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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material under§240.14a-12 |
Garrett Motion Inc.GARRETT MOTION INC.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
☒ | No fee | |||
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☐ | Fee paid previously with preliminary | |||
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Dear Garrett Stockholder:Fellow Stockholders:
20182021 was a landmarkan important year for Garrett Motion. We becameMotion in many positive and impactful aspects. Ahead of our Annual Meeting of Stockholders on Thursday, May 26, 2022, I’d like to share key highlights for the year.
Active Oversight by New Board
At the end of April 2021, we successfully completed our financial restructuring journey. With the backing of new equity owners and a listed membersignificantly improved financial position, our common stock commenced trading on the Nasdaq Global Select Market in May under the ticker symbol “GTX,” and our Series A preferred stock commenced trading on the Nasdaq Global Select Market in October under the ticker symbol “GTXAP.” During and after the restructuring period—within a challenging environment impacted by the pandemic, semiconductor shortages and other industry-wide issues—Garrett continued to report strong financial results and deliver on its mission to launch cutting-edge technologies that enable vehicles to become safer, more connected and efficient, and environmentally friendly.
Garrett emerged from the Chapter 11 process at the end of the New York Stock Exchange following our successful spinoff from Honeywell on October 1, 2018. We debuted as an independent companyApril with a strongreconstituted Board of Directors effectively onboarded to contribute immediately upon listing. The Board is committed to sound governance and effective oversight consistent with our goal to create enduring value for stockholders.
Diverse and Independent Board
Directors. Our Board is comprisedcurrently composed of seven well-qualifiednine members with high integrity that collectively bring a wide range of skillsets, experiences,diverse backgrounds and perspectives necessary to be strong stewards. Sixsignificant financial, automotive and business experience. Seven of our sevennine directors are independent, and four bring more diversity to our Board’s composition. Our Board has established three are women. Importantly,standing committees—the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee. Under the Board’s guidance and effective oversight, Garrett will continue to operate with best-in-class corporate governance practices.
Garrett’s Board and its committees provide active oversight of the Company’s strategy and execution, including the management of risks and issues facing the Company, including those associated with COVID-19 and our Board membersEnvironmental, Social and Governance (ESG) initiatives.
Corporate Citizenship
Garrett’s focus on and commitment to operating as a group have demonstrated expertiseresponsible, respected corporate citizen is stronger than ever. We continue to develop solutions for the automotive industry’s most pressing sustainability issues, from differentiated turbocharging and electrification solutions for emission reduction, to advanced software and optimal vehicle performance. Our mission is executed in industrialtandem with our efforts to make the Company’s operations global markets, public company governance, and other areas critical to Garrett’s long-term success. For more information on our Board composition, please referrespectful to the enclosed proxy statement.
Active Oversight
An essential role of theenvironment and communities in which we serve. Our Board is to provide effective oversight related to Garrett’s corporate strategy and execution. In accomplishing this core fiduciary responsibility, the Board is highly engaged and meets on both a regular and ad-hoc basis to discuss important issues affecting the company’s ability to deliver sustainable operating and financial performance.
The Board’s Audit Committee, Compensation Committee, andits Nominating and Governance Committee, formin collaboration with Garrett senior management, oversee risks and initiatives relating to ESG.
Additionally, in 2021, we published our first sustainability report, which sets out our comprehensive vision for Garrett’s sustainability and environmental impact. It also includes our first external sustainability targets which demonstrate our commitment to support our customers with their respective ambitions on critical ESG topics. Our sustainability report can be found on our website at http://garrettmotion.com/corporate/sustainability.1
Garrett prides itself on developing the foundationright working environment and the right capabilities to advance our performance culture and support our growth strategy while launching breakthroughs in sustainable mobility. We invest in creating an inclusive, stimulating, and safe work environment where our employees can further Advance Motion. While the COVID-19 pandemic has shown signs of slowing over the last several months, no one can be sure what challenges remain ahead of us. Rest assured, however, that the health and safety of our corporate governance structureemployees, supporting our customers and are focused on transparency and accountability. Each committee has adopted a written charter, with clearly delineated roles and responsibilities, to help assure Garrett’s vitality on behalf of its customers, employees,serving our stockholders and other key stakeholders.stakeholders will always be our top priorities.
Corporate Citizenship
Our commitment to address environmental and social issues is an integral component of Garrett’s leading brand. We adhere to the highest safety and ethical standards while striving to safeguard the environment. The company’s innovative technical solutions, which have been a hallmarkThank you for your continued support of Garrett for more than 60 years, enable significant improvements in engine fuel economy and exhaust emissions. We also have worked diligently to build a positive corporate culture that prides itself on diversity and inclusion, and supports local communities through various educational initiatives.
This is truly an exciting period for our company and we are delighted to have you, our new stockholders, join us on our latest journey in Garrett’s longstanding history. We value your support and look forward to your attendance at our inaugural annual meeting of stockholders on June 4th.Motion.
Sincerely,
Chairman of the Board |
1 | The information on our website, including our sustainability report, is not incorporated by reference into, and does not form part of, this proxy statement. |
Dear Garrett Stockholder:
I am pleased to invite you to Garrett Motion’s Annual Meeting of Stockholders, which will be held on Tuesday, June 4, 2019Thursday, May 26, 2022 at 8:00 a.m. Central European Summer Time (2:9:00 a.m. Eastern time) atTime (3:00 p.m. Central Europe Time). The Four Seasons Hotel, Veleslavĺnova 1098/2a, 110 00 Praha 1 - Staré Město-Staré Město, Prague, Czech Republic. Thisannual meeting will be our first annuala completely virtual meeting, of stockholders since we became an independent public company on October 1, 2018, and we look forward to greeting those stockholders that arewhich will be conducted via live webcast. You will be able to attend.
In our 2018 letter to stockholders, which is included in the Annual Report, we discuss our performance for the year, strategy for long-term growth, and outlook. Atattend the annual meeting we planonline and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/GTX2022. For further information on how to provide a brief year-end summaryattend and participate in addition to conducting the official business ofmeeting, please see “General Information About Voting and the annual meeting.Annual Meeting” in the accompanying proxy statement.
We are pleased to make our Annual Report and proxy materials available to stockholders over the Internet under the U.S. Securities and Exchange Commission’s Notice and Access rules. We believe this electronic delivery option provides our stockholders with information in a more timely, cost-efficient, and environmentally conscious manner versus providing materials in paper form.
It is very important that your shares be represented and voted at the annual meeting regardless of whether you plan to attend in person.electronically. The accompanying proxy statement contains information about the matters on which you are asked to vote as well as specific instructions for voting over the telephone or via the Internet, or submitting your proxy. If you have previously received our Notice of Internet Availability of Proxy Materials, then instructions regarding how you can vote are contained in that notice. You are encouraged to read the materials carefully and vote in accordance with the Board of Directors’ recommendations.
Thank you for your investment in Garrett Motion. We appreciate your support.
Sincerely,
Olivier Rabiller President & Chief Executive Officer |
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GARRETT MOTION INC.
Z.A. La Pièce 16
Rolle, Switzerland 1180
NOTICE OF 20192022 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 4, 2019May 26, 2022
20192022 Annual Meeting Information
Date Thursday, May 26, 2022 | ||||
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To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 20192022 Annual Meeting of Stockholders of Garrett Motion Inc., or the Annual Meeting, will be held on Tuesday, June 4, 2019,Thursday, May 26, 2022 at 8:00 a.m. Central European Summer Time (2:9:00 a.m. Eastern time), atTime (3:00 p.m. Central Europe Time). The Four Seasons Hotel, Veleslavínova 1098/2a, 110 00 Praha 1 – StaréAnnual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting Město-Staréwww.virtualshareholdermeeting.com/GTX2022 and entering your 16-digit Město, Prague, Czech Republic.control number included in your Notice of Internet Availability of Proxy Materials, proxy card, or on the instructions that accompanied your proxy materials. At the Annual Meeting, stockholders will consider and vote on the following matters:
MATTER | ||
1 | The election of | |
2 | The ratification of the appointment of Deloitte SA as our independent registered public accounting firm for the fiscal year ending December 31, | |
3 | The approval, on an advisory(non-binding) basis, of the compensation of our named executive officers | |
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The stockholders will also act on any other business that may properly come before the Annual Meeting or any postponement, continuation or adjournment thereof.
Stockholders of record at the close of business on Thursday, April 11, 2019,March 29, 2022, are entitled to notice of, and to vote at, the Annual Meeting or any postponement, continuation or adjournment thereof. A complete list of these stockholders will be available on the bottom panel of your screen during the meeting after entering the 16-digit control number included on the Notice of Internet Availability of Proxy Materials or any proxy card that you received, or on the materials provided by your bank or broker. Your vote is important regardless of the number of shares you own.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 26, 2022. The Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K are available free of charge at proxyvote.com and at investors.garrettmotion.com.
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To ensure that a quorum is present at the Annual Meeting, please vote your shares over the Internet or by telephone, or, if you received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the enclosed envelope, whether or not you expect to attend the Annual Meeting. We encourage stockholders to submit their proxy via telephone or online. If you decide to attend the Annual Meeting, you will be able to vote in person,electronically, even if you have previously submitted your proxy.
By Order of the Board of Directors, |
Corporate Secretary |
April 24, 20198, 2022
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This section summarizes and highlights certain information contained in this proxy statement, but does not contain all the information that you should consider when casting your vote. Please review the entire proxy statement as well as our 2018 annual report to stockholders for the fiscal year ended December 31, 2021 (the “2021 Annual Report”) carefully before voting.
Garrett Motion Inc. (the “Company”, “Garrett”, “we” or “us”) became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Honeywell”(together with its subsidiaries, “Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the“Spin-Off”). EachOn October 1, 2018, approximately 74 million shares of Garrett common stock were distributed to Honeywell stockholders, with each Honeywell stockholder of record receivedreceiving one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares ofdate, and the Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with theSpin-Off, Garrett´s common stock began trading“regular-way” under the ticker symbol “GTX” on the New York Stock ExchangeExchange. On September 20, 2020, the Company and certain of its subsidiaries (the “Debtors”) each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors’ chapter 11 cases were jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.” On April 20, 2021, the Debtors filed the Revised Amended Plan of Reorganization (the “Plan”). On April 26, 2021, the Bankruptcy Court entered an order, among other things, confirming the Plan. On April 30, 2021 (the “Plan Effective Date”), the conditions to the effectiveness of the Plan were satisfied or waived and the Company emerged from Chapter 11 bankruptcy restructuring (“Emergence”). In connection with the Emergence, all shares of the Company’s common stock outstanding prior to the Plan Effective Date (the “Old Common Stock”) were canceled. Additionally, among other things, the Company issued 65,035,801 shares of common stock (the “common stock”) to those holders of Old Common Stock who had not made a cash-out election, issued 247,768,962 shares of the Company’s Series A Cumulative Convertible Preferred Stock (the “Series A preferred stock”) to certain participants in the Plan, including affiliated funds of Centerbridge Partners, L.P. (“Centerbridge”) and affiliated funds of Oaktree Capital Management, L.P. (“Oaktree”), and issued 834,800,000 shares of the Company’s Series B Preferred Stock (the “Series B preferred stock”) to Honeywell.
This proxy statement includes several website addresses and references to additional materials found on October 1, 2018.those websites. These websites and materials are not incorporated by reference herein.
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Proposal 1 | Board Recommendation and Page No. | |||
Election of
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The Board recommends a vote“FOR” each of the Board’s nominees.
See “Proposal One—Election of Directors” beginning onpage |
Directors
Name | Primary Occupation | Age* | Independent | Committee Membership | ||||||||||||||
A | C | G | ||||||||||||||||
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Olivier Rabiller | President and Chief Executive Officer, Garrett | 51 | ||||||||||||||||
| 69 | ● | CHAIR+ | ● | ||||||||||||||
Steven Silver | Senior Managing Director, Centerbridge Partners | 53 | ● | ● | ||||||||||||||
Julia Steyn | Chief Commercial Officer, VectoIQ | 46 | ● | ● | CHAIR | |||||||||||||
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* Ages are as of April | CHAIR = Committee Chair + = Audit Committee Financial Expert | A = Audit Committee C = Compensation Committee G = Nominating and Governance Committee |
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Director Highlights
One of the primary functions of our Board is to oversee management’s performance on behalf of theour stockholders, to ensure the long-term interests of our stockholders are being served. It is therefore essential that the Board be comprised of directors who are qualified to effectively support our growth and commercial strategy. We believe that our directors bring a well-rounded variety of experience, industry backgrounds and diversity to the Board, and represent an effective mix of skills and perspectives to meet the challenges of our commercial and strategic goals.
Diversity and Age
Independence and Expertise
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Balanced Mix of Skills, Qualifications and Experience
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Independence and Expertise
7 of 9 Directors are independent | ||
2 of 3 Audit Committee members are financial experts |
Balanced Mix of Skills, Qualifications and Experience
Board and Committee Meeting Attendance Rate
All of our incumbent directors |
Corporate Governance Highlights
Garrett is committed to good governance practices that protect and promote the long-term value of the Company for its stockholders. The Board regularly reviews our governance practices to ensure they reflect the evolving governance landscape and appropriately support and serve the best interests of the Company and its stockholders.
Independent Oversight |
Independent Chairperson of the Board
Regular executive sessions of non-employee directors at Board meetings (chaired by independent Chairperson) and committee meetings (chaired by independent committee chairs)
100% independent Board committees
Active Board and committee oversight of the Company’s strategy and risk management |
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Board Effectiveness | Directors possess deep and diverse set of skills and expertise relevant to oversight of our business operations and strategy
Annual assessment of director skills and commitment to director refreshment to ensure Board meets the Company’s evolving oversight needs
44% of directors are
Highly engaged Board with all directors having attended
Annual Board and committee self-evaluations
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Stockholder Rights | Proxy access
Majority voting for directors in uncontested elections
Resignation policy for directors who do not receive a majority of the votes cast
No poison pill
No supermajority voting provisions
No fee-shifting provisions |
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Good Governance Practices | All directors
Development and regular review of succession plans for Chief Executive Officer and members of senior management
Board committees have sole discretion to retain and terminate independent third-party advisors, and to set such advisors’ terms of engagement including compensation Code of Business Conduct applicable to directors and all employees
Ethics training annually for all employees
Securities Trading Policy prohibits hedging by directors and executive officers, and prohibits short sales, pledging and buying or selling puts, calls, options or other derivative securities of the Company by directors, officers and employees
Stock ownership guidelines for directors and executive officers
Responsible corporate citizenship and environmental initiatives |
Proposal 2 | Board Recommendation and Page No. | |||
Ratification of the appointment of Deloitte SA as our independent registered public accounting firm for the fiscal year ending December 31, |
| The Board recommends a vote“FOR” the ratification of the appointment of Deloitte SA as Garrett’s independent registered public accounting firm for the fiscal year ending December 31,
See “Proposal Two—Ratification of Appointment of Independent Registered Public Accounting Firm” beginning onpage |
Proposal 3 | Board Recommendation and Page No. | |||
Approval, on an advisory(non-binding) basis, of the compensation of our named executive officers as disclosed in this proxy statement (“Say-on-Pay Vote”) |
| The Board recommends a vote“FOR” the approval, on an advisory(non-binding) basis, of the compensation of our named executive officers.
See “Proposal Three—Approval, on an Advisory(Non-Binding) Basis, of the Compensation of Our Named Executive Officers(“Say-on-Pay Vote”)” beginning onpage |
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Executive Compensation Highlights
Our overall compensation program is structured to attract, motivate and retain highly qualified executive officers by paying them competitively, consistent with our success and their contribution to that success. Our ability to excel depends on the skill, creativity, integrity and teamwork of our employees. We believe compensation should be structured to reward short-term and long-term business results and exceptional performance, and most importantly, maximize stockholder value. In that regard, we selected performance metrics and an award mix that we believed fit our starting plan. Going forward, we remain committed to maintaining disciplined compensation governance processes by periodically reassessing our incentive structures and making necessary changes in light of evolving market practices and changes in our own business goals and strategy. The broader objectives of our 20182021 compensation program included:
Pay-for-performance by tying variable compensation to achievement of Company and individual goals;
Selecting performance metrics that reflect the commitments the Company made to its financial stakeholders, which include driving profitable top-line growth and using cash flows to deleverage the Company;
Aligning executives’ interests with stockholders’those of stockholders by having a significant portion of our executive officers’ total compensation delivered in the form of stock-based incentives; and
Adhering to good governance principles in setting compensation programs and policies.
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20192022 Executive Compensation Program
In designing our executive compensation program for 2019, our first full year as an independent company,2022, the Compensation Committee built on the guiding principles of our 20182021 compensation program, including apay-for-performance philosophy, strong governance practices and aligning interests with those of our stockholders. In particular, the Compensation Committee focused on designing an incentive-based compensation program that aims to align our executive officers’ compensation opportunities with achievement of the Company’s short- and long-term business goals. For further information regarding our executive compensation program structure for 2019, please see “Compensation Discussion and Analysis—Company Compensation Programs for Fiscal 2019.”
The following are certain key highlights of our 20192022 executive compensation program:
Commitment to Pay-for-Performance Incentive Program | 75% of our annual Short-Term Incentive Compensation Plan (“ICP”) for
Performance goals were set at challenging levels that will require the Company to achieve significant growth and performance.
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Strong Compensation Governance |
Stock ownership guidelines for executives and directors, with 5x base salary for the Chief Executive Officer.
Double-triggerchange-in-control provisions and no excise taxgross-ups.
Anti-hedging and anti-pledging policy that prohibits executives and directors from pledging or hedging our securities. |
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GARRETT MOTION INC.
Z.A. La Pièce 16
Rolle, Switzerland 1180
For the 20192022 Annual Meeting of Stockholders
To Be Held on Tuesday, June 4, 2019Thursday, May 26, 2022
GENERAL INFORMATION ABOUT VOTING AND THE ANNUAL MEETING
This proxy statement is being furnished in connection with the solicitation of proxies by the board of directors (the “Board of Directors” or “Board”) of Garrett Motion Inc. (the “Company”, “Garrett”, “we” or “us”), for use at the 20192022 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Tuesday, June 4, 2019,Thursday, May 26, 2022 at 8:00 a.m. Central European Summer Time (2:9:00 a.m. Eastern time), at The Four Seasons Hotel, Veleslavínova 1098/2a, 110 Time (3:00 Praha 1 – StaréMěsto-Staré Město, Prague, Czech Republic,p.m. Central Europe Time), and at any postponement, continuation or adjournment thereof. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/GTX2022 and entering your 16-digit control number included in your Notice of Internet Availability of Proxy Materials (“Internet Notice”), proxy card, or on the instructions that accompanied your proxy materials.
This proxy statement, proxy card and our annual report to stockholders for the fiscal year ended December 31, 2018 (the “20182021 Annual Report”)Report will be released on or about April 24, 2019.15, 2022.
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders To Be Held on June 4, 2019:May 26, 2022:
This proxy statement and our 20182021 Annual Report are available for viewing, printing and downloading atwww.proxyvote.com.www.proxyvote.com.
Directions to the Annual Meeting are available on the Company’s website atwww.investors.garrettmotion.com/events-and-presentations.
Garrett became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the“Spin-Off”). Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares of Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with theSpin-Off, Garrett´s common stock began trading“regular-way” under the ticker symbol “GTX” on the New York Stock Exchange (the “NYSE”) on October 1, 2018.
Holders of record of our common stock and Series A cumulative convertible preferred stock at the close of business on Thursday, April 11, 2019March 29, 2022 (the “Record Date”), or will be entitled to notice of, and such stockholders and holders of a valid proxy will be entitled to notice of, and to vote at, the Annual Meeting or any postponement, continuation or adjournment of the Annual Meeting. On that date, 74,634,286
Each holder of our common stock is entitled to one vote for each share of common stock held of record by such holder on all matters on which our stockholders generally are entitled to vote, including on the matters described in this proxy statement. Holders of our Series A preferred stock are entitled to vote on an as-converted basis (including accrued dividends) with holders of our common stock, together as a single class, on each matter submitted for a vote by the holders of our common stock. Each holder of our Series A preferred stock is entitled to cast a number of votes on each matter as if the holder were the holder of record, as of the Record Date, of a number of shares of our common stock wereequal to the whole number of shares of our common stock that would be issuable upon conversion of such holder’s Series A preferred stock (including shares in lieu of accrued and unpaid dividends on such holder’s shares of Series A preferred stock) in connection with an Automatic Conversion Event (as such term is defined in the Certificate of Designations for the Series A preferred stock) occurring on the Record Date. As a result, each holder of Series A preferred stock will be entitled to cast approximately 1.079 votes for each share of Series A preferred stock held as of the Record Date.
On the Record Date, we had 329,646,249 shares entitled to vote, which includes 64,506,104 shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting. Each share265,140,145 shares of common stock entitles the holder thereof to one vote with respect to all matters submitted to stockholders at the Annual Meeting.into which our Series A preferred stock (including accrued dividends) were convertible as of such date. We have no other securities entitled to vote at the Annual Meeting.
In this proxy statement, we refer to our common stock and our Series A preferred stock together as our “voting stock”, and we refer to holders of shares of our voting stock as our “stockholders”.
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Notice of Internet Availability of Proxy Materials. Materials
As permitted by the Securities and Exchange Commission (the “SEC”) rules, Garrett is making this proxy statement and its 20182021 Annual Report available to its stockholders electronically via the Internet. On or about April 24, 2019,15, 2022, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) containing instructions on how to access this proxy statement and our 20182021 Annual Report and vote online. If you received an Internet Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them. Instead, the Internet Notice instructs you on how to access and review all of the important information contained in the proxy statement and 20182021 Annual
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Report. The Internet Notice also instructs you on how you may submit your proxy over the Internet. If you received an Internet Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Internet Notice.
Printed Copies of Our Proxy Materials. Materials
If you received printed copies of our proxy materials, then instructions regarding how you can vote are contained on the proxy card included in those materials.
If you are the record holder of your shares, you may vote in one of four ways. You may vote by submitting your proxy over the Internet, by telephone, or by mail or you may vote in person atelectronically during the Annual Meeting.
By Internet
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If you have Internet access, you may vote your shares from any location in the world atwww.proxyvote.com by following the instructions on the Internet Notice or proxy card. | You may vote your shares by calling1-800-690-6903 and following the instructions on the proxy card. | If you received a proxy card by mail, you may vote by completing, dating and signing the proxy card. | If you attend the online Annual Meeting, you may vote |
Internet and telephone voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern time, on June 2, 2019 (5:59 a.m. Central European Summer Time, on June 3, 2019).Wednesday, May 25, 2022. We encourage stockholders to submit their proxy via telephone or the Internet.
If the shares you own are held in your bank or brokerage firm account in a fiduciary capacity (typically referred to as being held in “street name”), you can vote by following the directions provided to you by your bank or brokerage firm. If the shares you own are held in street name and you wish to vote in personelectronically at the Annual Meeting, you must obtain a “legal proxy” from the organization that holdsshould contact your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting. Please contact the organization that holds your shares for instructions on howbank or broker to obtain a legal proxy. You must bring a copy ofyour 16-digit control number or otherwise vote through the legal proxy tobank or broker.
Attending the Annual Meeting and present it with your ballot in order for your voteOnline
We have decided to be counted.
Attendinghold the Annual Meeting
entirely online this year. A virtual meeting enables increased stockholder attendance and participation because stockholders can participate from any location around the world. You may attend the Annual Meeting only if you are a Garrett stockholder who is entitled to vote at the Annual Meeting, or if you hold a valid proxy for the Annual Meeting. In order to be admitted intoYou may attend and participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/GTX2022. To attend and participate in the Annual Meeting, you must present government-issued photo identification (such as a driver’s license).will need the 16-digit control number included in your Internet Notice, proxy card, or on the instructions that accompanied your proxy materials. If your bank or broker holds your shares are held in street“street name,” as described below, you will also be required to present proof of beneficial ownership of our common stock on the Record Date, such as the Internet Notice you received from your bank or broker, a bank or brokerage statement, or a letter from your bank or broker showing that you owned shares of our common stock at the close of business on the Record Date.
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should contact your broker or other nominee to obtain your 16-digit control number or otherwise vote through the broker or other nominee. You will need to obtain your own Internet access if you choose to attend the Annual Meeting online and/or vote over the Internet. If you lose your 16-digit control number, you may join the Annual Meeting as a “Guest”, but you will not be able to vote, ask questions or access the list of stockholders as of the Record Date. The meeting webcast will begin promptly at 9:00 a.m. Eastern Time (3:00 p.m. Central Europe Time). We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:45 a.m. Eastern Time (2:45 p.m. Central Europe Time) and you should allow ample time for check-in procedures.
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website, and the information for assistance will be located on the Annual Meeting login page.
Questions and Answers During the Annual Meeting
We have designed the virtual Annual Meeting to provide substantially the same opportunities to participate as stockholders would have at an in-person meeting. As part of the Annual Meeting, we will hold a live Q&A session, during which we intend to answer questions submitted during the meeting that are pertinent to the Company and the meeting matters, as time permits. If you wish to submit a question during the Annual Meeting, you may do so by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/GTX2022, clicking the Q&A button on your screen and typing your question into the provided text field.
We reserve the right to exclude questions regarding topics that are not pertinent to meeting matters or company business or are inappropriate. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition. Any questions that are appropriate and pertinent to the Annual Meeting will be answered in the live Question and Answer session during the Annual Meeting, subject to time constraints. Any such questions that cannot be answered during the Annual Meeting due to time constraints will be posted and answered on our Investor Relations website, https://investors.garrettmotion.com, as soon as practicable after the Annual Meeting.
Additional information regarding the ability of stockholders to ask questions during the Annual Meeting, related rules of conduct, and other materials for the Annual Meeting will be available during the Annual Meeting at www.virtualshareholdermeeting.com/GTX2022.
At the Annual Meeting, our stockholders will be asked to vote on the proposals set forth below. The Board recommends that you vote your shares as indicated below. If you return a properly completed proxy card, or vote your shares by telephone or over the Internet, your shares of commonvoting stock will be voted on your behalf as you direct. If not otherwise specified, the shares of commonvoting stock represented by the proxies will be voted in accordance with the Board’s recommendations as follows:
“FOR” the election of Daniel Ninivaggi, Olivier Rabiller, D’aun Norman, John Petry, Tina Pierce, Robert Shanks, Steven Silver, Julia Steyn and | ||
“FOR” the ratification of the appointment of Deloitte SA as our independent registered public accounting | ||
“FOR” the approval, on an advisory(non-binding) basis, of the compensation of our named executive | ||
In the discretion of the persons appointed as proxies on any other items that may properly come before the Annual Meeting. |
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If the shares you own are held in street name through a bank or brokerage firm, the bank or brokerage firm is required to vote your shares in accordance with your instructions. You should direct your broker how to vote the shares held in your account. Under applicable stock exchange rules, if you do not instruct your broker on how to vote your shares, your broker will be able to vote your shares with respect to certain “routine” matters, but will not be allowed to vote your shares with respect to certain“non-routine” matters. The ratification of the appointment of Deloitte SA as our independent registered public accounting firm is a routine matter. Each other proposal to be voted on at the Annual Meeting is anon-routine matter. Generally, brokernon-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker has not received voting instructions from the beneficial owner and lacks discretionary voting power to vote those shares.
Revoking Your Proxy or Changing Your Vote
Voting over the Internet or by telephone or execution of a proxy will not in any way affect a stockholder’s right to attend the Annual Meeting and vote in person.electronically. A proxy may be revoked before it is used to cast a vote.vote at the Annual Meeting. If the shares you own are held in your name, you can revoke a proxy by doing one of the following:
filing with our Corporate Secretary, at or before the taking of the vote at the Annual Meeting, a written notice of revocation bearing a later date than the proxy;
duly executing a later-dated proxy relating to the same shares and delivering it to our Corporate Secretary before the taking of the vote; or
attending the Annual Meeting and voting in person.electronically. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting.
Any written notice of revocation or subsequent proxy should be sent to us at the following address: Garrett Motion Inc., Z.A. La Pièce 16, Rolle, Switzerland 1180, Attention: JeromeJérôme Maironi, Corporate Secretary.
If the shares you own are held in street name, you will need to follow the directions provided to you by your bank or brokerage firm to change your vote.
The presence in personelectronically or representation by proxy of a majority in voting power of the shares of commonvoting stock of the Company entitled to vote at the Annual Meeting is necessary to establish a quorum. Abstentions and brokernon-votes are included in the shares present or represented at the Annual Meeting for purposes of determining whether a quorum is present. If a quorum is not present, the chair of the Annual Meeting may adjourn the meeting until a quorum is obtained.
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The table below sets forth the vote required for the approval of each proposal before the Annual Meeting, and the effect of abstentions and brokernon-votes.
Proposal | Votes Required | Effect of Abstentions and BrokerNon-Votes | ||
Proposal 1: Election of Directors | Majority of votes cast (votes cast “FOR” each nominee must exceed votes cast “AGAINST”). | No effect. | ||
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm | Approval of a majority in voting power of the shares of | Abstentions will be treated as votes against; no brokernon-votes expected. | ||
Proposal 3: Approval, on an Advisory(Non-Binding) Basis, of the Compensation of our Named Executive Officers(“Say-on-Pay Vote”) | Approval of a majority in voting power of the shares of | Abstentions will be treated as votes against; broker | ||
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The votes will be counted, tabulated and certified by a representative or appointee of Broadridge Financial Solutions, the Company’s inspector of election for the Annual Meeting. We plan to announce preliminary voting results at the Annual Meeting and we will report the final results in a Current Report on Form8-K, which we intend to file with the SEC shortly after the conclusion of the Annual Meeting.
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PROPOSAL ONE—ELECTION OF DIRECTORS
The Board has nominated Maura J. Clark andDaniel Ninivaggi, Olivier Rabiller, D’aun Norman, John Petry, Tina Pierce, Robert Shanks, Steven Silver, Julia Steyn and Steven Tesoriere as Class I director nominees for election at the Annual Meeting.
Our Board unanimously recommends that you vote“
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Our Board is currently comprised of sevennine directors. As described in our Second Amended and Restated Certificate of Incorporation (“Certificate(our “Certificate of Incorporation”) (which was adopted prior to the effective date of ourSpin-Off from Honeywell and prior to the election of all of our current directors) our Board is currently divided into three classes. The term of our Class I directors currently in office expires at this Annual Meeting, the term of our Class II directors expires at the annual meeting of stockholders in 2020, and the term of our Class III directors expires at the annual meeting of stockholders in 2021. Our Certificate of Incorporation provides that, beginning with our annual meeting of stockholders in 2022, our Board will be declassified and all director nominees will stand for election forone-year terms that expire at the following year’s annual meeting. The following table describes the schedule for the election of our directors over the next four annual meetings and the terms our directors will serve if elected.
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If you return a duly executed proxy card without specifying how your shares are to be voted, the persons named in the proxy card will vote to elect Maura J. Clark and Olivier Rabillerall nine nominees as Class I directors. Maura J. Clark and Olivier RabillerEach nominee currently serveserves on our Board and haveeach has indicated their willingness to continue to serve if elected. However, if eitherany director nominee should be unable to serve, or for good cause will not serve, the shares of commonvoting stock represented by proxies may be voted for a substitute nominee designated by our Board, or our Board may reduce its size.Board. Our Board has no reason to believe that eitherany of the nominees will be unable to serve if elected.
In accordance with our Third Amended and RestatedBy-laws (the(our “Bylaws”), and our Corporate Governance Guidelines, upon appointment, election orre-nomination to the Board, directors must agree to submit an irrevocable resignation effective upon the director’s failure to receive a majority of the votes cast in an uncontested election and the acceptance of such resignation by the Board.election. If a director fails to receive a majority of votes cast, the Board will have 90 days from the date the election results are certified to make a decision whether to accept or reject the resignation. Once the Board makes its decision, the Company will promptly make a public announcement of the Board’s decision. If the Board rejects the resignation, the public announcement will include a statement regarding the reasons for its decision. The Chair of the nominating and governance committee (the “NominatingNominating and Governance Committee”)Committee of the Board or, in the event the Chair of the Nominating and Governance Committee did not receive a majority of the votes cast, the independent directors who did receive a majority of the votes cast, has the authority to manage the Board’s review of the resignation. Any director whose resignation is being considered will not participate in any deliberations or vote on whether to accept or reject his or hertheir own resignation.
