by the fair market value of Wabtec common stock price as of December 31, 2021.2023. |
(3)
| This represents the number of restricted shares of Wabtec stock that were granted in 2018 to the executive under the 2011 Stock Incentive Plan and that remain unvested as of December 31, 2021. One-fourth of this award vested on March 1, 2019, March 1, 2020, and March 1, 2021 and the remaining one-fourth shares vested on March 1, 2022. |
(4)
| This represents the number of restricted shares of Wabtec stock that were granted in 2019 to the executive under the 2011 Stock Incentive Plan and that remain unvested as of December 31, 2021. One-third of this award vested on March 1, 2020, one-third of this award vested on March 1, 2021 and the remaining one third shares vested on March 1, 2022. |
3
| 46
| | | l Proxy Statement for 2022 Annual Meeting |
TABLE OF CONTENTS
(5)
| This represents the number of restricted shares of Wabtec stock that were granted to the executive as a special success award in 2019 under the 2011 Stock Incentive Plan that remained unvested as of December 31, 2021. One-third of this award vested on March 1, 2020, one-third of this award vested on March 1, 2021 and the remaining one-third shares vested on March 1, 2022. |
(6)
| This represents the number of restricted shares of Wabtec stock that were granted to the executive in 2019 under the 2011 Stock Incentive Plan that remained unvested as of December 31, 2021. One-fourth of this award vested on March 1, 2020, one-fourth of this award vested on March 1, 2021 and one-fourth of this award vested on March 1, 2022 and the remaining shares will vest in one-fourth increments on March 1, 2023. |
(7)
| This represents the number of restricted shares of Wabtec stock that were granted in 2020 to the executive under the 2011 Stock Incentive Plan and that remain unvested as of December 31, 2021. One-third of this award vested on March 1, 2021, one-third of this award vested on March 1, 2022 and the remaining one-third of the shares will vest on March 1, 2023. |
(8)
| This represents the number of restricted shares of Wabtec stock that were granted to the executive as a special award in 2019 under the 2011 Stock Incentive Plan that remained unvested as of December 31, 2021. One-third of this award vested on December 5, 2020, one-third of this award vested on December 5, 2021 and the remaining one-third shares will vest on December 5, 2022. |
(9)
| This represents the number of restricted shares of Wabtec stock that were granted to the executive as a special award in 2020 under the 2011 Stock Incentive Plan that remained unvested as of December 31, 2021.2023. This award will vest in full on October 13, 2024. |
(10)
4
| This represents the number of restricted shares of Wabtec stock that were granted in 2021 to the executive under the 2011 Stock Incentive Plan and that remain unvested as of December 31, 2021.2023. One-third of this award vested on March 1, 2022, one-third of this award vested on March 1, 2023 and one-third of thethis award will vest on each of March 1, 2023 and March 1, 2024. |
(11)
5
| This represents the number of restricted shares of Wabtec stock that were granted to the executive as a new hirespecial award in 20212020 under the 2011 Stock Incentive Plan that remained unvested as of December 31, 2021.2022. This award will vest in full on August 30, 2024. |
2024 (the third anniversaryProxy Statement | / | | 63 |
TABLE OF CONTENTS Executive Compensation Tables
6
| This represents the number of restricted shares of Wabtec stock that were granted in 2022 to the grant date).executive under the 2011 Stock Incentive Plan and that remain unvested as of December 31, 2023. One-third of this award vested on March 1, 2023, additional one-thirds of this award will vest on each of March 1, 2024 and March 1, 2025. |
7
| This represents the number of restricted shares of Wabtec stock that were granted in 2023 to the executive under the 2011 Stock Incentive Plan and that remain unvested as of December 31, 2023. One-third of this award will vest on March 1, 2024, and one-third of this award will vest on each of March 1, 2025 and March 1, 2026. |
Option Exercises and Stock Vested This table provides information concerning vesting of stock, including restricted stock, restricted stock units and similar instruments, during 20212023 for the named executive officers on an aggregate basis. | | Rafael Santana | | | 0 | | | $ 0 | | | 28,209 | | | $2,091,697 | | | | John Olin | | | 0 | | | $0 | | | 0 | | | $0 | | | | David DeNinno | | | 0 | | | $0 | | | 15,042 | | | $1,122,949(2) | | | | Pascal Schweitzer | | | 0 | | | $0 | | | 3,439 | | | $255,001 | | | | Eric Gebhardt | | | 0 | | | $0 | | | 0 | | | $0 | | | | Patrick Dugan | | | 0 | | | $0 | | | 19,302 | | | $1,441,355(2) | |
Rafael Santana | | | 0 | | | $0 | | | 90,567 | | | $9,428,320 | John Olin | | | 0 | | | $0 | | | 2,874 | | | $301,475 | David L. DeNinno | | | 0 | | | $0 | | | 15,136 | | | $1,501,868 | Pascal Schweitzer | | | 0 | | | $0 | | | 10,736 | | | $1,067,369 | Eric Gebhardt | | | 0 | | | $0 | | | 2,170 | | | $227,628 |
(1)
1
| Calculated by multiplying the number of shares of restricted stock that vested by the market price of Wabtec’s common stock on the vesting date. |
(2)
2
| This includes a payout of awards with a 2020-2022 performance period granted under the 2018-2020 long-term incentive plan. Under this plan, Mr. Dugan and Mr. DeNinno earned and received on March 18, 2021, a payout of 3,241 and 2,431 shares of Wabtec common stock, respectively, with the respective values on that date of $250,432 and $187,843. Mr. Santana, Mr. Schweitzer, Mr. Gebhardt and Mr. Olin did not participate in the 2018-2020 long-term incentive plan. |
Post-Employment CompensationNonqualified Deferred Compensation
John Olin | | | Wabtec Plan | | | $114,900 | | | | | | $4,817 | | | | | | $119,307 |
1
| This entire amount was included as compensation in the Summary Compensation Table for the last completed fiscal year. |
2
| Amount disclosed for Mr. Olin represents the total earnings on his 2023 deferrals to the deferred compensation plan, which earned a return for the year based on the prime rate plus 1%, (total of 8.5%). $2,427 of the earnings were from “above market” earnings under SEC rules which amount was included in the Summary Compensation Table for the last completed fiscal year. |
Wabtec sponsors a deferred compensation plan (the “DC plan”) for certain executive officers and non-employee directors. Under the terms of theDC plan, eligible employee executive officers may electcontribute pre-tax up to defer(i) 75% of their base salary, (ii) up to 100% of their cash bonus, and/and (iii) up to 100% of their performance units. Each participant must re-enroll and make contribution elections on an annual basis. Under the DC plan, distributions may occur at retirement or long term incentive payout.at specified times chosen by the plan participant. A plan participant may also apply for distribution of their account balance in the event of unforeseeable emergencies. Upon death, all account balances are paid to the plan participant’s beneficiary in a lump sum. The DC plan allows for payments via lump sum or in installments (from two to ten years). The DC plan was redesigned during 2023. For 2023 deferrals, the only investment option paid the prime rate plus 1%. With the plan redesign, the prime plus 1% was eliminated as an investment option on any new deferrals and all participants were offered investment options that mirror those offered in Wabtec’s 401(k) plan. Any earnings in the DC plan are based on the performance (either positive or negative) of the investments selected by the plan participant. The totality of investment options are chosen by the sole discretion of the Company and are reviewed at least annually. Assets are not formally funded and at all times a plan participant remains an unsecured, general creditor of the Company. Mr. Olin elected to defer 15% of his base salary during 2023. None of the named executive officers other than Mr. Olin currently have any benefits under this plan. 64 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Executive Compensation Tables
Potential Payments Upon Termination or Change in Control Our severance and change-in-control protections are designed to be fair and competitive. These protections are intended to retain executives in the event they need to consider actions that may impact job security or ease an executive’s transition at retirement. These benefits help us compete for talent and are within the range of competitive practice at similar companies. Severance Agreementand Employment Continuation Agreements We have entered into Severance and Employment Continuation Agreements (the “Continuation Agreements”) with Mr. Santana
On May 6, 2020,each of the named executive officers effective December 5, 2022. The Continuation Agreements supersede and replace in their entirety any prior agreements. The severance payments and benefits under the Continuation Agreements will also be in lieu of any severance payments and benefits under any severance plans of the Company, entered into a Severance Agreement with Mr. Santana setting forthprovided that any more favorable equity vesting provisions included in award agreements will control.
