The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | | (2)
| This information is based solely on a Schedule 13G/A filed with the SEC by The Vanguard Group, Inc. (“Vanguard”) on February 11, 2019. Vanguard reported that it may be deemed to have sole voting power as to 35,727 shares, shared voting power as to 9,798 shares, sole dispositive power with respect to 3,146,832 shares and shared dispositive power with respect to 40,966 shares as of December 31, 2018.
| 1,758,906(7) | | 5.0% |
(1) | This information is based solely on a Schedule 13G/A filed with the SEC by BlackRock, Inc. (“BlackRock”) on January 27, 2022. BlackRock reported that it may be deemed to have sole voting power with respect to 3,333,357 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 3,540,367 shares and no shared dispositive power with respect to any shares as of December 31, 2021. |
(2) | This information is based solely on a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP (“Dimensional”) on February 8, 2022. Dimensional reported that it may be deemed to have sole voting power as to 2,599,311 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 2,653,292 shares and no shared dispositive power with respect to any shares as of December 31, 2021. |
(3) | This information is based solely on a Schedule 13G filed with the SEC by Invesco Ltd. (“Invesco”) on February 14, 2022. Invesco reported that it may be deemed to have sole voting power as to 1,941,383 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 1,945,667 shares and no shared dispositive power with respect to any shares as of December 31, 2021. |
(4) | This information is based solely on a Schedule 13G filed with the SEC by Front Street Capital Management, Inc. (“FSC”) and Tarkio Fund (“TARKX”) on January 28, 2021. FSC reported that it may be deemed to have sole voting power as to 144,065 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 933,092 shares and no shared dispositive power with respect to any shares of December 31, 2020; and TARKX reported that it may be deemed to have sole voting power as to 848,600 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 848,600 shares and no shared dispositive power with respect to any shares as of December 31, 2020. |
(5) | This information is based solely on a Schedule 13G filed with the SEC by Victory Capital Management Inc. (“Victory”) on February 2, 2022. Victory reported that it may be deemed to have sole voting power as to 1,864,776 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 1,884,076 shares and no shared dispositive power with respect to any shares as of December 31, 2021. |
(6) | This information is based solely on a Schedule 13G filed with the SEC by AllianceBernstein L.P. (“AB”) on February 14, 2022. AB reported that it may be deemed to have sole voting power as to 1,569,486 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 1,848,126 shares and no shared dispositive power with respect to any shares as of December 31, 2021. |
(7) | This information is based solely on a Schedule 13G/A filed with the SEC by The Vanguard Group, Inc. (“Vanguard”) on February 10, 2022. Vanguard reported that it may be deemed to have sole voting power as to no shares, shared voting power as to 42,605 shares, sole dispositive power with respect to 1,697,918 shares and shared dispositive power with respect to 60,988 shares as of December 31, 2021. |
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Ownership of Securities Stock Ownership of Directors and Management The following table sets forth information regarding the beneficial ownership of Common Stock by each current director and director nominee of the Company, by each current and former executive officer of the Company named in the Summary Compensation Table below, and by the current directors and executive officers of the Company as a group. Unless otherwise indicated, the information is provided as of the Record Date (i.e., March 2, 2022). Each of the persons listed below is the beneficial owner of less than 1% of the outstanding shares of Common Stock, and the current executive officers and directors as a group own approximately 2.52% of the outstanding shares of Common Stock. The table also reflects for each person the number of Common Stock units associated with compensation deferred under the Company’s Deferred Compensation Plan. None of the persons named below has pledged any of his/her shares as security. | (3)
| This information is based solely on a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP (“Dimensional”) on February 8, 2019. Dimensional reported that it may be deemed to have sole voting power as to 2,759,974 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 2,891,463 shares and no shared dispositive power with respect to any shares as of December 31, 2018.
|
| (4)
| This information is based solely on a Schedule 13G/A filed with the SEC by BlackRock, Inc. (“BlackRock”) on February 6, 2019. BlackRock reported that it may be deemed to have sole voting power with respect to 2,360,981 shares and sole dispositive power with respect to 2,443,451 shares as of December 31, 2018.
|
| (5)
| This information is based solely on a Schedule 13G filed with the SEC by UBS Group AG on behalf of itself and its wholly owned subsidiaries, UBS AG London Branch, UBS Securities LLC, and UBS Financial Services Inc. (collectively, “UBS”), on February 15, 2019. UBS reported that it has shared voting and dispositive power with respect to all of these shares as of December 31, 2018.
|
| (6)
| This information is based solely on a Schedule 13G filed with the SEC on February 14, 2019 by (i) TIAA-CREF Investment Management, LLC, (ii) College Retirement Equities Fund-Stock Account and (iii) Teachers Advisors, LLC (all of the foregoing, collectively, “TIAA-CREF”). TIAA-CREF reported that it has sole voting and dispositive power with respect to all of these shares as of December 31, 2018.
|
Stock Ownership of Directors and Management
The following table sets forth information regarding the beneficial ownership of Common Stock by each current director and director nominee of the Company, by each current and former executive officer of the Company named in the Summary Compensation Table below, and by the current directors and executive officers of the Company as a group. Unless otherwise indicated, the information is provided as of the Record Date (i.e., March 6, 2019). Each of the persons listed below is the beneficial owner of less than 1% of the outstanding shares of Common Stock, and the current executive officers and directors as a group own approximately 1.6% of the outstanding shares of Common Stock. The table also reflects for each person the number of Common Stock units associated with compensation deferred under the Company’s Deferred Compensation Plan. None of the persons named below has pledged any of his/her shares as security.
| Name | Number of Shares of Common Stock Beneficially Owned(1) | Number of Deferred Common Stock Units Beneficially Owned(2) | | NAME | | | NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED(1) | | | NUMBER OF DEFERRED COMMON STOCK UNITS BENEFICIALLY OWNED(2) | David J. Antoniuk | 48,802(3) | 0 | | 201,316 | (3)(4) | | 0 | Roy V. Armes | 9,324 | 0 | | Anne E. Bélec | | | 23,865 | | | 0 | Robert G. Bohn | 22,360 | 0 | | 46,225 | | | 0 | Terrance L. Collins | | | 58,061 | (5) | | 0 | Donald M. Condon, Jr. | 25,900 | 1,932 | | 44,617 | | | 1,932 | Anne M. Cooney | 20,653 | 0 | | 44,518 | | | 0 | Amy Davis | | | 8,384 | | | | Thomas L. Doerr, Jr. | 3,642(4) | 0 | | 66,195 | (6) | | 0 | Kenneth W. Krueger | 49,875 | 5,232 | | 88,972 | | | 5,232 | Robert W. Malone | | | 8,384 | | | | Leslie L. Middleton | | | 45,383 | (7) | | 0 | C. David Myers | 28,257 | 0 | | 52,122 | | | 0 | Barry L. Pennypacker | 282,150(5) | 10,010 | | John C. Pfeifer | 20,653 | 0 | | 44,518 | | | 0 | Aaron H. Ravenscroft | 49,774(6) | 0 | | 163,558 | (8) | | 0 | Peter A. Ruck | 3,642(7) | 0 | | Total of all current executive officers and directors as a group (13 persons) | 569,457(8) | 17,174 | | Total of all current executive officers and directors as a group (14 persons) | | | 896,118 | (9) | | 7,164 |
(1) | Unless otherwise noted, the specified persons have sole voting power and sole dispositive power as to the indicated shares. |
(2)
| The Company has the sole right to vote all shares of Common Stock underlying the Common Stock units held in the Deferred Compensation Plan Trust. The independent trustee of the Trust has dispositive power as to such shares.
|
(3)
| Includes 41,802
(2) | The Company has the sole right to vote all shares of Common Stock underlying the Common Stock units held in the Deferred Compensation Plan Trust. The independent trustee of the Trust has dispositive power as to such shares. |
(3) | Includes 125,062 shares that Mr. Antoniuk has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2019 Annual Meeting. |
(4)
| Includes 3,642 shares that Mr. Doerr has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2019 Annual Meeting.
|
(5)
| Includes 213,617 shares that Mr. Pennypacker has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2019 Annual Meeting. Also includes 29,433 shares that will vest on March 28, 2019 pursuant to the Company’s 2013 Omnibus Incentive Plan.
|
(6)
| Includes 37,951 shares that Mr. Ravenscroft has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2019 Annual Meeting. Also includes 5,814 shares issued under Restricted Stock Units and 4,709 shares that will vest on March 28, 2019 pursuant to the Company’s 2013 Omnibus Incentive Plan.
|
(7)
| Includes 3,642 shares that Mr. Ruck has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2019 Annual Meeting.
|
(8)
| Includes 305,079 shares that the Company’s named executive officers have the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2019 Annual Meeting.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors and persons owning more than ten percent of the Company’s Common Stock to file reports of ownership and changes in ownership of equity and derivative securities of the Company with the Securities and Exchange Commission and the New York Stock Exchange. To the Company’s knowledge, based on information provided by the reporting persons, all applicable reporting requirements for fiscal year 2018 were complied with in a timely manner, except as follows: the Form 4s reporting the grant of equity awards on February 20, 2018 to each of Messrs. Antoniuk, Doerr, Musial, Pennypacker and Ravenscroft were each filed on February 26, 2018 due to a clerical error.
NON-EMPLOYEE DIRECTOR COMPENSATION
The annual compensation package for non-employee directors is designed to attract and retain highly experienced and qualified individuals to serve on the Company’s Board of Directors. It is also intended to be competitive relative to general industrial companies of comparable size to the Company. The Compensation Committee typically reviews the market competitiveness of the non-employee director compensation program every two years with the assistance of an outside consulting firm.
The 2018 compensation package for non-employee directors consisted of cash (annual retainers) and equity (stock) awards. No meeting fees were paid to non-employee directors in 2018. Directors are also entitled to reimbursement of their reasonable out-of-pocket expenses in connection with their travel to and from attendance at Board and committee meetings and other Company events. An individual director’s actual annual compensation will vary based on committee memberships and committee chair responsibilities.
A significant portion of the target annual compensation package is delivered in the form of equity, which is designed to promote a strong alignment of interests between the Company’s non-employee directors and its shareholders. In 2018, the equity award, consisting of a stock grant, was set based on the guideline value of $110,000. The number of shares granted were based on the 20-day average stock price prior to February 14, 2018 (which was the date of the distribution of meeting materials to the Board in connection with the February 2018 Board meeting). The accounting expense was based on the closing stock price as of the date of grant.
