AUDIT COMMITTEE REPORT
The Audit Committee assists the board in overseeing the accounting and financial reporting processes of the company and audits of the consolidated financial statements of the company. The Audit Committee operates pursuant to a written charter, a copy of which can be found on the company’s website at
www.mt.com under “About
Us/Us / Investor
Relations/Relations / Corporate Governance.” In discharging its oversight role, the Audit Committee discussed the audited consolidated financial statements contained in the
20172019 annual report separately with the company’s independent registered public accounting firm and the company’s management and reviewed the company’s internal controls and financial reporting.
The company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), is responsible for auditing the company’s consolidated financial statements as well as the company’s internal control over financial reporting. PwC issues an integrated audit report that includes opinions as to (1) whether the consolidated financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the company and its subsidiaries in accordance with accounting principles generally accepted in the United States of America, and (2) whether the company maintained, in all material respects, effective internal control over financial reporting.
Audited Consolidated Financial Statements
In reviewing the company’s audited consolidated financial statements with PwC, the Audit Committee discussed the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board’sBoard, including Auditing Standard Section 1301, and the Securities and Exchange Commission, as amended, and other matters including, without limitation:
•
Understanding the terms of the audit, including the objectives of the audit and the related responsibilities of both PwC and management;
•
PwC’s responsibilities under PCAOB Standards and related rules, including the nature, scope, and results of their audits;
the
•
The written disclosures and confirming letter from PwC regarding their independence required under therelevant Public Company Accounting Oversight Board Rule 3526;rules;
certain
•
Certain matters regarding the company’s accounting policies, practices, and critical accounting estimates;
the
•
The auditor’s evaluation of the quality of the company’s financial reporting;
information
•
Information related to significant unusual transactions, including the business rationale for such transactions;
an
•
An overview of the overall audit strategy, including timing of the audit, significant risks the auditor identified, and significant changes to the planned audit strategy or identified risks;
any
•
Any material weaknesses or significant deficiencies in internal controls over financial reporting; and
the
•
The extent of any significant accounting adjustments.
In reviewing the company’s audited consolidated financial statements with the company’s management, the Audit Committee discussed
several of the same topics listed above with management, including, without limitation, the process used by management in formulating accounting estimates and the reasonableness of those estimates.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the board approved, that the audited consolidated financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2017.
2019.
Independent Registered Public Accounting Firm Fees
| | | | Audit Fees | | | Audit-Related Fees | | | Tax Fees | | | All Other Fees | |
| 2019 | | | | $ | 4,167,000 | | | | | $ | 33,000 | | | | | $ | 539,000 | | | | | $ | 3,000 | | |
| 2018 | | | | $ | 3,913,416 | | | | | $ | 134,178 | | | | | $ | 270,523 | | | | | $ | 8,300 | | |
AUDIT COMMITTEE REPORT
Audit Fees — Represents fees for (i) the audit of the annual consolidated financial statements and internal control over financial reporting, (ii) review of consolidated financial statements included in quarterly reports on Form 10-Q, and (iii) audit services provided in connection with statutory audits and certain regulatory filings.
Audit-Related Fees —
RepresentsFor 2019, represents fees for employee benefit plan audits and attestation services related to financial reporting. For 2018, represents fees for (i) due diligence services related to mergers and acquisitions and (ii) employee benefit plan audits.
Tax Fees — Represents fees for tax consultation and compliance-related services.
Other Fees — Represents fees for
a software
licenselicenses for
a technical financial accounting and reporting application.
The Audit Committee has determined that PwC’s provision of the services included in the categories “Audit-Related Fees,” “Tax Fees,” and “Other Fees” is compatible with PwC maintaining its independence. All non-audit services were approved in advance by the Audit Committee pursuant to the procedures described below.
Audit Committee Approval of Non-Audit Services
The Audit Committee approves all non-audit services PwC provides in accordance with the following framework:
•
The Audit Committee is considered to have pre-approved any project in an approved category that is less than $50,000 in fees. Specific projects in excess of this amount and any potential projects not included in the pre-approval framework are presented to the Audit Committee ChairmanChair for advance approval.
•
On a quarterly basis, PwC reports all non-audit services outside of the pre-approval framework to the Audit Committee and any proposals for non-audit services in the upcoming quarter.
•
The Audit Committee reviews all non-audit fees at least annually.
The independent registered public accounting firm ensures that all audit and non-audit services provided to the company have been approved by the Audit Committee. Each year, the company’s management and the independent registered public accounting firm confirm to the Audit Committee that every non-audit service being proposed is permissible.
Independent Registered Public Accounting Firm for
20182020
The Audit Committee has appointed PwC as the company’s independent registered public accounting firm to audit and report on the company’s consolidated financial statements and internal control over financial reporting for the fiscal year ending December 31,
20182020 and to perform such other services as may be required of them.
Respectfully submitted by the members of the
Audit Committee:
Francis A. Contino,Chair
Elisha W. Finney
Michael A. Kelly
Thomas P. Salice
| | | | | Respectfully submitted by the members of the
Audit Committee: | |
| | | | | Elisha W. Finney, Chair
Wah-Hui Chu
Michael A. Kelly | |
PROPOSAL TWO:
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
You are being asked to ratify the appointment of PricewaterhouseCoopers LLP (PwC) as the company’s independent registered public accounting firm. The Audit Committee has appointed PwC, independent public accountants, to audit and report on the company’s consolidated financial statements for the fiscal year ending December 31, 20182020 and to perform such other services as may be required of them. PwC’s appointment is ratified if a majority of votes cast, excluding abstentions, with respect to this proposal are voted “FOR.”
Auditor Attendance at Annual Meeting
Representatives of PwC are expected to be present at the annual meeting. They will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.
Limitation on Amount of Audit Fees
We have no existing direct or indirect understandings or agreements with PwC that place a limit on current or future years’ audit fees. Please see the Audit Committee Report above for further details concerning PwC’s fees.
The Board of Directors recommends that you voteFORratification of the appointment of PwC as independent registered public accounting firm. Proxies will be voted “FOR”ratification of the appointment of PwC unless otherwise specified in the proxy.
NOMINATING
AND& CORPORATE GOVERNANCE COMMITTEE REPORT
The Nominating and& Corporate Governance Committee assists the board in identifying and recommending individuals to be nominated for election to the Board of Directors by shareholders. The committee is responsible for advising the board on the structure and membership of committees of the board as well as developing corporate governance guidelines applicable to the operation of the company. The Nominating and& Corporate Governance Committee operates pursuant to a written charter, a copy of which can be found on the company’s website atwww.mt.com under “About Us/Us / Investor Relations/Relations / Corporate Governance.” We describe below the committee’s process the committee established to nominate directors to the board, the committee’s adoption of additional corporate governance best practices, and the committee’s engagement in other activities in 2019 related to corporate governance.
Director Nomination Process
The Board of Directors
as well as someshould be composed of successful individuals who demonstrate integrity, dedication, reliability, knowledge of corporate affairs, a general understanding of the
committee’s recent corporate governance activities.Director Nomination Process
company’s business, and an ability to work well together. Diversity in business background, area of expertise, gender, and ethnicity will be considered. Longer-term board succession will also be considered, taking into account the demographics of respective board members. The Nominating & Corporate Governance Committee evaluates current and prospective directors according to a skills and experience competency matrix (described under Board of Directors — General Information — Minimum Qualifications for Directors) to ensure that the Board has an appropriate mix of relevant skills and experience.
1.
When there is an actual or anticipated board vacancy, candidates forthe Nominating & Corporate Governance Committee will, together with the Chairman of the Board of Directorsand the Chief Executive Officer, determine the specific qualifications, competencies, and skills that are desired for potential candidates to fill that vacancy.
2.
Candidates’ names may be recommendedsuggested by (i) any member of the Nominating and& Corporate Governance Committee (ii)or other boardBoard members, (iii)or by third parties engaged for that purpose by the committee, and/Committee, or (iv) the company’s shareholders. by shareholders pursuant to applicable rules and regulations.
3.
The Nominating & Corporate Governance Committee will receive all candidates’ names. The Nominating & Corporate Governance Committee will assess candidates who meet the specific qualifications, competencies, and skills relevant to the specific vacancy, and these candidates will be required to provide information regarding their background, experience, independence, and other information.
4.
As a general rule, members of the Nominating & Corporate Governance Committee, the Chairman of the Board, the Chief Executive Officer, and in appropriate cases other board members, will interview candidates who are under active consideration.
5.
Following these interviews, the Nominating & Corporate Governance Committee will consider shareholder recommendationseach candidate.
6.
The Nominating & Corporate Governance Committee will ensure that each candidate meets the specific qualifications, qualities, and evaluate themskills that are desired for candidates to fill the relevant vacancy. The Committee will also ensure that all candidates otherwise satisfy the list of director qualifications set out in the same mannerCompany’s corporate governance guidelines.
7.
The Nominating & Corporate Governance Committee will then propose a candidate to the full Board for consideration as other candidates. Shareholders interested in recommending a personnew director. The full Board will then, as applicable, vote to beappoint the candidate as a director ofor nominate the company must make such recommendation in writing. The recommendation must be forwardedcandidate to stand for election as a director.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE REPORT
Corporate Governance Best Practices
In 2018 we committed to apply the
Secretary of the company at: Mettler-Toledo International Inc., Im Langacher 44, 8606 Greifensee, Switzerland. Shareholder recommendations must include the information and be sent within the time-frames specifiedbest practice principles set out in the
company’s by-laws,Commonsense Principles of Corporate Governance (Commonsense Principles 2.0). These voluntary principles are intended to provide a
copy of which can be obtained from the Secretary. Additional details regarding minimum qualificationsframework for
director nominees can be found insound, long-term oriented governance. Among the corporate governance
guidelines on the company’s website atwww.mt.com under “About Us/Investor Relations/Corporate Governance.”The Nominating and Corporate Governance Committee proceeds as follows in nominating candidates for a position on the company’s Board of Directors.
best practices we have adopted are: | | (1) | The committee begins by working with the Chairman of the Board and the Chief Executive Officer to determine the specific qualifications, qualities, and skills that are desired for potential candidates to fill the vacancy on the board. The committee makes this determination based upon the current composition •
87.5% of the board the specific needs of the company in light of theis independent •
Presiding Director as independent lead director skills •
Separate Non-Executive Chairman and experience competency matrix,CEO roles •
Independent Audit, Compensation, and the Minimum Qualifications for Directors included in the corporate governance guidelines. These state that the Board of Directors should be composed of successful individuals who demonstrate integrity, reliability, knowledge of corporate affairs, a general understanding of the company’s business, and an ability to work well together. The committee considers diversity in business background, area of expertise, gender, and ethnicity. The committee also evaluates longer-term board succession, taking into account the demographics of respective board members. |
| (2) | The Nominating and& Corporate Governance Committee will then compile a listCommittees | | | •
Regular executive sessions of all candidates recommendedindependent directors •
Annual board and committee self-evaluation •
Policy limiting directorships •
Proxy access •
Annual director elections •
Regular director refreshment •
Majority voting in uncontested elections | | | •
No poison pill in effect •
Stock ownership guidelines for directors •
Multiple avenues for shareholders to fillcommunicate with the vacancy on the board. Candidates who meet the desired qualifications, qualities,board •
Board oversight of strong ethics program and skills will be required to provide information regarding the candidates’ background, experience, independence, and other information.annual publication of Corporate Responsibility Report | |
| (3) | Members of the Nominating and Corporate Governance Committee, the Chairman of the Board, the Chief Executive Officer, and, in appropriate cases, other board members, will interview those candidates who have completed the questionnaire. |
| (4) | Following these interviews, the full Nominating and Corporate Governance Committee considers the qualifications of each candidate to ensure that each candidate meets the specific qualities and skills that are desired. The committee will propose to the Board of Directors for consideration a list of candidates qualified for the position. |
Summary of 2019 Activities
TABLE OF CONTENTS
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE REPORT
During 2017,2019, the Nominating and& Corporate Governance Committee evaluated changes in individual Directors’directors’ professional status to evaluate their ability to continue serving on the board. They also identified and interviewed candidates to nominate to the board and appointed a new DirectorMs. Doat-Le Bigot to the board. They developedutilized the board’s skills and experience competency matrix and made use of it in the board’s self-evaluation and director search process.process, and they approved updates to the corporate governance guidelines. With regard to the current board nominees, the Nominating and& Corporate Governance Committee has recommended to the board that nineall current directors be nominated for re-election.
Respectfully submitted by the members of the
Nominating
and& Corporate Governance Committee:
Hans Ulrich Maerki,
Thomas P. Salice, Chair
Wah-Hui Chu
Constance L. HarveyRichard Francis
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
The primary elements of our executive compensation program are as follows (all elements are reviewed annually):
 | | |
Name | | Title |
Olivier A. Filliol | | President and Chief Executive Officer |
William P. Donnelly | | Executive Vice President |
Thomas Caratsch | | Head of Laboratory |
Marc de La Guéronnière | | Head of European and North American Market Organizations |
Simon Kirk | | Head of Product Inspection |
EXECUTIVE SUMMARYThis Compensation Discussion and Analysis describes our executive compensation program, focusing on the compensation of our named executive officers.
The Compensation Committee oversees
Our 2019 Named Executive Officers
| | | | | Name | | | Title | |
| | | | | Olivier A. Filliol | | | President and Chief Executive Officer | |
| | | | | Shawn P. Vadala | | | Chief Financial Officer | |
| | | | | Peter Aggersbjerg | | | Head of Divisions and Operations | |
| | | | | Marc de La Guéronnière | | | Head of European and North American Market Organizations | |
| | | | | Gerhard Keller | | | Head of Process Analytics | |
Primary Elements of our
executive compensation program. In carrying out its duties, the Compensation Committee receives information and recommendations from the Chairman, the Head of Human Resources, and the Chief Executive Officer, and consults with outside compensation consultants as it deems appropriate.In establishing executive compensation policies the Compensation Committee considers, among other things, the results of the Advisory Vote to Approve Executive Compensation from the prior year’s Annual Meeting of Shareholders. The result of last year’s advisory vote was very positive with 95% of votes cast in favor of the company’s compensation of its named executive officers.
