2021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
2019
Fuel Specialties
| Oilfield Services | Performance Chemicals | ||
 |  |  |
INNOSPEC INC. 8310 South Valley Highway, Suite 350, Englewood, CO 80112
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | ☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |||
| ☒ | Definitive Proxy Statement | |||||
| ☐ | Definitive Additional Materials | |||||
| ☐ | Soliciting Material Pursuant to§240.14a-12 |
INNOSPEC INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required.
| ☒ | No fee required. |
| ☐ |
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| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
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| (1) | Amount Previously Paid: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
2021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
2019
Fuel Specialties
| Oilfield Services | Performance Chemicals | ||
| | |
INNOSPEC INC. 8310 South Valley Highway, Suite 350, Englewood, CO 80112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT 2021
March 22, 201919, 2021
Dear Fellow Stockholder:
It is with great pleasure that we invite you to our 20192021 Annual Meeting of Stockholders. The meetingStockholders (“Annual Meeting”), which will be held on Wednesday, May 8, 20195, 2021 at 10.0010:00 a.m. Central Time at Innospec’s offices at 2600 Technology Forest Blvd., The Woodlands, Houston, TX 77381.
Important notice regarding availability of Proxy Materials forEastern Time. Due to the COVID-19 pandemic, the Annual Meeting will be held in a virtual format only again this year, to provide a safe experience for our stockholders, our employees and our community. You will be able to attend and participate in the Annual Meeting, vote your shares electronically and submit your questions prior to and during the Annual Meeting by visiting: https://www.meetingcenter.io/237172316, as further described in the Proxy Statement.
At the Annual Meeting, stockholders will be asked to elect and ratify nominees to the Board of StockholdersDirectors, to hold an advisory “say-on-pay” vote on the compensation of our named executive officers, to ratify the appointment of our independent registered public accounting firm for 2021, and to transact any other matters and business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting. The Proxy Statement included with this letter provides you with information about the Annual Meeting and the business to be held on May 8, 2019:
We are continuing to take advantage of the Securities and Exchange Commission (the “SEC”) rules that allow companies to furnish proxy materials to stockholders via the internet. This electronic process gives you fast, convenient access to materials, reduces impact on the environment and reduces our printing and mailing costs. As you have received a Notice Regarding the Availability of Proxy Materials (“Notice”) by mail, you will not receive a printed copy of the proxy materials, unless you specifically request one. If you would still like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials which are included in the Notice.conducted.
Whether or not you plan to attend the annual meeting,virtual Annual Meeting, your vote on matters to be acted upon at the meeting is important to us. We hope that you will vote by telephone or via the internet by following the instructions on your Notice Regarding the Availability of Proxy Materials (“Notice”) or proxy card. Alternatively, if you have requested written proxy materials, you may vote by signing, dating and returning your proxy card. If you are a holder of record and you sign and return your proxy card without specifying your voting choices, your proxy will be voted in accordance with the Board of Directors’ recommendations as set out in the Proxy Statement.
If you are a beneficial holder of our stock (i.e., with shares held in “street name”), we urge you to give voting instructions to your broker so that your vote can be counted. This is important because brokers are not able to cast votes with respect to the election of directors or executive compensation unless they have received instructions from the beneficial owner of stock.
If you have any questions concerning the meeting,Annual Meeting, please contact Mr. David B. Jones, Innospec’s Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary at1-303-792-5554 or david.jones@innospecinc.com.david.jones@innospecinc.com.
YOUR VOTE IS IMPORTANT TO US. We urge you to read the Proxy Statement carefully. Whether or not you plan to attend the Annual Meeting, we encourage you to vote promptly through the internet, by telephone, or by mail.
Thank you for your continued support. We look forward to seeing those of you who will be able to attend the 2019 Annual Meeting of Stockholders.
Sincerely,
Patrick S. Williams
President and Chief Executive Officer
INNOSPEC INC.NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
8310 South Valley Highway, Suite 350
Englewood, CO 80112
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Date and time
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Online via live audio webcast at
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Record Date
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Ratification of the election of one Class I Director | ||||||
| Proposal 3 | Advisory approval of the Company’s executive compensation | |||||
| Proposal 4 | Ratification of the appointment of the Company’s independent registered public accounting firm | |||||
| To obtain Proxy Materials |  |
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Call 1-800-579-1639 (for beneficial owners with shares held in “street name”) | ||||
 | investorvote@computershare.com with “Proxy Materials Innospec Inc.” in the subject line (for stockholders of record) sendmaterial@proxyvote.com (for beneficial owners with shares held in “street name”) | |||||
| Voting Methods | | www.envisionreports.com/iosp (for stockholders of record) www.proxyvote.com (for beneficial owners with shares held in “street name”) | ||||
| Call the toll-free number 1-800-652-8683 | |||
 | Complete and return a proxy card (if you received a paper copy) | |||
| Attend virtually and vote at the | |||
Stockholders may also transact any other business properly brought before the meeting. At this time, the Board of Directors knows of no other proposals or matters to be presented.
On behalf of the Board of Directors:
David B. Jones
Vice President, General Counsel,
Chief Compliance Officer and Corporate Secretary
March 22, 2019
David B. Jones |
Vice President, General Counsel, |
Chief Compliance Officer and Corporate Secretary |
March 19, 2021 |
TABLE OF CONTENTS | Page No. | |||
| INFORMATION ABOUT THE 2021 ANNUAL MEETING OF STOCKHOLDERS AND VOTING AT THE MEETING | 1 | |||
| CORPORATE GOVERNANCE | 9 | |||
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Ø Executive Sessions of Independent Non-Management Directors | 15 | |||
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Ø Copies of Code of Conduct, Corporate Governance Guidelines and Committee Charters | 20 | |||
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PROXY STATEMENT
INFORMATION ABOUT THE 2021 ANNUAL MEETING OF STOCKHOLDERS AND VOTING AT THE MEETING
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Why did you send me the Notice Regarding the Availability of Proxy Materials?
We sent you the Notice Regarding the Availability of Proxy Materials (the “Notice”) because the Board of Directors (the “Board”) of Innospec Inc. (“Innospec” or the “Corporation”“Company”) is soliciting your proxy to vote at the 20192021 Annual Meeting of Stockholders, which will be held on Wednesday, May 8, 20195, 2021 at 10.00 a.m. CentralEastern Time, in a virtual meeting format only at Innospec’s offices at 2600 Technology Forest Blvd., The Woodlands, Houston, TX 77381.https://www.meetingcenter.io/237172316.
The Proxy Statement summarizes the information you need to vote at the 2019 Annual Meeting of Stockholders.Meeting. You do not need to attend the 2019 Annual Meeting of Stockholders in person to vote your stock. Alternatively, you may simply vote by telephone, over the internet, or, if you have requested written proxy materials, by completing, signing and returning the accompanying proxy card.
Innospec intends to commence distribution of the Notice to stockholders on or about March 26, 2019.23, 2021.
What proposals will be voted on at the Annual Meeting of Stockholders?
StockholdersYou are being asked to consider and vote on threefour proposals at the 2019 Annual Meeting of Stockholders.Meeting. The following is a summary of the proposals and the voting recommendations of the Board with respect to each proposal:
SUMMARY OF PROPOSALS
| NO. | PROPOSAL | HOW THE BOARD VOTE | MORE INFORMATION | |||
| 1 | Election of two Class II Directors |
| Page 36 | |||
| 2 | Ratification of the election of one Class I Director |
| Page 38 | |||
| 3 | Advisory approval of the Company’s executive compensation |
| Page 54 | |||
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| Ratification of the appointment of the |  FOR | Page 56 |
Important notice regarding availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 8, 2019.
Important notice regarding availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 5, 2021. |
Are proxy materials available on the internet?
Yes. OurThis Proxy Statement, including proxy card, for the 2019 Annual Meeting of Stockholders and our 20182020 Annual Report on Form10-K are available atwww.envisionreports.com/iospforstockholders for stockholders of record andwww.proxyvote.comwww.edocumentview.com/iospfor beneficial holders.
Who is entitled to vote at the meeting?
March 14, 201911, 2021 is the record date for the 2019 Annual Meeting of Stockholders.Meeting. If you owned Innospec Common Stock at the close of business on March 14, 2019,11, 2021, you are entitled to vote. On this record date, we had 24,804,57624,842,239 shares of our Common Stock outstanding and entitled to vote at the 2019 Annual Meeting of Stockholders.Meeting. Our Common Stock is our only class of voting stock.
How many votes do I have?
You have one vote for each share of Common Stock that you owned at the close of business on the March 14, 201911, 2021 record date. Your Notice indicates the number of shares of Common Stock you are entitled to vote.
What is the difference between holding stock as a stockholder of record and as a beneficial owner?
Although many stockholders are the record holders of their stock, others hold their stock beneficially, which means it is held through a stockbroker, bank or other nominee rather than directly in the stockholder’s own name. As summarized below, there are some differences between stock held of record and thatstock owned beneficially.
Stockholder of Record
If your shares of Common Stock are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those shares, the stockholder of record and the Notice is being sent to you directly at your address of record. As the stockholder of record, you have the right to grant your voting proxy directly to Innospec or to vote in person at the Annual Meeting of Stockholders. Alternatively, you may voteby voting by telephone or via the internet, as describedor, if you have requested written materials, by signing, dating and returning your proxy card to Innospec. Alternatively, you may vote at the virtual only Annual Meeting. For more information on voting by telephone or via the internet see the description below under the heading “Information about the 20192021 Annual Meeting of Stockholders and Voting at the Meeting - May I vote by telephone or via the internet?”.
Beneficial Owner
If your Common Stock is held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of stock held in “street name” and our proxy materials are being forwarded to you by your
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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 stock and are also invited to attend the 2019 Annual Meeting of Stockholders.Meeting. However, since you are not the stockholder of record, you may only vote these shares in person at the 2019 Annual Meeting of Stockholders if you follow the instructions described below under the headingheadings “Information about the 20192021 Annual Meeting of Stockholders and Voting at the Meeting - How do I attend and vote in person at the 2019virtual Annual Meeting?” and “How do I register to attend the Annual Meeting of Stockholders?virtually on the internet?”.
Your broker or nominee has provided a voting instruction card for you to use in directing your broker or nominee as to how to vote your stock. You may also vote by telephone or via the internet by following your broker or other nominee’s directions as described below under the heading “Information about the 20192021 Annual Meeting of Stockholders and Voting at the Meeting - May I vote by telephone or via the internet?”.
How do I vote by proxy if I am a stockholder of record?
If you are a stockholder of record and you properly fill in your proxy card and it is received by us in time to vote, or you vote by internet or telephone, your “proxy” (i.e., one of the individuals named on your proxy card) will vote your stock as you have directed. If you sign the proxy card (including by electronic signature in
the case of internet or telephonic voting), but do not make specific voting choices, the person holding your proxy will vote your stock as recommended by the Board as follows:
“FOR”there-election election of three class IIItwo Class II directors;
“FOR” the ratification of the election of one Class I Director;
“FOR”the approval, on an advisory basis, of the Company’s executive compensation; and
“FOR”the ratification of the appointment of the Corporation’sCompany’s independent registered public accounting firm.
If any other matter is presented at the meeting,Annual Meeting, your vote will be cast in accordance with the best judgment of the individuals named on your proxy card. As of the date of printing this Proxy Statement, we know of no such other matters that need to be acted on at the 2019 Annual Meeting of Stockholders.Meeting.
How do I give voting instructions if I am a beneficial holder?owner?
If you are a beneficial owner of stock, your broker will communicate with you directly and ask you how you want your stock to be voted. If you give the broker voting instructions, the broker will vote your stock as you direct. If you do not give the broker voting instructions, one of two things can happen, depending on the type of proposal in question. Brokers have discretionary power to vote your stock with respect to “routine” matters, but they do not have discretionary power to vote your stock on“non-routine” matters. Brokers holding stock beneficially owned by their clients do not have the ability to cast votes with respect to the election and ratification of directors or executive compensation unless they have received instructions from the beneficial owner of the stock because these are considerednon-routine“non-routine” matters.It is therefore important that you provide voting instructions to your broker if your shares of Common Stock are held beneficially through a broker so that your vote with respect to directors and executive compensation, and any other matter treated as“non-routine”, is counted.
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May I vote by telephone or via the internet?
Yes, you may vote by telephone or via the internet. We encourage you to do so because your vote will be tabulated faster than if you mailed it. Please note the following depending on whether you are a stockholder of record or a beneficial owner whose shares are held by a bank or broker in “street name”:
If you are a stockholder of record, you may vote electronically through the internet atwww.envisionreports.com/iosp or by telephone Toll Free1-800-652-8683 within the U.S.A., U.S. Territories and Canada. Be sure to have your control number, which appears on your Notice or proxy card, with you when you vote.
If you are a beneficial owner and hold your stock in “street name,”name”, you may vote electronically through the internet atwww.proxyvote.com and you should contact your bank or broker to determine whether you will be able to vote by telephone. Be sure to have your control number, which appears on your Notice or proxy card, with you when you vote.
Whether or not you plan to attend the 2019 Annual Meeting of Stockholders in person,virtually, we urge you to vote. Doing so by returning the proxy card or voting by telephone or via the internet will not affect your ultimate right to attend and vote in person.
Proxies submitted byat the internet or telephone must be received by 1:00 a.m. Central Time on May 8, 2019.meeting.
May I revoke my proxy?
Yes. If you change your mind after you vote, you may revoke your proxy by following any of the procedures described below. To revoke your proxy:
Send in another signed proxy with a later date or resubmit your vote by telephone or the internet; |
Send a letter revoking your proxy to Mr. David B. Jones, Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary at Innospec Inc., 8310 South Valley Highway, Suite 350, Englewood, CO 80112; or
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If you wish to revoke your proxy, you must do so sufficiently in advance to permit the necessary examination and tabulation of the subsequent proxy or revocation before the vote is taken.
How do I attend and vote in person at the 2019virtual Annual Meeting?
The Annual Meeting will be a completely virtual meeting of Stockholders?
Ifstockholders, which will be conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you arewere a stockholder of record,the Company as of the close of business on the Record Date, or if you mayhold a valid proxy for the Annual Meeting. No physical meeting will be held.
You will be able to attend the Annual Meeting online and submit your questions during the meeting andby visiting www.meetingcenter.io/237172316. Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. You also will be able to vote your shares online by attending the Annual Meeting by webcast.
To participate in person. Ifthe Annual Meeting, you choosewill need to do so, please bringreview the information included on your Notice, oron your proxy card showingor on the instructions that accompanied your control number and proof of identification.proxy materials. The password for the meeting is OTL2021.
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If you are the beneficial owner of stock held in “street name”, you may votehold your shares in person only if you obtainthrough an intermediary, such as a signed proxy from the stockholder of record giving you the right to vote the stock. To do so,bank or broker, you must bringregister in advance using the instructions below, under the heading “How do I register to attend the Annual Meeting virtually on the Internet?”.
The online meeting will begin promptly at 10:00 a.m., Eastern Time. We encourage you to access the meeting prior to the 2019 Annual Meeting of Stockholders proof of identification, an account statement or letter fromstart time leaving ample time for the broker, bank or other nominee indicating that you arecheck in. Please follow the owner of the stock and a signed proxy from the stockholder of record giving you the right to vote the stock. The account statement or letter must show that you were the beneficial owner of the stock on the record date, which is March 14, 2019.registration instructions as outlined in this Proxy Statement.
Even if you plan to attend the 2019virtual Annual Meeting, of Stockholders in person, Innospec recommends that you vote your stock in advance by internet or telephone, or by returning the accompanying proxy card, as described above, so that your vote will be counted if you later decide not to attend the 2019Annual Meeting.
How do I register to attend the Annual Meeting virtually on the Internet?
If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received.
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet.
To register to attend the Annual Meeting online by webcast you must submit proof of Stockholders.your proxy power (legal proxy) reflecting your Innospec Inc. holdings, along with your name and email address, to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 29, 2021.
You will receive a confirmation of your registration by email after we receive your registration materials.
Requests for registration should be directed to us at the following:
By email
Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com.
By mail
Computershare
Innospec Inc. Legal Proxy
P.O. Box 505008
Louisville, KY 40202
What votes need to be present to hold the 2019 Annual Meeting of Stockholders?Meeting?
To have a quorum for our 2019 Annual Meeting, of Stockholders, the holders of a majority of the shares of Common Stock outstanding and entitled to vote need to be present in personvirtually or represented by proxy. Abstentions and broker“non-votes” are treated as present and entitled to vote and are counted in determining whether we have a quorum.
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What vote is required to approve each proposal?
For Proposal 1, the affirmative vote of a plurality of the votes cast by holders of all stock entitled to vote on such proposal is required (meaning that the nominees for Innospec Director who receive the highest number of shares voted “for” their election are elected). While directors are elected by a plurality vote, we have a “majority vote” director resignation policy in place, as described below.
As Proposal 2 is an advisory vote, there is no specified vote requirement for approval. Innospec will consider that the affirmative vote of the majority of the stock present (in person or represented by proxy) and entitled to vote on such proposal reflects the advice of the stockholders.
For Proposal 3, the affirmative vote of the majority of the stock present (in person or represented by proxy) and entitled to vote on such proposal is required.
| Proposal | required? | |||||||
Proposal 1 | ||||||||
Election of two Class II Directors | Plurality of votes of shares present virtually or represented by proxy* | No | ||||||
Proposal 2 | Ratification of election of one Class I Director | Plurality of votes of shares present virtually or represented by proxy* | No | |||||
Proposal | Advisory approval of the | Majority of the stock present | No | |||||
Proposal | Ratification of the appointment of the | Majority of the stock present | Yes | |||||
What is our “Majority Vote” Director Resignation Policy?
According to the procedure set forth in the Corporation’s Corporate Governance Guidelines, in an uncontested election, any nominee for director (including incumbent directors) who receives a greater number of votes “withheld” from his or her election than votes “for” such election must offer his or her resignation promptly to the Board of Directors following certification of the stockholder vote. Upon receipt of the resignation, the Nominating and Corporate Governance Committee will consider the resignation offer and recommend to the Board of Directors whether to accept it. The Board of Directors will act on the Nominating and Corporate Governance Committee’s recommendation within 120 days following certification of the stockholder vote. The Nominating and Corporate Governance Committee and the Board of Directors may consider any factors they deem relevant in deciding whether to accept a Director’s resignation. Thereafter, the Corporation will promptly disclose the Board’s decision whether to accept the Director’s resignation offer (and the reasons for rejecting the resignation offer, if applicable) in a Current Report on Form8-K furnished to the SEC. This resignation policy does not apply to contested director elections.
| * | While directors are elected by a plurality vote, we have a “majority vote” director resignation policy in place, as described on page 36. |
| ** | As Proposal 3 is an advisory vote, there is no specified vote requirement for approval. Innospec will consider that the affirmative vote of the majority of the stock present (virtually or represented by proxy) and entitled to vote on such proposal reflects the advice of the stockholders. |
How are votes counted?
In the election of Innospec Directors, your vote may be cast “FOR” each of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees.
| Proposal | How your vote may be cast | Is broker discretionary | ||||
Proposal 1 | Election of two Class II Directors | “FOR” each of the nominees or “WITHHELD”* with respect to one or more of the nominees ** | No | |||
Proposal 2 | Ratification of election of one Class I Director | “FOR” the nominee or “WITHHELD”* with respect to the nominee ** | No | |||
Proposal 3 | Advisory approval of the Company’s executive compensation | “FOR”, “AGAINST” or “ABSTAIN” | No | |||
Proposal 4 | Ratification of appointment of the Company’s independent registered public accounting firm | “FOR”, “AGAINST” or “ABSTAIN” | Yes | |||
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* If you “withhold” authority to vote with respect to one or more nominees for Innospec Director, your vote will have no effect on the election of such nominees.
Your** While directors are elected by a plurality vote, may be cast “FOR”, “AGAINST” or “ABSTAIN” with respect to the advisory approval of executive compensation, and the ratification of the appointment of Innospec’s independent registered public accounting firm.we have a “majority vote” director resignation policy in place, as described on page 36.
If you sign (including electronic confirmations in the case of internet or telephone voting) your proxy card with no instructions on how to vote, your stock will be voted in accordance with the recommendations of the Board. If you sign (including electronic confirmation in the case of internet or telephone voting) your broker voting instruction card with no instructions on how to vote, your stock will be voted in the broker’s discretion only with respect to “routine” matters, but will not be voted with respect to“non-routine” matters. As described in “Information about the 20192021 Annual Meeting of Stockholders and Voting at the Meeting - How do I give voting instructions if I am a beneficial holder?owner?”, election of directors and executive compensation are considerednon-routine“non-routine” matters. We will appoint one or more inspectors of election to count votes cast in personvirtually or by proxy.
What is the effect of brokernon-votes and abstentions?
A broker“non-vote” occurs when a broker holding stock for a beneficial owner does not or cannot vote on a particular proposal because the broker does not have discretionary voting power for that particular proposal and has not received instructions from the beneficial owner.
Common Stock owned by stockholders electing to abstain from voting with respect to any proposal will be counted towards the presence of a quorum. Common Stock beneficially owned and voted by the beneficiary through a broker will be counted towards the presence of a quorum, even if there are brokernon-votes with respect to some proposals, as long as the broker votes on at least onenon-routine“non-routine” proposal.
Abstentions and instructions to withhold votes with respect to any nominee for director election (which uses a plurality standard) will result in those nominees receiving fewer votes but will not count as votes “against” the nominee. Brokernon-votes will not be considered present and entitled to vote with respect to elections of directors and therefore will have no direct effect on the outcome of the election of directors. Abstentions will be treated as present and entitled to vote with respect to Proposals 23 and 34 and, therefore, will have the effect of votes “against” these proposals. Brokernon-votes will have no direct effect on the outcome of these proposals.
What happens if the 2019 Annual Meeting of Stockholders is adjourned or postponed?
Your proxy will still be effective and will be voted at the rescheduled 2019 Annual Meeting of Stockholders.Meeting. You will still be able to change or revoke your proxy until it is voted.
Where can I find the voting results?
Final voting results will be disclosed in aForm 8-K to be filed with the SECU.S. Securities and Exchange Commission (“SEC”) within four business days after the 20192021 Annual Meeting of Stockholders. If official results are not available at that time, we will provide preliminary voting results in the Form8-K and will provide the final results in an amendment to the Form8-K as soon as they become available. You can find theForm 8-K on our website atwww.innospecinc.com.
Will Innospec’s independent accountants attend the 2019 Annual Meeting of Stockholders?Meeting?
A representative of KPMGPricewaterhouseCoopers LLP (“KPMG”PwC”), our current independent registered public accounting firm, will be available by telephone at the 2019 Annual Meeting of Stockholders to answer questions and will have an opportunity to make a statement if such representative wishes.
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Do Directors attend the 2019 Annual Meeting of Stockholders?Meeting?
Our Corporate Governance Guidelines provide that Directors are expected to attend our annual meetings of stockholders and any special meeting of stockholders called by Innospec to consider extraordinary business transactions. Unless they are unable to do so as a result of special circumstances, Directors are encouraged to attend all other special meetings of stockholders called by Innospec. All of our Directors then in office telephonically attended the 20182020 Annual Meeting of Stockholders that was held on May 9, 2018.
Can6, 2020, which was held as a stockholder or interested person communicate directly with our Board? If so, how?
Any stockholder and other interested person who may desire to contact the Chairman or any of the Directors of Innospec may do so via the followinge-mail address:contact.board@innospecinc.com, or by writing to them at Innospec Inc., 8310 South Valley Highway, Englewood, CO 80112. The Corporate Secretary or the Assistant General Counsel will review communications received electronically and forward themvirtual meeting due to the addressee of the communication. The Corporate Secretary will review the communications received by mail or courier and forward to the appropriate addressee.COVID -19 pandemic.
Whom should I call if I have any questions?
If you have any questions about the 2019 Annual Meeting, of Stockholders, voting or directions to attend the 2019 Annual Meeting, of Stockholders, please contact Mr. David B. Jones, Innospec’s Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary, at1-303-792-5554 or atdavid.jones@innospecinc.com.
