Proposals 5, 6 7 and 87 are considered routine matters, and a broker will be permitted to exercise its discretion to vote uninstructed shares on these proposals. This means that, if you do not provide voting instructions on proposal 5, 6 7 or 8,7, your broker may nevertheless vote your shares on your behalf with respect to the ratification of the appointment of Deloitte & Touche LLP as ourthe Company’s independent registered public accounting firm for the fiscal year ending December 28, 2019,31, 2022, there-appointment of Deloitte LLP as the Company’s U.K. statutory auditor for the year ending December 28, 201931, 2022 and to authorizethe authorization of the Audit Committee to determine the remuneration of Deloitte LLP, but cannot vote your shares on any other matters being considered at the AGM.
Can I change my vote after I return my proxy card?
Yes. Shareholders
of record may revoke a proxy and/or change their vote prior to the completion of voting at the AGM by:
•signing another proxy card or voting instruction form with a later date and delivering it to the Corporate Secretary prior to 10:00 a.m., Mountainof the Company, 1144 Fifteenth Street, Denver, Colorado 80202 by 11:59 Eastern Time on May 21, 2019;
June 8, 2022;•voting again over the internet or by telephone prior to 10:00 a.m., Mountainby 11:59 Eastern Time on May 21, 2019 (or, if you are a street name holder, such earlier time as your bank or broker may direct);
June 8, 2022;•voting in person (virtually) at the AGM if you are a shareholder of recordAGM; or are a street-name holder that has obtained a legal proxy from your bank or broker; or
•notifying the Corporate Secretary of the Company in writing prior to 10:00 a.m., Mountainby 11:59 Eastern Time on May 21, 2019.
June 8, 2022.
Street name holders who wish to revoke or change their votes should contact the bank, broker or other nominee that holds their shares.
Who pays for costs relating to the proxy materials and AGM?
The
Company pays for the costs of preparing, assembling and mailing this Proxy Statement, the Notice, the
20182021 Annual Report, the proxy card and the
U.K. annual report and accounts for the year ended
December 29, 2018, along withJanuary 1, 2022, and the cost of posting the proxy materials on a
website, are to be borne by us.website. In addition to the use of mail,
ourthe Company’s directors, officers and employees may solicit proxies personally and by telephone, facsimile and other electronic means. They
will receive no compensation in addition to their regular
salaries. Wesalaries for this work. The Company may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the proxy material to their principals and to request authority for the execution of proxies.
WeThe Company may reimburse these persons for their expenses in so doing.
Shareholders’ requests under section 527 of the Companies Act
Under section 527 of the Companies Act, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish a statement on a website setting out any matter relating to:
(i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or
(ii) any circumstance connected with an auditor of the Company ceasing to hold office since the last annual general meeting.
The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act. Where the Company is required to place a statement on a website under section 527 of the Companies Act, it must forward the statement to the Company’s auditor notno later than the time when it makes the statement available on the website. The business whichthat may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the Companies Act to publish on a website.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors unanimously recommends that shareholders vote “FOR” each nominee to serve as director.
The Company’s Articles of Association provide that each director shall retire from office at each annual general meeting of the Company and shall be eligible for
re-election. The first proposal for consideration at the AGM is the election of each of the
eightnine candidates named below as a director for a
one-year term expiring at
our 2020the 2023 annual general meeting of shareholders.
Each of these candidates is currently a director. Each nominee has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unable to serve.
Ms. Karyn Ovelmen resigned from our Board of Directors on March 1, 2019 and will not be standing forre-election at the AGM.Upon the recommendation of the Nominating and Governance Committee, the Board has nominated each of the
nine directors identified below as a nominee for a
one-year term expiring at the
20202023 annual general meeting of shareholders or until his or her successor is duly elected and qualified, or until his or her earlier retirement, resignation, disqualification, removal or death. If any director nominee should become unavailable for election prior to the AGM, an event that currently is not anticipated by the Board, either the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board, or the number of directors may be reduced accordingly.
Set forth on the following pages is biographical and other background information concerning each nominee for director, as well as a discussion of the specific experience,
qualificationqualifications and skills of each director that helped lead the Board to conclude that each respective director should continue to serve as a member of the Board.
The form of shareholder resolutions for this proposal are set forth under the heading “Shareholder Resolutions for the
20192022 Annual General Meeting”
on page 56 ofin this Proxy Statement.
Composition of the Board of Directors
Our
The Company’s business and affairs are managed under the direction of ourits Board of Directors, which consists of eightnine directors. The Board has affirmatively determined that all of the directors, except Mr. Jurek who is the Chief Executive Officer of whom Messrs. Ireland, Plant and Klebe and Mrs. Mains have affirmatively been determined by our Board of Directors to be independent. Wethe Company, are independent under the NYSE listing standards. The Company is party to a shareholders agreement with certain affiliates of The Blackstone Group L.P.Inc. (“Blackstone” or ourthe “Sponsor”). This agreement grants ourthe Sponsor the right to designate nominees to ourthe Board of Directors subject to the maintenance of certain ownership requirements in us.the Company. See “Certain Relationships and Related Person Transactions—Transactions — Shareholders Agreement.” Currently, one of the directors, Mr. Simpkins, is a designee of the Sponsor.
The following presents the names, ages as of April
1, 201915, 2022 and selected biographical information for each of
ourthe director nominees.
| | | | | | | | | | | | | | |
Name | | Age | | | Position |
David L. Calhoun
Neil P. Simpkins | | 55 | 61 | | | Director, ChairmanChair of the Board |
James W. Ireland, III
| | | 64 | | | Director |
Ivo Jurek | | 57 | 54 | | | Director, Chief Executive Officer |
Julia C. Kahr
James W. Ireland, III | | 67 | 40 | | | Director |
Terry Klebe
Julia C. Kahr | | 43 | 64 | | | Director |
Stephanie K. Mains
Terry Klebe | | 67 | 51 | | | Director |
John Plant
Stephanie K. Mains | | 54 | 65 | | | Director |
NeilWilson S. Neely
| | 66 | | Director |
| Alicia Tillman | | 46 | | Director |
Molly P. SimpkinsZhang | | 60 | 52 | | | Director |
David L. CalhounNeil P. Simpkins has served as a director of Gates Industrial Corporation plc since November 2017 and as the Chair of the Board since January 2020. He has served as a director of Gates entities since 2014. He is currently an Executive Advisor to Blackstone, and prior to that was a Senior Managing Director of Blackstone’s Corporate Private Equity Group. Since joining Blackstone in 1998, Mr. Simpkins has led the acquisitions of TRW Automotive, Vanguard Health Systems, TeamHealth, Apria, Summit Materials, Change Healthcare and Gates. Before joining Blackstone, Mr. Simpkins was a Principal at Bain Capital. While at Bain Capital, Mr. Simpkins was involved in the execution of investments in the consumer
products, industrial, healthcare and information industries. Prior to joining Bain Capital, Mr. Simpkins was a consultant at Bain & Company in the Asia Pacific region and in London. He currently serves as a director of Apria, Inc., Change Healthcare, Inc. and TeamHealth, Inc. and previously served as a director of Summit Materials, Inc. from 2009 to 2018.
Ivo Jurek has served as a director of Gates Industrial Corporation plc since its formation in September 2017 and has served as the Chief Executive Officer and a director of Gates entities since 2014. He is a Senior Managing DirectorMay 2015. Mr. Jurek oversees and Headmanages all of Portfolio OperationsGates’ departments and lines of Blackstoneproducts and a Member of Blackstone’s Management and Executive Committees. Mr. Calhoun joined Blackstone in January 2014 and oversees a team within the portfolio operations group focused on creating and driving added value initiatives with Blackstone portfolio company CEOs. From 2014 to 2015, Mr. Calhoun served as Executive Chairman of the Board for Nielsen, a company he joined in 2006 asservices globally. As Chief Executive Officer, shortly after it was acquired byMr. Jurek has led Gates to expand product lines in fluid power and power transmission and strategically grow market share while driving improved financial performance. Mr. Jurek has a consortiumdeep understanding of private equity investors including Blackstone. Throughout his seven years’ tenure,new technology development, manufacturing, distribution and international business markets. Prior to joining Gates, Mr. Calhoun led Nielsen’s transformation into a leading global information and measurement company listed on the New York Stock Exchange (NLSN) and Standard & Poor’s 500 Index. Before Nielsen, Mr. CalhounJurek served as Vice ChairmanPresident of The General Electric CompanyEaton Electrical, Asia Pacific beginning in November 2012 until May 2015. During that time, Mr. Jurek had management oversight of Eaton Electrical’s Asia Pacific portfolio which included optimizing manufacturing plants, identifying new markets, and President and Chief Executive Officer of GE Infrastructure,assisting with the company’s largest business unit. During his distinguishedtwenty-six year tenure at GE, Mr. Calhoun ran multiple business units, including GE Lighting, GE Employers Reinsurance Co., GE Aircraft Engines, and GE Transportation (Aircraft and Rail). Earlier in his career at GE, he held a wide range of operating, finance, and marketing roles across the company, including within GE Plastics and GE Capital. In addition to Nielsen, Mr. Calhoun also serves on the Board of Directors of The Boeing Company and Caterpillar. He is theco-author with Rick Kashoverall performance of the book “How Companies Win.”company. Prior to that, Mr. Calhoun is a memberJurek served as Group President for Cooper Power Systems — Cooper Bussmann, with complete oversight of Virginia Tech’s Pamplin Advisory Council, which advises the university on studentall business activities there and alumni issues.in significant general management positions in International Rectifier Corporation and TRW Inc.
James W. Ireland, III has served as a director of Gates Industrial Corporation plc since November 2018. From 2011 tountil his retirement in 2018, Mr. Ireland served as President and Chief Executive Officer of General Electric Africa, a digital and industrial company focused on transforming the industry with machines that have software defined solutions. From 2007 until 2011, Mr. Ireland served as the President and Chief Executive Officer of General Electric’s Asset Management Group. From 1999 to 2007, Mr. Ireland was President of NBC Universal Television Stations and Network Operations (a General Electric wholly-owned subsidiary), one of the world’s leading media and entertainment companies in development, production, and marketing of entertainment, news and information to a global audience.Ivo Jurek has served as a director of Gates Industrial Corporation plc since its formation in September 2017 and has served as our Chief Executive Officer and Director since May 2015. Mr. Jurek oversees and manages all of Gates’ departments and lines of products and services globally. As CEO, Mr. Jurek has led Gates to expand product lines in fluid power and power transmission, and strategically grow market share through acquisitions and joint ventures, while driving improved financial performance through increased plants efficiency. Mr. Jurek has a deep understanding of new technology development, manufacturing, distribution and international business markets. Prior to joining Gates, Mr. Jurek served as President of Eaton Electrical, Asia Pacific from November 2012. During that time, Mr. Jurek had management oversight of Eaton Electrical’s Asia Pacific portfolio which included optimizing manufacturing plants, identifying new markets, and assisting with the overall performance of the company. Prior to that, Mr. Jurek served as Group President for Cooper Power Systems—Cooper Bussmann, with complete oversight of all business activities there and in significant general management positions in International Rectifier Corporation’s and TRW Inc.
Julia C. Kahrhas served as a director of Gates Industrial Corporation plc since its formation in September 2017 and has served as a director of Gates entities since 2014. She ishas 20 years of experience managing private equity investments, most recently as a Senior Managing Director of Blackstone’s Corporate Private Equity Group. Since joiningGroup, where she worked from 2004 through September 2021. While at Blackstone, in 2004, she has beenMs. Kahr was involved in the execution of Blackstone’sits investments in SunGard, Encore Medical, DJ Orthopedics, Summit Materials, Precision Medicine Group and Gates. Before joining Blackstone, she was a Project Leader at the Boston Consulting Group, where she worked with companies in a variety of industries, including health care, financial services, media and entertainment, and consumer goods. She is also the sole author of Working Knowledge, a book published by Simon & Schuster in 1998. SheMs. Kahr currently serves on the Boardas a director of Directors of DJ Orthopedics and Barry-Wehmiller Companies, Inc. and is also a member of the Board of Directors of, Sheltering Arms, BRIC Arts Media and New York Public Radio.Saint Ann’s School, and previously served as a director of Summit Materials, Inc. from 2009 to 2017.
Terry Klebehas served as a director of Gates Industrial Corporation plc since its formation in SeptemberDecember 2017 and has served as a director of Gates entities since 2016. Mr. Klebe was previously Senior Vice President and Chief Financial Officer of Cooper Industries plc, a multinational industrial manufacturing company with 2010 revenues of $5.1 billion, from 2002 until his retirement in February 2010. Following his retirement as Chief Financial Officer, Mr. Klebe continued to serveremained on the executive management team as vice chairmanVice Chairman at Cooper through his retirement inIndustries plc from February 2010 until April 2011. Mr. Klebe also served on the Boardboard of Directorsdirectors of Fairchild Semiconductors and as a head of the company’s Audit Committee until its sale.
sale in September 2016.
Stephanie K. Mains has served as a director of Gates Industrial Corporation plc since February 2019. Most recently, she served asMs. Mains is currently the CEO of LSC Communications-MCL, an Atlas Holdings portfolio company. Prior to that Ms. Mains was the interim Chief Executive Officer of GE Power Conversion from April 2020 until December 2020, and the President and CEO of ABB Electrification Products Industrial Solutions, a 2018 acquisition from GE. She led Industrial Solutions, a $2.6B leading provider of advanced technologies that distribute, protect and control electricity for a number of industrial, commercial, and residential applications around the world,GE, from November 2015 until January 2019. Prior to Industrial Solutions, sheShe served as Vice President of GE Distributed Power Global Services from March 2013 until October 2015, where she led a $2.2B global business servicing technologies that power the oil & gas, utilities, mining, and industrial segments. From March 2006 until March of 2013, she held positions of increasing responsibility from General Manager to Vice President as she led the global build out and transformation of a $4B service operations for GE Energy-Power the world’s leading provider of power equipment and services.from March 2006 until March 2013. Prior to joining GE Energy, sheMs. Mains spent 17 years across multiple GE businesses in financial and transformational leadership positions, including CFO for GE Aviation Services Material Solutions, a $4B aftermarket business. Mrs. Mains holds a B.B.A. in Finance fromSolutions. She currently serves on the Universityboard of Kentucky, USA.John Plantdirectors for Diamondback Energy, Inc., Stryten Manufacturing, LLC, and LCI Industries.
Wilson S. Neely has served as a director of Gates Industrial Corporation plc since its formationApril 2020. He is currently a strategic advisor to InterNex Capital, an asset-based, digital lender providing innovative and flexible working capital financing to small- and medium-sized businesses. Prior to that, from 1991 until his retirement in September 2017 and hasJanuary 2020, Mr. Neely served as a directorPartner of Gates entities since 2015.Simpson Thacher & Bartlett LLP with a corporate practice primarily in the areas of mergers and acquisitions and
capital markets. While at Simpson Thacher, Mr.
Plant was elected Chief Executive Officer of Arconic Inc. in February 2019. Mr. Plant is the former Chairman of the Board, presidentNeely advised on numerous business combination transactions, including leveraged buyouts, recapitalizations and
Chief Executive Officer of TRW Automotive, which was acquired by ZF Friedrichshafen AG in May 2015.strategic partnerships between private equity funds and corporate partners. In addition, he oversaw numerous capital markets transactions. He
was aco-member of the Chief Executive Office of TRW Inc. from 2001 to 2003 and an Executive Vice President of TRW from its 1999 acquisition of Lucas Varity to 2003. Prior to TRW, Mr. Plant was President of Lucas Variety Automotive and managing director of the Electrical and Electronics division from 1991 through 1997. Mr. Plant currently serves
on the board of directors and select committees for the University of Texas Law School Foundation, Readworks, myFace, and Historic Hudson Valley, of which he serves as
a director of Masco Corporation, Jabil Circuit Corporation and as Chairman of Arconic. He is a board
member of the Automotive Safety Council and also a Fellow of the Institute of Chartered Accountants.Neil P. Simpkinschair.
Alicia Tillmanhas served as a director of Gates Industrial Corporation plc since its formationApril 2021. She is currently the Global Chief Marketing Officer of Capitolis and has over 20 years of experience in September 2017global marketing, strategy, operations, and digital transformation in public and private companies. Prior to joining Capitolis, Ms. Tillman worked at SAP from 2015 through March 2021, where she spent four years in the role of Executive Vice President and Global Chief Marketing Officer, leading a marketing organization of over 2,000 employees. At SAP, she was a key contributor to the acquisition and integration of multiple companies, rebuilt the technology foundation to scale digital and demand generation capabilities and developed the brand story. Prior to joining SAP, she worked for American Express from 2004 through 2015, serving as head of Marketing, Public Affairs and Business Services. She currently serves on the board of directors of RainFocus.
Peifang Zhang (also known as Molly P. Zhang) has served as a director of Gates entitiesIndustrial Corporation plc since 2014. HeJuly 2020. She is retired from Orica Ltd., a Senior Managing Directorglobal mining services company, where she served in a number of Blackstone’s Corporate Private Equity Group. Sincesenior executive roles, including Vice President, Asset Management and Vice President/Manufacturing executive, Mining Systems. Before joining Blackstone in 1998, Mr. Simpkins has ledOrica, Dr. Zhang spent 22 years with Dow Inc. where she held executive positions including managing director, SCG-Dow Group, global business vice president for Dow Technology Licensing and Catalyst business, and regional manufacturing director of Dow Asia Pacific. Dr. Zhang currently serves on the acquisitionsboard of TRW Automotive, Vanguard Health Systems, Team Health, LLC, Apria Healthcare Group, Summit Materials, Change Healthcare,directors of two other public companies, Arch Resources, Inc. and Gates. Before joining Blackstone, Mr. Simpkins was a Principal at Bain Capital. While at Bain Capital, Mr. Simpkins was involved in the execution of investments in the consumer products, industrial, healthcare and information industries. Prior to joining Bain Capital, Mr. Simpkins was a consultant at Bain & Company in the Asia Pacific region and in London. He currently serves as a Director of Apria HealthcareAqua Metals, Inc. Her previous public board experience includes GEA Group, Change Healthcare,Cooper-Standard Holdings Inc. and Team Health, Inc. and served as a director of Summit Materials, Inc. from 2009 to 2018.Newmont Mining Corporation.
When considering whether directors have the experience, qualifications, attributes or skills, taken as a whole, to enable ourthe Board of Directors to satisfy its oversight responsibilities effectively in light of ourthe Company’s business and structure, the Board of Directors focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believeThe Company believes that ourits directors provide an appropriate mix of experience and skills relevant to the size and nature of ourthe business. In
particular, the members of our Board of Directors considered the following important characteristics, among others:
•Mr. Calhoun’s management perspective he brings to Board deliberationsSimpkins’ significant financial and his extensive management expertise at public companies,business experience, including as a current Executive Advisor to, and former Chief Executive Officer, Executive ChairmanSenior Managing Director in the Corporate Private Equity Group at, Blackstone and director of Nielsen.
former Principal at Bain Capital.•Mr. Jurek’s extensive business and industry experience as well as his experience leading Gates since May 2015.
•Mr. Ireland’s extensivesubstantial management expertise, including as former Chief Executive Officer of General Electric Africa and General Electric’s Asset Management Group.
Mr. Jurek’s extensive business and industry experience as well as his experience leading Gates since May 2015.
•Ms. Kahr’s extensive knowledge of a variety of different industries and her significant financial and investment experience from her involvement inprior employment with Blackstone, including as a Senior Managing Director.
•Mr. Klebe’s extensivefinancial acumen and business and leadership experience, including as former Chief Financial Officer and then Vice Chairman of the Board of Cooper Industries plc.
Mrs.•Ms. Mains’ leadership and operational experience from her service in various senior management roles, including as former President and CEO, ABB Electrification Products Industrial Solutions and Vice President of GE Distributed Power Global Services.
Mr. Plant’s significant management and operational experience from his service in various senior management roles, including as former Chairman of the Board, President andcurrent Chief Executive Officer of TRW Automotive.
LSC Communications-MCL and as a former Chief Financial Officer, as well as extensive experience across multiple GE businesses.•Mr. Simpkins’ significant financialNeely’s strong knowledge of corporate governance and his legal experience as a retired Partner from Simpson Thacher & Bartlett LLP in the areas of mergers and acquisitions and capital markets.
•Ms. Tillman’s executive experience in global marketing, strategy, operations and digital transformation, including digital and demand generation.
•Dr. Zhang’s global business experience includingand her strong understanding of the Asia market, as a Senior Managing Directorwell as her expertise in the Corporate Private Equity Group at Blackstoneindustrials sector.
CORPORATE GOVERNANCE
Board Highlights
Board composition
•Size of Board: 9 members
•Number of independent directors: 8
•Committee independence: 100%
Commitment to Board refreshment and former Principal at Bain Capital.diversity
CORPORATE GOVERNANCE
•Annual election of directors
•Average director tenure in years: 3 years
•New directors in the past two years: 3
•Percent female: 44%
•Percent ethnically diverse: 11%
Highly engaged directors
•Board and committee meetings held in 2021: 21
•Attendance rate: 100%
•During 2021, in addition to the formal meetings, directors received routine briefings and participated in ongoing discussions with management regarding the Company’s response to the Covid-19 pandemic and resulting market conditions.
Directors’ Independence and Controlled Company Exception
Our
As of the record date, April 12, 2022, the Sponsor holdsheld more than a majority of the voting power of ourthe Company’s ordinary shares eligible to vote in the election of ourthe directors. As a result, we arethe Company is a “controlled company” within the meaning of the NYSE corporate governance standards. Under these NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including the requirements that (1) that a majority of ourthe Board of Directors consist of independent directors, (2) that ourthe Board of Directors havehas a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, and (3) that ourthe Board of Directors havehas a nominating and governance committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. A company whose shares are listed on the NYSE that ceases to be a controlled company may continue to rely on these exemptions during transition periods prescribed by the NYSE. For
The Company has previously utilized such exemptions, but beginning in 2020, a majority of the Board now consists of independent directors. Since the beginning of 2021, the Compensation Committee and the Nominating and Governance Committee have been comprised entirely of independent directors with written charters addressing each such committee’s purpose and responsibilities. Thus, at
least some period, we intend to continue to utilizethis time, the Company no longer relies on these
controlled company exemptions.
The Board has affirmatively determined that
Messrs. Ireland, Klebe and Plant and Mrs. Mainsall of its directors, except Mr. Jurek who is the Chief Executive Officer of the Company, are independent under the NYSE listing
standards, and that Ms. Ovelmen, who served on our Board until her resignation in March 2019, was independent during her tenure.standards.
Board Meetings, AGM and Attendance
Directors are expected to attend Board meetings and meetings of committees on which they serve. In 2018,2021, the Board of Directors met a total of fivesix times. All directors attendedOverall director attendance at least 75 percent of the total meetings of the Board and its committees was 100%, with each individual director attending all meetings of Directorsthe Board and the committees on which he or she served during his or her tenure during 2018.in 2021. It is
the policy of the Board of Directors that directors are invited to attend the AGM, although such attendance is not mandatory.
In 2021, two directors attended the AGM.
The Board believes that independent leadership is important. The Board also believes that, depending on what appears to be in the best interests of the Company and its shareholders at any given point in time, it should be able to choose whether the roles of
ChairmanChair of the Board and Chief Executive Officer are combined or separate. Therefore, the Board does not have a policy on whether the role of
ChairpersonChair and Chief Executive Officer should be separate or combined and, if it is to be separate, whether the
ChairpersonChair should be selected from the independent directors. Currently, Mr.