Equity awards made in 2018 to non-employee directors were granted under the Company’s 2013 Omnibus Incentive Plan. The Compensation Committee may, in its discretion, grant awards from time-to-time in such amounts as it determinesPlan within sixty days following the record date for the 2022 Annual Meeting.
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(4) | Includes 14,500 shares held by the David and Nancy Antoniuk JT/WROS. |
(5) | Includes 39,450 shares that Mr. Collins has the right to such non-employee directors as it selects. The following table summarizes the 2018 compensation elements providedacquire pursuant to the Company’s non-employee directors:
| | Element
| Amount
| Annual Retainer for Board Chair (Non-Executive)
| $125,000
| Annual Retainer for Board Member
| $75,000
| Annual Retainer for Lead Independent Director
| $25,000
| Annual Retainer for Audit Committee Chair
| $20,000
| Annual Retainer for Compensation Committee Chair
| $15,000
| Annual Retainer for Governance Committee Chair
| $15,000
| Annual Retainer for Audit Committee Member
| $10,000
| Annual Retainer for Compensation Committee Member
| $7,500
| Annual Retainer for Governance Committee Member
| $7,500
| Annual Equity Grant
| $110,0002013 Omnibus Incentive Plan within sixty days following the record date for the 2022 Annual Meeting.
|
The Compensation Committee(6)
| Includes 39,066 shares that Mr. Doerr has determined that the guideline value ofright to acquire pursuant to the equity award to be granted to non-employee directors will be increased from $110,000 to $120,000 beginning in 2019.
Non-Employee Directors’ Compensation
TheCompany’s 2013 Omnibus Incentive Plan within sixty days following table sets forth the total compensation earned by non-employee directors duringrecord date for the fiscal year ended December 31, 2018.
| | | | | | Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards(3) | All Other Compensation(4) | Total | José María Alapont(5) | $23,125 | $89,594 | $0 | $7,969 | $120,688 | Roy V. Armes(6) | $45,000 | $55,232 | $0 | $0 | $100,232 | Robert G. Bohn | $123,750 | $89,594 | $0 | $0 | $213,344 | Donald M. Condon, Jr. | $100,000 | $89,594 | $0 | $486 | $190,080 | Anne M. Cooney | $92,500 | $89,594 | $0 | $593 | $182,687 | Kenneth W. Krueger | $200,000 | $89,594 | $0 | $593 | $290,187 | Jesse A. Lynn(5) | $23,125 | $89,594 | $0 | $0 | $112,719 | C. David Myers | $100,625 | $89,594 | $0 | $0 | $190,219 | John C. Pfeifer | $90,000 | $89,594 | $0 | $593 | $180,187 |
| (1)
| Includes annual cash retainers for the board chair, board members, committee chairs and committee members.
|
| (2)
| Reflects the grant date fair value of stock granted in 2018, as computed under the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”). The grant date fair value of stock granted in 2018 is calculated by multiplying the number of shares granted by the actual closing price of the Company’s common stock on the grant date. The stock granted in 2018 contained no restrictions or vesting period. Ms. Cooney and Messrs. Condon and Myers each deferred their 2018 stock grant pursuant to the Company’s Deferred Compensation Plan. Prior to 2018, the Company awarded restricted stock units to the non-employee directors that vested on the second anniversary of the grant date. At December 31, 2018, Ms. Cooney and Messrs. Bohn, Condon, Krueger, Myers and Pfeifer each had 4,151 restricted stock units outstanding. Messrs. Armes, Alapont and Lynn had no restricted stock units outstanding at year end.2022 Annual Meeting.
|
| (3)
| No stock options were awarded to directors in 2018, and no director had any outstanding stock options at year end.
|
| (4)
| From time-to-time, spouses or guests of directors may be invited to accompany directors at a Company function at the Company’s expense. During 2018, spouses and guests of directors were invited to attend events related to the February Board meeting. The “All Other Compensation” column reflects amounts reimbursed by the Company for travel, meals, and other related expenses for those spouses and guests attending events related to the February Board meeting.
|
| (5)
| Messrs. Alapont and Lynn tendered their resignations as directors of the Company in February 2018. After the forfeiture of their unvested restricted stock units granted in 2016 and 2017 in connection with their resignations, the Board reinstated and accelerated their unvested restricted stock units granted in 2016 and 2017. No amounts relating to these unvested restricted stock units are included in this table as no additional expenses or charges were incurred by the Company in connection with the reinstatement and acceleration of such unvested restricted stock units.
|
| (6)
| Mr. Armes was appointed to the Board effective July 31, 2018, and the Compensation Committee determined that, for his Board and committee service in 2018, he would receive one-half of the 2018 cash award (i.e., one-half of the annual retainer for service as a Board member, one-half of the annual retainer for service on the Compensation Committee, and one-half of the annual retainer for service on the Governance Committee) and one-half of the 2018 equity award of stock.
(7) | Includes 26,277 shares that Mr. Middleton has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2022 Annual Meeting. |
(8) | Includes 111,004 shares that Mr. Ravenscroft has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2022 Annual Meeting. |
(9) | Includes 340,859 shares that the Company’s current executive officers have the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2022 Annual Meeting. |
NON-EMPLOYEE DIRECTOR COMPENSATION The annual compensation package for non-employee directors is designed to attract and retain highly experienced and qualified individuals to serve on the Company’s Board of Directors. It is also intended to be competitive relative to general industrial companies of comparable size to the Company. The Compensation Committee typically reviews the market competitiveness of the non-employee director compensation program every two years with the assistance of an outside consulting firm. The 2021 compensation package for non-employee directors consisted of cash (annual retainers) and equity (stock) awards. No meeting fees were paid to non-employee directors in 2021. Directors are also entitled to reimbursement of their reasonable out-of-pocket expenses in connection with their travel to and from Board and committee meetings and other Company events. An individual director’s actual annual compensation will vary based on committee memberships and committee chair responsibilities. A significant portion of the target annual compensation package is delivered in the form of equity, which is designed to promote a strong alignment of interests between the Company’s non-employee directors and its shareholders. In 2021, the equity award, consisting of a stock grant, was set based on the guideline value of $120,000. The number of shares granted were based on the closing stock price on February 24, 2021 (which was the date of the Board meeting). The accounting expense was based on the closing stock price as of the date of grant. Equity awards made in 2021 to non-employee directors were granted under the Company’s 2013 Omnibus Incentive Plan. The Compensation Committee may, in its discretion, grant awards from time-to-time in such amounts as it determines and to such non-employee directors as it selects. The following table summarizes the 2021 compensation elements provided to the Company’s non-employee directors: DIRECTOR PAY ELEMENT | | AMOUNT | Stock Ownership GuidelinesAnnual Retainer for Non-Employee DirectorsBoard Chair (Non-Executive)
| The Company’s corporate governance guidelines contain stock ownership guidelines
| $125,000 | Annual Retainer for non-employee directors. The guidelines, as revised in 2016 dueBoard Member1 | | $80,000 | Annual Retainer for Lead Independent Director | | $25,000 | Annual Retainer for Audit Committee Chair | | $20,000 | Annual Retainer for Compensation Committee Chair | | $15,000 | Annual Retainer for Governance Committee Chair | | $15,000 | Annual Retainer for Audit Committee Member | | $10,000 | Annual Retainer for Compensation Committee Member | | $7,500 | Annual Retainer for Governance Committee Member | | $7,500 | Annual Equity Grant | | $120,000 |
(1) | Increased from $75,000 to $80,000 effective May 2021. |
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Non-Employee Director Compensation Non-Employee Directors’ Compensation The following table sets forth the total compensation earned by non-employee directors during the fiscal year ended December 31, 2021. NAME | | FEES EARNED OR PAID IN CASH(1) | | STOCK AWARDS(2) | | TOTAL | Roy V. Armes | | $46,667 | | $120,003 | | $166,670 | Anne E. Bélec | | $97,501 | | $120,003 | | $217,504 | Robert G. Bohn | | $105,001 | | $120,003 | | $225,004 | Donald M. Condon, Jr. | | $99,376 | | $120,003 | | $219,379 | Anne M. Cooney | | $101,251 | | $120,003 | | $221,254 | Amy R. Davis | | $22,917 | | $30,005 | | $52,922 | Kenneth W. Krueger | | $205,001 | | $120,003 | | $325,004 | Robert W. Malone | | $22,292 | | $30,005 | | $52,297 | C. David Myers | | $107,501 | | $120,003 | | $227,504 | John C. Pfeifer | | $95,001 | | $120,003 | | $215,004 |
(1) | Includes annual cash retainers for the board chair, board members, committee chairs and committee members. |
(2) | Reflects the grant date fair value of stock holdings being reducedgranted in 2021, as a resultcomputed under the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”). The grant date fair value of stock granted in 2021 is calculated by multiplying the Spin-Off (as defined below), provide thatnumber of shares granted by the later of (a) the end of the fifth calendar year after the non-employee director is first appointed as a member of the Board, or (b) the end of the third calendar year after the effective date of the Spin-Off, each non-employee director should acquire and hold an amountclosing price of the Company’s common stock with a value equal to five times the non-employee director’s total annual cash retainer (excluding any additional retainer for committee chair positions), with compliance measured annually at the first Board meeting in a given year, based on each non-employee director’s stock ownership and the stock price as of the close of business on the last day of the preceding calendar year.grant date. The stock granted in 2021 was not restricted and vested immediately upon grant. For purposes of determining2021, Ms. Cooney and Messrs. Condon and Pfeifer each deferred their 2021 stock ownership under the guidelines, unvested restricted stock will be included but unexercised options will not be included. Non-employee directors are requiredgrant pursuant to retain net shares upon vesting of equity awards until achieving the level of stock ownership established in the guidelines. If a non-employee director has not met the level of stock ownership established in the guidelines as of the applicable measurement date, then the non-employee director must acquire shares during the subsequent calendar year equal in value to at least 50% of the total annual retainer paid or payable to the non-employee director during such subsequent calendar year, determined after tax. As of December 31, 2018, the non-employee directors were in compliance or projected to be in compliance (as applicable) with the stock ownership guidelines. Deferred Compensation Plan
Under the Company’s Deferred Compensation Plan, each non-employeePlan. At December 31, 2021, no director may elect to defer all orhad any part of his or her annual retainer, as well as equity, for future payment upon death, disability, termination of service as a director, a date specified by the participant, or the earlier of any such date to occur. A director may use the Deferred Compensation Plan as a means of achieving the stock ownership guidelines applicable to the director by electing to defer a portion of his or her compensation under the Company’s Deferred Compensation Plan and investing in the Company’srestricted stock units (value equivalent to the Company’s stock price).outstanding.