Corporate Governance Highlights
We are committed to good corporate governance, which promotes the long-term interests of our stakeholders, strengthens Board and management accountability, and helps build public trust in the Company. The Corporate Governance section below describes our governance framework, which includes the following highlights:
Our Corporate Governance Framework
Corporate Governance Principles
Innospec places the strongest emphasis on high standards of Corporate Governance. We have policies to guide all of our employees, Directors and third party representatives and provide extensive training to assure that we operate to these standards throughout the Company. Through its Nominating and Corporate Governance Committee, the Board evaluates our corporate governance policies and practices, which form our corporate governance framework, against evolving best practices as benchmarks for assessing that we follow appropriate standards when conducting our business.
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One of the cornerstones of our Corporate Governance is transparency. Accordingly, you will find the following key policies and procedures on our website under the heading Corporate Governance at www.innospecinc.com/about-us/corporate-governance:
Anti-Corruption Policy
Corporate Governance Guidelines
Audit Committee Charter
Compensation Committee Charter
Nominating and Corporate Governance Committee Charter
Conflict Minerals Policy
Code of Conduct
Innospec Supplier Code of Conduct
Director Independence Policy
Gifts, Hospitality, Charitable Donations and Sponsorship Policy
Reporting Governance Concerns
Also available on our website are this Proxy Statement, our 2020 Annual Report on Form 10-K and our latest Responsible Business Report, being our 2019 report.
Corporate Governance Guidelines
Our Board of Directors believes that adherence to sound corporate governance policies and practices is important in ensuringso that the CorporationCompany is governed and managed with the highest standards of responsibility, ethics and integrity and intaking into account the best interests of the stockholders.all stakeholders. We have adopted a set of Corporate Governance PrinciplesGuidelines intended to reflect a set of core values that provide the foundation for our governance and management systems and our interactions with others.
Our Corporate Governance Guidelines address key governance matters, including, but not limited to:
| Ø | Selection and composition of the Board; |
| Ø | Director orientation and continuing education; |
| Ø | Board membership criteria and selection process; |
| Ø | Board operations, including the size of the Board and Board independence; |
| Ø | Director responsibilities; |
| Ø | Executive sessions of non-management Directors; |
| Ø | Performance evaluations of the Board, Committees of the Board and individual Directors; |
| Ø | Director compensation; |
| Ø | Director access to management and outside advisors; |
| Ø | Management succession; |
| Ø | Resignation policy in uncontested Director elections; and |
| Ø | Limits on Board members serving on other public company boards. |
The Board of Directors believes that corporate governance is an evolving process and periodically reviews and updates the Corporate Governance Guidelines. A current copy of those principlesthe Corporate Governance Guidelines can be found on our website under the
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heading Corporate Governance atwww.innospecinc.com/about-us/corporate-governance, or by writing to Mr. David B. Jones, Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary at Innospec Inc., 8310 South Valley Highway, Suite 350, Englewood, CO 80112.
Stockholder Engagement
The Corporation undertook a comprehensive investor engagement program in 2018, directly engaging with almost 60 investment groups. This included six of the ten largest investors in Innospec. This program included three investor conferences, in New York, Boston and San Francisco, and twonon-deal road-shows, meeting with investors in Chicago, New York, Baltimore, Philadelphia, Boston and Burlington.
The Corporation was represented by a minimum of two, and often three, of the senior company executives comprising the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”) and the Senior Vice-President of Investor Relations. In each case, an updated presentation was produced covering the business performance, the strategy and the financial management of the Corporation. This presentation was concurrently updated on the company’s website to ensure that all investors have access to the same information.
As well as business performance and strategy, other issues were discussed as raised by investors. These included leadership, succession planning and compensation mechanisms, and environmental and social responsibility matters, as outlined in the Innospec Responsible Business Report for 2017, which is also available on the Corporation’s website at:www.innospecinc.com/about-us/corporate-social-responsibility/sustainability/sustainability-reports.
Corporation’sInnospec’s Leadership Structure
The Board believes that the roles of Chairman of the Board (anon-executive position) and Chief Executive Officer should remain separate to enable the Board to provide effective guidance to management and promote oversight and accountability of management. This separation preserves the distinction between the management and oversight functions, maintaining the responsibility of management to help develop corporate strategy and the responsibility of the Board to review and provide input on corporate strategy.
To fulfilfulfill the role, the Chairman of the Board, among other things: creates and maintains an effective working relationship between the Board and the Corporation’sCompany’s management; provides the CEO withon-going direction as to current Board needs, interests, views and expectations; and ensures thatdirects the Board agenda is appropriately directed to the matters of greatest importance to the Corporation.Innospec.
Dr. Boon was appointed as Chief Operating Officer effective November 2015. In this role, Dr. Boon has direct responsibility for the global Fuel Specialties business as well as an overseeing role with our global Performance Chemicals and Oilfield Specialties businesses and has a key role in the strategic development of Innospec. Prior to this, Dr. Boon was the Executive Vice President, Business Operations from June 2009 and was responsible for all our businesses in Europe, Middle East and Africa (EMEA). Dr. Boon joined the CorporationCompany in 1997 and has held various senior management positions covering most operational aspects of the business. He has over 2530 years international experience in the specialty chemicals industry and previously held positions with Ciba Geigy and FMC in the U.S. and Europe. He has a PhD in Chemistry from Leicester University.
Mr. Ian P. Cleminson
Age: 53
Mr. Ian P. Cleminson Age: 55 Executive Officer since July 3, 2006 |
Mr. Cleminson serves as Executive Vice President and CFO to the Corporation,Company, having joined it in February 2002. Prior to this appointment, Mr. Cleminson was Financial Controller for the Fuel Specialties and Performance Chemicals business units within the Corporation.Company. He joined the CorporationCompany from BASF plc. where, between 1999 and 2002, he served as Financial Controller of their SuperabsorbantsSuperabsorbents division. Previously, he worked as an accountant in private practice since 1989.
Dr. Catherine Hessner
Age: 60
Dr. Catherine Hessner Age: 62 Executive Officer since August 12, 2003 |
Dr. Hessner serves as Senior Vice President, Human Resources (“SVP, HR”) of the Corporation,Company, having joined it in March 2003. Prior to joining the Corporation,Company, she served as European Human Resources Director for Nova Chemicals, a U.S. commodity chemicals company. From 1995 to 1999, Dr. Hessner served as European HR Director, based in the U.K., for Anheuser-Busch, the U.S. brewing corporation and, prior to that, spent nine years with various divisions of Mars Incorporated in a variety of human resources and general business roles. Dr. Hessner has informed the Company that she will retire, effective April 30, 2021.
Dr. Ian M. McRobbie
Age: 70
Dr. Ian McRobbie Age: 72 Executive Officer since May 7, 2002 |
Dr. McRobbie serves as Senior Vice President Research and Chief Technology Officer of the Company, having joined the Corporationit in January 2002. Between 1989 and 2002, he was Technical Director of A H Marks and Company Limited, a privately owned U.K. chemical company operating in agrochemical and specialty chemical markets. Prior to this, he worked in senior research and manufacturing roles for Seal Sands Chemical Co. Limited (a wholly owned subsidiary of the Hexcel Corporation based in California) and BTP plc. (now part of Clariant).
Mr. Brian R. Watt
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Age: 60
Mr Brian Watt Age: 62 Executive Officer since January 1, 2010 |
Mr. Watt was appointed Senior Vice President, Corporate Development and Investor Relations in August 2017. Mr. Watt has significant experience in the chemicals industry and prior to joining the Corporation,Company, he held commercial positions in Shell, ICI, Avecia and Astra Zeneca. Mr. Watt joined the CorporationCompany as Mergers and Acquisitions Manager in 2001 and latterly he then held positions in both the Performance Chemicals and Fuel Specialties business units and was appointed as Vice President, Strategic Planning and Regulatory Affairs in 2010, before taking up his current role. Mr. Watt has informed the Company that he has decided to retire, effective April 30, 2021.
Mr. David B. Jones
Age: 50
Mr. David B. Jones Age: 52 Executive Officer since March 1, 2018 |
Mr. Jones was appointed Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary on March 1, 2018. Before joining the Corporation,Company, Mr. Jones served as Vice President, Deputy General Counsel of West Corporation, and Chief Counsel of Lennox International, and prior to that he was a Partner with DLA Piper LLP. Mr. Jones is a Certified Public Accountant and was in private practice with Ernst & Young and PricewaterhouseCoopers prior to commencement of his legal career.
Family Relationships
There are no family relationships between any of the persons referred to in the sections “INFORMATION ABOUT THE BOARD OF DIRECTORS” OR “INFORMATION ABOUT THE EXECUTIVE OFFICERS” above.
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis (“CD&A”) is designed to explain the Company’s executive compensation philosophy and programs and describes the material elements of compensation for 20182020 for the individualsNEOs listed in the “Summary Compensation Table” as our NEOs.. The tables following the Compensation Discussion and AnalysisCD&A contain specific information on the compensation awarded to or earned by the NEOs in 2018.2020.
AtThis CD&A is organized into the 2018 Annual Meeting of Stockholders, the Corporation conducted afollowing sections:
Section | Description | |
Executive Summary | Highlights of our executive pay programs, key results in the year and summary of Company’s compensation philosophy | |
Say-on-Pay Results | Our Say-on-Pay results for 2020 | |
How We Set Pay | Goals of our executive pay programs and summary of how our Compensation Committee establishes and governs the programs | |
Elements of Pay | Elements of pay and description of how our incentive compensation programs are designed to reward increases in stockholder value, company performance against financial targets and executive performance against personal objectives | |
Other Pay Programs and Policies | Information on other aspects of our compensation programs |
non-bindingExecutive Summary advisory vote on its executive compensation. At that meeting, approximately 85% of the stock present and entitled to vote on the proposal voted to “Approve” executive compensation.
2020 Results
The Compensation Committee takes the outcome of the vote into consideration when reviewing its executive compensation programs. The Compensation Committee also considers the interaction of our compensation programs with our business objectives, input from the independent compensation consultant and executive compensation market data. Each of these factors is evaluatedCompany’s financial results in 2020 were adversely impacted by the Compensation Committee inCOVID-19 pandemic and the exercise of its fiduciary duty to act inglobal economic environment. Unprecedented market conditions caused by circumstances outside management’s control meant we missed our financial targets for the best interests of the Corporation. While each of these factors was considered as part of the Compensation Committee’s decisions regarding executive compensation, the Compensation Committee did not make any changes or modificationsyear, which had been set prior to the executive compensation programs orpandemic. The impact of COVID-19 on our global business continues to evolve. However, we have maintained a strong balance sheet, delivered a higher total stockholder return (“TSR”) than our Comparator Group and continued to operate the compensation of any ofbusiness throughout the NEOs aspandemic. Improving business conditions during the 3rd and 4th quarters combined with efforts by management to focus on cash generation enabled the Company to maintain its dividend for 2020 and enter 2021 with a $104.7 million net cash position.
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Corporate Free Cash Flow Ended year with net cash position of $104.7M and paid off all our external bank debt | Stockholder Dividend Continued dividend policy from 2019, paying $1.04 in 2020, an increase from $1.02 in 2019 and $0.89 in 2018 | Total Stockholder Return Delivered 33% over the last 3 years vs our 2020 Chemicals Industry Comparator Group average of 7% during the same period | ||||||
Continuity of Operations Operated manufacturing facilities throughout the pandemic | Enhanced Health and Safety Procedures Strengthened health and safety protocols in accordance with local guidelines at each of our operating facilities | Performance Chemicals Operating Income for 2020 up 8% over 2019 with growth in high margin segments and increased focus on driving sustainability strategy | ||||||
Oilfield Services Rebounded from all-time low oil prices and plummeting demand to finish the year EBITDA neutral and with a strengthened position in Middle East region | Fuel Specialties New products introduced and experienced good growth in 2020 in new markets in developing regions | Drag Reducing Agents Experienced strong growth in sales in Oilfield Services | ||||||
New Product Introduction and Commercialization Products launched in the last 5 years have accounted for 23% of total sales in 2020 |
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As a result of the advisory vote, althoughCOVID-19 pandemic, the demand for oil and fuel collapsed and the financial performance of our Fuel Specialties and Oilfield Services divisions fell below the threshold level for bonus payments. Overall, the financial performance of the Company was below the threshold level required to receive a pay-out under the rules of all Company bonus plans for all employees, including NEOs. As part of our pay-for-performance culture, the Compensation Committee has made certain modificationsthe discretion to consider the economic and refinements asbusiness challenges the Company faces. In recognition of the efforts, leadership and accomplishments of the NEOs and all other employees under extraordinary circumstances, the Compensation Committee exercised its discretion to make available a $12 million discretionary pool allowing for a potential one-time discretionary payment to employees. The size of the discretionary pool equates to approximately 50% of the value of the total potential bonus payments at target across all employees, including the NEOs. As part of its regular review process, as discussed herein.this, the Compensation Committee and the other independent members of the full Board approved one-time discretionary payments to the NEOs totaling $835,088, which equates to around 7% of the total discretionary pool.
Compensation Philosophy and Overall Objectivesphilosophy
The compensation philosophy of the CorporationCompany is to link executive compensation to continuous improvement in corporate performance and increases in stockholder value, while at the same time allowing the CorporationCompany to attract and retain the executive talent required to successfully manage our business. The overall compensation program is designed to motivate our employees to achieve business objectives and maximize their long-term commitment to our success.
For the CEO, we target his base salary in the upper quartile of the relevant market for the role, given his track record of success and tenure with the Company. For the other NEOs, we target the market median (50th percentile) but consider other factors including individual experience and expertise, overall performance, internal pay equity and contribution to the Company.
| Ø | Our CEO’s base salary was increased by 4% to $1,170,000 for 2020, which was within 25% of the average base salary for CEOs in the Comparator Group companies, as defined below, and 10% below the upper quartile of the U.S. survey group in the year. |
| Ø | Following the 2020 increases, base salaries for the other NEOs increased by an average of 3.5% and were all within a 5% range of the market median data. |
NEOs for 2020 |
Mr. Patrick S. Williams President and Chief Executive Officer |
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer |
Dr. Philip J. Boon Executive Vice President and Chief Operating Officer |
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations |
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer |
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Basic Compensation Practices
Our executive compensation program engages certain pay practices to accomplish our overall objectives while avoiding other, more problematic or controversial practices.
What We Do | ||||||
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What We Don’t Do | ||||||
| Allow directors and executive officers to |
| Pay dividends on unvested performance | |||
| Pay tax gross ups to our NEOs |
| Pay above market interest on deferred | |||
| Allow option repricing or share recycling | |||||
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Compensation Elements and Performance Metrics
The Corporation aimsCompensation Committee seeks to achieve this by providingan appropriate balance between fixed and variable compensation elements to link a significant proportion of compensation to performance. The elements are designed to provide incentive for our NEOs to achieve goals that alignare important to the Company’s success.
Compensation Element | Performance Metrics for 2020 | Rationale | ||
| Base Salary | Fixed pay targeted at upper quartile of relevant market for the CEO and market median for other NEOs | |||
| Management Incentive Compensation Plan (MICP -annual cash incentive) | • Corporate/Business performance (Operating Income, Cash Flow) • Represents 80% of target bonus | Rewards operational performance and profitability | ||
• Performance against personal objectives • Represents 20% of target bonus | Rewards achievement of personal objectives relative to current economic and business challenges | |||
| Market Value Stock Option Awards (Long-term equity) | Directly aligns with value delivered to stockholders as such options only have value if stock price increases over long period of time | |||
| Full Value Stock Awards (Long-term, performance-based equity) | • Relative TSR performance vs • Revenue growth • Earnings per share growth | Full vesting requires delivery of long-term financial and relative TSR performance | ||
| Market Value Cash Incentive Awards (Long-term and payable in cash) | Cash-based award that directly aligns with value delivered to stockholders as such awards only have value if stock price increases over long period of time | |||
| Full Value Cash Incentive Awards (Long-term, performance-based and payable in cash) | • Relative TSR performance vs • Revenue growth • Earnings per share growth | Full vesting requires delivery of long-term financial and relative TSR performance |
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Balance of Fixed and Variable Compensation
For Executive Officers’ interestsOfficers, the target is at least 50% of total compensation is delivered through variable pay with stockholder valuea mix of long-term and achievementshort-term incentives and cash and equity compensation. In 2020 over 50% of overall compensation for the CEO and other NEOs was delivered through variable compensation.
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Details of our long-term strategies withinpay programs in 2020, to include say-on-pay results, how we set pay, elements of pay and other pay programs are detailed in the frameworkfollowing sections of the CD&A.
At the 2020 Annual Meeting of Stockholders, the Company conducted a non-binding advisory vote on its executive compensation. At that meeting, approximately 99% of the stock present and entitled to vote on the proposal voted to “Approve” executive compensation. The Compensation Committee noted the high level of stockholder support when reviewing its executive compensation programs and made no changes or modifications to the programs as a direct consequence of this vote. The Compensation Committee takes the outcome of the vote into account when reviewing its executive compensation programs together with consideration of the interaction of our overall principlescompensation programs with our business objectives, input from the independent compensation consultant and executive market data. Each of good corporate governance.these factors is evaluated by the Compensation Committee in the exercise of its fiduciary duty to act in the best interests of the Company. As
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part of its regular review process regarding executive compensation, the Compensation Committee considered each of these factors and any modifications to its NEO compensation process are discussed herein.
The goals of the Corporation’sCompany’s executive compensation programs are to:
| Ø | Establish pay levels that are necessary to attract and retain highly qualified executive officers, |
| Ø | Recognize superior individual performance and taking on new responsibilities |
| Ø | Balance short-term and long-term compensation to complement the |
| Ø | Provide variable compensation opportunities linked to the |
| Ø | Encourage |
| Ø | Align Executive Officer compensation with the interests of stockholders; and |
| Ø | Reward |
The CorporationCompany regularly reviews its executive compensation programs to ensureconfirm that each component is competitive and provides a balance between fixed elements of pay and performance related elements. No element of compensation is driven exclusively by tax, accounting or regulatory considerations. Further information on each of the key components of compensation is given in the Elements of Pay section below.
Role of the Compensation Committee and the Compensation Consultant
The Compensation Committee of the Board of Directors oversees the Corporation’sCompany’s compensation programs and practices for NEOs and other key Executive Officers and Directors. The Compensation Committee reviews and approves compensation for our Executive Officers, including salary, incentive programs, stock-based awards and compensation, retirement plans, perquisites and supplemental benefits, employment agreements, severance arrangements, change ofin control arrangements and other executive compensation matters. AdviceIn 2020, advice to the Compensation Committee iswas provided by Mr. Dion Read, an independent compensation consultant, who has significant experience in executive compensation, having worked for Hay Group and Watson Wyatt (now Willis Towers Watson) in this area.compensation. Mr. Read was retained by the Compensation Committee and meetshas met with the Compensation Committee at least annually and providesprovided advice at other times as the Compensation Committee deemsdeemed appropriate. Any other work undertaken by Mr. Readthe compensation consultant for the CorporationCompany must be approved by the Compensation Committee. In 2018,2020, Mr. Read did not perform any additional work for the Corporation.Company. The Compensation Committee has conducted an assessment ofassessed the independence of Mr. Read and has determined that he does not have any conflict of interest.
As a result of Mr. Read’s planned retirement in early 2021, the Compensation Committee appointed Exequity as independent compensation consultant to the Compensation Committee effective January 1, 2021.
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The Compensation Committee reviews and approves the compensation structure for our NEDs at least bi-annually, including retainers, fees, stock-based awards and other compensation and expense items. This review is discussed under the “Director Compensation” section of this Proxy Statement.
The processes and procedures for the Compensation Committee oversight of compensation programs are discussed in the “Corporate Governance” section of this Proxy Statement.
Role of the Chief Executive Officer and Other Executive Officers
The CEO attends Compensation Committee meetings by invitation only and does not attend Compensation Committee meetings when his compensation is being determined. Each year, the CEO, at the request of the Compensation Committee, provides his assessment of the performance of the other Executive Officers, including their achievement of individual objectives and contribution to the overall business performance. He then recommends adjustments to base salary, if appropriate.
The Compensation Committee then reviews all elements of compensation for the Executive Officers, taking into accountconsidering the recommendations of the CEO, as well as market data and information from the Senior Vice President, Human Resources (“SVP, HR”). The Compensation Committee also reviews all elements of compensation for the CEO and evaluates the CEO’s performance in light of those goals, taking into account the ChairmanChair of the Compensation Committee’s review and assessment of the performance of the CEO, overall business performance and results, competitive market data and other relevant information provided by the SVP, HR. The Compensation Committee reviews, discusses and determines the CEO’s compensation package without him being present.
The Compensation Committee makes decisions relating to the compensation of the Executive Officers,NEOs, including the CEO, which it recommends to the full Board of Directors for approval.
The SVP, HR assists the Compensation Committee, serving as the Compensation Committee’s Secretarysecretary, and provides information on compensation as requested by the Compensation Committee.
Competitive Market
The Compensation Committee reviews nationally recognized compensation survey data provided by Willis Towers Watson to compare the Corporation’sCompany’s compensation practice with the external market. In 2018, forFor the Executive Officers based in the U.S., Willis Towers Watson U.S. data for similar sized roles in organizations with over $1 billion revenue was used. These are standard Willis Towers Watson data sets and were not customized prior to use. In addition, the Compensation Committee also uses a Chemical Industry PeerComparator Group (“Comparator Group”) as an additional reference point for our CEO’s compensation. The companies included in the peer groupComparator Group were selected by the Compensation Committee based on a number ofseveral factors, including company size products and level of global operations.market capitalization. The Compensation data for these companies is collected from their proxy statementsCommittee reviewed the Comparator Group in November 2020 and analyzed by the Compensation Committee. The peer group of eleven companies for 2018 was:removed Cambrex, Innophos, Omnova Solutions and Polyone, who were no longer relevant due to M&A activity; and added Avient Corporation, Balchem Corporation, Koppers Holdings Inc., Rayonier Advanced Materials, Ingevity Corporation and Minerals Technologies Inc.
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The Comparator Group for 2021 consists of the following 18 companies:
• Albermarle Corporation | • American Vanguard | • Ashland Global Specialty | ||
• Avient Corporation | • Balchem Corporation | • Cabot Corporation | ||
• Ferro Corporation | • H.B. Fuller Company | • Ingevity Corporation | ||
• Koppers Holding Inc. | • Kraton Corporation | • Minerals Technologies Inc. | ||
• NewMarket Corporation | • Quaker Chemical Corporation | • Rayonier Advanced Materials | ||
• Sensient Technologies | • Stepan Company | • Tredegar Corporation | ||
Due to completed acquisition activity during 2017, Chemtura Corporation was removed from the peer group for 2018.
In 2018, the Compensation Committee undertook a comprehensive review of the peer group and concluded it was appropriate to increase the number of companies in the peer group to provide more information on market practice. As a result, the Committee added Kraton Corporation, Sensient Technologies Corporation, Tredegar Corporation, Quaker Chemicals Corporation and OMNOVA Solutions to the peer group effective from the beginning of 2019. These additions were made to add companies from the chemical sector with strong performance and appropriate sized revenue and market capitalizations compared to Innospec.
In 2018, for U.K.-basedFor U.K. based Executive Officers, Willis Towers Watson U.K. data for similar sized roles in organizations with over $1 billion revenue was used. These are also standard Willis Towers Watson data sets and were not customized prior to use. All executive jobs arewere assessed and graded by Mr. Read, in his capacity as the Compensation Committee’s independent compensation consultant using the Willis Towers Watson Global Grading methodology. Job sizes are then matched into the data to ensureso that comparisons are made at the appropriate level.
References to market data in this Compensation Discussion and Analysis,CD&A, unless otherwise noted, are to these foregoing sources.
Our Compensation Committee has designed our compensation program to align pay with performance. Our executives are rewarded for delivery of long-term stockholder value, performance against long and short-term financial targets and personal objectives aligned to our strategy.
