UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14ASCHEDULE14A
(RULE 14A-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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☒ | Definitive Proxy Statement |
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☐ | Soliciting Material Pursuant to §240.14a-12 |
MYERS INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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1293 South Main Street — Akron, Ohio 44301
March 20, 2018
23, 2020
Dear Fellow Shareholders,
On behalf of the Board of Directors of Myers, I am pleasedIt is a privilege to update you about our work on behalf of Myers shareholders as Chairman of its Board of Directors. I am writing to update you on our work.
In October, with David Banyard’s departure from the shareholdersCompany, the board acted swiftly and decisively in naming our Executive Vice President, Chief Legal Officer, and Corporate Secretary Andrean Horton as Interim President and CEO. During this transition, Andrean has been capably supported by other members of the company,team, including our two segment group presidents, Chris DuPaul and Mike Valentino, and Executive Vice President and CFO Kevin Brackman. The Company's management has also been strengthened by the September hiring of Tom Harmon, our Vice President and Chief Human Resources Officer.
We were actively engaged in my second yearfinding a new CEO, and a search committee comprised of board members (led by director and Corporate Governance and Nominating Committee Chair Bruce Lisman) worked diligently and quickly to attract and select the best possible candidate. We were very pleased to announce the selection of Mike McGaugh as Chairman.
Myers’ new President, Chief Executive Officer, and director effective April 6, 2020. Mike most recently served as Executive Vice President and Chief Operating Officer of BMC Stock Holdings, Inc. and previously served The Dow Chemical Company for over 20 years in global business leadership roles.
The Myers managementboard, including in very recent strategy sessions, is focusing the Company on revenue growth -- encompassing both new products and potential related acquisitions. Already, our Distribution segment has seen positive results. Until 2018, sales had been declining every year since 2012. Last year, however, organic sales increased by 1.7% and the acquisition of Tuffy Manufacturing (announced in late August) is expected to be accretive to Myers’ earnings.
Our largest segment, Material Handling, suffered from a decline in earnings last year. To put this into context, however, despite a 15% decline in sales, the segment increased its adjusted EBITDA margin by 130 basis points, thanks to management's continual attention to driving efficiencies.
The board was highly engaged throughout 2019. In fact, there were a total of ten full board meetings and a total of fifteen regular committee meetings. All directors attended a board meeting and plant tour at our Scepter facility in Miami, Oklahoma. I want to thank the entire Miami team is relatively new,for their kind hospitality (even during a tornado warning!).
Effective with CEO David Banyard having assumed that role in December 2015 and CFO Matteo Anversa having joined the company in December 2016. They are ably supported bythis year’s annual meeting, we will be making one change to our Committee Chairs. After over a strong corporate teamdecade of Chief Accounting Officer Kevin Brackman, Vice President of Investor Relations and Treasurer Monica Vinay, and Kevin Gehrt, Vice President of Human Resources.
As with the management team, your Board is a relatively new team as well. Five of the current nine directors have joined the boardsuperb service in the past three years; two board members are women. We will continue to review and upgrade our governance, compensation plans, and corporate controls and compliance. Our objective is to ensure that Myers outperforms companies of similar and larger size, and we believe that we are meeting that goal.
As of this year’s Annual Meeting, our boardrole, Bob Stefanko will be shrinkingtransitioning off as John CroweAudit Chair. He will be succeeded by director Jane Scaccetti, who is currently Audit Chair of Penn National Gaming. She joins Bruce Lisman and Dan Lee have both decided not to stand for re-election. John joined the board in 2009 and has distinguished himselfSarah Coffin as the chairChairs of the Corporate Governance and Nominating Committee through bothand Compensation Committees, respectively. Fortunately, we are retaining Bob’s wise counsel as a director.
We continue to incorporate best practices in our CEOcorporate governance. For example, we conduct annual elections for all directors; ensure there is an independent board chair and committees comprised exclusively of independent board transitions overmembers; and utilize the past few years. After a nine-year career with us, he has decidedservices of an independent third party to retire. Dan joined in 2016 in his second stint withfacilitate annual self-evaluations of our board but has decidedperformance.
The committee system is central to focus more on his other business interests. We thank both John and Dan for their commitment to Myers.
Our Committees are a critical part of our governance structure, and all of them have a key role in the organization.structure. Each of the Audit and Compensation Committees reviews and approves all proposed chargeschanges and adjustments (affecting earnings and employee compensation) at their respective committee meetings on a quarterly basis. During the year, the Audit Committee extended its contract with our external auditors, which strengthened this relationship and lowered our costs substantially. The
Our Compensation Committee hired a new consultant,continues to work to optimize the Company’s compensations program, ensuring that management’s short- and we will continue to be diligent in evaluating shareholder-friendly forms of executivelong-term incentives are properly aligned with shareholders’ interests. The Corporate Governance and employee compensation.
JustNominating Committee is charged with overseeing board training and evaluation, as we ask much of our management team,well as acontinuing board we hold ourselves to a high standard of excellence. We continue to self-evaluate. For example, we use an independent party to evaluate our peers, each committee, and the board as a whole. To maximize the effectiveness of these independent evaluations, we discuss the feedback—in both committee and board meetings—and establish objectives for improvement. In addition, we promote individual director education. Last fall, the entire board spent half a day during the beginning of a scheduled board meeting in an intensive education effort highlighting current topics affecting corporate governance and other current topics, including cybersecurity and tax policy, affecting the company and Corporate America.
succession. The boardAudit Committee continues to work closely with managementour outside independent accounting firm and internal financial staff to evaluateensure the quality of our financial controls.
Environmental stewardship and define Myers’ enterprise strategy.corporate responsibility are likewise very important to Myers – and something about which several shareholders have inquired on an ongoing basis. We incorporate environmental consciousness into all aspects of our operations by, among other measures, recycling and reprocessing plastic scrap in our facilities. We also manufacture returnable packaging products and implement and maintain recycling programs. We conserve energy whenever we can and focus on sustainability, as well. The board remains focused on the Company’s safety record, which thankfully remains well below the industry average. We continue to strive for zero injuries at our facilities, and last year our recordable injuries were reduced by one-third (our injury rate is about half that of the industry). We are confidentalso working to increase employee engagement and satisfaction within the organization. To that end, we completed an engagement survey last year, in which 91% of all employees responded.
As I mentioned in last year’s letter, we changed the companymethod (but not the actual dollar equivalent) of director pay. Beginning a year ago, the stock portion of director pay was granted at the beginning of the year, with vesting at year end, rather than granted at year end (in April, 2019, for instance, Directors’ stock grants vested at about $24/share). Directors’ annual cash retainer has made significant strides in implementing its strategy, whichbeen $55,000 since 2018, and was articulated to the investment community in early 2017. Building a winning culture is a key part of executing our strategy. As a board, we have been deeply involved with management in defining Myers’ culture as one that is results- and action-oriented. We are committed to transparency and candor, remaining flexible, and consistently attentive to our customers’ needs. We also strongly believe in operating with the highest ethical standards and promoting diversity throughout our organization. We believe that stressing such an environment is important for customers and employees alike, as well as for long-term shareholder value.$52,500 from 2015.
For the secondfourth consecutive year, we reached out to our shareholders. Specifically, last fall we contacted all shareholders who ownedowning more than 1% of Myers’ outstanding shares, offering to meet on governance issues. We contacted our company to solicit their opinions on our corporate governance and compensation practices. From September through January, Compensation Committee Chair Sarah Coffin, Treasurer Monica Vinay, and I spoke withtop shareholders representing about 33%approximately three-quarters of Myers’ shares (last year, shareholders who owned about 65% of the company wished to speak with us).total outstanding shares. We continue to appreciate these frank conversations with our shareholders, who offered us valuable insights on their governance views. We have already taken action as a result of these conversations -- and will continue to do so.
We are alsowere gratified by the results of the “say on pay” proposal at last year’syear's annual meeting, when more than 2530 million shares voted for,“for” and only about 220,000 voted against. This was a substantial improvement over last year when about 6.7 millionless than 700,000 shares voted against“against.”
During 2019, the total return (including dividends) for Myers’ stock was 13.8%, compared to 31.5% for the S&P 500 (the return for smaller companies like Myers was generally less than that index). Although this same “say on pay” proposal.one year performance was relatively disappointing, we believe that one year is not an appropriate gauge of long-term performance, and are gratified about our internal improvements and opportunities for long-term growth.
WeAs always, we welcome feedback from our shareholders. Shareholders may send communication by email to governance@myersind.com, or by mail or courier delivery addressed as follows: Board of Directors (or Committee Chair, Board Member, or Non-Management Directors, as the case may require), c/o Chief FinancialLegal Officer and Corporate Secretary, Myers Industries, Inc., 1293 South Main Street South, Akron, Ohio 44301, as outlined more fully outlinedcompletely in our Communication Procedures for Interested Parties and Shareholders available on the Company’s website www.myersind.com.www.myersindustries.com.
Although we recognize that it is a very short period of time, we are cognizant of and encouraged by Myers’ stock price performance during 2017; Myers stock began the year trading at $14.30/share and ended at $19.50/share. Including dividends, the total shareholder return for Myers last year was about 40% -- compared to almost 22% return for the S&P 500 Index. Of course, this is not a prediction of future performance, and one year is not an appropriate gauge of long-term performance. But we are certainly pleased by the market’s reaction, to date, to our results and articulated strategy.
Please rest assured that yourYour board remains very active and engaged and that we begin 2018 with renewed enthusiasm and a continued commitment2020 firmly committed to building long-term shareholder value at Myers. Thank you for your support of the companyCompany and confidence in our efforts on your behalf.
Sincerely,
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F. Jack Liebau, Jr. |
Chairman of the Board |
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The Board of Directors of Myers Industries, Inc. (“Myers Industries” or the “Company”) has fixed the close of business on March 1, 20186, 2020, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting.Meeting of Shareholders to be held on April 29, 2020 (the “Annual Meeting”). This Proxy Statement, together with the related proxy card and our 20172019 Annual Report to Shareholders, is being mailed to our shareholders on or about March 20, 2018.23, 2020. To be sure that your shares are properly represented at the Annual Meeting, whether or not you intend to attend the Annual Meeting via live webcast or in person, please complete and return the enclosed proxy card, or follow the instructions to vote by telephone or internet, as soon as possible.
If you have any questions or need assistance in voting your shares, please contact our Investor Relations Department at (330) 761-6212.
By Order of the Board of Directors, |
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Andrean R. |
Interim President and Chief Executive Officer |
Akron, Ohio
March 20, 201823, 2020
THE 20172019 ANNUAL REPORT TO SHAREHOLDERS ACCOMPANIES THIS NOTICE
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on April 25, 2018 (the “Annual Meeting”): Meeting: This Proxy Statement and the Company’s 20172019 Annual Report to Shareholders are available on Myers Industries’ website at at:
http://investor.myersindustries.com/investor-relations/financial-information/default.aspx.default.aspx.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: | Wednesday, April |
Time: | 9:00 |
Location: | The live webcast of the meeting will be available on the Investor Relations section of the Company’s website at www.myersindustries.com and the meeting will be held in person at: 1554 South Main Street, Akron, OH 44301 (subject to federal and state restrictions that may be imposed due to COVID-19 mitigation efforts)
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Record Date: | March |
Items of Business
1. To elect the | 4. To consider such other business as may be properly brought before the meeting or any adjournments thereof. |
2. To
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The Board of Directors recommends that you vote “FOR” each of the director nominees included in Proposal No.Number 1 and “FOR” each of Proposal Nos.Numbers 2 3 and 4.3. The full text of these proposals is set forth in the accompanying Proxy Statement.
How to Vote
| By Telephone |
| By Internet |
| By Mail |
| Via Webcast or In Person |
You may vote by calling 1-800-690-6903. | You may vote online at www.proxyvote.com. | You may vote by completing and returning the enclosed proxy card. | All shareholders are cordially invited to attend the Annual Meeting via live webcast or in person (if permitted under current federal or state restrictions in connection with COVID-19 mitigation efforts). | ||||
PROXY STATEMENTSTATEMENT SUMMARY
Below are the highlights of important information you will find in this Proxy Statement. As this is only a summary, we request you please review the full Proxy Statement before casting your vote.
General Meeting Information | |
| Wednesday, April 9:00 a.m. EDT |
Place | In-person: 1554 South Main Street, Akron, OH 44301 (subject to federal or state restrictions that may be imposed in connection with COVID-19 mitigation efforts) Online: The live webcast of the meeting will be available on the Investor Relations section of the Company’s website at www.myersindustries.com |
Record Date | March |
Voting |
Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for the election of directors and one vote for each of the proposals to be voted on.
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Voting Matters and Board Recommendations | |||||
Proposal | Voting Options | Vote Required for Approval | Effect of Abstentions and Broker | Board Recommendation | |
| Election of Directors | “FOR” all nominees or “WITHHOLD” your vote for one or more of the nominees | Nominees for election as directors who receive the greatest number of votes cast |
| FOR EACH NOMINEE |
2. | Advisory Vote to Approve Executive Compensation | “FOR” or “AGAINST” or “ABSTAIN” from voting | Affirmative vote of the holders of a majority of the common stock represented in person or by proxy at the Annual |
| FOR |
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Appointment of Independent Registered Public Accounting Firm
| “FOR” or “AGAINST” or “ABSTAIN” from voting | Affirmative vote of the holders of a majority of the common stock represented in person or by proxy at the Annual |
| FOR | |
PROXY STATEMENT SUMMARY (CONTINUED)
Recent Highlights and Achievements
The Company’s management and its Board of Directors of the Company (the “Board” or “Board of Directors”) have together developed a strategic vision for the Company.Company, which they have focused on implementing for the past several years. This long-term strategy is guided by three key operating principles:
Niche market focus
Flexible operations through the use of an asset-light business model
Strong cash flow growth
The Company’s mission is to instill a culture where safety and efficiency are part of every aspect of the business and where employees are empowered to act like owners. The Company’s management and Board of Directors work hand-in-hand to develop our strategic vision and together review the Company’s strategy and performance periodically throughout the year.
Myers Industries has made meaningful progress executing its long-term strategy. The Company’s key achievements in 20172019 included, among others:
Strong commercial executionImproved adjusted operating income from $40.4 million in three key niche markets:2018 to $42.0 in 2019 and expanded adjusted gross margin by 150 basis points to 33.3%, despite significant market headwinds evidenced by a decrease in net sales from $566.7 million in 2018 to $515.7 million in 2019.
Double-digit year-over-year salesExecuted strategic transformation actions for our Distribution Segment, which includes enhancements in that segment’s go-to-market strategy, implementation of 80/20 to drive improved contribution margins, and optimization of logistics and overhead costs, resulting in increased EBITDA margin of 8% in the Distribution Segment toward goal of 10% by the end of 2020.
Completed acquisition of Tuffy Manufacturing for $18 million in August 2019 to support growth in our Consumer and Food & Beverage marketsDistribution Segment.
High single-digit year-over-year sales growth in our Vehicle market
Progress towards transforming into an asset-light operating model
Restructured our operating footprint eliminating three facilities and generating labor, overhead and transportation savings
Divested our Brazil operations, which were non-strategic and generated negative cash flow
Reduced debt by $38.5 million
Reduced working capital by $10 million despite higher sales volume
IncreasedGenerated cash flow from continuing operations by 45% vs. 2016 to $49of $47.0 million
Established an acquisition pipeline, giving us the ability to deploy future and free cash flow towards higher growthof $36.7 million in 2019.
The Company uses certain non-GAAP measures in this proxy statement. Adjusted income per diluted share from continuing operations, operating income as adjusted, income from continuing operations as adjusted, EBITDA as adjusted, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow are non-GAAP financial measures and are intended to serve as a supplement to results provided in accordance with accounting principles generally accepted in the United States. Myers Industries believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Appendix A to this proxy statement.
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PROXY STATEMENT SUMMARY (CONTINUED)
Governance Highlights
Myers Industries is committedIndustries’ commitment to applying sound corporate governance practices.practices has been illustrated through a number of positive actions taken over recent years. We firmly believe that sound corporate governance practices areis in the best interests of our shareholders and strengthenstrengthens accountability within the organization. The following is a summary of our sound governance practices:
Annual Elections |
| Yes |
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| Stock Ownership Guidelines for Executives |
| Yes |
Independent Board Chair |
| Yes |
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| Anti-Hedging and Anti-Pledging Policy |
| Yes |
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| Code of Conduct and Ethics |
| Yes |
Committee Independence |
| 100% |
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| Board Member Recruiting Guidelines |
| Yes |
Number of Financial Experts |
| 4 |
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| Executive Sessions of the Board |
| Yes |
Board Gender Diversity |
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| Anonymous Reporting |
| Yes |
Board and Committees |
| Yes |
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| Clawback Policy |
| Yes |
Over-Boarding Policy |
| Yes |
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Myers Industries’ commitment to sound corporate governance practices has been illustrated through a number of actions taken over the years, as shown below.
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PROXY STATEMENT SUMMARY (CONTINUED)
Director Nominees
You are being asked to vote on the election of the following seven director candidates. The candidates listed below are the nominees recommended by the Corporate Governance and Nominating Committee (the “Governance Committee”) and approved by the Board to serve for a one-year term. Detailed information on each director is available starting on page 9.12.
Two of our current directors, John Crowe and Daniel Lee, who served as directors during 2017, are not standing for re-election to the Board. Both Mr. Crowe and Mr. Lee will continue to serve as a director of the Company until the 2018 Annual Meeting. Effective with the Annual Meeting, the size of the Board of Directors will be reduced from nine (9) to seven (7) directors. The Company thanks Messrs. Crowe and Lee for their service on the Board and thanks Mr. Crowe for his leadership as Chair of the Corporate Governance and Nominating Committee.
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| Current Committee Memberships | ||||
Name | Age | Director Since | Experience | Independent | Audit | Compensation | Governance | ||
Sarah R. Coffin | 67 | 2010 | Former CEO, Aspen Growth Strategies, LLC | Yes | ● | Chair |
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Ronald M. De Feo | 68 | 2018 | Former President, Chief Executive Officer and Executive Chairman of Kennametal Inc. (NYSE: KMT) and a founding partner of Nonantum Capital Partners, LLC | Yes |
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William A. Foley | 72 | 2011 | Executive Chairman and former CEO, Libbey Inc. (NYSE: LBY) | Yes |
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F. Jack Liebau, Jr. Chairman(1) | 56 | 2015 | Former President and CEO of Roundwood Asset Management | Yes | ● | ● | ● | ||
Bruce M. Lisman | 73 | 2015 | Former Chairman of the Global Equity Division, JP Morgan Chase & Co. (NYSE: JPM) | Yes |
| ● | Chair | ||
Lori Lutey | 55 | 2018 | Former Executive Vice President and Chief Financial Officer of Schneider National (NYSE: SNDR) | Yes | ● |
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Michael McGaugh(2) | 46 | 2020 | President and CEO, Myers Industries, Inc. | No |
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Jane Scaccetti | 65 | 2016 | CEO and founding partner of Drucker & Scaccetti | Yes | ● |
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Robert A. Stefanko | 77 | 2007 | Former Chairman and EVP of Finance and Administration of A. Schulman, Inc. (former NASDAQ) | Yes | Chair | ● |
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(1) | Mr. Liebau is an ex officio member of each of the Company’s committees. |
(2) | As described in the Company’s Current Report on Form 8-K filed on March 16, 2020 and the press release filed as an exhibit to such Current Report, the Board of Directors appointed Mr. McGaugh as the Company’s President and Chief Executive Officer and a director effective April 6, 2020. |
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Name | Age | Director Since | Experience | Independent | Audit | Compensation | Corporate Governance |
R. David Banyard | 49 | 2016 | President, CEO, Myers Industries. Inc. | No |
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Sarah R. Coffin | 65 | 2010 | Former CEO, Aspen Growth Strategies, LLC | Yes | ● | CHAIR |
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William A. Foley | 70 | 2011 | Chairman of the Board and CEO, Libbey Inc. (NYSE: LBY) | Yes |
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F. Jack Liebau, Jr. Chairman* | 54 | 2015 | Former President and CEO of Roundwood Asset Management | Yes | ● | ● | ● |
Bruce M. Lisman** | 71 | 2015 | Former Chairman of the Global Equity Division, JP Morgan Chase & Co. (NYSE: JPM) | Yes |
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Jane Scaccetti | 63 | 2016 | CEO and founding partner of Drucker & Scaccetti | Yes | ● |
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Robert A. Stefanko | 75 | 2007 | Former Chairman and EVP of Finance and Administration of A. Schulman, Inc. (NASDAQ) | Yes | CHAIR | ● |
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*Mr. Liebau is an2020 Proxy Statement ex officio| member of each of the Company’s committees.iii
**Mr. Lisman will be named the Chair of the Corporate Governance and Nominating Committee following Mr. Crowe’s retirement.