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Stock Ownership Guidelines for Non-Employee Directors The Company’s corporate governance guidelines contain stock ownership guidelines for non-employee directors. The guidelines provide that each non-management director should acquire and hold stock of the Company with a value equal to five times the non-management director’s total annual cash retainer (excluding any additional retainer for committee memberships or chairpersonships, lead director or chairperson of the Board roles) with the compliance measured annually at the first Board meeting in a given year (a) commencing with the later of the first Board meeting in the sixth full calendar year after the director is first elected as a member of the Board, or (b) December 31, 2019, based on each director’s stock ownership and the stock price as of the close of business on the last day of the preceding calendar year. For purposes of the foregoing stock ownership requirement, restricted stock will be included but unexercised options will not be included. If a director has not met the stock ownership requirement as of the end of a given calendar year (a) commencing as of the later of the end of the fifth calendar year after the director is first elected as a member of the Board, or (b) December 31, 2019, then the director must acquire shares during the subsequent calendar year equal in value to at least 50% of the total annual retainer paid or payable to the director during such subsequent calendar year, determined after tax. As of December 31, 2021, the non-employee directors were in compliance or projected to be in compliance (as applicable) with the stock ownership guidelines. Deferred Compensation Plan Under the Company’s Deferred Compensation Plan, each non-employee director may elect to defer all or any part of his or her annual retainer, or equity grant, for future payment upon death, disability, termination of service as a director, a date specified by the Director, or the earlier of any such date to occur. A director may use the Deferred Compensation Plan as a means of achieving the stock ownership guidelines applicable to the director by electing to defer a portion of his or her compensation under the Company’s Deferred Compensation Plan and investing in the Company’s stock.
COMPENSATION DISCUSSION AND ANALYSIS 2021 Executive Summary Introduction The compensation discussion and analysis below, which should be read together with the compensation tables that follow in this Proxy Statement, is designed to assist shareholders with understanding the objectives of our executive compensation program, the different components of compensation paid and the basis for our compensation decisions. This discussion focuses on the compensation of the Named Executive Officers who are listed in the Summary Compensation Table in this Proxy Statement and who are listed below:
Aaron H. Ravenscroft
COMPENSATION DISCUSSION AND ANALYSIS AND COMPENSATION COMMITTEE REPORT
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
| | The compensation discussion and analysis below, which should be read together with the compensation tables located elsewhere in this Proxy Statement, is designed to assist shareholders with understanding the objectives of our executive compensation program, the different components of compensation paid and the basis for our compensation decisions. This discussion focuses on the compensation of the executive officers named in the Summary Compensation Table in this Proxy Statement (the “named executive officers”), who are listed below:
Barry L. Pennypacker – President and& Chief Executive Officer
| David J. Antoniuk – Senior | | Executive Vice President and& Chief Financial Officer Aaron H. Ravenscroft – Executive Vice President, Cranes
| Thomas L. Doerr, Jr. – Senior | | Executive Vice President, General Counsel and Secretary | Peter A. Ruck – SeniorLeslie L. Middleton
| | Executive Vice President, Business DevelopmentAmericas and EU Mobile Cranes | 2018 Terrance L. Collins
| | Executive SummaryVice President, Human Resources |
I. EXECUTIVE SUMMARY In 2021, the Company and its employees, customers, supply chain, and communities continued to be challenged by the COVID-19 pandemic. The Company continues to follow safety protocols designed to battle the spread of the virus, working to ensure employee health and safety. Additionally, the Company has deployed policies, benefits, and pay practices to provide employees with the support they require during this challenging period while also helping the Company retain its talented and committed workforce. The Compensation Committee decided to keep executive officers base salaries flat during 2021, given the continued impact of COVID-19 on the business. In 2021, the Company managed numerous COVID-related challenges with a focus on protecting long-term shareholder value by: Strong Financial Performance Resulted in Above-Target Awards
| The Company’s strong financial performance in 2018 resulted in above target achievement of its financial goals under its annual incentive plan. Revenue increased $265.5 million, or 17% year-over-year, to $1,846.8 million, and Adjusted EBITDA increased $41.5 million year-over-year to $116.2 million.▪
| Consistent with our emphasis on performance-based pay, a significant proportion of our named executive officers’ target annual pay opportunity is based on financial results (relative to specific goals) and stock price appreciation over time. CommensuratePartnering with the Company’s 2018suppliers to minimize the impact of supply chain disruption.
|
| ▪ | Utilizing The Manitowoc Way, the Company leveraged its Lessons Learned Program to share best practices to protect employees, customers, suppliers, and their families from the spread of COVID-19. |
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Compensation Discussion and Analysis II. PAY FOR PERFORMANCE An essential part of the Company’s compensation programs involves continuing to align pay outcomes with safety, financial performance, and the performance of its stock. The Compensation Committee establishes meaningful goals for performance-based compensation, including performance measures, measure weighting and thresholds, targets, and maximums for its short-term and long-term incentive plan compensation. The Company set targets based on its operating and strategic plans, which are intended to drive shareholder value. 2021 short-term incentive plan (“STIP”). The 2021 STIP was focused on three quantifiable performance measures: Adjusted EBITDA, Net Working Capital as a % of sales, and Safety Focused Hazard Observations (Safety SLAMs) with a weighting of 50%, 30%, and 20%, respectively. These performance measures focus the Company’s executives on improving annual operating performance. The business performance produced an above target payout under its 2021 short term incentive program. The Company uses Adjusted EBITDA and Net Working Capital as a % of sales, which are financial measures that are not prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as metrics to evaluate the Company’s performance. The Company defines Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation and amortization plus the addback of certain restructuring and other charges. Net Working Capital as a % of sales is defined as net accounts receivable, plus net inventory, less accounts payable, and accrued expenses divided by net sales. The Company believes these non-GAAP measures provide important supplemental information to shareholders regarding business trends that can be used in evaluating its results of operations because these financial measures provide a consistent method of comparing financial performance and are commonly used by investors to assess performance. These non-GAAP financial measures should be considered together with, and are not substitutes for, the GAAP financial information. The Company believes the addition of Safety SLAMs align with the importance and priority of ensuring the safety and well-being of every Company employee. SLAMs is an acronym for Stop-Look-Assess-Manage. The proactive safety focused hazard observations help reduce the risk of avoidable safety incidents while increasing lessons learned, knowledge sharing, and teachings to avoid future injuries to employees. In Q3 and Q4 of 2021, the Company completed the acquisition of substantially all the assets of Aspen Equipment Company (“Aspen”) and the crane business of H&E Equipment Services, Inc. (“H&E”), respectively. The acquisitions were excluded from the achievement used to determine the Company’s 2021 short-term incentive plan (“STIP”) payout. The Company elected to exclude the impact of the acquisitions in the 2021 STIP achievement as the performance metrics set by the Compensation Committee did not include acquisition growth. The Company exceeded the 2021 performance targets for Adjusted EBITDA, Net Working Capital as a % of sales, and Safety SLAMs under STIP, resulting in an earned payout of 191.9% of target. The Company achieved, after adjustment for the exclusion of the impact of the acquisitions of Aspen and H&E: Adjusted EBITDA of $112.8 million, Net Working Capital as a % of sales of 20.5% and, the completion of 1,245 Safety SLAMs per 200,000 hours worked. 24
Compensation Discussion and Analysis 2019 long-term performance. The 2019 long-term performance share awards were based on two equally weighted metrics measured over a three-year performance period ended December 31, 2021: (a) Adjusted EBITDA Percent for the year ended December 31, 2021 and (b) relative Total Shareholder Return (“TSR”) as compared to companies in the S&P SmallCap 600 Industrials Index, excluding Commercial Services and Professional Services companies. In 2021, the Company had an Adjusted EBITDA Percent of 6.7% (see Annex A) including the impact of acquisitions, which is 40 basis points above its threshold, 170 basis-points below its target goal, which equated to a 40.7% payout (Adjusted EBITDA Percent is defined as Adjusted EBITDA divided by net sales). For the three-year performance period, the Company achieved a relative TSR of 34.0% which was in the 28th percentile of the selected peer group. Both Adjusted EBITDA and relative TSR were above threshold but below the target requirement, resulting in a payout of 37.4% for the 2019 performance share awards. The 2021 acquisitions of Aspen and H&E were included in the achievement used to determine the Company’s 2019 long-term incentive plan payout. The Company elected to include the impact of the acquisitions in the 2019 LTIP achievement as the Company’s long-term strategy includes growth through acquisitions. The performance-based structure of the Company’s executive compensation program and its volatile stock performance has impacted equity payouts and the realized equity value for its executives, commensurate with returns to shareholders. The strong alignment between pay and performance is evidenced by the fact that the average level of performance share awards (“PSUs”) the Company’s NEOs earned over the last three years is 45.7% of target. 25
Compensation Discussion and Analysis A reconciliation of Adjusted EBITDA excluding acquisitions (a non-GAAP financial measure) to Adjusted EBITDA including acquisitions (a non-GAAP financial measure) and further to Net income (loss) (the most directly comparable GAAP financial measure) and the calculation of Net Working Capital as a % of sales, which excludes the impacts of acquisitions, for the year ended December 31, 2021, is included in Annex A to this Proxy Statement. 2021 long-term incentive plan (“LTIP”). To complement the 2021 STIP, the 2021 LTIP utilized a combination of awards intended to enable the Company to attract and retain employees, while tying the achievement of those awards to the long-term performance of the Company and returns for its shareholders. 50% of the equity awards under the 2020 LTIP consisted of performance shares, earned upon achievement of specific performance goals measured over a three-year performance period. The remaining 50% of the equity awards consisted of restricted stock units. 2021 Say-on-Pay Advisory Vote The Company’s say-on-pay advisory vote received support from approximately 67.0% of the shares voted in 2021, a decrease from the percentage of votes in support of executive compensation in 2020 and 2019. While still receiving a majority favorable vote by shareholders, the Compensation Committee viewed the relatively lower approval as an opportunity to continue engaging shareholders to better understand their views related to executive compensation and be able to answer any specific questions or concerns related to executive compensation program design, decisions, and policies. See the section above titled “2021 Engagement Summary” for more details about out shareholder outreach activities during 2021. Given the input received from shareholders, the Company believes that ongoing shareholder engagement is mutually beneficial. Through shareholder outreach, the Company is afforded an opportunity to share its executive pay philosophy and steps taken to attract, reward, and retain top executive talent needed to execute Manitowoc’s growth strategy. It also provided shareholders with an opportunity to share their respective executive compensation philosophies and the role they play when making investment decisions. Shareholders’ views and the Company’s efforts, relative to Environmental, Social, and (Corporate) Governance (“ESG”), are also a part of conversations. Based on discussions the Company had with shareholders and in consideration of their feedback, the Company believes that shareholders generally agree that the compensation delivered has been commensurate with performance. One of the things that we heard from shareholders is that they value ESG. In response to such feedback, the Company decided to add an ESG performance metric to its 2021 STIP, which measured Safety SLAMs and accounted for 20% of the 2021 STIP payout. The Company’s ESG targets continue to evolve in 2022, expanding from a single safety metric to now include environmental, safety, and diversity metrics. III. COMPENSATION GOVERNANCE Compensation Oversight The Compensation Committee of the Board, which is chaired by Anne Cooney, consists of five independent directors. The Compensation Committee must meet at least four times a year. During 2021, the Compensation Committee met six times. It has overall responsibility for: | ▪ | Reviewing and approving the corporate goals and objectives related to executive compensation, |
| ▪ | Setting compensation policy and benchmarking, |
| ▪ | Reviewing and approving the compensation levels and payouts for executive officers under the incentive awardscompensation plans, |
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Compensation Discussion and Analysis | ▪ | Reviewing and commenting on the Company’s strategic and financial plan to determine their relationship to the compensation programs, |
| ▪ | Reviewing the Company’s process for 2018 were paid out above target. | | Key Business Results
| Impact on Pay Decisionsmanaging and mitigating compensation-related risks,
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• Adjusted EBITDA increased to $116.2 million from $74.7 million in 2017.
