UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box: | ||
[ ] | Preliminary Proxy Statement | |
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
[X] | Definitive Proxy Statement | |
[ ] | Definitive Additional Materials | |
[ ] | Soliciting Material |
CORNING INCORPORATED | ||
(Name of Registrant as Specified In Its Charter) | ||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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2022
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
QualityIntegrityPerformanceLeadershipInnovationIndependenceThe Individual
“We remain dedicated to practicing sound corporate governance and are committed to preserving the trust of Values that defineall our relationshipsstakeholders, communicating consistently and openly with employees, customers, and the communities in which we operate.
— Wendell P. Weeks
Dear Fellow
During the meeting, shareholders will vote on the annual election of directors, the advisory approval of the
We Looking ahead, across our markets, our long-term growth drivers are strong. And our role is clear: We lead in capabilities that are vital to We remain dedicated to practicing sound corporate For example, in 2021 we engaged our
I look forward to sharing more details at the Annual Meeting. The following pages contain the formal notice of meeting and the proxy statement. I encourage you to sign and return your proxy card or to vote by Thank you for your investment in Corning and your participation in our governance process. Sincerely,
Wendell P. Weeks Chairman of the Board and Chief Executive Officer | ||
Notice of 2022 Annual |
Thursday, April 28, 2022 12 noon Eastern Time
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Our 2022 Annual Meeting will be held in a virtual-only format. You will not be able to attend the Annual Meeting physically. You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on February 28, 2022. The live audio webcast of the meeting will begin promptly at 12 noon Eastern | ||
| To attend and vote your shares during the Annual Meeting, you will need to log in to virtualshareholdermeeting. com/GLW2022 using, (i) for record holders, the control number found on your proxy card or the notice you previously received, or (ii) for holders who own shares in street name through brokers, the control number issued to you by your brokerage firm. You may vote during the Annual Meeting by following the instructions available on the website during the meeting. If you do not have a control number, you may log in as a guest, although you will not be able to vote during the meeting. We urge you to vote and submit your proxy in advance of the meeting using one of the methods described in the proxy materials whether or not you plan to attend the Annual Meeting. You may vote your shares in advance at ProxyVote.com. |
ITEMS OF BUSINESS
1. | Election of |
2. | Advisory approval of our executive compensation (Say on Pay); |
3. | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting |
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Any other business or action |
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WHO CAN VOTE
You may vote at our 20192022 Annual Meeting if you were a shareholder of record at the close of business on March 4, 2019.February 28, 2022.
Your vote is important to us. Please exercise your right to vote.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on May 2, 2019:April 28, 2022: our proxy statement, 20182021 Annual Report on Form 10-K and other materials are available on our website atcorning.com/2019-proxy2022-proxy.
Sincerely,
Linda E. Jolly
Vice President and Corporate Secretary
March 22, 201918, 2022
VOTE RIGHT AWAY
Your vote is very important. Even if you plan to attend the Annual Meeting, pleasePlease promptly submit your proxy or voting instructions by Internet, telephone or mail to ensure the presence of a quorum. You may also vote in person atduring our Annual Meeting.Meeting (subject to the circumstances described in the box at left). If you are a shareholder of record, your admission ticket is attachedyou may vote during the meeting using the control number on the proxy card or the notice previously provided to your proxy card.you. If your shares are held in the name of a broker, nominee or other intermediary, you must bring proof of ownership with yousuch party can provide the control number to you. Shareholders without a control number may still attend the meeting.meeting as guests.
By telephone | By mail | By Internet | ||
Dial toll-free 24/7 1-800-690-6903 |
| Cast your ballot, sign the proxy card and send by mail |
| Visit 24/7 |
2 | CORNING 2022 PROXY STATEMENT |
Proposal 1 Election of Directors | ||
Board of Directors’ Qualifications and Experience | ||
Corning’s Director Nominees |
CORNING | 3 |
Forward-Looking Statements and Materiality Disclaimer
The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements that are intended to take advantage of the “safe harbor” provisions of the federal securities law. The words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “hope,” “want,” “strive,” “aim,” “goal,” “target,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible,” and similar words are intended to identify forward-looking statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. Our actual future results, including the achievement of our targets, goals or commitments, could differ materially from our projected results as a result of changes in circumstances, assumptions not being realized, or other risks, uncertainties and factors. Such risks, uncertainties and factors include but are not limited to unexpected delays, difficulties, and expenses in executing against our environmental, climate, diversity and inclusion or other “ESG” targets, goals and commitments outlined in this document, changes in laws or regulations affecting us, such as changes in data privacy, environmental, safety and health laws and the risk factors discussed in our filings with the U.S. Securities and Exchange Commission, including our annual reports on Form 10-K and quarterly report on Form 10-Q.
This document contains ESG-related statements based on hypothetical scenarios and assumptions as well as estimates that are subject to a high level of uncertainty, and these statements should not necessarily be viewed as being representative of current or actual risk or performance, or forecasts of expected risk or performance. In addition, historical, current, and forward-looking environmental and social-related statements may be based on standards for measuring progress that are still developing, and internal controls and processes that continue to evolve. Forward-looking and other statements in this document may also address our corporate responsibility and sustainability progress, plans, and goals, and the inclusion of such statements is not an indication that these contents are necessarily material for the purposes of complying with or reporting pursuant to the U.S. federal securities laws and regulations, even if we use the word “material” or “materiality” in this document.
Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
4 | CORNING |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. As used in this proxy statement, “Corning,” the “Company” and “we” may refer to Corning Incorporated itself, one or more of its subsidiaries, or Corning Incorporated and its consolidated subsidiaries.
Annual Meeting Date and Time To be held virtually at: virtualshareholdermeeting. com/GLW2022 Record Date Admission On March 18, 2022, we posted this proxy statement and our 2021 Annual Report on Form 10-K on our website at corning.com/2022-proxy and began mailing them to shareholders who requested paper copies. | ||
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Proposals That Require Your Vote
Proposal | Board Vote Recommendation | More Information | |||
1 | Election of | For Each Nominee | page | ||
2 | Advisory approval of | For | page | ||
3 | Ratification of appointment of independent registered public accounting firm | For | page | ||
Business Information – Who We Are
Corning is one of the world’s leading innovators in materials science. For more than 167170 years, Corning has applied its unparalleled expertise in specialty glass, ceramics and optical physics to develop products that have created new industries, transformed people’s lives and unleashed significant new capabilities. Our innovation approach delivers long-term value for Corning and its shareholders.
Our reportable segments are as follows:
Reportable Segments* | Net Sales % | Segments Description | ||
Display | manufactures glass substrates for | |||
Optical | manufactures carrier and enterprise network solutions for the telecom and data center industries | |||
Specialty | manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for | |||
Environmental | manufactures ceramic substrates and filters for automotive and diesel | |||
Life Sciences | manufactures glass and plastic labware, equipment, media and reagents to provide workflow solutions for |
*All other segmentsbusinesses that do not meet the quantitative threshold for separate reporting arehave been grouped as “All Other”.Other.” This group is primarily comprised of the results of Hemlock Semiconductor Group, the pharmaceutical technologies business, andauto glass, new product lines and development projects, as well as other businesses and certain corporate investments. All Other represented 2% of Corning’s sales in 2018.
CORNING | 5 |
Proxy Statement Summary
Our 2018 Performance Highlights2021 Results
Net Sales | Earnings per Share | Cash | |
$ | $ | $ | |
$ | $ | $ |
*Adjusted free cash flow is a Non-GAAP measure. Refer to Appendix A for more information.
**Cash flows from operating activities less capital expenditures.
***Adjusted free cash flow for compensation purposes was $1,565 million. Refer to Appendix A for more information.
CORE PERFORMANCE MEASURES
In managing the Company and assessing our financial performance, we adjust certain measures provided byin our consolidated financial statements withto arrive at measures that are not calculated in accordance with GAAPGenerally Accepted Accounting Principles (“GAAP”) and exclude specific items that are non-recurring, related to arrive atforeign exchange volatility, or unrelated to continuing operations. These measures are our Core Performance Measures. Our management uses Core Performance Measures, along with financial measures in accordance with GAAP, to make financial and operational decisions. We believe that sharing our Core Performance Measures with investors provides greater visibility into how we make business decisions. Accordingly, these measures also form the basis for our compensation program metrics.
Non-GAAPItems that are excluded from certain Core Performance calculations include: gains and losses on our translated earnings contracts, acquisition-related costs, certain discrete tax items and other tax-related adjustments, restructuring, impairment losses and other 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. More information on these items can be found in Appendix A.
Corning utilizes constant-currency reporting for our Display Technologies, Environmental Technologies, Specialty Materials and Life Sciences segments for the Japanese yen, South Korean won, Chinese yuan and new Taiwan dollar, and the euro. The Company believes that the use of constant-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.
These non-GAAP measures are not an alternative to, or a replacement for, financial results determined in accordance with generally accepted accounting principles.GAAP. Please see 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.
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Proxy Statement Summary
Our Strategy2021 Performance Highlights: Year-Over-Year Growth and Capital Allocation Frameworkthe Success of “More Corning”
In October 2015,2021, we delivered year-over-year growth by leveraging our core capabilities and capturing a compelling set of short- and long-term opportunities across our portfolio through our “More Corning” strategy, in which we sell more Corning announcedcontent into the products consumers buy. In 2021, we exceeded $14 billion in core net sales, $2 in Core EPS and we nearly doubled free cash flow. We increased our dividend by 9% and reduced outstanding shares by 5% through the resumption of share repurchases, returning nearly $2.6 billion to our shareholders. We are pleased that we achieved double-digit ROIC and expanded our operating margin by 230 basis points.
In 2021, we grew significantly year-over-year, with all segments adding core net sales and four out of five logging double-digit percentage increases. It was a strong year, even compared to pre-pandemic levels. Since 2019, we have grown core net sales by 21% and Core EPS by 18%. However, freight, logistics, and raw material costs, and lower automotive sales due to chip shortages, impacted our margins. During the third and fourth quarters, we negotiated with customers to change the pricing in our contracts to share increased costs more appropriately. The revised pricing terms take effect throughout 2022 and we expect gross margin to expand accordingly.
Additionally, we have successfully captured a compelling set of long-term growth opportunities by innovating, extending commercial relationships, and scaling operations to meet demand across all of our Market-Access Platforms. We see further growth ahead as Corning remains increasingly vital to multiple industry transformations that are accelerating and moving the world forward.
Corning holds a leadership position in each of the markets addressed by its five Market-Access Platforms. Throughout 2021, the Company grew in all of our strategic markets and advanced important growth initiatives and strategic partnerships with industry leaders.
● | Optical Communications – Optical Communications sales grew 22% year over year to $4.3 billion. Growth was supported by increases in broadband, 5G, and cloud computing. |
● | Life Sciences – The Company is driving “More Corning” content into in the market, delivering all-time high Life Sciences segment sales of more than $1.2 billion in 2021 – up 24% year over year. Growth was driven by strong ongoing demand to support the global pandemic response, research labs reopening following pandemic-driven closures, and continued growth in bioproduction. |
● | Automotive – Core net sales in Environmental Technologies grew 16%, driven by strength in heavy duty, to reach an all-time high of $1.6 billion, despite weakness in the automotive market related to chip shortages. |
● | Mobile Consumer Electronics – 2021 Specialty Materials sales grew ~7% and surpassed $2 billion for the first time. Since 2016, the segment has added ~$900 million in annual revenue on a base of slightly more than $1.1 billion. |
● | Display – 2021 sales grew ~17% to $3.7 billion. The Company experienced the most favorable pricing environment in more than a decade. In 2021, Corning’s display glass volume growth exceeded glass market growth, as the Company ramped up its Gen 10.5 facilities that supply glass for large-size TVs. |
CORNING 2022 PROXY STATEMENT | 7 |
Proxy Statement Summary
Update on Our Leadership Priorities
STRATEGY & GROWTH FRAMEWORK
In 2019, we outlined our goals for growth and shareholder returns in our 2020-2023 Strategy & Growth Framework, highlighting significant opportunities to sell more Corning content through each of our Market-Access Platforms, our “More Corning” strategy.
The Company is focused on our cohesive portfolio and Capital Allocationthe utilization of our financial strength, supported by strong operating cash flow generation, which we expect to continue. Corning has and will continue to use its cash to grow, extend its leadership and reward shareholders. Our key growth drivers remain intact, and some are accelerating as key trends converge around Corning’s capabilities.
Corning will continue to advance the objectives of the Strategy & Growth Framework, (the Framework) that reflects the Company’s financial and operational strengths, as well aswhich sets its ongoing commitment to increasing shareholder value. The Framework outlines our leadership priorities and articulates the opportunities we see across our businesses. We designed the Framework to create significant value for shareholders by focusing our portfolio and leveraging our financial strength. Under our Framework we target generating $26 to $30 billion of cash through 2019, returning more than $12.5 billion to shareholders through 2019 and investing $10 billion through 2019 to sustain our leadership positions and deliver growth.
* Target Debt to Target EBITDA, see Appendix A for definitions
Focusing Our Portfolio:its business. Our probability of success increases as we invest in our world-class capabilities. Corning is concentrating approximately 80% of its research, development and engineering investment andalong with capital spending on a cohesive set of three core technologies, four manufacturing and engineering platforms, and five market-access platforms. Our cost of innovation declines as we reapplyMarket-Access Platforms. This strategy allows us to quickly apply our talents and repurpose our assets. By combining capabilities we create higher and more sustainable advantages, and, ultimately, delighted customers.
Table of Contentsassets across the Company, as needed, to capture high-return opportunities.
Proxy Statement Summary
Utilizing Our Financial Strength:We expect to generate and deploy $26 to $30 billion through 2019. We plan to invest $10 billion of that amount to grow and maintain our market leadership positions. We also plan to distribute more than $12.5 billion to our shareholders through share repurchases and our quarterly dividend.
Performance against the Strategy and Capital Allocation Framework:For the last three years, we have invested for growth through our Strategy and Capital Allocation Framework. The significant benefits of these investments are evident in our financial performance. In 2018, we built new capacity, launched new products, grew sales by more than $1 billion dollars, and extended our leadership position in all businesses. We exited the year with strong execution, expanded margins, and great momentum.
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Proxy Statement Summary
A Tradition of Delivering Value to Shareholders
Corning’s progress on its Strategy and Capital Allocation Framework is part of a longer-term objective of delivering value to shareholders. While we have returned $11.8 billion of the $12.5 billion promised as part of the Framework that began in October 2015, over the past five years, Corning has delivered $17.4 billion to shareholders.
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ANNUAL DIVIDENDS PER COMMON SHARE AND INCREASE OVER PRIOR YEAR |
8 | CORNING 2022 PROXY STATEMENT |
On February 6, 2019, Corning’s Board declared an 11.1% increase in the Company’s dividend, from $0.18 to $0.20 per share quarterly, beginning with the dividend paid in the first quarter of 2019. This marks the eighth dividend increase since October 2011.
Proxy Statement Summary
Environmental, Social and Governance Matters at Corning
In accordance with Corning’s Values, we believe that a commitment to positive environmental, social and governance-related business practices strengthens our Company and our community, increases our connection with our shareholders, and helps us better serve our customers and the communities in which our employees live and we operate. We also see these commitments as new opportunities to create value for our shareholders, our employees, our customers, and the wider world.
In 2021, Corning committed to reduce Scope 1 and 2 greenhouse gas (GHG) emissions by 30% (absolute basis) and relevant Scope 3 GHG emissions by 17.5% (absolute basis) by 2028 compared to a 2021 baseline. We also established a Center of Excellence focused on setting and attaining the Company’s sustainability and climate goals, and appointed a Vice President of Sustainability and Climate Initiatives. We published our inaugural Sustainability Report, prepared in reference to the Global Reporting Initiative’s (GRI) standards. It also responds to the Hardware Sustainability Accounting Standard, the Sustainability Accounting Standards Board (SASB) sector-specific standard most relevant for our business. Our 2021 Sustainability Report, which also includes reporting in alignment with the TCFD, can be found at www.corning.com/sustainability.
Sustainability and Climate Governance at Corning
BOARD Our Board and its committees oversee matters related to Corning’s environmental, social and governance (ESG) practices, performance and disclosures, and the Corporate Responsibility and Sustainability Committee is charged with general oversight of environmental and social risk matters and annually reviews the Company’s sustainability strategy. | ||
SUSTAINABILITY AND CLIMATE INITIATIVES CENTER OF EXCELLENCE The Sustainability and Climate Initiatives Center of Excellence oversees and directs sustainability efforts, climate initiatives and related reporting. To further integrate our sustainability initiatives into our core operating practices, in 2021 Corning appointed a Vice President of Sustainability and Climate Initiatives to drive sustainability actions across the Company. | ||
SUSTAINABILITY LEADS, WORKING AND STEERING COMMITTEES Consisting of senior cross-functional and sustainability leaders that provide input on corporate social responsibility and sustainability matters and coordinate and implement initiatives to achieve the Company’s short-and long-term sustainability goals and objectives. | ||
CORNING 2022 PROXY STATEMENT | 9 |
Proxy Statement Summary
Our Environmental, Social, and Governance Goals
In 2020, Corning adopted 12 sustainability goals to drive progress toward those areas where we can achieve the greatest impact. Corning’s goals were adopted after a materiality assessment, which identified issues most important to the Company and its stakeholders. In 2021, we set our first carbon reduction goals as part of our ongoing climate action plan. The goals align with the Sustainable Development Goals (SDGs) adopted by the United Nations in 2015 as a “blueprint to achieve a better and more sustainable future for all.”
