UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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13320-A Ballantyne Corporate Place
April |
Fellow Stockholders:
On behalf of the Board of Directors, we invite you to attend the SPX Corporation 20162018 Annual Meeting of Stockholders on May 24, 2016,15, 2018, at 8:00 a.m. (Eastern Time), at the SPX Building, 13320 Ballantyne Corporate Place, Charlotte, North Carolina 28277.
Transformative Spin-Off of SPX FLOW, Inc.Significant Accomplishments in 2017
This will be SPX Corporation’s first Annual Meeting followingIn 2017, we exceeded the Spin-Off of SPX FLOW, Inc. The Spin-Off was a transformative eventtargets we provided to the financial community early in the life of the Companyyear and was intendeddrove growth in our full-year adjusted earnings and cash generation from our core operations. These financial results were driven by commercial and operational initiatives across our businesses, including enhancements to optimize management’s focus on the Company’s diverse collection of high-quality businesses, with the objective of driving greater long-term performance and value creation for stockholders.
New Members of Executive Officer Team and Board of Directors
The Spin-Off became effective on September 26, 2015, at which time the current executive officersour sales channels and new directorsproduct introductions.
As a result of SPX assumed their new roles. Simultaneously,our team’s efforts, both our Detection and Measurement and Engineered Solutions (Core) segments recorded full-year segment income growth of approximately 40% and substantial improvement in margins. At the former SPX executive officers transitionedsame time, our HVAC segment remains well positioned to positionsachieve solid growth in profitability and cash generation. Furthermore, we recently reduced our expectations for cash usage associated with FLOW, and,our project work in South Africa, which remains on track for substantial completion by the end of next year (2019).
While we continue to work vigorously towards our longer-term goals, we are pleased with the exceptionour team’s efforts to create a stronger, more profitable company. Our successes in 2017 were well received by investors as these accomplishments were reflected in another year of one retirement, the former SPX directors resigned to become directors of FLOW. The new group of SPX executive officers and directors have brought focus to the changes needed to execute on the “new” SPX corporate strategy and have already made significant adjustments to SPX’s executive compensation programs to further align to stockholder interests. On September 28, 2015, the stock of SPX Corporation began trading under the new ticker symbol “SPXC.”appreciation in our share price.
Transitioning the Company to Enable EarningsWell Positioned for Growth and Value Creation
We expect the next few years to be a periodSPX is now comprised of meaningful change at SPX as we implement our new strategy. SPX todaythree healthy platforms, and each is a diversified, global supplier of a wide array of highly engineered infrastructure products focused in the heating, ventilation, and air conditioning (HVAC); detection and measurement; and power industries. Across mostgenerating double-digit returns on invested capital. Most of our businesses we haveare leaders in attractive, niche markets, with strong competitive positions, well-knowntechnology and high-quality brands, and high levels of replacement revenues. Our balance sheet is strong, margin profiles.and the company is well positioned to invest, both organically and inorganically, for continued, sustainable double-digit earnings growth and cash generation.
In early September,On our Q4 2017 earnings call, we presentedannounced that we had increased the level of expected liquidity available through 2020 for capital allocation to more than $600 million, or by 50%. We have also increased our new business profile to the investment community. As partresources directed at managing our pipeline of acquisition targets. Our efforts are primarily focused on opportunities that align well with our presentation, we laid out a plan to deliver value creation for stockholders over the next three years by growingexisting platforms and that strengthen our high return businesses incompetitive position within our HVAC and Detection and Measurement segments, expanding margins insegments.
Our team has done a great job repositioning our transformer business,company for growth. We expect 2018 to be another successful year for SPX, and lowering costs and improving productivity in our power generation businesses.we are excited about the opportunities ahead of us.
Meeting Attendance and Voting
All SPX stockholders of record at the close of business on March 29, 2016,20, 2018, are welcome to attend the Annual Meeting. Whether or not you plan to attend, it is important that your shares arebe represented at the Annual Meeting.To ensure that youyour shares will be represented, we ask you to vote by telephone, mail, or over the internet as soon as possible.
For stockholders planning to attend this year’s meeting, we and the other members of your Board of Directors look forward to personally greeting you.you personally. On behalf of the Board of Directors and our leadership team, we would like to express our appreciation for your continued interest in the business of SPX.
Sincerely,
Patrick O’Leary Chairman of the Board of Directors | Gene Lowe President and Chief Executive Officer |
SPX CORPORATION
13320-A Ballantyne Corporate Place
Charlotte, North Carolina 28277
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Tuesday, May 24, 201615, 2018
8:00 a.m., Eastern Time (Eastern Time)
SPX Building, 13320 Ballantyne Corporate Place, Charlotte, North Carolina 28277
Agenda
The principal business of the Annual Meeting will be to:
1. | Elect the two nominees named in our |
2. | Approve our named executive officers’ compensation, on anon-binding advisory basis; |
3. |
Ratify our Audit Committee’s appointment of our independent registered public accounting firm for |
Transact any other business properly brought before the meeting or any adjournment thereof. |
Record Date
March 29, 201620, 2018
You may vote at the Annual Meeting in person or by proxy if you were a stockholder of record at the close of business on March 29, 2016.20, 2018. You may revoke your proxy at any time prior to its exercise at the Annual Meeting.
Proxy Materials
This year, we are again electronically disseminating Annual Meeting materials to some of our stockholders, as permitted under the “Notice and Access” rules approved by the Securities and Exchange Commission. Stockholders for whom Notice and Access applies will receive a Notice of Internet Availability of Proxy Materials containing instructions on how to access Annual Meeting materials via the internet. The Notice also provides instructions on how to obtain paper copies if preferred.
By Order of the Board of Directors,
John W. Nurkin
Vice President, SecretaryGeneral Counsel and General CounselSecretary
Approximate Date of Mailing of Proxy Materials or
Notice of Internet Availability:
April 12, 20163, 2018
SPX CORPORATION
Proxy Statement
Annual Meeting of Stockholders
The Annual Meeting of our stockholders will be held at 8:00 a.m. (Eastern Time), Eastern Time, on Tuesday, May 24, 2016,15, 2018, at the SPX Building, 13320 Ballantyne Corporate Place, Charlotte, North Carolina 28277.
We are furnishing this Proxy Statement to our stockholders in connection with the solicitation of proxies by our Board of Directors for the 20162018 Annual Meeting of Stockholders on that date and any adjournment or postponement of the meeting.
Our 20152017 Annual Report on Form10-K, without exhibits, accompanies this Proxy Statement. You may obtain a copy of the exhibits described in the Form10-K for a fee upon request. Please contact Paul Clegg, Vice President, Finance and Investor Relations and Communications, SPX Corporation,13320-A Ballantyne Corporate Place, Charlotte, North Carolina 28277.
Important Notice Regarding the Availability of Proxy Materials
for the 20162018 Annual Meeting of Stockholders:
The Notice of Annual Meeting, Proxy Statement, and our 20152017 Annual Report
to Stockholders are available electronically at
www.envisionreports.com/SPXC (for stockholders of record) or
www.edocumentview.com/SPXC (for all other stockholders).
MEETING AND VOTING HIGHLIGHTS | i | |||
CORPORATE GOVERNANCE | 1 | |||
DIRECTOR COMPENSATION | ||||
PROPOSAL 1: ELECTION OF DIRECTORS | ||||
14 | ||||
OWNERSHIP OF COMMON STOCK | ||||
EXECUTIVE COMPENSATION | ||||
Potential Payments Upon Termination or | ||||
PROPOSAL 2: APPROVAL OF NAMED EXECUTIVE OFFICERS’ COMPENSATION, ON ANON-BINDING ADVISORY BASIS(“ | ||||
AUDIT MATTERS | ||||
PROPOSAL | ||||
QUESTIONS AND ANSWERS | ||||
APPENDIX A – | A-1 |
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This summary highlights information about SPX Corporation (“Company,” “SPX,” “we,” “our,” or “us”), vote recommendations of the SPXour Board of Directors (“Board”), and certain information contained elsewhere in this proxy statement (“Proxy Statement”) for SPX’s 2016the Company’s 2018 Annual Meeting of Stockholders (the “Annual(“Annual Meeting” or the “meeting”). This summary does not contain all of the information that you should consider in voting your shares. YouBefore voting, you should carefully read the entire Proxy Statement and 2015our 2017 Annual Report on Form10-K10-K. carefully before voting.
As you read this Proxy Statement, keep in mind that 2015 was a unique year for SPX. In 2015, we completed the transformative spin-off of our Flow business (the “Spin-Off”) into a newly-formed, independent, publicly-owned company called SPX FLOW, Inc. (“FLOW”). The Spin-Off became effective on September 26, 2015, at which time the current executive officers and new directors of SPX assumed their new roles. Simultaneously, the former SPX executive officers transitioned to positions with FLOW, and, with the exception of one retirement, the former SPX directors resigned to become directors of FLOW. Although SPX and FLOW are now separate companies and the former SPX executive officers and directors no longer hold positions with SPX, rules and regulations of the Securities and Exchange Commission (the “SEC”) and/or the New York Stock Exchange (the “NYSE”) require that we provide certain information (including compensation information) regarding these former executive officers and directors for the period of time prior to the Spin-Off. We have endeavored to clearly indicate for you throughout this Proxy Statement what information relates to pre-Spin-Off SPX and where we have changed our approach.
Annual Meeting
Time and Date: | 8:00 a.m. (Eastern Time), | |
Place: | SPX Building | |
13320 Ballantyne Corporate Place | ||
Charlotte, North Carolina 28277 | ||
Record Date: | March |
Purpose of Meeting and Board Recommendations
Proposals | Board Vote Recommendation | Votes Required for Approval | Page Reference | |||||
Proposal 1: | Election of Directors | FOR each nominee | Majority of votes cast | 10 | ||||
Proposal 2: | ||||||||
| Approval of Named Executive Officers’ Compensation, on aNon-binding Advisory Basis(“ |
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| FOR | Majority of | ||||||
Proposal | Ratification of Appointment of Independent Registered Public Accounting Firm | FOR | Majority of shares present or represented by proxy and entitled to vote |
The Board strongly encourages you to exercise your right to vote on these matters. Your vote is important.
Who May Vote
Holders of SPX common stock of SPX whose shares are recorded directly in their names in our stock register (“stockholders of record”) at the close of business on March 29, 2016,20, 2018, may vote their shares on the matters to be acted upon at the meeting. Stockholders who hold shares of our common stock in “street name,” that is, through an account with a broker, bank, trustee, or other holder of record, as of such date may direct the holder of record how to vote their shares at the meeting by following the instructions that they receive from the holder of record.
A list of stockholders entitled to vote at the meeting will be available for examination at our principal executive offices located at13320-A Ballantyne Corporate Place, Charlotte, North Carolina 28277, for a period of at least 10ten days prior to the Annual Meeting and during the meeting. The stock register will not be closed between the record date and the date of the meeting.
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How to Vote
How to Vote | Stockholders of Record* | Street Name Holders† | ||||
MOBILE DEVICE | Scan the QR Code to vote using your mobile device: | Refer to voting instruction | ||||
INTERNET | Visit the applicable voting website: | www.envisionreports.com/ SPXC | www.proxyvote.com | |||
TELEPHONE | Within the United States, U.S. Territories, and Canada, on touch-tone telephone, call toll free: | 1-800-652-VOTE (8683) | Refer to voting instruction | |||
Complete, sign, and mail your proxy card or voting instruction form in the self-addressed envelope provided. | ||||||
MEETING | For instructions on attending the Annual Meeting in person, please see below and page |
* | You hold shares registered in your name with SPX’s transfer agent, Computershare, or you are an Employee Benefit Plan Participant. |
† | You hold shares held through a broker, bank, trustee, or other holder of record. |
To allow sufficient time for voting, your voting instructions must be received by 11:59 p.m. Eastern Time(Eastern Time) on May 23, 2016,14, 2018, if you are not voting in person at the meeting.
Admission to Meeting
If you are a stockholder of record, you will need to bring with you to the meeting either the Notice of Internet Availability of Proxy Materials or any proxy card that is sent to you. Otherwise, you will be admitted only upon other verification of record ownership at the admission counter.
If you own shares held in street name, bring with you to the meeting either (1) the Notice of Internet Availability of Proxy Materials or any voting instruction form that is sent to you, or (2) your most recent brokerage statement or a letter from your bank, broker, or other holder of record indicating that you beneficially owned shares of our common stock on March 29, 2016.20, 2018. We can use that to verify your beneficial ownership of common stock and admit you to the meeting.If you intend to vote at the meeting, you also will need to bring to the meeting a legal proxy from your bank, broker, or other holder of record that authorizes you to vote the shares that the holder of record holds for you in its name.
Additionally, all persons will need to bring a valid government-issued photo ID to gain admission to the meeting.
Additional Information
More detailed information about the Annual Meeting and voting can be found in “Questions and Answers” beginning on page 56.46.
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CODE OF BUSINESS CONDUCT
We have adopted a Code of Business Conduct that applies to all our directors, officers, and employees, including our chief executive officer and senior financial and accounting officers. Our Code of Business Conduct requires each director, officer, and employee to avoid conflicts of interest; comply with all laws and other legal requirements; conduct business in an honest and ethical manner; and otherwise act with integrity and in the best interest of our Company and our stockholders. In addition, our Code of Business Conduct acknowledges special ethical obligations for financial reporting. We maintain a current copy of our Code of Business Conduct, and we will promptly post any amendments to or waivers of our Code of Business Conduct regarding our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website (www.spx.com) under the heading “Investor Relations—Corporate Governance—Commitment to Compliance.”
CORPORATE GOVERNANCE GUIDELINES
As part of its ongoing commitment to good corporate governance, the Board has codified its corporate governance practices into a set of Corporate Governance Guidelines. These guidelines assist the Board in the exercise of its responsibilities and may be amended by the Board from time to time. Our Corporate Governance Guidelines comply with the applicable requirements of the listing standards of the NYSE and are available on our website (www.spx.com) under the heading “Investor Relations—Corporate Governance”.
CODE OF BUSINESS CONDUCT
We have adopted a Code of Business Conduct that applies to all our directors, officers, and employees, including our CEO and senior financial and accounting officers. Our Code of Business Conduct requires each director, officer, and employee to avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the best interest of our company and our stockholders. In addition, our Code of Business Conduct acknowledges special ethical obligations for financial reporting. The Code of Business Conduct also meets the requirements of a code of business conduct and ethics under the listing standards of the NYSE and the requirement of a “Code of Ethics” as defined in the rules of the SEC. We maintain a current copy of our Code of Business Conduct, and will promptly post any amendments to or waivers of our Code of Business Conduct regarding our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website (www.spx.com) under the heading “Investor Relations—Corporate Governance—Commitment to Compliance”.Governance.”
DIRECTOR INDEPENDENCE
Our Corporate Governance Guidelines require that a substantial majority of the Board meet the independence requirements of the listing standards of the NYSE. OurNew York Stock Exchange (“NYSE”). At least annually, our Board reviews at least annually, whether each of our directors is independent. The Board has adopted categorical Independence Standards to help guide it in this process. Our Independence Standards are available on our website (www.spx.com), under the heading “Investor Relations—Corporate Governance”. Members of the Audit Committee, Compensation Committee, and Nominating and Governance Committee must meet all applicable independence tests of the NYSE and SEC.Governance.” Based on its most recent annual review, the Board has concluded that Mr.Patrick J. O’Leary, Mr.Ricky D. Puckett, Mr.David A. Roberts, Dr.Ruth G. Shaw, Robert B. Toth, and Ms.Tana L. Utley are independent, as defined in our Independence Standards and the listing standards of the NYSE. The Board has concluded that Mr.Eugene J. Lowe, SPX’s President and Mr. Kearney areChief Executive Officer (“CEO”), is not independent as defined in our Independence Standards and the listing standards of the NYSE.
Thenon-employee members of the Board meet regularly in executive session without management. In addition, thenon-employee members of the Board meet in executive session on a regular basis with the CEO and such other management as the Board deems appropriate on a regular basis.appropriate.
CHARITABLE CONTRIBUTIONS
It is the policy of the Board that no officer or director shall solicit contributions for charities from other officers or directors or directly from SPX if the director or officer soliciting the contributions personally controls the charity. In addition, no officer or director shall solicit contributions from other officers or directors for charities controlled by SPX.
From time to time, SPX may make contributions to charitable organizations for which a member of our Board or one of our executive officers serves as a director or officer. In the past three fiscal years, however, the amount of any of these contributions in any single fiscal year has not exceeded the greater of (a)(1) $1 million or (b)(2) 2% of the charitable organization’s consolidated gross revenues.
RISK OVERSIGHT
The Board exercises overall risk oversightgovernance at SPX. Committees takeSPX, with committees taking the lead in discrete areas of risk oversight when appropriate.oversight. For example, the Audit Committee is primarily responsible for risk oversight relating to financial statements,statements; the Compensation Committee is primarily responsible for risk oversight relating to executive compensation,compensation; and the Nominating and Governance Committee is primarily responsible for risk oversight relating to corporate governance. Committees report to the Board on risk management matters.
Management presents to the BoardAudit Committee its view of the topprincipal risks facing SPX in a dedicated “enterprise risk management” presentation at least once a year. Matters such as risk tolerance and management of risk are also discussed at
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this meeting. In addition, risk isthe Board explicitly addressedaddresses risk in a wide range of Board discussions, including those relating to segment or business unit activities,activities; specific corporate functions (such as treasury, intellectual property, tax, capital allocation, legal, etc.), cybersecurity,; cybersecurity; and consideration of extraordinary transactions. As part ofIn addition to the Board’s active role in these discussions, our directors ask questions, offer insights, and challenge management to continually improve its risk assessment and management. Thethe Board has full access to management, as well as the ability to engage advisors, in order to assist it in its risk oversight role.
We conduct an annualin-depth review of the risks associated with our incentive-based agreements and practices. In 2015,2017, we again determined that the risks wereassociated with these arrangements are appropriate.
See “Risk Analysis,” on page 34,30, for further discussion.
STRATEGIC PLANNING
Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our Company. Our Board has been instrumental in determining our next steps as we pivot towards growth with a focus on strengthening our current complement of businesses.
• | Constant Focus on Strategy: Throughout the year, our Board provides guidance to management on strategy and helps to refine business plans to implement the strategy. |
• | Annual Strategy Deep-dive: Each year, typically during the third quarter, the Board holds an extensive meeting with senior management dedicated to discussing and reviewing our long-term business plans and overall corporate strategy. As part of this meeting, our CEO leads a discussion of key risks to the plans and strategy, as well as risk mitigation plans and activities. |
Furthermore, in setting our business strategy, the Board plays a critical role in determining the types and appropriate levels of risk undertaken by the Company.
COMMUNICATIONS WITH DIRECTORS
Interested parties may communicate with any of ournon-employee directors by writing to the director in care of our Corporate Secretary at our address shown on the front cover of this Proxy Statement. In accordance with the policy adopted by ournon-employee directors, our Corporate Secretary will promptly relay to the addressee all communications that he determines require prompt attention by anon-employee director and will regularly provide thenon-employee directors with a summary of all substantive communications.
BOARDDIRECTOR NOMINEES, QUALIFICATIONS, AND DIVERSITY
The Nominating and Governance Committee is responsible for proposing director nominees and will consider director nominee recommendations offered by stockholders in accordance with ourBy-laws.The Nominating and Governance Committee selects individuals as director nominees based on their businessthe following:
Neither the Board nor the Nominating and Governance Committee has set minimum requirements with respect to age, education, or years of business experience or set specifichas specified required skill sets for directors, but each does require each director to have a proven record of success and leadership. The Nominating and Governance Committee seeks to structure the Board suchso that it consists of a diverse group of individuals, each with a unique combination of skills, experience, and background. The Nominating and Governance Committee has no set diversity policy or targets, but places what it believes to
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be appropriate emphasis on certain skills, experience, orand background that it determines addsadd or would add value to our Board. Knowledge of our industryindustries and strategic perspective, as well as financial expertise and experience on other boards, are examples of attributes that our Board and the Nominating and Governance Committee consider to be key. The Nominating and Governance Committee also considers effective interaction among Board members and between the Board and management to be crucial factors in considering individuals for nomination.
We believe that each director should bring a wealth of experience, talent, and diverse perspective that, individually and in the aggregate, adds value to our Company. As our Corporate Governance Guidelines state, our Nominating and Governance Committee, and ultimately our Board, selects individuals as director nominees based on the totality of their business and professional accomplishments, integrity, demonstrated ability to make independent analytical inquiries, ability to understand our business, absence of conflicts of interest, and willingness to devote the necessary time to Board duties. For a better understanding of the qualifications of each of our directors, we encourage you to read their biographies, beginning on page 14 of this Proxy Statement, as well as other publicly available documents discussing their careers and experiences.
DIRECTOR NOMINEES
The Nominating and Governance Committee considers the criteria listed above at least each time the director is responsiblere-nominated for proposing director nominees and will consider director nominee recommendations offered by stockholders in accordance with our by-laws.
Board membership. At such times as the Board and the Nominating and Governance Committee determine there is a need to add or replace a director, the Nominating and Governance Committee identifies director candidates through references from its members, other directors, management, or outside search firms, if appropriate.
In considering individuals for nomination, the Nominating and Governance Committee consults with our Chairman and our President and CEO. A director’s qualifications in meeting the criteria discussed above under “Board Qualifications and Diversity” are considered at least each time the director is re-nominated for Board membership. The Nominating and Governance Committee applies the same process and standards to the evaluation of each potential director nominee, regardless of whether he or she is recommended by one or more stockholders or is identified by some other method.
CORPORATE GOVERNANCE
Any stockholder who wishes to recommend an individual for consideration by the Nominating and Governance Committee should provide written notice of the recommendation to our Corporate Secretary at our address on the cover of this Proxy Statement. Such notice must be accompanied by certain disclosures, including written information about the recommended nominee’s business experience and background, and documentation required under ourBy-laws for stockholder nominations of directors, as well as a consent in writing signed by the recommended nominee that he or she is willing to be considered as a nominee and, if nominated and elected, that he or she will serve as a director. In addition, any director nominee must provide information we may reasonably request in order for us to determine the eligibility of such nominee to serve as an independent director.
Once the Nominating and Governance Committee identifies a director candidate, directors and members of management interview the candidate. Following that process, the Nominating and Governance Committee and the Board determine whether to nominate the candidate for election at an annual meeting of stockholders or, if applicable, to appoint the candidate as a director. Any such nomination or appointment is subject to acceptance by the candidate. Our by-lawsBy-laws require that any director appointed to the Board other than at an annual meeting of stockholders be submitted for election by our stockholders at the next annual meeting.
At this Annual Meeting you will be asked to elect six directors, five of whom are non-employee directors appointed to fill vacancies created in connection with the Spin-Off. In accordance with the above described process, the Nominating and Governance Committee identified director candidates through references from directors, management, and an outside search firm. Mr. O’Leary was identified through references from management; Mr. Puckett was identified through a reference from a then non-employee director; Mr. Roberts was identified through a reference from our then Chairman, President and CEO; Dr. Shaw was identified through a reference from our then Chairman, President and CEO; and Ms. Utley was identified through an outside search firm.
If you wish to recommend a nominee for director for the 2017 Annual Meeting, our Corporate Secretary must receive your written nomination on or before January 24, 2017. You should submit your proposal to our Corporate Secretary at our address on the cover of this Proxy Statement. As detailed in our by-laws, for a nomination to be properly brought before an annual meeting, your notice of nomination must include: (1) your name and address, as well as the name and address of any beneficial owner of the shares, and the name and address of the nominee; (2) the class and number of shares of SPX stock owned beneficially and of record by you and any beneficial owner as of the date of the notice (which information must be supplemented as of the record date); (3) a description of certain agreements, arrangements, or understandings entered into by you or any beneficial owner with respect to the shares (which information must be supplemented as of the record date); (4) a statement that you are a record holder of SPX shares entitled to vote at the meeting and that you plan to appear in person or by proxy at the meeting to make the nomination; (5) a description of all arrangements or understandings between you and any other persons pursuant to which you are making the nomination; (6) any other information regarding you, any beneficial owner, or the nominee that the rules of the SEC require to be included in a proxy statement; (7) the nominee’s agreement to serve as a director if elected; and (8) a statement as to whether each nominee, if elected, intends to tender, promptly following his or her election or re-election, an irrevocable resignation effective upon his or her failure to receive the required vote for re-election at the next meeting at which he or she would face re-election and the acceptance of such resignation by the Board, in accordance with our Corporate Governance Guidelines. In addition, any director nominee must provide information we may reasonably request in order for us to determine the eligibility of such nominee to serve as an independent director.
DIRECTOR ELECTION
In uncontested elections, we elect directors by majority vote. Under this majority votevoting standard, each director must be elected by a majority of the votes cast with respect to that director, meaning that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. In a contested election, directors are elected by a plurality of the votes represented in person or by proxy at the meeting. An election is contested if the number of nominees exceeds the number of directors to be elected. Whether or not an election is contested is determined ten days in advance of the date we file our definitive proxy statement with the SEC.Securities and Exchange Commission (“SEC”). This year’s election is uncontested. Accordingly, the majority vote standard will apply.
If a nominee already serving as a director is not elected at an annual meeting, then the law of the State of Delaware (SPX’s Statestate of organization) law provides that the director will continue to serve on the Board as a “holdover director” until his or her successor is elected. Our Nominating and Governance Committee, however, has established procedures requiring directors to tender to the Board advance resignations. As set forth in our Corporate Governance Guidelines, the Board will nominate for election orre-election as a director only those candidates who agree to tender, promptly following each annual meeting of stockholders at which they are elected orre-elected as a director, irrevocable resignations that will be effective only if (1) the director fails to receive a sufficient number of votes forre-election at the next annual meeting of stockholders at which he or she facesre-election, and (2) the Board accepts the resignation. In addition, the Board will fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with this provision.
In the event a resignation is triggered as a result of a directordirector’s not receiving a majority vote, the Nominating and Governance Committee will consider the resignation and make a recommendation to the Board on whether to accept or reject it, or whether other action should be taken. The Board will consider the Nominating and Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it in a Current Report on Form8-K filed with the SEC within 90 days from the date of certification of the election results.
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decision and the rationale behind it in a Current Report on Form 8-K filed with the SEC within 90 days from the date of the certification of the election results. At the 2015 Annual Meeting, each director standing for election received a majority of the votes cast for his or her election.
ATTENDANCE AT ANNUAL MEETING
It is our policy to invite all members of our Board to attend our Annual Meeting. While their attendance is not required, each of our directors serving at the time of our last Annual Meeting attended that meeting. We anticipate all our directors will attend the 2016 Annual Meeting.
INDEPENDENT COMPENSATION CONSULTANT
The Compensation Committee has retained Pearl Meyer as its sole independent compensation consultant. Pearl Meyer does not provide any services to our Company other than advice to and services for the Compensation Committee relating to compensation of all executives and the Nominating and Governance Committee relating to compensation of ournon-employee directors. The independent compensation consultant may provide other consulting services to SPX, with approval from the Compensation Committee or the Nominating and Governance Committee. The Compensation Committee reviews services provided by its independent compensation consultant on at least an annual basis.
The independent compensation consultant:
The Compensation Committee has directed the independent compensation consultant to collaborate with management, including our human resources function, to obtain data, clarify information, and review preliminary recommendations prior to the time they are shared with the relevant committee.
The Compensation Committee has considered the independence of Pearl Meyer in light of SEC rules, and NYSE listing standards.standards, and the requirements of the Compensation Committee charter. The Compensation Committee requested and received a letter from Pearl Meyer addressing relationships with and the independence of Pearl Meyer and the Pearl Meyer senior advisor involved in the engagement, includingengagement. In addition to this information, the Compensation Committee noted the following factors: (1) other services provided to us; (2) fees paid by us as a percentage of Pearl Meyer’s total revenue; (3) policies or procedures maintained by Pearl Meyer that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisor and a member of the Compensation Committee; (5) any SPX stock owned by the senior advisor; and (6) any business or personal relationships between our executive officers and the senior advisor. The Compensation Committee discussed these considerations and concluded that the work performed by Pearl Meyer and Pearl Meyer’s senior advisor involved in the engagement did not raise any conflict of interest and that Pearl Meyer provides objective and competent advice. The following protocols are designed to help ensure objectivity:
The Compensation Committee concluded that the work performed by Pearl Meyer and Pearl Meyer’s senior advisor involved in the engagement did not raise any conflict of interest and that each was independent.
4 | |
CORPORATE GOVERNANCE
CONSIDERATION OF RELATED-PARTY TRANSACTIONS
Pursuant to its charter and a written related-party policy, the Audit Committee is charged with reviewing and approving any related-party transactions. A related-party transaction is a transaction involving SPX and any of the following persons: a director, director nominee, or executive officer of SPX; a holder of more than 5% of SPX common stock; or an immediate family member or person sharing the household of any of these persons. When considering a transaction, the Audit Committee is required to review all relevant factors, including whether the transaction is in the best interest of our company,Company; our Company’s rationale for entering into the transaction,transaction; alternatives to the transaction,transaction; whether the transaction is on terms at least as fair to our Company as would be the case were the transaction entered into with a third party,party; potential for an actual or apparent conflict of interest,interest; and the extent of the related party’s interest in the transaction. Our legal staff is primarily responsible for the development and implementation of procedures and controls to obtain information from our directors and officers relating to related-party transactions and then determining, based on the facts and circumstances, whether we or a related party has a direct or indirect material interest in the transaction.