PROXY STATEMENT SUMMARY (CONTINUED)
Board Overview
Myers Industries has an experienced and effective Board focused on shareholder value creation. The Board is currently composed of nineeight members, eightall of whom are independent. The charts below highlight the Board’s composition and experience.experience, including the impending appointment of Mike McGaugh as a non-independent director effective April 6, 2020.
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PROXY STATEMENT SUMMARY (CONTINUED)
Board Composition
Director Qualifications
Directors (number / %)
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| Executive Leadership | |
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| Public Board Experience | |
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| 88% |
| Investor Relations | |
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| 78% |
| M&A | |
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| 78% |
| Global Experience | |
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6 |
| 66% |
| Brand and Marketing | |
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4 |
| 44% |
| Financial Expert | |
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4 |
| 44% |
| Industry Experience / Operational Expertise | |
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PROXY STATEMENT SUMMARY (CONTINUED)
Shareholder Outreach
We believe engaging in shareholder outreach is an important element of strong corporate governance. In 2017, in a continuation of the Company’s shareholder outreach efforts in 2016, members of our Board and executive management acted on this belief and contacted the top 12 shareholders who own 1% or greater of outstanding shares and represent approximately 71% of total shares outstanding. Following this outreach, conference calls were conducted with 4 of the 12 shareholders initially approached who had indicated interest in having a conversation with our management and directors, whose ownership represented approximately 33% of total shares outstanding. During our outreach meetings, we discussed with shareholders corporate governance matters (including the Company’s shareholder outreach efforts through discussions and through the Company’s proxy statement), the correlation between the Company’s executive compensation practices and the Company’s strategy, safety, environmental and social policies and reporting practices of the Company and other items of shareholder interest.
The Company values the input received from these discussions with shareholders. Following these conversations, the Company has continued to emphasize the importance of safety in our operations and has renewed its focus on enhancing sustainable business practices and incorporating environmental consciousness throughout our operations. Additionally, the Compensation Committee of the Company regularly evaluates the Company’s compensation program and considers shareholders’ input when developing changes to the compensation program.
In addition, each spring, we mail all shareholders a copy of the Company’s Annual Report and Proxy Statement.
At any time during the year shareholders may access our Annual Report, Proxy Statement, financial presentations, and corporate governance guidelines at www.myersindustries.com. Shareholders may contact any director, committee of the board, non-management director or the Board through the following:
via U.S. Mail at:
Myers Industries, Inc.
c/o Corporate Secretary
1293 South Main Street
Akron, Ohio 44301
via e-mail at:
governance@myersind.com
A toll-free hotline has also been established if an interested party wishes to contact a director, a committee of the Board, a non-management director or the Board by phone. The number is (877) 285-4145 and is available worldwide 24 hours a day, seven days a week.
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PROXY STATEMENT SUMMARY (CONTINUED)
Executive Compensation Overview
Myers Industries’ executive compensation program, set forth by the Compensation Committee, is designed to implement our executive pay philosophy to:
Attract and retain talented and experienced executives and other key employees
Ensure that the actual compensation paid to our executive officers is aligned and correlated with financial performance and changes in shareholder value (“pay for performance”)
Motivate our executive officers to achieve short-term and long-term Company goals that will increase shareholder value
Reward executives whose knowledge, skills and performance are crucial to our success
Compensation Practices
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Directors (number / %)
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9 |
| 100% |
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7 |
| 78% |
| Other Public Board Experience |
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| 78% |
| Investor Relations |
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| 67% |
| Mergers & Acquisitions |
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| 78% |
| Global Experience |
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6 |
| 67% |
| Brand and Marketing |
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4 |
| 44% |
| Audit Committee Financial Expert |
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5 |
| 56% |
| Industry Experience / Operational Expertise |
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PROXY STATEMENT SUMMARY (CONTINUED)
Elements of Compensation for 2017Shareholder Engagement
Our 2017 executive compensation program was designed to reinforce the relationship between the interestsOne of our named executive officers (or “NEOs”)key priorities is conducting robust engagement with our shareholders in order to provide transparency into our business and determine which issues are important to our shareholders. The objectives and key characteristicsParticipants in our engagement programs include executive management, members of each element of our 2017 executive compensation are summarized below:
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PROXY STATEMENT SUMMARY (CONTINUED)
2017 NEO Pay Mix
2017 CEO Compensation Mix
2017 CFO Compensation Mix
2017 CAO Compensation Mix
* “Fixed” compensation includes salary and service-based restricted stock; “variable” compensation includes annual bonuses, performance stock units and stock options; “long-term” compensation includes stock options, performance stock units and restricted stock, and “short-term” compensation includes salary and annual bonuses.
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TABLE OF CONTENTS OF PROXY STATEMENT
1
Corporate Governance and Compensation Practices and Policies
The Board of Directors is committed to maintaining soundand Investor Relations personnel. Our methods of engagement include:
Earnings conference calls
Investor conferences
One-on-one investor meetings and one-on-one investor conference calls
Outreach calls and meetings with shareholders’ corporate governance and compensation structures that promote the best interests of our shareholders. departments
Corporate Governance Guidelines
The Company has adopted “Corporate Governance Guidelines” and a “Code of Business Conduct and Ethics” for the Company’s directors, officers and employees. Each of our corporate governance policies is available on the “Corporate Governance” page accessed from the “Investor Relations” page of our website at www.myersindustries.com.
Corporate Governance and Compensation Practices
Below is a discussion of our corporate governance and compensation practices and policies.
Shareholder OutreachClawback Policy
In 2017, the Company and members of the Board continued to conduct considerable shareholder outreach, through which we have requested input from our largest institutional investors and other shareholders holding approximately 71% of our outstanding shares.
Following this outreach, discussions were ultimately conducted with 4 of the shareholders initially approached who had indicated interest in having a conversation with our management and directors, whose ownership represented approximately 33% of the Company’s outstanding shares. The Company received feedback on:Yes
corporate governance matters (for example, the Company’s shareholder outreach efforts, including through the Company’s proxy statement)Over-Boarding Policy
Yes
Director Nominees
You are being asked to vote on the election of the following director candidates. The candidates listed below are the nominees recommended by the Corporate Governance and Nominating Committee (the “Governance Committee”) and approved by the Board to serve for a one-year term. Detailed information on each director is available starting on page 12.
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Name | Age | Director Since | Experience | Independent | Audit | Compensation | Governance | ||
Sarah R. Coffin | 67 | 2010 | Former CEO, Aspen Growth Strategies, LLC | Yes | ● | Chair |
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Ronald M. De Feo | 68 | 2018 | Former President, Chief Executive Officer and Executive Chairman of Kennametal Inc. (NYSE: KMT) and a founding partner of Nonantum Capital Partners, LLC | Yes |
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William A. Foley | 72 | 2011 | Executive Chairman and former CEO, Libbey Inc. (NYSE: LBY) | Yes |
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F. Jack Liebau, Jr. Chairman(1) | 56 | 2015 | Former President and CEO of Roundwood Asset Management | Yes | ● | ● | ● | ||
Bruce M. Lisman | 73 | 2015 | Former Chairman of the Global Equity Division, JP Morgan Chase & Co. (NYSE: JPM) | Yes |
| ● | Chair | ||
Lori Lutey | 55 | 2018 | Former Executive Vice President and Chief Financial Officer of Schneider National (NYSE: SNDR) | Yes | ● |
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Michael McGaugh(2) | 46 | 2020 | President and CEO, Myers Industries, Inc. | No |
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Jane Scaccetti | 65 | 2016 | CEO and founding partner of Drucker & Scaccetti | Yes | ● |
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Robert A. Stefanko | 77 | 2007 | Former Chairman and EVP of Finance and Administration of A. Schulman, Inc. (former NASDAQ) | Yes | Chair | ● |
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Director Nominees
You are being asked to vote on the election of the following director candidates. The candidates listed below are the nominees recommended by the Corporate Governance and Nominating Committee (the “Governance Committee”) and approved by the Board to serve for a one-year term. Detailed information on each director is available starting on page 12.
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| Current Committee Memberships | ||||
Name | Age | Director Since | Experience | Independent | Audit | Compensation | Governance | ||
Sarah R. Coffin | 67 | 2010 | Former CEO, Aspen Growth Strategies, LLC | Yes | ● | Chair |
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Ronald M. De Feo | 68 | 2018 | Former President, Chief Executive Officer and Executive Chairman of Kennametal Inc. (NYSE: KMT) and a founding partner of Nonantum Capital Partners, LLC | Yes |
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William A. Foley | 72 | 2011 | Executive Chairman and former CEO, Libbey Inc. (NYSE: LBY) | Yes |
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F. Jack Liebau, Jr. Chairman(1) | 56 | 2015 | Former President and CEO of Roundwood Asset Management | Yes | ● | ● | ● | ||
Bruce M. Lisman | 73 | 2015 | Former Chairman of the Global Equity Division, JP Morgan Chase & Co. (NYSE: JPM) | Yes |
| ● | Chair | ||
Lori Lutey | 55 | 2018 | Former Executive Vice President and Chief Financial Officer of Schneider National (NYSE: SNDR) | Yes | ● |
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Michael McGaugh(2) | 46 | 2020 | President and CEO, Myers Industries, Inc. | No |
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Jane Scaccetti | 65 | 2016 | CEO and founding partner of Drucker & Scaccetti | Yes | ● |
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Robert A. Stefanko | 77 | 2007 | Former Chairman and EVP of Finance and Administration of A. Schulman, Inc. (former NASDAQ) | Yes | Chair | ● |
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(1) | Mr. Liebau is an ex officio member of each of the |
(2) | As described in the |
2020 Proxy Statement | iii
PROXY STATEMENT SUMMARY (CONTINUED)
Board Overview
Myers Industries has an experienced and effective Board focused on shareholder value creation. The Board is currently composed of eight members, all of whom are independent. The charts below highlight the Board’s composition and experience, including the impending appointment of Mike McGaugh as a non-independent director effective April 6, 2020.
Board Composition
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Director Qualifications
Directors (number / %)
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| 100% |
| Executive Leadership |
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| 78% |
| Other Public Board Experience |
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7 |
| 78% |
| Investor Relations |
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6 |
| 67% |
| Mergers & Acquisitions |
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7 |
| 78% |
| Global Experience |
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6 |
| 67% |
| Brand and Marketing |
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| 44% |
| Audit Committee Financial Expert |
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5 |
| 56% |
| Industry Experience / Operational Expertise |
iv | Myers Industries, Inc.
PROXY STATEMENT SUMMARY (CONTINUED)
Shareholder Engagement
One of our key priorities is conducting robust engagement with our shareholders in order to provide transparency into our business and determine which issues are important to our shareholders. Participants in our engagement programs include executive management, members of the Board of Directors and Investor Relations personnel. Our methods of engagement include:
Earnings conference calls
Investor conferences
One-on-one investor meetings and one-on-one investor conference calls
Outreach calls and meetings with shareholders’ corporate governance departments
Shareholder Outreach
We believe engaging in shareholder outreach is an important element of strong corporate governance. In 2019, in a continuation of the Company’s shareholder outreach efforts that began in 2016, members of our Board and executive management acted on this belief and contacted the top 12 shareholders who own 1% or greater of outstanding shares and represent collectively approximately 75% of total shares outstanding. Following this outreach, we received feedback and questions on corporate governance matters, Board of Directors and management composition, and other items of shareholder interest.
The Company values the input received from these discussions with shareholders. Following these conversations, the Company has continued to emphasize the importance of safety in our operations and has renewed its focus on enhancing sustainable business practices and incorporating environmental consciousness throughout our operations. Additionally, the Compensation Committee of the Company regularly evaluates the Company’s compensation programs and considers shareholder input in evaluating the programs.
At any time during the year shareholders may access our Annual Report, Proxy Statement, financial presentations, and corporate governance guidelines at www.myersindustries.com.
Shareholder Communications
Shareholders may contact any director, committee of the board, non-management director or the Board through the following:
via U.S. Mail at:
Myers Industries, Inc.
c/o Secretary
1293 South Main Street
Akron, Ohio 44301
via e-mail at:
governance@myersind.com
A toll-free hotline has also been established if an interested party wishes to contact a director, a committee of the Board, a non-management director or the Board by phone. The number is (877) 285-4145 and is available worldwide 24 hours a day, seven days a week.
2020 Proxy Statement | v
PROXY STATEMENT SUMMARY (CONTINUED)
Executive Compensation Overview
Myers Industries’ executive compensation program, set forth by the Compensation Committee, is designed to implement our executive pay philosophy to:
Attract and retain talented and experienced executives and other key employees
Ensure that the actual compensation paid to our executive officers is aligned and correlated with financial performance and changes in shareholder value (“pay for performance”)
Motivate our executive officers to achieve short-term and long-term Company goals that will increase shareholder value
Reward executives whose knowledge, skills and performance are crucial to our success
Compensation Practices
What We Do | What We Don't Do |
Link Pay to Performance | Enter into Employment Contracts |
Limited Post-Employment/Change in Control Provisions | Offer Tax Gross-Ups for Change in Control Payments |
Grant Awards with Double Trigger Change in Control Provisions | Reprice Underwater Options |
Impose Stock Ownership Guidelines | Allow Cash Buyouts of Underwater Options |
Retain an | Permit Short Sales by Directors, Officers, or |
Tally Sheets to Evaluate and Monitor NEO Compensation | Provide Perquisites |
Maintain an Executive Compensation Clawback Policy | Allow Hedging or Pledging of Company Stock |
vi | Myers Industries, Inc.
PROXY STATEMENT SUMMARY (CONTINUED)
Elements of Compensation for 2019
Our 2019 executive compensation program was designed to reinforce the relationship between the interests of our named executive officers (or “NEOs”) and our shareholders. The objectives and key characteristics of each element of our 2019 executive compensation are summarized below:
Type of Pay & Form | Performance Periods | Objectives | ||||
Fixed | Base Pay (cash) | 1 year | • Compensation for job performance | |||
• Recognizes individual skills, competencies, and experience | ||||||
• Generally determined based on an individual’s time in the position, experience, performance, future potential and external market conditions, and peer benchmarking | ||||||
• May be influenced/changed as a result of changes in the executive’s responsibilities, an assessment of annual performance, our financial ability to pay base salaries and provide increases, and/or external market data relating to base pay practices of peers | ||||||
At Risk | Annual Bonus (cash) | 1 year | • Variable cash compensation with 80% tied to the achievement of annual corporate operational goals (currently the Company’s adjusted operating income growth) established by the Compensation Committee each fiscal year to align with corporate strategic goals • Added 20% qualitative element with individual performance goals to maintain personal accountability of each NEO • Aligns interests of executives with shareholders, with amount earned dependent on Company performance objectives designed to enhance shareholder value | |||
Long-Term Incentives (performance stock unit awards, stock options, and | 3 years | • Motivates and rewards leaders for increasing shareholder value and returns while promoting our long-term interests by aiding in the retention of high-quality executives | ||||
• Reflects the belief that a significant component of executive compensation should be at risk where the amount earned depends on achieving Company performance objectives (the Company’s three-year cumulative EBITDA and three-year total free cash flow as a percentage of sales) designed to | ||||||
• Helps build executive stock ownership, consistent with our stock ownership objectives | ||||||
• Encourages retention through multi-year vesting | ||||||
2020 Proxy Statement | vii
PROXY STATEMENT SUMMARY (CONTINUED)
2019 CEO and CFO Target Compensation Mix(1)
2019 CEO Target Compensation Mix(2)
2019 CFO Target Compensation Mix
____________________
(1) | “Fixed” compensation includes salary and |
(2) | Based on CEO target compensation prior to |
viii | Myers Industries, Inc.
Myers Industries, Inc.
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2 | Myers Industries, Inc.
Corporate Governance and Compensation Practices and Policies
The Board of Directors is committed to maintaining sound corporate governance and a compensation structure that promotes the best interests of our shareholders.
Corporate Governance Guidelines
The Company has adopted “Corporate Governance Guidelines” and a “Code of Business Conduct and Ethics” for the Company’s directors, officers and employees. Each of our corporate governance policies is available on the “Corporate Governance” page accessed from the “Investor Relations” page of our website at www.myersindustries.com.
Corporate Governance and Compensation Practices
We consider the opinions expressed by shareholders through their votes, periodic meetings and other communications and believe that shareholder engagement leads to enhanced governance practices. In 2016, we implemented a proactive investor outreach program which includes contacting shareholders who own 1% or more of our outstanding shares.
In 2019, the Company and members of the Board continued to conduct considerable shareholder outreach, through which we requested input from our twelve largest institutional investors and other shareholders collectively holding approximately 75% of our outstanding shares. Following this outreach, we received feedback and questions on corporate governance matters, changes to the Board of Directors and management, and other items of shareholder interest.
We value shareholder views and insights and expect to continue to dialogue with our shareholders.
In accordance with best practices, all of our directors are elected annually.