• Adjusted Operating Cash Flow provided cash of $40.1 million in 2018.
| • Short-term incentive awards (under the 2018 short-term incentive plan) were earned at 172.5% of target, reflecting above target financial performance.
• Salary increases for certain named executive officers for 2018.
|
| ▪ | Recommending non-employee director pay levels based on input from third-party consultants, |
| A reconciliation▪
| Ensuring regulatory compliance of Adjusted EBITDA (a non-GAAP financial measure) to Net income (loss) from continuing operations (the most directly comparable GAAP financial measure) is includedall filings and compensation pay programs and practices, and |
| ▪ | Keeping abreast of all developments in Item 7. “Management’s Discussionexecutive compensation and Analysis of Financial Condition and Results of Operations” (on page 33)employee compensation practices outside of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. In addition, a reconciliation of Adjusted Operating Cash Flow (a non-GAAP financial measure) to Net cash used for operating activities (the most directly comparable GAAP financial measure) is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (on page 34) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. “GAAP” means accounting principles generally accepted in the United States of America.Company. |
Compensation Policy and Practices The Company’s executive compensation program reflects a strong pay-for-performance design and incorporates many governance best practices to help us achieve the high standards that the Company and its shareholders expect.
Our Executive Pay Program Aligns Pay-For-Performance and Applies Governance Best Practices
Our executive compensation program reflects a strong pay-for-performance design and incorporates many governance best practices. Over the past several years (subject to certain unusual factors related to the March 2016 spin-off of the Company’s former foodservice business into an independent, public company (the “Spin-Off”)), the Company’s executive compensation program design and practices have evolved to better support our changing business and talent needs, as well as to reflect market practices and trends. In particular, as summarized below, we have linked the pay program to key metrics of our business strategy and shareholder value creation through our short-term and long-term incentive plans. The Company’s approach is to apply a comprehensive perspective in selecting performance measures and setting goals for both the short-term and long-term incentive plans. As a result of the foregoing considerations, the performance metrics used in our short-term incentive plan and the financial measures used in our long-term incentive plan in connection with our performance share grants have continued to adapt along with our business strategy from year-to-year to best reflect the direct accountabilities assigned to the management team for a particular year (short-term incentives) and for several years (long-term incentives).
2018 Incentive Plan Design
The 2018 short-term incentive plan (“STIP”) and the 2018 long-term incentive plan (“LTIP”), collectively, cover key financial measures that we believe will increase shareholder value over time while also emphasizing the importance of maintaining adequate liquidity for working capital requirements and future investment opportunities. The performance measures used in the 2018 STIP and 2018 LTIP award design were as follows:
| | | | 2018 Short-Term Incentive Plan
| 2018 Long-Term Incentive Plan
| • Adjusted EBITDA (weighted 50%), which is a useful measure of the Company’s annual operating performance, measures gross profit, less engineering, selling and administrative expenses, plus depreciation and certain other nonrecurring items.
• Free Cash Flow (weighted 50%), which is an important measure that drives operational cash generation, equals non-GAAP adjusted operating cash flow, less capital expenditures, excluding the cash impact of certain nonrecurring items.
| • Performance shares (50% of the targeted value of the LTIP grant) earned based on the results of two equally weighted measures:
• Relative Total Shareholder Return (“TSR”) (weighted 50%), which aligns payouts to our relative TSR performance, and assesses the Company’s relative TSR to the S&P SmallCap 600 Industrials Index, and
• Adjusted EBITDA Percent for the year ending December 31, 2020 (“Fiscal Year 2020 Adjusted EBITDA Percent”) (weighted 50%), which is equal to gross profit, less engineering, selling, and administrative expenses, plus depreciation and certain other nonrecurring items, divided by net sales.
• Stock options (50% of the targeted value of the LTIP grant) which vest in equal installments over three years, commencing on the first anniversary of the grant date, and have value only as the stock price increases.
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| WHAT WE DO | WHAT WE DON’T DO | Incentive Plan Design for 2019
We continually monitor our executive compensation program and consider modifications that will allow us to drive achievement of our business strategy, meet our talent needs, and maintain market competitive plans to maximize long-term shareholder value. In designing our 2019 STIP and LTIP, we utilized the same performance measures utilized in our 2018 STIP and LTIP, as we believe that these performance measures continue to capture our key financial drivers of success and that use of consistent performance measures, with the goal of improvement in such performance measures over time, ensures that our executive compensation program is aligned with the interests of our shareholders, including maximizing long-term returns to our shareholders.
Governance Best Practices
| | Our executive compensation program reflects a strong pay-for-performance design and incorporates many governance best practices, including those listed below: ✓
| UsingUse multiple performance measures in connection with short-term and long-term incentive awards
| Limiting✘
| Provide gross-ups upon a change in control or have single-trigger cash severance provisions | ✓ | Limit both short-term incentive and performance share payouts to 200% of target | Having✘
| Offer excessive perquisites to executive officers | ✓ | Have short-term incentive payouts which vary commensurate with the Company’s performance, and which reflect the Company’s performance versus goals during the respective annual periods | Using✘
✘ | Allow employees to pledge their holdings of Company securities or engage in hedging transactions involving Company securities Guarantee pay increases or incentive awards | ✓ | Use relative TSR as a metric for performance share grants, tying payouts to increasing shareholder valuevalue. If TSR is negative, the TSR portion of payout cannot exceed target of 100% | Providing✘
✘ | Reprice options Design incentive plans that encourage excessive risk | ✓ | Provide long-term incentives to executive officers through equity-based awards that are “at risk” | General avoidance of change in control excise tax gross-ups or single-trigger cash severance provisions
| Maintaining
| ✓ | Maintain stock ownership guidelines for executive officers | Periodically communicating with major shareholders regarding our pay practices
| Providing a limited amount of perquisites to executive officers
| Having a policy prohibiting employees from pledging their holdings of Company securities and from engaging in hedging transactions involving Company securities✓
| TheSupport the Compensation Committee’s engagement of an independent compensation consultant, Willis Towers Watson, to assist with review of the Company’s executive compensation program
| 2018 Say-on-Pay Advisory Vote
| In 2018, our say-on-pay advisory vote received support from approximately 94%
| ✓ | Require executive officers to sign an employment agreement defining the terms of their employment, the shares voted. We believe that this result demonstrates our shareholders’ strong endorsementterms in the event of the executive compensation program design, decisionsa change in employment and policies. Our shareholder vote was one of many factors consideredall restrictive covenants by the Compensation Committee in reviewing the Company’s executive compensation program. We continue to maintain an ongoing dialogue with our shareholders to help ensure our executive compensation program is aligned with the interests of our shareholders. Compensation Program Administration
The Compensation Committee of the Board of Directors is primarily responsible for administering the Company’s executive compensation program. As such, the Compensation Committee reviewswhich executives are bound, during and approves all elementsafter their employment
| | |
Use of the executive compensation program that cover the named executive officers. This review includes an annual consideration of the Company’s business strategy and talent needs and alignment of compensation to performance and shareholder interests. During fiscal 2014, the Compensation Committee hired, and it continues to engage, Willis Towers Watson (“Compensation Consultants”) as an Independent Advisor The Compensation Committee has the authority to engage the services of outside advisors, experts, and others to assist in performing its duties. Since 2014, the Compensation Committee has retained Willis Towers Watson, an executive consulting firm, as its independent compensation consultant to provide advice and information on the following: | ▪ | Compensation trends and market information to assist the Compensation Committee with in fulfilling its duties, including its review |
| ▪ | Executive compensation and changes to be considered to improve effectiveness consistent with our compensation philosophy, |
| ▪ | Market data and recommendations on Chief Executive Officer and executive officer compensation, |
| ▪ | Materials for Compensation Committee meetings (which are attended by members of the Willis Towers Watson team), and |
| ▪ | Best practices for governance of executive compensation program. Additional information aboutas well as areas of possible concern or risk in the Company’s programs. |
The Compensation Committee assesses Willis Towers Watson’s independence on an annual basis, taking into consideration the following factors, among others: | ▪ | The Compensation Committee’s oversight of the relationship between the Company and Willis Towers Watson mitigates the possibility that management could misuse other engagements to influence Willis Towers Watson’s compensation work for the Compensation Committee. |
| ▪ | Willis Towers Watson has adopted internal safeguards to ensure that its executive compensation advice is independent. |
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Compensation Discussion and Analysis | ▪ | The Compensation Committee retains ultimate decision-making authority for all executive pay matters and understands Willis Towers Watson’s role is simply that of advisor. |
| ▪ | The absence of any significant business or personal relationship between Willis Towers Watson and processesany of our executives or members of the Compensation Committee is presentedCommittee. |
The foregoing factors are relevant to the Compensation Committee’s ongoing and annual assessment to continue utilizing the compensation consultant services of Willis Towers Watson. For fiscal 2021, Willis Towers Watson also provided the Compensation Committee with a written assessment of the independence of Willis Towers Watson’s advisory work to the Committee. Willis Towers Watson provided executive compensation consulting services in the amount of $174,874. Based on the foregoing, the Compensation Committee has concluded that the engagement of Willis Towers Watson does not raise any conflict of interest. The Annual Process The Compensation Committee reviews an annual calendar each year, which sets out the items that will be addressed at each upcoming meeting. While the Compensation Committee’s primary focus is on reviewing and approving items related to executive officer compensation, it also annually approves various incentive plan designs and award achievements that apply more broadly across the Company. The Compensation Committee also reviews succession plans for the leadership team and any human resources and compensation-related risks and mitigation plans. Compensation Peer Group On an annual basis, the Compensation Committee reviews compensation data from third-party market surveys and a customized group of peer companies in order to obtain insight into market competitive pay levels for our named executive officers. In 2021, the Compensation Committee used both third-party market survey data and peer group company data in making its compensation decisions. Identifying a relevant compensation peer group is difficult, as the Company is the only stand-alone publicly traded crane company in the U.S. and one of only a few worldwide. As a result, we used both a quantitative and qualitative approach to our peer selection and our independent executive compensation consultant, Willis Towers Watson, performed the analysis for the Compensation Committee’s consideration. In creating our peer group, companies were identified using the following criteria: | ▪ | Direct business and industry competitors, |
