UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

 

Check the appropriate box:

Lydall, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

NOTICE OF ANNUAL MEETING

To: The Owners of Lydall, Inc. Common Stock

You are cordially invited to attend the Annual Meeting of Stockholders.

Location:		Hilton Hartford, 315 Trumbull Street, Hartford, CT 06103

Date:

Date:

Friday, April 28, 201726, 2019

Time:

Time:

9:00 a.m.

The Annual Meeting of Stockholders will be held for the purposes of:

All stockholders are invited to attend the Annual Meeting; however, whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Therefore, we urge you to vote promptly and submit your proxy by telephone, via the Internet, or by signing, dating and returning the enclosed proxy card in the enclosed prepaid envelope. If you decide to attend the Annual Meeting, you have the right to vote in person even if you have previously submitted your proxy. If you hold your stock in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

Sincerely,

Chad A. McDaniel
Senior Vice President, General Counsel, and
Chief Administrative Officer

Manchester, CT
March 9, 201714, 2019

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28, 2017.26, 2019.

This proxy statement, along with the Lydall, Inc. 20162018 Annual Report and Form 10-K, are available free of charge on our website at:www.lydall.com and by clicking onInvestor Relations.

TABLE OF CONTENTS

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Lydall, Inc.
One Colonial Road
Manchester, CT 06042-2378

 

PROXY STATEMENT

 

Lydall, Inc. (“we”, “Lydall” or the “Company”) is providing these proxy materials in connection with the solicitation by our Board of Directors (the “Board”) of proxies to be voted at our 20172019 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Friday, April 28, 201726, 2019 beginning at 9:00 a.m. at the Hilton Hartford, 315 Trumbull Street, Hartford, Connecticut and at any postponements or adjournments thereof. This Proxy Statement is being mailed or otherwise furnished to stockholders on or about March 9, 2017.14, 2019. You should review this information together with our 20162018 Annual Report to Stockholders, which accompanies this Proxy Statement.

Information about the Annual Meeting

Why did you send me this Proxy Statement?

We sent you this Proxy Statement and the enclosed proxy card because the Board is soliciting your proxy to vote at the Annual Meeting to be held on Friday, April 28, 201726, 2019 or any postponements or adjournments thereof. This Proxy Statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this Proxy Statement.

Who can vote at the Annual Meeting?

Only stockholders of record of Lydall’s Common Stock at the close of business on Friday, March 3, 20171, 2019 (the “Record Date”) are entitled to vote at the Annual Meeting and any postponement or adjournment thereof. As of the Record Date, there were 17,211,06317,504,397 shares of Common Stock issued and outstanding, the holders of which are entitled to one vote per share.

How many shares must be present to conduct the Annual Meeting?

We must have a “quorum” present in person or by proxy to hold the Annual Meeting. A quorum is a majority of the outstanding shares entitled to vote. Votes withheld from any nominee, abstentions and broker non-votes (defined below) will be counted as present or represented for the purpose of determining the presence or absence of a quorum for the Annual Meeting.

What matters are to be voted upon at the Annual Meeting?

FourThree proposals are scheduled for a vote:

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How does the Board recommend that I vote?

The Board recommends that you vote:

How do I vote before the Annual Meeting?

With respect to each of (a) the election of directors, you may vote “FOR” any or all of the nominees or withhold authority to vote for any or all nominees. With respect to the frequency of future advisory votes on executive compensation, you may vote for the frequency of 1 year, 2 years, 3 years, or abstain from voting. For(b) the advisory vote on the compensation of the Company’s Named Executive Officers and (c) the ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor, you may vote “FOR” or “AGAINST” or abstain from voting.

If you hold your shares in your own name, you may vote as follows:

		Telephone — To vote by telephone, please follow the instructions on the enclosed proxy card. If you vote by telephone, it is not necessary to mail your proxy card.
		Internet — To vote over the Internet, please follow the instructions on the enclosed proxy card. If you vote on line, it is not necessary to mail your proxy card.
		Mail — To vote by mail, please complete, sign and date your proxy card and return it in the enclosed postage-paid envelope.
		In Person — If you wish to vote in person, written ballots will be available at the Annual Meeting.

How do I vote if my broker holds my shares in “street name”?

If you hold your shares beneficially in street name, you may vote by submitting voting instructions to your broker, bank or other nominee. For directions on how to vote shares held beneficially in street name, please refer to the voting instruction cardinstructions provided by your broker, bank or other nominee.

May I vote at the Annual Meeting?

Yes, if you hold your shares in your own name, you may vote your shares at the Annual Meeting if you attend in person. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual Meeting in person. If you hold your shares in street name, in order to vote in person at the Annual Meeting, you must request a proxy from your broker, bank or other nominee.

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What should I do if I receive more than one set of proxy materials?

You may receive more than one set of these proxy materials, including multiple copies of this Proxy Statement and multiple proxy cards or voting instruction cards.forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction cardform for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction cardform that you receive to ensure that all your shares are voted.

How many votes do I have?

Each share of Common Stock that you own as of the close of business on the Record Date entitles you to one vote on each nominee and on each other matter voted upon at the Annual Meeting.

May I change my vote?

Yes, if you own shares in your own name, you may change your vote or revoke your proxy at any time before the vote at the Annual Meeting by executing a valid proxy bearing a later date and delivering it to us prior to the Annual Meeting at Lydall, Inc., One Colonial Road, Manchester, Connecticut 06042, Attn: Secretary. You may withdraw your vote at the Annual Meeting and vote in person by giving written notice to our Secretary. You may also revoke your vote without voting by sending written notice of revocation to our Secretary at the above address. However, if you are a beneficial owner whose shares are held of record by a broker, bank or other nominee, you must contact your broker, bank or other nominee to change your vote.

How are my shares voted if I submit a proxy but do not specify how I want to vote?

