UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

 

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Soliciting Material under §240.14a-12

 

Chase Corporation

(Name of Registrant as Specified In Its Charter)

 

 

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CHASE CORPORATION

295 University Avenue

Westwood, MA  02090

Telephone (781) 332-0700

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Notice is hereby given that the annual meeting of shareholders of Chase Corporation will be held at 9:30 a.m. on Tuesday, February 7, 20174, 2020 at the Hilton Boston-Dedham, 25 Allied Drive, Dedham,Courtyard Boston Dedham/Westwood, 64 University Avenue, Westwood, MA  0202602090 for the following purposes:

 

(1)

To elect tennine members of the Board of Directors of the corporation, each to serve until the 20182021 annual meeting of shareholders or until his or her successor is duly elected and qualified;

 

(2)

To conduct a non-binding advisory vote on the compensation of our named executive officers;

(3)

To ratify the appointment of PricewaterhouseCoopersGrant Thornton LLP as the corporation’s independent registered public accounting firm for the fiscal year ending August 31, 2017;2020; and

 

(3)(4)

To transact such other business as may properly come before the meeting or any adjournment or postponement of the meeting.

 

Only shareholders of record on the books of Chase Corporation at the close of business on November 30, 201629, 2019 are entitled to notice of and to vote at the meeting.

We have elected to provide access to our proxy materials over the internet for the holders of our common stock, which is the only class of voting stock outstanding, under the Securities and Exchange Commission’s “notice and access” rules. Detailed information concerning these matters is set forth in the Important Notice Regarding the Availability of Proxy Materials (the “Notice”), which holders of our common stock have received in the mail, and in this Notice of Annual Meeting of Shareholders and the attached Proxy Statement.

It is important that your shares be represented at the meeting. Therefore, whether or not you plan to attend the meeting, please either vote by telephone or internet (if you hold shares of our common stock) or, if you received printed proxy materials and wish to vote by mail, please promptly sign and return your proxy card in the enclosed envelope. Please review the instructions on each of your voting options described in the attached Proxy Statement as well as in the Notice you received in the mail. If you attend the Annual Meeting and wish to vote your shares in person, your proxy will not be used.

 

The Board of Directors hopes that all shareholders who can conveniently do so will personally attend the meeting.

 

 

 

 

By order of the Board of Directors,

 

 

 

GEORGE M. HUGHES

 

Corporate Secretary

 

 

December 22, 201620, 2019

 

 

SHAREHOLDERS ARE REQUESTED TO SIGN AND DATE THE ACCOMPANYING PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE

 

 

 

CHASE CORPORATION

295 University Avenue

Westwood, MA  02090

Telephone (781) 332-0700

PROXY STATEMENT

December 22, 201620, 2019

 

The enclosed proxy is solicited by and on behalf of the Board of Directors of Chase Corporation (the “Company”) for the annual meeting of the Company’s shareholders to be held on February 7,  20174,  2020 at 9:30 a.m., and at any adjournment thereof (the “Meeting”).  The cost of solicitation will be borne by the Company.  In addition to solicitation by mail, directors, officers and regular employees of the Company may solicit proxies personally or by telephone.

 

The authority granted by a duly executed proxy may be revoked at any time before it is exercised by filing with the Secretary of the Company a written revocation or a duly executed proxy bearing a later date or by voting in person at the Meeting. Shareholders who attend the Meeting in person will not be deemed thereby to have revoked their proxies unless they affirmatively indicate at the meetingMeeting their intention to vote their shares in person.  Unless a proxy is revoked, the shares represented thereby will be voted as directed.  If no specifications are made, then proxies will be voted “for”"for" the election of the directors nominated by the Board of Directors, “for”"for" the approval, on an advisory and non-binding basis, of the compensation of the Company's named executive officers, "for" the ratification of the appointment of the Company’sCompany's independent registered public accounting firm, and in accordance with the judgment of the proxy holders as to any other matter that may be properly brought before the Meeting or any adjournment or postponement thereof.

 

On November 30, 2016,29, 2019, there were 9,344,5599,423,946 outstanding shares of the Company’s common stock, $0.10 par value per share, which is the only class of voting stock outstanding.  Shareholders of record at the close of business on November 30, 201629, 2019 are entitled to vote at the Meeting.  With respect to all matters that will come before the Meeting, each shareholder may cast one vote for each share of common stock registered in his or her name on the record date.

 

A majority in interest of the Company's common stock outstanding and entitled to vote represented at the Meeting in person or by proxy will constitute a quorum for the transaction of business at the Meeting.   Directions to withhold authority, abstentions, and broker non-votes will be counted as present at the Meeting for purposes of determining the existence of a quorum at the Meeting.  A “broker non-vote” occurs when a registered broker holding a customer’s shares in the name of the broker has not received voting instructions on a matter from the customer and is barred by applicable rules from exercising discretionary authority to vote on the matter and so indicates on the proxy.

 

The approximate dateWe have elected to distribute our proxy materials for the Annual Meeting to holders of our common stock via the internet under the “notice and access” approach permitted by the rules of the Securities and Exchange Commission (the “SEC”). Accordingly, on whichor about December 20, 2019, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to holders of our common stock that contains instructions on how to access the proxy materials, including this proxy statement and accompanying proxy card will be first sent or givenour annual report to shareholders is December 23, 2016.  The Company’s annual report for the fiscal year ended August 31, 2016 will be sent2019, on the internet. Our annual report to shareholders includes a copy of our annual report on Form 10-K for the same date.fiscal year ended August 31, 2019, as filed with the SEC on November 13, 2019, except for certain exhibits.

If you are a holder of our common stock and would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the Notice.

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on February 7, 20174, 2020:

 

The Notice of Annual Meeting of Shareholders, this proxy statement and the Company's annual report to shareholderssecurity holders are available at https://materials.proxyvote.com/16150R.

1

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding ownership of the Company's common stock as of November 30, 201629, 2019 by (i) all persons known to the Company to be beneficial owners of more than 5% of the Company's outstanding common stock, (ii) each of our directorsor nominees for director, (iii) each of the executive officers named in our summary compensation table, and (iv) all of our directors and executive officers as a group.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nature and Amount of Beneficial Ownership

 

 

Nature and Amount of Beneficial Ownership

 

 

Number of

 

Shares

 

Total Shares

 

Percentage  of

 

 

Number of

 

Shares

 

Total Shares

 

Percentage  of

 

 

Shares

 

Subject to

 

Beneficially

 

Outstanding

 

 

Shares

 

Subject to

 

Beneficially

 

Outstanding

 

Name

 

Owned (a)

 

Options (b)

 

Owned (c)

 

Shares

 

    

Owned (a)

    

Options (b)

    

Owned (c)

    

Shares

 

FMR LLC (d)
82 Devonshire Street
Boston, MA 02109

 

940,623

 

 —

    

940,623

    

10.1

%

 

1,095,975

 

 —

    

1,095,975

    

11.6

%

Edward L. Chase Revocable Trust (e)
39 Nichols Road
Cohasset, MA 02025

    

879,512

 

 —

 

879,512

 

9.4

%

    

823,312

 

 —

 

823,312

 

8.7

%

Royce & Associates, LLC (f)
1414 Avenue of the Americas
New York, NY 10019

 

635,674

 

 —

 

635,674

 

6.8

%

Neuberger Berman Group LLC (f)
1290 Avenue of the Americas
New York, NY 10104

 

638,954

 

 —

 

638,954

 

6.8

%

Peter R. Chase
295 University Avenue
Westwood, MA 02090

 

1,056,741

 

 —

 

1,056,741

 

11.3

%

 

939,769

 

 —

 

939,769

 

10.0

%

Adam P. Chase (g)

 

294,072

 

87,712

 

381,784

 

4.0

%

 

331,584

 

55,806

 

387,390

 

4.1

%

Kenneth J. Feroldi (h)

 

19,913

 

 —

 

19,913

 

*

 

 

10,860

 

 —

 

10,860

 

*

 

Christian J. Talma (i)

 

6,636

 

314

 

6,950

 

*

 

Mary Claire Chase

 

1,971

 

 —

 

1,971

 

*

 

 

6,031

 

 —

 

6,031

 

*

 

Everett Chadwick, Jr.

 

2,022

 

 —

 

2,022

 

*

 

Thomas D. DeByle

 

650

 

 —

 

650

 

*

 

John H. Derby III

 

1,211

 

 —

 

1,211

 

*

 

 

2,520

 

 —

 

2,520

 

*

 

Lewis P. Gack

 

8,261

 

 —

 

8,261

 

*

 

 

4,132

 

 —

 

4,132

 

*

 

George M. Hughes

 

2,480

 

 —

 

2,480

 

*

 

Chad A. McDaniel

 

520

 

 —

 

520

 

*

 

 

1,921

 

 —

 

1,921

 

*

 

Dana Mohler-Faria

 

520

 

 —

 

520

 

*

 

 

1,965

 

 —

 

1,965

 

*

 

Thomas Wroe, Jr.

 

6,276

 

 —

 

6,276

 

*

 

 

5,181

 

 —

 

5,181

 

*

 

All executive officers and directors as a group (11 persons)

 

1,393,987

 

87,712

 

1,481,699

 

15.7

%

 

1,311,249

 

56,120

 

1,367,369

 

14.4

%

*     Less than one percent

 

(a)

Excludes shares that may be acquired through stock option exercises.

 

(b)

Pursuant to Rule 13d-3(d) (1) of the Exchange Act, includes shares that may be acquired through stock option exercises within the 60-day period following November 30, 2016.29, 2019.  Excludes shares underlying stock options that have not vested and will not vest within such 60-day period.

 

(c)

The beneficial owners of these shares have sole voting power and sole investment power over such shares, except as otherwise indicated.

 

2

(d)

These shares are deemed to be beneficially owned by FMR LLC, Abigail P. Johnson Fidelity Management & Research Company, and Fidelity Low-Priced Stock Fund, a registered investment company. This information is based upon the Schedule 13G/A filed on February 12, 201613, 2019 by FMR LLC. 

 

(e)

These shares are deemed to be beneficially owned byThe trustees of the Edward L. Chase Revocable Trust. The trusteesTrust have voting and investment power with respect to the shares.  The trustees of the trust are Andrew Chase, Jean Chase, Sarah Chase, E. Stephen Chase, and Janet Gibson, each of whom has a business address c/o Edward L. Chase Revocable Trust, 39 Nichols Road, Cohasset, MA 02025.

 

(f)

These shares are deemed to be beneficially owned by Royce & Associates,Neuberger Berman Group LLC which has sole voting and investment power over the shares.certain affiliates. This information is based upon the Schedule 13G/A13G filed on January 12, 2016February 13, 2019 by Royce & Associates,Neuberger Berman Group LLC.

 

(g)

Of the total shares beneficially owned, 37,19022,014 represent shares of restricted stock, subject to forfeiture under time-based vesting provisions, with respect to which the executive has the right to vote and receive dividends.  Of this amount,  3,6902,829 shares of restricted stock are further subject to forfeiture under performance vesting provisions.

 

2

(h)

Of the total shares beneficially owned,  19,1535,670 represent shares of restricted stock, subject to forfeiture under time-based vesting provisions, with respect to which the executive has the right to vote and receive dividends.

(i)

Of the total shares beneficially owned, 6,296 represent shares of restricted stock, subject to forfeiture under time-based vesting provisions, with respect to which the executive has the right to vote and receive dividends.  Of this amount, 1,7095,428 shares of restricted stock are further subject to forfeiture under performance vesting provisions.

 

Certain Transactions

The Edward L. Chase Trust (the “Trust”), owners of two insurance policies on the life of Claire E. Chase, reimbursed the Company for premiums paid on the policies in exchange for the Company’s release of any claims on such policies. In August 2016, the Trust reimbursed the Company $1,238,348 related to the John Hancock (formerly Manufacturers’ Life Insurance Company) policy, the full value of premiums paid to date by the Company. In September 2016, subsequent to fiscal 2016, the Trust reimbursed the Company $1,504,134 related to the Metropolitan Life Insurance policy, its then cash surrender value, plus an additional prepaid premium related to the policy. Claire E. Chase is the spouse of a former executive of the Company, Edward L. Chase (deceased), and who in each case are the parents of Peter R. Chase (the Executive Chairman of the Company) and the grandparents of Adam P. Chase (the President and CEO of the Company). The Trust is a greater-than-5% owner of the Company’s common stock. Terms and conditions of these transactions were reviewed and approved by the independent members of the Company's Board of Directors in advance.  

During the fourth quarter of fiscal 2016, the Company recognized a gain of $877,000 to selling, general and administrative expenses related to a life annuity payable to Barbara A. Chase (deceased). Upon Ms. Chase’s passing in August 2016, the Company’s payment obligation under the annuity ceased, and the previously recorded liability was released. Barbara A. Chase is the spouse of a former executive of the Company, Francis M. Chase (deceased) and who are in each case the respective aunt and uncle of Peter R. Chase and the great-aunt and great-uncle of Adam P. Chase.

3

In October 2016, subsequent to the fiscal year end, Chase entered into an agreement to sell its now former corporate headquarters and executive office in Bridgewater, MA. This transaction is conditional upon the execution of a definitive asset purchase and sale agreement. It is anticipated that this transaction will close in fiscal 2017, if all conditions are met. The Company has determined these assets’ net book value are not material to the financial statements for the fiscal year ended August 31, 2016, and that these assets will qualify for held for sale disclosure under ASC Topic 360, “Property, Plant and Equipment” for subsequent periods. The potential buyer has been deemed a related party given professional connections between it and two members of the Company’s Board of Directors, including Peter R. Chase (the Executive Chairman of the Company). The terms and conditions of the proposed transaction were reviewed and approved by all members of the Company's Board of Directors who were not parties related to the potential buyer. They concluded that the sale price was appropriate, after considering a recent market appraisal of the land and building performed by an independent third party valuation firm.

 

Consistent with the requirements of the NYSE MKT,American, the Audit Committee of the Board of Directors of the Company reviews and oversees any transactions with a “related person” within the scope of the SEC’s rules on disclosure of such transactions.  From time to time, the Board of Directors has formed a special independent committee of the Board comprised of independent and non-interested directors to review and oversee proposals relating to specific transactions with related persons on an ad hoc basis.  The Company does not have a written policy relating to such review. 

 

Other than as described above, and other than the compensation and severance arrangements with the Company’s named executive officers and the director compensation arrangements described in “Executive Officer and Director Compensation,” the Company is not a participant in any transaction since the beginning of its last completed fiscal year, or any presently proposed transaction, involving more than $120,000 in which any shareholder holding more than 5% of the Company’s common stock, any of its executive officers, directors, director nominees or the immediate family members of any of them, has or will have a direct or indirect material interest.

 

Compensation Committee Interlocks and Insider Participation

 

The current members of the committeeCompensation and Management Development Committee are Messrs. Wroe (Chairman), DeByle, Derby and Hughes.McDaniel.  None of the Company’s executive officers serves as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of the Company’s Board of Directors or Compensation and Management Development Committee.

43

PROPOSAL 1

ELECTION OF DIRECTORS

 

TenNine directors are to be elected at the Meeting.  The Board of Directors recommends that the tennine nominees named below be elected as directors.  The directors elected at the Meeting will hold office until the next annual meeting and until their successors are elected and qualified.  When a proxy in the accompanying form is properly executed and returned, unless marked to the contrary, all shares represented by such proxy will be voted for the election of the persons named below.  If any nominee should become unable or unwilling to serve as director, then the persons voting the accompanying proxy may in their discretion vote for a substitute.  The Board of Directors is not presently aware of any reason that would prevent any nominee from serving as a director if elected.

 

Vote Required

 

As long as a quorum is present, the nominees for director shall be elected by a plurality of the votes cast at the Meeting by the holders of shares entitled to vote at the Meeting.  Votes may be cast in favor of the election of the nominees for director or withheld; votes that are withheld and broker non-votes will have no effect on the outcome of the election of directors. 

 

Nominees

 

The following table contains certain information about the nominees for director, as of the record date, including their business experience, qualifications, and other directorships.  In addition to the qualifications and other attributes presented below, the Company also believes that each of the nominees has demonstrated the personal and professional integrity, good business judgment, adherence to high ethical standards, and commitment to service to the Company that are required of all directors.  All of the current directors’ present terms expire in 2017.2019.  All of the nominees below are current standing directors of the Company. 

 

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

 

Age 

 

Other Directorships and Qualifications 

 

Director Since

 

 

 

 

 

 

 

Adam P. Chase

 

44

 

President of the Company since January 2008, Chief Executive Officer of the Company since February 2015.  Adam Chase was the Chief Operating Officer of the Company from February 2007 to February 2015.

 

2010

 

 

 

 

 

 

 

 

 

 

 

Adam Chase has nearly two decades of experience at Chase Corporation in various capacities including finance and operations as well as nine years as an executive officer of the Company.   His background in the day to day management of sales and operations as well as his current perspective gives him insight into the critical components of strategy and tactics that will help grow the Company. The Board believes that it is important to have the insight of the Chief Executive Officer of the Company reflected in its strategic thinking.

 

 

5

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

 

Age 

 

Other Directorships and Qualifications 

 

Director Since

 

 

 

 

 

 

 

Peter R. Chase

 

68

 

Chairman of the Board of the Company since February 2007, and Executive Chairman of the Company since February 2015. Peter Chase was the Chief Executive Officer of the Company from September 1993 to February 2015. He is currently a director of AIM Mutual Insurance Company, and was a director of Bridgewater Savings Bank through December 2014.

 

1993

 

 

 

 

 

 

 

 

 

 

 

Peter R. Chase was named an executive officer of the Company in 1988, and has more than 40 years’ experience in various positions since starting with Chase Corporation.  He has extensive knowledge of both the day to day operations of the Company and its strategic vision. The Board believes that Peter Chase's deep understanding of the Company's operations, its history and its industry benefit the Board of Directors in its deliberations and in setting strategy for the Company.

 

 

 

 

 

 

 

 

 

Mary Claire Chase

 

61

 

President of Chase Partners, LTD., an executive search firm specializing in financial services and management consulting, since August 2000.

 

2005

   

 

 

 

 

 

 

 

 

 

 

Mary Claire Chase has an extensive background in human resources.   Her experience with evaluating executive talent gives her insight into organizational structure which is critical to executing strategic plans.

 

 

 

 

 

 

 

 

 

Everett Chadwick, Jr.

 

75

 

Formerly served as the Company’s Chief Financial Officer, Vice President of Finance and Treasurer and in other senior finance roles from 1988 to 2006. He served as an independent consultant to Chase Corporation since 2011, prior to joining the Board of the Company. Mr. Chadwick also served as a director of the Company from 2003 to 2004.

 

2015

 

 

 

 

 

 

 

 

 

 

 

Mr. Chadwick offers financial and accounting experience to the Board. He has extensive knowledge of both the financial operations of the Company and its strategic vision.

 

 

6

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

 

Age 

 

Other Directorships and Qualifications 

 

Director Since

 

 

 

 

 

 

 

John H. Derby III

 

71

 

President at Derby Management, a management consulting firm specializing in both emerging and middle market growth companies, since 1990.  Previous positions include CEO of Mayer Electronics Corporation, President of CB Sports, President of Litton Industries Medical Systems, CEO of Datamedix Corporation and Executive Vice President of Becton Dickinson Medical Systems. Mr. Derby is currently a director of numerous privately held companies (including Reiser, Brainshark, Inc., Loci Controls and Rome Snowboards), and served on the board of Research Frontiers Incorporated (NasdaqCM:REFR), from 2011 through 2013.

 

2015

 

 

 

 

 

 

 

 

 

 

 

Mr. Derby’s strong executive, consulting and sales experience and insight benefit the Company, particularly through his core expertise in sales, marketing and strategic planning.

 

 

 

 

 

 

 

 

 

Lewis P. Gack

 

72

 

Principal of LPG Consulting, an accounting and business consulting firm.  Previously Treasurer and Chief Financial Officer of the United Group Operating Companies, Inc., a wholesale liquor distributor, from 1998 to October 2007.

 

2002

 

 

 

 

 

 

 

 

 

 

 

Mr. Gack offers financial, accounting and legal experience as well as executive experience to the Board.  He has a background in public accounting in addition to operations and management expertise including a focus on inventory management and distribution.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

George M. Hughes

 

77

 

Founder and Principal of the law firm, Hughes & Associates since May 1996. Mr. Hughes is a business lawyer and has been a director of the Company for over 30 years.

 

1984

   

 

 

 

 

 

 

 

 

 

 

The Board believes that his legal background, together with his extensive knowledge of the Company’s operations and history, offer a valuable contribution to the Board, particularly on matters relating to corporate governance, board oversight, and strategic acquisitions.

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

    

Age 

    

Other Directorships and Qualifications 

    

Director Since

 

 

 

 

 

 

 

Adam P. Chase

 

47

 

President of the Company since January 2008, Chief Executive Officer of the Company since February 2015.  Adam Chase was the Chief Operating Officer of the Company from February 2007 to February 2015.

 

2010

 

 

 

 

 

 

 

 

 

 

 

Adam Chase has over two decades of experience at Chase Corporation in various capacities including finance and operations as well as over ten years as an executive officer of the Company.   His background in the day to day management of sales and operations as well as his current perspective as Chief Executive Officer gives him insight into the critical components of strategy and tactics that will help grow the Company. The Board believes that it is important to have the insight of the Chief Executive Officer of the Company reflected in its strategic thinking.

 

 

 

74

 

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

 

Age 

 

Other Directorships and Qualifications 

 

Director Since

 

 

 

 

 

 

 

Chad A. McDaniel

 

43

 

Mr. McDaniel is the Senior Vice President, General Counsel and Chief Administrative Officer of Lydall, Inc. (NYSE:LDL), leading the Company's global Legal, Human Resources and Environmental, Health & Safety organizations.  Prior to joining Lydall in 2013, he was with United Technologies Corporation (NYSE:UTX) from 2007 to 2013, serving in multiple legal and managerial positions.

