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
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Gentherm Incorporated
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INVITATION TO OUR SHAREHOLDERS
April 25, 201617, 2018
To our Shareholders:
We cordially invite you to attend our 20162018 annual meeting of shareholders, which will be held on Thursday,Friday, May 26, 2016,18, 2018, at 9:30 a.m., Eastern Time, at our offices located at 21680 Haggerty Road, Northville, Michigan. The business to be conducted at the annual meeting is set forth in the attached Notice of 20162018 Annual Meeting of Shareholders and proxy statement.
Thank you for your continued support of Gentherm.
Sincerely,
Daniel R. CokerPhillip M. Eyler
President and Chief Executive Officer
NOTICE OF 20162018 ANNUAL MEETING OF SHAREHOLDERS
Our 20162018 annual meeting of shareholders will be held on Thursday,Friday, May 26, 2016,18, 2018, at 9:30 a.m., Eastern Time, at our offices located at 21680 Haggerty Road, Northville, Michigan to conduct the following items of business:
Only holders of our common stock at the close of business on April 11, 2016,2, 2018, the record date, are entitled to receive this notice and to attend and vote at the annual meeting.
Your vote is important. Whether or not you plan to attend the meeting, we urge you to vote promptly and save us the expense of additional solicitation. If you attend the annual meeting, you may revoke your proxy in accordance with the procedures set forth in the proxy statement and vote in person.
By Order of the Board of Directors | |
Kenneth J. Phillips | |
Vice-President, General Counsel and Secretary |
Northville, Michigan
April 25, 2016
This proxy summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider and therefore you should read the entire proxy statement before voting. For more complete information regarding 20152017 performance of Gentherm Incorporated (the “Company”), review our annual report on Form 10-K for the year ended December 31, 2015.2017.
Please Vote Today
Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to vote promptly to save us the expense of additional solicitation. Please carefully review the proxy materials for the 20162018 annual meeting and follow the instructions below to cast your vote on all of the proposals.
Proposals, Board Recommendations and Required Vote
Proposal | Board Recommendation | Required Vote | ||||
No. 1 - | Election of Directors (page | FOR each nominee | Plurality* | |||
No. 2 - | Ratification of Appointment of Independent Registered Public Accounting Firm for | FOR | Majority of votes cast | |||
No. 3 - | Advisory Vote on Named Executive Officer Compensation (page | FOR | Majority of votes cast | |||
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| Notwithstanding that directors will be elected by a plurality of votes cast at the annual meeting, in the event any director nominee receives a greater number of votes “withheld” than votes “for” his or her election, our majority voting policy requires such nominee to promptly tender his or her resignation, conditioned on acceptance by the Company’s Board of Directors (the “Board”). See “Board Matters – Corporate Governance – Corporate Governance Guidelines” in this proxy statement for further information regarding our majority voting policy. |
Voting Methods in Advance of Annual Meeting
Even if you plan to attend the 20162018 annual meeting in person, please vote right away using one of the following voting methods (see page 2 for additional details).Make sure to have your proxy card or voting instruction card in hand and follow the instructions.
By Mail. Complete, sign and return your proxy card or voting instruction card in the enclosed envelope.
Attend and Vote at Annual Meeting
Date: | Friday, May 18, 2018 |
Time: | 9:30 a.m., Eastern Time |
Location: |
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Shareholders of record and beneficial owners (if in possession of a proxy from your broker, bank or other nominee) as of April 11, 20162, 2018 may attend and vote at the annual meeting.
The Board currently consists of nine directors. Current directors Lewis Booth and Daniel Coker are not standing for re-election at the 2018 annual meeting. The Board has re-nominated the remaining seven current directors and nominated John Stacey as a new director. Effective as of the annual meeting, the Board will reduce the number of directors of the Company to eight in accordance with the Company’s bylaws. All directors are elected annually and serve one-year terms. Mr. Carlos Mazzorinterms until his or her successor has been duly elected and Dr. Franz Scherer have determined not to stand for re-election at the 2016 annual meeting. The Board has re-nominated the remaining
seven current directors and has nominated two additional director nominees, Mr. Ronald Hundzinski and Ms. Yvonne Hao.qualified or until such director’s earlier resignation, retirement or death. The following table provides summary information about such director nominees.
| Director |
| Current Committee |
| Other Public | |||||||||||||||||||
Name | Age | Director Since | Independent | Committee | Primary Occupation(s) | Other Public Company Boards | Age | Since | Independent | Memberships | Primary Occupation(s) | Company Boards | ||||||||||||
Lewis Booth | 67 | 2013 | Yes | •Audit (C) •Nominating •Corporate Governance (C) | •Former Executive Vice-President and CFO of Ford Motor Company | •Rolls-Royce Holdings •Mondelez International | ||||||||||||||||||
Francois J. Castaing | 70 | 2001 | Yes | •Audit •Nominating (C) •Corporate Governance •Technology | •Former Technical Advisor to the Chairman of Chrysler Corporation •Former President of Chrysler International •Former Vice-President of Vehicle Engineering of Chrysler Corporation | — | 72 | 2001 | Yes | • Audit • Compensation • Nominating (C) • Technology | • Chairman of the Board of the Company • Former Technical Advisor to the Chairman of Chrysler Corporation • Former President of Chrysler International • Former Vice-President of Vehicle Engineering of Chrysler Corporation | — | ||||||||||||
Daniel R. Coker | 63 | 2007 | No | — | •President and Chief Executive Officer of the Company | — | ||||||||||||||||||
Sophie Desormière | 49 | 2012 | Yes | •Compensation •Nominating | •General Manager Marketing and Sales, Senior ExecutiveVice-President of Solvay | — | 51 | 2012 | Yes | • Compensation • Corporate Governance • Nominating | • General Manager Marketing and Sales, Senior Executive Vice-President of Solvay | Somfy S.A. (Euronext Paris: SO) | ||||||||||||
Phillip M. Eyler | 46 | 2017 | No | — | • President and Chief Executive Officer of the Company | — | ||||||||||||||||||
Maurice E.P. Gunderson | 64 | 2007 | Yes | •Compensation (C) •Nominating •Technology | •Managing Member of Shingebiss, LLC •Founder and Former Managing Director of Nth Power LLC | — | 66 | 2007 | Yes | • Corporate Governance (C) • Nominating • Technology | • Managing Director of Autotech Ventures • Managing Member of Shingebiss, LLC • Founder and Former Managing Director of Nth Power LLC | — | ||||||||||||
Yvonne Hao | 41 | — | Yes | —(1) | •Operating Partner, Bain Capital | •Bombardier Recreational Products | 43 | 2016 | Yes | • Audit • Compensation (C) • Nominating | • Chief Operating Officer and Chief Financial Officer of PillPack | — | ||||||||||||
Ronald Hundzinski | 57 | — | Yes | —(1) | •Vice President and Chief Financial Officer of BorgWarner Inc. | — | 59 | 2016 | Yes | • Audit* • Nominating | • Executive Vice President and Chief Financial Officer of BorgWarner Inc. | — | ||||||||||||
Oscar B. Marx, III | 77 | 1999 | No | — | •Chairman of the Board •Former President and CEO of TMW Enterprises, Inc. •Former Vice-President of the Automotive Components Group of Ford Motor Company | — | ||||||||||||||||||
Byron T. Shaw II | 48 | 2013 | Yes | • Nominating • Technology (C) | •President of Byron Shaw LLC •Former Managing Director of the Silicon Valley Office for General Motors | — | 50 | 2013 | Yes | • Corporate Governance • Nominating • Technology (C) | • President of Byron Shaw LLC • Former Managing Director of the Silicon Valley Office for General Motors | — | ||||||||||||
John Stacey | 53 | New Nominee | Yes | —** | • Executive Vice President and Chief Human Resources Officer, Harman International Industries | — | ||||||||||||||||||
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(C) Chairperson of the stated committee.
* Upon the retirement of current Director and Chairperson of the Audit Committee, Lewis Booth, which will be effective as of the 2018 annual meeting, the Board has determined that, if elected, Mr. Hundzinski will become the Chairperson of the Audit Committee and Mr. Gunderson will become a member of the Audit Committee.
** If elected at the 2018 annual meeting, the Board has determined that Mr. Stacey will become a member of the Compensation and Nominating Committees.
Executive Compensation Highlights
At the 20162018 annual meeting, shareholders are being asked to provide advisory (non-binding) approval of the compensation of our named executive officers in 2015,2017, as disclosed in this proxy statement in accordance with SEC rules (commonly known as a “say-on-pay” proposal). See “Compensation Discussion and Analysis” beginning on page 16 for information regarding our compensation philosophy, objectives and design, our compensation-setting process and our executive compensation program components, as well as the decisions made for 20152017 with respect to each of our named executive officers.
The Company’s say-on-pay proposal presented at the 20152017 annual meeting of shareholders, whereby shareholders were asked to provide advisory approval of the Company’s compensation for its named executive officers in 2014,2016, was approved by approximately 95%91% of the votes cast.cast (not including abstentions and broker non-votes).
Frequency of Say-on-Pay Proposal
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly known as the Dodd-Frank Act, requires that we seek an advisory shareholder vote at least every six years indicating whether shareholders prefer a say-on-pay advisory vote be taken every one, two or three years. At the 2016our 2017 annual meeting of shareholders, are being asked to provide advisory approval84% of the Company’s compensation program for its named executive officersvotes cast on the proposal regarding the frequency of our say-on-pay advisory vote were in 2015.favor of every year as the frequency, and the Board determined thereafter to conduct annual say-on-pay votes until the next frequency vote.
Governance Highlights
The Company is committed to good corporate governance appropriate to the Company and its shareholders. Highlights include:
Independent, non-executive Chairman of the Board currently and a commitment to have a Lead Independent Director if the Chairman of the Board is ever not independent
Refreshed Board of Directors with four of the eight nominees newly nominated since 2016
Gender diversity, with women representing two of the eight nominees
Terminated existing shareholder rights plan (a/k/a poison pill) in March, 2018
Stock ownership guidelines and ownership amongapplicable to our Chief Executive Officer and directors
At the 2016 annual meeting, shareholders are being asked to approve an amendment to the Company’s Amended and Restated Bylaws to increase the minimum number of directors from five to seven and the maximum number of directors from nine to 11. The Board believes this proposal is in the best interests of the Company and its shareholders in anticipation of Board succession planning, additional diversity and new directors with expertise relating to new products and industries and future acquisitions.
Ratification of Appointment of Independent Registered Public Accounting Firm for 20152018
At the 20162018 annual meeting, shareholders are being asked to ratify the Audit Committee’s appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2016.2018. Grant Thornton has served in such capacity since 2007.
The following table sets forth the fees the Company was billed for audit and other services provided by Grant Thornton in 20152017 and 2014.2016. All of such services were approved in conformity with the pre-approval policies and procedures described under “Audit Committee Matters—Pre-Approval Policies and Procedures” on page 36.44. The Audit Committee of the Board, based on its reviews and discussions with management and Grant Thornton, determined that the provision of these services was compatible with maintaining Grant Thornton’s independence.
| 2015 ($) | 2014 ($) |
| 2017 ($) |
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| 2016 ($) |
| |||||||||
Audit Fees | 1,607,000 | 1,502,000 |
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| 2,278,000 |
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| 1,936,000 |
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Audit-Related Fees | 77,000 | 88,000 |
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| 135,000 |
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| 24,000 |
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Tax Fees | 5,000 | 5,000 |
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| 30,000 |
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| 43,000 |
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All Other Fees | 20,000 | 16,000 |
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| 3,000 |
|
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| 3,000 |
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Total Fees | 1,709,000 | 1,611,000 |
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| 2,446,000 |
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| 2,006,000 |
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 201618, 2018
Who is soliciting my vote?
The Board of Directors (the “Board”) of Gentherm Incorporated (the “Company”) is soliciting your proxy, as a holder of our common stock, for use at the 20162018 annual meeting of shareholders and any adjournment or postponement of such meeting (the “annual meeting”). The annual meeting will be held on Thursday,Friday, May 26, 2016,18, 2018, at 9:30 a.m., Eastern Time, at our offices located at 21680 Haggerty Road, Northville, Michigan.
The notice of annual meeting, proxy statement and form of proxy was first mailed to shareholders of record of our common stock on or about April 25, 2016.17, 2018.
What is the purpose of the annual meeting?
At the annual meeting, you will be voting on:
The Board recommends a voteFOR each of the director nominees listed in this proxy statement, FOR the ratification of the appointment of Grant Thornton, andFOR each other proposal listed above. the approval of the compensation of our named executive officers. We are not aware of any other matters that will be brought before the shareholders for a vote at the annual meeting. If any other matter is properly brought before the meeting and you are a shareholder of record of our common stock, your signed proxy card gives authority to your proxies to vote on such matter in their best judgment; proxy holders named in the proxy card will vote as the Board recommends or, if the Board gives no recommendation, in their own discretion.
During or immediately following the annual meeting, management will report on our performance and will respond to appropriate questions from shareholders. Representatives of Grant Thornton will be present at the annual meeting, will make a statement, if they desire to do so, and will answer appropriate questions from our shareholders.
Who is entitled to vote?
You may vote if you owned shares of our common stock at the close of business on April 11, 2016,2, 2018, the record date, provided such shares are held directly in your name as the shareholder of record or are held for you as the beneficial owner through a broker, bank or other nominee. As of April 11, 2016,2, 2018, we had 36,427,39736,793,513 shares of common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the annual meeting.
What is the difference between holding shares as a shareholder of record and a beneficial owner?
Shareholders of Record. If your common shares are registered directly in your name with our transfer agent, Computershare, you are considered the shareholder of record with respect to those shares, and these proxy materials are being sent directly to you by us. As the shareholder of record, you have the right to grant your voting proxy directly to us through the enclosed proxy card or to vote in person at the annual meeting.
Beneficial Owners. Many of our shareholders hold their common shares through a broker, bank or other nominee rather than directly in their own names. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner with respect to those shares, and these proxy materials (including a voting instruction card) are being forwarded to you by your broker, bank or nominee who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the annual meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the annual meeting unless you request and obtain a proxy from your broker, bank or nominee. Your broker, bank or nominee has enclosed a voting instruction card for you to use in directing the broker, bank or nominee on how to vote your shares.
May I vote my shares in person at the annual meeting?
Even if you plan to be present at the annual meeting, we encourage you to vote your shares prior to the meeting.
Shareholders of Record. If you are a shareholder of record and attend the annual meeting, you may deliver your completed proxy card or vote by ballot.
Beneficial Owners. If you hold your common shares through a bank, broker or other nominee and want to vote such shares in person at the annual meeting, you must obtain a proxy from your broker, bank or other nominee giving you the power to vote such shares.
Can I vote my shares without attending the annual meeting?
You may vote by completing, signing and returning the enclosed proxy card or voting instruction card. If you are a shareholder of record and the postage-paid envelope is missing, please mail your completed proxy card to Gentherm Incorporated, c/o Corporate Secretary, 21680 Haggerty Road, Northville, MI 48167. You may have the option to vote your shares via the internet or telephone.
Can I change my vote?
Shareholders of Record. You may change your vote at any time before the proxy is exercised by voting in person at the annual meeting or by filing with our corporate secretary either a notice revoking the proxy or a properly signed proxy. In each case, such notice or proxy must bear a later date than your prior proxy. If sent by mail, it must be received by our corporate secretary no later than 5:00 p.m., Eastern Time, on May 25, 2016.17, 2018. Your attendance at the annual meeting in person will not cause your prior proxy to be revoked unless you file the proper documentation for it to be so revoked.
Beneficial Owners. If you hold your shares through a bank, broker or other nominee, you should contact such person prior to the time such voting instructions are exercised.
What does it mean if I receive more than one proxy card or voting instruction card?
If you receive more than one proxy card or voting instruction card, it means that you have multiple accounts with banks, brokers, other nominees and/or our transfer agent. Please sign and deliver, or otherwise vote, each proxy card and voting instruction card that you receive. We recommend that you contact your nominee and/or our transfer agent, as appropriate, to consolidate as many accounts as possible under the same name and address. Our transfer agent is Computershare, P.O. Box 30170, College Station, TX 77842-3170; Telephone: (800) 962-4284.