Environmental | Social | Governance | ||
Greenhouse Gas Reduction – By 2028, Corning will reduce Scope 1 and 2 greenhouse gas emissions by 30% (absolute basis) and relevant Scope 3 emissions by 17.5% (absolute basis), compared to a 2021 baseline. Energy Management – By 2030, Corning will increase its use of renewable energy by 400% from a 2018 baseline. Water Conservation – Corning will enhance its water strategies across Corning sites, prioritizing manufacturing plants and communities in high-risk water-scarce regions, by 2025. Waste Management – Corning will enhance its waste strategies across Corning sites, prioritizing manufacturing plants, by 2025. | Sustainable Supply Chain – 100% of Corning’s high risk suppliers and contract manufacturers will be certified as socially responsible by 2025. Occupational Health and Safety – Corning will continue to maintain our safety metrics in the top quartile of our industry benchmark values. Community Involvement and Partnerships – Corning will encourage increased volunteerism efforts year over year by supporting, rewarding, and recognizing employees’ efforts in the community. | Board Diversity – Corning will maintain a diverse board. Board Oversight of ESG Matters – The Corporate Responsibility and Sustainability Committee will review the sustainability program annually. Risk Management – Environmental, Social, and Governance issues will be integrated into Corning’s Enterprise Risk Management Processes. Ethical Business Practices – All employees will understand Corning’s Code of Conduct, including how to report allegations of ethical or legal misconduct. Transparency and Reporting – Corning issued its inaugural sustainability report in 2021 and will continue to do so every year thereafter. Environmental and Social Advocacy – Corning will continue its advocacy for environmental and social issues. |
Our Commitment to Environmental, Social and Governance Issues
Corning demonstrates its commitment to environmental, social, governance and human capital matters, and its Values, in many ways that can be explored in our 2021 Sustainability Report and our Sustainability website, both which can be found at corning.com/sustainability.
CLIMATE | ● In 2021, Corning committed to reduce Scope 1 and 2 GHG emissions by 30% (absolute basis) and relevant Scope 3 GHG emissions by 17.5% (absolute basis) by 2028 compared to a 2021 baseline. Information about our climate goals is available at corning.com/worldwide/en/sustainability/ climate-goals.html ● Demonstrating our support of and commitment to the growth of our Sustainability and Climate Initiatives Program, in 2021 Corning appointed a Vice President of Sustainability and Climate Initiatives and established a Center of Excellence focused on setting and attaining the Company’s sustainability and climate goals. | |
10 | CORNING 2022 PROXY STATEMENT |
Proxy Statement Summary
ENVIRONMENTAL | ● Corning is committed to protecting the environment through the continuous improvement of our processes, products and services. For example, Corning’s ceramic substrates and particulate filters have prevented more than 4 billion tons of hydrocarbons, 4 billion tons of nitrogen oxides, and 40 billion tons of carbon monoxide from entering the atmosphere since 1970. ● We’re proud of our sustained participation and strong performance in the ENERGYSTAR® programs. In 2021, the EPA named Corning as an ENERGYSTAR® Partner of the Year for the eighth consecutive year and recognized us for Sustained Excellence for the sixth consecutive year. ● Since 2014, 37 Corning facilities have received the ENERGYSTAR® Challenge for Industry recognition by exceeding the goal of improving energy efficiency by at least 10% in five years or less. On average, these facilities achieved a 21% energy reduction in less than two years. ● Corning continues to be a corporate user and advocate for renewable energy, increasing its annual global renewable electricity usage from 72,000 MWh in 2020 to 83,000 MWh in 2021. | |
HEALTH AND | ● In August 2021, 400 volunteer employees, seven doctors, and 36 nurses worked day and night to operate a COVID-19 vaccination clinic at our plant in Reynosa, Mexico, vaccinating over 10,000 employees and 30,000 members of the community. ● Corning continues to maintain its best-in-class health and safety performance, ranking in the top quartile of global, industry-leading company performance as measured by a total case incidence rate. ● Corning continues to use its portfolio and capabilities to address immediate worldwide health needs, including accelerating the delivery of COVID-19 vaccines by expanding the manufacturing of Valor® and Velocity® Glass vials and providing steady access to lab supply needs for COVID-19 research applications and test kit preparation. | |
DIVERSITY, EQUITY | ● Diversity, equity, and inclusion are integral to Corning’s belief in the fundamental dignity of The Individual – one of Corning’s seven core Values. We are committed to providing an inclusive environment where all employees can thrive. The Company’s Diversity, Equity and Inclusion Report can be found at https://www.corning.com/worldwide/en/sustainability/people/diversity.html ● To support our diversity initiatives locally and nationally and to lead our Office of Racial Equity and Social Unity, Corning appointed a Chief Diversity, Equity & Inclusion Officer, reporting to our Senior Vice President, Human Resources. ● Corning signed the 2020 Board Challenge pledge to increase diversity among boards of U.S. companies. Corning has added two Black directors and one female director in the past three years, bringing our total to three Black and four female directors. ● In 2021, Corning established the North Carolina A&T University scholars program, to which Corning will donate $5.5 million over five years to provide more than 50 scholarships to increase student diversity in STEM education and careers. ● With a goal to hire more black teachers in local school districts, Corning’s Office of Racial Equity and Social Unity (ORESU) created an incentive package based on partial loan repayment to recruit new teachers, resulting in the hiring of four new teachers of color and the creation of new avenues for reaching diverse teaching talent. ● As part of its global DE&I education and awareness initiative, in 2021 Corning’s ORESU team rolled out Intersections, a digital learning series and resource database to promote employee education and thoughtful dialogue, as well as Unconscious Bias training to the Company’s global salaried workforce. | |
HUMAN CAPITAL | ● Corning believes in equal pay for equal work and annually tracks and implements actions to maintain 100% pay equity globally. In 2021, Corning achieved 100% gender pay equity amongst our global salaried workforce. In the U.S., we also maintained minority versus majority pay equity. ● Corning provides compensation that always meets, and very often significantly exceeds, minimum wage requirements in all the jurisdictions we operate in. We are currently in the process of researching and gathering living wage standards and data by country and identifying any gaps in meeting living wage standards in all countries where we have significant operations. Our preliminary analysis, starting with the countries where Corning has the greatest number of employees, indicates that Corning provides compensation that would meet or exceed a higher living wage standard. ● Corning’s Human Rights Policy is available at corning.com/worldwide/en/sustainability/people/ human-rights-policy.html. ● Corning’s 2021 EEO-1 Report is available at corning.com/worldwide/en/sustainability/people/ diversity/eeo-1-report.html. | |
CORNING 2022 PROXY STATEMENT | 11 |
Proxy Statement Summary
Supply Chain Sustainability
Corning is committed to a strategic, integrated and socially responsible supply chain – one that reflects our seven core Values, all the time, all around the world. Even when faced with a global pandemic, our commitment is unwavering. We are dedicated to not only living our Values ourselves, but holding our suppliers accountable to do the same. Our Values are embedded in our Supplier Code of Conduct – enforcement of the Code is of utmost importance and we proactively leverage tools and processes to manage our suppliers, holding them to the highest degree of ethical and socially responsible standards. We work to ensure compliance to all laws and regulations, with particular focus on those which seek to put an end to forced labor and human trafficking, and we continuously look for ways to expand the scope of our efforts to the benefit of all involved.
Corning is committed to a strategic, integrated and socially responsible supply chain – one that reflects our seven Values, all the time, all around the world | |||||||||
Environment | Social | Governance | |||||||
Sustainable Procurement – ensure the suppliers we select share our values and adhere to the environmental standards contained in our Supplier Code of Conduct; Integration of sustainability into core supply chain sourcing/audit processes Eco-Friendly Products – proactively engage with suppliers that provide ecofriendly products Carbon Footprint – work closely with supply chain partners to identify opportunities to reduce overall carbon footprint | Human Rights – Achieved Top Quartile score on multiple 2021 external assessments, including CHRB, MSCI and JPMC Responsible Materials Sourcing – committed to the responsible sourcing of minerals in an ethical and sustainable manner Supplier Diversity – working to increase products and services obtained directly from diverse suppliers and actively participating in key organizations such as NGLCC, NMSDC, and WBENC | Board Oversight – The Corporate Responsibility and Sustainability Committee has formal oversight of ESG-related supply chain policies Supply Chain Sustainability Team – dedicated team to ensure supply chain sustainability (social and environmental) Supply Chain Social Responsibility Training – in 2020, launched awareness training for strategic preferred suppliers to reinforce the Supplier Code of Conduct | |||||||
Recent Achievements Achieved 59% towards our objective to have 100% of our high risk and contract manufacturing suppliers certified socially responsible by 2025 Leveraged Corning’s Responsible Mining Initiative in assessing the suppliers that represent 75% of our spend in the mining supply chain |
12 | CORNING 2022 PROXY STATEMENT |
Proxy Statement Summary
Supporting Sustainable Communities
Throughout its history, Corning has routinely made contributions to civic, educational, charitable, cultural and other institutions that improve the quality of life and increase the resources of the communities in which it operates, making Corning more attractive to employees.
The Company undertakes its philanthropic activities both directly as well as indirectly through The Corning Incorporated Foundation (the Foundation), a separate 501(c)(3) organization. We believe in being an active corporate citizen and the Foundation directs its grant-making toward the communities where Corning operates and its employees live, enabling initiatives in four areas: education, culture, human services and volunteerism. In 2021, Corning donated $3.8 million to the Foundation, and the Foundation disbursed approximately $4.8 million, in direct grants to non-profit organizations which includes grants made under the Foundation’s Employee Programs (Employee Matching Gifts, Dollars for Doers, Vibrant Community Grants and Excellence in Volunteerism Awards). Additional information about the Foundation can be found at corningfoundation.org.
A sampling of the ways that the Foundation made an impact in our communities in 2021 included grants in support of the following organizations:
● | The Foodbank of the Southern Tier, in support of an internal organizational assessment of equity and inclusivity as well as an external assessment of underserved populations |
● | The John W. Jones Museum, in support of the commission and construction of a statue depicting John W. Jones as he helps fugitive slaves along the Underground Railroad |
● | North Carolina State University, to support equipping North Carolina residents to have equitable access to the internet and education |
● | Give2Asia, in support of COVID-19 efforts in Delhi and Pune India through the Sustainable Environment and Ecological Society (SEEDS) |
● | Monroe Community College (MCC), in support of education and practical training in the field of optics. Corning Incorporated also created the Technician Pipeline Program at MCC which includes a two-year scholarship to earn an AAS degree in optics at MCC, an annual salary while in the program, and full-time technician role upon graduation. |
● | Clarkson University, to support implementation of the Student Spaceflight Experiment Program (SSEP) with four regional school districts in Canton, NY |
● | The ARTS Council of the Southern Tier, for Southern Tier arts and cultural organizations to provide innovative and hands-on arts and cultural programming to youth to address the summer learning loss exacerbated by COVID-19 |
● | Jasper-Troupsburg Central School District, in support of helping the high school procure teacher classroom supplies after Hurricane Fred and flooding rendered the school unusable for the 2021-2022 school year |
Corning’s direct giving includes annual contributions to both local and international cultural and educational institutions. In particular, Corning is proud to support The Corning Museum of Glass (CMOG) – the world’s leading glass museum. Beyond just a key cultural and community hub, CMOG also provides Corning with a unique innovation crucible where our glass scientists and experts collaborate with glass artists and designers to creatively explore the novel properties of glass and innovate new uses in an environment uninhibited by traditional commercial boundaries. In a small community, our employees, including executives and their families, inevitably have relationships with the non-profit organizations that receive such contributions from the Company. Wendell P. Weeks (chairman and CEO), Jeffrey W. Evenson (executive vice president and chief strategy officer), Edward A. Schlesinger (executive vice president and CFO) and David L. Morse (executive vice president and chief technology officer) serve on the CMOG board of trustees. In 2021, Corning provided cash and non-cash contributions of services to CMOG of approximately $39 million.
Corning provides financial support to the Alternative School for Math and Science (ASMS), a private middle school located in Corning, New York, with an advanced curriculum focused on science and math. Currently, children of Corning employees represent approximately 57% of its enrollment. In 2021, Corning’s non-cash contributions totaled approximately $1.6 million and cash contributions totaled $346,000. Kim Frock Weeks (spouse of Wendell P. Weeks, our chairman and CEO) serves on the ASMS board of trustees and also serves as executive head of school but receives no salary or benefits in this role.
CORNING 2022 PROXY STATEMENT | 13 |
Proxy Statement Summary
2021 Executive Compensation Program
As shown below, in 2021 approximately 90% of our CEO’s target total compensation and 83% of the other Named Executive Officers’ (NEOs) target total compensation (in both cases excluding employee benefits and perquisites), was variable and dependent on Corning’s business, operating and financial performance or stock price.
2021 Compensation Components | ||
CEO | ALL OTHER NEOs | |
RSUs – Restricted Stock Units
PSUs – Performance Stock Units
CPUs – Cash Performance Units
14 | CORNING 2022 PROXY STATEMENT |
Proxy Statement Summary
2021 Pay Components
Pay Component | Form and Payout Method | Purpose | Award Value | |||
Base Salary | Cash - fixed | ● Fixed portion of annual cash income | ● Value of role in competitive marketplace ● Value of role to the Company ● Skills and performance ● Internal equity | |||
Short-Term Incentives ● GoalSharing Plan | Cash - variable | ● Variable portion of annual cash income ● Focus all employees on delivering annual unit and business scorecard objectives | ● Available to all employees; generally targeted at 5% of base salary based on annual corporateperformance and business unit objectives | |||
● Performance IncentivePlan (PIP) | Cash - variable | ● Variable portion of annual cash income ● Provide additional incentive to deliver annual corporate and business financial plans | ● Target awards are set individually based on the competitive marketplace and level of experience ● Payouts for NEOs are based on a combination ofcorporate financial performance and the averagefinancial performance of our five Market-AccessPlatforms (MAPs) | |||
Long-Term Incentives (LTI) ● Cash Performance Units ● Performance Stock Units ● Restricted Stock Units | 25% cash and 75% stock, 70% performance-based (CPUs and PSUs) and 30% time-based (RSUs) | ● Focus executives on long-term results ● Align the long-term interests of executives and shareholders ● Ensure equity ownership for executive team | ● Target awards are based on competitive marketplace, level of executive, skills and performance ● Actual value earned relative to target is basedon corporate performance against pre-set goalsand stock price performance over the three-yearperformance period ● ROIC performance over the three-year performance period may increase or decrease earned CPUs and PSUs by up to 10% | |||
All Other: ● Benefits ● Perquisites ● Severance Protection | Ongoing or Event-Driven | ● Support the health and security of our executives, and their ability to plan for retirement ● Enhance executive productivity | ● Competitive marketplace ● Level of executive ● Standards of good governance |
Our Metrics and Why We Use Them | ||
Core Earnings per Share (Core EPS): | Adjusted Free Cash Flow: | |
Core EPS is our key measure of profitability. Corning budgets for share repurchases in establishing both financial and compensation annual targets. Core Net Sales: Growing core net sales — both organically through innovation and through acquisitions — remains critical to our short-and long-term success. | Strong cash generation enables us to invest in future growth,sustain leadership and provide returns to shareholders, as wellas remain financially strong during periods of uncertainty. It also requires us to carefully manage our capital investments. Return on Invested Capital (ROIC): We focus on ROIC because it reflects our ability to generate returnsfrom the capital we have deployed in our operations. The Cash Performance Units (CPUs) payout and Performance Stock Units (PSUs) earned are increased or decreased up to 10% based on Corning’s ROIC over the three-year performance period. |
Core net sales is a primary indicator of Corning’s long- and short-term success. Evaluating performance against predetermined net sales metrics provides insight into how well the Company has retained sales, as well as progress against sales growth targets, accounting for both organic growth efforts and the impact of acquisitions. We use core net sales as a performance measure in our annual bonus plans (GoalSharing and PIP) because those plans impact every employee through GoalSharing and over 7,800 employees through PIP. In this way, every employee has line-of-sight to Corning’s sales growth goals. Core net sales is also included as a performance measure in the LTI plan, impacting approximately 350 senior executives and key employees, because those employees are responsible for driving the short and long-term financial growth of the Company. Incorporating net sales performance into both GoalSharing and the LTI allows for a comprehensive evaluation of Corning’s ability to establish sustainable sales growth while also addressing near-term market fluctuations. It is a “duplicate goal” for only about 350 our of approximately 61,000 employees, and the Compensation Committee and Company believe the increased focus on core net sales growth is appropriate for that smaller group of executives given the importance of sales growth for Corning over time.
CORNING 2022 PROXY STATEMENT | 15 |
Proxy Statement Summary
2021 Compensation Plan Payout Percentages
The following table reflects our 2021 compensation plan’s payout percentages based on our 2021 financial performance:
SHORT TERM INCENTIVES
ANNUAL CASH BONUS – GOALSHARING
Components | Weighting | % of target earned | ||
Corporate financial performance | 25% | 198% | ||
Average all unit plans (>100 units) | 75% | 132% | ||
2021 payout (% of target) | 149%* | |||
* Equal to 7.44% of base salary for each NEO based on a 5% target. | ||||
ANNUAL CASH BONUS – PIP | ||||
Components | Weighting | % of target earned | ||
Corporate financial performance | 50% | 198% | ||
Average of 5 MAPs financial performance | 50% | 131% | ||
2021 payout (% of target) | 165% |
LONG TERM INCENTIVE PLAN
CASH PERFORMANCE UNITS AND PERFORMANCE STOCK UNITS (70% OF LTI TARGET — 2021 PERFORMANCE RESULTS)
Components | Weighting | % of target earned | ||
Adj Free Cash Flow | 70% | 164% | ||
Core Net Sales | 30% | 200% | ||
2021 blended performance result | 175% | |||
LTI PLAN PAYOUT FOR 3-YEAR PERIOD ENDING DECEMBER 31, 2021* | ||||
Components | % of target earned, 2019-2021 performance | |||
2019 performance result | 62% | |||
2020 performance result | 181% | |||
2021 performance result | 175% | |||
2019-2021 average performance | 139% | |||
ROIC MODIFIER | +3% | |||
2019-2021 average performance | × | ROIC Modifier | = | Final % payout of 2019 target CPUs |
139% × 103% = 143% Final Payout |
* | The first payout of PSUs, initially granted in 2020, will be paid in 2023 and therefore are not reflected in this table. | |
16 | CORNING 2022 PROXY STATEMENT |
Proxy Statement Summary
Our Director Nominees
All director nominees are independent with the exception of Mr. Weeks.
