UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to §240.14a-12
|
| |
| CELANESE CORPORATION |
| (Name of Registrant as Specified In Its Charter) |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box):
|
| | | | |
þ | No fee required |
| | |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
| (1) Title of each class of securities to which transaction applies: |
| (2) Aggregate number of securities to which transaction applies: |
| (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) Proposed maximum aggregate value of transaction: |
| (5) Total fee paid: |
|
| | | | |
¨ | Fee paid previously with preliminary materials. |
| | |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) Amount Previously Paid: |
| (2) Form, Schedule or Registration Statement No.: |
| (3) Filing Party: |
| (4) Date Filed: |
|
| | | | |
| Table of Contents |
| LETTER TO SHAREHOLDERS FROM OUR CEO | |
| |
LETTER TO STOCKHOLDERS FROM OUR CHAIRMAN AND CEO | |
| |
LETTER TO STOCKHOLDERSSHAREHOLDERS FROM OUR LEAD INDEPENDENT DIRECTOR | |
| |
VOTING INFORMATION | |
| |
PROXY SUMMARY | |
Annual Meeting Information | |
Roadmap of Voting Matters | |
Governance Highlights | |
Director Nominees | |
Performance and Compensation Decisions | |
Additional Information | |
| |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS | |
| |
| VOTING INFORMATION | |
| |
| PROXY STATEMENT SUMMARY | |
| Director Nominees | |
| Director Nominee Highlights | |
| Environmental, Social and Governance Update | |
| Performance Highlights | |
| Additional Information | |
| |
| PROXY STATEMENT | |
| Information About Solicitation and Voting | |
| |
| GOVERNANCE | |
ITEM 1: ELECTION OF DIRECTORS | |
| Director Nominees | |
| Board and Committee Governance | |
| Board Oversight | |
| Shareholder Engagement | |
Additional Governance FeaturesMatters | |
| Director Compensation | |
| Director Independence and Related Person Transactions | |
| | | | | |
| |
| |
| STOCK OWNERSHIP INFORMATION | |
Principal StockholdersShareholders and Beneficial Owners | |
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports | |
| Securities Authorized for Issuance Under Equity Compensation Plans | |
| |
| |
| |
|
| |
| AUDIT MATTERS | |
| Audit Committee Report | |
ITEM 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
| |
| EXECUTIVE COMPENSATION* | |
ITEM 2:3: ADVISORY APPROVAL OF EXECUTIVE COMPENSATION | |
| Compensation Discussion and Analysis | |
| Compensation Risk Assessment | |
| Compensation and Management Development Committee Report | |
Compensation Committee Interlocks and Insider Participation | |
| Compensation Tables | |
| |
| CEO Pay Ratio | |
| |
AUDIT MATTERS | |
Audit Committee Report | |
ITEM 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| |
| |
MANAGEMENT PROPOSAL | |
ITEM 4: APPROVAL OF THE AMENDMENT OF OUR CERTIFICATE OF INCORPORATION
| |
| |
| QUESTIONS AND ANSWERS | |
| Annual Meeting Information | |
| Proxy Materials and Voting Information | |
Annual Meeting Information | |
Company Documents, Communications and StockholderShareholder Proposals | |
| |
| EXHIBIT A | |
| Non-U.S. GAAP Financial Measures | |
| |
EXHIBIT B | |
Amendment to Certificate of Incorporation | |
| |
| |
* Additional detailDetailed table of contents for compensation topics on page 3444. |
| | | | | | | | | | | | | | |
Cautionary Note Regarding Forward-Looking Statements; Available Information This Proxy Statement includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this Proxy Statement. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our Forms 10-K and 10-Q. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
References to our website in this Proxy Statement are provided as a convenience, and the information on our website is not, and shall not be deemed to be a part of this Proxy Statement or incorporated into any other filings we make with the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including Celanese Corporation, that electronically file with the SEC at http://www.sec.gov. |
|
| | | | | | | |
| | Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / i |
|
| | | | | | | | | | | | | | | | | | | |
| | | | A letter from Mark C. Rohr,Lori J. Ryerkerk, our Chairman and CEO | |
March 10, 2022
March 8, 2019
Dear Fellow Stockholders:Shareholders:
As I reflect on 2021 and the first part of 2022, I am pleasedproud of what Celanese was able to invite youaccomplish for its customers, employees and shareholders in the face of many hurdles. To me, it speaks to attend the 2019 Annual Meeting of Stockholders of Celanese Corporation to be held at 7:00 a.m. (Central Daylight Saving Time) on Thursday, April 18, 2019. This year’s Annual Meeting will be held at The Westin Irving Convention Center at Las Colinas, 400 West Las Colinas Blvd., Irving, Texas 75039.
The following Notice of Annual Meeting of Stockholders and Proxy Statement includes information about the matters to be acted upon by stockholders. Celanese also has made available with this Proxy Statement a copypower of our 2018 Annual Report. business model and our culture.
We encourage you to readstarted the year seeing recovery across all of our Annual Report, which includesbusinesses, but also witnessing a resurgence of COVID globally. The question of how fast the recovery would be was first and foremost in our audited financial statementsminds, and additional information about the business. Celanese has madeyear brought challenges almost immediately.
With its unanticipated magnitude, the proxy materials available viaFebruary 2021 deep freeze in the internet. The Company believes that providing internet accessU.S. Gulf Coast shut down our Texas facilities, stressed all of our operations and supply chains globally, and dealt personal hardships to our proxy materials increasesemployees in Texas. Throughout the abilityrest of the year our business was tested by global transportation and logistics disruption, energy curtailments in China, the global semiconductor chip shortage, and rapidly-increasing raw material and energy costs.
We faced all of these hurdles while continuing to prioritize the safety of our stockholdersemployees during an ever-evolving global pandemic and delivered record business and financial results. Our key victories in 2021 and early 2022 in advancing business and sustainability include:
•growing through our strategic imperatives, innovation and customer success;
•publishing a comprehensive sustainability report, Elements of Opportunity;
•announcing a goal to review important Company information, while reducingreduce our Scope 1 and 2 greenhouse gas intensity 30% by 2030;
•advancing our strategy through high-value acquisitions including the environmental impactSantoprene business (closed December 2021) and the majority of DuPont’s Mobility & Materials business (announced February 2022 and scheduled to close around the end of 2022); and
•caring for our Annual Meeting.people and communities.
At Celanese, we are committed to effective corporate governance. To that end, both management and our boardOur team is proud of directors regularly evaluate matters relating to our corporate governance profile. Based on our ongoing assessment of governance best practices and discussions with our stockholders, in February 2016, we made two major changes – our board of directors proactively adopted “proxy access” amendments to the Company’s by-laws to enable eligible stockholders to include qualifying director nominees in the Company’s proxy materials for its annual meeting of stockholders, subject to the terms and conditions specified in the by-laws. In addition, our board of directors recommended, and stockholders approved, a proposal to transition to an annually elected board of directors. Beginning with the 2019 Annual Meeting, all directors will be elected annually. We will continue to monitor, and assess the value of, corporate governance developments to the Company and to you.
We hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting through the other acceptable methods described in the Proxy Statement. You may submit your proxy via the internet, by phone, or by signing, dating, and returning the enclosed proxy card (or voting instruction form, if you hold shares through a broker). If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy. Please review the instructions on each of your voting optionsaccomplishments described in this Proxy StatementStatement. We worked with resiliency and grit to deliver record 2021 adjusted earnings per share and free cash flow while returning significant capital to shareholders and advancing our sustainability journey, as wellyou can read about in more detail in these pages. A special thank you to Celanese employees for their dedication and efforts.
Please join our Board of Directors and executive officers on April 20, 2022, at 1:00 p.m. Central time, when we hold our Annual Meeting of Shareholders in live virtual format. Your vote is very important, and whether or not you are able to attend the event in real time, we encourage you submit your voting instructions by proxy as described in the Noticethis document. We look forward to your participation.
Thank you received in the mail or via email.
On behalf of the board of directors, I would like to express our appreciation for your continued support of Celanese. I look forward to seeing you at the Annual Meeting.
Sincerely,
Mark C. RohrLori J. Ryerkerk
Chairman and Chief Executive Officer
|
| | | | | | | |
| | Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 1 |
|
| | | | | | |
| | | | A letter from Edward G. Galante, our Lead Director | |
March 8, 2019
Dear Fellow Stockholders:
As the Lead Independent Director of your board of directors, I am honored to have the opportunity to write to you, our stockholders, as part of this year’s Proxy Statement. The Proxy Statement affords us the opportunity to reach out to all of Celanese’ stockholders to review, among many other things, where the Company has been and where we are going. Our board is committed to executing its governance responsibilities and providing appropriate oversight of the Company’s operations, long-term strategy and risk exposure.
Over the past few years, we have enhanced our proxy statement to make it clearer, simpler and more straightforward with a focus on what matters most to stockholders. This includes providing a better understanding of our strategy, corporate governance and executive compensation. We hope the following pages will help you better understand the Company and how our governance and compensation practices are linked to performance and accountability in a manner that drives long-term stockholder value. As overseers of the Company, it is the board’s responsibility to remain highly engaged in the Company’s strategic approach to creating value for our share owners and, correspondingly, to actively manage the Company’s enterprise risks. We appreciate your feedback and look forward to a meaningful engagement on issues that are important to all of us.
Over the last few years, Celanese also has enhanced its stockholder outreach program. Throughout the period, the Company held multiple meetings with stockholders and proactively reached out to stockholders on an individual basis to solicit their feedback on topics of importance to stockholders. During 2018, we held meetings with stockholders owning collectively more than 50% of our stock. The board remains very focused on the Company’s strategic initiatives to strengthen financial performance, which in turn will foster long-term sustainable growth for our stockholders.
The board has also been focused on governance and board composition. As noted by our Chairman, during 2016 our board of directors proactively adopted proxy access and, based on stockholders’ comments and vote in April 2016, we have phased out our classified board structure. In addition to these developments, we continue to maintain our focus on key governance practices that we understand are important to stockholders. Notably, almost one-half of our directors have joined our board in the past five years, bringing with them fresh perspectives and a diversity of experiences, and one-third of our directors are female. These new directors have allowed us to rotate directors among committees. As of the 2018 Annual Meeting, 75% of our standing committees were chaired by directors new to Celanese in the last five years.
On behalf of the board of directors, I would like to express our sincere appreciation for the trust you have placed in us, and we look forward to serving you throughout the upcoming year.
Sincerely,
Edward G. Galante
Lead Independent Director
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 2 |
VOTING INFORMATION
It is very important that you vote in order to play a part in the future of the Company. Please carefully review the proxy materials for the 2019 Annual Meeting of Stockholders (“Annual Meeting”) and follow the instructions below to cast your vote on all of the voting matters.
Who is Eligible to Vote
You are entitled to vote at the Annual Meeting if you were a stockholder of record at the close of business on February 19, 2019, the record date for the meeting. On the record date, there were 127,843,230 shares of the Company’s Common Stock issued, outstanding and entitled to vote at the Annual Meeting.
How to Vote
Even if you plan to attend the Annual Meeting in person, please submit your voting instructions by proxy right away using one of the following methods for submitting a proxy (see page 83 for additional details). Make sure to have your proxy card, voting instruction form or notice of internet availability in hand and follow the instructions.
|
| | | | | | | | | | |
VOTE IN ADVANCE OF THE MEETING | | VOTE IN PERSON |
| | | | | | | | | | |
via the internet | | by phone | | by mail | | in person |
: | | ) | | * | | m |
| | |
Visit proxyvote.com to submit a proxy via computer or your mobile device | | Call 1-800-690-6903 or the telephone number on your proxy card or voting instruction form | | Sign, date and return your proxy card or voting instruction form | | |
| | |
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact Alliance Advisors, LLC, 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003. Stockholders may call toll free: (855) 486-7908.
All stockholders of record may vote in person at the Annual Meeting. Beneficial owners may vote in person at the Annual Meeting if they have a legal proxy, as described in the response to question 20 on page 89.Important Note About Meeting Admission Requirements: If you plan to attend the meeting in person, see the answer to question 19 on page 88 for important details on admission requirements. |
| | | | | |
| | | | | |
| Electronic Stockholder Document Delivery | |
| Instead of receiving future copies of annual meeting proxy materials by mail, stockholders of record and most beneficial owners can elect to receive an e-mail that will provide electronic links to these documents. Opting to receive your proxy materials online will save us the cost of producing and mailing documents and will also give you an electronic link to the proxy voting site. |
|
|
| | | | | |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 3 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 PROXY SUMMARY | | |
| This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding the Company’s 2018 performance, please review our 2018 Annual Report, which includes the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. | | |
| Annual Meeting Information | | |
| | | |
| Date and Time | | April 18, 2019 | 7:00 a.m. (Central Daylight Saving Time) | | |
| Place | | The Westin Irving Convention Center at Las Colinas
400 West Las Colinas Blvd., Irving, TX 75039 | | |
| Record DateA letter from William M. Brown, our Lead Director | | February 19, 2019 | | |
| Voting | | Stockholders as of the record date are entitled to vote. Each share of Common Stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on. | | |
| Entry | | If you decide to attend the meeting in person, upon your arrival you will need to register as a visitor. See ”Questions and Answers” for further instructions. | | |
| | | |
| Roadmap of Voting Matters | |
| | |
| Stockholders are being asked to vote on the following matters at the Annual Meeting: | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Our Board’s Recommendation | |
| ITEM 1. Election of Directors (page 9) | | | | | | | | | | | |
| The board and the nominating and corporate governance committee believe that the nine director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management. | FOR each Director Nominee | |
| ITEM 2. Advisory Approval of Executive Compensation (page 35) | | | | | | | | | | | |
| The Company seeks a non-binding advisory vote to approve the compensation of certain executive officers, as described in the Compensation Discussion and Analysis beginning on page 36 and in the Compensation Tables beginning on page 61. The board values stockholders’ opinions and the compensation and management development committee will take into account the outcome of the advisory vote when considering future executive compensation decisions. | FOR | |
| ITEM 3. Ratification of Independent Registered Public Accounting Firm (page 79) | | | | | | | | | | | |
| The audit committee and the board believe that the continued retention of KPMG LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019 is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the audit committee’s selection of the independent registered public accounting firm for 2019. | FOR | |
| ITEM 4. Approval of the Amendment of our Certificate of Incorporation (page 81) | | | | | | | | | | | |
| The Company seeks approval of an amendment of our Certificate of Incorporation regarding removal of directors. | FOR | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
March 10, 2022
Dear Fellow Shareholders:
As the Lead Independent Director of the Board of Directors, I am honored to have the opportunity to write to our shareholders to review some of the highlights of Celanese’s 2021 efforts and accomplishments in advance of our upcoming Annual Meeting of Shareholders.
The Board is pleased with Celanese’s accomplishments in 2021: record financial performance, continued execution against its long-term strategy, and accomplishment of significant milestones on Celanese’s continuing environmental, social and governance (ESG) journey. In last year’s Proxy Statement, we communicated to you about the Board’s and management’s purposeful efforts during a difficult and unprecedented 2020 to protect our people and business and to position Celanese for recovery. We believe Celanese’s 2021 results and progress demonstrate the success of those efforts.
Through our shareholder outreach program, we have heard from our investors a high level of interest in Celanese’s work to promote a more sustainable world through addressing the threat of climate change and fostering a diverse and inclusive workforce, as well as how the Board oversees Celanese’s ESG initiatives. As detailed in these pages, the Board and management have responded to our shareholders by making thoughtful, deliberative progress in these areas.
The Board’s deep commitment to ESG progress is reflected in its 2021 adoption of a detailed and formalized approach to overseeing ESG priorities through its Committees and the full Board. This updated framework is described in “Governance - Board Oversight of Environmental, Social and Governance Matters”. Some of Celanese’s key accomplishments during 2021 and early 2022 are also described beginning on page 7. These efforts are overseen by a Board representing variety of viewpoints and experience. Through thoughtful refreshment, the Board has added five new directors in the last five years, most recently adding Rahul Ghai, an experienced financial executive, and Michael Koenig, a long-time materials industry executive. Three of these directors added in the last five years are women and two are racially diverse. The Board believes this mix of fresh perspectives is an effective complement to the experience and knowledge of our longer-serving directors. We are committed to continuous improvement in the diversity of our leadership and our organization.
Your Board remains committed to effective oversight of the Company’s operations, long-term strategy and risk management to foster long-term sustainable growth for our shareholders. On behalf of the Board of Directors, I would like to express our sincere appreciation for the trust that Celanese shareholders have placed in us, and we look forward to continuing to serve you throughout the upcoming year.
Sincerely,
William M. Brown
Lead Independent Director
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 4 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Governance Highlights | | |
| | We are committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens board and management accountability and helps build public trust in the Company. The Governance section beginning on page 9 describes our governance framework, which includes the following highlights: | | |
| | • Independent lead director | • Active stockholder engagement | | | |
| | • 8 of our 9 directors are independent | • Diverse board in terms of gender, experience and skills | | |
| | • Board committees consist entirely of independent directors | • Director retirement guideline | | |
| | • Independent directors meet without management present | • Restrictions on share hedging and pledging | | |
| | • Annual board self-assessment process | • Share ownership guidelines for executives and directors | | |
| | • Majority voting for all directors | • Longstanding commitment to corporate responsibility | | |
| | • Proxy access, under which up to 20 stockholders owning collectively 3% of our stock may nominate 20% of our directors | • Policy providing for return of long-term incentive compensation under certain circumstances (clawback policy) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Director Nominees | | |
| | The following table provides summary information about each director nominee. Each nominee is to be elected by a majority of the votes cast. See “Item 1: Election of Directors”and “Director Nominees”, for additional information about the nominees and the other directors continuing in office. | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Name and Qualifications | Age | Director Since | Primary Occupation / Other Public Company Boards | Independent | Committee Memberships | |
| | Jean S. Blackwell | 64 | 2014 | Former EVP/CFO – Cummins Inc. | ü | CMD; NCG£ | |
| | &5ÂGq@L | | | Ingevity Corp.; Johnson Controls Int’l plc | | | |
| | William M. Brown | 56 | 2016 | Chairman/President/CEO Harris Corp. | ü | AC; EHS | |
| | &:5ÂG@6LQq | | | Harris Corp. | | | |
| | Edward G. Galantet | 68 | 2013 | Former SVP – Exxon Mobil Corporation | ü | CMD; NCG | |
| | &Q.:ÂGq@6L | | | Linde plc; Clean Harbors Inc.; Marathon Petroleum Corp. | | | |
| | Kathryn M. Hill | 62 | 2015 | Former SVP Dev. Strategy – Cisco Systems Inc. | ü | CMD£; EHS | |
| | &Q:5@6 | | | Moody’s Inc.; NetApp Inc. | | | |
| | David F. Hoffmeister | 64 | 2006 | Former SVP / CFO – Life Technologies Corp. | ü | AC; NCG | |
| | .Â6&Q:GqL | | | Glaukos Corporation; ICU Medical Inc. | | | |
| | Dr. Jay V. Ihlenfeld | 67 | 2012 | Former SVP, Asia Pacific - 3M Company | ü | CMD; EHS£ | |
| | Q.:5G@6 | | | Ashland Global Holdings, Inc. | | | |
| | Mark C. Rohr | 67 | 2007 | Chairman & Chief Executive Officer – Celanese Corp. | | – | |
| | &Q:5Gq@6L. | | | Ashland Global Holdings, Inc. | | | |
| | Kim K.W. Rucker | 52 | 2018 | Former EVP and GC, Andeavor | ü | AC; EHS | |
| | &Q5:Gq6L | | | Lennox International Inc.; Marathon Petroleum Corp. | | | |
| | John K. Wulff | 70 | 2006 | Former Chairman – Hercules Inc. | ü | AC£; NCG | |
| | &.:ÂGq6L | | | Atlas Air Worldwide Holdings, Inc. | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Board Committees: | | Qualifications: | | | | | |
| | AC | Audit Committee | | & | Leadership | | G | Govt/regulatory | | |
| | CMD | Compensation and Management Development Committee | | Q | Global experience | | q | Financial transactions | | |
| | EHS | Environmental, Health, Safety, Quality and Public Policy Committee | | . | Chemical industry | | @ | Operational | | |
| | NCG | Nominating and Corporate Governance Committee | | : | Innovation-focused | | 6 | Strategic | | |
| | £ | Committee Chair | | 5 | Customer-focused | | L | Risk oversight | | |
| | t | Lead Independent Director | | Â | Financial experience | | | | | |
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 52 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance and Compensation Decisions | |
| | |
| 2018 Key Performance Highlights | |
| Business Performance | |
| In 2018, our key performance metrics were as follows: | |
| • Net sales were $7.2 billion, up 16.5% | |
| • Cash from operations was $1.56 billion while free cash flow(1) was $1.20 billion
| |
| • Net earnings was $1.2 billion while Adjusted EBIT(1) was $1.85 billion, up 36.6%
| |
| • GAAP earnings per sharewas $8.95, up 44.6%, while adjusted earnings per share(1) was $11.00, an increase of 46.5% over 2017
| |
| Stockholder Value Creation | |
| • Positive three- and five-year total stockholder return of 41.7% and 78.5%, exceeding the S&P500 Index | |
| • Returned a record $1.1 billion to stockholders through dividends and share repurchases | |
| • Increased the quarterly cash dividend rate by 17.4% in 2018 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| How Pay is Aligned to 2018 Company Performance | |
| The operation of our variable incentives demonstrates strong linkage between pay and performance. See page 50 for the detailed performance results. | |
| • Annual Incentive – 2018 performance resulted in above target achievement on our financial and stewardship objectives established at the beginning of the year under our 2018 annual incentive plan | |
| • Long-Term Incentive – The performance-based restricted stock units (“PRSUs”) granted in 2016, based on our Adjusted EBIT(1) and Return on Capital Employed over a 2016-2018 performance period will pay out at 199.2% of target
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 Key Compensation Decisions | |
| • 2018 Compensation – Based on our 2018 performance, the compensation and management development committee approved a business performance modifier of 161% under our 2018 annual incentive plan and established individual performance modifiers for the named executive officers. In addition, the committee had earlier awarded PRSUs and time-based restricted stock units in February 2018 under our 2018 long-term incentive plan. See page 49 for more information. | |
| | |
| Key Compensation Features | |
| • No employment agreements | |
| • Change in control double-trigger equity awards (participant’s employment must be terminated to receive benefits) | |
| • Clawback, no share hedging and no pledging policies | |
| • No tax gross-ups of severance, change-in-control payments or perquisites, other than for relocation benefits | |
| • A high percentage of compensation is at risk (i.e., tied to performance) | |
| • Significant executive share ownership requirements | |
| | |
| Additional Information | |
| Please see “Questions and Answers” beginning on page 83 for important information about the proxy materials, voting, the Annual Meeting, Company documents, communications and the deadlines to submit stockholder proposals for the 2019 Annual Meeting of Stockholders. | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | |
| (1) Free cash flow, Adjusted EBIT and adjusted earnings per share are non-U.S. GAAP financial measures. See “Exhibit A” for information concerning these measures including a definition and a reconciliation to the most comparable U.S. GAAP financial measure. | |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 6 |
|
| | | | | | |
| | | | Notice of Annual Meeting of StockholdersShareholders | |
CELANESE CORPORATION
222 W. Las Colinas Blvd., Suite 900N
Irving, Texas 75039
|
| |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS |
|
| | | | | | | |
| Date and Time: | | April 18, 2019, 7:20, 2022, 1:00 a.m.p.m. (Central Daylight Saving Time) |
Place:Virtual Meeting Website: | | The Westin Irving Convention CenterOnline at Las Colinas
400 West Las Colinas Blvd., Irving, Texas 75039
www.virtualshareholdermeeting.com/CE2022 |
| Items of Business: | | ● To elect Jean S. Blackwell, William M. Brown, Edward G. Galante, Rahul Ghai, Kathryn M. Hill, Dr. Jay V. Ihlenfeld, David F. Hoffmeister, Mark C. Rohr,Deborah J. Kissire, Michael Koenig, Kim K.W. Rucker and John K. WulffLori J. Ryerkerk to serve until the 20202023 Annual Meeting of Stockholders,Shareholders, or until their successors are elected and qualified or their earlier resignation; |
| | ●Advisory vote to approve executive compensation;
|
| | ● To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2019;2022; |
| | | ● To hold an advisory vote to approve an amendment to our certificate of incorporation;executive compensation; and |
| | |
| | | ● To transact such other business as may properly be brought before the meeting in accordance with the provisions of the Company’s FifthSixth Amended and Restated By-laws (the “by-laws”). |
| Record Date: | | You are entitled to attend the 2022 Annual Meeting virtually and to vote if you were a stockholder of record as ofshareholder at the close of business on February 19, 2019.22, 2022. |
Our Proxy Statement follows. FinancialThis year’s Annual Meeting will be held as a “virtual meeting” via the Internet at www.virtualshareholdermeeting.com/CE2022. You will be able to vote and other information about Celanese Corporation are contained in oursubmit questions online through the virtual meeting platform during the Annual Report to Stockholders for the fiscal year ended December 31, 2018 (“2018 Annual Report”), which accompanies the Proxy Statement.Meeting.
To ensure that your shares are represented at the meeting, we urge you to submit your voting instructions by proxy as promptly as possible. You may submit your proxy via the Internet or telephone, or, if you received paper copies of the proxy materials by mail, you can also submit a proxy via mail by following the instructions on the proxy card or voting instruction card. We encourage you to submit a proxy via the Internet. It is convenient and saves us significant postage and processing costs. You can revoke a proxy at any time prior to its exercise at the Annual Meeting by following the instructions in the Proxy Statement.
By Order of the Board of Directors of
Celanese Corporation
James R. Peacock IIIA. Lynne Puckett
Senior Vice President, Deputy General Counsel
and Corporate Secretary
Irving, Texas
March 8, 2019
|
| | | | | | | | | | | | | |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS TO BE HELD ON APRIL 18, 201920, 2022 |
The Celanese Corporation 20192022 Notice of Annual Meeting and Proxy Statement, 20182021 Annual Report and other proxy materials are available at www.proxyvote.com. |
|
| | | | | | | |
| | Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 3 |
VOTING INFORMATION
You are invited to attend the Annual Meeting to be held at 1:00 p.m. (Central Daylight Saving Time) on Wednesday, April 20, 2022. This year’s Annual Meeting will be held as a “virtual meeting” via the Internet at www.virtualshareholdermeeting.com/CE2022.
It is very important that you vote in order to play a part in the future of the Company. Please carefully review the proxy materials for the Annual Meeting and follow the instructions below to cast your vote on all of the voting matters.
Who is Eligible to Vote
You are entitled to vote at the Annual Meeting if you were a shareholder at the close of business on February 22, 2022, the record date for the meeting. On the record date, there were 108,029,267 shares of the Company’s Common Stock issued, outstanding and entitled to vote at the Annual Meeting.
How to Vote
Even if you plan to attend the Annual Meeting, please submit your voting instructions by proxy right away using one of the following methods for submitting a proxy (see page 89 for additional details). Make sure to have your proxy card, voting instruction form or Notice of Internet Availability in hand and follow the instructions. Unless those documents provide different instructions, most of our shareholders will be able to vote in advance of the meeting by one of the following means: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| VOTE IN ADVANCE OF THE MEETING* | | VOTE AT THE VIRTUAL MEETING |
| | | | | | | | | |
| via the internet | by phone | by mail | by QR code | | |
| : | ) | * | | | m |
|
| Visit proxyvote.com to submit a proxy via computer or your mobile device | Call 1-800-690-6903 or the telephone number on your proxy card or voting instruction form | Sign, date and return your proxy card or voting instruction form | Scan this QR code to vote with your mobile device (may require free app) | | |
|
* You will need the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact Alliance Advisors, LLC, 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003. Shareholders may call toll free: (800) 574-5971.
Important Note About Meeting Admission Requirements: If you plan to attend the virtual meeting, see the answer to question 2 on page 87 for important details on requirements to log-in to the meeting. | | | | | | | | | | | | | | |
| | | | |
| Electronic Shareholder Document Delivery | |
| Instead of receiving future copies of annual meeting proxy materials by mail, shareholders of record and most beneficial owners can elect to receive an e-mail that will provide electronic links to these documents. Opting to receive your proxy materials online will save us the cost of producing and mailing documents and will also give you an electronic link to the proxy voting site. |
|
|
| | | | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 4 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| PROXY STATEMENT SUMMARY | We provide below highlights of certain information in this Proxy Statement. As this is only a summary, please refer to the complete Proxy Statement and 2021 Annual Report before you vote.
| |
| | | |
| Proxy Item No. 1 Election of 11 Director Nominees | ü The Board recommends a vote FOR all Director Nominees Our Board and the Nominating and Corporate Governance Committee believe that the eleven director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.
| |
| | | | | | | | | | | | | | | | | | | | | |
| Director Nominees | | |
| The following table provides summary information about each director nominee. Each nominee is to be elected by a majority of the votes cast. | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Qualifications | Age | Director Since | Primary Occupation / Other Public Company Boards | Independent | Committee Memberships(1) | |
| | | | | | | |
| Jean S. Blackwell | 67 | 2014 | Former EVP / CFO – Cummins Inc. | ü | AC; NCG | |
| &Q5ÐGq@6L | | | Ingevity Corp.; Johnson Controls Int’l plc | | | |
| William M. Brown | 59 | 2015 | Executive Chair – L3Harris Technologies, Inc. | ü | CMD; NCGt | |
| &Q:5Gq@6L | | | Becton, Dickinson and Company | | | |
| Edward G. Galante | 71 | 2013 | Former SVP – Exxon Mobil Corporation | ü | CMD£; EHS | |
| &Q.:ÐGq@6L | | | Linde plc; Clean Harbors Inc.; Marathon Petroleum Corp. | | | |
| Rahul Ghai | 50 | 2022 | Chief Financial Officer – Otis Worldwide Corporation | ü | AC; NCG | |
| &Q:Gq@6L | | | | | | |
| Kathryn M. Hill | 65 | 2015 | Former SVP Dev. Strategy – Cisco Systems Inc. | ü | CMD; EHS£ | |
| &Q:5@6 | | | Moody’s Corporation; NetApp Inc. | | | |
| David F. Hoffmeister | 67 | 2006 | Former SVP / CFO – Life Technologies Corp. | ü | AC; NCG | |
| &Q.:Gq6L | | | Glaukos Corporation; ICU Medical Inc.; StepStone Group Inc. | | | |
| Dr. Jay V. Ihlenfeld | 70 | 2012 | Former SVP, Asia Pacific – 3M Company | ü | CMD; EHS | |
| Q.:5ÐG@6 | | | Ashland Global Holdings, Inc. | | | |
| Deborah J. Kissire | 64 | 2020 | Former Vice Chair - Ernst & Young LLP | ü | AC£; EHS | |
| &Q:5Gq6L | | | Omnicom Group; Axalta Coatings System Ltd.; Cable One, Inc. | | | |
| Michael Koenig | 58 | 2022 | Chief Executive Officer – Nobian Industrial Chemicals B.V. | ü | CMD; EHS | |
| &Q.:5ÐG@6L | | | Symrise AG | | | |
| Kim K.W. Rucker | 55 | 2018 | Former EVP and GC – Andeavor | ü | AC; NCG£ | |
| &Q:5ÐGq6L | | | Lennox International Inc.; Marathon Petroleum Corp.; HP Inc. | | | |
| Lori J. Ryerkerk | 59 | 2019 | Chairman, Chief Executive Officer – Celanese Corporation | | – | |
| &Q.:ÐGq@6L | | | Eaton Corporation plc | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Qualifications: | | | | | | | | Board Committees: | | | | | |
| & | Leadership | | G | Govt/regulatory | | AC | Audit Committee | | |
| Q | Global experience | | q | Financial & transactions | | CMD | Compensation and Management Development Committee | | |
| . | Chemical industry | | @ | Operational | | EHS | Environmental, Health, Safety, Quality and Public Policy Committee |
| : | Innovation-focused | | 6 | Strategic | | NCG | Nominating and Corporate Governance Committee | | |
| 5 | Customer-focused | | L | Risk oversight | | £ | Committee Chair | | |
| Ð | Environmental / sustainability | | | | t | Lead Independent Director | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 5 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Director Nominee Highlights | | |
| | | |
| Director succession is a robust, ongoing process at Celanese. Our Board regularly evaluates desired attributes in light of the Company’s strategy and evolving needs. We believe that our director nominees bring a well-rounded variety of skills, qualifications, experience and diversity, and represent an effective mix of deep company knowledge and fresh perspectives. | | |
| | | |
| | | |
| Diversity | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| Tenure | | | | | Age | | | | Expertise and Independence | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | |
| | Average Tenure: 6 years | | Average Age: 62 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| Balanced Mix of Skills, Qualifications and Experience | | | | | | | | | | | | | | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 6 |
| | | | | | | | | | | | | | |
| Environmental, Social and Governance Update |
| | | | |
| Accelerating safe and sustainable solutions through chemistry. |
| | | | |
We believe we have a responsibility to meaningfully improve the world through the power of chemistry.
|
| | | | |
| This responsibility to do more is instilled within us at Celanese, and we believe that when chemistry connects with sustainability, the possibilities are endless. |
|
Sustainability Strategy Framework
Celanese is committed to protecting natural resources and helping our partners and their customers to do the same. We use a three-pronged approach to integrate key elements of sustainability into our operational and product strategy:
| | | | | | | | |
| Reducing GHG Emissions in Our Own Operations | Building Solutions to Support Customers’ Sustainability Goals | Improving the Sustainability of Existing Products |
| Example Initiatives: | Example Solutions: | Example Products: |
•New environmental data tracking system to help identify opportunities to support targets •Use of Carbon Capture and Solar Power at the world’s largest acetic acid plant •Heat and power solution at Belgium facility saving approximately 3,100 metric tons of carbon dioxide (CO2) annually •Award winning energy-efficiency checklist used to consider sustainability impact at project inception; Adding sustainability factors to expenditure review process in 2022 | •Improve the efficiency of construction materials (Elotex® redispersible powders) •Are used in solar panels (VAM) •Make automobiles weigh less for better fuel-efficiency •Power electric vehicles (LiBS) •Eliminate pollutive painting, coating, and finishing steps in automotive and other applications •Improve health and well-being with our VitalDose® controlled release long-acting drug delivery solutions | •Pom ECO-B is made from up to 97% certified mass-balance bio-content with up to 50% CO2 reduction •Santoprene™ TPV uses in-process recycling during processing and the finished product has potential to be recycled at end-of-life •BlueRidge™ biodegradable alternative to single-use plastics •Clarifoil® bio-based film used in packaging applications for consumer products •Materials and emulsions made from renewable and recyclable feedstocks |
Setting Meaningful Climate and Other Environmental Goals
Climate change is one of the most pressing societal issues of our time, and we made a priority to improve and analyze our greenhouse gas emissions database, evaluate a meaningful reduction target, and develop a greenhouse gas abatement strategy. We are proud to set the below environmental targets measured against a 2021 baseline. This includes our newest goal to reduce Scope 1 and Scope 2 total greenhouse gas intensity by 30% by 2030, measured as metric tons of CO2 equivalent per metric tons of product. We have also committed to better understand our Scope 3 emissions sources to develop a roadmap to identify, quantify, and reduce Scope 3 emissions.
*The intensity targets are based on production from a 2021 baseline for current Celanese owned or operated assets.
As we work to reduce our carbon impact, we are expanding our portfolio of sustainable solutions to help our customers meet their sustainability objectives. Supporting this and our broader growth strategy, we have set intensity-based targets to better reflect the effects of future organic and acquisition opportunities.
Our environmental analytics drive important decision making in areas such as climate, energy, waste, and water. As a result, our greenhouse gas reduction target is focused on capital investment projects and the increased use of renewable energy to help us achieve this goal. For example, key projects ongoing at our Clear Lake, Texas plant, the largest acetic acid plant in the world, include:
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 7 |
•Carbon capture and utilization of waste CO2 to produce additional methanol with lower overall CO2 emissions;
•Solar power energy commitment to supply ~33% of the annual electricity consumption; and
•Acetic acid expansion to maximize raw material efficiencies and establish the ability to further reduce utility steam requirements.
Significant Steps Forward and Achievements in 2021 and Early 2022
Our proactive commitments to robust climate, sustainability governance, and social programs has led to recent significant progress.
■Adopted new goal to reduce Scope 1 and Scope 2 total greenhouse gas intensity by 30% by 2030 (see https://sustainability.celanese.com/News/2022/greenhouse-gas-emissions-reduction)
■Formed working group to develop a roadmap to identify, quantify and reduce Scope 3 emissions
■Implemented a new software system to capture SASB-aligned environmental metrics
■Began tracking ~50% more data points on climate to support goal setting and progress monitoring
■Published a Water Management Policy, which includes conducting local water risk evaluations especially in regions of water stress (available at https://sustainability.celanese.com/News/2022/celanese-formalizes-water-policy)
■Commenced solar energy deployment at Clear Lake plant
■Created a Supplier Risk Management program which evaluates and monitors strategic suppliers that represent approximately 50% of our 2020 spend
■Improved to MSCI ESG “A” rating
■Held a dedicated ESG Enterprise Risk Management (ERM) workshop to further embed sustainability risks into Celanese ERM program risk assessments
■Reached a milestone of 1,000,000 hours volunteered by our employees since the beginning of 2015
■Published comprehensive Sustainability Report, which includes:
–our first SASB-aligned index; and
–our first Task Force on Climate-Related Financial Disclosures (TCFD) index
See “Human Capital Management” beginning on page 49 of this Proxy Statement for additional information about our human capital efforts. Go to https://www.celanese.com/sustainability/ to learn more about Sustainability at Celanese.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 8 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate Governance Highlights | | |
| Our Corporate Governance Policies Reflect Best Practices | | |
| We are committed to good corporate governance, which promotes the long-term interests of shareholders, strengthens Board and management accountability and helps to build public trust in the Company. | | |
| | | |
| | | |
| | | | |
| Independent Oversight | ● 10 of 11 director nominees are independent (all except for the CEO) ● Lead Independent Director with clearly defined and robust responsibilities ● Regular executive sessions of independent directors at Board meetings (chaired by the Lead Independent Director) and Committee meetings (chaired by independent Committee chairs) ● 100% independent Board Committees ● Active Board oversight of the Company’s strategy, risk management and ESG efforts | | |
| | |
| | | | |
| Board Refreshment
| ● Comprehensive, ongoing Board succession planning process ● Focus on diversity (3 of the Board’s 4 committees are chaired by women, who are also independent directors); 6 of 11 director nominees are women, or racially or ethnically diverse) ● Regular Board refreshment and mix of tenure of directors (10 new directors since the beginning of 2012, 7 since the beginning of 2015, 5 since the beginning of 2018 and 2 since the beginning of 2021) ● Annual Board and Committee assessments including performance evaluation of individual directors ● Retirement age of 75 | | |
| | | | |
| Shareholder Rights
| ● Annual election of all directors ● Majority-vote and director resignation policy for directors in uncontested elections ● Proxy access right for shareholders (3% ownership threshold continuously for 3 years / 2 director nominees or 20% of the Board / 20 shareholder aggregation limit) ● Directors may be removed with or without cause ● One class of outstanding shares with each share entitled to one vote ● No poison pill | | |
| | | | |
| Good Governance Practices
| ● Prohibition on hedging or pledging Company stock ● Comprehensive clawback policy ● Rigorous director and executive stock ownership requirements ● Active shareholder engagement program ● Global Code of Conduct applicable to directors and all employees with annual compliance certification ● Political activities disclosures on our website ● Longstanding commitment to corporate responsibility | | |
| | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | |
| Proxy Item No. 2 Ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year ending December 31, 2022 | ü The Board recommends a vote FOR this proposal The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022 is in the best interests of the Company and its shareholders. As a matter of good corporate governance, shareholders are being asked to ratify the Audit Committee’s selection of the independent registered public accounting firm for 2022.
àSee “Audit Matters” beginning on page 41 of this Proxy Statement for additional information. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 9 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Highlights | |
| Business Performance in 2021(see page 46 for more information on our controllable actions to drive performance) | | |
| ü | We reported 2021 net sales of $8.5 billion, 51% higher than 2020 and 36% higher than 2019. | | |
| ü
| Record net sales, together with our successful offsetting of $1.1 billion in raw material, energy and logistics cost inflation during a volatile year, supported: | | |
| | t | GAAP diluted earnings per share of $17.06, and Adjusted EPS(1) of $18.12, the latter surpassing the previous record Adjusted EPS by 65%; | | |
| | t | Net earnings of $1,890 million and Adjusted EBIT(1) of $2,473 million; and | | |
| | t | Operating cash flow of $1,757 million and free cash flow(1) of $1,263 million. | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advancing our Strategy for Earnings Per Share Growth and Effective Capital Allocation | | |
| In February 2022, we entered into a definitive agreement to acquire the majority of the Mobility & Materials business of DuPont for $11.0 billion in cash. This acquisition, expected to close around the end of 2022, will expand our Engineered Materials business with a broad portfolio of engineered thermoplastics and elastomers, industry-renowned brands and intellectual property, global production assets, and a world-class organization. | | |
| In 2021, we: | | Net Sales ($Bn) | | |
| ü
| completed the acquisition of the Santoprene business, enhancing our Engineered Materials business with an industry-leading team, product portfolio and set of production facilities through effective deployment of capital from the 2020 sale of our interest in Polyplastics; | | | | |
| ü | navigated sourcing and logistics constraints and maintained margin through deliberate commercial actions; and | | | |
| ü | lifted foundational earnings per share by deploying $2.6 billion to organic investments, M&A and share repurchases, in addition to returning $304 million in cash to shareholders through dividends. | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Cash Flow | Cash Returned to Shareholders | | |
| | | |
| | Operating Cash Flow ($M) | | | | |
| | | | | | |
| | Free Cash Flow ($M) | | |
| | | | | | |
| | Share Repurchases ($M) | | |
| | | | | | |
| | Cash Dividends ($M) | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ü
| Proxy Item No. 3 Advisory Approval of Executive Compensation | ü The Board recommends a vote FOR this proposal Our Board recommends that shareholders vote “FOR” the advisory approval of the compensation of our named executive officers (“NEOs” or “named executive officers”) for the 2021 performance year.
|
| | | |
| Additional Information | | |
| Please see “Questions and Answers” beginning on page 86 for important information about the proxy materials, voting, the Annual Meeting, Company documents, communications and the deadlines to submit shareholder proposals for the 2022 Annual Meeting. | | |
| (1) Adjusted earnings per share, adjusted EBIT and free cash flow are non-U.S. GAAP financial measures. See “Exhibit A” for information concerning these measures including a definition and a reconciliation to the most comparable U.S. GAAP financial measure. | | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 10 |
PROXY STATEMENT
For the Annual Meeting of StockholdersShareholders To Be Held Virtually on April 18, 201920, 2022
The boardBoard of directorsDirectors (the “board“Board of directors”Directors” or the “board”“Board”) of Celanese Corporation, a Delaware corporation (the “Company,” “we,” “us” or “our”), solicits the enclosed proxy for use at our 20192022 Annual Meeting of StockholdersShareholders (the “Annual Meeting”) to be held virtually at 7:1:00 a.m.p.m. (Central Daylight Saving Time) on Thursday,Wednesday, April 18, 2019,20, 2022, at The Westin Irving Convention Center at Las Colinas, 400 West Las Colinas Blvd., Irving, Texas 75039.our virtual meeting website www.virtualshareholdermeeting.com/CE2022. This Proxy Statement (this “Proxy Statement”) contains information about the matters to be voted on at the meeting and the voting process, as well as information about our directors. We will bear the expense of soliciting the proxies for the Annual Meeting. |
| | | | | | | | | | | | | |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS TO BE HELD ON APRIL 18, 201920, 2022 |
The Celanese Corporation 20192022 Notice of Annual Meeting and Proxy Statement, 20182021 Annual Report and other proxy materials are available at www.proxyvote.com. |
INFORMATION ABOUT SOLICITATION AND VOTING
Pursuant to U.S. Securities and Exchange Commission (“SEC”) rules, we have elected to furnish proxy materials to our stockholdersshareholders via the Internet instead of mailing printed copies of those materials to each stockholder.shareholder. If you received a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) by mail, you will not receive a printed copy of the proxy materials unless you request one. Instead, the Notice of Internet Availability will instruct you as to how you may access and review the proxy materials and cast your vote on the Internet. If you received a Notice of Internet Availability by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability. StockholdersShareholders who requested paper copies of proxy materials or previously elected to receive proxy materials electronically will not receive the Notice of Internet Availability and, instead, will receive the proxy materials in the format requested. This Proxy Statement, our 20182021 Annual Report and other information about the Annual Meeting also are available in the investor relations“News & Events” section of our website, https://investors.celanese.com.
The Notice of Internet Availability and, for stockholdersshareholders who previously requested electronic or paper delivery, the proxy materials will be made availablemailed on or about March 8, 2019,10, 2022, to stockholdersshareholders of record and beneficial owners who owned shares of the Company’s Common Stock (“Common Stock”) at the close of business on February 19, 2019.22, 2022.
Our principal executive offices are located at 222 W. Las Colinas Blvd., Suite 900N, Irving, Texas 75039.
For additional information about the proxy materials and the Annual Meeting, see “Questions and Answers”.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 8 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 11 |
GOVERNANCE
The Company is committed to effective corporate governance, which promotes the long-term interests of stockholders,shareholders, strengthens boardBoard and management accountability and helps build public trust in the Company. See “Corporate Governance Highlights” for more information. The Company’s certificate of incorporation, by-laws, corporate governance guidelines, boardBoard committee charters and other materials can be accessed on our website, https://investors.celanese.com, by clicking “Corporate Governance.” Instructions on how to obtain copies of these materials are also included in the response to question 2320 in the Questions and Answers section on page 8992. ITEM 1: Election of Directors
Background
Based on the recommendation of our independent nominatingNominating and corporate governance committee,Corporate Governance Committee (the “N&CG Committee”), our boardBoard of directorsDirectors has nominated nineeleven directors — Jean S. Blackwell, William M. Brown, Edward G. Galante, Rahul Ghai, Kathryn M. Hill, David F. Hoffmeister, Dr. Jay V. Ihlenfeld, Mark C. Rohr,Deborah J. Kissire, Michael Koenig, Kim K.W. Rucker and John K. Wulff,Lori J. Ryerkerk — to serve a one-year term expiring at the 20202023 Annual Meeting of Stockholders.Shareholders. These director nominees have consented to be elected to serve as directors for the next year.
At the Annual Meeting, youshareholders will have the opportunity to elect these nominees. Unless otherwise instructed, the proxy holders will vote the proxies received by them for these nineeleven nominees. If any of our nominees is unable or declines to serve as a director as of the time of the Annual Meeting, the boardBoard may designate a substitute nominee or reduce the size of the board.Board. Proxies will be voted for any nominee who shall be designated by the boardBoard of directorsDirectors to fill the vacancy.
The name of each of our nominees for election and certain information about them, as of the date of this Proxy Statement (except ages, which are as of the date of the Annual Meeting), is set forth below. Included in the information below is a description of the particular qualifications, attributes, skills and experience that led the boardBoard to conclude that each person below should serve as a director of the Company.
|
| | | | | | | | | | | | | | | | | | | |
| Board Composition and Refreshment | | | BOARD REFRESHMENT | | |
| | | | | | Over the last five years: |
Ensuring theBuilding a board that is composed of directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the long-term interests of our stockholders,shareholders, is a principleprincipal priority of the boardBoard and the nominatingN&CG Committee. The Board and corporate governance committee. The board and the committeeCommittee also understand the importance of boardBoard refreshment, and continuously strive to maintain an appropriate balance of tenure, turnover, diversity and skills on the board.skills. The boardBoard believes that new perspectives and new ideas are critical to a forward-looking and strategic board, as is the ability to benefit from the valuable experience and familiarity with the complexities of our business that longer-serving directors bring. The Board regularly evaluates the skills represented on the Board. | | | | BOARD REFRESHMENT | |
| | Under Mark Rohr’s leadership of the board since 2012 |
| ● | | • | SixFive new directors elected, three of whom are women and two of whom are racially or ethnically diverse |
| | •● | Rotation of all boardBoard committee chairs |
| | •● | New lead independent director electedBoard leadership transition and two successive Lead Independent Directors |
| | •● | Expanded qualificationsprofessional experience and diversity represented on the boardBoard |
| | •● | Transitioned to annual election of directors |
| | | | | |
| | | | | |
| | | | | |
| |
| | | | |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 9 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 12 |
The election of Messrs. Ghai and Koenig to the Board in February 2022 was the result of a strategic succession planning effort by the Board and the N&CG Committee to bring additional materials industry experience, to enhance the global perspective of our Board given our increasingly global footprint, and bring additional operating and financial expertise following the retirement of John Wulff after more than 14 years of service. The N&CG Committee engaged a search firm to identify qualified candidates. This firm identified Messrs. Ghai and Koenig, among other candidates, as qualified nominees. The N&CG Committee and the full Board carefully reviewed the experience, skills and attributes of Messrs. Ghai and Koenig, along with those of a number of other qualified candidates, as well as their independence. After interviews, the N&CG Committee and the Board determined to elect each of them to the Board in February 2022 and to recommend to our shareholders that they be elected at the 2022 Annual Meeting.
Qualifications Required of All Directors
The boardBoard and the nominating and corporate governance committeeN&CG Committee require that each director be a recognized person of high integrity with a proven record of success in his or her field and have the ability to devote the time and effort necessary to fulfill his or her responsibilities to the Company. Each director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, a willingness to assume fiduciary responsibilities, an appreciation of diversity and a commitment to sustainability and to dealing responsibly with social issues. In addition, the boardBoard conducts interviews of potential director candidates to assess integral qualities, including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.
The board does not have a defined diversity policy, butBoard considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for board membership.Board membership and assesses the effectiveness of this policy through the N&CG Committee’s annual review of director nominees. The boardBoard believes that diversity results in a variety of points of view and, consequently, a more effective decision-making process. The Board has added three women directors and two racially/ethnically diverse directors in the last five years.