What if I do not vote for some of the items listed on my proxy card or voting instruction card?
Shareholders of Record. If you indicate a choice with respect to any matter to be acted upon on your proxy card, the shares will be voted in accordance with your instructions. Proxy cards that are signed and returned, but do not contain voting instructions with respect to certain matters, will be voted in accordance with the recommendations of the Board on such matters or if the Board gives no recommendation, then in the discretion of the proxy holders.
Beneficial Owners. If you indicate a choice with respect to any matter to be acted upon on your voting instruction card, the shares will be voted in accordance with your instructions. If you do not indicate a choice or return the voting instruction card, the bank, broker or other nominee will determine if it has the discretionary authority to vote on each applicable matter. Under applicable law, a bank, broker or nominee has the discretion to vote on routine matters, including the ratification of the appointment of an independent registered public accounting firm. For all other matters at the 20162018 annual meeting, brokers and certain banks and nominees will be unable to vote on your behalf if you do not instruct them how to vote your shares in the manner set forth on your voting instruction card. Therefore, it is very important for you to vote your shares for each proposal.
How many shares must be present to hold the annual meeting?
In order for us to conduct the annual meeting, a majority of the outstanding shares entitled to vote at the annual meeting as of April 11, 2016 must be present in person or by proxy at the meeting. This is known as a quorum. Abstentions, withheld votes and broker non-votes will be considered present for purposes of determining a quorum.
What vote is required to approve each item of business?
How Do Votes Impact Approval of Proposal? | |||||||||||||||
Proposal | Required Approval | For | Withhold/ | Abstention | Broker | ||||||||||
No. 1 | – Election of Directors | Plurality of votes | For the | Against the | — | Not a vote cast | |||||||||
No. 2 | – Ratification of Appointment of Independent Registered Public Accounting Firm for | Majority of votes | For the | Against the | Not a vote cast | — | |||||||||
No. 3 | – Advisory Vote on Named Executive Officer Compensation | Majority of votes | For the | Against the | Not a vote cast | Not a vote cast | |||||||||
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| Notwithstanding that directors will be elected by a plurality of votes cast at the annual meeting, in the event any director nominee receives a greater number of votes “withheld” than votes “for” his or her election, the Company’s majority voting policy requires such nominee to promptly tender his or her resignation, conditioned on Board acceptance. |
If any other matter is properly submitted to the shareholders at the annual meeting, its adoption generally will require the affirmative vote of holders of a majority of votes cast at the annual meeting. The Board does not propose to conduct any business at the annual meeting other than as stated above.
Although the advisory votes in Proposals No.Proposal Nos. 2 and No. 3 are not binding on the Company, the Board and/or respective committee will take your vote into consideration in determining future activities.
How many shares must be present to hold the annual meeting?
In order for us to conduct the annual meeting, a majority of the outstanding shares entitled to vote at the annual meeting as of April 2, 2018 must be present in person or by proxy at the meeting. This is known as a quorum. Abstentions, withheld votes and broker non-votes will be considered present for purposes of determining a quorum.
Is a registered list of shareholders available?
The names of shareholders of record entitled to vote at the annual meeting will be available to such shareholders at the annual meeting for any purpose reasonably relevant to the meeting.
Who will count the votes and where can I find the voting results?
The Inspector of Elections appointed at the 20162018 annual meeting will tabulate the voting results. We intend to announce the preliminary voting results at the annual meeting and, in accordance with rules of the Securities and Exchange Commission (the “SEC”), we intend to publish the final results in a current report on Form 8-K within four business days of the annual meeting.
PROPOSAL NO. 1—ELECTIONELECTION OF DIRECTORS
The Board currently consists of nine directors. All directors are elected annually and serve one-year terms. Each director will serve until a successor is duly elected and qualified or until such director’s earlier resignation, retirement or death. Mr. Carlos MazzorinMessrs. Lewis Booth and Dr. Franz Scherer have determinedDaniel Coker will not to stand for re-election at the 20162018 annual meeting. The Board has re-nominated the remaining seven current directors and has also nominated two additional director nominees,John Stacey as a new nominee. Mr. Ronald HundzinskiStacey’s broad human resources experience in multi-national environments is extremely valuable as we employ thousands of employees around the globe. His specific experience in the automotive industry will provide insight and Ms. Yvonne Hao.guidance for managing our workforce, enhancing the skills of our existing employees and cultivating new talent. Effective as of the annual meeting, the Board will reduce the number of directors of the Company to eight in accordance with the Company’s bylaws. As discussed below, the Board has affirmatively determined that seven of the nineeight director nominees are independent under the applicable rules of the NASDAQ Global Select Market (“Nasdaq”).
Each nominee has consented to be listed in this proxy statement and agreed to serve as a director if elected by the shareholders. If any nominee becomes unable or unwilling to serve between the date of this proxy statement and the annual meeting, which we do not anticipate, the Board may designate a new nominee and the persons named as proxies in the attached proxy card will vote for that substitute nominee (unless the proxies were previously instructed to withhold votes for the nominee who has become unable or unwilling to serve). Alternatively, the Board may reduce the size of the Board.
The Board recommends that you vote FOR the election of each of the director nominees.
The directors and director nominees of the Company are as follows:
Name |
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| Current Company Title | |||||
Francois J. Castaing | ||||||
| 72 | Chairman of the Board | ||||
Sophie Desormière | 51 | Director | ||||
Phillip M. Eyler | 46 | President, Chief Executive Officer and Director | ||||
Maurice E.P. Gunderson | 66 | Director | ||||
Yvonne Hao | 43 | Director | ||||
Ronald Hundzinski | ||||||
| 59 | Director | ||||
Byron T. Shaw II | 50 | Director | ||||
John Stacey | 53 | Director Nominee | ||||
Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board
The Nominating Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience and background sought of Board members in the context of our business and the then-current membership on the Board. The Committee and the Board review and assess the continued relevance of and emphasis on these factors as part of the Board’s self-assessment process and in connection with candidate searches to determine if they are effective in helping to satisfy the Board’s goal of creating and sustaining a Board that can appropriately support and oversee the Company’s activities.
We believe our directors have an appropriate balance of knowledge, experience, attributes, skills and expertise as a group to ensure that the Board appropriately fulfills its oversight responsibilities and acts in the best interests of shareholders. Although specific qualifications for Board membership may vary from time to time, desired qualities include (A) the highest ethical character, integrity and shared values with the Company, (B) loyalty to the Company and concern for its success and welfare, (C) sound business judgment, and (D) sufficient commitment and availability to effectively carry out a director’s duties. Listed below are additional key skills and experience that we consider important for our directors to have in light of our current business and structure. Thereafter, the biographies of the directors and nominees set forth their business experience during at least the past five years, as well as the specific experience, qualifications, attributes and skills that led to the Nominating Committee’s conclusion that each director and nominee should continue to serve on the Board.
for growing our business, which may include mergers and acquisitions. Useful experience in mergers and acquisitions includes an understanding of the importance of “fit” with the Company’s culture and strategy, the valuation of transactions, and management’s plans for integration with existing operations. |
Director Background and Qualifications
Lewis BoothFrancois J. Castaing has served as a director of the Company since 2013. Mr. Booth served2001, as Executive Vice-President and Chief Financial Officer (CFO) of Ford Motor Company from 2008 until his retirement in 2012. Prior to his appointment to CFO, Mr. Booth held the positions of Chairman and CEO of Ford of Europe as well as President of Ford’s Asia Pacific and Africa Operations. He has served on the Board of Directors of publicly-traded Rolls-Royce Holdings since 2011, where he is Chairman of the Audit Committee, a memberBoard since 2017 and as Lead Independent Director of the Nominations and Governance Committee and a member of the Science and Technology Committee, and publicly-traded Mondelez International sinceBoard from 2012 where he is a member of the Finance Committee and a member of the Human Resources and Compensation Committee. Mr. Booth, a qualified chartered management accountant, received his Bachelor’s engineering degree from Liverpool University.
As Executive Vice-President and CFO of Ford Motor Company, Mr. Booth was responsible for all of the company’s financial operations, including the Controller’s office, treasury and investor relations. Mr. Booth’s 34-year decorated career at Ford illustrates his financial expertise and knowledge of manufacturing, operations and the investment community. His strategic expertise in the worldwide automotive industry is critical to us as we continue to expand globally. Based on the foregoing, the Board has determined that Mr. Booth is an “audit committee financial expert” in accordance with SEC rules.
Francois J. Castaing has served as a director of the Company since 2001.2016. Mr. Castaing retired in 2000 as technical advisor to the Chairman of Chrysler Corporation. Prior to his retirement, Mr. Castaing spent 13 years with Chrysler Corporation, where he held various positions, including Vice-President of Vehicle Engineering from 1988 to 1996 and President of Chrysler International from 1996 to 1997. Mr. Castaing was Vice-President of Engineering and Group Vice-President Product and Quality of American Motors, from 1980 until Chrysler acquired that company in 1987. Mr. Castaing began his career with Renault as Technical Director for Renault Motorsport Programs. From 2004 to 2015, he served as a director of publicly-traded TRW Automotive Holdings Corp., where he was a member of the Audit Committee and the Chairman of the Compensation Committee. Mr. Castaing also serves on the board of FIRST in Michigan: For Inspiration and Recognition of Science and Technology, a not-for-profit foundation.
Mr. Castaing’s distinguished career in the automotive industry has given him extensive experience in our most important customer market. During his tenure at some of the world’s largest automobile manufacturers, Mr. Castaing developed leadership, strategic planning and organizational skills that greatly benefit the Company. In addition, his technical background contributes to his deep understanding of our operations and enables him to assist in problem solving. He also has significant knowledge of the Company based on his 1517 years of service on the Board.
Daniel R. Coker has servedBoard and in his role as our Presidentthe former Lead Independent Director and Chief Executive Officer since 2003, and as a director since 2007. Mr. Coker joined Gentherm in 1996 as Vice-President of Sales and Marketing. Prior to such time, from 1986 to 1995, Mr. Coker served as Vice-President and General Manager of North American Operations for Arvin, Inc. Mr. Coker received his Bachelor’s degree from Tennessee Technological University.
Mr. Coker has extensive knowledgecurrent Chairman of the day to day operations of our business. His product development background allows him to fully understand and manage our business. In addition, Mr. Coker’s experience as our highest ranked officer, coupled with the managerial positions he previously held with other automotive-related companies, gives Mr. Coker industry insight and leadership and executive management skills key to our performance.Board.
Sophie Desormière has served as a director of the Company since 2012. Ms. Desormiére has served as General Manager Marketing and Sales, Senior Executive Vice-President at Solvay, a Belgium-based company and a developer of specialty chemicals, since November 2010. Previously, Ms. Desormière spent 17 years in increasingly responsible positions at Valeo, an independent industrial group focused on the design, production and sale of components, integrated systems and modules for the automotive industry, including Research & Development Product Line Director, Branch Marketing Innovation Director, Group Product Marketing Director and Comfort Enhancement Domain Director. Ms. Desormière was elected a member of the Supervisory Board of publicly traded Somfy S.A. (Euronext Paris: SO) in 2017. Ms. Desormière is a graduate of the Ecole Nationale Supérieure de Chimie de Paris, the Institut de Formation du Caoutchouc and the Program for Management Development at Harvard Business School.
Ms. Desormière has broad experience in product planning, product development and market analysis. Her background in these areas assists the Company in its development of long-term product strategies. In addition, the skills Ms. Desormière has developed while working at and serving on the board of global companies with significant European operations enables her to provide key insight with respect to the Company’s integration of its worldwide operations.
Phillip M. Eyler has served as President and Chief Executive Officer of the Company since December 2017, and as a director of the Company since December 2017. From 2015 until 2017, Mr. Eyler served as President of the $3 billion Connected Car division at Harman Industries International, Inc., a subsidiary of Samsung. The Connected Car Division focused on developing highly integrated connected car systems encompassing infotainment, telematics, connected safety and cyber security solutions, among others. Mr. Eyler joined Harman in 1997, and held a number of positions during his tenure, including Senior Vice-President and General Manager of Harman’s Global Automotive Audio business from 2011 to 2015. He also led Harman’s North American Automotive business and the North American and Asian Manufacturing group. Mr. Eyler began his career at Siemens AG in the electromechanical components division. He earned a Bachelor of Science degree in mechanical engineering from Purdue University and an MBA from the Fuqua School of Business at Duke University.
Mr. Eyler’s extensive experience in the Automotive industry, our largest market, enables him to understand and manage our business. His prior leadership experience at a growing automotive supplier brings an important skill to our board, as we strive to continue to grow our various lines of business. Mr. Eyler’s familiarity with managing manufacturing operations also critical to our Company. As the Chief Executive Officer, Mr. Eyler has extensive knowledge of the day-to-day operations of our business. Being our highest ranked officer, coupled with the managerial positions he previously held with other automotive-related companies, gives Mr. Eyler industry insight and leadership and executive management skills key to our performance.
Maurice E.P. Gunderson has served as a director of the Company since 2007. Mr. Gunderson has served as Managing Director of the venture capital firm Autotech Ventures since 2017, and a Managing Member of the consulting firm Shingebiss, LLC since 1999. Previously, Mr. Gunderson spent 1514 years as the co-founder and Managing Director of Nth Power, a venture capital firm specializing in investments emerging from the global restructuring of the energy industry, andsector; four years as a Senior Partner at CMEA Capital, a San Francisco based venture capital firm. Mr. Gunderson alsofirm specializing in energy and materials; and as a Managing Director of Runway Capital. He currently serves as an advisor to Auto Tech Ventures,Starburst Ventures; as well as a directorDirector and President of Onboard Dynamics, Inc., Runway Capital ManagementMt. Diablo Pilots Association; and Radiant Capital Management,Director and CFO of Herd It Through the Grapevine Herding Dog Rescue, all privately-held companies. Mr. Gunderson is also Chairman of the Contra Costa County (California) Aviation Advisory Committee. Mr. Gunderson received a Bachelor of Arts degree and Master of Science degreedegrees in mechanical engineering from Oregon State University and a MastersMaster’s in Business Administration from Stanford University. He is a Registered Professional Engineer in California, a Life Fellow of the American Society of Mechanical Engineers and a Board Leadership Fellow of the National Association of Corporate Directors.
Mr. Gunderson’s background as a venture capitalist enables him to provide key insight with respect to the Company’s investments in new thermoelectricmarkets and technologies. Mr. Gunderson also has strong leadership and governance skills, as a result of his board service for several energynumerous startup and materials-relatedemerging companies. His engineering background gives him a deep understanding of our business and operations.
Yvonne Hao has served as a director of the Company since 2016. She is currently the COO and CFO of PillPack, a new nomineehigh-growth venture funded national e-commerce pharmacy startup. From 2008 to the Gentherm Board of Directors. Since 2008,2016, Ms. Hao has held various positions at Bain Capital, including as an Operating Partner since 2013 and prior to that, as interim executive officer for various portfolio companies. At Bain, Ms. Hao iswas responsible for portfolio company performance, working closely with management of various Bain investment companies. She held the position of interim CEO or COO at several of these companies, including Gymboree and D&M Holdings. Prior to 2008, Ms. Hao worked at Honeywell in various positions starting in 2003 and at McKinsey & Company starting in 1997. Ms. Hao has served as a director of publicly-traded Bombardier Recreational Products sincefrom 2011 where she serves on the Investment and Risk Committee, anduntil 2016. She has also servesserved as a past director of privately-held companies, including Gymboree and Consolidated Container Corporation.Company. Ms. Hao holds a B.A. from Williams College and a Masters of Philosophy in Development Economics from Cambridge University.
Ms. Hao’s current role as COO and CFO at PillPack, as well has her roles as interim CEO and COO at other companies, provides her with expertise in executive management, strategic planning, operations and brand marketing. Ms. Hao’s experience at PillPack offers a healthcare industry perspective on the Board as we look to grow our medical business. She also brings a unique institutional investor perspective resulting from her previous positions at Bain Capital, a global private equity and venture capital investment firm. Finally, Ms. Hao has international business experience as a result of managing a business expansion in Asia, where the Company has a significant presence with customers and manufacturing plants. Ms. Hao has significant finance expertise as a result of her current position as a CFO and based on various other positions in which she has served. The Board has determined this qualifies her as an “audit committee financial expert” under SEC rules.