In the course of the Board’s determination regarding the independence of each of the non-employee directors, the Nominating and Governance Committee and Audit Committee considered any relevant transactions, relationships, or arrangements. Except as set forth below, no member of our Board or management was aware of any transactions that would be required to be disclosed in this section.
Agreement with pre-Spin-Off NEO
In connection with his relocation to Charlotte, North Carolina, in 2002, we made an interest-free loan to Mr. Foreman, as described in “Compensation Discussion and Analysis—2015 Program Design and Decisions—Other Benefits and Perquisites,” on page 32.
Agreements with FLOW
In connection with the Spin-Off, SPX entered into agreements with FLOW that govern our relationship and provide for an orderly transition of FLOW into an independent, publicly-owned company. Following the Spin-Off, SPX and FLOW operate independently. Following is a summary of the terms of these material agreements. Please see the full agreements, filed as exhibits to our periodic reports with the SEC, for additional detail.
Separation and Distribution Agreement
SPX entered into a Separation and Distribution Agreement with FLOW that set forth the principal actions to be taken in connection with the Spin-Off, including the internal reorganization. It also set forth other agreements that govern certain aspects of the parties’ relationship following the Spin-Off.
Transfer of Assets and Assumption of Liabilities. The Separation and Distribution Agreement identifies certain assets transferred and liabilities assumed in advance of FLOW’s separation so that generally each company retained the assets of, and the liabilities associated with, its respective businesses. To the extent that any such transfer of assets or assumption of liabilities contemplated by the Separation and Distribution Agreement was not consummated at or prior to the distribution, the parties will cooperate to effect such transfer or assumption as promptly following the distribution as practicable. If any such transfer of assets or assumption of liabilities were consummated at or prior to the distribution, then the party retaining such asset or liability agreed to take such actions as reasonably requested by the party to which such asset or liability is to be transferred or assumed in order to place such party, insofar as reasonably possible, in the same position as if such asset or liability had been transferred or assumed as contemplated by the Separation and Distribution Agreement.
Cash Adjustments. Pursuant to the Separation and Distribution Agreement, we contributed to FLOW an amount of cash and cash equivalents, so that, as of the distribution, FLOW had, in the aggregate, an amount of cash and cash equivalents of at least $200 million.
The Distribution. The Separation and Distribution Agreement governs the rights and obligations of the parties regarding the distribution and certain actions that occurred prior to the distribution, such as the reorganization, the adoption of the amended and restated articles of incorporation and amended and restated by-laws, and the election of officers and directors. Pursuant to this agreement, as consideration for the transfer to FLOW of the assets that related to its businesses, FLOW issued to us (1) such number of shares of its common stock required in order for us to effect the distribution and (2) physical evidence of FLOW’s indebtedness under the 2017 Notes (the “Global Note”). We (a) caused our agent to distribute all issued and outstanding shares of FLOW common stock to our stockholders as of the record date, and (b) exchanged the Global Note for physical evidence of indebtedness under the Global Note.
CORPORATE GOVERNANCE
Release of Claims. The parties agreed to broad releases under which we each released the other company and its wholly-owned subsidiaries and affiliates, and its respective stockholders, directors, officers, agents and employees (in their respective capacities as such) from any and all liabilities existing or arising from any acts or events occurring or failing to occur or any conditions existing at or prior to the distribution. These releases are subject to certain exceptions set forth in the Separation and Distribution Agreement.
Indemnification. The parties indemnified each other against certain liabilities in connection with the Spin-Off and our respective businesses and other matters specified in the Separation and Distribution Agreement. The Separation and Distribution Agreement specifies procedures with respect to claims subject to indemnification and related matters.
Insurance. The Separation and Distribution Agreement provides for the allocation between the parties of rights and obligations under existing insurance policies and sets forth procedures for the administration of insured claims. In addition, the Separation and Distribution Agreement allocates between the parties the right to proceeds and obligations to incur certain deductibles under certain insurance policies.
Dispute Resolution. In the event of any dispute arising out of the Separation and Distribution Agreement, the general counsels of the parties and such other representatives as the parties designate will negotiate to resolve the dispute. If the parties are unable to resolve the dispute in this manner within 60 days, then at the request of either party, the dispute will be resolved through binding arbitration.
Tax Matters Agreement
The Tax Matters Agreement governs the parties’ respective rights, responsibilities, and obligations with respect to taxes, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters. Under the Tax Matters Agreement, we are generally responsible for all U.S. federal and state income taxes incurred through the effective time of the distribution, and the parties will each generally be responsible for any other taxes attributable to their businesses.
Under the Tax Matters Agreement, certain special rules and indemnities would apply in the event the Spin-Off were not tax-free. FLOW agreed in the Tax Matters Agreement (i) generally not to enter into certain transactions that could cause the Spin-Off to be taxable, and (ii) to indemnify SPX for any tax liabilities resulting from such a transaction. For example, during the two-year period following the distribution, among other restrictions, FLOW may not, subject to certain exceptions, enter into or authorize: (1) any transaction resulting in an acquisition of its stock or assets beyond certain thresholds; (2) any merger, consolidation, or liquidation; (3) any issuances of equity securities beyond certain thresholds; or (4) any repurchases of SPX common stock beyond certain thresholds. FLOW’s indemnification obligations to us under the Tax Matters Agreement will not be limited in amount or subject to any cap. In addition, under certain circumstances, if the Spin-Off becomes taxable to us, FLOW may be required to make payments to us in respect of any resulting tax benefits to FLOW, if, as and when such benefits are realized.
The covenants and obligations under the Tax Matters Agreement may discourage, delay or prevent a change of control otherwise considered favorable. Though valid as between the parties, the Tax Matters Agreement is not binding on the IRS.
Employee Matters Agreement
The parties entered into an Employee Matters Agreement governing the allocation of employees to FLOW and obligations and responsibilities regarding compensation, benefits, and labor matters. Under the Employee Matters Agreement, the parties allocated all employees of SPX and our affiliates immediately before the Spin-Off among the parties based upon whether each employee’s employment duties before the Spin-Off relate to SPX’s business or FLOW’s business and upon various other factors as applicable.
The Employee Matters Agreement provides that, unless otherwise specified, we are responsible for liabilities associated with our current employees and all our pre-Spin-Off employees up to the time of the Spin-Off, and FLOW is responsible for liabilities associated with its employees.
The Employee Matters Agreement also includes provisions regarding cooperation between the parties on matters relating to employees and employee benefits and other administrative provisions.
The Employee Matters Agreement also provides for the mechanics for the conversion, adjustment, cancellation, or replacement of equity awards granted under SPX equity plans. For more information about the treatment of outstanding stock options and unvested equity awards, see the Employee Matters Agreement, filed as an exhibit to our periodic reports with the SEC.
CORPORATE GOVERNANCE
Transition Services Agreement
The parties entered into a Transition Services Agreement, under which each party will provide the other with certain services to help ensure an orderly transition following the Spin-Off.
The services we provide to FLOW include information technology, human resources, finance and financial reporting, and other administrative services. The services we receive from FLOW include information technology, human resources, finance and financial reporting, tax compliance, facility access, and other administrative services. The charge for these services will be intended to allow the relevant party to recover the direct and indirect costs incurred in providing such services, in a manner generally consistent with past practice. The Transition Services Agreement contains customary mutual indemnification provisions.
The Transition Services Agreement generally provides for a term of services starting at the Spin-Off and continuing for a period of up to 12 months following the Spin-Off. Other than with respect to certain fixed-term pass-through services, a party may terminate any transition services it is receiving upon 30 days’ prior notice to the other party. Any extension or renewal of the Transition Services Agreement or the services provided thereunder would require mutual agreement of the parties.
Trademark License Agreement
We have transferred all our rights to use the green “X” SPX logo and trademark to FLOW as well as certain know-how used in the conduct of its business. The parties entered into a Trademark License Agreement pursuant to which we received a royalty-free exclusive license to use certain names, licensees, and trademarks in our business. We will have up to 18 months after the distribution date to cease use of the green “X” SPX logo in our business. We may continue to use ‘‘SPX’’ in our marketing materials for three years and will have a perpetual license to use the name ‘‘SPX’’ in our corporate name and in the name of our subsidiaries. We will have the right to use the current SPX buildmark, as approved by FLOW, for up to 20 years with the right of automatic renewal.
BOARD LEADERSHIP STRUCTURE
Our governance documents provide the Board with flexibility to select the leadership structure that is most appropriate for the Company and its stockholders in consideration of then-current circumstances. The Board regularly evaluates the Company’s leadership structure and has concluded that the Company and its stockholders are best served by not having a formal policy regarding whether the same individual should serve as both Chairman of the Board and CEO. This approach allows the Board to elect the most qualified Directordirector as Chairman of the Board while also maintaining the ability to separate the Chairman of the Board and CEO roles when necessary or appropriate. For example, as of September 26, 2015, we separated the positions of Chairman of the Board and CEO in light of the fact that our then-elected CEO was both new to the role and had not previously served on a public company board of directors.
Currently, Eugene J. Lowe, III, serves as our President and CEO, a position he has held since September 26, 2015. In this role, Mr. Lowe is responsible for managing theday-to-day operations of the Company and for planning, formulating, and coordinating the development and execution of our corporate strategy, policies, goals, and objectives. Mr. Lowe is accountable for Company performance and reports directly to the Board.
EffectiveSince September 26, 2015, Patrick J. O’Leary was appointed to servehas served as ournon-employee Chairman of the Board. In this role, Mr. O’Leary’s responsibilities include the following:
CORPORATE GOVERNANCE
InOur Corporate Governance Guidelines provide that in the event the Board determines that the same individual should again serve as both Chairman of the Board and CEO, the Board will establishappoint an independent director to serve as Lead Director position.Director. In this case,that circumstance, the Lead Director would be elected by and fromserve as the independent directors and have clearly delineated duties. These duties, as set forth in our Corporate Governance Guidelines, would include acting as principal liaison between the independent directors and the Chairman and CEO, chairingCEO; chair meetings of independent directors, developingnon-employee directors; develop the Board’s agendasagenda in collaboration with the Chairman and CEO,CEO; and reviewingreview and advisingadvise on the quality of the information provided to the Board.
The small size of our Board and the relationship between management andnon-employee directors putsput each director in a position to influence agendas, the flow of information, and other matters. Ournon-employee directors meet regularly in private session, without management, as part of our Board meetings and can also call additional meetings of thenon-employee directors at their discretion.
2018 PROXY STATEMENT | 5 |
CORPORATE GOVERNANCE
The Board believes that its current leadership structure provides an appropriate balance among strategy development, operational execution, and independent oversight, and that this structure is thereforecurrently in the best interests of the Company and its stockholders.
BOARD COMMITTEES
The Board met 11six times during 2015.in 2017. The Board currently has a standing Audit Committee, Compensation Committee, and Nominating and Governance Committee. Each director attended at least 75% of the meetings of the Board and of the committees on which he or she served in 2015.2017. Each committee has adopted a charter that specifies the composition and responsibilities of the committee. Each committee charter is posted on our website (www.spx.com) under the heading “Investor Relations—Corporate Governance”.Governance—Board Committees.”
The table below provides membership and 20152017 meeting information following the Spin-Off for each of the Board Committees.
Current Directors | Audit Committee | Compensation Committee | Nominating and Governance Committee | |||
Ricky D. Puckett | Chair | X | X | |||
David A. Roberts | X | Chair | X | |||
Ruth G. Shaw | X | X | Chair | |||
Tana L. Utley | X | |||||
Number of Meetings | 2 | 5 | 2 |
The table below provides membership and 2015 meeting information prior to the Spin-Off for each of the Board committees.
Former Directors | Audit Committee | Compensation Committee | Nominating and Governance Committee | |||
Anne K. Altman | X | |||||
Patrick D. Campbell | X | X | ||||
Emerson U. Fullwood | X | X | Chair | |||
Robert F. Hull, Jr. | X | X | ||||
Terry S. Lisenby | Chair | X | ||||
Michael J. Mancuso | X | Chair | X | |||
David V. Singer | X | X | ||||
Number of Meetings | 7 | 7 | 5(a) |
Directors | Audit Committee | Compensation Committee | Nominating and Governance Committee | |||
Ricky D. Puckett | Chair | X | X | |||
David A. Roberts | X | Chair | X | |||
Ruth G. Shaw | X | X | Chair | |||
Robert B. Toth* | X | |||||
Tana L. Utley | X | |||||
Number of Meetings | 5 | 5 | 5 |
CORPORATE GOVERNANCE
AUDIT COMMITTEE
Membership:Membership
The Board has determined that each member of the Audit Committee is independent in accordance with our Audit Committee charter, Corporate Governance Guidelines, and Independence Standards, as well as with the rules of the SEC and the listing standards of the NYSE. In addition, the Board has determined that each member of the Audit Committee has a working familiarity with basic finance and accounting practices, including the ability to read and understand financial statements. Finally, the Board has determined that Mr. Puckett (serving currently and as of the Spin-Off) and Mr. Lisenby and Mr. Mancuso (serving up to the Spin-Off) each is an “audit committee financial expert” under the rules of the SEC and each has accounting and/or related financial management expertise, as required by the listing standards of the NYSE.
Function:Function
The Audit Committee is responsible for ensuring the integrity of the financial information reported by our company.Company. The Audit Committee appoints the independent registered public accounting firm, approves the scope of audits performed by it and by the internal audit staff, and reviews the results of those audits. The Audit Committee also meets with management, the Company’s independent registered public accounting firm, and the internal audit staff to review audit andnon-audit results, as well as financial, cybersecurity, accounting, compliance, and internal control matters. In addition, the Board has delegated oversight of the Company’s enterprise risk management program to the Audit Committee.
Additional information on the Audit Committee and its activities is set forth in the “Audit Committee Report” on page 53.43.
COMPENSATION COMMITTEE
Membership:Membership
The Board has determined that each member of the Compensation Committee is independent in accordance with our Compensation Committee Charter, Corporate Governance Guidelines, and Independence Standards, as well as with the rules of the SEC and the listing standards of the NYSE. In addition, the Board has determined that each member of the Compensation Committee meets the “outside director” and “non-employee“non-employee director” requirements as defined, respectively, under grandfathered provisions of Section 162(m) of the Internal Revenue Code and Section 16 under the Securities Exchange Act of 1934, as amended.
6 | 2018 PROXY STATEMENT |
CORPORATE GOVERNANCE
Function:Function
The Compensation Committee sets the compensation for our executive officers, including agreements with our executive officers, equity grants, and other awards;awards, and makes recommendations to the Board on these same matters for our CEO. The Compensation Committee receives input regarding compensation for our executive officers, including proposed compensation, from its independent compensation consultant, as well as from our CEO for his direct reports. The Compensation Committee previouslyhas delegated to our CEO the authority to issue up to an aggregateone-time grants of 75,000 restricted shares or restricted stock units annually to persons other than Section 16 officers. In 2016, the Compensation Committee revised this delegation to our CEO and granted authority for the CEO to issue up to $50,000 per individual and $250,000 in the aggregate worth of equity grants annually tonon-officer employees.
The Compensation Committee has the authority under its charter to retain, terminate, and set fees and retention terms for suchits independent compensation consultant or such other outside advisors as it deems necessary or appropriate in its sole discretion. The Compensation Committee reviews outside advisorsconsultants and consultantsadvisors on at least an annual basis to determine objectivity and review performance, including a review of the total fees paid to such advisors or consultants.consultants and advisors. The Compensation Committee has retained Pearl Meyer as its independent compensation consultant.
Additional information on the Compensation Committee, its activities, and its relationship with its independent compensation consultant, and on management’s role in setting compensation, is set forth in “Compensation Discussion and Analysis,” beginning on page 22,18, and “Corporate Governance—Independent Compensation Consultant,” beginning on page 4.
CORPORATE GOVERNANCE
NOMINATING AND GOVERNANCE COMMITTEE
Membership:Membership
The Board has determined that each member of the Nominating and Governance Committee is independent in accordance with our Nominating and Governance Committee Charter, Corporate Governance Guidelines, and Independence Standards, as well as with the rules of the SEC and the listing standards of the NYSE.
Function:Function
The Nominating and Governance Committee assists the Board in identifying qualified individuals to become Board members and by recommending director nominees to the Board the director nominees;Board; develops and recommends to the Board our Corporate Governance Guidelines; leads the Board in its annual review of the Board’s performance; and makes recommendations to the Board regarding the compensation ofnon-employee directors; directors and makes recommendations to the Board with respect to the assignment of individual directors to various committees. The Nominating and Governance Committee also approves equity awards fornon-employee directors, subject to Board approval.
7 |
Annual Compensation
Our director compensation program includes the following compensation opportunities effective as of the Spin-Off for ournon-employee directors:
Annual Retainer of Cash | $ | 75,000 | ||
Annual Equity Grant of Time-Vested Restricted Stock | $ | 130,000 | ||
Additional Fees: | ||||
Chairman of the Board | $ | 125,000 | ||
Audit Committee Chair | $ | 20,000 | ||
Compensation Committee Chair | $ | 15,000 | ||
Nominating and Governance Committee Chair | $ | 10,000 |
Annual Retainer of Cash | $ | 75,000 | ||
Annual Equity Grant of Restricted Stock Units | $ | 130,000 | ||
Additional Fees: | ||||
Chairman of the Board | $ | 125,000 | ||
Audit Committee Chair | $ | 20,000 | ||
Compensation Committee Chair | $ | 15,000 | ||
Nominating and Governance Committee Chair | $ | 10,000 |
As of January 1, 2016, weWe pay the annual retainer and any applicable additional fees to ournon-employee directors in equal quarterly installments, paid in arrears. The cash portion of compensation for a director who has a partial quarter of service (due to joining or leaving the Board, or beginning or ending service as Chairman or a Committee Chair, during the quarter) ispro-rated. We do not pay meeting fees or additional compensation to directors for special meetings.
The annual equity grant is provided by grants of restricted stock units (“RSU”) under the SPX Corporation 2006Non-Employee Directors’ Stock Incentive Plan (the “2006 Directors’ Plan”) and the SPX Corporation 2002 Stock Compensation Plan (the “2002 Stock Plan”). We award sharesRSUs to ournon-employee directors based on the grant date value of the award (calculated by dividing the $130,000 annual equity retainer by the closing price of the Company’s stock on the date of grant),. The RSU award is granted on the date of our Annual Meeting which shares vestand vests the day before the following Annual Meeting, and vestingannual meeting. Vesting is subject to the director’s continued service on our Board as of the date of that meeting.through such vesting date. The annual equity grant for a director who has a partial year of service (due to joining the Board during the year) ispro-rated.
Any cash dividends paid with respectOurnon-employee directors have the option to sharesdefer settlement and payout of unvested restricted stock are depositedsuch RSU grants that vest until six months after separating from service on our Board (or, if earlier, a Change in Control as defined in the director’s name2002 Stock Plan). Anon-employee director must generally make such deferral election in an escrow or similar account maintained by SPX for that purpose. These dividends are subjectthe year prior to the same restrictions as the shares of restricted stock to which they relate and are payable only upon vestinggrant of the underlying stock. RSU award.
We do not currently pay dividends.dividends, or with respect to the RSUs, dividend equivalents.
Directors who are SPX employees receive no compensation for their service as directors.
The Nominating and Governance Committee reviewsnon-employee director compensation from time to time and makes recommendations to the Board. The Nominating and Governance Committee compares ournon-employee director compensation to our peer companies and consults with our independent compensation consultant when reviewing compensation type and structure.
2017 COMPENSATION CHANGES IN 2015
As of the Spin-Off, in 2015, our current non-employee directors each received payments for the annual retainer and any applicable additional fees with annualized values as listed above, pro-rated for his or her period of service beginning as of the Spin-Off, which was the date they each became a non-employee director of the Company. In addition, each received restricted stock of the Company with an annualized value of $130,000, pro-rated for service from the Spin-Off until the Annual Meeting, which vests the day before the Annual Meeting, subject to the director’s continued service onMr. Toth joined our Board as of the date of the meeting. anon-employee director effective July 1, 2017 and receivedpro-rated annual compensation as described above.
Mr. Lowe, our President and Chief Executive Officer,CEO, received no compensation for his service as a director.
Prior to the Spin-Off, in 2015, the annual retainer was $90,000 and the annual equity grant was $130,000, with additional fees in an amount of $25,000 for service as Lead Director; $20,000 for service as Audit Committee Chair; $15,000 for service as Compensation Committee Chair; and $10,000 for service as Nominating and Governance Committee Chair. We added fees for service as Committee Chairs in 2015 in recognition of the additional workload borne by the directors serving in these roles. The annual retainer and Lead Director fee remain unchanged from 2014 through the Spin-Off. As of the Spin-Off, we reduced the annual retainer as listed above to align non-employee director compensation to our new peer group. The former non-employee directors each received payments for the annual retainer and applicable additional fees, pro-rated for his or her period of service up to the Spin-Off, which was the date they each ceased to be a director of the Company. In addition, each received restricted stock of the Company granted at the 2015 Annual Meeting, which vested immediately prior to the Spin-Off. These shares were initially scheduled to vest on the day before our 2016 Annual Meeting.
DIRECTOR COMPENSATION
Mr. Kearney did not receive compensation as a director during his service as our Chairman, President and CEO prior to the Spin-Off. Since the Spin-Off, Mr. Kearney is no longer our Chairman, President or CEO, but remains a director on our Board and is compensated under the same terms as our other non-employee directors. Mr. Kearney’s non-employee director compensation for 2015 was pro-rated for that portion of the year when he was no longer an employee of the Company.
OTHER BENEFITS
Matching Gifts Program
In 2015, the SPX Foundation madeWe will make matching donations for qualified charitable contributions for any director up to a total of $20,000$10,000 per annum. This practice was suspended as of June 30, 2015, and we are evaluating whether to implement a new program going forward.year.
Travel Reimbursements
We reimbursenon-employee directors for the reasonable expenses of attending Board and committee meetings and for expenses associated with director training and development. From time to time, a director’s spouse may accompany the director to certain business functions, and tax laws may require the incremental costs associated with the spouse’s attendance to be imputed as income to the director as income.director. On occasion, a director’s spouse may accompany a director when he
8 | 2018 PROXY STATEMENT |
DIRECTOR COMPENSATION
or she travels on our corporate aircraft for Board-related business; in such instances, the value of the spouse’s travel is imputed as income to the director (determined under the U.S. Department of Transportation’s standard industry fare level (“SIFL”)).
STOCK OWNERSHIP GUIDELINES
Our Stock Ownership Guidelines are designed to help ensure that our directors are engaged directors withand have interests closely aligned with those of our long-term stockholders. We request that allnon-employee directors achieve holdings in Company stock of three times the annual cash retainer within five years of his or her date of appointment as a director. All of our current directors were in compliance with these requirements as of March 29, 2016, and all our pre-Spin-Off directors were in compliance with these requirements as of the Spin-Off.20, 2018. For additional information on our Stock Ownership Guidelines, see “Stock Ownership Guidelines,” beginning on page 18.
DIRECTOR COMPENSATION
15.
The following table summarizes the compensation of our directors who served during 2015. The top portion of the table lists our current directors following the Spin-Off. The bottom portion lists our former directors who served prior to the Spin-Off, except Mr. Kearney, who transitioned from Chairman, President and CEO to a non-employee director as of the Spin-Off. Mr. Kearney received no compensation as a director while serving as our Chairman, President and CEO prior to the Spin-Off.2017. Mr. Lowe, our President and CEO, receives no compensation in connection with his service as a director and, accordingly, is omitted from this table. Ms. Wyrsch retired from service on our Board in January 2015, and Mr. Mancuso retired from service on our Board in September 2015. Ms. Altman was appointed to the Board in March 2015.
Current Directors | Fees Earned or Paid in Cash ($)(1) | Stock ($)(2) | All Other ($) | Total ($) | ||||||||||||
Christopher J. Kearney | $ | 32,877 | $ | 83,862 | $ | — | $ | 116,739 | ||||||||
Patrick J. O’Leary | $ | 87,671 | (a) | $ | 84,883 | $ | — | $ | 172,554 | |||||||
Ricky D. Puckett | $ | 41,644 | (b) | $ | 84,883 | $ | — | $ | 126,527 | |||||||
David A. Roberts | $ | 39,452 | (c) | $ | 84,883 | $ | — | $ | 124,335 | |||||||
Ruth G. Shaw | $ | 37,260 | (d) | $ | 84,883 | $ | — | $ | 122,143 | |||||||
Tana L. Utley | $ | 32,877 | $ | 84,883 | $ | — | $ | 117,760 | ||||||||
Former Directors | ($)(3) | ($)(4) | ($)(5) | ($) | ||||||||||||
Anne K. Altman | $ | 45,000 | (a) | $ | 130,000 | $ | — | $ | 175,000 | |||||||
Patrick D. Campbell | $ | 60,000 | $ | 130,000 | $ | — | $ | 190,000 | ||||||||
Emerson U. Fullwood | $ | 83,336 | (b) | $ | 130,000 | $ | — | $ | 213,336 | |||||||
Robert E. Hull, Jr. | $ | 60,000 | $ | 130,000 | $ | — | $ | 190,000 | ||||||||
Terry S. Lisenby | $ | 73,332 | (c) | $ | 130,000 | $ | — | $ | 203,332 | |||||||
Michael J. Mancuso | $ | 70,000 | (d) | $ | 130,000 | $ | 1,993 | $ | 201,993 | |||||||
David V. Singer | $ | 60,000 | $ | 130,000 | $ | — | $ | 190,000 | ||||||||
Martha B. Wyrsch | $ | 68,292 | (e) | $ | — | $ | — | $ | 68,292 |
Directors
|
Fees Earned or Paid in Cash ($)(1)
| Stock Awards ($)(2)
| All Other Compensation ($)(3)
| Total ($)
| ||||
Patrick J. O’Leary
| $200,000(a)
| $130,000
| $ —
| $330,000
| ||||
Ricky D. Puckett
| $ 95,000(b)
| $130,000
| $ 6,750
| $231,750
| ||||
David A. Roberts
| $ 90,000(c)
| $130,000
| $ 10,000
| $230,000
| ||||
Ruth G. Shaw
| $ 85,000(d)
| $130,000
| $ 10,000
| $225,000
| ||||
Robert B. Toth
| $ 37,500(e)
| $113,260
| $ —
| $150,760
| ||||
Tana L. Utley
| $ 75,000
| $130,000
| $ —
| $205,000
|
(1) | Represents annual retainer of |
Mr. |
Mr. |
Mr. |
Dr. |
(e) | Mr. Toth’s annual retainer ispro-rated for service beginning July 1, 2017. |
(2) | Stock awards are time-vested awards that vest the day before the next |
(3) | Represents |
|
PROPOSAL 1: ELECTION OF DIRECTORS
Our Board currently consists of seven directors. The directors are divided into three classes. There are currently three directors in the first class, two directors in the second class, and two directors in the third class.
At this Annual Meeting, you will be asked to elect threetwo directors to the firstthird class, Dr. Shaw and Mr. Toth. Mr. Lowe, Mr. O’Leary, and Mr. Roberts; two directors to the second class, Mr. Puckett and Ms. Utley; and one director to the third class, Dr. Shaw. Mr. Kearney wasRoberts were elected to the thirdfirst class by our stockholders at our 20152016 Annual Meeting of Stockholders and Mr. Puckett and Ms. Utley were elected to the second class by our stockholders at our 2017 Annual Meeting of Stockholders, and they will continue to serve on the Board as described below.
Each of the director nominees is a current SPX director and, if elected, will serve for the terms as described below until a qualified successor director has been elected or until he or she resigns, retires, or is removed by the stockholders for cause.
Each director nominee has agreed to tender, promptly following his or her election, an irrevocable resignation effective upon his or her failure to receive the required vote forre-election at the next meeting at which he or she would facere-election and the acceptance of such resignation by the Board, in accordance with our Corporate Governance Guidelines.
Your shares will be voted as you specify on the enclosed proxy card.card that accompanies this Proxy Statement. If you do not specify how you want your shares voted, then we will vote them FOR the election of each of Dr. Shaw and Mr. Lowe, Mr. O’Leary, Mr. Roberts, Mr. Puckett, Ms. Utley, and Dr. Shaw.Toth. If unforeseen circumstances (such as death or disability)disability of the nominee) make it necessary for the Board to substitute another person for any of the nominees, then your shares will be voted FOR that other person. The Board does not anticipate that any of the nominees will be unable to serve.