 

2016

 

 

 

 

 

 

 

 

 

 

 

Mr. McDaniel's legal and human resource background and broad expertise, including experience working for publicly traded companies in the manufacturing industry, offers a valuable contribution to the Board, particularly on issues relating to corporate legal and regulatory matters, strategic acquisitions, managerial issues, banking relationships, corporate finance and business strategy.

 

 

 

 

 

 

 

 

 

Dana Mohler-Faria

 

69

 

Dr. Mohler-Faria is currently President Emeritus of Bridgewater State University, after having served as president from 2002 to 2015, and is a former member of the Massachusetts Board of Elementary and Secondary Education. He chairs and is involved in multiple non-profits focused on leadership and higher education. He was formerly the Special Advisor for Education to the Governor of Massachusetts prior to the creation of a cabinet-level Secretary of Education in 2008.

 

2016

 

 

 

 

 

 

 

 

 

 

 

Dr. Mohler-Faria's higher education background, including his prior executive role overseeing one of the largest public colleges in Massachusetts, along with his experience advising state government, offers a valuable contribution to the Board, particularly on matters relating to leadership of a diverse organization, working with state government, finance and strategic vision.

 

 

 

 

 

 

 

 

 

Thomas Wroe, Jr.

 

66

 

Executive Chairman of the Board of Apex Tool Group, LLC since 2016, previously Chairman of the Board since 2013. Mr. Wroe served as CEO of Apex Tool Group, LLC from 2014 to 2016.  He served as Chairman of the Board of Sensata Technologies (NYSE:ST) from its IPO in 2010 until 2015, and presently continues to serve on its Board. Mr. Wroe was also CEO of Sensata Technologies through 2012.  He served on the Board of Directors of GT Advanced Technologies (OTC:GTAT) from 2013 through 2016.

 

2008

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

    

Age 

    

Other Directorships and Qualifications 

    

Director Since

 

 

 

 

 

 

 

Peter R. Chase

 

71

 

Chairman of the Board of the Company since February 2007, and Executive Chairman of the Company since February 2015. Peter Chase was the Chief Executive Officer of the Company from September 1993 to February 2015. He is currently a director of AIM Mutual Insurance Company.

 

1993

 

 

 

 

 

 

 

 

 

 

 

Peter R. Chase was named an executive officer of the Company in 1988, and has more than 45 years’ experience in various positions since starting with Chase Corporation.  He has extensive knowledge of both the day to day operations of the Company and its strategic vision. The Board believes that Peter Chase's deep understanding of the Company's operations, its history and its industry benefit the Board of Directors in its deliberations and in setting strategy for the Company.

 

 

 

 

 

 

 

 

 

Mary Claire Chase

 

64

 

President of Chase Partners, LTD., an executive search firm specializing in financial services and management consulting, since August 2000. Prior to launching Chase Partners, most recently Ms. Chase served as Senior Vice President, Director of Executive Search for Putnam Investments and Director of Global Staffing and Development for Arthur D. Little, Inc.

 

2005

   

 

 

 

 

 

 

 

 

 

 

Mary Claire Chase has an extensive background in human resources.   Her experience with evaluating executive talent gives her insight into organizational structure which is critical to executing strategic plans.

 

 

 

 

 

 

 

 

 

Thomas D. DeByle

 

59

 

Senior Vice President and CFO at NN, Inc. (NASDAQ: NNBR) since September 2019. Previously, Vice President and Chief Financial Officer of Standex International  (NYSE:SXI) from March 2008 through September 2019.

 

2019

 

 

 

 

 

 

 

 

 

 

 

Mr. DeByle's financial background and broad expertise, including experience as an executive for publicly traded companies that manufacture a variety of products and services for diverse commercial and industrial markets, offers a valuable contribution to the Board, particularly on issues relating to corporate finance, business strategy, strategic acquisitions, managerial issues, and banking relationships.

 

 

85

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

    

Age 

    

Other Directorships and Qualifications 

    

Director Since

 

 

 

 

 

 

 

John H. Derby III

 

74

 

President at Derby Management, a management consulting firm specializing in both emerging and middle market growth companies, since 1990, and Director of Tufts Entrepreneurship Center since 2018 and a professor since 2006.  A lecturer at MIT since 2000.  Mr. Derby is currently a director of numerous privately held companies, including Reiser Inc. (Chairman), Loci Controls, Brainshark (Co-Founder and Director) and AVIANT Healthcare and Hospice.

 

2015

 

 

 

 

 

 

 

 

 

 

 

Mr. Derby’s strong executive, consulting and sales experience and insight benefit the Company, particularly through his core expertise in sales, marketing and strategic planning.

 

 

 

 

 

 

 

 

 

Lewis P. Gack

 

75

 

Principal of LPG Consulting, an accounting and business consulting firm. 

 

2002

 

 

 

 

 

 

 

 

 

 

 

Mr. Gack offers financial, accounting and legal experience as well as executive experience to the Board.  He has a background in public accounting in addition to operations and management expertise including a focus on inventory management and distribution.

 

 

 

 

 

 

 

 

 

Chad A. McDaniel

 

46

 

Mr. McDaniel is the Executive Vice President, General Counsel and Chief Administrative Officer of Lydall, Inc. (NYSE:LDL), leading the Company's global Legal, Human Resources and Environmental, Health & Safety organizations.  He has been with Lydall since 2013.

 

2016

 

 

 

 

 

 

 

 

 

 

 

Mr. McDaniel's legal and human resource background and broad expertise, including experience working for publicly traded manufacturing companies, offers a valuable contribution to the Board, particularly on issues relating to corporate legal and regulatory matters, strategic acquisitions, managerial issues, banking relationships, corporate finance and business strategy.

 

 

6

Business Experience During Past Five Years,

Has Been a

Name

Age

Other Directorships and Qualifications

Director Since

Mr. Wroe’s strong executive experience, including serving as chief executive of a large public company, provides a well-rounded global perspective.  He has experience in the oversight of complex operations and engineering, acquisitions and integration, manufacturing and customer relations, and offers additional business development expertise to the Board. 

 

 

 

 

 

 

 

 

 

 

 

Business Experience During Past Five Years,

 

Has Been a

Name 

    

Age 

    

Other Directorships and Qualifications 

    

Director Since

 

 

 

 

 

 

 

Dana Mohler-Faria

 

72

 

Dr. Mohler-Faria is currently President Emeritus of Bridgewater State University, after having served as president from 2002 to 2015, and is a former member of the Massachusetts Board of Elementary and Secondary Education. He chairs and is involved in multiple non-profits focused on leadership and higher education. He was formerly the Special Advisor for Education to the Governor of Massachusetts prior to the creation of a cabinet-level Secretary of Education in 2008.

 

2016

 

 

 

 

 

 

 

 

 

 

 

Dr. Mohler-Faria's higher education background, including his prior executive role overseeing one of the largest public colleges in Massachusetts, along with his experience advising state government, offers a valuable contribution to the Board, particularly on matters relating to leadership of a diverse organization, working with state government, finance and strategic vision.

 

 

 

 

 

 

 

 

 

Thomas Wroe, Jr.

 

69

 

Chairman of the Board of Apex Tool Group, LLC since 2013. Mr. Wroe served as CEO of Apex Tool Group, LLC from 2014 to 2016.  He served as Chairman of the Board of Sensata Technologies (NYSE:ST) from its IPO in 2010 until 2015, and continues to serve on its Board. Mr. Wroe was also CEO of Sensata Technologies through 2012.  He served on the Board of Directors of GT Advanced Technologies (OTC:GTAT) from 2013 through 2016.

 

2008

 

 

 

 

 

 

 

 

 

 

 

Mr. Wroe’s strong executive experience, including serving as chief executive of a large public company, provides a well-rounded global perspective.  He has experience in the oversight of complex operations and engineering, acquisitions and integration, manufacturing and customer relations, and offers additional business development expertise to the Board. 

 

 

 

 

 

 

 

 

 

 

Adam P. Chase, President and Chief Executive Officer of the Company, is the son of Peter R. Chase, grandson of Edward L. Chase (deceased) and the nephew of Mary Claire Chase.

 

Peter R. Chase, Executive Chairman of the Company, is the father of Adam P. Chase, the son of Edward L. Chase (deceased) and the brother of Mary Claire Chase.

 

Mary Claire Chase is the daughter of Edward L. Chase (deceased), the sister of Peter R. Chase and the aunt of Adam P. Chase.

7

Corporate Governance

 

The Company has long believed that good corporate governance and high corporate ethics are important to ensure that the Company is managed for the long-term benefit of its shareholders.

 

The Company’s Board of Directors held fivefour meetings during the fiscal year ended August 31, 2016.2019.  Each director attended at least 75% of the aggregate of all meetings of the Board of Directors and all meetings held by committees of the Board on which he or she served, with the exception of Ronald Levy, who did not stand for re-election at our 2016 annual meeting of shareholders.served.  The Company does not have a formal policy with respect to director attendance at annual shareholders meetings; however, it does encourage all directors to attend.  Nine outAll nine of the tencurrent directors nominated and elected attended last year’s annual shareholders meeting held in February 2016.2019.

 

The Company has adopted the Chase Corporation Code of Ethics, which is applicable to all of our employees, including our Executive Chairman, President and Chief Executive Officer,  Treasurer and Chief Financial Officer, Corporate Controllerand Treasurer and other employees with important roles in the financial reporting process.  The Company has also adopted a Code of Business Conduct and Ethics for Directors of Chase Corporation, which is applicable to members of our Board of Directors.  The Chase Corporation Code of Ethics and the Code of Business Conduct and Ethics for Directors of Chase Corporation are both available on the Chase Corporation web site www.chasecorp.com.  It is the Company’s intent to disclose any amendment to these codes of ethics, as they apply to our directors and executive officers, and to disclose any waiver, including an implicit waiver, from the provisions of these codes of ethics as they relate to such directors and officers, on its web site.   

 

Shareholders may contact an individual director, the Board as a group, or a specified Board committee or group, including the non-employee directors as a group, by writing to:  Chase Corporation, 295 University Avenue, Westwood, MA 02090 Attn: Board of Directors.

 

9

The Board undertakes a review of director independence annually.  As a result of its most recent review, the Board has determined that the following directors are independent, as defined in the listing standards of the NYSE MKT:  Everett Chadwick, Jr.,American:  Thomas D. DeByle, John H. Derby III, Lewis P. Gack, George M. Hughes, Chad A. McDaniel, Dana Mohler-Faria and Thomas Wroe, Jr. In making this decision,these determinations, the Board considered all relationships between the Company and the directors, including: Mr. Chadwick’sDerby’s consulting services performed for the Company prior to becoming a Board member, and his former employment relationship with the Company which ended in 2006; Mr. Derby’s consulting services performed during fiscal 2017 for the Company prior to becoming a Board member; and Mr. Hughes’ role as outside general counsel to the Company (and $84,000 in related compensation paid), as well as his administrative role as corporate secretary, which is a non-employee and non-officer position.Derby Management received $5,500.  The Board determined each such relationships,relationship, and the aggregate of such relationships, to be immaterial to the applicable director’s ability to exercise independent judgment.

 

Board Leadership Structure

 

As part of the Company’s succession plan, effectiveEffective with its annual shareholders meeting held in February 2015, and as approved bypart of the Board at that time,Company’s Board-approved succession plan, Adam P. Chase was named President and Chief Executive Officer of Chase Corporation and Peter R. Chase was named Executive Chairman of Chase Corporation. The Company had previously combined the offices of Chairman and Chief Executive Officer.  Both the current Executive Chairman and the current President and Chief Executive Officer have long histories with the Company, and the Board believes that its leadership structure makes the best use of their combined extensive knowledge of the Company and its industry, and enables clear communication between management and the Board. 

 

While the independent directors meet regularly in executive session, the Board currently has elected not to have a designated lead independent director to chair meetings at which only independent directors are present.  The Board’s view is that given the relatively small size of the Board, the appointment of a lead independent director is not necessary at this time.  The standing committees of the Board all have one or more overlapping members, and the Board feels that communication among committees is relatively efficient in light of this cross-fertilization of membership.  The Board believes that it is appropriate to choose the director to lead a particular discussion on a case by case basis, depending on the matter to be discussed, and that the existing structure fosters collaboration among independent directors.

8

 

Board’s Role in Risk Oversight

 

The Board is responsible for monitoring the risks that affect the Company, including operational, legal, regulatory, strategic and financial risks. As part of the regular Board meetings, management presents the Board with updates regarding key facets of the Company’s operations. The Board is responsible for assessing risks based on its working knowledge of the Company and the risks inherent in the Company’s business. As discussed below, the Audit Committee monitors the Company’s financial and audit-related risks.   The Compensation and Management Development Committee monitors any risks that may arise from the Company’s compensation policies and practices.

 

10

Committees of the Board of Directors

 

The Board has the following standing committees: (a) Audit, (b) Compensation and Management Development, and (c) Nominating and Governance.  All members of the committees serve at the pleasure of the Board of Directors.  The functions and current membership of each committee are as follows:

 

Audit Committee.   The Audit Committee recommends to the Board of Directors the engagement of the Company’s registered public accounting firm, reviews the scope and extent of its audit of the Company’s financial statements, reviews the annual financial statements with the registered public accounting firm and with management, and makes recommendations to the Board of Directors regarding the Company’s policies and procedures as to internal accounting and financial controls.  The current members of the Audit Committee are Lewis P. Gack, Chairman, Everett Chadwick Jr.,Thomas D. DeByle, Chad A. McDaniel and Dana Mohler-Faria, and Thomas Wroe, Jr.Mohler-Faria. Each member of the committee is independent, as independence for audit committee members is defined in the listing standards of the NYSE MKTAmerican and the applicable regulations of the Securities and Exchange Commission.  The Board has determined that Mr. Gack is an audit committee financial expert as defined in Securities and Exchange Commission regulations.  The Audit Committee held fiveten meetings during the fiscal year ended August 31, 2016.2019.  The Audit Committee operates under a written charter, which was amended in October 2019, that is available through the Company's website at www.chasecorp.com.    

During the 2019 fiscal year, the Audit Committee, in consultation with executive financial management at the Company, invited a competitive process to review the appointment of the Company’s independent registered public accounting firm for the current fiscal year.  As a result of this process and following careful deliberation, on February 6, 2019, the Committee notified the Company’s prior independent auditor, PricewaterhouseCoopers LLP, that it had determined to dismiss PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, effective following the issuance of the Company’s Quarterly Report on Form 10‑Q for the period ending February 28, 2019.  On April 2, 2019, the Committee authorized entering into an engagement letter with Grant Thornton LLP.  Grant Thornton LLP officially became the Company’s independent registered public accounting firm on that same day, as reflected in the Company’s Form 8-K filed on April 4, 2019.

 

Compensation and Management Development Committee.   The Compensation and Management Development Committee advises the Board of Directors on matters of management, organization, and succession, recommends persons for appointments to key employee positions, and makes the final decisions regarding compensation for directors, officers and key employees.  The committee also administers the Company’s equity incentive plans.  The role of our Executive Chairman and our Chief Executive Officer in reporting their evaluations of our other named executive officerChief Financial Officer and our Treasurer and making recommendations as to histheir compensation, (and in the case of the Executive Chairman, his evaluation of and recommendation as to the compensation of the Chief Executive Officer), as well as the committee’s use of compensation consultants from time to time in benchmarking base salaries and providing other industry data, are described in more detail in the Compensation Discussion and Analysis presented elsewhere in this proxy statement.  The members of the committee are Thomas Wroe, Jr., Chairman, Thomas D. DeByle, John H. Derby III and George M. Hughes.Chad A. McDaniel.  Each member of the committee is independent, as independence for compensation committee members is defined under the listing standards of the NYSE MKTAmerican and the applicable regulations of the Securities and Exchange Commission.  The committee held two meetingfive meetings during the fiscal year ended August 31, 2016.2019.  The Compensation and Management Development Committee operates under a written charter, which was amended in October 2019, that is available through the Company's website at www.chasecorp.com.    

9

 

Nominating and Governance Committee.  The Nominating and Governance Committee recommends persons for election as directors of the Company, and makes recommendations to the Board of Directors regarding the structure and membership of the various committees of the Board of Directors, including the Nominating and Governance Committee itself.  The members of the Nominating and Governance Committee are George M. Hughes,Dana Mohler-Faria, Chairman, Lewis P. Gackand,  Chad A. McDaniel.McDaniel and Thomas Wroe, Jr.  Each member of the committee is independent, as independence for nominating committee members is defined in the listing standards of the NYSE MKT.American.  The Nominating and Governance Committee held twofour meetings during the fiscal year ended August 31, 2016.2019. The Nominating and Governance Committee operates under a written charter, which was amended in October 2019, that is available through the Company’s website at www.chasecorp.com. 

 

11

Director Nomination Process

 

The Nominating and Governance Committee identifies individuals believed to be qualified to become Board members and recommends individuals to fill vacancies.  In nominating candidates, the Committee takes into consideration such factors as it deems appropriate, including judgment, experience, skills and personal character, as well as the needs of the Company.  The Nominating and Governance Committee will consider nominees recommended by shareholders if such recommendations are made in writing to the committee.committee and in accordance with the Company’s Bylaws.  The Nominating and Governance Committee does not plan to change the manner in which the committee evaluates nominees for election as a director based on whether the nominee has been recommended by a shareholder or otherwise. 

 

The Company’s Bylaws provide that the Nominating and Governance Committee shall recommend the Chief Executive Officer of the Company for the election to the Board.

 

The Company’s Bylaws provide that the Nominating and Governance Committee may recommend to the Board of Directors any individual or individuals for election to the Board of Directors if, after such election, a majority of the Board of Directors shall consist of “non-affiliated directors.”  “Non-affiliated directors” are directors (i) who are not lineal descendants of Edward L. Chase (whether by blood or adoption); (ii) who are not the spouse of Edward L. Chase or of any of such spouse’s lineal descendants; (iii) who are not at the time of determination, and shall not have been at any time within three years preceding such time, officers or employees of the Company (or its predecessor) or any of its subsidiaries, affiliates or divisions; (iv) who are not at the time of determination the beneficial owners of more than 10% of the issued and outstanding shares of any class of the Company’s stock; (v) who are not officers, employees, directors or partners of any person who at the time of determination is a holder of more than 10% of the issued and outstanding shares of any class of the Company’s stock; and (vi) who satisfy the standards for independence under the listing rules of any registered national securities exchange on which the Company’s stock may be listed.    

 

The Nominating and Governance Committee does not have a formal policy relating to diversity among directors.   In considering new nominees and whether to re-nominate existing members of the Board, the committee examines each person’s specific skills and attributes in the context of the skill sets represented on the Board as a whole, and seeks to achieve a Board with strengths in its collective knowledge and a broad diversity of perspectives, skills and business and professional experience.  Among other items, the committee looks for a range of experience in strategic planning, sales, finance, executive leadership, legal and similar attributes.

 

In addition to the requirements relating to “non-affiliated directors” summarized above, at least a majority of the directors on the Board must be independent directors as defined in the rules of the NYSE MKT.

10

 

Audit Committee Report on Financial Statements for the Year Ended August 31, 20162019

 

The Audit Committee of the Board of Directors is appointed by the Board of Directors.  The members of the Audit Committee meet the independence requirements of the NYSE MKTAmerican.  The Audit Committee, in accordance with its written charter, oversees the Company’s financial reporting process on behalf of the Board of Directors.  Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls.  In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended August 31, 20162019 with management including a discussion of the quality, not just the acceptability, of the Company’s accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

12

 

The Audit Committee has discussed with PricewaterhouseCoopersGrant Thornton LLP, the Company’s Independent Registered Public Accounting Firm, the matters required to be discussed by the Statementapplicable requirements of Auditing Standards No. 16, Communications with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board (United States) (PCAOB),  which provides that certain matters related to the conduct of the audit of the Company’s financial statements are to be communicated to the Audit Committee. and Securities and Exchange Commission. The Audit Committee has also received the written disclosures and letter from PricewaterhouseCoopersGrant Thornton LLP required by applicable requirements of the PCAOB regarding PricewaterhouseCoopersGrant Thornton LLP’s communications with the audit committee concerning independence, and has discussed with PricewaterhouseCoopersGrant Thornton LLP its independence from the Company.

 

The Audit Committee discussed with PricewaterhouseCoopersGrant Thornton LLP the overall scope and plans for its audit.  The Audit Committee met with PricewaterhouseCoopersGrant Thornton LLP, with and without management present, to discuss the results of its examination, its evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting.

 

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended August 31, 20162019 for filing with the Securities and Exchange Commission.  The Audit Committee has selected PricewaterhouseCoopersapproves the selection of Grant Thornton LLP to serve as the Company’s Independent Registered Public Accounting Firm for fiscal year 2017.2020.