Ronald Hundzinski is has served as a new nominee todirector of the Gentherm Board of Directors.Company since 2016. Since 2012, Mr. Hundzinski has served as the Executive Vice President and Chief Financial Officer of BorgWarner, Inc. (NYSE:BWA). From 2005 to 2012, Mr. Hundzinski served in BorgWarner’s finance department in positions of increasing responsibility, including as Controller from 2010 to 2011 and Treasurer from 2011 to 2012. Mr. Hundzinski holds a B.B.A. in finance from Western Michigan University and an M.B.A. from the University of Colorado.
Mr. Hundzinski’s experience as the Chief Financial Officer of a large, global automotive supplier brings important practical experience to our Board of Directors. He understands the key operational, strategic and financial issues of the Company as an executive of a public company in the automotive industry, and he can provide unique, real-time advice on critical industry matters.
Mr. Hundzinski also has significant finance and accounting expertise and the Board has determined this qualifies him as aan “audit committee financial expertexpert” under SEC rules. His expertise and knowledge in our largest industry segment brings invaluable insight to our Board of Directors.
Oscar B. Marx, III has served as Chairman of the Board since he joined the Board in 1999. Mr. Marx also served as Interim Chief Executive Officer of the Company from October 2001 through March 2003. He previously served as President and CEO of
TMW Enterprises, Inc., a private investment firm located in Troy, Michigan, from 1995 to 2001. In 1994, Mr. Marx was President and Chief Executive Officer of Electro-Wire Products (predecessor to TMW Enterprises, Inc.), a major supplier of electrical distribution systems to the automotive industry. After 32 years of service, Mr. Marx retired from Ford Motor Company in 1994 as Vice-President of its Automotive Components Group (currently known as Visteon Corporation).
Mr. Marx has a unique perspective and understanding of the Company’s business, given his prior service as our Interim Chief Executive Officer. In addition, Mr. Marx’s experience as a senior executive at other automotive-related companies, including Ford Motor Company, gives him relevant industry, managerial and strategic planning expertise key to our success. He also has significant knowledge of the Company based on his 17 years of service on the Board.
Byron T. Shaw II has served as a director of the Company since 2013. Dr. Shaw has been the President of Byron Shaw LLC, a consulting firm providing diligence, strategy and execution advisory services focusing on automotive technology and related services, since 2012. From 2006 to 2012, Dr. Shaw worked at General Motors in various positions, most recently as Managing Director of the Silicon Valley Office for General Motors and General Motors Ventures LLC. From 1998 to 2003, he worked at BMW in various positions, including Principal Technology Engineer and Manager of Advanced Technology. Dr. Shaw currently serves on the Board of Directors or Advisory Board of several privately-held companies, including Smalltech LLC, Project Renovo, Qualia Networks, Auto TechAutotech Ventures, Up Shift Cars and Rotary Wing Engine. Dr. Shaw received Bachelor of Science degrees and a Master of Science in Mechanical Engineering from the Massachusetts Institute of Technology and a Ph.D. in mechanical engineering/controls from University of California, Berkeley.
Dr. Shaw’s extensive experience in the automotive industry and in advanced technologies enables him to provide key insight with respect to improvements in our existing products. His technical expertise has also been critical to the Company’s development of new products for other markets.
John Stacey is a new nominee to serve as a director of the Company. He currently serves as the Executive Vice President and Chief Human Resources Officer of Harman Industries International, Inc., a subsidiary of Samsung, a position he has held since 2008. Previously, Mr. Stacey served in various senior human resources positions with Anheuser-Busch InBev SA/NV from 1990 to 2008, including, most recently, as Vice President, People for InBev North America, InBev Central and Eastern Europe from 2005 through January 2008. Mr. Stacey received a Bachelor of Commerce degree from Memorial University of Newfoundland.
Mr. Stacey’s broad human resources experience in multi-national environments is extremely valuable as we employ thousands of employees around the globe. His specific experience in the automotive industry will provide insight and guidance for managing our workforce, enhancing the skills of our existing employees and cultivating new talent.
The Board believes that there should be at least a majority of independent directors on the Board. The Board recently undertook its annual review of director independence in accordance with the applicable rules of Nasdaq. The independence rules include a series of objective tests, including that the director is not employed by us and has not engaged in various types of business dealings with us. In addition, the Board is required to make a subjective determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations, the Board has affirmatively determined that director nominees Mr. Castaing, Ms. Desormière, Mr. Booth,Gunderson, Ms. Hao, Mr. Castaing, Mr. Gunderson, Mr. Mazzorin, Dr. Scherer andHundzinski, Dr. Shaw and Mr. Stacey are independent directors under the applicable rules of Nasdaq, and that, upon election, Mr. Hundzinski and Ms. Hao will be independent directors under the applicable rules of Nasdaq. In determining the independence of Mr. MazzorinStacey, the Board considered Mr. Stacey’s current employment at Harman Industries International, Inc., which is Mr. Eyler’s previous employer. Based on specific inquiries and Dr. Scherer have determinedanalysis, the Board concluded that Mr. Stacey’s previous working relationship with Mr. Eyler would not to stand for re-election at the 2016 annual meeting.interfere with Mr. CokerStacey’s exercise of independent judgment in carrying out his responsibilities as a director. Mr. Eyler is employed by us and therefore is not an independent director. Of the directors not standing for re-election, Mr. Marx is not deemedBooth was affirmatively determined to be an independent, directorbut Mr. Coker was not as a result of his prior roleprevious employment as Interim CEOPresident and Chief Executive Officer of the Company.
Each member of the Audit Committee, the Compensation Committee, the Nominating Committee, the Corporate Governance Committee and the Technology Committee is independent under Nasdaq rules. In addition, the Board has affirmatively determined that the members of the Audit Committee and Compensation Committee qualify, and that Mr. Gunderson and Mr. Stacey are expected to qualify upon appointment following the 2018 annual meeting, as independent in accordance with the additional independence rules established by the SEC and Nasdaq. Upon election to the Board, the Board anticipates that the new director nominees will serve on the following Board committees: (i) Ms. Hao – Compensation and Nominating; and (ii) Mr. Hundzinski – Audit, Nominating and Corporate Governance, and the Board has affirmatively determined that they qualify as independent in accordance with the additional independence rules for the Compensation Committee and Audit Committee, respectively, as established by the SEC and Nasdaq.
General
The Board has general oversight responsibility for our affairs and, in exercising its fiduciary duties, the Board represents and acts on behalf of the shareholders. Although the Board does not have responsibility for our day-to-day management, it stays regularly informed about our business and provides oversight and guidance to our management through periodic meetings and other
communications. The Board provides critical oversight in, among other things, our strategic planning process, leadership development and succession planning, risk management, as well as other functions carried out through the Board committees as described below.
Board Leadership
The Company’s current Board leadership is as follows:
The Board believes that, by separating the positions of Chairman of the Board and Chief Executive Officer, the Board can provide better oversight of risks, including credit, liquidity and operational risks, faced by the Company. Since neitherIf the Chairman of the Board noris not independent under the Chief Executive Officer is considered to be independent,applicable rules of Nasdaq, the Board has designatedadopted a policy of appointing a Lead Independent Director. The Lead Independent Director would act as chairperson of all meetings of the independent directors and would have the authority to call additional meetings of the independent directors at any time. The Lead Independent Director would also act as a liaison both between the Chairman of the Board and the Chief Executive Officer, and between these individuals, on the one hand, and the independent directors, on the other hand. As Mr. Castaing is independent, the Board has not appointed a Lead Independent Director at this time.
Board Oversight of Risk Management
The Board oversees the Company’s risk management primarily through the following:
Meetings
The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The independent directors hold regularly scheduled executive sessions to meet without management present. These executive sessions generally occur around regularly scheduled meetings of the Board. The independent directors also hold additional meetings periodically as deemed necessary or appropriate.
All directors are expected to attend all meetings of the Board and of the Board committees on which they serve. The Board met sixseven times in 2015,2017, and each director serving in 20152017 (as of and from the date he or she joined the Board and applicable committees) attended significantly more than 75% of the aggregate of all meetings of the Board and the committees of which he or she was a member in 2015.2017.
The Board has adopted a policy strongly encouraging directors to attend the Company’s annual meeting of shareholders in person or, if necessary, by telephone or similar communication equipment. All current directors serving in 2015 attended the 20152017 annual meeting of shareholders.
The Board has delegated various responsibilities and authority to Board committees. Each committee has regularly scheduled meetings and reports on its activities to the full Board. Each committee operates under a written charter approved by the Board, which is reviewed annually by the respective committee and the Board and is available on our website,www.gentherm.com, under the “About Us”“Investor Relations – Corporate Governance” tab. The table below sets forth the current membership for the five Board committees and the number of meetings held for each in 2015.2017.
Director | Audit | Compensation | Nominating | Corporate Governance1 | Technology | |||||
Lewis Booth | Chair | X | Chair | |||||||
Francois J. Castaing | X | Chair | X | X | ||||||
Sophie Desormière | X | X | ||||||||
Maurice E.P. Gunderson | Chair | X | X | |||||||
Carlos E. Mazzorin(1) | X | X | ||||||||
Franz Scherer(1) | X | X | X | |||||||
Byron T. Shaw II | X | Chair | ||||||||
Meetings | 8 | 3 | 2 | 1 | 4 |
Director |
| Audit |
|
| Compensation |
|
| Nominating |
|
| Corporate Governance |
|
| Technology |
| ||||
Lewis Booth* |
| Chair |
|
|
|
|
|
| X |
|
|
|
|
|
|
|
| ||
Francois J. Castaing |
|
|
|
| X |
|
| Chair |
|
|
|
|
| X |
| ||||
Sophie Desormière |
|
|
|
| X |
|
| X |
|
| X |
|
|
|
|
| |||
Maurice E.P. Gunderson* |
|
|
|
|
|
|
|
| X |
|
| Chair |
|
| X |
| |||
Yvonne Hao |
| X |
|
| Chair |
|
| X |
|
|
|
|
|
|
|
|
| ||
Ronald Hundzinski* |
| X |
|
|
|
|
|
| X |
|
|
|
|
|
|
|
| ||
Byron T. Shaw II |
|
|
|
|
|
|
|
|
| X |
|
| X |
|
| Chair |
| ||
Meetings |
| 8 |
|
| 6 |
|
| 2 |
|
| 2 |
|
| 4 |
| ||||
* Upon the retirement of current Director and Chairperson of the Audit Committee, Lewis Booth, which will be effective as of the 2018 annual meeting, the Board has determined that Mr. Hundzinski will become the Chairperson of the Audit Committee and Mr. Gunderson will join the Audit Committee as a member.
If elected, the board has determined that Mr. Stacey would join the Compensation Committee and the Nominating Committee. |
| ||||||||||||||||||
Audit Committee
The Audit Committee’s responsibilities include:
reviewing any reports made to the Company’s ethics hotline; and
The responsibilities and activities of the Committee are described in greater detail in “Audit Committee Report” and “Audit Committee Matters,” as well as in its charter.
The Board has determined that each Audit Committee member has sufficient knowledge in reading and understanding financial statements to serve on the Committee. The Board has further determined that twoall three current Committee members, Mr. Booth, Ms. Hao and Dr. Scherer,Mr. Hundzinski, qualify as “audit committee financial experts” in accordance with SEC rules. Upon election to the Board, the Board anticipates that new director nominee Mr. Hundzinski will also qualify as an “audit committee financial expert.” The designation of an “audit
committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those which are generally imposed on each of them as a member of the Committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the Committee or the Board.
The Compensation Committee’s responsibilities include:
The Board has determined that the current members of the Compensation Committee qualify as “non-employee directors” as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees. In connection with any such engagement, the Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor.
The Compensation Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Committee are described further in “Compensation Discussion and Analysis,” as well as in its charter.
Role of Management. As was also the case in prior years, in 20152017 the Compensation Committee received significant input from management with respect to the Company’s executive compensation program. See “Compensation Discussion and Analysis” for further information.
Role of Compensation Consultant. With respectThe Compensation Committee has the sole authority to engage outside advisors and establish the Company’s 2015 executive compensation program,terms of such engagement, including compensatory fees. In connection with any such engagement, the Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor.
In late 2016, the Compensation Committee engaged a compensation consultant, Hay Group,Mercer, to provide general market and peer group information for all executive officers. That information was used in 2017 as part of the Committee’s review of executive officer compensation. During 2017, the Compensation Committee engaged Mercer to provide general advice in connection with the implementation of retention packages for all executive officers, excluding the President and peer group data for the Chief Executive Officer (the “Non-CEO Officers”). Retention packages were granted to seven Non-CEO Officers as part of the transition from outgoing President and Chief FinancialExecutive Officer, positions.Mr. Coker, to the current President and Chief Executive Officer, Mr. Eyler. See “Compensation Discussion and Analysis” for further information.
The Committee’s determination to engage Mercer and approve the terms of such engagement has been made independently from the Company’s management. When engaged, the Committee works with management to determine Mercer’s responsibilities and direct its work product, although the Committee is responsible for the formal approval of the work plan. Mercer was paid $12,057 for compensation consulting to the Committee in 2017. The Mercer consultants who performed the compensation consulting at the direction of the Compensation Committee are referred to as the “Compensation Consultants”.
During 2017, based on the determination of management, the Company retained Mercer to provide other services unrelated to executive and non-employee director compensation, which generally consisted of consultation on global employee titles and levels (aggregate fees of $56,538), and providing general market data for various employee positions globally (aggregate fees of $45,838). While neither the Compensation Committee nor the Board approved such other services, the Committee believes that the advice it has received from Mercer has been objective and not influenced by Mercer’s other relationships with the Company because of the policies and procedures Mercer and the Committee have in place. These policies and procedures include:
• | the Compensation Consultants receive no incentive or other compensation based on the fees charged to the Company for other services provided by Mercer; |
• | the Compensation Consultants are not responsible for selling other Mercer services to the Company; | ||
• | Mercer’s professional standards prohibit the Compensation Consultants from considering any other relationships Mercer may have with the Company in rendering their advice and recommendations; | ||
• | the Committee has the sole authority to retain and terminate the Compensation Consultants; | ||
• | the Compensation Consultants were given direct access to the Committee; and | ||
• | the Committee evaluated the quality and objectivity of the services provided by the Compensation Consultants. |
Except as set forth above, the Committee noted there were no potential conflicts of interest raised by the work of its Compensation Consultants.
Nominating Committee
The Nominating Committee’s responsibilities include:
The responsibilities and activities of the Committee are described in greater detail in its charter.
The Nominating Committee reviews and makes recommendations to the Board, from time to time, regarding the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board, the operations of the Company and the long-term interests of shareholders. See “Proposal No. 1—Election of Directors—Directors – Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board” and “Proposal No. 1—Election of Directors—Directors – Director Background and Qualifications.” The Committee does not have a specific diversity policy underlying its nomination process, although it seeks to ensure the Board includes directors with diverse backgrounds, qualifications, skills and experience relevant to the Company’s business.
Generally, the Nominating Committee will re-nominate incumbent directors who continue to satisfy the Committee’s criteria for membership on the Board, continue to make important contributions to the Board and consent to continue their service on the Board. If a vacancy on the Board occurs or the Board increases in size, the Committee will actively seek individuals that satisfy the Committee’s criteria for membership on the Board and the Committee may rely on multiple sources for identifying and evaluating potential nominees, including referrals from our current directors and management. In 2015, the Committee employed a search firm in connection with identifying and evaluating Board nominee candidates upon learning that Mr. Mazzorin and Dr. Scherer had determined not to stand for re-election at the 2016 annual meeting. Director nominee Mr. Hundzinski was identified as a result of the work completed by the search firm. Director nominee Ms. HaoStacey was recommended by one of our current management directors.