Nominees for Election to Serve Until 20172021 Annual Meeting
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
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Nominees to Serve Until 2018 Annual Meeting
Ruth Shaw
Retired Group Executive Age: Director since:2015 Committees: • Nom. & Gov. (Chair) • Audit • Compensation |
PROFESSIONAL HIGHLIGHTS
Ruth G. Shaw,
SKILLS AND QUALIFICATIONS
Dr. Shaw contributes a deep understanding of the electric utility industry; corporate governance; human resources |
10 | |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Nominees to Serve Until 2019 Annual Meeting
Bob Toth Managing Director at Age: 57 Director since: 2017 Committees: • Compensation | PROFESSIONAL HIGHLIGHTS
SKILLS AND QUALIFICATIONS Mr. Toth contributes significant insight on mergers and acquisitions and on strategic portfolio management and the strategic and operational issues related thereto. Mr. Toth also brings extensive experience leading companies in the manufacturing sector, including knowledge and skills in senior management, finance, and operations. |
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES. |
Directors Continuing to Serve Until 2019 Annual Meeting
Gene Lowe
President and CEO of Age: Director since:2015 Committees: • |
PROFESSIONAL HIGHLIGHTS
Eugene J. Lowe, III,
SKILLS AND QUALIFICATIONS
Mr. Lowe brings valuable operations, strategic planning, marketing, and business development experience to our Board. As the only member of SPX management to serve on the Board, Mr. Lowe also contributes a level of understanding of our Company not easily |
2018 PROXY STATEMENT | 11 |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Patrick O’Leary
Retired Executive Age: Director since:2015 Committees: • |
PROFESSIONAL HIGHLIGHTS
Patrick J. O’Leary,
SKILLS AND QUALIFICATIONS
Mr. O’Leary contributes a deep understanding of SPX history and businesses to our Board. In addition, he brings broad financial strategy |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Dave Roberts
Age: Director since:2015 Committees: • Compensation • Audit • Nom. & Gov. |
PROFESSIONAL HIGHLIGHTS
David A. Roberts,
SKILLS AND QUALIFICATIONS
Mr. Roberts brings extensive experience in senior management of multinational companies, including expertise in the industrial and manufacturing sectors, and mergers and acquisitions, to our Board. Mr. Roberts also contributes strong financial acumen and experience from his service on various public company boards. |
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
Directors Continuing to Serve Until 20182020 Annual Meeting
Age: Director since: Committees: • • Compensation • Nom. & Gov. |
PROFESSIONAL HIGHLIGHTS
SKILLS AND QUALIFICATIONS
Mr. |
Tana Utley Vice President of Large Age: 54 Director since: 2015 Committees: • Audit | PROFESSIONAL HIGHLIGHTS Tana L. Utley, 54, has served as Vice President of the Large Power Systems Division at Caterpillar Inc., a SKILLS AND QUALIFICATIONS Ms. Utley brings a |
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
Director and Nominee Skills and Experience
Under the leadership of our Nominating and Governance Committee, our Board developed and maintains a director skills matrix that identifies expertise and experience that the Board believes contribute to an effective and well-functioning board and that the Board as a whole should possess.
The Nominating and Governance Committee and the Board use this matrix to identify areas for director training and as a tool to maintain a balanced and well-rounded board. In addition, the Nominating and Governance Committee considers these and other criteria when evaluating potential candidates for the Board. Together, this variety of skill sets, experiences, and personal backgrounds allows our directors to provide the diversity of thought that is critical to the Board’s decision-making and oversight process. For a better understanding of our Board qualifications and diversity, we encourage you to read “Director Nominees, Qualifications, and Diversity” beginning on page 2.
\Employee Engagement, Safety, and Talent Examples include culture, safety results, and workforce planning Strategic Portfolio Management Examples include experience with acquisitions, divestitures, integration, and strategic planning Operations and Continuous Improvement Examples include experience in operations, project management, and supply chain management Innovation and Technology Development Examples include research & development, new product introductions, and business transformation Growth and Value Creation Examples include sales, distribution, and channel management Financial Planning and Review Examples include financial and accounting experience CEO Experience Corporate Governance Executive Compensation Risk Management Ethics and Compliance Technology and Cybersecurity Industry Expertise (multi-industrial manufacturing) Lowe O’Leary Puckett Roberts Shaw Toth Utley ENTERPRISE PRIORITIES OTHER KEY EXPERIENCE Technical Expertise (e.g., direct hands-on experience and subject-matter expert during his/her career) Managerial Knowledge (e.g., experience derived through general managerial experience) Working Knowledge (e.g., exposure as a Board committee member at SPX or another company) No Knowledge (e.g., exposure comes from Board Committee report-outs only)
14 | 2018 PROXY STATEMENT |
We maintain Stock Ownership Guidelines to emphasize the importance of substantive, long-term share ownership by our directors and officers to align their financial interests with those of our stockholders.
The guidelines are:
Position | ||
| Target Value | |
Non-Employee Directors | 3x annual retainer | |
Chief Executive Officer | 5x annual salary | |
Chief Operating Officer* | 4x annual salary | |
Other Executive Officers | 3x annual salary | |
Other Designated Executives | 1x annual salary |
* SPX does not currently have the COO position. |
Shares held in family trusts and shares held in retirement plan accounts are deemed to be owned shares for purposes of these guidelines.Guidelines. Unexercised stock options and unvested performance-based equity awards are excluded. We asknon-employee directors and executives to attain the desired level of stock ownership within five years of appointment to a director or officer position.
Once anon-employee director or executive attains the desired level of share ownership, he or she will continue to be in compliance with these guidelines even if the non-employee directorhe or executiveshe later falls below the guideline, as long as he or she retains at least 50% of the net shares acquired upon exercise of stock options and at least 50% of the net shares acquired pursuant to vested restricted equity awards and vested restricted stock unit grants until he or she again meets or exceeds the guidelines. “Net shares” means the shares remaining after disposition of shares necessary to pay the related tax liability and, if applicable, the stock option exercise price.
Each current non-employee director and named executive officer was in compliance with these requirements as of March 29, 2016. Each pre-Spin-Off non-employee director and pre-Spin-Off named executive officer was in compliance with these requirements as of September 25, 2015, the last trading day each individual served as a non-employee director or employee, as applicable, of SPX.20, 2018.
2018 PROXY STATEMENT | 15 |
OWNERSHIP OF COMMON STOCK
DIRECTORS AND EXECUTIVE OFFICERS
The following table includes information about how much of our common stock (our only outstanding class of equity securities) is beneficially owned by:
Unless otherwise noted, amounts and percentages are as of March 29, 2016.
OWNERSHIP OF COMMON STOCK
Number of Shares of Common Stock Beneficially | Right to Within 60 | Percent of Class | ||||||||||
DIRECTOR AND DIRECTOR NOMINEES WHO ARE NOT NAMED EXECUTIVE OFFICERS |
| |||||||||||
Christopher J. Kearney(2) | 403,361 | — | * | |||||||||
Patrick J. O’Leary | 7,133 | — | * | |||||||||
Ricky D. Puckett | 7,133 | — | * | |||||||||
David A. Roberts | 7,133 | — | * | |||||||||
Ruth G. Shaw | 7,133 | — | * | |||||||||
Tana L. Utley | 7,133 | — | * | |||||||||
CURRENT NAMED EXECUTIVE OFFICERS | ||||||||||||
Eugene J. Lowe, III | 45,719 | — | * | |||||||||
John W. Nurkin | 13,407 | — | * | |||||||||
Scott W. Sproule | 21,531 | — | * | |||||||||
John W. Swann, III | 11,017 | — | * | |||||||||
NaTausha H. White | 3,773 | — | * | |||||||||
All current directors and executive officers as a group (12 persons)(3) | 534,885 | — | 1.3 | % | ||||||||
FORMER EXECUTIVE OFFICERS WHO ARE NAMED EXECUTIVE OFFICERS(4) |
| |||||||||||
Robert B. Foreman | 109,405 | — | * | |||||||||
Jeremy W. Smeltser | 84,624 | — | * | |||||||||
David A. Kowalski | 88,774 | — | * |
Number of Shares of Common Stock Beneficially Owned(1)
|
Right to Acquire Beneficial Ownership Under Options Exercisable/ Stock Units Distributable Within
| Percent of Class
| ||||||||||
DIRECTORS AND DIRECTOR NOMINEES WHO ARE NOT NAMED EXECUTIVE OFFICERS
|
| |||||||||||
Patrick J. O’Leary
|
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20,192
|
|
|
4,810
|
|
|
*
|
| |||
Ricky D. Puckett
|
|
20,192
|
|
|
4,810
|
|
|
*
|
| |||
David A. Roberts
|
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20,192
|
|
|
4,810
|
|
|
*
|
| |||
Ruth G. Shaw
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20,192
|
|
|
4,810
|
|
|
*
|
| |||
Robert B. Toth
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4,491
|
|
|
4,491
|
|
|
*
|
| |||
Tana L. Utley
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20,192
|
|
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4,810
|
|
|
*
|
| |||
NAMED EXECUTIVE OFFICERS
| ||||||||||||
Eugene J. Lowe, III(3)
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267,170
|
|
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197,856
|
|
|
*
|
| |||
Scott W. Sproule(3)
|
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86,642
|
|
|
37,782
|
|
|
*
|
| |||
J. Randall Data(3)
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48,750
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|
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31,097
|
|
|
*
|
| |||
John W. Nurkin(3)
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59,118
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|
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25,184
|
|
|
*
|
| |||
John W. Swann, III(3)
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54,822
|
|
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25,588
|
|
|
*
|
| |||
All directors and executive officers as a group (13 persons)(3)
|
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691,848
|
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384,399
|
|
|
1.60
|
%
|
* | Less than 1.0% |
(1) | Beneficial ownership is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. In general, beneficial ownership includes any shares a director or officer can vote or transfer, |
(2) |
(3) |
16 | |
OWNERSHIP OF COMMON STOCK
The following table includes certain information about each person or entity known to us to be the beneficial owner of more than five percent of the issued and outstanding shares of our common stock.
Name and Address | Shares of Common Stock Beneficially Owned | Percent of Class(1) | ||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 5,334,444(2) | |||||||
The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 | ||||||||
| 4,528,039(3) | |||||||
ACR Alpine 8000 Maryland Avenue, Suite 700 St. Louis, MO 63105 | 2,529,964(4) |
(1) | Ownership percentages set forth in this column are based on the assumption that each of the principal shareowners continued to own, as of March |
(2) | Based on information provided in a Schedule 13G/A filed with the SEC on January |
(3) | Based on information provided in a Schedule 13G/A filed with the SEC on February |
(4) | Based on information provided in a Schedule 13G/A filed with the SEC on February |
MQRFUND, ACR, |
(d) | ||||
ACR, AIM, and Mr. Tompras with respect to the 2,022,109 shares owned directly by accounts separately managed by ACR. |
OWNERSHIP OF COMMON STOCK
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, officers, and beneficial owners of more than 10% of our outstanding common stock to file with the SEC reports of ownership and changes in ownership. SEC regulations require that directors, officers, and beneficial owners of more than 10% of our outstanding common stock furnish us with copies of all Section 16(a) reports they file.
Based solely upon a review of Forms 3 and 4 (including amendments to such forms) furnished to us during 20152017 and Forms 5 furnished with respect to 2015,2017, no director, officer, or beneficial owner of more than 10% of our outstanding common stock failed to file on a timely basis during 20152017 any reports required by Section 16(a), except for two late transactions: one late filing of a Form 4 reporting sales of common stock on behalf of Ms. Belinda Hyde—Vice PresidentMarch 10, 2017 by Michael A. Reilly, Corporate Controller and Chief Human ResourcesAccounting Officer, and one late filing of a Form 4 on behalf of Mr. J. Randall Data—President of South Africa and Global Operations, due in each case to an inadvertent error inwas filed after the reporting a grant of restricted stock under the 2002 Stock Compensation Plan.deadline.
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Compensation Discussion and Analysis
INTRODUCTION
As you read ourThis Compensation Discussion and Analysis (“CD&A”), keep in mind that 2015 was a unique and transformative year for our Company given the Spin-Off of FLOW at the end of September. The current executive officers, Compensation Committee members, and executive compensation design at SPX are all new. To this end, and given the change in the nature and size of the Company, the compensation practices, programs, and compensation levels for the executive officers prior to the Spin-Off are no longer reflective of our current approach to executive compensation.
Meet Our Current Named Executive Officers
This CD&A provides information about our executive compensation program and the factors that were considered in making compensation decisions for our currentnamed executive officers and how we have modified our programs to meet SPX’s needs(“NEOs”).
Our NEOs for the future. The compensation decisions that pertain to the current executive officers2017 are listed in the table below (“current NEOs”) were made by the members of the SPX Compensation Committee of the Board (the “Committee”) who were appointed effective September 26, 2015.below:
| Title
| |
Eugene J. Lowe, III | President and Chief Executive Officer | |
Scott W. Sproule | Vice President, Chief Financial Officer and Treasurer | |
J. Randall Data | President, South Africa and Global Operations | |
John W. Nurkin | Vice President, General Counsel and Secretary | |
John W. Swann, III | President, Weil-McLain, Marley Engineered Products and Radiodetection | |
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Pre-Spin-Off Named Executive OfficersEXECUTIVE SUMMARY
SPX spun-off FLOW, which becameThe past two and a half years have been transformative for SPX. In 2015, we completed thespin-off of the Flow business (the“Spin-Off”) into an independent, publiclly-ownedpublicly-owned company called SPX FLOW, Inc. (“FLOW”). TheSpin-Off became effective on September 26, 2015. However, pursuant to the disclosure requirements included in the SEC’s rules, this CD&A must also describe certain compensation actions taken before the Spin-Off.2015, at which time our executive officers and directors assumed their new roles. As a result, this CD&A includes compensationwe believe that pertainsa focus on operations as the “new” SPX, is particularly relevant for evaluating our business performance and executive compensation.
When assessing ourpay-for-performance outcomes, it is necessary to separate thepre-Spin-Off results frompost-Spin-Off results. The Company’s business model, strategy, managed assets, executive officer team, and membership of the Compensation Committee (the “Committee”) of our Board were materially different compared with periods prior to the former executive officers listedSpin-Off.
Summary of Key Business Accomplishments
Over the past year, our overall solid execution has placed us in our strongest financial condition since theSpin-Off. We achieved several key milestones on our value creation roadmap, positioning our Company for further success and investments in organic and inorganic growth, which included the table belowfollowing accomplishments:
• | Our full-year results were at the upper end of our 2017 guidance range, including Core operating income* growth of approximately 24%;† |
• | Our Core free cash flow* exceeded our expectations and targets, achieving 118%† conversion of adjusted net income from continuing operations;* |
• | We increased segment income in our Detection and Measurement and Engineered Solutions (Core)* segments by approximately 40% each; |
2016 | 2017 | |||||
GAAP EPS | $0.30 |
| $1.91 | |||
Adjusted EPS* | $1.47 |
| $1.78 |
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EXECUTIVE SUMMARYCOMPENSATION
Our FutureThree-Year Total Stockholder Return
Due to the significant difference betweenpre-Spin-Off SPX and New Executive Compensation Design
TheSPX after the Spin-Off of FLOW, we do not believe a three-year total stockholder return (“TSR”) is relevant. Therefore, we are presenting the total stockholder return from the point of theSpin-Offin September 2015.
TSR fromSpin-Off through December 31, 2017
FromSpin-Off, on September 26, 2015, marked a significant milestone inthrough the long historyend of SPX. The objective2017, the SPX total stockholder return of the Spin-Off163.8% was to narrow the strategic focus of each company and create value for both future companies.
We ended 2015 by opening a new chapter in our business. We assembled a new and experienced executive team1.8 times greater than that brings extensive industry knowledge and strong functional and operational skills to SPX. With the new members of the Committee in place, we also began the critical restructuring of our peer group (as defined in page 24) and 3.9 times greater than the S&P 500.
2017 Compensation Highlights
Our executive compensation program has three primary elements: base salary, annual incentives, and long-term incentives. Each of these compensation elements serves a specific purpose in our compensation strategy. Base salary is an essential component to ensure that it is clearly alignedany market-competitive compensation program. Annual incentives reward the achievement of short-term goals, while long-term incentives drive our NEOs to focus on stockholder value creation. Based on our performance, and consistent with our new business strategy and the interestsdesign of our stockholders.program, the Committee made the following executive compensation decisions for 2017:
• | Base Salary. Annual salary increases ranged from 3% to 7%. These adjustments were a continuation of the effort to bring our NEOs’ base salaries to the market median, commensurate with performance, over a three-year period. These adjustments were also reflective of the exceptional contributions made by our NEOs in connection with executing on key initiatives and the Company’s strategic priorities. For details, please see page 24 of this CD&A. |
• | Annual Incentive. Based on our performance results, awards under our Executive Bonus Program were paid at 187.5% of target. This payout applied to all our NEOs, with the exception of Mr. Swann, whose payout was 93.0% based on both business unit and corporate results. For details, please see page 25 of this CD&A. |
• | Long-Term Incentives. All of our NEOs received equity and equity-based awards in 2017. Target award amounts and the mix of vehicles used are described beginning on page 26 of this CD&A. |
* Non-GAAP financial measure. Reconciliations of amounts presented as non-GAAP financial measures with the amounts of the most comparable measures calculated and presented in accordance with GAAP, and other important information regarding non-GAAP financial measures, are presented in the appendix of this Proxy Statement.
† Exclusive of annual incentive adjustments.
19 |
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PROGRAM
Reflecting the Voice of Our Stockholders
We carefully consider the results of our stockholder say-on-paySay-on-Pay vote from the precedingprevious year. At our
At the 20152017 Annual Meeting, approximately 47%96% of the votes cast supportedapproved our executive compensationcompensation. We
decisions. The current NEOs and Committee members are all newinterpreted this result, which exceeded the approximately 90% favorable vote we received in their roles, and the executive compensation2016, as a
for which the last vote was cast no longer applies to SPX. We interpreted the resultsstrong endorsement of our 2015 vote as a signalcompensation program’s design and direction. We continue to actively seek and
expandhighly value the perspectives of our dialogue withinvestors. During the year, we reached out to stockholders to help us understand their perspectives on compensationowning
approximately 75% of our common stock. We have taken and will continue to take steps tostockholder feedback into
ensure thatconsideration as we make adjustments toevolve our program that are aligned with our future business strategy and leadership
objectives, as well as competitive practices.compensation program. Most importantly, we are committed to ensuring that our
ongoing program is
designed in the best interests of both our stockholders and executives.
In the period shortly prior to and continuing after the Spin-Off, management engaged in dialogue with our largest investors to solicit feedback and gather information on the views and opinionsSummary of our stockholders on various governance issues, including executive compensation practices. Based on this feedback, SPX has designed its executive compensation programs post-Spin-Off (and for 2016) that:Compensation Program
• |
• |
• |
• |
• |
• | Includes a relative “total |
• |
• |
• |
Changes to the ExecutiveOur Compensation Program for 2016Principles
Our executive compensation program for 2015 largely reflected the historic practices of SPX before the Spin-Off. However, after the Spin-Off, the new members of the Committee, in partnership with our new management team and our independent compensation consultant, undertook a thorough review of these practices. The result is a newly-designed executive compensation program for 2016 and beyond that is centered on our new compensation philosophy and takes into accountaround the feedback we received from stockholders. The following principles guide the structure of our newly-designed program:principles:
Executive officers’ interests should be more directly aligned with those of Link to Business Priorities and Performance A significant portion of total compensation should be variable and subject Target total compensation should be competitive with that being offered Maintaining best-practice executive compensation governance standardsAlignment with
Stockholders’ Interests
stockholders when compensation emphasizes an appropriate balance of
both short- and long-term financial performance and is directly affected by
our stock price. Requiring executive officers to hold a meaningful amount
of equity supports alignment to stockholder interests.
to the attainment of certain specific and measurable performance goals
and objectives.Competitiveness
to individuals holding comparable positions at other public companies with
which we compete for leadership and market talent.Governance
is critical to the decision-making process and the ability to manage risk.
Doing so is in the best interests of our stockholders and executives.
20 | |
EXECUTIVE COMPENSATION
ConsistentComponents of Total Direct Compensation
For 2017, we continued to focus on ensuring alignment of pay practices with these principles, afterstockholder interests and driving apay-for-performance culture.
Design and philosophical characteristics of the Spin-Off we aligned our executive officer totalSPX compensation with that of our new group of peer companies:program include:
• |
• |
• |
Mix of Compensation Elements
The following charts show that for 20162017 the mix of compensation elements targeted for our current NEOs iswas heavily weighted toward variable performance-based compensation. The mix of LTI is based on the allocation value used in determining the number of units or options, as applicable, for each award.
2018 PROXY STATEMENT | 21 |
EXECUTIVE COMPENSATION
Our CEO’sPay-for-Performance Alignment
Because 2016 and 2017 were our first two full years,post-Spin-Off, as a materially different company, a three-year TSR does not provide a meaningful comparison to our peer group. The following chart shows our CEO’s compensation relative to our TSR and compared with our peers, demonstrating how our executive compensation program aligns with performance. This chart is based on ourtwo-year TSR; the average of our CEO’s total compensation for 2016 and 2017 by percentile; and the average total compensation for CEOs at our peer companies, from their most recent two proxy statement filings.
* | Peer company compensation based on 2015 and 2016 target compensation data from each company’s two most recent proxy statement filings. |
While our CEO’s relative pay rank falls below the median of our peer companies for 2017, our philosophy is to align executive compensation with that of our peers and provide variable incentive compensation that rewards executives at higher levels when superior performance is achieved.
|
EXECUTIVE COMPENSATION
HOW DECISIONS FOR OUR NAMED EXECUTIVE OFFICERS WERE MADE
Executive Compensation Practices
What We Do | ||
Heavy emphasis on variable compensation | ||
Majority of long-term incentive awards are performance based | ||
Clawback provisions | ||
Regular risk assessments | ||
“Double-trigger” termination payments upon a change in control | ||
✓ | Regular risk assessments | |
✓ | Annual reviews of share utilization | |
✓ | Stockholder outreach | |
✓ | Regular market assessments against our peer group |
What We Do Not Do | ||||
û | No multi-year guarantees of salary increases | |||
No taxgross-ups on termination payments following a change | ||||
û | No hedging of Company stock | |||
No pledging of Company stock | ||||
û | No significant perquisites or defined benefit pension plans | |||
û | No “single-trigger” termination payments upon a change | |||
No repricing or backdating | ||||
No cash buyout of underwater stock options without stockholder approval |
Pay At-A-Glance
Compensation Decisions for Our Current Named Executive Officers
SPX promoted all of its current NEOs from positions they held within the pre-Spin-Off organization, with the exception of Ms. White, who was hired on April 13, 2015 in anticipation of the Spin-Off. Before the Spin-Off, none of these individuals was a named executive officer. Because of this, when making compensation decisions, the current Committee took into account the significant increases in the individual responsibilities, accountabilities, and risk associated with these promotions. The current Committee also considered the critical need for a quick and successful onboarding of our new leadership team and the newly adopted approach to our executive compensation for 2016.
The following table shows the base salaries and target bonus opportunities for each of the current NEOs that were approved by the current Committee in connection with the Spin-Off:
Current NEO | Base Salary | Executive Bonus Plan Target (Cash) | ||||||||||
As a % of Base Salary | $ | |||||||||||
Eugene J. Lowe, III | $ | 775,000 | 100 | % | $ | 775,000 | ||||||
Scott W. Sproule | $ | 410,000 | 70 | % | $ | 287,000 | ||||||
John W. Swann, III | $ | 400,000 | 60 | % | $ | 240,000 | ||||||
John W. Nurkin | $ | 330,000 | 60 | % | $ | 198,000 | ||||||
NaTausha H. White | $ | 325,000 | 55 | % | $ | 178,750 |
The adjustments to base salary and annual incentive targets are reflective of the current Committee’s philosophy of setting pay between the 25th percentile and median of the SPX peer group.
EXECUTIVE COMPENSATION
On September 26, 2015, all of the pre-Spin-Off NEOs joined FLOW. On that same date, we appointed our current executive officers. In October 2015, the current Committee approved a one-time equity grant to align executive officer compensation with long-term stock performance, while supporting our leadership retention needs through this critical point in our business transformation. The grant was comprised of 50% stock options and 50% RSUs, each vesting at the end of three years:
Current NEO | Stock Options | RSUs | Grant Date Fair Value | |||||||||
Eugene J. Lowe, III | $ | 1,249,986 | $ | 1,250,004 | $ | 2,499,990 | ||||||
Scott W. Sproule | $ | 312,495 | $ | 312,498 | $ | 624,993 | ||||||
John W. Swann, III | $ | 249,999 | $ | 250,006 | $ | 500,005 | ||||||
John W. Nurkin | $ | 207,499 | $ | 207,500 | $ | 414,999 | ||||||
NaTausha H. White | $ | 162,500 | $ | 162,497 | $ | 324,997 |
In the months prior to the Spin-Off, the pre-Spin-Off Committee made other equity-related decisions that affected our current NEOs before the current NEOs assumed their new leadership positions. These actions are outlined on page 31 of this Proxy Statement.
Compensation Decisions for Pre-Spin-Off Named Executive Officers
SPX publicly announced its plans to spin off the businesses in October 2014. In consideration of the challenges anticipated to effectuate the Spin-Off transaction, the pre-Spin-Off Committee made the following decisions for SPX’s pre-Spin-Off executive officers:
Equity Conversion
Current and outstanding unvested equity was converted to post-Spin-Off SPX equity based on a conversion factor. Prior to the Spin-Off, the three-day simple average was used in comparison to the post-Spin-Off six-day simple average to determine the share ratio of 4.0589 and the price ratio of 0.25.
Individuals holding pre-Spin-Off unvested shares who continued their employment with SPX after the Spin-Off received 4.0589 unvested shares for each share of pre-Spin-Off SPX unvested equity. However, the value of the post-Spin-Off shares was 25% of the value of the pre-Spin-Off shares. With regard to vested shares of Company stock, employees were treated the same as other stockholders and each received one share of FLOW and one share of post-Spin-Off SPX stock (SPXC) for each share of pre-Spin-Off SPX stock (SPW) owned as of the Spin-Off transaction record date.
For example, pre-Spin-Off, Mr. Lowe was granted 3,554 RSUs in January 2015. At Spin-Off, using the average three-day share price of $49.60, the fair market value of this award was $176,278 (3,554 RSUs X $49.60). The share conversion factor of 4.0589, results in the number of shares converted to post-Spin-Off shares of SPX totaling 14,425 (3,554 RSUs X 4.0589). Based on the average six-day share price of post-Spin-Off SPX stock of $12.22, the converted fair market value of this grant was virtually the same post-Spin-Off as it was pre-Spin-Off at $176,274 (14,425 RSUs X $12.22).
The increase in the number of shares to participants is offset by the reduction in the underlying value of the equity.
EXECUTIVE COMPENSATION
HOW DECISIONS FOR OUR CURRENT NAMED EXECUTIVE OFFICERS WERE MADE
The Role of the Compensation Committee
The Committee is responsible for overseeing thatthe design and administration of the executive compensation program so that the program is designed and administered in a manner consistent with our compensation philosophy. The Committee reviews compensation levels for all of our executive officers, including our NEOs. The Committee also makes all final compensation decisions regarding our NEOs and officers, except for the CEO, whose compensation is reviewed and approved by the full Board, excluding Mr. Lowe, based upon recommendations of the Committee.
The Committee also works very closely with its independent compensation consultant and with management to examine the effectiveness of the Company’s executive compensation program. Details of the Committee’s authority and responsibilities are specified in the Committee’s charter, which is available on our website (www.spx.com) under the Company’s website atwww.spx.com.heading “Investor Relations—Corporate Governance—Board Committees.”
The Role of Management
In general, certainCertain members of our senior management team help prepare for and attend meetings where executive compensation, Company and individual performance, and competitive compensation levels and practices are discussed and evaluated. However, only the Committee members are allowed to vote on decisions regarding executive compensation. The Committee also receives recommendations from the CEO regarding the compensation of our other officers, including the other NEOs. The CEO does not participate in the deliberations of the Committee and Board regarding his own compensation.
The Role of the Independent Compensation Consultant
The Committee engages an independent compensation consultant to provide expertise on competitive pay practices and compensation program design and to provide an objective assessment of any inherent risks of any compensation programs. Pursuant to the authority granted to it under its charter, the Committee has retained Pearl Meyer as its independent consultant. Pearl Meyer reports directly to the Committee and does not provide any additional services to management. The Committee has conducted an independence assessment of Pearl Meyer in accordance with SEC rules, NYSE listing standards, and the requirements of the Compensation Committee charter, and has determined that work performed by Pearl Meyer does not create a conflict of interest.
2018 PROXY STATEMENT | 23 |
EXECUTIVE COMPENSATION
The Role of the Peer Group
AfterOur executive compensation program takes into account the Spin-Off,compensation practices of companies with which we compete or could compete for executive talent. In its 2017 review, the Committee refined SPX’sadded four companies (Barnes Group Inc., Harsco Corporation, Nordson Corporation, and TriMas Corporation) to and removed two companies (Joy Global, Inc. and Powell Industries, Inc.) from our peer group with the assistance of its independent compensation consultant to better reflect the Company’s new structure.group. The Committee usesremoved Joy Global, Inc. due to its acquisition by Komatsu America Corp., noting data will no longer be available, and Powell Industries, Inc. due to its revenues falling below the peer group dataselection size criteria. The Committee believes these changes provide a more relevant comparison based on the similarity of these companies to assistSPX in compensation decisions around base pay, short-term incentives,size and long-term incentives, as well as benchmarking otheroperational complexity.
For purposes of setting 2017 executive compensation, matters.the Committee used the following peer companies (“peer group”):
The
SPX Peer Companies | ||
Actuant Corporation | EnPro Industries, Inc. | |
Altra Industrial Motion Corp. | Graco Inc. | |
Babcock & Wilcox Enterprise, Inc. | Harsco Corporation | |
Barnes Group Inc. | IDEX Corp. | |
Chart Industries, Inc. | Nordson Corporation | |
CIRCOR International, Inc. | Regal Beloit Corporation | |
Crane Co. | Rexnord Corporation | |
Colfax Corp. | SPX FLOW, Inc. | |
Curtiss-Wright Corporation | TriMas Corporation |
Our peer companies were drawn from a pool of potential peer companies identified by our management either as key competitors for senior talent or as having businesses or serving end markets similar to our company.Company. These companies were further reviewed for appropriateness as peers by Pearl Meyer prior to the Committee approval. The primary factors used to generate the group were:were as follows:
SPXSPX’s annual revenues for 2017 rank slightly above that ofbelow the median peer company.