Elements of Pay
The material elements of compensation for the Corporation’sCompany’s NEOs are:
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These elements are explained and discussed in separate sections below. The Compensation Committee seeks to achieve an appropriate balance between fixed and variable compensation elements in line with our policy to link a significant proportion of compensation to performance. For Executive Officers the target is that at least 50% of total compensation should be delivered through variable compensation comprising a mix of long
and short-term incentives and cash andnon-cash compensation. The Compensation Committee has formally reviewed the allocation of compensation between the different elements using market knowledge and input from its advisors and is satisfied that the balance is appropriate and generally in line with market practice. In 2018 over 50% of overall compensation for the CEO and other NEOs was delivered through variable compensation.
Annual Cash Compensation
Base Salary
A base salary is provided to our Executive Officers. The level of base salary is reviewed on an annual basis and is adjusted, if appropriate, to recognize the scope and complexity of a role, market data and individual performance. The Compensation Committee targets base salary at the median (50th percentile) of the survey group but considers other factors including individual experience and expertise, overall performance, internal pay equity and contribution to the Corporation.Company. We believe that this methodology enables us to remain competitive as an employer in our markets without incurring unnecessary costs. In the case of Mr. Williams, the Compensation Committee views Mr. Williams as key to the Corporation’sCompany’s continued success, given his unique skills and experience and his long and successful tenure as CEO, and therefore determined that it was appropriate to benchmark his base salary in the upper quartile of the relevant market.
2018 Salary Increases
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The survey data for 2018 indicated base salaries were generally in line with the market, apart from in a small number of cases, where salaries were around 10% to 15% below the market. As a result, the 2018 base salary level increases for the NEOs, excluding the CEO, were on average 5.5%. Mr. Williams’ base salary was increased by 6.0% to $1,068,480 which was within 15% of the average base salary for CEOs in the peer group of companies and broadly in line with the upper quartile of the U.S. survey group.
Following the 2018 increases, base salaries for the NEOs were all within a 10% range of the market median data, which, based on the advice of their independent compensation advisor, the Compensation Committee believes is an appropriate salary range, given the experience of the NEOs.
Annual Incentives
The Corporation’sCompany’s Management Incentive Compensation Plan (“MICP”) is a short-term incentive plan, which provides for cash payments which are driven by annual performance. Payments are based on achievement againstpre-determined financial goals set by the Board each year. Targets are set for corporate performance and business unit performance (where appropriate) and for personal performance against objectives. All payments under the MICP are subject to an overall corporateCorporate Operating Income performance threshold of 90% of the agreed target for the year:year; if this target is not achieved, no payments under the MICP are made to any individual, regardless of personal and business unit performance.
Further, where an individual’s payment under the MICP includes a financial measure for a business unit, the business unit must also achieve a minimum of 90% of the operating income target or the individual will not receive any MICP bonus for that year for that element, irrespective of overall corporate and personal performance.
Actual MICP Bonus pay-outs are based on the following formula:
Following a review of the relevant market, the Compensation Committee determined that Mr. Williams’s bonus at target and maximum potential was below the median market level and therefore agreed to increase his Target MICP Bonus Percentage from 75% of base salary to 85% of base salary, with the maximum potential bonus increasing from 172.5% to 195.5%, effective January 1, 2020. The target percentage for the other Senior Executive Officers remained at 50%, with a maximum potential MICP Bonus pay-out as a percentage of salary of 115%. The levels of MICP target bonus are reviewed periodically and are targeted at the median level against the market. The target and maximum bonus percentages for the CEO are within 15% of the average levels for CEOs in the Comparator Group of companies and the median levels in the U.S. survey group, which the Compensation Committee believes to be appropriate.
The Financial Performance Multiplier is determined by the following table:
| % Business Achievement against
| Financial Performance
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| Less than 90% | 0 | ||||
90% | 50% | |||||
100% | 100% | |||||
Equal to or more than 130% | 250% | |||||
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The MICP incentive payment opportunityFinancial Performance Multiplier increases on a linear basis. For example, a 95% Business Achievement results in a 75% Financial Performance Multiplier, and split between corporate and personal objectives are showna 110% Business Achievement results in the following table:a 150% Financial Performance Multiplier.
| Proportion of MICP bonus at target split: | ||||||||
Corporate/ Business Performance | Personal objectives | Target MICP Bonus as % of | Maximum MICP Bonus as % of salary | |||||
CEO | 80% of target bonus | 20% of target bonus | 75% | 172.5% | ||||
Senior Executive Officers | 80% of target bonus | 20% of target bonus | 50% | 115% | ||||
The Compensation Committee reviews the allocation between business and personal performance each year to ensureverify that it is appropriate.
The financial performance measures are established by the Compensation Committee and are reviewed by them each year to ensureso that they remain appropriate and focusfocused on the delivery of high performance while recognizing the economic and business challenges the CorporationCompany faces. In 2018,2020, the Compensation Committee determined that, consistent with the approach taken in the previous year, the appropriate measures were corporate operating income before restructuring, which is a measure of earnings, and corporate free cash flow, which is seen as a measure of working capital management. follows:
| Ø | Corporate Operating Income (before restructuring). This is a measure of earnings and represents operating income adjusted to exclude certain one-time/nonrecurring restructuring costs, such as severance, that are not reflective of our underlying operations for the period in which they are recorded and therefore mask our underlying trends. These one-time/nonrecurring items are approved by the Compensation Committee. |
| Ø | Corporate Free Cash Flow. This is seen as a measure of working capital management and represents corporate operating cash flow after capital expenditure and before the cash effect of restructuring. |
| Ø | Personal Performance against Objectives. Annual personal objectives for each NEO are established by the Compensation Committee at the start of the financial year and reflect the specific role and responsibilities of the NEO. |
The metrics are set at the start of the year and approved by the Compensation Committee. Corporate operating income before restructuring is operating income adjusted to exclude certainone-time/nonrecurring restructuring costs, such as severance payments from the calculations, because they are not reflective of our underlying operations for the particular period in which they are recorded and, therefore, mask our underlying operating trends. Corporate free cash flow represents corporate operating cash flow after capital expenditure and before the cash effect of restructuring. Theseone-time/nonrecurring items are approved by the Compensation Committee. Corporate operating income before restructuring and corporate free cash flow arenon-GAAP measures. In addition, the Compensation Committee determines whether the performance measures for any NEO should also include operating income and operating cash flow for the relevant individual businesses, based on the NEO’s specific role and responsibilities. This determination is made at the start of the year. These measures were chosen as they are designed to align the NEOs with the balanced objectives of increasing earnings and improving cash flow through working capital management, which the Compensation Committee believes are key to the success of the Corporation.Company. Personal objectives are specific to the particular business unit(s) or function within which the Executive OfficerNEO operates. In addition to the personal element shown in the formula above, if an individual’s overall performance assessment for the year is below satisfactory, then no MICP bonus is paid to that individual at all.
The levels of MICP target bonus are reviewed periodically and are targeted at the median level against the market. The target and maximum bonus percentages for the CEO are within 25% of the average levels for CEOs in the peer group of companies and the median levels in the U.S. survey group, which the Compensation Committee believes to be appropriate.
Maximum incentive payments under the MICP are awarded when the CorporationCompany or, where relevant, an individual business unit exceeds its target performance measures by 30%.
No awards are made under the MICP until the annual business results have been audited by the independent registered public accounting firm and approved by both the Audit Committee of the Board and the full Board.
A provision exists which allows for potential claw-back of bonuses already paid to all Executive Officers if, at some point in the future, it is identified that the audited annual financial results need to be materially restated.
In 2018,2020, for all NEOs, MICP incentive payments were based on achievement of targets set for corporate operating income (before restructuring) and corporate free cash flow. In the case of Dr. Boon, in addition to
corporate targets, a proportion of his MICP incentive payment was based on achievement of targets set for operating cash flow for the global Fuel Specialties business unit and the achievement of targets set for the operating income for the regional Fuel Specialties businesses, with a proportion based on the operating income for both the global Performance Chemicals business unit and the global Oilfield SpecialtiesServices business unit.
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The consolidated financial performance targets set for annual MICP incentive payments purposes andPersonal Performance Multiplier is determined by the actual level achieved for the Corporation as a whole in 2018 were as follows:following table:
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41 – 45 | 125% | |||||||
36 – 40 | 100% | |||||||
31 – 35 | 50% | |||||||
26 – 30 | 25% | |||||||
25 or less | 0 | |||||||
As a result, MICP bonus levels for that part of the overall MICP incentive payment based on consolidated operating income were paid at 175% of the target MICP bonus levels and at 195% of the target level for that part of the overall MICP bonus based on consolidated operating cash flow.
In 2018 the Fuel Specialties regional businesses achieved 105%, 97% and 111% of the targets set for operating income. As a result, in the case of Dr. Boon, MICP bonus levels for those parts of his overall MICP bonus based on operating income for the relevant regional Fuel Specialties businesses unit were paid at 125%, 85% and 155% of the target levels, respectively. The Performance Chemicals business unit achieved 124% of the target set for operating income, and the Oilfield Services business achieved 134% of the target set for operating income. As a result, MICP bonus levels for those parts of Dr. Boon’s overall MICP bonus based on operating income for the Performance Chemicals business unit and the Oilfield Specialties business unit were paid at 220% and 250% of the target levels, respectively.
In assessing the individual performance on personal objectives for each NEO, the Compensation Committee uses the following process.process:
Annual personal objectives for each NEO are established by the Compensation Committee at the start of the financial year. These objectives are also designed to focus on delivery of high performance and take into accountconsider the economic and business challenges the CorporationCompany faces. The Compensation Committee annually reviews the scoring mechanism for the personal objectives to ensuremake sure it rewards performance appropriately. Each objective is weighted to give a maximum potential total score of 50. A good performance on the personal objectives is defined as achieving an overall score at the end of the year of 36 to 40 and earns the target level for the 20% based on personal objectives. Achievement of the maximum score of 46 to 50 represents exceptional performance against the personal objectives and increases the 20% of the overall target MICP bonus based on personal objectives by a factor of 50%. The relationship between score on personal objectives and as shown in the amount of MICP bonus earned for personal performance is shown below:table above.
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At the end of the year, as part of the annual performance review process, the performance against each objective is reviewed and marked against the weighting set at the start of the year to give a total score out of 50. In the case of the CEO, this assessment is done by the ChairmanChair of the Compensation Committee and the resultant score and assessment for each objective is reviewed and approved by the Compensation Committee as a whole prior to review and approval by the independent members of the full Board. In the case of the other NEOs, the assessment is done by the CEO, who reviews the objectives and proposes a mark for each objective against the weighting set at the start of the year. This, together with the underlying rationale, is reviewed and approved by the Compensation Committee prior to review and approval by the independent members of the full Board.
The consolidated financial performance targets set for annual MICP payments purposes and the actual level achieved for the Company in 2020 were as follows:
| Financial Performance Measure | Target Set for Annual Bonus Purposes | Actual Achieved for MICP Bonus | Achievement as % of Target | % of Target MICP Bonus Achieved | ||||
Corporate Operating Income (before restructuring) | $133.303 million | $63.193 million | 47% | 0% | ||||
Corporate Free Cash Flow | $62.335 million | $108.325 million | 174% | N/A since Corporate Operating Income threshold not met | ||||
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As shown above, although the corporate free cash flow target for the Company was exceeded by over 70%, the minimum threshold of 90% was not achieved for the Corporate Operating Income financial performance measure. As a result, no MICP bonuses were payable under the plan in 2020, regardless of personal and business unit performance.
The following table summarizes the incentive payments madeassessment of the personal performance scores for 2020 performance under the MICP for 2018 performance for each of the NEOs. No incentive awards were made to any of the NEOs including selected relevant information about their performances:under the MICP for 2020.
| Annual Incentive MICP | ||||||||||||||||
| Executive | Target MICP Incentive Payment as % of Base Salary | Assessment of Personal Objectives | Achieved MICP Incentive Payment as % of Base Salary | MICP Incentive Award | ||||||||||||
Mr. Patrick S. Williams President and Chief Executive Officer | 75 | % | 47 | 130.5 | % | $ | 1,394,366 | |||||||||
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | 50 | % | 46 | 87 | % | $ | 373,004 | |||||||||
Dr. Philip J. Boon Executive Vice President and | 50 | % | 46 | 80.8 | % | $ | 306,810 | |||||||||
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | 50 | % | 46 | 87 | % | $ | 236,229 | |||||||||
Dr. Ian M. McRobbie Senior Vice President, Research and Technology | 50 | % | 47 | 87 | % | $ | 213,731 | |||||||||
| NEO | Target MICP Bonus as a Percentage of | Personal Performance | MICP Incentive | ||||||||||||
Mr. Patrick S. Williams President and Chief Executive | 85% | 46 | $0 | ||||||||||||
Mr. Ian P. Cleminson Executive Vice President and | 50% | 46 | $0 | ||||||||||||
Dr. Philip J. Boon Executive Vice President and | 50% | 43 | $0 | ||||||||||||
Mr. Brian R. Watt Senior Vice President, | 50% | 46 | $0 | ||||||||||||
Dr. Ian M. McRobbie Senior Vice President and Chief | 50% | 46 | $0 | ||||||||||||
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The scoringscore for the personal objectivesperformance includes consideration of the achievement of the following factors:
selected relevant goals and objectives for each NEO. In 2020, the Compensation Committee set personal objectives for Mr. Williams, ledwhich focused on the developmentkey challenges and implementation of a growth strategypriorities for the Corporation,Company, which included safety, strategic initiatives, financial and compliance goals. These were in addition to the financial targets for Corporate Operating Income and Free Cash Flow, on which 80% of Mr. William’s incentive compensation under the MICP is based. The key personal performance goals for Mr. Williams are summarized below, together with the actual performance achieved:
Personal Performance Goals and Objectives | Actual Performance vs Personal Goals and Objectives | |
| Drive Safety standards across all sites, with no serious accidents and overall safety performance as measured by the Lost Time Accident Frequency Ratio (LTAFR) to better industry average | • Completed roll-out of new behavioural safety program globally • No serious accidents in year, but Company’s LTAFR for 2020 was slightly worse than industry average • Implemented robust procedures at all operating facilities to protect employees and mitigate the spread of COVID-19 in the work environment • Operated manufacturing facilities throughout the pandemic with no evidence of virus transmission at the Company facilities in 2020 | |
| Identify and implement strategies to improve profitability and efficiency during economic uncertainty and mitigate impact of any potential disruption in ability to supply customers | • Developed and implemented number of measures to allow sites to continue to operate during pandemic. • Vast majority of customer needs met despite restrictions of pandemic • Completed rail project for one of key Performance Chemicals facilities, which will improve efficiency and lower costs • Detailed plans developed to mitigate impact of Brexit in Europe and achieved no negative impact on supply to customers once Brexit implemented • Careful management of cash flow in difficult market conditions and achieved significant out-performance on cash flow target, while maintaining dividend payment | |
| Continue development of growth strategy, including commercialization of new products | • Updated 5-year strategy plan approved by Board • Sales of new products launched in last 5 years accounted for 23% of total sales in 2020. • Expanded capacity for Drag Reducing Agent product (“DRA”) which continued to grow ahead of expectations • Key strategic segments of Mining, Construction and Agriculture in Performance Chemicals had strongest year to date | |
| Drive our Sustainability strategy forward | • Successfully maintained our Gold Medal on the EcoVadis Sustainability Rating despite implementation of more challenging criteria • Sulfate-free product range expanded including sustainable, higher performing surfactants in Performance Chemicals | |
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Given Mr. William’s performance measured against the goals set, the Compensation Committee recommended Mr. Williams be awarded a score of 46 out of 50 for his personal objectives. However, no bonus was payable to Mr. Williams under the MICP plan in 2020 since the minimum threshold of 90% was not achieved for the Corporate Operating Income financial performance measure.
The relevant selected key personal performance goals and objectives for each of our other NEO’s are summarized below, together with the actual performance achieved. However, no incentive payment was made to any of our NEO’s under the MICP plan in 2020, regardless of their score for their personal goals and objectives, since the minimum threshold of 90% was not achieved for the Corporate Operating Income financial performance measure.
Mr. Ian P. Cleminson Personal Performance Goals and Objectives | Actual Performance vs Personal Goals and Objectives Awarded Score of 46 out of 50 | |
| Develop and deliver a program to strengthen cyber security across the Company in response to the 2019 cyber incident | • Successfully delivered external auditor assessment recommendations, with follow up external audit showing significant progress in all areas • Successful implementation of program to strengthen IT infrastructure and new cyber security training program implemented for all employees to improve cyber security awareness | |
| Provide lead financial support for the diligence and structuring of potential acquisitions | • Significant work completed on potential acquisitions including evaluation of alternative deal structures, potential synergies and outline integration plans. • Liaised with banking group and successfully gained full support for acquisition strategy | |
| Drive a focus on working capital, with associated cash requirement, across the Company | • Led the focus on strong cash management across the Company during the pandemic. Achieved significant out-performance on cash flow target, while maintaining dividend payment • Paid off all external bank debt and ended the year with a net cash position of $104 million | |
| Support development of new 5-year strategy for Performance Chemicals business | • Robust and improved financial model built to enable development of 5-year strategy for Performance Chemicals, focusing on identification and financial evaluation of organic growth opportunities | |
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Dr. Philip J. Boon Personal Performance Goals and Objectives | Actual Performance vs Personal Goals and Objectives Awarded score of 43 out of 50 | |
| Develop plans to mitigate impact of any disruption to our ability to supply product to customers | • All Fuel Specialties manufacturing facilities continued to operate throughout the pandemic • Plans developed and implemented to allow continued movement of goods in EMEA due to pandemic restrictions on cross border travel | |
| Lead the Fuel Specialties business in challenging market conditions, with focus on cost management and improved margins | • Led review of all Fuel Specialties operations in light of impact of COVID-19 pandemic on market demand and implemented number of cost saving programs • All manufacturing sites for Fuel Specialties continued to operate | |
| Drive regional growth strategy for Fuel Specialties | • Strong sales growth for key products in Asia-Pacific and Latin America regions, despite sharp fall in market demand as result of pandemic • Won first two accounts in China for diesel detergent product range | |
| Drive sales of new products in Fuel Specialties globally | • Sales of new products launched in last 5 years accounted for 26% of total Fuel Specialties sales globally in 2020 • New Lubricity Improver launched, and new pour point depressant successfully introduced in Russian market | |
Mr. Brian R. Watt Personal Performance Goals and Objectives | Actual Performance vs Personal Goals and Objectives Awarded score of 46 out of 50 | |
| Lead development of new 5-year strategy | • Worked with all 3 businesses to develop new strategy, including identification of key market trends and new technologies • Worked closely with Performance Chemicals business to identify opportunities to leverage technology expertise to expand and create alternative markets • Full Company wide strategy approved by Board | |
| Lead full risk management review across all businesses with emphasis on understanding and evaluation key risks | • Full review completed and approved by the Board • Detailed recovery plans developed for all key manufacturing sites to mitigate potential disruption to operations in event of any unplanned shutdown/closures | |
| Lead acquisition strategy and identification of potential targets, including project management of due diligence and acquisition process for any potential acquisitions | • Worked closely with CFO and CEO on potential acquisition, including management of due diligence process, development of business plans for potential acquisition, including integration and synergies | |
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Dr. Ian M. McRobbie Personal Performance Goals and Objectives | Actual Performance vs Personal Goals and Objectives Awarded score of 46 out of 50 | |
| Continue to support DRA business, through developing product range and further improving our manufacturing process. | • Significant work done to successfully develop new product variants to enhance product range • Led the DRA plant capacity expansion project, with two phases of expansion successfully completed and further expansion coming on-line in 2021 to provide more capacity | |
| Lead development of a long-term technology strategy for the Company, focussing on new technologies and product discovery | • Identified new approach to underpin product discovery, with focus on improving sustainability • Implemented new scientific program to underpin technology developed and established number of collaborative research activities with select academic groups | |
| Continue to support development of strategic relationships with key customers, based on technology | • Joint research projects on new technologies and applications established with number of key strategic customers in Performance Chemicals business | |
| Identify technology program to support business strategy for key product groups | • Strategy developed for key product groups and research projects identified and implemented to deliver strategy, with resources allocated to each key project | |
Due to the economic challenges caused by the COVID 19 pandemic, including the developmentcollapse in oil and fuel demand, the overall Company financial performance fell below the threshold level required to receive a pay-out under the 2020 MICP or other bonus plans. As a result, under the rules of new productsthe MICP and market segments. In particular, Mr. Williams initiated a reviewall other bonus plans, no bonuses were payable to identify opportunitiesany employees including the CEO and other NEOs. During the first quarter of 2020, the Company’s priorities shifted from driving growth to drive innovationadapting to maintaining commitments to our key stakeholders, including our employees, customers and new product development, which resulted in streamlining the Corporation’sstockholders. The Company’s primary focus was keeping employees safe and safely operating our manufacturing facilities in Europeorder to create centersmeet customer demand. These efforts along with efforts by management to focus on cash generation enabled the Company to maintain its dividend for 2020 and enter 2021 with a strong balance sheet and $104.7 million of excellence for R&D and technical service and the closurecash.
As part of the Everberg facilitypay-for-performance philosophy, the Compensation Committee has the discretion to consider the economic and business challenges the Company faces. Coupled with improving business conditions during the 3rd and 4th quarters, key accomplishments were delivered in Belgium. He has alsothe year, specifically:
Implemented procedures at our operating facilities to promote health and safety of our employees and to mitigate the spread of COVID-19 in the work environment
Operated manufacturing facilities throughout the pandemic with no evidence of virus transmission at the Company facilities in 2020
Continuation of the dividend policy from 2019, paying $1.04 in dividends per share in 2020 (semi-annual dividend of $0.52), an increase from $1.02 in 2019 and $0.89 in 2018
Paid the Company’s external bank debt down to zero
Strong stock price recovery in fourth quarter
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Performance Chemicals operating income up 10% over 2019 and 8% over budget for the year despite the challenging environment
Employees continued to drivework throughout the developmentpandemic, including remote working where possible in line with local guidance and regulations of new markets forrelevant jurisdictions despite challenging environment
Major capital projects continuing to progress as planned, without the Performance Chemicals business. In addition, Mr. Williams has provided strong leadershipneed to the Oilfield Specialties business to deliver improved operating performanceraise additional capital
After a full discussion and in this business and investment in a new manufacturing facility to support growth in new market segments. He has also driven the development and implementation of robust succession plans for the key leadership roles in the Corporation. The Corporation has also exceeded the target set for safety across the Corporation, with the lost time accident rate across the whole Corporation less than thatrecognition of the industry average in the year. Based on his personal performanceefforts, leadership and the overall strong resultsaccomplishments of the Corporation in a difficult economicNEOs and competitive environment,all other employees under extraordinary circumstances and adverse market conditions, the independent members ofCommittee exercised its discretion and recommended to the full Board approved the Compensation Committee’s recommendationsthat a pool of up to a maximum of $12 million be made available for Mr. Williams to be awarded a bonus of $1,394,366.
Mr. Cleminson has driven the developmentemployees. The recommendation and amount of the Corporation’s planspool were approved at the February 2021 Board meeting. This provided for a one-off discretionary payment to manageall employees broadly equivalent to bonus payments that would have been based on achievement of financial performance at the implications of new tax reforms. In addition, he has provided strong financial leadershipminimum threshold level on average while recognizing individual personal performance.
The Compensation Committee approved one-time payments to the Oilfield Specialties business, working closely with Mr. WilliamsNEOs broadly equivalent to improve operatingbonus payments that would have been based on achievement of corporate financial performance at the minimum threshold level, which equated to approximately 50% of the value of their total potential bonus payments at target. The payments were also subject to personal performance, in this business. He has also ledline with the approach for all employees. The final approved on-goingone-off evolutiondiscretionary payments to the NEOs are detailed below and enhancement of our banking relationships and played a key roleare included in the continued development of our Investor Relations strategy. He has played an important role in overseeing“Summary Compensation Table” under the Sarbanes- Oxley control
policies and processes for the Corporation and had a key role in the continued development and management of our Compliance program.