If you submit a properly executed and signed proxy card and return it without indicating how you would like to vote your shares, the persons named in the proxy card (or, if applicable, their substitutes) will vote your shares as the Board recommends, which is:

What is a broker non-vote?

If you are a beneficial owner whose shares are held of record by a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker, bank or other nominee does not have discretionary authority to vote. This is called a “broker non-vote.” In particular, brokers will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (“NYSE”). If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the proposal to ratify the appointment of PricewaterhouseCoopers LLP even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority under NYSE rules to vote on the election of directors or on the advisory vote on executive compensation or on the advisory vote on the frequency of future advisory votes on executive compensation without instructions from you, and in the absence of instructions from you, a broker non-vote will occur and your shares will not be voted on these matters.

Your vote is important, and we strongly encourage you to vote your shares by following the instructions provided on the voting instruction card.form. Please return your voting instructions to your broker, bank or other nominee and contact the person responsible for your account to ensure that your shares are voted on your behalf.

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What vote is required to elect directors?

UnderAt prior annual meetings, our Bylaws provided that Directors arewere elected by a plurality of the votes cast by stockholders entitled to vote at the Annual Meeting. This meansmeant that the nominees receiving the highest number of votes, whether or not a majority of the total number of votes cast, willwould be elected. Neither votes that arewere withheld nor broker non-votes will affect the outcome of the election of Directors.

In December 2018, the Board amended our Bylaws to provide for a majority vote standard which applies to the 2019 Annual Meeting. Under this revised standard, a nominee shall be elected as a Director if the votes cast “FOR” such nominee’s election exceed the votes cast “AGAINST” such nominee’s election (with “abstentions” and “broker non-votes” not counted as a vote “for” or “against” such nominee’s election).

In contested elections (defined below), Directors would be elected by a plurality of the votes cast by stockholders entitled to vote at the Annual Meeting as described above. A “contested election” is any meeting on the election of directors for which a stockholder has properly nominated a person for election to the Board in compliance with the advance notice requirements and such nomination has not been timely withdrawn by such stockholder.

What happens in an uncontested election if an incumbent director does not receive a majority of the votes cast on his or her election?

OurAs noted above, the Board has adoptedrecently amended Lydall’s Bylaws to provide for a majority voting policyvote standard with respect to the election of Directors, which is set forth inDirectors. The Board also amended the Corporate Governance Guidelines of the Company. Under this policy,Company to address the situation where, in an uncontested elections,election, an incumbent Director nominee is required to tenderdoes not receive more votes “FOR” than “AGAINST” his or her election.

As a condition to being nominated by the Board of Directors for re-election as a director, each incumbent director must deliver to the Board of Directors an irrevocable resignation from the Board of Directors that will become effective if, and only if, both (1) the election is an uncontested election (i.e., one in which the number of shares voted “for” a Director’s election is less than 50% ofnominees does not exceed the number of theDirectors to be elected), and such nominee does not receive more votes cast “for” than “against” such nominees’ election and (2) the Board of Directors determines to accept such resignation in accordance with respect to that Director’s election. For this purpose, votes cast include votes to withhold authority but exclude broker non-votes.policy.

The Corporate Governance Committee will make a recommendation to the Board of Directors as to whether to accept or reject the tenderedsuch resignation, or take anywhether other action.action should be taken. The Board of Directors will act on the tenderedsuch resignation, taking into account the Corporate Governance Committee’s recommendation, and publicly disclose its decision regarding such resignation and the rationale behind the decision within 90ninety (90) days from the date of the certification of the election results. The Corporate Governance Committee in making its recommendation, and the Board of Directors in making its decision, may each consider any factors or other information that they considerit considers appropriate and relevant and may act in their sole and absolute discretion. TheA Director who has tendered his or herwhose resignation is being considered in accordance with this policy mayshall not participate in the consideration of such tendered resignation by either the Corporate Governance Committee or the Board.Board of Directors.

If an incumbent Director’s resignation is not accepted by the Board, such Director will continue to serve until the next Annual Meeting and until his or her successor is duly elected and qualified, or his or her earlier resignation or removal. If a Director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill the resulting vacancy or otherwise take action pursuant to the applicable provisions of the Company’s Bylaws and the Company’s Restated Certificate of Incorporation in effect at such time.

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What vote is required to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers?

This matter is being submitted to enable stockholders to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers. In order to be approved on an advisory basis, this proposal must receive the affirmative vote of a majority of the shares present or represented at the Annual Meeting and entitled to vote and voting on the matter. Brokers are not entitled to vote on this proposal in the absence of voting instructions from the beneficial owner. Abstentions and broker non-votes are not considered to have been voted on this matter and have the practical effect of reducing the number of affirmative votes required to achieve a majority for the matter by reducing the total number of shares from which the majority is calculated. This proposal is an advisory vote and the result will not be binding on the Board or the Company.

What vote is required to approve, on an advisory basis, the frequency of future advisory votes on the compensation of the Company’s Named Executive Officers?

This matter is being submitted to enable stockholders to approve, on an advisory basis, the frequency of future advisory votes on executive compensation. Under the Company’s Bylaws, the affirmative vote of a majority of the shares present or represented at the Annual Meeting and entitled to vote and voting on the matter in favor of one of the three frequency options will constitute the stockholders’ approval with respect to that frequency under this non-binding advisory proposal. If none of the frequency options receives the vote of such a majority, the Board will consider the frequency option receiving the greatest number of votes cast as the stockholders’ preference with respect to this non-binding advisory proposal. The Board and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding the frequency of advisory votes on executive compensation. Abstentions and broker “non-votes” are not considered to have been voted on this matter and have the practical effect of reducing the number of affirmative votes required under the Company’s Bylaws to achieve a majority for this matter by reducing the total number of shares from which the majority is calculated. This proposal is an advisory vote and the result will not be binding on the Board or the Company.

