principal executive, financial and accounting officers. The Code covers among other things, conflicts of interest, corporate opportunities, confidentiality, protection and proper use of company assets, fair dealing, compliance with laws (including insider trading laws), the accuracy and reliability of our books and records, and the reporting of illegal or unethical behavior. It applies to our

The Code requires all transactions by directors and all of ouror employees including our principal executive, financial and accounting officers. Pursuant to the Code, allthat would create a conflict of interest, transactions, including related party transactions we would be required to disclosethat require disclosure in our proxy statement, mustto be presented toreviewed by a member of our internal Corporate Compliance Committee or an attorney in our legal department, who are authorized bydepartment. The Code also requires the Codetransaction to present such transactionsbe presented to our Chief Executive Officer and the Audit and Risk Management Committee. The Code does not otherwise establishinclude specific procedures and policies for the approval or ratification of conflict of interestdealing with these transactions, and we would develop such procedures on a but allows them to be dealt withcase-by-case basis as the need arises. Each year, we ask allthey arise. All members of the board and all officers tomust annually certify their compliance with the Code. Each member of the board and each officer certified compliance without exception in the first quarter of 2015.2017.

Copies of the Code and our Corporate Governance Guidelines and Code of Business Conduct are available on our website atwww.enproindustries.com. From our home page, click on the “Investor”“For Investors” tab, and then on “Corporate Governance.Governance�� and then, for the Code, click “Code of Conduct” and, for the Corporate Governance Guidelines, click on “Board of Directors” and then “Corporate Governance Guidelines.”

As described in our Corporate Governance Guidelines, theThe EnPro board believes that a substantial majority of the boarddirectors should consist of independent directors.be independent. At its February 20152017 meeting, the board of directors made a determination as toconsidered the independence of each nomineeperson nominated for election as a director at the 2017 annual meeting. In making these determinations,meeting and determined that Mr. Botts, Mr. Brueck, Mr. Burns, Ms. Creel, Mr. Hauser, Mr. Humphrey and Mr. van der Graaf are independent. Mr. Macadam, the remaining member of our board, is an employee and is not considered independent.

To determine independence, the board used the definition of an “independent director” in the NYSE listing standards and the categorical standards set forth in our Corporate Governance Guidelines. Under these guidelines,Guidelines, which categorize a director will beas independent only if the board affirmatively determines thataffirms the director has no outside material relationship with our company (either directly or as a director, partner, shareholder or officer of an organization that has a relationship with us).

Under our Corporate Governance Guidelines, a director will not fail tomay be deemed independent solely aseven though we have a result of a relationship we have with an organization with which the director is affiliated as a director, partner, shareholder or officer,officer. In such situations, the director is deemed independent so long as:

In addition, underUnder the guidelines, the board cannot conclude that a director iscannot be independent if he or she falls into one of the following categories:

To assist in the board’s independence determinations, eachEach director nominated for election at the 20152017 annual meeting completed a questionnaire that included questions to identify any relationships the director may have with us or with any of our executive officers or other directors. After discussing all relationships disclosed in the responses to these questionnaires, the board determined that no director except Mr. Botts, Mr. Brueck, Mr. Burns, Ms. Creel, Mr. Harnett, Mr. Hauser and Mr. van der Graaf are independent because noneMacadam has a material relationship with the company other than as a director. As our Chief Executive Officerdirector and President, Mr. Macadam is automatically disqualified from being an independent director.all except him are independent.

The board of directors and each of the Audit and Risk Management, Committee, the Compensation and Human Resources, Committee and the Nominating and Corporate Governance Committee conduct self-evaluations annually tocommittees each assess their performance.performances with yearly self-evaluations. The board and committee evaluation process involves the distributionevaluations are completed by means of a self-assessment questionnaire submitted to all board and committee members that invitesthe directors inviting written

an individual director assessment component to permit each director to evaluate the contributions of each of the other directors. The evaluations are then summarized, reviewed by the Chairman of the Board and serve asbecome the basis for a discussiondiscussions of board, committee and committee performancedirector performances and any recommended improvements. Going forward,recommendations for improvements in the ways the board ofand committees function and directors has determined that the self-assessment process will include an assessment of the performance of each director.perform their duties.