The Nominating Committee will consider recommendations from shareholders of director candidates that are sent on a timely basis and otherwise in accordance with our Bylaws and other applicable law and regulations. The Committee will evaluate nominees recommended by shareholders against the same criteria that it uses to evaluate other potential nominees. We did not receive any recommendations for director nominations from shareholders for the 2018 annual meeting. See “—“–Shareholder Communication with the Board” and “Additional Information—Requirements for Submission of Shareholder Proposals and Nominations for 20172019 Annual Meeting” for additional information.
Corporate Governance Committee
The Corporate Governance Committee was formed in February 2015, and itsCommittee’s responsibilities include:
overseeing the Board’s annual self-evaluation process; and
The Corporate Governance Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Committee are described in greater detail in its charter.
Technology Committee
The Technology Committee evaluates and advises management with respect to the development and use of technology by the Company for use in its current and potential future products, including the long-term strategic goals of the Company’s research and development initiatives. The Technology Committee also advises management on its policies and procedures surrounding cyber security. The responsibilities and activities of the Committee are described in greater detail in its charter.
The Board, as well as management, is committed to responsible corporate governance to ensure that we are managed for the benefit of our shareholders. To that end, the Board and management periodically review and update, as appropriate, our corporate governance policies and practices, and, when required, make changes to such policies and practices as mandated by the Sarbanes-Oxley Act, the Dodd-Frank Act, other SEC rules and regulations and the Nasdaq listing standards.
A copy of the Board’s committee charters, the Code of Business Conduct and Ethics and the Corporate Governance Guidelines are available on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab and will be sent to any shareholder, without charge, upon written request to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines which are available on our website,www.gentherm.com, under the “About Us” tab. These guidelines provide a structure within which our directors and management can effectively pursue the Company’s objectives for the benefit of our shareholders. The Corporate Governance Guidelines address, among other things, Board and committee structure, composition and procedures, director responsibilities, compensation and continuing education, as well as shareholder communications with the Board.
Majority Voting Policy. The Corporate Governance Guidelines includes a policy to be followed if any nominee for director receives a greater number of votes “withheld” from his or her election than votes “for” such election. In such event, the applicable director
must promptly tender his or her resignation, conditioned on Board acceptance, following certification of the shareholder vote; provided, however, that this does not apply when the number of individuals nominated for election exceeds the number of directors to be elected, including as a result of a proxy contest. The Nominating Committee will consider the resignation offer and, within 60 days following certification of the shareholder vote, recommend to the Board whether to accept such resignation. The Board will act on the Committee’s recommendation within 90 days following certification of the shareholder vote. The Board will promptly disclose in reasonable detail its decision and rationale regarding the acceptance or rejection of the resignation, as applicable, in a widely disseminated press release, in a filing with the SEC or by other widely disseminated public announcement. If a director’s resignation is accepted by the Board, the Board may either fill the resulting vacancy or decrease the size of the Board pursuant to our Bylaws.
Annual Performance Evaluations. The Corporate Governance Committee oversees the annual performance evaluation process. The Board and its committees conduct self-evaluations at least annually to determine whether the Board and its committees are functioning effectively. During 2017, the Corporate Governance Committee retained a third party independent advisor to facilitate the Board self-evaluation process, which the Board believes helped promote a robust and candid process. The Board met with the independent advisor to review and discuss the evaluation results and any actions to be taken as a result of the discussion. The Board also reviews the Corporate Governance Committee’s periodic recommendations concerning the performance and effectiveness of the Board and its committees.
Code of Conduct
The Board has adopted a Code of Business Conduct and Ethics (“Code of Conduct”), which sets out the basic principles to guide the actions and decisions of our employees, directors and officers, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct addresses, among other things, ethical principles, insider trading, conflicts of interest, compliance with laws and confidentiality. The Code of Conduct is available on our website,www.gentherm.com, under the “About Us” tab. Any amendments to the Code of Conduct, or any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq, will be posted on our website,www.gentherm.com, under the “About Us”“Investor Relations – Corporate Governance” tab within four business days of any such amendment or waiver.
See “—Committees of the Board” for a description of the Board’s delegation of authority and responsibilities to the five standing committees.
Succession Planning
The succession planning process for executive officers is designed to assist the Board in understanding our readiness and the related transition risks for a crisis as well as a planned transition, and to oversee the development of strong leadership quality and executive bench strength. On at least an annual basis, the Board meets with the Chief Executive Officer and in executive session without management to discuss succession planning and strategies to strengthen and supplement the skills and qualifications of internal succession candidates. Key executives have ongoing exposure to the Board to assist in the Board’s oversight. Further, the Chief Executive Officer, other executive officers and Human Resources periodically provide the Board with an assessment of key executives for potential succession and discuss potential sources of external candidates.
During 2017, the Board spent considerable time and resources planning for and implementing a strategy with respect to the transition from Mr. Coker to Mr. Eyler in the position of President and Chief Executive Officer. The Board engaged a third party search firm to identify and screen outside candidates. Board members individually interviewed multiple internal and external candidates for several months during the year. Through this process, Mr. Eyler was selected and announced as the next President and Chief Executive Officer of the Company on October 3, 2017, and ultimately appointed to such position on December 4, 2017.
Shareholder Engagement
The Company and/or Board engages periodically with the Company’sCompany's shareholders to discuss performance, strategy, governance practices and compensation programs. Each year, the Company interacts with its shareholders through various engagement activities.
Non-employee directors of the Board receive both cash and equity compensation. Such compensation is intended to encourage non-employee directors to continue Board service, further align the interests of the Board and shareholders, and attract new non-employee directors with outstanding qualifications. Directors who are employees or officers of the Company do not receive any additional compensation for Board service.
20152017 Compensation Program
In 2015, the Board approved an increase in the annual equity retainer for non-employee directors from $50,000 to $100,000 based on the significant increase in both the size and complexitylight of the Company’s operationsincreasing workload and the corresponding oversight required by the Board. The cash portion of compensation program for non-employee directors did not change in 2015 except as follows: the cash retainer paid to the Chairmanresponsibilities of the Board was increased from $75,000 to $90,000 and the cash retainer paid to the Lead Independent Director was set at $55,000, which is $5,000 more than other non-employee directors besides the Chairman of the Board. The increase in the annual equity retainer and the cash compensation paid to the Chairman of the Board and the Lead Independent Director
were determined after management provided the Board with an analysis of amounts paid to directors of other companies of similar size and complexity. No compensation consultants were retained byCorporate Governance Committee, effective mid-2017 the Compensation Committee determined to pay the chairperson and members of the Corporate Governance Committee the same compensation (pro-rated for the purpose of determining or recommendinginitial, partial year) as is received by the amount or form of director compensation for 2015.Audit, Compensation and Technology Committees, whereas previously they were not compensated.
The following table sets forth the current compensation program for non-employee directors in 2015.directors.
($) | |||||
Annual cash retainer for Board service: | |||||
Chairman of the Board | 90,000 | ||||
Lead Independent Director (if any) | 55,000 | ||||
Other non-employee directors | 50,000 | ||||
Annual cash retainers for Committee service: | |||||
Nominating Committee-chair | 5,000 | ||||
Nominating Committee-members | 1,000 | ||||
Audit, Compensation, Corporate Governance and Technology Committees-chairs | 10,000 | ||||
Audit, Compensation, Corporate Governance and Technology Committees-members | 5,000 | ||||
Annual equity retainer (fair market value) | 100,000 | ||||
No additional cash compensation is paid to members of the Corporate Governance Committee.
Consistent with historical practice, the annual cash retainers were paid in advance ofimmediately following the 20152017 annual meeting of shareholders.shareholders (excluding the cash retainers paid with respect to Corporate Governance Committee service, which was paid mid-year on a pro-rata basis following the compensation adjustment by the Compensation Committee noted above). Consistent with the terms of the Company’s 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan”), on the date of such annual meeting, each non-employee director received a restricted stock award having a fair market value of $100,000, or 1,9202,751 shares.
The restricted stock vests in full on the first anniversary of the grant date. The restricted stock will be forfeited in the event of termination of service as a non-employee director of the Company prior to the first anniversary of the grant date, subject to acceleration of vesting upon retirement (as defined under the 2013 Equity Incentive Plan), and subject to the Compensation Committee’s right to accelerate the vesting of all or a portion of the restricted stock at any time. During the restricted period, the restricted stock entitles the participant to all of the rights of a shareholder, including the right to vote the shares and the right to receive any dividends thereon. Prior to the end of the restricted period, restricted stock generally may not be sold, assigned, pledged, or otherwise disposed of or hypothecated by participants.
The Company does not provide any perquisites to directors, but does reimburse directors for out-of-pocket expenses incurred in attending Board and committee meetings.
20152017 Compensation Table
The table below sets forth the compensation of each non-employee director in 2015.2017.
Name | Fees Earned or Paid in Cash ($)(1) | Restricted Stock ($)(2) | Total ($) |
| Fees Earned ($)(1) |
|
| Restricted ($)(2) |
|
| Total ($) |
| ||||||||||||
Lewis Booth | 61,000 | 100,000 | 161,000 |
|
| 61,000 |
|
|
| 100,000 |
|
|
| 161,000 |
| |||||||||
Francois J. Castaing | 70,000 | 100,000 | 170,000 | |||||||||||||||||||||
Francois J. Castaing (3) |
|
| 105,000 |
|
|
| 100,000 |
|
|
| 205,000 |
| ||||||||||||
Sophie Desormière | 56,000 | 100,000 | 156,000 |
|
| 58,500 |
|
|
| 100,000 |
|
|
| 158,500 |
| |||||||||
Maurice E.P. Gunderson | 66,000 | 100,000 | 166,000 |
|
| 66,000 |
|
|
| 100,000 |
|
|
| 166,000 |
| |||||||||
Oscar B. Marx, III | 90,000 | 100,000 | 190,000 | |||||||||||||||||||||
Carlos E. Mazzorin | 56,000 | 100,000 | 156,000 | |||||||||||||||||||||
Franz Scherer | 56,000 | 100,000 | 156,000 | |||||||||||||||||||||
Yvonne Hao |
|
| 63,500 |
|
|
| 100,000 |
|
|
| 163,500 |
| ||||||||||||
Ronald Hundzinski |
|
| 56,000 |
|
|
| 100,000 |
|
|
| 156,000 |
| ||||||||||||
Oscar B. Marx, III (3) |
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||
Byron T. Shaw II | 61,000 | 100,000 | 161,000 |
|
| 63,500 |
|
|
| 100,000 |
|
|
| 163,500 |
| |||||||||
|
|
| ||||||||||||||||||||||
Total | 516,000 | 800,000 | 1,316,000 |
|
| 516,000 |
|
|
| 800,000 |
|
|
| 1,316,000 |
| |||||||||
────────────────────
(1) | Reflects cash retainers for Board and committee service. |
(2) | Reflects restricted stock awards granted under the 2013 Equity Incentive Plan. The amounts reported represent the grant date fair value of the restricted stock award, which is the closing trading price of a share of our common stock on the grant date multiplied by the number of shares subject to the award. The closing trading price of a share of our common stock on May |
(3) | Mr. Marx, the Company’s former Chairman of the Board, retired from the Board effective as of the 2017 annual meeting. All of Mr. Marx’s compensation for service during 2017 was paid during 2016. For Mr. Castaing, the amount shown includes compensation for service as Chairman of the Board beginning as of the 2017 annual meeting. |
At December 31, 2015,2017, each current non-employee director had the following number of shares underlying2,751 unvested restricted stock awards and only Mr. Gunderson had unexercised stock option awards (all(granted to him from service as a director of which were fully vested atthe Company in prior years). At December 31, 2015) and unvested restricted stock awards, respectively: Mr. Booth, 0 and 1,920; Mr. Castaing, 0 and 1,920; Ms. Desormière, 0 and 1,920;2017, Mr. Gunderson 20,000 and 1,920; Mr. Marx, 0 and 1,920; Mr. Mazzorin, 0 and 1,920; Dr. Scherer, 0 and 1,920; and Dr. Shaw, 0 and 1,920.had 10,000 unexercised stock option awards having an exercise price of $11.08.
Director Stock Ownership Requirements
The Board has adopted stock ownership requirements for the directors of the Company to further the alignment of shareholders and directors. Directors are required to own common stock having a value of at least $200,000, computed as of each regularly scheduled Board meeting, based on the average closing price of our common stock as of the last day of the then-most recently completed 12 full calendar months. In connection with the increase in director annual equity retainers beginning in 2015, the Board increased the minimum value requirement from $100,000 to $200,000. For purposes of such calculation, the following shares are included: shares held by directors individually, shares held by their spouses or other family members residing in their same households, shares held in trust for their economic benefit or the economic benefit of their spouses or family members residing in their same households, and shares held in a retirement plan or deferred compensation plan for their benefit. The value of “in-the-money” vested stock options is also included, but the value of unvested stock options and unvested restricted stock is not.
For directors who were first appointed or elected less than four years ago, the minimum ownership level must be achieved by the date which is four years after such individual was first appointed or elected. The Compensation Committee is responsible for reviewing any non-compliance with the stock ownership requirements and recommending to the Board any actions necessary to remedy such non-compliance. As of the date hereof, all directors subject to the above minimum ownership levels hold common stock having a value in excess of $200,000.
Our Chief Executive Officer is subject to the same stock ownership requirements as our non-employee directors.directors, regardless as to whether our Chief Executive Officer is also a director. See “Compensation Discussion and Analysis – Other Equity-Related Policies – Executive Stock Ownership Requirements” for further information.
Shareholder Communication with the Board
Shareholders wishing to send communications directly to the Board or to a specific director are asked to send such communications to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167. Shareholders sending such communications should clearly mark them as intended for delivery to the Board or to a specific director. Our corporate secretary has been instructed by the Board to screen each communication so received only for the limited purposes of ascertaining (A) whether such communication is indeed from a shareholder and (B) whether such communication relates to the Company. Our corporate secretary will promptly forward copies of all such communications that pass such limited screening to each director, in the case of communications to the entire Board, or to the particular director addressee. Delivery by our corporate secretary will be completed by mail, facsimile or e-mail, as our corporate secretary determines appropriate.
If a shareholder’s communication to the Board involves or concerns our corporate secretary, or if a shareholder has another appropriate reason for communicating to the Board through a means other than through our corporate secretary, such shareholder is asked to send such communication to the attention of either the Company’s President or the Chairman of the Board, in either case at the address above. Any such communication should clearly state that it is a shareholder communication and should clearly state the reason it was not delivered to our corporate secretary for further delivery to the Board.
COMPENSATION DISCUSSIONDISCUSSION AND ANALYSIS
This section of the proxy statement explains our compensation philosophy, objectives and design, our compensation-setting process and our executive compensation program components, as well as the decisions made for 20152017 with respect to each of our named executive officers. This section also provides certain other information as additional context for the “Named Executive Officer Compensation Tables” that follow.
Our named executive officers for 20152017 were Daniel R. Coker, former President and Chief Executive Officer; Phillip M. Eyler, current President and Chief Executive Officer, Barry G. Steele, Vice-President of Finance, Chief Financial Officer and Treasurer; Frithjof R. Oldorff, President of the Automotive Business Unit;Climate and Comfort; Darren Schumacher, Chief Technology Officer; and Kenneth J. Phillips, Vice-President, General Counsel and Secretary; and Darren Schumacher, Vice-President of Product DevelopmentSecretary (collectively, the “named executive officers” or the “NEOs”). Messrs.
Overview of CEO Compensation During 2017
During 2017, the Company experienced a change in its most senior officer position, President and Chief Executive Officer. After 15 years as President and Chief Executive Officer, and 22 years with the Company, Mr. Coker Steele, Phillips and Schumacher are referredretired. The Board of Directors negotiated the terms of Mr. Coker’s retirement with one primary objective, to as our “U.S. NEOs.” In August 2015,ensure a smooth transition from Mr. Oldorff relocated from GermanyCoker to the United Statesnew President and became employed byChief Executive Officer. After a comprehensive search, including thorough evaluations of both internal and external candidates, the Company. PriorBoard of Directors selected Mr. Eyler to succeed Mr. Coker. The compensation paid to Mr. Coker and Mr. Eyler during 2017 is primarily a result of the two agreements the Company entered into with those individuals, and each is described below.
