UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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JOHN BEAN TECHNOLOGIES CORPORATION
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
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March 30, 201729, 2018
Dear JBT Corporation Stockholder:
It is my pleasure to invite you to attend the 20172018 Annual Meeting of Stockholders of John Bean Technologies Corporation, which will be held on Friday, May 12, 201711, 2018 at 9:30 a.m., Central Time, at 70 West Madison Street, Suite 450,2nd Floor Conference Center, Chicago, Illinois. At the meeting, we will ask our stockholders to approve our nominees for directors; approve the John Bean Technologies Corporation 2017 Incentive Compensation and Stock Plan (the “2017 Incentive Compensation Plan”); approve on an advisory basis a non-binding resolution regarding the compensation of our named executive officers described in the accompanying Proxy Statement; approve on an advisory basis the frequency of the advisory vote to approve named executive officer compensation; and ratify the appointment of KPMG LLP as our auditor for 2017.2018. You may vote at the Annual Meeting if you were a stockholder of record as of the close of business on March 16, 2017.15, 2018.
At our Annual Meeting, I will also report on our performance in 2016 and answer your questions. Please refer to the accompanying Proxy Statement for additional information about the matters to be considered at the meeting. The Proxy Statement includes a description of our executive compensation program, which is designed to provide competitive, performance-based compensation that places a significant portion of our named executive officers’ compensation at risk. Our named executive officers’ at-risk compensation depends on our achievement of pre-approved performance measures designed to ensure we provide long-term value to our stockholders. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, our proxy requests an advisory vote from stockholders on our named executive officers’ compensation, and anwhich we request annually in accordance with our previous advisory vote onof our stockholders and the frequencydirection of the advisory vote from stockholders on our named executive officers’ compensation.Board of Directors.
MANAGEMENT RECOMMENDS A VOTE FOR THE RE-ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR, FOR THE 2017 INCENTIVE COMPENSATION PLAN, FOR THE NON-BINDING RESOLUTION REGARDING NAMED EXECUTIVE OFFICER COMPENSATION, FOR EVERY ONE YEAR AS THE FREQUENCY OF THE ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION, AND FOR THE RATIFICATION OF THE APPOINTMENT OF OUR AUDITOR.
Your vote is important. To be sure that your vote counts and to assure a quorum, please submit your vote promptly whether or not you plan to attend the meeting. You can revoke a proxy prior to its exercise at the meeting by following the instructions in the accompanying Proxy Statement.
Our stockholders have a choice of voting on the Internet, by telephone or by mailing a proxy card. If you are a stockholder of record and you plan to attend the meeting, please mark the appropriate box on your proxy card or use the alternative Internet or telephone voting options in accordance with the voting instructions you have received. If you vote by telephone or on the Internet, you do not need to return your proxy card. If your shares are held by a bank, broker or other intermediary and you plan to attend the Annual Meeting of Stockholders, please send written notification to our Corporate Secretary, 70 West Madison Street, Suite 4400, Chicago, Illinois 60602, and enclose evidence of your ownership (such as a letter from the bank, broker or intermediary confirming your ownership or a bank or brokerage firm account statement). The names of all those indicating they plan to attend the Annual Meeting of Stockholders will be placed on an admission list held at the registration desk for the meeting.
Stockholders may help us reduce printing and mailing costs and conserve resources by opting to receive future proxy materials by e-mail. Information about how to do this is included in the accompanying Proxy Statement.
Sincerely, | |
| |
Thomas W. Giacomini | |
Chairman of the Board |
Thomas W. Giacomini
Chairman of the Board
NOTICE OF THE 20172018
ANNUAL MEETING OF STOCKHOLDERS
Friday, May 12, 201711, 2018 at 9:30 a.m., Central Time
70 West Madison Street, Suite 450,2nd Floor Conference Center, Chicago, IL 60602
The 20172018 Annual Meeting of Stockholders of John Bean Technologies Corporation will be held at the time and place noted above. At the meeting we will ask our stockholders to:
1. | Re-elect two directors, |
2. |
Approve on an advisory basis a non-binding resolution regarding the compensation of our named executive officers as described in the Proxy Statement for the |
3. |
Ratify the appointment of KPMG LLP as our independent registered public accounting firm for |
4. | Vote on any other business properly brought before the meeting or any postponement or adjournment thereof. |
By Order of the Board of Directors | |
| |
James L. Marvin | |
Executive Vice President, General | |
Counsel and Secretary |
James L. Marvin
Executive Vice President, General
Counsel and Secretary
Who is soliciting my vote? — The Board of Directors (the “Board”) of John Bean Technologies Corporation (“JBT Corporation” or the “Company,” “we,” “us” or “our”) is soliciting proxies for use at our What am I voting on? — The agenda for the Annual Meeting is to:
Who can vote? — You can vote at the Annual Meeting if you were a holder of John Bean Technologies Corporation common stock (“Common Stock”) as of the close of business on March Many of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their name. If your shares are registered directly in your name with our transfer agent, Computershare Investor Services, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to grant your voting proxy to the persons appointed by us or to vote in person at the Annual Meeting. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker or nominee on how to vote your shares, and you are also invited to attend the Annual Meeting. However, if you are not a stockholder of record, you may not vote these shares in person at the Annual Meeting unless you bring with you a legal proxy, executed in your favor, from the stockholder of record. Your broker or nominee is obligated to provide you with a voting instruction card for you to use. 1 How do I vote? — If you received a notice of electronic availability, you cannot vote your shares by filling out and returning the notice. The notice, however, provides instructions on how to vote by Internet, by telephone or by requesting and returning a paper proxy card or voting instruction card. Whether you hold shares directly as a registered stockholder of record or beneficially in street name, you may vote without attending the Annual Meeting. You may vote by granting a proxy or, for shares held beneficially in street name, by submitting voting instructions to your broker, bank or other nominee. You may vote your shares in one of the following ways:
If you hold your shares in street name (through a bank, broker or other nominee) it is critical that you cast your vote if you want it counted on Proposals 1 Telephone and Internet voting for stockholders of record will be available 24 hours a day, seven days a week, and will close at 11:59 p.m. Central Time on May Who counts the votes? — Our Board of Directors will designate individuals to serve as inspectors of election for the Annual Meeting. The inspectors will determine the number of shares outstanding and the number of shares represented at the Annual Meeting. They will also determine the validity of proxies and ballots, count all of the votes and determine the results of the actions taken at the Annual Meeting. How many votes must be present to hold the meeting? — Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail. In order for us to hold our Annual Meeting, holders of a majority of our outstanding shares of Common Stock as of March What is a broker non-vote? — If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on how to vote the shares, the broker may return a proxy card without voting on that proposal. This is known as abroker non-vote. Broker non-votes will have no effect on the vote for any matter properly introduced at the Annual Meeting but are counted for purposes of establishing a quorum at the meeting. 2 If you are a beneficial owner, your bank, broker or other holder of record is permitted to vote your shares on Proposal How many votes are needed to approve the proposals? — The election of directors at the For the proposals for (i) approval, Could other matters be decided at the Annual Meeting? — As of the date this Proxy Statement was printed, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. If other matters are properly presented at the Annual Meeting for consideration, the proxy holders designated on proxy cards or designated in the other voting instructions you have submitted will have the discretion to vote on those matters for you. Can I access the Notice of Annual Meeting, Proxy Statement and Can I revoke a proxy after I submit it? —You may revoke your proxy at any time before it is exercised. You can revoke a proxy by:
Who can attend the Annual Meeting? — The Annual Meeting is open to all holders of Common Stock. Each holder is permitted to bring one guest. Security measures will be in effect in order to ensure the safety of attendees and the orderly conduct of the Annual Meeting. 3 Do I need a ticket to attend the Annual Meeting? — Yes, you will need an admission ticket or proof of ownership of Common Stock to enter the Annual Meeting. If your shares are registered in your name and you received the proxy materials by mail, you will find an admission ticket attached to the proxy card sent to you. If your shares are in the name of your broker or bank or you received your materials electronically, you will need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND EITHER AN ADMISSION TICKET OR PROOF THAT YOU OWN JBT CORPORATION COMMON STOCK, YOU MAY NOT BE ADMITTED INTO THE ANNUAL MEETING. Proposal 1: Election of Directors The Board of Directors currently consists of seven members. We have three classes of directors, each class being of as nearly equal size as possible. The term for each class is three years. Class terms expire on a rolling basis, so that one class of directors is elected each year. The term for the nominees for director at the The nominees for director this year are The Board of Directors expects that all of the nominees will be able and willing to serve as directors. If any nominee is not available:
Vote Required The election of directors will be determined by a majority voting standard. This means that a director nominee will be elected to the Board of Directors only if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. The Board of Directors recommends a voteFOR the re-election of
Proposal 2:
In accordance with Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), we are seeking an advisory vote on a non-binding resolution from our stockholders on the compensation of our executive officers whose compensation is included in the Summary Compensation Table of this Proxy Statement (our “named executive officers”). This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices, as disclosed under the “Executive Compensation” section of this Proxy Statement. 4 At our Annual Meeting held in As described in more detail in the “Compensation Discussion and Analysis” section of this Proxy Statement, we have structured our executive compensation program to attract, engage and retain talented individuals and motivate them to create long-term stockholder value by achieving performance objectives and strategic goals and appropriately managing risk. Our program is designed to:
In the section of this Proxy Statement entitled “Compensation Discussion and Analysis,” we describe our executive compensation programs in more detail, including the philosophy and business strategy underpinning the programs, the individual design elements of the compensation programs, and information about how our compensation plans are administered. We encourage stockholders to review this section of the Proxy Statement. Our compensation programs consist of elements designed to complement each other and reward achievement of short-term and long-term objectives linked to financial performance metrics. We have chosen the selected metrics to align the compensation of our named executive officers to our business strategy. The Compensation Committee regularly reviews best practices related to executive compensation to ensure a close alignment between our business strategy and executive compensation opportunities. Over the past several years, under the leadership of our Compensation Committee, we have made a number of modifications to the structure of our executive compensation programs to ensure that the proportion of short- and long-term annual incentive compensation that is based upon objective business performance results has remained significant, and maintain a close alignment between business performance measures for incentive compensation awards and our company’s core strategic objectives. For As illustrated by these actions, the Compensation Committee has strived to structure our executive compensation practices in a manner that is performance-based with a view towards maximizing long-term stockholder value. Our Compensation Committee and the Board of Directors believes that the policies and programs described in the “Compensation Discussion and Analysis” section of this Proxy Statement are effective in achieving our strategic objectives and have contributed to our positive financial performance. 5 Vote Required In order for this proposal to be adopted by stockholders, at least a majority of the votes cast at the Annual Meeting in person or by proxy by the stockholders entitled to vote on the matter must be voted in its favor. The Board of Directors recommends a voteFOR the following non-binding resolution: RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and narrative descriptions that accompany those tables in this Proxy Statement, is hereby approved. Effect of Proposal Since the required vote is advisory, the result of the vote is not binding upon the Board of Directors and will not require the Board of Directors or the Compensation Committee to take any action regarding our executive compensation practices. The Board of Directors and the Compensation Committee value the opinions of our stockholders as expressed through their votes and other communications. Although the resolution is non-binding, the Board of Directors and the Compensation Committee will carefully consider the outcome of the advisory vote on named executive officer compensation and those opinions when making future compensation decisions.
Proposal KPMG LLP has served as our independent public accountants since our inception in July 2008. The Audit Committee of the Board of Directors has approved KPMG LLP continuing to serve as the independent auditors for us for the fiscal year ending December 31, For
6 The Audit Committee of the Board of Directors considered the effect of KPMG LLP’s non-audit services in assessing the independence of such accountants and concluded that the provision of such services by KPMG LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee of the Board of Directors reviews all relationships between KPMG LLP and us, including the provision of non-audit services which have an increased potential of impairing the auditor’s independence. The Audit Committee pre-approved all audit and non-audit services provided by KPMG LLP summarized in the table above during We have been advised by KPMG LLP that it will have a representative in attendance at the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires and also will be available to respond to appropriate questions. Vote Required In order for this proposal to be adopted by stockholders, at least a majority of the votes cast at the Annual Meeting in person or by proxy by the stockholders entitled to vote on the matter must be voted in its favor. The Board of Directors recommends a voteFOR ratification of the appointment of as the Company’s independent registered public accounting firm for
7 Nominees for Directors
Ms. Devine served as President and Managing Director of ExxonMobil Corporation’s Norwegian affiliate, Exxon Mobil Norway, from 1996 to 2000. Prior to the merger of ExxonMobil, she served as Secretary of Mobil Corporation from 1994 to 1996. From 1990 to 1994, Ms. Devine managed Mobil’s international government relations and from 1988 to 1990, Ms. Devine served as manager, security planning for Mobil. From 2000 to 2003, Ms. Devine was a Fellow at Harvard University’s Belfer Center for Science and International Affairs. Prior to joining Mobil, Ms. Devine served 15 years in the United States government in positions at the White House, the American Embassy in Paris, France, and the U.S. Department of Justice. Ms. Devine has served on the Board of Director of Valeo since 2015 and Conoco Phillips since Ms. Devine’s experience in international affairs and her knowledge of the Federal government that result from her fifteen years of government service, including posts in the White House, the American Embassy in Paris, France and the Department of Justice, as well as her current role as a member of the Council on Foreign Relations, are assets to our businesses that market and sell to the U.S. government and navigate international trade issues. Ms. Devine’s service on the Board of Directors of our predecessor, TechnipFMC, formerly known as FMC Technologies, Inc., beginning in 2005 also brought to the Board familiarity with the historical business strategies, products and management of the businesses that now comprise JBT Corporation.
Member of the Audit Committee Member of the Nominating and Governance Committee | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Class I - Term Expiring in | ||
| James M. Ringler
72 | |
Mr. Ringler currently serves as Chairman of the Board of Teradata Corporation. Mr. Ringler served as Vice Chairman of Illinois Tool Works Inc. until his retirement in 2004. Prior to joining Illinois Tool Works, he was Chairman, President and Chief Executive Officer of Premark International, Inc., which merged with Illinois Tool Works in November 1999. Mr. Ringler joined Premark in 1990 and served as President and Chief Operating Officer until 1996. From 1986 to 1990, he was President of White Consolidated Industries’ Major Appliance Group, and from 1982 to 1986, he was President and Chief Operating Officer of The Tappan Company. Prior to joining The Tappan Company in 1976, Mr. Ringler was a consulting manager with Arthur Andersen & Co. Mr. Ringler has served as Chairman of the Board of Teradata Corporation since September 2007 and he has been a member of the Boards of Directors of The Dow Chemical Company in 1976, Mr. Ringler was a consulting manager with Arthur Andersen & Co. Mr. Ringler has served as Chairman of the Board of Teradata Corporation since September 2007 and he has been a member of the Boards of Directors of DowDuPont, Inc. (formerly known as The Dow Chemical Company) since 2001, Autoliv, Inc. since 2002, and TechnipFMC since 2001. Mr. Ringler serves as chairman of Autoliv’s compensation committee and serves on the audit and compensation committees of TechnipFMC. Mr. Ringler served on the Board of Directors of Ingredion Incorporated from 2001 to 2014.
Mr. Ringler brings a broad perspective to our Board from his past experience and his current service on the boards and key committees of a number of large public companies, including those described above. Additionally, Mr. Ringler’s experience as a chief executive and board chairman provide the Board with significant experience in its evaluations of risks and opportunities facing our company. Mr. Ringler’s service on the Board of Directors of our predecessor, TechnipFMC, formerly known as FMC Technologies, Inc. since 2001 (which became TechnipFMC plc in 2017). Mr. Ringler served on the Board
of Directors of Ingredion Incorporated from 2001 to 2014. Mr. Ringler serves as chairman of Autoliv’s compensation committee and serves on the audit committees of Autoliv, Dow Chemical and TechnipFMC plc (where he also serves as a compensation committee member). Mr. Ringler brings a broad perspective to our Board from his past experience and his current service on the boards and key committees of a number of large public companies, including those described above. Additionally, MR. Ringler’s experience as a chief executive and board chairman provide the Board with significant experience in its evaluations of risks and opportunities facing our company. Mr. Ringler’s service on the Board of Directors of our predecessor, FMC Technologies, Inc., beginning in 2001 also brings to the Board familiarity with the historical business strategies, products and management of the businesses that now comprise JBT Corporation.
Member of the Nominating and Governance Committee
Member of the Compensation Committee
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Directors Continuing in Office | ||
Class II - Term Expiring in 2019 | ||
| Edward (Ted) L. Doheny II
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Mr. Doheny was named President and Chief Executive Officer of Sealed Air Corporation effective January 1, 2018. He served as the President and Chief Executive Officer of Joy Global, Inc. Mr. Doheny brings 30 years of industrial
Member of the Nominating and Governance Committee | ||
Mr. Doheny has served as the President and Chief Executive Officer of Joy Global, Inc. since December 2013. Previously he served as an Executive Vice President of Joy Global, Inc. and President and Chief Operating Officer of Joy Mining Machinery (positions he assumed in 2006), where he had global responsibility for the company’s underground mining machinery business. Prior to joining Joy Global, Mr. Doheny spent 21 years with Ingersoll-Rand Corporation, where he held a variety of senior executive positions domestically and internationally, including President of Industrial Technologies from 2003 to 2005 and President of Air Solutions from 2000 to 2003. Mr. Doheny brings 25 years of industrial equipment industry experience to our Board from his roles at Joy Global and Ingersoll Rand. Mr. Doheny’s executive officer positions bring to our Board expertise and experience of an acting president and chief executive officer of a world leading manufacturer of highly mechanized equipment and systems delivered directly to markets all over the world.
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Class II - Term Expiring in 2019 | ||
| Alan D. Feldman
66 | |
Mr. Feldman served as President and Chief Executive Officer of Midas, Inc. from January 2003 until May 2012 and as its Chairman from May 2006 until May 2012. Prior to joining Midas in January 2003, Mr. Feldman held several senior management posts with McDonald’s Corporation, becoming President of McDonald’s USA in 1998 and Chief Operating Officer and President of McDonald’s Americas in 2001. From 1983 through 1994, Mr. Feldman was with PepsiCo, where he served in financial and operations posts at Frito-Lay and Pizza Hut. At Pizza Hut, Mr. Feldman was named Senior Vice President of Operations in 1990 and Senior Vice President, Business Strategy and Chief Financial Officer, in 1993. Mr. Feldman has served on the Board of Directors of GNC Holdings, Inc. since July 2013, the Board of Directors of Foot Locker, Inc. since May 2005 and on the Board of Directors of the University of Illinois Foundation since September 2012 (where he also serves asChair-Elect). Mr. Feldman has a significant amount of expertise in the fast-food, quick-serve and snack food
industries, a significant market for our JBT FoodTech division,
Mr. Feldman served as President and Chief Executive Officer of Midas, Inc. from January 2003 until May 2012 and as its Chairman from May 2006 until May 2012. Prior to joining Midas in January 2003, Mr. Feldman held several senior management posts with McDonald’s Corporation, becoming President of McDonald’s USA in 1998 and Chief Operating Officer and President of McDonald’s Americas in 2001. From 1983 through 1994, Mr. Feldman was with PepsiCo, where he served in financial and operations posts at Frito-Lay and Pizza Hut. At Pizza Hut, Mr. Feldman was named Senior Vice President of Operations in 1990 and Senior Vice President, Business Strategy and Chief Financial Officer, in 1993. Mr. Feldman has served on the Board of Directors of GNC Holdings, Inc. since July 2013, the Board of Directors of Foot Locker, Inc. since May 2005 and on the Board of Directors of the University of Illinois Foundation since September 2012 (where he also serves as Chair-Elect).
Mr. Feldman has a significant amount of expertise in the fast-food, quick-serve and snack food industries, a significant market for our FoodTech businesses, as a result of his senior management positions with McDonald’s and PepsiCo’s Frito-Lay and Pizza Hut operating units as described above. Additionally, his experience as the Chief Financial Officer of Pizza Hut allows him to make significant contributions to the Board’s Audit Committee, and his former role as CEO and Chairman of Midas, Inc. provides our Board with the expertise and experience of a former chief executive officer and board chairman of an international retail, parts and services business.