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The chart below summarizes the notable skills, qualifications and experience of each of our directors and highlights the balanced mix of skills, qualifications and experience of the Board as a whole. These align with the needs of Garrett’s long-term commercial and strategic goals. This high-level summary is not intended to be an exhaustive list of each director’s skills or contributions to the Board.
Skills/Qualifications/Experience |
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| Ninivaggi | Olivier Rabiller |
Petry | Tina Pierce | Robert Shanks | Steven Silver | Julia Steyn | Steven Tesoriere | |||||||||||||||||||||||||
| ● | ● | |||||||||||||||||||||||||||||||||
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| ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||
Audit Committee Financial Expert | ● | ||||||||||||||||||||||||||||||||||
| ● | ||||||||||||||||||||||||||||||||||
Business Strategy | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||
Industry Background | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||||
Board of Directors Experience | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||
Technology, Innovation and Security | ● | ● | ● | ||||||||||||||||||||||||||||||||
Global Business | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||
Public Company Governance and Risk Management | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||||
Mergers & Acquisitions | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||
Current or Former Public or Private Company Executive | ● | ● | ● | ● | |||||||||||||||||||||||||||||||
Diversity | ● | ● | ● | ● |
The biographies of each of our current directors, includingwho are also our Class I director nominees, are included below. Each of the biographies also highlights specific experience, qualifications, attributes and skills that led us to conclude that such person should serve as a director. We believe that, as a whole, our Board exemplifies the highest standards of personal and professional integrity and the requisite skills and characteristics, leadership traits, work ethic and independence to provide effective oversight.
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Director Biographies
All director nominees to be elected at the 2022 Annual Meeting (subsequent terms to expire in 2023)
Director Since: 2021 Age: 57 • Board Chairman Committee Memberships: • Nominating and Governance Committee | DANIEL NINIVAGGI Mr. Ninivaggi (Chairman) became a member and Chairman of our Board of Directors in connection with our Emergence in April 2021. He has served as Chief Executive Officer and a director of Lordstown Motors Corporation, a manufacturer of electrically powered vehicles, since August 2021. Previously, Mr. Ninivaggi served as an independent consultant and board member from September 2019 to August 2021. Mr. Ninivaggi served as Chief Executive Officer of Icahn Automotive Group, LLC (“Icahn Automotive”) and Managing Director of Icahn Enterprises L.P. (“IEP”) – Automotive Segment from March 2017 through August 2019. IEP is a publicly traded diversified holding company and Icahn Automotive is a wholly-owned subsidiary of IEP. Prior to that, from February 2014 until March 2017, Mr. Ninivaggi served as Co-Chairman (from May 2015) and Co-CEO of Federal-Mogul Holdings Corp., an $8 billion automotive supplier (subsequently acquired by Tenneco, a publicly traded component supplier to automotive, commercial vehicle and industrial original equipment manufacturers and the independent automotive aftermarket). Mr. Ninivaggi was President and Chief Executive Officer of IEP between 2010 and 2014, at which time IEP operated through ten diverse operating segments. Mr. Ninivaggi has served as a director of numerous other public and private companies, including: Hertz Global Holdings, Inc., a publicly traded car rental company (from September 2014 to June 2021); Metalsa S.A., a privately held manufacturer of frames and other structural components for automotive and commercial vehicles (Advisory Board); Navistar International Corporation, a publicly traded manufacturer of trucks, buses and engines (from August 2017 to October 2018); Icahn Enterprises G.P. Inc., the general partner of IEP (from 2012 to 2015); CVR Energy, Inc., a publicly traded independent petroleum refiner and marketer of high value transportation fuels (from 2012 to 2014); CVR GP, LLC, the general partner of CVR Partners LP, a publicly traded nitrogen fertilizer company (from 2012 to 2014); XO Holdings, a privately held telecommunications company affiliated with IEP (from 2010 to 2014); Tropicana Entertainment Inc., a publicly traded company primarily engaged in the business of owning and operating casinos and resorts (from 2011 to 2015); Motorola Mobility Holdings Inc., a publicly traded mobile phone and electronics manufacturer (from 2010 to 2011); and CIT Group, Inc., a publicly traded bank holding company (from 2009 to 2011). Prior to joining IEP, Mr. Ninivaggi spent six years at Lear Corporation, a publicly traded Tier 1 automotive supplier specializing, at the time, in seating systems, interior components and systems as well as electrical and electronic distribution systems and components. Mr. Ninivaggi began his career at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP before joining Winston & Strawn LLP, where he became partner. He holds a Bachelor of Arts degree from Columbia University, an MBA from the University of Chicago Graduate School of Business, and a Juris Doctor degree (with distinction) from Stanford Law School. Skills and Qualifications: Mr. Ninivaggi’s qualifications to serve on our Board include his extensive management experience in the automotive industry, his global business experience and his strong leadership skills. |
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Class I director nominees to be elected at the 2019 Annual Meeting (subsequent terms to expire in 2022)
Director Since: 2018
Age:
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Committee Memberships:
• None | OLIVIER RABILLER
Mr. Rabiller has served as our President and Chief Executive Officer as well as a member of our Board since the
Skills and Qualifications: |
Director Since: 2021 Age: 55 Committee Memberships: • Audit Committee • Nominating and Governance Committee | D’AUN NORMAN Ms. Norman became a member of our Board of Directors in connection with our Emergence in April 2021. Ms. Norman retired from Ernst & Young, a leading accounting firm, as an audit partner in 2019, after over 30 years of assurance and advisory experience, including 16 years as a partner specializing in audits of publicly-traded global automotive suppliers and other industrial companies. Ms. Norman’s key audit experiences include her work on Visteon Corporation from 2013 to 2019 following the Ford spinoff and bankruptcy emergence; Federal-Mogul from 2006 to 2014 during its bankruptcy and upon emergence; Cooper Tire from 2008 to 2014 during merger negotiations; and Owens-Illinois from 1988 to 2016 during the leveraged buyout and exit, including transition from public to private status and the subsequent IPO. In addition, Ms. Norman served as Assurance People Leader for EY Michigan and Northwest Ohio area practice and as EY Central Region ASC 606 Revenue Recognition Adoption Leader. She is currently Chair of the Bowling Green State University Alumni Leadership Council where she has served multiple other roles. Ms. Norman has a Bachelor of Science in Business Administration, Accounting from Bowling Green State University and attended the EY Executive Education program at Kellogg School of Management, Northwestern University. She is a Certified Public Accountant and holds an AICPA Certification in Cybersecurity Fundamentals. Skills and Qualifications: Ms. Norman’s qualifications to serve on our Board include her extensive financial expertise and prior work with automotive industry clients. |
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Director Since: 2021 Age: 50 Committee Memberships: • Nominating and Governance Committee JOHN PETRY Mr. Petry became a member of our Board of Directors in connection with our Emergence in April 2021. Mr. Petry founded Sessa Capital IM, L.P. (“Sessa Capital”), an investment advisory firm, in 2012 and currently serves as its Managing Principal. Sessa Capital makes, on behalf of its funds and accounts, concentrated investments in value-oriented equity and debt securities, based on in-depth fundamental research. From 2010-2012, Mr. Petry served as a Principal at Columbus Hill Capital Partners, an investment fund focused on distressed investments. From 1997-2010, Mr. Petry held positions at Gotham Capital, most recently as partner, where he researched companies, invested in securities throughout the capital structure and structured investments in new fund vehicles and asset management business start-ups. Mr. Petry has over 25 years in the finance industry and public market investing, has led activist campaigns, invested in private equity businesses, and has experience with restructurings. Mr. Petry currently chairs two non-profit boards, Education Reform Now, which focuses on federal, state and local education policy, and Only One, which is dedicated to ocean conservation. Mr. Petry received a B.S. in Economics from the University of Pennsylvania, Wharton School. Skills and Qualifications: Mr. Petry’s qualifications to serve on our Board include his extensive financial and investment expertise, and public and private company advisory experience in business strategy and growth. Director Since: Age: Committee Memberships: • Skills and Qualifications: Class II directors (terms to expire in 2020)2018202147Committee Memberships:• Audit Committee• Nominating and Governance CommitteeCOURTNEY M. ENGHAUSERMs. Enghauser has served as a member of the Board since theSpin-Off. Ms. Enghauser is a principal at CME Investments LLC and currently advises private equity firms on acquisitions and transactions in the automotive industry. Ms. Enghauser was previously the Chief Financial Officer of Sensus, now a part of Xylem, a leading global water technology company, from April 2013 to June 2017. Prior to that, Ms. Enghauser was the Chief Financial Officer of Kinetek, Inc., where she was responsible for the financial management and reporting of a global portfolio company consisting of eleven operating subsidiaries and sixteen holding companies in the electric motors and controls industries located throughout the world. Ms. Enghauser also served as Director of Finance, Mergers and Acquisitions of Kinetek, Inc. and Chief Financial Officer of Finishing Services & Technologies, Inc. after starting her career as an auditor at PricewaterhouseCoopers. Ms. Enghauser graduated with a Bachelor of Science in Accounting from Indiana University and is a Certified Public Accountant.Skills and Qualifications: We believe Ms. Enghauser is qualified to serve on our Board due to her significant experience in the technology sector and her expertise in global financial strategy.Director Since: 2018Age: 5155Compensation Committee (CHAIR)None CARSTEN J. REINHARDTTINA PIERCEMr. ReinhardtSince January 2020, Ms. Pierce has served as Vice President and Chief Financial Officer (CFO) of Honeywell Performance Materials and Technologies (PMT), a memberglobal leader in sustainability and digitization solutions for industrial performance, with sales of our Board since$10B in 2021. Since joining Honeywell in 1988, Ms. Pierce has held a series of finance leadership roles of increasing responsibility across multiple industries. From June 2017 to January 2020, she was Vice President & CFO for Honeywell Homes & Buildings Technologies. In this role, she focused on spinning off theSpin-Off. Mr. Reinhardt has Homes business into a new company called Resideo (REZI). She received the Honeywell Senior Leadership Award in 2019. Previously, from July 2014 to June 2017, she served as an independent senior advisor since October 2016. From October 2016 to February 2019, Mr. Reinhardt served as Senior AdvisorCFO for RLE International,Honeywell Process Solutions, UOP and Honeywell Electronic Materials. She brings extensive global experience in over 65 countries and lived in Hong Kong and Singapore. Ms. Pierce is NACD Directorship Certified (NACD.DC) with a development and service provider to the international engineering industries. From July 2012 to October 2016, Mr. Reinhardt was President and CEO of Voith Turbo GmbH & Co. KG, a supplier of advanced powertrain technologies to the rail, commercial vehicle, marine, power generation, oil & gas and mining industries. Prior to that, Mr. Reinhardt served as COO of Meritor Inc., a manufacturer of automobile components,Cybersecurity Oversight Certificate from 2008 through 2011 and as President of Meritor’s Commercial Vehicle Division from 2006 until 2008. Before joining Meritor, Mr. Reinhardt served as President and CEO of Detroit Diesel Corporation, a diesel engine manufacturer, from 2003 through 2006, following 10 years in a variety of management positions at Daimler Trucks North America, a manufacturer of commercial vehicles. Mr. Reinhardt started his career as Management Trainee at Daimler AG, a multinational automotive corporation, in Stuttgart, Germany. Mr. Reinhardt currently sits on the Board ofSAF-Holland S.A., where he serves as a member of the audit committee. He also sits on the Boards of several private companies, including GRUNDFOS Holding A/S, Rosti Group AB, Rosti Automotive AB, Tegimus Holding, GmbH, and Beinbauer GmbH. Mr. ReinhardtCarnegie Mellon University. Ms. Pierce holds a Bachelor’smaster’s degree in Mechanical Engineeringbusiness administration from Esslingen TechnicalFlorida State University in Germany and a Master of Sciencebachelor’s degree in automobile engineeringfinance from Ball State University. She is a Certified Public Accountant and Certified Management Accountant, and she completed the UniversityNorthwestern Kellogg School of Hertfordshire, UK.Management Executive Scholar Program.We believe Mr. Reinhardt is qualifiedMs. Pierce’s qualifications to serve on our Board due to hisinclude her financial management skills and her extensive experience and operational expertise in the automotive industry acrossmanaging global markets.businesses. 8 10
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Class III directors (terms to expire in 2021)
Director Since:
Age:
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Committee Memberships:
• Audit Committee (CHAIR)
• Compensation Committee |
Mr. Skills and Qualifications: Mr. Shanks’ qualifications to serve on our Board include his extensive management experience in the automotive industry and his financial experience as a CFO of a public company. |
Director Since: 2021 Age: 53 Committee Memberships: • Compensation Committee | STEVEN SILVER Mr. Silver became a member of our Board of Directors in connection with our Emergence in April 2021. Mr. Silver joined Centerbridge in 2006 and co-heads the firm’s global private equity investing activities. He serves as a member of the firm’s Management Committee and focuses on investments in the Industrials and Consumer sectors. Mr. Silver also currently serves on the Boards of Directors of American Bath Group, a manufacturer of bathing products, FreshDirect, an online grocery delivery service, KIK Custom Products, Inc. (and affiliated entities), a consumer manufacturer, Remedi SeniorCare Holding Corporation, a Skills and Qualifications: Mr. Silver’s qualifications to serve on our Board his extensive financial and investment expertise, and advisory experience in business strategy and growth. |
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Director Since: 2021 Age: 46 Committee Memberships: • Audit Committee • Compensation Committee (CHAIR) | JULIA STEYN Ms. Steyn became a member of our Board of Directors in connection with our Emergence in April 2021. Ms. Steyn has served as
Skills and Qualifications: |
Director Since: 2021 Age: 44 Committee Memberships: • Nominating and Corporate Governance Committee (CHAIR) | STEVEN TESORIERE Mr. Tesoriere became a member of our Board of Directors in connection with our Emergence in April 2021. Mr. Tesoriere joined Oaktree, a global asset management firm specializing in alternative investment strategies, in 2016 where he serves as a Skills and Qualifications: Mr. Tesoriere’s qualifications to serve on our Board include his extensive financial |
No directorNone of our directors or executive officerofficers serving during 2021 is or was related by blood, marriage or adoption to any other such director or executive officer. No arrangements or understandings exist between any
As described below under “Certain Relationships and Related Person Transactions”, in connection with the Company’s Emergence, the Company entered into to the Investor Rights Agreement and adopted a certificate of designations for the Company’s Series B preferred stock, each of which provides certain investors in the Company with the right to nominate directors to the Board, subject to certain conditions. Pursuant to the Investor Rights Agreement, Steven Silver, Julia Steyn and Robert Shanks were designed as director nominees by Centerbridge, Steven Tesoriere, Daniel Ninivaggi and any other person pursuant to which such personD’aun Norman were designated as director nominees by Oaktree, and John Petry was selecteddesignated as a director or nominee.nominee by the Additional Investors (as defined below). Additionally, pursuant to the certificate of designations of the Company’s Series B preferred stock, Tina Pierce was designated as a director nominee by Honeywell.
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Corporate Governance Highlights
Garrett is committed to good governance practices that protect and promote the long-term value of the Company for its stockholders. The Board regularly reviews our governance practices to ensure they reflect the evolving governance landscape and appropriately support and serve the best interests of the Company and its stockholders.
Independent Oversight | 7 of 9 directors are independent Independent Chairperson of the Board Regular executive sessions of non-employee directors at Board meetings (chaired by independent Chairperson) and committee meetings (chaired by independent committee chairs) 100% independent Board committees Active Board and committee oversight of the Company’s strategy and risk management | |
Board Effectiveness | Directors possess deep and diverse set of skills and expertise relevant to oversight of our business operations and strategy Annual assessment of director skills and commitment to director refreshment to ensure Board meets the Company’s evolving oversight needs The Board oversees risk management, reviewing and advising management on significant risks facing the Company, and fostering a culture of integrity and risk awareness 44% of directors are diverse Highly engaged Board with all directors having attended at least 75% of total number of meetings of the Board and committees on which they serve Annual Board and committee self-evaluations Non-employee directors serve only until age 75, unless otherwise determined by the Board Board has adopted a policy on continuing director education | |
Stockholder Rights | Proxy access Majority voting for directors in uncontested elections Resignation policy for directors who do not receive a majority of the votes cast Two classes of voting stock, common stock and Series A preferred stock, with each share of common stock entitled to one vote and each share of Series A preferred stock entitled to vote with the common stock on an as converted basis (giving effect to accrued and unpaid dividends) No poison pill No supermajority voting provisions No fee-shifting provisions | |
Good Governance Practices | All directors are elected annually for one-year terms Development and regular review of succession plans for Chief Executive Officer and members of senior management Clawback policy for executive officers Board committees have sole discretion to retain and terminate independent third-party advisors, and to set such advisors’ terms of engagement including compensation Code of Business Conduct applicable to directors and all employees Ethics training annually for all employees Securities Trading Policy prohibits hedging by directors and executive officers, and prohibits short sales, pledging and buying or selling puts, calls, options or other derivative securities of the Company by directors, officers and employees Stock ownership guidelines for directors and executive officers Responsible corporate citizenship and environmental initiatives |
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Our Board has determined that each of our directors listed below meet the applicable criteria for independence established by Nasdaq. Olivier Rabiller is not an independent director under Nasdaq rules due to his employment as our Chief Executive Officer and President, and we have determined that Tina Pierce is not an independent under Nasdaq rules due to her employment by Honeywell, with whom we have various contractual arrangements and have made certain payments as described under “Certain Relationship and Related Person Transactions” on page 57 of this proxy statement.
Independent Directors | ||||
Daniel Ninivaggi | Robert Shanks | Julia Steyn |
In arriving at the foregoing independence determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities and any relationships they have with us and our management.
We have also determined that from January 1, 2021 to the date of this proxy statement, each of the following past directors was independent while serving on our Board, according to our Corporate Governance Guidelines and the criteria for independence established by applicable listing standards: Messrs. Carsten J. Reinhardt, Jerome Stoll and Scott A. Tozier, and Mses. Maura J. Clark, Courtney M. Enghauser and Susan L. Main.
We do not have any fixed rule as to whether our Chairperson and Chief Executive Officer positions should be separate, or whether our Chairperson should be an employee or elected from among non-employee directors. We believe that it is in the best interests of the Company to have the flexibility to evaluate its leadership structure over time as part of Garrett’s ongoing succession planning process. In the event that, in the future, the Chairperson of the Board is not an independent director, our Corporate Governance Guidelines provide that an independent “Lead Director” will be elected from among the independent directors.
The Board has determined that the best leadership structure for Garrett at this time is to separate the positions of Chairperson and Chief Executive Officer, with an independent Chairperson leading the Board. We believe this structure enhances the Board’s ability to exercise independent oversight of management as Garrett navigates the early stages of life as an independent public company. During this crucial and transformative period, the duties of Chairperson of the Board and Chief Executive Officer are particularly demanding.
Board members are expected to prepare for, attend and participate in all meetings of the Board and committees on which they serve. During the fiscal year ended December 31, 2021, there were 21 meetings of the Board, 11 of which took place following our Emergence. During 2021, each incumbent director attended at least 75% of the aggregate of the total number of Board meetings and committee meetings on which he or she then served that were held during the period of such director’s service. We do not maintain a formal policy regarding director attendance at the annual meeting; however, it is expected that, absent compelling circumstances, directors will attend. We did not hold an annual meeting in 2021 due to our Emergence.
Executive Sessions of Non-Employee Directors
As provided in the Corporate Governance Guidelines, the Board holds executive sessions of its non-employee directors on at least a quarterly basis, including at least one executive session of independent directors annually. Over the course of each year, the topics of discussion in executive sessions of non-employee directors will include
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management performance and succession plans, Board compliance with the Company’s corporate governance policies and the needs of the Board. Daniel Ninivaggi, the independent Chairperson of the Board, currently presides over executive sessions. Our Corporate Governance Guidelines provide that, if we have a Lead Director, the Lead Director will preside over executive sessions.
Director Orientation and Continuing Education
The Board views orientation and continuing education as vital tools for building an effective Board. We provide all new directors, upon joining the Board, with an orientation session regarding the Board and the Company’s operations. The orientation consists of presentations by members of senior management on the Company’s strategic plans, financial statements and key issues, policies and practices. We also periodically provide materials, updates and presentations, including in regular Board and committee meetings, or provided by qualified third parties, to all directors on issues and subjects that assist them in fulfilling their responsibilities, such as key industry developments and the competitive landscape. The Board also periodically visits our facilities around the globe. In 2021, the Board adopted a formal policy on director education articulating the Board’s belief that our stockholders are best served by a Board comprised of individuals who are well versed in modern principles of corporate governance and other subject matters relevant to their board service, and who thoroughly comprehend the roles and responsibilities of an effective board in the oversight of the Company. This policy provides for the reimbursement to directors of certain expenses associated with directors’ attendance at seminars, conferences and other continuing education programs designed for directors of public companies.
The Board will regularly assess its composition to identify the qualifications and skills that directors and candidates should possess. To promote thoughtful Board refreshment, we have:
• | adopted a retirement age policy under whichnon-employee directors will serve only until the annual meeting of stockholders immediately following their 75th birthday, unless otherwise approved by the Board; |
developed a comprehensive Board succession planning process; and
implemented an annual Board and Committee self-assessment process.
We believe that, over time, the Board will benefit from a mix of new directors, who will bring fresh ideas and viewpoints, and longer-serving directors who will have developed deep insight into the Company’s business and operations. As Garrett matures as an independent company, the Board will seek to maintain a balance of directors who have longer terms of service and directors who have joined more recently.
Comprehensive, Ongoing Process for Board Succession Planning and Selection and Nomination of Directors
Our current directors were selected prior to theSpin-Off through a process involving both Honeywell and us. Following theSpin-Off, asAs provided in our corporate governance guidelines (the “CorporateCorporate Governance Guidelines”),Guidelines, the Board, together with the Nominating and Governance Committee, is responsible for annually evaluating the requisite skills and characteristics of Board members, as well as its composition as a whole to ensure the overall Board composition, as well as the perspective and skills of its individual members, will effectively support Garrett’s growth and commercial strategy, as well as effectively oversee risk management, capital allocation and management succession. The Board’s assessment includes a consideration of independence, diversity, age, skills, experience and industry backgrounds in the context of the needs of the Board and the Company, as well as the ability of members (and any candidates for membership) to devote sufficient time to performing their duties in an effective manner.
Each year, the Nominating and Governance Committee assesses the directors to be nominated for election by stockholders at the annual meeting. To ensure that the Board evolves in a manner that serves the business and strategic needs of the Company, before recommending forre-nomination a slate of incumbent directors for an additional term, the Nominating and Governance Committee will evaluateevaluates whether incumbent directors possess the requisite skills and perspective, both individually and collectively. At a minimum, directors are expected to exemplify the highesthigh standards of personal and professional integrity and to constructively challenge management through their
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active participation and questioning. The Board also considers the other demands on the time of a candidate, and with respect to current members of the Board, their attendance at, preparedness for and participation in, Board and committee meetings.
The Nominating and Governance Committee has responsibility for periodically identifying and recruiting new members to the Board based on needs and skills indentifiedidentified through discussions with the Chairperson of the Board, the Chief Executive Officer, the Lead Director (if any) and other Board members. When these needs arise, we anticipate that potential candidates meeting these criteria will be identified either by professional recruiting agencies, reputation or existing Board members. Candidates will be interviewed by the Chairperson, Chief Executive Officer, Lead Director (if any) and other members of the Board, as appropriate, to ensure that candidates not only possess the requisite skills and characteristics but also the personality, leadership traits, work ethic and independence to effectively contribute as a member of the Board.
Maura J. Clark, anon-employee Class I director nominee for election at the Annual Meeting, was recommended by Honeywell prior to theSpin-Off.
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ConsiderationBoard Diversity Matrix as of Board DiversityApril 8, 2022
Total Number of Directors | 9 | |||||||
Female | Male | Non-Binary |
Did Not
| |||||
Gender Identity | ||||||||
Directors | 3 | 6 | 0 | 0 | ||||
Demographic Background | ||||||||
African American or Black | 0 | 0 | 0 | 0 | ||||
Alaskan Native or Native American | 0 | 0 | 0 | 0 | ||||
Asian | 0 | 0 | 0 | 0 | ||||
Hispanic or Latinx | 0 | 0 | 0 | 0 | ||||
Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | ||||
White | 3 | 5 | 0 | 0 | ||||
Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | ||||
LGBTQ+ | 1 | |||||||
Did Not Disclose Demographic Background | 1 |
The Company believes that a Board recognizes the valuemade up of ahighly qualified individuals from diverse Boardbackgrounds promotes better corporate governance and performance and effective decision-making and thus has included diversity as a factor that will be taken into consideration by the Nominating and Governance Committee and the Board when identifying director candidates and recommending or selecting nominees for election by stockholders. As of the date of this proxy statement, the Board does not have a formal policy with respect to diversity.diversity, but strives to maintain a Board in which each gender represents at least 33% of independent directors.
Stockholder Recommendations and Nominations of Director Candidates
Stockholders may recommend individuals to the Nominating and Governance Committee for consideration as potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the Nominating and Governance Committee, c/o Secretary, Garrett Motion Inc., Z.A. La Pièce 16, Rolle, Switzerland 1180. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided onwithin a timely basis,reasonable amount of time before we plan to file our proxy statement, the Nominating and Governance Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.
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Stockholders also have the right under our Bylaws to directly nominate director candidates for inclusion in our proxy statement, without any action or recommendation on the part of the Nominating and Governance Committee or the Board, by following the procedures set forth in our Bylaws that are described below under the heading “Additional Information—Stockholder Proposals.”
Proposals and Director Orientation and Continuing Education
The Board views orientation and continuing education as vital tools for building an effective Board. We provide all new directors, upon joining the Board, with an orientation session regarding the Board and the Company’s operations. The orientation consists of presentations by members of senior management on the Company’s strategic plans, financial statements and key issues, policies and practices. We also periodically provide materials, updates and presentations, including in regular Board and committee meetings, or provided by qualified third-parties, to all directors on issues and subjects that assist them in fulfilling their responsibilities. In addition, the Company pays for all expenses for any director who wishes to attend seminars, conferences and other continuing education programs designed for directors of public companies.Nominations.”
Corporate Governance Documents
We believe that good corporate governance is important to ensure that Garrett is managed for thelong-term benefit of our stockholders. Our Nominating and Governance Committee will periodically reviewreviews and reassessreassesses our Corporate Governance Guidelines, other governance documents and overall governance structure. Complete copies of our Corporate Governance Guidelines and committee charters are available on the “Investors—Leadership & Governance” section of our website atwww.garrettmotion.com. Alternatively, you may request a copy of any of these documents by writing to Garrett Motion Inc., Attention: JeromeJérôme Maironi, Corporate Secretary, Z.A. La Pièce 16, Rolle, Switzerland 1180.
The Board has adopted a written code of ethics (the “Code of Business Conduct”), which applies to all of our employees, officers and directors. Our Code of Business Conduct is available in the “Investors—Leadership & Governance” section of our
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website atwww.garrettmotion.com. In addition, we intend to post on our website all disclosures that are required by law or the NYSENasdaq listing rules concerning any amendments to, or waivers from, any provision of our Code of Business Conduct.
Board Leadership StructureCommittees
We do not have any fixed rule as to whether our Chairperson and Chief Executive Officer positions should be separate, or whether our Chairperson should be an employee or elected from amongnon-employee directors. We believe that it is in the best interests of the Company to have the flexibility to evaluate its leadership structure over time as part of Garrett’s ongoing succession planning process. In the event that, in the future, the Chairperson of the Board is not an independent director, our Corporate Governance Guidelines provide that an independent “Lead Director” will be elected from among the independent directors.
The Board has determined that the best leadership structure for Garrett at this time is to separate the positions of Chairperson and Chief Executive Officer, with an independent Chairperson leading the Board. We believe this structure enhances the Board’s ability to exercise independent oversight of management as Garrett begins its life as an independent public company. During this crucial and transformative period, the duties of Chairperson of the Board and Chief Executive Officer are particularly demanding.
Our Board has determined that all of ournon-employee directors, who are listed below, meet the applicable criteria for independence established by the NYSE. Olivier Rabiller is not an independent director under the NYSE rules due to his employment as our Chief Executive Officer and President.
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In arriving at the foregoing independence determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities and any relationships they have with us and our management. The Board considered that Carsten J. Reinhardt is a director and minority shareholder of Tegimus Holding GmbH (“Tegimus”), a supplier to Garrett. In 2018, the Company’s payments to Tegimus did not exceed 2% of Tegimus’ gross revenues. The Board determined that this relationship does not impair Mr. Reinhardt’s independence.
Board members are expected to prepare for, attend and participate in all meetings of the Board and committees on which they serve. Our Board met two times during the fiscal year ended December 31, 2018. During 2018, each director attended 100% of the aggregate of the total number of Board meetings and committee meetings on which he or she then served.
Executive Sessions ofNon-Employee Directors
As provided in the Corporate Governance Guidelines, the Board holds executive sessions of itsnon-employee directors on at least a quarterly basis, including at least one executive session of independent directors annually. Over the course of each year, the topics of discussion in executive sessions ofnon-employee directors will include management performance and succession plans, Board compliance with the Company’s corporate governance policies and the needs of the Board. Carlos M. Cardoso, the independent Chairperson of the Board, currently presides over executive sessions. Our Corporate Governance Guidelines provide that, if we have a Lead Director, the Lead Director will preside over executive sessions.
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Board Committees
Our Board has established three standing committees—the audit committee (the “Audit Committee”),Audit Committee, the compensation committee (the “Compensation Committee”),Compensation Committee, and the Nominating and Governance Committee (collectively, the “Committees”)—each of which operates under a charter that has been approved by our Board. Current copies of the Audit Committee, Compensation Committee, and Nominating and Governance Committee charters are posted on the “Investors—Leadership & Governance” section of our website located atwww.garrettmotion.com.
Our Board has determined that all of the members of each of the Committees are independent as defined under applicable NYSENasdaq rules. In addition, all members of the Audit Committee meet the heightened independence requirements contemplated byRule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all members of the Compensation Committee satisfy the heightened independence requirements of the NYSENasdaq rules specific to the independence of compensation committee members.