The Compensation Committee uses independent compensation consultant Pearl Meyer & Partners. They provide market surveys of executive compensation in technology firms in comparable industries (including scientific instrument firms), which are considered in setting compensation levels. See the Compensation Committee Report for a discussion of the Committee’s review of Pearl Meyer & Partners’s independence.
The objectivesProgram
| | | | | | | | | | Long-Term Incentives | |
| Pay Element | | | Base Salary | | | Cash Incentive | | | Stock Options | | | Performance Share Units | |
| Type | | | Cash | | | Cash | | | Equity | | | Equity | |
| Performance Period | | | N/A | | | 1 year | | | 5-year vesting pro rata; cliff vesting for performance options | | | 3-year performance period, cliff vesting | |
| Performance Measures | | | N/A | | | EPS, net cash flow, sales, individual
targets | | | Stock price appreciation, EPS growth for performance options | | | Relative total shareholder return (rTSR) | |
Objectives of our executive compensation programs are to:Executive Compensation Programs
•
Ensure compensation reflects performance. The company links pay to performance in part by setting challenging, objectively measurable targets, and paying cash incentives designed to reward achievement of those targets. At the same time, when performance is only at or below target, compensation tends to be below market.
•
Focus executives on achieving financial and operating objectives that provide long-term shareholder value creation. The company does this in part by linking long-term compensation to the company’s long-term performance. The annual cash incentive is also tied to relevant metrics, including growth in earnings per share.
•
Align executives’ interests with those of the company’s shareholders. The company does this with its long-term incentives, including various performance-based equity grants, and by enforcing the equity ownership guidelines described below.
•
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Attract and retain the best talent. Total compensation must be competitive in the global personnel market in which we operate.
Our executive compensation program follows best practices:Executive Compensation Program Follows Best Practices
•
We consult independent compensation consultants to ensure our executive compensation is in line with industry and market standards.
•
We deploy a mix of short- and long-term incentives to ensure compensation aligns with performance and motivates long-term shareholder value creation.
•
Our long-term incentives include various performance-based equity incentives.
COMPENSATION DISCUSSION AND ANALYSIS
•
We have an executive compensation clawback policy to ensure that amounts are not erroneously awarded.
•
We maintain executive share ownership guidelines that align executives’ interests with shareholders’.
•
We prohibit directors and executives from hedging the ownership of company securities.
•
We responsibly manage the use of equity compensation.
Our
Results of 2019 Say-on-Pay Vote
In establishing executive compensation policies the Compensation Committee considers, among other things, the results of the Advisory Vote to Approve Executive Compensation from the prior year’s Annual Meeting of Shareholders. The result of last year’s advisory vote was very positive with 93% of votes cast in favor of the company’s compensation of its named executive officers.
Our Executive Compensation is alignedAligned with performance. Performance
In
2017, we grew adjusted earnings per share by 19% duethe 20-year period ending December 31, 2019, the company’s total return to
shareholders has been 1977%, compared with 224% for the S&P 500. Based on the quality of leadership of the management team, and the overall performance of the company, the committee believes management’s
growth initiatives, proactive gross margin expansion, and cost control.The key componentscompensation is appropriate.
Key Components of 2017 executive compensation were as follows:2019 Executive Compensation
•
Salaries — Mr. Filliol’s and Mr. Caratsch’s base salariessalary did not change. Mr. Donnelly’s base salary decreased as he transitions toward retirement. Base salaries for the other named executive officers were moderately increased. Base salaries in all cases were reviewed in light of salary market data, local market conditions, and individual performance.
•
Annual Cash Incentives — The average target achievement for our named executive officers in 20172019 was 114.5%104%, resulting in incentive payments of between 137%54% and 87%78% of base salary.
•
Long-Term Incentives — The total value of equity granted to Mr. Filliol decreased in 2017, which reflects that he received a one-time grant of performance options in 2016 to close gaps over the coming years in his cash compensation versus market. Mr. Caratsch’s grant was unchanged. Grants to the othernamed executive officers, excluding first-time named executive officers, increased by between 3% and 6%20%.
DISCUSSION & ANALYSIS
Role of the Compensation Committee
The Compensation Committee oversees our executive compensation program and evaluates and sets the compensation of the directors. In carrying out its duties, the Compensation Committee receives information and recommendations from the Chairman, the Head of Human Resources, and the Chief Executive Officer. No executive officer plays a role in making compensation decisions with respect to his or her own compensation.
Role of Independent Compensation Consultant
Pursuant to its charter, the Compensation Committee has the sole authority to retain, terminate, obtain advice from, and compensate its outside advisors, including its compensation consultants. The company has provided appropriate funding to the Compensation Committee to do so. In 2019, the Compensation Committee retained independent compensation consultant Pearl Meyer & Partners (PM&P). In 2018, PM&P provided market surveys of executive compensation in technology firms in comparable industries (including scientific instrument firms), which are considered in setting compensation levels.
PM&P reports directly to the Compensation Committee, and the Compensation Committee may replace PM&P or hire additional consultants at any time. PM&P attends meetings of the Compensation Committee, as requested, and communicates with the Chair of the Compensation Committee between meetings; however, the Compensation Committee makes all decisions regarding the compensation of the company’s executive officers.
COMPENSATION DISCUSSION AND ANALYSIS
PM&P provides various executive compensation services to the Compensation Committee at its request with respect to the company’s executive officers and other key employees, as well as the Board of Directors and Chairman of the Board. The services PM&P provides include advising the Compensation Committee on the principal aspects of the executive compensation program and evolving best practices, and providing market information and analysis regarding the competitiveness of the company’s program design and awards in relation to the company’s performance.
The Compensation Committee reviews the services provided by its outside consultants and believes that PM&P is independent in providing executive compensation consulting services. The Compensation Committee conducted a specific review of its relationship with PM&P, and determined that PM&P’s work for the Committee in 2019 did not raise any conflicts of interest, consistent with the guidance provided under the Dodd-Frank Act, or applicable rules and regulations of the SEC and the NYSE. In making this determination, the Compensation Committee noted that during 2019:
•
PM&P did not provide any services to the company or its management other than service to the Compensation Committee, and its services were limited to executive compensation consulting. Specifically, it did not provide, directly or indirectly through affiliates, any non-executive compensation services, including, but not limited to, pension consulting or human resource outsourcing;
•
Fees from the company were less than 1% of PM&P’s total revenue during the year of 2019;
•
PM&P maintains a Conflicts Policy, which was provided to the Compensation Committee, with specific policies and procedures designed to ensure independence;
•
With regard to whether any of the individuals on the PM&P team assigned to the company has any business or personal relationship with members of the Compensation Committee outside of the engagement, there is just one business relationship which we and PM&P have reviewed and believe does not impact PM&P’s independence:
◦
Mr. Salice is a member of the Board of Directors of Waters Corporation, which is a client of Mr. Van Putten, the lead consultant from PM&P providing services to the company’s Compensation Committee. Additionally, Mr. Salice is Co-Founder and Partner of SFW Capital and, on certain occasions, PM&P will assist SFW with compensation matters pertaining to their portfolio companies.
•
None of the PM&P consultants working on the company engagement, or PM&P, had any business or personal relationship with executive officers of the company; and
•
None of the PM&P consultants working on the company engagement directly own company stock.
The Compensation Committee monitors the independence of its compensation consultant on an annual basis.
COMPENSATION DISCUSSION AND ANALYSIS
Role of our Compensation Peer Group
In evaluating the competitiveness of the company’s executive compensation, the Compensation Committee periodically conducts both broad-based surveys of executive compensation and surveys of the compensation of executives in the instruments and electronics industries. In 2018, PM&P provided data using confidential surveys relating to CEO and senior executive compensation at technology companies in comparable industries, including scientific instruments firms, and firms of similar size to the company. They also provided data on peer company compensation at the following peer companies:
| | | | | Agilent Technologies | | | AMETEK | |
| | | | | Bio-Rad Laboratories | | | Bruker Corp. | |
| | | | | Fortive Corp. | | | Hologic | |
| | | | | IDEX Corp. | | | Intuitive Surgical | |
| | | | | PerkinElmer | | | ResMed | |
| | | | | Rockwell Automation | | | Roper Technologies | |
| | | | | Teleflex | | | Varian Medical Systems | |
| | | | | Waters Corp. | | | Xylem | |
The Compensation Committee also reviewed CEO compensation data from certain Swiss industrial public companies of a similar size and international organizational structure as the company.
Compensation Program Elements
The company’s compensation program consists of three main elements: base salary, an annual cash incentive, and long-term incentive compensation. The majority of executive compensation is performance-based, and is paid in the form of the annual cash incentive and long-term incentive compensation.
Our goal is to ensure that the three main elements of compensation are carefully considered and fair, and that executives are motivated to further the interests of shareholders, both short-term and long-term.
Each year the Compensation Committee separately reviews each of the three elements, as well as total compensation. ItThe Committee takes into account the company’s growth and performance, individual executive performance, and developments in the markets in which we compete for talent. In evaluating the competitiveness of the company’s executive compensation, the Compensation Committee periodically conducts both broad-based surveys of executive compensation and surveys of the compensation of executives in the instruments and electronics industries. In 2017, Pearl Meyer & Partners provided data using confidential surveys relating to CEO and senior executive compensation at technology companies in comparable industries, including scientific instruments firms, and firms of similar size to the company. They also provided data on peer company compensation at Agilent Technologies, Inc., Ametek Inc., Bio-Rad Laboratories, Inc., IDEX Corporation, PerkinElmer Inc., Rockwell Automation Inc., Roper Technologies, Inc., Sartorius AG, Waters Corporation, and Xylem Inc. The Compensation Committee also reviewed CEO compensation data from certain Swiss industrial public companies of a similar size and international organizational structure as the company.
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Based on the quality of leadership of the management team, and the overall performance of the company, the committee believes management’s compensation is appropriate.
Base Salary
The company’s goal is to pay base salaries that are approximately at or somewhat below the median. Based on market data, we believe base salaries for our executive officers are generally slightly lower than those at peer companies. Although a competitive base salary is necessary and appropriate to attract and retain high quality talent, we believe the majority of executive compensation should be paid in ways that link pay with performance. We accomplish this through the annual cash incentive and long-term incentives.
The Compensation Committee considered its review of the salary market data referred to above, local market conditions, and individual performance in setting base salaries for 2017.2019. The 20172019 base salary for Mr. Filliol and Mr. Caratsch did not change. The 2017 base salary of Mr. Donnelly decreased 45% as he continues to transition toward leaving the company at the end of 2018. The Compensation Committee increased the base salary for Mr. Aggersbjerg by 1%, Mr. de La Guéronnière by 2%, and Mr. KirkVadala by 1%8%, in each case effective April 1st.
Mr. Keller is a first-time named executive officer.
We link pay with performance through our cash incentive plan, called POBS Plus. The purpose of the incentive plan is to provide an incentive to key employees of the company to reward them for driving the success of the company as measured based on objective financial criteria. The incentive plan is administered by the Compensation Committee. At the end of each year, the Compensation Committee establishes the performance targets on which each participant’s incentive is based for the coming year. The targets used relate
COMPENSATION DISCUSSION AND ANALYSIS
closely to our annual plan and budget, which are approved by the full Board of Directors each year. The targets are set taking into account the economic environment, the health of the company’s end-user markets, and the challenges and opportunities of the company’s various businesses. See “
20172019 Threshold, Target, Maximum, and Actual Performance” below.
In addition, between 12 and 20 percent of the incentive for each participant in the POBS Plus incentive plan is based on individual objective performance targets relating to the company’s annual business objectives. The Compensation Committee directly evaluates the Chief Executive Officer’s performance on his individual targets, and reviews the CEO’s recommendation on the individual target performance of the other executive officers. The Compensation Committee reviews the audited results of the company’s performance against each participant’s performance targets and determines the incentive payment, if any, earned by each participant.
Cash Incentive Payment as % of Base Salary
| | | | Achievement vs. Target Levels | |
| Name | | | <90% | | | 100%
(Target) | | | 130%
(Maximum) | |
| Olivier A. Filliol | | | | | — | | | | | | 50% | | | | | | 169.4% | | |
| Shawn P. Vadala | | | | | — | | | | | | 45% | | | | | | 157.5% | | |
| Other Named Executive Officers | | | | | — | | | | | | 45% | | | | | | 160.5% | | |
| | | | | | |
| | Achievement vs. Target Levels |
| Name | | <90% | | 100%
(Target) | | 130%
(Maximum) |
| Olivier A. Filliol | | | — | | | | 50 | % | | | 169.4 | % |
| William P. Donnelly | | | — | | | | 45 | % | | | 157.5 | % |
| Other Named Executive Officers | | | — | | | | 45 | % | | | 160.5 | % |
The plan provides that targets for 100% achievement should be challenging and ambitious, but also realistic and attainable such that it is possible to achieve and exceed them. The impact of over- or under-achieving targets on the annual incentive can be significant. The company and Board of Directors therefore approach the target setting process with care and consideration. We believe targets are set consistently with the philosophy of the POBS Plus plan that they be challenging and ambitious. In the last five years the average target achievement for the named executive officers was 107%.