Chair of the Audit Committee
Member of the Nominating and Governance Committee
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Class II - Term Expiring in 2019 | ||
| James E. Goodwin
73 | |
Mr. Goodwin served as Chairman and Chief Executive Officer of UAL Corporation and United Airlines from March 1999 until his retirement on October 31, 2001. Mr. Goodwin served as President and Chief Operating Officer of UAL Corporation and United Airlines from 1998 to 1999. During his career with UAL Corporation and United Airlines, Mr. Goodwin became Senior Vice President-Marketing in 1985, Senior Vice President-Services in 1988, Senior Vice President-Maintenance Operations in 1991, Senior Vice President-International in 1992 and Senior Vice President-North America in 1995. Mr. Goodwin has served on the Boards of Directors of AAR Corp. since April 2002 and Federal Signal Corporation since October 2005 (where he currently serves as lead independent director). Mr. Goodwin serves on the Advisory Board of Wynnchurch Capital, a private equity firm, and has served on the Boards of Directors of two of their portfolio companies, Burtek Enterprises, Inc. and Northstar Aerospace, Inc., since March 2013. Mr. Goodwin’s thirty-four years of operational and management experience in the airline industry, including in the positions described above at United Airlines and its parent, UAL Corporation, allow him to provide unique insight into the aviation industry generally and are especially critical to our AeroTech division. Additionally, Mr. Goodwin’s experience as a chief executive and board chairman of UAL Corporation and United Airlines, as well as his current service as a director and as a member of the audit committee of AAR Corp., an aviation support company, and his experience as chairman of the board of Federal Signal Corporation adds to the insights he brings to our Board regarding opportunities in the aviation industry, to our Board’s Audit Committee and more generally in assessing and evaluating risks and opportunities facing our company. Lead Independent Director Member of the Audit Committee Member of the Nominating and Governance | ||
Mr. Goodwin served as Chairman and Chief Executive Officer
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Class III - Term Expiring in 2020 | |
| Thomas W. Giacomini |
Mr. Giacomini became the Company’s President and Chief Executive Officer in September 2013 and was elected Chairman of the Board in May 2014. Prior to joining the Company, he served as Vice President (since February 2008) of Dover Corporation, a diversified global manufacturer, and President and Chief Executive Officer (since November 2011) of Dover Engineered Systems. Prior to serving in these roles, Mr. Giacomini served as President (from April 2009 to November 2011) and Chief Executive Officer (from July 2009 to November 2011) of Dover Industrial Products and President (from October 2007 to July 2009) of Dover’s Material Handling Platform. Mr. Giacomini joined Dover in 2003 following its acquisition of Warn Industries, an industrial manufacturer specializing in vehicle performance enhancing equipment. During his tenure at Warn Industries he held a variety of leadership roles including President and Chief Operating Officer. Prior to joining Warn Industries, Mr. Giacomini held various roles at TRW, Inc. Mr. Giacomini served as a director of Clarcor, Inc. from August 2015 through February 2017, when it was acquired by Parker-Hannifin. Mr. Giacomini was appointed to the Board of Directors of MSA Safety Incorporated in June 2017. Mr. Giacomini holds an MBA from Northwestern’s Kellogg School of Management and a Bachelor’s degree in Mechanical Engineering from University of Michigan (Dearborn). Mr. Giacomini’s experience as a senior executive officer of a large and diversified global manufacturing company brings to the Board a managerial and operating perspective gained from his experience managing the risks, implementing the strategies and spearheading growth initiatives of a larger global company. Chairman of the Board of Directors | |
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Class III - Term Expiring in 2020 | |
| Polly B. Kawalek |
Ms. Kawalek retired in 2004 after serving for 25 years in various capacities with Quaker Oats, Inc., which in 2001 became a business unit of PepsiCo. She served as President of PepsiCo’s Quaker Foods division from 2002 until her retirement. In 2001, Ms. Kawalek served as President of Quaker Oats’ U.S. Foods division and from 1997 through 2000 she served as President of its Hot Breakfast division. Ms. Kawalek currently serves as a director of Elkay Manufacturing Company. Ms. Kawalek served as a director of Martek Biosciences Corp. from 2005 until February 2011 and as a director of Kimball International, Inc. from 1998 until January 2009. Ms. Kawalek brings twenty-five years of food industry experience to our Board from her roles at Quaker Oats, both prior and subsequent to its acquisition by PepsiCo. Ms. Kawalek’s insights into research and development, product innovation and marketing bring our Board key perspectives for strategic planning. Chair of the Nominating and Governance Committee Member of the Compensation Committee | |
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Our Board of Directors believes that the purpose of corporate governance is to ensure that we maximize stockholder value in a manner that is consistent with both the legal requirements applicable to us and a business model that requires our employees to conduct business with the highest standards of integrity. The Board has adopted and adheres to corporate governance principles which the Board and senior management believe promote this purpose, are sound and represent best practices. The Board reviews these governance practices, the corporate laws of the State of Delaware under which we were incorporated, the rules and listing standards of the New York Stock Exchange and the regulations of the Securities and Exchange Commission, as well as best practices recognized by governance authorities to benchmark the standards under which it operates. The corporate governance principles adopted by the Board of Directors may be viewed on the Investor Relations section of our website under Corporate Governance atwww.jbtcorporation.comwww.jbtc.com/investors, and are also available in print to any stockholder upon request. A request should be directed to our principal executive offices at 70 West Madison Street, Suite 4400, Chicago, Illinois 60602, Attention: Executive Vice President, General Counsel and Secretary.
Our Board of Directors believes that stockholders should have opportunities to engage directly with Company management and the Board. The Company engages with stockholders on a variety of topics throughout the year to ensure we are addressing questions and concerns, to seek input and to provide perspective on the Company’s strategy, operating results, compensation and policies. Stockholder feedback from this engagement is considered by the Board of Directors and reflected in enhancements to policies and practices. In addition to the opportunity for direct engagement, there are a number of ways for stockholders to effectively communicate a point of view with the Board of Directors, including the following: a) the annual election of director nominees by way of a majority vote standard; b) the annual advisory vote to approve executive compensation; c) our commitment to thoughtfully consider stockholder proposals properly submitted to the Company; d) the ability to attend and voice opinions at the Annual Meeting of Stockholders; and e) the ability to direct communications to our Board of Directors.
Our Board of Directors held 76 meetings during 2016.2017. Each director attended at least 75%all of the meetings of the Board. In addition, each of our directors attended all of the meetings of the committees on which he or she served during 2016.2017. The Board of Directors has scheduled a board meeting on the day of the 20172018 Annual Meeting of Stockholders, and the Company encourages Board members to attend the Annual Meeting of Stockholders. All of our Board members attended the 20162017 Annual Meeting of Stockholders.
Committees of the Board of Directors
The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee.
Each of these committees operates pursuant to a written charter setting out the functions and responsibilities of the committee, each of which may be reviewed on the Investor Relations section of our website under Corporate Governance atwww.jbtcorporation.comwww.jbtc.com/investors, and is also available in print to stockholders upon request submitted to our principal executive offices at 70 West Madison Street, Suite 4400, Chicago, Illinois 60602, Attention: Executive Vice President, General Counsel and Secretary.
The following table provides 2016 meeting and membership information for each of the Board’s committees:
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The Audit Committee met 8 times during 2017, the Compensation Committee met 3 times during 2017 and Nominating and Governance Committee met 2 times during 2017.
The Audit Committee charter gives the Audit Committee the authority and responsibility for the engagement, compensation and oversight of our independent public accountants and the review and approval in advance of the scope of audit and non-audit assignments and the related fees of the independent public
accountants. The Audit Committee charter also gives this committee authority to fulfill its obligations under Securities and Exchange Commission and New York Stock Exchange requirements, which include:
· | responsibilities associated with our external independent auditor, including their appointment, compensation, retention or termination, and oversight; |
· | review and discuss with management, our Vice President of Internal Audit and our independent auditor the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies that could significantly affect our financial statements; |
· | review of the scope, planning and staffing of the prospective audit and approval of estimated fees therefor; |
· | resolution of disagreements between management and our independent auditor regarding financial reporting; |
· | oversight over accounting and financial reporting processes associated with the preparation of our financial statements and filings with the Securities and Exchange Commission; |
· | review of reports by management and legal counsel relating to litigation and compliance with laws, internal policies and controls that are material to our financial statements; |
· | review and assess our financial and accounting organization and internal controls; |
· | review policies with respect to major risk assessment and risk management practices designed to monitor and control exposure to such risks; |
· | review of matters associated with auditor independence and approval of non-audit services; and |
· | oversight over “whistle-blower” procedures for reporting questionable accounting and audit practices. |
Audit Committee members meet privately in separate sessions with representatives of our senior management, our independent public accountants and our Vice President of Internal Audit after most Audit Committee meetings (4 such sessions were held following Audit Committee meetings in 2016)2017).
The Board of Directors has determined that all of the members of the Audit Committee (C. Maury Devine, Alan D. Feldman and James E. Goodwin) (i) are independent directors as defined by the New York Stock Exchange listing rules and satisfy the enhanced independence criteria required for audit committee service under Securities and Exchange Commission rules and the New York Stock Exchange listing rules and (ii) meet the New York Stock Exchange standard of having accounting or related financial management expertise and meet the Securities and Exchange Commission criteria for an “audit committee financial expert.”
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The principal duties of the Compensation Committee under its charter include:
· | reviewing succession plans for the Chief Executive Officer and other primary executive officers annually, and reporting to the full Board on succession planning and management development; |
| · | administering our 2017 Incentive Compensation and Stock Plan (the “Incentive Compensation Plan”), approving and administering other equity compensation plans; |
| · | reviewing our overall compensation philosophies to ensure policies appropriately link management interests with those of stockholders and mitigate risks; |
| · | approving the peer group used for compensation and relative performance comparisons and ensuring our pay programs are competitive and enable us to attract, retain and motivate top talent; |
| · | reviewing all new employee benefit plans, fringe benefits and payroll practices and approving the activities related to mergers, consolidations, split-ups, spin-offs or terminations of such plans; |
| · | reviewing and approving the short- and long-term performance goals and individual objectives (as it relates to the Chief Executive Officer) compared to incentive plan terms and total incentive compensation amounts to be paid to executive officers, and reviewing, approving and administering policies and agreements permitting recovery of executive officer compensation in the event of a restatement of our financial results; |
| · | appointing members of the Employee Benefits Plan Committee and periodically reviewing the actions taken by that committee; |
| · | approving all executive officer pay packages, periodically reviewing executive officer perquisites and executive severance arrangements, hedging and pledging policies, and establishing and monitoring compliance with executive stock ownership guidelines; |
· | recommending to the full Board changes to compensation for non-employee directors; and |
· | reviewing management’s Compensation Discussion and Analysis to be included in our annual proxy statement, issuing its report on executive compensation for inclusion in our annual report or proxy statement, reviewing and recommending for Board approval the frequency of advisory votes on executive compensation (“say-on-pay”), and reviewing the results of say-on-pay resolutions and the input received from our stockholders engagement efforts, and considering any implications thereof. |
The Board of Directors has determined that all of the members of our Compensation Committee (Edward L. Doheny, II, Polly B. Kawalek and James M. Ringler) are independent directors as defined by the New York Stock Exchange listing rules and satisfy the enhanced independence criteria required for compensation committee service under Securities and Exchange Commission regulations and the New York Stock Exchange corporate governance listing standards. The Compensation Committee members meet privately in separate sessions with representatives of our compensation consultant and our Executive Vice President, Human Resources after most Compensation Committee meetings (3 such sessions were held following the Compensation Committee in 2017).
Under its charter, our Compensation Committee has the authority to engage the services of outside auditors, expertsconsultants, outside lawyers, and others to assist the committee’s fulfillment of these responsibilities, and our Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”), an internationally recognized executive compensation consulting firm, as the Committee’s
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independent compensation consultant for 2016.2017. For 2016,2017, the Compensation Committee’s engagement agreement with Meridian provided for a scope of work that included ensuring that the Compensation Committee’s compensation recommendations were consistent with our business strategy, pay philosophy, prevailing market practices and relevant regulatory mandates and assisting the Committee’s efforts to make compensation decisions that were aligned with the interests of our stockholders. In addition, Meridian’s engagement for 20162017 included the provision of incentive compensation plan design advice as well as advising on the Company’s compensation peer group. In connection with its engagement of Meridian in 2016,2017, the Compensation Committee considered various factors bearing upon Meridian’s independence including, but not limited to, the amount of fees received by Meridian from the Company as a percentage of Meridian’s total revenue, Meridian’s policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship with any member of the Compensation Committee or management that could impact Meridian’s independence. After reviewing these and other factors, the Compensation Committee determined that Meridian was independent and that its engagement did not present any conflicts of interest. Meridian also determined that it was independent from management and confirmed this in a written statement delivered to the Chair of the Compensation Committee.
The Compensation Committee annually reviews executive pay, peer group selection criteria, compensation design practices and performance to help ensure that our total compensation program is consistent with our compensation philosophies. When determining compensation levels for executive officers for 2016,2017, the Compensation Committee utilized compensation survey data that was supplied by Meridian.Meridian and Aon Hewitt. For purposes of this survey, a group of peer companies was selected by our management, reviewed by Meridian and approved by the Compensation Committee. The list is reviewed prior to each compensation survey by the Compensation Committee to ensure continuing relevancy of the peer group considering the size and financial performance of the proposed companies. With each survey, the Compensation Committee’s independent consultant collects,
analyzes and reports back to the Compensation Committee on the amounts, designs, and components of compensation paid by the peer group, utilizing regression analysis to develop size-adjusted values for companies with varying revenue size and to provide relevant comparisons. For our Chief Executive Officer, Chief Financial Officer and Executive Vice Presidents, the Compensation Committee also reviews data compiled annually by Meridian from proxy statement filings by peer group companies to assess pay levels and design practices for comparable executive officers.
Based on the survey market data and the additional data from public filings, the Compensation Committee reviewed the appropriateness of management’s recommendations for each of our executive officer’s base pay, annual management incentive plan bonus and annual long term incentive plan awardawards for 2016.2017. The Compensation Committee allocated total annual compensation to our executive officers among the various elements of short-term cash (base pay and management incentive plan bonus) and long-term compensation (equity incentive awards) to approximate the market 50th percentile targeted pay levels and mix identified in the survey results and in the data obtained from public filings.
The Compensation Committee also periodically reviews non-employee director compensation to ensure that the amount of compensation provided to non-employee directors is within appropriate parameters. A survey was commissioned by the Compensation Committee in 2015 in connection with its review of 2016 non-employee director compensation. The companies included within the survey were selected by our management and approved by the Compensation Committee for peer group comparison.
The scope of authority delegated to the Compensation Committee by the Board of Directors is to decide whether or not to accept, reject or modify our management’s proposals for total compensation awards to our named executive officers. The Compensation Committee also has the authority to recommend to the Board of Directors the amount of compensation to be paid to our non-employee directors. Our Chief Executive Officer participated this year in the compensation decisions for the other named executive officers. He did not have a role in setting his own base pay, annual management incentive plan compensation or the size of his annual long-term incentive plan award. Our former and current Executive Vice President, Human Resources, officers, working with Meridian, provided recommendations for each executive’s base pay, annual management incentive plan bonus and annual long-term incentive plan award for the Compensation Committee’s review. Our Chief Financial Officer our Executive Vice President, Corporate Development and our Director, Investor Relations and Financial Planning & Analysis also provided the Compensation Committee with information related to our financial performance against our objectives. This information was then used by the Compensation Committee as factors in setting annual targets and ratings associated with incentive compensation awards and selecting appropriate structuresperformance metrics and objectives for long-term performance-based incentive compensation awards.
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Nominating and Governance Committee
The principal duties of the Nominating and Governance Committee under its charter are:
· | identifying and recommending to the Board of Directors qualified candidates for vacancies on the Board in accordance with criteria established by the Board; |
· | identifying and recommending nominees for the Board of Directors to be submitted for election at the Annual Meeting; |
· | making recommendations to the Board of Directors concerning the membership of Board committees and committee chairpersons; |
· | developing and recommending to the Board of Directors a set of Corporate Governance Guidelines, reviewing them annually, and making recommendations to the Board from time to time regarding matters of corporate governance; |
· | recommending to the Board of Directors in the event of an emergency, a temporary replacement of the Chief Executive Officer or any other primary executive officer, in accordance with the applicable succession plan; |
· | reviewing our ethics policy annually and recommending changes to the Board of Directors; |
· | annually reviewing and evaluating all relationships between non-employee directors and our company and making recommendations to the Board of Directors regarding the assessment of each non-employee director’s independence; |
· | monitoring orientation and training needs of the directors and making recommendations regarding director training programs and advising the Board on emerging governance trends; and |
· | reporting annually to the Board of Directors the Committee’s assessment of the performance of the Board and its committees. |
The Board of Directors has determined that all of the members of the Nominating and Governance Committee (C. Maury Devine, Edward L. Doheny II, Alan D. Feldman, James E. Goodwin, Polly B. Kawalek and James M. Ringler) are independent directors as defined by the New York Stock Exchange listing rules.
Stockholders may submit recommendations for future candidates for election to the Board of Directors for consideration by the Nominating and Governance Committee by writing to: Executive Vice President, General Counsel and Secretary, John Bean Technologies Corporation, 70 West Madison Street, Suite 4400, Chicago, Illinois 60602. A letter making a director candidate recommendation must include the candidate’s name, biographical information and a summary of the candidate’s qualifications. In addition, the letter should be accompanied by a signed statement from the nominee indicating that the nominee is willing to serve as a member of the Board. To make a recommendation for the 20182019 Annual Meeting, please refer to the timing requirements specified in the section of this Proxy Statement entitled “Proposals for the 20182019 Annual Meeting of Stockholders.” All submissions from stockholders meeting these requirements will be reviewed by the Nominating and Governance Committee.
In connection with its role in recommending candidates for the Board, the Nominating and Governance Committee advises the Board with respect to the combination of skills, experience, perspective and background that its members believe are required for the effective functioning of the Board considering our current business strategies and regulatory, geographic and market environment. The Committee has not established specific, minimum qualifications for director nominees. Our corporate governance principlesCorporate Governance Guidelines provide that directors should be selected based on integrity, successful business experience, stature in their
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own fields of endeavor and the diversity of perspectives they bring to the Board. Our corporate governance principlesCorporate Governance Guidelines also require that a majority of our non-employee directors be active or retired senior executives, preferably chief executive, chief financial or chief operating officers or other similar senior officers of publicly-held companies. In addition, the corporate governance principlesCorporate Governance Guidelines provide that our non-employee directors also be chosen based on recognized experience in our lines of business and leadership in areas of government service, academia, finance and international trade. Nominees to be evaluated by the Nominating and Governance Committee for future vacancies on the Board will be selected by the Committee from candidates recommended by multiple sources, including business and personal contacts of the members of the Nominating and Governance Committee, recommendations by our senior management and candidates identified by independent search firms, stockholders and other sources, all of whom will be evaluated based on the same criteria. All of the current nominees for the Board are standing members of the Board that are proposed by the entire Board for re-election.
The Nominating and Governance Committee conducted a review of the independence of the members of the Board of Directors and its committees and reported its findings to the full Board at its February 16, 201722, 2018 meeting. Six of our seven directors who served on our Board in 20162017 were non-employee directors. Our Chairman, President and Chief Executive Officer, Thomas W. Giacomini, is our single employee director. Each of our directors completes an annual questionnaire requiring disclosure of any relationships (including industrial, banking, consulting, legal, accounting, charitable or familial relationships) which could impair the independence of such director. The Nominating and Governance Committee reviewed all of the commercial transactions, relationships and arrangements between us and our subsidiaries, affiliates and executive officers with companies
with whom the six non-employee directors who served on our Board in 20162017 are affiliated or employed. The only transaction, relationship and arrangement of this nature that exists and was reviewed by the Nominating and Governance Committee was the continuing service by C. Maury Devine (ending May 2016) and James M. Ringler as membersa member of the Board of Directors of the formerTechnipFMC, formerly known as FMC Technologies, Inc., the company from which we separated in a spin-off transaction in July 2008. In January 2017, Technip and FMC Technologies, Inc. merged into TechnipFMC plc, and Mr. Ringler is a member of that company’s board. Ms. Devine resigned from the FMC Technologies, Inc. board in May 2016 when the merger was announced and completed her service on the Technip board at the closing of the merger. FMC Technologies, Inc., now known as TechnipFMC plc, and JBT Corporation are parties to certain agreements that pertain to the separation of the operations of the two companies and which address, among other things, continuing indemnification obligations between the two companies, intellectual property licensing arrangements, and sales distributor agreements. Although the Board has not adopted categorical standards of materiality, this relationship was not deemed to be material or as impacting the independence of our non-employee directors.
Based on the report and recommendation of the Nominating and Governance Committee, the Board has determined that each of its non-employee members (C. Maury Devine, Edward L. Doheny II, Alan D. Feldman, James E. Goodwin, Polly B. Kawalek and James M. Ringler) satisfies the independence criteria set forth in the corporate governance listing standards of the New York Stock Exchange. In addition, all of the members of the Audit Committee satisfy the enhanced independence criteria required for members of audit committees, and all of the members of the Compensation Committee satisfy the enhanced independence criteria required for members of compensation committees, under regulations adopted by the Securities and Exchange Commission and the New York Stock Exchange corporate governance listing standards.
Executive Sessions of Independent Directors
The Board of Directors holds executive sessions of only its independent directors after regularly scheduled Board of Directors meetings. James E. Goodwin was selected by the Board of Directors to serve as the presiding “lead independent director” for these executive sessions during 2016,2017, and was re-selected to serve in that capacity for 2017.2018.
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Stockholder Communications to the Board
Stockholders and other interested parties may communicate directly with the Board of Directors, with the presiding “lead independent director” for an upcoming meeting or the independent directors as a group by submitting written correspondence c/o Lead Independent Director, John Bean Technologies Corporation, 70 West Madison Street, Suite 4400, Chicago, Illinois 60602. The lead independent director will review any such communication at the next regularly scheduled Board meeting unless, in his or her judgment, earlier communication to the full Board is warranted.
In May 2014, our President and Chief Executive Officer, Thomas W. Giacomini, was elected Chairman of the Board. In its determination that Mr. Giacomini should serve in this role, our Board believed that Board independence and oversight of management were effectively maintained through the Board’s composition, committee system and policy of having regular executive sessions of non-employee directors. A combined Chief Executive Officer and Chairman role serves as an effective bridge between the Board and our management, and provides strong unified leadership of the Company. The Board retains the authority to modify its Board leadership structure to address our Company’s circumstances and advance the best interests of the Company and its stockholders as and when appropriate. The Board believes the role of Chief Executive Officer and Chairman, together with the role of the lead independent director, provides an appropriate balance in the Company’s leadership. Our Corporate Governance Guidelines provide for the annual election of a lead independent director by a majority of the non-employee directors. The lead independent director chairs executive sessions of independent directors, which our Corporate Governance Guidelines require to occur at least annually in conjunction with regularly scheduled Board meetings. Our independent directors typically meet in an executive
session at the conclusion of each of our regularly scheduled Board of Director meetings and following that meeting our lead independent director provides feedback to our Chief Executive Officer to the extent desired by the independent directors. The Board’s annual self-evaluation includes questions regarding the Board’s opportunities for open communication and effectiveness of executive sessions. Our Corporate Governance Guidelines limit employee members of the Board to two seats. Our Chairman of the Board, President and Chief Executive Officer is the only member of management currently serving on our Board. Currently all other members of our Board are independent. Our three Board committees are comprised entirely of independent directors and each committee has regular interaction with our senior management in establishing their agendas and obtaining information from our Company’s operations.
Our Corporate Governance Guidelines provide that Board members will be selected based on integrity, successful business experience, stature in their own fields of endeavor, and the diversity of perspectives they bring to the Board. Our Corporate Governance Guidelines further state that consideration should also be given to candidates with experience in the Company’s lines of business and leadership in such areas as government service, academia, finance and international trade. We have from time to time engaged the services of an executive search firm to help us identify qualified Board candidates meeting these criteria and specifically seek director candidates who helped us meet the following parameters: experience in the food, airline or airfreight industries; industrial manufacturing background; international business exposure; financial expertise; added to the diversity of our Board; possessed chief executive officer or senior P&L management skills; experience on public company boards; and a sophisticated understanding of M&A transactions and integration into existing businesses. We believe we have achieved a diversity of perspectives with our current Board membership, which consists of directors who are holding or have held a variety of senior management level positions and have extensive public company board experience, broad experience across the industries in which we conduct business, international business expertise and State and Federal government service. For more information regarding the background, experience and attributes of our directors, please refer to the complete biographies of our directors that appear under “Board of Directors” in this Proxy Statement.