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Committee Membership | ||||||||
Name | Audit Committee | Compensation Committee | Nominating and Governance Committee | |||||
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Steven Silver | ||||||||
Julia Steyn | ||||||||
Steven Tesoriere |
| = Member |
Audit Committee
Met
Current Committee Members:
| Primary Responsibilities Include:
• Reviewing audits of the Company’s financial statements, and other matters related to the conduct of the audit, and recommending to the Board whether the audited financial statements should be included in our Annual Report on Form10-K;
• Preparing the Audit Committee report to be included in our proxy statement;
• Reviewing with management and the independent auditor our annual and interim financial • Reviewing and discussing the types of information to be disclosed and the types of presentations to be made in connection with earnings releases and financial information and earnings guidance provided to analysts and ratings agencies;
• Appointing our independent auditor and approving all audit engagement fees andnon-audit engagements with the independent auditor;
• Evaluating, at least annually, the independent auditor’s
• Overseeing the work of our independent auditor;
•
• • Pre-approving all non-audit engagements and
• Reviewing
|
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• Considering and reviewing, in consultation with the independent auditor and the internal auditor, the Company’s internal audit function, including its scope, plan, budget, activities, organizational structure and staffing; • Reviewing on an annual basis the performance of the internal audit function, and receiving reports from the internal auditor on the status of significant findings, recommendations and management’s responses; • Establishing clear hiring policies regarding employees or former employees of the independent auditor; • Reviewing and discussing, with management as appropriate, our major enterprise and financial risk (including cybersecurity) exposures, assessment, management policies; and reviewing the internal control report prepared by management; • Establishing procedures for the confidential anonymous submission by employees, and receipt, retention and treatment of, accounting and auditing related concerns and complaints; • Reviewing material legal and compliance matters and our integrity and compliance program periodically with management; • Reviewing and discussing the Company’s plans, practices and policies concerning significant financial matters including: (1) the Company’s financial condition, liquidity and funding needs and (2) make recommendations to the Board concerning proposed equity, debt or other securities offerings or other significant credit programs, (3) hedging policies; (4) make recommendations regarding dividend strategy, stock repurchases and tax strategy; and • Undertaking an annual performance evaluation of the activities of the committee, including the committee’s responsibilities as set forth above. | ||
Financial Expertise and Independence
All members of the Audit Committee meet the independence standards of the
Report
The Report of the Audit Committee is set forth beginning on page |
Nominating and Governance Committee
Met
Current Committee Members:
| Primary Responsibilities Include:
•
•
• Reviewing the Company’s management development program, including executive succession plans and making recommendations to the Board relating to the election of the Company’s officers in coordination with the Compensation Committee; |
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• Overseeing the succession planning process for our
• Overseeing
• Reviewing and assessing the adequacy of our Corporate Governance Guidelines and governance structure;
• Overseeing the director orientation and continuing education programs;
• Reviewing and reporting to the Board regarding matters relating to the Company’s role as a responsible corporate citizen, including health, safety and environmental matters, equal employment opportunity and other matters, including the Company’s Code of Business Conduct; and
•
Independence
The Nominating and Governance Committee is comprised entirely of directors who are independent under the |
Compensation Committee
Met
Current Committee Members:
| Primary Responsibilities Include:
• Reviewing and
• Reviewing and
• Reviewing and
• Reviewing the management development
• Reviewing and administering our bonus, stock and other benefits plans, as may be provided in any such plans or deemed appropriate by the Board;
• Reviewing and approving Company employment agreements and compensatory transactions with
• Establishing and reviewing perquisite benefits policies;
|
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•
• Reviewing and discussing annually with management our “Compensation Discussion and Analysis,” and recommending to the Board whether such section should be included in the Company’s Annual Report on Form10-K and annual proxy statement;
• Reviewing and making recommendations to the Board regarding the frequency ofsay-on-pay votes, taking into account the results of the most recentsay-on-pay frequency vote, and reviewing and approving the proposals regardingsay-on-pay votes andsay-on-pay frequency votes to be included in the Company’s annual proxy |
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• Undertaking an annual performance evaluation of the activities of the committee, including the committee’s responsibilities as set forth above.
Independence
The Compensation Committee is comprised entirely of directors who are independent under the
Delegation Authority
The Compensation Committee may form and delegate authority to subcommittees, including a subcommittee consisting of two or more individuals who qualify asnon-employee directors under Section 16 the Exchange Act.
Role of Management and Compensation Consultant
For information regarding the role of management and our compensation consultant
Report
The Compensation Committee Report is set forth beginning on page |
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Carlos M. Cardoso, Maura J. Clark, Carsten J. Reinhardt,Robert Shanks, Steven Silver and Julia Steyn, who serves as chair, and Scott A. Tozier.chair. No member of our Compensation Committee is or has been an officer or employee of the Company.
During 2018,2021, none of our executive officers served as a member of the Board or Compensation Committee, or other committee serving an equivalent function, of any other entity that has, or that at the time had, one or more of its executive officers serving as a member of our Board or Compensation Committee.
The Board’s Role in Risk Oversight
The Board recognizes that the achievement of our strategic and commercial objectives involves taking risks and that those risks may evolve over time. The Board has oversight responsibility for Garrett’s risk management, which is designed to identify, assess, and communicate these risks across the Company’s operations, and foster a corporate culture of integrity and risk awareness. Consistent with this approach, one of the Board’s primary responsibilities includes reviewing assessments of, and advising management with respect to, significant risks and issues facing the Company.
In addition, the Board has tasked designated committees of the Board to assist with the oversight of certain categories of risk management, and the committees report to the Board regularly on these matters.
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The Audit Committee reviews and discusses, with management as appropriate, our major financial and enterprise risk (including cybersecurity) risk exposures, risk assessment and risk management policies;
The Compensation Committee, in approving and evaluating the Company’s executive compensation plans, policies and programs, takes into account the degree of risk to the Company that such plans, policies and programs may create;create and assists the Board in fulfilling its oversight responsibilities with respect to succession planning for our executive officers; and
The Nominating and Governance Committee assists the boardBoard in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership and structure, succession planning for our directors and executive officers, and our overall governance structure, and also by reviewing our Code of Business Conduct, which creates a foundation for our compliance program.
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Our Board does not believe that its role in the oversight of our risks affects the Board’s leadership structure.
Corporate SustainabilityResponsibility
Garrett’s corporatemission to enable cleaner, safer vehicles is at the heart of its contribution to society. We develop solutions for the auto industry’s most pressing sustainability issues, from emissions reduction to vehicle cybersecurity. Corporate responsibility is an importanttherefore a priority for the Company and the Board. The Board is responsible for promoting the exercise of responsible corporate citizenshipresponsibility and sustainability as well as monitoring adherence to Company standards. The NominatingBoard manages oversight of sustainability through a Sustainability Committee, which is comprised of senior leaders who assess and Governance Committee reviews and addresses withprioritize topics that are material for the Board the Company’s policies and programs relating to compliance with its Code of Conduct, health, safety and environmental matters, equal employment opportunity and other relevant matters regarding Garrett’s role as a responsible corporate citizen.
Garrett believes that in order to grow as a Company, we must work to have a positive impact on the communities that sustain us. We must work to respect and protect not only the communities where we live and work, but also the planet and its inhabitants.business.
Garrett articulates its commitments to health, safetysocial and the environment, and to socialenvironmental considerations in the communities in which it operates in itsthe Company’s Code of Business Conduct, which can be found on our website atwww.garrettmotion.com under “Investors—Leadership & Governance”. As part
The Company published its first sustainability report in 2021 and intends to annually report progress on its sustainability commitments. Our sustainability report is available on our website at https://www.garrettmotion.com/corporate/sustainability/.
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Our WeCare4 sustainability approach, defined in 2019 following Garrett’s first materiality assessment, focuses on two essential building blocks required to successfully achieve our mission:
Culture of this commitment:innovation
We minimizeDeveloping our people
○ | We encourage our employees to fulfill their potential and support their development through a comprehensive annual performance review and objective-setting process, training and development opportunities, including a catalogue of approximately 1,000 web-based learning modules, and leadership training for managers. |
○ | Our Diversity and Inclusion Committee drives a global network of diversity and inclusion champions and policy improvements, as well as awareness activities such as unconscious bias training and cultural adaptation online learning. |
○ | World-class health and safety considerations are integrated into Garrett’s procedures and processes. Health and safety are an integral aspect of the design of our products, processes and services, and the lifecycle of our products. |
○ | Our management systems apply a global standard that provides protection of human health during normal and emergency situations. |
Educating future innovators
○ | Garrett places a high value on Science, Technology, Engineering and Math (“STEM”) research and learning opportunities that provide young people with the skills needed to develop the future of sustainable mobility. The Company sponsors higher education institutes in several countries to further critical research in technical areas and provide students with opportunities to study STEM programs. |
○ | We support STEM awareness in our host communities, holding regular open days for school children with a specific focus on encouraging girls to take an interest in STEM. |
○ | The Company launched its Internship and graduate program in 2019 and sponsors Formula SAE and Formula Student teams in several countries. |
Responsible operations
Managing our environmental footprint
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○ | As a company whose products help reduce harmful emissions from vehicles, we are committed to reducing the impact of our operations on the environment. Garrett applies global standards governing environmental impact as part of our lifecycle management, assessing end-to-end performance from design to manufacturing and service support. |
○ | All of our sites are certified ISO 14001, with 12 of 13 manufacturing sites certified ISO 50001. We have annual targets to reduce, reuse and recycle waste, and reduce water use and have implemented several renewable energy and efficiency projects to reduce our CO2 emissions. |
○ | Garrett submitted its first CDP Climate Change report in 2019. |
Behaving ethically
○ | Garrett ensures compliance and integrity both internally and externally through the adoption of best-in-class, robust practices, codes of conduct and policies which bind the directors, officers and employees of Garrett and its subsidiaries as well as our suppliers, vendors and other providers. These are available on our website and/or have been filed by Garrett with the SEC. |
○ | The Garrett Code of Business Conduct covers topics such as child and forced labor, external stakeholder human rights and working conditions. |
○ | Garrett has adopted a Supplier Code of Conduct that provides clear expectations for suppliers to ensure they treat their employees with dignity and respect. Garrett is committed to the responsible sourcing of tantalum, tin, tungsten and gold (“3TG”) throughout our global supply chain and to compliance with the SEC’s Conflict Mineral Rules. |
Garrett’s Board provides oversight of management’s Environmental, Social and Governance (ESG) initiatives, including over the environmental footprintdesign, implementation and monitoring of our operations through efforts to safeguard natural resources, reduce waste, increase energy and water efficiency and reduce emissions of harmful pollutants;WeCare4 sustainability approach.
Health safety and the environment are an integral aspect of the design of our products, processes and services, and of the lifecycle of our products;
Our management systems apply a global standard that provides protection of both human health and the environment during normal and emergency situations;
Our senior leadership and individual employees are accountable for their role in meeting these commitments; and
We measure and periodically review our progress and strive for continuous improvement.
Prohibition of Hedging or Pledging the Company’s Securities
We believe it is improper and inappropriate for any person associated with Garrett to engage in short-term or speculative transactions involving the Company’s securities. Directors, officers and employees of the Company are therefore prohibited from engaging in short sales, and from pledging and buying or selling puts, calls, options or other derivative securities of the Company.
Our securities trading policy also prohibits directors and executive officers from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of the Company’s equity securities whether they are granted to such director or executive officer by the Company as part of such person’s compensation or otherwise held, directly or indirectly, by such director or executive officer.
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Stockholders and other interested parties who wish to send communications to thenon-management directors as a group, any individual director or the full Board should address such communications to JeromeJérôme Maironi, Corporate Secretary, Garrett Motion Inc., Z.A. La Pièce 16, Rolle, Switzerland 1180. All communications, except for marketing and advertising materials, will be forwarded to the appropriate individual(s).
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The following table sets forth the names, ages and positions of our current executive officers:
Name | Age | Position | ||
Olivier Rabiller* | President | |||
Craig Balis | Senior Vice President | |||
Sean Deason | 50 | Senior Vice President & Chief Financial Officer | ||
Daniel Deiro | Senior Vice President, Global Customer Management | |||
| ||||
Thierry Mabru | Senior Vice President, Integrated Supply Chain | |||
| Senior Vice President, General Counsel | |||
Fabrice Spenninck | Senior Vice President |
* | Mr. Rabiller is a member of our Board. See “Proposal One—Election of Directors” for more information about Mr. Rabiller. |
Craig Balis has served as our Senior Vice President and Chief Technology Officer since theSpin-Off.Spin-Off in 2018. From June 2014 and until theSpin-Off, Mr. Balis was the Vice President and Chief Technology Officer of Honeywell Transportation Systems. From December 2008 to June 2014, Mr. Balis was the Vice President of Engineering of Honeywell Transportation Systems. From 1998 until 2008, Mr. Balis served as Director of Program Management and Director of Product Development at Garrett Engine Boosting Systems. Prior to this, Mr. Balis worked seven years as an advanced technology manager at AlliedSignal Aerospace, working in the aircraft turbine engine division. Mr. Balis has a Bachelor of Science and Master’s Degreedegree in engineeringEngineering from the University of Illinois.
Sean Deason has served as our Senior Vice President and Chief Financial Officer since June 2020. Mr. Deason previously served as Chief Financial Officer and Controller of WABCO Holdings Inc. (“WABCO”), a manufacturer of technology systems for commercial vehicles, from April 2019 to June 2020. Prior to that, Mr. Deason was WABCO’s Vice President Controller and Investor Relations from June 2015 to April 2019. Prior to joining WABCO, Mr. Deason spent four years with Evraz N.A., a steel products manufacturer, where he served as Vice President, Financial Planning & Analysis. Prior to Evraz, Mr. Deason spent 12 years with Lear Corporation, a global automotive technology manufacturer, where he served as Director, Finance, Corporate Business Planning & Analysis, Director, Finance, Asia Pacific Operations, and Assistant Treasurer, and held various other positions of increasing responsibility since August 1999. Mr. Deason holds a Masters of International Management from Thunderbird School of Global Management and is a Certified Management Accountant.
Daniel Deirohas served as our Senior Vice President, Global Customer Management, and General Manager Japan/Korea since theSpin-Off. From August 2014 until theSpin-Off, Mr. Deiro was the Vice President of Customer Management and General Manager for Honeywell Transportation Systems for Japan and Korea. From April 2012 until August 2014, Mr. Deiro was a Senior Customer Management Director at Honeywell Transportation Systems. Mr. Deiro has a degree in Automotive Engineering from Haute école spécialisée bernoise, Technique et Informatique(BFH-TI), Biel, Switzerland.
Alessandro GiliJoanne Lauhas served as our Senior Vice President, and Chief Financial Officer since theSpin-Off. From June 2018 until theSpin-Off, Mr. Gili was the Chief Financial Officer of Honeywell Transportation Systems. From February 2015 until May 2018, Mr. Gili was the Chief Financial Officer of Ferrari N.V. In April 2015 he was also appointed as President of Ferrari Financial Services S.p.A. From June 2013 to February 2015, he was a Vice President and Chief Accounting Officer and Corporate Controller of Fiat Chrysler Automobiles N.V. From June 2011 tothe Company since October 2021. Between February 2021 and October 2021, she served as Senior Finance Director of Corporate Consolidation, Controlling and Tax at Eurofins Scientific, a bio-analytical testing provider. Previously, Ms. Lau served in various capacities at WABCO for approximately eight years. There, Ms. Lau served as Global Accounting and Reporting Manager from June 2013 Mr. Gili was Vice President,through December 2014, as Assistant Corporate Controller from January 2015 through March 2019, and Chief Accounting Officer of Chrysler Group LLC. Prior to joining the Fiat Group, Mr. Gili was a project manager for Innovative Redesign Managements Consultants. Mr. Gili spent the first years of his career in Audit at Coopers & Lybrand. Mr. Gilias Corporate Controller from April 2019 through February 2021. Ms. Lau holds a Bachelor’s degreeBachelor of Science in financeFinance from TurinSanta Clara University and is a Certified Public Accountant and Certified Public Auditor in Italy.Accountant.
Thierry Mabruhas served as our Senior Vice President, Integrated Supply Chain since theSpin-Off.Spin-Off in 2018. From March 2013 until theSpin-Off, Mr. Mabru was the Vice President of Global Integrated Supply Chain for Honeywell Transportation Systems. From April 2011 until February 2013, Mr. Mabru was Senior Director of Global Advanced Manufacturing Engineering for Honeywell Transportation Systems. From September 2006 to February 2011,
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Mr. Mabru was Director of the Program Management Office of Honeywell Aerospace EMEAI. Mr. Mabru currently serves as director of both the Board of Friction Material Pacific (FMP) Group Australia PTY Limited and Board of Friction Material Pacific (FMP)
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Group PTY Limited.Limited, which are friction material manufacturers. Mr. Mabru holds a Master of Science degree from the École Nationale de Mécanique et d’Aé rotechniques (ISAE/ENSMA), Poitier, France.
JeromeJérôme Maironihas served as our Senior Vice President, General Counsel and Corporate Secretary since theSpin-Off.Spin-Off in 2018. For the five years prior to theSpin-Off, Mr. Maironi was the Vice President of Global Legal Affairs for Honeywell Performance Materials and Technologies. Mr. Maironi graduated with an Executive MBA from INSEAD, Fontainebleau, France. Mr. Maironi received a post-graduate degree in Law & Practice of International Trade and a Master of Law from the University Rene Descartes, Paris, France. Mr. Maironi is a member of the Association Francaise des Juristes d’Entreprise and has also passed the French Bar Exam. Mr. Maironi graduated with an Executive MBA from INSEAD, Fontainebleau, France.
Fabrice Spenninckhas served as our Senior Vice President and Chief Human Resources Officer since theSpin-Off.Spin-Off in 2018. From August 2015 until theSpin-Off, Mr. Spenninck was Vice President of Human Resources of Honeywell Transportation Systems. From 2013 to 2015, Mr. Spenninck was Vice President of Labor and Employee Relations and, from 2011 to 2013, he was Senior Director of Human Resources (One Country Leader) in France and North Africa at Honeywell. Mr. Spenninck holds a Master’s degree in Human Resources and Labor Relations from the University of Montpellier, France.
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Compensation Discussion and Analysis
Our Compensation Discussion and Analysis describes the principles underlying the material components of the executive compensation programs for our named executive officers who are named in the “Summary Compensation Table” below and the factors relevant to an analysis of the compensatory policies and decisions. In 2021, our named executive officers were:
Olivier Rabiller, President and Chief Executive Officer;
Sean Deason, Chief Financial Officer;
Craig Balis, Senior Vice President and Chief Technology Officer;
Thierry Mabru, Senior Vice President, Integrated Supply Chain; and
Jérôme Maironi, Senior Vice President, General Counsel, and Corporate Secretary.
2018Financials
2021 was a monumentalremarkably challenging and successful year for Garrett and one of the most dynamic years in the automotive industry. Garrett faced several waves of the COVID-19 pandemic, unpredictable customer demand due to the semiconductor shortage, global shipping delays and industry slowdown in the second half of the year. Even in this volatile environment, Garrett delivered strong results across all key metrics and strengthened its industry leadership position across all areas of the business. Garrett delivered net sales of $3.6 billion, an increase of more than 15% over 2020, outpacing global auto production by approximately 12.5 percentage points. Net income in 2021 was $495 million, with a net income margin of 13.6%.
A large driver of our 2021 success comes from our commercial vehicle and aftermarket businesses, which saw net sales growth of 25% and 21%, respectively. These two high margin businesses comprised approximately 30% of our net sales in 2021 and an even greater proportion of our earnings.
This growth in commercial vehicles and aftermarket, coupled with the improved mix of light vehicle sales, allowed Garrett to increase our Adjusted EBITDA1 by 38% and our Adjusted EBITDA Margin1 by 220 basis points to 16.7% (each as defined in the table set forth under “Short-Term Incentive Compensation Plan (“ICP”) Awards—Corporate Performance” below) over 2020. Finally, our cash used for operations was $310 million. Net of cash paid for reorganizations and other adjustments, Adjusted Free Cash Flow1 (as defined in the table set forth under “Short-Term Incentive Compensation Plan (“ICP”) Awards—Corporate Performance” below) was $367 million in 2021 as we consummatednicely converted our Spin-Off from Honeywell and launched a new era as an independent publicly traded company. With over 60 years of turbo technology leadership, being an independently run company marks an exciting new chapter for our employees, clients, and stockholders. Throughout 2018, we carefully planned and drove numerous initiatives to prepare Garrett for its debut as a standalone public company.earnings growth into cash.
We delivered solid 2018 results consistent with thehigh-end of our forecast with revenue growth from new product launches well above industry growth rates of 4% – 5%, confirming the translation of our strong customer win rates into our financials. For purposes of our short-term incentive plan (the “ICP”) for 2018, we exceeded the target achievement level of both of our financial performance goals, Organic Revenue Growth and Adjusted EBITDA, which resulted in an above-target payout under the ICP.Compensation Philosophy
Early on in our preparation efforts, we identified compensation as a key vehicle for attracting, retaining, and motivating top talent. In developing our compensation programs, we thoroughly reviewed the programs that we inherited from Honeywell to ensure that they continue to address the needs of our business and address the unique challenges we will face as a standalone company. Some program features we chose to maintain without adjustment and others we refined based on our more focused strategy, scale of operations, and labor force. Our compensation philosophy is designed to align the interests of our executive officers with those of our stockholders by providing pay that is directly linked to the achievement of performance goals established to foster the creation of sustainable long-term stockholder value. At the root of our compensation philosophy is the use of variable,at-risk compensation that connects pay outcomes with superior results and sustainable growth execution. AsOur Chief Executive Officer compensation mix did not change during 2021, as shown in the chart below, 81%below; 83% of the 2018total target total direct compensation of our Chief Executive Officer is at risk.
1 | Please refer to the Annex for additional information regarding our non-GAAP financial measures. |
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2021 Chief Executive Officer Compensation Mix at Target (as of December 31, 2021)
2021 Program Changes
As previously reported, on April 30, 2021, the conditions to effectiveness of the Plan were satisfied or waived and Garrett emerged from its Chapter 11 restructuring. In connection with its Emergence and pursuant to the terms of the Company’s 2018 Stock Incentive Plan (the “2018 Plan”), outstanding equity awards under the 2018 Plan were cancelled and participating equity holders received cash payments in full satisfaction of certain of their cancelled awards. See “Elements of Executive Compensation—Management Side Letters” for a detailed discussion of cancelled awards under the 2018 Plan. In addition, the Company made a number of changes to its executive compensation program following Emergence.
In considering the design of the 2021 executive compensation program, the Compensation Committee evaluated the short-term and long-term metrics best suited to align executive pay to the Company’s strategy as it emerges from Chapter 11 restructuring. This evaluation focused on developing metrics for both the Short-Term Incentive Compensation Plan (“ICP”) and Long-Term Incentive Plan (“LTI Plan”). Consideration was given to performance metrics used to manage the operations of the Company, practices adopted by companies emerging from similar financial restructurings, and the long-term incentive alignment of the leadership team.
On May 25, 2021, the Compensation Committee recommended that the Board approve, and the Board approved and adopted, the LTI Plan. We structured the 2021 LTI Plan to take the form of an “Emergence Grant,” which was sized in excess of a standard annual grant in order to align incentives as of the Company’s Emergence and with the intention of covering equity grants for fiscal years 2021 and 2022. As a result, no stock-based compensation awards were granted to the named executive officers in Q1 2022. In arriving at its decision, the Compensation Committee also prioritized the need to restore equity-based incentives after the cancellation of prior equity-based incentives in conjunction with the Company’s Chapter 11 process. The 2021 LTI Plan award granted to each named executive officer includes 50% time-based restricted stock units (RSUs) and 50% performance share units (PSUs), which include performance goals tied to the Company’s absolute total shareholder return (“TSR”) as well as a combination of Adjusted EBITDA and Adjusted EBITDA Margin. The Compensation Committee believes these metrics also support the Company’s strategic goals related to cash generation, pursuing efficiency and cost reduction initiatives, and continuing its expansion into new markets. See “Elements of Executive Compensation—2021 Long Term Incentive Plan (“LTI Plan”)” for a detailed discussion of the 2021 LTI Plan.
The Company maintained the core structure of its ICP, in which 75% is tied to quantitative performance goals and 25% is tied to individual scorecard objectives. The quantitative performance goals are evenly weighted among Adjusted Free Cash Flow Conversion, Adjusted EBITDA, and Adjusted EBITDA Margin. Adjusted EBITDA was newly added as a complementary metric to Adjusted EBITDA Margin. The Compensation Committee will continue to evaluate and evolve our programs as necessary to support our business strategy and organizational context. See “Elements of Executive Compensation—Short-Term Incentive Compensation Plan (“ICP”) Awards” for a detailed discussion of the 2021 ICP Awards.
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2018 Chief Executive Officer Compensation Mix at Target (as of December 31, 2018)Peer Group
A key priority was assessing which metrics to include in our ICP and Long-Term Incentive Plan (“LTIP”). We selected performance metrics and an award mix that we believed fit our starting business plan. Going forward, we remain committed to maintaining disciplined compensation governance processes whereby we periodically reassess our incentive structures in light of evolving market practices and changes in our own business goals and strategy and making changes as necessary.
As part of our commitment to understanding market compensation practices, in January 2019, we created aOur compensation peer group which includes companies of similar size, industry and global presence and with which the Company competes for talent. We made an effort to create a balance betweenincluded companies headquartered in the United States and Europe. This peer group, which is described in more detail starting on page 24, is30, was referenced to establish market-competitive base salaries, award sizes for our ICP and LTIP,LTI Plan, and the metrics used in the ICP and LTIPLTI Plan beginning in 2019.2021. In addition to thethis peer group, described, we also leverageleveraged broader market surveys and other data sources to guide the establishment of our executive compensation programs.programs for 2021.
Prior to theSpin-Off, each of our executive officers who are named in the “Summary Compensation Table” below, our “Named Executive Officers”, was employed by Honeywell, except as otherwise described below. Accordingly, allpre-Spin-Off payments and benefits described below were provided by Honeywell and all decisions as to the compensation of the Named Executive Officers prior to theSpin-Off were made by Honeywell. The Compensation Discussion and Analysis describes the principles underlying the material components of the executive compensation programs established by Honeywell prior to theSpin-Off, to the extent relevant to understanding the compensation paid to our Named Executive Officers in 2018, but primarily focuses on the executive compensation programs approved by our Compensation Committee for thepost-Spin-Off portion of 2018 and beyond.Program Highlights
Our Named Executive Officers during 2018 were:
Olivier Rabiller, President and Chief Executive Officer;
Alessandro Gili, Senior Vice President and Chief Financial Officer;
Craig Balis, Senior Vice President and Chief Technology Officer;
Jérôme Maironi, Senior Vice President, General Counsel, and Corporate Secretary; and
Thierry Mabru, Senior Vice President, Integrated Supply Chain.
Mr. Gili was hired by Honeywell Technologies Sàrl, a subsidiary of Honeywell, in June 2018 and serves as our Senior Vice President and Chief Financial Officer. Prior to theSpin-Off, Messrs. Rabiller, Balis, Maironi, and Mabru were employees of Honeywell.
As noted above, our overall compensation program is structured to attract, motivate and retain highly qualified executive officers by paying them competitively, consistent with our success and their contribution to that success. Our ability to excel depends on the skill, creativity, integrity and teamwork of our employees. We believe compensation should be structured to reward short-term and long-term business results and exceptional performance, and most importantly, maximize stockholder value.
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The following table highlights key features of our executive compensation program. We believe these practices promote good governance and serve the interests of our stockholders.
What We Do | What We Don’t Do | |||||||
✓ | X | No single-trigger cash severance or benefits in connection with a change in control | ||||||
✓ | X | No guaranteed | ||||||
✓ | X | No excise taxgross-up provisions | ||||||
✓ | X | No repricing of stock option awards and our plans expressly forbid exchanging underwater options for cash without stockholder approval | ||||||
✓ | X | No hedging or pledging of our equity securities | ||||||
| X | No dividends or dividend equivalents paid on unearned performance stock units | ||||||
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At our 2020 annual meeting, approximately 97% of the votes cast by our stockholders approved, on an advisory basis, the compensation of our named executive officers, which we believe affirms our stockholders’ support of our executive compensation program. We did not hold a say-on-pay vote in 2021 because we did not hold a stockholders’ meeting in 2021 as a result of our Chapter 11 process.
Determination of CompensationProcess
As noted above,Our Compensation Committee oversaw and administered our executive compensation program for 2018 prior to theSpin-Off was determined by the Management Development2021, with input from our management team and an independent compensation consultant.
Process and Timeline for Designing and Delivering Compensation
The Compensation Committee (the “Honeywell MDCC”) of the Honeywell Board of Directorsis responsible for evaluating programs and Honeywell senior management. Accordingly, following theSpin-Offprocedures for annual and in particular, with respect to the payout of our annual bonus program, the 2018 ICP,and our compensation for 2019, our newly formed Compensation Committee determined the appropriatelong-term executive compensation and benefits forassessing organizational structure and the development of our executives. The overall performance of our Named Executive Officers asCompensation Committee follows a team will be reviewed annuallyrobust process to review and propose to the Board for approval all compensation decisions regarding the named executive officers. These decisions are informed by peer group and market data and supported by the Compensation Committee.review and advice of an independent compensation consultant.
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Role of Management
To aid the Compensation Committee in making its determination, our Chief Executive Officer provides recommendations annually to the Compensation Committee regarding the compensation of all other executive officers (other(i.e., other than himself) based on the overall corporate achievements during the period being assessed and his knowledge of the individual contributions to our success by each of the Named Executive Officers.other named executive officers. Our Named Executive Officersnamed executive officers do not play a role in their own compensation determinationdeterminations other than discussing their performance with our Chief Executive Officer, or in the case of the Chief Executive Officer, with the Compensation Committee and Chairperson of the Board.
Our senior management also supports the Compensation Committee by developing recommendations for specific award designs, including metric assessment, performance goal-setting, and program administration. While members of our senior management may attend the meetings of the Compensation Committee, they do not attend executive sessions and do not attend the portions of meetings atduring which their own compensation is discussed.
Role of Independent Compensation Consultant
Since shortly after ourSpin-Off, ourFollowing Emergence, the newly elected Compensation Committee has retained Semler Brossyengaged Meridian Compensation Partners (“Meridian”) as its independent compensation consultant.consultant and discontinued the prior committee’s engagement of Semler BrossyBrossy. Meridian assists the Compensation Committee in its evaluation of the compensation provided to our Chief Executive Officer and other executive officers. Semler Brossyofficers and the design of such executive compensation programs. Meridian generally attends Compensation Committee meetings and provides information, research and analysis pertaining to executive compensation and governance as requested by the Compensation Committee. Other than advising the Compensation Committee and
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senior management, as described above, Semler BrossyMeridian did not provide any services to the Company in 2018.2021. The Compensation Committee has considered the independence of Semler Brossy,Meridian, consistent with the requirements of the NYSE,Nasdaq, and has determined that Semler BrossyMeridian is independent. Further, pursuant to SEC rules, the Compensation Committee conducted a conflicts of interest assessment and determined that there is no conflict of interest resulting from retaining Semler Brossy.working with Meridian. The Compensation Committee intends to reassess the independence of its advisor at least annually.
Executive Compensation Peer Group
In 2019, Semler Brossy2021, Meridian worked with the Compensation Committee and management to develop areview the Garrett compensation peer group of companies to be used for market comparison purposes in terms of executive pay levels and practices. The objective was to create a peer group of companies that compete with us for global talent and that are similar to us in terms of industry, international presence, and size across various financial measures. We chose to select individual companies forMeridian assessed our peer group based onagainst the following:following characteristics, which are consistent with criteria historically reviewed:
Key Size Measures;
Industry;
Headquarter Location;
Global Presence;
Product Focus and Business Model;
Evolving Technology; and
Key Size Measures.Competitor for Talent.