Since October 2009, the Company has maintained an independent Board Chair. F. Jack Liebau, Jr. has served as the independent Chair since the 2016 Annual Meeting of Shareholders
The Company believes this leadership structure is appropriate as it further aligns the interests of the Company and our shareholders by ensuring independent leadership of the Board
The independent Board Chair serves as a liaison between our directors and the Company’s management and helps to maintain open communication and discussion by the Board
Our independent Chair is an ex officio member of each of our standing committees
Duties of the Board Chair are specified in the Charter of the Chairman of the Board of Directors and include serving in a presiding capacity, coordinating the activities of the Board, and such other duties and responsibilities as the Board may determine from time-to-time. This charter is available on the “Corporate Governance” page accessed from the “Investor Relations” page on our website at www.myersindustries.com
2020 Proxy Statement | 3
Board and Committee Independence
Periodic Review of Director Independence: The Board of Directors reviews the independence of each director using the current standards for “independence” established by the New York Stock Exchange (“NYSE”) and other applicable regulations and considers any other material relationships a director may have with the Company as disclosed in annual director and officer questionnaires. The Company’s Corporate Governance Guidelines provide that a majority of the Board of Directors be comprised of independent directors and the charters of each of the Board’s committees require that all committee members be independent
Independence Determination: The Board has determined that all of the current members of the Board are independent under these standards. Upon his appointment to the Board of Directors effective April 6, 2020, Michael McGaugh will not be considered independent under these standards. The determination of whether a director is “independent” is based upon the Board’s review of the relationships between each director and the Company, if any, under the Company’s “Board of Directors Independence Criteria” policy, and the corporate governance listing standards of the NYSE. In connection with the Board’s determination regarding the independence of each non-management director and nominee, the Board considered any transactions, relationships and arrangements as required by our independence guidelines. In particular, the Board considered the following relationships:
Committee Independence: All members of the Company’s Audit Committee, Compensation Committee and Governance Committee have been determined to be independent directors. In addition, the Board has determined that the members of the Audit Committee and Compensation Committee meet the additional independence criteria required for such committee membership under the applicable NYSE listing standards
Other Relationships: Except as set forth in this Proxy Statement, neither the Company nor any of the Board nominees or any of their associates have or will have any arrangements or understandings with any person with respect to any future employment by the Company or its affiliates or with respect to any future transactions to which the Company or any of its affiliates will or may be a party
Pursuant to the Company’s director resignation policy, in an uncontested election, any incumbent director who receives a greater number of votes “Withheld” from his or her election than votes “For” his or her election (and with respect to such incumbent director’s election at least 25% of the Company’s shares outstanding and entitled to vote thereon were “Withheld” from the election of such director) shall submit an offer of resignation to the Board of Directors
The Governance Committee will then recommend to the Board whether to accept or reject any tendered resignations, and the Board will decide whether to accept or reject such tendered resignations
The Board’s decision will be publicly disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”)
If an incumbent director’s tendered resignation is rejected, he or she will continue to serve until his or her successor is elected, or until his or her earlier resignation, removal from office, or death. If an incumbent director’s tendered resignation is accepted, then the Board will have the sole discretion to fill any resulting vacancy to the extent permitted by the Company’s Amended and Restated Code of Regulations
The Company has adopted a policy that the maximum number of public company boards on which a non-CEO director may sit is five (including our Board) and the maximum number of public company boards on which a CEO director may sit is three (including our Board).
4 | Myers Industries, Inc.
The Board annually reviews the Company’s strategic plan, which addresses, among other things, the Company’s risks and opportunities. Certain areas of oversight are delegated to the relevant Committees of the Board and the Committees regularly report back on their deliberations. This oversight is enabled by reporting processes that are designed to provide visibility to the Board about the identification, assessment, monitoring and management of enterprise-wide risks. Every year, management conducts an enterprise-wide risk assessment of the Company and each of its business segments and presents the assessment to the Board for review. The focus of this assessment includes a review of strategic, financial, operational, compliance, reputational and technology (IT) objectives and risks for the Company. In addition:
Audit Committee: The Audit Committee maintains primary responsibility for oversight of risks and exposures pertaining to the accounting, auditing and financial reporting processes of the Company
Compensation Committee: The Compensation Committee maintains primary responsibility for risks and exposures associated with oversight of the administration and implementation of our compensation policies
Governance Committee: The Governance Committee maintains primary responsibility for risks and exposures associated with corporate governance and succession planning
Each committee also considers the reputational risk implicated by the oversight responsibilities described above.
The Company maintains a ��Clawback Policy” that provides for the recoupment of certain incentive compensation in the event of an accounting restatement resulting from material noncompliance (whether or not based upon misconduct) with financial reporting requirements under the federal securities laws. The Clawback Policy is administered by the Compensation Committee and applies to current and former executive officers and such other employees who may from time to time be deemed subject to the policy by the Compensation Committee.
Our Board, in coordination with the Governance Committee, oversees succession planning for the CEO and other officers of the Company. As part of its succession planning oversight, the Board reviews the senior management team’s experience, skills, competence and potential, to help assess which executives have the ability to develop the attributes that the Board believes are necessary to lead and execute the Company's strategic vision.
The Company maintains “Stock Ownership Guidelines” whereby our executive officers and non-employee directors are expected to hold a specified amount of our common stock. These expectations are as follows:
CEO:5X annual base salary
Executive Vice Presidents (CFO and CLO): 3X annual base salary
Vice Presidents (including CHRO): 1X annual base salary
Non-Employee Directors: 5X annual base salary
CFO:3X annual base salary
Vice Presidents (including the CAO): 1X annual base salary
Non-Employee Directors:5X annual cash Board retainer
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The executive officers and non-employee directors have five years from the date they become subject to the guidelines to attain the ownership requirement. These “Stock Ownership Guidelines” are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at www.myersindustries.com.
Anti-Hedging and Pledging Policy
The Company prohibits directors, officers and employees from engaging in any hedging or pledging transactions with respect to Company shares.
2020 Proxy Statement | 5
Board Member Recruiting Guidelines
The Company’s Board Member Recruiting Guidelines outline the process for nominating potential director candidates for consideration by the Governance Committee. These recruiting guidelines are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at www.myersindustries.com.
Executive Sessions of the Board and Committees
The Board has a policy requiring the non-management directors, both as to the Board and Committees, to meet regularly in executive session without any management personnel or employee directors present. During 2019, the Board and each Committee met regularly in executive session as follows: Board, ten times; Audit Committee, six times; Compensation Committee, six times; and the Governance Committee, three times.
The Chairman of each Committee was selected as the Presiding Director for each Committee executive session.
The Audit Committee maintains procedures, including a worldwide telephone “hotline,” which allows employees and interested parties to report any financial or other concerns anonymously as further detailed under “Shareholder Communication with Directors” below.
We have a “Code of Ethics and Business Conduct,” which incorporates a “Code of Ethical Conduct for the Finance Officers and Finance Department Personnel,” which embodies our commitment to ethical and legal business practices, as well as satisfying the NYSE requirements to implement and maintain such policies. The Board expects all of our officers, directors and other members of our workforce to act ethically at all times. This policy is available on the “Corporate Governance” page accessed from the “Investor Relations” page on our website at www.myersindustries.com.
Annual Board and Committee Self-Assessments
The Board conducts annual self-assessments of the Board, as well as of the Audit Committee, the Compensation Committee, and the Governance Committee, to assist in determining whether the Board and its Committees are functioning effectively. In late 2017 through 2018, the Board conducted self-assessment evaluations with the assistance of outside counsel and reviewed the results as a Board. In 2019, evaluations were conducted by an independent consultant and feedback was provided to the Board, committees and individual directors. The Board intends to utilize this consultant process every third calendar year.
Shareholder Communication with Directors
Our Board provides the following methods for interested parties and shareholders to send communications to a director, to a Committee of the Board, to the non-management directors, or to the Board:
Interested parties may send such communications by e-mail to governance@myersind.com or by mail or courier delivery addressed as follows:
Board of Directors (or Committee Chairman, Director or Non-Management Directors, as the case may be)
c/o Secretary
Myers Industries, Inc.
1293 South Main Street
Akron, Ohio 44301
6 | Myers Industries, Inc.
All communications directed to the “Board of Directors” or to the “Non-Management Directors” will be forwarded unopened or unread to the Chairman of the Governance Committee. The Chairman of the Governance Committee in turn determines whether the communications should be forwarded to the appropriate members of the Board and, if so, forwards them accordingly. For communications addressed to a particular director or the Chairman of a particular Committee of the Board, however, the Secretary will forward those communications, unopened or unread, directly to the person or Committee Chairman in question.
The Company maintains a “hotline” for receiving, retaining and addressing complaints from any interested party regarding accounting, internal accounting controls and auditing matters, and procedures for the anonymous submission of these concerns.
The hotline is maintained by an independent third party. Interested parties may also use this hotline to communicate with the Board.
Any interested party may contact a director, a Committee of the Board, the non-management directors, or the Board through the toll free hotline at (877) 285-4145.
The hotline is available worldwide, 24 hours a day, seven days a week. Note that all reports made through the hotline are directed to the Chairman of the Audit Committee and the Secretary. We do not permit any retaliation of any kind against any person who submits a complaint or concern under these procedures.
At Myers Industries, we are committed to helping our customers make the world a safer and more efficient place. We provide bulk packaging that is more easily cleaned than other solutions. We provide stronger, rigid packaging for safe stacking and storage of food and beverage products. In addition, we provide a wide selection of storage bins to help our customers organize their workplace and drive efficiency. We also provide world-leading tire pressure monitoring systems so that our end users have the proper and safest pressure in their car tires. Ultimately, we incorporate safety and environmental consciousness into our products, and into all aspects of our operations.
Myers Industries is built on a foundation of quality, ethics, hard work and dedication which begins and ends with our people.
We believe in providing our employees with a supportive work environment that fosters individual thinking and personal accountability. We expect employees to be responsible not only for their personal success within the organization, but also for the success of the organization as a whole.
Here are the values that serve, collectively, as our daily compass:
Bias for Action: From top to bottom, we have a preference for action. That means we each take personal ownership, expect to be held accountable, and make proactive decisions – even when there is risk.
Analytical, Results-Oriented: We take an analytical approach to ideas and problem-solving, and focus our efforts on achieving the challenging goals we’ve set forth. However, we also learn from our mistakes, all for the sake of driving continuous improvement.
Customer Intimacy: By always seeking to understand our customers’ needs, values, and motivations, we can serve them in the best way possible. That way, we can connect with and network within our target clients.
Open, Candid, Non-Political: While we encourage speaking candidly and challenging the status quo, we also listen to each other’s perspectives and seek to understand competing ideas and opinions.
Flexible: Change, variety, and ambiguity are inevitable. We embrace this and take the initiative to explore new methods and viewpoints.
2020 Proxy Statement | 7
Humble: Being humble means focusing on the success of the team instead of self-recognition, as well as seeking out opportunities to support others.
Process: Process is everything, and it’s what allows us to execute initiatives in an organized manner, create structured implementation plans, and anticipate potential problems.
Environmental Impact and Sustainable Business Practices
Myers Industries has a long-standing respect for the environment. Today, we incorporate environmental consciousness into every aspect of our operation – from using recycled products in our lunch rooms and recycling office paper, to recycling and reprocessing plastic scrap in our factories, to taking steps to prevent water, air and land pollution by conserving energy whenever possible.
The Company has instituted a Sustainability Committee to develop and oversee our long-term sustainable business practices. The team is responsible for establishing key metrics, goals and reporting standards across the company.
We also encourage our businesses to explore certifications. Our Ameri-Kart and Scepter Canada locations have ISO 9001 certifications and our Scepter US location is actively pursuing ISO 14001 certification.
As a result of continuous improvement efforts, Myers Industries has identified and acted upon practices that incorporate energy efficiency, waste reduction and utilization of environmentally friendly raw materials.
Energy Efficiency
✓ | Our asset light business model requires fewer pieces of energy dependent equipment at our facilities. |
✓ | We replace propane powered forklifts with pallet jacks and electric powered forklifts which do not need oil, spark plugs, pistons, belts, or catalytic converters and do not have a reason for an exhaust. |
✓ | As we upgrade and renovate facilities, CFL or incandescent bulbs are replaced with light-emitting diode (LED) bulbs which require much less wattage and are long lasting. We also install fans that mix the hot air at the ceiling with the cold air at the floor, creating a uniform temperature and reducing energy usage for heating by up to thirty-percent (30%). For example, Akro-Mils completed energy efficient improvements at its Wadsworth, Ohio facility including: |
instillation of LED lighting and signage, occupancy sensors, fluorescent T5 and T8 lights and wall-packs as well as an interior lighting system with less power density than the energy code standard in its new warehouse,
energy efficiency upgrades of injection molding machines, and
new cooling towers with variable frequency drives (VFDs) replaced cooling tower pumps with VFDs
As a result, the company now consumes less electricity, and new molding machines have increased production speed saving approximately 2,348,550 kWh and reducing CO2 by 4,361,600 pounds annually.
Waste Reduction and Recycling
✓ | Our re-usable packaging products replace expendable packaging, preventing expendable packaging from being sent to a landfill. Some of our products have been in-use, out in the marketplace, for over twenty (20) years. |
✓ | As part of our maintenance and repair program, we re-furbish our product molds. This reduces plastic waste material called flash and the need to re-grind or handle the product during processing which, in turn, improves safety. |
✓ | Buckhorn has managed a year-over-year improvement in recycling content efforts, and Akro-Mils recycles most materials unless contaminated. |
✓ | Patch Rubber Company’s continuous improvement processes have resulted in greater first pass yield and less start-up and other scrap generation: |
the first pass yield on the mixer, which is a measure of how much of the original material added into the mixer is usable without re-work or repair has risen from 95% to 98%.
scrap generation on the 4-roll calender has been reduced by ~50%.
continuous improvement processes on the 3-roll calendar have resulted in a first pass yield increase from 60% to 95%.
8 | Myers Industries, Inc.
✓ | In 2017, Scepter’s Toronto facility utilized outside resources to help identify opportunities for reuse and recycling. In a one-year period, the site recycled over 695 thousand pounds of material, including plastic, paper, corrugated, wood and metal. |
✓ | Myers Tire Supply’s Distribution Center in Akron, Ohio: |
partners with FedEx who returns the pallets that are shipped from the Distribution Center each day so they can be re-used,
has an arrangement with a neighboring business to pick-up and re-use skids that the neighboring business would have otherwise sent to a landfill, and
re-uses full size corrugated boxes to ship products versus recycling or disposing of these boxes.
Environmentally Friendly Raw Materials
✓ | We’ve worked to ensure that colorants used in our plastics manufacturing do not contain lead or other heavy metals. Today, 100% of the colorants we use are free of these materials. |
✓ | Within our Material Handling Segment, the businesses set goals and strategies to increase the amount of re-processed and re-grind resin (vs. virgin resin) used in the manufacturing of plastic products. For example: |
in 2018, Akro-Mils increased its use of regrind material by 72,000 pounds per month and has been targeting increased usage annually.
our Scepter Oklahoma location has an on-site pelletizer to re-process scrap in-house, versus re-grinding the scrap.
Buckhorn buys/takes back our products which are re-ground and the material re-processed.
In addition to our own environmental responsibility, we also encourage our customers to focus on sustainability by providing alternative solutions in manufacturing materials, transportation methods and product end-use.
The health and safety of our employees, our customers, and our end-users is at the forefront of each business decision we make:
✓ | We maintain an Environmental Health and Safety Policy and Principles that all employees are expected to understand and promote (this policy is available on the Corporate Governance page accessed from the Investor Relations page of
Ameri-Kart supervisors hold “Toolbox Talks” with team members to regularly discuss safety procedures. Jamco, Patch Rubber Company and Akro-Mils contract with outside safety professionals to hold monthly safety training and other related activities. Patch Rubber Company completes a process hazard analysis (PHA) every three years. Patch Rubber Company and Buckhorn use daily continuous improvement meetings to review near-miss reports and safety observations, and to track follow-up corrective actions.
2020 Proxy Statement | 9 We strive to provide our employees with financial, personal, and physical well-being through our comprehensive and highly competitive pay and benefits packages, as well as by providing access to a variety of innovative and flexible employee health and wellness programs. We also invest in our people through annual employee development programs, including web-based training solutions and an improved Learning Management System that increases efficiency and compliance. We are working to improve the factors that drive employee engagement and satisfaction within our organization, as we believe that an engaged and enthusiastic workforce is key to achieving our organizational goals. In 2019, we completed an engagement survey with all of our employees across the company. The survey included 63 questions, and 91% of employees responded. Following the survey we conducted employee feedback sessions across the organization to better understand the results. Action plans are now in place. For example, we’ve implemented an employee rewards and recognition software platform focused on improving employee connection and collaboration. As we cultivate the future of our workforce, we are also taking steps to further promote diversity. For example,
At Myers Industries, we believe that sharing our success in the communities where we do business is key to community development. With the help of our employees, we strive to create a positive impact on our communities, making them better places to live and work. Myers Industries community involvement can be any combination of financial contributions, leadership assistance, or employee volunteering in local civic and charitable organizations. Charitable Contribution Program Our goal is to support organizations, projects, and programs that encourage the development and well-being of local communities. While our employees have the opportunity to donate time and funds to the community organizations of their choice, Myers Industries is strongly connected to and focused on the following areas of impact:
Each year, the Charitable Contributions Committee will designate funds for charitable contribution to organizations that complement the categories above and meet these requirements:
10 | Myers Industries, Inc.
Myers Industries also provides a matching gifts program for employee donations made to qualified nonprofit organizations meeting the criteria outlined above. Employee Relations and Workplace Environment We are committed to providing a safe and open work environment where we empower our employees to achieve their full potential, regardless of differences in gender, age, ethnic background, culture, religion, sexual orientation, or physical ability. We strive to provide our employees with financial, personal and physical well-being through our comprehensive and highly competitive pay and benefits packages as well as by providing access to a variety of innovative, flexible and convenient employee health and wellness programs. We also invest in our people through annual employee development and engagement programs, including web-based training solutions. 2020 Proxy Statement | 11 PROPOSAL NO. 1 — ELECTION OF DIRECTORS Set forth below for each nominee for election as a director is a brief statement, including the age, principal occupation and business experience for at least the past five years, and any directorships held with public companies. The members of the Governance Committee have recommended, and the independent members of the Board of Directors have nominated, the persons listed below as nominees for the Board of Directors. Each of the below nominees has consented: to serve as a nominee, to being named as a nominee in this Proxy Statement, and to serve as a director if elected. If any nominee should become unavailable for any reason, it is intended that votes will be cast for a substitute nominee designated by the Board. There is no reason to believe that the nominees named will be unable to serve if elected. Proxies cannot be voted for a greater number of nominees than the number named in this Proxy Statement. THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THESE NOMINEES
12 | Myers Industries, Inc.
Director since: 2010 Committees: Compensation (Chair) Audit Business Experience: • Former Chief Executive Officer of Aspen Growth Strategies, LLC, an investment company • Former Executive Vice President, Hexion and Senior Vice President, Noveon, Inc. (now Lubrizol), both specialty chemical and polymer producers in the industrial market space Current and Former Directorships: • Director of FLEXcon, a privately held manufacturer of pressure-sensitive films and adhesives • Former Director and Chair of the Compensation Committee of SPX Corporation (NYSE: SPXC) (now SPX Corporation and SPX Flow), a global industrial equipment and manufacturing company • Former Director of Huttenes-Albertus International, an international manufacturer of chemical products for the foundry industry Skills and Expertise: • Former division and global leader in multiple companies with extensive merger and acquisition responsibility • Substantial senior level executive experience in marketing, distribution and operations • Background in the polymer and specialty chemicals industries • Broad experience in governance, audit, compensation and leadership with public, private and non-profit boards RONALD M. DE FEO Business Experience: Age: 68 Director since: 2018 Committees: Compensation Governance • Founding partner of Nonantum Capital Partners, LLC, a private equity firm • Former President, Chief Executive Officer, and Executive Chairman of Kennametal Inc. (NYSE: KMT), a supplier of tooling and industrial materials • Former Chief Executive Officer of Terex Corporation (NYSE: TEX), manufacturer of lifting and material handling solutions for a variety of industries • Various marketing and leadership positions at Case Corporation, Tenneco Inc. (NYSE: TEN), and Procter & Gamble (NYSE: PG) Current and Former Directorships: • Trustee for Iona College • Former Executive Chairman and Director of Kennametal Inc. • Former Chairman of Terex Corporation Skills and Expertise: • Over 20 years of senior management and industrial experience • Extensive experience with public and private company boards, corporate governance, mergers and acquisitions, brand and marketing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 Proxy Statement | 13
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14 | Myers Industries, Inc.