The Continuation Agreements, which have an indefinite term, provide that each named executive officer will receive severance payments and certain benefits in casethe event of histhe executive’s termination by the Company without “cause”cause (as defined)defined in the Continuation Agreements) or hisby the executive for good reason (as defined in the Continuation Agreements). The severance payments and benefits payable to each executive upon such termination asof employment will vary based on whether or not the termination of employment occurs during the period from the date of a resultchange in control (as defined in the Continuation Agreements) through the second anniversary of certain adverse changessuch date (the “Change in his job (commonly known as “good reason”Control Period”). Under this arrangement, ifIf such termination of employment does not occur during a Change in Control Period, the termination occurs other thanseverance payments and benefits will be as follows:
a lump sum cash severance payment equal to: (A) for “cause” or by Mr. Santana, for “good reason” (as defined), Mr. Santana will be entitled to severance benefits equal to 200% oftwo times the sum of his then-currentbase salary and target annual bonus; and (B) for each of the other named executive officers, the sum of (1) the named executive officer’s base salary plus 1/52 of the named executive officer’s base salary for each full year of the named executive officer’s service with the Company and (2) the named executive officer’s target annual bonus; provided that the amount in clause (1) will not exceed one and one-half times the named executive officer’s base salary (the “Cash Severance Payment”); a lump sum payment equal to: (A) for Mr. Santana, twenty-four times the full monthly premium cost to the Company of group medical, dental, vision, life, and long-term disability coverage for Mr. Santana; and (B) for each of the other named executive officers, the Company’s portion of the monthly premium cost of the named executive officer’s medical, dental and vision coverage multiplied by the number of full months of base salary that is represented by the base salary in the Severance Payment described above (the “Benefits Payment”); a pro rata portion of the named executive officer’s annual bonus for the year in which the termination date occurs based on actual performance of the Company and the number of days the named executive officer is employed during such year, payable at the same time and on the same terms as annual bonuses paid to other executives of the Company (the “Pro-Rated Annual Bonus”); a lump sum payment equal to: (A) $100,000 for Mr. Santana; and (B) $50,000 for each of the other named executive officers, for transition cost assistance (the “Transition Payment”); and certain minimum equity vesting requirements as follows: for Mr. Santana, full vesting, and for each of the other named executive officers, pro rata vesting (based on the portion of the vesting period that has elapsed as of the termination date of all Post-2021 Equity Grants (as defined in the Continuation Agreements), subject to actual performance results for the full performance period for any awards with performance-based vesting conditions, and provided that any such vested grants that are options or stock appreciation rights will remain exercisable for three years or until the end of the applicable term, if earlier. If such termination of employment occurs during a Change in Control Period, the severance payments and benefits will be similar to those described above but in some cases in larger amounts, as follows: the Cash Severance Payment will be equal to the sum of the named executive officer’s base salary and target annual bonus amount plus accrued compensationmultiplied by (A) for Mr. Santana, three; and continued medical(B) for each of the other named executive officers, two; the Benefits Payment will be equal to the applicable monthly benefits cost described above for two years. In eitherthe named executive officer multiplied by (A) for Mr. Santana, thirty-six; and (B) for each of the other named executive officers, twenty-four; the Pro-Rated Annual Bonus; the Transition Payment; and l2024 Proxy Statement for 2022 Annual Meeting | | / | 47
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case, he would also retain pro-rated participationthe minimum equity vesting provisions described above for Post-2021 Equity Grants, except the vesting for both Mr. Santana and the other named executive officers will be full, rather than prorated, performance-vesting awards will have performance goals deemed achieved at maximum levels, and the awards in any three-year long-term incentive plansall cases will be subject to the provisions of the Company (which will vest at the end2011 Stock Incentive Plan regarding treatment of the performance period based on actual performance results). For purposes of this arrangement, “cause” means (i) the willful and continued failure by Mr. Santana to substantially perform his duties to the Company; (ii) the willful or grossly negligent engaging by Mr. Santana in misconduct which is materially injurious to the Company, monetarily or otherwise; or (iii) the conviction of Mr. Santana for any felony or charge of moral turpitude. “Good reason” for this arrangement means (i) diminution of Mr. Santana’s duties, authority level or responsibilities; (ii) Mr. Santana being required to report to any person other than the Chairman of the Company; (iii) a material diminution of Mr. Santana’s annual compensation; or (iv) a failure to nominate Mr. Santana to the Wabtec board of directors. Had Mr. Santana’s employment terminated on December 31, 2021 without cause or for good reason under this arrangement, he would have been entitled to a cash severance payment in the amount of $6,029,050.
Death or Disability. If Mr. Santana’s employment is terminated due to his death or disability, he will receive his base salary through the date of termination, any unreimbursed business expenses, and any vested amounts or benefits under Wabtec’s benefit plans, including any benefits payable for death or disability under applicable plans or policies. If Mr. Santana had terminated his employment due to death at December 31, 2021, the value of the life insurance benefits payable under Wabtec’s plan to Mr. Santana would have been $1,000,000 or in the case of termination for disability at December 31, 2021, the value of the disability benefits under Wabtec’s plan to Mr. Santana would have been $300,000 annually.
By the Company for Cause; By Mr. Santana for any Reason. If Mr. Santana’s employment is terminated for cause (as defined) or he terminates his employment for any reason, the Severance Agreement will terminate without further obligations of the Company.
While Mr. Santana has also entered into the Employment Continuation Agreement referenced below, any benefits due to Mr. Santana under the Employment Continuation Agreement upon termination of employmentawards upon a change in control of the Company (i.e., depending on whether awards are assumed or potential changereplaced by the buyer in control shallthe transaction).
The severance payments and benefits are conditioned on the named executive officer signing and not revoking a general release of claims. The Continuation Agreements contain restrictive covenants, including non-competition and non-solicitation covenants during the named executive officer’s employment and for the one-year period following the named executive officer’s termination date, and confidentiality and non-disparagement covenants. Any amounts paid to a named executive officer under a Continuation Agreement will be reduced (but not below zero) by any amounts receivedto the maximum amount that can be paid without being considered an excess parachute payment under Internal Revenue Code Section 280G and subject to the Severance Agreement.excise tax under Internal Revenue Code Section 4999, but only if the net after-tax benefit of the reduced amount to the Executive is higher than the net after-tax benefit of the unreduced amount. EmploymentTermination Treatment in Equity Award AgreementsThe vesting and settlement of equity awards in various termination scenarios is subject to the terms of the underlying 2011 Stock Incentive Plan and the respective grant agreements, as well as the minimum vesting requirements of the Continuation Agreements with Certain Executive Officers
During 2021, Wabtec had in effect employment continuationdescribed above. The 2011 Stock Incentive Plan and grant agreements with certain senior executive officers, including the following named executive officers: Rafael Santana, John Olin and David DeNinno (each an “Agreement” and collectively, the “Agreements”). The purpose of the Agreements ismay provide for more favorable vesting conditions which apply to ensure that, in the event Wabtec is confronted with a situation that could result in a change in ownership or control of the Company, the named executive officers are provided certain financial assurancesthan required by the Continuation Agreements. The following summarizes treatment of equity awards for the named executive officers upon termination of employment or change in control (referred to enable themas a “Section 11 Event” in the 2011 Stock Incentive Plan):
| • | Death/Disability: Awards vest in full, subject to actual performance results for the full performance period for any performance units or other performance-vesting awards. |
| • | Retirement/Severance with Less Than 65 Retirement Points: A prorated portion of outstanding options and restricted shares or units will become vested on the executive’s next scheduled vesting date. Also, a pro-rated portion of performance units or other performance-vesting awards will remain outstanding and become vested at the end of the applicable performance period (based on actual performance results). For Mr. Santana, in case of severance, vesting will be treated as described below as if he had 65 or more retirement points (i.e., full, rather than prorated vesting). |
| • | Retirement/Severance with 65 or More Retirement Points: The entire unvested portion of outstanding options and restricted shares or units will continue to vest per their original vesting schedule, and the full amount of performance units or other performance-vesting awards will remain outstanding and become vested at the end of the applicable performance period (based on actual performance results). |
| • | Change in Control (No Severance): For awards granted before 2022, the 2011 Stock Incentive Plan provided full vesting upon the change in control event, with performance units or other performance-vesting awards earned at maximum. |
| • | Change in Control with Severance: The 2011 Stock Incentive Plan was amended in 2022 to remove automatic vesting upon a change in control. For awards granted in 2022 and later, if the awards remain outstanding (or are assumed or replaced by the surviving entity) following a change in control and the executive’s employment is terminated without cause or for good reason during the one-year period following such event, the awards will become fully vested, with performance units or other performance-vesting awards earned at maximum. If awards do not remain outstanding (and are not assumed or replaced by the surviving entity) following a change in control, the awards will become fully vested upon the change in control. |
“Severance” means a termination without cause or with good reason under the Continuation Agreements. Under the award agreements, “retirement” means a named executive officer’s termination of employment (other than due to performdeath, disability, or cause) if (i) the responsibilitiesnamed executive officer has given the Company at least one year’s advance written notice of the position without undue distractionintent to retire, and to exercise judgment without bias due to personal circumstances, since continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders. Under each Agreement, if the executive is employed on(ii) at the date on whichof termination of employment the named executive officer is at least age fifty-five (55) and has at least five (5) years of service. “Retirement points” means the sum of a changenamed executive officer’s age and years of control, as defined in the Agreements, occurs then the executive will be entitled to remain employed by Wabtec until the 24-month anniversaryservice. As of the change of control, subject to certain termination provisions. Each Agreement contains standard confidentiality and other restrictive covenants, including restrictions for a period of one year following terminationend of the executive’s employment on soliciting business or employees away from us or providing any services that may competelast fiscal year, with our business. During the employment period, the executive will (a) receive a base salary at a monthly rate at least equalrespect to the monthly salary paid to the executive immediately prior to the change of control, (b) be afforded the opportunity to receive a cash bonus (i) on terms and conditions no less favorable to the executive than the annual cash bonus opportunity made available to the executive for the fiscal year ended immediately prior to the change of control and (ii) in an amount not less than the target cash bonus amount for the executive in the fiscal year ending immediately prior to the change of control, (c) participate in all long-term incentive compensation programs for key executives and benefit plans at a level that is commensurate with the executive’s opportunity to participate in such plans immediately prior to the change of control, or if more favorable, at the level made available to the executive or other similarly situated officers at any time thereafter, (d) receive fringe benefits and office and support staff at a level that is commensurate with the executive’s benefits immediately prior to the change of control, or if more favorable, at the level made available to the executive or other similarly situated officers at any time thereafter, (e) receive expense reimbursement at a level that is commensurate with the executive’s benefits immediately prior to the change of control, or if more favorable, at the level made available to the executive thereafter and (f) be indemnified, duringNEOs, only Mr. DeNinno had 65 retirement points.