David CalhounNeil Simpkins serves as
ChairmanChair of the Board and Mr. Ivo Jurek serves as Chief Executive Officer.
In cases where the Board believes that the
ChairmanChair and Chief Executive Officer roles should be combined
or when the Chair is otherwise not “independent” pursuant to
ourthe Company’s Corporate Governance Guidelines, the independent directors may elect from among themselves an individual who acts as Lead Director. The Lead Director shall help coordinate the efforts of the independent and
non-management directors in the interest of ensuring that objective judgment is brought to bear on sensitive issues involving the management of the Company and, in particular, the performance of senior management.
The Board’s Role in
Management’s Succession Planning
The Board of Directors is responsible for
reviewing the
development, implementation and regular review of a succession plan
forrelating to the Chief Executive Officer and
oversees and provides input to the CEO on succession planning for our other executive
officers. Board membersofficers that is developed by management. Directors are expected to have a thorough understanding of the characteristics necessary for a Chief Executive Officer to execute on a
long termlong-term strategy that optimizes operating performance, profitability and shareholder value creation. As part of its responsibilities under its charter, the
Nominating and GovernanceCompensation Committee
of the Board of Directors oversees the evaluation of management and
oversees and approves the management continuity planning process. Additionally, it
is the responsibility of the Nominating and Governance Committee to review and evaluatereviews the succession plans relating to the Chief Executive Officer and other executive officers and
to makemakes recommendations to the Board with respect to the selection of individuals to occupy these positions. The ongoing succession process is designed to reduce vacancy,
readinesstransition and
transitionreadiness risks and develop strong leadership quality and executive bench strength.
The succession plan for the Chief Executive Officer and other key employees is reviewed not less than annually with the Board of Directors in executive session.The Board’s Role in Risk Oversight
Our Board exercises direct oversight of strategic risks to the Company. The Audit Committee reviews guidelines and policies governing the process by which management assesses and manages the Company’s exposure to risk, including the Company’s major financial risk exposures and the steps management takes to monitor and control such exposures. The Compensation Committee oversees risks relating to the Company’s compensation policies and practices. Each committee charged with risk oversight reports to the Board on those matters.
Additionally, with respect to cybersecurity risk oversight, our Board and our Audit Committee receive updates from our information technology team to assess the primary cybersecurity risks facing the Company and the measures the Company is taking to mitigate such risks. In addition to such updates, our Board and our Audit Committee receive updates from management as to changes to the Company’s cybersecurity risk profile or significant newly identified risks.
Executive Sessions
To ensure free and open discussion and communication among thenon-management directors of the Board, thenon-management directors meet in executive session at most Board meetings with no members of management present. Our Chairman presides over executive sessions.
Board Committees
Our
The Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The composition and responsibilities of each committee are described below.
OurThe Board of Directors may also establish from time to time any other committees that it deems necessary or desirable. Members serve on these committees until such member’s successor is duly elected and qualified or until such member’s earlier resignation, removal, retirement, disqualification or death.
Each of the standing committees of the Board of Directors discussed below operate under written charters, which are available on
ourthe Company’s website at www.gates.com under “About Us: Investor Relations: Governance: Governance Documents.” The information contained on, or accessible from,
ourthe website is not part of this Proxy Statement by reference or otherwise.
The Audit Committee
currently consists of Mr.
Ireland, Mr. Klebe,
Mr. IrelandMs. Mains and
Mrs. Mains,Dr. Zhang, with Mr. Klebe serving as chair.
OurThe Audit Committee is responsible for, among other things:
•selecting and hiring our independent auditors, and approving the audit andnon-audit services to be performed by ourthe independent auditors;
•assisting the Board of Directors in evaluating the qualifications, performance and independence of ourthe independent auditors;
•assisting the Board of Directors in monitoring the quality and integrity of ourthe Company’s financial statements and ourits accounting and financial reporting;
•assisting the Board of Directors in monitoring ourthe Company’s compliance with legal and regulatory requirements;
•reviewing guidelines and policies governing the process by which management assesses and manages the Company’s exposure to risk, including the Company’s major financial and regulatory risk exposures and the steps management takes to monitor and control such exposures;
•reviewing the adequacy and effectiveness of our internal controls over financial reporting processes;reporting;
•assisting the Board of Directors in monitoring the performance of ourthe internal audit function;
•reviewing with management and ourthe independent auditors ourthe Company’s annual and quarterly financial statements;
•establishing procedures for the receipt, retention and treatment of complaints received by usthe Company regarding accounting, internal accounting controls, or auditing matters, and material legal and regulatory matters, as well as the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and
•preparing the audit committee report thatrequired by the rules and regulations of the SEC require to be included in ourthe annual proxy statement.
The
SEC rules and NYSE rules require usthe Company to have an Audit Committee comprised of solely independent directors. The Board has affirmatively determined that Messrs.Mr. Ireland, Mr. Klebe, Ms. Mains and Ireland and Mrs. MainsDr. Zhang qualify as independent directors under the NYSE listing standards and the independence standards of Rule10A-3 of the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”). In addition, ourthe Board of Directors has determined that Mr. Ireland, Mr. Klebe, isMs. Mains and Dr. Zhang are each an “audit committee financial expert” within the meaning of Item 407(d) of RegulationS-K under the Securities Act.Act of 1933, as amended from time to time (the “
Securities Act”). The Audit Committee held foureight meetings during 2018.2021.
Compensation Committee
Our
The Compensation Committee
currently consists of
Ms. Kahr, Mr. Klebe and Mr. Simpkins,
Mr. Calhoun andwith Ms. Kahr
with Mr. Simpkins serving as
chair.Chair. The Compensation Committee is responsible for, among other things:
•reviewing and approving corporate goals and objectives relevant to the compensation of our CEO,the Chief Executive Officer, evaluating our CEO’sthe Chief Executive Officer’s performance in light of those goals and objectives and, either as a committee or together with the other independent directors (as directed by the Board of Directors), determining and approving our CEO’sthe Chief Executive Officer’s compensation level based on such evaluation;
•reviewing and approving, or making recommendations to the Board of Directors with respect to, the compensation of ourthe other executive officers, including annual base salary, bonus and equity-based incentives and other benefits;
•overseeing the evaluation of management and the management succession planning process;
•reviewing and recommending the compensation of our directors;
•reviewing and discussing annually with management ourthe Company’s “Compensation Discussion and Analysis” disclosure required by SEC rules;
•preparing the compensation committee report required by the SEC rules to be included in ourthe annual proxy statement; and
•reviewing and making recommendations with respect to ourincentive and equity compensation plans.
The charter of the Compensation Committee permits the committee to delegate any or all of its authority to one or more subcommittees; provided, however, that when appropriate to satisfy the requirements of Section 16b-3 of the Exchange Act, any such subcommittee shall be composed solely of two or more members that have been determined to be “Non-Employee Directors” within the meaning of Rule 16b-3 under the Exchange Act. The charter of the Compensation Committee also permits the committee to delegate to one or more officers the authority to make awards to employees other than any officer subject to Section 16 of the Exchange Act under the incentive compensation or other equity-based plan, subject to compliance with the plan, the Company’s articles of association and the laws of the jurisdiction of its organization. In addition, the Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable.
See “Executive Compensation — Compensation Discussion and Analysis — Executive Compensation Determination Process” for a description of the process for determining compensation, including the role of the executive officers and independent compensation consultant.
The Compensation Committee held
fivefour meetings during
2018.2021.
Nominating and Governance Committee
Our
The Nominating and Governance Committee
currently consists of Mr.
Simpkins,Ireland, Ms. Kahr, Mr.
CalhounNeely and
Ms. Kahr,Mr. Simpkins, with Mr. Simpkins serving as
chair.Chair. The Nominating and Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board. The Nominating and Governance Committee may consider (a) minimum individual qualifications, including strength of character, mature judgment, familiarity with the Company’s business and industry, independence of thought and an ability to work collegially with the other members of the Board and (b) all other factors it considers appropriate, which may include age, gender and ethnic and racial background, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, corporate governance background, various and relevant career experience, relevant technical skills, relevant business or government acumen, financial and accounting background, executive compensation background and the size, composition and combined expertise of the existing Board. In addition, although the Nominating and Governance Committee considers diversity of viewpoints, background and experiences, the Board does not have a formal diversity policy. The Nominating and Governance Committee will consider the qualification of any candidate nominated by a shareholder in accordance with the Companies Act. The Nominating and Governance Committee will evaluate candidates recommended by shareholders on a substantially similar basis as it considers other nominees.
The Nominating and Governance Committee is also responsible for, among other things:
•overseeing the evaluation of the Board of Directors and management;
Directors;•reviewing developments in corporate governance practices and developing and recommending a set of corporate governance guidelines; and
•recommending members for each committee of ourthe Board of Directors.
The Nominating and Governance Committee held three meetings during 2018.2021.
The Board’s Role in Risk Oversight
The Board exercises direct oversight of strategic risks to the Company, which includes regular review and evaluation of the Company’s system of financial and operational internal controls, its compliance with applicable laws and regulations, its programs and protocols to minimize information security risks, and its processes for identifying, assessing and mitigating other significant risks that may affect the Company. The Board also exercises direct oversight of the Company’s environmental, social and governance (“ESG”) and human capital management strategies, practices and policies, including the Company’s reporting on such matters.
The Committees also have certain responsibilities related to risk oversight. The Audit Committee reviews guidelines and policies governing the process by which management assesses and manages the Company’s exposure to risk, including the Company’s major financial risk exposures and the steps management takes to monitor and control such exposures. The Audit Committee also oversees the Company’s Code of Business Conduct and Ethics and other material legal and regulatory policies, including the Company’s Whistleblower Policy, and reviews reports and investigations of potential violations under such policies. The Compensation Committee oversees risks relating to the Company’s compensation policies and practices for all employees and conducts a comprehensive compensation risk assessment at least annually. The Compensation Committee has regular discussions related to human capital, including management succession planning. Each committee charged with risk oversight reports to the Board on those matters on a regular basis.
To fulfill its responsibilities related to risk oversight, the Board must understand the significant risks the Company faces and confirm management is identifying and appropriately managing and mitigating such risks. In 2020, the Company implemented a robust Enterprise Risk Management (“ERM”) program, which includes an annual risk assessment and project plan, creation of a risk register to monitor mitigation actions and identify emerging risks, on-going dialogue and collaboration among management, use of data analytics and data science methodologies, quarterly meetings on mitigation plans, and periodic reports to the Board. The ERM process is managed by a management committee called the Enterprise Risk Committee, led by the Chief Financial Officer, Chief Legal Officer, Chief Accounting Officer and Vice President of Global Internal Audit, in coordination with senior functional leaders across the Company.
With respect to information security risk oversight, the Board receives regular updates from the Company’s senior management team to assess cybersecurity and other information technology risks facing the Company and the measures the Company is taking to mitigate such risks. The Company’s approach to identifying and mitigating such risks is ongoing monitoring of all of its technology systems and a comprehensive process to ensure its technology environment is operating and maintained in accordance with best practices and security standards defined within the NIST Cybersecurity Framework. In the past three years, the Company has not experienced any material information security breaches or incurred any material expenses, penalties, or settlements related to information security breaches. Employees take part in a mandatory internal educational program to ensure continual awareness of new and emerging threats (which includes phishing simulations) and computer-based training that is required at the time of hire and annually thereafter. Employees are subject to information technology policies, including the Company’s Acceptable Use Policy, Dual Use Device Policy, Information Security Policy and Password Policy.
Board Education
The Company provides continuing education for directors through board materials and presentations, discussions with management, and the opportunity to attend external board education programs. In addition, since 2020, the Company has provided all directors with access to the resources of the National Association of Corporate Directors through a Company membership.
Executive Sessions
To ensure free and open discussion and communication among the non-management directors of the Board, the non-management directors meet in executive session at most Board meetings without members of management. The Chair presides over executive sessions of non-management directors.
Code of Business Conduct and Ethics and Corporate Governance Guidelines
We maintain
The Company maintains a Code of Business Conduct and Ethics that applies to all of
ourits officers, directors and employees, including
our principalthe chief executive officer,
principalchief financial officer,
principalchief accounting officer and
corporate controller, or persons performing similar functions, which is posted on
ourits website at www.gates.com under “About Us: Investor Relations: Governance: Governance Documents.”
OurThe Code of Business Conduct and Ethics is a “code of
ethics,”ethics” as defined in Item 406(b) of Regulation
S-K. We The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of
ourthe code of ethics on
ourits website. The information contained on, or accessible from,
ourthe website is not part of this Proxy Statement by reference or otherwise.
Our
The Company’s Corporate Governance Guidelines set forth many of the practices, policies and procedures that provide the foundation of
ourits commitment to strong corporate governance. The policies and practices covered in
ourthe Corporate Governance Guidelines include operation of the Board of Directors, Board structure, director independence and Board committees.
OurThe Corporate Governance Guidelines are reviewed at least annually by
ourthe Nominating and Governance Committee and are revised as necessary or appropriate.
OurThe Corporate Governance Guidelines are posted on
ourthe Company’s website at www.gates.com under “About Us: Investor Relations: Governance: Governance Documents.”
Director, Officer and Employee Hedging and Pledging
The Company’s insider trading policy contains prohibitions on hedging and pledging. Directors, executive officers and employees are prohibited from trading in puts or calls or similar instruments of Company stock, from engaging in short sales of Company stock and from engaging in transactions (including variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of Company stock. Directors, executive officers and employees are also prohibited from pledging Company stock as collateral for a loan or as part of a margin account.
Compensation Committee Interlocks and Insider Participation
During the fiscal 2018,year ended January 1, 2022 (“Fiscal 2021”), Mr. Simpkins, Mr. Calhoun and Ms. Kahr and Mr. Klebe served on the Compensation Committee. None of these individuals has been an officer or employee of the Company or any of its subsidiaries at any time. In 2018,Fiscal 2021, none of ourthe executive officers served as a member of the board of directors or compensation committee of any other company that has one or morewhose executive officers servingofficer(s) served as a member of ourthe Company’s Board or Compensation Committee. The Company and certain of its affiliates are party to certain transactions with Blackstone described in the “Related-Person Transactions Policy and Procedures” section of this Proxy Statement.
Communications with the Board of Directors
Any shareholder or other interested party may communicate with
ourthe directors, individually or as a group, the
ChairmanChair or the
non-management or independent directors as a group, by addressing such communications to the
General Counsel and Corporate Secretary of the Company, 1144 Fifteenth Street, Denver, Colorado 80202, who will forward such communications to the appropriate party unless the communications are of a personal nature or not related to the duties and responsibilities of the Board of Directors, including, without limitation, junk mail, mass mailings, business solicitations, spam, surveys and routine product or business inquiries.
Shareholder Engagement
The Company values shareholder engagement and is committed to maintaining open communications with the investment community. Throughout the year, management engages with shareholders on topics including company strategy and performance, corporate governance, compensation practices and sustainability. During 2021, in addition to quarterly earnings calls, the senior management team participated in eleven investor conferences and a number of other investor meetings. These engagements typically included the Company’s Chief Executive Officer, who is also a director, as well as its Chief Financial Officer and its Vice President of Investor Relations. The input from these engagements informs the Company’s decision-making and it intends to continue this outreach going forward.
The Company also submits an advisory vote to its shareholders on an annual basis to approve the Named Executive Officer compensation. At the 2021 AGM, approximately 95% of the votes cast were in favor of the advisory vote to approve executive compensation. The Committee took this into account when making the decisions described in the Compensation Discussion and Analysis in this proxy statement.
The Company welcomes investor interaction and feedback. The Investor Relations department is the point of contact for shareholder interaction with the Company and can be reached through investors.gates.com. The information contained on, or accessible from, the website is not part of this Proxy Statement by reference or otherwise.
The following presents the positions, ages as of April 1, 201915, 2022 and selected biographical information for each of ourthe Company’s current executive officers (other than Mr. Jurek, whose biographical information appears above under “Director Backgrounds”). | | | | | | | | | | | | | | |
Name | | Age | | | Position |
Roger C. Gaston
Cristin Bracken | | 54 | 63 | Senior Vice President, Chief Legal Officer and Corporate Secretary |
| Grant Gawronski | | 59 | | Executive Vice President—Human Resources |
Grant Gawronski
| | | 56 | | | President and Chief Commercial Officer |
Walter T. Lifsey | | 63 | 60 | | | Executive Vice President and Chief Operating Officer |
David H. Naemura
L. Brooks Mallard | | 55 | 49 | | | Executive Vice President and Chief Financial Officer |
Jamey S. Seely
Thomas Pitstick | | 50 | 47 | | | ExecutiveChief Marketing Officer and Senior Vice President General Counsel and Corporate Secretaryof Strategic Planning |
Roger
Cristin C. GastonBrackenhas served as our Executivethe Company’s Senior Vice President—Human ResourcesPresident, Chief Legal Officer and Corporate Secretary since October 2020. Ms. Bracken joined the Company in January 20182017, previously serving as its Vice President and Assistant General Counsel, Compliance and Litigation, and then serving as its interim General Counsel prior to her appointment as Chief Legal Officer. As Chief Legal Officer, Ms. Bracken is responsible for all legal functions for Gates, including securities and corporate governance, M&A, litigation, commercial, regulatory, compliance, patents and trademarks, real estate, employment and labor, and environmental matters. Ms. Bracken has extensive experience as a lawyer specializing in compliance, complex litigation, risk management, regulatory, commercial agreements and transactions, and employment law for public and private equity-backed corporations. Prior to joining Gates, she held senior legal leadership roles in both the oil and gas and energy trading industries at companies such as SM Energy Company, Forest Oil Corporation and Dynegy Inc. She also previously served as Senior Vice President—Human Resources from August 2016. As Executive VP of Human Resources, Mr. Gaston works to build and enhance the Gates HR function globally. He oversees talent management, recruiting, benefits, labor relations, maintaining a healthy workforce, and talent development. Prior to Gates,an Assistant District Attorney in Houston, Texas. Ms. Bracken began her legal career at Fulbright & Jaworski LLP in its Dallas office.
Mr. Gaston worked as Senior Vice President- Human Resources for Avaya, a multibillion dollar enterprise telecommunications and solutions company, since 2006. At Avaya, Mr. Gaston oversaw all aspects of human resource management and industrial relations policies, practices and operations. Before Avaya, Mr. Gaston was a Corporate Vice President- Human Resources for Storage Technology Corp. from 2000 to 2005. Prior to Storage Technology Mr. Gaston
Grant Gawronski has served as the Senior Vice President, Human Resources for Toys R Us, Inc. from 1996-2000. A Chapter 11 petition for bankruptcy protection was filed by Avaya in January of 2017.Grant Gawronski has served as ourCompany’s Executive Vice President &and Chief Commercial Officer since December 2018. His direct commercial responsibilities include thefirst-fit and replacement businesses in the Americas region, the Europe, Middle East & Africa region, and EMEA regions,the East Asia & India region, as well as the Company’s global oil & gas business. Mr. Gawronski joined Gates in 2017 as President, Americas, and has broad leadership experience. Prior to joining the Company, Mr. Gawronski served as President, Electrical Industrial and Infrastructure for Eaton Corporation from 2012 to 2017. In that role, Mr. Gawronski oversaw a portfolio that included global oil and gas business units, the power quality business unit, and all Eaton electrical business units in Latin America and Canada. Prior to that, Mr. Gawronski served as Group President at Cooper Industries, and in significant general management positions at GE Lighting.
Walter Lifseyhas served as ourthe Company’s Executive Vice President and Chief Operating Officer since August 2015. As COO,Chief Operating Officer, Mr. Lifsey manages and oversees all manufacturing and operations globally for Gates, including the Operationsoperations function, HSE, Quality Assurance, Procurementhealth, safety and environmental, quality assurance, procurement and certain New Product Development. Mr. Lifsey has transformed manufacturing processes and procedures at Gates and is developing critical new assets and infrastructure for Gates globally.product development. Prior to joining Gates, Mr. Lifsey served as Chief Operating Officer of View Inc., a world-class manufacturer of intelligent windows, where Mr. Lifsey was responsible for all aspects of manufacturing, product quality, manufacturing engineering, operational planning, and manufacturing information systems. Before his time at View, Mr. Lifsey served in various roles at Atmel Corporation beginning in 2006 before becoming their as Chief Operating Officer where he led global operations from May 2010 to November 2012. Prior to Atmel, he served in various senior management roles at International Rectifier Corporation and TRW Inc.David Naemura
L. Brooks Mallardhas served as ourthe Company’s Executive Vice President and Chief Financial Officer since March 2015.February 2020. As CFO, Mr. NaemuraMallard manages Gates’ global corporate finance and accounting functions, including capital structure, resource allocation, financial reporting and the maintenance of ourthe global internal control systems. Mr. Naemura also manages Information Technology and Gates’ mergers and acquisitions function. Previously, Mr. NaemuraMallard served as the Chief Financial Officer of Henniges Automotive, a Group CFO in Danaher Corporation starting in April 2012. While Group CFO, Mr. Naemura maintained responsibilityglobal supplier of highly engineered sealing and anti-vibration systems for a diverse group of businesses in a variety of industrial and electronics end markets.the automotive market, beginning June 2019. Prior to serving in his Group CFO Role at Danaher Corporation, Mr. NaemuraHenniges Automotive, he served as a Platform CFOthe Executive Vice President and Chief Financial Officer of Jeld-Wen beginning in DanaherNovember 2014, where he helped take the company from June 2009 to March 2012. Mr. Naemura wasbeing private equity held, through an initial public offering on the New York Stock Exchange. He also previously an operating company CFO in Danaher. Prior to Danaher, Mr. Naemura was employed by Tektronix Corporation since 2000, prior to their acquisition by Danaher Corporation in 2007. Mr. Naemura was also formerly an auditor.Jamey Seelyhas held senior financial leadership roles with TRW Automotive, Cooper Industries plc, Thomas & Betts, and Briggs & Stratton during his career.
Thomas G. Pitstickhas served as our Executivethe Company’s Chief Marketing Officer and Senior Vice President General Counselof Strategic Planning since October 2020. Prior to that, he served in various leadership roles, including Chief Marketing Officer and Corporate SecretarySenior Vice President of Product Line Management, as well as Senior Vice President of Innovation, since September 2017.joining the Company in January 2016. Mr. Pitstick is responsible for global marketing, company branding, corporate communications, global product line management, R&D for engine systems products, strategic planning, corporate development and M&A. Prior to joining Gates, Ms. Seely served as Executive Vice President, General Counsel and Corporate Secretary for ION Geophysical overseeing all corporate matters, securities regulation and disclosure issues, corporate governance, litigation, executive compensation and a broad range of financings, joint ventures and strategic transactions. Prior to ION, Ms. SeelyMr. Pitstick served as Senior Vice President of Alternative Energy for NRG Energy, Inc.,Marketing — Electrical Sector with management and legal oversight of multiple new business and startup ventures related to enhanced oil recovery, solar power and nuclear project development.Eaton Corporation. Prior to NRG Energy, Ms. SeelyEaton’s acquisition of Cooper Industries, he served as Vice President and General Counsel at DirectManager of the Cooper Power Systems Energy Automation Solutions business unit and as a partnerheld various roles in theCooper’s corporate and securities law groupbusiness development functions. Before Cooper, Mr. Pitstick held a number of Thompson & Knight LLP. Ms. Seely is licensed to practice in Texascommercial, product line management and New York.business development roles with technology start-up companies.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and AnalysisExecutive Summary
This Compensation Discussion & Analysis (“
CD&A”) describes the compensation earned by or paid to our the Company’s principal executive officer (“Chief Executive Officer our ”), principal financial officer (“Chief Financial Officer”) and ourthe three other most highly compensated executive officers serving in such capacities as of December 29, 2018January 1, 2022 (collectively, referred to as ourthe “Named Executive Officers”). OurThe Named Executive Officers for Fiscal 2021 are listed below: | | | | | | | | |
Name | | Title
Position |
Ivo Jurek | | Chief Executive Officer |
David Naemura
L. Brooks Mallard | | Chief Financial Officer |
Grant Gawronski | | Chief Commercial Officer |
Walter Lifsey | | Chief Operating Officer |
Jamey Seely
Thomas Pitstick | | ExecutiveChief Marketing Officer and Senior Vice President General Counsel and Corporate Secretaryof Strategic Planning |
Compensation Philosophy and Objectives
Our philosophy is
To ensure management’s interests are aligned with those of the shareholders, the Company emphasizes a pay-for-performance compensation philosophy. The Company believes that a significant portion of each executive’s compensation should be “at risk” and tied to
offer anoverall Company and individual performance. The executive compensation program
that willis designed to enable
usthe Company to attract, motivate, reward and retain high-caliber executives who are capable of creating and sustaining value for
ourcustomers and shareholders
and achieving the Company’s business goals over the long term. In addition,
ourthe executive compensation program is designed to provide a fair and competitive compensation opportunity that appropriately rewards executives for their contributions to
ourthe Company’s success.