The board of directors has determined that Mr. Hauser, the chairmanHumphrey, a member of the Audit and Risk Management Committee, is an “audit committee financial expert” as that term is defined in Item 401(h) of the SEC’sRegulation S-K. At its February 20152017 meeting, the board determined that Mr. Hauser,Humphrey, through his education and experience, as a certified public accountant andincluding his prior experience as the Chief Financial Officer of Duke Energy Corporation,Roper Technologies, Inc., has all of the following attributes:

When considering candidates for director, the Nominating and Corporate Governance Committee takes into account a number of factors, including whether the candidate is independent from management and the company, whether the candidate has relevant business experience, the composition of the existing board, matters of diversity (including diversity in professional experience and industry background), and the candidate’s existing commitments to other businesses. In addition, all candidates must meet the requirements set forth inof our Corporate Governance Guidelines. Those requirements include the following:include:

The Nominating and Corporate Governance Committee will consider recommendingcandidates for nomination director candidateswho are recommended by shareholders. Shareholders who wish to suggest that the board nominate a particular candidate for nomination should send a written statement addressed to our Secretary at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina 28209 in accordance with the timeline and procedures set forth in our bylaws for shareholders to nominate directors themselves.28209. See “Shareholder Proposals” on page 67 for a description of the requirements to be followed under our bylaws in submitting a candidate and the content of the required statements.

In evaluatingThe Nominating and Corporate Governance Committee annually reviews a matrix, similar to the compositionmatrix appearing on page 3, which compares the skills of our current directors with all of the board of directors in connection with recommending candidates for electionskills we have identified as directors,necessary to maintain an attentive, high-functioning board. When the Nominating and Governance Committee annually reviews aidentifies desirable skills matrix, comparing the skills of the current directors with all desired skills identified in the matrix. To the extent that the Nominating and Governance Committee has identified any desired skills not provided byare lacking among incumbent directors, that it would

After conducting an initial evaluationThe Committee evaluates the candidates and if it agrees on the suitability of a candidate, if the committee believes the candidate might be a suitable director,is interviewed by each member of the Nominating and Corporate Governance Committee and each other director not then serving on the Nominating and Corporate Governance Committeeboard of directors, generally separately interviews the candidate.in separate meetings. The Nominating and Corporate Governance Committee may also ask the candidate to meet with management.

If the Nominating and Corporate Governance Committee concludes that a candidate has skills which would be a valuable additionadd value to the board and thatif the candidate meets all of the requirements for board membership, itthe Committee will recommend the candidate to the full board that the candidate be nominatedfor nomination for election (or appointed, ifor appointment (if the purpose of the committee’s search was to fill a vacancy).

Before recommending a sitting director forre-election, the Nominating and Corporate Governance Committee considers whether the director’sre-election would be consistent with the criteria for board membership in our Corporate Governance Guidelines (as described above), the skills identified in the skills matrix used by the committeeCommittee (as described above) and applicable rules and requirements of the SEC and NYSE. This process includes a review on behalf ofby the Nominating and Corporate Governance Committee of the responses to the annual director questionnaires.

Since Mr. Harnett is 72 years of age, pursuant to our Corporate Governance Guidelines described above, he may not be nominated for election as a director unless the Nominating and Corporate Governance Committee and our board of directors, by a vote of a majority of directors (not including Mr. Harnett), specifically determine that, in light of all the circumstances, it is in the best interests of our company and our shareholders that he be nominated for re-election. The determination to

nominate Mr. Harnett for re-election as a director was made by a unanimous vote of the Nominating and Corporate Governance Committee and our board of directors, other than Mr. Harnett who recused himself from the vote in each instance.

In making this determination, the Nominating and Corporate Governance Committee and board of directors considered Mr. Harnett’s tenure and leadership, the continuity of his position as Chairman of the board of directors and the Nominating and Governance Committee, his finance, governance and management background, his understanding of the company and the history of the asbestos litigation of the company’s subsidiaries as the company progresses in the ACRP, as well as changes in the composition of the board of directors. Since December 2011, three directors have retired from service and a fourth (Mr. Browning) will retire at the 2015 annual meeting. Four new directors have joined the board during that period. The board believes that, given these circumstances, Mr. Harnett’s continued service maintains a desirable level of continuity on the board of directors and is in the best interest of the company and its shareholders.