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TABLE OF CONTENTS Executive Compensation Tables
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and after his employment period, for claims arising fromAmounts of Potential Payments Upon Termination or out ofChange in Control
Consistent with SEC requirements, the executive’s performance as an officer, director or employee of Wabtec or any of its subsidiaries, or in any other capacity while serving atfollowing table shows the request of the Company, to the maximum extent permitted by applicable law and Wabtec’s governing documents. Wabtec is also required to maintain existing or comparable insurance policies covering such matters at a level of protectionestimated amounts that is no less than that afforded under the Company’s governing documents in effect immediately prior to the change of control. Death or Disability. If an executive’s employment is terminated after a change of control due to death or disability, the executive will receive only the executive’s base salary through the date of termination, any vested amounts or benefits under Wabtec’s benefit plans, including any benefits payable for death or disability under applicable plans or policies. If, after a change of control, any of the named executive officers had terminated employment due to death at December 31, 2021, the value of the life insurance benefits payable under Wabtec’s plan to such executive would have been: Mr. Olin $1,000,000 and Mr. DeNinno $938,000 or, in the case of termination for disability at December 31, 2021, the value of the disability benefits under Wabtec’s plan to such executive would have been Mr. Olin $300,000 and Mr. DeNinno $300,000 annually.
For Cause/Voluntary Termination. If, after a change of control, an executive’s employment is terminated by Wabtec for cause (as defined in the Agreements), or the executive voluntarily terminates their employment other than for good reason (as defined in the Agreements), the executive will receive only the executive’s base salary through the date of termination and any vested amounts or benefits under Wabtec’s benefit plans, including accrued but unpaid vacation. If, after a change of control Mr. Olin or Mr. DeNinno had been terminated by the Company for cause, or if Mr. Olin or Mr. DeNinno voluntarily terminated his employment other than for good reason, at December 31, 2021, no benefits would have been payable to either Mr. Olin or Mr. DeNinno.
Other thanwould have become vested upon the events described above, assuming such event had occurred on December 31, 2023. Amounts for Cause/Good Reason. If, after a change of control, an executive’s employment is terminated by Wabtec other than for cause or the executive terminates his employment for good reason the executive will receive (a) the executive’s base salary through the date of termination, (b) a cash amount equal to two times the sum of the executive’s annual base salary and the target cash bonus amount for the executive for the fiscal year ending immediately prior to the change of control, and (c) any vested benefits under Wabtec’s benefit plans, including benefits under the 2011 Stock Incentive Plan. The executive will also be entitled to continue participation in all of Wabtec’s employee and executive welfare and fringe plans until the earlier of the 24-month anniversary of the termination date and the date the executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer. The amounts described may be subject to reduction as may be necessary to avoid characterization of amounts as “excess parachute payments” under the Internal Revenue Code. (if a reduction would resultequity awards in the executive receiving a greater amount after taxes). Wabtec does not provide gross-up payments for excise taxes related to “excess parachute payments.” If, after a changetable are based on the average closing price (calculated by averaging the highest and lowest price) of control, anyour common stock on December 29, 2023 (the last trading day in 2023) of the three named executive officers had been terminated$126.99 per share, and in case of stock options as reduced by the Company other than for cause, or if the executive had terminated his employment for good reason, at December 31, 2021, the value of the benefit to such executive would have been: Mr. Santana $6,029,050, Mr. Olin $3,029,050, and Mr. DeNinno $2,279,050.
Potential Change of Control. If, after the occurrence of a potential change of control, as definedapplicable exercise price. Performance units are included in the Agreement,table assuming maximum performance.
Potential Payments Upon Termination and prior to a change of control, (a)(i) an executive’s employment is terminated by the Company other than for cause or by the executive for good reason or (ii) the Company terminates the Agreement and (b) a change of control, which also constitutes certain changes in ownership or effective control under Section 409A of the Code, as amended, occurs within one year of the termination, the executive will be deemed, solely for purposes of determining the executive’s rights under the Agreement, to have remained employed until the change of control and to have been terminated by the Company without cause immediately after the change of control. In such case, at December 31, 2021, the value of severance benefits to the executive would have been: Mr. Santana $6,029,050, Mr. Olin $3,029,050 and Mr. DeNinno $2,279,050.Change-in-Control Provisions1 Except with respect to Mr. Santana, Wabtec may terminate the Employee Continuation Agreements at any time prior to the occurrence of a change of control without liability, except as may arise in circumstances relating to a potential change of control. Neither Mr. Santana’s Continuation Agreement nor his Severance Agreement can be unilaterally terminated by the Company, and his Severance Agreement survives expiration of the Continuation Agreement provided that his employment has not terminated.
Mr. Santana | | | Continuation Agreement | | | | | | | | | | | | | | | | | | | | | Cash Severance Payment | | | 6,890,000 | | | 10,335,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Benefits Payment(2) | | | 42,201 | | | 63,302 | | | 0 | | | 0 | | | 0 | | | 0 | | | Prorated Annual Bonus(6) | | | 3,485,178 | | | 3,485,178 | | | 0 | | | 0 | | | 3,485,178 | | | 3,485,178 | | | Transition Payment | | | 100,000 | | | 100,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Equity Awards(3) | | | | | | | | | | | | | | | | | | | | | Performance Shares | | | 37,675,374 | | | 37,675,374 | | | 8,756,195 | | | 0 | | | 37,675,374 | | | 37,675,374 | | | Restricted Stock | | | 10,373,305 | | | 10,373,305 | | | 2,229,690 | | | 0 | | | 10,373,305 | | | 10,373,305 | | | Options | | | 479,774 | | | 479,774 | | | 479,774 | | | 0 | | | 479,774 | | | 479,774 | Mr. Olin | | | Continuation Agreement | | | | | | | | | | | | | | | | | | | | | Cash Severance Payment | | | 1,559,423 | | | 3,118,846 | | | 0 | | | 0 | | | 0 | | | 0 | | | Benefits Payment(2) | | | 18,017 | | | 36,033 | | | 0 | | | 0 | | | 0 | | | 0 | | | Prorated Annual Bonus(6) | | | 1,257,623 | | | 1,257,623 | | | 0 | | | 0 | | | 1,257,623 | | | 1,257,623 | | | Transition Payment | | | 50,000 | | | 50,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Equity Awards(3) | | | | | | | | | | | | | | | | | | | | | Performance Shares | | | 3,403,170 | | | 6,944,575 | | | 0 | | | 0 | | | 6,944,575 | | | 6,944,575 | | | Restricted Stock | | | 1,819,637 | | | 3,360,663 | | | 1,410,732 | | | 0 | | | 3,360,663 | | | 3,360,663 | | | Options | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | Mr. DeNinno | | | Continuation Agreement | | | | | | | | | | | | | | | | | | | | | Cash Severance Payment | | | 1,307,500 | | | 2,615,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Benefits Payment(2) | | | 18,017 | | | 36,033 | | | 0 | | | 0 | | | 0 | | | 0 | | | Prorated Annual Bonus(6) | | | 854,855 | | | 854,855 | | | 0 | | | 854,855 | | | 854,855 | | | 854,855 | | | Transition Payment | | | 50,000 | | | 50,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Equity Awards(3) | | | | | | | | | | | | | | | | | | | | | Performance Shares | | | 5,558,450 | | | 5,558,450 | | | 1,492,738 | | | 5,558,450 | | | 5,558,450 | | | 5,558,450 | | | Restricted Stock | | | 1,353,586 | | | 1,353,586 | | | 226,423 | | | 1,353,586 | | | 1,353,586 | | | 1,353,586 | | | Options | | | 81,626 | | | 81,626 | | | 81,626 | | | 81,626 | | | 81,626 | | | 81,626 | Mr. Schweitzer | | | Continuation Agreement | | | | | | | | | | | | | | | | | | | | | Cash Severance Payment | | | 1,439,957 | | | 2,879,913 | | | 0 | | | 0 | | | 0 | | | 0 | | | Benefits Payment(2) | | | 21,101 | | | 22,753 | | | 0 | | | 0 | | | 0 | | | 0 | | | Prorated Annual Bonus(6) | | | 1,025,795 | | | 1,025,795 | | | 0 | | | 0 | | | 1,025,795 | | | 1,025,795 | | | Transition Payment | | | 50,000 | | | 50,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Equity Awards(3) | | | | | | | | | | | | | | | | | | | | | Performance Shares | | | 2,686,625 | | | 3,235,451 | | | 1,593,471 | | | 0 | | | 3,235,451 | | | 3,235,451 | | | Restricted Stock | | | 461,567 | | | 1,126,147 | | | 175,627 | | | 0 | | | 1,126,147 | | | 1,126,147 | | | Options | | | 52,761 | | | 63,314 | | | 63,314 | | | 0 | | | 63,314 | | | 63,314 |
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TABLE OF CONTENTS Executive Compensation Tables
Mr. Gebhardt | | | Continuation Agreement | | | | | | | | | | | | | | | | | | | | | Cash Severance Payment | | | 1,286,058 | | | 2,572,115 | | | 0 | | | 0 | | | 0 | | | 0 | | | Benefits Payment(2) | | | 21,101 | | | 42,201 | | | 0 | | | 0 | | | 0 | | | | | | Prorated Annual Bonus(6) | | | 1,027,470 | | | 1,027,470 | | | 0 | | | 0 | | | 1,027,470 | | | 1,027,470 | | | Transition Payment | | | 50,000 | | | 50,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | Equity Awards(3) | | | | | | | | | | | | | | | | | | | | | Performance Shares | | | 2,147,700 | | | 3,390,146 | | | 914,095 | | | 0 | | | 3,390,146 | | | 3,390,146 | | | Restricted Stock | | | 1,760,244 | | | 2,316,933 | | | 2,043,396 | | | 0 | | | 2,316,933 | | | 2,316,933 | | | Options | | | 41,622 | | | 49,946 | | | 49,946 | | | 0 | | | 49,946 | | | 49,946 |
2021 Severance of Mr. DuganThe Company terminated Mr. Dugan’s employment effective as of December 31, 2021 in accordance with the Transition Service Agreement dated as of September 9, 2021. In connection with that termination, and in consideration for a release of claims, the Company provided Mr. Dugan with the following severance benefits: (i) cash severance in the amount of $2,520,000 (two times the sum of his annual salary and his targeted 2021 bonus, as provided in his employment continuation agreement) paid as a lump sum on December 31, 2021, (ii) a lump sum of $50,000 paid on December 31, 2021 for certain additional costs; (iii) continued participation in Wabtec’s healthcare plans for 24 months, valued at $29,050, and (iv) accelerated vesting of his outstanding stock options and restricted stock awards and eligibility to receive a pro-rated award of performance units. See the Grants of Plan-Based Awards Table on page 44 for the incremental accounting charges related to the additional equity vesting.Under the 2011 Stock Incentive Plan, in instances of disability or death during employment or a Section 11 Event as defined in the Plans, respectively, which generally includes a change of control of Wabtec, all outstanding options become exercisable even if not otherwise exercisable. In addition, in the case of a Section 11 Event, all outstanding options are subject to being cashed out automatically based on the difference between the option exercise price and the value of Wabtec stock in connection with the Section 11 Event. In instances of a Section 11 Event only, all restrictions on restricted stock or restricted stock units lapse. For performance units, in instances of a Section 11 Event, all performance units are deemed to have been fully earned regardless of the attainment of performance targets. The following table provides the value of such benefits for each of our named executive officers (other than Mr. Dugan who separated during 2021) as if the applicable event occurred on December 31, 2021:
| | Mr. Santana | | | | | | | | | | | | | Options | | | $924,773 | | | $924,773 | | | $924,773 | | | | Restricted Stock | | | $6,339,974 | | | $6,339,974 | | | $6,339,974 | | | | Performance Units(3) | | | $8,382,409 | | | $8,382,409 | | | $18,575,267 | | | | Mr. Olin | | | | | | | | | | | | | Restricted Stock | | | $1,021,860 | | | $1,021,860 | | | $1,021,860 | | | | Mr. DeNinno | | | | | | | | | | | | | Options | | | $414,806 | | | $414,806 | | | $414,806 | | | | Restricted Stock | | | $1,386,306 | | | $1,386,306 | | | $1,386,306 | | | | Performance Units(3) | | | $2,527,196 | | | $2,527,196 | | | $4,328,814 | | | | Mr. Schweitzer | | | | | | | | | | | | | Options | | | $93,413 | | | $93,413 | | | $93,413 | | | | Restricted Stock | | | $845,618 | | | $845,618 | | | $845,618 | | | | Performance Units(3) | | | $1,308,395 | | | $1,308,395 | | | $2,643,649 | | | | Mr. Gebhardt | | | | | | | | | | | | | Options | | | $35,288 | | | $35,288 | | | $35,288 | | | | Restricted Stock | | | $1,681,026 | | | $1,681,026 | | | $1,681,026 | | | | Performance Units(3) | | | $227,203 | | | $227,203 | | | $911,387 | |
(1)
| ShouldThe table assumes the named executive officer die or become permanently disabled, the unvested portionevent (termination, death, disability, CIC) occurs as of optionsDecember 29, 2023 and restricteda stock will become immediately vested upon such termination. Performance shares will vest on a pro-rata basis based on the time the participant remained employed during the performance period. For purposeprice of this table, performance units are included assuming maximum performance results.$126.99. |
(2)
| Our 2011 Stock Incentive Plan does not provideThe Benefits Payment represents: for gross-up payments inMr. Santana, the eventfull cost of an excise tax liability upon a change of control. However, under our Agreements, payments to an employee upon a change of control may be subject to limitations inall medical, dental, vision, disability and life insurance benefits; for all other NEO’s, the event that an excise tax liability would be triggered.employer provided cost for medical, dental and vision. |
(3)
| AssumesThe Performance Awards reflect unvested awards for the performance period: 2021-2023, 2022-2024, and 2023-2025. The value included for the 2021- 2023 Performance Awards reflect settlement at 145.3% of target. The 2022-2024 and 2023-2025 awards are assumed to settle at maximum numberpayout of units200%. The Restricted Stock and Options reflect unvested awards as summarized in the Outstanding Equity Awards section. |
(4)
| The value of Equity Awards for termination without cause and resignation for good reason are paid and includes units which were vestedcalculated as of December 31, 2021 but were2023, however the final settlement is not yet paidaccelerated and occurs according to participants.the timing in the awards agreements. |
In March 2022 the Company amended the 2011 Stock Incentive Plan to replace automatic vesting of awards upon a Section 11 Event with so-called “double trigger” vesting if awards remain outstanding following a Section 11 Event. If awards remain outstanding (or are assumed or replaced by the surviving entity) following a Section 11 Event and the participant’s employment is terminated without “cause” or for “good reason” (in each case, as defined in the award agreement) during the one-year period following such event, the awards will become fully vested. If awards do not remain outstanding (and are not assumed or replaced by the surviving entity) following a Section 11 Event, the awards will become fully vested upon a Section 11 Event.
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TABLE OF CONTENTS
(5)
| This scenario does not include termination of employment and strictly includes the value of single trigger vesting related to pre-2022 Equity Awards. |
(6)
| The Prorated Annual Bonus reflects the actual bonus amounts earned for 2023 and paid in March 2024. |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of SEC Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Santana, our Chief Executive Officer. For 2021,2023, our last completed fiscal year: the annual total compensation of our median employee of our company (other than our CEO) was $45,266;$48,924; and | • | the annual total compensation of our CEO, as reported in the Summary Compensation Table presented on page 4261, was $11,027,238.$15,493,240. |
Based on this information, for 2021,2023, the ratio of the annual total compensation of Mr. Santana, our Chief Executive Officer, to the median of the annual total compensation of all employees was approximately 244317 to 1. To identify the median employee among of all our employees (excluding the CEO), as well as to determine the annual total compensation of the “median employee” for this purpose, the methodology and the material assumptions, adjustments, and estimates that we used were as follows: We selected December 31, 20212023 as the date upon which we would identify the median employee. We determined that, as of December 31, 2021,2023, our employee population for pay ratio disclosure purposes consisted of approximately 25,394 individuals.28,020 individuals (excluding contingent workers and 825 individuals who became our employees as the result of the LKZ acquisition that closed in December 2023). We did not use any statistical sampling techniques. To identify the median employee from our employee population, we used total target cash compensation reflected in our payroll records for those employees. In making these determinations, we annualized the compensation of all permanent employees who were hired in 20212023 but did not work for us or our consolidated subsidiaries for the entire fiscal year. We did not make any cost-of-living adjustments in identifying the median employee. 68 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Executive Compensation Tables
With respect to the annual total compensation of the median employee, we identified and calculated the elements of such employee’s compensation for 20212023 in accordance with the requirements of Item 402(c)(2)402I(2)(x) of SEC Regulation S-K, resulting in annual total compensation of $45,266.$48,924. We did not otherwise adjust or annualize the median employee’s or the CEO’s compensation for purposes of determining the pay ratio noted above The CEO pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodologies and assumptions described above. SEC rules for identifying the median employee and determining the CEO pay ratio permit companies to employ a wide range of methodologies, estimates and assumptions. As a result, the CEO pay ratios reported by other companies, which may have employed other permitted methodologies or assumptions and which may have a significantly different work force structure from ours, are likely not comparable to our CEO pay ratio. l2024 Proxy Statement for 2022 Annual Meeting | | / | 51
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TABLE OF CONTENTS Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information about our approach to rewarding our NEOs in a “pay for performance” manner for accomplishment of pre-defined business goals and objectives, refer to the Compensation Discussion and Analysis section of this Proxy Statement. 2023 Pay Versus Performance Table (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | 2023 | | | $15,493,240 | | | $26,664,494 | | | $3,457,624 | | | $5,595,542 | | | $186 | | | $211 | | | $815 | | | $5.92 | 2022 | | | $11,685,472 | | | $14,962,045 | | | $2,629,586 | | | $3,049,535 | | | $131 | | | $133 | | | $633 | | | $4.86 | 2021 | | | $11,027,238 | | | $15,961,883 | | | $3,806,454 | | | $3,565,170 | | | $120 | | | $150 | | | $558 | | | $4.26 | 2020 | | | $11,044,419 | | | $9,083,133 | | | $2,847,857 | | | $1,487,328 | | | $95 | | | $120 | | | $414 | | | $3.79 |
1
| The dollar amounts reported in column (b) are the amounts of total compensation reported for Rafael Santana (our Principal Executive Officer ”PEO“) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Executive Compensation Tables—Summary Compensation Table.” |
The following table provides information concerning the compensation of our non-employee directors for the period January 1, 2021 through December 31, 2021:
| | Albert J. Neupaver, Chair | | | $310,000 | | | $160,072 | | | $470,072 | | | | Lee Banks | | | $110,000 | | | $160,072 | | | $270,072 | | | | Byron Foster | | | $91,667 | | | $133,342 | | | $225,009 | | | | Lee B. Foster, II (3) | | | $160,000 | | | $160,072 | | | $320,072 | | | | Linda A. Harty | | | $130,000 | | | $160,072 | | | $290,072 | | | | Michael W. D. Howell | | | $110,000 | | | $160,072 | | | $270,072 | | | | William E. Kassling | | | $110,000 | | | $160,072 | | | $270,072 | | | | Brian P. Hehir | | | $130,000 | | | $160,072 | | | $290,072 | | | | Ann Klee | | | $110,000 | | | $160,072 | | | $270,072 | |
(1)
2
| ReflectsThe dollar amounts reported in column (c) represent the aggregateamount of “compensation actually paid” to Mr. Santana, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Santana during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Santana’s total compensation for each year to determine the compensation actually paid: |
2023 | | | $15,493,240 | | | $(10,655,185) | | | $21,826,440 | | | $26,664,494 | 2022 | | | $11,685,472 | | | $(8,200,042) | | | $11,476,615 | | | $14,962,045 | 2021 | | | $11,027,238 | | | $(7,201,548) | | | $12,136,195 | | | $15,961,883 | 2020 | | | $11,044,419 | | | $(5,832,485) | | | $3,871,198 | | | $9,083,133 |
a
| The grant date fair value dollar amount calculated in accordance with ASC 718 related toof equity awards represents the awardstotal of stock to the directors under the 1995 Non-Employee Directors’ Fee and Stock Option Plan. For the assumptions usedamounts reported in the calculation of this amount under ASC 718, see Note 12 of“Stock Awards” and “Option Awards” columns in the Notes to Consolidated Financial Statements in Wabtec’s Annual Report on Form 10-KSummary Compensation Table for the year ended December 31, 2021.applicable year. |
(2)
b
| The annualequity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the $160,072 stock retainer was made on May 19, 2021, with each non-employee director being granted 2,060 restricted shares of Wabtec common stock with a grant datefollowing: (i) the year-end fair market value of $77.705 per share. Mr. Faiveley retired fromany equity awards granted in the Boardapplicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to this grant and thereforethe vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not receivematerially differ from those disclosed at the time of grant. Mr. Byron Foster was granted 1,662 restricted shares of Wabtec common stock with a grant date fair market value of $80.23 per share upon joiningThe amounts deducted or added in calculating the Board of Directors on July 8, 2021.equity award adjustments are as follows: |
(3)
| Mr. Lee Foster and Mr. Howell elected to defer 100% of the stock retainer. |
Each non-employee director who remained in service after the May 2021 annual meeting receives an annual cash retainer of $110,000 and an annual stock retainer of $160,000 for their services as a director, which includes all meeting attendance. In addition, our Chair receives an additional annual retainer of $200,000, our non-employee Lead Independent Director receives an additional annual retainer of $30,000 and our committee chairs receive additional annual retainers as follows: Compensation Committee and Audit Committee Chairpersons each receive $20,000, and the Nominating and Governance Committee Chairperson receives $15,000. All directors are reimbursed for their out of pocket expenses incurred in connection with attendance at meetings and other activities related to the board or its committees.70 Each non-employee director was granted 2,060 restricted shares of Wabtec common stock based on the fair market value of Wabtec stock on May 19, 2021 ($77.705). Mr. Byron Foster was granted 1,662 restricted shares of Wabtec common stock with a grant date fair market value of $80.23 per share upon joining the Board of Directors on July 8, 2021. If a director voluntarily resigns or is otherwise terminated within 12 months from the grant of the restricted shares, the director will forfeit the shares.