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
20172019 Threshold, Target, Maximum, and Actual Performance
| | | | | | | | |
| 2017 Performance Targets | | Threshold | | Target | | Maximum | | Actual |
| Adjusted Non-GAAP Earnings Per Share(1) | | | $15.89 | | | | $16.39 | | | | $17.89 | | | | $17.55 | |
| Net Cash Flow(2) | | | $455.5 million | | | | $480.1 million | | | | $553.9 million | | | | $517.2 million | |
| Group Sales (at budgeted currency rates) | | | $2,516.5 million | | | | $2,568.4 million | | | | $2,724.1 million | | | | $2,646.3 million | |
| 2019 Performance Targets | (1) | Excludes purchased intangible amortization (net of tax) of $7.1 million, a one-time tax charge of $72.0 million for the implementation of the Tax Cuts and Jobs Act (“Tax Act”), a one-time gain (net of tax) of $2.7 million relating to the sale of a facility, restructuring charges (net of tax) of $10.0 million, and acquisition costs (net of tax) of $1.3 million. | Threshold | | | Target | | | Maximum | | | Actual | |
| Adjusted Non-GAAP Earnings Per Share(1) | | | $21.68 | | | $22.70 | | | $24.40 | | | $22.62 | |
| Net Cash Flow(2) | | | $608.6 million | | | $657.9 million | | | $740.2 million | | | $650.5 million | |
| Group Sales (at budgeted currency rates) | | | $2,934.7 million | | | $3,025.4 million | | | $3,176.7 million | | | $3,022.6 million | |
| (2) | Represents cash flow from operations before tax payments and voluntary pension payments less capital expenditures, restructuring payments, and excess tax benefits from share-based payment arrangements. Excludes deviations for facility expansion and acquisition capital expenditures versus target. |
(1)
Excludes a one-time net deferred tax gain of $15.8 million associated with the enactment of Swiss tax reform, restructuring charges (net of tax) of $12.6 million, and purchased intangible amortization (net of tax) of $10.8 million. Adjusted EPS was also reduced $0.15 per share for an adjustment to restate our actual tax rate to our budgeted tax rate before non-recurring items.
(2)
Represents cash flow from operations before tax payments and voluntary pension payments less capital expenditures, restructuring payments, and excess tax benefits from share-based payment arrangements. Excludes deviations for facility expansion and acquisition capital expenditures versus target.
The
20172019 weighted performance relative to targets resulted in the following incentive payments as a percent of base salary under the POBS Plus plan for
2017:2019 for each named executive officer:
| | |
| | Mr. Filliol | | | 137 | | 78% | | |
| | | | | Mr. DonnellyVadala | | | 97 | | 66% | | |
| | | | | Mr. CaratschAggersbjerg | | | 107 | | 54% | | |
| | | | | Mr. de La Guéronnière | | | 87 | | 62% | | |
| | | | | Mr. KirkKeller | | | 95 | | 66% | | |
Clawback Policy
The board believes it is good corporate governance and in the interests of shareholders to have a recoupment or “clawback” policy concerning incentive-based compensation, specifically with regard to the company’s variable cash compensation, the POBS Plus plan. As a matter of basic fairness, the board wishes to correct for errors in the event of certain accounting restatements affecting incentive-based compensation to ensure that amounts are not erroneously awarded.
In July 2013, the board adopted a clawback policy that applies to all executive officers and certain other individuals. In the event the company is required to prepare an accounting restatement due to the material noncompliance of the company with any financial reporting requirement under the securities laws (other than a restatement caused by a change in applicable accounting rules or interpretations), the board will review the specific facts and circumstances and take such actions as it considers appropriate in its sole discretion with respect to the incentive-based compensation of covered individuals as follows:
With respect to POBS Plus cash incentives, the board will determine the amount that would have been due under the restated financial results, and whether to seek reimbursement of any excess amount that was paid (net of any taxes paid but taking into account any deductions that may be taken upon repayment) for cash incentives paid within the three-year period prior to the determination of the necessary restatement.
COMPENSATION DISCUSSION AND ANALYSIS
Another method we have historically used to link pay with performance is awarding stock options, which we believe aligns management’s long-term interests with those of the company’s shareholders. Named executive officers’ stock options generally vest over five years, 20% per year, starting on the first anniversary of the date of grant. The company has,
in the past, also granted performance options with cliff vesting of five years or
longer, including a grant oflonger. The only such options outstanding are performance options
granted to the CEO in 2016,
described below.which have a five-year performance period and fully vest in 2022 if the company has achieved at least 12% compound annual growth in its fully diluted earnings per share, subject to certain adjustments, over the five year period from January 1, 2017 through December 31, 2021. All options have a term of ten years. We expect future grants will similarly have vesting schedules of five years and terms of ten years.
The 2016 compensation market data provided by Pearl Meyer & Partners revealed certain gaps in both cash and long-term incentive compensation compared to market and peer companies. The gaps were the result of strong growth in market capitalization, no or minimal increases in cash compensation over the last several years, and long-term incentive increases that were lower than market and peer companies. Reflecting input from Pearl Meyer & Partners on current market practices, the Compensation Committee generally determined to close the equity gaps by granting a new type of performance-based long-term incentive:
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
performance share units, described below. The gap in the CEO’s cash compensation was addressed with a one-time grant of performance stock options in 2016, as described below. With these changes, a greater proportion of the namedNamed executive officers’ total compensation is being made in the form of long-term incentives that further align management’s long-term interests with those of the company’s shareholders.
In 2016 and 2017, each named executive officerofficers also received a target awardawards of performance share units, under which the individual will earn shares of common stock in the future if certain performance conditions (including market criteria) are met. The company’s performance share units are based on relative total shareholder return (rTSR) over a three-year period, specifically, the company’s relative performance against each of the companies that make up the S&P 500 Healthcare Index and the S&P 500 Industrials Index. The units have three-year cliff vesting. The company must achieve at least a 30th percentile performance for the performance share units to start vesting. The units will vest at 100% if the company achieves a 60th percentile performance, and the units will vest at 200% if the company’s relative performance is at the 75th percentile or better.
The vesting schedule is shown in this table (linear
interpretationinterpolation is applied between the points shown):
| | | | | | | | rTSR Percentile Rank | | | Shares Earned as % of Target | |
| | | | | Threshold | | | ≤ 30% | | | 0% | |
| | | | | | | | 45% | | | 50% | |
| | | | | Target | | | 60% | | | 100% | |
| | | | | | | | 67.5% | | | 150% | |
| | | | | Maximum | | | ≥ 75% | | | 200% | |
| | | | |
| | rTSR Percentile Rank | | Shares Earned as % of Target |
| Threshold | | | ≤ 30% | | | | 0% | |
| | | | 45% | | | | 50% | |
| Target | | | 60% | | | | 100% | |
| | | | 67.5% | | | | 150% | |
| Maximum | | | ≥ 75% | | | | 200% | |
The vesting percentage of the performance share units is capped at 100% of target when the company’s absolute TSR is negative.
In Mr. Filliol’s case, in 2016 the Compensation Committee additionally made a one-time grant of performance stock options. This one-time grant is intended to address an existing cash compensation gap that will not be closed with an increase in cash compensation over the coming 5-year period. The performance stock options have a five-year performance period and fully vest in 2022 if the service and performance conditions are met. The performance stock options will only vest if the company has achieved at least 12% compound annual growth in its fully diluted earnings per share, subject to certain adjustments, over the five year period from January 1, 2017 through December 31, 2021. The Compensation Committee determined that at this time it would be appropriate for a greater proportion of the CEO’s total compensation to be long-term performance-based and therefore decided to address his existing cash compensation gap with this one-time performance stock option grant.
In determining the amount of each named executive officer’s equity grants, the Compensation Committee evaluates the relative importance of the individual’s job, the contribution and performance of the individual, their years of service, and their total compensation, as well as competitive information about equity as described above relative to each individual. In
2017,2019, these factors led to the grant of equity with the grant date fair values each as described in the table “Grant of Plan-Based Awards.”
The Compensation Committee believes that past performance is just one factor to take into account in determining the size of future awards.
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Equity Grant Practices and Policy
The Compensation Committee approves all equity grants. Equity grants are typically made once each year when the overall annual compensation review takes place (typically in late October or early November each year). The Compensation Committee and Board meeting dates are set several years in advance, and the grants are made on the meeting date. In the past, the Committee has also made initial grants to individual executive officers at the time they started serving as executive officers. All options have an exercise price equal to the closing price of the company’s shares on the New York Stock Exchange on the date of grant.
Equity Ownership Guidelines
The Compensation Committee feels it is important for senior executives to have a significant portion of their ongoing compensation tied to the interests of shareholders. The Compensation Committee has
COMPENSATION DISCUSSION AND ANALYSIS
implemented equity ownership guidelines for executive officers that call for the individuals to accumulate equity ownership as follows:
| | |
Category | | Category | | | Value of Equity Ownership Required | |
| | | | | CEO | | | 5x base salary | |
Executive Vice President/ | | | | CFO | | | 3x base salary | |
| | | | | Other executive officers | | | 2x base salary | |
The following types of equity count towards the ownership requirement: shares held directly, vested and unvested restricted stock units (if any), and the in-the-money value of vested stock options. Individuals have five years from the date of appointment as an officer to meet the ownership requirement. If an individual does not meet the requirement within the relevant time periods, the Compensation Committee has the discretion not to make further equity grants to that person. If an individual has met their requirement but subsequently falls below due to a drop in share price, they will have 24 months to rebuild their ownership, subject to Compensation Committee discretion. All officers satisfy the equity ownership guidelines.
Post-Employment Holding Requirement
The CEO is required to hold 15,000 shares until at least one year following his last day of employment. Except when terminated for cause, the named executive officers have a two-year period following their last day of employment (five years in the case of the CEO) to exercise stock options that were vested on their last day of employment.
Clawback Policy
The board believes it is good corporate governance and in the interests of shareholders to have a recoupment or “clawback” policy concerning incentive-based compensation, specifically with regard to the company’s variable cash compensation, the POBS Plus plan. As a matter of basic fairness, the board wishes to correct for errors in the event of certain accounting restatements affecting incentive-based compensation to ensure that amounts are not erroneously awarded.
The board has adopted a clawback policy that applies to all executive officers and certain other individuals. In the event the company is required to prepare an accounting restatement due to the material noncompliance of the company with any financial reporting requirement under the securities laws (other than a restatement caused by a change in applicable accounting rules or interpretations), the board will review the specific facts and circumstances and take such actions as it considers appropriate in its sole discretion with respect to the incentive-based compensation of covered individuals as follows:
With respect to POBS Plus cash incentives, the board will determine the amount that would have been due under the restated financial results, and whether to seek reimbursement of any excess amount that was paid (net of any taxes paid but taking into account any deductions that may be taken upon repayment) for cash incentives paid within the three-year period prior to the determination of the necessary restatement.
Company Equity Hedging Policy
The board and the company’s executive officers, and their designees, are prohibited from any transaction hedging the ownership of company securities, including trading in publicly-traded options, puts, calls, or other derivative instruments that are directly related to company securities. This policy does not apply to employees who are not executive officers.
Under the Share Purchase Plan, executive officers may purchase company shares using all or a portion of their cash incentive payable under the POBS Plus plan, subject to approval of the Compensation Committee. The issue price for shares under the plan will be equal to the New York Stock Exchange closing price on the
COMPENSATION DISCUSSION AND ANALYSIS
date of issuance, which occurs before March 15 of each year. All shares issued pursuant to the plan are restricted for a period of five years from the date of issuance, during which time they may not be sold, assigned, transferred, or otherwise disposed of, nor may they be pledged or otherwise hypothecated, except in the case of death or disability.
Prior to 2018 Section 162(m) of the Internal Revenue Code prohibited the company from deducting compensation in excess of $1 million paid to certain employees, generally its CEO and its three other most highly compensated executive officers (excluding the CFO), unless that compensation qualified as performance-based compensation. Starting in 2018 there is no performance-based compensation exception to the $1 million cap, and the pool of relevant employees additionally includes the CFO and any employee subject to the limitation in a prior year. We maintain flexibility to balance the need to fairly compensate the company’s executive officers with the company’s ability to deduct compensation of relevant officers.
Tax Equalization Agreements
The company is a party to tax equalization agreements with Messrs. Filliol, Caratsch,Aggersbjerg, and Kirk,Keller, who are non-U.S. citizens and non-U.S. residents who pay income tax on their earnings in Switzerland. The individuals do not receive any cash benefit from the agreements, the principle of which is to leave the employee in exactly the same position (i.e., no better and no worse off) as if they had not become subject to U.S. taxation on a portion of their income. Under the tax equalization agreements, the company has agreed to pay taxes borne by these executives in respect of incremental taxation being due in the United States by virtue of their work for the company there. Because the individuals are left no better and no worse off than had they not become subject to U.S. taxation, the Compensation Committee does not believe it is appropriate to take into account the U.S. taxes paid by the company under the tax equalization agreements when determining the employees’ compensation each year. In cases where the individual’s Swiss taxes are lower as a result of the company having paid these U.S. tax amounts, the individual must make a payment to the company under the tax equalization agreement.
The company is a party to employment agreements with each of the named executive officers. These agreements provide for a base salary subject to adjustment and participation in our cash incentive plan and other employee benefit plans. Each agreement prohibits the executive from competing with the company for a period of
6 – 126-12 months after termination of employment. The agreements have no fixed term. They have an effective term of
6 – 126-12 months because they may be terminated without cause by either party and during the notice period the executive is entitled to full compensation under the agreement, including payment of base salary, target cash incentive, and continuation of benefits.
The equity compensation arrangements are separately described in the sections below entitled “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End.” The operation of the employment agreements in the context of a termination or a change in control is separately described below under “Payments Upon Termination or Change in Control.”