 

 

By the Chase Corporation Audit Committee

 

 

 

 

 

Lewis P. Gack (Chairman)

Everett Chadwick, Jr.Thomas D. DeByle

Dana Mohler-FariaChad A. McDaniel

 

Thomas Wroe, Jr.Dana Mohler-Faria

 

1311

EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

 

Introduction

 

This Compensation Discussion and Analysis is intended to provide a context for the disclosures contained in this proxy statement with respect to the compensation paid to our executive officers. Compensation information is presented below for our Executive Chairman, Peter R. Chase, our President and Chief Executive Officer, Adam P. Chase,  and our Treasurer and Chief Financial Officer, KennethChristian J. Feroldi. As part of the Company’s succession plan, effective with its annual shareholders meeting held in February 2015, and as approved by the Board at that time, Adam P. Chase,Talma. Information is also presented for our then President and Chief Operating Officer, was named President and Chief Executive Officer of Chase Corporation and Peter R. Chase, our then Chief Executive Officer, was named Executive Chairman of Chase Corporation.Treasurer, Kenneth J. Feroldi, was appointedwho held the position of Chief Financial Officer on September 1, 2014, coinciding with the start of our fiscal 2015.Together,through February 5, 2019. Collectively, these three officers are referred to as theour “named executive officers,officers.” and their compensation is detailed in the tables that follow this Compensation Discussion and Analysis. Specifically, this Compensation Discussion and Analysis will explain the objectives and material elements of the compensation of the named executive officers during the fiscal year ended August 31, 2016.  2019.  Unless the context requires otherwise, references in this section to our Chief Financial Officer refer to Mr. Talma, whether before or after his assumption of that role, and references to our Treasurer refer to Mr. Feroldi, whether during or after the period in which he served as our Chief Financial Officer.

 

The Compensation and Management Development Committee of our Board of Directors has the responsibility of developing and overseeing a comprehensive compensation philosophy, with strategies and principles that have the support of the Board of Directors and management, and that ensure the fair and consistent administration of our compensation program.  The Compensation and Management Development Committee makes recommendations to the full Board for approval relating to the total compensation to be paid to the named executive officers, including salary, performance bonus, equity awards, long-term awards, benefits and perquisites. 

 

In this analysis, we refer to the Compensation and Management Development Committee as “the committee” or “the compensation committee.” 

 

Philosophy and Objectives of Our Compensation Program

 

The primary objectives of the compensation committee are to ensure that our executive compensation and benefits programs:

 

·

retain executive talent by offering compensation that is commensurate with pay at other public companies of a similar size in the same or similar industries in the region, as adjusted for individual factors, and considering the complexity of the Company’s business;

 

·

safeguard company interests and the interests of our shareholders;

 

·

are effective in driving executive performance by having, for the Chief Executive Officer, the Chief Financial Officer and the Treasurer pay at risk, so actual pay is tied to company-wide goal achievementsachievement and superior performance is rewarded;

 

·

foster teamwork on the part of management;

 

·

are consistent and competitive with Chase CorporationsCorporation’s compensation peer group;

 

·

are cost-efficient and fair to employees, management and shareholders; and

14

 

·

are well-communicated to and understood by program participants.

 

Our compensation committee believes that the most effective compensation program is one that will provide incentives that are directly linked to the achievement of company strategies through easily measured, company-wide performance targets, while providing a reasonable level of income security to the named executive officers through competitive base salaries and retirement benefits.  To this end, our executive compensation reflects a balance of cash and non-cash compensation, and a mix of currently paid compensation and long-term incentives.   The compensation committee does not set a rigid target for these mixes, and the mix will necessarily vary from year to year based upon our underlying financial performance.  Our incentive plans combine financial targets to reward performance with time-based vesting to assist retention. 

 

12

Committee Purposes and Responsibilities

 

One of the primary purposes of the compensation committee is to determine the total target compensation levels for the senior executive officers of the companyCompany and to establish and annually review the programs that will determine the actual rewards against those targets.

 

The committee is charged with ensuring that the target compensation levels and the allocation of short termshort-term and long termlong-term components are sufficient to attract, motivate and retain seasoned professional managers, while at the same time ensuring that the pay is reasonable and fair to our shareholders in light of the Company’s financial performance and when compared to executive officers of similar position and responsibility at other businesses.

 

The committee is also responsible for reviewing the annual compensation for service on our Board of Directors or for service as a member or chair of any of the various committees of our Board of Directors, and, if appropriate, for recommending to the Board for approval any changes to those programs. 

 

The committee has the authority to retain and terminate any legal counsel or any compensation or other consultant to be used to assist in the evaluation of director or executive compensation and has sole authority to approve the consultant’s fees or other retention terms.

 

It also reviews and administers our equity compensation plans, and reviews any existing or proposed employment agreement, change in control or severance agreement, or any special or supplemental benefits not offered as part of a broad-based plan that are made available to our named executive officers. Where appropriate, it recommends adoption, amendment, or termination of such programs or agreements to the full Board of Directors.

 

Role of Executive Officers in Compensation Decisions

 

Our compensation committee makes all determinations affecting the compensation for our named executive officers, including our Executive Chairman and our Chief Executive Officer, and recommends those determinations to the full Board of Directors for approval.  Our Executive Chairman may from time-to-time attend meetings of the committee as a non-voting advisory member, except that he is not present for any discussion of his individualown compensation.  The compensation committee receives and considers our Executive Chairman’s and our Chief Executive Officer’s evaluations of, the other named executive officer (and in the case of the Executive Chairman, his evaluation of the Chief Executive Officer), as well asand their recommendations with respectas to all componentselements of compensation of the other named executive officer (and in the case of the Executive Chairman, his

15

recommendations with respect to all components of compensation of theour Chief Executive Officer).  In reviewingFinancial Officer and considering the evaluations and recommendations received, the committee takes into account the familial relationship between the Executive Chairman, Peter R. Chase and the President and Chief Executive Officer, Adam P. Chase, and satisfies itself that the recommendations are based solely on merit and performance.our Treasurer. The committee expressly reserves the right to exercise its discretion in modifying any adjustments or awards recommended by our Executive Chairman or our Chief Executive Officer, although historically the committee has given significant weight to the recommendations of our Executive Chairman and our Chief Executive Officer with respect to the other named executive officer (and in the case of the Executive Chairman, his recommendations with respect to the Chief Executive Officer).these.

 

Use of Compensation Consultants and Benchmarking Data

 

A description of the extent to which we have historically benchmarked our base salary levels against other companies is described below under “Base Salary.”  The committee has taken advice from expert compensation consultants engaged both by the committee and by management to set up the position values and salary ranges for executive officers and continues to adjust base salaries annually in order for the Company to be competitive with respect to executive compensation.  The compensation consultants have used similar benchmarking data in recommending the performance basedperformance-based components of the executive compensation package.  The committee engaged a compensation consultant, Pearl Meyer & Partners (“Pearl Meyer”) in fiscal 2013,2017, and Pearl Meyer completed the process of performing a full review of executive and all exempt employee compensation in 2014.2017.  Pearl Meyer provided the committee and management with recommendations based on this review. Prior to this most recent engagement, the Company had last hired Pearl Meyer to perform a similar assessment in 2013.

The committee has considered and will consider the results of this most recent review in establishing compensation plans for periods subsequent to this review. 

Prior to engaging Pearl Meyer, the compensation committee assessed the independence of the consultant from management and, on the basis of that assessment and taking into consideration the independence factors that are required to be considered by applicable stock exchange rules, satisfied itself that no relationships exist that would create a conflict of interest or that would compromise Pearl Meyer’sits independence from management.    The committee will update our compensation market review in 2017.

 

13

Principal Elements of our 20162019 Compensation Program

 

There were up to three principal elements of compensation for our named executive officers during fiscal 2016.2019.  These were:

 

·

base salary;

 

·

for our named executive officers other than our Executive Chairman, a cash bonus component based on the performance of our business against corporate objectives under our annual cash incentive plan; and

 

·

for our named executive officers other than our Executive Chairman, long term incentive compensation in the form of equity awards including:

 

·

a restricted stock award based on the performance of our business against different corporate objectives (comprising 50% of the total equity component target value for our Chief Executive Officer,  and Chief Financial Officer and 67% for our Chief Financial Officer)Treasurer);

 

·

a time-based vesting restricted stock award (25% of the total equity component target value for our Chief Executive Officer and Chief Financial Officer and 33% for our Chief Financial Officer)Treasurer); and

16

 

·

stock options (25% of the total equity component target value for our Chief Executive Officer and Chief Financial Officer).

 

Beginning in fiscal 2013,2017, as a result of discussions between the compensation committee and Peter R. Chase, at the time our Chief Executive Officer and currently our Executive Chairman, the committee determined that Mr. Chase would not participate in the equitycash incentive program component of the Company’s executive compensation programs going forward.programs.  This shift in the allocation of annual pay components for Peter R. Chase away from equity-based awards reflectsthe cash incentive program reflected a shift in the day-to-day responsibilities of the Executive Chairman (who continues to be a director and the Chairman of the Board of Directors), as part of the Company’s succession planning, and following Adam P. Chase’s ascension to the Chief Executive Officer role in fiscal 2015. In addition, Peter R. Chase has not participated in the Company's equity incentive programs since 2013, in recognition that his equity accumulation from previous yearsby the committee of service has already fulfilled the primary purpose of equity awards, in aligning the interests of a key member of management with the long-term interests of shareholders and reinforcing an incentive to maximize shareholder value. The committee recognized the diminishing incremental benefit of additional equity awardsgrants in achieving thesethe shareholder alignment and otherretention objectives such as retention.of the equity program in light of Mr. Chase's accumulation of equity from prior years of service. The Executive Chairman’s compensation program for 2016,fiscal 2019, therefore, consisted primarily of his salary, andas it had in the cash incentive program.prior two years.  The committee has retained both the cash bonus and long-term equity componentcomponents of its executive compensation program for its other named executive officers.Chief Executive Officer, Chief Financial Officer and Treasurer.

 

The financial measurement metrics and targets used in both the annual cash incentive plan and the annual equity award plan are subject to annual review by the committee, which reserves the right to set different objectives on either the cash incentive plan or equity award program as it feels appropriate in light of the annual and long termlong-term objectives of the Company.  As discussed in more detail below, the committee utilizes differing financial performance targets for the cash incentive plan and the equity awards program. The two programs also differ in the dollar value of the target awards and in their vesting provisions, since payments under the cash incentive plan are made after the end of each fiscal year, and the equity awards (including those that are subject to additional performance-based vesting criteria) customarily vest over a period of three years from the time of grant.  The total compensation packagepackages for our Chief Executive Officer,  Chief Financial Officer and Treasurer thus providesprovide a mix of (1) current cash payments in the form of salary, independent of year-to-year financial performance; (2) annual cash payments determined by reference to the Company’s actual results of operations for the year compared to a target; and (3) equity awards, for named executive officers other than our Executive Chairman, subject to vesting provisions relating to the Company’s financial results, together with restricted stock and (in the case of our Chief Executive Officer and Chief Financial Officer)  stock options that are not specifically tied to financial performance, but all of which are subject to time-based vesting provisions in order to foster our retention objectives. 

 

The cash incentive plan for 2016 sets2019 set target compensation levels with respectreference to targeted earnings before interest expense, taxes, depreciation and amortization (“EBITDA”), as adjusted at the discretionto exclude costs and gains or losses related to our acquisitions and divestitures, costs of the committeeproducts sold related to inventory step-up to fair value, settlement gains or losses resulting from lump sum distributions to participants in our defined benefit plans, and other significant items (“Adjusted EBITDA”), less the effects of foreign transaction gains or “EBITDA-basedloss (“Adjusted EBITDAX” or the “Adjusted EBITDA-based target”).  The equity award program sets target compensation levels with respect to a combination of     

14

(1) our earnings per share (“EPS”) for the fiscal year in question, as adjusted at the discretion of the committee.committee, and (2) our return on invested capital (ROIC) over a three year period.  (Our calculation of each such metric under the plan is described in more detail below.) As a result, a substantial proportion of our named executive officers’ total compensation under both the cash and equity incentive programs is tied to our earnings in each fiscal year.  The committee determined for 20162019 that an Adjusted EBITDA-based target is the most appropriate tool for measuring the underlying performance of the Company and its management team for the annual cash incentive plan, while EPS isand ROIC are used for the equity plan as it isthey are a more common and consistent measuremeasures for longer term incentive programs and alignsalign with how shareholders are rewarded.  In addition, the committee has chosen to emphasize company-wide achievement of financial objectives in this manner, as opposed to emphasizing more subjective individual performance criteria or measurements based upon business unitssegments or other operating data, because it believes it is important to use a metric that is easily measured and understood from the beginning of the year, that fosters teamwork among the management team, and that most directly aligns the interest of the named executive officers participating in the program with those of all shareholders.  The committee does retain discretion to adjust or supplement the cash incentive awards paid, either upward or downward.

17

 

The following discussion seeks to explain why the compensation committee has chosen to pay each compensation element, how it determines the amount of each element, and how the element and the committee’s decisions regarding that element in fiscal 20162019 fit into the Company’s overall compensation objectives and affect decisions regarding other elements. 

 

Base Salary.  We pay a base salary to each of our named executive officers.  The objective is to provide base compensation to the executive that is competitive with base compensation that the executive could earn in a similar position at other companies.  A range of base salary levels for key positions in the Company was established most recently mostin recently in 20142018 upon the recommendation of a compensation consultant, Pearl Meyer, which was engaged by the committee to provide analysis and input on executive pay and incentive plan design for the then top three executive officers in addition to all exempt employee compensation.  and vice presidents of the Company,  excluding our Executive Chairman, Peter R. Chase, for reasons noted above.

The ranges for these key positions were established taking into account benchmarking data provided by the compensation consultant which included a survey of the following 1615 companies:

 

●

Advanced Emissions Solutions Inc.American Vanguard Corporation

●

HawkinsLydall, Inc.

●

American Pacific CorpBalchem Corporation

●

Intrepid PotashPGT Innovations, Inc.

●

American Vanguard Corp

●

KMG Chemicals Inc.

●

Arabian American Development

●

Landec Corp

●

Core Molding Technologies, Inc.

●

Material Science CorpQuaker Chemical Corporation

●

Flotek Industries, Inc.

●

Penford CorpRaven Industries, Inc.

●

FutureFuel CorpCorp.

●

PGTRogers Corporation

●

Hawkins, Inc.

●

Trecora Resources

●

KMG Chemicals, Inc.

●

UFP Technologies, Inc.

●

GSE Holding Inc.Landec Corporation

●

Zoltek Cos Inc.

 

The companies surveyed had median revenuesrevenue in the one year prior to the survey of approximately $298$313 million (putting us at the 2920th percentile)percentile at the time), median full timefull-time employees of 502805 (putting us at the 7245ndth percentile) and median market capitalization of approximately $416$625 million (putting us at the 3573thrd percentile).  Our market capitalization to revenue ratio was at the 4992thnd percentile relative to the companies surveyed. Atsurveyed and our EBITDA margin was the time ofhighest relative to the report, the positions of Chief Executive Officer, Chief Operating Officer and Chief Financial Officer constituted our named executive officers.companies surveyed. In comparison to the peer group, Pearl Meyer reported that our Chief Executive Officer’s compensation at the time was in the topbottom quartile with respect to cash compensation and below median with respect to total compensation, and our Chief Financial Officer’s compensation at the time was in the bottom quartile with respect to cash compensation and at median with respect to total compensation, while our Chief Operating Officer’s total compensation and cash compensation were above median, and our Chief Financial Officer’s (Mr. Feroldi’s predecessor) compensation was above the median with respect to cash compensation and below median for total compensation.

15

Individual executives’ base salaries are set initially upon hiring or promotion to a position within the established range, taking into account each executive’s experience in the role and other subjective factors, and are reviewed annually thereafter.  As outlined above, the Executive Chairman and the Chief Executive Officer make salary adjustment recommendations, if any, to the committee with respect to the other named executive (and in the case of the Executive Chairman, makes an adjustment recommendation to the committee with respect to theour Chief Executive Office).Financial Officer and our Treasurer.  Historically, salary increases have been aligned with movement of the market or higherhave been adjusted in circumstances where executives are promoted to substantially increased responsibilities.   For fiscal 2016,2019, the committee increased the salary of Adam P. Chase, our Chief Executive Officer and Kenneth J. Feroldi, our Chief Financial Officer by 11% and 10%, respectively.13%. The committee did not change the base salary of Peter R. Chase, our Executive Chairman. The increase for Adam P. Chase was based onIn February 2019 upon his outstanding performance in fiscal 2015, and 2016 marking his first full year aspromotion to Chief Financial Officer, Christian J. Talma’s base salary increased from $250,000 to $275,000. At the Chief Executive Officer.same time, Kenneth J. Feroldi’s increasesalary was reduced from $295,000 to $177,000 in 2016 reflectedrecognition of the reduced work schedule and lessened responsibilities of his anticipated salary level for his second yearnewly assumed role as Chief Financial

18

Officer as outlined in his August 19, 2014 offer letter.Treasurer.  The committee intends from time to time, to revisit the salary ranges used by reference to updated benchmark data, in order to ensure that salaries remain competitive but not excessive.excessive.  The committee will also review the salaries of our named executive officers to align with our current organizational structure, maturation in role, and projected responsibilities as we move forward into 2017.responsibilities.

 

Cash Incentive Plan.  At the beginning of each fiscal year, following the annual budget presentation by management to the Board of Directors, the committee sets a corporate performance target for the upcoming fiscal year to be used in connection with the company’sCompany’s incentive compensation programs.  For the reasons discussed above, our Executive Chairman does not participate in the cash incentive plan.  As noted above, for the cash incentive plan thisthe financial target was established as an Adjusted EBITDA-based target for fiscal 2016.2019.  The Adjusted EBITDA-based target was set by the committee with reference to both historical performance and expected future performance.  The committee believes that the targets set as a general matter should be reasonably attainable through consistent performance as compared to recent years, and it is the committee’s expectation that the actual awards granted under the relevant plan will exceed the “target” awards where management achieves growth over historical annual Adjusted EBITDAEBITDAX levels.  The Adjusted EBITDA-based targets are set in a way that tends to generally reflect improvement over historical results, at least during periods of multi-year growth in Adjusted EBITDA, but do not always reflect improvement over the most immediately preceding fiscal year.EBITDAX.  For fiscal 2016,2019, the corporate Adjusted EBITDA-based target set by the committee was $57.2$79.2 million.

 

At the end of the fiscal year, actual results are compared to the target established at the beginning of the year.  In establishing the compensation program, it is the Board’s intent to exclude from actual performance measurements the effect of items generally consistent with items excluded in the Company’s historical definition of Adjusted EBITDA from the calculations.EBITDA.  The committee consequently has the discretion to decide, and has decided from time to time in the past, to exclude certain items or to make other adjustments in order to fairly reflect our underlying operating performance for the year.

No adjustments were made for fiscal 2019.

In order for any amounts to be payable under the plan, the Company must meet a threshold level of 90%80% of the Adjusted EBITDA-based target.  Actual payments are made under the plan by reference to the target awards established by the committee for each of the named executive officers as a percentage of their base salaries, although they can be subject to adjustment as described below. The maximum award under the cash incentive plan is reached at 120% of the target performance measure.  The Company’s actual Adjusted EBITDAEBITDAX was $64.0$65.2 million for fiscal 2016,2019, and represented achievement at approximately 112%82% of the target amount for the year. Our calculation of Adjusted EBITDA is explained in greater detail in our Annual Report on Form 10-K for fiscal year 2016 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Important Performance Measures.”

 

1916

The reconciliation from net income, the most directly comparable financial measure presented in accordance with U.S. GAAP, to Adjusted EBITDAX for fiscal 2019 and 2018 is as follows (in thousands):

 

 

 

 

 

 

 

Year Ended August 31,

 

2019

    

2018

 

 

 

 

 

 

Net income

$

32,711

 

$

43,143

Interest expense

 

519

 

 

1,172

Income taxes

 

10,842

 

 

13,822

Depreciation expense

 

4,762

 

 

5,817

Amortization expense

 

12,445

 

 

11,807

EBITDA(1)

$

61,279

 

$

75,761

Loss on impairment of goodwill

 

2,410

 

 

 —

Pension settlement costs

 

511

 

 

 —

Operations optimization costs (excluding depreciation)

 

986

 

 

590

Acquisition-related costs

 

 —

 

 

393

Cost of sale of inventory step-up

 

 —

 

 

1,070

Gain on sale of license

 

 —

 

 

(1,085)

Gain on sale of businesses

 

 —

 

 

(1,480)

Adjusted EBITDA(1)

$

65,186

 

$

75,249

Foreign transaction (gains) losses

 

48

 

 

(85)

Adjusted EBITDAX

$

65,234

 

$

75,164

(1)

Our calculations of EBITDA and Adjusted EBITDA, non-GAAP financial measures, are explained in greater detail in our Annual Report on Form 10-K for fiscal year 2019 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Important Performance Measures.” As outlined above, Adjusted EBITDAX further excludes the impact of foreign transaction gains or losses.

Amounts potentially payable under the cash incentive plan, as a percentage of salary at the beginning of the year, and amounts actually paid are reflected in the table below for fiscal year 2016.2019.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual FY 2016 Payments

 

 

Cash Awards Payable for 2019

 

Actual FY 2019 Payment

 

 

Cash Awards Payable for 2016

 

Award as

 

 

 

 

 

 

 

 

 

 

 

Award as

 

 

 

 

 

 

 

 

 

 

percentage

 

Final

 

 

 

 

 

 

 

 

percentage

 

Final

 

 

At 90% of

 

At 100%

 

At 120%

 

of annual

 

payments

 

 

At 80% of

 

At 100%

 

At 120%

 

of annual

 

payments

 

Name of executive

 

target

 

of target

 

of target

 

salary

 

made

 

    

target

    

of target

    

of target

    

salary (1)

    

made (1)

 

 

(as percentage of base salary)

 

 

 

 

 

 

 

(as percentage of base salary)

 

 

 

 

 

 

Peter R. Chase

    

75

%  

150

%  

300

%  

238

%  

$

1,428,013

 

Adam P. Chase

 

25

%  

50

%  

100

%  

79

%  

$

317,336

 

 

50

%  

100

%  

200

%  

56

%  

$

316,713

 

Kenneth J. Feroldi

 

15

%  

30

%  

60

%  

48

%  

$

119,001

 

 

30

%  

60

%  

120

%  

34

%  

$

75,799

 

Christian J. Talma

 

15

%  

30

%  

60

%  

27

%  

$

71,219

 

(1)

In relation to his appointment as Chief Financial Officer in February 2019,  Christina J. Talma’s target award for the cash incentive plan increased prospectively from 30% to 60% of base salary, at the same time his salary increased from $250,000 to $275,000. Mr. Talma’s fiscal 2019 cash incentive award was calculated and paid out in November 2019 based on approximately five months of a 30% target award, utilizing a $250,000 salary, and approximately seven months of a 60% target award, utilizing a $275,000 salary. Mr. Feroldi’s cash incentive plan remained consistent at  a 60% target award as a percentage of salary for the entire year, but utilized his actual total salary earned for the year ($226,167) as the base. Each named executive officer’s actual payment is reflected in the table above.