On June 28, 2017, the same day a transition plan leading up to Mr. Coker’s retirement was announced, the Company entered into a Retirement Agreement with Mr. Coker (the “Coker Retirement Agreement”). The Coker Retirement Agreement was intended to ensure that Mr. Coker remained with the Company until a successor could be appointed (the “Transition Date”) and to ensure that Mr. Coker provided adequate transition services to the Company through the Transition Date. The Coker Retirement Agreement provided for the following benefits to Mr. Coker, conditioned upon Mr. Coker’s continued employment through the Transition Date and in recognition of Mr. Coker’s many years of service to the Company: (1) a cash payment of $850,000, equal to one year’s base salary (the “Retirement Payment”); (2) an additional cash payment of $500,000, payable at the sole discretion of the Compensation Committee based on Mr. Coker’s performance of his duties through the Transition Date and based on Mr. Coker’s assistance in the transition of his duties to his move, Mr. Oldorff was employed by the Company’s German subsidiary, Gentherm GmbH. The Company and its German Subsidiary are operated as essentially one company, so the compensation arrangementsuccessor (the “Transition Payment”); (3) acceleration of Mr. Oldorff while employed by Gentherm GmbH was substantially similar to thoseCoker’s unvested restricted stock and stock options in accordance with the retirement provisions of the U.S. NEOs, except as noted below. Key differences betweenapplicable equity incentive plans under which such arrangements are explained in greater detail throughout this sectionequity awards were granted (“Accelerated Equity Vesting”); (4) acceleration of the proxy statement,in-service vesting date to the date of retirement (“Accelerated Defined Benefit Vesting”) in order to increase the annual accrued benefit from $300,000 to $342,000 under The Executive Nonqualified Defined Benefit Plan of Gentherm Incorporated effective April 1, 2008 (the “U.S. Defined Benefit Plan”); and (5) title to the Company-owned vehicle that Mr. Coker was driving at the time of his retirement (the “Coker Vehicle”). Mr. Coker’s replacement, Mr. Eyler, was appointed as the new President and Chief Executive Officer on December 4, 2017. The Compensation Committee later determined that Mr. Coker earned the full discretionary Transition Payment. Payment and delivery of the above benefits to Mr. Coker was conditioned upon his delivery and the non-withdrawal of a general release in favor of Gentherm, its affiliates and other related parties as well as inhis agreement to specified non-compete, non-solicit, non-interference and non-disparagement provisions for 24 months following his retirement. Mr. Coker delivered the “Named Executive Officer Compensation Tables” that follow:required general release and it became effective; thereafter, the above payment and benefits were paid and delivered.
The Coker Retirement Agreement and perquisites of the named executive officers for 2015.
Executive Compensation and Governance Practices
What We Do | What We Prohibit | |||
• | ||||
| • | Hedging and use of derivatives (page | ||
• | No special grants or timing based on the release of material, non-public information (page 22) | • |
| |
• | Maintain equity plan without an evergreen provision | • |
| |
• | Maintain alignment with shareholders, as equity awards represent a significant portion of NEO compensation | • | Repricing/replacement of underwater stock options and SARs | |
• | ||||
|
| |||
• | Discourage pledging and require | |||
• | Annual say-on-pay shareholder vote | |||
Say-On-Pay Vote at 20152017 Annual Meeting of Shareholders
The Company’s say-on-pay proposal was approved by approximately 95%91% of the votes cast at the 20152017 annual meeting. Given the high level of shareholder support, the Committee did not revise the Company’s compensation policies and decisions relating to the named executive officers directly as a result of such vote. The Committee will continue to consider the outcome of shareholder votes and other shareholder feedback in making future compensation decisions for the named executive officers.
Compensation Philosophy, Program Objectives, and Key Features
The compensation program for named executive officers is designed to attract, motivate and retain qualified executives and to provide them incentives to achieve or exceed the Company’s annual operational and financial goals and increase long-term shareholder value. Under this program, our named executive officers are rewarded for their service to the Company, the achievement of performance goals and the realization of increased shareholder value. We believe our NEO compensation program is structured appropriately to support our business objectives, as well as our culture. The Committee regularly reviews the Company’s NEO compensation program to ensure the fulfillment of our compensation philosophy and goals.
The following table sets forth the primary purpose and key features of each component of our NEO compensation program in 2015.2017.
Component | Primary Purpose(s) | Key Features | |||||
Base Salary | • Retains and attracts employees in a competitive market
• Preserves an employee’s commitment during downturns in our industry and/or equity markets generally | • Initial base salaries of • Initial base
• Subject to annual review and merit-based increase | |||||
Bonus | • Motivates and rewards achievement of individual performance and Company financial and operational goals
• Retains and attracts employees for short term | • Aligns executives with the operating performance of the Company • Drives profitable growth through a combination of revenue and earnings targets • Achieves pay for performance goal | • Bonus plan provides for a cash bonus up to a predetermined amount, as a percentage of base salary; bonus potential tied to base salary adjustments • Initial percentages of base salary for bonus purposes are negotiated in connection with hiring; these percentages are subject to periodic review based on experience, responsibilities, anticipated individual growth, internal equity pay and other subjective factors
• Earned • In 2017, bonuses were computed and paid bi-annually based on half-year results; starting in 2018, bonuses will be paid annually based on full year results | ||||
Equity Awards | •
• • Retains and | • Retains employees during transition periods, such as during the recent change in the Chief Executive Officer position | • Consist of restricted stock and stock options • Based on the executive’s position, current salary, and competitiveness in the market • Exercise/base price of option awards fixed at fair market value of our common stock on the grant date • Generally vest pro rata over | ||||
Defined Benefit Plans | • Maintains stability and competency at the executive level | • U.S. Defined Benefit Plan (as defined below, for Mr. Coker only) beginning in 2018 • German Defined Benefit Plan (as defined | |||||
Other Benefits and Perquisites | • | • Vacation pay • Eligibility for participation in 401(k) plan
• Use of • Club memberships, in the case of | |||||
Process for Making Compensation Determinations
Advisors Utilized in Determination of Executive Compensation
Management. In determining the compensation of executive officers, the Compensation Committee receives significant input from Ms. Erin Ascher,the Company’s President and Chief Executive Officer as well as the Company’s Vice-President of Talent Development and Chief Human Resources Officer, and Mr. Coker, who has more than 12 years’ experience in his executive officer role with the Company. Ms. Ascher and Mr. CokerOfficer. These individuals have the most involvement in, and knowledge of, the Company’s business goals, strategies and performance, the overall effectiveness of the management team and each person’s individual contribution to the Company’s performance. For each named executive officer, Ms. Ascher and Mr. Cokerthe above officers make a compensation recommendation, which is reviewed by the ChairmanChairperson of the BoardCompensation Committee and presented to the Committee. Mr. Coker doesThe President and Chief Executive Officer, and the Vice-President of Talent Development and Chief Human Resources Officer, do not provide input with respect to histheir own compensation. Management also provides the Committee with information regarding the individual’s experience, current performance, potential for advancement and other subjective factors. The Committee retains the discretion to modify the recommendations of Mr. Cokermanagement and reviews such recommendations for their reasonableness based on individual and Company performance as well as market information. It is not uncommon for the Committee to modify the initial executive compensation recommendations made by management following due inquiry.
The Compensation Committee works with management to set the agenda for Committee meetings, and Mr. Cokerthe President and Chief Executive Officer is invited regularly to attend such meetings. The Committee also meets regularly in executive session to discuss compensation issues generally outside the presence of management, as well as to review the performance and determine the compensation of Mr. Coker.the President and Chief Executive Officer.
Third-Party Consultants. With respect to the Company’s 2015 executive compensation program, In late 2016, the Compensation Committee engaged a compensation consultant, Hay Group,Mercer, to provide general market and peer group information for all executive officers and peer group data forofficers. That information was used in 2017 as part of the Chief Executive Officer and Chief Financial Officer positions. The compensation consultant performed a general surveyCommittee’s review of market conditions and summarized general market data for the Compensation Committee. The report from the compensation consultant described salary, equity and total compensation data. The Compensation Committee received an appropriate independence letter from the compensation consultant and confirmed there were no conflicts of interest. The information provided by the compensation consultant was one of many factors considered byexecutive officer compensation. During 2017, the Compensation Committee engaged Mercer to provide general advice in determining 2015 executive compensation.connection with the implementation of retention packages for Non-CEO Officers.
Comparability
In evaluating management’s recommendations regarding the compensation of executive officers, the Compensation Committee considers the compensation offered by other similarly-situated companies, based on its review of information from various publications, its extensive experience with compensation practices in other businesses, information included in proxy statements of similar companies with comparable market capitalization and comparable revenues, its engagement of compensation consultants (as noted above, a compensation consultant was engaged by the Compensation Committee in prior years,2016 to do a market survey, which was used in part in establishing 2017 executive compensation), and its members’ subjective review of the reasonableness and fairness of proposed compensation in light of all relevant circumstances. The companies which the Committee considers to be comparable for purposes of the above analysis (based on revenue, market capitalization and industry), and for which the Committee has been provided data, include: American Axle & Manufacturing Holdings, Inc.,include the following (ticker symbols in parentheses): CTS Corporation (CTS), Dorman Products, Inc. (DORM), Fabrinet (FN), Gentex Corp. (GNTX), Kimball Electronics, Inc. (KE), LCI Industries (formerly Drew Industries Incorporated, Gentex Corp., Leggett & Platt, Inc.) (LCII), Littlefuse, Inc., Measurement Specialties, Inc. (LFUS), Methode Electronics, Inc. (MEI), Modine Manufacturing Company Remy International, Inc.(MOD), Shiloh Industries, Inc. (SHLO), Standard Motor Products, Inc. and(SMP), Stoneridge, Inc. (SRI) and Superior Industries International, Inc. (SUP).
20152017 Compensation Determinations
Base Salary
In 2015,2017, each named executive officer received an annual base salary paid in cash. The initial base salaries of the U.S. NEOs were negotiated in connection with their hiring, and the initial base salary of Mr. Oldorff was set forth in his Employment Agreements.hiring.
The Compensation Committee reviews the base salaries of the named executive officers on an annual basis and generally grants salary increases following such reviews. Historically, base salary increases have been between 3-6% and represented a combination of a cost of living / inflation adjustment and a merit raise. However, larger base salary increases are considered where market information indicates that an adjustment is appropriate.
Consistent with prior years, in determining base salaries for 2015,2017, the Compensation Committee considered an individual’s performance, position, experience and current salary, as well as the Company’s financial resources, the salaries of other executive officers and employees of the Company, and the base salaries paid by similarly-situated companies to individuals having similar job responsibilities as further discussed under “–Process for Making Compensation Determinations – Comparability.” In determining Mr.
Coker’s base salary for 2015,2017, the Committee also considered the need to retain Mr. Coker until his demonstration of leadershipsuccessor had been identified and ability to manage the Company’s growing business.hired.
For 2015,2017, the Compensation Committee concluded that a market adjustment in base salaries for several of the NEOsMr. Coker and Mr. Steele was appropriate based on a review of the factors described above. The Compensation Committee concluded to increase the base salaries for several executive officersthese individuals in 20152017 by 13% and 8%, respectively, to reflect individual performance, additional duties and market levels. For all other NEOs, the Compensation Committee concluded to increase their base salaries by 3%.
As part of the employment negotiations with Mr. Eyler, his initial base salary as set forth in the Eyler Contract was established based on market information and Mr. Eyler’s requirements to leave his then-current position. The Compensation Committee believes that Mr. Eyler’s initial base salary is appropriate based on all relevant factors. Mr. Eyler’s initial base salary will not be adjusted in 2018 and the first review of his base salary by the Compensation Committee will take place in 2019.
Bonus
2015The Compensation Committee reviews and approves each of the bonuses set forth below. The Compensation Committee also establishes the annual incentive targets for each NEO in a manner consistent with determining base salaries. For NEOs who begin employment with the Company during a year, annual performance bonuses are prorated based on the number of days worked during such year.
2017 Bonus Plan. For 2017, bonuses were computed and paid in accordance with the Gentherm Incorporated Performance Bonus Plan (the “2017 Bonus Plan”). The 20152017 Bonus Plan was substantiallygenerally similar to the 2014Company’s 2016 bonus plan (the “2016 Bonus Plan”); however, the 2017 Bonus Plan placed a greater emphasis on Company financial performance than the 2016 Bonus Plan. Under the 20152017 Bonus Plan, the NEOs and other eligible employees earned cash bonuses up to pre-determined amounts (as percentages of their respective base salaries)salaries – 100% for Mr. Eyler, 85% for Mr. Coker and 50% for each other NEO), based on the financial performance of the Company and the participant’s overall performance during the period ranked on a scale from “unacceptable” to “breakthrough performer”. Each participant’s bonus payment is then determined according to a stated formula, but the final bonus amount paid to each participant is subject to increase or decrease at the discretion of the Compensation Committee’s evaluationCommittee. The maximum bonus is 200% of individualthe target bonus amount.
For purposes of determining the Company’s financial performance against individual performance goals approvedfor 2017, the Compensation Committee concluded to use two metrics and weigh those metrics equally. The first financial metric established by the Compensation Committee together with management, in advance of the applicable performance period. The goals are aligned with overall Company objectives and were broad-ranging, depended on the individual’s position, and included items such as eliminating or reducing specific expenses, completing engineering objectives, developing new business, streamlining operations, completing other specific projects and other similar types of goals. The performance goals were intended to be subjective, or have overriding subjective elements to them. The Committee had full discretion to determine whether the performance goals had been met, except that bonus payouts are conditioned on the satisfaction of minimum threshold Company financial metrics (the “Minimum Metrics”). Regardless of the Committee’s subjective evaluation of individual performance, if the Minimum Metrics are not met no bonuses are payable under the 2015 Bonus Plan. For 2015, the Committee usedwas the Company’s earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, transaction expenses, debt retirement expenses, unrealized currency gain or loss, and unrealized revaluation of derivatives and other extraordinary items as determined by the Compensation Committee (“Adjusted EBITDA”) as the sole Minimum Metric and set such metric at $118 million (Adjusted EBITDA was $134 million for 2014 and was $81.5 million for 2013). The Compensation Committee considers Adjusted EBITDA as an appropriate supplemental measure of the Company’s overall operational performance.
The 2015 Bonus Plan also provides that if certain Companysecond financial metrics are exceeded for the full calendar year (the “Stretch Metrics”), then the total amount of discretionary bonus earned by each participant for the year will be increased ratably by an amount determinedmetric established by the Compensation Committee up to 20% (the “Formula Performance Adjustment”). For 2015, the Committee used Adjusted EBITDA as the sole Stretch Metric and set such metric at $178 million. Actualwas revenue. The target Adjusted EBITDA for 2017 was set by the Compensation Committee at $160 million (for comparison purposes, actual Adjusted EBITDA was $146 million for 2016, $152 million for 2015, $134 million for 2014 and $81.5 million for 2013). The target revenue for 2017 established by the Compensation Committee was $152 million.
For each reporting period in$975 million (for comparison purposes, actual revenue was $917 million for 2016, $856 million for 2015, $811 million for 2014 and $662 million for 2013). Further, for 2017 the Compensation Committee determined that if a minimum Adjusted EBITDA result was not achieved for the bonus period (the “Minimum Metric”), no bonuses would be paid. The Minimum Metric for 2017 was established by the Compensation Committee as 85% of the target Adjusted EBITDA, or $136 million. Half way during the year, bonuses were computed and paid based on the Company’s achievement for the first half of 2017; however, the bonus plan provides that the total bonuses to be paid for the year, both in respect of the first half of 2017 and in respect of the second half of 2017, are to be computed based on the Company’s financial performance and the individual’s overall performance for the entire year. In no event, however, will a participant be required to return any portion of the bonus paid in respect of the first half of the year.
