UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statementproxy statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,proxy statement, if other than the Registrant)
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JULY 7, 2017
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
March 15, 2017
Dear Superior Stockholder:
You are cordially invited to attend the Annuala Special Meeting of Stockholders (the “Special Meeting”) of Superior Industries International, Inc. (the “Annual Meeting”(“we,” “us” or the “Company”), which will be held at the Westin Detroit Metropolitan Airport Hotel (2501 Worldgateway Place, Detroit, Michigan 48242) on April 25,, 2017, at 10:00 a.m.: Eastern Daylight Time.
During 2016, Superior Industries International, Inc.On March 22, 2017, we entered into an Investment Agreement with TPG Growth III Sidewall, L.P. (“TPG” or the “Investor”) pursuant to which we agreed to issue a number of shares of Series A Perpetual Convertible Preferred Stock, par value $0.01 per share (the “Company”“Series A Preferred Stock”), and Series B Perpetual Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”), to the Investor for an aggregate purchase price of $150 million (the “Investment”). The Series A Preferred Stock is convertible into shares of our common stock, par value $0.01 per share, at the option of the holder or, “Superior”upon the occurrence of certain events, at our option. The Series B Preferred Stock is convertible into Series A Preferred Stock only upon receipt of approval by Superior’s stockholders as described herein. At the closing of the Investment on May 22, 2017, we issued 140,202 shares of Series A Preferred Stock, which was equal to 19.99% of the shares of common stock outstanding on such date on an as converted basis, and 9,798 shares of Series B Preferred Stock to the Investor.
At the Special Meeting, holders of shares of our common stock and Series A Preferred Stock (other than the Investor) will be asked to consider and vote on a proposal to approve the following rights in connection with the Investment: (i) the conversion of all outstanding shares of Series B Preferred Stock into shares of Series A Preferred Stock and the subsequent issuance of shares of common stock upon election by the holder to convert the Series A Preferred Stock, and the right to receive additional shares of Series A Preferred Stock relating to non-cash dividends paid in the form of an increase in the Stated Value (as defined below) of the Series A Preferred Stock (collectively, the “Conversion Right”) continuedand (ii) the Investor’s preemptive rights to drive improvementparticipate in its financial and operational performance, return capital to our stockholders and engage with our stockholders on important topics such as executive compensation.
Below are a fewfuture Company issuances of common stock or securities convertible into or exercisable for common stock (the “Preemptive Right”), each of which right requires the approval of the Company’s recent key initiatives:
Continued Focus on Value Creation. Overstockholders in accordance with the past few years, the Company assembled a results-driven experienced management team that has identifiedrules and executed upon significant opportunities for operational improvements. Additionally, the Company has enhanced the value it provides to its customers by providing an expanded product offering that includes lighter weight wheels, larger diameter wheels and more sophisticated finishes. This ability to provide value meeting a wider spectrumregulations of our customer’s needs, by utilizing proprietary technologies, allows us to differentiate ourselves from the market. In 2016, we also made progress towards and completed various manufacturing, operational and organizational initiatives that continue to enhance our competitive position including:
Further highlights from our 2016 performance can also be found in the “2016 Performance & Business Highlights” and “Compensation Discussion and Analysis” sections of the attached Proxy Statement.
Strategic PlanThe New York Stock Exchange (the “NYSE”). We reaffirmed our commitmentrefer to the strategic plan we introduced in 2015, which is focused on improving our global competitiveness, building on our culture of product innovationproposals to approve the Conversion Right and technology, evaluating opportunities for disciplined growth and value creation, maintaining a balanced approach to capital allocation and increasing our visibility with the financial community. We are seeking to achieve these priorities by, among other actions:Preemptive Right collectively as the “Equity Rights Proposal.”
Our management works closely with our Board of Directors (the “Board”) to monitorunanimously approved the progress being made on our strategic plan. The Board reviews Superior’s strategic plan at least annuallyEquity Rights Proposal and more frequently as significant opportunities or events arise.
Continued to Return Capital to Stockholders. We continue to evaluate different strategies for maximizing our stockholders’ return on investment. We are proud to have returned over $39.1 million torecommends that our stockholders in 2016 through share repurchases and dividends. Through March 1, 2017, we have $35.0 million outstanding onvote “FOR” the Equity Rights Proposal.
If our current share repurchase authorization.
Maintained Strong Financial Metrics. In 2016, we achieved solid positive results in a number of our financial metrics, including: unit sales growth, value-added sales(1), net sales, net income, EBITDA(2) and diluted EPS, as well asstockholders do not approve the lowering of our effective tax rate. WithEquity Rights Proposal presented at the completion of our new Mexican facility in 2015, our capital expenditures have been significantly reducedSpecial Meeting, the Series B Preferred Stock will not be converted into Series A Preferred Stock, and the Company ended 2016 with a sound cash position and balance sheet, all while continuingdividend rate applicable to return capitalthe Series B Preferred Stock will increase from 9% per annum to our stockholders. This positions the Company to be well positioned to continue investing in our business as well as acting upon opportunities that are consistent with our strategic plan.
Proxy Access Proposal Implemented. The Company’s proxy access proposal that was submitted to our stockholders was overwhelmingly supported by our stockholders at our 2016 annual meeting. Following that meeting, our directors conducted further dialogue with some of our stockholders to receive further input11% per annum beginning on September 19, 2017. Dividends on the proposal. Following that outreach,Preferred Stock are payable, at the Board adopted a proxy access proposalCompany’s election, in October 2016.
Your Votecash or in the form of an increase in the stated value (initially, $1,000 per share, the “Stated Value”) of such Preferred Stock. Until stockholder approval is Important. We, andobtained, any non-cash dividends on either the restSeries A Preferred Stock or the Series B Preferred Stock must be paid in the form of an increase in the Stated Value of the Board, invite you to attendSeries B Preferred Stock and shall not result in an increase in the Annual Meeting. If you are not able to attendStated Value of the Series A Preferred Stock.
Please carefully read the accompanying proxy statement in person, we encourage you to vote by proxy. The Proxy Statement contains detailedits entirety for information about the matters on whichto be voted upon. You may also obtain more information about the Company from documents we are asking you to vote.have filed with the Securities and Exchange Commission; see “Where You Can Find More Information” in the accompanying
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proxy statement. Your vote is important. Whether or not you plan to attend the Annual Meeting, your vote is important, andmeeting in person, we encourageurge you to vote promptly. You can votesubmit your shares over the telephone,proxy as soon as possible via the Internet, by telephone or by completing, dating, signing and returning a proxy card, as described in the Proxy Statement.mail.
Thank you for your ongoing support of, and continued interest in, Superior.
Donald J. Stebbins | ||
President and Chief Executive Officer | Chairman of the Board |
A Note from Donald J. Stebbins
In this Proxy Statement, you will note that Ms. Dano has chosen not to run for reelection as a member of our Board. She made this decision after giving consideration to her other commitments as well as reflecting on the fact that, in large part through her leadership efforts, our Board is now in very capable hands, making it an appropriate time for her to transition her leadership role to others.
While I share her conviction that our Board is in very capable hands, I cannot emphasize how much Ms. Dano’s leadership will be missed. Since her arrival on the Board in 2007, she has been a strong advocate for moving Superior forward. During her tenure, Superior expanded its Mexican operations, dealt with numerous board member and executive transitions, moved its headquarters to its present location in Michigan and oversaw the expansion of Superior’s customer base and product offerings. All of these efforts combined to make Superior one of the best suppliers of automotive and light truck wheels in the world.
I trust you share the sentiment of the other Board members and all employees of Superior in wishing Ms. Dano continuing success in both her professional and personal pursuits.
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This Proxy Statementproxy statement is dated March 15,, 2017 and is first being made available to stockholders via the Internet on or about March 16,, 2017.
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JULY 7, 2017
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
NOTICE OF 2017 ANNUALSPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON , 2017
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Each holder of Superior common stock and Series A Preferred Stock as of the Record Date (other than the Investor) will be entitled to one vote on each matter for each share of common stock held, or into which such holder’s Series A Preferred Stock is convertible, on the Record Date. | |
Items to Be Voted On: | 1. To
2. To consider and vote on a proposal to approve
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How to Vote: | YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE |
BY ORDER OF THE BOARD OF DIRECTORS, |
/s/ |
Nadeem Moiz |
Secretary |
Southfield, Michigan
March 15, , 2017
Notice of Electronic Availability of Proxy Statement and Annual Report
As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this Proxy Statement and our Annual Report available to stockholders electronically via the Internet. On or about March 16, 2017, we will mail to most of our stockholders a notice (the “Notice”) containing instructions on how to access this Proxy Statement and our Annual Report and to vote via the Internet or by telephone.
The Notice also contains instructions on how to request a printed copy of the proxy materials. In addition, you may elect to receive future proxy materials in printed form by mail or electronically bye-mail by following the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials viae-mail, unless you elect otherwise.
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PROXY SUMMARYINFORMATION ABOUT THE SPECIAL MEETING AND VOTING
Why did you send me this proxy statement?
We sent you this proxy statement and the proxy card because the Board of Directors (the “Board”) of Superior Industries International, Inc. (the “Company”) is soliciting your proxy to vote at the special meeting of stockholders (the “Special Meeting”) to be held on , 2017, at : Eastern Daylight Time, at , and at any postponements or adjournments of the Special Meeting. This summary highlights selectedproxy statement summarizes information contained elsewherethat is intended to assist you in making an informed vote on the proposals described in this Proxy Statement. This summary does not contain allproxy statement.
What is the purpose of the information that you shouldSpecial Meeting?
On March 22, 2017, we entered into an Investment Agreement with TPG Growth III Sidewall, L.P. (“TPG” or the “Investor”) pursuant to which we agreed to issue a number of shares of Series A Perpetual Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), and Series B Perpetual Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”), to the Investor for an aggregate purchase price of $150 million (the “Investment”). The Series A Preferred Stock is convertible into shares of our common stock, par value $0.01 per share, at the option of the holder or, upon the occurrence of certain events, at our option. The Series B Preferred Stock is convertible into Series A Preferred Stock only upon receipt of approval by Superior’s stockholders, as described herein. At the closing of the Investment on May 22, 2017, we issued 140,202 shares of Series A Preferred Stock, which was equal to 19.99% of the shares of common stock outstanding on such date, and 9,798 shares of Series B Preferred Stock to the Investor.
As described in more detail below, in accordance with the terms of the Investment Documents (as defined below) and applicable rules, regulations and guidance of the New York Stock Exchange (“NYSE”), the Company is calling the Special Meeting to consider and you should readvote upon a proposal to approve certain of the entire Proxy Statement carefully before voting. For more complete information regarding our 2016 performance, please review our 2016 Annual Report on Form10-K for the year ended December 25, 2016 filedInvestor’s rights associated with the SECPreferred Stock. The Special Meeting described in this proxy statement is scheduled to be held on March 3, 2017.
The 2016 annual report to stockholders, including financial statements, is being made available to stockholders together with, 2017, and we are providing these proxy materials on or about March 16, 2017.to you in connection with the Special Meeting.
2017 ANNUAL MEETING OF STOCKHOLDERS – ANNUAL MEETING INFORMATION
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For more information regardingAt the AnnualSpecial Meeting, and voting, please see our “Q&A” Section, found at page 63.
2017 ANNUAL MEETING OF STOCKHOLDERS – AGENDA AND VOTING RECOMMENDATIONS
Proposals: | Board Voting Recommendation: | Page Reference for More Detail: | ||||
1. | Election of Directors | “FOR” all nominees | 6 | |||
2. | To approve, in anon-binding advisory vote, executive compensation of the Company’s named executive officers; | “FOR” | 27 | |||
3. | To select, in anon-binding advisory vote, the frequency of thenon-binding advisory vote on executive compensation of the Company’s named executive officers; | “1 YEAR” | 29 | |||
4. | Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2017 | “FOR” | 30 |
YOUR VOTE IS IMPORTANT.Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You can vote yourholders of shares over the telephone, via the Internet or by completing, dating, signing and returning a proxy card, as described in the Proxy Statement. Your prompt cooperation is greatly appreciated.
2016 PERFORMANCE & BUSINESS HIGHLIGHTS
Since 2014, we have focused our strategic priorities on improving our financial and operating performance and increasing value for our stockholders. Even though the full impact of our operating initiatives has yetcommon stock and Series A Preferred Stock (other than the Investor) will be asked to be fully reflected in our financial performance, as discussed below, we continued seeing positive results in 2016.
Recent Business Highlights/Company Performanceconsider and vote upon the following proposals:
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What are the Board’s voting recommendations?
The Board unanimously approved the Equity Rights Proposal and the Adjournment Proposal, and unanimously recommends that the Company’s stockholders vote “FOR” each of these proposals.
Why did the Company Approve the Investment?
The Board approved the Investment to finance a portion of the purchase price for the Company’s acquisition of 92.3% of the outstanding common stock of Uniwheels AG by means of a tender offer, which closed on May 30,
EXECUTIVE COMPENSATION HIGHLIGHTS
Highlights of our 2016 executive compensation program and recent changes are summarized as follows.
2016 Executive Compensation Highlights and Recent Changes
Why is the Company seeking approval of the Equity Rights Proposal?
We are required to seek approval of the Equity Rights Proposal pursuant to the terms of the Investment Agreement and the related agreements and other documents entered into by the Company and the Investor in connection with the Investment Agreement, including the Investor Rights Agreement, dated as calculated over a three-year period:
As discussed inof May 22, 2017 (the “Investor Rights Agreement”), by and between the “2016 Executive Compensation Components – Long-Term Equity Incentive Compensation” section of this Proxy Statement, these performance measures were developed after a rigorousbottom-up financial analysis of our business.
2016SAY-ON-PAY VOTE AND STOCKHOLDER ENGAGEMENT
Leading upCompany and the Investor. The Investment Agreement and the Investor Rights Agreement are referred to our 2016 annual meeting, members of our senior executive team and members of our Compensation and Benefits Committee engaged with many of our largest stockholders and heard their input regarding our executive compensation programs. As a result of these discussions and before last year’s vote was tallied, we:
At our 2016 annual meeting, our stockholders did provide majority support for Superior’s NEO compensation throughherein, collectively, as theSay-on-Pay Vote (approximately 67% support was received). However, since we received less than 70% support, we continued to engage in substantial outreach efforts with our major stockholders and their proxy advisors to gather feedback regarding our executive compensation programs.
Following the 2016 annual meeting, directors from our Compensation and Benefits Committee held additional meetings with significant stockholders, and we also engaged and met with one proxy advisory firm regarding our executive compensation programs. Senior management also continually received input in the normal course of meetings with our stockholders. “Investment Documents.”
In addition, the Company’s common stock is listed on the NYSE and, as a result, the Company is subject to certain NYSE listing rules and regulations. Rule 312.03(c) of the Compensation and Benefits Committee’s reviewNYSE Listed Company Manual (“NYSE Rule 312.03(c)”) requires stockholder approval prior to the issuance of our programscommon stock, or securities convertible into or exercisable for common stock, in lightany transaction or series of transactions if (i) the common stock to be issued has, or will have upon issuance, voting power equal to or in excess of 20% of the 2016Say-on-Pay results, we tookvoting power outstanding before the following actions:
CORPORATE GOVERNANCE HIGHLIGHTS
Our Board is committed to having a sound governance structure that promotes the best interestsissuance of our stockholders. The following table highlights certainsuch stock or of our governance practices:
Name | Age | Director Since | Principal Occupation | Independent | Board Committees | |||||||||
Michael R. Bruynesteyn | 53 | 2015 | Treasurer & Vice President, Strategic Finance of Turner Construction Company | X | • Audit Committee • Nominating & Corporate Governance Committee | |||||||||
Jack H. Hockema | 70 | 2014 | Chairman & CEO of Kaiser Aluminum Corporation | X | • Audit Committee • Nominating & Corporate Governance Committee (Chair) | |||||||||
Paul J. Humphries | 62 | 2014 | President of High Reliability Solution (a business group of Flextronics International Ltd.) | X | • Audit Committee • Compensation & Benefits Committee | |||||||||
James S. McElya | 69 | 2013 | Chairman of the Board of Directors, Affinia Group Intermediate Holdings Inc. | X | • Compensation & Benefits Committee (Chair) • Nominating & Corporate Governance Committee | |||||||||
Timothy C. McQuay | 65 | 2011 | Retired Managing Director, Investment Banking with Noble Financial Markets | X | • Audit Committee (Chair) • Compensation & Benefits Committee | |||||||||
Ellen B. Richstone | 65 | 2016 | Retired Chief Financial Officer, Rohr Aerospace | X | • Audit Committee • Nominating & Corporate Governance Committee | |||||||||
Donald J. Stebbins | 59 | 2014 | President and CEO of Superior Industries International, Inc. | |||||||||||
Francisco S. Uranga | 53 | 2007 | Corporate Vice President & Chief Business Operations Officer for Latin America, Foxconn | X | • Compensation & Benefits Committee • Nominating & Corporate Governance Committee |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
Margaret S. Dano, who has served on our Board since 2007 and as our Chairperson since 2014, will retire from the Board upon the expiration of her term at the Annual Meeting. The Board would like to thank Ms. Dano for her years of dedicated service to the Company. Although we presently have nine directors, as a result of Ms. Dano’s retirement from the Board, the Board has resolved to reduce the number of directors from nine to eight effective upon Ms. Dano’s retirement fromshares of common stock outstanding before the Board immediately followingissuance of the Annual Meeting.
Uponcommon stock or of securities convertible into or exercisable for common stock (collectively, the recommendation“Conversion Cap”). Because of this restriction, in exchange for the Investor’s $150 million investment in the Company, the Investor received 140,202 shares of Series A Preferred Stock, which was convertible into a number of shares of common stock representing approximately 19.99% of our Nominatingoutstanding common stock prior to such issuance and, Corporate Governance Committee,in lieu of additional shares of Series A Preferred Stock, the BoardInvestor received 9,798 shares of Series B Preferred Stock. Pursuant to the terms of the Company’s Certificate of Designations relating to the Preferred Stock (the “Certificate of Designations”), the Series B Preferred Stock will convert into our Series A Preferred Stock (and, consequently, become convertible into our common stock) following stockholder approval.
The NYSE has nominatedcertain additional rules, including Rule 312.03(b) of the eight individuals listed belowNYSE Listed Company Manual (“NYSE Rule 312.03(b)”), which requires stockholder approval prior to stand for electionissuances of securities to, among others, directors and substantial stockholders of the Company, that could be implicated in the future if the Investor exercises the Preemptive Right. In order to eliminate any requirement that the future exercise of the Preemptive Right would require stockholder approval, we are seeking such approval now as part of the Equity Rights Proposal. For a more detailed description of the Preemptive Right, see the description under “Description of the Investment Documents—Investor Rights Agreement—Preemptive Rights” below.
What will happen if the Company’s stockholders do not approve the Equity Rights Proposal?
If the Company’s stockholders do not approve the Equity Rights Proposal, then the Series B Preferred Stock will not convert into Series A Preferred Stock and will remain outstanding. Furthermore, if stockholder approval is not obtained by September 19, 2017, the dividend rate applicable to the Series B Preferred Stock will increase from 9% per annum to 11% per annum unless and until stockholder approval is obtained. Dividends on the Preferred Stock are payable, at the Annual Meeting for aone-year term endingCompany’s election, in cash or in the form of an increase in the stated value (initially, $1,000 per share, the “Stated Value”) of such Preferred Stock. Until stockholder approval is obtained, any non-cash dividends on either the Series A Preferred Stock or Series B Preferred Stock must be paid in the form of an increase in the Stated Value of the Series B Preferred Stock and shall not result in an increase in the Stated Value of the Series A Preferred Stock.
What will happen if the Company’s stockholders approve the Equity Rights Proposal?
If the Company’s stockholders approve the Equity Rights Proposal, each share of Series B Preferred Stock will convert into one share of Series A Preferred Stock. Additionally, the Series A Preferred Stock will no longer
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be subject to the Conversion Cap, and all shares of Series A Preferred Stock will be convertible into shares of common stock at the annual meetingoption of stockholdersthe Investor or, in 2018 or untilcertain circumstances, at the option of the Company.