2020 Proxy Statement | 15
16 | Myers Industries, Inc.
ROBERT A. STEFANKO
• Former Director and member of the • Former Director of The Davey Tree Expert Company, a
Former Chair of the Skills and • Extensive involvement in • Extensive financial and
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Each of the foregoing nominees is recommended by the Governance Committee. The Governance Committee believes that each of the nominees possesses certain key attributes that the Governance Committee believes to be important for an effective Board. There are, and during the past ten years there have been, no legal proceedings material to an evaluation of the ability of any director, nominee, or executive officer of Myers Industries to act in such capacity or concerning his or her integrity. There are no family relationships among any of the directors, director nominees and executive officers.
The Board of Directors recommends that you vote “FOR” each of the director nominees listed above.
2020 Proxy Statement | 17
The Governance Committee reviews and evaluates individuals for nomination to stand for election as a director who are recommended to the Governance Committee: in writing by any of our shareholders or by our current or past directors, executive officers, or identified by professional search firms retained by the Governance Committee.
Recruiting Guidelines and Director Qualifications
The Company’s Board Member Recruiting Guidelines outline the process for the Governance Committee to recruit and evaluate potential director candidates. These guidelines are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at www.myersindustries.com. In considering these potential candidates for nomination to stand for election, the Governance Committee will consider:
The current composition of the Board and how well it functions as a group
The talents, personalities, and strengths of current directors
The value of contributions made by individual directors
The need for a person with specific skills, experiences or background relevant to the Company’s strategy to be added to the Board
Any anticipated vacancies due to retirement or other reasons
Other factors that may enter into the nomination decision
The Governance Committee endeavors to select nominees that contribute unique skills and professional experiences in order to advance the performance of the Board of Directors and establish a well-rounded Board with diverse views that reflect the interests of our shareholders. The Governance Committee considers diversity as one of a number of factors in identifying nominees for directors; however, there is no formal policy in this regard. The Governance Committee views diversity broadly to include diversity of experience, skills and viewpoint, in addition to traditional concepts of diversity such as race and gender.
When considering an individual candidate’s suitability for the Board, the Governance Committee will evaluate each individual on a case-by-case basis. The Governance Committee does not prescribe minimum qualifications or standards for directors, however, the Governance Committee looks for directors who have personal characteristics, educational backgrounds and relevant experience that would be expected to help further the goals of the Company. In addition, the Governance Committee will review the extent of the candidate’s demonstrated excellence and success in his or her chosen business, profession, or other career and the skills and talents that the candidate would be expected to add to the Board. The Governance Committee may choose, in individual cases, to conduct interviews with the candidate and/or contact references, business associates, other members of boards on which the candidate serves or other appropriate persons to obtain additional information. The Governance Committee will make its determinations on whether to nominate an individual candidate based on the Board’s then-current needs, the merits of that candidate and the qualifications of other available candidates.
Shareholder Recommendation Policy
The Governance Committee will consider individuals for nomination to stand for election as a director who are recommended to it in writing by any of our shareholders that strictly follow the below procedures. Shareholders making recommendations for directors must:
Certify that the person making the recommendation is a shareholder of the Company (including the number of shares held as of the date of the recommendation)
Provide the full name and address of the proposed nominee as well as a biographical history setting forth past and present directorships, employment, occupations and civic activities for at least the past five years
18 | Myers Industries, Inc.
Provide a signed written statement from the proposed nominee consenting to be named as a candidate and, if nominated and elected, consenting to serve as a director
Submit a signed written statement that the shareholder making the recommendation and the proposed nominee will make available to the Governance Committee all information reasonably requested in furtherance of the Governance Committee’s evaluation
Provide a letter of recommendation to the following address: Corporate Governance and Nominating Committee, c/o Secretary, Myers Industries, Inc., 1293 South Main Street, Akron, Ohio 44301
Submit all required information before the close of business on or before November 15th of the year prior to our next Annual Meeting of shareholders
In accordance with our Amended and Restated Code of Regulations, a shareholder may directly nominate a candidate for election as a director of the Company only if written notice of such intention is received by the Secretary not less than sixty (60) days nor more than ninety (90) days prior to the date of such Annual Meeting of shareholders or special meeting of shareholders for the election of directors. In the event that the date of such meeting to elect directors is not publicly disclosed at least seventy (70) days prior to the date of such meeting, written notice of such shareholder’s intent to nominate a candidate must be received by the Secretary not later than the close of business on the tenth (10th) day following the date on which notice of such meeting is first provided to the shareholders. A shareholder wishing to directly nominate an individual to serve as a director must follow the procedure outlined in Article I, Section 12 of our Amended and Restated Code of Regulations, titled “Advance Notice of Director Nomination” and then send a signed letter of nomination to the following address: Corporate Governance and Nominating Committee, c/o Secretary, Myers Industries, Inc., 1293 South Main Street, Akron, Ohio 44301. Our Amended and Restated Code of Regulations is available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at: www.myersindustries.com.
There were a total of 10 regularly scheduled and special meetings of the Board of Directors in 2019. During 2019, all directors attended at least 75% of the aggregate total number of the meetings of the Board and committees on which they served. Seven of our then current directors and then nominees attended our Annual Meeting in 2019 in person, telephonically, or virtually via the internet. Although we do not have a formal policy requiring directors to attend the Annual Meeting, our directors are encouraged to attend.
The Board has three standing committees: the Audit Committee, the Compensation Committee, and the Governance Committee. Set forth below are the current committee memberships.
Director | Audit Committee | Compensation Committee | Governance Committee |
Sarah R. Coffin | X | Chair | |
Ronald M. De Feo | X | X | |
William A. Foley | X | X | |
F. Jack Liebau, Jr.* | X | X | X |
Bruce M. Lisman | X | Chair | |
Lori Lutey | X | X | |
Jane Scaccetti | X | X | |
Robert A. Stefanko | Chair | X |
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* Mr. Liebau is an ex officio member of each of the Board committees.
In addition to the standing Audit Committee, Compensation Committee and Governance Committee, from time to time, the Board has established, and may establish in the future, special committees to address particular matters.
2020 Proxy Statement | 19
6 Meetings Held in 2019 |
The Audit Committee assists our Board in the oversight and integrity of our financial statements, ensures our structure meets legal and regulatory requirements, and oversees our internal auditing functions, controls, and procedures. The Board has determined that based on their extensive financial background and expertise, F. Jack Liebau, Jr. (ex officio), Lori Lutey, Jane Scaccetti and Robert A. Stefanko meet the criteria of a “financial expert” under SEC rules. None of our Audit Committee members serve on more than two other public company audit committees.
Audit Committee Functions:
Engage the independent registered public accounting firm and responsible for the appointment, compensation and oversight of external auditor
Approve all audit and accounting engagements (audit and non-audit)
Review the results of the audit and interim reviews
Evaluate the independence of the independent registered public accounting firm
Review the financial results of the Company with the independent registered public accounting firm prior to their public release and filling of reports with the SEC
Direct and supervise special investigations
Oversee accounting, internal accounting controls, auditing matters, reporting hotline and corporate compliance programs
See the Audit Committee Report on page 53 for further information regarding the Audit Committee’s activities.
6 Meetings Held in 2019 |
The Compensation Committee administers our executive incentive compensation programs and determines, either as a committee or together with the other independent board members, annual base salaries and incentive compensation awards for our executive officers.
Compensation Committee Functions:
Review and approve compensation of executive officers of the Company
Review and approve the CEO’s compensation-related corporate goals
Evaluate the CEO’s performance
Establish and administer the Company’s policies, programs and procedures for compensating its executive officers and directors
Review and approve equity award grants
Review, assess and monitor the Company’s Stock Ownership Guidelines
Oversee regulatory compliance with respect to compensation matters
Oversee shareholder communications regarding executive compensation matters
Retain outside consultants regarding executive compensation and other matters
20 | Myers Industries, Inc.
Corporate Governance and Nominating Committee
3 Meetings Held in 2019 |
The Governance Committee assists the Board in developing and implementing corporate governance guidelines, identifying potential director candidates, determining the size and composition of our Board and its committees, and evaluating the overall effectiveness of our Board.
Governance Committee Functions:
Evaluate new director candidates and incumbent directors
Recommend nominees to serve on the Board as well as members of the Board’s committees to the independent directors of the Board
Recommend and monitor participation in continuing education programs by the directors
Oversee succession planning of executive officers and directors
Identify and evaluate CEO candidates
Committee Charters and Policies
The Board has adopted written charters for each of the Audit Committee, the Compensation Committee and the Governance Committee. Each committee reviews and evaluates the adequacy of its charter at least annually and recommends any proposed changes to the Board for approval. Each of the written charters and policies of the Audit Committee, the Compensation Committee, and the Governance Committee are available on the “Corporate Governance” page accessed from the “Investor Relations” page of the Company’s website at: www.myersindustries.com.
2020 Proxy Statement | 21
The Company has structured its non-employee director compensation to attract and retain highly qualified directors and to compensate directors for their service, while also aligning the interests of the directors to the long-term interests of the Company’s shareholders.
In addition to the compensation provided to our non-employee directors, which is described below, our Amended and Restated Code of Regulations provides that we will indemnify, to the fullest extent then permitted by law, any of our directors or former directors who was or is a party or is threatened to be made a party to any matter, whether civil or criminal, by reason of the fact that the individual is or was a director of the Company, or serving at our request as a director of another entity. We have entered into indemnity agreements with each of our directors contractually obligating us to provide such protection. We also currently have in effect director and officer insurance coverage.
2019 Non-Employee Director Compensation
The Company’s non-employee director compensation program maintained in 2019 reflected the recommendations of the Compensation Committee’s compensation consultant based on the consultant’s assessment of market competitiveness. The analysis included pay levels and prevalent practices for retainers, fees, equity-based compensation, and stock ownership guidelines, and affirmed that the Company’s non-employee director compensation program is structured in a manner consistent with good governance, continues to be aligned with best practices, and meets the needs of the Board.
For 2019, each non-employee director received an annual cash retainer of $55,000 and an equity-based award under our 2017 Incentive Stock Plan of Myers Industries, Inc., as Amended and Restated (the “2017 Plan”) of $75,000. Directors who are employees of the Company do not receive any annual retainer. Director cash retainers are paid quarterly in arrears, and the equity based award is granted for directors’ upcoming year of service subject to vesting at the following year’s Annual Meeting of Shareholders. The target value of each equity based award in 2019 was $75,000, based on the fair market value of our common stock on the grant date. Directors may elect to receive an equivalent number of stock units rather than shares of common stock upon vesting, with payment to be made with respect to such stock units when such director ceases to be a member of the Board. For non-employee directors who join the Board between annual meeting dates, the annual equity award is prorated for the portion of the term that such director serves.
The cash portions of the retainers established for 2019 for our non-employee directors’ annual, committee member, and committee chair service is set forth below.
Compensation Type | 2019 Director Compensation | ||
Annual Cash Retainer | $55,000 | ||
Annual Equity Based Award | $75,000 | ||
Supplemental Annual Cash Retainer |
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Committee Members
*Mr. Crowe will be retiring from
$10,000
Chair of Audit Committee
$20,000
Chair of Compensation Committee
$20,000
Chair of Governance & Nominating Committee
$16,000
Board Chair
$90,000
Ad-Hoc Committee Members
$10,000
Ad-Hoc Committee Chairman
$15,000
22 | Myers Industries, Inc.
The following table shows the compensation paid to our non-employee directors for their service during 2019.
NON-EMPLOYEE DIRECTOR COMPENSATION FOR FISCAL YEAR 2019
Name |
| Fees Earned or Paid in Cash ($) |
| Stock Awards ($)(1) |
| Non-Equity Incentive Plan Compensation ($) |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
| All Other Compensation ($) |
| Total ($) |
Sarah R. Coffin |
| $ 85,000 |
| 75,006 |
| — |
| — |
| — |
| $160,006 |
Ronald M. De Feo |
| $ 75,000 |
| 75,006 |
| — |
| — |
| — |
| $150,006 |
William A. Foley |
| $ 75,000 |
| 75,006 |
| — |
| — |
| — |
| $150,006 |
F. Jack Liebau, Jr. |
| $145,000 |
| 75,006 |
| — |
| — |
| — |
| $220,006 |
Bruce M. Lisman |
| $ 88,500 |
| 75,006 |
| — |
| — |
| — |
| $163,506 |
Lori Lutey |
| $ 75,000 |
| 75,006 |
| — |
| — |
| — |
| $150,006 |
Jane Scaccetti |
| $ 75,000 |
| 75,006 |
| — |
| — |
| — |
| $150,006 |
Robert A. Stefanko |
| $ 90,000 |
| 75,006 |
| — |
| — |
| — |
| $165,006 |
(1) | Except as otherwise noted, Stock Award amounts do not reflect compensation actually received by the directors. For non-employee directors who served on the Board
2020 Proxy Statement | 23 PROPOSAL NO. 2 — ADVISORY VOTE TO Myers Industries,
| • | Base salary | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Annual cash bonus opportunities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Long-term incentives, such as equity based performance awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Benefits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Align our executives with shareholders to help ensure that the actual compensation paid to our executive officers
O Short-term performance incentives with objective performance goals through an annual bonus plan focused on operating performance O Long-term performance incentives that provide rewards for achieving long-term strategic initiatives through the use of performance based stock units, stock option grants, and | • | Long-term incentives, such as equity based performance awards, stock option grants, and other service based awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Annual cash bonus opportunities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Reward executives whose knowledge, skills and performance are crucial to our success | • | Base salary | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Annual cash bonus opportunities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Long-term incentives, such as equity based performance awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Result of 2019 Advisory Vote on Executive Compensation
At the 2019 Annual Meeting of shareholders, over 97% of the votes cast on the Say-on-Pay proposal were voted in favor of the compensation of our named executive officers. The Compensation Committee evaluated those results as evidencing shareholder general support of the current structure of our executive compensation program.
2020 Advisory Vote on Executive Compensation
We are presenting the following proposal, which gives you, as a shareholder, the opportunity to endorse or not endorse our compensation program for our NEOs by voting “FOR” or “AGAINST” the following resolution.
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables, and narrative discussion is hereby APPROVED.”
Although the advisory vote is non-binding, the Board values shareholders’ opinions, and the Compensation Committee will review the results of the vote and consider shareholders’ concerns and take those matters into account when considering future decisions concerning our executive compensation program.
Our advisory Say-on-Pay vote occurs annually with the next advisory vote at the Annual Meeting in 2021.
The Board of Directors recommends that you vote “FOR” Proposal 2
relating to the approval of the Company’s executive compensation.
24 | Myers Industries, Inc.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Discussion and Analysis
In this section, we describe the material components of our executive compensation program for our named executive officers (“NEOs”), whose compensation for 2019 is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement.
NAMED EXECUTIVE OFFICERS (“NEOs”) | |
R. David Banyard(1) | President and Chief Executive Officer |
Andrean Horton(1) | Interim President and Chief Executive Officer, Chief Legal Officer, and Secretary |
Kevin Brackman | Executive Vice President and Chief Financial Officer |
Thomas Harmon(2) | Vice President and Chief Human Resources Officer |
(1)Mr. Banyard served as President and Chief Executive Officer and director through his voluntary resignation effective October 25, 2019. Ms. Horton was appointed as Interim President and Chief Executive Officer effective October 25, 2019, in addition to her offices as Chief Legal Officer and Secretary. | |
(2)Mr. Harmon was appointed Vice President and Chief Human Resources Officer on September 30, 2019. | |
The Compensation Committee is responsible for overseeing our executive compensation plans and policies, administering our equity plans, and approving all compensation for our NEOs.
The Compensation Committee believes that the Company’s NEOs should be paid in a manner that attracts the best-available talent, drives performance, encourages an appropriate sensitivity to risk, and encourages and rewards increases in shareholder value. This philosophy is achieved through the Company’s base salary, annual bonus opportunity, long-term incentive plan and other benefits, which are described in greater detail later in this Proxy Statement. Myers Industries’ NEOs are compensated in a manner consistent with the Company’s strategy, competitive practice, sound compensation governance principles, and shareholder interests.
The Compensation Committee’s goals are to:
Attract and retain talented and experienced executives and other key employees whose knowledge, skills and performance are crucial to our success
Ensure that the actual compensation paid to our executive officers correlates with financial performance (“pay for performance”)
Motivate our executive officers to pursue, and reward them for achieving, short-term and long-term Company goals that are intended to deliver shareholder value
2020 Proxy Statement | 25
Our Strategy and Pay for Performance Approach to Executive Compensation
The Company’s mission is to instill a culture where safety and efficiency are part of every aspect of the business and where employees are empowered to act like owners. The Company has developed a long-term strategic vision for the Company, guided by three key operating principles:
Niche market focus
Flexible operations through the use of an asset-light business model
Strong cash flow growth
The Company’s compensation program is designed to compensate the Company’s NEOs in a manner consistent with the Company’s mission and near and long-term strategic vision. The Company’s compensation program seeks to achieve this through the mixture of base pay, short and long-term incentives, and the provision of other benefits. Base pay and other benefits provide appropriate compensation to attract and retain talent. Short-term incentives are tied to the achievement of Company growth with targets intended to advance the long-term strategic vision of the Company. Long-term incentives, which in 2019 comprised from 38% to 56% of each NEOs’ target compensation and which are primarily comprised of equity awards, provide executives with an ownership stake in the Company (emphasizing the “act like owners” principle of the Company) and help drive long-term shareholder value creation. Further, long-term incentive awards are based on performance metrics (EBITDA and free cash flow as a percentage of sales) that support the achievement of the Company’s operating principles.
Performance Highlights and Key Achievements in 2019
In 2019, we achieved the following:
Improved adjusted operating income from $40.4 million in 2018 to $42.0 in 2019 and expanded adjusted gross margin by 150 basis points to 33.3%, despite significant market headwinds evidenced by a decrease in net sales from $566.7 million in 2018 to $515.7 million in 2019.
Executed strategic transformation actions for our Distribution Segment, which includes enhancements in that segment’s go-to-market strategy, implementation of 80/20 to drive improved contribution margins, and optimization of logistics and overhead costs, resulting in increased EBITDA margin of 8% in the Distribution Segment toward goal of 10% by the end of 2020.
Completed acquisition of Tuffy Manufacturing for $18 million in August 2019 to support growth in our Distribution Segment.
Generated cash flow from continuing operations of $47.0 million and free cash flow of $36.7 million in 2019.
Highlights of our 2019 NEO compensation program were as follows:
Results of Objective Performance Metrics: Incentive payouts with respect to 2019 were commensurate with our business and financial achievements:
Based on the Company’s adjusted operating income growth in 2019 of 3.1% (excluding impact of the Tuffy Manufacturing acquisition) compared to the growth goals of 11.6% at target and 34.0% at maximum, incentive awards under our 2019 annual plan were earned at 27.8% of the targeted level for all NEOs.
For the Company’s long-term incentive program’s three-year performance period ending in 2019,
the Company achieved three-year cumulative adjusted EBITDA of $192.7 million which, based on the target level of $217.4 million, resulted in no vesting of 50% of our long-term incentive awards, and
the Company achieved three-year total free cash flow as a percentage of sales of 7.9% which, based on the target level of 6.1%, resulted in vesting of the other 50% of our long-term incentive awards at 187% of the three year targeted level.