The Company’s actual financial results, based on the relative achievement and equal weighting of the Adjusted EBITDA and revenue targets, are then applied to the following schedule to determine the percentage of each participant’s target bonus that is to be paid, prior to the individual adjustments discussed further below (and if the Company’s financial achievement falls between two levels, a linear calculation is made to determine the exact percentage applied):
Financial Achievement | Degree of Achievement | Percentage Applied | ||
85% of the Target | Threshold | 50% | ||
100% of Target | Target | 100% | ||
120% or more of Target | Maximum | 150% |
Next, each participant’s performance during the bonus period, based on a number of subjective metrics, is ranked on a scale (the “Performance Scale”) from “unacceptable” to “breakthrough performer”, and the average result of such rankings is used to further
modify the above bonus percentage computation by a “performance multiplier” as follows (and if the average result of rankings is between two levels, a linear calculation is made to determine the exact performance multiplier):
|
| Performance Scale | ||
Level |
| Level Number |
| Performance Modifier |
Breakthrough Performer |
| 6 |
| 135% |
Outstanding |
| 5 |
| 120% |
Valued Contributor |
| 4 |
| 110% |
Performs to Expectations |
| 3 |
| 100% |
Room for Improvement |
| 2 |
| 60% |
Unacceptable |
| 1 |
| 0% |
The end result, after applying the above multiplier, is the percentage of the participant’s target bonus that is earned; provided, however, that the Compensation Committee retains the right to increase or decrease the final bonus amount at its discretion. For 2017, the Company’s financial performance resulted in a payout level of 89.8%. Adjusted EBITDA was $148 million or 93% of the target for that financial metric and revenue was $986 million or 101% of the target for that financial metric. The combined result, 97%, translated into the 89.9% payout. The Adjusted EBITDA and revenue targets and actual results are set forth in the table below:
Financial Metric |
| Target |
|
| Actual |
|
| Achievement |
| |||
Adjusted EBITDA |
| $ | 160,000 |
|
| $ | $148,000 |
|
|
| 93% |
|
Revenue |
| $ | 975,000 |
|
| $ | $986,000 |
|
|
| 101% |
|
Combined (weighted equally) |
|
|
|
|
|
|
|
|
|
| 97% |
|
The Compensation Committee then applied performance modifiers for each named executive officer achieved most or allto arrive at the final calculated bonus payments for 2017. The Compensation Committee elected to exercise additional discretion to increase the bonuses of his performance goalsMessrs. Steele, Oldorff and in several cases, substantially surpassed expectations. For the calendar year 2015, the Committee did not approve a Formula Performance AdjustmentPhillips for the named executive officers or any other employees because actual Adjusted EBITDA did not exceed the Stretch Metrics.
The 2015 Bonus Plan was divided into two distinct performance periods, the first half of the year (January 1st through June 30th),by approximately $19,000, $10,000 and $18,000, respectively, but did not exercise any discretion with respect to the second half of the year (July 1st through December 31st); however, the Company must be on track (based on estimated projections for the full year) to meet the full year Minimum Metrics for the first half bonus to be paid, and the Formula Performance Adjustment is only computed after the end of the full calendar year and any related adjustment paid with the bonusbonuses for the second half ofbonus payments, except to adjust the year. The achievement or failuresecond half payment to achieve the applicable individual criteria forensure the first performance period did not impact the achievementhalf discretionary increase remained realized, or failurewith respect to achieve the applicable individual criteria for the second performance period. If earned, bonusesMessrs. Coker or Eyler.
Bonuses are paid approximately two months ofafter the end of the applicable performance period.
Unless an exception is granted by the Compensation Committee, a participant must be employed on the bonus payment date to be eligible to receive a bonus.
Effective January 1, 2017, the Compensation Committee adopted the Gentherm Incorporated Compensation Clawback Policy (the “Clawback Policy”), which policy expressly applies to bonuses. See “–Other Equity-Related Policies – Clawback Policy” for further information.
Beginning in 2018, bonuses to executive officers and other selected senior employees (“Senior Level Participants”) will be governed by the Amended and Restated Gentherm Incorporated Performance Bonus Plan (the “New Bonus Plan”). The New Bonus Plan differs from the 2017 Bonus Plan in the following material ways: First, the performance period for Company and individual performance goals are annual instead of semi-annual. Consequently, bonus payments will be made annually instead of semi-annually. Next, instead of using the Performance Scale, cash bonuses for Senior Level Participants will be determined in part by achievement of individual goals that are intended to be primarily objective, but which may also be subjective or have subjective elements as determined by the Compensation Committee and/or the Chief Executive Officer. The Company’s financial performance will still have the same weight in determining bonuses under the 2015New Bonus Plan as it had under the 2017 Bonus Plan. The maximum payout under the 2018 Bonus Plan will remain at 200% of target bonus.
Signing and Make-Whole Bonuses for Mr. Eyler
On September 18, 2017 the Company and Mr. Eyler entered into the Eyler Contract, which set forth the initial terms of Mr. Eyler’s employment. The Compensation Committee does not haveEyler Contract provided for a formal written policy regarding adjustmentsigning bonus of bonus$250,000, payable after Mr. Eyler’s first day of employment which was December 4, 2017. The Eyler Contract also included two Make-Whole Bonuses that were intended to compensate Mr. Eyler for payments that he was entitled to receive from his former employer but would no longer receive by accepting the position with the Company. The Make-Whole Bonuses are payable as follows: (1) $1,000,000 no earlier than January 1, 2018 and no later than March 31, 2018 and (2) $1,000,000 no earlier than January 1, 2019 and no later than March 31, 2019. The amount of $1,000,000 must be repaid if Mr. Eyler’s employment is terminated for “cause” or without “good reason”, each as defined in the relevant performance measures or underlying facts upon which they are based are restated or otherwise adjusted in a manner that would materially increase or reduceEyler Contract, prior to the sizefirst anniversary of the incentive payment.Start Date.
Equity Awards – Ordinary Grants
Equity awards in the form of restricted stock and stock options and cash-settled SARs represented a significant portion of NEO compensation in 2015,2017, as the Compensation Committee continues to regard increasing long-term shareholder value as senior management’s primary objective. In February 2015,2017, the Committee granted equity awards to the named executive officers pursuant to the 2013 Equity Incentive Plan. Consistent with prior years, the size of the awards depended on the executive’s position and current salary, as well as management’s recommendations, competitiveness in the market, and other subjective factors deemed relevant by the Committee. The Committee fixed the exercise price of stock options at the fair market value of the underlying shares on the grant date, such that grantees only benefit to the extent the price of our common stock increases over time.between the grant date and the exercise date.
All of the NEOs received restricted stock and stock options in 2015.2017. The Compensation Committee believes restricted stock aligns interests with shareholders in a manner similar to stock options, as described above, but also has underlying value on the grant date that might otherwise be paid in cash as an additional bonus.
In 2015,2017, the restricted stock awards granted to the NEOs, excluding those granted to Mr. Eyler, vest in threefour equal annual installments and the stock option awards granted to the NEOs, excluding those granted to Mr. Eyler, vest in fourfive equal annual installments, in each case commencing on the first anniversary of the date of grant. The restricted stock awards and stock options granted to Mr. Eyler were issued in connection with the negotiation of his initial hire as part of the Eyler Contract. Such shares of restricted stock and stock options vest in three and four equal annual installments, respectively, commencing on the first day of Mr. Eyler’s employment with the Company, December 4, 2017. See “Named Executive Officer Compensation Tables – Grants of Plan-Based Awards in 2015”2017” for further information.
Equity Awards – Special Retention Grants
During 2017, the Compensation Committee concluded to deliver retention packages to executive officers, other than the President and Chief Executive Officer, in the form of restricted stock awards. Those awards were issued on October 3, 2017. Pursuant to such awards, each applicable executive officer receives a fixed number of shares of restricted common stock in the Company that vests on the 18 month anniversary of the grant date, or April 3, 2019; however, such restricted shares will automatically vest if the executive officer’s employment is terminated without “cause” or for “good reason”, each as defined in the award agreement. These shares of restricted stock were awarded by the Compensation Committee as a means of retaining executive officers during the transition of the office of President and Chief Executive Officer from Mr. Coker to Mr. Eyler and for a period of time thereafter. See “Named Executive Officer Compensation Tables – Outstanding Equity Awards at December 31, 2017” for further information.
Defined Benefit Plans
U.S. NEOsDefined Benefit Plan
During 2008, in recognition of the Company’s need for stability and competence at the executive level, the Compensation Committee recommended, and the independent directors at such time subsequently approved, The Executive Nonqualifiedthe U.S. Defined Benefit Plan of Gentherm Incorporated effective April 1, 2008 (the “U.S. Defined Benefit Plan”).Plan. Mr. Coker has been the only participant in the U.S. Defined Benefit Plan.
The U.S. Defined Benefit Plan, more fully described in Note 1112 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2015, has2017, had a six-year vesting period that began on April 1, 2011. OnceAs a result, the benefits accruing to Mr. Coker were fully vested the U.S. Defined Benefit Plan providesas of April 1, 2017 and provided for 15 annual benefit payments to Mr. Coker, each in the amount of $300,000, beginning January 1, 2018. To entice Mr. Coker to continue as the President and Chief Executive Officer of the Company until his successor was identified and in place, the Compensation Committee agreed to amend the U.S. Defined Benefit Plan on May 19, 2017, to increase the annual benefit payable to Mr. Coker to $342,000 if Mr. Coker continued to provide service to the Company through January 1, 2018. Such amendment was approved by the independent directors. On June 28, 2017, the same day a transition plan leading up to Mr. Coker’s retirement was announced, the Company entered into the Coker Retirement Agreement. The Coker Retirement Agreement provided that if Mr. Coker’s retirement date was prior to January 1, 2018, the Company would amend the terms of the U.S. Defined Benefit Plan, as amended, to accelerate the in-service vesting date to ensure an increase in the annual accrued benefit from $300,000 to $342,000. Mr. Coker became fully vested in the incremental benefit, as described in the amendment to the U.S. Defined Benefit Plan effective December 4, 2017. In making its decisions with respect to the U.S. Defined Benefit Plan, the Committee has reviewed the benefits offered to presidents and chief executive officers of similarly situated companies, and continues to believe that the U.S. Defined Benefit Plan is fair and reasonable.companies.
The Company has also established a corporate-owned life insurance policy (“COLI”) on the life of Mr. Marx, former Chairman of the Board. The COLI is held by a trust established for payment of benefits under the U.S. Defined Benefit Plan.
Mr. OldorffGerman Defined Benefit Plan
Our German Subsidiary maintains a defined benefit plan for former and current members of its management team (the “German Defined Benefit Plan”). The German Defined Benefit Plan is expected to be funded exclusively by participants’ pre-tax contributions and the earnings on those contributions. However, the amount of future benefits to which a participant is entitled, while based on the
amount of such participant’s contributions to the plan, is subject to minimum future guaranteed returns on those contributions. As a result, the German Subsidiary records a liability for the amount that projected future benefit payments exceed projected future defined benefit plan assets. For the year ended December 31, 2015,2017, Mr. Oldorff was eligible to participate in the German Defined Benefit Plan; however, he did not make any voluntary contributions to the German Defined Benefit Plan in 2015.2017.
The German Defined Benefit Plan is further described in Note 1112 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2015.2017.
Other than Mr. Coker and Mr. Oldorff, no other NEOs are participants in any defined benefit plan.
Other Benefits and Perquisites
U.S. NEOs and Mr. Oldorff
Mr. Oldorff
Severance and Change in Control Benefits
U.S. NEOs.General. Other than the U.S. Defined Benefit Plan, the German Defined Benefit Plan and the 401(k) plan described above, the Company does not provide or maintain any post-retirement medical benefits, non-qualified deferred compensation plans or retirement or pension plans for U.S. employees, including the U.S. NEOs. However, certain of theThe Company’s equity compensation plans contemplate acceleration of vesting upon, and exercisability of awards following, a termination of a participant’s employment. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for further information.
Mr. Eyler. The Eyler Contract provides for certain benefits to him upon termination of his employment with the Company, including upon a change in control. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the potential payments and benefits payable to Mr. Eyler following a termination of employment under the terms of the Eyler Contract.
Mr. Oldorff. Other than the German Defined Benefit Plan and the German Defined Contribution Plan described above, From January 1, 2015 to July 31, 2015, Mr. Oldorff was not eligibleparty to receive or participate in any post-retirement medicala written service agreement (“German Service Agreement”) with W.E.T. Automotive Systems AG (our “German Subsidiary”), and effective August 1, 2015 he is party to an Executive Relocation and Employment Agreement (“Oldorff Contract”) with the Company, each of which set forth the material terms of his compensation for the respective periods and replaced the German Service Agreement. The Oldorff Contract provides for certain benefits non-qualified deferred compensation plans or retirement or pension plans.to him upon termination of his employment with the Company. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the potential payments and benefits payable to Mr. Oldorff following a termination of employment under the terms of the Oldorff Contract.
Special Non-Recurring Benefits
Having joined Gentherm in 1996, Mr. Coker was appointed President and Chief Executive Officer in 2003. At the beginning of 2017, the Board recognized Mr. Coker was nearing retirement and began a search for his Servicereplacement. To induce Mr. Coker to continue as President and Chief Executive Officer until his successor could be identified and hired, the Compensation Committee negotiated and executed the Coker Retirement Agreement on June 28, 2017. The Coker Retirement Agreement provided for the special, non-recurring benefits described in the introductory section of this Compensation Discussion and certainAnalysis under the subheading “Overview of CEO Compensation During 2017”. Those benefits include the Company’s equity compensation plans.Retirement Payment, the Transition Payment, Accelerated Equity Vesting, Accelerated Defined Benefit Vesting and title to the Coker Vehicle.
Executive Stock Ownership Requirements
Our Chief Executive Officer is subject to the same stock ownership requirements as our non-employee directors. Our Chief Executive Officer must own common stock having a value of at least $200,000.$200,000; provided, however, that a newly-appointed Chief Executive Officer must achieve such minimum ownership level by the date which is four years after such individual was first appointed. See “Board Matters – Director Compensation – Director Stock Ownership Requirements” for further information. The other named executive officers are not subject to stock ownership requirements. Mr. Coker was in compliance with the stock ownership requirements at all times during 2017. Mr. Eyler, having been first appointed on December 4, 2017, was not yet subject to the stock ownership requirements.
Timing and Pricing of Equity Grants
The Compensation Committee does not coordinate the timing of equity grants with the release of material non-public information. The Committee usually considers equity awards for executive officers on an annual basis at regularly scheduled meetings of the Committee, which are generally scheduled a year or more in advance, and for new hires as applicable.
In accordance with the 2013 Equity Incentive Plan, the exercise or base price of stock option or SAR awards is at least 100% of the fair market value of our common stock on the date of grant (which date is not earlier than the date the Compensation Committee approves such award). The Committee is authorized to modify, extend or renew outstanding stock options or SARs or accept the cancellation or surrender of such awards. However, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the Committee may not take actions that would constitute a repricing of stock options or SARs without satisfying the applicable shareholder approval requirements of Nasdaq. In particular, the 2013 Equity Incentive Plan prohibits direct repricings (lowering the exercise price of a stock option or the base price of a SAR) and indirect repricings (cancelling an outstanding stock option or SAR and granting a replacement or substitute stock option or SAR with a lower exercise or base price, or otherwise exchanging such awards for cash, stock options, SARs or other awards).
Policy on Pledging and Hedging Company Securities
In addition to the restrictions set forth in SEC regulations, the Board has adopted a Statement of Policy for Securities Trading by Company Personnel which prohibits the hedging of Company securities and significantly limits any pledging of Company securities. In particular, the policy prohibits employees, officers and directors from making trades while in possession of material, non-public information. Specified restricted persons, including our officers and directors, are also prohibited from trading on a short-term basis of less than six months, short sales and derivative trading generally. In addition, the policy prohibits pledging of Company securities or holding Company securities in a margin account, except in situations and on conditions pre-approved by our Chief Financial Officer. At a minimum, such person must demonstrate the financial capacity to repay the applicable loan without resort to the margin or pledged securities. No Company securities beneficially owned by a director or executive officer were pledged or subject to a margin account at any time during 2015.