PROPOSAL 1 — ELECTION OF DIRECTORS

The current term of office of all of the Company’s Directors expires at the Annual Meeting and when their successors are elected and qualified. W. Leslie Duffy, a current Director, is not standing for re-election. Mr. Duffy has served as a Director of the Company since 1992, and the Board thanks Mr. Duffy for his many years of service to the Board, including as Chairman since 2005.

At the Annual Meeting, stockholders will be asked to consider the election of Mr. James J. Cannon, who has been nominated for election as a Director of the Company for the first time. Mr. Cannon was originally proposed to the Committee by a third party search firm, and our Board determined to include him among its nominees.

The Corporate Governance Committee of the Board believes the Company is well-served by its current Directors; and, accordingly, the Committee has nominated Dale G. Barnhart, David G. Bills, Kathleen Burdett, James J. Cannon, Matthew T. Farrell, Marc T. Giles, William D. Gurley, Suzanne Hammett, and S. Carl Soderstrom, Jr. for election as Directors of the Company until the next annual meeting of stockholders to be held in 20182020 and until their successors are elected and qualified. Except for Mr. Cannon, who is newly nominated this year, eachEach nominee is currently serving as a Director of the Company. EachCompany, and each nominee including Mr. Cannon, has consented to serve if elected or re-elected. If any nominee becomes unavailable to serve as a Director before the Annual Meeting, the Corporate Governance Committee may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Corporate Governance Committee.

In connection with its consideration of Director nominations for the Annual Meeting, the Corporate Governance Committee considered the factors described in the Corporate Governance section of this Proxy Statement, under “Nomination Process.” The Corporate Governance Guidelines of the Company specify that at least a majority of the members of the Board, as well as all of the members of the Audit Review Committee, the Compensation Committee and the Corporate Governance Committee, shall be “independent” within the meaning of the applicable NYSE rules. The Corporate Governance Committee has determined that each of the nominees for election, other than Mr. Barnhart, is “independent” as defined by the NYSE rules and that each of the nominees for election, including Mr. Barnhart, are free from the influence of any particular stockholder or group of stockholders whose interests may diverge from the interests of the Company’s stockholders as a whole. There are no family relationships between any Director nominee for Director or executive officer of the Company. In addition, the Corporate Governance Committee has determined that each member of our Audit Review Committee is “financially literate” within the meaning of the NYSE rules and is an “audit committee financial expert” as defined under rules promulgated by the SEC. The Corporate Governance Committee has also determined that each member of the Compensation Committee meets the enhanced independence rules of the NYSE.

Under the Restated Certificate of Incorporation of the Company, the Board is empowered to establish the number of Directorships between three and fifteen. The Board has currently fixed the number of Directorships at eight.nine.

Unless otherwise instructed, it is the intention of the persons named in the accompanying proxy card to vote for the Director nominees designated by the Corporate Governance Committee. Proxies cannot be voted for a greater number of persons than the number of nominees named.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF ALL PERSONS NOMINATED BY THE CORPORATE GOVERNANCE COMMITTEE AS DIRECTORS OF THE COMPANY.

Nominees and Qualifications

The following table contains certain biographical information pertaining to each nominee for election as a Director of the Company, including their business experience and other directorships. Each nominee brings a unique background and set of skills to our Board, giving the Board as a whole competence and experience in a wide variety of areas, including executive management, manufacturing, marketing, finance, corporate governance, mergers and acquisitions, private equity and service on other public company boards of directors. Included in the table below is a discussion of each nominee’s principal experience, qualifications, attributes and skills that led the Corporate Governance Committee to conclude that he or she should serve as one of our Directors.

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The Audit Review Committee is responsible for fee negotiations with the independent auditor. All of the services described above were approved by the Audit Review Committee pursuant to policies and procedures that were established to comply with the SEC rules that require audit committee pre-approval of audit and non-audit services. On an ongoing basis, management communicates specific projects and categories of services for which advance approval of the Audit Review Committee is required. The Audit Review Committee reviews these requests and advises management and the independent auditor if the Audit Review Committee pre-approves the engagement of the independent auditor for such projects and services. On a periodic basis, the independent auditor reports to the Audit Review Committee the actual spending for such projects and services as compared with the approved amounts. The Audit Review Committee may delegate the ability to pre-approve audit and permitted non-audit services to a sub-committee or the Chair of the Audit Review Committee, provided that any such pre-approvals are reported at the next Audit Review Committee meeting.

The Audit Review Committee has considered whether the services provided by PwC, other than audit services, are compatible with maintaining that firm’s independence and has concluded that PwC is independent.

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CORPORATE GOVERNANCE

General

Pursuant to the Delaware General Corporation Law and the Company’s Bylaws, the Company’s business, property and affairs are managed by or under the direction of the Board. Members of the Board are kept informed of the Company’s business through discussions with the Chief Executive Officer and other officers, by reviewing materials provided to them, and by participating in meetings of the Board and its committees.

The Company is committed to good corporate governance practices and has adopted Corporate Governance Guidelines to provide a framework for the effective governance of the Company. The Corporate Governance Committee periodically reviews the Corporate Governance Guidelines and recommends changes, as appropriate, to the Board for approval.

The Board has three standing committees to assist the Board in executing its responsibilities: the Audit Review Committee, the Compensation Committee and the Corporate Governance Committee. In accordance with NYSE rules, each Committee is comprised solely of non-employee, independent Directors, within the meaning of the applicable NYSE rules. The Board has adopted a charter for each of the three standing committees, and the Company has a Code of Ethics and Business Conduct (the “Code”) applicable to all Directors, officers and employees. Links to the Corporate Governance Guidelines, each Committee’s charters and the Code can be found on Lydall’s website atwww.lydall.com. All materials available atwww.lydall.com are also available to stockholders in print without charge, upon written request to Lydall, Inc., One Colonial Road, Manchester, CT 06042-2378, Attention: Secretary.