Will the Conversion Right be dilutive to existing holders of the Company’s common stock?
The Conversion Right may be dilutive to existing stockholders. Approval of the Equity Rights Proposal will cause the conversion of Series B Preferred Stock into shares of Series A Preferred Stock and will remove the restriction imposed by the Conversion Cap, allowing holders of the Series A Preferred Stock to convert all of their successors, if any, are elected or appointed. All nominees have consentedshares of Series A Preferred Stock into common stock. Based on the capitalization of the Company as of the Record Date, the conversion of all of the outstanding shares of Series A Preferred Stock (including shares of Series A Preferred Stock issuable upon the conversion of the Series B Preferred Stock) would result in TPG owning approximately % of our outstanding common stock. At the same time, however, approval of the Equity Rights Proposal will eliminate the outstanding Series B Preferred Stock, which is senior to be named in this Proxy Statementthe common stock as to payment of dividends and to serve as directors, if elected. Indistribution of assets upon liquidation, dissolution or winding up of the event that any nomineeCompany.
Who is unable or declinesentitled to serve as a directorvote at the timeSpecial Meeting?
The record holders of the Annual Meeting, the proxies will be voted for the election of a substitute nominee(s) proposed by the Nominating and Corporate Governance Committeeshares of the Board. If any such substitute nominee(s)Company’s common stock and 140,202 shares of Series A Preferred Stock outstanding on the close of business on , 2017 are designated, we will file an amended proxy statement and proxy card that identifiesentitled to vote at the substitute nominee(s) and provide information required by the rulesSpecial Meeting, except as set forth below. The holders of the SEC.Company’s common stock are entitled to one vote for each share of common stock on each matter submitted to a vote at the Special Meeting, and holders of Series A Preferred Stock are entitled to one vote for each share of common stock into which the Series A Preferred Stock would be convertible as of the Record Date. As of the dateRecord Date, the 140,202 shares of this Proxy Statement,Series A Preferred Stock outstanding would be convertible into shares of common stock. TPG, as a holder of the BoardCompany’s Series A Preferred Stock, is not awareentitled to vote on the Equity Rights Proposal presented at the Special Meeting, but is permitted to vote on the Adjournment Proposal.
What is a broker non-vote?
The term broker non-vote refers to shares held by a brokerage firm or other nominee (for the benefit of its client) that anyare represented at the Special Meeting, but with respect to which such broker or nominee is unablenot instructed to vote on a particular proposal and does not have discretionary authority to vote on that proposal. Brokers and nominees do not have discretionary voting authority on certain non-routine matters, such as the Equity Rights Proposal and the Adjournment Proposal, and accordingly may not vote on such matters absent instructions from the beneficial holder. If you hold your shares in “street name” or will decline to serve asthrough a director.broker, it is important that you give your broker your voting instructions.
The Board, through the Nominating and Corporate Governance Committee, considers the following experience, qualifications, attributes and skills of both potential director nominees as well as existing members of the Board:
What is a quorum?
For more information regarding director nominations and qualifications, see the sections titled “Information about Director Nominees” (beginning on page 7) and “Director Selection” (beginning on page 17).
Information about Director Nominees
Set forth below is information about our nominees, including their names and ages, recent employment or principal occupation, their period of service as a Superior director, the names of other public companies for which they currently serve as a director or have served as a director within the last five years and a summary of their specific experience, qualifications, attributes or skills that led to the conclusion that they are qualified to serve as a director.
Each of the nominees for director has been nominated for election by the Board upon recommendation by the Nominating and Corporate Governance Committee and has consented to serve if elected. When a member of the Nominating and Corporate Governance Committee is under consideration for nomination, the nominee typically recuses himself or herself from the discussion and abstains from the voting on the recommendation.
MICHAEL R. BRUYNESTEYN
Treasurer and Vice President, Strategic Finance, Turner Construction Company
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JACK A. HOCKEMA
Chief Executive Officer, Kaiser Aluminum Corporation
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PAUL J. HUMPHRIES
President of High Reliability Solutions, a business group at Flextronics International Ltd.
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JAMES S. MCELYA
Chairman of the Board of Directors, Affinia Group Intermediate Holdings Inc.
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TIMOTHY C. MCQUAY
Retired Managing Director, Investment Banking, Noble Financial Capital Markets
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ELLEN B. RICHSTONE
Retired Chief Financial Officer, Rohr Aerospace
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DONALD J. STEBBINS
Superior Industries International, Inc. President and Chief Executive Officer
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FRANCISCO S. URANGA
Corporate Vice President and Chief Business Operations Officer for Latin America, Foxconn
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Each director nominee must receive the affirmative vote of a plurality of the votes cast to be elected, meaning thatconducted at the eight persons receiving the largest number of “yes” votes willSpecial Meeting, a quorum must be elected as directors. You may vote in favor of any or all of the nominees or you may withhold your vote as to any or all of the nominees. The nominees receiving the highest number of affirmative votespresent. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum. Accordingly, shares representing votes must be present in person or by proxy at the meetingSpecial Meeting to constitute a quorum. Abstentions are counted as present for the purpose of determining a quorum; broker non-votes are not counted for the purpose of determining the presence of a quorum at the Special Meeting as the proposals to be considered would not be evaluated as routine by the NYSE.
If a quorum is not present, the Special Meeting will be elected as directors. Proxies may not be voted for more than the eight directors and stockholders may not cumulate votes in the election of directors. In an uncontested election, our Corporate Governance Guidelines provide that any nominee for director who receivesadjourned until a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation following certificationquorum is obtained.
What vote is required to approve each of the stockholder vote. The Nominatingproposals, and Corporate Governance Committeehow will abstentions and broker non-votes affect the Board must then decide whether or not to accept the tendered resignation, culminating with a public disclosure explaining the Board’s decision and decision-making process.outcome?
RecommendationApproval of the Board
We believe eachEquity Rights Proposal requires the affirmative vote of our eight director nominees have the professional and leadership experience, industry knowledge, commitment, diversity of skills and ability to work in a collaborative manner necessary to execute our strategic plans. We believe the election of the Company’s eight nominees named in Proposal No. 1 and on the proxy card best positions the Company to deliver value to and represent the interests of all Company stockholders.
The Board unanimously recommends a vote “FOR” its eight nominees for election as Director. Proxies solicited by the Board will be voted “FOR” Superior’s eight nominees unless stockholders specify a contrary vote.
BOARD STRUCTURE AND COMMITTEE COMPOSITION
Board Structure and Leadership
The Board has separated the roles of Chairperson of the Board and Chief Executive Officer, with Margaret Dano serving as Chairperson since April 1, 2014. The Board will elect a new Chairperson following Ms. Dano’s retirement from the Board effective immediately following the Annual Meeting; however, the Board intends to continue to separate the roles of Chairperson of the Board and Chief Executive Officer. The Board believes that this leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of stockholders and Superior’s overall corporate governance. The Board also believes that this leadership structure allows the Chief Executive Officer to focus his time and energy on operating and managing the Company and will provide an appropriate balance between strong leadership, appropriate safeguards and oversight bynon-employee directors.
Superior’s Corporate Governance Guidelines provide the Board with flexibility to select the appropriate leadership structure depending on then current circumstances. In making leadership structure determinations, the Board considers many factors, including the specific needs of the business and what is in the best interests of Superior’s stockholders. If the Board appoints a Chairperson that is an independent director, pursuant to the terms of Superior’s Corporate Governance Guidelines, the Chairperson also serves as the “Lead Director.” If the Chairperson is not an independent director, on an annual basis, one of the independent directors is designated by a majority of the independent directorsvotes which all stockholders present in person or by proxy at the Special Meeting are entitled to becast on the Lead Director.proposal, assuming a
On an annual basis,3
quorum is present. The Company’s common stock and Series A Preferred Stock vote together as a single class on any matter on which the Board, with the assistanceholders of common stock are entitled to vote, however TPG, as holder of the NominatingCompany’s Series A Preferred Stock, is not entitled to vote on the Equity Rights Proposal. Under applicable NYSE Rules, abstentions are counted as present for purposes of determining a quorum and Corporate Governance Committee, makes an annual determinationare also counted as shares voted with respect to such proposal, and therefore, if you return your proxy card and “ABSTAIN” from voting, it will have the independencesame effect as a vote against the Equity Rights Proposal. A broker non-vote would have no effect on the outcome of each director using the current standards for “independence” established byproposal.
Approval of the New York Stock Exchange, additional criteria set forth in Superior’s Corporate Governance Guidelines and considerationAdjournment Proposal requires the affirmative vote of any other material relationship a director may have with Superior as disclosed in annual director and officer questionnaires. Our Corporate Governance Guidelines provide that a majority of the Board and all membersshares of common stock represented in person or by proxy at the Special Meeting, whether or not a quorum is present. Accordingly, an abstention will have the effect of a vote against the proposal, but a broker non-vote would have no effect on the outcome of the Audit, Compensationproposal.
What should I do if I receive more than one proxy card or other set of proxy materials for the Company?
If you hold your shares in multiple accounts or registrations, or in both registered and Benefitsstreet name, you will receive a proxy card for each account. Please sign, date and Nominatingreturn all proxy cards you receive from the Company. If you choose to vote by phone or by Internet, please vote once for each proxy card you receive. Only your latest dated proxy for each account will be voted.
I share an address with another stockholder, and Corporate Governance Committeeswe received only one paper copy of the Board will be independent.
The Board has determined that all of its current directors are independent under these standards, except for Donald J. Stebbins, our Chief Executive Officer. All members of each of Superior’s Audit, Compensation and Benefits and Nominating and Corporate Governance Committees are independent directors. In addition, upon recommendationproxy materials. How may I obtain an additional copy of the Nominating and Corporate Governance Committee, the Boardproxy materials?
Superior has determined that the members of the Audit Committee and Compensation and Benefits Committee meet the additional independence criteria required for audit committee and compensation committee membership under the New York Stock Exchange applicable listing standards.
We recognize the importance of board refreshment to achieve the right blend of institutional knowledge and fresh perspectives. The composition of our Board has changed significantly in recent years. Six of our current directors joined the Board since 2013, with the size of the Board being increased to nine directors in 2016 with the appointment of Ms. Richstone. In addition, the Board has affirmatively determined that eight of our nine current directors are independent using the current standards for “independence” establishedadopted a procedure approved by the New York Stock Exchange.
Independent directors comprise 88.9%Securities and Exchange Commission (the “SEC”) called “householding.” Under this procedure, Superior delivers one set of our Board and the average tenure of our directors is 4.2 years:
Tenure by Director
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During 2016, the Board held 6 meetings. During this period, all of the incumbent directors attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by all Committees of the Board on which each such director served, during the period for which each such director served. All of Superior’s directors attended last year’s Annual Meeting on April 26, 2016, with the exception of Ms. Richstone,proxy materials to multiple stockholders who was not appointed to the Board until October 2016. Superior’s directors are not required, but are strongly encouraged, to attend the Annual Meeting of stockholders.
The Board and its Committees also consulted informally with management from time to time and acted at various times by written consent without a meeting during 2016. Additionally, the independent directors met in executive session regularly without the presence of management. The Chairperson and Lead Director, Ms. Dano, presided over executive sessions of the independent directors in 2016.
Our Nominating and Corporate Governance Committee seeks to build and maintain an effective, well-rounded, financially literate and diverse Board that represents all of our stockholders.
Process for Identification and Review of Directors Candidates to Join the Board
Identifying and recommending individuals for nomination, election orre-election to our Board is a principal responsibility of our Nominating and Corporate Governance Committee. This Committee carries out this function through an ongoing, year-round process, which includes the annual Board and committee evaluation process. Each director and director candidate is evaluated by the Nominating and Corporate Governance Committee based on his or her individual merits, taking into account Superior’s needs and the composition of our Board.
To assist in its evaluation of directors and director candidates, the Nominating and Corporate Governance Committee looks for certain experiences, qualifications, attributes and skills that would be beneficial to have represented on the Board and on our committees at any particular point in time. Nominees for the Board should be committed to enhancing long-term stockholder value and must possess relevant experience and skills, good business judgment and personal and professional integrity. Among the experiences, qualifications, attributes and skills considered by the Nominating and Corporate Governance Committee are senior executive experience, automotive industry experience, financial experience, public company board experience, operational management, international business, capital markets and/or banking experience, legal and regulatory compliance and diversity. The Nominating and Corporate Governance Committee seeks diversity of business experience, viewpoints and personal background, and diversity of skills in finance, marketing, international business, financial reporting and other areas that are expected to contribute to an effective Board.
In recommending candidates for election to the Board, the Nominating and Corporate Governance Committee considers nominees recommended by directors, officers, employees, stockholders and others, usingshare the same criteria to evaluate all candidates. The Nominating and Corporate Governance Committee reviews each candidate’s qualifications, including whether a candidate possesses any of the specific qualities and skills desirable in certain members of the Board. The Nominating and Corporate Governance Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.
Any stockholder entitled to vote in the election of directors generally may nominateaddress unless Superior has received contrary instructions from one or more personsof the stockholders. This procedure potentially means extra convenience for electionstockholders and reduces Superior’s printing and mailing costs as directorwell as the environmental impact of its stockholder meetings. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, Superior will deliver promptly a separate copy of the proxy statement and annual report to any stockholder at a meeting by providing written notice of such stockholder’s intentshared address to make such nomination or nominations to the Corporate Secretarywhich Superior delivered a single copy of the Company not later thanproxy materials. If you are a stockholder who shares an address with another stockholder and would like only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or notify us if you are the closestockholder of business on the 90th day nor earlier than the closerecords.
To receive free of business on the 120th day prior to theone-year anniversarycharge a separate copy of the date of the preceding year’s annual meeting. With respect to an election to be heldproxy materials, stockholders may contact Superior’s Secretary at a special meeting of stockholders for the election of directors, stockholder nominations must be made not later than the close of business on the
later of the 90th day prior to such special meeting nor earlier than the close of business on the 120th day prior to such special meeting, or no later than the close of business on the 10th day following the date a public announcement has been made of the date of the special meeting and of the nominees proposed by the Board to be elected or reelected at such meeting. When submitting candidates for nomination to be elected at Superior’s annual meeting of stockholders, the stockholder must follow the notice procedures and provide the information required by the Bylaws. The notice must be submitted in writing to the following address: Superior Industries International, Inc., Attn: Corporate Secretary, 26600 Telegraph Rd., Suite 400, Southfield, MI 48033. The recommendation must include the same48033 or 248-352-7300.
Stockholders who hold shares in “street name” (as described below) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information as is specified in the Bylaws for stockholder nominees to be considered at an Annual Meeting, including but not limited to the following:about householding.
The chairperson of the meeting may refuse to acknowledge the nomination of any person not made in compliance with these procedures, and the nomination shall be void.materials?
Proxy Access Bylaw.
In October 2016, we adopted a proxy access provision in our Bylaws. It allows a stockholder, or group of no more than 20 eligible stockholders, that has maintained continuous ownership of 3% or more of our common stock for at least three years to include in ourSuperior’s proxy materials for an annual meeting of stockholders a number of director nominees for up to 20% of the directors then in office as of the last day on which a notice of proxy access nomination may be delivered to the Company (if such an amount is not a whole number, then the closest whole number below 20%). An eligible stockholder must maintain the 3% ownership requirementalso are available at least until the annual meeting at which the proponent’s nominee will be considered. Proxy access nominees who withdraw, become ineligible or unavailable or who do not receive at least a 25% vote in favor of election will be ineligible as a nominee for the following two years. If any stockholder proposes a director nominee under our advance notice provision, we are not required to include any proxy access nominee in our proxy statement for the annual meeting.
The proponent is required to provide the information about itself and the proposed nominee(s) that is specified in the proxy access provision of our Bylaws. The required information must be in writing and provided to the Secretary of the Company not less than 90 days nor more than 120 days prior to the anniversary of the date
that the Company first distributed its proxy statement to stockholders for the immediately preceding annual meeting of stockholders. We are not required to include any proxy access nominee in our proxy statement if the nomination does not comply with the proxy access requirements of our Bylaws.
Any stockholder considering utilizing proxy access should refer to the specific requirements set forth in our Bylaws.
Superior has three standing committees: the Audit Committee, the Compensation and Benefits Committee and the Nominating and Corporate Governance Committee. Each of these Committees has a written charter approved by the Board. A copy of each charter can be found by clicking on “Board Committee Charters” in the “Investors” section of our website at www.supind.com.www.supind.com/investor.html. This website address is included for reference only. The information contained on the Company’sthis website is not incorporated by reference into this Proxy Statement.proxy statement.
AUDIT COMMITTEEHow many votes do I have?
Each holder of record of Superior common stock and Series A Preferred Stock will be entitled to one vote on each matter for each share of common stock held, or into which its Series A Preferred Stock is convertible, on the Record Date.
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What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record. If your shares are registered directly in your name with Superior’s transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares, and the proxy materials were sent directly to you by Superior.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the “beneficial owner” of shares held in “street name,” and the proxy materials were forwarded to you by that organization. As a beneficial owner, you have the right to instruct your broker, bank, trustee or nominee how to vote your shares.
If I am a stockholder of record of Superior’s shares, how do I vote?
If you are a stockholder of record, there are four ways to vote:
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The Compensation and Benefits Committee’s responsibilities and duties include an annual review and approval of Superior’s compensation strategy to ensure that it promotes stockholder interests and supports Superior’s strategic and tactical objectives, and that it provides appropriate rewards and incentives for management and employees, including administration of Superior’s Amended and Restated 2008 Equity Incentive Plan and review of compensation-related risk management. For 2016, the Compensation and Benefits Committee performed these oversight responsibilities and duties by, among other things, directing a review of our compensation practices and policies generally, including conducting an evaluation of the design of our executive compensation program, in light of our risk management policies and programs. Additional information regarding the Compensation and Benefits Committee’s risk management review appears in the “Compensation Philosophy and Objectives” portion of the “Compensation Discussion and Analysis” section of this Proxy Statement.
On an annual basis, the Compensation and Benefits Committee reviews and makes recommendations to the Board regarding the compensation ofnon-employee directors,non-employee chairpersons, lead directors and Board committee members. In 2015, the Compensation and Benefits Committee engaged Willis Towers Watson to compile compensation surveys for review by the Compensation and Benefits Committee and to compare compensation paid to Superior’s directors with compensation paid to directors at companies included in the surveys. Additionally, the Compensation and Benefits
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If I am a beneficial owner of shares held in street name, how do I vote?
If you are a beneficial owner of shares held in street name, there are two ways to vote:
For additional description
• | In person. If you are a beneficial owner of shares held in street name and wish to vote in person at the |
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Superior is committed to having sound corporate governance principles. Key information regarding Superior’s corporate governance initiatives can be found on its website, including Superior’s Corporate Governance Guidelines, Superior’s Code of Conduct and the charter for each CommitteeYou must bring a copy of the Board. The corporate governance pages canlegal proxy to the Special Meeting and ask for a ballot from an usher when you arrive. You must also bring valid picture identification such as a driver’s license or passport and proof that the organization that holds your shares held such shares on the Record Date. In order for your vote to be found by clicking on “Corporate Governance” incounted, you must hand both the Investor sectioncopy of the website at www.supind.com. This website address is included for reference only. The information contained onlegal proxy and your completed ballot to an usher to be provided to the Company’s websiteinspector of election.
• | By Proxy. If you are a beneficial owner of shares held in street name, this proxy statement and accompanying materials have been forwarded to you by the organization that holds your shares. Such organization will vote your shares in accordance with your instructions using the methods set forth in the information provided to you by such organization.See “What is a broker non-vote?” below. |
What happens if I do not incorporated by reference into this Proxy Statement.give specific voting instructions?