Clawback Policy
The Compensation Committee adopted the Clawback Policy effective January 1, 2017. Under the Clawback Policy, in the event the Company is required to make an accounting restatement to correct an error that is material to its previously issued financial statements under applicable securities laws, and the Compensation Committee has determined that any bonus, retention award, or incentive compensation has, based on the erroneous financial statements, been paid to any executive officer who knowingly or through gross negligence engaged in the activity that caused such restatement to be necessary, or who knowingly or through gross negligence failed to prevent such activity, the Committee shall have the discretion to take such action as it deems necessary to recover the compensation so paid, remedy the misconduct, and prevent its recurrence. The Clawback Policy gives the Compensation Committee authority to seek reimbursement of bonuses, retention awards, or incentive compensation paid to an affected executive officer, cancellation of any equity awards granted to such officer, and reimbursement of any gains realized by such officer on the exercise of rights attributable to such awards. The amount recoverable in each case is limited to the extent to which such bonus, retention award, or amount of incentive compensation was calculated based upon the achievement of certain financial results that were subsequently reduced due to a restatement. The recovery period under the Clawback Policy is three full years preceding and including the date the Board concludes, or reasonably should have concluded based on evidence available to it, that the Company’s financial statements contained a material error.
Tax and Accounting Implications
Deductibility of Executive Compensation
Section 162(m) of the Code provides that annual compensation in excess of $1 million paid to a company’s chiefprincipal executive officer, principal financial officer and the three other highest compensated executive officers (excluding the chief financial officer) is not deductible by the company for federal income tax purposes, subject to specified exemptions (the most significant of which is certain performance-based compensation).purposes. The Committee intends to continue to review the application of Section 162(m) of the Code with respect to any future compensation arrangements considered by the Company. However, to maintain flexibility in compensating the Company’s executive officers to meet a variety of objectives, the Committee reserves the right to compensate Company executesexecutives in amounts deemed appropriate, regardless of whether such compensation is deductible for federal income tax purposes. Section 162(m) of the Code mayis expected to prevent the Company from deducting a portion of the compensation paid to Mr. Coker and Mr. Eyler, each of whom held the Company’sposition of President and Chief Executive Officer in 2015.2017.
Nonqualified Deferred Compensation
Section 409A of the Code provides that amounts deferred under nonqualified deferred compensation arrangements will be included in an employee’s income when vested, as well as be subject to additional taxes, penalties and interest, unless certain requirements are complied with. The Company believes that its compensation arrangements satisfy, or are exempt from, the requirements of Section 409A.
Change in Control Payments
If a company makes “parachute payments,” Section 280G of the Code disallows a company’s tax deduction forprohibits the company from deducting the portion of the parachute payments constituting “excess parachute payments” and Section 4999 the Code imposes on the payee a 20% excise tax on the excess parachute payments.” For this purpose, parachute payments generally are defined as payments to specified persons that are contingent upon a change in control in an amount equal to or greater than three times the person’s base amount (i.e. the five-year average Form W-2 compensation). The excess parachute payments, which are nondeductible and subject to a 20% excise tax, equal the amountportion of the parachute payments lessthat exceeds one times the payee’s base amount. Additionally, Section 4999 of the Code imposes a 20% excise tax on any person who receives excess parachute payments.
The Eyler Contract and the Company’s equity incentive plans may entitle participants to receive payments in connection with a change in control that may result in excess parachute payments. The Eyler Contract provides that, if any payment Mr. Eyler is entitled to receive in connection with a change in control constitutes a “parachute payment” within the meaning of Section 280G of the Code and is subject to the excise tax imposed by Section 4999 of the Code, then the Company shall gross-up the amount of such payment to an amount which, after reduction for all taxes (including the excise tax) imposed on both the payment and the gross-up, exactly equals the amount of the payment after reduction for all taxes imposed on the payment other than the excise tax. Mr. Eyler was entitled to a similar benefit from his previous employer and the Company agreed to provide the foregoing benefit to entice Mr. Eyler to accept a position with the Company. Except as set forth above, the Company does not pay tax gross-ups including with respect to the excise tax imposed on any person who receives excess parachute payments.
COMPENSATION COMMITTEECOMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) in this proxy statement with management, including Messrs. CokerEyler and Steele. Based on such review and discussion, the Committee recommended to the Board that the CD&A be included in the Company’s annual report on Form 10-K for the year ended December 31, 20152017 and the proxy statement for the 20162018 annual meeting.
The Compensation Committee
Yvonne Hao, Chairperson
Francois Castaing
Sophie Desormière
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2015,From January 2017 until November 2017, the Compensation Committee consisted of Messrs.Mr. Gunderson, and Mazzorinas Chairperson, Mr. Castaing, Ms. Desormière and Ms. Desormière.Hao. In November, 2017, Mr. Gunderson was appointed Chairperson of the Corporate Governance Committee and resigned from the Compensation Committee; simultaneously, Ms. Hao was appointed Chairperson of the Compensation Committee. All members of the Compensation Committee during 20152017 were independent directors and none of them is or has been an employee or officer of ours. During 2015,2017, none of our executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on the Compensation Committee or the Board.
NAMED EXECUTIVE OFFICEROFFICER COMPENSATION TABLES
Summary Compensation Table for 20152017
The table below summarizes the total compensation paid or earned by the named executive officers in 2015, 20142017, 2016 and 2013.2015.
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($)(1) |
|
| Stock Awards ($)(2) |
|
| Option Awards ($)(3) |
|
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) |
|
| All Other Compensation ($)(5) |
|
| Total ($) |
| |||||||
Daniel R. Coker |
| 2017 |
|
| 850,000 |
|
|
| 650,250 |
|
|
| 951,250 |
|
|
| 925,800 |
|
|
| 609,361 |
|
|
| 1,599,990 |
|
|
| 5,586,651 |
|
Former President and Chief |
| 2016 |
|
| 750,000 |
|
|
| 637,500 |
|
|
| 731,520 |
|
|
| 750,330 |
|
|
| 386,584 |
|
|
| 94,646 |
|
|
| 3,350,580 |
|
Executive Officer |
| 2015 |
|
| 700,000 |
|
|
| 682,500 |
|
|
| 750,420 |
|
|
| 737,660 |
|
|
| 378,457 |
|
|
| 96,105 |
|
|
| 3,345,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillip M. Eyler |
| 2017 |
|
| 62,500 |
|
|
| 1,312,500 |
|
|
| 1,065,000 |
|
|
| 1,874,675 |
|
|
| — |
|
|
| 2,500 |
|
|
| 4,317,175 |
|
President and Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry G. Steele |
| 2017 |
|
| 390,000 |
|
|
| 194,695 |
|
|
| 920,826 |
|
|
| 416,610 |
|
|
| — |
|
|
| 24,108 |
|
|
| 1,946,239 |
|
Vice-President of Finance, Chief |
| 2016 |
|
| 360,500 |
|
|
| 165,125 |
|
|
| 488,560 |
|
|
| 321,570 |
|
|
| — |
|
|
| 17,248 |
|
|
| 1,353,003 |
|
Financial Officer and Treasurer |
| 2015 |
|
| 350,000 |
|
|
| 240,000 |
|
|
| 416,900 |
|
|
| 316,140 |
|
|
| — |
|
|
| 19,349 |
|
|
| 1,342,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frithjof R. Oldorff(6) |
| 2017 |
|
| 450,883 |
|
|
| 212,592 |
|
|
| 975,471 |
|
|
| 416,610 |
|
|
| — |
|
|
| 105,724 |
|
|
| 2,161,280 |
|
President of Automotive Climate and |
| 2016 |
|
| 437,750 |
|
|
| 196,626 |
|
|
| 406,400 |
|
|
| 321,570 |
|
|
| — |
|
|
| 99,136 |
|
|
| 1,461,482 |
|
Comfort |
| 2015 |
|
| 404,575 |
|
|
| 299,838 |
|
|
| 491,600 |
|
|
| 316,140 |
|
|
| — |
|
|
| 185,162 |
|
|
| 1,697,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Darren Schumacher |
| 2017 |
|
| 412,000 |
|
|
| 194,259 |
|
|
| 940,568 |
|
|
| 416,610 |
|
|
| — |
|
|
| 22,306 |
|
|
| 1,985,743 |
|
Chief Technology Officer |
| 2016 |
|
| 364,440 |
|
|
| 162,220 |
|
|
| 447,480 |
|
|
| 321,570 |
|
|
| — |
|
|
| 19,958 |
|
|
| 1,315,668 |
|
|
| 2015 |
|
| 319,300 |
|
|
| 220,000 |
|
|
| 416,900 |
|
|
| 316,140 |
|
|
| — |
|
|
| 22,164 |
|
|
| 1,294,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth J. Phillips |
| 2017 |
|
| 392,533 |
|
|
| 221,693 |
|
|
| 923,098 |
|
|
| 416,610 |
|
|
| — |
|
|
| 17,240 |
|
|
| 1,971,174 |
|
Vice‑President, General Counsel and |
| 2016 |
|
| 381,100 |
|
|
| 170,275 |
|
|
| 488,560 |
|
|
| 321,570 |
|
|
| — |
|
|
| 24,476 |
|
|
| 1,386,251 |
|
Secretary |
| 2015 |
|
| 370,000 |
|
|
| 240,000 |
|
|
| 416,900 |
|
|
| 316,140 |
|
|
| — |
|
|
| 20,913 |
|
|
| 1,363,953 |
|
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| ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
| Amounts reported for |
(2) | Amounts reported reflect the aggregate grant-date fair value of stock awards. All awards in this column for |
(3) | Amounts reported reflect the aggregate grant-date fair value of option awards. Awards in this column for |
Coker was |
(5) | Amounts reported for |
(6) | Certain cash payments reported for Mr. Oldorff |
Narrative Discussion of Grants of Plan-Based Awards in 2015Summary Compensation Table
Employment Agreements
The initial salary, signing bonus, Make-Whole Bonuses and equity grants paid to Mr. Oldorff.From January 1, 2015 to July 31, 2015, Mr. Oldorff was party to a Service Agreement with our German Subsidiary. From August 1, 2015Eyler were all made pursuant to the date hereof,terms of the Eyler Contract described in the introductory section of the Compensation Discussion and Analysis under the subheading “Overview of CEO Compensation During 2017”.
While working in the United States, Mr. OldorffOldorff’s employment is party to the Employment Agreement with the Company. His 2015 compensation was governed by the terms of his employment agreement and he is entitled to certain annual housing and travel allowances and relocation benefits upon the Servicetermination of his employment. Otherwise, Mr. Oldorff’s compensation is determined in the same manner as the other NEOs. See “Compensation Discussion and Analysis – 2017 Compensation Determinations – Other Benefits and Perquisites”.
Except for Mr. Eyler and Mr. Oldorff, our NEOs do not have employment agreements.
Retirement Agreement
The Coker Retirement Agreement was intended to ensure that Mr. Coker remained with the Company until a successor could be appointed and to ensure that Mr. Coker provided adequate transition services to the Employment Agreement.Company through the Transition Date. Other than his base salary, bonus under the 2017 Bonus Plan, 401(k) match and personal use of a company automobile while employed by the Company, Mr. Coker’s compensation during 2017 was determined pursuant to the Coker Retirement Agreement described in the introductory section of the Compensation Discussion and Analysis under the subheading “Overview of CEO Compensation During 2017”.
Stock Awards and Option Awards
The Stock Awards for Messrs. Schumacher and Phillips. Messrs.Steele, Oldorff, Schumacher and Phillips for 2017 include, in addition to recurring annual grants, the special one-time retention awards issued on October 3, 2017. Pursuant to such awards, each applicable executive officer receives a fixed number of shares of restricted common stock in the Company that vests on the 18 month anniversary of the grant date, or April 3, 2019; however, such restricted shares will automatically vest if the executive officer’s employment is terminated without “cause” or for “good reason”, each as defined in the award agreement. These shares of restricted stock were namedawarded by the Compensation Committee as a means of retaining executive officers onlyduring the transition of the office of President and Chief Executive Officer from Mr. Coker to Mr. Eyler and for a period of time thereafter
The Compensation Committee also considers using equity awards to reward unique achievements by the NEOs. On April 2, 2016 a small amount of restricted stock (1,000 to 2,000 shares each) was awarded to several NEOs in 2015connection with the acquisition of Cincinnati Sub-Zero Products, LLC in special recognition of the efforts of the recipients in connection with such acquisition. This one-time award of restricted stock vested in full on April 1, 2017.
With respect to Mr. Coker, all of the unvested restricted stock he held on the date of his retirement, December 4, 2017, was immediately vested upon his retirement in accordance with the provisions of the applicable equity incentive plans under which such equity awards were granted. See “Compensation Discussion and 2014.Analysis – 2017 Compensation Determinations – Special Non-Recurring Benefits” for further information. The total value of such awards at the time of acceleration was $3,794,448. Of this amount, $3,684,648 had been reported as compensation paid to Mr. Coker in Summary Compensation TableTables in prior years, a difference of $109,800.
Defined Benefit Plan
To entice Mr. Coker to continue as the President and Chief Executive Officer of the Company until his successor was identified and in place, the Compensation Committee agreed to amend the U.S. Defined Benefit Plan to increase the annual post-retirement benefit payable to Mr. Coker from $300,000 to $342,000 if Mr. Coker continued to provide service to the Company until his successor was appointed. See “Compensation Discussion and Analysis – 2017 Compensation Determinations – Special Non-Recurring Benefits” for 2015 is not required to include their compensation information for 2013.further information.
Grants of Plan-BasedPlan-Based Awards in 20152017
The following table provides information about equity awards granted to the named executive officers in 2015.2017. The Company did not grant any non-equity or equity incentive awards in 2015.2017.
Name |
| Grant Date |
| All Other Stock Awards: Number of Shares of Stock or Units (#)(1) |
|
| All Other Option Awards: Number of Securities Underlying Options (#)(2) |
|
| Exercise Price or Base Price of Option Awards ($/Sh) |
|
| Grant Date Fair Value of Stock and Option Awards ($)(3) |
| ||||
Daniel R. Coker |
| 02/22/2017 |
|
| 25,000 |
|
|
| — |
|
|
| — |
|
|
| 951,250 |
|
|
| 02/22/2017 |
|
| — |
|
|
| 100,000 |
|
|
| 38.05 |
|
|
| 925,800 |
|
Phillip M. Eyler |
| 12/04/2017 |
|
| 30,000 |
|
|
| — |
|
|
| — |
|
|
| 1,065,000 |
|
|
| 12/04/2017 |
|
| — |
|
|
| 212,500 |
|
|
| 35.50 |
|
|
| 1,874,675 |
|
Barry G. Steele |
| 02/22/2017 |
|
| 15,000 |
|
|
| — |
|
|
| — |
|
|
| 570,750 |
|
|
| 02/22/2017 |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 416,610 |
|
|
| 10/03/2017 |
|
| 9,398 |
|
|
| — |
|
|
| — |
|
|
| 350,076 |
|
Frithjof R. Oldorff |
| 02/22/2017 |
|
| 15,000 |
|
|
|
|
|
|
| — |
|
|
| 570,750 |
|
|
| 02/22/2017 |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 416,610 |
|
|
| 10/03/2017 |
|
| 10,865 |
|
|
| — |
|
|
| — |
|
|
| 404,721 |
|
Darren Schumacher |
| 02/22/2017 |
|
| 15,000 |
|
|
| — |
|
|
| — |
|
|
| 570,750 |
|
|
| 02/22/2017 |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 416,610 |
|
|
| 10/03/2017 |
|
| 9,928 |
|
|
| — |
|
|
| — |
|
|
| 369,818 |
|
Kenneth J. Phillips |
| 02/22/2017 |
|
| 15,000 |
|
|
| — |
|
|
| — |
|
|
| 570,750 |
|
|
| 02/22/2017 |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 416,610 |
|
|
| 10/03/2017 |
|
| 9,459 |
|
|
| — |
|
|
| — |
|
|
| 352,348 |
|
────────────────────
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | All Other Option Awards: Number of Securities Underlying Options (#)(2) | Exercise Price or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | |||||||||||||||
Daniel R. Coker | | 02/18/2015 02/18/2015 | | | 18,000 — | | | — 70,000 | | | — 41.69 | | | 750,420 737,660 | | |||||
Barry G. Steele | | 02/18/2015 02/18/2015 | | | 10,000 — | | | — 30,000 | | | — 41.69 | | | 416,900 316,140 | | |||||
Frithjof R. Oldorff | | 08/03/2015 02/18/2015 | | | 10,000 — | | 30,000 | 41.69 | | 491,600 316,140 | | |||||||||
Kenneth J. Phillips | | 02/18/2015 02/18/2015 | | | 10,000 — | | | — 30,000 | | | — 41.69 | | | 416,900 316,400 | | |||||
Darren Schumacher | | 02/18/2015 02/18/2015 | | | 10,000 — | | | — 30,000 | | | — 41.69 | | | 416,900 316,400 | | |||||
(1) | Relate to restricted stock granted to the NEOs under the 2013 Equity Incentive Plan. |
(2) | Relate to stock options granted to the NEOs under the 2013 Equity Incentive Plan. |
(3) | The restricted stock granted on February 22, 2017 had a grant-date fair value of |
Narrative Discussion of Grants of Plan-Based Awards in 20152017
Restricted Stock.Stock – Annual Grants. The restricted stock vests in three equal installmentsgranted on the first through third anniversaries of the date of grant, provided such person’s employment is continuing on each such vesting date.