Qualifications, Attributes, Skills and Experience to be Represented on the Board
The boardBoard has identified particular qualifications, attributes, skills and experience that are important to be represented on the boardBoard as a whole, in light of the Company’s current and expected future business needs. TheThese are summarized in the following table summarizes certain characteristics of the Company and the associated qualifications, attributes, skills and experience that the board believes should be represented on the board.table.
| | | | | | | | | | | | | | | | | | | | |
| Qualifications, Attributes, Skills
and Experience | | Characteristics | No. of Directors |
| & | Relevant senior leadership/C-Suite experience | | Senior leadership experience allows directors to better understand day-to-day and strategic aspects of a business | 10 |
| Q | Global business experience | | Our business is global and multicultural, with products manufactured in the Americas, Europe and Asia and operations in 18 countries around the world | 11 |
| . | Extensive knowledge of the Company’s business and/or chemical industry | | A deep understanding of the Company’s business and/or the chemical industry allows a director to better guide the Company | 5 |
| : | Experience in innovation-focused businesses | | Focus on innovation to drive performance | 10 |
| 5 | Experience in customer-driven businesses | | High level of customer interaction | 7 |
| Ð | Environmental/sustainability experience | | Experience with complex environmental regulation and sustainability-focused strategy | 6 |
| G | Government/regulatory/geopolitical exposure | | Regulatory obligations and political challenges in various jurisdictions | 10 |
| q | Financial & transactions experience | | High level of familiarity with financial matters and complex financial transactions, including in foreign countries / currencies | 8 |
| @ | Operational expertise | | Experience managing manufacture of many types and kinds of products consistent with high level specifications and in large quantities | 8 |
| 6 | Strategy development experience | | Experience with strategy development, allowing the Board to better evaluate management’s plan and guide the Company | 11 |
| L | Risk oversight/management expertise | | Assessment of risk and the policies/procedures to manage risk | 9 |
|
| | | | | | | | | | | | | | | | |
| Qualifications, Attributes, Skills and Experience | | CharacteristicsRecently-Elected Directors Enhance Key Expertise |
&● | Relevant senior leadership/C-SuiteActing Executives (CEO and CFO of multibillion dollar companies) | ● | Financial Transactions and Capital Markets |
| ● | Deep Chemical and Materials industry executive experience | ● | Senior leadership experience allows directors to better understand day-to-dayAudit, Financial Reporting and strategic aspects of a business |
Q | Global business experience | | The Company’s business is global and multicultural, with products manufactured in the Americas, Europe and Asia and operations in 18 countries around the world |
. | Extensive knowledge of the Company’s business and/or chemical industry | | A deep understanding of the Company’s business and/or the chemical industry allows a director to better guide the Company |
: | Experience in innovation-focused businesses | | Focus on innovation to drive performance |
5 | Experience in customer-driven businesses | | High level of customer intimacy |
 | High level of financial experience | | Multi-dimensional businesses in multiple chemical segments |
G | Government/regulatory/geopolitical exposure | | Regulatory obligations and political challenges in various jurisdictions around the globe |
q | Financial transactions experience | | Complex financial transactions, including those in different countries and currencies |
@ | Operational expertise | | Ability to manufacture many types and kinds of products consistent with high level specifications and in large quantities |
6 | Strategy development experience | | Experience with strategy development, allowing the board to better evaluate management’s plan and guide the Company |
L | Risk oversight/management expertise | | Assessment of risk and the policies/procedures to manage riskManagement |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 10 |
|
| | | | | | |
| | | | | Governance | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 13 |
Director Nominees
Director Nominees
| | | | | | | | | | | | | | | | | | | | | | | |
| Jean S. Blackwell |
| |
| Ms. Blackwell served as Chief Executive Officer of Cummins Foundation and Executive Vice President, Corporate Responsibility, of Cummins Inc., a leading global power leader that designs, manufactures, distributesdesigner, manufacturer, distributor and services diesel and natural gasservicer of engines and engine-related component products, from March 2008 until her retirement in March 2013. She previously served as Executive Vice President and Chief Financial Officer from 2003 to 2008, and had previous roles as Vice President, Cummins Business Services from 2001 to 2003,fr Vice President, Human Resources, from 1998 to 2001, and Vice President and General Counsel from 1997 to 1998 of Cummins Inc. Prior thereto, Ms. BlackwellCounsel. Previously, she was a partner at the Indianapolis law firm of Bose McKinney & Evans LLP from 1984 to 1991, where she practiced in the areaareas of financial and real estate transactions. She has also served in state government, including as Executive Director of the Indiana State Lottery Commission and State of Indiana Budget Director. Ms. Blackwell has served as a member of the board of directors of Ingevity Corporation, a leading global manufacturer of specialty chemicals and high performance carbon materials, since May 2016, including as the chair of the audit committee andBoard, as a member of its compensation committee and nominating, governance and sustainability committee, and previously as chair of the executiveaudit committee. Ms. Blackwell has also served as a member of the board of directors of Johnson Controls International plc, a leading diversified technology company, since May 2018, including as a member of its compensation committee and as chair of the governance and sustainability committee. She previously served as a member of the board of directors from April 2004 to November 2009, and as chair of the audit committee, of Phoenix Companies Inc., a life insurance company. Ms. Blackwell also served as a member of the board of directors of Essendant Inc. (formerly United Stationers Inc.), a leading national wholesale distributor of business products, from 2007-2018, including as a memberchair of the governance committee and the audithuman resources committee, and as the chaira member of the human resource committee and the governanceaudit committee. |
| | | | | | |
Director since: 2014 Age: 6467 Current Board Committees: CompensationAudit
Nominating and Corporate Governance Other Public Company Boards: Ingevity Corporation Johnson Controls International plc Essendant Inc. (2007-2018) Phoenix Companies Inc. (2004-2009) | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | 5 | Â | Substantial global leadership, operational, financial, transactional, strategic, customer-driven, and risk management experience gained as Executive Vice President/CFO and General Counsel of Cummins Inc., and service on other boards of directors. |
| q | @ | L6 |
| L | | |
| G | | | Substantial governmental experience from having served in the Indiana State Government. |
| Ð | | | Substantial environmentally-focused strategic experience from tenure as Executive Vice President, Corporate Responsibility of Cummins Inc. |
| | | | | |
| | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| William M. Brown |
| |
| Mr. Brown is ChairmanExecutive Chair of the Board President and Chief Executive Officer of L3Harris Technologies, Inc., successor to Harris Corporation an international communications and informationa global aerospace and defense technology company. He previously served as L3Harris’ Chair and CEO from July 2019 to June 2021. Mr. Brown joined Harris in November 2011 as President and Chief Executive Officer and was appointed Chairman in April 2014. He will retire from the Board of L3Harris on June 29, 2022, pursuant to the merger agreement that resulted in the creation of L3Harris. Prior to joining Harris, Mr. Brown was Senior Vice President,SVP, Corporate Strategy and Development, of United Technologies Corporation (“UTC”). He also served five years as President of UTC’s Fire & Security Division. In total, Mr. Brown spent 14 years with UTC, holding U.S. and international roles at various divisions, including Carrier Corporation’s Asia Pacific Operations and the Carrier Transicold division. Before joining UTC in 1997, he worked for McKinsey & Company as a senior engagement manager. He began his career as a project engineer at Air Products and Chemicals, Inc. Mr. Brown joined the board of directors of Becton, Dickinson and Company, a global medical technology company, in March 2022 and serves on their Compensation and Human Capital Committee and Corporate Governance and Nominating Committee. He serves on the board of directors of the Fire Department of NYC Foundation and the board of trustees of Florida Institute of Technology, and served on the board of trustees of Florida Polytechnic University from 2013 to 2017. Technology. |
|
| | | | | | |
Director since: 20162015 Age: 5659 Current Board Committees: AuditCompensation
Environmental, Health, Safety & QualityNominating and Corporate Governance
Other Public Company Boards: Harris CorporationL3Harris Technologies, Inc.
Becton, Dickinson and Company | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | : | 5 | Substantial leadership, financial, governmental/geopolitical, innovation, strategic and risk management experience gained in roles of Chairman President and CEO of L3Harris Technologies, Inc. and Harris Corporation. |
| Â | G | @ | 6 |
| 6 | L | q | |
| | | | |
| Q | q | @ | Substantial transactional, global business, operational and strategic experience gained in various roles with United Technologies Corporation. |
| 6 | | |
| | | | | | | |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 11 |
|
| | | | | | |
| | | | | Governance | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 14 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Edward G. Galante |
| |
| Mr. Galante served as Senior Vice President and as a member of the management committee of Exxon Mobil Corporation, an international oil and gas company, from August 2001 until his retirement in 2006. Prior to that, he held various management positions of increasing responsibility during his more than 30 years with Exxon Mobil Corporation, including serving as Executive Vice President of ExxonMobil Chemical Company from 1999 to 2001. Mr. Galante currently serves as a director (since 2018), chairmanchair of the compensation and management development committee and as a member of the auditnomination and governance committee of Linde plc. He formerly (since 2007) served on the Board of Praxair, Inc. prior to its merger with Linde AG. He also serves as a director (since 2010), and chairmanchair of the environmental, health and safety committee and a member of the compensation committee and of the corporate governance committee of Clean Harbors, Inc. He served as a director and member of the compensation committee and the environmental, health, safety and security committee of Andeavor Corporation (formerly Tesoro Corporation) until it was acquired by Marathon Petroleum Corporation. Mr. Galante currently serves as a director (since 2018) of Marathon Petroleum Corporation, and as a member of its compensation and organization development committee (Chair) and its sustainability committee. From 2008 until November 2014, Mr. Galante served as a member of the board of directors of Foster Wheeler AG, which included service on Foster Wheeler'sthe compensation and executive development committee (including as chairman)chair) and audit committee. |
| | | | | | |
Director since: 2013 Age: 6871 Current Board Committees: Compensation Nominating and Corporate GovernanceEnvironmental, Health, Safety, Quality & Public Policy
Other Public Company Boards: Linde plc Clean Harbors Inc. Marathon Petroleum Corporation Andeavor Corporation (2016-2018) Praxair, Inc. (2007-2018) Foster Wheeler AG (2008-2014) | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | . | Substantial leadership, chemical industry, oil industry, operational, global business, financial, innovation-focused, transactional, sustainability-focused, governmental/regulatory, strategy development and risk management experience gained with more than 30 years’ service with Exxon Mobil Corporation, including as Executive Vice President of ExxonMobil Chemical Company, and service on other boards of directors. |
| : | ÂÐ | G |
| q | @ | 6 |
| L | | |
| | | |
| | | | | |
| | | | | |
| | | | | | | |
|
| | | | | | | | |
| | Kathryn M. Hill |
| | | |
| | | Ms. Hill served in a number of positions at Cisco Systems, Inc. from 1997 to 2013, including, among others, as Executive Advisor from 2011 to 2013, Senior Vice President, Development Strategy and Operations from 2009 to 2011, Senior Vice President, Access Networking and Services Group from 2008 to 2009, and Senior Vice President, Ethernet Systems and Wireless Technology Group from 2005 to 2008. Cisco designs, manufactures and sells Internet Protocol (IP)-based networking and other products related to the communications and information technology industry and provides services associated with these products. Prior to joining Cisco, Ms. Hill had a number of engineering roles at various technology companies. Ms. Hill has served as a member of the board of directors of Moody’s Corporation, an essential component of the global capital markets providing credit ratings, research, tools and analysis, since May 2011, including currently serving as the chair of the compensation and human resources committee and as a member of the governance and nominating committee, the audit committee and the executive committee. She also currently serves as a member of the board of directors (since 2013), and as chair of the compensation committee and a member of the corporate governance and nominating committee, of NetApp, Inc. |
| |
| | | | | | | | |
| | Director since: 2015 Age: 62 Board Committees: Compensation Environmental, Health, Safety & Quality Other Public Company Boards: Moody's Inc. NetApp Inc. | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| | | & | Q | : | Substantial innovation-focused, leadership, customer-focused, global business, operational and strategic experience gained in various roles with Cisco Systems, Inc. |
| | | 5 | @ | 6 |
| | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | |
|
| | | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 12 | | | | |
| | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Rahul Ghai |
| |
| Mr. Ghai has served as Executive Vice President and Chief Financial Officer of Otis Worldwide Corporation, a leading elevator and escalator manufacturing, installation and service company since its April 2020 spin-off from United Technologies Corporation (UTC). Until the spin-off, he served as Vice President and Chief Financial Officer of the Otis Elevator division of UTC from July 2019. Mr. Ghai served as Senior Vice President and Chief Financial Officer of Harris Corporation from February 2016 through June 2019. Prior to Harris Corporation, Mr. Ghai held executive-level finance roles of increasing responsibility at Aetna and UTC. He holds a bachelor’s degree in commerce from Delhi University and an MBA from Purdue University. |
| | | | | | |
|  Age: 50 Current Board Committees: Audit Nominating and Corporate Governance Other Public Company Boards: None | | | Governance | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | : | Significant experience as a public company chief financial officer and financial executive gained from leadership roles at multiple companies. Deep knowledge of financial reporting, audit and risk matters. |
| G | q | @ |
| 6 | L | |
| | | | |
| | | | |
| | | |
| | | | | | | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 15 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Kathryn M. Hill |
| |
| Ms. Hill served in a number of positions at Cisco Systems, Inc. from 1997 to 2013, including, among others, as Executive Advisor from 2011 to 2013, Senior Vice President, Development Strategy and Operations from 2009 to 2011, Senior Vice President, Access Networking and Services Group from 2008 to 2009, and Senior Vice President, Ethernet Systems and Wireless Technology Group from 2005 to 2008. Cisco designs, manufactures and sells Internet Protocol (IP)-based networking and other products related to the communications and information technology industry and provides services associated with these products. Prior to joining Cisco, Ms. Hill had a number of engineering roles at various technology companies. Ms. Hill has served as a member of the board of directors of Moody’s Corporation, an essential component of the global capital markets providing credit ratings, research, tools and analysis, since May 2011, including currently serving as the chair of the compensation and human resources committee and as a member of the governance and nominating committee, the audit committee and the executive committee. She also currently serves as a member of the board of directors (since 2013), and as a member of the compensation committee and the corporate governance and nominating committee of NetApp, Inc. |
|
| | | | | | |
Director since: 2015 Age: 65 Current Board Committees: Compensation Environmental, Health, Safety, Quality & Public Policy Other Public Company Boards: Moody's Corporation NetApp, Inc. | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | : | Substantial innovation-focused, leadership, customer-focused, global business, operational and strategic experience gained in various roles with Cisco Systems, Inc. |
| 5 | @ | 6 |
| | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| David F. Hoffmeister |
| |
| Mr. Hoffmeister served as the Senior Vice President and Chief Financial Officer of Life Technologies Corporation, a global life sciences company, prior to its acquisition by FisherThermoFisher Scientific Inc. in February 2014. From October 2004 to November 2008, he served as Chief Financial Officer of Invitrogen Corporation, which merged with Applied Biosystems in November 2008 to form Life Technologies Corporation. Before joining Invitrogen, Mr. Hoffmeister spent 20 years with McKinsey & Company as a senior partner serving clients in the healthcare, private equity and chemical industries on issues of strategy and organization. From 1998 to 2003, Mr. Hoffmeister was the leader of McKinsey’s North American chemical practice. Mr. Hoffmeister serves as a director of Glaukos Corporation (since 2014) and is a member of the audit committee. He also serves as a director (since 2018) of ICU Medical Inc. andwhere he is a member of its audit committee and compensation committee and StepStone Group Inc., a private markets investment firm (since 2020), where he is chair of the audit committee. Our Board has affirmatively determined that Mr. Hoffmeister’s simultaneous service on these other audit committees does not impair his ability to effectively serve on our Audit Committee. |
| | | | | | |
Director since: 2006 Age: 6467 Current Board Committees: Audit Nominating and Corporate Governance Other Public Company Boards: Glaukos Corporation ICU Medical Inc. StepStone Group Inc. | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| . | Âq | 6 | Substantial chemical industry, finance and strategic experience as a large consulting firm partner. |
| | | |
| & | Q | : | Substantial leadership, global business, financial, innovation-focused, transactional, governmental/regulatory, and risk management experience gained as Chief Financial Officer of Life Technologies Corporation. |
| G | q | L |
| | | |
| | | |
| | | | | | |
| | | | | | | | |
| | | | |
| | | | | | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 16 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Dr. Jay V. Ihlenfeld |
| |
| From 2006 until his retirement in 2012, Dr. Ihlenfeld served as the Senior Vice President, Asia Pacific, for 3M Company, a leader in technology and innovation. Dr. Ihlenfeld previously served as 3M Company’s Senior Vice President, Research and Development from 2002 to 2006. A 33-year veteran of 3M Company, Dr. Ihlenfeld has also held various leadership and technology positions, including Vice President of its Performance Materials business and Executive Vice President of its Sumitomo/3M business in Japan. Dr. Ihlenfeld serves as lead independent director (since 2019) and a director and member of the auditcompensation committee and member of the environmental, health, safety and quality committee (since 2017) of Ashland Global Holdings, Inc. (formerly Ashland Inc.). |
| | | | | | |
Director since: 2012 Age: 6770 Current Board Committees: Compensation Environmental, Health, Safety, Quality & QualityPublic Policy Other Public Company Boards: Ashland Global Holdings, Inc. | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| Q | . | : | Substantial chemical industry knowledge and operational, global business, innovation, environmental strategy, customer-driven, geopolitical and strategy development experience gained in various roles over 33 years with 3M Company. |
| 5 | Ð | G |
| @ |
| 6 | | |
| | | |
| | | | |
| | | | | |
|
| | | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 13 | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Deborah J. Kissire |
| |
| Ms. Kissire retired in 2015 as Vice Chair and Regional Managing Partner, member of the Americas Executive Board and member of the Global Practice Group of Ernst & Young LLP, an independent registered public accounting firm. During her more than 35-year career in the financial sector, Ms. Kissire served in various leadership positions at Ernst & Young, including Vice Chair and Regional Managing Partner for the East Central and Mid-Atlantic Regions and U.S. Vice Chair of Sales and Business Development. In addition to expertise in public company accounting and financial reporting, Ms. Kissire has significant executive-level experience in positions involved with strategic planning, governance, global branding, and gender inclusiveness. Ms. Kissire has served as a member of the board of directors of Cable One, Inc., a leading American cable and internet service provider, since 2015, including as chair of the audit committee. In 2016, she joined the board of directors of Omnicom Group Inc., a global marketing and corporate communications holding company, and currently serves on its audit and finance committees. Ms. Kissire also has served on the board of directors of Axalta Coating Systems Ltd., a manufacturer of liquid and powder coatings, since 2016, where she is currently a member of the compensation committee and the chair of the nominating and corporate governance committee. She is a member of the Advisory Board for Texas State University’s McCoy College of Business and has served on the boards of Goodwill Industries of Greater Washington and Junior Achievement USA. |
| | | | | | |
| Age: 64 Current Board Committees: Audit Environmental, Health, Safety, Quality & Public Policy Other Public Company Boards: Cable One, Inc. Omnicom Group, Inc. Axalta Coating Systems Ltd. | | | Governance | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | : | Substantial experience with public company financial reporting, auditing, strategic planning, governance and risk management. Substantial board experience, including as an independent Audit Committee member, with other public companies. |
| 5 | G | q |
| 6 | L | |
| | | |
| | | | |
| | | | | |
|
| | | | | | | |
Mark C. Rohr | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 17 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Michael Koenig |
| |
| Mr. Rohr was named our Chairman, President andKoenig is Chief Executive Officer in April 2012 after beingand a member of our board of directors since April 2007. Prior to joining the Company, Mr. Rohr was Executive Chairman and a director of Albemarle Corporation, a global developer, manufacturer and marketer of highly engineered specialty chemicals. During his 11 years with Albemarle, he held various executive positions, including Chairman and Chief Executive Officer. Earlier in his career, Mr. Rohr held executive leadership roles with various companies, including Occidental Chemical Corporation and The Dow Chemical Company. Mr. Rohr has served on the board of directors of Ashland Global Holdings Inc. (formerly Ashland Inc.) since 2008,Nobian Industrial Chemicals B.V., a privately-held European leader in the production of essential chemicals that spun out of Nouryon in July 2021. He previously served as Chief Executive Officer of ELKEM ASA, a publicly-listed and currentlyNorwegian-headquartered global supplier of silicon-based advanced materials, from 2019 to 2021 and CEO of China National Bluestar Group, a specialty chemicals company, from 2016 to 2019. Prior to that Mr. Koenig held multiple senior executive positions in Germany and China at life sciences company Bayer from 1990 to 2015. Mr. Koenig serves as chairman of the supervisory board (since 2020) of Symrise AG, a publicly-listed developer and producer of food and cosmetic flavor and fragrance ingredients, is a member of the auditing committee and is chairman of the personnel committee and the nominating committee. Mr. Koenig previously served as a member of its audit committeethe board of directors of Conzzeta AG, a sheet-metal processing company now known as Bystronic AG, and its environmental, health & safety committee. In 2016, he also served as Chairmanchairman of the American Chemistry Council’s Executive Committee and as Chairmansupervisory board of REC Solar Group. Mr. Koenig holds a master’s degree in Chemical Process Engineering from the International CouncilTechnical University of Chemical Associations.
Dortmund, Germany. |
| | | | | | |
Director since: 20072022 Age: 6758 Current Board Committees: NoneCompensation
Environmental, Health, Safety, Quality & Public Policy Other Public Company Boards: Ashland Global Holdings, Inc.Symrise AG
Elkem ASA (2016-2021)
Conzzeta AG (2018-2021) | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | :. | Substantial leadership, financial,experience as a materials manufacturing executive in numerous countries around the world. Experience in global and international business innovation-focused, customer-driven focus, operational, strategy development, risk management, transactionalconsiderations. Valuable global perspective gained as an executive and governmental experience gained inBoard member of companies headquartered outside of the roles of Chairman, CEO and President of Celanese Corporation (since 2012) and CEO/COO of Albemarle Corporation (from 2000 to 2011).United States. |
| : | 5 | | GÐ |
| qG | @ | 6 |
| L | | |
| . | | | A full career in the chemical industry, including leadership positions with the ACC and IACA. |
| | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Kim K.W. Rucker |
| |
| Ms. Rucker served as Executive Vice President, General Counsel and Secretary of Andeavor, an integrated marketing, logistics and refining company, from 2016 until it was acquired by Marathon Petroleum Corporation in 2018. Prior to joining Andeavor, she served as Executive Vice President Corporate & Legal Affairs, General Counsel and Corporate Secretary of Kraft Foods Group, Inc., a food and beverage company, from 2012 to 2015. Beginning in 2008, Ms. Rucker served as Senior Vice President, General Counsel and Chief Compliance Officer of Avon Products, Inc., a global manufacturer of beauty and related products and assumed additional duties as Corporate Secretary in 2009. Ms. Rucker also served as Senior Vice President, Secretary and Chief Governance Officer of Energy Future Holdings Corp., an energy company, from 2004 to 2008. She was also Corporate Counsel for Kimberly-Clark Corporation and a Partner in the Corporate & Securities group at the law firm of Sidley Austin LLP. She holds a BBA in economics from the University of Iowa, a J.D. from the Harvard Law School and a Master in Public Policy degree from the John F. Kennedy School of Government at Harvard University. Ms. Rucker has servedserves on the boardboards of directorsHP Inc. (since 2015) of2021), a leading technology company, Lennox International Inc. (since 2015), a global provider of climate control solutions including currently serving as– where she is a member of the governance committee and the compensation and human resources committee. Ms. Rucker also serves on the board of directors ofcommittee – and Marathon Petroleum Corporation (since 2018), and – where she serves as a member of its sustainability committee. |
| | | | | | |
Director since: 2018 Age: 5255 Current Board Committees: Audit Environmental, Health, Safety & QualityNominating and Corporate Governance
Other Public Company Boards: Lennox International Inc. Marathon Petroleum Corp. HP Inc. | | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | Q | 5: | ExperienceSubstantial experience with multiple industries including customer-driven, innovation and marketing companies, and substantial experience with complex mergers and acquisitions and regulatory matters, together with a broad knowledge of law, corporate governance, internal and external communications, government affairs and community involvement activities, gained as an executive with leadership roles at, and as a director of, multiple public companies. |
| :5 | Ð | G |
| q | 6 |
| L | G | |
| | | |
| | | |
| | | |
| | | |
| | | | | |
|
| | | | | | | |
| | Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 1418 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Lori J. Ryerkerk |
| |
| Ms. Ryerkerk was named our Chief Executive Officer and President and a member of our board of directors effective May 2019. In April 2020, she was named Chairman of the Board. Previously, Ms. Ryerkerk was the Executive Vice President of Global Manufacturing of Shell Downstream Inc., the largest business of Royal Dutch Shell plc (now Shell plc), a global group of energy and petrochemical companies, where she led a team of 30,000 employees and contractors at refineries and chemical sites worldwide. Ms. Ryerkerk joined Shell in May 2010 as the Regional Vice President of Manufacturing in Europe and Africa, and was responsible for the operation of five Shell Manufacturing facilities and five joint ventures. In October 2013, she was named Executive Vice President of Global Manufacturing, Shell Downstream Inc. Before joining Shell, she was Senior Vice President, Refining, Supply and Terminals at Hess Corporation, where she was responsible for refineries, terminals and a distribution network, and supply and trading. Prior to that, Ms. Ryerkerk spent 24 years with ExxonMobil where she started her career as a process technologist at a refinery in Baton Rouge, Louisiana. Throughout her tenure at ExxonMobil, she took on a variety of operational and senior leadership roles in Refining and Chemicals Manufacturing, Power Generation, and various other groups including Supply, Economics and Planning, HSSE, and Public Affairs/Government Relations. Ms. Ryerkerk received a Chemical Engineering degree from Iowa State University. She serves on the Board of Eaton Corporation plc, a diversified power management company, and previously served on the board of directors of Axalta Coating Systems, a leading provider of liquid and powder coatings. |
| | | | | | |
| | | | Governance | |
|
| | | | | | | |
John K. Wulff |
| |
| Mr. Wulff is the former Chairman of the board of directors of Hercules Incorporated, a specialty chemicals company, a position he held from July 2003 until Ashland Inc.’s acquisition of Hercules in November 2008. Prior to that time, he served as a member of the Financial Accounting Standards Board from July 2001 until June 2003. Mr. Wulff was previously Chief Financial Officer of Union Carbide Corporation, a chemical and polymers company, from 1996 to 2001. During his fourteen years at Union Carbide, he also served as Vice President and Principal Accounting Officer from January 1989 to December 1995 and Controller from July 1987 to January 1989. Mr. Wulff was also a partner of KPMG LLP and predecessor firms from 1977 to 1987. Mr. Wulff is currently a member of the audit and compensation committees, and a member of the board of directors (since 2016) of Atlas Air Worldwide Holdings, Inc., a leading global provider of outsourced aircraft and aviation operating services. He previously served as a member of the board of directors from 2004 to 2016, the chairman of the governance and compensation committee and as a member of the audit committee of Moody’s Corporation. Mr. Wulff served as a director of Sunoco, Inc. from March 2004 until October 2012 when Sunoco was acquired by Energy Transfer Partners L.P., and as a director of Chemtura Corporation from October 2009 until April 2017 when Chemtura was acquired by Lanxess A.G. |
| | | | | | |
Director since: 20062019 Age: 7059 Current Board Committees: AuditNone
Nominating and Corporate Governance
Other Public Company Boards: Atlas Air Worldwide Holdings, Inc.
ChemturaEaton Corporation (2009-2017)
Moody’s Corporation (2004-2016)
Sunoco Inc. (2004-2012) plc
| | | | | Specific Qualifications, Attributes, Skills and Experience: |
| & | .Q | :. | Substantial leadership, chemical industry, financial,operational, global business, innovation-focused, transactional, governmental/regulatory, strategy development and risk management and innovation-focused business experience gained as Chairman of Hercules Incorporated, a specialty chemicals company, and as CFO of Union Carbide Corporation, awith more than 30 years’ service in the chemical and polymers company.refinery business, most recently as Executive Vice President, Global Manufacturing at Royal Dutch Shell (now Shell plc), and previous service on other boards of directors. |
| Â: | Ð | G |
| q | @ | 6 |
| L | | |
| | | |
| Ð | | | | |
| Â | G | | Substantial finance and governmental and regulatory experience as a large accounting firm partnercorporate leader focusing on environmental and member of the FASB.sustainability performance and strategy. |
| | | |
| | | | | |
Vote Required
Each director must receive a majority of the votes cast in favor of his or her election.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERSSHAREHOLDERS VOTE
“FOR” THE NOMINEES LISTED ABOVE
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 15 |
|
| | | | | | |
| | | | | Governance | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 19 |
Board and Committee Governance
Director Elections
|
| | | | | | | | | | | | | | | | | | | |
| As a result of the removal by stockholders of our classified board structure, commencing with the 2019 Annual Meeting of Stockholders, all | | | Governance | |
Board and Committee Governance
Director Elections
| | | | | | | | | | | | | | | | | | | | |
All Celanese directors will beare elected annually. We currently have one class
As part of directors whose term expires in 2019. The remainder of our directors are unclassified and their terms expire at the Annual Meeting.
To ensure that theits efforts to maintain a board remains composed of high-functioning members capable of keeping their commitments to board service, the corporate governance and nominating committeeN&CG Committee evaluates the qualifications and performance of each incumbent director before recommending the nomination of that director for an additional term.
In February 2016, our board
Our Board proactively adopted a by-law, which permits a stockholder,shareholder, or a group of up to 20 stockholders,shareholders, owning at least three percent of the Company’s outstanding Common Stock continuously for at least three years, to submit director nominees for up to the greater of two directors or 20 percent of the number of directors currently serving on the board,Board, subject to a phase-in and the terms and conditions specified in the by-laws.
| | | Proxy Access | |
| | Holders of at least | |
| | 3% | |
| | held by up to 20 stockholdersshareholders | |
| | Holding the shares | |
| | continuously for at least | |
| | 3 | |
| | years | |
| | Can nominate two candidates or | |
| | 20% | |
| | of the board,Board, whichever is greater, for election at an annual stockholders’shareholders’ meeting | |
| | |
| | | | |
| | | | |
Majority Voting Standard
Our by-laws provide that, in an election of directors where the number of nominees does not exceed the number of directors to be elected, each director must receive the majority of the votes cast with respect to that director. This means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. The boardBoard believes this majority vote standard appropriately gives stockholdersshareholders a greater voice in the election of directors than the traditional plurality voting standard. If an incumbent director does not receive a majority vote, he or she has agreed that a letter of resignation will be submitted to the board.Board. The corporate governance and nominating committeeN&CG Committee will make a recommendation to the boardBoard on whether to accept or reject the resignation, or whether other action should be taken. The boardBoard will act on the resignation within 90 days of the certification of the vote, taking into account the recommendation of the corporate governance and nominating committee,N&CG Committee, which will include consideration of the vote result, the director’s contributions to the Company during his or her tenure, the director’s qualifications, and any relevant input from stockholders.shareholders. Only independent directors will participate in the deliberations regarding a tendered resignation.
Composition of the Board of Directors
Our certificate of incorporation provides that the number of members of the boardBoard of directorsDirectors shall be fixed by the board,Board, but shall be no less than seven and no more than fifteen. Our boardBoard may fill vacancies and increase or, upon the occurrence of a vacancy, decrease the board’sBoard’s size between annual stockholders’shareholder meetings. As of the date of this Proxy Statement, we have, and the boardBoard has established the size of the boardBoard to be, nine11 directors. Our boardBoard of directorsDirectors is and shall be comprised of a majority of independent directors. See “Director Independence and Related Person Transactions” for additional information. In addition, the Company has a director retirement guideline, the full text of which is set forth in our corporate governance guidelines. The guideline provides that a director should retire from the boardBoard of directorsDirectors no later than the annual meeting of stockholdersshareholders following such director’s 7275ndth birthday; provided, however, the retirement guideline may be waived by a majority of uninterested directors upon the recommendation of the nominating and corporate governance committee.N&CG Committee.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 16 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 20 |
Annual Board Evaluationand Committee Self-Evaluation Process
Each year, the members of the boardBoard and each committee conduct a self-assessment. The process for the self-assessment is approved by the boardBoard each year based on a recommendation from the nominatingN&CG Committee. In 2020, the N&CG recommended, and corporate governance committee. the Board approved, updates to refresh its annual self-assessment process.
Under the process used in 2018,2021, the nominating and corporate governance committeeN&CG Committee develops a thorough list of topics to be considered by the directors, including boarddirectors. These topics are incorporated into a Board questionnaire that is completed by each director and committee structure, oversight, information, and culture, which are approved by the board.committee-specific questionnaires for each committee. The chaircompletion of the nominatingquestionnaires is followed by teleconferences held by our Senior Vice President and corporate governance committee has a teleconferenceGeneral Counsel with each independent director, including the Lead Independent Director, and then finally with the Chairman and CEO, to discuss the topics and to gather any other feedback a director has as they relate to the full boardBoard and each of the committees. The chair of the nominating and corporate governance committee elicits comments from the directors concerning improvements for the board, the committees, the lead independent director, the committee chairs, the CEO and management. The chair of the nominating and corporate governance committee then confers with the Chairman and the lead independent director to ensure that they understand any concerns that were raised, and summarizes the input from the questionnaires and conversations is summarized and presents itpresented to the full boardBoard (and to the independent directors as to the Chair / CEO) and to the individual committees at the October board meeting. EachBoard and committee chair also conducts a similar self-assessment with respect to their committee based on (i) a subsetmeetings.
An overview of the board discussion topics, (ii) comments made to the chair of the nominating and corporate governance committee or the committee chair and (iii) discussion during executive sessions of committee meetings. our current process is illustrated below.
| | | | | | | | |
| Board and Committee Self-Evaluation Process Summary |
| Process Design and Approval | v | Discussion among management and N&CG Chair regarding key topics for assessment and incorporates into a questionnaire. |
| Topics generally include Board and committee structure, oversight, information, individual director assessments, culture and current strategic or business topics of particular importance. |
| v | N&CG recommends process for Board approval in July. |
| Questionnaire | v | Board members complete and provide comments on detailed questionnaire. |
| Includes specific questions and topics for each committee. |
| One-on-One Conversations | v | SVP and General Counsel holds one-on-one conversations with each director to discuss their feedback and comments on the questionnaire, and any other topics a director wishes to raise. |
| v | SVP and General Counsel confers with the Chair of the N&CG Committee, the Chairman/CEO and Lead Independent Director so that they understand any concerns that were raised. |
| Report-Out to Committees and Board | v | Feedback reported to Board and individual committees at October meeting. |
| v | Board and each committee hold dedicated closed executive sessions in October to discuss assessment and provide any feedback to management. |
| Implementation of Feedback | v | Management and directors coordinate to update policies and practices to incorporate director feedback. |
| v | The Board reviews implementation progress in connection with the following year’s self-evaluation process. |
| | Enhancements implemented from most recent self-evaluation included director education, increased regularity of certain agenda topics, and increased director touchpoints with individual members of management. |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 21 |
Also, the nominatingN&CG Committee and corporate governance committee evaluatesfull Board evaluate directors who are nominees for re-election to the boardBoard as part of the nomination process.
Board Leadership Structure
The Company’s governance framework provides the boardBoard with flexibility to select the appropriate leadership structure for the Company. In making leadership structure determinations, the boardBoard considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders.shareholders.
In April 2020, the Board elected Chief Executive Officer Lori Ryerkerk to serve as Chairman of the Board. The Board made this election as part of the planned transition of leadership from Mark Rohr. Mr. Rohr served as CEO until Ms. Ryerkerk’s appointment into that role in May 2019 and then served as Executive Chairman until June 2020. Therefore, the current leadership structure is comprised of a combined chairmanChairman of the board (“Chairman”)Board and chief executive officer,Chief Executive Officer, a lead independent director, boardLead Independent Director, and Board committees comprised exclusively of and chaired by independent directors, andtogether with active engagement by all directors. The boardBoard believes the structure provides an effective balance between strong company leadership and appropriate safeguards and oversight by independent directors.
|
| | | | | | | | | | | | | | | | | | | | | | |
| Board Leadership Structure | | | | | |
| ● | Chairman of the Board and CEO: Mark Rohr | | The boardBoard believes this is the optimal structure to guide the Companyprovide consistent leadership and to maintain the focus required to achieve the Company’s strategic plan and long-term business goals. However,The N&CG Committee and the board reevaluatesBoard will continue to reevaluate the structure annually. |
| ● | Chairman and Chief Executive Officer: Lori Ryerkerk | |
| ● | Lead Independent Director: Edward GalanteWilliam Brown (since April 2021) | | |
| ● | All boardBoard committees comprised exclusively of independent directors | | |
| ● | Active engagement by all directors | | |
| | | | | | | | |
Duties and Responsibilities of Lead Independent Director
The duties and responsibilities of the Company’s lead independent director,Lead Independent Director are documented in the Lead Independent Director Policy, which is part of our corporate governance guidelines. The Company’s Lead Independent Director, who is elected by the independent directors for a one-year term:
•presides over executive sessions of the non-employee, independent members of the boardBoard and at meetings of the boardBoard in the absence of, or upon the request of, the Chairman and CEO;Chairman;
•approves the scheduling of boardBoard meetings, as well as the agenda and materials for each boardBoard meeting and executive session of the board’s non-employee,Board’s independent directors;
•has the authority to call meetings of the boardBoard and such other meetings of the non-employee, independent directors as he/she deems necessary;
•serves as a liaison and supplemental channel of communication between the non-employee, independent directors and the Chairman and Chairman/CEO;
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 17 |
•meets regularly with the Chairman and Chairman/CEO;
•communicates with stockholdersshareholders as requested and deemed appropriate by the board;Board;
•interviews director candidates along with the nominating and corporate governance committee;N&CG Committee;
•approves and coordinates the retention of advisors and consultants who report directly to the non-employee, independent members of the board,Board, except as otherwise required by applicable law or the New York Stock Exchange (“NYSE”) Listing Standards;
•guides the board’sBoard’s governance processes concerning the annual boardBoard self-evaluation and CEO succession planning; and
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 22 |
•when requested by the Chairman or the board,Board, assists the boardBoard in reviewing and assuringpromoting compliance with governance principles.
Leadership Structure Determination– Details and Rationale
Consistent with the board’sBoard’s commitment to corporate governance practices that are in the best interests of the Company and its stockholders,shareholders, at least one executive session of the directors each year includes a review of the board’sBoard’s leadership structure and consideration of whether the position of chairmanChairman of the boardBoard should be held by the chief executive officerChief Executive Officer or an independent director. This section describes the details and the board’sBoard’s rationale for its current leadership structure.
Under the Company’s by-laws, the Chairman presides over meetings of the board,Board, presides over meetings of stockholders,shareholders, consults and advises the boardBoard and its committees on the business and affairs of the Company and performs such other duties as may be assigned by the board.Board. The chief executive officerChief Executive Officer is generally in charge of the daily affairs of the Company, subject to the overall direction and supervision of the boardBoard and its committees and subject to such powers as reserved by the board. Mark RohrBoard. Lori Ryerkerk currently serves as both Chairman of the Board and chief executive officer.Chief Executive Officer.
The Board has had a Lead Independent Director role for more than a decade. In November 2011, the Company’s presiding director role was transitioned to a lead independent director role and, in connection with this transition,February 2021, the independent directors expandedelected William M. Brown to serve as Lead Independent Director beginning after the role of the lead independent director (see above). In February 2019,2021 Annual Meeting (held in April 2021), and the independent directors re-elected Edward Galante to serveMr. Brown as lead independent director beginning at the 2019 Annual Meeting. The duties and responsibilities of the lead independent director are described above and are set forthLead Independent Director in the Company’s corporate governance guidelines.February 2022. Although annually elected, the lead independent directorLead Independent Director is generally expected to serve for more than one year, although generally not more than three -to five years.
Importantly, all directors play an active role in overseeing the Company’s business both at the boardBoard and committee levels. As set forth in the Company’s corporate governance guidelines, the core responsibility of the directors is to exercise their business judgment to act in what they reasonably believedbelieve to be in the best interests of the Company and its stockholders.shareholders. The boardBoard currently consists of one member of management (our CEO)the Chairman and eight non-employeeChief Executive Officer and ten independent directors. The non-employeeindependent directors are skilled and experienced leaders in business. Many currently serve or have served as chief executives or members of senior management of Fortune 1000 companies.companies and/or as senior leaders in top consulting, accounting and law firms. In these roles, the non-employeeindependent directors have been called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of management. As such, the non-employeeindependent directors are well-equipped to oversee the success of the business and to provide advice and counsel to the chief executive officerChief Executive Officer and Company management.
As part of each regularregularly scheduled boardBoard meeting, the non-employeeindependent directors meet in executive session without the chief executive officerChairman/CEO present. These meetings allow non-employeeindependent directors to discuss issues of importance to the Company, including the business and affairs of the Company, as well as matters concerning management, without any member of management present. All of the boardBoard committees, which are described below, are chaired by, and comprised entirely of, independent directors.
The boardBoard believes that combined leadership of both the boardBoard and the Company by Mr. RohrMs. Ryerkerk is currently the optimal structure to guide the Company, provide consistent leadership and maintain the focus required to achieve the Company’s long-term business goals. The Company’s
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 18 |
business is complex and it has operations in 18 countries around the world. Given the complex global reach of our business, the board believes the chief executive officer is in the best position to focus directors’ attention on critical business matters and to speak for and lead both the Company and the board.
The boardBoard believes that the current leadership structure – a combined Chairman of the Board and chief executive officer,Chief Executive Officer, a lead independent director, boardIndependent Director, Board committees comprised exclusively of independent directors and active engagement by all directors – is effective and currently serves the business and stockholdersshareholders well.
Board Meetings in 20182021
Each of our directors is expected to devote sufficient time and attention to his or her duties and to attend all boardBoard meetings and committee meetings on which he or she serves. The boardBoard of directorsDirectors held seven meetings during 20182021 and committees of the boardBoard held a total of 2021 meetings. Overall attendance at such meetings was over 95%100%. AllTherefore all incumbent directors attended at least 75% of the aggregate of (i) meetings of the boardBoard and
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 23 |
(ii) meetings of the boardBoard committees on which they served during the fiscal year ended December 31, 2018.2021. In addition, the boardBoard expects directors to attend the annual meeting of stockholdersshareholders absent special circumstances. All of our directors who were members of the boardBoard as of the 20182021 Annual Meeting of StockholdersShareholders attended the annual meeting.2021 Annual Meeting.
Committees of the Board
The boardBoard of directorsDirectors has four standing boardBoard committees:
audit committee;•Audit Committee;
compensation•Compensation and management development committee;Management Development Committee;
nominating•Nominating and corporate governance committee;Corporate Governance Committee; and
environmental, health, safety, quality•Environmental, Health, Safety, Quality and public policy committee.Public Policy Committee.
The following table sets forth the current composition of our committees:committees as of the date of this Proxy Statement:
| | | | | | | | | | | | | | | | | |
| Independent Director | Audit Committee | Compensation and Management Development Committee | Environmental, Health, Safety, Quality and Public Policy Committee | Nominating and Corporate Governance Committee |
Jean S. Blackwell À | ü | l | | | l |
William M. Brownt | ü | | l | | l |
| Edward G. Galante | ü | | £ | l | |
Rahul Ghai À | ü | l | | | l |
| Kathryn M. Hill | ü | | l | £ | |
David F. Hoffmeister À | ü | l | | | l |
| Dr. Jay V. Ihlenfeld | ü | | l | l | |
Deborah J. Kissire À | ü | £ | | l | |
| Michael Koenig | ü | | l | l | |
| Kim K.W. Rucker | ü | l | | | £ |
| Lori J. Ryerkerk | | | | | |
| Meetings in 2021 | Board = 7 | 7 | 5 | 4 | 5 |
£ Chairperson l Member À Financial Expert u Lead Independent Director |
|
| | | | | |
| | Independent Director | Audit Committee | Compensation and Management Development Committee | Environmental, Health, Safety, Quality and Public Policy Committee | Nominating and Corporate Governance Committee |
Jean S. Blackwell À | ü | | l | | £ |
William M. Brown À | ü | l | | l | |
Edward G. Galanteu | ü | | l | | l |
| Kathryn M. Hill | ü | | £ | l | |
David F. Hoffmeister À | ü | l | | | l |
| Dr. Jay V. Ihlenfeld | ü | | l | £ | |
| Mark C. Rohr | | | | | |
| Kim K.W. Rucker | ü | l | | l | |
John K. Wulff À | ü | £ | | | l |
| Meetings in 2018 | Board = 7 | 7 | 5 | 4 | 4 |
£ Chairperson l Member À Financial Expert u Lead Independent Director |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 19 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 24 |
Audit Committee
The Company’s audit committeeAudit Committee (the “Audit Committee”) is currently comprised of Ms. Kissire (chair), Ms. Blackwell, Mr. Wulff (chairman), Mr. Brown,Ghai, Mr. Hoffmeister and Ms. Rucker, each of whom the boardBoard has affirmatively determined is independent of the Company and its management under the rules of the NYSE and the SEC. The boardBoard has also determined that Ms. Blackwell, Mr. Brown,Ghai, Mr. Hoffmeister and Mr. WulffMs. Kissire are “audit committee financial experts”“Audit Committee Financial Experts” as the term is defined in Item 407(d)(5) of Regulation S-K.applicable SEC rules. Each member of the audit committeeAudit Committee is also “financially literate” as that term is defined by the rules of the NYSE. The complete text of the audit committeeAudit Committee charter, as last amendedreviewed and approved by the boardBoard of directorsDirectors on July 16, 2018,April 14, 2021, is available on our website, https://investors.celanese.com, by clicking “Corporate Governance”.
The audit committeeAudit Committee is directly responsible for the appointment, compensation and oversight of the work of the Company’s independent registered public accounting firm. The independent registered public accounting firm reports directly to the audit committee.Audit Committee. The principal purposes of the audit committeeAudit Committee are to oversee:
•accounting and reporting practices of the Company and compliance with legal and regulatory requirements regarding such accounting and reporting practices;
•the quality and integrity of the financial statements of the Company;
•internal control and compliance programs;
•the independent registered public accounting firm’s qualifications and independence; and
•the performance of the independent registered public accounting firm and the Company’s internal audit function.
The Audit Committee Charter provides that the Audit Committee may, in its sole discretion and at the Company’s expense, retain legal accounting or other consultants or experts it deems necessary in the performance of its duties and without having to seek the approval of the Board.
Compensation and Management Development Committee
The Company’s compensationCompensation and management development committeeManagement Development Committee (the “CMDC”) is currently comprised of Mr. Galante (chair), Mr. Brown, Ms. Hill, (chair), Ms. Blackwell,Dr. Ihlenfeld and Mr. Galante and Dr. Ihlenfeld.Koenig. The boardBoard has determined that all members of the compensation and management development committeeCMDC are independent under Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and applicable NYSE listing standards, and qualify as “non-employee directors” for purposes of Section 162(m) of the Internal Revenue Code. The complete text of the compensation and management development committeeCMDC charter, as last amended by the boardBoard of directorsDirectors on July 16, 2018,14, 2021, is available on our website, https://investors.celanese.com, by clicking “Corporate Governance”. A description of the compensation and management development committee’sCMDC’s processes and procedures for determining executive compensation and the roles of management and the compensation consultant in determining or recommending the amount and form of compensation is more fully described in “Compensation Discussion and Analysis.”. The compensation and management development committeeCMDC charter provides that the compensationCMDC may, in its sole discretion and management development committee may, from time to time,at the Company’s expense, retain legal, accounting or other consultants or experts, including but not limited to compensation consulting firms, that the compensation and management development committeeCMDC deems necessary in the performance of its duties. The principal purposes of the compensation and management development committeeCMDC are to:
•review and approve the compensation of the Company’s executive officers;
•review and approve the corporate goals and objectives relevant to the compensation of the CEO and the other executive officers, and to evaluate the CEO’s and the other executive officers’ performance and compensation in light of such established goals and objectives; and
•oversee the development and implementation of succession plans for the CEO and the other key executives.executives; and
•oversee management in the areas of human capital management, including talent development, diversity, equity and inclusion.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 25 |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 20 |
Nominating and Corporate Governance Committee
The Company’s nominating and corporate governance committeeN&CG Committee is currently comprised of Ms. BlackwellRucker (chair), Ms. Blackwell, Mr. Galante,Brown, Mr. HoffmeisterGhai and Mr. Wulff.Hoffmeister. The complete text of the nominatingN&CG Committee charter, as last reviewed and approved by the Board of Directors on April 14, 2021, and our corporate governance committee charter,guidelines, as amendedlast reviewed and approved by the boardBoard of directorsDirectors on July 16, 2018, isApril 14, 2021, are available on our website, https://investors.celanese.com, by clicking “Corporate Governance”. The nominating and corporate governance committeeN&CG Committee charter provides that the nominatingN&CG Committee may, in its sole discretion and corporate governance committee may, from time to time,at the Company’s expense, retain legal accounting orand other consultants or experts, including but not limited to leadership search firms, the nominating and corporate governance committeeN&CG Committee deems necessary in the performance of its duties, including in its process of identifying director candidates.
The principal purposes of the nominating and corporate governance committeeN&CG Committee are to:
•identify, screen and review individuals qualified to serve as directors and recommend candidates for nomination for election at the annual meeting of stockholdersshareholders or to fill boardBoard vacancies;
•review and recommend non-employeeindependent director compensation to the board;Board;
•develop and recommend to the boardBoard and oversee implementation of the Company’s corporate governance guidelines;
•oversee evaluations of the board; andBoard;
•recommend to the boardBoard nominees for the committees of the board.Board; and
•review and assess our Board’s and the committees’ structure for overseeing ESG matters, oversee our strategy and processes for public reporting on ESG and sustainability and oversee our and our political action committee’s political engagement initiatives.
During 2018,2021, Willis, as independent outside compensation consultant, advised the nominating and corporate governance committeeN&CG Committee on non-employee director compensation matters.
Environmental, Health, Safety, Quality and Public Policy Committee
The Company’s environmental, health, safety, qualityEnvironmental, Health, Safety, Quality and public policy committeePublic Policy Committee (the “EHS Committee”) is currently comprised of Ms. Hill (chair), Mr. Galante, Dr. Ihlenfeld (chairman), Ms. Kissire and Mr. Brown, Ms. Hill and Ms. Rucker.Koenig. The environmental, health, safety, quality and public policy committeeEHS Committee assists the boardBoard in fulfilling its oversight duties regarding, while Company management retains responsibility for assuring compliance with, applicable environmental, health and safety laws and regulations. The complete text of the environmental, health, safety, quality and public policy committeeEHS Committee charter, as last amended by the boardBoard of directorsDirectors on July 16, 2018,April 14, 2021, is available on our website, https://investors.celanese.com, by clicking “Corporate Governance”.
The principal purposes of the environmental, health, safety, quality and public policy committeeEHS Committee are to:
•oversee the Company’s policies and practices concerning environmental, health, safety, quality and public policy issues;
•review the impact of such policies and practices on the Company’s corporate social responsibilities, public relationsESG and sustainability;sustainability responsibilities;
•oversee the development, implementation and monitoring of greenhouse gas (GHG) reduction and other sustainability-related investments into our manufacturing and production processes; and
•make recommendations to the boardBoard regarding these matters.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 21 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 26 |
Board Oversight
StockholdersShareholders elect the boardBoard to oversee management and to serve stockholders’shareholders’ long-term interests. Management is responsible for delivering on our strategy, creating our culture, creating and delivering innovative products and services, establishing accountability, and controlling risk. The boardBoard and its committees work closely with management to balance and align strategy, risk, corporate social responsibility, and other areas while considering feedback from stockholders.shareholders. Essential to the board’sBoard’s oversight role is a transparent and active dialogue between the boardBoard and its committees, and management. To support that dialogue, the boardBoard and its committees have access to, receive presentations from, and conduct regular meetings with the senior leadership team, other business and function leaders, subject matter experts, the Company’s enterprise risk management and internal audit functions, and external experts and advisors.
Board oversight of strategy
One of the board’sBoard’s primary responsibilities is overseeing management’s establishment and execution of the Company’s strategy. As Celanese continues to transform and expand its business, the boardBoard works with management to respond to a dynamically changing environment. At least quarterly, the CEO, the senior leadership team, and leaders from across the Company provide detailed business and strategy updates to the board.Board. At least annually, the boardBoard conducts an even more in-depth review of the Company’s overall strategy, including critical issues, risks and opportunities. At all of these reviews, the boardBoard engages with the senior leadership team and other business leaders regarding business objectives, the competitive landscape, economic trends, environmental and sustainability goals and investments, public policy and regulatory developments and other critical issues. At meetings occurring throughout the year, the boardBoard also assesses acquisitions, the Company’s operating and capital plan, and performance for alignment to our strategy. The boardBoard looks to the focused expertise of its committees to inform strategic oversight in their areas of focus. Members of senior management are available to discuss the Company’s strategy, plans, results and issues with the boardBoard committees and the board,Board, and regularly attend such meetings to provide periodic briefings and access. In addition, the audit committeeAudit Committee regularly holds separate executive sessions with the lead client service partner of the independent registered public accounting firm, the chief financial officer, the internal auditor, the chief compliance officer and other members of management as appropriate.
Board oversight of risk
Effective risk management is critical to Celanese’s ability to achieve its strategy.strategy and ESG goals. The boardBoard oversees management in exercising its responsibility for managing risk, considering our robust framework of policies, procedures, and processes to anticipate, identify, assess, prioritize, and mitigate risks across the Company. Risk management is considered a strategic activity within the Company and responsibility for managing risk rests with executive management while the committees of the boardBoard and the boardBoard as a whole participate in the oversight of the process. Specifically, the boardBoard has responsibility for overseeing the strategic planning process, reviewing and monitoring management’s execution of the strategic and business plan, and selected risk areas, including cybersecurity. Each boardBoard committee is responsible for oversight of specific risk areas relevant to their respective committee charter. The oversight responsibility of the boardBoard and the boardBoard committees is enabled by an enterprise risk management model and process implemented by management that is designed to identify, assess, manage and mitigate risks. In addition, the boardBoard recognizes that risk management and oversight comprise a dynamic and continuous process and reviews the enterprise risk model and process periodically. On a regular basis, the boardBoard and its committees engage with management on risk as part of broad strategic and operational discussions which encompass interrelated risks, as well as on a risk-by-risk basis.
The boardBoard executes its oversight responsibility directly and through its committees, whocommittees. Committees discuss the Company’s risk exposures with management, the internal audit executive and the independent external auditor in an iterative risk assessment process. Results of risk audits are routinely reported to leadership and the Audit Committee, which regularly reportreports back to the board.Board. Some examples of risks overseen by committees are:
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 27 |
•The audit committee oversees the enterprise risk process that management implements, andAudit Committee regularly reviews and assesses the Company’s processes to manage financial reporting risk and to manage internal audit, internal control over financial reporting and disclosure controls and procedures, tax, investment, and other financial risks, as well as the Company’s financial position and financial activities. ItThe Audit Committee also reviewsoversees the Company’s compliance program.
•The CMDC oversees compensation programs, policies and practices and their effect on risk-taking by management. See “Compensation Risk Assessment” for additional information. |
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 22 |
policies for risk assessment and steps management has taken to control certain risks not otherwise delegated by the board to other committees.
| |
• | The compensation and management development committee•The N&CG Committee oversees compensation programs and policies and practices and their effect on risk-taking by management. See “Compensation Risk Assessment” for additional information. |
The nominating and corporate governance committee manages risk by overseeing the governance framework and structure as well as other corporate governance matters, including oversight of the annual boardBoard and committee assessmentself-assessment process, and is charged with developing and recommending to the boardBoard corporate governance principles and policies and boardBoard committee structure, leadership and membership.
•The environmental, health, safety, quality and public policy committeeEHS Committee oversees the Company’scertain operational risks including those risks associated with employee,related to environmental, process and product safety and quality, public policy and reputation.as well as reputational issues related to those matters.
•The full board addressesBoard oversees the enterprise risk process that management implements and reviews risks associated with cybersecurity.it.
•The full boardBoard and the compensation and management development committeeCMDC address issues and risks associated with diversity, equity and inclusion and human capital management.
•The full Board and the Audit Committee oversee cybersecurity risk.