The Company offers a Deferred Compensation Plan for executive officers and non-employee directors. Under the terms of the plan, eligible directors may defer the annual stock and/or cash retainer, provided that any deferral of the stock retainer will be subject to the same vesting and forfeiture conditions as if the stock retainer had not been deferred. Deferred amounts, including any applicable earnings credited on the deferrals, will be paid out to the director following his termination of service with the Board. During 2021, Mr. Lee Foster and Mr. Howell elected to defer 100% of the stock retainer.
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TABLE OF CONTENTS 2023 | | | $14,084,958 | | | $7,765,458 | | | $— | | | $(74,368) | | | $— | | | 50,392 | | | $21,826,440 | 2022 | | | $9,319,998 | | | $2,184,162 | | | $— | | | $(70,543) | | | $— | | | $42,998 | | | $11,476,615 | 2021 | | | $9,065,366 | | | $2,976,341 | | | $— | | | $61,792 | | | $— | | | $32,696 | | | $12,136,195 | 2020 | | | $5,441,403 | | | $(1,379,240) | | | $— | | | $(221,467) | | | $— | | | $30,502 | | | $3,871,198 |
3
| The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Santana, who has served as our CEO since July 2019) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Santana) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, John Olin, David L. DeNinno, Pascal Schweitzer, and Eric Gebhardt; (ii) for 2022, John Olin, David L. DeNinno, Pascal Schweitzer, and Eric Gebhardt; (iii) for 2021, John Olin, David L. DeNinno, Pascal Schweitzer, Eric Gebhardt, Patrick D. Dugan; and for 2020, Patrick D. Dugan, David L. DeNinno, Pascal Schweitzer, Nicole Theophilus, Albert J. Neupaver, and Scott E. Wahlstrom. |
4
| The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Santana), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Santana) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Santana) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
2023 | | | $3,457,624 | | | $(1,621,522) | | | $3,759,440 | | | $5,595,542 | 2022 | | | $2,629,586 | | | $(1,250,011) | | | $1,669,960 | | | $3,049,535 | 2021 | | | $3,806,454 | | | $(1,917,786) | | | $1,676,503 | | | $3,565,170 | 2020 | | | $2,847,857 | | | $(1,531,362) | | | $170,833 | | | $1,487,328 |
a
| The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
2023 | | | $2,583,295 | | | $1,173,276 | | | $— | | | ($3,079) | | | $— | | | $5,948 | | | $3,759,440 | 2022 | | | $1,420,738 | | | $244,469 | | | $— | | | $290 | | | $— | | | $4,463 | | | $1,669,960 | 2021 | | | $1,016,773 | | | $373,430 | | | $175,446 | | | $104,296 | | | $— | | | $6,558 | | | $1,676,503 | 2020 | | | $1,409,472 | | | $(905,176) | | | $55,683 | | | $(399,355) | | | $— | | | $10,209 | | | $170,833 |
5
| Cumulative TSR for the Company is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period based on a deemed fixed investment of $100 at the beginning of such period. |
TABLE OF CONTENTS 6
| Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is our peer group of manufacturing companies which consists of the following publicly traded companies: AGCO, AMETEK, Borg Warner, CSX, Dover, Emerson Electric, Fortive Corporation, Greenbriar Companies, Howmet Aerospace Inc., Illinois Tool Works, Ingersoll-Rand, Norfolk Southern, Oshkosh, Parker-Hannifin Corporation, Rockwell Automation, Terex, Textron, Trinity and Xylem. There was no change from the group used for 2022. Howmet Aerospace Inc. was formerly known as Arconic, Inc. (included in the 2022 group) and changed its name as the result of a separation of its business. |
7
| The dollar amounts reported represent the amount of net income excluding non-controlling interest reflected in the Company’s audited financial statements for the applicable year. |
8
| EPS means our “adjusted earnings per diluted share” calculated as U.S. GAAP earnings per diluted share, adjusted for non-cash amortization expense and certain restructuring costs. |
Most Important Performance Measures for 2023 As described in greater detail in the Compensation Discussion and Analysis, the Company’s executive compensation program includes linking pay of our NEOs to Company, business unit and individual performance as a key objective. The metrics that the Company uses for both our annual cash incentive awards and for performance units that are part of our long-term incentive compensation awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our long-term stockholders. For 2023, the most important financial performance measures used by the Company to link executive compensation actually paid to the NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows: EPS | Annual Cash Conversion | Cumulative Cash Conversion | Return on Invested Capital | Relative TSR |
Relationship of Compensation Actually Paid to Certain Measures As described in more detail in the Compensation Discussion and Analysis, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the 2023 Pay Versus Performance Table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the 2023 Pay Versus Performance Table. We believe the table above shows the alignment between compensation actually paid to the NEOs and the Company’s performance, consistent with our compensation philosophy as described in our Compensation Discussion and Analysis. Specifically, a large portion of the NEOs’ compensation is tied to the value of our stock and, as such, the CEO and non-CEO “compensation actually paid” each year was aligned with our TSR performance and increased when our TSR performance increased, but declined when our TSR performance declined. The charts below show, for the past four years, the relationship of the Company’s TSR relative to its peers as well as the relationship between the CEO and non-CEO “compensation actually paid” and (i) the Company’s TSR and the Company’s Peer Group’s TSR; (ii) the Company’s net income; and (iii) EPS. 72 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS 74 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Proposal
3 | Proposal 3—Ratify Independent Registered Public Accounting Firm | |
The Audit Committee has appointed Ernst & Young LLP as the independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2022.2024. Although you are not required to ratify this appointment, we ask that you do. If you do not, the Audit Committee will reconsider its choice.take the vote into consideration when determining whether or not to retain Ernst & Young LLP. Ernst & Young LLP served as our independent registered public accounting firm for the fiscal year ended December 31, 2021. 2023. and has served as the Company’s independent registered public accounting firm since 2002. Even if the selection of Ernst & Young LLP is ratified by stockholders, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting to answer appropriate questions and make a statement if the representative so desires. Vote Required This proposal is adopted if a majority of the shares present in person or by proxy vote for the proposal. Because the total shares voted “for,” “against,” or “abstain” are counted to determine the minimum votes required for approval, if you abstain from voting, it has the same legal effect as if you vote against. If a broker limits the number of shares voted on the proposal on its proxy card or indicates that the shares represented by the proxy card are not being voted on the proposal, it is considered a broker non-vote. Broker non-votes are not counted as a vote or used to determine the favorable votes required to approve the proposal. | ✔ | | | The Board recommends you vote FOR this proposal. |
2024 Proxy Statement | / | | 75 |
TABLE OF CONTENTS Proposal 3: Ratify Independent Registered Public Accounting Firm
Fees to the Independent Registered Public Accounting Firm The following table shows the aggregate fees for services provided by Ernst & Young LLP for the fiscal years ended December 31, 20212023 and December 31, 2020:2022: | | Audit Fees | | | $7,559,964 | | | $7,547,210 | | | | Audit-Related Fees | | | $470,023 | | | $37,333 | | | | Tax Fees | | | $711,549 | | | $1,014,725 | | | | All Other Fees | | | $0 | | | $0 | | | | Total Fees | | | $8,741,536 | | | $8,599,268 | |
Audit Fees | | | $8,483,014 | | | $8,151,652 | Audit-Related Fees | | | $530,467 | | | $115,247 | Tax Fees | | | $460,914 | | | $93,676 | All Other Fees | | | $0 | | | $0 | Total Fees | | | $9,474,395 | | | $8,360,575 |
Audit fees include fees for audit services in connection with Wabtec’s annual financial statements, including the audit of internal control over financial reporting, the reviews of Wabtec’s quarterly reports on Form 10-Q, comfort letters, consents, and other services relating to Securities and Exchange Commission filings and statutory audits required internationally. Audit-related fees include fees for services performed within the respective year primarily related to due diligence in connection with mergers and acquisitions and non-financial statement audits. Tax fees include fees for services related to tax compliance, including tax return preparation, tax advice and tax planning. l Proxy Statement for 2022 Annual Meeting | | | 53
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TABLE OF CONTENTS
This category includes the aggregate fees billed for products and services provided by the independent accountants that are not reported above under “Audit Fees,” “Audit-Related Fees,” or “Tax Fees.” The Audit Committee considered the compatibility of the non-audit-related services provided by and fees paid to Ernst & Young LLP in 2020 and 20212023 and determined that such services and fees are compatible with the independence of Ernst & Young LLP. Audit Committee Pre-Approval Policies and Procedures The Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm to assure that the provision of such services does not impair the independent registered public accounting firm’s independence. The annual audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. All other permitted services, including those described under “Fees to the Independent Registered Public Accounting Firm” above are also pre- approvedpre-approved by the Audit Committee. The Audit Committee has delegated its pre-approval authority to its Chair if the fee to be approved does not exceed $100,000$500,000 as well as adjustments to any general pre-approval fee threshold up to $50,000. All services provided by Ernst & Young LLP for fiscal year 20212023 were pre-approved by the Audit Committee. 76 | 54
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TABLE OF CONTENTS Proposal 3: Ratify Independent Registered Public Accounting Firm
|
Pursuant toAudit Committee ReportThe Audit Committee is responsible for reviewing the terms of Wabtec’s amended and restated by-laws, William E. Kassling will be nominated to be a memberCompany’s financial reporting process on behalf of the Board so long as he is able and willing to serve and beneficially owns a certain percentage of Wabtec common stock. Ann Klee and Rafael Santana joined the Board in 2019 in connection with the acquisition of GE’s transportation business. Pursuant to the Severance Agreement between the Company and Mr. Santana, the failureDirectors. Management of the Company has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. In the performance of its oversight function, the Audit Committee meets with management periodically to nominate Mr. Santanaconsider the adequacy of the Company’s internal controls and the objectivity of its financial reporting. The Audit Committee meets privately with the independent registered public accountants, who have unrestricted access to the board of directors may constitute “Good Reason” for Mr. Santana to terminate his employment and be entitled to compensation as set forth therein.