Dr. Boon delivered good business results in operating income for the Fuel Specialties business in a very competitive global market. In addition, he has provided strong leadership to the Fuel Specialties business in the Americas and implemented new programs to improve focus and efficiency to position the business for continued growth. He has also spearheaded the drive to utilize the new subsidiary in China to source more cost effective raw materials in the region for the Corporation. In addition, he has driven the identification and delivery of a number of significant new commercial opportunities in very competitive markets.
Mr. Watt has led the development of the overall strategy for the Corporation, working closely with Mr. Williams. He has also led an extensive review of the Corporation’s risk management strategy and played an important role in reducing the cost of insurance for the Corporation, without any reduction in coverage. He has improved the efficiency and effectiveness of the Corporate Development process for the Corporation, working closely with all three main businesses. He also continued to develop and manage our Investor Relations strategy.
Dr. McRobbie has continued to lead the development and commercialization of new products in both Performance Chemicals and Fuel Specialties. In particular, he has spearheaded the development of a new product strategy for key market segments in Performance Chemicals, including the identification of new technologies and applications. He has also led the design, build and commissioning of a new manufacturing facility for our Oilfield Specialties business and delivered this key strategic initiative in a very tight timescale. He also initiated a number of major joint research projects with a number of key strategic commercial partners.
| NEO | One-Off Discretionary Payment | |
Mr. Patrick S. Williams President and Chief Executive Officer | $500,000 | |
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | $96,660 | |
Dr. Philip J. Boon Executive Vice President and Chief Operating Officer | $100,526 | |
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | $73,462 | |
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer | $64,440 |
Long-Term IncentivesIncentive Plans
The Compensation Committee believes that equity basedequity-based long-term incentive awards are an important element of the overall compensation for the Corporation’sCompany’s Executive Officers. They are designed to giveprovide a focus on achievement of long-term performance goals that help create long-term value for stockholders, act as long-term retention incentives for executives and, through the ownership of Common Stock of the Corporation,Company, encourage long-term strategic decision-making that is aligned with the interests of stockholders.
Long-Term Incentive PlansCompany Stock Option Plan and Performance Related Stock Option Plan
The Corporation operatedCompany offered two equity-based incentive plans in which the NEOs received awards in 2018,prior to 2019, the CSOP and the PRSOP both of which provided for(together, the “Prior Plans”). The Prior Plans offered options exercisable for common stock as well asboth Common Stock and stock equivalent units
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(“SEUs”), which are payable in cash based on stock price. The terms and features of the CSOP and PRSOP are described below.
The CSOP and the PRSOP bothBoth plans expired in May 2018 and no further options or SEUs were granted under these plans after that date. There are options and SEUs granted under these plansthe Prior Plans that remain outstanding.
The key features of the Prior Plans are summarized below:
| CSOP and PRSOP Key Features | ||||||
| CSOP | PRSOP | |||||
| Options | SEUs | Options | SEUs | |||
| Granted at market price | Granted at market price | Granted at zero cost | Granted at zero cost | |||
Exercisable for Common Stock | Redeemable for cash based on stock appreciation | Exercisable for Common Stock | Redeemable for cash based on stock appreciation | |||
| No performance criteria | No performance criteria | Specified Performance criteria | Specified Performance criteria | |||
| 3-year vesting | 3-year vesting | Normally 3-year vesting | Normally 3-year vesting | |||
| 10-year term | 10-year term | 10-year term | 10-year term | |||
Immediate vesting upon change in control | Immediate vesting upon change in control | Immediate vesting upon change in control | Immediate vesting upon change in control | |||
As previously disclosed in November 2020, the Compensation Committee approved a modification to the performance period of the Company’s 2018 grants of options and SEUs in response to the effects of the COVID-19 pandemic and other factors negatively impacting the Company’s industry, and in order to help retain and motivate the Executive Officers to achieve the performance targets in coming years as described below. Due to the impact of the pandemic, the performance goals set in 2018 for the performance period from 2018 through 2020 were not expected to be able to be achieved due to circumstances outside management’s control. Under the rules of the Prior Plans, when events have happened which cause the existing performance goals to have become unfair or impractical, the Compensation Committee can use discretion to modify goals in a way that would be no more or less difficult to achieve than when the goals were originally created. The Compensation Committee determined that targets extended through 2022 would be no more or less difficult to achieve than the original goals set to end in 2020. Additionally, the Compensation Committee considered its use of discretion in this case to be consistent with the intent of the Prior Plans to align the interests of the Executive Officers with stockholders given that the options and SEUs will ultimately only vest if such performance goals are satisfied, which the Compensation Committee feels maintains strong focus on performance. If performance targets are not met, then the options and SEUs will lapse.
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As amended, the goals for the options and SEUs granted in 2018 remain based on (i) relative performance of total stockholder return versus the Russell 2000 index, measured comparing the average stock price during the last quarter of 2022 to the average stock price over the last six months of 2017, (ii) the growth in sales revenue for the Company comparing 2022 sales revenue to 2018, excluding the Company’s Octane Additives business unit, and (iii) the growth in earnings per share comparing 2022 earnings per share to 2018 earnings per share, excluding the Octane Additives business unit. Total vesting is based on the following formula:
The performance components are determined by the following levels of growth, which must be achieved before awards vest:
| Relative performance of TSR vs. Russell 2000 index from 2018-2022 | Proportion of the 35% allocated to TSR vesting | |
110%
| 100%
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100%
| 90%
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90%
| 80%
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80%
| 70%
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70%
| 60%
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Less than 70%
| 0%
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| Growth in Revenue excluding Octane Additives in 2022 vs. 2018 budget | Proportion of the 30% allocated to growth in Revenue vesting | |
Total growth vs. 2018 budget 8% | 100% | |
Total growth vs. 2018 budget 6% | 60% | |
Total growth vs. 2018 budget 4% | 20% | |
Less than 4% | 0 (nil) | |
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| Growth in Earnings per Share (EPS) excluding Octane Additives in 2022 vs. 2018 budget | Proportion of 35% allocated to growth in EPS vesting | |
Total growth vs. 2018 budget 3% | 100% | |
Total growth vs. 2018 budget 2% | 60% | |
Total growth vs. 2018 budget 1% | 20% | |
Less than 1% | 0 (nil) | |
Awards vest on a straight-line basis between each threshold. For example, a total growth in EPS of 2.5% versus the 2018 budget would result in 80% of the options vesting. Other than the changes in the performance period described above, the 2018 options remain subject to all applicable terms of the Prior Plans.
Omnibus Plan
At the 2018 Annual Meeting of Stockholders, the stockholders approved a new equity-based incentive plan, the Innospec Inc. 2018 Omnibus Long-Term Incentive Plan (“Omnibus Plan”).Plan. The Omnibus Plan provides for the grant ofnon-qualified and incentive stock options, full value awards and cash incentive awards. NoFull value awards, stock options and cash incentive awards were madegranted under the Omnibus Plan to the NEOs in 2020.
Following are the key features of this plan:
Omnibus Plan Key Features | ||||||
Stock Awards | Cash Incentive Awards | |||||
| Options | Full Value | Market Priced | Full Value | |||
| Granted at market price | Granted at zero cost | Granted at market price | Granted at zero cost | |||
| Exercisable for Common Stock | Grant of Common Stock | Redeemable for cash based on stock appreciation | Redeemable for cash based on stock appreciation | |||
| No performance criteria | Specified performance criteria | No performance criteria | Specified performance criteria | |||
| Minimum 1-year vesting | Minimum 1-year vesting | Minimum 1-year vesting | Minimum 1-year vesting | |||
| Immediate vesting upon change in control | Immediate vesting upon change in control | Immediate vesting upon change in control | Immediate vesting upon change in control | |||
Options granted under the Omnibus Plan to any participant normally do not become exercisable or vested prior to the earlier to occur of (i) the first anniversary of the NEOsdate on which it is granted and (ii) the participant’s
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termination date by reason of death or disability. In the event the participant’s termination date occurs for any reason other than death, disability, retirement or an involuntary termination without cause, any unvested options shall be forfeited, and in 2018. Awards werethe event the participant’s termination date occurs by reason of death, disability, retirement or an involuntary termination without cause, unvested options will lapse unless the Compensation Committee determines otherwise in its sole discretion.
Full value awards granted under the Omnibus Plan in 2019.
Company Stock Option Plan (“CSOP”)
Undernormally require the CSOP, options were granted at market value and become exercisable after three years, with all options vesting at the endachievement of the three-year period. All options have aten-year term. Options were granted
within twenty days after the public announcement of the Corporation’s annual financial results or similar information. Except in certain circumstances, participants must remain in employment with the Corporationspecified performance criteria in order to be able to exercise their options. The exceptions to this include death, injury,ill-health or disability, redundancy and the transfervest. When vesting is conditional on achievement of the part of the business within which the option holder works. In these cases, under the rules of the CSOP, options vest and the holder has a twelve-month period within which to exercise the options.
In the event of a change of control of the Corporation, under the rules of the CSOP, all options become immediately exercisable.
Performance Related Stock Option Plan (“PRSOP”)
Under the PRSOP, options were granted at no cost and become exercisable normally after three years, provided that specifiedset performance criteria, are achieved. All options have aten-year term. However, if an option was granted to a participant who is, or would otherwise be, subject to Section 409A of the Internal Revenue Code, with an exercise price less than the fair market value of the shares on the date of grant, it must be exercised (if at all) no later than March 15 of the calendar year immediately following the calendar year in which it is first capable of exercise under the PRSOP. The performancesuch criteria that are set are designed to be “stretch” targets, which focus on delivery of high performance and enhancing stockholder value, while recognizing the economic and business challenges the CorporationCompany faces. The performance criteria wereare regularly reviewed to ensure thatso they remainedremain relevant and stretching. Vesting of a full value award may also be conditional on the participant’s completion of a specified period of service with the Company. All full value awards granted under the Omnibus Plan to any participant are subject to the same minimum vesting requirements described above for options, regardless of whether they are conditional on specified performance criteria and/or completion of a specified period of service. Upon vesting, shares subject to full value awards are transferred to the participant’s nominated brokerage account. Under the Omnibus Plan rules, except in certain circumstances, if a participant ceases to be employed with the Company, all unvested full value awards are forfeited. If the participant ceases employment by reason of death, disability, retirement or involuntary termination without cause, all unvested full value awards are forfeited unless the Compensation Committee determines otherwise, in their absolute discretion, in which case all awards made within 12 months of the termination date are forfeited and up to 100% of full value awards made more than 12 months prior to the termination date will become vested and participants have a 12-month period to exercise any vested options.
Cash incentive awards granted in 2020 were made in the form of units. The value of each award once vested will be equal to the number of units multiplied by the closing stock price of the Company on the date it is exchanged for cash. The Compensation Committee determines the grant date to be used in advance and the stock price used is typically the closing stock price at the end of the day prior to the agreed grant date. Cash incentive awards are subject to the same minimum vesting requirements described above for options and full value awards and are treated in the same way as options and full value awards if a participant ceases to be employed with the Company.
The criteria for full value and cash incentive awards made in 20182020 under the Omnibus Plan, where vesting is conditional on achievement of specific performance measures, are based on relative performance of total stockholder return versus the Russell 2000 index, measured over a three-year period starting with the financial year of the date of grant, the growth in sales revenue, for the Corporation, excluding the Octane Additives business, for the Company and the growth in earnings per share, excluding the Octane Additives business. The Octane Additives business is a declining legacy business and at the time of grant had one remaining customer that was transitioning away from this product. As a result, the Compensation Committee determined that, given the expected continued decline inend of this business, it is appropriate to exclude it from the Octane Additives business, theseperformance targets for long term incentive plans, and that the performance measures wouldset provide the appropriate focus on the continued growth of the CorporationCompany together with delivering stockholder value. The Company announced in August 2020 that there would be no further orders for the Octane Additives business and that this business had reached its conclusion. Total vesting for the 2020 awards is based on the following formula:
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The performance components are determined by the following levels of growth, which must be achieved before awards vest:
Relative performance of TSR vs. Russell
| Proportion of the 35% allocated to TSR
| |||
Relative performance of Total Shareholder Return (TSR) vs. Russell 2000 index | Proportion of the 35% allocated to TSR vesting | |||
110% | 100% | 100%
| ||
100% | 90% | 90%
| ||
90% | 80% | 80%
| ||
80% | 70% | 70%
| ||
70% | 60% | 60%
| ||
Less than 70% | 0 (nil) | 0%
| ||
Growth in Revenue excluding Octane | Proportion of the 30% allocated to | |
Total growth vs. 2020 budget 5% | 100% | |
Total growth vs. 2020 budget 3% | 60% | |
Total growth vs. 2020 budget 2% | 20% | |
Less than 2% | 0 (nil) | |
| ||
| ||
| ||
| ||
| ||
Growth in Earnings per Share (EPS) Octane Additives in 2022 vs. | Proportion of the 35% allocated to | |
Total growth vs. | 100% | |
Total growth vs. | 60% | |
Total growth vs. | 20% | |
Less than | 0 (nil) | |
|
The grants were issued on a date set by the Compensation Committee each year. This was usually after the public announcement of the annual financial results. The Compensation Committee determined the grant date to be used in advance and the stock price used was typically the closing stock price at the end of the day prior to the agreed grant date.
If participants cease to be employed with the Corporation prior to the end of the vesting period, awards will lapse unless the Compensation Committee determines otherwise.
In the event of a change of control of the Corporation, under the rules of the PRSOP, all options become immediately exercisable.
Stock Equivalent Units (“SEUs”)
Equity based awards, payable in cash, were made in the form of SEUs. SEUs were granted separately under either or both of the CSOP and PRSOP. The SEUs may be exercised separately from options that have been granted under the corresponding plan and such SEU exercise has no impact on those options. Two types of SEU awards have been made under these plans.
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The performance criteria set in any one year were normally used for both SEU awards and any stock option awards under the PRSOP.
The value of the SEU once vested will be equal to the closing stock price of the Corporation on the date it is exchanged for cash. The grants of SEUs are issued on a date set by the Compensation Committee each year. This is usually after the public announcement of the annual financial results. The Compensation Committee determines the grant date to be used in advance and the stock price used is typically the closing stock price at the end of the day prior to the agreed grant date.
If participants cease to be employed with the Corporation prior to the end of the vesting period, the SEUs will lapse unless the Compensation Committee determines otherwise.
The SEUsfull value awards and options, together with the optionscash incentive awards, granted under the CSOP and PRSOPOmnibus Plan are intended to deliver an overall long-term incentive award in line with the grant policy as detailed below.
Grant Policy
In setting the policy for awards granted under the CSOP and PRSOP,Omnibus Plan, the Compensation Committee considered market median practice in both the U.S. and the U.K., given the number of executives who are based in the U.K. The grant policy provides for target amounts as follows:
Grants of CSOPs and SEUs at market price as % of base salary | Grants of PRSOPs and zero priced SEUs as % of base salary | |||||||||||||||
Grants of stock options and cash
| Grants of full value awards and
| |||||||||||||||
Chief Executive Officer | 30 | % | 220 | % | 30%
| 220%
| ||||||||||
Executive Officers | 20 | % | 90 | % | 20%
| 90%
| ||||||||||
The Compensation Committee determined the actual levels of grant utilizing the following matrices taking account of personal performance where:
Rating 1 | = | Outstanding performance | - | 150% of policy is granted | ||||||||
Rating 2 | = | Exceeding expectations | - | 125% of policy is granted | ||||||||
Rating 3 | = | Good performance | - | 100% of policy is granted | ||||||||
Rating 4 or 5 | = | Below Expectations | - | No grant is made |
The personal rating impacts the amount of actual grant awarded as follows:
| Chief Executive Officer | Chief Executive Officer | Executive Officers | Chief Executive Officer | Executive Officers | ||||||||||||||||||||
| Performance rating | Grants of CSOPs and market price SEUs as % of base salary | Grants of PRSOPs and zero priced SEUs as % of base salary | Performance rating | Grants of CSOPs and market price SEUs as % of base salary | Grants of PRSOPs and zero priced SEUs as % of base salary | Grants of stock options and cash incentive awards at market price as % of base salary | Grants of full value awards and full value cash incentive awards as % of base salary | Performance rating | Grants of stock options and cash incentive awards at market price as % of base salary | Grants of full value awards and full value cash incentive awards as % of base salary | ||||||||||||||
1 | 45 | 330 | 1 | 30 | 135 | 45 | 330 | 1 | 30 | 135 | ||||||||||||||
2 | 37.5 | 275 | 2 | 25 | 112.5 | 37.5 | 275 | 2 | 25 | 112.5 | ||||||||||||||
3 | 30 | 220 | 3 | 20 | 90 | 30 | 220 | 3 | 20 | 90 | ||||||||||||||
4 | 0 | 0 | 4 | 0 | 0 | 0 | 0 | 4 | 0 | 0 | ||||||||||||||
5 | 0 | 0 | 5 | 0 | 0 | 0 | 0 | 5 | 0 | 0 | ||||||||||||||
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The performance of the Executive Officers, other than the CEO, is assessed by the CEO and the Compensation Committee. The CEO recommends a rating to the Compensation Committee. The Compensation Committee reviews these and separately assesses the performance of the CEO and makes a final recommendation on performance ratings for all Executive Officers to the full Board for approval. This provides for a rigorous performance-related grant policy, in addition to the performance elements of the grants themselves.
In 2018,2020, Mr. Williams was rated as 1“1” for his 20172019 performance and as such was eligible for long-term incentive awards at 150% of the policy levels for this role. In the case of the other NEOs, based on the assessment of their individual performance as approved by the Compensation Committee, Dr. McRobbie and Mr. Cleminson were also eligible for awards at 150% of the policy level, and Dr. Boon Dr. McRobbie and Mr. Watt were eligible for awards at 150%125% of the policy level.
As previously disclosed, from 2012,In line with the Compensation Committee’s policy, 75% of the awards due under the policy will be made in the form of full value awards to be granted at zero cost and option grants under the CSOP and PRSOP plans,Omnibus Plan, with the remaining 25% made in the form of SEUs. cash incentive awards.
The Compensation Committee have alsohas determined that in order to help manage option utilization rates and burn rates, the level of full value awards and option grants in any one year should be restricted to a burn rate of no more than 1% of the Corporation’sCompany’s stock outstanding with the balance of long-term incentives provided for undergranted as cash incentive awards that do not impact the policy bridged using SEUs.burn rate. In 2018,2020, the level of full value awards and option grants under the policy was less than 1% of the Corporation’sCompany’s stock outstanding.
Exceptional Stock Option Awards
The Compensation Committee also had the discretion to grant options or SEUs under the CSOP or PRSOPOmnibus Plan outside of the stated policy to reflect extraordinary corporate performance. In addition, the Compensation Committee had the discretion to grant full value awards, options or SEUscash incentive awards under the CSOP or PRSOPOmnibus Plan outside of the standard policy levels and annual grant process for retention or recruitment purposes. In 2018,2020, no such awards were made to any of the NEOs.
Additional Long-Term Incentive Plan
The acquisition of the Huntsman European Differentiated Surfactants (“EDS”) business at the end of 2016 represented a major step in the development of the Corporation.Company. At the same time, the Board recognized the importance of both robust succession planning for the executive officersExecutive Officers over the next3-5 years and retaining the current team during this period. As a result, the Compensation Committee recommended an additional long-term incentive plan (“Additional LTIP”) designed to focus key executives on delivering a return on the investment on the acquisition by its successful integration and on the sustained growth of the larger business and, for the senior executives, delivering on the agreed succession plans for the key roles. The new planAdditional LTIP was approved by the Board in February 2018. The plan covers a three-year period that commenced in January 2018 and will endended on December 31, 2020. Under this plan, a cash incentive award will beis payable to eligible participants based on achievement of specified performance measures. There are two levels to the plan, Level A and Level B. The performance measures and weightings for Level A participants are:
| Ø | 40% weighting on the achievement of a stretch Earnings per Share (“EPS”) target for 2020, excluding the Octane Additives business, which would deliver an increase in EPS of over 40%, excluding the Octane Additives business, versus the 2017 achieved level. |
| Ø | 40% weighting on delivery of the earnings before tax in the acquisition business plan for the EDS acquisition. |
| Ø | 20% weighting on the delivery of the agreed succession plans and associated actions for key roles, as approved by the Board, by end 2020. |
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The performance measures for Level B participants are the same as for Level A participants excluding the measure relating to delivery of succession plans for key roles. In the case of Level B participants, there are three alternative weighting options for the performance measure as follows:
| Performance Measure | Weightings – Option 1 | Weightings – Option 2 | Weightings – Option 3 | Weightings- Option 1 | Weightings- Option 2 | Weightings- Option 3 | |||||||||||||||
Achievement of stretch EPS target | 70% | 50% | 30% | 70% | 50% | 30% | |||||||||||||||
| Achievement of earnings before tax target in EDS acquisition business plan | 30% | 50% | 70% | 30% | 50% | 70% | |||||||||||||||
The weighting option for a Level B participant is determined based on their role and responsibilities.
The following levels of each performance measure must be achieved before awards may vest:
% of Stretch EPS Target, excluding TEL for 2020 | % of potential pay-out for EPS measure | |||
| % of Stretch EPS Target excluding TEL for 2020 | % of potential pay-out for EPS measure | |||
100% | 100% | 100% | ||
95% | 80% | 80% | ||
90% | 60% | 60% | ||
Below 90% | 0 | 0 | ||
| % of target EBIT for the EDS acquisitions achieved in 2020 | % of potential pay-out for acquisition measure | % of potential pay-out for acquisition measure | ||
110% | 100% | 100% | ||
100% | 80% | 80% | ||
90% | 60% | 60% | ||
Below 90% | 0 | 0 | ||
Achievement of agreed succession plan measures – | % of Potential Pay-out for Succession Plan Measure | |
20 | 100% | |
19 | 95% | |
18 | 90% | |
17 | 85% | |
16 | 80% | |
15 | 75% | |
Less than 15 | 0 | |
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| Achievement of agreed succession plan measures as assessed by Compensation Committee and scored out of 20 | % of Potential Pay-out for Succession Plan Measure | |
20 | 100% | |
19 | 95% | |
18 | 90% | |
17 | 85% | |
16 | 80% | |
15 | 75% | |
Less than 15 | 0 |
Anypay-out for the earnings before tax measure for the EDS acquisition is subject to an overall “floor” set at 75% of the cumulative target earnings before tax over the three years of the planAdditional LTIP i.e. 2018, 2019 and 2020. If the cumulative target earnings before tax is less than this floor, then nopay-out will be made for this element, regardless of the actual earnings before tax achieved for 2020.
The maximum aggregate amount payable under the planAdditional LTIP during the three-year life of the plan is $15 million. The amount was set at a level which would be an incentive for participants and, by incorporating EPS as a measure, would deliver value to stockholders. Participants have to be still in employment with the CorporationCompany at the end of the period in the same or similar role and must have achieved a minimum of a 3 (Good Performer) performance rating in each year of the plan in order to be eligible to receive any payment under this plan. In exceptional circumstances, the Compensation Committee can, at its absolute discretion, award some or all of any potential payment to a participant who leaves the CorporationCompany prior to the end of the performance period if they leave due to injury, disability,ill-health or death. Eligibility for participation in the plan was at the discretion of the Compensation Committee subject to approval by the Board. Mr. Williams, Mr. Cleminson, Dr. Boon, Dr. McRobbie and Mr. Watt are all participating in the PlanAdditional LTIP as Level A participants.