We also believe that a significant portion of each executive’s compensation should be “at risk” and tied to overall Company and individual performance. As described below,
we believethe Company believes that each element of
ourits executive compensation program aligns with this philosophy.
Executive Compensation Structure
The material elements of ourthe executive compensation program include basethe following, all of which are described in detail in this CD&A:
•Base salary an annual,
•Annual Cash Bonus (a short-term incentive plan that is tied in part, to Companythe Company’s annual financial performance,performance)
•Long-Term Equity Incentives (a long-term incentive opportunities, broad-basedopportunity consisting of performance-based restricted stock units, time-based vesting restricted stock units and stock options)
•Broad-based employee benefits, limited perquisites and severance coverage all
Say-on-Pay and Say-on-Frequency Votes
In 2021, the Compensation Committee considered the outcome of
which are described below.Corporate the shareholder advisory vote on 2020 executive compensation when making decisions relating to the compensation of the Named Executive Officers and the Company’s executive compensation program and policies. The shareholders voted at the 2021 AGM, in a non-binding, advisory vote, on the 2020 compensation paid to the Named Executive Officers. Approximately 95% of the votes cast were in favor of the Company’s 2020 compensation decisions. Based on this level of support, the Compensation Committee decided that the “say-on-pay” vote result did not necessitate any substantive changes to the compensation program.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), shareholders can vote on the frequency of say-on-pay voting once every six years. The Company expects this vote to next occur at its 2025 annual meeting. Until that time, the Company expects to hold an advisory, non-binding say-on-pay vote on an annual basis.
Governance Highlights
Related to Compensation PracticesThe Company is committed to corporate governance practices that promote long-term value and strengthen board and management accountability to its shareholders, including the following: | | | | | | | | |
What We Do (Best Practice)
| | What We Don’t Allow
Compensation Practice |
• SeparatePay-for-Performance
| | — The majority of the roles of Chairmantotal executive direct compensation is variable and Chief Executive Officer• Enforce strict insider trading policies
• Set stock ownership guidelines for executives and directors
• Limit perquisites and other benefits
• Incorporatechange-in-control provisions that are consistent with market practice
| | • No hedgingdirectly or pledging ofindirectly tied to Company stock by executives or directors
• Nochange-in-control severance multiple in excess of three times salary and target bonus
• No excise tax or income taxgross-ups (except in the event of relocation)
•performance.
— No incentive funding when Company performance on a metric does not meet threshold requirements for such metric under ourthe annual short-termshort and long term incentive plan• plans (relating to performance awards).
— Half of the Chief Executive Officer’s equity-based compensation is performance based to motivate enhancement of long-term shareholder value. — Compensation Committee review of executive tally sheets reflecting all compensation components to ensure that compensation decisions are in line with the Company’s pay-for-performance philosophy. |
| Excellence on the Board | | — Annual election of directors by majority vote. — Separation of Chair and Chief Executive Officer roles. — All members of Audit Committee are financial experts. |
| Robust Stock Ownership Guidelines | | Stock ownership guidelines of 6x base salary for the Chief Executive Officer; 3x base salary for other executive officers and certain senior vice presidents; 4x cash retainer for directors. |
| Double Trigger Change in Control | | Executive Change in Control Plan and, beginning in 2020, equity grants require both a change in control and a qualifying termination for accelerated vesting. |
| Strict Trading Policy; Anti-Hedging and Pledging Policies | | Enforcement of a strict trading policy; no short sales or speculative trading, including no hedging or pledging of Company stock, by executives or directors. |
| Clawback Policy | | Recovery of cash and equity incentive compensation in certain circumstances if it was paid based on inaccurate financial statements. |
| Tax Gross-Ups | | No guaranteedexcise tax or income tax gross-ups (except in the event of relocation). |
| Employment Contracts | | None of the current Named Executive Officers have an employment contract. |
| Independent Compensation Consultant | | Retains an independent compensation consultant reporting directly to the Compensation Committee. |
Executive Compensation Determination Process
Role of Board, and Management.Compensation Committee. The Compensation Committee provides assistance to ourthe Board for oversight of ourto oversee the Company’s executive compensation program. Our BoardAs part of its responsibilities under its charter, the Compensation Committee oversees the annual compensation decision process for the Named Executive Officers, including the Chief Executive Officer. The Compensation Committee has historically taken into account multiple factors,
such as considering the responsibilities, performance, contributions and experience of each Named Executive Officer and their compensation in relation to other employees and other equivalent roles.
In addition, the Board takes into account our Chief Executive Officer’s judgment and knowledge of our industry when considering recommendations for executive officer compensation. Our Chief Executive Officerroles at peer companies.
The Compensation Committee annually reviews
each executive officer’s and Named Executive Officer’s performance with the
Board and recommends an appropriate base salary, annual incentive target opportunity and annual incentive payout and, if applicable, grant of long-term equity incentive award. Based upon the recommendations of our Chief Executive Officer and the other considerations described below and in consideration of the executive compensation philosophy described above, the Board approves the annual compensation packages for our executive officers other than our Chief Executive Officer.The Board annually reviews our Chief Executive Officer’s performance, base salary, annual incentive target opportunity and outstanding long-term incentive awards and approves any changes to the Chief Executive Officer’s overall compensation package in light of such review. OurThe Chief Executive Officer does not participate in deliberations regarding his own compensation.
Timing
In addition, the Compensation Committee has historically taken into account the recommendations of the Chief Executive Officer based on his judgment and knowledge of the industry when making compensation decisions for the executive officers (other than the Chief Executive Officer). The Chief Executive Officer annually reviews each other executive officer’s performance with the Compensation Decisions. Pay recommendationsCommittee and recommends to the Compensation Committee an appropriate base salary, annual incentive target opportunity and annual incentive payout and grant of long-term equity incentive award. Based upon this recommendation and the other considerations described below, and in consideration of the executive compensation philosophy described above, the Compensation Committee reviews the overall annual compensation packages for our executives,the executive officers, including the Named Executive Officers, and approves such compensation packages, other than the proposed equity grants. Proposed grants of equity to the Named Executive Officers and other Section 16 officers are madereviewed and approved by the full Board in order to qualify such grants as exempt from the short-swing profit provisions of Section 16 of the Exchange Act.
Role of the Independent Compensation Consultant. The Compensation Committee retains an independent compensation consultant, Aon’s Human Capital Solutions Practice, a division of Aon plc (the “Consultant”), to support the oversight and management of the executive compensation program. The Compensation Committee retains sole authority to hire or terminate the Consultant, approve its compensation, determine the nature and scope of services, and evaluate performance. One or more representatives of the Consultant attend Compensation Committee meetings, as requested, and communicate with the Compensation Committee atChair between meetings. The Compensation Committee makes all final decisions. The Consultant’s specific roles include, but are not limited to:
•advising the Compensation Committee on executive compensation trends and regulatory developments;
•providing a total compensation study for executives, compared against the companies in the peer group, and recommendations for executive pay;
•working with the Compensation Committee to develop an appropriate peer group of comparable companies to serve as a reference point in executive compensation decision-making;
•providing advice to the Compensation Committee on governance best practices, as well as any other areas of concern or risk;
•serving as a resource to the Compensation Committee Chair for meeting agendas and supporting materials in advance of each meeting;
•reviewing and commenting on proxy disclosure items, including this CD&A;
•reviewing and commenting on the Compensation Committee’s annual compensation risk assessment;
•advising the Compensation Committee on management’s pay recommendations; and
•from time to time, reviewing and providing compensation recommendations for non-employee directors to the Nominating and Governance Committee.
The Compensation Committee has assessed the independence of the Consultant as required by SEC and NYSE rules. The Compensation Committee reviewed its second scheduled meetingrelationship with the Consultant and considered all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act. Based on this review, the Compensation Committee concluded that the Consultant is independent and there are no conflicts of interest raised by the work performed by the Consultant.
Role of the Peer Group. The Compensation Committee, with the help of the Consultant, conducts an annual review and evaluation of executive and director compensation in comparison to an industry peer group. In establishing the industry peer group, the Compensation Committee targets approximately 15-20 companies based on the following selection criteria:
•publicly-traded companies within similar Global Industry Classification Standard (“GICS”) code classifications;
•peer companies used by the potential peer companies (peers of peers) within the similar GICS codes;
•peer companies used by proxy advisory firm Institutional Shareholder Services Inc. (“ISS”) in 2020;
•companies with annual revenues of approximately 0.4x to 3x Gates’ annual revenues; and
•companies with enterprise values of approximately 0.2x to 5x Gates’ total enterprise value.
For Fiscal 2021 compensation decisions, the Compensation Committee selected the same companies used for the fiscal year typically heldended January 2, 2021 compensation decisions, with the addition of one new company, Dover Corporation. The full list of peers, all of which are in the GICS Industrials Sector and Capital Goods Industry Group, is shown below. Regal Beloit Corporation and Rexnord Corporation merged during 2021, but are listed separately as they were included in the peer group pay study prior to the merger.
1.AMETEK, Inc.
2.Colfax Corporation
3.Crane Co.
4.Donaldson Company, Inc.
5.Dover Corporation
6.Flowserve Corporation
7.Graco Inc.
8.IDEX Corporation
9.Ingersoll Rand Inc.
10.Lincoln Electric Holdings, Inc.
11.Nordson Corporation
12.Pentair plc
13.Regal Beloit Corporation
14.Rexnord Corporation
15.SPX Corporation
16.The Timken Company
17.Xylem Inc.
The Compensation Committee uses competitive compensation data from the annual total compensation study of peer companies as a reference point to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Compensation Committee uses multiple reference points when establishing targeted compensation levels. The Compensation Committee uses the competitive 50th percentile for targeted total compensation as a guide, but does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader U.S. market. Instead, the Compensation Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.
For the fiscal year ending December 31, 2022 (“Fiscal 2022”), the Compensation Committee, in consultation with the Consultant, reviewed the composition of the peer group and, using the same selection criteria, maintained the same peer group as used for Fiscal 2021 compensation decisions.
Role of Tally Sheets. Each year, the Compensation Committee conducts a comprehensive compensation review for each Named Executive Officer prior to making decisions about executive compensation for the next year. The Committee reviews a tally sheet for each Named Executive Officer that encompasses two years of all elements of compensation, including the value of base salary, short-term incentives, long-term incentives, retirement benefits, health and welfare benefits and personal benefits. This comprehensive review ensures that future compensation decisions are in line with the Company’s pay-for-performance compensation philosophy.
Timing of Compensation Decisions. The Compensation Committee generally makes executive compensation decisions in February aroundof each year, after the same time we report ourCompany reports its fourth quarter andyear-end financial results for the preceding fiscal year (the “February meeting”). This timing allows the Compensation Committee to have a complete financial performance picture prior tobefore making compensation decisions.Compensation decisions with respect to prior year performance, as well as annual equity awards and target performance levels under our incentive plans for the current year are typically made at this February meeting. Any equity awards recommended by the Compensation Committee at this meeting are reviewed by the Board and, if approved, are dated on the date of the Board meeting held later that day or the following day. The exception is executive compensation, including equity grants, to executives who are promoted or hired from outside the Company during the year. These executives may receive compensation changes or equity grants effective or dated, as applicable, as of the date of their promotion, hiring date, or other Board approvalapproved date.
Role of the Independent Compensation Consultant. We have retained an independent compensation consultant, Aon (the “Consultant”), to support the oversight and management of our executive compensation program.
In fiscal 2018, the Consultant performed a variety of work, including but not limited to: attending Compensation Committee meetings and preparing materials and analysis for any program changes; advising the Compensation Committee on executive compensation trends and regulatory developments; providing a comprehensive risk assessment of our compensation programs; reviewing our peer group; providing a total compensation study to assist in comparing our compensation program against peer companies’ programs; providing advice to the Compensation Committee on governance best practices, as well as any other areas of concern or risk; reviewing and commenting on proxy statement disclosure items, including preparation of this CD&A; advising the Compensation Committee on executive and directors’ pay recommendations; and providing advice and guidance on new performance-based restricted stock unit documentation.
The Compensation Committee has assessed the independence of the Consultant as required by the NYSE rules. The Compensation Committee reviewed its relationship with the Consultant and considered all relevant factors, including those set forth in Rule
10C-1(b)(4)(i)
through (vi) under the Exchange Act. Based on this review, the Compensation Committee concluded that the Consultant is independent and there are no conflicts of interest raised by the work performed by the Consultant.Peer Group. Additionally, in 2017, the Consultant performed a competitive pay study to assist the Compensation Committee in its review and evaluation of executive and director compensation. The Consultant
developed, and the Compensation Committee approved, a peer group of fifteen companies based on the following criteria:
publicly-traded companies within similar GICS code classifications;
peer companies used by the potential peer companies within the similar GICS codes;
management and Board recommendations;
companies with annual revenues of approximately 0.4x to 3x Gates’ annual revenues; and
companies with enterprise values of approximately 0.2x to 5x Gates’ expected total enterprise value.
The peer group used to assist with 2018 compensation decisions consisted of the following companies:
Peer Group
| | | | |
Actuant Corporation | | Flowserve Corporation | | Nordson Corporation |
AMTEK, Inc. | | Franklin Electric Co. | | Regal Beloit Corporation |
Colfax Corporation | | Graco, Inc. | | Rexnord Corporation |
Donaldson Company, Inc. | | IDEX Corporation | | SPX Corporation |
EnPro Industries, Inc. | | Lincoln Electric Holdings | | The Timken Company |
What We Pay and Why: Elements of Compensation
Our
The Company’s executive compensation program is designed to recognize an executive’s scope of responsibilities, leadership ability and effectiveness in achieving key performance goals and objectives. As an executive’s level of responsibility within Gates increases, so does the percentage of total compensation that is linked to performance in the form of variable compensation.
WeThe Company also
provideprovides various retirement and benefit programs and modest, business-related benefits as discussed below.
Total Compensation Mix. The Company’s mix of target total compensation in 2021, as illustrated by the below charts, is significantly skewed towards variable “at-risk” compensation. 
Approximately 86% of the Chief Executive Officer’s compensation in Fiscal 2021 was variable and at-risk, with the majority being performance-based. In addition, the majority of long-term equity incentives were performance-based, consisting of 50% in the form of performance-based vesting restricted stock units (“PRSUs”) and 5% in the form time-based vesting non-qualified stock options (“Options”) that are premium priced. The other 45% of the Chief Executive Officer’s long-term equity incentives consisted of 25% in the form of time-based vested restricted stock units (“RSUs”) and 20% Options. The long-term incentive opportunity is described further below.
Base Salary. Base salaries for ourthe Company’s Named Executive Officers in 20182021 were determined by the Compensation Committee after consideration of: (1)of the Chief Executive Officer’s recommendations (for all Named Executive Officers other than the Chief Executive Officer); (2)the breadth, scope and complexity of the executive’s role; (3) internal equity; (4) current compensation; (5) tenure in position and prior tenure in related roles (excepting Gates); (6)roles; skill set; market pay levels; and (7) individual performance. Base salaries are reviewed annually at the February meeting or at other times when appropriate and may be increased from time to time pursuant to such review. The Consultant assists the Compensation Committee with this process by providing market and peer group data and making recommendations.
Effective
January 1, 2018, weFebruary 26, 2021, the Company adjusted the
annual base salary of Mr. Jurek
by 2.5% (from
$900,000$1,030,000 to
$945,000)$1,055,750), Mr. Mallard by 2.5% (from $550,000 to $563,750), Mr. Gawronski by 2.5% (from $667,575 to $684,264), Mr. Lifsey by 2.5% (from $669,231 to $685,962) and Mr.
Lifsey (from $548,625Pitstick by 0% (base salary remaining at $444,528, as he received an increase following his October 2020 promotion to
$610,000)Chief Marketing Officer and Senior Vice President of Strategic Planning). The Company made these adjustments primarily to
align with market compensation practices and reward
performance as well as to better align their compensation to the market. Mr. Jurek’s base salary increase also reflected aone-time salary adjustment that was provided to offset the elimination of automobile allowances beginning in 2018. Effective January 1, 2018, Mr. Naemura also received a similarone-time salary adjustment (from $595,000 to $610,000) to offset the elimination of automobile allowances beginning in 2018. Additionally, in connection with his promotion in December 2018, Mr. Gawronski’s annual base salary was increased from $500,000 to $600,000, effective December 1, 2018.individual performance. The Summary Compensation Table below shows the base salary earned by each Named Executive Officer during
fiscal 2018.AnnualFiscal 2021.
Short-Term Incentive Plan. We provide anOpportunity. The Company provides a short-term annual incentive opportunity under the Gates Global Bonus PlanPolicy (the “Annual Plan”) to (1) reward certain employees, including ourits Named Executive Officers, for achieving specific performance goals that would advance our profitability; (2)the Company’s profitability and drive key business results;results, and (3)to recognize individuals based on their contributions to those results.
Payouts under the 2018 Annual Plan were based on a combination of the achievement of ourthe Company’s financial performance goals in the fiscal yearFiscal 2021 (the “Gates Financial Performance Factor”), which fund the Annual Plan,
and the Named Executive Officer’s performance during the fiscal year against his or her individual performance goals (the “Individual Performance Factor”).
Gates Financial Performance Factor. The Gates Financial Performance Factor sets the funding levels for the Annual Plan. The Board, after an evaluation of possible financial performance measures, determined to continue to useusing Adjusted EBITDA, (50%), Free Cash Flow (30%) and Revenue (20%) as the financial performance measures for 2018.2021. The Board determined that these financial performance measures werewould be critical indicators of ourthe Company’s performance for 20182021 and, when combined, contributedwould contribute to sustainable growth. Financial performance for these measures was determined 100% at a company-wide level. The Annual Plan financial performance measures and weightings for 2021 are described below. | | | | | | | | |
Performance Measure | | Definitions
Description |
| Adjusted EBITDA (50%) | | Adjusted EBITDA under the Annual Plan is defined in substantially the same manner as described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations— Operations — Non-GAAP Measures,” of ourthe 2021 Annual Report on Form10-K for the fiscal year ended December 29, 2018, except it does not include foreign exchange impacts if greater than an absolute value of $10 million. |
| Report. |
| Free Cash Flow (30%) | | Calculated as Adjusted EBITDA (as defined for purposes of the Annual Plan as described immediately above), less capital expenditures, plus or minus the change in average trade working capital; measured as an annualized average against actual performance. |
| capital versus prior year. |
| Revenue (20%) | | Revenue under the Annual Plan is defined as consolidated revenue as reflected in ourthe Company’s financial statements, excluding the impacts of acquisitions made during the fiscal year. |
The Compensation Committee
has reserved the ability to adjust the actual financial performance results to exclude the effects of extraordinary, unusual or infrequently occurring events. The weighted achievement factor for each of the financial performance measures
will beis determined by multiplying the weight attributed to each performance measure by the applicable achievement factor for each measure. For each of the performance measures, the achievement factor
will beis determined by calculating the payout percentage against the target goal based on a
pre-established scale. Funding attainment with respect to these performance measures can range from:
no•0% funding for performance below the threshold requirement level;
requirement;•50% of target incentive for achieving 95% of the target performance requirement;requirement (threshold);
•100% of target incentive for achieving 100% of the target performance requirement (target); and
•150% of target incentive for achieving 105% or above of the target performance requirement.
requirement (maximum).If achievement with respect to any
Payouts for performance measure falls between the threshold and target, or between the target and maximum, earned award amounts for that particular performance measure will bepoints are interpolated on a straight-line mathematical basis (andand rounded to the nearest whole number). If achievement with respect to any performance measure does not reach threshold, then that measure will be deemed to have 0% attainment.
number. The following table outlines the calculation of the potential funding attainmentof the Annual Plan for 2021 based on the Company’s attainment of the Gates Financial Performance Factor measures without any adjustments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | | | | Threshold | | Target | | Maximum | | 2021 Attainment | | Potential Funding |
| Measure | | Weighting | | | | | $ | | % | | $ | | % |
| Adjusted EBITDA | | 50% | | $ | 645.4 | | | $ | 679.4 | | | $ | 713.4 | | | $ | 738.5 | | | 108 | % | | $ | 20.6 | | | 150 | % |
| Free Cash Flow | | 30% | | $ | 481.1 | | | $ | 506.4 | | | $ | 531.7 | | | $ | 554.0 | | | 109 | % | | $ | 12.4 | | | 150 | % |
| Revenue* | | 20% | | $ | 3,013.1 | | | $ | 3,110.0 | | | $ | 3,195.1 | | | $ | 3,474.4 | | | 112 | % | | $ | 8.3 | | | 150 | % |
* Revenue threshold and maximum are narrower than 95% and 105% to align with the associated EBITDA levels.
pre-established
scale. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Measure | | Weighting | | | Threshold
(50%
Funding
for 95%
of Target) | | | Target
(100%
Funding) | | | Maximum
(150%
Funding for
105% of
Target) | | | 2018
Attainment
($) | | | 2018
Attainment
(%) | | | 2018
Recommendation
(%) | |
| | | | | | (Dollars in Millions) | | | | | | | |
Adjusted EBITDA | | | 50 | % | | $ | 708.8 | | | $ | 746.1 | | | $ | 783.4 | | | $ | 751.4 | | | | 107 | % | | | 107 | % |
Free Cash Flow | | | 30 | % | | $ | 529.0 | | | $ | 556.8 | | | $ | 584.6 | | | $ | 553.5 | (1) | | | 94 | % | | | 75 | % |
Revenue | | | 20 | % | | $ | 3,148.8 | | | $ | 3,316.8 | | | $ | 3,446.4 | | | $ | 3,331.9 | | | | 106 | % | | | 106 | % |
Total | | | | | | | | | | | | | | | | | | | | | | | 103 | % | | | 97 | % |
(1) | For fiscal 2018, the Compensation Committee adjusted the Free Cash Flow results to exclude $30.0 million of incremental capital expenditures that were approved by the Board following the establishment of the financial performance targets for fiscal 2018 under the Annual Plan.
|
Notwithstanding the establishment of the performance componentsmeasures and the formula for determining the funding levels as described above,payment amounts for the Annual Plan, the Compensation Committee has the ability tocan exercise positive or negative discretion and award a greater or lesser amount to fund the Annual Plan than the amount determined by the above formula if, in the exercise of its business judgment, the Compensation Committee determines that a greater or lesser amount is warranted under the circumstances. The Compensation Committee believes its use of positive discretion should be limited to extraordinary circumstances.