Each of the boardBoard committees is required to make regular reports of its actions and any recommendations to the boardBoard with respect to risk management, including recommendations to assist the boardBoard with its overall risk oversight function. In addition, an annual report of enterprise risks, which undergo a comprehensive review using strategic, operational, financial, compliance and IT risk themes, is delivered to the Board. This approach to risk oversight does not affect the board’sBoard’s leadership structure.
Each of our directors havehas substantial experience managing and overseeing risk for complex, international organizations that they leverage while serving on our Board. For example, Ms. Ryerkerk’s experience as our chief executive officer, Mr. Wullf’sBrown’s experience leading Hercules InternationalL3 Harris Technologies, Inc. as its chairman, necessitatedchief executive officer and Mr. Koenig’s experience leading Nobian Industrial Chemicals as its chief executive officer each necessitate risk management and oversight on a daily basis, while Mr. Brown continues to do so as president and the chief executive officer Harris Corporation.basis. The extensive chemicals leadership histories shared by Mr. Galante, and Dr. Ihlenfeld and Ms. Ryerkerk, as well as Ms. Hill’s leadership experience in technology, allow each of them to understand and address key risk-related issues unique to our industry and the Company. Risk management was an active component of Mr. Hoffmeister’s responsibilities as chief financial officer for Life Technologies and Ms. Kissire’s senior leadership positions with Ernst & Young LLP and continues to be an integral part of Mr. Wulff’sGhai’s responsibilities as chief financial officer for Union Carbide.Otis Worldwide Corporation. Finally, the management, leadership, accounting and legal backgrounds of Ms. Blackwell, Ms. Kissire and Ms. Rucker cause them to be especially in-tune with recognizing and advising on a broad array of issues affecting corporate risk.
Highlight on oversight of human capital management
The board,Board, the compensation and management development committee,CMDC, and the environmental, health, safety, quality and public policy committeeEHS Committee engage with the senior leadership team and human resources executives on a regular basis across a broad range of human capital management issues. Celanese is focused on creating a respectful, safe, rewarding, diverse, and inclusive work environment that allows our people to build meaningful careers. The success of these human capital management objectives is essentialimportant to the fulfillment of our strategy, and the boardBoard works with management to provide oversight on matters including culture, succession planning and development, compensation, benefits, employee recruiting and retention, diversity, equity and inclusion and respectful workplace. Additionally, each year, the compensation and management development committeeCMDC Committee evaluates management’s annual assessment of risk related to our compensation policies and practices. The boardBoard and the compensation and management development committeeCMDC Committee work with the CEO and our head of Human Resources to review CEO and senior executive succession plans, considering the qualifications and experience of potential leadership candidates.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 28 |
Highlight on oversight of cybersecurity risk and data privacy
The boardBoard and the audit committeeAudit Committee are each involved in oversight of the Company’s management of cybersecurity risk. Cybersecurity protection is vital to maintaining our proprietary information and the trust of our customers and employees. We must securerecognize the importance of securing our data and systems from potential breach. Management provides regular updates to the Board, including information about cybersecurity governance processes, the status of projects to strengthen internal
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 23 |
cybersecurity, and the results of security breach simulations. The boardBoard and its committees also discuss recent incidents throughout the industry and the emerging threat landscape.
To protect the Company, we maintain cyber/information security insurance with coverage for security incident response expenses, certain losses due to network security failures, investigation expenses, privacy liability and certain third-party liability. In early 2021, we hired a Chief Information Security Officer to further support our efforts to protect our information and manage our cybersecurity risks.
Highlight on oversight of strategic acquisitions
The boardBoard provides oversight of Celanese’s strategic acquisition and integration process, which supports alignment with our strategic objectives, provides accountability across acquisitions, and enables insight for future acquisitions. Our board includes eight members withBoard has a depth of extensive negotiation, acquisition, integration, and other business combination experience. That depth of experience that allows the boarddirectors to constructively engage with management and effectively evaluate acquisitions for alignment with our strategy and culture. Celanese views strategic acquisitions as an important element in delivering long-term stockholdershareholder value. While management is charged with identifying potential acquisition targets, executing transactions, and managing integration, our board’sBoard’s oversight extends to each phase. Management and the boardBoard regularly discuss potential acquisitions and their role in the Company’s overall business strategy. These discussions include acquisitions in process and potential future acquisitions, focusing on valuation, strategic risk, and potential synergies with our businesses and strategy. When management considers potentially significant acquisitions, the boardBoard receives updates and discusses with management a broad range of matters, including negotiations, due diligence findings, valuation, tax impacts, integration planning, talent retention, environmental and other risk, and regulatory impacts. Throughout the acquisition process, the boardBoard has access to the senior leadership team, appropriate business leaders, subject matter experts, and external advisors. As part of the entire strategic acquisition lifecycle, the boardBoard also receives regular updates and provides feedback on ongoing integration, operational success, and financial performance of our completed acquisitions, which allows the boardBoard to provide oversight and to identify trends and opportunities across transactions and over time.
AdditionalBoard oversight of environmental, social and governance matters
We recognize that our success is defined by multiple groups of stakeholders – investors, customers, employees, communities – and this recognition is reflected in our efforts to promote safety and protect our environmental resources as a responsible corporate citizen.
In 2019, CEO Lori Ryerkerk recognized the need to lead the next generation of sustainability efforts for the Company and formed the Celanese ESG Council. Our ESG Council is a cross-functional team of senior leaders from each region to develop, make recommendations to management and implement an ESG strategy on topics significant to Celanese’s long-term success.
The ESG Council meets monthly to form recommendations to senior leadership on key ESG program strategy and implementation of ESG-related projects. For example, the ESG Council has made recommendations on standards reporting alignment, further development of key KPIs, and has led the publication of the Company’s inaugural comprehensive Sustainability Report, available on sustainability.celanese.com.
The Company and the Board receive feedback from shareholders on ESG issues through our shareholder outreach program and through communication from shareholders. See “Shareholder Engagement” below.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 29 |
During 2021, our Board of Directors and its committees conducted an in-depth review of their approach to overseeing ESG topics most significant to Celanese. In April 2021, our Board agreed on a strengthened and clarified framework for overseeing priority ESG matters by aligning a specific committee or the full Board to each. The diagram below illustrates primary Board or committee oversight responsibility by topic.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Public Shareholders | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Board of Directors | |
| |
| | | | | | | | | | ü | Public Policy and Regulatory Issues | | | | | | | | | |
| | | | | | | | | | | ü | Enterprise Climate Policy and Strategy | | | | | | | | | |
| | | | | | | | | | | ü | Charitable Giving / Volunteerism | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Audit Committee | | CMD Committee | | N&CG Committee | | EHS Committee |
| | |
| ü | Compliance and Business Conduct Policy | | ü | Talent and Leadership Development, including Succession | | ü | Board Composition, Independence, Refreshment and ESG Oversight Approach | | ü | Environmental Policies |
| | | | | | ü | Process Sustainability |
| ü | Financial Risk | | | | | | ü | Workforce, Process and Chemical Safety |
| ü | Corporate Integrity | | ü | Executive Compensation and Performance | | ü | Shareholder Rights | | |
| | | | | | | | | | ü | ESG Metric Reporting | | ü | Supply Chain Risk |
| | | | | | | | ü | Diversity, Equity and Inclusion | | ü | Political Engagement / PAC Oversight | | ü | Product Quality |
| | | | | | | | | | | | ü | Greenhouse Gas Reduction in Manufacturing Processes |
| | | | | | | | ü | Pay Equity | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Celanese Executive Leadership | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Celanese ESG Council | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | Consists of cross-functional and regional senior leaders, and includes the chairs of our ten expert committees. The Council is responsible for recommending and monitoring progress against goals, metrics, and KPIs. | | | | | | | |
| | | | | | | | | | | | | |
Our Board regularly reviews the areas of responsibility of its committees, including through a regular annual review of its Committee Charters and our Corporate Governance FeaturesGuidelines, and include as part of those reviews ESG topics that are most significant to Celanese.
Stockholder
Shareholder Engagement
The boardBoard believes accountability to stockholdersshareholders is a mark of good governance and critical to the Company’s success. To that end, the Company maintains dedicated resources to actively engagefor regular active communication with stockholders.shareholders. The Company regularly engages with stockholdersshareholders on a variety of topics throughout the year to ensure we are addressingaddress their questions and concerns, to seek input and to provide perspective on Company policies and practices. Topics include corporate strategy, ESG matters, sustainability, cash deployment, executive compensation plan design and practices, governanceBoard composition and social responsibility.refreshment and executive succession.
During 2018,2021, we met with stockholders holding more than 50%contacted shareholders representing approximately 60% of our Common Stock, through in-personshares to offer engagement meetings and telephone calls. In addition,met telephonically in 2021 and early 2022 with shareholders holding approximately 47% of our shares. At these meetings senior representatives of our executive, corporate governance, human resources and investor
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 30 |
relations teams met virtually with shareholder representatives to discuss our strategy, our ESG and sustainability progress, governance, human capital and executive compensation.
Shareholder Feedback in 2021 and Early 2022 Related to Our Strategy, Board and ESG Progress
We have listened intently to the views of shareholders, and the substantial majority that we attended 9 investor conferencesspoke to in 2021 were supportive of our leadership structure, Board composition,, business response to the COVID-19 pandemic, and 15 non-transaction roadshows. In November 2015,progress on our ESG journey. Below is a summary of key topics that we held an investor dayfound to be of interest to our shareholders during this year’s engagement.
| | | | | |
| Topics of Interest to Shareholders | Our Perspective, Response, Actions Taken and Actions Planned |
| Climate-Related Topics: ● Our progress towards tracking our Scope 1, 2 and 3 emissions ● Our plans for disclosing GHG emissions metrics and targets ● Opportunities to reduce GHG emissions through products and operations | ● We implemented new software to capture SASB-aligned environmental metrics to enhance our tracking capabilities. In our Sustainability Report released in the third quarter of 2021, we reported Scope 1 and 2 emissions in accordance, for the first time, with the Greenhouse Gas Protocol. We have established an internal task force that is evaluating the impact of tracking our Scope 3 emissions.
● In March 2022, we announced plans for a 30% reduction in Scope 1 and 2 GHG Intensity (measured by product volume) by 2030.
● We are actively investing in projects to increase our energy efficiency and our use of renewable energy. |
| ● Sustainability-focused products | ● We are currently developing a growing range of products made from biological sources or renewable materials and materials that can be recycled or composted at the end of their life. ● Additionally, we see significant growth opportunities for products supporting future mobility, vehicle light-weighting and other end-product efficiencies. |
| ● Board structure and oversight, including Board refreshment, combined Chair / CEO leadership structure and Board oversight of ESG | ● We have a highly-qualified and diverse board that brings unique capabilities across functions, experiences, industries and background.
● Our mix of longer-serving and newer members of our Board effectively combines deep knowledge and experience in the complexities of our business with fresh perspectives and insights.
● We believe a combined Chairman / CEO leadership structure, complemented by a strong Lead Independent Director role, to be the optimal leadership structure for the company at this time. Our Board reviews this structure annually. See page 22. |
| |
See page 52 for information about discussions with more than 140 participants. We hosted another similar eventshareholders in May 2018 with more than 196 participants.2021 regarding human capital matters and our executive compensation programs. In addition to this direct engagement, the Company has instituted a number of complementary mechanisms that allow stockholdersshareholders to effectively communicate a point of view with the board,Board, including:
| |
• | the ability to attend and voice opinions at the annual meeting of stockholders•a dedicated annual meeting page on our website (see page 88); •a majority voting standard (see page 20); •an annual advisory vote to approve executive compensation (see page 46); •annual election of directors (see page 20); •proxy access (see page 20); •commitment to thoughtfully consider shareholder proposals submitted to the Company (see page 93); and •the ability to direct communications to individual directors, a Board committee or the entire Board (see page 9288); |
| |
• | a dedicated annual meeting page on our website (see page 89); |
| |
• | a majority voting standard (see page 16); |
| |
• | the annual advisory vote to approve executive compensation (see page 35); |
| |
• | annual election of directors (beginning in 2019) (see page 16); |
| |
• | commitment to thoughtfully consider stockholder proposals submitted to the Company (see page 90); and |
| |
• | the ability to direct communications to individual directors or the entire board (see page 90). |
See page 41 for additional information about engagement with stockholders regarding executive compensation.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 24 |
Social Responsibility and Political Engagement
Corporate Social Responsibility
The environmental, health, safety, quality and public policy committee assists the board in guiding our comprehensive corporate social responsibility initiatives. These initiatives reflect strategic business imperatives and our core belief that we should be a responsible corporate citizen in the communities where we live and work. Our policies and business practices, including our diversity and inclusion efforts, philanthropy and community investment, safety and environmental sustainability, foster relationships that demonstrate our commitment and values.
The primary goal of our diversity and inclusion efforts is to create a work environment that is compatible with, and respectful of, all of our employees and maximizes employee engagement in accomplishing our mission and business objectives. Examples include our employee resource groups located in facilities and locations where we operate in Asia, Europe and the Americas.
The primary goal of our philanthropy initiative is to provide support through volunteer service, participation in and employee-led giving to local organizations, and community collaboration with institutions, organizations and good works that enhance the sustainability of the host communities in which we principally operate. This is brought to life through national partnerships and local initiatives in support of needy families, primary education and safe places to live and grow. We formed the Celanese Foundation in 2012. The Foundation matches employee gifts to recognized 501(c)(3) charities and provides grants to employee-selected charities based on employee volunteerism and alignment with our focus areas. Since its inception, the Celanese Foundation has provided grants totaling over $10,000,000 to organizations. In addition, our employees are encouraged to contribute their money, and their time, volunteering over 200,000 hours in 2018 alone.
The primary goal of our safety initiative is to assure that employees and contractors remain injury free. At Celanese, safety is considered a value, which holds fast against changing priorities. Leaders are committed to creating the best working environment where employees and contractors are engaged in training and procedures that minimize hazards and prevent injuries. In 2018, we continued with industry leading safety performance. Recognized with numerous industry safety awards, including the American Chemistry Council Responsible Care Company of the Year, we are committed to continuous improvement in eliminating injuries.
In addition to preserving the health and safety of our employees, contractors and communities, Celanese is committed to protecting the environment, and ensuring the safe operations of our processes. Our process safety strategy continues to provide exemplary results in reducing loss of primary containment incidents. We are strengthening the process safety culture by focusing on leadership commitment to process safety, developing competencies and learning from incidents. This data-driven approach led to improvements through our award winning Walk the Line program, where workers conduct a thorough safety review before starting a process.
We consider protecting the environment a fundamental responsibility. We treat the communities where we do business as our own by protecting the energy, air and water supplies and minimizing waste. Many times, our capital investments help us substantially reduce our environmental emissions. Examples include boiler conversions from coal and fuel oil to natural gas in the U.S. and Mexico. Our latest construction projects also include the best technology to improve efficiency and environmental performance.
We believe that chemistry plays an integral role in solving many of the world’s challenges. This belief means we are committed to advancing safe, effective and sustainable products and technologies that unlock the untapped potential of humankind. This potential is at work at Celanese where each employee has taken measures to be a steward of the earth’s natural resources and of each other. We are committed to continuing our significant progress in meaningful areas of our business, including energy use, protecting sensitive air and water ecosystems, continued emissions reductions, meaningful safety measures, and a people-centered culture, all while growing Celanese products, customers and technologies to new heights.
The Celanese 2018 Stewardship Report is available at www.celanese.com/stewardship.
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 2531 |
How We Have Responded To Shareholder Feedback on Governance Matters in the Past
We routinely consider shareholder feedback in compensation and governance matters. In prior years, in response to shareholder feedback, we took action to eliminate our classified board structure, adopted a proxy access by-law, extended the PRSU performance period from two to three years, added a return measure (ROCE) to our long-term incentive plan, adopted a more enhanced compensation clawback policy, and amended our insider trading policy to further address anti-hedging and prevent pledging of our Common Stock by our executive officers.
Additional Governance Matters
As a global company, Celanese must not only meet a breadth of varying local, state and regional regulations, but also be mindful of possible social and political conflicts. We understand the role corporate governance plays in maintaining our goal to act in accordance with our values.
Celanese’s Board of Directors is composed of a diverse group of leaders with experience at major domestic and international companies. They have worked in key market sectors that reflect our customer base and have sound financial and governance expertise. Their experience provides an understanding of business strategies and impacts, as well as challenges and risks. Ten of 11 directors are independent, 45% represent gender diversity and 18% racial or ethnic diversity. Copies of our committee charters and other governance documents are available on our website, https://investors.celanese.com.
Governance and Compensation Best Practices
Celanese is committed to strong corporate governance and compensation practices that promote the long-term interests of shareholders, strengthen board and management accountability and help build public trust in the Company. Examples are listed on page 49. Political Engagement Policy
The Company believes in responsible corporate governance and actively participates in the political process to support the needs of our business and our 7,500 employees. The Company seeks to responsibly use our resources to advance public policy that is consistent with the Company’s values, the sustainability of our business and long-term stockholder values. The CompanyAlthough Celanese does not provideengage in any direct political contributions.contributions, the Company strives to offer fair, thoughtful and transparent educational advocacy programs to acquaint elected officials about the work we do, the jobs we create and the people behind the innovative solutions we produce. The Company does, however, sponsorsponsors a voluntary, nonpartisan political action committee called the Celanese Political Action Committee (“CELPAC”). CELPAC supports candidates for federal, state and local office in the U.S., representing both major U.S. political parties, that advocate and pursue government policies that promote the Company’s interests. CELPAC allows eligible employeesis governed by a Board of Directors who regularly evaluates the merits of donations to pool their personal funds on a voluntary basiscandidates to align those donations with other employees to help elect candidates who appreciatethe Company’s goals. For our full political engagement policy and understand the issues important to Company. Participation in CELPAC is entirely voluntary. At least annually, Celanese posts to its website, www.celanese.com (under “Company Info”; “Political Engagement Policy”),for a list of all political contributions, made during the prior calendar year, including CELPAC’s contributions.
Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies
The Company’s hedging policy prohibits directors, executive officers and other employees from purchasing any financial instrument that is designedplease go to hedge or offset any decrease in the market value of Common Stock, including prepaid variable forward contracts, equity swaps, collars and exchange funds. Directors and executive officers are also prohibited from engaging in short sales related to Common Stock. The Company’s pledging policy prohibits directors and executive officers from pledging Common Stock, including holding Common Stock in a margin account. In addition, directors and the Company’s executive officers are required to obtain pre-approval from the Company’s Deputy General Counsel before pledging shares of Common Stock. Such approval will only be granted if the individual can clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities.https://celanese.com/about-us/political-engagement-policy.
Code of Conduct
The Company has adopted a code of business conduct applicable to directors, executive officers and all other employees. Our employees, suppliers and customers can ask questions about our code of conduct and other ethics and compliance issues, or report potential violations, through Navex, a global Internet and telephone information and reporting services company. The code of conduct is available on our compliance website, http://compliance.celanese.com, by clicking “Business Conduct Policy”. In the event the Company amends or waives any of the provisions of the code of conduct applicable to our principaldirectors or executive officer, principal financial officer or controller that relates to any element of the definition of ”code of ethics” enumerated in Item 406(b) of Regulation S-K under the 1934 Act,officers, the Company intends to disclose these actions on the Company’s website.website to the extent required by SEC or NYSE rules.
No Hedging, No Pledging and Anti-Short Sale Policies
The Company's hedging policy prohibits directors, executive officers and all employees of the Company and its subsidiaries from engaging in any transaction, acquiring any financial instrument, or entering into any derivative contract, directly or indirectly (including through any designee), that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of any securities of the Company, including Common Stock, held directly or
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 26 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 32 |
indirectly by any such person. The policy applies to all securities of the Company held by such a person, including securities not acquired as compensation. The hedging policy indicates that prohibited hedging may include put options, call options, forward sale contracts, prepaid variable forward contracts, equity swaps, collars and exchange funds.
The Company's pledging policy prohibits directors and executive officers from pledging Common Stock, including holding Common Stock in a margin account. Directors and executive officers are also prohibited from engaging in short sales related to Common Stock.
Director Compensation
Director Compensation ProcessesProcess
Our director compensation program is intended to enhance our ability to attract, retain and motivate non-employee directors of exceptional ability and to promote the common interest of directors and stockholdersshareholders in enhancing the value of our Common Stock.
The boardBoard reviews director compensation at least annually based on recommendations by the nominating and corporate governance committee.N&CG Committee. The nominating and corporate governance committeeN&CG Committee has the sole authority to engage a consulting firm to evaluate director compensation and since 2017 has engaged Willis to assist in setting director compensation. The nominating and corporate governance committeeN&CG Committee reviews director compensation taking into account multiple factors, including pay practices and trends at publicly traded companies (including companies in our compensation comparator group and surveys of S&P 500 compensation data), continued expansion of director, committee chair and lead director responsibilities, and the growing time commitment.commitment of Board and Committee service. The nominating and corporate governance committeeN&CG Committee and the boardBoard base their determinations on director compensation on recommendations from Willis and these factors. In July 2021, based on market practices and reviewing trends at other S&P500 companies and our compensation comparator companies (outlined below). Based on that review,these considerations, the board did not approve anyBoard approved changes in the level or mix ofto non-employee director compensation, when reviewedwhich are set forth below. Prior to these changes, the last increase in July 2018. Willis also serves as the independent consultant to thenon-employee director compensation and management development committee on executive compensation.was effective in August 2017.
Director Compensation in 20182021
The Company uses both cash and equity-based compensation to attract and retain qualified directors to serve on our boardBoard of directors,Directors, as follows:
|
| | | | |
| Director Compensation Component | Amount | |
| Annual Awards | |
| Annual cash retainer (paid quarterly) | $105,000 | 115,000 |
| Annual time-based restricted stock units (“RSU”)(one-year vesting) | $150,000 | 160,000 |
| Incremental Awards for Board Leadership |
| Annual cash fee for chair: (i) nominating and corporate governance committee, and (ii) environmental, health, safety, quality and public policy committee | $15,000 | |
| Annual cash fee for chair: (i) audit committee, and (ii) compensation and management development committee | $20,000 | |
| Annual cash fee for lead independent director | $25,000 | 30,000 |
Newly-elected directors receive a pro-rata equity award. Non-managementIn addition to the above, Directors are reimbursed for expenses incurred in attending board, committee and shareholder meetings. Directors are also reimbursed for reasonable expenses associated with other business activities that benefit the Company, including participation in director education programs. We generally do not provide perquisites to our directors, other than small gifts provided at Board meetings and upon retirement. Occasionally, a director may use Company-provided aircraft for travel to Board meetings.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 33 |
U.S. non-management directors are entitled to participate in the Company’s 2008 Deferred Compensation Plan (“2008 Deferred Plan”), which is an unfunded, nonqualified deferred compensation plan that allows directors the opportunity to defer all or a portion of their cash compensation and RSUs in exchange for a future payment amount equal to their deferments plus or minus certain amounts (including dividend equivalents) based on the market performance of specified measurement funds selected by the participant. Deferrals by directors under the 2008 Deferred Plan, including deferrals of RSUs, do not receive above-market earnings. Directors Blackwell, Brown, Galante, Hill, Ihlenfeld, Kissire, Rucker and Wulff were the only directors that made contributions to, or had balances in, this plan during 2021.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 27 |
20182021 Director Compensation Table
The table below is a summary of compensation earned and RSUs granted by the Company to non-management directors for the fiscal year ended December 31, 2018.2021. | | Name(1) (a) | | Fees
Earned or
Paid in
Cash ($)(2) (b) | | Stock
Awards ($)(3) (c) | | Option
Awards($)(4) (d) | | Non-Equity
Incentive Plan
Compensation ($) (e) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)(5) (f) | | All Other
Compensation ($)(6) (g) | | Total ($) (h) | Name(1) (a) | | Fees
Earned or
Paid in
Cash ($)(2) (b) | | Stock
Awards ($)(3) (c) | | Option
Awards($) (d) | | Non-Equity
Incentive Plan
Compensation
($)
(e) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($) (f) | | All Other
Compensation ($) (g) | | Total
($)
(h) |
| Jean S. Blackwell | | 120,000 |
| | 149,891 |
| | — | | — | | — | | — | | 269,891 |
| Jean S. Blackwell | | 113,958 | | | 149,926 | | | — | | — | | — | | — | | 263,884 | |
| William M. Brown | | 105,000 |
| | 149,891 |
| | — | | — | | — | | — | | 254,891 |
| William M. Brown | | 129,583 | | | 149,926 | | | — | | — | | — | | — | | 279,509 | |
| Bennie W. Fowler | | 37,788 |
| | — | | — | | — | | — | | — | | 37,788 |
| |
| Edward G. Galante | | 130,000 |
| | 149,891 |
| | — | | — | | — | | 5,000 | | 284,891 |
| Edward G. Galante | | 131,042 | | | 149,926 | | | — | | — | | — | | — | | 280,968 | |
| Kathryn M. Hill | | 125,000 |
| | 149,891 |
| | — | | — | | — | | — | | 274,891 |
| Kathryn M. Hill | | 126,042 | | | 149,926 | | | — | | — | | — | | — | | 275,968 | |
| David F. Hoffmeister | | 105,000 |
| | 149,891 |
| | — | | — | | — | | — | | 254,891 |
| David F. Hoffmeister | | 109,583 | | | 149,926 | | | — | | — | | — | | — | | 259,509 | |
| Dr. Jay V. Ihlenfeld | | 120,000 |
| | 149,891 |
| | — | | — | | — | | — | | 269,891 |
| Dr. Jay V. Ihlenfeld | | 113,958 | | | 149,926 | | | — | | — | | — | | — | | 263,884 | |
| Deborah J. Kissire | | Deborah J. Kissire | | 121,250 | | | 149,926 | | | — | | — | | — | | — | | 271,176 | |
| Kim K.W. Rucker | | 25,109 |
| | 87,445 |
| | — | | — | | — | | — | | 112,554 |
| Kim K.W. Rucker | | 120,208 | | | 149,926 | | | — | | — | | — | | — | | 270,134 | |
| John K. Wulff | | 125,000 |
| | 149,891 |
| | — | | — | | — | | — | | 274,891 |
| John K. Wulff | | 52,083 | | | 149,926 | | | — | | — | | — | | — | | 202,009 | |
| |
(1)
| Mr. Fowler resigned during 2018. Therefore, the information above reflects his service on the board from his election to the board through the date of his resignation. Mr. Rohr is not included in this table because he was an employee of the Company during 2018 and received no compensation for his services as a director.
|
| |
(2)
| Includes amounts earned for the annual retainer and committee chair and lead independent director fees for the respective directors, as applicable. |
| |
(3)
| Represents the grant date fair value of 1,372 RSUs granted to each non-management director in April 2018 (790 RSUs for Ms. Rucker, granted in October 2018, which represents a prorated amount of RSUs for time served from her election through April 2019) under the Company’s 2009 Global Incentive Plan (for Ms. Rucker, under the 2018 Global Incentive Plan) computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation. For a discussion of the method and assumptions used to calculate such expense, see Notes 2 and 20 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. As of December 31, 2018, each non-management director listed in the table owned 1,372 RSUs, except Mr. Fowler, who held no RSUs, and Ms. Rucker, who held 790(1)Mr. Ghai and Mr. Koenig are not included in this table because they became directors in February 2022. Ms. Ryerkerk is not included in this table because she was an employee of the Company during 2021 and received no compensation for her services solely as a director. Mr. Wulff retired from the Board in May 2021 after more than 14 years of service. (2)Includes amounts earned for the annual retainer and committee chair and lead independent director fees for the respective independent directors, as applicable. (3)Represents the grant date fair value of 975 RSUs granted to each non-management director in April 2021 under the 2018 Global Incentive Plan. The fair value of RSUs granted to our non-management directors under our 2021 LTIP as part of the annual award was calculated to be $153.77 per RSU, which reflects the average of the high and low market price of our Common Stock as reported by the NYSE on the applicable grant date and discounted for lack of dividend participation. As of December 31, 2021, each non-management director listed in the table owned 975 RSUs. |
| |
(4)
| The Company has not granted stock options to directors since 2007. As of December 31, 2018, no persons serving as a non-management director held any stock options.
|
| |
(5)
| Deferrals by directors under the 2008 Deferred Plan, including deferrals of RSUs, do not receive above-market earnings and therefore no amount with respect to those deferrals is included in the Table. |
| |
(6)
| Directors are reimbursed for expenses incurred in attending board, committee and stockholder meetings. Directors are also reimbursed for reasonable expenses associated with other business activities that benefit the Company, including participation in director education programs. We generally do not provide perquisites to our directors, other than small gifts provided at board meetings and upon retirement. Occasionally, a director may use Company-provided aircraft for travel to board meetings. Also, a director’s spouse may accompany him or her on Company business at our request. For example, spouses are invited to some of the board dinners we hold during the year in connection with board meetings. This policy involves a de minimus or no incremental cost to us, and we believe it serves a legitimate business purpose. The board does not provide any tax gross-ups on any director perquisites. No director received perquisites at or exceeding a total value of $10,000 in 2018. For Mr. Galante, represents the matching of a charitable contribution to a local charity.
|
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 28 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 34 |
Director Stock Ownership Guidelines
The boardBoard of directorsDirectors considers Common Stock ownership by directors to be of utmost importance. The boardBoard believes such ownership enhances the commitment of directors to our future and aligns their interests with those of our other stockholders.shareholders. The boardBoard has therefore established minimum stock ownership guidelines for non-employee directors that require each director to own Common Stock having a value of at least five times his or her base annual cash retainer of $105,000.$115,000. Each newly elected director has five years from the year elected to reach this ownership level. During the five-year period, a director may not sell more than 50% of the shares received as compensation. As of the computation date, December 31, 2018,2021, all of our then current independent directors had attained the minimum stock ownership levels based on holdings except for Ms. Rucker,Kissire, who joined the boardBoard in 2018, who is on-track for compliance2020 and is not required to meet the minimum stock ownership guidelines until 2023.2025. Ms. Kissire is on-track for compliance. Messrs. Ghai and Koenig joined the Board in February 2022 and will have until 2027 to comply with the stock ownership guidelines.
Director Independence and Related Person Transactions
Director Independence
The listing standards of the NYSE require companies listed on the NYSE to have a majority of “independent” directors. As noted below, all of our directors, other than our Chairman and chief executive officer,Chief Executive Officer, are independent.
The boardBoard of directorsDirectors has adopted standards of independence for directors that are set forth in Exhibit A to the Company’s corporate governance guidelines. The boardBoard reviews and determines the independence of each of the directors in accordance with these standards. The full text of the corporate governance guidelines is available on our website, https://investors.celanese.com, by clicking “Corporate Governance”. These standards incorporate all of the requirements for director independence contained in the NYSE listing standards. The NYSE listing standards generally provide that a director is independent if the boardBoard affirmatively determines that the director has no material relationship with the Company directly or as a partner, stockholdershareholder or officer of an organization that has a relationship with the Company. In addition, a director is not independent if certain other relationships exist.
The board,Board, based on the recommendation of the nominating and corporate governance committee,N&CG Committee, affirmatively determined that eightten of our current directors, Messrs. Brown, Galante, Hoffmeister, Ihlenfeld and Wulff, and Ms. Blackwell, Mr. Brown, Mr. Galante, Mr. Ghai, Ms. Hill, Mr. Hoffmeister, Mr. Ihlenfeld, Ms. Kissire, Mr. Koenig, and Ms. Rucker are independent of the Company and its management under the NYSE listing standards and the Company’s director independence standards. Mr. Rohr,Ms. Ryerkerk, our Chairman and CEO, is the only current director who is not independent. The Board had previously determined that Mr. Wulff, who retired from the Board in May 2021, was independent under these standards.
In addition, in compliance with the NYSE listing standards, we have an Audit Committee, a Compensation and Management Development Committee and a Nominating and Corporate Governance Committee that are each entirely composed of independent directors. Each of these committees have written charters addressing the respective committee’s purpose and responsibilities and the annual evaluation of the performance of these committees.
The Company in the normal course of business has been a party to transactions with other entities (or their subsidiaries) where certain of our directors are themselves either directors or officers. When making the board’sBoard’s director independence determination, the boardBoard was aware of, and considered, the relationships listed below. All the business relationships noted below were entered into on standard pricing and terms asand arose in the ordinary course of our business. The amounts involved in each relationship did not exceed, in any of the last three fiscal years: (1) the greater of $1,000,000 or two percent of such othereither company’s consolidated gross revenues.revenues, in the case of entities where our directors serve on the board, or (2) 1% of the consolidated gross revenues of the Company or the
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 35 |
director’s entity, in the case of entities where our directors serve as executive officers. As a result, each qualified under a categorical standard of independence that the boardBoard previously approved and therefore, none of the relationships were otherwise deemed to be a material relationship that impaired the director’s independence.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 29 |
|
| | | | |
| Director | Organization | Director’s Relationship
to Organization
| Type of Transaction, Relationship or Arrangement | Does the Amount Exceed the Greater of $1 million or 2% of either company’s Gross Revenues?(1) |
| Jean S. Blackwell | Ingevity Corporation and its subsidiaries and affiliates | Director | Business Relationship - Routine sales to Ingevity | No |
| Johnson Controls International plc and its subsidiaries and affiliates | Director | Business Relationship - Routine sales to, and purchases from, Johnson Controls | No |
| Edward G. Galante | Praxair, Inc.Linde plc and its subsidiaries and affiliates*affiliates | Director | Business Relationship - Routine purchases from Praxair | No |
| Linde plcsales to, and subsidiaries and affiliates* | Director | Business Relationship - Routine purchases from, Linde | No |
| Clean Harbors and its subsidiaries and affiliates | Director | Business Relationship - Routine purchases from Clean Harbors | No |
Kathryn M. HillRahul Ghai | Moody’s Inc.Otis Worldwide Corporation and its subsidiaries and affiliates | Chief Financial Officer | Business Relationship - Routine purchases from Otis | No |
| David F. Hoffmeister | Glaukos Corporation and its subsidiaries and affiliates | Director | Business Relationship - Routine purchases from Moody’ssales to Glaukos | No |
| Dr. Jay V. Ihlenfeld | Ashland Global Holdings Inc. and its subsidiaries and affiliates | Director | Business Relationship - Routine sales to, and purchases from, Ashland | No |
| Deborah J. Kissire | Axalta Coating Systems Ltd. and its subsidiaries and affiliates | Director | Business Relationship - Routine sales to Axalta | No |
| Michael Koenig | Nobian Industrial Chemicals B.V. | Chief Executive Officer | Business Relationship - Routine purchases from Nobian | No |
| Symrise AG and its subsidiaries and affiliates | Director | Business Relationship - Routine sales to Symrise | No |
| Kim K.W. Rucker | HP Inc. and its subsidiaries and affiliates | Director | Business Relationship - Routine purchases from HP | No |
* During 2018, Praxair, Inc. merged with Linde AG to form Linde plc.(1) In cases where our Board member serves as an executive officer, such transactions did not exceed 1% of either company’s gross revenues.
In addition, in compliance with the NYSE listing standards, we have an audit committee, a compensation and management development committee and a nominating and corporate governance committee thatThere are each entirely composed of independentno family relationships among our directors. Each of these committees have written charters addressing the respective committee’s purpose and responsibilities and the annual evaluation of the performance of these committees.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 36 |
Certain RelationshipsRelationships and Related Person Transactions
The boardBoard of directorsDirectors has adopted a written policy regarding related person transactions (the “Related Party Transaction Policy”). For purposes of SEC rules and such policy, an interested transaction is a transaction or relationship in which the aggregate amount involved exceeds or may reasonably be expected to exceed $120,000 since the beginning of the Company’s last fiscal year, the Company or any of its subsidiaries is a participant, and any related party will have a direct or indirect material interest in the transaction or relationship. A related party is any person who is or was during the last fiscal year an executive officer, director or nominee for election as a director; a greater than 5 percent beneficial owner of Common Stock; or an immediate family member of any of these persons. Compensation paid to our named executive officers is not treated as an interested transaction under the Related Party Transaction Policy to the extent that it is disclosed as compensation in this Proxy Statement. In addition, a related party would not be deemed to have a “material interest” in a transaction simply due to such person’s position as an officer ora director of the other party in the transaction or, in the case of simply being an employee of the other party to the transaction, in the latter case if the aggregate amount involved in the subject year does not exceed the greater of $1,000,000 or two percent of that party’s annual revenues.
The audit committeeAudit Committee reviews the material facts of all interested transactions that meet the requirements discussed above and therefore require the audit committee’sAudit Committee’s approval and either approves or disapproves of the entry into the interested transaction. In determining whether to approve or ratify an interested transaction, the audit committee
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 30 |
Audit Committee takes into account, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. The Audit Committee may not approve any interested transaction if it determines the interested transaction to be inconsistent with the interests of the Company and the shareholders.
In addition, the audit committeeAudit Committee has delegated to the chairmanchair of the audit committeeAudit Committee the authority to pre-approve or ratify (as applicable)approve any interested transaction with a related party (other than the chair or an immediate family member of the chair) in which the aggregate amount involved is expected to be less than $2,000,000. In connection with regularly scheduled meetings of the audit committee,Audit Committee, the Company provides the audit committeeAudit Committee for its review a summary of each new interested transaction that was pre-approvedapproved by the chairmanchair of the audit committee.Audit Committee. No director may participate in any discussion or approval of an interested transaction for which he or she is a related party, except that the director is to provide all material information concerning the interested transaction to the audit committee.Audit Committee.
No interested transactions were approved or ratified or, to our knowledge, required to be approved or ratified, during 2018.2021.
None of our directors are adverse to the Company in any pending litigation.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 31 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 37 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Stock Ownership Information | |
STOCK OWNERSHIP INFORMATION
Principal StockholdersShareholders and Beneficial Owners
The following table sets forth information with respect to the beneficial ownership of Common Stock as of February 19, 2019,22, 2022, by (i) each person known to the Company to beneficially own more than 5% of our Common Stock; (ii) each of the Company’s present directors, including those nominated for election at the Annual Meeting; (iii) the named executive officers serving during the last fiscal year;; and (iv) all present directors and executive officers of the Company as a group. The percentage of beneficial ownership set forth below is calculated in accordance with SEC Rule 13d-3Rules and is based on the number of shares of Common Stock outstanding and entitled to vote as of February 19, 2019,22, 2022, which was 127,843,230.108,029,267.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amount and Nature of Beneficial Ownership of Common Stock |
| | Common Stock
Beneficially Owned(1) | | Rights to
Acquire
Shares of Common Stock(2) | | Total
Common
Stock
Beneficially Owned | | Percentage of
Common Stock
Beneficially Owned |
| | | | |
The Vanguard Group, Inc.(3) | | 13,418,615 | | | — | | | 13,418,615 | | | 12.4 | |
Wellington Management Company, LLP(4) | | 9,438,575 | | | — | | | 9,438,575 | | | 8.7 | |
BlackRock, Inc.(5) | | 7,642,373 | | | — | | | 7,642,373 | | | 7.1 | |
Dodge & Cox(6) | | 7,154,913 | | | — | | | 7,154,913 | | | 6.6 | |
Directors(7)(8) | | | | | | | | |
| Jean S. Blackwell | | 7,226 | | | — | | | 7,226 | | | * |
| William M. Brown | | 103 | | | — | | | 103 | | | * |
| Edward G. Galante | | 9,923 | | | — | | | 9,923 | | | * |
| Rahul Ghai | | — | | | — | | | — | | | |
| Kathryn M. Hill | | 9,474 | | | — | | | 9,474 | | | * |
| David F. Hoffmeister | | 46,420 | | | — | | | 46,420 | | | * |
| Dr. Jay V. Ihlenfeld | | 7,510 | | | — | | | 7,510 | | | * |
| Deborah J. Kissire | | 100 | | | | | 100 | | | * |
| Michael Koenig | | — | | | — | | | — | | | * |
| Kim K.W. Rucker | | 56 | | | — | | | 56 | | | * |
Named Executive Officers(7) | | | | | | | | |
| John G. Fotheringham | | 16,680 | | | — | | | 16,680 | | | * |
| Thomas F. Kelly | | 26,460 | | | — | | | 26,460 | | | * |
| A. Lynne Puckett | | 22,487 | | | — | | | 22,487 | | | * |
| Scott A. Richardson | | 41,438 | | (8) | — | | | 41,438 | | | * |
Lori J. Ryerkerk(9) | | 46,620 | | | — | | | 46,620 | | | * |
All present directors, nominees and executive officers as a group (16 persons)(10) | | 237,031 | | | — | | | 237,031 | | | * |
|
| | | | | | | | | | | |
| | | Amount and Nature of Beneficial Ownership of Common Stock |
| | | Common Stock
Beneficially Owned(1) | | Rights to
Acquire
Shares of Common Stock(2) | | Total
Common
Stock
Beneficially Owned | | Percentage of
Common Stock
Beneficially Owned |
| | | | | |
The Vanguard Group, Inc.(3) | | 14,638,982 |
| | — |
| | 14,638,982 |
| | 11.4 |
Dodge & Cox(4) | | 10,727,345 |
| | — |
| | 10,727,345 |
| | 8.4 |
BlackRock, Inc.(5) | | 9,467,199 |
| | — |
| | 9,467,199 |
| | 7.4 |
Directors(6)(7) | | | | | |
| | |
| Jean S. Blackwell | | 2,601 |
| | 1,372 |
| | 3,973 |
| | * |
| William M. Brown | | 103 |
| | 1,372 |
| | 1,475 |
| | * |
| Edward G. Galante | | 5,298 |
| | 1,372 |
| | 6,670 |
| | * |
| Kathryn M. Hill | | 4,849 |
| | 1,372 |
| | 6,221 |
| | * |
| David F. Hoffmeister | | 41,795 |
| | 1,372 |
| | 43,167 |
| | * |
| Dr. Jay V. Ihlenfeld | | 4,257 |
| | 1,372 |
| | 5,629 |
| | * |
| Kim K.W. Rucker | | — |
| | 790 |
| | 790 |
| | * |
| John K. Wulff | | 27,675 |
| | 1,372 |
| | 29,047 |
| | * |
Named Executive Officers(6) | | | | | | | | |
| Peter G. Edwards | | — |
| | — |
| | — |
| | * |
| Shannon L. Jurecka | | 2,598 |
| | — |
| | 2,598 |
| | * |
| Kevin S. Oliver | | 19,547 |
| | — |
| | 19,547 |
| | * |
| Scott A. Richardson | | 21,825 |
| (7) | — |
| | 21,825 |
| | * |
Mark C. Rohr(8) | | 527,432 |
| | — |
| | 527,432 |
| | * |
| Scott M. Sutton | | 74,038 |
| | — |
| | 74,038 |
| | * |
All present directors, nominees and executive officers as a group (13 persons)(9) | | 712,472 |
| | 10,394 |
| | 722,866 |
| | * |
| |
* | *Less than 1% of shares. |
| |
(1)
| Includes shares for which the named person or entity has sole and/or shared voting and/or investment power. Does not include shares that may be acquired through the vesting of restricted stock units or other rights to acquire shares. To our |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 32 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 38 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Stock Ownership Information | |
(1)Includes shares for which the named person or entity has sole and/or shared voting and/or investment power. Does not include shares that may be acquired through the vesting of restricted stock units or other rights to acquire shares. To our knowledge, none of the Common Stock listed as beneficially owned by the current directors or executive officers are subject to hedges or have been pledged.
| |
(2)
| Reflects rights to acquire shares of Common Stock within 60 days of February 19, 2019, and includes, as applicable, shares of Common Stock issuable upon the vesting of restricted stock units granted under the 2009 GIP and 2018 GIP within 60 days of February 19, 2019. Does not include units in a stock denominated deferred compensation plan with investments settled in shares of Common Stock as follows: Ms. Blackwell – 6,476 equivalent shares, Mr. Brown – 3,923 equivalent shares, Mr. Galante – 5,925 equivalent shares, Dr. Ihlenfeld – 7,550 equivalent shares, and Mr. Wulff – 17,860 equivalent shares.
|
| |
(3)
| On January 10, 2019, The Vanguard Group, Inc. (“Vanguard Group”) filed Amendment No. 5 to Schedule 13G with the SEC reporting beneficial ownership of 14,638,982 shares of Common Stock as of December 31, 2018, with sole voting power over 160,611 shares, shared voting power over 30,203, sole dispositive power over 14,452,968 shares and shared dispositive power over 186,014 shares. The address of Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
| |
(4)
| On February 14, 2019, Dodge & Cox filed Amendment No. 9 to Schedule 13G with the SEC reporting beneficial ownership of 10,727,345 shares of Common Stock as of December 31, 2018, with sole voting power over 10,208,518 shares and sole dispositive power over 10,727,345 shares. The address of Dodge & Cox is 555 California Street, 40th Floor, San Francisco, CA 94104. |
| |
(5)
| On February 4, 2019, BlackRock, Inc. (“BlackRock”) filed Amendment No. 1 to Schedule 13G with the SEC reporting beneficial ownership of 9,467,199 shares of Common Stock as of December 31, 2018, with sole voting power over 8,258,418 shares and sole dispositive power over 9,467,199 shares. The address of BlackRock is 55 East 52nd Street, New York, NY 10055. |
| |
(6)
| Listed alphabetically. Each person has sole investment and voting power with respect to the Common Stock beneficially owned by such person. |
| |
(7)
| Includes beneficial ownership of Common Stock by Mr. Richardson of 526 equivalent shares in the Celanese Stock Fund under the CARSP as of February 19, 2019. He has the ability to direct the voting of the Company’s Common Stock underlying these equivalent shares and the ability to change their investment options at any time. |
| |
(8)
| Mr. Rohr also serves as a director and his ownership information is set forth under “Named Executive Officers”. |
| |
(9)
| Excludes shares held by Mr. Edwards who ceased employment on January 31, 2019 and Mr. Oliver who ceased to be an executive officer effective April 24, 2018. Does not include 153,488 PRSUs (at target) held by our current executive officers as of February 19, 2019 subject to future performance and vesting conditions.
|
(2)Reflects rights to acquire shares of Common Stock within 60 days of February 22, 2022, and includes, as applicable, shares of Common Stock issuable upon the vesting of restricted stock units granted under the 2018 GIP within 60 days of February 22, 2022. Does not include units in a stock denominated deferred compensation plan with investments settled in shares of Common Stock as follows: Ms. Blackwell – 8,625 equivalent shares, Mr. Brown – 9,680 equivalent shares, Mr. Galante – 6,322 equivalent shares, Dr. Ihlenfeld – 9,512 equivalent shares, Ms. Kissire – 760 equivalent shares, and Ms. Rucker – 4,099 equivalent shares. (3)On February 9, 2022, The Vanguard Group, Inc. (“Vanguard Group”) filed Amendment No. 8 to Schedule 13G with the SEC reporting beneficial ownership of 13,418,615 shares of Common Stock as of December 31, 2021, with shared voting power over 178,277 shares, sole dispositive power over 12,969,032 shares and shared dispositive power over 449,583 shares. The address of Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(4)On February 4, 2022, Wellington Group Holdings LLP (“Wellington”) filed a Amendment No. 2 to Schedule 13G with the SEC reporting beneficial ownership of 9,438,575 shares of Common Stock as of December 31, 2021, with shared voting power over 8,700,729 shares and shared dispositive power over 9,438,575 shares. The address of Wellington is 280 Congress Street, Boston, MA 02210.
(5)On February 7, 2022, BlackRock, Inc. (“BlackRock”) filed Amendment No. 4 to Schedule 13G with the SEC reporting beneficial ownership of 7,642,374 shares of Common Stock as of December 31, 2021, with sole voting power over 6,483,006 shares and sole dispositive power over 7,642,374 shares. The address of BlackRock is 55 East 52nd Street, New York, NY 10055.
(6)On February 14, 2022, Dodge & Cox filed Amendment No. 12 to Schedule 13G with the SEC reporting beneficial ownership of 7,154,913 shares of Common Stock as of December 31, 2021, with sole voting power over 6,830,263 shares and sole dispositive power over 7,154,913 shares. The address of Dodge & Cox is 555 California Street, 40th Floor, San Francisco, CA 94104.
(7)Listed alphabetically. Each person has sole investment and voting power with respect to the Common Stock beneficially owned by such person.
(8)Includes beneficial ownership of Common Stock by Mr. Richardson of 558 equivalent shares in the Celanese Stock Fund under the CARSP as of February 22, 2022. Mr. Richardson has the ability to direct the voting of the Common Stock underlying these equivalent shares and the ability to change their investment options at any time.
(9)Ms. Ryerkerk also serves as a director and her ownership information is set forth under “Named Executive Officers”.
(10)Does not include an estimated 255,127 PRSUs (at target) held by our current executive officers as of February 22, 2022 subject to future performance and vesting conditions.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, officers (as defined) and persons who own more than ten percent of our Common Stock, to file with the SEC reports of their ownership and changes in their ownership of Common Stock. Directors, officers and greater than ten percent stockholders are required by the SEC’s regulations to furnish the Company with copies of all Section16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company,filed reports or written representations from our directors and officers that all reportable transactions were reported, the Company believes, to the best of its knowledge, that for the year ended December 31, 2018,2021, all Section 16 filing requirements applicable to its directors, officers and greater than ten-percent stockholdersshareholders were complied with.
with except that a single report for Ms. Kissire, one of our directors, reporting the conversion into phantom stock of vested restricted stock units for which Ms. Kissire had elected to defer receipt pursuant to our 2008 Deferred Compensation Plan (but no change in ownership) was filed late.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 33 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 39 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Stock Ownership Information | |
Securities Authorized for Issuance Under Equity Compensation Plans
The following information is provided as of December 31, 2021 with respect to equity compensation plans:
| | | | | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) | |
| | (a) | | (b) | | (c) | |
| Equity compensation plans approved by security holders | | 1,600,801 | | (1) | $ | — | | (2) | 18,132,572 | | (3) |
(1)Includes 1,600,801 restricted stock units ("RSUs") granted under the Celanese Corporation 2018 Global Incentive Plan (the "2018 Plan"), including shares that may be issued pursuant to outstanding performance-based RSUs, assuming currently estimated maximum potential performance; actual shares issued may vary, depending on actual performance. If the performance-based RSUs included in this total vest at the target performance level (as opposed to the maximum potential performance), the aggregate RSUs outstanding would be 956,376. Also includes 36,565 share equivalents attributable to RSUs deferred by non-management directors under the Company's 2008 Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 2018 Plan. Upon vesting, a share of the Company's Common Stock is issued for each RSU. Column (b) does not take any of these RSU awards into account because they do not have an exercise price.
(2)There were no outstanding options under the 2018 Plan as of December 31, 2021.
(3)Includes shares available for future issuance under the 2018 Plan and the Celanese Corporation 2009 Employee Stock Purchase Plan approved by shareholders on April 23, 2009 (the "ESPP"). As of December 31, 2021, an aggregate of 4,552,099 shares were available for future issuance under the 2018 Plan and 13,580,473 shares of our Common Stock were available for future issuance under the ESPP. As of December 31, 2021, 419,527 shares have been offered for purchase under the ESPP.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 40 |
AUDIT MATTERS
Audit Committee Report
The Audit Committee is composed of five independent directors, each of whom satisfies the independence requirement of Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the external reporting process and the Company’s internal controls. The Audit Committee serves as the primary communication link among the Board, the independent public accounting firm, and our internal auditors.
Company management is responsible for the financial statements and the reporting process, including the system of disclosure controls and procedures and the internal control over financial reporting. The independent registered public accounting firm, KPMG LLP, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee reviewed and discussed with the Company’s management and KPMG LLP the audited financial statements for the Company for the year ended December 31, 2021. The Audit Committee also met with KPMG LLP and the internal auditors, with and without management present, to discuss the results of the auditors’ examinations, their evaluation of our internal control, and the overall quality of our financial reporting. The Audit Committee also discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. In addition, the Audit Committee reviewed and discussed with KPMG LLP its independence from the Company and management, including the matters in the written disclosures required by PCAOB Rules.
The Audit Committee discussed with KPMG LLP and the internal auditors the overall scope and plans for their respective audits. The Audit Committee reviewed and discussed the fees billed to the Company by KPMG LLP for audit, audit-related, tax and other services provided during fiscal 2021, which are set forth under “Item 2: Ratification of Independent Registered Public Accounting Firm”, and determined that the provision of non-audit services is compatible with KPMG LLP’s independence. Based on the Audit Committee’s reviews and discussions described above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements for the Company be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC. The Audit Committee evaluates the performance of the independent registered public accounting firm each year and determines whether to re-engage the current firm or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the registered public accounting firm, along with their capabilities, technical expertise, and knowledge of our operations and industry. Based on these evaluations, the Audit Committee decided to engage KPMG LLP as our independent registered public accounting firm for fiscal 2022. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee has continued its long-standing practice of recommending that the Board ask our shareholders to ratify the appointment of the registered public accounting firm at our annual meeting of shareholders. This report was submitted by the current members of the Audit Committee,
| | | | | | | | | | | |
| Dated: February 9, 2022 | Deborah J. Kissire, Chair | | (The Audit Committee report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing under the Securities Act of 1933, or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates the Audit Committee report by reference therein.) |
| Jean S. Blackwell | |
| Rahul Ghai | |
| David F. Hoffmeister | |
| Kim K.W. Rucker | |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 41 |
ITEM 2: Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has selected KPMG LLP to audit the Company’s consolidated financial statements for the fiscal year ending December 31, 2022. Since 2004, KPMG LLP has served as our independent registered public accounting firm and also provided other audit-related and non-audit services that were approved by the Audit Committee.