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The Compensation Committee was careful in constructingto construct a group based on the considerations above that, on the whole, captures Garrett’s global presence and talent market as well as its unique business dynamics. We worked thoughtfully to createAs a balance ofU.S.-listed but European-headquartered company that attracts talent globally, we included both U.S. and European companies. TheFor 2021, our peer group whichconsisted of the Compensation Committee approved in January 2019, is as follows:following companies:
Company | Ticker | Country of Inc. | Country of HQ | Primary Industry Classification | Revenue ($Mil) | EBITDA Margin | Enterprise Value ($Mil) | Market Cap ($Mil) | Employee Count | |||||||||||||||||||
US-Listed | ||||||||||||||||||||||||||||
Allison Transmission Holdings, Inc. | ALSN | US | US | Construc. Machinery & Heavy Trucks | $ | 2,654 | 40 | % | $ | 8,620 | $ | 6,319 | 2,700 | |||||||||||||||
American Axle & Manufacturing Holdings, Inc. | AXL | US | US | Auto Parts & Equip. | $ | 7,310 | 16 | % | $ | 5,119 | $ | 1,667 | 25,000 | |||||||||||||||
BorgWarner Inc. | BWA | US | US | Auto Parts & Equip. | $ | 10,543 | 16 | % | $ | 10,461 | $ | 8,583 | 29,000 | |||||||||||||||
Cooper-Standard Holdings Inc. | CPS | US | US | Auto Parts & Equip. | $ | 3,695 | 12 | % | $ | 1,884 | $ | 1,372 | 32,000 | |||||||||||||||
Dana Incorporated | DAN | US | US | Auto Parts & Equip. | $ | 8,007 | 11 | % | $ | 4,416 | $ | 2,591 | 30,900 | |||||||||||||||
Delphi Technologies PLC | DLPH | Jersey | UK | Auto Parts & Equip. | $ | 4,976 | 16 | % | $ | 2,982 | $ | 1,623 | 18,000 | |||||||||||||||
Meritor, Inc. | MTOR | US | US | Construc. Machinery & Heavy Trucks | $ | 4,313 | 10 | % | $ | 2,563 | $ | 1,753 | 8,600 | |||||||||||||||
Modine Manufacturing Company | MOD | US | US | Auto Parts & Equip. | $ | 2,223 | 9 | % | $ | 1,232 | $ | 788 | 11,700 | |||||||||||||||
Tenneco Inc. | TEN | US | US | Auto Parts & Equip. | $ | 9,874 | 9 | % | $ | 4,270 | $ | 2,862 | 32,000 | |||||||||||||||
The Timken Company | TKR | US | US | Industrial Machinery | $ | 3,449 | 16 | % | $ | 4,933 | $ | 3,297 | 17,000 | |||||||||||||||
Tower International, Inc. | TOWR | US | US | Auto Parts & Equip. | $ | 2,182 | 10 | % | $ | 877 | $ | 606 | 7,600 | |||||||||||||||
Veoneer, Inc. | VNE | US | Sweden | Auto Parts & Equip. | $ | 2,285 | -2 | % | $ | 1,674 | $ | 2,482 | 7,500 | |||||||||||||||
Visteon Corporation | VC | US | US | Auto Parts & Equip. | $ | 3,050 | 9 | % | $ | 2,309 | $ | 2,253 | 10,000 | |||||||||||||||
WABCO Holdings Inc. | WBC | US | Belgium | Construc. Machinery & Heavy Trucks | $ | 3,854 | 16 | % | $ | 6,235 | $ | 5,986 | 16,135 |
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Company | Ticker | Country of Inc. | Country of HQ | Primary Industry Classification | Revenue ($Mil) | EBITDA Margin | Enterprise Value ($Mil) | Market Cap ($Mil) | Employee Count | Exchange | Country of HQ | Primary Industry Classification | Revenue ($Mil) | Enterprise Value ($Mil) | Market Cap ($Mil) | Employee Count | ||||||||||||||||||||||||||||||||||||||
US-Listed | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allison Transmission Holdings, Inc. | NYSE | US | Construction Machinery & Heavy Trucks | $ | 2,293 | $ | 6,098 | $ | 3,790 | 3,300 | ||||||||||||||||||||||||||||||||||||||||||||
American Axle & Manufacturing Holdings, Inc. | NYSE | US | Auto Parts & Equip. | $ | 5,359 | $ | 3,833 | $ | 1,064 | 20,000 | ||||||||||||||||||||||||||||||||||||||||||||
Autoliv, Inc. | NYSE | Sweden | Auto Parts & Equip. | $ | 8,230 | $ | 10,332 | $ | 9,046 | 55,873 | ||||||||||||||||||||||||||||||||||||||||||||
BorgWarner Inc. | NYSE | US | Auto Parts & Equip. | $ | 15,109 | $ | 14,222 | $ | 10,806 | 49,700 | ||||||||||||||||||||||||||||||||||||||||||||
Cooper-Standard Holdings Inc. | NYSE | US | Auto Parts & Equip. | $ | 2,426 | $ | 1,268 | $ | 381 | 21,900 | ||||||||||||||||||||||||||||||||||||||||||||
Dana Incorporated | NYSE | US | Auto Parts & Equip. | $ | 8,780 | $ | 5,965 | $ | 3,291 | 39,500 | ||||||||||||||||||||||||||||||||||||||||||||
Gentex Corporation | NasdaqGS | US | Auto Parts & Equip. | $ | 1,731 | $ | 7,968 | $ | 8,243 | 5,303 | ||||||||||||||||||||||||||||||||||||||||||||
Meritor, Inc. | NYSE | US | Construction Machinery & Heavy Trucks | $ | 3,928 | $ | 2,769 | $ | 1,736 | 9,600 | ||||||||||||||||||||||||||||||||||||||||||||
Modine Manufacturing Company | NYSE | US | Auto Parts & Equip. | $ | 1,991 | $ | 916 | $ | 523 | 10,900 | ||||||||||||||||||||||||||||||||||||||||||||
Sensata Technologies Holding plc | NYSE | US | Elec. Comp. & Equip. | $ | 3,821 | $ | 12,066 | $ | 9,776 | 21,000 | ||||||||||||||||||||||||||||||||||||||||||||
The Timken Company | NYSE | US | Industrial Machinery | $ | 4,133 | $ | 6,624 | $ | 5,256 | 18,000 | ||||||||||||||||||||||||||||||||||||||||||||
Veoneer, Inc. | NYSE | Sweden | Auto Parts & Equip. | $ | 1,657 | $ | 3,855 | $ | 3,974 | 6,033 | ||||||||||||||||||||||||||||||||||||||||||||
Visteon Corporation | NasdaqGS | US | Auto Parts & Equip. | $ | 2,774 | $ | 3,317 | $ | 3,112 | 10,000 | ||||||||||||||||||||||||||||||||||||||||||||
Non-US-Listed | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Autoneum Holding AG | SWX:AUTN | Switzerland | Switzerland | Auto Parts & Equip. | $ | 2,261 | 10 | % | $ | 1,124 | $ | 757 | 12,133 | SWX | Switzerland | Auto Parts & Equip. | $ | 2,055 | $ | 1,410 | $ | 787 | 12,093 | |||||||||||||||||||||||||||||||
ElringKlinger AG | DB:ZIL2 | Germany | Germany | Auto Parts & Equip. | $ | 1,960 | 10 | % | $ | 1,425 | $ | 548 | 9,600 | DB | Germany | Auto Parts & Equip. | $ | 1,935 | $ | 1,144 | $ | 704 | 9,554 | |||||||||||||||||||||||||||||||
HELLA GmbH & Co. KGaA | DB | Germany | Auto Parts & Equip. | $ | 7,120 | $ | 6,873 | $ | 6,889 | 35,800 | ||||||||||||||||||||||||||||||||||||||||||||
LEONI AG | DB:LEO | Germany | Germany | Auto Parts & Equip. | $ | 5,961 | 6 | % | $ | 2,012 | $ | 1,209 | 86,000 | DB | Germany | Auto Parts & Equip. | $ | 5,896 | $ | 1,943 | $ | 324 | 102,262 | |||||||||||||||||||||||||||||||
Martinrea International Inc. | TSX:MRE | Canada | Canada | Auto Parts & Equip. | $ | 2,797 | 12 | % | $ | 1,273 | $ | 802 | 15,000 | TSX | Canada | Auto Parts & Equip. | $ | 3,007 | $ | 1,971 | $ | 924 | 16,000 | |||||||||||||||||||||||||||||||
Rheinmetall AG | DB | Germany | Aerospace & Defense | $ | 7,149 | $ | 4,011 | $ | 3,588 | 19,998 | ||||||||||||||||||||||||||||||||||||||||||||
TI Fluid Systems plc | LSE:TIFS | UK | UK | Auto Parts & Equip. | $ | 4,062 | 11 | % | $ | 2,404 | $ | 1,334 | 28,000 | LSE | UK | Auto Parts & Equip. | $ | 3,740 | $ | 2,017 | $ | 1,327 | 25,700 |
In addition to the 19 companies above,
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Upon the Compensation Committee identified four additional European-headquartered companies – Aptiv, Autoliv, TE Connectivity,Committee’s recommendation, the Board approved the addition of HELLA and Valeo – that we will monitor outsideRheinmetall AG and the removal of Delphi from the peer group.
The Compensation Committee intends to continually evaluate the peer group to ensure that it remains an appropriate market reference going forward and continues to suit our business needs.
In addition to reviewing information regarding the peer group, our Compensation Committee also leverages broader market survey and data sources to guide the establishment of our executive compensation programs.
Elements of Executive Compensation
The following is a discussion of the primary elements of 20182021 compensation for each of our Named Executive Officers. As previously mentioned, our compensation for 2018 prior to theSpin-Off was determined by the Honeywell MDCC and Honeywell senior management. Accordingly, with respect to 2018 compensation prior to theSpin-Off, the following discussion reflects the decisions of the Honeywell MDCC and senior management and does not reflect the determinations of our Compensation Committee.Certain elements of the compensation provided to our executives in 2018 after theSpin-Off werenamed executive officers as determined by our Compensation Committee.Board. All USD amounts are shown in USD. Certain amounts payable to one or more of our named executive officers represent compensation paid in Swiss Francs (including salaryspin-off bonuses, and short-term incentive compensation plan payouts)bonuses) and were converted to USD using the average exchange rate for the year-endedyear ended December 31, 20182021 under GAAP of 1 USD to 0.9777630680.91389 CHF, unless otherwise noted.
Base Salary
Base salaries are intended to attract and compensate high-performing and experienced leaders and are determined based on performance, scope of responsibility, and years of experience with reference made to relevant competitive market data (but not targeted to a specific competitive position).
Our Named Executive Officers received base salaries from Honeywell in 2018 to compensate them for services rendered to Honeywell prior to theSpin-Off. In April 2018, in recognition of the Named Executive Officers’ 2017 performance as part of the Honeywell annual compensation review, Honeywell increased the Named Executive Officers’ base salaries (other than for Messrs. Rabiller and Gili, who were not then employed by Honeywell).
On May 2, 2018, Honeywell Technologies Sàrl, a subsidiary of Honeywell, entered into an employment agreement with Mr. Gili appointing him as Senior Vice President and Chief Financial Officer of the Company starting June 1, 2018. The agreement provides Mr. Gili with an annual base salary of $542,054.
In addition, in October 2018, pursuant to the offer letters entered into in connection with theSpin-Off, effective as of theSpin-Off, the Named Executive Officers’ base salaries were increased (other than for Mr. Gili), in order to reflect their new roles and responsibilities with our company.
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The following table sets forth the base salaries for each of our Named Executive Officers, including the increases in April 2018 and October 2018:
Annual Base Salary | ||||||||||||
Named Executive Officer | As of January 1, (Pre-Spin-Off) ($) | As of April 1, 2018 (Pre-Spin-Off) ($) | As of October 1, (Post-Spin-Off) ($) | |||||||||
Olivier Rabiller | 556,039 | 556,039 | 889,786 | |||||||||
Alessandro Gili | — | 542,054 | 542,054 | |||||||||
Craig Balis | 381,585 | 386,188 | 409,097 | |||||||||
Jérôme Maironi | 389,500 | 397,300 | 460,234 | |||||||||
Thierry Mabru | 364,301 | 370,130 | 414,211 |
In February 2019, the Compensation Committee determined to increase the salariesnamed executive officers for Messrs. Rabiller and Gili, effective April 1, 2019, from $889,786 and $542,054 to $920,468 and $560,540, respectively, after taking into consideration industry and market data, to reflect their roles and responsibilities at the Company, and to bring their2021. The actual base salaries closerpaid to those paid at similar positions within our peer group. The base salaries for the remaining Named Executive Officers will remain unchanged for 2019.
Spin-Off Bonuses
In 2018, in consideration of their contributions to the successful completion of theSpin-Off, certaineach of our Named Executive Officers received aone-time bonus paid by Honeywell. The following table sets forth the bonuses paid to our Named Executive Officers, which alsonamed executive officers for 2021 are set forthdisclosed in the Summary Compensation Table below in the column titled “Bonus”:below.
Named Executive Officer | 2021 Annual Base Salary ($) | |||||
Olivier Rabiller | 984,801 | |||||
Sean Deason | 623,707 | |||||
Craig Balis | 437,689 | |||||
Thierry Mabru | 443,161 | |||||
Jérôme Maironi | 492,401 |
Short-Term Incentive Compensation Plan (“ICP”) Awards
ICP awards are intended to motivate and reward executives to achieve annual corporate, strategic business group and functional goals in key areas of financial and operational performance. Each Named Executive Officer’snamed executive officer’s target ICP opportunity is based upon a percentage of base salary. For 2018, the total target ICP opportunities were prorated based on each Named Executive Officer’s target incentive opportunity, calculated based on the applicable target percentage and annual base salary in effect, before and after theSpin-Off and prorated for the number of days in the year that such target incentive was in effect.
The 2018Pre-Spin-Off andPost-Spin-Off target percentages for each Named Executive Officer,named executive officer, as a percentage of base salary, are set forth below:
Target ICP Opportunity | ||||||||
Named Executive Officer | Pre-Spin-Off (% of Base Salary) | Post-Spin-Off (% of Base Salary) | ||||||
Olivier Rabiller | 65 | % | 100 | % | ||||
Alessandro Gili | 75 | % | 75 | % | ||||
Craig Balis | 40 | % | 55 | % | ||||
Jérôme Maironi | 40 | % | 60 | % | ||||
Thierry Mabru | 40 | % | 55 | % |
Named Executive Officer | 2021 (% of Base Salary) | ||||
Olivier Rabiller | 125 | % | |||
Sean Deason | 80 | % | |||
Craig Balis | 60 | % | |||
Thierry Mabru | 60 | % | |||
Jérôme Maironi | 65 | % |
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For 2018, payout under2021, the ICP was designed so that payout was based in part on the achievement of objective Company performance criteria (the “Company Performance Portion”), which represented 75% of eachthe award opportunity, and in part on the achievement of individual performance objectives (the “Individual Performance Portion”), which represented the remaining 25% of eachthe award opportunity. Award
Corporate Performance. The 2021 ICP award opportunities under the Company Performance Portion of the 2018 ICP were based on the achievement of twothree financial performance criteria: organic revenue growthAdjusted EBITDA ($M), Adjusted EBITDA Margin (%) and adjusted EBITDA goals, each of which wasAdjusted Free Cash Flow %, weighted equally. We chose these performance metrics because we believe they are relevant to our financial stakeholders’ assessment of our performance for 2018, and each goal was challenging and set at levels that would require the Company to achieve significant growth and performance. Award opportunities
Performance goals for each metric were established at threshold, target and maximum levels with intermediate inflections between threshold and target as well as between target and maximum. Achievementlevels. Payout for achievement at or above maximum for each metric was capped at 200% of target, and achievement below threshold would resulthave resulted in no payout. Straight-line interpolation iswould have been used to calculate the 20182021 ICP payout associated with actual results falling between goals. The goals were set at levels that were expected to be challenging but achievable at the outset of the year. The following table sets forth the applicable goals and achievements for each measure, as well as our actual results for each measure.measure:
Performance Criteria | Weighting | Threshold (50%) | 75% | Target (100%) | 150% | Maximum (200%) | Actual Results | Payout % of Target | ||||||||||||||||||||||||
Organic Revenue Growth(1) | 50% | 4% | 4.5% | 5.1% | 6.0% | 7% | 5.6% | 127.8% | ||||||||||||||||||||||||
Adjusted EBITDA(2) | 50% | $ | 610M | $ | 630M | $ | 650M | $ | 685M | $ | 710M | $ | 656M | 108.6% | ||||||||||||||||||
118.2% |
Performance Criteria | Weighting | Threshold (25%) | Target (100%) | Maximum (200%) | Achievement | Payout | ||||||||||||||||||||||||
Adjusted EBITDA $M(1) | 33% | $ | 460 | $ | 520 | $ | 600 | $ | 618 | 200% | ||||||||||||||||||||
Adjusted EBITDA Margin(2) | 33% | 14% | 14.9% | 16% | 16.9% | 200% | ||||||||||||||||||||||||
Adjusted Free Cash Flow Conversion(3) | 33% | 80% | 90% | 110% | 116% | 200% |
(1) |
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(2) |
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(3) | “Adjusted Free Cash Flow” is defined as net cash provided by operating activities less expenditures for property plant and equipment adjusted for cash paid for reorganizational items, cash paid for repositioning charges, cash paid for acquisition and divestitures, cash paid for legacy environmental costs and cash flows associated with company invoice factoring programs. Adjusted Free Cash Flow Conversion is defined as Adjusted Free Cash Flow divided by Adjusted Net Income. Adjusted Net Income is defined as our |
The aggregate resultIndividual Performance. For 2021, the ICP payouts under the Individual Performance Portion, which represented 25% of the Company Performance Portion was a payout of 118.2% of the target ICPaward opportunity, reflecting our strong performance in 2018 against challenging goals.
The individual performance portion of the ICP contained a discretionary elementwere based on the Compensation Committee’s and the Board’s assessment of each executive’s individual performance against their objectives established at the beginning of the fiscal year specifically related to the categories of differentiated technology, global presence and capabilities innovation, and(operational excellence), customer experience. This assessment was conducted in consultationexperience with our Committee Chair and Chairpersoneach such goal comprising 15% of the Board with respect to the performance of our Chief Executive Officer and with our Chief Executive Officer with respect to the performanceIndividual Performance Portion, as well as pre-established strategic goals which comprised 10% of the other Named Executive Officers. With regard toIndividual Performance Portion. Individual process objectives for the other Named Executive Officers, individual objectivesnamed executive officers are typically developed during the Company’s annual strategic planning to ensure rigor and business alignment, and the year-end performance assessment is performed using a formal process that matches actual goalsperformance and behaviors against established expectations. The Compensation Committee determined that with regard to the 25% discretionary element
Each of the ICP, Messrs. Rabiller, Gili, Balis, Maironi, and Mabru earned 146%, 146%, 116%, 146%, and 103%, respectively, which is then weighted with the Company Performance Portion.
The 2018 annual cash payments paid to our Named Executive Officers under the ICP arenamed executive officers had individualized performance goals for 2021 as follows:
Named Executive Officer | 25% Individual ICP Portion | 75% Company ICP Portion | 2018 Total ICP Payout | |||||||||||||||||||||
Target ($) | Earned ($) | Target ($) | Earned ($) | Earned ($) | Payout as % Target (%) | |||||||||||||||||||
Olivier Rabiller | 118,145 | 172,491 | 354,434 | 418,942 | 591,433 | 125 | ||||||||||||||||||
Alessandro Gili(1) | 101,635 | 148,311 | 304,905 | 360,398 | 508,709 | 125 | ||||||||||||||||||
Craig Balis | 43,243 | 50,315 | 129,729 | 153,340 | 203,655 | 117 | ||||||||||||||||||
Jérôme Maironi | 52,917 | 77,094 | 158,751 | 187,644 | 264,738 | 125 | ||||||||||||||||||
Thierry Mabru | 42,016 | 43,314 | 126,049 | 148,990 | 192,304 | 114 |
• | Mr. |
Mr. Deason’s goals consisted of completing the Company’s business acceleration; ensuring a successful Emergence with a stable capital structure and investor relations function; strengthening employee engagement; filling critical roles within the Company; developing a succession plan strategy; and increasing functional productivity within the Company; and performing the day-to-day requirements of the job, including delivering on the Company’s AOP and STRAP.
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In February 2019,Mr. Balis’ goals consisted of ensuring the flawless launch of new technologies; timely implementing elements of new products; delivering engineering transformation; planning and executing the Company’s energy management plan; reducing overall development costs; and performing the day-to-day requirements of the job, including delivering on the Company’s AOP and STRAP.
Mr. Mabru’s goals consisted of ensuring successful launches of new technologies with no capacity issues; revamping the Company’s end-to-end supply chain; transforming the Garrett Quality management system; driving the deployment of the GEM and its functions; accelerating the digitization and automation of production; driving Capex efficiency metrics; optimizing indirect manufacturing costs; and performing the day-to-day requirements of the job, including delivering on the Company’s AOP and STRAP.
Mr. Maironi’s goals consisted of completing the Company’s business acceleration, including ensuring a successful Emergence and overseeing compliance processes for the Company; ensuring proper government relations; developing and implementing global internal policies that match international standards; reviewing and streamlining the Company’s corporate governance and risk management strategies; and performing the day-to-day requirements of the job, including delivering on the Company’s AOP and STRAP.
The Individual Performance assessment was conducted by our Compensation Committee after taking into consideration industryin consultation with the Board with respect to the performance of our Chief Executive Officer and market data, determinedwith the Board and our Chief Executive Officer with respect to increase the 2019performance of the other named executive officers, leading to a rating and a recommended individual payout. The Company Performance Portion and the Individual Performance Portion for each named executive officer are weighted 75% and 25%, respectively, to determine the total ICP targetpayout for each named executive officer.
The 2021 annual incentive percentages for Mr. Rabillercash payments paid to 125% and Mr. Gili to 80%. Theour named executive officers under the ICP target annual incentive percentages for the remaining Named Executive Officers will remain unchanged for 2019.are as follows:
Named Executive Officer | 2021 Total ICP Payout | |||||||||
Earned ($) | Payout as % Target (%) | |||||||||
Olivier Rabiller | 2,215,803 | 180.0 | % | |||||||
Sean Deason | 866,953 | 173.8 | % | |||||||
Craig Balis | 453,009 | 172.5 | % | |||||||
Thierry Mabru | 471,966 | 177.5 | % | |||||||
Jérôme Maironi | 560,106 | 175.0 | % |
The actual annual cash payments payable for 20182021 under the ICP based on the achievement of the Company Performance Portion are set forth in the Summary Compensation Table below in the column titled“Non-Equity Incentive Plan Compensation,” and the portion of the cash payment based on individual performance is set forth in the column titled “Bonus.Compensation.”
Equity Awards
The goal of our long-term, equity-based incentive awards is to align the interests of our Named Executive Officersnamed executive officers with the interests of our stockholders. Because vesting is based on continued service, our equity-based incentives also encourage the retention of our Named Executive Officersnamed executive officers during the award vesting period. The following discussion touches upon
Management Side Letters
Pursuant to the grantterms of equity awards by Honeywell prior to theSpin-Off,the grant of Garrett equity awards at2018 Plan and following theSpin-Off and the conversion of Honeywell equity awards into Garrett equity awards in connection with theSpin-Off.
Honeywell Long-Term Incentive Company’s Emergence, our named executive officers (except for Mr. Deason, as he did not hold unvested stock-based compensation awards at the time of Emergence) entered into management side letters (“LTI”Side Letters”) Compensation. Priorthat provided that each recipient would receive a cash payment in respect of, and in full satisfaction of, certain of the recipient’s outstanding equity-based awards under the 2018 Plan as of two days prior to the Plan Effective Date. The Side Letters also provided that the recipient will repay the Spin-Off,after-tax Honeywell generally granted annual LTI awardsvalue of such cash payment if the recipient’s employment is terminated by the Company for “cause” or by the recipient without “good reason” (each as defined in February of each year during an open trading window period following the release of Honeywell’s financial results for the preceding fiscal year. In determining the size of annual LTI awards for executives, Honeywell considered (1) an executive’sSide Letters) prior year performance, (2) his or her leadership impact and expected contribution toward the future performance of Honeywell or a business unit, (3) the relative size of previous LTI grants awarded to the executive, (4) the value of LTI awarded to executives in comparable peer group positions, and (5) the vested and unvested equity held by the applicable executive.
Honeywell 2018 Stock Options and RSUs. Based on their assessment using the criteria noted above, on February 27, 2018, the Honeywell MDCC awarded Mr. Rabiller stock options (“Honeywell Stock Options”) covering 15,800 shares of Honeywell stock that were scheduled to vest in equal 25% installments over a four-year period, subject to continued employment on the applicable vesting date, and expire ten years from the date of grant, as well as 2,400 Honeywell restricted stock units (“Honeywell RSUs”) that were scheduled to vest in substantially equal installments on the second, fourth and sixth anniversaries of the grant date, subject to continued employment on the applicable vesting date.
The other Named Executive Officers, other than Mr. Gili, were awarded annual Honeywell Stock Options and Honeywell RSUs on the same basis as other similarly situated executives of Honeywell, with individual award decisions made by Honeywell management based on LTI award pools approved by the Honeywell MDCC. Honeywell Stock Options granted to the other Named Executive Officers in 2018 were scheduled to vest in equal 25% installments over a four-year period. Honeywell RSUs granted to the other Named Executive Officers were scheduled to vest in full on the thirdfirst anniversary of the grant date.
Additionally, pursuantPlan Effective Date. For a description of each participating named executive officer’s cash payment amount under the terms of his respective Side Letter, see “Narrative Disclosure to his employment agreement, Mr. Gili received an awardSummary Compensation Table and Grants of 12,300 Honeywell RSUs which were scheduled to vest in two equal 50% installments on each of the first and second anniversaries of the date of grant, subject to continued employment through each vesting date.Plan-Based Awards Table” below.
The following table summarizes the number and grant date fair value of Honeywell Stock Options and Honeywell RSUs awarded to our Named Executive Officers:
Named Executive Officer | Options Awarded (#) | Stock Options Grant Date Value ($) | RSUs Awarded (#) | RSUs Grant Date Fair Value ($) | ||||||||||||
Olivier Rabiller | 15,800 | 373,670 | 2,400 | 372,936 | ||||||||||||
Alessandro Gili | — | — | 12,300 | 1,911,297 | ||||||||||||
Craig Balis | 11,800 | 279,070 | 1,690 | 262,609 | ||||||||||||
Jérôme Maironi | 11,200 | 264,880 | 1,600 | 248,624 | ||||||||||||
Thierry Mabru | 8,700 | 205,755 | 1,250 | 194,238 |
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Converted Awards inSpin-Off.2021 Long Term Incentive Plan (“LTI Plan”)
Honeywell Stock Options. In connection with theSpin-Off, any Honeywell Stock Options held by our employees that were unvested as of October 1, 2018 (the “Distribution Date”) were terminated and canceled in accordance with their terms as of the Distribution Date and, in respect of such canceled stock options, we issued restricted stock units (“Company RSUs”) that will vest in accordance with the same vesting schedule that appliedPursuant to the corresponding Honeywell Stock Options. Honeywell Stock Options that were vested as of the Distribution Date remain outstanding with Honeywell until exercised by the employee or normal expiration, subject to the terms of the applicable Honeywell equity incentive plan and related grant agreement under which such options were granted.
In respect of Honeywell Stock Options held by our employees that were granted prior to 2018 and remained unvested as of the Distribution Date, the initial value of the new Company RSUs was determined based on the excess of the “regular way” (i.e., after theSpin-Off) closing price of Honeywell common stock subject to each such option immediately prior to the Distribution Date less the exercise price of the applicable option, while the replacement value in respect of unvested Honeywell Stock Options held by our employees that were granted in 2018 was based on the formula used to determine the value of the Honeywell stock options at the time of grant. The number of Company RSUs issued was determined based on the “when issued” closing price of our shares immediately prior to the Distribution Date (rounded up to the nearest whole share).
Honeywell RSUs. In connection with theSpin-Off, any Honeywell RSUs held by our employees that were outstanding and unvested as of the Distribution Date were terminated and canceled in accordance with their terms and, in respect of each such canceled Honeywell RSU award, we replaced the economic value by issuing Company RSUs that will vest in accordance with the same vesting schedule that applied to the corresponding Honeywell RSUs. In respect of such Company RSUs, the initial value was determined based on the “regular way” closing price of Honeywell common stock subject to such Honeywell RSUs immediately prior to the Distribution Date, with the number of Company RSUs determined based on the “when issued” closing price of SpinCo shares immediately prior to the Distribution Date (rounded up to the nearest whole share).
Honeywell Performance Plan Awards. In connection with theSpin-Off, Honeywell Performance Plan awards for both the 2017-2019 and 2018-2020 performance periods that were held by our employees as of the Distribution Date were terminated and canceled in accordance with their terms. With respect to the 2017-2019 performance period only, we replaced the economic value of such canceled awards by issuing Company RSUs that will vest in March 2020, consistent with the vesting schedule that applied to the corresponding Honeywell Performance Plan Performance Stock Units (“PSUs”) or cash units, as applicable. In respect of such Company RSUs, the initial value was determined based on Honeywell’s latest estimate of performance against plan metrics for the performance period in progress as of the Distribution Date, with the number of Company RSUs determined based on the “when issued” closing price of our shares immediately prior to the Distribution Date (rounded up to the nearest whole share). We expect to replace the canceled awards for the 2018-2020 Honeywell Performance Plan.
Rabiller Honeywell PRSUs. Additionally, Mr. Rabiller’s unvested Honeywell 2016 performance-based RSUs (“Performance RSUs”) were terminated and canceled in accordance with their terms, and we replaced the economic value with a grant of Company RSUs that will vest in accordance with the same time-based vesting schedule that applied to the Honeywell Performance RSUs. In respect of such Company RSUs, the initial value was determined based on Honeywell’s relative total shareholder return over a truncated performance period ending immediately prior to the Distribution Date and the “regular way” closing price of Honeywell common stock subject to the Performance RSUs immediately prior to the Distribution Date, with the number of Company RSUs determined based on the “when issued” closing price of our shares immediately prior to the Distribution Date (rounded up to the nearest whole share).
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During 2018, in replacement of the Honeywell equity awards described above, we made the following grants of Company RSUs to our Named Executive Officers. The Company RSUs listed below vest in accordance with the applicable vesting schedule described above and were based on the intrinsic value of Honeywell awards subject to conversion, with the exception of Honeywell Stock Options issued in 2018, which were converted based on their grant date fair value.
Named Executive Officer | Replacement Company RSUs Awarded (#) | Replacement Company RSUs Grant Date Fair Value($) | ||||||
Olivier Rabiller | 291,042 | 1,953,633 | ||||||
Alessandro Gili | 111,139 | 1,411,710 | ||||||
Craig Balis | 221,880 | 1,444,090 | ||||||
Jérôme Maironi | 175,678 | 1,135,522 | ||||||
Thierry Mabru | 165,374 | 1,127,123 |
Honeywell Growth Plan. The Honeywell Performance Plan replaced the prior cash-based Honeywell Growth Plan under whichnon-overlapping performance-contingent awards were made on a biennial basis, with payouts based on financial targets measured over atwo-year period. Because Growth Plan grants were made every other year, the Honeywell MDCC attributed half of the award value to each year of the performance cycle for purposes of compensation planning.
For the final 2016-2017 Growth Plan performance cycle, the calculated payout for the Honeywell Aerospace SBG, of which the Honeywell’s Transportation Systems business (the “Business”) was a part, was 36% of target. The following table summarizes the target number of Growth Plan Units (“GPUs”) granted to each Named Executive Officer, other than Mr. Gili, in February 2016, and the annualized value of the final earned awards attributed to 2017:
Named Executive Officer | # GPUs Awarded in 2016 (#) |
x | Annualized Unit Value($)(1) |
= | Annualized Target Award Value($) |
x | Final Pay Out Percentage (Aerospace) |
= | Earned Award Attributable to 2017($)(2) | |||||||||||||||||||||||||||
Olivier Rabiller | 6,000 | 50 | 300,000 | 36.0 | % | 108,000 | ||||||||||||||||||||||||||||||
Craig Balis | 3,450 | 50 | 172,500 | 36.0 | % | 62,100 | ||||||||||||||||||||||||||||||
Jérôme Maironi(3) | 4,000 | 50 | 200,000 | 103.0 | % | 206,000 | ||||||||||||||||||||||||||||||
Thierry Mabru | 2,600 | 50 | 130,000 | 36.0 | % | 46,800 |
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Under the deferred payout feature of the prior Growth Plan, 50% of the earned amounts for the final performance cycle of January 1, 2016 through December 31, 2017 was paid in March 2018. The liability for the final earned payment for the 2016-2017 Growth Plan performance cycle was assumed by the Company and was paid to eligible executives in the first quarter of 2019, subject to each suchnamed executive remaining employed by us as of the date of payment. Because these amounts were earned and determinable in 2017, SEC rules do not require us to disclose in the Summary Compensation Table the payouts made in March 2018 or March 2019.
Annual Equity Grants—Founders’ Grants. In addition, pursuant to the executives’officers’ offer letters or employment agreements, each entered into in connection with theSpin-Off,of Messrs. Rabiller, Gili,Deason, Balis, Maironi and Mabru are each
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is eligible for an annual grant of equity awards with an initial target opportunity of 325%350%, 182%170%, 200%, 189% and 160%, respectively, of the executive’s annual base salary, as well assalary. Under our LTI Plan, the Board granted awards, 50% in the form of PSUs and 50% in the form of RSUs to our named executive officers.
The PSUs will vest based on the achievement of Absolute TSR with stock price hurdles, Adjusted EBITDA $M and Adjusted EBITDA Margin %, weighted 60%, 20% and 20%, respectively. The Absolute TSR portion will vest over asign-ontwo-year grant of Companyperformance period from January 1, 2022 through December 31, 2023, and the portion based on Adjusted EBITDA $M and Adjusted EBITDA Margin will vest over a three-year performance period for from January 1, 2021 through December 31, 2023.