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Role of Board in Risk Oversight
As part of its general oversight over the management of the Company, our Audit Committee periodically reviews assessments prepared by our management of the primary risks relevant to our business and the mitigation actions we implement to address these risks. The role of the Board in risk oversight is to provide guidance to management through its Audit Committee, based upon their experience and perspectives, regarding the overall effectiveness of its strategies to monitor and mitigate those risks. During Board meetings, the Board periodically receives reports directly from the Division Presidents for each of our divisions; these updates provide our Board with a more detailed understanding of the strategies of each of our divisions and the opportunities and risks that they face. Management also provides the Board with periodic reports regarding its enterprise risk management programs, our internal audit program, our code of ethics and compliance training programs and our internal control assessments. Our Audit Committee also receives a quarterly update from our Executive Vice President, General Counsel and Secretary regarding material litigation and legal loss contingencies involving the Company as well as reports to our employee hotline.
In addition, our Compensation Committee periodically reviews assessments prepared by Meridian of potential risks associated with our compensation programs and determines whether our compensation policies and practices adequately and effectively mitigate those risks. The Compensation Committee reports its findings and recommendations, if any, to the Board.
The Compensation Committee bi-annually reviews non-employee director compensation to ensure that the amount of compensation provided to non-employee directors is within appropriate parameters. A survey was commissioned by the Compensation Committee in late 2015 in connection with its review of 2016 non-employee director compensation, using the same peer group utilized for purposes of benchmarking our executive officer compensation. No changes were made to the amount of non-employee director compensation in 2017. In late 2017, the Compensation Committee commissioned Meridian to conduct a peer group survey to review non-employee director compensation. The results of the survey indicated that our total non-employee director compensation was below the peer group median. Accordingly, the Compensation Committee recommended to the full Board a slight increase in non-employee director compensation in 2018 to realign with peer group companies, which was approved by the Board.
For 2016,2017, each of our non-employee directors received an annual retainer of $70,000. This annual retainer is structured to provide each non-employee director with the option to receive 0%, 50%, or 100% of the value of the retainer in the form of restricted stock units (“RSUs”), provided a timely election to receive restricted stock unitsRSUs is made by a non-employee director, and the option to elect to receive any remainder in cash, payable in
quarterly installments. Restricted stock unitsRSUs granted as part of the 20162017 retainer had a fair market value equal to the deferred amount of the annual retainer on the date of the grant and vest in May 2017.2018. The amount of this annual retainer is allocated among fees earned or paid in cash (column (b)) and stock awards (column (c)) in the Director Compensation Table below based upon the election made by each director.
We also make an annual non-retainer equity grant to our non-employee directors of restricted stock or restricted stock unitsRSUs of equivalent value. Our practice is to make these awards on May 1 of each year. On May 1, 2016,2017, we awarded each of our non-employee directors restricted stock unitsRSUs with a value of $110,000, which is included in the amount contained in column (c) of the Director Compensation Table below. These awards will also vest in May 2017.2018.
Our non-employee directors do not receive additional cash remuneration for Board of Directors meetings or committee meetings attended. For 2017, the chairs of the Audit Committee, and the Compensation Committee received an additional annual fee of $15,000; the chair of the Nominating and Governance Committee received an additional annual fee of $10,000; and the Board of Director’s lead independent director received an additional annual fee of $20,000, and a pro-rated portion of that fee is
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included as fees earned or paid (column (b)) for 2017 in the Director Compensation Table below for each chair and the lead independent director. Each non-employee director will also receive reimbursement for reasonable incidental expenses incurred in connection with the attendance of meetings of the Board and Board committees.
We have ownership requirements for our non-employee directors that are based on a multiple of five times the amount of each non-employee director’s annual retainer to be met within three years of their appointment to the Board, and each of our non-employee directors who are currently subject to this requirement is in compliance with the ownership requirements. Beginning with theequity awards issued to non-employee directors in 2017, awards,those non-employee directors who meet the ownership guidelines will be able to elect whether to have the restricted stock unitsRSUs they elect to receive from the annual retainer and the annual non-retainer equity grants they are awarded (i) distributed at the time of vesting, which is one year after grant date, or (ii) distributed after they complete their service on our Board. PriorFor all RSUs granted to non-employee directors prior to 2017, non-employee directors who met the ownership guidelines were required to hold the restricted stock units they elected to receive from their annual retainer and annual non-retainer equity grantsdistribution is deferred until after each director completes their Board service was completed.service. These restricted stock unitsRSUs are forfeited if a director ceases service on the Board of Directors prior to the vesting date of the restricted stock units,RSUs, except in the event of death or disability. Unvested restricted stock unitsRSUs will be settled and are payable in Common Stock upon the death or disability of a director or in the event of a “change in control” of the Company, as such term is defined in the Incentive Compensation Plan.
Our non-employee directors do not receive additional cash remuneration for Board of Directors meetings or committee meetings attended. For 2016, the chairs of the Audit Committee, and the Compensation Committee received an additional annual fee of $15,000; the chair of the Nominating and Governance Committee received an additional annual fee of $10,000; and the Board of Director’s lead independent director received an additional annual fee of $20,000, and a pro-rated portion of that fee is included as fees earned or paid (column (b)) in the Director Compensation Table below for each chair and the lead independent director. Each non-employee director will also receive reimbursement for reasonable incidental expenses incurred in connection with the attendance of meetings of the Board and Board committees.
The following table shows all compensation awarded, paid to or earned by the non-employee members of our Board of Directors from all sources for services rendered in all of their capacities to us during 2016.2017.
Director Compensation Table
Name (1) | Fees Earned or Paid in Cash ($) (2) | Stock Awards ($) (3) | All Other Compensation ($) (4) | Total ($) | ||||||||
(a) | (b) | (c) | (g) | (h) | ||||||||
C. Maury Devine | 70,000 | 110,015 | 5,000 | 185,015 | ||||||||
Edward L. Doheny II | 48,333 | 145,001 | 0 | 193,334 | ||||||||
Alan D. Feldman | 83,333 | 110,015 | 0 | 193,348 | ||||||||
James E. Goodwin | 51,667 | 145,001 | 0 | 196,668 | ||||||||
Polly B. Kawalek | 10,000 | 180,039 | 10,000 | 200,039 | ||||||||
James M. Ringler | 70,000 | 110,015 | 2,425 | 182,440 | ||||||||
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| Stock |
| All Other |
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| Cash |
| Awards |
| Compensation |
| Total |
Name (1) |
| ($) (2) |
| ($) (3) |
| ($) (4) |
| ($) |
(a) |
| (b) |
| (c) |
| (d) |
| (e) |
C. Maury Devine |
| 70,000 |
| 109,984 |
| 10,000 |
| 189,984 |
Edward L. Doheny II |
| 73,333 |
| 109,984 |
| 0 |
| 183,317 |
Alan D. Feldman |
| 85,000 |
| 109,984 |
| 0 |
| 194,984 |
James E. Goodwin |
| 78,333 |
| 109,984 |
| 0 |
| 188,317 |
Polly B. Kawalek |
| 10,000 |
| 180,006 |
| 10,000 |
| 200,006 |
James M. Ringler |
| 70,000 |
| 109,984 |
| 10,000 |
| 189,984 |
(1) | Thomas W. Giacomini, our Chairman, President and Chief Executive Officer, is not included in the table as he was our employee during |
(2) | Includes the amount of any cash portion of the director’s annual retainer each director elected to receive and additional fees paid to the chairperson of each board committee and the lead independent director for serving that function. |
(3) | RSU grants were made on May 1, |
(4) | Represents charitable contributions made in the name of directors by us during |
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Our non-employee directors do not participate in our employee benefit plans other than our matching program for charitable contributions.
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
In 2016,2017, the members of the Compensation Committee of the Board were Edward L. Doheny II, Polly B. Kawalek, and James M. Ringler, none of whom has ever been an officer or employee of our Company. None of our executive officers has ever served on the board of directors or on the compensation committee of any other entity that has had any executive officer serving as a member of our Board of Directors.
During 2016,2017, we were not a participant in any transaction or series of related transactions in which any “related person” had or will have a material interest and in which the amount involved exceeded $120,000. A “related person” is any person who was in any of the following categories since the beginning of 2016:
· | any of our directors or executive officers; |
· | any nominee for director; |
· | any immediate family member of any of our directors or executive officers or any nominee for director, with immediate family member including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law and any person (other than a tenant or an employee) sharing the household of a director or executive officer or a nominee for director; |
· | a security holder listed in the “Other Security Ownership” table below; or |
· | any immediate family member of such a security holder. |
Under its charter, the Audit Committee is responsible for reviewing and approving any transactions with “related persons”.
All of our non-employee directors and executive officers are subject to our Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics provides that each of our employees and directors is expected to avoid engaging in activities where their personal interests conflict with, or have the appearance of conflicting with, our interests. Personal interests that may give rise to conflicts of interest include commercial, industrial, banking, consulting, legal, accounting, charitable and financial relationships, and may also arise when
a director or employee receives personal benefits outside of the compensation or reimbursement programs approved by the Board of Directors. These requirements also extend to immediate family members of employees and directors.
Suspected violations of our Code of Business Conduct and Ethics, including potential conflicts of interest, must be reported to the Chairman of the Board, if the suspected violation involves a director, or to the General Counsel, if the suspected violation involves an executive officer (or to the Chairman of the Board if the suspected violation involves the General Counsel), or reported to our ethicsemployee hotline. The Chairman of the Board or the General Counsel, as applicable, will discuss the matter with the Chairman of the Board, or the Chair of the Audit Committee, as appropriate, for evaluation and appropriate resolution. Reports made to our employee hotline will be reported to the Board of Directors, or the Audit Committee, which will have the responsibility for determining if there is a conflict of interest and, if so, how to resolve it without compromising the best interests of us and our stockholders.
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Under our Corporate Governance Guidelines, directors must disclose to the Board of Directors any potential conflict of interest they may have with respect to a matter under discussion and, if appropriate, recuse themselves and not participate in the discussion or voting on a matter on which they may have a conflict. No such matters were reviewed or approved by the Board of Directors or the Audit Committee of the Board during 2016.2017.
Our Code of Business Conduct and Ethics also prohibits any employee or director from taking for themselves personally (including for the benefit of family members or friends) business opportunities that are discovered through the use of our property, information or position with the Company without the prior consent of the Board of Directors. No employee or director may use corporate property, information or position with the Company for improper personal gain, or may compete with us, directly or indirectly.
Our Code of Business Conduct and Ethics may be reviewed on the Investor Relations section of our website under Corporate Governance atwww.jbtcorporation.comwww.jbtc.com/investors. A waiver of any provision of our Code of Business Conduct and Ethics for a director or an executive officer may only be made by the Board of Directors, or a committee appointed by the Board, and will be promptly disclosed to the extent required by law, including the rules, regulations or listing standards of the Securities and Exchange Commission and the New York Stock Exchange.
In addition to the foregoing ethics policy, the Nominating and Governance Committee periodically reviews all commercial business relationships that exist between us and companies with which our directors are affiliated in order to determine if non-employee members of the Board are independent under the rules of the New York Stock Exchange.
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The following table shows, as of February 1, 2017,March 15, 2018, the number of shares of our Common Stock beneficially owned by each of our directors, each of our named executive officers, and all directors and executive officers as a group.
| Beneficial Ownership on February 1, 2017 | ||||
Name | Common Stock of John Bean Technologies Corporation | Percent of Class (1) | ||
David C. Burdakin (2) | 16,198 | * | ||
Brian A. Deck (2) | 20,335 | * | ||
C. Maury Devine (3) | 47,249 | * | ||
Edward L. Doheny II (3) | 20,812 | * | ||
Alan D. Feldman (3) | 51,150 | * | ||
Thomas W. Giacomini (2) | 129,756 | * | ||
James E. Goodwin (3) | 43,806 | * | ||
Polly B. Kawalek (3) | 59,967 | * | ||
James L. Marvin (2) | 11,948 | * | ||
Mark K. Montague (2) | 16,878 | * | ||
James M. Ringler (3) | 44,244 | * | ||
Steven R. Smith (2) | 34,982 | * | ||
All directors and executive officers as a group (15 persons) (2)(3) | 529,892 | 1.81% |
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| Common Stock of John Bean |
|
|
|
Name |
| Technologies Corporation |
| Percent of Class (1) |
|
David C. Burdakin (2) |
| 33,458 |
| * |
|
Brian A. Deck (2) |
| 41,208 |
| * |
|
C. Maury Devine (3) |
| 48,363 |
| * |
|
Edward L .Doheny II (3) |
| 24,826 |
| * |
|
Alan D. Feldman (3) |
| 54,493 |
| * |
|
Thomas W. Giacomini (2) |
| 221,814 |
| * |
|
James E. Goodwin (3) |
| 47,820 |
| * |
|
Polly B. Kawalek (3) |
| 65,438 |
| * |
|
James M. Ringler (3) |
| 47,587 |
| * |
|
Steven R. Smith (2) |
| 48,728 |
| * |
|
Paul E. Sternlieb (2) |
| — |
| * |
|
All directors and executive officers as a group (15 persons) (2)(3) |
| 706,610 |
| 2.24 | % |
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|
|
(1) | Percentages are calculated on the basis of the number of outstanding shares plus shares deemed outstanding pursuant to Rule |
(2) | Includes (i) shares owned by the |
(3) | Includes shares (i) owned by the individual and |
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The table below lists the persons known by us to beneficially own more than five percent of our Common Stock, based on the most recent holdings reported by our stockholders on Schedule 13G :
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (1) | ||||||||
BlackRock, Inc. | 3,573,846(2) | 12.3 | % | |||||||
55 East 52nd Street New York, NY 10055 | ||||||||||
T. Rowe Price Associates, Inc. | 3,215,911(3) | 11.0 | % | |||||||
100 East Pratt Street Baltimore, MD 21202 | ||||||||||
The Vanguard Group | 2,367,511(4) | 8.11 | % | |||||||
100 Vanguard Boulevard Malvern, PA 19355 | ||||||||||
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Name and Address of |
| Amount and Nature of |
| Percent of |
|
Beneficial Owner |
| Beneficial Ownership |
| Class (1) |
|
BlackRock, Inc. |
| 3,924,309 | (2) | 12.4 | % |
55 East 52nd Street |
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New York, NY 10055 |
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T. Rowe Price Associates, Inc. |
| 3,811,593 | (3) | 12.0 | % |
100 East Pratt Street |
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Baltimore, MD 21202 |
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The Vanguard Group |
| 2,906,629 | (4) | 9.20 | % |
100 Vanguard Boulevard |
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Malvern, PA 19355 |
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(1) | Percentages are calculated on the basis of the amount of our outstanding shares (exclusive of treasury shares) plus shares deemed outstanding pursuant to Rule |
(2) | Based on Schedule 13G/A filed with the Securities and Exchange Commission on January |
(3) | Based on Schedule 13G/A filed with the Securities and Exchange Commission on February |
(4) | Based on Schedule 13G/A filed with the Securities and Exchange Commission on February |
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Compensation Discussion and Analysis
Executive Summary
Our compensation programs are designed to pay for performance, aligning our executive officers’ goals with the interests of our stockholders, while allowing us to attract and retain skilled executives to deliver business results. For 2016,2017, we continued to administer our existing short- and long-term incentive compensation programs in alignment with our financial and operational strategies. A significant portion of our named executive officers’ compensation is directly related to our business results and share performance. This ensures a close correlation of the financial interests of our named executive officers with the interests of our stockholders.
Our strong financial results for 2016 can be seenThe achievement of the performance metrics used in our incentive compensation plans in 2017 are set forth in the year over year comparison set forthtable below. For a description of the performance metrics and adjustments, see – “Performance Metrics Used in our Incentive Compensation Plan.” Please see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K10‑K for 20162017 for a more detailed description of our 20162017 financial results. For a description of the performance metrics and adjustments, see – “Performance Metrics Used in our Incentive Compensation Plans.”
Financial Highlights
Performance Metric | 2016 Results | 2015 Results | 2016 Adjusted Results (1) | 2015 Adjusted Results (2) | Change % (3) | |||||||||||||||
EBITDA (in millions) | $141.9 | $118.6 | $154.5 | $117.8 | 30.27 | % | ||||||||||||||
EBIT Margin | 7.65% | 8.05% | 9.00% | 8.56% | 11.80 | % | ||||||||||||||
Average Operating Working Capital | 12.66% | 13.29% | 12.66% | 13.57% | (4.74 | %) | ||||||||||||||
Diluted EPS from Continuing | $2.28 | $1.88 | $2.28 | $1.88 | 21.28 | % | ||||||||||||||
Return On Invested Capital (ROIC) | 13.30% | 15.16% | 13.30% | 15.16% | (12.27 | %) | ||||||||||||||
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Performance Metrics |
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Short-Term Incentive Compensation |
| 2017 Target |
| 2017 Results (1) |
| ||
EBITDA (in millions) |
| $ | 180.4 |
| $ | 195.2 |
|
EBIT Margin |
|
| 9.0 | % |
| 9.4 | % |
Average Operating Working Capital (AOWC) |
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| 12.8 | % |
| 14.0 | % |
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Long-Term Incentive Compensation |
| 2015 - 2017 Target |
| 2015 - 2017 Results (1) |
| ||
Cumulative Diluted EPS from Continuing Operations (EPS) |
| $ | 5.3 |
| $ | 7.2 |
|
Average Return On Invested Capital (ROIC) |
|
| 15.0 | % |
| 13.7 | % |
(1) | EBITDA, |
The year-over-year comparison of these results, as adjusted for purposes of our incentive compensation performance metrics, appears below:
Our 20162017 performance-based compensation metrics for our short-term incentive compensation awards to our named executive officers had targets that required year-over-year growth in our earnings before incomeinterest, taxes, depreciation, and amortization (“EBITDA”) and year-over-year improvements in our earnings before income taxinterest and taxes (“EBIT”) margin and average operating working capital as a percent of sales (“AOWC”). Demonstrating our pay-for-performance philosophy, our 20162017 financial performance and individual performance impacted performance-based compensation as follows:
Our performance with respect to EBITDA and EBIT margin and AOWC all exceeded their target performance levels, and resulted in management incentive plan (“MIP”) awards above the target level, with the EBITDA growth metric having the most significant impact on those awards. The 75% portion of MIP awards based on these performance metrics paid out at 206%131% of the target award amounts. The remaining 25% was based on performance against personal performance objectives approved by the Board in the case of Mr. Giacomini and approved by Mr. Giacomini in the case of all other named executive officers.
28
Short-Term Incentive Compensation Metrics | ||
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We used a three year measurement period for the metrics associated with our long-term incentive plan (“LTIP”) awards made to our named executive officers in 2016,2017, thus the performance-based compensation derived from LTIP awards will not be determinable until after the end of 2018.2019. The metrics for performance-based LTIP awards issued in 20162017 established targets that require growth in cumulative EPS and strong average operating return on invested capital (“ROIC”) results over the three year period ending on December 31, 2018.2019. We instituted a three year measurement period for LTIP award metrics in 2015. Prior to that, the performance period was one year. Our proxy statement
Long-Term Incentive Compensation Metrics | |
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|
The three year performance period for the performance RSUs granted in 2015 ended on December 31, 2017. In February 2018, the Compensation Committee evaluated the results of the three-year performance period for the performance RSUs granted in 2015. We achieved cumulative EPS of $7.22 over the three-year performance period, which represents 200% of our goal for cumulative EPS, and each year thereafter will quantify performance-based LTIP compensation13.7% average ROIC over the three-year performance period, which represents 82% of our goal for each year’s three-year performance-based plan.average ROIC, respectively. The cumulative EPS measure is weighted 70% and the average ROIC measure is weighted 30%. As a result, the performance RSUs for the 2015–2017 performance period were earned at 165% of target.
2016
29
2017 Compensation FeaturesHighlights
Highlighted below are features of our executive compensation program that we continued in 2016,2017, consistent with our philosophy of aligning executive compensation opportunities with the interests of our stockholders.
· | Maintained strong incentive plan emphasis on business results. For |
· | Set financial targets to require continued performance improvement. Following a strong year in which our performance exceeded |
· | Balance division performance targets and full company performance targets for named executive officers with division management roles. For |
Principles of our Executive Compensation Program
The main objectives of our executive compensation program are to:
· | Pay for performance |
· | Drive business strategy |
· | Align interests of executives and stockholders |
· | Foster a long-term focus |
· | Attract, retain and motivate executive talent |
· | Appropriately manage risk |
· | Provide a competitive pay opportunity |
Our compensation program is designed around the following principles:
· | Executive compensation is performance-based.Our executive compensation program closely links a substantial portion of an executive’s compensation with company financial performance targets and achievement of individual objectives. We encourage pay for performance with a short-term management incentive program (MIP) that provides for cash payments based on achievement of financial, operational and strategic goals. Annual MIP awards are calculated based on a formula that is weighted 75% to business results and 25% to performance against individual objectives, or PPIs. Our long-term incentive plan (LTIP) awards are predominantly performance-based, with 60% of long-term incentive compensation awards tied to the achievement of financial performance objectives over a three-year period. |
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· | Performance metrics are designed to promote achievement of stretch objectives but not to incentivize undue risk-taking by our executive management team. The performance metrics in our incentive compensation plans are designed to create incentives to drive our key business strategies in our |
· | Long-term compensation incentives represent a significant portion of executive compensation. At-risk long-term compensation in the form of equity-based LTIP grants, 60% of which are contingent on financial performance metrics over a three-year period, along with stock ownership guidelines, align the interests of our executives with our stockholders and provide proper motivation for enhancing both short-term and long-term stockholder value. |
· | Compensation opportunities are competitive. We seek to provide competitive compensation opportunities that attract and retain talented people. We target the 50th percentile or median level of the market for all elements of compensation with the possibility of above market short-term incentive and long-term incentive payments for outstanding performance. |
The following table illustrates what we do and what we do not do, consistent with our executive compensation principles:
WHAT WE DO | WHAT WE DO NOT DO | |
| ||
High percentage of executive compensation is tied to performance with caps on all incentive plan payouts.
| X Our executive severance agreements do not include excise tax gross-up provisions. XOur executive severance agreements do not provide single-trigger change-in-control severance benefits. X Our incentive programs do not encourage excessive risk taking. X We do not allow our directors, executive officers or other employees to engage in any hedging or pledging transactions involving JBT securities. XWe do not allow re-pricing of stock option awards. X We do not grant excessive perquisites to executives. | |
In addition to direct compensation in the form of base salaries, short-term incentive cash awards and long-term equity awards, we provide various forms of indirect compensation. Each of our named executive officers is eligible for severance and change in control payments upon termination in certain circumstances pursuant to individual change in control agreements and an executive severance plan. These agreements are designed to ensure we can attract and retain executive talent and to permit our senior executives to remain focused on value creation for stockholders in the event of a potential change-in-control event. We also provide retirement benefits (primarily via defined contribution plans) and a limited number of perquisites to our named executive officers. All of these program designs are periodically reviewed against our peer group practices by our Compensation Committee with the assistance of the Committee’s independent compensation consultant.