For 2018, based on management’s recommendation,Fiscal 2021, the Compensation Committee used itsreviewed the Company’s attainment of the Gates Financial Performance Factor and, at the recommendation of the Company’s management team, determined it would be appropriate to exclude the translation impact of foreign exchange gains and losses (the “FX impact”) to both the targets and the attainment calculation, as the FX impact on Adjusted EBITDA target was greater than $10 million. Below is the calculation of the potential funding of the Annual Plan for 2021, with the adjustments for FX impact. This did not change the result of maximum attainment of each measure. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | | | | | | Adjusted Target (100% Funding) | | 2021 Attainment Adjusted for FX | | Potential Funding |
| Measure | | Weighting | | FX Impact | | | $ | | % | | $ | | % |
| Adjusted EBITDA | | 50% | | $ | 24.7 | | | $ | 704.1 | | | $ | 745.3 | | 108 | % | 106 | % | | $ | 20.6 | | | 150 | % |
| Free Cash Flow | | 30% | | $ | 24.7 | | | $ | 531.1 | | | $ | 563.5 | | | 106 | % | | $ | 12.4 | | | 150 | % |
| Revenue | | 20% | | $ | 95.2 | | | $ | 3,205.2 | | | $ | 3,512.7 | | | 110 | % | | $ | 8.3 | | | 150 | % |
Finally, the Compensation Committee, at the recommendation of the Company’s management team, exercised negative discretion to
reduce the
attainment percentage for Free Cash Flowpotential funding, reducing it from
94%an aggregate maximum payout of 150% to
75%, which resulted in the total attainment percentage being reduced from 103% to 97%an aggregate payout of 135%.
After the Gates Financial Performance Factor is calculated and the “pool” is setaggregate amount available to fund bonus payouts, ourthe Annual Plan is approved by the Compensation Committee, the Company’s Chief Executive Officer hasmay allocate the discretion to determine how that pool is allocated throughoutfunding across the organization as he deems appropriate (excluding with respect to himself). This is done by adjusting and may adjust the Gates Financial Performance Factor either upward or downward for each functional area or geographic region based on the performance of that specific functional area or geographic region. For fiscal 2018, ourFiscal 2021, the Compensation Committee, based on the recommendation of the Chief Executive Officer, exercised his discretion to adjustadjusted the Gates Financial Performance Factor for certainthe Company’s corporate function, which includes the Named Executive Officers, from 135% to 130%.
Individual Performance Factor. Under the Annual Plan, the Compensation Committee establishes an individual target award opportunity for each executive that reflected the market median target annual incentive opportunity as determined in the annual review and evaluation of executive compensation described above. At the end of the functional areas applicableperformance period, the Committee considered both the Company’s 130% corporate function payout factor as described above and individual performance factors that are based on achievement against the performance criteria listed below to determine the otherappropriate attainment percentage for the Named Executive Officers. There is no stated maximum on the Individual Performance Factor. Each Named Executive Officer’s
•Financial Goals: Achieving the Company’s annual financial plan, as well as the annual financial plan for the executive’s region or function.
•Regional Growth Goals: Focusing on growth opportunities to drive richer margins and mix; appropriate pricing strategies in the face of inflationary environment.
•Operational Excellence: Managing sourcing through an inflationary environment; workplace safety; advancements in product quality and inventory management; effectuate scheduled restructuring activities; operational efficiency/productivity and executing on key company initiatives.
•Building Organizational Capacity: Reinforcing our ethical standards; attracting talent; building an inclusive environment, building a talent pipeline, developing, and promoting diverse talent as a key differentiator, increasing individuals’ organizational capabilities, and fostering cooperation among the global team.
Environmental, Social and Governance measures in categories such as ethics, sustainability, and diversity and inclusion, have been embedded in our short-term incentive plan and are factored into the growth, operational excellence and building organizational capacity goals that influence the Individual Performance Factor was determined based on both financial andFactor.
non-financialPayout objectives appropriate for each Named Executive Officer’s position. For 2018, we selected the following individual performance goals for each of our Named Executive Officers:Operational Excellence: Improvements in operational efficiency/productivity.
Building Organizational Capacity: Increasing talent pipeline within the organization; attracting and developing talent and growing organizational capacity.
Financial Goals: Achieving our annual financial plan.
. Actual amounts paid under the Annual Plan were calculated by multiplying each Named Executive Officer’s base salary in effect on December 31, 20182021 by (i) his or her Annual Plan target bonus opportunity (which is reflected as a percentage of base salary), (ii) the final Gates Financial Performance Factor and (iii) the Individual
Performance Factor. There is no maximum on the discretionary components of the Annual Plan. The following table illustrates the calculation of the annual cash incentive awards payable to each of ourthe Named Executive Officers under the 2018 Annual Plan based on 20182021 financial performance and individual performance.
| | | | | | | | | | | | | | | | | | | | |
Name | | Base Salary
($) | | | Target
Bonus
(% of Base
Salary) | | | Target Bonus
Opportunity
($) | | | Combined
Performance
Factor (%)* | | | Actual
Payout
($) | |
I. Jurek | | $ | 945,000 | | | | 150 | % | | $ | 1,417,500 | | | | 98 | % | | $ | 1,389,150 | |
D. Naemura | | $ | 610,000 | | | | 115 | % | | $ | 701,500 | | | | 98 | % | | $ | 687,470 | |
G. Gawronski(1) | | $ | 600,000 | | | | 75.85 | % | | $ | 455,096 | | | | 100 | % | | $ | 455,096 | |
W. Lifsey | | $ | 610,000 | | | | 100 | % | | $ | 610,000 | | | | 93 | % | | $ | 567,300 | |
J. Seely | | $ | 425,000 | | | | 70 | % | | $ | 297,500 | | | | 95 | % | | $ | 282,625 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Base Salary
($) | | Target
Annual Plan
Opportunity
(% of Base
Salary) | | Target Annual Plan
Opportunity
($) | | Individual Performance Factor (%) | | Financial Performance Factor | | 2021 Actual Payout |
| Ivo Jurek | | $ | 1,055,750 | | | 150% | | $ | 1,583,625 | | | 100 | % | | 130 | % | | $ | 2,058,713 | |
| Brooks Mallard | | $ | 563,750 | | | 100% | | $ | 563,750 | | | 103.85 | % | | 130 | % | | $ | 761,063 | |
| Grant Gawronski | | $ | 684,264 | | | 100% | | $ | 684,264 | | | 103.85 | % | | 130 | % | | $ | 923,757 | |
| Walt Lifsey | | $ | 685,962 | | | 100% | | $ | 685,962 | | | 100 | % | | 130 | % | | $ | 891,750 | |
| Tom Pitstick | | $ | 444,528 | | | 75 | % | | $ | 333,396 | | | 100 | % | | 130 | % | | $ | 433,415 | |
Long-Term Incentive Opportunity. The Company believes that its Named Executive Officers’ long-term compensation should be directly linked to the value it delivers to shareholders. Equity awards granted to Named Executive Officers are designed to provide long-term incentive opportunities over a period of several years. In connection with the Company’s initial public offering (the “IPO”), it adopted the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (the “2018 Omnibus Incentive Plan”), a market-based long-term incentive program that allows for awards of a mix of performance shares, restricted shares and stock options. The 2018 Omnibus Incentive Plan was informed by the peer group and broader public company practice and is consistent with the Company’s compensation objective of providing a long-term equity incentive opportunity that aligns compensation with the creation of shareholder value and achievement of business goals.
In February 2021, the Company’s Board approved annual long-term incentive awards (the “2021 LTI”) under the 2018 Omnibus Incentive Plan to incentivize long-term business performance as well as to promote retention. The 2021 LTI for Named Executive Officers, other than the Chief Executive Officer, is comprised of 34% PRSUs, 33% RSUs, and 33% Options. The 2021 LTI for the Chief Executive Officer is comprised of 50% PRSUs, 25% RSUs, 20% Options and 5% premium priced Options with a strike price that reflects a 10% premium over the closing price on the date of grant.
Each Named Executive Officer’s target opportunity for the 2021 LTI is a percentage of his base salary. For 2021, the percentage of base salary was: Mr. Jurek (470%), Mr. Mallard (190%), Mr. Gawronski (240%), Mr. Lifsey (240%), and Mr. Pitstick (105%).
The RSUs and Options will vest in substantially equal annual installments on the first three anniversaries of the grant date, subject to the executive’s continued employment through the vesting date. The PRSUs provide that 50% of the award will vest if the Company achieves a certain level of average annual Adjusted Return on Invested Capital (“Adjusted ROIC”) and the remaining 50% will vest if the Company achieves certain Relative Total Shareholder Return (“Relative TSR”) goals. Performance for the Adjusted ROIC and Relative TSR goals are each measured over a three year performance period based on the pre-established scale. The Compensation Committee selected Adjusted ROIC as a metric to drive focus on making sound investments and efficient use of working capital. The Compensation Committee selected Relative TSR as a metric to align a significant portion of pay delivery directly with shareholder value creation. It also aligns the interests and experience of executive officers with those of the Company and its shareholders and filters out macroeconomic and other factors that are not within management’s control.
* | | | | | | | | |
| Performance Measure | | Description |
| Adjusted ROIC (50%) | | 50% of PRSU value is calculated as (Adjusted EBITDA - depreciation and amortization) x (1 - 25% tax rate)) divided by (total assets - non-restricted cash - accounts payable - goodwill and other intangible assets that arose from the acquisition of Gates by Blackstone in 2014). |
| | The final percentage after applyingfinancial measures used to determine Adjusted ROIC are calculated in accordance with U.S. GAAP as presented in the Company’s financial statements, except (i) Adjusted EBITDA is defined in substantially the same manner as described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Measures” of the 2021 Annual Report, (ii) the depreciation and amortization deduction excludes the amortization of intangible assets arising from the acquisition of Gates Financial Performance Factorby Blackstone in 2014 and the Individual Performance Factor.(iii) total assets excludes both income tax receivables and deferred income tax assets. |
(1)Relative TSR (50%) | During fiscal 2018, Mr. Gawronski’s target incentive percentage was increased from 75% to 85% in connection with his promotion in December 2018. Accordingly, Mr. Gawronski’s target incentive opportunity for fiscal 2018 was calculated using a
| pro-rated target incentive percentage50% of PRSU value is based on the time spentCompany’s three-year relative TSR ranking against companies in each role.the S&P 400 Capital Goods Industry Index (the “Relative TSR Peer Group”). TSR is measured by stock price change and dividends over the performance period as a percentage of the beginning stock price. The beginning and ending stock prices are based on the 20-day trailing averages.
|
The total number of PRSUs that vest at the end of the three year performance period will range from a payout of 0% to a maximum of 200% as determined by measuring actual performance over the performance period for Adjusted ROIC and Relative TSR against the performance goals based on a pre-established scale. Payout for achievement between the performance levels will be determined based on a straight-line interpolation of the applicable payout range rounded to the nearest whole percentage. Payouts are subject to the Named Executive Officer’s continued employment through the end of the applicable performance period and are paid out after the certification of the performance results by the Compensation Committee. The Compensation Committee chose Adjusted ROIC and Relative TSR performance goals that are, in the Compensation Committee’s view, challenging but achievable.
2019-2021 PRSUs. For the PRSUs vested and payable in 2022 (granted in 2019 for a three year performance period from 2019-2021 (the “2019-2021 Performance Period”)), the level of achievement of the two weighted metrics of Adjusted ROIC and Relative TSR resulted in an aggregate payout of 40%, as explained below.
Adjusted ROIC. The PRSU payout level for Adjusted ROIC was based on the three year average during the 2019-2021 Performance Period. The three-year threshold, target and maximum goals were 15%, 20% and 25%, respectively. The Adjusted ROIC achievement was 19.4% for 2019, 15.2% for 2020 and 22.4% for 2021, resulting in a three year average of 19.0% and a payout of 80% of this metric.
Relative TSR. The payout goals for Relative TSR are below. Relative TSR achievement for the three year performance period was 15.41%, which ranks 34 out of 38 of the Relative TSR Peer Group. This performance was below the threshold, resulting in a 0% payout for this metric.
| | | | | | | | |
| Relative TSR Percentile Rank | | Potential Payout Percentage |
| 75th Percentile or above | | 200% |
| 50th Percentile | | 100% |
| 25th Percentile | | 50% |
| Below 25th Percentile | | - |
Other Aspects of the Company’s Compensation Programs
Sign-on Bonuses. and Discretionary Bonuses. From time to time, wethe Company may awardsign-on and discretionary bonuses.Sign-on bonuses are used only when necessary to attract highly skilled officers to the Company. Generally, they are used to incentivize candidates to leave their current employers or may be used to offset the loss of unvested compensation they may forfeit as a result of leaving their current employers. NoDuring Fiscal 2021, the Company did not award any sign-on or discretionary bonuses were awarded to anyNamed Executive Officers.
Employment Agreements. At this time, none of the Named Executive Officers have employment agreements in 2018.Long-Term Incentive. We believe that our Named Executive Officers’ long-term compensation should be directly linked to the value we deliver to stockholders. Equity awards to our Named Executive Officers are designed to provide long-term incentive opportunities over a period of several years.
Historically, grants have not been made on an annual basis, and instead were made upon an executive’s commencement of employment with us, when an executive receives a promotion into a more senior-level position or to reward performance. In connection with the IPO, we adopted the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (the “2018 Omnibus Incentive Plan”), a market-based long-term incentive program which allows for awards of a mix of performance shares, stock options and restricted shares. The 2018 Omnibus Incentive Plan is informed by the peer group and broader public company practice and is consistent with our compensation objective of providing a long-term equity incentive opportunity that aligns compensation with the creation of stockholder value and achievement of business goals.
2018 Grants. The Compensation Committee determined that the size, structure and value of theplace.
pre-IPO grants were sufficient incentive for 2018 and therefore no additional equity grants were made in 2018, except for one time grants under the 2018 Omnibus Incentive Plan to Mr. Gawronski and Ms. Seely described below.During 2018, we made a specialone-time grant of stock options under the 2018 Omnibus Incentive Plan to each of Mr. Gawronski and Ms. Seely. Ms. Seely’s award consisted of 80,000 stock options which were granted to reward performance and in recognition of her contributions toward the completion of the IPO. Mr. Gawronski received a grant of 220,000 stock options to better align his compensation with market practices. The grant date fair values of these awards, calculated in accordance with Accounting Standards Codification Topic 718 (“Topic 718”), are reported in the Summary Compensation Table below. The stock options vest ratably on each of the first four anniversaries of the grant date, subject to the executive’s continued employment. For more information regarding the stock options, including the vesting criteria, see the section entitled “Narrative Disclosure Relating to the Summary Compensation Table and the Grants of Plan-Based Awards Table” below.
2014 Incentive Plan andCo-Invest Shares. Ourpre-IPO long-term incentive program consisted of awards under the 2014 Omaha Topco Ltd. Stock Incentive Plan, which was assumed by Gates Industrial Corporation plc and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with thepre-IPO reorganization (the “2014 Incentive Plan”), permitting our Named Executive Officers to obtain shares in Omaha Topco. In connection with the assumption by Gates of the awards under the 2014 Omaha Topco Ltd. Stock Incentive Plan, Omaha Topco options were converted into Gates options and the exercise prices were adjusted to ensure that the options received were of equivalent economic value to the legacy Omaha Topco options. Additionally, Omaha Topco restricted stock units were converted into Gates restricted stock units.
The stock options granted under our 2014 Incentive Plan have four equally-weighted tiers. Tier I is subject to a five-year pro rata vesting schedule, and the remaining tiers are subject to vesting upon Blackstone’s achievement of specified internal rates of return or multiple of investment targets. Vesting of Tier I may accelerate upon specified events, and, for grants awarded prior to May 2017, vesting of Tiers II – IV may continue past separation of service upon specified events. For more information regarding the stock options, including the vesting criteria, see the section entitled “Narrative Disclosure Relating to the Summary Compensation Table and the Grants of Plan-Based Awards Table” below. Going forward, equity incentive awards will be made pursuant to the 2018 Omnibus Incentive Plan.
Prior to our IPO, certain of our Named Executive Officers and other eligible employees were provided with the opportunity to invest in Omaha Topco’s common stock. We considered this investment opportunity an important part of our equity program at the time because it encouraged stock ownership and aligned the investing Named Executive Officers’ financial interests with those of Omaha Topco’s stockholders. In connection with the IPO and the assumption by Gates of the awards under the 2014 Omaha Topco Ltd. Stock Incentive Plan, Omaha Topco shares were converted into Gates ordinary shares. Messrs. Jurek and Naemura participated in the program and invested 149,118 and 27,743 shares, respectively.
2019 Long-Term Incentive. In February 2019, our Compensation Committee approved the first annual long-term incentive grant (the “2019LTI”) under the 2018 Omnibus Incentive Plan to incentivize long-term business performance as well as to promote retention. The 2019 LTI is comprised of 33% time-based vesting restricted stock units (“RSUs”), 33% time-based vesting stock options and 34% performance based RSUs (“PRSUs”). Each of the RSUs and options will vest in equal annual installments on the first three anniversaries of the grant date, subject to the executive’s continued employment through the vesting date.
The awards under the 2019 LTI were granted on February 22, 2019. The target total grant date fair values for each of Messrs. Jurek’s, Naemura’s, Gawronski’s and Lifsey’s and Ms. Seely’s awards were $4,500,000, $1,382,260, $1,548,000, $1,551,840 and $658,750, respectively. The post-termination vesting and the exercise rights of the options under the 2019 LTI are substantially the same as the rights that apply to the options granted Mr. Gawronski and Ms. Seely in 2018 and described under the heading “Narrative Disclosure Relating to the Summary Compensation Table and Grants of Plan-Based Awards—Equity-Based Awards—2018 Grants”. In addition, Mr. Jurek was awarded aone-time special grant of time-based stock options with a grant date fair value of $4,500,000. These options are premium priced options which have an exercise price of $19.00 per share and vest in equal installments on the third, fourth and fifth anniversary of the grant date.
With respect to the RSUs, in the event of a termination for any reason other than death or disability prior to the vesting of the RSUs, all unvested shares of RSUs shall be forfeited. The RSUs will fully vest in the event of a termination due to death or disability and immediately prior to a change in control.
The PRSUs provide that 50% of the award will generally vest if the Company achieves a certain level of average annual Adjusted Return on Invested Capital (“Adjusted ROIC”) and the remaining 50% of the PRSUs will generally vest if the Company achieves certain Relative Total Shareholder Return (“Relative TSR”) goals, in each case, measured over a three year performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% as determined by measuring actual performance over the
performance period for Adjusted ROIC and Relative TSR against the performance goals based on apre-established scale.
Payouts for achievement between the performance levels will be determined based on a straight line interpolation of the applicable payout range. The PRSU awards will vest at the end of the three-year performance period, subject to the Named Executive Officer’s continued employment through the end of the applicable performance period, and are paid out after the certification of the performance results by the Compensation Committee.
If the executive’s employment terminates for any reason other than as described below, all unvested PRSUs will be forfeited. Upon death or disability during the performance period, PRSUs representing apro-rata portion of the number of PRSUs that would have vested based on the Company’s actual performance for the entire performance period will be eligible to vest on apro-rata basis based on days employed during the performance period. Upon a change in control during the performance period, the PRSUs will vest based on the Company’s Relative TSR performance as measured through the date of the change in control and Adjusted ROIC as measured through the most recently completed fiscal quarter relative to the performance criteria determined by the Compensation Committee. Additionally, a target number of PRSUs will vest if a change in control occurs within the first six months of the performance period.
Other Aspects of Our Compensation Programs
Retirement Benefits. We offer The Company offers the following retirement benefits to eligible U.S.-based employees, including ourthe Named Executive Officers, as specified below. Additional details about the Gates Corporation Supplemental Retirement Plan (the “Supplemental Retirement Plan”), as it applies to ourthe Named Executive Officers, is included in the “2018“2021 Nonqualified Deferred Compensation” section of this Proxy Statement.
| | | | | | | | |
Plan | | Description |
Gates MatchMaker 401(k) Plan........... | | A qualified defined contribution retirement benefit available to eligible U.S. employees (as defined in the plan document) that is intended to qualify as a profit sharing plan under Section 401(k) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”). |
| |
Supplemental Retirement Plan............. | | A funded, nonqualified plan that provides ourthe Company’s executives, including our Named Executive Officers, benefits similar to the Gates MatchMaker 401(k) Plan but without an employer match or the Code contribution and earnings limitations. |
We offer
The Company offers a defined contribution retirement benefit to all eligible U.S. participants through the Gates MatchMaker 401(k) Plan. The Gates MatchMaker 401(k) Plan provides employees with individual retirement accounts funded by (1) an automatic Gates-paid contribution of 3% of employee eligible earnings, and (2) a Gates-paid match on employee contributions
dollar-for-dollar on the first 3% of eligible earnings that the employee contributes. The Code sets maximum limitations on employee contributions for participants
and as well as limitations on the earnings upon which employee/employer contributions may be made.
Our plans comply with the maximums under the Code as established and amended from time to time.We
The Company currently
offeroffers participation in the Supplemental Retirement Plan to specified U.S.
employeesexecutives that include the Named Executive Officers. This plan is a nonqualified deferred compensation plan that provides participants with two benefit opportunities:
| 1. | Non elective employer contribution. A 6% employer contribution (the “Retirement Contribution”) on eligible earnings that exceed Section 401(a)(17) of the Code’s dollar limits.
|
| 2. | Compensation Deferral Opportunity. The Supplemental Retirement Plan permits participants to defer up to 80% of base salary and 80% of bonus compensation. There is no employer paid matching contribution on these deferrals.
|
1. Non elective employer contribution. A 6% employer contribution (the “Retirement Contribution”) on eligible earnings that exceed Section 401(a)(17) of the Code’s dollar limits.
2. Compensation Deferral Opportunity. Employee participants may defer up to 80% of base salary and 80% of bonus compensation. There is no employer paid matching contribution on these deferrals.
These deferrals are in addition to amounts participants may defer in the Gates MatchMaker 401(k) Plan.
Other Benefits. We provide The Company provides other benefits to the Named Executive Officers that we believeits believes are necessary to compete for executive talent. The additional benefits for the Named Executive Officers generally consist of a parking subsidy, tax preparation services and an executive annual physical examination. Taxgross-ups are provided to our executive officers, including the Named Executive Officers, for certain relocation benefits which aremay be provided in connection with an executive’s commencement of employment with us.the Company. In certain circumstances, the Company provides Named Executive Officers with limited personal use of an airplane leased by the Company pursuant to a fractional lease program. The value of any personal use (including for any family members who accompany the Named Executive Officer) is imputed as income to the Named Executive Officer, who is fully responsible for any associated tax liability. The specific amounts attributable to the 2018 other benefits provided to the Named Executive Officers in 2021 are set forth in the “All Other Compensation” column of the Summary Compensation Table of this Proxy Statement.We
The Company also provideprovides other benefits such as medical, dental and short-term disability coverage to each Named Executive Officer, which are identical to the benefits provided to all other eligible U.S.-based employees. Our executiveExecutive officers, including ourthe Named Executive Officers, also receive enhanced benefits that are not available to other employees, such as relocation assistance and enhanced life, accidental death and dismemberment (“AD&D”) and long-term disability insurance benefits. Specifically, all Named Executive Officers were eligible for enhanced life and AD&D insurance benefits in the following amounts in 2018:2021: 3x base salary up to $1,000,000 (for Mr. Pitstick), 3x base salary up to $2,000,000 (for Messrs. Naemura, Gawronski, Mallard, and Lifsey and Ms. Seely)Lifsey) and 3x base salary up to $3,000,000 (for Mr. Jurek). In addition, all Named Executive Officers were eligible for enhanced long-term disability insurance benefits of 66.7% of their salary (up to $20,000/month). TheAn individual disability insurance plan is offered to executives with an income of over $360,000, including the Named Executive Officers, to cover annual income in excess of $360,000. The plan provides an additional $10,000 of monthly
benefit above the group disability plan.