Name and Primary Occupation | Age | Director since | Committee Memberships* | Other Public Company Boards | ||||
Donald W. Blair Retired Executive Vice President and Chief Financial Officer, NIKE, Inc. | 60 | 2014 | ●Audit ●Finance | 1 | ||||
Leslie A. Brun Chairman and Chief Executive Officer Sarr Group, LLC | 66 | 2018 | ●Audit ●Compensation | 3 | ||||
Stephanie A. Burns Retired Chairman and Chief Executive Officer, Dow Corning Corporation | 64 | 2012 | ●Audit ●Corporate Relations (Chair) | 2 | ||||
John A. Canning, Jr. Chairman, Madison Dearborn Partners, LLC | 74 | 2010 | ●Executive ●Finance ●Governance | 0 | ||||
Richard T. Clark, Lead Independent Director Retired Chairman, Chief Executive Officer and President, Merck & Co., Inc. | 72 | 2011 | ●Compensation ●Executive ●Governance | 1 | ||||
Robert F. Cummings, Jr. Retired Vice Chairman of Investment Banking, JPMorgan Chase & Co. | 69 | 2006 | ●Executive ●Finance (Chair) ●Governance | 1 | ||||
Deborah A. Henretta Retired Group President of Global E-Business, Procter & Gamble Company | 57 | 2013 | ●Audit ●Corporate Relations | 3 | ||||
Daniel P. Huttenlocher Dean and Vice Provost, Cornell Tech | 60 | 2015 | ●Audit ●Finance | 1 | ||||
Kurt M. Landgraf President, Washington College | 72 | 2007 | ●Audit (Chair) ●Compensation ●Executive | 1 | ||||
Kevin J. Martin Vice President, Mobile and Global Access Policy, Facebook, Inc. | 52 | 2013 | ●Corporate Relations ●Governance | 0 | ||||
Deborah D. Rieman Retired Executive Chairman, MetaMarkets Group | 69 | 1999 | ●Audit ●Compensation (Chair) | 0 | ||||
Hansel E. Tookes II Retired Chairman and Chief Executive Officer, Raytheon Aircraft Company | 71 | 2001 | ●Compensation ●Executive ●Governance (Chair) | 3 | ||||
Wendell P. Weeks Chairman, Chief Executive Officer and President, Corning Incorporated | 59 | 2000 | ●Executive (Chair) | 2 | ||||
Mark S. Wrighton Chancellor and Professor of Chemistry, Washington University in St. Louis | 69 | 2009 | ●Audit ●Finance | 2 |
Name and Primary Occupation | Age | Director since | Committee Memberships* | Other Public Company Boards | ||||
Donald W. Blair Retired Executive Vice President and Chief Financial Officer, NIKE, Inc. | 63 | 2014 | ● Audit ● Finance | 1 | ||||
Leslie A. Brun Chairman and Chief Executive Officer, Sarr Group, LLC | 69 | 2018 | ● Audit ● Compensation | 2 | ||||
Stephanie A. Burns Retired Chairman and Chief Executive Officer, Dow Corning Corporation | 67 | 2012 | ● Audit ● Corporate Responsibility (Chair) | 2 | ||||
Richard T. Clark, Lead Independent Director Retired Chairman, Chief Executive Officer and President, Merck & Co., Inc. | 76 | 2011 | ● Compensation ● Executive ● Governance | 1 | ||||
Pamela J. Craig Retired Chief Financial Officer, Accenture plc. | 65 | 2021 | ● Audit ● Corporate Responsibility | 3 | ||||
Robert F. Cummings, Jr. Retired Vice Chairman of Investment Banking, JPMorgan Chase & Co. | 72 | 2006 | ● Executive ● Finance (Chair) ● Governance | 0 | ||||
Roger W. Ferguson, Jr. Retired President and Chief Executive Officer, TIAA | 70 | 2021 | ● Compensation ● Governance | 3 | ||||
Deborah A. Henretta Retired Group President of Global E-Business, Procter & Gamble Company | 60 | 2013 | ● Corporate Responsibility ● Information Technology | 3 | ||||
Daniel P. Huttenlocher Dean, MIT Stephen A. Schwarzman College of Computing | 63 | 2015 | ● Finance ● Information Technology | 1 | ||||
Kurt M. Landgraf Retired President, Washington College | 75 | 2007 | ● Audit (Chair) ● Compensation ● Executive | 0 | ||||
Kevin J. Martin Vice President, US Public Policy, Meta Platforms, Inc. | 55 | 2013 | ● Corporate Responsibility ● Governance |
| 0 | |||
Deborah D. Rieman Retired Executive Chairman, Metamarkets Group | 72 | 1999 | ● Compensation (Chair) ● Information Technology | 0 | ||||
Hansel E. Tookes II Retired Chairman and Chief Executive Officer, Raytheon Aircraft Company | 74 | 2001 | ● Compensation ● Executive ● Governance (Chair) | 1 | ||||
Wendell P. Weeks Chairman and Chief Executive Officer, Corning Incorporated | 62 | 2000 | ● Executive (Chair) | 1 | ||||
Mark S. Wrighton Interim President, George Washington University | 72 | 2009 | ● Finance ● Information Technology (Chair) | 1 |
*Audit = Audit Committee; Compensation = Compensation Committee; Corporate Responsibility = Corporate Responsibility and Sustainability Committee; Executive = Executive Committee; Finance = Finance Committee; Governance = Nominating and Corporate Governance Committee; Information Technology = Information Technology Committee
CORNING 2022 PROXY STATEMENT |
Proxy Statement Summary
Governance Highlights
Corning is committed to maintaining strong corporate governance as a critical component of driving sustained shareholder value. The Board of Directors continually monitors emerging best practices in governance to best serve the interests of the Company’s stakeholders.
The following is a brief overview of some of our most notable corporate governance practices and policies:
● | |
We contacted holders of practices and engaged with holders of approximately 39% of our common stock on these matters; | |
● | We ensure alignment of our corporate governance practices with the Investor Stewardship Group’s corporate governance Principles for U.S. Listed Companies (see page |
● | Our Board through its committees provides direct oversight of environmental, social and governance risks and issues (see page 31); |
● | We adopted the principles embodied in the Shareholder-Director Exchange (SDX) Protocol; and |
● |
The Corporate Governance section beginning on page 1619 describes our governance framework, which includes the following:
ü ü ü ü |
ü ü ü ü |
Shareholder Communication
Communicating with shareholders, particularly about our Strategy and Capital Allocation Framework,strategic priorities, is critically important to Corning. We communicate with our shareholders through a number of channels, including quarterly earnings calls, U.S. Securities and Exchange Commission (SEC) filings, Investor Days, investor conferences, our website atcorning.comand other electronic communications. Our executives and Board members also routinely engage with investors through in-person meetings and calls.
In addition to regular discussions regarding our Strategy and Capital Allocation Framework,strategic priorities, we also conduct regular shareholder outreach to theunderstand perspectives on our governance teams atpractices including our largest investors.sustainability initiatives, Board composition, human capital management, and executive compensation. We value direct interaction with our shareholders, and their feedback is shared with our Board of Directors to inform decision making.
In 2018,2021, as part of our shareholder governance outreach:
● | we outstanding shares; |
● | we discussed a variety of topics including our Board composition and experience; and |
● | investors were complimentary of our |
More information on our shareholder outreachengagement can be found on page 49.55.
18 | CORNING |
Proxy Statement Summary
Environmental, Social andCorporate Governance Matters and Human Capital Management
In accordance with Corning’s Values, we believe that a commitment to positive environmental, social and governance-related business practices strengthens our company and our community, increases our connection with our shareholders, and helps us better serve our customers
and the communities in which our employees live and we operate. We also see in these commitments additional waysBoard of creating value for our shareholders, our employees, our customers, and the wider world. As part of our corporate risk management process, the Board and our management monitor long-term risks that may be impacted by environmental, social and governance issues.Directors
Proxy Statement Summary
Supporting Sustainable Communities through Charitable Outreach
Corning is headquartered in a small community in upstate New York and strives to establish itself as the employer of choice for the workers on whom it depends. Throughout its history, the Company has routinely made contributions to civic, educational, charitable, cultural and other institutions that improve the quality of life and increase the resources of the surrounding community, making it more attractive to employees. In a small community, our employees, including executives and their families, inevitably have relationships with the non-profit organizations that receive such contributions from the Company.
The Company undertakes its philanthropic activities both directly and indirectly through The Corning Incorporated Foundation (the Foundation), a separate 501(c)3 organization. We believe in being an active corporate citizen and the Foundation directs its grant-making toward the communities where Corning operates and its employees live, enabling initiatives in four areas: education, culture, human services and volunteerism. In 2018, Corning donated $3.0 million to the Foundation, and the Foundation disbursed approximately $4.6 million, of which approximately 32% was directed toward initiatives supporting education, including grants made under the Corning Incorporated Foundation Matching Gifts and Dollars for Doers programs. Additional information about the Foundation can be found atcorningfoundation.org.
Corning’s direct giving includes annual contributions to both local and international cultural and educational institutions. Locally, the Corning Museum of Glass (CMoG) – the world’s leading glass museum – is the largest recipient of the Company’s support. In addition to being a key cultural and community hub, CMOG also provides Corning with a unique innovation crucible where our glass scientists and experts collaborate with glass artists and designers to creatively explore the novel properties of glass and innovate new uses in an environment unconstrained by commercial considerations. Wendell P. Weeks (chairman, CEO and president), David Morse (executive vice president and chief technology officer) and Jeffrey W. Evenson (executive vice president and chief strategy officer) serve on the CMoG board of trustees. In 2018, Corning provided cash and non-cash contributions of services to CMoG of approximately $44 million.
Corning provides financial support to the Alternative School for Math and Science (ASMS), a private middle school located in Corning, New York, with an advanced curriculum focusing on science and math. Currently, children of Corning employees represent approximately 53% of its enrollment. In 2018, non-cash contributions totaled approximately $1.5 million and cash contributions totaled $300,000. Christine M. Pambianchi, (executive vice president, People and Digital) and Kim Frock Weeks (spouse of Wendell P. Weeks, our chairman, CEO and president) serve on the ASMS board of trustees. Ms. Frock Weeks also serves as administrative head of school at ASMS, but receives no salary or benefits in this role.
Proxy Statement Summary
Executive Compensation Highlights
As shown below, in 2018 approximately 89% of our CEO’s target total compensation (excluding employee benefits and perquisites) and 80% of the other Named Executive Officers’ (NEOs) target total compensation (excluding employee benefits and perquisites) was variable and depended on Corning’s operating performance or stock price.
2018 Pay Components
| ||||||
| ||||||
|
Target Total Compensation
Proxy Statement Summary
Our Incentive Compensation Performance Metrics
Our goals for annual and long-term incentives focus on the key drivers for executing our Strategy and Capital Allocation Framework and creating and sustaining long-term shareholder value: profitability, cash generation and revenue growth.
|
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% PIP performance | 25% | 1.58% | ||
Average Business Unit Performance | 75% | 4.83% | ||
2018 performance result | 6.41% |
Long Term Incentives (LTI)
CASH (CASH PERFORMANCE UNITS – 60% OF LTI AWARD TARGET) | ||||
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 (above) | 128% | |||
2016-2018 average performance | 112% |
Our Board of Directors employs practices that foster effective Board oversight of critical matters such as strategy, management succession planning, financial and other controls, risk management and compliance. The Board reviews our major governance policies, practices and processes regularly in the context of current corporate governance trends, investor feedback, regulatory changes and recognized best practices. Corning also chooses to alignaligns its corporate governance practices with the Investor Stewardship Group’s (ISG) Corporate Governance Framework for U.S. Listed Companies.
The following sections provide an overview of our corporate governance structure and processes, including key aspects of our Board operations, and how they align with the ISG Principles for U.S. Listed Companies.Principles.
Practice | Description | |
ISG Principle 1: Boards are accountable to shareholders | ||
Annual election of directors | All directors are elected annually, which reinforces our Board’s accountability to shareholders. | |
Majority voting standard for director elections | Our by-laws mandate that directors be elected under a “majority voting” standard in uncontested elections. Each director nominee must receive more votes “For” his or her election than votes “Against” in order to be elected. | |
Proxy access | Eligible shareholders may include their director nominees in our proxy materials. | |
No poison pill | Corning does not have a poison pill. | |
ISG Principle 2: Shareholders should be entitled to voting rights in proportion to their economic interest | ||
One-share, One-vote | ||
ISG Principle 3: Boards should be responsive to shareholders and be proactive in order to understand their perspectives | ||
Shareholder | Our investor relations team maintains an ongoing dialogue with investors and portfolio managers year-round on matters of business performance and results. In 2021, we reached out to investors representing approximately 54% of our outstanding shares and engaged with shareholders representing approximately 39% of our shares. Management and | |
ISG Principle 4: Boards should have a strong, independent leadership structure | ||
Lead Independent Director | Our Corporate Governance Guidelines require a Lead Independent Director with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of the Board. As former Chairman, Chief Executive Officer and President of Merck & Co., Inc., our Lead Independent Director, Richard T. Clark, brings deep leadership experience to the role. See page | |
Annual Evaluation of Leadership Structure | The Board considers the appropriateness of its leadership structure annually and discloses in the proxy statement why it believes the current structure is appropriate. See page | |
CORNING | 19 |
Corporate Governance and the Board of Directors
Practice | Description | |
ISG Principle 5: Board should adopt structures and practices that enhance their effectiveness | ||
Independence | Our Corporate Governance Guidelines require a substantial majority of our directors to be independent. Currently, all directors but one (or 93%) are independent. Except for our Executive Committee, each of our Board committees consists entirely of independent directors. See page | |
Skills and qualifications | Our Board is composed of accomplished professionals with | |
Commitment to Diversity | The | |
Director tenure | The current average tenure of members of our Board, excluding our CEO Mr. Weeks, is | |
Director overboarding | Corning values director participation on other public company boards as a means of adding | |
Board and committee evaluations | The Board and each committee conducts an annual review of its effectiveness. The Chair of the Nominating and Corporate Governance Committee, as part of the Board evaluation, annually interviews each director and solicits | |
Meeting attendance | The Board met seven times in 2021. Directors attended 99% of combined total Board and applicable committee meetings in | |
ISG Principle 6: Boards should develop management incentive structures that are aligned with the long-term strategy of the company | ||
Robust stock ownership guidelines | We require robust stock ownership for directors (5x annual cash retainer), CEO (6x base salary), and other NEOs and Senior Leadership Team members (3x base salary) | |
Shareholder support for executive compensation | Corning’s executive compensation program received | |
The Compensation Committee annually reviews and approves | ||
Long- and short-term goals drive executive compensation | ||
Clear communication of economic drivers of executivecompensation | The proxy statement clearly communicates the link between management incentive compensation plans and the Company’s | |
20 | CORNING |
Corporate Governance and the Board of Directors
The Board regularly considers the issue of board leadership in committee meetings and executive sessions of the independent directors. As the Board reviews its leadership structure, it considers a variety of factors, with a particular focus on those described on page 29. If the Chair and CEO roles are combined, our Corporate Governance Guidelines require that the independent directors annually appoint an independent director to serve as Lead Independent Director. The Lead Independent Director has significant authority and responsibilities with respect to the operation of the Board, as described below under the heading “Lead Independent Director.” The Company believes that a Lead Independent Director effectively promotes strong Board governance and oversight.
36. The Company’s Corporate Governance Guidelines provide that the Board must annually review whether the role of Chairman should be a non-executive position or combined with that of the CEO. Early in 2019,In February 2022, the Board determined that, at the present time, aour combined Chairman and CEO, supplementedsupported by a strongour Lead Independent Director, continues to provide appropriatestrong leadership and oversight and ensures effective functioning of management and the Company.
Mr. Weeks’ knowledge of the Company makes him best suited to set the Board’s agenda and serve as a strategic liaison between management and the Board in order to enhance the Company’s ability to carry out its strategic plans. Richard T. Clark was re-appointed effective February 6, 2019, to the role of Lead Independent Director of the Board by the independent directors.directors effective February 2, 2022, pursuant to the requirement of our Corporate Governance Guidelines that when the Chairman and CEO roles are combined, the independent directors annually appoint a Lead Independent Director from their membership. Mr. Clark’s understanding of the Company and the industry, his experience on other public boards, and his management expertise as the former Chairman, Chief Executive Officer and President of Merck & Co., Inc. enables him to assure independent board leadership at the Company.
CORNING | 21 |
Corporate Governance and the Board of Directors
As of the date of this proxy statement,filing, the Board has 1415 directors and the following sixseven committees: (1) Audit Committee; (2) Compensation Committee; (3) Corporate RelationsResponsibility and Sustainability Committee; (4) Executive Committee; (5) Finance Committee; (6) Information Technology Committee; and (6)(7) Nominating and Corporate Governance Committee. Each of the committees operates under a written charter adopted by the Board except the Executive Committee, which operates pursuant to Corning’s by-laws. The committee charters and the by-laws are available on our website at investor.corning.com/investor-relations/governance/overview/default.aspx.default.aspx. Each committee reviews and reassesses the adequacy of theirits charter annually, conducts annual evaluations of theirits performance with respect to theirits duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committee’s activities. Additionally, the Board and each of the committees has the authority to retain outside advisors as the Board and/or each committee deems necessary.
DirectorBoard committee membership on committees of Corning’s Board is set forth in the following table.below. “C” denotes Chair of the committee.