As of the date of this Proxy Statement, none None of our named executive officers have employment agreements. Our Chief Executive Officer had a three-year employment agreement that reflected our negotiations
with him in connection with his hiring in August
31
Compensation Setting Process
Our Compensation Committee makes all final compensation decisions regarding our named executive officers. Each of our compensation plans and agreements for executive officers was reviewed and approved by our Compensation Committee. All of the members of our Compensation Committee are independent directors as defined by the listing requirements of the New York Stock Exchange. Under its charter, our Compensation Committee has the authority to engage the services of outside auditors,consultants, experts and others to assist the committee’s fulfillment of its responsibilities. In 2016,2017, the Compensation Committee engaged Meridian, an independent compensation consultant, to provide expertise on pay philosophy, prevailing market practices and relevant regulatory mandates and assist the Committee’s efforts to make compensation decisions that were aligned with the interests of our stockholders. Our Chief Executive Officer and our Executive Vice President, Human Resources also provide input on compensation programs and policies and our Chief Executive Officer makes recommendations to the Compensation Committee with regard to compensation for our named executive officers other than himself.
Allocation of Pay Between Short- and Long-Term
Our compensation programs are designed in a manner that provides incentives to our named executive officers to achieve short- and long-term financial, operating and strategic objectives. To foster a long term view among our executive officers (i.e., longer than twelve months), our compensation programs provide longer term incentives in the form of equity incentive compensation with a three-year vesting requirement and a variable performance-based component. The ultimate value of these long term incentives to an executive depends upon our financial performance over a three year period and on the market value of the equity after the end of the vesting period. That value is largely dependent upon our company’s future performance and market dynamics.
As shown in the table below, 56% of the target compensation of our Chief Executive Officer and, on average, 45%53% of the target compensation of our other named executive officers was linked to short-term and long-term performance based incentives for 2016.2017. An additional 22%25% of our Chief Executive Officer’s target compensation, and 16%21% (on average) of all of our other named executive officers’ target compensation consist of time-based LTIP awards and is tied to the value of our Common Stock at the end of the three-year vesting periods. These time-based LTIP awards are at risk of forfeiture until the vesting date. These equity grants, in combination with the three year performance period and our executive stock ownership requirements, reflects the program’s goals of rewarding our named executive officers for long-term performance—which aligns the interests of our named executive officers andwith the interests of our stockholders.
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(1) | The amounts shown for “At Risk” Performance-Based Compensation include MIP cash incentives and performance-based LTIP incentives and are based on target award levels. |
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Those target award levels are |
| also used in the calculation of percentages of total compensation. The amounts shown for the LTIP incentives are based on grant date fair value. The LTIP incentives consist of |
(2) | The amounts shown do not include any compensation for Mr. Sternlieb, whose compensation in 2017 included a one-time discretionary LTIP award, as a sign-on incentive, that is not reflective of the annual compensation program design. |
Establishing Competitive Pay Levels
Our Compensation Committee monitors executive pay, peer group practices and our performance to ensure that our total compensation program design is consistent with our stated compensation philosophies and that overall compensation is within appropriate parameters. Based on this review, which is detailed below, our Compensation Committee concluded that the total compensation we paid in 2016 to our named executive officers was appropriate.
Our compensation philosophy is to set total target compensation for our named executive officers near the 50th percentile of compensation for similar positions at peer group companies. For our named executive officers, total target compensation includes base pay, annual cash incentive compensation at target opportunity (MIP), and long-term incentives (LTIP) at target value in the form of time and performance-based restricted stock .RSUs. We utilize comprehensive compensation surveys to compare each element of pay and total target compensation for each of our named executive officers against compensation of comparable positions at peer companies. Each named executive officer’s total target compensation opportunity generally is designed to be generally consistent with target benchmark levels.levels, with appropriate differences based on individual experience, impact and performance. The allocation between the elements of compensation—base pay, annual cash incentive compensation and long-term equity and cash compensation award value—may vary from the market in individual cases, but is established in a way that keeps total target compensation consistent with the market.
When it determined 20162017 compensation levels for our named executive officers in February 2016,2017, the Compensation Committee utilized compensation survey data and publicly disclosed proxy data supplied to the Committee by its independent consultant, Meridian. The Compensation Committee reviews this external market benchmarking data to compare our executive officer compensation against executive officer compensation paid by a peer group of industrial manufacturing and service companies. This group includes companies that are of similar size and includes companies that are engaged in the food or transportation businesses that we believed we would compete with across some of our businesses for customers, suppliers, executive talent and, ultimately, investors, and which provides a representative sample for comparison of financial and stock performance.
The revenue of these companies in the year surveyed (fiscal year 2015) ranged from $537$590 million to $2.62$2.52 billion, with a median of $1.17$1.39 billion. Although the companies included in the survey varied in revenue size and market capitalization, the survey utilized regression analysis to develop size-adjusted values for each element of compensation. The Compensation Committee reviews the peer group annually. For 20162017 named executive officer compensation, the peer group consisted of the following 25 industrial companies*, which was approved by the Compensation Committee after consulting with Meridan,Meridian, our independent compensation consultant.
AAR Corp. | IDEX Corporation | ||
Albany International Corp. | Kaman, Inc. | ||
Altra Industrial Motion Corp. | The Middleby Corporation | ||
Applied Industrial Technologies, Inc. | Moog Inc. | ||
Barnes Group | Mueller Water Products, Inc. | ||
Briggs & Stratton Corporation | Standex International Corporation | ||
Chart Industries, Inc. | Tennant Company | ||
CIRCOR International, Inc. | |||
Titan International Inc. | |||
CLARCOR Inc.* | TriMas Corporation | ||
Curtiss-Wright Corporation | Valmont Industries, Inc. | ||
EnPro Industries, Inc. | Welbilt, Inc. | ||
Federal Signal Corporation | Woodward, Inc. | ||
Hillenbrand Inc. | |||
* Blount International, Inc., Columbus McKinnon, Inc., ESCO Technologies, Inc. and L.B. Foster Company were replaced by Barnes Group, Parker Hannifin Corporation fka CLARCOR Inc., Hillenbrand Inc.,
and Welbilt, Inc. fka Manitowoc Foodservice Inc. in was removed from the peer group as of August 2016 after the 2016 compensation benchmarking analysis was completed and were considered when evaluating the 2017 compensation.2017.
33
Performance Metrics Used in our Incentive Compensation PlansPlan
Incentive compensation awards to our named executive officers in 20162017 were based on performance targets tied to our year-over-year growth in EBITDA, year-over-year improvements in EBIT margin and AOWC, and our cumulative EPS and average ROIC over a three-year periodperiod. For the named executive officers with divisional responsibilities, the performance targets were tied to a blend of their divisions’ year-over-year improvement in EBITDA, EBIT margin and AOWC and overall corporate performance on such measures.
A description of each of these metrics is as follows:
· | EBITDA is operating income plus depreciation and amortization. EBITDA growth is one of our primary internal performance measures designed to align long-term incentive opportunities with our internal benchmark for generating operating cash flow. |
· | EBIT margin is operating income as a percentage of total revenue. We utilize EBIT margin as a performance metric because it measures our ability to convert revenue into income. |
· | Average operating working capital (AOWC) expresses the sum of our inventory (on a first-in-first out basis) plus accounts receivable minus accounts payable minus advance payments as a percentage of our total revenue. We use AOWC to measure the efficiency of our business in managing working capital levels, since it measures the conversion cycle of working capital to cash. |
· | Cumulative EPS is the sum of the most recent three years of after-tax earnings generated from continuing operations divided by the total number of our diluted shares of our outstanding Common Stock. As an incentive measure, we believe that linking sustained EPS growth to compensation helps us drive our executive officers to improve overall earnings. |
· | Average operating ROIC takes a three year average of the sum of our net income and after tax net interest (or tax impacted EBIT) as a percentage of our average invested capital. Our average invested capital is the average month end sum of equity, debt, accumulated other comprehensive pension income (or loss) and cash equivalents. We utilize average operating ROIC as a performance metric because it measures how efficiently and effectively we use capital to generate profits. |
EBIT margin is operating income as a percentage of total revenue. We utilize EBIT margin as a performance metric because it measures our ability to convert revenue into income.
Average operating working capital (AOWC) expresses the sum of our inventory (on a first-in-first out basis) plus accounts receivable minus accounts payable minus advance payments as a percentage of our total revenue. We use AOWC to measure the efficiency of our business in managing working capital levels, since it measures the conversion cycle of working capital to cash.
Cumulative EPS is the sum of the most recent three years of after-tax earnings generated from continuing operations divided by the total number of our diluted shares of our outstanding Common Stock. As an incentive measure, we believe that linking sustained EPS growth to compensation helps us drive our executive officers to improve overall earnings.
Average operating ROIC takes a three year average of the sum of our net income and after tax net interest (or tax impacted EBIT) as a percentage of our average invested capital. Our average invested capital is the average month end sum of equity, debt, accumulated other comprehensive pension income (or loss) and cash equivalents. We utilize average operating ROIC as a performance metric because it measures how efficiently and effectively we use capital to generate profits.
Since our financial performance metrics are based on year-over-year improvements as well as cumulative or average improvements over a three year period, we preserve flexibility to adjust certain of these measures to account for the cumulative effect of unusual or non-recurring items, such as changes in tax law or accounting principles, changescharges relating to restructuring our businesses, significant acquisitions and divestitures, and foreign exchange movements. To set our 20162017 targets, for purposes of making year over year comparisons we used our 20152016 results as the 20152016 baseline for use in 20162017 compensation decisions.In the determination of our results for the year-over-year performance-based incentive compensation awards, we excluded the financial impact of restructuring charges and the acquisitions we completed in 2016 from our 20162017 results.
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Components of Compensation Program
The following table presents in summary form each of the components of our named executive officer’s compensation for 20162017 and briefly describes the purpose and characteristics of each of these components.
Component | Purpose | |||
Characteristics | ||||
Base Salary | Salary for level of responsibility, experience and sustained individual performance. | Fixed cash component targeted at our peer group median (size adjusted); base salary can vary from market due to individual performance, contribution, experience, time in position and internal equity considerations. | ||
Annual Cash Management Incentive Plan (“MIP”) Awards | Focus management on achievement of financial performance metrics and objectives important to the success of their divisions (as applicable) and our overall performance. | A target MIP award is designed to provide peer group median cash compensation opportunities (size adjusted) when combined with base salary; significantly exceeding targets allows achievement of upper quartile cash compensation compared with peers.
75% is based on business performance measures (“BPI”).
25% is based on personal performance measures (“PPI”). | ||
Long-Term Incentive Plan (“LTIP”) Awards | Retention incentive and focuses management on achievement of important performance metrics aligned with our long-term strategic plan. | A target LTIP award is designed to provide competitive total compensation compared to our peer group when combined with base salary and target MIP award.
Delivered through performance-based
Ultimate value depends on our performance against pre-established financial goals measured over a three year period, and our stock price at the end of a three year vesting | ||
Perquisites | Provides executive with a limited amount of selected benefits commensurate with those provided to executives at peer group companies. | Benefits which personally benefit an employee, are not related to job performance, and are available to a limited group of employees. | ||
Retirement Benefits | Provide an appropriate level of income upon retirement. | U.S. retirement benefits under a tax-qualified defined contribution plan (401(k) plan) and a non-qualified defined contribution plan.
Additional U.S. retirement benefits for some of our executive officers through a defined benefit pension plan and a related supplemental executive retirement plan (both frozen as of December 31, 2009). |
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Component | Purpose | Characteristics | ||
Potential Payments Upon Change in Control | Encourages executives to operate in the best interests of stockholders in light of a potential change in control. | Contingent in nature; payable only if an executive officer’s employment is terminated or adversely impacted as specified under the change in control provisions of various plans. | ||
Other Potential Post-Employment Payments | Potential payments under scenarios of death, disability, retirement, termination without cause. | Contingent in nature; payable only if executive officer’s employment is terminated under the arrangements of various plans. |
Base Salary
The Compensation Committee uses our compensation peer group’s range around the median base pay value for comparable positions to set our base salary midpoint for each named executive officer’s salary grade. Each salary grade range sets a minimum pay at 75 % of the midpoint and maximum pay at 125 % of the midpoint. The base salary of a particular named executive officer is set within their salary grade range, generally at, above or below the 50th percentile based on experience, contribution, and proficiency in their role. Guidelines for merit increases in base salary are established annually for all of our employees (including named executive officers) based on annual market surveys, and merit increases are applied as appropriate to adjust base salaries.
For 2016, this2017, the merit increase guideline was set at an increase of 3.0%. The Compensation Committee judged the base salaries of the named executive officers to be correctly positioned relative to the 50th percentile for each of their positions based on their experience, proficiency and sustained performance, and accordingly approved a rangemerit increases ranging from 2% to 7%8% increase for each of them in 2016.2017. Our General CounselChief Financial Officer received a 7%8% increase in base salary in order to bring him closer to the targeted 50th percentile. The base salary of Mr. Sternlieb was not increased or included in the merit increase review in 2017, as he joined the Company late in the year. We emphasize performance-based compensation for our named executive officers, therefore we generally provide only modest annual increases in base salary, unless an executive’s base salary is significantly lower than the comparable executive compensation market data provided by Meridian.
Annual Cash Incentive Compensation
Our annual cash management incentive compensation plan (“MIP”) component of our Incentive Compensation Plan is a variable cash-based incentive plan designed to focus management on performance factors important to our overall performance and to the continued success of our business units.
Payout Opportunity
Target percentage amounts for annual MIP awards are based on survey market data and peer company proxy statements and for 2016,statements. For 2017, the Compensation Committee set the annual MIP award target percentages (expressed as percentage of base salary) for each of our named executive officers ranged from 45% to 100% of base salary.officers. The highest percentage (100%) was assigned to our Chief Executive Officer and our other named executive officers had MIP target percentages ranging from 45%55% to 65%70% of base salary.
For 2016,2017, our annual MIP opportunity was weighted primarily toward business performance (75%), referred to as the “BPI” component, and secondarily to individual performance (25%), referred to as the “PPI” component. Our Compensation Committee reviews and approves BPI targets for our MIP award program annually utilizing measures it believes correlate highly to enterprise value growth and total stockholder returns. For MIP awards for all of our executive officers in 2016,2017, we utilized year-over-year growth in EBITDA and year-over-year improvement in EBIT margin and AOWC. EBITDA was weighted at 50% of the total BPI component, with EBIT margin and AOWC each weighted at 25%, and are each based on overall company results. Annual MIP award opportunities for our executive officers who had
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division management responsibilities also utilized division MIP targets for EBITDA, EBIT margin and AOWC. For these executive officers, performance against corporate BPI targets was weighted 40% and against division BPI targets was weighted 60%.
The Compensation Committee established a range from “0.00” (below threshold) to “2.50” (performance far in excess of plan) for performance against each of these measures. Achievement of target performance for any metric would result in a “1.00” BPI rating. There was a minimum level for each measure below which a participant receives 0% of the target award, and correspondingly a maximum performance level
which, even if exceeded, would not generate more than 250% of the BPI portion of the target award. In between the minimum and maximum performance targets, the performance level of each measure is plotted on a predefined curve which indicates the percent of the target award that should be awarded. The performance achieved on each measure is added together and divided by the number of measures to determine the actual percentage payout of the target award amount.
The following charts provide the performance curves for the corporate BPI targets for 2016:2017:
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The slope of each of the curves reflects the Compensation Committee’s desire to reward above-target performance. As performance increases from threshold to target, the awards increase proportionately, and when performance exceeds the target level of performance, certain awards increase more rapidly.
Determination of BPI Payout
Messrs. Giacomini Deck, Montague and MarvinDeck received a corporate-wide BPI rating which was based on our consolidated results. Messrs. Burdakin, Smith, and SmithSternlieb have division management roles, and for 20162017 their BPI rating was based 40% on consolidated results and 60% on the results of the divisions in which they served.
For 20162017 MIP awards, the following table shows the overall company and division performance measures used for BPI and our performance against each of these performance measures (adjusted in the manner described under “Performance Metrics Used in our Incentive Compensation Plans” above).
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Overall Company Performance Measures | ||||||||||||||||
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| 0% Payout of |
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| 100% Payout of |
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| 250% Payout |
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| 2017 |
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| Target BPI |
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| Target BPI |
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| of Target BPI |
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| Performance |
| Weight |
| Payout | |
EBITDA |
| $ | 157.4 |
| $ | 180.4 |
| $ | 207.4 |
| $ | 195.2 |
| 50 | % | 1.68 |
EBIT Margin |
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| 8.0 | % |
| 9.0 | % |
| 9.9 | % |
| 9.4 | % | 25 | % | 1.60 |
AOWC |
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| 14.4 | % |
| 12.8 | % |
| 10.7 | % |
| 14.0 | % | 25 | % | 0.30 |
Total BPI Rating |
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| 1.31 |
Overall Company Performance Measures EBITDA Growth (Decline) EBIT Margin Improvement (Decline) AOWC Improvement (Decline) Total BPI Rating JBT FoodTech Division Performance Measures EBITDA Growth (Decline) EBIT Margin Improvement (Decline) AOWC Improvement (Decline) Total BPI Rating JBT AeroTech Division Performance Measures EBITDA Growth (Decline) EBIT Margin Improvement (Decline) AOWC Improvement (Decline) Total BPI Rating 0% Payout of
Target BPI 100% Payout of
Target BPI 250% Payout
of Target BPI 2016
Performance Weight BPI
Payout 1.0% 17.0% 32.0% 30.2% 50 % 2.28 (70 bps ) 30 bps 90 bps 95 bps 25 % 2.50 (120 bps ) 40 bps 255 bps 63 bps 25 % 1.18 2.06 0% Payout of
Target BPI 100% Payout of
Target BPI 250% Payout
of Target BPI 2016
Performance Weight BPI
Payout 6.0% 22.0% 34.0% 33.5% 50 % 2.40 (65 bps ) 35 bps 85 bps 119 bps 25 % 2.50 (95 bps ) 25 bps 105 bps (73) bps 25 % 0.16 1.87 0% Payout of
Target BPI 100% Payout of
Target BPI 250% Payout
of Target BPI 2016
Performance Weight BPI
Payout (9.0%) 5.0% 16.0% 17.6% 50 % 2.50 (100 bps ) 0 bps 60 bps 71 bps 25 % 2.50 (140 bps ) 60 bps 360 bps 186 bps 25 % 1.61 2.19
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EBITDA |
| $ | 151.0 |
| $ | 174.0 |
| $ | 197.0 |
| $ | 182.8 |
| 50 | % | 1.49 |
EBIT Margin |
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| 11.4 | % |
| 12.4 | % |
| 13.5 | % |
| 12.5 | % | 25 | % | 1.18 |
AOWC |
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| 8.0 | % |
| 6.5 | % |
| 9.0 | % | 25 | % | 0.32 |
Total BPI Rating |
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| Weight |
| Payout | |
EBITDA |
| $ | 44.0 |
| $ | 49.5 |
| $ | 55.0 |
| $ | 53.0 |
| 40 | % | 1.93 |
EBIT Margin |
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| 9.9 | % |
| 10.9 | % |
| 11.7 | % |
| 11.2 | % | 25 | % | 1.45 |
AOWC |
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| 26.0 | % |
| 21.5 | % |
| 27.0 | % | 35 | % | 0.50 |
Total BPI Rating |
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| 1.31 |
Our 20162017 financial performance results impacted the MIP as follows:
Our overall performance with respect to EBITDA growth and EBIT margin and AOWC improvement exceeded target performance levels, and resulted in Management Incentive Plan (MIP) awards above the target level, with the EBITDA growth metric having the most significant impact on those awards. The 75% portion of MIP awards based on these performance metrics paid out at 206% of the target award amounts.
· | Our overall performance with respect to EBITDA and EBIT margin exceeded target performance levels, while performance with respect to AOWC improvement did not reach the target. Our aggregate performance across the three measures resulted in Management Incentive Plan (MIP) awards above the target level, with the EBITDA metric having the most significant impact on those awards. The 75% portion of MIP awards based on these performance metrics paid out at 131% of the target award amounts. |
· | Our |
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· | Our |
Our resulting BPI multiple was then multiplied by our individual named executive officer’s MIP award target percentage to determine the BPI portion of the MIP award payout to that executive.
38
Determination of PPI Payout
The PPI rating is based on the achievement by an executive officer of individual annual objectives. A broad range of factors, generally qualitative in nature, but others that are quantitative, may be considered in this PPI rating assessment, including corporate and operations level cost control, strategic initiatives, operational objectives regarding market development and growth, margin improvement and revenue growth as well as objectives relating to restructuring, integration and safety. These objectives differ from those utilized to determine performance ratings for establishing an executive officer’s base salary described above under “Components of Compensation Program — Base Salary.” For our 20162017 MIP program, our Compensation Committee approved a PPI range from 0.00 to 2.00. For individual PPI objectives, the level of performance and resulting individual ratings on objectives required to achieve a PPI rating of 2.00 is quite high and unusual.
Our Chief Executive Officer provided the Compensation Committee his recommendation with respect to the PPI ratings for the performance of individual objectives byfor each of the other named executive officers. For our Chief Executive Officer, the Compensation Committee solicits feedback from the independent directors, evaluates his performance in executive session, and uses that assessment to recommend his PPI rating to the independent directors. In determining our Chief Executive Officer’s individual performance PPI rating, the independent directors evaluated his performance on a variety of objectives tied to:
| · | Culture and Values; |
| · | JBT Strategy and Deployment; |
execution of JBT’s operational excellence model (“JEM”) focusing on pricing, productivity (Lean Enterprise) and quality;
· | JBT Operational Improvement Framework and Execution; and |
| · | Succession Planning |
Our named executive officers received PPI ratings ranging from 1.251.00 to 1.751.50 for 2016,2017, with an average rating of 1.53.1.22. On average, the PPI portion of the annual MIP award compensation represents less than 7%6% of the total compensation paid to our named executive officers (as set forth in the Summary Compensation Table below).