26 | Myers Industries, Inc.
Revised Elements of 2019 Annual Incentive Plan: The Compensation Committee determined to include in our 2019 annual incentive plan a qualitative element for each NEO based on individual performance, weighted at 20% of the total annual incentive opportunity with payouts ranging from zero to two times of target, resulting in a possible 0% to 40% of total annual bonus opportunity for each NEO. The 2019 results for each NEO are described below under “Annual Bonus Performance – 2019 Objectives and Achievements.”
The Company uses certain non-GAAP measures in this proxy statement. Adjusted income per diluted share from continuing operations, operating income as adjusted, income from continuing operations as adjusted, EBITDA as adjusted, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow are non-GAAP financial measures and are intended to serve as a supplement to results provided in accordance with accounting principles generally accepted in the United States. Myers Industries believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Appendix A to this proxy statement.
Checklist of Compensation Practices
Our success depends largely on the contributions of motivated, focused and energized executives all working to achieve our strategic objectives. The Compensation Committee and senior management, with assistance from our independent compensation advisor, develop competitive pay programs for our executives and we follow the basic tenets set forth below:
WHAT WE DO | WHAT WE DON’T DO |
Link Pay to Performance | Enter into Employment Contracts |
Use Double Trigger Change in Control Provisions in Awards | Offer Tax Gross-Ups for Change in Control Payments |
Impose Stock Ownership Guidelines | Reprice Underwater Options |
Retain an Independent Compensation Advisor | Allow Cash Buyouts of Underwater Options |
Use Tally Sheets to Evaluate and Monitor NEO Compensation | Permit Short Sales by Directors, Officers, or |
Maintain an Executive Compensation Clawback Policy | Offer Executive Perquisites |
Limit scope of Post-Employment/Change in Control Benefits | Allow Hedging or Pledging of Company Stock |
Our executive compensation program consists of elements designed to provide an integrated and competitive total pay package: base salary, annual bonus, long-term incentives and benefits. A majority of the compensation package for NEOs is performance-based and the metrics are focused on paying for growth.
2020 Proxy Statement | 27
Description of Compensation Elements
Our 2019 executive compensation program was designed to reinforce the relationship between the interests of our NEOs and our shareholders and is comprised of three primary components: base pay (salary), annual cash bonus and long-term incentives. The objectives and key characteristics of each element of our 2019 executive compensation program are summarized below:
Type of Pay & Form | Performance Periods | Objectives | |||||
Fixed | Base Pay (cash) | 1 year | • | Compensation for | |||
• | Recognizes individual skills, competencies, and | ||||||
• | Generally determined based on an | ||||||
• | May be influenced/changed as | ||||||
At Risk | Annual Bonus (cash) | 1 year | • | Variable cash compensation with 80% tied to the achievement of annual corporate operational goals (currently the Company’s adjusted operating income growth) established by the Compensation Committee each fiscal year to align with corporate strategic goals | |||
• | Added 20% qualitative element with individual performance goals to maintain personal accountability of each NEO | ||||||
• | Aligns interests of executives with shareholders, with amount earned dependent on Company and individual performance objectives designed to enhance shareholder value | ||||||
Long-Term Incentives (performance stock unit awards, stock options, and restricted stock unit awards) | 3 years | • | Motivates and rewards leaders for increasing shareholder value and returns while promoting our long-term interests consistent with strategic goals | ||||
• | Reflects the belief that a significant component of executive compensation should be at risk where the amount earned depends on achieving long-term Company performance objectives (the Company’s three-year cumulative EBITDA and three-year total free cash flow as a percentage of sales) designed to enhance shareholder value | ||||||
• | Helps build executive stock ownership consistent with our stock ownership objectives | ||||||
• | Encourages retention of executive management team through multi-year vesting | ||||||
28 | Myers Industries, Inc.
We believe in linking pay for performance. The following graphs indicate the percentage of each NEO’s total target direct compensation that is attributable to base salary, target bonus, and target long-term incentives. For Mr. Banyard, the percentages were applicable during his service as President and Chief Executive Officer through October 25, 2019. For Ms. Horton, the percentages are based on her role as Executive Vice President, Chief Legal Officer, and Secretary and do not reflect the supplemental monthly payment of $25,000 she received beginning October 1, 2019, during her appointment as Interim President and Chief Executive Officer. For Mr. Harmon, the percentages are based on his participation in the Company’s compensation programs for 2020. Mr. Harmon’s participation in our 2019 annual incentive plan was pro-rated for the period of his employment during 2019 based on a target opportunity of 50% of his base salary. Mr. Harmon also received on September 30, 2019, the following onboarding awards (i) a cash award of $100,000 which is subject to disgorgement if Mr. Harmon’s employment with the Company is terminated prior to September 30, 2021, and (ii) an award of restricted stock units valued at $100,000 which will vest in two equal installments on the second and third anniversary of the grant subject to his continued employment on those dates. The target compensation mix for Ms. Horton, Mr. Brackman, and Mr. Harmon does not reflect the one-time retention awards they received on October 16, 2019, in connection with the departure of Mr. Banyard. Each cash retention award was $100,000 and was subject to vesting in two equal installments on the first and second anniversary of the grant. Each restricted stock unit retention award was valued at $100,000 and was subject to vesting in three equal installments on the first three anniversaries of the grant, conditioned on continued employment on those dates.
2020 Proxy Statement | 29
How Compensation is Determined
The Company believes its practices are consistent with the practices of a company of its size, reflect best practices regarding the governance of executive pay programs and reflect the executive pay program’s objectives of delivering competitive and appropriate pay aligned with our shareholders’ interests.
The Compensation Committee refers to market data to benchmark and help establish pay opportunities for the NEOs that are competitive for a company of our size in our industry, and for the role and experience of the individual executive. The Compensation Committee generally considers a range around the market median when establishing compensation levels for the NEOs.
As part of its annual review and consideration of the benchmarking process used to assess the Company’s pay levels and pay programs for its executives, the Compensation Committee and its independent compensation consultant conduct an executive compensation market analysis that draws from third-party compensation surveys and publicly available data for a group of peer companies (“Compensation Peer Group”). The Compensation Committee annually reviews the Compensation Peer Group, with input from the Committee’s independent compensation consultant, to evaluate whether the composition of the group remains relevant for the ensuing calendar year, with consideration of certain quantitative and qualitative criteria, including: (1) companies within approximately 40% to 250% of the Company’s revenue, (2) companies operating within the Company’s industries and end-markets, and (3) companies with similar focus and/or business complexity. Our Compensation Committee regards the Company’s comparison to these companies as reference points only because finding direct publicly-traded peers within the lower end of our revenue range is difficult and does not seek to establish any specific benchmark in reference to these companies or to require changes in our executive compensation to match changes in these companies’ compensation.
The following companies comprised the Compensation Peer Group for executive compensation benchmarking purposes in 2019.
$ in millions
Company Name | Industry | Revenue | Market Cap | ||
Altra Industrial Motion Corp. | Industrial Machinery | $1,830 | $2,340 | ||
Park-Ohio Holdings Corp. | Industrial Machinery | $1,656 | $358 | ||
Advanced Drainage Systems, Inc. | Building Products | $1,385 | $2,672 | ||
Milacron Holdings Corp. | Industrial Machinery | N/A | N/A | ||
Chart Industries, Inc. | Industrial Machinery | $1,299 | $2,463 | ||
Standard Motor Products, Inc. | Auto Parts & Equipment | $1,133 | $1,002 | ||
Alamo Group Inc. | Construction Machinery & Heavy Trucks | $1,119 | $1,480 | ||
Dorman Products, Inc. | Auto Parts & Equipment | $991 | $2,470 | ||
Neenah, Inc. | Paper Products | $938 | $1,180 | ||
Commercial Vehicle Group, Inc. | Construction Machinery & Heavy Trucks | $935 | $220 | ||
Stoneridge, Inc. | Auto Parts & Equipment | $834 | $804 | ||
OMNOVA Solutions Inc. | Specialty Chemicals | $736 | $454 | ||
TriMas Corporation | Industrial Machinery | $723 | $1,400 | ||
Motorcar Parts of America, Inc. | Auto Parts & Equipment | $514 | $418 | ||
Lindsay Corporation | Agricultural & Farm Machinery | $441 | $952 | ||
The Gorman-Rupp Company | Industrial Machinery | $398 | $980 | ||
Core Molding Technologies, Inc. | Commodity Chemicals | $301 | $55 | ||
| 2019 Revenue | 2019 Market Cap | |||
Myers Industries | $516 | $593 | |||
Based on the annual evaluation of the Compensation Peer Group conducted in late 2019, the Compensation Committee determined to eliminate certain companies for 2020 due to acquisitions or impending acquisitions (Milacron Holding and Omnova Solutions) or due to becoming significantly larger than the Company (Park-Ohio Holdings, Altra Industrial Motion, and Advanced Drainage Systems), and added several companies as being size and industry comparatively appropriate (Spartan Motors, Standex International, ESCO Technologies, and Raven Industries). Accordingly, the following companies will comprise the Compensation Peer Group for executive compensation benchmarking purposes in 2020.
30 | Myers Industries, Inc.
Company Name | Industry | Revenue | Market Cap |
Chart Industries, Inc. | Industrial Machinery | $1,299 | $2,463 |
Standard Motor Products, Inc. | Auto Parts & Equipment | $1,133 | $1,002 |
Alamo Group Inc. | Construction Machinery & Heavy Trucks | $1,119 | $1,480 |
Dorman Products, Inc. | Auto Parts & Equipment | $991 | $2,470 |
Spartan Motors, Inc. | Specialty Vehicle Mfg and Assembly | $941 | $485 |
Neenah, Inc. | Paper Products | $938 | $1,180 |
Commercial Vehicle Group, Inc. | Construction Machinery & Heavy Trucks | $935 | $220 |
Stoneridge, Inc. | Auto Parts & Equipment | $834 | $804 |
Esco Technologies | Aviation & Space Filtration & Fluid Control | $821 | $2,400 |
Standex International Corporation | Diversified Global Manufacturing | $790 | $982 |
TriMas Corporation | Industrial Machinery | $723 | $1,400 |
Motorcar Parts of America, Inc. | Auto Parts & Equipment | $514 | $418 |
Lindsay Corporation | Agricultural & Farm Machinery | $441 | $952 |
The Gorman-Rupp Company | Industrial Machinery | $398 | $980 |
Raven Industries, Inc. | Technology Engineering and Manufacturing | $389 | $1,214 |
Core Molding Technologies, Inc. | Commodity Chemicals | $301 | $55 |
Consistent with the objectives of our executive pay philosophy of attracting and retaining a talented and experienced executive management team and other key employees, paying for performance, motivating our executive officers to achieve short-term and long-term Company goals that will enhance shareholder value, and rewarding executives whose knowledge, skills, and performance are crucial to our success, actual compensation may be above or below the median
for executives in similar roles at companies of similar size and complexity, depending on an evaluation of several factors including, but not limited to, time-in-position, experience, performance, and future potential. We believe this approach is appropriate as it is intended to attract and retain key executives, but does not position our compensation costs out of line with expected or actual performance.
Base salary provides a fixed element of compensation that competitively rewards our NEOs’ individual skills, competencies, experience and performance. Additionally, the base salaries provide our NEOs with income regardless of the Company’s stock price performance, which acts as a risk-balancing measure in that it helps to avoid incentives to create short-term stock price fluctuations. Furthermore, it helps mitigate elements beyond the control of the Company, like general economic and stock market conditions unrelated to Company performance.
The Company does not have written employment agreements with our NEOs. The Board and Compensation Committee annually review the performance of the CEO and the CEO’s corporate goals and objectives and, in connection with this review, may recommend a merit-based increase to the CEO’s base salary.
For the other NEOs, base salary adjustments are based on recommendations by the CEO to the Compensation Committee. In making such adjustments, the Company’s performance and the individual NEO’s scope of work, performance and competitive benchmarks are considered.
For 2019, the base salaries of all NEOs were maintained at the same levels in effect at the end of calendar year 2018 as shown in the table below, although Mr. Harmon’s base salary of $340,000 was established upon his appointment as Vice President and Chief Human Resources Officer on September 30, 2019. Ms. Horton began receiving a supplemental monthly payment of $25,000 commencing October 1, 2019, and continuing for the period during which she serves as the Company’s Interim President and Chief Executive Officer, but such amount is not considered as part of her base salary for compensation related purposes such as short-term or long-term incentive compensation opportunities. Mr. Banyard’s base salary remained in effect through his voluntary termination on October 25, 2019.
2020 Proxy Statement | 31
2019 NEO Base Salaries and Adjustments
Name | % Increase | Salary |
David Banyard | 0.0% | $718,940 |
Andrean Horton(1) | 0.0% | $375,000 |
Kevin Brackman | 0.0% | $350,000 |
Thomas Harmon | N/A | $340,000 |
(1) | Ms. Horton’s base salary does not |
The Company’s annual incentive plan is a cash-based incentive plan in which our NEOs, along with certain other senior level employees, participate. The annual incentive plan is intended to reward management primarily for annual business growth that will help us achieve our long-term objectives.
For 2019 annual bonuses, performance was determined using the following objective financial metric:
Measure | Alignment with | |
Operating Income Growth | Operating income growth supports the Company’s objective of cash flow growth and allows the Company to reward business performance | 80% |
The Compensation Committee also included a qualitative element in our 2019 annual incentive plan based on each NEO’s individual performance, with weighting at 20% of the target annual incentive opportunity and payouts ranging from zero to two times target, equating to 0% to 40% of total annual bonus opportunity for each NEO.
Annual Bonus Performance – 2019 Objectives and Achievements
The Compensation Committee annually approves a target bonus opportunity for each NEO. Objective performance targets were established for achieving certain levels of operating income growth with a weighting of 80% of each NEO’s total annual bonus opportunity. As part of the annual bonus performance goal-setting process, the Board annually reviews and approves management’s business and financial plan for the Company, and the Compensation Committee reviews the various performance goals, with minimum and maximum ranges intended to appropriately reward for results that exceed or fall short of target expectations. Bonuses can range from 0% to 200% of target, depending on actual performance, a practice determined to be consistent with the range of annual bonus opportunities of other companies our size.
Goals are intended to reward for growth and business performance, consistent with the Company’s strategy, and motivate management with additional compensation opportunities without encouraging excessive risk-taking. We reward our executives with higher levels of cash compensation for results that substantially exceed target results. Conversely, we pay relatively lower levels of cash compensation for results that fail to meet minimally acceptable performance expectations.
Our 2019 goals were set first by establishing that growth is a critical element of success. As a step toward a long term trajectory in growth for 2019, the company set a target growth goal of 11.6% and a maximum growth goal of 34%. To incentivize our team to continue to provide growth, we also set a threshold of 0%, which is above our industry’s historical performance level of -2% at the 25th percentile.
32 | Myers Industries, Inc.
The following table illustrates the Company’s adjusted operating income growth actual results for 2019 and the impact on our annual incentive plan payout:
|
| Fiscal Year 2019 Goals and Payout |
|
|
|
| ||||
Performance Metric |
| Threshold (0%) |
| Target (100%) |
| Maximum (200%) |
| 2019 Actual Results |
| Payout |
Operating Income Growth (%) |
| 0% |
| 11.6% |
| 34% |
| 3.1% |
| 27.8% |
For 2019, the Compensation Committee determined to also consider the individual performance of each named executive officer based on achievement against individual performance objectives, which it had done prior to 2018, with a weighting of 20% of each NEO’s target annual incentive opportunity. Payouts under this qualitative metric were based on evaluations of each NEO’s job performance during 2019 based on qualitative measures or goals individually established for such executive. The Committee understands the need to align incentive compensation with objective financial performance, but also believes that including a qualitative element allows both the Committee and executive management to guide and assess continuous improvement in personal performance of the Company’s leadership team. For each NEO other than the CEO, the evaluations were completed by the CEO for this qualitative portion of the executive’s bonus for 2019. For the CEO, the Compensation Committee evaluated the CEO’s performance with respect to the CEO’s qualitative goals or measures in reaching its determination with respect to payouts on this element. Consistent with the objective performance metric of our annual incentive plan, payouts on this qualitative measure can range from 0% to 200% of target, therefore 0% to 40% of the NEO’s overall annual bonus opportunity, depending on actual performance Based upon such reviews and recommendations, the Compensation Committee approved the following percentage payouts with respect to the 20% qualitative element of the total bonus opportunity: (i) Ms. Horton, 27.8%; (ii) Mr. Brackman, 27.8%; and (iii) Mr. Harmon 27.8%. Mr. Banyard was not evaluated due to his voluntary departure on October 25, 2019.
Based on the Compensation Committee’s determination of the results above, the NEOs earned bonus awards for 2019 as follows:
Name |
| Base Salary |
| Target Award (% of Base) | Objective Metric Achievement (% of Target) | Qualitative Metric Achievement (% of Target) | Earned Award Amount | ||
R. David Banyard(1) | $718,940 | 100% | N/A | N/A | $ 0 | ||||
Andrean Horton(2) | $375,000 | 60% | 27.8% | 27.8% | $ 62,550 | ||||
Kevin Brackman | $350,000 | 60% | 27.8% | 27.8% | $ 58,380 | ||||
Thomas Harmon(3) | $340,000 | 50% | 27.8% | 27.8% | $ 11,815 |
(1) | Mr. Banyard was ineligible to receive a
|
(2) | Ms. Horton’s award
| ||||||||||||||||||||||||||||
(3) | Mr. Harmon’s award earned was pro-rated to reflect his period of |
The Company’s long-term incentive plan was established to, among other things, encourage management to drive long-term shareholder value and to align management’s interests with shareholders’ interests, emphasizing the “act like owners” principle of the Company. The long-term incentive plan is intended to motivate and reward leaders for increasing shareholder value and returns. The Company believes the Company’s shareholders and employees are both best served by having our NEOs focused on and rewarded based on the achievement of longer-term results of the Company. To accomplish this, the Board has, over the years, awarded a blend of stock options, service-based restricted stock units, performance restricted stock units, and performance-based long-term cash incentives to NEOs. In particular, the use of stock options, service-based restricted stock units, and performance restricted stock units are designed to meet specific reward objectives:
50% Weighting: Long-term performance restricted stock units are intended to reward our executives for achieving financial goals over a multi-year period. Long-term performance restricted stock units vest at the end of three-year period based on achievement of pre-established objectives over that performance period.
30% Weighting: Stock options help align our NEO's interests with those of our shareholders because options produce rewards to our executives only if our stock price increases after options are granted. We believe options are performance-based awards because stock price appreciation that provides gains to the executive
2020 Proxy Statement | 33
generally is attributed to
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20% Weighting: Service-based restricted stock units help retain our key executives. Restricted stock units also align our executives with the total returns earned by our investors. Grants of service-based restricted stock units vest ratably over a three-year period, conditioned on continued employment, providing a strong executive retention device.
The target long-term incentive opportunity for each NEO (other than Mr. Harmon) was based on a percentage of their respective base salaries as follows: Mr. Banyard, 250%, Ms. Horton, 100%, and Mr. Brackman, 100%. Mr. Harmon received on September 30, 2019 (i) an onboarding cash award of $100,000 which is subject to disgorgement if Mr. Harmon’s employment with the Company is terminated prior to September 30, 2021, and (ii) an onboarding award of restricted stock units valued at $100,000 which will vest in two equal installments on the second and third anniversary of the grant subject to his continued employment on those dates, or approximately 60% of his base salary. In 2020, Mr. Harmon’s target long-term incentive opportunity will be 65% of his base salary.