Our directors share certain characteristics and attributes that we believe are critical to effective board membership, includingmembership. They include sound and mature business judgment essential to intelligent decision-making, experience at thein policy-making, level at a business, integrity and honesty, and the ability to collaborate in an effective manner at a board level.effectively. These characteristics, and attributes and the specific employment and leadership experiences and other qualifications listed for each of our directorsnoted in his or her biographythe biographies found above underin the captionsection headed “Nominees for Election” led tosupport the conclusion thatboard’s nomination for election of each of these individuals should be nominated for election.individuals.

Shareholders and other interested parties can send communications tocommunicate with our board in various ways. They may write the board at 5605 Carnegie Boulevard, Suite 500, Charlotte, NC 28209; they may contact the board anonymously and confidentially through our EnTegrity Assistance Line; and they may attend our annual shareholders meeting, where they will have the opportunity to talk directly to members of our board.

Letters to the board should be addressed in care of our Secretary, who the board has authorized to receive and process written correspondence. He will direct correspondence about issues within the board’s scope of responsibility directly to the Chairman and to the chairman of any committee to which the correspondence relates. Customer complaints and other correspondence about ordinary business matters are sent directly to the applicable business. Correspondence of other types is not forwarded to the board but held by means of the Secretary and made available to any director who wishes to see it.

Shareholders and other interested parties who wish to send anonymous and confidential correspondence to the board may do so through our EnTegrity Assistance Line. You can find instructionsThe line is staffed by an independent third party who is responsible for receiving and forwarding messages on the line. Instructions for using the EnTegrity Assistance Lineline are available under the “Corporate Governance” link accessed from the “For Investors” link on our website atwww.enproindustries.com.An independent third party staffs the line. We have instructed this third party that any reportItems addressed to the board of directors beare forwarded to the Chairman of the Audit and Risk Management Committee, anon-management director. ReportsItems not addressed specifically to the board of directors are forwarded to our Director of Internal Audit, who reports directly to the Audit and Risk Management Committee and is a member of our internal Corporate Compliance Committee. The Director of Internal Audit periodically updates the Audit and Risk Management Committee regardingabout the investigation and resolution of all reports of alleged misconduct (financial or otherwise).

Shareholdersalleging financial and other interested parties also may send written correspondence to the board in caretypes of our Secretary, addressed to 5605 Carnegie Boulevard,

Directors who are also employees receive no compensation for serving onIn 2016, our board. Our non-employee directors receivereceived the following compensation:

PhantomAdditional cash compensation is paid to:

In addition, each director may be granted phantom shares upon his or her initial election to the board. The amount of such an award is determined by the Nominating and Corporate Governance Committee and has generally been based on the number of days remaining in the year that the director is elected.

Employee directors receive no compensation for serving on our board.

Non-employee directors are generally granted to non-employee directorsphantom shares at the first board meeting of the Compensation Committee each year. Phantom shares are fully vested when awarded and are paid in shares of common stock when a director ceases his or her service on the board.

The board has adopted stock ownership requirements pursuantBoard members are required to which aown the company’s stock. Each director has until five years afterfrom the date he or she joins the individual becomes a directorboard to accumulate ownership ofEnPro shares having aequal in value equal to at least five times the annual cash retainer paid to directors. Phantom

common stock). Deferred fees inFees deferred into a director’s stock account are credited with stock units, that each have aequal in value on a given date equal to the fair market value of one share of our common stock on thata given date. All amounts deferred are payable when a director ceases his or her service on the board. TheAs of December 31, 2016, the following non-employee directors have the followinghad deferred compensation balances under the plan as of December 31, 2014:plan: Mr. Botts, 1,716 stock units; Mr. Browning, 7,599 2,666

stock units; Mr. Brueck, 1,0173,960 stock units; Mr. Harnett, $210,239$223,266 and 6,4836,683 stock units; and Mr. Hauser, $406,320$605,938 and 6,5757,707 stock units.

The following table presents the compensation we paid to allnon-employee directors for their service in 2014 including a non-employee director who retired from service during 2014.2016.