Deborah A. Henretta | Daniel P. Huttenlocher | Kurt M. Landgraf | Kevin J. Martin | Deborah D. Rieman | Hansel E. Tookes II | Wendell P. Weeks | Mark S. Wrighton | |||||||||||||||||||||||
Board Committees | ||||||||||||||||||||||||||||||
Audit | C | |||||||||||||||||||||||||||||
Compensation | C | |||||||||||||||||||||||||||||
Corporate | C | |||||||||||||||||||||||||||||
Executive | C | |||||||||||||||||||||||||||||
Finance | C | |||||||||||||||||||||||||||||
Information Technology | C | |||||||||||||||||||||||||||||
Nominating and Corporate Governance | C |
22 | CORNING 2022 PROXY STATEMENT |
Corporate Governance and the Board of Directors
Corning’s Board of Directors met seven times in 2021. Its committees and their functions are as follows:
Committee | Primary Responsibilities | |
Number of Meetings | ● Assists the Board of Directors in its oversight of (i) the integrity of Corning’s financial statements, (ii) the independent registered public accounting firm and (iii) Corning’s compliance with legal and regulatory requirements● Approves the appointment of Corning’s independent registered public accounting firm, oversees the firm’s qualifications, independence and performance, and determines the appropriateness of fees for the firm● Reviews the effectiveness of Corning’s internal control over financial reporting, including disclosure controls and procedures● Reviews the results of Corning’s annual audit and quarterly and annual financial statements● Regularly reviews our enterprise risk management program; monitors legal and regulatory risks by regular discussions with management; evaluates potential risks related to accounting, internal control over financial reporting and tax planning |
Corporate Governance and the Board of Directors
CORNING 2022 PROXY STATEMENT | 23 |
Corporate Governance and the Board of Directors
Committee | Primary Responsibilities | |
Number of Meetings | ● Reviews all potential material transactions, including mergers, acquisitions, divestitures and investments in third parties● Reviews capital expenditure plans and capital projects● Monitors Corning’s short- and long-term liquidity● Reviews Corning’s tax position and strategy● Reviews and recommends for approval by the Board declaration of dividends, stock repurchase programs, and short- and long-term financing transactions● Monitors strategic risks related to financial affairs, including capital structure and liquidity risk, transaction execution risk, credit and counterparty risk, market risk, |
Corporate Governance and the Board of Directors
(1) | The Board of Directors has determined that each member of the Audit Committee satisfies the applicable audit committee independence requirements of the New York Stock Exchange (NYSE) and the SEC. The Board also determined that each member of our Audit Committee is financially literate and Mr. Landgraf, Mr. Blair, Mr. Brun, Dr. Burns, and |
(2) | The Board of Directors has determined that each member of the Compensation Committee satisfies the applicable compensation committee independence requirements of the NYSE and the SEC. |
(3) | The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee satisfies the |
24 | CORNING 2022 PROXY STATEMENT |
Corporate Governance and the Board of Directors
Our Board is responsible for the oversight and success of our Company. We seek to maintain a mix of directors who bring strong leadership, diverse perspectives, a broad range of skills relevant to Corning and depth of experience to their positions. Our board is high-functioning and engaged. A supermajority of independent directors ensures robust debate and challenged opinions in the boardroom, while diversity of gender, age, ethnicity and expertise contributes to a wide range of views. Our Board includes four women, three African-Americans, and four directors who hold science, technology or mathematics Ph. Ds. We also have two decades of age diversity among our directors, with their ages ranging between 55 and 76 years. We also value the broad corporate governance experience of directors who have served on the boards of other public companies, which adds additional rigor to our governance and risk oversight practices.
Board of Directors Snapshot
INDEPENDENCE | TENURE | AGE | DIVERSITY | ||||||
14 Independent | 0-5 years: 3 6-10 years: 6 11-15 years: 3 16-20 years: 1 20+ years: 2 Average Director Tenure: 10.6 years |
55-60 years: 2 61-65 years: 4 66-70 years: 3
71+ years: 6 Average Age: 68 |
4 Women
3 Black/African-American | ||||||
SKILLS AND EXPERIENCE | ||||||
6 Technology/ Innovation | 12 Risk Management | 6 Public Company CEO or C-Suite Experience | 9 Industry Experience | |||
10Financial | 7 Operations | 5 Corporate Governance & Ethics | 15 Public Company Director Experience |
Board Nomination and Refreshment Process
When considering Board candidates, the Nominating and Corporate Governance Committee considers those factors most relevant to the Company’s needs, including relevant knowledge and experience, diversity of background, and expertise in areas including business, finance, accounting, science and technology, marketing, manufacturing, operations, international business, government and human capital management. The Committee assesses personal qualities of leadership, character, judgment, ethics and reputation; roles and contributions valuable to the business community and the ability to act on behalf
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of shareholders; whether the candidate is free of conflicts and has the time required for preparation, participation and meeting attendance. Pursuant to the Company’s Corporate Governance Guidelines, the Committee actively seeks out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences, to include in the pool from which Board nominees are chosen. The Board conducts an annual self-evaluation which helps identify skills and experiences to seek in future candidates that would benefit the Company, its stakeholders and the Board. It’s the Company’s practice to add new Board members prior to the anticipated retirement of other members of the Board, in order to maintain appropriate Committee sizes and to ensure continuity of leadership and expertise.
Corning signed the 2020 Board Challenge Pledge to increase diversity among boards of directors for U.S. companies. The Nominating and Corporate Governance Committee actively seeks out highly qualified women and minority candidates to include in the pool from which Board nominees are chosen. Today, the Company has three Black directors and four women on its 15-person board, and it remains committed to improving diversity. |
In the case of incumbent directors, the Nominating and Corporate Governance Committee will review such directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any transactions of such directors with the Company, if any, during their term. For those potential new director candidates who appear upon first consideration to meet the Board’s selection criteria, the Nominating and Corporate Governance Committee will conduct appropriate inquiries into their background, qualifications and skills relevant to Corning’s strategic priorities and, depending on the result of such inquiries, arrange for in-person meetings with the potential candidates.
The Nominating and Corporate Governance Committee uses multiple sources for identifying director candidates, including executive search firms, its members’ own contacts, and referrals from other directors, members of management and the Company’s advisors. To maintain a pipeline for new directors, the Nominating and Corporate Governance Committee has retained the executive search firm of Spencer Stuart to help identify director prospects, perform candidate outreach, assist in reference and background checks, and provide other related services on an ongoing basis. Director candidates recommended by shareholders in the manner described on page 91 will be considered in the same manner in which the Nominating and Corporate Governance Committee evaluates candidates recommended by other sources. In addition, our by-laws permit a group of up to 20 shareholders who have owned a minimum of 3% of our outstanding capital stock for at least three years to submit director nominees for up to the greater of two directors or 20% of the board for inclusion in our proxy statement. See “How Do I Submit A Shareholder Proposal For, Or Nominate a Director For Election At, Next Year’s Annual Meeting” on page 91 of this proxy statement.
The Nominating and Corporate Governance Committee regularly considers the long-term make-up of our Board of Directors and how the composition of our board changes over time. The Nominating and Corporate Governance Committee also considers the skills needed on our board as our business and the markets in which we do business evolve. The board seeks to balance the knowledge and experience that comes from longer-term board service with the new ideas and energy that can come from adding new directors to the board. In the last ten years, we have added 7 new independent directors to the board and have had 5 directors retire. The median tenure for the director nominees of approximately 8 years reflects the balance the board seeks between different perspectives brought by long-serving directors and new directors.
Management Succession Planning
One of the Board’s primary responsibilities is ensuring that Corning has a high-performing management team in place. The Board oversees management succession planning, with our Lead Independent Director facilitating ongoing review and Board approval of succession and management development plans for the CEO and Senior Leadership Team. The goal of this ongoing process is to maximize the pool of internal candidates able to assume top management positions with minimal business interruption. The Board regularly discusses succession planning for the chief executive officer and other senior management positions in executive sessions. The Board has regular engagement with various levels of management at Board and Committee meetings which gives directors additional exposure to the management pipeline.
In 2020, the Board oversaw the reorganization of our operating structure to align management and business teams around our five Market-Access Platforms. The structure includes a Senior Leadership Team of nineteen senior executives, representing a wealth of skills and knowledge developed over many years of service to the Company, whose leadership will be key as Corning navigates the ongoing challenges stemming from the COVID-19 pandemic and prepares for future growth. We believe the strength of this new structure and team is evident in our 2021 performance.
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Corporate Governance and the Board of Directors
Our Board is 93% independent and such independent oversight bolsters our success. Our Board has determined that each of our non-employee directors qualifies as “independent” in accordance with the listing requirements of the NYSE, applicable SEC rules and the Company’s director qualification standards. Mr. Weeks is not independent because he is an executive officer of Corning.
The NYSE listing requirements state that no director may be qualified as “independent” unless our Board affirmatively determines that the director has no material relationship with Corning. When making independence determinations, the Board considers all relevant facts and circumstances which might bar a director from being determined to be “independent”,“independent,” including the NYSE criteria.
Our Corporate Governance Guidelines require the Board to make an annual determination regarding the independence of each of our directors. In making its independence determinations, the Board considered transactions, if any, that occurred since the beginning of 20162019 between Corning and entities associated with our independent directors or members of their immediate family. The Board also reviewed and discussed information with regard to each director’s business and personal activities as they may relate to Corning and Corning’s management. It considered that each of Mr.Messrs. Martin, Ms. HenrettaBrun and Ferguson, Drs. Huttenlocher and Wrighton, isand Ms. Henretta are or were, during the previous three years, an employee, partner or affiliate of a company or organization that had a business relationship with Corning at some time during those years. The Board also considered: that Corning’s business relationships with each such company or organization were ordinary course/arm’s length dealings; no Corning director had a personal interest in, or received a personal benefit from, such relationships; any payments or contributions to or from each of these entities constituted less than the greater of $1 million, or 2% of such entity’s consolidated gross revenues in each of those years; that such relationships arisearose only from such director’s position as an employee, partner or affiliate of the relevant company with which Corning does business; that such director has no input or direct or indirect material interest in any of the business relationships or transactions; that such director had no role or financial interest in any decisions about any of these relationships or transactions; and that such a relationship does not bar independence under the NYSE listing requirements, applicable SEC rules or Corning’s director qualification standards.
Corporate Governance and the Board of Directors
Based on all of the relevant facts and circumstances, the Board concluded that none of the director relationships mentioned above constituted a material relationship with Corning that represents a potential conflict of interest, or otherwise interferes with the exercise by any of these directors of his or her independent judgment with respect to Corning.
Policy on Transactions with Related Persons
The Board of Directors has a policy requiring the full Board or a designated Board committee to approve or ratifypre-approve any transaction involving Corning in which one of our directors, nominees for director, executive officers, or greater than 5% shareholders, or their immediate family members, have a direct or indirect material interest and where the amount involved exceeds $120,000 in any fiscal year. The Board has delegated to the Nominating and Corporate Governance Committee the responsibility for reviewing and approving any such transactions.
In determining whether to approve or ratify any such transaction, the Board or relevant committee must consider, in addition to other factors deemed appropriate, whether the transaction is on terms no less favorable to Corning than transactions involving unrelated parties. No director may participate in any review approval or ratificationapproval of any transaction if he or she, or his or her immediate family member, has a direct or indirect material interest in the transaction.
We did not have anyThere were no such transactions requiring review and approval in accordance with this policy during 2018.2021.
Compensation Committee Interlocks and Insider Participation
Messrs. Brun, Clark, Ferguson, Landgraf and Tookes and Dr. Rieman served on the Compensation Committee during 2021. No member of the Compensation Committee that served during 2021 is now, or has ever been, an officer or employee of Corning. No member of the Compensation Committee had any relationship with Corning or any of its subsidiaries during 20182021 pursuant to which disclosure would be required under applicable rules of the SEC pertaining to the disclosure of transactions with related persons. No Corning executive officer currently serves or served during 20182021 on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on Corning’s Board or Compensation Committee.
Our Board is responsible for the oversight and success of our Company. Beyond a broad range of skills and experiences, we seek to maintain an optimal mix of newer directors, who bring fresh perspectives, and longer-tenured directors, who have contributed to developing our strategy – which takes a long-term approach to innovation – and have acquired an in-depth understanding of our global organization. The result is a high-functioning and engaged Board. A supermajority of independent directors ensures robust debate and challenged opinions in the boardroom, while diversity of gender, age, ethnicity and expertise contributes to a diverse range of views. Our 14 directors include a diverse range of individuals, including three women, two African-Americans, and four directors who hold science, technology or mathematics Ph.Ds. We also have two decades of age diversity among our directors, with their ages ranging between 52 and 74 years. We also value the broad corporate governance experience of directors who serve on the boards of other public companies, which adds additional rigor to our governance and risk oversight practices.
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Board Nomination and Refreshment Process
When considering Board candidates, the Nominating and Corporate Governance Committee considers those factors most relevant to the Company’s needs, including related knowledge, diversity of background, and experience in areas including business, finance, accounting, science and technology, marketing, manufacturing, operations, international business, government and human capital management. The Committee assess personal qualities of leadership, character, judgment, ethics and reputation; roles and contributions valuable to the business community and the ability to act on behalf of shareholders; whether the candidate is free of conflicts and has the time required for preparation, participation and meeting attendance. In February 2019, the Committee formalized its diversity focus by approving new Corporate Governance Guidelines which state that it will actively seek out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences, to include in the pool from which Board nominees are chosen.
In the case of incumbent directors, the Nominating and Corporate Governance Committee will review such directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any transactions of such directors with the Company during their term. For those potential new director candidates who appear upon first consideration to meet the Board’s selection criteria, the Nominating and Corporate Governance Committee will conduct appropriate inquiries into their background, qualifications and skills relevant to Corning’s Strategy and Capital Allocation Framework and, depending on the result of such inquiries, arrange for in-person meetings with the potential candidates.
The Nominating and Corporate Governance Committee uses multiple sources for identifying director candidates, including executive search firms, its members’ own contacts, and referrals from other directors, members of management and the Company’s advisors. To maintain a pipeline for new directors, the Nominating and Corporate Governance Committee has retained the executive search firm of Spencer Stuart to help identify director prospects, perform candidate outreach, assist in reference and background checks, and provide other related services on an ongoing basis. Director candidates recommended by shareholders in the manner described on page 84 will be considered in the same manner in which the Nominating and Corporate Governance Committee evaluates candidates recommended by other sources. In addition, our by-laws permit a group of up to 20 shareholders who have owned a minimum of 3% of our outstanding capital stock for at least three years to submit director nominees for up to the greater of two directors or 20% of the board for inclusion in our proxy statement. See “How Do I Submit A Shareholder Proposal For, Or Nominate a Director For Election At, Next Year’s Annual Meeting” on page 84 of this proxy statement.
Corporate Governance and the Board of Directors
Management Succession Planning
One of the Board’s primary responsibilities is ensuring that Corning has a high-performing management team in place. The Company’s CEO is supported by a Management Committee of ten senior executives that oversee the full sphere of the Company’s business, of which four are also our Named Executive Officers. The Board oversees management succession planning, with our Lead Independent Director facilitating ongoing review and Board approval of succession and management development plans for the CEO and Management Committee. The goal of this ongoing process is to maximize the pool of internal candidates able to assume top management positions with minimal business interruption. To assist the Board, the CEO annually provides an assessment of senior managers and their potential as successor CEO, as well as individuals considered potential successors to certain other senior management positions. Each member of the Management Committee annually presents to fellow Management Committee members his or her own succession planning analysis.
Our Board recognizes the importance of effective risk oversight in running a successful global business and in fulfilling its fiduciary responsibilities to Corning and itsour shareholders. While the CEO and other members of our senior leadership team are responsible for the day-to-day management of risk, our Board is responsible for oversight of the Company’s risk management program. The Board exercises this oversight responsibility directly and through its committees.
Board of Directors (Committee report-outs, discussions with management and annual Board review) | ||||||||||
Audit Committee Reviews our enterprise risk management program; monitors legal and regulatory risks by regular discussions with management; oversees internal and external audit; evaluates potential risks related to accounting, internal control over financial reporting, and tax | Compensation Committee Monitors potential risks related to the design and administration of compensation plans and policies, and benefits and perquisites plans and policies, including performance-based compensation programs, to promote appropriate incentives in line with shareholder interest that do not promote excessive risk-taking. | Finance Committee Monitors strategic risks related to financial affairs, including (but not limited to) capital structure and liquidity risk, transaction execution risk, credit and counterparty risk, market risk and foreign exchange risk; reviews the policies and strategies related to tax, financial exposures and contingent liabilities. | ||||||||
Information Technology Committee Monitors potential risk relating to information technology systems, data integrity and protection; information security; cybersecurity; and disaster recovery and business continuity plans. | Corporate Monitors risks relating to sustainability, employment policy, human capital management, employee relations, supply chain integrity, human rights, political activity, public relations | Nominating and Corporate Governance Committee Monitors potential risks related to governance practices by reviewing Board succession plans and performance evaluations, | ||||||||||||
Management and the Company’s Risk Council (Updates to Board or relevant Committees on risk exposures and mitigation efforts) | ||||||||||||||
Risks associated with current business status or strategic alternatives are subjected Table of Contentsto
Corporate Governance analysis, discussion and deliberation by management and the Board of Directors
Management and the Board discuss risks associated with strategic alternatives being contemplated and the risk-reward associated with these alternatives. Once such a strategy is in place, at each meeting, the Board reviews it with the CEO and discusses any newly-identified strategic risks.
Board. Operationally, management reports periodically to the Board on the Company’s enterprise risk management (ERM) policies and procedures, and to the Audit, Information Technology, Finance, and Corporate RelationsResponsibility and Sustainability Committees on our top risks and compliance policies and practices. Management also provides a comprehensive annual report of top risks to the Board. Corning’s ERM program utilizes (1) a Risk Council chaired by the Executive Vice President and Chief Financial Officer and composed of Corning management and staff to aggregate, prioritize and assess risks, including strategic, financial, operational, business, reputational, governance and managerial risks; (2) an internal audit department; and (3) a Compliance Council, which reports directly to each of the Audit Committee and Corporate RelationsResponsibility and Sustainability Committee and reviews the Company’s compliance with laws and regulations of the countries in which we conduct business.
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The Board believes that the work undertaken by the committees of the Board, together with the work of the full board and the Company’s management, enables the Board to effectively oversee Corning’s management of risk.