Stock Options. The stock options vestFebruary 22, 2017 vests in four equal installments on the first through fourth anniversaries of the date of grant, provided such person’s employment is continuing on each such vesting date.
Restricted Stock – Retention Grants. The restricted stock granted on October 3, 2017 vests on the 18 month anniversary of the date of grant, April 3, 2019, provided such person’s employment is continuing on such vesting date; however, such restricted shares will automatically vest if his employment is terminated without “cause” or by employee for “good reason”, each as defined in the award agreement. These shares of restricted stock were awarded by the Compensation Committee to retain executive officers during the transition of the office of President and Chief Executive Officer from Mr. Coker to Mr. Eyler and for a period of time thereafter.
Restricted Stock – Eyler Grant. The restricted stock granted on December 4, 2017 to Mr. Eyler was awarded in connection with his initial employment with the Company in accordance with the terms of the Eyler Contract and such restricted stock vests in three equal installments on the first through third anniversaries of the date of grant, provided that Mr. Eyler’s employment is continuing on each such vesting date; however, such restricted shares granted to Mr. Eyler will automatically vest if his employment is terminated without “cause” or by Mr. Eyler for “good reason”, each as defined in the Eyler Contract.
Stock Options – Annual Grants. The stock options granted on February 22, 2017 vest in five equal installments on the first through fifth anniversaries of the date of grant, provided such person’s employment is continuing on each such vesting date.
Stock Options – Eyler Grant. The stock options granted on December 4, 2017 to Mr. Eyler were awarded in connection with his initial employment with the Company in accordance with the terms of the Eyler Contract and such options vest in four equal
installments on the first through fourth anniversaries on the grant date, provided that Mr. Eyler’s employment is continuing on each such vesting date; however, such stock options granted to Mr. Eyler will automatically vest if his employment is terminated without “cause” or by Mr. Eyler for “good reason”, each as defined in the Eyler Contract.
Outstanding Equity AwardsAwards at December 31, 20152017
The following table presents information on the unexercised option awards and unvested stock awards held by the named executive officers as of December 31, 2015.2017.
|
|
|
|
|
|
| Stock Awards |
| ||||||||||||||||||||
|
|
|
| Option Awards |
|
| Number of Shares or Units of Stock |
|
| Market Value of Shares or Units of |
| |||||||||||||||||
|
|
|
| Number of Securities Underlying Unexercised Options (#) |
|
| Option Exercise |
|
| Option Expiration |
|
| That Have Not Vested |
|
| Stock That Have Not Vested |
| |||||||||||
Name |
| Grant Date |
| Exercisable |
|
| Unexercisable |
|
| Price ($) |
|
| Date |
|
| (#)(4) |
|
| ($)(5) |
| ||||||||
Daniel R. Coker |
| 07/02/2013(1) |
|
| 40,000 |
|
|
| — |
|
|
| 19.10 |
|
| 07/02/2020 |
|
|
| — |
|
|
| — |
| |||
|
| 02/19/2014(1) |
|
| 60,000 |
|
|
| — |
|
|
| 26.17 |
|
| 02/19/2021 |
|
|
| — |
|
|
| — |
| |||
|
| 02/18/2015(1) |
|
| 70,000 |
|
|
| — |
|
|
| 41.69 |
|
|
| 02/18/2022 |
|
|
| — |
|
|
| — |
| ||
|
| 02/24/2016(1) |
|
| 70,000 |
|
|
| — |
|
|
| 40.64 |
|
|
| 02/24/2023 |
|
|
| — |
|
|
| — |
| ||
|
| 02/22/2017(1) |
|
| 70,000 |
|
|
| — |
|
|
| 38.05 |
|
|
| 02/22/2024 |
|
|
| — |
|
|
| — |
| ||
Phillip M. Eyler |
| 12/04/2017 |
|
| — |
|
|
| 212,500 |
|
|
| 35.50 |
|
| 12/04/2021 |
|
|
| 30,000 |
|
|
| 952,500 |
| |||
Barry G. Steele |
| 07/02/2013(2) |
|
| 20,000 |
|
|
| — |
|
|
| 19.10 |
|
| 07/02/2020 |
|
|
| — |
|
|
| — |
| |||
|
| 02/19/2014(2) |
|
| 20,000 |
|
|
| 10,000 |
|
|
| 26.17 |
|
| 02/19/2021 |
|
|
| — |
|
|
| — |
| |||
|
| 02/18/2015(2) |
|
| 15,000 |
|
|
| 15,000 |
|
|
| 41.69 |
|
|
| 02/18/2022 |
|
|
| — |
|
|
| — |
| ||
|
| 02/24/2016(2) |
|
| 7,500 |
|
|
| 22,500 |
|
|
| 40.64 |
|
|
| 02/24/2023 |
|
|
|
|
|
|
|
|
| ||
|
| 02/22/2017(2) |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 02/22/2024 |
|
|
|
|
|
|
|
|
| ||
|
| Various |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 34,397 |
|
|
| 1,092,105 |
| ||
Frithjof R. Oldorff |
| 07/02/2013(3) |
|
| 20,000 |
|
|
| — |
|
|
| 19.10 |
|
| 07/02/2020 |
|
|
| — |
|
|
| — |
| |||
|
| 02/19/2014(3) |
|
| — |
|
|
| 10,000 |
|
|
| 26.17 |
|
| 02/19/2021 |
|
|
| — |
|
|
| — |
| |||
|
| 02/18/2015(2) |
|
| 15,000 |
|
|
| 15,000 |
|
|
| 41.69 |
|
| 02/18/2022 |
|
|
| — |
|
|
| — |
| |||
|
| 02/24/2016(2) |
|
| 7,500 |
|
|
| 22,500 |
|
|
| 40.64 |
|
| 02/24/2023 |
|
|
|
|
|
|
|
|
| |||
|
| 02/22/2017(2) |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
| 02/22/2024 |
|
|
|
|
|
|
|
|
| |||
|
| Various |
|
| — |
|
|
| — |
|
|
| — |
|
| — |
|
|
| 35,864 |
|
|
| 1,138,682 |
| |||
Darren Schumacher |
| 11/20/2013(2) |
|
| 15,000 |
|
|
| — |
|
|
| 23.71 |
|
| 11/20/2020 |
|
|
| — |
|
|
| — |
| |||
|
| 02/19/2014(2) |
|
| 10,000 |
|
|
| 10,000 |
|
|
| 26.17 |
|
| 02/19/2021 |
|
|
| — |
|
|
| — |
| |||
|
| 02/18/2015(2) |
|
| 15,000 |
|
|
| 15,000 |
|
|
| 41.69 |
|
|
| 02/18/2022 |
|
|
| — |
|
|
| — |
| ||
|
| 02/24/2016(2) |
|
| 7,500 |
|
|
| 22,500 |
|
|
| 40.64 |
|
|
| 02/24/2023 |
|
|
|
|
|
|
|
|
| ||
|
| 02/22/2017(2) |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 02/22/2024 |
|
|
|
|
|
|
|
|
| ||
|
| Various |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 34,927 |
|
|
| 1,108,932 |
| ||
Kenneth J. Phillips |
| 07/02/2013(2) |
|
| 20,000 |
|
|
| — |
|
|
| 19.10 |
|
| 07/02/2020 |
|
|
| — |
|
|
| — |
| |||
|
| 02/19/2014(2) |
|
| 20,000 |
|
|
| 10,000 |
|
|
| 26.17 |
|
| 02/19/2021 |
|
|
| — |
|
|
| — |
| |||
|
| 02/18/2015(2) |
|
| 15,000 |
|
|
| 15,000 |
|
|
| 41.69 |
|
|
| 02/18/2022 |
|
|
| — |
|
|
| — |
| ||
|
| 02/24/2016(2) |
|
| 7,500 |
|
|
| 22,500 |
|
|
| 40.64 |
|
|
| 02/24/2023 |
|
|
|
|
|
|
|
|
| ||
|
| 02/22/2017(2) |
|
| — |
|
|
| 45,000 |
|
|
| 38.05 |
|
|
| 02/22/2024 |
|
|
|
|
|
|
|
|
| ||
|
| Various |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 34,458 |
|
|
| 1,094,042 |
| ||
────────────────────
| ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
(2) | Outstanding stock options held by the |
(3) | Outstanding cash-settled SARs held by Mr. Oldorff vest in four equal installments on the first through fourth anniversaries of the date of grant, provided his employment is continuing on each such vesting date. |
| July 2, | February 19, | February 18, |
| February 18, |
|
| February 24, |
|
| February 22, |
|
| April 3, |
|
| December 4, |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Name | 2016 | 2017 | 2018 | 2016 | 2017 | 2018 |
| 2018 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2020 |
| |||||||||||||||||||||||||||||
Daniel R. Coker | 10,000 | 6,000 | 6,000 | 6,000 | 6,000 | 6,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Phillip M. Eyler |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
| 10,000 |
|
|
| 10,000 |
|
|
| 10,000 |
| ||||||||||||||||||||||||||||||||
Barry G. Steele | 6,000 | 4,000 | 4,000 | 3,334 | 3,333 | 3,333 |
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 9,398 |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||
Frithjof Oldorff | — | — | — | 3,334 | 3,333 | 3,333 |
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 10,865 |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||
Darren Schumacher |
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 9,928 |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||
Kenneth J. Phillips | 6,000 | 4,000 | 4,000 | 3,334 | 3,333 | 3,333 |
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,333 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| 9,459 |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||
Darren Schumacher | — | 4,000 | 4,000 | 3,334 | 3,333 | 3,333 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) | Based on the closing price of our common stock as quoted on Nasdaq on December 31, |
Option Exercises and Stock Vested in 20152017
The following table provides information on the value realized by the named executive officers on the exercise of option awards and the vesting of stock awards in 2015.2017. The number of shares acquired and the value realized for each award excludes the payment of any fees, commissions or taxes.
| Option Awards | Stock Awards |
| Option Awards |
|
| Stock Awards |
| |||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) |
| Number of |
|
| Value Realized |
|
| Number of |
|
| Value |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Daniel R. Coker | 80,000 | 2,513,476 | 16,000 | 799,300 |
|
| — |
|
|
| — |
|
|
| 61,000 |
|
|
| 2,174,200 |
| ||||||||||||
Phillip M. Eyler |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||
Barry G. Steele | 30,000 | 948,383 | 10,000 | 496,180 |
|
| — |
|
|
| — |
|
|
| 12,667 |
|
|
| 462,146 |
| ||||||||||||
Frithjof Oldorff | 30,000 | 811,900 | — | — |
|
| 80,000 |
|
|
| 616,600 |
|
|
| 6,667 |
|
|
| 240,846 |
| ||||||||||||
Darren Schumacher |
|
| 10,000 |
|
|
| 115,597 |
|
|
| 11,667 |
|
|
| 422,896 |
| ||||||||||||||||
Kenneth J. Phillips | 32,500 | 1,027,621 | 12,500 | 606,205 |
|
| 12,500 |
|
|
| 326,163 |
|
|
| 12,667 |
|
|
| 462,146 |
| ||||||||||||
Darren Schumacher | 25,500 | 563,222 | 6,000 | 260,840 | ||||||||||||||||||||||||||||
────────────────────
(1) | Based on the number of stock options or cash-settled SARs exercised multiplied by the difference between (A) the purchase price received upon sale of the underlying shares, in the case of options, or the closing price of our common stock as quoted on Nasdaq on the date of exercise, in the case of cash-settled SARs, and (B) the exercise or base price. |
(2) | Based on the number of shares of restricted stock vested multiplied by the closing price of our common stock as quoted on Nasdaq on the date of vesting (except in certain cases where all or a part of such vested stock was sold on the date of vesting, in which case the actual price received upon sale is used). With respect to Mr. Coker, all of his unvested restricted stock was immediately vested upon his retirement in accordance with the provisions of the applicable equity incentive plans under which such equity awards were granted. See “Compensation Discussion and Analysis – 2017 Compensation Determinations – Special Non-Recurring Benefits” for further information. |
Pension BenefitsBenefits in 20152017
The following table provides information related to the U.S. Defined Benefit Plan and the German Defined Benefit Plan in 2015.2017.
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) |
| Plan Name |
| Number of Years Credited Service (#) |
| Present Value of Accumulated Benefit ($)(1) |
| Payments During Last Fiscal Year ($) |
| |||||||||||
Daniel R. Coker | The Executive Nonqualified Defined Benefit Plan of Gentherm Incorporated | 5 | 2,897,765 | — |
| The Executive Nonqualified Defined Benefit Plan of Gentherm Incorporated |
| 6 |
| 4,218,121 |
|
| — |
| ||||||||||
Frithjof R. Oldorff | The Gentherm GmbH Deferred Compensation Pension Plan | N/A | 1,108,793 | — |
| The Gentherm GmbH Deferred Compensation Pension Plan |
| N/A |
| 1,316,003 |
|
| — |
| ||||||||||
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(1) | Represents the present value of future benefits under the U.S. Defined Benefit Plan for Mr. Coker and the German Defined Benefit Plan for Mr. Oldorff through December 31, |
See “Compensation Discussion and Analysis – 2017 Compensation Determinations – Defined Benefit Plans” for a description of the material terms of the above plans.
PotentialPotential Payments Upon TerminationTermination or Change in Control
Equity Awards
CertainThe Eyler Contract and certain of the Company’s equity compensation plans contemplate acceleration of vesting upon, and exercisability of awards following, specified events.
Eyler Contract. Under the terms of the Eyler Contract, if Mr. Eyler’s employment is terminated by the Company without “cause”, or by Mr. Eyler for “good reason” (each as defined in the Eyler Contract), Mr. Eyler is entitled to accelerated vesting of (1) the 212,500 stock options and 30,000 shares of restricted stock granted to him on his hire date and (2) any additional unvested equity awards that are scheduled to vest within 12 months after such termination date. If such termination occurs within 12 months after a “change in control” (as defined in the Eyler Contract), then Mr. Eyler is also entitled to accelerated vesting of any additional unvested equity awards, regardless of scheduled vesting date.
Equity Compensation Plans. Outstanding awards of restricted stock, stock options and cash-settled SARs as of December 31, 20152017 were granted under the 2013 Equity Incentive Plan, the 2011 Equity Incentive Plan, the 2006 Equity Incentive Plan, the Amended and Restated 1997 Stock Incentive Plan and the related award agreements. Under each plan, prior to a termination event, the Compensation Committee retains discretionary authority to accelerate the vesting of these awards for any reason, in whole or in part. In addition:
Upon any termination of service, the unvested portion of any restricted stock, stock option or SAR award will be immediately terminated or forfeited.forfeited, unless an agreement to the contrary has been made with the recipient, such as the case for Mr. Eyler under the Eyler Contract.
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