Corporate Governance Principles
Superior is committed to excellence in corporate governanceStockholders of Record. If you are a stockholder of record and maintains clear policies and practices that promote good corporate governance, including:you:
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then the persons named as proxy holders will vote your shares in the manner recommended by the Board be independent (with 8 outon all matters presented in this proxy statement and, in accordance with applicable law, as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Special Meeting.
Beneficial Owners of 9 current directors being independent).
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the taking of management.
Annual Board and Committee Self-Assessments
Each year, the directors undertake a self-assessment of the Board and each Committee on which they serve that elicits feedback on the performance and effectiveness of the Board and its Committees. As part of this self-assessment, the directors are asked to consider the Board’s role, relations with management, composition and meetings. Each Committee is asked to consider its role and the responsibilities articulated in the Committee charter, the composition of the Committee and the Committee meetings. Each Committee and the full Board reviews such self-assessments and considers areas that can benefit from change. These opportunities, as well as proposed action plans, are shared with the full Board and, if supported, the plan is implemented andre-assessed at the time of the next annual self-assessment.
Our Board, in coordination with the Compensation and Benefits Committee, oversees and is actively engaged in Chief Executive Officer and senior management succession planning, which is reviewed at least annually. As part of its succession planning process, the Board reviews the senior management team’s experience, skills, competence and potential, in order to assess which executives have the ability to develop the attributes that the Board believes are necessary to lead and achieve the Company’s goals. Directors personally assess candidates by engaging with potential successors at Board and Committee meetings, as well as less formal settings.
The Role of the Board in Risk Oversight
Superior’s management is responsible forday-to-day risk management activities. The Board, acting directly and through its Committees, is responsible for the oversight of Superior’s risk management. Superior and the Board approach risk management by integrating and communicating strategic planning, operational decision-making and risk oversight. The Board commits extensive time and effort every year to discussing and agreeing upon Superior’s strategic plan, and it reconsiders key elements of the strategic plan as significant events and opportunities arise during the year. As part of the review of the strategic plan, as well as in evaluating events and opportunities that occur during the year, the Board and management focus on the primary success factors and risks for Superior. With such oversight of the Board, Superior has implemented practices and programs designed to help manage the risks to which Superior is exposed in its business and to align risk-taking appropriately with its efforts to increase stockholder value. Superior’s internal audit department provides both management and the Audit Committee, which oversees our financial and risk management policies, with ongoing assessments of Superior’s risk management processes and system of internal control and the specific risks facing Superior.
While the Board has primary responsibility for oversight of the Company’s risk management, the Board’s standing Committees support the Board by regularly addressing various risks in their respective area of oversight. Specifically, the Audit Committee identifies and requires reporting on areas perceived as potential risks to Superior’s business. As provided in its Committee charter, the Audit Committee reports regularly to the Board. As part of the overall risk oversight framework, other Committees of the Board also oversee certain categories of risk associated with their respective areas of responsibility. For example, the Compensation and Benefits Committee oversees compensation-related risk management, as discussed further under “Compensation and Benefits Committee” and in the “Compensation Philosophy and Objectives” portion of the “Compensation Discussion and Analysis” section of this proxy.
Each Committee reports regularly to the full Board on its activities. In addition, the Board participates in regular discussions among the Board and with Superior’s senior management of many core subjects, including strategy, operations, finance and legal and public policy matters, in which risk oversight is an inherent element. The Board believes that the leadership structure described above under “Board Leadership Structure” facilitates the Board’s oversight of risk management because it allows the Board, with leadership from the independent Lead Director and working through its Committees, including the independent Audit Committee, to participate actively in the oversight of management’s actions.
Stockholder Communications with the Board
Stockholders may communicate with Superior’s Board, or any individual member or members of the Board, through Superior’s Secretary at Superior Industries International, Inc., 26600 Telegraph Rd., Suite 400, Southfield, MI 48033 with a request to forward the communicationprior to the intended recipientSpecial Meeting.
Who will serve as the inspector of election?
A representative from Broadridge will serve as the inspector of election.
How can I attend the Special Meeting?
Only stockholders as of the Record Date are entitled to attend the Special Meeting. Each stockholder must present valid picture identification such as a driver’s license or recipients. In general, any stockholder communication delivered to Superior for forwarding topassport and provide proof of stock ownership as of the BoardRecord Date. The use of mobile phones, pagers, recording or specified director photographic equipment, tablets and/or directorscomputers is not permitted at the Special Meeting.
Where can I find the voting results?
Preliminary voting results will be forwardedannounced at the Special Meeting. Final voting results will be tallied by the inspector of election after the taking of the vote at the Special Meeting. Superior will publish the final voting results in accordancea Current Report on Form 8-K, which Superior is required to file with the stockholder’s instructions. However,SEC within four business days following the Company reservesSpecial Meeting.
Who is paying the right not to forward to directors any abusive, threatening or otherwise inappropriate materials.
Corporate Governance Guidelines
The Board believes in sound corporate governance practices and has adopted formal Corporate Governance Guidelines to enhance its effectiveness. Our Board has adopted these Corporate Governance Guidelines in order to ensure that it has the necessary authority and practices in place to fulfill its rolecosts of management oversight and monitoring for the benefit of our stockholders. The Corporate Governance Guidelines set forth the practices our Board will follow with respect to, among other areas, director qualification and independence, board and Committee meetings, involvement of and access to management, and Chief Executive Officer Performance evaluation and succession planning. The Corporate Governance Guidelines are publicly available on our website, www.supind.com, under “Investors.” This website address is included for reference only. The information contained on the Company’s website is not incorporated by reference into this Proxy Statement.
Our Code of Conduct is included on our website, www.supind.com, under “Investors,” which, among others, applies to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. This website address is included for reference only. The information contained on the Company’s website is not incorporated by reference into this Proxy Statement. Upon request to Superior Industries International, Inc., Investor Relations, 26600 Telegraph Rd., Suite 400, Southfield, MI 48033, copies of our Code of Conduct are available, without charge.
Superior uses a combinationis paying the costs of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board.solicitation of proxies. Superior does not provide any perquisites to itsnon-employee Board members. In setting the compensation ofnon-employee directors, Superior considers the significant amount of time that the Board members expend in fulfilling their duties to Superior as well as the experience level required to serve on the Board. The Board, through its Compensation and Benefits Committee, annually reviews the compensation arrangements and compensation policies fornon-employee directors,non-employee chairpersons, lead directors and Board Committee members. The Compensation and Benefits Committee recently reviewed market data compiled by Willis Towers Watsonhas retained Okapi Partners LLC to assist in assessing totalnon-employee director compensation. Pursuantobtaining proxies by mail, facsimile, telephone or email from brokerage firms, banks, broker-dealers or other similar organizations representing beneficial owners of shares for the Special Meeting. We have agreed to our Corporate Governance Guidelines, in recommending director compensation, our Compensation and Benefits Committee is guided by three goals: (i) compensation should fairly pay directorssuch firm a fee of approximately $50,000.00 plus out-of-pocket expenses. Okapi Partners LLC may be contacted toll-free at (877) 629-6356. Superior may also reimburse brokerage firms, banks, broker-dealers or other similar
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organizations for work required in a companythe cost of forwarding proxy materials to beneficial owners. In addition, certain of Superior’s sizedirectors, officers and scope; (ii)regular employees, without additional compensation, should align directors’ interests withmay solicit proxies on Superior’s behalf in person, by telephone, by fax or by electronic mail. See “Proxy Solicitation and Costs” in this proxy statement for further information.
What happens if the long-term interestsSpecial Meeting is postponed or adjourned?
If the Special Meeting is postponed or adjourned due to a lack of Superior’s stockholdersa quorum or to solicit additional proxies, we intend to reconvene the Special Meeting as soon as reasonably practical. Your proxy will still be effective and (iii)may be voted at the structure ofrescheduled or adjourned meeting, and you will still be able to change or revoke your proxy until it is voted at the compensation should be clearly disclosed to Superior’s stockholders.rescheduled or adjourned meeting.
Ournon-employee director cash compensation program during 2016 consisted of the following:
Non-employee directors typically do not receive forms of remuneration, perquisites or benefits, but are reimbursed for their expenses in attending meetings. There are no cash fees payable for attendance at Board or Committee meetings.7
Under Superior’s Amended and Restated 2008 Equity Incentive Plan, members of the Board who were not also Superior employees (other than Ellen B. Richstone who joined the Board in October 2016) were granted 2,946 RSUs on April 26, 2016. These RSUs vest in full on the first anniversary of the grant date.
The following table provides information as to compensation for services of thenon-employee directors during 2016.
Director Compensation Table
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards(2) ($) | Pension Value and Nonqualified Deferred Compensation Earnings(3) ($) | Total ($) | ||||||||||||
Michael R. Bruynesteyn | $ | 66,065 | $ | 74,976 | — | $ | 141,041 | |||||||||
Margaret S. Dano(4) | $ | 150,000 | $ | 74,976 | $ | 110,335 | $ | 335,311 | ||||||||
Jack A. Hockema | $ | 69,500 | $ | 74,976 | — | $ | 144,476 | |||||||||
Paul J. Humphries | $ | 70,000 | $ | 74,976 | — | $ | 144,976 | |||||||||
James S. McElya | $ | 66,000 | $ | 74,976 | — | $ | 140,976 | |||||||||
Timothy C. McQuay | $ | 73,000 | $ | 74,976 | — | $ | 147,976 | |||||||||
Ellen B. Richstone(5) | $ | 12,613 | — | — | $ | 12,613 | ||||||||||
Francisco S. Uranga | $ | 64,000 | $ | 74,976 | $ | 23,849 | $ | 162,825 |
Non-Employee Director Stock Ownership
Effective July 2015, the Board adopted an amended and restated stock ownership policy for members of the Board. The policy requires eachnon-employee director to own shares of Superior’s common stock having a value equal to at least three times thenon-employee director’s regular annual cash retainer, with a three-year period to attain that ownership level. All of ournon-employee directors are in compliance with this stock ownership policy. Additionally, all of ournon-employee directors (other than Mr. Bruynesteyn, who joined the Board in November 2015 and Ms. Richstone, who joined the Board in October 2016) meet the required ownership level under this stock ownership policy.
PROPOSAL NO. 21 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATIONEQUITY RIGHTS PROPOSAL
Superior provides its stockholdersApproval of the Conversion Right and the Preemptive Right
Background of the Investment
Pursuant to the Investment Agreement, which we signed on March 22, 2017, TPG agreed to make a $150 million equity investment in the Company in exchange for shares of our newly created Series A Preferred Stock and shares of our newly created Series B Preferred Stock, the terms of each of which are outlined in our Certificate of Designations relating to the Series A Preferred Stock and Series B Preferred Stock filed with our Certificate of Incorporation, and described under “Description of the Preferred Stock” below. In addition, we agreed to the terms of an Investor Rights Agreement, which was entered into upon closing of the Investment on May 22, 2017. TPG’s ownership in the Company was approximately 19.99% on an as-converted basis at the closing of the Investment on May 22, 2017. For a more detailed description of TPG Growth’s equity investment in the Company and each of the Investment Documents, see “Description of the Investment Documents” below.
We were attracted to the opportunity with TPG because (i) it provided a large single source of capital to castfinance a portion of the Uniwheels transaction, (ii) provided capital that was less restrictive than debt, (iii) the conversion issue price negotiated was at a 15% premium to our 30-day trailing average common stock price, and (iv) we believe that the strategic relationship with TPG will provide significant benefits to us as a result of TPG’s broad business relationships, including in our industry. Additionally, we believe that TPG, through its representation on our Board, will provide valuable insight to the Company as it continues to execute its growth strategy, including through the acquisition of Uniwheels.
Equity Rights Proposal Highlights
The Company’s common stock is listed on the NYSE and, as a result, the Company is subject to certain NYSE listing rules and regulations. NYSE Rule 312.03(c) requires stockholder approval prior to the issuance of common stock, or securities convertible into or exercisable for common stock, in any transaction or series of transactions if (i) the common stock to be issued has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock, or (ii) the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock. Because of this restriction, in exchange for the Investor’s $150 million investment in the Company, the Investor received 140,202 shares of Series A Preferred Stock, which was convertible into a number of shares of common stock representing approximately 19.99% of our outstanding common stock prior to such issuance and, in lieu of additional shares of Series A Preferred Stock, the Investor received 9,798 shares of Series B Preferred Stock. Pursuant to the terms of the Company’s Certificate of Designations, all outstanding Series B Preferred Stock will convert into shares of our Series A Preferred Stock (and, consequently, become convertible into shares of our common stock) only upon receipt of stockholder approval.
If the Company’s stockholders do not approve the Equity Rights Proposal, then the Series B Preferred Stock will not convert into Series A Preferred Stock and, therefore, not become convertible into common stock. Furthermore, if stockholder approval is not obtained by September 19, 2017, the dividend rate applicable to the Series B Preferred Stock will increase from 9% per annum to 11% per annum unless and until stockholder approval is subsequently obtained. Dividends on either the Series A Preferred Stock the Series B Preferred Stock are payable, at the Company’s election, in cash or in the form of an annual advisory vote on executive compensation (a“Say-on-Pay” proposal). At Superior’s 2016increase in the Stated Value of such share. Until stockholder approval is obtained, any non-cash dividends must be paid in the form of an increase in the Stated Value of the Series B Preferred Stock and shall not result in an increase in the Stated Value of the Series A Preferred Stock.
The NYSE has certain additional rules, including NYSE Rule 312.03(b), which requires stockholder approval prior to issuances of securities to, among others, directors and substantial stockholders of the Company,
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that could be implicated in the future if the Investor exercises the Preemptive Right. In order to eliminate any requirement that the future exercise of the Preemptive Right would require stockholder approval, we are seeking such approval now as part of the Equity Rights Proposal. For a more detailed description of the Preemptive Right, see the description under “Description of the Investment Documents—Investor Rights Agreement—Preemptive Rights” below.
Finally, if the stockholders do not approve the Equity Rights Proposal at the Special Meeting, then the Company is obligated to use its reasonable best efforts to obtain stockholder approval at the Company’s next annual meeting of stockholders approximately 67%and each subsequent annual meeting thereafter.
Based on the capitalization of the votes cast on theSay-on-Pay proposal were voted in favorCompany as of the compensationRecord Date, the conversion of Superior’s named executive officers (“NEOs”).
As detailedall of the Series A Preferred Stock into shares of common stock (including shares of Series A Preferred Stock issuable upon conversion of the Series B Preferred Stock) would result in the “Compensation Discussion and Analysis” beginning on page 36, members of the Compensation and Benefits Committee engaged with stockholders during 2016 (both before and after the 2016 annual meeting) to obtain input regarding the executive compensation policies and practices as did Superior’s management team during the course of its general stockholder outreach in 2016. Several modifications to Superior’s program were made as a result of input received from this stockholder engagement effort:
Executive Compensation Program Changes in 2016 and 2017
Our executive compensation program also continues to follow several other best practices that are discussed beginning on page 36 in the “Compensation Discussion and Analysis,” some of which are summarized as follows:
Executive Compensation Program Best Practices
The Compensation and Benefits Committee intends to continue its stockholder outreach efforts in 2017 regarding Superior’s executive compensation programs. The Compensation and Benefits Committee will continue to consider the results of futureSay-on-Pay votes when making future compensation decisions for Superior’s named executive officers.
As shown above, the core of Superior’s executive compensation philosophy and practice continues to be an emphasis on pay for performance – withInvestor owning approximately 2/3 of annual equity grants being subject to attainment of performance goals. Superior’s executive officers are compensated in a manner consistent with Superior’s strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests% of our stockholders. We urge yououtstanding common stock after giving effect to read the “Compensation Discussion and Analysis,” the compensation tables and the narrative discussion set forth on pages 36 to 61 of this Proxy Statement for additional details on Superior’s executive compensation program.
We are asking stockholders to vote on the following resolution:
RESOLVED, that the stockholders approve the compensation of Superior’s named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules, including the “Compensation Discussion and Analysis,” the compensation tables and narrative discussion.
Vote Required
Approval of this proposal requires (i) a majority of the shares represented and voting at the Annual Meeting at which a quorum is present and (ii) that shares voting affirmatively also constitute at least a majority of the required quorum. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal.
Recommendation of the Board of Directorssuch conversion.
The Board unanimously recommends a voteTHE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” the approval of thenon-binding advisory resolution to approve executive compensation.THE EQUITY RIGHTS PROPOSAL.
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PROPOSAL NO. 3 – ADVISORY VOTE ON THE FREQUENCYDESCRIPTION OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATIONINVESTMENT DOCUMENTS
As required by the Dodd-Frank Act and Section 14A of the Exchange Act, we are providing stockholders an advisory vote on the frequency with which the stockholders shall have the opportunity to cast a vote on the advisory“say-on-pay” vote on executive compensation of the nature reflected in Proposal 2 above. The advisory vote on the frequency of thesay-on-pay vote is anon-binding vote as to how often thesay-on-pay vote should occur: every year, every two years or every three years. In addition, stockholders may abstain from voting. At the 2011 annual meeting, our stockholders previously supported a one year frequency for this stockholder advisory vote.
After careful consideration, the Board recommends that future stockholdersay-on-pay advisory votes on executive compensation be conducted every year. After careful consideration, the Board has determined that holding an advisory vote on executive compensation every year is the most appropriate policy for Superior at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every year. While Superior’s executive compensation programs are designed to promote a long-term connection between pay and performance, the Board recognizes that executive compensation decisions and disclosures are made annually. Holding an annual advisory vote on executive compensation provides Superior with more direct and immediate feedback on our compensation programs. We believe that an annual advisory vote on executive compensation is consistent with our practice of seeking input and engaging in dialogue with our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.
Please mark on the proxy card your preference as to the frequency of holding stockholder advisory votes on executive compensation, as either every year, every two years, or every three years, or you may abstain from voting.
The Board will take the results of the vote into account when deciding when to call for the next advisory vote on executive compensation. However, because this vote is advisory and not binding on the Board in any way, the Board may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more frequently than the option approved by the Company’s stockholders. A scheduling vote similar to this Proposal 3 will occur at least once every six years.
We are asking stockholders to vote on the following resolution:
RESOLVED, that the stockholders approve the “1 year” frequency option for the advisory vote on executive compensation.
Vote Required
The option of every year, two years or three years that receives the highest number of votes cast by the shares present or represented by proxy and entitled to vote at the Annual Meeting will be deemed to have received the advisory approval of the stockholders. Accordingly, abstentions and brokernon-votes will be counted for purposes of determining the presence or absence of the quorum for the transaction of business but will not otherwise be counted and therefore will have no effect on this proposal.
Recommendation of the Board of Directors
The Board unanimously recommends a vote for “1 YEAR” on the frequency of the advisory vote on executive compensation.
PROPOSAL NO. 4 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Superior is asking the stockholders to ratify the Audit Committee’s appointment of Deloitte & Touche LLP as Superior’s independent registered public accounting firm for the fiscal year ending December 31, 2017. Neither the Company’s Articles of Incorporation nor the Bylaws require that stockholders ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm. However, we are requesting ratification because we believe it is a matter of good corporate practice. In the event the stockholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in Superior’s and its stockholders’ best interests.
Deloitte has audited Superior’s consolidated financial statements annually since 2009. Representatives of Deloitte are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that those representatives will be available to respond to appropriate questions.
Principal Accountant Fees and Services
The following is a summary of the fees billedmaterial terms of the Investment Agreement and the Investor Rights Agreement. While we believe this summary covers the material terms of these agreements, we encourage you to Superiorread each of them; the Investment Agreement is included as Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC by its independent registered public accounting firm, Deloitte & Touche LLPthe Company on March 24, 2017 and the Investor Rights Agreement is included as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC by the Company on May 26, 2017. For more information about accessing the Current Reports on form 8-K and other information that we file with the SEC, please see “Where You Can Find More Information” below.