WeThe Company also
provide vacationprovides unlimited flexible time off and paid holidays to
all employees, including the Named Executive Officers.
All of the Named Executive Officers were eligible for four weeks of vacation in 2018.
Change in Control and Severance Benefits. The Board believes that the Named Executive Officersexecutives are better able to perform their duties with respect to any potential proposed corporate transaction without concern for the impact of the transaction on their individual employment with carefully structuredchange-in-control change in control and severance benefits. In addition, the Board believes that the interests of our stockholdersthe Company’s shareholders are better protected and enhanced by providing greater certainty regarding executive pay obligations in the context of planning and negotiating any potential corporate transactions. We provide limited single-triggerchange-in-control benefits to certain of our Named Executive OfficersAccordingly, in their equity grant agreements and pursuant to the Supplemental Retirement Plan.In connection with the IPO, wethe Company adopted the Executive Severance Plan and Executive Change in Control Plan. The Executive Severance Plan provides for severance payments upon certain terminations of employment to our Named Executive Officers and other senior executives who are expected to make substantial contributions to our success and thereby provides for stability and continuity of operations. The Named Executive Officers are generally provided with severance payments for a period of two years for Mr. Jurek (who will receive the sum of two times base salary plus two times previous year bonus), one year for Mr. Naemura (who will receive the sum of one times base salary plus one times previous year bonus) and two years for the other Named Executive Officers (who will receive two times base salary) should his or her employment be terminated either by us without “cause” or by the executive for “constructive termination.” The Executive Severance Plan also provides for reimbursement for reasonable outplacement and provides health and dental benefit continuation assistance.
The Executive Change in Control Plan provides double-trigger benefits to Mr. Jurek and all of our executive vice presidents (including each of the Named Executive Officers), regional presidents and select senior vice presidents. The Executive Change in Control Plan serves to encourage these key executives to carry out their duties and provide continuity of management in the event of a “change in control” of Gates. The Named
Executive Officers are generally provided with payments in the amount of two andone-half times base salary plus target bonus (for Mr. Jurek) and one andone-half times base salary plus target bonus (for the other Named Executive Officers) should his or her employment be terminated either by us without “cause” or by the executive for “constructive termination” within thetwo-year period following a change in control. The Executive Change in Control Plan also provides for reimbursement for reasonable outplacement and provides life and long-term disability insurance and health and dental benefit continuation assistance. The benefits provided under both the Executive Severance Plan and the Executive Change in Control Plan for certain executives. Executives are contingent upon the affected Named Executive Officer’s execution andnon-revocation of a general release of claims and compliance with specified restrictive covenants. See “Potential Payments upon a Termination or Change in Control,” which describes thenot entitled to payments to which each of the Named Executive Officers may be entitled under the Executive Severance Plan andif they are entitled to receive payment under the Executive Change in Control Plan.
Plan discussed below. For information regarding these plans, including the participants, please see “Potential Payments upon Termination or Change in Control.” Prior to 2020, the Company provided limited single-trigger change in control benefits to certain Named Executive Officers in their Options and RSU award agreements. Beginning in 2020, the Options and RSU award agreements provide for double trigger vesting based upon the occurrence of both a change in control and a qualified termination. The terms of the Company’s Supplemental Retirement Plan also provide for early distribution upon a change in control.
Clawback Policy. We have The Company has adopted a clawback policy for incentive compensation. Under the policy, if the Compensation Committee determines that cash or equity incentive compensation of its current and former Section 16 officers (or any other current and former employee designated by the Board or the Compensation Committee) was overpaid, in whole or in part, as a result of a restatement of the reported financial results of the Company or any of its segments due to materialnon-compliance with financial reporting requirements (unless due to a change in accounting policy or applicable law), and such restatement was caused by or contributed to, directly or indirectly, by such employee’s fraud, willful misconduct or gross negligence, then the Compensation Committee will determine, in its discretion, whether to seek to recover or cancel any overpayment of incentive compensation paid or awarded based on the inaccurate financial information or restated results. The clawback policy and ourthe 2018 Omnibus Incentive Plan also provide that if a covered person engages in any detrimental activity (as defined in ourthe 2018 Omnibus Incentive Plan) as determined by the Compensation Committee, the Compensation Committee may, in its sole discretion, provide for one or more of the following: (i) cancellation of any or all of such covered person’s outstanding awards; or (ii) forfeiture by the covered person of any gain realized on the vesting or exercise of awards, and prompt repayment of any such gain to us.the Company.
Executive Stock Ownership Guidelines. We have adopted an executive stock ownership program for our To better align the financial interests of the Company’s Named Executive Officers and other executives. Eachits shareholders, the Company has executive stock ownership guidelines. The Company, along with the Compensation Committee, reviews the executive ownership annually as of our Named Executive Officers is expected to own our ordinary shares in the following amounts: | | |
Chief Executive Officer | | 5 times base salary |
All other Named Executive Officers | | 3 times base salary |
annual measurement date, February 1, 2021. Any Named Executive Officerofficer who does not meet the threshold will beis required to retain 50% of stock acquired through the exercise or vesting of
equity awards made by the Company. In calculating the ownership, the Company includes direct and certain indirect ownership, unvested time-based vesting restricted stock units and shares underlying vested but unexercised stock options (based on the excess of the market price of the stock over the exercise price). The Company does not include unvested stock options or unvested performance-based restricted stock units. Currently, each Named Executive Officer is expected to own the Company’s ordinary shares in the amounts listed below. As of the annual measurement date, all of the then-employed Named Executive Officers either met the applicable ownership guidelines or were in compliance with the equity retention mandate. | | | | | | | | | | | | | |
| Chief Executive Officer | | | 6 times base salary | |
| Other Named Executive Officers | | | 3 times base salary | |
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on
itssuch review and discussion,
with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into
ourthe 2021 Annual
Report on Form10-K for the fiscal year ended December 29, 2018.Report.
Submitted by the Compensation Committee of
ourthe Board of Directors:
Julia C. Kahr, Chair
Terry Klebe
Neil P. Simpkins
ChairDavid Calhoun
Julia C. Kahr
CEO PAY RATIO
The following table sets forth the ratio of the Chief Executive Officer’s total compensation to that of the Company’s median employee for Fiscal 2021.
| | | | | | | | |
| CEO total annual compensation | | $ | 8,772,300 | |
| Median employee total annual compensation | | $ | 39,583 | |
| Ratio | | 222 to 1 |
The SEC rules for identifying the median employee and calculating the pay ratio allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee population and compensation practices. As a result, the pay ratio reported above may not be comparable to the pay ratio reported by other companies, as other companies may have utilized different methodologies and have different employment and compensation practices. The Company believes the pay ratio above is a reasonable estimate calculated in a manner consistent with the SEC rules.
To calculate the 2021 CEO pay ratio, the Company used the same median employee it used for purposes of calculating the 2019 and 2020 CEO pay ratio, as there has been no material change in the Company’s employee population, employee compensation programs or the median employee compensation, that it believes would significantly impact the CEO pay ratio. This median employee is an hourly employee located in Canada. The methodology and material assumptions, adjustments and estimates used to identify the median employee are set forth in the Company’s proxy statement filed with the SEC on April 1, 2020. The Company calculated the median employee’s total annual compensation in the same manner as it calculated the Chief Executive Officer’s total annual compensation in the Summary Compensation Table
in this Proxy Statement.
COMPENSATION TABLES
2021 Summary Compensation Table
The following table sets forth the compensation for the 2016, 20172019, 2020 and 20182021 fiscal years for Messrs.Mr. Jurek, NaemuraMr. Gawronski and Mr. Lifsey, the 20172020 and 2018 2021 fiscal years for Ms. SeelyMr. Mallard, and the 20182021 fiscal year for Mr. Gawronski. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal
Position | | Year | | | Salary
($)(1) | | | Bonus
($) | | | Stock
Awards
($) | | | Option
Awards
($)(2) | | | Non-Equity
Incentive
Plan
Compensation
($)(3) | | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) | | | All Other
Compensation
($)(4) | | | Total
($)(5) | |
Ivo Jurek | | | 2018 | | | $ | 943,269 | | | | — | | | | — | | | | — | | | $ | 1,389,150 | | | | — | | | $ | 201,983 | | | $ | 2,534,402 | |
Chief Executive | | | 2017 | | | $ | 900,000 | | | | — | | | | — | | | $ | 749,472 | | | $ | 2,025,000 | | | | — | | | $ | 195,305 | | | $ | 3,869,777 | |
Officer | | | 2016 | | | $ | 900,000 | | | | — | | | | — | | | | — | | | $ | 1,750,000 | | | | — | | | $ | 128,898 | | | $ | 2,778,898 | |
| | | | | | | | | |
David Naemura | | | 2018 | | | $ | 609,423 | | | | — | | | | — | | | | — | | | $ | 687,470 | | | | — | | | $ | 110,023 | | | $ | 1,406,916 | |
Chief Financial | | | 2017 | | | $ | 572,789 | | | $ | 22,212 | | | | — | | | | — | | | $ | 1,026,375 | | | | — | | | $ | 113,058 | | | $ | 1,734,434 | |
Officer | | | 2016 | | | $ | 509,135 | | | | — | | | | — | | | | — | | | $ | 823,000 | | | | — | | | $ | 56,373 | | | $ | 1,388,508 | |
| | | | | | | | | |
Grant Gawronski, | | | 2018 | | | $ | 503,846 | | | | — | | | | — | | | $ | 1,700,600 | | | $ | 455,096 | | | | — | | | $ | 36,527 | | | $ | 2,696,069 | |
EVP, Chief Commercial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Jamey Seely, | | | 2018 | | | $ | 425,000 | | | | — | | | | — | | | $ | 618,400 | | | $ | 282,625 | | | | — | | | $ | 62,842 | | | $ | 1,388,867 | |
EVP, General | | | 2017 | | | $ | 120,962 | | | $ | 180,000 | | | | — | | | $ | 635,250 | | | $ | 148,601 | | | | — | | | $ | 45,256 | | | $ | 1,130,069 | |
Counsel and Corporate Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Walt Lifsey, | | | 2018 | | | $ | 607,640 | | | | — | | | | — | | | | — | | | $ | 567,300 | | | | — | | | $ | 96,532 | | | $ | 1,271,472 | |
Chief Operating | | | 2017 | | | $ | 541,592 | | | | — | | | | — | | | | — | | | $ | 822,938 | | | | — | | | $ | 80,795 | | | $ | 1,445,325 | |
Officer | | | 2016 | | | $ | 507,885 | | | | — | | | | — | | | $ | 335,220 | | | $ | 627,000 | | | | — | | | $ | 469,575 | | | $ | 1,939,680 | |
(1) | The amounts reported in the “Salary” column consist of base salary earned in fiscal 2018. The following base salary increases were effective January 1, 2018: Mr. Jurek (from $900,000 to $945,000); Mr. Naemura (from $595,000 to $610,000); and Mr. Lifsey (from $548,625 to $610,000). Additionally, in connection with his promotion in December 2018, Mr. Gawronski’s annual base salary was increased from $500,000 to $600,000, effective December 1, 2018.
|
(2) | The amounts reported in the “Option Awards” column for 2018Pitstick. Mr. Mallard and Mr. Pitstick were not named executive officers prior to the 2020 fiscal year and the 2021 fiscal year, respectively, and therefore no compensation information for such prior years appears in this table for these individuals. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($)(1) | | Bonus
($) | | Stock Awards ($)(2) | | Option Awards ($)(2) | | Non-Equity Incentive Plan Compensation ($)(3) | | Change in Pension Value and
Nonqualified Deferred Compensation
Earnings
($) | | All Other Compensation(4)($) | | Total | | Ivo Jurek | | 2021 | | $ | 1,051,392 | | | $ | — | | | $ | 4,204,468 | | | $ | 1,240,104 | | | $ | 2,058,713 | | | $ | — | | | $ | 217,623 | | | $ | 8,772,300 | | | Chief Executive Officer | | 2020 | | $ | 1,063,962 | | | $ | 1,545,000 | | | $ | 3,827,542 | | | $ | 1,158,749 | | | $ | — | | | $ | — | | | $ | 84,867 | | | $ | 7,680,120 | | | | 2019 | | $ | 989,635 | | | $ | — | | | $ | 3,350,070 | | | $ | 5,982,476 | | | $ | — | | | $ | — | | | $ | 164,509 | | | $ | 10,486,690 | | | | | | | | | | | | | | | | | | | | | | L. Brooks Mallard | | 2021 | | $ | 561,423 | | | $ | — | | | $ | 788,522 | | | $ | 353,326 | | | $ | 761,063 | | | $ | — | | | $ | 75,349 | | | $ | 2,539,683 | | | Chief Financial Officer | | 2020 | | $ | 465,385 | | | $ | 568,852 | | | $ | 745,450 | | | $ | 344,849 | | | $ | — | | | $ | — | | | $ | 102,331 | | | $ | 2,226,867 | | | | | | | | | | | | | | | | | | | | | | Grant Gawronski | | 2021 | | $ | 681,440 | | | $ | — | | | $ | 1,208,953 | | | $ | 541,718 | | | $ | 923,757 | | | $ | — | | | $ | 90,821 | | | $ | 3,446,689 | | | Chief Commercial Officer | | 2020 | | $ | 688,997 | | | $ | 634,196 | | | $ | 1,156,005 | | | $ | 528,715 | | | $ | — | | | $ | — | | | $ | 51,461 | | | $ | 3,059,374 | | | | 2019 | | $ | 636,519 | | | $ | — | | | $ | 1,152,394 | | | $ | 509,972 | | | $ | — | | | $ | — | | | $ | 74,818 | | | $ | 2,373,703 | | | | | | | | | | | | | | | | | | | | | | Walt Lifsey | | 2021 | | $ | 683,131 | | | $ | — | | | $ | 1,211,973 | | | $ | 543,063 | | | $ | 891,750 | | | $ | — | | | $ | 96,582 | | | $ | 3,426,499 | | | Chief Operating Officer | | 2020 | | $ | 690,706 | | | $ | 669,231 | | | $ | 1,158,882 | | | $ | 530,030 | | | $ | — | | | $ | — | | | $ | 56,884 | | | $ | 3,105,733 | | | | 2019 | | $ | 639,703 | | | $ | — | | | $ | 1,155,267 | | | $ | 511,237 | | | $ | — | | | $ | — | | | $ | 83,436 | | | $ | 2,389,643 | | | | | | | | | | | | | | | | | | | | | | Tom Pitstick | | 2021 | | $ | 444,528 | | | $ | — | | | $ | 343,578 | | | $ | 153,966 | | | $ | 433,415 | | | $ | — | | | $ | 56,417 | | | $ | 1,431,904 | | | Chief Marketing Officer | | | | | | | | | | | | | | | | | | |
(1)The amounts reported in the “Salary” column consist of base salary earned in Fiscal 2021. The following base salary increases were effective February 26, 2021: Mr. Jurek (from $1,030,000 to $1,055,750); Mr. Mallard (from $550,000 to $563,750); Mr. Gawronski (from $667,575 to $684,264); Mr. Lifsey (from $669,231 to $685,962); and Mr. Pitstick (unchanged at $444,528, as he received an increase following his October 2020 promotion to Chief Marketing Officer and Senior Vice President of Strategic Planning). (2)The amounts reported in the “Stock Awards” and “Option Awards” columns for 2021 represent the grant date fair value of the time-based RSUs, PRSUs, and time-based options granted under our 2018 Omnibus Incentive Plan to Mr. Gawronski and Ms. Seely calculated in accordance with Topic 718 using a Black-Scholes valuation model. For information regarding the assumptions used in determining the fair value of these awards, please refer to Note 18, Share-Based Compensation of the audited consolidated financial statements included in our Annual Report on Form10-K for the fiscal year ended December 29, 2018. |
(3) | The amounts reported in the“Non-Equity Incentive Plan Compensation” column include amounts earned by Named Executive Officers under the Annual Plan. The terms of the Annual Plan are described more fully above in the “What We Pay and Why: Elements of Compensation—Annual Incentive Plan.”
|
(4) | The amounts reported in the “All Other Compensation” column for 2018 reflect the sum of: (1) the amounts contributed by Gates to the Gates MatchMaker 401(k) Plan and the Supplemental Retirement Plan, which are calculated on the same basis for all participants, including the Named Executive Officers; (2) relocation benefits (where applicable) and a relatedgross-up; and (3) the cost of all other executive benefits that are required to be reported by SEC rules. The material provisions of the Gates MatchMaker 401(k) Plan and the Supplemental Retirement Plan are described in the “2018 Nonqualified Deferred Compensation” section of this Proxy Statement.
|
The narrative following the table below describes these components of All Other Compensation:
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Company
Contributions
to Gates
MatchMaker
401(k)(a) | | | Company
Contributions
to Gates
Executive
Supplemental
Retirement
Benefit Plan(b) | | | Relocation(c) | | | Tax
Gross-ups(d) | | | Other
Benefits(e) | | | Total | |
I. Jurek | | $ | 16,500 | | | $ | 161,596 | | | | — | | | | — | | | $ | 23,886 | | | $ | 201,983 | |
D. Naemura | | $ | 16,500 | | | $ | 81,648 | | | | — | | | | — | | | $ | 11,875 | | | $ | 110,023 | |
G. Gawronski | | $ | 16,500 | | | $ | 13,731 | | | | — | | | | — | | | $ | 6,297 | | | $ | 36,527 | |
J. Seely | | $ | 16,500 | | | $ | 28,716 | | | $ | 5,428 | | | $ | 2,214 | | | $ | 9,984 | | | $ | 62,842 | |
W. Lifsey | | $ | 16,500 | | | $ | 69,335 | | | | — | | | | — | | | $ | 10,698 | | | $ | 96,532 | |
(a) | Company Contributions to Gates MatchMaker 401(k) Plan. Gates makes matching contributions on 100% up to 3% of eligible earnings deferred by all eligible participants, including Named Executive Officers, in accordance with the Gates MatchMaker 401(k) Plan. Gates also makes anon-elective contribution to all eligible participants, including Named Executive Officers, in an amount equal to 3% of eligible earnings, subject to Code limitations.
|
(b) | Company Contributions to the Supplemental Retirement Plan. Gates makes a Retirement Contribution of 6% of eligible compensation on behalf of all eligible participants, including the Named Executive Officers, under the Supplemental Retirement Plan for eligible compensation that exceeds Section 401(a)(17) of the Code.
|
(c) | Relocation. Gates provides relocation benefits to its newly hired executive officers, including Named Executive Officers, that include home finding assistance, home purchase assistance (including reimbursement of closing costs and limited inspection fees), home sale assistance (marketing and closing cost assistance), moving household goods and a lump sum for miscellaneous expenses of $6,500.
|
(d) | TaxGross-Ups. Gates provides a reimbursement for taxable moving expenses.
|
(e) | Other Benefits. Certain additional limited benefits are made available to executives, including the Named Executive Officers. The aggregate incremental cost of these benefits is included for each Named Executive Officer in the “All Other Compensation” column of the Summary Compensation Table, but the individual values for each item are not required to be disclosed under SEC rules because none of them exceeded the greater of $25,000 or 10% of the total amount of personal benefits for each Named Executive Officer. In general, these benefits include a parking subsidy, reimbursement of gym membership fees (used by Ms. Seely) and tax preparation services. Gates also makes available executive physicals to all Named Executive Officers (only used by Mr. Jurek in 2018). Amounts reported also include the full value of the premiums paid by Gates with respect to the enhanced life, AD&D and long-term disability insurance benefits provided to the Named Executive Officers.
|
2018 Grants of Plan-Based Awards
The following table provides information on bonus opportunity ranges under the 2018 Annual Plan for, and stock options granted in 2018 to, each of our Named Executive Officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts under
non-equity incentive plan awards
($) | | | All other
option
awards:
number of
securities
underlying
options (#) | | | Exercise
or base
price of
option
awards ($/sh) | | | Grant date
fair value
of stock
and option
awards ($) | |
Name | | Grant Date | | | Threshold | | | Target | | | Maximum | |
I. Jurek(1) | | | | | | $ | 141,750 | | | $ | 1,417,500 | | | | — | | | | | | | | | | | | | |
D. Naemura(1) | | | | | | $ | 70,150 | | | $ | 701,500 | | | | — | | | | | | | | | | | | | |
G. Gawronski(1) | | | | | | $ | 45,510 | | | $ | 455,096 | | | | — | | | | | | | | | | | | | |
2018 Options(2) | | | 3/9/2018 | | | | | | | | | | | | | | | | 220,000 | | | $ | 17.72 | | | $ | 1,700,600 | |
J. Seely(1) | | | | | | $ | 29,750 | | | $ | 297,500 | | | | — | | | | | | | | | | | | | |
2018 Options(2) | | | 3/9/2018 | | | | | | | | | | | | | | | | 80,000 | | | $ | 17.72 | | | $ | 618,400 | |
W. Lifsey(1) | | | | | | $ | 61,000 | | | $ | 610,000 | | | | — | | | | | | | | | | | | | |
(1) | The amounts located in the first row for each Named Executive Officer represent the cash-based award opportunity range under the 2018 Annual Plan, the terms of which are summarized under “What We Pay and Why: Elements of Compensation—Annual Incentive Plan” above. For purposes of this table and threshold level disclosure, we assumed that the lowest weighted of the three performance measures achieved the threshold level of attainment (in other words, 10% of the target award was earned) and the Individual Performance Factor was set at 100%. Additionally, discretion can be used to reduce the payment to zero. Annual Plan payments, if earned, are contingent upon the Named Executive Officer remaining in continuous employment through the payment date. The calculation uses each Named Executive Officer’s base salary as of December 31, 2018. During fiscal 2018, Mr. Gawronski’s target incentive percentage was increased from 75% to 85% in connection with his promotion in December 2018. Accordingly, Mr. Gawronski’s target incentive opportunity for fiscal 2018 was calculated using apro-rated target incentive percentage based on the time spent in each role. The actual amount earned by each Named Executive Officer for 2018 is included in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
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(2) | Represents time-based stock options granted under our 2018 Omnibus Incentive Plan to Ms. Seely and Mr. Gawronski in 2018. The grant date fair value of the stock options is calculated in accordance with ASC Topic 718 using a Black-Scholes valuation model. See Footnote (2) to the Summary Compensation Table.
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Narrative Disclosure Relating to the Summary Compensation Table and the Grants of Plan-Based Awards Table
Employment Agreements
Previously, Messrs. Jurek, Naemura and Lifsey entered into employment agreements with us in connection with their commencement of employment. In connection with the adoption of the Executive Severance Plan and the Executive Change in Control Plan, each of Messrs. Jurek, Naemura and Lifsey agreed to terminate their existing employment agreements with us.
