Age 3453 | CORNING2019 PROXY STATEMENTDirector Since 2013 | |
Table of Contents
Proposal 1Election of Directors
Age
69
Director Since
1999
Committees ●Audit
●Compensation (Chair)
• Corporate Relations • Nominating and Corporate Governance Current Public and Investment Company Directorships ●None
• Carmichael Investment Partners, LLC Public and Investment Company Directorships Held During the Past 5 Years ●Neustar,• Xtera Communications, Inc. | | | | | |
 | | Deborah D. Rieman Retired Executive Chairman, MetaMarkets Group Dr. Rieman has more than 31 years of experience in the software industry. In 2016, she retired as executive chairman of MetaMarkets Group. Previously, she was managing director of Equus Management Company, a private investment fund. From 1995 to 1999, she served as president and chief executive officer of Check Point Software Technologies, Incorporated. Dr. Rieman brings significant expertise in information technology, innovation and entrepreneurial endeavors to the Board and skills related to her Ph.D. in mathematics. She is also the former president and chief executive officer of a software company specializing in security and has experience in technology development, marketing, business development and support, investor relations and investing.
Skills and Qualifications — Expertise in information technology and cyber securitycybersecurity— Experience in technology development, marketing, business development and support, innovation, entrepreneurial endeavors and investing |
| Director Since
2001
1999 | | Committees ●Executive
●Nominating and Corporate Governance (Chair)
• Information Technology Current Public and Investment Company Directorships ●Harris Corporation
●NextEra Energy, Inc.
●Ryder Systems Inc.
• None Public and Investment Company Directorships Held During the Past 5 Years • Neustar, Inc. | | | | | |
| 36 | CORNING 2020 PROXY STATEMENT |
●None
Table of Contents Proposal 1Election of Directors  | | Hansel E. Tookes II Retired Chairman and Chief Executive Officer, Raytheon Aircraft Company Mr. Tookes retired from Raytheon Company in December 2002. He joined Raytheon in 1999 and served as president of Raytheon International, chairman and chief executive officer of Raytheon Aircraft, and executive vice president of Raytheon Company. From 1980 to 1999, Mr. Tookes served United Technologies Corporation as president of Pratt and Whitney’s Large Military Engines Group and in a variety of other leadership positions. Mr. Tookes provides extensive experience in operations, manufacturing, performance excellence, business development, technology-driven business environments, and military and government contracting. He also brings his science and engineering education, training and knowledge to the Board. Mr. Tookes’ industry expertise includes aviation, aerospace and defense, transportation, and technology.
Skills and Qualifications — Extensive experience in global operations, manufacturing, performance excellence, business development, technology-driven business environments, and military and government contracting— Education, training and knowledge in science and engineering— Extensive public company board experience |
CORNING2019 PROXY STATEMENT | 35 |
Table of Contents
Proposal 1Election of Directors
| Director Since
2000
2001 | | Committees ●• Compensation • Executive • Nominating and Corporate Governance (Chair) Current Public and Investment Company Directorships ●Amazon.com,• NextEra Energy, Inc. ●Merck & Co.,• Ryder Systems Inc. Public and Investment Company Directorships Held During the Past 5 Years ●None
• Harris Corporation | | | | | |
 | | Wendell P. Weeks Chairman, Chief Executive Officer, and President, Corning Incorporated Mr. Weeks joined Corning in 1983. He was named vice president and general manager of the Optical Fiber business in 1996; senior vice president in 1997; senior vice president of Opto Electronics in 1998; executive vice president in 1999; and president, Corning Optical Communications in 2001. Mr. Weeks was named president and chief operating officer of Corning in 2002; president and chief executive officer in 2005; and chairman and chief executive officer on April 26,in 2007. He added the title of president in December 2010. Mr. Weeks brings deep and broad knowledge of the Company based on his long career across a wide range of Corning’s staff groups and major businesses. In his 37 years with the company, Mr. Weeks has 36 yearsheld a variety of Corning experience including financial, management, business development, commercial, leadership, and general management.management roles. His experiencesleadership in many of Corning’s businesses, andwith numerous technologies, and twelve15 years as chief executive officer have given him a unique understanding of Corning’s diverse business operations and life-changing innovations.
Skills and Qualifications — Wide range of experience including financialglobal business management, business development, commercial leadership, manufacturing, and general managementinnovation— Unique understanding of Corning’s businesses and innovations— Significant public company board experience |
| Director Since
2009
2000 | | Committees ●Audit
●Finance
• Executive (Chair) Current Public and Investment Company Directorships ●Brooks Automation,• Amazon.com, Inc. ●Cabot Corporation
• Merck & Co., Inc. Public and Investment Company Directorships Held During the Past 5 Years • None | | | | | |
| CORNING 2020 PROXY STATEMENT | 37 |
●None
Table of Contents Proposal 1Election of Directors  | | Mark S. Wrighton Professor and Chancellor and Professor of Chemistry,Emeritus, Washington University in St. Louis Dr. Wrighton has more than 26 years of leadership experience overseeing large research universities. Since 1995, Dr. Wrighton has beenHe was elected chancellor and professor of Chemistry at Washington University in St. Louis , a major research university.university in 1995, and served as its chief executive officer for 24 years. Before joining Washington University, he was a researcher and professor at the Massachusetts Institute of Technology, where he was head of the Department of Chemistry from 1987 to 1990, and then provost from 1990 to 1995. Dr. Wrighton served as a presidential appointee to the National Science Board from 2000 to 2006. He is also a past chair of the Association of American Universities, The Business Higher Education Forum, and the Consortium on Financing Higher Education. He was elected to membership in the American Academy of Arts and Sciences and the American Philosophical Society, and he is a Fellow of the American Association for the Advancement of Science. Dr. Wrighton is a professor, chemist and research scientist with expertise in materials and research interests in the areas of transition metal catalysis, molecular electronics and photoprocessesphoto processes at electrodes. He also has expertise in areas of direct relevance to Corning, including materials chemistry, photochemistry, surface chemistry and life sciences. Under Dr. Wrighton’s executive and fiscal leadership, Washington University has grown significantly in academic stature, research enterprise, infrastructure, student quality, curriculum and international reputation. Dr. Wrighton brings to the Board his vast scientific knowledge and understanding of complex research and development issues.
Skills and Qualifications — Deep knowledge in areas of direct relevance to Corning, including materials chemistry, photochemistry, surface chemistry and life sciences— Executive leadership experience, including finance and audit experience— Extensive experience leading institutions with research and development focus— Significant public company board experience | Age 70 | Director Since 2009 | | Committees • Finance • Information Technology (Chair) Current Public and Investment Company Directorships • Brooks Automation, Inc. • Cabot Corporation Public and Investment Company Directorships Held During the Past 5 Years • None | | | | | |
3638 | CORNING2019 2020 PROXY STATEMENT |
Table of Contents
Director Compensation | |  |
 Director Compensation The Compensation Committee strives to setsets director compensation at levels that ensure our directors are paid appropriately for their time commitment and responsibilities relative to directors at companies of comparable size, industry and scope of operations. The Committee believes that providing a competitive compensation package is important because it enables Corning to attract and retain highly qualified directors who are critical to the Company’s long-term success. Our objective is to pay non-employee directors competitively compared to the compensation peer group (listed on page 55)comparable companies and to award a significant portion of director compensation in equity. The Compensation Committee’s independent consultant, Frederic W. Cook & Co., Inc., conducts an annual review of the director compensation levels relative to Corning’s compensation peer group and advises the Committee annually to ensure that compensation levels remain competitive. The Company uses a combination of stock-based compensation and cash for its directors. Corning believes it is desirable that a significant portion of director compensation should be linked to the Company’s performance andperformance. Therefore, a portion of the Directors’ compensation is therefore paid inas an annual equity grant of restricted share units, of common stock, which are settled in shares of common stock following retirement or resignation from the Board. To continue to enable the company to attract and incent our Directors, it is important that shareholders approve Corning’s 2019 Equity Plan for Non-Employee Directors, Proposal 4 of this proxy statement. Directors may electdefer receipt of the annual equity retainer restricted share units by electing distribution in up to 10 annual installments and also may defer all or a portion of their cash compensation. AmountsCash amounts deferred may be allocated toto: an account earning interest, compounded quarterly, at the rate equal to the prime rate of Citibank, N.A. at the end of each calendar quarter,quarter; a restricted stock unit account,account; or a combination of such accounts. In 2018,2019, six directors elected to defer some or all of their cash compensation. A cap on director’s compensation of $700,000 per director per year will go into effect upon the approval of Corning’s 2019 Equity Plan for Non-Employee Directors, Proposal 4 of this proxy statement. As an employee of the Company, Mr. Weeks is not compensated separately for service on the Board or any of its Committees. 20182019 Director Compensation
The following table outlines 20182019 director compensation: | Annual Equity Grants | | Each non-employee director annually receives a form of long-term equity compensation approved by the Board. Annual equity grants for non-employee directors are generally approved at the February meeting of the Board. If, however, a director is appointed between the February meeting and December 31, then that director will receive a pro-rata grant shortly after joining the Board. In 2018,2019, our directors’ annual equity compensationgrant was increased from $155,000 to $165,000.$175,000. We issued 5,5335,182 restricted stock units (with a grant date value of approximately $165,000)$175,000) to each non-employee director under our 20102019 Equity Plan for Non-Employee Directors, prorated for Directors joining the Board after February 2018.Directors. These restricted stock units are not available for transfer or sale until six months after the date of a director’s retirement or resignation. | Annual Cash Retainer
Compensation | | $110,000In 2019, our directors’ annual base cash compensation was $110,000 | Lead Independent
Director RetainerCompensation | | Our Lead Independent Director received anreceives additional cash retainercompensation of $35,000. |
| CORNING 2020 PROXY STATEMENT | 39 |
CORNING2019 PROXY STATEMENT | 37 |
Table of Contents Director Compensation Committee Chair Retainer
Compensation | | The Audit Committee Chair andreceives additional cash compensation of $25,000. The Compensation Committee Chair each received anreceives additional cash retainercompensation of $20,000. Other Committee Chairs received anreceive additional cash retainercompensation of $15,000. | Committee Member
RetainersCompensation | | Each Audit Committee member received areceives additional cash retainercompensation of $18,000; each Compensation Committee member received areceives additional cash retainercompensation of $12,000; and each Executive, Finance, Nominating and Corporate Governance, and Corporate Relations Committee member received areceives additional cash retainercompensation of $10,000. |
In 2018,2019, the directors below performed the followingspecified leadership roles: | Name | | Leadership Role | | Mr. Clark | | Lead Independent Director | | Mr. Landgraf | | Audit Committee Chair | | Dr. Rieman | | Compensation Committee Chair | | Dr. Burns | | Corporate Relations Committee Chair | | Mr. Cummings | | Finance Committee Chair | | Mr. Tookes | | Nominating and Corporate Governance Committee Chair |
Non-employee directors are reimbursed for expenses (including costs of travel, food, and lodging) incurred in attending Board, committee, and shareholder meetings. Directors are also reimbursed for reasonable expenses associated with participation in director education programs. Directors’ Charitable Giving Programs Although closed to directors joining the Board after October 5, 2016, Corning has a Directors’ Charitable Giving Program pursuant to which a director may direct the Company to make a charitable bequest to one or more qualified charitable organizations recommended by such director and approved by Corning in the amount of $1,000,000 (employee directors) or $1,250,000 (non-employee directors) following his or her death. This program is either funded directly by the Company or by purchasing insurance policies on the lives of the directors. However, we are under no obligation to use the proceeds of the insurance policies to fund a director’s bequest and can elect to retain any proceeds from the policies as assets of Corning and use another source of funds to pay the directors’ bequests. In 2018,2019, we paid a total of $82,982$68,628 in premiums and fees on such policies for our current directors. Because the charitable deductions and cash surrender value of life insurance policies accrue solely to Corning, the directors derive no direct financial benefit from the program, and we do not include these amounts in the directors’ compensation. Generally, one must have been a director for five years to participate in the program. Directors who had not yet achieved five years’ tenure as of October 5, 2016 will be permitted to participate after five years of Board service. In 2018,2019, Messrs. Blair, Canning, Clark, Cummings, Landgraf, Martin, Tookes and Weeks, Ms. Henretta and Drs. Burns, Rieman and Wrighton were eligible to participate in the program. Directors are also eligible to participate in the Corning Incorporated Foundation Matching Gifts Program for eligible charitable organizations. This Program is available to all Corning employees and directors. The maximum matching gift amount available from the Foundation on behalf of each participant in the Program is $7,500 per calendar year. Corning also pays premiums on our directors’ and officers’ liability insurance policies covering directors.policies. Changes to Director Compensation in 20192020 In February 2019,2020, the Board approveapproved certain changes to director compensation proposed by the Compensation Committee in consultation with the Committee’s independent consultant. Effective January 1, 2019,2020, the non-employee directors’ annual equity grant will increaseincreased from $165,000$175,000 to $175,000.$185,000. As with the 20182019 director equity compensation, this amount will be payable in restricted stock units, which are not available for transfer or sale until six months after the date of a director’s retirement or resignation. In addition, the Audit Committee Chair retainer will increase from $20,000 to $25,000 effective January 1, 2019. 3840 | CORNING2019 2020 PROXY STATEMENT |
Table of Contents Director Compensation 2018
2019 DIRECTOR COMPENSATION TABLE | Name | | Fees Earned or
Paid in Cash(1)
($) | | Stock
Awards(2)
($) | | All Other
Compensation(3)
($) | | Total
($) | | Donald W. Blair | | $ | 138,000 | | $ | 164,994 | | $ | 5,244 | | $ | 308,238 | | Leslie A. Brun(4) | | | 70,000 | | | 82,504 | | | 0 | | | 152,504 | | Stephanie A. Burns | | | 153,000 | | | 164,994 | | | 0 | | | 317,994 | | John A. Canning, Jr. | | | 140,000 | | | 164,994 | | | 7,500 | | | 312,494 | | Richard T. Clark | | | 177,000 | | | 164,994 | | | 7,500 | | | 349,494 | | Robert F. Cummings, Jr. | | | 155,000 | | | 164,994 | | | 0 | | | 319,994 | | Deborah A. Henretta | | | 138,000 | | | 164,994 | | | 0 | | | 302,994 | | Daniel P. Huttenlocher | | | 138,000 | | | 164,994 | | | 0 | | | 302,994 | | Kurt M. Landgraf | | | 170,000 | | | 164,994 | | | 7,500 | | | 342,494 | | Kevin J. Martin | | | 130,000 | | | 164,994 | | | 7,000 | | | 301,994 | | Deborah D. Rieman | | | 160,000 | | | 164,994 | | | 0 | | | 324,994 | | Hansel E. Tookes II | | | 157,000 | | | 164,994 | | | 0 | | | 321,994 | | Mark S. Wrighton | | | 138,000 | | | 164,994 | | | 0 | | | 302,994 |
| Name | | Compensation Earned or
Paid in Cash(1)
($) | | Stock
Awards(2)
($) | | All Other
Compensation(3)
($) | | Total
($) | | Donald W. Blair | | $138,000 | | $174,996 | | $ 7,500 | | $320,496 | | Leslie A. Brun | | 140,000 | | 174,996 | | | | 314,996 | | Stephanie A. Burns | | 153,000 | | 174,996 | | | | 327,996 | | John A. Canning, Jr. | | 140,000 | | 174,996 | | 7,500 | | 322,496 | | Richard T. Clark | | 177,000 | | 174,996 | | 7,500 | | 359,496 | | Robert F. Cummings, Jr. | | 155,000 | | 174,996 | | | | 329,996 | | Deborah A. Henretta | | 138,000 | | 174,996 | | | | 312,996 | | Daniel P. Huttenlocher | | 138,000 | | 174,996 | | 6,250 | | 319,246 | | Kurt M. Landgraf | | 175,000 | | 174,996 | | 7,500 | | 357,496 | | Kevin J. Martin | | 130,000 | | 174,996 | | 7,500 | | 312,496 | | Deborah D. Rieman | | 160,000 | | 174,996 | | | | 334,996 | | Hansel E. Tookes II | | 157,000 | | 174,996 | | | | 331,996 | | Mark S. Wrighton | | 138,000 | | 174,996 | | 7,500 | | 320,496 |
| (1) | Includes all fees and retainersCompensation earned, whether paid in cash or deferred pursuant to the Corning Incorporated Non-Employee Directors’ Deferred Compensation Plan. | | | | (2) | The amounts in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of restricted stock units granted pursuant to the 2010 Equity Plan for Non-Employee Directors. Assumptions used in the calculation of these amounts are included in Note 111 to the Company’s audited financial statements for the fiscal year ended December 31, 20182019 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 12, 2019.18, 2020. There can be no assurance that the grant date fair value amounts will ever be realized. The total number of award shares, RSUs, RSU deferrals and options each Director had outstanding as of December 31, 20182019 is shown in the table below. Total stock holdings for directors as of December 31, 20182019 are shown in the “Beneficial Ownership of Directors and Officers” table. | | | | (3) | The amounts in this column reflect charitable donation matches made by the Corning Incorporated FoundationFoundation’s Matching Gifts Program. | (4) | Mr. Brun’s compensation reflects prorated amounts from July 18, 2018, the date he joined the Board. |
The following are the total number of award shares and restricted stock units (RSUs) and RSU deferrals outstanding each Director had as of December 31, 20182019 | Name | | Award Shares/Units and RSU
Deferrals Outstanding at
December 31, 2018(1) | | Options
Outstanding at
December 31, 2018(2) | | Donald W. Blair | | 55,837 | | 0 | | Leslie A. Brun | | 2,812 | | 0 | | Stephanie A. Burns | | 63,634 | | 0 | | John A. Canning, Jr. | | 100,944 | | 1,323 | | Richard T. Clark | | 53,409 | | 0 | | Robert F. Cummings, Jr. | | 177,792 | | 2,345 | | Deborah A. Henretta | | 60,998 | | 0 | | Daniel P. Huttenlocher | | 25,357 | | 0 | | Kurt M. Landgraf | | 157,087 | | 0 | | Kevin J. Martin | | 42,953 | | 0 | | Deborah D. Rieman | | 111,060 | | 2,345 | | Hansel E. Tookes II | | 98,310 | | 2,345 | | Mark S. Wrighton | | 69,760 | | 2,345 |
| Name | | Award Shares/Units and RSU
Deferrals Outstanding at
December 31, 2019(1) | | Options
Outstanding at
December 31, 2019(2) | | Donald W. Blair | | 65,497 | | 0 | | Leslie A. Brun | | 7,994 | | 0 | | Stephanie A. Burns | | 72,539 | | 0 | | John A. Canning, Jr. | | 110,669 | | 1,323 | | Richard T. Clark | | 58,591 | | 0 | | Robert F. Cummings, Jr. | | 188,003 | | 0 | | Deborah A. Henretta | | 69,314 | | 0 | | Daniel P. Huttenlocher | | 30,539 | | 0 | | Kurt M. Landgraf | | 162,269 | | 0 | | Kevin J. Martin | | 48,135 | | 0 | | Deborah D. Rieman | | 116,242 | | 0 | | Hansel E. Tookes II | | 103,492 | | 0 | | Mark S. Wrighton | | 74,942 | | 0 |
| (1) | This column reflects restricted shares and restricted share units awarded and outstanding or deferred for each Director as of December 31, 2018.2019. | | | | (2) | No options were granted to non-employee directors in 2018.2019. |
| CORNING 2020 PROXY STATEMENT | 41 |
CORNING2019 PROXY STATEMENT | 39 |
Table of Contents Stock Ownership
Information | |  |
 Stock Ownership
Information Stock Ownership Guidelines We believe in the importance of equity ownership by directors and executive management as an effectivea direct link to shareholders, and require all directors, named executive officers (NEOs), and non-NEO executive management to achieve the required levels of ownership under our stock ownership guidelines within five years of their election, appointment or designation. Restricted, and direct and indirectly owned shares, and current and deferred restricted stock units, each count toward our stock ownership guidelines. An NEO who falls below the ownership requirement for any reason will have up to three years to return to the required minimum ownership level. All directors and NEOs who have been so for five years or more currently comply with our guidelines. | DIRECTORS | | CEO | | OTHER NEOs | | NON-NEO SENIOR
MANAGEMENT | | | | | | | | 5X
Annual Cash Retainer | | 6X
Base Salary | | 3X
Base Salary | | 1.5X
Base Salary |
Our directors and executive management are also subject to our anti-hedging and anti-pledging policies. For further information, see “Anti-Hedging Policy” and “Anti-Pledging Policy” both on page 56.59. Section 16(a) Beneficial Ownership Reporting Compliance
SEC rules require disclosure of those directors, officers, and beneficial owners of more than 10% of our common stock who fail to timely file reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year. Based on review of reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2018, all Section 16(a) filing requirements were met.
4042 | CORNING2019 2020 PROXY STATEMENT |
Table of Contents Stock Ownership Information Beneficial Ownership Table | As of December 31, 2018 | | Shares Directly or
Indirectly Owned(1)(2)(3) | | | Stock Options
Exercisable
Within 60 Days | | Restricted Share
Units Vesting
Within 60 Days | | (A)
Total Shares
Beneficially
Owned | | | Percent
of Class | | (B)
Restricted Share
Units Not Vesting
Within 60 Days(4) | | Total of
Columns
(A) + (B) | | The Vanguard Group | | — | | | — | | — | | 62,711,606 | (5) | | 7.83 | | — | | — | | BlackRock, Inc. | | — | | | — | | — | | 53,217,738 | (6) | | 6.60 | | — | | — | | T. Rowe Price Associates, Inc. | | — | | | — | | — | | 43,683,804 | (7) | | 5.40 | | — | | — | | State Street Corporation | | — | | | — | | — | | 40,385,093 | (8) | | 5.00 | | — | | — | | Donald W. Blair | | 17,243 | | | 0 | | 0 | | 17,243 | | | * | | 38,594 | | 55,837 | | Leslie A. Brun | | 0 | | | 0 | | 0 | | 0 | | | * | | 2,812 | | 2,812 | | Stephanie A. Burns | | 49,288 | | | 0 | | 0 | | 49,288 | | | * | | 23,100 | | 72,388 | | John A. Canning, Jr. | | 139,150 | | | 1,323 | | 0 | | 140,473 | | | * | | 51,794 | | 192,267 | | Richard T. Clark | | 41,962 | | | 0 | | 0 | | 41,962 | | | * | | 11,447 | | 53,409 | | Robert F. Cummings, Jr. | | 151,199 | | | 2,345 | | 0 | | 153,544 | | | * | | 113,106 | | 266,650 | | Deborah A. Henretta | | 25,965 | | | 0 | | 0 | | 25,965 | | | * | | 35,033 | | 60,998 | | Daniel P. Huttenlocher | | 13,910 | | | 0 | | 0 | | 13,910 | | | * | | 11,447 | | 25,357 | | Kurt M. Landgraf | | 62,957 | | | 0 | | 0 | | 62,957 | | | * | | 94,130 | | 157,087 | | Kevin J. Martin | | 31,506 | | | 0 | | 0 | | 31,506 | | | * | | 11,447 | | 42,953 | | Deborah D. Rieman | | 100,813 | | | 2,345 | | 0 | | 103,158 | | | * | | 11,447 | | 114,605 | | Hansel E. Tookes II | | 96,863 | | | 2,345 | | 0 | | 99,208 | | | * | | 11,447 | | 110,655 | | Mark S. Wrighton | | 63,743 | | | 2,345 | | 0 | | 66,088 | | | * | | 11,447 | | 77,535 | | Wendell P. Weeks | | 800,371 | (9) | | 488,003 | | 3,182 | | 1,291,556 | | | * | | 246,598 | | 1,538,154 | | R. Tony Tripeny | | 48,939 | | | 102,663 | | 993 | | 152,595 | | | * | | 51,006 | | 203,601 | | James P. Clappin | | 90,836 | | | 36,664 | | 1,065 | | 128,565 | | | * | | 62,750 | | 191,315 | | Lawrence D. McRae | | 137,456 | | | 162,943 | | 1,081 | | 301,480 | | | * | | 66,321 | | 367,801 | | David L. Morse | | 35,953 | | | 72,365 | | 1,033 | | 109,351 | | | * | | 61,830 | | 171,181 | | All Directors and Executive | | | | | | | | | | | | | | | | | | Officers as a group (25 persons) | | 2,162,918 | (10)(11) | | 1,468,167 | | 10,995 | | 3,642,080 | | | * | | 1,214,102 | | 4,856,182 |
| As of December 31, 2019 | | Shares Directly or
Indirectly
Owned(1)(2)(3) | | Stock Options
Exercisable
Within 60 Days | | Restricted Share
Units Vesting
Within 60 Days | | (A)
Total Shares
Beneficially
Owned | | Percent
of Class | | (B)
Restricted Share
Units Not Vesting
Within 60 Days(4) | | Total of
Columns
(A) + (B) | | The Vanguard Group | | — | | — | | — | | 63,137,386 | (5) | 8.20 | % | — | | — | | BlackRock, Inc. | | — | | — | | — | | 53,843,615 | (6) | 7.00 | % | — | | — | | State Street Corporation | | — | | — | | — | | 40,407,846 | (7) | 5.25 | % | — | | — | | Donald W. Blair | | 17,243 | | | | | | 17,243 | | * | | 48,254 | | 65,497 | | Leslie A. Brun | | 0 | | | | | | 0 | | * | | 7,994 | | 7,994 | | Stephanie A. Burns | | 49,288 | | | | 7,600 | | 56,888 | | * | | 24,405 | | 81,293 | | John A. Canning, Jr. | | 139,150 | | 1,323 | | | | 140,473 | | * | | 61,519 | | 201,992 | | Richard T. Clark | | 41,962 | | | | | | 41,962 | | * | | 16,629 | | 58,591 | | Robert F. Cummings, Jr. | | 151,199 | | | | | | 151,199 | | * | | 123,317 | | 274,516 | | Deborah A. Henretta | | 25,965 | | | | | | 25,965 | | * | | 43,349 | | 69,314 | | Daniel P. Huttenlocher | | 13,910 | | | | | | 13,910 | | * | | 16,629 | | 30,539 | | Kurt M. Landgraf | | 62,957 | | | | | | 62,957 | | * | | 99,312 | | 162,269 | | Kevin J. Martin | | 31,506 | | | | | | 31,506 | | * | | 16,629 | | 48,135 | | Deborah D. Rieman | | 100,813 | | | | | | 100,813 | | * | | 16,629 | | 117,442 | | Hansel E. Tookes II | | 96,863 | | | | | | 96,863 | | * | | 16,629 | | 113,492 | | Mark S. Wrighton | | 66,088 | | | | | | 66,088 | | * | | 16,629 | | 82,717 | | Wendell P. Weeks | | 850,823 | (8) | 418,592 | | 2,808 | | 1,272,223 | | * | | 221,740 | | 1,493,963 | | R. Tony Tripeny | | 57,350 | | 128,790 | | 927 | | 187,067 | | * | | 51,641 | | 238,708 | | James P. Clappin | | 103,558 | | 75,856 | | 966 | | 180,380 | | * | | 56,485 | | 236,865 | | Lawrence D. McRae | | 151,242 | | 175,204 | | 978 | | 327,424 | | * | | 58,634 | | 386,058 | | David L. Morse | | 48,617 | | 39,192 | | 940 | | 88,749 | | * | | 54,854 | | 143,603 | All Directors and Executive
Officers as a group
(26 persons) | | 2,300,583 | (9)(10) | 1,301,460 | | 17,622 | | 3,619,665 | | | | 1,196,679 | | 4,816,344 |
| * | Less than 0.50% | | (1) | Includes shares of common stock subject to forfeiture and restrictions on transfer, granted under Corning’s Incentive Stock Plans. | | (2) | Includes shares of common stock subject to forfeiture and restrictions on transfer, granted under Corning’s Restricted Stock Plans for non-employee directors. | | (3) | Includes shares of common stock held by The Bank of New York Mellon Corporation as the trustee of Corning’s Investment Plans for the benefit of the members of the group, who may instruct the trustee as to the voting of such shares. If no instructions are received, the trustee votes the shares in the same proportion as it votes the shares for which instructions were received. The power to dispose of shares of common stock is also restricted by the provisions of the plans. The trustee holds for the benefit of Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse, and all executive officers as a group, the equivalent of 12,577,12,900, 0, 2,312, 6,740,2,371, 6,913, 0 and 24,65422,183 shares of common stock, respectively. It also holds for the benefit of all employees who participate in the plans the equivalent of 12,059,56211,138,600 shares of common stock (being 1.52%1.46% of the class). | | (4) | Restricted Share Units represent the right to receive unrestricted shares of common stock upon the lapse of restrictions, at which point the holders will have sole investment and voting power. Restricted Share Units that will not vest within 60 days of the date of this table are not considered beneficially owned for purposes of the table and therefore are not included in the Total Shares Beneficially Owned column because the holders are not entitled to voting rights or investment control until the restrictions lapse. However, ownership of these RSUs further aligns our Directors and Executive Officers’ interests with those of our shareholders. | | (5) | Reflects shares beneficially owned by The Vanguard Group (Vanguard), according to a Schedule 13G/A filed by Vanguard with the SEC on February 11, 2019,12, 2020, reflecting ownership of shares as of December 31, 2018.2019. Vanguard has sole voting power and/or sole dispositive power with respect to 61,552,33161,789,731 shares and shared voting power and/or shared dispositive power with respect to 1,159,275.1,347,655. According to the Schedule 13G/A, Vanguard beneficially owned 7.83%8.20% of our common stock as of December 31, 2018.2019. | | (6) | Reflects shares beneficially owned by BlackRock, Inc. (BlackRock), according to a Schedule 13G/A filed by BlackRock with the SEC on February 2, 2019,5, 2020, reflecting ownership of shares as of December 31, 2018.2019. BlackRock has sole voting power and/or sole dispositive power with respect to 53,217,73853,843,615 shares and shared voting power and/or shared dispositive power with respect to 0 shares. According to the Schedule 13G/A, BlackRock beneficially owned 6.6%7.0% of our common stock as of December 31, 2018.2019. | | (7) | Reflects shares beneficially owned by T. Rowe Price Associates, Inc. (T. Rowe Price), according to a Schedule 13G filed by T. Rowe Price with the SEC on February 14, 2019, reflecting ownership of shares as of December 31, 2018. T. Rowe Price has sole voting power and/or sole dispositive power with respect to 43,683,804 shares and shared voting power and/or shared dispositive power with respect to 0. According to the Schedule 13G, T. Rowe Price beneficially owned 5.4% of our common stock as of December 31, 2018. | (8) | Reflects shares beneficially owned by State Street Corporation (State Street), according to a Schedule 13G filed by State Street with the SEC on February 14, 2019,2020, reflecting ownership of shares as of December 31, 2018.2019. State Street has sole voting power and/or sole dispositive power with respect to 0 shares and shared voting power and/or shared dispositive power with respect to 40,385,093.40,407,846. According to the Schedule 13G, State Street beneficially owned 5.0%5.25% of our common stock as of December 31, 2018.2019. | (9)(8) | Includes 787,794Reflects 837,923 shares held by a revocable trust of which Mr. Weeks is the beneficiary. He currently has no voting authority over these shares. | (10)(9) | Does not include 28,74519,375 shares owned by the spouses and minor children of certain executive officers and directors as to which such officers and directors disclaim beneficial ownership. | (11)(10) | As of December 31, 2018,2019, none of our directors or executive officers have pledged any such shares. |
| CORNING 2020 PROXY STATEMENT | 43 |
CORNING2019 PROXY STATEMENT | 41 |
Table of Contents Proposal 2
Advisory Approval of Executive Compensation
(Say on Pay) | |  |
Proposal 2 Advisory Approval of Executive Compensation
(Say on Pay) Our Board of Directors requests that shareholders approve the compensation of our Named Executive Officers (NEOs), pursuant to Section 14A of the Securities Exchange Act of 1934, as disclosed in this proxy statement, which includes the Compensation Discussion and Analysis, the Summary Compensation Table and the supporting tabular and narrative disclosure on executive compensation. This
While this vote is advisory and not binding on the Company, but the Board of Directors values shareholder opinion and will consider the outcome of the vote in determining our executive compensation programs. Say on Pay Proposal Our Board maintains a “pay for performance” philosophy that forms the foundation for all of the Compensation Committee’s decisions regarding executive compensation. In addition, our compensation programs are designed to facilitate strong corporate governance, foster collaboration and support our short- and long-term corporate strategy.strategies. The Compensation Discussion and Analysis portion of this proxy statement contains a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions, including 20182019 Company performance and the direct alignment of pay with performance, focusing on the compensation of our NEOs. Our shareholders have affirmed their support of our programs in our outreach discussions and in last year’stheir ongoing support of our Say on Pay results.proposals. We believe that we have created a compensation program deserving of shareholder support. For these reasons, the Board of Directors recommends that shareholders vote in favor of the resolution: RESOLVED, that on an advisory non-binding basis, the total compensation paid to the Company’s Named Executive Officers (CEO, CFO and three other most highly compensated executives), as disclosed in thethis proxy statement for the 2019 Annual Meeting of Shareholders pursuant to the SEC’s executive compensation disclosure rules including(which includes the Compensation Discussion & Analysis, the Summary Compensation Table, and the supporting tabular and related narrative disclosure on executive compensation,compensation) is hereby APPROVED.   | FOR | Our Board unanimously recommends a vote FOR the advisory approval of our executive compensation as disclosed in this proxy statement. |
4244 | CORNING2019 2020 PROXY STATEMENT |
Table of Contents Compensation Discussion
& Analysis | |  |
Compensation Discussion
& Analysis This Compensation Discussion & Analysis (CD&A) presents Corning’s executive compensation for 2018,2019, including the compensation for our Named Executive Officers (NEOs), and describes how this compensation aligns with our pay for performance philosophy and supports the success of our 2016-2019 Strategy and Capital Allocation Framework. OUR NEOs IN FISCAL YEAR 2019 WERE: OUR NEOs IN FISCAL YEAR 2018 WERE: | | Named Executive Officer | | Role | | Years in Role | | Years at Corning | | Wendell P. Weeks | | Chairman, Chief Executive Officer (CEO) and President | | 1415 Years as CEO
(1213 years as CEO/Chairman) | | 3637 years | | R. Tony Tripeny | | Executive Vice President and Chief Financial Officer | | 34 Years | | 3435 years | | James P. Clappin | | Executive Vice President, Corning Glass Technologies | | 89 Years | | 3940 years | | Lawrence D. McRae | | Vice Chairman and Corporate Development Officer | | 34 Years as Vice Chairman
(1920 years as Corporate Development Officer) | | 3435 years | | David L. Morse | | Executive Vice President and Chief Technology Officer | | 67 Years | | 4344 years |
CD&A Table of Contents To assist shareholdersyou in finding important information, we call your attention to the following sections of the CD&A: Executive Summary
Executive Compensation Philosophy Our compensation program is designed to attract and retain the most talented employees within our industry segments and to motivate them to perform at the highest level while executing on our Strategy and Capital Allocation Framework.strategic framework. In order to retain and motivate this caliber of talent, the Compensation Committee (the Committee) is committed to promoting a performance-based culture. Rewards areCompensation is tied to financial metrics thatdeveloped to incent management to successfully deliver on the Strategy and Capital Allocation Frameworkour strategic framework and our commitments to our shareholders.Our executive compensation is directly aligned with our Company performance. | CORNING 2020 PROXY STATEMENT | 45 |
CORNING2019 PROXY STATEMENT | 43 | |
Table of Contents Compensation Discussion & Analysis Target Total
2019 Compensation Components | CEO | | ALL OTHER NEOs |  | |  |
| Our Metrics and Why We Use Them | | | | | | |  Core Earnings per Share (Core EPS): Core EPS is our key measure ofprofitability. Corning generally budgets for share repurchases in establishing its target Core EPS measures. Core Net Sales: Sales growth,both organic through innovation and through acquisitions, is critical to ourshort-andlong-term success. Adjusted Operating Cash Flow: Strong positive cash generation enables ourongoing investment in growth, sustained leadership and returns to shareholders. | |  CapEx: Making good decisions on where and when toinvest for future growthis paramount to our long-term success. Return on Invested Capital (ROIC): We focus on ROIC because it reflects our ability togenerate returns from the capital we have deployed in our operations.The Cash Performance Units (CPUs) payout is increased or decreased up to 10% based on Corning’s ROIC over the three-year performance period. |
Our Short- and Long-Term Incentives | Short-Term Incentives | (Paid in Cash) |  |  |
Long-Term Incentives | (CPU, RSU and Option Awards) |  |
44 | CORNING2019 PROXY STATEMENT |
Table of Contents Compensation Discussion & Analysis 2018
| Our Short- and Long-Term Incentives | Short-Term Incentives (Paid in Cash) |  |  | | Long-Term Incentives (Paid in Cash and Equity) |  |
2019 Compensation Metrics Our
In 2019, our key compensation metrics are Core Earnings per Share (Core EPS), Core Net Sales and Adjusted Operating Cash Flow less CapEx. These metrics are designed to ensurewere tightly aligned with the successkey financial objectives of our Strategy and Capital Allocation Framework by improvingtargeting improvements in profitability (Core EPS), incenting top line growth (Core Net Sales) and generating, operating cashcashflow (Adjusted Operating Cash Flow less CapEx)flow), and prudent investing for growth (CapEx). | | | CORE EPS | | CORE NET SALES | | ADJUSTED
OPERATING
CASH FLOW LESS CAPEX | 2018 Actual Results | $1.78 | $11,398
million | $926
millionCAPEX | | | | | | | | | | 2018 Score as %2019 Actual Results | | $1.76 | | $11,656 million | | $2,109 million | | $1,978 million | | | | | | | | | | 2019 Performance
of Target PayoutResult | | 116%22%
of target for 20182019 | | 155%31%for PIP
127%for CPUs*
of target for 20182019 | | 128%0%
of target for 20182019 | | 150%
of target for 2019 |
* The payout scales for CPUs and PIP differ; CPUs are capped at 150% and PIP is capped at 200%. Please see page 47 for more information.