 

A similar cash incentive program was approved by the committee and maintained and paid out of a bonus pool, with payments determined by reference to our Adjusted EBITDA-based target, for other key employees at the Company. In fiscal 2016,2019, approximately 100185 employees participated in that program,  (withwith most payments at the discretion of the Executive Chairman and the Chief Executive Officer).Officer.

17

 

Equity Incentive Plan.  The third element of our compensation program is our equity-based long-term incentive plan.  In 20162019 our equity incentive plan used a combination of three types of equity awards: performance-based restricted stock, time-vesting restricted stock and stock options.  For the reasons discussed above, Peter R. Chase does not participate in the equity incentive plan.

Our Chief Financial Officer, Kenneth J. Feroldi, received a combination of performance-basedTreasurer’s equity compensation has historically emphasized restricted stock and time-vesting restrictedawards over stock but the components of his equity incentive plan award did not include a stock option grantoptions in light of his relatively low direct equity ownership (having been appointed Chief Financial Officer in September 2014 and not having participated in the equity incentive plan prior to his appointment) and given that his equitylower target award, target representsas a lower percentage of his salary, than the total equity award for Adam P. Chase,compared to our Chief Executive Officer. Our current Chief Financial Officer’s equity incentive award does include a stock option component, in order to more closely align his award’s components and incentives with those of our Chief Executive Officer and in order to include a component whose value is derived directly from an increase in share value.

 

Theperformance-basedelement measured measuresannualperformance against (1) an earnings per share (“EPS”) base target and (2) a return on invested capital (“ROIC”) base target (weighted 80% and 20%, respectively, of the total performance based targetequity award target), for fiscal 20162019 and represented 50% of the total target equity award for Adam P. Chase and Christian J. Talma, and 67% of thetargetequityawardforKennethJ.Feroldi.Theotherhalfofthetotaltargetequityawardfor Adam P. Chase and Christian J. Talma was split evenly between time-based vesting restricted stock and stock options and the entire remaining total equity award for Kenneth J. Feroldi consisted of time-based vesting restricted stock.

 

20

The following table shows, for each of the named executive officers participating in the equity incentive plan, the total target equity awards for each officer as determined at the beginning of the fiscal year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Target Equity

    

 

 

    

Performance

    

Time Vesting

    

 

 

    

Target Equity

    

 

 

    

Performance

    

Time Vesting

    

 

 

 

Award as % of

 

Value at

 

Shares at

 

Shares at

 

Stock Options at

 

 

Award as % of

 

Value at

 

Shares at

 

Shares at

 

Stock Options at

 

Name

 

Salary

 

Grant Date

 

 Grant Date (1)

 

 Grant Date (2)

 

Grant Date (3) 

 

 

Salary (1)

 

Grant Date

 

 Grant Date (2)

 

 Grant Date (3)

 

Grant Date (4) 

 

Adam P. Chase

 

100

%  

$

400,000

 

5,063

 

2,532

 

7,246

 

 

100

%  

$

567,000

 

2,286

 

1,143

 

3,468

 

Kenneth J. Feroldi

 

45

%  

$

112,500

 

1,899

 

949

 

-

 

 

60

%  

$

177,000

 

952

 

476

 

 —

 

Christian J. Talma

 

30

%  

$

75,000

 

303

 

151

 

459

 

(1)

Total target equity award as a percentage of salary in the table represents the initial amount determined on September 1, 2018 (the first day of fiscal 2019). Based on changes in roles during fiscal 2019: (a) Christian J. Talma’s equity award was expanded to be based on 30% of salary for the approximately five months he served as Chief Accounting Officer and 60% of salary for the approximately seven months he served as Chief Financial Officer; and (b) Kenneth J. Feroldi’s total target equity award was limited to the indicated percentage of his actual salary earned during the approximately five months he served as Chief Financial Officer.

(2)

Value represents 50%, 50% and 67% of the total equity award target for Adam P. Chase, Christian J. Talma and Kenneth J. Feroldi, respectively, and assuming achievement at 100% of the performance targets, using the closing share price on the last day of the prior fiscal year. Based upon actual fiscal 20162019  financial performance, and giving effect to the adjustments described under footnote (1) above, the total actual payout for the performance share component of the equity compensation plan for fiscal 20162019 was 9,628360 shares for Adam P. Chase, 81 shares for Christian J. Talma and 3,61162 shares for Kenneth J. Feroldi, (subjectall of which is subject to additional time-based vesting provisions),provisions, calculated in the manner described under “Performance-based restricted stock” below.

 

(2)(3)

Value represents 25%, 25% and 33% of the total equity award targets for Adam P. Chase, Christian J. Talma and Kenneth J. Feroldi, respectively, using the closing share price on the last day of the prior fiscal year. 

 

(3)(4)

Value represents 25% of the total equity award for both Adam P. Chase and Christian J. Talma, using the Black-Scholes value of the options on the last day of the prior fiscal year.

 

In the event of a named executive officer’s retirement, death or disability or dismissal without cause before the scheduled vesting date, then the awards will vest pro rata to the date of the termination of employment.  In the event of a named executive officer’s voluntary termination of employment or termination for cause, all of the unvested portion of the award will be forfeited.  Upon a change of control of the Company, any unvested awards will automatically vest. 

18

 

Each of the three types of equity awards that collectively comprise our equity incentive plan are described in more detail below:

 

·

Performance-based restricted stock.  The performance-based restricted stock awards are made at the beginning of the year based upon the target performance levels, with the target number of shares being determined by dividing the target equity award value by our stock price on the grant date.   For fiscal 2016,2019, the corporate EPS target set by the committee was $3.00.$4.86 and the ROIC target set by the committee was 31.1%.

 

The final award amounts are determined after the end of the fiscal year by reference to our actual performance for the year.  In order for any payments to be made under EPS component or the ROIC component of the equity incentive plan, the Company must achieve at least 90%80% of the EPS target.target or the ROIC target, as applicable. The EPS target was weighted as 80% of the target performance-based equity award, and the ROIC target was weighted as 20% of the target performance-based equity award.   If the Company achieves less than 90%80% of both of the performance target,targets, the full award would be forfeited.  If the Company achieves 90%80% of that target,either of the  targets, then the actual payment would be 50% of the target shares available under that target (with the other 50% being forfeited).  If the Company achievesAchievement between 80% and 100% of theeither target then the actual payment would be 100% of the targeted share amount.  Achievement between 90% and 100% would be pro-rated.  If the Company achieves 120% of theeither target,  then the executive’s equity award would be 200% of the targeted share amount.amount available under that target.  Achievement between 100% and 120% of either target would be pro-rated.  The total opportunity is capped at 200% of the targeted share amount.  Accordingly, there is no incremental award in 2019 at performance levels above 120% of the earnings per shareeither target.

21

 

EPS as defined in the plan may differ from earnings per share as calculated under generally accepted accounting principles, since the plan uses the fully diluted number of shares outstanding as of the first day of the fiscal year and may include other adjustments as determined by the compensation committee (no such other adjustments were made for fiscal 2016).committee.  Our basic and diluted EPS as reported under U.S. generally accepted accounting principles for fiscal 20162019 were  $3.55$3.48 and $3.50$3.46 per share, respectively. Using the fully diluted number of shares outstanding as of September 1, 2015,2018, the EPS used for purposes of evaluating performance under the 20162019 equity plan was $3.55,$3.49, or approximately 118%72% of the target.target EPS of $4.86.  Because less than 80% of the target EPS was achieved in fiscal 2019, no share payout was made for the portion of the performance-based stock award determined by reference to the EPS target for 2019.

ROIC is defined in the plan as the three-year average earnings before interest expense and income tax, divided by the three-year average of the sum of equity and debt less cash on hand at year-end.  The fiscal 2019 target was set as the trailing three-year average ROIC, calculated using fiscal year 2019’s budgeted results and the prior two years’ (fiscal years 2018 and 2017) actual results. Actual ROIC for the measurement period was calculated using actual results for the three years ended August 31, 2019. The ROIC used for purposes of evaluating performance under the 2019 equity plan was 28.5%, or approximately 92% of the target ROIC of 31.1%.  The actual payments made under the ROIC performance share component of the plan thus represented approximately 190%79% of the targeted share amount.amount for that component.

 

The final share amounts are calculated and approved by the compensation committee upon finalization of our financial results for the fiscal year.  Equity awards made for fiscal 2016 exceeded2019 fell short of the target levels because of the stronglower earnings achievedrecognized by the Company during that year. The restricted stock award under the plan will not vest however, until the last day of the second fiscal year following the fiscal year that is used as the performance period.  In other words, the performance-based equity awards for fiscal 20162019 will vest on August 31, 2018.2021.

 

The committee believes that the combination of performance measures to determine the number of shares of common stock underlying each award, and the “cliff” vesting of the award two years after the end of the performance period, is useful in accomplishing the dual objectives of rewarding superior performance and encouraging retention of its qualified executives.

19

 

·

Time-based vesting restricted stock.  The committee has incorporatedalso incorporates time-based vesting shares into our long-term incentive plan for participating executive officers since 2011.officers.  The purpose of the time vesting restricted stock grant is to provide a long termlong-term incentive in the form of a fixed award that is not subject to a performance measurement target.  The number of shares is determined by reference to the value of the award (25%, 25% and 33% of the total target equity award value for Adam P. Chase, Christian J. Talma and Kenneth J. Feroldi, respectively) divided by the closing market price of our common stock on the last day of the prior fiscal year. Christian J. Talma received a supplemental award during the fiscal year, in connection with the increase in his total equity award target and the increase in his salary, in each case relating to his appointment as Chief Financial Officer, as described in more detail above. The shares vest in three years from their grant, or on August 31, 2018.2021. 

 

·

Stock options.  Since fiscal 2011, theThe committee has incorporatedincorporates stock option grants into our long-term incentive plan on a formulaic basis as part of the overall long termlong-term incentive plan for certain executive officers. Thus, 25% of the total target value of the equity plan awards for 20162019 for both Adam P. Chase and Christian J. Talma was made in options to purchase common stock. The purpose of the option grant was to further align the executive’s interests with that of the shareholders, to encourage equity participation among management team members and provide a long-term incentive for his future commitment as a key member of the executive management team.   The option grant was made effective as of September 1, 2015,2018, with an exercise price equal to the fair market value of the common stock on that date.  The number of shares of common stock subject to Adam P. Chase’sthese option grantgrants was determined by taking 25% of histhe total equity award opportunity and dividing it by the Black-Scholes value of an individual option on the date of grant. The options granted in fiscal 20162019 will vest in three equal annual installments, beginning on August 31, 2016.2019.   Mr. Feroldi did not receive  a stock option grant for the reasons noted above. Christian J. Talma received a supplemental option award during the year, with an exercise price equal to the fair market value of the common stock at that time, due to his change in role as discussed above.

 

Discretionary Bonuses.  The committee does not consider discretionary cash bonuses to be a material part of the executive compensation program, outside of the cash incentive plan described above.  As noted above, the

22

committee has the discretion to adjust an award determined under the cash incentive plan upward or downward, and has exercised that discretion in prior years in a manner that has historically had a small impact on total compensation compared to the objective components.

 

In fiscal 2016,2019, the committee determined not to issue any such discretionary payments.

 

Voting and Dividends on Stock Awards.  Participants in the equity award program are able to vote and receive dividends upon their restricted shares before the vesting period.shares vest. The committee has determined that permitting the participants to vote and receive dividends prior to the vesting of the awards was appropriate and consistent with the committee’s retention and pay for performance objectives. The committee took into account the fact that dividends on unvested awards would typically represent a small percentage of the executives’ total compensation. Dividends paid on unvested awards are not required to be repaid if the vesting provisions are not met, but the underlying shares themselves remain subject to forfeiture through the vesting date, putting the bulk of the economic value of the award at risk and subject to the performance and time-based vesting conditions.

20

Chief Executive Officer’s Compensation at Risk and Compared to the Creation of Shareholder Value. One of the primary objectives of the compensation program is to drive executive performance by having pay at risk, so actual pay is tied to company-wide goal achievement and superior performance, thus aligning the compensation of our executives with the interests of our shareholders. Summaries of the principal elements of compensation and of the total compensation for Adam P. Chase, Chief Executive Officer, are as follows:

Picture 3

The CEO principal elements of compensation pay mix above is calculated based on (1) 2019 base salary, (2) 2019 cash incentive plan awards actually paid in November 2019, (3) stock option grants and time-based vesting restricted shares granted in September 2018 and (4) actual performance-based restricted shares awarded based on 2019 performance and valued using August 31, 2018 share prices.

Picture 5

Our Chief Executive Officer’s total compensation has grown and contracted along with the Company’s creation of shareholder value, as evidenced by the trading price of the Company’s common stock as reported by the NYSE American (formerly NYSE MKT) as of August 31 of each applicable year, utilizing fiscal 2015 as the base year. Total compensation used in the chart above is further detailed under “Summary Compensation Table” below. The above includes the value of all time-based vesting and actual performance-based shares received for each applicable year,  valued at grant-date price,  and stock options valued at grant-date Black-Scholes value,  inclusive of a $1,000,000 equity retention grant in fiscal 2017, which was split between restricted stock and options.

21

Picture 6

Adam P. Chase’s Annual Incentive Plan (“AIP”) cash bonus has trended in alignment with the Company’s Adjusted EBITDA, utilizing fiscal 2015 as the base year.

Retirement Programs

 

In addition to the primary components of executive pay described above, we maintain certain retirement plans and benefits for our executive officers.  Many of these plans are available to larger groups of employees.   The committee feels that the opportunity to participate in programs that assist the executives and other employees in saving for retirement is an important part of those employees’ compensation package.

 

·

Our named executive officers may elect to make contributions to a retirement account in our “Chase Deferred Salary Savings Plan” (the “401(k) plan”), which is available to substantially all employees of certain businesses of the Company and under which we made a matching contribution to each participant in each of the last three fiscal years.years  (or in the case of Mr. Talma, in 2019 after he became eligible for the plan after completing six months with the Company).  The matching contribution under the 401(k) plan is the equivalent of 100% of the first one percent of the employees’employee’s pre-tax contribution to the plan plus 50% thereafter, up to an amount equal to three and one halfone-half percent of the employee's annual salary.  Our matching contributions to the accounts of the named executive officers are shown in the “All Other Compensation” column in the Summary Compensation Table.

 

·

We also maintain a non-qualified Supplemental Savings Plan covering selected employees, including our named executive officers.  Participants may elect to defer a portion of their compensation for future payment in accordance with the terms of the plan.

·

We maintain a tax-qualified defined benefit pension plan and a non-qualified Supplemental Pension Plan.  The Supplemental Pension Plan covers those of our employees who from time to time may be designated by our Board of Directors.  During fiscal 2016, our Our Executive Chairman, Peter R. Chase, and our President and Chief Executive Officer, Adam P. Chase, were designatedreceived a full payout of his non-qualified Supplemental Savings Plan balance in fiscal 2017 after entering a separation of service letter with the Company, reducing the level of services that he performs as being covered.  These plans are described in more detail under “Executive Compensation—Other Executive Plans—Pension Plan”.  As noted in that section, benefits are paid at a higher rate to employees who became employed prior to May 1, 1995 or who are covered by certain collective bargaining agreements and meet certain other qualifications, as compared to those who were employed after that date.  Of our named executive officers, only ourthe Executive Chairman was employed prior to May 1, 1995, and therefore only he accrues benefits atno more than 20% of the higher rate.average level of services performed in the previous 36 months.

2322

We maintain a tax-qualified defined benefit pension plan and a non-qualified Supplemental Pension Plan.  The Supplemental Pension Plan covers those of our employees who from time to time may be designated by our Board of Directors.  During fiscal 2019, our Executive Chairman, Peter R. Chase, and our President and Chief Executive Officer, Adam P. Chase, were designated as being covered.  These plans are described in more detail under “Executive Compensation—Other Executive Plans—Pension Plans”.  As noted in that section, benefits are paid at a higher rate to employees who became employed prior to May 1, 1995 or who are covered by certain collective bargaining agreements and meet certain other qualifications, as compared to those who were employed after that date.  Of our named executive officers, only our Executive Chairman, Peter R. Chase, was employed prior to May 1, 1995, and therefore only he accrues benefits at the higher rate.Our Executive Chairman, Peter R.Chase, began collecting his non-qualified Supplemental Pension Plan balance in fiscal 2017 after entering a separation of service letter with the Company, as noted above.

 

Other Benefits

 

We own a life insurance policy on the life of Peter R. Chase as a mechanism available for use to help fund our obligations under the unfunded, non-qualified excess benefit planSupplemental Pension Plan described above.

 

We also provide Peter R. Chase with a company car and provided him with a golf club membership.membership through the first quarter of fiscal 2018.  We provide our other named executive officers a car allowance of $1,000 per month.  We provide each of our named executive officers reimbursement for certain financial planning and tax services up to $5,000 per year.  Our compensation committee considers these arrangements to be fair and reasonable in light of the relatively low cost to the Company. 

 

Named executive officers may also participate in our medical and dental insurance offerings by electing to make payroll deductions designed to cover approximately 25%35% of the cost of these programs (with the company covering the other 75%65% of the cost).   We also provide disability and life insurance coverage for our named executive officers and pay a portion of the related premiums.

 

NamedStock Ownership Guidelines

The Board of Directors believes that it is important to align the interests of both members of senior management and directors with those of our shareholders.  As described above, the compensation committee takes this principle into account in designing the compensation programs in which our executive officers participate. In order to further foster these objectives, the Board has established stock ownership guidelines that encourage the accumulation and retention of our common stock.

Our current stock ownership guidelines are expressed as a multiple of base salary or, in the case of directors, a multiple of annual cash compensation.  Under the guidelines, each of our Executive Chairman and our Chief Executive Officer are required to acquire and hold stock with a fair market value of at least five times base salary.  For all other executive officers, the multiple is three times base salary, and for non-employee directors, the multiple is five times annual cash compensation. Directors are required to achieve compliance by February 2021 or, if later, by 36 months from the first election to the Board. Newly appointed executives are required to comply within 60 months of their appointment. Shares of stock subject to time-based vesting provisions count toward the ownership guidelines, but shares subject to performance-based vesting conditions and shares underlying stock options do not count toward the ownership guidelines. The compensation committee retains the discretion to grant waivers or make exceptions to the policy under appropriate circumstances.

The full stock ownership guidelines are available on our corporate website, www.chasecorp.com.

23

Prohibitions on Hedging and Pledging

Our current insider trading policy, most recently revised in November 2019, specifically prohibits our directors, officers and selected other employees from (a) holding Company securities in a margin account or pledging Company securities as collateral for a loan, or (b) purchasing any financial instruments or entering into any other transactions that are designed to hedge or offset any decrease in the market value of the Company’s common stock owned directly or indirectly by them (commonly referred to as “hedging”) or entering into certain other speculative transactions.

This policy, referred to as the Chase Corporation Responsibilities and Requirements of Officers and Directors of a Publicly-Held Company, is available on our corporate website, www.chasecorp.com.

Severance Agreements

 

As any ofWe have entered into arrangements with our named executives were hired by us, promoted or have taken on additional responsibilities, we enter into agreements with themexecutive officers pursuant to which they would be entitled to receive severance benefits upon termination by us without cause, or upon the occurrence of certain enumerated events during the two years following a change in control.  The events that trigger payment are generally those related to termination of employment without cause or detrimental changes in the executive’s terms and conditions of employment. See “Payments Upon Termination or Change of Control” below for a more detailed description of these triggering events and the resulting benefits. We believe that this structure will help: (i) assure that the named executive officers can give their full attention and dedication to us, free from distractions caused by personal uncertainties and risks related to a pending or threatened change in control, (ii) assure the named executives’ objectivity in considering shareholders’ interests, (iii) assure the named executives of fair treatment in case of involuntary termination following a change in control, and (iv) attract and retain key executive talent in a competitive market.

 

Consideration of the 2015Previous Shareholder Advisory Vote on Executive Compensation

 

At the Company’s 20152019 annual meeting of shareholders (heldheld February 3, 2015),5, 2019,  approximately 98% of votes cast at the meeting with respect to the proposal were voted to approve, on an advisory basis, the compensation of our named executive officers. No specific component of our 20162019 executive compensation program was altered based upon this voting result. However, the committee will continue to monitor shareholder feedback as it reviews and establishes future executive compensation plans and determines awards for our named executive officers. Our Board of Directors has determined in 2019 that an advisory vote will be conducted on a triennial basis (next planned to be done at the Company’s 2018an annual meeting).  basis.A non-binding, advisory vote on our current executive compensation is set out in this proxy statement as Proposal 2.

 

24

Compensation Risks

 

The Compensation and Management Development Committee has considered the components of the Company’s compensation policies and practices.  We believe that risks arising from our compensation policies and practices for our employees, including our executive officers, are not likely to have a material adverse effect on us.  In addition, although a significant portion of executive compensation is performance based and “at-risk,” the committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risk.  