The Committee reviews the peer group regularly to assure alignment and adds or removes companies as peers as it deems appropriate and necessary to maintain competitive and balanced alignment. The Committee uses the peer group data to assist in compensation decisions around base salary, short-term incentives, and long-term incentives, as well as in benchmarking other executive compensation matters.
Base Salary
Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain talent. Base salary levels are reviewed annually. When making adjustments, the Committee considers the Company’s overall performance; the NEO’s individual performance, experience, career potential, and tenure with the Company; and competitive market practices. The Committee approved increases in base salary, effective March 20, 2017, as reflected in the table below, to continue to improve the competitive market position of our NEO’s base salaries relative to our peer group.
Named Executive Officer | Base Salary (From 3/21/2016) | Base Salary (From 3/20/2017) | % Adjustment | |||||||||
Eugene J. Lowe, III | $ | 786,625 | $ | 825,956 | 5.0 | % | ||||||
Scott W. Sproule | $ | 416,150 | $ | 445,281 | 7.0 | % | ||||||
J. Randall Data | $ | 408,000 | $ | 430,440 | 5.5 | % | ||||||
John W. Nurkin | $ | 334,950 | $ | 355,047 | 6.0 | % | ||||||
John W. Swann, III | $ | 406,000 | $ | 418,180 | 3.0 | % |
24 | 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
Annual Incentive
Executive Bonus Program
Our Executive Bonus Program pays annual bonuses ranging from 0% to 200% of target by reference to three key metrics: Core operating income,* Core cash flow,* and Core revenue.*
The Committee selected these metrics to be transparent and to provide clarity and consistency in calculating bonuses. In setting short-term incentive goals, SPX management and the Committee utilized a number of data points to focus targets on driving the Company’s strategic priorities, including setting goals that align executive pay with stockholder return. Further, the use of Core* results is intended to incentivize the executives to focus on the performance of our go forward businesses, which exclude the South African projects.
2017 targets were set to drive double-digit growth in profitability and to deliver Core free cash flow* at 100% conversion of adjusted net income from continuing operations.* Core revenue* targets were established in-line with our externally communicated strategy.
In our Process Cooling business, within the Engineered Solutions segment, we are successfully executing on our strategy to improve the revenue mix of the business on more profitable services and components. The implementation of this strategy has reduced Engineered Solutions (Core) segment revenues* by 8%,† but significantly increased profitability. In 2017, Engineered Solutions (Core)* operating profits* increased 42%† compared to the prior year.
When setting these targets for 2017, SPX management and the Committee considered this lower revenue, higher margin profile in our Process Cooling business, within the Engineered Solutions segment.
The table below shows the 2017 threshold, target, and maximum goals for each of the relevant metrics under our Executive Bonus Program, as well as the actual performance results.
Level of Performance ($ Millions) | Payout % | |||||||||||||||||||
Performance Metric and Weighting | Threshold ($) | Target ($) | Maximum ($) | Actual ($) | ||||||||||||||||
Core Operating Income* (50%) | $ | 102.7 | $ | 115.5 | $ | 135.0 | $ | 130.4 | 176.3 | % | ||||||||||
Core Free Cash Flow* (30%) | $ | 62.0 | $ | 69.2 | $ | 76.4 | $ | 78.9 | 200.0 | % | ||||||||||
Core Revenue* (20%) | $ | 1,250.0 | $ | 1,300.0 | $ | 1,400.0 | $ | 1,396.7 | 196.7 | % | ||||||||||
Total Corporate Results | 187.5 | % |
For 2017, Core operating income* of $130.4M resulted in a 176.3% payout, with a weighting of 50%. Core free cash flow* of $78.9M resulted in a 200% payout, with a weighting of 30%. Core revenue* of $1,396.7M resulted in a 196.7% payout, with a weighting of 20%. The cumulative payout for 2017 results was 187.5% of target for those NEOs with 100% of their bonus tied to corporate metrics.
Mr. Lowe, Mr. Sproule, Mr. Data, and Mr. Nurkin had bonus payouts based on corporate results, generating an overall payout of 187.5%. Mr. Swann had a target incentive that includes both business unit and corporate results: 75% of his incentive is based on his role as President, Weil-McLain, Marley Engineered Products, and Radiodetection, and 25% is based on corporate metrics. For 2017, business unit performance achievement metric was 61.5%, generating an overall payout of 93.0% for Mr. Swann.
* Non-GAAP financial measure. Reconciliations of amounts presented as non-GAAP financial measures with the amounts of the most comparable measures calculated and presented in accordance with GAAP, and other important information regarding non-GAAP financial measures, are presented in the appendix of this Proxy Statement.
† Exclusive of annual incentive adjustments.
|
EXECUTIVE COMPENSATION
The updated peer group includes the following:
| ||
| ||
| ||
| ||
| ||
|
HOW DECISIONS FOR THE PRE-SPIN-OFF EXECUTIVES WERE MADE
This section summarizes how the pre-Spin-Off Committee made decisions about compensationExecutive Bonus Results for our pre-Spin-Off executives. These decisions may no longer be reflective of our current approach to executive compensation.
For senior-level management, and in particular for the pre-Spin-Off NEOs, a significant majority of direct compensation (salary, bonus, and equity awards) was incentive-based. Bonuses were based on operating performance, and equity awards were designed to reward increased stock price and to aid in retention. Both cash bonuses and equity awards were also designed to align employee interests with those of our stockholders. Pre-Spin-Off NEOs also received certain perquisites and post-employment benefits.
Pre-Spin-Off NEO performance was judged primarily by reference to performance of the pre-Spin-Off Company as a whole. In addition, subjective assessments were made, including direct assessments of performance, formal talent assessment reviews, and assessments of adherence to the values of the pre-Spin-Off organization. At least annually, the pre-Spin-Off Committee reviewed tally sheets setting forth total compensation and walk-away values. The pre-Spin-Off Committee established and approved all elements of compensation for the pre-Spin-Off CEO based on input from and conversations with members of the pre-Spin-Off management team and its independent compensation consultant (Pearl Meyer), as well as its own assessments.
Prior to the Spin-Off, the most significant aspects of management’s role in the pre-Spin-Off compensation-setting process were for the human resources, finance, and legal departments to prepare materials for the pre-Spin-Off Committee with input from the pre-Spin-Off Committee’s independent compensation consultant. The pre-Spin-Off CEO provided his evaluation of the performance of each of the other pre-Spin-Off NEOs and offered recommendations regarding their salary levels, bonus targets, and equity awards. The pre-Spin-Off CEO reviewed these recommendations with the pre-Spin-Off Committee’s independent compensation consultant, and then they were submitted to the pre-Spin-Off Committee for review, discussion, and approval. The pre-Spin-Off members of management also prepared and recommended business performance targets and objectives.
Historically, the pre-Spin-Off Committee also considered the competitive compensation practices of other companies for comparative purposes without targeting specific benchmark percentiles. These comparative analyses were just one of several tools used to set compensation. Compensation outside the target levels was awarded based on reasons that included, but were not limited to, market forces, Company or individual performance, longevity of contribution to the Company, existing contractual obligations, and differing levels of responsibility and value created by officers with the same or similar title. The following companies comprised the former peer group for determining 2015 compensation prior to the Spin-Off: Cameron International Corp., Carlisle Companies, Inc, Chicago Bridge & Iron Company N.V., Colfax Corp., Crane Co., Dover Corp., Dresser-Rand Group Inc., Flowserve Corp., FMC Technologies, Inc., Foster Wheeler AG, Ingersoll-Rand Co. Ltd., Jacobs Engineering Group Inc, KBR, Inc., Pall Corp., Parker-Hannifin Corp., Pentair, Ltd., Rockwell Automation, Inc., Roper Industries, Inc., The Babcock & Wilcox Co., and Xylem Inc.
EXECUTIVE COMPENSATION
2015 PROGRAM DESIGN AND DECISIONS
The pre-Spin-Off Committee made decisions about compensation for pre-Spin-Off SPX executive officers, unless otherwise noted. These decisions are reflective of historic compensation structure related to a significantly larger company, as well as the context of the Spin-Off transaction itself.
Base Salary2017
Current Named Executive Officers
SPX promoted all of its current NEOs from positions they held within the pre-Spin-Off organization, with the exception of Ms. White, who was hired on April 13, 2015 in anticipation of the Spin-Off. This was a significant factor in setting the initial post-Spin-Off base salaries for our current NEOs, in addition to benchmarking data that was provided by the Committee’s independent compensation consultant. Each of the adjustments were made to set base pay between the 25th percentile and median pay of our current peer group. The table below shows the pre- and post-Spin-Off base salariestotal annual bonuses earned by our NEOs for each of the current NEOs, which were approved by the current Committee during a special meeting on the first business day following the Spin-Off.2017.
Current NEO | Title | Base Salary (01/01/2015) | Base Salary (From 3/23/2015) | Base Salary (Effective 9/21/2015) | ||||||||||
Eugene J. Lowe, III | President and Chief Executive Officer | $ | 370,000 | $ | 420,000 | $ | 775,000 | |||||||
Scott W. Sproule | Vice President, Chief Financial | $ | 325,395 | $ | 341,665 | $ | 410,000 | |||||||
John W. Swann, III | President, Weil-McLain, Marley | $ | 324,480 | $ | 345,571 | $ | 400,000 | |||||||
John W. Nurkin | Vice President, Secretary and | $ | 270,816 | $ | 287,065 | $ | 330,000 | |||||||
NaTausha H. White | Vice President and Chief Human | N/A | $ | 325,000 | * | $ | 325,000 |
Named Executive Officer
| Base Salary as of 12/31/2017
|
Target Payout (as a % of Base Salary)
| Bonus Achieved (% of Target
| Total
| ||||||||||||
Eugene J. Lowe, III
|
$
|
825,956
|
|
|
100
|
%
|
|
187.5
|
%
|
$
|
1,548,723
|
| ||||
Scott W. Sproule
|
$
|
445,281
|
|
|
70
|
%
|
|
187.5
|
%
|
$
|
584,452
|
| ||||
J. Randall Data
|
$
|
430,440
|
|
|
65
|
%
|
|
187.5
|
%
|
$
|
524,618
|
| ||||
John W. Nurkin
|
$
|
355,047
|
|
|
60
|
%
|
|
187.5
|
%
|
$
|
399,442
|
| ||||
John W. Swann, III
|
$
|
418,180
|
|
|
60
|
%
|
|
93.0
|
%
|
$
|
233,344
|
|
Pre-Spin-Off NamedSPX Corporation Executive OfficersAnnual Bonus Plan
No pre-Spin-Off NEO other than Mr. Smeltser received a salary increase for 2015. Mr. Smeltser received an increase in salary of 3%, in line with the U.S. merit increase budget for all employees.
Pre-Spin-Off NEO | Pre-Spin-Off Title | Base Salary (01/01/2015) | Base Salary (from 3/23/2015) | |||||||
Christopher J. Kearney | Chairman, President and Chief Executive Officer | $ | 1,224,800 | $ | 1,224,800 | |||||
Jeremy W. Smeltser | Vice President and Chief Financial Officer | $ | 571,200 | $ | 588,300 | |||||
Robert B. Foreman | Executive Vice President, Global Business Systems and Services; President, Asia Pacific | $ | 840,050 | $ | 840,050 | |||||
David A. Kowalski | President, Global Manufacturing Operations | $ | 613,500 | $ | 613,450 |
Executive Bonus Program
For 2015, our current NEO’s participated in the same bonus structure as the pre-Spin-Off NEOs.
BonusesAnnual bonuses to named executive officersNEOs are paid under the 162(m) Plan (defined later)(as defined in “Tax Matters” on page 29). Provided thatUnder the 162(m) Plan, the threshold for at least one metric must be met in order for any bonus to be paid. For 2017, at least one performance metricsmetric applicable to the NEOs under the 162(m) Plan arewas met, and subject totherefore the maximum payment amount permitted under the 162(m) Plan the Committee has provided that annual incentive payments under the 162(m) Plan shall be paid by reference to the metrics under the Executive Bonus Plan (as further described below), the plan under which other executives were paid.
EXECUTIVE COMPENSATION
The Executive Bonus Plan paid bonuses ranging from 0% to 200% of target bonus by reference to one or more metrics. The thresholdwas achieved. However, after reviewing overall Company results for at least one metric must have been met in order for any bonus to be paid. If only one metric threshold were met, total potential payout was limited to 50% of target bonus.
In anticipation of the Spin-Off and to keep all corporate Executive Bonus Plan participants focused on executing the transaction and facilitating a smooth transition following the Spin-Off, the pre-Spin-Off Committee approved Spin-Off-related metrics and a minimum payout opportunity under the Executive Bonus Plan of 85%. Target payout opportunity was 125% and the maximum payout opportunity remained capped at 200%.
The table below shows the 2015 threshold, target, and maximum goals for each of the relevant metrics under the Executive Bonus Plan, as set by the pre-Spin-Off Committee, and the actual performance results.
Performance Metric | Level of Performance ($ Millions) | |||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Actual ($) | |||||||||||||
Bank EBITDA | $ | 175 | $ | 185 | $ | 195 | $ | 132 | ||||||||
Revenue | $ | 1,928 | $ | 1,960 | $ | 1,992 | $ | 1,721 |
The metrics selected for the Executive Bonus Plan were Bank EBITDA (Consolidated EBITDA, as defined in our credit facilities) and Revenue. These metrics were selected because the pre-Spin-Off Committee believed they are transparent and provide certainty of calculation. Further, these metrics aligned with public communications and internal business goals.
Bank EBITDA equals Net Income, plus (or minus, in the case of a benefit): income tax expense, interest expense, depreciation and amortization, write-off intangibles, extraordinary or non-reoccurring cash or non-cash expenses, loss on disposition of assets, loss on discontinued operations, and pension expense. For the complete definition of Bank EBITDA, see our credit facilities filed as exhibits to our periodic reports with the SEC. Revenue is the total sales for post-Spin-Off SPX in 2015.
Based on the performance results above,2017, the Committee exercised its negative discretion and approved an 85%reduced the payout under the 162(m) Plan by referencefrom 200% to the Executive Bonus Plan.to 187.5%. This payout applied to all our current NEOs, with the exception of Mr. Swann, whose payout was 93.0% based on results specificboth business unit and corporate results. The preceding percentages were determined by reference to his business units (see tables below). This payout also applied tometrics under the pre-Spin-Off NEOs who were employed by FLOW asExecutive Bonus Program—for a more detailed description of the Spin-Off. However, SPX did not make these payments to the pre-Spin-Off NEOs who were employed by FLOW as of the Spin-Off. The following tables summarize actualannual bonus payouts.payment determinations, see “Executive Bonus Program” on page 25.
Current Named Executive Officers
This table shows the total bonuses earned by our current NEOs for 2015. The total bonus amount is the sum of bonuses earned in their roles for the period prior to the Spin-Off and bonuses earned for the period following the Spin-Off through the end of the year.
Current NEOs | Base as of | Before Spin-Off: 1/1/2015 – 9/26/2015 | After Spin-Off: 9/27/2015 – 12/31/2015 | Total Bonus | ||||||||||||||||||||||||||||
Target Payout (as a % of Base Salary) | Bonus Achieved (%) | Bonus Earned ($) | Target Payout (as a % of Base Salary) | Bonus Achieved (%) | Bonus Earned ($) | |||||||||||||||||||||||||||
Eugene J. Lowe, III | $ | 775,000 | 70 | % | 85 | % | $ | 339,510 | 100 | % | 85 | % | $ | 173,736 | $ | 513,246 | ||||||||||||||||
Scott W. Sproule | $ | 410,000 | 50 | % | 85 | % | $ | 128,294 | 70 | % | 85 | % | $ | 64,339 | $ | 192,633 | ||||||||||||||||
John W. Swann, III | $ | 400,000 | 50 | % | 60 | % | $ | 87,910 | 60 | % | 84 | % | $ | 53,043 | $ | 140,953 | ||||||||||||||||
John W. Nurkin | $ | 330,000 | 45 | % | 85 | % | $ | 92,935 | 60 | % | 85 | % | $ | 44,387 | $ | 137,322 | ||||||||||||||||
NaTausha H. White* | $ | 325,000 | 55 | % | 85 | % | $ | 69,290 | 55 | % | 85 | % | $ | 40,071 | $ | 109,362 |
EXECUTIVE COMPENSATION
Former SPX Executives
This table shows only a pro-rata portion, calculated based on the time elapsed as of the Spin-Off, of the bonus that could be earned by the former SPX executives for the period January 1, 2015 through December 31, 2015, assuming a bonus achieved of 85%. Please refer to the SPX FLOW, Inc. proxy statement for information about bonus amounts ultimately earned by the former SPX executives for the period January 1, 2015 through December 31, 2015 and which were paid by FLOW.
Pre-Spin-Off NEO | Base as of | Pre-Spin-Off: 1/1/2015 – 9/26/2015 | ||||||||||||||
Target Payout (as a % of Base Salary) | Bonus Achieved (%) | Bonus Earned ($) | ||||||||||||||
Christopher J. Kearney | $ | 1,224,800 | 130 | % | 85 | % | $ | 997,440 | ||||||||
Jeremy W. Smeltser | $ | 588,300 | 80 | % | 85 | % | $ | 294,827 | ||||||||
Robert B. Foreman | $ | 840,050 | 100 | % | 85 | % | $ | 526,240 | ||||||||
David A. Kowalski | $ | 613,450 | 80 | % | 85 | % | $ | 307,431 |
Equity-Based Awards
Current Named Executive OfficersLong Term Incentives
Long-term incentives are an integral part of our executive compensation program. They are designed to strongly align the financial interests of our NEOs with those of our stockholders through performance-based compensation that correlates with the creation of long-term stockholder value. Our long-term incentive awards also support our executive retention strategy.
For 2015, the current Committee did not approve any new equity awards for the current NEOs beyond the one-time grant described on page 26 of this Proxy Statement. The only other actions related to equity awards in 2015 for the new NEOs were made by the former members of2017, the Committee prior toapproved the Spin-Off. The following actionsmix of long-term incentive awards, which awards were taken by the pre-Spin-Off Committee,granted in anticipation of the Spin-Off and in conjunction with pre-Spin-Off promotions and historic award grants:March 2017 under our stockholder approved plans:
• |
• |
• | Cash Performance Units (“CPUs”) tied to cumulative segment income over a three-year performance measurement period that is aligned with external commitments, and with potential payout range of 0% to 150% of target; and |
• | Restricted Stock Units (“RSUs”) that vest ratably over a three-year period. |
Our NEOs received the following long-term incentive award opportunities in 2017:
Target LTI
| Units
| |||||||||||||||||||
Named Executive Officer
| Options
| PSUs
| CPUs
| RSUs
| ||||||||||||||||
Eugene J. Lowe, III
|
$
|
2,900,000
|
|
|
82,405
|
|
|
28,611
|
|
|
725,000
|
|
|
28,611
|
| |||||
Scott W. Sproule
|
$
|
700,000
|
|
|
19,891
|
|
|
6,907
|
|
|
175,000
|
|
|
6,907
|
| |||||
J. Randall Data
|
$
|
650,000
|
|
|
18,471
|
|
|
6,413
|
|
|
162,500
|
|
|
6,413
|
| |||||
John W. Nurkin
|
$
|
475,000
|
|
|
13,498
|
|
|
4,687
|
|
|
118,750
|
|
|
4,687
|
| |||||
John W. Swann, III
|
$
|
465,000
|
|
|
13,214
|
|
|
4,588
|
|
|
116,250
|
|
|
4,588
|
|
The allocation of Options were based on the SPX Black-Scholes valuation; RSUs and PSUs were based on the average closing fair market value of SPX stock for the 15 trading days immediately preceding the date of grant; and CPUs were valued at $1.00 per unit, with assumed payment at the 100% target amount.
26 | 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
Stock Options
In 2017, awards of Options were granted to the Spin-Off, on August 20, 2015, the former memberseligible participants, including each of the Committee approved 50% vesting of the performance-based equity awards that were granted as part of the long-term incentive awards provided to non-officers in 2013 (for the 2013-2015 performance cycle, based on r-TSR vs. the S&P Composite 1500 Industrials Index). Accordingly, each of Mr. Lowe, Mr. Sproule, Mr. Swann and Mr. Nurkin’s PSUs vested for the performance period at 50% of post-Spin-Off converted target shares (6,545, 6,732, 3,738, and 4,487, respectively). These same modifications also apply to the 2014 performance-based equity awards that were granted as part of the long-term incentive awards provided to non-officers in 2014 (for the 2014-2017 performance cycle, based on r-TSR vs. the S&P Composite 1500 Industrials Index).
For 2016, the currentNEOs. The Committee approved the following mix2017 Option grants to the NEOs in March 2017. The 2017 Options grant agreement provides for time-based ratable vesting (of 33 1⁄3 percent per year) over a three-year period (generally subject to continued employment during the period) with a maximum term of long-termten years. The Committee approves all grants of Options to be issued by the Company pursuant to approved equity incentive awards:grant guidelines.
The 2017 awards of PSUs provide eligible participants, including each of the NEOs, the opportunity to receive shares of common stock based onpre-established financial performance targets over a specified three-year period (and generally subject to continued employment during the performance period). The performance criteria for the PSUs are based on ther-TSR and of SPX as compared to the results of a peer group within the S&P 600 Capital Goods IndexIndex. At grant date, this peer group was comprised of 56 companies that compete in similar markets. Payouts under the program are made in shares of our common stock and range from 0% to 150% based on our TSR achievement versus the peer group. Payout cannot exceed target if our TSR return is negative.
Cash Performance Units
As part of the 2017 long-term incentive program, participants, including each of the NEOs, have the opportunity to receive cash incentive payments based on SPX’s performance over a specified three-year period in the form of CPUs (and generally subject to continued employment during the performance period). CPU payments are based on SPX’s actual performance over the three-year performance cycle beginning with the fiscal year in which the CPU is granted. In March 2017, the Committee granted three-year CPUs with a performance period ending December 31, 2019. Payouts under the program range from 0% to 150% based on achievement of cumulative segment income targets, and each unit has a par value of $1.00.
Restricted Stock Units
As part of the 2017 long-term incentive program, participants, including each of the NEOs, received RSUs. The Committee approved the 2017 RSU grants to the NEOs in March 2017. The 2017 RSU grant agreement provides for time-based ratable vesting (of 33 1⁄3 percent per year) over a three-year performance measurement period;
Outstanding equity awards are more fully described in the “Outstanding Equity Awards at FiscalYear-End” table in “Executive Compensation,” beginning on page 35.
Equity Conversion for PreSpin-Off Grants
Equity granted prior to theSpin-Off was converted topost-Spin-Off SPX equity based on a three-year performance measurement period that are alignedconversion factor. Prior to external commitments;
Individuals holdingpre-Spin-Off unvested shares who continued their employment with SPX after theSpin-Off received 4.0589 unvested shares for each share ofpre-Spin-Off SPX unvested equity. However, the value of thepost-Spin-Off shares was 25% of the value of thepre-Spin-Off shares. With regard to vested shares of Company stock, employees were treated the same as other stockholders and each received one share of FLOW and one share ofpost-Spin-Off SPX stock (SPXC) for each share ofpre-Spin-Off SPX stock (SPW) owned as of theSpin-Off transaction record date.
Note: PSUs are capped Application of the share conversion factor of 4.0589 resulted in the number of shares converted topost-Spin-Off shares of SPX totaling 14,425 (3,554 RSUs x 4.0589). Based on the averagesix-day share price ofpost-Spin-Off SPX stock of $12.22, the converted fair market value of this grant was virtually the samepost-Spin-Off as it waspre-Spin-Off at target if$176,274 (14,425 RSUs x $12.22).
The increase in the SPX r-TSR metricnumber of shares to participants is negative.offset by the reduction in the underlying value of the equity.
|
EXECUTIVE COMPENSATION
Pre-Spin-Off Executive Officers
The pre-Spin-Off Committee historically awarded performance-based equity awards as part of SPX’s long-term incentive program. For 2015, in light of the planned Spin-Off, the pre-Spin-Off Committee determined that senior executives (including the pre-Spin-Off NEOs) should receive their 2015 awards in the form of both stock options and time-vested restricted shares. The table below shows the value of the long-term incentive awards granted for 2015 to each of the pre-Spin-Off NEOs:
Pre-Spin-Off NEO | Stock Options ($) | Time-Vested Restricted Shares ($) | LTI Fair Market Value at Grant Date ($) | |||||||||
Christopher J. Kearney | $ | 3,382,501 | $ | 3,382,505 | $ | 6,765,006 | ||||||
Jeremy W. Smeltser | $ | 786,347 | $ | 786,312 | $ | 1,572,659 | ||||||
Robert B. Foreman | $ | 1,043,213 | $ | 1,043,235 | $ | 2,086,448 | ||||||
David A. Kowalski | $ | 786,347 | $ | 786,312 | $ | 1,572,659 |
These awards vest ratably over three years, except that stock granted to retirement-eligible officers vested at the time of the Spin-Off. Retirement-eligible officers (Mr. Kearney, Mr. Foreman, and Mr. Kowalski) agreed not to sell or impair such vested equity until it would have vested had they not been retirement-eligible.
Results of 2013-2015 Performance Cycle
As mentioned earlier, prior to the Spin-Off, on August 20, 2015, the former members of the Committee approved 50% vesting of the performance-based equity awards that were granted as part of the long-term incentive awards provided to non-officers in 2013 (for the 2013-2015 performance cycle, based on r-TSR vs. the S&P Composite 1500 Industrials Index).
These same modifications also apply to the 2014 PSU awards to non-officers that spans the 2014-2016 performance cycle.
OTHER PRACTICES, POLICIES, AND GUIDELINES
Policy on Hedging
No SPX director or employee may trade in derivative securities relating to SPX securities, such as put and call options or forward transactions.
ImpactPolicy on Compensation from Misconduct–ClawbacksPledging
If the Board were to determine that a named executiveNo SPX director or officer had engaged in fraudulent or intentional misconduct, it would take action to remedy the misconduct and impose appropriate discipline. Discipline would vary based on the facts and circumstances, but may include termination of employment or other appropriate actions.
We retroactively adjust compensation in the event of a restatement of financial or other performance results to the extent required by the Sarbanes-Oxley Act of 2002. The 162(m) Plan provides for repayment or forfeiture of awards under specified circumstances if the Company, as a result of misconduct, is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Any awards earned or accrued during the twelve-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document that failed to materially comply with a financial reporting requirement must be paid back to the Company. To the extent that the affected award was deferred under a nonqualified deferred compensation plan maintained by the Company rather than paid to the executive officer, the deferred amount (and any earnings from it) must be forfeited. Beginning in 2013, our equity award agreements have provided that awards are subject to any compensation recovery policy adopted by us, as amended from time to time.
Other Benefits and Perquisites
We provide perquisites to attract and retain executives in a competitive marketplace, and believe these benefits are generally consistent with market practices of our peer group and other comparable public industrial manufacturing companies. See the Summary Compensation Table and accompanying footnotes for a full listing of benefits and perquisites. We do not provide tax gross-up payments for perquisites.
In connection with the relocation of our headquarters to Charlotte, North Carolina in 2002, our then-employees who relocated, including Mr. Foreman, were eligible to receive interest-free, 20-year relocation loans to finance the purchase of a principal
EXECUTIVE COMPENSATION
residence. Mr. Foreman received a loan in the amount of $1.5 million. Under the terms of this loan, we have notified Mr. Foreman that the loan is due and payable and anticipate that it will be repaid on or before August 19, 2016. We have not made any relocation loans to officers since 2002.
Our CEO may utilize our aircraft for personal travel for himself and his family. Other executive officers may be permitted personal use of our aircraft for themselves and their families if approved by our CEO. We report the value of any personal use of our corporate aircraft by NEOs as ordinary taxable income and as compensation in the Summary Compensation Table on page 36.
Retirement and Deferred Compensation Plans
Post-Spin-Off, none of our current NEOs participate in a defined benefit pension plan.
Executive officers and other senior-level management are eligible to participate in thepledge SPX Corporation Retirement Savings and Stock Ownership Plan (the “401(k) Plan”) and the SPX Corporation Supplemental Retirement Savings Plan (the “SRSP”), a non-qualified deferred compensation plan that permits voluntary deferrals of base salary and annual bonuses. For more information regarding these plans, see the Nonqualified Deferred Compensation in 2015 table and accompanying narrative and footnotes, beginning on page 44.securities.
Pre-Spin-Off NEOs participated in the SPX Corporation Supplemental Retirement Plan for Top Management (the “TMP”). Some of the pre-Spin-Off NEOs were also participants in the SPX US Pension Plan (formerly named the SPX Corporation Individual Account Retirement Plan) (the “IARP”) and the SPX Corporation Supplemental Individual Account Retirement Plan (the “SIARP”). None of our current NEOs participate in these plans. The IARP and SIARP accounts with respect to executive officers were frozen prior to the Spin-Off. The TMP liabilities and benefits for the pre-Spin-Off NEOs transferred to FLOW at the time of the Spin-Off.
Termination and Change-in-Control Provisions
We design termination and change-in-control contractual provisions to be competitive at the time we enter into an agreement. As a result, our agreements have changed over time, with newer agreements generally offering reduced payments and increased vesting obligations.