Please see “Our 2018 Performance Highlights”2019 Performance” on page 6 for more information about our Core Performance Measures which management uses to measure our business performance and, accordingly, we use for our compensation metrics. Appendix A to this proxy statement forcontains a reconciliation of the non-GAAP measures we use in this proxy statement to the most directly comparable GAAP financial measures. Core Earnings per Share (Core EPS), Core Net Sales and Adjusted Operating Cash Flow are non-GAAP financial measures used by our management to obtain a clearer view of Corning’s operating results.CORNING 2020 PROXY STATEMENT | 47 |
| | Accordingly, these Core Performance Measures form the basis for our compensation performance metrics. |
CORNING2019 PROXY STATEMENT | 45 |
Table of Contents Compensation Discussion & Analysis 2018 Company Performance Overview
In 2018, we utilized our financial strength to continue our focus on innovation, advancing key programs across our market-access platforms to make progress in our Strategy and Capital Allocation Framework.
Highlights of progress across Corning’s market-access platforms include:
●Optical Communications:Secured contracts with industry leaders in the carrier and data center segments that will add significant sales in 2019 and beyond, introduced new products for the hyperscale data center and carrier environments and expanded market access through the acquisition of 3M’s Communication Markets Division
●Mobile Consumer Electronics:Extended the company’s leadership with the launch and adoption of Corning® Gorilla® Glass 6 as well as other cover glass and sensing technology innovations
●Automotive:Gained significant new sales and platform wins for gasoline particulate filters including reaching the production milestone of 1 million GPFs; increased pull for Gorilla Glass for Automotive solutions, particularly the industry’s first AutoGrade™ Glass Solutions for automotive interiors, reaching more than 55 platform wins to date
●Life Sciences Vessels:Increased shipments of Corning Valor® Glass fourfold year over year, indicating progress toward certification across more pharmaceutical companies
●Display:Reached stable returns as the glass pricing environment continued to improve and Corning extended its global leadership by establishing the world’s first Gen 10.5 manufacturing facility
|
Please see “Our 2018 Performance Highlights” on page 6 and “Our Strategy and Capital Allocation Framework” on page 7 for additional information on Corning’s 2018 financial performance. |
2018 Performance and Compensation Alignment
Each year we setour Compensation Committee sets rigorous and challenging performance goals aligned with our strategic objectives. We continue to believe thatThe success of our strategic framework requires top line growth, overall profitability, and the generation of operating cash flow, are the most important measures to the successful execution of our Strategy and Capital Allocation Frameworkprudent investment for growth and delivery of long-term shareholder value. Approximately 89% of the CEO’s target total compensation (excluding employee benefits and perquisites) and 80% of the other NEOs’ target total compensation (excluding employee benefits and perquisites) is variable and depends upon our operating performance or is linked to our stock price. Net profitability and sales growth, both short- and long-term, drive success under our Strategy and Capital Allocation Framework.strategic framework. Accordingly, we have incentive measures linked to both short- and long-term outcomes. Our short-term incentives are cash paymentsbonuses composed of the Performance Incentive Plan (PIP) and the GoalSharing plan. Under each of the PIP, and the GoalSharing plan, Core EPS (75% weight) measures bottom line profitability and Core Net Sales (25% weight) focuses on increasing top line growth. These two financial goals comprisedetermine 100% of PIP payouts for NEOs. ActualIn 2019, actual performance was above thesignificantly below established PIP targets, for 2018, with the blended result being a payout of 126%24% of PIP target.target(significantly lower than the 126% PIP payout in 2018). While 2019 was a challenging year for the Company, this result clearly demonstrates the alignment of our executive compensation with our financial performance. GoalSharing is a company-wide plan that rewards our workforce forbased on the Company’s and Business Unit’srespective business unit’s success by including compensation objectives reflecting a combination of(25% corporate financial (25% weight) andperformance/75% business unit performance (75% weight)weighting as outlined above). NEOs receive payouts based on the weighted average performance of all business unit plans, which resulted in a payout of 6.41%2019 was4.37% of base salary for 2018. 46 | CORNING2019 PROXY STATEMENT |
Tableversus a target of Contents5%(down significantly compared to 6.41% in 2018).
Compensation Discussion & Analysis
Our Long-Term Incentive (LTI) awards reflectprogram reflects our belief that (1) revenue growth and cash flows and revenue growth enable investments that will sustain our growth over the long term and that the(2) our executives’ interests ofshould aligned with our executives and shareholders should be aligned.shareholders’ interest. LTI awards are comprised of 60% Cash Performance Units (CPUs), 25% Restricted Stock Units (RSUs), and 15% Stock Options. CPU awards are based 70%35% on Adjusted Operating Cash Flow, less35% on CapEx and 30% on Core Net Sales, averaged over a three-year performance period. In addition to the above measures, 2016metrics, 2017 CPUs to be paid in 2020 are subject to an ROIC modifier of up to +/-10% based on ROIC improvementperformance over the three-year period 20162017 through 2018. We implemented this ROIC modifier in response to investor feedback and in support of our Capital Allocation Framework.2019. We define ROIC as core net income before interest, divided by invested capital. Core net income before interest is calculated using constant exchange rates for Japanese yen, NewSouth Korean won, Chinese yuan, new Taiwan dollar, and Chinese yuanthe euro against the U.S. dollar, and a constant tax rate. Invested capital is the sum of total assets excluding foreign currency hedge assets less total liabilities excluding foreign currency hedge liabilities and debt. The 2019 performance result for CPUs (impacting year 3 of the 2017-2019 CPUs, year 2 of the 2018-2020 CPUs and year 1 of the 2019-2021 CPUs) was62% of target. | | While 2019 was a challenging year for the Company, the compensation outcomes clearly illustrate the alignment of our executive compensation with Corning’s financial performance. | | | | | | | | | | PAY FOR PERFORMANCE RESULTS | | | | | | | 2019 | 2018 | | | | PIP payout(% of target) | 24% | 126% | | | | Goalsharing payout(vs. 5% target) | 4.37% | 6.41% | | | | 2019 CPU performance result(% of target) | 62% | 128% | | | | | | | |
2019 Company Performance Overview In 2019, we delivered the commitments of the 2016-2019 Strategy and Capital Allocation Framework. While 2019 was a challenging year financially, we grew sales 2%, had strong performance in three segments, advanced key growth initiatives, and took action to address headwinds in Display Technologies and Optical Communications. However, our 2019 growth did not meet long-term targets and we accelerated actions in our Optical Communications and Display Technologies segments to align production output and working capital to match reduced customer demand, which impacted gross margin. Corning expects to build momentum throughout 2020 that will keep us on track to achieve the goals laid out in our four-year Strategy & Growth Framework. | 48 | CORNING 2020 PROXY STATEMENT |
Table of Contents Compensation Committee approved this ROIC modifier calculationDiscussion & Analysis Despite facing challenges, in early 2016.2019 we made progress across all of our market-access platforms, including: | • | Automotive:Accelerated GPF adoption, driving more than $250 million in 2019 sales; advanced commercialization of AutoGrade™ Glass Solutions with industry leaders across the auto ecosystem, including GAC, Visteon Corporation, LG Electronics, and BOE; ramped manufacturing in Hefei facilities | | • | Optical Communications:Continued to co-innovate with industry leaders to advance 5G and hyperscale data solutions that increase network efficiency – exemplified by new collaborations with Intel, Verizon, CenturyLink, and Altice Portugal; earned global recognition for products including RocketRibbon™ extreme-density cable for hyperscale data centers | | • | Mobile Consumer Electronics:Extended industry leadership with next-generation cover glass solutions and deepened customer commitments, including an additional $250 million investment from Apple, setting the stage for strong adoption of continued innovations | | • | Life Sciences Vessels:Signed commercial agreements with three leading pharmaceutical companies, building on the announcement that a leading pharmaceutical manufacturer received FDA approval of Corning Valor Glass for use as a primary package for a marketed drug product; advanced leadership in key growth categories – cell culture and gene therapy – by innovating and increasing capacity for market-leading solutions | | • | Display:Continued progress toward stable returns; created richer entertainment experiences through display glass innovation; advanced leadership in Gen 10.5 glass, supporting the growth of large-size TVs; Corning display glass price declines remained moderate |
| Please see “Our 2019 Performance” on page 6 and “Successful Completion of our 2016-2019 Strategy and Capital Allocation Framework” on page 7 for additional information on Corning’s 2019 financial performance. |
The following table compares the 2018our 2019 actual results andwith our targeted goals for each performance measure compared with 2017.2018. | | 2018 | | 2017 | | Measure | | Actual and
% increase
vs. ’17 Actual | | Target and
% increase
vs. ’17 Actual | | Actual | | Target | | Core EPS | | $1.78 | | $1.74 | | $1.60 | | $1.57 | | Percentage increase vs ’17 Actual | | +11.9% | | +8.8% | | | | | | Core Net Sales (millions) | | $11,398 | | $11,028 | | $10,258 | | $9,945 | | +11.5% | | +7.5% | | | | | | Adjusted Operating Cash Flow | | $926 | | $696 | | $816 | | $756 | | less CapEx (millions) | | N/A(1) | | N/A(1) | | | | |
| | | 2019 | | 2018 | | Measure | | Actual and
% increase
vs. ’18 Actual | Target and
% increase
vs. ’18 Actual | | Actual | Target | | Core EPS | | $1.76 | $1.96 | | $1.78 | $1.74 | | Percentage increase vs ’18 Actual | | -1.1% | +10.2% | | | | | Core Net Sales (millions) | | $11,656 | $12,298 | | $11,398 | $11,028 | | | +2.3% | +7.9% | | | | Adjusted Operating Cash Flow
(millions)
CapEx (millions)(2) | | $2,109 | $2,700 | | $3,168 | N/A(2) | | | N/A(1) | N/A(1) | | | | | | $1,978 | $2,350 | | $2,242 | N/A(2) | | | N/A(1) | N/A(1) | | | |
| (1) | Adjusted Operating Cash Flow lessand CapEx goals are established yearly, independent of the prior year. | | | | (2) | 2019 was the first year that a separate goal was established for Adjusted Operating Cash Flow and CapEx. |
Please see “Our 2018 Performance Highlights” on page 6 for more information about our Core Performance Measures and Appendix A to this proxy statement for a reconciliation of the non-GAAP measures we use in this proxy statement to the most directly comparable GAAP financial measures. In 2018, Corning used constant currency rates for the Japanese yen of ¥107:$1, for the New Taiwan dollar of NT$31:$1, for the Chinese yuan of ¥6.7:$1 and for the South Korean won of ₩1,175:$1, and restated all prior periods to these constant currency rates for comparability purposes. For additional information about our Core Performance Measures, please see page 6. Our rigorous goal setting process is demonstrated by the following payout scale for our short- and long-term incentive plans:
| | | | Short Term/Annual Incentive
2018 PIP Measures | | Long-Term Incentive
2018 CPU Measures
(Year Three of 2016-2018 Plan) | | | | | Core EPS Goal
(Weighted 75%) | | Core Net Sales Goal
(Weighted 25%) | | Adjusted Operating Cash
Flow less CapEx Goal (Weighted 70%) | | Core Net Sales Goal
(Weighted 30%) | | | Payout % | | Core
EPS | | Growth
(over
prior year) | | Core Net
Sales
(in $M) | | Growth
(over
prior year) | | Adjusted
OCF less
CapEx (in $M) | | % of
2018 Plan | | Core Net
Sales
(in $M) | | % of
2017
Core Net
Sales | | | 200% | | $1.96 | | 22.8% | | $11,490 | | 12.0% | | Capped at 150% | | | 150% | | 1.89 | | 18.6% | | 11,387 | | 11.0% | | $1,096 | | 157.5% | | $11,490 | | 12.0% | | | 125% | | 1.81 | | 13.4% | | 11,205 | | 9.2% | | 896 | | 128.7% | | 11,387 | | 11.0% | | TARGET | | 100% | | 1.74 | | 9.4% | | 11,028 | | 7.5% | | 696 | | 100.0% | | 11,028 | | 7.5% | | | 75% | | 1.64 | | 2.7% | | 10,601 | | 3.3% | | 496 | | 71.3% | | 10,601 | | 3.3% | | | 50% | | 1.60 | | 0.5% | | 10,387 | | 1.3% | | 429 | | 61.7% | | 10,387 | | 1.3% | | | 0% | | 1.42 | | -10.7% | | 10,054 | | -2.0% | | 296 | | 42.5% | | 10,054 | | -2.0% |
OUR RIGOROUS GOAL SETTING PROCESS IS DEMONSTRATED BY THE FOLLOWING TARGETS AND PAYOUT SCALE FOR OUR SHORT- AND LONG-TERM INCENTIVE PLANS: | | | | | Short Term/Annual Incentive
2019 PIP Measures | | Long-Term Incentive 2019 CPU Measures
(Year Three of 2017-2019 Plan) | | | | | | Core EPS Goal
(Weighted 75%) | | Core Net Sales Goal
(Weighted 25%) | | Adjusted Operating Cash
Flow Goal (Weighted
35%) | | CapEx
(weighted 35%) | | Core Net Sales Goal
(Weighted 30%) | | | | Payout % | | Core
EPS | | Growth
(over
prior year) | | Core Net
Sales
(in $M) | | Growth
(over
prior year) | | Adjusted
OCF (in $M) | | % of
2019 Plan | | CapEx
(in $M) | | % of
2019 Plan | | Core Net
Sales
(in $M) | | % of
2018
Core Net
Sales | | | | 200% | | $ 2.19 | | 22.8% | | $ 12,895 | | 13.1% | | Capped at 150% | | | | 150% | | 2.13 | | 19.8% | | 12,746 | | 11.8% | | $3,000 | | 111.1% | | $ 2,100 | | 89.4% | | $ 12,895 | | 13.1% | | | | 125% | | 2.07 | | 16.4% | | 12,581 | | 10.4% | | 2,875 | | 106.5% | | 2,163 | | 92.0% | | 12,746 | | 11.8% | | TARGET | | 100% | | 1.96 | | 10.2% | | 12,298 | | 7.9% | | 2,700 | | 100.0% | | 2,350 | | 100.0% | | 12,298 | | 7.9% | | | | 75% | | 1.86 | | 4.2% | | 12,007 | | 5.3% | | 2,541 | | 94.1% | | 2,517 | | 107.1% | | 12,007 | | 5.3% | | | | 50% | | 1.81 | | 1.9% | | 11,804 | | 3.6% | | 2,494 | | 92.4% | | 2,544 | | 108.3% | | 11,804 | | 3.6% | | | | 0% | | 1.68 | | -5.6% | | 11,398 | | 0.0% | | 2,400 | | 88.9% | | 2,600 | | 110.6% | | 11,398 | | 0.0% |
| We align rigorous financial goals and compensation targets to drive significant year-over-year performance. |
| CORNING 2020 PROXY STATEMENT | 49 |
CORNING2019 PROXY STATEMENT | 47 |
Table of Contents Compensation Discussion & Analysis ROIC Modifier In 2016, based on investor feedback and in support of our Strategy and Capital Allocation Framework, the Compensation Committee added a three-year ROIC modifier to CPUs.the CPUs in our LTI Plan. With this modifier, the CPU payout may be increased or decreased up to 10% based on ROIC performance over the three-year performance period. For the 2016-20182017-2019 performance period, the ROIC improvement target was established at 250100 basis points, which the Committee believed was challenging but achievable through continued strong operating performance. The setting of this target reflected the multi-year operating plan for the companyCompany and management’s assessment of future Company performance. The ROIC modifier for 20162017 CPUs (based on 20162017 through 20182019 performance) was as follows: ROIC Improvement
2016 – 2018
(in basis points) | | Modifier (Adjustment to 2016 CPUs) | | 250 | | +10% | | 175 | | +5% | | 100 | | No adjustment | | 50 | | -5% | | 0 | | -10% |
ROIC Improvement
2017 – 2019
(in basis points) | | Modifier (Adjustment to 2017 CPUs) | | 250 | | +10% | | 175 | | +5% | | 100 | | No adjustment | | 50 | | -5% | | 0 | | -10% |
From 20162017 to 2018,2019, ROIC improved 17472 basis points, resulting in a +4.74% increase 2.8% decreaseto the 20162017 CPU payout made in 2019.2020. Results for Short Term Incentives and the 2016-2018 LTI
2019 Compensation Plan Payout Percentages The following table reflects our 2019 compensation plan’s payout percentages based on our 2019 financial performance: | Short Term Incentives | PERFORMANCE INCENTIVE PLAN (PIP)
100% CORPORATE FINANCIAL PERFORMANCE | | Components | | Weighting | | % of target
earned | | Core EPS | | 75% | | 116% | | Core Net Sales | | 25% | | 155% | | 2018 performance result | | | | 126% | | | GOALSHARING – 25% CORPORATE PERFORMANCE,
75% BUSINESS UNIT PERFORMANCE | | Components | | | | % of base
salary earned | | Corporate financial performance — | | | | | | 1.25% target × 126% performance | | | | | | (See PIP above) | | 25% | | 1.58% | | Average Business Unit Performance | | 75% | | 4.83% | | 2018 performance result | | | | 6.41% |
| Long Term Incentives | CASH PERFORMANCE UNITS
(60% OF LTI TARGET – OTHER 40% ARE RSUs AND OPTIONS) | | Components | | Weighting | | % of target
earned, 2018
performance
year | | Operating Cash Flow less CapEx | | 70% | | 128% | | Core Net Sales | | 30% | | 127% | | 2018 performance result | | | | 128% | | | | 2016-2018 CPU PERFORMANCE RESULTS | | Components | | | | % of target
earned,
2016-2018
performance | | 2016 performance result | | | | 88% | | 2017 performance result | | | | 120% | | 2018 performance result | | | | 128% | | 2016-2018 average performance | | | | 112% |
| Short Term Incentives | | | | | | PERFORMANCE INCENTIVE PLAN (PIP) | | | 100% CORPORATE FINANCIAL PERFORMANCE | | | | | | | % of target | | Components | | Weighting | | earned | | Core EPS | | 75% | | 22% | | Core Net Sales | | 25% | | 31% | | 2019 payout | | | | 24% | | | | | | | | GOALSHARING – | | | | | | 25% CORPORATE PERFORMANCE, 75% BUSINESS UNIT PERFORMANCE | | | | | | | | | | | | % of base | | Components | | | | salary earned | | Corporate financial performance — | | | | | | 1.25% target × 24% performance | | | | | | (See PIP above) | | 25% | | 0.30% | | Average Business Unit Performance | | 75% | | 4.07% | | 2019 payout | | | | | | (vs. 5% target) | | | | 4.37% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Long Term Incentives | | | | | | CASH PERFORMANCE UNITS | | | | | | (60% OF LTI TARGET – OTHER 40% ARE RSUs AND OPTIONS) | | | | | | % of target | | | | | | earned, 2019 | | | | | | performance | | Components | | Weighting | | year | | Operating Cash Flow | | 35% | | 0% | | CapEx | | 35% | | 150% | | Core Net Sales | | 30% | | 31% | | 2019 blended performance result | | | | 62% | | | | | | | | 2017-2019 CPU PERFORMANCE RESULTS | | | | | | % of target | | | | | | earned, | | | | | | 2017-2019 | | Components | | | | performance | | | | | | | | | | | | | | 2017 performance result | | | | 120% | | 2018 performance result | | | | 128% | | | | | | | | 2019 performance result | | | | 62% | | 2017-2019 average performance | | | | 103% |
2016-2018 2017-2019
average performance | × | ROIC
Modifier
of -2.8% | = | Final percentage% payout of 2017
target amount of 2016 CPUs to be paid in 2018 | 112%103% × 4.74%97.2% =100%117% |
48Following two strong years, our 2019 financial performance fell well short of our targets and our compensation payouts reflect that shortfall. |
| 50 | CORNING2019 2020 PROXY STATEMENT |
Table of Contents Compensation Discussion & Analysis
Total Shareholder Return Corning’s Total Shareholder Return (TSR), which consists of stock price appreciation and reinvestment of common dividends, outperformed the S&P 500 Index over the lastis shown below for 1, 3 and 5 year periods. The financial challenges of 2019 significantly impaired our 1-, 3-, and 5-year periods asTSR results.In the first three years of year-end 2018. Since the introduction of our 2016-2019 Strategy and Capital Allocation Framework, we haveTSR significantly outperformed the S&P 500 Index by nearlyIndex;however, 2019 TSR performance was disappointing as a result of headwinds in Display Technologies and Optical Communications. Nevertheless, we had strong performance in three timessegments, grew sales 2%, advanced key growth initiatives, and took action to address headwinds in termsthe segments mentioned above. Although 2019 was a challenging year, our compensation outcomes demonstrate the direct alignment of total shareholder return.our executive compensation program with the Company’s performance. The Strategy and Capital Allocation Framework has paid off from a financial perspective.
Between its inception in October 2015 and year-end 2018, Corning had TSR of approximately
95% vs. less than 35% for the S&P 500. |
ANNUALIZED TOTAL SHAREHOLDER RETURN | | TOTAL SHAREHOLDER RETURN SINCE START OF FRAMEWORK | | ANNUALIZED TOTAL SHAREHOLDER RETURN | As of year-end 2018 | | October 21, 2015 through year-end 20182019 | | As of year-end 2019 |  | |  | Source: Bloomberg
| | Source: Bloomberg
|
Shareholder Engagement At our 2018 annual meeting of shareholders, our Say on Pay proposal received support from | 90% | of votes cast. |
Strong Say on Pay Results.At our 20182019 Annual Meeting of shareholders, our Say on Pay proposal received support from 90%94% of votes cast. We have received 90% or greater support for our Say on Pay proposal each of the past three years. We view this level of shareholder support as an affirmation of our current pay practices and pay for performance philosophy.