Committee Risk Oversight & Actions Taken Amidst COVID
Board of Directors | ||||||||
The Board’s well defined risk management process and responsibilities facilitate effective oversight | ||||||||
Audit Oversees Enterprise Risk Management and Business Continuity Monitors ERM program, including ongoing risks related to COVID and the integration of ESG risks and opportunities | Compensation Monitors potential risks related to the design and administration of compensation plans and policies Oversaw implementation of pay equity program, worked with management to address Human Capital Management challenges (attraction, retention) as Corning added over 11k net employees in 2021 and launched data gathering phase to begin Living Wage analysis | Finance Monitors strategic risks related to financial affairs Worked with the management to ensure proper liquidity and diligent capital allocation framework – i.e., paying down debt versus extending it. Also, oversaw mitigation of risk related to increased costs of precious metals | ||||||
Information Technology Monitors potential risk relating to information technology systems Oversaw efficient transition to a remote work environment, acceleration of network capacity expansion and investment, continued enhancements to cyber security preparedness and improvements to manufacturing IT infrastructure | Corporate Responsibility & Sustainability Monitors ESG risks including public relations, reputation, employment policy and relations, human capital management and political activity Oversaw internal adoption of GHG emissions and TCFD disclosures | Nominating and Corporate Governance Monitors potential risks related to governance practices Added two new directors in 2021, ensuring the board is composed of a diverse and experienced team of directors | ||||||
Management and the Company’s Risk Council (Updates to Board or relevant Committees on risk exposures and mitigation efforts) | ||||||||
Blue: Committee Risk Oversight Mandate
Black: Actions taken in Managing Risk
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Investing in Risk Management
Positioned to Adapt to Challenging Environments
Corning’s focus on long-term stability allows the Company to be well positioned to respond effectively to challenging operating environments, including the COVID-19 pandemic | ||||
Business Continuity & Safety | Strong Balance Sheet | Focused Leadership Oversight | ||
● Maintain a Corporate CrisisResponse Team led by senior management and charged with ensuring proper business continuity functions are in place ● Maintain a Global PandemicPlan, designed to address preparedness for a range of critical healthcare situations ● Our existing Safety & Health& Management Systems model provides a framework to protect our employees in their daily work | ● Generated $1.775 billion in FreeCash Flow in 2021 ● Hold an efficient debt maturityprofile with no material debt due in the near-term and the longest average maturity among S&P 500 companies ● Disciplined capital allocation approach paired with cost control and marginimprovement supporting a fortified balance sheet | ● Corning’s leadership team has deep experience in crisismanagement ● Eric Musser, promoted toPresident & COO in 2020, leads operations and oversees our global manufacturing and supply chain ● Our Board prioritizes effectiverisk management of our globalbusiness and exercises oversight through specific delegation toeach committee | ||
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Corporate Governance and the Board of Directors
Environmental, Social and Governance (ESG) Oversight
Rather than concentrating all ESG matters into a single Committee, the Board believes each Committee should maintain oversight over the particular matters that fall within its scope. The appropriate Committees then report to the Board as appropriate. For example:
● | The Corporate Responsibility and Sustainability Committee maintains general oversight of environmental and social risks, with particular responsibility for employee welfare and labor relations, social justice, supply chain integrity, human rights, political activity, community responsibility, and environmental and climate-related matters. It annually reviews the Company’s sustainability strategy. |
● | The Audit Committee is responsible for reviewing the Company’s enterprise risk management (ERM) program and business continuity risk procedures, as well as disclosures about relevant risks made in our financial reports and filings. |
● | The Compensation Committee reviews matters related to talent and culture, as well as initiatives such as the gender pay equity program. |
● | The Information Technology Committee monitors risks related to information technology systems, data integrity and protection, business continuity, information security and cybersecurity and plans for protection of our most important intellectual property assets. |
● | The Nominating and Corporate Governance Committee oversees our Corporate Governance Guidelines and the matters governed by those guidelines. |
● | The Finance Committee reviews our fiscal policies integral to maintaining enterprise sustainability. |
Using this approach, members of each committee are able to leverage their specific subject-matter expertise to oversee and advise the Board on the matters most relevant to their committee’s area of responsibility. In some circumstances, such as our efforts related to our Office of Racial Equity and Social Unity, Board members participate directly in working groups with management. Operating as an integrated whole, our Board is best positioned to manage the ESG risks and issues most impactful to our enterprise and our communities.
Corning recognizes that cyber risks are enterprise-wide and management issues for the Board of Directors to oversee. The Information Technology (IT) Committee of the Board has information security oversight as a key component of its charter and in all meetings it reviews not only cyber incidents, if any, but also corporate actions to improve its cybersecurity posture. Briefings to the Information Technology Committee are presented by Corning’s Chief Information Security Officer in combination with our Chief Digital and Information Officer who review both quarterly activity and long-term cybersecurity strategies of the Company, as well as general cybersecurity trends for possible impact on the Company. Moreover, on an annual basis there is a joint meeting of the IT and Audit Committees to review cybersecurity risks to the Company giving a broader segment of the Board the ability to raise any concerns it may have regarding the Company’s cybersecurity posture and recommend any future changes to controls or procedures. All IT Committee and joint IT/Audit committee meetings are summarized to the full Board with any significant cybersecurity issues being addressed as appropriate. Should a cyber incident rise to the level of a corporate crisis, consistent with the Company’s crisis response protocols, the Board would be engaged.
Directors are positionedAlthough a number of the Board’s opportunities to assess Company culture were paused or shifted to virtual formats in a number2021 due to ongoing limitations on in-person meetings related to the COVID-19 pandemic, the Board nevertheless continues to maintain the ability to assess Company culture. Even when held virtually, members of ways. Thethe Company’s full Management Committee attendsSenior Leadership Team attend every Board meeting and numerous other members of management attend committee meetings. FormalThe Company’s Chief Compliance Officer attends meetings of the Audit Committee and annually reports to the full Board and the Corporate Responsibility and Sustainability Committee. In times when in-person meetings are safe and advisable given
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Corporate Governance and the Board of Directors
the current pandemic, formal dinners and informal lunches with meeting attendees at the meetings provide Directors insight to how our teams function. When presenting an issue relevant to the Board, full business and technology teams attend to answer the Directors’ questions and to join them at these dinners and lunches. Once a year theThe Board visits our research campus to meet with dozens of employees working on our key innovation initiatives.initiatives and/or participates in a technology showcase on an annual basis, where our newest initiatives are highlighted and discussed. If the Board is unable to visit our research campus in person, virtual Technology Showcases have been held, where senior innovators demonstrate those products and innovations in the Company’s commercialization pipeline. The Board also meets at different Corning locations – occasionally internationally – to see our manufacturing facilities, meet local managers and employees and explore the Company’s culture. At the Company’s annual meeting, allAll Company officers and their spouses are invited to attend thea Board dinner on an annual basis and have opportunities for direct interaction. The Company looks forward to the return of hosting events in-person when circumstances permit.
Corning does not use compensation policies or practices that create risks that are likely to have a material adverse effect on the Company. |
In February 2019,2022, the Compensation Committee reviewed the conclusions of a risk assessment of our compensation policies and practices covering all employees. This type of assessment is conducted annually by a cross-functional team with representatives from Human Resources (Compensation and Benefits), Law and Finance. The Compensation Committee evaluated the levels of risk-taking that potentially could be encouraged by our compensation arrangements, considering the arrangements’ risk-mitigation features, to determine whether they are appropriate in the context of our strategic plan and annual budget, our overall compensation arrangements, our compensation objectives, and Corning’s overall risk profile. Identified risk-mitigation features included the following:
● | The mix of cash and equity payouts tied to both short-term financial performance, mid-term financial performance, and long-term value creation; |
● | The time vesting requirements in our long-term incentive plans, which help align the interests of employees to shareholders; |
● | The use of multiple financial performance metrics that are readily monitored and reviewed, and aligned with the corporate and business unit objectives; |
● | The rigorous budget and goal-setting processes that involve both top-down and bottom-up analyses; |
● | The use of common performance metrics for incentives across Corning’s management team and all eligible employees with corporate results impacting the compensation of all Corning employees; |
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● | Our robust stock ownership, clawback, anti-hedging and anti-pledging policies for NEOs and other employees; |
● | Multiple levels of review and approval of awards, including Committee approval of all officer compensation; and |
● | Immediate oversight of executive pay matters in mergers and acquisitions and unit compensation throughout the acquisition integration process. |
The Compensation Committee concluded that Corning’s executive compensation program is balanced and does not reward excessive financial risk-taking.
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Board and Shareholder Meeting Attendance
The Board of Directors met in person fiveseven times during 2018. 2021. Attendance at Board and committee meetings averaged 99% in 2018, 2021, and each incumbent director attended no less than 90%91% of the meetings of the Board and committees on which the director served.
All of our directors attended our 2018 Annual Meeting of Shareholders except for Mr. Brun, who became a director in July 2018. The Board has a policy requiring all directors to attend our Annual Meeting, absent extraordinary circumstances. All of our directors attended our 2021 Annual Meeting of Shareholders except for Ms. Craig, who joined the Board on June 29, 2021.
We are committed to conducting business lawfully and ethically. Our directors, NEOs,executive officers, and all Corning employees, are required to act at all times with honesty and integrity. We have a comprehensive Code of Conduct that applies to all Corning directors and employees that covers areas of professional conduct, including conflicts of interest, the protection of corporate opportunities and assets, employment policies, non-discrimination policies, confidentiality, vendor standards, and intellectual property, and requires strict adherence to all laws and regulations applicable to our business. Furthermore, our Code of Ethics for Chief Executive Officer and Financial Executives requires business integrity, avoidance of conflicts of interest, and transparency. Our Board spends meaningful time with executive management at board meetings, and other members of management at other board events, where the relationships developed enable the Board to ensure that the Company maintains a culture of integrity, responsibility and accountability throughout the organization.
We also have a supplemental “Code of Conduct for Directors and Executive Officers” that includes policies calling for strict observance of all laws applicable to our business, that requires directors and executive officers to avoid any conflict between their personal interests and the interests of the companyCompany in dealing with suppliers, customers, and other third parties, and which imposes standards upon certain conduct in their personal affairs, including transactions in securities of the Company, any companyCompany affiliate, or any unaffiliated organization. Each director and executive officer is expected to be familiar with and to follow these policies to the extent applicable to them. Any employee can provide an anonymous report of an actual or apparent violation of our Codes of Conduct. We will disclose any future amendments to, or waivers from, any provision of our Codes of Conduct involving our directors, our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions on our website within four business days following the date of any such amendment or waiver. No such waivers were sought or granted in 2018.2021.
Lobbying and Political Contributions Policy
Corning encourages employees to participate in the political process on a personal basis. However, any use of Corning funds, property, resources or employee work time for U.S. political purposes — for example, to any U.S. political party, candidate or government official – is subject to Corning’s Lobbying and Political Contributions Policy and must be approved in advance by Corning’s Government Affairs office. Any contact with members of the U.S. Congress or executive branch officials on behalf of Corning, or any Corning contribution to U.S. government officials or payment related to these officials, must be approved by and coordinated through Corning’s Government Affairs office. Our policy can be found atcorning.com/political-contributions.at investor.corning.com/investor-relations/governance/political-contributions/default.aspx.
Shareholders and interested parties may communicate concerns to any director, committee member or the Board by writing to the following address: Corning Incorporated Board of Directors, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831, Attention: Corporate Secretary. Please specify to whom your correspondence should be directed. The Board has instructed our Corporate Secretary to review correspondence directed to the Board and, at the Corporate Secretary’s discretion, to forward items that are appropriate for the Board’s consideration.
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Corporate Governance Materials Available on Corning’s Website
In addition to our Corporate Governance Guidelines and Director Qualification Standards, other information relating to Corning’s corporate governance is available on the Investor Relations – Governance – Downloads section of our website atinvestor.corning.com/investor-relations/governance/overview/default.aspxincluding:
● | Corporate Governance Guidelines with Director Qualification Standards |
● | Corning Incorporated By-Laws |
● | Political Contributions and Lobbying Policy |
● | Whistleblower Policy |
● | Code of Conduct for Directors and Executive Officers |
● | Code of Ethics for Chief Executive Officer and Financial Executives |
● | Our Code of Conduct |
● | Audit Committee Charter |
● | Compensation Committee Charter |
● | Corporate |
● | Finance Committee Charter |
● | Information Technology Committee Charter |
● | Nominating and Corporate Governance Committee Charter |
Corning’s Human Rights Policy is available athttp://www.corning.com/worldwide/en/sustainability/people/human-rights-policy.html.
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Board of Directors’ Qualifications and Experience
Our Board is composed ofcomprises accomplished professionals with diverse skills and areas of expertise. The broad range of skills, knowledge and opinions represented on our Board is one of its core strengths. Moreover, we believe our directors’ wide range of professional experiences, backgrounds and backgrounds, education and skills provides significant value to the Company, and we intend to continue leveraging this strength.
UponMs. Craig was appointed to the recommendation ofBoard at its June 29, 2021 meeting after being recommended to the Nominating and Corporate Governance Committee by its third-party search firm. She is standing for election for the Board of Directors granted Mr. Canning a one-time waiver of the mandatory retirement age policy on February 6, 2019. The Board concluded that Mr. Canning’s experience and skill set, in particular his broad financial experience and ongoing contributions in furtherance of the Strategy and Capital Allocation Framework, were exceptionally beneficial to the Company and that Mr. Canning’s continued service was in the best interest of the Company through the Framework’s conclusion.first time following her appointment.
The following table describes key competencies and skills of our directors.directors who are standing for re-election.
All directors other than Mr. Weeks are independent. Mr. Clark is the Lead Independent Director.
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Proposal 1Election of Directors
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Donald W. Blair | Leslie A. Brun | Stephanie A. Burns | Richard T. Clark | Pamela J. Craig | Robert F. Cummings, Jr. | Roger W. Ferguson, Jr | Deborah A. Henretta | Daniel P. Huttenlocher | Kurt M. Landgraf | Kevin J. Martin | Deborah D. Rieman | Hansel E. Tookes II | Wendell P. Weeks | Mark S. Wrighton | |
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Board Tenure | |||||||||||||||
Years | 7 | 3 | 10 | 10 | <1 | 15 | 1 | 8 | 7 | 14 | 9 | 22 | 20 | 21 | 13 |
After considering the recommendations of the Nominating and Corporate Governance Committee, the Board has set the number of directors at fourteen and nominated the persons described below to stand for election. All of the nominees, except for Ms. Craig, whose effective date of Board membership was June 29, 2021, were elected by Corning’s shareholders at the 20182021 Annual Meeting, except for Mr. Brun who was appointed toMeeting. All of the Board in July 2018, andnominees have consented to being named in this proxy statement and to serve as director if elected or re-elected. The Board believes that each of these nominees is qualified to serve as a director of Corning in light of their respective skills and qualifications, as further described below. Equally important, the Board believes this combination of backgrounds, skills and experiences creates a Board that is well-equipped to exercise oversight responsibilities for Corning’s shareholders and other stakeholders.
If elected by our shareholders, the fourteenfifteen director nominees will serve for a one-year term expiring at our 20202023 Annual Meeting of Shareholders. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal.