Investment Agreement
On March 22, 2017, the Company and TPG entered into the Investment Agreement, pursuant to which TPG agreed to purchase a number of shares of the Company’s newly authorized Series A Preferred Stock, at a purchase price and liquidation preference of $1,000 per share, and Series B Preferred Stock, at a purchase price and liquidation preference of $1,000 per share, for professional services renderedan aggregate investment in the Company by TPG of $150 million in a private placement exempt from the registration requirements of the Securities Act. The terms of the Series A Preferred Stock and Series B Preferred Stock are described under “Description of Preferred Stock” below. The Investment closed on May 22, 2017 (the “Closing”).
Closing
At the Closing, the Certificate of Designations, which had been adopted and approved by the Board, was filed with the Secretary of State of the State of Delaware. Additionally, at the Closing, the Company entered into the Investor Rights Agreement and appointed Ransom A. Langford to the Board as designee of TPG, as described more fully below under “—Investor Rights Agreement.”
Covenants
The Company has undertaken to hold a special meeting of stockholders within 120 days of the Closing for the years ended December 25, 2016purposes of approving (i) the conversion of the Series B Preferred Stock into Series A Preferred Stock and December 27, 2015:(ii) the issuance of additional shares of Series A Preferred Stock, including the issuance of shares of common stock upon conversion thereof. If the stockholders do not approve these items at the meeting described in this proxy statement, the Company must use its reasonable best efforts to obtain stockholder approval at the next annual meeting of stockholders and each subsequent annual meeting thereafter.
In addition, pursuant to the Investment Agreement, the Company applied to cause the shares of common stock to be issued upon conversion of the Series A Preferred Stock to be approved for listing on NYSE, which approval has been obtained, subject to official notice of issuance.
Representations and Warranties
In the Investment Agreement, each of the Company and TPG made certain representations and warranties. The Company’s representations and warranties to TPG included, among others, representations and warranties with respect to its capitalization and certain other representations regarding matters relating to the Company’s business and the issuance of the Company’s securities. TPG’s representations and warranties to the Company included, among others, representations and warranties about its status as an accredited investor and its investment intent. The representations and warranties in the Investment Agreement survive until the first anniversary of Closing.
Stockholders are not third-party beneficiaries under the Investment Agreement and should not construe the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of
Fee Category | Fiscal 2016 Fees | Fiscal 2015 Fees | ||||||
Audit Fees | $ | 1,197,000 | $ | 1,251,000 | ||||
Audit-Related Fees | 6,000 | 32,720 | ||||||
Tax Fees | 595,500 | 695,700 | ||||||
All Other Fees | 909,000 | 157,730 | ||||||
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Total Fees | $ | 2,707,500 | $ | 2,137,150 | ||||
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Audit Fees. Consist of fees billed for professional services rendered for the integrated audit of Superior’s consolidated financial statements and of its internal control over financial reporting, for review10
facts or condition of the interim consolidated financial statements includedCompany, TPG or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Investment Agreement, which subsequent information may or may not be fully reflected in quarterlythe Company’s public disclosures. The provisions of the Investment Agreement, including the representations and warranties, should not be read alone, but instead should only be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement, including the periodic and current reports and forstatements that the statutory audits forCompany files with the SEC. For more information regarding these documents incorporated by reference, see “Where You Can Find More Information” below.
Investor Rights Agreement
On May 22, 2017, in connection with the Closing, the Company and TPG entered into the Investor Rights Agreement in order to establish various arrangements with respect to the governance of the Company, certain subsidiaries locatedactions that may or may not be taken with respect to, and certain rights with respect to, TPG’s Preferred Stock.
Board Representation and Observer Rights
Pursuant to the terms of the Investor Rights Agreement, the Company increased the size of the Board from eight to nine members immediately upon the Closing, and TPG had the right to nominate one individual to serve on our Board. On May 22, 2017, Ransom A. Langford was appointed to our Board, effective as of Closing, upon designation by TPG. Mr. Langford did not participate in Mexico.
Audit-Related Fees. Consisthis capacity as director in discussions of, fees billed for assurance and related services that are reasonablyor vote with respect to, matters related to the performanceInvestment that were approved by our Board, including our Board vote recommending approval of the auditconversion of the Series B Preferred Stock into Series A Preferred Stock and the issuance common stock upon conversion of the Series A Preferred Stock.
Under the Investment Agreement, TPG has the right to designate one person to be appointed or reviewnominated for election to the Board so long as TPG and its affiliates hold 50% of Superior’s consolidated financial statementsthe amount of the original Investment (including common stock into which the Preferred Stock may convert) (the “Investor Amount”).
Provided that TPG, together with its affiliates, maintains its Investor Amount, the Company will take such action as is necessary to have an Investor director on the board at all times, including, but not limited to, including the TPG designee in the Company’s slate of Board nominees for election by the Company’s stockholders and including such nominee in the Company’s proxy statement. Each TPG nominee that is elected to the Board will receive the same indemnification rights and will be entitled to the same insurance coverage as is provided to each of the other Board members.
The Investor Rights Agreement sets forth certain criteria that TPG nominees must meet, including, among others, not being prohibited or disqualified from serving as a director pursuant to any rule or regulation of the SEC, NYSE or applicable law, and provides the Board the right, subject to certain requirements, to object to the nomination or appointment of any such nominee to the Board that does not meet the applicable criteria, in which case TPG will be allowed to designate another person who meets the specified requirements for nomination or appointment, as applicable, to the Board.
Upon the death, disability, disqualification resignation or removal of a TPG nominee from the Board, TPG will have the right to designate a new director to fill the resulting vacancy, as long as TPG has retained the Investor Amount.
If the Investor Amount is between 10% and 50%, TPG may designate a Board observer to attend and participate in all Board meetings in a non-voting capacity.
Registration Rights
Pursuant to the Investor Rights Agreement, the Company has provided TPG with certain registration rights with respect to its Registrable Securities (as hereinafter defined), as described in more detail below. “Registrable
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Securities” means any shares of Preferred Stock, common stock or any other securities of the Company for which Preferred Stock may be converted, redeemed or exchanged, held or beneficially owned by TPG or its transferees.
The Company is required to file, prior to the one year anniversary of Closing, a registration statement for a shelf registration on Form S-3 (the “Form S-3 Shelf”), or, if the Company is ineligible to use a Form S-3 Shelf, a registration statement for a shelf registration on Form S-1 (the “Form S-1 Shelf”) covering the resale of the Registrable Securities on a delayed or continuous basis. If the shelf registration ceases to be effective under the Securities Act while Registrable Securities are still outstanding, the Company must use reasonable efforts to cause the shelf registration to be effective again or file an additional shelf registration statement.
At any time after Closing, TPG may request (i) registration under the Securities Act of all or any portion of the Registrable Securities on Form S-3, if available, and (ii) registration under the Securities Act for all or any portion of the Registrable Securities held by the requesting holder on Form S-1 if a Form S-3 registration is not reported under “Audit Fees.” These services include accounting consultationsavailable (each, a “Demand Registration”). The holders of the Registrable Securities are limited to three Demand Registrations in total and no more than two demand registrations in any 12-month period. If the offering of Company securities pursuant to a demand registration is in the form of an underwritten public offering, TPG may designate the investment banker(s) and manager(s) to administer the offering, subject to the approval of the Company, however the Company is not obligated to effect an underwritten offering pursuant to a shelf registration unless the aggregate offering price is expected to exceed $50 million or includes all remaining Registrable Securities.
In addition to the foregoing shelf and demand registration rights, TPG will have piggyback registration rights pursuant to which TPG may require the inclusion of some or all of its Registrable Securities in any registration filed by the Company for the account of the Company or any of the Company’s other security holders (provided that the registration permits the inclusion of such Registrable Securities). In any such registration that is an underwritten offering, the Company has the right to select the investment banker(s) and manager(s), subject to the approval of TPG, and to the extent requested by the underwriters, the Company may reduce the number of the Investor’s Registrable Securities to be included in any such registration.
The Company will pay all of the costs and expenses incurred in connection with transactions, mergerany registrations under the Investor Rights Agreement. The Company will not, however, be obligated to pay any out-of-pocket expenses incurred by TPG (other than the expenses of one counsel for all such holders) or any underwriting discounts and acquisition due diligence, attestcommissions attributable to the sale of the Registrable Securities.
The Investor Rights Agreement provides for customary registration rights indemnification by each of the Company and the Investor.
Preemptive Rights
Pursuant to the terms of the Investor Rights Agreement, except in the case of Excluded Issuances (as hereinafter defined), TPG has the right (but not the obligation) to participate in future equity issuances by the Company of capital stock or other securities convertible or exchangeable into capital stock for so long as the Investor Amount is at least 50%. An “Excluded Issuance” means (i) the issuance of shares of any capital stock (including upon exercise of options) to directors, officers, employees, consultants or other agents of the Company as approved by the Board in connection with their employment or performance of services, (ii) the issuance of any capital stock in connection with any “business combination” (as defined in the rules and regulations promulgated by the SEC) or otherwise in connection with bona fide acquisitions of securities or substantially all of the assets of another person, business unit, division or business, in each case, to the sellers in such transaction as consideration thereof, (iii) the issuance of any securities pursuant to the conversion, redemption or exchange of Preferred Stock issued to TPG and (iv) the issuance of any shares of a subsidiary of the Company to the Company or a wholly owned subsidiary of the Company.
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The Investor Rights Agreement provides that arethe Company must give TPG written notice no less than 5 business days before the closing of an issuance of capital stock and offer to sell to TPG, on such terms as the new capital stock is to be issued, a pro rata portion of such capital stock (based on the ownership percentage of TPG of the Company’s outstanding common stock, assuming full conversion of TPG’s Preferred Stock). TPG must exercise its preemptive right by written notice on or prior to the business day immediately before the date of closing of the equity issuance. If TPG does not requiredexercise its preemptive rights within the applicable period, the Company may sell the applicable equity interests to supportother investors. If the integrated auditCompany has not sold the equity interests within 120 days of Superior’s consolidated financial statements and its internal controls over financial reporting and consultations concerning financial accounting and reporting standards.
Tax Fees. Consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, assistance with tax reporting requirements and audit compliance, assistance with customs and duties compliance, value-added tax compliance and tax advice on international, federal and state tax matters. Additionally,original notice to TPG, the tax fees include services for assistanceCompany must provide TPG with a corporate tax project that was undertaken and completed in 2015.new notice prior to undertaking a subsequent equity issuance.
All Other FeesTransfer Restrictions. Consist of fees for professional services other than the services reported above, including permissible business process advisory and consulting services.
The Audit Committee determined that allnon-audit services provided by Deloitte were compatible with maintaining such firm’s audit independence.
Policy on Audit CommitteePre-Approval of Audit and PermissibleNon-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee’s policyInvestor Rights Agreement contains customary transfer restrictions whereby TPG may not transfer any Preferred Stock or any securities into which the Preferred Stock is topre-approve all audit and permissiblenon-audit services to be provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.Pre-approval is generally providedconvertible for up to one year andfollowing the Closing. After the one-year period, TPG may not transfer to (i) anypre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to report periodically to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with thispre-approval, and the fees for the services performed to date. The Audit Committee may alsopre-approve particular services on acase-by-case basis.
Approval of this proposal requires (i) a majority competitor of the shares represented and votingCompany or (ii) any person that would, to TPG’s knowledge, hold 25% or more of the common stock (on an as-converted basis) as a result of the transfer.
Other Covenants
For so long as the Investor Amount is at least 50%, the Annual Meeting at which a quorum is present and (ii) that shares voting affirmatively also constituteCompany must obtain consent from the holders of at least a majority of the required quorum.
Recommendationoutstanding Preferred Stock before adopting any plan of liquidation, dissolution or winding up of the Company, or filing any voluntary petition for bankruptcy, receivership or similar proceedings.
At all times while the Investor Amount is greater than 10%, TPG shall not, directly or indirectly, and shall cause affiliates not to acquire, offer to acquire, agree to acquire or make a public proposal to acquire, by purchase or otherwise, capital stock of the Company, or any right to vote or direct the voting of any capital stock of the Company;provided that these restrictions do not apply to (x) purchases or acquisitions permitted under the Investor Rights Agreement, (y) acquisitions of capital stock of the Company issued in connection with stock dividends, stock splits, recapitalizations or similar transactions and (z) issuances by the Company of capital stock of the Company or options, warrants or other rights to acquire capital stock of the Company to any director, as compensation for his or her membership on the Board.
Termination
The Investor Rights Agreement will terminate in the event that the Investor Amount ceases to be equal to or greater than 10%.
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DESCRIPTION OF PREFERRED STOCK
The following is a summary of the material terms of the preferences, limitations, voting powers and relative rights of the Series A Preferred Stock and Series B Preferred Stock as contained in the Certificate of Designations. While we believe that this summary covers the material terms and provisions of the Preferred Stock, we encourage you to read the Certificate of Designations, which is included as Exhibit 3.1 to the Current Report on Form 8-K filed by the Company on May 26, 2017, and is incorporated by reference herein. For more information about accessing the Current Report on Form 8-K and the other information we file with the SEC, please see “Where You Can Find More Information” below.
Series A Preferred Stock
Ranking
With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up of the Company, the Series A Preferred Stock ranks (i) senior to the common stock and all other common stock equivalents of the Company that do not expressly rank on parity with or senior to the Series A Preferred Stock, (ii) on parity with any class or series of capital stock of the Company created after the Closing that expressly ranks on parity with the Series A Preferred Stock, and (iii) junior to any class or series of capital stock of the Company created after the Closing that expressly ranks senior to the Series A Preferred Stock.
Dividend Rights
Each holder of the Series A Preferred Stock is entitled to receive dividends accruing on a daily basis, with respect to each share or fraction of a share, beginning on the date of issuance of the share, at a rate of 9% per annum of the Stated Value of the whole share (the “Preferred Dividend”). The initial “Stated Value” is $1,000 per share plus the sum of any Preferred Dividends paid in the form of an increase in Stated Value of the share, plus the sum of all accumulated and unpaid dividends. The Preferred Dividend will be paid, at the Company’s election, in cash or in the form of an increase in the Stated Value of the Series A Preferred Stock,provided, that until stockholder approval is obtained, any non-cash dividends must be paid in an increase in the Stated Value of the Series B Preferred Stock and shall not result in an increase in the Stated Value of the Series A Preferred Stock.
In addition to the Preferred Dividends, holders of the Series A Preferred Stock are entitled to participate in common stock dividends. In the event that the Company pays a dividend or makes a distribution in respect of the common stock, the Company simultaneously will declare a dividend (or distribution) on each share of Series A Preferred Stock equal to the dividend that would have been payable to the holder of the Series A Preferred Stock if the shares of Series A Preferred Stock had been converted into common stock on the date of determination of holders of common stock entitled to receive such dividend or distribution (the “Participating Dividend”). No dividends may be paid on shares of the Company’s capital stock that rank junior to or on parity with the Series A Preferred Stock unless all accrued but unpaid dividends are paid on the Series A Preferred Stock.
Liquidation Rights
Subject to the satisfaction in full of the debts of the Company, upon liquidation, dissolution or winding up of the Company, each holder of Series A Preferred Stock will be entitled to a per share amount equal to the greater of: (i) the liquidation preference (which is the greater of (A) the Stated Value plus any accrued and unpaid dividends and (B) the amount that would have been payable had all shares of the Preferred Stock been converted into common stock immediately before the liquidation) multiplied by the number of shares of Series A Preferred Stock held by the holder; and (ii) the per share amount such holder would have received had it converted its shares of Series A Preferred Stock into common stock immediately prior to such liquidation.
In the event the assets of the Company available for distribution to stockholders upon any liquidation, dissolution or winding-up of the affairs of the Company are insufficient to pay in full the liquidating distributions
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payable with respect to all outstanding shares of the Series A Preferred Stock and all other classes or series of preferred stock ranking on parity with the Series A Preferred Stock, holders of Series A Preferred Stock and holders of such other classes or series of preferred stock will share ratably in any distribution of the Company’s assets in proportion to the respective amounts to which they would otherwise be entitled upon liquidation, dissolution or winding-up of the Company.
Voting Rights
Holders of Series A Preferred Stock have the right to vote together with the holders of common stock, as a single class, on all matters which the holders of common stock are entitled to vote. The holders of Series A Preferred Stock are entitled to one vote per share of common stock that would be issuable to the holder upon conversion of all shares of Series A Preferred Stock held by such holder.
The Company may not declare or pay any dividend or distribution on, or directly or indirectly purchase, redeem, repurchase or otherwise acquire or permit any subsidiary of the Company to redeem or acquire, any securities that rank junior to the Preferred Stock, other than Participating Dividends actually paid on outstanding Preferred Stock, without the consent of the majority of the holders of the then-outstanding Series A Preferred Stock.
In addition, without the approval of the holders of at least a majority of the outstanding shares of Preferred Stock, the Company may not:
Redemption Rights
The Series A Preferred Stock is redeemable, in whole or in part, at the option of each holder at a per share redemption price equal to the Redemption Value (as hereinafter defined) on or after May 23, 2024, or upon the occurrence of any of the following events:
the consummation of (a) any recapitalization, reclassification or change of the common stock as a result of which the common stock would be converted into, or exchanged for, or represent solely the
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right to receive, cash, stock, other securities, other property or assets or (b) any share exchange, consolidation or merger of the Company pursuant to which the common stock will be converted into, or exchanged for, or represent solely the right to receive, cash, stock, other securities, other property or assets; |
The “Redemption Value” means the price per share of Preferred Stock equal to (a) for any redemption occurring prior to October 22, 2018, the product of the Stated Value and 1.75 and (b) for any redemption occurring on or after October 22, 2018, the greater of (x) the product of the Stated Value and 2.00 and (y) an amount equal to the number of shares of common stock such share of Preferred Stock is convertible into at the time of such redemption multiplied by the volume-weighted average price per share of common stock for each of the 30 consecutive trading days ending the trading day before the record date of the redemption.
The Company may, at its option, redeem in whole at any time all shares of Preferred Stock at the time outstanding, by delivery of written notice to each holder of Preferred Stock at least 30 days prior to the proposed redemption date, at a redemption price paid in cash for each share of Preferred Stock equal to the then-applicable Redemption Value.
Conversion
At any time after the Closing Date, each holder of Series A Preferred Stock has the right, at its option, to convert each share of the holder’s Series A Preferred Stock at any time into that number of shares of common stock determined by dividing (i) the sum of the Stated Value and any accrued and unpaid dividends by (ii) the Conversion Price (as hereinafter defined). The “Conversion Price” means $28.162, subject to certain anti-dilution adjustments as provided in the Certificate of Designations. A holder of Series A Preferred Stock may exercise this conversion right for all or any portion of the holder’s Series A Preferred Stock as long as the holder is converting at least 1,000 shares of Series A Preferred Stock or all of the shares of Series A Preferred Stock held by the holder.
Series B Preferred Stock
Ranking
With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up of the Company, the Series B Preferred Stock ranks (i) senior to the common stock and all other common stock equivalents of the Company that do not expressly rank on parity with or senior to the Series B Preferred Stock, (ii) on parity with any class or series of capital stock of the Company created after the Closing that expressly ranks on parity with the Series B Preferred Stock, and (iii) junior to any class or series of capital stock of the Company created after the Closing that expressly ranks senior to the Series B Preferred Stock.
Dividend Rights
Each holder of the Series B Preferred Stock is entitled to receive a Preferred Dividend, accruing on a daily basis, with respect to each share or fraction of a share, beginning on the date of issuance of the share, at a rate of 9% per annum of the Stated Value of the whole share, provided that if stockholder approval of the Equity Rights Proposal is not obtained by September 19, 2017, the Preferred Dividend applicable to the Series B Preferred
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Stock will accrue at a rate of 11% per annum. The initial “Stated Value” is $1,000 per share plus the sum of any Preferred Dividends paid in the form of an increase in Stated Value of the share, plus the sum of all accumulated and unpaid dividends. The Preferred Dividend will be paid, at the Company’s election, in cash or in the form of an increase in the Stated Value of the Series B Preferred Stock.