The RSUs valued at $4,300,000, $1,479,806, $800,000, $1,000,000 and $800,000, respectively, each of whichwill vest in twofive equal 50% installments on eachthe annual anniversary of the third and fourth anniversaries of theSpin-Off,grant date over five years, subject to continued employment throughemployment. The tables below set forth the number and value of each vesting date.equity award granted under the LTI Plan.
The Absolute TSR component is based on the achievement of stock price hurdles that are based on the average closing stock price calculated over any consecutive 30 trading-day period. Assessment will occur at the end of the performance period and the payout shall be based on the highest-ranking 30-day period. The maximum number of PSUs that may be earned under the LTI Plan is 100% of target. The Company determined that including an Absolute TSR component will serve as a powerful means to incentivize share price appreciation.
We made the following grants of PSUs and RSUs under the LTI Plan to our named executive officers in 2021:
Named Executive Officer | Aggregate Dollar- Denominated Value ($) | PSUs (#) | RSUs (#) | |||||||||
Olivier Rabiller | $ | 7,602,860 | 454,499 | 454,499 | ||||||||
Sean Deason | $ | 2,500,936 | 149,506 | 149,506 | ||||||||
Craig Balis | $ | 1,696,637 | 101,425 | 101,425 | ||||||||
Thierry Mabru | $ | 1,374,280 | 82,155 | 82,154 | ||||||||
Jérôme Maironi | $ | 1,803,722 | 107,826 | 107,827 |
Other HoneywellCompany Compensation and Benefit Programs for Fiscal 2021
In addition to the annual and long-term compensation programs described above, prior to theSpin-Off, Honeywell provided the Named Executive Officers with benefits, retirement plans and limited perquisites consistent with those provided to other Honeywell executives working in Switzerland, as described below.
Honeywell Transportation Systems Retention Program
In 2016, certain of the Named Executive Officers were eligible to participate in Honeywell’s employee retention program for key employees of Honeywell Transportation Systems pursuant to a retention letter entered into between the Named Executive Officer and Honeywell. Under the retention program, participants are eligible to receive a retention payment, payable in two installments, at the completion of each retention period, beginning on December 9, 2016 and ending on (i) February 28, 2018, for the first installment, and (ii) February 28, 2019, for the second installment. Based on individual and Honeywell or Company performance, as applicable, during the period between December 9, 2016 and February 28, 2019, the Company may increase the retention payments by up to 100%. Receipt of each installment of the retention payment is conditioned upon the Named Executive Officer’s continued employment through the end of each retention period and the Named Executive Officer meeting certain performance standards, as set forth in the executive’s applicable retention letter.
The following table sets forth the minimum and maximum retention payment opportunity for each installment, as well as the cash payment received from Honeywell for the retention period ending February 28, 2018, for the Named Executive Officers eligible to participate in this opportunity.
Named Executive Officer | Minimum Payment ($) | Maximum Payment ($) | 2018 Retention Payment ($) | |||||||||
Olivier Rabiller | 152,491 | 304,982 | 280,583 | |||||||||
Craig Balis | 87,682 | 175,365 | 161,336 | |||||||||
Thierry Mabru | 66,080 | 132,159 | 121,586 |
In connection with theSpin-Off, the Company assumed Honeywell’s obligations with respect to the retention payment for the retention period ending February 28, 2019.
Under the retention program, in the event of a qualifying termination of employment, the Named Executive Officers will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below.
Severance Benefits—Honeywell Executive Level Termination and Severance Policy—Switzerland
Prior to theSpin-Off, the Named Executive Officers were eligible to participate in a Honeywell sponsored severance plan, which provides for certain severance payments upon termination of employment without cause. The triggering events that would have resulted in the severance payments and benefits and the amount of those payments and benefits were selected to provide the participating executives with financial protection upon loss of employment in order to support Honeywell’s executive retention goals. In 2018, none of the Named Executive Officers were eligible to receive additional or enhanced severance payments or benefits in connection with a change in control under the severance plan; however, pursuant to the terms of their outstanding equity awards, prior to theSpin-Off, the Named Executive Officers were entitled to accelerated vesting of outstanding awards upon death, disability or, for awards issued after April 2014, upon a “double-trigger” termination within two years following a Change in Control.
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Retirement Plan
In 2018, our Named Executive Officers were eligible to participate in Honeywell’s Swiss pension scheme (Pensionskasse der Honeywell Schweiz) which provides retirement savings and risk benefits (i.e. ill health and death in service benefits) for all full-time employees. Mr. Balis previously accrued pension benefits under certain Honeywell U.S. pension plans while he was employed in the U.S. The material terms of these plans are explained in detail in the section entitled “Pension Benefits—Fiscal Year 2018.”
Beginning in 2019, the Named Executive Officers were eligible to participate in Garrett’s pension plan sponsored in Switzerland and named “Columna Sammelstiftung Client Invest Winterthur”.
Honeywell Supplemental Savings Plan
Mr. Balis has an account balance under the Honeywell Supplemental Savings Plan as a result of his prior service with Honeywell in the United States. This plan provides Honeywell executives with the opportunity to defer base salary that cannot be contributed to Honeywell’s 401(k) savings plan due to IRS limitations. These amounts are matched by Honeywell only to the extent required to make up for a shortfall in the available match under the 401(k) savings plan due to IRS limitations. Deferred compensation balances earn interest at a fixed rate based on Honeywell’s15-year cost of borrowing, which is subject to change on an annual basis. Consistent with the long-term focus of the executive compensation program, matching contributions are treated as if invested in Honeywell Common Stock. This plan is explained in detail in the section entitled “Nonqualified Deferred Compensation—Fiscal Year 2018.” In 2018, Mr. Balis did not contribute to the plan (and Honeywell did not make any matching contributions to his account); however, his account continued to earn interest under the plan. Mr. Balis elected to receive benefits under this plan in a lump sum in January of the year following his separation from service.
In connection with the Spin-Off, Mr. Balis’ account balance was transferred to Garrett’s Supplemental Savings Plan effective October 1, 2018, as described further in the section entitled “Nonqualified Deferred Compensation—Fiscal Year 2018.”
Other Company Compensation and Benefit Programs for Fiscal 2018
In addition to the annual and long-term compensation programs described above, after theSpin-Off,we provided the Named Executive Officersnamed executive officers with benefits and limited perquisites consistent with those provided to other Company executives, as described below.
Severance Benefits
Certain of our Named Executive Officers’named executive officers’ employment agreements and offer letters provide that the executive is eligible to receive severance payments upon a qualifying involuntary termination of employment, including in connection with a change in control of our Company (as opposed to solely upon a “single-trigger” change in control). Additionally, we maintain a severance policy under which our Named Executive Officersnamed executive officers are eligible to receive severance payments and benefits upon a qualifying termination, including in connection with a change in control. We believe that these protections serve to encourage continued attention and dedication to duties without distraction arising from the possibility of a change in control, and provide the business with a smooth transition in the event of such a termination of employment in connection with a transaction. These severance and change in control arrangements are designed to retain certain of our executives in these key positions as we compete for talented executives in the marketplace where such protections are commonly offered. For a detailed description of the severance provisions contained in our Named Executive Officers’named executive officers’ employment agreements and offer letters and our severance policy, see “Summary of Potential Payments and Benefits—Termination Events” below.
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Garrett Supplemental Savings Plan
We maintain the Garrett Supplemental Savings Plan for our executives in the United States. Effective as of the Spin-Off, Mr. Balis’ account balance under the Honeywell Supplemental Savings Plan was transferred to our Garrett Supplemental Savings Plan. This plan provides our executives with the opportunity to defer pre-tax compensation and incentive compensation that cannot be contributed to our 401(k) savings plan due to IRS limitations. These amounts may be matched by Garrett, and the amount of such matching contributions are at our discretion. Matching contributions, if any, are immediately vested. Deferred compensation balances earn interest through the Fidelity U.S. Bond Index Fund, which is subject to change on a daily basis. This plan is explained in detail in the section entitled “Nonqualified Deferred Compensation—FiscalCompensation-Fiscal Year 2018.2021.” Mr. Balis does not actively contribute to the plan (and we
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are not actively making any matching contributions to his account); however, his account continues to earn interest under the plan. Mr. Balis elected to receive benefits under this plan in a lump sum, which amount will be paid on the later of six months or in January of the year following his separation from service.
Retirement Plan
Our named executive officers are eligible to participate in Garrett’s pension plan sponsored in Switzerland and named “Columna Sammelstiftung Client Invest Winterthur”. For a detailed description of Garrett’s Swiss pension plan, see “Pension-Benefits-Fiscal Year 2021” below.
Comprehensive Benefits Package
We provide a competitive benefits package to all full-time employees, including the Named Executive Officers, thatnamed executive officers, which includes life insurance benefits.
Other Benefits and Perquisites
In 2018,2021, the Named Executive Officersnamed executive officers were eligible for benefits under the Company’s car policy (in the form of a company car or cash allowance) as it generally applies to executives in Switzerland, as well as reimbursements associated with legal representation, family, tax, legal and financial planning expenses. In 2018,2021, we also provided Messrs. Gili and MaironiMr. Deason with relocation assistancetuition reimbursement in connectionan amount equal to $147,171 to cover his children’s international school fees in accordance with each executive’s relocation to Switzerland.the terms of his current employment agreement with the Company.
Additional Compensation Components
In the future, we may provide different and/or additional compensation components, benefits and/or perquisites to our Named Executive Officersnamed executive officers to ensure that we provide a balanced and comprehensive compensation structure. We believe that it is important to maintain flexibility to adapt our compensation structure to properly attract, motivate and retain the top executive talent for which we compete. All future practices regarding compensation components, benefits and/or perquisites will be subject to periodic review by the Compensation Committee.
Company Compensation Programs for Fiscal 2019
In 2019, the Compensation Committee adopted the 2019 ICP pursuant to which we will grant ICP awards based in part on the achievement of objective Company performance criteria, which will represent 75% of each award opportunity, and in part on the achievement of individual performance, which will represent the remaining 25% of each award opportunity. Under our 2019-2021 Long-Term Incentive Plan (“LTI Plan”), the Compensation Committee has granted awards, 50% in the form of Performance Stock Units (“PSUs”), 25% in the form of Restricted Stock Units (“RSUs”), and 25% in the form of stock options.
The Company performance goals for both the 2019 ICP and the 2019-2021 PSUs are based on organic revenue growth and adjusted EBITDA, as was the case for the 2018 ICP, and a new metric for 2019, levered free cash flow, each weighted 20%, 40%, and 40%, respectively. The company performance goals for the 2019 ICP are based on the 2019 fiscal year performance period and the goals for the 2019-2021 PSUs are based on a three-year performance period ending December 31, 2021.
Management and the Compensation Committee understand the potential for concern about duplicating metrics under both performance-based incentive plans and carefully considered this factor when implementing such a program design. The Compensation Committee weighed this against the benefits of utilizing these metrics for both 2019 incentive awards and ultimately decided to structure both performance-based incentive plans around these key priorities in order to emphasize the importance of delivering on the commitments the Company made to its financial stakeholders in connection with theSpin-Off, which are to drive profitabletop-line growth and use cash flows to deleverage the Company. The Compensation Committee believes these metrics are aligned with feedback received from financial stakeholder outreach discussions and are critical at this time for executing the Company’s near-term strategy, which will position us to be successful over the long term.
We are committed to ensuring that our programs continually evolve as necessary to support our business strategy and organizational context. As such, our 2019 program has already evolved from our 2018 program to incorporate a third financial metric, levered free cash flow, and we have shifted the weightings of Company financial performance metrics.
The Compensation Committee is currently evaluating and determining the metrics that best align with the Company’s long-term strategy for inclusion in its future incentive compensation plans. The Compensation Committee is focused on, among other things:
differentiating the metrics under the 2020-2022 LTI Plan from the 2020 ICP,
evaluating the best measures to support the Company’s long-term strategy,
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rewarding long-term stockholder value creation,
minimizing an incentive to take excessive risk, and
maintaining good governance.
We expect to analyze how different performance metrics align with short- and long-term stockholder value creation, both for our own organization as well as more generally within our industry, and how those metrics correlate to our financial stakeholders’ priorities for our Company. We also will continue to review the performance metrics utilized by our peer group. Finally, as we establish the performance metrics for the 2020 – 2022 LTI Plan and the 2020 ICP, we expect to analyze the merits of independent metrics versus modifier structures, and absolute goals versus relative goals.
Tax and Accounting Considerations
Section 409A of the Internal Revenue Code
Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our Named Executive Officers,named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A of the Code.
Section 280G of the Internal Revenue Code
Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% penalty on the individual receiving the excess payment.
Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess
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parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. In approving the compensation arrangements for our Named Executive Officersnamed executive officers in the future, the Compensation Committee will consider all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G of the Code. However, the Compensation Committee may, in its judgment,authority under the applicable compensation plans, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.
Accounting Standards
ASC Topic 718 requires us to calculate the grant date “fair value” of our stock-based awards using a variety of assumptions. ASC Topic 718 also requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of restricted stock, RSUs and performance units under our equity incentive award plans will be accounted for under ASC Topic 718. We have adopted ASU2016-09, Improvements to Employee Share-Based Payment Accounting, and elected to account for forfeitures of awards at the time of grant. The Compensation Committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align the accounting expense of our equity awards with our overall executive compensation philosophy and objectives.
Responsible Equity Grant Practices
Our equity grant practices ensure all grants are made on fixed grant dates and at exercise prices or grant prices equal to the fair market value of our Common Stock on such dates. Equity grants are awarded under our
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stockholder-approved plans and we do not backdate, reprice or grant equity awards retroactively. Our stockholder-approved equity plans prohibit repricing of awards or exchanges of underwater options for cash or other securities without stockholder approval.
Our policy on securities trading prohibits our directors, officers and employees from trading in our securities during certain designated blackout periods and otherwise while they are aware of materialnon-public information.
Prohibition on Hedging and Pledging
Our securities trading policy also prohibits hedging by directors and executive officers, and their Related Prohibited Persons,Parties (as defined in such policy), from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and prohibits short sales, pledging and buyingexchange funds) or selling puts, calls, optionsotherwise engaging in transactions that are designed to or other derivative securitieshave the effect of hedging or offsetting any decrease in the market value of the Company’s equity securities whether they are (1) granted by the Company by directors, officers and employees, and their Relatedas part of the person’s compensation; or (2) otherwise held, directly or indirectly. See “Additional Prohibited Persons. See “Prohibition of Hedging or Pledging the Company’s Securities”Transactions” above for more information about the securities trading policy.
We expect to adoptmaintain a clawback policy that requires certain cash and equity incentive compensation to provide forbe repaid to the cancellation or recovery of compensation of our employeesCompany by its executive officers in the event of specified events, which may include certain financial restatementsthe Company being required to prepare an accounting restatement as a result of intentional or covenant breaches.grossly negligent misconduct by such executive officer. The clawback policy also authorizes the Board, or a designated committee, to recoup bonus or incentive compensation (whether cash-based or equity-based) such executive officer received during the three fiscal years preceding the year the restatement is determined to be required, to the extent such bonus or incentive compensation exceeds what the executive officer would have received based on an applicable restated performance measure or target.
Stock Ownership Guidelines and Broad-Based Stock Ownership
In addition to the elements of executive officer compensation described above, we have adopted stock ownership guidelines pursuant to which our Named Executive Officersnamed executive officers are required to hold a number of shares of our common
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stock having a market value equal to or greater than a multiple of each executive’s base salary. Until the applicable ownership guideline is achieved, each Named Executive Officernamed executive officer is required to retain at least 50% of the shares acquired from Company equity awards after payment (or withholding) of the exercise price, if applicable, and taxes. Once the applicable ownership guideline is achieved, the aforementioned retention ratio will no longer apply. If a Named Executive Officer’snamed executive officer’s share ownership subsequently falls back below the applicable ownership guideline and remains below the ownership guideline on a continuous basis for a period of more than 24 months, the Named Executive Officernamed executive officer will be required to comply again with the retention ratio until such time as the Named Executive Officernamed executive officer again achieves the ownership guidelines.
Our ownership guidelines are shown below. We believe the use of a retention ratio appropriately balances the need to work toward achieving these requirements with standard liquidity needs our Named Executive Officersnamed executive officers may face. As a result of the cancellation and cash out of their equity awards under the 2018 Plan due to our Emergence, none of our named executive officers met their ownership requirements under our ownership guidelines, as of December 31, 2021. See “Elements of Executive Compensation—Management Side Letters” for a detailed discussion of cancelled awards under the 2018 none ofPlan. Also, our Named Executive Officers have metownership guidelines do not take into account PSUs held by each named executive officer, only their requirements because theSpin-Off occurred in October 2018RSUs and they are continuing to grow their equity positions in the Company.freely tradeable shares.
Named Executive Officer | Ownership Guideline as a Multiple of Base Salary | |
Olivier Rabiller | 5x | |
| 3x | |
Craig Balis | 3x | |
Thierry Mabru | 2x | |
Jérôme Maironi | 3x | |
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The information contained in this Report of the Compensation Committee shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act (except to the extent that we specifically incorporate this information by reference).
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis and, based on such review and discussions, recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.statement and incorporated by reference in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2021.
COMPENSATION COMMITTEE
Carsten J. ReinhardtJulia Steyn (Chair)
Carlos M. CardosoRobert Shanks
Maura J. Clark
Scott A. TozierSteven Silver
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2018 SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of our Named Executive Officersnamed executive officers for the yearyears ended December 31, 2018.2021, 2020 and 2019.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Olivier Rabiller President and Chief Executive Officer | 2018 | 639,476 | 597,178 | 5,251,916 | 373,670 | 418,942 | 127,988 | 25,053 | 7,434,223 | 2021 | 984,801 | — | 7,602,860 | — | 2,215,802 | 165,233 | 22,650 | 10,991,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alessandro Gili Senior Vice President and Chief Financial Officer | 2018 | 316,198 | 148,311 | 3,331,519 | — | 360,398 | 27,141 | 153,374 | 4,336,941 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 905,670 | — | 3,582,093 | — | — | 114,388 | 22,016 | 4,624,167 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 897,923 | 276,011 | 2,830,817 | 790,273 | 452,735 | 92,521 | 29,221 | 5,369,501 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sean Deason Chief Financial Officer | 2021 | 623,707 | — | 2,500,936 | — | 866,853 | 59,590 | 174,189 | 4,225,376 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 314,773 | 1,223,105 | — | — | — | 28,916 | 302,340 | 1,869,134 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Craig Balis Senior Vice President and Chief Technology Officer | 2018 | 390,764 | 272,095 | 1,030,513 | 279,070 | 153,340 | 187,932 | 106,704 | 2,420,418 | 2021 | 437,690 | — | 1,696,637 | — | 453,008 | 122,457 | 31,260 | 2,741,052 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | �� | 402,520 | — | 914,285 | — | — | 92,872 | 27,284 | 1,436,961 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 402,431 | 158,707 | 852,143 | 200,710 | 76,793 | 78,306 | 139,763 | 1,908,853 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thierry Mabru Senior Vice President, Integrated Supply Chain | 2021 | 443,161 | — | 1,374,280 | — | 471,965 | 101,235 | 22,650 | 2,413,292 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 407,552 | — | 838,186 | — | — | 79,660 | 22,016 | 1,347,414 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 407,461 | 119,604 | 672,721 | 162,570 | 77,971 | 65,674 | 20,826 | 1,526,827 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jérôme Maironi Senior Vice President, General Counsel, and Corporate Secretary | 2018 | 429,418 | 77,094 | 1,208,459 | 264,880 | 187,644 | 17,944 | 231,738 | 2,417,177 | 2021 | 492,401 | — | 1,803,722 | — | 560,106 | 93,139 | 28,676 | 2,978,043 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thierry Mabru Senior Vice President, Integrated Supply Chain | 2018 | 379,693 | 222,685 | 962,142 | 205,755 | 148,990 | 65,034 | 21,775 | 2,006,074 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 452,835 | — | 989,904 | — | — | 70,823 | 42,856 | 1,556,418 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 452,735 | — | 875,153 | 213,377 | 122,312 | 65,732 | 210,923 | 1,940,232 |
(1) | Base salary and other compensation values in this Summary Compensation Table originally denoted in local currency (CHF) have been converted to USD using the average exchange rate for the year-ended December 31, |
(2) | Amounts |
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(3) |
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Named Executive Officer | Honeywell RSUs (#) | Grant Date Fair Value ($) | ||||
Olivier Rabiller | 2,400 | 372,936 | ||||
Alessandro Gili | 12,300 | 1,911,297 | ||||
Craig Balis | 1,690 | 262,609 | ||||
Jérôme Maironi | 1,600 | 248,624 | ||||
Thierry Mabru | 1,250 | 194,238 |
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Named Executive Officer | Company RSUs (#) | Grant Date Fair Value ($) | ||||
Olivier Rabiller | 232,440 | 4,126,972 | ||||
Alessandro Gili | 79,990 | 1,420,222 | ||||
Craig Balis | 43,250 | 767,904 | ||||
Jérôme Maironi | 54,060 | 959,835 | ||||
Thierry Mabru | 43,250 | 767,904 |
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Item | Olivier Rabiller | Alessandro Gili | Craig Balis | Jérôme Maironi | Thierry Mabru | |||||||||||||
Car Allowance or Car Lease ($) | 21,171 | 12,350 | 21,171 | 9,703 | 20,466 | |||||||||||||
Family-Related Allowances ($) | — | — | 53,592 | — | — | |||||||||||||
Relocation Assistance ($) | — | 121,368 | — | 173,757 | — | |||||||||||||
Excess Liability Insurance ($) | — | — | — | 292 | — | |||||||||||||
Tax Planning ($) | 3,882 | 19,656 | 31,941 | 47,986 | 1,309 | |||||||||||||
Total ($) | 25,053 | 153,374 | 106,704 | 231,738 | 21,775 |
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(4) | Amounts represent the payouts earned under our ICP in 2021. For 2021, the awards under the ICP were based on the named executive officer’s target incentive, and annual base salary as of September 1, 2021. See “Elements of Executive Compensation—Short-Term Incentive Compensation Plan (“ICP”) Awards” for a detailed discussion of the 2021 ICP. |
(5) | The change in pension value includes the increase in vested benefits in 2021 under our Swiss pension scheme attributable to employer contributions and allocated interest. See “Nonqualified Deferred Compensation—Fiscal Year 2021” for a detailed discussion of the Garrett Supplemental Savings Plan and “Pension Benefits—Fiscal Year 2021” for a detailed discussion of the Garrett Swiss Plan. |
(6) | For 2021, “All Other Compensation” consists of the following: |
Item | Olivier Rabiller | Sean Deason | Craig Balis | Thierry Mabru | Jérôme Maironi | |||||||||||||||
Car Allowance or Car Lease ($) | 22,650 | 22,650 | 22,650 | 22,650 | 22,650 | |||||||||||||||
Tuition Reimbursement ($) | — | 147,171 | — | — | — | |||||||||||||||
Tax Planning ($) | — | 4,368 | 8,610 | — | 6,026 | |||||||||||||||
Total ($) | 22,650 | 174,189 | 31,260 | 22,650 | 28,676 |
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GRANTS OF PLAN-BASED AWARDS—FISCAL YEAR 20182021
The following table shows all plan-based awards which Honeywell and the Company granted to the Named Executive Officersnamed executive officers during 2018. The share numbers and values shown in the following table with respect to Honeywell equity awards granted prior to theSpin-Off do not reflect the adjustments of such awards that occurred in connection with theSpin-Off, which was effective October 1, 2018. See the section above entitled “– Converted Awards inSpin-Off” for a description of the adjustment of Honeywell equity awards in connection with theSpin-Off.2021.
Name | Grant Date | Company | Estimated Future ($) | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Award Type | Performance Plan | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Olivier Rabiller | (2) | 177,217 | 354,434 | 708,868 | — | — | — | — | — | — | — | ICP(2) | — | — | 307,750 | 1,231,002 | 2,462,003 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | Honeywell | — | — | — | 288 | 4,600 | 9,200 | — | — | — | 752,008 | PSU | LTI Plan | 05/26/2021 | (3) | — | — | — | 136,350 | 454,499 | — | — | 3,662,353 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (3)(4) | Honeywell | — | — | — | — | — | — | — | 15,800 | 155.39 | 373,670 | (5) | RSU | LTI Plan | 05/26/2021 | (4) | — | — | — | — | — | — | 454,499 | 3,940,506 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (6)(4) | Honeywell | — | — | — | — | — | — | 2,400 | — | — | 372,936 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/1/2018 | (8) | Garrett | — | — | — | — | — | — | 232,440 | — | — | 4,126,972 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alessandro Gili | (2) | 152,453 | 304,905 | 609,810 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/1/2018 | (9)(4) | Honeywell | — | — | — | — | — | — | 12,300 | — | — | 1,911,297 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/1/2018 | (8) | Garrett | — | — | — | — | — | — | 79,990 | — | — | 1,420,222 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sean Deason | ICP(2) | — | — | 124,741 | 498,966 | 997,932 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PSU | LTI Plan | 05/26/2021 | (3) | — | — | — | 44,852 | 149,506 | — | — | 1,204,719 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU | LTI Plan | 05/26/2021 | (4) | — | — | — | — | — | — | 149,506 | 1,296,217 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Craig Balis | (2) | 64,865 | 129,729 | 259,458 | — | — | — | — | — | — | — | ICP(2) | — | — | 65,653 | 262,614 | 525,227 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (10) | Honeywell | 15,625 | 250,000 | 500,000 | — | — | — | — | — | — | — | PSU | LTI Plan | 05/26/2021 | (3) | — | — | — | 30,428 | 101,425 | — | — | 817,283 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (3)(4) | Honeywell | — | — | — | — | — | — | — | 11,800 | 155.39 | 279,070 | (5) | RSU | LTI Plan | 05/26/2021 | (4) | — | — | — | — | — | — | 101,425 | 879,355 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (11)(4) | Honeywell | — | — | — | — | — | — | 1,690 | — | — | 262,609 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/1/2018 | (8) | Garrett | — | — | — | — | — | — | 43,250 | — | — | 767,904 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thierry Mabru | ICP(2) | — | — | 66,474 | 265,896 | 531,793 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PSU | LTI Plan | 05/26/2021 | (3) | — | — | — | 24,647 | 82,155 | — | — | 662,005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU | LTI Plan | 05/26/2021 | (4) | — | — | — | — | — | — | 82,154 | 712,275 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jérôme Maironi | (2) | 79,376 | 158,751 | 317,502 | — | — | — | — | — | — | — | ICP(2) | — | — | 80,015 | 320,060 | 640,121 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (10) | Honeywell | 14,688 | 235,000 | 470,000 | — | — | — | — | — | — | — | PSU | LTI Plan | 05/26/2021 | (3) | — | — | — | 32,348 | 107,826 | — | — | 868,862 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (3)(4) | Honeywell | — | — | — | — | — | — | — | 11,200 | 155.39 | 264,880 | (5) | RSU | LTI Plan | 05/26/2021 | (4) | — | — | — | — | — | — | 107,827 | 934,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (11)(4) | Honeywell | — | — | — | — | — | — | 1,600 | — | — | 248,624 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/1/2018 | (8) | Garrett | — | — | — | — | — | — | 54,060 | — | — | 959,835 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thierry Mabru | (2) | 63,025 | 126,049 | 252,098 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (10) | Honeywell | 11,563 | 185,000 | 370,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (3)(4) | Honeywell | — | — | — | — | — | — | — | 8,700 | 155.39 | 205,755 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | (11)(4) | Honeywell | — | — | — | — | — | — | 1,250 | — | — | 194,238 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/1/2018 | (8) | Garrett | — | — | — | — | — | — | 43,250 | — | — | 767,904 | (7) |
(1) | The amounts shown represent the |
(2) | The amounts shown represent the range of potential payouts under the |
(3) | On |
(4) |
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
The material terms of the employment agreements and/or offer letters with each of our Named Executive Officers,named executive officers, as in effect in 2018 following theSpin-Off,2021, are described below.
President and Chief Executive Officer—Olivier Rabiller.Rabiller
On May 2, 2018, Honeywell entered into an offer letter with Mr. Rabiller appointing him as President and Chief Executive Officer of the Company, which became effective upon the completion of theSpin-Off. The letter provides Mr. Rabiller with an annual base salary of $889,786 (which was $984,801 in 2021) and an annual cash incentive target opportunity under the ICP equal to 100% of his annual base salary. Under Mr. Rabiller’s offer letter, the 2018 ICP award will be prorated based on Mr. Rabiller’s target incentive beforesalary (which was 125% in 2021), and after theSpin-Off and the number of days in the year such target incentive was in effect. For 2018, the ICP target incentive for Mr. Rabiller while he was an executive of Honeywell was equal to 40%other elements of his annual base salary.compensation.
Additionally, under the offer letter, Mr. Rabiller is eligible for an annual grant of equity awards with an initial target opportunity of 325% of annual base salary.salary (which was 350% in 2021). Mr. Rabiller’s annual equity award will be determined by the Board and will be based on his individual performance.
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Further, in connection with the successful completion of theSpin-Off and pursuant to his offer letter, Mr. Rabiller received a grant of Company RSUs valued at $4,300,000,$4,300,000. However, in connection with the Company’s Emergence, Mr. Rabiller entered into a Side Letter, pursuant to which vestshis outstanding equity-based and cash-based awards under the 2018 Plan were cancelled and he received a cash payment of $2,848,700 in two equal installments on eachsatisfaction of such cancelled awards (which was originally denoted in local currency (CHF) and converted to USD using then-current exchange rate of 1 USD to 0.9094 CHF). See “Elements of Executive Compensation—Management Side Letters” for a detailed discussion of the third and fourth anniversaries of theSpin-Off, subject to continued employment through each vesting date.Side Letters.
In addition, Mr. Rabiller is eligible to receive vacation benefits in accordance with Company policy.
In the event of Mr. Rabiller’s involuntary termination of employment without cause, he will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below. Mr. Rabiller’s offer of employment is also contingent upon his execution of the Company’s intellectual property andnon-competition agreements, which includetwo-year post-terminationnon-competition andnon-solicitation restrictions and customary confidentiality provisions.
Senior Vice President and Chief Financial Officer—Alessandro Gili.Officer-Sean Deason
On May 2, 2018, Honeywell Technologies29, 2020, the Company and Garrett Motion Sàrl a subsidiary of Honeywell, entered into an employment agreement with Mr. GiliDeason appointing him as Senior Vice President and Chief Financial Officer of the Company.Company effective June 15, 2020. The agreement provides Mr. GiliDeason with an annual base salary of $542,054$606,235 (which was $623,707 in 2021) and an annual cash incentive target opportunity under the ICP equal to 75%80% of his annual base salary.
In addition, pursuant to his employment agreement, Mr. Deason received a 40one-time sign-on
bonus of $1,063,570. The sign-on bonus will be repaid by Mr. Deason if prior to the one-year anniversary of his start date, Mr. Deason’s employment is terminated for any reason. Mr. Deason also received a one-time relocation bonus equal to $159,535, which is subject to repayment if Mr. Deason terminates employment for any reason or if Garrett Motion Sàrl terminates Mr. Deason’s employment (other than for reason of redundancy) prior to the second anniversary of his start date. Additionally, under the employment agreement, Mr. GiliDeason is eligible for an annual grant of equity awards with an initial target opportunity of 182%170% of annual base salary. Mr. Gili’sDeason’s annual equity award will be determined by the Board. Further, in connection with the successful completion of theSpin-OffBoard and pursuant towill be based on his employment agreement, individual performance.
Mr. Gili received a grant of Company RSUs valued at $1,479,806, which vests in two equal installments on each of the third and fourth anniversaries of the grant date, subject to continued employment through each vesting date. Mr. Gili wasDeason is also granted 12,300 Honeywell RSUs, which vest in two equal installments on each of the first and second anniversaries of the grant date, subject to continued employment through each vesting date.
In addition, Mr. Gili is eligible to receive vacation benefits in accordance with Company policy, a cash car allowance in the amount of $1,835 per month and relocation assistance in connection withtuition reimbursement, for up to two years, to cover the cost of his relocation to Switzerland, each, in accordance with Company policy.children’s international school fees. Mr. Deason’s employment agreement also includes two-year post-termination non-competition restrictions and one-year post-termination non-solicitation restrictions.