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There are six categories of participation for Level A participants and five categories for Level B participants. The maximum incentive award for each participant at each category is as follows:
| Level A | Maximum Incentive Award Payable | Total number of participants at each level | Maximum Incentive Award Payable | Total number of participants at each level | ||||||
Category 1 | $4,175,000 | 1 | $4,175,000 | 1 | ||||||
Category 2 | $1,350,000 | 1 | $1,350,000 | 1 | ||||||
Category 3 | $1,250,000 | 1 | $1,250,000 | 1 | ||||||
Category 4 | $800,000 | 2 | $800,000 | 2 | ||||||
Category 5 | $750,000 | 1 | $750,000 | 1 | ||||||
Category 6 | $555,000 | 2 | $555,000 | 2 |
| Level B | Maximum Incentive Award Payable | Total number of participants at each level | Maximum Incentive Award Payable | Total number of participants at each level | ||||||
Category 1 | $500,000 | 3 | $500,000 | 3 | ||||||
Category 2 | $300,000 | 2 | $300,000 | 2 | ||||||
Category 3 | $275,000 | 3 | $275,000 | 3 | ||||||
Category 4 | $250,000 | 1 | $250,000 | 1 | ||||||
Category 5 | $200,000 | 8 | $200,000 | 8 |
In the case of the NEOs, the Compensation Committee determined that Mr. Williams was eligible to participate in the PlanAdditional LTIP at LevelA-Category 1, Dr. Boon was eligible to participate in the planAdditional LTIP at LevelA-Category 2, Mr. Cleminson at LevelA-Category 3, Mr. Watt at LevelA-Category 4 and Dr. McRobbie at LevelA-Category 66.
In the event of a change of control of the Corporation,Company, the targets for the measures in the additional long-term incentive planAdditional LTIP will be deemed to have been fully achieved and participants will receive the maximum incentive award payable as detailed above.
A provision exists which allows for potential claw-back of any payment made under the additional long-term incentive planAdditional LTIP to any participant if, within 2 years of any payment made, it is identified that the audited annual financial results need to be materially restated. The additional long-term incentive planAdditional LTIP also provides for the potential claw-back of any payment made under such plan to an individual participant if, within 2 years of any payment, the actions of such participant bring the CorporationCompany into disrepute, as determined by the Compensation Committee, regardless of whether the participant is still employed by the CorporationCompany or not in that period.
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The Additional LTIP matured on December 31, 2020. The outcome for Level A participants, which includes the NEOs, for each Performance Measure is summarized below:
Performance Measure | Weightings | Achievement as at end 2020 | |||||
Earnings Per Share (“EPS”) target for 2020, excluding the Octane Additives business, which delivers an increase in EPS of over 40% for the Company, excluding the Octane Additives business, versus the 2017 achieved level | 40% | 66% of target set | |||||
Earnings before tax target for 2020 as set out in the acquisition business plan approved by the Board for the EDS acquisition | 40% | 137% of target set | |||||
Delivery of the agreed succession plans and associated actions for key roles, as approved by the Board | 20% | Score of 20 out of 20 as assessed by Compensation Committee | |||||
Based on the performanceoutcome of the differentPerformance Measures shown above, no participant in the Additional LTIP qualified for a pay-out against the EPS measure and all participants in the Additional LTIP qualified for a pay-out at 100% of target for the EDS EBIT measure and for the succession plan measure according to the weightings assigned to each participant. For the NEOs, performance measure weightings for achievement of the EPS, EDS EBIT and succession plan score measures sincewere 40%, 40% and 20% respectively. Based on the plan was introduced in January 2018,results, the Board approved a total paymentPlan pay-out of $11,763,350 would be due if payments were due under this plan on December 31 2018. The absolute amount of any payment will however not be determined until$7.937 million at the February 2021 at which timemeeting. In the case of the CEO and NEOs, this gave a total pay-out of 60% of the maximum potential payment. The approved payment may be zero ifamounts for each of the performance measures does not achieveNEOs is detailed below and in the threshold levels above.Summary Compensation table under the “Non-Equity Incentive Compensation” column:
| NEO | Award payable as at end 2020 | |
Mr. Patrick S. Williams President and Chief Executive Officer | $2,505,000 | |
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | $750,000 | |
Dr. Philip J. Boon Executive Vice President and Chief Operating Officer | $810,000 | |
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | $480,000 | |
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer | $333,000 | |
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Other Pay Programs and Policies
Stock Ownership Guidelines
To further align stockholder and Executive Officer interests, the CorporationCompany has adopted a minimum stockholding requirement for the Executive Officers. The CEO is required to acquire and hold stock valued at the equivalent of four times his base salary and all other Executive Officers are required to acquire and hold stock valued at the equivalent of two times their base salary. Only stock which is registered in the Executive Officer’s name or held beneficially in “street name” on behalf of such Executive Officer are taken into accountis considered for these purposes. Unvested equity awards are not taken into account.considered. At the end of 2018,2020, the stockholding of the CEO equated to 12.011.5 times hisyear-end salary using the average stock price during 20182020 of $72.84.
$78.25. The stockholding of each of the other NEOs was also greater than 200% of theiryear-end salary using the same average stock price for 2018.2020. The Compensation Committee determined that there should also be a similar minimum stockholding requirement for the NEDs. All NEDs are required to acquire and hold stock valued at the equivalent of two times their annual retainer. At the end of 2018,2020, the stockholding for all the NEDs, except Mr. PadfieldMs. Poccia and Mr. Landless,Ms. Arnold, was also greater than 200% of the annual retainer. The new levels of stockholding for NEDs and Executive Officers must be reached within five years of appointment or the introduction of this policy, whichever is later, and Mr. Padfield and Mr. LandlessMs. Poccia therefore have one and twohas three more years respectively,and Ms. Arnold five more years to reach the required level.
Nonqualified Deferred Compensation Plan
The Company offers a Nonqualified Deferred Compensation Plan (the “Deferred Plan”). The select group of highly compensated employees eligible for the Deferred Plan are designated by the Company in its sole discretion, subject to top hat requirements. Eligible participants are permitted to elect to defer up to 25% of their base salary and up to 100% of any performance-based compensation which is paid in cash. In 2020, Mr. Williams was the only NEO eligible to participate in the Deferred Plan, as the other NEOs are not based in the U.S.
The Company makes discretionary contributions in any given Deferred Plan year equal to the amount of Company contributions that would have otherwise been allocated to the participant under a qualified plan. In this case, such Company contributions are equal to the amount of the participant’s eligible profit-sharing contributions that exceeds IRS employee plus employer contribution limits under the qualified plan. Additionally, the Company has complete discretion to determine each year whether to make an additional annual contribution on behalf of some or all participants in the Deferred Plan. Other discretionary employer contribution factors may include, but are not limited to, achievement of company financial performance objectives. In 2021, Mr. Williams was credited with a discretionary Company contribution of $12,109, which accrued during fiscal year 2020.
The amounts deferred are credited to accounts hypothetically invested in investments selected by the participant that mirror the investment alternatives available in the Company’s qualified retirement savings plans subject to IRC Section 401(a). Each participant in the Deferred Plan is 100% vested in that portion of his or her account that is attributable to employee elective deferrals. For participants receiving an employer discretionary contribution, the “3 Year Cliff” vesting schedule from the date of contribution applies.
Distribution of a participant’s vested accounts for participants who have reached Retirement (i.e. age 50 with a minimum of five years of service) will begin within 60 days of the participant’s separation from service, pursuant to the form of payment selected (lump-sum or instalments over a period not to exceed 10 years) on properly executed election forms. Vested account benefits will be paid in one lump sum to the participant’s beneficiary in the event of the participant’s death in service. A participant’s vested account benefits will be paid to the participant in one lump sum in the event of separation from service that is not Retirement. The Deferred Plan is subject to the rules of IRC Section 409A, which restricts the timing of distributions made to specified employees. As a result, commencement of payments to any eligible NEO participating in the Deferred Plan must be delayed for at least six months after separation from service.
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Other Benefits and Perquisites
TheseOther benefits are provided as appropriate and are set by reference toin line with median market practice. They generally consist ofWe provide our NEOs with pension arrangements, life, disability and medical insurance coverage consistent with that provided to all full-time employees in the relevant geographic area. In addition, we provide a company car or car allowance life, disability and medical cover. There are nonon-qualified deferred compensation plans.to our NEOs in some regions, consistent with that provided to all senior employees in that region. Full details are set out in the table “All Other Compensation”, following the “Summary Compensation Table”.Table.
Post-termination Compensation
Post-termination arrangements vary depending on the nature of the termination event and are designed to be in accordance with U.S. and U.K. market norms, depending on where the executive is based. Full details are set out in the footnotes to the “Post Employment Payments” table.
Employment Agreements
Each of the NEOs has a rolling twelve-month12-month employment agreement with the Corporation.Company. Under these agreements, the CorporationCompany can terminate the agreement by giving one year’s notice to the NEO. In the case of Mr. Williams, he can terminate the agreement by giving the CorporationCompany one year’s notice, while the other NEOs are required to give the CorporationCompany six months’ notice if they wish to terminate the agreement. The employment agreement for each of the NEOs also includes a “Change ofin Control” clause. This specifies that, in the event of a change in control of the Corporation,Company, if the CorporationCompany terminates the NEO within twelve12 months of the change ofin control, or if the NEO terminates his employment within twelve12 months for good reason, the NEO will be entitled to a compensation payment. If the CorporationCompany terminates the employment of the NEO during this period, the payment is calculated as twenty-four24 months’ compensation defined as base salary, bonus at target and any car allowance from the date of notice of termination. If the NEO terminates his employment for good reason during this period, the payment is calculated as twenty-four24 months’ compensation, defined as above, from the date of the change ofin control. In addition, under the rules of the stock option plans, all options would vest on the change ofin control. The NEOs are treated in the same way as other employees who hold options under the plans. Change ofA change in control is deemed to have occurred if a person or group becomes the beneficial owner of 30% or more of the combined voting power of the Corporation;Company; there is a consolidation or merger and the CorporationCompany is not the surviving Corporation;company; the stockholders of the CorporationCompany approve plans or proposals for a liquidation or dissolution of the CorporationCompany or, if following a cash offer or merger, the members of the Board cease to constitute a majority of the Board. In addition, under their employment agreement, each of the NEOs, including the CEO and the CFO, is subject to a twelve month12-month non-solicitation period, with respect to customers and employees, and a twelve month12-month non-compete period, from the date their employment with the CorporationCompany ends.
Indemnification Agreements
The CorporationCompany has entered into indemnification agreements with each of the directorsDirectors and NEOs in furtherance of the indemnification provisions contained in the Corporation’sCompany’s Certificate of Incorporation and Bylaws, which indemnify the directors and officers of the CorporationCompany to the fullest extent authorized or permitted by law. The indemnification agreements provide for indemnification arising out of specified indemnifiable events, such as events relating to the fact that the indemnitee is or was a director or officer or
agent of the CorporationCompany or any subsidiary of the CorporationCompany or is or was a director, officer member, manager, trustee or agent of another entity at the request of the Corporation,Company, including any action or inaction by the indemnitee in such a capacity. The indemnification agreements provide for advancement of expenses prior to final adjudication of the claim. To the extent that indemnification is unavailable, the agreements provide for contribution. The indemnification agreements set forth procedures relating to indemnification claims. The agreements also provide for maintenance of directors’ and officers’ liability insurance.
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All Employee Sharesave Plan
The CorporationCompany provides a broad based employee stock purchase plan, which gives eligible employees the right to acquire Common Stock through payroll deductions over apre-determined period at a purchase price which reflects a 15% discount (20% for participants outside of the U.S.) to the market price of our stock.Common Stock. No participant may purchase more than $25,000 in value of Common StocksStock under this plan in any calendar year. All of our NEOs participated in the Sharesave Plan in 2018.2020.
U.S. Tax Matters
Internal Revenue Code (“IRC”) Section 162(m) limits the deductibility of annual compensation in excess of $1 million paid to “covered employees” (as defined by the IRC) of the Corporation.Company. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which, among other things, eliminated the ability of companies to rely on the performance-based compensation exception to such deduction limitation under Section 162(m) and expanded the definition of covered employee. The changes to IRC Section 162(m) became effective for taxable years beginning after December 31, 2017. The Act includes a transition rule so that these changes do not apply to compensation paid pursuant to a “binding written contract” that was in effect on November 2, 2017 and that was not materially modified on or after such date.
As a result, beginning in 2018, the Corporation is no longer able to take a deduction for any compensation paid to our NEOs in excess of $1 million unless the compensation originally qualified for the “performance-based” compensation exception and qualifies for transition relief applicable to certain arrangements in place on November 2, 2017. Despite the Compensation Committee’s efforts to structure the executive compensation in a manner intended to be exempt from Section 162(m), and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the guidance issued thereunder as amended by the Act, the application of the transition rule may be of limited future value with respect to the preservation of the deduction of compensation payable to covered employees in excess of the Section 162(m) limits.
The Act also expanded the definition of covered employee. For 2017, our covered employees included the CEO and other NEOs (but not the CFO) who were Executive Officers as of the last day of our fiscal year. For 2018 and after, our covered employees generally include anyone who (i) was the CEO or CFO at any time during the year, (ii) was one of the other NEOs who was an Executive Officer as of the last day of the fiscal year, and (iii) was a covered employee for any previous year after 2016.
The changes to IRC Section 162(m) became effective for taxable years beginning after December 31, 2017. As a result, beginning in 2018, the Company is no longer able to take a deduction for any compensation paid to our covered employees in excess of $1 million unless the compensation originally qualified for the “performance-based” compensation exception and qualifies for transition relief applicable to certain arrangements in place on November 2, 2017.
As with prior years, although the Compensation Committee will consider deductibility under IRC Section 162(m) with respect to the compensation arrangements for Executive Officers, deductibility will not be the sole factor used in determining appropriate levels or methods of compensation. Since our compensation objectives may not always be consistent with the requirements for full deductibility, we and our subsidiaries may enter into or modify compensation arrangements under which payments would not be deductible under Section 162(m) if the Compensation Committee believes that it is in the best interest of the CorporationCompany and its stockholders.
In addition, IRC Section 409A imposes restrictions on nonqualified deferred compensation plans. The deferred compensation plans maintained by the CorporationCompany are structured to either be exempt from the requirements of IRC Section 409A or, if not exempt, to satisfy the requirements of IRC Section 409A, and the
Corporation Company has reviewed and, where appropriate, has amended each of its deferred compensation plans to meet the requirements of IRC Section 409A.
Impact of Accounting Treatment
The CorporationCompany accounts for employee stock options and its employee Sharesave plan in accordance with generally accepted accounting principles. For further information on stock-based compensation, see Note 1718 to our consolidated financial statements included in our Annual Report on Form10-K for the year ended December 31, 2018.2020.
The Compensation Committee assists the Board of Directors in its oversight of the Corporation’sCompany’s compensation process. The Compensation Committee’s responsibilities are more fully described in its charter, which is accessible on Innospec’s website atwww.innospecinc.com/corporate-governance.
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The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on that review and those discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Corporation’s 2019Company’s 2021 Proxy Statement and incorporated by reference into the Corporation’sCompany’s Annual Report on Form10-K for the fiscal year ended December 31, 2018.2020. This report is provided by the following independent directors, who comprise the Compensation Committee.
No portion of this Compensation Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (“Securities Act”) or the Securities Exchange Act of 1934, as amended (“Exchange Act”), through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that the CorporationCompany specifically incorporates this report, or a portion of it, by reference. In addition, this report shall not be deemed to be filed under the Securities Act or the Exchange Act.
THE COMPENSATION COMMITTEE
JOACHIM ROESER,LAWRENCE J. PADFIELD, Chair
MILTON C. BLACKMORE
LAWRENCE J. PADFIELD
SUMMARY COMPENSATION TABLE
| Name & Principal Position | Salary | Bonus | Stock Awards | Option Awards | Non Equity Incentive Compensation | Change in Pension fund value and other deferred benefits | All Other Compensation | Total | ||||||||||||||||||||||||
| (1) | (2) | (3) | (4) | (5) | (6) | |||||||||||||||||||||||||||
| Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||
Patrick S. Williams | 2018 | 1,089,028 | - | - | 2,836,652 | 1,394,366 | - | 93,222 | 5,413,268 | |||||||||||||||||||||||
President and Chief Executive Officer | 2017 | 1,026,462 | - | - | 4,491,214 | 1,738,800 | - | 98,655 | 7,355,131 | |||||||||||||||||||||||
| 2016 | 977,692 | 243,881 | - | 1,091,109 | 4,428,000 | - | 95,862 | 6,836,544 | ||||||||||||||||||||||||
Ian P. Cleminson | 2018 | 358,330 | - | - | 425,136 | 315,645 | - | 97,354 | 1,196,465 | |||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | 2017 | 330,844 | - | - | 545,255 | 386,324 | - | 91,617 | 1,354,040 | |||||||||||||||||||||||
| 2016 | 303,674 | 113,134 | - | 193,011 | 1,108,300 | - | 83,786 | 1,801,905 | ||||||||||||||||||||||||
Philip J. Boon | 2018 | 389,154 | - | - | 465,359 | 317,765 | - | 108,815 | 1,281,093 | |||||||||||||||||||||||
Executive Vice President, and Chief Operating Officer | 2017 | 362,132 | - | - | 584,094 | 305,782 | -136,618 | 103,159 | 1,218,549 | |||||||||||||||||||||||
| 2016 | 334,277 | 131,791 | - | 218,685 | 1,308,947 | 367,130 | 92,998 | 2,453,828 | ||||||||||||||||||||||||
Brian R. Watt | 2018 | 279,205 | - | - | 340,583 | 244,665 | - | 81,497 | 945,950 | |||||||||||||||||||||||
Senior Vice President, Corporate Development and Investor Relations | 2017 | 261,741 | - | - | 479,072 | 309,481 | - | 79,876 | 1,130,170 | |||||||||||||||||||||||
| 2016 | 242,719 | 63,731 | - | 185,123 | 712,403 | - | 70,868 | 1,274,844 | ||||||||||||||||||||||||
Ian M. McRobbie | 2018 | 253,205 | - | - | 312,620 | 221,363 | 875 | 81,154 | 869,217 | |||||||||||||||||||||||
Senior Vice President, Research and Technology | 2017 | 245,828 | - | - | 474,100 | 284,081 | -7,202 | 78,358 | 1,075,165 | |||||||||||||||||||||||
| 2016 | 238,856 | 53,731 | - | 153,045 | 707,819 | 152,120 | 68,537 | 1,374,108 | ||||||||||||||||||||||||
| Name & Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non Equity Incentive Compensation | Change in Pension fund value and other deferred benefits | All Other Compensation | Total | |||||||||||||||||||||||||||
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | ||||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||
Mr. Patrick S. Williams President and Chief Executive Officer | 2020 | 1,192,500 | 500,000 | 2,249,044 | 848,526 | 2,505,000 | - | 159,375 | 7,454,444 | |||||||||||||||||||||||||||
| 2019 | 1,125,000 | - | 2,322,870 | 908,841 | 1,611,563 | - | 111,013 | 6,079,287 | ||||||||||||||||||||||||||||
| 2018 | 1,089,028 | - | - | 2,836,652 | 1,394,366 | - | 93,222 | 5,413,268 | ||||||||||||||||||||||||||||
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | 2020 | 377,027 | 96,660 | 297,837 | 120,674 | 750,000 | - | 105,119 | 1,747,317 | |||||||||||||||||||||||||||
| 2019 | 359,905 | - | 262,480 | 112,295 | 345,657 | - | 101,043 | 1,181,380 | ||||||||||||||||||||||||||||
| 2018 | 345,386 | - | - | 425,136 | 304,243 | - | 93,837 | 1,168,602 | ||||||||||||||||||||||||||||
Dr. Philip J. Boon Executive Vice President, and Chief Operating Officer | 2020 | 402,319 | 100,526 | 269,159 | 109,033 | 810,000 | - | 116,682 | 1,807,719 | |||||||||||||||||||||||||||
| 2019 | 390,293 | - | 284,626 | 121,788 | 302,641 | - | 109,238 | 1,208,586 | ||||||||||||||||||||||||||||
| 2018 | 375,096 | - | - | 465,359 | 306,287 | - | 104,882 | 1,251,624 | ||||||||||||||||||||||||||||
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | 2020 | 287,568 | 73,461 | 192,400 | 77,952 | 480,000 | - | 86,656 | 1,198,037 | |||||||||||||||||||||||||||
| 2019 | 278,972 | - | 203,447 | 87,010 | 267,928 | - | 83,615 | 920,972 | ||||||||||||||||||||||||||||
| 2018 | 269,120 | - | - | 340,583 | 235,827 | - | 78,553 | 924,083 | ||||||||||||||||||||||||||||
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer | 2020 | 256,409 | 64,440 | - | 289,239 | 330,000 | 68,615 | 100,556 | 1,109,259 | |||||||||||||||||||||||||||
| 2019 | 249,338 | - | - | 315,377 | 238,899 | 112,548 | 80,846 | 997,008 | ||||||||||||||||||||||||||||
| 2018 | 244,058 | - | - | 312,620 | 213,367 | 844 | 78,223 | 849,112 | ||||||||||||||||||||||||||||
Footnotes to “Summary Compensation Table”:
| 1. | Mr. Williams is paid in U.S. dollars. All the other NEOs above are paid in GB Pounds Sterling. For the purposes of the “Summary Compensation Table”, a GB Pound Sterling to U.S. Dollar exchange rate of |
| 2. | As |
| 3. | The value of the |
| | 95 |
Black-Scholes model, with reference to the underlying stock price, |
| these grant date fair values refer to Note |
| 4. | The value of the option awards for all NEO’s listed above for 2020 and 2019 discloses the grant date fair value of options awarded under the Omnibus Plan and the grant date fair value of any cash incentive awards granted in lieu of stock option awards and full value awards as required by the terms of the grant. In the case of Dr. McRobbie, 100% of the award was in the form of cash incentive awards. The value of the option awards and cash incentive awards are determined using the number of options awarded and, for the cash incentive awards, the number of units awarded, and the grant date fair value for each option or unit made in the year. The grant date fair values on Company stock options and cash incentive awards are calculated in the same way as the full value awards above. The value of the option awards listed above for 2018 discloses the value of options awarded under the CSOP and PRSOP and the grant date fair value of any SEUs awarded in lieu of stock option awards as required by the terms of the grant. The value of the option awards and SEUs are determined in the same way as for the option awards and cash incentive awards granted under the Omnibus Plan, as detailed above. For each Executive Officer, the value of the |
| Name | Value of SEUs included under option awards | Proportion of value of SEUs relating to market price SEUs | Proportion of value of SEUs relating to zero price SEUs | Value of cash incentive awards | Proportion of value of cash incentive awards relating to those granted at market price | Proportion of value of cash incentive awards relating to those granted at zero cost | ||||||||||||
Mr. Patrick S. Williams | $ | 727,346 | 3.7 | % | 96.3 | % | $774,382
| 3.2%
| 96.8%
| |||||||||
Mr. Ian P. Cleminson | $ | 106,284 | 5.9 | % | 94.1 | % | $104,676
| 5.1%
| 94.9%
| |||||||||
Dr. Philip J. Boon | $ | 116,362 | 5.9 | % | 94.1 | % | $94,567
| 5.1%
| 94.9%
| |||||||||
Mr. Brian R. Watt | $ | 85,160 | 5.9 | % | 94.1 | % | $67,617
| 5.1%
| 94.9%
| |||||||||
Dr. Ian M. McRobbie | $ | 312,620 | 5.9 | % | 94.1 | % | $289,239
| 5.1%
| 94.9%
| |||||||||
TheNon-Equity Incentive Compensation for all Executive Officers listed above relates to incentive compensation earned for the stated year under the MICP and |
| Name | Incentive Compensation earned | Incentive Compensation earned in 2016 under the 2014 LTIP | ||||||
Mr. Patrick S. Williams | $ | 1,548,000 | $ | 2,880,000 | ||||
Mr. Ian P. Cleminson | $ | 328,300 | $ | 780,000 | ||||
Dr. Philip J. Boon | $ | 288,947 | $ | 1,020,000 | ||||
Mr. Brian R. Watt | $ | 262,403 | $ | 450,000 | ||||
Dr. Ian M. McRobbie | $ | 257,819 | $ | 450,000 | ||||
Dr. |
| | 96 |
| 7. | The amounts reflected under “All Other Compensation” for |
2020. |
ALL OTHER COMPENSATION
Car Allowance | Leased Car Costs | Pension Allowance | Pension Contribution | Healthcare | Insurances | Other | Total | |||||||||||||||||||||||||||||
| (1) | (1) | (2) | (3) | (4) | (4) | (5) | ||||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||
Mr. Patrick S. Williams | ||||||||||||||||||||||||||||||||||||
| President and Chief Executive Officer | 2018 | 0 | 0 | 0 | 55,000 | 28,434 | 1,245 | 8,543 | 93,222 | |||||||||||||||||||||||||||
Mr. Ian P. Cleminson | ||||||||||||||||||||||||||||||||||||
| Executive Vice Presiident and Chief Financial Officer | 2018 | 18,251 | 0 | 71,666 | 0 | 2,095 | 5,342 | 0 | 97,354 | |||||||||||||||||||||||||||
Dr. Philip J. Boon | ||||||||||||||||||||||||||||||||||||
| Executive Vice President, and Chief Operating Officer | 2018 | 18,251 | 0 | 77,831 | 0 | 2,095 | 7,524 | 3,114 | 108,815 | |||||||||||||||||||||||||||
Mr. Brian R. Watt | ||||||||||||||||||||||||||||||||||||
| Senior Vice President, Corporate Development and Investor Relations | 2018 | 0 | 17,904 | 55,841 | 0 | 2,095 | 5,657 | 0 | 81,497 | |||||||||||||||||||||||||||
Dr. Ian M. McRobbie | ||||||||||||||||||||||||||||||||||||
| Senior Vice President, Research and Technology | 2018 | 18,251 | 0 | 50,641 | 0 | 1,675 | 10,587 | 0 | 81,154 | |||||||||||||||||||||||||||
Car |
Leased |
Pension |
Retirement |
Healthcare |
Insurances |
Other |
Total | |||||||||||
| (1) | (1) | (2) | (3) | (4) | (4) | (5) | ||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||
Mr. Patrick S. Williams President and Chief Executive Officer | 2020 | 0 | 0 | 0 | 49,609 | 18,479 | 1,063 | 90,224 | 159,375 | |||||||||
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | 2020 | 17,592 | 0 | 75,405 | 0 | 2,060 | 10,062 | 0 | 105,119 | |||||||||
Dr. Philip J. Boon Executive Vice President, and Chief Operating Officer | 2020 | 17,592 | 0 | 80,463 | 0 | 2,060 | 13,345 | 3,222 | 116,682 | |||||||||
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | 2020 | 0 | 16,128 | 57,513 | 0 | 2,060 | 10,955 | 0 | 86,656 | |||||||||
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer | 2020 | 17,592 | 0 | 51,281 | 0 | 1,647 | 30,036 | 0 | 100,556 | |||||||||
Footnotes to “All Other Compensation” table:
| (1) | Executive Officers based in the U.K. are entitled to a leased company car or an allowance in lieu of a car. The allowance is set at £13,650 ($ |
| (2) | For U.K. based Executive Officers, where pensionable salary is subject to a cap, Executive Officers receive a salary supplement of 20% in lieu of pension for any salary above the |
| (3) | The Company provides a number of |
| | 97 |
was $37,500. The |
| (4) | The NEOs are eligible for healthcare insurance and life and disability insurance through programs which are available to substantively the majority of salaried |
| (5) | Mr. Williams and Dr. Boon receive payments of |
Employment Agreements
Each of the NEOs has a rolling twelve-month employment agreement with the Corporation.Company. Under these agreements, the CorporationCompany can terminate the agreement without cause by giving one year’s notice to the NEO. In the case of Mr. Williams, he can terminate the agreement by giving the CorporationCompany one year’s notice, while the other NEOs are required to give the CorporationCompany six months’ notice if they wish to terminate the agreement. The employment agreement for each of the NEOs also includes a “Change of Control” clause, which is described in more detail in the narrative following the “Post Employment Payments” table.