In addition to the Preferred Dividends, holders of the Series B Preferred Stock are entitled to participate in common stock dividends. In the event that the Company pays a dividend or makes a distribution in respect of the common stock, the Company simultaneously will declare a Participating Dividend on each share of Series B Preferred Stock equal to the dividend that would have been payable to the holder of the Series B Preferred Stock if the shares of Series B Preferred Stock had been converted to Series A Preferred Stock and, subsequently, to common stock on the date of determination of holders of common stock entitled to receive such dividend or distribution. No dividends may be paid on shares of the Company’s capital stock that rank junior to or on parity with the Series B Preferred Stock unless all accrued but unpaid dividends are paid on the Series B Preferred Stock.
Liquidation Rights
Subject to the satisfaction in full of the debts of the Company, upon liquidation, dissolution or winding up of the Company, each holder of Series B Preferred Stock will be entitled to a per share amount equal to the greater of: (i) the liquidation preference (which is the greater of (A) the Stated Value plus any accrued and unpaid dividends and (B) the amount that would have been payable had all shares of the Preferred Stock been converted into common stock immediately before the liquidation) multiplied by the number of shares of Series B Preferred Stock held by the holder; and (ii) the per share amount such holder would have received had all holders of Series B Preferred Stock converted their shares into Series A Preferred Stock and, subsequently, into common stock immediately prior to such liquidation.
In the event the assets of the Company available for distribution to stockholders upon any liquidation, dissolution or winding-up of the affairs of the Company are insufficient to pay in full the liquidating distributions payable with respect to all outstanding shares of the Series B Preferred Stock and all other classes or series of preferred stock ranking on parity with the Series B Preferred Stock, holders of Series B Preferred Stock and holders of such other classes or series of preferred stock will share ratably in any distribution of the Company’s assets in proportion to the respective amounts to which they would otherwise be entitled upon liquidation, dissolution or winding-up of the Company.
Voting Rights
Holders of Series B Preferred Stock have no voting rights, except that, without the approval of the holders of at least a majority of the outstanding shares of Preferred Stock, the Company may not:
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Redemption Rights
The Series B Preferred Stock is redeemable, in whole or in part, at the option of each holder at a per share redemption price equal to the Redemption Value on or after May 23, 2024, or upon the occurrence of any of the following events:
The Company may, at its option, redeem in whole at any time all shares of Preferred Stock at the time outstanding, by delivery of written notice to each holder of Preferred Stock at least 30 days prior to the proposed redemption date, at a redemption price paid in cash for each share of Preferred Stock equal to the then-applicable Redemption Value.
Conversion
The Series B Preferred Stock is not convertible unless and until stockholder approval of the Equity Rights Proposal is obtained, at which time all outstanding shares of Series B Preferred Stock will convert, on a one-for-one basis, into shares of Series A Preferred Stock.
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PROPOSAL NO. 2 – ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING
Overview
The Adjournment Proposal, if adopted, will allow the Board to adjourn the Special Meeting to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to the Company’s stockholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Equity Rights Proposal.
Consequences if the Adjournment Proposal is Not Approved
If the Adjournment Proposal is not approved by the Company’s stockholders, the Board may not be able to adjourn the Special Meeting to a later date in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Equity Rights Proposal.
Vote Required for Approval
The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of the Company’s common stock (including the Series A Preferred Stock, on an as-converted basis) represented in person or by proxy and entitled to vote thereon at the Special Meeting. Abstentions will have the same effect as a vote “AGAINST” this proposal.
The Board unanimously recommends that you voteTHE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADJOURNMENT PROPOSAL.
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Based on the ratificationcapitalization of the appointmentCompany as of Deloittethe Record Date, the conversion of all of the Series A Preferred Stock into shares of our common stock (including shares of Series A Preferred Stock issuable upon conversion of the outstanding Series B Preferred Stock) would result in the Investor owning approximately % of our outstanding common stock after giving effect to servesuch conversion. TPG, as Superior’s independent registered public accounting firm fora holder of our Series A Preferred Stock, is not entitled to vote on the fiscal year ending December 31, 2017. Proxies solicitedEquity Rights Proposal presented at the Special Meeting, but is permitted to vote on the Adjournment Proposal. TPG, as holder of the Series B Preferred Stock, is not entitled to vote on any of the proposals set forth in this proxy statement.
On May 22, 2017, Ransom A. Langford was appointed to our Board, effective as of the Closing, pursuant to TPG’s director nomination rights under the Investor Rights Agreement. Because Mr. Langford joined our Board prior to the consummation of the Investment, he did not participate as a director of the Company in discussions of, or vote with respect to, matters related to the Investment that were approved by our Board, including our Board vote recommending approval of the board will be voted forissuance of Series A Preferred Stock and Series B Preferred Stock and issuance of common stock upon conversion of the proposal unless stockholders specify a contrary vote.Series A Preferred Stock. No directors or officers of the Company purchased any securities in the Investment.
VOTING SECURITIES AND PRINCIPAL OWNERSHIP
The following table sets forth certain information with respect to beneficial ownership of Superior common stock as of March 1,, 2017, the Record Date, for (i) the named executive officers (ii) each director and director nominee, (iii) all directors and named executive officers as a group and (iv) all persons known to Superior to beneficially own 5% or more of Superior common stock.
Name and Address(1) of Beneficial Owner | Shares Beneficially Owned(1) | Percentage of Total Voting Power(1)(2) | ||||||
5% Beneficial Stockholders: | ||||||||
BlackRock, Inc.(3) | 2,814,025 | 11.3 | % | |||||
Dimensional Fund Advisors LP(4) | 2,261,130 | 9.1 | % | |||||
GAMCO Asset Management, Inc.(5) | 2,242,958 | 9.0 | % | |||||
The Vanguard Group, Inc.(7) | 2,123,988 | 8.5 | % | |||||
Steven J. Borick(7)(8) | 1,538,101 | 6.2 | % | |||||
The Louis L. Borick Foundation(7) | 1,500,100 | 6.0 | % | |||||
Directors and Named Executive Officers: | ||||||||
Donald J. Stebbins(9) | 199,670 | * | ||||||
Parveen Kakar(9)(10) | 74,312 | * | ||||||
Kerry A. Shiba(9)(10) | 72,774 | * | ||||||
Margaret S. Dano(9)(10) | 45,515 | * | ||||||
Francisco S. Uranga(9)(10) | 36,915 | * | ||||||
Timothy C. McQuay(9) | 16,915 | * | ||||||
James S. McElya(9) | 14,293 | * | ||||||
Jack A. Hockema(9) | 21,915 | * | ||||||
Michael R. Bruynesteyn(9) | 5,946 | * | ||||||
Ellen B. Richstone | — | * | ||||||
Paul Humphries(9) | 6,915 | * | ||||||
James F. Sistek(9) | 16,176 | * | ||||||
Larry Oliver(9) | 14,460 | * | ||||||
Superior’s Directors and Named Executive Officers as a Group (13 persons)(9)(10) | 525,806 | 2.1 | % |
Name and Address(1) of Beneficial Owner | Shares Beneficially Owned(1) | Percentage of Total Voting Power(1)(2) | ||||||
5% Beneficial Stockholders: | ||||||||
TPG Groups Holdings (SBS) Advisors, Inc.(3) | 4,978,411 | % | ||||||
BlackRock, Inc.(4) | 2,814,025 | % | ||||||
Dimensional Fund Advisors LP(5) | 2,261,130 | % | ||||||
GAMCO Asset Management, Inc.(6) | 2,242,958 | % | ||||||
The Vanguard Group, Inc.(7) | 2,123,988 | % | ||||||
Steven J. Borick(8)(9) | 1,538,101 | % | ||||||
The Louis L. Borick Foundation(8) | 1,500,100 | % | ||||||
Directors and Named Executive Officers: | ||||||||
Donald J. Stebbins(10) | 314,144 | * | ||||||
Nadeem Moiz | — | * | ||||||
Parveen Kakar(10)(11) | 76,741 | * | ||||||
James F. Sistek(10) | 18,605 | * | ||||||
Robert Tykal | — | * | ||||||
Timothy C. McQuay(10) | 20,946 | * | ||||||
Michael R. Bruynesteyn(10) | 8,977 | * | ||||||
Jack A. Hockema(10) | 24,946 | * | ||||||
Paul Humphries(10) | 9,946 | * | ||||||
Ransom A. Langford | — | * | ||||||
James S. McElya(10) | 17,323 | * | ||||||
Ellen B. Richstone | 3,031 | * | ||||||
Francisco S. Uranga(10)(11) | 39,946 | * | ||||||
Superior’s Directors and Named Executive Officers as a Group (13 persons)(10)(11) | 534,605 | % |
* | Less than 1%. |
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(1) | All persons have the Company’s principal office as their address, except as otherwise indicated. Except as indicated in the footnotes to this table, and subject to applicable community property laws, the persons listed have sole voting and investment power with respect to all shares of Superior’s common stock beneficially owned by them. |
(2) | The percentage of |
(3) | The information with respect to the holdings of TPG Group Holdings (SBS) Advisors, Inc. (“Group Advisors”), a registered investment advisor, is based solely on the Schedule 13D filed May 31, 2017 by Group Advisors, David Bonderman and James G. Coulter. Group Advisors is the sole member of TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability company, which is the general partner of TPG Group Holdings (SBS), L.P., a Delaware limited partnership, which is the sole member of TPG Holdings I-A, LLC, a Delaware limited liability company, which is the general partner of TPG Holdings I, L.P., a Delaware limited partnership, which is the sole member of TPG Growth GenPar III Advisors, LLC, a Delaware limited liability company, which is the general partner of TPG Growth GenPar III, L.P., a Delaware limited partnership, which is the general partner of TPG Growth III Sidewall, L.P., a Delaware limited partnership (“TPG Growth Sidewall”), which directly holds 140,202 shares of Series A Preferred Stock and 9,798 shares of Series B Preferred Stock. David Bonderman is the President of Group Advisors and officer, director and/or manager of other affiliated entities. James G. Coulter is the Senior Vice President of Group Advisors and officer, director and/or manager of other affiliated entities. Group Advisors’ address is TPG Global, LLC, 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102. |
(4) | The information with respect to the holdings of BlackRock, Inc. (“BlackRock”), a registered investment advisor, is based solely on the Schedule 13G/A filed January 17, 2017 by BlackRock. By virtue of being the parent holding company of the holders of such shares, BlackRock has sole voting power with respect to 2,755,722 shares and sole dispositive power with respect to all 2,814,025 shares. BlackRock’s address is 55 East 52nd Street, New York, New York 10022. |
The information with respect to the holdings of Dimensional Fund Advisors LP (“Dimensional Fund”), a registered investment advisor, is based solely on the Schedule 13G/A filed February 9, 2017 by Dimensional Fund. Dimensional Fund serves as investment advisor to four registered investment companies and as investment manager to certain other commingled group trusts and separate accounts (collectively, the “Funds”), which own all shares. The Funds have sole voting power with respect to 2,185,465 shares owned by the Funds and sole dispositive power with respect to all 2,261,130 shares owned by the Funds. The address for the Dimensional Fund is Palisades West, Building one, Austin, Texas 78746. |
The information with respect to the holdings of GAMCO Asset Management Inc. (“GAMCO”), a registered investment advisor, is based solely on the Schedule 13D Amendment No. 39 filed January 24, 2017 by Gabelli Funds, LLC (“Gabelli Funds”), GAMCO, Teton Advisors, Inc. (“Teton Advisors”), GGCP, Inc. (“GGCP”), GAMCO Investors, Inc. (“GBL”), Associated Capital Group, Inc. (“AC”) and Mario G. Gabelli (“Mario Gabelli”). Subject to certain restrictions, (i) GAMCO holds 1,208,075 shares and has sole voting power with respect to 1,117,075 shares; (ii) Gabelli Funds holds 543,000 shares and has sole voting and dispositive power with respect to such shares; (iii) Teton Advisors holds 483,883 shares and has sole voting and dispositive power with respect to such shares; and (iv) AC holds 8,000 shares and has sole voting and dispositive power with respect to such shares. None of GGCP, GBL or Mario Gabelli directly hold or have voting or dispositive power over any shares. Each of Gabelli Funds and GAMCO is wholly-owned subsidiary of GBL. Mario Gabelli is (i) the controlling stockholder, chief executive officer, chief investment officer and a director of GGCP, (ii) chairman and executive officer of GBL, (iii) chief investment officers of |
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Gabelli Funds and (iv) controlling stockholder of Teton. The address for these holders is One Corporate Center, Rye, New York 10580-1435. |
The information with respect to the holdings of The Vanguard Group, Inc. (“Vanguard”), a registered investment advisor, is based on the Schedule 13G/A filed February 10, 2017 by Vanguard. The aggregate amount beneficially owned by Vanguard is 2,123,988 shares. Of such shares, Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 28,160 shares by virtue of its serving as investment manager of certain collective trust accounts, and Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial owner of 3,046 shares by virtue of its serving as investment manager of Australian investment offerings. Vanguard has sole voting power with respect to 29,488 shares, sole dispositive power with respect to 2,094,110 shares and shared dispositive power with respect to 29,878 shares. The address for Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
The information with respect to the share ownership of Steven J. Borick and The Louis L. Borick Foundation (the “Foundation”), of which Mr. Borick is the President, is based solely on the Schedule 13D/A, Amendment No. 12 filed on February 13, 2017. The Foundation and Mr. Borick share voting and dispositive power over |
Includes restricted stock units, subject to solely time-based vesting requirements, (“RSUs”) in the amount of |
Includes stock options in the amount of 48,500 for Mr. Kakar |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and directors, as well as those persons who own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. These persons are required by SEC rule to furnish us with copies of all Section 16(a) forms they file.22
Based solely on a review of copies of reports filed with the SEC and submitted to us and on written representations by certain of our directors and executive officers, we are not aware of any failure to file reports on a timely basis during the year ended December 25, 2016 under the reporting requirements of Section 16(a) of the Exchange Act, except that, Parveen Kakar, James Sistek and Kerry Shiba, failed to timely file a Form 4 for RSU vesting events (and related withholding events) that took place in March 2016 and Lawrence Oliver failed to timely file a Form 4 for an inheritance (occurring in April 2015), as well as for RSU vesting events (and related withholding events) and the purchase of shares (both occurring in March 2016). All aforementioned parties have subsequently filed Form 4 reports.
CERTAIN RELATIONSHIPSSTOCKHOLDERS’ PROPOSALS AND RELATED TRANSACTIONSNOMINATIONS OF BOARD MEMBERS
Transactions with Related Persons
In the first quarter of 2015, we entered into an agreement to purchase a subscription to online software provided by New Generation Software Inc. (“NGS”). Our Senior Vice President, Business Operations, is a board member and passive investor and our Vice President of Information Technology is also a passive investor in NGS. We made payments to NGS of $243,000 and $351,000 during the 2016 and 2015 fiscal year, respectively. The transaction was entered into in the ordinary course of business and on an arms-length basis.
Review, Approval or Ratification of Transactions with Related Persons
As provided in its Committee charter, the Audit Committee is primarily responsible for the review, approval and ratification of related person transactions. As mandated by the Audit Committee, Superior’s management is required to inform the Audit Committee of all related person transactions, including relationships and dollar values. Superior’s Code of Conduct also requires that transactions be reported to the Audit Committee. Additionally, the Nominating and Corporate Governance Committee annually reviews any related person transactions involving a director when determining director independence.
“Related-person transactions” are transactions between Superior and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. A “related person” is a director, executive officer, nominee for director or a person known to Superior to beneficially own 5% or more of Superior common stock, in each case since the beginning of the last fiscal year, and their immediate family members.
Also see Note 11 — Leases and Related Parties in Notes to the Consolidated Financial Statements in Item 8 — Financial Statements and Supplementary Data of the Annual Report on Form10-K for the year ended December 25, 2016 filed with the SEC on March 3, 2017.
Our Corporate Governance Guidelines provide that a majority of the Board and all members of the Audit, Compensation and Benefits and Nominating and Corporate Governance Committees of the Board will be independent. On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire that requires disclosure of any transactions with Superior in which a director or executive officer, or any member of his or her immediate family, has a direct or indirect interest. Following completion of these questionnaires, the Board, with the assistance of the Nominating and Corporate Governance Committee, makes an annual determination as to the independence of each director using the current standards for “independence” established by the New York Stock Exchange, additional criteria set forth in Superior’s Corporate Governance Guidelines and consideration of any other material relationship a director may have with Superior.
On March 1, 2017, the Board determined that all of its current directors are independent under these standards, except for Mr. Stebbins. All members of each of Superior’s Audit, Compensation and Benefits and Nominating and Corporate Governance Committees are independent directors. In addition, upon recommendation of the Nominating and Corporate Governance Committee, the Board has determined that the members of the Audit Committee and Compensation and Benefits Committee meet the additional independence criteria required for audit committee and compensation committee membership under the New York Stock Exchange applicable listing standards.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis discusses Superior’s executive compensation structure, philosophy, decisions and results primarily for 2016 (and other relevant periods) and is organized into the following sections:
Our senior management team has been assembled to drive our performance and accomplish the performance results discussed below. This discussion focuses on the compensation structure in effect for the named executive officers (who will be referred to as the “NEOs”) in 2016. The tenure of each NEO with Superior is noted in the following table:
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Executive Summary
We are one of the largest suppliers of cast aluminum wheels to the world’s leading automobile and light truck manufacturers, with wheel manufacturing operations in the United States and Mexico. Products made in our North American facilities are delivered primarily to global automotive manufacturers’ assembly operations in North America.
Company Evolution
Since 2014, we have focused our strategic priorities on improving our financial and operating performance and increasing value for our stockholders. Even though the full impact of our operating initiatives has yet to be fully reflected in our financial performance, as discussed below, we continued seeing positive results in 2016.
Recent Business Highlights/Company Performance
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Executive Compensation Highlights
Highlights of our 2016 executive compensation program and recent changes are summarized, as follows.
2016 Executive Compensation Highlights and Recent Changes
As discussed in the “2016 Executive Compensation Components – Long-Term Equity Incentive Compensation” section of this Proxy Statement, these performance measures were developed after a rigorousbottom-up financial analysis of our business.
2016 Total Direct Compensation Allocation
(assuming performance-based components earned at target)
2016Say-on-Pay Vote and Stockholder Engagement
Leading up to our 2016 annual meeting, members of our senior executive team and members of our Compensation and Benefits Committee engaged with many of our largest stockholders and heard their input regarding our executive compensation programs. As a result of these discussions and before last year’s vote was tallied, we:
Pre-Annual Meeting Compensation Actions
At our 2016 annual meeting, our stockholders did provide majority support for Superior’s NEO compensation through theSay-on-Pay Vote (approximately 67% support was received). However, since we received less than 70% support, we continued to engage in substantial outreach efforts with our major stockholders and their proxy advisors to gather feedback regarding our executive compensation programs.
Following the 2016 annual meeting, directors from our Compensation and Benefits Committee held additional meetings with significant stockholders and we also engaged and met with one proxy advisory firm regarding our executive compensation programs. Senior management also continually received input in the normal course of meetings with our stockholders.
The main themes of the feedback we received from these stockholder meetings are summarized, as follows:
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In addition, as a result of the Compensation and Benefits Committee’s review of our programs, including an analysis of our 2016Say-on-Pay results, we took the following actions:
Other Post-Annual Meeting Compensation Actions
Compensation Governance
Philosophy
The Compensation and Benefits Committee believes that Superior’s NEOs should be paid in a manner that attracts, motivates and retains the best-available talent and rewards them for driving successful results. This philosophy is achieved through the base salary, AIPP and LTIP being set within the 50th and 75th percentile of the benchmark for each position, as well as recognizing the relative skills, experience and past performance of the NEOs and their respective roles and responsibilities within the organization, and judgments about the extent to which the NEOs can impact the company-wide performance and creation of stockholder value. Within this overall philosophy, the Compensation and Benefits Committee’s ongoing objectives are:
Superior’s executive officers are compensated in a manner consistent with Superior’s strategy, competitive practice, sound compensation governance principles and stockholder interests and concerns. Superior began placing an even greater emphasis on performance-based compensation in 2015. In 2015, the company deployed an AIPP and LTIP compensation program, which was developed after obtaining guidance from our independent compensation consultant and seeking and receiving feedback from some of our stockholders regarding desired plan design features.