| ▪ | Executive talent competitors, |
| ▪ | Companies in the Corporate Governance — Compensation Committee section of this Proxy Statement. Compensation Program Objectives and Philosophy
Our executive compensation program is intendedindustries with similar operational complexion, including exposure to align the interests of our executives with the interests of our shareholders as well ascyclicality,
|
| ▪ | Relative revenues between ~0.5x to motivate our executives to maximize long-term total returns to our shareholders. For these reasons, the Compensation Committee designs the executive compensation program consistent with market typical/best practices to ensure alignment between executive pay and Company performance. An important element of the compensation program design is to provide incentive-based compensation that is directly tied to Company performance. The Compensation Committee annually reviews the key elements of the program considering the Company’s business strategy and talent needs. Our executive compensation program seeks to provide competitive total compensation opportunities to attract, motivate and retain highly-qualified executives critical to the achievement of the Company’s financial and strategic goals.3x, |
Key objectives and elements of our compensation philosophy include the following:
| ▪ | Geographic presence. |
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Compensation Discussion and Analysis The Compensation Committee reviewed and evaluated all the data, and adopted the following peer group as a result of this analysis: | | | 2021 PEER GROUP | | | Enerpac Tool Group (formerly Actuant Corporation) | Harsco Corporation | Terex Corporation | | | | Astec Industries, Inc. | Hyster-Yale Materials Handling, Inc. | The Greenbrier Companies, Inc. | | | | Briggs & Stratton Corporation(1) | Kennametal Inc. | The Timken Company | | | | Columbus McKinnon Corporation | Lincoln Electric Holdings, Inc. | Valmont Industries, Inc. | | | | Flowserve Corporation | Meritor, Inc. | Wabash National Corporation | | | | Gardner Denver Holdings, Inc. (now Ingersoll Rand, Inc.) | MYR Group Inc. | | | | | Graco Inc. | SPX Corporation | |
Paying(1)
| Stopped trading as a public company |
Compensation Design Executive Compensation Philosophy.The Company executive compensation program is intended to align the interests of executives with the interests of shareholders as well as to motivate executives to maximize sustainable long-term total returns for shareholders. For these reasons, the Compensation Committee designs the executive compensation program to reflect the strategic priorities and cyclical nature of the business, with reference to practices observed within the Company’s industry and considered to be “best practice” by shareholders, to ensure alignment between executive pay and Company performance. An important element of the compensation program design is to provide incentive-based compensation that is directly tied to Company performance. The Compensation Committee annually reviews the key elements of the program considering the Company’s business strategy and talent needs. The Company’s executive compensation program seeks to provide competitive total compensation opportunities to attract, motivate and retain highly qualified executives critical to the achievement of the Company’s financial and strategic goals. The key objectives and elements of our compensation philosophy include the following: | | Pay for performance. Performance A significant portion of the target compensation awarded to our named executive officers is incentive-based and “at risk,risk.” meaning it isIncentives are only earned if specific financial and/or other performance goals are achievedachieved. With respect to Company long-term incentive awards, the incentives increase or decrease in value based on the caseshare price of stock options, if the stock price appreciates over the next several years following the grant date.Company stock. Incentive awards are based on achievement of specific goals and are capped at 200% of the targeted award opportunity. Providing market competitive compensation.
| Provide Market Competitive Compensation Pay levels are targeted to be, on average, at market median levels based on individuallevels. Other factors (such asalso taken into consideration include experience, length of service, and individual performance),performance, internal structure, and internal and external equity, business needs, Company performance, comparable positions at general industrial companies of similar size, and other factors. Encouraging long-term service.
| Encourage Long-term Service The Company offers retirement and savings plans, including the Company’s 401(k) Retirement Plan and Deferred Compensation Plan, which are payable after retirement or separation from the Company and provide employees with the opportunity to earn Company contributions or save pre-tax dollars for retirement. | Promoting executive stock ownership. Align Interests with Our Shareholders
Long-term incentive awards to executive officersexecutives are solely equity-based, and executive officers are subject to stock ownership guidelines to ensure meaningful ongoing alignment with shareholders’ interests and market best practice. |
Actual total compensation can vary from target compensation based on the individual’s performance and the Company’s financial and stock price performance. In accordance with SEC rules, the Summary Compensation Table shows the grant date fair value of long-term incentive plan grants. The grant date fair value is often very different from the actual realized and realizable/current values (if any amount is even earned) of such awards. The Compensation Committee annually reviews executive officer pay, the past several years of actual realized and target compensation, outstanding long- 29
Compensation Discussion and Analysis term incentive awards (including the potential realizable value at various stock prices), accumulated deferred compensation balances, and potential change-in-control severance amounts. In setting market-based pay levels, the Compensation Committee reviews and relies primarily upon market data from surveys of comparably sized general industrial companies and peer group compensation data from an independent advisor. Survey and peer group data of comparable positions is analyzed annually in considering adjustments to base salaries and target short-term and long-term incentive award opportunities. Survey data is also reviewed periodically to help maintain the competitiveness of all elements of compensation. For detailed information about the peer group used for this benchmarking, please see the above section entitled Compensation Peer Group. Pay Mix.Consistent with the Company’s pay philosophy, the majority of the target total direct compensation (i.e., the sum of base salary and target STIP and LTIP award grant date values) of the executive officers is “at risk,” because payment is based on achievement of specific financial and other performance goals (i.e., STIP payouts and performance shares) or the value realized is determined by the price of a share of stock (i.e., the value of restricted share units and performance shares). The following charts illustrate that, in 2021, “at-risk” compensation accounted for 80% of the target total direct compensation for Mr. Ravenscroft and, on average, 72% of the other named executive officers’ target total direct compensation. Award opportunities have typically been provided through a combination of short-term and long-term incentive opportunities, covering multiple financial and stock price performance measures. Incentive performance goals are set to directly align to The Company’s business strategy and long-term shareholder value creation. Performance Measures Used in 2021.The 2021 STIP and the 2021 LTIP collectively cover key financial measures that we believe will increase shareholder value over time while also emphasizing the importance of maintaining adequate liquidity for working capital requirements and future investment opportunities. The 2021 STIP performance measures exclude the impacts of the acquisitions of Aspen and H&E. The performance measures used in the design and the rationale for using such performance measures were as follows: 30
Compensation Discussion and Analysis 2021 Short-Term Incentive Plan(1) | PERFORMANCE MEASURES | RATIONALE | Adjusted EBITDA (weighted 50%), which is equal to net income (loss) interest, income taxes, depreciation and amortization, plus the addback of certain restructuring and other charges. In 2021 Adjusted EBITDA excluded acquisitions. | Adjusted EBITDA is a useful measure of the Company’s annual operating performance and is commonly used by investors and research analysts to assess results. | Net Working Capital as a % of sales (weighted 30%), which is equal to net accounts receivable, plus net inventory, less accounts payable and accrues expenses divided by net sales for the year. | Net Working Capital as a % of sales is a useful measure of the Company’s working capital turnover measuring the relationship between the funds used to finance the Company’s operations and the revenues the company used to continue operations and generate profits. | Safety SLAMs (Stop-Look-Assess-Manage) (weighted 20%), which is a proactive safety initiative that encourages employees to perform hazard observations to prevent employee injuries and other safety incidents, and is measured as the number of SLAMs performed per 200,000 hours worked. | SLAMs is a useful measure for safety performance as it is a leading indicator which has a direct correlation to the reduction of workplace incidents and injuries. Typically, as SLAMs increase, workplace incidents and injuries decrease. |
(1) | Adjusted EBITDA and Working Capital as a % of Sales reflect adjustments excluding the impact of the acquisitions of Aspen and H&E |
2021 Long-Term Incentive Plan | PERFORMANCE MEASURES & EQUITY AWARD CATEGORIES | RATIONALE | Performance Shares (50% of the targeted value of the LTIP grant) earned based on the individual’sresults of three measures: | The benefit of performance and the Company’s financial and stock price performance. In accordance with SEC rules, the Summary Compensation Table shows the grant date fair value of LTIP grants, which grant date fair valueshares is often very different from the actual realized and realizable/current values (if any amount is even earned) of such awards. The Committee annually reviews officer pay, the past several years of actual and target compensation, outstanding long-term incentive awards (including the potential realizable value at various stock prices), accumulated deferred compensation balances, and potential change-in-control severance amounts. In connection with our executive compensation determinations, we review third-party market survey data among comparable companies and broader market trends/developments, as provided by Willis Towers Watson. In setting market-based pay levels, the Compensation Committee reviews and relies primarily upon market data from surveys of comparably-sized general industrial companies. Survey data of comparable positions is analyzed annually in considering adjustments to base salaries and target short-term and long-term incentive award opportunities. Survey data is also reviewed periodically to help maintain the competitiveness of all elements of compensation.