In the event of Mr. Gili’sDeason’s involuntary termination of employment without cause, he will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—TerminationBenefits-Termination Events” below. Mr. Deason’s offer of employment is also contingent upon his execution of the Company’s intellectual property and non-competition agreements, which include customary confidentiality provisions.
Other Named Executive Officers—Craig Balis, Thierry Mabru, and Jérôme Maironi.Maironi
Honeywell entered into offer letters with each of Messrs. Balis, Mabru, and Maironi.
The offer letters for Messrs. Balis, Mabru, and Maironi each provide for an annual base salary of $409,097, $414,211, and $460,234, respectively, and an annual cash incentive target opportunity under the ICP equal to 55%, 55% and 60% of the executive’s annual base salary, respectively. Under the offer letters, the 2018 ICP awardsrespectively, which were prorated based on the Named Executive Officer’sincreased to 60%, 60% and 65%, respectively, in February 2020 after taking into consideration industry and market data, and mix of target incentive before and after theSpin-Off and the number of days in the year such target incentive was in effect. For 2018, the ICP target incentivecompensation for Messrs. Balis, Mabru, and Maironi while each was an executive of Honeywell was equal to 55%, 55%, and 60% of the executive’s annual base salary, respectively.executive.
Additionally, under the offer letters, each of Messrs. Balis, Mabru, and Maironi is eligible for an annual grant of equity awards with an initial target opportunity of 200%, 160% and 189%, respectively, of the executive’s annual base salary. Annual equity awards will be determined by the Board and are based on the executive’s individual performance.
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Under the offer letters, and in connection with the successful completion of theSpin-Off, each of Messrs. Balis, Mabru, and Maironi also received grants of Company RSUs valued at $800,000 for Messrs. Balis and Mabru and $1,000,000 for Mr. Maironi. The awards vestHowever, in two equal installments onconnection with the Company’s Emergence, each of Messrs. Balis, Mabru, and Maironi entered into a Side Letter, pursuant to which each named executive officer’s outstanding equity-based and cash-based awards under the third2018 Plan were cancelled and fourth anniversarieshe received a cash payment of $642,369; $634,375; and $681,131, respectively, in satisfaction of such cancelled awards (which were originally denoted in local currency (CHF) and converted to USD using then-current exchange rate of 1 USD to 0.9094 CHF). See “Elements of Executive Compensation—Management Side Letters” for a detailed discussion of theSpin-Off, subject to continued employment through each vesting date. Side Letters.
In addition, Messrs. Balis, Mabru, and Maironi are eligible to receive vacation benefits in accordance with Company policy. Further, Mr. Maironi iswas also entitled to relocation assistance in connection with his relocation to Switzerland in accordance with Company policy.
In the event of Messrs. Balis, Mabru, or Maironi’s involuntary termination of employment without cause, they will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below. The offer letters for Messrs. Balis, Mabru and Maironi are also contingent upon the execution of the Company’s intellectual property andnon-competition agreements, which includetwo-year post-terminationnon-competition andnon-solicitation provisions and customary confidentiality provisions.
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OUTSTANDING EQUITY AWARDS AT 2018 FISCALYEAR-END
The following table shows all outstanding Company equity awards held by the named executive officers as of December 31, 2018:
Stock Awards | ||||||||||||
Name(1) | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (#)(2) | |||||||||
Olivier Rabiller | 7/26/2013 | 13,684 | (3) | 168,861 | ||||||||
2/26/2015 | 8,577 | (4) | 105,840 | |||||||||
2/25/2016 | 33,193 | (5) | 409,602 | |||||||||
7/29/2016 | 85,186 | (6) | 1,051,195 | |||||||||
2/28/2017 | 71,477 | (7) | 882,026 | |||||||||
2/28/2017 | 36,934 | (8) | 455,766 | |||||||||
2/27/2018 | 41,991 | (9) | 518,169 | |||||||||
10/1/2018 | 232,440 | (10) | 2,868,310 | |||||||||
Alessandro Gili | 6/1/2018 | 111,139 | (11) | 1,371,455 | ||||||||
10/1/2018 | 79,990 | (10) | 987,077 | |||||||||
Craig Balis | 7/26/2013 | 22,132 | (3) | 273,109 | ||||||||
2/27/2014 | 33,216 | (12) | 409,885 | |||||||||
2/26/2015 | 9,430 | (4) | 116,366 | |||||||||
2/25/2016 | 39,791 | (5) | 491,021 | |||||||||
2/28/2017 | 59,241 | (7) | 731,034 | |||||||||
7/27/2017 | 27,639 | (13) | 341,065 | |||||||||
2/27/2018 | 30,431 | (14) | 375,519 | |||||||||
10/1/2018 | 43,250 | (10) | 533,705 | |||||||||
Jérôme Maironi | 7/25/2014 | 23,152 | (15) | 285,696 | ||||||||
2/26/2015 | 10,719 | (4) | 132,272 | |||||||||
2/25/2016 | 46,487 | (5) | 573,650 | |||||||||
2/28/2017 | 66,474 | (7) | 820,289 | |||||||||
2/27/2018 | 28,846 | (14) | 355,960 | |||||||||
10/1/2018 | 54,060 | (10) | 667,100 |
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Name(1) | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (#)(2) | |||||||||
Thierry Mabru | 7/25/2012 | 17,523 | (16) | 216,234 | ||||||||
2/26/2015 | 6,859 | (4) | 84,640 | |||||||||
7/31/2015 | 19,452 | (17) | 240,038 | |||||||||
2/25/2016 | 29,845 | (5) | 368,287 | |||||||||
2/28/2017 | 46,191 | (7) | 569,997 | |||||||||
7/27/2017 | 23,032 | (13) | 284,215 | |||||||||
2/27/2018 | 22,472 | (14) | 277,304 | |||||||||
10/1/2018 | 43,250 | (10) | 533,705 |
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OPTION EXERCISES AND OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END
The following table shows all outstanding Company equity awards held by the named executive officers as of December 31, 2021:
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(1) | ||||||||||||||||||||||||||||||||||||
Olivier Rabiller | 5/26/2021 | — | — | — | — | 454,499 | (2) | 3,649,627 | — | — | |||||||||||||||||||||||||||||||||||
5/26/2021 | — | — | — | — | — | — | 318,150 | (3) | 2,554,740 | (4) | |||||||||||||||||||||||||||||||||||
Sean Deason | 5/26/2021 | — | — | — | — | 149,506 | (2) | 1,200,533 | — | — | |||||||||||||||||||||||||||||||||||
5/26/2021 | — | — | — | — | — | — | 59,802 | (3) | 480,210 | (4) | |||||||||||||||||||||||||||||||||||
Craig Balis | 5/26/2021 | — | — | — | — | 101,425 | (2) | 814,443 | — | — | |||||||||||||||||||||||||||||||||||
5/26/2021 | — | — | — | — | — | — | 40,570 | (3) | 325,777 | (4) | |||||||||||||||||||||||||||||||||||
Thierry Mabru | 5/26/2021 | — | — | — | — | 82,154 | (2) | 659,697 | — | — | |||||||||||||||||||||||||||||||||||
5/26/2021 | — | — | — | — | — | — | 32,862 | (3) | 263,882 | (4) | |||||||||||||||||||||||||||||||||||
Jérôme Maironi | 5/26/2021 | — | — | — | — | 107,827 | (2) | 865,851 | — | — | |||||||||||||||||||||||||||||||||||
5/26/2021 | — | — | — | — | — | — | 43,130 | (3) | 346,334 | (4) |
(1) | Market value is determined based on the closing price of our common stock on December 31, 2021 or $8.03 per share. |
(2) | On May 25, 2021, the Board approved awards of RSUs for each named executive officer, each scheduled to vest in substantially equal installments on the first five anniversaries of the grant date, subject to continued employment on the applicable vesting date. |
(3) | On May 25, 2021, the Board approved awards of PSUs. The performance period for the PSUs will end on December 31, 2023. In accordance with applicable SEC rules, the number of PSUs shown represents the number of performance shares that may be earned during the performance period based on the threshold achievement of Absolute TSR with stock price hurdles and on-target achievement of Adjusted EBITDA $M and Adjusted EBITDA Margin %, weighted 60%, 20% and 20%, respectively, subject to continued employment through the last day of the applicable performance period. |
(4) | Represents both (A) the EBITDA-based PSUs at target achievement, granted on May 26, 2021 that may vest on the date that our Company releases its earnings for the fiscal year ending December 31, 2023 if specified performance criteria are met, subject to the exercise of negative discretion by the Compensation Committee (the performance metrics for this award are the cumulative Adjusted EBITDA for the “performance period” commencing January 1, 2021 and ending on December 31, 2023 (20%) and cumulative Adjusted EBITDA Margin for the performance period (20%)); and (B) the TSR-based PSUs at threshold achievement granted on May 26, 2021 that may vest on the date that our Company releases its earnings for the fiscal year ending December 31, 2023 if specified performance criteria are met, subject to the exercise of negative discretion by the Compensation Committee (the performance metric for this award is absolute TSR for the period commencing January 1, 2022 and ending on December 31, 2023). |
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STOCK VESTED—FISCAL YEAR 20182021
The following table shows for 20182021 the number of shares acquired upon exercise of Honeywell option awards and the vesting of Honeywell and Company stock awards and the value realized upon such exercise and vesting.vesting:
Option Awards | Stock Awards | Stock Awards | ||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||||||||||||||||
Olivier Rabiller | 29,932 | 2,915,844 | 3,404 | 512,439 | 473,154 | 2,963,810 | ||||||||||||||||||||
Alessandro Gili | — | — | — | — | ||||||||||||||||||||||
Sean Deason | — | — | ||||||||||||||||||||||||
Craig Balis | 8,597 | 478,260 | 4,542 | 684,879 | 145,755 | 927,300 | ||||||||||||||||||||
Thierry Mabru | 121,059 | 764,051 | ||||||||||||||||||||||||
Jérôme Maironi | 17,284 | 1,109,121 | 4,831 | 727,893 | 134,923 | 853,127 | ||||||||||||||||||||
Thierry Mabru | 8,964 | 384,684 | 2,607 | 391,769 |
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PENSION BENEFITS—FISCAL YEAR 20182021
The following table provides summary information about the pension benefits that have been earned by our Named Executive Officersnamed executive officers in 2018.2021. For 2018,2021, the Named Executive Officersnamed executive officers all participated in a pension plan sponsored in Switzerland and named “Pensionskasse der Honeywell Schweiz”“Columna Sammelstiftung Client Invest Winterthur” (the “Honeywell“Garrett Swiss Plan”). HoneywellGarrett Swiss Plan benefits depend on each Named Executive Officer’snamed executive officer’s annual contribution election and age. The column in the table below entitled “Present Value of Accumulated Benefits” represents the value of the employer contributions in the HoneywellGarrett Swiss Plan with related interest, converted to U.S. dollars. Employee contributions and related interest are not included. In addition, prior to his transfer from the U.S. to Switzerland, Mr. Balis was eligible to earn a pension benefit under two U.S. plans, the Honeywell International Inc. Supplemental Executive Retirement Plan (the “SERP”) and the Honeywell International Inc. Retirement Earnings Plan (the “REP”), each as more fully described below. We are not aware of any payments under these plans in 2018. Beginning in 2019, the Named Executive Officers were eligible to participate in a pension plan sponsored in Switzerland and named “Columna Sammelstiftung Client Invest Winterthur”.
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | ||||||||||||||||
Olivier Rabiller | Honeywell Swiss Plan(1) | 8 | 533,997 | Garrett Swiss Plan(1) | 11.0 | 941,942 | ||||||||||||||||
Alessandro Gili | Honeywell Swiss Plan(1) | 0.6 | 27,141 | |||||||||||||||||||
Sean Deason | Garrett Swiss Plan(1) | 1.5 | 88,506 | |||||||||||||||||||
Craig Balis | Honeywell Swiss Plan(1) | 4.6 | 362,817 | Garrett Swiss Plan(1) | 7.6 | 681,661 | ||||||||||||||||
U.S. REP(2) | 24.8 | 577,330 | ||||||||||||||||||||
U.S. SERP(2) | 24.8 | 426,235 | ||||||||||||||||||||
Thierry Mabru | Garrett Swiss Plan(1) | 10.8 | 595,838 | |||||||||||||||||||
Jérôme Maironi | Honeywell Swiss Plan(1) | 0.5 | 17,944 | Garrett Swiss Plan(1) | 3.5 | 252,420 | ||||||||||||||||
Thierry Mabru | Honeywell Swiss Plan(1) | 7.8 | 326,839 |
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HoneywellGarrett Swiss Plan Information
The HoneywellGarrett Swiss Plan is a broad-based pension plan in which a significant portionall of Honeywell’s SwissGarrett’s Swiss-based employees participate.participate, as well as our named executive officers. The HoneywellGarrett Swiss Plan complies with Swiss tax requirements applicable to broad-based pension plans. Normal retirement age under the HoneywellGarrett Swiss Plan is 65.65, for men, and 64, for women. All benefits are immediately vested.
The Named Executive Officersnamed executive officers can contribute to the HoneywellGarrett Swiss Plan based on their age at rates that range from0-11%5%-11% of pensionable salary with additional contributions for death and disability benefits. Employer contributions are also based on the Named Executive Officer’snamed executive officer’s age at rates that range from0-11%5.5%-11.5% of pensionable salary with additional contributions for death and disability benefits. Participants are guaranteed a minimumFor 2021, participants received an interest rate of return each year which is approved by the Honeywell Swiss Plan trustee board. For 2018, this minimum rate was 3%of 10%.
The HoneywellGarrett Swiss Plan defines pensionable salary as the sum of annual base salary, approved bonus (for death and disability benefits, average bonus for last three years), sales incentives/commissions, lump sum merit increases, prior year’s emergencybonuses, gratuities and gifts for service pay, health insurance contributions, private share of company car, and general rail subscription or equivalent payment,years, in each case, while taking into account any changes to compensation that have been agreed to for the applicable year, minus the annual coordination amount and limited to the HoneywellGarrett Swiss Plan’s annual pay limit. For 2018,2021, the annual coordination amount was $25,236$27,460 and the HoneywellGarrett Swiss Plan’s annual pay limit was $865,240.
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$941,470.
Annual benefits under the HoneywellGarrett Swiss Plan are calculated at a Named Executive Officer’snamed executive officer’s retirement date and are equal to a percentage of the Named Executive Officer’snamed executive officer’s account balance specified in the HoneywellGarrett Swiss Plan based on his age and retirement year. The normal payment form is a joint and 60% survivor annuity with the member’s surviving spouse, with a lump sum option.
Swiss pension law requires participants who were covered by the pension plan of another employer to transfer the termination benefit of that pension plan into the HoneywellGarrett Swiss Plan. Participants are permitted to withdraw part of the termination benefit, or pledge the termination benefit, for home ownership.
Mr. Balis: U.S. Plan Information
Prior to his transfer to Switzerland in June 2014, Mr. Balis earned a pension benefit under the SERP and the REP. Mr. Balis’ total pension benefit from Honeywell is the sum of his Honeywell Swiss Plan benefits, his REP benefits, and his SERP benefits.
The REP and SERP benefits depend on the length of Mr. Balis’ U.S. covered employment. The table column entitled “Present Value of Accumulated Benefits” represents a financial calculation that estimates the present value of the full pension benefit that he has earned. It is based on various assumptions, including assumptions about how long he will live and future interest rates.
The REP is atax-qualified pension plan in which most of Honeywell’s U.S. employees participate. The REP complies with tax requirements applicable to broad-based pension plans, which impose dollar limits on the amount of benefits that can be provided. As a result, the pensions that can be paid under the REP for higher-paid employees represent a much smaller fraction of current income than the pensions that can be paid to less highly paid employees. Honeywell makes up for this difference, in part, by providing supplemental pensions through the SERP.
The benefit formula that applies to Mr. Balis under these plans is (1) 6% of final average compensation (annual average compensation for the five calendar years out of the previous ten calendar years that produces the highest average) times (2) credited service. Compensation includes base pay, paid short-term incentive compensation, payroll-based rewards and recognition and lump sum incentives. The REP compensation is limited by U.S. tax rules while the SERP compensation is not.
The SERP benefits will be paid in a lump sum on the first day of the first month that begins following the 105th day after the later of the officer’s separation from service (as that term is defined in Internal Revenue Code Section 409A) or his earliest retirement date. Mr. Balis is entitled to receive his REP benefit in other payment forms, including joint and survivor annuities. However, the value of each available payment form is the same.
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NONQUALIFIED DEFERRED COMPENSATION—FISCAL YEAR 20182021
The following table provides information on the defined contribution or other plans that during 20182021 provided for deferrals of compensation to our Named Executive Officer’snamed executive officers on a basis that is nottax-qualified.
Name | Plan | Executive Contributions in 2018 ($) | Registrant Contributions in 2018 ($) | Aggregate Earnings in 2018 ($) | Aggregate Withdrawals /Distributions ($) | Aggregate Balance as of December 31, 2018 ($) | ||||||||||||||||
Olivier Rabiller | Growth Plan(1) | — | 108,000 | — | — | 108,000 | ||||||||||||||||
Craig Balis | Honeywell Supplemental | — | — | 15,218 | — | — | ||||||||||||||||
Garrett Supplemental Savings Plan(3) | — | — | 4,292 | — | 329,891 | |||||||||||||||||
Growth Plan(1) | — | 62,100 | — | — | 62,100 | |||||||||||||||||
Jérôme Maironi | Growth Plan(1) | — | 206,000 | — | — | 206,000 | ||||||||||||||||
Thierry Mabru | Growth Plan(1) | — | 46,800 | — | — | 46,800 |
Name | Plan | Executive Contributions in 2021 ($) | Registrant Contributions in 2021 ($) | Aggregate Earnings in 2021 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance as of December 31, 2021 ($) | ||||||||||||||||||||||||
Craig Balis | Garrett Supplemental Savings Plan(1) | — | — | (6,924 | ) | — | 378,864 |
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Honeywell Supplemental Savings Plan (“SS Plan”SSP”)
Prior to his transfer to Switzerland in June 2014, Mr. Balis participated inThe SSP is a U.S. nonqualified deferred compensation plan that permits executives to defer the portion of their annual base salary that could not be contributed to Honeywell’stax-qualifiedpre-tax 401(k) plan due to the annual deferral and compensation limits imposed by the Internal Revenue Code and/or up to an additional 25% of base annual salary for the plan year. Employer matching contributions are credited after one year of service and to the extent amounts were not already matched under the 401(k) plan.
Participant deferrals are credited with a rate of interest, compounded daily, based on Honeywell’s15-year cost of borrowing. The rate is subject to change annually, and for 2018, this rate was 3.38%. Matching contributions are treated as invested in Honeywell common stock with dividends reinvested. However, the employer stock portion of Mr. Balis’ account was converted to a cash amount upon theSpin-Off. All distributions from the Honeywell SS Plan will be in cash.
Mr. Balis elected to receive his Honeywell SS Plan benefits in a lump sum in January of the year following his separation from service. Amounts deferred for the 2005 plan year and later cannot be withdrawn before the distribution date for any reason. Amounts deferred for the 2004 plan year and earlier may be withdrawn before the distribution date if a hardship exists or the participant requests an immediate withdrawal subject to a penalty of 6%.
Garrett Supplemental Savings Plan (“Garrett SS Plan”)
Effective as of the Spin-Off, Mr. Balis’ account balance under the Honeywell SS Plan was transferred to our Garrett SS Plan. Similar to the Honeywell SS Plan, the Garrett SS Plan is a U.S. nonqualified deferred compensation plan that
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permits executives to defer the portion of their pre-tax compensation and incentive compensation that could not be contributed to Garrett’s tax-qualified 401(k) plan due to the annual deferral and compensation limits imposed by the Internal Revenue Code and/or up to an additional 25% of base annual salary for the plan year. Employer matching contributions are discretionary and immediately vested.
Participant deferrals are credited with a rate of interest, compounded daily, based on the Fidelity U.S. Bond Index Fund. The rate is subject to change daily, and for 2018,2021, the average rate was 0.03%-1.8%.
Mr. Balis elected to receive his Garrett SS PlanSSP benefits in a lump sum, which amount will be paid on the later of six months or in January of the year following his separation from service. Amounts deferred cannot be withdrawn before the distribution date for any reason.
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SUMMARY OF POTENTIAL PAYMENTS AND BENEFITS—TERMINATION EVENTS
Overview
This section describes the benefits payable to our Named Executive Officersnamed executive officers in two circumstances:
Termination of Employment
Change in Control
Company Executive Severance
Employment Agreements and Offer Letters
Olivier Rabiller. Under Mr. Rabiller’s offer letter, upon an involuntary termination of employment, other than for cause, Mr. Rabiller will be entitled to 24 months of base salary continuation and target incentive compensation, which will be extended to 36 months in the case of such termination within two years after a change in control of the Company.
Alessandro Gili. Under Mr. Gili’s employment agreement, Mr. Gili is entitled to asix-month notice period upon a termination of employment by the Company, whereby the Company is obligated to provide Mr. Gili with continued salary and benefits for the duration of the notice period regardless of whether Mr. Gili will continue to provide services to the Company. Additionally, upon an involuntary termination of employment, other than for cause, Mr. Gili will be entitled to 18 months of base salary continuation and target incentive compensation, which will be extended to 36 months in the case of such termination within two years after a change in control of the Company that occurs within two years after theSpin-Off.
Company Severance Plan
Our Named Executive Officersnamed executive officers are eligible for severance payments and benefits upon a qualifying termination of employment under our Company severance plan.Severance Pay Plan for Designated Executive Employees of Garrett Motion Inc. (the “Company Severance Plan”). Upon an involuntary termination of employment by the Company, the Named Executive Officersnamed executive officers are entitled to 18 months of base salary continuation, target incentive compensation prorated for the severance period and continued health and welfare benefits for the duration of the severance period, in each case, which will be extended to 24 months in the case of such termination following a change in control.period. We do not provide our Named Executive Officers,named executive officers, all of whom reside in Switzerland, with continued health and welfare benefits upon a qualifying termination of employment as these benefits typically are provided by the government.
Honeywell Transportation Systems Retention Program
Under the termsIn April 2021, our Board approved increases of the retention program,our named executive officers’ severance entitlements upon aan executive’s termination of employment due to the Named Executive Officer’s death or an involuntary termination of employment, other than for cause, prior to the end of the applicable retention period, the Named Executive Officer or his estate, as applicable, will receive the remaining portion of the retention payment.
2018 Stock Incentive Plan
Terms of Equity Awards. Under the terms of the 2018 Stock Incentive Plan, or the 2018 Plan, in the event of a change in control, if the successor corporation refuses to assume or substitute any outstanding equity, or the executive is terminated without “cause” or resignation for “good reason” following a “change in control” (each as defined in the 2018Company Severance Plan). Upon such termination, our named executive officers would be entitled to receive cash severance equal to 24 months’ base salary (36 months for Mr. Rabiller and Mr. Deason), plus two times such officer’s target bonus (three times for Mr. Rabiller and Mr. Deason) for the year in which the executive is terminated. However, these cash severance entitlements have been further modified by the terms of each named executive officer’s award agreement under the 2021 LTI Plan, as described below.
2021 Long-Term Incentive Plan
Equity Vesting Acceleration
Pursuant the terms of the 2021 LTI Plan and further below) within 24 monthsapplicable award agreements, in the event a named executive officer is terminated without “cause”, or resigns for “good reason” or “retirement” (each as defined in the LTI Plan), unvested equity awards are treated as follows:
• | RSUs. With respect to unvested RSUs held by the executive, the number of RSUs that would have otherwise vested on the next scheduled vesting date following the executive’s termination will immediately vest, subject to the executive’s execution of an effective release of claims. |
• | PSUs. Unvested PSUs held by the executive will remain eligible to vest in accordance with their terms on a pro-rated basis. |
Except for PSUs with performance goals tied to the Company’s TSR, the above equity treatment also applies when a named executive officer is terminated due to death or “disability” (as defined in the LTI Plan).
Pursuant to the terms of the 2021 LTI Plan and applicable award agreements, in the event a named executive officer is terminated without “cause,” due to death or “disability,” or resigns for “good reason” or “retirement” within a two-year period following a “change in control” (each as defined in the LTI Plan), unvested equity awards are treated as follows; provided that such awards are continued, assumed, replaced, converted or substituted by the successor entity:
• | RSUs. All unvested RSUs held by the executive will immediately vest. |
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• | PSUs. All unvested PSUs held by the executive will immediately vest (with performance goals deemed 100% achieved and applicable stock price goals will be equitably adjusted to account for the change in control) and settle within 60 days following the termination date. |
Cash Severance Modifications
In addition, the named executive officers’ award agreements under the 2021 LTI Plan modify the terms of their cash severance entitlements, superseding and replacing, as of the second anniversary of our Emergence, the severance terms included in each named executive officer’s offer letter and employment agreement as well as the terms of the Company Severance Plan. Pursuant to the applicable award agreements, the named executive officers will be entitled to receive cash severance equal to no more than 18 months’ base salary (24 months for Mr. Rabiller), plus a pro-rated bonus payment (based on actual performance, or target performance if required by applicable local law) for the year in which the executive experiences a “non-change in control qualifying termination” (as such term will be defined in each case, such equity awards will immediately vest and, if applicable, become exercisable and be deemed exercised immediately prior to the changea new severance policy once adopted). If a named executive officer experiences a “change in control transaction. Additionally,qualifying termination” (as such term will be defined in a new severance policy once adopted), he will be entitled to receive cash severance equal to no more than 18 months’ base salary (24 months for Mr. Rabiller), plus one-half times such officer’s target bonus (two times for Mr. Rabiller), plus a pro-rated bonus payment (based on actual performance, or target performance if required by applicable local law) for the year in which the executive is terminated.
By entering into their award agreements under the 20182021 LTI Plan, any outstanding equity awards will immediately vest and, if applicable, become exercisable and be deemed exercised, upon the death or disability of the executive.
Honeywell Executive Severance
Priornamed executive officers have also agreed to theSpin-Off, the Named Executive Officers were entitledwaive certain rights to benefitsclaim “good reason” under the “Honeywell Executive Level Termination &Company Severance Policy—Switzerland” (“Executive Severance Policy”). In addition to the Executive Severance Policy, other Honeywell benefits plans, such as its annual incentive compensation plan and long-term incentive plan, have provisions that would have impacted these benefits.Plan.
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Summary of Potential Payments Upon Termination or Change in Control
The following table summarizes the payments that would be made to our Named Executive Officersnamed executive officers upon the occurrence of certain qualifying terminations of employment or a change in control, in any case, occurring on December 31, 2018.2021. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination, (ii) accrued bonus for the year of termination, or (ii)(iii) other benefits earned or accrued by the Named Executive Officernamed executive officer during his employment that are available to all salaried employees, such as accrued vacation, and assume that any successor company in a change in control assumed or substituted awards for any outstanding awards under the 2018LTI Plan. Pension and nonqualified deferred compensation benefits, which are described elsewhere in this filing, are not included in the table below in accordance with the applicable disclosure requirements, even though they may become payable at the times specified in the table.
Name | Benefit | Death ($) | Disability ($) | Termination Without Cause (no Change in Control) ($) | Termination Without Cause in Connection with a Change in Control ($) | Benefit | Death ($) | Disability ($) | Termination Without Cause (no Change in Control) ($) | Termination Without Cause in Connection with a Change in Control ($) | ||||||||||||||||||||||||||||||
Olivier Rabiller | Cash | 109,793 | 109,793 | 3,668,937 | 5,448,509 | Cash | — | — | 4,431,604 | 6,647,406 | ||||||||||||||||||||||||||||||
Equity Acceleration(1) | 6,459,769 | 6,459,769 | — | 6,459,769 | Equity Acceleration(1) | 1,216,543 | 1,216,543 | 1,216,543 | 7,299,254 | |||||||||||||||||||||||||||||||
All Other Payments or Benefits(2) | 280,583 | — | 280,583 | 280,583 | All Other Payments or Benefits | — | — | — | — | |||||||||||||||||||||||||||||||
Total | 6,850,145 | 6,569,562 | 3,949,520 | 12,188,861 | Total | 1,216,543 | 1,216,543 | 5,648,148 | 13,946,660 | |||||||||||||||||||||||||||||||
Alessandro Gili | Cash | 209,421 | 209,421 | 1,632,314 | 3,055,206 | |||||||||||||||||||||||||||||||||||
Equity Acceleration(1) | 2,358,532 | 2,358,532 | — | 2,358,532 | ||||||||||||||||||||||||||||||||||||
Sean Deason | Cash | — | — | 1,684,010 | 3,368,020 | |||||||||||||||||||||||||||||||||||
Equity Acceleration(1) | 400,177 | 400,177 | 400,177 | 2,481,066 | ||||||||||||||||||||||||||||||||||||
All Other Payments or Benefits | — | — | — | — | All Other Payments or Benefits | — | — | — | — | |||||||||||||||||||||||||||||||
Total | 2,567,953 | 2,567,953 | 1,632,314 | 5,413,738 | Total | 400,177 | 400,177 | 2,084,187 | 5,769,087 | |||||||||||||||||||||||||||||||
Craig Balis | Cash | 63,132 | 63,132 | 1,014,283 | 1,331,332 | Cash | — | — | 1,050,455 | 1,400,607 | ||||||||||||||||||||||||||||||
Equity Acceleration(1) | 3,271,704 | 3,271,704 | — | 3,271,704 | Equity Acceleration(1) | 271,481 | 271,481 | 271,481 | 1,628,886 | |||||||||||||||||||||||||||||||
All Other Payments or Benefits | 161,336 | — | 161,336 | 161,336 | All Other Payments or Benefits | — | — | — | — | |||||||||||||||||||||||||||||||
Total | 3,496,171 | 3,334,836 | 1,175,618 | 4,764,371 | Total | 271,481 | 271,481 | 1,321,936 | 3,029,492 | |||||||||||||||||||||||||||||||
Thierry Mabru | Cash | — | — | 1,063,585 | 1,418,114 | |||||||||||||||||||||||||||||||||||
Equity Acceleration(1) | 219,900 | 219,900 | 219,900 | 1,319,401 | ||||||||||||||||||||||||||||||||||||
All Other Payments or Benefits | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | 219,900 | 219,900 | 1,283,485 | 2,737,515 | ||||||||||||||||||||||||||||||||||||
Jérôme Maironi | Cash | 209,422 | 209,422 | 1,313,983 | 1,682,170 | Cash | — | — | 1,218,692 | 1,624,923 | ||||||||||||||||||||||||||||||
Equity Acceleration(1) | 2,834,967 | 2,834,967 | — | 2,834,967 | Equity Acceleration(1) | 288,615 | 288,615 | 288,615 | 1,731,694 | |||||||||||||||||||||||||||||||
All Other Payments or Benefits(2) | — | — | — | — | All Other Payments or Benefits | — | — | — | — | |||||||||||||||||||||||||||||||
Total | 3,044,389 | 3,044,389 | 1,313,983 | 4,517,137 | Total | 288,615 | 288,615 | 1,507,307 | 3,356,617 | |||||||||||||||||||||||||||||||
Thierry Mabru | Cash | 47,578 | 47,578 | 1,010,619 | 1,331,632 | |||||||||||||||||||||||||||||||||||
Equity Acceleration(1) | 2,574,420 | 2,574,420 | — | 2,574,420 | ||||||||||||||||||||||||||||||||||||
All Other Payments or Benefits(2) | 121,586 | — | 121,586 | 121,586 | ||||||||||||||||||||||||||||||||||||
Total | 2,743,584 | 2,621,998 | 1,132,205 | 4,027,638 |
(1) | Represents the sum of the values attributable to the accelerated vesting of the unvested portion of all outstanding |
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EQUITY COMPENSATION PLAN INFORMATIONCEO Pay Ratio Disclosure
TheAs required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following table sets forthinformation regarding the equity awards outstanding underrelationship of the 2018 Planannual total compensation of our median employee to the annual total compensation of Olivier Rabiller, our CEO. We consider the pay ratio specified below to be a reasonable estimate, calculated in a manner that is intended to be consistent with the requirements of Item 402(u) of Regulation S-K.