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Summary Compensation Table(1)
| | | | | | | | | | | | | | |
Name and
Principal Position | | Year | | Base
Salary
($) | | Stock
Awards
($)(2) | | Option
Awards
($)(3) | | Non-Equity
Incentive Plan
Compensation
($)(4) | | All Other
Compensation
($)(5) | | Total
($) |
Olivier A. Filliol
President and
Chief Executive Officer | | | 2017 | | | $ | 851,642 | | | $ | 1,439,685 | | | $ | 3,574,521 | | | $ | 1,165,898 | | | $ | 227,339 | | | $ | 7,259,085 | |
| | | 2016 | | | | 851,642 | | | | 1,199,874 | | | | 5,074,671 | | | | 961,844 | | | | (733,362 | ) | | | 7,354,669 | |
| | | 2015 | | | | 896,466 | | | | — | | | | 3,575,041 | | | | 650,386 | | | | 1,531,967 | | | | 6,653,860 | |
William P. Donnelly
Executive Vice President | | | 2017 | | | | 271,225 | | | | 162,967 | | | | 583,532 | | | | 264,443 | | | | 26,125 | | | | 1,308,292 | |
| | | 2016 | | | | 408,875 | | | | 77,108 | | | | 647,156 | | | | 387,069 | | | | 24,575 | | | | 1,544,783 | |
| | | 2015 | | | | 404,797 | | | | — | | | | 1,293,771 | | | | 251,839 | | | | 26,178 | | | | 1,976,585 | |
Thomas Caratsch
Head of Laboratory | | | 2017 | | | | 304,291 | | | | 124,970 | | | | 432,743 | | | | 325,104 | | | | 225,794 | | | | 1,412,902 | |
| | | 2016 | | | | 307,460 | | | | 64,883 | | | | 492,761 | | | | 247,845 | | | | 11,167 | | | | 1,124,117 | |
| | | 2015 | | | | 316,970 | | | | — | | | | 493,285 | | | | 213,669 | | | | 314,155 | | | | 1,338,079 | |
Marc de La Guéronnière
Head of EU and NA | | | 2017 | | | | 263,434 | | | | 246,562 | | | | 680,615 | | | | 229,535 | | | | 73,841 | | | | 1,493,986 | |
| | | 2016 | | | | 259,235 | | | | 184,777 | | | | 693,888 | | | | 208,193 | | | | 72,100 | | | | 1,418,194 | |
| | | 2015 | | | | 254,176 | | | | — | | | | 694,219 | | | | 174,487 | | | | 69,474 | | | | 1,192,356 | |
Simon Kirk
Head of Product Inspection | | | 2017 | | | | 318,056 | | | | 172,256 | | | | 398,661 | | | | 302,498 | | | | 257,027 | | | | 1,448,497 | |
| | | 2016 | | | | 320,168 | | | | 154,216 | | | | 389,240 | | | | 287,430 | | | | 189,169 | | | | 1,340,222 | |
| | | 2015 | | | | 330,070 | | | | — | | | | 388,874 | | | | 151,073 | | | | 195,677 | | | | 1,065,694 | |
| (1) | All amounts shown were paid in Swiss francs, except amounts paid to Mr. Donnelly and U.S. tax equalization payments, which were paid in U.S. dollars, and amounts paid to Mr. de La Guéronnière, which were paid in Euros. For purposes of this table, all amounts paid in Swiss francs were converted to U.S. dollars at a rate of CHF 0.9847 to $1.00, and amounts paid in Euros were converted to U.S. dollars at a rate of EUR 0.8879 to $1.00, in each case the respective average exchange rate in 2017. |
| (2) | Represents the aggregate grant date fair value of performance share units for each individual computed in accordance with ASC 718. The valuation assumptions associated with such awards are discussed in Note 11 to the company’s consolidated financial statements included in the Form 10-K for the fiscal year ending December 31, 2017. The following table lists the value of each officer’s award assuming the highest level of performance conditions will be achieved: |
| | | | |
| Name | | Year | | Maximum
Value of
Award
($) |
| Olivier A. Filliol | | | 2017 | | | $ | 2,879,370 | |
| | | | 2016 | | | | 2,399,748 | |
| William P. Donnelly | | | 2017 | | | | 325,935 | |
| | | | 2016 | | | | 154,216 | |
| Thomas Caratsch | | | 2017 | | | | 249,939 | |
| | | | 2016 | | | | 129,767 | |
| Marc de La Guéronnière | | | 2017 | | | | 493,124 | |
| | | | 2016 | | | | 369,554 | |
| Simon Kirk | | | 2017 | | | | 344,511 | |
| | | | 2016 | | | | 308,432 | |
| (3) | Represents the aggregate grant date fair value of stock option awards for each individual computed in accordance with ASC 718. The valuation assumptions associated with such awards are discussed in Note 11 to the company’s consolidated financial statements included in the Form 10-K for the fiscal year ending December 31, 2017. In Mr. Filliol’s case, the 2016 total includes a one-time grant of performance stock options with a grant date fair value of $1.5 million, with the remainder of the value representing the time-based annual stock option grant. |
| (4) | Amounts shown are the annual cash incentive earned under the company’s POBS Plus incentive plan. |
| (5) | Includes tax equalization payments and other miscellaneous benefits as set out below. As described in the Compensation Discussion and Analysis above, the individuals do not receive any cash benefit from the tax equalization payments. The principle of the tax equalization is to leave the employee in exactly the same position (i.e., no better and no worse) as if they had not become subject to U.S. taxation on a portion of their income. As such, the Compensation Committee does not believe it is appropriate to include these tax equalization amounts when determining the employees’ compensation each year. Negative amounts represent payments by the individual to the company, for example as a result of lower Swiss taxes being due by virtue of the U.S. tax payments. |
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Miscellaneous personal benefits, none of which individually exceeds $25,000 in value unless otherwise stated, include car allowances, expense allowances, tax equalization calculation, the company’s contribution to certain Swiss insurances beyond what’s available to all employees, the value of meals in the company cafeteria, and the company’s contributions to individual retirement accounts. In Mr. Kirk’s case, benefits include a schooling allowance of $44,999 in 2017, $48,508 in 2016, and $84,499 in 2015.
| | | | | | | | | | |
| Name | | Year | | Tax Equalization | | Retirement Contribution | | Swiss Insurance | | Miscellaneous Benefits |
| Olivier A. Filliol | | | 2017 | | | $ | (27,887 | ) | | $ | 189,012 | | | $ | 25,335 | | | $ | 40,878 | |
| | | 2016 | | | | (983,698 | ) | | | 189,012 | | | | 25,233 | | | | 36,091 | |
| | | 2015 | | | | 1,286,554 | | | | 189,012 | | | | 21,987 | | | | 34,414 | |
| William P. Donnelly | | | 2017 | | | | n.a. | | | | 16,125 | | | | n.a. | | | | 10,000 | |
| | | 2016 | | | | n.a. | | | | 14,575 | | | | n.a. | | | | 10,000 | |
| | | 2015 | | | | n.a. | | | | 16,178 | | | | n.a. | | | | 10,000 | |
| Thomas Caratsch | | | 2017 | | | | 107,018 | | | | 75,008 | | | | 13,909 | | | | 29,860 | |
| | | 2016 | | | | (101,655 | ) | | | 75,789 | | | | 13,993 | | | | 23,041 | |
| | | 2015 | | | | 200,897 | | | | 78,133 | | | | 11,222 | | | | 23,903 | |
| Marc de La Guéronnière | | | 2017 | | | | n.a. | | | | 59,887 | | | | n.a. | | | | 13,953 | |
| | | 2016 | | | | n.a. | | | | 58,147 | | | | n.a. | | | | 13,953 | |
| | | 2015 | | | | n.a. | | | | 55,521 | | | | n.a. | | | | 13,953 | |
| Simon Kirk | | | 2017 | | | | 85,281 | | | | 78,401 | | | | 12,900 | | | | 80,445 | |
| | | 2016 | | | | 17,730 | | | | 78,921 | | | | 12,844 | | | | 79,673 | |
| | | 2015 | | | | (12,235 | ) | | | 81,362 | | | | 11,547 | | | | 115,003 | |
Grants of Plan-Based Awards
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
[POBS Plus Cash Incentive] | | Grant Date | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2) | | All Other
Option
Awards:
Number of
Securities
Underlying Options
(#)(3) | | Exercise or
Base Price
of Option
Awards
($/Sh) | | Grant Date
Fair Value
of Stock
and Option
Awards
($)(4) |
| Name | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) |
| Olivier A. Filliol | | | 0 | | | $ | 425,821 | | | $ | 1,442,682 | | | | 11/02/2017 | | | | 0 | | | | 1,705 | | | | 3,410 | | | | 17,305 | | | $ | 671.60 | | | $ | 5,014,206 | |
| William P. Donnelly | | | 0 | | | | 101,250 | | | | 354,375 | | | | 11/02/2017 | | | | 0 | | | | 193 | | | | 386 | | | | 2,825 | | | | 671.60 | | | | 746,499 | |
| Thomas Caratsch | | | 0 | | | | 136,931 | | | | 488,386 | | | | 11/02/2017 | | | | 0 | | | | 148 | | | | 296 | | | | 2,095 | | | | 671.60 | | | | 557,713 | |
| Marc de La Guéronnière | | | 0 | | | | 118,985 | | | | 424,379 | | | | 11/02/2017 | | | | 0 | | | | 292 | | | | 584 | | | | 3,295 | | | | 671.60 | | | | 927,177 | |
| Simon Kirk | | | 0 | | | | 143,304 | | | | 511,116 | | | | 11/02/2017 | | | | 0 | | | | 204 | | | | 408 | | | | 1,930 | | | | 671.60 | | | | 570,916 | |
| (1) | Represents the range of cash incentive payments possible under the company’s POBS Plus incentive plan in respect of the 2017 fiscal year. The maximum incentive possible is 169.4% of base salary for Mr. Filliol, 157.5% for Mr. Donnelly, and 160.5% of base salary for the other named officers. The target cash incentive is 50% of base salary for Mr. Filliol and 45% of base salary for the other named officers. The actual incentive earned in each year is included in the “Summary Compensation Table” above. |
| (2) | Represents the range of stock awards possible under grants of performance share units made under the Mettler-Toledo International Inc. 2013 Equity Incentive Plan. Based on satisfaction of the performance conditions these awards may increase up to the maximum (200% of the target) or decrease to zero. The number of units actually received will depend on the company’s total shareholder return relative to the total shareholder return of each of the other companies in the S&P 500 Healthcare Index and the S&P 500 Industrials Index. Total shareholder return will be measured over a three year period beginning on the date of grant. Each unit received will be settled with one share of common stock shortly after the performance period closes. |
| (3) | Option awards made under the Mettler-Toledo International Inc. 2013 Equity Incentive Plan. The option grants vest in five equal annual installments starting on the first anniversary of the date of grant. |
| (4) | The grant date fair value of the performance share units of $844.39 per share and of options of $206.56 per share have been computed in accordance with ASC 718. For the performance share units the company used a Monte Carlo model to determine fair value. For the options the company used the Black-Scholes option pricing model, based upon the following assumptions: estimated time until exercise of 5.8 years; a risk-free interest rate of 2.00%; a volatility rate of 28%; and no dividend yield. The actual value of the performance share units and stock options may significantly differ from that calculated by these models, and depends on the company’s relative share price performance and the excess of the market value of the common stock over the exercise price at the time of exercise, respectively. |
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Outstanding Equity Awards at Fiscal Year-End
| | | | | | | | | | | | | | | | |
| | Option Awards(1) | | Stock Awards(2) |
| Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | Option
Exercise
Price
($) | | Option
Grant
Date | | Option
Expiration
Date | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested |
| Olivier A. Filliol | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,257 | | | $ | 2,637,297 | |
| | | | 68,100 | | | | 0 | | | | | | | $ | 90.76 | | | | 10/28/2009 | | | | 10/28/2019 | | | | | | | | | |
| | | | 67,260 | | | | 0 | | | | | | | $ | 133.00 | | | | 11/03/2010 | | | | 11/03/2020 | | | | | | | | | |
| | | | 65,990 | | | | 0 | | | | | | | $ | 149.95 | | | | 11/02/2011 | | | | 11/02/2021 | | | | | | | | | |
| | | | 59,930 | | | | 0 | | | | | | | $ | 169.37 | | | | 10/31/2012 | | | | 10/31/2022 | | | | | | | | | |
| | | | 37,656 | | | | 9,414 | | | | | | | $ | 244.99 | | | | 11/07/2013 | | | | 11/07/2023 | | | | | | | | | |
| | | | 26,058 | | | | 17,372 | | | | | | | $ | 263.62 | | | | 11/06/2014 | | | | 11/06/2024 | | | | | | | | | |
| | | | 15,408 | | | | 23,112 | | | | | | | $ | 312.36 | | | | 11/05/2015 | | | | 11/05/2025 | | | | | | | | | |
| | | | 6,043 | | | | 24,172 | | | | | | | $ | 397.95 | | | | 11/03/2016 | | | | 11/03/2026 | | | | | | | | | |
| | | | | | | | | | | | 12,678 | | | $ | 397.95 | | | | 11/03/2016 | | | | 11/03/2026 | | | | | | | | | |
| | | | 0 | | | | 17,305 | | | | | | | $ | 671.60 | | | | 11/02/2017 | | | | 11/02/2027 | | | | | | | | | |
| William P. Donnelly | | | | | | | | | | | | | | | | | | | | | | | | | | | 357 | | | | 221,169 | |
| | | | 10,105 | | | | 0 | | | | | | | $ | 133.00 | | | | 11/03/2010 | | | | 11/03/2020 | | | | | | | | | |
| | | | 24,745 | | | | 0 | | | | | | | $ | 149.95 | | | | 11/02/2011 | | | | 11/02/2021 | | | | | | | | | |
| | | | 20,633 | | | | 0 | | | | | | | $ | 169.37 | | | | 10/31/2012 | | | | 10/31/2022 | | | | | | | | | |
| | | | 12,446 | | | | 3,556 | | | | | | | $ | 244.99 | | | | 11/07/2013 | | | | 11/07/2023 | | | | | | | | | |
| | | | 7,973 | | | | 6,378 | | | | | | | $ | 263.62 | | | | 11/06/2014 | | | | 11/06/2024 | | | | | | | | | |