Beginning in 2017, the Compensation Committee revised the long-term incentive performance metrics to include the two objective metrics which continued to be used in 2019 – three-year cumulative EBITDA and three-year total free cash flow as a percentage of sales. These metrics were adopted to better align with the Company’s strategy, drive consistent performance over time toward achieving objective financial metrics with strong alignment with shareholder value, and to more effectively correlate this performance to compensation. Additionally, these metrics are used by management to assess operating performance of the business. Cumulative EBITDA acts as a measure of the Company’s operating performance with targets emphasizing growth and relates strongly to shareholder return, creating greater alignment between long-term executive incentive compensation and enhancing shareholder value. Free cash flow is defined as cash flow from continuing operations less capital expenditures. Free cash flow as a percentage of sales recognizes the importance of the efficient use of cash to the Company’s ability to fund ongoing investments in our business while incentivizing management to create a business culture that generates strong cash flow year after year. We also believe that free cash flow conversion is a good measurement of success and has a strong correlation to shareholder value over the long-term.
The following table shows the performance periods for the Company’s long-term incentive programs outstanding as of the end of 2019:
Performance Period | Grant Date | Settlement Date (If Earned) | Performance Measures (each with 50% weighting) | |||||||||||||||||||||||||||||
2017-2019 | March 2017 | 2020 | 3-year cumulative EBITDA | 3-year total free cash flow as a | ||||||||||||||||||||||||||||
|
|
|
| 3-year total free cash flow as a | ||||||||||||||||||||||||||||
2019-2021 | March 2019 | 2022 | 3-year cumulative EBITDA | 3-year total free cash flow as a % of
| ||||||||||||||||||||||||||||
Once target values are developed, annual awards for each long-term element are based on an individual’s position, experience, future potential, organizational level, scope of responsibilities, their ability to impact results, and any special recruiting and retention needs. For the NEOs, the Compensation Committee aimed to emphasize performance-based elements (long-term performance restricted stock units and options) over service-based elements (restricted stock units).
34 | Myers Industries, Inc.
For our NEOs other than Mr. Harmon, the following mix of target long-term incentives were maintained for calendar year 2019. Mr. Harmon received an onboarding cash award of $100,000 subject to disgorgement if his employment with the Company is terminated for cause or voluntarily prior to September 30, 2021, and an onboarding award of restricted stock units valued at $100,000 which will vest in two equal installments on the second and third anniversary of the grant subject to his continued employment on those dates.
Long-Term Incentive Performance-Objectives and Achievements for the Three-Year Period Ended in 2019
For the three-year period ending in 2019, the Company established three-year performance objectives for the two performance metrics of cumulative EBITDA and total free cash flow as a percentage of sales. For the three-year period ending in 2019, the Company achieved a three-year cumulative EBITDA of $192.7 million, resulting in a settlement percentage of 0% of target. For the same performance period, the Company’s total free cash flow as a percentage of sales was 7.9%, resulting in a settlement percentage of 187% of target. The table below summarizes the vesting of our long-term incentive awards for the period 2017 through 2019:
Fiscal Years 2017-2019 Goals and Payouts | |||||
Performance Metric | Target | Actual | Payout % |
Weighting | Combined Payout % |
Cumulative EBITDA | $217.4 Million | $192.7 Million | 0% | 50% |
|
Total Free Cash Flow (as a % of Sales) |
6.1% |
7.9% |
187% |
50% |
93.5% |
2019 Long-Term Retention Awards
In October 2019, following the voluntary resignation of Mr. Banyard as President and Chief Executive Officer, the Compensation Committee determined that it was appropriate on a one-time basis to issue long-term cash-based and equity-based retention awards to our remaining NEOs and certain other senior officers. Each cash retention award was in the amount of $100,000 and was subject to vesting in two equal installments on the first and second anniversary of the grant, conditioned on continued employment on those dates. Each restricted stock unit retention award was valued at $100,000 and was subject to vesting in three equal installments on the first three anniversaries of the grant, conditioned on continued employment on those dates. The following table sets forth the value of the special retention awards granted to each NEO in 2019:
Name |
| Cash Award |
| Value of RSUs |
| Number of RSUs(1) |
| Total Value of Retention Awards |
Andrean Horton |
| $100,000 |
| $100,005 |
| 6,112 |
| $200,005 |
Kevin Brackman |
| $100,000 |
| $100,005 |
| 6,112 |
| $200,005 |
Thomas Harmon |
| $100,000 |
| $100,005 |
| 6,112 |
| $200,005 |
(1) Based on the closing price of the Company’s common stock on the grant date of October 16, 2019.
2020 Proxy Statement | 35
NEOs participate in broad-based benefit plans that are available to other employees. These benefits are not tied to individual or Company performance, which is the same approach used for other employees. Moreover, changes to executives’ benefits reflect the changes to the benefits of other employees.
The Company’s NEOs participate in the following broad-based benefit plans that provide basic health, life, and income security:
The Company maintains qualified and nonqualified retirement programs for which our NEOs are eligible to participate. NEOs participate in our qualified retirement plan, a tax-qualified 401(k) plan pursuant to which all participants are eligible to receive matching contributions from the Company on the same terms as all of our other employees. The Company matching contribution is 100% of the first 3% contributed by a participant plus 50% of the next 2% contributed, for a total of up to 4% match on a participant’s compensation up to federal limits.
Each of our NEOs is eligible to participate in our Executive Nonqualified Excess Plan (“Nonqualified Deferred Compensation Plan”), which is a nonqualified retirement savings plan that allows for deferrals above the IRS limits on qualified plans. This plan is intended to restore compensation benefits that would have been earned under the tax-qualified 401(k) plan but for certain limitations imposed by the federal tax laws. Participating officers are at all times 100% vested in their voluntary deferrals. The Company may also provide matching or discretionary credits to the accounts of eligible officers, as determined by the Company in its sole discretion. The Compensation Committee believes that maintaining this Nonqualified Deferred Compensation Plan helps to maintain the competitiveness of our entire executive retirement benefits.
NEOs also participate in broad-based benefit plans that are available to all employees, including health insurance and life and disability insurance.
The Company provides no executive perquisites to our NEOs other than reimbursement of executive physicals.
36 | Myers Industries, Inc.
For the Company’s NEOs, the following mix of target long-term incentives were set for 2017:
Other Benefits
NEOs also participate in broad-based benefit plans that are available to all employees. These benefits are not tied to individual or Company performance, which is the same approach used for other employees. Moreover, changes to executives’ benefits reflect the changes to the benefits of other employees.
The Company’s NEOs participate in the following broad-based benefit plans that provide basic health, life and income security:
The Company maintains qualified and nonqualified retirement programs to provide our NEOs with the basic needs described above. NEOs participate in our qualified retirement plan (a tax-qualified 401(k) plan, pursuant to which all participants are eligible to receive matching contributions from the Company) on the same terms as all of our other employees
Beginning in 2018, each of our NEOs is eligible to participate in the Executive Nonqualified Excess Plan, which is a nonqualified retirement savings plan that allows for deferrals above the IRS limits on qualified plans. This plan is intended to restore deferred compensation benefits that would have been earned under the tax-qualified 401(k) plan but for certain limitations imposed by the Code
NEOs also participate in broad-based benefit plans that are available to all employees, including health insurance and life and disability insurance
The Company provides no executive perquisites, other than a legacy car allowance benefit for one NEO.
33
Stock Ownership Guidelines | • | A key objective of our pay program in general and our long-term equity-based incentive awards in particular is to encourage stock ownership of insiders. As a result, we have maintained Stock Ownership Guidelines since 2010 |
• | Under the Stock Ownership Guidelines, our NEOs and non-employee directors are expected to hold a specified amount of our common stock, | |
|
CEO: 5X annual base salary Executive Vice Presidents (CFO and CLO): 3X annual base salary Vice Presidents (including CHRO): 1X annual base salary Non-Employee Directors:
| |
• | The NEOs and non-employee directors have five years from becoming subject to the guidelines to attain the ownership requirement | |
• | In determining stock ownership for purposes of our ownership guidelines, shares owned outright, including shares owned jointly with a spouse or separately by a spouse and/or children that live in the NEO’s household, vested and unvested time-based restricted stock and | |
Accounting and Tax Considerations | • | In December 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), as further amended by the 2017 Tax Act, restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million to the NEOs, effective for tax years beginning after 2017, subject to a transition rule for written binding contracts which were in effect on November 2, 2017, and which were not modified in any material respect on or after such date |
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Risk Assessment of Compensation Practices
In the design and approval of the Company’s executive compensation program, the Compensation Committee considers risks that may be inherent in the program, but has designed the program to guard against excessive risk taking. The following are some features of the compensation program that are designed to help the Company manage compensation-related risk:
Using a variety of vehicles for providing compensation, including salary, bonus, and equity-based compensation, comprised of cash and equity based incentives with different vesting periods, which act to focus executives on specific objectives under the Company’s business plan while creating alignment with shareholders
Providing a mixture of fixed and variable, annual and long-term, and cash and equity compensation to encourage behavior and actions that are in the long-term interests of the Company and our shareholders
Placing an emphasis on performance-based awards more than service-based awards to further align the interests of our employees with those of our shareholders
Establishing, and reviewing on an annual basis, base salaries to be consistent with an employee’s responsibilities
Diversifying incentive-based risk by using differing performance measures, including Company financial performance
2020 Proxy Statement | 37
Determining and awarding incentive award grants based on a review of multiple indicators of performance that diversify the risk associated with any single indicator of performance
As a result, the Compensation Committee believes that the design of the Company’s compensation program does not encourage employees to take unnecessary or excessive risks that could harm the Company’s long‑term value.
Timeline and Essential Components of Compensation Decision-Making
The Compensation Committee oversees our executive compensation plan and policies, administers our equity plans, and approves all compensation for our NEOs. Portions of the Compensation Committee’s annual agenda items are summarized below:
Late Winter/Spring | |||||
• | Approve annual incentive plan payouts for prior year | • | Approve long-term incentive plan award levels for NEOs and share pool for all equity awards | ||
• | Approve long-term performance vesting and payouts for prior performance period | • | Grant long-term incentive awards | ||
• | Approve current year’s annual incentive plan metrics, NEO performance criteria, and thresholds, targets and maximum goals | • | Review proxy advisory firms’ pay for performance reports, feedback, and proxy recommendations | ||
• | Approve current year’s long-term incentive plan thresholds, targets and maximum goals | ||||
Summer | Fall | ||||
• | Review the results of the Company’s “Say-on-Pay” vote (and any other compensation-related items voted upon at the annual meeting) | • | Review long-term incentive performance metrics | ||
• | Review the Company’s overall compensation program and consider any structural changes | • | Review peer group composition and executive compensation levels | ||
38 | Myers Industries, Inc.
Parties Involved in Compensation Decision-Making
Role of Compensation Committee | • | Five independent directors comprise our Compensation Committee, which is responsible for overseeing our executive pay plans and policies, administering our equity plans and approving all compensation for our NEOs |
• | The Compensation Committee routinely requests information from senior management regarding the Company’s performance, pay and programs to assist it in its actions | |
• |
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34
Risk Assessment of Compensation Practices
In the design and approval of the Company’s executive compensation program, the Compensation Committee considers risks that may be inherent in such program. The Compensation Committee has designedthe authority to retain outside advisors as needed to assist it in reviewing and modifying the Company’s programs and providing competitive pay levels and terms
•
In arriving at its decision on NEO compensation, program to guard against excessive risk taking. the Compensation Committee takes into account the shareholder “say-on-pay” vote results at the previous annual meeting of shareholders
•
The following are some features ofCompensation Committee annually reviews and establishes the compensation program that are designed to help the Company manage compensation-related risk:
Using a variety of vehiclesgoals used for providing compensation, including salary, bonus, and equity-based compensation, comprised of cash and equity based incentives with different vesting periods, which act to focus executives on specific objectives under the Company’s business plan while creating alignment with shareholders
Providing a mixture of fixed and variable,our annual and long-term and cash and equity compensation to encourage behavior and actions that are inincentive plans. The Compensation Committee assesses the long-term interestsperformance of the Company and our shareholders
Placing an emphasisthe CEO. Based on performance-based awards more than service-based awards to further align the interests of our employees with those of our shareholders
Establishing, and reviewing on an annual basis, base salaries to be consistent with an employee’s responsibilities
Diversifying incentive-based risk by using differing performance measures, including Company financial performance
Determining and awarding incentive award grants based on a review of multiple indicators of performance that diversify the risk associated with any single indicator of performance
As a result,this evaluation, the Compensation Committee believes thatthen recommends the designCEO’s compensation for the next year to the Board for its consideration and approval
•
The Compensation Committee reviews the CEO’s compensation recommendations for the CFO, providing appropriate input and approving final awards
•
Finally, the Compensation Committee provides guidance and final approval to the CEO with regard to the determination of the Company’s compensation programs does not encourage our employees to take unnecessary or excessive risks that could harm the long‑term value of Myers Industries.other key executives
35
Role of Senior Management
•
The Company’s management serves in an advisory or support capacity as the Compensation Decision-MakingCommittee carries out its charter regarding executive compensation
Timeline
•
The Company’s CEO and ComponentsCHRO typically participate in meetings of the Compensation Decision-MakingCommittee
| ||||
• | The Company’s CFO and/or CLO may participate as necessary or at the Compensation Committee’s request | |||
• | The Company’s management normally provides the Compensation Committee with information regarding the Company’s performance as well as information regarding executives who participate in the Company’s various plans. Such data is usually focused on the executives’ historical pay and benefit levels, plan costs, context for how programs have changed over time and input regarding particular management issues that need to be addressed. In addition, management normally furnishes similar information to the Compensation Committee’s independent compensation advisor | |||
• | Management provides input regarding the recommendations made by the Compensation Committee’s independent advisors or the Compensation Committee | |||
• | Management implements, communicates and administers the programs approved by the Compensation Committee, reporting back to it any questions, concerns or issues | |||
• | The CEO annually evaluates the performance of the Company and the other NEOs. Based on these evaluations, the CEO provides the Compensation Committee with recommendations regarding the pay for such executives for its consideration, input, and approval. The Compensation Committee authorizes the CEO to establish the pay for the Company’s other executives and senior management based on terms consistent with those used to establish the pay of the NEOs. Members of management present at meetings when pay is discussed are recused from such discussions when the Compensation Committee focuses on his or her individual pay | |||
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Parties Involved in Compensation Decision-Making
36
2020 Proxy Statement | 39
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Compensation Committee Interlocks and Insider Participation
At the end of fiscal year 2019, the following directors were members of the Compensation Committee: Sarah R. Coffin, Ronald DeFeo, William A. Foley, Bruce M. Lisman, and Robert A. Stefanko. Chairman F. Jack Liebau, Jr. participates on the Compensation Committee in an ex officio capacity. None of the Compensation Committee’s members have at any time been an officer or employee of the Company. In the past fiscal year, none of our NEOs have served as a member of the board of directors or compensation committee of any entity that has one or more NEOs serving on the Company’s Board or Compensation Committee.
Compensation Committee Report on Executive Compensation
The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.
The Compensation Committee, in the performance of its duties and responsibilities, has reviewed and discussed with management the information provided under the section titled “Compensation Discussion and Analysis.” Based on discussions with management and our review of the “Compensation Discussion and Analysis” disclosure, we have recommended to the Board that the “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
The foregoing report has been furnished by the current members of the Compensation Committee, being:
Sarah R. Coffin, Chair and Presiding Director, Ronald DeFeo, William A. Foley, F. Jack Liebau, Jr. (ex officio), Bruce M. Lisman and Robert A. Stefanko.
Summary of Cash and Certain Other Compensation
The following table summarizes the compensation paid by us to our named executive officers, as determined in accordance with SEC rules, for the years ended December 31, 2019, 2018, and 2017.
40 | Myers Industries, Inc.
Name and Principal Position | Year | Salary | Bonus | Stock Awards(1)(2) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation(4) | Total |
R. David Banyard, President & Chief Executive Officer | 2019 | $608,334 | $0 | $1,258,144 | $539,205 | $0 | $143,660 | $2,549,343 |
2018 | $718,940 | $0 | $1,258,145 | $539,205 | $1,437,880 | $122,782 | $4,076,952 | |
2017 | $708,067 | $0 | $1,238,823 | $692,323 | $593,210 | $ 46,741 | $3,279,164 | |
Andrean Horton, Interim President and CEO, Chief Legal Officer and Secretary(5) | 2019 | $450,000 | $0 | $ 362,491 | $75,007 | $ 62,550 | $122,192 | $1,072,240 |
2018 | $ 79,327 | $0 | $0 | $0 | $104,795 | $ 2,163 | $ 186,285 | |
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Kevin Brackman, Executive Vice President, Chief Financial Officer | 2019 | $350,000 | $0 | $344,658 | $100,005 | $ 58,380 | $132,165 | $985,208 |
2018 | $277,850 | $0 | $137,892 | $ 59,096 | $372,903 | $ 20,787 | $868.528 | |
2017 | $258,678 | $0 | $135,779 | $ 75,878 | $178,686 | $ 23,715 | $672,736 | |
Thomas Harmon, Vice President, Chief Human Resources Officer(6) | 2019 | $ 78,462 | $100,000 | $199,997 | $0 | $ 11,815 | $112,729 | $503,003 |
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(1) | Amounts shown do not reflect compensation actually received by the executive officers. Instead the amounts shown are reported at grant date fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 718, Compensation — Stock Compensation (referred to herein as “FASB ASC Topic 718”). The assumptions used for this calculation are fully described in the footnote titled “Stock Compensation” of the Notes to Consolidated Financial Statements under Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC. The
Mr. Harmon – $100,005. The |
(2) | Information regarding the |
(3) | For 2019, the amounts set forth in this column represent incentive bonuses that were earned during 2019 and paid |
(4) | The amounts set forth in this column include: (i) Company contributions under our 401(k) plan and Nonqualified Deferred Compensation Plan; (ii) dividends from vested restricted stock; (iii) executive physicals, and (iv) one-time retention cash-based awards granted to the NEOs in fiscal 2019 subject to vesting in equal installments on the first two anniversaries of the awards, conditioned on continued employment on such dates. These benefits are valued based on the incremental costs to the Company and
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| 2019 |
| 2018 |
| 2017 | ||
Mr. Banyard |
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Contributions |
| $11,200 |
|
| $52,488 |
|
| $10,800 |
Executive physical |
| — |
|
| 1,568 |
|
| 3,805 |
Dividends |
| 132,460 |
|
| 68,726 |
|
| 32,136 |
|
| $143,660 |
|
| $122,782 |
|
| $46,741 |
Ms. Horton |
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Contributions |
| $ 22,192 |
|
| $2,163 |
|
| — |
Cash Long-term Retention Award |
| 100,000 |
|
| — |
|
| — |
Executive physical |
| — |
|
| — |
|
| — |
Dividends |
| — |
|
| — |
|
| — |
|
| $122,192 |
|
| $2,163 |
|
| — |
Mr. Brackman |
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Contributions |
| $ 27,561 |
|
| $17,010 |
|
| $10,800 |
Automobile allowance |
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|
|
| 1,615 |
|
| 8,400 |
Cash Long-term Retention Award |
| 100,000 |
|
| — |
|
| — |
Executive physical |
| 1,997 |
|
| — |
|
| 3,543 |
Dividends |
| 2,607 |
|
| 2,162 |
|
| 972 |
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| $132,165 |
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| $20,787 |
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| $23,715 |
Mr. Harmon |
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Contributions |
| $ 6,854 |
|
| — |
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| — |
Cash Long-term Retention Award |
| 100,000 |
|
| — |
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| — |
Relocation |
| 5,875 |
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| — |
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| — |
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| $112,729 |
|
| — |
|
| — |
40 (5)
Ms. Horton was appointed Interim President and CEO effective October 25, 2019. Ms. Horton began receiving a supplemental monthly payment of $25,000 effective October 1, 2019.