In addition, under the employment agreement, Mr. Williams is entitled to a target bonus under the MICP of 75%85% of his base salary, with a potential maximum MICP bonus of 172.5%195.5%. All other NEOs have a MICP target bonus of 50% with a potential maximum of 115% of base salary. Each NEO is also entitled to participate in long-term incentive plans, which have been described in more detail, including grant policy for different NEOs, in the Compensation Discussion and Analysis section, above.
Each NEO is also able to participate in the pension arrangements relevant for the business unit and country where they are based. In the case of Mr. Williams, he participates in a Defined Contribution plan in line with other U.S. based employees and details of the amount paid into the plan are provided in the “Summary Compensation Table”. He is also eligible to participate in a non- qualified deferred compensation retirement plan, in line with other eligible employees in the U.S.. Details of the amount paid into this plan are included in the “All Other Compensation” table and further information is provided in the Non-Qualified Deferred Compensation table on page 109. As noted in the “Summary Compensation Table”, Dr. Boon and Dr. McRobbie werewas able to participate in the Innospec Limited Defined Benefit Pension Plan until its closure to future service accrual on March 31, 2010 and this is described more fully in the narrative following the Pension Benefit table on page 50. Mr. Watt participated in a defined contribution plan in line with other U.K. based employees.107. Mr. Cleminson, Dr. Boon, Mr. Watt and Dr. McRobbie also participateddo not participate in this scheme from April 2010the defined contribution plan for U.K. based employees due to limits on pension provision set by the U.K. government and detailsin line with the approach for other impacted U.K. employees, they receive a 20% salary supplement in lieu of pension provision. Details of the amounts of salary supplements paid into this plan are provided in the “All Other Compensation” table.
| | 98 |
The employment agreements for each NEO also provide medical insurance and life and disability insurance, through programs, which are available to the majority of salaried employees in the relevant part of the business unit. The costs of these insurances are provided in the footnotes to the “All Other Compensation” table.
In addition, under their employment agreement, each of the NEOs, including the CEO and the CFO, is subject to a twelve monthtwelve-month non-solicitation period, with respect to customers and employees, and a twelve monthtwelve-month non-compete period, from the date their employment with the CorporationCompany ends.
Pay Ratio Disclosure
In line with the SEC disclosure requirements, the CorporationCompany has determined the ratio of the total annual compensation of Mr. Williams, CEO, to the total annual compensation of the median employee for 2018,2020, the last completed fiscal year.
In 2018,2020, the total annual compensation of the CEO was $5,413,268.$7,454,544. The total annual compensation of the median employee was $91,080.$75,014. As a result, for 2018,2020, the ratio of the CEO’s total annual compensation to the total annual compensation of the median employee was approximately 5999 to 1.
The Corporation has reviewed its employee composition and compensation practices for 2018 and determined that there have been no changes in its employee population and/or employee compensation arrangements in the year that it believes would significantly impact its pay ratio disclosure. As a result, the Corporation has concluded it is appropriate to use the same median employee identified for the 2017
disclosure in its pay ratio calculation. The median employee was identified by examining compensation information derived from payroll records for all employees, excluding the CEO, who were employed by the CorporationCompany on November 1 2017.2020. As of such date, the CorporationCompany employed approximately 1,9151,900 people, with 680around 600 of these employees located in the United States and 1,235around 1,300 located outside the United States. All employees were included, whether employed on a full-time, part-time, temporary or seasonal basis. In identifying the median employee, the CorporationCompany selected actual cash compensation for the 12 month period ending December 31 20162019 as the most appropriate measure of compensation, as there has been no change in the employee population or compensation arrangements that would have resulted in a significant change in the pay distribution to the workforce. Cash compensation was defined as base salary (for salaried employees), wages (for hourly employees), bonus and incentive payments earned in 2016,2019, and any cash allowances including shift allowance, car allowance and responsibility allowance, but excluding any payments relating to stock based incentives. In the cases where an individual was employed on November 1 2017,2020, but had not been employed in 2016,2019, the 20162019 compensation of an employee in a similar role and location was used as an estimate. In the cases where a full-timefull time or part-timepart time permanent employee was not employed by the CorporationCompany for all of 2016,2019, the compensation was annualized. Compensation was not analysed for any temporary or seasonal workers. This measure was consistently applied to all employees included in the calculation.
To determine the annual total compensation of the CEO, we used the amount reported in the “Total” column of the “SummarySummary Compensation Table”Table in this Proxy Statement, which includes salary, stock and option awards, bonus, change in pension value, and all other compensation. The median employee’s total annual compensation for 20182020 was calculated in accordance with the same requirements applicable to the CEO’s compensation as reported in the “SummarySummary Compensation Table”Table and that number was used to calculate the ratio of the CEO’s pay to that of the median employee.
The SEC rules requiring pay ratio disclosure allow companies to exercise a significant amount of flexibility in making the determination as to who is the median employee and do not mandate that each company use the same method. We believe that the pay ratio information above is a reasonable estimate calculated in a manner consistent with the SEC rules. However, the total annual compensation of our median employee is unique to that person and is not necessarily a good indicator of the total annual compensation of any of the other employees of the Corporation,Company, and it is not comparable to the annual total compensation of employees at other companies. Similarly, we would not expect that the ratio of the CEO’s total annual compensation to that of the median employee to be a number that can be compared to the ratio determined by other companies in any meaningful fashion.
| | 99 |
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2020
| Name and Principal Position | Grant Date | Estimated Future Payouts Under Plan Awards | Estimated Future Payouts Under Equity Plan Awards | All other Stock Awards: No. of Securities, Shares of stock or units | All other Awards: underlying options | Exercise Price of Awards | Grant Date Fair Value of Stock and Option Awards | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Plan Awards | All other Stock Awards: No. of Securities, Shares of stock or units | All other Options Awards: No. of Securities underlying options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Patrick S. Williams President and Chief Executive Officer | (1) | 02/20/18 | - | - | - | 714,412 | 1,407,812 | 2,101,213 | - | - | - | - | (1) | 02/24/20 | - | - | - | 764,675 | 1,506,859 | 2,249,044 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | 02/20/18 | - | - | - | - | - | - | - | 1,663 | 68.20 | 26,990 | (2) | 02/24/20 | - | - | - | - | - | - | - | 1,323 | 95.70 | 24,727 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | 02/20/18 | - | - | - | 238,124 | 469,245 | 700,366 | - | - | - | - | (3) | 02/24/20 | - | - | - | 254,883 | 502,269 | 749,655 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | - | 360,612 | 801,360 | 1,843,128 | - | - | - | - | - | - | - | (4) | - | 447,525 | 994,500 | 2,287,350 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (5) | 02/20/18 | - | - | - | - | - | - | - | 4,988 | 68.20 | 80,955 | (5) | 02/24/20 | - | - | - | - | - | - | - | 3,967 | 95.70 | 74,143 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | (1) | 02/20/18 | - | - | - | 102,003 | 201,006 | 300,009 | - | - | - | - | (1) | 02/24/20 | - | - | - | 101,265 | 199,551 | 297,837 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | 02/20/18 | - | - | - | - | - | - | - | 387 | 68.20 | 6,281 | (2) | 02/24/20 | - | - | - | - | - | - | - | 286 | 95.70 | 5,345 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | 02/20/18 | - | - | - | 34,001 | 67,002 | 100,003 | - | - | - | - | (3) | 02/24/20 | - | - | - | 33,772 | 66,551 | 99,331 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | - | 81,634 | 181,410 | 417,244 | - | - | - | - | - | - | - | (4) | - | 85,509 | 190,021 | 437,050 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (5) | 02/20/18 | - | - | - | - | - | - | - | 1,161 | 68.20 | 18,843 | (5) | 02/24/20 | - | - | - | - | - | - | - | 856 | 95.70 | 15,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dr. Philip J. Boon Executive Vice President and Chief Operating Officer | (1) | 02/20/18 | - | - | - | 111,651 | 220,018 | 328,384 | - | - | - | - | (1) | 02/24/20 | - | - | - | 91,514 | 180,336 | 269,159 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | 02/20/18 | - | - | - | - | - | - | - | 424 | 68.20 | 6,882 | (2) | 02/24/20 | - | - | - | - | - | - | - | 258 | 95.70 | 4,822 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | 02/20/18 | - | - | - | 37,223 | 73,352 | 109,481 | - | - | - | - | (3) | 02/24/20 | - | - | - | 30,513 | 60,129 | 89,745 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | - | 88,527 | 196,728 | 452,474 | - | - | - | - | - | - | - | (4) | - | 90,963 | 202,141 | 464,924 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (5) | 02/20/18 | - | - | - | - | - | - | - | 1,270 | 68.20 | 20,612 | (5) | 02/24/20 | - | - | - | - | - | - | - | 774 | 95.70 | 14,466 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | (1) | 02/20/18 | - | - | - | 81,712 | 161,020 | 240,329 | - | - | - | - | (1) | 02/24/20 | - | - | - | 65,416 | 128,908 | 192,400 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | 02/20/18 | - | - | - | - | - | - | - | 310 | 68.20 | 5,031 | (2) | 02/24/20 | - | - | - | - | - | - | - | 185 | 95.70 | 3,458 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | 02/20/18 | - | - | - | 72,104 | 53,686 | 80,129 | - | - | - | - | (3) | 02/24/20 | - | - | - | 57,727 | 42,987 | 64,159 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | - | 63,277 | 140,616 | 323,417 | - | - | - | - | - | - | - | (4) | - | 65,018 | 144,485 | 332,316 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (5) | 02/20/18 | - | - | - | - | - | - | - | 930 | 68.20 | 15,094 | (5) | 02/24/20 | - | - | - | - | - | - | - | 553 | 95.70 | 10,336 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dr. Ian M. McRobbie Senior Vice President, Research and Technology | (1) | 02/20/18 | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | 02/20/18 | - | - | - | - | - | - | - | 1,138 | 68.20 | 18,470 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | 02/20/18 | - | - | - | 100,011 | 197,081 | 294,150 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | - | 57,250 | 127,224 | 292,615 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer | (1) | 02/24/20 | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | 02/24/20 | - | - | - | - | - | - | - | 789 | 95.70 | 14,746 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | 02/24/20 | - | - | - | 93,327 | 183,910 | 274,492 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | - | 57,973 | 128,830 | 296,309 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Footnotes to “Grants of Plan-Based Awards” table:
| (1) |
|
| (2) |
|
| (3) |
|
| (4) | Estimatedpay-outs under the MICP |
| (5) | Options issued under the |
|
|
|
• Details of the grant policy and performance criteria for the awards made in 2020 are covered earlier in the Compensation Discussion and Analysis.
• The All Other Options Awards column in the “Grants of Plan-Based Awards” table details the following types of awards made under the Omnibus Plan:
The CSOP.Options. Options were granted at market value and become exercisable normally after three years, with all options vesting at the end of this period. Cash based awards were also made in the form of SEUs, which can be cashed after three years, assuming the NEO remains employed by the Corporation. The SEU awards are detailed under “All Other Option Awards” in the rows labelled (2) in the table. On cashing the SEU award, the NEO receives a payment for each SEU equal to the market stock price of the Corporation at that time less the market stock price at time of grant. The CSOP awardsoptions awarded are detailed under “All Other Option Awards” in the rows labelled (5). The grant date fair value for the option awards and SEUs under the CSOP has been determined using the fair value of the Corporation’sCompany’s stock on date of grant.
Cash incentive awards granted at market price. Cash incentive awards were also made in the form of units, which can be cashed after three years, assuming the NEO remains employed by the Company. The value of each award once vested will be equal to the number of units multiplied by the closing stock price of the Company on the date it is exchanged for cash, less the market stock price at time of grant. These awards are detailed under “All Other Option Awards” in the rows labelled (2) in the table. The grant date fair value for the cash incentive awards granted at market price has been determined using the fair value of the Company’s stock on the date of grant.
The PRSOP.Estimated Future Pay-Outs Under Equity Awards column in the “Grants of Plan-Based Awards” table details the following types of awards made under the Omnibus Plan:
Full Value AwardsOptions. Full value awards were granted at zero cost, i.e. with an exercise price of zero and become exercisablevest after a minimum of two years but normally after three years, provided, that specified
performance criteria are achieved as set by the Compensation Committee. All options have aThe full value awards are detailed under “Estimated Future ten-yearpay-outs term and once options vest,under Equity Plan Awards” in the recipient has the right to exercise themrow labelled (1)
Cash Incentive Awards granted at any time prior to their expiration date. Under the PRSOP, cash basedzero cost. Cash incentive awards were also made in the form of SEUs. SEUsunits. These awards were also granted at zero cost and become exercisable after a minimum of two years but normally after three years, subject to achievement of performance criteria set by the Compensation Committee. All SEUscash incentive awards granted at zero cost have aten-year term and once the SEUsawards vest, the recipient has the right to exercise them at any time prior to their expiration date. However, if optionthese cash incentive awards or SEUs under the PRSOP were granted to a participant who was or would otherwise be subject to Section 409A of the Internal Revenue Code, with an exercise price less than the fair market value of the shares on the date of grant, it must be exercised (if at all) no later than March 15 of the calendar year immediately following the calendar year in which it is first capable of exercise under the PRSOP.Omnibus Plan. The SEU awardsCash Incentive Awards granted at zero cost are detailed under “Estimated FuturePay-outs under Equity Incentive Plan Awards” in the row under the grant date labelled (3) in the table above and the PRSOP option awards are also detailed under “Estimated Futurepay-outs under Equity Plan Awards” in the row labelled (1). above.
In 2018,2020, the relative weighting and performance criteria for both optionsthe full value awards and SEUs were set as:the cash incentive awards granted at zero costs:
35% weighting on the relative performance of the Corporation’sCompany’s Total Shareholder Return (“TSR”) versus the Russell 2000 Total Return Index (“Index”). The threshold level is set at 70% of the Index performance over three years, in which case 60% of the optionsfull value awards and SEUscash incentive awards granted at zero cost will vest. The target level is set at 90% of the Index performance, in which case 80% of the optionsfull value awards and SEUscash incentive awards granted at zero cost will vest and the maximum level is set at 110% of the Index performance, in which case all the granted optionsfull value awards and SEUscash incentive awards granted at zero cost will vest
| | 101 |
30% weighting on the compound increase per annum in sales revenue, excluding the Octane Additives business. The threshold level is set at a total growth of 4%2% versus the 20182020 budget figure, in which case 20% of the optionsfull value awards and SEUscash incentive awards granted at zero cost will vest. The target level is set at a total growth of 6%3% versus the 20182020 budget figure, in which case 60% of the optionsfull value awards and SEUscash incentive awards granted at zero cost will vest and the maximum level is set at a total growth of 8%5% versus the 20182020 budget figure, in which case all the granted optionsfull value awards and SEUscash incentive awards granted at zero cost will vest
35% weighting on the compound increase per annum in earnings per share (“EPS”), excluding the Octane Additives business. The threshold level is set at a total growth of 1%2% versus the 20182020 budget figure, in which case 20% of the optionsfull value awards and SEUscash incentive awards granted at zero cost will vest. The target level is set at a total growth of 2%3% versus the 20182020 budget figure, in which case 60% of the optionsfull value awards and SEUscash incentive awards granted at zero cost will vest and the maximum level is set at a total growth of 3%5% versus the 20182020 budget figure in which case all the full value awards and cash incentive awards granted options and SEUsat zero cost will vest
The estimated futurepay-outs for the PRSOP optionsfull value awards and SEUcash incentive awards granted at zero cost have been valued using the grant date fair value for the awards.
MICP.MICP. Payment under the MICP is based on achievement ofpre-determined financial goals and personal objectives set by the Board each year. The threshold level is set at 90% achievement of the financial goals and the target payment is earned for 100% achievement of the financial goals. The maximum payment is earned for 130% achievement of the financial goals. The potential awards for 20182020 are detailed in the table in the row under the grant date heading labelled (4). As this is an annualnon-equity incentive plan, no grant date is disclosed.