Shareholder Outreach.In 2018, as part of our shareholder outreach program,2019, we met with shareholders representing approximately 45% of our outstanding shares, and approximately two-thirds of our top fifty shareholders. In these meetings, we discussedAdditionally, executive management, Board members, Investor Relations and the Corporate Secretary engage annually with the governance teams of our Strategylargest investors to understand their perspectives on a variety of matters, including executive compensation, risk oversight, corporate governance policies and Capital Allocation Framework (SCAF), as well as governance, compensation, human capital management andcorporate sustainability matters. practices. We learned through these meetingsthatmeetings that our investors are pleased with the SCAFour strategic framework and believe we have clearly articulated how it creates shareholder value and how it is connected to management compensation at Corning.compensation. These shareholders also were generally supportive of our executive compensation program, the direct linkage of financial metrics in our performance-based variable compensation plans to the SCAF,our strategic framework, and the addition of the ROIC modifier that was implemented in 2016 in response to investor feedback. As in previous years, shareholders were not prescriptive about compensation plan design. Instead, they were more interested to see that the results and outcomes delivered by the incentive plans were aligned appropriately with Corning’s performance and had appropriately incented our executives to deliver on our SCAF.strategic framework. We also communicate with shareholders through a number of routine forums, including quarterly earnings presentations, U.S. Securities and Exchange Commission (“SEC”) filings, the Annual Report and Proxy Statement, the annual shareholder meeting, investor meetings and conferences and web communications. We relay shareholder feedback and trends on corporate governance and sustainability developments to our Board and its Committees and work with them to both enhance our practices and improve our disclosures. | CORNING 2020 PROXY STATEMENT | 51 |
CORNING2019 PROXY STATEMENT | 49 |
Table of Contents Compensation Discussion & Analysis What’s Coming in 2020 Compensation Program Design Although our shareholders are generally supportive of our executive compensation program, they have provided feedback which has influenced refinements to our Executive Compensation program design in 2020. What we heard from shareholders... | | What we did... | | Shareholdersliked the 3-year ROICmodifier linked to the SCAF | | In 2016 we introduced a three-year +/-10% ROIC modifier to the CPUsin our Long-Term Incentive Plan.For 2020 we haveincreased theweighting of the three-year modifier to +/-25% and added additionalmetrics, to tightly align with the long-term goals of the new Strategy &Growth Framework. (See chart below) | | Shareholderslike the alignment ofexecutive compensationwith thestrategic frameworks | | The key performance measures for our variable compensation programsare to increase revenues and EPS and generate operating cash flow whilecarefully managing our CapEx | | | | | | Beginning in 2020, the LTI modifier will include targets for three-yearROIC, Operating Margin and Operating Cash Flowto tightly align with thelong-term goals of the new Strategy & Growth Framework | | Shareholders wanted to seemoreequity and less cashin the executiveLong-Term Incentive Plan | | Beginning in 2020, weincreased the equity componentin our LTI Plan by 88%(from 40% to 75%) of an executive’s annual target opportunity (see chart below) |
2019 LTI vs. 2020 LTI | 2019 LTI Mix | | 2020 LTI Mix |  |
| 40% EQUITY / 60% CASH | | 75% EQUITY / 25% CASH | | CPU Payment Metrics: | | CPU/PSU Payout Metrics: | | • | 30% Core Net Sales | | • | 33.3% Core Net Sales | | • | 35% Adjusted Operating Cash Flow | | • | 33.3% Adjusted Operating Cash Flow | | • | 35% CapEx | | • | 33.3% CapEx | | • | Average of three one-year performance periods | | • | Average of three one-year performance periods | | • | Subject to a +/-10% modifier linked to ROIC improvement | | • | Subject to a +/-25% modifier linked to ROIC and Operating Margin improvements and cumulative three-year Operating Cash Flow |
| 52 | CORNING 2020 PROXY STATEMENT |
Table of Contents Compensation Discussion & Analysis | Robust Compensation Program Governance | | Corning has rigorous and robust governance with respect to its executive compensation plan: | ✓ Close alignment of pay with performance over both the shortshort- and long-term horizon, and delivery of the goals of our Strategy and Capital Allocation Frameworkstrategic framework
✓Mix of cash and equity incentives tied to short-term financial performance and long-term value creation
✓CEO total compensation targeted within a competitive range of the Compensation Peer Group median
✓Caps on payout levels for annual incentives in a budgeted down-cycle year
✓Significant NEO share ownership requirements
✓Anti-hedging and pledging policies
✓Clawback policy applicable to both cash and equity compensation
✓Minimum 3-year vesting period for restricted stock or restricted stock unit awards in employee equity plan | |
✓Independent compensation consultant advisor to the Compensation Committee
✓History of demonstrated responsiveness to shareholder concerns and feedback, and ongoing commitment to shareholder engagement
✓Limited and modest perquisites that have a sound benefit to the Company’s business
✕No tax gross-ups or tax assistance on perquisites
✕No repricing or cash buyout of underwater stock options without shareholder approval
✕No excise tax gross-ups for officer agreements entered into after July 2004
|
20182019 Executive Compensation Program Details
Our key compensation program principles are as follows: ●• | Provide a competitive base salary | | | | ●• | Pay for performance | | | | ●• | Incent executionsuccessful completion of our 2016-2019 Strategy and Capital Allocation Framework | | | | ●• | Apply a team-based management approach | | | | ●• | Increase the proportion of performance-based incentive compensation for more senior positions | | | | ●• | Align the interests of our executive group with shareholders |
Base Salary Base salaries provide a form of fixed compensation and are reviewed annually by the Committee, which considers internal equity and individual performance, as well as competitive positioning, as discussed in the “Compensation Peer Group” section starting on page 54.58. In 2018,2019, Mr. Weeks’ base salary increased by 3%3.25%, consistent with the salary increase budget for all other U.S. salaried employees. Mr. Tripeny received a base salary increase of 15% as part of a multi-year strategy to better align his overall compensation package to comparable external salary benchmarks as he continues to demonstrate strong performance as CFO. Base salaries of the remaining NEOs also increased by 5.5% as a result of strong performance and to align compensation with both internal and external salary benchmarks as the Company grows. 50 | CORNING2019 PROXY STATEMENT |
Table of Contents3.25% in 2019.
Compensation Discussion & Analysis
Short-Term Incentives Short-term incentives are designed to reward NEOs for Corning’s consolidated annual financial performance supporting our Strategy and Capital Allocation Frameworkstrategic framework and team-based management approach. Corning has two short-term incentive plans: the Performance Incentive Plan (PIP) and GoalSharing. | CORNING 2020 PROXY STATEMENT | 53 |
Table of Contents Compensation Discussion & Analysis PIP targets are individually established by the Committee each February as a percentage of the NEO’s year-end salary depending on the competitive marketplace and his or her level of experience. In 2018,2019, Mr. Weeks’ PIP target iswas unchanged at 150% of year-end base salary. Mr. McRae’s PIP target iswas 85% of year-end base salary and other NEOs havehad PIP targets of 80%. PIP goalstargets are approved in February and payments are made by the following March 15 once the performance results are known. As outlined on page 48,50, the 20182019 PIP payout will be 126%24% of target based on performance achievement above the pre-establishedwhich was well below 2019 targets. GoalSharing is designed to motivate employees to work together to achieve the most critical goals in each business unit. All Corning employees are eligible for GoalSharing with a target generally equal to 5% of base salary. Earned GoalSharing may be 0% - 10% of base salary, and is weighted 25% on corporate financial performance and 75% on business unit performance. The NEOs’ GoalSharing is based 25% on corporate financial performance and 75% on the average of the results of all business unit plans. GoalSharing goals are approved in February each year and paymentpayments are made by the end of the following February once the performance results are known. As outlined on page 48,51, the 20182019 GoalSharing payout will be 6.41%for our NEOs was 4.37% of year-end base pay due to achievement above the pre-established targets.versus a target of 5%.
Long-Term Incentives Long-Term Incentives (LTI) are comprised of cash and equity in the form of CPUs, RSUs, and stock options (Options). We believe it is important to link LTI amountsmetrics to financial measures that supportwill drive the executionsuccess of our Strategy and Capital Allocation Frameworkstrategic framework and generate long-term value for our shareholders. We also believe it is important for a significant portion of LTI to be in the form of equity to align our executives’ stock ownership interests with those of our shareholders. LTI targets are established by the Committee for each NEO annually in February. Mr. Weeks’ 20182019 LTI target is $9was $9.75 million. Other NEOs’ targets may be found in footnote 3 to the Summary Compensation Table on page 5862 and range from $2.125$2.35 million to $2.4$2.55 million. ●• | CPUsrepresent 60% of the annual target LTI target.value. Payout is based on cash generation and revenue growth, growth—measures that support our Strategy and Capital Allocation Frameworkstrategic framework as well as our long-term financial health and success. The performance measures for CPUs are 1) Adjusted Operating Cash Flow less CapEx (70%(35%), which aligns the cash flow goal to our capital allocation plan, and2) CapEx (35%) which maintains focus on our CapEx,prudent investment decisions and 2)3) Core Net Sales (30%). Actual CPUs earned are based on the averageactual performance averaged over a three-year period. CPUs awarded in 2018 are2019 were also subject to a three-year ROIC modifier of up to ±10% to further align compensation earned with the goal of our 2016-2019 Strategy and Capital Allocation Framework to improve our corporate ROIC. Accordingly, CPUs earned for the years 2018-20202019-2021 will be paid out (in 2021) subject to an adjustment of up to ±10%, depending2022) based on Corning’s ROIC performance over the three-year performance period compared to a pre-established performance target.goals. | | | | ●• | RSUsrepresent 25% of the annual target LTI value. The number of RSUs granted is determined based on the closing stock price on the first business day of April, and awards cliff vest approximately three years from the grant date. | | | | ●• | Optionsrepresent 15% of the annual target LTI value. The number of Options granted is determined using a Black-Scholes valuation. Options were granted on the first business day of April. Vesting is three years after the grant date, and the option awards have a maximum ten-year term. |
| 54 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 51 |
Table of Contents Compensation Discussion & Analysis Long-Term Incentives – Cash Component
| * | Performance targets are established in February each year for the calendar year. See page 48pages 49 and 50 for 20182019 performance measures and results | | | | ** | 3-year ROIC improvement target is established at the beginning of each 3-year performance period. See page 4851 for 2016-20182017-2019 performance measuremeasures and results |
2018
2019 Long-Term Incentives – Equity Components 
 | Compensation
Component | Target
Opportunity | Number of
Units/Options Granted | Vesting
Period | Value
Realized | Restricted
Stock
Units (RSUs) | CEO:
$2.25 million
Other NEOs:
$0.53 million to
$0.6 million
| 25% of LTI target, based onthe closing price of Corning’scommon stock on the grantdate (April 2, 2018)1, 2019) | Approximately
3 years | Dependent upon Corningcommon stock price on thevesting date | Stock
Options | CEO:
$1.35 million
Other NEOs:
$0. 32 million to
$0.36 million
| 15% of LTI target, based onthe Black Scholes Valuationat the time of the grant (April 2, 2018)(April 1, 2019) | 3 years | Dependent upon Corningcommon stock price increase,if any, between time ofthe grant and the time ofexercise |
52 | CORNING2019 PROXY STATEMENT |
| CORNING 2020 PROXY STATEMENT | 55 |
Table of Contents Compensation Discussion & Analysis
CEO Target Compensation Over the past fourteenfifteen years, under the leadership of Mr. Weeks, Corning has grown significantly, achieved the lowest cost position and market leadership in many key businesses, and created new-to-the-world product categories, such as Corning®Gorilla®Glass, heavy-duty diesel substrates and filters, customized fiber-to-the-home solutions and Corning Valor®Glass. Based on
In recognition of this sustained leveltrack record of performance and particularly strong performance results in 2017 and 2018 in February 2018,2019, the Compensation Committee approved a 3%3.25% base salary increase for Mr. Weeks and an increase inincreased Mr. Weeks’ LTI target to $9$9.75 million. ●• | Base salary– increased by 3%3.25%, in line with base salary increases for all other U.S. based salaried employees. | ● | | | • | Short-Term Incentives Target–remained flat at 155% of base salary, comprised of a PIP target of 150% of base salary and a GoalSharing target of 5% of base salary. | ● | | | • | Long-Term Incentives Target– increased to $9$9.75 million from $8.25$9 million |
Eighty-nine
Year-over-year, eighty-nine percent of Mr. Weeks’ pay is directly tied to Corning’s operating performance and stock price. As a result, Mr. Weeks’ year over year compensation in 2019 is significantly below that of 2018. The table below shows annual CEO pay (i.e., salary and incentive compensation) for 2018 and 2019, excluding employee benefits, perquisites and the change in pension value, which can fluctuate significantly year-to-year solely due to discount rate changes.
CEO COMPENSATION | | 2018 | | 2019 | | Percent Change | | Base | $1,412,769 | | $1,457,604 | | +3.2% | | Goalsharing | 91,996 | | 64,755 | | -29.6% | | PIP | 2,712,528 | | 533,448 | | -80.0% | | CPUs | 6,692,386 | | 3,365,442 | | -49.7% | | RSUs | 2,250,004 | | 2,437,491 | | +8.3% | | Stock Options | 1,068,905 | | 1,262,629 | | +18.1% | | Total Compensation (excluding pension and all other compensation) | $14,228,588 | | $9,121,369 | | -35.9 |
Employee Benefits and Perquisites
Employee Benefits:Our NEOs are eligible to participate in the same employee benefits plans as all other eligible U.S. salaried employees. These plans include medical, dental, life insurance, disability, matching gifts, qualified defined benefit and defined contribution plans. We also maintain non-qualified defined benefit and defined contribution retirement and long-term disability plans with the same general features and benefits as our qualified plans for all U.S. salaried employees affected by tax law compensation, contribution or deduction limits. In addition to the standard benefits available to all eligible U.S. salaried employees, the NEOs are eligible for the benefits and perquisites described in this section.
Executive Supplemental Pension Plan (ESPP):We maintain an ESPP to reward and retain long-serving individuals who are critical to executing Corning’s innovation strategy. Our non-qualified ESPP covers approximately 2026 active participants, including all of the NEOs. In 2006, we capped the percentage of cash compensation earned as a retirement benefit under the ESPP at a maximum of 50% of final average pay for 25 or more years of service, a change that applies to all the NEOs except Dr. Morse. The definition of pay used to determine benefits includes base salary and annual cash bonuses. Long-term cash or equity incentives are not included and do not affect retirement benefits. Executives must have at least ten years of service to be vested under this plan. All of the NEOs meet the ten-year vesting requirement. While we seek to maintain well-funded qualified retirement plans, we do not fund our non-qualified retirement plans. For additional details of the ESPP benefits and plan features, please refer to the section entitled “Retirement Plans” on page 64.67.
Executive Physical and Wellness:All executives are eligible for an annual physical exam in addition to wellness programs sponsored by Corning for all employees. The cost of the physical is imputed income to the executive.
Relocation and Expatriate-Related Expenses:As part of our global mobility program, our policies provide that employees who relocate to another country at our request are eligible for certain relocation and expatriate benefits to facilitate the transition and international assignment. These benefits include moving expenses, allowances for housing and goods and services, and tax assistance. These policies are intended to recognize and compensate employees for incremental costs incurred with moving or with living and working outside of the employee’s home country. The goal of these relocation and expatriate assistance programs is to ensure that employees are not financially advantaged or disadvantaged because of their relocation and/or international assignment, including related taxes. In July 2016, Mr. Clappin’s assignment in Tokyo ended and he relocated back to Corning, NY. While he was based in Tokyo, Mr. Clappin was eligible for expatriate benefits. Tax-related assistance extends for several years beyond the assignment end due to LTI amounts earned while on assignment which vest after the assignment end date. These amounts are detailed in footnote 5, section (v) to the Summary Compensation Table. | 56 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 53 |
Table of Contents Compensation Discussion & Analysis
Other Executive Perquisites:We provide the NEOs with an overall allowance that can be used for home security, modest personal aircraft usage, and limited financial counseling services. Each NEO is responsible for all taxes on any imputed income resulting from these perquisites. Given the limited commercial flight options available in the Corning, New York area, the Committee believes that a well-managed program of limited personal aircraft use provides an extremely important benefit at a reasonable cost to the Company. We closely monitor business and personal usage of our planes and limit personal usage to keep it at a low percentage of total usage. The Committee establishes annual personal aircraft usage caps under this program (both hours and absolute dollar value) for each NEO. The established cap for the CEO was 100 hours and $170,000; the cap for the other NEOs was approximately half this level or lower. Actual utilization falls below these caps. For additional details, refer to footnotes relating to “All Other Compensation” included with the Summary Compensation Table starting on page 58.61.
Executive Severance:We have entered into severance agreements with each NEO. The severance agreements provide clarity for both Corning and the executive if the executive’s employment terminates. By having an agreement in place, we avoid the uncertainty, negotiations and potential litigation that may otherwise occur in the event of termination. The agreements are competitive with market practices at many other large companies and are helpful in retaining senior executives. Additional details can be found under “Arrangements with Named Executive Officers” on page 67.70.
Executive Change-in-Control Agreements:The Committee believes that it is in the best interests of shareholders, employees and the communities in which Corning operates to ensure an orderly process if a change in control were to occur. The Committee also believes it is important to prevent the loss of key management personnel (who would be difficult to replace) that may occur in connection with a potential or actual change in control. Therefore, we have provided each NEO with a change-in-control agreement (separate from the severance agreements described above). The change-in-control agreements provide that an executive’s employment must be terminated or effectively terminated in connection with a change in control in order to receive severance benefits. Additional details about the specific agreements can be found under “Arrangements with Named Executive Officers – Change-in-Control Agreements” on page 69.72. In 2012, the Committee approved updated forms of agreements for all corporate officers entering into change-in-control agreements after July 2004, which contain no provision for gross-ups for excise taxes, and cap severance and other benefits at 2.99 times base salary plus target bonus, with cash severance for most officers limited to 2 times base salary plus target bonus. Except for Mr. Tripeny, whose agreement is dated January 1, 2015, our current NEOs have grandfathered agreements that were entered into prior to July 2004. Compensation Peer Group Corning is a diversified technology company with five reportable business segments. The majority of our businesses do not have U.S. public company peers. Most of our businesses compete with non-U.S. companies in Asia and Europe, or privately-held companies that do not provide comparable executive compensation disclosure. In attempting to identify peer companies for compensation purposes, Corning must look to globally diversified companies or innovation companies in other industries to find organizations of similar size and complexity (when viewed in terms of revenues, net income, market capitalization, assets and number of employees). For these reasons, our peer group for compensation purposes does not closely resemble the companies with which we compete for business. ● | | | | | • | Our largest competitors and most relevant financial performance peers are not U.S. public companies.
| | ● | | | | | • | Corning must look to globally diversified companies or innovation companies in other industries to find companies of similar size and complexity. | | | | | |
| CORNING 2020 PROXY STATEMENT | 57 |
Table of Contents Compensation Discussion & Analysis We currently participate in and use several executive compensation surveys for NEO positions. Primary surveys are the Willis Towers Watson General Industry Executive Compensation Survey, the Equilar TrueValue Survey and Aon Hewitt Total Compensation Measurement Survey for Executives. The surveys provide general market data for relevant positions in companies with revenues and market capitalization similar to Corning’s in both the Technologytechnology industry and in general industry. 54 | CORNING2019 PROXY STATEMENT |
Table of Contents
Compensation Discussion & Analysis
20182019 Compensation Peer Group
The Compensation Peer Group in 20182019 is set forth below. It is the same as the Compensation Peer Group in 2017, except for Monsanto Company and Praxair, Inc., which were acquired during 2018 and are no longer included.2018. | Advanced Micro Devices, Inc. | | Cummins Inc. | | Medtronic, Inc. | | TE Connectivity Limited | | | | | | | | | Agilent Technologies, Inc. | | Danaher Corporation | | Motorola Solutions, Inc. | | Texas Instruments Incorporated | | | | | | | | | Applied Materials, Inc. | | Dover Corporation | | NetApp, Inc. | | Thermo Fisher Scientific, Inc. | | | | | | | | | BorgWarner, Inc. | | Eaton Corporation PLC | | PPG Industries, Inc. | | | | | | | | | | | Boston Scientific Corporation | | Harris Corporation | | QUALCOMM, Inc. | | | | | | | | | | | Broadcom Corporation | | Juniper Networks, Inc. | | Rockwell Automation, Inc. | | |
The Company selects a fair and challenging Compensation Peer Group as a reference point when setting its executive compensation. The Company’s percentage ranking versus the Compensation Peer Group is near to or well-above the median in all measured categories. PERCENT RANK, CORNING VERSUS COMPENSATION PEER GROUP |
PERCENT RANK, CORNING VERSUS COMPENSATION PEER GROUP 
Corning uses the Compensation Peer Group solely as a reference point, in combination with broader executive compensation surveys, to assess each NEO’s target total direct compensation (i.e., salary, target bonus, and the grant date fair value of long-term incentives). Our goal is to position our CEO’s target total direct compensation within a competitive range of the Compensation Peer Group median. Median target total direct CEO compensation in the Compensation Peer Group was determined to be $12.9$13.6 million, and 75th percentile target total direct CEO compensation was $15.4$14.7 million, compared with Corning target total direct CEO compensation of $12.7$13.5 million. Beyond the CEO, external data serves as a reference point, with internal equity and individual performance and impact being more important considerations in establishing a base salary and target total direct compensation for the other NEOs. Compensation Program – Other Governance Matters
Role of Compensation Consultant The Compensation Committee has the authority to retain and terminate a compensation consultant, and to approve the consultant’s fees and all other terms of such engagement. Since 2014, the Committee has retained an executive compensation expert from Frederic W. Cook & Co., Inc. (FW Cook) as its independent consultant. In 2018,2019, FW Cook attended all Committee meetings. FW Cook advises the Committee on all matters related to NEO and director compensation and assists the Committee in interpreting its data as well as data and recommendations received from the Company. | 58 | CORNING 2020 PROXY STATEMENT |
Table of Contents Compensation Discussion & Analysis In 2018,2019, the Company also engaged Compensation Advisory Partners LLC (CAP) and Willis Towers Watson (WTW) to assist management with various executive compensation matters. The Committee conducted an independence review of FW Cook, CAP and WTW pursuant to SEC and NYSE rules, and concluded that the work of each firm for the Committee did not raise any conflicts of interest concerns. FW Cook provides no services to Corning other than the services rendered to the Committee. CORNING2019 PROXY STATEMENT | 55 |
Table of Contents
Compensation Discussion & Analysis
Role of Executive Management in the Executive Compensation Process Corning’s executive vice president, People and Digital and senior vice president (SVP), Human Resources and SVP, Global Compensation and Benefits, working closely with other members of Corning’s Human Resources, Law and Finance departments, are responsible for designing and implementing executive compensation programs and discussing with the Committee significant proposals or topics that affect executive compensation at the Company. The SVP, Global Compensation and Benefits, formulates the target total compensation recommendations for all of the NEOs (except the CEO) and reviews the recommendations for each of the other NEOs with the CEO. The NEOs do not recommend or suggest individual compensation actions that benefit them personally. The CEO may propose adjustments he deems appropriate before management’s recommendations are submitted to the Committee. Recommendations for the CEO’s compensation are prepared by the Committee’s independent compensation consultant (FW Cook) and are not discussed or reviewed with the CEO prior to the Committee’s review and the CEO is not present for discussion of his compensation by the Committee. After the annual budget is finalized each year, the Committee receives management’s recommendations for the compensation plan performance metrics and sets the final targets for the year. The CFO and the Controller typically attendsattend the annual Committee meeting to review the CD&A and attends that portion of the February Committee meeting where performance metrics are reviewed.
Clawback Policy Our clawback policy gives the Committee the sole and absolute discretion to make retroactive adjustments to any cash or equity-based incentive compensation paid to executive officers and other key employees if such payment was based upon the achievement of financial results that were subsequently the subject of a restatement. The Committee has discretion to seek recovery of any amount that it determines was received inappropriately by such individuals.
Anti-Hedging Policy Our anti-hedging policy prohibits employees and directors from selling or buying publicly traded options on Corning stock, or trading in any Corning stock derivatives. Additionally, these individuals may not engage in transactions in which they may profit from short-term speculative swings in the value of Corning stock utilizing “short sales” or “put” or “call” options.
Anti-Pledging Policy Our anti-pledging policy prohibits employees and directors from holding Corning stock in a margin account or pledging Company securities as collateral for a loan.
Tax Deductibility of Compensation Historically, the Committee has made compensation decisions with an eye towards deductibility of performance-based pay under IRC Section 162(m). However, the Tax Cuts and Jobs Act of 2017 (“the Tax Act”) that was signed into law December 22, 2017 eliminated the exemption from Section 162(m)’s deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017. Compensation paid to our covered officers in excess of $1 million therefore will not be deductible unless it qualifies for transition relief.
Accounting Implications In designing our compensation and benefit programs, we review the accounting implications of our decisions. We seek to deliver cost-effective compensation and benefit programs that meet both the needs of the Company and our employees. 56 | CORNING2019 2020 PROXY STATEMENT | 59 |
Table of Contents Compensation Discussion & Analysis Compensation Committee Report The Compensation Committee of the Board of Directors (the Committee), which is composed entirely of independent directors, is responsible to the Board of Directors and our shareholders for the oversight and administration of executive compensation at Corning. The Committee approves the principles guiding the Company’s compensation philosophy, reviews and approves executive compensation levels (including cash compensation, equity incentives, benefits and perquisites for officers) and reports its actions to the Board of Directors for review and, as necessary, approval. The Committee is responsible for interpreting Corning’s executive compensation plans and programs. In the event of any questions or disputes, the Committee may use its judgment and/or discretion to make final administrative decisions regarding these plans and programs. It is our practice that all compensation decisions affecting a corporate officer must be reviewed and approved by the Committee. Additional details regarding the role and responsibilities of the Committee are defined in the Committee Charter, located in the Corporate Governance section of the Company’s website. The Committee has reviewed and discussed the foregoing CD&A with management. Based on our review and discussions with management, we recommended to the Board of Directors that the CD&A be included in this proxy statement and in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.
The Compensation Committee: Deborah D. Rieman,Chair
Leslie A. Brun
Richard T. Clark
Kurt M. Landgraf
Hansel E. Tookes II | 60 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 57 |
Table of Contents Compensation Discussion & Analysis 20182019 Compensation Tables
20182019 Summary Compensation Table
This table describes the total compensation paid to our NEOs for fiscal years 2019, 2018 2017 and 2016,2017, as required. The components of the total compensation are described in the footnotes below and in more detail in the tables and narratives that follow. For information on the role of each component of compensation, see the description under “Compensation Discussion and Analysis.” 2018 Non-Equity Incentive Plan Compensation for each NEO, shown in the table below in column (f), is arrived at by adding together the relevant 2018 value in each of columns (A), (B), (C), (D), (X) and (Y) from the tables in Footnote 3 below.