The Majority of Target Compensation is Performance-Based
Consistent with the Company’s pay philosophy, the majority of the target total direct compensation (i.e., the sum of base salary and target STIP and LTIP award grant date values) of the named executive officers is only earned if specific financial goals are achieved or, in the case of stock options, if the stock price appreciates over the next several years following the grant date. Specifically, in 2018, performance-based incentive award opportunities represented, on average, 69% of the target total direct compensation for the named executive officers and reflected the use of stock options and performance shares.
Award opportunities have typically been provided through a combination of short-term and long-term incentive opportunities, covering multiple financial and stock price performance measures. Incentive performance goals are set to directly align to our business strategy and long-term shareholder value creation.
LTIP Awards are Tied to Company Performance
Long-term incentive awards are intended tothat they align the interests of executives to the interests of shareholders through longer term performance metrics and share performance.
| Adjusted EBITDA Percent for the three-year average from fiscal year 2021 to fiscal year 2023 (“Fiscal Year 2023 Adjusted EBITDA Percent”) (weighted 60%) is equal to net income (loss) before interest, income taxes, depreciation, and amortization, plus the addback of certain restructuring and other charges, divided by net sales. | Fiscal Year 2023 Adjusted EBITDA Percent is an important indicator to measure how much operating profit is generated for each dollar of revenue earned over the performance period. | Non-New Machine Sales (weighted 40%) is equal to revenue derived from activities other than new equipment sales, including, but not limited to, used equipment sales, rental revenue, sales of parts, and service & training revenue during the three-year performance period. | Non-New Machine Sales is an important measure of how much the organization is generating sales from used equipment, aftermarket parts, rental, training, and field service work which aligns with those of Company shareholders by allowing executives to sharethe Company’s strategic priorities. And in the growthaggregate, non-new machine sales typically generate higher margins and are less cyclical in nature compared to new machine sales. | Relative Total Shareholder Return (“TSR”) (applied as a modifier of +/- 20%) not to exceed 200% achievement. If TSR is negative, the TSR portion of payout cannot exceed target of 100%. | Relative TSR as a modifier aligns payouts to our relative TSR performance and assesses the Company’s relative TSR to the Russell 2000 Index. | Restricted Stock Units (50% of the targeted value of the LTIP grant) which vest in equal installments over three years, commencing on the first anniversary of the grant date. | Restricted stock units are beneficial because they’re time based, vesting ratably over three years, they promote long-term retention of executive talent, and their value is tied to stock price appreciation. |
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Compensation Discussion and Analysis IV. EXECUTIVE COMPENSATION Overview of Executive Compensation We believe the executive compensation program described in more detail below, by element and in total, best achieves the Company’s objectives. The following table presents a summary of each element of the Company’s executive compensation program. ELEMENT | | PURPOSE | | CHARACTERISTICS | Base Salary | | Establish a certain element of pay for an individual’s competencies, skills, experience, and performance relative to his or her current job | | Not at risk; eligible for annual performance-based merit increase consideration and adjustments for changes in job responsibilities | Short-Term Incentives | | Motivate and reward the achievement of annual financial successgoals of the Company as reflected inaligned to the Company’s stock pricekey strategic objectives for the year | | Performance-based cash opportunity; amount earned will vary based on actual financial results achieved | Long-Term Incentives | | Motivate and other performance measures. In addition, long-term incentive awards have facilitated the attraction, retention and motivation of executives and key employees. In 2018, long-term incentive award opportunities for named executive officers were provided through equity-based awards and are “at-risk,” requiringreward the achievement of specific multi-year performancelong-term financial goals orand align executive compensation with shareholder value by paying long-term incentives in shares of our stock price appreciation.
The 2018 grant mix under the 2018 LTIP was delivered as follows:
| | | | | All at risk with value driven by share price; half of the award opportunity is also performance-based with the amount realized, if any, by the executive dependent upon future performance | Retirement Benefits and Deferred Compensation | | Encourage long-term service with the Company by providing retirement plan contributions that can grow in value over an executive’s career and opportunities to defer compensation | | Both fixed and variable aspects; contributions drive growth of funds and future payments | Perquisites and Personal Benefits | | Provide additional financial security and a competitive pay package that helps attract and retain qualified executives, though perquisites are limited | | Generally fixed; actual cost is based on participation and usage | Employment Agreements and Severance Benefits | | Defines terms of employment, severance, and restrictive covenants; provide continuity of the leadership team leading up to and after a change in control by providing severance benefits | | Specifies minimum level of benefits while employed and severance benefits in the event employment is terminated without cause or for good reason, with enhanced benefits following a change in control. |
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Compensation Discussion and Analysis 2021 Pay Elements The below sections describe additional details about each pay element that the Company granted and paid to its named executive officers during 2021. Annual Base Salary. As a result of the COVID-19 pandemic, the Compensation Committee and executive offers decided to keep executive officer base salaries flat during 2021. The following table outlines executive officer base salaries in 2021 compared to their base salaries in effect at the end of 2020. NAME | | FISCAL 2020 ($) | | | FISCAL 2021 ($) | | | PERCENTAGE INCREASE | | Aaron H. Ravenscroft | | $ | 800,000 | | | $ | 800,000 | | | 0.0% | | David J. Antoniuk | | $ | 522,700 | | | $ | 522,700 | | | 0.0% | | Thomas L. Doerr, Jr. | | $ | 400,000 | | | $ | 400,000 | | | 0.0% | | Leslie L. Middleton | | $ | 388,000 | | | $ | 388,000 | | | 0.0% | | Terrance L. Collins | | $ | 372,600 | | | $ | 372,600 | | | 0.0% | |
Incentive Plans. The Company provides short-term incentive and long-term incentive award opportunities to motivate the achievement of its business strategy by specifying key metrics of success. To drive results and align performance and payouts, the incentive plans each: Include multiple performance measures; Have target performance goals set based on forecasts/budget, business conditions, prior year’s performance, probability of achievement and other factors; Vary payouts commensurate with performance results (with potential payouts capped at 200% of the target award opportunity for goal-based plans); and Cover different time periods, with short-term incentive plans covering one year and long-term incentive plans typically covering three years, with an ongoing stock ownership requirement. To best drive success, the Company believes a combination of performance measures should be used to ensure that executive officers are motivated and rewarded for managing the Company’s overall financial health and driving long-term sustainable growth in value for the Company’s shareholders. As such, the short-term incentive plan and performance share component of the long-term incentive plan each use three performance metrics, which may change from year-to-year to reflect the critical areas of focus for the applicable performance period. The Compensation Committee believes that, collectively, the performance metrics used will best drive long-term shareholder value and align management rewards to the Company’s business strategy. Short-Term Incentives. Short-term incentive awards are made under the 2013 Omnibus Incentive Plan and are referred to in this Proxy Statement as STIP awards. The 2021 STIP award was assessed at an overall Company performance level for all executive officers, based 50% on Adjusted EBITDA, 30% Net Working Capital as a % of sales and 20% Safety SLAMs. The Adjusted EBITDA (50%) metric was selected to focus the executive team on increasing shareholder value through profits generated in the year. Net Working Capital as a % of sales is defined as net accounts receivable, plus net inventory less accounts payable and accrued expenses divided by net sales. Safety SLAMs is a proactive safety initiative that encourages employees to perform hazard observations to prevent accidents and injuries; this metric is measured by the number of Safety SLAMs performed per 200,000 hours worked. 33
Compensation Discussion and Analysis The Compensation Committee determines the target short-term incentive award percentage for each executive officer based on the position’s impact, level of responsibilities, and short-term incentive levels of similar positions based on market data. The 2021 target short-term incentive award percentages (which are the same as the 2020 targets) for each of the named executive officers are set forth below. NAMED EXECUTIVE OFFICER | | 2021 TARGET INCENTIVE (AS % OF BASE SALARY) | | Aaron H. Ravenscroft | | 100% | | David J. Antoniuk | | 75% | | Thomas L. Doerr, Jr. | | 60% | | Leslie L. Middleton | | 60% | | Terrance L. Collins | | 60% | | 2018 Award Type (Weighting)
|
Awards earned under the 2021 STIP can range from 0% to 200% of an individual’s target award opportunity based on actual results versus the target performance goals for the year, and the Compensation Committee may exercise discretion to reduce or increase the incentive award otherwise earned by a participant in any year based on individual or other performance factors determined by the Compensation Committee. Earned awards, if any, are fully paid out after the end of the year unless deferred under our Deferred Compensation Plan, which is described below. | Performance Measure
| Performance/Vesting Period
| | | | Stock Options (50%)
| ▪ Stock price appreciation (only have value if price increases)
| Three-year ratable vesting (33.33% per year), commencing on the first anniversary of the grant date; expire 10 years after grant
| | | | Performance Shares (50%)
| ▪ 50% Relative TSR as compared to the S&P SmallCap 600 Industrials Index
▪ 50% Fiscal Year 2020 Adjusted EBITDA Percent
| Three-year performance period ending on December 31, 2020; performance share awards vest on the third anniversary of the grant date, if performance goals are met
| | The Company’s actual 2021 performance results were between target and maximum for Adjusted EBITDA, Net Working Capital as a % of sales and Safety SLAMs, resulting in a payout of 191.9% of target. The 2021 STIP performance metrics excluded the impacts of the Aspen and H&E acquisitions. Presented below are the specific threshold, target, and maximum performance levels for the 2021 STIP awards, as well as 2021 actual results (dollars in millions): | | THRESHOLD | | TARGET | | MAXIMUM | | | | | RESULTING AWARD | | MEASURE (WEIGHTING) | | (50% Payout) | | (100% Payout) | | (200% Payout) | | 2021 ACTUAL | | AS % OF TARGET3 | | Adjusted EBITDA ($M) (50%)1,2 | | $ | 59.0 | | $ | 75.0 | | $ | 88.0 | | $ | 112.7 | | 200.0% | | Net Working Capital as % of Sales (30%) | | 24.0% | | 22.0% | | 20.0% | | 20.5% | | 172.8% | | Safety SLAMs (20%) | | 15% improvement (814 SLAMS per 200k hours) | | 20% improvement (850 SLAMS per 200k hours) | | 25% improvement (885 SLAMS per 200k hours) | | | 1,245.0 | | 200.0% | | Total Payout as a Percent of Target4 | | | | | | | | | | | | | | 191.9% | |
(1) | “Adjusted EBITDA” is equal to net income (loss) before interest, income taxes, depreciation and amortization, plus the addback of certain restructuring and other charges. |
Executive Compensation Elements
We believe the executive compensation program described in more detail below, by element and in total, best achieves our objectives. The following table presents a summary of each element of our executive compensation program.