 

The committee has reviewed the elements of executive compensation to determine whether any portion of executive compensation encourages excessive risk taking.risk-taking.  It concluded that:

 

·

the Company’s significant weighting toward long-term incentive compensation, including performance targets and time-based vesting provisions used in tandem, discourages excessive risk taking;

·

the Company’s performance goals are appropriately set in order to avoid targets that, if not met, result in a large percentage loss of compensation;

·

assuming achievement of at least a minimum level of performance, payouts under the Company’s performance-based plans result in some compensation at levels below full target achievement, rather than an “all or nothing” approach; and

·

as a manufacturing company, the Company is not generally subject to the types of risks that may be present in a corporation involved in financial services, trading or investment activities. 

 

Impact of Tax and Accounting Issues

Section 162(m) of the Internal Revenue Code denies a tax deduction to a public corporation for annual compensation in excess of one million dollars paid to its Executive Chairman, its Chief Executive Officer and certain of its other most highly compensated officers, unless such compensation is paid pursuant to one of the enumerated exceptions set forth in Section 162(m) of the Code, which include an exception for “performance based” compensation meeting certain requirements.  Where possible, the committee attempts to structure its compensation programs such that compensation paid will be tax deductible whenever it is consistent with our compensation philosophy.  However, the committee has not adopted a policy requiring all compensation to be tax deductible.  Our compensation committee believes that factors other than tax deductibility are more important in determining the forms and levels of executive compensation most appropriate and in the best interests of our shareholders.  Our compensation committee believes that it is important to retain the flexibility to design compensation programs consistent with our executive compensation philosophy, even if some executive compensation is not fully deductible.  Also, the deductibility of some types of compensation payments will depend on the timing of an executive’s vesting or exercise of previously granted rights.  Accordingly, our compensation committee may from time to time approve elements of compensation for certain executives that are not fully deductible.  

In addition, the compensation committee considers the impact of Section 409A of the Internal Revenue Code, which imposes certain requirements on “nonqualified deferred compensation plans.”  These may be particularly relevant in the case of compensation paid after termination of a named executive officer’s employment under the change in control and severance agreements discussed above.  We believe that this compensation is in compliance with the applicable requirements of Section 409A.

25

Report of the Compensation and Management Development Committee

 

The Compensation and Management Development Committee of the Chase Corporation Board of Directors has reviewed and discussed the foregoing Compensation Discussion and Analysis with management of the Company, and based on such review and discussion we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

 

By the Compensation and Management Development Committee

 

 

 

Thomas Wroe, Jr. (Chairman)

 

Thomas D. DeByle

John H. Derby III

 

George M. HughesChad A. McDaniel

 

2625

Executive Compensation

 

The following table contains a summary of the compensation paid or accrued during the fiscal years ended August 31, 2016, 20152019, 2018 and 20142017 to our Executive Chairman, our President and Chief Executive Officer, and to our Treasurer and our Chief Financial Officer.

 

Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

 

    

 

    

 

    

 

    

Change in

    

 

    

 

 

    

 

    

 

    

 

    

 

    

 

    

 

    

Change in

    

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Non-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Non-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive Plan

 

Compensation

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive Plan

 

Compensation

 

All Other

 

 

 

 

Fiscal

 

Salary

 

Bonus

 

Stock Awards

 

Option Awards

 

Compensation

 

Earnings

 

Compensation

 

Total

 

 

Fiscal

 

Salary

 

Bonus

 

Stock Awards

 

Option Awards

 

Compensation

 

Earnings

 

Compensation

 

Total

 

Name and Principal Position

 

Year

 

 ($) (2)

 

 ($) (3)

 

($) (4)

 

($) (4)

 

($) (5)

 

($) (6)

 

($) (7)

 

($)

 

 

Year

 

 ($) (2)

 

 ($) (3)

 

($) (4)

 

($) (4)

 

($) (5)

 

($) (6)

 

($) (7)

 

($)

 

Peter R. Chase

 

2016

 

600,000

 

-

 

-

 

-

 

1,428,013

 

3,635,608

 

69,588

 

5,733,209

 

 

2019

 

600,000

 

 —

 

 —

 

 —

 

 —

 

 —

 

34,610

 

634,610

 

Executive Chairman

 

2015

 

600,000

 

-

 

-

 

-

 

1,356,198

 

1,321,703

 

71,517

 

3,349,418

 

 

2018

 

600,000

 

 —

 

 —

 

 —

 

 —

 

 —

 

34,825

 

634,825

 

 

2014

 

600,000

 

-

 

-

 

-

 

1,674,462

 

2,535,421

 

81,340

 

4,891,223

 

 

2017

 

600,000

 

 —

 

 —

 

 —

 

 —

 

 —

 

67,456

 

667,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adam P. Chase

 

2016

 

400,000

 

-

 

300,000

 

100,000

 

317,336

 

150,462

 

44,352

 

1,312,150

 

 

2019

 

567,000

 

 —

 

425,025

 

141,668

 

316,713

 

302,355

 

101,325

 

1,854,086

 

President & Chief

 

2015

 

360,000

 

-

 

270,000

 

90,000

 

271,240

 

132,810

 

48,327

 

1,172,377

 

 

2018

 

500,000

 

 —

 

424,958

 

141,678

 

394,013

 

55,004

 

103,069

 

1,618,722

 

Executive Officer

 

2014

 

326,000

 

22,500

 

244,500

 

81,500

 

303,264

 

48,868

 

45,814

 

1,072,446

 

 

2017

 

475,000

 

 —

 

856,314

 

618,754

 

394,013

 

89,543

 

61,230

 

2,494,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth J. Feroldi

 

2016

 

250,000

 

-

 

112,496

 

-

 

119,001

 

-

 

35,774

 

517,271

 

 

2019

 

226,167

 

 —

 

73,750

 

 —

 

75,799

 

 —

 

39,629

 

415,345

 

Treasurer & Chief

 

2015

 

227,500

 

-

 

108,275

 

-

 

102,845

 

-

 

27,717

 

466,337

 

Treasurer and Former Chief

 

2018

 

285,000

 

 —

 

171,012

 

 —

 

134,868

 

 —

 

48,555

 

639,435

 

Financial Officer (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

275,000

 

 —

 

714,958

 

 —

 

136,868

 

 —

 

46,072

 

1,172,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian J. Talma

 

2019

 

264,583

 

 —

 

95,545

 

31,878

 

71,219

 

 —

 

24,506

 

487,731

 

Chief Financial Officer (1)

 

2018

 

4,808

 

1,400

 

75,059

 

 —

 

 —

 

 —

 

173

 

81,440

 

(1)

Mr. FeroldiTalma was appointed Chief Financial Officer in February 2019, previously having been Chief Accounting Officer since August 2018. Mr. Feroldi served as Treasurer and Chief Financial Officer on September 1, 2014,  coinciding withthrough February 2019, and has remained in the startposition of fiscal 2015. Treasurer (a non-executive officer position) since that time.

 

(2)

Salary includes amounts earned in the fiscal year, whether or not deferred.

 

(3)

The amounts reflected in this column represent discretionary adjustments to payments under the Company’s cash incentive plan.

 

(4)

Amounts under “Stock Awards” reflect the net grant date fair value of the stock-based incentive awards granted under our equity incentive program in thatthe indicated fiscal year (and for fiscal 2017 includes our equity retention agreements). For the portion of the award subject to performance-based conditions, the amount is based on the estimated probable outcome of the award as of the grant date (in the case of the portion of the award subject to performance conditions).date.  Amounts under “Option Awards” reflect the grant date fair value of stock options awarded during the fiscal year.year, including those awarded in fiscal 2017 under the Chief Executive Officer’s equity retention agreement.  In each case, amounts are reported whether or not the award had vested and was recorded as compensation expense in accordance with the accounting for stock based compensation guidance during the year.  Assumptions made in the valuation are described in more detail in Note 1 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2016.  The amounts reported have been adjusted to eliminate service-based forfeiture assumptions used for financial reporting purposes.2019. Using the grant date fair value but assuming the maximum performance target under the stock-based incentive plan were met or exceeded, the amounts reported under “Stock Awards” for 20162019 would have been $500,000approximately $708,375 for Adam P. Chase, and $187,500$122,917 for Kenneth J. Feroldi.Feroldi and $159,151 for Christian J. Talma.  The total compensation column for such officers in 20162019 would have correspondingly been increased by $200,000approximately $283,350, $49,167 and $75,004$63,697, respectively.  Based on the financial results for fiscal 2016,  amounts between2019,  fewer shares were issued under the amount reported under “Stock Awards” andperformance-based element of our equity incentive plan than were used in the maximum performance amounts were achieved. assumptions reflected in the table.

 

27

(5)

These amounts reflect incentive payments made under our Annual Cash Incentive Program earned during the applicable fiscal year and paid in November following the respective fiscal year end.  The incentive program is described in the Compensation Discussion and Analysis under the heading “Principal Elements of our 20162019 Compensation Program—Cash Incentive Plan”.

26

 

(6)

Represents the current year benefit increase (or decrease) ofaggregate change in the actuarial present value of accumulated benefits under the qualified defined benefit plan as well asand the supplemental pension plan as described under “—Other Executive Plans—Pension Plan”Plans”. Amounts for Peter R. Chase under this column are reported as zero under applicable SEC regulations because the aggregate change in actuarial present value of his accumulated benefits was a negative amount (a reduction of $764,564). This reflects a distribution of $1,554,708 from the supplemental pension plan during the year, as described in more detail under “—Other Executive Plans—Pension Plans”, net of an increase of $790,144 resulting from changes in actuarial assumptions from the prior year.

 

(7)

These amounts include all other compensation as described in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualified

 

Life & 

 

Automobile

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 401(k) and

 

Long-Term

 

Allowance

 

 

 

 

 

 

 

 

 

 

Qualified

 

Life & 

 

Automobile

 

 

 

 

 

 

 

 

 

 

 Supplemental

 

Disability

 

 or Use of

 

 

 

 

 

 

 

 

 

 

 401(k) and

 

Long-Term

 

Allowance

 

 

 

 

 

 

 

 

 

 

Retirement Plan

 

Insurance

 

Company 

 

 

 

 

 

 

 

 

 

 

 Supplemental

 

Disability

 

 or Use of

 

 

 

 

 

 

 

 

Fiscal

 

Contributions

 

Premiums

 

Car

 

Other

 

 

 

 

 

Fiscal

 

Retirement Plan

 

Insurance

 

Company 

 

Other

 

 

 

 

Name

    

Year

    

(a)

    

(b)

    

(c)

    

(d)

    

Total

 

    

Year

    

Contributions

    

Premiums

    

Car

    

(a)

    

Total

 

Peter R. Chase

 

2016

 

$

30,274

 

$

9,464

 

$

28,680

 

$

1,170

 

$

69,588

 

 

2019

 

$

9,275

 

$

1,971

 

$

23,364

 

$

 —

 

$

34,610

 

 

2015

 

 

30,274

 

 

9,454

 

 

30,143

 

 

1,646

 

 

71,517

 

 

2018

 

 

9,275

 

 

3,022

 

 

22,528

 

 

 —

 

 

34,825

 

 

2014

 

 

21,000

 

 

7,323

 

 

24,888

 

 

28,129

 

 

81,340

 

 

2017

 

 

26,236

 

 

10,685

 

 

29,330

 

 

1,205

 

 

67,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adam P. Chase

 

2016

 

 

7,000

 

 

1,937

 

 

12,000

 

 

23,415

 

 

44,352

 

 

2019

 

 

27,478

 

 

36,547

 

 

12,000

 

 

25,300

 

 

101,325

 

 

2015

 

 

7,131

 

 

1,937

 

 

12,000

 

 

27,259

 

 

48,327

 

 

2018

 

 

24,841

 

 

37,120

 

 

12,000

 

 

29,108

 

 

103,069

 

 

2014

 

 

7,147

 

 

2,465

 

 

12,000

 

 

24,202

 

 

45,814

 

 

2017

 

 

18,543

 

 

2,504

 

 

12,000

 

 

28,183

 

 

61,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth J. Feroldi

 

2016

 

 

17,460

 

 

2,276

 

 

12,000

 

 

4,038

 

 

35,774

 

 

2019

 

 

14,973

 

 

2,401

 

 

12,000

 

 

10,255

 

 

39,629

 

 

2015

 

 

12,627

 

 

1,936

 

 

12,000

 

 

1,154

 

 

27,717

 

 

2018

 

 

19,552

 

 

3,006

 

 

12,000

 

 

13,997

 

 

48,555

 

 

2017

 

 

18,355

 

 

2,310

 

 

12,000

 

 

13,407

 

 

46,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian J. Talma

 

2019

 

 

3,650

 

 

3,006

 

 

12,000

 

 

5,850

 

 

24,506

 

 

2018

 

 

 —

 

 

173

 

 

 —

 

 

 —

 

 

173

 

(a)

This amount represents the contribution by the Company on behalf of the named executive officers to the Chase Corporation Retirement Savings Plans.

(b)

These amounts include the portions of premiums paid by the Company for life insurance coverage exceeding $50,000.

(c)

These amounts represent payment of dividends on restricted stock, country club membership, and all other compensation (consisting of reimbursement for financial planning and tax services) as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Dividends on

    

 

 

    

 

 

    

 

 

 

    

 

    

Dividends on

    

 

 

    

 

 

    

 

 

 

 

Fiscal

 

Restricted

 

Country Club

 

 

 

 

 

 

 

 

Fiscal

 

Restricted

 

Country Club

 

 

 

 

 

 

 

Name

 

Year

 

Stock

 

Membership

 

All Other

 

Total

 

 

Year

 

Stock

 

Membership

 

All Other

 

Total

 

Peter R. Chase

 

2016

 

$

-

 

$

1,170

 

$

-

 

$

1,170

 

 

2019

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

 

2015

 

 

-

 

 

1,078

 

 

568

 

 

1,646

 

 

2018

 

 

 —

 

 

 —

 

 

 —

 

$

 —

 

 

2014

 

 

23,879

 

 

4,250

 

 

-

 

 

28,129

 

 

2017

 

 

 —

 

 

1,205

 

 

 —

 

$

1,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adam P. Chase

 

2016

 

 

21,265

 

 

-

 

 

2,150

 

 

23,415

 

 

2019

 

 

20,300

 

 

 —

 

 

5,000

 

 

25,300

 

 

2015

 

 

25,109

 

 

-

 

 

2,150

 

 

27,259

 

 

2018

 

 

26,958

 

 

 —

 

 

2,150

 

 

29,108

 

 

2014

 

 

22,142

 

 

-

 

 

2,060

 

 

24,202

 

 

2017

 

 

26,033

 

 

 —

 

 

2,150

 

 

28,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth J. Feroldi

 

2016

 

 

4,038

 

 

-

 

 

-

 

 

4,038

 

 

2019

 

 

10,255

 

 

 —

 

 

 —

 

 

10,255

 

 

2015

 

 

1,154

 

 

-

 

 

-

 

 

1,154

 

 

2018

 

 

13,997

 

 

 —

 

 

 —

 

 

13,997

 

 

2017

 

 

13,407

 

 

 —

 

 

 —

 

 

13,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian J. Talma

 

2019

 

 

850

 

 

 —

 

 

5,000

 

 

5,850

 

 

2018

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2827

Grants of Plan-Based Awards for Fiscal 20162019

 

The following table sets forth information relating to potential payments to each of our named executive officers under our fiscal 20162019 cash and equity-based incentive award programs.  The actual amounts that we paid under each of these programs are described in more detail under our Compensation Discussion and Analysis under the heading “Principal Elements of our 20162019 Compensation Program—Cash Incentive Plan”  and “—Equity Incentive Plan” and, except in the case of restricted stock with performance-based vesting conditions, are reflected in the Summary Compensation Table and its footnotes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other Option

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other Option

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

 

 

 

Estimated Possible Payouts Under Non-

 

Estimated Future Payouts Under

 

 

 

Number of

 

or Base

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

or Base

 

 

 

 

 

 

 

 

 

Equity Incentive Plan Awards

 

Equity Incentive Plan Awards

 

All Other

 

Securities

 

Price of

 

Grant Date

 

 

 

 

 

 

Estimated Possible Payouts Under Non-

 

Estimated Future Payouts Under

 

All Other

 

Securities

 

Price of

 

Grant Date

 

  

 

  

 

  

 

 

  

 

 

  

 

 

  

 

  

 

  

 

  

Stock

  

Underlying

  

Option

  

Fair Value of

 

  

 

  

 

  

Equity Incentive Plan Awards (1)

  

Equity Incentive Plan Awards (2)

  

Stock

  

Underlying

  

Option

  

Fair Value of

 

 

Grant

 

Approval

 

Threshold

 

Target

 

Maximum

 

Threshold

 

Target

 

Maximum

 

Awards

 

Options

 

Awards

 

Stock Awards

 

 

Grant

 

Approval

 

Threshold

 

Target

 

Maximum

 

Threshold

 

Target

 

Maximum

 

Awards

 

Options

 

Awards

 

Stock Awards

 

Name & Award

 

 Date

 

Date

 

($)

 

($)

 

($)

 

(#)

 

(#)

 

(#)

 

(#)

 

(#)

 

($/Share)

 

($)

 

 

 Date

 

Date

 

($)

 

($)

 

($)

 

(#)

 

(#)

 

(#)

 

(#) (2)

 

(#)

 

($/Share)

 

($)

 

Peter R. Chase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash award

 

11/5/2015

 

11/5/2015

 

$

450,000

 

$

900,000

 

$

1,800,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adam P. Chase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash award

 

9/1/2015

 

8/31/2015

 

$

100,000

 

$

200,000

 

$

400,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/1/2018

 

8/29/2018

 

$

283,500

 

$

567,000

 

$

1,134,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance restricted stock grant

 

9/1/2015

 

8/31/2015

 

 

 

 

 

 

 

2,532

 

5,063

 

10,126

 

 

 

 

 

 

 

$

199,989

 

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

1,143

 

2,286

 

4,572

 

 

 

 

 

 

 

 

$

283,350

 

Time vesting restricted stock grant

 

9/1/2015

 

8/31/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

2,532

 

 

 

 

 

100,014

 

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,143

 

 

 

 

 

 

 

141,675

 

Option award

 

9/1/2015

 

8/31/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,246

 

$

39.50

 

99,995

 

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,468

 

$

123.95

 

 

141,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth J. Feroldi

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash award

 

9/1/2015

 

8/31/2015

 

$

37,500

 

$

75,000

 

$

150,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/1/2018

 

8/29/2018

 

$

67,850

 

$

135,700

 

$

271,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance restricted stock grant

 

9/1/2015

 

8/31/2015

 

 

 

 

 

 

 

949

 

1,899

 

3,798

 

 

 

 

 

 

 

$

75,011

 

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

198

 

397

 

794

 

 

 

 

 

 

 

 

$

49,208

 

Time vesting restricted stock grant

 

9/1/2015

 

8/31/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

949

 

 

 

 

 

37,486

 

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

198

 

 

 

 

 

 

 

24,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian J. Talma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash award

 

9/1/2018

 

8/29/2018

 

$

63,750

 

$

127,500

 

$

255,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance restricted stock grant

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

257

 

514

 

1,028

 

 

 

 

 

 

 

 

$

63,710

 

Time vesting restricted stock grant

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

151

 

 

 

 

 

 

 

18,716

 

Time vesting restricted stock grant

 

8/20/2019

 

8/20/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

132

 

 

 

 

 

 

 

13,118

 

Option award

 

9/1/2018

 

8/29/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

459

 

$

123.95

 

 

18,750

 

Option award

 

8/20/2019

 

8/20/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

483

 

$

99.38

 

 

13,128

 

(1)

The non-equity incentive plan award ranges shown reflect payout opportunities considering the adjustments made during the fiscal year to the compensation plans for Mr. Feroldi and Mr. Talma, given changes in roles described elsewhere in this proxy statement.

(2)

The performance restricted stock grant and the time vesting restricted grant amounts shown above for Mr. Feroldi are shown at the net total of those granted on September 1, 2018, and those forfeited on August 20, 2019. The performance restricted stock grant amount shown above for Mr. Talma is shown at the gross total of those granted on September 1, 2018 and those supplemental shares granted (contingent on performance criteria) on August 20, 2019 in consideration of his increased responsibilities as Chief Financial Officer.

28

 

Amounts in the table above under “Threshold” represent cash amounts payable under the cash incentive plan if 90%80% of the corporate Adjusted EBITDA-based performance target is achieved, representing a specified percentage of the named executive officers’ base salaries, and share amounts payable under the performance based equity incentive program if 90%80% of the corporate EPS-based performance target isand 80% of the ROIC-based performance target was achieved.  Below those performance levels, no payments would be made under the respective plans.  It is possible, however, that a lower share amount payout could be made if less than 80% of the target is achieved under one but not both of the EPS-based or ROIC-based performance targets. This did in fact occur in 2019, when the threshold for the EPS-based performance target was not achieved, while the threshold for the ROIC-based target was met. Amounts under “Target” represent 100% of the target payout under each of those plans, which is set in each case as a specified percentage of the named executive officer’s base salary.   The maximum payout under either the cash incentive plan or the performance based equity award program is 200% of the target award.  The Compensation and Management Development Committee of the Board of Directors formally approved the equity awards on August 31, 2015.29, 2018. The grant date fair value of the possible equity awards reflects the fair value of our common stock on September 1, 2015,2018, the first day of our fiscal year and the date on which awards were initially granted, multiplied by the total number of shares of restricted stock to be awarded assuming the target was met (assumed to be the probable outcome of the performance conditions at the initial grant date).TheawardswereactuallypaidinaccordancewiththeplansuponfinalizationofourannualfinancialresultsandcertificationoftheawardsbythecompensationcommitteeinNovember2019.Theactualpaymentsforfiscalyear2019reflectedtheachievementofan amount between the threshold and the target payout for  the participating officers in accordance withboth the plans upon finalizationcash incentive plan and ROIC-based element of our annual financial results and certification of the awards by the compensation committee in November 2016.   In the case of both the performance-based equity award, and the cash incentive plan, the actual payments for fiscal year 2016 reflected the achievement of an amount betweenless than the target andthreshold (resulting in no payment) in the maximum payout forEPS-based component of the participating officers.

performance-based equity award.