| (a) | | (b) | | (c) | | (d)(1) | | (e)(2) | | (f)(3) | | (g)(4) | | (h)(5) | | (i) | | Named Executive Officer | | Year | | Salary
($) | | Stock
Awards
($) | | Option
Awards
($) | | Non-Equity
Incentive Plan
Compensation
($) | | Change in
Pension
Value And
Nonqualified
Deferred
Compensation
Earnings
($) | | All Other
Compensation
($) | | Total
($) | | Wendell P. Weeks | | 2018 | | $1,412,769 | | $2,250,004 | | $1,068,905 | | $9,496,910 | | $214,550 | | $477,933 | | $14,921,071 | | Chairman, Chief Executive | | 2017 | | 1,370,971 | | 2,062,503 | | 1,154,705 | | 9,240,173 | | 2,680,783 | | 359,440 | | 16,868,575 | | Officer and President | | 2016 | | 1,337,740 | | 2,062,491 | | 963,399 | | 5,750,512 | | 928,531 | | 266,582 | | 11,309,255 | | R. Tony Tripeny | | 2018 | | 643,269 | | 531,248 | | 252,380 | | 2,128,343 | | 784,470 | | 137,172 | | 4,476,882 | | Executive Vice President and | | 2017 | | 553,269 | | 475,011 | | 265,933 | | 1,796,340 | | 858,254 | | 111,412 | | 4,060,219 | | Chief Financial Officer | | 2016 | | 504,808 | | 349,991 | | 163,480 | | 916,406 | | 214,950 | | 126,222 | | 2,275,857 | | James P. Clappin | | 2018 | | 731,515 | | 587,497 | | 279,101 | | 2,521,206 | | 49,144 | | 333,350 | | 4,501,813 | | Executive Vice President, | | 2017 | | 703,600 | | 524,988 | | 293,929 | | 2,401,287 | | 674,260 | | 157,335 | | 4,755,399 | | Corning Glass Technologies | | 2016 | | 686,538 | | 525,007 | | 245,230 | | 1,537,749 | | 66,568 | | 3,452,856 | | 6,513,948 | | Lawrence D. McRae | | 2018 | | 780,113 | | 600,012 | | 285,043 | | 2,720,709 | | 58,395 | | 68,687 | | 4,512,959 | | Vice Chairman and Corporate | | 2017 | | 750,173 | | 562,491 | | 314,921 | | 2,610,289 | | 893,805 | | 78,304 | | 5,209,983 | | Development Officer | | 2016 | | 731,971 | | 562,505 | | 262,737 | | 1,633,734 | | 90,676 | | 83,329 | | 3,364,952 | | David L. Morse | | 2018 | | 677,465 | | 562,494 | | 267,225 | | 2,444,561 | | 444,224 | | 149,850 | | 4,545,819 | | Executive Vice President and | | 2017 | | 646,683 | | 524,988 | | 293,929 | | 2,321,182 | | 1,154,083 | | 115,809 | | 5,056,674 | | Chief Technology Officer | | 2016 | | 631,010 | | 525,007 | | 245,230 | | 1,498,641 | | 468,668 | | 97,390 | | 3,465,946 |
| Our 2019 financial performance fell well short of our targets. As a result, 2019 compensation was significantly lower than 2018 compensation. CEO pay (i.e., base plus incentives) was down 35.9% year-over-year and NEO pay was down 32.4%, excluding employee benefits and perquisites and the change in pension value, which increased due to declining discount rates. |
| (a) | | (b) | | (c) | | | (d)(1) | | | (e)(2) | | | (f)(3) | | | (g)(4) | | | (h)(5) | | | (i) | | Named Executive Officer | | Year | | Salary
($) | | | Stock
Awards
($) | | | Option
Awards
($) | | | Non-Equity
Incentive Plan
Compensation
($) | | | Change in
Pension Value
And
Nonqualified
Deferred
Compensation
Earnings
($) | | | All Other
Compensation
($) | | | Total
($) | Wendell P. Weeks
Chairman, Chief Executive
Officer and President | | 2019 | | $ | 1,457,604 | | | $ | 2,437,491 | | | $ | 1,262,629 | | | $ | 3,963,645 | | | $ | 4,527,898 | | | $ | 634,387 | | | $ | 14,283,654 | | | 2018 | | | 1,412,769 | | | | 2,250,004 | | | | 1,068,905 | | | | 9,496,910 | | | | 214,550 | | | | 477,933 | | | | 14,921,071 | | | 2017 | | | 1,370,971 | | | | 2,062,503 | | | | 1,154,705 | | | | 9,240,173 | | | | 2,680,783 | | | | 359,440 | | | | 16,868,575 | R. Tony Tripeny
Executive Vice President and
Chief Financial Officer | | 2019 | | | 700,769 | | | | 587,494 | | | | 304,322 | | | | 960,485 | | | | 1,856,908 | | | | 134,966 | | | | 4,544,944 | | | 2018 | | | 643,269 | | | | 531,248 | | | | 252,380 | | | | 2,128,343 | | | | 784,470 | | | | 137,172 | | | | 4,476,882 | | | 2017 | | | 553,269 | | | | 475,011 | | | | 265,933 | | | | 1,796,340 | | | | 858,254 | | | | 111,412 | | | | 4,060,219 | James P. Clappin
Executive Vice President,
Corning Glass Technologies | | 2019 | | | 761,731 | | | | 625,010 | | | | 323,746 | | | | 1,047,808 | | | | 1,565,776 | | | | 149,794 | | | | 4,473,865 | | | 2018 | | | 731,515 | | | | 587,497 | | | | 279,101 | | | | 2,521,206 | | | | 49,144 | | | | 333,350 | | | | 4,501,813 | | | 2017 | | | 703,600 | | | | 524,988 | | | | 293,929 | | | | 2,401,287 | | | | 674,260 | | | | 157,335 | | | | 4,755,399 | Lawrence D. McRae
Vice Chairman and Corporate
Development Officer | | 2019 | | | 812,500 | | | | 637,492 | | | | 330,221 | | | | 1,104,186 | | | | 1,842,624 | | | | 77,664 | | | | 4,804,687 | | | 2018 | | | 780,113 | | | | 600,012 | | | | 285,043 | | | | 2,720,709 | | | | 58,395 | | | | 68,687 | | | | 4,512,959 | | | 2017 | | | 750,173 | | | | 562,491 | | | | 314,921 | | | | 2,610,289 | | | | 893,805 | | | | 78,304 | | | | 5,209,983 | David L. Morse
Executive Vice President and
Chief Technology Officer | | 2019 | | | 710,962 | | | | 600,011 | | | | 310,797 | | | | 1,013,326 | | | | 1,750,354 | | | | 163,088 | | | | 4,548,538 | | | 2018 | | | 677,465 | | | | 562,494 | | | | 267,225 | | | | 2,444,561 | | | | 444,224 | | | | 149,850 | | | | 4,545,819 | | | 2017 | | | 646,683 | | | | 524,988 | | | | 293,929 | | | | 2,321,182 | | | | 1,154,083 | | | | 115,809 | | | | 5,056,674 |
| (1) | The amounts in the Stock Awards column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of restricted stock units and restricted stock awards granted pursuant to the long termlong-term incentive plan. Assumptions used in the calculation of these amounts are included in Note 1 to the Company’s audited financial statements for the fiscal year ended December 31, 20182019 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 12, 2019.18, 2020. This same method was used for the fiscal years ended December 31, 20172018 and 2016.2017. There can be no assurance that the grant date fair value amounts will ever be realized. | | | | (2) | The amounts in the OptionsOption Awards column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of stock option awards granted pursuant to the long termlong-term incentive plan. Assumptions used in the calculation of these amounts are included in Note 1 to the Company’s audited financial statements for the fiscal year ended December 31, 20182019 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 12, 2019.18, 2020. The grant date fair value amounts may never be realized. |
| CORNING 2020 PROXY STATEMENT | 61 |
Table of Contents Compensation Discussion & Analysis | (3) | The amounts in the Non-Equity Incentive Plan Compensation column reflect the sum of annual short termshort-term incentive payments and earned cash performance units. All of the annual cash bonuses paid to the NEOs are performance-based. Cash bonuses are paid annually through two plans: (i) GoalSharing; and (ii) the Performance Incentive Plan (PIP). Awards earned under the 20182019 GoalSharing plan were 6.41%4.37% of each NEO’s year-end base salary and paid in February 2019.2020. Awards earned under the 20182019 PIP were based on actual corporate performance compared to the Core EPS and core net salesCore Net Sales goals established for the plans in February 2018.2019. Based on actual performance, each of the NEOs earned PIP awards equal to 126%24% of their annual target bonus opportunities (established as a percentage of year-end base salary). Cash awards earned under the PIP for 20182019 will be paid in March 2019.2020. |
58 | CORNING2019 PROXY STATEMENT |
Table of Contents
| | Named Executive Officer | | Year End
Base Salary | | | 2019
PIP Target % | | | Actual
2019 PIP
Performance
Results (% Tgt.) | | | (A)
2019 PIP
$ Award | | | Actual 2019
GoalSharing
Performance % | | | (B)
2019
GoalSharing
$ Award | | | Wendell P. Weeks | | $ | 1,481,800 | | | | 150% | | | | 24% | | | $ | 533,448 | | | | 4.37% | | | $ | 64,755 | | | R. Tony Tripeny | | | 712,400 | | | | 80% | | | | 24% | | | | 136,781 | | | | 4.37% | | | | 31,132 | | | James P. Clappin | | | 774,400 | | | | 80% | | | | 24% | | | | 148,685 | | | | 4.37% | | | | 33,841 | | | Lawrence D. McRae | | | 826,000 | | | | 85% | | | | 24% | | | | 168,504 | | | | 4.37% | | | | 36,096 | | | David L. Morse | | | 722,800 | | | | 80% | | | | 24% | | | | 138,778 | | | | 4.37% | | | | 31,586 |
Compensation Discussion & Analysis
| Named Executive Officer | | Year End
Base Salary | | 2018
PIP Target % | | Actual 2018 PIP
Performance
Results
(% Tgt.) | | (X)
2018
PIP $ Award | | Actual 2018
GoalSharing
Performance % | | (Y)
2018
GoalSharing
$ Award | | Wendell P. Weeks | | $1,435,200 | | 150% | | 126% | | $2,712,528 | | 6.41% | | $91,996 | | R. Tony Tripeny | | 690,000 | | 80% | | 126% | | 695,520 | | 6.41% | | 44,229 | | James P. Clappin | | 750,000 | | 80% | | 126% | | 756,000 | | 6.41% | | 48,075 | | Lawrence D. McRae | | 800,000 | | 85% | | 126% | | 856,800 | | 6.41% | | 51,280 | | David L. Morse | | 700,000 | | 80% | | 126% | | 705,600 | | 6.41% | | 44,870 |
In addition to the 20182019 PIP and 2018 GoalSharing awards noted above, the amounts in column (f) also reflect the earned portions of CPU Awardsawards granted in 2019, 2018 2017 and 20162017 on the basis of 20182019 performance against established measures. 20182019 CPU award payouts will be made in 20212022 based on actual corporate performance compared to the established performance goals averaged over three years (2018, 2019(2019, 2020 and 2020)2021) and subject to thea ±10% ROIC modifier as described on page 48.51. 2018 and 2017 and 2016 CPU award payouts are based on performance goals averaged over three years (2018, 2019 and 2020) and (2017, 2018 and 2019) and (2016, 2017 and 2018) respectively and are also subject to thea ±10% ROIC modifier. Adjusted operating cash flow, capexOperating Cash Flow, CapEx and core net salesCore Net Sales goals for 20192020 and 20202021 are yet to be established. While the final payout amounts for 20182019 and 20172018 CPU awards are unknown, the table below reflects the earned amount of 2019, 2018 2017 and 20162017 CPU awards which are reflected in the “Non-Equity IncentiveNon-Equity Plan Compensation”Compensation column above, on the basis of 20182019 performance metrics which excludes the portion of the 2019 award that remains unearned because ROIC performance against targets (2020-2021) is not yet known and the portion of the 2018 award that remains unearned because ROIC performance against targets (2018-2020) are not yet known and the portion of 2017 award that remains unearned because ROIC performance against targets (2017-2019) aretarget (2020) is not yet known. The 3-year ROIC modifier for the period 2016-20182017-2019 was +4.74%-2.8%. The summary compensation tableSummary Compensation Table includes an adjustment for 20162017 CPUs as shown in the table below as a result of this modifier. | Named Executive Officer | 2018 LTI
Target | 2018 CPU
Target
Award
($) | 2018 CPU
Performance
Results % | (A)
Prorated Earned
2018 CPU Award
Based on 2018
Performance
(Year One of
Three)
($)* | 2017 CPU
Target
Award
($) | (B)
Prorated Earned
2017 CPU Award
Based on 2018
Performance
(Year Two of
Three)
($)* | 2016 CPU
Target
Amount | (C)
Prorated Earned
2016 CPU Award
Based on 2018
Performance
(Year Three of
Three)*
($) | (D)
Prorated Earned
2016 CPU Award
Based on
True-up of
2016 - 2018
Performance and
ROIC Modifier**
($) | | Wendell P. Weeks | $9,000,000 | $5,400,000 | 128% | $2,073,600 | $4,950,000 | $1,900,800 | $4,950,000 | $1,900,800 | $817,186 | | R. Tony Tripeny | 2,125,000 | 1,275,000 | 128% | 489,600 | 1,140,000 | 437,760 | 840,000 | 322,560 | 138,674 | | James P. Clappin | 2,350,000 | 1,410,000 | 128% | 541,440 | 1,260,000 | 483,840 | 1,260,000 | 483,840 | 208,011 | | Lawrence D. McRae | 2,400,000 | 1,440,000 | 128% | 552,960 | 1,350,000 | 518,400 | 1,350,000 | 518,400 | 222,869 | | David L. Morse | 2,250,000 | 1,350,000 | 128% | 518,400 | 1,260,000 | 483,840 | 1,260,000 | 483,840 | 208,011 | | | | | | | | | | |
| Named Executive Officer | | 2019 LTI
Target | | | 2019 CPU
Target
Award
($) | | | 2019 CPU
Performance
Results % | | | (C)
Prorated Earned
2019 CPU Award
Based on 2019
Performance
(Year One
of Three)
($)* | | | 2018 CPU
Target
Award
($) | | | (D)
Prorated Earned
2018 CPU Award
Based on 2019
Performance
(Year Two
of Three)
($)* | | | 2017 CPU
Target
Award
($) | | | (E)
Prorated Earned
2017 CPU Award
Based on 2019
Performance
(Year Three of
Three)*
($) | | | (F)
Prorated Earned
2017 CPU
Award Based on
2017 - 2019 ROIC
Modifier**
($) | | Wendell P. Weeks | | $ | 9,750,000 | | | $ | 5,850,000 | | | | 62% | | | $ | 1,088,100 | | | $ | 5,400,000 | | | $ | 1,004,400 | | | $ | 4,950,000 | | | $ | 920,700 | | | $ | 352,242 | | R. Tony Tripeny | | | 2,350,000 | | | | 1,410,000 | | | | 62% | | | | 262,260 | | | | 1,275,000 | | | | 237,150 | | | | 1,140,000 | | | | 212,040 | | | | 81,122 | | James P. Clappin | | | 2,500,000 | | | | 1,500,000 | | | | 62% | | | | 279,000 | | | | 1,410,000 | | | | 262,260 | | | | 1,260,000 | | | | 234,360 | | | | 89,662 | | Lawrence D. McRae | | | 2,550,000 | | | | 1,530,000 | | | | 62% | | | | 284,580 | | | | 1,440,000 | | | | 267,840 | | | | 1,350,000 | | | | 251,100 | | | | 96,066 | | David L. Morse | | | 2,400,000 | | | | 1,440,000 | | | | 62% | | | | 267,840 | | | | 1,350,000 | | | | 251,100 | | | | 1,260,000 | | | | 234,360 | | | | 89,662 |
| * | reduced by 10% to accommodateas a result of the +/-10% ROIC modifier result which is not known until the end of the 3-year performance period. These amounts get trued-up and reported in the third and final year of each 3-year performance period. period | | | | | ** | 20162017 CPUs earned as a result of the true-up of final performance under the 3-year plan as well as the ROIC modifier of +4.74%-2.8% based on 2016-20182017-2019 ROIC improvementperformance against pre-established objectives
|
The amount disclosed in column (f) consists of the total (A) + (B) + (C) + (D) + (E) + (F) shown in this footnote (3). (4) | The amounts in the “ChangeChange in Pension Value And Nonqualified Deferred Compensation Earnings” columnColumn reflect the increase in the actuarial present value of the NEO’s benefits under all defined benefit pension plans established by the Company determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Although the “Change in Pension Value And Nonqualified Deferred Compensation Earnings” column (g) is also used to report the amount of above market earnings on compensation that is deferred under the nonqualified deferred compensation plan, Corning does not have any above market earnings under its nonqualified deferred compensation plan, also referred to as the Supplemental Investment Plan. In 20182019 the discount rate used to value the actuarial liability increaseddecreased approximately 6998 basis points from 3.6%4.29% to 4.29%3.31%. Discount rate changes over the past several years have resulted in significant year-to-year fluctuations in the present value of pension benefits as shown below: |
| | Named Executive Officer | | 2019 Present
Value in
Pension
Benefits($) | | | 2018 Present
Value in
Pension
Benefits ($) | | �� | 2017 Present
Value in
Pension
Benefits ($) | | | 2016 Present
Value in
Pension
Benefits ($) | | | Wendell P. Weeks | | $ | 32,230,668 | | | $ | 27,702,770 | | | $ | 27,488,220 | | | $ | 24,807,437 | | | R. Tony Tripeny | | | 8,831,472 | | | | 6,974,564 | | | | 6,190,094 | | | | 5,331,840 | | | James P. Clappin | | | 11,045,812 | | | | 9,480,036 | | | | 9,430,892 | | | | 8,756,632 | | | Lawrence D. McRae | | | 12,277,918 | | | | 10,435,294 | | | | 10,376,899 | | | | 9,483,094 | | | David L. Morse | | | 11,766,413 | | | | 10,016,059 | | | | 9,571,835 | | | | 8,417,752 | | | Valuation Discount Rate | | | 3.31% | | | | 4.29% | | | | 3.60% | | | | 4.02% |
| 62 | CORNING 2020 PROXY STATEMENT |
| Named Executive Officer | | 2018 Present
Value in
Pension
Benefits ($) | | 2017 Present
Value in
Pension
Benefits ($) | | 2016 Present
Value in
Pension
Benefits ($) | | 2015 Present
Value in
Pension
Benefits ($) | | Wendell P. Weeks | | $27,702,770 | | $27,488,220 | | $24,807,437 | | $23,878,906 | | R. Tony Tripeny | | 6,974,564 | | 6,190,094 | | 5,331,840 | | 5,116,890 | | James P. Clappin | | 9,480,036 | | 9,430,892 | | 8,756,632 | | 8,690,064 | | Lawrence D. McRae | | 10,435,294 | | 10,376,899 | | 9,483,094 | | 9,392,418 | | David L. Morse | | 10,016,059 | | 9,571,835 | | 8,417,752 | | -------Not an NEO-------- | | Valuation Discount Rate | | 4.29% | | 3.60% | | 4.02% | | 4.25% |
CORNING2019 PROXY STATEMENT | 59 |
Table of Contents Compensation Discussion & Analysis (5) | The following table shows “All Other Compensation” amounts provided to the NEOs. Capped personal aircraft rights, financial counseling services and home security are the only perquisites offered to the NEOs. The value of the personal aircraft rights in the table below reflects the incremental cost of providing such perquisites and is calculated based on the average variable operating costs to the Company. Hourly rates are developed using variable operating costs that include fuel costs, mileage, maintenance, crew travel expense, catering and other miscellaneous variable costs. Fixed costs that do not change based on usage, such as pilot salaries, hangar expense and general taxes and insurance are excluded. |
| Named Executive Officer | | Year | | Company Match
on Qualified
401(k) Plan | | Company Match
on Supplemental
Investment Plan | | Value of
Personal
Aircraft
Rights(i) | | Value of Home
Security Costs
and Financial
Counseling(ii) | | Expatriate
Benefits | | Other(iii) | | TOTALS | | Wendell P. Weeks | | 2018 | | $16,227 | | $77,320 | | $195,485 | | $179,746 | (iv) | | $0 | | | $9,155 | | $477,933 | | | 2017 | | 14,603 | | 75,028 | | 94,117 | | 165,921 | (iv) | | 0 | | | 9,771 | | 359,440 | | | 2016 | | 9,880 | | 73,165 | | 56,893 | | 109,520 | (iv) | | 0 | | | 17,124 | | 266,582 | | R. Tony Tripeny | | 2018 | | 4,900 | | 54,092 | | 17,758 | | 47,219 | | | 0 | | | 13,203 | | 137,172 | | | 2017 | | 4,800 | | 30,685 | | 14,138 | | 50,859 | | | 0 | | | 10,930 | | 111,412 | | | 2016 | | 4,800 | | 25,017 | | 4,303 | | 80,030 | | | 0 | | | 12,072 | | 126,222 | | James P. Clappin | | 2018 | | 16,810 | | 89,499 | | 53,820 | | 18,680 | | | 132,122 | (v) | | 22,419 | | 333,350 | | | 2017 | | 7,410 | | 65,894 | | 49,039 | | 23,461 | | | 0 | | | 11,531 | | 157,335 | | | 2016 | | 7,410 | | 58,473 | | 54,708 | | 17,791 | | | 3,311,896 | (v) | | 2,578 | | 3,452,856 | | Lawrence D. McRae | | 2018 | | 16,981 | | 0 | | 47,673 | | 3,620 | | | 0 | | | 413 | | 68,687 | | | 2017 | | 16,673 | | 0 | | 58,055 | | 3,231 | | | 0 | | | 345 | | 78,304 | | | 2016 | | 16,364 | | 0 | | 59,489 | | 6,781 | | | 0 | | | 695 | | 83,329 | | David L. Morse | | 2018 | | 15,129 | | 82,896 | | 29,369 | | 10,708 | | | 0 | | | 11,748 | | 149,850 | | | 2017 | | 14,820 | | 52,554 | | 24,588 | | 12,052 | | | 0 | | | 11,795 | | 115,809 | | | 2016 | | 14,820 | | 45,734 | | 20,080 | | 12,389 | | | 0 | | | 4,367 | | 97,390 |
| | Named Executive Officer | | Year | | Company Match
on Qualified
401(k) Plan | | | Company Match
on Supplemental
Investment Plan | | | Value of
Personal
Aircraft
Rights(i) | | | Value of Home
Security Costs
and Financial
Counseling(ii) | | Expatriate
Benefits | | Other(iii) | | | Total
All Other
Compensation | | | Wendell P. Weeks | | 2019 | | | $15,907 | | | | $79,781 | | | $ | 279,448 | | | $ | 250,500 | (iv) | | | $0 | | | | $8,751 | | | $ | 634,387 | | | | | 2018 | | | 16,227 | | | | 77,320 | | | | 195,485 | | | | 179,746 | (iv) | | | 0 | | | | 9,155 | | | | 477,933 | | | | | 2017 | | | 14,603 | | | | 75,028 | | | | 94,117 | | | | 165,921 | (iv) | | | 0 | | | | 9,771 | | | | 359,440 | | | R. Tony Tripeny | | 2019 | | | 5,000 | | | | 52,621 | | | | 3,961 | | | | 61,039 | | | | 0 | | | | 12,345 | | | | 134,966 | | | | | 2018 | | | 4,900 | | | | 54,092 | | | | 17,758 | | | | 47,219 | | | | 0 | | | | 13,203 | | | | 137,172 | | | | | 2017 | | | 4,800 | | | | 30,685 | | | | 14,138 | | | | 50,859 | | | | 0 | | | | 10,930 | | | | 111,412 | | | James P. Clappin | | 2019 | | | 17,153 | | | | 38,131 | | | | 56,279 | | | | 23,720 | | | | 1,929 | (v) | | | 12,582 | | | | 149,794 | | | | | 2018 | | | 16,810 | | | | 89,499 | | | | 53,820 | | | | 18,680 | | | | 132,122 | (v) | | | 22,419 | | | | 333,350 | | | | | 2017 | | | 7,410 | | | | 65,894 | | | | 49,039 | | | | 23,461 | | | | 0 | | | | 11,531 | | | | 157,335 | | | Lawrence D. McRae | | 2019 | | | 17,290 | | | | 0 | | | | 57,109 | | | | 2,920 | | | | 0 | | | | 345 | | | | 77,664 | | | | | 2018 | | | 16,981 | | | | 0 | | | | 47,673 | | | | 3,620 | | | | 0 | | | | 413 | | | | 68,687 | | | | | 2017 | | | 16,673 | | | | 0 | | | | 58,055 | | | | 3,231 | | | | 0 | | | | 345 | | | | 78,304 | | | David L. Morse | | 2019 | | | 15,438 | | | | 74,806 | | | | 28,549 | | | | 36,450 | | | | 0 | | | | 7,845 | | | | 163,088 | | | | | 2018 | | | 15,129 | | | | 82,896 | | | | 29,369 | | | | 10,708 | | | | 0 | | | | 11,748 | | | | 149,850 | | | | | 2017 | | | 14,820 | | | | 52,554 | | | | 24,588 | | | | 12,052 | | | | 0 | | | | 11,795 | | | | 115,809 |
| (i) | Amounts shown above reflect aircraft usage over the calendar 2018 although the executive allowance runs from November 1 through October 30. Mr.2019. Messrs. Weeks’ and McRae’s use of Corning aircraft for travel to external board meetings is also included. | | | | (ii) | NEOs may use their executive allowance for residential security andor financial counseling services. | | | | (iii) | These amounts include costs attributable to executive physicals, including associated travel costs, an annual Board gift, and contributions made under the Corning Incorporated Foundation Matching Gifts Program. | | | | (iv) | This reflects Company-paid expenses relating to personal and residential security benefitting Mr. Weeks and, through association, his family. Mr. Weeks’ personal safety and security are of vital importance to the Company’s business and prospects, and the Board considers these costs to be appropriate. However, because these costs can be viewed as conveying a personal benefit to Mr. Weeks, they are reported as perquisites in this column. | | | | (v) | This reflects expenses pursuant to our standard global mobility program in connection with Mr. Clappin’s assignment in Tokyo, Japan as President, Corning Glass Technologies. Mr. Clappin repatriated back to the USU.S. in July 2016. Given2016, but tax costs extend beyond the lengthend of his assignment trailing foreign tax paymentsbecause of LTI amounts earned during the assignment but which vest and are possible based onpaid after the allocationend of long-term incentive compensation to appropriate tax jurisdictions.the assignment. |
| CORNING 2020 PROXY STATEMENT | 63 |
60 | CORNING2019 PROXY STATEMENT |
Table of Contents Compensation Discussion & Analysis 20182019 Grants of Plan Based Awards
| | |
| | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards | | | | | | | Named
Executive
Officer | Award | Grant
Date | Date of
Committee
Action | | Threshold(1)
($) | Target(1)
($) | Maximum(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) | Closing
Market
Price on
Date of
Grant | Grant Date
Fair Value
of Stock
and Option
Awards | | Wendell P. | Performance | | | | | | | | | | | | | | Weeks | Incentive Plan | n/a | | | $0 | $2,152,800 | $4,305,600 | | | | | | | | GoalSharing Plan | n/a | | | 0 | 71,760 | 143,520 | | | | | | | | Cash Performance Units | 2/6/18 | 2/6/18 | | 0 | 5,400,000 | 8,910,000 | | | | | | | | Time-Based Restricted | | | | | | | | | | | | | | Stock Units | 4/2/18 | 2/6/18 | | | | | | 83,241 | | | 27.03 | $2,250,004(2) | | Stock Options | 4/2/18 | 2/6/18 | | | | | | | 149,849 | 27.03 | 27.03 | 1,068,905(3) | | R. Tony | Performance | | | | | | | | | | | | | | Tripeny | Incentive Plan | n/a | | | 0 | 552,000 | 1,104,000 | | | | | | | | GoalSharing Plan | n/a | | | 0 | 34,500 | 69,000 | | | | | | | | Cash Performance Units | 2/6/18 | 2/6/18 | | 0 | 1,275,000 | 2,103,750 | | | | | | | | Time-Based Restricted | | | | | | | | | | | | | | Stock Units | 4/2/18 | 2/6/18 | | | | | | 19,654 | | | 27.03 | 531,248(2) | | Stock Options | 4/2/18 | 2/6/18 | | | | | | | 35,381 | 27.03 | 27.03 | 252,380(3) | | James P. | Performance | | | | | | | | | | | | | | Clappin | Incentive Plan | n/a | | | 0 | 600,000 | 1,200,000 | | | | | | | | GoalSharing Plan | n/a | | | 0 | 37,500 | 75,000 | | | | | | | | Cash Performance Units | 2/6/18 | 2/6/18 | | 0 | 1,410,000 | 2,326,500 | | | | | | | | Time-Based Restricted | | | | | | | | | | | | | | Stock Units | 4/2/18 | 2/6/18 | | | | | | 21,735 | | | 27.03 | 587,497(2) | | Stock Options | 4/2/18 | 2/6/18 | | | | | | | 39,127 | 27.03 | 27.03 | 279,101(3) | | Lawrence D. | Performance | | | | | | | | | | | | | | McRae | Incentive Plan | n/a | | | 0 | 680,000 | 1,360,000 | | | | | | | | GoalSharing Plan | n/a | | | 0 | 40,000 | 80,000 | | | | | | | | Cash Performance Units | 2/6/18 | 2/6/18 | | 0 | 1,440,000 | 2,376,000 | | | | | | | | Time-Based Restricted | | | | | | | | | | | | | | Stock Units | 4/2/18 | 2/6/18 | | | | | | 22,198 | | | 27.03 | 600,012(2) | | Stock Options | 4/2/18 | 2/6/18 | | | | | | | 39,960 | 27.03 | 27.03 | 285,043(3) | | David L. | Performance | | | | | | | | | | | | | | Morse | Incentive Plan | n/a | | | 0 | 560,000 | 1,120,000 | | | | | | | | GoalSharing Plan | n/a | | | 0 | 35,000 | 70,000 | | | | | | | | Cash Performance Units | 2/6/18 | 2/6/18 | | 0 | 1,350,000 | 2,227,500 | | | | | | | | Time-Based Restricted | | | | | | | | | | | | | | Stock Units | 4/2/18 | 2/6/18 | | | | | | 20,810 | | | 27.03 | 562,494(2) | | Stock Options | 4/2/18 | 2/6/18 | | | | | | | 37,462 | 27.03 | 27.03 | 267,225(3) |