Equity-Based Awards
2018 Grants
Mr. Gawronski and Ms. Seely were awarded stock options under the 2018 Omnibus Incentive Plan calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“Topic 718”). For information regarding the assumptions used in determining the fair value of these awards, please refer to Note 18, Share-based Compensation, of the audited consolidated financial statements included in the Annual Report. Where the number of shares ultimately issued depends on March 9, 2018 to better align Mr. Gawronski’s compensationa performance or market condition, the target number of awards is used for the purpose of the above table. With respect to the marketPRSUs, 50% vest subject to attainment of certain levels of Adjusted ROIC and 50% vest subject to reward Ms. Seely’s performance and contributions toward the completionattainment of a certain Relative TSR. The grant date fair value of the IPOshares that vest according to Adjusted ROIC was computed in accordance with Topic 718 based upon the probable outcome of the performance conditions as of the grant date. As the shares that vest according to Relative TSR are subject to market conditions as defined under Topic 718 and are not subject to performance conditions as defined under Topic 718, they have no maximum grant date fair values that differ from the grant date fair values presented in the table. Assuming the highest level of performance is achieved with respect to the Adjusted ROIC awards, the grant date fair value of the stock awards would be: Mr. Jurek — $5,444,968; Mr. Mallard — $970,607; Mr. Gawronski — $1,488,118; Mr. Lifsey — $1,491,843; and Mr. Pitstick — $422,913.
(3)The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent amounts earned by Named Executive Officers under the Annual Plan. The terms of the Annual Plan are described more fully above in the “Elements of Compensation — Annual Plan.”
(4)The amounts reported in the “All Other Compensation” column for 2021 reflect the sum of: (i) the amounts contributed by Gates to the Gates MatchMaker 401(k) Plan and the Supplemental Retirement Plan, which are calculated on the same basis for all participants, including the Named Executive Officers, and (ii) the cost of all other executive benefits that are required to be reported by SEC rules. The material provisions of the Gates MatchMaker 401(k) Plan and the Supplemental Retirement Plan are described in the “2021 Nonqualified Deferred Compensation” section of this Proxy Statement. Please see the following table for further information on the aggregate incremental cost of these benefits.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Company Contributions to Gates MatchMaker 401(k)(a) | | Company Contributions to Gates Executive Supplemental Retirement Plan(b) | | Other Benefits(c) | | Total |
| I. Jurek | | $17,400 | | $147,654 | | $52,569 | | $217,623 |
| L. Mallard | | $17,400 | | $44,417 | | $13,532 | | $75,349 |
| G. Gawronski | | $17,400 | | $61,540 | | $11,881 | | $90,821 |
| W. Lifsey | | $17,400 | | $63,742 | | $15,440 | | $96,582 |
| T. Pitstick | | $17,400 | | $31,276 | | $7,741 | | $56,417 |
(a)Company Contributions to Gates MatchMaker 401(k) Plan. Gates makes matching contributions of 100% on up to 3% of eligible earnings deferred by all eligible participants, including Named Executive Officers, in accordance with the Gates MatchMaker 401(k) Plan. Gates also makes a non-elective contribution to all eligible participants, including Named Executive Officers, in an amount equal to 3% of 220,000eligible earnings, subject to Code limitations.
(b)Company Contributions to Gates Executive Supplemental Retirement Plan. Gates makes a retirement contribution of 6% of eligible compensation on behalf of all eligible participants, including the Named Executive Officers, under the Supplemental Retirement Plan for eligible compensation that exceeds Section 401(a)(17) of the Code.
(c)Other Benefits. Gates provided certain other benefits to Named Executive Officers. The aggregate amount reported in the Other Benefits column consists of the following: For Mr. Jurek, (i) parking subsidy of $3,900, (ii) tax preparation services of $3,860, (iii) enhanced life insurance premium of $4,716, (iv) enhanced AD&D and 80,000 stock options respectively. No other long-term equity incentivedisability insurance premium of $13,320, and (v) personal use of an airplane leased by the Company pursuant to a fractional lease program of $26,773 This aggregate incremental cost was calculated based on the variable operating costs to the Company for personal usage, which includes fees per flight hour, fuel charges and any additional usage or service fees. Mr. Jurek was accompanied by family members, but there was no aggregate incremental cost associated with these additional passengers. Because the airplane is used primarily for business travel, this methodology excludes costs that do not change based on usage, such as the annual lease fee. For Mr. Mallard, (i) parking subsidy of $3,900, (ii) enhanced life insurance premium of $2,594, and (iii) enhanced AD&D and long-term disability insurance premium of $7,038. For Mr. Gawronski, (i) enhanced life insurance premium of $3,144, and (ii) enhanced AD&D and long-term disability insurance premium of $8,737. For Mr. Lifsey, (i) parking subsidy of $3,900, (ii) enhanced life insurance premium of $3,144, and (iii) enhanced AD&D and long-term disability insurance premium of $8,396. For Mr. Pitstick, (i) parking subsidy of $1,950, (ii) enhanced life insurance premiums of $1,572, and (iii) enhanced AD&D and long-term disability insurance premium of $4,219.
2021 Grants of Plan-Based Awards
The following table summarizes all grants of plan-based awards were granted to the Named Executive Officers in fiscal 2018.Fiscal 2021:
The stock options granted to Mr. Gawronski | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts under
non-equity incentive plan awards
($) | | Estimated Future Payouts under Equity incentive plan awards
(#) | | All
other
stock
awards:
number
of
shares
of stock
units
(#) | | All other
option
awards:
number of
securities
underlying
options
(#) | | Exercise
or base
price of
option
awards
($/sh) | |
Grant date
fair value
of stock
and option
awards
($) |
| Name | | Award Type | | Grant Date | | Threshold | | Target | | Max | | Threshold | | Target | | Max | | | | |
| I Jurek | | Annual Plan(1) | | — | | $ | 158,363 | | | $ | 1,583,625 | | | $ | — | | | | | | | | | | | | | | | |
| | PRSU(2) | | 2/26/2021 | | | | | | | | 41,350 | | 165,400 | | 330,800 | | | | | | | | $ | 2,963,968 | |
| | RSU(3) | | 2/26/2021 | | | | | | | | | | | | | | 82,700 | | | | | | $ | 1,240,500 | |
| | Options(4) | | 2/26/2021 | | | | | | | | | | | | | | | | 148,950 | | $15.00 | | $ | 992,007 | |
| | Options(5) | | 2/26/2021 | | | | | | | | | | | | | | | | 39,009 | | $16.50 | | $ | 248,097 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| L. Mallard | | Annual Plan(1) | | — | | $ | 56,375 | | | $ | 563,750 | | | $ | — | | | | | | | | | | | | | | | |
| | PRSU(2) | | 2/26/2021 | | | | | | | | 6,070 | | 24,278 | | 48,556 | | | | | | | | $ | 435,062 | |
| | RSU(3) | | 2/26/2021 | | | | | | | | | | | | | | 23,564 | | | | | | $ | 353,460 | |
| | Options(4) | | 2/26/2021 | | | | | | | | | | | | | | | | 53,052 | | $15.00 | | $ | 353,326 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| G. Gawronski | | Annual Plan(1) | | — | | $ | 68,426 | | | $ | 684,264 | | | $ | — | | | | | | | | | | | | | | | |
| | PRSU(2) | | 2/26/2021 | | | | | | | | 9,306 | | 37,222 | | 74,444 | | | | | | | | $ | 667,018 | |
| | RSU(3) | | 2/26/2021 | | | | | | | | | | | | | | 36,129 | | | | | | $ | 541,935 | |
| | Options(4) | | 2/26/2021 | | | | | | | | | | | | | | | | 81,339 | | $15.00 | | $ | 541,718 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| W. Lifsey | | Annual Plan(1) | | — | | $ | 68,596 | | | $ | 685,962 | | | $ | — | | | | | | | | | | | | | | | |
| | PRSU(2) | | 2/26/2021 | | | | | | | | 9,329 | | 37,316 | | 74,632 | | | | | | | | $ | 668,703 | |
| | RSU(3) | | 2/26/2021 | | | | | | | | | | | | | | 36,218 | | | | | | $ | 543,270 | |
| | Options(4) | | 2/26/2021 | | | | | | | | | | | | | | | | 81,541 | | $15.00 | | $ | 543,063 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| T. Pitstick | | Annual Plan(1) | | — | | $ | 33,340 | | | $ | 333,396 | | | $ | — | | | | | | | | | | | | | | | |
| | PRSU(2) | | 2/26/2021 | | | | | | | | 2,645 | | 10,578 | | 21,156 | | | | | | | | $ | 189,558 | |
| | RSU(3) | | 2/26/2021 | | | | | | | | | | | | | | 10,268 | | | | | | $ | 154,020 | |
| | Options(4) | | 2/26/2021 | | | | | | | | | | | | | | | | 23,118 | | $15.00 | | $ | 153,966 | |
(1)Represents the cash-based award opportunity range under the Annual Plan, the terms of which are summarized under “Elements of Compensation — Annual Plan” above. For purposes of this table and Ms. Seely in 2018 are time-based and vest ratably on eachthreshold level disclosure, the Company assumed that the lowest weighted of the first four anniversariesthree performance measures achieved the threshold level of attainment (in other words, 10% of the grant date, subjecttarget award was earned) and the Individual Performance Factor was set at 100%. The calculation uses each Named Executive Officer’s base salary as of December 31, 2021. Please refer to the executive’s continued employment.In connection with a termination“2021 Summary Compensation Table” for “cause” (as definedthe actual cash-based award earned under the Annual Plan by each Named Executive Officer for 2021.
(2)Represents the threshold, target and maximum payout shares of the PRSUs granted under the 2018 Omnibus Incentive Plan), all outstanding vested and unvested options will immediately terminate and expire. Any partPlan in 2021. Threshold payout of Mr. Gawronski’sshares is calculated assuming threshold levels of attainment of 50% for the Adjusted ROIC measure. The number of shares ultimately issued, which could be greater or Ms. Seely’s stock option award that is vested upon termination of employment for any reason otherless than death or disability or a voluntary termination of employment will generally remain outstanding and exercisable for 90 days following the termination of employment. This period is shortened to 60 days if the executive voluntarily terminates his or her employment, and is extended to 12 months if employment is terminated due to death or disability. If the termination occurs during a blackout period, the executivetarget, will be ablebased on achieving specific performance conditions. Please refer to exercise the vested options within 30 days following the end“Elements of Compensation — Long-Term Incentive” above. The grant date fair value of the blackout period.If Mr. Gawronski or Ms. Seely engagesPRSUs for the February 26, 2021 award was calculated in any detrimental activity (as definedaccordance with Topic 718 based on target, the probable outcome of the performance conditions.
(3)Represents RSUs granted in 2021 under the 2018 Omnibus Incentive Plan) as determined by the Compensation Committee, the Compensation Committee may, in its sole discretion, provide for one or morePlan. The grant date fair value of the following: (i) cancellation of any or all of such individual’s outstanding options; or (ii) forfeiture byRSUs for the individual of any gain realizedFebruary 26, 2021 award was the closing price on the exercise of the options or the disposition of any ordinary shares received upon exercise of the options, and prompt repayment of any such gain to us.See “Potential Payments upon a Termination or Change in Control—Long-Term Incentive Awards” below for a description of the potential vesting under the Named Executive Officers equity awards in connection with a Change in Control or certain terminations of employment.
Pre-IPO Option Grants
Prior to the IPO, our Named Executive Officers, other than Mr. Gawronski, received grants of stock options under the 2014 Incentive Plan. As discussed under “Long-Term Incentive—2014 Incentive Plan,” in connection with the IPO and the assumption by Gates of the awards under the 2014 Omaha Topco Ltd. Stock Incentive Plan, Omaha Topco options were converted into Gates options and the exercise prices were adjusted to ensure that the options received were of equivalent economic value to the legacy Omaha Topco options.
The stock options are divided into four equally weighted tranches referred to as “Tiers” for vesting purposes. Tier I of the stock options (25% of the total award) is subject to time-based vesting restrictions that vest 20% on each of the first five anniversaries of the grant date or vesting reference date, as applicable. Tiers II, III and IV (each 25% of the total) are subject to exit-based vesting and will vest and become exercisable if either the specified internal rate of return or multiple of investment targets noted below are achieved:
| • | | Tier I Options. Tier I options (25% of the total award) are subject to time-based vesting that vest 20% on each of the first five anniversaries of the grant date or vesting reference date, as applicable, subject to the participant’s continued employment.
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| • | | Tier II Options. Tier II options (25% of the total award) vest and become exercisable, if, prior to July 3, 2022, and on or after the date that Blackstone has sold at least 25% of the maximum number of the shares that it held in Omaha Topco to any unaffiliated person or group or has sold all or substantially all of the assets of Omaha Topco to any unaffiliated person or group (any such date, a “Liquidity Event”), Blackstone receives net cash proceeds together with any dividends or distributions received, in each case, in respect of its Omaha Topco shares sold that results in either (i) a return of at least 2.0 times the amount of its cumulative invested capital or (ii) an annual internal rate of return of at least 15% on its cumulative invested capital, in each case, subject to the participant’s continued employment.
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| • | | Tier III Options. Tier III options (25% of the total award) vest and become exercisable, if, on or after a Liquidity Event, Blackstone receives net cash proceeds together with any dividends or distributions received, in each case, in respect of its Omaha Topco shares sold that results in either (i) a return of at least 2.5 times the amount of its cumulative invested capital or (ii) an annual internal rate of return of at
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| least 20% on its cumulative invested capital, in each case, subject to the participant’s continued employment.
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| • | | Tier IV Options. Tier IV options (25% of the total award) vest and become exercisable at the same time, and subject to the same conditions, as the Tier II Options. However, the Tier IV options have an exercise price greater than the fair market value of one share of Omaha Topco common stock on the date of grant of such options.
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Any part of a Named Executive Officer’s stock option award that is vested upon termination of employment by us without “Cause” or by the Named Executive Officer for “good reason” (as such terms are defined in the stock option agreements), will generally remain outstanding and exercisable for 90 days following the termination of employment. This period is shortened to 30 days if the Named Executive Officer resigns without good reason and no grounds for a termination by us for Cause exists, and is extended to 12 months if employment is terminated due to death or Disability. Vested options will immediately terminate if the Named Executive Officer’s employment is terminated by us for Cause, if the Named Executive Officer resigns without good reason when grounds for Cause exist or if there is a restrictive covenant violation. Any vested options that are not exercised within the applicable post-termination exercise window will terminate. Any part of a Named Executive Officer’s stock option award that vests following a termination without Cause, for good reason or due to death or Disability, will generally remain outstanding and exercisable for 60 days following the date such option vested. In each case, the exercise period will be shortened to the expiration date of the stock option, if earlier. See “Potential Payments upon a Termination or Changegrant.
(4)Represents Options granted in Control—Long-Term2021 under the 2018 Omnibus Incentive Awards” below for a descriptionPlan. The grant date fair value of the potential vesting that each of these Named Executive Officers may be entitled toOptions for the February 26, 2021 award was calculated in connectionaccordance with Topic 718 using a Change in Control or certain terminations of employment.By accepting a grant ofBlack-Scholes valuation model.
(5)Represents premium time-based stock options pursuant(“Premium Options”) granted to the 2014Chief Executive Officer in 2021 under the 2018 Omnibus Incentive Plan and the stock option award agreement, our Named Executive Officers agreed to certain restrictive covenants, including an indefinite covenant not to disclose confidential information and not to disparage us, and, during eachPlan. The grant date fair value of the executive’s employment and for theone-year period following any termination of employment (or such longer period as the Named Executive Officer is eligible to receive severance payments from us), covenants related tonon-competition andnon-solicitation of employees, customers or suppliers.In addition, as a condition to receiving his or her equity-based awards and in connection with investments in our common stock, each Named Executive Officer was required to enter into a subscription agreement , which, along with the award agreement, generally govern the Named Executive Officers’ rights with respect to any shares of our common stock purchased or acquired on exercise of vested stock options.
If a Named Executive Officer materially breaches any of these restrictive covenants contained in the stock option award agreement, then we have the right to “claw back” and recover any gains the Named Executive Officer may have realized with respect to his or her shares acquired under the terms of the stock option agreement or pursuant to the subscription agreement, as applicable. If the Named Executive Officer (i) is terminated for “Cause” (as defined in the respective Named Executive Officer’s employment agreements), (ii) voluntarily resigns when grounds exist for “Cause” or (iii) violates a restrictive covenant, then we have the right to repurchase his or her shares, including any shares issuable or issued upon the exercise of any optionsPremium Options for the lesser of (a) fair market value (measured as of the purchase date) and (b) cost.
Pre-IPO RSU Grants
Prior to the IPO, Mr. Gawronski receivedFebruary 26, 2021 award was calculated in accordance with Topic 718 using a grant of RSUs under the 2014 Incentive Plan which were converted into Gates RSUs in connection with the IPO.
One-third of the outstanding RSUsMonte Carlo valuation method. These premium-priced options vest on each of the first and second anniversaries of the grant date, with the remaining outstanding RSUs vestingequally on the third, fourth and fifth anniversary of the grant date, subject to Mr. Gawronski’s continued employment through each applicable vesting date. If Mr. Gawronski’s employment is terminated for any reason, all unvested RSUS will be cancelled immediately without consideration.
By accepting a grant of RSUs pursuant to the 2014 Incentive Plan and the RSU award agreement, Mr. Gawronski agreed to certain restrictive covenants, discussed above under“—Pre-IPO
Option Grants.” In addition, as a condition to receiving his RSU award, Mr. Gawronski was required to enter into a management equity agreement. Pursuant to the management equity agreement, we have the right to “claw back” any gains or repurchase shares with respect to Mr. Gawronski’s RSUs under the circumstances discussed above under“—Pre-IPO Option Grants.”
See “Potential Payments upon a Termination or Change in Control—Long-Term Incentive Awards” below for a description of the potential vesting under Mr. Gawronski’s equity awards in connection with a Change in Control.
Outstanding Equity Awards at
December 29, 2018January 1, 2022
The following table provides information regarding outstanding equity awards held by each Named Executive Officer as of January 1, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Option Awards (*) | | Stock Awards |
| Name | | Grant date and
award type | | Number of
securities
underlying
unexercised
options
(#)
exercisable | | Number of
securities
underlying
unexercised
options
(#)
unexercisable | | Equity Incentive Plan Awards: Number of securities underlying unexercised unearned options (#)(2) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of shares or units of stock that have not vested (#)(3) | | Market value of shares or units of stock that have not vested ($)(4) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(5) | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(6) |
| I. Jurek | | 5/18/2015 Tier I(1) | | 1,017,239 | | — | | | | $6.56 | | 5/18/2025 | | | | | | | | |
| | 5/18/2015 Tier II | | | | | | 1,017,239 | | $6.56 | | 5/18/2025 | | | | | | | | |
| | 5/18/2015 Tier III | | | | | | 1,017,239 | | $6.56 | | 5/18/2025 | | | | | | | | |
| | 5/18/2015 Tier IV | | | | | | 1,017,239 | | $9.84 | | 5/18/2025 | | | | | | | | |
| | 5/2/2017 Tier I(1) | | 108,397 | | 27,099 | | | | $7.87 | | 5/2/2027 | | | | | | | | |
| | 5/2/2017 Tier II | | | | | | 135,496 | | $7.87 | | 5/2/2027 | | | | | | | | |
| | 5/2/2017 Tier III | | | | | | 135,496 | | $7.87 | | 5/2/2027 | | | | | | | | |
| | 5/2/2017 Tier IV | | | | | | 135,496 | | $11.80 | | 5/2/2027 | | | | | | | | |
| | 2/22/2019 Options(7) | | 168,081 | | 84,041 | | | | $16.46 | | 2/22/2029 | | | | | | | | |
| | 2/22/2019 Options(8) | | — | | 796,460 | | | | $19.00 | | 2/22/2029 | | | | | | | | |
| | 2/22/2019 RSU | | | | | | | | | | | | 30,073 | | $ | 478,461 | | | | | |
| | 2/22/2019 PRSU | | | | | | | | | | | | | | | | 24,167 | | $ | 384,497 | |
| | 2/21/2020 Options(7) | | 80,468 | | 160,938 | | | | $12.60 | | 2/21/2030 | | | | | | | | |
| | 2/21/2020 RSU | | | | | | | | | | | | 61,310 | | $ | 975,442 | | | | | |
| | 2/21/2020 PRSU | | | | | | | | | | | | | | | | 47,821 | | $ | 760,832 | |
| | 2/26/2021 Options(7) | | — | | 148,950 | | | | $15.00 | | 2/26/2031 | | | | | | | | |
| | 2/26/2021 Options(9) | | — | | 39,009 | | | | $16.50 | | 2/26/2031 | | | | | | | | |
| | 2/26/2021 RSU | | | | | | | | | | | | 82,700 | | $ | 1,315,757 | | | | | |
| | 2/26/2021 PRSU | | | | | | | | | | | | | | | | 82,700 | | $ | 1,315,757 | |
| L. Mallard | | 2/24/2020 Options(7) | | 25,431 | | 50,863 | | | | $11.76 | | 2/24/2030 | | | | | | | | |
| | 2/24/2020 RSU | | | | | | | | | | | | 19,549 | | $ | 311,025 | | | | | |
| | 2/24/2020 PRSU | | | | | | | | | | | | | | | | 7,855 | | $ | 124,973 | |
| | 2/26/2021 Options(7) | | — | | 53,052 | | | | $15.00 | | 2/26/2031 | | | | | | | | |
| | 2/26/2021 RSU | | | | | | | | | | | | 23,564 | | $ | 374,903 | | | | | |
| | 2/26/2021 PRSU | | | | | | | | | | | | | | | | 12,139 | | $ | 193,131 | |
| G. Gawronski | | 3/9/2018 Options(10) | | 165,000 | | 55,000 | | | | $17.72 | | 3/9/2028 | | | | | | | | |
| | 2/22/2019 Options(7) | | 57,819 | | 28,911 | | | | $16.46 | | 2/22/2029 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Option Awards (*) | | Stock Awards |
| Name | | Grant date and
award type | | Number of
securities
underlying
unexercised
options
(#)
exercisable | | Number of
securities
underlying
unexercised
options
(#)
unexercisable | | Equity Incentive Plan Awards: Number of securities underlying unexercised unearned options (#)(2) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of shares or units of stock that have not vested (#)(3) | | Market value of shares or units of stock that have not vested ($)(4) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(5) | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(6) |
| | 2/22/2019 RSU | | | | | | | | | | | | 10,346 | | $ | 164,605 | | | | | |
| | 2/22/2019 PRSU | | | | | | | | | | | | | | | | 8,313 | | $ | 132,260 | |
| | 2/21/2020 Options(7) | | 36,716 | | 73,433 | | | | $12.60 | | 2/21/2030 | | | | | | | | |
| | 2/21/2020 RSU | | | | | | | | | | | | 27,975 | | $ | 445,082 | | | | | |
| | 2/21/2020 PRSU | | | | | | | | | | | | | | | | 11,240 | | $ | 178,828 | |
| | 2/26/2021 Options(7) | | — | | 81,339 | | | | $15.00 | | 2/26/2031 | | | | | | | | |
| | 2/26/2021 RSU | | | | | | | | | | | | 36,129 | | $ | 574,812 | | | | | |
| | 2/26/2021 PRSU | | | | | | | | | | | | | | | | 18,611 | | $ | 296,101 | |
| W. Lifsey | | 8/24/2015 Tier I(1) | | 250,668 | | — | | | | $6.56 | | 8/24/2025 | | | | | | | | |
| | 8/24/2015 Tier II | | | | | | 250,668 | | $6.56 | | 8/24/2025 | | | | | | | | |
| | 8/24/2015 Tier III | | | | | | 250,668 | | $6.56 | | 8/24/2025 | | | | | | | | |
| | 8/24/2015 Tier IV | | | | | | 250,668 | | $9.84 | | 8/24/2025 | | | | | | | | |
| | 5/12/2016 Tier I(1) | | 84,685 | | — | | | | $6.56 | | 5/12/2026 | | | | | | | | |
| | 5/12/2016 Tier II | | | | | | 84,685 | | $6.56 | | 5/12/2026 | | | | | | | | |
| | 5/12/2016 Tier III | | | | | | 84,685 | | $6.56 | | 5/12/2026 | | | | | | | | |
| | 5/12/2016 Tier IV | | | | | | 84,685 | | $9.84 | | 5/12/2026 | | | | | | | | |
| | 2/22/2019 Options(7) | | 57,963 | | 28,982 | | | | $16.46 | | 2/22/2029 | | | | | | | | |
| | 2/22/2019 RSU | | | | | | | | | | | | 10,371 | | $ | 165,003 | | | | | |
| | 2/22/2019 PRSU | | | | | | | | | | | | | | | | 8,334 | | $ | 132,594 | |
| | 2/21/2020 Options(7) | | 36,807 | | 73,616 | | | | $12.60 | | 2/21/2030 | | | | | | | | |
| | 2/21/2020 RSU | | | | | | | | | | | | 28,044 | | $ | 446,180 | | | | | |
| | 2/21/2020 PRSU | | | | | | | | | | | | | | | | 11,268 | | $ | 179,274 | |
| | 2/26/2021 Options(7) | | — | | 81,541 | | | | $15.00 | | 2/26/2031 | | | | | | | | |
| | 2/26/2021 RSU | | | | | | | | | | | | 36,218 | | $ | 576,228 | | | | | |
| | 2/26/2021 PRSU | | | | | | | | | | | | | | | | 18,658 | | $ | 296,849 | |
| T. Pitstick | | 1/11/2016 Tier I(1) | | 84,685 | | — | | | | $6.56 | | 1/11/2026 | | | | | | | | |
| | 1/11/2016 Tier II | | | | | | 84,685 | | $6.56 | | 1/11/2026 | | | | | | | | |
| | 1/11/2016 Tier III | | | | | | 84,685 | | $6.56 | | 1/11/2026 | | | | | | | | |
| | 1/11/2016 Tier IV | | | | | | 84,685 | | $9.84 | | 1/11/2026 | | | | | | | | |
| | 5/2/2017 Tier I(1) | | 28,579 | | 7,145 | | | | $7.87 | | 5/2/2027 | | | | | | | | |
| | 5/2/2017 Tier II | | | | | | 35,724 | | $7.87 | | 5/2/2027 | | | | | | | | |
| | 5/2/2017 Tier III | | | | | | 35,724 | | $7.87 | | 5/2/2027 | | | | | | | | |
| | 5/2/2017 Tier IV | | | | | | 35,724 | | $11.80 | | 5/2/2027 | | | | | | | | |
| | 2/22/2019 Options(7) | | 15,463 | | 7,732 | | | | $16.46 | | 2/22/2029 | | | | | | | | |
| | 2/22/2019 RSU | | | | | | | | | | | | 2,767 | | $ | 44,023 | | | | | |
| | 2/22/2019 PRSU | | | | | | | | | | | | | | | | 2,223 | | $ | 35,368 | |
| | 2/21/2020 Options(7) | | 8,777 | | 17,557 | | | | $12.60 | | 2/21/2030 | | | | | | | | |
| | 2/21/2020 RSU | | | | | | | | | | | | 6,689 | | $ | 106,422 | | | | | |
| | 2/21/2020 PRSU | | | | | | | | | | | | | | | | 2,687 | | $ | 42,750 | |
| | 2/26/2021 Options(7) | | — | | 23,118 | | | | $15.00 | | 2/26/2031 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Option Awards (*) | | Stock Awards |
| Name | | Grant date and
award type | | Number of
securities
underlying
unexercised
options
(#)
exercisable | | Number of
securities
underlying
unexercised
options
(#)
unexercisable | | Equity Incentive Plan Awards: Number of securities underlying unexercised unearned options (#)(2) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of shares or units of stock that have not vested (#)(3) | | Market value of shares or units of stock that have not vested ($)(4) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(5) | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(6) |
| | 2/26/2021 RSU | | | | | | | | | | | | 10,268 | | $ | 163,364 | | | | | |
| | 2/26/2021 PRSU | | | | | | | | | | | | | | | | 5,289 | | $ | 84,148 | |
(*)The Company has a number of awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with the initial public offering in January 2018. No new awards have been granted under this plan since 2017. The options are split equally into four tiers, each with specific vesting conditions. Tier I options vested evenly over 5 years from the grant date, subject to the participant’s continuing to provide service to Gates on the vesting date. Tier II, III and IV options vest on achievement of specified investment returns by Blackstone at the time of a defined liquidity event, which is also subject to the participant’s continued provision of service to Gates on the vesting date. The performance conditions associated with Tiers II, III and IV must be achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant.