29

Outstanding Equity Awards at Fiscal Year-End 20162019

 

The following table sets forth information relating to options and unvested restricted stock outstanding as of August 31, 20162019 that were granted pursuant to our 2013 Equity Incentive Plan or predecessor plans to our named executive officers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

Stock Awards

 

 

 

 

 

 

 

 

 

 

  

Stock Awards

 

    

 

    

 

    

 

 

    

 

    

 

 

 

    

Market

 

    

 

    

 

    

 

 

    

 

    

 

    

Market

 

 

Option Awards

 

 

Number of

 

Value of

 

 

Option Awards

 

Number of

 

Value of

 

 

Number of

 

Number of

 

 

 

 

 

 

 

Shares or

 

Shares or

 

 

Number of

 

Number of

 

 

 

 

 

 

Shares or

 

Shares or

 

 

Securities

 

Securities

 

 

 

 

 

 

 

Units of

 

Units of

 

 

Securities

 

Securities

 

 

 

 

 

 

Units of

 

Units of

 

 

Underlying

 

Underlying

 

Option

 

 

 

 

Stock That

 

Stock That

 

 

Underlying

 

Underlying

 

Option

 

 

 

Stock That

 

Stock That

 

 

Unexercised

 

Unexercised

 

Exercise

 

Option

 

 

Have Not

 

Have Not

 

 

Unexercised

 

Unexercised

 

Exercise

 

Option

 

Have Not

 

Have Not

 

 

Options

 

Options

 

Price

 

Expiration

 

 

Vested 

 

Vested 

 

 

Options

 

Options

 

Price

 

Expiration

 

Vested 

 

Vested 

 

Name

 

# Exercisable

 

# Unexercisable

 

($)

 

Date

 

 

(#)

 

($)

 

 

# Exercisable

 

# Unexercisable

 

($)

 

Date

 

(#)

 

($)

 

Peter R. Chase

 

11,144

 

 —

 

$

12.77

 

8/31/2021

 

 

 —

 

$

 —

 

 

 —

 

 —

 

$

 —

 

 

 

 —

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adam P. Chase

 

25,000

 

 —

 

$

16.53

 

7/8/2018

 

 

19,322

 

$

1,243,757

 

 

7,747

 

 —

 

$

29.72

 

8/31/2023

 

 

 

 

 

 

 

25,000

 

 —

 

$

11.15

 

8/31/2019

 

 

 

 

 

 

 

 

7,438

 

 —

 

$

35.50

 

8/31/2024

 

 

 

 

 

 

 

15,105

 

 —

 

$

12.70

 

8/31/2020

 

 

 

 

 

 

 

 

7,246

 

 —

 

$

39.50

 

8/31/2025

 

 

 

 

 

 

 

16,953

 

 —

 

$

12.77

 

8/31/2021

 

 

 

 

 

 

 

 

29,159

 

 —

 

$

64.37

 

8/31/2026

 

 

 

 

 

 

 

15,532

 

 —

 

$

16.00

 

10/22/2022

 

 

 

 

 

 

 

 

3,060

 

1,531

 

$

93.50

 

8/31/2027

 

 

 

 

 

 

 

7,747

 

 —

 

$

29.72

 

8/31/2023

 

 

 

 

 

 

 

 

1,156

 

2,312

 

$

123.95

 

8/31/2028

 

8,382

 

$

840,044

 

 

4,959

 

2,479

 

$

35.50

 

8/31/2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth J. Feroldi

 

 —

 

 —

 

$

 —

 

 

 

6,005

 

$

601,821

 

 

2,416

 

4,830

 

$

39.50

 

8/31/2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christian J. Talma

 

153

 

306

 

$

123.95

 

8/31/2028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161

 

322

 

$

99.38

 

8/31/2028

 

797

 

$

79,875

 

Kenneth J. Feroldi

 

 —

 

 —

 

$

 —

 

 

 

 

6,334

 

$

407,720

 

 

The stock option awards noted in the table above with an August 2028 expiration date vests in three equal annual tranches beginning August 31, 2019 through August 31, 2021. The stock option award noted in the table above with an August 20252027 expiration date vests in three equal annual tranches beginning August 31, 20162018 through August 31, 2018. The stock option award noted in the table above with an August 2024 expiration date vests in three equal annual tranches beginning August 31, 2015 through August 31, 2017.  2020.

 

Amounts under the “Stock Awards” columns reflect restricted stock issued under our equity incentive programs for fiscal 20162019 and 2015.2018, and, in the case of Kenneth J. Feroldi, a portion of an equity retention agreement entered into in fiscal 2017.  The columns include the value of the share amounts issued during fiscal 20162019 and 2015,2018, even though the final number of shares comprising the 20162019 award was not certified until after the fiscal year end and remained subject to increase or decrease as of August 31, 2016.2019.  The market value of all restricted stock is based on the closing price of our common stock on the last trading day in the fiscal year.  The closing price as reported by the NYSE MKTAmerican on August 31, 20162019 was $64.37.$100.22.    

 

30

StockFor Adam P. Chase,  Kenneth J. Feroldi and Christian Talma, stock awards for fiscal 20152017 and 2018 will vest between August 31, 2020 and August 31, 2021, and stock awards for fiscal 2019 will vest on August 31, 2017 and awards for fiscal 2016 will vest on August 31, 20182021, all as outlined in the table below (as of August 31, 2016)2019):

 

 

 

 

 

 

 

 

 

 

 

Vesting of Stock Awards

 

 

Name

    

August 31, 2016

    

August 31, 2017

 

    

August 31, 2020

 

August 31, 2021

 

Adam P. Chase

 

11,727

 

7,595

 

 

4,953

 

3,429

 

Kenneth J. Feroldi

 

3,486

 

2,848

 

 

3,702

 

2,303

 

Christian J. Talma

 

 —

 

797

 

 

 

 

 

 

 

As noted above, subsequent to August 31, 2016,  4,5652019,  1,926, 335 and 1,712 additional433 stock awards vestingotherwise set to vest August 31, 20182021 were granted toforfeited by Adam P. Chase,  and Kenneth J. Feroldi, and Christian J. Talma, respectively, under our equity incentive program for fiscal 20162019 under the financial performance measures applicable to that plan. Because the amount was determined after August 31, 2016,2019, based on our fiscal year performance, these shares are not reflectedexcluded in the tables above. See the discussion under “Principal Elements of our 20162019 Compensation Program—Equity Incentive Plan” in our Compensation Discussion and Analysis above.

 

30

Option Exercises and Stock Vested for 20162019

 

The following table sets forth information relating to options exercised by each of our named executive officers in the year ended August 31, 2016 that were granted pursuant to our 2013 Equity Incentive Plan or predecessor plans by each of our named executive officers.2019. The table also reflects stock vesting during fiscal 2016,2019, which represented for both Adam P. Chase and Kenneth J. Feroldi the equity incentive awards made during fiscal 2014.2017, in addition to all the shares granted to Mr. Chase as part  of his September 1, 2016 retention grant and the third of five annual installments of shares granted Mr. Feroldi as part of his September 1, 2016 retention grant. For Mr. Talma, vesting in 2019 represents the vesting of shares granted upon his joining Chase Corporation in August 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option Awards

  

Stock Awards

 

 

Option Awards

  

Stock Awards

 

 

Number of

 

 

 

 

Number of

 

 

 

 

 

Number of

 

 

 

 

Number of

 

 

 

 

 

Shares

 

 

 

 

Shares

 

 

 

 

 

Shares

 

 

 

 

Shares

 

 

 

 

 

Acquired on

 

Value Realized

 

Acquired on

 

Value Realized

 

 

Acquired on

 

Value Realized

 

Acquired on

 

Value Realized

 

 

Exercise

 

Upon Exercise

 

Vesting

 

on Vesting

 

 

Exercise

 

Upon Exercise

 

Vesting

 

on Vesting

 

Name

 

(#)

 

($)

 

(#)

 

($)

 

 

(#)

 

($)

 

(#)

 

($)

 

Peter R. Chase

    

61,490

    

$

2,722,166

    

 —

    

$

 —

 

    

 —

    

$

 —

    

 —

    

$

 —

 

Adam P. Chase

 

50,000

 

$

2,047,500

 

13,712

 

$

882,641

 

 

 —

 

$

 —

 

16,993

 

$

1,703,038

 

Kenneth J. Feroldi

 

 —

 

$

 —

 

 —

 

$

 —

 

 

 —

 

$

 —

 

5,891

 

$

590,396

 

Christian J. Talma

 

 —

 

$

 —

 

609

 

$

59,378

 

 

31

Payments Upon Termination or Change of Control

 

Executive Severance and Change in Control Agreements.  The Company has entered into severance arrangements with Peter R. Chase, Adam P. Chase,  and Kenneth J. Feroldi.Feroldi and Christian J. Talma. Under the terms of each named executive officer’s severance agreement, (or in the case of Mr. Feroldi, his offer letter), if the named executive’s employment is terminated by the Company without cause, or terminated by the executive within 24 months after the occurrence of a change in control of the Company for good reason, then the named executive will receive the following benefits: 

 

·

Severance pay in an amount equal to a multiple (2.0x in the case of Peter R. Chase 1.5x in the case ofand Adam P. Chase and 1.0x in the case of Kenneth J. Feroldi)Feroldi and Christian J. Talma) of the greater of the named executive’s annual salary in effect prior to the change in control or his annual salary in effect immediately prior to termination. For these purposes, the named executive officer’s salary will include bonuses, calculated by taking the average of the prior two years’ annual bonuses.

 

·

Health insurance, dental insurance and group term life insurance for a period ending on the earlier of the commencement date of equivalent benefits from a new employer or one year from his termination date, provided the named executive continues to pay an amount equal to the employee’s share of contributions.

 

·

Continued participation in benefits in effect for the named executive as of the date of termination, subject to the terms and conditions of the respective plans and applicable law, for a period of one year following the termination date.

If terminated for cause, the named executive shall be entitled to his salary through the period ending with the date of such termination and any accrued benefits.  In case of death, disability or retirement, the named executive shall be entitled to such benefits as may be provided to him pursuant to the Company’s employee benefit plans.

32

Amounts that would have been owed to our named executive officers upon termination or a change of control assuming a triggering event took place on August 31, 2016, the last day of the Company’s most recently completed fiscal year, are presented below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

 

 

    

After

    

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

Change in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Termination

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 

without

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in

 

Cause or by

 

 

 

 

 

 

 

 

 

 

 

 

 

Control

 

the

 

 

 

 

 

 

 

 

 

 

 

 

 

Termination

 

Executive

 

Disability,

 

 

 

 

 

 

 

 

Voluntary or

 

without

 

for Good

 

Death or

 

Change in

 

Name

 

Benefit

 

For Cause

 

Cause

 

Reason

 

Retirement

 

Control

 

Peter R. Chase

 

Salary

 

-

 

$

1,200,000

 

$

1,200,000

 

 

-

 

 

-

 

 

 

Non-Equity Incentive Plan Compensation

 

-

 

 

2,784,211

 

 

2,784,211

 

 

-

 

 

-

 

 

 

Medical Benefits

 

-

 

 

14,179

 

 

14,179

 

 

-

 

 

-

 

 

 

All Other Compensation

 

-

 

 

39,738

 

 

39,738

 

 

-

 

 

-

 

 

 

Acceleration of Stock Options

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

Acceleration of Restricted Stock

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

Total

 

-

 

$

4,038,128

 

$

4,038,128

 

$

-

 

$

-

 

Adam P. Chase

 

Salary

 

-

 

$

600,000

 

$

600,000

 

 

-

 

 

-

 

 

 

Non-Equity Incentive Plan Compensation

 

-

 

 

441,432

 

 

441,432

 

 

-

 

 

-

 

 

 

Medical Benefits

 

-

 

 

15,887

 

 

15,887

 

 

-

 

 

-

 

 

 

All Other Compensation

 

-

 

 

20,937

 

 

20,937

 

 

-

 

 

-

 

 

 

Acceleration of Stock Options

 

-

 

 

-

 

 

191,717

 

 

-

 

$

191,717

 

 

 

Acceleration of Restricted Stock

 

-

 

 

764,154

 

 

1,537,600

 

$

764,154

 

 

1,537,600

 

 

 

Total

 

-

 

$

1,842,410

 

$

2,807,573

 

$

764,154

 

$

1,729,317

 

Kenneth J. Feroldi

 

Salary

 

-

 

$

250,000

 

$

250,000

 

 

-

 

 

-

 

 

 

Non-Equity Incentive Plan Compensation

 

-

 

 

110,923

 

 

110,923

 

 

-

 

 

-

 

 

 

Medical Benefits

 

-

 

 

11,168

 

 

11,168

 

 

-

 

 

-

 

 

 

All Other Compensation

 

-

 

 

31,736

 

 

31,736

 

 

-

 

 

-

 

 

 

Acceleration of Stock Options

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

Acceleration of Restricted Stock

 

-

 

 

247,455

 

 

517,947

 

$

247,455

 

 

517,947

 

 

 

Total

 

-

 

$

651,282

 

$

921,774

 

$

247,455

 

$

517,947

 

If the named executive officer is terminated without cause, or for good reason within 24 months of a change of control, the Company will also pay, at the request of the executive, for an outplacement service for a period of up to one year.  These services are not reflected in the table above, as the amount cannot be determined.

 

Restricted Stock and Option Awards.  Under the terms of the applicable restricted stock awards, in the event of a termination without cause, unvested restricted stock awards will vest on a prorated basis through the date of termination.

 

In the event of a “change in control” as defined in the applicable award, unvested shares of restricted stock will automatically vest, and the vesting of outstanding but unvested stock options may be accelerated, at the discretion of the Board of Directors. For purposes of the table above,below, we have assumed the accelerated vesting of stock options upon the occurrence of a change in control.

 

3331

Amounts that would have been owed to our named executive officers upon termination or a change of control assuming a triggering event took place on August 31, 2019, the last day of the Company’s most recently completed fiscal year, are presented below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

 

 

    

After

    

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Termination

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 

without

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in

 

Cause or by

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control

 

the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Termination

 

Executive

 

Disability,

 

 

 

 

 

 

 

 

Voluntary or

 

without

 

for Good

 

Death or

 

Change in

 

Name

 

Benefit

 

For Cause

 

Cause

 

Reason

 

Retirement

 

Control

 

Peter R. Chase

 

Salary

 

 

 —

 

$

1,200,000

 

$

1,200,000

 

 

 —

 

 

 —

 

 

 

Non-Equity Incentive Plan Compensation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

Medical Benefits

 

 

 —

 

 

12,026

 

 

12,026

 

 

 —

 

 

 —

 

 

 

All Other Compensation

 

 

 —

 

 

11,246

 

 

11,246

 

 

 —

 

 

 —

 

 

 

Acceleration of Stock Options (1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

Acceleration of Restricted Stock

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

Total

 

$

 —

 

$

1,223,272

 

$

1,223,272

 

$

 —

 

$

 —

 

Adam P. Chase

 

Salary

 

 

 —

 

$

1,134,000

 

$

1,134,000

 

 

 —

 

 

 —

 

 

 

Non-Equity Incentive Plan Compensation

 

 

 —

 

 

710,726

 

 

710,726

 

 

 —

 

 

 —

 

 

 

Medical Benefits

 

 

 —

 

 

17,672

 

 

17,672

 

 

 —

 

 

 —

 

 

 

All Other Compensation

 

 

 —

 

 

76,025

 

 

76,025

 

 

 —

 

 

 —

 

 

 

Acceleration of Stock Options (1)

 

 

 —

 

 

 —

 

 

10,284

 

 

 —

 

$

10,284

 

 

 

Acceleration of Restricted Stock

 

 

 —

 

 

381,137

 

 

647,020

 

$

381,137

 

 

647,020

 

 

 

Total

 

$

 —

 

$

2,319,560

 

$

2,595,727

 

$

381,137

 

$

657,304

 

Kenneth J. Feroldi

 

Salary

 

 

 —

 

$

226,167

 

$

226,167

 

 

 —

 

 

 —

 

 

 

Non-Equity Incentive Plan Compensation

 

 

 —

 

 

105,334

 

 

105,334

 

 

 —

 

 

 —

 

 

 

Medical Benefits

 

 

 —

 

 

7,306

 

 

7,306

 

 

 —

 

 

 —

 

 

 

All Other Compensation

 

 

 —

 

 

29,076

 

 

29,076

 

 

 —

 

 

 —

 

 

 

Acceleration of Stock Options (1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

Acceleration of Restricted Stock

 

 

 —

 

 

141,845

 

 

568,308

 

$

141,845

 

$

568,308

 

 

 

Total

 

$

 —

 

$

509,727

 

$

936,190

 

$

141,845

 

$

568,308

 

Christian J. Talma

 

Salary

 

 

 —

 

$

264,583

 

$

264,583

 

 

 —

 

 

 —

 

 

 

Non-Equity Incentive Plan Compensation

 

 

 —

 

 

71,219

 

 

71,219

 

 

 —

 

 

 —

 

 

 

Medical Benefits

 

 

 —

 

 

17,672

 

 

17,672

 

 

 —

 

 

 —

 

 

 

All Other Compensation

 

 

 —

 

 

18,656

 

 

18,656

 

 

 —

 

 

 —

 

 

 

Acceleration of Stock Options (1)

 

 

 —

 

 

 —

 

 

270

 

 

 —

 

 

270

 

 

 

Acceleration of Restricted Stock

 

 

 —

 

 

12,160

 

 

36,480

 

$

12,160

 

$

36,480

 

 

 

Total

 

$

 —

 

$

384,290

 

$

408,881

 

$

12,160

 

$

36,751

 

(1)

Acceleration of stock options above does not include the effects of unvested stock options with an exercise price of greater than $100.22, the closing price of our common stock on August 31, 2019 as reported by the NYSE American.

 

If the named executive officer is terminated without cause, or for good reason within 24 months of a change of control, the Company will also pay, at the request of the executive, for an outplacement service for a period of up to one year.  These services are not reflected in the table above, as the amount cannot be determined.

32

 

Other Executive Plans

2013 Equity Incentive Plan. The 2013 Equity Incentive Plan (the “2013 Plan”) provides for the grant of stock options (both non-statutory options or “NSOs” and, in the case of employees, incentive stock options or “ISOs”), restricted stock, performance awards (including cash), dividend equivalents, deferred stock and unrestricted stock. Unless otherwise determined by the Committee, awards may not be transferred except by will or by the laws of descent and distribution, until the award has been exercised and all restrictions have lapsed, as applicable. The number of shares subject to grant under the 2013 Plan is 1,200,000. The maximum number of awards that may be issued to any person in any fiscal year is 500,000 shares.  The maximum annual cash award that may be issued to any person is $3,000,000.  As of August 31, 2016, 1,158,2912019,  1,057,892 shares of the Company’s common stock reserved under the 2013 Plan remained available for future issuance.

2005 Incentive Plan. The 2005 Incentive Plan (the “2005 Plan”) provided for the grant of stock options (both NSOs and, in the case of employees, ISOs), restricted stock, performance awards (including cash), dividend equivalents, deferred stock and unrestricted stock. Unless otherwise determined by the Committee, awards may not be transferred except by will or by the laws of descent and distribution, until the award has been exercised and all restrictions have lapsed, as applicable. The number of shares subject to grant under the 2005 Plan was 1,000,000. The maximum number of awards that could be issued to any person in any calendar year was 200,000 shares.  The maximum annual cash award that could be issued to any person was $2,000,000.  In accordance with its terms, the 2005 Plan terminated in February 2016.

Non-Qualified Retirement Savings Plan.  The Company maintains a non-qualified Supplemental Savings Plan covering selected employees, including the named executive officers. The Supplemental Savings Plan covers those employees of the Company who from time to time may be designated by the Board of Directors and who meet other eligibility and salary criteria.  Historically,  all of the Company's named executive officers have been designated by the Board of Directors as being covered by the Supplemental Savings Plan. For fiscal 2016,2019, the Company’s Chief Executive ChairmanOfficer and the Company’s Chief Financial OfficerTreasurer participated in the plan.  Participants may elect to defer a portion of their compensation for future payment in accordance with the terms of the plan. The following table gives details relating to our named executive officers' participation in this plan. 

 

Non-Qualified Deferred Compensation for 20162019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Executive

    

Registrant

    

Aggregate Earnings

    

 

 

 

    

 

    

Executive

    

Registrant

    

Aggregate Earnings

    

 

    

 

 

 

 

 

 

Contributions in

 

Contributions in

 

(Loss) in

 

Aggregate Balance at

 

 

 

 

Contributions in

 

Contributions in

 

(Loss) in

 

Withdrawals

 

Aggregate Balance at

 

Name

 

Fiscal Year

 

Fiscal Year ($)(1)

 

Fiscal Year ($)(2)

 

 Fiscal Year ($)(3)

 

Fiscal Year End ($)(4)

 

 

Fiscal Year

 

Fiscal Year ($)(1)

 

Fiscal Year ($)(2)

 

 Fiscal Year ($)(3)

 

 Fiscal Year ($)(3)

 

Fiscal Year End ($)(4)

 

Peter R. Chase

 

2016

 

$

36,000

 

$

20,999

 

$

35,971

 

$

904,183

 

Adam P. Chase

 

2019

 

 

34,020

 

 

19,845

 

 

2,079

 

 

 —

 

 

135,678

 

Kenneth J. Feroldi

 

2016

 

$

114,461

 

$

8,730

 

$

11,707

 

$

201,299

 

 

2019

 

 

13,299

 

 

7,704

 

 

32,554

 

 

 —

 

 

536,292

 

(1)

Amounts in this column are included in the “Salary” column in the Summary Compensation Table.