2020 Proxy Statement | 41
| 2017 |
| 2016 |
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| 2015 |
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Mr. Banyard |
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Contributions |
| 10,800 |
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| 10,600 |
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| — |
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Relocation |
| — |
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| 3,518 |
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| — |
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Automobile allowance |
| — |
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| 4,154 |
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| — |
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Executive physical |
| 3,805 |
|
| — |
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| — |
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Dividends |
| 32,136 |
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| 26,627 |
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| 1,038 |
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| 46,741 |
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| 44,899 |
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| 1,038 |
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Mr. Anversa |
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Contributions |
| 10,800 |
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| — |
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| — |
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Mr. Brackman |
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Contributions |
| 10,800 |
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| 5,678 |
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| — |
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Relocation |
| — |
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| 72,048 |
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| — |
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Automobile allowance |
| 8,400 |
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| 8,400 |
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| — |
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Executive physical |
| 3,543 |
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| — |
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Dividends |
| 972 |
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| — |
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| — |
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| 23,715 |
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| 86,126 |
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| — |
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(6)
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The following table contains information concerning the grants of plan based awards to the NEOs under the 2017 Incentive Stock Plan of Myers Industries, Inc., as Amended and Restated (the “2017 Plan”). The actual value and gains, if any, on an option exercise are dependent upon the future performance of our common stock and overall market conditions. The option awards and unvested portion of stock awards identified in the table below are also reported in the Outstanding Equity Awards at Fiscal 2019 Year-End table below.
Grants of Plan Based Awards During Fiscal Year 2019
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| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
| Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
| All Other Stock Awards: Number of Shares of Stock or Units(3) (#) |
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| All Other Option Awards: Number of Securities Underlying Options(4) (#) |
| Exercise or Base Price of Option Awards ($/Sh) |
| Grant Date Fair Value of Stock and Option Award ($) | ||||||||||
Name |
| Grant Date |
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| Threshold ($) |
| Target ($) |
| Maximum ($) |
| Threshold (#) |
| Target (#) |
| Maximum (#) |
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R. David Banyard |
| 03/06/2019 |
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| 718,940 |
| 1,437,880 |
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| 03/06/2019 |
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| 0 |
| 48,368 |
| 96,736 |
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| 898,677(5) | ||
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| 03/06/2019 |
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| 19,347 |
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| 359,467 | ||
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| 03/06/2019 |
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| 93,288 |
| 18.58 |
| 539,205(6) | ||
Andrean Horton |
| 03/06/2019 |
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| 225,000 |
| 450,000 |
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| 03/06/2019 |
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| 0 |
| 10,091 |
| 20,182 |
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| 187,491(5) | |
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| 03/06/2019 |
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| 4,037 |
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| 75,007 | |
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| 03/06/2019 |
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| 19,464 |
| 18.58 |
| 112,500(6) | |
|
| 10/16/2019 |
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| 100,000(7) |
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| |
|
| 10/16/2019 |
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|
|
|
|
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|
| 6,112(8) |
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|
| 99,992 | |
Kevin Brackman |
| 03/06/2019 |
|
|
|
| 210,000 |
| 420,000 |
|
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|
|
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| ||
|
| 03/06/2019 |
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|
|
| 0 |
| 9,419 |
| 18,838 |
|
|
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|
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| 175,005(5) | ||
|
| 03/06/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,767 |
|
|
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|
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| 69,991 | ||
|
| 03/06/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 18,166 |
| 18.58 |
| 105,000(6) | ||
|
| 10/16/2019 |
|
|
|
| 100,000(7) |
|
|
|
|
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| ||
|
| 10/16/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,112(8) |
|
|
|
|
|
| 99,992 | ||
Thomas Harmon |
| 09/30/2019 |
|
|
|
| 42,500 |
| 85,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||
|
| 09/30/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,666(9) |
|
|
|
|
|
| 100,005 | ||
|
| 10/16/2019 |
|
|
|
| 100,000(7) |
|
|
|
|
|
|
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|
|
|
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|
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| ||
|
| 10/16/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,112(8) |
|
|
|
|
|
| 99,992 | ||
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|
| ||
(1) | Represents estimated future payout for annual cash bonuses. The payouts are based on results of operating income growth. Mr. Harmon’s annual cash bonus opportunity was pro-rated for the period of his employment in 2019. |
(2) | Represents awards of performance stock units that will vest on the third anniversary of the grant date with payout based 50% on cumulative adjusted EBITDA and 50% on free cash flow as a percentage of sales for the performance period of 2019-2021. |
(3) | Represents awards of restricted stock units which vest ratably in three annual installments on each of the first three anniversaries of the grant date. The grant date fair value of such awards was calculated using the closing price of our common stock |
(4) | Represents awards of non-qualified stock options which vest ratably in three annual installments on each anniversary date of the grant. |
(5) | Represents payout at target based on the grant date fair value of such awards calculated by using the closing price of our common stock on the date of grant of $18.58 per share. |
(6) | Grant date fair value of stock option awards |
(7) | Represents cash based retention awards
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(8) | Represents awards |
(9) | Represents an award of restricted stock units granted upon commencement of employment which vests in two equal installments on the
|
42 | Myers Industries, Inc.
Outstanding Equity Awards at Fiscal Year End
The following table shows all outstanding equity awards held by the NEOs at the end of fiscal year 2019 that have not been exercised or that have not vested. Certain of the awards identified in the table below are also reported in the “Grants of Plan Based Awards During Fiscal Year 2019” table above.
Outstanding Equity Awards at Fiscal 2019 Year-End
Name | Option Awards | Stock Awards | |||||||||
Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(1) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(1) | |||
R. David Banyard(2) | 33,040 | 0 |
| 21.30 | 6/1/2020 |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Andrean Horton |
| 19,464(3) |
| 18.58 | 3/06/2029 | 4,037(4) | 67,337 | 10,091(5) | 168,318 | ||
|
|
|
|
|
| 6,112(6) | 101,948 |
|
| ||
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Kevin Brackman | 4,500 | 0 |
| 17.95 | 3/23/2025 |
|
|
|
| ||
7,700 | 0 |
| 11.62 | 3/02/2026 |
|
|
|
| |||
11,317 | 5,658(7) |
| 14.30 | 3/02/2027 |
|
|
|
| |||
3,621 | 7,242(8) |
| 21.30 | 3/08/2028 |
|
|
|
| |||
| 18,166(3) |
| 18.58 | 3/06/2029 |
|
|
|
| |||
|
|
|
|
| 904(9) | 15,079 | 6,782(10) | 113,124 | |||
|
|
|
|
| 1,233(11) | 20,566 | 4,624(12) | 77,128 | |||
|
|
|
|
| 3,767(4) | 62,834 | 9,419(5) | 157,109 | |||
|
|
|
|
|
| 6,112(6) | 101,949 |
|
| ||
Thomas Harmon |
|
|
|
|
| 6,112(6) | 101,949 |
|
| ||
|
|
|
|
|
| 5,666(13) | 94,509 |
|
| ||
|
| Option Awards |
| Stock Awards | ||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) |
| Number of Securities Underlying Unexercised Options (#) |
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| Option Exercise Price ($) |
| Option Expiration Date |
| Number of Shares or Units of Stock That Have Not Vested (#) |
| Market Value of Shares or Units of Stock That Have Not Vested ($)(1) |
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
|
| Exercisable |
| Unexercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. David Banyard |
| 26,933 |
| 53,867(2) |
|
|
| 11.62 |
| 3/2/2026 |
|
|
|
|
|
|
|
|
|
|
|
| 154,882(3) |
|
|
| 14.30 |
| 3/2/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 32,873(5) |
| 641,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 20,400(6) |
| 397,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 24,752(7) |
| 482,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 91,700(10) |
| 1,788,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 61,879(11) |
| 1,206,641 |
Matteo Anversa |
| — |
| 45,266(3) |
|
|
| 14.30 |
| 3/2/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10,638(8) |
| 207,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,234(7) |
| 141,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 18,085(11) |
| 352,658 |
Kevin Brackman |
| 3,000 |
| 1,500(4) |
|
|
| 17.95 |
| 3/23/2025 |
|
|
|
|
|
|
|
|
|
| 2,567 |
| 5,133(2) |
|
|
| 11.62 |
| 3/2/2026 |
|
|
|
|
|
|
|
|
|
|
|
| 16,975(3) |
|
|
| 14.30 |
| 3/2/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 500(9) |
| 9,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,600(6) |
| 31,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,713(7) |
| 52,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,782(11) |
| 132,249 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | Upon Mr. Banyard’s voluntary departure on October 25, 2019, all unexercisable options and all unvested stock units awards were forfeited. |
(3) | These stock options were granted on March 6, 2019 subject to vesting in equal installments in March 2020, March 2021, and March 2022. |
(4) | Represents unvested service based restricted units that were granted on March 6, 2019. These units will vest in equal installments in March 2020, March 2021, and March 2022. |
(5) | Represents unvested performance based restricted stock units that were granted on March 6, 2019. These units will vest in March 2022 based on applicable performance conditions. The units shown indicate the number of shares that would be paid out if 100% of the performance target is achieved. |
(6) | Represents unvested service based restricted units that were granted as a one-time retention award on October 16, 2019. These units will vest in equal installments in October 2020, October 2021, and October 2022. |
(7) | These stock options were granted on March 2, 2017; the remaining unexercisable options vested in March 2020. |
(8) | These stock options were granted on March 8, 2018; the remaining unexercisable options vest in equal installments in March 2020 and March 2021. |
(9) | Represents unvested service based restricted stock units that were granted on March 2, 2017. These remaining units vested in March 2020. |
(10) | Represents unvested performance based restricted stock units that were granted on March 2, 2017. These units vested in March 2020 based on applicable performance conditions. The units shown indicate the number of shares that would be paid out if 100% of the performance target is achieved. |
(11) | Represents unvested service based restricted stock units that were granted on March 8, 2018. These remaining units will vest in equal installments in March 2021 and March 2022. |
(12) | Represents unvested performance based restricted stock units that were granted on March 8, 2018. These units will vest in March 2021 based on applicable performance conditions. The units shown indicate the number of shares that would be paid out if 100% of the performance target is achieved. |
(13) | Represents unvested service based restricted units that were granted on September 30, 2019 as an onboarding grant for Mr. Harmon. These units will vest in equal installments in September 2021 and September 2022. |
2020 Proxy Statement | 43
Option Exercises and Stock Vested for Fiscal Year End 2019
The following table shows the options that were exercised and the restricted stock grants that vested for the NEOs during fiscal year 2019.
Name |
| Option Awards |
| Stock Awards | |||
| Number of shares acquired on exercise (#) | Value realized on exercise ($) |
| Number of shares acquired on vesting (#) | Value realized on vesting ($) | ||
R. David Banyard |
| 184,055 | $584,292 |
| 88,266 | $1,652,751 | |
Andrean Horton |
|
|
|
|
|
| |
Kevin Brackman |
|
|
|
| 2,322 | $44,305 | |
Thomas Harmon |
|
|
|
|
|
| |
|
|
|
|
|
|
| |
Nonqualified Deferred Compensation
The following table shows the contributions, earnings, and balances of the NEOs in our Nonqualified Deferred Compensation Plan with respect to fiscal year 2019.
|
|
|
|
|
|
Name | Executive ($) | Registrant ($) | Aggregate ($) | Aggregate ($) | Aggregate ($) |
R. David Banyard | $492,197 | — | $74,860 | — | $675,073 |
Andrean Horton | $ 21,799 | $10,992 | $ 1,073 | — | $ 22,872 |
Kevin Brackman | $ 10,365 | $16,361 | $ 2,874 | — | $ 24,428 |
Thomas Harmon | — | — | — | — | — |
(1) | Contributions by the Company in the last fiscal year under the |
Name |
| Termination for Cause or Voluntary Resignation |
| Termination without Cause or for Good Reason |
| Retirement(1) |
| Death |
| Disability |
| Termination without Cause or Resignation for Good Reason in connection with a Change of Control |
| Actual Termination Amounts Received |
R. David Banyard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance |
| - |
| 1,437,880 |
| - |
| 13,826 |
| 13,826 |
| 1,437,880 |
| - |
Bonus Severance |
| - |
| 1,437,880 |
| - |
| - |
| - |
| 1,437,880 |
| - |
Other Benefits |
| - |
| 72,043 |
| - |
| 328,164 |
| 52,109 |
| 72,043 |
| - |
Equity Acceleration |
| - |
| 6,083,435 |
| - |
| 6,083,435 |
| 6,083,435 |
| 6,083,435 |
| - |
Total |
| - |
| 9,031,238 |
| - |
| 6,425,424 |
| 6,149,370 |
| 9,031,238 |
| - |
Matteo Anversa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance |
| - |
| 425,000 |
| - |
| 8,173 |
| 8,173 |
| 425,000 |
| - |
Bonus Severance |
| - |
| 297,500 |
| - |
| - |
| - |
| 297,500 |
| - |
Other Benefits |
| - |
| 42,963 |
| - |
| 547,108 |
| 31,405 |
| 42,963 |
| - |
Equity Acceleration |
| - |
| 955,961 |
| - |
| 955,961 |
| 955,961 |
| 955,961 |
| - |
Total |
| - |
| 1,721,425 |
| - |
| 1,511,243 |
| 995,540 |
| 1,721,425 |
| - |
Kevin Brackman |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Bonus Severance |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Other Benefits |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Equity Acceleration |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Total |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
Policies and Procedures with Respect to Related Party Transactions(2)
The Board is committed to upholdingEarnings in this column represent estimated earnings on the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, it is our preference, as a general rule, to avoid related party transactions. No related party transactions occurred during fiscal year 2017.
Our Governance Committee reviews all relationships and transactions inNonqualified Deferred Compensation Plan, which we and our directors, nominees for director and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. In addition, under Code of Business Conduct and Ethics, our Audit Committee is responsible for reviewing and investigating any matters pertaining to our ethical codes of conduct, including conflicts of interest.
46
As a result of rules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (in the Company’s case, the CEO). In determining the median employee, a listing of all employees (the Company’s full employee population, but excluding the CEO) as of December 17, 2017 was prepared and the Company applied a “consistently applied compensation measure” to determine the median employee. For the consistently applied compensation measure, the Company looked to annual base salaries of employees for 2017. We used an annual base salary as our consistently applied compensation measure as it represents the primary compensation component paid to all of our employees. Non-U.S. employees werebased upon participant-directed investment allocations. These amounts are not included in the determination of the median employee compensation, with the salary amounts of such non-U.S. employees converted to U.S. dollars using the applicable exchange rate as of December 17, 2017.
Mr. Banyard, the Company’s CEO, had 2017 annual total compensation of $3,279,164, as reflected in the Summary Compensation Table includedbecause they do not constitute above market interest or preferential earnings.
44 | Myers Industries, Inc.
Employment Arrangements Including Change in Control
The following table summarizes severance payments and benefits available to our NEOs if certain terminations of employment occurred during 2019. On February 21, 2020, the Company adopted a Senior Officer Severance Plan that superseded and replaced the Severance and Change in Control Agreements and Change in Control Agreements previously entered into between the Company and its NEOs, as described in and filed with the Current Report on Form 8-K filed by the Company on February 27, 2020.
Event Triggering Payment or Provision of Benefits | Benefit | R. David Banyard, President and Chief Executive Officer(1) | Kevin Brackman, Executive Vice President, Chief Financial Officer | Andrean Horton, Interim President and CEO, Chief Legal Officer(2) | Thomas Harmon, Vice President, Chief Human Resources Officer(2) |
Termination without cause or NEO terminates for good reason, including within 180 days following a change in | Severance Benefits – Cash Payment | Amount equal to the sum of (A) 2X his then-current annual base salary (or at highest rate in effect during the prior one year period), and (B) 2X his annual bonus at the target level in effect during the prior two year period, in a lump sum within 30 days. | Amount equal to the sum of (A) 1X his then-current annual base salary (or at highest rate in effect during the prior one year period), and (B) 1X his annual bonus at the target level in effect during the prior two year period, in a lump sum within 30 days. | Amount equal to the sum of (A) 2X her then-current annual base salary (or at highest rate in effect during the prior one year period), and (B) 2X her annual bonus at the target level in effect during the prior two year period, in a lump sum within 30 days. | Amount equal to the sum of (A) 2X her then-current annual base salary (or at highest rate in effect during the prior one year period), and (B) 2X her annual bonus at the target level in effect during the prior two year period, in a lump sum within 30 days. |
Annual Bonus for the Year of Termination – Cash Payment | Amount equal to the pro-rata portion of the current year target annual bonus within 30 days after such termination. | Amount equal to the pro-rata portion of the current year target annual bonus within 30 days after such termination. | Amount equal to the pro-rata portion of the current year target annual bonus within 30 days after such termination. | Amount equal to the pro-rata portion of the current year target annual bonus within 30 days after such termination. | |
Stock Awards – Cash Payment | All outstanding performance stock unit grants, stock options, and restricted stock awards will become vested, to the extent not previously forfeited or terminated. | All outstanding performance stock unit grants, stock options, and restricted stock awards will become vested, to the extent not previously forfeited or terminated. | All outstanding performance stock unit grants, stock options, and restricted stock awards will become vested, to the extent not previously forfeited or terminated. | All outstanding performance stock unit grants, stock options, and restricted stock awards will become vested, to the extent not previously forfeited or terminated. | |
Certain Benefits and Perquisites | Health coverage, long term disability protection, life insurance protection for two years, and outplacement services for one year. | Health coverage, long term disability protection, life insurance protection and outplacement services for one year. | Health coverage, long term disability protection, life insurance protection for two years, and outplacement services for one year. | Health coverage, long term disability protection, life insurance protection for two years, and outplacement services for one year. | |
(1) The (2) With respect to Ms. Horton and Mr. Harmon, these severance benefits were available only in the event of their respective termination without cause or for good reason within 180 days following a change in control. | |||||
2020 Proxy Statement | 45
Termination by reason of death or disability | Cash Payment | Base salary and annual | Base salary and annual bonus accrued and unpaid to the date of death or disability. | Base salary and annual bonus accrued and unpaid to the date of death or disability. | Base salary and annual bonus accrued and unpaid to the date of death or disability. |
Certain Benefits and Perquisites | Any amounts payable under any employee If Mr. Banyard and/or his surviving spouse and dependents properly elect continued medical coverage in accordance with Code Section 4980B, the Company shall pay the entire cost of the | Any amounts payable under any employee benefit plan of the Company in
| Any amounts payable under any employee benefit plan of the Company in accordance with the terms of such plan. | Any amounts payable under any employee benefit plan of the Company in accordance with the terms of such plan. | |
Termination with cause or voluntary resignation | Other Terms | If Mr. Banyard is terminated by the Company for cause or resigns other than for good reason, then he is entitled only to compensation earned prior to the date of termination that has not yet been paid, and | If Mr. Brackman is terminated by the | If Ms. Horton is terminated by the Company for cause or resigns other than for good reason, then she is entitled only to compensation earned prior to the date of termination that has not yet been paid. | If Mr. Harmon is terminated by the Company for cause or resigns other than for good reason, then he is entitled only to compensation earned prior to the date of termination that has not yet been paid. |
46 | Myers Industries, Inc.