On September 28, 2015, the Committee recommended and the Board approved an employment agreement and a change-in-control agreement for the Company’s President and Chief Executive Officer and severance benefit agreements and change-in-control agreements for all other current executive officers.
Our severance arrangements are designed to protect stockholder interests by stabilizing management during periods of uncertainty. Executives often assign significant value to severance agreements because they provide compensation for lost professional opportunities in the event of a change in control.
Severance agreements also can be a powerful tool to discourage entrenchment of management, in that severance agreements can offset the risk of financial and professional loss that management may face when recommending a sale to or merger with another company. Our severance arrangements are structured to serve the above functions, which differ, and are perceived by recipients to differ, from pay for performance. Accordingly, decisions relating to other elements of compensation have minimal effect on decisions relating to existing severance agreements.
Post-Spin-Off, SPX utilizes a double-trigger in the event of a change in control. If the executive officer experiences a qualifying negative employment action following a change in control, the executive officer becomes immediately vested in all previously granted unvested SPX equity, including shares subject to performance vesting at the target level of vesting. This feature is designed to be equitable in the event of dismissal without cause or resignation for good reason, and we believe it is appropriate in the event of termination following a change in control.
Severance and change-in-control terms are further discussed and quantified in “Potential Payments Upon Termination or Change in Control,” beginning on page 45.
EXECUTIVE COMPENSATION
Tax Matters
We seek to structure executive compensation in a tax efficient manner and review compensation plans in light of applicable tax provisions, including Section 162(m) of the Internal Revenue Code. To maintain flexibility in structuring executive compensation to achieve its goals and compensation philosophy, the Committee has not adopted a policy requiring all compensation to be tax deductible. We structure our executive officer bonuses to be tax deductible, and therefore a separate plan, the SPX Corporation Executive Annual Bonus Plan (the “162(m) Plan”), determines whether each executive officer qualifies for the payment of bonuses described above, and sets a cap on the amount of bonus that may be awarded and treated as tax-deductible.
The Committee may set the amounts payable under the 162(m) Plan (subject to the maximum amount permitted under the 162(m) Plan and applicable performance metrics being met). While the Committee can exercise its discretion to reduce any bonus payable under the 162(m) Plan, the Committee does not have discretion to increase the bonus payable under the 162(m) Plan.
A portion of the stock awarded to executive officers vests based on the same trigger as under the 162(m) Plan. In 2015, the 162(m) Plan performance goal was met.
Stock Ownership Guidelines
Our Stock Ownership Guidelines are designed to help ensure officersour officers’ interests are closely aligned with those of our long-term stockholders. Additional detail can be found in the Ownership“Ownership of Common Stock sectionStock” on page 18.15.
Impact on Compensation from Misconduct–Clawbacks
If the Board were to determine that a NEO had engaged in fraudulent or intentional misconduct, it would take action to remedy the misconduct and impose appropriate discipline. Discipline would vary based on the facts and circumstances, but may include termination of employment and/or other appropriate actions.
We retroactively adjust compensation in the event of a restatement of financial or other performance results to the extent required by the Sarbanes-Oxley Act of 2002. The 162(m) Plan (defined in “Tax Matters” on page 29) provides for repayment or forfeiture of awards under specified circumstances if the Company, as a result of misconduct, is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Any awards earned or accrued during the12-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document that failed to materially comply with a financial reporting requirement must be paid back to the Company. To the extent that the affected award was deferred under a nonqualified deferred compensation plan maintained by the Company rather than paid to the executive officer, the deferred amount (and any earnings from it) must be forfeited. Beginning in 2013, our equity award agreements have provided that awards are subject to any compensation recovery policy adopted by the Company, as amended from time to time.
Other Benefits and Perquisites
We provide perquisites to attract and retain executives in a competitive marketplace, and we believe these benefits are generally consistent with market practices of our peer group and other comparable public industrial manufacturing companies. For a full listing of benefits and perquisites, see the “Summary Compensation Table” and accompanying footnotes beginning on page 32. We do not provide taxgross-up payments for perquisites.
Our CEO may utilize our aircraft for personal travel for himself and his family. Other executive officers may be permitted personal use of our aircraft for themselves and their families if approved by our CEO. We report the value of any personal use of our corporate aircraft by NEOs as ordinary taxable income and as compensation in the “Summary Compensation Table” on page 32.
Retirement and Deferred Compensation Plans
None of our NEOs participate in an SPX defined benefit pension plan.
Our executives, along with the majority of our U.S.-based employee population, are eligible to receive matching contributions into the SPX Corporation Retirement Savings and Stock Ownership Plan (the “401(k) Plan”), atax-qualified retirement savings plan. Matching contributions are immediately vested and are invested initially in the SPX Common Stock Fund in the form of units. This fund under the 401(k) Plan is primarily invested in SPX common stock, with a small portion of the fund in cash, for purposes of administrative convenience.
Executive officers and other senior-level management employees are also eligible to participate in the SPX Corporation Supplemental Retirement Savings Plan (the “SRSP”), anon-qualified deferred compensation plan that permits voluntary deferrals of base salary and annual bonuses.
For more information regarding these plans, see the “Nonqualified Deferred Compensation” table and accompanying narrative and footnotes, beginning on page 37.
28 | 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
Termination andChange-in-Control Provisions
As described below, all our NEOs, except our CEO, have entered into the current form of ourchange-in-control agreement as filed with the SEC.
On September 28, 2015, the Committee recommended, and the Board approved, an employment agreement and achange-in-control agreement for Mr. Lowe, President and Chief Executive Officer, and severance benefit agreements andchange-in-control agreements for all other executive officers. The Committee reviews these agreements annually considering stakeholder interests and market competitiveness and will address adjustments as it deems appropriate.
Our severance arrangements are designed to protect stockholder interests by stabilizing management during periods of uncertainty. Executives often assign significant value to severance agreements because these agreements provide compensation for lost professional opportunities in the event of a negative qualifying event following achange-in-control.
Severance agreements can also be a powerful tool to discourage entrenchment of management, in that these agreements can offset the risk of financial and professional loss that management may face when recommending a sale to or merger with another company. Our severance arrangements are structured to serve the above functions, which differ, and are perceived by recipients to differ, from pay for performance. Accordingly, decisions relating to other elements of compensation have minimal effect on decisions relating to existing severance agreements. As described above, all our NEOs, except our CEO, have entered into the most current form of our severance benefit agreement as filed with the SEC.
We utilize a double-trigger in the event of achange-in-control. If the executive officer experiences a qualifying negative employment action following achange-in-control, then the executive officer becomes immediately vested in all previously-granted unvested SPX equity, including shares subject to performance vesting, at the target level. This feature is designed to be equitable in the event of dismissal without cause or resignation for good reason, and we believe it is appropriate in the event of termination following achange-in-control.
Severance andchange-in-control terms are further discussed and quantified in “Potential Payments Upon Termination orChange-in-Control,” beginning on page 38.
Tax Matters
We seek to structure executive compensation in atax-efficient manner and review compensation plans in light of applicable tax provisions, including the performance-based exception under Section 162(m) of the Internal Revenue Code. To maintain flexibility in structuring executive compensation to achieve its goals consistent with its compensation philosophy, the Committee has not adopted a policy requiring all compensation to be tax deductible. We generally structure our executive officer annual bonuses to be tax deductible, and therefore for 2017 a separate plan, the SPX Corporation Executive Annual Bonus Plan (the “162(m) Plan”), approved by our stockholders at our 2016 Annual Meeting, determined whether each executive officer qualified for the payment of bonuses described above and set a cap on the amount of bonus that may be awarded and treated as tax deductible.
The Committee set the amounts payable under the 162(m) Plan (subject to the maximum amount permitted under the 162(m) Plan and applicable performance metrics being met). While the Committee was authorized to exercise its discretion to reduce any bonus payable under the 162(m) Plan, the Committee did not have discretion to increase the bonus payable under the 162(m) Plan.
The performance-based exception under Section 162(m) was repealed in the tax reform legislation signed into law on December 22, 2017. As a result, it is uncertain whether compensation that the Committee intended to structure as performance-based compensation under Section 162(m), including long-term incentive performance awards, will be deductible to the extent that compensation to a covered employee in any year exceeds the limit on deductibility under Section 162(m). While the Committee considers the deductibility of awards as a factor in determining executive compensation, the Committee also looks at other factors in making its decisions and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible for income tax purposes.
2018 PROXY STATEMENT | 29 |
EXECUTIVE COMPENSATION
Notes
The discussion of performance targets in this Compensation Discussion and AnalysisCD&A is exclusively in the context of executive compensation and should not be used for any other purpose or regarded as an indication of management’s expectations of future results.
References to “bonus” or “bonuses” in this CD&A and the compensation tables are to our annual performance-based payments reflected as “Non-Equity“Non-Equity Incentive Plan Compensation” in the “Summary Compensation Table” on page 36.32 and “Estimated Future Payouts underNon-Equity Incentive Plan Awards” in the “Grants of Plan Based Awards” table on page 34.
Management regularly monitors and reviews our compensation programsprogram and the related risks and reports its findings to the Committee.
We do not believe our compensation policies and practices give rise to risks that are reasonably likely to have a material adverse effect on our Company. In reaching this conclusion, we considered the following factors:
EXECUTIVE COMPENSATION
No single SPX business unit carries a significant portion of the Company’s risk profile, or has compensation structured in a significantly different manner than other business units within the Company, regardless of relative business unit profitability or compensation expense as a percentage of revenues.
Management does not believe that any of the design features pose a significant concern. Based upon this analysis, we determined that the compensation programs do not present a material risk.
30 | 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
The Compensation Committee of the SPX Board of Directors consists of threefour directors. Each of the Committee members is independent, as defined under SEC rules and the listing standards of the NYSE. Additionally, each member of the Committee is an “outside director” within the meaning of grandfathered provisions of Section 162(m) of the Internal Revenue Code. The Committee reviews SPX’s “Compensation Discussion and Analysis” on behalf of the Board.
The Committee has reviewed and discussed the “Compensation Discussion and Analysis” with management, and based on the review and discussions, the Committee recommended to the Board that the “Compensation Discussion and Analysis” be included in this Proxy Statement and SPX’s Annual Report on Form10-K for the year ended December 31, 2015.2017.
Compensation Committee,
David A. Roberts, Chairman
Ricky D. Puckett
Ruth G. Shaw
Robert B. Toth
|
EXECUTIVE COMPENSATION
The following table summarizes the compensation for theour named executive officers during 2015.2017. The “named executive officers” or “NEOs” are (i) our Chief Executive Officer, our Chief Financial Officer, and our next three most highly compensated officers who were serving as officers as of December 31, 2015 (top portion of this and the following tables) (“current NEOs”), and (ii) our former Chief Executive Officer, our former Chief Financial Officer, and our next two most highly compensated former officers for whom we are required to disclose compensation during 2015 pursuant to Item 402(a)(3) of Regulation S-K (bottom portion of this and the following tables) (“pre-Spin-Off NEOs”).officers.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||||||||
Eugene J. Lowe, III President and Chief Executive Officer | 2015 | $ | 511,692 | $ | — | $ | 1,742,982 | $ | 1,555,156 | $ | 513,246 | $ | — | $ | 48,047 | $ | 4,371,123 | |||||||||||||||||||
Scott W. Sproule Vice President, Chief Financial Officer and Treasurer | 2015 | $ | 358,861 | $ | — | $ | 1,007,677 | $ | 312,495 | $ | 192,633 | $ | — | $ | 29,281 | $ | 1,900,947 | |||||||||||||||||||
John W. Swann, III President, Weil-McLain, Marley Engineered Products and Radiodetection | 2015 | $ | 357,768 | $ | — | $ | 694,548 | $ | 249,999 | $ | 140,953 | $ | — | $ | 28,753 | $ | 1,472,021 | |||||||||||||||||||
John W. Nurkin Vice President, Secretary and General Counsel | 2015 | $ | 296,827 | $ | — | $ | 731,711 | $ | 207,499 | $ | 137,322 | $ | — | $ | 22,896 | $ | 1,396,255 | |||||||||||||||||||
NaTausha H. White Vice President and Chief Human Resources Officer | 2015 | $ | 236,250 | $ | 100,000 | $ | 462,431 | $ | 162,500 | $ | 109,362 | $ | — | $ | 93,855 | $ | 1,164,398 | |||||||||||||||||||
($)(7) | ($) | ($)(8) | ($)(9) | ($)(10) | ($)(11) | ($)(12) | ($) | |||||||||||||||||||||||||||||
Christopher J. Kearney Former Chairman, President and Chief Executive Officer | 2015 | $ | 904,468 | $ | — | $ | 3,382,505 | $ | 3,382,501 | $ | 997,440 | $ | 6,446,495 | $ | 469,917 | $ | 15,583,326 | |||||||||||||||||||
2014 | $ | 1,214,277 | $ | — | $ | 6,941,749 | $ | — | $ | 3,088,946 | $ | 3,585,158 | $ | 412,522 | $ | 15,242,652 | ||||||||||||||||||||
2013 | $ | 1,147,615 | $ | — | $ | 5,199,977 | $ | — | $ | 1,824,680 | $ | 771,380 | $ | 261,011 | $ | 9,204,663 | ||||||||||||||||||||
Jeremy W. Smeltser Former Vice President and Chief Financial Officer | 2015 | $ | 430,359 | $ | — | $ | 786,312 | $ | 786,347 | $ | 294,827 | $ | 335,729 | $ | 74,512 | $ | 2,708,086 | |||||||||||||||||||
2014 | $ | 556,923 | $ | — | $ | 1,613,698 | $ | — | $ | 886,502 | $ | 326,309 | $ | 104,098 | $ | 3,487,530 | ||||||||||||||||||||
2013 | $ | 486,538 | $ | — | $ | 1,188,532 | $ | — | $ | 484,000 | $ | 70,908 | $ | 57,651 | $ | 2,287,629 | ||||||||||||||||||||
Robert B. Foreman Former Executive VicePresident,GlobalBusiness Systems andServices; and President, Asia Pacific | 2015 | $ | 604,190 | $ | — | $ | 1,043,235 | $ | 1,043,213 | $ | 526,240 | $ | 4,779,901 | $ | 244,799 | $ | 8,241,578 | |||||||||||||||||||
2014 | $ | 832,814 | $ | — | $ | 2,140,906 | $ | — | $ | 1,629,697 | $ | 2,393,486 | $ | 335,293 | $ | 7,332,196 | ||||||||||||||||||||
2013 | $ | 788,110 | $ | — | $ | 1,485,670 | $ | — | $ | 961,950 | $ | 1,297,713 | $ | 213,690 | $ | 4,747,133 | ||||||||||||||||||||
David A. Kowalski Former President, Global Manufacturing Operations | 2015 | $ | 453,044 | $ | — | $ | 786,312 | $ | 786,347 | $ | 307,431 | $ | 679,668 | $ | 55,858 | $ | 3,068,660 | |||||||||||||||||||
2014 | $ | 607,990 | $ | — | $ | 1,613,698 | $ | — | $ | 538,364 | $ | 827,648 | $ | 122,555 | $ | 3,710,256 | ||||||||||||||||||||
2013 | $ | 548,654 | $ | — | $ | 1,188,532 | $ | — | $ | 483,000 | $ | 193,282 | $ | 81,176 | $ | 2,494,644 |
EXECUTIVE COMPENSATION
Name and Principal Position
| Year
| Salary ($)(1)
| Bonus ($)
| Stock Awards ($)(2)
| Option Awards ($)(3)
| Non-Equity Incentive Plan Compensation ($)(4)
|
Change in Pension Value Deferred Compensation Earnings ($)
| All Other Compensation ($)(5)
| Total ($)
| |||||||||||||||||||||||||||
Eugene J. Lowe, III President and Chief Executive Officer
|
|
2017
|
|
$
|
817,551
|
|
$
|
—
|
|
$
|
1,654,860
|
|
$
|
791,088
|
|
$
|
1,548,723
|
|
$
|
—
|
|
$
|
79,241
|
|
$
|
4,891,463
|
| |||||||||
|
2016
|
|
$
|
784,084
|
|
$
|
—
|
|
$
|
1,844,703
|
|
$
|
768,237
|
|
$
|
654,472
|
|
$
|
—
|
|
$
|
53,494
|
|
$
|
4,104,990
|
| ||||||||||
|
2015
|
|
$
|
511,692
|
|
$
|
—
|
|
$
|
1,742,982
|
|
$
|
1,555,156
|
|
$
|
513,246
|
|
$
|
—
|
|
$
|
48,047
|
|
$
|
4,371,123
|
| ||||||||||
Scott W. Sproule Vice President, Chief Financial Officer and Treasurer
|
|
2017
|
|
$
|
439,055
|
|
$
|
—
|
|
$
|
399,501
|
|
$
|
190,954
|
|
$
|
584,452
|
|
$
|
—
|
|
$
|
46,892
|
|
$
|
1,660,854
|
| |||||||||
|
2016
|
|
$
|
414,806
|
|
$
|
—
|
|
$
|
461,176
|
|
$
|
192,056
|
|
$
|
242,366
|
|
$
|
—
|
|
$
|
49,623
|
|
$
|
1,360,027
|
| ||||||||||
|
2015
|
|
$
|
358,861
|
|
$
|
—
|
|
$
|
1,007,677
|
|
$
|
312,495
|
|
$
|
192,633
|
|
$
|
—
|
|
$
|
29,281
|
|
$
|
1,900,947
|
| ||||||||||
J. Randall Data President, South Africa and Global Operations
|
|
2017
|
|
$
|
425,645
|
|
$
|
—
|
|
$
|
370,928
|
|
$
|
177,322
|
|
$
|
524,618
|
|
$
|
—
|
|
$
|
33,566
|
|
$
|
1,532,079
|
| |||||||||
|
2016
|
|
$
|
406,251
|
|
$
|
—
|
|
$
|
368,941
|
|
$
|
153,644
|
|
$
|
203,674
|
|
$
|
—
|
|
$
|
32,532
|
|
$
|
1,165,042
|
| ||||||||||
John W. Nurkin Vice President, General Counsel and Secretary
|
|
2017
|
|
$
|
350,752
|
|
$
|
—
|
|
$
|
271,096
|
|
$
|
129,581
|
|
$
|
399,442
|
|
$
|
—
|
|
$
|
32,558
|
|
$
|
1,183,429
|
| |||||||||
|
2016
|
|
$
|
333,868
|
|
$
|
—
|
|
$
|
306,197
|
|
$
|
127,525
|
|
$
|
167,207
|
|
$
|
—
|
|
$
|
18,862
|
|
$
|
953,659
|
| ||||||||||
|
2015
|
|
$
|
296,827
|
|
$
|
—
|
|
$
|
731,711
|
|
$
|
207,499
|
|
$
|
137,322
|
|
$
|
—
|
|
$
|
22,896
|
|
$
|
1,396,255
|
| ||||||||||
John W. Swann, III President, Weil-McLain, Marley Engineered Products and Radiodetection
|
|
2017
|
|
$
|
415,577
|
|
$
|
—
|
|
$
|
265,370
|
|
$
|
126,854
|
|
$
|
233,344
|
|
$
|
—
|
|
$
|
36,919
|
|
$
|
1,078,064
|
| |||||||||
|
2016
|
|
$
|
404,689
|
|
$
|
—
|
|
$
|
313,600
|
|
$
|
130,599
|
|
$
|
50,669
|
|
$
|
—
|
|
$
|
35,110
|
|
$
|
934,667
|
| ||||||||||
|
2015
|
|
$
|
357,768
|
|
$
|
—
|
|
$
|
694,548
|
|
$
|
249,999
|
|
$
|
140,953
|
|
$
|
—
|
|
$
|
28,753
|
|
$
|
1,472,021
|
|
(1) |
Name | Deferred into 401(k) Plan | Deferred into SRSP | ||||||
Eugene J. Lowe, III | $ | 5,692 | $ | 26,827 | ||||
Scott W. Sproule | $ | 7,509 | $ | 36,750 | ||||
John W. Swann, III | $ | 8,861 | $ | 45,816 | ||||
John W. Nurkin | $ | 4,166 | $ | 17,118 | ||||
NaTausha H. White | $ | 18,000 | $ | — |
Name
|
Deferred into 401(k) Plan
|
Deferred into SRSP
| ||||||||||||
Eugene J. Lowe, III
|
$
|
12,102
|
|
$
|
39,936
|
| ||||||||
Scott W. Sproule
|
$
|
9,603
|
|
$
|
43,024
|
| ||||||||
J. Randall Data
|
$
|
5,492
|
|
$
|
20,808
|
| ||||||||
John W. Nurkin
|
$
|
5,153
|
|
$
|
19,809
|
| ||||||||
John W. Swann, III
|
$
|
11,712
|
|
$
|
29,405
|
|
(2) |
Stock Award grants are generally subject to performance or |
(3) |
In |
Name | Deferred into 401(k) Plan | Deferred into SRSP | ||||||
Eugene J. Lowe, III | $ | 6,077 | $ | 0 | ||||
Scott W. Sproule | $ | 8,538 | $ | 0 | ||||
John W. Swann, III | $ | 6,462 | $ | 0 | ||||
John W. Nurkin | $ | 10,986 | $ | 0 | ||||
NaTausha H. White | $ | 10,500 | $ | 0 |
Name
|
Deferred into 401(k) Plan
|
Deferred into SRSP
| ||||||||||||
Eugene J. Lowe, III
|
$
|
5,793
|
|
$
|
85,954
|
| ||||||||
Scott W. Sproule
|
$
|
8,224
|
|
$
|
—
|
| ||||||||
J. Randall Data
|
$
|
12,706
|
|
$
|
—
|
| ||||||||
John W. Nurkin
|
$
|
13,038
|
|
$
|
15,418
|
| ||||||||
John W. Swann, III
|
$
|
6,437
|
|
$
|
5,815
|
|
The 2015 bonus awards were not eligible to be deferred under the SRSP.
32 | 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
All Other Compensation for |
All Other Compensation | Eugene J. Lowe, III | Scott W. Sproule | John W. Swann, III | John W. Nurkin | NaTausha H. White | |||||||||||||||
Relocation—Taxable(a) | $ | 79,949 | ||||||||||||||||||
Relocation—Non Taxable(a) | $ | 656 | ||||||||||||||||||
Financial Planning | $ | 525 | ||||||||||||||||||
Executive Physical | $ | 668 | ||||||||||||||||||
Guest Travel/Meals (non-aircraft) | $ | 719 | $ | 400 | $ | 947 | ||||||||||||||
Business Use of Aircraft/Guest Travel (Grossed-Up)(b) | $ | 6,837 | ||||||||||||||||||
Aircraft—Incremental Cost(c) | $ | 40 | ||||||||||||||||||
Retirement Savings Plan Match | $ | 13,250 | $ | 13,250 | $ | 13,250 | $ | 13,250 | $ | 13,250 | ||||||||||
Supplemental Retirement Savings Plan Match | $ | 26,727 | $ | 15,312 | $ | 15,103 | $ | 8,699 | ||||||||||||
Total | $ | 48,047 | $ | 29,281 | $ | 28,753 | $ | 22,896 | $ | 93,855 |
EXECUTIVE COMPENSATION
Name | Deferred into 401(k) Plan | Deferred into SRSP | ||||||
Christopher J. Kearney | $ | 18,000 | $ | 165,720 | ||||
Jeremy W. Smeltser | $ | 16,477 | $ | 49,016 | ||||
Robert B. Foreman | $ | 22,801 | $ | 37,479 | ||||
David A. Kowalski | $ | 8,259 | $ | 23,948 |
All Other Compensation | Eugene J. Lowe, III | Scott W. Sproule | J. Randall Data | John W. Nurkin | John W. Swann, III | |||||||||||||||
Financial Planning | $ | 750 | $ | 4,430 | $ | — | $ | 475 | $ | 8,629 | ||||||||||
Executive Physical | $ | 713 | $ | — | $ | 1,172 | $ | — | $ | — | ||||||||||
Matching Gift(a) | $ | 2,500 | $ | 10,000 | $ | — | $ | 4,180 | $ | — | ||||||||||
Business Use of Aircraft/Guest Travel(b) | $ | — | $ | — | $ | — | $ | — | $ | 2,517 | ||||||||||
Group Term Life (>$50,000) | $ | 1,710 | $ | 1,035 | $ | 1,554 | $ | 2,022 | $ | 2,471 | ||||||||||
401(k) Plan Match | $ | 13,500 | $ | 13,500 | $ | 13,500 | $ | 13,500 | $ | 13,500 | ||||||||||
SRSP Match | $ | 60,068 | $ | 17,927 | $ | 17,340 | $ | 12,381 | $ | 9,802 | ||||||||||
Total | $ | 79,241 | $ | 46,892 | $ | 33,566 | $ | 32,558 | $ | 36,919 |
We will make matching donations for charitable contributions made by employees up to a total of $5,000 per annum. We will make matching donations for executive officers up to a total of $10,000. Amounts represented are |
All Other Compensation | Christopher J. Kearney | Jeremy W. Smeltser | Robert B. Foreman | David A. Kowalski | ||||||||||||
Board of Director | $ | 116,739 | ||||||||||||||
Financial Planning | $ | 17,875 | $ | 5,564 | ||||||||||||
Executive Physical | $ | 334 | $ | 80 | ||||||||||||
Headquarter Relocation Loan(a) | $ | 84,000 | ||||||||||||||
SPX Foundation Matching Gift(b) | $ | 30,000 | ||||||||||||||
Personal Use of Aircraft(c) | $ | 51,192 | ||||||||||||||
Business Use of Aircraft/Guest Travel (Grossed-Up)(d) | $ | 8,913 | $ | 3,731 | ||||||||||||
Aircraft—Incremental Cost(e) | $ | 68,660 | $ | 120 | $ | 80 | ||||||||||
Retirement Savings Plan Match | $ | 13,250 | $ | 13,250 | $ | 13,250 | $ | 13,250 | ||||||||
Supplemental Retirement Savings Plan Match | $ | 187,127 | $ | 52,906 | $ | 99,737 | $ | 36,673 | ||||||||
Retiree Medical(f) | $ | 5,827 | $ | 2,712 | $ | 17,692 | $ | 2,124 | ||||||||
Total(g) | $ | 469,917 | $ | 74,512 | $ | 244,799 | $ | 55,858 |
(b) |
Represents guest |
CEO Employment Agreement
The above benefits for Mr. Lowe are provided pursuant to the terms of his employment agreement. His employment agreement provides for annual base salary levels, annual incentive compensation opportunity, severance entitlements, and allowance amounts for annual income tax return preparation and financial planning. The initial term of Mr. Lowe’s employment agreement expiresexpired on December 31, 2017, and the term willagreement automatically renewrenews in additional subsequent one year-long terms unless at least 180 days prior to the expiration of the initial or any subsequent extended term of the employment agreement one of the parties provides the other party with a written notice of nonrenewal.non-renewal.
See “Compensation Discussion and Analysis,” beginning on page 18, for further discussion and explanation of each element of compensation.
CEO Pay Ratio
For 2017, our last completed fiscal year, the median of the annual total compensation of all employees of the Company (other than our CEO) was $56,123 and the annual total compensation of our CEO was $4,891,463. Based on this information, for 2017 the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 87 to 1.
To identify the median employee, we conducted a full analysis of our total employee population as of December 31, 2017, without the use of statistical sampling. We determined our median employee using “total compensation” paid during the full year 2017. Total compensation consisted of gross wages to include base wages, overtime, shift differential, incentives, paid time off, and perquisites, as applicable. We did not annualize gross wages for employees who were not employed for the full year in 2017. For those employees located outside of the US, currencies were converted to US Dollars using the posted Bloomberg market rates as of December 27, 2017. We have an even number of employees when not including the CEO, therefore there are two employees for whom the number of employees with greater “total compensation” equals the number of employees with less “total compensation.” From those two employees, we selected as the median employee the one with lower “total compensation.” We then calculated the annual total compensation of the median employee using the same methodology used in calculating the annual total compensation of our CEO, as reported in the “Summary Compensation Table” on page 32. The selection of the higher compensated of the two employees as the median employee instead of the one selected would not have affected the ratio presented above, as the difference in total annual compensation of the two employees was less than $20.
This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K of the SEC using the data and methodology summarized above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the median employee compensation amount and CEO pay ratio reported by other companies may not be comparable to the amount and ratio reported above.
33 |
EXECUTIVE COMPENSATION
The above benefits for pre-Spin-Off NEOs were provided pursuant to the terms of their employment agreements. Each such employment agreement with a pre-Spin-Off NEO was assigned to FLOW as of the Spin-Off.
See “Compensation Discussion and Analysis” beginning on page 22, for further discussion and explanation of each element of compensation.
The following table provides information regarding equity andnon-equity awards granted to the current NEOs in 2015 and the pre-Spin-Off NEOs in 2015 through the date of the Spin-Off.2017.