Best Practices
The core of Superior’s executive compensation philosophy enables the company to continue to attract and retain talent while driving performance. The Compensation and Benefits Committee has made significant overhauls to our executive compensation program since 2014. The Compensation and Benefits Committee continues to monitor and review the compensation program against our financial performance and continues to monitor the market to ensure competitive and performance driven plans.
Our programs continue to have many features that our stockholders widely consider best practices and that we view as consistent with our compensation and governance philosophy, including:
BEST PRACTICES
Compensation Risk Oversight
The Compensation and Benefits Committee’s annual review and approval of Superior’s compensation philosophy and strategy includes the review of compensation-related risk management. The Compensation and Benefits Committee believes that the following risk oversight and compensation design features described in greater detail elsewhere herein safeguard against excessive risk taking:
Methodology for Establishing Compensation
In designing and administering the compensation programs of the NEOs, the Compensation and Benefits Committee attempts to strike a balance among the above elements, which are discussed in more detail below. The Compensation and Benefits Committee considers the pay practices of comparable companies to determine the appropriate pay mix and compensation levels, as well as Superior’s own specific short and long-term strategic objectives. The following section describes the various methods the Compensation and Benefits Committee uses in its design, administration and oversight of the compensation programs for the NEOs.
The Compensation and Benefits Committee has direct responsibility for making recommendations to the Board regarding the approval, amendment or termination of Superior’s executive compensation plans and programs. The Compensation and Benefits Committee establishes the annual compensation of Superior’s CEO. It also reviews the compensation for other executive officers and makes recommendations to the independent members of the Board.
Consistent with its charter, the Compensation and Benefits Committee is composed of four directors. Each member of the Committee is independent, as determined by the Board and based on the New York Stock Exchange listing standards. Their independence from management allows the Compensation and Benefits Committee members to apply independent judgment when designing and overseeing our compensation program and in making pay decisions.
The Compensation and Benefits Committee from time to time engages independent compensation consultants to provide advice and ongoing recommendations regarding executive compensation programs and principles that are consistent with Superior’s business goals and pay philosophy. The Compensation and Benefits Committee has the final authority to hire and terminate any consultant, as well as the responsibility to consider the independence of the consultant. The Compensation and Benefits Committee continued to retain Willis Towers Watson in 2016 to assist with specific assignments. The Compensation and Benefits Committee has assessed the independence of Willis Towers Watson, and concluded that Willis Towers Watson’s work does not raise any conflict of interest under applicable SEC and New York Stock Exchange rules.
Setting Executive Pay (Benchmarking)
The Compensation and Benefits Committee is responsible for establishing the annual compensation of Superior’s CEO. For the remaining NEOs and other executives, Superior’s CEO recommends compensation levels and specific components of compensation. The Compensation and Benefits Committee reviews these recommendations and adjusts them as it deems appropriate before approving or recommending any changes to either the CEO or Board.
The Compensation and Benefits Committee typically reviews broad-based third-party compensation surveys covering a wide array of public companies, some larger and some smaller than we are, to obtain a general understanding of current compensation practices. These compensation surveys provide valuable data for subjective review and confirmation of the equanimity of the salaries paid to the NEOs. The data also gives the Compensation and Benefits Committee information concerning market pay practices regarding the pay mix among base salary, annual bonus and long-term incentives of companies in the industry that compete with us for executive talent. The Compensation and Benefits Committee targets the compensation components within the 50th and 75th percentile range of the peer data while taking into consideration the experience level and performance of each named executive officer.
For 2016, the Compensation and Benefits Committee relied upon the study performed by Willis Towers Watson in 2015. Willis Towers Watson was engaged, starting in 2015, to assist the Compensation and Benefits Committee in evaluating the competitiveness of Superior’s executive compensation program. Willis Towers Watson based its competitive pay assessment on survey data of a company with $800 million in revenue. In addition, for the CEO and CFO position, Willis Towers Watson utilized proxy data from our peer group consisting of the following fourteen automotive part and equipment manufacturers with median and mean revenues of approximately $864 million and $875 million, respectively:
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2016 Executive Compensation Components
Introduction – Elements of Pay
The following is a summary of the 2016 direct core compensation elements (base salary, annual incentives and long-term incentives) of our executive compensation program.
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In addition, Superior’s NEOs were provided retirement benefits and certain other benefits.
Narrative descriptions of the individual elements of compensation are set forth below.
The Compensation and Benefits Committee does not use a specific formula for allocating compensation among the various components. Instead, the Compensation and Benefits Committee considers market pay practices and whether the total compensation package is fair, reasonable and in accordance with the interests of our stockholders.
Base Salary
Base salary provides a fixed element of compensation that competitively rewards the executive’s skills, experience and contributions to Superior. The base salary of the CEO was established when we he was appointed as our CEO in May of 2014 and has remained the same through fiscal year 2016.
For NEOs other than the CEO, base salary adjustments are based on recommendations of the CEO to the Compensation and Benefits Committee, taking into account the executive’s performance, scope of work, competitive benchmarks and Company performance. In setting 2016 salaries, the CEO and the Compensation and Benefits Committee reviewed the analysis and findings of our independent compensation consultant. Base salaries for NEOs other than the CEO are generally adjusted when deemed necessary to meet market competition or when appropriate to recognize increased responsibilities. On March 28, 2016, certain of our NEOs received merit and market based increases, as shown in the following table:
2016 Base Salary Increase – NEO
Officer Name | Date | Reason | Increase | Salary | ||||||||||||
Stebbins, Don | n/a | n/a | 0.00 | % | $ | 900,000.00 | ||||||||||
Shiba, Kerry | 3/28/16 | Merit | * | 3.70 | % | $ | 420,000.00 | |||||||||
Kakar, Parveen | 3/28/16 | Merit | * | 4.00 | % | $ | 390,000.00 | |||||||||
Sistek, James | 3/28/16 | Merit | * | 4.00 | % | $ | 390,000.00 | |||||||||
Oliver, Larry | 3/28/16 | Merit | * | 4.00 | % | $ | 390,000.00 |
2017 Update. Annual base salary rates to be effective as of April 1, 2017, as determined on the Record Date:
2017 Base Salary Increase – NEO
Officer Name | Date | Reason | Increase | Salary | ||||||||||||
Stebbins, Don | n/a | n/a | 0.00 | % | $ | 900,000.00 | ||||||||||
Shiba, Kerry | n/a | n/a | 0.00 | % | $ | 420,000.00 | ||||||||||
Kakar, Parveen | 4/01/17 | Merit | * | 4.00 | % | $ | 405,600.00 | |||||||||
Sistek, James | 4/01/17 | Merit | * | 4.00 | % | $ | 405,600.00 | |||||||||
Oliver, Larry | n/a | n/a | 0.00 | % | $ | 390,000.00 |
Annual Incentive Compensation and Bonuses
As part of our proxy filed in 2016, we submitted the AIPP so that our stockholders could approve the material terms of the AIPP’s performance goals. At Superior’s 2016 annual meeting of stockholders, approximately 99% of the votes cast on this proposal were voted in favor of adopting the AIPP. As a product of this approval, we combined our prior AIPP for our CEO and the AIPP into one plan document. Accordingly, we have granted awards under the AIPP, as indicated further below.
In 2016, the AIPP continues the program implemented in 2011, which provides a correlation to Company performance by using AIPP Adjusted EBITDA as a payout metric, coupled with an individual performance component for our NEOs other than the CEO based on the individual’s performance rating under the Annual Performance Management Program. “AIPP Adjusted EBITDA” is a performance measure that is equal to our earnings before interest income and expense, income taxes, depreciation, amortization and M&A activity costs.
The Compensation and Benefits Committee selected the financial performance component of the AIPP for 2016, because it is an objective measure of core Company performance, without considering matters such as, interest income or expense, taxes, or depreciation and amortization, which generally do not impact operational efficiencies. The Compensation and Benefits Committee believes that this type of program, which combines objectively measureable financial goals with adjustments for individual performance for certain NEOs, reinforces a Company culture based on team contribution towards results and provides a clear line of sight for participants to understand individual rewards.
The AIPP Adjusted EBITDA target for this program was adopted after we conducted a rigorous bottom up full range comprehensive business and financial planning analysis in several layers of the Company from middle management up through our Board. Because of this comprehensive process, the Compensation and Benefits Committee approved a performance goal level that is designed to be met if we meet our business plan.
Under the AIPP, Mr. Stebbins was eligible to receive a cash bonus ranging from 0% to 200% of his base salary depending on Superior’s level of achievement of AIPP Adjusted EBITDA goals, set forth in the following table, which were set by the Compensation and Benefits Committee and approved by the Board:
AIPP Adjusted EBITDA Goal ($) | % of AIPP Adjusted EBITDA Target | % of CEO Salary Payable | Actual % of CEO Salary Earned | Total Amount Paid | ||||||||||||
<72,000,000 | <80.0 | % | 0 | % | ||||||||||||
72,000,000 | 80.0 | % | 80.0 | % | ||||||||||||
89,470,000* | 99.41 | % | 99.41 | % | 99.41 | % | $ | 894,690 | ||||||||
90,000,000 | 100.0 | % | 100.0 | % | ||||||||||||
108,000,000 | 120.0 | % | 200.0 | % | ||||||||||||
>108,000,000 | >120 | % | 200.0 | % |
The AIPP for 2016 provides annual cash incentives to our NEOs and other high ranking executives other than the CEO along the same basic structure as was used in 2015, with fixed and discretionary components. A fixed amount, expressed as a percentage of base salary, was payable if the Company achieved a set level of AIPP Adjusted EBITDA. For all NEOs other than the CEO, the Compensation and Benefits Committee could exercise its business judgment to increase or decrease the fixed portion of thenon-equity incentive bonus a NEO otherwise earned within a range of 0% to 200% depending the NEO’s annual performance rating (againstpre-specified individual performance goals). Under the AIPP for 2016, the target bonus percentage for the NEOs ranged from 75% to 80% of base salary if the target AIPP Adjusted EBITDA was attained.
The following table illustrates the payout opportunities under the AIPP Adjusted EBITDA and individual performance components of the AIPP for 2016:
AIPP Adjusted EBITDA Goal ($) | % of AIPP Adjusted EBITDA Target | % of Salary Payable | Individual Performance Multiplier | |||||||
<72,000,000 | <80 | 0% | n/a | |||||||
72,000,000 | 80.0 | % | 60% - 64% | 0-200 | % | |||||
81,200,000 | 90.0 | % | 68% - 72% | 0-200 | % | |||||
89,470,000* | 99.41 | % | 75% - 85% | 0-200 | % | |||||
90,000,000 | 100.0 | % | 75% - 86% | 0-200 | % | |||||
99,000,000 | 110.0 | % | 83% - 88% | 0-200 | % | |||||
108,000,000 | 120.0 | % | 90% - 96% | 0-200 | % | |||||
117,000,000 | 130.0 | % | 98% - 104% | 0-200 | % | |||||
>117,000,000 | 130.0 | % | 98% - 104% | 0-200 | % |
The following table shows the target award, AIPP Adjusted EBITDA performance multiplier, individual performance multiplier, and amounts paid to the NEOs other than the CEO under the AIPP for 2016:
Name | Target Award | AIPP Adjusted EBITDA Performance Multiplier | Individual Performance Multiplier | Total Amount Earned | ||||||||||||
K. A. Shiba | $ | 252,000 | 99.41 | % | 100 | %(1) | $ | 250,513 | ||||||||
P. Kakar | $ | 195,000 | 99.41 | % | 100 | %(2) | $ | 193,850 | ||||||||
J. Sistek | $ | 195,000 | 99.41 | % | 115 | %(3) | $ | 222,913 | ||||||||
L. Oliver | $ | 195,000 | 99.41 | % | 50 | %(4) | $ | 96,925 |
Long-Term Equity Incentive Compensation
The Compensation and Benefits Committee, after receiving feedback prior to our 2015 annual meeting from management’s discussion with some of our stockholders regarding desired plan design features, approved certain changes to our long-term incentive awards in 2015. In these conversations, we discussed leveraging the performance-based features in our CEO’s 2014 employment agreement across all of our NEOs. Due to the positive feedback regarding this concept, we implemented a new long-term incentive program in 2015 that mirrors the strong (2/3) emphasis on performance-based equity awards inherent in our CEO’s 2014 employment agreement. This emphasis continued in 2016. In 2016, the total value of our LTIP awards, which were granted on March 7, 2016, was allocated 2/3 to PRSU awards and 1/3 to RSU awards. The PRSU awards provide Mr. Stebbins the opportunity to earn up to 150% of the target award value in Company stock and our other NEOs the opportunity to earn up to 200% of the target award value in Company stock. Performance criteria for the 2016 PRSU awards to all of our NEOs were updated to be the following (weighting in parenthesis): (i) Cumulative EPS (40%), (ii) ROIC (40%) and (iii) Relative TSR (20%).
Each of these three performance criteria are calculated as follows:
The Compensation and Benefits Committee choose each criterion for the following reasons:
The target levels of these performance criteria were designed after a rigorous bottom up full range comprehensive business and financial planning analysis in several layers of the Company from middle management up through our Board. Because of this process, the Compensation and Benefits Committee approved performance goal levels that are designed to be met if we meet our business plan.
The RSU award for Mr. Stebbins cliff vests on December 31, 2018 and the RSU awards for the other NEOs vest in equal annual installments over a three-year period.
The total target award opportunities for our NEOs, expressed as a percentage of each NEO’s annual base salary (at date of grant), is as follows: Mr. Stebbins – 200%, Mr. Shiba – 80%, Mr. Kakar – 75%, Sistek – 75%, and Oliver – 75%. The numbers of units awarded to our NEOs in 2016 are set forth in the following chart:
2016 NEO Long-Term Incentive Awards
Name | PRSUs (at target) (#) | RSUs (#) | ||||||
Don Stebbins | 64,103 | 32,051 | ||||||
Kerry Shiba | 9,465 | 4,733 | ||||||
Parveen Kakar | 8,216 | 4,108 | ||||||
James Sistek | 8,216 | 4,108 | ||||||
Larry Oliver | 8,216 | 4,108 |
2017 Update. The Compensation and Benefits Committee, in connection with the aforementioned study by Willis Towers Watson and after receiving feedback from management’s discussion with some of our stockholders regarding desired plan design features, has approved the use of the same performance criteria (and weighting) that was used for the 2016 LTIP awards for the 2017 LTIP awards (Cumulative EPS, ROIC and Relative TSR). The target value for the 2017 LTIP awards for our NEOs as a percentage of base salary are as follows: Mr. Stebbins – remains at 200%; Mr. Shiba – 90% ; Mr. Kakar – 90%; Mr. Sistek – 90%; and Mr. Oliver – 90%. In order to align all of our NEO’s compensation, starting in 2017, all NEO’s will be granted RSUs that vest in equal annual installments over a three-year period.
Retirement and Similar Benefits
Mr. Kakar, is a participant in Superior’s Salary Continuation Plan, which provides a retirement benefit for participants who terminate employment after having reached specified vesting dates and after reaching the age of 65 (or in the event of death while in our employ prior to separation from service). Upon a qualifying termination, Superior will pay to the participant a benefit equal to 30% of his or her final average compensation over the preceding 36 months. For employee participants, final average compensation includes only base salary. The benefit is paidbi-weekly and continues for the longer of 10 years or until death, provided death occurs more than 10 years after the employee’s retirement date. Mr. Kakar’s rights have vested under the Salary Continuation Plan. The Salary Continuation Plan was closed to new participants in 2011 and, as a result, Messrs. Stebbins, Shiba, Sistek, and Oliver are not participants.
All employees may participate in Superior’stax-qualified Savings and Retirement Plan which is a 401(k) plan. For fiscal year 2016, Superior matched 100% of the first 1% ofbefore-tax contributions made to the plan
and 50% of such contributions over 1% and up to 6%. However, Superior did not match employee contributions in excess of the legal limit of $18,000 ($24,000 for individuals older than 50 years of age) in 2016. All Company contributions are vested 100% after two years of service.
Other Benefits
Superior provides NEOs with incidental benefits that the Compensation and Benefits Committee believes are reasonable and consistent with the competitive market. For example, the NEOs receive an automobile allowance (which is a similar benefit provided to some of our other employees). In addition, the NEOs may participate in Superior’s health and welfare benefit plans that are available to other executives and employees. Additionally, in 2016, we provided additional perquisites to our CEO and CFO as further discussed in footnote 5 to the “Summary Compensation Table” section of this Proxy Statement. The commuting and temporary living expenses to our CFO discussed therein are scheduled to terminate in June 2017.
Severance / Change in Control Benefits
Mr. Stebbins’ Employment Agreement provides him a lump sum severance payment of one year’s base salary plus a prorated amount of his current year annual bonus at target level, and 12 months’ health care continuation, if he is terminated without “cause” or resigns for “good reason” other than within one year following a change in control of Superior. The severance payment is two years’ base salary and two times current year annual bonus at target level, and health care continuation is 24 months if Mr. Stebbins is terminated without “cause” or resigns for “good reason” within one year following a change in control of Superior.
Messrs. Kakar, Shiba, Sistek and Oliver currently participate in the Executive Change in Control Severance Plan. The plan is intended to encourage executive officers to remain employed with the Company during an important time when prospects for continued employment are often uncertain and to provide some measure of financial security prior to and after a change of control. The amounts to be paid under the plan help ensure that the interests of Superior’s executives will be materially consistent with the interests of Superior’s stockholders when considering corporate transactions. Under the plan, if the employment of a participant is terminated within two years following a change in control, the participant will receive atwo-times multiple of the sum of both the participant’s annual base salary and the participant’s target annual bonus, paid in a lump sum within 60 days after termination. The participant would also receive apro-rata target annual bonus for the year in which the change in control occurs. The Compensation and Benefits Committee considers these protections to be an important part of the NEOs’ compensation and consistent with competitive market practices.
Other Termination or Change in Control Benefits
Upon a change of control of Superior, participants will fully vest in the benefits provided under the Salary Continuation Plan. Moreover, the Amended and Restated 2008 Equity Incentive Plan provides that all outstanding equity awards will become fully vested upon the occurrence of a change in control unless the award agreement provides otherwise or the award is assumed by the successor entity. If the awards are assumed by the successor entity, a “double-trigger” vesting applies, so that a participant’s awards vest if he incurs a qualifying termination within two years after the change of control.
Risk Mitigation, Regulatory, and Other Considerations
Executive Stock Ownership Guidelines
In July 2015, the Board approved revised stock ownership guidelines for its executive officers, including the NEOs. The Chief Executive Officer is required to own shares equal to 5 times his annual base salary and all other executive officers are required to own shares equal to 2 times his or her annual base salary. The applicable level of stock ownership must be attained within 5 years of becoming subject to the Stock Ownership Guidelines. In addition, participants must retain 100% of the net shares received upon exercise or vesting until in compliance with the required ownership level.
All of our NEOs are in compliance with these stock ownership guidelines. Additionally, all of our NEOs (other than Mr. Sistek, who joined the Company in 2015 and Mr. Oliver, who joined the Company in 2016) meet the required ownership level under this stock ownership policy.
Ownership levels as of the last measurement date are shown in the following table.