 

(2)

Amounts in this column are included in the "All Other Compensation" column in the Summary Compensation Table.

 

(3)

Amounts in this column are not included in the Summary Compensation Table.

 

34

(4)

This column includes amounts in the named executive officer’s total deferred compensation account as of the last day of the fiscal year.  In addition to the contribution for fiscal 2016,2019, this column reports the portion of the aggregate balance that was reported as compensation in the Summary Compensation Table in each of the Company’s previous proxy statements and also includes aggregate earnings on previously contributed amounts (if any).

 

All payments under the Supplemental Savings Plan to participants or their designated beneficiaries will be made in a lump sum.  Distribution of these amounts will commence no later than the end of the year in which the participant has separated from service with the Company. 

 

Effective January 1, 2017 (during fiscal year 2017), Peter R. Chase, Executive Chairman, entered a separation of service letter with the Company, reducing the level of services that he performs as the Executive Chairman to no more than 20% of the average level of services performed in the previous 36 months. In doing so, he qualified for payout of his benefits under thenon-qualified Supplemental Savings Plan. Mr. Chase’s balance in the plan was distributed in full in July 2017 (fiscal 2017).Mr. Chase continues to serve as a director and as the Chairman of the Board of Directors.

33

Pension Plan.Plans.   The Company maintains a tax-qualified defined benefit pension plan (“Pension Plan for Employees of Chase Corporation”) and a non-qualified excess benefit plan (“Supplemental Pension Plan”).  The qualified pension plan covers substantially all employees of certain businesses of the Company who have attained the age of 21 and have completed six months of service.  The Supplemental Pension Plan covers those employees of the Company who from time to time may be designated by the Board of Directors and who meet other eligibility and salary criteria.  Currently, the Company's Executive Chairman and the Company’s Chief Executive Officer have been designated by the Board of Directors as being covered by the excess benefit plan.  Benefits under the qualified pension plan are determined based on final average base earnings (subject to Code-imposed limits on compensation and excluding bonuses, overtime, and other extraordinary amounts) and total years of service with the Company (up to a maximum of 40 years).  Benefits under the Supplemental Pension Plan are determined based on final average earnings (including base salary and incentive based bonuses and without regard to Code-imposed limits on compensation) and total years of service with the Company.  A participant becomes fully vested in the Supplemental Pension Plan benefits upon completion of five years of service with the Company. Benefits are payable upon the participant’s separation from service with the Company, including the participant’s retirement or death. Benefits under the Supplemental Pension Plan are paid out on a monthly basis over a period of ten years.

 

The following table shows the actuarial present value of the accumulated benefits for each of the named executive officers at the end of fiscal 2016.2019.  The change in this present value between each fiscal year is reflected in the summary compensation table above.

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Number of

    

Present Value of

    

Payments

 

 

 

 

 

Years Credited

 

Accumulated

 

During Last

 

Name

 

Plan Name

 

Service (#)

 

Benefit ($)

 

Fiscal Year ($)

 

Peter R. Chase

 

Pension Plan for Employees of Chase Corporation

 

47

 

$

 —

 

 —

 

 

 

Supplemental Pension Plan

 

47

 

$

10,485,975

 

1,554,708

 

Adam P. Chase

 

Pension Plan for Employees of Chase Corporation

 

21

 

$

368,017

 

 —

 

 

 

Supplemental Pension Plan

 

21

 

$

602,025

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Number of

    

Present Value of

    

Payments

 

 

 

 

 

Years Credited

 

Accumulated

 

During Last

 

Name

 

Plan Name

 

Service (#)

 

Benefit ($)

 

Fiscal Year ($)

 

Peter R. Chase

 

Pension Plan for Employees of Chase Corporation

 

44

 

$

-

 

-

 

 

 

Supplemental Pension Plan

 

44

 

$

14,409,732

 

-

 

Adam P. Chase

 

Pension Plan for Employees of Chase Corporation

 

18

 

$

237,103

 

-

 

 

 

Supplemental Pension Plan

 

18

 

$

286,037

 

-

 

Kenneth J. Feroldi

 

Pension Plan for Employees of Chase Corporation

 

n/a

 

$

-

 

-

 

 

 

Supplemental Pension Plan

 

n/a

 

$

-

 

-

 

Effective January 1, 2017 (during fiscal year 2017), Peter R. Chase, Executive Chairman, entered a separation of service letter with the Company, reducing the level of services that he performs as the Executive Chairman to no more than 20% of the average level of services performed in the previous 36 months. In doing so, he qualified for payout of his benefits under the Supplemental Pension Plan. His first payment occurred in July 2017, six months after entering the separation of services agreement,  continued through fiscal 2018 and 2019 and are anticipated to continue on a monthly basis over a period of ten years.

 

See the Notes to financial statements found in Item 8 of the Company’s Annual Report on Form 10-K for more information about the Company’s pension plans.  For participants who were employed prior to May 1, 1995 or are covered by a collective bargaining agreement, the monthly benefit is equal to the excess of (a) over (b) plus (c), where:

 

35

(a)

is 1.5% of the participant’s final average compensation multiplied by credited service up to a maximum of 35 years;

 

(b)

is 0.6% of the participant’s final average covered compensation multiplied by credited service up to a maximum of 35 years; and

 

(c)

is 0.8% of the participant’s average monthly compensation multiplied by credited service in excess of 35 years to a maximum of 40 years.

34

 

Of our named executive officers, only our Executive Chairman was employed prior to May 1, 1995, and therefore only he accrues benefits at the rates outlined above. For participants who were employed on or after May 1, 1995 and before December 1, 2008, and are not covered by a collective bargaining agreement, the monthly benefit is equal to the excess of (a) over (b) plus (c), where:

 

(a)

is 0.75% of the participant’s final average compensation multiplied by credited service up to a maximum of 35 years;

 

(b)

is 0.3% of the participant’s final average covered compensation multiplied by credited service up to a maximum of 35 years; and

 

(c)

is 0.4% of the participant’s average monthly compensation multiplied by credited service in excess of 35 years to a maximum of 40 years.

 

Effective December 1, 2008, we adopted a soft freeze in the qualified pension plan whereby no new employees hired will be admitted to the plan, with the exception of the International Association of Machinists and Aerospace Workers Union.   Effective July 15, 2012, we adopted a soft freeze for the International Association of Machinists and Aerospace Workers Union.  All participants admitted to the plan prior to December 1, 2008 and in the case of the International Association of Machinists and Aerospace Workers Union, prior to July 15, 2012, will continue to accrue benefits as detailed in the plan agreements.

 

Chief Executive Officer Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the total annual compensation of our employees and the total annual compensation of our Chief Executive Officer, Adam P. Chase.

For fiscal 2018, we identified our median compensated employee as of June 30, 2018, out of our total global employee population of 751 employees at the time, using a Consistently Applied Compensation Measure (“CACM”) of gross payroll earnings for the year-to-date period ending on such date. Gross payroll earnings consists of all compensation elements appearing in payroll records for each individual, which primarily includes base salary or wages, overtime, bonuses, and other pay components. For purposes of determining the median employee, the pay of those permanent employees that were hired or joined the Company after September 1, 2017 through June 30, 2018 was adjusted to reflect the full period’s gross payroll earnings. Where applicable, gross payroll earnings were converted to U.S. dollars using the average foreign exchange rates from September 1, 2017 through June 30, 2018.

Under applicable SEC rules, we are required to identify our median employee at least once every three years. There were no changes to our employee population or employee compensation arrangements during 2019 that we believe would significantly impact our pay ratio disclosure, and therefore we concluded that we could continue to use the median employee identified in fiscal 2018.

For our fiscal year ended August 31, 2019, our median employee identified as described above had total compensation, determined in accordance with applicable SEC rules, was $43,598.  As reported in the Summary Compensation Table, the 2019 annual total compensation for our Chief Executive Officer, Adam P. Chase, was $1,854,086, resulting in a pay ratio of 43:1.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

35

Compensation of Directors

 

The following table shows how non-employee Directors who are not employees of the Company are paid an annual cash retainercompensated for service on both the Board of $22,000.  In addition, directors who serve on a Board committee receive an annual cash retainer of $3,500 for each committee on which they serve.  Non-employee directors also receive $25,000 of Chase Corporation common stock annually, inDirectors and the form of restricted stock valued at the closing price on the day proceeding the first daycommittees of the new yearBoard of Board service.Directors for both the twelve-month period ending January 31, 2020 (the “2020 Term”) and for the twelve-month period ended January 31, 2019 (the “2019 Term”).  The stock awards vest one year fromCompany’s fiscal 2019 comprises five months of the date2019 Term and seven months of grant. The annual retainer covers all meetings.the 2020 Term.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 Term

 

2019 Term

 

 

 Cash

 

Stock Awards

 

 Cash

 

Stock Awards

 

 

($)

 

($) (a)

 

($)

 

($) (a)

Annual retainer

 

$

45,000

 

$

60,000

 

$

35,000

 

$

40,000

Committee membership (all members):

 

 

 

 

 

 

 

 

 

 

 

 

Audit

 

 

3,750

 

 

3,750

 

 

3,750

 

 

3,750

Compensation and Management Development

 

 

2,500

 

 

2,500

 

 

2,500

 

 

2,500

Nominating and Governance

 

 

1,875

 

 

1,875

 

 

1,875

 

 

1,875

Committee chairperson (in addition to Committee membership):

 

 

 

 

 

 

 

 

 

 

 

 

Audit

 

 

7,500

 

 

7,500

 

 

7,500

 

 

7,500

Compensation and Management Development

 

 

5,000

 

 

5,000

 

 

5,000

 

 

5,000

Nominating and Governance

 

 

3,750

 

 

3,750

 

 

3,750

 

 

3,750

(a)

The stock awards reflect the restricted stock issued onFebruary 5, 2019 with a grant date fair value of $101.92 per share and February 6, 2018 with a grant date fair value of $101.05 per share for the 2020  Term and 2019 Term, respectively.

In addition to the cash and stock retainer, committee chairperson annual fees will be paid in the form of restricted stock valued at the closing price on the day proceeding the first day of the new year of Board Service.  This award also vests one year from the date of grant.  The annual fees for committee chairpersons are as follows: Audit - $9,000; Compensation and Management Development - $6,000; Nominating and Governance - $4,000.

 

Under the compensation policy noted above, the Compensation & Management Development Committee authorized a grant of an aggregate of 4,5544,599 shares of restricted stock to non-employee members of the Board of Directors as compensation for their service to be performed for the period ending January 31, 2017.2020.  This restricted

36

stock will vest on February 1, 2017,2020, at which time the shares of common stock will be issued.  The number of shares granted to each Director for the 2020 Term is equal to $25,000$60,000 divided by the closing price of the Company’s common stock at the time of grant, except that it additionally takes into consideration each Director’s involvement as a member or chairperson of any of the various committees of the Board as outlined above.  If a Director notifies the Company of his or her election prior to January 1 of the relevant calendar year, any portion of the cash retainer may be taken in shares of stock, issued in equal quarterly installments.

 

Non-Qualified Retirement Savings Plan for the Board of Directors.    The Company maintains the Non-Qualified Retirement Savings Plan for the Board of Directors.  Participants may elect to defer a portion of their compensation for future payment in accordance with the terms of the plan.

 

The following table summarizes the total compensation paid to the directors who are not employees of the Company during fiscal 2016:

2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

    

 

    

Change in

    

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonqualified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees Earned

 

 

 

 

 

 

Non-Equity

 

Deferred

 

 

 

 

 

 

 

 

Fees Earned

 

 

 

 

 

 

 

 

or Paid in

 

 

 

 

Option

 

Incentive Plan

 

Compensation

 

All Other

 

 

 

 

 

or Paid in

 

 

 

 

 

 

 

 

 Cash

 

Stock Awards

 

Awards

 

Compensation

 

Earnings

 

Compensation

 

Total

 

 

 Cash

 

Stock Awards

 

Total

 

 

($)

 

($) (a)

 

($)

 

($)

 

($)

 

($) (b)

 

($)

 

 

($)

 

($) (a)

 

($)

 

Mary Claire Chase

 

$

22,000

 

$

25,000

 

-

 

-

 

-

 

 

-

 

$

47,000

 

 

$

40,833

 

$

60,000

 

$

100,833

 

Everett Chadwick, Jr.

 

 

25,500

 

 

25,000

 

-

 

-

 

-

 

 

-

 

 

50,500

 

Thomas D. DeByle

 

 

28,490

 

 

66,250

 

 

94,740

 

John H. Derby III

 

 

25,500

 

 

25,000

 

-

 

-

 

-

 

 

-

 

 

50,500

 

 

 

43,333

 

 

62,500

 

 

105,833

 

Lewis P. Gack

 

 

29,000

 

 

34,000

 

-

 

-

 

-

 

 

-

 

 

63,000

 

 

 

50,833

 

 

73,125

 

 

123,958

 

George M. Hughes

 

 

29,000

 

 

29,000

 

-

 

-

 

-

 

$

84,000

 

 

142,000

 

Ronald Levy (c)

 

 

12,083

 

 

                  - 

 

-

 

-

 

-

 

 

-

 

 

12,083

 

Chad A. McDaniel

 

 

14,875

 

 

25,000

 

-

 

-

 

-

 

 

-

 

 

39,875

 

 

 

48,177

 

 

68,125

 

 

116,302

 

Dana Mohler-Faria

 

 

14,875

 

 

25,000

 

-

 

-

 

-

 

 

-

 

 

39,875

 

 

 

47,865

 

 

69,375

 

 

117,240

 

Thomas Wroe, Jr.

 

 

29,000

 

 

31,000

 

-

 

-

 

-

 

 

-

 

 

60,000

 

 

 

50,208

 

 

69,375

 

 

119,583

 

(a)

The stock awards reflect the restricted stock issued on February 2, 20165, 2019 with a grant date fair value of $48.12$101.92 per share. The shares of restricted stock will vest at the conclusion of the current one-year service period.

(b)

Represents compensation George M. Hughes received for his services as outside general counsel to the Company during fiscal 2016.

(c)

Mr. Levy served as a director through the date of the annual meeting of shareholders in February 2016, and did not stand for reelection at that meeting.

As of August 31, 2016,2019, none of the non-employee directors held outstanding stock options.

36

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Company is seeking the approval of its shareholders of an advisory resolution regarding the compensation of our named executive officers, as disclosed in this proxy statement under the section titled "Executive Officer and Director Compensation—Compensation Discussion and Analysis" and "—Executive Compensation." While this shareholder vote on executive compensation is only an advisory vote that is not binding on the Company or the Board of Directors, the Company values the opinions of its shareholders and will consider the outcome of the vote when making future compensation decisions.

As described more fully in the Compensation Discussion and Analysis section, the primary objective of our executive compensation program is to attract, retain and reward executive officers who contribute to our long-term success. We believe this requires a competitive compensation structure as compared to companies of a similar size in the same or similar industries in the region. Additionally, we seek to align a significant portion of executive officer compensation to the achievement of specified Company performance goals. Incentive cash bonuses are included to drive executive performance by having pay at risk so that a significant portion of potential annual cash compensation is tied to an Adjusted EBITDA-based target. We also include performance-based equity grants with an additional time-based vesting component as a significant element of prospective executive compensation (comprising 50% of the total equity component target value for our Chief Executive Officer and Chief Financial Officer, and 67% for our Treasurer). Consequently, the value of a portion of an executive's compensation is both dependent upon company-wide performance measures and tied directly to the performance of our common stock through targets based on earnings per share and return on invested capital. Restricted stock awards and (in the case of the Chief Executive Officer and Chief Financial Officer)  stock option grants, each with time-based vesting provisions, collectively represent the remaining portions of our equity incentive program, and are designed to align executive incentives with long-term shareholder interests.

We urge shareholders to read the Compensation Discussion and Analysis section above, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and the related compensation tables and narrative above which provide detailed information on the compensation of our named executive officers.

In light of the above, the Compensation and Management Development Committee and the Board of Directors believe that the policies and procedures articulated in the Compensation Discussion and Analysis section above are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has supported and contributed to the Company's success.

Principal Effects of Approval or Non-Approval of the Proposal

The approval of the compensation of the named executive officers, commonly known as a "say-on-pay" resolution, is non-binding on the Board of Directors. As stated above, although the vote is non-binding, the Board and the Compensation and Management Development Committee will review and consider the voting results when making future decisions regarding our executive compensation program.

37

 

Frequency of Advisory Votes

Shareholders will have an opportunity to cast an advisory vote on the frequency of say-on-pay resolutions at least every six years. Following the 2018 annual meeting of shareholders, the Board of Directors determined to hold say-on-pay votes on an annual basis. The next advisory vote on the frequency of the say-on-pay vote will occur at the 2024 annual meeting of shareholders.

Vote Required

The non-binding approval of the compensation of the named executive officers by the shareholders requires the approval of a majority of the votes cast by the shareholders entitled to vote on this proposal at the Meeting. Abstentions, broker non-votes, and votes withheld will not be treated as votes cast for this purpose and will not affect the outcome of the election. Proxies solicited by the Board will be voted to approve the compensation of the named executive officers unless a shareholder has indicated otherwise in the proxy.

OUR BOARD RECOMMENDS A VOTE FOR THE NON-BINDING, ADVISORY PROPOSAL 2TO APPROVE THE EXECUTIVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.

38

PROPOSAL 3

RATIFICATION OF THE APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Company’s Audit Committee has selected PricewaterhouseCoopersapproves the selection of Grant Thornton LLP (“PwC”Grant Thornton”), to serve as the Company’s independent registered public accounting firm for its current fiscal year (which ends August 31, 2017)2020).  PwCGrant Thornton served as the Company’s independent registered public accounting firm in connection with the audit for the fiscal year ended August 31, 2016.2019.  Representatives of PwCGrant Thornton will attend the Meeting, have the opportunity to make a statement if they so desire, and be available to respond to appropriate questions.

 

PricewaterhouseCoopers LLP (“PwC”) served as the Company’s independent auditors until February 2019. The Company’s Audit Committee dismissed PwC on February 6, 2019, effective following the issuance of the Company’s Quarterly Report on Form 10‑Q for the period ended February 28, 2019. PwC’s reports on the Company’s financial statements for the fiscal years ended August 31, 2018 and 2017 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the Company’s fiscal years ended August 31, 2018 and 2017 and the subsequent interim period through February 6, 2019, there were (a) no “disagreements” (within the meaning of Item 304(a) of Regulation S-K) with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have cause it to make reference to the subject matter of the disagreements in its reports on the consolidated financial statements of the Company; and (b) no “reportable events” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K), except for the material weakness in internal control over financial reporting that existed as of August 31, 2018 related to the review of cash flow forecasts used in the valuation of customer relationship intangible assets acquired in a business combination.

On April 2, 2019, following the completion of a competitive process by the Audit Committee to identify and appoint a successor to PwC, the Audit Committee approved the engagement of Grant Thornton as the Company’s independent registered public accounting firm. During the Company’s fiscal years ended August 31, 2018 and 2017 and the subsequent interim period through April 2, 2019, neither the Company nor anyone on its behalf consulted with Grant Thornton on any matter that (i) involved the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Grant Thornton concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) was either the subject of a “disagreement”, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions, or a “reportable event”, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

The Company provided PwC and Grant Thornton with a copy of the disclosure required by Item 304(a) of Regulation S-K prior to the time this proxy statement was filed with the SEC. In the event that PwC or Grant Thornton believed the disclosures were incorrect or incomplete, each was permitted to express its views in a brief statement to be included in this proxy statement. Neither submitted such a statement.

39

Audit and Non-Audit Fees

 

The following table sets forth fees for services provided by the PwCGrant Thornton LLP, and our predecessor auditor PricewaterhouseCoopers LLP,  during fiscal years 20162019 and 2015:2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2016

    

2015

 

    

2019

    

2018

 

Audit Fees (1)

 

$

1,463,222

 

$

1,529,615

 

Audit Fees to Grant Thornton LLP (1)

 

$

1,071,401

 

$

 —

 

Audit Fees to PricewaterhouseCoopers LLP (1)

 

 

512,061

 

 

1,684,736

 

Audit-related fees (2)

 

 

 —

 

 

 —

 

 

 

 —

 

 

33,619

 

Tax fees (3)

 

 

126,169

 

 

121,510

 

 

 

54,700

 

 

118,396

 

All other fees (4)

 

 

 —

 

 

 —

 

 

 

 —

 

 

 —

 

Total

 

$

1,589,391

 

$

1,651,125

 

 

$

1,638,162

 

$

1,836,751

 

(1)

Represents fees for professional services provided in connection with the audit of our annual financial statements and review of our quarterly financial statements.  Audit fees in both fiscal years include services related to the review of the Company’s internal control over financial reporting.

 

(2)

Represents fees, if any, for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported in footnote (1) above. 

 

(3)

Represents fees for services provided in connection with the Company’s tax compliance and tax consulting including preparation of the Company’s federal and state tax returns.

 

(4)

Represents fees, if any, for services provided to the Company not otherwise included in the categories above.

 

In accordance with its charter, the Audit Committee approves in advance any non-audit services provided by the independent registered public accounting firm, including tax planning services which will exceed $20,000 per project, before the services are rendered.  In some cases, the Chairman of the Audit Committee has the delegated authority from the Audit Committee to pre-approve certain services, and such pre-approvals are communicated to the full Audit Committee at its next meeting.  During fiscal years 20162019 and 2015,2018, all services were approved by the Audit Committee in accordance with this policy and applicable SEC regulations.