FOR | Our Board unanimously recommends that shareholders vote FOR all of our director nominees. |
36 | CORNING |
Proposal 1Election of Directors
Age Director Since 2014 Committees ● Audit● FinanceCurrent Public and Investment Company Directorships ● Dropbox, Inc.Public and Investment Company Directorships Held During the Past 5 Years ● None | Donald W. Blair Retired Executive Vice President and Chief Financial Officer, NIKE, Inc. Mr. Blair was the executive vice president and chief financial officer of NIKE, Inc. from 1999 to October 2015. Prior to joining NIKE, he served Mr. Blair brings over Skills and Qualifications —Expertise in finance, audit and management — |
Age Director Since 2018 Committees ● Audit● CompensationCurrent Public and Investment Company Directorships ● Ariel Alternatives, LLC● Broadridge Financial Solutions, Inc. ● CDK Global Inc.Public and Investment Company Directorships Held During the Past 5 Years ● Ariel Investments, LLC ● Hewlett Packard Enterprise Company● Merck & Co., Inc. ● NXT Capital Inc. ● Praesidium SGR | Leslie A. Brun Chairman and Chief Executive Officer, Sarr Group LLC Mr. Brun is chairman and chief executive officer of Sarr Group, LLC, co-founder, chairman and chief executive officer of Ariel Alternatives, LLC, vice chairman and senior advisor of G100 Companies and World 50 and a member of the Council on Foreign Relations. He is also the founder and former chief executive officer and chairman of Hamilton Lane, where he served as chief executive officer and chairman from 1991 until 2005, former lead director of Merck & Co., Inc., a former director and chairman of the board of Automatic Data Processing, Inc., and a former director of Hewlett Packard Enterprise Company. In addition, Mr. Brun also served as a managing director and co-founder of the investment banking group of Fidelity Bank, and as a past vice president in the corporate finance division of E.F. Hutton & Co. Mr. Brun brings to the board significant financial expertise and operating and management experience, along with extensive public company directorship and committee experience. He also brings broad experience on governance issues facing large public companies. Skills and Qualifications —Expertise in finance, management, investment banking, financial advisory and management across highly regulated and audited industries — |
CORNING | 37 |
Proposal 1Election of Directors
Age Director Since 2012 Committees ● Audit● CorporateCurrent Public and Investment Company Directorships ● HP Inc.● Kellogg CompanyPublic and Investment Company Directorships Held During the Past 5 Years ● | Stephanie A. Burns Retired Chairman and Chief Executive Officer, Dow Corning Corporation Dr. Burns has Dr. Burns brings significant expertise in scientific research, issues management, science and technology leadership, and business management to the Board, as well as skills related to her Ph.D. in organic chemistry. She is the past honorary president of the Society of Chemical Industry and was appointed by President Obama to the President’s Export Council. Dr. Burns is a former chair of the American Chemistry Council. Skills and Qualifications —Global innovation, manufacturing and business leadership experience —Significant expertise in research and development, science and technology leadership, and audit and business management —Significant public company board experience |
Age Director Since Committees ● Compensation● Executive ● Current Public and Investment Company Directorships ● Public and Investment Company Directorships Held During the Past 5 Years ● |
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Proposal 1Election of Directors
| Richard T. Clark Retired Chairman, Chief Executive Officer and President, Merck & Co., Inc. Mr. Clark retired from Merck in 2011. He joined Merck in 1972 and held a broad range of senior management positions. He became president and chief executive officer of Merck in May 2005 and chairman of the board in April 2007. He transitioned from the chief executive officer role in January 2011 and served as Merck board chairman through November 2011. He was president of the Merck Manufacturing Division (June 2003 to May 2005) of Merck Sharp & Dohme Corp. He is chairman emeritus of the board of Project Hope and a trustee of several charitable non-profit organizations. As the former chairman, president and chief executive officer of a Fortune 100 company, Mr. Clark brings broad managerial expertise, operational expertise, Skills and Qualifications —Broad and deep managerial expertise, operational expertise, and business knowledge —Extensive experience in the issues facing public companies and multinational businesses —Significant public company board experience, including as chairman and chief executive officer of an R&D-focused global corporation |
38 |
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Proposal 1 Election of Directors
Age Director Since Committees ● Audit ● Current Public and Investment Company Directorships ● ● Merck & Co. ● The Progressive Corporation Public and Investment Company Directorships Held During the Past 5 Years ● Akamai Technologies, Inc. ● Walmart Inc. | Pamela J. Craig Retired Chief Financial Officer, Accenture plc. From 2006 through 2013, Ms. Craig served as chief financial officer of Accenture plc., a global management consulting, technology services and outsourcing company, following many other leadership roles in line management, consulting and operations during her 34 years with the company. Ms. Craig has extensive finance, management, operational, technology and international business expertise, including her accomplishments and executive abilities as chief financial officer at Accenture. Ms. Craig brings to Corning’s Board valuable experience with governance issues facing public companies. She is also actively involved in charitable organizations focused on education and on the advancement of women in business, including The Women’s Forum of New York, New York University Stern School of Business, Junior Achievement of New Jersey, and is a member of the Board of Trustees of Smith College. Skills and Qualifications — Over 34 years of financial expertise and management experience at the international, operational, and corporate levels — Experience in global operations in the information technology and services industry — Experience in business transformation, management, mergers & acquisitions, strategic planning, and business process improvement — Extensive public company board experience |
Age Director Since 2006 Committees ● Executive ● Finance (Chair) ● Nominating and Corporate Governance Current Public and Investment Company Directorships ● None Public and Investment Company Directorships Held During the Past 5 Years ● W. R. Grace & Co. | Robert F. Cummings, Jr. Retired Vice Chairman of Investment Banking, JPMorgan Chase & Co. Mr. Cummings retired as vice chairman of Investment Banking at JPMorgan Chase & Co. (JPM) in February 2016. He had served in that role since December 2010, advising on client opportunities across sectors and industry groups. Mr. Cummings began his business career in the investment banking division of Goldman, Sachs & Co. in 1973 and was a partner of that firm from 1986 until his retirement in 1998. He served as an advisory director at Goldman Sachs until 2002. Mr. Cummings’ Board qualifications include Skills and Qualifications —Extensive investment banking experience including finance, business development and strategy, and mergers and acquisitions —Knowledgeable in the areas of technology, telecommunications, private equity and real estate |
CORNING | 39 |
Proposal 1Election of Directors
Age Director Since Committees ● ● Compensation Current Public and Investment Company Directorships ● Alphabet, Inc. ● ● Public and Investment Company Directorships Held During the Past 5 Years ● General Mills, Inc. | Roger W. Ferguson, Jr. Retired President and Chief Executive Officer, TIAA Mr. Fergusonwas the President and Chief Executive Officer of TIAA from April 2008 – March 2021. He is also the former Vice Chairman of the Board of Governors of the U.S. Federal Reserve System. Prior to joining TIAA in April 2008, Mr. Ferguson was head of financial services for Swiss Re and Chairman of Swiss Re America Holding Corporation. From 1984 to 1997, he was an Associate and Partner at McKinsey & Company. He began his career as an attorney at the New York City office of Davis Polk & Wardwell. Mr. Ferguson has been a national leader in banking and financial services for over 20 years as the former President and Chief Executive Officer of a Fortune 100 company; he brings extensive banking, financial and executive leadership expertise to Corning’s Board. Mr. Ferguson is a member of the Smithsonian Institution’s Board of Regents and the American Academy of Arts & Sciences. He currently serves on the boards of Alphabet, Inc.; Blend Labs, Inc.; and International Flavors & Fragrances, Inc. He also serves on the boards of The Conference Board, the Institute for Advanced Study, and Memorial Sloan Kettering Cancer Center. He is a fellow of the American Philosophical Society and a member of the Economic Club of New York, the Council on Foreign Relations, the Group of Thirty, and the National Association for Business Economics. Skills and Qualifications — Expertise in banking, financial and executive leadership — Experience in regulation, international policy, compliance, oversight and strategy |
Age 60 Director Since 2013 Committees ● Corporate Responsibility and Sustainability ● Information Technology Current Public and Investment Company Directorships ● American Eagle Outfitters, Inc. ● Meritage Homes Corporation ● NiSource, Inc. Public and Investment Company Directorships Held During the Past 5 Years ● Staples, Inc. | Deborah A. Henretta Retired Group President of Global E-Business, Procter & Gamble Company Ms. Henretta has over Ms. Henretta was a member of Singapore’s Economic Development Board (EDB) from 2007 to 2013. She contributed to the growth strategies for Singapore and was selected to serve on the EDB’s Economic Strategies Committee between 2009 and 2011. In 2008, she received a U.S. State Department appointment to the Asia-Pacific Economic Cooperation’s Business Advisory Ms. Henretta Skills and Qualifications —Significant experience in business leadership and global — —Significant knowledge of digital transformation and |
40 |
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Proposal 1 Election of Directors
Age Director Since 2015 Committees ● Finance Information Technology● Current Public and Investment Company Directorships ● Amazon.com, Inc.Public and Investment Company Directorships Held During the Past 5 Years ● None | Daniel P. Huttenlocher Dean, Dr. Huttenlocher is the Dr. Huttenlocher holds a Ph.D. in computer science and a Master of Science degree in Electrical Engineering, both from the Massachusetts Institute of Technology. He is a renowned computer science researcher and educator, and a prolific inventor with two dozen U.S. patents. He brings to the board extensive experience in technology innovation and commercialization, and expertise in developing next-generation products and services. Skills and Qualifications —Extensive experience in technology innovation and commercialization —Expertise in information technology and computer —Experience with emerging technologies and customer experience |
Proposal 1Election of Directors
Age Director Since 2007 Committees ● Audit (Chair)● Compensation● ExecutiveCurrent Public and Investment Company Directorships ● Public and Investment Company Directorships Held During the Past 5 Years ● | Kurt M. Landgraf Retired President, Washington College
Mr. Landgraf was selected for his wealth of executive management experience in public companies, non-profit entities, higher education, and government. He brings to the Board his financial expertise and operations skills and experience, represented by his positions at ETS and DuPont. Mr. Landgraf’s other areas of specialized knowledge include technology, transportation, education, finance, pharmaceuticals, health care, energy, materials, and mergers and acquisitions. Skills and Qualifications —Extensive executive management experience in public companies, non-profit entities, higher education and government —Financial and audit expertise —Operations experience —Specialized knowledge including technology, transportation, education, pharmaceuticals, health care, energy, materials, and mergers and acquisitions —Significant public company board experience |
| 41 |
Proposal 1 Election of Directors
Age Director Since 2013 Committees ● CorporateResponsibility and Sustainability ● Nominating and Corporate GovernanceCurrent Public and Investment Company Directorships ● Public and Investment Company Directorships Held During the Past 5 Years ● | Kevin J. Martin Vice President,
Mr. Martin has two decades experience as a lawyer and policymaker in the telecommunications field. Before joining the FCC as a commissioner in 2001, Mr. Martin was a special assistant to the president for Economic Policy and served on the staff of the National Economic Council, focusing on commerce and technology policy issues. He served as the official U.S. government representative to the G-8’s Digital Opportunity Task Force. Mr. Martin brings deep experience to the board in the telecommunications, economics, governmental and legal arenas. Skills and Qualifications —Specialized knowledge of telecommunications, social media and information technology industries —Extensive knowledge of government policy and regulatory environment |
Proposal 1Election of Directors
Age Director Since 1999 Committees ● ● Information Technology Current Public and Investment Company Directorships ● NonePublic and Investment Company Directorships Held During the Past 5 Years ● Neustar, Inc. | Deborah D. Rieman Retired Executive Chairman, Dr. Rieman has more than 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 —Experience in technology development, marketing, business development and support, innovation, entrepreneurial endeavors and investing |
42 |
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Proposal 1 Election of Directors
Age Director Since 2001 Committees ● Compensation● Executive● Nominating and Corporate Governance (Chair)Current Public and Investment Company Directorships ● Public and Investment Company Directorships Held During the Past 5 Years ● ● NextEra Energy, Inc. | 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 |
Proposal 1Election of Directors
Age Director Since 2000 Committees ● Executive (Chair)Current Public and Investment Company Directorships ● Amazon.com, Inc.Public and Investment Company Directorships Held During the Past 5 Years ● | Wendell P. Weeks Chairman and Chief Executive Officer, Mr. Weeks
Mr. Weeks currently sits on the board of Amazon.com, Inc. and served on the board of Merck & Co., Inc. from February 2004 to May 2020. He is also on the board of trustees for the Corning Museum of Glass. Skills and Qualifications — — Wide-ranging experience —Unique understanding of Corning’s businesses and innovations |
| 43 |
Proposal 1 Election of Directors
Age Director Since 2009 Committees ● Finance Information Technology (Chair)● Current Public and Investment Company Directorships ● Azenta, Inc. (formerly known as Brooks Automation, Inc.Public and Investment Company Directorships Held During the Past 5 Years ● | Mark S. Wrighton
Dr. Wrighton has more than 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 photoprocesses 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 in St. Louis 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 — |
44 | CORNING |
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 awardfor a significant portion of director compensation in equity.to be stock-based. The Compensation Committee’s independent consultant, Frederic W. Cook & Co., Inc., conducts an annual review of the director compensation levels relative to external best practices as well as 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 compensation for its directors. Corning believes it is desirable that a significant portion of director compensation should be linked to the Company’s performance andover time. Therefore, a portion of the directors’ compensation is therefore paid as an annual equity grant of restricted stock units (in 2021, 64% of annual retainer), which are not settled in restricted unitsshares of common stock which are settled in shares followinguntil 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 electfurther defer receipt of the annual equity retainer restricted stock 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, six2021, seven 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.
20182021 Director Compensation
The following table outlines 20182021 director compensation:compensation.
Each non-employee director annually receives a | ||
Annual Equity Grants | ||
In | ||
Annual Cash Retainer | ||
Lead Independent Director | Our Lead Independent Director received |
Director Compensation
Committee Chair | The Audit Committee Chair | |
CORNING 2022 PROXY STATEMENT | 45 |
Director Compensation
Committee Member | Each Audit Committee member received |
In 2018,2021, 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 | |
Mr. Cummings | Finance Committee Chair | |
Mr. Tookes | Nominating and Corporate Governance Committee Chair | |
Dr. Wrighton | Information Technology 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 eitherdirectly 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, we paid a total of $82,982 in premiums and fees on such policies for our current directors.general corporate assets. 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 bewere permitted to participate after five years of Board service. In 2018,2021, all directors except Messrs. Canning, Clark, Cummings, Landgraf, Martin, TookesBrun and Weeks,Ferguson and Ms. Henretta and Drs. Burns, Rieman and WrightonCraig 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 active 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 20192022
In February 2019,2022, the Board approve certain changesapproved an increase to director compensation in order to remain competitive, as proposed by the Compensation Committee in consultation with the Committee’s independent consultant. Effective January 1, 2019,In February 2022, the non-employee directors’ annual equity grant will increaseincreased from $165,000$195,000 to $175,000. As with the 2018 director$205,000. This annual equity compensation, this amountgrant will be payable in restricted stock units, which arewill not be available for transfer or sale until six months after the date of a director’s retirement or resignation. In addition,resignation from the Audit Committee Chair retainer will increase from $20,000board. No changes were made to $25,000 effective January 1, 2019.cash compensation in 2022.
46 | CORNING |
Director Compensation
20182021 DIRECTOR COMPENSATION TABLE
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | ||||||||||||
Donald W. Blair | $ | 138,000 | $ | 164,994 | $ | 5,244 | $ | 308,238 | $138,000 | $195,000 | $7,500 | $ 340,500 | ||||||||
Leslie A. Brun | 70,000 | 82,504 | 0 | 152,504 | 143,000 | 195,000 | 0 | 338,000 | ||||||||||||
Stephanie A. Burns | 153,000 | 164,994 | 0 | 317,994 | 153,000 | 195,000 | 0 | 348,000 | ||||||||||||
John A. Canning, Jr. | 140,000 | 164,994 | 7,500 | 312,494 | ||||||||||||||||
Richard T. Clark | 177,000 | 164,994 | 7,500 | 349,494 | 185,000 | 195,000 | 7,500 | 387,500 | ||||||||||||
Pamela J. Craig | 71,654 | 97,506 | 7,500 | 176,660 | ||||||||||||||||
Robert F. Cummings, Jr. | 155,000 | 164,994 | 0 | 319,994 | 155,000 | 195,000 | 0 | 350,000 | ||||||||||||
Roger W. Ferguson, Jr. | 101,250 | 146,267 | 0 | 247,517 | ||||||||||||||||
Deborah A. Henretta | 138,000 | 164,994 | 0 | 302,994 | 130,000 | 195,000 | 7,500 | 332,500 | ||||||||||||
Daniel P. Huttenlocher | 138,000 | 164,994 | 0 | 302,994 | 130,000 | 195,000 | 7,000 | 332,000 | ||||||||||||
Kurt M. Landgraf | 170,000 | 164,994 | 7,500 | 342,494 | 178,000 | 195,000 | 7,500 | 380,500 | ||||||||||||
Kevin J. Martin | 130,000 | 164,994 | 7,000 | 301,994 | 130,000 | 195,000 | 0 | 325,000 | ||||||||||||
Deborah D. Rieman | 160,000 | 164,994 | 0 | 324,994 | 155,000 | 195,000 | 0 | 350,000 | ||||||||||||
Hansel E. Tookes II | 157,000 | 164,994 | 0 | 321,994 | 160,000 | 195,000 | 0 | 355,000 | ||||||||||||
Mark S. Wrighton | 138,000 | 164,994 | 0 | 302,994 | 145,000 | 195,000 | 7,500 | 347,500 |
(1) | Includes all fees and retainers 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 |
(3) | The amounts in this column reflect charitable donation matches made by the Corning |
The following areshows the total number of award shares andrestricted stock, restricted stock units and RSU deferrals outstanding each Director had outstanding at December 31, 2021. No options were granted to any Director in 2021, and as of December 31, 20182021 no Director had any outstanding options.
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 |
RSAs, RSUs and Deferrals Outstanding at December 31, | |||
86,598 | |||
Leslie A. Brun | 21,562 | ||
Stephanie A. Burns | 84,944 | ||
Richard T. Clark | 72,598 | ||
Pamela J. Craig | 2,384 | ||
Robert F. Cummings, Jr. | 210,237 | ||
Roger W. Ferguson, Jr. | 5,982 | ||
Deborah A. Henretta | 87,745 | ||
Daniel P. Huttenlocher | 43,988 | ||
Kurt M. Landgraf | 176,253 | ||
Kevin J. Martin | 68,704 | ||
Deborah D. Rieman | 129,952 | ||
Hansel E. Tookes II | 117,262 | ||
Mark S. Wrighton | 88,569 | ||
CORNING |
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 ourthe guidelines.
In December 2020, we increased the stock ownership guidelines applicable to non-NEO executive Senior Leadership Team members as a multiple of base salary from 1.5 to 3 in line with all NEOs other than the CEO whose multiple remains 6 times base salary. Newly-appointed Senior Leadership Team members have five years to comply with the new guidelines.
DIRECTORS | CEO | OTHER NEOs and SENIOR LEADERSHIP TEAM MEMBERS | ||||
5X | 6X | 3X |
|
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 56.67.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
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, 2018,2021, all Section 16(a) filing requirements were met.met except that one Form 4 for John P. Bayne, Jr., Senior Vice President and General Manager, Mobile Consumer Electronics, covering a disposal of 202 shares of common stock, was not timely filed due to an oversight of the reporting person.
48 | CORNING |
Stock Ownership Information
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) | |||||||||||||||||||||||
As of December 31, 2021 | Shares Directly or Indirectly Owned(1)(2)(3) | Stock Options Exercisable Within 60 Days | Restricted Stock Units Vesting Within 60 Days | (A) Total Shares Beneficially Owned | Percent of Class | (B) RSUs and PSUs Not Vesting Within 60 Days(4) | Total of Columns (A) + (B) | |||||||||||||||||||||||
The Vanguard Group | — | — | — | 62,711,606 | (5) | 7.83 | — | — | — | — | — | 92,075,409 | (5) | 10.79 | % | — | — | |||||||||||||
Samsung Display Co., Ltd. | — | — | — | 80,000,000 | (6) | 9.5 | %(7) | — | — | |||||||||||||||||||||
BlackRock, Inc. | — | — | — | 53,217,738 | (6) | 6.60 | — | — | — | — | — | 53,727,975 | (8) | 6.3 | % | — | — | |||||||||||||
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 | 17,243 | 17,243 | * | 69,355 | 86,598 | ||||||||||||||||||
Leslie A. Brun | 0 | 0 | 0 | 0 | * | 2,812 | 2,812 | 0 | 0 | * | 21,562 | 21,562 | ||||||||||||||||||
Stephanie A. Burns | 49,288 | 0 | 0 | 49,288 | * | 23,100 | 72,388 | 56,888 | 56,888 | * | 44,410 | 101,298 | ||||||||||||||||||
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 | 41,962 | 41,962 | * | 30,636 | 72,598 | ||||||||||||||||||
Pamela J. Craig | 0 | 0 | * | 2,384 | 2,384 | |||||||||||||||||||||||||
Robert F. Cummings, Jr. | 151,199 | 2,345 | 0 | 153,544 | * | 113,106 | 266,650 | 151,199 | 151,199 | * | 145,551 | 296,750 | ||||||||||||||||||
Roger W. Ferguson, Jr. | 6,938 | 6,938 | * | 5,982 | 12,920 | |||||||||||||||||||||||||
Deborah A. Henretta | 25,965 | 0 | 0 | 25,965 | * | 35,033 | 60,998 | 25,965 | 25,965 | * | 61,780 | 87,745 | ||||||||||||||||||
Daniel P. Huttenlocher | 13,910 | 0 | 0 | 13,910 | * | 11,447 | 25,357 | 13,910 | 13,910 | * | 30,078 | 43,988 | ||||||||||||||||||
Kurt M. Landgraf | 62,957 | 0 | 0 | 62,957 | * | 94,130 | 157,087 | 62,957 | 62,957 | * | 113,296 | 176,253 | ||||||||||||||||||
Kevin J. Martin | 31,506 | 0 | 0 | 31,506 | * | 11,447 | 42,953 | 31,506 | 31,506 | * | 37,198 | 68,704 | ||||||||||||||||||
Deborah D. Rieman | 100,813 | 2,345 | 0 | 103,158 | * | 11,447 | 114,605 | 100,813 | 100,813 | * | 30,339 | 131,152 | ||||||||||||||||||
Hansel E. Tookes II | 96,863 | 2,345 | 0 | 99,208 | * | 11,447 | 110,655 | 96,863 | 96,863 | * | 30,399 | 127,262 | ||||||||||||||||||
Mark S. Wrighton | 63,743 | 2,345 | 0 | 66,088 | * | 11,447 | 77,535 | 66,088 | 66,088 | * | 30,256 | 96,344 | ||||||||||||||||||
Wendell P. Weeks | 800,371 | (9) | 488,003 | 3,182 | 1,291,556 | * | 246,598 | 1,538,154 | 641,404 | (9) | 573,835 | 3,075 | 1,218,314 | * | 494,636 | 1,712,950 | ||||||||||||||
R. Tony Tripeny | 48,939 | 102,663 | 993 | 152,595 | * | 51,006 | 203,601 | 81,632 | 134,595 | 874 | 217,101 | * | 118,737 | 335,838 | ||||||||||||||||
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 | 180,103 | 125,521 | 880 | 306,504 | * | 130,821 | 437,325 | ||||||||||||||||
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 | ||||||||||||||||||||||
Eric S. Musser | 89,217 | 6,284 | 1,258 | 96,759 | * | 146,304 | 243,063 | |||||||||||||||||||||||
Lewis A. Steverson | 0 | 0 | 1,098 | 1,098 | * | 121,843 | 122,941 | |||||||||||||||||||||||
All Directors and Executive Officers as a group (32 persons) | 1,854,224 | (10)(11) | 1,179,695 | 11,113 | (11) | 3,045,032 | * | 2,394,872 | 5,439,904 |
* 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, |
(4) | The Restricted Stock Units (RSUs) and Performance Share Units |
(5) | Reflects shares beneficially owned by The Vanguard Group (Vanguard), according to a Schedule 13G/A filed by Vanguard with the SEC on February |
(6) | Reflects shares beneficially owned by Samsung Display Co., Ltd. (Samsung), according to a Schedule 13G/A filed by Samsung with the SEC on April 8, 2021, reflecting ownership of shares as of April 8, 2021. Samsung lists its address as 1, Samsung-ro, Giheung-gu, Yongin-si, Gyeonggi-Do, 17113, Republic of Korea. Samsung has sole voting power and/or sole dispositive power with respect to 80,000,000 shares and shared voting power and/or shared dispositive power with respect to 0. According to the Schedule 13G/A, Samsung beneficially owned 9.0% of our common stock as of April 8, 2021. |
(7) | Samsung Display Co., Ltd.’s 80,000,000 shares of common stock were equal to 9.5% of our common stock as of December 31, 2021. |
(8) | Reflects shares beneficially owned by BlackRock, Inc. (BlackRock), according to a Schedule 13G/A filed by BlackRock with the SEC on February |
(9) | Includes |
(10) | Does not include |
(11) | As of December 31, |
(12) | All shares were sold to satisfy tax withholding requirements on Restricted Stock Units. |
CORNING |
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 (the “Exchange Act”), as disclosed in this proxy statement, which includes the Compensation Discussion and Analysis, the Summary Compensation Table and the supporting tabularcompensation tables and narrative disclosure on executive compensation.