Representatives of KPMG LLP will virtually attend the Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from shareholders.
We are asking our shareholders to ratify the selection of KPMG LLP as our independent registered public accounting firm. Although ratification is not required by our by-laws or otherwise, the Board is submitting the Audit Committee’s selection of KPMG LLP to our shareholders for ratification as a matter of good corporate practice. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders. If the appointment of KPMG LLP is not ratified, the Audit Committee will evaluate the basis for the shareholders’ vote when determining whether to continue the firm’s engagement.
Audit and Related Fees
Aggregate fees billed to the Company by KPMG LLP and its affiliates were as follows:
| | | | | | | | | |
| | Year Ended December 31, |
| | 2021 | 2020 | |
Audit Fees(1) | $ | 7,786,275 | | $ | 6,818,661 | | |
Audit-related Fees(2) | $ | 60,028 | | $ | 97,380 | | |
Tax Fees(3) | $ | 1,321,559 | | $ | 1,275,285 | | |
All Other Fees(4) | — | | — | | |
| Total Fees | $ | 9,167,862 | | $ | 8,191,326 | | |
(1)For professional services rendered for the audits of annual consolidated financial statements of the Company (including the audit of internal control over financial reporting), statutory audits in non-U.S. jurisdictions, the review of the Company’s quarterly consolidated financial statements and review of SEC filings.
(2)Primarily for professional services rendered in connection with consultation on financial accounting and reporting standards and employee benefit plan audits.
(3)Primarily for professional services related to technical assistance, the preparation of tax returns in non-U.S. jurisdictions and assistance with tax audits and appeals.
(4)For other permitted professional advisory services.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 42 |
Audit Committee Pre-Approval Policy
The Audit Committee is responsible for appointing, retaining and pre-approving the fees of the Company’s independent registered public accounting firm. The Audit Committee has adopted a Policy for Pre-Approval of Independent Auditor Services (“Pre-Approval Policy”) pursuant to which proposed services may be pre-approved through the application of detailed policies and procedures (“general pre-approval”) or by specific review of each service (“specific pre-approval”). The Audit Committee has provided general pre-approval for certain specific types of non-prohibited audit, audit-related and tax services that do not exceed $200,000 per project and $1,000,000 per year in the aggregate and gives detailed guidance to management as to the specific services that are eligible for general pre-approval. The Audit Committee is to be informed on a timely basis of any services performed by the independent registered public accounting firm pursuant to general pre-approval. Unless a type of service is included in this general pre-approval, it will require specific pre-approval. The annual audit services engagement terms and fees must be specifically pre-approved by the Audit Committee. Requests to provide services that require specific pre-approval must be submitted to the Audit Committee by both the independent registered public accounting firm and the chief financial officer or corporate controller, and must include detailed back-up documentation and a joint statement as to whether the request or application is consistent with the SEC’s rule on auditor independence.
The Audit Committee may delegate its pre-approval authority to one or more of its members. The member or members to whom such authority is delegated must report any pre-approval decisions to the Audit Committee at its next scheduled meeting.
All services performed by our independent registered public accounting firm in 2021 were pre-approved by the Audit Committee or otherwise under the Pre-Approval Policy.
Vote Required
Although ratification is not required in our by-laws or otherwise, approval of this proposal requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR” THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2022
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 43 |
EXECUTIVE COMPENSATION
Table of Contents
|
| | | | |
ITEM 2:3: ADVISORY APPROVAL OF EXECUTIVE COMPENSATION | |
| |
| COMPENSATION DISCUSSION AND ANALYSIS | |
Executive SummaryCD&A Highlights | |
Overview | |
| Named Executive Officers | |
2018 Performance Highlights | |
Performance Goals for 2018 | |
2018 Payouts Aligned to Performance | |
CEO 2018 Compensation Decisions | |
Our Response to the 2018 Advisory Vote and Stockholder Feedback | |
| We Follow Compensation Governance Best Practices | |
| |
| Human Capital Management | |
| |
| |
| 2021 Say on Pay Vote and Shareholder Engagement | |
| Compensation Philosophy and Elements of Pay | |
| Compensation Philosophy | |
| Compensation Objectives | |
| Elements of Compensation | |
| Setting Total Compensation | |
| Our Compensation Comparator Group | |
| |
2018 Compensation Decisions | |
| Base Salary | |
| Annual Incentive Plan Awards | |
| Long-Term Incentive Compensation | |
Executive Pay Parity | |
| |
| Compensation Governance | |
| Compensation and Management Development Committee Oversight | |
| |
| | | | | |
Role of the CMDC’s Independent Compensation Consultant in Making Decisions | |
Role of Management in Making Decisionsand Management’s Consultant | |
| |
|
| |
| |
| |
| |
| Additional Information Regarding Executive Compensation | |
| Other Compensation Elements | |
| Executive Stock Ownership Requirements | |
| Executive Compensation Clawback Policy | |
| Tally Sheets | |
| Tax and Accounting Considerations | |
| |
| COMPENSATION RISK ASSESSMENT | |
| |
| COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT | |
| | |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | |
| |
| COMPENSATION TABLES | |
20182021 Summary Compensation Table | |
20182021 Grants of Plan-Based Awards Table | |
Outstanding Equity Awards at Fiscal 20182021 Year-End Table | |
20182021 Option Exercises and Stock Vested Table | |
20182021 Pension Benefits Table | |
20182021 Nonqualified Deferred Compensation Table | |
| Potential Payments Upon Termination or Change in Control | |
| |
| CEO PAY RATIO | |
Non-GAAP Financial Measures
This Proxy Statement, including the Compensation Discussion and Analysis, contains financial measures presented on a Non-GAAP basis. Celanese’s non-GAAP financial measures used in this document are as follows: [1] Adjusted earnings per share (or Adjusted EPS), which we define as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method; [2] Free cash flow, which we define as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to our partner in our methanol joint venture. Free cash flow amounts are net of pension contributions of $316 million in 2017; [3] Adjusted EBIT, which we define as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items; and [4] Return on invested capital (adjusted), which we define as Adjusted EBIT, tax effected using the adjusted tax rate, divided by the sum of the average of beginning and ending short- and long-term debt and Celanese Corporation shareholders’ equity. See “Exhibit A” to this Proxy Statement for additional information concerning these performance measures and a reconciliation of these measures to earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted, net cash provided by (used in) operations, net earnings (loss) attributable to Celanese Corporation, and net earnings (loss) attributable to Celanese Corporation divided by the sum of the average of beginning and end the of year short- and long-term debt and Celanese Corporation shareholders’ equity, the most comparable U.S. GAAP financial measures, respectively. |
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 34 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 44 |
ITEM 2:3: Advisory Approval of Executive Compensation
The Company’s compensation program for our named executive officers (“NEOs”) was designed by our compensation and management development committee (the “CMDC”) to meet our compensation philosophy and objectives.objectives, including maintaining a strong pay for performance culture. The principles of the program have contributed to our strong performance and have rewarded executives appropriately. See “Compensation Discussion and Analysis – Executive SummaryCD&A Highlights” for a summary of our compensation philosophy, 2018structure, 2021 performance, pay decisions and additionalapproach to compensation information.oversight.
We are presenting thisThis “say-on-pay” proposal which gives you, as a stockholder,shareholders the opportunity annually to endorse or not endorsecast a vote on our executive compensation program through an advisory votebased on the following resolution:
“Resolved, that the stockholdersshareholders approve, on an advisory basis, the compensation of our named executive officers,NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative disclosure, contained in this Proxy Statement.”
The boardBoard of directorsDirectors recommends that stockholdersshareholders endorse the compensation program for our named executive officersNEOs by voting FOR the above resolution. We believe that executive compensation for 2018 was reasonable, and justified by our performance. Our compensation program is the result of a carefully considered approach and takes into account input provided by shareholders and advice received from the compensation and management development committee’sCMDC’s independent compensation consultant. We believe that executive compensation for 2021 was supported by our performance. The Board of Directors currently has a policy of holding annual advisory votes to approve our executive compensation. Provided that the Board of Directors does not modify this policy, the Company’s next say-on-pay proposal after the 2022 Annual Meeting will be presented at the 2023 Annual Meeting of Shareholders.
Advisory Vote
This vote is mandated by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC regulations. As an advisory vote, this proposal is not binding upon the Company. In addition, the non-binding advisory vote described in this proposal will not be construed as overruling any decision by the Company, the boardBoard of directors,Directors, or the compensation and management development committee,CMDC, relating to the compensation of the named executive officers,NEOs, or creating or changing any fiduciary duties or other duties on the part of the boardBoard of directors,Directors, or any committee of the boardBoard of directors,Directors, or the Company.
Vote Required
The voting on this proposal is advisory. Approval of this proposal requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote. In 2017, our stockholders voted to have this advisory vote each year. In 2023, we will have another vote to determine the frequency of this advisory vote.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERSSHAREHOLDERS
VOTE “FOR” THE APPROVAL OF OUR EXECUTIVE COMPENSATION PROGRAM
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 35 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 45 |
Compensation Discussion and Analysis
Our Compensation Discussion and Analysis describes the objectives and elements of our executive compensation program, its alignment with performance, the 2018 compensation decisions regarding our named executive officersNEOs, and other actions of the compensation and management development committee.CMDC.
Executive SummaryCD&A Highlights
Overview | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO Compensation Structure At a Glance |
| | Our NEO Compensation Program contains the following key elements: | |
| ü | Competitive base salaries to recruit and retain top executive talent; | |
| ü | Annual cash incentive opportunities based on short-term financial and stewardship goals; | |
| ü | Long-term equity incentive plans that are primarily performance-based to reward achievement against long-term financial goals designed to create long-term shareholder value; and | |
| ü | Market-competitive benefit programs with limited perquisites. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 Payouts Aligned to Record Financial Performance, Supported by Key Actions Taken |
| | | | Earnings | | | | | Earnings Per Share | | |
| Net earnings ($M) | | | | | | |
| | | | | |
| Adjusted EBIT ($M) | | | | |
| | | | | |
| GAAP EPS | | | | |
| | | | | |
| Adjusted EPS | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Total Shareholder Return | | ü | Actions led by management positioned Celanese to deliver record 2021 results following a 2020 that was significantly impacted by the COVID-19 pandemic. | |
| Celanese TSR (%) | | | |
| | | | | ü | Key controllable actions that supported our results include: |
| -●- S&P 500 Index (%) | | | t | Successfully navigated raw material procurement and logistics challenges in an environment of disruptions. | |
| | | | | | |
rDow Jones US Chemical Index (%) | | | t | Maintained margins in the face of inflationary cost pressures and constrained materials sourcing. | |
| | | | | | |
| | | | | t | Flexed our global production network and the timing of facility turnarounds to meet periods of robust consumer demand despite external disruptions to production in the form of weather events, curtailments and others. | |
| | | | | | t | Shifted Engineered Materials’ production mix to higher-value applications (e.g. electric vehicles, 5G and medical); deployed our Acetyl Chain network to take advantage of favorable pricing and demand environments. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholder Return and Payout Highlights | ü | Record Adjusted EBIT(1) and Adjusted EPS(2) performance in 2021 drove above-target payouts of: | |
| t | 172.2% for the Annual Incentive Plan company performance factor; and | |
| t | 160.1% for our 2019-2021 performance restricted stock unit (PRSU) award. | |
| ü | Total shareholder return(2) over the 1, 3 and 5 year periods ended December 31, 2021 compared favorably to industry peers in the Dow Jones US Chemical Index, as shown in the graph above. | |
| ü | In 2021, our performance supported a 10% increase in our dividend per share and the return of $1,304 million of capital to shareholders in the form of share repurchases and dividends. | |
| (1) Adjusted EPS and Adjusted EBIT are non-U.S. GAAP financial measures. See “Exhibit A” for information concerning these measures, including a definition and reconciliation to the most comparable U.S. GAAP financial measure. |
| (2) Total shareholder return, or TSR, reflects cumulative stock price appreciation plus dividends, with dividends deemed reinvested. |
| | | | | |
Our compensation program for named executive officers:supports the execution of our business strategy and the achievement of our long-term financial objectives; | | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 46 |
attracts, motivates and retains a talented team of executives who will provide leadership for our success in dynamic, competitive markets and products, using balanced performance metrics;aligns performance with long-term stockholder value creation; | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 Compensation Decisions | | Key Pay and Governance Practices |
| The CMDC kept the structure of the Annual Incentive Plan consistent with prior years. | | Practices designed to align pay with performance for shareholders and to mitigate risk include: | |
The CMDC approved a revised structure for the 2021 long-term incentive grants to drive intermediate-term improvement by effectively positioning the Company to successfully address the continued impact of the pandemic and take advantage of market opportunities. See page 64 for more details. | | ü | Independent compensation consultant reporting to the CMDC | |
| ü | Challenging performance targets tied to metrics that are consistent with our strategy and long-term shareholder value creation | |
| Certain NEOs received salary increases intended to make their salaries more competitive with our compensation comparator group. | | ü | Individual payouts under incentive plans are subject to absolute caps and limits based on relative TSR performance, to align management pay with shareholder outcomes | |
| | | | | | | | | | | | ü | Robust clawback policy | |
| 96% | of shareholdervotes cast supported our say-on-pay vote at our 2021 Annual Meeting. | | ü | Market-aligned stock ownership guidelines for NEOs | |
| ü | Annual risk assessment of our compensation policies and practices | |
| | | |
| | | |
| |
rewards executives’ contributions at a level reflecting Company performance and their individual performance.
Our compensation and management development committee has designed our executive compensation program based on principles that reflect these objectives. These principles have contributed to our strong performance and have rewarded executives commensurately.
Our strategic plan is designed to enhance and sustain the overall growth of the Company. This strategic plan builds upon the Company’s differentiated business models in the Acetyl Chain and Engineered Materials. In the Acetyl Chain, the business focuses on optimizing profitability by leveraging the flexibility in its operations and an expansive global asset base. In Engineered Materials, a unique combination of one of the broadest materials portfolios in the industry and a project pipeline management system has differentiated Celanese’s ability to deliver customer value.
In 2018, we continued our focus on improving our models in the Acetyl Chain and Engineered Materials, which showed resilience in 2018 despite underlying market conditions and growth. These economic models are paired with our unwavering commitment to social responsibility, safety and environmental stewardship, to drive stockholder value.
The Company’s performance has been strong relative to the ambitious goals that we outlined in 2015, and we delivered on the objectives that we established for 2018. We exceeded our 3-year plan commitments in adjusted earnings per share, adjusted EBIT growth, share repurchaes and free cash flow. At our Investor Day in May 2018 we outlined a new 3-year plan to continue our growth trajectory based on our models. One of our key long-term objectives is to deliver annualized earnings and cash flow growth such that we consistently rank among the top tier chemical companies. We adhere to a balanced approach of preferentially investing in high return new opportunities and continuing to return cash to stockholders via dividends and share repurchases. We believe achieving these objectives will continue to significantly increase stockholder value.
Named Executive Officers
Our named executive officers (“named executive officers” or “NEOs”)NEOs for 20182021 are: |
| | | | | | | |
| Named Executive Officer | Title (as of December 31, 2018) |
Mark C. RohrLori J. Ryerkerk | Chairman, of the Board, Chief Executive Officer and President |
| Scott A. Richardson | SeniorExecutive Vice President and Chief Financial Officer* |
Scott M. Sutton | Chief Operating Officer |
Peter G. Edwards | Executive Vice President & General Counsel |
Shannon L. JureckaThomas F. Kelly | Senior Vice President, and Chief Human Resources OfficerEngineered Materials |
Kevin S. OliverJohn G. Fotheringham | Former Chief Accounting Officer, Controller | Senior Vice President, Acetyls |
| A. Lynne Puckett | Senior Vice President, General Counsel and Acting Chief Financial Officer*Corporate Secretary |
* Mr. Oliver performed the functions of the Chief Financial Officer from October 2017 until February 16, 2018, when Mr. Richardson was named our Senior Vice President and Chief Financial Officer.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 36 |
2018 Performance Highlights
We anticipated headwinds coming into 2018 from acetate tow. These headwinds did materialize, as well as other unexpected challenges, including Hurricane Florence and an inflationary environment in raw materials, logistics and supply chain. Nevertheless, we overcame these challenges through rigorous planning and responsive actions that offset these headwinds and, as noted below and in the accompanying charts, we delivered strong financial results in 2018 with growth in both Engineered Materials and the Acetyl Chain.
The Acetyl Chain anticipated and positioned itself well through the optionality provided by its global network and business model in an industry that saw continued periodic disruptions in 2018.
Engineered Materials grew by commercializing more than 3,250 projects, a 47% increase year over year, and through the Omni acquisition which closed in the first quarter.
During 2018 we announced a number of organic investments in both Engineered Materials and the Acetyl Chain. We also announced the acquisition of Next Polymers in India, which closed in January 2019. Our strong overall growth and commitment to maximizing stockholder value have contributed to these results. Productivity gains across businesses and in support functions also contributed to earnings growth.
| |
(1)
| Adjusted earnings per share or Adjusted EPS is a non-GAAP financial measure that we define as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. See “Exhibit A” to this Proxy Statement for additional information concerning this performance measure and a reconciliation of this measure to diluted earnings per share, the most comparable U.S. GAAP financial measure. |
| |
(2)
| Total stockholder return or TSR is cumulative stock price appreciation plus dividends, with dividends reinvested. |
| |
(3)
| Free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to our partner in our methanol joint venture. Free cash flow amounts noted above are net of pension contributions of $316 million and $300 million in 2017 and 2016, respectively. See “Exhibit A” to this Proxy Statement for additional information concerning this liquidity measure and a reconciliation of this measure to cash flow from operations, the most comparable U.S. GAAP financial measure. |
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 3747 |
We believe the performance goals underlying our compensation program for the named executive officers were instrumental in helping us achieve strong financial performance in 2018.
Our net sales were $7.2 billion in 2018, up 16.5% from 2017, primarily due to increases in price and volume in 2018.
| |
• | We generated net earnings of $1.2 billion in 2018, up 42.9%, primarily due to increases in price and volume, while Adjusted EBIT(4) was $1.85 billion in 2018, up 36.6% from 2017.
|
| |
• | GAAP diluted earnings per share were $8.95, up 44.6% from 2017, while adjusted earnings per share(1) for 2018 was $11.00, an increase of 46.5% over 2017, both a record, primarily due to an increase in product pricing, volume growth, productivity initiatives and a reduction in outstanding share count through share repurchases, facilitated by our strong cash generation.
|
| |
• | Cumulative total stockholder return(2) over the prior 1-, 3- and 5-year periods was (14.3)%, 41.7% and 78.5%, respectively. Our 1-year TSR(2) was in the middle of our compensation comparator group (described below), just slightly below the Dow Jones Chemical Index performance of (14)%, and lower than the S&P500 Index at (4.4)%. However, our 3- and 5-year TSR of 41.7% and 78.5%, respectively, exceeded the S&P500 Index and the Dow Jones Chemical Index for the same periods, and our TSR was performing in line with the S&P500 Index through the 3rd quarter of 2018. During the fourth quarter of 2018, several external factors suddenly impacted the equity markets negatively, including (but not limited to) significant declines in crude oil prices and trade tensions between the US and China. These events impacted certain sectors of the S&P more negatively, including the materials sector. As a result of this fourth quarter volatility, our 1-year TSR for 2018 lagged the broad S&P500 Index.
|
| |
• | Our cash flow from operations was $1.56 billion, up 94.0% from 2017, while our free cash flow(3) was $1.20 billion, up 135.4% from 2017. This record level of free cash flow and a portion of our balance sheet cash allowed us to execute on our cash deployment priorities in 2018 by investing in our existing businesses, executing prudent M&A, and returning cash to our stockholders, all designed to enhance returns.
|
During 2018, we returned a record $1.1 billion to stockholders:
| |
◦ | We increased the rate of our quarterly cash dividend per share by 17.4% and paid an aggregate of $280 million in cash dividends. We have paid cash dividends for 55 consecutive quarters and the compound rate of increase in the dividend per share has been approximately 33.5% since 2009.
|
| |
◦ | We repurchased $817 million of our Common Stock under our announced share repurchase program.
|
| |
◦ | We have returned $3.9 billion to stockholders since 2012 in the form of cash dividends and share repurchases.
|
| |
(4)
| Adjusted EBIT is a non-GAAP financial measure (“Adjusted EBIT”) that we define as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items. See “Exhibit A” to this Proxy Statement for additional information concerning this performance measure and a reconciliation of this measure to net earnings, the most comparable U.S. GAAP financial measure. |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 38 |
We achieved these results with a highly engaged and dedicated workforce, which we pay competitively for their contributions An example of recognizing our employees’ contributions to our success is our 2018 Global Equity Award, which provided for an equity grant to almost 7,000 employees in 31 countries. Our global leadership team has been charged with accelerating the Company’s growth plans through accountability for our business objectives as well as to continue to shape our culture. For these reasons, during 2018, we continued development of our global career framework to provide our employees with clearer insight into the career opportunities at Celanese for both personal and professional development as we execute our growth plans. To further engage our employees, we provide support for our employees through numerous employee resource groups that work together for the common good of our company and our communities. Our employees continued their support of local communities, volunteering over 200,000 hours worldwide.
Performance Goals for 2018
In February 2018, we established our 2018 annual incentive plan, as described more fully below, which is our annual cash performance bonus plan, and which uses Adjusted EBIT as the primary financial performance measure, as well as working capital and three stewardship performance measures. Also, in 2018, we implemented a long-term incentive plan, as described more fully below (the “2018 LTIP”), under which we awarded time-vesting restricted stock units to the CEO and Mr. Oliver and performance-based restricted stock units (“PRSUs”) to each of our other active named executive officers. The PRSUs will become earned based on our achievement of Adjusted EPS growth and return on capital employed goals for a three-year performance period (2018-2020). See “CEO 2018 Compensation Decisions” and “2018 Compensation Decisions” below.When the compensation and management development committee set the performance hurdles for the 2018 annual incentive plan and the 2018 LTIP, they considered our strategic plan, our annual operating plan and the headwinds facing the Company. It was anticipated that these headwinds would only partially be balanced by anticipated benefits to Engineered Materials from the pipeline model, new acquisitions and productivity efforts.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 39 |
Taking these considerations into account, the compensation and management development committee set aggressive Adjusted EBIT hurdles for the Company under our 2018 annual incentive plan as follows:
|
| | | | | | | | | | | |
| | | 2017 | | | Percentage Y-o-Y Improvement for 2018 Annual Incentive Plan Payout | | |
| Metric | | Actual | | | Threshold | | Target | | Superior | | |
Adjusted EBIT(1) | | $1,356 million | | | 0% | | 8% | | 15% | | |
The working capital as a percentage of net sales level required to achieve a superior level of performance was set at a level on par with the top quartile of chemical companies in the Dow Jones Chemical Index. The required level for threshold and target performance was maintained from the prior year because it is substantially higher than median performance of other chemical companies in the index. How we treat acquisitions was made more difficult – the closing date working capital amount for in-year acquisitions was excluded as compared to an eight-quarter exclusion used in the 2017 plan.
As part of our continued commitment to environmental, social and governance issues, we have included stewardship metrics in our annual incentive programs for the last 12 years. For 2018, the stewardship metrics were made more difficult to achieve than the prior year due to the integration of our SOFTER, Nilit and Omni acquisitions into the incident calculations for employee/contractor injuries, and process safety and environmental releases.
The compensation and management development committee reviewed our strategic plan and forecasts and set the target Adjusted EPS hurdle for the 2018 LTIP (a combined level of Adjusted EPS for 2018, 2019 and 2020) at a level that reflects growth over the prior year consistent with our external projections.
2018 Payouts Aligned to Performance
Annual Incentive Plan. As summarized in the table below and described more fully below, our Adjusted EBIT for 2018 represented 36% growth over the prior year, our working capital as a percent of net sales was below our target at 18.1%, and our aggregate performance on the stewardship metrics exceeded target. The compensation and management development committee approved an overall annual incentive (bonus) plan payout of 161.4% of target under the plan.
|
| | | |
2018 Annual Incentive Plan Performance Measure | | Actual
Result
| Achievement as a
% of Target
|
Adjusted EBIT Growth | | Superior | 200% |
Working Capital as % of Net Sales | | Below Target | 55% |
Stewardship: | | | |
Occupational Safety | | Below Target | 42% |
Process safety | | Above Target | 167% |
Environmental | | Superior | 200% |
Total Aggregate Payout | | | 161.4% |
2016 LTIP. As described more fully below, our Adjusted EPS growth for the 2016-2018 performance period under our 2016 long-term incentive plan was 22.3%, while our Return on Capital Employed for the same period was 22.9%, exceeding our superior level for Adjusted EPS growth and just below our superior level for Return on Capital Employed. The compensation and management development committee approved an overall 2016 LTIP payout of 199.2% of target.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 40 |
CEO 2018 Compensation Decisions
Our CEO, Mr. Rohr, has been a director of the Company since 2007 and our CEO since 2012. For 2018, the compensation and management development committee made no changes to the level of his base salary or target annual performance bonus potential. In light of Mr Rohr’s eligibility for retirement, the compensation and management development committee deliberated on how best to set his long term incentive award for 2018, and the type of award was changed to a time-vesting restricted stock unit (RSU). The committee determined to use this vehicle, rather than PRSUs, to encourage his retention during a likely period of succession planning and management transition. The committee increased the award value slightly over the prior year to reflect the competitive positioning of Mr. Rohr’s total compensation considering his contributions and performance and the fact that time-vesting RSUs, unlike PRSUs, cannot be earned at greater than target. The award vests annually over 3 years, and will continue to vest if Mr. Rohr retires, ensuring that he has a continued interest in the success of the Company after his retirement.
Mr. Rohr’s total direct compensation for 2018 taking into account company and individual performance and, for comparison purposes, his total direct compensation for 2017, are displayed in the table below.
|
| | | | | | | | |
| | | 2018 | | 2017 |
| | | Amount | | Amount |
| Salary Earned | | $ | 1,155,000 |
| | $ | 1,155,000 |
|
Annual Performance Bonus (1) | | 3,200,000 |
| | 3,100,000 |
|
Long-Term Incentive Award (2) | | 7,999,985 |
| | 7,499,920 |
|
| Total direct compensation | | $ | 12,354,985 |
| | $ | 11,754,920 |
|
| | | | | |
(1) Computed as 135% times salary earned times actual company performance modifier of 161.4% and 158% of target in 2018 and 2017, respectively, times personal performance modifier of 127.15% and 125.8% in 2018 and 2017, respectively. |
(2) Grant date fair value. |
See “2018 Compensation Decisions” for additional information on our compensation plans and the CEO’s performance and compensation in 2018.Our Response to the 2018 Advisory Vote and Stockholder Feedback
In 2018, stockholders continued their strong support of our executive compensation programs with 98.3% of the votes cast for approval of the “say-on-pay” proposal at the 2018 Annual Meeting of Stockholders. Nevertheless, consistent with its strong interest in stockholder engagement, communication and transparency, the compensation and management development committee continued to examine our executive compensation program to assure alignment between the interests of our senior executives and stockholders. The compensation and management development committee considered the outcome of the 2018 vote and will consider the results of future say on pay votes when making future compensation decisions for named executive officers.
Beyond consideration of the annual “say-on-pay” vote, the Company regularly engages with stockholders to better understand their perspectives. During 2018, we held one on one or group discussions in person or by telephone with stockholders collectively owning more than 50% of our shares on topics such as corporate strategy, cash deployment, executive compensation plan design and practices, governance and social responsibility. These discussions provided valuable insights into our stockholders’ views on executive compensation programs and corporate governance practices. We continue to actively seek feedback from our investors, listen to their concerns, and make appropriate changes to our compensation plans. Additional information about stockholder engagement is included on page 24.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 41 |
We Follow Compensation Governance Best Practices
The compensation and management development committeeCMDC and management periodically review the compensation and benefit programs for our named executive officersNEOs and other employees to align them with our philosophy and objectives. Accordingly, the Company hashave adopted a number of practices over the last several years that favorably affectto enhance our executive compensation program:
|
| | | | |
| What We Do |
| |
ü | 100% independent directors on our compensation and management development committee |
ü | Conduct an annual ”say-on-pay” advisory vote for stockholders |
ü | Generally provide a significant proportion of NEO compensation in the form of performance-based compensation |
| ü | Pay for performance, including using a high percentage of performanceperformance-based restricted stock units for the annual equity grant to ensure a significant portion of NEO compensation is performance-based and to align management’s interests with stockholdersshareholders |
| ü | UseReference an appropriate comparator group, evaluated annually to ensure it remains appropriate, when establishing compensation |
| ü | 100% independent directors on our CMDC |
| ü | Maintain robust anti-hedging and anti-pledging policies |
| ü | Conduct an annual ”say-on-pay” advisory vote |
| ü | Regularly engage with our shareholders to receive feedback on business, governance and compensation matters |
| ü | Balance short- and long-term incentives, aligning long-term incentives with stockholderfuture performance and shareholder returns |
| ü | Include caps on individual payouts inunder incentive plans |
| ü | IncludeMaintain a clawback policy, inwhich can be triggered by a financial restatement, breach of our business conduct policy or certain restrictive covenants, and other matters, and which covers annual bonus and long-term incentive plansawards with a 3-year look back |
| ü | Market-alignedMaintain market-aligned stock ownership guidelines requiring our CEO to hold shares valued at 6x base salary (3x(4x for other NEOs) |
| ü | UseApply double-trigger vesting forin the event of a change in control in our long-term equity awards (i.e., participant must have been terminateda qualifying termination after the change in control event to receive benefits) |
| ü | Condition grants of long-term incentive awards on execution of a non-solicitation / noncompetition agreement |
| ü | Mitigate undue risk taking in compensation programs |
ü | Use ofRetain an independent executive compensation consultant reporting to the committeeCMDC |
| ü | Process for reviewingAnnually review executive compensation consultant and advisoradvisors for independence and performance |
ü | Anti-hedging and anti-pledging provisions included in our Insider Trading Policy |
| |
| What We Don’t Do |
| |
| X | No change in control excise tax ”gross-up” agreements |
| X | No excessive perquisites |
| X | No tax ”gross-ups” for perquisites, except for relocation and expatriate benefits (for all employees) |
| X | No employment agreements or multi-year compensation guarantees |
| X | No stock option repricing, reloads or exchangeexchanges without stockholdershareholder approval |
| X | No dividend equivalents paid on unvested equity awards |
| X | No excessive risk-taking in our compensation programs |
In addition to maintaining good corporate governance, we have designed our annual incentive plan and long-term incentive plansplan to be aligned with best practices that mitigate against excessive risk. See “Compensation Risk Assessment”.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 42 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 48 |
Human Capital Management
We achieved our 2021 performance with a highly engaged, valued, dedicated, diverse and global workforce. We believe we demonstrated significant progress in our human capital efforts during 2020 and 2021.
| | | | | | | | | | | | | | |
| 2021 Accomplishments | | 2021 External Recognition |
| v | We published our inaugural Human Capital Report and comprehensive Sustainability Report, reporting metrics in human capital and other areas. | | v | Perfect Corporate Equality Index score from the Human Rights Campaign Foundation for the third consecutive year. |
| v | Our Diversity, Equity & Inclusion Council, formed in 2020 outlined our collective vision of DE&I at Celanese with our organization-wide Expression of Diversity, Equity, and Inclusion. | | v | Named a 2021 “Noteworthy Company” for Diversity by DiversityInc, based on our diversity metrics, programs, leadership accountability and community efforts. |
| v | We relaunched our Employee Resource Groups (ERGs) with a revamped communications strategy, simplified sign-up process and the alignment of an executive sponsor with each ERG. | | v | Honored by the Women’s Forum of New York for the level of female representation on our Board of Directors. |
Board and CMDC Oversight. Our CMDC and the full Board of Directors have a structured approach to regularly reviewing and overseeing talent and human capital matters. Key human capital topics described in the table below are codified in the CMDC’s charter and are incorporated into the CMDC’s regular meeting agendas. CMDC oversight of human capital is complemented by full Board oversight of additional key topics, as described in the table below.
As part of its work in this important area, our CMDC is currently working with management to develop a form of Human Capital Scorecard, which will serve as a ‘dashboard’ that will include key human capital metrics and data from our organization, to help track our progress, identify opportunities for continued improvement and support future public disclosures of key human capital information to our shareholders and other interested parties. This work is continuing in 2022.
| | | | | | | | | | | |
Key Areas of CMDC Oversight (in addition to compensation matters) | Additional Areas of Oversight by the Full Board |
| ü | Diversity, Equity and Inclusion, including recruitment and retention initiatives | ü | CEO succession planning and support of the CMDC’s performance review for the CEO |
| ü | Human capital metrics, including workforce composition, skills metrics and pay equity | ü | Review of the CMDC’s work on leadership succession planning |
| ü | Succession planning, including senior leadership | | |
| ü | Integration of talent strategy with business goals | | |
| ü | Health and wellness and other workforce wellbeing matters | | |
Diversity, Equity and Inclusion. We believe that intentionally employing a diverse workforce and providing an inclusive workplace empowers us to think more creatively, act more innovatively and deliver more value for our customers and shareholders. In recent years we have sought and made significant progress in this area:
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 49 |
•We promote employee engagement through 52 chapters of nine different Employee Resource Groups (ERGs) designed to inspire, develop and increase the visibility, representation and promotion of underrepresented groups.
•We engage with trade associations and engineering groups to enhance our recruiting pipeline of diverse employees.
•In 2020, we launched our Diversity, Equity and Inclusion Council, chaired by one of our NEOs (Mr. Kelly), to strengthen our diversity strategy, identify potential actions and review progress.
| | | | | | | | | | | |
| Women represent: | People of Color represent: |
24% of our global workforce(1) | 2 of our 5 NEOs | 31% of our U.S. workforce(1) | 2 of our 11 Board Members |
29% of our global management roles(1) | 5 of our 11 Board Members | 34% of our U.S. management roles(1) | |
(1) Reflect year-end 2021 estimates (other than NEO and Board member data, which reflect current compositions of those groups). |
Health, Safety and Environmental Stewardship. We focus on more than the occupational health and safety of our employees, contractors and any visitors to our sites. We have an expanded view and measurement of "Stewardship" that includes process safety and releases to the environment since they may have an impact on the communities where we live and work. We believe these stewardship values are critical to our success in attracting and retaining the best industry talent across the globe.
We believe in continuous improvement of our safety environment by building competency in our people and having a comprehensive management system built from recognized safety practices from around the globe. Through deliberate actions, we have improved our employee safety, process safety and environmental incident metrics in recent years. See “Human Capital Resources” in our most recent Annual Report on Form 10-K filed with the SEC, for more information.
We have reflected our commitment to these stewardship goals through our long-standing practice of including them as part of our annual incentive program for our approximately 1,000 bonus-eligible employees for the last 14 years. For more information, please see “Annual Incentive Plan Awards.” | | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 50 |
Employee Health and Wellness. Our efforts to support our employees’ physical well-being starts with comprehensive health benefits offered to all US employees who work more than 20 hours per week, plus their eligible family members. Around the world, we seek to offer benefits that are competitive in each of the countries in which we operate.
| | | | | | | | |
| Significant Health and Wellness Benefits for U.S. Employees |
| | |
| ü | Medical coverage |
| s | Above-industry-average employer contributions to a Health Savings Account |
| s | Includes benefits for transgender employees and dependents |
| s | Access to a low-cost and convenient telemedicine service |
| ü | Dental and vision coverage with free or low-cost preventive care |
| ü | Wellness programs that promote and encourage annual physicals for all employees and healthy lifestyle assistance, such as smoking cessation assistance |
| ü | Programs offered at no cost to eligible participants: |
| s | Access to an expert medical second opinion with a board-certified doctor when dealing with an illness, injury or chronic pain |
| s | Coverage of up to eight FDA approved over-the-counter COVID-19 tests per eligible participant per month |
| s | Participation in a virtual physical therapy program to help with chronic musculoskeletal pain |
| s | A program created to empower people with diabetes to live better, healthier lives |
| | |
Talent Development. At Celanese, we are committed to fostering an engaging and inclusive workplace with opportunities for collaboration, development and leadership. Our Talent Management strategies guide our approach to acquiring talent, managing performance, developing bench strength, supporting development and helping employees reach their fullest potential.
We believe in giving employees clear opportunities to pursue their individual career goals and helping our leaders be a resource, champion and coach. We provide online courses, leadership webinars and other resources to support employee development. Key resources are described in the table below.
| | | | | |
| Talent Development Resources for Employees |
| Resource | What it does: |
| Global Career Framework | Provides clarity around opportunities that exist at Celanese; Helps employees own their own careers; and Allows employees to increase their scope and responsibility, both by expanding current roles and potentially moving to new roles. |
| Technical Career Ladder | Supports employees in manufacturing and other technical functions in growing and developing their careers. |
| Leadership Framework | Defines the attributes, competencies and behaviors of leaders at Celanese. |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 51 |
2021 Say on Pay Vote and Shareholder Engagement
At our 2021 Annual Meeting of Shareholders, our “say-on-pay” proposal received the support of 96% of our shareholder votes cast. The CMDC was pleased with the 2021 “say-on-pay” vote result and believes that the high level of support reflects alignment of our compensation plan design with the perspectives of our shareholders, as well as the Company’s responsiveness to shareholder feedback over the past several years.
As described above under “Governance – Shareholder Engagement”, we conducted an outreach effort during fall of 2021 directed at holders of 60% of our common stock. During 2021 and early 2022 we met with holders of approximately 47% of our common stock, at which meetings senior representatives of our executive, corporate governance, human resources and investor relations teams met virtually with shareholders to discuss our ESG and sustainability progress, governance, human capital and executive compensation. The feedback we receive through our shareholder engagement process is invaluable to our Board and CMDC and an essential part of their decision-making processes. Shareholder Feedback in 2021 and Early 2022 Related to Executive Compensation and Human Capital
During 2021 and early 2022, our shareholders provided valuable commentary and insights into our compensation and human capital practices and disclosures as described below.
| | | | | |
| Feedback We Heard | Our Perspective and Response |
● The substantial majority of the shareholders that we spoke with on compensation topics in 2021 were supportive of our executive compensation program, its overall structure and our compensation philosophy. | ● The CMDC is committed to continuously evaluating the optimal structure of our annual and long-term incentive plans in order to align our NEOs’ compensation with shareholder outcomes. ● For LTIP awards granted in 2022, our CMDC approved a more broadly-applicable payout modifier based on relative TSR versus an industry peer group, to enhance the alignment between pay and performance. See page 64 for more information. |
| ● Our shareholders sought to understand the CMDC’s rationale for the bifurcated performance periods in the 2021 PRSU awards. | ● We have provided detailed disclosure in this proxy statement beginning on page 61 describing the revised structure of the LTIP awards granted in February 2021, which changes were in part to address the impact of the COVID-19 pandemic. |
● Our shareholders expressed positive feedback on our disclosure of increased information about our workforce in our inaugural Human Capital Report released in February 2021 and in our comprehensive Sustainability Report Elements of Opportunity released in the third quarter of 2021, and inquired about our plans to publicly release additional data to allow assessment of our progress. | ● At Celanese, we believe a diverse and inclusive environment is key to driving innovation, creativity and growth. We actively analyze our workforce to help improve the extent to which it reflects the areas from which we draw talent. ● As part of the way we incorporate ESG topics into the fabric of our corporate strategy, we actively monitor our human capital metrics on a global level and are committed to continued disclosure going forward, to allow our shareholders to assess our progress over time. |
● Our shareholders asked about whether and how we plan to incorporate ESG metrics, including metrics related to diversity, equity and inclusion, into our incentive compensation plans. | ● As part of our continued commitment to our ESG performance, we have included stewardship metrics in our annual incentive for 14 years. We include metrics related to employee and process safety as well as environmental releases to directly motivate and reward continuous improvement in these areas. See page 56 for more information.
● The CMDC is committed to further reviewing our incentive plan in future years to determine if and how the inclusion of additional metrics related to diversity, equity and inclusion could help further align our NEOs’ compensation to positive long-term business and shareholder outcomes. |
| |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 52 |
Compensation Philosophy and Elements of Pay
Compensation Philosophy
Our focus is to deliver continued earnings growth and superior long-term value creation for our stockholders.shareholders. To that end, we have adopted a pay-for-performance compensation program that is designed to reward executives for superior company and individual performance through awards of annualannual- and long-term incentives.incentives, and to align management’s interests with those of shareholders. At the same time, these programs are intended to be sufficiently competitive with our compensation peer companies so as to alsoallow us to attract and retain highly qualified personnel.talent. We believe that our current compensation program is both attractive to our executives and aligned with the best interests of our stockholders.shareholders. Our compensation and management development committeeCMDC has designed our executive compensation program based on principles that reflect these objectives. These principles have contributed to our strong performance and have rewarded executives appropriately.
Compensation Objectives
The objectives of our compensation program are to provide pay that is competitive, performance-based, aligned with the interests of our stockholders,shareholders, and focused on attracting, rewarding and retaining talent as described below:
•Competitive – pay should be set at a level for the role that recognizes the knowledge, skills, experience and attributes of our executives and is competitive towith our peers with whom we compete for talent, is equitable among our executive officers, and recognizes the knowledge, skills and attributes of our executive officers;talent;
Performance-based •Performance-Based – pay should reward individual and Company performance when pre-established short- and long-term goals are met or exceeded and when Company performance compares favorably to competitors and peers, and likewise, should provide for consequenceslower payouts when such targets and objectives are not met;
•Aligned with StockholdersShareholder Outcomes – incentive plans should encourage long-term increases in stockholdershareholder value; and
•Focused on Talent – pay should be designed to attract, motivate and retain key executives.talented leaders.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 43 |
Elements of Compensation
The table below summarizes the current elements of our compensation program for named executive officersNEOs and how each element supports the Company’s compensation objectives:
our pay-for-performance philosophy: |
| | | | | | | | | | | | | | | | | | | | | | |
Compensation
Element
| DescriptionBasis for Performance Measurement | Alignment with Principle of
Pay-for-Performance | | Page |
| Short-Term Annual Cash Compensation |
| Base Salary | | Individual performance and contributions based on primary duties and responsibilities | Competitive compensation element required to recruit and retain top executive talent; pay for primary duties and responsibilities | | Performance-
Based
| Stockholder
Alignment
| Talent
|
| | | | | | | | |
Base Salary
(refer to page 47)
| | • | | Fixed level of compensation | ü | | | ü |
| | | | | | | | |
Annual Incentive Plan (Bonus) (refer to page 47)
| | • | | Performance-based, cash incentive opportunity | ü
Rewards performance against short-term financial and stewardship goals | ü
| ü
| ü
|
| | | ■2018 plan measures are Adjusted EBIT and working capital as a percentage of net sales and stewardship | |
| ■ Stewardship metrics (injuries, process safety, the environment and environment)product quality) | | | | |
| | | | |
Long-Term Incentive Awards (refer to page 51)
| | | | |
| | | | | | | | (Equity) |
Performance-
based Restricted Stock UnitsRSUs | | • | | Performance-based, long-term equity incentive planplan: company performance and stock price | üRewards performance against long-term financial goals that are tied to corporate strategy | ü
| ü
| ü
|
| | | ■ 2018 plan measures are Adjusted EPS and ROCE(2) over a three-yeardesignated performance period, (2018-2020), with a limit on the Adjusted EPS payout if relative total stockholder returnTSR is below a specified threshold | | | | |
| | | | | | | | |
Time-based
Restricted Stock
Units RSUs | | • Time-based, long-term equity incentive plan: stock price | Granted annually as part of the long-term incentive plan to facilitate ownership and retention, or in special circumstances such as to attract a talented new hire | | Awards generally vest over three-year term
■ 61 Granted to CEO and one other NEO in 2018 | ü
| | ü
| ü
|
| | | | | | | | |
Stock Options(1)
| | • | | Variable pay based on increases in our stock price over time
■ None granted to NEOs in 2018
| ü
| ü | ü
| ü
|
| | | | | | | | Employee Benefits |
Retirement Plans (refer to pages 56 and 67)
| | • | | Celanese Americas Retirement Savings Plan | ü
Competitive compensation element required to recruit and retain top executive talent | | | ü
|
| • | | Celanese Americas Supplemental Retirement Savings Plan | ü
| | | ü
|
| • | | Celanese Americas Retirement Pension Plan(3)
| |
| | | ü
|
| | | | | | | | |
Severance Arrangements (refer to page 70)
| | • | | Executive Severance Benefits Plan | ü | | | ü |
| • | | Change in Control AgreementAgreements | ü | | ü | ü |
DeferredDeferral of Compensation Plan(refer to page 69)
| | • | | Deferred Compensation Plan | ü | | | |
| | | | | | | |
| |
(1)
| Available for grant to new hires, for promotion awards and in special circumstances. |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 44 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 53 |
Setting Total Compensation
|
| | | | | | | |
| Our compensation-setting process consists of establishing overall target total compensation for each named executive officerNEO and then allocating that compensation among base salary, annual incentive plan awards, and long-term incentive awards.opportunities. While no specific formula is used to determine the allocation between cash and equity-based compensation, when allocating these compensation elements we generally utilize a compensation mix more heavily weighted towards variable and incentiveperformance-based compensation. The compensation and management development committeeCMDC strongly believes that the CEO’s compensation should be the most heavily weighted towards variable and long-term incentive awards to align hisher compensation with stockholder interests relativeshareholder interests. The target pay mix for our CEO for 2021 is highlighted to other named executive officers.the right, with nearly 90% performance-based or “at risk.” | |
|
|
|
|
|
Target Level of Compensation
•To establish the appropriate target level of compensation for the CEO and each named executive officer,other NEO, each compensation element is reviewed by the compensation and management development committee againstCMDC relative to market data for the role forwithin our compensation comparator group provided by the compensation and management development committee’s independent compensation consultant. group.
•The compensation and management development committee’sCMDC’s philosophy is to target each executive officer’sNEO’s compensation to be generally at the median of and also competitive with, members of our comparator group for target total annual cashdirect compensation (base salary plus target annual incentive plan award) and target total direct compensation (total annual cash compensationaward plus the grant value of long-term incentive awards). GeneralIndividual position considerations such as tenure, experience level, scope of role, performance and relative compensation amounts across executives also impact how compensation is calibrated relative to market norms. The CMDC also considers general industry compensation survey data was also presented by the independent compensation consultant, and considered. Tosince the extent thattalent market for many of our executives is broader than the companies in our primary comparator group.
•A significant portion of the total compensation of our executive officerseach NEO is performance-based and, therefore, “at risk”, actualrisk.” As a result, realized compensation is determined by Company performance and, further, with respect to the annual incentive bonus plan, individual performance against pre-established objectives.
•To the extent that we exceed our annual or multi-year performance targets andand/or an executive officerNEO significantly exceeds individual performance objectives, our compensation program is designed to reward such executive officerperformance by paying total compensation that is greater than the median level of the comparator group. To
•Conversely, to the extent that we do not achieveunderperform against our annual or multi-year performance targets and/or an executive officer’sNEO underperforms with respect to individual performance does not meet expectations,objectives, our compensation program is designed to reduce the amount ofpay total compensation received by such executive officer.
Setting compensation targets based on comparative market and industry datathat is intended to ensure that our compensation practices are competitive in terms of attracting, rewarding and retaining executives. In addition, because each executive officer’s target compensation is set by reference to persons with similar duties at companies in our comparator group and/or general industry,lower than the compensation and management development committee does not establish any fixed relationship between the compensationmedian level of the CEO and that of any other executive officer. Internal pay equity among the other executive officers is also considered when setting compensation targets. The level of responsibility, scope of role and impact to the organization are all taken into consideration.
Although the compensation and management development committee strives to set executive compensation at levels that are competitive with the comparator companies, it does not rigidly adhere to a particular target in determining executive compensation. Any executive officer’s total compensation may vary from the targets due to various other factors, including exceptionally strong or weak Company performance, or particularly strong or weak
group.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 45 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 54 |
individual performance, overAlthough the prior year. TheCMDC strives to set target compensation and management development committee also takes into account additional individualat levels that are competitive with our comparator companies, it does not rigidly adhere to any particular market reference point in determining executive compensation. Any NEO’s total target compensation may vary from market benchmarks due to various other factors, when establishing total executive compensation levels, including an executive’s position within the Company, level of experience, individual performance over prior years, breadth of responsibilities, tenure and need for retention.
Our Compensation Comparator Group
As noted above, the compensation and management development committee’sThe CMDC’s independent compensation consultant provided an analysis of compensation data and practices from a select group of peer companies in the chemical industry. The compensation and management development committee,CMDC, with the assistance of theits independent compensation consultant, identified the companies to be included in the comparator group.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| What we look for in our comparator group | | | How we use the comparator group |
| | | | | | | | |
| How the comparator group was chosen | | | How we use the comparator group |
| | | | | | | | |
| ü | MarketComparable market capitalization | | | ü | As an input in developing base salary ranges, annual incentive targets and long-term incentive award ranges |
| ü | MajorComparable total revenues | | | |
| ü | Presence of major global operations | | | |
| ü | Chemical industry participant | | | ü | To assess competitiveness of total direct compensation |
| ü | Comparable size based on revenueSimilar business complexity | | | ü | To benchmark annual incentive bonus plan designs as well as the form and mix of equity and director paycash retainer for non-employee directors |
| ü | Number of employeesParticipants in the chemical industry | | | |
| | | | | ü | To evaluate share utilization (overhang levels and run rate) |
| ü | Complexity of business | | | ü | To benchmark share ownership guidelines |
| ü | Comparable NEO roles and responsibilities | | | ü | As an input in designing compensation plans, benefits and perquisitesbenefit plans |
| | | | | |
The comparator group used by the compensation and management development committeeCMDC in setting target pay for 20182021 was as follows: |
| | | | |
| Air Products & Chemicals, Inc. | FMC Corp. |
| Albemarle Corporation | Huntsman Corp. |
| Ashland Global Holdings Inc. | International Flavors & Fragrances Inc. |
Albemarle Corporation | LyondellBassell Industries N.V. |
Ashland Inc. | Monsanto Company* |
| Axalta Coating Systems Ltd. | PolyOneLyondellBasell Industries N.V. |
| Avient Corporation | PPG Industries Inc. |
| CF Industries Holdings Inc. | PPG IndustriesRPM International Inc. |
| Eastman Chemical Co. | Praxair Inc. |
Ecolab Inc. | RPM International Inc. |
FMC Corp. | The Chemours Company |
Huntsman Corp.Ecolab Inc. | The Sherwin-Williams Company |
_______________ | |
* During 2018, Monsanto completed its merger with Bayer, and Praxair merged with Linde AG to form Linde plc. Except for compensation data included in Monsanto’s and Praxair’s 2018 proxy statement, the compensation and management development committee has ceased using Monsanto and Praxair as comparator companies. |
| |
During 2018, after pay setting,Our CMDC reviews the comparator group annually in consultation with the independent compensation consultant to ensure that the individual companies in the group continue to be appropriate and management development committeethat the group as a whole is appropriate.
The CMDC reviewed the comparator group during 2020 and determined not to make any modifications to the comparator group.
group for considering 2021 pay levels.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 46 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 55 |
2018 Compensation Decisions
Base Salary
The compensation and management development committeeCMDC reviews and approves at least annually the base salaries for the CEO and each of the other named executive officers.NEOs. In making a determination of the appropriate level of an executive officer’sNEO’s base salary, the compensation and management development committeeCMDC considers a number of factors, including (i) the scope, complexity, and financial or business impact of the executive’s position, (ii) the executive’s level of expertise, experience and individual performance, (iii) how the executive’s base salary compares to that of the Company’s other executives, and (iv) how the executive’s base salary compares to the base salary of similarly-situatedsimilarly situated executives at companies in our peercomparator group or in compensation surveys we review. As a result of these factors, base salaries may actually be set higher or lower than the median level of similarly-situatedsimilarly situated executives at companies in our comparator group, when appropriate.