For 2021, our last completed fiscal year:
the annual total compensation of the employee who represents our median compensated employee (other than our CEO) was $35,299; and
the 2018 Stock Planannual total compensation of our CEO, as reported in the Summary Compensation Table included above, was $10,991,346.
Based on this information, forNon-Employee Directors 2021, our CEO’s annual total compensation was 311 times that of the median of the annual total compensation of all of our employees (other than the CEO).
Determining the Median Employee
Employee Population
We used our employee population data as of December 31, 2018:October 1, 2019 as the determination date for identifying our median employee. As of such date, our employee population consisted of approximately 6,100 individuals.
Methodology for Determining Our Median Employee
Plan Category | Number of Shares to be issued upon exercise of outstanding options, warrants and rights (#) | Weighted- average exercise price of outstanding options, warrants and rights ($) | Number of Shares remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) (#)(1) | |||||||||
Equity compensation plans approved by security holders | 3,369,622 | (2) | — | 7,025,926 | ||||||||
Equity compensation plan not approved by security holders | — | — | — | |||||||||
Total | 3,369,622 | — | 7,025,926 |
To identify the median employee from our employee population, we selected base salary and target bonus as the most appropriate measure of compensation, which was consistently applied to all of our employees included in the calculation. In identifying the median employee, we annualized the compensation of all permanent employees who were new-hires in 2021 and we converted international currencies to US dollars using the exchange rates on the determination date.
This employee is the same employee identified for purposes of our 2021 disclosure. We believe that there have been no changes in our employee population or employee compensation arrangements since that median employee was identified in 2019 that would significantly impact our pay ratio disclosure. Compensation Measure and Annual Total Compensation of Median Employee With respect to the annual total compensation of the employee who represents our median compensated employee, we calculated the elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $35,299. Annual Total Compensation of CEO With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2021 Summary Compensation Table included in this Proxy Statement. |
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EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth the equity awards outstanding under the LTI Plan as of December 31, 2021:
Plan Category | Number of Shares to be issued upon exercise of outstanding options, warrants and rights (#) | Weighted- average exercise price of outstanding options, warrants and rights ($) | Number of Shares remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) (#)(1) | |||||||||
Equity compensation plans approved by security holders | 3,291,184 | (2) | — | 27,989,292 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 3,291,184 | — | 27,989,292 |
(1) | Consists of the LTI Plan. |
(2) | Represents shares underlying unvested RSUs and PSUs granted under the LTI Plan. |
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Non-Employee Director Compensation Agreements
In 2018, weWe have entered into letter agreements with each of ournon-employee directors effective upon theSpin-Off. The letter agreementsthat generally provide a total compensation package that includes annual cash fees and annual restricted stock unitRSU grants to fairly compensate ournon-employee directors for the time and effort necessary to serve on the Board.
Under the letter agreements, ourOur non-employee directors receive a cash retainer for service on the Board and for service on each committee of which thenon-employee director is a member. The Independent Chairperson of the Board and the Chairperson of each committee may receive a higher retainer for such service. Cash retainers are paid quarterly on the first business day of the applicable quarter. The fees paid to ournon-employee directors for service on the Board are as follows:set forth in the table below.
Cash Compensation | ||||
Annual Cash Retainer | $ | 80,000 | ||
Independent Chairperson Annual Cash Retainer | $ | 100,000 | ||
Committee Chair Annual Cash Retainer | ||||
Audit | $ | 20,000 | ||
Compensation | $ | 15,000 | ||
Nominating and Governance | $ | 15,000 | ||
Other Committees | $ | 10,000 | ||
Committee Member Annual Cash Retainer | ||||
Audit | $ | 10,000 | ||
Compensation | $ | 7,500 | ||
Nominating and Governance and Other Committees | $ | 5,000 |
In addition, each of ournon-employee directors is eligible to receive an annual restricted stock unitRSU grant with a total target value of $120,000 (the actual number of restricted stock unitsRSUs to be determined by dividing the target value by the fair market value of Company common stock on the date of the annual meeting of stockholders). The restricted stock unitsRSUs will vest on the earlier of theone-year anniversary of the grant date, death, disability or thenon-employee director’s removal from the Board in connection with a change in control.
Ournon-employee directors will receiveMses. Norman, Steyn and Pierce and Messrs. Adamczyk, Ninivaggi and Shanks, who were appointed to the Board in 2021, received a prorated annual restricted stock unitRSU grant for their servicebased on our Board for the remainder of the 2018 calendar year after theSpin-Off, with the number of restricted stock units based ondays from the closing price of the Company’s common stock on a “when issued” basis on the day immediately prior togrant date of theSpin-Off. These restricted stock units will be granted to ournon-employee directors in the first quarter of 2019.until December 31, 2021. As described above, these restricted stock unitsRSUs will vest on the earlier of theone-year anniversary of theSpin-Off grant date, death, disability or thenon-employee director’s removal from the Board in connection with a change in control. Effective September 30, 2021, Mr. Adamczyk resigned from the Board and was replaced by Ms. Pierce. In connection with her appointment as a director, pursuant to her letter agreement, Ms. Pierce received a pro-rated grant of RSUs based on the number of days from the grant date until December 31, 2021 that vest on the same terms as described above.
In December 2021, the Nominating and Governance Committee recommended that the Board approve, and the Board approved and adopted modifications to the RSU vesting terms described above to provide that:
Non-employee directors’ entitlement to annual RSU grants will be measured from one annual stockholders’ meeting to the next annual stockholders’ meeting;
RSUs and prorated RSUs will vest on the earlier of the one-year anniversary of the grant date, death, disability, the non-employee director’s removal from the Board in connection with a change in control, or the next annual stockholders’ meeting; and
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Prorated RSU grants made to non-employee directors who join the Board between two annual stockholders’ meetings will be based on the period between such two annual stockholders’ meetings, which will vest at the next stockholders’ meeting to align with the other Board members.
Due to the above mentioned modification that the entitlement to annual RSU grants will be measured form one annual stockholders’ meeting to the next annual stockholders’ meeting (instead of calendar year), the eligible board members have received a pro-rata grant in Q1 2022 for the period of January 1, 2022 until the next stockholders’ meeting May 26, 2022. These prorated awards will vest on the earlier of death, disability, the non-employee director’s removal from the Board in connection with a change in control, or the next annual stockholders’ meeting. Going forward annual grants will be made once in the year on the annual stockholders’ meeting.
We also reimburse ournon-employee directors for expenses incurred in connection with attending Board and committee meetings and provide ournon-employee directors with business travel accident insurance.
In October 2021, the Board approved and established an additional benefit to reimburse our non-employee directors, up to $10,000 in the aggregate, for attendance at continuing professional educational programs directly related to service as a public company director.
In accordance with our 2018 StockLTI Plan, forNon-Employee Directors, the maximum numberamount of shares with respect to which awardscompensation that may be grantedpaid to anynon-employee director during any calendarfiscal year is 20,000.$750,000.
Stock Ownership Guidelines
Under ournon-employee director stock ownership guidelines, eachnon-employee director is required to hold a number of shares of Company common stock having a market value equal to or greater than five times the annual
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base cash retainer payable to thenon-employee director. Until the applicable ownership guideline is achieved, eachnon-employee director is required to retain at least 50% of the shares acquired from Company restricted stock unitRSU grants, other than any shares required to be sold to pay applicable taxes. Once the applicable ownership guideline is achieved, the aforementioned retention ratio will no longer apply. If anon-employee director’s share ownership subsequently falls back below the applicable ownership guideline and remains below the ownership guideline on a continuous basis for a period of more than 24 months, thenon-employee director will be required to comply again with the retention ratio until such time as thenon-employee director again achieves the ownership guideline.
The following table sets forth information regarding the compensation earned by ournon-employee directors for the year ended December 31, 2018.2021. Mr. Rabiller, who served as our President and Chief Executive Officer during the year ended December 31, 2018,2021, and continues to serve in that capacity, does not receive additional compensation for his service as a director, and therefore is not included in the Director Compensation table below. All compensation paid to Mr. Rabiller is reported in the Summary Compensation Table included under “Executive Compensation.”
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2018 DIRECTOR COMPENSATION TABLE2021 Director Compensation Table
Name | Fees Earned or Paid in Cash ($)(1) | Total ($) | ||||||
Carlos M. Cardoso | 58,125 | 58,125 | ||||||
Maura J. Clark | 25,625 | 25,625 | ||||||
Courtney M. Enghauser | 23,750 | 23,750 | ||||||
Susan L. Main | 23,750 | 23,750 | ||||||
Carsten J. Reinhardt | 23,750 | 23,750 | ||||||
Scott A. Tozier | 26,875 | 26,875 |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other ($)(3) | Total ($) | ||||||||||||
Daniel Ninivaggi(4) | 124,178 | 80,548 | — | 204,726 | ||||||||||||
D’aun Norman(4) | 63,767 | 80,548 | — | 144,315 | ||||||||||||
Darius Adamczyk(4) | 53,699 | 80,548 | (5) | — | 134,247 | |||||||||||
Tina Pierce(6) | 20,000 | 30,000 | — | 50,000 | ||||||||||||
Julia Steyn(4) | 70,479 | 80,548 | — | 151,027 | ||||||||||||
Robert Shanks(4) | 72,158 | 80,548 | — | 152,706 | ||||||||||||
Carlos Cardoso(7) | 161,250 | — | — | 161,250 | ||||||||||||
Scott Tozier(7) | 113,750 | — | — | 113,750 | ||||||||||||
Maura Clark(7) | 111,250 | — | — | 111,250 | ||||||||||||
Susan Main(7) | 107,500 | — | — | 107,500 | ||||||||||||
Courtney M. Enghauser(7) | 107,500 | — | — | 107,500 | ||||||||||||
Carsten J. Reinhardt(7) | 107,500 | — | 4,827 | 112,327 | ||||||||||||
Jérôme Stoll(7) | 102,500 | — | 4,653 | 107,153 | ||||||||||||
John Petry(4)(8) | — | — | — | — | ||||||||||||
Steven Silver(4)(8) | — | — | — | — | ||||||||||||
Steven Tesoriere(4)(8) | — | — | — | — |
(1) | Reflects cash retainer fees earned by our directors in |
(2) | As of December 31, 2021, Mr. Ninivaggi, Mr. Norman, Ms. Steyn and Mr. Shanks each held 9,290 outstanding RSUs and Ms. Pierce held 4,274 outstanding RSUs. |
(3) | Amounts for Messrs. Reinhardt and Stoll represent reimbursement of tax planning services. |
(4) | Mses. Norman and Steyn and Messrs. Adamczyk, Ninivaggi, Petry, Shanks, Silver and Tesoriere were appointed to our Board on April 30, 2021. |
(5) | Upon his resignation from the Board, effective September 30, 2021, Mr. Adamczyk forfeited his unvested RSUs with an aggregate value of $80,548. |
(6) | Ms. Pierce was appointed to our Board on September 30, 2021. As a result, she received a |
(7) | As of April 30, 2021, Mses. Enghauser, Clark and Main and Messrs. Cardoso, Reinhardt, Stoll and Tozier stepped down from our Board in connection with our Emergence. As a result of the |
(8) | Messrs. Petry, Silver and Tesoriere have waived compensation for Board service. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table below sets forth information as of March 29, 2022 regarding beneficial ownershipthe amount and percentage of our outstanding shares of common stock as of April 15, 2019, by:
and Series A preferred stock beneficially owned by (i) each person or group of affiliated persons, known toby us to be the beneficial owner ofown beneficially more than 5% of theour outstanding shares of our common stock as of such date basedand Series A preferred stock (based on currently available SchedulesSchedule 13G or Schedule 13D and 13G filedfilings with the SEC;
SEC and information supplied by the applicable persons), (ii) each of our directors (which includes all nominees);
our named executive officers;officers and
directors, and (iii) all of our directorsexecutive officers and executive officersdirectors as a group.
The number of shares of common stock beneficially owned by each person or entity is determined in accordance with the applicable rules of the SEC and includes voting or investment power with respect to shares of our common stock. The information is not necessarily indicative of beneficial ownership for any other purpose. Shares of our common stock issuable under restricted stock units that will vest, and stock options that will be exercisable, on or before June 14, 2019, are deemed beneficially owned for computing the percentage ownership of the person holding the options, but are not deemed outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, to our knowledge, alleach of the persons named in the table havebelow has sole voting and investment power with respect to theirthe shares of common stock, except to the extent authority is shared by spouses under community property laws. Unless otherwise indicated, the address of all directors and executive officers is La Pièce 16, Rolle, Switzerland 1180. The inclusion of any shares deemed beneficially owned in this table doesby such person. Pursuant to Rule 13d-3(d)(1)(i) under the Exchange Act, the beneficial owner of securities as a result of conversion privileges exercisable within 60 days considers such securities outstanding for purposes of calculating the percentage of a class of equity securities held by such beneficial owner, but may not constitute an admissionassume the exercise of conversion privileges held by others. As a result, the percentages of a class of equity securities held by beneficial ownership of those shares.owners may sum to more than 100%.
Name and Address of Beneficial Owner | Total Number of Shares Beneficially Owned | Percentage of Common Stock Beneficially Owned(1) | ||||||
Holders of more than 5% of our Common Stock | ||||||||
BlackRock, Inc. | 8,682,139 | (2) | 11.6% | |||||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 7,406,825 | (3) | 9.9% | |||||
Deccan Value Investors L.P. Vinit Bodas | 7,031,600 | (4) | 9.4% | |||||
Sessa Capital (Master), L.P. and affiliated funds 888 Seventh Avenue, 30th Floor | 5,772,464 | (5) | 7.4% |
Beneficial Owner | Amount of Beneficial Ownership of Common Stock(1) | Percent of Class(2) | Amount of Beneficial Ownership of Series A Preferred Stock | Percent of Class | ||||||||||||
5% Stockholders: | ||||||||||||||||
Attestor Value Master Fund LP(3) | 4,237,711 | 6.23 | % | 3,514,904 | 1.43 | % | ||||||||||
Baupost Group, L.L.C.(4) | 29,055,292 | 32.29 | % | 25,480,292 | 10.37 | % | ||||||||||
Cyrus(5) | 33,856,569 | 38.41 | % | 23,636,315 | 9.62 | % | ||||||||||
Sessa Capital (Master), L.P.(6) | 23,504,588 | 28.98 | % | 16,592,384 | 6.75 | % | ||||||||||
Honeywell International Inc.(7) | 7,092,446 | 10.32 | % | 4,196,330 | 1.71 | % | ||||||||||
Keyframe(8) | 4,989,082 | 7.34 | % | 3,483,032 | 1.42 | % | ||||||||||
Hawk Ridge Master Fund, L.P.(9) | 6,013,159 | 8.82 | % | 3,676,595 | 1.50 | % | ||||||||||
Centerbridge Credit Partners Master, L.P.(10) | 20,205,933 | 24.02 | % | 19,621,696 | 7.99 | % | ||||||||||
Centerbridge Special Credit Partners III-Flex, L.P.(10) | 51,791,249 | 45.63 | % | 48,985,486 | 19.94 | % | ||||||||||
Oaktree Value Opportunities Fund Holdings, L.P.(11) | 15,093,203 | 19.13 | % | 14,374,581 | 5.85 | % | ||||||||||
OCM Opps GTM Holdings, LLC(11) | 55,429,960 | 47.35 | % | 52,555,471 | 21.39 | % | ||||||||||
Oaktree Phoenix Investment Fund LP(11) | 1,904,762 | 2.87 | % | 1,904,762 | 0.78 | % | ||||||||||
Directors and Named Executive Officers: | ||||||||||||||||
Daniel Ninivaggi(12) | 35,100 | * | — | — | ||||||||||||
D’aun Norman(13) | 15,100 | * | — | — | ||||||||||||
John Petry(6) | 23,504,588 | 28.98 | % | 16,592,384 | 6.75 | % | ||||||||||
Tina Pierce(13) | 5,810 | * | — | — | ||||||||||||
Robert Shanks(13) | 15,100 | * | — | — | ||||||||||||
Steven Silver(13) | — | — | — | — |
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Name and Address of Beneficial Owner | Total Number of Shares Beneficially Owned | Percentage of Common Stock Beneficially Owned(1) | ||||||
Directors (including all nominees) and Named | ||||||||
Olivier Rabiller | 49,111 | * | ||||||
Carlos M. Cardoso | 0 | * | ||||||
Maura J. Clark | 0 | * | ||||||
Courtney M. Enghauser | 0 | * | ||||||
Susan L. Main | 0 | * | ||||||
Carsten J. Reinhardt | 0 | * | ||||||
Scott A. Tozier | 0 | * | ||||||
Craig Balis | 62,794 | * | ||||||
Alessandro Gili | 55,569 | (6) | * | |||||
Thierry Mabru | 35,050 | * | ||||||
Jérôme Maironi | 57,239 | * | ||||||
All current directors and executive officers as a group (13 persons) | 298,648 | (7) | 4.0% |
Beneficial Owner | Amount of Beneficial Ownership of Common Stock(1) | Percent of Class(2) | Amount of Beneficial Ownership of Series A Preferred Stock | Percent of Class | ||||||||||||
Julia Steyn(13) | 15,100 | * | — | — | ||||||||||||
Steven Tesoriere | — | — | — | — | ||||||||||||
Olivier Rabiller(14) | 237,699 | * | — | — | ||||||||||||
Sean Deason(13) | 29,901 | * | — | — | ||||||||||||
Daniel Deiro(13) | 12,532 | * | — | — | ||||||||||||
Craig Balis(15) | 20,305 | * | — | — | ||||||||||||
Joanne Lau | — | — | — | — | ||||||||||||
Thierry Mabru(13) | 16,430 | * | — | — | ||||||||||||
Jerome Maironi(16) | 25,565 | * | — | — | ||||||||||||
Fabrice Michel Spenninck(17) | 21,947 | * | — | — | ||||||||||||
Executive officers and directors as a group (consisting of 16 persons) | 23,955,177 | 29.43 | % | 16,592,384 | 6.75 | % |
* | Less than 1% |
(1) |
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(2) |
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(3) |
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(4) |
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(5) |
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(6) |
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stock |
(7) |
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(8) | Based on a Schedule 13D filed by Keyframe Fund I, L.P., a Delaware limited partnership (“KFI”), Keyframe Fund II, L.P., a Delaware limited partnership (“KFII”), Keyframe Fund III, L.P., a Delaware limited partnership (“KFIII”), Keyframe Fund IV, L.P., a Delaware limited partnership (“KFIV”), Keyframe Capital Advisors, L.L.C., a Delaware limited liability company (“KCA”), Keyframe Capital Partners, L.P., a Delaware limited partnership (“KCP”) and Keyframe Capital Partners GP, L.L.C., a Delaware limited liability company (“KCPGP”) on May 10, 2021, and information provided by or on behalf of such persons to the Company on February 14, 2022. These securities are beneficially owned by (i) KFI, as a result of its direct ownership of shares of common stock |
(9) | Based on a Schedule 13D filed by Hawk Ridge Master Fund, LP, a Delaware limited partnership (“Hawk Ridge”), Hawk Ridge Management, LLC, a Delaware limited liability company (“Hawk Ridge GP”), Hawk Ridge Capital Management, L.P., a Delaware limited partnership (“Hawk Ridge LP”), Hawk Ridge Capital Management GP LLC, a Delaware limited liability company (“Hawk Ridge Capital GP”), on May 10, 2021, and information provided by or on behalf of such persons to the Company on February 8, 2022. These securities are beneficially owned by (i) Hawk Ridge, as a result of its direct ownership of shares of common stock and Series A preferred stock, (ii) Hawk Ridge GP, as the general partner of Hawk Ridge, (iii) Hawk Ridge LP, as the investment manager to Hawk Ridge, (iv) Hawk Ridge Capital GP, as the general partner of Hawk Ridge LP, and (v) Mr. David G. Brown, as the portfolio manager of Hawk Ridge LP and sole member and manager of Hawk Ridge GP and Hawk Ridge Capital GP. The address of each of the foregoing is 12121 Wilshire Blvd., Suite 900, Los Angeles CA 90025. |
(10) | Based on a Schedule 13D filed by Centerbridge Credit Partners Master, L.P. (“Credit Partners Master”), Centerbridge Credit Partners Offshore General Partner, L.P. (“Credit Partners Offshore GP”), Centerbridge Credit Cayman GP, Ltd. (“Credit Cayman GP”), Centerbridge Credit GP Investors, L.L.C. (“Credit GP Investors”), Centerbridge Special Credit Partners III-Flex, L.P. (“SC III-Flex”), Centerbridge Special Credit Partners General Partner III, L.P. (“Special Credit III GP”), CSCP III Cayman GP Ltd. (“CSCP III Cayman GP”) and Jeffrey H. Aronson on May 13, 2021. CSCP III Cayman GP is the general partner of Special Credit III GP, which is the general partner of SC III-Flex, and may be deemed to share voting and dispositive power over the 2,805,763 shares of common stock and 48,985,486 shares of Series A preferred stock held of record by SC III-Flex. As the director of CSCP III Cayman GP, Jeffrey H. Aronson may be deemed to share voting and dispositive power over the securities held of record by SC III-Flex. Such persons and entities expressly disclaim beneficial ownership of the securities held of record by SC III-Flex, except to the extent of any proportionate pecuniary interest therein. Credit GP Investors is the sole director of Credit Cayman GP, which is the general partner of Credit Partners Offshore GP, which is the general partner of Credit Partners Master, and may be deemed to share voting and dispositive power over the 584,237 shares of common stock and 19,621,696 shares of Series A preferred stock held of record by Credit Partners Master. As the managing member of Credit GP Investors, Jeffrey H. Aronson may be deemed to share voting and dispositive power over the securities held of record by Credit Partners Master. Such persons and entities expressly disclaim beneficial ownership of the securities held of record by Credit Partners Master, except to the extent of any proportionate pecuniary interest therein. The address of each of CSCP III Cayman GP, Special Credit III GP, SC III-Flex, Credit GP Investors, Credit Cayman GP, Credit Partners Offshore GP, Credit Partners Master and Mr. Aronson is 375 Park Avenue, 11th Floor, New York, New York 10152. |
(11) | Based on a Schedule 13D filed by Oaktree Value Opportunities Fund Holdings, L.P. (“Oaktree Value Opportunities Fund Holdings”), Oaktree Value Opportunities Fund GP, L.P. (“Oaktree Value Opportunities Fund GP LP”), Oaktree Value Opportunities Fund GP Ltd. (“Oaktree Value Opportunities Fund GP”), OCM Opps GTM Holdings, LLC (“OCM Opps”), Oaktree Fund GP, LLC (“Oaktree Fund GP”), Oaktree Fund GP I, L.P. (“Oaktree Fund GP I”), Oaktree Capital I, L.P. (“Oaktree Capital I”), OCM Holdings I, LLC (“OCM Holdings I”), Oaktree Holdings, LLC (“Oaktree Holdings”), Oaktree Capital Management, L.P. (“Oaktree Capital Management LP”), Oaktree Capital Management GP, LLC (“Oaktree Capital Management GP”), Atlas OCM Holdings, LLC (“Atlas OCM”), Oaktree Capital Group, LLC (“Oaktree Capital Group”), Oaktree Capital Group Holdings GP, LLC (“Oaktree Capital Group Holdings”), Brookfield Asset Management Inc. (“Brookfield”), BAM Partners Trust (“BAM Partners Trust”) and Oaktree Phoenix Investment Fund LP (“Oaktree Phoenix”) on May 14, 2021. These securities are beneficially owned by (i) Oaktree Value Opportunities Fund Holdings, as a result of its direct ownership of 718,622 shares of common stock and 14,374,581 shares of Series A preferred stock, (ii) OCM Opps, as a result of its direct ownership of 2,874,489 shares of common stock and 52,555,471 shares of Series A preferred stock, (iii) Oaktree Phoenix, as a result of its direct ownership of 1,904,762 shares of Series A preferred stock, (iv) Oaktree Value Opportunities Fund GP LP, solely in its capacity as the general partner of Oaktree Value Opportunities Fund Holdings, (v) Oaktree Value Opportunities Fund GP, solely in its capacity as the general partner of Oaktree Value Opportunities Fund Holdings, (vi) Oaktree Fund GP, solely in its capacity as the general partner of OCM Opps, (vii) Oaktree Fund GP I, solely in its capacity as the managing member of Oaktree Fund GP and the sole shareholder of Oaktree Value Opportunities Fund GP, (viii) Oaktree Capital I, solely in its capacity as the general partner of Oaktree Fund GP I, (ix) OCM Holdings I, solely in its capacity as the general partner of Oaktree Capital I, (x) Oaktree Holdings, solely in its capacity as the managing member of OCM Holdings I, (xi) Oaktree Capital Management LP, solely in its capacity as the sole director of Oaktree Value Opportunities Fund GP, (xii) Oaktree Capital Management GP, solely in its capacity as the general partner of Oaktree Capital Management LP, (xiii) Atlas OCM, solely in its capacity as the general partner of Oaktree Capital Management LP, (xiv) Oaktree Capital Group, solely in its capacity as the managing member of Oaktree Holdings, (xv) Oaktree Capital Group Holdings, solely in its capacity as the indirect owner of the class B units of each of Oaktree Capital Group and Atlas OCM, (xvi) Brookfield, solely in its capacity as the indirect owner of the class A units of each of Oaktree Capital Group and Atlas OCM, and (xvii) BAM Partners Trust, solely in its capacity as the sole owner of Class B Limited Voting Shares of Brookfield. Each of the foregoing persons and their directors, executive officers, investment managers, managers, members and general partners disclaims beneficial ownership of the securities except to the extent of their pecuniary interest therein (if any), other than Oaktree Value Opportunities Fund Holdings and OCM Opps for their directly held shares of common stock and Series A preferred stock. The address of each of the foregoing is 333 S. Grand Avenue, 28th Floor, Los Angeles, CA 90071. |
(12) | Represents (i) 15,100 restricted stock units that |
Section 16(a) Beneficial Ownership Reporting Compliance
(13) | Represents restricted stock units that vest within 60 days of March 29, 2022. |
Section 16(a) of the Exchange Act requires our directors, officers (as defined in Rule16a-1(f) under the Exchange Act) and the holders of more than 10% of our common stock to file with the SEC initial reports of ownership of our common stock and other equity securities on a Form 3 and reports of changes in such ownership on a Form 4 or Form 5. Officers, directors and 10% stockholders are required by SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of copies of Section 16(a) reports furnished to us and representations made to us, we believe that during 2018 our officers, directors and holders of more than 10% of our common stock complied with all Section 16(a) filing requirements.
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(14) | Represents (i) 90,899 restricted stock units that vest within 60 days of March 29, 2022, and (ii) 146,800 shares of common stock held by Mr. Rabiller. |
(15) | Represents (i) 20,285 restricted stock units that vest within 60 days of March 29, 2022, and (ii) 20 shares of common stock held by Mr. Balis. |
(16) | Represents (i) 21,565 restricted stock units that vest within 60 days of March 29, 2022, and (ii) 4,000 shares of common stock held by Mr. Maironi. |
(17) | Represents (i) 11,947 restricted stock units that vest within 60 days of March 29, 2022, and (ii) 10,000 shares of common stock held by Mr. Spenninck. |
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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Relationships and Transactions Related to theSpin-Off
Prior to theSpin-Off, Honeywell was our sole stockholder. In connection with theSpin-Off, we and Honeywell entered into certain agreements that govern our relationship and provided for an orderly transition to our status as an independent, publicly-traded company. Following theSpin-Off, Honeywell no longer holds any of our common stock, and we and Honeywell operate independently. Below is a summary of the terms of the agreements we entered into with Honeywell in connection with theSpin-Off.
Indemnification and Tax Agreements
Indemnification and Reimbursement Agreement
On September 12, 2018, we entered into the Indemnification and Reimbursement Agreement with Honeywell, under which we are required to make certain payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to Honeywell’s legacy Bendix friction materials business in the United States, as well as certain environmental-related liability payments and accounts payable andnon-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business prior to ourSpin-Off, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of the Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Distribution Date Currency Exchange Rate (1.16977 USD = 1 EUR) equivalent of $175 million (exclusive of any late payment fees) in respect of such liabilities arising in any given calendar year. The payments that we are required to make to Honeywell pursuant to the terms of the Indemnification and Reimbursement Agreement will not be deductible for U.S. federal income tax purposes. The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. In 2018, we made€36.2 million ($41.0 million) in payments to Honeywell under the Indemnification and Reimbursement Agreement.
Tax Matters Agreement
On September 12, 2018, we entered into a Tax Matters Agreement with Honeywell. The Tax Matters Agreement governs the respective rights, responsibilities and obligations of Honeywell and us after theSpin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests).
The Tax Matters Agreement generally provides that we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, VAT and payroll taxes, relating to Garrett for all periods, including periods prior to the completion date of theSpin-Off. Among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, one of our subsidiaries is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to us, as determined by Honeywell. We currently estimate that our aggregate payments to Honeywell with respect to the mandatory transition tax will be $240 million. Under the terms of the Tax Matters Agreement, we are required to pay this amount in Euros, without interest, in five annual installments, each equal to 8% of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively.
In addition, the Tax Matters Agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to effectuate theSpin-Off. The Tax Matters Agreement also provides that we are required to indemnify Honeywell for certain taxes (and reasonable expenses) resulting from the failure of theSpin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law. In 2018, we made€16.4 million ($18.7 million) in payments to Honeywell under the Tax Matters Agreement.
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The Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve thetax-free nature of theSpin-Off.
In connection with theSpin-Off, we entered into various other agreements with Honeywell, which are briefly described below. For a more complete description of these agreements, please see our Form8-K filed with the SEC on October 1, 2018.
Separation and Distribution Agreement
On September 27, 2018, we entered into a Separation and Distribution Agreement with Honeywell in advance of theSpin-Off, which sets forth our agreements with Honeywell regarding the principal actions to be taken in connection with theSpin-Off. It also sets forth other agreements that govern aspects of our relationship with Honeywell following theSpin-Off. In 2018, we made€1,462.8 million ($1,701.9 million) in payments to Honeywell under the Separation and Distribution Agreement.
Transition Services Agreement
On September 27, 2018, we entered into a Transition Services Agreement pursuant to which Honeywell agreed to provide us, and we agreed to provide Honeywell, with specified services, including information technology, financial, human resources and labor, health, safety and environmental, sales, product stewardship, operational and manufacturing support, procurement, customer support, supply chain and logistics and legal and contract and other specified services, for a limited time to help ensure an orderly transition following theSpin-Off. Under the agreement, the service recipient is required to pay to the service provider a fee equal to the cost of service specified for each service, which is billed on a monthly basis. In 2018, we made $4.9 million in payments to Honeywell under the Transition Services Agreement.
Employee Matters Agreement
On September 27, 2018, we entered into an Employee Matters Agreement with Honeywell that addresses certain employment and employee compensation and benefits matters following the Separation. During 2018, we did not make any payments to Honeywell under the Employee Matters Agreement.
Intellectual Property Agreement
On September 27, 2018, we entered into an Intellectual Property Agreement with Honeywell, pursuant to which, among other things, we agreed not to assert our intellectual property rights against Honeywell or (with limited exceptions) act to impair Honeywell’s intellectual property rights, and Honeywell agreed not to assert its intellectual property rights against us or (with limited exceptions) act to impair our intellectual property rights, in each case for a period of five years. We granted to Honeywell, and Honeywell granted to us, a perpetual royalty-free license to certain intellectual property that has historically been shared between us and Honeywell and we agreed to negotiate a commercial license with Honeywell under other intellectual property rights in the event either we or Honeywell determine such rights are necessary in order to pursue new projects in the ordinary course of business for a period of five years. In 2018, we did not make any payments to Honeywell under the Intellectual Property Agreement.
Trademark License Agreement
On September 27, 2018, we entered into a Trademark License Agreement with Honeywell pursuant to which, among other things, Honeywell granted us a fullypaid-up, royalty free, nonsublicenseable,non-exclusive license to use certain of Honeywell’s trademarks, trade names and service marks with respect to the “Honeywell” brand in connection with the sale, provision, marketing, performance and promotion of the products, services and offerings of the Business as its exists immediately prior to theSpin-Off. In 2018, we did not make any payments to Honeywell under the Trademark License Agreement.