At its February 2017 meeting, the board of directors approved increasing each of the annual cash retainer and annual grant of phantom shares paid to all directors by $5,000, the cash retainer paid to the Chairman of the Board by $10,000, and the annual cash retainers paid to

the chairs of the Compensation and Human Resources Committee, Audit and Risk Management Committee and Nominating and Corporate Governance Committee by $3,000, $5,000 and $2,500, respectively.

The Audit Committee oversees the quality and integrity of our financial reporting processes and our systems of internal accounting controls. Management is responsible for preparingprepares our financial statements and for establishingestablishes and maintainingmaintains adequate internal control over financial reporting. The independent registered public accounting firm is responsible for performingperforms an independent integrated audit of those financial statements and the effectiveness of our internal control over financial reporting.

The Audit Committee has met and held discussionsdiscussed with management and PricewaterhouseCoopers LLP, (PricewaterhouseCoopers), our independent registered public accounting firm, for 2014, regarding our audited 20142016 consolidated financial statements and our internal control over financial reporting. Management represented toIn meeting with the Audit Committee, management informed the committee that our consolidated financial statements were prepared in accordance with generally accepted accounting principles and that our internal control over financial reporting was effective as of December 31, 2014.2016. The Audit Committee has reviewed and discussed the consolidated financial statements and our system of internal control over financial reporting with management and PricewaterhouseCoopers.

The Audit Committee also has discussed with PricewaterhouseCoopers the matters required to be discussed by Auditing Standard No.16,Communications

The Audit Committee has furtheralso discussed with our internal auditors and PricewaterhouseCoopers the overall scope and plans for their respective 20142016 audits. TheWith and without the presence of management, the Audit Committee met with the internal auditors and PricewaterhouseCoopers with and without management present, to discuss the results of their examinations, the evaluations of our internal control over financial reporting, and the overall quality of our financial reporting.

In reliance upon the Audit Committee’sRelying on its discussions with management and PricewaterhouseCoopers and the Audit Committee’sits review of themanagement’s representation of management and the report of PricewaterhouseCoopers to the Audit Committee,it, the Audit Committee recommended that the board of directors include our audited consolidated financial statements in our Annual Report onForm 10-K for the year ended December 31, 20142016 to be filed with the SEC.

The Compensation and Human Resources Committee is responsible for developingdevelops and overseeingoversees the implementation of our compensation philosophy and strategy. The committee assists the board of directors by exercising oversight concerningmonitoring the appropriateness and cost of our compensation and benefit programs, particularly for the CEO and the other senior executives.

The section entitled “Compensation Discussion and Analysis” explains the material elements of our

compensation program and provides an analysis of the material factors underlying the committee’s compensation policies and decisions. The committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussionsection with management, the committee hasand recommended to our board of directors that the Compensation Discussion and Analysisit be included in this proxy statement and in our annual report onForm 10-K for the year ended December 31, 2014.2016.

This compensation discussion and analysis provides information about our 20142016 compensation program for the followingour named executive officers (collectively, “named executive officers” or “NEOs”) listed in the summary compensation table appearing in this proxy statement:NEOs. For 2016, those officers are:

We designThe objectives of our executive officer compensation programs are to attract, motivate and retain the key executives who will drive our success. Our objectives are to establish pay practices that reward themthese executives for superior performance and align their interests as managers of our company with the long-term interests of our shareholders.

We achieve our objectives through compensation that:

Our executive compensation program is designed to tie pay to bothIn structuring annual and long-term incentive compensation opportunities, we select performance measures that we believe significantly drive the value of our company. For 2016, we selected a combination of incentive performance measures that focus on driving operating earnings and rewarding the appropriate use of capital, and include a relative shareholder return measure to evaluate our performance relative to a peer

group. We set goals against these measures and make little or no payment for poor performance against our goals, though our executives can earn significant payment relative to their salary levels for superior performance against them. We make annual awards of restricted stock units which vest after three years, both to encourage retention and to provide an incentive for performance to increase the value of our shares.

While we generally set measures based on company-wide performance (and for this purpose we include GST in our results as if it were reconsolidated), for annual incentive awards to divisional personnel, 75% of the award is based on the respective division’s performance with the remaining 25% based on company-wide performance. We have generally accomplishedbelieve that this by making annualweighting toward divisional performance not only improves theline-of-sight for the incentives for employees in our divisions, but appropriately recognizes and three-year incentive awards,rewards collaboration of divisional personnel across the company.