| | | | | | | | | Estimated Future Payouts Under | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Equity Incentive Plan Awards | | | | | | | | | | | | | | | | | | (a) | | | | (b) | | (c) | | (d)(1) | | | (e)(1) | | | (f)(1) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | | | | | | | | | | | | | | | | | | | All Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock | | | All Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | | Option | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number | | | Awards: | | | Exercise | | | Closing | | | | | | | | | | | | | | | | | | | | | | | of | | | Number of | | | or Base | | | Market | | | | | | | | | | | | | | | | | | | | | | | Shares | | | Securities | | | Price of | | | Price on | | | Grant Date Fair | | Named | | | | | | Date of | | | | | | | | | | | of Stock | | | Underlying | | | Option | | | Date of | | | Value of Stock | | Executive | | | | Grant | | Committee | | Threshold | | | Target | | | Maximum | | | or Units | | | Options | | | Awards | | | Grant | | | and Option | | Officer | | Award | | Date | | Action | | ($) | | | ($) | | | ($) | | | (#) | | | (#) | | | ($/Sh) | | | ($) | | | Awards | | Wendell P. Weeks | | Performance Incentive Plan | | n/a | | | | | $0 | | | $ | 2,222,700 | | | $ | 4,445,400 | | | | | | | | | | | | | | | | | | | | | | | | | GoalSharing Plan | | n/a | | | | | 0 | | | | 74,090 | | | | 148,180 | | | | | | | | | | | | | | | | | | | | | | | | | Cash Performance Units | | 2/6/19 | | 2/6/19 | | | 0 | | | | 5,850,000 | | | | 9,652,500 | | | | | | | | | | | | | | | | | | | | | | | | | Time-Based Restricted Stock Units | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | 71,860 | | | | | | | | | | | $ | 33.92 | | | | $2,437,491 | (2) | | | | Stock Options | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | | | | | 143,721 | | | $ | 33.92 | | | | 33.92 | | | | 1,262,629 | (3) | | R. Tony Tripeny | | Performance Incentive Plan | | n/a | | | | | 0 | | | | 569,920 | | | | 1,139,840 | | | | | | | | | | | | | | | | | | | | | | | | | GoalSharing Plan | | n/a | | | | | 0 | | | | 35,620 | | | | 71,240 | | | | | | | | | | | | | | | | | | | | | | | | | Cash Performance Units | | 2/6/19 | | 2/6/19 | | | 0 | | | | 1,410,000 | | | | 2,326,500 | | | | | | | | | | | | | | | | | | | | | | | | | Time-Based Restricted Stock Units | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | 17,320 | | | | | | | | | | | | 33.92 | | | | 587,494 | (2) | | | | Stock Options | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | | | | | 34,640 | | | | 33.92 | | | | 33.92 | | | | 304,322 | (3) | | James P. Clappin | | Performance Incentive Plan | | n/a | | | | | 0 | | | | 619,520 | | | | 1,239,040 | | | | | | | | | | | | | | | | | | | | | | | | | GoalSharing Plan | | n/a | | | | | 0 | | | | 38,720 | | | | 77,440 | | | | | | | | | | | | | | | | | | | | | | | | | Cash Performance Units | | 2/6/19 | | 2/6/19 | | | 0 | | | | 1,500,000 | | | | 2,475,000 | | | | | | | | | | | | | | | | | | | | | | | | | Time-Based Restricted Stock Units | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | 18,426 | | | | | | | | | | | | 33.92 | | | | 625,010 | (2) | | | | Stock Options | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | | | | | 36,851 | | | | 33.92 | | | | 33.92 | | | | 323,746 | (3) | | Lawrence D. McRae | | Performance Incentive Plan | | n/a | | | | | 0 | | | | 702,100 | | | | 1,404,200 | | | | | | | | | | | | | | | | | | | | | | | | | GoalSharing Plan | | n/a | | | | | 0 | | | | 41,300 | | | | 82,600 | | | | | | | | | | | | | | | | | | | | | | | | | Cash Performance Units | | 2/6/19 | | 2/6/19 | | | 0 | | | | 1,530,000 | | | | 2,524,500 | | | | | | | | | | | | | | | | | | | | | | | | | Time-Based Restricted Stock Units | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | 18,794 | | | | | | | | | | | | 33.92 | | | | 637,492 | (2) | | | | Stock Options | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | | | | | 37,588 | | | | 33.92 | | | | 33.92 | | | | 330,221 | (3) | | David L. Morse | | Performance Incentive Plan | | n/a | | | | | 0 | | | | 578,240 | | | | 1,156,480 | | | | | | | | | | | | | | | | | | | | | | | | | GoalSharing Plan | | n/a | | | | | 0 | | | | 36,140 | | | | 72,280 | | | | | | | | | | | | | | | | | | | | | | | | | Cash Performance Units | | 2/6/19 | | 2/6/19 | | | 0 | | | | 1,440,000 | | | | 2,376,000 | | | | | | | | | | | | | | | | | | | | | | | | | Time-Based Restricted Stock Units | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | 17,689 | | | | | | | | | | | | 33.92 | | | | 600,011 | (2) | | | | Stock Options | | 4/1/19 | | 2/6/19 | | | | | | | | | | | | | | | | | | | 35,377 | | | | 33.92 | | | | 33.92 | | | | 310,797 | (3) |
| (1) | The amounts shown in columns (d), (e) and (f) reflect the award amounts under (i) the Company’s 20182019 Performance Incentive Plan (PIP) (ii) 2018the 2019 GoalSharing Plan and (iii) the Cash Performance Units under the Company’s 2012 Long-Term IncentiveCorning 2019 Corporate Performance Plan. Awards under these plans are paid in cash. If the threshold level of performance is not met the payout will be 0%. If the performance target is met, the payout iswill be 100% of the target award. If the maximum level of performance is met for GoalSharing and PIP the payout iswill be 200% of the target award, and 165% for CPUs. These payouts incorporateCPUs which represents the 150% performance metrics cap plus the maximum 10% ROIC modifier. PIP and GoalSharing awards are based on the individual’s 20182019 bonus target and year-end base salary. Actual awards earned for CPUs are based on average performance against established metrics over three years (2018, 2019, 2020)(2019, 2020, 2021), adjusted up or down by up to 10% based on ROIC results versus the pre-established goal for the three-year period, and will be payable in February 2021. 2022. | | | | (2) | These amounts reflect the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock awards granted in calendar year 20182019 pursuant to the Company’sCorning 2012 Long-Term Incentive Plan and correspond to the amounts set forth in the “Stock Awards”Stock Awards column of the 20182019 Summary Compensation Table. Stock awards vest approximately 100% three years after grant date. | | | | (3) | These amounts reflect the total grant date fair value computed in accordance with FASB ASC Topic 718 of stock options granted in calendar year 20182019 pursuant to the Company’sCorning 2012 Long-Term Incentive Plan and correspond to the amounts set forth in the “Option Awards” column (e) for 2019 of the 2018 Summary Compensation Table. Stock options vest 100% three years after grant date. |
| 64 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 61 |
Table of Contents Compensation Discussion & Analysis Outstanding Equity Awards at 20182019 Fiscal Year-End The following table shows stock option awards classified as exercisable and unexercisable as of December 31, 2018.2019. The table also shows unvested restricted stock and restricted stock unit awards assuming a market value of $30.21$29.11 a share (the NYSE closing price of the Company’s stock on December 31, 2018)2019). | Option Awards | | Stock Awards | Named
Executive
Officer | | Grant
Date | | Vesting
Code(1) | | Number of
Securities Underlying
Unexercised Options
Exercisable
(#) | | Number of
Securities Underlying
Unexercised Options
Unexercisable
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of
Shares or Units
of Stock That
Have Not Vested
(#)(2) | | Market Value of
Shares or Units
of Stock That
Have Not Vested
($)(3) | | Wendell P. | | 04/30/13 | | A | | 114,943 | | 0 | | 14.50 | | 4/30/2023 | | 249,780 | | $7,545,854 | | Weeks | | 05/31/13 | | A | | 108,436 | | 0 | | 15.37 | | 5/31/2023 | | | | | | | 03/31/14 | | A | | 42,027 | | 0 | | 20.82 | | 3/31/2024 | | | | | | | 04/30/14 | | A | | 41,846 | | 0 | | 20.91 | | 4/30/2024 | | | | | | | 05/30/14 | | A | | 41,080 | | 0 | | 21.30 | | 5/30/2024 | | | | | | | 03/31/15 | | A | | 44,092 | | 0 | | 22.68 | | 3/31/2025 | | | | | | | 04/30/15 | | A | | 47,778 | | 0 | | 20.93 | | 4/30/2025 | | | | | | | 05/29/15 | | A | | 47,801 | | 0 | | 20.92 | | 5/29/2025 | | | | | | | 03/31/16 | | A | | 0 | | 49,366 | | 20.89 | | 3/31/2026 | | | | | | | 04/29/16 | | A | | 0 | | 55,236 | | 18.67 | | 4/29/2026 | | | | | | | 05/31/16 | | A | | 0 | | 49,366 | | 20.89 | | 5/31/2026 | | | | | | | 03/31/17 | | A | | 0 | | 137,514 | | 27.00 | | 3/31/2027 | | | | | | | 04/02/18 | | A | | 0 | | 149,849 | | 27.03 | | 4/2/2028 | | | | | | | Total | | | | 488,003 | | 441,331 | | | | | | | | | | R. Tony Tripeny | | 02/01/12 | | A | | 7,229 | | 0 | | 12.90 | | 2/1/2022 | | 51,999 | | $1,570,890 | | | 03/01/12 | | A | | 14,456 | | 0 | | 12.97 | | 3/1/2022 | | | | | | | 03/28/13 | | A | | 16,075 | | 0 | | 13.33 | | 3/28/2023 | | | | | | | 04/30/13 | | A | | 14,778 | | 0 | | 14.50 | | 4/30/2023 | | | | | | | 05/31/13 | | A | | 13,942 | | 0 | | 15.37 | | 5/31/2023 | | | | | | | 03/31/14 | | A | | 6,004 | | 0 | | 20.82 | | 3/31/2024 | | | | | | | 04/30/14 | | A | | 5,978 | | 0 | | 20.91 | | 4/30/2024 | | | | | | | 05/30/14 | | A | | 5,869 | | 0 | | 21.30 | | 5/30/2024 | | | | | | | 03/31/15 | | A | | 5,787 | | 0 | | 22.68 | | 3/31/2025 | | | | | | | 04/30/15 | | A | | 6,271 | | 0 | | 20.93 | | 4/30/2025 | | | | | | | 05/29/15 | | A | | 6,274 | | 0 | | 20.92 | | 5/29/2025 | | | | | | | 03/31/16 | | A | | 0 | | 8,377 | | 20.89 | | 3/31/2026 | | | | | | | 04/29/16 | | A | | 0 | | 9,373 | | 18.67 | | 4/29/2026 | | | | | | | 05/31/16 | | A | | 0 | | 8,377 | | 20.89 | | 5/31/2026 | | | | | | | 03/31/17 | | A | | 0 | | 31,670 | | 27.00 | | 3/31/2027 | | | | | | | 04/02/18 | | A | | 0 | | 35,381 | | 27.03 | | 4/2/2028 | | | | | | | Total | | | | 102,663 | | 93,178 | | | | | | | | | | James P. | | 03/31/15 | | A | | 11,574 | | 0 | | 22.68 | | 3/31/2025 | | 63,815 | | $1,927,851 | | Clappin | | 04/30/15 | | A | | 12,542 | | 0 | | 20.93 | | 4/30/2025 | | | | | | | 05/29/15 | | A | | 12,548 | | 0 | | 20.92 | | 5/29/2025 | | | | | | | 03/31/16 | | A | | 0 | | 12,566 | | 20.89 | | 3/31/2026 | | | | | | | 04/29/16 | | A | | 0 | | 14,060 | | 18.67 | | 4/29/2026 | | | | | | | 05/31/16 | | A | | 0 | | 12,566 | | 20.89 | | 5/31/2026 | | | | | | | 03/31/17 | | A | | 0 | | 35,004 | | 27.00 | | 3/31/2027 | | | | | | | 04/02/18 | | A | | 0 | | 39,127 | | 27.03 | | 4/2/2028 | | | | | | | Total | | | | 36,664 | | 113,323 | | | | | | | | |
| Option Awards | | Stock Awards | | | | | | | | Number of | | | Number of | | | | | | | | Number of | | | Market Value of | | | | | | | | Securities Underlying | | | Securities Underlying | | | Option | | | | | Shares or Units | | | Shares or Units | | Named | | | | | | Unexercised Options | | | Unexercised Options | | | Exercise | | | Option | | of Stock That | | | of Stock That | | Executive | | Grant | | Vesting | | Exercisable | | | Unexercisable | | | Price | | | Expiration | | Have Not Vested | | | Have Not Vested | | Officer | | Date | | Code(1) | | (#) | | | (#) | | | ($) | | | Date | | (#)(2) | | | ($)(3) | | Wendell P. | | 03/31/14 | | A | | | 42,027 | | | | 0 | | | | 20.82 | | | 03/31/24 | | | 224,548 | | | | $6,536,592 | | Weeks | | 04/30/14 | | A | | | 41,846 | | | | 0 | | | | 20.91 | | | 04/30/24 | | | | | | | | | | | 05/30/14 | | A | | | 41,080 | | | | 0 | | | | 21.30 | | | 05/30/24 | | | | | | | | | | | 03/31/15 | | A | | | 44,092 | | | | 0 | | | | 22.68 | | | 03/31/25 | | | | | | | | | | | 04/30/15 | | A | | | 47,778 | | | | 0 | | | | 20.93 | | | 04/30/25 | | | | | | | | | | | 05/29/15 | | A | | | 47,801 | | | | 0 | | | | 20.92 | | | 05/29/25 | | | | | | | | | | | 03/31/16 | | A | | | 49,366 | | | | 0 | | | | 20.89 | | | 03/31/26 | | | | | | | | | | | 04/29/16 | | A | | | 55,236 | | | | 0 | | | | 18.67 | | | 04/29/26 | | | | | | | | | | | 05/31/16 | | A | | | 49,366 | | | | 0 | | | | 20.89 | | | 05/31/26 | | | | | | | | | | | 03/31/17 | | A | | | 0 | | | | 137,514 | | | | 27.00 | | | 03/31/27 | | | | | | | | | | | 04/02/18 | | A | | | 0 | | | | 149,849 | | | | 27.03 | | | 04/02/28 | | | | | | | | | | | 04/01/19 | | A | | | 0 | | | | 143,721 | | | | 33.92 | | | 04/01/29 | | | | | | | | | | | Total | | | | | 418,592 | | | | 431,084 | | | | | | | | | | | | | | | | R. Tony Tripeny | | 02/01/12 | | A | | | 7,229 | | | | 0 | | | | 12.90 | | | 02/01/22 | | | 52,568 | | | | $1,530,254 | | | | 03/01/12 | | A | | | 14,456 | | | | 0 | | | | 12.97 | | | 03/01/22 | | | | | | | | | | | 03/28/13 | | A | | | 16,075 | | | | 0 | | | | 13.33 | | | 03/28/23 | | | | | | | | | | | 04/30/13 | | A | | | 14,778 | | | | 0 | | | | 14.50 | | | 04/30/23 | | | | | | | | | | | 05/31/13 | | A | | | 13,942 | | | | 0 | | | | 15.37 | | | 05/31/23 | | | | | | | | | | | 03/31/14 | | A | | | 6,004 | | | | 0 | | | | 20.82 | | | 03/31/24 | | | | | | | | | | | 04/30/14 | | A | | | 5,978 | | | | 0 | | | | 20.91 | | | 04/30/24 | | | | | | | | | | | 05/30/14 | | A | | | 5,869 | | | | 0 | | | | 21.30 | | | 05/30/24 | | | | | | | | | | | 03/31/15 | | A | | | 5,787 | | | | 0 | | | | 22.68 | | | 03/31/25 | | | | | | | | | | | 04/30/15 | | A | | | 6,271 | | | | 0 | | | | 20.93 | | | 04/30/25 | | | | | | | | | | | 05/29/15 | | A | | | 6,274 | | | | 0 | | | | 20.92 | | | 05/29/25 | | | | | | | | | | | 03/31/16 | | A | | | 8,377 | | | | 0 | | | | 20.89 | | | 03/31/26 | | | | | | | | | | | 04/29/16 | | A | | | 9,373 | | | | 0 | | | | 18.67 | | | 04/29/26 | | | | | | | | | | | 05/31/16 | | A | | | 8,377 | | | | 0 | | | | 20.89 | | | 05/31/26 | | | | | | | | | | | 03/31/17 | | A | | | 0 | | | | 31,670 | | | | 27.00 | | | 03/31/27 | | | | | | | | | | | 04/02/18 | | A | | | 0 | | | | 35,381 | | | | 27.03 | | | 04/02/28 | | | | | | | | | | | 04/01/19 | | A | | | 0 | | | | 34,640 | | | | 33.92 | | | 04/01/29 | | | | | | | | | | | Total | | | | | 128,790 | | | | 101,691 | | | | | | | | | | | | | | |
62 | CORNING2019 2020 PROXY STATEMENT | 65 |
Table of Contents Compensation Discussion & Analysis | Option Awards | | Stock Awards | Named
Executive
Officer | | Grant
Date | | Vesting
Code(1) | | Number of
Securities Underlying
Unexercised Options
Exercisable
(#) | | Number of
Securities Underlying
Unexercised Options
Unexercisable
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of
Shares or Units
of Stock That
Have Not Vested
(#)(2) | | Market Value of
Shares or Units
of Stock That
Have Not Vested
($)(3) | | Lawrence D. | | 01/03/11 | | B | | 16,888 | | 0 | | 19.19 | | 1/3/2021 | | 67,402 | | $2,036,214 | | McRae | | 02/01/11 | | B | | 14,283 | | 0 | | 22.69 | | 2/1/2021 | | | | | | | 03/01/11 | | B | | 14,711 | | 0 | | 22.03 | | 3/1/2021 | | | | | | | 04/30/13 | | A | | 12,841 | | 0 | | 14.50 | | 4/30/2023 | | | | | | | 05/31/13 | | A | | 30,982 | | 0 | | 15.37 | | 5/31/2023 | | | | | | | 03/31/14 | | A | | 12,008 | | 0 | | 20.82 | | 3/31/2024 | | | | | | | 04/30/14 | | A | | 11,956 | | 0 | | 20.91 | | 4/30/2024 | | | | | | | 05/30/14 | | A | | 11,737 | | 0 | | 21.30 | | 5/30/2024 | | | | | | | 03/31/15 | | A | | 11,850 | | 0 | | 22.68 | | 3/31/2025 | | | | | | | 04/30/15 | | A | | 12,840 | | 0 | | 20.93 | | 4/30/2025 | | | | | | | 05/29/15 | | A | | 12,847 | | 0 | | 20.92 | | 5/29/2025 | | | | | | | 03/31/16 | | A | | 0 | | 13,463 | | 20.89 | | 3/31/2026 | | | | | | | 04/29/16 | | A | | 0 | | 15,064 | | 18.67 | | 4/29/2026 | | | | | | | 05/31/16 | | A | | 0 | | 13,463 | | 20.89 | | 5/31/2026 | | | | | | | 03/31/17 | | A | | 0 | | 37,504 | | 27.00 | | 3/31/2027 | | | | | | | 04/02/18 | | A | | 0 | | 39,960 | | 27.03 | | 4/2/2028 | | | | | | | Total | | | | 162,943 | | 119,454 | | | | | | | | | | David L. Morse | | 03/31/14 | | A | | 12,008 | | 0 | | 20.82 | | 3/31/2024 | | 62,863 | | $1,899,091 | | | 04/30/14 | | A | | 11,956 | | 0 | | 20.91 | | 4/30/2024 | | | | | | | 05/30/14 | | A | | 11,737 | | 0 | | 21.30 | | 5/30/2024 | | | | | | | 03/31/15 | | A | | 11,574 | | 0 | | 22.68 | | 3/31/2025 | | | | | | | 04/30/15 | | A | | 12,542 | | 0 | | 20.93 | | 4/30/2025 | | | | | | | 05/29/15 | | A | | 12,548 | | 0 | | 20.92 | | 5/29/2025 | | | | | | | 03/31/16 | | A | | 0 | | 12,566 | | 20.89 | | 3/31/2026 | | | | | | | 04/29/16 | | A | | 0 | | 14,060 | | 18.67 | | 4/29/2026 | | | | | | | 05/31/16 | | A | | 0 | | 12,566 | | 20.89 | | 5/31/2026 | | | | | | | 03/31/17 | | A | | 0 | | 35,004 | | 27.00 | | 3/31/2027 | | | | | | | 04/02/18 | | A | | 0 | | 37,462 | | 27.03 | | 4/2/2028 | | | | | | | Total | | | | 72,365 | | 111,658 | | | | | | | | |
| Option Awards | | Stock Awards | | | | | | | | Number of | | | Number of | | | | | | | | Number of | | | Market Value of | | | | | | | | Securities Underlying | | | Securities Underlying | | | Option | | | | | Shares or Units | | | Shares or Units | | Named | | | | | | Unexercised Options | | | Unexercised Options | | | Exercise | | | Option | | of Stock That | | | of Stock That | | Executive | | Grant | | Vesting | | Exercisable | | | Unexercisable | | | Price | | | Expiration | | Have Not Vested | | | Have Not Vested | | Officer | | Date | | Code(1) | | (#) | | | (#) | | | ($) | | | Date | | (#)(2) | | | ($)(3) | | James P. | | 03/31/15 | | A | | | 11,574 | | | | 0 | | | | 22.68 | | | 03/31/25 | | | 57,451 | | | | $1,672,399 | | Clappin | | 04/30/15 | | A | | | 12,542 | | | | 0 | | | | 20.93 | | | 04/30/25 | | | | | | | | | | | 05/29/15 | | A | | | 12,548 | | | | 0 | | | | 20.92 | | | 05/29/25 | | | | | | | | | | | 03/31/16 | | A | | | 12,566 | | | | 0 | | | | 20.89 | | | 03/31/26 | | | | | | | | | | | 04/29/16 | | A | | | 14,060 | | | | 0 | | | | 18.67 | | | 04/29/26 | | | | | | | | | | | 05/31/16 | | A | | | 12,566 | | | | 0 | | | | 20.89 | | | 05/31/26 | | | | | | | | | | | 03/31/17 | | A | | | 0 | | | | 35,004 | | | | 27.00 | | | 03/31/27 | | | | | | | | | | | 04/02/18 | | A | | | 0 | | | | 39,127 | | | | 27.03 | | | 04/02/28 | | | | | | | | | | | 04/01/19 | | A | | | 0 | | | | 36,851 | | | | 33.92 | | | 04/01/29 | | | | | | | | | | | Total | | | | | 75,856 | | | | 110,982 | | | | | | | | | | | | | | | | Lawrence D. | | 02/01/11 | | B | | | 14,283 | | | | 0 | | | | 22.69 | | | 02/01/21 | | | 59,612 | | | | $1,735,305 | | McRae | | 03/01/11 | | B | | | 14,711 | | | | 0 | | | | 22.03 | | | 03/01/21 | | | | | | | | | | | 05/31/13 | | A | | | 30,982 | | | | 0 | | | | 15.37 | | | 05/31/23 | | | | | | | | | | | 03/31/14 | | A | | | 12,008 | | | | 0 | | | | 20.82 | | | 03/31/24 | | | | | | | | | | | 04/30/14 | | A | | | 11,956 | | | | 0 | | | | 20.91 | | | 04/30/24 | | | | | | | | | | | 05/30/14 | | A | | | 11,737 | | | | 0 | | | | 21.30 | | | 05/30/24 | | | | | | | | | | | 03/31/15 | | A | | | 11,850 | | | | 0 | | | | 22.68 | | | 03/31/25 | | | | | | | | | | | 04/30/15 | | A | | | 12,840 | | | | 0 | | | | 20.93 | | | 04/30/25 | | | | | | | | | | | 05/29/15 | | A | | | 12,847 | | | | 0 | | | | 20.92 | | | 05/29/25 | | | | | | | | | | | 03/31/16 | | A | | | 13,463 | | | | 0 | | | | 20.89 | | | 03/31/26 | | | | | | | | | | | 04/29/16 | | A | | | 15,064 | | | | 0 | | | | 18.67 | | | 04/29/26 | | | | | | | | | | | 05/31/16 | | A | | | 13,463 | | | | 0 | | | | 20.89 | | | 05/31/26 | | | | | | | | | | | 03/31/17 | | A | | | 0 | | | | 37,504 | | | | 27.00 | | | 03/31/27 | | | | | | | | | | | 04/02/18 | | A | | | 0 | | | | 39,960 | | | | 27.03 | | | 04/02/28 | | | | | | | | | | | 04/01/19 | | A | | | 0 | | | | 37,588 | | | | 33.92 | | | 04/01/29 | | | | | | | | | | | Total | | | | | 175,204 | | | | 115,052 | | | | | | | | | | | | | | | | David L. Morse | | 03/31/16 | | A | | | 12,566 | | | | 0 | | | | 20.89 | | | 03/31/26 | | | 55,794 | | | | $1,624,163 | | | | 04/29/16 | | A | | | 14,060 | | | | 0 | | | | 18.67 | | | 04/29/26 | | | | | | | | | | | 05/31/16 | | A | | | 12,566 | | | | 0 | | | | 20.89 | | | 05/31/26 | | | | | | | | | | | 03/31/17 | | A | | | 0 | | | | 35,004 | | | | 27.00 | | | 03/31/27 | | | | | | | | | | | 04/02/18 | | A | | | 0 | | | | 37,462 | | | | 27.03 | | | 04/02/28 | | | | | | | | | | | 04/01/19 | | A | | | 0 | | | | 35,377 | | | | 33.92 | | | 04/01/29 | | | | | | | | | | | Total | | | | | 39,192 | | | | 107,843 | | | | | | | | | | | | | | |
| (1) | The companyCompany uses the following vesting codes codes: |
| AA: | 100% Vesting 3 years after grant date | | B | | | B: | 1/3 Vesting 1 year after grant date, 1/3 Vesting 2 years after grant date and 1/3 Vesting 3 years after grant date |
| (i) | 93,910; 15,758; 23,725; 25,503 and 23,725 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse, respectively, on March 31, 2016, which vest on April 15, 2019.
| | (ii) | 72,629; 16,587; 18,355; 19,70119,701; and 18,328 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse, respectively, on March 31, 2017, which vest on April 15, 2020. | | (iii) | 83,241; 19,654; 21,735; 22,198
| | (ii) | 80,059; 18,661; 20,670; 21,117; and 20,81019,777 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse, respectively, on April 2, 2018, which vest on April 15, 2021. | | | | | (iii) | 71,860; 17,320; 18,426; 18,794; and 17,689 restricted share units granted to Messrs. Weeks, Tripeny, Clappin, McRae and Dr. Morse, respectively, on April 1, 2019, which vest on April 15, 2022. |
| (3) | Year-end market price is based on the December 31, 20182019 NYSE closing price of $30.21.$29.11. |
| 66 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 63 |
Table of Contents Compensation Discussion & Analysis Options Exercised and Shares Vested in 20182019 The following table sets forth certain information regarding options exercised and restricted stock and restricted stock units that vested during 20182019 for the NEOs. | | Option Awards | | Stock Awards | | Named Executive Officer | | Number of Shares
Acquired on Exercise
(#) | | Value Realized
on Exercise
($) | | Number of Shares
Acquired on Vesting
(#) | | Value Realized
on Vesting
($) | | Wendell P. Weeks | | 462,354 | | $8,220,903 | | 87,685 | | $2,429,749 | | R. Tony Tripeny | | 67,659 | | 1,043,723 | | 18,267 | | 514,600 | | James P. Clappin | | 0 | | 0 | | 22,893 | | 634,915 | | Lawrence D. McRae | | 50,667 | | 854,808 | | 26,091 | | 725,960 | | David L. Morse | | 63,151 | | 670,437 | | 22,839 | | 633,569 |
| | | Option Awards | | Stock Awards | | | | Number of Shares | | Value Realized | | Number of Shares | | Value Realized | | | | Acquired on Exercise | | on Exercise | | Acquired on Vesting | | on Vesting | | Named Executive Officer | | (#) | | ($) | | (#) | | ($) | | Wendell P. Weeks | | 223,379 | | $4,209,813 | | 97,092 | | $3,378,172 | | R. Tony Tripeny | | 0 | | 0 | | 16,751 | | 580,571 | | James P. Clappin | | 0 | | 0 | | 24,790 | | 861,248 | | Lawrence D. McRae | | 29,729 | | 381,595 | | 26,584 | | 923,885 | | David L. Morse | | 72,365 | | 949,106 | | 24,758 | | 860,292 |
Retirement Plans
Qualified Pension Plan Corning maintains a qualified defined benefit pension plan to provide retirement income to Corning’s U.S.-based employees which was amended effective July 1, 2000, to include a cash balance component. All salaried and non-union hourly employees as of July 1, 2000, were given a choice to prospectively accrue benefits under the previously existing career average earnings formula or a cash balance formula, if so elected. Employees hired subsequent to July 1, 2000, earn benefits solely under the cash balance formula. Benefits earned under the career average earnings formula are equal to 1.5% of plan compensation plus 0.5% of plan compensation on which employee contributions have been made. Under the career average earnings formula, participants may retire as early as age 55 with 5 years of service. Unreduced benefits are available when a participant attains the earlier of age 60 with 5 years of service or age 55 with 30 years of service. Otherwise, benefits are reduced 4% for each year by which retirement precedes the attainment of age 60. Pension benefits earned under the career average earnings formula are distributed in the form of a lifetime annuity with six years of payments guaranteed. Benefits earned under the cash balance formula are expressed in the form of a hypothetical account balance. Each month a participant’s cash balance account is increased by (1) pay credits based on the participant’s plan compensation for that month and (2) interest credits based on the participant’s hypothetical account balance at the end of the prior month. Pay credits vary between 3% and 8% based on the participant’s age plus service at the end of the year. Interest credits are based on 10-year Treasury bond yields, subject to a minimum credit of 3.80%. Pension benefits under the cash balance formula may be distributed as either a lump sum of the participant’s hypothetical account balance or an actuarial equivalent life annuity. Messrs. Weeks, Clappin, McRae and Dr. Morse are earning benefits under the career average earnings formula. Mr. Tripeny is earning benefits under the cash balance formula. All of the active NEOs are currently eligible to retire under the plan.
Supplemental Pension Plan and Executive Supplemental Pension Plan Since 1986, Corning has maintained non-qualified pension plans to attract and retain its executive workforce by providing eligible employees with retirement benefits in excess of those permitted under the qualified plans. The benefits provided under the Supplemental Pension Plan (SPP) are equal to the difference between the benefits provided under the Corning Incorporated Pension Plan and benefits that would have been provided thereunder if not for the limitations of the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended (the Code). | CORNING 2020 PROXY STATEMENT | 67 |
Table of Contents Compensation Discussion & Analysis Each NEO participates in the Corning Incorporated Executive Supplemental Pension Plan (ESPP). Participants in the ESPP receive no benefits from the SPP, other than earned SPP benefits under the cash balance formula prior to their participation in the ESPP, if any. Executives fully vest in their ESPP benefit upon attainment of age 50 with 10 years of service. All NEOs are fully vested in the ESPP. 64 | CORNING2019 PROXY STATEMENT |
Table of Contents
Compensation Discussion & Analysis
Under the ESPP, participants earn benefits based on the highest 60 consecutive months of average plan compensation over the last 120 months immediately preceding the date of termination of employment. A change in the benefits provided under the ESPP formula was approved in December 2006. Following the change, gross benefits determined under this plan are equal to one of two benefit formulas: Formula A: 2.0% of average plan compensation multiplied by years of service up to 25 years. Formula B: 1.5% of average plan compensation multiplied by years of service. Benefits are determined under Formula A for all NEOs except for Dr. Morse, whose benefits are determined under Formula B. Benefits earned under the Corning Incorporated Pension Plan and the cash balance formula of the SPP prior to ESPP participation, if any, will offset benefits earned under the ESPP. Participants may retire as early as age 55 with 10 years of service. Unreduced benefits under Formulas A and B are available when a participant attains the earlier of age 60 with 10 years of service or age 55 with 25 years of service, provided their accrued benefit is less than four-times-the-annual-compensation limitation under Section 401(a)(17) of the Code ($1,100,0001,120,000 in 2018)2019). Participants with accrued benefits in excess of four times the annual compensation limitation under Section 401(a)(17) of the Code must be age 57 with 25 years of service to receive an unreduced benefit under the ESPP. Otherwise, benefits are reduced 4% for each year by which retirement precedes the attainment of age 60. Benefit reductions of 1% per year by which retirement precedes age 57 apply if the four-times-annual-compensation-limit rule noted above is in effect for the participant. Benefits earned under the ESPP are distributed in the form of a lifetime annuity, with six years of payments guaranteed except for benefits earned under the cash balance formula of the SPP prior to becoming a participant in the ESPP, which is distributed as a lump sum of the participant’s credited balance. All NEOs are currently eligible to retire under the ESPP.