Element
| Purpose
| Characteristics
| Base Salary
| Establish a certain element of pay for an individual’s competencies, skills, experience and performance relative to his or her current job
| Not at risk; eligible for annual performance-based merit increase consideration and adjustments for changes in job responsibilities
| Short-Term
Incentives
| Motivate and reward the achievement of annual Company financial goals aligned to the key strategic objectives for the year
| Performance-based cash opportunity; amount earned will vary based on actual financial results achieved
| Long-Term
Incentives
| Motivate and reward the achievement of specific longer term financial goals
| All of the award opportunity is performance-based or “at-risk,” with the amount realized, if any, by the executive dependent upon multi-year financial results and stock price performance
| Retirement Benefits and Deferred Compensation
| Encourage long-term service with the Company by providing retirement plan contributions that can grow in value over an executive’s career and opportunities to defer compensation
| Both fixed and variable aspects; contributions drive growth of funds and future payments
| Perquisites and Personal Benefits
| Provide additional financial security and a competitive pay package that helps attract and retain qualified executives, though perquisites are limited
| Generally fixed; actual cost is based on participation and usage
| Change in Control
(“CIC”) Continued
Employment and
Severance Benefits
| Provide continuity of the leadership team leading up to and after a change in control
| Contingent component; provides for continued employment upon a CIC and severance benefits if an executive’s employment is terminated following a CIC
|
In setting total compensation, a consistent approach is applied for all executive officers. Executive officers may receive base salary and incentive pay increases at the time of promotions. In connection with promotions, the Compensation Committee may increase base salary and target incentive award percentages and make additional incentive grants. Additional detail regarding each pay element is presented below. Other than the Change in Control Severance Arrangements described below, the Company does not have employment agreements with any of the named executive officers.
Base Salaries. Salaries are reviewed annually, and adjustments, if any, are based on consideration of the Company’s overall budget for base salaries for the year, individual factors (competencies, skills, experience, and performance), internal equity, and market pay practice data. The following table shows, for each named executive officer, such named executive officer’s 2018 base salary, the percentage increase in such named executive officer’s base salary (compared to his 2017 base salary) and the reason for such increase in base salary:
| | | | Named Executive Officer | 2018 Base Salary | 2018 Base Salary Percentage Increase (Compared to 2017 Base Salary) | Reason for Increase in Base Salary | Barry L. Pennypacker | $1,000,000 | 2.20% | Merit | David J. Antoniuk | $505,000 | 3.06% | Merit | Aaron H. Ravenscroft | $437,000 | 12.05% | Combination of Market-Based Adjustment & Merit | Thomas L. Doerr, Jr. | $375,000 | -- | N/A | Peter A. Ruck | $340,000 | -- | N/A |
Incentive Plans. The Company provides short-term and long-term incentive award opportunities to motivate the achievement of its business strategy by specifying key metrics of success. In order to drive results and align performance and payouts, the incentive plans each:
Include multiple performance measures;
Have target performance goals set based on forecasts/budget, business conditions, prior year’s performance, probability of achievement and other factors;
Vary payouts commensurate with performance results (with potential payouts capped at 200% of the target award opportunity for goal-based plans); and
Cover different time periods, with short-term incentive plans covering one year and long-term incentive plans typically covering three years, with an ongoing stock ownership requirement.
In order to best drive success, we believe a combination of performance measures should be used to ensure that management is motivated and rewarded for managing the Company’s overall financial health and driving long-term sustainable growth in value for the Company’s shareholders. As such, the short-term incentive plan and performance share component of the long-term incentive plan each use two performance metrics, which may change from year-to-year to reflect the critical areas of focus for the applicable performance period. The Compensation Committee believes that, collectively, the performance metrics used will best drive long-term shareholder value and align management rewards to the Company’s business strategy.
Short-Term Incentives. Short-term incentive awards are made under the 2013 Omnibus Incentive Plan and are referred to in this Proxy Statement as STIP awards. STIP awards, which are measured on an annual basis, reward eligible participants for maximizing shareholder value.
The 2018 STIP award was based 50% on free cash flow performance and 50% on Adjusted EBITDA. The free cash flow (50%) and Adjusted EBITDA (50%) metrics were selected to focus the executive team on increasing shareholder value over time and maintaining adequate liquidity for working capital requirements and future investment opportunities.
For all of the named executive officers, the 2018 STIP awards were based on overall Company performance (rather than a combination of business unit performance and Company performance).
The 2018 target short-term incentive award percentages assigned to the Company’s named executive officers ranged from 55% to 100% of base salary, based on the position’s responsibilities and business impact. Awards earned under the 2018 STIP can range from 0% to 200% of an individual’s target award opportunity based on actual results versus the target performance goals for the year, and the Compensation Committee may exercise discretion to reduce the incentive award otherwise earned by a participant in any year based on individual or other performance factors determined by the Committee. Earned awards, if any, are fully paid out after the end of the year.
The Company’s actual 2018 performance results were between target and maximum for Adjusted EBITDA and above maximum for free cash flow, resulting in a payout of 172.5% of target. Presented below are the specific threshold, target, and maximum performance levels for the 2018 STIP awards, as well as 2018 actual results (dollars in millions):
| | | | | | | | | | | | | | | Measure (Weighting) | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | 2018 Actual | Resulting Award as % of Target(3) | Adjusted EBITDA (50%)(1)(4) | $80.0 | $105.0 | $130.0 | $116.2 | 145.0% | Free Cash Flow (50%)(2)(5) | $(50.0) | $(25.0) | $10.0 | $17.6 | 200.0% | Total Payout as a Percent of Target | | | | | 172.5% |
| (1)
| “Adjusted EBITDA” equals gross profit, less engineering, selling and administrative expenses, plus depreciation and certain other nonrecurring items.
|
| (2) | “Free Cash Flow” equals non-GAAP adjusted operating cash flow, less capital expenditures, excluding the cash impact of certain nonrecurring items.
|
| (3)
| Straight-line interpolation is used for calculating the payout between the specific performance levels. |
(3) | (4)
| A reconciliation of Adjusted EBITDA excluding acquisitions (a non-GAAP financial measure) to Net income (loss) from continuing operations (the most directly comparable GAAP financial measure) is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (on page 33) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. |
(5) A reconciliation of Free Cash Flow (a non-GAAP financial measure) to non-GAAP adjusted operating cash flow is included in Annex B to this Proxy Statement. In addition, a reconciliation of non-GAAP adjusted operating cash flow to Net cash used for operating activities (the most directly comparable GAAP financial measure) is included in Item 7. “Management’sAnnex A to this Proxy Statement.
|
The actual 2021 STIP award payouts for the named executive officers are presented in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. The potential dollar range of the 2021 STIP awards for each named executive officer is presented in the Grants of Plan-Based Awards table. Use of Discretion. While the Compensation Committee is permitted to apply discretion in considering potential adjustments presented by management in order to assess performance of continuing operations, no discretion was used to pay awards under the 2021 STIP that would not have otherwise been earned. Long-Term Incentives. Long-term incentive award grants are made under the 2013 Omnibus Incentive Plan. Long-term incentive awards are intended to align the interests of executives with those of shareholders by allowing executives to share in the growth and financial success of the Company, as reflected in the Company’s stock price and other performance measures. In addition, long-term incentive awards facilitate the attraction, retention, and motivation of executives and key employees. For 2021, the Compensation Committee increased Messrs. Ravenscroft’s and Middleton’s regular target award value to reflect their promotions in 2020 to Chief Executive Officer and Executive Vice President, Americas and EU Mobiles, respectively. The Committee also approved a one-time 30% increase in target LTIP for 2021 to Messrs. Antoniuk, Doerr, Middleton, and Collins, for retention purposes considering the unexpected impact of the 34
Compensation Discussion and Analysis COVID-19 pandemic. This one-time increase was delivered in the same equity mix as the regular 2021 LTIP award (i.e., 50% Performance Shares and 50% RSUs). The regular target long-term incentive value approved for each named executive officer, plus the value of the additional 30% increase for 2021, as applicable, is set forth in the table below: NAMED EXECUTIVE OFFICER | | 2021 TARGET LTIP VALUE | | 2021 LTIP GRANT VALUE(1) | | Aaron H. Ravenscroft | | $ | 2,500,000 | | $ | 2,500,000 | | David J. Antoniuk | | $ | 925,000 | | $ | 1,202,500 | | Thomas L. Doerr, Jr. | | $ | 600,000 | | $ | 780,000 | | Leslie L. Middleton | | $ | 500,000 | | $ | 750,000 | | Terrance L. Collins | | $ | 486,000 | | $ | 631,800 | |
(1) | This includes the regular Target LTIP Value plus the one-time 30% increase. |
In 2021, the long-term incentive awards to our named executive officers under the 2021 LTIP consisted of 50% performance shares, and 50% restricted stock units, of which the performance shares are considered “at risk” as they require the achievement of specific multi-year performance goals or stock price appreciation. Grants under the 2021 LTIP were delivered as follows: | | |
| | | | | | 2021 Award Type (Weighting) | Performance Measure | Performance/Vesting Period | | | | | | | Performance Shares (50%) | ▪ 60% three-year average Adjusted EBITDA Percent ▪ 40% Non-New Machine Sales ▪ Relative TSR applied as a modifier of Financial Condition and Results+/-20% up to 200% achievement as compared to the Russell 2000 Index, but if negative the TSR portion of Operations” (on page 34)payout cannot exceed target of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.100%. | The actual 2018 STIP award payouts for the named executive officers are presented in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. The potential dollar range of the 2018 STIP awards for each named executive officer is presented in the Grants of Plan-Based Awards table.
Use of Discretion. The Compensation Committee did not use discretion to pay awards under the 2018 STIP that would not have otherwise been earned. The Compensation Committee is permitted to apply discretion in considering potential adjustments presented by management in order to assess performance of continuing operations. In practice, the Compensation Committee has made a limited number of adjustments, which, for awards to be earned by executives during a particular year, must be determined no later than the Compensation Committee’s February meeting. The Compensation Committee reviews the actual results for a year and considers and approves potential adjustments. With respect to the executive officers of the Company, these adjustments for a plan year must be made no later than the February Compensation Committee meeting of that year.