| | 102 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 20182020
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | | Number of Securities Underlying Unexercised Options Exercisable | | | Number of Securities Underlying Unexercised Options Unexercisable | | | Equity Incentive Plans Awards: Number of Securities Underlying Unexercisable | | | Option Exercise Price | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | | Market Value of Shares or Units of Stock That Have not Vested | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | |||||||||||||||||
| ($) | ($) | ($) | ||||||||||||||||||||||||||||||||||||||||||
Mr. Patrick S. Williams | 1 | 10 | 2,268 | 43.95 | 02/23/2025 | |||||||||||||||||||||||||||||||||||||||
President and Chief | 1 | 11 | 1,530 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||
Executive Officer | 1 | 14 | 1,663 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
| 2 | 14 | 4,988 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 17 | 5,511 | 0.00 | 03/15/2024 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 17 | 16,535 | 0.00 | 03/15/2024 | ||||||||||||||||||||||||||||||||||||||||
| 6 | 16 | 1,483 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||
| 6 | 18 | 1,323 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||
| 7 | 16 | 4,448 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||
| 7 | 18 | 3,967 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||
| 8 | 16 | 3,697 | 0.00 | 03/15/2023 | ||||||||||||||||||||||||||||||||||||||||
| 8 | 18 | 3,297 | 0.00 | 03/15/2024 | ||||||||||||||||||||||||||||||||||||||||
| 9 | 16 | 0.00 | 02/25/2022 | 11,091 | 1,006,286 | |||||||||||||||||||||||||||||||||||||||
| 9 | 18 | 0.00 | 02/24/2023 | 9,892 | 897,501 | |||||||||||||||||||||||||||||||||||||||
Mr. Ian P. Cleminson | 1 | 14 | 387 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
Executive Vice President and | 2 | 14 | 1,161 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
Chief Financial Officer | 3 | 17 | 787 | 0.00 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
| 4 | 17 | 1,776 | 0.00 | 02/25/2028 | ||||||||||||||||||||||||||||||||||||||||
| 5 | 15 | 374 | 61.83 | 05/05/2022 | ||||||||||||||||||||||||||||||||||||||||
| 6 | 16 | 273 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||
| 6 | 18 | 286 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||
| 7 | 16 | 819 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||
| 7 | 18 | 406 | 95.07 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||
| 7 | 18 | 450 | 95.07 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||
| 8 | 16 | 418 | 0.00 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||
| 8 | 18 | 437 | 0.00 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||
| 9 | 16 | 0.00 | 02/25/2022 | 1,253 | 113,685 | |||||||||||||||||||||||||||||||||||||||
| 9 | 18 | 0.00 | 02/24/2023 | 1,310 | 118,856 | |||||||||||||||||||||||||||||||||||||||
Dr. Philip J. Boon | 1 | 12 | 331 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||
Executive Vice President and | 1 | 14 | 424 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
Chief Operating Officer | 2 | 12 | 993 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||
| 2 | 14 | 140 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 14 | 1,130 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plans Awards: Number of Securities Underlying Unexercisable | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | |||||||||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||||||
Mr. Patrick S. Williams | 1 | 6 | 2268 | 43.95 | 02/23/2025 | |||||||||||||||||||||||||||||||||||||||
President and Chief | 1 | 7 | 2,347 | 44.18 | 02/22/2026 | |||||||||||||||||||||||||||||||||||||||
Executive Officer | 1 | 9 | 1,530 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||
| 1 | 11 | 1,663 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 6 | 6,805 | 43.95 | 02/23/2025 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 7 | 7,040 | 44.18 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 9 | 4,589 | 70.60 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 11 | 4,988 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 7 | 7,040 | 0.00 | 02/21/2026 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 8 | 25,000 | 0.00 | 02/22/2027 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 9 | 8,526 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 11 | 12,193 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 7 | 21,120 | 0.00 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 9 | 25,577 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 11 | 36,581 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 5 | 10 | 184 | 64.94 | 12/25/2020 | ||||||||||||||||||||||||||||||||||||||||
Mr. Ian P. Cleminson | 1 | 7 | 450 | 44.18 | 02/22/2026 | |||||||||||||||||||||||||||||||||||||||
| Executive Vice President | 1 | 9 | 302 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||
and Chief Financial Officer | 1 | 11 | 387 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
| 2 | 7 | 1,349 | 44.18 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 9 | 529 | 70.60 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 9 | 378 | 70.60 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 11 | 1,161 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 7 | 1,236 | 0.00 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 8 | 3,000 | 0.00 | 02/22/2027 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 9 | 1,034 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 10 | 1,741 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 6 | 3,710 | 0.00 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 7 | 3,102 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 10 | 5,223 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 5 | 12 | 374 | 61.83 | 05/01/2022 | ||||||||||||||||||||||||||||||||||||||||
Dr. Philip J. Boon | 1 | 7 | 510 | 44.18 | 02/22/2026 | |||||||||||||||||||||||||||||||||||||||
| Executive Vice President | 1 | 9 | 331 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||
and Chief Operating Officer | 1 | 11 | 424 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||
| 2 | 7 | 1,528 | 44.18 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 9 | 993 | 70.60 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 2 | 11 | 140 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 11 | 1,130 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 7 | 1,401 | 0.00 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 8 | 3,000 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 9 | 1,132 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 3 | 11 | 1,906 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 7 | 6,000 | 0.00 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 9 | 8,000 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 13 | 4,203 | 0.00 | 11/01/2025 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 14 | 3,395 | 0.00 | 11/01/2025 | ||||||||||||||||||||||||||||||||||||||||
| 4 | 11 | 5,717 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||
| 5 | 12 | 374 | 61.83 | 05/01/2022 | ||||||||||||||||||||||||||||||||||||||||
| | 103 |
| Option Awards | Stock Awards | 3 | 11 | 3,000 | 0.00 | 02/22/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plans Awards: Number of Securities Underlying Unexercisable | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 12 | 1,489 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 17 | 862 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 13 | 8,000 | 0.00 | 01/11/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 17 | 2,584 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 15 | 374 | 61.83 | 05/05/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 16 | 296 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 18 | 258 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | 16 | 365 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | 16 | 523 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | 18 | 774 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8 | 16 | 453 | 0.00 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8 | 18 | 395 | 0.00 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9 | 16 | 0.00 | 02/25/2029 | 1,359 | 123,302 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9 | 18 | 0.00 | 02/24/2030 | 1,184 | 107,424 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Brian R. Watt | 1 | 7 | 431 | 44.18 | 02/22/2026 | 1 | 12 | 242 | 70.60 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President, | 1 | 9 | 242 | 70.60 | 02/21/2027 | 1 | 14 | 310 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Development | 1 | 11 | 310 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Investor Relations | 2 | 7 | 702 | 44.18 | 02/22/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Development and | 2 | 12 | 725 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Relations | 2 | 14 | 930 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 12 | 1,088 | 0.00 | 02/22/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 17 | 631 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 12 | 3,262 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 17 | 1,891 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 15 | 374 | 61.83 | 05/05/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 16 | 212 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 18 | 185 | 95.70 | 02/21/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | 16 | 136 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | 16 | 499 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | 18 | 291 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | 7 | 592 | 44.18 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | 9 | 725 | 70.60 | 02/21/2027 | 7 | 18 | 262 | 95.70 | 02/24/2030 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | 11 | 930 | 68.20 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 7 | 1,186 | 0.00 | 02/22/2026 | 8 | 16 | 324 | 0.00 | 02/25/2029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 8 | 3,000 | 0.00 | 02/22/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 9 | 827 | 0.00 | 02/21/2027 | 8 | 18 | 282 | 0.00 | 02/21/2030 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 11 | 1,395 | 0.00 | 02/20/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 7 | 3,558 | 0.00 | 02/22/2026 | 9 | 16 | 0.00 | 02/25/2022 | 971 | 88,099 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 9 | 2,479 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 11 | 4,184 | 0.00 | 02/20/2028 | 9 | 18 | 0.00 | 02/24/2023 | 846 | 76,758 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 12 | 374 | 61.83 | 05/01/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dr. Ian M. McRobbie | 1 | 7 | 1,426 | 44.18 | 02/22/2026 | 1 | 12 | 950 | 70.60 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President, | 1 | 9 | 950 | 70.60 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and Technology | 1 | 11 | 1,138 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President | 1 | 14 | 1,138 | 68.20 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Chief Technology Officer | 3 | 11 | 3,000 | 0.00 | 02/22/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 7 | 3,922 | 0.00 | 02/22/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 8 | 3,000 | 0.00 | 02/22/2027 | 3 | 12 | 4,274 | 0.00 | 02/21/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 9 | 4,274 | 0.00 | 02/21/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 11 | 5,121 | 0.00 | 02/20/2028 | 3 | 17 | 2,315 | 0.00 | 02/20/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 12 | 374 | 61.83 | 05/01/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 15 | 374 | 61.83 | 05/05/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 16 | 919 | 81.07 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 18 | 789 | 95.70 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8 | 16 | 1,406 | 0.00 | 02/25/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8 | 18 | 1,207 | 0.00 | 02/24/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Footnotes to “Outstanding Equity Awards at Fiscal Year End 2018”2020” table:
| (1) | SEUs issued under the CSOP. These are detailed in the columns headed “Number of Securities UnderlyingUn-Exercised Options” |
| (2) | Options issued under the CSOP. These are detailed in the columns headed “Number of Securities UnderlyingUn-Exercised Options” |
| | 104 |
| (3) | SEUs issued under the PRSOP. SEUs under the PRSOP which are not exercisable are detailed in the column headed “Equity Incentive Plans Awards” and those which are exercisable are detailed in the column headed “Number of Securities UnderlyingUn-Exercised Options Exercisable” |
| (4) | Options issued under the PRSOP. Option awards under the PRSOP which are not exercisable are detailed in the column headed “Equity Incentive Plan Awards” and those which are exercisable are detailed in the column headed “Number of Securities UnderlyingUn-Exercised Options Exercisable” |
| (5) | Options issued under the ShareSave plan. These are detailed in the columns headed “Number of Securities UnderlyingUn-Exercised Options” |
| (6) | Cash Incentive Awards granted at market price issued under the Omnibus Plan. These are detailed in the column headed “Number of Securities Underlying Un-Exercised Options” |
| (7) | Options issued under the Omnibus Plan. These are detailed in the column headed “Number of Securities Underlying Un-Exercised Options” |
| (8) | Cash Incentive Awards granted at zero cost issued under the Omnibus Plan. Cash Incentive awards under the Omnibus Plan which are not exercisable are detailed in the column headed “Equity Incentive Plan Awards” and those which are exercisable are detailed in the column headed “Number of Securities Underlying Un-Exercised Options Exercisable” |
| (9) | Full Value Awards issued under the Omnibus Plan. The number of units awarded are detailed in the column headed “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” and the market value of these is detailed in the column headed “Equity Incentive Plan Awards: Market or Pay-out Value of Unearned Shares, Units or Other Rights That Have Not Vested”, using the 2020 year end share price of $90.73 as an indication |
| (10) | SEUs vested on February 23, 2018 |
|
Additional SEUs vested on February 22, 2019 |
Options and SEUs have vesting date of February 21, 2020 |
Options have vesting date of |
Options and SEUs have vesting date of February 20, 2021 |
Options have vesting date of November 1, 2021 |
Omnibus Full Value Awards, Options and Cash Incentive Awards have vesting date of |
Options and SEUs have vesting date of |
| (18) | Omnibus Full Value Awards, Options and Cash Incentive Awards have vesting date of February 24, 2023 |
With respect tonon-vested or unearned performance based stock options, full value awards and SEUs, the number of shares reported in the table is based on the performance achieved for each performance goalsgoal in the previous fiscal year (2018)(2020), except where performance was below the threshold level, in which case the number of shares and SEUs reported is based on the threshold level, as detailed below:
For those options and SEUs that expire in February 2028, relative performance of 102% for TSR versus Russell 2000 index; EPS and gross revenue, excluding Octane Additives were less than the threshold level. For those options and SEUs that expire in February 2029, relative performance of |
|
In the case of the options and SEUs which expire in February 2026, the number of shares reported is based on achieving the maximum performance of relative performance of 100% for TSR versus the Russell 2000 index was less than the maximum performance of 3% increase inthreshold level; EPS excluding Octane Additives per annum and the maximum performance of 8% increase in growth in gross revenue, excluding Octane Additives per annum as thesewere also less than the threshold level.
For those options and SEUs vestthat expire in February 20192030, relative performance of TSR versus the Russell 2000 index was less than the threshold level; EPS and this isgross revenue, excluding Octane Additives were also less than the expected outcome.threshold level.
The number of shares reported for Dr. Boon in the case of those which vest in November 2019 and November 2020 is based on the full achievement of the performance measures as this is the expected outcome. The number of SEUs reported for Mr. Williams and each of the NEOs in the case of those granted in February 2017 and which vest in February 2019 are based on the full achievement of the performance measures as this is the expected outcome.
The market value of any shares which have not vested is calculated using the year endyear-end stock price of $61.76,$90.73, as an indication.
| | 105 |
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2018
2020
The following table provides information for the NEOs on exercises of stock option and cash based awards, (SEUs) and matching stock which transferred to the NEOswere granted as SEUs during the fiscal year 2018,2020, including the number of shares or SEUs acquired on exercise or transfer and the value realized.
| Name and Principal Position | Option Awards | Stock Awards | ||||||||||||||||||
| Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Exercise | |||||||||||||||||
| ($) | ($) | |||||||||||||||||||
Mr. Patrick S. Williams | ||||||||||||||||||||
President and Chief | (1 | ) | 5,444 | 353,588 | - | - | ||||||||||||||
Executive Officer | (4 | ) | 16,331 | 1,060,698 | - | - | ||||||||||||||
Mr. Ian P. Cleminson | ||||||||||||||||||||
Executive Vice President and | (1 | ) | 1,230 | 84,563 | - | - | ||||||||||||||
Chief Financial Officer | (2 | ) | 558 | 13,838 | - | - | ||||||||||||||
| (3 | ) | 1,677 | 41,254 | - | - | |||||||||||||||
| (4 | ) | 3,688 | 252,812 | - | - | |||||||||||||||
Dr. Philip J. Boon | ||||||||||||||||||||
Executive Vice President and | (5 | ) | 881 | 29,170 | - | - | ||||||||||||||
Chief Operating Officer | (1 | ) | 1,054 | 73,253 | - | - | ||||||||||||||
| (1 | ) | 940 | 65,330 | - | - | |||||||||||||||
| (2 | ) | 511 | 11,993 | - | - | |||||||||||||||
| (1 | ) | 427 | 10,910 | - | - | |||||||||||||||
| (3 | ) | 776 | 19,439 | - | - | |||||||||||||||
| (3 | ) | 506 | 12,675 | - | - | |||||||||||||||
| (4 | ) | 2,819 | 194,511 | - | - | |||||||||||||||
| (4 | ) | 6,000 | 447,150 | - | - | |||||||||||||||
Mr. Brian R. Watt | ||||||||||||||||||||
Senior Vice President, | (1 | ) | 908 | 62,062 | - | - | ||||||||||||||
Corporate Development and Investor Relations | (1 | ) | 970 | 66,300 | - | - | ||||||||||||||
| (2 | ) | 429 | 11,600 | - | - | |||||||||||||||
| (2 | ) | 441 | 9,843 | - | - | |||||||||||||||
| (2 | ) | 441 | 10,760 | - | - | |||||||||||||||
| (3 | ) | 1,286 | 35,288 | - | - | |||||||||||||||
| (3 | ) | 1,038 | 23,583 | - | - | |||||||||||||||
| (3 | ) | 1,322 | 32,786 | - | - | |||||||||||||||
| (3 | ) | 283 | 6,430 | - | - | |||||||||||||||
| (4 | ) | 3,537 | 243,169 | - | - | |||||||||||||||
| (4 | ) | 2,909 | 199,994 | - | - | |||||||||||||||
Dr. Ian M. McRobbie | ||||||||||||||||||||
Senior Vice President, | (5 | ) | 881 | 29,170 | - | - | ||||||||||||||
Research and Technology | (1 | ) | 4,861 | 372,839 | - | - | ||||||||||||||
| (1 | ) | 3,675 | 281,873 | - | - | |||||||||||||||
| (1 | ) | 3,903 | 299,360 | - | - | |||||||||||||||
| (2 | ) | 1,768 | 62,570 | - | - | |||||||||||||||
| (2 | ) | 1,782 | 54,654 | - | - | |||||||||||||||
| (2 | ) | 1,774 | 58,099 | - | - | |||||||||||||||
| Name and Principal Position | Option Awards | Stock Awards | ||||||||||||||||||
| Number of Shares Acquired on Exercise | Value Exercise | Number of Shares Vesting | Value Realized on Exercise | |||||||||||||||||
| ($) | ($) | |||||||||||||||||||
Mr. Patrick S. Williams | (1) | 11,219 | 866,556 | - | - | |||||||||||||||
President and Chief Executive Officer | (3) | 4,589 | 97,057 | - | - | |||||||||||||||
| (4) | 33,654 | 3,480,833 | - | - | ||||||||||||||||
| (5) | 184 | 3,870 | - | - | ||||||||||||||||
Mr. Ian P. Cleminson | (1) | 1,361 | 130,248 | - | - | |||||||||||||||
Executive Vice President and Chief Financial Officer | (2) | 302 | 7,580 | - | - | |||||||||||||||
| (3) | 529 | 11,188 | - | - | ||||||||||||||||
| (3) | 378 | 7,995 | ||||||||||||||||||
| (4) | 4,081 | 374,432 | - | - | ||||||||||||||||
Dr. Philip J. Boon | (4) | 4,467 | 381,482 | - | - | |||||||||||||||
Executive Vice President and Chief Operating Officer | ||||||||||||||||||||
Mr. Brian R. Watt | - | - | - | - | ||||||||||||||||
Senior Vice President, Corporate Development & Investor Relations | ||||||||||||||||||||
Dr. Ian M. McRobbie | - | - | - | - | ||||||||||||||||
Senior Vice President and Chief Technology Officer | ||||||||||||||||||||
Footnotes to the “Option Exercises and Stock Vested during Fiscal 2018”2020” table:
| (1) | SEUs exercised which were issued under the PRSOP |
| (2) | SEUs exercised which were issued under the CSOP |
| (3) | Options exercised which were issued under the CSOP |
| (4) | Options exercised which were issued under the PRSOP |
| (5) | Options exercised which were issued under the ShareSave Plan |
The aggregate dollar amount realized on exercise of option awards, SEUs and matching shares was computed by calculating the closing price of all underlying Common Stockcommon stock on the date of exercise or transfer, less the exercise price of the option, multiplied by the number of shares underlying the options or SEUs exercised or stock transferred.
| | 106 |
PENSION BENEFIT
| Name and Principal Position | Plan Name | Number of years credited service at March 31, 2010 | Present Value of Accumulated Benefits | Payments During Last Fiscal Year | Plan Name | Number of years credited service at March 31, 2010 | Present Value of Accumulated Benefits | Payments During Last Fiscal Year | ||||||||||||||
| Name and Principal Position | $ | $ | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
Dr. Ian M. McRobbie Senior Vice President, Research and Technology | Innospec Limited Pension Plan | 10.25 | 1,012,107 | 50,579 | ||||||||||||||||||
Dr. Ian M. McRobbie | Innospec Limited Pension Plan | 10.25 | 1,056,279 | 50,631 | ||||||||||||||||||
Senior Vice President and Chief | ||||||||||||||||||||||
Technology Officer | ||||||||||||||||||||||
Footnotes to “Pension Benefit” table:
The Company operated the Innospec Limited Pension Plan (“Pension Plan”) for relevant employees based in the U.K.. The Pension Plan was available to all employees in the U.K., but closed to future service accrual for all members on March 31, 2010. Dr. McRobbie was a member of this Pension Plan on that date. The Company does not participate in any other defined benefit pension arrangements in respect of any of the NEOs. The Defined Benefit Pension table therefore covers the Pension Plan only. The number of years of credited service is based on service to March 31, 2010, when the Pension Plan closed to future service accrual. The Pension Plan provides a pension on retirement of 1/57 of pensionable salary for each year of service. The amount of annual salary which is defined as pensionable under the Pension Plan is capped and at the time the plan closed, this cap was set at $171,797. Dr. McRobbie was not subject to the cap on pensionable salary as he joined the Pension Plan prior to the introduction of the cap. As a result, Dr. McRobbie’s pensionable salary was his full base salary. • Pensionable salary under the Pension Plan is defined as base salary only, up to the pensions cap where relevant. Any bonus payments, incentive payments or supplementary payments are not treated as pensionable. • Under the rules of the Pension Plan, normal retirement age is 65 although members can retire at 60 without an actuarial reduction. Retirement between the ages of 55 and 60 is permitted, but the pension payable is reduced by an amount determined by the actuarial advisors to the Trustees of the Pension Plan. If a member of the Pension Plan is made redundant by the Company and is already aged 50 or over, then, under the rules of the Pension Plan, they are able to take their pension immediately without any actuarial reduction. If, however, a member was under 50 at the time of severance, they would be entitled to unreduced pension benefits from age 55. From April 2010, the minimum age from which pension benefits can be paid increased to 55 (with the exception of certain members protected under U.K. pension legislation). Dr. McRobbie is classed as a protected member and was therefore unaffected by the change in April 2010. Any benefit paid would be in the normal form payable by the Pension Plan, namely a monthly pension with an option to surrender part of this pension for a tax-free lump sum, in line with U.K. tax regulations. |
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• If an individual chooses to transfer benefits into the Pension Plan from another plan, they will be provided with a service credit in lieu of the transferred in benefits. The amount of service credit given is calculated by the actuaries on behalf of the Trustees of the Pension Plan and is designed to be cost neutral to the Pension Plan. The right to transfer is subject to the approval of the Trustees of the Pension Plan, who have determined that with effect from April 1, 2010 no further transfers in will be accepted following the closure of the Pension Plan to future service accrual.
|
• Dr. McRobbie joined the Pension Plan on January 1, 2002 and received a service credit of 2.000 years in lieu of transferred in benefits from another plan. This is included in the total credited service in the table and equates to $206,103 of additional present value accumulated benefit which is included in the total “Present Value of Accumulated Benefit” in the table above.
|
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Discount rate | 1.36% per annum | |
Post retirement pension increases | 2.35% per annum based on CPI on pensions in excess of the Guaranteed Minimum Pension (“GMP”). GMP is assumed to increase in line with statutory requirements. | |
Pre-retirement decrements | Individuals are assumed to remain in service and retire at the earliest age at which they can take their full pension benefits unreduced in normal health and circumstances, except for Dr. McRobbie who has already started to take his pension benefits from the Pension Plan. | |
Post retirement mortality | Self-Administered Pension Schemes (“SAPS”) Series 2 All Pensioners (Amounts) tables with a multiplier of | |
Commutation | At retirement, individuals are assumed to commute 20% of their benefits in exchange for a cash lump sum based on the current factors in force, except for Dr. McRobbie who chose not to commute any of his benefits at the time he started to take them from the Pension Plan. | |
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| | 108 |
NON-QUALIFIED DEFERRED COMPENSATION
The following table provides information regarding The Innospec Inc. Non-qualified Deferred Compensation Plan during fiscal year 2020. Mr Williams is the only NEO who was eligible to participate in this plan during 2020. More information on the plan is provided in the Compensation Discussion and Analysis section of the Proxy under the section headed “Non-qualified Deferred Compensation Plan”.
| Executive Contributions in Last Fiscal Year | Registrant Contributions in Last Fiscal Year | Aggregate Earnings (Losses) in Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance at end of last Fiscal Year 2020 | ||||||
| (1) | (2) | (3) | (4) | (5) | ||||||
| ($) | ($) | ($) | ($) | ($) | ||||||
Mr. Patrick S. Williams President and Chief Executive Officer | - | 12,109 | 1,493 | - | 51,825 |
Footnotes to the “Non-qualified Deferred Compensation” table
| (1) | These amounts, if any, are included in the Summary Compensation Table in the “Salary” and “Non-Equity Incentive Compensation” columns for 2020. Mr. Williams did not make any contributions into the Deferred Compensation plan in 2020. |
| (2) | The amount disclosed for Mr. Williams includes an employer elective deferral for $12,109, which accrued during fiscal year 2020 and credited to Mr. Williams’ account in 2021. These amounts are included in the Summary Compensation Table in the “All Other Compensation” column for 2020. |
| (3) | These amounts are not included in the Summary Compensation Table because Plan earnings were not preferential or above market. |
| (4) | Withdrawal and distribution amounts, if any, are not included in the Summary Compensation Table because these are pay-outs of prior years’ earnings and contributions. There were no withdrawals or distributions in 2020. |
| (5) | These amounts are as of December 31, 2020 and do not take into account the amounts in the “Registrant Contributions in Last Fiscal Year” column in the table above that were accrued during fiscal year 2020 but were credited to Mr. Williams’ account in 2021 as detailed above. |
| | 109 |
POST EMPLOYMENT PAYMENTS
The following table quantifies the potential payments upon termination or change of control that any of our NEOs would receive assuming that the relevant termination event had occurred on December 31, 2018.2020. The potential payments relating to vested and unvested stock options and full value awards include payments relating to SEUscash incentive awards as well as options.options and full value awards.
| Name and Principal Position | Benefit | Retirement | Termination without cause | Termination in event of Change of Control | Death in Service | |||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||
Mr. Patrick S. Williams President and Chief Executive Officer | Cash Severance - Salary and benefits | 0 | 1,068,480 | 2,136,960 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 801,360 | 1,602,720 | 0 | ||||||||||||||
| Vested Stock options | 40,393 | 0 | 40,393 | 40,393 | ||||||||||||||
| Unvested Stock options | 191,921 | 232,314 | 9,258,721 | 9,258,721 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 200,000 | ||||||||||||||
Total | 232,314 | 2,102,154 | 13,038,794 | 9,499,114 | ||||||||||||||
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | Cash Severance - Salary and benefits | 0 | 363,334 | 726,668 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 172,966 | 345,931 | 0 | ||||||||||||||
| Vested Stock options | 0 | 0 | 0 | 0 | ||||||||||||||
| Unvested Stock options | 31,704 | 31,704 | 1,288,643 | 1,288,643 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 2,075,588 | ||||||||||||||
Total | 31,704 | 568,004 | 2,361,242 | 3,364,231 | ||||||||||||||
Dr. Philip J. Boon Executive Vice President and Chief Operating Officer | Cash Severance - Salary and benefits | 0 | 392,543 | 785,086 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 187,570 | 375,141 | 0 | ||||||||||||||
| Vested Stock options | 0 | 0 | 0 | 0 | ||||||||||||||
| Unvested Stock options | 58,926 | 58,926 | 2,293,588 | 2,293,588 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 2,250,843 | ||||||||||||||
Total | 58,926 | 639,039 | 3,453,815 | 4,544,431 | ||||||||||||||
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | Cash Severance - Salary and benefits | 0 | 268,142 | 536,284 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 134,071 | 268,142 | 0 | ||||||||||||||
| Vested Stock options | 0 | 0 | 0 | 0 | ||||||||||||||
| Unvested Stock options | 53,424 | 53,424 | 1,144,908 | 1,144,908 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 1,608,852 | ||||||||||||||
Total | 53,424 | 455,637 | 1,949,334 | 2,753,760 | ||||||||||||||
Dr. Ian M. McRobbie Senior Vice President, Research and Technology | Cash Severance - Salary and benefits | 0 | 260,004 | 520,009 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 121,301 | 242,602 | 0 | ||||||||||||||
| Vested Stock options | 0 | 0 | 0 | 0 | ||||||||||||||
| Unvested Stock options | 25,043 | 25,043 | 1,032,781 | 1,032,781 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 1,455,611 | ||||||||||||||
Total | 25,043 | 406,348 | 1,795,392 | 2,488,392 | ||||||||||||||
| Name and Principal Position | Benefit | Retirement | Termination without cause | Termination in event of Change of Control | Death in Service | |||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||
Mr. Patrick S. Williams President and Chief Executive Officer | Cash Severance - Salary and benefits | 0 | 1,170,000 | 2,340,000 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 994,500 | 1,989,000 | 0 | ||||||||||||||
| Vested Stock options | 136,896 | 136,896 | 136,896 | 136,896 | ||||||||||||||
| Unvested Stock options | 207,140 | 207,140 | 12,098,214 | 12,098,214 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 200,000 | ||||||||||||||
| Total | 344,036 | 2,508,536 | 16,564,110 | 12,435,110 | ||||||||||||||
Mr. Ian P. Cleminson Executive Vice President and Chief Financial Officer | Cash Severance - Salary and benefits | 0 | 397,636 | 795,272 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 190,022 | 380,044 | 0 | ||||||||||||||
| Vested Stock options | 0 | 0 | 0 | 0 | ||||||||||||||
| Unvested Stock options | 56,234 | 56,234 | 1,600,186 | 1,600,186 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 2,280,264 | ||||||||||||||
| Total | 56,234 | �� | 643,892 | 2,775,502 | 3,880,450 | |||||||||||||
Dr. Philip J. Boon Executive Vice President and Chief Operating Officer | Cash Severance - Salary and benefits | 0 | 421,875 | 843,749 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 202,141 | 404,282 | 0 | ||||||||||||||
| Vested Stock options | 26,652 | 26,652 | 1,159,779 | 1,159,779 | ||||||||||||||
| Unvested Stock options | 83,536 | 83,536 | 1,680,021 | 1,680,021 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 2,425,694 | ||||||||||||||
| Total | 110,188 | 734,204 | 4,087,831 | 5,265,494 | ||||||||||||||
Mr. Brian R. Watt Senior Vice President, Corporate Development and Investor Relations | Cash Severance - Salary and benefits | 0 | 288,971 | 577,942 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 144,485 | 288,971 | 0 | ||||||||||||||
| Vested Stock options | 19,466 | 19,466 | 414,141 | 414,141 | ||||||||||||||
| Unvested Stock options | 70,052 | 70,052 | 1,222,958 | 1,222,958 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 1,733,825 | ||||||||||||||
| Total | 89,518 | 522,974 | 2,504,012 | 3,370,924 | ||||||||||||||
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| Name and Principal Position | Benefit | Retirement | Termination without cause | Termination in event of Change of Control | Death in Service | |||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||
Dr. Ian M. McRobbie Senior Vice President and Chief Technology Officer | Cash Severance - Salary and benefits | 0 | 275,253 | 550,506 | 0 | |||||||||||||
| Cash Severance - Bonus | 0 | 128,830 | 257,661 | 0 | ||||||||||||||
| Vested Stock options | 19,124 | 19,124 | 679,094 | 679,094 | ||||||||||||||
| Unvested Stock options | 45,325 | 45,325 | 1,207,395 | 1,207,395 | ||||||||||||||
| Life Assurance | 0 | 0 | 0 | 1,545,964 | ||||||||||||||
Total | 64,449 | 468,532 | 2,694,656 | 3,432,453 | ||||||||||||||
Footnotes to “Post Employment Payments” table:
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In the case of resignation or dismissal for cause, none of the NEOs would be entitled to any post-employment payments from the Company.