Certain of our named executive officers received base pay increases effective in March 2018, in amounts ranging from 0% to 11%, based on the compensation and management development committee’s application of the above factors and expansions in roles for the new year. Mr. Richardson was appointed chief financial officer in February 2018. The Company’s pay philosophy is that, in general, the pay for individuals new to a role should work toward the desired competitive pay positioning (e.g., median) over time as they gain experience in the role. In most cases, the individual’s pay is expected to reach the desired competitive positioning within 1-3 years uponafter taking the role. At
Our CMDC approved base salaries for our NEOs effective in March 2021, based on the time of his appointment as CFO, Mr. Richardson’s salary was increased $50,000, from $450,000 to $500,000 to reflect his new role. As partapplication of the planabove factors. Ms. Ryerkerk, Mr. Kelly and Mr. Fotheringham received salary increases of approximately 9%, 8% and 9%, respectively, which increases were intended to bring Mr. Richardson closermake their salaries more competitive with our compensation comparator group following their completion of additional years in their roles — Ms. Ryerkerk having become CEO approximately two years prior and Messrs. Kelly and Fotheringham being promoted to market median and reflecting his continued development and performancetheir current positions approximately one year prior. Base salaries as CFO, his base salary was adjusted to $580,000approved in September 2018.February 2021 are set forth in the table below.
| | | | | |
| Named Executive Officer | 2021 Base Salary |
| Lori J. Ryerkerk | $1,200,000 |
| Scott A. Richardson | $650,000 |
| Thomas F. Kelly | $565,000 |
John G. Fotheringham(1) | $550,000 |
| A. Lynne Puckett | $536,000 |
| (1) Mr. Fotheringham is based in the United Kingdom and his salary is paid in British pounds (GBP or £). His base salary was expressed in U.S. dollars at the time approved by the CMDC for 2021 and was converted to his GBP-denominated base salary using an average of the exchange rates over the 90 days prior to such CMDC determination, which was $1.307/£1.00. |
Annual Incentive Plan Awards
Plan Summary
AThe CMDC approves a target annual incentive plan award, expressed as a percentage of annual base salary, is set for each named executive officerNEO based on the market data for his or her position and his or her level within the organization. Target bonus percentages for each named executive officerNEO are shown in the chart below. For 2018,2021, the actual annual incentive plan award that an executive officerNEO (other than our CEO) could potentially receive ranged from 0% – 300% of his or her target annual incentive plan award based on our achievement of certain business, financial and stewardship performance targets and the achievement by the executive officerNEO of personal objectives established for him or her at the beginning of the year. Each performance measure has a threshold, target and superior level, and failure to achieve threshold performance on any performance measure produces a zero payout for that measure, regardless of the individual results. See page "502021Business Performance Summary” below for the detailed performance measures established for 2021 and the results against them.Individual performance levelsmodifier for 2018. AnNEOs other than the CEO. The CMDC believes that individual performance modifiers are valuable compensation components that can reward qualitative performance and value creation
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 56 |
within each NEO’s area of responsibility or, alternatively, reduce payouts for individual performance that does not meet performance expectations. Our CEO recommends to the CMDC an individual performance modifier for each executive officerNEO (other than the CEO) is recommended to the compensation and management development committee by our CEOherself) after the end of the fiscal year based on hisher assessment of each such NEO’s performance against his or her individual objectives established at the satisfactory completionbeginning of the variousyear.
Beginning in 2021, the individual objectives. performance modifier does not apply to the annual incentive plan award granted to our CEO. The CMDC believes that the CEO holds ultimate accountability for the performance of the organization as a whole, and therefore her annual incentive plan payout is based solely on the Company’s performance against the quantitative performance objectives set forth by the CMDC, which are described in detail below under "2021 Business Performance Summary.” Payout Formula. The formula for determining the actual payout for each executive officer is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| TARGET BONUS | | BUSINESS RESULTS | | INDIVIDUAL RESULTS | | ANNUAL BONUS |
| | | | | | | | |
| Eligible Earnings | X | Target Bonus
% | X | Business Performance Modifier
[0-200%] | X | Individual Performance Modifier
[0-150%] | = | Annual Performance Bonus Award
[0-300%] |
| | | | | | (Does not apply to CEO) | | |
Eligible earnings is defined as either the actual amount of base pay that is earned for the year, or an annualized base salary rate, depending onincluding the situation. This amount includeseffect of any base salary adjustments that might have been
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 47 |
made throughoutpart-way through the year. The annual incentive plan award is paid in March of the year following the end of the performance period.
For 2018, theTarget Annual Award Amounts.The 2021 target annual performance bonus award expressed as a percentage of base salaryeligible earnings for each of the named executive officers was as follows:
NEOs is set forth in the following table. These target percentages were unchanged in 2021. |
| | | | |
| Named Executive Officer | Target Annual
Incentive Plan Bonus
(% of Base Salary) (1) Eligible Earnings) |
Mark C. RohrLori J. Ryerkerk | 135%130% |
| Scott A. Richardson | 75%85% |
Scott M. SuttonThomas F. Kelly | 100%70% |
PeterJohn G. EdwardsFotheringham | 70% |
| A. Lynne Puckett | 75% |
Shannon L. Jurecka | 65% |
Kevin S. Oliver | 45% |
(1)Level in effect at the end of the year, taking into account adjustments during the year.
|
2021 Company Performance Goals and Objectives
The 2021 annual incentive plan metrics were set in February 2021 and included Adjusted EBIT, working capital as a percentage of net sales, and stewardship goals relating to occupational and process safety, the environment and product quality. Within each of these performance metrics, there are three incremental performance levels: threshold, target and superior. These goals require a high level of performance during the one-year performance period to be achieved. Threshold and superior levels are designed to provide a smaller award, or potentially no award, for lower levels of performance (threshold) as well as to reward exceptional levels of performance (superior).
The structure of the 2021 annual incentive plan was substantially identical to the structure used in recent years, as the CMDC continues to believe that this structure appropriately motivates and rewards achievement of short term
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 57 |
|
| | | | | | | | | | | | | | | | | | | |
The 2018 annual incentive plan awards were based on our achievement of incremental levels of Adjusted EBIT, a working capital component, and stewardship goals relating to occupational and process safety and the environment. Within each of these performance metric areas, there are three incremental performance levels, which are referred to internally as threshold, target and superior. The target level for all metrics is set at amounts that generally reflect our internal, confidential business plan at the time the awards are established, and take into account known headwinds / tailwinds and economic conditions. These goals require a high level of performance over the one-year performance period to be achieved. Threshold and superior levels are set as a percentage of target (except for the stewardship goals, which for 2018 are set in absolute incidents) and are designed to provide a smaller award for lower levels of acceptable performance (threshold) as well as to reward exceptional levels of performance (superior). | | Rewarding Performance that Drives Business Success | | | Executive Compensation | |
objectives that drive shareholder value. When the CMDC set the performance hurdles for the 2021 annual incentive plan in February 2021, they considered our performance in 2019 (as the most recent year not impacted by the COVID-19 pandemic), the impact of the COVID-19 pandemic on our business and 2020 results, our 2021 annual operating plan and our longer-term strategic plan. The CMDC set the threshold, target range and superior levels for Adjusted EBIT and working capital in the 2021 annual incentive plan to be in line with our internal, confidential business plan as of February 2021, taking into account the anticipated continued impact of the COVID-19 pandemic, potential business recovery scenarios and known business headwinds and tailwinds, and to reflect improvement over 2020 results.
Adjusted EBIT Metric. Instead of a specific dollar amount, the CMDC set a narrow range for the achievement of target results for Adjusted EBIT, detailed below under “2021Business Performance Summary.” The CMDC made this determination due to economic volatility and reduced predictability of financial forecasting in February 2021. Additionally, the CMDC set an asymmetric payout curve for threshold versus superior payout, meaning that a higher level of performance would be required to receive a superior payout. The CMDC set the threshold, target and superior payouts to reflect improvements of 1.7%, 17.2% (at the mid-point of the target range) and 37.0% over actual Adjusted EBIT in 2020, respectively. Also, the target for a superior payout reflected a meaningful increase of approximately 5.0% over pre-pandemic Adjusted EBIT in 2019, which itself was the second-highest in the Company’s history. Working Capital Metric. The working capital as a percentage of net sales level required to achieve a target level of performance was set at a level slightly better than pre-pandemic 2019 results. The CMDC set the target for a superior payout (17.0%) to reflect improvement over pre-pandemic 2018 and 2019 working capital performance of 18.1% and 29.0%, respectively. The required levels for threshold and superior performance on working capital were adjusted to create a wider range around the target to address the higher volatility and uncertainty in February 2021.
Stewardship Metrics. As part of our continued commitment to environmental, social and governance issues, we have included stewardship metrics in our annual incentive programs for the last 14 years , and in 2020, we incorporated a quality metric. Consistent with our continuous improvement approach, the performance goals for 2021, which are based on numbers of absolute incidents, reflected reduced numbers of incidents compared to the metrics for 2020 and 2019.
The annual incentive plan encourages executive officers to focus on financial performance for the fiscal year by basing 85% of the award on the following metrics:
• Adjusted EBIT
• Working Capital
|
|
|
|
|
|
|
| |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 58 |
2021 Business Performance AssessmentSummary
In February 2021, the CMDC approved the 2021 annual incentive plan metrics as set forth below. The threshold, target and superior performance levels approved by the CMDC in February 2021, the actual performance achieved and the corresponding payout percentages are set forth in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Metric | | Weighting | | Threshold | | Target | | Superior | | Actual | | Achievement | | Payout |
Adjusted EBIT Growth(1) | | 65% | | 5.0% | | 18-23% | | 41.0% | | 118.7% | | 200% | | 130% |
| Adjusted EBIT Amount ($ million) | | | | $1,150 | | $1,300- 1,350 | | $1,550 | | $2,473 | | | | |
Working Capital as % of net sales(2) | | 15% | | 22.0% | | 19.5% | | 17.0% | | 15.0% | | 198% | | 29.7% |
| Stewardship: | | | | | | | | | | | | | | |
Occupational Safety(3) | | 5% | | 20 | | 15 | | 13 | | 20 | | 50% | | 2.5% |
Process Safety(4) | | 5% | | 8 | | 7 | | 6 | | 14 | | —% | | —% |
Environment(5) | | 5% | | 11 | | 8 | | 7 | | 15 | | —% | | —% |
Quality(6) | | 5% | | 18 | | 13 | | 12 | | 5 | | 200% | | 10.0% |
Aggregate Business Performance Modifier(7) | | | | 172.2% |
(1)Adjusted EBIT is defined as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, refinancing expense and taxes and further adjusted for Certain Items. See “Exhibit A”. The percentages for Threshold, Target and Superior reflect the required percentage improvement over the prior year’s Adjusted EBIT of $1,131 million, further adjusted to give effect to the loss of earnings from the divestment of our joint venture interest in Polyplastics Co. Ltd., which was completed in the fourth quarter of 2020. (2)The working capital component is defined as (a) third-party accounts receivable plus (b) inventory less (c) third-party accounts payable divided by (d) net sales annualized, computed monthly and compared with monthly targets. To incentivize management to focus on working capital based on the monthly needs of the business, the annual incentive plan consists of monthly working capital targets — each with threshold, target and superior levels — with performance measured monthly. The achievement noted in the table reflects the average of the monthly performance results compared to the monthly targets. Working capital excludes the working capital associated with acquisitions closed in 2021.
(3)For purposes of assessing occupational safety, the number of Company injuries is expressed as actual recordable injuries and lost time injuries (as defined in OSHA regulations) of our employees and on-site contractors world-wide, exclusive of employees and contractors of our recently acquired companies.
(4)Process safety includes the actual number of incidents of an unplanned or uncontrolled release of primary containment in a process that results in an injury, fire, explosion, community impact or exceeds a threshold quantity.
(5)Environmental stewardship includes the actual number of serious and major chemical releases into the environment (defined as a release that is greater than 15% of the reportable quantity).
(6)Quality stewardship includes the actual number of product quality incidents measuring ‘high-severity’ using our internal quality notification definitions.
(7)Actual annual incentive plan payouts are further impacted by the individual performance modifiers assigned by the CMDC to each NEO (other than the CEO).
Individual Performance Assessments: Process and 2021 Assessments
Purpose and Process
The compensation and management development committeeCMDC believes that individual performance goals are appropriate instruments for guiding, measuring and rewarding individual contributions to strategic corporate initiatives and thereforeinitiatives. The CMDC engages in an annual process to
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 59 |
evaluate our NEOs’ performance against their objectives set at the beginning of the year. For NEOs other than our CEO, this process also informs the assignment of individual performance modifier is a key component to the annual incentive plan decision.modifiers.
Process for CEO.At the beginning of each fiscal year, the CEO and the compensation and management development committeeCMDC jointly set the annual, individual performance objectives for the CEO. Performance against goals is reviewed throughout the year on a periodic basis. The principle individual performance objectives for the CEO during 2018 included the following:
Manage capital expenditures while thoughtfully funding incremental expansion;
Further develop pipeline management for Engineered Materials;
Engage gender diversity across the Company and engage women in leadership roles;
Continue efforts in making employee engagement a defining element of our culture building a diverse and inclusive organization; and
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 48 |
Continue strong support of community outreach and volunteerism.
At the end of the fiscal year, the CEO submits to the compensation and management development committeeCMDC and the full boardBoard a performance self-assessment. The performance assessment is based on factors such as achievement of company and individual objectives and contributions to our financial performance. Individual performance of the CEO is used by the compensation and management development committee in consideration of merit increases in base salary and the individual performance modifier on the annual incentive plan.
Process for other NEOs.At the beginning of each fiscal year, each named executive officer (excluding the CEO) jointly sets his or her annual,CEO develops the individual performance objectives for each NEO (other than herself) in consultation with the CEO,each such NEO, subject to review and approval by the compensation and management development committee. Individual performance objectives for the other named executive officers in 2018 included specific objectives related to execution against critical corporate initiatives and our strategic plan, cost reduction, human resource development and leadership alignment. CMDC.
At the end of the fiscal year, the CEO conducts a final review with each of hisher direct reports, including each named executive officer,NEO, and rates their individual performance. The CEO then submits to the compensation and management development committeeCMDC a performance assessment and compensation recommendation for each of the named executive officers.other NEOs. The performance evaluations are based on factors such as achievement of company and individual objectives and contributions to our financial performance. Individual
CMDC Decisions.The CMDC refers to the individual performance of the named executive officers is used by the CEO and the compensation and management development committeeother NEOs in consideration ofdetermining any merit increases in base salary andas well as, for NEOs other than the CEO, the individual performance modifier onmodifiers for the annual incentive plan award.plan.
The compensation and management development committee reviews and evaluates the CEO’s self-assessment of performance against objectives and,CMDC, with input from the full boardBoard and the independent compensation consultant, determines in executive session the individual performance modifier assigned to the CEO for the recently completed year andCEO’s base salary, adjustmentstarget bonus and long-term incentive awards for the new year. The compensation and management development committeeCMDC reviews and approves the base salary adjustmentsthese amounts and the individual performance modifiers for the other named executive officers,NEOs, based in part on the recommendations by the CEO. The compensation and management development committee’s assessment of each named executive officer’s performance relative to Company and personal objectives was communicated to the executive.
In setting the CEO’s
NEO Performance Assessments for 2021
The individual performance modifierobjectives established for 2018 at 127.15%,our NEOs revolved around the compensationfollowing primary themes:
•Drive profitable growth and managementincrease our competitive advantage;
•Support local and organic growth through strategic expansions and M&A decisions;
•Build leadership diversity and talent through targeted hiring and development committee consideredto advance successor readiness for critical roles;
•Drive growth in emerging areas and build on our momentum to drive profitability in a numberrebounding market;
•Drive continuous improvement of safety, quality and reliability;
•Implement digitalization and automation solutions to improve efficiency and the employee and customer experience;
•Demonstrate commitment to sustainability through unique product offerings that meet existing customer needs and enhance the visibility of our internal ESG efforts; and
• Build on our reputation as a good steward of our resources and a valued community partner.
CEO. The individual performance objectives for the CEO during 2021 that were recognized by the CMDC as part of her performance assessment included the following:
•Led the achievement of record financial and operating results for 2021, despite transportation and supply chain disruptions and the continuing impact of the CEO’s accomplishmentsCOVID-19 pandemic;
•Exercised critical leadership in 2018, including:
Executed on all aspects ofenabling the financial plan, which ledCompany to record setting levels of adjusted earnings per share and Adjusted EBIT, including more that $1 billion of Adjusted EBITnavigate unprecedented supply chain disruptions, preserve margin in the Acetyl Chain;face of rapidly-increasing raw material and energy costs;
Grew pipeline closes by 47% to more than 3,250•Negotiated, signed and closed the Santoprene acquisition, the largest in recent Company history at the time, which brought a valuable and highly-differentiated product portfolio into the Engineered Materials segment;
Returned business;$1.1 billion to stockholders through dividends and repurchases of shares;
Rewarded employees worldwide by granting a stock award in order to reinforce engagement and alignment towards the Company’s 3 year strategic plan;
Onboarded a new chief financial officer;
Added a new director to the board, increasing the diversity of the board;
Substantially integrated one acquisition;
Increased the number of women in executive positions and grew the bench of diverse talent at every level of the organization;
Employed various tactics to increase internal mobility and expanded our global career framework to include all non-exempt employees, allowing for a more fungible talent pool;
Personally led efforts to build leadership capability in support of a respectful workplace for all employees;
Substantially improved safety performance of acquired businesses and maintained high-performing stewardship results in the areas of process safety and environmental events;
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 49 |
Removed impediments to allow the Company to be added to the S&P500 Index;
Increased volunteerism across Celanese with employees investing over 200,000 hours of their time in the communities where we work and live; and
Granted more than $2,500,000 to a number of non-profit organizations recommended by employees through the Celanese Foundation.
Based on the compensation and management development committee’s evaluation of company and individual performance, it awarded annual incentive plan awards for 2018 for the CEO and the remaining executive officers, which are shown in the “2018 Summary Compensation Table” below under the “Non-Equity Incentive Plan Compensation” column. The CEO also recommended a discretionary bonus for Ms. Jurecka, based on extraordinary individual performance in the areas of advancing company culture, building our company’s talent, and driving diversity and inclusion. Based on that recommendation, the compensation and management development committee approved a discretionary bonus for such executive officer, which is shown in the “2018 Summary Compensation Table” below under the “Bonus” column.2018 Performance Summary
The threshold, target and superior performance levels, as well as the actual performance levels and corresponding payout percentages, for the performance measures used in the 2018 annual incentive plan, which were approved by the compensation and management development committee, were as follows:
|
| | | | | | | | | | | | | | |
| Metric | | Weighting | | Threshold | | Target | | Superior | | Actual | | Achievement | | Payout |
Adjusted EBIT Growth(1) | | 65% | | 0% | | 8% | | 15% | | 36% | | 200% | | 130% |
| Adjusted EBIT Amount ($ billion) | | | | $1.356 | | $1.460 | | $1.560 | | $1.852 | | | | |
Working Capital as % of net sales(2) | | 20% | | 18.4% | | 17.4% | | 16.4% | | 18.1% | | 55% | | 11% |
| Stewardship: | | | | | | | | | | | | | | |
Occupational Safety(3) | | 5% | | 38 | | 25 | | 15 | | 35 | | 42% | | 2% |
Process Safety(4) | | 5% | | 13 | | 11 | | 8 | | 9 | | 167% | | 8% |
Environment(5) | | 5% | | 48 | | 37 | | 31 | | 15 | | 200% | | 10% |
| Aggregate business performance modifier | | | | 161.4% |
| |
(1)
| For purposes of calculating the 2018 annual incentive plan award, Adjusted EBIT is defined as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, refinancing expense and taxes and further adjusted for Certain Items. See “Exhibit A”. The percentages for Threshold, Target and Superior reflect the required percentage improvement over the prior year’s Adjusted EBIT of $1.356 billion. |
| |
(2)
| For purposes of calculating the 2018 annual incentive plan award, the working capital component is defined as (a) third-party accounts receivable plus (b) inventory less (c) third-party accounts payable divided by (d) net sales annualized, computed monthly and compared with monthly targets. The table reflects the full year average of the monthly results compared to the targets. Working capital excludes the working capital associated with acquisitions closed in 2018.
|
| |
(3)
| For purposes of calculating the 2018 annual incentive plan award for occupational safety, the number of Company injuries is expressed as actual recordable incidents and lost time injuries (as defined in OSHA regulations) of our employees and on-site contractors world-wide, exclusive of employees / contractors of our recently acquired companies.
|
| |
(4)
| For purposes of calculating the 2018 annual incentive plan award, process safety includes the actual number of incidents of an unplanned or uncontrolled release of primary containment in a process that results in an injury, fire, explosion, community impact or exceeds a threshold quantity.
|
| |
(5)
| For purposes of calculating the 2018 annual incentive plan award, environment stewardship includes the actual number of serious and major chemical releases into the environmental (defined as a release that is greater than 15% of the reportable quantity).
|
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 5060 |
•Continued to advance efforts to promote a diverse and inclusive workforce, with a significant percentage of external hires globally being female and, within the United States, being people of color.
As noted above, the CEO’s annual incentive award for 2021 does not include an individual performance modifier.
Other NEOs. For other NEOs, the CMDC noted the achievements against their objectives described below, among others. | | | | | | | | |
| Executive | Key Achievements in 2021 |
| Scott A. Richardson | ü | Effectively provided development and succession readiness planning within his team, including strengthening diversity through external hires and internal talent movement. |
| ü | Executed critical leadership in M&A activity, including the acquisition of the Santoprene business as well as evaluating and advancing other potential M&A opportunities. |
| ü | Successfully delivered productivity and cost efficiency initiatives, in spite of facing challenges from global supply chain tightness and disruptions. |
| Thomas F. Kelly | ü | Led investments and productivity initiatives to improve the Engineered Materials business and position it for future success. |
| ü | Executed critical leadership in M&A activity, including the acquisition of the Santoprene business as well as evaluating and advancing other potential M&A opportunities. |
| ü | Enhanced the depth and readiness of his organization, including through completing dedicated coaching with female and diverse future leaders and leading the DE&I Council. |
| John G. Fotheringham | ü | Led successful year for the Acetyl Chain business and increased foundational earnings of that business, including by strengthening customer relationships. |
| ü | Drove sustainability-related initiatives in the Acetyls business including packaging products, the low-carbon methanol project at the Clear Lake facility, and building out capabilities in his team. |
| ü | Increased use of real-time market analytics and intelligence to inform commercial decision-making. |
| A. Lynne Puckett | ü | Led the publication of Celanese’s first comprehensive sustainability report in 2021. |
| ü | Led legal support of key strategic transactions including the acquisition of Santoprene and continued work on the previously-announced Korea Engineering Plastics structuring initiative. |
| ü | Achieved successful resolution of disputes and engagement on potential regulations. |
Based on the CMDC’s evaluation of the NEOs’ individual performance during 2021, it awarded annual incentive awards to the CEO and remaining NEOs as set forth in the “2021 Summary Compensation Table” below under the “Non-Equity Incentive Plan Compensation” column.
Long-Term Incentive Compensation
PhilosophyPlan Summary
In furtherance of our long-term compensation strategy, we offer a compensation mix that provides appropriate incentives to meet our objectives of providing competitive pay packages for talented executives, delivering compensation that is performance-based, and aligning management’s interests with those of stockholders. As described above in the “Elements of Compensation” table, long-termLong-term incentives in the form of equity awardsperformance-based and time-based restricted stock units support our compensation objectivesphilosophy and are consistent with our overall strategy to attract, motivate, reward and retain top performers.objectives. Since 2009,2013, the compensation and management development committeeCMDC has annually granted (except in 2012) long-term incentive awards to our executive officersNEOs with overlapping performance periods to provide them with personal financial motivation to help us reach our longer-term goals. In addition to providing the officer with a long-term stake in our success, we believe these awards also serve as a significant retention tool to dissuade them from leaving the Company.tool. The Company currently makes these awards under our stockholder-approved 2009 Global Incentive Plan (the “2009 GIP”) or, beginning in April 2018, the stockholder-approvedshareholder-approved 2018 Global Incentive Plan (the “2018 GIP”).
As discussed under “Setting Total Compensation” above, the total award value for the long-term incentives is determined by the compensation and management development committee each year in its discretion as part of setting total annual compensation, taking into account market data from our comparator group and, where the comparator group did not have corresponding executives with similar roles, then from survey data. The award value is then divided by the grant date fair value of the award to determine the number of units actually awarded. The starting value for the award, however, does not represent the actual compensation the named executive officer will realize. These awards are intended to focus the named executive officersNEOs on future company performance, and the actual value realized by a named executive officerNEO will depend on our stock price and financial performance over time and the named executive officer’sNEO’s continued employment with the Company. SeeAnnual long-term incentive grants to NEO’s are heavily performance-weighted; in recent years 70% of each NEO’s annual long-term incentive award has been in the form of performance-based RSUs (increasing to 85% for the 2021 “grants), with the remaining 30% in 2018 Grantstime-based RSUs (15% for 2021 grants) that vest in three equal | | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 61 |
installments on the first three anniversaries of Plan–Based Awards Table” for additional information.the grant. For 2021, the CMDC modified this approach to provide greater emphasis on performance by increasing the proportion of the value allocated to performance-based RSUs and bifurcating the awards into two performance periods.
The following table summarizes the principlehistorical principal design elements of our performance-based long-term equity awards. |
| | | | | | | | | | |
| Feature | 2016-2018 LTIPPerformance-Based PRSU Awards Granted 2017-2020 |
| Form of award | Performance-vesting restricted stock unit |
| Performance period | Three years |
| Performance measure(s) | Adjusted EPS(1) (70%) (earnings measure) and Return on Capital Employed (ROCE)(1) (30%) (return measure) |
| Maximum payout | 200% xof target |
Performance limitsTSR Limiter (payout limit based on relative Company stock performanceperformance) | The payout onPayout is limited to 150% (out of the 200% maximum) for the Adjusted EPS component is limited ifIf our TSR over the Company’s relative total stockholder return (TSR)performance period is in the bottom quartile of the S&P 500 index companies |
| Dividends on unvested awards | No |
Alternate performance measure | No |
| |
(1) Return on Capital Employed is defined as Adjusted EBIT divided by capital employed, which is the beginning and end-of-year average of the sum of property, plant and equipment, net; trade working capital (calculated as trade receivables, plus inventories less trade payables - third party and affiliates); goodwill; intangible assets, and investments in affiliates, adjusted to eliminate noncontrolling interests.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 51 |
(1) Adjusted EPS and ROCE are non-U.S. GAAP financial measures. See “Exhibit A” for information concerning these measures including a definition and reconciliation to the most comparable U.S. GAAP financial measure.
The following table highlights the design elements of our performance-based long-term equity awards granted in 2021 that differ from our historical practice. Except for the items noted in the table, features of the 2021 grants are identical to those for recent historical grants. |
| | | | | | | | | | |
| Feature | Performance-Based PRSU Awards Granted in 2021 |
| Performance period | 18-month performance period for 50% of the PRSUs and three-year performance period for the remaining 50% of the PRSUs |
| TSR Limiter (payout limit based on relative Company stock performance) | For the 18-month portion of the award, the payout is limited to 100% (out of the 200% maximum) for the entire award if our TSR over the 18-month performance period is in the bottom half of S&P 500 index companies
For the 36-month portion, the payout is limited in the same way as in prior years’ grants |
| Executive Compensation | | |
The following summarizes long-term incentive awards that had performance periods concluded during 2018 or that were awarded in 2018.
Payout on LTIP Awards Granted in 20162019
Annual Performance Award.A portion of our long-term incentive awardPRSUs granted to NEOs in February 2016 was a PRSU2019 were earned based on Adjusted EPS Growth and Return on Capital Employed earned over the three-year2019-2021 performance period 2016-2018, as described above and in earlier proxy statements (“2016(the “2019 LTIP”). As noted in the table below, the level of Adjusted EPS achieved was between target and superior performance and the level of Return on Capital Employed was slightly below superior. Afterabove superior, resulting in a reviewtotal payout of the actual performance compared to the PRSU performance metrics, the compensation and management development committee determined that the award should pay out at 199.2%160.1% of the target amount uponon the vesting date in February 2019.2022. The Company’s three-year relative total stockholder return was aboveCMDC set the bottom quartilepayout in accordance with the terms of the S&P 500 Index and, therefore, there was no reduction in2019 LTIP, without making any adjustments to the earned levelperformance metrics or terms of the plan to account for the negative impact of COVID-19 on our financial results during a significant portion of the performance period. Absent the uncontrollable impact of the COVID-19 pandemic, we expect that the 2019 LTIP awards would have paid out closer to, or at, 200% of target.
Cumulative Adjusted EPS component.
over the 2019-2021 performance period was $35.29, exceeding our previous three-year record $28.17 Adjusted EPS from 2018 through 2020. Performance compared to target is shown below::
| | | | | | | | | | | | | | | | | | | | | | | |
Performance
Measure | Metric
Weighting | Threshold | Target | Superior | Actual | | Payout |
Adjusted EPS(1) (2) (3) | 70% | $31.00 | $34.00 | $37.00 | $35.29 | | 143.0% |
Return on Capital Employed(1)(4) | 30% | 14.0% | 18.5-20.5% | 23% | 24% | | 200.0% |
| Aggregate payout | | | | | | | 160.1% |
| | | | | | | |
|
| | | | | | |
Performance Measure | Metric Weighting | Threshold | Target | Superior | Actual | Payout |
Adjusted EPS(1) Growth(2) | 70% | —% | 6% | 12% | 22.3% | 200.0% |
Return on Capital Employed(1)(3) | 30% | 14% | 18.5%-20.5% | 23% | 22.9% | 197.3% |
| Aggregate payout | | | | | | 199.2% |
| | | | | | | |
| |
(1) (1) | Adjusted EPS is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. Return on Capital Employed (ROCE) is defined as Adjusted EBIT divided by capital employed, which is the beginning and end-of-year average of the sum of property, plant and equipment, net, trade working capital (calculated as trade receivables, net plus inventories less trade payables - third party and affiliates), goodwill, intangible assets, and investments in affiliates, adjusted to eliminate noncontrolling interests. See “Exhibit A” for definitions and additional information. |
| |
(2)
| The Adjusted EPS goals will be determined by comparing the increase in the cumulative amount of Adjusted EPS over the three-year performance period (2016-2018) to the Adjusted EPS for fiscal 2015. The cumulative measure incorporates long-term compound annual growth rates determined by the compensation and management development committee.
|
| |
(3)
| The Company’s three-year average ROCE will be compared to benchmarks for Threshold, Target (a range) and Superior set by the compensation and management development committee. ROCE goals are established in a manner that focuses management on value creation through the effective deployment of capital. |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 52 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 62 |
(2) The Adjusted EPS goals were determined through a target increase in the cumulative amount of Adjusted EPS over the three-year performance period 2019-2021) relative to the Adjusted EPS for fiscal 2018. The cumulative measure reflects long-term compound annual growth rates determined by the CMDC in setting the cumulative goals.
(3) The 2019 LTIP award agreements contain a feature (the “TSR Limiter”) potentially limiting the payment for the Adjusted EPS component. If the Company’s relative TSR for the 3-year performance period is in the bottom quartile of the S&P 500 Index for the same period, then the final payout on the Adjusted EPS performance measure is limited to 150% of target (instead of the full 200%). The Company’s 3-year TSR for the performance period was 99.0%, which was greater than the bottom quartile of the S&P 500 index over the same period, so the TSR Limiter feature did not limit the Adjusted EPS growth performance payout.
(4) The Company’s 3-year average ROCE was compared to benchmarks for Threshold, Target (a range) and Superior set by the CMDC in February 2019. ROCE goals are established in a manner that focuses management on value creation through the effective deployment of capital.
LTIP Awards Granted in 20182021
The COVID-19 pandemic had a substantial and negative impact on our demand environment and financial results during 2020. As detailed in our publicly released and filed financial results as well as our most recent prior Proxy Statement (for our 2021 Annual Performance Award.Meeting of Shareholders)For 2018,, our Adjusted EPS results for 2020 were significantly impacted (down 19.83% from 2019). At the compensationbeginning of 2021, although we expected the impact of the pandemic on our 2021 results to be less severe than it had been on our 2020 results, the Company faced an uncertain demand environment and management development committee approvedthe CMDC determined that it was a key priority to design the long-term incentive plan for 2021 (the “2021 LTIP”) to encourage management to focus on near-term performance and positioning the Company for business recovery in 2021 and beyond.
In recognition of this environment at the time, the CMDC, in consultation with its third-party independent compensation consultant and management, developed and approved a revised design (the “2018 LTIP”) underfor the 2009 GIP pursuant2021 LTIP. The CMDC’s objectives with this revised design included incentivizing and rewarding a strong intermediate-term recovery and longer-term value creation and ensuring that eventual payouts correspond to which awards of PRSUsshareholder outcomes.
NEO grants were made to our named executive officers, other than the CEO. The designawarded as part of the 2018regular LTIP was substantially similar to the 2016 LTIPgrant cycle. These awards were more heavily performance based than in prior years, with 85% in PRSUs and 2017 Long Term Incentive Plan (“2017 LTIP”).15% in RSUs. These PRSUs granted on February 8, 2018 facilitate stock ownership and will vest on February 15, 2021, subject to adjustment (0-200% of targeted amount) based on the Company’s achievement of target levels of adjusted earnings per shareAdjusted EPS and returnReturn on capital employed duringCapital Employed following (i) an 18-month performance period, through June 30, 2022, for 50% of the PRSUs and (ii) a three-year performance period (2018-2020) asfrom January 1, 2021 through December 31, 2023 for the remaining 50% of the PRSUs.
Under the 2021 LTIP, the Adjusted EPS metric for 2021 LTIP reflects growth over 2020 results: the threshold, target and superior performance levels for year one are all set to be higher than actual 2020 Adjusted EPS results, and the superior metric is set to be meaningfully higher than pre-pandemic 2019 Adjusted EPS results, which were the second-highest in Company history. The metrics for years two and three reflect further growth. The metrics also include an assumed level of Board-approved share repurchases and additional capital deployment opportunities, consistent with our forecasted cash flows and anticipated uses of cash. The performance weightings and payout matrix are described in the following table:
| | | | | | | | | | | | | | | | | |
| | Payout Level |
| Metric
Weighting | Below Threshold | Threshold | Target | Superior |
Adjusted EPS(1) Growth(2) | 85% | 0% | 50% | 100% | 200% |
Return on Capital Employed(1) | 15% | 0% | 50% | 100% | 200% |
(1) See “Exhibit A” for definitions and additional information. (2) The Adjusted EPS goals will be determined by comparing the increase in the cumulative amount of Adjusted EPS over the 18-month (Jan. 2021-Jun. 2022) or three-year performance period (2021-2023) to the Adjusted EPS for fiscal 2020. The cumulative measure incorporates long-term compound annual growth rates determined by the CMDC.
|
| | | | | |
| | | Payout Level |
| | Metric Weighting | Below Threshold | Threshold | Target | Superior |
Adjusted EPS(1) Growth(2) | 70% | 0% | 50% | 100% | 200%(4) |
Return on Capital Employed(1)(3) | 30% | 0% | 50% | 100% | 200% |
| | | | | | | | |
(1)(3)
| See the corresponding notes to the table above concerning the 2016 LTIP awards.Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 63 |
| | | | | | | | | | | | | | | | | | | | |
| (2) | The Adjusted EPS goals will be determined by comparing the increase in the cumulative amount of Adjusted EPS over the three-year performance period (2018-2020) to the Adjusted EPS for fiscal 2017. The cumulative measure incorporates long-term compound annual growth rates determined by the compensation and management development committee.
| | Executive Compensation | |
The structural differences between the 2021 LTIP compared to recent prior years, along with the CMDC’s rationale for such differences, are summarized in the table below.
| | | | | |
| Feature | Rationale |
(4)Increased Weighting Towards PRSUs: 85% of the 2021 LTIP awards to NEOs are performance-based (compared to 70% for LTIP awards over the last several years)
| To increase the pay-for-performance nature of the 2021 LTIP and motivate NEO performance in driving business recovery coming out of the depths of the COVID-19 pandemic. |
ThBifurcated Performance Periode payout: 18-month performance period for 50% of the PRSUs and 36-month performance period for the remaining 50% of the PRSUs.
| To reinforce the importance of driving intermediate-term improvement in operating results on the adjusted earnings growth measure will bepath to longer-term value creation. |
Stricter Payout Limits based on Relative Stock Performance: Payout on the PRSUs eligible to vest at 18 months is limited ifto 100% (from the 200% maximum) unless the Company’s three-year relative total stockholder return is inTSR over the bottom quartile18-month performance period exceeds the median of the S&P 500 Index.companies. | To ensure alignment of payouts and shareholder outcomes, the TSR Limiter on the 18-month portion of the grant is stricter than the limiter on grants with three-year performance periods; grant also retains the previously-described TSR Limiter on the PRSUs eligible to vest at 36 months. |
Higher Overall Target Value: Target grant-date fair values for 2021 PRSUs and RSUs granted to the NEOs were increased over 2020 amounts, which increased amounts are set forth in the Summary Compensation Table. | To (1) reflect adjustments to the total target compensation for certain NEOs whose total target pay is below market, (2) mitigate the uncontrollable impact of the pandemic on previously-granted PRSUs (which have not been modified and which in February 2021 were forecasted to pay out significantly below the target level) and (3) incentivize NEOs to drive near-term recovery while retaining long term goals. |
The CMDC considered the grant and structure of these awards to be consistent with the long-term interests of our shareholders, to incentivize strong go-forward performance and to encourage the retention of key leaders. The CMDC believes that the design of these awards, in particular the heavy weighting of these awards towards PRSUs as well as the tightened TSR limiter, helps ensure that strong absolute and relative future company performance will be required in order to receive an above-average payout on these awards.
The CMDC believes that the revised design of these awards has supported the delivery of record financial results and the outperformance of our TSR relative to the Dow Jones US Chemical Index in 2021, as described in more detail under “Performance Highlights” in the Proxy Summary and “CD&A Highlights” above. We disclose the specific performance targets for our long-term incentive plans after completion of the relevant performance period.period as we view the target-setting as competitively sensitive. We will show the performance targets and results for the 2018portion of the 2021 PRSUs that vests after 18 months in the spring 20212023 proxy statement and for the portion that vests after 36 months in the spring 2024 proxy statement, in each case after completion of the applicable performance period.
Other Awards.As noted above, for 2018, the compensation and management development committee determined to make our CEO’s (Mr. Rohr’s) long-term incentive award
Looking Forward — LTIP Awards Granted in
the form of time-vesting RSUs, vesting annually over 3 years, rather than PRSUs as for the other named executive officers. The compensation and management development committee determined to use this vehicle, rather than PRSUs, to reflect a shift in the CEO’s focus to succession planning and transition. See “CEO 2018 Compensation Decisions” for more information about Mr. Rohr’s RSU award.2022 In additionFebruary 2022, the CMDC approved LTI grants (the “2022 LTIP”) using the pre-2021 grant structure including (1) a 70%/30% PRSU and RSU mix, (2) reduced grant-date fair value compared to the 2021 LTIP awards (for the 2021 NEOs), and (3) a PRSU award under the 2018 LTIP, Mr. Oliver also received time-vesting RSUs in February 2018 (like the prior year) along with other senior leaders who are not named executive officers. These RSU awards vest over 3 years from the grant date. In light of his interim status as acting CFO, the compensation and management development committee decided not to adjust his historical long-term award mix.
In addition, in connection with Mr. Edwards’ decision to retire as an officerthree-year performance period for 100% of the Company effective December 31, 2018, and in orderPRSUs.
Additionally, to encourage his continued employment infurther align management compensation payouts with shareholder outcomes, the CMDC replaced the TSR Limiter with a non-officer capacity through January 31, 2019TSR modifier that can modify PRSU payouts by plus or minus 20% based on our relative stock performance compared to facilitate a smooth transitionan index of his role,industry peers, the management and compensation committee agreed to permit pro rata vesting of the final tranche of a time-vesting RSU award originally granted to him in 2017 when he was first hired. As required by SEC rules, the incremental fair value of this modified award appearsDow Jones US Chemical Index, as additional 2018 compensation in the Summary Compensation Table and as an additional grant in the Grant of Plan-Based Awards Table.follows:
Executive Pay Parity | | | | | |
| Relative TSR Compared to the Dow Jones US Chemical Index | PRSU Award Payout Modifier |
| Less than the 25th percentile | 80% |
| 25th - 75th percentile | 100% (i.e. no modification to payout) |
| Greater than the 75th percentile | 120% |
The disparities in Mr. Rohr’s totalCMDC continually evaluates and assesses the optimal LTIP structure for aligning our NEOs’ compensation as compared to that of the other named executive officers exist because his responsibilities are greater and his ability to impact the future of the Company is greater. The average total direct compensation (base salary, actual annual incentive plan award and grant date fair value of long-term incentives) awarded to the named executive officers was 32.7% of the total compensation of the CEO. Mr. Richardson’s, Mr. Sutton’s, Mr. Edwards’, Ms. Jurecka’s, and Mr. Oliver’s total compensation consisted of 18.8%, 36.3%, 23.1%, 14.9% and 9.6% of Mr. Rohr’s total compensation, respectively. The compensation and management
with shareholder outcomes.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 53 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 64 |
development committee believes that these compensation relationships effectively reflect each named executive officer’s level of responsibility and our core compensation philosophy.
Compensation Governance
Compensation and Management Development Committee Oversight
The compensation and management development committeeCMDC, which consists solely of independent directors, is responsible for establishing compensation policies and programs that are consistent with our business strategy and aligned with our stockholders’shareholders’ interests. Specifically, the compensation and management development committeeCMDC is responsible for:
•reviewing and approving the corporate goals and objectives relevant to the compensation of the CEO and our other named executive officers;NEOs;
•evaluating the performance and compensation of the CEO and our other named executive officersNEOs in light of their established goals and objectives;
•reviewing and approving both target and actual pay levels of the CEO and our other named executive officers;NEOs; and
•reviewing and approving incentive and equity-based compensation plans, including our annual incentive plan award and our long-term incentive plans, and all grants of awards under such plans to our executive officers.NEOs.
Our compensation and management development committee is comprised entirely of independent directors (as defined under NYSE listing standards) who are also non-employee directors (under SEC rules) and outside directors (under IRS rules).
Role of the CMDC’s Independent Compensation Consultant in Making Decisions
Pursuant to its charter, the compensation and management development committeeCMDC has the sole authority to retain and terminate any compensation consultant.
During 2018,2021, the compensation and management development committeeCMDC retained Willis Towers Watson PLC (“Willis”) as its independent outside compensation consultant to advise it in connection with executive compensation matters. Representatives of Willis regularly attend compensation and management development committeeCMDC meetings as requested by its chair, and report directly and exclusively to the compensation and management development committeeCMDC on matters relating to compensation for the named executive officers.NEOs. In 2018,2021, Willis provided the following services to the compensation and management development committee:CMDC:
analyzed and benchmarked incentive plan targets;
•reviewed and provided guidance on compensation plan design;
•reviewed the composition of our compensation comparator group and recommended modifications;group;
•conducted an analysis of our compensation for the CEO and the other named executive officers,NEOs, and assessed how target and actual compensation aligned with our philosophy and objectives;objectives as well as executive compensation paid by our compensation comparator group; and
•provided market data, historical compensation information, internal equity comparisons, share usage and dilution data, competitive practice information, and recommendations regarding compensation trends, compensation strategy and our proxy statement.
In addition, Willis analyzed and benchmarked non-employee director compensation at the request of the nominating and corporate governance committee.N&CG Committee.
In addition to the executive compensation services provided by Willis to the compensation and management development committee,CMDC, and the director compensation services provided to the nominating and corporate governance committee,N&CG Committee, specialized teams at Willis and affiliates provided certain services to the Company in 20182021 at the request of management consisting of (i) pension valuation and other services for broad-based defined benefit plans that
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 54 |
we sponsor; (ii) total rewards consulting services, including advice in connection with union negotiations, annuity purchases and analysis for M&A activity; (iii) non-customized executive and non-executive compensation survey data, and (iv) insurance procurement services for directors’ and officers’ and other specialized insurance coverages. In fiscal 2018,2021, the Company paid $198,937approximately $132,000 to Willis for its executive and director compensation services to the compensationCMDC and management development committeethe N&CG Committee and approximately $1,813,524$3,060,000 to Willis for its other services to the Company.
The compensation and management development committeeCMDC believes that, given the nature and scope of these services, the provision of these additional services did not raise any conflict of interest pursuant to applicable SEC and NYSE rules and did not impair Willis’s ability to provide independent advice to the compensation and management development committeeCMDC concerning executive compensation matters and concluded that no such conflicts of interest existed. In making this determination, the compensation and management development committeeCMDC considered, among other things, the following
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 65 |
factors: (i) the types of non-compensation services provided by Willis, noting in particular that many of the services had been provided to the Company by the former Towers Perrin firm since 2003 (pension and compensation) and by the former Willis & Co. firm since 2008 (insurance brokerage), and that the Willis personnel who perform these additional services for the Company operated separately and independently of the Willis personnel that perform executive compensation-related services for the committee,CMDC and N&CG Committee, (ii) the amount of fees for such non-compensation services, noting in particular that such fees are negligibleimmaterial when considered in the context of Willis’s total revenues for the period, (iii) Willis’s policies and procedures that are designed to prevent conflicts of interest, (iv) the committee’sCMDC’s decision to engage Willis, and the fact that the committee,CMDC, in its discretion, determines whether to retain or terminate Willis as its executive compensation consultant, (v) Willis representatives who advise the compensation and management development committeeCMDC do not provide any other services to the Company, (vi) there are no other business or personal relationships between Company management or members of the compensation and management development committee,CMDC, on the one hand, and any Willis representatives who provide executive compensation services to the Company, on the other hand, and (vii) neither Willis nor any of the Willis representatives who provide executive compensation services to the Company own any Common Stock or other securities of the Company (except potentially in passive investments where the investment decision is made by external managers).
In compliance with SEC and NYSE requirements regarding the engagement of executive compensation consultants, Willis provided the compensation and management development committeeCMDC with a letter, considered by the committee,CMDC, confirming facts regarding the independence of such firm’s directors, consultants and employees who advise the committeeCMDC on executive compensation matters.
Role of Management in Making Decisionsand Management’s Consultant
The compensation and management development committeeCMDC regularly meets with the CEO and the senior vice presidentSenior Vice President and chief human resources officerChief Human Resources Officer (CHRO) to receive reports and recommendations regarding the compensation of our named executive officersNEOs other than the CEO. In particular,
Management has separately retained Pay Governance LLC (“Pay Governance”) to assist management in designing and formulating its compensation recommendations to the CMDC. Pay Governance provides management advice and benchmarking on incentive compensation design. Pay Governance does not provide advice directly to the CMDC, and as noted above, the CMDC has separately retained Willis as its independent compensation consultant to provide it with independent advice.
The CEO submits recommendations, as appropriate, to the compensation and management development committeeCMDC on the base salary, target annual incentive plan award levels, and target levels of long-term incentive plan compensation to be offered to each named executive officerNEO (other than himself)herself). Recommendations are developed in consultation with the senior vice president and CHRO (other than for herself) and, are reviewed by the compensation and management development committee’sCMDC’s independent compensation consultant, and are accompanied by peer company and general market data prepared by suchthe CMDC’s independent compensation consultant. In addition, the CEO makes recommendations to the compensation and management development committeeCMDC on the individual performance modifiers usedapplied to determine each named executive officer’s actual payoutthe other NEOs’ payouts under the annual incentive plan award. Although the compensation and management development committeeCMDC considers the CEO’s recommendations and discusses the CEO’s performance with the Board, the final decisions regarding base salary, annual incentive plan and long-term incentive plan opportunities and individual performance modifiers are made by the compensation and management development committee after discussion with the board.CMDC. The CEO does not make any recommendations to the compensation and management development committeeCMDC regarding hisher own compensation.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 55 |
Additional Information Regarding Executive Compensation
Other Compensation Elements
Consistent with providing a total pay program that is sufficiently competitive with the members of our compensation comparator group so as to attract and retain highly qualified personnel, our named executive officersNEOs receive or have access to the following benefits. We believe all of these plans have proven useful and, in many cases, necessary for recruiting and retention purposes.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 66 |
Executive Benefits and Perquisites
Our NEOs receive health and welfare benefits, such as group medical, life and long-term disability insurance coverage, under plans generally available to all other salaried employees in the country where they are based. Consistent with our pay-for-performance philosophy, we provide our NEOs with limited perquisites and executive fringe benefits. We provide an annual physical exam and limited reimbursement (up to $10,000 annually with no tax gross-up) for financial planning services. For NEOs who we ask to serve on assignments outside of their home country, we provide benefits under our expatriate assignment program to help offset the additional costs of the assignment, including relocation expenses, travel, housing, car and educational allowances, cost of living differentials, tax preparation expenses, and certain related tax equalization and tax gross-up payments. For NEOs who we ask to relocate upon joining or being promoted within the company, we provide benefits under our relocation program to help offset the additional costs of the relocation, including the shipment of household goods, travel, temporary housing, and other allowances, home sale assistance, and certain related tax gross-up payments. While Company-chartered aircraft are generally used for Company business only, we maintain an Aircraft Use Policy that authorizes personal use in certain circumstances, the incremental costs of which we report as compensation to named executive officers as set forth in SEC rules. On certain occasions in 2021, family members of Ms. Ryerkerk accompanied her on business trips on Company-provided aircraft at no incremental cost to us.
The benefits described above are also described in the notes to the “2021 Summary Compensation Table”, to the extent applicable in 2021. The CMDC reviews these arrangements regularly to assure they continue to fulfill business needs. Retirement Benefits
Our named executive officersNEOs participate in our various employee benefit plans designed to provide retirement income. Our qualified and non-qualified pension plans provide a retirement income base, and our qualified and non-qualified 401(k) and supplemental savings and retirement plans permit additional retirement savings. To encourage retirement savings under the qualified and nonqualified 401(k) plans, we provide an employer matching contribution. We limit eligible compensation for employer contributions under the qualified and non-qualified 401(k) plans to annual base salary for our named executive officers.NEOs. As a result, the compensation and management development committee’sCMDC’s decisions to grant annual incentive awards (whether cash or equity) do not create any additional retirement benefits under these plans for our named executive officers.NEOs. Our U.S. defined benefit pension plan, the Celanese Americas Retirement Pension Plan, was frozen as of the end of 2013. Messrs. Richardson, Kelly, and Fotheringham, who were employed before the freeze date, participate in the plan. In addition to certain U.S. plans, Mr. Fotheringham, who is currently based in the United Kingdom, has participated in plans in Germany, the Netherlands and the United Kingdom when he held positions in those respective countries during his career with us. For more information about these plans and NEO participation in them, see “20182021 Summary Compensation Table”, “20182021 Pension Benefits Table” and “20182021 Nonqualified Deferred Compensation Table”. Perquisites
Our named executive officers receive health and welfare benefits, such as group medical, group life and long-term disability insurance coverage, under plans generally available to all other U.S.-based salaried employees. Consistent with our pay-for-performance policy, we provide our named executive officers with limited executive fringe benefits and perquisites. For named executive officers who we ask to serve on overseas assignments, we provide benefits under our expatriate assignment program to help offset the additional costs of the assignment, including relocation expenses, housing, car and educational allowances, cost of living differentials, tax preparation expenses, and certain related tax equalization and tax gross-up payments. These are described in the notes to the “2018 Summary Compensation Table”.Severance Plan
In order to haveoffer a competitive benefit that allows for consistent administration without negotiations of special payments, we have an Executive Severance Benefits Plan (“Severance Plan”) for our named executive officers.NEOs. The Severance Plan provides cash payments upon involuntary termination without cause (as defined in the Severance Plan), but is not available in the event of a change in control to individuals that have a change in control agreement as described below. See “Potential Payments Upon Termination or Change In Control” for additional information. Change in Control Agreements
We have change in control agreements with each of our named executive officersNEOs to ensure that management will objectively consider potential transactions that may benefit stockholdersshareholders without regard to any potential impact on their continued employment. The change in control agreements provide for a cash payment to be made following a termination of employment by the Company without cause or by the officerNEO with good reason (as defined in the agreements) within two years following a change in control. See “Potential Payments Upon Termination or Change In Control” for additional information. | | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 67 |
In approving the form of change in control agreement, several years ago, the compensation and management development committeeCMDC considered the prevalence and terms of such agreements among similarly-situated executives at the companies in our compensation comparator group based on data collected for the Company by the compensation and management development committee’sCMDC’s then independent compensation consultant. The compensation and management development committeeCMDC also determined that the uniform non-compete and non-
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 56 |
solicitnon-solicit clauses contained in such agreements provide a significant benefit to the Company. None of the change in control agreements in effect with our named executive officersNEOs contains a tax gross-up.
No Employment Agreements
We do not have any employment agreements with any of our executive officers.NEOs. All of our executive officersNEOs are “at will” employees.
Executive Stock Ownership Requirements
The compensation and management development committeeCMDC has adopted stringent stock ownership guidelines for our named executive officers. The typesNEOs, as shown in the table below. Each NEO has five years from the date of securities that count towardhire or promotion to achieve the required share ownership include only (i) shares of Common Stock owned outright, whether individually or through beneficial ownership in a trust or partnership, (ii) shares of Common Stock or share equivalents held in a Company-sponsored deferred compensation or retirement plan, and (iii) 60% of unvested RSUs that will vest within one year of the measurement date. Stock options do not count towards the ownership requirements.level. Failure to meet stock ownership requirements, or failure to make a meaningful effort to do so, may result in the executive officerNEO not receiving future base salary increases or long-term incentive awards, and may also make the executive officerNEO ineligible for promotion.