ThisWhile 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.
Our Board maintains a “pay for performance” philosophy that forms the foundation for all of the Compensation Committee’sCommittee 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 20182021 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 executive pay 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 tabularcompensation tables and related narrative disclosure on executive compensation,compensation) is hereby APPROVED.
FOR | Our Board unanimously recommends a vote FOR the |
50 | CORNING |
This Compensation Discussion & Analysis (CD&A) presents Corning’s executive compensation for 2018,2021, including the compensation for our Named Executive Officers (NEOs), and describes how this compensation aligns with our pay for performancepay-for-performance philosophy and supports the successrecognizes achievement of our Strategy and Capital Allocation Framework.corporate goals.
OUR NEOS IN FISCAL YEAR 2021 WERE:
Named Executive Officer | Role | Years in Role | Years at Corning | |||
Wendell P. Weeks | Chairman and Chief Executive Officer (CEO) | ( | ||||
R. Tony | Executive Vice President and Chief Financial Officer | |||||
Lawrence D. McRae | Vice Chairman and Corporate Development Officer | |||||
President and Chief Operating Officer | 2 Years (6 years as Executive Vice President) | 36 years | ||||
Lewis A. Steverson | Executive Vice President and Chief |
* | Mr. Tripeny relinquished the role of Chief Financial Officer as of February 18, 2022 in advance of his retirement. |
To assist shareholdersyou in finding important information, we call your attention to the following sections of the CD&A:
CORNING 2022 PROXY STATEMENT | 51 |
Compensation Discussion & Analysis
Executing against strategic objectives despite a historically challenging environment
Executing, Adapting, and Innovating while Protecting our People, Customers, and Communities
2021 was another extremely challenging year with the ongoing COVID-19 pandemic continuing to present unexpected obstacles. We also faced added hardships due to unprecedented supply chain and logistics difficulties. Throughout the year, management and the Board continued to focus on keeping our employees safe and retaining our talent, taking care of our customers, protecting our financial health and preserving the trust of Corning stakeholders.
Despite this mounting adversity, Corning continued to deliver – in 2021, we exceeded $14 billion in core net sales and $2 in Core EPS. We nearly doubled free cash flow, achieved ROIC of more than 10% (growing ROIC from 9.1% at the end of 2018 to 10.6% at the end of 2021), and expanded our operating margin by 230 basis points. While these excellent operational results stand as a remarkable achievement for Corning and its employees on their own, they are that much more impressive given the challenging and ever-evolving macro environment.
These outstanding results in this period of global disruption were driven by excellent execution, flexibility and innovation at all levels of the Company.
FULL-YEAR KEY HIGHLIGHTS
$14.1B Full-year core sales grew 23% year over year | $2.07 Full-year core EPS up 49% year over year | $1.8B Full-year free cash flow nearly doubling year over year |
During 2021 we operated in the face of unprecedented logistical challenges, volatile raw materials prices and component shortages, including the semiconductor chip shortage and component constraints that impacted production levels in the automotive market. Delivering for customers in this complex environment required both decisive action and agility. We focused on identifying these new challenges early and addressing them head on. Our ability to sense disruption and act quickly has been key to keeping our plants running and ultimately meeting our customers’ needs. The flexibility of our global supply management and operations teams have allowed us to maintain a steady supply of raw materials while finding creative shipping strategies. Additionally, our digital supply chain capabilities enable real-time visibility into emerging situations, allowing us to proactively address issues.
At the same time, due to these and other global challenges, we continued to incur added costs as we worked to meet increasing customer demand. While we have implemented mitigating actions, certain costs continue to increase. In response to this ongoing inflationary environment, we are implementing price increases across all of our businesses. We have already seen some benefit from these actions in 2021 and their impact is expected to accelerate in 2022.
Our focus on execution while maintaining flexibility and implementing creative solutions have enabled us to continue to deliver for our customers, while providing actionable insight into the current dynamic environment to prepare us for the next challenge. We remain focused on meeting demand and expanding our margins.
In addition to our impressive 2021 results, we are successfully capturing a compelling set of long-term growth opportunities through our innovation and broad market access, as we continue to extend our commercial relationships and scale operations to meet demand. Throughout 2021, announcements with industry leaders illustrated the power of our portfolio and the strength of our relationships, demonstrating not only our relevance across multiple markets that are experiencing accelerating transformation, but also our role as a key innovation partner. Our strong position stems from a complementary set of three core technologies, four proprietary manufacturing and engineering platforms and five Market-Access Platforms. We are leaders in each. We generate growth opportunities by delivering new
52 | CORNING 2022 PROXY STATEMENT |
Compensation Discussion & Analysis
combinations and applications of these capabilities to help our customers expand and drive their industries forward. For example, as customers expand network capacity, capability and access, we have continued to expand in the Optical Communications segment to meet demand and are well positioned to capture significant ongoing growth as network investments increase. In Life Sciences, ongoing demand to support the global pandemic response, continued recovery in academic and pharmaceutical labs and strong demand for bioproduction vessels and diagnostic-related consumables has continued to drive sales growth for our key innovations, including those that have helped to battle the ongoing COVID-19 pandemic. To date, Corning’s products have enabled the delivery of more than 5 billion doses of COVID-19 vaccines. We have become increasingly vital to multiple industry transformations that are moving the world forward.
Poised for Growth and Excellent Performance Against Challenging Metrics
In 2021, we again set rigorous targets across our key performance metrics and exceeded each of them. The metrics we use to measure our performance include Core Earnings Per Share, Core Net Sales, and Adjusted Free Cash Flow, multiplied by a modifier based on our Return on Invested Capital (ROIC) (see below). These metrics and ROIC modifier were chosen because they are key drivers for creating long-term shareholder value and the financial indicators that best reflect the achievement of the strategic and operational objectives set out for our management team.
Our 2021 One-Year, Three-Year, and Five-Year TSR, as measured against the S&P 500 TSR in the applicable year, did not reflect our strong results, which are evident through our core operating metrics. Our stock price in the second half of 2021 was negatively affected by investors’ concerns about the impact to Corning of a correction in the display industry supply chain and our ability to mitigate higher freight, logistics, and raw material costs. In January 2022, when we provided our investors with our views on the display industry’s supply chain issues and explained the steps we are taking to mitigate the higher costs we are seeing, our stock price recovered and our One-Year, Three-Year and Five-Year TSR significantly improved.
In 2021, we set aggressive year-over-year targets and exceeded them despite significant external challenges:
● | Core EPS: target set 21.6% above 2020 actual – 122% of target achieved |
● | Core Net Sales: target set 9.4% above 2020 actual – 113% of target achieved |
● | Adjusted Free Cash Flow: target set 39.5% above 2020 actual – 120% of target achieved |
While share price performance is extremely important and considered by our Compensation Committee, our executive compensation program, particularly for our CEO, is heavily based on our performance against underlying metrics that support long-term shareholder value creation, including the financial and operational metrics identified by our shareholders as meaningful for our business. Based on shareholder feedback, starting in 2022, we will include gross margin percentage improvement as an additional financial metric in our PIP for each of our businesses. As reflected in our 2022 guidance, we believe Corning remains in an excellent position to execute on our Strategy & Growth Framework and deliver sustainable shareholder value.
Our Performance Against Our Metrics | ||||||||
Core EPS: | Core Net Sales: | Adjusted Free Cash Flow: | ||||||
Measure of Corporate Profitability | Indicator of Short- and Long-term Success | Indicator of the Ability to Invest in Growth and Return Value to Shareholders | ||||||
$1.39 2020 Actual Performance | $1.69 2021 Target | $2.07 2021 Actual Performance | $11.45B 2020 Actual Performance | $12.53B 2021 Target | $14.12B 2021 Actual Performance | $932M 2020 Actual Performance | $1.3B 2021 Target | $1.56B 2021 Actual Performance |
+21.6% above 2020 Actual Performance | 122% of 2021 Target achieved | +9.4% above 2020 Actual Performance | 113% of 2021 Target achieved | +39.5% above 2020 Actual Performance | 120% of 2021 Target achieved | |||
CORNING 2022 PROXY STATEMENT | 53 |
Compensation Discussion & Analysis
Our Metrics and Why We Use Them
Core Earnings per Share (Core EPS): Core EPS is our key measure of profitability. Corning budgets for share repurchases in establishing both financial and annual compensation targets. Core Net Sales: Growing core net sales — both organically through innovation and through acquisitions — remains critical to our short- and long-term success. | Adjusted Free Cash Flow: Strong cash generation enables us to invest in future growth, sustain leadership and provide returns to shareholders, as well as remain financially strong during periods of uncertainty. It also requires us to carefully manage our capital investments. Return on Invested Capital (ROIC): We focus on ROIC because it reflects our ability to generate returns from the capital we have deployed in our operations. Earned CPUs and PSUs will be increased or decreased up to 10% based on Corning’s ROIC over the three-year performance period. |
ROIC Modifier | ||||||
Reflecting the Performance of Our Multi-Year Operating Plan | ||||||
ROIC Improvement 2019 – 2021 (in basis points) | Modifier (Adjustment to 2019 CPUs) | |||||
250 | +10% | |||||
175 | +5% | 150 basis point improvement in ROIC from 2019 to 2021 (from 9.1% to 10.6%) resulted in a modifier to 2019 CPUs of +3% | ||||
100 | No adjustment | |||||
50 | -5% | |||||
0 | -10% | |||||
Corning’s TSR Performance
Corning’s Total Shareholder Return (TSR), which consists of stock price appreciation and reinvestment of common dividends, is shown below for one-, three- and five-year periods.
ANNUALIZED TOTAL SHAREHOLDER RETURN
As of December 31, 2021
Source: S&P Capital IQ Financial Database
● | Corning’s one-year TSR performance is at the 19th percentile of the S&P 500; |
● | Corning’s three-year TSR performance is at the 22nd percentile of the S&P 500; and |
● | Corning’s five-year TSR performance is at the 38th percentile of the S&P 500. |
Our 2021 One-Year, Three-Year, and Five-Year TSR, as measured against the S&P 500 TSR in the applicable year, did not reflect our strong results, which are evident through our core operating metrics. Our stock price in the second half of 2021 was negatively affected by investors’ concerns about the impact to Corning of a correction in the display industry supply chain and our ability to mitigate higher freight, logistics, and raw material costs. In January 2022, when we provided our investors with our views on the display industry’s supply chain issues and explained the steps we are taking to mitigate the higher costs we are seeing, our stock price recovered and our One-Year, Three-Year and Five-Year TSR significantly improved.
54 | CORNING 2022 PROXY STATEMENT |
Compensation Discussion & Analysis
Shareholder Engagement
At our 2021 annual meeting of shareholders, our Say on Pay proposal receivedsupport from 91% of votes cast. |
Strong Say on Pay Results. At our 2021 Annual Meeting of shareholders, our Say on Pay proposal received support from 91% of votes cast. We have received an average of 92% support for our Say on Pay proposal over 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 2021, we contacted shareholders representing 54% of our outstanding shares to encourage engagement, and met with shareholders representing approximately 39% of our outstanding shares, including eight of our ten largest shareholders. At these annual meetings, executive management, Board members, Investor Relations and the Corporate Secretary engage with the governance teams of our largest investors to understand their perspectives on a variety of matters, including executive compensation, risk oversight, corporate governance policies and corporate sustainability practices. Investors were complimentary of our new GHG reduction goals, gender pay equity success, board diversity and our actions taken in response to the COVID-19 pandemic, and continue to be pleased with our strategic priorities and business results. Corning’s efforts to promote a diverse and equitable workforce were widely viewed as a differentiating element of the Company with positive actions toward diversity at both the board and Company level. We received positive feedback and heard broad support of our executive compensation program and design changes made in recent years. Shareholders were pleased with the use of our strategic metrics to align executive incentives with long-term value creation. We look forward to continuing these engagements and incorporating shareholder feedback into our compensation program design.
In 2021, we reached out toshareholders representingapproximately 54% of our outstanding shares and met with 8 out of 10 of ourlargest shareholders. |
We have taken into account the views of our shareholders when making many of our governance and disclosure decisions in recent years, including:
● | Proactively adopting proxy access |
● | Expanding disclosure about the board’s role in strategic planning and risk oversight |
● | Enhancing disclosure and governance regarding political contributions |
● | Publishing a Sustainability Report and setting GHG emission reduction goals |
● | Enhancing disclosure about board refreshment and board diversity |
● | Enhancing disclosure about human capital management and the efforts of our Office of Racial Equity and Social Unity |
● | Adjusting our executive LTI program design as described below |
We also communicate with shareholders through a number of routine forums, including quarterly earnings presentations, SEC filings, Proxy Statements, our online annual communications, our Sustainability Report, our Diversity and Inclusion Report, the Annual Meeting of shareholders, 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.
Responding to Shareholder Feedback in Concrete Ways
Corning takes our shareholders’ feedback seriously. The chart below shows adjustments we have made to our executive compensation program in response to feedback received during our shareholder engagement in recent years.
What we heard from shareholders… | How we responded… | |
Shareholders expressed a desire to see usfocus on improving our ROIC | We implemented a three-year +/-10% ROIC modifier to the CPUs and PSUs inour Long-Term Incentive Plan. | |
Shareholders like the alignmentof executive compensation with their interests | Beginning in 2020, we decreased the cash component of our Long-TermIncentive Plan from 60% to 25% and increased the equity component in our LTI Plan by 88% (from 40% to 75% of target) of an executive’s annual target opportunity. In 2022, we will add gross margin percentage improvement as a financial metric in the annual cash bonus (PIP) plan for our businesses. |
CORNING 2022 PROXY STATEMENT | 55 |
Compensation Discussion & Analysis
Implementing Shareholder Feedback
Our 2021 compensation plan reflects changes that we made in 2020 in response to shareholder feedback. Based on feedback received in 2019, the Compensation Committee approved a redesign of our LTI Plan in 2020. As a result, our LTI plan has:
● | a higher portion of compensation tied to corporate financial performance (increased from 60% in 2019 to 70% in 2020 and 2021), accomplished by introducing Performance Stock Units (PSUs) (and eliminating stock options); |
● | a smaller cash component percentage (Cash Performance Units or CPUs) (decreased from 60% in 2019 to 25% in 2020 and 2021); and |
● | a higher equity component percentage (PSUs and RSUs) (increased from 40% in 2020 to 75% in 2020 and 2021). |
Because shareholders communicated that they liked the changes we made to our compensation plan in 2020, no further design changes were implemented in 2021 to our LTI plan. However, we adjusted our 2021 annual executive bonus from 100% weighted on corporate financial performance to 50% weight on corporate financial performance and 50% weight on the average financial performance of each of our 5 Market-Access Platforms. The Compensation Committee made this change to put greater emphasis on financial performance and growth in our five strategic markets. In 2022, we are adding a gross margin improvement target to the business performance component of PIP. The short- and long-term incentive plans are more fully explained on pages 62 and 63.
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 priorities. In order to retain and motivate this caliber of talent, the Compensation Committee (the Committee) is committed to promoting a performance-based and team-based culture. Rewards arePerformance-based compensation is tied to financial metrics thatdeveloped to incent management to successfully deliver on the Strategy and Capital Allocation Frameworkour strategic priorities and our commitments to our shareholders.The majority of our executive compensation is directly aligned with our Company financial performance, business financial performance and stock performance.
2021 Target Compensation Components
CEO | ALL OTHER NEOs | |
56 | CORNING |
Compensation Discussion & Analysis
Target TotalOur Short-Term Incentives
In 2021, in response to a recommendation from our Compensation Committee, we adjusted PIP for our NEOs from 100% weighted on corporate financial performance to 50% weighted on corporate financial performance and 50% weighted on the average financial performance of each of our MAPs to put greater emphasis on the financial performance in each of our five strategic markets.