The NEOs are treated in line with all other employees in the event of retirement or change of control in terms of payments relating to stock options, full value awards and cash incentive awards. In the case of retirement, under the rules of the CSOP and the Omnibus Plan, any CSOP or Omnibus options or cash incentive awards granted at market price will vest and become exercisable; whilst under the rules of the PRSOP and Omnibus Plan full value awards or cash incentive awards granted at zero price which have not vested will lapse. The value of any stock options, full value awards and cash incentive awards which will become exercisable under each scenario, using the 2020 year end stock price of $90.73, is included in the table above, as an indication. |
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The employment agreement for each NEO includes a change in control clause. This specifies that, in the event of a change in control of the Company, if the Company terminates the Executive Officer within twelve months of the change of control, or if the Executive Officer terminates his employment within twelve months for good cause, the Executive Officer will be entitled to a compensation payment. If the Company terminates the employment of the Executive Officer during this period, the payment is calculated as twenty-four months compensation defined as base salary, bonus at target and any car allowance from the date of notice of termination. If the Executive Officer terminates his employment, the payment is calculated as twenty-four months compensation, defined as above, from the date of the change of control. In addition, under the rules of |
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| Name | Fees Earned or | Option Awards (Fair Market Value) | Total | |||||||
| $ | $ | $ | ||||||||
Mr. Hugh G. C. Aldous | 103,000 | 32,182 | 135,182 | |||||||
Mr. Milton C. Blackmore | 175,000 | * | 32,182 | 207,182 | ||||||
Mr. David F. Landless | 106,000 | 32,182 | 138,182 | |||||||
Mr. Lawrence J. Padfield | 90,000 | 32,904 | 122,182 | |||||||
Mr. Robert I. Paller | 105,000 | * | 32,182 | 137,182 | ||||||
Mr. Joachim Roeser | 105,000 | 32,182 | 137,182 | |||||||
*This amount includes $15,000 each in fees paid to Mr. Blackmore and Mr. Paller for serving as a member of a special committee of directors set up on April 9, 2018 to consider a demand letter addressed to the Board of Directors.
The director’s compensation is a flat annual fee based on the following arrangement:
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In addition to the compensation arrangements described above:
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Each NED also receives an annual grant of stock options under theNon-Executive Directors Stock Option Plan (“NEDSOP”) in February equal to $80,000, based on the closing stock price for Corporation stock on
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| Name | Number of Options | Grant Price | Date of Grant | |||||||
| $ | ||||||||||
Mr. Hugh G. C. Aldous | 293 | 0.00 | 02/20/18 | |||||||
| 880 | 68.2 | 02/20/18 | ||||||||
| 283 | 0.00 | 02/21/17 | ||||||||
| 850 | 70.60 | 02/21/17 | ||||||||
| 441 | 0.00 | 02/22/16 | ||||||||
| 1,030 | 44.18 | 02/22/16 | ||||||||
| 444 | 0.00 | 02/23/15 | ||||||||
| 1,035 | 43.95 | 02/23/15 | ||||||||
| 977 | 46.03 | 02/14/14 | ||||||||
| 1,089 | 41.31 | 02/20/13 | ||||||||
| 1,522 | 29.56 | 02/23/12 | ||||||||
| 1,660 | 27.11 | 02/22/11 | ||||||||
Mr. Milton C. Blackmore | 293 | 0.00 | 02/20/18 | |||||||
| 880 | 68.2 | 02/20/18 | ||||||||
| 283 | 0.00 | 02/21/17 | ||||||||
| 850 | 70.60 | 02/21/17 | ||||||||
| 441 | 0.00 | 02/22/16 | ||||||||
| 1,030 | 44.18 | 02/22/16 | ||||||||
| 1,035 | 43.95 | 02/23/15 | ||||||||
Mr. David F. Landless | 293 | 0.00 | 02/20/18 | |||||||
| 880 | 68.2 | 02/20/18 | ||||||||
| 283 | 0.00 | 02/21/17 | ||||||||
| 850 | 70.60 | 02/21/17 | ||||||||
| 1,000 | 0.00 | 05/05/16 | ||||||||
| 404 | 0.00 | 05/05/16 | ||||||||
| 942 | 48.28 | 05/05/16 | ||||||||
Mr. Lawrence J. Padfield | 293 | 0.00 | 02/20/18 | |||||||
| 880 | 68.20 | 02/20/18 | ||||||||
| 283 | 0.00 | 02/21/17 | ||||||||
| 850 | 70.60 | 02/21/17 | ||||||||
| 441 | 0.00 | 02/22/16 | ||||||||
| 1,030 | 44.18 | 02/22/16 | ||||||||
| 444 | 0.00 | 02/23/15 | ||||||||
| 1,035 | 43.95 | 02/23/15 | ||||||||
| 977 | 46.03 | 02/14/14 | ||||||||
| 1,108 | 40.58 | 05/15/13 | ||||||||
Mr. Robert I. Paller | 293 | 0.00 | 02/20/18 | |||||||
| 880 | 68.20 | 02/20/18 | ||||||||
| 283 | 0.00 | 02/21/17 | ||||||||
| 850 | 70.60 | 02/21/17 | ||||||||
| 441 | 0.00 | 02/22/16 | ||||||||
| 1,030 | 44.18 | 02/22/16 | ||||||||
| 1,035 | 43.95 | 02/23/15 | ||||||||
| 977 | 46.03 | 02/14/14 | ||||||||
| 1,089 | 41.31 | 02/20/13 | ||||||||
| 1,522 | 29.56 | 02/23/12 | ||||||||
| 1,660 | 27.11 | 02/22/11 | ||||||||
| 3,673 | 12.25 | 05/24/10 | ||||||||
| Name | Number of Options | Grant Price | Date of Grant | |||||||
| $ | ||||||||||
Mr. Joachim Roeser | 293 | 0.00 | 02/20/18 | |||||||
| 880 | 68.20 | 02/20/18 | ||||||||
| 283 | 0.00 | 02/21/17 | ||||||||
| 850 | 70.60 | 02/21/17 | ||||||||
| 441 | 0.00 | 02/22/16 | ||||||||
| 1,030 | 44.18 | 02/22/16 | ||||||||
| 444 | 0.00 | 02/23/15 | ||||||||
| 1,035 | 43.95 | 02/23/15 | ||||||||
| 977 | 46.03 | 02/14/14 | ||||||||
| 1,089 | 41.31 | 02/20/13 | ||||||||
| 1,522 | 29.56 | 02/23/12 | ||||||||
| 1,660 | 27.11 | 02/22/11 | ||||||||
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The following table summarizes information, as of December 31, 2018 relating to current equity compensation plans of the Corporation approved by security holders pursuant to which grants of options, full value options, restricted stock, restricted stock units or other rights to acquire stock have been granted from time to time under the CSOP, PRSOP and NEDSOP.Omnibus Plan, all options, full value awards and cash incentive awards would vest on the change of control. The NEOs are treated in the same way as other employees who hold options, full value awards or cash incentive awards under the plans. Change of control is deemed to have occurred if a person or group becomes the beneficial owner of 30% or more of the combined voting power of the Company; there is a consolidation or merger and the Company is not the surviving Company; the stockholders of the Company approve plans or proposals for a liquidation or dissolution of the Company or, if following a cash offer or merger, the members of the Board cease to constitute a majority of the Board. The amounts detailed in the Post Employment Payments table include the compensation payments and the value of any stock options, full value awards and cash incentive awards, which will become exercisable in these scenarios, using the 2020 year-end stock price of $90.73, as an indication.
NEOs based in the U.K. are provided with life assurance cover at six times their base salary if they die in service. In the case of the Executive Officers based in the U.S., the death in service cover is 1.25 times base salary, with the maximum payment capped at $200,000. The amount of these potential payments for each NEO is included in the table above, as an indication.
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If the Company terminates the employment of an Executive Officer without cause, the Executive Officer would normally be eligible for a severance payment to cover loss of salary and other direct compensation for the duration of the notice period specified in their employment agreement. All the NEOs have a twelve-month notice period. In addition, in line with the rules of the CSOP, PRSOP and Omnibus Plan, any CSOP and Omnibus options and cash incentive awards granted at market price would vest and the PRSOP both expired in May 2018Executive Officer would have twelve months from the date of termination to exercise these and no furtherany vested options wereand vested cash incentive awards granted at market price under these Plans after that date. At the 2018 Annual Meeting of Stockholders, the stockholders approved a new equity-based incentive plan, the Innospec Inc. 2018 Omnibus Long-Term Incentive Plan (“Omnibus Plan”). This plan provides for options exercisable for Common Stock and performance shares as well as SEUs, which are payable in cash based on stock price. No awards were made under the Omnibus Plan to any of the share plans. With regards to the options, full value awards and cash incentive awards, the NEOs in 2018.are treated the same way as other employees who hold options, full value awards and cash incentive awards under the plans. The Corporation does not have any equity compensation plans which have not been approved by stockholders. Additional information about the CSOP and PRSOP can be foundamounts detailed in the Compensation Discussionpost-employment payments table include the severance payments and Analysis section of the proxy statement and information about the NEDSOP can be found in the Director Compensation section of the proxy statement.
| Plan Category | No. of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by stockholders | 337,238 | $ | 14.106 | 900,000 | ||||||||
| Equity compensation plans not approved by stockholders | ||||||||||||
Total | 337,238 | $ | 14.106 | 900,000 | ||||||||
The Corporation has retained and continues to retain Smith, Gambrell & Russell, LLP, a law firm with which Mr. Paller is Of Counsel. During the fiscal year ended December 31, 2018 the Corporation paid Smith, Gambrell & Russell, LLP, $306,442 in fees for services provided during the period.
Mr. Landless is anon-executive director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”). In 2018, the Corporation’s subsidiary, Innospec Limited, sold scrap metal to EMR for a value of $335,840. A tendering process was operated to selectany share options, full value awards and cash incentive awards which will become exercisable, using the best buyer for the scrap metal.
Pursuant to the Corporation’s Code2020 year end stock price of Ethics Policy, all senior officers must disclose to the Board of Directors any material transaction or relationship that could reasonably be expected to give rise to a conflict of interests. The Code of Ethics Policy also states that no employee may seek to obtain special treatment from the Corporation for family members, friends or for businesses in which family members or friends have an interest. During the year ended December 31, 2018 the Corporation has not made any charitable contributions to any charity on which any Director serves as an Executive Officer.
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The independent registered public accounting firm of the Corporation, selected by the Audit Committee for the fiscal year ended December 31, 2019 is KPMG LLP.
The Board has adopted a written Audit Committee Charter.
As part of fulfilling its responsibilities, the Audit Committee:
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Based upon these reviews and discussions, the Audit Committee has recommended to the Board of Directors, and the Board of Directors has approved, that the Corporation’s audited consolidated financial statements be included in the Corporation’s Annual Report on Form10-K for the fiscal year ended December 31, 2018 filed with the SEC.$90.73.
No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that the Corporation specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be filed under either the Securities Act or the Exchange Act.
The foregoing report has been approved by all members of the Audit Committee.
DAVID F. LANDLESS, Chair
HUGH G. C. ALDOUS
JOACHIM ROESER
Principal Accountant Fees and Services
The Board of Directors are seeking ratification of KPMG LLP’s appointment at the 2019 Annual Meeting of Stockholders in respect of the 2019 fiscal year as described in Proposal 3 in this Proxy Statement.
Aggregate fees for professional services rendered for the Corporation by KPMG LLP and other global KPMG member firms for the fiscal years 2018 and 2017 were:
Fee type
| Fiscal 2018
| Fiscal 2017
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Audit | 2,005 | 1,600 | ||||||
Audit Related | - | - | ||||||
Tax | - | - | ||||||
Other | - | - | ||||||
Total | 2,005 | 1,600 | ||||||
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Audit CommitteePre-Approval Policies and Procedures
The Audit Committeepre-approves all audit and permittednon-audit services provided by the Corporation’s independent registered public accounting firm. The Audit Committee may delegatepre-approval authority to the Audit Committee Chairman, provided all such delegatedpre-approval decisions are reported to the Audit Committee at its next regularly scheduled meeting. Generalpre-approval of certain audit, audit-related and tax services, which are detailed as to type of service, is granted by the Audit Committee at each quarterly meeting. The Audit Committee subsequently reviews fees that are paid for suchpre-approved services. Specificpre-approval is required for all other services that are requested of our independent registered public accounting firm. These requests are reviewed quarterly, and the status of all such requests and services is reviewed with the Audit Committee.
In fiscal years 2018 and 2017, $nil and $nil, respectively, were paid to the Corporation’s independent registered public accounting firm for which thede minimis exception was used.
The table “Beneficial Owners at fiscalyear-end 2018” sets out certain information with respect to the beneficial ownership of the Corporation’s Common Stock as of December 31, 2018 by holders of more than 5% of the Corporation’s outstanding Common Stock. The table “Stock Ownership of Directors and Executive Officers” sets out informationwith regard to the Directors of the Corporation, our NEOs, and all current Directors and Executive Officers of the Corporation as a group. As of December 31, 2018 excluding treasury stock, there were 24,433,701 shares of Common Stock outstanding. According to the rules adopted by the SEC, a person is the “beneficial owner” of securities if he or she has or shares the power to vote them or to direct their investment or has the right to acquire beneficial ownership of such securities within sixty days through the exercise of an option, warrant, right of conversion of a security or otherwise. The percentage of the Corporation’s Common Stock beneficially owned by a person assumes that the person has exercised all options and converted all convertible securities that the person holds which are exercisable or convertible within sixty days of the date as of which such information is provided in the applicable table. To the knowledge of the Corporation, each stockholder has sole voting and investment power with respect to the stock indicated as beneficially owned, unless otherwise indicated in a footnote. Unless otherwise indicated, the business address of each person is the Corporation’s corporate address.
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| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||
BlackRock, Inc. | (1) | 3,993,716 | 16.40 | % | ||||||
55 East 52nd Street | ||||||||||
New York | ||||||||||
NY 10022 | ||||||||||
FMR LLC | (2) | 3,659,994 | 14.99 | % | ||||||
245 Summer Street | ||||||||||
Boston | ||||||||||
MA 02210 | ||||||||||
The Vanguard Group | (3) | 2,509,196 | 10.27 | % | ||||||
100 Vanguard Boulevard | ||||||||||
Malvern | ||||||||||
Pennsylvania | ||||||||||
PA 19355 | ||||||||||
Dimensional Fund Advisors LP | (4) | 1,465,866 | 6.00 | % | ||||||
Building One 6300 Bee Cave Road | ||||||||||
Austin | ||||||||||
TX 78746 | ||||||||||
Based on a review of filings with the SEC, the Corporation is unaware of other holders of more than 5% of the outstanding shares of Innospec Inc. Common Stock.
Notes:
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The following table sets out the amount of the Corporation’s Common Stock beneficially owned by each of the Directors, the CEO, the CFO and the other NEOs of the Corporation:
| Name | Shares Owned Directly or Indirectly | Shares Underlying Options Exercisable | Total | Percent of Class | ||||||||||||||
Mr. Hugh G. C. Aldous | (1) | 34,398 | 11,252 | 45,650 | * | |||||||||||||
Mr. Milton C. Blackmore | (2) | 7,000 | 2,506 | 9,506 | * | |||||||||||||
Dr. Philip J. Boon | 34,180 | 5,731 | 39,911 | * | ||||||||||||||
Mr. Ian P. Cleminson | 22,997 | 5,059 | 28,056 | * | ||||||||||||||
Mr. David F. Landless | 500 | 0 | 500 | * | ||||||||||||||
Dr. Ian M. McRobbie | 35,889 | 0 | 35,889 | * | ||||||||||||||
Mr. Robert I. Paller | 8,125 | 11,427 | 19,552 | * | ||||||||||||||
Mr. Lawrence J. Padfield | 2,019 | 5,035 | 7,054 | * | ||||||||||||||
Mr. Joachim Roeser | 5,260 | 8,198 | 13,458 | * | ||||||||||||||
Mr. Brian R. Watt | 30,553 | 4,852 | 35,405 | * | ||||||||||||||
Mr. Patrick S. Williams | 183,714 | 34,965 | 218,679 | * | ||||||||||||||
| Directors and Executive Officers as a group (13 persons) | (3) | 386,635 | 93,314 | 479,949 | 1.62 | |||||||||||||
Footnotes to “Stock Ownership” table:
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Section 16(a) of the Exchange Act requires the Corporation’s Directors and Officers, and persons who beneficially own more than 10% of a registered class of the Corporation’s Common Stock and other equity securities, to file initial reports of ownership and reports of changes in ownership of the Corporation’s Common Stock or other equity securities with the SEC. Such persons are required by SEC regulations to furnish the Corporation with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the Corporation, the Corporation believes that each of its Officers, Directors and beneficial owners of more than 10% of the Common Stock complied with all Section 16(a) filing requirements applicable to them during fiscal 2018, except that due to an administrative error, Mr. Landless filed one late report for a purchase of shares of Common Stock.
As of the date of this Proxy Statement, management is not aware of any matters to be presented at the Annual Meeting of Stockholders other than the matters specifically stated in the Notice of Annual Meeting of Stockholders and discussed in this Proxy Statement. If any other matter or matters are properly brought before the meeting, the persons named in the enclosed Proxy Form have discretionary authority to vote the proxy on each such matter in accordance with their judgement.
SOLICITATION AND EXPENSES OF SOLICITATION
The solicitation of proxies will be made initially through the internet and bye-mail. The Corporation’sCompany’s Directors, Executive Officers and employees may also solicit proxies in person, orvia computer, by telephone or email without additional compensation. In addition, proxies may be solicited by certain banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries that will mail material to or otherwise communicate with the beneficial owners of shares of the Corporation’sCompany’s Common Stock. All expenses of solicitation of proxies will be paid by the Corporation.Company.
A copy of the Corporation’s 2018Company’s 2020 Annual Report on Form10-K for the fiscal year ended December 31, 20182020 is now available to stockholders via the internet atwww.envisionreports.com/iosp. Stockholders who require a printed copy of the Annual Report on Form10-K may obtain one by writing to or calling our investor relations department: Investor Relations, Innospec Inc., Innospec Manufacturing Park, Oil Sites Road, Ellesmere Port, Cheshire, CH65 4EY, England, telephone+44-151-355-3611, or bye-mail toinvestor@innospecinc.com.
STOCKHOLDERS’ PROPOSALS FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS
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The CorporationCompany anticipates holding its 20202022 Annual Meeting of Stockholders on May 6, 2020.4, 2022.
Under the regulations of the SEC, any stockholder wishing to make a proposal to be acted upon at the 20202022 Annual Meeting of Stockholders and have it included in our proxy materials must present such proposals to the Secretary of the Corporation notCompany no later than November 27, 2019.23, 2021.
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Stockholder proposals or Director nominations not included in a proxy statement for an annual meeting must comply with the advance notice procedures and information requirements set out in the Bylaws of the CorporationCompany in order to be properly brought before that Annual Meeting of Stockholders. Under the Corporation’sCompany’s Bylaws, any stockholder desiring to make a proposal to be acted upon at the 20202022 Annual Meeting of Stockholders must present such proposals to the Corporate Secretary not before February 8, 20204, 2022 and not later than March 9, 2020.6, 2022.
By order of the Board of DirectorsBoard:
David B. Jones
Vice President, General Counsel,
Chief Compliance Officer and Corporate Secretary
March 22, 201919, 2021
PLEASE VOTE VIA THE INTERNET OR BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS ON YOUR NOTICE OR PROXY CARD OR ALTERNATIVELY, IF YOU HAVE REQUESTED WRITTEN MATERIALS SIGN, DATE AND RETURN YOUR PROXY CARD IN THE RETURN ENVELOPE PROVIDED.
| PLEASE VOTE VIA THE INTERNET OR BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS ON YOUR NOTICE OR PROXY CARD OR ALTERNATIVELY, IF YOU HAVE REQUESTED WRITTEN MATERIALS SIGN, DATE AND RETURN YOUR PROXY CARD IN THE RETURN ENVELOPE PROVIDED. |
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Your vote matters – here’s how to vote!MR A SAMPLE You may vote online or by phone instead of mailing this card. DESIGNATION (IF ANY) Votes submitted electronically must beADD 1ADD 2 received by 1:00 am, (Central Time), on ADD 3 May, 8, 2019.ADD 4ADD 5 OnlineADD 6
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4. 1. Election of two Class II Directors: +01—Milton C. Blackmore For Withhold 02—Robert I. Paller For Withhold For Withhold01 - David F. Landless 02 - Lawrence J. Padfield 03 - Patrick S. WilliamsFor Against Abstain For Against Abstain
2. Say on Pay - An advisory vote onRatification of the approvalappointment of executive 3.one Class 1 Director: Elizabeth K. Arnold. 4. Ratification of the appointment of Innospec Inc.’s independent compensation. registered public accounting firm.Bfirm: 3. Say on Pay—An advisory vote on the approval of executive compensation. For Against Abstain For Withhold For Against Abstain Authorized Signatures —This— This section must be completed for your vote to count. Please date and sign below.
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2019 Annual Meeting Admission Ticket 2019The 2021 Annual Meeting of Stockholders of Innospec Inc. Stockholderswill be held on Wednesday, May 8, 2019,5, 2021 at 10:00 a.m. Central00am Eastern Time, Innospec's offices 2600 Technology Forest Blvd.,virtually via the internet at www.meetingcenter.io/237172316. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. The Woodlands, Houston, TX77381 Upon arrival, please presentpassword for this admission ticket and photo identification at the registration desk.meeting is — OTL2021. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/iosp Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/iosp IFqIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Innospec Inc. + Notice of 20192021 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — May 8, 20195, 2021 Patrick S. Williams and Ian P. Cleminson, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Innospec Inc. to be held on May 8, 20195, 2021 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees and FOR Proposals 2, 3 and 3.4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.
Audit Committee Financial Expert
Pay for performance