The following table sets forth the ownership requirement (expressed as a multiple of base salary) for each of our named executive officers serving at year-end and the shares or equivalents owned (expressed as a multiple of base salary) asNEOs. As of December 31, 2018 under2021, and using a reference stock price of $144.74, the average of the 2021 high and low share trading prices, and base salary as of the end of 2021, all NEOs were either in compliance with our current ownership guidelines:
guidelines or were on track for compliance by the applicable deadline based on their respective hire or promotion dates. |
| | | | |
| Named Executive Officer | Minimum Required Ownership | | Ownership as of December 31, 2018(1)(2)
|
Mark C. RohrLori J. Ryerkerk | 6 times base salary | | 43.8 times base salary |
| Scott A. Richardson | 4 times base salary |
| Tom F. Kelly | 4.64 times base salary |
Scott M. SuttonJohn G. Fotheringham | 4 times base salary |
| A. Lynne Puckett | 11.14 times base salary |
Peter G. Edwards | 4 times base salary | | 0.6 times base salary |
Shannon L. Jurecka | 4 times base salary | | 1.0 times base salary |
| |
(1)
| Calculated using $101.10, the average of the 2018 high and low share prices, and total salary paid during 2018.
|
| |
(2)
| Ms. Jurecka is on track for compliance with the ownership guideline by the October 2022 deadline, based on her promotion date. Mr. Edwards resigned as an officer effective December 31, 2018 and retired from the Company effective January 31, 2019. |
Executive Compensation Clawback Policy
In order to further align management’s interests with the interests of stockholdersshareholders and support good governance practices, our compensation and management development committee adoptedthe CMDC maintains a robust clawback (also known as a recoupment) policy applicable to long-term incentive plan awards to an employee along withand bonuses paid out under our annual incentive plan. The policy prohibitsallows recoupment or cancellation of an award in the awardee fromcase of (i) a material restatement of financial statements, (ii) an act or omission constituting a violation of the Company’s business conduct or other policy causing financial harm to the Company, (iii) an act for which the employee or the Company could be held civilly or criminally liable, or (iv) violations of restrictive covenants relating to (a) disclosing confidential or proprietary information, (ii)(b) competing with us, and (iii)(c) soliciting or hiring employees or certain former employees, orand (d) soliciting any consultants of ours to cease working with us, in each case, for a specified period of one year following the termination of the awardee’saward recipient’s employment with us for any reason. In the event that the awardeeaward recipient violates the provisions of the recoupment policy, the covered awards willCMDC may determine to cease vesting on and the awardee will forfeit any rights to the coveredoutstanding equity awards and will be requiredrequire the award recipient to deliver to us any amount received from theannual bonus awards or long-term incentive cash awardawards or any gain realized on any stock option exercises or any other transaction relating to an equity award granted by us.
In addition, pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, if we are required to restate our financial statements due to material noncompliance with any financial reporting requirements as a result of misconduct, the CEO and chief financial officerChief Financial Officer will be required to reimburse us for any bonus or other incentive-based or equity-
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 57 |
basedequity-based compensation received during the 12 months following the first public issuance of the non-complying document, and any profits realized from the sale of securities of the Company during those 12 months.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 68 |
Tally Sheets
From time-to-time, the compensation and management development committeeCMDC reviews a summary report, or “tally sheet,” prepared by management for each named executive officer.NEO. The purpose of a tally sheet is to show the total dollar value of the executive’s annual compensation. This includes the executive’s base salary, annual incentive award, long-term incentive compensation, and other compensation. The tally sheet also shows (or the committeeCMDC is separately provided from time to time) holdings of Common Stock and equivalents, and accumulated value and unrealized gains under prior long-term incentive compensation awards. The compensation and management development committeeCMDC uses tally sheets to estimate the total annual compensation of the named executive officers,NEOs, and to provide perspective on the value accumulated by the named executive officersNEOs from our compensation program.
Tax and Accounting Considerations
Tax Deductibility of Compensation Expense
Internal Revenue Code Section 162(m) limits the deductibility of compensation in excess of $1 million paid to any one named executive officercertain covered individuals, including each of our NEOs, in any calendar year. Under the tax rules in effect before 2018, compensation that qualified as "performance-based" under Section 162(m) was deductible without regard to this $1 million limit. However, the 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”) eliminated this performance-based compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. As a result, compensation that the committee structured in 2017 and prior years with the intent of qualifying as performance-based compensation under Section 162(m) that is paid on or after January 1, 2018 may not be fully deductible, depending on the application of the special grandfather rules. Moreover, from and after January 1, 2018, compensation awarded in excess of $1 million to our named executive officers generally will not be deductible.
Although the 2017 Tax Act will limit the deductibility of compensation paid to the named executive officers,NEOs is limited, the compensation and management development committeeCMDC will, consistent with its pastpractice, continue to design compensation programs that are intended to be in the best long-term interests of the Company and our stockholders,shareholders, with deductibility of compensation being one of several considerations taken into account.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 58 |
Compensation Risk Assessment
It is our policy to regularly monitor our compensation policies and practices to determine whether our risk management objectives are being met and to adjust those policies and practices to address any incentives that are determinedhave the potential to encourage risks that are reasonably likely to have a material adverse effect on us and any changes in our risk profile. With respect to the compensation of our executives, the compensation and management development committee,CMDC, with the input of theits independent compensation consultant and management, takes into consideration whether any such programs may incentivize excessive risk taking. As part of these considerations and consistent with its compensation philosophy, our compensation program, particularly our annual and long-term incentive plans, are designed to provide incentives for the executives to achieve our objectives without encouraging excessive risk-taking because:
•our incentive programs utilize a mix of short-term and long-term performance measures, which provide executives with short-term incentive to improve our results while also providing a significant incentive to maintain those results for the long-term;
•a significant portion of our named executive officers’NEOs’ incentive compensation consists of long-term incentive or other equity-based compensation, which, when coupled with our stock ownership guidelines, encourages long-term equity ownership of our Common Stock by the executives, aligning their interests with our stockholders;shareholders;
•the financial metrics utilized under each of the programs are designed to reflect measures of stockholdershareholder value over multiple years or annual operational performancevarious time horizons that the compensation and management development committeeCMDC believes will create long-term stockholdershareholder value;
•various non-financial metrics (such asrelated to achievement of environmental, health, safety and safety goals)quality goals are used as part of the process of determining compensation;
•in determining the exact mix of compensation from year to year, the compensation and management development committeeCMDC intends to grant awards that provide an appropriate level of “market risk” that do not encourage excessive risk taking; and
•compensation payment opportunities that may be excessive are avoided due to the limits placed on the amount of incentive payments that may be earned.earned as well as the selection of performance goals that are expected to be challenging to achieve at superior levels; and
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 69 |
•we have recovery policies (“clawbacks”) applicable to long- and short-term incentive compensation that permit the Company to cancel awards and recoup certain gains in the event of certain material financial restatements or certain conduct detrimental to the Company.
With respect to the compensation of employees other than the named executive officers,NEOs, the compensation and management development committeeCMDC has reviewed our compensation policies and practices to determine whether those policies and practices encourage excessive or inappropriate risk. Our compensation programs for employees other than the named executive officersNEOs are designed to incentivize employees to demonstrate the couragewillingness to make decisions that benefit the Company as a whole, while accepting personal accountability and avoiding unnecessary risk.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 59 |
Compensation and Management Development Committee Report
The compensationCompensation and management development committeeManagement Development Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and the compensation and management development committee’sCommittee’s independent compensation consultant and, based on its review and discussions, the compensationCompensation and management development committeeManagement Development Committee recommended to the boardBoard of directorsDirectors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20182021 and this Proxy Statement. This report was submitted by the compensation and management development committee,
| | | | | |
| Edward G. Galante, Chair |
Dated: February 6, 2019 | William M. Brown |
| Kathryn M. Hill Chair |
| Jean S. Blackwell |
| Edward G. Galante |
| Dr. Jay V. Ihlenfeld |
| Michael Koenig |
The compensationThis Compensation and management development committee reportManagement Development Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing under the Securities Act of 1933, or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates the compensation and management development committee report by reference therein.
Compensation Committee Interlocks and Insider Participation
No member of the compensation and management development committee was at any time during 2018 employed as an employee or officer of the Company or had any relationship with us requiring disclosure under Item 404 of Regulation S-K. In addition, no executive officer of the Company has served on the board of directors or compensation committee of any other entity that has one or more executive officers who served as a member of our board of directors or compensation and management development committee during 2018.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 60 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 70 |
Compensation Tables
20182021 Summary Compensation Table
The following table summarizes all compensation for the fiscal years ended December 31, 2018, 20172021, 2020 and 20162019 awarded to, earned by, or paid to each of the NEOs:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal
Position(1) | | Year | | Salary
($) | | Bonus ($)(2) | | Stock Awards ($)(3) | | Option Awards ($)(4) | | Non- Equity
Incentive Plan Compen- sation ($)(5) | | Change in
Pension Value
and
Non-Qualified
Deferred
Compen- sation Earnings ($)(6) | | All
Other Compen- sation ($)(7) | | Total
($) |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| | | | | | | | | | | | | | | | | | |
Lori J. Ryerkerk
Chairman. Chief Executive Officer and President | | 2021 | | 1,180,000 | | — | | 8,649,886 | (8) | — | | 2,641,548 | | — | | 99,558 | | 12,570,992 |
| 2020 | | 1,065,385 | | — | | 4,499,869 | (8) | — | | 1,385,000 | | — | | 117,192 | | 7,067,446 |
| 2019 | | 613,846 | | 35,000 | | 4,999,797 | (8) | — | | 244,065 | | — | | 135,095 | | 6,027,803 |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Scott A. Richardson
Executive Vice President and Chief Financial Officer | | 2021 | | 646,000 | | — | | 2,899,928 | (8) | — | | 1,323,770 | | 5,000 | | 88,206 | | 4,962,904 |
| 2020 | | 623,077 | | — | | 1,699,862 | (8) | — | | 635,538 | | 4,000 | | 88,535 | | 3,051,012 |
| 2019 | | 595,385 | | — | | 1,499,877 | (8) | — | | 202,907 | | 5,000 | | 77,378 | | 2,380,547 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Thomas F. Kelly
Senior Vice President, Engineered Materials | | 2021 | | 557,000 | | 200,000 | | 1,869,984 | (8) | — | | 872,830 | | — | | 63,516 | | 3,563,330 |
| 2020 | | 510,000 | | 200,000 | | 1,099,838 | (8) | — | | 342,720 | | 1,000 | | 314,295 | | 2,467,853 |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
John G. Fotheringham Senior Vice President, Acetyls(9) | | 2021 | | 567,095 | | — | | 1,659,974 | | — | | 820,292 | | 3,000 | | 83,917 | | 3,134,278 |
| | | | | | | | | | | | | | | | | |
A. Lynne Puckett
Senior Vice President & General Counsel | | 2021 | | 536,000 | | 66,667 | | 1,869,984 | (8) | — | | 796,081 | | — | | 61,182 | | 3,329,914 |
| 2020 | | 532,000 | | 66,667 | | 1,099,838 | (8) | — | | 335,160 | | — | | 58,520 | | 2,092,185 |
| 2019 | | 446,000 | | 375,000 | | 2,799,814 | (8) | — | | 132,997 | | — | | 101,345 | | 3,855,156 |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(1)Ms. Ryerkerk was elected Chief Executive Officer and President effective May 1, 2019 and Chairman of the Board effective April 16, 2020; Mr. Kelly was appointed as an executive officer effective in April 2020, and Mr. Fotheringham was appointed as an executive officer effective in May 2020. Information is not provided for years in which individuals were not named executive officers:officers. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal
Position(1) | | Year | | Salary ($)(2) | | Bonus ($) | | Stock Awards ($)(3) | | Option Awards ($)(4) | | Non- Equity
Incentive Plan Compen- sation ($)(5) | | Change in
Pension Value
and
Non-Qualified
Deferred
Compen- sation Earnings ($)(6) | | All
Other Compen- sation ($)(7) | | Total ($) |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Mark C. Rohr Chairman, Chief Executive Officer and President | | 2018 | | 1,155,000 |
| | — |
| | 7,999,985 |
| (8) | — | | 3,200,000 |
| | 1,000 |
| | 158,175 |
| | 12,514,160 |
|
| | 2017 | | 1,155,000 |
| | — |
| | 7,499,920 |
| | — | | 3,100,000 |
| | 1,000 |
| | 163,708 |
| | 11,919,628 |
|
| | 2016 | | 1,142,308 |
| | — |
| | 5,999,880 |
| | — | | 1,962,000 |
| | 1,000 |
| | 156,218 |
| | 9,261,406 |
|
| | | | | | | | | | | | | | | | | | | |
Scott A. Richardson Senior Vice President and Chief Financial Officer | | 2018 | | 513,846 |
| | — |
| | 799,904 |
| (8) | — | | 968,400 |
| | — |
| | 66,949 |
| | 2,349,099 |
|
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Scott M. Sutton Chief Operating Officer | | 2018 | | 750,000 |
| | — |
| | 2,499,878 |
| (8) | — | | 1,210,500 |
| | — |
| | 76,875 |
| | 4,537,253 |
|
| | 2017 | | 645,231 |
| | — |
| | 1,299,884 |
| | — | | 1,422,000 |
| | 1,000 |
| | 65,836 |
| | 3,433,951 |
|
| | 2016 | | 581,538 |
| | — |
| | 4,799,848 |
| | — | | 739,600 |
| | — |
| | 61,527 |
| | 6,182,513 |
|
Peter G. Edwards Executive Vice President & General Counsel | | 2018 | | 594,230 |
| | — |
| | 1,510,036 |
| (8) | — | | 726,300 |
| | — |
| | 65,365 |
| | 2,895,931 |
|
| | 2017 | | 530,769 |
| | — |
| | 2,499,896 |
| (9) | — | | 715,500 |
| | — |
| | 291,880 |
| | 4,038,045 |
|
| | | | | | | | | | | | | | | | | | | |
Shannon L. Jurecka Senior Vice President & Chief Human Resources Officer | | 2018 | | 450,769 |
| | 40,000 |
| | 599,858 |
| (8) | — | | 720,000 |
| | — |
| | 49,585 |
| | 1,860,212 |
|
| | 2017 | | 361,539 |
| | — |
| | 874,731 |
| | — | | 438,000 |
| | — |
| | 11,423 |
| | 1,685,693 |
|
| | | | | | | | | | | | | | | | | | | |
Kevin S. Oliver Former Chief Accounting Officer, Controller and Acting CFO | | 2018 | | 370,408 |
| | — |
| | 274,898 |
| (8) | — | | 246,000 |
| | — |
| | 316,220 |
| | 1,207,526 |
|
| | 2017 | | 355,100 |
| | — |
| | 229,846 |
| | — | | 278,000 |
| | 14,000 |
| | 38,761 |
| | 915,707 |
|
| | 2016 | | 341,428 |
| | — |
| | 459,877 |
| | — | | 179,000 |
| | — |
| | 37,557 |
| | 1,018,009 |
|
| |
(1)(3)Represents the grant date fair value of long-term incentive (equity) awards granted in the year indicated under our 2018 GIP computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). The method and assumptions used to calculate such value are set forth in note 8 below and additional information is set forth in the “2021 Grants of Plan-Based Awards Table” on a grant-by-grant basis. (4)No stock options were granted during the fiscal year ended December 31, 2021. | Principal position as of December 31, 2018. Mr. Richardson was elected Senior Vice President and Chief Financial Officer effective February 16, 2018. Ms. Jurecka was elected Senior Vice President and Chief Human Resources Officer in 2017 and was named an executive officer effective October 18, 2017. Mr. Oliver served as our acting Chief Financial Officer from October 2017 until the appointment of Mr. Richardson, as our new Chief Financial Officer, and remained our Chief Accounting Officer until April 20, 2018, after which he relocated to our Amsterdam Regional Headquarters and serves as our Vice President, Finance, Europe. Information is not provided for years prior to 2018 for Mr. Richardson because he was not an executive officer prior to 2018. Information is not provided for Mr. Edwards or Ms. Jurecka for years prior to 2017 because neither was an executive officer prior to 2017.
|
| |
(2)
| For Messrs. Richardson and Oliver, includes dividends on deferred RSUs with a hold feature that settled in 2018. Additional information is included in the “2018 Nonqualified Deferred Compensation Table” and accompanying text. |
| |
(3)
| Represents the grant date fair value of long-term incentive (equity) awards granted in the year indicated under our 2009 GIP computed in accordance with FInancial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). For a detailed discussion of the method and assumptions used to calculate such value for 2018, see Notes 2
|
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 61 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 71 |
and 20(5)For 2021, represents Annual Incentive Plan award cash payouts with respect to our Consolidated Financial Statements contained in our2021 performance. Further information about the Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The compensation and management development committee approved a change in the vesting treatment for the RSU award received by Mr. Edwards in 2017 when he joined the company. The approved change provides for pro rata vesting of the final tranche on the original vesting date. Consequently, for 2018, Mr. Edwards’ stock award value also reflects the incremental fair value of $410,108 related to the modification. Additional information regarding PRSUs and RSUs granted to the named executive officers during 2018Incentive Plan is set forth in note 8 below and in the “2018Compensation Discussion and Analysis – Compensation Decisions – Annual Incentive Plan Awards" and the “2021 Grants of Plan-Based Awards Table”.(6)Consists entirely of the aggregate respective change in the actuarial present value of each individual’s pension benefits based on a discount rate of 2.78% for 2021. The values shown assume retirement from the CARPP and the CASRSP (as applicable) for Messrs. Richardson, Kelly and Fotheringham at age 65 with a life only benefit under the Celanese Americas Retirement Pension Plan (“CARPP”) and the Celanese Americas Supplemental Retirement Savings Plan (“CASRSP”), as applicable. Mr. Fotheringham also has a balance in our legacy German defined-benefit supplementary pension plan from his service there with us from 1997 through 2006. The actuarial present value of Mr. Fotheringham’s benefits under these plans decreased from December 31, 2020 to December 31, 2021 by approximately $8,200 (and no compensation amount is reported in the table with respect thereto). See “2021 Pension Benefits Table” on a grant-by-grant basis.and accompanying text. | |
(4)
| No stock options were granted during the fiscal year ended December 31, 2018.
|
| |
(6)
| Consists entirely of the aggregate respective change in the actuarial present value of each individual’s pension benefits based on a discount rate of 4.23% for 2018. The discount rate in 2017 was 3.54% and the rate in 2016 was 3.95%. The values shown assume retirement from the CARPP and the CASRSP (as applicable) at age 65 with a life only benefit.
|
| |
(7) | The amounts reported in this column with respect to fiscal 2018The amounts reported in this column with respect to fiscal 2021 consist of the following:
|
(a) Aggregate Company contributions, including matching and retirement contributions made for 2018,2021, under the Company’s tax-qualified and non-qualified defined-contribution retirement plans, including the Celanese Americas Retirement Savings Plan (“CARSP”), a tax-qualified, defined contribution (401(k)) plan, and the Celanese Americas Supplemental Retirement Savings Plan (“CASRSP”),CASRSP, an unfunded, non-qualified defined contribution plan:plan, and a UK-based plan in which Mr. Rohr, $127,050,Fotheringham participates: Ms. Ryerkerk, $99,558, Mr. Richardson, $56,523,$73,757, Mr. Sutton, $76,875,Kelly $63,516, Mr. Edwards, $65,365,Fotheringham, $43,483, and Ms. Jurecka, $49,585, and Mr. Oliver, $40,745.Puckett, $61,182.
The CARSP is available to substantially all of our U.S. employees, including all the named executive officers.NEOs. The plan is subject to the provisions of ERISA. Eligible participants are entitled to a 6% match of his or her pre-tax and after-tax contributions to the CARSP and an allocation of 5% of his or her salary up to the Code Section 401(a)(17) limit ($275,000290,000 in 2018)2021) in lieu of the former pension plan contribution under the Celanese Americas Retirement Pension Plan (“Retirement Contributions”). The amount contributed to the plan by or on behalf of a participant is limited by Code Section 415 and is credited with earnings based on the earnings rate of an investment fund maintained for investments under the CARSP chosen by the participant.
Each of the named executive officersNEOs is entitled to an allocation under the CASRSP equal to (a) Retirement Contributions limited by Code Section 415 and not contributed to the CARSP, and (b) 6% of his or her salary in excess of the compensation limits under the CARSP (“Excess Earnings Contributions”). The amount contributed to the plan on behalf of a participant is credited with earnings based on the earnings rate of an investment fund maintained for investments under the CARSP which is currently the 1-3 year Government/Credit Bond Index Fund. Additional information about the CASRSP is set forth in the “20182021 Nonqualified Deferred Compensation Table” and accompanying text. (b) The Company provides the following perquisitesexecutive health services and reimbursement of up to $10,000 annually (with no tax gross-up) for personal financial planning and wealth management services to the named executive officers: personal liability insurance,NEOs. Ms. Ryerkerk and executive health services. In addition,Mr. Richardson were the compensationonly NEOs reimbursed for financial planning and wealth management development committee has authorizedservices in 2021. The Company also provided certain tax and financial advisory services benefits in 2021 to Mr. Rohr, as CEO,Richardson (related to his prior expatriate assignment in China) and to Mr. Fotheringham relating to determination of tax withholdings, income reporting, and tax payments with regards to business travel across multiple countries. For Mr. Fotheringham these amounts totaled $24,898. The Company also provided him a tax equalization payment of $14,684 related to his recent expatriate service in the Netherlands. We also provided a home office allowance of less than $1,000 for Mr. Fotheringham in 2021.
From time to time, our NEOs travel on Company-provided aircraft for security and safety reasons and to maximize histhe efficiency of their travel and availability for Company business. On certain occasions in 2021, family members of Ms. Ryerkerk also accompanied her on business and considers travel that is related to Company business or otherwise benefits the Company, including travel to meetings of other boards of directors, as business use. This table includes thetrips on Company-provided aircraft at no incremental cost of the use of Company-provided aircraft and related travel expenses for Mr. Rohr to attend meetings of another public company’s and a private foundation’s board of directors on which he serves (and not for vacation, commuting or other personal use), of $22,555 for 2018. The incremental cost was determined using a method that takes into account the variable costs such as landing fees, aircraft fuel charges, taxes, local transportation and catering. Because our aircraft is used primarily for business-related travel, we do not include fixed costs, such as the acquisition costs of leased aircraft. The Company also provided certain benefits under our expatriate assignment program to Mr. Richardson (related to his prior assignment in China) and Mr. Oliver (related to his three-year assignment to Amsterdam as our Vice President, Finance, Europe). For Mr. Richardson, the benefits consisted of $5,400 for tax preparation services. For Mr. Oliver, the benefits had an aggregate cost of $271,884, and consisted of relocation expenses, housing, car and educational allowances, cost of living differentials, tax preparation expenses, immigration fees and certain other taxable reimbursements related to the assignment. Mr. Oliver also received under the program $5,162 in tax gross-ups for certain of the program’s taxable benefits. us.
Perquisites and personal benefits were excluded for all of the named executive officersNEOs to the extent that the total value of all perquisites and personal benefits for a named executive officeran NEO was less than $10,000. In addition, the table does not include any amounts for personal benefits provided to any of the named executive officersNEOs for which we believe there is no aggregate incremental cost to us, including use of tickets for certain sporting events.us.
NoOther than tax equalization payments with respect to overseas expatriate assignments, no tax gross-ups were paid to any named executive officerNEO during 2018 except as noted above for Mr. Oliver under our expatriate assignment program.2021.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 62 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 72 |
| |
(8)(8)The stock awards for 2021 consisted of annual equity awards of RSUs and PRSUs under the 2021 long-term incentive plan (LTIP). Equity awards under the 2021 LTIP consisted of 85% performance-based stock units (PRSUs) and 15% time-based stock units (RSUs).
| The stock awards consisted of the following: |
|
| | |
| | Total 2018 Stock Awards |
| Name | Grant Date Fair Value of Annual PRSUs | Grant Date Fair Value of Time-Vested RSUs |
| Mark C. Rohr | — | $7,999,985 |
| Scott A. Richardson | $799,904 | — |
| Scott M. Sutton | $2,499,878 | — |
| Peter G. Edwards | $1,099,928 | — |
| Shannon L. Jurecka | $599,858 | — |
| Kevin S. Oliver | $192,429 | $82,469 |
2018 LTIP / Annual PRSUs.Performance-Vested RSUs. The fair value of the annual award PRSUs granted under the 20182021 LTIP was calculated to be $94.05 per share,$118.92, as determined using a Monte Carlo simulation model onwith reference to February 8, 2018,10, 2021, the date of grant, discounted for lack of dividend participation and for implications of the potential performance limitation if cumulative TSR for the performance period is inbelow the bottom quartile,relevant threshold, and adjusted for a performance premium. Payout of such PRSUs can range from a minimum of 0% to a maximum of 200% of target. The target and maximum potential values of the award of PRSUs for the named executive officersNEOs granted in 2021 using the fair value discussed above, assuming performance at the target and maximum levels of performance conditions, is set forth below. Actual performance, and the stock price at the eventual payout dates, is uncertain.
|
| | | | |
| | Annual PRSU Awards |
| Name | Target Number of PRSUs | Value at Target Performance | Maximum Number of PRSUs | Value at Highest Performance |
| Scott A. Richardson | 8,505 | $799,904 | 17,010 | $1,599,808 |
| Scott M. Sutton | 26,850 | $2,499,878 | 53,700 | $4,999,756 |
| Peter G. Edwards | 11,695 | $1,099,928 | 23,390 | $2,199,856 |
| Shannon L. Jurecka | 6,378 | $599,858 | 12,756 | $1,199,716 |
| Kevin S. Oliver | 2,046 | $192,429 | 4,092 | $384,858 |
| | | | | | | | | | | | | | |
| 2021 Annual PRSU Awards |
| Name | Target Number of PRSUs | Value at Target Performance | Maximum Number of PRSUs | Value at Highest Performance |
| | | | |
| Lori J. Ryerkerk | 61,827 | $7,352,467 | 123,654 | $14,704,934 |
| Scott A. Richardson | 20,728 | $2,464,974 | 41,456 | $4,929,948 |
| Thomas F. Kelly | 13,366 | $1,589,485 | 26,732 | $3,178,970 |
| John G. Fotheringham | 11,865 | $1,410,986 | 23,730 | $2,821,972 |
| A. Lynne Puckett | 13,366 | $1,589,485 | 26,732 | $3,178,970 |
| | | | |
| | | | |
Time-Vested RSUs.The fair value of Time-Vested RSUs (ratable vesting) granted to Mr. Rohr and Mr. Oliver listed inour NEOs under 2021 LTIP as part of the first table aboveannual award was calculated to be $96.23$124.06 per share, the average of the high and low market price of our Common Stock as reported by the NYSE on February 8, 2018,10, 2021, the date of grant, and discounted for lack of dividend participation. See Note (3) above concerning
(9)Mr. Fotheringham is based in the compensation cost relatedUnited Kingdom and his salary, Annual Incentive Plan award, and retirement plan contributions are paid in British pounds (GPB or £). For reporting purposes, these amounts have been converted to a modificationU.S. dollars using the average of the daily exchange rates for 2021 reported by the European Central Bank, which average was approximately $1.385/£1.00. For purposes of payment to Mr. Edwards’ 2017 RSU award.him, his Annual Incentive Plan award was converted into GBP using our forecasted rates for 2022 aligned with recent spot rates as reported by the European Central Bank, which rate was $1.375/£1.00.
| |
(9)
| The grant date fair value of long-term incentive (equity) awards granted in 2017 to Mr. Edwards includes a sign-on equity award of RSUs provided when he joined the Company valued at $1,499,979. |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 63 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 73 |
20182021 Grants of Plan-Based Awards Table
The following table summarizes incentive awards and other plan-based awards granted to each of the named executive officersNEOs during the fiscal year ended December 31, 2018:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards | | Estimated Future Payouts
Under Equity
Incentive Plan Awards | | All Other Stock Awards | | Grant
Date Fair
Value of
Stock
and
Option
Awards
($) | |
| | | | | | Number
of
Shares
of Stock
or Units
(#) | | Number
of
Securities
Under-
lying
Options
(#) | | |
| Name | | Grant Date | | Thres-
hold
($) | | Target
($) | | Maxi-
mum
($) | | Thres-hold
(#) | | Target
(#) | | Maxi-
mum
(#) | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (l) | |
| Lori J. Ryerkerk | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 767,000 | | 1,534,000 | | 3,068,000 | | — | | — | | — | | — | | — | | — | |
PRSUs(2) | | 2/10/21 | | — | | — | | — | | 30,914 | | 61,827 | | 123,654 | | — | | — | | 7,352,467 | |
Time RSUs(2) | | 2/10/21 | | — | | — | | — | | — | | — | | — | | 10,458 | | — | | 1,297,419 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Scott A. Richardson | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 274,550 | | 549,100 | | 1,647,300 | | — | | — | | — | | — | | — | | — | |
PRSUs(2) | | 2/10/21 | | — | | — | | — | | 10,364 | | 20,728 | | 41,456 | | — | | — | | 2,464,974 | |
Time RSUs(2) | | 2/10/21 | | — | | — | | — | | — | | — | | — | | 3,506 | | — | | 434,954 | |
| Thomas F. Kelly | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 194,950 | | 389,900 | | 1,169,700 | | — | | — | | — | | — | | — | | — | |
PRSUs(2) | | 2/10/21 | | — | | — | | — | | 6,683 | | 13,366 | | 26,732 | | — | | — | | 1,589,485 | |
Time RSUs(2) | | 2/10/21 | | — | | — | | — | | — | | — | | — | | 2,261 | | — | | 280,500 | |
| John G. Fotheringham | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 198,484 | | 396,967 | | 1,190,901 | | — | | — | | — | | — | | — | | — | |
PRSUs(2) | | 2/10/21 | | — | | — | | — | | 5,933 | | 11,865 | | 23,730 | | — | | — | | 1,410,986 | |
Time RSUs(2) | | 2/10/21 | | — | | — | | — | | — | | — | | — | | 2,007 | | — | | 248,988 | |
| A. Lynne Puckett | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 201,000 | | 402,000 | | 1,206,000 | | — | | — | | — | | — | | — | | — | |
PRSUs(2) | | 2/5/20 | | — | | — | | — | | 6,683 | | 13,366 | | 26,732 | | — | | — | | 1,589,485 | |
Time RSUs(2) | | 2/5/20 | | — | | — | | — | | — | | — | | — | | 2,261 | | — | | 280,500 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards | | Grant Date Fair Value of Stock and Option Awards ($) | |
| | | | | | | Number of
Shares of Stock or Units (#) | | Number of Securities
Under- lying Options (#) | | |
| Name | | Grant Date | | Thres- hold ($) | | Target ($) | | Maxi- mum ($) | | Thres-hold (#) | | Target (#) | | Maxi- mum (#) | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (l) | |
| Mark C. Rohr | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 389,813 |
| | 1,559,250 |
| | 4,677,750 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Time RSUs(3) | | 2/8/18 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 83,134 |
| | — |
| | 7,999,985 |
| |
| Scott A. Richardson | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 108,750 |
| | 435,000 |
| | 1,305,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
PRSUs(2) | | 2/8/18 | | — |
| | — |
| | — |
| | 4,253 |
| | 8,505 |
| | 17,010 |
| | — |
| | — |
| | 799,904 |
| |
| Scott M. Sutton | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 187,500 |
| | 750,000 |
| | 2,250,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
PRSUs(2) | | 2/8/18 | | — |
| | — |
| | — |
| | 13,290 |
| | 26,580 |
| | 53,160 |
| | — |
| | — |
| | 2,499,878 |
| |
| Peter G. Edwards | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 112,500 |
| | 450,000 |
| | 1,350,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
PRSUs(2) | | 2/8/18 | | — |
| | — |
| | — |
| | 5,848 |
| | 11,695 |
| | 23,390 |
| | — |
| | — |
| | 1,099,928 |
| |
Time RSUs(3) | | 11/5/18 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 4,125 |
| | — |
| | 410,108 |
| (4) |
| Shannon L. Jurecka | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 74,750 |
| | 299,000 |
| | 897,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
PRSUs(2) | | 2/8/18 | | — |
| | — |
| | — |
| | 3,189 |
| | 6,378 |
| | 12,756 |
| | — |
| | — |
| | 599,858 |
| |
| Kevin S. Oliver | | | | | | | | | | | | | | | | | | | |
AIP(1) | | N/A | | 42,188 |
| | 168,750 |
| | 506,250 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
PRSUs(2) | | 2/8/18 | | — |
| | — |
| | — |
| | 1,023 |
| | 2,046 |
| | 4,092 |
| | — |
| | — |
| | 192,429 |
| |
Time RSUs(3) | | 2/8/18 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 857 |
| | — |
| | 82,469 |
| |
| |
(2)
| 2018 LTIP. PRSUs representing the 2018 LTIP were awarded under the 2009 GIP and vest on February 15, 2021, based on the Company’s achievement of target levels of Adjusted EPS growth and Return on Capital Employed during fiscal years
|
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 64 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 74 |
2018-2020.(2)2021 LTIP. The 2021 LTIP was comprised of 85% PRSUs and 15% Time-based RSUs. The PRSUs were awarded under the 2018 GIP and vest 50% on each of August 15, 2022 and February 15, 2024, based on the Company’s achievement of target levels of Adjusted EPS and Return on Capital Employed between January 1, 2021 and June 30, 2022 and during fiscal years 2021-2023, respectively. See “2018 Compensation Decisions - Long-Term Incentive Compensation” and “Exhibit A” for more information about these awards and performance measures. The Time-based RSUs vest 33% on each of February 15, 2022 and 2023 and 34% on February 15, 2024. | |
(3)
| Time RSUs. Time-vesting RSUs were awarded to Mr. Rohr and Mr. Oliver in February 2018. These RSUs vest 33% on each of February 15, 2019 and 2020 and 34% on February 15, 2021. See “CEO 2018 Compensation Decisions” for more information about Mr. Rohr’s RSU award. The compensation and management development committee modified Mr. Edwards’ 2017 RSU award. The approved change provides for pro rata vesting of the final tranche on the original vesting date, January 27, 2020. |
| |
(4)
| Reflects the incremental fair value of Mr. Edwards' existing 2017 RSU award as a result of the modification described in Note (3) above. |
Outstanding Equity Awards at Fiscal 20182021 Year-End Table
The following table summarizes outstanding equity awards held by each of the named executive officersNEOs as of December 31, 2018,2021, including the vesting dates for the portions of these awards that have not yet vested:
| | | | | Option Awards(1) | | Stock Awards(1) | | | Option Awards(1) | | Stock Awards(1) |
| Name | | Grant Date | | Number of Securities Underlying Unexer- cised Options (#) Exercisable | | Number of Securities Underlying Unexer- cised Options (#) Unexer-cisable | | Option
Exercise
Price ($) | | Option
Expiration Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested (#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (2) ($) | | Equity
Incentive
Plan Awards:
Number
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested (#) | | Equity Incentive
Plan Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or Other
Rights That Have
Not Vested (2) ($) | Name | | Grant
Date | | Number of
Securities
Underlying
Unexer-
cised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexer-
cised
Options
(#)
Unexer-cisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (2) ($) | | Equity
Incentive
Plan Awards:
Number
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#) | | Equity Incentive
Plan Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or Other
Rights That Have
Not Vested (2) ($) |
| (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| Mark C. Rohr | | | | | | | | | | | | | |
| Lori J. Ryerkerk | | Lori J. Ryerkerk | |
| | | 4/5/12 | | 30,032 |
| (3) | — |
| | 45.38 | | 4/5/19 | | — |
| | — |
| | — |
| | — |
| | 5/1/19 | | — | | — | | | — | | — | | 33,428 | | (3) | | 5,617,910 | | | — | | | — | |
| | | 2/3/16 | | — |
| | — |
| | — | | — | | 213,500 |
| (4) | | 19,208,595 |
| | — |
| | — |
| | 5/1/19 | | — | | — | | | — | | — | | 2,966 | | (4) | | 498,466 | | | — | | | — | |
| | | 2/9/17 | | — |
| | — |
| | — | | — | | — |
| | — |
| | 179,818 |
| (5) | | 16,178,225 |
| | 2/5/20 | | — | | — | | | — | | — | | 8,658 | | (8) | | 1,455,063 | | | 61,902 | | (9) | | 10,403,250 | |
| | | 2/8/18 | | — |
| | — |
| | — | | — | | 83,134 |
| (14) | | 7,479,566 |
| | — |
| | — |
| | 2/10/21 | | — | | — | | | — | | — | | 10,458 | | (11) | | 1,757,571 | | | 123,654 | | (12) | | 20,781,291 | |
| | | | | | | | | | | | | | |
| Scott A. Richardson | Scott A. Richardson | | | | | | | | | | | | | Scott A. Richardson | |
| | | 2/3/16 | | — |
| | — |
| | — | | — | | 10,412 |
| (4) | | 936,768 |
| | — |
| | — |
| | 2/6/19 | | — | | — | | | — | | — | | 18,342 | | (3) | | 3,082,557 | | | — | | | — | |
| | | 2/3/16 | | — |
| | — |
| | — | | — | | 747 |
| (7) | | 67,208 |
| | — |
| | — |
| | 2/6/19 | | — | | — | | | — | | — | | 1,629 | | (5) | | 273,770 | | | — | | | — | |
| | | 12/8/16 | | — |
| | — |
| | — | | — | | 2,128 |
| (10) | | 191,456 |
| | — |
| | — |
| | 2/5/20 | | — | | — | | | — | | — | | 3,271 | | (8) | | 549,724 | | | 23,384 | | (9) | | 3,929,915 | |
| | | 2/9/17 | | — |
| | — |
| | — | | — | | 1,182 |
| (12) | | 106,345 |
| | 8,370 |
| (5) | | 753,049 |
| | 2/10/21 | | — | | — | | | — | | — | | 3,506 | | (11) | | 589,218 | | | 41,456 | | (12) | | 6,967,095 | |
| | | 2/8/18 | | — |
| | — |
| | — | | — | | — |
| | — |
| | 8,505 |
| (6) | | 765,195 |
| |
| | | | | | | | | | | | | | |
| Scott M. Sutton | | | | | | | | | | | | | |
| Thomas F. Kelly | | Thomas F. Kelly | |
| | | 2/3/16 | | — |
| | — |
| | — | | — | | 42,698 |
| (4) | | 3,841,539 |
| | — |
| | — |
| | 1/14/19 | | — | | — | | | — | | — | | 4,526 | | (6) | | 760,640 | | | — | | | — | |
| | | 2/3/16 | | — |
| | — |
| | — | | — | | 10,668 |
| (8) | | 959,800 |
| | — |
| | — |
| | 2/6/19 | | — | | — | | | — | | — | | 9,750 | | (3) | | 1,638,585 | | | — | | | — | |
| | | 12/8/16 | | — |
| | — |
| | — | | — | | 12,769 |
| (10) | | 1,148,827 |
| | — |
| | — |
| | 2/6/19 | | — | | — | | | — | | — | | 870 | | (5) | | 146,212 | | | — | | | — | |
| | | 2/9/17 | | — |
| | — |
| | — | | — | | — |
| | — |
| | 31,166 |
| (5) | | 2,804,005 |
| | 2/5/20 | | — | | — | | | — | | — | | 2,116 | | (8) | | 355,615 | | | 15,130 | | (9) | | 2,542,748 | |
| | | 2/8/18 | | — |
| | — |
| | — | | — | | — |
| | — |
| | 26,580 |
| (6) | | 2,391,403 |
| | 2/10/21 | | — | | — | | | — | | — | | 2,261 | | (11) | | 379,984 | | | 26,732 | | (12) | | 4,492,580 | |
| | | | | | | | | | | | | | |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 65 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Peter G. Edwards | | | | | | | | | | | | | | | | | | | |
| | | 1/27/17 | | — |
| | — |
| | | — | | — | | 12,192 |
| (11) | | 1,096,914 |
| | — |
| | | — |
|
| | | 2/9/17 | | — |
| | — |
| | | — | | — | | — |
| | | — |
| | 23,974 |
| (5) | | 2,156,941 |
|
| | | 2/8/18 | | — |
| | — |
| | | — | | — | | — |
| | | — |
| | 11,695 |
| (6) | | 1,052,199 |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Shannon L. Jurecka | | | | | | | | | | | | | | | | | | | |
| | | 10/16/16 | | — |
| | — |
| | | — | | — | | 507 |
| (9) | | 45,615 |
| | — |
| | | — |
|
| | | 2/9/17 | | — |
| | — |
| | | — | | — | | 414 |
| (12) | | 37,248 |
| | 2,928 |
| (5) | | 263,432 |
|
| | | 2/9/17 | | — |
| | — |
| | | — | | — | | 788 |
| (12) | | 70,896 |
| | — |
| | | — |
|
| | | 10/18/17 | | — |
| | — |
| | | — | | — | | 4,013 |
| (13) | | 361,050 |
| | — |
| | | — |
|
| | | 2/8/18 | | — |
| | — |
| | | — | | — | | — |
| | | — |
| | 6,378 |
| (6) | | 573,829 |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Kevin S. Oliver | | | | | | | | | | | | | | | | | | | |
| | | 2/3/16 | | — |
| | — |
| | | — | | — | | 5,701 |
| (4) | | 512,919 |
| | — |
| | | — |
|
| | | 2/3/16 | | — |
| | — |
| | | — | | — | | 410 |
| (7) | | 36,888 |
| | — |
| | | — |
|
| | | 12/8/16 | | — |
| | — |
| | | — | | — | | 980 |
| (10) | | 88,171 |
| | — |
| | | — |
|
| | | 2/9/17 | | — |
| | — |
| | | — | | — | | 544 |
| (12) | | 48,944 |
| | 3,858 |
| (5) | | 347,104 |
|
| | | 2/8/18 | | — |
| | — |
| | | — | | — | | 857 |
| (14) | | 77,104 |
| | 2,046 |
| (6) | | 184,079 |
|
| | | | | | | | | | | | | | | | | | | | | | |
| |
(2)
| For PRSUs, the market or payout value has been computed based on the number of units awarded at an assumed superior performance (200% of target performance) for the 2017 PRSUs, and at an assumed target performance (100%) for the 2018 PRSUs, multiplied by the closing stock price on December 31, 2018, the last trading day in 2018. Actual performance and payout value may vary. For time-based RSUs (including the 2016 PRSUs that were earned based on performance at 199.2% of target but remain subject to time-based vesting), the market value has been computed based on the number of units awarded that are unvested at the close of business on December 31, 2018 multiplied by the closing stock price on December 31, 2018. Actual payout value may vary.
|
| |
(3)
| Subject to a hold requirement upon exercise. |
| |
(4)
| Represents PRSUs granted in February 2016 under our 2016 LTIP adjusted for actual performance at 199.2% of target as described above. The PRSUs vest 100% on February 15, 2019. |
| |
(5)
| Represents PRSUs granted in February 2017 under our 2017 LTIP at an assumed superior performance (200% of target). These PRSUs vest 100% on February 15, 2020 subject to adjustment (0-200% of targeted amount shown) based on Company performance in 2017-2019 against pre-established performance measures. |
| |
(6)
| Represents PRSUs granted in February 2018 under our 2018 LTIP at target. These PRSUs vest 100% on February 15, 2021 subject to adjustment (0-200% of targeted amount shown) based on Company performance in 2018-2020 against pre-established performance measures.
|
| |
(7)
| Represents RSUs granted in February 2016. These RSUs vest 33% on each of February 15, 2017 and 2018, and 34% on February 15, 2019. |
| |
(8)
| Represents RSUs granted in February 2016. These RSUs vest 100% on February 15, 2019. |
| |
(9)
| Represents RSUs granted in October 2016. These RSUs vest 33% on each of October 17, 2017 and 2018, and 34% on October 17, 2019. |
| |
(10)
| Represents RSUs granted in December 2016. These RSUs vest 33% on each of December 8, 2017 and 2018, and 34% on December 8, 2019. |
| |
(11)
| Represents RSUs granted in January 2017. These RSUs vest 33% on each of January 27, 2018 and 2019, and 34% on January 27, 2020. |
| |
(12)
| Represents RSUs granted in February 2017. These RSUs vest 33% on each of February 15, 2018 and 2019, and 34% on February 15, 2020. For additional information on the CEO’s RSU award, see “CEO 2018 Compensation Decisions”. |
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 6675 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John G. Fotheringham | | | | | | | | | | | | | | | | | | | |
| | 2/6/19 | | — | | — | | | | — | | — | | 4,265 | | (3) | | 716,776 | | | — | | | | — | |
| | 2/6/19 | | — | | — | | | | — | | — | | 381 | | (5) | | 64,031 | | | — | | | | — | |
| | 2/5/20 | | — | | — | | | | — | | — | | 636 | | (8) | | 106,886 | | | 4,798 | | (9) | | 806,352 | |
| | 4/15/20 | | — | | — | | | | — | | — | | 1,261 | | (10) | | 211,924 | | | 9,158 | | (9) | | 1,539,093 | |
| | 2/10/21 | | — | | — | | | | — | | — | | 2,007 | | (11) | | 337,296 | | | 23,730 | | (12) | | 3,988,064 | |
| | | | | | | | | | | | | | | | | | | | | |
| A. Lynne Puckett | | | | | | | | | | | | | | | | | | | |
| | 2/13/19 | | — | | — | | | | — | | — | | 12,053 | | (3) | | 2,025,627 | | | — | | | | — | |
| | 2/13/19 | | — | | — | | | | — | | — | | 1,072 | | (5) | | 180,160 | | | — | | | | — | |
| | 2/13/19 | | — | | — | | | | — | | — | | 6,425 | | (7) | | 1,079,786 | | | — | | | | — | |
| | 2/5/20 | | — | | — | | | | — | | — | | 2,116 | | (8) | | 355,615 | | | 15,130 | | (9) | | 2,542,748 | |
| | 2/10/21 | | — | | — | | | | — | | — | | 2,261 | | (11) | | 379,984 | | | 26,732 | | (12) | | 4,492,580 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
(2)For PRSUs, the market or payout value has been computed based on the number of units set forth in the preceding column for the 2020 and 2021 PRSUs, multiplied by the closing stock price on December 31, 2021, the last trading day in 2021. Actual performance and payout value may vary. For time-based RSUs, the market value has been computed based on the number of units awarded that are unvested at the close of business on December 31, 2021 multiplied by the closing stock price on December 31, 2021. Actual payout value may vary.
(3)Represents earned PRSUs granted under our 2019 LTIP adjusted for actual performance at 160.1% of target. These PRSUs vested in full on February 15, 2022.
(4)Represents RSUs granted in May 2019 under our 2019 LTIP. These RSUs vested 33% on each of February 15, 2020 and 2021, and 34% on February 15, 2022.
(5)Represents RSUs granted in February 2019 under our 2019 LTIP. These RSUs vested 33% on each of February 15, 2020 and 2021, and 34% on February 15, 2022.
(6)Represents RSUs granted in January 2019. These RSUs vested on January 14, 2022.
(7)Represents RSUs granted in February 2019. These RSUs vested on February 15, 2022.
(8)Represents RSUs granted in February 2020 under our 2020 LTIP. These RSUs vest 33% on each of February 15, 2021 and 2022, and 34% on February 15, 2023.
(9)Represents PRSUs granted under our 2020 LTIP. These PRSUs vest 100% on February 15, 2023 subject to adjustment (0-200% of targeted amount shown) based on Company performance in 2020-2022 against pre-established performance measures. As of December 31, 2021, these PRSUs were trending above target and are reflected herein at an assumed 200% payout.
(10)Represents RSUs granted in April 2020 under our 2020 LTIP. These RSUs vest 33% on each of February 15, 2021 and 2022, and 34% on February 15, 2023.
(11)Represents RSUs granted in February 2021under our 2021 LTIP. These RSUs vest 33% on each of February 15, 2022 and 2023, and 34% on February 15, 2024.
(12)Represents PRSUs granted under our 2021 LTIP. These PRSUs vest 50% on August 15, 2022 and February 15, 2024 subject to adjustment (0-200% of targeted amount shown) based on Company performance between January 1, 2021 and June 30, 2022, and 2021-2023, respectively, against pre-established performance measures. As of December 31, 2021, these PRSUs were trending above target and are reflected herein at an assumed 200% payout.
|
| | | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 76 |
| |
(13)
| Represents RSUs granted in October 2017. These RSUs vest 33% on each of October 18, 2018 and 2019, and 34% on October 18, 2020.
|
| |
(14)
| Represents RSUs granted in February 2018. These RSUs vest 33% on each of February 15, 2019 and 2020, and 34% on February 15, 2021.
|
20182021 Option Exercises and Stock Vested Table
The following table summarizes the exercise of stock options by and the vesting of stock awards of each named executive officerNEO during the fiscal year ended December 31, 2018:2021. No NEOs exercised any stock options during fiscal 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards | |
| Name | | Number of Shares
Acquired on
Exercise
(#) | | Value
Realized
on Exercise
($) | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(2) | |
| (a) | | (b) | | (c) | | (d) | | (e) | |
| Lori J. Ryerkerk | | — | | | | — | | | | 16,825 | | | | 2,459,195 | | | |
| Scott A. Richardson | | — | | | | — | | | | 18,729 | | | | 2,465,673 | | | |
| Thomas F. Kelly | | — | | | | — | | | | 17,621 | | | | 2,347,600 | | | |
| John G. Fotheringham | | — | | | | — | | | | 5,699 | | | | 750,273 | | | |
| A. Lynne Puckett | | — | | | | — | | | | 8,314 | | | | 1,094,538 | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1)Gross shares (includes shares withheld to cover taxes) acquired.
(2)Value realized reflects the number of shares vested multiplied by the average of the high and low market price of our Common Stock as reported by the NYSE on the applicable vesting date.
|
| | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards | |
| Name | | Number of Shares
Acquired on Exercise (#) | | Value Realized
on Exercise ($) | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized
on Vesting ($) | |
| (a) | | (b) | | (c) | | (d) | | (e) | |
| Mark C. Rohr | | — |
| | | — |
| | | 19,417 |
| | | 2,095,483 |
| | |
| Scott A. Richardson | | — |
| | | — |
| | | 4,665 |
| | | 466,792 |
| | |
| Scott M. Sutton | | — |
| | | — |
| | | 18,183 |
| | | 1,774,671 |
| | |
| Shannon L. Jurecka | | — |
| | | — |
| | | 3,057 |
| | | 303,790 |
| | |
| Peter G. Edwards | | — |
| | | — |
| | | 6,005 |
| | | 673,521 |
| | |
| Kevin S. Oliver | | — |
| | | — |
| | | 2,340 |
| | | 235,358 |
| | |
| |
(1)
| Gross shares (includes shares withheld to cover taxes) acquired. |
20182021 Pension Benefits Table
The following table summarizes the present value of the accumulated retirement benefits of each named executive officerNEO as of the end of the fiscal year ended December 31, 2018:2021: |
| | | | | | | | | | | | | | | |
| Name | | Plan Name(1) | | Number of Years
Credited
Service (#) | | Present
Value of
Accumulated
Benefit ($)(2) | | Payments
During
Last Fiscal
Year ($) | |
| (a) | | (b) | | (c) | | (d) | | (e) | |
| Mark C. Rohr | | CARPP | | 1.6667 |
| | | 30,000 |
| | | — |
| | |
| Scott A. Richardson | | CARPP | | 8.7500 |
| | | 79,000 |
| | | — |
| | |
| Scott M. Sutton | | CARPP | | 0.3333 |
| | | 6,000 |
| | | — |
| | |
| Peter G. Edwards | | CARPP | | — |
| | | — |
| | | — |
| | |
| Shannon L. Jurecka | | CARPP | | — |
| | | — |
| | | — |
| | |
| Kevin S. Oliver | | CARPP | | 5.7500 |
| | | 71,000 |
| | | — |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Plan Name(1) | | Number of Years Credited Service (#)(2) | | Present
Value of
Accumulated
Benefit ($)(3) | | Payments
During
Last Fiscal
Year
($) |
| (a) | | (b) | | (c) | | (d) | | (e) |
| Lori J. Ryerkerk | | CARPP | | — | | | — | | | — | |
| | | | | | | | | | | |
| Scott A. Richardson | | CARPP | | 8.7500 | | | 93,000 | | | — | |
| Thomas F. Kelly | | CARPP | | 1.3333 | | | 17,000 | | | — | |
| John G. Fotheringham | | CARPP | | 5.8333 | | | 93,000 | | | — | |
| | Supplementary Pension Scheme (Germany) | | 8.8333 | | | 159,238 | (4) | | — | |
| A. Lynne Puckett | | CARPP | | — | | | — | | | — | |
| |
(1) (1) As noted below, the CARPP has been frozen, meaning that benefits (other than earnings) are no longer accrued for compensation or service after the plan freeze date. (2) Accrued benefits under the CARPP for Messrs. Richardson and Mr. Kelly were frozen as of December 31, 2013, and the credited service reflects their years of services prior to that date. Mr. Fotheringham’s credited service with respect to the Supplementary Pension Scheme (Germany) reflects his participation in such plan from May 1997 through February 2006 while he worked with us in Germany, and with respect to the CARPP reflect his participation in such plan from March 2006 to December 2011 while he worked with us in the United States. (3) The present value amounts shown in the table above are the amount needed today that, with interest, would provide the NEO’s future retirement benefit. Retirement is assumed to occur at age 65 and participants receive their cash balance benefit as a lump sum. | As noted below, this plan has been frozen, meaning that benefits (other than earnings) are no longer accrued for compensation or service after the applicable plan freeze date. |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 67 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 77 |
(4) The actuarial present value is calculated in euros (€), and for reporting purposes in this table has been converted into U.S. dollars using a spot exchange rate of $1.1326/€1.00 published by the European Central Bank for December 31, 2021.
| |
(2)
| The present value amounts shown in the table above are the amount needed today that, with interest, would provide the named executive officer’s future retirement benefit. Retirement is assumed to occur at age 65 in the CARPP and participants receive their cash balance benefit as a lump sum. |
CARPP. The Celanese Americas Retirement Pension Plan (“CARPP”) is a tax-qualified, defined benefit pension plan sponsored by Celanese Americas. This plan covers substantially all of our U.S. employees.employees who were hired prior to the plan’s 2013 freeze date. The plan is subject to the provisions of ERISA. All of our named executive officersMr. Richardson, Mr. Kelly and Mr. Fotheringham (from his past employment with us in the United States) participated in this plan in 2018, with the exception of Mr. Edwards and Ms. Jurecka.2021.