(1)Represents Tier I time-vesting stock options.
(2)Represents Tier II, III and IV exit-vesting stock options.
(3)The RSUs vest in substantially equal annual installments on each of the first, second and third anniversaries of the grant date.
(4)Reflects the aggregate market value of the unvested time-vesting RSUs, based on a price of $15.91 per ordinary share, which was the share price of the Company’s ordinary shares on December 29, 2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Option Awards | | | Stock Awards | |
Name | | Grant Date | | | Number of
securities
underlying
unexercised
options (#)
exercisable | | | Number of
securities
underlying
unexercised
options (#)
unexercisable | | | Equity
Incentive
Plan
Awards:
Number of
securities
underlying
unexercised
unearned
options
(#)(2) | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of
shares or
units of
stock that
have not
vested
(#)(3) | | | Market
value of
shares or
units of
stock that
have not
vested
($)(4) | | | Equity
incentive
plan
awards:
number of
unearned
shares,
units or
other
rights that
have not
vested (#) | | | Equity
incentive
plan
awards:
market or
payout
value of
unearned
shares,
units or
other
rights that
have not
vested
($) | |
I. Jurek | | | 5/18/2015 | | | | Tier I | (1) | | | 610,343 | | | | 406,896 | | | | — | | | $ | 6.56 | | | | 5/18/2025 | | | | | | | | | | | | | | | | | |
| | | 5/18/2015 | | | | Tier II | | | | — | | | | — | | | | 1,017,239 | | | $ | 6.56 | | | | 5/18/2025 | | | | | | | | | | | | | | | | | |
| | | 5/18/2015 | | | | Tier III | | | | — | | | | — | | | | 1,017,239 | | | $ | 6.56 | | | | 5/18/2025 | | | | | | | | | | | | | | | | | |
| | | 5/18/2015 | | | | Tier IV | | | | — | | | | — | | | | 1,017,239 | | | $ | 9.84 | | | | 5/18/2025 | | | | | | | | | | | | | | | | | |
| | | 5/2/2017 | | | | Tier I | (1) | | | 27,099 | | | | 108,397 | | | | — | | | $ | 7.87 | | | | 5/2/2027 | | | | | | | | | | | | | | | | | |
| | | 5/2/2017 | | | | Tier II | | | | — | | | | — | | | | 135,496 | | | $ | 7.87 | | | | 5/2/2027 | | | | | | | | | | | | | | | | | |
| | | 5/2/2017 | | | | Tier III | | | | — | | | | — | | | | 135,496 | | | $ | 7.87 | | | | 5/2/2027 | | | | | | | | | | | | | | | | | |
| | | 5/2/2017 | | | | Tier IV | | | | — | | | | — | | | | 135,496 | | | $ | 11.80 | | | | 5/2/2027 | | | | | | | | | | | | | | | | | |
D. Naemura | | | 3/30/2015 | | | | Tier I | (1) | | | 223,157 | | | | 148,771 | | | | — | | | $ | 6.56 | | | | 3/30/2025 | | | | | | | | | | | | | | | | | |
| | | 3/30/2015 | | | | Tier II | | | | — | | | | — | | | | 371,928 | | | $ | 6.56 | | | | 3/30/2025 | | | | | | | | | | | | | | | | | |
| | | 3/30/2015 | | | | Tier III | | | | — | | | | — | | | | 371,928 | | | $ | 6.56 | | | | 3/30/2025 | | | | | | | | | | | | | | | | | |
| | | 3/30/2015 | | | | Tier IV | | | | — | | | | — | | | | 371,928 | | | $ | 9.84 | | | | 3/30/2025 | | | | | | | | | | | | | | | | | |
G. Gawronski | | | 12/4/2017 | | | | RSU | | | | | | | | | | | | | | | | | | | | | | | | 50,863 | | | $ | 670,374 | | | | | | | | | |
| | | 3/9/2018 | | | | Options | (5) | | | — | | | | 220,000 | | | | — | | | $ | 17.72 | | | | 3/9/2028 | | | | | | | | | | | | | | | | | |
J. Seely | | | 9/19/2017 | | | | Tier I | (1) | | | 20,980 | | | | 83,922 | | | | — | | | $ | 13.44 | | | | 9/19/2027 | | | | | | | | | | | | | | | | | |
| | | 9/19/2017 | | | | Tier II | | | | — | | | | — | | | | 104,902 | | | $ | 13.44 | | | | 9/19/2027 | | | | | | | | | | | | | | | | | |
| | | 9/19/2017 | | | | Tier III | | | | — | | | | — | | | | 104,902 | | | $ | 13.44 | | | | 9/19/2027 | | | | | | | | | | | | | | | | | |
| | | 9/19/2017 | | | | Tier IV | | | | — | | | | — | | | | 104,902 | | | $ | 20.16 | | | | 9/19/2027 | | | | | | | | | | | | | | | | | |
| | | 3/9/2018 | | | | Options | (5) | | | — | | | | 80,000 | | | | — | | | $ | 17.72 | | | | 3/9/2028 | | | | | | | | | | | | | | | | | |
W. Lifsey | | | 8/24/2015 | | | | Tier I | (1) | | | 150,400 | | | | 100,268 | | | | — | | | $ | 6.56 | | | | 8/24/2025 | | | | | | | | | | | | | | | | | |
| | | 8/24/2015 | | | | Tier II | | | | — | | | | — | | | | 250,668 | | | $ | 6.56 | | | | 8/24/2025 | | | | | | | | | | | | | | | | | |
| | | 8/24/2015 | | | | Tier III | | | | — | | | | — | | | | 250,668 | | | $ | 6.56 | | | | 8/24/2025 | | | | | | | | | | | | | | | | | |
| | | 8/24/2015 | | | | Tier IV | | | | — | | | | — | | | | 250,668 | | | $ | 9.84 | | | | 8/24/2025 | | | | | | | | | | | | | | | | | |
| | | 5/12/2016 | | | | Tier I | (1) | | | 33,874 | | | | 50,811 | | | | — | | | $ | 6.56 | | | | 5/12/2026 | | | | | | | | | | | | | | | | | |
| | | 5/12/2016 | | | | Tier II | | | | — | | | | — | | | | 84,685 | | | $ | 6.56 | | | | 5/12/2026 | | | | | | | | | | | | | | | | | |
| | | 5/12/2016 | | | | Tier III | | | | — | | | | — | | | | 84,685 | | | $ | 6.56 | | | | 5/12/2026 | | | | | | | | | | | | | | | | | |
| | | 5/12/2016 | | | | Tier IV | | | | — | | | | — | | | | 84,685 | | | $ | 9.84 | | | | 5/12/2026 | | | | | | | | | | | | | | | | | |
(1) | Represents Tier I time-vesting stock options held by the Named Executive Officers as of December 29, 2018. The Tier I options vest 20% on each of the first five anniversaries of the grant date.
|
(2) | Represents Tier II, III and IV exit-vesting stock options held by the Named Executive Officers as of December 29, 2018. The Tier II, III and IV exit-vesting options become vested when and to the extent specified internal rate of return or multiple of investment targets are
|
31, 2021, the last trading day of Fiscal 2021. | achieved by Blackstone as described(5)The PRSUs vest on the date the Compensation Committee certifies the achievement of the performance measures following the three-year performance period, with 50% subject to attainment of certain levels of Adjusted ROIC and 50% subject to attainment of Relative TSR. For 2019 and 2020 PRSU awards, the amounts shown in this column represent threshold payout shares of the outstanding PRSUs assuming both an attainment of 0.1% above threshold for the Adjusted ROIC measure and a threshold 50% payout under the TSR measure. For 2021 PRSU awards ,the amounts shown in this column represent threshold payout shares of the outstanding PRSUs assuming threshold levels of attainment of 50% under both measures. The number of shares ultimately issued, which could be zero or greater than the number presented above, will be based on achieving specific performance conditions. Please refer to “Elements of Compensation — Long-Term Incentive” above. For the PRSUs granted on February 22, 2019, the Compensation Committee certified the Company’s achievement of 80% of the Adjusted ROIC measure and 0% of the Relative TSR metric for the 2019 -2021 performance period, resulting in a vesting of 40% of the grant amount effective January 28, 2022.(6)Represent the aggregate market value of the threshold payout shares of the unvested PRSUs, based on a price of $15.91 per ordinary share, which was the share price of the Company’s ordinary shares on December 31, 2021, the last trading day of Fiscal 2021. (7)Represents time-based stock options granted under the “—Narrative Disclosure Relating to the Summary Compensation Table and Grants of Plan-Based Awards—Equity-Based Awards” section above. |
(3) | Represents time-vesting RSUs held by Mr. Gawronski as of December 29, 2018.One-third of the RSUs vest on each of the first and second anniversaries of the grant date, with the remaining outstanding RSUs vesting on the third anniversary of the grant date.
|
(4) | Reflects the aggregate market value of the unvested time-vesting RSUs, based on a price of $13.18 per ordinary share, which was the share price of the Company’s ordinary shares on December 28, 2018, the last trading day of the fiscal year.
|
(5) | Represents time-vesting stock options granted during 2018 to Mr. Gawronski and Ms. Seely. The options vest ratably on each of the first four anniversaries of the grant date, subject to the executive’s continued employment.
|
2018 Omnibus Incentive Plan. These options vest in substantially equal annual installments on the first three anniversaries of the grant date.
(8)Represents premium- priced time-based stock options granted to the Chief Executive Officer under the 2018 Omnibus Incentive Plan. These premium-priced options vest equally on the third, fourth and fifth anniversary of the grant date.
(9)Represents premium- priced time-based stock options granted to the Chief Executive Officer under the 2018 Omnibus Incentive Plan. These premium-priced options vest in substantially equal annual installments on the first three anniversaries of the grant date.
(10)Represents time-based stock options granted to Mr. Gawronski. The options vest in substantially equal annual installments on the first four anniversaries of the grant date.
2021 Option Exercises and Stock Vested
The following table provides information regarding ourthe Named Executive Officers’ option exercises and stock that vested during 2018. | | | | | | | | | | | | | | | | |
Name | | Option Awards | | | Stock Awards | |
| | # of Shares
Acquired on
Exercise
(#) | | | Value
Realized on
Exercise
($) | | | # of Shares or
Units Acquired
on Vesting
(#) | | | Value Realized
on Vesting
($)(1) | |
Ivo Jurek | | | — | | | | — | | | | — | | | | — | |
David Naemura | | | — | | | | — | | | | — | | | | — | |
Grant Gawronski | | | — | | | | — | | | | 25,430 | | | $ | 375,601 | |
Jamey Seely | | | — | | | | — | | | | — | | | | — | |
Walt Lifsey | | | — | | | | — | | | | — | | | | — | |
(1) | Based on a $14.77 share price, which was the closing price of the Company’s ordinary shares on the trading day prior to the vesting date.
|
2018
2021. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Shares Acquired on Exercise
(#) | | Value Realized on Exercise
($) | | Shares or Units Acquired on Vesting
(#) | | Value Realized on Vesting ($)(1) |
| I. Jurek | | — | | $ | — | | | 60,727 | | $ | 1,031,752 | |
| L. Mallard | | — | | $ | — | | | 9,774 | | $ | 174,661 | |
| G. Gawronski | | — | | $ | — | | | 24,331 | | $ | 413,384 | |
| W. Lifsey | | — | | $ | — | | | 24,392 | | $ | 414,420 | |
| T. Pitstick | | — | | $ | — | | | 6,110 | | $ | 103,809 | |
(1)Based on a share price of $17.87 for Mr. Mallard, and $16.99 for all other Named Executive Officers, which was the closing price of the Company’s ordinary shares on the trading day prior to the vesting date.
2021 Nonqualified Deferred Compensation
The Company offers to its executives, including all of the Named Executive Officers, the opportunity to participate in the Supplemental Retirement Plan. The table below provides information as of
December 29, 2018,January 1, 2022, for those Named Executive Officers who were eligible to participate in this plan.
| | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in Last FY
($)(1) | | | Registrant
Contributions
in Last FY
($)(2) | | | Aggregate
Earnings
(Losses)
in Last FY
($)(3) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance at
Last FYE
($)(4) | |
I. Jurek | | | 138,915 | | | | 161,596 | | | | (34,539 | ) | | | — | | | | 738,892 | |
D. Naemura | | | — | | | | 81,648 | | | | (9,508 | ) | | | — | | | | 193,583 | |
G. Gawronski | | | — | | | | 13,731 | | | | — | | | | — | | | | 13,731 | |
J. Seely | | | — | | | | 28,716 | | | | — | | | | — | | | | 28,716 | |
W. Lifsey | | | — | | | | 69,335 | | | | (6,124 | ) | | | — | | | | 150,873 | |
(1) | This column reflects 2018 Annual Plan bonuses earned by the Named Executive Officers with respect to the last fiscal year that have been deferred on a voluntary basis. Only Mr. Jurek elected to defer 10% of his 2018 Annual Plan bonus. Mr. Jurek’s deferral amount is
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive Contributions in Last FY(1) | | Registrant Contributions in Last FY(2) | | Aggregate Earnings (Losses) in Last FY ($)(3) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate Balance at Last FYE ($)(4) | | I. Jurek | | $ | — | | | $ | 147,654 | | | $ | 167,558 | | | $ | — | | | $ | 1,528,517 | | | L. Mallard | | $ | — | | | $ | 44,416 | | | $ | 1 | | | $ | — | | | $ | 55,240 | | | G. Gawronski | | $ | 312,716 | | | $ | 61,540 | | | $ | 49,151 | | | $ | — | | | $ | 854,155 | | | W. Lifsey | | $ | — | | | $ | 63,742 | | | $ | 33,651 | | | $ | — | | | $ | 389,889 | | | T. Pitstick | | $ | — | | | $ | 31,276 | | | $ | 18,013 | | | $ | — | | | $ | 164,764 | |
(1)This column reflects 2021 base salary and/or bonus earned by the Named Executive Officers with respect to Fiscal 2021 that have been deferred on a voluntary basis. Mr. Gawronski elected to defer 12% of his base salary and 25% of his 2021 bonus. The amounts reported in this column are included in the 2021 Summary Compensation Table as either “Salary” or “Bonus” as appropriate. (2)This column contains contributions by us with respect to Fiscal 2021 under the Supplemental Retirement Plan, which provides for benefits in excess of amounts permitted to be contributed under the Gates MatchMaker 401(k) Plan as a result of Section 401(a)(17) of the Code. As a result, participants are eligible to receive a Retirement Contribution paid by the Company in an amount equal to 6% of eligible compensation that exceeds Section 401(a)(17) of the Code, which is earned in 2021 and paid in the first quarter of 2022. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table. (3)“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
(2) | This column contains contributions by us with respect to the last fiscal year under the Supplemental Retirement Plan, which provides for benefits in excess of amounts permitted to be contributed under our Gates MatchMaker 401(k) Plan as a result of Section 401(a)(17) of the Code. As a result, participants are eligible to receive a retirement contribution paid by the Company in an amount equal to 6% of eligible compensation that exceeds Section 401(a)(17) of the Code, which is earned in 2018 and paid in the first quarter of 2019. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table.
|
(3) | Because amounts included in this column do not include above-market or preferential earnings, none of these amounts are included under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table. |
(4) | The following amounts reported in the “Aggregate Balance at Last Fiscal Year End” column were reported as compensation in the Summary Compensation Table for Fiscal 2017: Mr. Jurek: $472,920; Mr. Naemura: $121,443 and Mr. Lifsey: $87,662.
|
Narrative to 2018 Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.
(4)Balances at the end of Fiscal 2021 consist of (1) executive contributions, which reflect salary, bonus, and equity compensation deferrals made by the Named Executive Officers over time, beginning when they first became eligible to participate in the Supplemental Retirement Plan, plus (2) the Company’s contributions, plus (3) earnings and losses credited on all deferrals, less (4) pre-retirement distributions, if any, taken by the Named Executive Officer since they began participating in the Supplemental Retirement Plan. Of the amounts reported in this column, $46,738, $10,823, $24,240, and $24,342 were reported as compensation to Messrs. Jurek, Mallard, Gawronski, and Lifsey respectively, in the Summary Compensation TableWe for 2020, and $125,927, $48,697, and $55,620 were reported as compensation to Messrs. Jurek, Gawronski, and Lifsey for 2019.
Narrative to 2021 Nonqualified Deferred Compensation Table
The Company currently
offeroffers participation in the Supplemental Retirement Plan to specified U.S. employees including the Named Executive Officers. This plan is a nonqualified deferred compensation plan that provides participants with two benefit opportunities:
| 1. | Non elective employer contribution. A 6% employer contribution (the “Retirement Contribution”) on eligible earnings that exceed Section 401(a)(17) of the Code’s dollar limits.
|
| 2. | Compensation Deferral Opportunity. Participants may defer up to 80% of base salary and 80% of bonus compensation. There is no employer paid matching contribution on these deferrals.
|
a Retirement Contribution and a Compensation Deferral Opportunity, as described under the heading “Other Aspects of the Company’s Compensation Programs — Retirement Benefits.”
These deferrals are in addition to amounts participants may defer in the Gates MatchMaker 401(k) Plan. Each Named Executive Officer who participates in the deferral feature of the Supplemental Retirement Plan is 100% vested in
that portion of their account that is attributable toboth elective
deferrals. In June 2017, a Rabbi trust to hold plan assets was establisheddeferrals and
the Rabbi trust was funded in January 2018.employer contributions at all times. The amounts deferred are credited to accounts selected by the Named Executive Officer that mirror the investment alternatives available in the Gates MatchMaker 401(k) Plan. During fiscal 2018, participants wereParticipants are permitted to select the investment alternatives in which they wantedwant their accounts to be deemed to be invested and wereare credited with earnings and/or losses based on the performance of the relevant investments. Participants wereare able to periodically change the investment elections for their accounts during fiscal 2018. accounts.
A Named Executive Officer’s vested account will commence to be paid at the earliest to occur of the following events: (1) the specified date elected by the participant (provided the date specified is at least two years from the end of the Supplemental Retirement Plan year in which the contribution to the Supplemental Retirement Plan is made); (2) the participant’s Disability (as defined in the Supplemental Retirement Plan); (3) the participant’s termination of employment; (4) the participant’s death; or (5) upon a Change in Control (as defined in the Supplemental Retirement Plan).