Pension Benefits The table below shows the actuarial present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such NEO, under the qualified pension plan and the ESPP. These amounts were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements with the exception of the assumed retirement age and the assumed probabilities of leaving employment prior to retirement. Retirement was assumed to occur at the earliest possible unreduced retirement age for each plan in which the executive participates. For purposes of determining the earliest unreduced retirement age, service was assumed to be granted until the actual date of retirement. For example, an executive under the ESPP formula who is age 50 with 20 years | 68 | CORNING 2020 PROXY STATEMENT |
Table of Contents Compensation Discussion & Analysis of service would be assumed to retire at age 55 due to eligibility of unreduced benefits at 25 years of service or age 57, if the four times annual compensation limit rule noted previously applies. No termination, disability or death was assumed to occur prior to retirement. Otherwise, the assumptions used are described in Note 1112 to our Financial Statements for the year ended December 31, 2018,2019, of our Annual Report on Form 10-K filed with the SEC on February 12,18, 2019. CORNING2019 PROXY STATEMENT | 65 |
Table of Contents
| | | | | Number of Years | | | Present Value of | | | Payments During | | | | | | Credited Service | | | Accumulated Benefit | | | Last Fiscal Year | | Named Executive Officer | | Plan Name | | (#) | | | ($) | | | ($) | | Wendell P. Weeks | | Qualified Pension Plan | | | 37 | | | | $2,255,969 | | | | $0 | | | | ESPP | | | 25 | (1) | | | 29,974,699 | | | | 0 | | R. Tony Tripeny | | Qualified Pension Plan | | | 34 | | | | 414,868 | | | | 0 | | | | ESPP | | | 25 | (1) | | | 8,416,604 | | | | 0 | | James P. Clappin | | Qualified Pension Plan | | | 40 | | | | 1,680,926 | | | | 0 | | | | ESPP | | | 25 | (1) | | | 9,364,886 | | | | 0 | | Lawrence D. McRae | | Qualified Pension Plan | | | 34 | | | | 1,901,119 | | | | 0 | | | | ESPP | | | 25 | (1) | | | 10,376,799 | | | | 0 | | David L. Morse | | Qualified Pension Plan | | | 44 | | | | 1,979,882 | | | | 0 | | | | ESPP | | | 44 | (2) | | | 9,786,531 | | | | 0 |
Compensation Discussion & Analysis
| Named Executive Officer | | Plan Name | | Number of years
Credited Service
(#) | | Present Value of
Accumulated Benefit
($) | | Payments During
Last Fiscal Year
($) | | Wendell P. Weeks | | Qualified Pension Plan | | 36 | | | 1,976,797 | | $0 | | | ESPP | | 25 | (1) | | 25,725,973 | | 0 | | R. Tony Tripeny | | Qualified Pension Plan | | 33 | | | 358,560 | | 0 | | | ESPP | | 25 | (1) | | 6,616,004 | | 0 | | James P. Clappin | | Qualified Pension Plan | | 39 | | | 1,470,978 | | 0 | | | ESPP | | 25 | (1) | | 8,009,058 | | 0 | | Lawrence D. McRae | | Qualified Pension Plan | | 33 | | | 1,662,390 | | 0 | | | ESPP | | 25 | (1) | | 8,772,904 | | 0 | | David L. Morse | | Qualified Pension Plan | | 43 | | | 1,783,856 | | 0 | | | ESPP | | 43 | (2) | | 8,232,203 | | 0 |
| (1) | Under Formula A, years of service are capped at 25 years, in determining benefits under the ESPP. | | | | (2) | Under Formula B, years of service are not capped. |
The compensation considered for purposes of determining benefits under the qualified pension plan and the ESPP for the NEOs is the “Salary” plus the GoalSharing and PIP cash bonuses set forth in the Summary Compensation Table. Bonuses are included as compensation in the calendar year paid. Long-term cash or equity incentives are not (and have never been) considered as eligible earnings for determining retirement benefits under these plans. For the 20182019 calendar year, the NEOs eligible earnings and final average compensation were as follows: | | As of December 31, 2018 | | Named Executive Officer | | Eligible Pension
Earnings | | Final Average
Earnings | | Wendell P. Weeks | | $5,168,942 | | $3,580,781 | | R. Tony Tripeny | | 1,474,809 | | 934,515 | | James P. Clappin | | 1,721,603 | | 1,285,019 | | Lawrence D. McRae | | 1,902,402 | | 1,380,344 | | David L. Morse | | 1,587,447 | | 1,175,195 |
| | | As of December 31, 2019 | | | | Eligible Pension | | | Final Average | | Named Executive Officer | | Earnings | | | Earnings | | Wendell P. Weeks | | | $4,262,128 | | | | $3,800,265 | | R. Tony Tripeny | | | 1,440,518 | | | | 1,054,345 | | James P. Clappin | | | 1,565,806 | | | | 1,377,970 | | Lawrence D. McRae | | | 1,720,580 | | | | 1,486,864 | | David L. Morse | | | 1,461,432 | | | | 1,262,559 |
Non-qualified Deferred Compensation The table below shows the contributions, earnings and account balances for the NEOs in the Supplemental Investment Plan. Pursuant to the Company’s Supplemental Investment Plan, the NEOs may choose to defer up to 75% of annual base salary and up to 75% of GoalSharing and PIP cash bonuses. The participant chooses from the same funds available under our Company Investment Plan (401(k)) in which to “invest” the deferred amounts. No cash is actually invested in the unfunded accounts under the Supplemental Investment Plan. Deferred amounts incur gains and losses based on the performance of the individual participant’s investment fund selections. Participants may change their elections among these fund options. Corning does not have any above market earnings under its Supplemental Investment Plan. All of our current NEOs have more than three years of service with the Company, so all of the Company’s matching contributions are fully vested. Participants cannot withdraw any amounts from their deferred compensation balances until retirement from the Company at or after age 55 with 5 years of service. Participants may elect to receive distributions as a lump sum payment or two to five annual installments. If an NEO leaves the Company prior to retirement, the account balance is distributed in a lump sum six months following the executive’s departure. No NEO withdrawals or distributions were made in 2018.
66 | CORNING2019 2020 PROXY STATEMENT | 69 |
Table of Contents Compensation Discussion & Analysis | Named Executive Officer | | Aggregate Balance
at January 1, 2018
($) | | Executive
Contributions
in 2018
($)(1) | | Company
Contributions
in 2018
($)(2) | | Aggregate
Earnings
in 2018
($)(3) | | Aggregate
Withdrawals/
Distributions
in 2018
($) | | Aggregate
Balance as of
December 31, 2018
($) | | Wendell P. Weeks | | 6,257,298 | | 75,129 | | 77,320 | | (231,055 | ) | | 0 | | 6,178,692 | | R. Tony Tripeny | | 2,450,204 | | 270,462 | | 54,092 | | (132,755 | ) | | 0 | | 2,642,003 | | James P. Clappin | | 4,797,702 | | 319,991 | | 89,499 | | (48,252 | ) | | 0 | | 5,158,940 | | Lawrence D. McRae | | 0 | | 0 | | 0 | | — | | | 0 | | 0 | | David L. Morse | | 1,165,876 | | 67,123 | | 82,896 | | 22,022 | | | 0 | | 1,337,917 |
No NEO withdrawals or distributions were made in 2019. | Named Executive Officer | | Aggregate Balance
at January 1, 2019
($) | | Executive
Contributions
in 2019
($)(1) | | Company
Contributions
in 2019
($)(2) | | Aggregate
Earnings
in 2019
($)(3) | | Aggregate
Withdrawals/
Distributions
in 2019
($) | | Aggregate
Balance as of
December 31, 2019
($) | | Wendell P. Weeks | | $6,178,692 | | $77,520 | | $79,781 | | $1,061,957 | | $0 | | $7,397,951 | | R. Tony Tripeny | | 2,642,003 | | 263,103 | | 52,621 | | 632,745 | | 0 | | 3,590,472 | | James P. Clappin | | 5,158,940 | | 30,875 | | 38,131 | | 903,422 | | 0 | | 6,131,368 | | Lawrence D. McRae | | 0 | | 0 | | 0 | | — | | 0 | | 0 | | David L. Morse | | 1,337,917 | | 60,571 | | 74,806 | | 30,605 | | 0 | | 1,503,899 |
| (1) | Reflects participation in the Supplemental Investment Plan by Messrs. Weeks, Tripeny, Clappin, and Dr. Morse in the deferral of a portion of their 20182019 base salaries and participation by Messrs. Tripeny and Clappin, and Dr. Morse in the deferral of a portion of the bonus received in 20182019 for prior year performance. The Named Executive Officers’ contributions are included in the Summary Compensation Table, as a part of Salary and/or Non-Equity Incentive Plan Compensation. | | | | (2) | Reflects Company match on the Supplemental Investment Plan which was credited to the account of the Named Executive Officers in 2018.2019. All of these amounts are included in the All Other Compensation column of the Summary Compensation Table (and are also detailed in footnote (5) to that Table). | | | | (3) | Reflects aggregate earnings on each type of deferred compensation listed above. The earnings on deferred base salary and bonus payments are calculated based on the actual returns from the same fund choices that Company employees have in the qualified 401(k) plan. Currently, employees have 14 fund choices that they may select from. As nonqualified plans, these plans are unfunded which means that no actual dollars are invested in these funds. The Company does not provide any above market interest rates or other special terms for any deferred amounts. These amounts are not included in the Change in Pension Value column of the Summary Compensation Table. |
Arrangements with Named Executive Officers
Severance Agreements We have entered into severance agreements with each of our NEOs. All new executive severance agreements and executive change-in-control agreements entered into after July 2004, limit the benefits that may be provided to an executive to 2.99 times the executive’s annual compensation of base salary plus target incentive payments. Messrs. Weeks, Clappin, McRae and Dr. Morse have agreements which were in effect prior to July 2004. Mr. Tripeny has a severance agreement dated as of January 1, 2015.
Severance Agreements—Mr. Weeks Under Mr. Weeks’ severance agreement, if he is terminated involuntarily, and without cause, or as a result of disability, he is entitled to the following: ●• | Base salary, reimbursable expenses and annual bonus accrued and owing as of the date of termination (lump sum payment); | | | | ●• | A severance amount equal to 2.99 times his then-base salary plus an annual bonus amount (calculated at 100% of target that would have been paid for the fiscal year in which the termination occurs) (lump sum payment); | | | | ●• | Continued participation in the Company’s benefit plans for up to three years; and | | | | ●• | In the calendar year following the year in which the termination occurs (subject to a six-month waiting period), the purchase of his principal residence by the Company upon request. |
If however, Mr. Weeks is terminated for cause or he resigns, he would (1) be entitled to accrued, but unpaid salary (lump sum payment) and any reimbursable expenses accrued or owing to him and, if terminated for cause, (2) forfeit any outstanding stock awards. | 70 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 67 |
Table of Contents Compensation Discussion & Analysis
Severance Agreements—Other Named Executive Officers Under the severance agreements, an NEO is entitled to severance payments if he is terminated involuntarily other than for cause. Generally, under the severance agreements, an NEO (other than Mr. Weeks) is entitled to receive the following: ●• | Accrued but unpaid base salary, reimbursable expenses, vacation pay and the executive’s target percentage for the annual bonus plans multiplied by the executive’s salary, pro-rated to the last day of the month closest to the termination date (lump sum payment); | | | | ●• | A severance amount equal to two times the executive’s then-base salary plus an annual bonus amount (an amount equal to executive’s salary multiplied by the executive’s target percentage in effect on the termination date under the Company’s Performance Incentive Plan and 5% target under the GoalSharing Plan) (lump sum payment); | | | | ●• | Continued medical, dental and hospitalization benefits for 24 months; | | | | ●• | In the calendar year following the year in which the termination occurs (subject to a six-month waiting period), the purchase of his principal residence by the Company upon request; and | | | | ●• | Outplacement benefits up to a maximum amount of $50,000. |
The following table reflects the amounts that would be payable under the various arrangements assuming termination occurred at December 31, 2018.2019. | TERMINATION SCENARIOS (INCLUDING SEVERANCE, IF ELIGIBLE) | | Named Executive Officer | | | | Voluntary(1) | | For Cause | | Death | | Disability(1) | | Without Cause | | Wendell P. Weeks | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | $10,942,682 | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 75,972 | (2) | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | n/a | | | | Purchase of Principle Residence | | n/a | | n/a | | n/a | | n/a | | $250,000 to $1,000,000 | (3) | | | Pension Non-Qualified Annuity | | $1,664,086 | | $0 | | $1,664,086 | | $1,664,086 | | $1,664,086 | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | Pension—Qualified Annuity | | $127,729 | | $127,729 | | $63,864 | | $127,729 | | $127,729 | | | R. Tony Tripeny | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 2,415,000 | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 50,648 | (2) | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | Purchase of Principle Residence | | n/a | | n/a | | n/a | | n/a | | 50,000 to 250,000 | (3) | | | Pension Non-Qualified Annuity | | 430,664 | | 0 | | 337,845 | | 430,664 | | 430,664 | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | Pension—Qualified Lump Sum | | 366,033 | | 366,033 | | 366,033 | | 366,033 | | 366,033 | | | James P. Clappin | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 2,775,000 | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 30,868 | (2) | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | Purchase of Principle Residence | | n/a | | n/a | | n/a | | n/a | | 0 | (3) | | | Pension Non-Qualified Annuity | | 543,582 | | 0 | | 418,713 | | 543,582 | | 543,582 | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | Pension—Qualified Annuity | | 99,733 | | 99,733 | | 49,867 | | 99,733 | | 99,733 | | | Lawrence D. McRae | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 3,040,000 | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 50,648 | (2) | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | Purchase of Principle Residence | | n/a | | n/a | | n/a | | n/a | | $50,000 to $250,000 | (3) | | | Pension Non-Qualified Annuity | | 579,469 | | 0 | | 469,055 | | 579,469 | | 579,469 | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | Pension—Qualified Annuity | | 109,687 | | 109,687 | | 54,843 | | 109,687 | | 109,687 | | | David L. Morse | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 2,590,000 | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 33,416 | (2) | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | Purchase of Principle Residence | | n/a | | n/a | | n/a | | n/a | | 250,000 to 1,000,000 | (3) | | | Pension Non-Qualified Annuity | | 617,892 | | 0 | | 460,514 | | 617,892 | | 653,197 | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | Pension—Qualified Annuity | | 133,770 | | 133,770 | | 66,885 | | 133,770 | | 133,770 | |
TERMINATION SCENARIOS (INCLUDING SEVERANCE, IF ELIGIBLE) | Named Executive Officer | | | | Voluntary(1) | | For Cause | | Death | | Disability(1) | | Without Cause | | | Wendell P. Weeks | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | $11,297,984 | | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | $53,019 | (2) | | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | n/a | | | | | Purchase of Principal Residence | | n/a | | n/a | | n/a | | n/a | | $250,000 to $1,000,000 | (3) | | | | Pension—Non-Qualified Annuity | | $1,768,825 | | $0 | | $1,768,825 | | $1,768,825 | | $1,768,825 | | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | | Pension—Qualified Annuity | | $132,664 | | $132,664 | | $66,332 | | $132,664 | | $132,664 | | | R. Tony Tripeny | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 2,493,400 | | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 53,548 | (2) | | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | | Purchase of Principal Residence | | n/a | | n/a | | n/a | | n/a | | 50,000 to 250,000 | (3) | | | | Pension—Non-Qualified Annuity | | 500,415 | | 0 | | 383,698 | | 500,415 | | 500,415 | | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | | Pension—Qualified Lump Sum | | 403,031 | | 403,031 | | 403,031 | | 403,031 | | 403,031 | | | James P. Clappin | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 2,865,280 | | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 29,624 | (2) | | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | | Purchase of Principal Residence | | n/a | | n/a | | n/a | | n/a | | 0 | (3) | | | | Pension—Non-Qualified Annuity | | 585,038 | | 0 | | 440,194 | | 585,038 | | 585,038 | | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | | Pension—Qualified Annuity | | 104,669 | | 104,669 | | 52,334 | | 104,669 | | 104,669 | | | Lawrence D. McRae | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 3,138,800 | | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 53,548 | (2) | | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | | Purchase of Principal Residence | | n/a | | n/a | | n/a | | n/a | | 50,000 to 250,000 | (3) | | | | Pension—Non-Qualified Annuity | | 627,755 | | 0 | | 498,655 | | 627,755 | | 627,755 | | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | | Pension—Qualified Annuity | | 114,622 | | 114,622 | | 57,311 | | 114,622 | | 114,622 | | | David L. Morse | | Severance Amount | | n/a | | n/a | | n/a | | n/a | | 2,674,360 | | | | | Value of Benefits Continuation | | n/a | | n/a | | n/a | | n/a | | 35,346 | (2) | | | | Value of Outplacement Services | | n/a | | n/a | | n/a | | n/a | | 50,000 | | | | | Purchase of Principal Residence | | n/a | | n/a | | n/a | | n/a | | 250,000 to 1,000,000 | (3) | | | | Pension—Non-Qualified Annuity | | 687,575 | | 0 | | 499,923 | | 687,575 | | 725,495 | | | | | Pension—Non-Qualified Lump Sum | | n/a | | n/a | | n/a | | n/a | | n/a | | | | | Pension—Qualified Annuity | | 138,705 | | 138,705 | | 69,353 | | 138,705 | | 138,705 | |
68 | CORNING2019 2020 PROXY STATEMENT | 71 |
Table of Contents Compensation Discussion & Analysis | (1) | Non-qualifiedNonqualified plan benefits shown for all NEOs are payable from the Executive Supplemental Pension Plan. The timing and form of the benefits payable in the table above for a voluntary termination are as follows: Messrs. Weeks, Tripeny, McRae and Clappin’s Executive Supplemental Pension Plan benefits are payable as an immediate life annuity. Dr. Morse’s benefit is payable as an immediate life annuity with six years guaranteed. | | | | (2) | The value of welfare benefits continuation is estimated at $25,324$17,673 per year for family coverage (threethree years of benefits continuation for Mr. Weeks and two years of benefitsfor Dr. Morse. Benefits continuation for Messrs. Tripeny and McRae.McRae is $26,774 per year for two years. Mr. Clappin’s benefits continuation is $15,434$14,812 per year for two years. Dr. Morse’s benefits continuation is $16,708 for two years. | | | | (3) | Under the terms of the severance agreements, the NEOs may also request that Corning purchase their principal residence in the Corning, New York area. Corning is unable to accurately and precisely estimate the value that may be delivered under this provision as it requires an independent appraisal of the executive’s residence as well as, for Mr. Weeks and Dr. Morse, a calculation of the executive’s purchase price of the residence plus a percentage of documented improvements made to the property. These values are not maintained by Corning in its normal course of business. They are required only if an executive is terminated. Such purchase must be finalized in the calendar year following the year in which the executive’s termination occurred (subject to a six-month waiting period). Mr. Clappin does not currently have a principal residence in the Corning, New York area. |
Change-in-Control Agreements We have entered into change-in-control agreements with each of the NEOs. These agreements are intended to provide for continuity of management if there is a change in control of the Company. These agreements will be effective until the executive leaves the employ of Corning or until the executive ceases to be an officer of Corning. If during the term of the agreement a change in control occurs, the restrictions on all restricted stock and restricted stock units held by the NEO lapse, and any stock options vest and become immediately exercisable. The NEOs are also entitled to severance and other benefits upon certain terminations of employment following or in connection with a change in control. ●• | For Mr. Weeks, benefits are payable if he (i) is terminated without cause or resigns for “good reason”, each during a “potential change in control period” or (ii) resigns or is terminated for any reason or within four years following a change in control. | | | | ●• | For the NEOs (other than Mr. Weeks), benefits are payable if their employment is terminated (other than for cause, by reason of death or disability, or by the executive for any reason) during a potential change in control period, or within two years following a change in control. |
The benefits payable are as follows: ●• | Accrued but unpaid base salary, reimbursable expenses, vacation pay and the executive’s target percentage for the annual bonus plans multiplied by the executive’s salary, pro-rated to the last day of the month closest to the termination date (lump sum payment); | | | | ●• | A severance amount equal to 2.99 times (for Mr. Weeks) and two times (for Messrs. McRae, Clappin, Tripeny and Dr. Morse) the NEO’s then-current base salary plus an annual bonus amount (lump sum payment); | | | | ●• | Continued participation in the Company’s benefit plans for 3 years; | | | | ●• | Upon request, purchase of the NEO’s principal residence in the Corning, NY area; and | | | | ●• | Outplacement benefits (equal to 20% of base salary) (excluding Mr. Weeks). |
If the employment of an NEO (other than Mr. Weeks) is terminated for cause or he resigns for other than good reason, or the NEO’s employment terminates by reason of death or disability, the NEO is entitled to accrued but unpaid base salary, reimbursable expenses, vacation pay and the executive’s target percentage for the annual bonus plans multiplied by the executive’s salary, pro-rated to the last day of the month closest to the termination date (lump sum payment). In addition, each NEO except Mr. Tripeny is generally entitled to receive a gross-up payment in an amount sufficient to make him whole for any federal excise tax on excess parachute payments imposed under Section 280G and 4999 of the IRC. However, if the federal excise tax can be avoided by reducing the related payments by a present value of $45,000 or less, then the payment will be reduced to the extent necessary to avoid the excise tax and no gross-up payment will be made to the NEO. | 72 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 69 |
Table of Contents Compensation Discussion & Analysis The following table reflects the amounts that would be payable under the various arrangements assuming that a change in control occurred on December 31, 20182019 | | Cash-based | | Long-Term Incentives(1) | | | | Named Executive Officer | | Cash
Severance
($) | | Interrupted
Perf. Cycles
($) | | ESPP
($) | | Misc.
Benefits
($) | | Excise
Tax Gross Up
($) | | Interrupted
CPU Perf. Cycles
($) | | Share-based
Awards
($) | | Total
Benefits
($) | | Wendell P. Weeks | | 15,574,119 | | 0 | | 25,547,425 | | 125,972 | | 0 | | 11,439,032 | | 10,021,399 | | 62,707,947 | | R. Tony Tripeny | | 2,415,000 | | 0 | | 6,571,298 | | 100,648 | | 0 | | 2,523,225 | | 2,049,374 | | 13,659,545 | | James P. Clappin | | 2,775,000 | | 0 | | 7,966,827 | | 80,868 | | 0 | | 2,949,831 | | 2,561,120 | | 16,333,646 | | Lawrence D. McRae | | 3,040,000 | | 0 | | 8,717,633 | | 100,648 | | 0 | | 3,084,631 | | 2,708,464 | | 17,651,376 | | David L. Morse | | 2,590,000 | | 0 | | 9,411,026 | | 83,417 | | 0 | | 2,788,837 | | 2,527,066 | | 17,400,346 |
| | | Cash-based | | Long-Term Incentives(1) | | | | Named Executive Officer | | Cash
Severance
($) | | Interrupted
Perf. Cycles
($) | | ESPP
($) | | Misc.
Benefits
($) | | Excise
Tax Gross Up
($) | | Interrupted
CPU Perf. Cycles
($) | | Share-based
Awards
($) | | Total
Benefits
($) | | Wendell P. Weeks | | 12,582,984 | | 0 | | 28,288,975 | | 103,019 | | 0 | | 10,329,000 | | 7,138,433 | | 58,442,411 | | R. Tony Tripeny | | 2,493,400 | | 0 | | 7,949,509 | | 103,548 | | 0 | | 2,333,400 | | 1,670,671 | | 14,550,528 | | James P. Clappin | | 2,865,280 | | 0 | | 8,892,534 | | 79,624 | | 0 | | 2,673,000 | | 1,827,641 | | 16,338,079 | | Lawrence D. McRae | | 3,138,800 | | 0 | | 9,818,878 | | 103,548 | | 0 | | 2,728,200 | | 1,897,556 | | 17,686,982 | | David L. Morse | | 2,674,360 | | 0 | | 10,715,934 | | 85,346 | | 0 | | 2,475,600 | | 1,775,943 | | 17,727,183 |
| (1) | Long-term incentives includeincludes a combination of equity (stock options, and restricted stock units) and cash (cash performance units) which vest upon a change of control. |
In addition to the above, the NEOs may also request that Corning purchase their principal residence. Corning is unable to accurately and precisely estimate the value as it requires an independent appraisal of the executive’s residence and, for all, a calculation of the executive’s purchase price of such residence and any documented improvements made to the property. This is data that Corning does not maintain in its normal course of business. See footnote (3) to the “Termination Scenarios” on page 69. 70 | CORNING2019 PROXY STATEMENT |
Table of Contents71.
Compensation Discussion & Analysis
Pay Ratio Disclosure For 2018,2019, our last completed fiscal year, the annual total compensation of the median employee, excluding our CEO, was $52,095$49,121 and the annual total compensation of our CEO was $14,921,071.$14,283,654. Accordingly, the ratio of the CEO’s annual total compensation to the annual total compensation of the median employee was 286:291:1. This reflects analysis of our global workforce of 50,04550,155 employees as of October 1, 2018,2019, which excludes 597741 employees in Brazil, 7994 employees in Hungary, 334349 employees in India, 2 employees in Indonesia, 3 employees in Pakistan, 118155 employees in South Africa, and 16877 employees in Turkey and 60 employees in Russia, which are de minimis. We used estimated total cash compensation to determine the median employee. Our estimate of total cash compensation for our full 20182019 fiscal year included (i) annual base salary plus annual incentives calculated at target for salaried employees and (ii) hourly salary rate times annual standard hours plus additional adjustments for shift differentials, estimated overtime rates, production bonuses, holiday bonuses, fixed bonuses and other cash allowances paid to hourly employees. While our compensation programs and practices did not change materially, our total headcount grew by 10.6%. Accordingly, we deemed it prudent to update our median employee in 2018. Our estimates were based on an analysis of the pay components and payrolls in each of the 4237 countries in which we operate, excluding Brazil, Hungary, India, Indonesia, Pakistan, Russia, South Africa and Turkey. Total cash compensation rates of employees paid in foreign currencies were converted into U.S. dollars using our standard monthly foreign exchange conversion rates in effect on October 1, 20182019 for the determination of the median and December 31, 20182019 for the year-end actual total compensation. Once the median employee was identified, actual total compensation was determined in accordance with Item 402(c)(2)(x) of Regulation S-K. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. | CORNING 2020 PROXY STATEMENT | 73 |
CORNING2019 PROXY STATEMENT | 71 |
Table of Contents Proposal 3
Ratification of Appointment of Independent Registered Public Accounting Firm | |  |
Proposal 3
Ratification of Appointment of Independent Registered Public Accounting Firm The Audit Committee (the Committee) evaluates our independent registered public accounting firm each year and has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for 2019.2020. PwC has served in this role since 1944. The Committee concluded that many factors contribute to the continued support of PwC’s independence, such as the oversight of the Public Company Accounting Oversight Board (PCAOB) through the establishment of audit, quality, ethics, and independence standards in addition to conducting audit inspections; the mandating of reports on internal control over financial reporting; PCAOB requirements for audit partner rotation; and limitations imposed by regulation and by the Committee on non-audit services provided by PwC. The Committee preapproves all audit and permitted non-audit services that PwC performs for the Company, and it approves the audit fees associated with the engagement of PwC. All services provided to Corning by PwC in 20172018 and 20182019 were pre-approved by the Committee in accordance with the policy. The Committee and the PCAOB require key PwC partners assigned to our audit to be rotated at least every five years. The Committee and its Chair oversee the selection process for each new lead engagement partner. Throughout this process, the Committee and management provide input to PwC about the Company’s priorities, discuss candidate qualifications and interview potential candidates put forth by the firm. In determining whether to reappoint PwC, the Committee took into consideration a number of factors, including: ●• | PwC’s global capabilities to handle the breadth and complexity of Corning’s global operations; | | | | ●• | PwC’s technical expertise and knowledge of Corning’s industry and global operations; | | | | ●• | The quality and candor of PwC’s communications with the Committee and management, which include routine executive sessions with the Committee held without management present and a management survey of PwC’s performance; | | | | ●• | PwC’s independence; | | | | ●• | The appropriateness of PwC’s fees; and | | | | ●• | PwC’s tenure as our independent registered public accounting firm, including the benefits of that tenure (including higher audit quality due to PwC’s deep understanding of Corning’s business and accounting policies and practices), the avoidance of significant costs and disruptions that would be associated with retaining a new independent auditor, and the controls and processes in place such as rotation of key partners and an annual assessment of PwC’s qualifications, service quality, sufficiency of resources, quality of communications, working relationship with our management, objectivity and professional skepticism that help ensure PwC’s continued independence. |
7274 | CORNING2019 2020 PROXY STATEMENT |
Table of Contents Proposal 3Ratification of Appointment of Independent Registered Public Accounting Firm Based on its evaluation, the Committee believes that the continued retention of PwC is in the best interests of the Company and its shareholders. The Board concurs and requests that the shareholders ratify the appointment of PwC as Corning’s independent registered public accounting firm for the fiscal year ending December 31, 2019.2020. If the selection of PwC is not ratified by a majority of the shares of common stock present or represented at the annual meeting and entitled to vote on the matter, the Committee will review its future selection of an independent registered public accounting firm in light of that vote result. Even if the selection is ratified, the Committee in its discretion may appoint a different registered public accounting firm at any time during the year if the Committee determines that such change would be appropriate. Corning expects representatives of PwC to be present at the Annual Meeting and available to respond to questions that may be raised there. These representatives may comment on the financial statements if they so desire.  | FOR | Our Board unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2020. |
Fees Paid to Independent Registered Public Accounting Firm Aggregate fees for professional services rendered by PwC in 20172018 and 2018:2019: | | 2017 | | 2018 | | Audit Fees | | $8,223,000 | | $9,572,000 | | Audit-Related Fees | | 357,000 | | 357,000 | | Tax Fees | | 948,000 | | 326,000 | | All Other Fees | | 235,000 | | 58,000 | | Total Fees | | $9,763,000 | | $10,313,000 |
| | | 2018 | | | 2019 | | | Audit Fees | | $ | 9,572,000 | | | $ | 9,479,000 | | | Audit-Related Fees | | | 357,000 | | | | 73,000 | | | Tax Fees | | | 326,000 | | | | 408,000 | | | All Other Fees | | | 58,000 | | | | 13,000 | | | Total Fees | | $ | 10,313,000 | | | $ | 9,973,000 | |
Audit Fees.These fees are composed of professional services rendered in connection with the annual audit of Corning’s consolidated financial statements, including the audit of the effectiveness of internal control over financial reporting, and reviews of Corning’s quarterly consolidated financial statements on Form 10-Q that are customary under the PCAOB auditing standards generally accepted in the United States.standards. Audit fees also include statutory audits of Corning’s foreign jurisdiction subsidiaries, comfort letters, consents for other SEC filings and reviews of documents filed with the SEC. The increase from 2017 to 2018 primarily relates to statutory audits at new locations and incremental audit procedures relating to an acquisition and the impact of the Tax Cuts and Jobs Act. Audit-Related Fees.These fees are composed of professional services rendered in connection with due diligence pertaining to acquisitions, procedures to translate certain financial statements for foreign subsidiaries, employee benefit plan audits, agreed-upon procedures and the evaluation of new accounting policies. Tax Fees.These fees are composed of statutory tax compliance, assistance for Corning’s foreign jurisdiction subsidiaries’ tax returns, expatriate tax return compliance and other tax compliance projects. All Other Fees.These fees are composed primarily of an information technology security assessment, contract compliance assessment and licensing technical accounting software from the independent registered public accounting firm. | CORNING 2020 PROXY STATEMENT | 75 |
CORNING2019 PROXY STATEMENT | 73 |
Table of Contents Proposal 3Ratification of Appointment of Independent Registered Public Accounting Firm Policy Regarding Audit Committee Pre-Approval of Audit and Permitted Non-Audit Services of Independent Registered Public Accounting Firm The Audit Committee has adopted a policy for pre-approval of audit and permitted non-audit services by Corning’s independent registered public accounting firm. The full Audit Committee approves annually projected services and fee estimates for these services and other major types of services. The Audit Committee chairman has been designated by the Audit Committee to approve any services arising during the year that were not pre-approved by the Audit Committee and services that were pre-approved, but for which the associated fees will materially exceed the budget established for the type of service at issue. Services approved by the chairman are communicated to the full Audit Committee at its next regular meeting. For each proposed service, the independent registered public accounting firm is required to provide supporting documentation detailing said service and confirm that the provision of such services does not impair its independence. The Audit Committee regularly reviews reports detailing services provided to Corning by its independent registered public accounting firm. Report of the Audit Committee The purpose of the Audit Committee is to assist the Board of Directors in its general oversight of Corning’s financial reporting, internal controls and audit functions. The Audit Committee operates under a written charter adopted by the Board of Directors. The directors who serve on the Audit Committee have no financial or personal ties to Corning (other than director compensation and equity ownership as described in this proxy statement) and are all “financially literate” and “independent” for purposes of the New York Stock Exchange listing standards. The Board of Directors has determined that none of the Audit Committee members has a relationship with Corning that may interfere with the members’ independence from Corning and its management. The Audit Committee met with management periodically during the year to consider the adequacy of Corning’s internal controls and the objectivity of its financial reporting. The Audit Committee discussed these matters with Corning’s independent registered public accounting firm and with the appropriate financial personnel and internal auditors. The Audit Committee also discussed with Corning’s senior management and independent registered public accounting firm the process used for certifications by Corning’s chief executive officer and chief financial officer that are required for certain of Corning’s filings with the SEC. The Audit Committee met privately with both the independent registered public accounting firm and the internal auditors, both of whom have unrestricted access to the Audit Committee. The Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm. Management is responsible for: the preparation, presentation and integrity of Corning’s financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion on the effectiveness of internal control over financial reporting. During the course of 2018,2019, management updated the documentation, and performed testing and evaluation of Corning’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation, and it provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management, internal audit and the independent registered public accounting firm at each regularly scheduled Audit Committee meeting. At the conclusion of the process, management provided the Audit Committee with, and the Audit Committee reviewed a report on, the effectiveness of Corning’s internal control over financial reporting. The Audit Committee 74 | CORNING2019 PROXY STATEMENT |
Table of Contents
Proposal 3Ratification of Appointment of Independent Registered Public Accounting Firm
also reviewed: the report of management contained in Corning’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, filed with the SEC; as well as PricewaterhouseCoopers LLP’s Report of Independent Registered Public Accounting Firm included in Corning’s Annual Report on Form 10-K for the year ended December 31, 20182019 related to its audits of the consolidated financial statements and financial statement schedule, and the effectiveness of internal control over financial reporting. | 76 | CORNING 2020 PROXY STATEMENT |
Table of Contents Proposal 3Ratification of Appointment of Independent Registered Public Accounting Firm The Audit Committee has discussed with the independent registered public accounting firm the matters required by the applicable requirements of the Public Company Accounting Oversight Board.Board and the SEC. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and discussed with them their independence from Corning and its management. The Audit Committee has considered whether the provision of permitted non-audit services by the independent registered public accounting firm to Corning is compatible with the auditor’s independence. Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors and the Board of Directors approved that the audited financial statements be included in Corning’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.