 

38

Vote Required and Board of Directors Recommendation

 

The ratification of the selection of the Company’s independent registered public accounting firm requires the affirmative vote of a majority of the votes cast on the matter at the Meeting.  As a result, abstentions, broker non-votes and the failure to submit a proxy or vote in person at the Meeting will have no effect on the outcome.   If the Company’s shareholders do not ratify the selection of PwCGrant Thornton LLP as the Company’s independent registered public accounting firm, the Audit Committee will reconsider its selection. 

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERSGRANT THORNTON LLP, INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS AS AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING AUGUST 31, 2017.2020.    

 

40

Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports

 

The Company’s directors, executive officers and ten percent shareholders file reports with the SEC indicating the number of shares of any class of the Company’s equity securities that they owned when they became a director, executive officer or ten percent shareholder and, after that, any changes in their ownership of the Company’s equity securities.  BasedOn April 6, 2018,  Mary Claire Chase received 4,500 shares of Chase common stock as a gift for which a Form 4 was filed on May 10, 2019. Other than as noted above, and based solely upon a review of these reports on Forms 3, 4 and 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, the Company believes that all reporting persons filed on a timely basis the reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended, during the most recent fiscal year.

39

Explanation of Amendments to By-Laws

Effective April 7, 2016, the Company’s Board of Directors amended and restated the Bylaws to:

·

correspond with changes to the Massachusetts Business Corporation Act (the “MBCA”) since the Bylaws were last amended;

·

outline the procedures by which shareholders may make proposals or nominate directors for consideration at a meeting of shareholders;

·

amend the share ownership threshold for calling a special meeting of shareholders; and

·

enact certain other modernizing and clarifying amendments.

The changes made are described below:

Article II—Meeting of Shareholders

Article II, Section 1 “Meeting of Shareholders” was amended to enable (but not require) the Company to permit shareholders and proxyholders not physically present at a meeting of shareholders to participate and vote at the meeting by means of remote communications if the Company has implemented reasonable measures to provide such holders an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings and to verify that each person deemed present and permitted to vote by remote communication is such a holder, and the Company keeps a record of each vote cast  or other action taken at the meeting by remote communication.

Article II, Section 2 “Annual Meetings” was amended to eliminate the requirement that the annual meeting be held within six months after the end of the Company’s fiscal year (which is no longer a MBCA requirement), to state that the purpose of the annual meeting is the election of directors and such other purposes as are specified in the notice of the meeting, and to state that to the extent a shareholder is entitled as a matter of law independent of the Bylaws to propose nominations or other business to be considered at an annual meeting, such holder may do so only in compliance with the Bylaws and any other applicable requirements.

Article II, Section 3 “Special Meetings” was amended to change the ownership threshold of shareholders who may call a special meeting of shareholders from 10% to 25% of the capital stock entitled to vote at the meeting, in the event that the Company has a class of voting stock registered under the Exchange Act.

40

Article II, Section 9 “Advance Notice of Business at Meetings of Stockholders” was added to require that in order for a shareholder to propose a matter before a meeting of the shareholders (other than the nomination of directors, which is addressed in Article III, Section 7), a shareholder must be a shareholder of record at the time the Company gives notice of the meeting, must be entitled to vote at the meeting, and must give timely written notice to the Secretary of the Company in accordance with the procedures outlined in this section. To be timely with respect to an annual meeting, a shareholder’s notice must be given not less than 90 days nor more than 120 days before the anniversary of the Company’s mailing of proxy materials for the immediately preceding annual meeting of shareholders, except that if the meeting is not held within 30 days before or after the anniversary of the preceding annual meeting, the shareholder’s notice must be received by the later of (a) the 120th day before the annual meeting, or (b) the 10th day after the day on which notice of the meeting is mailed to shareholders or public disclosure of the date is made, whichever occurs first. To be timely with respect to a special meeting, the shareholder’s notice must be given not less than 90 nor more than 120 days before the date of the special meeting, except that if the first day on which notice of the meeting is mailed to the shareholders (or public disclosure of the meeting date is made) is less than 100 days before the date of the special meeting, the shareholder’s notice must be given not later than the 10th day after the date the notice of meeting is mailed (or such public disclosure is made, whichever occurs first). A shareholder’s notice must set forth a brief description of the matter the shareholder proposes to bring before the meeting, as well as (i) the name and address of the record holder and name and address of the beneficial owner, if any, on whose behalf the proposal is made; (ii) details of any equity interests, including convertible securities and derivative instruments held or beneficially owned by the shareholder and by such beneficial owner; (iii) any proxy, contract, arrangement or understanding pursuant to which the shareholder or beneficial owner has any right to vote any of the Company’s shares; (iv) any short interest in any security of the Company; (v) any rights to dividends on the shares of the Company that are separated or separable from the underlying shares; (vi) any performance-related fees (other than an asset-based fee) that the shareholder is entitled to based on any increase or decrease in the value of shares of the Company or derivative instruments; (vii) any material interest that the shareholder or beneficial owner has in the proposed business; (viii) a description of any agreement, arrangement or understanding that the shareholder or beneficial owner has with any other person relating to the proposed business; and (ix) the basis on which the shareholder is entitled to make the proposal. The provisions of this section will apply whether or not the shareholder seeks inclusion of the proposal in the Company’s proxy statement for the meeting, except that any shareholder proposal that complies with Rule 14a-8 of the proxy rules promulgated under the Exchange Act and is included in the Company’s proxy statement for a meeting shall be deemed to comply with the requirements for the timing and content of notices under this section.

Article III—Officers and Directors

Article III, Section 1 “Enumeration” was amended to state that the number of directors may be determined by vote of the shareholders or the board of directors.  This section had previously provided for the number to be fixed at the annual meeting or a special meeting of shareholders.  It was also amended to state that the number of directors may be decreased at any time either by vote of the shareholders or by a majority of directors then in office, but only to eliminate vacancies.  Finally, it added “chief executive officer” to the list of officers of the corporation, in addition to the president, treasurer, secretary and such other officers as the directors may appoint.

41

Article III, Section 2 “Qualifications”, which states that directors need not be stockholders, was amended to clarify that the board may nevertheless adopt stock ownership guidelines from time to time in its discretion.

Article III, Section 3 “Election” was amended to refer to the chief executive officer in two places in which the officers were enumerated. It also clarified that director and officer terms end on their death, resignation or removal, if such events occur earlier than the next annual meeting of shareholders. Finally, it was amended to provide that if a chairman of the board is appointed in accordance with new Article V, Section 7 (described below), the chairman may be an officer of the corporation, as an Executive Chairman, if so designated by the directors.

Article III, Section 4 “Removal” was amended to clarify that officers may be removed from their respective offices with or without cause by the board of directors.

Article III, Section 5 “Resignation” was amended to add the chief executive officer to the list of persons to whom a resignation may be given in writing by directors or officers.

Article III, Section 6 “Vacancies” contains non-substantive changes to clarify that any vacancy in the board may be filled by the directors then in office even if the remaining directors are less than a quorum.

Article III, Section 7 “Nomination of Directors” was added to provide procedures for the nomination of directors at an annual or special meeting of shareholders. Only persons nominated in accordance with this section will be eligible for election. Nominations may be made by or at the direction of the board of directors, or by any person who is a shareholder of record at the time of the giving of the notice required by this section, who is entitled to vote at the meeting, and who has given timely notice to the secretary of the Company in accordance with this section.  To be timely with respect to an annual or special meeting, a shareholder’s notice must be delivered within the same time periods outlined above under Article II, Section 9 for other shareholder proposals at such a meeting. A shareholder’s notice must set forth, as to each person whom the shareholder proposed to nominate for election or re-election as a director, (a) the name, age, business address and residence address of such person, (b)  the principal occupation or employment of such person, (c) the class and number of shares of capital stock of the Company beneficially owned by such person, (d) whether or not the person is “independent” under the independence standards of the Company’s principal trading market, and all facts that currently prevent the person from being considered independent, if applicable, and (e) any other information relating to the person that is required to be disclosed in solicitations for proxies under the Exchange Act.  The shareholders notice must also set forth, as to the shareholder giving the notice, the information described in clauses (i) through (vi) under Article II, Section 9 above, as to the identity of the shareholder and certain equity or derivative interests of the shareholder in the Company, as well as a description of all familial, compensatory, financial and/or other relationships, arrangements and transactions, existing at any time within the preceding three years or currently proposed between the person proposed to be nominated as a director and such shareholder or such beneficial owner, if any, or any of their respective affiliates and associates. The Company may require any proposed nominee to furnish such other information as it may reasonably require to determine the proposed nominee’s eligibility, or lack thereof, to serve as an independent director of the Company.

Article IV—Powers and Duties of Directors and Officers

42

Article IV, Section 1 “Directors” was amended to add a clarifying statement that board committees may make rules of conduct for their business, and in the absence of such rules and unless otherwise provided by the directors, committee business will be conducted as nearly as possible in the same manner as provided in the Bylaws for meetings of directors.

Article IV, Section 2 “Chief Executive Officer” was added to account for the potential separation of the offices of president and chief executive officer from time to time, in the discretion of the board.  It substitutes the chief executive officer (in place of the president) as the officer who shall have general charge and supervision of the business of the Company, and provides that unless a separate Chairman of the Board has been appointed or except as otherwise determined by the Board, the chief executive officer shall preside at meetings of the shareholders and, if he is a director, meetings of the board. The sections that follow were consequently renumbered.

Article IV, Section 3 “President” adds a separate description of the duties of the office of president. The president shall, subject to the direction of the chief executive officer, have general charge and supervision of the business of the Company and shall perform such other duties as the chief executive officer shall prescribe. If no other chief executive officer has been appointed, the president will perform the duties of chief executive officer.

Article IV, Section 4 “Vice Presidents” and Article IV, Section 5 “Treasurer” were each amended to add the chief executive officer to the president as the offices that may designate duties from time to time of such offices.

Article IV, Section 8 “Nominating Committee” deleted a provision in subsection (d) thereof that would require any committee of the board to have a majority of members be “non-affiliated directors” as defined in the Bylaws. This was deleted in light of similar stock exchange requirements applicable to standing committees and the Board’s determination that flexibility may be warranted for other ad hoc or specialized committees from time to time. For similar reasons, this subsection was amended to delete the requirement that all board committees have at least three members.  In subsection (e) of Section 8, the definition of “non-affiliated directors” was amended to add a requirement that, in order to be considered a “non-affiliated director”, a person must satisfy the independence standards under the listing rules of any registered national stock exchange on which the Company’s shares may be listed.

Article V—Meeting of the Directors

Article V Section 2 “Special Meetings” was amended to provide that any of the chairman of the board, the chief executive officer, or two or more directors (or one director if there is only one director) may call a special meeting of the board.  Formerly, only the directors or president could call a special board meeting.

Article V Section 3 “Notice” was amended to require that any director who is absent when the determination is made of the time and place of a regular or annual meeting of the board be given notice of such determination. This section was also amended to permit electronic communication as a means of notice to directors of a special meeting of the board.

43

Article V Section 5 “Meetings by Telephone Conference Calls or Other Electronic Communication” was added to permit directors or members of a board committee to participate in a meeting of directors or such committee by means of a conference call or other electronic means through which all persons participating can hear each other at the same time. The sections that follow were consequently renumbered.

Article V Section 7 “Chairman of the Board” was added to provide that the board of directors may appoint a chairman to preside at meetings and perform such other duties and possess such other powers as are assigned to him or her by the board of directors.

Article V Section 8 “Compensation of Directors” was added to provide that directors may be paid such compensation for their services as the board may determine from time to time, including reimbursement for expenses. No such payment shall preclude any director from serving the Company in any other capacity.

Article VI—Corporate Records

Article VI, Section 1 “Records to be Kept” was amended to add a new clause (c), providing that the Company may conclusively presume that the registered holder of a stock certificate is the absolute owner of the shares of stock represented thereby and that the shareholder’s record address is the shareholder’s current address.

Article VII—Share Certificates

Article VII “Share Certificates” was added primarily to enable (but not require) the board to authorize the issue of uncertificated shares of capital stock.  Except to the extent the board determines to issue shares without certificates, a shareholder shall be entitled to a certificate stating the number, the class and the designation of the series, if any, of the shares the certificate represents, in such form as shall be prescribed from time to time by the board of directors.  Share certificates shall be signed (a) by the chairman of the board, the chief executive officer, the president or a vice president, and (b) by the treasurer or an assistant treasurer or the secretary or an assistant secretary.  The Articles that follow were consequently renumbered.

Article XI—Forum for Adjudication of Disputes

Article XI “Forum for Adjudication of Disputes” was added to provide that, unless the Company consents in writing to the selection of an alternative forum, the Business Litigation Session of the Superior Court of Suffolk County, Massachusetts (or, if such court lacks jurisdiction, certain other courts located in Massachusetts) will be the sole and exclusive forum for the following actions: (i) any derivative action or proceeding brought on behalf of the Company; (ii) any action asserting a claim of breach of a fiduciary duty owed by a director or officer or other employee of the Company to the Company or its shareholders; (iii) any action asserting a claim against the Company or any director or officer or other employee arising pursuant to any provision of the MBCA or the Company’s articles of organization or Bylaws; or (iv) any action asserting a claim against the Company, or any director, officer or employee of the Company, governed by the internal affairs doctrine.

44

Certain other non-substantive changes were also made, including harmonizing references to the Company’s shareholders (rather than stockholders) in the Bylaws.

The foregoing description of the Bylaws is qualified in its entirety by reference to the Bylaws, which were filed as Exhibit 3.1 to the Current Report on Form 8-K the Company filed with the Securities and Exchange Commission on April 12, 2016 and are incorporated herein by reference.

Deadlines for Submitting Shareholder Proposals

 

Any shareholder who wishes to present a proposal for consideration at next year’s annual meeting, or to nominate a person as a candidate for election to the board directly, must give written notice to us at our principal executive offices between August 25, 201721, 2020 and September 24, 2017,21, 2020, including the information required by our amended and restated Bylaws.  The information required by our Bylaws for shareholder proposals and director nominations is summarized above.  Under Rule 14a-8 of the Exchange Act, if you desire that such proposal be included in our proxy statement and proxy card for next year’s annual meeting, you must give written notice to us no later than August  25, 2017.21, 2020. Any such proposal must also comply with the other requirements of that rule.  

 

Annual Report on Form 10-K

 

The Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2016,2019, filed with the Securities and Exchange Commission, may be obtained, without charge, by writing to Chase Corporation, Attn: Paula Myers,Investor Relations,  295 University Avenue,  Westwood, Massachusetts 02090.  The Company’s Annual Report on Form    10-K is also available free of charge through the Company’s website at www.chasecorp.com.

 

Householding of Annual Meeting Materials

 

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports.  This means that only one copy of our proxy statement or annual report may have been sent to multiple shareholders in your household.  We will promptly deliver a separate copy of either document to you if you write or call us at the following address or telephone number:  Chase Corporation, Attn: Paula Myers,Investor Relations,  295 University Avenue, Westwood, Massachusetts 02090 (telephone 781-332-0700).    If you wish to receive separate copies of our annual report and proxy statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and telephone number.

 

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Miscellaneous

 

The Company’s management does not know of any business that will come before the Meeting except the matters described in the notice.  If other business is properly presented for consideration at the Meeting, then your proxy will confer discretionary authority to vote on such business.  It is intended that the proxies will be voted by the persons named therein in accordance with their judgment on such matters.

 

The telephone number of the Hilton Boston-DedhamCourtyard Boston Dedham/Westwood is 781-329-7900.781-467-1252.  For directions to Hilton Boston-Dedham,the Courtyard Boston Dedham/Westwood, please contact Paula Myers directly at  508-697-3660.

 

In the event that a quorum is not present when the Meeting is convened, it is intended to vote the proxies in favor of adjourning from time to time until a quorum is obtained.

 

 

By order of the Board of Directors,

 

 

 

 

 

George M. Hughes

 

Corporate Secretary

 

 

 

4641

ANNUAL MEETING OF SHAREHOLDERS OF

CHASE CORPORATION

February 7, 2017

GO GREEN

e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS:

The Notice of Meeting, Proxy Statement, Proxy Card and Annual Report to Shareholders
are available at https://materials.proxyvote.com/16150R

Please sign, date and mail

your proxy card in the

envelope provided as soon

as possible.

Picture 2  Please detach along perforated line and mail in the envelope provided.  Picture 1

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       21030000000000000000 0


020717

 

Proxy Card Reproduction

 

Picture 1

MANAGEMENT RECOMMENDS A VOTE "FOR ALL NOMINEES" FOR THE ELECTIONBY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 02/03/2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF DIRECTORS AND “FOR” PROPOSAL 2.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.  PLEASEFUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. CHASE CORPORATION 295 UNIVERSITY AVENUE WESTWOOD, MA 02090 VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 02/03/2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK YOUR VOTEBLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN HERE    ☒

FOLLOWS: KEEP THIS PORTION FOR AGAINST  ABSTAIN

YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For Withhold For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the AllAll The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. ELECTION OF DIRECTORS:

NOMINEES:

Election of Directors Nominees 01. Adam P. Chase 06. Lewis P. Gack 02. Peter R. Chase 07. Chad A. McDaniel 03. Mary Claire Chase 08. Dana Mohler-Faria 04. Thomas D. DeByle 09. Thomas Wroe, Jr. 05. John H. Derby III The Board of Directors recommends you vote FOR proposals 2 and 3. 2. Advisory vote on the compensation of our named executive officers. For 0 0 Against 0 0 Abstain 0 0 3. To ratify the appointment of PricewaterhouseCoopersGrant Thornton LLP as the corporation's independent registered public accounting firm for the fiscal year ending August 31, 2017

☐FOR ALL NOMINEES

O Everett Chadwick, Jr.

O Adam P. Chase

THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES THAT YOU SPECIFY. IF YOU DO NOT SPECIFY A CHOICE AS TO A MATTER, THEN THE SHARES REPRESENTED HEREBY WILL BE VOTED “FOR ALL NOMINEES" FOR THE ELECTION OF DIRECTORS AND “FOR” PROPOSAL 2.

PLEASE SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED STAMPED ENVELOPE PROMPTLY, SO AS TO ENSURE A QUORUM AT THE MEETING REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON.

RECEIPT OF THE NOTICE OF ANNUAL MEETING AND THE ACCOMPANYING PROXY STATEMENT IS ACKNOWLEDGED.

☐WITHHOLD AUTHORITY
FOR ALL NOMINEES

O Peter R. Chase

O Mary Claire Chase

O John H. Derby III

O Lewis P. Gack

☐FOR ALL EXCEPT

O George M. Hughes

   (See instructions below)

O Chad A. McDaniel

O Dana Mohler-Faria

O Thomas Wroe, Jr. 

INSTRUCTIONS:To withhold authority to vote for2020. NOTE: Such other business as may properly come before the meeting or any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

Signature of Shareholder

  Date:

  Signature of Shareholder

  Date:

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Note:

adjournment thereof. Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.name(s) appear(s) hereon. When signing as attorney, executor, administrator, attorney, trustee or guardian,other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If the signer is a corporation please sign full corporate name by duly authorized officer, giving full title as such. If signer is aor partnership, please sign in full corporate or partnership name by authorized person.

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officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 0000433198_1 R1.0.1.18 SHARES CUSIP # JOB #SEQUENCE #

☐

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PROXY

CHASE CORPORATION

295 University Avenue

Westwood, MA 02090

Telephone (781) 332-0700

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, FEBRUARY 7, 2017

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

THE UNDERSIGNED, REVOKING ALL PRIOR PROXIES, HEREBY APPOINTS PETER R. CHASE AND GEORGE M. HUGHES, AND EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE, AS SPECIFIED HEREIN, ALL SHARES OF THE CORPORATION'S COMMON STOCK THAT THE UNDERSIGNED WOULD BE ENTITLED TO VOTE IF PRESENT IN PERSON AT THE ANNUAL MEETING, TO BE HELD AT 9:30 A.M. ON TUESDAY, FEBRUARY 7, 2017 AT THE HILTON BOSTON-DEDHAM HOTEL, 25 ALLIED DRIVE, DEDHAM, MA 02026, AND AT ANY ADJOURNMENT THEREOF, AND HEREBY CONFERS UPON THE PROXIES, AND EACH OF THEM, DISCRETIONARY AUTHORITY TO VOTE UPON ANY OTHER BUSINESS THAT MAY COME BEFORE THE MEETING AND WITH RESPECT TO WHICH DISCRETIONARY AUTHORITY MAY BE GRANTED.

(Continued and to be signed on the reverse side.)

 

 

 

 

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1.1

14475 

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Folio_chase proxy v3_page_2.gif

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and Annual Report are available at www.proxyvote.com CHASE CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TUESDAY, FEBRUARY 4, 2020 64 UNIVERSITY AVE WESTWOOD, MA 02090 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THE UNDERSIGNED, REVOKING ALL PRIOR PROXIES, HEREBY APPOINTS PETER R. CHASE AND GEORGE M. HUGHES, AND EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE, AS SPECIFIED HEREIN, ALL SHARES OF THE CORPORATION'S COMMON STOCK THAT THE UNDERSIGNED WOULD BE ENTITLED TO VOTE IF PRESENT IN PERSON AT THE ANNUAL MEETING, TO BE HELD AT 9:30 A.M. ON TUESDAY, FEBRUARY 4, 2020 AT COURTYARD BOSTON DEDHAM/WESTWOOD, 64 UNIVERSITY AVE, WESTWOOD, MA 02090, AND AT ANY ADJOURNMENT THEREOF, AND HEREBY CONFERS UPON THE PROXIES, AND EACH OF THEM, DISCRETIONARY AUTHORITY TO VOTE UPON ANY OTHER BUSINESS THAT MAY COME BEFORE THE MEETING AND WITH RESPECT TO WHICH DISCRETIONARY AUTHORITY MAY BE GRANTED. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. (Continued and to be signed on the reverse side.) 0000433198_2 R1.0.1.18