Committees

The table below shows current membership and indicates the chairperson (*) for each of the standing Board committees.

Audit Review		Compensation		Corporate Governance
David G. Bills Kathleen Burdett*		Matthew T. Farrell		Kathleen Burdett
Matthew T. Farrell		Marc T. Giles		W. Leslie Duffy
Suzanne Hammett		William D. Gurley*		Marc T. Giles
S. Carl Soderstrom, Jr.		Kathleen Burdett James J. Cannon Matthew T. Farrell William D. Gurley* Suzanne Hammett		David G. Bills James J. Cannon Marc T. Giles William D. Gurley
				S. Carl Soderstrom, Jr.*

TheAudit Review Committee assists the Board in fulfilling its responsibility to oversee the integrity of the Company’s financial reporting process. The duties and responsibilities of the Audit Review Committee include: overseeing the performance of the Company’s systems of internal accounting and financial controls; overseeing the Company’s internal audit function; reviewing and determining the outside auditor’s qualifications and independence; reviewing the Company’s process for monitoring compliance with applicable legal, regulatory and ethics programs; overseeing the procedures for employee complaints and concerns regarding questionable accounting or auditing matters; overseeing the annual independent audit of the Company’s financial statements; and preparing the Audit Review Committee Report required by the SEC to be included in the Company’s proxy statement.

The Audit Review Committee meets periodically with management to consider the adequacy of the Company’s internal controls and its financial reporting process, and reviews pending or threatened legal proceedings involving the Company and other material contingent liabilities. It also discusses these matters with the Company’s internal auditors, independent auditor, and appropriate Company financial and legal personnel. The Audit Review Committee reviews and approves the Company’s financial statements and discusses them with management and the independent auditors before those financial statements are publicallypublicly released or filed with the SEC.

The Audit Review Committee meets regularly in private session with the independent auditor, has the sole authority to retain and dismiss the independent auditor, pre-approves audit and non-audit services, and periodically reviews the independent auditor’s performance and independence from management. The independent auditor has unrestricted access to, and reports directly to, the Audit Review Committee.

The Audit Review Committee also reviews and approves the Company’s decision to enter into all swaps transactions, has adopted and reviews annually the policy relating to the Company’s use of the non-financial end-user exception (“Swaps Policy”) and reports to the Board annually on the Company’s compliance with the Swaps Policy.

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Audit Committee Financial Expert — The Board has determined that each member of the Audit Review Committee is “financially literate” within the meaning of the NYSE rules and is an “audit committee financial expert” as that term is defined under Item 407(d)(5)(ii) of Regulation S-K.

TheCompensation Committeehas responsibility for the Company’s compensation of management, incentive plans and programs. The duties and responsibilities of the Compensation Committee include: making recommendations to the Board regarding the Company’s incentive and equity-based compensation plans and non-CEO compensation policy; reviewing and approving the Company’s goals and objectives relevant to compensation (such as the goal of attracting and retaining highly qualified individuals and motivating individual performance leading to increased stockholder value); determining and approving the Chief Executive Officer’s annual compensation, including incentive awards; reviewing the Company’s Compensation Discussion and Analysis (“CD&A”) with management and, based upon such review, considering whether it will recommend to the Board that the CD&A be included in the Company’s proxy statement; preparing the Compensation Committee Report for inclusion in the annual proxy statement; approving all grants of stock awards pursuant to the Company’s stock incentive compensation plans; approving all employment agreements and compensation arrangements for the CEO, the Named Executive Officers and other direct reports of the CEO; reviewing whether risks associated with the Company’s compensation policies and practices are reasonably likely to have a material adverse effect on the Company; reviewing the form and amount of compensation for non-management Directors and recommending changes to the Board; and retaining or obtaining advice from compensation advisors after taking into consideration certain independence factors related to said compensation advisors.

TheCorporate Governance Committeehas responsibility for developing Board membership and overseeing corporate governance of the Company. The Corporate Governance Committee is responsible for: identifying individuals who are qualified to become Board members consistent with criteria approved by the Board; selecting and recommending to the Board the Director nominees for the next Annual Meeting; making recommendations to the Board as to the membership and chairperson of each standing committee; developing and recommending to the Board a set of corporate governance guidelines applicable to the Company designed to provide for effective and efficient governance of the Company; overseeing the evaluation of the Board; and providing guidance on matters relating to corporate governance.

Other duties and responsibilities of the Corporate Governance Committee include: assessing whether aan incumbent director nominee who does not receive a “majority of themore votes cast”“for” than “against” his or her election in an uncontested election of directors should continue to serve as a director; reviewing annually the relationships between directors, the Company and members of management and recommending to the Board whether each director qualifies as “independent”; periodically reviewing the Board’s leadership structure to assess whether it is appropriate given the specific characteristics or circumstances of the Company; overseeing the development of a succession plan for the Chief Executive Officer; evaluating the Chief Executive Officer’s performance annually and overseeing the evaluation of the Company’s executive officers; and reviewing and approving all director and officer indemnification and insurance arrangements.

Nomination Process

The Corporate Governance Committee is responsible for identifying individuals who are qualified to be Directors, consistent with criteria approved by the Board, and selecting and recommending to the Board the Director nominees for each Annual Meeting. The Corporate Governance Committee evaluates the skills and expertise needed by the Board and the skills and expertise that are possessed by current Board members. The Corporate Governance Committee seeks persons of the highest ethical standards and proven integrity, and with demonstrated ability and sound judgment, to serve as members of the Board.