Summary of Potential Termination Payments and Benefits
The following table summarizes the value of the termination payments and benefits that each of our NEOs would receive if he or she had terminated employment on December 31, 2019, under the circumstances shown.
Name |
| Termination for Cause or Voluntary Resignation |
| Termination without Cause or for Good Reason |
| Retirement(1) |
| Death |
| Disability(2) |
| Termination without Cause or Resignation for Good Reason in connection with a Change of Control |
| |||
Andrean Horton |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash Severance(3) |
| - |
| $100,000 |
| - |
| $107,212 |
| $107,212 |
| $850,000 |
| |||
Bonus Severance |
| - |
| - |
| - |
| - |
| - |
| $675,000 |
| |||
Other Benefits |
| - |
| - |
| - |
| $250,000 |
| - |
| $ 19,979 |
| |||
Equity Acceleration(4) |
| - |
| $346,057 |
| - |
| $346,057 |
| $346,057 |
| $346,057 |
| |||
Total |
| - |
| $446,057 |
| - |
| $703,269 |
| $453,269 |
| $1,891,036 |
| |||
Kevin Brackman |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash Severance(3) |
| - |
| $450,000 |
| - |
| $106,731 |
| $106,731 |
| $450,000 |
| |||
Bonus Severance |
| - |
| $420,000 |
| - |
| - |
| - |
| $420,000 |
| |||
Other Benefits |
| - |
| $ 35,031 |
| - |
| $774,934 |
| $17,291 |
| $ 35,031 |
| |||
Equity Acceleration(4) |
| - |
| $587,976 |
| - |
| $587,976 |
| $587,976 |
| $587,976 |
| |||
Total |
| - |
| $1,493,007 |
| - |
| $1,469,641 |
| $711,998 |
| $1,493,007 |
| |||
Thomas Harmon |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash Severance(3)(5) |
| $(100,000) |
| $100,000 |
| - |
| $106,538 |
| $106,538 |
| $780,000 |
| |||
Bonus Severance |
|
|
|
|
| - |
| - |
| - |
| $510,000 |
| |||
Other Benefits |
|
|
|
|
| - |
| $266,622 |
| $34,582 |
| $ 51,177 |
| |||
Equity Acceleration(4) |
|
|
| $198,812 |
| - |
| $198,812 |
| $198,812 |
| $198,812 |
| |||
Total |
| $(100,000) |
| $298,812 |
| - |
| $571,973 |
| $339,933 |
| $1,539,989 |
| |||
R. David Banyard(6) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash Severance |
| - |
|
|
|
|
|
|
|
|
|
|
| |||
Bonus Severance |
| - |
|
|
|
|
|
|
|
|
|
|
| |||
Other Benefits |
| - |
|
|
|
|
|
|
|
|
|
|
| |||
Equity Acceleration |
| - |
|
|
|
|
|
|
|
|
|
|
| |||
Total |
| - |
|
|
|
|
|
|
|
|
|
|
| |||
(1) | None of the NEOs were eligible for retirement benefits as of December 31, 2019. |
(2) | Values for these amounts are based on |
(3) | Values for these amounts include acceleration of cash-based retention awards granted on October 16, 2019. |
(4) | Values for these amounts are based on the closing price of our common stock on December 31, 2019, of $16.68. |
(5) | Mr. Harmon received a $100,000 signing bonus which is subject to |
(6) | Mr. Banyard’s employment terminated upon his voluntary resignation effective October 25, 2019 and
|
Policies and Procedures with Respect to Related Party Transactions
The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, it is our preference, as a general rule, to avoid related party transactions. No related party transactions occurred during fiscal year 2019.
Our Governance Committee reviews all relationships and transactions in which we and our directors, nominees for director and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. In addition, under Code of Business Conduct and Ethics, our Audit Committee is responsible for reviewing and investigating any matters pertaining to our ethical codes of conduct, including conflicts of interest.
2020 Proxy Statement | 47
As a result of rules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (in the Company’s case, the CEO). In determining the median employee, a listing of all employees (the Company’s full employee population, but excluding the CEO) as of December 31, 2018, was prepared and the Company applied a “consistently applied compensation measure” to determine the median employee. For the consistently applied compensation measure, the Company looked to annual base salaries of employees for 2018. We used an annual base salary as our consistently applied compensation measure as it represents the primary compensation component paid to all of our employees. Non-U.S. employees were included in the determination of the median employee compensation, with the salary amounts of such non-U.S. employees converted to U.S. dollars using the applicable exchange rate as of December 31, 2018.
The annual total compensation paid to our CEOs in 2019 on a pro rata basis based on their time of service was $2,303,159, as reflected in the Summary Compensation Table information included in this Proxy Statement. The annual total compensation for 2019 of our median employee (other than the CEO) was calculated in accordance with the requirements of the Summary Compensation Table and determined to be $39,929. Our CEO annual total compensation was approximately 57.68 times that of our median employee in 2019.
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. Accordingly, 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.
48 | Myers Industries, Inc.
Security Ownership of Certain Beneficial Owners and Management
The following table shows the number of shares of our common stock beneficially owned as of March 18, 2020, (unless otherwise indicated) by:
Each shareholder known by us to be the beneficial owner of more than 5% of our common stock;
Each of the Company’s directors and director nominees;
Each named executive officer in our summary compensation table; and
All of our current directors and officers as a group
A beneficial owner of stock is a person who has sole or shared voting power, meaning the power to control voting decisions, or sole or shared investment power, meaning the power to cause the sale of the stock. All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted. The Company had no preferred stock issued or outstanding.
|
| Shares Beneficially Owned |
|
| Percent of Shares Outstanding(1) | ||
Greater Than 5% Owners(2) |
|
|
|
|
|
|
|
GAMCO Investors, Inc.(3) |
| 6,857,255 |
|
| 19.2% | ||
One Corporate Center 401 Theodore Frems Ave. Rye, NY 10580-1422 |
|
|
|
|
|
|
|
BlackRock, Inc.(4) |
| 5,587,513 |
|
| 15.6% | ||
55 East 52nd Street New York, NY 10055 |
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.(5) |
| 3,195,200 |
|
| 8.9% | ||
100 East Pratt Street Baltimore, Maryland 21202 |
|
|
|
|
|
|
|
The Vanguard Group(6) |
| 2,460,062 |
|
| 6.9% | ||
100 Vanguard Blvd. Malvern, PA 19355 |
|
|
|
|
|
|
|
Directors, Nominees, and Named Executive Officers(7,8) |
|
|
|
|
|
|
|
R. David Banyard |
| 61,848 |
|
| * | ||
Kevin Brackman |
| 29,685 |
|
| * | ||
Thomas Harmon |
| 0 |
|
| * | ||
Andrean Horton |
| 7,185 |
|
| * | ||
Michael McGaugh |
| 25,000 |
|
| * | ||
Sarah R. Coffin(9) |
| 19,999 |
|
| * | ||
Ronald M. De Feo(10) |
| 10,000 |
|
| * | ||
William A. Foley(11) |
| 18,020 |
|
| * | ||
F. Jack Liebau, Jr. (10) |
| 32,038 |
|
| * | ||
Bruce Lisman(10) |
| 24,138 |
|
| * | ||
Lori Lutey(10) |
| 2,123 |
|
| * | ||
Jane Scaccetti(10) |
| 20,252 |
|
| * | ||
Robert A. Stefanko(12) |
| 13,744 |
|
| * | ||
All Directors, Nominees and Named Executive Officers as a group (12 persons) |
| 264,062 |
|
| * | ||
* | Less than 1% ownership |
(1) | The percentage of shares beneficially owned is based on 35,724,608 shares of common stock outstanding as of March 18, 2020. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days after March 18, 2020, are deemed to be outstanding and beneficially owned by the person holding such options for the purpose of computing the number of shares beneficially owned and the percentage ownership of |
2020 Proxy Statement | 49
(2) | According to filings made with the SEC, this party or an affiliate has dispositive and/or voting power over the shares. Number of shares of common stock beneficially owned |
| According to
Schedule 13D/A
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(4) | According to a Schedule 13G/A filed February 4, 2020, Blackrock, Inc. possessed sole power to vote with respect to 5,529,987 of these shares, sole power to direct the disposition with respect to 5,587,513 of these shares, and |
(5) | According to the Schedule 13G/A filed February 14, 2020, these securities are owned by various individual and institutional investors that T. Rowe Price Associates, Inc. (“Price Associates”) serves as investment adviser with power to direct investments and/or sole power to vote the securities (including T. Rowe Price Small-Cap Value Fund, Inc.,
|
(6) | According to a Schedule 13G/A filed February 12, 2020, The Vanguard Group possessed sole power to vote with respect to 74,217 of these shares, sole power to direct the |
(7) | Unless otherwise noted, the beneficial owner uses the same address as the address of the principal office of the Company |
(8) | According to
|
(9) | The table does not reflect (i) 200 shares held in a trust for which this director serves as trustee and disclaims beneficial ownership, (ii) 11,678 share awards that have been deferred by this director that will be converted into common stock
|
(10)
| The
|
(11) | The
|
(12) | The table does not reflect (i) 22,644 share awards that have been deferred by this
|
50 | Myers Industries, Inc.
PROPOSAL NO. 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. In accordance with these responsibilities, the Audit Committee appointed Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ended December 31, 2019. Additional information regarding the services provided to the Company by EY during 2019 is set forth below, under the section titled “Matters Relating to the Independent Registered Public Accounting Firm.”
In selecting EY as the Company’s independent registered public accounting firm, the Audit Committee considered a variety of factors, including:
The firm’s independence and internal quality controls
The overall depth of talent
EY’s experience with the Company’s industry and companies of similar scale and size
In determining whether to reappoint EY as the Company’s independent registered public accounting firm for the year ending December 31, 2020, the Audit Committee again took those factors into consideration along with its evaluation of the past performance of EY and EY’s familiarity with the Company’s business and internal control over financial reporting. EY’s audit report appears in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
In accordance with SEC rules and EY policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to our company. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of the lead audit partner under this rotation policy involves discussions with EY regarding qualified audit experience and ability to devote the time necessary to serve as lead audit partner. The current EY lead audit partner at EY for the Company was appointed in 2017.
The Audit Committee believes that the continued retention of EY as our independent registered public accounting firm is in the best interest of the Company and our shareholders and, although shareholder ratification is not required under the laws of the State of Ohio, we are asking shareholders to ratify the selection of EY as our independent registered public accounting firm for 2020, in order to provide a means by which our shareholders may communicate their opinions to the Audit Committee. If our shareholders do not ratify the appointment of EY, the Audit Committee will reconsider the appointment, but is not obligated to change the appointment, and may for other reasons be unable to make another appointment.
The Board of Directors recommends that you vote “FOR” Proposal 3
relating to the ratification of the appointment of Ernst & Young LLP
2020 Proxy Statement | 51
Matters Relating to the Independent Registered Public Accounting Firm
EY Representatives at Annual Meeting
EY audited the books and records of the Company for the years ended December 31, 2019 and 2018. Representatives of EY are expected to be available at the Annual Meeting to respond to appropriate questions and will be given the opportunity to make a statement if they desire to do so.
A description of the fees billed to the Company by EY for the years ended December 31, 2019 and 2018 is set forth in the table below.
EY was first retained by the Audit Committee in 2011. The Audit Committee reviewed the non-audit services provided by EY during the year ended December 31, 2019, and determined that the provision of such non-audit services was compatible with maintaining its independence (see “Audit Committee Report” on page 53).
| 2019 | 2018 |
| |||||
Audit Fees(1) | $ | 1,680,000 |
| $ | 1,751,000 |
| ||
Audit Related Fees(2) | $ | 14,000 |
| $ | — |
| ||
Tax Fees (3) | $ | 10,000 |
| $ | 57,000 |
| ||
All Other Fees(4) | $ | 32,200 |
| $ | 7,200 |
| ||
Total Fees | $ | 1,736,200 |
| $ | 1,815,200 |
| ||
(1) | Professional fees for the audit of the annual financial statements and the review of the quarterly financial statements. |
(2) | Fees for assurance and related services reasonably related to merger and acquisition activities. |
(3) | Professional fees for tax compliance, tax advice, and tax planning. |
(4) | Fees for all other products and services. |
The Audit Committee’s Pre-Approval Policy requires the pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific fee range or budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this policy, and the fees for the services performed to date. During 2019, all services were pre-approved by the Audit Committee in accordance with the policy. The Pre-Approval Policy is available on the “Corporate Governance” page accessed from the “Investor Relations” page of our website at: www.myersindustries.com.
52 | Myers Industries, Inc.
The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or Exchange Act.
The Audit Committee, which is composed of five independent directors, is responsible for assisting the Board in fulfilling its oversight responsibilities pertaining to the accounting, auditing and financial reporting processes of the Company. The duties and responsibilities of the Audit Committee are set forth in the Audit Committee Charter, which is published on the Company’s website (www.myersindustries.com) on the “Corporate Governance” page under the Investor Relations section (and can be found directly here: http://s2.q4cdn.com/555961355/files/doc_downloads/corp-gov/2017/Audit-Committee-Charter-Amended-11-2-2017.pdf).
Management is responsible for establishing and maintaining the Company’s internal control over financial reporting and for preparing financial statements in accordance with accounting principles generally accepted in the United States of America. The Audit Committee is directly responsible for the appointment, oversight, compensation and retention of EY, the independent registered public accounting firm for the Company since 2011. For additional information regarding the Audit Committee’s assessment of EY and tenure of EY as the Company’s independent registered public accounting firm, see “Proposal No. 3 – Ratification of Appointment of Independent Registered Public Accounting Firm beginning on page 51. EY is responsible for performing an independent audit of the Company’s annual financial statements and expressing an opinion on:
The conformity, in all material respects, of the Company’s financial statements with accounting principles generally accepted in the United States of America and
The effectiveness of internal control over financial reporting
Each member of the Audit Committee is financially literate and independent as defined under the Board of Directors Independence Criteria policy and the independence standards set by the NYSE for both directors and audit committee members. The Board has identified each of F. Jack Liebau, Jr. (ex officio), Lori Lutey, Jane Scaccetti and Robert A. Stefanko as an “audit committee financial expert.”
The Audit Committee’s responsibility is one of oversight. Members of the Audit Committee rely on the information provided and the representations made to them by management, which has primary responsibility for establishing and maintaining appropriate internal control over financial reporting, and for the Company’s financial statements and reports; and by the independent registered public accounting firm, which is responsible for performing an audit in accordance with Standards of the Public Company Accounting Oversight Board — United States (“PCAOB”) and expressing an opinion on:
The conformity, in all material respects, of the Company’s financial statements with accounting principles generally accepted in the United States of America
The effectiveness of internal control over financial reporting
In the performance of our duties we have:
Reviewed and discussed with management the Company’s audited financial statements as of and for the year ended December 31, 2019
Discussed with EY, among other matters, the fair and complete presentation of the Company’s results, the assessment of the Company’s internal control over financial reporting, significant accounting policies applied in the Company’s financial statements, as well as, when applicable, alternative accounting treatments and the matters required to be discussed by Auditing Standard No. 16 (PCAOB 2012-01) and the rules of the SEC
2020 Proxy Statement | 53
Received the written disclosures and the letter from EY required by applicable requirements of the PCAOB Rule 3526 regarding EY’s communications with the Audit Committee concerning independence, and discussed with EY its independence from the Company and its management. As part of that review, we received the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Committee discussed the independence of the independent registered public accounting firm
The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditor’s independence
The Audit Committee concluded that the independent registered public accounting firm is independent from the Company and its management
Based on the reviews and discussions referred to above, and exercising our business judgment, we recommended to the Board that the financial statements referred to above be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. We have selected EY as the Company’s independent registered public accounting firm for fiscal 2020, and have approved submitting the selection of the independent registered public accounting firm for ratification by the shareholders.
The foregoing report has been furnished by the current members of the Audit Committee, being:
Robert A. Stefanko, Chair and Presiding Director, Sarah R. Coffin, F. Jack Liebau, Jr. (ex officio), Lori Lutey, and Jane Scaccetti
54 | Myers Industries, Inc.
General Information About the Meeting and Voting
Meeting Time and Applicable Dates | This Proxy Statement is furnished in connection with the solicitation by the Board of Myers Industries, Inc., an Ohio corporation, of the accompanying proxy to be voted at the Annual Meeting to
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Attending the | Myers Industries will host the 2020 Annual Meeting live via the internet and
2020 Proxy Statement | 55
Executive Officers of the Company Disclosure regarding the executive officers of the Company is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, Shareholder Proposals for Inclusion in Proxy Statement Any shareholder who intends to present a proposal at the Company’s next Annual Meeting to be held in April Not later than November Not earlier than January In accordance with our Amended and Restated Code of Regulations, a shareholder may submit notice of a shareholder proposal that it intends to raise at our Annual Meeting (and not desiring to be included in the Company’s proxy statement) only if advance written notice of such intention is received by the The submission of such a notice does not ensure that a proposal can be raised at our Annual Meeting. The Compensation Committee Report and the Audit Committee Report (including reference to the independence of the Audit Committee members) are not deemed filed with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and shall not be deemed incorporated by reference into any prior or future filings made by us under the Securities Act, or the Exchange Act, except to the extent that we specifically incorporate such information by reference. The section of this proxy entitled “Compensation Discussion and Analysis” is specifically incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31,
2020 Proxy Statement | 57
The accompanying proxy is solicited by and on behalf of the Board, whose notice of meeting is attached to this Proxy Statement, and the entire cost of such solicitation will be borne by Myers Industries. In addition to the use of the mail, proxies may be solicited by personal interview and telephone by directors, officers and employees of Myers Industries. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and Myers Industries will reimburse them for reasonable out-of-pocket expenses incurred by them in connection therewith. Although a copy of the Annual Report on Form 10-K is provided to you at the time of delivery of the definitive Proxy Statement, we will mail without charge, upon written request, a copy of our Annual Report on Form 10-K for the year ended December 31, Notice Regarding Delivery of Security Holder Documents The SEC now permits companies to send a single set of annual disclosure documents to any household at which two or more shareholders reside, unless contrary instructions have been received, but only if the Company provides advance notice and follows certain procedures. In such cases, such shareholders continue to receive a separate notice of the meeting and proxy card. This “householding” process reduces the volume of duplicate information and reduces printing and mailing expenses. We have not instituted householding for shareholders of record; however, a number of brokerage firms may have instituted householding for beneficial owners of the Company’s shares of common stock held through such brokerage firms. If your family has multiple accounts holding shares of common stock of the Company, you already may have received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of the annual disclosure documents. The broker will arrange for delivery of a separate copy of this Proxy Statement or our Annual Report promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies. Myers
APPENDIX A – MYERS INDUSTRIES, INC. Reconciliation of non-GAAP Financial Measures
(
Dollars in thousands)
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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