If the distribution is made on account of a termination of employment (other than death), the vested account will be distributed in accordance with the form of distribution as elected
(a(as a single
lump-sum or in annual installments over two, three, four or five
years)years with the first installment made as soon as possible after the first day of the seventh month following the termination of employment). If a distribution is made on account of death, the participant’s vested account will be distributed to his or her beneficiary in a single
lump-sum as soon as practicable following the participant’s death, regardless of the form of benefit
elected. If a distribution is made on account of a termination of employment for any reason other than Disability or death, distribution of alump-sum or the first installment will be made or begin as soon as possible after the first day of the seventh month following the termination of employment. If a distribution is made on account of Disability or death,elected, with the distribution
will be made
or begin as soon as possible on the first day of the month following the payment event. If a distribution is made on account of a specified date or Change in Control, the distribution will be made or begin as soon as is reasonably practical, but in no event later than the last day of the calendar
year.year that such event occurred.
Potential Payments upon a Termination or Change in Control
Summary of Potential Payments
Severance and other benefits that are payable upon a termination of employment or upon a change in control under the Executive Severance Plan and Change in Control Plan are described below. The table following this narrative discussion summarizes the amounts that would have been payable upon termination or a change in control under certain circumstances to Named Executive Officers, assuming that their employment terminated on December 28, 2018.January 1, 2022.
Executive Severance Plan. In connection with ourthe IPO wein 2018, the Company adopted the Executive Severance Plan. The Executive Severance Plan provides for severance payments upon certain terminations of employment to ourits Named Executive Officers and other executive officers who are expected to make substantial contributions to ourits success and thereby provide for stability and continuity of operations. All of ourthe Company’s Named Executive Officers participate in the Executive Severance Plan pursuant to individual participation agreements.
The Executive Severance Plan provides that, if
we terminatethe Company terminates the employment of a Named Executive Officer for any reason other than “cause”, death or disability, or if the Named Executive Officer
voluntarily terminates
other than foras a
result of “constructive termination,” then the Named Executive Officer will be entitled to receive:
•salary continuation payments in an amount equal to (a) the sum of two times base salary and two times previous year bonus for Mr. Jurek, (b) the sum of one times base salary and one times previous year bonus for Mr. Naemura and (c) two times base salary for each other Named Executive Officer,Mr. Mallard, Mr. Gawronski and Mr. Lifsey, paid in substantially equal installments over a period of 24 months, (12 monthsor (c) one times base salary for Mr. Naemura);
Pitstick, paid in substantially equal installments over a period of 12 months.•the Named Executive Officer’s annual bonus under the Annual Plan as earned (without the adjustment for an individual performance factor) for the year in which the separation occurs(pro-rated (pro-rated for days of service during the fiscal year), payable concurrently with cash bonus payments to other employees under the Annual Plan;
•cash payments in an amount equal to the total amount of Gates’ portion of the monthly COBRA insurance premiums for participation in the health and dental benefit programs in which the Named Executive Officer participated immediately prior to separation, payable monthly for each month of the welfare continuation period, which is equal to (a) 24 months for a period of 24 months;Mr. Jurek, Mr. Mallard, Mr. Gawronski and Mr. Lifsey, and (b) 12 months for Mr. Pitstick.
•reimbursement for reasonable outplacement services whichthat are directly related to the Named Executive Officer’s termination and which are incurred only during asix-consecutive month period that ends within or with the12-month period following the termination of the Named Executive Officer’shis employment.
For these purposes, “cause” and “constructive termination” have the meanings ascribed to such terms in the Executive Severance Plan.
Our
The Executive Severance Plan contains a
“best-of-net” “best-of-net” provision. With a
“best-of-net” “best-of-net” provision, if any of the participants is subject to an excise tax under Code Section 280G and Code Section 4999, then the amount of severance the participant receives may be reduced so that the excise tax does not apply; however, such reduction will only occur if it results in the receipt of a greater
after-tax severance than would otherwise be provided.
Named Executive Officers are not entitled to payments under the Executive Severance Plan if they are entitled to receive payment under the Executive Change in Control Plan discussed below. In addition, in order to receive payments under the Executive Severance Plan, the Named Executive Officer must execute and not revoke a release of claims against
usthe Company and continue to comply with confidentiality,
non-compete,non-solicitation and
non-disparagement covenants during
each of the executive’s employment and for the
one-year period following any termination of employment (or such longer period as the Named Executive Officer is eligible to receive severance payments from us).
Executive Change in Control Plan. In connection with ourthe IPO wein 2018, the Company adopted the Executive Change in Control Plan in which all of our executive officers, including eachthe Named Executive Officer,Officers, excluding Mr. Pitstick, participate pursuant to individual participation agreements. The Executive Change in Control Plan serves to encourage these key executives to carry out their duties and provide continuity of management in the event of a “change in control” of Gates. If a change in control occurs and the eligible Named Executive Officer’s employment is terminated by us or a successor for reasons other than “cause” or is terminated voluntarily by the individual for “constructive
termination,” in each case within the period beginning 90 days prior to the consummation of a change in control and ending on the second anniversary of the date of such change in control, then the Executive Change in Control Plan generally provides that the individual would be entitled to receive:
•alump-sum payment in the amount of two andone-half times base salary plus target bonus amount (for Mr. Jurek) and one andone-half times base salary plus target bonus amount (for the other participating Named Executive Officers);
•alump-sum payment equal to the executive’sNamed Executive Officer’s target annual bonus amount in effect prior to the change in control(pro-rated (pro-rated for days of service during the fiscal year);
, plus any earned and unpaid bonus from the prior fiscal year.•cash payments in an amount equal to the total amount of the monthly COBRA insurance premiums for participation in the health and dental benefit programs as well as the monthly premiums for the life and long-term disability insurance benefit programs in which the Named Executive Officer participated in immediately prior to separation, payable monthly for each month of the welfare continuation period, which is equal to 30 months for Mr. Jurek and 24 months for each other participating Named Executive Officer;Officers; and
•reimbursement for reasonable outplacement services whichthat are directly related to the Named Executive Officer’s termination and which are incurred only during asix-consecutive month period that ends within or with the12-month period following the termination of the Named Executive Officer’shis employment.
For these purposes, “change in control”, “cause” and “constructive termination” have the meanings ascribed to such terms in the Executive Change in Control Plan.
Neither plan contains a single trigger or a modified single trigger for benefits. In addition, the Executive Change in Control Plan does not provide for benefits upon death or disability following a change in control.
Our
The Executive Change in Control Plan contains a
“best-of-net” “best-of-net” provision. With a
“best-of-net” “best-of-net” provision, if any of the participants is subject to an excise tax under Code Section 280G and Code Section 4999, then the amount of severance the participant receives may be reduced so that the excise tax does not apply; however, such reduction will only occur if it results in the receipt of a greater
after-tax severance than would otherwise be provided.
To the extent a payment or benefit that is paid or provided under the Executive Change in Control Plan would also be paid or provided under the terms of another plan, program, agreement, arrangement or legal requirement, the
executiveparticipating Named Executive Officer would be entitled to payment under the Executive Change in Control Plan or such other applicable plan, program, agreement, arrangement or legal requirement, whichever provides for greater benefits, but would not be entitled to benefits under both the Executive Change in Control Plan and such other plan, program, agreement, arrangement or legal requirement.
In addition, in order to receive payment and benefits under the Executive Change in Control Plan, the
participating Named Executive Officer must execute and not revoke a release of claims against
Gatesthe Company and continue to comply with confidentiality,
non-compete and
non-solicitation covenants during
each of the executive’s employment and for the
one-year period following any termination of employment (or such longer period as the Named Executive Officer is eligible to receive severance payments from us).
Neither plan contains a single trigger or a modified single trigger for benefits. In addition, the Executive Change in Control Plan does not provide for benefits upon death or disability following a change in control.
Annual PlanMessrs. Jurek, Naemura, Gawronski and Lifsey and Ms. Seely participatedPlan.
All of the Named Executive Officers participate in the Annual Plan. For fiscal 2018, the Annual Plan, providedwhich provides that a participant hadhas to be an employee at the time of a payout in order to receive a payout under the Annual Plan, except (i) in the case of death, Disability (as defined in the Annual Plan) or Retirement (as defined in the Annual Plan), (ii) if such payment wasis required by local law or individual employment agreement or (iii) at the discretion of the Gates Global Bonus Policy Review Committee, under the terms of a Gates-approvedCompany-approved severance arrangement (referred to as “Termination“Termination with Severance”Severance”). In the case of death, Disability or Retirement, theany bonus payout, if applicable, would have been calculated based on the target achievement of annual financial performance targets (without the adjustment for an individual performance factor), and prorated to reflect the number of full months the participant worked for us by the participantCompany in the year of such termination. In the case of Termination with Severance, the bonus payout would have been calculated in accordance with the Executive Severance and Change in Control Plans, as applicable.
Retirement Benefits. The Supplemental Retirement Plan that is made available to all Named Executive Officers has payment provisions relating to the termination of employment with the Company and a Change in Control (as defined in the Supplemental Retirement Plan), which are described more fully above under “Nonqualified Deferred Compensation for Fiscal 2021.”
Long-Term Incentive Awards
Pre-IPO Option
GrantsFor Messrs.Grants. The Company has a number of awards issued under the 2014 Omaha Topco Ltd. Stock Incentive Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan (the “2014 Incentive Plan”) in connection with the Company’s initial public offering in January 2018. No new awards have been granted under this plan since 2017. Of the Company’s Named Executive Officers, Mr. Jurek, NaemuraMr. Lifsey, and Lifsey,Mr. Pitstick were issued options pursuant to the 2014 Incentive Plan. The options are split equally into four tiers, each with specific vesting conditions. Tier I options vest evenly over 5 years from the grant date, subject to the participant’s continuing to provide service to the Company on the vesting date. Tier II, III and IV options vest on Blackstone’s achievement of specified investment returns at the time of a defined liquidity event, which is also subject to the participant’s continued provision of service to the Company on the vesting date. The performance conditions associated with Tiers II, III and IV must be achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant.
Additionally, for Mr. Jurek, vesting of one additional “tranche” of the Tier I time-vesting options will accelerate upon termination of employment by (i) the Company without Cause, (ii) by the participant for Good Reason, andor (iii) death or Disability ((i)–(iii) collectively referred to as a “Good Leaver Termination”). In addition, for all Named Executive Officers with options granted prior to May 2017, with respect to the Tier II, III and IV exit-vesting options, if there is a separation from service due to a Good Leaver Termination prior to July 3, 2022, then a percentage of such options equal to the “Specified Portion” listed below will remain outstanding and eligible to vest for a period ending on the earlier of (x) the date that is 24 months following the date of termination or (y) July 3, 2022. | | | | |
Date of Good Leaver Termination
| | Specified Portion
(Messrs. Jurek, Naemura,
Lifsey) | |
Prior to the first anniversary of the date of grant/vesting reference date
| | | 20 | % |
On or after the first anniversary of the date of grant/vesting reference date and prior to the second anniversary of the date of grant/vesting reference date
| | | 40 | % |
On or after the second anniversary of the date of grant/vesting reference date and prior to the third anniversary of the date of grant/vesting reference date
| | | 60 | % |
On or after the third anniversary of the date of grant/vesting reference date and prior to the fourth anniversary of the date of grant/vesting reference date
| | | 80 | % |
On or after the fourth anniversary of the date of grant/vesting reference date and prior to the fifth anniversary of the date of grant/vesting reference date
| | | 100 | % |
On or after the fifth anniversary of the date of grant/vesting reference date
| | | — | |
| | | | | | | | | | | | | | |
| Date of Good Leaver Termination | | Specified Portion (Jurek and Lifsey) | | Specified Portion (Pitstick) |
| Prior to the first anniversary of the date of grant/vesting reference date | | 20% | | 0% |
| On or after the first anniversary of the date of grant/vesting reference date and prior to the second anniversary of the date of grant/vesting reference date | | 40% | | 20% |
| On or after the second anniversary of the date of grant/vesting reference date and prior to the third anniversary of the date of grant/vesting reference date | | 60% | | 40% |
| On or after the third anniversary of the date of grant/vesting reference date and prior to the fourth anniversary of the date of grant/vesting reference date | | 80% | | 60% |
| On or after the fourth anniversary of the date of grant/vesting reference date and prior to the fifth anniversary of the date of grant/vesting reference date | | 100% | | 80% |
| On or after the fifth anniversary of the date of grant/vesting reference date | | | | 100% |
In addition, for options granted prior to May 2017, if the participant retires on or after the third anniversary of the vesting commencement date, is at least age 62 and has completed three years of service, then the Board may, in its discretion, treat such retirement as a Good Leaver Termination with respect to Tiers II, III and IV.
For all option awards
under the 2014 Incentive Plan, upon a “Change in Control” (as such term is defined in the 2014 Incentive Plan) during the participant’s employment, all unvested Tier I time-vesting options will accelerate and become fully vested. The Tier II, III and IV exit-vesting options
woulddo not automatically become fully vested in connection with a Change in
Control. However,Control; however, all or a portion of the Tier II, III and IV exit-vesting options may become vested to the extent a Change in Control occurs prior to July 3, 2022, which results in the applicable vesting conditions being met. If not, then the Tier II, III and IV exit-vesting options would remain outstanding and eligible to vest until July 3, 2022, or until Blackstone ceases to own any of
ourthe Company’s ordinary shares.
2018 Omnibus Incentive Plan — Outstanding Equity Awards
Options.With respect to the RSUsOptions granted pursuant to Mr. Gawronski priorthe 2018 Omnibus Incentive Plan, in the event of a termination for “cause” (as defined under the 2018 Omnibus Incentive Plan), all outstanding vested and unvested Options will immediately terminate and expire. In the event of a termination for death or disability, all outstanding unvested Options shall vest and all outstanding vested Options shall remain exercisable for one year thereafter. In the event of a termination for any other reason, including a voluntary termination, all outstanding unvested Options shall immediately terminate and expire, and all outstanding vested Options shall remain exercisable for 60 days after such termination (or, if such termination occurs during or up to our IPO, inseven days before a blackout under the Company’s Trading Policy, then 30 days after such blackout period ends). In the event of a “Change in Control” as defined in the 2018 Omnibus Incentive Plan, Options awarded in 2018 and 2019 will vest immediately. The Options granted in 2020 and thereafter require both a Change in Control and a termination of the executive by the Company without Cause (as defined in his RSU award agreement) during Mr. Gawronski’s employment, unvested the 2018 Omnibus Incentive Plan), by the executive by reason of Constructive Termination (as defined in the Executive Change in Control Plan) or a termination for death or disability for accelerated vesting.
RSUs will fully vest.2018 Awards
and PRSUs.
With respect to RSUs and PRSUs granted pursuant to the fiscal 2018 grants to Mr. Gawronski and Ms. Seely of time-vesting stock options,Omnibus Incentive Plan, in the event of a termination due tofor any reason other than death or disability outstandingprior to the vesting of the RSUs and PRSUs, all unvested options will immediately vest. Additionally, all optionsRSUs and PRSUs shall be forfeited. In the event of termination for death or disability, RSUs will fully vest and become exercisable immediately priorPRSUs representing a pro-rata portion of the number of PRSUs that would have vested based on the Company’s actual performance for the entire performance period will be eligible to vest on a pro-rata basis based on days employed during the performance period. In the event of a “Change in Control” (as defined in the 2018 Omnibus Incentive Plan). Retirement Benefits
The Supplemental Retirement Plan that is made available to all Named Executive Officers has payment provisions relating, RSUs granted in 2018 and 2019 will vest immediately and PRSUs will be earned based on the Company’s Relative TSR performance as measured through the date of the change in control and Adjusted ROIC as measured through the most recently completed fiscal quarter relative to the performance criteria determined by the Compensation Committee, with 50% of the earned PRSUs vesting on the date of the Change in Control and the remaining 50% of the earned PRSUs vesting on the first anniversary of the date of the Change in Control; provided that, the remaining 50% will vest immediately upon a termination by the Company without Cause (as defined in the 2018 Omnibus Incentive Plan). Additionally, the target number of employment with Gates andPRSUs will be earned if a Change in Control occurs within the first six months of the performance period, with the earned PRSUs vesting as set forth in the preceding sentence. The target number of PRSUs will vest on the date of such Change in Control if the PRSUs are not continued, converted, assumed or replaced by the Company, any of its subsidiaries or a successor entity thereto. RSUs granted in 2020 and thereafter require both a Change in Control and a termination of the executive by the Company without Cause (as defined in the Supplemental Retirement2018 Omnibus Incentive Plan), which are described more fully above under “Nonqualified Deferred Compensationby the executive by reason of Constructive Termination (as defined in the Executive Change in Control Plan) or a termination for Fiscal 2018.”
death or disability, for accelerated vesting.
Payments and Benefits Upon Termination or
Change-in-Control Change in Control
The following table describes the potential payments and benefits that would have been payable to
ourthe Named Executive Officers assuming an eligible termination (as described above under “Summary of Potential Payments”) of their employment on the last business day of
fiscal 2018.Fiscal 2021.
The amounts shown in the table below do not include:
•payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the Named Executive Officers; or
•distributions of previously vested plan balances under the Gates MatchMaker 401(k) Plan and the Supplemental Retirement Plan (see the “2018“2021 Nonqualified Deferred Compensation” section above for information about the Supplemental Retirement Plan).
| | | | | | | | | | | | | | | | | | | | |
| | | I. Jurek | | | D. Naemura | | | G. Gawronski | | | J. Seely | | | W. Lifsey | |
Termination—Disability or Death | | | | | | | | | | | | | | | | | | | | |
Cash Severance Payments(1) | | $ | 1,417,500 | | | $ | 701,500 | | | $ | 455,096 | | | $ | 297,500 | | | $ | 610,000 | |
Equity Awards(2) | | $ | 1,490,725 | | | $ | 492,431 | | | $ | 0 | | | $ | 0 | | | $ | 444,013 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 2,908,225 | | | $ | 1,193,931 | | | $ | 455,096 | | | $ | 297,500 | | | $ | 1,054,013 | |
| | | | | | | | | | | | | | | | | | | | |
Termination—By the Company without Cause | | | | | | | | | | | | | | | | | | | | |
Cash Severance Payments(3) | | $ | 7,314,975 | | | $ | 2,316,830 | | | $ | 1,641,443 | | | $ | 1,138,575 | | | $ | 1,811,700 | |
Health Plan Continuation(4) | | $ | 27,053 | | | $ | 27,053 | | | $ | 27,053 | | | $ | 18,748 | | | $ | 18,748 | |
Outplacement(5) | | $ | 7,400 | | | $ | 7,400 | | | $ | 7,400 | | | $ | 7,400 | | | $ | 7,400 | |
Equity Awards(2) | | $ | 1,490,725 | | | $ | 492,431 | | | $ | 0 | | | $ | 0 | | | $ | 444,013 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 8,840,153 | | | $ | 2,843,715 | | | $ | 1,675,896 | | | $ | 1,164,723 | | | $ | 2,281,861 | |
| | | | | | | | | | | | | | | | | | | | |
Change-in-Control—(with Termination) | | | | | | | | | | | | | | | | | | | | |
Cash Severance Payments(6) | | $ | 7,323,750 | | | $ | 2,668,750 | | | $ | 2,037,740 | | | $ | 1,381,250 | | | $ | 2,440,000 | |
Health Plan Continuation(4) | | $ | 85,993 | | | $ | 57,438 | | | $ | 51,614 | | | $ | 36,415 | | | $ | 43,774 | |
Outplacement(5) | | $ | 7,400 | | | $ | 7,400 | | | $ | 7,400 | | | $ | 7,400 | | | $ | 7,400 | |
Equity Awards(2) | | $ | 3,269,240 | | | $ | 984,864 | | | $ | 670,374 | | | $ | 0 | | | $ | 1,000,143 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 10,686,382 | | | $ | 3,718,452 | | | $ | 2,767,128 | | | $ | 1,425,065 | | | $ | 3,491,317 | |
| | | | | | | | | | | | | | | | | | | | |
Change-in-Control—(without Termination) | | | | | | | | | | | | | | | | | | | | |
Equity Awards(2) | | $ | 3,269,240 | | | $ | 984,864 | | | $ | 670,374 | | | $ | 0 | | | $ | 1,000,143 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,269,240 | | | $ | 984,864 | | | $ | 670,374 | | | $ | 0 | | | $ | 1,000,143 | |
| | | | | | | | | | | | | | | | | | | | |
(1) | Amounts reported reflect the Annual Plan bonus based on the target achievement of annual financial and individual performance targets.
|
(2) | For Messrs.
•Payments related to any accidental death and dismemberment and long-term disability insurance any Named Executive Officers holds. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | I. Jurek | | L. Mallard | | G. Gawronski | | W. Lifsey | | T. Pitstick | | Termination – Disability or Death | | | | | | | | | | | Cash Severance Payments(1) | | $ | 1,583,625 | | | $ | 563,750 | | | $ | 684,264 | | | $ | 685,962 | | | $ | 333,396 | | Equity Awards(2) | | 10,692,461 | | | 1,812,223 | | | 3,290,311 | | | 3,298,498 | | | 919,178 | | | Total | | $ | 12,276,086 | | | $ | 2,375,973 | | | $ | 3,974,575 | | | $ | 3,984,460 | | | $ | 1,252,574 | | | | | | | | | | | | | | Termination – By the Company without Cause | | | | | | | | | Cash Severance Payments(3) | | $ | 3,695,125 | | | $ | 1,691,250 | | | $ | 2,052,793 | | | $ | 2,057,885 | | | $ | 777,924 | | Health Plan Continuation(4) | | 25,456 | | | 20,977 | | | 25,456 | | | 7,991 | | | 25,456 | | Outplacement(5) | | 8,000 | | | 8,000 | | | 8,000 | | | 8,000 | | | 8,000 | | Equity Awards(2) | | 217,876 | | | — | | | — | | | — | | | — | | | Total | | $ | 3,946,457 | | | $ | 1,720,227 | | | $ | 2,086,249 | | | $ | 2,073,876 | | | $ | 811,380 | | | | | | | | | | | | | | Change in Control – (with Termination) | | | | | | | | | | | Cash Severance Payments(6) | | $ | 6,598,438 | | | $ | 2,255,000 | | | $ | 2,737,058 | | | $ | 2,743,847 | | | $ | 333,396 | | Health Plan Continuation(4) | | 68,360 | | | 54,346 | | | 51,544 | | | 25,851 | | | 48,400 | | Outplacement(5) | | 8,000 | | | 8,000 | | | 8,000 | | | 8,000 | | | 8,000 | | Equity Awards(2) | | 10,692,461 | | | 1,812,223 | | | 3,290,311 | | | 3,298,498 | | | 919,178 | | | Total | | $ | 17,367,259 | | | $ | 4,129,569 | | | $ | 6,086,913 | | | $ | 6,076,196 | | | $ | 1,308,974 | | | | | | | | | | | | | | Change in Control – (without Termination) | | | | | | | | | Equity Awards(2) | | $ | 7,733,012 | | | $ | 866,936 | | | $ | 1,953,334 | | | $ | 1,958,219 | | | $ | 570,241 | | | Total | | $ | 7,733,012 | | | $ | 866,936 | | | $ | 1,953,334 | | | $ | 1,958,219 | | | $ | 570,241 | |
(1)Cash Severance Payments (Death or Disability): Amounts reported reflect the Fiscal 2021 Annual Plan payment (without the adjustment for an individual performance factor). (2)Equity Awards: For Mr. Jurek, Naemura and Lifsey, if the executive’s employment is terminated by the Company without Cause, by the executive for Good Reason or as a result of death or Disability, then vesting of one |