Related Party Transaction Approval Policy. Our board of directors has adopted written Related Party Transaction Policies and Procedures, a copy of which is available on Wabtec’s website at http://www.wabteccorp.com. Under this policyAudit Committee. Specifically, the Nominating and Corporate Governance Committee must review and approve in advance all related party transactions that are required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC. If advance approval is not feasible, the Nominating and Corporate Governance Committee must approve or ratify the transaction at its next scheduled meeting. Transactions required to be disclosed pursuant to Item 404 include any transaction between Wabtec and any officer, director or certain affiliates of Wabtec that has a value in excess of $120,000. In reviewing related party transactions, the Nominating and Corporate Governance Committee evaluates all material facts about the transaction, including the nature of the transaction, the benefit provided to Wabtec, whether the transaction is on commercially reasonable terms that would have been available from an unrelated third-party and any other factors necessary to its determination that the transaction is fair to Wabtec.
During 2021, the Company’s GE Transportation business sourced items from Mecco Partners LLC in the amount of $141,278. Mr. Lee Foster, a director of Wabtec, and his immediate family members hold a one-third ownership interest in Mecco in the aggregate. Mr. Lee Foster’s interest in this transaction is solely in his capacity as an owner of Mecco.
During 2021, Wabtec sourced approximately $8.4 million worth of goods from Parker-Hannifin and purchased less than $120,000 of goods from Parker Hannifin. Mr. Banks’ interest in this transaction is solely in his capacity as an executive officer of Parker-Hannifin.
During 2021, Mr. Byron Foster, the Chief Commercial Officer of Dana Incorporated, joined the Wabtec Board. During 2021, Wabtec sourced approximately $19.3 million worth of goods from Dana Incorporated. Mr. Byron Foster’s interest in this transaction is solely in his capacity as an executive officer of Dana Incorporated.
For each of the aforementioned transactions, the Board’s Nominating and Corporate GovernanceAudit Committee has reviewed and approveddiscussed with management and the transaction.independent registered public accountants the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2023.
The Audit Committee has also discussed with the independent registered public accountants the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission. Furthermore, the Audit Committee received and reviewed the written disclosures and the letter from the independent registered public accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and have discussed with the independent registered public accountants their independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that Wabtec’s audited financial statements, as of and for the fiscal year ended December 31, 2023, be included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2023, to be filed with the Securities and Exchange Commission. Respectfully submitted, The Audit Committee Brian P. Hehir (Chair)
Beverley A. Babcock
Byron S. Foster
Linda A. Harty l2024 Proxy Statement for 2022 Annual Meeting | | / | 55
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TABLE OF CONTENTS Director and Executive Officer Stock Ownership Under the proxy rules of the SEC, a person beneficially owns Wabtec common stock if the person has the power to vote or dispose of the shares, or if such power may be acquired, by exercising options or otherwise, within 60 days. The table below shows the number of shares of Wabtec common stock beneficially owned as of January 31, 2024 by our directors, nominees for director, Chief Executive Officer, Chief Financial Officer and the other named executive officers, and the directors and executive officers as a group. Each person has sole voting power and sole dispositive power with respect to the shares listed unless indicated otherwise. No directors or executive officers have pledged shares of Wabtec common stock. Rafael Santana | | | 165,216(1)(2) | | | * | John Olin | | | 39,014(1) | | | * | David L. DeNinno | | | 91,493(1)(2) | | | * | Pascal Schweitzer | | | 29,845(1)(2) | | | * | Eric Gebhardt | | | 24,788(1)(2) | | | * |
Beverley A. Babcock | | | 1,857(5) | | | * | Lee C. Banks | | | 10,715(1) | | | * | Byron S. Foster | | | 5,336(1) | | | * | Linda A. Harty | | | 11,869(1) | | | * | Brian P. Hehir | | | 32,735(1)(3) | | | * | William E. Kassling | | | 753,279(1)(4) | | | * | Ann R. Klee | | | 9,691(1) | | | * | Albert J. Neupaver | | | 678,104(1)(2) | | | * | Directors and Executive Officers as a Group (24 persons) | | | 1,999,717(1)(2) | | | 1.1% |
*
| Less than 1%. Note that all Percent of Class calculations are based on the issued and outstanding shares of Wabtec common stock as of the March 20, 2024 record date. |
1
| Includes restricted shares as follows: Mr. Santana – 74,608; Mr. Olin – 26,464, Mr. DeNinno – 10,659; Mr. Schweitzer – 4,256, and Mr.Gebhardt – 21, 513. Each other non-employee director held 1,857 restricted shares, and all directors and executive officers as a group – 196,052. The restricted stockholders have sole voting power with respect to the restricted shares but do not have sole or shared dispositive power until the restricted shares vest. |
2
| Includes options that are exercisable on or within 60 days of January 31, 2023 as follows: Mr. Santana – 68,833; Mr. DeNinno – 25,958; Mr. Schweitzer – 7,716; Mr. Gebhardt – 3,275; and Mr. Neupaver – 82,692; and all directors and executive officers as a group – 211,988. |
3
| Includes 28,535 shares owned by Mr Hehir. Also includes 4,200 shares held by the Brian P. Hehir and Janet S. Hehir Foundation for which Mr. Hehir serves as a trustee. |
4
| Includes 78,345 shares owned by Mr. Kassling. Also includes 671,654 shares owned by Davideco, a Delaware corporation, and 3,280 shares owned by Mr. Kassling’s wife. Mr. Kassling disclaims beneficial ownership of the shares held by his wife. |
5
| Does not include 1,550 shares which have been deferred. |
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TABLE OF CONTENTS Security Ownership of Certain Beneficial Owners The following table shows stockholders who are known to Wabtec to be beneficial owners of more than 5% of Wabtec’s common stock as of March 20, 2024. The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355 | | | 20,014,239 | | | 11.1% | BlackRock, Inc.