Name | Share Guideline ($ value) | Total Shares Held ($ value)* | ||||||
Don Stebbins | $ | 4,500,000 | $ | 8,021,652 | ||||
Kerry Shiba | $ | 840,000 | $ | 1,708,895 | ||||
Parveen Kakar | $ | 780,000 | $ | 1,360,382 | ||||
Jim Sistek | $ | 780,000 | $ | 725,487 | ||||
Larry Oliver | $ | 780,000 | $ | 636,372 |
Clawback Policy
The Company adopted a formal clawback policy (the “Clawback Policy”) that applies to all incentive-based cash and equity compensation awards granted on or after the effective date (“Incentive Compensation”) to any current or former executive officer of the Company (collectively, the “Covered Recipients”). In the event that the Company is required by applicable U.S. federal securities laws to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under such securities laws where such accounting restatement was caused or substantially caused by the intentional misconduct of the Covered Recipient, the Company will recover from such Covered Recipient who received Incentive Compensation during the three-year period preceding the date on which the Company is required to prepare an accounting restatement, based on the erroneous data, the amount, if any, in excess of what would have been paid to the Covered Recipient under the accounting restatement.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation that Superior may deduct in any one year with respect to its NEOs other than the CFO. However, compensation that qualifies for the performance-based compensation exemption from Section 162(m) is fully deductible, without regard to the limits of Section 162(m).
The AIPP and the Amended and Restated 2008 Equity Incentive Plan allow the Compensation and Benefits Committee to grant incentive awards that may qualify for the performance-based compensation exemption from Section 162(m). However, to maintain flexibility in compensating our executives, the Compensation and Benefits Committee reserves the right to use its business judgment to authorize compensation payments that may not qualify under the performance-based compensation exemption when the Compensation and Benefits Committee believes that such payments are appropriate. For example, equity awards that vest solely based on service criteria are not eligible for the performance-based compensation exemption.
The following Compensation Committee Report is not considered proxy solicitation material and is not deemed filed with the SEC. Notwithstanding anything to the contrary set forth in any of our previous filings made under the Securities Act of 1933, as amended, or under the Exchange Act that might incorporate future filings made by Superior under those statutes, the Compensation Committee Report will not be incorporated by reference into any such prior filings or into any future filings made by Superior under those statutes.
The Compensation and Benefits Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation and Benefits Committee recommended to the Board that the Compensation Discussion and Analysis be included in the proxy statement for the 2017 Annual Meeting of stockholders.
Submitted by the Compensation and Benefits Committee of the Board of Directors
James S. McElya, Chairperson
Paul J. Humphries
Timothy C. McQuay
Francisco S. Uranga
Summary Compensation Table
The following table provides summary information concerning the compensation earned for services rendered in all capacities to Superior by its Chief Executive Officer, its Chief Financial Officer, and each of its other three most highly compensated executive officers whose total compensation for 2016 was in excess of $100,000 and who were serving as executive officers at the end of 2016.
2016 Summary Compensation Table
Name and Principal Position | Year | Salary $ | Bonus(1) $ | Stock Awards(2) $ | Option Awards $ | Non- Equity Incentive Plan Compensation $ | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3)(4) $ | All Other Compensation(5) $ | Total $ | |||||||||||||||||||||||||||
Donald J. Stebbins | 2016 | 900,000 | — | 2,194,234 | (6) | — | 894,690 | — | 29,751 | 4,018,675 | ||||||||||||||||||||||||||
President and Chief | 2015 | 900,000 | — | 1,765,204 | — | 983,256 | — | 28,165 | 3,676,625 | |||||||||||||||||||||||||||
Executive Officer | 2014 | 571,153 | — | 2,574,925 | — | 480,511 | — | 80,069 | 3,706,658 | |||||||||||||||||||||||||||
Kerry A. Shiba | 2016 | 422,202 | — | 323,998 | — | 250,513 | — | 126,924 | 1,123,637 | |||||||||||||||||||||||||||
Executive Vice President, | 2015 | 396,940 | — | 253,377 | — | 265,478 | — | 21,924 | 937,719 | |||||||||||||||||||||||||||
Chief Financial Officer and | 2014 | 373,649 | — | 153,280 | — | 153,776 | — | 20,504 | 701,209 | |||||||||||||||||||||||||||
Secretary | ||||||||||||||||||||||||||||||||||||
Parveen Kakar | 2016 | 385,962 | — | 281,234 | — | 193,850 | 132,675 | 24,135 | 1,017,856 | |||||||||||||||||||||||||||
Senior Vice President – | 2015 | 354,808 | — | 195,507 | — | 260,000 | 101,520 | 17,435 | 929,270 | |||||||||||||||||||||||||||
Sales, Marketing | 2014 | 258,870 | — | 124,540 | — | 86,100 | 173,800 | 14,278 | 657,588 | |||||||||||||||||||||||||||
and Product Development | ||||||||||||||||||||||||||||||||||||
James F. Sistek | 2016 | 385,962 | — | 281,234 | — | 222,913 | — | 21,998 | 912,107 | |||||||||||||||||||||||||||
Senior Vice President – | 2015 | 375,000 | — | 195,507 | — | 275,000 | — | 23,298 | 868,805 | |||||||||||||||||||||||||||
Business Operations and Systems | 2014 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Lawrence R. Oliver | 2016 | 385,962 | — | 281,234 | — | 96,925 | — | 21,470 | 785,591 | |||||||||||||||||||||||||||
Senior Vice President – | 2015 | 353,365 | 109,000 | 195,507 | — | 260,000 | — | 53,497 | 971,369 | |||||||||||||||||||||||||||
Manufacturing Operations | 2014 | — | — | — | — | — | — | — | — |
Name | RSU ($) | PRSU At Target ($) | PRSU At Maximum ($) | |||||||||
Mr. Stebbins | 731,404 | 1,462,830 | 2,194,245 | |||||||||
Mr. Shiba | 108,007 | 215,991 | 431,982 | |||||||||
Mr. Kakar | 93,745 | 187,489 | 374,978 | |||||||||
Mr. Sistek | 93,745 | 187,489 | 374,978 | |||||||||
Mr. Oliver | 93,745 | 187,489 | 374,978 |
Grants of Plan Based Awards
The following table sets forth summary information regarding all grants of plan-based awards made to our NEOs during the year ended December 25, 2016.
2016 Grants of Plan Based Awards
Name | Grant Type | Grant Date |
Estimated Future Payouts |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units # | Grant Date Fair Value of Stock and Option Awards(2) $ | ||||||||||||||||||||||||||||||||
Threshold $ | Target $ | Maximum $ | Threshold # | Target # | Maximum # | |||||||||||||||||||||||||||||||||
Donald J. Stebbins | Annual Incentive | N/A | 720,000 | 900,000 | 1,800,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
RSU | 3/7/2016 | — | — | — | — | — | — | 32,051 | 731,404 | (3) | ||||||||||||||||||||||||||||
PRSU | 3/7/2016 | — | — | — | 48,077 | 64,103 | 96,155 | — | 1,462,830 | (3) | ||||||||||||||||||||||||||||
Kerry A. Shiba | Annual Incentive | N/A | 201,600 | 252,000 | 756,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
RSU | 3/7/2016 | — | — | — | — | — | — | 4,733 | 108,007 | |||||||||||||||||||||||||||||
PRSU | 3/7/2016 | — | — | — | 4,733 | 9,465 | 18,930 | — | 215,991 | |||||||||||||||||||||||||||||
Parveen Kakar | Annual Incentive | N/A | 156,000 | 195,000 | 585,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
RSU | 3/7/2016 | — | — | — | — | — | — | 4,108 | 93,745 | |||||||||||||||||||||||||||||
PRSU | 3/7/2016 | — | — | — | 4,108 | 8,216 | 16,433 | — | 187,489 | |||||||||||||||||||||||||||||
James Sistek | Annual Incentive | N/A | 156,000 | 195,000 | 585,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
RSU | 3/7/2016 | — | — | — | — | — | — | 4,108 | 93,745 | |||||||||||||||||||||||||||||
PRSU | 3/7/2016 | — | — | — | 4,108 | 8,216 | 16,433 | — | 187,489 | |||||||||||||||||||||||||||||
Lawrence Oliver | Annual Incentive | N/A | 156,000 | 195,000 | 585,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
RSU | 3/7/2016 | — | — | — | — | — | — | 4,108 | 93,745 | |||||||||||||||||||||||||||||
PRSU | 3/7/2016 | — | — | — | 4,108 | 8,216 | 16,433 | — | 187,489 |
Employment Agreement
Donald J. Stebbins, President and CEO
Based on feedback from our stockholders, we entered into an Amended and Restated Executive Employment Agreement with Donald J. Stebbins, dated August 10, 2016 (the “Employment Agreement”). The Employment Agreement was amended and restated to provide that, beginning in fiscal year 2017, Mr. Stebbins’ long term incentive awards and the allocation of such awards between time-based and performance-based components will be made by the Compensation and Benefits Committee under the terms of our Amended and Restated 2008 Equity Incentive Plan, provided that he is granted a target long-term incentive opportunity of 200% of his annual base salary (among other modifications). The term of the Employment Agreement is from August 10, 2016 and shall continue through and including April 30, 2017, with additionalone-year automatic renewals unless either Mr. Stebbins or we provide advance notice of nonrenewal of the Employment Agreement.
The Employment Agreement provides for an initial annual base salary of $900,000, which may be adjusted by the Compensation and Benefits Committee. The Employment Agreement provides for an annual bonus based on attainment of performance goals, determined by our Compensation and Benefits Committee, in the amount of 80% of annual base salary at threshold level performance, 100% of annual base salary at target level performance and up to a maximum of 200% of annual base salary. Superior also provides Mr. Stebbins a monthly automobile allowance and reimbursement of certain attorneys’ fees in connection with entering into the Employment Agreement. Mr. Stebbins is entitled to four weeks annual paid vacation and to participate in all benefit plans generally made available to executive officers of Superior.
The Employment Agreement includes a clawback of unearned incentive compensation paid based upon inaccurate financial results or erroneous information.
The Employment Agreement provides Mr. Stebbins a lump sum severance payment of one year’s base salary plus a prorated amount of his current year annual bonus at target level, and 12 months’ health care continuation, if he is terminated without “cause” or resigns for “good reason” other than within one year following a change in control of Superior. The severance payment is two year’s base salary and two times current year annual bonus at target level, and 24 months’ health care continuation is, if Mr. Stebbins is terminated without “cause” (as defined therein) or resigns for “good reason” (as defined therein) within one year following a change in control of Superior.
In general, the Employment Agreement provides that the equity awards vest only if Mr. Stebbins continues in employment with Superior through the vesting date or end of the performance period. The remaining 50,000 shares outstanding related to his inducement grant of restricted stock willpro-rata vest upon Mr. Stebbins’ termination of employment as a result of death or disability. Additionally, vesting of this initial 50,000 share restricted stock inducement grant fully accelerates if Mr. Stebbins is terminated without “cause” or resigns for “good reason, or if at any time between August 10, 2016 and Mr. Stebbins’ termination date, two or more members concurrently serving on the Board are persons who were neither appointed by the Board nor included in a slate recommended by the Board for election by Superior’s stockholders. If Mr. Stebbins is terminated without “cause” or resigns for “good reason” within one year following a change in control of Superior, all time-based equity awards becomes vested in full, and the performance-vested restricted stock units are to vest and be converted into shares based upon the level of attainment of performance goals through the change in control date.
These severance payments and benefits, and the acceleration of equity awards described above, are conditioned upon Mr. Stebbins providing Superior a release of claims.
The Employment Agreement does not provide a gross up for taxes incurred from receiving excess parachute payments on a change in control. The benefits under the Employment Agreement are to be reduced to the extent necessary to avoid the excise tax under Section 4999 of the Internal Revenue Code if such reduction results in a higherafter-tax amount to Mr. Stebbins.
Outstanding Equity Awards at 2016 Fiscal Year End
The following table sets forth summary information regarding the outstanding equity awards held by the NEOs at December 25, 2016.
Outstanding Equity Awards
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | Equity Incentive Plan Awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | ||||||||||||||||||||||||
Donald J. Stebbins | — | — | — | — | 32,051 | 860,569 | 64,103 | 1,721,166 | (2) | |||||||||||||||||||||||
— | — | — | — | 30,045 | 806,708 | 90,135 | 2,420,125 | (3) | ||||||||||||||||||||||||
— | — | — | — | 50,000 | 1,342,500 | — | — | |||||||||||||||||||||||||
— | — | — | — | 82,455 | 2,213,917 | — | — | |||||||||||||||||||||||||
Kerry A. Shiba | — | — | — | — | 4,733 | 127,081 | 9,465 | 254,135 | (2) | |||||||||||||||||||||||
— | — | — | — | 2,875 | 77,194 | 17,250 | 463,163 | (3) | ||||||||||||||||||||||||
— | — | — | — | 2,667 | 71,609 | — | — | |||||||||||||||||||||||||
12,000 | — | 16.76 | 4-May-2022 | — | — | — | — | |||||||||||||||||||||||||
12,000 | — | 22.57 | 13-May-2021 | — | — | — | — | |||||||||||||||||||||||||
25,000 | — | 17.71 | 28-Oct-2020 | — | — | — | — | |||||||||||||||||||||||||
Parveen Kakar | — | — | — | — | 4,108 | 110,300 | 8,216 | 220,600 | (2) | |||||||||||||||||||||||
— | — | — | — | 2,219 | 59,580 | 13,310 | 357,374 | (3) | ||||||||||||||||||||||||
— | — | — | — | 2,167 | 58,184 | — | — | |||||||||||||||||||||||||
9,000 | — | 16.76 | 4-May-2022 | — | — | — | — | |||||||||||||||||||||||||
9,000 | — | 22.57 | 13-May-2021 | — | — | — | — | |||||||||||||||||||||||||
5,000 | — | 16.32 | 20-May-2020 | — | — | — | — | |||||||||||||||||||||||||
4,500 | — | 15.17 | 14-Aug-2019 | — | — | — | — | |||||||||||||||||||||||||
15,000 | — | 21.84 | 16-May-2018 | — | — | — | — | |||||||||||||||||||||||||
12,000 | — | 18.55 | 12-Dec-2017 | — | — | — | — | |||||||||||||||||||||||||
James Sistek | — | — | — | — | 4,108 | 110,300 | 8,216 | 220,600 | (2) | |||||||||||||||||||||||
— | — | — | — | 2,219 | 59,580 | 13,310 | 357,374 | (3) | ||||||||||||||||||||||||
— | — | — | — | 2,145 | 57,593 | — | — | |||||||||||||||||||||||||
Lawrence Oliver | — | — | — | — | 4,108 | 110,300 | 8,216 | 220,600 | (2) | |||||||||||||||||||||||
— | — | — | — | 2,219 | 59,580 | 13,310 | 357,374 | (3) |
Option Exercises and Stock Vested in Fiscal Year 2016
The following table summarizes the exercising of options and vesting of restricted stock unit awards for the NEOs for fiscal year ended December 25, 2016.
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) | ||||||||||||
Donald J. Stebbins | — | — | — | — | ||||||||||||
Kerry A. Shiba | — | — | 6,249 | 201,461 | ||||||||||||
Parveen Kakar | 6,000 | 47,448 | 4,595 | 124,731 | ||||||||||||
James Sistek | — | — | 3,319 | 88,010 | ||||||||||||
Lawrence Oliver | — | — | 1,109 | 23,677 |
Securities Authorized for Issuance under Equity Compensation Plans
The following table contains information about securities authorized for issuance under Superior’s equity compensation plans. The features of these plans are described in Note 15 to our audited financial statements in Superior’s Annual Report on Form10-K for the year ended December 25, 2016 filed with the SEC on March 3, 2017.
Securities Authorized for Issuance Under Equity Compensation Plans
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuances under equity compensation plans(2) | |||||||||
Equity Compensation Plans approved by security holders | 231,625 | $ | 18.88 | 1,809,280 | ||||||||
Equity Compensation Plans not approved by security holders | — | — | — | |||||||||
Total | 231,625 | $ | 18.88 | 1,809,280 |
Pension Benefits
The following table summarizes the present value of benefits under Superior’s Salary Continuation Plan for each of the NEOs as of December 25, 2016.
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Nonqualified Deferred Compensation.
Superior does not have any nonqualified deferred compensation plans other than the Salary Continuation Plan.
Potential Payments upon Termination of Employment or Change in Control
Other than Mr. Stebbins, our President and CEO, none of Superior’s NEOs has had an employment agreement specifying a term of employment, and their employment may be terminated at any time. However, Superior does provide severance benefits upon the termination of a NEO’s employment under certain prescribed circumstances.
For a description of benefits upon termination of employment or change of control, see the “2016 Executive Compensation Components—Change in Control Severance Benefits” portion of the “Compensation Discussion and Analysis” section of this Proxy Statement.
Other Arrangements. The Salary Continuation Plan, as of the end of the fiscal year 2016, provides Mr. Kakar salary continuation benefits upon termination of employment due to a change in control, the “2016 Executive Compensation Components – Retirement and Similar Benefits” portion of the “Compensation Discussion and Analysis” section of this Proxy Statement.
Summary of Potential Termination Payments and Benefits. The following table summarizes the value of the termination payments and benefits that each of our NEOs would receive if he had terminated employment on
December 25, 2016 under the circumstances shown. The amounts shown in the tables do not include accrued but unpaid salary, earned annual bonus for 2016, or payments and benefits to the extent they are provided on anon-discriminatory basis to salaried employees generally upon termination of employment, such as distributions of plan balances under ourtax-qualified 401(k) plan and death or disability benefits under our generally available welfare programs. This table also does not include the value of unvested equity awards that vest on a change in control, as those amounts are shown in the next table and are not contingent on a termination of employment.
Name | Termination for Cause or Voluntary Resignation | Termination without Cause or for Good Reason(1) | Retirement | Death(1) | Disability(1) | Termination without Cause or Resignation For Good Reason in connection with a Change in Control | Actual Termination Amounts Received | |||||||||||||||||||||
Donald J. Stebbins | ||||||||||||||||||||||||||||
Cash Severance | — | 900,000 | — | — | — | 1,800,000 | — | |||||||||||||||||||||
Bonus Severance | — | 900,000 | — | — | — | 1,800,000 | — | |||||||||||||||||||||
COBRA Premiums | — | 14,409 | — | — | — | 28,817 | — | |||||||||||||||||||||
Equity Acceleration | — | 1,342,500 | — | 3,278,028 | 3,278,028 | 8,558,276 | — | |||||||||||||||||||||
Total | — | 3,156,909 | — | 3,278,028 | 3,278,028 | 12,187,093 | — | |||||||||||||||||||||
Kerry A. Shiba | ||||||||||||||||||||||||||||
Cash Severance | — | — | — | — | — | 840,000 | — | |||||||||||||||||||||
Target 2016 Bonus | — | — | — | — | — | 252,000 | — | |||||||||||||||||||||
Equity Acceleration | — | — | — | — | — | 734,601 | — | |||||||||||||||||||||
Total | — | — | — | — | — | 1,853,600 | — | |||||||||||||||||||||
Parveen Kakar(2) | ||||||||||||||||||||||||||||
Cash Severance | — | — | — | — | — | 780,000 | — | |||||||||||||||||||||
Target 2016 Bonus | — | — | — | — | — | 195,000 | — | |||||||||||||||||||||
Equity Acceleration | — | — | — | — | — | 627,350 | — | |||||||||||||||||||||
Total | — | — | — | — | — | 1,602,350 | — | |||||||||||||||||||||
James Sistek | ||||||||||||||||||||||||||||
Cash Severance | — | — | — | — | — | 780,000 | — | |||||||||||||||||||||
Target 2016 Bonus | — | — | — | — | — | 195,000 | — | |||||||||||||||||||||
Equity Acceleration | — | — | — | — | — | 626,759 | — | |||||||||||||||||||||
Total | — | — | — | — | — | 1,601,760 | — | |||||||||||||||||||||
Lawrence Oliver | ||||||||||||||||||||||||||||
Cash Severance | — | — | — | — | — | 780,000 | — | |||||||||||||||||||||
Target 2016 Bonus | — | — | — | — | — | 195,000 | — | |||||||||||||||||||||
Equity Acceleration | — | — | — | — | — | 569,166 | — | |||||||||||||||||||||
Total | — | — | — | — | — | 1,544,166 | — |
Change in Control Provisions under Other Agreements.The Amended and Restated 2008 Equity Incentive Plan provides that a change in control occurs upon the occurrence of any of the following: (1) any person becomes the beneficial owner of securities representing 50% or more of the total voting power of Superior’s outstanding voting securities; (2) consummation of a sale or disposition by Superior of all or substantially all of its assets; (3) consummation of a merger or consolidation of Superior with any other corporation, unless Superior’s stockholders continue to control at least 50% of the total voting power of the successor entity; or (4) Superior’s stockholders approve a plan of complete liquidation of the Company.