Effective January 1, 2001, the plan began providing benefits for new employees, as defined by the plan, hired after December 31, 2000, based on a different benefit formula (“Cash Balance Plan”). The Cash Balance Plan provides that for each plan year that employees work as defined, we credit 5% of the employee’s annual pensionable earnings (up to Internal Revenue Code limits) to a hypothetical plan account that has been established for each employee, and credit that account with interest. For a given year, the plan’s interest rate is the annual rate of interest on 30-year United States Treasury Securities for the August before the first day of that year. Effective January 1, 2008, employees vest in their accrued benefit after completing three years of service with us, as defined in the plan. If employees are vested when they leave the Company, they have the option to take their account balance with them, either in a lump-sum payment or as an annuity. Employees also have the choice to leave their account balance in the plan until the normal retirement age of 65. The amount of benefit depends on the employee’s pay and any interest earned on the Company contributions. Once vested, survivor benefits are applicable to married participants. Messrs. Rohr, Sutton, and Oliver are covered under the Cash Balance Plan benefit formula.
Under the CARPP, if an employee’s employment with us is terminated as a result of a corporate reorganization, layoff or corporate restructuring, including divestiture, that employee will receive an additional year of vesting service.
In connection with amendments to the CARPP in 2013, accrued benefits under the CARPP were frozen as of December 31, 2013, no further contributions will be made to the CARPP other than interest credits for the cash balance participants Mr. Rohr, Mr.(Mr. Richardson and Mr. Oliver,Kelly), and future pension-related contributions (“Retirement Contributions”) will be made to the CARSP or the CASRSP, depending on the level of eligible earnings of the participant.
Supplementary Pension Scheme (Germany). Mr. Fotheringham has a balance in our defined-benefit supplementary pension plan (Germany), where he worked with us from 1997 through 2006. Entitlements under this plan are based on pensionable earnings above the German social security contribution ceiling, and the annual retirement pension is equal to 20% of the sum of employer contributions. The actuarial present value is calculated assuming retirement based on Mr. Fotheringham’s earliest unreduced retirement age of 60 and based on a discount rate of 1.24%. 2018
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 78 |
2021 Nonqualified Deferred Compensation Table
The following table contains certain information concerning benefits under nonqualified deferred compensation plans and similar plans for the fiscal year ended December 31, 2018:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Plan Name | | Executive Contributions in Last FY ($)(1) | | Registrant
Contributions
in Last FY ($)(2) | | Aggregate
Earnings
in Last FY ($)(3) | | Aggregate
Withdrawal/
Distributions
($) | | Aggregate
Balance
at Last FYE ($)(4) | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | |
| Lori J. Ryerkerk | | CASRSP | | — | | 67,658 | | 8,806 | | — | | 134,893 | |
| | | | | | | | | | | | |
| 2008 Deferred Plan | | 318,000 | | — | | 26,943 | | — | | 344,943 | |
| Scott A. Richardson | | CASRSP | | — | | 41,857 | | 31,023 | | — | | 238,841 | |
| | | | | | | | | | | | | |
| Thomas F. Kelly | | CASRSP | | — | | 33,816 | | 4,180 | | — | | 25,954 | |
| | | | | | | | | | | | | |
| John G. Fotheringham | | Royal London Plan | | 13,588 | | 43,483 | | 4,979 | | — | | 69,607 | |
| A. Lynne Puckett | | CASRSP | | — | | 29,282 | | 3,437 | | — | | 50,618 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | |
| Name | | Plan Name | | Executive
Contributions
in Last FY ($) | | Registrant
Contributions
in Last FY ($)(1) | | Aggregate
Earnings
in Last FY ($)(2) | | Aggregate
Withdrawal/
Distributions ($)(3) | | Aggregate
Balance
at Last FYE ($)(4) | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | |
| Mark C. Rohr | | CASRSP | | — |
| | 96,800 |
| | (14,221 | ) | | — |
| | 397,305 |
| |
| Scott A. Richardson | | CASRSP | | — |
| | 26,273 |
| | (5,586 | ) | | — |
| | 68,861 |
| |
| | | 2009 GIP | | — |
| | — |
| | 8,870 |
| | 131,325 |
| | — |
| |
| Scott M. Sutton | | CASRSP | | — |
| | 46,624 |
| | (587 | ) | | — |
| | 114,195 |
| |
| | | 2008 Deferred Plan | | 539,100 |
| | — |
| | (39,242 | ) | | — |
| | 909,407 |
| |
| Peter G. Edwards | | CASRSP | | — |
| | 35,115 |
| | (1,404 | ) | | — |
| | 27,280 |
| |
| Shannon L. Jurecka | | CASRSP | | — |
| | 19,335 |
| | (705 | ) | | — |
| | 9,364 |
| |
| Kevin S. Oliver | | CASRSP | | — |
| | 10,494 |
| | (1,873 | ) | | — |
| | 35,490 |
| |
| | | 2009 GIP | | — |
| | — |
| | (3,233 | ) | | 18,537 |
| | 27,933 |
| |
(2)Amounts in this column for the CASRSP (for NEOs other than Mr. Fotheringham) and for the Royal London Plan (for Mr. Fotheringham) represent Company contributions credited under the plan for 2021, which amounts are also included as All Other Compensation in the “2021 Summary Compensation Table”. (3)Amounts in this column for the CASRSP (for NEOs other than Mr. Fotheringham) and for the Royal London Plan (for Mr. Fotheringham)represent earnings during 2021 under such plans. None of the amounts in this column were reported as compensation in the “2021 Summary Compensation Table”. |
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 68 |
(4)Amounts in this column do not include contributions credited for 2021 (column (d)) but not yet deposited into the participant’s account. The following amounts for each NEO were previously reported as compensation to the NEO in the Summary Compensation Table for previous years: Ms. Ryerkerk, $122,565 (for the CASRSP) and $0 (for the 2008 Deferred Plan); Mr. Richardson, $98,703; Mr. Kelly, $26,800; Mr. Fotheringham, $0; and Ms. Puckett, $45,430.
| |
(1)
| Amounts in this column for the CASRSP represent Company contributions credited under the plan forCASRSP. 2018, which amounts are also included as All Other Compensation in the “2018 Summary Compensation Table”. |
| |
(2)
| Amounts in this column for the CASRSP and the 2008 Deferred Plan represent earnings during 2018 under such plans. For Mr. Sutton, earnings correspond to the yield on the investment options chosen by him under the 2008 Deferred Plan, which mirror the investment options under the CARSP. Amounts in this column for the 2009 GIP represent changes in our stock price during the year for all outstanding RSUs and/or PRSUs that were previously vested but remain subject to a hold requirement, plus related unpaid cash dividends credited during 2018 on such awards. None of the amounts in this column were reported as compensation in the “2018 Summary Compensation Table”. |
| |
(3)
| Represents the value of shares issued, and accumulated dividends paid in cash, during 2018 from outstanding RSUs and/or PRSUs that were previously vested but remained subject to a hold requirement until 2018. None of the amounts in this column were reported as compensation in the “2018 Summary Compensation Table”. |
| |
(4)
| Amounts in this column for the CASRSP do not include contributions credited for 2018 (column (d)) but not yet deposited into the participant’s account. Amounts in this column for the 2009 GIP include the value, at December 31, 2018, of all vested RSUs owned by the named executive officer subject to a hold requirement, plus accrued but unpaid cash dividends. The original grant date fair value of these PRSUs or RSUs were reported as a component of compensation in the Stock Awards column of the Summary Compensation Table in the year in which the award was granted. The portion of amounts in this column that have been reported in prior year Summary Compensation Tables is as follows: (i) for the 2009 GIP, Mr. Richardson – $122,455 and Mr. Oliver – $47,902; and (ii) for the 2008 Deferred Plan, Mr. Sutton – $409,549.
|
All of our named executive officersNEOs other than Mr. Fotheringham, who is based in the United Kingdom, were eligible in 20182021 to participate in the CASRSP, an unfunded, nonqualified defined contribution plan sponsored by Celanese Americas that is available only to persons who have a full year base salary in excess of the Code Section 401(a)(17) limit ($275,000290,000 in 2018)2021) or had their Retirement Contributions limited in the CARSP by Code Section 415. If a person is eligible to participate in the CASRSP because their salary exceeded the Code Section 401(a)(17) limit, he or she is entitled to an allocation under this plan equal to 6% of his or her salary in excess of the compensation limits under the CARSP (“Excess Earnings Contributions”). In addition, eligible participants are entitled to an allocation under this plan equal to 5% of his or her qualified earnings in excess of the Retirement Contribution made to the CARSP. The amount contributed to the plan on behalf of a participant is credited with earnings based on the earnings rate of one of the funds maintained for investments under the CARSP, which is currently the 1-3 year Government/Credit Bond Index Fund. The aggregate annualized rate of return for the credited earnings in 20182021 was 1.4%-0.43%. Beginning in 2015, participants will beare credited with earnings based on the performance of certain hypothetical investment choices selected by the participant. These investment choices are the same investment choices available under the CARSP (other than the Celanese Stock Fund). Participants may change their investment elections at any time under the same rulerules that apply under the CARSP. Distributions under the CASRSP are in the form of a lump sum payment which is paid as soon as administratively practicable after termination of employment for most participants.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 79 |
Distributions to participants who are top 50 key employees of the Company must be delayed six months following termination based on Code Section 409A requirements.
2008 Deferred Plan.Our 2008 Deferred Plan is an unfunded, nonqualified deferred compensation plan that provides certain of our senior employees and directors the opportunity to defer a portion of their compensation in exchange for a future payment amount equal to their deferrals plus or minus certain amounts based on the market performance of specified measurement funds selected by the participant. Directors Blackwell, Brown, Galante, Ihlenfeld, Rucker and Wulff, and Mr. Sutton, wereMs. Ryerkerk was the only directors or named executive officersNEO that made contributions to, or had balances in, this plan during 2018.2021.
Royal London Plan. The Royal London Plan is a defined-contribution pension scheme available to substantially all of our U.K.-based employees. Mr. Fotheringham joined this plan upon his relocation to the United Kingdom in mid-2020. By virtue of his age, seniority and by agreement with the Company, Mr. Fotheringham is permitted to contribute amounts from his salary, with his employer contributing 8% of his salary earnings. Participants can select investment vehicles for contributed amounts, and the investment options available to Mr. Fotheringham are the same as those available to all participants in this plan. Following retirement (age 55), participants may elect to receive balance amounts in the form of an annuity, lump sum payment, or periodic draw-down.
Potential Payments Upon Termination or Change In Control
The particular events that trigger payments to our named executive officersNEOs upon termination of employment or a change in control are generally defined in our Severance Plan and the individual executives’ change in control agreements, deferred compensation agreements, or stock option,and PRSU or RSU award agreements. The compensation and management development committeeCMDC believes that the primary benefits to the Company of employment agreements are the non-competition and non-solicitation provisions found therein. In order to achieve the benefit of these provisions without incurring the generally negative obligations associated with employment agreements, the compensation and management development committee
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 69 |
CMDC offers a more limited change in control agreement to each executive officer. However, the deferred compensation agreements stock option /and PRSU / RSU award agreements are still effective and provide for some potential payments upon termination and change in control as described in the tables below.
Severance Plan
Our Executive Severance Benefits Plan (“Severance Plan”) applies to all our executive officers and other eligible employees, and provides, upon involuntary termination without cause or termination by the executive for good reason, for the payment of (i) 150% of one year’s base salary (one and one-halffor named executive officers (200% for the CEO, the COO and executive vice president-level executives)CEO); (ii) 150% of one year’s annual incentive plan bonus award (one and one-halffor named executive officers (200% for the CEO, the COO and executive vice president-level executives)CEO) based on target Company performance and a 1.0 individual modifier; and (iii) a prorated portion of the annual incentive plan award for the year in which the termination occurs based on actual Company performance and a 1.0 individual modifier. The Severance Plan also provides for the payment of premiums for post-termination health insurance coverage (“COBRA premiums”) for a period of one year from the date of termination (eighteen months for the CEO) and out-placement benefits. As a condition to the receipt of any benefits under the Severance Plan, an executive must agree to standard release, non-compete, non-solicitation, and confidentiality provisions. In addition, the Severance Plan provides that the vesting of long-term incentive or other equity awards upon termination without cause will be governed by the terms of the applicable award agreements. Executives who are involuntarily terminated for any other reason (e.g., death, disability, retirement, termination for cause) are not eligible to receive severance benefits under the Severance Plan.
Change in Control Agreements
We have change in control agreements with each of our executive officers. The change in control agreements provide for a payment to be made to these officers following a termination of employment by the Company without cause or by the officer with good reason within two years following a change in control or following the first public
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 80 |
announcement of a potential change in control transaction, provided certain conditions are satisfied. These benefits are in lieu of payments under the Severance Plan. Generally, the change in control agreements provide for each executive officer to receive:
•a lump sum payment equal to up to two times (three times for the CEO) the sum of:
| |
▪ | the names executive officer’s then current annualized base salary, and |
| |
▪ | the higher of (a) the officer’s target bonus in effect on the last day of the fiscal year that ended immediately prior to the year in which the date of termination occurs, or (b) the average of the cash bonuses paid by the Company to the named executive officer for the three fiscal years preceding the date of termination; and |
▪the named executive officer’s then current annualized base salary, and
▪the higher of (a) the officer’s target bonus in effect on the last day of the fiscal year that ended immediately prior to the year in which the date of termination occurs, or (b) the average of the cash bonuses paid by the Company to the NEO for the three fiscal years preceding the date of termination;
•a pro rata bonus award under our annual incentive plan award for the year in which the termination occurs based on actual Company performance;
•group health and dental coverage for the named executive officerNEO and his or her dependents for a period of up to two yearseighteen months following the date of termination.termination; and
•out-placement benefits for up to 12 months at the option of the executive officer.
The Company’s current form of change in control agreement, which was executed by all of the named executive officers,NEOs, does not contain a tax reimbursement provision and requires a cutback of benefits to avoid excise taxes if the after-tax benefit to the executive is greater than without the cutback. Each change in control agreement has a two-year term that is automatically renewed for successive two-year terms unless 90 days’ notice of non-renewal is given by either party to the agreement.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 70 |
|
| | | |
| For purposes of the change in control agreements: | | Changes to Change in Control Agreements
In 2015, in response to external feedback, we revised all outstanding change in control agreements to eliminate any gross-up provisions.
|
| “cause” generally means (i) a willful failure to perform one’s duties (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 30 days following written notice by the Company of such failure; (ii) conviction of, or a plea of nolo contendere to, (x) a felony under the laws of the United States or any state thereof or any similar criminal act in a jurisdiction outside the United States or (y) a crime involving moral turpitude; (iii) willful malfeasance or willful misconduct which is demonstrably injurious to the Company or its Affiliates (as defined); (iv) any act of fraud; (v) any material violation of the Company’s code of conduct; (vi) any material violation of the Company’s policies concerning harassment or discrimination; (vii) conduct that causes material harm to the business reputation of the Company or its Affiliates; or (viii) breach of the confidentiality, non-competition, or non-solicitation provisions of the change in control agreement. |
| | | |
| |
| |
| | |
| | | |
| “good reason” generally means (i) a material diminution in base salary or annual bonus opportunity; (ii) a material diminution in authority, duties, or responsibilities (including status, offices, titles and reporting requirements); (iii) a material change in the geographic location; (iv) the failure of the Company to pay compensation or benefits when due, or (v) any other action or inaction that constitutes a material breach by the Company of the change in control agreement. |
| | | |
| | | |
| “change in control” generally means any one of the following events: (a) any person becoming the beneficial owner of thirty percent (30%) or more of Company’s voting securities (other than as a result of certain issuances or open market purchases approved by incumbent directors); (b) the Company’s incumbent directors ceasing to constitute at least a majority of the board of directors; (c) the stockholdersshareholders of the Company approving a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction, or the sale or other disposition of all or substantially all of the Company’s assets, unless immediately following such transaction, (i) all or substantially all of the beneficial owners of the Company’s voting securities prior to such transaction are the beneficial owners of more than 50% of the combined voting power of the securities of the surviving entity in the transaction, (ii) no person is the beneficial owner of 30% or more of the combined voting power of the surviving entity in the transaction and (iii) at least a majority of the members of the board of directors of the surviving entity are incumbent directors; or (d) approval by the Company’s stockholdersshareholders of a complete liquidation and dissolution of the Company. The preceding was a summary of the definition of a change in control, so please refer to actual text of the definition as set forth in the change in control agreements. |
|
Long-Term Incentive Awards
The award agreements under which our stock option, PRSU and RSU awards were issued describe the circumstances under which the awards will vest (or become non-forfeitable), if earlier than the stated date. The following is a general summary of the provisions ofapplicable to the NEO awards that arewere unvested at December 31, 2018. 2021.
Upon the death or disability of a participant, a prorated portion of the award will generally vest. Upon a termination without cause, a similar prorated portion of the award will generally vest. Also, For time-based RSUs granted during and after 2020, a retiring participant is eligible for proratedto receive the full award on the original vesting timeline if thethe participant
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 81 |
is at the time of retirement at least 55 years of age and has at least 10 years of service with the Company, (for Mr. Rohr, 65 yearssubject to provision of agea release to the Company and at least 5 years of service; provided that his 2018 time-based RSU has continuedcompliance with two-year noncompetition and non-solicitation covenants. For other awards, an eligible retiree receives prorated vesting after retirement). For PRSUs, proration upon retirement is based on service over the applicable performance period. Prorated PRSUs remain subject to actual performance results in case of termination without cause or retirement, and are vested at target in case of death or disability.Unvested awards are forfeited upon a termination with cause or voluntary resignation.
In the case of a change in control, all awards granted since 2009 are “double trigger” – if a change in control occurs, the award is continued or replaced with an award of comparable value, and the participant is subsequently terminated without cause within two years of the change in control, then the portion of the award that was unvested at the time of termination will be accelerated. If in connection with a change in control the participant’s rights in the award are adversely affected (i.e., such as by the award not being continued) and the award is not replaced with an award of comparable value, then the unvested portion of the award would be accelerated upon the change in control without requiring termination of employment. PRSUs would vest at the greater of target level or estimated actual performance if otherwise payable upon a change in control.
Long-term incentive awards granted in 2010, 2011 and a portion of 2012 generally have a hold requirement for a portion of the shares received upon vesting of PRSUs or RSUs or upon the exercise of stock options. Under the hold requirement, a specified percentage of the award is held after the applicable vesting date as vested RSUs, to be settled by delivery of shares at the seventh anniversary of the grant date (or earlier in the event of death, disability or change in control). During the hold period, the vested RSUs are credited with cash dividends to be paid (without interest) at the end of the hold period. If during the hold period the participant’s employment is terminated by the Company for cause (as defined in the award agreement) or the participant breaches the applicable clawback
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 71 |
agreement with the Company, the RSUs subject to the hold requirement are forfeited and canceled without consideration. In the event of a change in control, all shares subject to the hold requirement would be delivered to the participant. In the event of certain other termination scenarios, the hold requirement would survive, and the shares would be delivered on the date they would have otherwise been delivered had the participant remained an employee. The hold requirement was eliminated from future equity awards during 2012.
Under such long-term incentive award agreements, a “change in control” of the Company generally means, in accordance with Treasury Regulation Section 1.409A-3(i)(5), any of the following: (i) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50%30% of the total voting power of the stock of the Company; (ii) a majority of members of the boardBoard is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the boardBoard prior to the date of the appointment or election; (iii) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to 50% of more of all of the assets of the Company immediately prior to such acquisition or acquisitions; or (iv) certain other business transactions affecting the Company.
Post-Termination Table
The table below shows an estimate of the amount of additional compensation that each of our named executive officersNEOs employed by us at year end would receive in the event of a termination or change in control, taking into consideration the circumstances of the termination and payments that the named executive officerNEO would be entitled to under the various agreements described above. The amounts shown are generally categorized as follows: voluntary termination or termination for cause; involuntary termination without cause or by the executive for good reason; termination due to death or disability; qualified retirement (if eligible); and change in control (with and without termination). The amounts shown assume that such termination was effective as of December 31, 2018, but2021, and with reference to stock values on December 31, 2018,2021, the last trading day of the year. On December 31, 2018,2021, the closing price of our Common Stock was $89.97$168.06 per share.
The table below includes additional benefits triggered by a termination and change in control only. Please see the following tables for details of the named executives’NEOs’ vested payments and benefits that they would be entitled to receive regardless of the occurrence of a termination or change of control:
The actual amounts that will be paid upon termination can only be determined at the time of the named executive officer’sNEO’s termination from the Company. The following table shows the potential payments to our named executive officers,NEOs, upon termination or change in control.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 72 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Termination of Employment | | Change in Control |
| | | Voluntarily or
for Cause | | Involuntarily
without
Cause | | Death | | Disability | | Retirement | | Without
Termination | | With
Termination |
| Mark C. Rohr | | | | | | | | | | | | | | |
| Cash Payments | | |
| | |
| | |
| | |
| | | | |
| | |
|
Severance Payment(1) | | $ | — |
| | $ | 6,581,768 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 7,070,667 |
|
| Equity Value | | |
| | | | |
| | |
| | | | |
| | |
RSUs(2) | | — |
| | 7,479,566 |
| | 7,479,566 |
| | 7,479,566 |
| | 7,479,566 |
| | 7,479,566 |
| | 7,479,566 |
|
PRSUs(3) | | — |
| | 28,300,153 |
| | 14,150,122 |
| | 14,150,122 |
| | 29,342,546 |
| | 35,464,015 |
| | 35,464,015 |
|
| Benefits & Perquisites | | |
| | | | |
| | |
| | | | |
| | |
Excise Tax Gross-Up(4) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Welfare Benefits Continuation(5) | | — |
| | 25,891 |
| | — |
| | — |
| | — |
| | — |
| | 25,891 |
|
Outplacement Services(6) | | — |
| | 16,200 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Reduction to Avoid Excise Tax(7) | | — |
| | — |
| | — |
| | — |
| | — |
| | (6,286,339 | ) | | — |
|
| Total | | $ | — |
| | $ | 42,403,578 |
| | $ | 21,629,688 |
| | $ | 21,629,688 |
| | $ | 36,822,112 |
| | $ | 36,657,242 |
| | $ | 50,040,139 |
|
| | | | | | | | | | | | | | | |
| Scott A. Richardson | | |
| | |
| | |
| | |
| | | | |
| | |
|
| Cash Payments | | |
| | |
| | |
| | |
| | | | |
| | |
|
Severance Payment(1) | | $ | — |
| | $ | 2,049,196 |
| | $ | — |
| | $ | — |
| | | | $ | — |
| | $ | 1,796,067 |
|
| Equity Value | | |
| | |
| | |
| | |
| | | | |
| | |
RSUs(2) | | — |
| | 274,768 |
| | 274,768 |
| | 274,768 |
| | | | 365,008 |
| | 365,008 |
|
PRSUs(3) | | — |
| | 1,585,361 |
| | 906,538 |
| | 906,538 |
| | | | 2,458,790 |
| | 2,458,790 |
|
| Benefits & Perquisites | | |
| | |
| | |
| | |
| | | | |
| | |
|
Excise Tax Gross-Up(4) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
Welfare Benefits Continuation(5) | | — |
| | 27,792 |
| | — |
| | — |
| | | | — |
| | 55,584 |
|
Outplacement Services(6) | | — |
| | $ | 16,200 |
| | — |
| | — |
| | | | — |
| | — |
|
Reduction to Avoid Excise Tax(7) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | (388,640 | ) |
| Total | | $ | — |
| | $ | 3,953,317 |
| | $ | 1,181,306 |
| | $ | 1,181,306 |
| | | | $ | 2,823,798 |
| | $ | 4,286,809 |
|
| | | | | | | | | | | | | | | |
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 7382 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Termination of Employment | | Change in Control |
| | Voluntarily or
for Cause | | Involuntarily
without
Cause | | Death | | Disability | | Retirement | | Without
Termination | | With
Termination |
| Lori J. Ryerkerk | | | | | | | | | | | | | | |
| Cash Payments | | | | | | | | | | | | | | |
Severance Payment(1) | | $ | — | | | $ | 8,314,800 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 10,624,800 | |
| Equity Value | | | | | | | | | | | | | | |
RSUs(2) | | — | | | 2,511,657 | | | 2,511,657 | | | 2,511,657 | | | — | | | 3,711,101 | | | 3,711,101 | |
PRSUs(3) | | — | | | 11,525,555 | | | 9,543,959 | | | 9,543,959 | | | — | | | 21,206,819 | | | 21,206,819 | |
| Benefits & Perquisites | | | | | | | | | | | | | | |
Welfare Benefits Continuation(4) | | — | | | 23,400 | | | — | | | — | | | — | | | — | | | 23,400 | |
Outplacement Services(5) | | — | | | 16,200 | | | — | | | — | | | — | | | — | | | — | |
Reduction to Avoid Excise Tax(6) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | — | | | $ | 22,391,612 | | | $ | 12,055,616 | | | $ | 12,055,616 | | | $ | — | | | $ | 24,917,920 | | | $ | 35,566,120 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | |
| Scott A. Richardson | | | | | | | | | | | | | | |
| Cash Payments | | | | | | | | | | | | | | |
Severance Payment(1) | | $ | — | | | $ | 3,104,284 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3,778,942 | |
| Equity Value | | | | | | | | | | | | | | |
RSUs(2) | | — | | | 991,386 | | | 991,386 | | | 991,386 | | | — | | | 1,412,712 | | | 1,412,712 | |
PRSUs(3) | | — | | | 5,144,485 | | | 4,051,422 | | | 4,051,422 | | | — | | | 8,529,381 | | | 8,529,381 | |
| Benefits & Perquisites | | | | | | | | | | | | | | |
Welfare Benefits Continuation(4) | | — | | | 27,686 | | | — | | | — | | | — | | | — | | | 41,529 | |
Outplacement Services(5) | | — | | | 16,200 | | | — | | | — | | | — | | | — | | | — | |
Reduction to Avoid Excise Tax(6) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | — | | | $ | 9,284,041 | | | $ | 5,042,808 | | | $ | 5,042,808 | | | $ | — | | | $ | 9,942,093 | | | $ | 13,762,564 | |
| | | | | | | | | | | | | | |
| Thomas F. Kelly | | | | | | | | | | | | | | |
| Cash Payments | | | | | | | | | | | | | | |
Severance Payment(1) | | $ | — | | | $ | 2,357,567 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,768,777 | |
| Equity Value | | | | | | | | | | | | | | |
RSUs(2) | | — | | | 1,351,875 | | | 1,351,875 | | | 1,351,875 | | | — | | | 1,642,450 | | | 1,642,450 | |
PRSUs(3) | | — | | | 2,989,955 | | | 2,408,972 | | | 2,408,972 | | | — | | | 5,155,241 | | | 5,155,241 | |
| Benefits & Perquisites | | | | | | | | | | | | | | |
Welfare Benefits Continuation(4) | | — | | | 27,686 | | | — | | | — | | | — | | | — | | | 41,529 | |
Outplacement Services(5) | | — | | | 16,200 | | | — | | | — | | | — | | | — | | | — | |
Reduction to Avoid Excise Tax(6) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | — | | | $ | 6,743,283 | | | $ | 3,760,847 | | | $ | 3,760,847 | | | $ | — | | | $ | 6,797,691 | | | $ | 9,607,997 | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Termination of Employment | | | | Change in Control |
| | | Voluntarily or
for Cause | | Involuntarily
without
Cause | | Death | | Disability | | | | Without
Termination | | With
Termination |
| Scott M. Sutton | | | | | | | | | | | | | | |
| Cash Payments | | |
| | |
| | |
| | |
| | | | |
| | |
|
Severance Payment(1) | | $ | — |
| | $ | 3,457,500 |
| | $ | — |
| | $ | — |
| | | | $ | — |
| | $ | 3,000,000 |
|
| Equity Value | | |
| | | | |
| | |
| | | | |
| | |
|
RSUs(2) | | — |
| | 1,684,238 |
| | 1,684,238 |
| | 1,684,238 |
| | | | 2,108,627 |
| | 2,108,627 |
|
PRSUs(3) | | — |
| | 6,102,665 |
| | 3,406,894 |
| | 3,406,894 |
| | | | 9,052,422 |
| | 9,052,422 |
|
| Benefits & Perquisites | | |
| | | | |
| | |
| | | | |
| | |
|
Excise Tax Gross-Up(4) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
Welfare Benefits Continuation(5) | | — |
| | 27,792 |
| | — |
| | — |
| | | | — |
| | 41,688 |
|
Outplacement Services(6) | | — |
| | 16,200 |
| | — |
| | — |
| | | | — |
| | — |
|
Reduction to Avoid Excise Tax(7) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
| Total | | $ | — |
| | $ | 11,288,395 |
| | $ | 5,091,132 |
| | $ | 5,091,132 |
| | | | $ | 11,161,049 |
| | $ | 14,202,737 |
|
| | | | | | | | | | | | | | | |
| Peter G. Edwards* | | |
| | |
| | |
| | |
| | | | |
| | |
|
| Cash Payments | | |
| | |
| | |
| | |
| | | | |
| | |
|
Severance Payment(1) | | $ | — |
| | $ | 2,277,387 |
| | $ | — |
| | $ | — |
| | | | $ | — |
| | $ | 2,619,460 |
|
| Equity Value | | |
| | | | |
| | |
| | | | |
| | |
RSUs(2) | | — |
| | 879,817 |
| | 879,817 |
| | 879,817 |
| | | | 1,096,914 |
| | 1,096,914 |
|
PRSUs(3) | | — |
| | 1,653,649 |
| | 983,282 |
| | 983,282 |
| | | | 3,209,140 |
| | 3,209,140 |
|
| Benefits & Perquisites | | |
| | | | |
| | |
| | | | |
| | |
Excise Tax Gross-Up(4) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
Welfare Benefits Continuation(5) | | — |
| | 17,261 |
| | — |
| | — |
| | | | — |
| | 25,891 |
|
Outplacement Services(6) | | — |
| | 16,200 |
| | — |
| | — |
| | | | — |
| | — |
|
Reduction to Avoid Excise Tax(7) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
| Total | | $ | — |
| | $ | 4,844,314 |
| | $ | 1,863,099 |
| | $ | 1,863,099 |
| | | | $ | 4,306,054 |
| | $ | 6,951,405 |
|
| *Mr. Edwards retired from the Company on January 31, 2019. The terms of Mr. Edwards’ separation are disclosed following these termination tables and the notes thereto. |
| | | | | | | | | | | | | | | |
| Shannon L. Jurecka | | | | | | | | | | | | | | |
| Cash Payments | | |
| | |
| | |
| | |
| | | | |
| | |
|
Severance Payment(1) | | $ | — |
| | $ | 1,587,383 |
| | $ | — |
| | $ | — |
| | | | $ | — |
| | $ | 1,402,038 |
|
| Equity Value | | |
| | | | |
| | |
| | | | |
| | |
RSUs(2) | | — |
| | 297,531 |
| | 297,531 |
| | 297,531 |
| | | | 514,808 |
| | 514,808 |
|
PRSUs(3) | | — |
| | 334,508 |
| | 252,636 |
| | 252,636 |
| | | | 837,261 |
| | 837,261 |
|
| Benefits & Perquisites | | |
| | | | |
| | |
| | | | |
| | |
Excise Tax Gross-Up(4) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
Welfare Benefits Continuation(5) | | — |
| | 14,769 |
| | — |
| | — |
| | | | — |
| | 29,538 |
|
Outplacement Services(6) | | — |
| | 16,200 |
| | — |
| | — |
| | | | — |
| | — |
|
Reduction to Avoid Excise Tax(7) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
| Total | | $ | — |
| | $ | 2,250,391 |
| | $ | 550,167 |
| | $ | 550,167 |
| | | | $ | 1,352,069 |
| | $ | 2,783,645 |
|
| | | | | | | | | | | | | | | |
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 7483 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Termination of Employment | | Change in Control |
| | Voluntarily or
for Cause | | Involuntarily
without
Cause | | Death | | Disability | | Retirement | | Without
Termination | | With
Termination |
| John G. Fotheringham | | | | | | | | | | | | | | |
| Cash Payments | | | | | | | | | | | | | | |
Severance Payment(1) | | $ | — | | | $ | 2,189,880 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,586,302 | |
| Equity Value | | | | | | | | | | | | | | |
RSUs(2) | | — | | | 485,189 | | | 485,189 | | | 485,189 | | | — | | | 726,355 | | | 726,355 | |
PRSUs(3) | | — | | | 1,967,646 | | | 1,713,372 | | | 1,713,372 | | | — | | | 3,883,194 | | | 3,883,194 | |
| Benefits & Perquisites | | | | | | | | | | | | | | |
Welfare Benefits Continuation(4) | | — | | | 13,968 | | | — | | | — | | | — | | | — | | | 20,952 | |
Outplacement Services(5) | | — | | | 16,200 | | | — | | | — | | | — | | | — | | | — | |
Reduction to Avoid Excise Tax(6) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | — | | | $ | 4,672,883 | | | $ | 2,198,561 | | | $ | 2,198,561 | | | $ | — | | | $ | 4,609,549 | | | $ | 7,216,803 | |
| | | | | | | | | | | | | | |
| A. Lynne Puckett | | | | | | | | | | | | | | |
| Cash Payments | | | | | | | | | | | | | | |
Severance Payment(1) | | $ | — | | | $ | 2,254,848 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,701,123 | |
| Equity Value | | | | | | | | | | | | | | |
RSUs(2) | | — | | | 1,665,307 | | | 1,665,307 | | | 1,665,307 | | | — | | | 1,995,544 | | | 1,995,544 | |
PRSUs(3) | | — | | | 3,355,990 | | | 2,637,870 | | | 2,637,870 | | | — | | | 5,542,283 | | | 5,542,283 | |
| Benefits & Perquisites | | | | | | | | | | | | | | |
Welfare Benefits Continuation(4) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Outplacement Services(5) | | — | | | 16,200 | | | — | | | — | | | — | | | — | | | — | |
Reduction to Avoid Excise Tax(6) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | — | | | $ | 7,292,345 | | | $ | 4,303,177 | | | $ | 4,303,177 | | | $ | — | | | $ | 7,537,827 | | | $ | 10,238,950 | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
(1)Reflects amounts that would be payable pursuant to our Executive Severance Benefits Plan and change in control agreements, as applicable as of December 31, 2021, and discussed above. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | Termination of Employment | | Change in Control |
| | | Voluntarily or
for Cause | | Involuntarily
without
Cause | | Death | | Disability | | | | Without
Termination | | With
Termination |
| Kevin S. Oliver | | |
| | |
| | |
| | |
| | | | |
| | |
|
| Cash Payments | | |
| | |
| | |
| | |
| | | | |
| | |
|
Severance Payment(1) | | $ | — |
| | $ | 805,453 |
| | $ | — |
| | $ | — |
| | | | $ | — |
| | $ | 1,152,374 |
|
| Equity Value | | |
| | | | |
| | |
| | | | |
| | |
| Stock Options | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
RSUs(2) | | — |
| | 172,922 |
| | 172,922 |
| | 172,922 |
| | | | 251,106 |
| | 251,106 |
|
PRSUs(3) | | — |
| | 757,817 |
| | 406,394 |
| | 406,394 |
| | | | 1,046,171 |
| | 1,046,171 |
|
| Benefits & Perquisites | | |
| | | | |
| | |
| | | | |
| | |
Excise Tax Gross-Up(4) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
Welfare Benefits Continuation(5) | | — |
| | 20,767 |
| | — |
| | — |
| | | | — |
| | 20,767 |
|
Outplacement Services(6) | | — |
| | 16,200 |
| | — |
| | — |
| | | | — |
| | — |
|
Reduction to Avoid Excise Tax(7) | | — |
| | — |
| | — |
| | — |
| | | | — |
| | — |
|
| Total | | $ | — |
| | $ | 1,773,159 |
| | $ | 579,316 |
| | $ | 579,316 |
| | | | $ | 1,297,277 |
| | $ | 2,470,418 |
|
| |
(1)(2)Time-based RSUs vest in full upon a Change in Control if the award is adversely affected and is not replaced with an award of equivalent economic value. The numbers presented in the Change in Control scenarios assume that the awards are adversely affected and not replaced with an award of equivalent economic value. To the extent the awards are replaced with awards of equivalent economic value and the Executive remained employed following a Change in Control, the numbers shown in the Change in Control without termination column would be different.
| Paid pursuant to the Severance Plan and change in control agreements, as applicable and discussed above. |
| |
(2)
| Time-based RSUs vest in full upon a change in control if the award is adversely affected and is not replaced with an award of equivalent economic value. The numbers presented in the change in control scenarios assume that the awards are adversely affected and not replaced with an award of equivalent economic value. To the extent the awards are replaced with awards of equivalent economic value and the executive remained employed following a change in control, the numbers shown in the Change in Control – Without Termination column above would be different. |
In the event of other eligible termination events, generally a prorated amount will vest based on the portion of the service period that has lapsed. For time-based RSUs granted in 2020 and later, an eligible retiree would receive the full award on the original vesting timeline, subject to provision of a release to the Company and compliance with two-year noncompetition and non-solicitation covenants.
| |
(3)
| Upon a change in control, 2016 / 2017 / 2018 PRSUs vest at the greater of target or estimated actual performance (200% for 2016 and 2017 and target performance for 2018 has been assumed) if the award is adversely affected and is not replaced with an award of equivalent economic value. The numbers presented in the change in control scenarios assume that the awards are adversely affected and not replaced with an award of equivalent economic value. To the extent the awards are replaced with awards of equivalent economic value and the executive remained employed following a change in control, the numbers shown in the Change in Control – Without Termination column above would be different. |
(3)Upon a Change in Control, 2019, 2020 and 2021 performance-based RSUs vest at the greater of target or estimated actual performance (160.1% for 2019 and target performance for 2020 and 2021 have been assumed) if the award is adversely affected and is not replaced with an award of equivalent economic value. The numbers presented in the Change in Control scenarios assume that the awards are adversely affected and not replaced with an award of equivalent economic value. To the extent estimated performance at the time of such an event exceeds target, or the awards are replaced with awards of equivalent economic value and the Executive remains employed following a Change in Control, the numbers shown in the Change in Control without termination column would be different.
In the event of death andor disability, a prorated amount of the 2019, 2020 and first tranche of the 2021 performance-based RSUs will vest based on estimated performance of 200% of target forperformance.
In the 2016 and 2017 PRSUs and at target for the 2018 PRSUs. Ifevent the executive is terminated without cause,Cause, a prorated amount of the 2019, 2020 and first tranche of the 2021 performance-based RSUs will vest based on actual performance. In the event the executive retires (minimum 10 years of service and age 55 or later (5 years of service and age 65 for Mr. Rohr)), a prorated amount of the 2017 and 2018 PRSUs will vest and the full amount of the 2016 PRSUs will vest, in each case based on actual performance.
| |
(4)
| None of the named executive officers is entitled to any tax gross-up upon a change-in-control. |
| |
(5)
| Represents reimbursement of premiums for 18 months for Messrs Rohr, Sutton and Edwards, 24 months for Mr. Richardson and Ms. Jurecka, and 12 months for Mr. Oliver, of medical and dental coverage continuation upon a change in control as applicable, and the payment of COBRA premiums for a period of one year (18 months for Mr. Rohr) from the date of termination under our Severance Plan, each based on 2019 rates. |
| |
(6)
| Upon termination by the Company without cause, each executive is entitled to up to $16,200 in outplacement services. |
| |
(7)
| The executives’ change in control agreements provide for a “best net” feature which would reduce the parachute payments to the safe-harbor limit if it is more financially advantageous to the executive on an after-tax basis (taking into consideration federal, state and local income taxes, and the imposition of the excise tax). In the event it is more advantageous for the executive’s payments to be reduced, the Company shall reduce or eliminate the payments by first reducing or eliminating those payments which are not payable in cash and then by reducing or eliminating cash payments in each case in reverse order of when they would have otherwise been paid.
|
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 75 |
On October 22, 2018, we announced the resignation of Peter G. Edwards, our Executive Vice President and General Counsel. In connection with Mr. Edwards’ resignation from the Company, Mr. Edwards and the Company entered into an Agreement and General Release (the “Agreement”) on November 5, 2018, pursuant to which Mr. Edwards agreed to voluntarily resign from all officer positions he held with the Company and any of its subsidiaries effective on December 31, 2018. His employment with the Company continued until January 31, 2019 (the “Separation Date”) to assure a smooth transition. The material terms of the Agreement, which are consistent with the Company’s benefit plans and equity award agreements, are:
Restrictive and Cooperating Covenants: Mr. Edwards agreed (1) for a period of two years after the Separation Date not to compete with the Company, or to solicit or hire former employees of the Company, and (2) to keep information concerning the Company confidential. Mr. Edwards agreed to cooperate with the Company as necessary after the Separation Date, including being available for conference calls and assisting with pending litigation and claims.
Release: The Agreement also provided for a general release by Mr. Edwards of any and all claims that he may have against the Company.
Vesting and Settlement of Equity Awards: Mr. Edwards’ outstanding equity awards generally were forfeited in accordance with their terms upon the Separation Date. However, to facilitate a smooth transition of his role and as consideration for the covenants and release described above, the management and compensation committee agreed to permit pro rata vesting of the final tranche of a time-vesting RSU award originally granted to him in 2017 when he was first hired.
Pension, Welfare and Other Benefits: Mr. Edwards was entitled to continue participation in the Company’s welfare benefit plans until January 31, 2019, and was entitled to receive two months of Company-paid health and dental coverage via COBRA. Mr. Edwards will continue to be entitled to his accrued benefits under the Company’s employee benefit and pension plans and policies in which he participates, independent of the Agreement. Mr. Edwards was entitled to receive the 2018 annual incentive plan bonus which he had earned by virtue of his service through December 31, 2018, payable in March 2019.
The table below shows the compensation that Mr. Edwards received in connection with his separation from service from the Company at January 31, 2019, taking into account the circumstances of the termination and payments that he received under the various agreements described above. |
| | | | | | |
| | | | | Mr. Edwards |
| | Payments and Benefits | | 2019 Separation |
| Cash Payments | $ | — |
|
| Equity Value | | | | |
RSUs (1) | 395,010 |
|
| PRSUs | — |
|
| Benefits and Perquisites | | | |
Tax Gross-Up (2) | — |
|
| Welfare Benefits Continuation | 2,877 |
|
| Outplacement Services | — |
|
| Accrued Vacation Pay | — |
|
| Total | $ | 397,887 |
|
(1) Represents the value of the pro rata portion of the final tranche of the 2017 time-vesting RSU award that was permitted to continue to vest in accordance with the original vesting schedule, as described above. The value in the table is based on the closing price of our Common Stock on the Separation Date.
(2) No tax gross-ups were provided in connection with this separation.
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 7684 |
In the event the executive retires, a prorated amount of the 2019, 2020 and first tranche of the 2021 performance-based RSUs will vest based on actual performance.
(4)Represents reimbursement of premiums for 18 months of medical and dental coverage continuation upon a termination in connection with a change in control as applicable, and the payment of COBRA premiums for a period of one year (1.5 years for Ms. Ryerkerk) from the date of termination under our Executive Severance Benefits Plan, each based on 2021 rates.
(5)Upon termination by the Company without cause, each Executive is entitled to up to $16,200 in outplacement services.
(6)The CIC Agreements provide for a “best net” feature which would reduce the parachute payments to the safe-harbor limit if it is more financially advantageous to the executive on an after-tax basis (taking into consideration federal, state and local income taxes, and the imposition of the excise tax). In the event it is more advantageous for the executive's payments to be reduced, the Company shall reduce or eliminate the payments by first reducing or eliminating those payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order of when they would have otherwise been paid.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of SEC Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employeesmedian-compensated employee and the annual total compensation of Mark C. Rohr, our chairman, chief executive officer and president.CEO.
For 2018, our last completed fiscal year:the year ended December 31, 2021:
the median of •the annual total compensation of all employees of our company (other than our CEO),median-compensated employee, was $90,427; an$81,180; andd
•the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $12,514,160.$12,570,992.
•based on this information, the ratio of the annual total compensation of Mr. Rohr,Ms. Ryerkerk, our CEO, to the median of the annual total compensation of all employeesour median-compensated employee was 154139.0 to 1.
To identify the median of the annual total compensation of all our employees and as permitted by SEC rules, we used the same median employee for 2018 as weWe identified for 2017, because there have been no significant changes to our workforce or pay design for 2018 that we believe would significantly change our CEO pay ratio results, excluding for this purpose the employees acquired as a result of the Omni Plastics acquisition that closed on February 1, 2018 (approximately 95 employees). The following briefly describes the process we used to identify our median employee for 2017, based onin calendar 2020 using our employee population as of November 1, 2017:
We selected November 1, 2017 as the date upon which2020. In identifying such employee, we would identify the “median employee” to allow sufficient time to identify the median employee given the global scope of our operations.
We determined that, as of November 1, 2017, our employee population for pay ratio disclosure purposes consisted of approximately 7,597 individuals. We did not exclude any employees working outside of the U.S. and we did not use any statistical sampling techniques. However, we did exclude approximately 349 employees formerly employed by Nilit Plastics, who became our employees as a result of an acquisition that closed on May 3, 2017.
To identify the median employee from our employee population, we used total compensationactual salary payments reflected in our payroll records, as reported towhich we believe is a reasonable method of identifying the various taxing authorities, generally consistingmedian employee. The substantial majority of salary, wages, overtime,our employees do not participate in annual bonus health and welfare benefits, andor long-term incentive taxable compensation forprograms, therefore we believe that excluding those employees.
In making these determinations, weprograms from consideration does not meaningfully impact the identification of the median employee. We annualized the compensation of all permanent employees who were hired in 20172020 but did not work for us or our consolidated subsidiaries for the entire fiscal year. We did not make any cost-of-living adjustments in identifying the median employee.
As permitted under SEC rules, we are electing to use the same employee to report our CEO pay ratio for the year ended December 31, 2021. Since November 1, 2020, there have been no changes in the Company’s employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure, nor has there been any change in such employee’s circumstances that we believe would cause such employee’s compensation to no longer be reflective of our median pay.
The CEO pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodologies and assumptions described above,above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s total annual compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, which were chosen from a wide range of permissible methodologies, estimates and assumptions. As a result, the CEO pay ratios reported by other companies, which may have employed other permitted methodologies, exclusions, estimates or assumptions, and which may have a significantly different work force structure, geographic locations, or compensation practices from ours, are likely not comparable to our CEO pay ratio.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 77 |
AUDIT MATTERS
Audit Committee Report
The audit committee is composed of four independent directors, each of whom satisfies the independence requirement of Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The audit committee assists the board of directors in fulfilling its oversight responsibilities with respect to the external reporting process and the Company’s internal controls. The audit committee serves as the primary communication link between the board, the independent public accounting firm, and our internal auditors.
Company management is responsible for the financial statements and the reporting process, including the system of disclosure controls and procedures and the internal control over financial reporting. The independent registered public accounting firm, KPMG LLP, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting.
The audit committee reviewed and discussed with the Company’s management and KPMG LLP the audited financial statements for the Company for the year ended December 31, 2018. The audit committee also met with KPMG LLP and the internal auditors, with and without management present, to discuss the results of the auditors’ examinations, their evaluation of our internal control, and the overall quality of our financial reporting. The audit committee also discussed with KPMG LLP the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board (the “PCAOB”). In addition, the audit committee discussed with KPMG LLP its independence from the Company and management and received from KPMG LLP the written disclosures required by PCAOB Rules regarding the independent registered public accounting firm’s communications with the audit committee concerning independence.
The audit committee discussed with KPMG LLP and the internal auditors the overall scope and plans for their respective audits. The audit committee reviewed and discussed the fees billed to the Company by KPMG LLP for audit, audit-related, tax and other services provided during fiscal 2018, which are set forth under “Item 3: Ratification of Independent Registered Public Accounting Firm”, and determined that the provision of non-audit services is compatible with KPMG LLP’s independence. Based on the audit committee’s reviews and discussions described above, the audit committee recommended to the board of directors that the audited consolidated financial statements for the Company be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for filing with the SEC.The audit committee evaluates the performance of the independent registered public accounting firm each year and determines whether to re-engage the current firm or consider other audit firms. In doing so, the audit committee considers the quality and efficiency of the services provided by the registered public accounting firm, along with their capabilities, technical expertise, and knowledge of our operations and industry. Based on these evaluations, the audit committee decided to engage KPMG LLP as our independent registered public accounting firm for fiscal 2019. Although the audit committee has the sole authority to appoint the independent registered public accounting firm, the audit committee has continued its long-standing practice of recommending that the board ask our stockholders to ratify the appointment of the registered public accounting firm at our annual meeting of stockholders. This report was submitted by the current members of the audit committee,
|
| |
Dated: February 6, 2019 | John K. Wulff, Chairman |
| William M. Brown |
| David F. Hoffmeister |
| Kim K.W. Rucker |
|
| | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / 7885 |
|
| | | | | | | | | | | | | | | | | | | |
| | | | Audit MattersQuestions and Answers about the Annual Meeting | |
QUESTIONS AND ANSWERS
The audit committee report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing under
Annual Meeting Information
1. What is the Securities Act of 1933, or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates the audit committee report by reference therein.
ITEM 3: Ratification of Independent Registered Public Accounting Firm
The audit committeepurpose of the boardAnnual Meeting?
At our Annual Meeting, shareholders will vote upon several important Company matters, including the election of directors has selected KPMG LLP to audit the Company’s consolidated financial statements for the year ended 2019. Since 2004, KPMG LLP has served as our independent registered public accounting firm and also provided other audit-related and non-audit services that were approved by the audit committee.directors. In addition, the current lead partner assignedfollowing our meeting, our management will respond to the Company’s audit has held such position since 2017questions from shareholders.
2. How do I attend and unless removed by the audit committee, is expected to continue through 2021, when he would rotate offparticipate in accordance with SEC requirements.
Representatives of KPMG LLP will be present at the Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders.
We are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm. Although ratification is not required by our by-laws or otherwise, the board is submitting the audit committee’s selection of KPMG LLP to our stockholders for ratification as a matter of good corporate practice. Even if the selection is ratified, the audit committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. If the appointment of KPMG LLP is not ratified, the audit committee will evaluate the basis for the stockholders’ vote when determining whether to continue the firm’s engagement.
Audit and Related Fees
Aggregate fees billed to the Company by KPMG LLP and its affiliates were as follows: |
| | | | | | | |
| | Year Ended December 31, |
| | 2018 | 2017 | |
Audit Fees(1) | $ | 6,423,150 |
| $ | 6,874,650 |
| |
Audit-related Fees(2) | 74,600 |
| 86,600 |
| |
Tax Fees(3) | 1,418,200 |
| 1,009,005 |
| |
All Other Fees(4) | — |
| — |
| |
| Total Fees | $ | 7,915,950 |
| $ | 7,970,255 |
| |
| |
(1)
| For professional services rendered for the audits of annual consolidated financial statements of the Company (including the audit of internal control over financial reporting), statutory audits in non-U.S. jurisdictions, the review of the Company’s quarterly consolidated financial statements and review of SEC filings. |
| |
(2)
| Primarily for professional services rendered in connection with consultation on financial accounting and reporting standards and employee benefit plan audits. |
| |
(3)
| Primarily for professional services related to technical assistance, the preparation of tax returns in non-U.S. jurisdictions and assistance with tax audits and appeals. |
| |
(4)
| For other permitted professional advisory services. |
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 79 |
|
| | | | | | | | |
| | | | Audit Matters | IMPORTANT NOTE: If you plan to attend the Annual Meeting virtually, you must follow these instructions to gain access to the meeting. |
Audit Committee Pre-Approval Policy
The audit committee is responsible for appointing, retainingThis year’s Annual Meeting will be held as a “virtual meeting.” To attend, participate in, vote, and pre-approvingsubmit questions during the fees of the Company’s independent registered public accounting firm. The audit committee has adopted a Policy for Pre-Approval of Independent Auditor Services (“Pre-Approval Policy”) pursuantannual meeting, shareholders will need to which proposed services may be pre-approved through the application of detailed policies and procedures (“general pre-approval”) or by specific review of each service (“specific pre-approval”). The audit committee has provided general pre-approval for certain specific types of non-prohibited audit, audit-related and tax services that do not exceed $200,000 per project and $1,000,000 per year in the aggregate and gives detailed guidance to management aslog-in to the specific services that are eligible for general pre-approval. The audit committee isvirtual meeting at www.virtualshareholdermeeting.com/CE2022 using the 16-digit control number found on the proxy card, voting instruction form, or Notice of Internet Availability made available to be informed on a timely basis of any services performed by the independent registered public accounting firm pursuant to general pre-approval. Unless a type of service is included in this general pre-approval, it will require specific pre-approval. The annual audit services engagement terms and fees must be specifically pre-approved by the audit committee. Requests to provide services that require specific pre-approval must be submitted to the audit committee by both the independent registered public accounting firm and the chief financial officer or corporate controller, and must include detailed back-up documentation and a joint statement as to whether the request or application is consistent with the SEC’s rule on auditor independence.