Estimated Future Payouts Under Equity Incentive Plan Awards | ||||||||||||||||||||||||||||||||||||
Name | Grant Date(1) | Award Date(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards Maximum ($)(2) | Threshold (#)(3) | Target (#)(3) | Maximum (#)(3) | Stock Option Awards (#)(4) | Exercise Price of Stock Option Awards ($) | Grant Date ($)(8) | |||||||||||||||||||||||||||
Eugene J. Lowe, III | 1/2/2013 | (5) | 8/20/2015 | (5) | 1,613 | 3,225 | 4,031 | $ | 100,040 | |||||||||||||||||||||||||||
1/2/2014 | (6) | 8/20/2015 | (6) | 1,484 | 2,967 | 3,709 | $ | 90,879 | ||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | $ | 1,207,637 | 14,425 | $ | 305,174 | ||||||||||||||||||||||||||||||
1/2/2015 | (7) | 12/18/2014 | 45,776 | $ | 21.16 | $ | 305,170 | |||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 101,133 | $ | 1,250,004 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 332,673 | $ | 12.36 | $ | 1,249,986 | ||||||||||||||||||||||||||||||
Scott W. Sproule | 1/2/2013 | (5) | 8/20/2015 | (5) | 1,659 | 3,317 | 4,146 | $ | 102,893 | |||||||||||||||||||||||||||
1/2/2014 | (6) | 8/20/2015 | (6) | 1,257 | 2,513 | 3,141 | $ | 76,973 | ||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | $ | 453,253 | 17,307 | $ | 366,145 | ||||||||||||||||||||||||||||||
8/20/2015 | 8/20/2015 | 10,147 | $ | 151,870 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 25,283 | $ | 312,498 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 83,168 | $ | 12.36 | $ | 312,495 | ||||||||||||||||||||||||||||||
John W. Swann, III | 1/2/2013 | (5) | 8/20/2015 | (5) | 921 | 1,842 | 2,303 | $ | 57,139 | |||||||||||||||||||||||||||
1/2/2014 | (6) | 8/20/2015 | (6) | 960 | 1,920 | 2,400 | $ | 58,810 | ||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | $ | 421,099 | 15,626 | $ | 330,582 | ||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 20,227 | $ | 250,006 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 66,535 | $ | 12.36 | $ | 249,999 | ||||||||||||||||||||||||||||||
John W. Nurkin | 1/2/2013 | (5) | 8/20/2015 | (5) | 1,106 | 2,211 | 2,764 | $ | 68,585 | |||||||||||||||||||||||||||
1/2/2014 | (6) | 8/20/2015 | (6) | 838 | 1,675 | 2,094 | $ | 51,305 | ||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | $ | 323,110 | 12,018 | $ | 254,252 | ||||||||||||||||||||||||||||||
8/20/2015 | 8/20/2015 | 10,147 | $ | 151,870 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 16,788 | $ | 207,500 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 55,224 | $ | 12.36 | $ | 207,499 | ||||||||||||||||||||||||||||||
NaTausha H. White | 4/13/2015 | 4/13/2015 | $ | 257,321 | 14,620 | $ | 299,934 | |||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 13,147 | $ | 162,497 | ||||||||||||||||||||||||||||||||
10/13/2015 | 10/13/2015 | 43,248 | $ | 12.36 | $ | 162,500 | ||||||||||||||||||||||||||||||
(1) | (1) | ($)(9) | (#)(10) | (#)(11) | ($)(12) | ($)(13) | ||||||||||||||||||||||||||||||
Christopher J. Kearney | 1/2/2015 | 12/18/2014 | $ | 2,388,360 | 39,391 | $ | 3,382,505 | |||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | 125,007 | $ | 85.87 | $ | 3,382,501 | ||||||||||||||||||||||||||||||
Jeremy W. Smeltser | 1/2/2015 | 12/18/2014 | $ | 705,960 | 9,157 | $ | 786,312 | |||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | 29,061 | $ | 85.87 | $ | 786,347 | ||||||||||||||||||||||||||||||
Robert B. Foreman | 1/2/2015 | 12/18/2014 | $ | 1,260,075 | 12,149 | $ | 1,043,235 | |||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | 38,554 | $ | 85.87 | $ | 1,043,213 | ||||||||||||||||||||||||||||||
David A. Kowalski | 1/2/2015 | 12/18/2014 | $ | 736,140 | 9,157 | $ | 786,312 | |||||||||||||||||||||||||||||
1/2/2015 | 12/18/2014 | 29,061 | $ | 85.87 | $ | 786,347 |
EXECUTIVE COMPENSATION
Estimated Future Payouts UnderNon-Equity Incentive | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date(1) | Threshold (#)(2) | Target (#)(2) | Maximum (#)(2) | Threshold (#)(3) | Target (#)(3) | Maximum (#)(3) | All Other (#)(4) | Stock Option Awards (#)(5) | Exercise Price of Stock Option Awards ($) | Grant Date Fair Value Stock and Option Awards ($)(6) | |||||||||||||||||||||||||||||||||
Eugene J. Lowe, III |
|
2/20/2017
|
|
|
412,978
|
|
|
825,956
|
|
|
1,651,912
|
| ||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
14,306
|
|
|
28,611
|
|
|
42,917
|
|
$
|
870,919
|
| ||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
362,500
|
|
|
725,000
|
|
|
1,087,500
|
| |||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
28,611
|
|
$
|
783,941
|
| ||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
82,405
|
|
$
|
27.40
|
|
$
|
791,088
|
| |||||||||||||||||||||||||||||||||
Scott W. Sproule |
|
2/20/2017
|
|
|
155,849
|
|
|
311,697
|
|
|
623,394
|
| ||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
3,454
|
|
|
6,907
|
|
|
10,361
|
|
$
|
210,249
|
| ||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
87,500
|
|
|
175,000
|
|
|
262,500
|
| |||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
6,907
|
|
$
|
189,252
|
| ||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
19,891
|
|
$
|
27.40
|
|
$
|
190,954
|
| |||||||||||||||||||||||||||||||||
J. Randall Data |
|
2/20/2017
|
|
|
139,893
|
|
|
279,786
|
|
|
559,572
|
| ||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
3,207
|
|
|
6,413
|
|
|
9,620
|
|
$
|
195,212
|
| ||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
81,250
|
|
|
162,500
|
|
|
243,750
|
| |||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
6,413
|
|
$
|
175,716
|
| ||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
18,471
|
|
$
|
27.40
|
|
$
|
177,322
|
| |||||||||||||||||||||||||||||||||
John W. Nurkin |
|
2/20/2017
|
|
|
106,514
|
|
|
213,028
|
|
|
426,056
|
| ||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
2,344
|
|
|
4,687
|
|
|
7,031
|
|
$
|
142,672
|
| ||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
59,375
|
|
|
118,750
|
|
|
178,125
|
| |||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
4,687
|
|
$
|
128,424
|
| ||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
13,498
|
|
$
|
27.40
|
|
$
|
129,581
|
| |||||||||||||||||||||||||||||||||
John W. Swann, III |
|
2/20/2017
|
|
|
125,454
|
|
|
250,908
|
|
|
501,816
|
| ||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
2,294
|
|
|
4,588
|
|
|
6,882
|
|
$
|
139,659
|
| ||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
58,125
|
|
|
116,250
|
|
|
174,375
|
| |||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
4,588
|
|
$
|
125,711
|
| ||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
13,214
|
|
$
|
27.40
|
|
$
|
126,854
|
|
(1) | The |
(2) | Represents the |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | ||||||||||||
Threshold | Target | Maximum | ||||||||||
Eugene J. Lowe, III | $ | 513,246 | $ | 754,773 | $ | 1,207,637 | ||||||
Scott W. Sproule | $ | 192,633 | $ | 283,283 | $ | 453,253 | ||||||
John W. Swann, III | $ | 10,527 | $ | 210,549 | $ | 421,099 | ||||||
John W. Nurkin | $ | 137,322 | $ | 201,944 | $ | 323,110 | ||||||
NaTausha H. White | $ | 109,362 | $ | 160,826 | $ | 257,321 |
(3) | Represents the potential payout for the PSUs granted on March 1, 2017. For the PSUs, threshold payout is 50% of target and maximum payout is 150% of target, and is based on the three-yearr-TSR versus the S&P 600 Capital Goods Index for 2017-2019. Payout is capped at target if our TSR is negative. |
(4) | Represents the RSU awards for |
(5) |
(6) |
Represents the |
|
EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END
The following table details the outstanding equity awards held by each of our current NEOs at December 31, 2015. As a result of the Spin-Off, pre-Spin-Off NEOs did not hold any outstanding equity awards of the Company at December 31, 2015.2017.
Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Award Date | Number of (#)(1) | Option ($)(2) | Option Expiration Date | Equity Incentive (#) | Equity Incentive ($)(3) | Award Date | Number of Securities Underlying Unexercised Option Unexercisable (#)(1) | Number of Securities Underlying Unexercised Option Exercisable (#)(1) | Option Exercise Price ($)(2) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market or Payout Unearned Shares, Units, or Other Rights That Have Not Vested ($)(3) | Equity Plan Number of Shares, Other Have Not | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(3) | |||||||||||||||||||||||||||||||||||||||||
Eugene J. Lowe, III |
|
1/2/2015
|
|
|
4,811
|
(4a)
|
$
|
151,017
|
| |||||||||||||||||||||||||||||||||||||||||||||||
|
1/2/2015
|
|
|
15,262
|
|
|
30,514
|
|
$
|
21.16
|
|
|
1/2/2025
|
| ||||||||||||||||||||||||||||||||||||||||||
4/1/2013 | 3,361(4a) | $31,358 |
|
10/13/2015
|
|
|
101,133
|
(4d)
|
$
|
3,174,565
|
| |||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 | 13,090(4b) | td22,130 |
|
10/13/2015
|
|
|
332,673
|
|
$
|
12.36
|
|
|
10/13/2025
|
| ||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 6,024(5a) | $56,204 |
|
3/2/2016
|
|
|
41,534
|
(5a)
|
$
|
1,303,752
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 12,042(5b) | td12,352 |
|
3/2/2016
|
|
|
93,450
|
(5b)
|
$
|
2,933,396
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/3/2015 | 14,425(6a) | td34,585 |
|
3/2/2016
|
|
|
124,613
|
|
|
62,306
|
|
$
|
12.85
|
|
|
3/2/2026
|
| |||||||||||||||||||||||||||||||||||||||
10/13/2015 | 101,133(6c) | $943,571 |
|
3/1/2017
|
|
|
28,611
|
(6a)
|
$
|
898,099
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2015 | 45,776 | $ | 21.16 | 1/2/2025 | $— |
|
3/1/2017
|
|
|
42,917
|
(6b)
|
$
|
1,347,165
|
| ||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 332,673 | $ | 12.36 | 10/13/2025 | $— |
|
3/1/2017
|
|
|
82,405
|
|
$
|
27.40
|
|
|
3/1/2027
|
| |||||||||||||||||||||||||||||||||||||||
Scott W. Sproule | 1/2/2013 | 3,458(4a) | $32,263 |
|
1/2/2015
|
|
|
5,773
|
(4b)
|
$
|
181,214
|
| ||||||||||||||||||||||||||||||||||||||||||||
1/2/2013 | 13,463(4b) | td25,610 |
|
8/20/2015
|
|
|
3,385
|
(4c)
|
$
|
106,255
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 5,102(5a) | $47,602 |
|
10/13/2015
|
|
|
25,283
|
(4d)
|
$
|
793,633
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 10,200(5b) | $95,166 |
|
10/13/2015
|
|
|
83,168
|
|
$
|
12.36
|
|
|
10/13/2025
|
| ||||||||||||||||||||||||||||||||||||||||||
1/3/2015 | 17,307(6a) | td61,474 |
|
3/2/2016
|
|
|
10,384
|
(5a)
|
$
|
325,954
|
| |||||||||||||||||||||||||||||||||||||||||||||
8/20/2015 | 10,147(6b) | $94,672 |
|
3/2/2016
|
|
|
23,363
|
(5b)
|
$
|
733,365
|
| |||||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 25,283(6c) | td35,890 |
|
3/2/2016
|
|
|
31,153
|
|
|
15,576
|
|
$
|
12.85
|
|
|
3/2/2026
|
| |||||||||||||||||||||||||||||||||||||||
10/13/2015 | 83,168 | $ | 12.36 | 10/13/2025 | $— |
|
3/1/2017
|
|
|
6,907
|
(6a)
|
$
|
216,811
|
| ||||||||||||||||||||||||||||||||||||||||||
John W. Swann, III | 1/2/2013 | 1,920(4a) | td7,914 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/2/2013 | 7,476(4b) | $69,751 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 3,896(5a) | $36,350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 7,793(5b) | $72,709 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/3/2015 | 15,626(6a) | td45,791 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 20,227(6c) | td88,718 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 66,535 | $ | 12.36 | 10/13/2025 | $— | |||||||||||||||||||||||||||||||||||||||||||||||||||
Scott W. Sproule |
|
3/1/2017
|
|
|
10,361
|
(6b)
|
$
|
325,232
|
| |||||||||||||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
19,891
|
|
$
|
27.40
|
|
|
3/1/2027
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
10/13/2015
|
|
|
20,227
|
(4d)
|
$
|
634,926
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
10/13/2015
|
|
|
6,743
|
(4e)
|
$
|
211,663
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
10/13/2015
|
|
|
66,535
|
|
$
|
12.36
|
|
|
10/13/2025
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
3/2/2016
|
|
|
8,307
|
(5a)
|
$
|
260,757
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
3/2/2016
|
|
|
18,690
|
(5b)
|
$
|
586,679
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
3/2/2016
|
|
|
24,922
|
|
|
12,461
|
|
$
|
12.85
|
|
|
3/2/2026
|
| ||||||||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
6,413
|
(6a)
|
$
|
201,304
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
9,620
|
(6b)
|
$
|
301,972
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
J. Randall Data |
|
3/1/2017
|
|
|
18,471
|
|
$
|
27.40
|
|
|
3/1/2027
|
| ||||||||||||||||||||||||||||||||||||||||||||
1/2/2013 | 2,306(4a) | td1,515 |
|
1/2/2015
|
|
|
4,006
|
(4b)
|
$
|
125,748
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2013 | 8,974(4b) | $83,727 |
|
8/20/2015
|
|
|
3,385
|
(4c)
|
$
|
106,255
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 3,402(5a) | $31,741 |
|
10/13/2015
|
|
|
16,788
|
(4d)
|
$
|
526,975
|
| |||||||||||||||||||||||||||||||||||||||||||||
1/2/2014 | 6,798(5b) | $63,425 |
|
10/13/2015
|
|
|
55,224
|
|
$
|
12.36
|
|
|
10/13/2025
|
| ||||||||||||||||||||||||||||||||||||||||||
1/3/2015 | 12,018(6a) | td12,128 |
|
3/2/2016
|
|
|
6,894
|
(5a)
|
$
|
216,403
|
| |||||||||||||||||||||||||||||||||||||||||||||
8/20/2015 | 10,147(6b) | $94,672 |
|
3/2/2016
|
|
|
15,512
|
(5b)
|
$
|
486,922
|
| |||||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 16,788(6c) | td56,632 |
|
3/1/2017
|
|
|
20,686
|
|
|
10,342
|
|
$
|
12.85
|
|
|
3/2/2026
|
| |||||||||||||||||||||||||||||||||||||||
10/13/2015 | 55,224 | $ | 12.36 | 10/13/2025 | $— |
|
3/1/2017
|
|
|
4,687
|
(6a)
|
$
|
147,125
|
| ||||||||||||||||||||||||||||||||||||||||||
NaTausha H. White | 4/13/2015 | 14,620(6d) | td36,405 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 13,147(6c) | td22,662 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/13/2015 | 43,248 | $ | 12.36 | 10/13/2025 | $— | |||||||||||||||||||||||||||||||||||||||||||||||||||
John W. Nurkin |
|
3/1/2017
|
|
|
7,031
|
(6b)
|
$
|
220,703
|
| |||||||||||||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
13,498
|
|
$
|
27.40
|
|
|
3/1/2027
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
1/2/2015
|
|
|
5,212
|
(4b)
|
$
|
163,605
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
10/13/2015
|
|
|
20,227
|
(4d)
|
$
|
634,926
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
10/13/2015
|
|
|
66,535
|
|
$
|
12.36
|
|
|
10/13/2025
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
3/2/2016
|
|
|
7,061
|
(5a)
|
$
|
221,645
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
3/2/2016
|
|
|
15,887
|
(5b)
|
$
|
498,693
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
3/2/2016
|
|
|
21,184
|
|
|
10,592
|
|
$
|
12.85
|
|
|
3/2/2026
|
| ||||||||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
4,588
|
(6a)
|
$
|
144,017
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
3/1/2017
|
|
|
6,882
|
(6b)
|
$
|
216,026
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
John W. Swann, III |
|
3/1/2017
|
|
|
13,214
|
|
$
|
27.40
|
|
|
3/1/2027
|
|
2018 PROXY STATEMENT | 35 |
EXECUTIVE COMPENSATION
(1) |
(2) | Based on the closing price of our common stock on the award date adjusted when applicable for theSpin-Off. |
(3) | Based on the closing price of our common stock of |
EXECUTIVE COMPENSATION
(4a) |
(4b) |
RSUs awarded on August 20, 2015, vest at 33 1⁄3 percent per year, subject to satisfaction of vesting criteria for the applicable year, with vesting dates of August 20, 2016, August 20, 2017, and August 20, 2018. The number of |
(5a) | RSUs awarded on March 2, 2016, |
(5b) | PSUs awarded on March 2, 2016, become eligible to vest March 2, 2019, subject to satisfaction of |
(6a) | RSUs awarded on |
(6b) | PSUs awarded on March 1, 2017, become eligible to vest March 1, 2020, subject to satisfaction of external performance criteria for the three-year performance period. LTI awards are generally subject to continued employment through the applicable vesting period. PSUs are capped at target if our TSR is negative. Amount presented assumes achievement of the maximum performance level. |
OPTION EXERCISES AND STOCK VESTED IN 20152017
The following table sets forth stock vested for each of our NEOs in 2015.2017. Our NEOs did not exercise any optionsOptions in 2015. Grants issued in 2012 with a performance component were forfeited due to failure to meet performance criteria. Only time-based restricted grants awarded in 2012, 2013, and 2014 had tranches that vested in 2015. NEOs in 2012 (Mr. Kearney, Mr. Foreman, and Mr. Kowalski) did not have any time-based grants for that year. Ms. White was hired on April 13, 2015, and therefore had no award that vested in 2015.2017.
Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||||
Eugene J. Lowe, III | 1,903 | $ | 163,489 | — | $ | — | 34,609 | $ | 897,344 | |||||||||||||||
Scott W. Sproule | 1,723 | $ | 148,017 | — | $ | — | 21,992 | $ | 542,173 | |||||||||||||||
J. Randall Data | — | $ | — | 10,895 | $ | 310,861 | ||||||||||||||||||
John W. Nurkin | — | $ | — | 15,935 | $ | 392,083 | ||||||||||||||||||
John W. Swann, III | 1,225 | $ | 105,239 | — | $ | — | 14,582 | $ | 358,875 | |||||||||||||||
John W. Nurkin | 1,272 | $ | 109,276 | |||||||||||||||||||||
NaTausha H. White | — | $ | — | |||||||||||||||||||||
(#) | ($)(2) | |||||||||||||||||||||||
Christopher J. Kearney | 15,854 | $ | 1,421,628 | |||||||||||||||||||||
Jeremy W. Smeltser | 7,201 | $ | 632,227 | |||||||||||||||||||||
Robert B. Foreman | 4,703 | $ | 421,718 | |||||||||||||||||||||
David A. Kowalski | 3,652 | $ | 327,475 |
(1) |
No SPX executive officer participates in an SPX defined benefit pension plan.
EXECUTIVE COMPENSATION
No current SPX officer participates in a defined benefit pension plan. In accordance with SEC rules and regulations, we are providing the following information for the pre-Spin-Off NEOs.
The following table sets forth the net present value of accumulated benefits payable to each of the pre-Spin-Off NEOs, including the number of years credited service, through Spin-Off. No pension benefit payments were made by SPX to anypre-Spin-Off NEOs during the 2015 fiscal year.
Name | Plan Name(1) | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(2) ($) | Payments Fiscal Year ($) | ||||||||||
Christopher J. Kearney | TMP | 15.00 | $ | 42,234,730 | $ | — | ||||||||
IARP | 18.62 | $ | 677,663 | $ | — | |||||||||
SIARP | 18.62 | $ | 2,270,752 | $ | — | |||||||||
Jeremy W. Smeltser | TMP | 6.41 | $ | 1,003,565 | $ | — | ||||||||
IARP | — | $ | — | $ | — | |||||||||
SIARP | — | $ | — | $ | — | |||||||||
Robert B. Foreman | TMP | 15.00 | $ | 23,119,368 | $ | — | ||||||||
IARP | 16.39 | $ | 517,615 | $ | — | |||||||||
SIARP | 16.39 | $ | 1,319,249 | $ | — | |||||||||
David A. Kowalski | TMP | 10.10 | $ | 2,989,784 | $ | — | ||||||||
IARP | 16.19 | $ | 389,571 | $ | — | |||||||||
SIARP | 16.19 | $ | 401,613 | $ | — |
|
EXECUTIVE COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION
The following table sets forth information relating to theSPX Corporation Supplemental Retirement Savings Plan (“SRSP”) for current NEOs in 2015 and for pre-Spin-Off NEOs in 2015 up to the date2017. Other members of the Spin-Off. Other senior-level management are also eligible to participate in the SRSP, a nonqualified deferred compensation plan that allows them to makepre-tax deferrals in excess of those permitted by the 401(k) Plan. Eligible executives may defer up to 50% of their base compensation (excluding annual bonuses) and up to 100% of their annual bonuses into the SRSP. Both base compensation and annual bonus deferral elections are made prior to the beginning of the year to which they relate.
A company match is made to the SRSP after the maximum company match has been made under the 401(k) Plan, and the deferrals and match are allocated to the fund(s) under the SRSP as selected by the participant.
In general, “eligible compensation” for purposes of the SRSP is the amount reported as wages on a participant’sForm W-2, (1) increased by (i)(a) amounts contributed by the participant to the 401(k) Plan and the SPX Corporation Flexible Spending Account Plans, and (ii)(b) vacation and holiday pay paid after termination of employment; and (2) decreased by (i)(a) reimbursements or other expense allowances, (ii)(b) fringe benefits (cash andnon-cash), (iii) (c) moving expenses, (iv)(d) welfare benefits (provided that short-term disability payments are included and long-term disability payments are excluded), (v)(e) employer-provided automobiles, mileage reimbursements, and car allowances for which no documentation is required, taxable andnon-taxable tuition reimbursements, and the taxable value of physical examinations, and group term life insurance coverage in excess of $50,000, (vi)(f) pay in lieu of notice, (vii)(g) deferred compensation, (viii)(h) the value of restricted shares and other equity awards, and (ix)(i) severance pay paid after termination of employment.
All matching contributions into the 401(k) Plan are invested initially in the SPX Common Stock Fund and are allocated in the form of units. The units consist primarily of SPX common stock, with a portion of the fund in cash, for purposes of administrative convenience. All matching contributions into the SRSP are made in cash and invested according to the participant’s elections. All participant and matching contributions vest immediately. There is no minimum holding period. The SRSP is unfunded and earnings are credited on account balances based on participant direction within the same investment choices available in the 401(k) Plan, except that the SPX Company Stock Fund and a stable value fund are not available under the SRSP. All returns in the SRSP and the 401(k) Plan are at market rates.In-service distributions are not allowed under the SRSP. All amounts deferred under the SRSP after 2009 will be paid in alump-sum payment six months following termination of employment. Participants may elect to receive theirpre-2009 accounts in a lump sum, annual installments (two to ten years), or monthly installments (up to 120 months) upon separation from service, on a date that is a specified number of months after retirement or separation from service, or on a specified date following separation from service (no later than attainment of age 70 1⁄2).
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) | |||||||||||||||
Eugene J. Lowe, III | $ | 34,473 | $ | 26,727 | $ | 900 | $ | — | $ | 133,261 | ||||||||||
Scott W. Sproule | $ | 36,750 | $ | 14,687 | $ | (9,318 | ) | $ | — | $ | 294,379 | |||||||||
John W. Swann, III | $ | 66,561 | $ | 15,103 | $ | 1,661 | $ | — | $ | 232,876 | ||||||||||
John W. Nurkin | $ | 17,118 | $ | 8,699 | $ | 136 | $ | — | $ | 97,457 | ||||||||||
NaTausha H. White | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
($)(1) | ($)(2) | ($)(3) | ($) | ($)(4) | ||||||||||||||||
Christopher J. Kearney | $ | 783,509 | $ | 187,127 | $ | (428,674 | ) | $ | 10,160,400 | $ | — | |||||||||
Jeremy W. Smeltser | $ | 180,469 | $ | 52,906 | $ | (15,460 | ) | $ | 748,361 | $ | — | |||||||||
Robert B. Foreman | $ | 134,362 | $ | 99,737 | $ | 5,311 | $ | 4,837,602 | $ | — | ||||||||||
David A. Kowalski | $ | 63,867 | $ | 36,673 | $ | (6,545 | ) | $ | 870,717 | $ | — |
EXECUTIVE COMPENSATION
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
Eugene J. Lowe, III | $ | 72,081 | $ | 60,068 | $ | 61,314 | $ | — | $ | 414,810 | ||||||||||
Scott W. Sproule | $ | 43,024 | $ | 17,927 | $ | 71,934 | $ | — | $ | 520,864 | ||||||||||
J. Randall Data | $ | 20,808 | $ | 17,340 | $ | 8,518 | $ | — | $ | 71,387 | ||||||||||
John W. Nurkin | $ | 19,809 | $ | 12,381 | $ | 20,407 | $ | — | $ | 156,466 | ||||||||||
John W. Swann, III | $ | 29,405 | $ | 9,802 | $ | 63,726 | $ | — | $ | 412,815 |
(1) | Contributions to the SRSP consisted of the following amounts reported in the Summary Compensation Table. |
Name | 2015 Salary | 2014 Non-Equity Incentive Plan Compensation | ||||||
Eugene J. Lowe, III | $ | 26,827 | $ | 7,646 | ||||
Scott W. Sproule | $ | 36,750 | $ | — | ||||
John W. Swann, III | $ | 45,816 | $ | 20,745 | ||||
John W. Nurkin | $ | 17,118 | $ | — | ||||
NaTausha H. White | $ | — | $ | — | ||||
Christopher J. Kearney | $ | 165,720 | $ | 617,789 | ||||
Jermey W. Smeltser | $ | 49,016 | $ | 131,452 | ||||
Robert B. Foreman | $ | 37,479 | $ | 96,883 | ||||
David A. Kowalski | $ | 23,948 | $ | 39,919 |
Name | 2017 Salary | 2016Non-Equity Incentive Plan Compensation | ||||||||||||
Eugene J. Lowe, III | $ | 39,936 | $ | 32,145 | ||||||||||
Scott W. Sproule | $ | 43,024 | $ | — | ||||||||||
J. Randall Data | $ | 20,808 | $ | — | ||||||||||
John W. Nurkin | $ | 19,809 | $ | — | ||||||||||
John W. Swann, III | $ | 29,405 | $ | — |
(2) | Represents matching amounts contributed by SPX to the SRSP. These amounts have been included in the All Other Compensation column of the Summary Compensation Table. |
(3) | Aggregate earnings under the SRSP are not |
2018 PROXY STATEMENT | 37 |
EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLCHANGE-IN-CONTROL
We have entered into Our NEOs are covered bychange-in-control agreements, severance agreements, and stock plan award agreements with our current NEOs governing compensation in the event of a termination of employment or a change in control of our Company. In addition, we have entered into an employment agreement with Mr. Lowe in lieu of a severance agreement. The following tables set forth the expected benefits to be received by each current NEO in the event of his or her termination resulting from various scenarios, assuming a termination date of December 31, 2015,2017 and a stock price of $9.33,$31.39, our closing stock price on December 31, 2015.29, 2017, the last trade day of fiscal 2017. Assumptions and explanations of the numbers set forth in the tables below are set forth in the footnotes to, and in additional text following, the tables. The pre-Spin-Off NEOs became employees of FLOW in at the time of the Spin-Off, and they did not receive any benefits in conjunction with this transition.