When considering candidates for Director, the Corporate Governance Committee takes into account a number of factors, including the following criteria approved by the Board: (i) whether the candidate is independent under the NYSE rules, the rules and regulations under the Exchange Act and the independence standards adopted by the Board; (ii) whether the candidate has skills and expertise needed by the Board; (iii) whether the candidate has demonstrated ability, sound judgment and good decision-making skills; (iv) whether the candidate has prior experience as a corporate Director; (v) whether the candidate has prior public company experience; (vi) whether the candidate has prior experience in global manufacturing companies; and (vii) the extent to which the candidate has other time commitments and obligations that might interfere with his or her duties and responsibilities as a Director. All members of the Audit Review Committee must meet the additional standards for independence applicable to members of an audit committee under Section 10A(m) of the Exchange Act and the NYSE rules

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and must satisfy the financial literacy requirements of the NYSE rules. At least one member of the Audit Review Committee must be an “audit

Independence Determination

The Board has concluded that David G. Bills, Kathleen Burdett, James J. Cannon, W. Leslie Duffy, Matthew T. Farrell, Marc T. Giles, William D. Gurley, Suzanne Hammett, and S. Carl Soderstrom, Jr. (all of the current non-employee Directors and nominees for Director)Directors) are “independent” for purposes of the applicable NYSE rules, that the members of the Audit Review Committee are also “independent” for purposes of Section 10A(m)(3) of the Exchange Act and that the members of the Compensation Committee are also “independent” under the enhanced independence rules of the NYSE for compensation committee members. The Board based its independence determinations in part on a review of the responses of the Directors to questions regarding employment and compensation history, affiliations, family and other relationships (which responses indicated that no relationships or transactions exist), together with an examination of those companies with whom the Company transacts business. Although the Board maintains categorical standards to assist in determining whether non-employee Directors are independent, given the absence of any relationships or transactions between non-employee Directors and the Company, the categorical standards were not used in connection with the Board’s determinations in February 2016 or 2017.determinations. The categorical standards are set forth in the Company’s Corporate Governance Guidelines (available onwww.lydall.com).

Compensation Committee Interlocks and Insider Participation

During fiscal year 2018, the Compensation Committee consisted of Kathleen Burdett, James J. Cannon, Matthew T. Farrell, William D. Gurley and Suzanne Hammett. As discussed above, all members of the Compensation Committee are independent Directors under the enhanced independence rules of the NYSE for compensation committee members. No executive officer of the Company has served as a Director or a member of a compensation committee of another company where any member of the Compensation Committee is an executive officer.

Risk Oversight

The Board oversees the Company’s risk management processes directly and through its committees.

Management has adopted an ongoing risk management process that it uses to identify and assess Company risks. Periodically, management advises the Board and the appropriate Board committee(s) of the following:

The Board fulfills its oversight role by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices, through:

In addition, the Board may request regular reports directly from personnel of the Company responsible for oversight of particular risks within the Company. This process enables the Board and its committees to coordinate and supervise risk oversight, particularly with respect to risks that are overseen by different committees of the Board and different personnel within the Company.

The Company provides detailed risk factors impacting its business in its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q filed with the SEC.

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Related Party Transactions

The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, as a general matter, the Company prefers to avoid related party transactions.

In addition, the Company will disclose, either on or through the Company’s website or in its annual proxy statement or Annual Report on Form 10-K filed with the SEC, any contributions by the Company to a tax exempt organization in which any non-management or independent Director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues. No such contributions have been made by the Company to any such tax exempt organization.

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REPORT OF THE AUDIT REVIEW COMMITTEE

The Audit Review Committee (the “Committee”) operates under a written charter adopted and approved by the Board (the “Charter”). The Charter, which defines the functions and responsibilities of the Committee, is reviewed annually. A link to the Committee’s Charter can be found onwww.lydall.com. The Committee has determined that its Charter and practices are consistent with the listing standards of the NYSE and the provisions of the Sarbanes-Oxley Act of 2002.

During 2016,2018, all Directors who served on the Committee were “independent” for purposes of the NYSE rules and Section 10A(m)(3) of the Exchange Act. The Board has determined that none of the Committee members has a relationship with the Company that may interfere with his/her independence from the Company and its management, and that each member is an “audit committee financial expert” as defined by the SEC.

Periodically, the Committee meets with management to consider the adequacy of the Company’s internal controls and the objectivity and appropriateness of its financial reporting. The Committee also discusses these matters with PwC, the Company’s independent auditors, appropriate Company financial personnel, and internal auditors, both separately and jointly. Independent and internal auditors of the Company have unrestricted access to the Committee.

Management has primary responsibility for the Company’s financial statements and the overall reporting process, including the Company’s system of internal controls. The independent auditors audit the annual financial statements prepared by management, express an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of the Company in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”), and discuss with the Committee the Company’s significant accounting policies, accounting estimates and management judgments reflected in the financial statements, audit adjustments arising from the audit, and other matters in accordance with Auditing Standard No. 1301 (Communications with Audit Committees) as adopted by the Public Company Accounting Oversight Board (“PCAOB”).

The Committee reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2016,2018, and met with both management and PwC to discuss those financial statements. Management has represented to the Committee that the financial statements were prepared in accordance with U.S. GAAP. PwC has reported to the Committee that such financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the Company in accordance with U.S. GAAP.

At each regularly scheduled Committee meeting during 2016,2018, the Committee monitored and discussed with management and PwC the status of the Company’s compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The Committee also reviewed and discussed with PwC and management their reports and attestations on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.

The Committee annually reviews PwC’s independence and performance in connection with the determination to retain PwC. PwC has provided to the Committee the written disclosures and the letter required by PCAOB’s Ethics and Independence Rule 3526 (Communication with Audit Committees Concerning Independence), and the Committee discussed and confirmed with PwC their independence. As a result of their evaluation, the Committee has concluded that PwC has the ability to provide the necessary expertise to audit the Company’s businesses on a global basis, and the Committee approved the appointment of PwC as Lydall’s independent registered public accounting firm for 2017.2019.