| | | | 4,182 | | | | 8,364 | | | | | | | $ | 312.36 | | | | 11/05/2015 | | | | 11/05/2025 | | | | | | | | | |
| | | | 1,094 | | | | 4,376 | | | | | | | $ | 397.95 | | | | 11/03/2016 | | | | 11/03/2026 | | | | | | | | | |
| | | | 0 | | | | 2,825 | | | | | | | $ | 671.60 | | | | 11/02/2017 | | | | 11/02/2027 | | | | | | | | | |
| Thomas Caratsch | | | | | | | | | | | | | | | | | | | | | | | | | | | 286 | | | | 177,183 | |
| | | | 720 | | | | 0 | | | | | | | $ | 90.76 | | | | 10/28/2009 | | | | 10/28/2019 | | | | | | | | | |
| | | | 570 | | | | 0 | | | | | | | $ | 133.00 | | | | 11/03/2010 | | | | 11/03/2020 | | | | | | | | | |
| | | | 780 | | | | 0 | | | | | | | $ | 149.95 | | | | 11/02/2011 | | | | 11/02/2021 | | | | | | | | | |
| | | | 2,745 | | | | 0 | | | | | | | $ | 169.37 | | | | 10/31/2012 | | | | 10/31/2022 | | | | | | | | | |
| | | | 5,420 | | | | 1,355 | | | | | | | $ | 244.99 | | | | 11/07/2013 | | | | 11/07/2023 | | | | | | | | | |
| | | | 3,630 | | | | 2,420 | | | | | | | $ | 263.62 | | | | 11/06/2014 | | | | 11/06/2024 | | | | | | | | | |
| | | | 2,126 | | | | 3,189 | | | | | | | $ | 312.36 | | | | 11/05/2015 | | | | 11/05/2025 | | | | | | | | | |
| | | | 0 | | | | 3,332 | | | | | | | $ | 397.95 | | | | 11/03/2016 | | | | 11/03/2026 | | | | | | | | | |
| | | | 0 | | | | 2,095 | | | | | | | $ | 671.60 | | | | 11/02/2017 | | | | 11/02/2027 | | | | | | | | | |
| Marc de La Guéronnière | | | | | | | | | | | | | | | | | | | | | | | | | | | 685 | | | | 424,371 | |
| | | | 12,555 | | | | 0 | | | | | | | $ | 133.00 | | | | 11/03/2010 | | | | 11/03/2020 | | | | | | | | | |
| | | | 12,725 | | | | 0 | | | | | | | $ | 149.95 | | | | 11/02/2011 | | | | 11/02/2021 | | | | | | | | | |
| | | | 12,245 | | | | 0 | | | | | | | $ | 169.37 | | | | 10/31/2012 | | | | 10/31/2022 | | | | | | | | | |
| | | | 7,380 | | | | 1,845 | | | | | | | $ | 244.99 | | | | 11/07/2013 | | | | 11/07/2023 | | | | | | | | | |
| | | | 5,061 | | | | 3,374 | | | | | | | $ | 263.62 | | | | 11/06/2014 | | | | 11/06/2024 | | | | | | | | | |
| | | | 2,992 | | | | 4,488 | | | | | | | $ | 312.36 | | | | 11/05/2015 | | | | 11/05/2025 | | | | | | | | | |
| | | | 1,173 | | | | 4,692 | | | | | | | $ | 397.95 | | | | 11/03/2016 | | | | 11/03/2026 | | | | | | | | | |
| | | | 0 | | | | 3,295 | | | | | | | $ | 671.60 | | | | 11/02/2017 | | | | 11/02/2027 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Simon Kirk | | | | | | | | | | | | | | | | | | | | | | | | | | | 532 | | | | 329,585 | |
| | | | 0 | | | | 959 | | | | | | | $ | 244.99 | | | | 11/07/2013 | | | | 11/07/2023 | | | | | | | | | |
| | | | 0 | | | | 1,804 | | | | | | | $ | 263.62 | | | | 11/06/2014 | | | | 11/06/2024 | | | | | | | | | |
| | | | 0 | | | | 2,514 | | | | | | | $ | 312.36 | | | | 11/05/2015 | | | | 11/05/2025 | | | | | | | | | |
| | | | 0 | | | | 2,632 | | | | | | | $ | 397.95 | | | | 11/03/2016 | | | | 11/03/2026 | | | | | | | | | |
| | | | 0 | | | | 1,930 | | | | | | | $ | 671.60 | | | | 11/02/2017 | | | | 11/02/2027 | | | | | | | | | |
| (1) | Each of the options vests ratably over five years starting from the first anniversary of the date of grant, except the performance options granted to Mr. Filliol on November 3, 2016. which vest on March 1, 2022 only if the company achieves 12% compound annual growth in its fully diluted earnings per share, subject to certain adjustments, between January 1, 2017 and December 31, 2021. |
| (2) | Each of the named executive officers, including the CEO, received a grant of performance share units in November 2016 and November 2017. The number of shares shown here is each named executive officer’s target award. See the Grants of Plan-Based Awards table above for performance and vesting information. The market value figure shown in the Stock Awards column is calculated using the closing share price of $619.52 on December 29, 2017. |
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Option Exercises and Stock Vested in Fiscal 2017
| | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number
of Shares
Acquired
on Exercise
(#) | | Net Value
Realized
on Exercise
($) | | Number of
Shares
Acquired
on Vesting
(#) | | Value Realized
on Vesting
($) |
| Olivier A. Filliol | | | 67,800 | | | $ | 28,510,256 | | | | — | | | $ | — | |
| William P. Donnelly | | | 47,490 | | | | 21,764,947 | | | | — | | | | — | |
| Thomas Caratsch | | | 26,333 | | | | 9,829,254 | | | | — | | | | — | |
| Marc de La Guéronnière | | | 0 | | | | 0 | | | | — | | | | — | |
| Simon Kirk | | | 9,160 | | | | 3,019,127 | | | | 218 | | | | 100,579 | |
Payments Upon Termination or Change in Control
The named executive officers are not entitled to any payment upon a change in control or upon termination of employment, regardless of the type of termination.
The company may terminate the employment of each of the named executive officers after giving the requisite 6 - 12 months’ notice. Named executive officers continue receiving their base salary, cash incentive, and benefits during the contractual notice period. Equity grants continue to vest so long as an individual remains employed or serves as a director, and vesting ceases on their last day of employment, regardless of the type of termination. Named executive officers forfeit unvested equity grants, and vested equity grants in a termination for cause, on the last day of employment.
Equity grants to the named executive officers (except Messrs. Filliol and Donnelly) made from 2013 onwards do not accelerate and do not vest automatically upon a change in control. The table below shows the value of those options that are still subject to accelerated vesting, assuming a change of control event occurred as of December 31, 2017. The expense associated with this acceleration is the same as absent a change in control, but would be incurred by the company earlier than over the normal course of the vesting period. The values shown below are calculated as the difference between $619.52, the share price on the last day the markets were open before December 31, 2017, and the respective exercise price.
| | | | |
| Name | | Net Value of
Accelerated
Unvested Stock
Options |
| Olivier A. Filliol | | $ | 24,972,457 | |
| William P. Donnelly | | | 7,140,435 | |
| Thomas Caratsch | | | 0 | |
| Marc de La Guéronnière | | | 0 | |
| Simon Kirk | | | 0 | |
This information is provided in accordance with the requirements of Item 402(u) of Regulation S-K and the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010.
For this disclosure we identified our median employee as of December 31, 2017, looking at compensation between January 1, 2017 and December 31, 2017. The total employee population considered was approximately 15,400 people; we did not exclude any employees. We used year-end local payroll records to identify the median employee. We did not apply any material assumptions, adjustments, or estimates, did not apply cost of living adjustments, and did not use statistical sampling.
COMPENSATION DISCUSSION AND ANALYSIS
Mr. Filliol’s annual total compensation for
20172019 was
$7,259,085,$8,755,320, as disclosed in the Summary Compensation Table
above.below. Our median employee’s annual total compensation, calculated consistent with Summary Compensation Table rules, for
20172019 was
$40,882.$39,445. Accordingly, the ratio of our CEO’s pay to our median employee is
178:222:1.
The pay ratio is influenced by the mix of geographies where the company has operations, and the nature of the work employees perform in the different countries. Approximately 40% of the company’s total workforce is located in low cost countries, including in China, India, Mexico, South East Asia, and Eastern Europe. Many of these employees are involved in assembly and manufacturing tasks, particularly in China and Mexico.
Almost all of our employees in the United States, Canada, and China are employed full-time. This is in line with industry practice in these regions. In Europe, we have a number of countries with a larger population of part-time employees (up to approximately 20 percent), in line with local practices.
Salary levels are driven by market and competitive conditions and are overseen by the Compensation Committee of the Board of Directors in the case of senior executive salaries, and by the Global Head of Human Resources in most other cases. The Compensation Committee and the Global Head of Human Resources are responsible for establishing compensation arrangements that allow the company to retain, attract, and motivate employees.
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table(1)
Name and
Principal Position | | | Year | | | Base
Salary
($) | | | Stock
Awards
($)(2) | | | Option
Awards
($)(3) | | | Non-Equity
Incentive Plan
Compensation
($)(4) | | | All Other
Compensation
($)(5) | | | Total
($) | |
| Olivier A. Filliol | | | | | 2019 | �� | | | | | 843,929 | | | | | | 1,860,350 | | | | | | 3,719,816 | | | | | | 661,640 | | | | | | 1,669,585 | | | | | | 8,755,320 | | |
| President and | | | | | 2018 | | | | | | 843,929 | | | | | | 1,787,174 | | | | | | 3,575,455 | | | | | | 557,837 | | | | | | 277,569 | | | | | | 7,041,964 | | |
| Chief Executive Officer | | | | | 2017 | | | | | | 843,929 | | | | | | 1,439,685 | | | | | | 3,574,521 | | | | | | 1,155,339 | | | | | | 225,046 | | | | | | 7,238,520 | | |
| Shawn P. Vadala | | | | | 2019 | | | | | | 386,900 | | | | | | 398,417 | | | | | | 797,384 | | | | | | 255,442 | | | | | | 25,350 | | | | | | 1,863,493 | | |
| Chief Financial Officer | | | | | 2018 | | | | | | 362,500 | | | | | | 383,542 | | | | | | 766,711 | | | | | | 201,371 | | | | | | 27,100 | | | | | | 1,741,224 | | |
| Peter Aggersbjerg | | | | | 2019 | | | | | | 319,412 | | | | | | 260,256 | | | | | | 520,460 | | | | | | 172,789 | | | | | | 117,934 | | | | | | 1,390,851 | | |
| Head of Divisions and Operations | | | | | 2018 | | | | | | 316,997 | | | | | | 216,338 | | | | | | 433,647 | | | | | | 150,510 | | | | | | 116,530 | | | | | | 1,234,022 | | |
| Marc de La Guéronnière | | | | | 2019 | | | | | | 273,525 | | | | | | 351,828 | | | | | | 703,112 | | | | | | 170,841 | | | | | | 76,890 | | | | | | 1,576,196 | | |
| Head of EU and NA | | | | | 2018 | | | | | | 267,800 | | | | | | 340,274 | | | | | | 680,361 | | | | | | 140,057 | | | | | | 74,942 | | | | | | 1,503,434 | | |
| | | | | | 2017 | | | | | | 261,900 | | | | | | 246,562 | | | | | | 680,615 | | | | | | 228,198 | | | | | | 73,411 | | | | | | 1,490,686 | | |
| Gerhard Keller | | | | | 2019 | | | | | | 302,782 | | | | | | 158,242 | | | | | | 316,204 | | | | | | 198,444 | | | | | | 240,484 | | | | | | 1,216,156 | | |
| Head of Process Analytics | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) All amounts shown were paid in Swiss francs, except amounts paid to Mr. Vadala and U.S. tax equalization payments, which were paid in U.S. dollars, and amounts paid to Mr. de La Guéronnière, which were paid in Euros. For purposes of this table, all amounts paid in Swiss francs were converted to U.S. dollars at a rate of CHF 0.9937 to $1.00, and amounts paid in Euros were converted to U.S. dollars at a rate of EUR 0.8931 to $1.00, in each case the respective average exchange rate in 2019.
(2)
Represents the aggregate grant date fair value of performance share units for each individual computed in accordance with ASC 718. The valuation assumptions associated with such awards are discussed in Note 12 to the company’s consolidated financial statements included in the Form 10-K for the fiscal year ending December 31, 2019. The following table lists the value of each officer’s award assuming the highest level of performance conditions will be achieved:
| | | | | Name | | | Year | | | Maximum
Value of
Award
($) | |
| | | | | Olivier A. Filliol | | | | | 2019 | | | | | | 3,720,700 | | |
| | | | | | | | | | 2018 | | | | | | 3,574,348 | | |
| | | | | | | | | | 2017 | | | | | | 2,879,370 | | |
| | | | | Shawn P. Vadala | | | | | 2019 | | | | | | 796,834 | | |
| | | | | | | | | | 2018 | | | | | | 767,084 | | |
| | | | | Peter Aggersbjerg | | | | | 2019 | | | | | | 520,512 | | |
| | | | | | | | | | 2018 | | | | | | 432,677 | | |
| | | | | Marc de La Guéronnière | | | | | 2019 | | | | | | 703,656 | | |
| | | | | | | | | | 2018 | | | | | | 680,549 | | |
| | | | | | | | | | 2017 | | | | | | 493,124 | | |
| | | | | Gerhard Keller | | | | | 2019 | | | | | | 316,484 | | |
(3)
Represents the aggregate grant date fair value of stock option awards for each individual computed in accordance with ASC 718. The valuation assumptions associated with such awards are discussed in Note 12 to the company’s consolidated financial statements included in the Form 10-K for the fiscal year ending December 31, 2019.