50 Hudson Yards
New York, NY 10001 | | | 12,015,588 | | | 6.7% | Wellington Management Group, LLP
280 Congress Street
Boston, MA 02210 | | | 9,760,215 | | | 5.4% | T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202 | | | 9,026,373 | | | 5% |
1
| Under SEC regulations, a person who has or shares voting or investment power with respect to a security is considered a beneficial owner of the security. Voting power is the power to vote or direct the voting of shares, and investment power is the power to dispose of or direct the disposition of shares. Unless otherwise indicated in the other footnotes below, each person has sole voting power and sole investment power as to all shares listed opposite such person’s name. |
2
| Based solely upon the Schedule 13G/A filed February 13, 2024, The Vanguard Group has sole dispositive power with respect to 19,258,382 shares, shared dispositive power with respect to 755,857 shares, and shared voting power with respect to 224,923 shares, and sole voting power with respect to zero shares. |
3
| Based solely upon the Schedule 13G/A filed February 6, 2024, Blackrock, Inc. has sole dispositive power with respect to 12,015,588 shares, sole voting power with respect to 10,641,948 shares, and shared voting or dispositive power with respect to zero shares. |
4
| Based solely upon the Schedule 13G/A filed February 8, 2024, Wellington Management Group LLP has shared dispositive power with respect to 9,760,215 shares, shared voting power with respect to 8,493,434 shares, and sole voting or dispositive power with respect to zero shares. |
5
| Based solely upon the Schedule 13G/A filed February 14, 2024, T Rowe Price Associates, Inc. has sole voting power with respect to 4,590,180 shares, sole dispositive power with respect to 9,024,635 shares and shared voting or dispositive power with respect to zero shares. |
TABLE OF CONTENTS Questions and Answers Relating to the Annual Meeting
Questions and Answers Relating to the
Annual Meeting We have provided you this booklet and proxy materials on or about April 4, 2024 because the Board of Directors of the Company is soliciting your proxy to vote at the Company’s 2024 Annual Meeting of stockholders. Who is entitled to vote? Holders of our common stock as of the close of business on March 20, 2024, the record date for this Annual Meeting (the “Record Date”), may vote at the Annual Meeting. As of the Record Date, there were 176,822,250 shares of our common stock outstanding. Stockholders are not permitted to cumulate votes with respect to the election of directors. Each share of common stock is entitled to one vote for each director nominee and on each proposal. Registered Stockholders. If shares of our common stock are registered directly in your name with our transfer agent, you are considered a “registered stockholder” with respect to those shares and the Notice was provided to you directly by us. As the registered stockholder, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote live at the Annual Meeting. Beneficial Owners. If you hold shares of our common stock in a brokerage account or by a bank or other nominee, you are considered to be the “beneficial owner” of shares that are held in “street name,” and the Notice was forwarded to you by your broker or nominee, who is considered the registered stockholder with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares. Beneficial owners are also invited to attend the Annual Meeting. However, since a beneficial owner is not the stockholder of record, you may not vote your shares of our common stock live at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy. If you request a printed copy of our proxy materials by mail, your broker, bank or other nominee will provide a voting instruction form for you to use. What do I need to be able to attend the Annual Meeting online? We will be hosting our Annual Meeting via live webcast only. Any stockholder can attend the Annual Meeting live online at www.virtualshareholdermeeting.com/WAB2024. The webcast will open at 11:15 a.m. Eastern Time on May 16, 2024, and the meeting will start shortly thereafter at 11:30 a.m. Eastern Time. Stockholders may vote and ask questions while attending the Annual Meeting online. In order to be able to attend the Annual Meeting, you will need the 16-digit control number, which is located on your Notice or proxy card (if you received a printed copy of the proxy materials). How many votes are needed for approval of each proposal? Proposal 1. As required by Wabtec’s amended and restated by-laws, each director is to be elected by a majority of votes cast with respect to that director’s election. Each stockholder will have one vote per share to vote for each Director nominee. Proposal 2: The approval of Proposal 2 requires a favorable vote of a majority of the shares present and entitled to vote on the Proposal. Proposal 3: The approval of Proposal 3 requires a favorable vote of a majority of the shares present and entitled to vote on the Proposal. 80 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Questions and Answers Relating to the Annual Meeting
Approval of any other matter that properly comes before the Annual Meeting requires the favorable vote of a majority of shares present and entitled to vote on the matter unless the matter requires more than a majority vote under statute or our amended and restated by-laws. We do not expect any business to come before the Annual Meeting other than the proposals described in this Proxy Statement. Abstentions and broker non-votes are not counted for purposes of the election of directors. For all other matters, an abstention will have the same effect as a vote against the proposal. If your shares are held by a broker, the broker will ask you how you want your shares to be voted. If you give the broker instructions, your shares will be voted as you direct. If you do not give instructions, one of two things can happen, depending on the type of proposal. For the ratification of the independent auditor (Proposal 3), the broker may vote your shares in its discretion. For all other proposals, the broker may not vote your shares at all if you do not give instructions, and such broker non-votes will have no effect on the outcome of the vote with respect to such proposals. What is the quorum requirement? A quorum is the minimum number of shares required to be present at the Annual Meeting to properly hold an annual meeting of stockholders and conduct business under our amended and restated by-laws and Delaware law. The presence, in person at the virtual meeting or by proxy, of a majority of the issued and outstanding shares of our common stock entitled to vote on the Record Date will constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are counted as shares present and entitled to vote for purposes of determining a quorum. As of the Record Date, March 20, 2024, we had 176,822,250 shares outstanding. How do I vote? If you are a registered stockholder, there are four ways to vote: | | | | | | By Internet (Before the Annual Meeting): You may vote over the Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on May 15, 2024 or until 11:59 p.m. Eastern Time on May 13, 2024 if you hold your shares in a Plan. You will need the 16-digit control number included on your Notice or proxy card (if you received a printed copy of the proxy materials); | | | | (2) | | | By Telephone: You may vote by toll-free telephone at 1-800-690-6903, until 11:59 p.m. Eastern Time on May 15, 2024 or until 11:59 p.m. Eastern Time on May 13, 2024 if you hold your shares in a Plan. You will need the 16-digit control number included on your Notice or proxy card (if you received a printed copy of the proxy materials); | | | | (3) | | | By Mail: If you received printed proxy materials, you may submit your vote by completing, signing and dating each proxy card received and returning it promptly in the postage-paid envelope we have provided. Proxies submitted by U.S. mail must be received before the start of the Annual Meeting; or | | | | (4) | | | By Internet (During the Annual Meeting): You may vote during the Annual Meeting by going to www.virtualshareholdermeeting.com/WAB2024. You will need the 16-digit control number included on your Notice or proxy card (if you received a printed copy of the proxy materials). If you previously voted via the Internet (or by telephone or mail), you will not limit your right to vote online at the Annual Meeting. |
If you are a beneficial owner, please follow the instructions from your broker, bank or other nominee to vote by Internet, telephone or mail. Beneficial owners may not vote via the Internet at the Annual Meeting unless they receive a legal proxy from their respective brokers, banks or other nominees. TABLE OF CONTENTS Questions and Answers Relating to the Annual Meeting
Can I change my vote? Yes. If you are a registered stockholder, you can change your vote or revoke your proxy any time before the Annual Meeting by: notifying our Corporate Governance GuidelinesSecretary, in writing, at Wabtec Corporation, 30 Isabella Street, Pittsburgh, PA 15212; voting again using the telephone or Internet before 11:59 p.m. Eastern Time on May 15, 2024 or before 11:59 p.m. Eastern Time on May 13, 2024 if you hold your shares in a Plan (your latest telephone or Internet proxy is the one that will be counted); or attending the virtual Annual Meeting and Codevoting with the ballot provided in the virtual meeting portal. Simply logging into the Annual Meeting online will not, by itself, revoke your proxy. If you are a beneficial owner, you may revoke any prior voting instructions by contacting your broker, bank or nominee. What is the effect of Business Conductgiving a proxy? Proxies are solicited by and Ethicson behalf of our Board. Mr. Neupaver and Mr. DeNinno have been designated as proxy holders by our Board. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our Board as described above. If any matters not described in this Proxy Statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote the shares. If the Annual Meeting is adjourned, the proxy holders can vote the shares on the new Annual Meeting date as well, unless you have properly revoked your proxy instructions, as described above. WabtecWhat is the effect of abstentions and broker non-votes?