The Audit Committee: Kurt M. Landgraf,Chair
Donald W. Blair
Leslie A. Brun
Stephanie A. Burns
Deborah A. Henretta
Daniel P. Huttenlocher
Deborah D. Rieman
Mark S. Wrighton CORNING2019 PROXY STATEMENT | 75 |
Table of Contents
Proposal 4
Approval of the 2019 Equity Plan for
Non-Employee DirectorsCORNING 2020 PROXY STATEMENT | |  |
In 2010, Corning shareholders voted to approve the 2010 Equity Plan for Non-Employee Directors (the 2010 Plan), which was a continuation of a similar program first adopted in 2000 and amended in 2003 and 2006. The 2010 Plan enabled the Board from time to time to make discretionary awards of shares and/or grants of options to purchase shares of Corning’s common stock to non-employee directors. In February 2019, the Board approved the adoption of the 2019 Equity Plan for Non-Employee Directors (the 2019 Plan), which will replace the 2010 Plan, and directed it be submitted to shareholders for approval. The affirmative vote of the holders of a majority of the shares of Corning’s common stock cast at the 2019 Annual Meeting is required to approve the 2019 Plan. If shareholders approve, the 2019 Plan will become effective on the date of such approval and will continue until it expires on May 2, 2029 or until it is replaced by another plan. In the event shareholders do not approve, the 2019 Plan will not become effective and the 2010 Plan will continue until its scheduled expiration on May 1, 2020 or when shares are no longer available, whichever is earlier.
Our Board of Directors recommends that you vote to approve the 2019 Plan. The 2019 Plan is intended to benefit the shareholders of Corning by providing a means to attract, retain and reward non-employee directors who contribute to the longer-term financial success of the Company and to align their interests with those of the shareholders by increasing their proprietary interest in the Company.
As of March 1, 2019, options and restricted share units covering an aggregate of 946,855 shares of Corning’s common stock were outstanding under the 2010 Plan. On March 4, 2019, the closing price of Corning’s common stock was $34.88.
The following is a summary of the principal features of the 2019 Plan. Every aspect of the 2019 Plan is not addressed in this summary.Shareholders are encouraged to read the full text of the 2019 Plan that is attached to this proxy statement as Appendix B.
Summary of the 2019 Equity Plan for Non-Employee Directors
Committee.The 2019 Plan is to be administered by the Compensation Committee (the Committee) of the Board of Directors. The Committee will determine (within the parameters specified in the 2019 Plan) when and to which eligible directors it may grant awards (collectively, Awards) of shares of the Company’s common stock (Shares) or options to purchase Shares (Options), in such type and magnitude, and subject to such terms and conditions, as it may determine.
Effective Date of the 2019 Plan.The 2019 Plan is effective for Awards granted on or after May 2, 2019.
Eligibility.Only directors of the Company who, at the time of grant of an Award, are not employees of the Company, are eligible to receive Awards under the 2019 Plan. Currently, 13 of Corning’s 14 directors are eligible to participate in the 2019 Plan.
Available Shares.Subject to adjustment as contemplated by the 2019 Plan, the maximum number of Shares that may be used for Awards is 1,500,000.
76 | CORNING2019 PROXY STATEMENT |
Table of Contents Proposal 4Approval of
Frequently Asked
Questions About the 2019 Equity Plan for Non-Employee Directors
Meeting and Voting Adjustments.The Committee will determine whether a corporate transaction, such as (but not limited to) any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares or other similar occurrence, has affected the price per Share or the number of Shares outstanding such that an adjustment to outstanding Awards is required to preserve (or prevent enlargement of) the benefits or potential benefits to be made available under the 2019 Plan. In the event of such a transaction, the Committee will, in such manner it deems equitable, adjust (i) the maximum number and kind of shares available under the 2019 Plan (ii) the number and kind of shares subject to outstanding Awards; and (iii) the exercise price of outstanding Options. If the Company is not the surviving corporation of a merger or other similar event, or in the event of a liquidation or reorganization of the Company, and in the absence of the surviving corporation’s assumption of outstanding Awards under the 2019 Plan, the Committee may provide for appropriate adjustment and/or settlement of Awards at either the time of grant or at a subsequent date. The Committee may also adjust Awards as it deems appropriate and consistent with the 2019 Plan’s purpose in the event of any other change of control of the Company.
Annual Award Limits.The maximum number of Shares subject to Awards granted during a single fiscal year to any Director, taken together with any cash fees paid during the fiscal year to the Director in respect of the Director’s service as a member of the Board during such year (including service as a member or chair of any committees of the Board), shall not exceed $700,000 in total value.
Types of Awards.
Stock Options.Options represent a right to purchase a specified number of Shares during a specified period at a price per Share no less than one hundred percent (100%) of the closing price of a Share on the New York Stock Exchange (NYSE). No Option shall be “repriced” (e.g., by reducing the exercise price, cancelling the Option in exchange for another Option with a lower exercise price, or cancelling the Option for cash or another Award, other than in connection with a change in control or an equitable adjustment following an applicable corporate transaction) without shareholder approval. The Shares covered by an Option may be purchased by cash payment of the exercise price or such other means as the Committee may permit, including (i) tendering Shares valued using the market price at the time of exercise, (ii) authorizing a third party to sell Shares acquired on exercise of an Option and remitting to the Company a sufficient portion of sale proceeds to pay the exercise price or (iii) any combination of the above. All Options shall be non-qualified options. No Option shall have an expiration date later than ten years after its grant date. Unless otherwise provided by the Committee, each Option will terminate on the earliest of (1) the third anniversary of the date on which the grantee ceased to be a Director, (2) the date on which written notice of termination of the Option is given to the Director (or such later date specified in the notice), and (3) the Option’s expiration date.
Stock Award.A stock award is a grant of Shares or a right to receive Shares (or their cash equivalent or a combination of both) in the future, subject to such conditions, restrictions and contingencies as the Committee shall determine.
Stock Award Settlements and Payments.The Committee, in its discretion, will determine whether dividends or dividend equivalent payments will be paid or credited to a director’s account prior to the time that a Stock Award becomes vested. Stock awards may be settled through cash payments, the delivery of Shares, the granting of Awards or a combination thereof, as the Committee shall determine. Any Award settlement may be subject to such conditions, restrictions and contingencies as the Committee shall determine.
Amendments and Termination.Any amendments of the 2019 Plan will comply with NYSE listing requirements and any applicable legal requirements. The Board may amend the 2019 Plan as it deems necessary and appropriate to better achieve its purpose, provided, however, that: (i) the number of available Shares cannot be increased and (ii) an Option cannot be “repriced” unless an amendment is properly approved by the Company’s shareholders. Notwithstanding anything to the contrary in the Plan, the Board may amend the Plan in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction in a tax- efficient manner and in compliance with local rules and regulations. The Board may suspend or terminate the 2019 Plan at any time. Any such suspension or termination shall not materially impair any outstanding Award granted under the 2019 Plan or the applicable director’s rights regarding such an Award.
CORNING2019 PROXY STATEMENT | 77 |
Table of Contents
Proposal 4Approval of the 2019 Equity Plan for Non-Employee Directors
Section 409A.The Company intends that all Awards be structured to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (“Section 409A”), such that no adverse tax consequences, interest, or penalties under Section 409A apply. The Committee may, without a participant’s consent, amend the 2019 Plan or any Awards, adopt policies and procedures, or take any other actions as are necessary or appropriate to preserve the 2019 intended tax treatment of Awards, including actions intended to (A) exempt the 2019 Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs or other interpretive authority that may be issued after an Award’s grant date. The Company will have no obligation to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any participant or any other person if any Award, compensation or other benefits under the 2019 Plan are determined to constitute “nonqualified deferred compensation” subject to taxes, penalties or interest under Section 409A.
New Plan Benefits Table.See “Director Compensation” on page 37 for information about awards made to directors under the 2010 Plan during fiscal year 2018.
| FOR | Our Board unanimously recommends a vote FOR the approval of the 2019 Equity Plan for Non-Employee Directors. |
Equity Compensation Plan Information
The following table shows the total number of outstanding options and shares available for other future issuances of options under all of our existing equity compensation plans, including the 2012 Long-Term Incentive Plan and our 2010 Equity Plan for Non-Employee Directors as of December 31, 2018.
| | A | | B | | C | | Plan Category | | Securities To Be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights | | Weighted-Average
Exercise Price
of Outstanding
Options, Warrants
and Rights | | Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(excluding securities reflected in
column A) | | Equity Compensation Plans Approved by Security Holders(1) | | 20,285,069 | | $ | 14.68 | | 61,767,482 | | Equity Compensation Plans Not Approved Security Holders | | 0 | | | | | 0 | | Total | | 20,285,069 | | $ | 14.68 | | 61,767,482 |
(1) | Shares indicated are total grants under the most recent shareholder approved plans as well as any shares remaining outstanding from any prior shareholder approved plans. |
78 | CORNING2019 PROXY STATEMENT |
Table of Contents
Frequently Asked
Questions About the
Meeting and Voting | |  |
Why Did You Send Me This Proxy Statement? We sent this proxy statement and the enclosed proxy card to you because our Board of Directors is soliciting your proxy to vote at the Annual Meeting. This proxy statement summarizes information concerning the matters to be presented at the meeting and related information that will help you make an informed vote. This proxy statement and the accompanying proxy card are first being distributed or made available to shareholders on or about March 22, 2019.20, 2020. When and Where is the Annual Meeting? The Annual Meeting will be held on Thursday, May 2, 2019,April 30, 2020, at 11 a.m. Eastern Time, at The Corning Museum of Glass, One Museum Way, Corning, New York 14830. We intend to hold our annual meeting in person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described in the proxy) or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our Investor Relations website (investor.corning.com), and we encourage you to check this website prior to the meeting if you plan to attend. Who May Attend the Annual Meeting? The Annual Meeting is open to holders of our common shares who held such shares as of the meeting’s record date, March 4, 2019.2, 2020. To attend the meeting, you will need to register upon arrival. We may check for your name on our shareholders’ list and ask you to produce valid photo ID and evidence of your share ownership. If we cannot verify that you own Corning shares, it is possible that you will not be admitted to the meeting. Please monitor our Investor Relations websiteinvestor.corning.comin case these attendance requirements are changed as a result of public health and safety measures related to the coronavirus (COVID-19) situation. What Am I Voting On? The following matters are scheduled for vote at the Annual Meeting: ●• | Election of 1413 directors for a one-year term;
| ● | | | • | Advisory approval of the Company’s executive compensation (Say on Pay);
| ● | | | • | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019;
2020; and | ● | Approval of the 2019 Equity Plan for Non-Employee Directors; and
| ●• | Any other business or action which may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. |
CORNING2019 PROXY STATEMENT | 79 |
Table of Contents
Frequently Asked Questions About the Meeting and Voting
How Do You Recommend That I Vote on These Items? The Board of Directors recommends that you vote your shares: ●• | FORall 1413 director nominees (Proposal 1);
| ● | | | • | FORthe advisory approval of the compensation of the Company’s NEOs, as such information is disclosed in the Compensation Discussion & Analysis, the compensation tables and the accompanying disclosure (Say on Pay) (Proposal 2);
and | ● | | | • | FORratification of the Board’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20192020 (Proposal 3); and
| ● | FOR the approval of the 2019 Equity Plan for Non-Employee Directors (Proposal 4). |
| 78 | CORNING 2020 PROXY STATEMENT |
Table of Contents Frequently Asked Questions About the Meeting and Voting Who is Entitled to Vote? You may vote if you owned our common shares as of the close of business on March 4, 2019,2, 2020, the record date for the Annual Meeting. How Many Votes Do I Have? You are entitled to one vote for each common share you own. As of the close of business on March 4, 2019,2, 2020, we had 785,218,735762,620,093 common shares outstanding. The shares held in our treasury are not considered outstanding and will not be voted or considered present at the meeting. How Do I Vote By Proxy Before the Annual Meeting? Before the meeting, registered shareholders may vote shares in one of the following three ways: ●• | By Internet atwww.proxyvote.com;
| ● | | | • | By telephone (from the United States and Canada only) at1-(800)-690-6903; and
| ● | | | • | By mail by completing, signing, dating and returning the enclosed proxy card in the postage paid envelope provided (see instructions on proxy card). |
Please refer to the proxy card for further instructions on voting by Internet or telephone. Please use onlyone of the three ways to vote. If you hold shares in the account of or name of a broker, your ability to vote those shares by Internet and telephone depends on the voting procedures used by your broker, as explained below under “How Do I Vote If My Broker Holds My Shares In “Street Name”?” May I Vote My Shares in Person At the Annual Meeting? Yes. You may vote your shares at the meeting if you attend in person, even if you previously submitted a proxy card or voted by Internet or telephone. Whether or not you plan to attend the meeting, however, we strongly encourage you to vote your shares by proxy before the meeting. 80 | CORNING2019 PROXY STATEMENT |
Table of Contents
Frequently Asked Questions About the Meeting and Voting
May I Change My Mind After I Vote? Yes. You may change your vote or revoke your proxy at any time before the polls close at the meeting. You may change your vote by: ●• | signing another proxy card with a later date and returning it to Corning’s Corporate Secretary at One Riverfront Plaza, Corning, NY 14831, prior to the meeting;
| ● | | | • | voting again by Internet or telephone prior to the meeting; or
| ● | | | • | voting again at the meeting. |
You also may revoke your proxy prior to the meeting without submitting any new vote by sending a written notice that you are withdrawing your vote to our Corporate Secretary at the address listed above. | CORNING 2020 PROXY STATEMENT | 79 |
Table of Contents Frequently Asked Questions About the Meeting and Voting What Shares Are Included on My Proxy Card? Your proxy card includes shares held in your own name and shares held in any Corning plan. You may vote these shares by Internet, telephone or mail, as described on the enclosed proxy card. Your proxy card does not include any shares held in a brokerage account in the name of your bank or broker (such shares are said to be held in “street name”). How Do I Vote if I Participate in the Corning Investment Plan? If you hold shares in the Corning Investment Plan, which includes shares held in the Corning Stock Fund in the Company’s 401(k) plan, these shares have been added to your other holdings on your proxy card. Your completed proxy card serves as voting instructions to the trustee of the plan. You may direct the trustee to vote your plan shares by submitting your proxy vote for those shares, along with the rest of your shares, by Internet, telephone or mail, all as described on the enclosed proxy card. If you do not instruct the trustee to vote, your plan shares will be voted by the trustee in the same proportion that it votes shares in other plan accounts for which it did receive timely voting instructions. How Do I Vote if My Broker Holds My Shares in “Street Name”? If your shares are held in a brokerage account in the name of your bank or broker (this is called “street name”), those shares are not included in the total number of shares listed as owned by you on the enclosed proxy card. Instead, your bank or broker will send you directions on how to vote those shares. Will My Shares Held in Street Name be Voted if I Do Not Provide My Proxy? Under the New York Stock Exchange rules, if you own shares in “street name” through a broker and do not vote, your broker may not vote your shares on proposals determined to be “non-routine.” In such cases, the absence of voting instructions results in a “broker non-vote.” Broker non-voted shares count toward achieving a quorum requirement for the Annual Meeting, but they do not affect the determination of whether the non-routine matter is approved or rejected. The proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm is the only matter in this proxy statement considered to be a routine matter for which brokers will be permitted to vote on behalf of their clients, if no voting instructions are furnished. Since Proposals 1 2 and 42 are non-routine matters, broker non-voted shares will not count as votes cast to affect the determination of whether those proposals are approved or rejected. Therefore, it is important that you provide voting instructions to your broker. CORNING2019 PROXY STATEMENT | 81 |
Table of Contents
Frequently Asked Questions About the Meeting and Voting
What if I Return My Proxy Card or Vote by Internet or Telephone but Do Not Specify How I Want to Vote? If you sign and return your proxy card or complete the Internet or telephone voting procedures, but do not specify how you want to vote your shares, we will vote them as follows: ●• | FORall 1413 director nominees (Proposal 1);
| ● | | | • | FORthe advisory approval of the Company’s executive compensation, as such information is disclosed in the Compensation Discussion & Analysis, the compensation tables and the accompanying disclosure (Say on Pay) (Proposal 2);
and | ● | | | • | FORratification of the Board’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20192020 (Proposal 3); and
| ● | FOR the approval of the 2019 Equity Plan for Non-Employee Directors (Proposal 4). |
If you participate in the Corning Investment Plan and do not submit timely voting instructions, the trustee of the plan will vote the shares in your plan account in the same proportion that it votes shares in other plan accounts for which it did receive timely voting instructions, as explained above under the question “How Do I Vote If I Participate In The Corning Investment Plan?” | 80 | CORNING 2020 PROXY STATEMENT |
Table of Contents Frequently Asked Questions About the Meeting and Voting What Does it Mean if I Receive More Than One Proxy Card? If you received more than one proxy card, you have multiple accounts with your brokers or our transfer agent. Please vote all of these shares. We recommend that you contact your broker or our transfer agent to consolidate as many accounts as possible under the same name and address. If you are registered holder, you may contact our transfer agent, Computershare Trust Company, N.A., at 1-(800)-255-0461. May Shareholders Ask Questions at the Annual Meeting? Yes. Our representatives will answer your questions of general interest to shareholders at the end of the meeting. In order to give a greater number of shareholders the opportunity to ask questions, we may impose certain procedural requirements, such as limiting repetitive or follow-up questions, or those of a personal nature. How Many Shares Must be Present to Hold the Meeting? In order for us to conduct our meeting, a majority of our outstanding common shares as of March 4, 2019,2, 2020, the record date for the meeting, must be present in person or by proxy at the meeting. This is called a quorum. Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail. 82 | CORNING2019 PROXY STATEMENT |
Table of Contents
Frequently Asked Questions About the Meeting and Voting
What is the Vote Required for Each Proposal? | | Affirmative Vote Required | | Broker Discretionary
Voting Allowed | Proposal 1: Election of 1413 director nominees | | Majority of votes cast at the meeting in person or by proxy | | No | Proposal 2: Advisory approval
of the Company’s executive
compensation (Say on Pay) | | Majority of votes cast at the meeting in person or by proxy | | No | Proposal 3: Ratification of the
appointment of independent registered
public accounting firm for fiscal year 20192020 | | Majority of votes cast at the meeting in person or by proxy | | Yes | Proposal 4: Approval of the 2019 Equity
Plan for Non-Employee Directors | | Majority of votes cast at the meeting in person or by proxy | | No |
With respect to Proposals 1, 2, 3 and 43 you may vote “FOR”, “AGAINST” or “ABSTAIN”. If you “ABSTAIN” from voting on any of these Proposals, the abstention will not constitute a vote cast. How Will Voting on “Any Other Business” be Conducted? We have not received proper notice of, and are not aware of, any business to be transacted at the meeting other than as indicated in this proxy statement. If any other item or proposal properly comes before the meeting, the proxies received will be voted on those matters in accordance with the discretion of the proxy holders. Who Pays for the Solicitation of Proxies? Our Board of Directors is making this solicitation of proxies on behalf of the Company. The Company will pay the costs of the solicitation, including the costs for preparing, printing and mailing this proxy statement. We have hired Innisfree M&A Incorporated to assist us in soliciting proxies. It may do so by telephone, in person or by other electronic communications. We anticipate paying Innisfree a fee of $25,000 plus expenses for these services. We also will reimburse brokers, nominees and fiduciaries for their costs in sending proxies and proxy materials to our shareholders so that you may vote your shares. Our directors, officers and regular employees may supplement Innisfree’s proxy solicitation efforts by contacting you by telephone or electronic communication or in person. We will not pay directors, officers or other regular employees any additional compensation for their proxy solicitation efforts. | CORNING 2020 PROXY STATEMENT | 81 |
Table of Contents Frequently Asked Questions About the Meeting and Voting How Can I Find the Voting Results of the Annual Meeting? Following the conclusion of the Annual Meeting, we will include the voting results in a Form 8-K, which we expect to file with the Securities and Exchange Commission (the “SEC”) on or before May 8, 2019. CORNING2019 PROXY STATEMENT | 83 |
Table of Contents4, 2020.
Frequently Asked Questions About the Meeting and Voting
How Do I Submit a Shareholder Proposal For, or Nominate a Director For Election at, Next Year’s Annual Meeting?
Proposals for Inclusion in Next Year’s Proxy Statement SEC rules permit shareholders to submit proposals for inclusion in our proxy statement if the shareholder and the proposal meet the requirements specified in SEC Rule 14a-8.
When to send these proposals:Any shareholder proposals submitted in accordance with SEC Rule 14a-8 must be received at our principal executive offices no later than the close of business on November 22, 2019.20, 2020.
Where to send these proposals:Proposals should be addressed to Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831.
What to include:Proposals must conform to and include the information required by SEC Rule 14a-8.
Director Nominees for Inclusion in Next Year’s Proxy Statement Our by-laws permit a group of shareholders (up to 20) who have owned at least 3% of Corning’s common stock for at least 3 years to submit director nominees for the greater of two directors or 20% of our Board. These director nominees will be included in our proxy statement if the shareholder(s) and the nominee(s) satisfy the requirements specified in our by-laws.
When to send these notices of director nominees:Notices of director nominees submitted under these by-law provisions must be received no earlier than October 24, 201921, 2020 and no later than November 22, 2019.20, 2020.
Where to send these notices of director nominees:Notices should be addressed to Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831.
What to include:Notices must include the information required by our by-laws, which are available on Corning’s website.
Other Proposals or Nominees for Presentation at Next Year’s Annual Meeting Our by-laws require that any shareholder proposal, including director nominations, that is not submitted for inclusion in next year’s proxy statement (either under SEC Rule 14a-8 or our proxy access by-laws), but is instead sought to be presented directly at the 20202021 Annual Meeting, must be received at our principal executive offices no earlier than the 120th120th day and no later than the close of business on the 90th90th day prior to the first anniversary of the preceding year’s annual meeting.
When to send these proposals:Shareholder proposals, including director nominations, submitted under these by-law provisions must be received no earlier than January 3, 20201, 2021 and no later than February 2, 2020.January 31, 2021.
Where to send these proposals:Proposals should be addressed to Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831.
What to include:Proposals must include the information required by our by-laws, which are available on Corning’s website. | 82 | CORNING 2020 PROXY STATEMENT |
Table of Contents Frequently Asked Questions About the Meeting and Voting Why Haven’t I Received a Printed Copy of the Proxy Statement or Annual Report? We are furnishing proxy materials to you online, as permitted by SEC rules, to expedite your receipt of materials while lowering costs and reducing the environmental impact of printing and mailing full sets of annual meeting materials. If you received by mail a notice of the electronic availability of these materials, you will not receive a printed copy unless you specifically request it. Such notice contains instructions on how to request a paper copy of the materials. 84 | CORNING2019 PROXY STATEMENT |
Table of Contents
Frequently Asked Questions About the Meeting and Voting
Is the Proxy Statement Available on the Internet? Yes. Most shareholders will receive the proxy statement and other annual meeting materials online. If you received a paper copy, you can also view these documents online by accessing our website atcorning.com/2019-proxy2020-proxy. You can elect to receive future proxy statements and annual reports by Internet instead of receiving paper copies by mail by following the instructions for making such election when you electronically vote your shares. Are You “Householding” For Shareholders Sharing the Same Address? Yes. The SEC’s rules regarding the delivery to shareholders of proxy statements, annual reports, prospectuses and information statements permit us to deliver a single copy of these documents to an address shared by two or more of our shareholders. This method of delivery is referred to as “householding,” and can significantly reduce our printing and mailing costs. It also reduces the volume of mail you receive. This year, we are delivering only one proxy statement and 20182019 Annual Report to multiple registered shareholders sharing an address, unless we receive instructions to the contrary from one or more of the shareholders. We will still be required, however, to send you and each other shareholder at your address an individual proxy voting card. If you would like to receive more than one copy of this proxy statement and our 20182019 Annual Report, we will promptly send you additional copies upon written or oral request directed to Broadridge Financial Solutions, Inc. (‘‘Broadridge’’(“Broadridge”), either by calling toll free at (866) 540-7095 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. The same phone number and mailing address may be used to notify us that you wish to receive a separate proxy statement or Annual Report in the future, or to request delivery of a single copy of a proxy statement or Annual Report if you are receiving multiple copies. Code of Ethics Our Board of Directors has adopted the Code of Ethics for the Chief Executive Officer and Financial Executives and the Code of Conduct for Directors and Executive Officers, which supplements the Code of Conduct governing all employees and directors. A copy of the Code of Ethics is available on our website atinvestor.corning.com/investor-relations/governance/overview/default.aspx. We will disclose any amendments to, or waivers from, the Code of Ethics on our website within four business days of such determination. During 2018,2019, no amendments to or waivers of the provisions of the Code of Ethics were made with respect to any of our directors or executive officers. Incorporation by Reference The Compensation Committee Report on page 5760 and the Report of Audit Committee of the Board of Directors on page 74,76, are not deemed filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by Corning under the Securities Act or the Exchange Act, except to the extent that Corning specifically incorporates such information by reference. In addition, this proxy statement includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this proxy statement. | CORNING 2020 PROXY STATEMENT | 83 |
Table of Contents Frequently Asked Questions About the Meeting and Voting Additional Information This proxy statement, our 20182019 Annual Report, our Annual Report on Form 10-K, and all other filings with the SEC, each of the Board Committee Charters and the Corporate Governance Guidelines and Director Qualification Standards may be accessed via the Investor Relations page on Corning’s website atcorning.com. These documents are also available without charge upon a shareholder’s written or oral request to Investor Relations, Corning Incorporated, One Riverfront Plaza, Corning, NY, 14831, telephone number 1-(607)-974-9000. | 84 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 85 |
Table of Contents Appendix A
Corning Incorporated and Subsidiary Companies Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures; Certain Definitions | |  |
Appendix A Corning Incorporated and Subsidiary Companies
Reconciliation of Non-GAAP Financial Measures to
GAAP Financial Measures; Certain Definitions Certain Definitions Used in this Proxy Statement: Target Debtis total reported debt, plus operating lease adjustment, plus pension and other post-employment benefits (OPEB) adjustment.