We believe our compensation structure aligns with the amount to be paid under these awardsinterests of our shareholders and results in payment based on our achievement of absolute performance goals established at the time these awards are made. Under these awards, poor performance leads to little or no actual payment while superior performance leads to significant payments relative to salary levels.performance.

The following charts set forthshow the relative portion of theour CEO’s total 2014 2016 targetin-service compensation of our CEO and the average targetin-service compensation of the four other NEOs

Other NEOs Average Target

In-service Compensation

In addition to incentivizingestablishing incentives for superior performance, another primary objective of our executive compensation program is retention of ourenables us to retain talented and motivated executive officers and our desire to replace them with other high-caliber individuals should thatthe need arise. A competitive pay package is vitally important to retaining and attracting these objectives. Accordingly, it has been our practice toindividuals, and we establish salaries and benefits, including post-employment benefits, at competitive levels.

Our compensation program allows the Compensation and Human Resources Committee (which we refer to in this “Compensation Discussion and Analysis” section of the proxy statement as the “committee”“Committee”) and theour board of directors to determine payexecutive compensation based on a comprehensive view of factors designed to produce long-term business success. The long-term correlation between our financial results and the compensation awarded to executive officers demonstrates the success of this approach.

Despite uneven levels of activityIn 2016, we achieved significant milestones in our markets during the year, our growth in 2014 illustrates the value of our participation in diverse markets and geographies. Our performances supports our long term objectives for growth, objectives that will be further supported by significant progress in GST LLC’s asbestos claims resolution process and a significant improvement(the “ACRP”) of ourde-consolidated Garlock Sealing Technologies, LLC (“GST”) subsidiary pending in our capital structure.

Formuted demand levels. We also continued to experience the adverse impact of the further strengthening U.S. dollar. While we took a variety of actions to mitigate the negative market trends, including exiting eight facilities, consolidating two decades, FME has provided enginesfacilities into existing sites, moving two facilities from leased to U.S. Navyowned locations, and nuclear power markets under licenses from MAN Diesel and Turbo and its affiliates. In 2014, FME expanded the relationship with an agreement to cooperate with MAN in the U.S. power generation

reduction plan initiated in the second quarter of 2016, resulted in segment profit margins of 4.5% in 2016, which represented an increase of 240 basis points compared to 2015. We believe that these efforts position our Engineered Products segment for further improved performance in the future, especially as the industrial markets begin to recover.

Acquisitions. In April 2016, we acquired Rubber Fab Gasket & Molding (“Rubber Fab”), a company that designs, markets and manufactures a full range of high performance sanitary gaskets, hoses and fittings for the hygienic process industries. Rubber Fab supplies critical process consumables for the pharmaceutical,bio-processing and food and beverage sectors. The majority of Rubber Fab’s sales are consumable products that require regular replacement due to scheduled maintenance and cleaning cycles. The acquisition of Rubber Fab expands our presence and scale in the hygienic market space and complements our existing sealing solutions to provide a comprehensive product portfolio. Over the course of 2016, we completed

integration activities related to the Rubber Fab acquisition. We continue to pursue acquisition opportunities in a number of markets like the hygienic market space that we have identified as being strategically important.

Dividends and share repurchases. In the first quarter of 2016, we increased our quarterly dividend by 5% to $0.21 per share. Additionally, throughout the course of 2016, we continued our efforts to return capital to our shareholders by repurchasing shares under our $50 million share repurchase program that was authorized by our board of directors in the fourth quarter of 2015. In 2016, we repurchased approximately 600,000 shares for $29.7 million. As we start 2017, we have approximately $14 million remaining of our previously authorized $50 million share repurchase program. We regularly evaluate our capital allocation strategy based on company performance and anticipated capital requirements for growth, and we will continue this practice in 2017.

We routinely engage in a wide-ranging dialogueThroughout the course of each year, we have dialogues with numerous shareholders, included regularincluding frequent conversations with many of our largest shareholders. We carefullyThese conversations cover a wide range of topics, including our strategic direction, financial performance, future growth opportunities, capital allocation strategy, and management practices. During these conversations in 2016, no shareholder or group of shareholders raised significant concerns about our practices or policies.