Calculation of Total MIP Payout
To illustrate how the annual MIP awards are determined under our compensation programs, making the assumption that an executive officer has a base salary of $375,000, a 55% target bonus, a BPI rating of 200% and a PPI rating of 125%, the executive officer’s annual MIP compensation payment would be calculated in the following manner:
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BPI |
| $375,000 (base salary) x .55 (target bonus) x .75 (BPI weighting) x 200% (Corporate BPI achievement) |
| $ | 309,375 |
PPI |
| $375,000 (base salary) x .55 (target bonus) x .25 (PPI weighting) x 125% (Individual PPI rating) |
| $ | 64,453 |
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| Total MIP Award Compensation: |
| $ | 373,828 |
BPI $375,000 (base salary) x .55 (target bonus) x .75 (BPI weighting) x 200% (Corporate BPI achievement) $ 309,375 PPI $375,000 (base salary) x .55 (target bonus) x .25 (PPI weighting) x 125% (Individual PPI rating) $ 64,453 Total MIP Award Compensation: $ 373,828
39
The following table sets forth the potential MIP awards for 20162017 at threshold, target and maximum performance levels for our named executive officers, and their actual MIP payouts driven by our overall financial performance in 2016.2017.
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Name |
| Base Salary |
| Threshold |
| Target |
| Maximum |
| Payout |
| Target |
| |||||||
Thomas W. Giacomini |
| 100 | % |
| $ | 0 |
| $ | 830,000 |
| $ | 1,971,250 |
| $ | 1,126,725 |
| 136 | % | ||
Brian A. Deck |
| 70 | % |
| $ | 0 |
| $ | 291,457 |
| $ | 692,210 |
| $ | 373,793 |
| 128 | % | ||
Steven R. Smith |
| 65 | % |
| $ | 0 |
| $ | 268,209 |
| $ | 636,996 |
| $ | 307,635 |
| 115 | % | ||
David C. Burdakin |
| 55 | % |
| $ | 0 |
| $ | 215,593 |
| $ | 512,033 |
| $ | 287,278 |
| 133 | % | ||
Paul E. Sternlieb (1) |
| 60 | % |
| $ | 0 |
| $ | 45,206 |
| $ | 107,364 |
| $ | 51,851 |
| 115 | % | ||
Name | Target MIP Award as a % of Base Salary | MIP Award Opportunity | Actual MIP Payout | Actual MIP Payout as a % of Target | ||||||||||||||||||||
| Threshold | Target | Maximum | ||||||||||||||||||||||
Thomas W. Giacomini | 100 | % | $ | 0 | $ | 791,063 | $ | 1,878,775 | $ | 1,556,416 | 197 | % | ||||||||||||
Brian A. Deck | 65 | % | $ | 0 | $ | 252,864 | $ | 600,552 | $ | 501,303 | 198 | % | ||||||||||||
Steven R. Smith | 60 | % | $ | 0 | $ | 241,015 | $ | 572,411 | $ | 448,167 | 186 | % | ||||||||||||
David C. Burdakin | 55 | % | $ | 0 | $ | 211,366 | $ | 501,994 | $ | 418,187 | 198 | % | ||||||||||||
James L. Marvin | 45 | % | $ | 0 | $ | 137,351 | $ | 326,209 | $ | 260,281 | 190 | % | ||||||||||||
Mark K. Montague | 45 | % | $ | 0 | $ | 159,617 | $ | 379,090 | $ | 296,488 | 186 | % | ||||||||||||
(1) | Represents a pro-rated MIP award opportunity for 2017. |
Long-Term Incentive Compensation
By providing our named executive officers with significant compensation opportunities in the form of long-term awards under the LTIP, we intend to ensure that a significant portion of our named executive officers’ total target compensation remains at risk and continues to be tied to the creation of value for our stockholders. To date, our LTIP awards have included two or more of the following types of awards: (i) performance-based restricted stock units,RSUs, which are tied to the achievement of Company financial goals, (ii) time-based restricted stock units,RSUs, which provide executives with an equity stake in our Company, and (iii) performance-based cash awards, which provides a future cash payment opportunity tied to the achievement of Company financial goals. The Compensation Committee reviews annually the use of performance-based cash awards in long-term incentive compensation, considering, among other things, the available shares under the Incentive Compensation Plan and the extent to which equity awards may dilute existing stockholders. Accordingly, the use of performance-based cash awards may vary from year to year; however, the Compensation Committee has a preference for performance-based equity awards due to the closer alignment of equity incentive awards with stockholder value creation. All LTIP awards made in 20162017 were stock-based awards. All of these awards provide a retention incentive for our named executive officers because they are subject to vesting requirements and are not paid out until the end of a three-year service period. The equity component of these awards provide our named executive officers the opportunity to realize financial rewards if our stock price appreciates over the long term. Beginning in 2015, alignment with long-term value creation was enhanced due to lengthening ofthe Compensation’s Committee’s decision to lengthen the LTIP performance period from one year to three years.
Earned Payout of 2015–2017 Performance RSUs
The three year performance period for the performance RSUs granted in 2015 ended on December 31, 2017. In February 2018, the Compensation Committee evaluated the results of the three-year performance period for the performance RSUs granted in 2015.
The table below sets forth the measures (adjusted in the manner described under “Performance Metrics Used in our Incentive Compensation Plan” above), the potential payouts and the level of achievement of the measures for the 2015–2017 performance RSUs granted to our named executive officers.
40
2015 — 2017 Performance Period
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3 Year Cumulative EPS |
| $ | 3.82 |
| $ | 5.27 |
| $ | 7.00 |
| $ | 7.22 |
| 200 | % |
3 Year Average ROIC |
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| 15.0 | % |
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| 13.7 | % | 82 | % |
Earned Payout |
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| 165 | % |
We achieved cumulative EPS of $7.22 over the three-year performance period, which represents over 200% of our goal for cumulative EPS, and 13.7% average ROIC over the three-year performance period, which represents 82% of our goal for average ROIC. We made adjustments to the EPS result to account for the effect of tax law changes on foreign income repatriation and deferred tax asset changes on the provision for taxes. The cumulative EPS measure is weighted 70% and the average ROIC measure is weighted 30%. As a result, the performance RSUs for the 2015–2017 performance period were earned at 165% of target.
The following table sets forth the target and maximum opportunities and the actual earned shares under the performance RSUs granted to each of our named executive officers in 2015. The earned shares will be distributed to our named executive officers on April 2, 2018, subject to their continued employment through that date:
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| 2015-2017 Performance RSUs | ||||
Name |
| Target Number of |
| Maximum Number of |
| % of Target |
| Number of Shares |
Thomas W. Giacomini |
| 43,892 |
| 87,784 |
| 165 | % | 72,422 |
Brian A. Deck |
| 9,010 |
| 18,020 |
| 165 | % | 14,867 |
Steven R. Smith |
| 8,230 |
| 16,460 |
| 165 | % | 13,580 |
David C. Burdakin |
| 7,450 |
| 14,900 |
| 165 | % | 12,293 |
Determination of 2017 LTIP Award Size and Mix
To determine the appropriate amount of LTIP awards for our named executive officers, we target the median level of the market for long-term incentive awards, with the possibility of above market awards for outstanding performance. We also consider internal equity and relative contribution among our named executive officers and make adjustments when appropriate. Using these guidelines, the Compensation Committee sets a target economic value for each named executive officer’s LTIP award. In determining the mix of awards, the Compensation Committee considers key business priorities, peer group practices, potential stockholder dilution from equity plans and the usage of shares available under the Incentive Compensation Plan.
In 2016,2017, the LTIP awards included two equity components: 60% was a performance-based restricted stock unitRSU award and 40% was a time-based restricted stock unitRSU award. To determine the number of shares for these equity components ofequity-based LTIP awards, we divide the target economic value of the equity component by the
closing share price of our Common Stock on the grant date to determine the number of shares or units for each award. Accordingly, we utilized the closing share price of our Common Stock on the day the Compensation Committee met to approve the target values for 20162017 LTIP awards for executive officers in February 2016.2017.
The following table sets forth the target and maximum opportunities for the performance-based RSU awards, as well as the time-based RSU awards, granted to each of our named executive officers in 2017, with the exception of Mr. Sternlieb. The actual payout will be determined after the completion of the three-year performance period on December 31, 2019. For Mr. Stenlieb, his 2017 compensation included a
41
one-time discretionary LTIP award, as a sign-on incentive, that is not reflective of the annual compensation program design and did not include a performance-based RSU award.
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Name |
| Time-based RSU | Target | Maximum |
| Total Opportunity |
Thomas W. Giacomini |
| 12,486 | 18,728 | 37,456 |
| 49,942 |
Brian A. Deck |
| 2,636 | 3,954 | 7,908 |
| 10,544 |
Steven R. Smith |
| 2,243 | 3,364 | 6,728 |
| 8,971 |
David C. Burdakin |
| 1,988 | 2,983 | 5,966 |
| 7,954 |
Paul E. Sternlieb (1) |
| 9,610 | — | — |
| 9,610 |
(1) | In 2017 Mr. Sternlieb received special sign-on time-based RSU awards as described below under “Long Term Incentive Compensation — Discretionary Awards.” |
Vesting of 2017 LTIP Awards
The ultimate realizable amount of 60% of the LTIP awards (the performance-based award) granted to our named executive officers in 20162017 will depend upon our achievement against specific performance metrics set by the Compensation Committee in February 20162017 for the three year period ending on December 31, 2018.2019. The percentage of the total performance-based restricted stock unitRSU award that will be earned will be determined atafter the end of the three-year performance period and the payment is subject to service-based vesting requirements. This three-year performance period puts a meaningful portion of each of our named executive officer’s targeted LTIP award at risk. The other 40% of the LTIP awards granted to our named executive officers will be earned if the named executive officer completes a three-year service-based vesting requirement.
Following satisfaction of the performance conditions and completion of the vesting period, the executive receives ownership and voting rights of the shares of Common Stock underlying the LTIP award. Vesting periods are utilized both as a retention incentive and as a means to align incentives with long-term value creation for stockholders. With the approval of the Compensation Committee, we may issue LTIP awards with reduced performance or vesting periods, though the Incentive Compensation Plan generally imposes a minimum period of one year.
Performance-Based LTIP Awards Granted in 2017
For performance-based LTIP awards granted in 2016,2017, the performance goals consisted of measures for cumulative EPS growth and average ROIC over a three-year period. The Compensation Committee established a range from “0.00” (below threshold) to “2.00” (performance far in excess of plan) for performance against each of these measures. Achievement of target performance for any metric would result in a “1.00” rating. There was a minimum level for each measure below which a participant receives 0% of the target award, and correspondingly a maximum performance level which, even if exceeded, would not generate more than 200% of the target award. In between the minimum and maximum performance targets, the performance level of each measure is plotted on a predefined curve which indicates the percent of the target award that should be earned. The cumulative EPS measure is weighted 70%, and the average ROIC measure is weighted 30%, and the two weighted measures are added together to determine the actual percentage payout of the target award amount. The performance period for these measures is three years.
42
The following charts provide the performance curves for the two metrics for performance-based restricted stock unitRSU awards granted in 2016:2017:
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DeterminationWe have granted performance-based equity awards with a performance period of Performance-Based Equity Award Achievement
For ourthree years since 2015, and, 2016 grants,as a result, we have overlapping performance periods with two periods currently in progress. The table below sets forth the tables below show the three-year measures used for performance-based restricted stock unit (“RSU”) awards to our named executive officers and the potential payouts (adjusted in
the manner described under “Performance Metrics Used in our Incentive Compensation Plans” above) and the potential payouts for the 2016–2018 and 2017–2019 performance RSU awards to our named executive officers. The cumulative EPS measure is weighted 70% and the average ROIC measure is weighted 30%. The payout of the awardsperformance RSUs granted in 20152016 will not be determinable until after the performance period is completed on December 31, 2017,2018, and the payout of the awardsperformance RSUs granted in 20162017 will not be determinable under after the performance period is completed on December 31, 2018. None of our named executive officers had LTIP awards with a performance period that ended in 2016.2019.
2015 — 2017 Performance Period
Performance Measures | 0% Payout of Target Grant | 100% Payout of Target Grant | 200% Payout of Target Grant | |||||||||
3 Year Cumulative EPS | $ | 3.82 | $ | 5.27 | $ | 7.00 | ||||||
3 Year Average ROIC | 10.5 | % | 15.0 | % | 18.3 | % | ||||||
2016 — 2018 Performance Period
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3 Year Cumulative EPS |
| $ | 5.63 |
| $ | 6.58 |
| $ | 8.05 |
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3 Year Average ROIC |
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| 15.0 | % |
| 18.3 | % |
Performance Measures | 0% Payout of Target Grant | 100% Payout of Target Grant | 200% Payout of Target Grant | |||||||||
3 Year Cumulative EPS | $ | 5.63 | $ | 6.58 | $ | 8.05 | ||||||
3 Year Average ROIC | 10.5 | % | 15.0 | % | 18.3 | % | ||||||
The following table sets forth the target and maximum opportunities for the performance-based restricted stock unit awards granted to each of our named executive officers in 2016. The actual payout will be determined after the completion of the three-year performance period on December 31, 2018.2017 — 2019 Performance Period
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| Target Grant |
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3 Year Cumulative EPS |
| $ | 7.87 |
| $ | 9.55 |
| $ | 12.50 |
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| 15.0 | % |
| 18.3 | % |
Name | Type of Award | LTIP Award Opportunity | ||||||
| Target | Maximum | |||||||
Thomas W. Giacomini | Performance RSU | 27,076 | 54,152 | |||||
Brian A. Deck | Performance RSU | 7,040 | 14,080 | |||||
Steven R. Smith | Performance RSU | 6,431 | 12,862 | |||||
David C. Burdakin | Performance RSU | 5,821 | 11,642 | |||||
James L. Marvin | Performance RSU | 3,384 | 6,768 | |||||
Mark K. Montague | Performance RSU | 3,114 | 6,228 | |||||
Discretionary Awards
In addition to our annual incentive compensation awards, our Compensation Committee may make discretionary awards under special circumstances, including exceptional contributions not recognized by the metrics set for our MIP and LTIP awards, new hire “sign-on” bonuses, awards upon promotion and retention awards. In 2017, Mr. Sternlieb received sign-on cash compensation of $140,000 and special equity awards of 4,805, 3,844, and 961 RSUs that vest in 2018, 2019, and 2020, respectively. The sign-on compensation was intended to offset a portion of the compensation that we estimated Mr. Sternlieb would forfeit by terminating employment with his former employer.
43
Securities Trading Policy
Our insider trading policy prohibits our directors, executive officers and other employees from engaging in any transaction in which they may profit from short-term speculative swings in the value of our securities. This includes “short sales” (selling borrowed securities which the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (selling owned, but not delivered securities), “put” and “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price or the like) and hedging transactions, such as zero-cost collars and forward sale contracts. In addition, our insider trading policy prohibits our directors, executive officers and other employees from engaging in any transaction involving arrangements to hold our securities in a margin account or pledging them as collateral.
Claw-Back Policy
Our Incentive Compensation Plan gives our Compensation Committee the discretion to “claw-back” or cancel all or a portion of outstanding awards in the event of misconduct prejudicial to the Company or in the event a restatement of our financial results from a prior period, whether as a result of errors, omissions or fraud,
results in a prior award’s performance measures no longer being satisfied. This provides the Compensation Committee with the authority to cancel any outstanding awards, whether or not vested or deferred, or to require an executive officer to repay any gain realized or payment received upon the exercise or payment of a prior award.
Option Repricing Prohibition
Our Incentive Compensation Plan expressly prohibits lowering of the exercise price of any option or stock appreciation right after issuance under the Incentive Compensation Plan, or cancelling any option or stock appreciation right when its exercise price exceeds the fair market value of a share of our common stock in exchange for cash or another award under the Incentive Compensation Plan (except with respect to certain change in control transactions). The Incentive Compensation Plan also prohibits taking any other action with respect to an option or stock appreciation right issued under the Incentive Compensation Plan that would be treated as a repricing under the rules of the NYSE without approval of our stockholders.
Impact of Section 162(m) of the Internal Revenue Code on Executive Compensation
Prior to the Tax Cuts and Jobs Act (“Tax Reform”) that was signed into law December 22, 2017, Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallowsdisallowed a tax deduction to public corporations for non-performance-based compensation in excess of $1 million paid forin any fiscal year to certain named executive officers. Among other requirements, in order for compensation to behave been considered performance-based for purposes of Section 162(m), it generally must behave been paid pursuant to a plan which iswas approved by the company’s public stockholders.
Under the Tax Reform, effective starting with the 2018 tax year, Section 162(m) generally limits to $1 million the U.S. federal income tax deductibility of compensation paid in one year to a company’s CEO or CFO, or any of its three next-highest paid executive officers, without regard to whether or not the compensation was performance-based. Grandfathered performance-based compensation is not subject to this limit on deductibility as long as such compensation meets certain requirements in the new law.
The Compensation Committee considers Section 162(m) when making compensation decisions, but other considerations, such as providing the named executive officers with competitive incentives to motivate and retain them, as well as rewarding extraordinary contributions, also significantly factor into the Compensation Committee’s decisions. The Compensation Committee retains the discretion to approve compensation to named executive officers that is not deductible if it is determined to be in the best interest of the Company.
44
Pension Plans
A longer term element of compensation for threeone of our named executive officers has been an Internal Revenue Service qualified defined benefit pension plan (the “Pension Plan”) that provides income replacement retirement benefits. At the time of our spin-off from FMC Technologies, Inc. in 2008, we maintained the benefits package offered by our former parent company but we subsequently decided to freeze the Pension Plan effective December 31, 2009. Benefits earned as of that date were frozen; while no additional benefits will accrue for any of our U.S.-based non-bargaining unit production personnel, the benefit earned through that date will be paid when the employee retires. All employees can continue to earn service for vesting purposes and for eligibility for early retirement benefits. The pension freeze also impacts our non-qualified defined benefit pension plan (the “Non-Qualified Pension Plan”) described below.
The Pension Plan utilizes the same benefit calculation formula for our named executive officers as is used for non-bargaining unit production personnel and administrative and technical staff. TwoOne of our named executive officers (Mr. Smith and Mr. Marvin) haveSmith) has significant accrued pension benefits under the pension plans as a result of theirhis tenure with our predecessor, FMC Technologies, Inc. and its predecessor, FMC Corporation.
Savings Plans
Most of our United States-based employees, including our named executive officers, are eligible to participate in our tax-qualified savings and investment plan (the “Qualified Savings Plan”). This plan provides an opportunity for employees to save for retirement on both a pre-tax and after-tax basis. Employees exceeding the Internal Revenue Service compensation limit for highly compensated employees can contribute between 0% and 20% of base pay and eligible incentives through pre-tax and after-tax contributions up to the maximum amount prescribed by law and the plan limits, and employees not considered highly compensated under Internal Revenue Service regulations can also contribute up to 75% of base pay and eligible incentives. In order to maintain a competitive benefit package that will attract and retain employees, we have an additional company non-elective
contribution to the Qualified Savings Plan equal to 3% of employees’ base and incentive pay. We match 50% of the first 6% of each employee’s contributions.
The Qualified Savings Plan also provides for additional discretionary matching contribution of between 0% and 33 1/3% of the first 6% of each employee’s contributions depending upon the Company’s achievement of pre-determined financial performance targets. For 2016,2017, each employee making contributions to the Qualified Savings Plan received an additional discretionary matching contribution of 12.5 %4.17% of the first 6% of the employee’s contributions as a result of our performance in 2016.2017.
Our named executive officers are also eligible to participate in a pre-tax non-qualified defined contribution plan (the “Non-Qualified Savings Plan”), which provides executives and employees who may reach contribution limits imposed by the Internal Revenue Service for the Qualified Savings Plan with the opportunity to participate in a tax advantaged savings plan comparable to the Qualified Savings Plan. The investment options offered to participants in our Non-Qualified Savings Plan are similar to those offered in our Qualified Savings Plan. For a description of the Non-Qualified Savings Plan, please see “ Non-Qualified Deferred Compensation Table.”
Change-in-Control Benefits
We entered into agreements with each of our named executive officers that provide them with compensation under certain circumstances in the event of a change-in-control in our ownership or management. The payments generally are based on a multiple of the named executive officer’s base salary and annual short-term incentive and are subject to “double-trigger” conditions, requiring both a “change of control” event and an adverse change in the executive’s employment. The executive severance agreements do not include excise tax gross-up provisions. All of our change-in-control agreements condition continuing availability of benefits on compliance with non-compete and non-solicitation provisions. These agreements are designed to ensure that we can attract and retain executive talent and to permit our senior
45
executives to remain focused on value creation for stockholders in the event of a potential change-in-control event. See “Compensation Tables and Explanatory Information — Potential Payments Upon Termination — Potential Payments Upon Change-in-Control” for a further description of the terms and potential amounts payable under these agreements.
The benefits payable under our change-in-control agreements are comparable to benefits for which executives in similar positions at peer companies are eligible under their change-in- control agreements. The competitive nature of these benefits is reviewed and analyzed periodically by our Compensation Committee with the assistance of the Committee’s independent consultant.
All of the change-in-control agreements with our named executive officers are what is commonly referred to as “double trigger” agreements. Under these agreements, the benefits are only payable to an executive if, in addition to the qualifying change-in-control event, the executive officer’s position is terminated or the executive’s responsibilities, salary, benefits and/or location are significantly changed. Beginning with restricted stock unit awards granted under the Incentive Compensation Plan in 2015, unvested restricted stock units
Unvested RSUs will vest after the occurrence of a change-in-control only if outstanding LTIP awardsthe RSUs are not assumed by the successor on the effective date of such transaction, the executive officer’s position is terminated within a period of twenty-four months, or the executive’s responsibilities, salary or location are significantly changed. Outstanding performance-based LTIP awards that vest under these circumstances prior to the completion of the performance period will be paid at 100% of the target award within 70 days. Please see “Compensation Tables and Explanatory Information — Potential Payments Upon Termination — Potential Payments Upon Change in Control.”