A “broker non-vote” occurs where a broker has not received voting instructions from the beneficial owner and for which the broker does not have discretionary power to vote on a particular matter. Brokerage firms and other intermediaries holding shares of our common stock in street name for their customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker will have discretion to vote your shares on our sole “routine” matter, the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024. Absent direction from you, your broker will not have discretion to vote on Proposal 1 (election of directors) or Proposal 2 (Say-On-Pay Advisory Vote), which are “non-routine” matters. Abstentions and broker non-votes are counted as shares present and entitled to vote for purposes of determining a quorum. With regards to Proposal 1 (election of directors), abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of the vote. For Proposal 2 and Proposal 3, an abstention will have the same effect as a vote against each applicable proposal. For Proposal 2 and Proposal 3 broker non-votes will have no effect on the outcome of the vote with respect to each Proposal. Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials? In accordance with the rules of the U.S. Securities and Exchange Commission (the “SEC”), we have elected to furnish our proxy materials, including this Proxy Statement and our 2023 Annual Report, primarily via the Internet. On April 4, 2024, we mailed to our stockholders a Notice that contains instructions on how to access our proxy materials on the Internet, how to vote at the meeting and how to request printed copies of the proxy materials and 2023 Annual Report. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of our proxy materials on the Internet to help reduce the environmental impact and cost of our annual meetings of stockholders. 82 | | / | 2024 Proxy Statement |
TABLE OF CONTENTS Questions and Answers Relating to the Annual Meeting
Where can I find the voting results of the Annual Meeting? We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Annual Meeting, we will provide preliminary voting results in the Current Report on Form 8-K and will provide the final results in an amendment to the Current Report on Form 8-K as soon as they become available. Why is the Annual Meeting being held virtually? The Annual Meeting will be held entirely online this year. We have embraced the latest technology to provide ease of access, real-time communication and cost savings for our stockholders and our Company. Hosting a virtual meeting provides easy access for our stockholders and facilitates participation because stockholders can participate from any location around the world. How are proxies solicited for the Annual Meeting? Our Board is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. We will reimburse brokers or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker, bank or other nominee holds shares of our common stock on your behalf. In addition, our directors and employees may also solicit proxies in person, by telephone or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies. How does the Board recommend that you vote your shares? The Board recommends that you vote: FOR PROPOSAL 1 | | | ELECTION OF LINDA A. HARTY, BRIAN P. HEHIR, AND BEVERLEY A. BABCOCK | FOR PROPOSAL 2 | | | APPROVAL OF AN ADVISORY (NON-BINDING) RESOLUTION TO APPROVE THE 2023 NAMED EXECUTIVE OFFICER COMPENSATION | FOR PROPOSAL 3 | | | RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2024 FISCAL YEAR |
Householding The SEC has adopted Corporate Governance Guidelinesrules that permit companies and intermediaries such as brokers to satisfy delivery requirements for Notices and other proxy materials with respect to two or more stockholders sharing the same address by delivering a Codesingle Notice and set of Business Conductproxy materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and Ethics that are applicable to all directors, officerscost savings for companies. We and employees, each of which includes the provisions required under applicable SEC and NYSE regulations. Copiessome brokers household proxy materials, delivering a single copy of our Corporate Governance GuidelinesNotice and Codeproxy materials to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once stockholders have received notice from their broker or us that materials will be sent in the householding manner to the stockholder’s address, householding will continue until we or the broker are otherwise notified or until the stockholder revokes such consent. If, at any time, (i) stockholders sharing an address and receiving multiple copies of Conductour Notice and other proxy materials wish to opt in to householding and receive a single copy of our proxy materials or (ii) stockholders no longer wish to participate in householding and would prefer to receive a separate Notice or other proxy materials in the future, they should notify their broker if shares are postedheld in a brokerage account; if holding registered shares, they should call (866) 540-7095 or write to the following address: 51 Mercedes Way, Edgewood, NY 11717 . Any beneficial owner who has received a single copy of a Notice or other proxy materials at a shared address can request to receive a separate copy of such materials for this 2024 Annual Meeting by written or oral request and we will promptly deliver a separate copy in the format requested. To receive separate copies of those materials for this or for future meetings, please request by telephone, internet, e-mail or mail by following the instructions found on our website at http://www.wabteccorp.com.the Notice that you have received or by making your request in writing to your broker or to us, as appropriate. TABLE OF CONTENTS Questions and Answers Relating to the Annual Meeting
Other Business We do not expect any business to come before the Annual Meeting other than the proposals described in this proxy statement.Proxy Statement. If other business is properly raised, your proxy authorizes its holder to vote according to their best judgment. Communication with the BoardThe Board provides a process for interested parties to send communications to the Board or any of the directors of Wabtec. Communications to the Board or any director should be sent c/o the Secretary of Wabtec, 30 Isabella Street, Pittsburgh, PA 15212. All such communications will be compiled by the Secretary of Wabtec and submitted to the Board or the individual director at the next regularly scheduled meeting of the Board. Interested parties may also communicate directly with the Lead Independent Director at the email address nonmanagementdirectors@wabtec.com.
Officers and employees may solicit proxies in person by telephone or facsimile. Wabtec pays no costs for proxy solicitation to any third party. Wabtec will pay approximately $50,000 to Broadridge Financial Solutions, Inc. (exclusive of printing and mailing fees) for sending the Notice, providing the Internet site for our proxy materials and providing proxy materials to any stockholder who requests them. We will also reimburse other nominees, custodians or fiduciaries who forward these materials to stockholders for their reasonable expenses in doing so. How to Submit Stockholder Proposals and Nominations for Next YearYear? To be included in the proxy for the 20232025 annual meeting, stockholder proposals must be submitted by December 6, 2022.5, 2024. Only proposals submitted on time may be eligible for inclusion in our proxy statement.Proxy Statement. Our amended and restated bylawsby-laws require that notice of business to be properly brought before the 20232025 Annual Meeting of stockholders must be submitted to us between January 5, 20234, 2025 and February 4, 2023.3, 2025. Only matters for which we receive timely notice and in accordance with our amended and restated bylawsby-laws may be brought before the 20232025 Annual Meeting. The Governance Committee will consider director nominees recommended by stockholders. Stockholders wishing to recommend a director candidate for consideration by the Governance Committee can do so by writing the Secretary of Wabtec at 30 Isabella Street, Pittsburgh, PA 15212 and providing the information required under our amended and restated by-laws, including, but not limited to the candidate’s name, biographical data and qualifications. Any such recommendation should be accompanied by a written statement from the individual of their consent to be named as a candidate and, if nominated and elected, to serve as a director. No candidates for Board membership have been put forward by stockholders for election at the 2024 Annual Meeting of stockholders. Our amended and restated by-laws require that for a stockholder to recommend a director nominee, notice in writing must be delivered to the Secretary of Wabtec no later than the 60th day and no earlier than the 90th day prior to the first anniversary of the previous year’s annual meeting proxy statement. Our amended and restated by-laws also permit a stockholder, or a group of up to 20 stockholders, that has owned at least three percent of our outstanding Common Stock continuously for at least three years to nominate and include in our proxy statement candidates for our Board, subject to certain requirements set forth in our amended and restated by-laws. Each stockholder, or group of stockholders, may nominate candidates for director, up to a limit of the greater of two or 20 percent of the number of directors on the Board. Any nominee must meet the qualification standards listed in our amended and restated by-laws. An eligible stockholder, or eligible group of stockholders, that wants to nominate a candidate for election to the Board pursuant to the proxy access provisions of our amended and restated bylawsby-laws must follow the procedures stated in Article II, Section 10 of our amended and restated bylaws.by-laws. These procedures include the requirement that your nomination must be delivered to Wabtec’s Secretary not later than the close of business on the 120th day or earlier than the close of business on the 150th day prior to the first anniversary of the preceding year’s annual meeting. If the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, your notice must be delivered not later than the 120th day prior to such annual meeting or, if later, the 10th day following the day we publicly announce the date of the 20232025 annual meeting of stockholders. In addition to satisfying the foregoing requirements under amended and restated by-laws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than Wabtec’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act (including a statement that such stockholder intends to solicit the holders of shares representing at least 67% of the voting power of the Company’s shares entitled to vote on the election of directors in support of director nominees other than Wabtec’s nominees), which notice must be postmarked or transmitted electronically to Wabtec at its principal executive offices no later than 60 calendar days prior to the anniversary date of the 2024 Annual Meeting (for the 2025 Annual Meeting, no later than March 18, 2025). However, if the date of the 2025 Annual Meeting is changed by more than 30 calendar days from such anniversary date, then notice must be provided by the later of 60 calendar days prior to the date of the 2025 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the 2025 Annual Meeting is first made by Wabtec. Stockholders are urged to review all applicable rules and consult legal counsel before submitting a nomination or proposal to Wabtec. Stockholder proposals to be brought before the 2023 annual meeting should be sent c/o the Secretary of Wabtec, 30 Isabella Street, Pittsburgh, PA 15212.
By order of the Board of Directors,
David L. DeNinno
Executive Vice President, General Counsel and Secretary
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| | / | l 2024 Proxy Statement for 2022 Annual Meeting |
TABLE OF CONTENTS Set forth below is the calculation of the non-GAAP performance measures included in this document.proxy statement. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec'sWabtec’s reported results prepared in accordance with GAAP. Non-GAAP financial measures have inherent material limitations as performance measures because they add back certain expenses incurred by us to GAAP financial measures, resulting in those expenses not being taken into account in the applicable non-GAAP financial measure. Because not all companies use identical calculations, our presentation of non- GAAP financial measures may not be comparable to other similarly titled measures of other companies. Wabtec Corporation Reconciliation of Reported Results to Adjusted Results Reported Results | | | $9,677 | | | $2,944 | | | $(1,678) | | | $1,266 | | | $(174) | | | $(267) | | | $825 | | | $(10) | | | $815 | | | $4.53 | Restructuring and Portfolio Optimization costs | | | — | | | 38 | | | 41 | | | 79 | | | — | | | (17) | | | 62 | | | — | | | 62 | | | $0.34 | Gain on LKZ Investment | | | — | | | — | | | — | | | — | | | (35) | | | — | | | (35) | | | — | | | (35) | | | $(0.19) | Non-cash Amortization expense | | | — | | | — | | | 298 | | | 298 | | | — | | | (74) | | | 224 | | | — | | | 224 | | | $1.24 | Adjusted Results | | | $9,677 | | | $2,982 | | | $(1,339) | | | $1,643 | | | $(209) | | | $(358) | | | $1,076 | | | $(10) | | | $1,066 | | | $5.92 | Fully Diluted Shares Outstanding (in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 179.5 | Reported EBIT Margin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13.1% | Adjusted Operating Margin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17.0% |
| | Reported Results | | | $7,822 | | | $2,369 | | | $(1,493) | | | $876 | | | $(139) | | | $(172) | | | $565 | | | $(7) | | | $558 | | | $2.96 | | | | Restructuring and Transaction costs | | | — | | | 53 | | | 25 | | | 78 | | | — | | | (15) | | | 63 | | | — | | | 63 | | | $0.33 | | | | Non-cash Amortization expense | | | — | | | — | | | 287 | | | 287 | | | — | | | (74) | | | 213 | | | — | | | 213 | | | $1.13 | | | | Foreign Exchange Gain | | | — | | | — | | | — | | | — | | | (8) | | | 2 | | | (6) | | | — | | | (6) | | | $(0.03) | | | | Amended Return, net | | | — | | | — | | | — | | | — | | | — | | | (25) | | | (25) | | | — | | | (25) | | | $(0.13) | | | | Adjusted Results | | | $7,822 | | | $2,422 | | | $(1,181) | | | $1,241 | | | $(147) | | | $(284) | | | $810 | | | $(7) | | | $803 | | | $4.26 | | | | Fully Diluted Shares Outstanding | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 188.1 | | | | Reported Income from Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $876 | | | | Reported EBIT Margin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11.2% | | | | Restructuring and Transaction Costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $78 | | | | Non-cash Amortization expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $287 | | | | Adjusted Income from Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $1,241 | | | | Adjusted EBIT Margin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15.9% | |
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ESG/ Sustainability
Human capital