Eugene J. Lowe, III | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability
| Death Pre-retirement |
Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | ||||||||||||||||||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 1,550,000 | (1) | $ | 2,325,000 | (3) | $ | — | $ | — | $ | — | $ | 1,651,912 | (1) | $ | 2,477,868 | (3) | ||||||||||||||||
Bonus | $ | — | $ | — | $ | — | $ | 1,550,000 | (4) | $ | 2,325,000 | (6) | $ | — | $ | 825,956 | (4) | $ | 825,956 | (4) | $ | 3,097,446 | (5) | $ | 4,646,169 | (7) | ||||||||||||||
Value of Accelerated Equity | $ | — | $ | 1,400,200 | (8) | $ | 1,400,200 | (8) | $ | 411,767 | (9) | $ | 1,400,200 | (8) | $ | — | $ | 17,507,148 | (9) | $ | 17,507,148 | (9) | $ | 16,200,084 | (10) | $ | 17,507,148 | (9) | ||||||||||||
Value of Accelerated CPUs | $ | — | $ | 1,354,126 | (11) | $ | 1,354,126 | (11) | $ | 1,354,126 | (11) | $ | 1,354,126 | (11) | ||||||||||||||||||||||||||
All Other Compensation | $ | 74,519 | (10) | $ | 74,519 | (10) | $ | 74,519 | (10) | $ | 162,972 | (10) | $ | 211,792 | (10) | $ | 79,241 | (12) | $ | 79,241 | (12) | $ | 79,241 | (12) | $ | 174,486 | (13) | $ | 234,085 | (14) | ||||||||||
TOTAL | $ | 74,519 | $ | 1,474,719 | $ | 1,474,719 | $ | 3,674,739 | $ | 6,265,571 | $ | 79,241 | $ | 19,766,471 | $ | 19,766,471 | $ | 22,478,054 | $ | 26,219,396 |
Scott W. Sproule
| (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability
| Death Pre-retirement |
Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 445,281 | (2) | $ | 890,562 | (1) | ||||||||
Bonus | $ | — | $ | 311,697 | (4) | $ | 311,697 | (4) | $ | 584,452 | (6) | $ | 1,168,904 | (8) | ||||||
Value of Accelerated Equity | $ | — | $ | 4,569,206 | (9) | $ | 4,569,206 | (9) | $ | 3,214,280 | (10) | $ | 4,569,206 | (9) | ||||||
Value of Accelerated CPUs | $ | — | $ | 332,281 | (11) | $ | 332,281 | (11) | $ | 332,281 | (11) | $ | 332,281 | (11) | ||||||
All Other Compensation | $ | 42,815 | (15) | $ | 42,815 | (15) | $ | 42,815 | (15) | $ | 95,285 | (16) | $ | 124,771 | (17) | |||||
TOTAL | $ | 42,815 | $ | 5,255,999 | $ | 5,255,999 | $ | 4,671,579 | $ | 7,085,724 |
J. Randall Data
| (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability
| Death Pre-retirement |
Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 430,440 | (2) | $ | 860,880 | (1) | ||||||||
Bonus | $ | — | $ | 279,786 | (4) | $ | 279,786 | (4) | $ | 524,618 | (6) | $ | 1,049,236 | (8) | ||||||
Value of Accelerated Equity | $ | — | $ | 3,702,987 | (9) | $ | 3,702,987 | (9) | $ | 2,565,822 | (10) | $ | 3,702,987 | (9) | ||||||
Value of Accelerated CPUs | $ | — | $ | 288,325 | (11) | $ | 288,325 | (11) | $ | 288,325 | (11) | $ | 288,325 | (11) | ||||||
All Other Compensation | $ | 41,388 | (15) | $ | 41,388 | (15) | $ | 41,388 | (15) | $ | 91,119 | (16) | $ | 117,866 | (17) | |||||
TOTAL | $ | 41,388 | $ | 4,312,486 | $ | 4,312,486 | $ | 3,900,324 | $ | 6,019,294 |
38 | |
EXECUTIVE COMPENSATION
Scott W. Sproule | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||||||||||||||||||||||
John W. Nurkin
| (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability
| Death Pre-retirement |
Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||||||||||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 410,000 | (2) | $ | 820,000 | (1) | $ | — | $ | — | $ | — | $ | 355,047 | (2) | $ | 710,094 | (1) | ||||||||||||||||
Bonus | $ | — | $ | — | $ | — | $ | 287,000 | (5) | $ | 574,000 | (7) | $ | — | $ | 213,028 | (4) | $ | 213,028 | (4) | $ | 399,442 | (6) | $ | 798,884 | (8) | ||||||||||||||
Value of Accelerated Equity | $ | — | $ | 792,677 | (8) | $ | 792,677 | (8) | $ | 267,056 | (9) | $ | 792,677 | (8) | $ | — | $ | 3,082,524 | (9) | $ | 3,082,524 | (9) | $ | 2,176,846 | (10) | $ | 3,082,524 | (9) | ||||||||||||
Value of Accelerated CPUs | $ | — | $ | 223,185 | (11) | $ | 223,185 | (11) | $ | 223,185 | (11) | $ | 223,185 | (11) | ||||||||||||||||||||||||||
All Other Compensation | $ | 39,423 | $ | 39,423 | $ | 39,423 | $ | 86,601 | (11) | $ | 110,373 | (11) | $ | 28,617 | (15) | $ | 28,617 | (15) | $ | 28,617 | (15) | $ | 78,119 | (16) | $ | 105,356 | (17) | |||||||||||||
TOTAL | $ | 39,423 | $ | 832,100 | $ | 832,100 | $ | 1,050,657 | $ | 2,297,050 | $ | 28,617 | $ | 3,547,354 | $ | 3,547,354 | $ | 3,232,639 | $ | 4,920,043 |
John W. Swann, III | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 400,000 | (2) | $ | 800,000 | (1) | ||||||||
Bonus | $ | — | $ | — | $ | — | $ | 240,000 | (5) | $ | 480,000 | (7) | ||||||||
Value of Accelerated Equity | $ | — | $ | 531,232 | (8) | $ | 531,232 | (8) | $ | 154,436 | (9) | $ | 531,232 | (8) | ||||||
All Other Compensation | $ | 38,462 | $ | 38,462 | $ | 38,462 | $ | 82,787 | (11) | $ | 115,797 | (11) | ||||||||
TOTAL | $ | 38,462 | $ | 569,694 | $ | 569,694 | $ | 877,223 | $ | 1,927,029 |
John W. Nurkin | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 330,000 | (2) | $ | 660,000 | (1) | ||||||||
Bonus | $ | — | $ | — | $ | — | $ | 198,000 | (5) | $ | 396,000 | (7) | ||||||||
Value of Accelerated Equity | $ | — | $ | 563,840 | (8) | $ | 563,840 | (8) | $ | 190,046 | (9) | $ | 563,840 | (8) | ||||||
All Other Compensation | $ | 31,731 | $ | 31,731 | $ | 31,731 | $ | 79,406 | (11) | $ | 127,271 | (11) | ||||||||
TOTAL | $ | 31,731 | $ | 595,571 | $ | 595,571 | $ | 797,452 | $ | 1,747,111 |
NaTausha H. White | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||||||||||||||||||||||
John W. Swann, III
| (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability
| Death Pre-retirement |
Involuntary Without Cause/ Voluntary Resignation for Good Reason | Termination Following Change in Control | |||||||||||||||||||||||||||||||||||
Salary | $ | — | $ | — | $ | — | $ | 325,000 | (2) | $ | 650,000 | (2) | $ | — | $ | — | $ | — | $ | 418,180 | (2) | $ | 836,360 | (1) | ||||||||||||||||
Bonus | $ | — | $ | — | $ | — | $ | 178,750 | (5) | $ | 357,500 | (7) | $ | — | $ | 250,908 | (4) | $ | 250,908 | (4) | $ | 250,908 | (6) | $ | 501,816 | (8) | ||||||||||||||
Value of Accelerated Equity | $ | — | $ | 259,066 | (8) | $ | 259,066 | (8) | $ | 45,468 | (9) | $ | 259,066 | (8) | $ | — | $ | 3,352,297 | (9) | $ | 3,352,297 | (9) | $ | 2,437,470 | (10) | $ | 3,352,297 | (9) | ||||||||||||
Value of Accelerated CPUs | $ | — | $ | 223,201 | (11) | $ | 223,201 | (11) | $ | 223,201 | (11) | $ | 223,201 | (11) | ||||||||||||||||||||||||||
All Other Compensation | $ | 31,250 | $ | 31,250 | $ | 31,250 | $ | 68,582 | (11) | $ | 78,506 | (11) | $ | 33,655 | (15) | $ | 33,655 | (15) | $ | 33,655 | (15) | $ | 92,605 | (16) | $ | 132,946 | (17) | |||||||||||||
TOTAL | $ | 31,250 | $ | 290,316 | $ | 290,316 | $ | 617,800 | $ | 1,345,072 | $ | 33,655 | $ | 3,860,061 | $ | 3,860,061 | $ | 3,422,364 | $ | 5,046,620 |
(1) | Two times current base salary. |
(2) | One times current base salary. |
(3) | Three times current base salary. |
(4) | Reflects annual bonus, which is equal to apro-rated portion of the highest of actual bonus for year preceding termination or current-year target bonus. |
(5) | Two times annual bonus, which is equal to the highest of actual bonus for year preceding termination or current-year target bonus plus the amount, if any, that the bonus that would have been paid to the executive for the bonus plan year in which such termination of employment occurs, based on the performance level actually attained, exceeds the amount payable under the highest of prior actual or current target bonus. |
(6) | One times annual bonus, which is equal to the highest of actual bonus for year preceding termination or current year target bonus plus the amount, if any, that the bonus that would have been paid to the executive for the bonus plan year in which such termination of employment occurs, based on the performance level actually attained, exceeds the amount payable under the highest of prior actual or current target bonus. |
(7) | Three times annual bonus, which is equal to the highest of actual bonus for year preceding termination or current year target bonus plus the amount, if any, that the bonus that would have been paid to the executive for the bonus plan year in which such termination of employment occurs, based on the performance level actually attained, exceeds the amount payable under the highest of prior actual or current target bonus. |
(8) | Two times annual bonus, which is equal to the highest of actual bonus for year preceding termination or current year target bonus plus the amount, if any, that the bonus that would have been paid to the executive for the bonus plan year in which such termination of employment occurs, based on the performance level actually attained, exceeds the amount payable under the highest of prior actual or current target bonus. |
EXECUTIVE COMPENSATION
(9) | Represents the accelerated vesting of all unvested |
(10) | Represents the accelerated vesting of all unvested PSUs (at assumed target performance level), RSUs, and Options, which would have otherwise vested within two years of termination for Mr. Lowe and within one year for Mr. Sproule, Mr. |
Represents the accelerated vesting of all unvested CPUs at assumed target performance level. |
(12) | Other compensation for Mr. Lowe includes payout of accrued vacation (up to five weeks of base salary). |
(13) | Sum of other compensation for Mr. Lowe includes: |
2018 PROXY STATEMENT | 39 |
EXECUTIVE COMPENSATION
(14) | Sum of other compensation for Mr. Lowe includes: |
Sum of other compensation for Mr. Sproule, Mr. |
(16) | Sum of other compensation for Mr. Sproule, Mr. Data, Mr. Nurkin, and Mr. Swann includes: |
(17) | Sum of other compensation for Mr. Sproule, Mr. Data, Mr. Nurkin, and Mr. Swann includes: |
40 | |
EXECUTIVE COMPENSATION
Equity Compensation Plan Information
The following table provides information as of December 31, 2015,2017, about SPX common stock that may be issued upon the exercise of options and rights under all our existing equity compensation plans, each of which was approved by our stockholders. These plans include the 2002 Stock Compensation Plan(and (and its predecessor plan, the 1992 Stock Compensation Plan),Plan) and the 2006Non-Employee Directors’ Stock Incentive Plan.
Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)(1) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(3) | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a)(1) | Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (b)(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(3) | |||||||||||||||
Equity Compensation Plans | 2,915,537 | $12.91 | 2,727,364 | 2,836,664 | 14.67 | 1,682,429 | |||||||||||||||
Total | 2,915,537 | $12.91 | 2,727,364 | 2,836,664 | 14.67 | 1,682,429 |
(1) | Comprised of |
(2) | Excludes |
(3) | All these shares were available for issuance under the 2002 Stock Compensation Plan and 2006Non-Employee Directors’ Stock Incentive Plan. |
41 |
PROPOSAL 2: APPROVAL OF NAMED EXECUTIVE OFFICERS’ COMPENSATION, ON ANON-BINDING ADVISORY BASIS(“SAY ON PAY”SAY-ON-PAY”)
We are asking our stockholders to cast an advisory vote at our Annual Meeting to approve the compensation of our named executive officers,NEOs, as disclosed in this Proxy Statement.
ThoughAlthough the vote isnon-binding, the Compensation Committee and the Board of Directors value your opinion and will consider the outcome of the vote in establishingrevising our compensation philosophy and making future compensation decisions.
We intend to seek approval of our executive compensation program on an annual basis.
WHY YOU SHOULD APPROVE OUR EXECUTIVENEO COMPENSATION PROGRAM
We have evaluatedDuring our second full year as the “new” SPX, we continued to focus on our commitment to having an executive compensation program over the course of 2015, and after the Spin-Off we began implementing plan design changes that are market competitive andis aligned with stockholder interests.interests and our goal of creating a meaningfulpay-for-performance culture. At our 2017 Annual Meeting, approximately 96% of votes cast approved our executive compensation. We interpreted this result, which exceeded the approximately 90% favorable vote we received in 2016, as a strong endorsement of our executive compensation program design and direction — further validating that our program is currently structured in the best interests of both our stockholders and executives.
These changesOur executive compensation and executive compensation program are more fully described in the “Compensation Discussion and Analysis”Analysis,” beginning on page 2218, and in the Summary“Summary Compensation TableTable” and subsequent tables, beginning on page 36.32.
OVERVIEW
Recent Changes toKey Components of Our Compensation ProgramsProgram
Base CompensationSalary
We settarget base paysalary for current NEOs betweenat the 25th and 50th percentilesmarket median of peer companies.companies for established performers.
Short-term IncentivesAnnual Incentive
We implemented plan design changes that focus annual bonus pay based on earnings,income, cash flow, and revenue growth.goals.
Long-term Incentives
We instituted a 2016 LTI plan design that targetstarget long-term pay based 50% on performance units, 25% on stock options, and 25% on restricted stock units.
Eliminated Single TriggersChange in Control Provisions
We added ahave double-trigger to our equity plans and agreementsprovisions in the event of a change of control.
Reduced Benefits and Perquisites
We decided current NEOs would not participate in defined benefit pension plans and retiree medical benefits.
Updated Peer Group
We refined our post-Spin-Off peer group to better reflect our industry, size, and competition.
Benefits and Perquisites
We have no NEO participation in defined benefit pension plans or retiree medical benefits.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE“FOR” THE APPROVAL OF NAMED EXECUTIVE OFFICERS’ COMPENSATION, ON A NON-BINDING ADVISORY BASIS (“ |
The following summary of the SPX Corporation Executive Annual Bonus Plan (the “162(m) Plan”) describes the material features of the 162(m) Plan; however, it is not complete and, therefore, you should not rely solely on it for a detailed description of every aspect of the 162(m) Plan. A copy of the 162(m) Plan is included as an appendix to this Proxy Statement.
THE INCENTIVE PLAN GENERALLY
The purpose of the 162(m) Plan is to enhance SPX’s ability to attract and retain highly qualified executives and to provide additional financial incentives to those executives to promote SPX’s success. The 162(m) Plan is also intended to satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m). If the 162(m) Plan is re-approved by stockholders, we expect that bonuses paid to executives under the 162(m) Plan until the 2021 Annual Meeting will continue to be fully deductible for federal income tax purposes.
INCENTIVE PLAN ADMINISTRATION
The 162(m) Plan is administered by the Compensation Committee (the “Committee”). The Committee has the authority to construe and interpret the 162(m) Plan and make the determinations necessary for administration of the 162(m) Plan.
ELIGIBILITY
Unless the Committee determines otherwise, each executive officer of SPX is eligible to participate in the 162(m) Plan. The Committee may also designate other executives as eligible to participate in the 162(m) Plan for a fiscal year.
PERFORMANCE GOALS
The Committee will establish performance goals for each fiscal year for each participant, based on one or more of the following performance measures: cash flow; cash flow from operations; total earnings; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from operations; net asset turnover; inventory turnover; capital expenditures; net earnings; operating earnings; gross or operating margin; debt; working capital; return on equity; return on net assets; return on total assets; return on capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; debt reduction; productivity; delivery performance; safety record; stock price; and total stockholder return.
Performance goals may relate to SPX or to one or more of our operating units or groups, and may be determined on an absolute basis or relative to internal goals or relative to levels attained in prior years or related to other companies or indices or as ratios expressing relationships between two or more performance goals. The Committee may adjust the performance goals to the extent necessary to prevent dilution or enlargement of any award due to extraordinary events or circumstances or to exclude the effects of extraordinary, unusual, or non-recurring items; changes in applicable laws, regulations, or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; asset impairment; or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, or other similar corporate transactions.
AWARDS
Within 90 days after the beginning of each fiscal year, the Committee will select the executives eligible to participate in the 162(m) Plan for that fiscal year. The Committee will also determine the performance goals to be attained for the fiscal year based on one or more performance measures and the payment schedule available to each participant based on the level of attainment of the performance goals. Following the end of the fiscal year, the Committee will determine whether and to what extent the performance goals were satisfied and the amount available for each participant, based on the payment schedule for that participant.
The Committee may reduce an award to any participant under the 162(m) Plan, including a reduction to zero, based on any factors it determines to be appropriate in its sole discretion. The maximum incentive bonus payable under the 162(m) Plan to any participant for any fiscal year is $4,000,000.
Incentive bonuses are generally payable in cash by March 15 of the year following the end of the performance period. However, the Committee may authorize payment in the form of shares under an equity plan previously approved by our stockholders or permit deferral under a nonqualified deferred compensation plan.
EXECUTIVE ANNUAL BONUS PLAN
TAX CONSEQUENCES
Generally, a participant will include the value of an 162(m) Plan bonus in his or her taxable income when it is received by the participant. We have adopted the 162(m) Plan to enable us to receive a full tax deduction at the time the participant recognizes taxable income. We have the right to withhold from any payment under the 162(m) Plan the amount necessary to satisfy any applicable withholding required under the tax laws.
NEW PLAN BENEFITS
Because amounts payable under the 162(m) Plan are based on performance goals that are determined each year at the discretion of the Committee, and because the Committee has discretionary authority to reduce the amount of any incentive otherwise payable under the 162(m) Plan, it cannot be determined at this time what benefits or amounts, if any, will be received by or allocated to any person under the 162(m) Plan.
REPAYMENT AND FORFEITURE
The 162(m) Plan provides for repayment or forfeiture of amounts paid or payable under the 162(m) Plan in specified circumstances involving misconduct that results in an accounting restatement due to material non-compliance with any financial reporting requirement under the securities laws.
AMENDMENT AND TERMINATION
The Board of Directors (the “Board”) has the right to amend or terminate the 162(m) Plan at any time. However, if any action that the Board proposes to take will have a material adverse effect on any incentive bonus previously awarded under the 162(m) Plan, then the affected participant must consent to the action.
|
PROPOSAL 3: RE-APPROVAL OF EXECUTIVE ANNUAL BONUS PLAN
At this Annual Meeting, you will be asked to re-approve the SPX Corporation Executive Annual Bonus Plan. The Board adopted the 162(m) Plan on February 21, 2006, and our stockholders approved the 162(m) Plan in May 2006 and re-approved the 162(m) Plan in May 2011. The 162(m) Plan is intended to optimize the tax deduction for performance-based awards to executives. The executive officers who are selected by the Committee each year to participate in the 162(m) Plan receive their annual bonus, if any, under the 162(m) Plan instead of under SPX’s traditional bonus program. We are asking our stockholders to re-approve the 162(m) Plan so that certain incentive awards granted thereunder may continue to qualify as exempt “performance based” compensation under Section 162(m). Our Company, and by extension our stockholders, can benefit from more favorable tax treatment of compensation that qualifies as exempt under Section 162(m). There are no proposed changes to the 162(m) Plan.
|
The Audit Committee of the SPX Board of Directors consists of four directors. Each of the Audit Committee membersmember is independent, as defined under SEC rules and the listing standards of the NYSE. The Audit Committee reviews SPX’s financial reporting process on behalf of the Board and is responsible for ensuring the integrity of the financial information reported by SPX.
Management is responsible for SPX’s financial reporting process, including its systems of internal and disclosure controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”). SPX’s independent registered public accounting firm, which is appointed by the Audit Committee, is responsible for auditing those financial statements. The Audit Committee’s responsibility is to monitor and review these processes. The Audit Committee has relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with US GAAP and on the representations of the independent registered public accounting firm included in itsthe firm’s report on SPX’s financial statements.
In this context, the Audit Committee has met and held discussions with management and Deloitte & Touche LLP (“Deloitte & Touche”Deloitte”), SPX’s independent registered public accounting firm.firm since 2002. Management represented to the Audit Committee that SPX’s consolidated financial statements were prepared in accordance with US GAAP, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by the Standards of the Public Company Accounting Oversight Board (“PCAOB”) for communication with audit committees, under which Deloitte & Touche must provide us with additional information regarding the scope and results of its audit of SPX’s consolidated financial statements.
In addition, we have discussed with Deloitte & Touche its independence from SPX and SPX management, including matters in the written disclosures required by PCAOB Rule 3526,Communication with Audit Committees Concerning Independence.
The Audit Committee discussed with SPX’s internal auditors and independent registered public accounting firm the overall scope and plans for its respective audits. WeThe Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the results of its examinations, the evaluations of SPX’s internal controls, and the overall quality of SPX’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited consolidated financial statements be included in SPX’s Annual Report onForm 10-K for the year ended December 31, 2015,2017, filed with the SEC.
The Audit Committee has reviewed and discussed with management its assertion and opinion regarding internal controls included in the 20152017 Annual Report on Form10-K to Stockholders as required by Section 404 of the Sarbanes-Oxley Act of 2002. Management has confirmed to the Audit Committee that at December 31, 2017 internal controls over financial reporting have beenwere appropriately designed and are operating effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparation of SPX’s consolidated financial statements for external purposes in accordance with US GAAP. The Audit Committee havehas also reviewed and discussed with Deloitte & Touche its audit and opinion regarding SPX’s internal control over financial reporting as required by Section 404, which opinion is included in the 20152017 Annual Report onForm 10-K.
Audit Committee,
Ricky D. Puckett, Chairman
David A. Roberts
Ruth G. Shaw
Tana L. Utley
|
AUDIT MATTERS
During fiscal years 20142016 and 2015,2017, we retained our principal auditor, Deloitte, & Touche, to perform services in the following categories and amounts:
2014 | 2015 |
2016
|
2017
| |||||||||||||
Audit Fees(1) | $ | 10,103,000 | $ | 11,258,000 | $
| 4,733,000
|
| $
| 4,087,000
|
| ||||||
Audit-Related Fees(2) | $ | 237,000 | $ | 121,000 | $
| 29,000
|
| $
| 65,000
|
| ||||||
Tax Fees(3) | $ | 1,542,000 | $ | 1,813,000 | $
| 404,000
|
| $
| 221,000
|
| ||||||
All Other Fees | N/A | N/A |
| N/A
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| N/A
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(1) | Fees for audit services billed or expected to be billed relate to |
(2) | Fees for audit-related services include due diligence services in connection with acquisitions, other technical accounting assistance, and attest or audit services that are not required. |
(3) | Fees for tax services |
PRE-APPROVAL BY AUDIT COMMITTEE
Our Audit Committee has adopted a policy that requires all audit andnon-audit services performed by Deloitte & Toucheto bepre-approved. The Audit Committee annually approves the fees and expenses for audit services performed by Deloitte, & Touche, as well as for any regularly recurringnon-audit services of the type covered by our annual engagement of Deloitte & Touche.Deloitte. In addition, ourpre-approval policy requirespre-approval by the Chair of the Audit Committee of fees and expenses for othernon-audit services that may arise during the year. The policy requires the Chair to report anynon-audit services that he haspre-approved to the Audit Committee at each regularly scheduled meeting of the Audit Committee. In no event may Deloitte & Touche perform any of the following services for us: (1) bookkeeping or other services related to our accounting records or financial statements; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions, orcontribution-in-kind reports; (4) actuarial services; (5) internal audit outsourcing services; (6) management functions or human resources services; (7) broker-dealer, investment advisor, or investment banking services; (8) legal services; or (9) expert services. The Audit Committee regularly considers whether specific projects or expenditures could potentially affect Deloitte & Touche’sDeloitte’s independence.
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PROPOSAL 4:3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP has been our independent registered public accounting firm since 2002. The Audit Committee has engaged Deloitte & Touche to perform reviews, in accordance with the Standards of the Public Company Accounting Oversight Board, of our financial statements to be filed on Form10-Q in 2016.2018. Consistent with past practice, on March 8, 2016,February 12, 2018, the Audit Committee approved the engagement of Deloitte & Touche to perform the audit of the financial statements and internal controlcontrols over financial reporting included in SPX’s Annual Report on Form10-K for the fiscal year ending December 31, 2016.2018. Representatives of Deloitte & Touche will be present at the Annual Meeting and will have the opportunity to make a statement if they so desire and to respond to appropriate questions.
Although we are not required to do so, we believe that it is appropriate for us to request stockholder ratification of the appointment of Deloitte & Touche as our independent registered public accountants.accounting firm. If stockholders do not ratify the appointment, the Audit Committee will investigate the reasons for the stockholders’ rejection and reconsider the appointment.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR |
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Why am I receiving these materials?
We are mailing or making available these materials available to you because we are soliciting your proxy to vote your shares in connection with our Annual Meeting, scheduled to take place on May 24, 2016,15, 2018, or at any adjournments or postponements of this meeting. We are first mailing or making available to stockholders this Proxy Statement, our Annual Report to Stockholders for the year ended December 31, 2015,2017, and related materials on or about April 12, 2016.3, 2018.
Why did I receive aone-page notice of internet availability of proxy materials rather than a full set of proxy materials?
SEC rules allow companies to provide stockholders with access to Proxy Materials over the internet rather than mailing the materials to stockholders. Accordingly, to conserve natural resources and reduce costs, we are sending many of our stockholders a Notice of Internet Availability of Proxy Materials. The Notice provides instructions for accessing the Proxy Materials on the website referred to in the Notice or for requesting printed copies of the Proxy Materials. The Notice also provides instructions for requesting the delivery of the Proxy Materials for future Annual Meetings in printed form.
Are the proxy materials available electronically?
Our Proxy Statement and our 20152017 Annual Report to Stockholders are available on our website at(www.spx.com.) under the heading “Investor Relations—Financial Information—Proxy and 10K.” Additionally, and in accordance with SEC rules, you may access our Proxy Statement at www.envisionreports.com/SPXC (for stockholders of record) or www.edocumentview.com/SPXC (for all other stockholders), which do not have “cookies” that identify visitors to the sites.
What is the purpose of this meeting?
This is the Annual Meeting of the Company’s stockholders. At the meeting, we will be voting on:
How does the Board recommend that I vote?
Proposal 1: | FOR the election of each of Mr. | |
Proposal 2: | FOR the approval of our named executive officers’ compensation. | |
Proposal 3: | FOR the | |
How can I attend the Annual Meeting?
You may attend the Annual Meeting if you were an SPX stockholder of record as of the close of business on March 29, 2016,20, 2018, or you hold a valid proxy for the Annual Meeting. You should be prepared to present photo identification for admittance. If you are a stockholder of record or hold your shares through the SPX 401(k) Plan or FLOW 401(k) Plan, then your name will be verified against the list of stockholders of record or plan participants on the record date prior to your being admitted to the Annual Meeting. If you are not a stockholder of record, but hold shares through a broker, bank, trustee, or other holder of record, you should provide proof of beneficial ownership on the record date, such as a recent account statement showing your ownership,ownership; a copy of the voting instruction card provided by your broker, bank, trustee, or other holder of record,record; or other similar evidence of ownership.
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QUESTIONS AND ANSWERS
What is a proxy?
Our Board of Directors is asking for your proxy, which is a legal designation of another person to vote the shares you own. We have designated two officers of the Company, Eugene J. Lowe, III, and Scott W. Sproule, to vote your shares at the meeting in the way you instruct and, with regard to any other business that may properly come before the meeting, as they think best.
Who is entitled to vote?
Stockholders at the close of business on March 29, 201620, 2018 (the record date), are entitled to vote. On that date there were 42,954,374 shares of SPX common stock outstanding.
How many votes do I have?
Each share of SPX common stock that you own entitles you to one vote.
How do I vote if I don’tdo not attend the Annual Meeting?
If your shares are held through a broker, bank, trustee, or other holder of record, then you then may vote your shares before the meeting over the internet by following the instructions on the Notice of Internet Availability of Proxy Materials or proxy card you received or, if you received a voting instruction form from your brokerage firm, bank, trustee, or other similar entity by mail, then by completing, signing, and returning the form you received. You should check your voting instruction form to see if telephone or internet voting is available to you.
If your shares are held in your name, then you may vote your shares before the meeting over the internet by following the instructions on the Notice of Internet Availability of Proxy Materials or proxy card you received for that account.
If you received more than one Notice of Internet Availability of Proxy Materials or proxy card, then this means you hold shares of our common stock in more than one account. You should complete, sign, date, and return each proxy card or vote all shares over the internet or by telephone for each of your accounts. If you vote over the internet or by telephone, then you should not mail back the related proxy card.
Can I vote at the Annual Meeting?
Yes. If you were a stockholder on the record date, then you can vote your shares of common stock in person at the Annual Meeting. If your shares are held through a broker, bank, trustee, or other holder of record, then you may vote your shares in person only if you have a legal proxy from the entity that holds your shares giving you the right to vote the shares. A legal proxy is a written document from your brokerage firm, bank, trustee, or other holder of record authorizing you to vote the shares it holds for you in its name. If you attend the meeting and vote your shares by ballot, then your vote at the meeting will revoke any vote you submitted previously.
Even if you currently plan to attend the meeting, we recommend that you also vote by proxy as described above so that your vote will be counted if you later decide not to attend the meeting.
May I revoke my proxy?
You may revoke your proxy in one of four ways at any time before it is exercised:
What constitutes a quorum?
The presence, in person or by proxy, of the holders ofone-third of the total number of shares of SPX stock issued and outstanding and entitled to vote at the Annual Meeting constitutes a quorum. You will be considered part of the quorum if you return a signed and dated proxy card, if you vote by telephone or internet, or if you attend the Annual Meeting.