Target EBITDAis earnings before interest, tax, depreciation and amortization,EBITDA, plus operating lease adjustment, plus pension and OPEB adjustment, plus stock compensation expense. * * * CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Year Ended December 31, 2018
2019 (Unaudited; amounts in millions, except per share amounts) | | Net
sales | | Net
income | | | Earnings
per
Share | | | As reported | | $11,290 | | $1,066 | | | $1.13 | | | Constant-currency adjustment(1) | | 108 | | 127 | | | 0.13 | | | Translation loss on Japanese | | | | 15 | | | 0.02 | | | Translated earnings contract loss, net(3) | | | | 97 | | | 0.10 | | | Acquisition-related costs(4) | | | | 103 | | | 0.11 | | | Discrete tax items and other tax-related | | | | 79 | | | 0.08 | | | Litigation, regulatory and other legal matters(6) | | | | 96 | | | 0.10 | | | Restructuring, impairment and other charges(7) | | | | 96 | | | 0.10 | | | Equity in earnings of affiliated companies(8) | | | | (119 | ) | | (0.13 | ) | | Pension mark-to-market adjustment(10) | | | | 113 | | | 0.12 | | | Core performance measures | | $11,398 | | $1,673 | | | $1.78 | |
| | | Net
sales | | | Net
income | | | Earnings
per share | | | As reported | | $ | 11,503 | | | $ | 960 | | | | $ | 1.07 | | | Constant-currency adjustment(1) | | | 153 | | | | 115 | | | | | 0.13 | | | Translation loss on Japanese yen-denominated debt(2) | | | | | | | 2 | | | | | 0.00 | | | Translated earnings contract gain, net(3) | | | | | | | (190 | ) | | | | (0.21 | ) | | Acquisition-related costs(4) | | | | | | | 99 | | | | | 0.11 | | | Discrete tax items and other tax-related adjustments(5) | | | | | | | 37 | | | | | 0.04 | | | Litigation, regulatory and other legal matters(6) | | | | | | | (13 | ) | | | | (0.01 | ) | | Restructuring, impairment and other charges(7) | | | | | | | 334 | | | | | 0.37 | | | Equity in losses of affiliated companies(8) | | | | | | | 165 | | | | | 0.18 | | | Pension mark-to-market adjustment(10) | | | | | | | 69 | | | | | 0.08 | | | Core performance measures | | $ | 11,656 | | | $ | 1,578 | | | | $ | 1.76 | |
See Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items. | CORNING 2020 PROXY STATEMENT | 85 |
Table of Contents Appendix A CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Year Ended December 31, 2017
2018 (Unaudited; amounts in millions, except per share amounts) | | Net
sales | | Net
income | | | (Loss)
Earnings per
Share | | | As reported | | $10,116 | | $(497 | ) | | $(0.66 | ) | | Constant-currency adjustment(1) | | 142 | | 138 | | | 0.15 | | | Translation gain on Japanese yen-denominated debt(2) | | | | (9 | ) | | (0.01 | ) | | Translated earnings contract loss, net(3) | | | | 78 | | | 0.09 | | | Acquisition-related costs(4) | | | | 59 | | | 0.07 | | | Discrete tax items and other tax-related adjustments(5) | | | | 127 | | | 0.14 | | | Litigation, regulatory and other legal matters(6) | | | | (9 | ) | | (0.01 | ) | | Restructuring, impairment and other charges(7) | | | | 62 | | | 0.07 | | | Equity in earnings of affiliated companies(8) | | | | (97 | ) | | (0.11 | ) | | Adjustments related to acquisitions(9) | | | | 13 | | | 0.01 | | | Pension mark-to-market adjustment(10) | | | | 14 | | | 0.02 | | | Adjustments to remove the impacts of the Tax Cuts and Job Act of 2017(13) | | | | 1,755 | | | 1.96 | | | Core performance measures | | $10,258 | | $1,634 | | | $1.60 | |
See Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items.
86 | CORNING2019 PROXY STATEMENT |
Table of Contents
Appendix A
| | | Net
sales | | | Net
income | | | Earnings
per share | | | As reported | | $ | 11,290 | | | $ | 1,066 | | | | $ | 1.13 | | | Constant-currency adjustment(1) | | | 108 | | | | 127 | | | | | 0.13 | | | Translation loss on Japanese yen-denominated debt(2) | | | | | | | 15 | | | | | 0.02 | | | Translated earnings contract loss, net(3) | | | | | | | 97 | | | | | 0.10 | | | Acquisition-related costs(4) | | | | | | | 103 | | | | | 0.11 | | | Discrete tax items and other tax-related adjustments(5) | | | | | | | 79 | | | | | 0.08 | | | Litigation, regulatory and other legal matters(6) | | | | | | | 96 | | | | | 0.10 | | | Restructuring, impairment and other charges(7) | | | | | | | 96 | | | | | 0.10 | | | Equity in earnings of affiliated companies(8) | | | | | | | (119 | ) | | | | (0.13 | ) | | Pension mark-to-market adjustment(10) | | | | | | | 113 | | | | | 0.12 | | | Core performance measures | | $ | 11,398 | | | $ | 1,673 | | | | $ | 1.78 | |
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Year Ended December 31, 2016
(Unaudited; amounts in millions, except per share amounts)
| | Net
sales | | Net
income | | | Earnings
per
Share | | | As reported | | $9,390 | | $3,695 | | | $3.23 | | | Constant-currency adjustment(1) | | 50 | | 65 | | | 0.06 | | | Translated earnings contract loss, net(3) | | | | 282 | | | 0.25 | | | Acquisition-related costs(4) | | | | 107 | | | 0.09 | | | Discrete tax items and other tax-related adjustments(5) | | | | (27 | ) | | (0.02 | ) | | Litigation, regulatory and other legal matters(6) | | | | 70 | | | 0.06 | | | Restructuring, impairment and other charges(7) | | | | 138 | | | 0.12 | | | Equity in earnings of affiliated companies(8) | | | | (18 | ) | | (0.02 | ) | | Adjustments related to acquisitions(9) | | | | (42 | ) | | (0.04 | ) | | Pension mark-to-market adjustment(10) | | | | 44 | | | 0.04 | | | Gain on realignment of equity investment(11) | | | | (2,676 | ) | | (2.34 | ) | | Taiwan power outage(12) | | | | 13 | | | 0.01 | | | Core performance measures | | $9,440 | | $1,651 | | | $1.44 | |
See Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items. CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED OPERATING CASH FLOWNON-GAAP FINANCIAL MEASURE TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Year Ended December 31, 2018
(Unaudited; amounts in millions) | Adjusted operating cash flow | $ | 3,168 | | | Adjustments from GAAP Net Cash Provided by Operating Activities | | | | | Proceeds from settlement of initial contingent consideration asset(a) | | (196 | ) | | Cash proceeds from realized gain on hedging instruments(b) | | (108 | ) | | Translation gains on cash balances(c) | | 55 | | | Net cash provided by operating activities | $ | 2,919 | |
(a) | Represents a budget to actual adjustment to arrive at the metric to calculate incentive compensation. | (b) | Represents the realized gain on translated earnings contracts. | (c) | Represents translation gains on Corning’s foreign cash balances |
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED OPERATING CASH FLOW LESS CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Year Ended December 31, 2018
(Unaudited; amounts in millions)
Adjusted operating cash flow less capital expenditures | $926 | | Adjustments from GAAP Net Cash Provided by Operating Activities: | | | Translation gain on cash balances(a) | 55 | | Proceeds from settlement of initial contingent consideration asset(b) | (196 | ) | Realized gains on hedging instruments(c) | (108 | ) | Capital expenditures(d) | 2,242 | | Net cash provided by operating activities | $2,919 | |
(a) | Represents translation gain on Corning’s foreign cash balances. | (b) | Represents a budget to actual adjustment to arrive at the metric to calculate incentive compensation. | (c) | Represents the realized gain on translated earnings contracts. | (d) | Represents Corning’s 2018 capital expenditures. |
CORNING2019 PROXY STATEMENT | 87 |
Table of Contents
Appendix A
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED OPERATING CASH FLOW LESS CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIESGAAP FINANCIAL MEASURE
Year Ended December 31, 2017
(Unaudited; amounts in millions)millions, except per share amounts) Adjusted operating cash flow less capital expenditures | $816 | | Adjustments from GAAP Net Cash Provided by Operating Activities | | | Translation loss on cash balances(a) | (342 | ) | Restructuring payments(b) | (4 | ) | Realized gains on hedging instruments(c) | (270 | ) | Capital expenditures(d) | 1,804 | | Net cash provided by operating activities | $2,004 | |
(a) | Represents translation losses on Corning’s foreign cash balances. | (b) | Represents a budget to actual adjustment to arrive at the metric to calculate incentive compensation. | (c) | Represents the realized gain on translated earnings contracts. | (d) | Represents Corning’s 2017 capital expenditures. |
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
DISPLAY TECHNOLOGIES SEGMENT RECONCILIATION OF CORE NET SALES TO NET SALES
Year Ended December 31, 2018
(Unaudited; amounts in millions)
| Net sales | | Net
sales | | Net (loss)
income | | (Loss)
earnings
per share | | | As reported | $ | 3,168 | | $ | 10,116 | | | $ | (497 | ) | | | $ | (0.66 | ) | | Constant-currency adjustment(1) | | 108 | | | 142 | | | | 138 | | | | | 0.15 | | | Translation gain on Japanese yen-denominated debt(2) | | | | | | | | (9 | ) | | | | (0.01 | ) | | Translated earnings contract loss, net(3) | | | | | | | | 78 | | | | | 0.09 | | | Acquisition-related costs(4) | | | | | | | | 59 | | | | | 0.07 | | | Discrete tax items and other tax-related adjustments(5) | | | | | | | | 127 | | | | | 0.14 | | | Litigation, regulatory and other legal matters(6) | | | | | | | | (9 | ) | | | | (0.01 | ) | | Restructuring, impairment and other charges(7) | | | | | | | | 62 | | | | | 0.07 | | | Equity in earnings of affiliated companies(8) | | | | | | | | (97 | ) | | | | (0.11 | ) | | Adjustments related to acquisitions(9) | | | | | | | | 13 | | | | | 0.01 | | | Pension mark-to-market adjustment(10) | | | | | | | | 14 | | | | | 0.02 | | | Adjustments resulting from the 2017 Tax Act(11) | | | | | | | | 1,755 | | | | | 1.96 | | | Core performance measures | $ | 3,276 | | $ | 10,258 | | | $ | 1,634 | | | $ | 1.60 | |
See Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items. | 86 | CORNING 2020 PROXY STATEMENT |
Table of Contents Appendix A CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED OPERATING CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Year Ended December 31, 2019 (Unaudited; amounts in millions) | Adjusted operating cash flow | | $ | 2,109 | | | Adjustments from GAAP Net Cash Provided by Operating Activities | | | | | | Realized gain on translated earnings contracts(a) | | | (66 | ) | | Translation losses on cash balances(b) | | | 33 | | | Restructuring, impairment and other charges(c) | | | (45 | ) | | Net cash provided by operating activities | | $ | 2,031 | |
| (a) | Represents the realized gain on translated earnings contracts. | | | | (b) | Represents translation losses on Corning’s foreign cash balances. | | | | (c) | Represents a budget to actual adjustment to arrive at the metric to calculate incentive compensation. |
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED OPERATING CASH FLOW LESS CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Year Ended December 31, 2019 (Unaudited; amounts in millions) | Adjusted operating cash flow less capital expenditures | | $ | 131 | | | Adjustments from GAAP Net Cash Provided by Operating Activities: | | | | | | Realized gain on translated earnings contracts(a) | | | (66 | ) | | Translation losses on cash balances(b) | | | 33 | | | Restructuring, impairment and other charges(c) | | | (45 | ) | | Capital expenditures(d) | | | 1,978 | | | Net cash provided by operating activities | | $ | 2,031 | |
| (a) | Represents the realized gain on translated earnings contracts. | | | | (b) | Represents translation losses on Corning’s foreign cash balances. | | | | (c) | Represents a budget to actual adjustment to arrive at the metric to calculate incentive compensation. | | | | (d) | Represents Corning’s 2019 capital expenditures. |
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED OPERATING CASH FLOW LESS CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Year Ended December 31, 2018 (Unaudited; amounts in millions) | Adjusted operating cash flow less capital expenditures | | $ | 926 | | | Adjustments from GAAP Net Cash Provided by Operating Activities: | | | | | | Translation losses on cash balances(a) | | | 55 | | | Receipt of contingent consideration(b) | | | (196 | ) | | Realized gain on translated earnings contracts(c) | | | (108 | ) | | Capital expenditures(d) | | | 2,242 | | | Net cash provided by operating activities | | $ | 2,919 | |
| (a) | Represents translation losses on Corning’s foreign cash balances. | | | | (b) | Represents a budget to actual adjustment to arrive at the metric to calculate incentive compensation. | | | | (c) | Represents the realized gain on translated earnings contracts. | | | | (d) | Represents Corning’s 2018 capital expenditures. |
| CORNING 2020 PROXY STATEMENT | 87 |
Table of Contents Appendix A CORNING INCORPORATED AND SUBSIDIARY COMPANIES CORE PERFORMANCE MEASURES
In managing the Company and assessing our financial performance, we adjust certain measures provided by our consolidated financial statements to exclude specific items to arrive atreport core performance measures. These items include gains and losses on our translated earnings contracts, acquisition-related costs, certain discrete tax items and other tax-related adjustments, restructuring, impairment, and restructuring-relatedother charges or credits, certain litigation-related expenses, pension mark-to-market adjustments and other items which do not reflect on-going operating results of the Company or our equity affiliates. Additionally, Corning has adopted the use of constant currencyutilizes constant-currency reporting for our Display Technologies and Specialty Materials segments for the Japanese yen, South Korean won, Chinese yuan and Newnew Taiwan dollar currencies. Effective January 1, 2019, Corning also began using constant-currency reporting for our Environmental Technologies and Life Sciences segments for the euro, Japanese yen and Chinese yuan. The Company believes that the use of constant currencyconstant-currency reporting allows investors to understand our results without the volatility of currency fluctuations and reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on our earnings and cash flows. Corning also believes that reporting core performance measures provides investors greater transparency to the information used by our management team to make financial and operational decisions. Core performance measures are not prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe investors should consider these non-GAAP measures in evaluating our results as they are more indicative of our core operating performance and how management evaluates our operational results and trends. These measures are not, and should not be viewed as a substitute for, GAAP reporting measures. With respect to the Company’s outlook for future periods, it is not possible to provide reconciliations for these non-GAAP measures because the Company does not forecast the movement of the Japanese yen, South Korean won, Chinese yuan or New Taiwan dollarforeign currencies against the U.S. dollar, or other items that do not reflect ongoing operations, nor does it forecast items that have not yet occurred or are out of the Company’s control. As a result, the Company is unable to provide outlook information on a GAAP basis.
Effective July 1, 2019, we replaced the term “Core Earnings” with “Core Net Income”. The terms are interchangeable and the underlying calculations remain the same. Items which we exclude from GAAP measures to arrive at core performance measures are as follows: | (1) | Constant-currency adjustmentsadjustment: Because a significant portion of Display Technologies segment revenues and expenses are denominated in Japanese yen, and a significant portion of Display Technologies and Specialty Materials segment manufacturing costs are denominated in Japanese Yen, Korean won, New Taiwancurrencies other than the U.S. dollar, and Chinese yuan, management believes it is important to understand the impact on earningscore net income of translating these currencies into U.S. dollars. Our Display Technologies segment sales and net income are primarily denominated in Japanese yen, but also impacted by the South Korean won, Chinese yuan, and new Taiwan dollar. Beginning January 1, 2019, as our Environmental Technologies and Life Science segments sales and net income are impacted by the euro, Chinese yuan and Japanese yen, these segments will also be presented on a constant-currency basis. We have not recast the prior periods for these two segments as the impact of fluctuations in these currencies are not material for prior periods. Presenting results on a constant-currency basis mitigates the translation impact and allows management to evaluate performance period over period, analyze underlying trends in our businesses, and establish operational goals and forecasts. Constant-yen: As of January 1, 2018, we use an We establish constant-currency rates based on internally derived management rate of ¥107,estimates which isare closely aligned to our current yen portfolio of foreign currency hedges, andwith the currencies we have recast all periods presented based on this rate to effectively remove the impact of changes in the Japanese yen.
Constant-won: As of January 1, 2018, we use an internally derived management rate of ₩1,175, which is closely aligned to our current won portfolio of foreign currency hedges, and have recast all periods presented based on this rate.
Constant-yuan: In January 2018, we began presenting results of the Display Technologies and Specialty Materials segments on a constant-yuan basis to mitigate the translation impact of this currency on these segments. We use an internally derived management rate of yuan 6.7, which is closely aligned to our current yuan portfolio of foreign currency hedges and consistent with historical prior period averages.
hedged. |
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Table of Contents
Appendix A
| Constant-Taiwan dollar: In January 2018, we began presenting results of the Display Technologies and Specialty Materials segments on a constant-Taiwan dollar basis to mitigate the translation impact of this currency on these segments. We use an internally derived management rate of Constant-currency rates are as follows: |
| Currency | | Japanese yen | | Korean won | | Chinese yuan | | New Taiwan dollar 31, which is closely aligned to our current New Taiwan dollar portfolio of cash flow hedges, and approximates the 10-year historical average of the currency. | | Euro | | Rate | | | | ¥107 | | | | ₩1,175 | | | | ¥6.7 | | | | NT$31 | | | | €.81 | |
| (2) | Translation (gain) loss on Japanese yen-denominated debt: We have excluded the gain or loss on the translation of our yen-denominated debt to U.S. dollars. | | | | (3) | Translated earnings contract (gain) loss (gain): We have excluded the impact of the realized and unrealized gains and losses of our Japanese yen, South Korean won, Chinese yuan and Newnew Taiwan dollar-denominated foreign currency hedges related to translated earnings, as well as the unrealized gains and losses of our euro and British pound-denominated foreign currency hedges related to translated earnings. | | | | (4) | Acquisition-related costs: These expenses include intangible amortization, inventory valuation adjustments and external acquisition-related deal costs. | | | | (5) | Discrete tax items and other tax-related adjustments: For 2019, these include discrete period tax items such as changes in tax law, the impact of tax audits, changes in judgement about the realizability of certain deferred tax assets and other tax-related adjustments. For 2018, this amount primarily relates to the preliminary IRS audit settlement offset by changes in judgment about the realizability of certain deferred tax assets. For 2017, this amount represents the removal of discrete adjustments (e.g., changes in tax law, other than those of the 2017 Tax Act which are set forth separately, and changes in judgment about the realizability of certain deferred tax assets) as well as other non-operational tax-related adjustments. | | | | (6) | Litigation, regulatory and other legal matters: Includes amounts that reflect developments in commercial litigation, intellectual property disputes, adjustments to our estimated liability for environmental-related items and other legal matters. | | | | (7) | Restructuring, impairment and other charges or credits: This amount includes restructuring, impairment and other charges or credits, as well as other expenses, primarily accelerated depreciation and asset write-offs, which are not related to continuing operations and are not classified as restructuring expense. | | | | (8) | Equity in earnings(earnings) losses of affiliated companies: These adjustments relate to costs not related to continuing operations of our affiliated companies, such as restructuring, impairment and other charges and settlements, or modifications, under “take-or-pay” contracts. | | | | (9) | Adjustments related to acquisitions: Includes fair value adjustments to the Corning Precision Materials (“CPM”) indemnity asset related to contingent consideration, post-combination expenses and other acquisition and disposal adjustments. | | | | (10) | Pension mark-to-market adjustment: Defined benefit pension mark-to-market gains and losses, which arise from changes in actuarial assumptions and the difference between actual and expected returns on plan assets and discount rates. | (11) | Gain on realignment of equity investment: Gain recorded upon the completion of the strategic realignment of our ownership interest in Dow Corning. | (12)(11) | Taiwan power outage: Impact of the power outage that temporarily halted production at our Tainan, Taiwan manufacturing location in the second quarter of 2016. The impact includes asset write-offs and charges for facility repairs, offset somewhat by partial reimbursement through our insurance program. | (13) | Adjustments resulting from the 2017 Tax Act: Includes a provisional amount related to the one-time mandatory tax on unrepatriated foreign earnings, a provisional amount related to the remeasurement of U.S. deferred tax assets and liabilities, changes in valuation allowances as a result ofresulting from the 2017 Tax Act, and adjustments for the elimination of excess foreign tax credit planning. |
| 88 | CORNING 2020 PROXY STATEMENT |
CORNING2019 PROXY STATEMENT | 89 |
Table of Contents
Appendix B
2019 Equity Plan for Non-Employee Directors | |  |
CORNING INCORPORATED
2019 EQUITY PLAN FOR NON-EMPLOYEE DIRECTORS
1. THE PLAN
a. | Purpose. This Corning Incorporated 2019 Equity Plan for Non-Employee Directors (as amended from time to time, the “Plan”) is intended to benefit the shareholders of Corning Incorporated (the “Corporation”) by providing a means to attract, retain and reward non-employee directors of the Corporation (“Directors”) who can and do contribute to the longer-term financial success of the Corporation and to increase their proprietary interest in the Corporation.
| b. | Effective Date. The Plan replaces the 2010 Equity Plan For Non-Employee Directors and will become effective upon its approval by the affirmative vote of a majority of the votes cast at the Corporation’s 2019 Annual Meeting of Shareholders and shall continue until it expires on the tenth (10th) anniversary of its effective date or is replaced by another plan.
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2. ADMINISTRATION
a. | Committee. The Plan shall be administered by the Compensation Committee (the “Committee”) of the Board of Directors of the Corporation (the “Board”), provided, however, that from time to time the Board may assume, at its sole discretion, administration of the Plan.
| b. | Awards.The Committee may grant awards (collectively, “Awards”) under the Plan of shares of the Corporation’s common stock, par value $0.50 per share, (“Shares”) or options to purchase Shares, in such type and magnitude, and subject to such terms and conditions (including vesting and forfeiture rules or pursuant to a deferred compensation plan), as it shall determine.
| c. | Powers and Authority. The Committee’s powers and authority under the Plan include, but are not limited to (i) permitting transferability of Awards to family members, trusts and partnerships for the benefit of participants and their family members, and as charitable donations; (ii) interpreting the Plan’s provisions; and (iii) administering the Plan in a manner that is consistent with its purpose. The Committee’s decisions in carrying out the Plan and its interpretation and construction of any provisions of the Plan or any Award, agreement or other instrument executed under the Plan shall be final and binding upon all persons. No members of the Committee shall be liable for any action or determination made in good faith in administering the Plan.
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3. ELIGIBILITY
Only Directors of the Corporation who, at the time of grant of an Award, are not employees of the Corporation shall be eligible to receive Awards under the Plan.
4. SHARES SUBJECT TO THE PLAN, ADJUSTMENTS AND AWARD LIMITS
a. | Maximum Shares Available for Delivery. Subject to adjustments under Section 4(b), the maximum number of Shares that may be delivered pursuant to Awards under the Plan, including pursuant to any deferred compensation plan for Directors shall be 1,500,000.
| b. | Adjustments for Corporate Transactions.
| | (i) | The Committee shall determine whether a corporate transaction has affected the price per Share or the number of Shares outstanding such that an adjustment or adjustments to outstanding Awards are required to preserve (or prevent enlargement of) the benefits or potential benefits intended to be made available under the Plan at the time of grant of an Award. For this purpose, a corporate transaction will include, but is not limited to, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares, or other similar occurrence. In the event of such a corporate transaction, the Committee shall, in such manner as the Committee deems equitable, adjust (i) the number and kind of shares which may be delivered under the Plan pursuant to Section 4(a); (ii) the number and kind of shares subject to outstanding Awards; and (iii) the exercise price of outstanding Options.
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Table of Contents Appendix B
| (ii) | In the event that the Corporation is not the surviving corporation of a merger, consolidation or amalgamation with another corporation, or in the event of a liquidation or reorganization of the Corporation, and in the absence of the surviving corporation’s assumption of outstanding Awards made under the Plan, the Committee may provide for appropriate adjustments and/or settlements of such Awards either at the time of grant or at a subsequent date. The Committee may also provide for adjustments and/or settlements of outstanding Awards as it deems appropriate and consistent with the Plan’s purpose in the event of any other change in control of the Corporation.
| c. | Annual Award Limits.The maximum number of Shares subject to Awards granted during a single fiscal year to any Director, taken together with any cash fees paid during the fiscal year to the Director in respect of the Director’s service as a member of the Board during such year (including service as a member or chair of any committees of the Board), shall not exceed $700,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes). The independent members of the Board may make exceptions to this limit for a non-executive chair of the Board, provided that the Director receiving such additional compensation may not participate in the decision to award such compensation.
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5. TYPES OF AWARDS
a. | General. The types of Awards that may be granted under the Plan include:
| | (i) | Stock Option. A stock option (“Option”) represents a right to purchase a specified number of Shares during a specified period at a price per Share which is no less than one hundred percent (100%) of the closing price of a Share on the New York Stock Exchange as of the grant date, as determined by the Committee. No Option shall be “repriced” (i.e., by reducing the exercise price, cancelling the Option in exchange for another Option with a lower exercise price, or cancelling the Option for cash or another Award, other than in connection with a change in control or an equitable adjustment under Section 4(b) above) without shareholder approval.The Shares covered by an Option may be purchased by means of a cash payment of the exercise price or such other means as the Committee may from time to time permit, including, without limitation, one or more of: (i) tendering Shares valued using the market price at the time of exercise, (ii) authorizing a third party to sell Shares (or a sufficient portion thereof) acquired upon exercise of an Option and to remit to the Corporation a sufficient portion of the sale proceeds to pay the exercise price for all the Shares acquired through such exercise prior to the issuance of the Shares by the Corporation; or (iii) any combination of the above. All Options shall be non-qualified options.
| | | No Option granted under the Plan will have an expiration date later than ten years after its grant date. Unless otherwise provided by the Committee, each Option will terminate in its entirety on the earliest of (1) the third anniversary of the date on which the grantee ceased to be a Director, (2) the date on which written notice of termination of the Option is given to the Director (or such later date as is specified in that notice), and (3) the Option’s expiration date.
| | (ii) | Stock Award. A stock award is a grant of Shares or a right to receive Shares (or their cash equivalent or a combination of both) in the future (“Stock Award”), subject to such conditions, restrictions and contingencies as the Committee shall determine.
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6. STOCK AWARD SETTLEMENTS AND PAYMENTS
a. | Dividends and Dividend Equivalents. The Committee, in its discretion, will determine whether dividends or dividend equivalent payments will be paid or credited to a Director’s account, prior to the time that a Stock Award becomes vested.
| b. | Payments. Stock Awards may be settled through cash payments, the delivery of Shares, the granting of Awards or a combination thereof, as the Committee shall determine. Any Award settlement may be subject to such conditions, restrictions and contingencies as the Committee shall determine.
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7. PLAN AMENDMENT AND TERMINATION
a. | Amendments. Any Plan amendments will comply with the New York Stock Exchange listing requirements and any applicable legal requirements. The Board may amend this Plan as it deems necessary and appropriate to better achieve the Plan’s purpose, provided, however, that: (i) the Share limitation set forth in Section 4(a) cannot be increased and (ii) an Option cannot be “repriced” as set forth in Section 5 unless such an amendment is properly approved by the Corporation’s shareholders. Notwithstanding anything to the contrary in the Plan, the Board may amend the Plan in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction in a tax- efficient manner and in compliance with local rules and regulations.
| b. | Plan Suspension and Termination. The Board may suspend or terminate this Plan at any time. Any such suspension or termination shall not of itself materially impair any outstanding Award granted under the Plan or the applicable Director’s rights regarding such Award.
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8. MISCELLANEOUS
a. | No Individual Rights. No person shall have any claim or right to be granted an Award under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any Director the right to be re-nominated or to continue to serve the Corporation, any subsidiary or related entity, in such capacity.
| b. | Unfunded Plan. The Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Corporation and any Director or beneficiary of a Director. To the extent any person holds any obligation of the Corporation by virtue of an Award granted under the Plan, such obligation shall merely constitute a general unsecured liability of the Corporation and accordingly shall not confer upon such person any right, title or interest in any assets of the Corporation.
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Table of Contents
Appendix B
c. | No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled.
| d. | Governing Law. The validity, construction and effect of the Plan and any Award, agreement or other instrument issued under it shall be determined in accordance with the laws of the State of New York without reference to principles of conflict of law.
| e. | Section 409A. The Corporation intends that all Awards be structured to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (“Section 409A”), such that no adverse tax consequences, interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any agreement evidencing the grant of an Award to the contrary, the Committee may, without a participant’s consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Award’s grant date. The Corporation makes no representations or warranties as to an Award’s tax treatment under Section 409A or otherwise. The Corporation will have no obligation under this Section 8(e) or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant “nonqualified deferred compensation” subject to taxes, penalties or interest under Section 409A.
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Table of Contents
 Who We Are
What We Do
For more than 167 years, Corning has applied its unparalleled expertise in glass science, ceramic science, and optical physics, along with its deep manufacturing and engineering capabilities, to develop products that transform industries and enhance people’s lives.
Corning Incorporated
One Riverfront Plaza
Corning, NY 14831-0001 U.S.A.
www.corning.com
02FI40118EN © 2019
02ARFI40120EN | © 2020 Corning Incorporated. All Rights Reserved. |  |
Table of Contents CORNING INCORPORATED
ATTN: LINDA E. JOLLY
ONE RIVERFRONT PLAZA, HQ E2-10
CORNING, NY 14831  | SCAN TO
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| CORNING INCORPORATED | | | | | | | | | The Board of Directors recommends you vote FOR the following proposals: | | | | | | | | 1. | Election of Directors | | | | | | | | | Nominees: | | For | | Against | | Abstain | | | | | | | | | | | | 1a. | | Donald W. Blair | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1b. | | Leslie A. Brun | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1c. | | Stephanie A. Burns | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1d. | | John A. Canning, Jr. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1e. | | Richard T. Clark | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1f.1e. | | Robert F. Cummings, Jr. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1g.1f. | | Deborah A. Henretta | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1h.1g. | | Daniel P. Huttenlocher | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1i.1h. | | Kurt M. Landgraf | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1j.1i. | | Kevin J. Martin | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1k.1j. | | Deborah D. Rieman | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | 1l.1k. | | Hansel E. Tookes, II | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | 1m.1l. | | Wendell P. Weeks | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | 1n.1m. | | Mark S. Wrighton | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | 2. | | Advisory approval of the Company’s executive compensation (Say on Pay). | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 3. | | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2020. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 4. | | Approval of the 2019 Equity Plan for Non-Employee Directors. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Yes | | No | | | | | | | | | | | | | | Please indicate if you plan to attend this meeting. | | | | ☐ | | ☐ | | | | | | | | | | | | |
| | | | | | | | | NOTE: Please sign EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title. | |
| | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | Signature (Joint Owners) | | Date | |
Table of Contents
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| Proxy — Corning Incorporated |
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 20192020 MEETING OF SHAREHOLDERS MAY 2, 2019APRIL 30, 2020
The undersigned hereby appoints Lawrence D. McRae and Wendell P. Weeks and each of them, proxies with full power of substitution, to vote as designated on the reverse side, on behalf of the undersigned all shares of stock which the undersigned may be entitled to vote at the Meeting of Shareholders of Corning Incorporated on May 2, 2019,April 30, 2020, and any adjournments thereof, with all powers that the undersigned would possess if personally present. In their discretion, the proxies are hereby authorized to vote upon such other business as may properly come before the meeting and any adjournments or postponements thereof. If you are a current or former employee of Corning Incorporated and own shares of Corning common stock through a Corning Incorporated benefit plan, share ownership as of March 4, 20192, 2020 is shown on this proxy card. Your vote will provide voting instructions to the trustees of the plans. If no instructions are given, the trustees will vote shares as described in the proxy statement. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON THE OTHER MATTERS REFERRED TO ON THE REVERSE SIDE HEREOF.
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