Policies and Procedures for Related Person Transactions
Our Board has adopted written policies and procedures (the “Policy”) for the review, approval and ratification of any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) (“Related Person Transactions”) in which the Company (including any of its subsidiaries) was, is or will be a
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participant and the amount involved exceeds $120,000, and in which any “Related Person” had, has or will have a direct or indirect material interest. Under the Policy, a “Related Person” includes (i) any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director, executive officer or a nominee to become a director of the Company; (ii) any person (or group) who is the beneficial owner of more than 5% of any class of the Company’s voting securities; (iii) any immediate family member of any of the foregoing persons; and (iv) any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.
Prior to entering into any Related Person Transaction, the Related Person must provide notice to our General Counsel of the facts and circumstances of the proposed Related Person Transaction. The Policy calls for the proposed transaction to be assessed by the General Counsel and, if determined to be a Related Person Transaction, submitted to the Nominating and GovernanceAudit Committee for its consideration at the next Nominating and GovernanceAudit Committee meeting or, if the General Counsel, in consultation with the Chief Executive Officer or Chief Financial Officer, determines that it is not practicable or desirable to wait until the next Nominating and GovernanceAudit Committee meeting, to the Chair of the Nominating and GovernanceAudit Committee.
The Nominating and GovernanceAudit Committee or Chair of the Nominating and GovernanceAudit Committee, as applicable, will review and consider all the relevant facts and circumstances available, including but not limited to:
the benefits to the Company of the proposed transaction;
the impact on a director’s independence in the event the Related Person is a director, an immediatelyimmediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; and
the availability of other sources for comparable products or services, the terms of the transaction including their fairness to the Company, and the terms available to unrelated third parties or to employees generally.
The Nominating and GovernanceAudit Committee (or the Chair of the Nominating and GovernanceAudit Committee) shall approve only those Related Person Transactions that are in, or are not inconsistent with, the best interests of the Company, as the Nominating and GovernanceAudit Committee (or its Chair) determines in good faith. From time to time, the Nominating and GovernanceAudit Committee shall review certain previously approved or ratified Related Person Transactions that remain ongoing in nature.
Except for the agreements discussed above, which were entered into priorThe Policy also deems certain transactions to thebe Spin-Off,pre-approved we have not been a party to anyor ratified under its terms, even if such transactions will exceed $120,000, including Related Person Transactions since January 1, 2018.involving competitive bids, certain employment relationships or transactions approved by the Compensation Committee of the Board or another group of independent directors, and certain transactions between the Company and Honeywell relating to the provision of ancillary services by Honeywell to the Company at facilities leased from Honeywell, and certain other transactions with Honeywell not exceeding $200,000 in aggregate per quarter.
Certain Related Person Transactions
Emergence from Chapter 11
In connection with our Emergence, we entered into certain transactions with our 5%+ stockholders, including Centerbridge, Oaktree, Honeywell and Sessa Capital, as further described below.
Second Amended and Restated Plan Support Agreement
On March 9, 2021, we entered into an Amended and Restated Plan Support Agreement, dated as of March 9, 2021 (the “PSA”), with Centerbridge, Oaktree, Honeywell and certain other investors and parties, which, on aggregate, held (at the time of the transactions in question) more than 5% of our registered securities, pursuant to which the Company agreed to reimburse such parties for their professional fees and expenses, subject to an interim cap on
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certain expenses of $25 million prior to the Company’s Emergence. Pursuant to the PSA, the Company reimbursed such investors and parties, who on aggregate beneficially owned 264,350,147 shares of our common stock and 225,464,670 shares of Series A preferred stock as of the Effective Date.
Replacement Equity Backstop Commitment Agreement
On March 9, 2021, we entered into a Replacement Equity Backstop Commitment Agreement (the “BCA”) with certain investors and parties, which, on aggregate, held (at the time of the transactions in question) more than 5% of our registered securities, pursuant to which the Company agreed to reimburse certain parties for all reasonable and documented out-of-pocket fees and expenses for all attorneys, accountants, other professionals, advisors and consultants incurred by those security holders or their affiliates in connection with the Company’s bankruptcy, subject to an interim cap of $25 million. Pursuant to the PSA and BCA, the Company reimbursed such investors and parties, who on aggregate beneficially owned 264,350,147 shares of our common stock and 225,464,670 shares of Series A preferred stock as of the Effective Date, in an aggregate amount of approximately $73.4 million.
Registration Rights Agreement
On April 30, 2021, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the holders of our common stock and Series A preferred stock named therein to provide for resale registration rights for the holders’ Registrable Securities (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Company agreed to file with the SEC a shelf registration statement for the offer and resale of common stock and Series A preferred stock held by Centerbridge, Oaktree and certain other investors and parties. The parties to the Registration Rights Agreement have customary underwritten offering and piggyback registration rights, subject to the limitations set forth therein. Under their underwritten offering registration rights, one or more of the parties to the Registration Rights Agreement holding, collectively, at least 7.5% of the aggregate number of Registrable Securities and Registrable Securities with an anticipated aggregate gross offering price (before deducting underwriting discounts and commissions) of at least $50 million have the right to demand that we file a registration statement with the SEC, and further have the right to demand that we effectuate the distribution of any or all of such holder’s Registrable Securities by means of an underwritten offering pursuant to an effective registration statement, subject to certain limitations described in the Registration Rights Agreement. The holders’ piggyback registration rights provide that, if at any time we propose to undertake a registered offering of our Common Stock, whether or not for our own account, we must give at least five business days’ notice to all holders of Registrable Securities to allow them to include a specified number of their Registrable Securities in the offering.
These registration rights are subject to certain conditions and limitations, including our right to delay or withdraw a registration statement under certain circumstances. We will generally pay all registration expenses in connection with our obligations under the Registration Rights Agreement, regardless of whether any Registrable Securities are sold pursuant to a registration statement. The registration rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions, as well as customary restrictions such as blackout periods and, if an underwritten offering is contemplated, limitations on the number of shares to be included in the underwritten offering that may be imposed by the managing underwriter.
Investor Rights Agreement
On April 30, 2021, we entered into an Investor Rights Agreement with Centerbridge, Oaktree and certain other investors party thereto including an affiliate of Sessa Capital (the “Additional Investors”), pursuant to which, subject to certain thresholds for beneficial share ownership, Centerbridge and Oaktree each have the right to designate three directors to our Board and the Additional Investors the right to designate one director to our Board.
Pursuant to the Investor Rights Agreement, Centerbridge and Oaktree will each have a continuing right to designate three directors to the Board, subject to its (and permitted transferees’) beneficial ownership of at least 60% of their respective aggregate initial ownership interest as of the Effective Date (the “Initial Investor Interest”), at least one of which will not be employed by Centerbridge or Oaktree, as applicable, or their respective affiliates. If Centerbridge or
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Oaktree, as applicable, beneficially own less than 60% but at least 40% of their respective Initial Investor Interest, then they will each have the right to designate at least two directors to the Board. If Centerbridge or Oaktree, as applicable, beneficially own less than 40% but at least 20% of their respective Initial Investor Interest, then they will each have the right to designate at least one director to the Board. If Centerbridge or Oaktree, as applicable, cease to own at least 20% of their respective Initial Investor Interest, then they will have no right to designate any directors to the Board.
Pursuant to the Investor Rights Agreement, the Additional Investors will have a continuing right to designate one director for election to the Board, subject to its (and permitted transferees’) beneficial ownership of at least 60% of their Initial Investor Interest. If the Additional Investors beneficially own less than 60% of their Initial Investor Interest, then they will have no right to designate any directors to the Board. The designee of the Additional Investors shall be the person nominated, separately and not jointly, by those Additional Investors holding at least 65% of the shares of Series A preferred stock held by the Additional Investors at such time. After the Additional Investors no longer have a right to designate a director as described above, if the Company becomes aware that at least 20% of the Series A preferred stock issued as of the Effective Date is held by stockholders other than Centerbridge and Oaktree, then the holders of a majority of the Series A preferred stock then outstanding (excluding Series A preferred stock held by Centerbridge and the Oaktree) will collectively have the right to designate one director to the Board.
Series B Preferred Stock Certificate of Designations
In connection with our Emergence, the Plan included a global settlement with Honeywell, which provided for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to certain agreements that we and certain of our subsidiaries had with Honeywell and its affiliates, and (b) the dismissal with prejudice of certain claims by Honeywell against us, in exchange for (x) a $375 million cash payment at Emergence and (y) the creation and issuance to Honeywell of 834,800,000 shares of our Series B preferred stock. Under the terms of the original Certificate of Designations of our Series B preferred stock, we were obligated to redeem an aggregate number of shares of Series B preferred stock equal to an aggregate redemption amount of $834.8 million, payable to Honeywell in annual cash installments beginning in 2022 and ending in 2030, subject to various conditions and put and call rights set forth in the Certificate of Designations for the Series B preferred stock.
On December 28, 2021, we elected to complete an early partial redemption of 345,988,497 shares of Series B preferred stock for an aggregate price of approximately $211 million, and on February 18, 2022, we elected to complete an early partial redemption of 217,183,244 shares of Series B preferred stock for an aggregate price of approximately $197 million. Following these early partial redemptions, we will be required by the amended and restated Certificate of Designations for the Series B preferred stock to make future scheduled redemptions of shares of Series B preferred stock in the amount of $18 million, $100 million, $100 million and $54 million, in the years 2024 to 2027, respectively.
Pursuant to the Certificate of Designations for our Series B preferred stock, Honeywell has the right to elect or appoint one director to our Board until the first date on which certain amounts due to Honeywell under the terms of the Series B preferred stock are, on aggregate, equal to or less than $125.0 million.
A dividend on the Series A preferred stock may not be declared so long as the Company has not satisfied or cannot satisfy in full deferred redemption payments or the next scheduled redemption payment owed to holders of Series B preferred stock.
Consultant Fee Letter
On April 26, 2021, we entered into a Consultant Fee Reimbursement Letter with Oaktree and its consultant (the “Fee Letter”). The Fee Letter was executed in order to document our agreement to (a) reimburse, pursuant to the PSA, Oaktree’s reasonable and documented fees and expenses incurred in its retention of the consultant in connection with the transactions contemplated by the PSA up to $112,500 and (b) facilitate Oaktree’s arrangements with the consultant to provide a co-investment opportunity in shares of Series A cumulative convertible preferred stock with an aggregate subscription price of approximately $250,000, which Oaktree otherwise would have been entitled to acquire pursuant to the PSA.
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Transactions with Honeywell
We lease certain facilities and receive property maintenance services from Honeywell, which as of the Plan Effective Date is the owner of our Series B preferred stock and appoints a director to our Board. We also contract with Honeywell for the occasional purchase of certain goods and services. Lease and service agreements were made at commercial terms prevalent in the market at the time they were executed. Our payments under our lease agreements with Honeywell were approximately $9 million during the fiscal year ended December 31, 2021 and approximately $2 million from the beginning of the fiscal year ended December 31, 2022 to the date of this proxy statement. Our payments under our bearings purchase and professional and other services agreements with Honeywell were less than $1 million in each of the same periods.
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PROPOSAL TWO—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board has appointed the firm of Deloitte SA as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2022. Although stockholder ratification of the appointment of Deloitte SA is not required by law, our Board believes that it is advisable to give stockholders an opportunity to ratify this appointment. If this proposal is not approved at the Annual Meeting, our Audit Committee will reconsider its appointment of Deloitte SA. Representatives of Deloitte SA are expected to be present at the Annual Meeting and will have the opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions from our stockholders. Even if the selection of Deloitte SA is ratified, the Audit Committee retains the discretion to select a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company.
As previously disclosed in the Form8-K filed with the SEC on November 6, 2018 (the “Form8-K”), on November 1, 2018, the Audit Committee approved the engagement of Deloitte SA as the Company’shas been our independent registered public accounting firm effective immediately. On the same date, the Audit Committee dismissed Deloitte & Touche LLP (“Deloitte US”)since 2018 and served as the Company’sour independent registered public accounting firm.
In connection withfirm for theSpin-Off, Honeywell had engaged Deloitte US to audit the combined financial statements of the Business included in the Company’s Registration Statement on Form 10, as amended and filed with the Securities and Exchange Commission on September 5, 2018 (the “Form 10”). The report of Deloitte US on the combined financial statements of the Business for each of the two fiscal years year ended December 31, 2016 and 2017 included in the Form 10 did not contain an adverse opinion or a disclaimer of opinion, nor was the report qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2016 and December 31, 2017, and the subsequent interim period through November 1, 2018, there were no (a) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of RegulationS-K and the related instructions) between the Company and Deloitte US on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which, if not resolved to the satisfaction of Deloitte US would have caused Deloitte US to make reference to the matter in connection with its report, or (b) “reportable events,” as that term is defined in Item 304(a)(1)(v) of RegulationS-K, except that, as previously disclosed in the Form 10, a material weakness in internal control over financial reporting was identified in August 2018 related to the estimation in the liability for unasserted Bendix-related asbestos claims. Specifically, it was determined that there were not effective controls in place to provide reasonable assurance that a material error would be prevented or detected related to the application of ASC 450 (Contingencies) in the estimation of such Bendix-related asbestos liability. Prior to theSpin-Off, and at the time the material weakness was identified, the Company was not a standalone entity and did not have a board of directors or an audit committee. Therefore, the Audit Committee did not discuss the material weakness with Deloitte US. The Company has authorized Deloitte US to respond fully to the inquiries of Deloitte SA concerning the material weakness.
During the fiscal years ended December 31, 2016 and 2017, and the subsequent interim period through November 1, 2018, neither the Company nor the Business, nor anyone on their behalf, consulted with Deloitte SA with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company that Deloitte SA concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of RegulationS-K and the related instructions) or a “reportable event” (as described in Item 304(a)(1)(v) of RegulationS-K).
The Company provided Deloitte US with a copy of the disclosures that it made in the Form8-K and requested that Deloitte US furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements contained in such Form8-K. A copy of Deloitte US’s letter, dated November 6, 2018, was filed as Exhibit 16.1 to the Form8-K.
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2021.
| The Board recommends a vote“FOR” the ratification of the appointment by the Audit Committee of Deloitte SA as our independent registered public accounting firm for the year ending December 31,
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Principal Accountant Fees and Services
The following table summarizes the fees of Deloitte SA, our independent registered public accounting firm, billed to us for each of the last two fiscal years.
Fee Category | 2018 | 2017 | 2021 | 2020 | ||||||||||||
Audit Fees(1) | $3,090,800 | — | $3,944,750 | $4,005,000 | ||||||||||||
Audit-Related Fees(2) | $1,300 | — | $105,160 | $12,000 | ||||||||||||
Tax Fees | — | — | — | — | ||||||||||||
All Other Fees | $50,000 | — | — | — | ||||||||||||
Total Fees | $3,142,100 | — | $4,049,910 | $4,017,000 |
(1) | Audit fees consist of fees for the audit of our financial statements, the review of the interim financial statements included in our quarterly reports on Form10-Q, and other professional services provided in connection with statutory and regulatory filings or |
(2) | Audit-related fees consist of fees that are reasonably related to the performance of the audit and the review of our financial statements and which are not reported under “Audit Fees.” |
(3) |
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Pre-Approval Policies and Procedures
During 2018, all audit and audit-related services provided to us were pre-approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(A) of Regulation S-X. The Audit Committee pre-approves all engagements of the Company’s accountants to provide both audit and non-audit services, and has not established formal pre-approval policies or procedures. The Audit Committee did not approve any non-audit services pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X during 2018.
The Audit Committee has reviewed our audited consolidated financial statements foradopted policies and procedures relating to the fiscal year ended December 31, 2018approval of all audit and has discussed these consolidated financial statements with our management and ournon-audit services that are to be performed by the Company’s independent registered public accounting firm. Management is responsible forThis policy provides that the preparation of our consolidated financial statements and for maintaining an adequate system of disclosure controls and procedures and internal control over financial reporting for that purpose. OurCompany will not engage its independent registered public accounting firm is responsible for conducting an independentto render audit of our annual consolidated financial statements in accordance with generally accepted auditing standards and issuing a report onor non-audit services unless the results of their audit. The Audit Committee is responsible for providingspecifically approves the service in advance. Between regularly scheduled meetings of the Audit Committee, the chairperson of the Audit Committee may pre-approve the terms and fees of non-audit engagements with the independent objective oversightauditor. Any such pre-approvals by the chairperson of these processes.the Audit Committee will be presented to the full Audit Committee at its next regularly scheduled meeting.
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The Audit Committee oversees the company’s financial reporting process on behalf of the Board of Directors. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed with the company’s management and independent auditors the audited consolidated financial statements and related footnotes for the fiscal year ended December 31, 2021, and the independent auditors’ report thereon, appearing in the Annual Report (collectively, the “2021 Financial Statements”).
Management has the primary responsibility for the financial statements and the reporting process, including the company’s internal controls systems, and has represented to the Audit Committee that the 2021 Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The independent auditors are responsible for expressing an opinion on the conformity of the company’s audited financial statements with GAAP, and for expressing an opinion on the effectiveness of the company’s internal control over financial reporting.
The Audit Committee has also received from, and discussed with, ourthe independent registered public accounting firm variousauditors the communications that they are required to provide to the Audit Committee, including theand matters required to be discussed by Public Company Accounting Oversight Board’s Auditing Standard No. 1301, Communications with Audit Committees.
Our independent registered public accounting firm also provided the Audit Committee with the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding(“PCAOB”) and the independent accountant’s communications withSecurities and Exchange Commission. In addition, the Audit Committee concerning independence, and our Audit Committee has discussed with ourthe independent registered public accounting firm itsauditors, the auditors’ independence, including the matters in the written disclosures and letter which were delivered to the Audit Committee by the independent auditors pursuant to the applicable requirements of the PCAOB. The Audit Committee has also considered whether the independent auditors’ provision of non-audit services to the company is compatible with maintaining the auditors’ independence.
The Audit Committee has discussed with the company’s internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the company’s internal controls, and the overall quality of the company’s financial reporting.
Based on the reviewreviews and discussions referred to above, the Audit Committee recommended to ourthe Board of Directors that the audited consolidated financial statements2021 Financial Statements be included in ourthe company’s Annual Report onForm 10-K for the year ended December 31, 20182021, for filing with the U.S. Securities and Exchange Commission.
By the Audit Committee of the Board of Directors of Garrett Motion Inc.:
Scott A. TozierRobert Shanks (Chair)
Carlos M. CardosoD’aun Norman
Courtney M. Enghauser
Susan L. MainJulia Steyn
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PROPOSAL THREE—APPROVAL, ON AN ADVISORY(NON-BINDING) BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS(“SAY-ON-PAY VOTE”)
Our Board unanimously recommends a vote “FOR” the resolution to approve, on an advisory (non-binding) basis, the compensation of our named executive officers, as disclosed in the compensation discussion and analysis, the accompanying compensation tables and related narrative disclosure of this proxy statement. |
As required by Section 14A(a)(1) of the Exchange Act, the below resolution enables our stockholders to vote to approve, on an advisory(non-binding) basis, the compensation of our Named Executive Officersnamed executive officers as disclosed in this proxy statement. This proposal, commonly known as a“say-on-pay” proposal, gives our stockholders the opportunity to express their views on our Named Executive Officers’named executive officers’ compensation. TheSay-on-Pay Vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officersnamed executive officers and the philosophy, policies and practices described in this Proxy Statement.proxy statement.
We encourage our stockholders to review the “Executive Compensation” section of this Proxy Statementproxy statement for more information.
As an advisory approval, this proposal is not binding upon us or our Board of Directors. However, the Compensation Committee, which is responsible for the design and administration of our executive compensation program, values the opinions of our stockholders expressed through your vote on this proposal. The Board and Compensation Committee will consider the outcome of this vote in making future compensation decisions for our Named Executive Officers.named executive officers. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders of Garrett Motion Inc. approve, on an advisory basis, the 20182021 compensation of Garrett Motion Inc.’s Named Executive Officersnamed executive officers as described in the Compensation Discussion & Analysis and disclosed in the Summary Compensation Table and related compensation tables and narrative disclosure set forth in Garrett Motion Inc.’s Proxy Statementproxy statement for the 20192022 Annual Meeting of Stockholders.”
Board RecommendationFrequency of Say-on-Pay Vote and 2021 Say-on-Pay Vote
At our 2019 annual meeting of stockholders held on June 4, 2019, the Company’s stockholders recommended, on an advisory basis, that the stockholder vote on the compensation of our named executive officers occur every year. In light of the foregoing recommendation, the Company has determined to hold a “say-on-pay” advisory vote every year. Accordingly, our next advisory say-on-pay vote (following the non-binding advisory vote at this Annual Meeting) is expected to occur at our 2023 annual meeting of stockholders.
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PROPOSAL FOUR—APPROVAL, ON AN ADVISORY(NON-BINDING) BASIS, OF THE FREQUENCY OF FUTURESAY-ON-PAY VOTES
Background
In accordance with Section 14A of the Exchange Act, we are requesting your advisory,non-binding vote regarding the frequency with which stockholders should have an opportunity to provide asay-on-pay vote. We are providing stockholders the option of selecting a frequency of every ONE YEAR, TWO YEARS, THREE YEARS or abstaining. Stockholders are not voting to approve or disapprove of the Board’s recommendation. Rather, stockholders are being asked to express their preference regarding the frequency of futuresay-on-pay votes.
We recommend that our stockholders select a frequency of every ONE YEAR. We believe that this frequency is appropriate because it will enable our stockholders to vote, on an advisory basis, on the most recent executive compensation information that is presented in our proxy statement, leading to a more meaningful and coherent communication between us and our stockholders on the compensation of our Named Executive Officers. An annual advisory vote on executive compensation is consistent with our goal of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.
Board Recommendation
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Stockholder Proposals and Director Nominations
Stockholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at our 20202023 annual meeting of stockholders pursuant to Rule14a-8 under the Exchange Act must submit the proposal to us in the form required by Rule 14a-8 at our principal executive offices, Z.A. La Pièce 16, Rolle, Switzerland 1180. Any proposal submitted pursuant to Rule14a-8 must be received by us no later than December 26, 2019.14, 2022. We suggest that proponents submit their Rule14a-8 proposals by certified mail, return receipt requested, addressed to our Secretary, JeromeJérôme Maironi.
In addition, our Bylaws establish an advance notice procedure with regard to director nominations and other proposals by stockholders that are not intended to be included in our proxy materials, but that a stockholder instead wishes to present directly at an annual meeting. To be properly brought before the 20202023 annual meeting of stockholders, a notice of the nomination or the matter the stockholder wishes to present at the meeting must be in writing and delivered to or mailed and received by our Corporate Secretary at our principal executive offices not later than March 6, 2020January 26, 2023 and not before February 5, 2020.25, 2023. However, if the 20202023 annual meeting of stockholders is more than 30 days earlier, or more than 60 days later, than the first anniversary of the Annual Meeting, notice must be so delivered or received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting and the 10th day following the date on which public disclosure of the date of such annual meeting was made. Our Bylaws also specify requirements relating to the content of the notice that stockholders must provide in order for a director nomination or other proposal to be properly presented at the 20202023 annual meeting of stockholders.
Additionally, to comply with the SEC’s universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.
Householding of Annual Meeting Materials
The SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials is being delivered to multiple stockholders who sharesharing an address unless wethe Company has received contrary instructions from one or more of the impacted stockholders priorstockholders. If a stockholder wishes to the mailing date. We agree to deliver promptly, upon written or oral request,receive a separate copy of the proxy materials, as requested,we will promptly deliver a separate copy to any stockholdersuch stockholders that contact us by mail at Garrett Motion Inc., Z.A. La Pièce 16, 1180 Rolle, Switzerland, +41 21 695 30 00, Attention: Investor Relations. Stockholders who hold their shares through a bank, broker or other nominee may have consented to reducing the shared address to which a single copynumber of those documents was delivered. If you prefer to receive separate copies of the proxy materials contact Broadridge Financial Solutions, Inc. at1-866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you are currentlydelivered to their address. In the event that a stockholder wishes to revoke a “householding” consent previously provided to a bank, broker or other nominee, the stockholder must contact the bank, broker or other nominee, as applicable, to revoke such consent. Any stockholders of record sharing an address with another stockholderwho now receive multiple copies of our annual reports, proxy statements and information statements, and who wish to receive only one copy of these materials per household in the future should also contact Investor Relations by mail or telephone as instructed above. Any stockholders sharing an address whose shares of voting stock are held by a bank, broker or other nominee who now receive multiple copies of our annual reports, proxy statements and information statements, and who wish to receive only one copy of proxy materials for yourper household, pleaseshould contact Broadridge at the above phone numberbank, broker or address.other nominee to request that only one set of proxy materials be delivered in the future.
Our Board is not aware of any matter to be presented for action at the Annual Meeting other than the matters referred to above and does not intend to bring any other matters before the Annual Meeting. However, if other matters should properly come before the Annual Meeting, it is intended that holders of the proxies will vote thereon in their discretion.
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The accompanying proxy is solicited by and on behalf of our Board, whose notice of meeting is attached to this proxy statement, and the entire cost of such solicitation will be borne by us. We have also engaged MacKenzie Partners, Inc. to assist in the solicitation of proxies and provide related advice and informational support for a services fee of up to $15,000 and the reimbursement of customary disbursements.
In addition to the use of the mails, proxies may be solicited by personal interview, telephone and email by directors, officers and other employees of Garrett who will not be specially compensated for these services. We will also request that brokers, nominees, custodians and other fiduciaries forward soliciting materials to the beneficial owners of shares held of record by such brokers, nominees, custodians and other fiduciaries. We will reimburse such persons for their reasonable expenses in connection therewith.
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We have also engaged MacKenzie Partners, Inc. to assist in the solicitation of proxies and provide related advice and informational support for a services fee and the reimbursement of customary disbursements that are not expected to exceed $15,000 in the aggregate.
Certain information contained in this proxy statement relating to the occupations and security holdings of our directors and officers is based upon information received from the individual directors and officers.
WE WILL FURNISH, WITHOUT CHARGE, A COPY OF OUR ANNUAL REPORT ON FORM10-K FOR THE YEAR ENDED DECEMBER 31, 2018,2021, INCLUDING CONSOLIDATED FINANCIAL STATEMENTS BUT NOT INCLUDING EXHIBITS, TO EACH OF OUR STOCKHOLDERS OF RECORD ON APRIL 11, 2019,MARCH 29, 2022, AND TO EACH BENEFICIAL STOCKHOLDER ON THAT DATE UPON WRITTEN REQUEST MADE TO JEROMEJÉRÔME MAIRONI, CORPORATE SECRETARY, GARRETT MOTION INC., Z.A. LA PIÈCE 16, ROLLE, SWITZERLAND 1180. A REASONABLE FEE WILL BE CHARGED FOR COPIES OF REQUESTED EXHIBITS.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,ELECTRONICALLY, WE URGE YOU TO VOTE YOUR SHARES VIA THE TOLL-FREE TELEPHONE NUMBER OR OVER THE INTERNET, AS DESCRIBED IN THIS PROXY STATEMENT. IF YOU RECEIVED A COPY OF THE PROXY CARD BY MAIL, YOU MAY SIGN, DATE AND MAIL THE PROXY CARD IN THE ENCLOSED RETURN ENVELOPE. PROMPTLY VOTING YOUR SHARES WILL ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING AND WILL SAVE US THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors,
Olivier Rabiller
President and Chief Executive Officer
Rolle, Switzerland
April 24, 20198, 2022
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This proxy statement includes Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Free Cash Flow, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures provided herein are adjusted for certain items as presented below and may not be directly comparable to similar measures used by other companies in our industry, as other companies may define such measures differently. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. Our management believes that Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Free Cash Flow are important indicators of operating performance because they exclude the effects of income taxes and certain other items, as well as the effects of financing and investing activities by eliminating the effects of interest and depreciation expenses and therefore more closely measures our operational performance. These non-GAAP measures should be considered in addition to, and not as replacements for, each measure’s respective most closely comparable GAAP measure. For additional information with respect to our Consolidated Financial Statements, see our 2021 Annual Report.
Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin
(Dollars in millions) | Year Ended December 31, 2021 | |||
Net income — GAAP | $ | 495 | ||
Net interest expense | 82 | |||
Tax expense | 43 | |||
Depreciation | 92 | |||
EBITDA | $ | 712 | ||
Non-operating income(1) | (12 | ) | ||
Reorganization items, net(2) | (125 | ) | ||
Stock compensation expense | 7 | |||
Repositioning charges(3) | 16 | |||
Foreign exchange loss on debt | 9 | |||
Adjusted EBITDA | $ | 607 | ||
Net sales | 3,633 | |||
Net income margin | 13.6 | % | ||
Adjusted EBITDA margin | 16.7 | % |
(1) | Non-operating income adjustment includes the non-service component of pension expense and other expense, net and excludes interest income, equity income of affiliates, and the impact of foreign exchange. |
(2) | The Company applied Accounting Standards Codification (“ASC”) 852 for periods subsequent to the Petition Date to distinguish transactions and events that were directly associated with the Company’s Chapter 11 reorganization process from the ongoing operations of the Company’s business. Accordingly, certain expenses and gains incurred during the Chapter 11 reorganization process are recorded within Reorganization items, net in the Consolidated Statements of Operations. The Company applied U.S. GAAP for the period subsequent to the Plan Effective Date. |
(3) | Repositioning charges adjustment primarily includes severance costs related to restructuring projects to improve future productivity. |
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Reconciliation of Net Cash Used for Operating Activities to Adjusted Free Cash Flow
(Dollars in millions) | Year Ended December 31, 2021 | |||
Net cash used for operating activities | $ | (310 | ) | |
Expenditures for property, plant and equipment | (72 | ) | ||
Stalking horse termination reimbursement | 79 | |||
Chapter 11 professional service costs | 220 | |||
Honeywell Settlement as per emergence agreement | 375 | |||
Chapter 11-related cash interests | 41 | |||
Stock compensation cash | 10 | |||
Repositioning cash | 14 | |||
Factoring and P-notes | 10 | |||
Adjusted Free Cash Flow | $ | 367 |
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DETACH AND RETURN
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SCAN TO GARRETT MOTION INC. VIEW MATERIALS & VOTE LA PIÈCE 16 ROLLE SWITZERLAND 1180 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 25, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting—Go to www.virtualshareholdermeeting.com/GTX2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 25, 2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D67474-P68206 KEEP THIS PORTION ONLY
FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY GARRETT MOTION INC. The Board of Directors recommends you vote FOR each of the following nominees: 1. The election to the Company’s board of directors of the nine nominees named in the Proxy Statement: Nominees: For Against Abstain 1a. Daniel Ninivaggi The Board of Directors recommends you vote FOR For Against Abstain proposals 2 and 3: 1b. Olivier Rabiller 2. The ratification of the appointment of Deloitte SA as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022. 1c. D’aun Norman 1d. John Petry 3. The approval, on an advisory (non-binding) basis, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement. 1e. Tina Pierce stockholders business NOTE: The will also act on any other that may properly come before the Annual Meeting or any 1f. Robert Shanks postponement, continuation or adjournment thereof. 1g. Steven Silver 1h. Julia Steyn 1i. Steven Tesoriere Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D67475-P68206 GARRETT MOTION INC. Annual Meeting of Stockholders May 26, 2022 9:00 AM Eastern Time This proxy is solicited by the Board of Directors The undersigned stockholder(s) hereby appoint(s) Olivier Rabiller and Jérôme Maironi, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this proxy card, all of the shares of voting stock of Garrett Motion Inc. that the undersigned stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM Eastern Time on May 26, 2022, virtually at www.virtualshareholdermeeting.com/GTX2022 and any adjournment, continuation or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s). If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. In their discretion, the proxies are further authorized to vote (x) for the election of any person to the Board of Directors if any nominee named herein becomes unable to serve or for good cause will not serve, (y) on any matter that the Board of Directors did not know would be presented at the Annual Meeting by a reasonable time before the proxy solicitation was made and (z) on such other business as may properly come before the Annual Meeting or at any adjournments, continuations, or postponements thereof. Continued and to be signed on reverse side
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