General Executive Severance Benefits
Under our executive severance plan, named executive officers who lose their job through no fault of their own are entitled to receive 15 months (18 months in the case of our Chief Executive Officer and President) of severance pay (limited to base pay and the executive’s annual target bonus, if any), their pro-rated annual target bonus, if any, through the date of termination, payment of a lump sum equivalent to the value of the
employer portion of the monthly premiums for medical and dental benefits for the same severance period, outplacement services, and tax preparation and financial planning assistance for the last calendar year of employment. See “Potential Payments Upon Termination” for a further description of the terms and potential amounts payable under our executive severance plan for our named executive officers. The availability of these severance benefits is conditioned on the executive’s compliance with non-disclosure, non-compete and non-solicitation covenants. Change-in-control agreements and severance benefits are exclusive of one another, and in no circumstances would any of our named executive officers receive benefits under both a change-in-control agreement and our general executive severance plan.
Under the terms of our Incentive Compensation Plan, in the event of the death or disability of an executive during active employment with us, all outstanding LTIP awards will vest immediately and will be paid at 100% of the target award. Please see “Compensation Tables and Explanatory Information — Potential Payments Upon Termination — Potential Payment in the Event of Death, Disability or Retirement.”
Impact of Retirement on Outstanding LTIP Awards
In the event of a named executive officer’s retirement from the Company upon or after attaining age 62 and a specified number of years of service, any unvested LTIP equity or cash awards remain outstanding after retirement and vest on the originally scheduled vesting date. This permits flexibility in retirement planning, permits us to provide an incentive for the vesting period and does not penalize our employees who receive long-term cash and equity awards as incentive compensation when they retire. For awards granted prior to 2016, separation prior to attaining age 62 and 10 years of service willwould result in the forfeiture of unvested awards. In 2016, the Compensation Committee approved a variation to these terms, permitting the Compensation Committee to selectively grant awards that will permit unvested equity awards outstanding after retirement to vest on their originally scheduled vesting date following a retirement
46
upon or after attaining the age of 62 and 5 years of service. This variation was approved to allow the Company the option to offer long term equity incentive compensation as a means of attracting and retaining personnel hired near their retirement or to incentivize existing employees who are nearing retirement but who have not been with the Company for a full ten year period.
Retirement Transition of Steven R. Smith
In connection with Mr. Montague received incentive equity compensationSmith’s retirement, which was announced in August of 2017 and planned for the second quarter of 2018, the Company and Mr. Smith entered into a Transition, Separation and General Release Agreement (the “Separation Agreement”). The Separation Agreement provides for: (i) the continuation of Mr. Smith’s employment through his retirement date; (ii) the vesting of Mr. Smith’s existing stock awards in February 2016 that require 5 years of serviceaccordance with their terms prior to his departureretirement date; (iii) the payment of Mr. Smith’s annual bonus for 2017 in accordance with its terms; and (iv) the following payments under the John Bean Technologies Corporation Executive Severance Plan and no other benefits under that plan: 15 times the Company’s portion of Mr. Smith’s current monthly premium for medical and dental coverage, a lump sum payment equal to qualify as retirement. All other equity awards grantedMr. Smith’s earned and accrued but unused 2018 vacation, outplacement assistance and a lump sum payment for remaining amounts due to Mr. Smith in 2018 for financial planning and tax preparation assistance. The Separation Agreement includes a standard release of claims by Mr. Smith against the named executive officers require 10 yearsCompany and a 24-month non-compete and non-solicitation covenant in favor of service for their departure to qualify as retirement.the Company and its subsidiaries.
Perquisites
We provide limited perquisites to our executive officers in order to facilitate the performance of their managerial and external marketing roles and to ensure a competitive total compensation package. The perquisites we currently provide to our executives include financial counseling fee reimbursement, parking fees and other minor expenses associated with their business responsibilities.
Stock Ownership Requirements
Our Compensation Committee established executive officer stock ownership guidelines in order to ensure a continuing alignment of executive and stockholder interests. Under our stock ownership guidelines, an executive officer is expected to maintain direct ownership of shares (including time-based restricted stock awards,RSUs, whether or not currently vested, but not counting any shares underlying outstanding stock options, and performance-based restricted stock unitsRSUs following the completion of the performance period) in an amount equal in value to a multiple of the individual’s salary-grade midpoint. Named executive officers who began their employment with the Company, or who have been internally promoted to an executive officer position, have five years to accumulate sufficient amounts of our Common Stock to satisfy the ownership multiple, pro-rated 20% each year. An executive may not sell any shares of our Common Stock that the executive may hold until reaching the applicable stock ownership guideline multiple (the pro-rated multiple until the end of the specified build up period).
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The stock ownership multiple for each of our named executive officers is provided in the following table. Each of our named executive officers currently satisfies our stock ownership guidelines applicable to them.
[ |
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| Number of Shares |
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| Multiple of Salary |
| Required |
| Shares Held as of |
Executive Officer |
| Grade Mid Point |
| to be Held as of 12/31/2017 |
| 12/31/2017 |
Thomas W. Giacomini |
| 5.0 |
| 32,539 |
| 252,351 |
Brian A. Deck |
| 3.0 |
| 8,407 |
| 56,049 |
Steven R. Smith |
| 2.0 |
| 7,165 |
| 55,258 |
David C. Burdakin |
| 2.0 |
| 5,712 |
| 44,335 |
Paul E. Sternlieb |
| 2.0 |
| 271 |
| 9,610 |
Executive Officer Thomas W. Giacomini Brian A. Deck Steven R. Smith David C. Burdakin James L. Marvin Mark K. Montague Multiple of Salary
Grade Mid Point Number of Shares
Required
to be Held as of 12/31/2016 Shares Held as of
12/31/2016 5.0 31,523 205,943 3.0 7,893 49,531 2.0 9,038 64,448 2.0 5,398 40,454 2.0 3,760 18,673 2.0 8,320 25,116
We do not believe that risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. We believe we have allocated our compensation among base salary and short and long-term compensation target opportunities in such a way as to not encourage excessive risk-taking. Further, with respect to our incentive compensation programs, although the performance metrics that determine payouts for certain managers are based on the achievement of business segment metrics, the metrics that determine long-term incentive award payouts for our named executive officers are company-wide metrics. The metrics for annual cash incentive award payouts for our named executive officers are also primarily company-wide metrics, the only exception being named executive officers who have division management roles (two(three of our named executive officers have this role), whose annual cash incentive payouts are based on metrics that are weighted 40% for company-wide and 60% for division performance. This is based on our belief that applying company-wide metrics encourages decision-making that is in the best long-term interests of our company and our stockholders as a whole.
The mix of equity award instruments used under our long-term incentive program that includes time-based awards in addition to performance-based awards also mitigates risk. In addition, the multi-year vesting of our equity awards and our share ownership guidelines for our executive officers properly account for the time horizon of risk. We also employ “claw-back” provisions in our equity incentive compensation programIncentive Compensation Plan to ensure that in the case of a restatement of our historical financial results for a period of time on which performance-based equity awards were granted, the amount of those awards can be recalibrated or cancelled to reflect our restated financial performance for that period. Finally, we set our target compensation at levels that we believe, based on market assessments, strikes the appropriate balance between managing the overall expense of our compensation in comparison with peers and allowing us to continue to attract and retain the caliber of employees that we believe we need to help us succeed in the markets we serve.
At its February 16, 201721, 2018 meeting, the Compensation Committee requested its independent compensation consultant, Meridian, to advise the Committee on whether we had any areas of compensation which appeared to encourage excessive risk-taking. In the review of its report to the Committee, Meridian did not identify any components of our compensation program that they viewed as encouraging excessive risk.
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The Compensation Committee Report that follows shall not be deemed to be incorporated by reference into any filing made by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filing incorporating this Proxy Statement by reference, except to the extent we incorporate this report by specific reference.
The Compensation Committee establishes and oversees the design and functioning of our executive compensation program. We have reviewed and discussed the foregoing Compensation Discussion and Analysis with the management of the Company. Based on this review and discussion, we recommend to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for the 20172018 Annual Meeting.
The preceding report has been furnished by the following members of the Compensation Committee:
Edward L. Doheny II, Chair | |
Polly B. Kawalek | |
James M. Ringler |
The following table summarizes compensation earned by each of our named executive officers during the fiscal years ending December 31, 2016,2017, December 31, 20152016 and December 31, 2014.2015. To understand the table below you need to read carefully the footnotes, which explain the various assumptions and calculations employed in determining the dollar amounts set forth below.
Name and Principal | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Thomas W. Giacomini | 2016 | 791,063 | 0 | 2,000,028 | 0 | 1,556,416 | 0 | 180,251 | 4,527,758 | |||||||||||||||||||||||||||
President and Chief Executive | 2015 | 760,688 | 0 | 2,199,975 | 0 | 1,500,000 | 0 | 164,662 | 4,625,325 | |||||||||||||||||||||||||||
Officer | 2014 | 733,333 | 0 | 1,600,018 | 0 | 1,378,666 | 0 | 102,373 | 3,814,390 | |||||||||||||||||||||||||||
Brian A. Deck | 2016 | 389,022 | 0 | 520,007 | 0 | 501,303 | 0 | 71,621 | 1,481,953 | |||||||||||||||||||||||||||
Executive Vice President and | 2015 | 374,518 | 0 | 895,003 | 0 | 460,704 | 0 | 61,424 | 1,791,649 | |||||||||||||||||||||||||||
Chief Financial Officer | 2014 | 334,583 | 250,000 | 653,278 | 0 | 408,860 | 0 | 31,662 | 1,678,383 | |||||||||||||||||||||||||||
Steven R. Smith | 2016 | 401,691 | 0 | 475,022 | 0 | 448,167 | 78,277 | 78,337 | 1,481,494 | |||||||||||||||||||||||||||
Executive Vice President and | 2015 | 384,129 | 0 | 475,020 | 0 | 439,520 | 0 | 68,699 | 1,367,368 | |||||||||||||||||||||||||||
President, JBT FoodTech | 2014 | 367,449 | 0 | 449,987 | 0 | 343,491 | 228,560 | 70,079 | 1,459,566 | |||||||||||||||||||||||||||
David C. Burdakin | 2016 | 384,301 | 0 | 429,993 | 0 | 418,187 | 0 | 75,048 | 1,307,529 | |||||||||||||||||||||||||||
Executive Vice President and | 2015 | 375,216 | 0 | 680,000 | 0 | 431,208 | 0 | 66,781 | 1,553,205 | |||||||||||||||||||||||||||
President, JBT AeroTech | 2014 | 365,000 | 0 | 429,991 | 0 | 344,487 | 0 | 76,408 | 1,215,886 | |||||||||||||||||||||||||||
James L. Marvin | 2016 | 305,225 | 0 | 249,965 | 0 | 260,281 | 21,766 | 42,012 | 879,249 | |||||||||||||||||||||||||||
Executive Vice President, | ||||||||||||||||||||||||||||||||||||
General Counsel and Secretary | ||||||||||||||||||||||||||||||||||||
Mark K. Montague | 2016 | 354,704 | 0 | 230,020 | 0 | 296,488 | 6,531 | 63,665 | 951,408 | |||||||||||||||||||||||||||
Former Executive Vice President, | 2015 | 351,916 | 0 | 230,013 | 0 | 292,178 | 0 | 61,410 | 935,517 | |||||||||||||||||||||||||||
Human Resources (6) | 2014 | 342,539 | 0 | 210,005 | 0 | 285,164 | 21,885 | 57,268 | 916,861 | |||||||||||||||||||||||||||
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| Change in |
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| Pension Value |
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| and Non- |
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| Qualified |
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| Non-Equity |
| Deferred |
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| Stock |
| Option |
| Incentive Plan |
| Compensation |
| All Other |
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Name and Principal |
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| Salary |
| Bonus |
| Awards |
| Awards |
| Compensation |
| Earnings |
| Compensation |
| Total |
Position in 2017 |
| Year |
| ($) |
| ($) |
| ($)(1)(2) |
| ($) |
| ($) |
| ($)(3)(4) |
| ($)(5) |
| ($) |
(a) |
| (b) |
| (c) |
| (d) |
| (e) |
| (f) |
| (g) |
| (h) |
| (i) |
| (j) |
Thomas W. Giacomini |
| 2017 |
| 830,000 |
| — |
| 2,700,011 |
| — |
| 1,126,725 |
| — |
| 174,755 |
| 4,831,491 |
President and Chief |
| 2016 |
| 791,063 |
| — |
| 2,000,028 |
| — |
| 1,556,416 |
| — |
| 180,251 |
| 4,527,758 |
Executive Officer |
| 2015 |
| 760,688 |
| — |
| 2,199,975 |
| — |
| 1,500,000 |
| — |
| 164,662 |
| 4,625,325 |
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Brian A. Deck |
| 2017 |
| 416,367 |
| — |
| 570,035 |
| — |
| 373,793 |
| — |
| 71,425 |
| 1,431,620 |
Executive Vice President |
| 2016 |
| 389,022 |
| — |
| 520,007 |
| — |
| 501,303 |
| — |
| 71,621 |
| 1,481,953 |
and Chief Financial |
| 2015 |
| 374,518 |
| — |
| 895,003 |
| — |
| 460,704 |
| — |
| 61,424 |
| 1,791,649 |
Officer |
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Steven R. Smith |
| 2017 |
| 412,629 |
| — |
| 485,006 |
| — |
| 307,635 |
| 137,703 |
| 76,771 |
| 1,419,744 |
Executive Vice President |
| 2016 |
| 401,691 |
| — |
| 475,022 |
| — |
| 448,167 |
| 78,277 |
| 78,337 |
| 1,481,494 |
|
| 2015 |
| 384,129 |
| — |
| 475,020 |
| — |
| 439,520 |
| — |
| 68,699 |
| 1,367,368 |
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David C. Burdakin |
| 2017 |
| 391,987 |
| — |
| 429,992 |
| — |
| 287,278 |
| — |
| 70,635 |
| 1,179,892 |
Executive Vice President |
| 2016 |
| 384,301 |
| — |
| 429,993 |
| — |
| 418,187 |
| — |
| 75,048 |
| 1,307,529 |
and President, AeroTech |
| 2015 |
| 375,216 |
| — |
| 680,000 |
| — |
| 431,208 |
| — |
| 66,781 |
| 1,553,205 |
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Paul E. Sternlieb |
| 2017 |
| 75,343 |
| 140,000 |
| 999,920 |
| — |
| 51,851 |
| — |
| 8,360 |
| 1,275,474 |
Executive Vice President |
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and President, Protein |
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(1) | The amounts in column (e) include awards of time-based |
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performance-based awards was estimated at the target payout level, or 100%. The actual achievement was |
The grant date fair value of performance-based restricted stock unitsRSUs for fiscal 2016 listed above at grant date2017 assuming the target and maximum levellevels of performance was achieved isare as follows:
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| Fair Value Assuming Target |
| Fair Value Assuming |
Name |
| Performance ($) |
| Maximum Performance ($) |
Thomas W. Giacomini |
| 1,619,972 |
| 3,239,944 |
Brian A. Deck |
| 342,021 |
| 684,042 |
Steven R. Smith |
| 290,986 |
| 581,972 |
David C. Burdakin |
| 258,030 |
| 516,060 |
Paul E. Sternlieb |
| — |
| — |
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Fair Value at Target | Fair Value Assuming | |||||
Name | Performance ($) | Maximum Performance ($) | ||||
Thomas W. Giacomini | 1,200,008 | 2,400,016 | ||||
Brian A. Deck | 312,013 | 624,026 | ||||
Steven R. Smith | 285,022 | 570,044 | ||||
David C. Burdakin | 257,987 | 515,974 | ||||
James L. Marvin | 149,979 | 299,958 | ||||
Mark K. Montague | 138,012 | 276,024 | ||||
(2) | The amounts in column (e) for 2015 also include a discretionary performance-based award granted to Mr. Giacomini in 2015 with a grant date fair value of $499,998, and discretionary time-based awards with grant date fair values of $374,999 and $249,999, respectively, granted to Messrs. Deck and Burdakin in |
(3) | The amounts in column (h) reflect the actuarial increase in the present value of pension benefits for Mr. Smith, our |
(4) | For the year 2015, the Pension and Non-Qualified Deferred Compensation Earnings for Mr. Smith |
(5) | The amounts in column (i) for the fiscal year ended December 31, |
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Perquisites ($) |
| Advisor Fees |
| Parking |
| Total Perquisites |
Thomas W. Giacomini |
| 20,000 |
| 5,604 |
| 25,604 |
Brian A. Deck |
| 8,467 |
| 5,604 |
| 14,071 |
Steven R. Smith |
| 17,367 |
| 5,604 |
| 22,971 |
David C. Burdakin |
| 20,000 |
| — |
| 20,000 |
Paul E. Sternlieb |
| 5,000 |
| 1,100 |
| 6,100 |
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Perquisites ($) | Reimbursement for Professional Advisor Fees | Parking | Total Perquisites | |||||
Thomas W. Giacomini | 20,000 | 5,604 | 25,604 | |||||
Brian A. Deck | 8,660 | 5,604 | 14,264 | |||||
Steven R. Smith | 15,950 | 5,604 | 21,554 | |||||
David C. Burdakin | 20,000 | 0 | 20,000 | |||||
James L. Marvin | 0 | 5,604 | 5,604 | |||||
Mark K. Montague | 20,000 | 0 | 20,000 | |||||
*Our cost for financial planning and personal tax assistance are specifically allocated to the individual named executive officers receiving the services to which such fees relate. All amounts paid to obtain financial planning and personal tax assistance for our named executive officers represent taxable income to the executive.
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| Matching Contributions |
| Discretionary Matching |
| Total |
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| to Qualified Savings |
| Contributions to |
| Company |
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| Plan and Non- |
| Qualified Savings Plan |
| Contributions |
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| Qualified |
| and Non-Qualified |
| to Savings |
Other Compensation ($) |
| Savings Plan* |
| Savings Plan* |
| Plans |
Thomas W. Giacomini |
| 143,185 |
| 5,966 |
| 149,151 |
Brian A. Deck |
| 55,060 |
| 2,294 |
| 57,354 |
Steven R. Smith |
| 51,648 |
| 2,152 |
| 53,800 |
David C. Burdakin |
| 48,610 |
| 2,025 |
| 50,635 |
Paul E. Sternlieb |
| 2,260 |
| — |
| 2,260 |
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*For a description of the matching contributions provided to participants in the Qualified Savings Plan and Non-Qualified Savings Plan, see “Compensation Discussion and Analysis — Savings Plans” above.
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Other Compensation ($) | Matching Contributions to Qualified Savings Plan and Non- Qualified Savings Plan* | Discretionary Matching Contributions to Qualified Savings Plan and Non-Qualified Savings Plan* | Total Company Contributions to Savings Plans | |||
Thomas W. Giacomini | 137,464 | 17,183 | 154,647 | |||
Brian A. Deck | 50,984 | 6,373 | 57,357 | |||
Steven R. Smith | 50,473 | 6,310 | 56,783 | |||
David C. Burdakin | 48,931 | 6,117 | 55,048 | |||
James L. Marvin | 32,362 | 4,046 | 36,408 | |||
Mark K. Montague | 38,813 | 4,852 | 43,665 |
Except for Thomas W. Giacomini, noneNone of our named executive officers was a party to written or oral employment contracts with us during 2016. Mr. Giacomini’s employment agreement expired by its terms in August 2016,2017, and, as a result, all of our named executive officers remain employed at our will. For a description of the material terms of their compensation arrangements, which include base salary, annual MIP, LTIP awards, matching contributions to retirement savings plans, pension benefits, perquisites, severance and change in control benefits, see “Compensation Discussion and Analysis” above.
Employment Agreement with Chief Executive Officer
In connection with the appointment of Mr. Giacomini as our President and Chief Executive Officer in 2013, we entered into an employment agreement with Mr. Giacomini memorializing the terms of Mr. Giacomini’s employment. The employment agreement had a three-year term (the “Employment Period”), which ended on August 31, 2016. Under the employment agreement, Mr. Giacomini received an initial base salary of $725,000 per year and was eligible to participate in our annual cash bonus and equity compensation programs. During the Employment Period, Mr. Giacomini’s target annual bonus was required to be no less than 100% of his annual base salary, and his 2013 bonus was pro-rated for his period of service during 2013. Mr. Giacomini participates in the Company’s executive severance plan, but his benefits under that plan will be based on an 18-month severance period rather than the 15-month severance period specified in the plan for all other participants. In addition, Mr. Giacomini has entered into an executive severance agreement which provides, among other benefits, for a severance payment equal to three times Mr. Giacomini’s base salary and annual incentive bonus for a qualifying termination of employment following a change-in-control of the Company. See “Potential Payments Upon Termination” below for additional discussion of payments upon termination, death, disability, or a change-in-control of the Company. Mr. Giacomini is also bound by certain non-solicitation and non-competition restrictions during the term of his employment and for a period of two years thereafter. Mr. Giacomini remains employed by us at will.
Grants of Plan-Based Awards Table
Shown below is information with respect to plan-based awards made in 20162017 to each named executive officer.
Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Possible Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) (1) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards (2)(3) | |||||||||||||||||||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||
| ($) | ($) | ($) | (#) | (#) | (#) | |||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||
Thomas W. Giacomini | ||||||||||||||||||||||||||||||||||||||||||||
MIP-Cash | 0 | 791,063 | 1,878,775 | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/18/2016 | 18,051 | 800,020 | |||||||||||||||||||||||||||||||||||||||||
Performance RSUs | 2/18/2016 | 0 | 27,076 | 54,152 | 1,200,008 | |||||||||||||||||||||||||||||||||||||||
Brian A. Deck | ||||||||||||||||||||||||||||||||||||||||||||
MIP-Cash | 0 | 252,864 | 600,552 | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/18/2016 | 4,693 | 207,994 | |||||||||||||||||||||||||||||||||||||||||
Performance RSUs | 2/18/2016 | 0 | 7,040 | 14,080 | 312,013 | |||||||||||||||||||||||||||||||||||||||
Steven R. Smith | ||||||||||||||||||||||||||||||||||||||||||||
MIP-Cash | 0 | 241,015 | 572,411 | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/18/2016 | 4,287 | 190,000 | |||||||||||||||||||||||||||||||||||||||||
Performance RSUs | 2/18/2016 | 0 | 6,431 | 12,862 | 285,022 | |||||||||||||||||||||||||||||||||||||||
David C. Burdakin | ||||||||||||||||||||||||||||||||||||||||||||
MIP-Cash | 0 | 211,366 | 501,994 | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/18/2016 | 3,881 | 172,006 | |||||||||||||||||||||||||||||||||||||||||
Performance RSUs | 2/18/2016 | 0 | 5,821 | 11,642 | 257,987 | |||||||||||||||||||||||||||||||||||||||
James L. Marvin | ||||||||||||||||||||||||||||||||||||||||||||
MIP-Cash | 0 | 137,351 | 326,209 | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/18/2016 | 2,256 | 99,986 | |||||||||||||||||||||||||||||||||||||||||
Performance RSUs | 2/18/2016 | 0 | 3,384 | 6,768 | 149,979 | |||||||||||||||||||||||||||||||||||||||
Mark K. Montague | ||||||||||||||||||||||||||||||||||||||||||||
MIP-Cash | 0 | 159,617 | 379,090 | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/18/2016 | 2,076 | 92,008 | |||||||||||||||||||||||||||||||||||||||||
Performance RSUs | 2/18/2016 | 0 | 3,114 | 6,228 | 138,012 | |||||||||||||||||||||||||||||||||||||||
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| All Other |
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| Stock |
| All Other |
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| Grant |
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| Awards: |
| Option |
| Exercise |
| Date Fair |
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| Number |
| Awards: |
| or Base |
| Value of |
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| Estimated Possible Payouts |
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| of Shares |
| Number of |
| Price of |
| Stock and | ||||
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|
| Under Non-Equity |
| Estimated Possible Payouts |
| of Stock |
| Securities |
| Option |
| Option | ||||||||
|
| Grant |
| Incentive |
| Under Equity Incentive |
| or Units |
| Underlying |
| Awards |
| Awards | ||||||||
Name |
| Date |
| Plan Awards |
| Plan Awards (1) |
| (#)(2) |
| Options (#) |
| ($/Sh) |
| (3)(4) | ||||||||
|
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| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
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| ($) |
| ($) |
| ($) |
| (#) |
| (#) |
| (#) |
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(a) |
| (b) |
| (c) |
| (d) |
| (e) |
| (f) |
| (g) |
| (h) |
| (i) |
| (j) |
| (k) |
| (l) |
Thomas W. Giacomini |
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|
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|
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|
|
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|
|
MIP - Cash |
|
|
| — |
| 830,000 |
| 1,971,250 |
|
|
|
|
|
|
|
|
|
|
|
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|
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Restricted Stock Units |
| 2/16/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
| 12,486 |
|
|
|
|
| 1,080,039 |
Performance RSUs |
| 2/16/2017 |
|
|
|
|
|
|
| — |
| 18,728 |
| 37,456 |
|
|
|
|
|
|
| 1,619,972 |
|
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Brian A. Deck |
|
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MIP - Cash |
|
|
| — |
| 291,457 |
| 692,210 |
|
|
|
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|
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|
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|
|
|
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Restricted Stock Units |
| 2/16/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
| 2,636 |
|
|
|
|
| 228,014 |
Performance RSUs |
| 2/16/2017 |
|
|
|
|
|
|
| — |
| 3,954 |
| 7,908 |
|
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|
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| 342,021 |
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Steven R. Smith |
|
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MIP - Cash |
|
|
| — |
| 268,209 |
| 636,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units |
| 2/16/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
| 2,243 |
|
|
|
|
| 194,020 |
Performance RSUs |
| 2/16/2017 |
|
|
|
|
|
|
| — |
| 3,364 |
| 6,728 |
|
|
|
|
|
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| 290,986 |
|
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David C. Burdakin |
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MIP - Cash |
|
|
| — |
| 215,593 |
| 512,033 |
|
|
|
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|
|
|
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|
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|
|
Restricted Stock Units |
| 2/16/2017 |
|
|
|
|
|
|
|
|
|
|
|
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| 1,988 |
|
|
|
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| 171,962 |
Performance RSUs |
| 2/16/2017 |
|
|
|
|
|
|
| — |
| 2,983 |
| 5,966 |
|
|
|
|
|
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| 258,030 |
|
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Paul E. Sternlieb (5) |
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MIP - Cash |
|
|
| — |
| 45,206 |
| 107,364 |
|
|
|
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|
|
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|
|
|
|
|
|
|
Restricted Stock Units |
| 10/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
| 961 |
|
|
|
|
| 99,992 |
Restricted Stock Units |
| 10/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
| 3,844 |
|
|
|
|
| 399,968 |
Restricted Stock Units |
| 10/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
| 4,805 |
|
|
|
|
| 499,960 |
(1) | The amounts shown in columns (g) and (h) reflect the target and maximum number of shares of common stock issuable pursuant to performance RSUs granted to each of our named executive officers in 2017 pursuant to our Incentive Compensation Plan. |
(2) | The amounts shown in column (i) reflect the number of |
(3) | The amounts in column (l) reflect the |
(4) | The amount listed in column (l) for “Performance RSUs” represents the full grant date fair value of |
(5) | Mr. Sternlieb received sign-on RSUs that vest in 2018, 2019, and 2020, respectively, as |
51
Outstanding Equity Awards at Fiscal Year-End Table
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Number of Securities Underlying Unexercised Unearned Options (#) | 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 ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(4) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Thomas A. Giacomini | 0 | 0 | 0 | - | - | 121,773 | 10,466,389 | 141,936 | 12,199,399 | |||||||||||||||||||||||||||
Brian A. Deck | 0 | 0 | 0 | - | - | 42,089 | 3,617,550 | 32,100 | 2,758,995 | |||||||||||||||||||||||||||
Steven R. Smith | 0 | 0 | 0 | - | - | 42,234 | 3,630,012 | 29,322 | 2,520,226 | |||||||||||||||||||||||||||
David C. Burdakin | 0 | 0 | 0 | - | - | 36,454 | 3,133,221 | 26,542 | 2,281,285 | |||||||||||||||||||||||||||
James L. Marvin | 0 | 0 | 0 | - | - | 11,278 | 969,344 | 13,698 | 1,177,343 | |||||||||||||||||||||||||||
Mark K. Montague | 0 | 0 | 0 | - | - | 15,769 | 1,355,346 | 14,198 | 1,220,318 | |||||||||||||||||||||||||||
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| Option Awards |
| Stock Awards | ||||||||||||||
|
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| Equity |
|
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| Incentive |
|
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| Equity |
| Plan Awards: |
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| Incentive |
| Market or |
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| Plan Awards: |
| Payout |
|
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| Market |
| Number of |
| Value of |
|
|
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|
|
|
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|
|
|
|
|
|
| Value of |
| Unearned |
| Unearned |
|
| Number of |
| Number of |
| Number of |
|
|
|
|
| Number of |
| Shares or |
| Shares, |
| Shares, |
|
| Securities |
| Securities |
| Securities |
|
|
|
|
| Shares |
| Units of |
| Units, or |
| Units, or |
|
| Underlying |
| Underlying |
| Underlying |
|
|
|
|
| or Units |
| Stock |
| Other |
| Other |
|
| Unexercised |
| Unexercised |
| Unexercised |
| Option |
|
|
| of Stock |
| That Have |
| Rights That |
| Rights That |
|
| Options |
| Options |
| Unearned |
| Exercise |
| Option |
| That Have |
| Not |
| Have Not |
| Have Not |
|
| (#) |
| (#) |
| Options |
| Price |
| Expiration |
| Not Vested |
| Vested |
| Vested |
| Vested |
Name |
| Exercisable |
| Unexercisable |
| (#) |
| ($) |
| Date |
| (#)(1) |
| ($)(2) |
| (#)(3) |
| ($)(4) |
(a) |
| (b) |
| (c) |
| (d) |
| (e) |
| (f) |
| (g) |
| (h) |
| (i) |
| (j) |
Thomas W. Giacomini |
| — |
| — |
| — |
| — |
| — |
| 122,595 |
| 13,583,526 |
| 91,608 |
| 10,150,166 |
Brian A. Deck |
| — |
| — |
| — |
| — |
| — |
| 35,714 |
| 3,957,111 |
| 21,988 |
| 2,436,270 |
Steven R. Smith |
| — |
| — |
| — |
| — |
| — |
| 25,597 |
| 2,836,148 |
| 19,590 |
| 2,170,572 |
David C. Burdakin |
| — |
| — |
| — |
| — |
| — |
| 28,137 |
| 3,117,580 |
| 17,608 |
| 1,950,966 |
Paul E. Sternlieb |
| — |
| — |
| — |
| — |
| — |
| 9,610 |
| 1,064,788 |
| — |
| — |
(1) | The outstanding |
|
|
|
|
|
|
|
|
|
|
|
Vesting Date |
| Thomas W. Giacomini |
| Brian A. Deck |
| Steven R. Smith |
| David C. Burdakin |
| Paul E.Sternlieb |
April 2, 2018 |
| 92,058 |
| 20,873 |
| 19,067 |
| 17,260 |
| — |
October 23, 2018 |
| — |
| — |
| — |
| — |
| 4,805 |
December 3, 2018 |
| — |
| 7,512 |
| — |
| 5,008 |
| — |
April 1, 2019 |
| 18,051 |
| 4,693 |
| 4,287 |
| 3,881 |
| — |
October 23, 2019 |
| — |
| — |
| — |
| — |
| 3,844 |
April 1, 2020 |
| 12,486 |
| 2,636 |
| 2,243 |
| 1,988 |
| — |
October 23, 2020 |
| — |
| — |
| — |
| — |
| 961 |
Total |
| 122,595 |
| 35,714 |
| 25,597 |
| 28,137 |
| 9,610 |
Vesting Date | Thomas A. Giacomini | Brian A. Deck | Steven R. Smith | David C. Burdakin | James L. Marvin | Mark K. Montague | ||||||||||||||||||
January 3, 2017 | 84,086 | 23,878 | 23,648 | 22,598 | 6,712 | 11,036 | ||||||||||||||||||
November 21, 2017 | 8,812 | |||||||||||||||||||||||
April 2, 2018 | 19,636 | 6,006 | 5,487 | 4,967 | 2,310 | 2,657 | ||||||||||||||||||
December 3, 2018 | 7,512 | 5,008 | ||||||||||||||||||||||
April 1, 2019 | 18,051 | 4,693 | 4,287 | 3,881 | 2,256 | 2,076 | ||||||||||||||||||
Total | 121,773 | 42,089 | 42,234 | 36,454 | 11,278 | 15,769 | ||||||||||||||||||
(2) | The market value of earned and unvested |
(3) | The outstanding |
52
forth the maximum number of shares that would vest, if the maximum performance conditions are satisfied, on the vesting dates indicated below. |
|
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|
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|
|
|
|
Vesting Date |
| Thomas W. Giacomini |
| Brian A. Deck |
| Steven R. Smith |
| David C. Burdakin |
April 1, 2019 |
| 54,152 |
| 14,080 |
| 12,862 |
| 11,642 |
April 1, 2020 |
| 37,456 |
| 7,908 |
| 6,728 |
| 5,966 |
Total |
| 91,608 |
| 21,988 |
| 19,590 |
| 17,608 |
Vesting Date | Thomas A. Giacomini | Brian A. Deck | Steven R. Smith | David C. Burdakin | James L. Marvin | Mark K. Montague | ||||||||||||||||||
April 2, 2018 | 87,784 | 18,020 | 16,460 | 14,900 | 6,930 | 7,970 | ||||||||||||||||||
April 1, 2019 | 54,152 | 14,080 | 12,862 | 11,642 | 6,768 | 6,228 | ||||||||||||||||||
Total | 141,936 | 32,100 | 29,322 | 26,542 | 13,698 | 14,198 | ||||||||||||||||||
(4) | The market value of unearned and unvested performance-based |
Option Exercises and Stock Vested Table
The following table displays amounts received as a result of restricted stock unitsRSUs vesting during 2016. Messrs. Giacomini, Deck and Burdakin2017. Mr. Sternlieb did not have any restricted stock unitsRSUs vest during 2016.2017.
|
|
|
|
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|
|
|
|
|
|
| Option Awards |
| Stock Awards | |||||
|
| Number of Shares |
| Value Realized |
| Number of Shares |
| Value Realized | |
|
| Acquired on Exercise |
| on Exercise |
| Acquired on Vesting |
| on Vesting | |
Name |
| (#) |
| ($) |
| (#) |
| ($) | |
(a) |
| (b) |
| (c) |
| (d) |
| (e) | |
Thomas W. Giacomini |
| — |
| — |
| 84,086 |
| $ | 7,168,332 |
Brian A. Deck |
| — |
| — |
| 23,878 |
| $ | 2,035,600 |
Steven R. Smith |
| — |
| — |
| 32,460 |
| $ | 3,045,234 |
David C. Burdakin |
| — |
| — |
| 22,598 |
| $ | 1,926,480 |
| Option Awards | Stock Awards | |||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
| (a) | (b) | (c) | (d) | (e) | ||||||
Steven R. Smith | 9,811 | $469,653 | ||||||||
James L. Marvin | 2,280 | $ | 109,144 | |||||||
Mark K. Montague | 5,494 | $ | 262,998 | |||||||
ThreeOne of our named executive officers, haveMr. Smith, has a pension benefit with the Company. The table below shows the present value of accumulated benefits payable to each of the participating named executive officers,Mr. Smith, including the number of years of service credited to each such named executive officer, under each of our pension plans determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. Credited years of service for each of the participating named executive officers under the pension plans include years of service with our predecessor. The Pension Plan values are the present value of accrued benefits at the first retirement date for unreduced benefits. The Non-Qualified Pension Plan values are the present value at December 31, 20162017 of the lump sum payable at the first retirement date for unreduced benefits. Effective December 31, 2009, we froze benefits under the U.S. Pension Plan and the Non-Qualified Pension Plan. For an explanation of the impact on these plans, see “Compensation Discussion and Analysis —Pension Plans” above.
Name | Plan Name | Number of Years Credited Service as of 12/31/2016 (#) | Present Value of Accumulated Benefit as of 12/31/2016 ($) (1) | Payments During Last Fiscal Year ($) | ||||
| (a) | (b) | (c) | (d) | (e) | ||||
Steven R. Smith | Pension Plan | 21.00 | 685,834 | 0 | ||||
| Non-Qualified Pension Plan | 21.00 | 431,919 | 0 | |||||
James L. Marvin | Pension Plan | 6.75 | 217,073 | 0 | ||||
| Non-Qualified Pension Plan | 6.75 | 85,577 | 0 | |||||
Mark K. Montague | Pension Plan | 1.42 | 78,083 | 0 | ||||
| Non-Qualified Pension Plan | 1.42 | 38,297 | 0 |
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|
| Number of |
| Present Value of |
|
|
|
|
|
| Years Credited |
| Accumulated |
|
|
|
|
|
| Service as of |
| Benefit as of |
| Payments During |
|
|
|
| 12/31/2017 |
| 12/31/2017 |
| Last Fiscal Year |
Name |
| Plan Name |
| (#) |
| ($) (1) |
| ($) |
(a) |
| (b) |
| (c) |
| (d) |
| (e) |
Steven R. Smith |
| Pension Plan |
| 21.00 |
| 774,561 |
| — |
|
| Non-Qualified Pension Plan |
| 21.00 |
| 480,895 |
| — |
|
|
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|
|
|
|
|
|
(1) | Amounts reported reflect the present value, expressed as a lump sum as of December 31, |
53
Pension Benefit Formula
Our Pension Plan is a defined benefit plan that provides eligible employees having five or more years of service a pension benefit for retirement. Years of credited service and final average yearly earnings through the pension freeze date of December 31, 2009 are used to calculate the pension benefit. The final average yearly earnings are based on the highest 60 consecutive months out of the final 120 months of compensation. The normal annual retirement benefit is the product of (a) and (b) below:
(a) | the sum of: |
the sum of (1) 1% of the participant’s final average yearly earnings up to the Social Security Covered Compensation Base (defined as the average of the maximum Social Security taxable wages bases for the 35-year period ending in the year in which Social Security retirement age is reached) plus (2) 1.5% of the participant’s final average yearly earnings in excess of the Social Security covered compensation base multiplied by the participant’s expected years of credited service at age 65 up to 35 years of credited service; and
1.5% of the participant’s final average yearly earnings multiplied by the participant’s expected years of credited service at age 65 in excess of 35 years of credited service.
· | the sum of (1) 1% of the participant’s final average yearly earnings up to the Social Security Covered Compensation Base (defined as the average of the maximum Social Security taxable wages bases for the 35‑year period ending in the year in which Social Security retirement age is reached) plus (2) 1.5% of the participant’s final average yearly earnings in excess of the Social Security covered compensation base multiplied by the participant’s expected years of credited service at age 65 up to 35 years of credited service; and |
· | 1.5% of the participant’s final average yearly earnings multiplied by the participant’s expected years of credited service at age 65 in excess of 35 years of credited service. |
(b) | the ratio of actual years of credited service to expected years of credited service at age 65. |
The Pension Plan defines “normal retirement age” as 65 with an unreduced early retirement benefit payable at age 62. All of the participatingMr. Smith, our only named executive officers areofficer with a benefit, is currently vested in theirhis accrued benefits under our Pension Plan. Eligibility under the Pension Plan terminates upon death or upon payment of the participant’s entire vested benefit. When we were established as a separate company from FMC Technologies, Inc. in July 2008, our employees who were formerly employed by FMC Technologies, Inc. received the benefit for years of credited service under FMC Technologies Inc.’s defined pension benefit plan. Our employees who were also formerly employed by FMC Corporation, FMC Technologies, Inc.’s predecessor, received the benefit for years of credited service under FMC Corporation’s defined pension benefit plan when FMC Technologies, Inc. was established as a separate company by FMC Corporation. Mr. Marvin was a former employee of FMC Technologies, Inc., and Mr. Smith was a former employee of both predecessor companies.
Early Retirement
All participants in our Pension Plan who were hired on or after January 1, 1984 (by either of our predecessors or by us) are eligible for early retirement on or after age 55 with ten years of service. Mr. Smith is eligible for early retirement.
A participant in the Pension Plan who retires on or after their “early retirement date” is entitled to receive the early retirement benefit, which is equal to the normal retirement benefit reduced by1/ 1/3 of 1% for each month by which the commencement of the participant’s early retirement benefit precedes the participant’s 62nd birthday. A participant in the Pension Plan whose employment terminates prior to their “early retirement date” is entitled to receive an early retirement benefit payable after the attainment of age 55, which is equal to the normal retirement benefit reduced by 1/2 of 1% for each month by which the commencement of the participant’s early retirement benefit precedes the participant’s 65th birthday.
Payment of Pension Benefit
The normal retirement benefit is an individual life annuity for single retirees and 50% joint and survivor annuity for married retirees. The Pension Plan also provides for a variety of other methods for receiving pension benefits such as 100% joint and survivor annuities, level income and lump sum for benefits with lump sum values of $1,000 or less. The levels of annuities are actuarially determined based on the age of the participant and the age of the participant’s spouse for joint and survivor annuities. The Pension Plan also provides a 75% joint and survivor option as required by the Pension Protection Act of
54
2006. The actuarial reduction for a participant and spouse who are both age 62 is 7.9% from the normal retirement benefit for the 50% joint and survivor annuity and 14.7% from the normal retirement benefit for the 100% joint and survivor annuity. The level income annuity pays increased benefits to the retiree until Social Security benefits begin at age 62 and reduces the benefit after age 62 so that the total of the retirement benefit and Social Security benefits is approximately equal before and after age 62.
Eligible Earnings
Eligible earnings under the Pension Plan for our named executive officers include the base salary and annual non-equity incentive compensation paid by us or our predecessor companies to the executives for each
plan year in which they were eligible to participate in the Pension Plan or its predecessor plans through December 31, 2009, the date upon which the U.S. Pension Plan was frozen.
Non-Qualified Pension Plan
We have also established a Non-Qualified Pension Plan that permits employees to obtain a “mirror” pension benefit under a non-qualified retirement plan for benefits limited under the Pension Plan for (1) limitations due to the Internal Revenue Service maximum annual pension benefit limit, (2) earnings that exceed the Internal Revenue Service limitations on earnings eligible for the tax-qualified Pension Plan, and (3) deferred compensation not included in the pensionable earnings definition in the Pension Plan. The Non-Qualified Pension Plan was also frozen as to future benefit accruals effective December 31, 2009. Accrued benefits under the Non-Qualified Pension Plan may be distributed as either a lump sum payment or in monthly payments over a five-year period. Lump sum distributions will be paid no sooner than six months after termination of employment for “specified employees” as defined by the Internal Revenue Code. All of our named executive officers areMr. Smith is a specified employees. Theemployee, and his distribution election may not be changed within 12 months of termination or retirement. Changes made prior to the 12 month requirement can result in deferral of participant’s distribution for an additional five years. The Non-Qualified Pension Plan was also frozen as to future benefit accruals effective December 31, 2009.
Non-Qualified Deferred Compensation Table
The contributions made by our named executive officers to the Non-Qualified Savings Plan in 2016,2017, together with matching contributions or other allocations to the Non-Qualified Savings Plan, earnings made on plan balances, any withdrawals or distributions, and the year-end balances in each of these plans were as follows.
Name | Executive Contributions in Last Fiscal Year ($) (1) | Company Contributions in Last Fiscal Year ($) (2)(3) | Aggregate Earnings in Last Fiscal Year ($) (4) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) (5) | |||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||
Thomas W. Giacomini | 1,473,322 | 136,759 | 223,412 | 0 | 2,678,376 | |||||||||
Brian A. Deck | 36,446 | 39,469 | 11,812 | 0 | 162,349 | |||||||||
Steven R. Smith | 8,412 | 38,895 | 17,814 | 0 | 391,159 | |||||||||
David C. Burdakin | 203,877 | 37,160 | 30,116 | 0 | 471,252 | |||||||||
Mark K. Montague | 6,469 | 18,520 | 11,711 | 0 | 214,112 | |||||||||
James L. Marvin | 3,052 | 25,777 | 4,157 | 0 | 59,699 | |||||||||
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|
|
| Executive |
|
|
| Aggregate |
|
|
| Aggregate |
|
| Contributions |
| Company |
| Earnings |
| Aggregate |
| Balance |
|
| in Last Fiscal |
| Contributions |
| in Last Fiscal |
| Withdrawals/ |
| at Last |
|
| Year |
| in Last Fiscal Year |
| Year |
| Distributions |
| Fiscal Year End |
Name |
| ($) (1) |
| ($) (2)(3) |
| ($) (4) |
| ($) |
| ($) (5) |
(a) |
| (b) |
| (c) |
| (d) |
| (e) |
| (f) |
Thomas W. Giacomini |
| 8,300 |
| 132,276 |
| 503,351 |
| — |
| 3,332,207 |
Brian A. Deck |
| 57,525 |
| 40,479 |
| 31,978 |
| — |
| 295,097 |
Steven R. Smith |
| 8,608 |
| 36,925 |
| 45,605 |
| — |
| 485,141 |
David C. Burdakin |
| 241,742 |
| 33,760 |
| 99,441 |
| — |
| 848,974 |
Paul E. Sternlieb |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
(1) | All of the named executive officers’ contributions reported in column (b) are included in salary and non-equity incentive plan compensation reported for the named executive officers in the Summary Compensation Table above. |
(2) | All of the contributions made by us for our named executive officers reported in column (c) are included in “All Other Compensation” for the executive officers in the Summary Compensation Table above. Amounts included in column (c) do not include contributions to the Qualified Savings Plan. |
55
(3) | Amounts included in column (c) include discretionary matching contributions based on |
(4) | Aggregate earnings represent an increase (decrease) in the value of investments in each of the named executive officers’ plans during the fiscal year ended December 31, |
(5) | The portion of the Aggregate Balance at Last Fiscal Year End reported as compensation in the Summary Compensation Table in our Proxy Statement for fiscal years ended prior to the year ended December 31, |
Pursuant to our Non-Qualified Savings Plan, certain of our employees, including our named executive officers, may defer between 1% and 100% of base salary and annual non-equity incentive compensation. Deferral
elections for our Non-Qualified Savings Plan are made by eligible employees in November or December of each year for base salary and annual non-equity incentive compensation amounts earned in the following year. The investment options for our Non-Qualified Savings Plan are publicly traded mutual funds. We make matching contributions in the same investment allocations that the participant selects for his or her contributions to our Non-Qualified Savings Plan.