(4)
Amounts shown are the annual cash incentive earned under the company’s POBS Plus incentive plan.
(5)
Includes tax equalization payments and other miscellaneous benefits as set out below. As described in the Compensation Discussion and Analysis above, the individuals do not receive any cash benefit from the tax equalization payments. The principle of the tax equalization is to leave the employee in exactly the same position (i.e., no better and no worse) as if they had not become subject to U.S. taxation on a portion of their income. As such, the Compensation Committee does not believe it is appropriate to include these tax equalization amounts when determining the employees’ compensation each year. Negative amounts represent payments by the individual to the company, for example as a result of lower Swiss taxes being due by virtue of the U.S. tax payments.
COMPENSATION DISCUSSION AND ANALYSIS
Miscellaneous personal benefits, none of which individually exceeds $25,000 in value unless otherwise stated, include children allowances, tax equalization calculation, the company’s contribution to certain Swiss insurances beyond what is available to all employees, the value of meals in the company cafeteria, the company’s contributions to individual retirement accounts, and allowances for expenses (in the case of Messrs. Filliol, Aggersbjerg, and Keller) and vehicles (in the case of Messrs. Vadala and de La Guéronnière). In Mr. Filliol’s case, miscellaneous benefits include a one-time service anniversary award of $49,311 in 2018.
| | | | | Name | | | Year | | | Tax
Equalization | | | Retirement
Contribution | | | Swiss
Insurance | | | Allowances | | | Miscellaneous
Benefits | |
| | | | | Olivier A. Filliol | | | | | 2019 | | | | | $ | 1,422,570 | | | | | $ | 188,894 | | | | | $ | 21,990 | | | | | $ | 15,699 | | | | | $ | 20,432 | | |
| | | | | | | | | | 2018 | | | | | | (17,185) | | | | | | 187,300 | | | | | | 21,708 | | | | | | 15,699 | | | | | | 70,047 | | |
| | | | | | | | | | 2017 | | | | | | (27,887) | | | | | | 187,300 | | | | | | 25,106 | | | | | | 15,699 | | | | | | 24,828 | | |
| | | | | Shawn P. Vadala | | | | | 2019 | | | | | | n.a. | | | | | | 15,350 | | | | | | n.a. | | | | | | 10,000 | | | | | | 0 | | |
| | | | | | | | | | 2018 | | | | | | n.a. | | | | | | 17,100 | | | | | | n.a. | | | | | | 10,000 | | | | | | 0 | | |
| | | | | Peter Aggersbjerg | | | | | 2019 | | | | | | 5,452 | | | | | | 78,735 | | | | | | 10,044 | | | | | | 10,567 | | | | | | 13,136 | | |
| | | | | | | | | | 2018 | | | | | | 2,000 | | | | | | 78,140 | | | | | | 9,867 | | | | | | 10,567 | | | | | | 15,956 | | |
| | | | | Marc de La Guéronnière | | | | | 2019 | | | | | | n.a. | | | | | | 61,792 | | | | | | n.a. | | | | | ��� | 15,098 | | | | | | 0 | | |
| | | | | | | | | | 2018 | | | | | | n.a. | | | | | | 60,702 | | | | | | n.a. | | | | | | 14,240 | | | | | | 0 | | |
| | | | | | | | | | 2017 | | | | | | n.a. | | | | | | 59,539 | | | | | | n.a. | | | | | | 13,872 | | | | | | 0 | | |
| | | | | Gerhard Keller | | | | | 2019 | | | | | | 130,000 | | | | | | 74,636 | | | | | | 9,730 | | | | | | 10,567 | | | | | | 15,551 | | |
Grants of Plan-Based Awards
| | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
[POBS Plus Cash Incentive] | | | | | | | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards(2) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3) | | | Exercise or
Base Price
of Option
Awards
($/Sh) | | | Grant Date
Fair Value
of Stock
and Option
Awards
($)(4) | |
| Name | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Grant Date | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | |
| Olivier A. Filliol | | | | | 0 | | | | | | 421,964 | | | | | | 1,429,615 | | | | | | 11/07/2019 | | | | | | 0 | | | | | | 2,316 | | | | | | 4,632 | | | | | | 18,940 | | | | | | 720.81 | | | | | | 5,580,166 | | |
| Shawn P. Vadala | | | | | 0 | | | | | | 177,390 | | | | | | 620,865 | | | | | | 11/07/2019 | | | | | | 0 | | | | | | 496 | | | | | | 992 | | | | | | 4,060 | | | | | | 720.81 | | | | | | 1,195,801 | | |
| Peter Aggersbjerg | | | | | 0 | | | | | | 144,098 | | | | | | 513,949 | | | | | | 11/07/2019 | | | | | | 0 | | | | | | 324 | | | | | | 648 | | | | | | 2,650 | | | | | | 720.81 | | | | | | 780,716 | | |
| Marc de La Guéronnière | | | | | 0 | | | | | | 123,698 | | | | | | 441,191 | | | | | | 11/07/2019 | | | | | | 0 | | | | | | 438 | | | | | | 876 | | | | | | 3,580 | | | | | | 720.81 | | | | | | 1,054,940 | | |
| Gerhard Keller | | | | | 0 | | | | | | 137,894 | | | | | | 491,821 | | | | | | 11/07/2019 | | | | | | 0 | | | | | | 197 | | | | | | 394 | | | | | | 1,610 | | | | | | 720.81 | | | | | | 474,446 | | |
(1)
Represents the range of cash incentive payments possible under the company’s POBS Plus incentive plan in respect of the 2019 fiscal year. The maximum incentive possible is 169.4% of base salary for Mr. Filliol, 157.5% for Mr. Vadala, and 160.5% of base salary for the other named officers. The target cash incentive is 50% of base salary for Mr. Filliol and 45% of base salary for the other named officers. The actual incentive earned in each year is included in the “Summary Compensation Table” above.
(2)
Represents the range of stock awards possible under grants of performance share units made under the Mettler-Toledo International Inc. 2013 Equity Incentive Plan. Based on satisfaction of the performance conditions these awards may increase up to the maximum (200% of the target) or decrease to zero. The number of units actually received will depend on the company’s total shareholder return relative to the total shareholder return of each of the other companies in the S&P 500 Healthcare Index and the S&P 500 Industrials Index. Total shareholder return will be measured over a three-year period beginning on the date of grant. Each unit received will be settled with one share of common stock shortly after the performance period closes.
(3)
Option awards made under the Mettler-Toledo International Inc. 2013 Equity Incentive Plan. The option grants vest in five equal annual installments starting on the first anniversary of the date of grant.
(4)
The grant date fair value of the performance share units of $803.26 per share and of options of $196.40 per share have been computed in accordance with ASC 718. For the performance share units the company used a Monte Carlo model to determine fair value. For the options the company used the Black-Scholes option pricing model, based upon the following assumptions: estimated time until exercise of 6 years; a risk-free interest rate of 1.74%; a volatility rate of 24%; and no dividend yield. The actual value of the performance share units and stock options may significantly differ from that calculated by these models, and depends on the company’s relative share price performance and the excess of the market value of the common stock over the exercise price at the time of exercise, respectively.
COMPENSATION DISCUSSION AND ANALYSIS
Outstanding Equity Awards at Fiscal Year-End
| | | | Option Awards(1) | | | Stock Awards | |
| Name | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | | Option
Exercise
Price
($) | | | Option
Grant
Date | | | Option
Expiration
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2) | | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)(3) | | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(3) | |
| Olivier A. Filliol | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,716 | | | | | | 2,947,828 | | | | | | 12,916 | | | | | | 10,246,004 | | |
| | | | | | 65,990 | | | | | | 0 | | | | | | | | | | | $ | 149.95 | | | | | | 11/02/2011 | | | | | | 11/02/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 59,930 | | | | | | 0 | | | | | | | | | | | $ | 169.37 | | | | | | 10/31/2012 | | | | | | 10/31/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 47,070 | | | | | | 0 | | | | | | | | | | | $ | 244.99 | | | | | | 11/07/2013 | | | | | | 11/07/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 43,430 | | | | | | 0 | | | | | | | | | | | $ | 263.62 | | | | | | 11/06/2014 | | | | | | 11/06/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 30,816 | | | | | | 7,704 | | | | | | | | | | | $ | 312.36 | | | | | | 11/05/2015 | | | | | | 11/05/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 18,129 | | | | | | 12,086 | | | | | | | | | | | $ | 397.95 | | | | | | 11/03/2016 | | | | | | 11/03/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | 12,678 | | | | | $ | 397.95 | | | | | | 11/03/2016 | | | | | | 11/03/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 6,922 | | | | | | 10,383 | | | | | | | | | | | $ | 671.60 | | | | | | 11/02/2017 | | | | | | 11/02/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 3,768 | | | | | | 15,072 | | | | | | | | | | | $ | 595.31 | | | | | | 11/08/2018 | | | | | | 11/08/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 0 | | | | | | 18,940 | | | | | | | | | | | $ | 720.81 | | | | | | 11/07/2019 | | | | | | 11/07/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shawn P. Vadala | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 517 | | | | | | 410,126 | | | | | | 2,472 | | | | | | 1,960,988 | | |
| | | | | | 1,740 | | | | | | 0 | | | | | | | | | | | $ | 149.95 | | | | | | 11/02/2011 | | | | | | 11/02/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 3,585 | | | | | | 0 | | | | | | | | | | | $ | 169.37 | | | | | | 10/31/2012 | | | | | | 10/31/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 3,770 | | | | | | 0 | | | | | | | | | | | $ | 244.99 | | | | | | 11/07/2013 | | | | | | 11/07/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 3,540 | | | | | | 0 | | | | | | | | | | | $ | 263.62 | | | | | | 11/06/2014 | | | | | | 11/06/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2,584 | | | | | | 646 | | | | | | | | | | | $ | 312.36 | | | | | | 11/05/2015 | | | | | | 11/05/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 1,557 | | | | | | 1,038 | | | | | | | | | | | $ | 397.95 | | | | | | 11/03/2016 | | | | | | 11/03/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 710 | | | | | | 1,065 | | | | | | | | | | | $ | 671.60 | | | | | | 11/02/2017 | | | | | | 11/02/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 808 | | | | | | 3,232 | | | | | | | | | | | $ | 595.31 | | | | | | 11/08/2018 | | | | | | 11/08/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 0 | | | | | | 4,060 | | | | | | | | | | | $ | 720.81 | | | | | | 11/07/2019 | | | | | | 11/07/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Peter Aggersbjerg | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 207 | | | | | | 164,209 | | | | | | 1,522 | | | | | | 1,207,372 | | |
| | | | | | 464 | | | | | | 696 | | | | | | | | | | | $ | 671.60 | | | | | | 11/02/2017 | | | | | | 11/02/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 457 | | | | | | 1,828 | | | | | | | | | | | $ | 595.31 | | | | | | 11/08/2018 | | | | | | 11/08/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 0 | | | | | | 2,650 | | | | | | | | | | | $ | 720.81 | | | | | | 11/07/2019 | | | | | | 11/07/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Marc de La Guéronnière | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 572 | | | | | | 453,756 | | | | | | 2,388 | | | | | | 1,894,353 | | |
| | | | | | 4,435 | | | | | | 0 | | | | | | | | | | | $ | 263.62 | | | | | | 11/06/2014 | | | | | | 11/06/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 5,984 | | | | | | 1,496 | | | | | | | | | | | $ | 312.36 | | | | | | 11/05/2015 | | | | | | 11/05/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 3,519 | | | | | | 2,346 | | | | | | | | | | | $ | 397.95 | | | | | | 11/03/2016 | | | | | | 11/03/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 1,318 | | | | | | 1,977 | | | | | | | | | | | $ | 671.60 | | | | | | 11/02/2017 | | | | | | 11/02/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 717 | | | | | | 2,868 | | | | | | | | | | | $ | 595.31 | | | | | | 11/08/2018 | | | | | | 11/08/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 0 | | | | | | 3,580 | | | | | | | | | | | $ | 720.81 | | | | | | 11/07/2019 | | | | | | 11/07/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gerhard Keller | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 219 | | | | | | 173,728 | | | | | | 804 | | | | | | 637,797 | | |
| | | | | | 162 | | | | | | 0 | | | | | | | | | | | $ | 244.99 | | | | | | 11/07/2013 | | | | | | 11/07/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 309 | | | | | | 0 | | | | | | | | | | | $ | 263.62 | | | | | | 11/06/2014 | | | | | | 11/06/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 291 | | | | | | 97 | | | | | | | | | | | $ | 312.36 | | | | | | 11/05/2015 | | | | | | 11/05/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 303 | | | | | | 202 | | | | | | | | | | | $ | 397.95 | | | | | | 11/03/2016 | | | | | | 11/03/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 316 | | | | | | 474 | | | | | | | | | | | $ | 671.60 | | | | | | 11/02/2017 | | | | | | 11/02/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 316 | | | | | | 1,264 | | | | | | | | | | | $ | 595.31 | | | | | | 11/08/2018 | | | | | | 11/08/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 0 | | | | | | 1,610 | | | | | | | | | | | $ | 720.81 | | | | | | 11/07/2019 | | | | | | 11/07/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)
Each of the options vests ratably over five years starting from the first anniversary of the date of grant, except the performance options granted to Mr. Filliol on November 3, 2016, which vest on March 1, 2022 only if the company achieves 12% compound annual growth in its fully diluted earnings per share, subject to certain adjustments, between January 1, 2017 and December 31, 2021.