The audit committee may delegate its pre-approval authority to one or more of its members. The member or members to whom such authority is delegated must report any pre-approval decisions to the audit committee at its next scheduled meeting.
All services performed by our independent registered public accounting firm in 2018 were pre-approved by the audit committee or otherwise under the Pre-Approval Policy.
Vote Required
Although ratification is not required in our by-laws or otherwise, approval of this proposal requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2019
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 80 |
MANAGEMENT PROPOSAL
ITEM 4: Approval of the Amendment of our Certificate of Incorporation
Background and Reasons for the Approval
The Proposed Amendment
On February 6, 2019, our board of directors approved and declared advisable an amendment of Article VII, Section 7.3 of our Second Amended and Restated Certificate of Incorporation, as it has been previously amended (the “Restated Certificate”), that would:
eliminate from such Section 7.3 (i) the currently inoperative clause under which the Company’s stockholders could remove directors of the Company with or without cause upon the affirmative vote of a majority in the voting power of all sharesshareholders entitled to vote generally inat the election of directors (the “Voting Power”) and (ii) the clause that provided that when Blackstone was not the beneficial owner of at least 50.1%2022 Annual Meeting.
The live webcast of the Voting Power,2022 Annual Meeting will begin promptly at 1:00 p.m. Central Time. Online access to the stockholders could remove directors “only for cause” and upon an affirmative vote of at least 80%audio webcast will open 15 minutes prior to the start of the Voting Power (the “Subject Clauses”); and
provide that2022 Annual Meeting. We encourage shareholders wishing to attend the stockholdersmeeting to access the meeting in advance of the Companydesignated start time and test their device’s audio system.
Beginning 15 minutes prior to, and during, the 2022 Annual Meeting, technical support will be available to assist shareholders with any technical difficulties they may removehave accessing or hearing the virtual meeting. Shareholders encountering any difficulties accessing, or allduring, the virtual meeting, please call the technical support team number that will be posted on the virtual meeting website’s login page.
In addition, any person may access the audio webcast of the Company’s directors without cause, as well as with cause, upon the affirmativeand listen to, but not participate in, ask questions or vote of at least 80% of the Voting Power (collectively, the “Amendment”).
The board has recommended that the Amendment be adopted by the Company’s stockholders at, the 2022 Annual Meeting. The text ofMeeting by logging on at the proposed Amendment comparing current Section 7.3virtual meeting site www.virtualshareholdermeeting.com/CE2022.
Even if you plan to the proposed amended Section 7.3 by virtue of the Amendment is included as Exhibit B to this Proxy Statement.
Reasons for Amendment
Second 7.3 of the Restated Certificate currently limits the removal of directors to “only for cause” “if at any time Blackstone no longer is the beneficial owner, in the aggregate, of at least 50.1% in voting power of all shares entitled to vote generally in the election of directors.” Blackstone does not currently own a controlling interest in the Company. Thus, the “only for cause” removal provision is operative. However, under the General Corporation Law of the State of Delaware (the “DGCL”), a corporation may not limit the removal of directors to “for cause” only unless the corporation has either a classified (staggered) board of directors or cumulative voting. As of the date ofattend the Annual Meeting, the Company will no longer have a classified board of directors. The Company does not have cumulative voting. In light of the elimination of the Company’s classified board structure and the factwe recommend that the Company does not have cumulative voting, our board of directors resolved that it is advisable and in the best interests of the Company and its stockholders to amend Section 7.3 of the Restated Certificate to eliminate the Subject Clauses, which became unnecessary to Section 7.3 upon Blackstone ceasing to hold at least 50.1% of the Voting Power, and to give the stockholders the right to remove directors without cause upon the affirmative vote of at least 80% of the Voting Power. If the Amendment is adopted by the stockholders and becomes effective, any or all of the members of the board of directors may be removed, with or without cause, by the holders of at least 80% of the Voting Power of the outstanding stock then entitled to vote in an election of directors.
General Effects of the Amendment Proposal
If the proposed Amendment is approved at the Annual Meeting, a certificate of amendment including the provisions of the Amendment conforming to the DGCL will be filed with the Secretary of State of the State of Delaware and would be effective upon filing with the Secretary of State. Following the filing of the certificate of amendment, the stockholders will be able to remove directors of the Company with, or without, cause as provided in the Amendment.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 81 |
The Amendment may be viewed as increasing the accountability of the Company's directors to stockholders by providing stockholders with the opportunity to remove directors without cause.
We do not foresee any risks with respect to the Amendment. In addition, there will be no U.S. Federal income tax consequences to the Company or stockholders as a result of the Amendment.
No Appraisal Rights
Stockholders have no rights under the DGCL or under our Restated Certificate to exercise dissenters’ or appraisal rights with respect to the Amendment.
Vote Required
The affirmative vote of the holders of at least 80% of the voting power of all shares of the Common Stock outstanding and entitled to vote generally in the election of directors of the Company is required to approve the proposal. Abstentions and broker non-votes will have the effect of a vote against the proposal. Shares of Common Stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. In the absence of specific instructions, properly executed, timely received and unrevoked proxies will be voted “FOR” the proposal.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE APPROVAL OF THE AMENDMENT OF OUR CERTIFICATE OF INCORPORATION
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 82 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
QUESTIONS AND ANSWERS
Proxy Materials and Voting Information
1. What is included in the proxy materials? What is a proxy statement and what is a proxy?
The proxy materials for our 2019 Annual Meeting of Stockholders (“Annual Meeting”) include the Notice of Annual Meeting, this Proxy Statement and our 2018 Annual Report. If you received a paper copy of these materials, the proxy materials also include a proxy card or voting instruction form.
A proxy statement is a document that SEC regulations require us to give you when we ask you to sign a proxy designating individuals to vote on your behalf. A proxy is your legal designation of another person to vote the Common Stock you own. That other person is called a proxy.
If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated two of our officers as proxies for the Annual Meeting. These two officers are Scott A. Richardson and James R. Peacock III.
The form of proxy and this Proxy Statement have been approved by the board of directors and are being provided to stockholders by its authority.
2. What is the difference between holding shares as a stockholder of record and as a beneficial owner?
If your shares are registered directly in your name with the Company’s registrar and transfer agent, Computershare Trust Company, N.A. (“Computershare”), you are considered a stockholder of record with respect to those shares. If your shares are held in a bank or brokerage account, you are considered the “beneficial owner” of those shares.
3. What shares are included on the proxy card?
If you are a stockholder of record, you will receive only one notice or proxy card for all the shares of Common Stock you hold in certificate form and in book-entry form and in any Company benefit plan.
If you are a Company employee and hold shares of Common Stock in our 401(k) savings plan, it is important that you direct the plan’s administrator how to vote your shares. If you hold shares of Common Stock in the Celanese Americas Retirement Savings Plan administered by Empower Retirement or a successor and do not vote your shares or specify your voting instructions on your proxy card, the administrator of the plan will vote your shares in advance so that your vote will be counted if you later decide not to, or are unable to, attend the same proportion as the shares for which they have received voting instructions. To allow sufficient time for voting by the administrators, your voting instructions must be received by April 15, 2019.Annual Meeting.
If you are a beneficial owner, you will receive voting instruction information from the bank, broker or other nominee through which you own your shares of Common Stock.
4.3. What different methods can I use to vote?
See page 34 for additional information about how to vote. By Telephone or Internet. All stockholdersshareholders of record can submit a proxy through the Internet, using the procedures and instructions described on the noticeNotice of Internet Availability or proxy card, or by touchtonetouch tone telephone within the U.S., U.S. territories and Canada, using the toll-free telephone number on the notice or proxy card. Beneficial owners may submit a proxy
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 83 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
through the Internet or by telephone if their bank, broker or other nominee makes those methods available, in which case the bank, broker or other nominee will include the instructions on the Notice of Internet Availability or voting instruction form that it provides with the proxy materials. The Internet and telephone proxy submission procedures are designed to authenticate stockholders’shareholders’ identities, to allow stockholdersshareholders to submit their proxies and to confirm that their voting instructions have been recorded properly.
By Written Proxy. All stockholdersshareholders of record can submit their voting instructions by written proxy card. If you are a stockholdershareholder of record and receive a notice regarding the availabilityNotice of proxy materials,Internet Availability, you may request a written proxy card by following the instructions included in the notice. If you are a beneficial owner, you may request a written proxy card or a voting
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 86 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
instruction form from your bank, broker or other nominee.
In Person.At the meeting. All stockholders of recordshareholders who attend the virtual annual meeting may vote in person at the meeting. Beneficial owners may also vote in person at the meeting if they have a legal proxy, as described in the response to question 20.
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact Alliance Advisors, LLC, 200 Broadacres Drive, 3rd Floor, Bloomfield, New Jersey 07003. StockholdersShareholders may call toll free: (855) 486-7908.(800) 574-5971.
4. How can I submit questions for the Annual Meeting?
Shareholders will be able to submit questions during the 2022 Annual Meeting. Beginning 15 minutes prior to, and during, the 2022 Annual Meeting, shareholders may submit questions through the virtual meeting website at www.virtualshareholdermeeting.com/CE2022.After the business portion of the 2022 Annual Meeting concludes and the meeting is adjourned, the Company intends to answer all questions submitted during the meeting that are pertinent to the Company and the items being brought before the shareholder vote at the 2022 Annual Meeting, as time permits and in accordance with our Rules of Conduct for the 2022 Annual Meeting. To promote fairness and efficient conduct of the meeting, we will respond to no more than two questions from any single shareholder.
The Agenda and the Rules of Conduct for the 2022 Annual Meeting will be available beginning 15 minutes prior to, and during, the 2022 Annual Meeting, at www.virtualshareholdermeeting.com/CE2022.
Answers to any appropriate questions that are not addressed during the meeting will be posted following the meeting on our website at https://investors.celanese.com under the heading “News & Events – Annual Meeting”. Questions and answers may be grouped by topic and substantially similar questions answered only once.
5. What are my voting choices for each of the proposals to be voted on at the 20192022 Annual Meeting and what are the voting standards?
|
| | | | | | | | | | | | | | | | | | | |
| Proposal | | Voting Choices and Board Recommendation | | Voting Standard |
| Item 1: Election of Directors | | • | Vote in favor of all or specific nominees; | | Majority of votes cast |
| • | Vote against all or specific nominees; or | | |
| • | Abstain from voting with respect to all or specific nominees. | | |
| The Board recommends a vote FOR each of the Director nominees. | | |
| | | | | |
| Item 2: Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm | | • | Vote in favor of the ratification; | | Majority of voting power(1) |
| • | Vote against the ratification; or | |
| • | Abstain from voting on the ratification. | | |
| The Board recommends a vote FOR the ratification. | | |
| | | | | | |
| Item 3: Advisory Vote to Approve Executive Compensation | | • | Vote in favor of the advisory proposal; | | Majority of voting power(1) |
| • | Vote against the advisory proposal; or | |
| • | Abstain from voting on the advisory proposal. | | |
| The Board recommends a vote FOR the advisory vote to approve executive compensation. | | |
| | | | | | |
Item 3: Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm | | • | Vote in favor of the ratification; | | Majority of voting power(1)
|
| • | Vote against the ratification; or | |
| • | Abstain from voting on the ratification. | | |
| The Board recommends a vote FOR the ratification.
| | |
| | | | | | |
Item 4: Proposal Regarding Approval of an Amendment to our Certificate of Incorporation | | • | Vote in favor of the proposal; | | 80% of voting power(2)
|
| • | Vote against the proposal; or | |
| • | Abstain from voting on the proposal. | | |
| The Board recommends a vote FOR the proposal.
| | |
| | | | | | |
(1) This means the vote of the holders of a majority of the voting power of the shares of Common Stock present in person or represented by proxy and entitled to vote.
(2) This means the vote of the holders of at least 80% of the outstanding voting power of the Common Stock entitled to vote on the proposal.
As an advisory vote, the proposal to approve executive compensation is not binding upon the Company. However, the compensation and management development committee, which is responsible for designing and administering the Company’s executive compensation programs, values the opinions expressed by stockholders and will consider the outcome of these votes when making future compensation decisions. See page 41 for a discussion of the results of the 2018 advisory vote.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 84 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 87 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
6. Could any additional proposals be raised at the Annual Meeting?
6.Management does not know of any items, other than those referred to in the accompanying Notice of Annual Meeting, which may properly come before the meeting or other matters incident to the conduct of the meeting. As to any other item or proposal that may properly come before the meeting, including voting on a proposal omitted from this proxy statement pursuant to the rules of the SEC, it is intended that proxies will be voted in accordance with the discretion of the proxy holders. See the response to question 22 for how to submit a proposal for action at the 2023 Annual Meeting of Shareholders.
7. What if I am unable to attend the Annual Meeting?
All shareholders are encouraged to vote in advance of the meeting by one of the means addressed above. A webcast playback of the 2022 Annual Meeting will be available to the public at www.virtualshareholdermeeting.com/CE2022 within approximately 24 hours after the completion of the meeting.
8. What information is included on the Annual Meeting page of the Company’s website?
The Annual Meeting page of our website allows our shareholders to (a) easily access the Company’s proxy materials for the Annual Meeting, (b) submit a proxy through the Internet, and (c) learn more about our Company. Go to https://investors.celanese.com, and choose “Annual Meeting” under “News & Events”.
Proxy Materials and Voting Information
9. What is the difference between holding shares as a shareholder of record and as a beneficial owner?
If your shares are registered directly in your name with the Company’s registrar and transfer agent, Computershare Trust Company, N.A. (“Computershare”), you are considered a shareholder of record with respect to those shares. If your shares are held in a bank or brokerage account or through another nominee, you are considered the “beneficial owner” of those shares.
10. What is the process to vote if I hold shares through the Celanese 401(k) savings plan?
If you are a Company employee and hold shares of Common Stock in our 401(k) savings plan, it is important that you direct the plan’s trustee how to vote your shares. If you hold shares of Common Stock in the Celanese Americas Retirement Savings Plan administered by Fidelity or a successor and do not vote your shares or specify your voting instructions on your proxy card, the trustee of the plan will vote your shares in the same proportion as the shares for which they have received voting instructions, unless contrary to ERISA. To allow sufficient time for voting by the trustee, your voting instructions must be received by April 17, 2022.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 88 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
11. What if I am a stockholdershareholder of record and do not specify a choice for a matter when returning a proxy?
StockholdersShareholders should specify their choice for each matter on the proxy card. If no specific instructions are given, proxies which are signed and returned will be voted:
|
| | | | | | | | | | | | | |
| ● | FOR the election of all director nominees as set forth in this Proxy Statement; |
| ● | FOR the advisory vote to approve executive compensation; |
● | FOR the proposal to ratify the appointment of KPMG LLP as independent registered public accounting firm; and
|
| ● | FOR the proposaladvisory vote to approve an amendment to our certificate of incorporation.executive compensation. |
7.12. What if I am a beneficial owner and do not give voting instructions to my broker?
As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the materials you receive from your bank, broker or other nominee. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered for vote.
Non-Discretionary Items. The election of directors and the advisory vote to approve executive compensation and the approval of the amendment to our certificate of inccorporation are non-discretionary items and may notcannot be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial owners.
Discretionary Items. The ratification of the appointment of KPMG LLP as Independent Registered Public Accounting Firm is a discretionary item. Generally, banks, brokers and other nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.
8.13. How are abstentions and broker non-votes counted?
Abstentions and broker non-votes are included in determining whether a quorum is present, but will not be included with respect to director elections andelections. With respect to the proposal to ratify the appointment of KPMG LLP as independent registered public accounting firm, the advisory vote to approve say on pay vote totalsexecutive compensation, and will not affect the outcome of the vote. With respect to allany other matters properly presented at the meeting, abstentions will count in the denominator and broker non-votes will havenot be included in determining the same effect as a vote againston the particular proposal.
9.14. What can I do if I change my mind after I vote my shares?
StockholdersShareholders can revoke a proxy prior to the completion of voting at the meeting by:
|
| | | | |
| ● | giving written notice to the Corporate Secretary of the Company; |
| ● | delivering a later-dated proxy; or |
| ● | voting in person at the meeting (if you are a beneficial owner, see the response to question 20).virtual meeting. |
10.15. Can I access the proxy materials on the Internet? How can I sign up for the electronic proxy delivery service?
The Notice of Annual Meeting, this Proxy Statement and the 20182021 Annual Report are available at www.proxyvote.com. In addition, stockholdersshareholders are able to access these documents on the Annual Meeting page of our website, https://investors.celanese.com, by clicking “News & Events”. Instead of receiving future copies of our notice of annual meeting, proxy statement and annual report by mail, stockholdersshareholders of record and most beneficial owners can elect to receive an e-mail that will provide electronic links to these documents. Opting to receive your proxy
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 85 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
materials online will save us the cost of producing and mailing documents, and also will give you an electronic link to the proxy voting site.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 89 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
StockholdersShareholders of Record. If you submit your proxy over the Internet, simply follow the prompts for enrolling in the electronic stockholdershareholder document delivery service. You also may enroll in this service at any time in the future by going directly to www.proxyvote.com and following the enrollment instructions.
Beneficial Owners. If you hold your shares in a bank or brokerage account, you also may have the opportunity to receive copies of these documents electronically. Please check the information in the proxy materials provided to you by your bank, broker or other nominee regarding the availability of this service.
11.16. Are votes confidential? Who counts the votes?
We will continue our long-standing practice of holding the votes of all stockholdersshareholders in confidence from directors, officers and employees except:
|
| | | | |
| ● | as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; |
| ● | in the case of a contested proxy solicitation; |
| ● | if a stockholdershareholder makes a written comment on the proxy card or otherwise communicates his or her vote to management; or |
| ● | to allow the independent inspector of election to certify the results of the vote. |
We also will continue, as we have for many years, to retain an independent tabulator to receive and tabulate the proxies and an independent inspector of election to certify the results.
12. When will the Company announce the voting results?
We will announce the preliminary voting results at the Annual Meeting. The Company will report the final results in a Current Report on Form 8-K filed with the SEC shortly after the meeting.
13. Does the Company have a policy about directors’ attendance at the Annual Meeting of Stockholders?
The Company has a policy requiring our directors then in office to attend annual meetings of stockholders, absent good reason. All directors at the time and director nominees attended the 2018 Annual Meeting.
14.17. How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Alliance Advisors, LLC to assist with the solicitation of proxies for a fee of $6,500.$7,500. We have also agreed to reimburse Alliance Advisors, LLC for certain expenses and to indemnify Alliance Advisors, LLC against certain losses and expenses. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of Common Stock.
Our directors, officers and employees also may solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 86 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
15.18. What is householding?
As permitted by the 1934 Act, only one copy of this Proxy Statement and our 20182021 Annual Report is being delivered to stockholdersshareholders residing at the same address who have the last same name, who we reasonably believe to be members of the same family or from whom we have previously received written consent to such a delivery unless, in each case, those stockholdersshareholders have notified the Company of their desire to receive multiple copies of the Proxy Statement and our 20182021 Annual Report. This is known as householding.
Even if the stockholdersshareholders residing at the same address have received only one Proxy Statement and our 20182021 Annual Report, each of those stockholdersshareholders will receive a separate proxy card with which to submit their voting instructions by proxy as to that stockholder’sshareholder’s shares. It is important that each stockholdershareholder receiving a proxy card, sign, date, and return each proxy card received, or submit their proxy via the internet or by phone in accordance with the instructions appearing on the proxy card.card or vote at the annual meeting.
The Company will promptly deliver, upon oral or written request, a separate copy of the Proxy Statement and our 20182021 Annual Report to any stockholdershareholder residing at an address to which only one copy of the Proxy Statement and our 20182021 Annual Report was mailed. Requests for additional copies of the Proxy Statement and our 20182021 Annual Report or for a copy of our proxy statements and annual reports in future years to be delivered to each stockholdershareholder residing at an address should be directed to the Corporate Secretary at the address listed in the response to question 23.22.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 90 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
Beneficial owners residing at the same address should contact their bank, broker or other nominee if they do not wish to receive multiple copies of our proxy statements and annual reports to stockholdersshareholders or if they are receiving only one copy and want to receive multiple copies of the Proxy Statement and our 20182021 Annual Report and our proxy statements and annual reports to stockholdersshareholders in future years. Each beneficial owner residing at the same address will receive a voting instruction form from their bank, broker or other nominee with which to direct how that beneficial owner’s shares are to be voted. It is important that each beneficial owner receiving a voting instruction form, sign, date, and return each voting instruction form received, or submit such beneficial owner’s voting instructions by internet or phone if their bank, broker or other nominee makes such means of voting available, or vote at the annual meeting, in each case, in accordance with the instructions appearing on the voting instruction form.
16. What information from this proxy statement is incorporated by reference into certain Company SEC filings?
The Company has made previous filings under the Securities Act of 1933, as amended, and the 1934 Act that incorporate future filings, including this Proxy Statement, in whole or in part. However, the report of the compensation and management development committee and the report of the audit committee shall not be incorporated by reference into any such filings.
17.19. Will you make a list of stockholdersshareholders entitled to vote at the Annual Meeting available?
We will make available a list of stockholdersshareholders of record as of the record date for inspection by stockholdersshareholders or for any purpose germane to the meeting during normal business hours from April 810 through April 17, 201919, 2022 at 222 W. Las Colinas Blvd., Suite 900N, Irving, TX 75039. This list also will be available to stockholders for any such purpose atto shareholders attending the virtual meeting.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 87 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
Annual Meeting Information
18. What is the purpose of the Annual Meeting?
At our Annual Meeting, stockholders will vote upon several important Company matters, including the election of directors. In addition, following our meeting, our management will respond to questions from stockholders.
19. How do I attend the Annual Meeting in person?
|
| | | | |
IMPORTANT NOTE: If you plan to attend the Annual Meeting, you must follow these instructions to gain admission. |
All attendees will need to bring a photo ID to gain admission. Please note that cameras, sound or video recording equipment, cellular telephones, smartphones or other similar equipment, electronic devices, large bags, briefcases or packages will not be allowed in the meeting room.
Attendance at the meeting is limited to stockholders as of the record date, February 19, 2019, or their authorized named representatives.
|
| | | | |
● | Stockholders of record: If you are a stockholder of record and receive your proxy materials by mail, your admission ticket is your proxy card (or a copy thereof). If you are a stockholder of record and receive your materials electronically, and vote via the Internet, please print a copy of your notice and access form or other evidence of your ownership of Common Stock. |
● | Beneficial owners: If you are a beneficial owner, bring the notice or voting instruction form (or a copy thereof) you received from your bank, broker or other nominee to be admitted to the meeting. You also may bring your bank or brokerage account statement reflecting your ownership of Common Stock as of the record date with you to the meeting. Please note that you will not be able to vote your shares at the meeting without a legal proxy, as described in the response to question 20. |
● | Authorized named representatives: If you are a stockholder as of the record date and intend to appoint an authorized named representative to attend the meeting on your behalf, you must send a written request for an admission ticket by regular mail to Celanese Attn: Corporate Secretary, 222 W. Las Colinas Blvd., Suite 900N, Irving, TX 75039. Requests for authorized named representatives to attend the meeting must be received no later than Monday, April 15, 2019. |
Please include the following information when submitting your request:
(1) Your name, complete mailing address and e-mail address;
(2) Proof that you own shares of the Company as of the record date (such as a copy of the portion of your voting instruction form showing your name and address, a bank or brokerage account statement or a letter from the bank, broker or other nominee holding your shares); and
(3) A signed authorization appointing such individual to be your authorized named representative at the meeting, which includes the name, address, telephone number and e-mail address of the authorized named representative.
Upon receipt of proper documentation, you and your named representative will receive confirmation that your named representative has been authorized. To gain admission to the meeting, the photo ID presented must match the documentation provided in item (3) above. We reserve the right to limit the number of representatives who may attend the meeting.
Ensuring the Annual Meeting is safe and productive is our top priority. As such, failure to follow these admission procedures may result in being denied admission or being directed to view the meeting in an overflow room. Because seating in the main meeting room is limited, and in order to be able to address security concerns, we reserve the right to direct attendees to view the meeting in an overflow room. In addition, failure to follow the meeting procedures may result in ejection from the meeting, being directed to view the meeting in an overflow room and/or
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 88 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
being denied admission to this and future meetings. If you have questions regarding these admission procedures, please call the Corporate Secretary at (972) 443-4700.
20. How can I vote at the meeting if I am a beneficial owner?
If you are a beneficial owner and want to vote your shares at the Annual Meeting, you will need to ask your bank, broker or other nominee to furnish you with a legal proxy. You will need to follow the procedures described in the response to question 19 and then bring the legal proxy with you to the meeting and hand it in with a signed ballot that will be provided to you at the meeting. You will not be able to vote your shares at the meeting without a legal proxy. If you do not have a legal proxy, you can still attend the meeting by following the procedures described in the response to question 19. However, you will not be able to vote to your shares at the meeting. Accordingly, we encourage you to cause your shares to be voted in advance by submitting a proxy, even if you intend to attend the meeting.
Please note that if you request a legal proxy, any previously executed proxy will be revoked, and your vote will not be counted unless you appear at the meeting and vote in person or legally appoint another proxy to vote on your behalf.
21. What information is included on the Annual Meeting page of the Company’s website?
The Annual Meeting page of our website allows our stockholders to (a) easily access the Company’s proxy materials for the Annual Meeting, (b) submit a proxy through the Internet, and (c) learn more about our Company. Go to investors.celanese.com, and click “News & Events”.
22. Could any additional proposals be raised at the Annual Meeting?
Management does not know of any items, other than those referred to in the accompanying Notice of Annual Meeting, which may properly come before the meeting or other matters incident to the conduct of the meeting. As to any other item or proposal that may properly come before the meeting, including voting on a proposal omitted from this proxy statement pursuant to the rules of the SEC, it is intended that proxies will be voted in accordance with the discretion of the proxy holders. See the response to question 25 for how to submit a proposal for action at the 2020 Annual Meeting of Stockholders.
Company Documents, Communications and StockholderShareholder Proposals
23.20. How can I view or request copies of the Company’s corporate documents and SEC filings?
The Company’s website contains the Company’s certificate of incorporation, by-laws, corporate governance guidelines, boardBoard committee charters, Code of Business Conduct and the Company’s SEC filings. To view these documents, go to our website, https://investors.celanese.com, and click “Corporate Governance.” To view the Company’s SEC filings, including Forms 3, 4 and 5 filed by the Company’s directors and executive officers, go to https://investors.celanese.com, and click “SEC Filings.“Financial Information.”
We will promptly deliver free of charge, upon request, a copy of the corporate governance guidelines, boardBoard committee charters or Code of Business Conduct or our most recent Form 10-K or Annual Report to any stockholdershareholder requesting a copy. Requests should be directed to the Company’s Corporate Secretary, Celanese Corporation, 222 W. Las Colinas Blvd., Suite 900N, Irving, TX 75039.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 89 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
24.21. How can I communicate with the directors?
Communications can be addressed to directors in care of the Corporate Secretary, Celanese Corporation, 222 W. Las Colinas Blvd., Suite 900N, Irving, TX 75039. At the direction of the board,Board, all mail received may be opened and screened for security purposes. All mail, other than trivial, obscene, unduly hostile, threatening, advertising, illegal or similarly unsuitable items, will be forwarded. Mail addressed to a particular director or Board committee will be forwarded or delivered to that director.director or committee. Mail addressed to “Outside Directors” or “Non-Employee Directors” will be forwarded or delivered to the lead independent director. Mail addressed to the “Board of Directors” will be forwarded or delivered to the Chairman of the Board and the lead independent director.
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 91 |
| | | | | | | | | | | | | | | | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
22. How do I submit a proposal for action at the 20202023 Annual Meeting of Stockholders?Shareholders?
A proposal for action to be presented by any stockholdershareholder at the 20202023 Annual Meeting of StockholdersShareholders will be acted upon only:
|
| | | | |
| ● | if the proposal is to be included in our proxy statement, pursuant to Rule 14a-8 under the 1934 Act, the proposal is received at on or before November 8, 2019;10, 2022; or |
| ● | if the proposal is not to be included in our proxy statement, pursuant to our by-laws, the proposal is submitted in writing to the Corporate Secretary on or before January 19, 202020, 2023 (but not earlier than December 20, 2019)21, 2022), and such proposal is, under Delaware General Corporation Law, an appropriate subject for stockholdershareholder action. |
In addition, the stockholdershareholder proponent, or a representative who is qualified under state law, must appear in person at the 20202023 Annual Meeting of StockholdersShareholders to present such proposal.
Proposals should be sent by mail to the Corporate Secretary, Celanese Corporation, 222 W. Las Colinas Blvd., Suite 900N, Irving, TX 75039. As described below, separate rules apply to submissions of director nominees under our proxy access provisions.
26.23. How do I submit a recommendation for a director nominee?
The nominating and corporate governance committeeN&CG Committee will consider recommendations for director nominees made by stockholders. Stockholdershareholders. Shareholder recommendations should be sent to: Celanese Corporation, Board of Directors, 222 W. Las Colinas Blvd., Suite 900N, Irving, Texas 75039, Attn: Corporate Secretary. Generally, recommended candidates are considered at the first or second board meeting held prior to the annual meeting of stockholders.shareholders. No candidates were recommended by stockholdersshareholders during 2018.2021.
The nominating and corporate governance committeeN&CG Committee considers individuals recommended by stockholdersshareholders in the same manner and to the same extent as it considers director nominees identified by other means. The chairman of the nominating and corporate governance committeeN&CG Committee will make exploratory contacts with those nominees whose skills, experiences, qualifications and personal attributes satisfy those that the nominating and corporate governance committeeN&CG Committee has identified as essential for a nominee to possess, as described above. Then, an opportunity will be arranged for the members of the nominating and corporate governance committeeN&CG Committee or as many members as can do so to meet the potential nominee. The nominating and corporate governance committeeN&CG Committee will then select a nominee to recommend to the boardBoard of directorsDirectors for consideration and appointment. Board members appointed in this manner will serve, absent unusual circumstances, until their election by our stockholdersshareholders at the next annual meeting of stockholders.shareholders.
Nominations of up to a specified number of directors may also be made by one or more eligible holders under the “Proxy Access” provisions of our by-laws. See “Board and Committee Governance” beginning on page 1620.
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 90 |
|
| | | | | | |
| | | | Questions and Answers about the Annual Meeting | |
The Annual Report on Form 10-K for the year ended December 31, 20182021 includes our financial statements for the year ended December 31, 2018.2021. We have furnished the 20182021 Annual Report on Form 10-K to all stockholdersshareholders as part of our Annual Report. The Annual Report on Form 10-K does not form any part of the material for the solicitation of proxies.
On behalf of the Board of Directors of Celanese Corporation
James R. Peacock III
A. Lynne Puckett
Senior Vice President, Deputy General Counsel
and Corporate Secretary
March 8, 2019
10, 2022
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / 91 |
|
| | | | | | |
| | Celanese 2022 / Notice of Annual Meeting and Proxy Statement / 92 |
Exhibit A
Non-U.S. GAAP Financial Measures
Definitions and Rationale
This Proxy Statement contains information regarding Adjusted EBIT, Operating EBITDA, free cash flow, and adjusted earnings per share, which are non-GAAP financial measures used by the Company. These measures are not recognized in U.S. GAAP and should not be viewed as alternatives to U.S. GAAP measures of performance. Non-GAAP financial measures are provided as additional information to stockholders,shareholders, investors, analysts and other parties as the Company believes them to be important supplemental measures for assessing our financial and operating results and as a means to evaluate our financial condition and period-to-period comparisons. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or as alternatives to, net earnings (loss), operating profit (loss), cash flow from operating activities (together with cash flow from investing and financing activities), earnings per share or any other U.S. GAAP financial measure. These non-GAAP financial measures should be considered within the context of our complete audited and unaudited financial results for the given period, which are available on the Financial Information/Financial Document library page of our website, https://investors.celanese.com. The definition and method of calculation of the following non-GAAP financial measures used herein may be different from other companies’ methods for calculating measures with the same or similar titles. Investors, analysts and analystsother parties should understand how another company calculates such non-GAAP financial measures before comparing the other company’s non-GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive or projections of future results.
Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items. We believe that adjusted EBIT provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of unusual, non-operational or restructuring-related activities that affect comparability. Our management recognizes that adjusted EBIT has inherent limitations because of the excluded items. Adjusted EBIT is one of the measures management uses for planning and budgeting, monitoring and evaluating financial and operating results and as a performance metric in the Company’s incentive compensation plan. We may provide guidance on adjusted EBIT but are unable to reconcile forecasted adjusted EBIT to a US GAAP financial measure without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains and losses, which may be significant, is not practical. Adjusted EBIT by business segment may also be referred to by management as segment income. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales. Adjusted EBIT margin has the same uses and limitations as Adjusted EBIT.
Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. We believe that Operating EBITDA provides transparent and useful information to investors, analysts and other parties in evaluating our operating performance relative to our peer companies. Operating EBITDA margin is defined by the Company as Operating EBITDA divided by net sales. Operating EBITDA margin has the same uses and limitations as Operating EBITDA.
Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We believe that adjusted earnings per share provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of the
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / A-1 |
above stated items that affect comparability and as a performance metric in the Company’s incentive compensation
|
| | |
| Celanese 2019 / Notice of Annual Meeting and Proxy Statement / A-1 |
plan. We may provide guidance on adjusted earnings per share but are unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains and losses, which may be significant, is not practical.
Note: The income tax expense (benefit) on Certain Items (“Non-GAAP adjustments”) is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management’s assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results.
Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. (“Mitsui”) related to our methanol joint venture, Fairway Methanol LLC.LLC (“Fairway”. We believe that free cash flow provides useful information to management, investors, analysts and other parties in evaluating the Company’s liquidity and credit quality assessment because it provides an indication of the long-term cash generating ability of our business. Although we use free cash flow as a measure to assess the liquidity generated by our business, the use of free cash flow has important limitations, including that free cash flow does not reflect the cash requirements necessary to service our indebtedness, lease obligations, unconditional purchase obligations or pension and postretirement funding obligations.
Return on invested capital (adjusted) is defined by the Company as adjusted EBIT, tax effected using the adjusted tax rate, divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation shareholders’ equity. We believe that return on invested capital (adjusted) provides useful information to management, investors, analysts and other parties in order to assess our income generation from the point of view of our shareholders and creditors who provide us with capital in the form of equity and debt and whether capital invested in the Company yields competitive returns.
The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation,Corporation; for adjusted EBIT margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted,share-diluted; and for free cash flow is net cash provided by (used in) operations.
|
| | | | | | | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / A-2 |
Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited |
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2018 | | 2017 |
| | (In $ millions, except percentages) |
| Net sales | 7,155 |
| | | | 6,140 |
| | |
| | | | | | | | |
| Net earnings (loss) attributable to Celanese Corporation | 1,207 |
| | | | 843 |
| | |
| (Earnings) loss from discontinued operations | 5 |
| | | | 13 |
| | |
| Interest income | (6 | ) | | | | (2 | ) | | |
| Interest expense | 125 |
| | | | 122 |
| | |
| Refinancing expense | 1 |
| | | | — |
| | |
| Income tax provision (benefit) | 292 |
| | | | 213 |
| | |
Certain items attributable to Celanese Corporation(1) | 228 |
| | | | 167 |
| | |
| Adjusted EBIT / Adjusted EBIT Margin | 1,852 |
| | 25.9 | % | | 1,356 |
| | 22.1 | % |
Depreciation and amortization expense(2) | 316 |
| | | | 303 |
| | |
| Operating EBITDA | 2,168 |
| | | | 1,659 |
| | |
| |
(1)
| Information about Certain items is included in the Company’s Non-GAAP Financial Measures and Other Information document dated January 28, 2019 available in the investor relations section of our website at www.celanese.com and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 28, 2019.
|
| |
(2)
| Excludes accelerated depreciation and amortization expense, which amounts are included in Certain items above. |
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2021 | | 2020 |
| (In $ millions, except percentages) |
| Net sales | 8,537 | | | | | 5,655 | | | |
| | | | | | | |
| Net earnings (loss) attributable to Celanese Corporation | 1,890 | | | | | 1,985 | | | |
| (Earnings) loss from discontinued operations | 22 | | | | | 12 | | | |
| Interest income | (8) | | | | | (6) | | | |
| Interest expense | 91 | | | | | 109 | | | |
| Refinancing expense | 9 | | | | | — | | | |
| Income tax provision (benefit) | 330 | | | | | 247 | | | |
Certain items attributable to Celanese Corporation(1) | 139 | | | | | (1,216) | | | |
| Adjusted EBIT / Adjusted EBIT Margin | 2,473 | | | 29.0 | % | | 1,131 | | | 20.0 | % |
Depreciation and amortization expense(2) | 362 | | | | | 344 | | | |
| Operating EBITDA | 2,835 | | | | | 1,475 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2019 | | 2018 | | 2017 |
| (In $ millions, except percentages) |
| Net sales | 6,297 | | | | | 7,155 | | | | | 6,140 | | | |
| | | | | | | | | | | |
| Net earnings (loss) attributable to Celanese Corporation | 852 | | | | | 1,207 | | | | | 843 | | | |
| (Earnings) loss from discontinued operations | 6 | | | | | 5 | | | | | 13 | | | |
| Interest income | (6) | | | | | (6) | | | | | (2) | | | |
| Interest expense | 115 | | | | | 125 | | | | | 122 | | | |
| Refinancing expense | 4 | | | | | 1 | | | | | — | | | |
| Income tax provision (benefit) | 124 | | | | | 292 | | | | | 213 | | | |
Certain items attributable to Celanese Corporation(1) | 381 | | | | | 228 | | | | | 167 | | | |
| Adjusted EBIT / Adjusted EBIT Margin | 1,476 | | | 23.4 | % | | 1,852 | | | 25.9 | % | | 1,356 | | | 22.1 | % |
Depreciation and amortization expense(2) | 329 | | | | | 316 | | | | | 303 | | | |
| Operating EBITDA | 1,805 | | | | | 2,168 | | | | | 1,659 | | | |
(1)Information about Certain items is included in the Company’s Non-GAAP Financial Measures and Other Information document available on the Financial Information/Financial Document Library page of our website, investors.celanese.com, and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 27, 2022.
(2)Excludes accelerated depreciation and amortization expense, which amounts are included in Certain items above.
|
| | | | | | | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / A-3 |
Adjusted Earnings (Loss) Per Share - Reconciliation of a Non-GAAP Measure - Unaudited | | | | Year Ended December 31, | | Year over Year Change | | | Year Ended December 31, | | Year over Year Change |
| | 2018 | | 2017 | | | | 2021 | | 2020 | |
| | | | per share | | | | per share | | per share | | | | per
share | | | per
share | | |
| | (In $ millions, except per share data) | | | | | (In $ millions, except per share data and percentages) |
| Earnings (loss) from continuing operations attributable to Celanese Corporation | 1,212 |
| | 8.95 |
| | 856 |
| | 6.19 |
| | 44.6 | % | Earnings (loss) from continuing operations attributable to Celanese Corporation | | 1,912 | | | 17.06 | | | 1,997 | | | 16.85 | | | 1.2 | % |
| Deduct: Income tax (provision) benefit | (292 | ) | | | | (213 | ) | | | | | |
| Income tax provision (benefit) | | Income tax provision (benefit) | | 330 | | | 247 | | |
| | Earnings (loss) from continuing operations before tax | 1,504 |
| | | | 1,069 |
| | | | | Earnings (loss) from continuing operations before tax | | 2,242 | | | 2,244 | | |
Certain items attributable to Celanese Corporation(1) | 228 |
| | | | 167 |
| | | | | Certain items attributable to Celanese Corporation(1) | | 139 | | | (1,216) | | |
| Refinancing and related expenses | 1 |
| | | | — |
| | | | | Refinancing and related expenses | | 9 | | | — | | |
| Adjusted earnings (loss) from continuing operations before tax | 1,733 |
| | | | 1,236 |
| | | | | Adjusted earnings (loss) from continuing operations before tax | | 2,390 | | | 1,028 | | |
Income tax (provision) benefit on adjusted earnings(2) | (243 | ) | | | | (198 | ) | | | | | Income tax (provision) benefit on adjusted earnings(2) | | (359) | | | (123) | | |
| Adjusted earnings (loss) from continuing operations(3) | 1,490 |
| | 11.00 |
| | 1,038 |
| | 7.51 |
| | 46.5 | % | Adjusted earnings (loss) from continuing operations(3) | | 2,031 | | | 18.12 | | | 905 | | | 7.64 | | | 137.2 | % |
| | | | | | | | | | | | | | | | | | | | |
| | Diluted shares (in millions)(4) | | | | | Diluted shares (in millions)(4) | |
| Weighted average shares outstanding | 134.3 |
| | | | 137.9 |
| | | | | Weighted average shares outstanding | | 111.2 | | | 117.8 | | |
| Incremental shares attributable to equity awards | 1.1 |
| | | | 0.4 |
| | | | | Incremental shares attributable to equity awards | | 0.9 | | | 0.7 | | |
| Total diluted shares | 135.4 |
| | | | 138.3 |
| | | | | Total diluted shares | | 112.1 | | | 118.5 | | |
| |
(1)
| Information about Certain items is included in the Company’s Non-GAAP Financial Measures and Other Information document dated January 28, 2019 available in the investor relations section of our website at www.celanese.com | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2019 | | 2018 | | 2017 | | | | | per
share | | | | per
share | | | | per
share | | (In $ millions, except per share data) | | Earnings (loss) from continuing operations attributable to Celanese Corporation | 858 | | | 6.89 | | | 1,212 | | | 8.95 | | | 856 | | | 6.19 | | | Income tax provision (benefit) | 124 | | | | | 292 | | | | | 213 | | | | | | | | | | | | | | | | | Earnings (loss) from continuing operations before tax | 982 | | | | | 1,504 | | | | | 1,069 | | | | Certain items attributable to Celanese Corporation(1) | 381 | | | | | 228 | | | | | 167 | | | | | Refinancing and related expenses | 4 | | | | | 1 | | | | | — | | | | | Adjusted earnings (loss) from continuing operations before tax | 1,367 | | | | | 1,733 | | | | | 1,236 | | | | Income tax (provision) benefit on adjusted earnings(2) | (178) | | | | | (243) | | | | | (198) | | | | | | | | | | | | | | | | Adjusted earnings (loss) from continuing operations(3) | 1,189 | | | 9.53 | | | 1,490 | | | 11.00 | | | 1,038 | | | 7.51 | | | | | | | | | | | | | | | Diluted shares (in millions)(4) | | Weighted average shares outstanding | 123.9 | | | | | 134.3 | | | | | 137.9 | | | | | Incremental shares attributable to equity awards | 0.8 | | | | | 1.1 | | | | | 0.4 | | | | | Total diluted shares | 124.7 | | | | | 135.4 | | | | | 138.3 | | | |
(1)Information about Certain items is included in the Company’s Non-GAAP Financial Measures and Other Information document available on the Financial Information/Financial Document Library page of our website, investors.celanese.com, and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 28, 2019. |
| |
(2)
| The adjusted effective tax rate is 14% for the year ended December 31, 2018 and 16% for the year ended December 31, 2017, as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 27, 2022.
(2)The adjusted effective tax rates for the years ended December 31, 2021, 2020, 2019, 2018 and 2017 are detailed in the Adjusted Tax Rate table below. |
| |
(3)
| The year ended December 31, 2018 excludes the immediate recognition of actuarial gains and losses and the impact of actual plan asset returns of (3.9)% vs. expected plan asset returns of 6.7%. The year ended December 31, 2017 excludes the immediate recognition of actuarial gains and losses and the impact of actual plan asset returns of 10.5% vs. expected plan asset returns of 7.3%.
|
| |
(4)
| Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive. |
|
| | | | | | | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / A-4 |
(3)Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset returns.
| | | | | | | | | | | |
| Actual Plan Asset Returns | | Expected Plan Asset Returns |
| (In percentages |
| 2021 | 1.1 | | | 6.3 | |
| 2020 | 12.4 | | | 6.5 | |
| 2019 | 16.7 | | | 6.5 | |
| 2018 | (3.9) | | | 6.7�� | |
| 2017 | 10.5 | | | 7.3 | |
(4)Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive.
Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited
| | | | Year Ended December 31, | | Year Ended December 31, |
| | 2018 | | 2017 | | 2021 | | 2020 | | 2019 | | 2018 | | 2017 |
| | (In percentages) | | (In percentages) |
| US GAAP effective tax rate | 19 |
| | 20 |
| US GAAP effective tax rate | 15 | | | 11 | | | 13 | | | 19 | | | 20 | |
Discrete quarterly recognition of GAAP items(1) | — |
| | (11 | ) | Discrete quarterly recognition of GAAP items(1) | (2) | | | 12 | | | — | | | — | | | (11) | |
Tax impact of other charges and adjustments(2) | — |
| | 1 |
| Tax impact of other charges and adjustments(2) | (1) | | | (9) | | | — | | | — | | | 1 | |
| Utilization of foreign tax credits | — |
| | 20 |
| Utilization of foreign tax credits | (1) | | | (3) | | | (3) | | | — | | | 20 | |
Changes in valuation allowances, excluding impact of other charges and adjustments(3) | (5 | ) | | (13 | ) | Changes in valuation allowances, excluding impact of other charges and adjustments(3) | 3 | | | — | | | 3 | | | (5) | | | (13) | |
Other(4) | — |
| | (1 | ) | Other(4) | 1 | | | 1 | | | — | | | — | | | (1) | |
| Adjusted tax rate | 14 |
| | 16 |
| Adjusted tax rate | 15 | | | 12 | | | 13 | | | 14 | | | 16 | |
| |
(1)
| Such as changes in tax laws (including US tax reform), deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments. |
| |
(2)
| Reflects the tax impact on pre-tax adjustments presented in Certain Items, which are excluded from pre-tax income for adjusted earnings per share purposes. Information about Certain items is included in the Company’s Non-GAAP Financial Measures and Other Information document dated January 28, 2019 available in the investor relations section of our website at www.celanese.com and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 28, 2019.
|
| |
(3)
| Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments. |
| |
(4)
| Tax impacts related to full-year forecasted tax opportunities and related costs. |
Free Cash Flow - Reconciliation(1)Such as changes in tax laws (including US tax reform), deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments.
(2)Reflects the tax impact on pre-tax adjustments presented in Certain Items, which are excluded from pre-tax income for adjusted earnings per share purposes. Information about Certain items is included in the Company’s Non-GAAP Financial Measures and Other Information document available on the Financial Information/Financial Document Library page of a Non-GAAP Measure - Unauditedour website, investors.celanese.com, and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 27, 2022. |
| | | | | |
| | Year Ended December 31, |
| | 2018 | | 2017 |
| | (In $ millions) |
| Net cash provided by (used in) investing activities | (507 | ) | | (549 | ) |
| Net cash provided by (used in) financing activities | (1,165 | ) | | (351 | ) |
| | | | |
| Net cash provided by (used in) operating activities | 1,558 |
| | 803 |
|
| Capital expenditures on property, plant and equipment | (337 | ) | | (267 | ) |
| Capital (distributions to) contributions from NCI | (23 | ) | | (27 | ) |
Free cash flow(1)(2) | 1,198 |
| | 509 |
|
| |
(1)(3)Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments.
| Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. related to our joint venture, Fairway Methanol LLC. |
| |
(2)
| Excludes required debt service and capital lease payments of $63 million and $27 million for the years ending December 31, 2018 and 2017, respectively.
|
(4)Tax impacts related to full-year forecasted tax opportunities and related costs.
|
| | | | | | | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / A-5 |
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited
Exhibit B
Article VII, Section 7.3 of the Second Amended and Restated Certificate of Incorporation
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| | 2021 | | 2020 | | 2019 | | 2018 | | 2017 |
| (In $ millions) |
| Net cash provided by (used in) investing activities | (1,119) | | | 592 | | | (493) | | | (507) | | | (549) | |
| Net cash provided by (used in) financing activities | (1,042) | | | (1,471) | | | (935) | | | (1,165) | | | (351) | |
| | | | | | | | | |
| Net cash provided by (used in) operating activities | 1,757 | | | 1,343 | | | 1,454 | | | 1,558 | | | 803 | |
| Capital expenditures on property, plant and equipment | (467) | | | (364) | | | (370) | | | (337) | | | (267) | |
| Capital (distributions to) contributions from NCI | (27) | | | (29) | | | (10) | | | (23) | | | (27) | |
Free cash flow(1)(2) | 1,263 | | | 950 | | | 1,074 | | | 1,198 | | | 509 | |
SECTION 7.3 Board of Directors: Removal of Directors. Any or all of the directors (other than the directors elected(1)Free cash flow is a liquidity measure used by the holders of any class or classes of Preferred Stock of the Corporation, voting separately as a class or classes, as the case may be) may be removed at any time either with or without causeCompany and is defined by the affirmative voteCompany as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui related to our joint venture, Fairway.
(2)Excludes required debt service and capital lease payments of a majority in voting power of all shares of$30 million, $26 million, $24 million, $63 million and $27 million for the Corporation entitled to vote generally in the election of directors, voting as a single class; provided, however, if at any time Blackstone no longer is the beneficial owner, in the aggregate, of at least 50.1% in voting power of all shares entitled to vote generally in the election of directors, then any director or the entire Board of Directors may be removed only for causeyears ending December 31, 2021, 2020, 2019, 2018 and only by the affirmative vote of at least 80% in voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting as a single class. For purposes of this Second Amended and Restated Certificate of Incorporation, the "beneficial owner" of shares shall be determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.2017, respectively.
Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited
| | | | | | | | | | | | | | | | | |
| | | | | | 2021 |
| | | | | (In $ millions,
except percentages) |
| Net earnings (loss) attributable to Celanese Corporation | | | | | 1,890 | |
| | | | | |
| Adjusted EBIT | | | | | 2,473 | |
| Adjusted effective tax rate | | | | | 15 | % |
| Adjusted EBIT tax effected | | | | | 2,102 | |
| | | | | |
| 2021 | | 2020 | | Average |
| (In $ millions, except percentages) |
| Short-term borrowings and current installments of long-term debt - third parties and affiliates | 791 | | | 496 | | | 644 | |
| Long-term debt, net of unamortized deferred financing costs | 3,176 | | | 3,227 | | | 3,202 | |
| Celanese Corporation shareholders’ equity | 4,189 | | | 3,526 | | | 3,858 | |
| Invested capital | | | | | 7,704 | |
| | | | | |
| Return on invested capital (adjusted) | | | | | 27.3 | % |
| | | | | |
| Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital | | | | | 24.5 | % |
|
| | | | | | | |
| Celanese 20192022 / Notice of Annual Meeting and Proxy Statement / B-1A-6 |
| | | | | | | | | | | | | | | | | |
| | | | | | 2020 |
| | | | | (In $ millions,
except percentages) |
| Net earnings (loss) attributable to Celanese Corporation | | | | | 1,985 | |
| | | | | |
| Adjusted EBIT | | | | | 1,131 | |
| Adjusted effective tax rate | | | | | 12 | % |
| Adjusted EBIT tax effected | | | | | 995 | |
| | | | | |
| 2020 | | 2019 | | Average |
| (In $ millions, except percentages) |
| Short-term borrowings and current installments of long-term debt - third parties and affiliates | 496 | | | 496 | | | 496 | |
| Long-term debt, net of unamortized deferred financing costs | 3,227 | | | 3,409 | | | 3,318 | |
| Celanese Corporation shareholders’ equity | 3,526 | | | 2,507 | | | 3,017 | |
| Invested capital | | | | | 6,831 | |
| | | | | |
| Return on invested capital (adjusted) | | | | | 14.6 | % |
| | | | | |
| Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital | | | | | 29.1 | % |
| | | | | | | | | | | | | | | | | |
| | | | | | 2019 |
| | | | | (In $ millions,
except percentages) |
| Net earnings (loss) attributable to Celanese Corporation | | | | | 852 | |
| | | | | |
| Adjusted EBIT | | | | | 1,476 | |
| Adjusted effective tax rate | | | | | 13 | % |
| Adjusted EBIT tax effected | | | | | 1,284 | |
| | | | | |
| 2019 | | 2018 | | Average |
| (In $ millions, except percentages) |
| Short-term borrowings and current installments of long-term debt - third parties and affiliates | 496 | | | 561 | | | 529 | |
| Long-term debt, net of unamortized deferred financing costs | 3,409 | | | 2,970 | | | 3,190 | |
| Celanese Corporation shareholders’ equity | 2,507 | | | 2,984 | | | 2,746 | |
| Invested capital | | | | | 6,465 | |
| | | | | |
| Return on invested capital (adjusted) | | | | | 19.9 | % |
| | | | | |
| Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital | | | | | 13.2 | % |
| | | | | | | | |
| Celanese 2022 / Notice of Annual Meeting and Proxy Statement / A-7 |