Based on the foregoing, the Committee has recommended to the Board, and the Board approved, that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2018.

David G. Bills
Kathleen Burdett, Chair
Matthew T. Farrell
Suzanne Hammett
S. Carl Soderstrom, Jr.

1920

COMPENSATION DISCUSSION AND ANALYSIS

Overview — Executive Summary

The goal of the Company’s executive pay program is to align the interests of executives and stockholders and create long-term value for the Company’s stockholders. To this end, the 20162018 compensation of the Named Executive Officers (“NEOs”) primarily consisted of four basic components, three of which were tied to performance against financial metrics and/or the market price of the Company’s stock:

Our executive compensation structure is designed to achieve the Company’s short-term and long-term financial and operational objectives and to align the interests of stockholders and executives. In that respect, the actual 20162018 compensation of the NEOs reflects the philosophy of making a substantial portion of each executive’s compensation variable depending on the Company’s performance.

The chart below shows the 20162018 compensation pay mix for the CEO.

The CEO compensation pay mix is calculated based on (1) 20162018 Base Salary, (2) 20162018 Cash Bonus paid in February 2017,March 2019, and (3) 20162018 Long-Term Incentive grantgrants made on December 4, 2015.8, 2017.

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Key Compensation Decisions

The following highlights the key decisions made by the Compensation Committee related to 20162018 compensation for the NEOs:

Align Management and Stockholder Interests

The Compensation Committee provides compensation and adopts policies designed to align the interests of executives with those of the stockholders. These include:

Attract, Motivate and Retain Executives

The Committee strives to attract, motivate and retain executive officers by:

In determining compensation for the NEOs for fiscal 2016,year 2018, including the grant of stock options and PSAs in December 2015,2017, the Committee considered the following:

In addition, the Committee reviews compensation data (which summarize current and historical compensation of each NEO) and an accumulated wealth analysis (which summarizes the long-term equity-based compensation accumulated by each NEO over the past five years). The Committee also evaluates each individual’s total compensation compared with other executives within the organization.

The Committee does not assign specific weights to any of these factors described above and, ultimately, the Committee’s compensation decisions are subjectively reached based on the Committee’s business judgment.

Periodically throughout the year, the Committee discusses the philosophy for overall compensation, reviews and discusses adequacy and appropriateness of the structure of compensation, considers whether to modify compensation and the relative mix of compensation elements and, on occasion, makes changes to compensation that it deems appropriate.

Role of Management

The Chief Executive Officer assists the Committee with respect to the compensation packages for the NEOs other than himself. This assistance includes making recommendations regarding salary and incentive compensation levels based on management’s review of performance, achievement of goals and objectives, and competitive market information. Executive officers do not play a role in their own compensation determinations or that of others (except that the Chief Executive Officer is directly involved, with the support of senior leaders in the Human Resources Department, in the compensation determinations of other executive officers), except to discuss their own respective individual performance with the Chief Executive Officer. The final approval of compensation for the executive officers is performed in private session, with no executive officer (including the CEO) attending. No executive officer is involved in determining Director compensation.

Annual Incentive Performance Program (“AIP Program”)

The Company’s AIP Program, determination of eligibility and amount of the cash performance bonus payable to each of the NEOs is described below:

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The Target Bonus Percentage, Target Bonus Amount, Combined AIP Bonus Payout Factor and Final AIP Payout amount for each of the NEOs for 20162018 are shown in the following table:

AIP Table 1

Name		Target Bonus Percentage				Target Bonus Amount				Combined AIP Bonus Payout Factor				Final AIP Payout				Target Bonus Percentage				Target Bonus Amount				Combined AIP Bonus Payout Factor				Final AIP Payout
Dale G. Barnhart			100%			$	592,000				125%			$	740,000				100%				629,300				28.3	%		$	177,777
Scott M. Deakin			60%			$	241,200				125%			$	301,500
Randall B. Gonzales																			60%				184,500				28.3	%		$	52,121
Chad A. McDaniel																			50%				167,500				28.3	%		$	47,319
Paul A. Marold, Jr.(1)			40%			$	112,500				144%			$	162,405				40%				140,000				37.1	%		$	51,954
Joseph A. Abbruzzi(2)			40%			$	124,200				89%			$	110,091
Chad A. McDaniel			40%			$	120,400				125%			$	150,500
Scott M. Deakin(2)																			60%				257,040				38.7	%		$	99,346
Joseph A. Abbruzzi(3)																			40%				132,000				23.7	%		$	31,218

The following is a summary of the long-term incentive awards made to the NEOs on the dates indicated as part of their 20162018 compensation:

Name		Time-Based Stock Option Awards (December 4, 2015)								Three-Year PSAs (December 4, 2015)								RSAs (February 18, 2016)								Total Value of Grants(1) ($)				Time-Based Stock Option Awards (December 8, 2017)								PSAs (December 8, 2017)								RSAs (March 12, 2018)								Total Value of Grants(1) ($)
		Number of Shares				Grant Date Fair Value(1) ($)				Number of Shares at Target				Grant Date Fair Value(1) ($)				Number of Shares				Grant Date Fair Value(1) ($)								Number of Shares				Grant Date Fair Value(1)				Number of Shares at Target				Grant Date Fair Value(1)				Number of Shares				Grant Date Fair Value(1)
Dale G. Barnhart			39,300				600,504				16,340				600,332				—				—				1,200,836				41,880			$	750,071				14,465			$	750,010											$	1,500,081
Randall B. Gonzales(2)																															11,180			$	195,091				3,955			$	195,179				8,106			$	400,031			$	790,301
Chad A. McDaniel																															9,075			$	162,533				3,135			$	162,550											$	325,083
Paul A. Marold, Jr.																															8,380			$	150,086				2,895			$	150,106											$	300,192
Scott M. Deakin			13,100				200,168				5,450				200,233				—				—				400,401				13,265			$	237,576				4,585			$	237,732											$	475,308
Paul A. Marold, Jr.(2)			11,400				125,172				4,610				125,162				6,450				175,118				425,452
Joseph A. Abbruzzi			8,200				125,296				3,410				125,283				—				—				250,579				8,380			$	150,086				2,895			$	150,106											$	300,192
Chad A. McDaniel			9,000				137,520				3,750				137,775				—				—				275,295

Adjustment or Recovery of Awards

The Company has included provisions relating to the clawback or recoupment of compensation in several of its plans.