As part of our continuing efforts to consider and adopt best compensation governance practices as they evolve, the diverse views expressed by shareholders who provide us with feedback andCommittee made significant changesseveral minor adjustments to our compensation program in 2013 following the input from our shareholders.for 2017. These changes includedare described below in “— Changes to compensation program in 2017.”

redesigningAt our long-term incentive2016 annual meeting, we asked our shareholders to support anon-binding resolution to approve the compensation plan which measures and rewards performance based onpaid to our named executive officers as reported in our proxy statement for that meeting. Of the equity value we create.

shares voted “for” or “against” that proposal, 90% of the shares were voted “for” approval of that resolution. The committeeCommittee typically establishes incentive compensation opportunities each February. Accordingly, the 2016 compensation program and incentive compensation

The 2014Committee changed the compensation program was substantially similar tofor 2016, as follows:

Redesigned our long-term incentive compensation awards. For 2016, we changed the 2013 program, with one exception. In 2014 we awarded a special grantdesign of restricted stock units to executive officersour long-term incentive awards. We granted awards using different performance measures for awards that are payable in cash and other key personnelawards payable in recognition of their efforts related to the strategy, planning and management of the ACRP, which resulted in the order issued in January 2014 by the bankruptcy court estimating the liability for present and future mesothelioma claims against GST LLC at $125 million, consistent with the positions GST LLC put forth at trial, and operating GST LLC and the other EnPro businessesstock. Payments under the unique circumstances presented by the ACRP. The special grant was made in the form of restricted stock units to help ensure the retention of these individuals as the ACRP progresses.

The restricted stock units awarded under the special grant were equal to twice the number of restricted stock units awarded in 2014 under the committee’s historical practice. The committee’s historical practice splits target long-term compensation grants equally among incentive2016 awards payable in cash are based on our adjusted return on invested capital over the three-year (2016-2018) performance period against threshold, target and maximum levels established when the awards were granted. In contrast to our use of adjusted return on invested capital under our annual incentive plans, for these awards this return on invested capital measure includes goodwill and other intangible assets to hold management accountable for the quality of acquisitions made.

The number of shares to be issued under the awards payable in stock is based on our total shareholder return (or TSR) over the same three-year period relative to TSR of the S&P SmallCap 600 Capital Goods (Industry Group) Index over that period. EnPro is one of the companies included in this index. Payment at the threshold level of these awards will occur if our TSR relative to the TSR of the index is at the 35^th percentile, with target payments at the 50^th percentile and maximum payments at the 75^th percentile. The awards limit the payout to the target level in the event that absolute TSR is negative and require recipients to hold the netafter-taxshares and restricted stock units. The special grant restricted stock units awarded in 2014 vest three years afterissued at the dateend of grant.the three-year performance period for an additional year.

For ourPayments on the long-term incentive compensation awards made in 2014, the committee continued the plan design first

over the three-year performance period of the plan to a defined target return. The committee believesCommittee concluded that the absolute measure used for those awards was significantly affected by general economic conditions, which are difficult to predict at the beginning of the three-year measurement cycle. The Committee selected separate measures for the 2016 long-term incentive awards payable in cash and in stock to include one metric (TSR) based on our performance relative to others during the three-year measurement period. The Committee, upon the recommendation of its independent advisor, selected the S&P SmallCap 600 Capital Goods (Industry Group) Index for this plan design holdscomparison after considering several alternative indices and groups because of its belief that the companies included in this index (a total of 57 companies, including EnPro) are of similar size and scope and would likely experience the same overall effects as EnPro from changes in general economic conditions.

The Committee selected adjusted return on invested capital for LTIP awards payable in cash to hold management to an absolute yardstick in measuring return on investment capital. Given the company’s acquisition activity, the Committee believed this measure should reflect as invested capital assets (intangible assets and goodwill) which arise from acquisition activity to hold management accountable for the long-term impact of acquisition decisions (the Committee does not only earnings growth, but alsoinclude these assets in measuring the qualityreturn on invested capital under annual incentive plans, because inclusion of any investments. It aligns management’s intereststhese assets, and the short measurement period to reflect the contributions from the acquisitions giving rise to the assets, could skew incentives for management away from completing otherwise attractive acquisition opportunities).