(2)
For Messrs. Filliol, Vadala, and de La Guéronnière includes performance share units (PSUs) granted on November 3, 2016, which vested January 8, 2020. For Messrs. Vadala, Aggersbjerg, and Keller includes unvested restricted stock units (RSUs) as follows,
COMPENSATION DISCUSSION AND ANALYSIS
which vest ratably over five years from the first anniversary of the date of grant. The market value figures shown above are calculated using the closing share price of $793.28 on December 31, 2019.
| | | | | Name | | | Grant Type | | | Grant Date | | | Unvested
Units (#) | |
| | | | | Shawn P. Vadala | | | | | RSU | | | | | | 11/05/2015 | | | | | | 44 | | |
| | | | | Peter Aggersbjerg | | | | | RSU | | | | | | 02/04/2016 | | | | | | 96 | | |
| | | | | | | | | | RSU | | | | | | 11/03/2016 | | | | | | 111 | | |
| | | | | Gerhard Keller | | | | | RSU | | | | | | 11/05/2015 | | | | | | 54 | | |
| | | | | | | | | | RSU | | | | | | 11/03/2016 | | | | | | 91 | | |
| | | | | | | | | | RSU | | | | | | 11/02/2017 | | | | | | 74 | | |
(3)
Includes PSUs that have a three-year performance period from the grant date and vest each January following satisfaction of the performance criteria. Unearned units shown are the maximum award possible under each grant. The market value figures shown above are calculated using the closing share price of $793.28 on December 31, 2019.
| | | | | Name | | | Grant Type | | | Grant Date | | | Unearned
Units (#) | |
| | | | | Olivier A. Filliol | | | | | PSU | | | | | | 11/02/2017 | | | | | | 3,410 | | |
| | | | | | | | | | PSU | | | | | | 11/08/2018 | | | | | | 4,874 | | |
| | | | | | | | | | PSU | | | | | | 11/07/2019 | | | | | | 4,632 | | |
| | | | | Shawn P. Vadala | | | | | PSU | | | | | | 11/02/2017 | | | | | | 434 | | |
| | | | | | | | | | PSU | | | | | | 11/08/2018 | | | | | | 1,046 | | |
| | | | | | | | | | PSU | | | | | | 11/07/2019 | | | | | | 992 | | |
| | | | | Peter Aggersbjerg | | | | | PSU | | | | | | 11/02/2017 | | | | | | 284 | | |
| | | | | | | | | | PSU | | | | | | 11/08/2018 | | | | | | 590 | | |
| | | | | | | | | | PSU | | | | | | 11/07/2019 | | | | | | 648 | | |
| | | | | Marc de La Guéronnière | | | | | PSU | | | | | | 11/02/2017 | | | | | | 584 | | |
| | | | | | | | | | PSU | | | | | | 11/08/2018 | | | | | | 928 | | |
| | | | | | | | | | PSU | | | | | | 11/07/2019 | | | | | | 876 | | |
| | | | | Gerhard Keller | | | | | PSU | | | | | | 11/08/2018 | | | | | | 410 | | |
| | | | | | | | | | PSU | | | | | | 11/07/2019 | | | | | | 394 | | |
Option Exercises and Stock Vested in Fiscal 2019
| | | | Option Awards | | | Stock Awards | |
| Name | | | Number of
Shares
Acquired
on Exercise
(#) | | | Net
Value
Realized
on Exercise
($) | | | Number of
Shares
Acquired
on Vesting
(#) | | | Value
Realized
on Vesting
($) | |
| Olivier A. Filliol | | | | | 135,360 | | | | | | 78,705,313 | | | | | | — | | | | | | — | | |
| Shawn P. Vadala | | | | | 2,385 | | | | | | 1,338,301 | | | | | | 96 | | | | | | 68,342 | | |
| Peter Aggersbjerg | | | | | — | | | | | | — | | | | | | 103 | | | | | | 70,121 | | |
| Marc de La Guéronnière | | | | | 13,225 | | | | | | 6,410,645 | | | | | | — | | | | | | — | | |
| Gerhard Keller | | | | | 157 | | | | | | 85,151 | | | | | | 185 | | | | | | 131,862 | | |
COMPENSATION DISCUSSION AND ANALYSIS
Payments Upon Termination or Change in Control
The named executive officers are not entitled to any payment upon a change in control or upon termination of employment, regardless of the type of termination.
The company may terminate the employment of each of the named executive officers after giving the requisite 6 – 12 months’ notice. Named executive officers continue receiving their base salary, cash incentive, and benefits during the contractual notice period. Equity grants continue to vest as scheduled so long as an individual remains employed or serves as a director, and in the case of Mr. Filliol equity grants would vest monthly, pro rata, during the notice period for grants starting in 2018. In all cases vesting ceases on their last day of employment, regardless of the type of termination. Named executive officers forfeit unvested equity grants, and vested equity grants in a termination for cause, on the last day of employment.
Equity grants to the named executive officers do not accelerate and do not vest automatically upon a change in control, except for equity grants made between 2015 and 2017 for Mr. Filliol and Mr. Vadala. The table below shows the value of those options that are still subject to accelerated vesting, assuming a change of control event occurred as of December 31, 2019. The expense associated with this acceleration is the same as absent a change in control, but would be incurred by the company earlier than over the normal course of the vesting period. The values shown below are calculated as the difference between $793.28, the share price on December 31, 2019, and the respective exercise price.
| | | | | Name | | | Net Value of
Accelerated
Unvested Stock
Options | |
| | | | | Olivier A. Filliol | | | | $ | 14,758,363 | | |
| | | | | Shawn P. Vadala | | | | | 850,616 | | |
| | | | | Peter Aggersbjerg | | | | | 0 | | |
| | | | | Marc de La Guéronnière | | | | | 0 | | |
| | | | | Gerhard Keller | | | | | 0 | | |
COMPENSATION COMMITTEE REPORT
The Compensation Committee assists the board in reviewing and monitoring the compensation of the company’s executives. The Compensation Committee operates pursuant to a written charter, a copy of which can be found on the company’s website at
www.mt.com under “About
Us/Us / Investor
Relations/Relations / Corporate Governance.”
The Compensation Committee is responsible for establishing compensation arrangements that allow the company to retain, attract, and motivate
highly qualified employees. The Compensation Committee reviews the company’s total compensation budget, and sets the annual compensation of the company’s executive officers, including the Chief Executive Officer. It also evaluates and sets the compensation of the directors. In carrying out its duties, the Compensation Committee receives input and recommendations from the Chairman, Head of Human Resources, and the Chief Executive Officer regarding the amount and form of executive and director compensation.
Pursuant to its charter, the Compensation Committee has the sole authority to retain, terminate, obtain advice from, oversee, and compensate its outside advisors, including its compensation consultant. The company has provided appropriate funding to the Committee to do so. In 2017, the Compensation Committee retained Pearl Meyer & Partners (“PM&P”) as its independent executive compensation consultant. PM&P reports directly to the Compensation Committee, and the Compensation Committee may replace PM&P or hire additional consultants at any time. PM&P attends meetings of the Compensation Committee, as requested, and communicates with the Chair of the Compensation Committee between meetings; however, the Compensation Committee makes all decisions regarding the compensation of the company’s executive officers.
PM&P provides various executive compensation services to the Compensation Committee at its request with respect to the company’s executive officers and other key employees, as well as the Board of Directors and Chairman of the Board. The services PM&P provides include advising the Compensation Committee on the principal aspects of the executive compensation program and evolving best practices, and providing market information and analysis regarding the competitiveness of the company’s program design and awards in relation to the company’s performance.
The Compensation Committee reviews the services provided by its outside consultants and believes that PM&P is independent in providing executive compensation consulting services. The Compensation Committee conducted a specific review of its relationship with PM&P, and determined that PM&P’s work for the Committee in 2017 did not raise any conflicts of interest, consistent with the guidance provided under the Dodd-Frank Act, or applicable rules and regulations of the SEC and the NYSE. In making this determination, the Compensation Committee noted that during 2017:
PM&P did not provide any services to the company or its management other than service to the Compensation Committee, and its services were limited to executive compensation consulting. Specifically, it did not provide, directly or indirectly through affiliates, any non-executive compensation services, including, but not limited to, pension consulting or human resource outsourcing;
Fees from the company were less than 1% of PM&P’s total revenue during the year of 2017;
PM&P maintains a Conflicts Policy, which was provided to the Compensation Committee, with specific policies and procedures designed to ensure independence;
TABLE OF CONTENTS
COMPENSATION COMMITTEE REPORT
With regard to whether any of the individuals on the PM&P team assigned to the company has any business or personal relationship with members of the Compensation Committee outside of the engagement, there is just one business relationship which we and PM&P have reviewed and believe does not impact PM&P’s independence:
| º | Mr. Salice is on the Compensation Committee of Waters Corporation, which is a client of Mr. Van Putten, the lead consultant from PM&P providing services to the company’s Compensation Committee. |
None of the PM&P consultants working on the company engagement, or PM&P, had any business or personal relationship with executive officers of the company; and
None of the PM&P consultants working on the company engagement directly own company stock.
The Compensation Committee monitors the independence of its compensation consultant on an annual basis.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. On the basis of such review and discussions, the Compensation Committee recommended to the Board of Directors, and the board approved, that the Compensation Discussion and Analysis be included in this Proxy Statement.
Respectfully submitted by the members of the
Compensation Committee:
Thomas P. Salice,Chair
Richard Francis
Michael A. Kelly
Hans Ulrich Maerki
PROPOSAL THREE:
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010 (the “Dodd-Frank Act”), the shareholders of the company are entitled to vote at the annual meeting to approve the compensation of the company’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K under the Securities Act and the Exchange Act.
As described more fully in the Compensation Discussion and Analysis section of this proxy statement and accompanying tables and narratives, our compensation program consists of three main elements: base salary, an annual cash incentive, and long-term incentive compensation. Our goal is to ensure that the three main elements of compensation are carefully considered and fair, and that executives are motivated to further the interests of shareholders, both short-term and long-term. The company has in the past sought approval from shareholders regarding the incentive plans that we use to motivate, retain, and reward our executives. Those incentive plans, including the POBS Plus Incentive System for Group Management and the 2013 Equity Incentive Plan, make up a majority of the pay that the company provides to our executives.
We have a long track record of delivering superior results for our shareholders. In the
15 year20-year period ending December 31,
2017,2019, the company’s total return to shareholders has been
1832%1977%, compared with
313%224% for the S&P 500. Our executive compensation programs have played a material role in our ability to drive strong financial results and attract and retain a highly qualified team to run the company.
We believe our executive compensation programs are transparent, consistent with current best practices, appropriately benchmarked to peers, and effective in supporting our company and our business objectives.
•
Our compensation programs are substantially tied to the achievement of key business objectives and to long-term shareholder returns.
•
Both our short-term and our long-term incentives are performance-based.
•
Performance is objectively measured.
•
Targets are set at challenging levels.
•
Stock options granted to executives have a ten-year term and vest over five years, which helps management focus on sustainable and long-term value creation.
•
We carefully monitor the compensation of executives from companies of similar size and complexity to help us to ensure our programs are within the range of market practices.
The company seeks your advisory vote on our executive compensation programs. Shareholder advisory votes on our executive compensation programs will occur annually. After the
20182020 Annual Meeting of Shareholders, the next such shareholder advisory vote will occur at the
20192021 Annual Meeting of Shareholders. We ask that you support the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section and the accompanying tables and narratives contained in this proxy statement. Because your vote is advisory, it will not be binding on the Board of Directors. However, the board will review the voting results and take such results into consideration when making future decisions regarding executive compensation.
Accordingly, weAn abstention shall not count as a vote cast with respect to this proposal. We ask our shareholders to vote “FOR” the following resolution at the annual meeting:
“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
The Board of Directors recommends that you voteFORthe approval of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation and disclosure rules of the Securities and Exchange Commission.
SHARE OWNERSHIP
This table shows how much of the company’s common stock is owned by directors, executive officers, and owners of more than 5% of the company’s common stock as of the record date March
5, 20189, 2020 (December 31,
20172019 in the case of 5% shareholders):
| | | | | | | | Shares Beneficially Owned(1) | |
| | | | | Name of Beneficial Owner | | | Number | | | Percent | |
| | | | | 5% Shareholders: | | | | | | | | | | | | | |
| | | | | The Vanguard Group | | | | | 2,775,467 | | | | | | 11.4% | | |
| | | | | 100 Vanguard Blvd.