Under the Amended and Restated Lydall 2003 Stock Incentive Compensation Plan (the “2003 Stock Plan”), any award recipient who breaches his or her non-competition, non-interference, non-solicitation or confidentiality obligations to the Company may be obligated,

Health & Welfare Plans — The Company offers a health care plan that provides medical, dental, prescription drug, and vision coverage to its employees, including the NEOs. The Company also offers fitness reimbursement up to $500 to its employees and “Wellness” incentives up to $1,000 to its employees who participate in Lydall’s medical plan, including the NEOs.

Perquisites — The Company primarily provides perquisites to NEOs for relocation expenses, tax gross-ups for relocation expenses, car allowances (including gas usage), and on occasion, tax assistance and other minimal expense reimbursements that are ancillary to a business purpose. Perquisites awarded to the NEOs in 20162018 are disclosed in the “All Other Compensation” column of the Summary Compensation Table.

The 20172019 AIP Target Bonus Percentages of the NEOs are shown above. No adjustments were made to the AIP Target Bonus Percentages of the NEOs exceptwere increased from 50% to 55% for Mr. McDaniel, whose AIP Target Bonus Percentage for 2017 was increased from 40% to 45%. for Mr. Marold and Mr. Abbruzzi. The Compensation Committee did not make any program design changes to the 2019 AIP Program for 2017.Program.

In December 2016,2018, the Compensation Committee,

Similar to the awards made in connection with the compensation packages for 2016,2018, the December 20162018 time-based stock option awards vest in equal installments over four years, while theyears. Vesting of PSAs will be determined upon certification by the Committee that the Company has achieved an established earnings per share target for fiscal year 2019. The RSAs vest on3-year rTSR during the third anniversary of the grant date.performance period from January 2019 through December 2021.

While the stock options RSAs and PSAs reflected in the table above related to each NEO’s compensation package for 2017,2019, they are reflected in the Summary Compensation Table as a 20162018 compensation item and in the table titled “Grants“Grants of Plan-Based Awards For 2016”2018” because they were granted or awarded in 2016.2018.

Stock Ownership; LimitsProhibitions on Hedging and Pledging

The Board has developed and implemented sharestock ownership guidelines that cover OutsideNon-Employee Directors and certain senior executive officers, including all of the NEOs. The sharestock ownership guidelines are designed to link the personal financial interests of the covered individuals to the Company’s success and better align their interests with the interests of the Company’s stockholders.

The Stock Ownership guideline for the OutsideNon-Employee Directors and the NEOs are as follows:

Position		TargetedMinimum Stock Ownership Amount
OutsideNon-Employee Directors		4 × Annual stock retainer
CEO		4 × Annual Base Salary
CFO		2 × Annual Base Salary
Other NEOs		1 × Annual Base Salary

The Company’s Corporate Governance Guidelines establish share ownership guidelines for OutsideNon-Employee Directors (the “Outside“Non-Employee Director Ownership Guidelines”). Under the OutsideNon-Employee Director Ownership Guidelines, each of the Company’s OutsideNon-Employee Directors should acquire and hold shares of the specified levelCompany’s Common Stock having a fair market value (determined as set forth below) equal to the Minimum Stock Ownership Amount shown in the table above. For purposes of determining whether a Non-Employee Director’s stock ownership amount satisfies the applicable Minimum Stock Ownership Amount for such Non-Employee Director, the fair market value of the Company’s Common Stock shall be the average closing price of the Company’s Common Stock over the 365-day period beginning with January 1, 2017, as reported by the New York Stock Exchange. The Minimum Stock Ownership Amount will be recalibrated every three (3) years after January 1, 2017, based on the then current annual stock retainer of the Non-Employee Directors and the average closing stock price of the Company’s Common Stock over the preceding 365-day period. The Minimum Stock Ownership Amount should be achieved within the later of: (i) five years from the date of their election as an Outsidethe original adoption of the Guidelines (which was February 23, 2006); (ii) five years from the date a person is first elected a Non-Employee Director of the Company (unless a waiver is granted by the Compensation Committee)Committee; or (iii) as to any increased stock ownership level resulting from an increase in the annual stock retainer, five years from the date of such increase. Currently, all of the Company’s OutsideNon-Employee Directors own a sufficient number of the Company’s shares to meet the applicable stock ownership levelsMinimum Stock Ownership Amount established by the OutsideNon-Employee Director Ownership Guidelines.

Under the Company’s Stock Ownership Guidelines for Senior Executive Officers (the “Officer Ownership Guidelines”), the targeted stock ownership amount for each covered individual will be determined as of the later of January 1, 2014 or the date such individual first

Qualifying ownership interests for purposes of the Officer Ownership Guidelines include:

The Company’s Securities Law Compliance policy prohibitshas long prohibited Directors and Executive Officers from engaging in hedging activities involving Lydall securities. PledgingHistorically, pledging of Lydall stock isor entering into margin loans involving Lydall stock had been discouraged, but not prohibited. TheIn 2018, the Company amended its Securities Law Compliance policy requiresto prohibit Directors and Executive Officers to obtain pre-clearance prior tofrom entering into any pledge of Lydall stock or margin loanloans involving Lydall stock, and the Company may prohibit such activities at any time.securities or otherwise pledging Lydall securities. None of the Company’s Directors or NEOs has any Lydall securities pledged or involved in margin loans.loans, nor did they throughout all of 2018.