Short-Term Incentives | |
(Paid in Cash) | |
* | Business Financial Performance is the average of the financial performance for the five MAPs |
Our Long-Term Incentives
Beginning in 2020 and in response to shareholder feedback, we realigned the equity and cash portions of LTI, reducing the portion of cash performance units from 60% to 25% and increasing the equity portion from 40% to 75%. With the addition of PSUs (and elimination of stock options) we also increased the overall portion of LTI tied to corporate financial performance from 60% to 70%. LTI awards are now composed of 45% Performance Stock Units (PSUs), 25% Cash Performance Units (CPUs) and 30% Restricted Stock Units (RSUs).
● | 2021 CPU and PSU awards will be based 70% on Adjusted Free Cash Flow, and 30% on Core Net Sales with annual results being averaged over a three-year performance period (2021–2023). In addition to the above metrics, CPUs and PSUs will be subject to an ROIC modifier of up to +/-10% based on ROIC improvement over the three-year period against pre-established objectives. |
Long-Term Incentives (Paid in Cash (CPUs) and Equity (PSUs and RSUs) |
CORNING | 57 |
Compensation Discussion & Analysis
20182021 Compensation Metrics and Results
Our key compensation metrics arefocus and align leadership on the key drivers for creating long-term value for our shareholders. In 2021, the Compensation Committee determined that our prior year key performance metrics – core net sales, profitability (as measured by Core Earnings per Share (Core EPS), Core Net Sales and Adjusted Operating Cash Flow less CapEx. These metrics are designeda cash flow measure (as measured by adjusted free cash flow) – were still the appropriate performance measures in 2021. However, the Compensation Committee adjusted PIP for our NEOs from 100% weighted on corporate financial performance to ensure50% weighted on corporate financial performance and 50% weighted on the successaverage financial performance of each of our StrategyMAPs to put greater emphasis on the financial performance in each of our five strategic markets.
2021 Key Compensation Metrics
Award | Type | Metrics Used | ||
Goalsharing (Cash) | Short-term/Annual | 25% corporate financial performance 75% operational unit performance (average of >100 unit plans) | ||
PIP (Cash) | Short-term/Annual | 50% corporate financial ● 25% core net sales ● 75% core EPS 50% average financial performance of our five MAPs ● 25% core net sales ● 25% adjusted free cash flow ● 50% core NPAT | ||
CPUs/PSUs | Long-term/three-year measurement period | Performance period metrics, average of three one-year performance periods: 30% core net sales 70% free cash flow Long-term modifier: final result adjusted +/- 10% based on ROIC improvement over the three-year performance period |
Core net sales is a primary indicator of Corning’s long- and Capital Allocation Frameworkshort-term success. Evaluating performance against predetermined net sales metrics provides insight into how well the Company has retained sales, as well as progress against sales growth targets, accounting for both organic growth efforts and the impact of acquisitions. We use core net sales as a performance measure in our annual bonus plans (GoalSharing and PIP) because those plans impact every employee through GoalSharing and over 7,800 employees through PIP. In this way, every employee has line-of-sight to Corning’s growth goals. Core net sales is also included as a performance measure in the LTI plan, impacting approximately 350 senior executives and key employees, because those employees are responsible for driving the long-term financial growth of the Company. Incorporating core net sales performance into both GoalSharing and the LTI allows for a comprehensive evaluation of Corning’s ability to establish sustainable sales growth while also addressing near-term market fluctuations. Core net sales is a “duplicate goal” for only about 350 our of approximately 61,000 employees, and the Compensation Committee believes the increased focus on core net sales growth is appropriate for that smaller group of executives given the importance of sales growth for Corning over time.
In addition to Corporate financial measures, each year the Company establishes key operational objectives, typically linked to key business, technology, financial and human capital goals. The Company operational objectives are, in turn, cascaded into division and operational unit annual objectives. Unit GoalSharing plans contain measures linked to those unit objectives, creating alignment with the key Company operational objectives. The Compensation Committee considers the progress the Company is making toward ESG goals when setting annual performance goals and, given the Company’s current progress, did not see a need to add a specific performance metric related to ESG in 2021.
2021 Performance and Compensation Alignment
In 2021, we delivered year-over-year growth by improving profitability (Core EPS), incenting top line growth (Core Net Sales)leveraging our core capabilities and generatingcapturing a compelling set of short- and long-term opportunities across our portfolio through our “More Corning” strategy, in which we sell more Corning content into the products consumers already buy through each of our Market-Access Platforms. We exceeded $14 billion in core net sales, $2 in Core EPS and we nearly doubled free cash flow. We increased our dividend by 9% and reduced outstanding shares by 5% through the resumption of share repurchases, returning nearly $2.6 billion to our shareholders. We are pleased that we achieved double-digit ROIC and expanded our operating cash (Adjusted Operating Cash Flow less CapEx).margin by 230 basis points.
In 2021, we grew significantly year-over-year, with all segments adding core net sales and four out of five logging double-digit percentage increases. It was a strong year, even compared to pre-pandemic levels.
CORNING 2022 PROXY STATEMENT |
Compensation Discussion & Analysis
See page 7 for more performance highlights and accomplishments.
The following table compares our 2021 actual results with our targeted goals for each performance measure compared with 2020 actual results.
2021 PIP & GoalSharing Corporate Performance Measures
(50% of PIP and 25% of GoalSharing)
PIP: The final PIP payout for NEOs was 165% of target, based upon the average of 1) the corporate financial performance shown in the chart above (198%, weighted at 50%) and 2) the average of the financial performance for the five MAPs (131%, weighted at 50%). Although MAP financial performance is averaged, the aggregate target for the five MAPs for Core NPAT was $2,534 million, weighted at 50%, and the average result was 112%; the aggregate target for MAP Core net sales was $12,139 million weighted at 25%, and the average result was 170%; and the aggregate target for MAP adjusted free cash flow was $1,925 million, weighted at 25%, and the average result was 132%. This resulted in the average financial performance for the five MAPs of 131%.
GoalSharing: The final GoalSharing payout for NEOs was 149% of target (or 7.44% of their year-end base salaries).
GoalSharing is based on the blended result of 1) the corporate financial performance shown in the chart above (198%, weighted at 25%) and 2) the average performance of over 100 unit plans (132%, weighted at 75%).
2021 CPU & PSU Performance Measures
* | |||
CORNING 2022 PROXY STATEMENT | 59 |
Compensation Discussion & Analysis
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.
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.
|
2018 Performance and Compensation Alignment
Each year we set rigorous and challenging performance goals aligned with our strategic objectives. We continue to believe that 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 Framework 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. Accordingly, we have incentive measures linked to both short- and long-term outcomes. Our short-term incentives are cash payments 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 comprise 100% of PIP payouts for NEOs. Actual performance was above the established PIP targets for 2018, with the blended result being a payout of 126% of PIP target.
GoalSharing is a company-wide plan that rewards our workforce for the Company’s and Business Unit’s success by including compensation objectives reflecting a combination of corporate financial (25% weight) and business unit performance (75% weight). NEOs receive payouts based on the weighted average performance of all business unit plans, which resulted in a payout of 6.41% of base salary for 2018.
Compensation Discussion & Analysis
Our Long-Term Incentive (LTI) awards reflect our belief that cash flows and revenue growth enable investments that will sustain our growth over the long term and that the interests of our executives and shareholders should be aligned. LTI awards are comprised of 60% Cash Performance Units (CPUs), 25% Restricted Stock Units (RSUs), and 15% Stock Options. CPU awards are based 70% on Adjusted Operating Cash Flow less CapEx and 30% on Core Net Sales, averaged over a three-year performance period. In addition to the above measures, 2016 CPUs are subject to an ROIC modifier of up to +/-10% based on ROIC improvement over the period 2016 through 2018. We implemented this ROIC modifier in response to investor feedback and in support of our Capital Allocation Framework. 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.rate of 21%. Invested capital is the sum of total assets excluding foreign currency hedge assets less total liabilities excluding foreign currency hedge liabilities and debt. The Compensation Committee approved this ROIC modifier calculation in early 2016.
The following table compares the 2018 actual results and targeted goals for each performance measure compared with 2017.
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) |
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% |
Compensation Discussion & Analysis
ROIC Modifier
In 2016, based on investor feedback and in support of our Capital Allocation Framework, the Compensation Committee addedWe maintain a three-year ROIC modifier to CPUs.the CPUs and PSUs in our LTI Plan. With this modifier, the CPU payoutawards may be increased or decreased up to 10% based on ROIC performance over the three-year performance period. For the 2016-20182019-2021 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 20162019 CPUs (based on 20162019 through 20182021 performance) was as follows:is set forth in the following table. We began granting PSUs in 2020, the first payout of which will occur in 2023.
ROIC Improvement 2019 – 2021 (in basis points) | Modifier (Adjustment to 2019 CPUs) | |||
250 | +10% | 150 basis point improvement in ROIC from 2019 to 2021 (from 9.1% to 10.6%) resulted in a modifier to 2019 CPUs of +3% | ||
175 | +5% | |||
100 | No adjustment | |||
50 | -5% | |||
0 | -10% |
ROIC Improvement 2016 – 2018 (in basis points) | Modifier (Adjustment to 2016 CPUs) | |
250 | +10% | |
175 | +5% | |
100 | No adjustment | |
50 | -5% | |
0 | -10% |
THREE-YEAR PAY-FOR-PERFORMANCE RESULTS | |||||||||
2021 | 2020 | 2019 | |||||||
PIP (% of target) | 165 | % | 100 | % | 24 | % | |||
Goalsharing blended performance result (% of target) | 149 | % | 137 | % | 87 | % | |||
CPU and PSU performance result (% of target) | 175 | % | 181 | % | 62 | % | |||
Three-year CPU ROIC modifier (+/- up to 10%) | +3.0 | % | -10 | % | -2.8 | % | |||
Three-year performance results (average of three years’ performance X modifier) | 143 | % | 112 | % | 100 | % |
From 2016 to 2018, ROIC improved 174 basis points, resulting in a +4.74% increase to the 2016 CPU payout made in 2019.
Results for Short Term Incentives and the 2016-2018 LTI Plan
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% |
CORNING 2022 PROXY STATEMENT |
Compensation Discussion & Analysis
Total Shareholder ReturnChanges to Performance Goals in 2022
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 last 1-, 3-, and 5-year periods as of year-end 2018. Since the introduction of our Strategy and Capital Allocation Framework,Beginning in 2022, we have outperformed the S&P 500 Index by nearly three times in terms of total shareholder return.
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Shareholder Engagement
Strong Say on Pay Results.At our 2018 Annual Meeting of shareholders, our Say on Pay proposal received support from 90% 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, we met with shareholders representing approximately 45% of our outstanding shares, and approximately two-thirds of our top fifty shareholders. In these meetings, we discussed our Strategy and Capital Allocation Framework (SCAF), as well as governance, compensation, human capital management and sustainability matters. We learned through these meetingsthat our investors are pleased with the SCAF and believe we have clearly articulated how it creates shareholder value and is connected to management compensation at Corning. These shareholders also were generally supportive of our executive compensation program, the direct linkage of financial metrics in our performance-based variable compensation plansadded a gross margin metric to the SCAF,business financial performance which comprises 50% of PIP for NEOs in order to emphasize the importance of improving our gross margin. Within each MAP, gross margin will be weighted 20%, core NPAT will be weighted 30% 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 resultscore net sales 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.
Table of Contentsadjusted free cash flow will each be weighted 25%.
Compensation Discussion & Analysis
Robust Compensation Program Governance Corning has rigorous and robust governance with respect to its executive compensation plan:
Our key compensation program principles are as follows:
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
Compensation Discussion & Analysis Short-Term Incentives Short-term incentives are designed to reward NEOs for Corning’s consolidated annual financial and operational performance supporting our PIP targets are 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 opportunity generally equal to 5% of base salary. NEOs’ GoalSharing is based 25% on corporate financial performance and 75% on the average of the results of all business unit plans. In 2021 the NEO’s GoalSharing See page 59 for details on the 2021 PIP and GoalSharing metrics and actual results for the year. Long-Term Incentives Beginning in
LTI targets are established by the Committee for each NEO annually in February. Mr. Weeks’
Compensation Discussion & Analysis
Over the past
Compensation In 2021, Mr. Week’s target compensation was increased, following the 2020 temporary salary
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 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 Executive Physical and Wellness:All executives are eligible for an annual physical exam in addition to wellness programs sponsored by Corning for all employees.
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 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 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
Compensation Discussion & Analysis 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 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. 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.
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
The Compensation Peer Group in
The Company
Compensation Discussion & Analysis 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 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 In 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.
Role of Executive Management in the Executive Compensation Process Corning’s 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. The Committee recommends the CEO’s compensation to the Board annually. After the annual budget is finalized each year, the Committee receives management’s recommendations for the The CFO and the Controller typically
Compensation Discussion & Analysis 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.
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.
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, The Compensation Committee: Deborah D. Rieman,Chair
Compensation Discussion & Analysis
This table describes the total compensation paid to our NEOs for fiscal years
In addition to the
Compensation Discussion & Analysis ROIC modifier for the period
Compensation Discussion & Analysis
Compensation Discussion & Analysis
Compensation Discussion & Analysis
Compensation Discussion & Analysis
Compensation Discussion & Analysis Outstanding Equity Awards at The following table shows stock option awards classified as exercisable and unexercisable as of December 31,
Compensation Discussion & Analysis
Compensation Discussion & Analysis Options Exercised and Shares Vested in The following table sets forth certain information regarding options exercised and restricted stock and restricted stock units that vested during
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, 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). 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
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 Formula B: 1.5% of average plan compensation multiplied by years of service. Benefits are determined under Formula A for all 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 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 except Mr. Steverson 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 of service would be assumed to retire at age 55 due to eligibility of unreduced benefits at 25 years of
Compensation Discussion & Analysis 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
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
Compensation Discussion & Analysis 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 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:
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.
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:
The following table reflects the amounts that would be payable under the various arrangements assuming termination occurred at December 31,
Compensation Discussion & Analysis TERMINATION SCENARIOS (INCLUDING SEVERANCE, IF ELIGIBLE)
Compensation Discussion & Analysis 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. Cash performance units and performance stock units are adjusted based on actual performance for completed performance periods and assumed performance of 100% for incomplete performance and adjusted CPUs and PSUs are vested and released immediately. The NEOs are also entitled to severance and other benefits upon certain terminations of employment following or in connection with a change in control.
The benefits payable are as follows:
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,
The following table reflects the amounts that would be payable under the various arrangements assuming that a change in control occurred on December 31,
Compensation Discussion & Analysis 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
For This reflects analysis of our global workforce of Our estimates were based on an analysis of the pay components and payrolls in each of the 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.
The Audit Committee The Audit Committee and the PCAOB require key PwC partners assigned to our audit to be rotated at least every five years. The Audit Committee and its Chair oversee the selection process for each new lead engagement partner. Throughout this process, the Audit Committee and management provide input to PwC about the Company’s priorities, discuss candidate qualifications and interview potential candidates put forth by In determining whether to reappoint PwC, the Audit Committee took into consideration a number of factors, including:
Proposal 3Ratification of Appointment of Independent Registered Public Accounting Firm Based on its evaluation, the Audit 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, 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.
Fees Paid to Independent Registered Public Accounting Firm Aggregate fees for professional services rendered by PwC in
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 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 Tax Fees.These fees are composed of statutory tax compliance, assistance for Corning’s foreign jurisdiction subsidiaries’ tax returns, tax transfer pricing services, expatriate tax return compliance and other tax All Other Fees.
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 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
also reviewed: the report of management contained in Corning’s Annual Report on Form 10-K
Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm for the year ended December 31, 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 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, The Audit Committee: Kurt M. Landgraf,Chair
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 When and Where Our Board of Directors has determined to hold the Annual Meeting in a virtual-only format on Thursday, April 28, 2022 at 12 noon Eastern Time at virtualshareholdermeeting.com/GLW2022. You will not be able to attend the Annual Meeting physically. You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on February 28, 2022. The live audio webcast of the Annual Meeting will We urge you to vote and submit your proxy in advance of the meeting using one of the methods described in the proxy materials whether or not you plan to attend the Annual Meeting. You may vote your shares at Who May Attend the Annual Meeting? The Annual Meeting is open to holders of shares of our common
Frequently Asked Questions About the Meeting and Voting What Am I Voting On? The following matters are scheduled for vote at the Annual Meeting:
How Do You Recommend That I Vote on These Items? The Board of Directors recommends that you vote your shares:
Who is Entitled to Vote? You may vote if you owned shares of our common How Many Votes Do I Have? You are entitled to one vote for each share of common 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:
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
Frequently Asked Questions About the Meeting and Voting May I Vote My Shares Yes. You may vote your shares
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:
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. 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 your proxy card or the 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 your proxy card or the 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 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.
Frequently Asked Questions About the Meeting and Voting 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
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:
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?” 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 the 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. How Many Shares Must be Present to Hold the Meeting? In order for us to conduct our meeting, a majority of our outstanding shares of common
Frequently Asked Questions About the Meeting and Voting What
With respect to Proposals 1, 2 How Will Voting on “Any Other Business” 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 out-of-pocket expenses for these services. We also will reimburse brokers 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
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
Frequently Asked Questions About the Meeting and Voting 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 the largest whole number that does not exceed 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 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 When to send these proposals:Shareholder proposals, including director nominations, submitted under these by-law provisions must be received no earlier than 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. 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.
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/2022-proxy
Frequently Asked Questions About the Meeting and Voting Are You “Householding” 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 Our Board of Directors The Compensation Committee Report on page This proxy statement, our
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
See Reconciliation of Non-GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items.
Appendix A CORNING INCORPORATED AND SUBSIDIARY COMPANIES
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
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.
Appendix A CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CORE PERFORMANCE MEASURES In managing the Company and assessing our financial performance, 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 For a reconciliation of non-GAAP performance measures to their most directly comparable GAAP financial measure, please see “Reconciliation of Non-GAAP Measures”.
Appendix A Items which we exclude from GAAP measures to arrive at core performance measures are as follows:
CORNING INCORPORATED VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on
You may attend the VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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 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 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. |