Reduced the maximum payout on long-term incentive compensation awards. The Committee set the maximum payout for long-term incentive compensation awards made in 2016 at 200% of the target level. The maximum payout for long-term incentive compensation awards granted in the prior three years was 300% of the target level. The Committee believed that, with thosethe change in the measures used to evaluate performance of shareholders by rewarding performance that, over time, is correlated with share price appreciation.

This plan design, which focuses onthe awards from the calculated growth in equity value per fully diluted share is in some ways similar to a total shareholder return measure; however, unlike a formula based solely on total shareholder return, payouts under the equity value plan are not subject to broader movementsused in the past three years, it was more appropriate to set the maximum payout at 200%, which level is consistent with its practice prior to 2013.

Reduced the portion of long-term compensation awarded as restricted stock market, which are outsideunits from 40% to33 1/3%. For 2016, the Committee returned to its practice prior to 2015 and split target long-term compensation grants equally among awards of management’s control. In adopting this standardrestricted stock units, incentive cash awards and incentive share awards. For long-term compensation awards made in 2015, the Committee’s grants were weighted more heavily toward restricted stock units: 40% of the 2015 grant was payable in restricted stock units, 30% in incentive awards payable in cash and 30% in incentive awards payable in shares.

Provided for the“double triggers” forchange-in-control vesting for new long-term incentive plan, the committee was also mindful that interim developments in the ACRP may result in significant volatility in the company’s stock price. The timing of events in the ACRP could substantially distortand equity awards. Our equity and long-term incentive compensation payable underplans had required vesting of certain equity and long-term incentive awards upon a formula based solely on total shareholder return measured aschange in control of our company. In contemplation of awards to be made in 2016, and at the recommendation of the Committee, the board of directors amended these plans to permit the Committee the flexibility to require additional events following a specific datechange in control to trigger the vesting of new equity and create incentives notlong-term incentive awards. The long-term incentive compensation awards and restricted stock units awards granted to employees in February 2016 provide that, if the resulting entity in the best long-term interestschange in control assumes the awards, the awards will vest early in connection with a change in control only if within two years after the change in control the employee is terminated without “cause” or the employee resigns for “good reason,” as such terms are defined in the awards.

Increased the weighting of divisional performance for annual incentive awards to divisional personnel. For 2016, the Committee increased divisional performance measures to 75% of the companyweighting for annual incentive awards to divisional personnel. The remaining 25% is based on company-wide performance measures. In recent years, awards made to divisional personnel were equally weighted between measures applicable to divisional performance and its shareholders.corporate-wide performance measures. The Committee believes that the increased weighting toward divisional performance will improve theline-of-sight for the incentives for employees in those divisions, as they can most significantly affect the performance of their respective division, but appropriately recognizes and rewards collaboration of divisional personnel across the company.

All of ournon-management directors sit on our Compensation and Human Resources Committee. The committee’s primary function as delegated to itthe Committee by our board involvesis overseeing the appropriateness and cost of our compensation programs, particularly the program for executive officers.

The role of the executive officers

In reviewing theThe compensation of theour CEO and the other executive officers is set by the committee is advised byCommittee based on the advice of its independent executive compensation consultant and

our human resources staff. The committee requestsHowever, our CEO and considers proposals byother executive officers are involved in certain aspects of our compensation practices. At the request of the Committee, our CEO as to the appropriateproposes salary levels of salary and incentive award opportunities for all executive officers other than himself.himself, and the Committee considers his proposals in setting compensation for those officers. The committee establishes theCommittee itself sets our CEO’s compensation independently of that of the other executive officers, so that an increase inwithout regard to the compensation of other executive officers. In this way, any increase in compensation that our CEO proposes for those officers as proposed by the CEO, does not form the basis for a corresponding increase in the CEO’shis compensation.

The performance measures and levels for our annual and long-term incentive plans are set by the Committee based on proposals made by our executive officers reviewofficers. The executives’ proposals are based on the forecasts for the performance of each of our operating units,divisions, key economic indicators affecting our businesses, historical performance of our businesses, recent trends in our industries, and our strategic plans. OurThe executive team proposespresents the Committee with the performance measures that it