The Non-Qualified Savings Plan provides executives and employees who may reach contribution limits imposed by the Internal Revenue Service for the Qualified Savings Plan with the opportunity to participate in a tax advantaged savings plan comparable to the Qualified Savings Plan. The investment options offered to participants in our Non-Qualified Savings Plan are similar to those offered in our Qualified Savings Plan. Participants may elect to defer up to 100% of their base pay or annual non-equity incentive compensation. The Non-Qualified Savings Plan provides for a match of 100% of the first 6% of each employee’s deferrals to the Non-Qualified Savings Plan, and a 6% company contribution for all eligible compensation in excess of the Internal Revenue Code Section 401(a)(17) limit (“Excess Income.Income”). In addition the Non-Qualified Savings Plan provides for an additional discretionary matching contribution of between 0% and 2% of the employee’s deferrals and Excess Income depending upon the Company’s achievement of pre-determined financial performance targets. For 2016,2017, each participant making deferrals to the Non-Qualified Savings Plan received an additional discretionary matching contribution of 0.75%0.25% of the participant’s deferrals and Excess Income as a result of our performance in 2016.2017. Employees who are otherwise eligible to participate in the Non-Qualified Savings Plan but do not elect to defer any of their base pay or non-equity compensation will receive a non-elective contribution of 3% for compensation in excess of the Internal Revenue Code Section 401(a)(17) limit.their Excess Income. Participants are vested on a three-year graded vesting schedule for company contributions. Accrued benefits under the Non-Qualified Savings Plan may be distributed as either a lump sum payment or in annual, quarterly or monthly payments over a five-year period. Distributions will be paid no sooner than six months after termination of employment for “specified employees” as defined by the Internal Revenue Code. All of our named executive officers are specified employees. The distribution election may not be changed within 12 months of termination or retirement. Changes made prior to the 12 month requirement can result in deferral of participant’s distribution for an additional five years.
Potential Payments Upon Termination
The compensation benefits that are payable to each of our named executive officers in the event of a voluntary termination will be the same as those available to all of our other salaried employees. In the event of the disability, retirement, involuntary not-for-cause termination or a change-in-control, our named executive officers will receive additional compensation benefits as described below. In the event of the death of a named executive officer, such officer’s estate will be entitled to receive the benefits described below. Termination payments and change-in-control payments will be mutually exclusive and our named executive officers will not be entitled to receive both forms of payments under any circumstances.
56
Payments in the Event of Death, Disability or Retirement
In the event of the death or disability of a named executive officer during active employment with us, all outstanding LTIP awards will vest immediately and will be paid at 100% of the target award. The performance-based cash awards under the LTIP will be paid in the form of a check or other cash instrument within 70 days. This same death or disability benefit will exist for any of our employees who hold an unvested LTIP award at the time of their death or disability. In the event of the retirement of any of our named executive officers after reaching the age of 62, all outstanding LTIP awards under the LTIP will be retained and will vest in accordance with their pre-retirement normal vesting schedule. If any of our named executive officers chose to retire as of the last day of our 20162017 fiscal year, the effect of that retirement would be the same as if the named executive officer had resigned because none of the named executive officers were eligible for retirement on December 31, 2016,2017, and the named executive officer would forfeit all unvested LTIP awards, except for the restricted stock units awarded to Mr. Montague in 2016.awards. The following table assumes that each of our named executive officers was retirement-eligible as of the end of our 20162017 fiscal year, and shows the value to each of our named executive officers should any of these events have occurred on December 31, 20162017 under our plans, policies and agreements.
Executive Benefits and Payments in the Event of
Death, Disability or Retirement on December 31, 20162017
| Long-Term Incentive Compensation | ||||||||||||||||
Name | Unearned Performance-Based Restricted Stock Units That Have Not Vested (1) ($) | Performance-Based Restricted Stock Units That Have Not Vested (2) ($) | Time-Based Restricted Stock Units ($) | Total (3) ($) | ||||||||||||
Thomas A. Giacomini | 6,099,700 | 6,087,237 | 4,379,153 | 16,566,089 | ||||||||||||
Brian A. Deck | 1,379,498 | 1,728,626 | 1,888,923 | 4,997,047 | ||||||||||||
Steven R. Smith | 1,260,113 | 1,711,952 | 1,918,060 | 4,890,125 | ||||||||||||
David C. Burdakin | 1,140,642 | 1,635,972 | 1,497,249 | 4,273,864 | ||||||||||||
James L. Marvin | 588,672 | 485,875 | 483,469 | 1,558,016 | ||||||||||||
Mark K. Montague (5) | 610,159 | 798,905 | 556,440 | 1,965,505 | ||||||||||||
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|
|
|
|
| |||||||||
|
| Long-Term Incentive Compensation | |||||||||||||||
|
| Unearned |
|
|
|
|
|
| |||||||||
|
| Performance-Based |
| Performance-Based |
|
|
|
| |||||||||
|
| Restricted Stock Units |
| Restricted Stock Units |
| Time-Based |
|
| |||||||||
|
| That Have Not Vested (1) |
| That Have Not Vested (2) |
| Restricted Stock Units |
| Total (3) | |||||||||
Name |
| ($) |
| ($) |
| ($) |
| ($) | |||||||||
Thomas W. Giacomini |
| 5,075,083 |
| 8,024,358 |
| 5,559,168 |
| 18,658,609 | |||||||||
Brian A. Deck |
| 1,218,135 |
| 1,647,264 |
| 2,309,848 |
| 5,175,247 | |||||||||
Steven R. Smith |
| 1,085,286 |
| 1,504,664 |
| 1,331,484 |
| 3,921,434 | |||||||||
David C. Burdakin |
| 975,483 |
| 1,362,064 |
| 1,755,515 |
| 4,093,062 | |||||||||
Paul E. Sternlieb |
| — |
| — |
| 1,064,788 |
| 1,064,788 | |||||||||
(1) | The performance period for units granted in |
(2) | Reflects the value of earned and unvested performance-based |
(3) | Retirement will not result in accelerated vesting. In the event of an eligible retirement at age 62, all unvested LTIP awards described in the table above may be retained and will vest on their normal vesting date, and, in the case of performance-based awards, subject to the achievement of the performance conditions. The value of such awards on the vesting date will depend on the market price on that date and the extent to which the performance conditions are met. |
Payments Made in an Involuntary Termination
Our named executive officers will receive payments pursuant to our executive severance plan described in “Compensation Discussion and Analysis — General Executive Severance Benefits” above in the event they lose their job involuntarily, other than for cause or as a result of a change-in-control. The benefits under this plan include:
· | a severance payment equal to 15 months of base salary and target bonus (18 months in the case of Mr. Giacomini); |
· | a pro-rata payment of annual target bonus at target levels for the calendar year in which the termination occurs; |
57
a severance payment equal to 15 monthsTable of base salary and target bonus (18 months in the case of Mr. Giacomini);Contents
| · | a payment equal to 15 times the employer portion of the monthly premiums for medical and dental benefits; |
| · | reimbursement for outplacement assistance in an amount not exceeding $50,000; and |
reimbursement for outplacement assistance in an amount not exceeding $50,000; and
· | a single lump sum payment of $20,000 less any amounts that we previously reimbursed the named executive officer for financial planning and tax preparation assistance in the year in which the termination of employment occurs. |
Benefits under our executive severance plan will be contingent upon continuing compliance by the terminated executive with non-disclosure, non-compete and non-solicitation covenants. An executive will cease to participate in the executive severance plan upon the occurrence of certain disqualifying events or the violation of the provisions contained in the separation agreement.
The amounts shown in the table below are calculated using the assumption that an involuntary not for cause termination occurred on December 31, 2016,2017, and as a result are based on amounts earned through such time and are only estimates of amounts which would be paid out to our named executive officers in the event of such a termination under our executive severance plan. The actual amounts that would be paid out if such a termination were to occur can only be determined at the time of such executive officer’s actual termination and would be subject to their current salaries and benefits at such time.
Executive Benefits and Payments for
Involuntary Termination Occurring on December 31, 20162017
| Compensation($) | Benefits and Perquisites($) | |||||||||||||||||
Name | Severance Payment | Pro-Rated Target Annual Non-Equity Incentive | Medical and Dental Benefits (1) | Financial Planning and Tax Preparation Assistance | Outplacement Services | Total($) | ||||||||||||
Thomas W. Giacomini | 2,400,000 | 791,063 | 12,128 | 0 | 50,000 | 3,253,191 | ||||||||||||
Brian A. Deck | 810,148 | 252,864 | 19,119 | 11,340 | 50,000 | 1,143,471 | ||||||||||||
Steven R. Smith | 813,062 | 241,015 | 19,119 | 4,050 | 50,000 | 1,127,246 | ||||||||||||
David C. Burdakin | 748,251 | 211,366 | 12,887 | 0 | 50,000 | 1,022,504 | ||||||||||||
James L. Marvin | 562,419 | 137,351 | 19,119 | 20,000 | 50,000 | 788,889 | ||||||||||||
Mark K. Montague | 642,901 | 159,617 | 13,142 | 0 | 50,000 | 865,660 | ||||||||||||
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|
| Compensation($) |
| Benefits and Perquisites($) |
|
| ||||||
|
|
|
| Pro-Rated |
|
|
| Financial |
|
|
|
|
|
|
|
| Target Annual |
| Medical and |
| Planning and |
|
|
|
|
|
| Severance |
| Non-Equity |
| Dental Benefits |
| Tax Preparation |
| Outplacement |
|
|
Name |
| Payment |
| Incentive |
| (1) |
| Assistance |
| Services |
| Total($) |
Thomas W. Giacomini |
| 2,520,000 |
| 830,000 |
| 12,323 |
| — |
| 50,000 |
| 3,412,323 |
Brian A. Deck |
| 901,474 |
| 291,457 |
| 19,344 |
| 11,533 |
| 50,000 |
| 1,273,808 |
Steven R. Smith (2) |
| 855,238 |
| 247,577 |
| 19,344 |
| 2,633 |
| 50,000 |
| 1,174,792 |
David C. Burdakin |
| 763,216 |
| 215,593 |
| 13,502 |
| — |
| 50,000 |
| 1,042,311 |
Paul E. Sternlieb |
| 780,000 |
| 45,206 |
| 6,624 |
| 15,000 |
| 50,000 |
| 896,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Assumes no change in current premium cost paid by the Company and such named executive for medical and dental benefits. |
(2) | Mr. Smith released the Company from obligations under the Executive Severance Plan in connection with his Separation Agreement as described above under “Compensation Discussion and Analysis - Retirement Transition of Steve R. Smith.” |
In the event of an involuntary termination in the absence of a change in control, the treatment of an executive officer’s outstanding equity awards is at the discretion of our Chief Executive Officer and the Compensation Committee. An executive officer may be permitted to retain all or a portion of these awards subject to their existing vesting schedule. For the valuation of these awards at December 31, 2016,2017, see the Outstanding Equity Awards at Fiscal Year-End Table above.
Potential Payments Upon Change-in-Control
We entered into “double-trigger” executive severance agreements with each of our named executive officers pursuant to which, in the event of both a qualifying change-in-control and any of (1) an involuntary termination of employment for reasons other than cause, disability or death within 24 months after the change in control, (2) a voluntary termination of employment for good reason within 24 months after the change in control or (3) our breach of any material provision of the underlying agreement, each of our named executive officers will be entitled to receive such executive’s accrued salary and vacation, certain expense reimbursements and certain other severance benefits described in the executive severance
58
agreements. The severance benefits include a multiple of two times their annual base salary (three times for Mr. Giacomini) and the same multiple of the executive’s annual target non-equity incentive compensation.
The cash portion of the severance benefits will generally be required to be paid in a single lump sum payment no later than 30 days after the date of termination, subject to certain delayed payment exceptions that may apply under certain circumstances pursuant to requirements imposed by Section 409A of the Internal Revenue Code.
Our named executive officers will not be obligated to seek other employment in mitigation of amounts payable under the executive severance agreements, and their subsequent re-employment will not impact our obligation to make the severance payments provided for under the executive severance agreements provided the executive’s employment does not violate any non-compete obligation under the executive severance agreement.
Our named executive officers who receive severance benefits under executive severance agreements will not be entitled to receive additional severance benefits under our general executive severance plan described above under “Potential Payments Made Upon Termination — Payments Made in an Involuntary Termination.”
As described above, a qualifying change in control is required as one of the two triggers resulting in payment of severance benefits. A qualifying change in control is defined in the executive severance agreements to include:
· | any person or group becomes the owner of more than 50% of the fair market value or voting power of our stock, |
· | either (i) any person or group acquires ownership of more than 30% of the voting power of our stock in any twelve-month period or (ii) a change in the majority of our Board of Directors during any twelve-month period (excluding changes endorsed by a majority of the members of our Board of Directors prior to such change), except in each case to the extent that at such time there is another person or group that owns a majority of our stock, and |
· | any person or group acquires more than 40% of the fair market value of our assets during any twelve-month period, except to the extent the assets are transferred to (i) a stockholder of our company (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by our company, (iii) a person or certain groups of persons that owns, directly or indirectly, 50% or more of the total value or voting power of all of our outstanding stock or (iv) an entity at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in the immediately preceding paragraph. |
A named executive officer’s voluntary termination will be considered to be for good reason for purposes of the executive severance agreements if, without the executive’s express written consent, there is any (1) material reduction or alteration in the executive’s duties or any assignment that is materially inconsistent with such executive’s duties, (2) meaningful change in the executive’s work location, (3) material reduction in the executive’s base salary, (4) material reduction in the executive’s level of participation in our compensation, benefit or retirement plans, policies, practices or arrangements or (5) failure of the successor in a change in control to assume our obligations under the executive severance agreement.
If payments of any amount to a named executive office under an executive severance agreement would be subject to an excise tax under the Internal Revenue Code, the amount of payments generally will be reduced to the maximum amount that may be paid without triggering an excise tax payment. No such reduction will be made, however, if the net after-tax benefit that a named executive officer would otherwise receive in the absence of such a reduction would exceed the net after-tax benefit the executive would receive after making such a reduction.
59
Under the terms of the grant agreements pursuant to which such awards were issued, in the event of a change of control, all outstanding LTIP awards granted prior to 2015 will vest immediately and will be paid at 100% of the target award. The performance-based cash awards under the LTIP will be paid in the form of a check or other cash instrument within 70 days. Beginning with LTIP awards made in 2015, unvested restricted stock unitsRSUs will vest after the occurrence of a change-in-control only if outstanding LTIP awards are not assumed by the successor on the effective date of such transaction, the executive officer’s position is terminated within a period of twenty-four months, or the executive voluntarily resigns due to significant change in responsibilities, salary, or location within a period of twenty-four months. Outstanding performance-based LTIP awards that vest
under these circumstances prior to the completion of the performance period will vest immediately and will be paid at 100% of the target award.
The amounts shown in the table below are calculated using the assumption that payments described above were triggered based on a change-in-control and qualifying termination as of December 31, 2016,2017, and as a result are based on amounts earned through such time and are only estimates of the amounts which would be paid to our named executive officers in the event of such a qualifying termination under the executive severance agreements. The actual amounts that would be paid out if such a termination were to occur can only be determined at the time of such executive officer’s actual termination and would be subject to their salaries, incentives and other benefits at that time.
Executive Benefits and Payments for
Change-in-Control Termination Occurring on December 31, 20162017
| Compensation($) | Benefits and Perquisites ($) | |||||||||||||||||||||||||||||||||||||||
Name | Base Salary Multiple (1) | Annual Cash Bonus Multiple | Pro- Rated Target Annual Non-Equity Incentive | LTIP Unearned Performance- Based Restricted Stock Units That Have Not Vested (2) | LTIP Performance- Based Restricted Stock Units That Have Not Vested (3)(4) | LTIP Time- Based Restricted Stock Units(4) | Value of additional Year of Vesting Service in Non- Qualified Retirement Plan | Health & Welfare Benefits (5) | Out- placement Services | Excise Tax Cutback | Total($) |
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Thomas W. Giacomini | 2,400,000 | 2,373,189 | 791,063 | 6,099,700 | 6,087,237 | 4,379,153 | 0 | 20,610 | 50,000 | (3,149,846) | 19,051,106 | |||||||||||||||||||||||||||||
Brian A. Deck | 785,598 | 505,728 | 252,864 | 1,379,498 | 1,728,626 | 1,888,923 | 24,616 | 26,292 | 50,000 | 0 | 6,642,145 | |||||||||||||||||||||||||||||
Steven R. Smith | 813,062 | 482,030 | 241,015 | 1,260,113 | 1,711,952 | 1,918,060 | 0 | 24,792 | 50,000 | (497,075) | 6,003,949 | |||||||||||||||||||||||||||||
David C. Burdakin | 772,388 | 422,732 | 211,366 | 1,140,642 | 1,635,972 | 1,497,249 | 0 | 18,574 | 50,000 | 0 | 5,748,923 | |||||||||||||||||||||||||||||
James L. Marvin | 620,600 | 274,702 | 137,351 | 588,672 | 485,875 | 483,469 | 0 | 25,100 | 50,000 | (494,442) | 2,171,327 | |||||||||||||||||||||||||||||
Mark K. Montague | 709,408 | 319,234 | 159,617 | 610,159 | 798,905 | 556,440 | 0 | 18,561 | 50,000 | 0 | 3,222,325 | |||||||||||||||||||||||||||||
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| Compensation($) |
| Benefits and Perquisites ($) |
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| LTIP |
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| Unearned |
| LTIP |
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| LTIP |
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| Rated |
| Restricted |
| Restricted |
| Time- |
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| Base |
| Annual |
| Target |
| Stock Units |
| Stock Units |
| Based |
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| Cash |
| Annual |
| That Have |
| That Have |
| Restricted |
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| Out- |
| Excise |
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| Multiple |
| Bonus |
| Non-Equity |
| Not Vested |
| Not Vested |
| Stock |
| Sign-on |
| Benefits |
| placement |
| Tax |
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Name |
| (1) |
| Multiple |
| Incentive |
| (2) |
| (3) |
| Units |
| Bonus |
| (4) |
| Services |
| Cutback (5) |
| Total($) |
Thomas W. Giacomini |
| 2,520,000 |
| 2,490,000 |
| 830,000 |
| 5,075,083 |
| 8,024,358 |
| 5,559,168 |
| — |
| 21,150 |
| 50,000 |
| — |
| 24,569,759 |
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Brian A. Deck |
| 848,446 |
| 582,914 |
| 291,457 |
| 1,218,135 |
| 1,647,264 |
| 2,309,848 |
| — |
| 26,817 |
| 50,000 |
| — |
| 6,974,881 |
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Steven R. Smith |
| 829,322 |
| 536,418 |
| 268,209 |
| 1,085,286 |
| 1,504,664 |
| 1,331,484 |
| — |
| 25,062 |
| 50,000 |
| — |
| 5,630,445 |
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David C. Burdakin |
| 787,836 |
| 431,186 |
| 215,593 |
| 975,483 |
| 1,362,064 |
| 1,755,515 |
| — |
| 19,665 |
| 50,000 |
| — |
| 5,597,342 |
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Paul E. Sternlieb |
| 780,000 |
| 468,000 |
| 45,206 |
| — |
| — |
| 1,064,788 |
| 140,000 |
| 9,789 |
| 50,000 |
| — |
| 2,557,783 |
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(1) | The base salary and annual cash bonus multiples reflect the terms of these officers’ change-in-control agreements as of December 31, |
(2) | Reflects the market value of unearned and unvested performance-based |
(3) | Reflects the value of performance-based |
(4) | Assumes no change in current premium cost paid for such named executive officer’s medical, dental, life insurance and disability benefits. |
(5) | The payments made to Messrs. Giacomini, Deck, Burdakin, and Sternlieb would be subject to an excise tax. However, no reduction would be made to any named executive officer’s payments to avoid triggering an excise tax payment, because the after-tax benefit the executive would receive in the absence of such a reduction would exceed the net after-tax benefit the executive would receive after making such a reduction. |
60
Securities Authorized for Issuance Under Equity Compensation Plans Table
The following table provides information on our compensation plan under which equity securities are authorized for issuance as of December 31, 2016. The table does not include the additional 1,000,000 shares proposed to be authorized
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| Number of securities to be |
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| Number of securities remaining |
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| issued upon exercise of |
| Weighted-average exercise |
| available for future issuance under |
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| outstanding options, warrants |
| price of outstanding options, |
| equity compensation plans (excluding |
Plan Category |
| and rights (2) |
| warrants and rights |
| securities reflected in column (a)) |
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| (a) |
| (b) |
| (c) |
Equity compensation plans approved by security holders: (1) |
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Restricted Stock Units |
| 947,959 |
| N/A |
| 1,283,917 |
Subtotal |
| 947,959 |
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| 1,283,917 |
Equity compensation plans not approved by security holders: |
| — |
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| — |
Total |
| 947,959 |
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| 1,283,917 |