The Amended and Restated 2008 Equity Incentive Plan provides that, unless otherwise provided in an applicable award agreement, all outstanding equity awards will immediately vest (at target for PRSUs) if (i) the participant is terminated without cause or resigns with good reason within two years following a change in control (“Double Trigger”) or (ii) upon a change in control if the awards are not assumed by the successor company.
The following table shows the total additional value of the equity awards that would be payable to each of the NEOs who were employed as of December 25, 2016 under the accelerated vesting provisions of the Amended and Restated 2008 Equity Incentive Plan upon the occurrence of a Double Trigger as of December 25, 2016.
Named Executive Officer | Restricted Stock ($)(1) | Performance Awards ($)(2) | Total ($) | |||||||||
Donald J. Stebbins | 5,223,694 | 3,334,582 | 8,558,276 | |||||||||
Kerry A. Shiba | 275,884 | 485,717 | 761,601 | |||||||||
Parveen Kakar | 228,064 | 399,286 | 627,350 | |||||||||
James Sistek | 227,473 | 399,286 | 626,759 | |||||||||
Lawrence Oliver | 169,880 | 399,286 | 569,166 |
Risk Assessment of Overall Compensation Program
The Compensation and Benefits Committee has designed Superior’s compensation programs to avoid excessive risk-taking. The following are some of the features that are designed to help Superior appropriately manage compensation-related business risk:
The Compensation and Benefits Committee has reviewed with management the design and operation of Superior’s incentive compensation arrangements for all managers and executive officers, including the performance objectives and target levels used in connection with incentive awards, for the purpose of assuring that these arrangements do not encourage inappropriate risk taking that could impose unnecessary or excessive risk to the value of Superior or the investments of Superior’s stockholders. In connection with such review, the
Compensation and Benefits Committee identified certain internal and external factors that comprise Superior’s primary business risks, and then reviewed Superior’s incentive compensation arrangements for the purpose of identifying any aspects of such programs that might encourage behaviors that could exacerbate the identified business risks.
In conducting this assessment, the Compensation and Benefits Committee considered the performance objectives and target levels used in connection with these incentive awards and also the features of Superior’s compensation program that are designed to mitigate compensation-related risk, including those discussed above. Based on such assessment, the Compensation and Benefits Committee concluded that Superior’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on Superior.
The information contained in this report shall not be deemed to be “soliciting material,” to be “filed” with the SEC or be subject to Regulation 14A or Regulation 14C (other than as provided in Item 407 of RegulationS-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in future filings with the SEC except to the extent that Superior specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
The Audit Committee has reviewed and discussed with Superior’s management and Deloitte & Touche LLP the audited consolidated financial statements of Superior contained in Superior’s Annual Report on Form10-K for the 2016 fiscal year. The Audit Committee has also discussed with Deloitte & Touche LLP the matters required to be discussed pursuant to applicable auditing standards.
The Audit Committee has received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP its independence from Superior.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Superior’s Annual Report on Form10-K for its 2016 fiscal year for filing with the SEC.
Submitted by the Audit Committee
Timothy C. McQuay, Chairperson
Jack A. Hockema
Paul J. Humphries
Michael R. Bruynesteyn
Ellen B. Richstone
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why did you send me this proxy statement?
We sent you this Proxy Statement and the proxy card because the Board of the Company is soliciting your proxy to vote at the Annual Meeting to be held on April 25, 2017, at 10:00 a.m. Eastern Time, and at any postponements or adjournments of the Annual Meeting. This Proxy Statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement.
What is the purpose of the Annual Meeting?
The Annual Meeting will be held for the following purposes:
What are the Board’s voting recommendations?
The Board recommends that you vote your shares:
What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials?
You may receive more than one Notice, more than onee-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separatee-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than onee-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive and vote over the Internet the shares represented by each Notice that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those Notices).
I share an address with another stockholder, and we received only one notice. How may I obtain an additional copy of the proxy materials?
Superior has adopted a procedure approved by the Securities and Exchange Commission (the “SEC”) called “householding.” Under this procedure, Superior delivers one set proxy materials to multiple stockholders who share the same address unless Superior has received contrary instructions from one or more of the stockholders.
This procedure potentially means extra convenience for stockholders and reduces Superior’s printing and mailing costs as well as the environmental impact of its Annual Meetings. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, Superior will deliver promptly a separate copy of the proxy statement and annual report to any stockholder at a shared address to which Superior delivered a single copy of the proxy materials. If you are a stockholder who shares an address with another stockholder and would like only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or notify us if you are the stockholder of records.
To receive free of charge a separate copy of the proxy materials, stockholders may contact Superior’s Secretary at 26600 Telegraph Rd., Suite 400, Southfield, MI 48033 or248-352-7300.
Stockholders who hold shares in “street name” (as described below) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.
How can I get electronic access to the proxy materials?
Superior’s proxy materials also are available at www.proxyvote.com. This website address is included for reference only. The information contained on this website is not incorporated by reference into this Proxy Statement.
Who is entitled to vote?
To be able to vote, you must have been a stockholder on March 1, 2017, the Record Date for determination of stockholders entitled to notice of and to vote at the Annual Meeting. As of the Record Date, 24,937,711 shares of Superior common stock were issued and outstanding.
How many votes do I have?
Each holder of record of Superior common stock will be entitled to one vote on each matter for each share of common stock held on the Record Date.
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record. If your shares are registered directly in your name with Superior’s transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares, and the proxy materials were sent directly to you by Superior.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the “beneficial owner” of shares held in “street name,” and the proxy materials were forwarded to you by that organization. As a beneficial owner, you have the right to instruct your broker, bank, trustee or nominee how to vote your shares.
If I am a stockholder of record of Superior’s shares, how do I vote?
If you are a stockholder of record, there are four ways to vote:
If I am a beneficial owner of shares held in street name, how do I vote?
If you are a beneficial owner of shares held in street name, there are two ways to vote:
You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot from an usher when you arrive. You must also bring valid picture identification such as a driver’s license or passport and proof that the organization that holds your shares held such shares on the Record Date. In order for your vote to be counted, you must hand both the copy of the legal proxy and your completed ballot to an usher to be provided to the inspector of election.
What is a quorum?
For business to be conducted at the Annual Meeting, a quorum must be present. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum. Accordingly, shares representing votes must be present in person or by proxy at the Annual Meeting to constitute a quorum. Abstentions and “brokernon-votes” will be counted for the purpose of determining whether a quorum is present for the transaction of business.
If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.
What happens if I do not give specific voting instructions?
Stockholders of Record. If you are a stockholder of record and you:
then the persons named as proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and, in accordance with applicable law, as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions then, under applicable rules, the organization that holds your shares may generally vote on “routine” matters but cannot vote on“non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “brokernon-vote.”
Which ballot measures are considered “routine” or“non-routine”?
Typically,“non-routine” matters include the election of directors (Proposal No. 1), thenon-binding advisory vote on executive compensation (Proposal No. 2) and thenon-binding advisory vote on the frequency of the advisory vote on executive compensation (Proposal No. 3) and “routine” matters include ratification of the appointment of independent auditors (Proposal No. 4).
What is a brokernon-vote?
The term brokernon-vote refers to shares held by a brokerage firm or other nominee (for the benefit of its client) that are represented at the Annual Meeting, but with respect to which such broker or nominee is not instructed to vote on a particular proposal and does not have discretionary authority to vote on that proposal. Brokers and nominees do not have discretionary voting authority on the election of directors and on other certainnon-routine matters, and accordingly may not vote on such matters absent instructions from the beneficial holder. If you hold your shares in “street name” or through a broker, it is important that you give your broker your voting instructions.
How are brokernon-votes and abstentions treated?
Brokernon-votes and abstentions are counted for purposes of determining whether a quorum is present.
With respect to the election of directors (Proposal No. 1), under plurality voting, brokernon-votes and abstentions would have no effect on the election of directors.
With respect to Proposals No. 2 and No. 4, (i) brokernon-votes and abstentions will not affect the outcome requiring an affirmative vote of a majority of the shares represented and voting at the Annual Meeting, however, (ii) brokernon-votes and abstentions will have the effect of a vote against the proposal with respect to the additional requirement that shares voting affirmatively also constitute at least a majority of the required quorum.
With respect to Proposal No. 3, (i) brokernon-votes and abstentions will be counted for purposes of determining the presence or absence of the quorum for the transaction of business, however, (ii) brokernon-votes and abstentions will not be counted for purposes of determining the number of shares “represented and voting” with respect to the proposal.
In order to minimize the number of brokernon-votes, Superior encourages you to vote or to provide voting instructions with respect to each proposal to the organization that holds your shares by carefully following the instructions provided in the voting instruction form.
What is the voting requirement to approve each of the proposals?
With respect to Proposal No. 1, the election of directors is determined by plurality voting, meaning that the eight persons receiving the largest number of “yes” votes will be elected as directors. Under Delaware law, since there is no particular percentage of either the outstanding shares or the shares represented at the meeting required to elect a director, abstentions and brokernon-votes will have no effect on the election of directors. Proxies may not be voted for more than the eight directors and stockholders may not cumulate votes in the election of directors.
In an uncontested election, our Corporate Governance Guidelines provide that any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation following certification of the stockholder vote. The Nominating and Corporate Governance Committee and the Board must then decide whether or not to accept the tendered resignation, culminating with a public disclosure explaining the Board’s decision and decision-making process.
Approval of Proposals No. 2, No. 3 and No. 4 requires (i) the affirmative vote of a majority of the shares represented and voting at the Annual Meeting at which a quorum is present and (ii) that shares voting affirmatively also constitute at least a majority of the required quorum.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the taking of the vote at the Annual Meeting. Prior to the applicable cutoff time, you may change your vote using the Internet or telephone methods described above, in which case only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted. You may also revoke your proxy and change your vote by signing and returning a new proxy card or voting instruction form dated as of a later date, or by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you properly vote at the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation to Superior’s Secretary at 26600 Telegraph Rd., Suite 400, Southfield, MI 48033 prior to the Annual Meeting.
Who will serve as the inspector of election?
Broadridge will serve as the inspector of election.
Where can I find the voting results?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be tallied by the inspector of election after the taking of the vote at the Annual Meeting. Superior will publish the final voting results in a Current Report on Form8-K, which Superior is required to file with the SEC within four business days following the Annual Meeting.
Who is paying the costs of this proxy solicitation?
Superior is paying the costs of the solicitation of proxies. Superior may also reimburse brokerage firms, banks, broker-dealers or other similar organizations for the cost of forwarding proxy materials to beneficial owners. In addition, certain of Superior’s directors, officers and regular employees, without additional compensation, may solicit proxies on Superior’s behalf in person, by telephone, by fax or by electronic mail. See “Proxy Solicitation and Costs” in this Proxy Statement for further information.
How can I attend the Annual Meeting?
Only stockholders as of the Record Date are entitled to attend the Annual Meeting. Each stockholder must present valid picture identification such as a driver’s license or passport and provide proof of stock ownership as of the Record Date. The use of mobile phones, pagers, recording or photographic equipment, tablets and/or computers is not permitted at the Annual Meeting.
What is the deadline to propose actions for consideration or to nominate individuals to serve as directors at the 2018 Annual Meeting of stockholders?
Requirements for Stockholder Proposals to Be Considered for Inclusion in Superior’s Proxy Materials. Proposals that a stockholder intends to present at the 2018 Annual Meeting of stockholders and wishes to be considered for inclusion in Superior’s proxy statement and form of proxy relating to the 2018 Annual Meeting of stockholders must be received no later than November 16, 2017 (the date that is 120 calendar days before the one year anniversary date of when Superior’s proxy statement was released to stockholders for thisthe 2017 Annual Meeting). However, if the 2018 Annual Meeting date has changed more than 30 days from this year’s meeting,the 2017 Annual Meeting date, then the deadline is a reasonable time before we begin to print and send out proxy materials. All proposals must comply with Rule14a-8 under the Exchange Act, which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals must be delivered to Superior’s Secretary by mail at 26600 Telegraph Rd., Suite 400, Southfield, MI 48033.
Requirements for Other Stockholder Proposals to Be Brought Before the 2018 Annual Meeting of Stockholders and Director Nominations. Our Amended and Restated Bylaws (the “Bylaws”) provide that any stockholder proposals (other than those made under Rule14a-8 of the Exchange Act) and any nomination of one or more persons for election as a director be made not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to theone-year anniversary of the date of the preceding year’s annual meeting. Accordingly, in order for a stockholder proposal or director nomination to be considered at the 2018 Annual Meeting, a written notice of the proposal or the nomination must be received by the Secretary of Superior no later than January 25, 2018 (assuming that the 2018 Annual Meeting is held on April 25, 2018, the anniversary of the 2017 Annual Meeting). However, if the date of the 2018 Annual Meeting is advanced by more than 30 days prior to or delayed by more than 60 days after theone-year anniversary of the date of the 2017 Annual Meeting, then, for notice by the stockholder to be timely, it must be received by the Secretary of Superior not earlier than the 120th day prior to the date of the 2018 Annual Meeting and not later than the close of business on the later of (i) the 90th day prior to the 2018 Annual Meeting, or (ii) the tenth day following the day on which public announcement of the date of the 2018 Annual Meeting is first made. In order for stockholder proposals that are submitted outside of SEC Rule14a-8 and are intended to be considered by the stockholders at the 2018 Annual Meeting to be considered “timely” for purposes of SEC Rule14a-4(c) under the Exchange Act, the proposal must be received by the Secretary of Superior no later than November 16, 2017. The notice must set forth the information required by the Bylaws with respect to each director nomination and stockholder proposal that the stockholder intends to present at the 2018 Annual Meeting. The proxy solicited by the Board for the 2018 Annual Meeting will confer discretionary voting authority with respect to any proposal presented by a stockholder at that meeting for which Superior has not been provided with timely notice, or, even if there is timely notice, the stockholder does not comply with the requirements of Rule14a-4(c)(2) promulgated under the Exchange Act. Notices must be delivered to Superior’s Secretary by mail at 26600 Telegraph Rd., Suite 400, Southfield, MI 48033.
Superior will bear the entire cost of this solicitation of proxies, including the preparation, assembly, printing and mailing of this Proxy Statement,proxy statement, the proxy card and any additional solicitation material that Superior may provide to stockholders. Copies of solicitation material will be provided to brokerage firms, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward the solicitation material to such beneficial owners. Further, the original solicitation of proxies by mail may be supplemented by solicitation by telephone and other means by directors, executive officers and employees of Superior. No additional compensation will be paid to these individuals for any such services. The Company will also post its proxy materials to its website under “Investors.” In addition, Superior has retained Okapi Partners LLC to act as a proxy solicitor in conjunction with the Special Meeting. Superior has agreed to pay that firm approximately $50,000.00 plus reasonable out-of-pocket expenses, for proxy solicitation services.
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STOCKHOLDERS SHARING THE SAME ADDRESS
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report and proxy materials, unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and postage fees.
Once again this year, aA number of brokers with account holders who beneficially own our common stock will be “householding” our annual report and proxy materials. A single set of our annual report and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting Broadridge Financial Solutions, either by calling toll-free(866) 540-7095, or by writing to Broadridge Financial Solutions, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
Upon written or oral request, Superior will promptly deliver a separate set of the annual report and other proxy materials to any beneficial owner at a shared address to which a single copy of any of those documents was delivered. To receive a separate set of the annual report and other proxy materials, you may write or call Superior’s Secretary at Superior Industries International, Inc., 26600 Telegraph Rd., Suite 400, Southfield, MI 48033, telephone(248) 352-7300.
Stockholders who share the same address and currently receive multiple copies of our annual report and other proxy materials, who wish to receive only one set in the future, can contact their bank, broker or other holder of record to request information about householding.
FORM10-KWHERE YOU CAN FIND MORE INFORMATION
SUPERIOR WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF SUPERIOR’S ANNUAL REPORT ON FORMThe SEC allows us to “incorporate by reference” into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC as specified below will update and supersede this information. Except to the extent that information is deemed furnished and not filed pursuant to securities laws and regulations, we incorporate by reference the following filings:
This proxy statement incorporates important business and financial information about Superior from other documents that are not included in or delivered with this document. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in this proxy statement through our website, www.superior-ind.com, and from the SEC at its website, www.sec.gov, or by written request directed to us in care of the Corporate Secretary, Superior Industries International, Inc.,
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26600 TELEGRAPH RD.Telegraph Rd., SUITESuite 400, SOUTHFIELD, MICHIGAN, ATTN: SECRETARY, OR CALLSouthfield, Michigan 48033. Stockholders may also read and copy materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Stockholders may obtain information on the operation of the Public Reference Room by calling the SEC at(248) 352-7300.1-800-SEC-0330. THE ANNUAL REPORT ON FORM10-K IS ALSO AVAILABLE AT WWW.SUPIND.COM. THIS PROXY STATEMENT AND THE 2016 ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE ON WWW.PROXYVOTE.COM.
The Board knows of no other matters to be presented for stockholder action at the AnnualSpecial Meeting. However, if other matters do properly come before the AnnualSpecial Meeting or any adjournments or postponements thereof, the Board intends that the persons named in the proxies will vote upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS |
/s/ |
Nadeem Moiz |
Secretary |
APPENDIX A
RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
In this Proxy Statement under the “2016 Performance & Business Highlights — Recent Business Highlights/Company Performance” and the “Compensation Discussion and Analysis — Recent Business Highlights/Company Performance” we discuss one important measure (EBITDA) that is not otherwise reconciled to our most recently filed10-K.
EBITDA is a key measure that is not calculated according to GAAP. EBITDA is defined as earnings before interest income and expense, income taxes, depreciation and amortization. We use EBITDA as an important indicator of the operating performance of our business. EBITDA is used in our internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board and evaluating short-term and long-term operating trends in our operations. We believe the EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace and to establish operational goals. EBITDA is anon-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Thisnon-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies
EBITDA
Fiscal Year Ended December 25, 2016 | 2016 | 2015 | ||||||
(Thousands of dollars) | ||||||||
Net income | $ | 41,381 | $ | 23,944 | ||||
Interest income, net | (245 | ) | (103 | ) | ||||
Income tax provision | 13,340 | 11,339 | ||||||
Depreciation(1) | 34,261 | 34,530 | ||||||
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EBITDA | $ | 88,737 | $ | 69,710 | ||||
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For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following:
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1. | Election of Directors |
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Nominees | ||||||||||||||||||||||||||||||||||||
01 | Michael R. Bruynesteyn 02 Jack A. Hockema 03 Paul J. Humphries 04 James S. McElya 05 Timothy C. McQuay | |||||||||||||||||||||||||||||||||||
06 | Ellen B. Richstone 07 Donald J. Stebbins 08 Francisco S. Uranga | |||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposal: | For | Against | Abstain | For | Against | Abstain | ||||||||||||||||||||||||||||||
2 | To approve, in a non-binding advisory vote, executive compensation of the Company’s named officers. | ☐ | ☐ | ☐ | 5 | To act upon such other matters as may properly come before the Annual Meeting or any postponements or adjournments thereof. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
The Board of Directors recommends you vote 1 YEAR on the following proposal: | 1 year | 2 years | 3 years | Abstain | ||||||||||||||||||||||||||||||||
3 | To select, in a non-binding advisory vote, the frequency of the non-binding advisory vote on executive compensation of the Company’s named officers. | ☐ | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
| The Board of Directors recommends you vote FOR proposals 4 and 5.
| For
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| Abstain
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4 | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017; and | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | ||||||||||||||||||||||||||||||||||||
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||||||||||||||
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