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QUESTIONS AND ANSWERS
Abstentions are counted as “shares present” at the Annual Meeting for purposes of determining whether a quorum exists. Proxies submitted by brokers, banks, trustees, or other holders of record holding shares for you as a beneficial owner that do not indicate a vote for some of or all of the proposals because that holder does not have voting authority and has not received voting instructions from you (so-called(so-called “brokernon-votes”) are also considered “shares present” for purposes of determining whether a quorum exists. If you are a beneficial owner, then these holders are permitted to vote your shares on the ratification of the appointment of our independent public accountants, even if they do not receive voting instructions from you.
What vote is required to approve each proposal?
Proposal | Vote Required | Broker Discretionary
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Election of Directors | Majority of Votes Cast | No | |||||
Approval of Named Executive Officers’ Compensation,on a Non-binding Advisory Basis | Majority of Votes Cast | No | |||||
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Ratification of Appointment of Independent Registered Public Accounting Firm | Majority of Shares Present or Represented by | Yes | |||||
Other Proposals | Majority of Shares Present or Represented by | No |
A majority of votes cast means that the number of shares voted for a director or proposal must exceed the number of shares voted against that director or proposal.
ImpactWhat is the impact of Abstentionsabstentions or Broker Non-Votesbrokernon-votes?
An abstention is not considered as a share voted and will not impact the election of directors or the Say on Pay vote.approval of our named executive officers’ compensation. However, since an abstention is considered a share present or represented by proxy and entitled to vote, as one less vote for approval it will have the effect of a vote against the re-approval of the Executive Annual Bonus Plan, the ratification of our independent public accountants and other proposals that may be brought before the Annual Meeting.
A brokernon-vote is not considered as a share voted or entitled to vote and will not impact the vote on any of the proposals.
The New York Stock Exchange does not consider the election of directors or matters relating to compensation to be routine. Unless the broker has received instructions from you, any broker holding shares for you will not have the ability to cast votes with respect to the election of directors or the approval of our named executive officers’ compensation, or the re-approval of the Executive Annual Bonus Plan.compensation. It is important, therefore, that you provide instructions to your broker if your shares are held by a broker so that your vote with respect to these matters is counted.
How does discretionary voting authority apply?
If you sign, date, and return your proxy card, then your vote will be cast as you direct. If your proxy card does not indicate how you want to vote, then you give authority to Eugene J. Lowe, III, and Scott W. Sproule to vote on the items discussed in these proxy materials and any other matter properly brought at the Annual Meeting. In such a case, your vote will be cast:
48 | 2018 PROXY STATEMENT |
QUESTIONS AND ANSWERS
Who pays to prepare, mail, and solicit the proxies?
We will pay all the costs of preparing, mailing, and soliciting the proxies. We will ask brokers, banks, trustees, and other nominees and fiduciaries to forward the Proxy Materials to the beneficial owners of SPX common stock and to obtain the authority to execute proxies. We will reimburse them for their reasonable expenses upon request. In addition to mailing Proxy Materials, our directors, officers, and employees may solicit proxies in person, by telephone, or otherwise. These individuals will not be specially compensated. We have retained D.F. KingGeorgeson LLC, a Computershare company, to assist us in soliciting your proxy and will pay an estimated
QUESTIONS AND ANSWERS
feewith inquiries of $12,500 plus reasonable out-of-pocket expenses. D.F. King will ask brokerage houses and other custodians and nominees whether other persons are beneficial owners of SPX common stock. If so, weWe will supply them with additional copies of the Proxy Materials for distribution to the beneficial owners. We will pay Georgeson LLC an estimated fee of $1,800 plus reasonableout-of-pocket expenses. We have not retained a proxy solicitor for this Annual Meeting to assist us in soliciting your proxy; however, as proxy returns are counted we may determine it is necessary to retain a proxy solicitor, in which case we will pay an estimated fee of $12,500 plus reasonableout-of-pocket expenses. We will also reimburse brokers, banks, trustees, and other nominees, fiduciaries, and other custodians for their costs of sending the Proxy Materials to the beneficial owners of SPX common stock.
Communications and Stockholder Proposals
How do I submit a stockholder proposal?
To bring a proposal other than the nomination of a director before an annual meeting, your notice of proposal must comply with the requirements of ourBy-laws and include any other information regarding you or any beneficial owner that would be required under the SEC’s proxy rules and regulations.
For a proposal to be included in our Proxy Statement for the 20172019 Annual Meeting, you must submit it no later than December 13, 2016.4, 2018. Your proposal must be in writing and comply with the proxy rules of the SEC. You should send your proposal to our Corporate Secretary at our address on the cover of this Proxy Statement.
You also may submit a proposal that you do not want included in the Proxy Statement, but that you want to raise at the 20172019 Annual Meeting. We must receive this type of proposal in writing on or after December 25, 2016,16, 2018, but no later than January 24, 2017.
As detailed in our by-laws, to bring a proposal other than the nomination of a director before an annual meeting, your notice of proposal must include: (1) a brief description of the business you want to bring before the meeting; (2) the reasons for conducting such business at the meeting; (3) your name and address as they appear on our stock records, as well as the name and address of any beneficial owner of the shares; (4) the class and number of shares of SPX stock owned beneficially and of record by you and any beneficial owner as of the date of the notice (which information must be supplemented as of the record date); (5) a description of certain agreements, arrangements, or understandings entered into by you or any beneficial owner with respect to the shares (which information must be supplemented as of the record date); (6) any material interest you or any beneficial owner may have in the business you want to bring before the meeting; (7) a description of all agreements, arrangements, and understandings between you or any beneficial owner and any other persons (including their names) in connection with the proposal of the business; and (8) any other information regarding you or any beneficial owner that would be required under the SEC’s proxy rules and regulations.15, 2019.
How do I recommendsubmit a director nominee?
If you wish to recommendsubmit a nominee for director for the 20172019 Annual Meeting, our Corporate Secretary must receive written notice of your writtenintended nomination on or before January 24, 2017.15, 2019. You should submitsend your proposalnomination to our Corporate Secretary at our address on the cover of this Proxy Statement. As detailed in our by-laws, for
For a nomination to be properly brought before an annual meeting, your notice of nomination must include: (1) your name and address, as well ascomply with the name and addressrequirements of any beneficial owner of the shares, and the name and address of the nominee; (2) the class and number of shares of SPX stock owned beneficially and of record by you and any beneficial owner as of the date of the notice (which information must be supplemented as of the record date); (3) a description of certain agreements, arrangements, or understandings entered into by you or any beneficial owner with respect to the shares (which information must be supplemented as of the record date); (4) a statement that you are a record holder of SPX shares entitled to vote at the meeting and that you plan to appear in person or by proxy at the meeting to make the nomination; (5) a description of all arrangements or understandings between you and any other persons pursuant to which you are making the nomination; (6) any other information regarding you, any beneficial owner, or the nominee that the rules of the SEC require to be included in a proxy statement; (7) the nominee’s agreement to serve as a director if elected; and (8) a statement as to whether each nominee, if elected, intends to tender, promptly following his or her election or re-election, an irrevocable resignation effective upon his or her failure to receive the required vote for re-election at the next meeting at which he or she would face re-election and the acceptance of such resignation by the Board of Directors, in accordance with our Corporate Governance Guidelines.By-laws. In addition, any director nominee must provide information we may reasonably request in order for us to determine the eligibility of such nominee to serve as an independent director.
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APPENDIX A - RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
“Core” results are non-GAAP financial measures that exclude the results of the South African projects. The South African projects do not impact our HVAC and Detection and Measurement segments, but do impact our Engineered Solutions segment and we evaluate “Engineered Solutions (Core)” results for certain purposes. Additionally, we have made other adjustments for items that are non-cash, bonus related, and/or unusual in nature. We also present certain other non-GAAP financial measures, identified as “Adjusted.” This appendix to the Proxy Statement includes reconciliations of the amounts of non-GAAP financial measures with the most comparable measures determined in accordance with accounting principles generally accepted in the United States (“GAAP”) and other important information regarding non-GAAP financial measures.
CORE OPERATING INCOME
SPX CORPORATION AND SUBSIDIARIES NON-GAAP RECONCILIATION - CORE OPERATING INCOME (Unaudited; in millions) | ||||
Twelve months ended | ||||
Operating income | $ | 54.8 | ||
Adjustments: | ||||
South African projects | 69.4 | |||
Non-service pension and postretirement items | 6.8 | |||
Contract settlement gain | (10.2) | |||
Core operating income, before annual incentive adjustment | 120.8 | |||
Corporate-annual incentive expense | 9.6 | |||
Core operating income | $ | 130.4 |
ADJUSTED NET INCOME FROM CONTINUING OPERATIONS
SPX CORPORATION AND SUBSIDIARIES NON-GAAP RECONCILIATION - ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (Unaudited; in millions) | ||||
Twelve months ended | ||||
Net Income from continuing operations | $ | 84.0 | ||
Adjustments: | ||||
South African projects | 71.3 | |||
Gain on contract settlement | (10.2) | |||
Pension and postretirement expense | 6.8 | |||
Gain on interest rate swaps | (2.7) | |||
Loss on amendment/refinancing of senior credit agreement | 0.9 | |||
Income tax benefit | (71.8) | |||
Adjusted Net Income from continuing operations | $ | 78.3 |
2018 PROXY STATEMENT | A-1 |
APPENDIX A
ADJUSTED EARNINGS PER SHARE
SPX CORPORATION EXECUTIVE ANNUAL BONUS PLAN
SPX Corporation, a Delaware corporation, adopts the SPX Corporation Executive Annual Bonus Plan (the “Plan”) for the purpose enhancing the Company’s ability to attract
SPX CORPORATION AND SUBSIDIARIES NON-GAAP RECONCILIATION - ADJUSTED EARNINGS PER SHARE (Unaudited; in millions) | ||||
Twelve months ended | ||||
GAAP EPS from continuing operations | $ | 1.91 | ||
Adjustments: | ||||
South African projects | 0.06 | |||
Gain on contract settlement | (0.17) | |||
Non-service pension items & other* | (0.02) | |||
Adjusted EPS from continuing operations | $ | 1.78 |
SPX CORPORATION AND SUBSIDIARIES NON-GAAP RECONCILIATION - ADJUSTED EARNINGS PER SHARE (Unaudited; in millions) | ||||
Twelve months ended | ||||
GAAP EPS from continuing operations | $ | 0.30 | ||
Adjustments: | ||||
South African projects | 0.34 | |||
Non-service pension items & other* | 0.83 | |||
Adjusted EPS from continuing operations | $ | 1.47 |
* | Other includes discrete tax items, loss on refinancing of senior credit agreement, net gain on sale of Dry Cooling business, non-cash intangible impairment, gain on interest rate swaps, adjustment to redeemable non-controlling interest, loss on early extinguishment of debt, non-actuarial gain on post retirement plans, adjustment for foreign currency loss associated with South African projects, and tax effects associated with adjustments. |
“Core operating income,” “adjusted net income from continuing operations,” and retain highly qualified executives and to provide additional financial incentives to such executives to promote the success of the Company and its subsidiaries. Remuneration payable under the Plan is intended to constitute “qualified performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and Section 1.162-27 of the Treasury Regulations promulgated thereunder, and the Plan shall be construed consistently with such intention.
1. Definitions. As used herein, the following terms shall have the respective meanings indicated:
(a) “Board” shall mean the Board of Directors of the Company.
(b) “Code” shall mean the Internal Revenue Code of 1986, as amended, or the corresponding provisions of any subsequent federal internal revenue law.
(c) “Committee” shall mean the Compensation Committee of the Board or such other committee appointed by the Board to administer the Plan that is comprised of not less than two directors of the Company, each of whom shall qualify in all respects as an “outside director” within the meaning of Section 162(m) of the Code and Section 1.162-27(e)(3) of the Regulations.
(d) “Company” shall mean SPX Corporation, a Delaware corporation.
(e) “Eligible Executive” shall mean the Company’s Chief Executive Officer, each other executive officer of the Company, and each other employee that the Committee determines, in its discretion, is or may be a “covered employee” of the Company within the meaning of Section 162(m) of the Code and Section 1.162-27(c)(2) of the Regulations.
(f) “Incentive Bonus” shall mean, for each Participant, an annual bonus to be paid in the amount determined by the Committee pursuant to Section 6 below.
(g) “Maximum Potential Incentive Bonus” shall mean, with respect to any Participant for any fiscal year, $4,000,000.
(h) “Participant” means, with respect to any fiscal year, an Eligible Executive who is eligible to participate in the Plan for such fiscal year in accordance with Section 3.
(i) “Performance Goal(s)” means the level or levels of Performance Measures established by the Committee for a fiscal year.
(j) “Performance Measures” means, with respect to any fiscal year, one or more of the following, which may be expressed with respect to the Company or one or more operating units or groups, as the Committee may determine: cash flow; cash flow from operations; total earnings;“adjusted earnings per share,share” are defined as operating income (loss), net income (loss) from continuing operations, and diluted or basic; earningsnet income (loss) per share from continuing operations diluted or basic; earnings before interestexcluding the following items: (a) results of the South African projects, (b) non-service pension and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from operations; net asset turnover; inventory turnover; capital expenditures; net earnings; operating earnings; gross or operating margin; debt; working capital; return on equity; return on net assets; return on total assets; return on capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets;postretirement expense reduction levels; debt reduction; productivity; delivery performance; safety record; stock price; and total stockholder return. Performance goals may be determined on an absolute basis or relative to internal goals or relative to levels attained in prior years or(income), (c) gain (loss) related to acquisitions/divestitures, (d) non-cash intangible impairment charges, (e) a non-recurring gain on a contract settlement, (f) non-cash charges associated with the amendment/refinancing of the senior credit agreement, (g) a non-recurring gain on interest rate swaps as these swaps no longer qualified for hedge accounting in connection with the amendment of our senior credit agreement, (h) Core operating income (loss) also adds back annual incentive expense associated with employees at our corporate headquarters, and (i) the removal of a tax benefit associated with worthless stock deductions, tax charges associated with the impact of the new U.S. tax act, and the removal of certain other companies or indices ordiscrete tax benefits, each, as ratios expressing relationships between two or more performance goals. The Committee shall provide how any Performance Measure shall be adjustedapplicable, as well as (j) the income tax impact of items (a) through (g). In addition to the extent necessaryCompany’s South African projects, the Company’s management views the impact related to prevent dilutioneach of the other items, with the exception of (h), as not indicative of the Company’s ongoing performance. The Company believes that inclusion of only the service cost and prior service cost components of pension and postretirement expense better reflects the ongoing costs of providing pension and postretirement benefits to its employees. Other components of GAAP pension and postretirement expense (income) are mainly driven by market performance, and the Company manages these separately from the operational performance of its business. The Company believes Core operating income, adjusted net income from continuing operations, and adjusted earnings per share, when read in conjunction with operating income (loss), income (loss) from continuing operations, and diluted net income (loss) per share from continuing operations, gives investors a useful tool to assess and understand the Company’s overall financial performance, because they exclude items of income or enlargementexpense that the Company believes are not reflective of any awardits ongoing operating performance, allowing for a better period-to-period comparison of operations of the Company. Additionally, the Company’s management uses Core operating income, adjusted net income from continuing operations, and adjusted earnings per share as a resultmeasures of extraordinary events or circumstances, as determined by the Committee, or to excludeCompany’s performance. Core operating income, adjusted net income from continuing operations, and adjusted earnings per share are not measures of financial performance under GAAP. The Core operating income, adjusted net income from continuing operations, and adjusted earnings per share measures do not provide investors with an accurate measure of the effects of extraordinary, unusual, or non-recurring items; changes in applicable laws, regulations, or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; asset impairment; or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, or other similar corporation transaction; provided, however, that no such adjustment will be made if the effect of such adjustment would cause an award to fail to qualify as performance-based compensation within the meaning of Code Section 162(m).actual operating income (loss), income (loss) from continuing operations, and diluted net income (loss) per share from continuing operations
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APPENDIX A
(k) “Regulations” shall mean the Treasury Regulations promulgated under the Code, as amended from time to time.
2. Administration of the Plan. The Plan shall be administered by the Committee, which shall have full power and authority to construe, interpret and administer the Plan and shall have the exclusive right to establish, adjust, pay or decline to pay an Incentive Bonus for each Participant. Such power and authority shall include the right to exercise discretion to reduce by any amount the Incentive Bonus payable to any Participant; provided, however, that the exercise of such discretion with respect to any Participant shall not have the effect of increasing the Incentive Bonus that is payable to any other Participant. Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, its subsidiaries, any Participant and any person claiming any benefit or right under the Plan.
3. Eligibility. All Eligible Executives shall be Participants in the Plan unless the Committee, in its sole and absolute discretion, designates that an Eligible Executive shall not be eligible for participation in the Plan for a fiscal year.
4. Awards. Not later than the 90th day of each fiscal year of the Company, the Committee shall designate, in writing, the Performance Goal(s) to be attained for each Participant for such fiscal year based on one or more Performance Measures, and the payout schedule detailing the total amount which may be available for payout to each Participant based upon the relative level of attainment of the Performance Goal(s).
5. Committee Certification. As soon as reasonably practicable after the end of each fiscal year of the Company, but in no event later than March 15 following the end of such fiscal year, the Committee shall certify, in writing, (i) whether and to what extent the Performance Goal(s) for the fiscal year were satisfied, and (ii) the amount available for each Participant’s Incentive Bonus for such fiscal year based upon the payout schedule established under Section 4 for such Participant for the fiscal year.
6. Payment of Incentive Bonuses. The amount of the Incentive Bonus actually paid to a Participant for a fiscal year shall be such amount as determined by the Committee in its sole discretion, including zero, provided that the actual Incentive Bonus paid shall not exceed the amount determined as payable by the Committee under Section 5 for the fiscal year or the Maximum Potential Incentive Bonus. Incentive Bonuses shall be paid in cash at such times and on such terms as are determined by the Committee in its sole and absolute discretion, but in no event later than March 15 following the fiscal year to which such Incentive Bonus relates. To the extent provided by the Committee, in its sole discretion, the annual Incentive Bonus may be paid in the form of shares of Company common stock under a shareholder-approved stock plan of the Company, or may be deferred under a nonqualified deferred compensation program maintainedreported by the Company subjectand should not be considered as substitutes for operating income (loss), net income (loss) from continuing operations, and diluted net income (loss) per share from continuing operations as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
CORE FREE CASH FLOW
SPX CORPORATION AND SUBSIDIARIES NON-GAAP RECONCILIATION - CORE FREECASH FLOW (Unaudited; in millions) | ||||
Twelve months ended | ||||
Net operating cash from continuing operations | $ | 54.2 | ||
Capital expenditures – continuing operations | (11.0) | |||
Adjustment for South African projects | 49.5 | |||
Core free cash flow, before annual incentive adjustment | 92.7 | |||
Annual Incentive adjustments | (13.8) | |||
Core free cash flow | $ | 78.9 |
“Core free cash flow” is defined as net cash from (used in) continuing operations less capital expenditures of continuing operations, excluding cash used in operations by our South African projects (which is net of a tax benefit). In addition, when calculating annual incentive awards, certain additional discrete adjustments were made as described in the termsprogram documents. The Company’s management believes that Core free cash flow is a useful financial measure for investors in evaluating the cash flow performance of multi-industrial companies, since it provides insight into the cash flow available to fund such things as mandatory and conditionsdiscretionary debt reduction, equity repurchases, and acquisitions or other strategic investments. The South African projects have a finite life and, thus, are expected to have a diminishing impact on the Company’s cash flows over the long-term. Core free cash flow is not a measure of such plan or program.
7. No Right to Bonus or Continued Employment. Neither the establishmentfinancial performance under GAAP. The Core free cash flow measure does not provide investors with an accurate measure of the Plan,actual net cash flow from (used in) continuing operations reported by the provisionCompany and should not be considered as a substitute for or payment of any amounts hereunder, nor any actioncash flows from (used in) operating activities as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
CORE REVENUE
SPX CORPORATION AND SUBSIDIARIES NON-GAAP RECONCILIATION - COREREVENUE (Unaudited; in millions) | ||||
Twelve months ended | ||||
Consolidated revenue | $ | 1,425.8 | ||
Exclude: South African projects | (29.1) | |||
Core revenue | $ | 1,396.7 |
“Core revenue” is defined as revenue for the Company excluding the results of the Company,South African projects. The South African projects have a finite life and, thus, are expected to have a diminishing impact on the Board orCompany’s operating results over the Committeelong-term. The Company’s management believes it is useful to disclose consolidated revenue without the results of its South African projects to provide investors with respectmetrics that the Company’s management uses to measure the Plan shall be held or construed to confer upon any person (a) any legal right to receive, or any interest in,overall performance of its businesses. Core revenue is not a measure of financial performance under GAAP The Core revenue measure does not provide investors with an Incentive Bonus or any other benefit under the Plan or (b) any legal right to continue to serve as an officer or employeeaccurate measure of the Company or any subsidiary or affiliate of the Company. The Company expressly reserves any and all rights to discharge any Participant without incurring liability to any person under the Plan or otherwise. Notwithstanding any other provision hereof and notwithstanding the fact that the stated Performance Goal has been achieved or the individual Incentive Bonus amounts have been determined,actual revenue reported by the Company shall have no obligation to pay any Incentive Bonus hereunder unless the Committee otherwise expressly provides by written contract or other written commitment.
8. Withholding. The Company shall have the right to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable federal, state, local or foreign withholding tax requirements imposed with respect to the payment of any Incentive Bonus.
9. Nontransferability. Except as expressly provided by the Committee, the rights and benefits under the Plan are personal to the Participant and shallshould not be subjectconsidered as a substitute for the Company’s revenue as determined in accordance with GAAP, and may not be comparable to any voluntary or involuntary alienation, assignment, pledge, transfer orsimilarly titled measures reported by other disposition.companies.
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APPENDIX A
10. Unfunded Plan. The Company shall have no obligation to reserve or otherwise fund in advance any amounts that are or may in the future become payable under the Plan. Any funds that the Company, acting in its sole and absolute discretion, determines to reserve for future payments under the Plan may be commingled with other funds of the Company and need not in any way be segregated from other assets or funds held by the Company. A Participant’s rights to payment under the Plan shall be limited to those of a general creditor of the Company.
11. Repayment/Forfeiture of Incentive Bonus. If the Company, as a result of misconduct, is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, then (a) any Participant whose Incentive Bonus is subject to automatic forfeiture due to such misconduct and restatement under Section 304 of the Sarbanes-Oxley Act of 2002, and (b) any Participant who the Committee determines either knowingly engaged in or failed to prevent the misconduct, or whose actions or in actions with respect to the misconduct and restatement constituted gross negligence, shall be required to reimburse the Company the amount of any payment of any Incentive Bonus earned or accrued during the twelve month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement. To the extent such Incentive Bonus was deferred under a nonqualified deferred compensation plan maintained by the Company rather than paid to the Participant, the amount of bonus deferred (and any earnings thereon) shall be forfeited.
12. Adoption, Amendment, Suspension and Termination of the Plan.
(a) Subject to the approval of the Plan by the Company’s stockholders, the Plan shall be effective for the fiscal year of the Company commencing January 1, 2006 and shall continue in effect until terminated as provided below. Upon such approval of the Plan by the Company’s stockholders, all Incentive Bonuses awarded under the Plan on or after January 1, 2006 shall be fully effective as if the stockholders had approved the Plan on or before January 1, 2006. If the Plan is not approved by stockholders at the Company’s 2006 Annual Meeting of Stockholders, the Plan and any awards granted under the Plan shall be null and void and of no effect.
(b) Subject to the limitations set forth in paragraph (c) below, the Board may at any time suspend or terminate the Plan and may amend it from time to time in such respects as the Board may deem advisable, subject to any requirement for stockholder approval imposed by applicable law, including Section 162(m) of the Code.
(c) No amendment, suspension or termination of the Plan shall, without the consent of the person affected thereby, materially, adversely alter or impair any rights or obligations under any Incentive Bonus previously awarded under the Plan.
13. Governing Law. The validity, interpretation and effect of the Plan, and the rights of all persons hereunder, shall be governed by and determined in accordance with the laws of the State of Delaware, other than the choice of law rules thereof.
13320-A Ballantyne Corporate Place • Charlotte, NC 28277 • USA
980-474-3700 • www.spx.com
SPXIMPORTANT ANNUAL MEETING INFORMATION 000004ENDORSEMENT LINE SACKPACKMR A SAMPLE DESIGNATION (IF ANY)ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6C123456789000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext
Using ablack ink pen, mark your votes with anX as shown in this example. Please do not write outside the designated areas. | ☒ |
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Daylight Time, on May 23, 2016.Vote by InternetGo to www.envisionreports.com/SPXCOr scan the QR code with your smartphoneFollow the steps outlined on the secure website
14, 2018.
Vote by Internet • Go towww.envisionreports.com/SPXC • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website |
Vote by telephone
qUsing a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. XAnnual Meeting Proxy Card 1234 5678 9012 345
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qA Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2, 3 and 4.1. Election of Directors:01 - Ricky D. Puckett (Term will expire in 2017)04 - Eugene J. Lowe, III (Term will expire in 2019) For Against Abstain02 - Tana L. Utley (Term will expire in 2017)05 - Patrick J. O’Leary (Term will expire in 2019) For Against Abstain03 - Ruth G. Shaw (Term will expire in 2018)06 - David A. Roberts (Term will expire in 2019) For Against Abstain +2. Approval of Named Executive Officers’ Compensation, on a Non-binding Advisory Basis.4. Ratification of Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for the 2016 fiscal year.For Against Abstain3. Re-approval of Executive Annual Bonus Plan.5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.For Against AbstainB Non-Voting ItemsChange of Address — Please print new address below.Meeting AttendanceMark box to the right if you plan to attend the Annual Meeting.C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
A | Proposals — The Board of Directors recommends a voteFOR all the nominees listed andFOR Proposals 2 and 3. |
1. Election of Directors: | For | Against | Abstain | For | Against | Abstain | ||||||||||
01 - Ruth G. Shaw (Term will expire in 2021) | ☐ | ☐ | ☐ | 02 - Robert B. Toth (Term will expire in 2021) | ☐ | ☐ | ☐ |
For | Against | Abstain | For | Against | Abstain | |||||||||||||
2. Approval of Named Executive Officers’ Compensation, on a Non-binding Advisory Basis. | ☐ | ☐ | ☐ | 3. Ratification of Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for the 2018 fiscal year. | ☐ | ☐ | ☐ | |||||||||||
4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. |
B | Non-Voting Items |
Change of Address — Please print new address below. | Meeting Attendance | |||||
Mark box to the right if you plan to attend the Annual Meeting. | ☐ |
C | Authorized Signatures — This section must be completed for your vote to be counted. – Date and Sign Below |
Please 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 full title.Date (mm/dd/yyyy) — Please print date below.Signature 1 — Please keep signature within the box.Signature 2 — Please keep signature within the box.C 1234567890JNT1UPX 2757001MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +02BIFE
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
/ / |
∎ | 1 UP X | |||
02SBXA |
Dear Stockholder:
The Annual Meeting of Stockholders of SPX Corporation will be held at 8:00 a.m. (Eastern Time) on Tuesday, May 24, 201615, 2018 at the SPX Building, 13320 Ballantyne Corporate Place, Charlotte, North Carolina 28277, for the following purposes:
1. Election of Directors.
Directors: 01 - Ruth G. Shaw (Term will expire in 2021), 02 - Robert B. Toth (Term will expire in 2021).
2. Approval of Named Executive Officers’ Compensation, on a Non-binding Advisory Basis.
3. Re-approval of Executive Annual Bonus Plan.4. Ratification of Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for the 20162018 fiscal year.5.
4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
Only holders of Common Stock of SPX Corporation of record at the close of business on March 29, 201620, 2018 will be entitled to vote at the meeting or any adjournment thereof.
To be sure that your vote is counted, we urge you to vote by telephone or by Internet. By giving your proxy, you do not affect your right to vote in person if you attend the meeting. Your prompt vote will aid the company in reducing the expense of additional proxy solicitation.
For stockholders with common shares held in the company’s KSOP Trust: It is important to remember that your specific voting directions to the Trustee are strictly confidential and may not be divulged by the Trustee to anyone, including the company or any director, officer, employee, or agent of the company. The Trustee will vote the shares being held by the Trust and not yet allocated to participants’ accounts in the same manner and proportion as the shares for which the Trustee has received timely voting instructions. Shares in participants’ accounts for which no timely voting instructions are received by the Trustee will be voted in the same manner.
BY ORDER OF THE BOARD OF DIRECTORS |
John W. Nurkin |
Vice President, Secretary and General Counsel |
qBY ORDER OF THE BOARD OF DIRECTORSJohn W. NurkinVice President, Secretaryand General Counsel
IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qSPX®
Proxy — SPX Corporation
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 24, 2016
15, 2018
Charlotte, North Carolina
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of SPX Corporation, a Delaware corporation, hereby appoints Eugene J. Lowe, III and Scott W. Sproule, or either one of them, with full power of substitution, to act as his or her agents and proxies at the Annual Meeting of Stockholders of SPX Corporation to be held in Charlotte, North Carolina on May 24, 201615, 2018 at 8:00 a.m. (Eastern Time) with authority to vote at said meeting, and adjournments thereof, as indicated below, all shares of stock of the company standing in the name of the undersigned on the books of the company.
This proxy when properly executed will be voted in the manner directed by the undersigned stockholder.If no direction is made, this proxy will be voted FOR ALL NOMINEES in Proposal 1, FOR Proposal 2, FOR Proposal 3, FOR Proposal 4, and as the proxies deem advisable on all other matters that may properly come before the meeting.
PLEASE VOTE, DATE, AND SIGN THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.