Malvern, PA 19355 | | | | | | | | | | | | | |
| | | | | FMR LLC | | | | | 2,074,316 | | | | | | 8.5% | | |
| | | | | 245 Summer Street
Boston, MA 02210 | | | | | | | | | | | | | |
| | | | | BlackRock, Inc. | | | | | 1,755,503 | | | | | | 7.2% | | |
| | | | | 55 East 52nd Street
New York, NY 10055 | | | | | | | | | | | | | |
| | | | | | | | Direct | | | Indirect(2) | | | Total | | |
| | | | | | | | Number | | | Percent | |
| | | | | Directors: | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Robert F. Spoerry(3) | | | | | 237,974 | | | | | | 49,668 | | | | | | 287,642 | | | | | | 1.2% | | |
| | | | | Wah-Hui Chu(4) | | | | | 2,916 | | | | | | 12,387 | | | | | | 15,303 | | | | | | * | | |
| | | | | Domitille Doat-Le Bigot | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | * | | |
| | | | | Olivier A. Filliol | | | | | 16,279 | | | | | | 242,936 | | | | | | 259,215 | | | | | | 1.1% | | |
| | | | | Elisha W. Finney | | | | | 155 | | | | | | 713 | | | | | | 868 | | | | | | * | | |
| | | | | Richard Francis | | | | | 392 | | | | | | 1,545 | | | | | | 1,937 | | | | | | * | | |
| | | | | Michael A. Kelly | | | | | 1,516 | | | | | | 5,359 | | | | | | 6,875 | | | | | | * | | |
| | | | | Thomas P. Salice(5) | | | | | 116,403 | | | | | | 9,787 | | | | | | 126,190 | | | | | | * | | |
| | | | | Named Executive Officers: | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Shawn P. Vadala | | | | | 5,010 | | | | | | 17,409 | | | | | | 22,419 | | | | | | * | | |
| | | | | Peter Aggersbjerg | | | | | 357 | | | | | | 921 | | | | | | 1,278 | | | | | | * | | |
| | | | | Marc de La Guéronnière | | | | | 12,557 | | | | | | 15,973 | | | | | | 28,530 | | | | | | * | | |
| | | | | Gerhard Keller | | | | | 0 | | | | | | 1,697 | | | | | | 1,697 | | | | | | * | | |
| | | | | All Directors and Executive Officers as a Group (13 persons): | | | | | 393,710 | | | | | | 378,347 | | | | | | 772,057 | | | | | | 3.2% | | |
| | | | |
| | Shares Beneficially Owned(1) |
| Name of Beneficial Owner | | Number | | Percent |
5% Shareholders:
| | | | | | | | |
| The Vanguard Group | | | 2,697,785 | | | | 10.5 | % |
100 Vanguard Blvd.
Malvern, PA 19355
| | | | | | | | |
| FMR LLC | | | 2,495,109 | | | | 9.7 | % |
245 Summer Street
Boston, MA 02210
| | | | | | | | |
| BlackRock, Inc. | | | 1,847,591 | | | | 7.2 | % |
55 East 52nd Street
New York, NY 10055
| | | | | | | | |
| | | | | | | | |
| | Direct | | Indirect(2) | | Total |
| | Number | | Percent |
Directors:
| | | | | | | | | | | | | | | | |
Robert F. Spoerry(3) | | | 362,413 | | | | 58,803 | | | | 421,216 | | | | 1.7 | % |
Wah-Hui Chu | | | 2,778 | | | | 19,342 | | | | 22,120 | | | | | * |
Francis A. Contino(4) | | | 6,748 | | | | 4,730 | | | | 11,478 | | | | | * |
Olivier A. Filliol | | | 16,279 | | | | 346,445 | | | | 362,724 | | | | 1.4 | % |
Elisha W. Finney | | | 17 | | | | 0 | | | | 17 | | | | | |
Richard Francis | | | 254 | | | | 416 | | | | 670 | | | | | * |
Constance L. Harvey | | | 169 | | | | 1,478 | | | | 1,647 | | | | | |
Michael A. Kelly | | | 1,378 | | | | 11,258 | | | | 12,636 | | | | | * |
Hans Ulrich Maerki | | | 6,811 | | | | 14,642 | | | | 21,453 | | | | | * |
Thomas P. Salice(5) | | | 129,112 | | | | 14,642 | | | | 143,754 | | | | | * |
Named Executive Officers:
| | | | | | | | | | | | | | | | |
William P. Donnelly(6) | | | 41,761 | | | | 15,751 | | | | 57,512 | | | | | * |
Thomas Caratsch | | | 770 | | | | 9,991 | | | | 10,761 | | | | | * |
Marc de La Guéronnière | | | 0 | | | | 49,131 | | | | 49,131 | | | | | * |
Simon Kirk | | | 1,075 | | | | 0 | | | | 1,075 | | | | | * |
All Directors and Executive Officers as a Group (19 persons): | | | 578,662 | | | | 630,966 | | | | 1,209,628 | | | | 4.8 | % |
| * | The percentage of shares of common stock beneficially owned does not exceed one percent of the outstanding shares. |
| (1) | Calculations of percentage of beneficial ownership are based on 25,450,448 shares of common stock outstanding on March 5, 2018. Information regarding 5% shareholders is based solely on Schedule 13Gs filed by the holders. For the directors and officers, the calculations assume the exercise by each individual of all options for the purchase of common stock held by such individual that are exercisable within 60 days of the date hereof. |
| (2) | Represents shares subject to stock options that are exercisable within 60 days. |
| (3) | Includes 346,826 shares held by Mr. Spoerry’s children (with respect to which Mr. Spoerry has beneficial ownership, including full voting and dispositive control) and 10,000 shares held by Mr. Spoerry’s spouse. |
| (4) | Includes 5,204 shares held by Mr. Contino’s family trust (with respect to which Mr. Contino retains beneficial ownership). |
| (5) | Includes 27,336 shares held by a charitable trust and over which Mr. Salice shares voting and investment power with his spouse as trustees, and 40,000 shares owned by a limited liability company in which Mr. Salice has voting and investment power. Mr. Salice disclaims beneficial ownership of the shares held by the charitable trust and the limited liability company except to the extent of his pecuniary interests therein. |
| (6) | Includes 40,761 shares held by Mr. Donnelly’s and Mr. Donnelly’s wife’s trusts. |
*
The percentage of shares of common stock beneficially owned does not exceed one percent of the outstanding shares.
(1)
Calculations of percentage of beneficial ownership are based on 23,980,520 shares of common stock outstanding on March 9, 2020. Information regarding 5% shareholders is based solely on Schedule 13Gs filed by the holders. For the directors and officers, the calculations assume the exercise by each individual of all options for the purchase of common stock held by such individual that are exercisable within 60 days of the date hereof.
(2)
Represents shares subject to stock options that are exercisable within 60 days.
(3)
Includes 221,826 shares held by Mr. Spoerry’s children (with respect to which Mr. Spoerry has beneficial ownership, including full voting and dispositive control) and 10,000 shares held by Mr. Spoerry’s spouse.
(4)
Includes 1,000 shares held by M&W Consultants Limited, in which Mr. Chu has voting and investment power.
(5)
Includes 30,636 shares held by a family foundation and over which Mr. Salice shares voting and investment power with his spouse as trustees, and 40,000 shares owned by a limited liability company in which Mr. Salice has voting and investment power. Mr. Salice disclaims beneficial ownership of the shares held by the family foundation and the limited liability company except to the extent of his pecuniary interests therein.
ADDITIONAL INFORMATION
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Messrs.
Salice, Francis,
Kelly, Maerki, and
Salice,Kelly, none of whom were officers or employees of the company or its subsidiaries or had any relationship requiring disclosure by the company under Item 404 of the Securities and Exchange Commission’s Regulation S-K during
2017.2019. No interlocking relationship exists between the members of Mettler-Toledo’s Board of Directors or the Compensation Committee and the board of directors or compensation committee of any other company, nor has any such interlocking relationship existed in the past.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the company’s executive officers and directors, and persons who own more than ten percent of a registered class of the company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”) and The New York Stock Exchange. Executive officers, directors and greater than 10% shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, or written representations from certain reporting persons, we believe that in the last fiscal year all filing requirements applicable to our executive officers and directors and greater than 10% shareholders were complied with except the filing of a Form 4 on November 24, 2017 reporting a stock purchase by Mr. Francis made on November 17, 2017.
Availability of Form 10-K and Annual Report to Shareholders
The company’s Annual Report to shareholders for the fiscal year ended December 31,
2017,2019, including consolidated financial statements, accompanies this proxy statement. The Annual Report is not to be regarded as proxy soliciting material or as a communication by means of which any solicitation is to be made.
The Annual Report is available on the company’s website atwww.mt.com under “About Us/Us / Investor Relations/Relations / Annual Report.” Upon written request, the company will furnish, without charge, to each person whose proxy is being solicited a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2019, as filed with the SEC. Requests in writing for copies of any such materials should be directed to Investor Relations, Mettler-Toledo International Inc., 1900 Polaris Parkway, Columbus, Ohio 43240-2020, USA, telephone +1 614 438 4748.
Electronic Delivery of Annual Report and Proxy Statement
If you wish to receive future annual reports, proxy statements and other materials, and shareholder communications electronically via the Internet, please follow the directions on your proxy card for requesting such electronic delivery. An election to receive materials electronically will continue until you revoke it. You will continue to have the option to vote your shares by mail, by telephone, or via the Internet.
How to Submit Shareholder Proposals
Shareholders may present proposals which may be proper subjects for inclusion in the proxy statement and for consideration at an annual meeting. To be considered, proposals must be submitted on a timely basis. We must receive proposals for next year’s annual meeting no later than November 15, 2018.16, 2020. Proposals and questions related thereto should be submitted in writing to the Secretary of the company. Proposals may be included in the proxy statement for next year’s annual meeting if they comply with certain rules and regulations promulgated by the SEC and in connection with certain procedures described in our by-laws, a copy of which may be obtained from the Secretary of the company. Any proposal submitted outside the processes of these rules and regulations will be considered untimely for the purposes of Rule 14a-4 and Rule 14a-5.
The cost of soliciting proxies will be borne by the company. In addition to the solicitation of proxies by use of the mail, some of our officers, directors, and employees, none of whom will receive additional compensation therefore, may solicit proxies in person or by Internet or other means. As is customary, we will, upon request, reimburse brokerage firms, banks, trustees, nominees, and other persons for their out-of-pocket expenses in forwarding proxy materials to their principals.
Delivery of Documents to Shareholders Sharing an Address
If you are the beneficial owner, but not the record holder, of shares of METTLER TOLEDO stock, your broker, bank, or other nominee may only deliver one copy of this proxy statement and our 20172019 annual report to multiple shareholders who share an address unless that nominee has received contrary instructions from one or more of the shareholders. We will deliver promptly, upon written or oral request, a separate copy of this proxy statement and our 20172019 annual report to a shareholder at a shared address to which a single copy of the documents was delivered. A shareholder who wishes to receive a separate copy of the proxy statement and
ADDITIONAL INFORMATION
annual report should submit this request by writing to Investor Relations, Mettler-Toledo International Inc., 1900 Polaris Parkway, Columbus, OH 43240, USA or by calling +1 614 438 4748. Shareholders sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future should contact their broker, bank, or other nominee to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.
We know of no other matter to be brought before the annual meeting. If any other matter requiring a vote of the shareholders should come before the meeting, it is the intention of the persons named in the proxy to vote the proxies with respect to any such matter in accordance with their reasonable judgment.
![[MISSING IMAGE: tv538868_pc1.jpg]](https://files.docoh.com/DEF 14A/0001174947-20-000401/tv538868_pc1.jpg)
1.1 - Robert F. Spoerry1.2 - Wah-Hui Chu1.3 - Domitille Doat-Le Bigot1.4 - Olivier A. Filliol1.5 - Elisha W. Finney1.6 - Richard Francis1.7 - Michael A. Kelly1.8 - Thomas P. SaliceFor Against Abstain For Against Abstain For Against Abstain1 U P XMETTLER-TOLEDO INTERNATIONAL INC.Using a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas.036MGA++Proposals — The Board of Directors recommend a vote FOR all the nominees listed and FOR A Proposals 2 and 3.2. RATIFICATION OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM3. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION1. ELECTION OF DIRECTORSFor Against AbstainPlease sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give fulltitle.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q2020 Annual Meeting Proxy CardFor Against AbstainYou may vote online or by phone instead of mailing this card.OnlineGo to www.investorvote.com/MTD or scanthe QR code — login details are located inthe shaded bar below.Save paper, time and money!Sign up for electronic delivery atwww.investorvote.com/MTDPhoneCall toll free 1-800-652-VOTE (8683) withinthe USA, US territories and CanadaVotes submitted electronically must bereceived by 11:59pm, (Eastern Time), onMay 6, 2020.Your vote matters – here’s how to vote!
![[MISSING IMAGE: tv538868_pc2.jpg]](https://files.docoh.com/DEF 14A/0001174947-20-000401/tv538868_pc2.jpg)
Small steps make an impact.Help the environment by consenting to receive electronicdelivery, sign up at www.investorvote.com/MTDNotice of 2020 Annual Meeting of ShareholdersProxy Solicited by Board of Directors for Annual Meeting — May 7, 2020The undersigned hereby appoints Robert F. Spoerry and Shawn P. Vadala, and each of them, Proxies for the undersigned, each with the power of substitution,to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meetingof Shareholders of Mettler-Toledo International Inc. to be held on May 7, 2020 or at any postponement or adjournment thereof.Shares represented by this proxy will be voted by the Proxies according to the directions marked on the reverse side. If no such directions are indicated, theProxies will have authority to vote FOR the election of the Board of Directors and FOR items 2 and 3.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items to be voted appear on reverse side)Proxy - Mettler-Toledo International Inc.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qChange of Address — Please print new address below. Comments — Please print your comments below.C Non-Voting Items++You can view the 2019 Annual Report to Stockholders and the 2020 Proxy Statementon the Internet at: www.mt.com/proxyonline
![[MISSING IMAGE: sig_robertf-spoerry.jpg]](https://files.docoh.com/DEF 14A/0001174947-20-000401/sig_robertf-spoerry.jpg)
![[GRAPHIC MISSING]](https://files.docoh.com/DEF 14A/0001174947-18-000395/sig_jamest-bellerjeau.jpg)
![[MISSING IMAGE: sig_michellem-roe.jpg]](https://files.docoh.com/DEF 14A/0001174947-20-000401/sig_michellem-roe.jpg){kind=small}
![[GRAPHIC MISSING]](https://files.docoh.com/DEF 14A/0001174947-18-000395/c487964_pc1.jpg)
![[GRAPHIC MISSING]](https://files.docoh.com/DEF 14A/0001174947-18-000395/c487964_pc2.jpg)