Tax Deductibility of 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 specified executive officers of public companies, unless certain specific and detailed criteria are satisfied. The Committee considers the anticipated tax treatment to the Company and the executive officers in its review and establishment of compensation programs and payments. However, to ensure that the Committee maintains the flexibility to structure executive compensation in ways that best promote the interests of the Company and in light of recent tax law changes, the Committee will not necessarily always seek to limit executive compensation to that deductible under Section 162(m) of the Code.

The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed by the Tax Cuts and Jobs Act (“TCJA”), effective for taxable years beginning after December 31, 2017, PSAssuch that compensation paid to our covered executive officers (including, now, our Chief Financial Officer) in excess of $1 million will not be deductible for tax years beginning with 2018, unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Such arrangements, now applicable to the Company’s 2016 and the stock optionpre-November 2, 2017 performance-based awards, granted in December 2016 are intended to qualify as “performance-based compensation”grandfathered and therefore notmay still be subject to the Section 162(m) limitation on deductibility.deduction.

Compensation Committee Report on Executive Compensation

The Compensation Committee (the “Committee”) is composed of Independent Directors, as defined under applicable NYSE rules, Rule 16b-3 of the Exchange Act and Section 162(m) of the Code. The Committee was appointed by the Board and chartered to oversee and approve the compensation and incentive programs of Lydall executive officers and Directors and to review all other incentive programs of the Company. The Committee has reviewed and discussed theCompensation Discussion and Analysis with management and, based on such review and discussion, the Committee recommended to the Board that theCompensation Discussion and Analysis be included in this Proxy Statement.

Kathleen Burdett
Matthew T. Farrell
Marc T. GilesJames J. Cannon
William D. Gurley, Chair
Suzanne Hammett

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EXECUTIVE COMPENSATION TABLES

Fiscal Year 20162018 Summary Compensation Table

The following table shows the compensation awarded to, earned by or paid to the Named Executive Officers for the fiscal years 2016, 20152018, 2017 and 2014.2016.

Name and Principal Position (a)		Year (b)				Salary ($) (c)				Bonus(2) ($) (d)				Stock Awards(3) ($) (e)				Option Awards(3) ($) (f)				Non-Equity Incentive Plan Compensation(4) ($) (g)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)				All Other Compensation(5) ($) (i)				Total ($) (j)
Dale G. Barnhart, President and Chief Executive Officer			2016				594,815								600,270				600,122				740,000				—				70,799				2,606,006
			2015				574,508				—				600,332				600,504				704,480				—				63,285				2,543,109
			2014				522,600				—				1,208,412				549,798				754,000				—				63,563				3,098,373
Scott M. Deakin, Executive Vice President and Chief Financial Officer(1)			2016				403,892				—				450,042				—				301,500				—				46,910				1,202,344
			2015				124,685				216,000				584,533				200,168				84,609				—				4,949				1,214,944
Paul A. Marold, Jr., President – Performance Materials(1)			2016				287,692				140,000				425,470				250,203				162,405				—				62,404				1,328,174
Joseph A. Abbruzzi, President – Technical Nonwovens			2016				311,877				—				300,456				—				110,091				—				87,571				809,995
			2015				301,315				—				125,283				125,296				200,054				—				85,984				837,932
			2014				288,271				—				569,635				124,416				207,404				—				93,587				1,283,313
Chad A. McDaniel, Senior Vice President, General Counsel and Chief Administrative Officer			2016				302,427				—				300,456				—				150,500				—				36,065				789,448
			2015				280,996				—				137,775				137,520				137,343				—				33,432				727,066
			2014				238,135				—				535,660				124,416				150,115				—				33,233				1,081,559

Name and Principal Position (a)		Year (b)				Salary ($) (c)				Bonus(3) ($) (d)				Stock Awards(4) ($) (e)				Option Awards(5) ($) (f)				Non-Equity Incentive Plan Compensation(6) ($) (g)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)				All Other Compensation(7) ($) (i)				Total ($) (j)
Dale G. Barnhart, President and Chief Executive Officer			2018				631,720								670,903				600,336				177,777								71,241				2,151,977
			2017				620,179				—				750,010				750,071				575,856				—				73,873				2,769,989
			2016				594,815				—				600,270				600,122				740,000				—				70,799				2,606,006
Randall B. Gonzales, Executive Vice President & CFO(1)			2018				316,846				67,071				846,869				420,240				52,121								114,820				1,817,967
Chad A. McDaniel, Senior Vice President, General Counsel and Chief Administrative Officer			2018				337,096								223,710				200,136				47,319								36,758				845,019
			2017				315,384				—				162,550				162,533				131,657				—				36,363				808,488
			2016				302,427				—				300,456				—				150,500				—				36,065				789,448
Paul A. Marold, Jr., President – Performance Materials			2018				351,589								181,785				162,618				51,954								44,023				791,969
			2017				335,289				—				150,106				150,086				125,022				—				42,989				803,492
			2016				287,692				140,000				425,470				250,203				162,405				—				62,404				1,328,174
Scott M. Deakin, President – Thermal Acoustical Solutions(2)			2018				430,246								111,911				100,086				99,346								45,186				786,775
			2017				420,162				—				437,867				237,576				234,058				—				44,936				1,374,599
			2016				403,892				—				450,042				—				301,500				—				46,910				1,202,344
Joseph A. Abbruzzi, President – Technical Nonwovens			2018				331,500								181,785				162,618				31,218								38,536				745,657
			2017				320,192				—				150,106				150,086				177,638				—				52,309				850,332
			2016				311,877				—				300,456				—				110,091				—				87,571				809,995