Long-Term Incentives. Long-term incentive award grants are made under the 2013 Omnibus Incentive Plan. Long-term incentive awards are intended to align the interests of executives with those of shareholders by allowing executives to share in the growth and financial success of the Company, as reflected in the Company’s stock price and other performance measures. In addition, long-term incentive awards facilitate the attraction, retention and motivation of executives and key employees.
Our general practice (other than in unusual circumstances, such as in 2015 when the Company made time-based awards of restricted stock units due to the difficulty of setting long-term performance targets as a result of the Spin-Off) is for all of our named executive officers’ long-term incentive awards under the LTIP to be “at risk”— requiring achievement of specific multi-year financial goals or stock price appreciation—rather than being solely time-based awards. In 2018, the long-term incentive awards to our named executive officers under the 2018 LTIP consisted of 50% stock options and 50% performance shares, all of which are considered “at risk.”
Stock Options. Stock options align executives’ interests with those of shareholders, since options only have realizable value if the price of the Company’s stock increases relative to the grant/exercise price. Stock options granted to the named executive officers and other eligible employees during fiscal 2018 have the following terms:
Exercise price is the closing trading price on the grant date;
Vest annually in 33.33% increments beginning on the first anniversary of the grant date; and
Expire 10 years after the grant date.
Performance Shares. Performance share award opportunities were provided to the named executive officers in 2018 to directly align the shares earned, if any, to the achievement of specific multi-year goals. The goals and the performance period were established by the Compensation Committee at the time of the award grant. 2018 Performance Share Grant. The 2018 performance share grant, which is based on ameasured over three-year performance period ending on December 31, 20202023 for Adjusted EBITDA and willRelative TSR, and Non-New Machine Sales; performance share awards vest on the third anniversary of the grant date, if performance goals are met was based on two equally weighted metrics – Fiscal Year 2020 Adjusted EBITDA Percent and relative TSR as compared to companies in the S&P SmallCap 600 Industrials Index. For these purposes, Fiscal Year 2020 Adjusted EBITDA Percent is equal to gross profit, less selling, general and administrative expenses, plus depreciation and restructuring charges, divided by net sales, and TSR, which is calculated using the 20-trading day average closing stock price at the beginning and end of the three-year performance period, is defined as stock price appreciation plus dividends reinvested on the ex-dividend date over the three-year performance period.
To emphasize the importance of long-term profitability and to focus the executive team on improving overall company performance on a year-to-year basis, 50% of the performance share grant was based on achieving a certain Fiscal Year 2020 Adjusted EBITDA Percent. The schedule for these awards is provided below:
Performance Level | Fiscal Year 2020 Adjusted EBITDA Percent | Award Payout (as a % of Target) | Maximum | 10.0% | 200% | Target | 8.5% | 100% | Threshold (no payouts below this level) | 7.0% | 25% |
| For the 50% of the 2018 performance share grant that was based on relative TSR, the Compensation Committee determined a performance schedule consistent with the Company’s pay-for-performance philosophy and current market practices, with pay approximating median levels at the target award opportunity level. The payout schedule for the relative TSR portion of the performance share grants is as follows:
Performance
Level
| Manitowoc’s Relative
TSR Performance
| Award Payout (as a % of Target)
| | | | | | | | | Maximum
| 75th Percentile
| 200%
| Target
| 50th Percentile
| 100%
| Threshold (no payouts below this level)
| 25th Percentile
| 25%
|
If TSR is negative, the TSR portion of the performance share payout cannot exceed the target.
2017 Performance Share Grant. The 2017 performance share grant was based on two equally-weighted metrics – Adjusted EBITDA Percent and relative TSR as compared to companies in the S&P SmallCap 600 Industrials Index – over the three-year performance period from January 1, 2017 through December 31, 2019. For these purposes, Adjusted EBITDA Percent is equal to gross profit, less engineering, selling and administrative expenses, plus depreciation and certain other nonrecurring charges, divided by net sales, and TSR, which is calculated using the 20-trading day average closing stock price at the beginning and end of the three-year performance period, is defined as stock price appreciation plus dividends reinvested on the ex-dividend date over the three-year performance period.
2016 Performance Share Grant. The 2016 performance share grant was based on two equally-weighted metrics – Return on Invested Capital (“ROIC”) and relative TSR as compared to companies in the S&P SmallCap 600 Industrials Index – over the three-year performance period from January 1, 2016 through December 31, 2018. For these purposes, ROIC is equal to the three-year weighted average ROIC, defined as Net Operating Profit After Tax, excluding the impact of the Spin-Off and other one-time related costs, divided by average invested capital derived as equity plus interest bearing debt, less cash and marketable securities, and relative TSR is as defined above. For purposes of measuring relative TSR, the Company’s peer group included the companies included in the S&P SmallCap 600 Industrials Index as of January 1, 2016 that were still actively traded at the end of the performance period (on December 31, 2018). Based on actual performance over the three-year performance period, awards were earned at approximately 40.5% of target (as reflected in the table below) and will be paid in 2019 following certification of results by the Compensation Committee.
Metric
| Actual Performance
| Award Payout
(as a % of Target)
| 3 Year Weighted Average ROIC
(50% Weighting)
| 0% achievement
(Threshold: 4%
Target: 6%
Maximum: 8%)
| 0.0%
| Relative TSR
(50% Weighting)
| 43.5th percentile relative to peers
(Threshold: 25th percentile
Target: 50th percentile
Maximum: 75th percentile)
| 81.0%
| Combined Payout (as a % of Target)
| 40.5%
|
Restricted Stock Units. In April 2018, the Company made an equity-based award (50%) | ▪ Value of restricted stock units that vest over time is tied to Mr. Ruck in connection with his employment with the Company. These restricted stock units vest 50%price appreciation | Three-year ratable vesting (33.33% per year), commencing on the secondfirst anniversary of his employment commencement date and 50% on the third anniversary of his employment commencement date. Grant Guideline Development. Consistent with past practice, the Compensation Committee annually sets award guidelines for each executive officer and job classification level based upon survey market median levels and the Company’s recent average stock price. LTIP awards to named executive officers were made in the first quarter of 2018. The approximate 20-trading-day average closing price ending on February 14, 2018 (which was the date of the distribution of meeting materials to the Board in connection with the February 2018 Board meeting) was used for determining the target performance award grant levels in 2018. The Black Scholes value was used to determine the number of options granted, however, the actual option grant price and accounting expense were determined at the date of grant.
The grant date fair value of the 2018 equity grants are presented in the Grants of Plan-Based Awards table. The ultimate value that will be realized, if any, is not determinable at the date of grant.
| Retirement Benefits and Deferred Compensation. To facilitate the long-term service of highly-qualified executives and retirement savings, the Company provides the following retirement and deferred compensation plans:
| 401(k) Retirement Plan. Active, regular, full-time, non-union, U.S. based employees (including the named executive officers) are eligible to participate in The Manitowoc Company, Inc. 401(k) Retirement Plan, which allows employees to build retirement savings on a tax-deferred basis. The plan has a tax-qualified defined contribution savings component, the 401(k) Savings feature, in which participating employees receive a Company match. In addition, the plan has a Retirement Plan feature, in which the Company provides an annual contribution of from 0% to 4% of eligible compensation to another defined contribution account. There are no employee contributions to the Retirement Plan feature. Contributions under the Retirement Plan feature are based on STIP award achievement, subject to a cap, and are reviewed and approved by the Company’s Retirement Committee. The value of Company annual matching contributions to the 401(k) Retirement Plan under the Savings feature is presented in the Summary Compensation Table and the All Other Compensation Table.
| Deferred Compensation. To further assist in attracting and retaining highly-qualified employees, to facilitate stock ownership and to encourage saving for retirement, executive officers and other key employees are eligible to participate in the Deferred Compensation Plan, which may include a Company contribution. Detailed information about the Deferred Compensation Plan is presented in the Non-Qualified Deferred Compensation table and in the narrative following that table. In addition, the value of the Company’s annual contributions to the Deferred Compensation Plan on behalf of the named executive officers is presented in the Summary Compensation Table in the “All Other Compensation” column and in the All Other Compensation Table.
Perquisites and Personal Benefits. In order to provide a market competitive total compensation package, the Company provides a limited amount of perquisites and supplemental benefits to our named executive officers. In 2018, the Company provided the following: supplemental long-term disability insurance, COBRA reimbursement, tax preparation, car allowance, memberships, expatriate benefits (including rent, housing-related insurance, educational expenses and car allowance), limited personal use of aircraft, commercial air flights for family members, meals and other expenses for spouses of the named executive officers in connection with the February 2018 Board meeting and gross-up payments on taxable fringe benefits. The value of perquisites and supplemental benefits, in total and itemized, provided in 2018 are presented in the Summary Compensation Table and the All Other Compensation Table.
Change in Control Severance Arrangements. In order to facilitate attraction and retention of highly-qualified executives, the Company has arrangements (“Contingent Employment Agreements”) with the named executive officers and certain other key executives, which provide for the executives’ continued employment (for a three-year period for Mr. Pennypacker and for a two-year period for the other executives) upon a change in control. In addition, the arrangements provide for certain severance benefits in the event the executive is terminated without “cause” (as defined in the Contingent Employment Agreements) prior to the end of the employment period (as such, the Contingent Employment Agreements have a “double trigger”). The severance benefits would consist of base salary, annual incentive bonus compensation (calculated at the target level), and other benefits that the executive otherwise would have been entitled to if his employment had not been terminated prior to the respective three or two year change in control employment period. Further detail regarding these agreements is presented in the Post-Employment Compensation section of this Proxy Statement.
|
Restricted Stock Units. Restricted stock units that vest over time tie a portion of the recipient’s compensation to stock price appreciation, as stock price affects the value of the restricted stock units. The restricted stock units granted to the named executive officers and other eligible employees during 2021 vest annually in 33.33% increments beginning on the first anniversary of the grant date. Performance Shares. Performance share award opportunities are provided to the named executive officers to directly align the shares earned, if any, to the achievement of specific multi-year goals. The goals and the performance period are established by the Compensation Committee at the time of the award grant. Performance Shares Granted in 2021. The 2021 performance share grant will vest following the third anniversary of the grant date based on Average Adjusted EBITDA Percent, and a relative TSR modifier assessed over a three-year performance period, and Non-New Machine Sales in each case concluding on December 31, 2023. 35
Compensation Discussion and Analysis To emphasize the importance of long-term profitability and to focus the executive team on improving overall company performance on a year-to-year basis, the primary measure is our three-year average Adjusted EBITDA Percent. The schedule for the 2021 awards is: PERFORMANCE LEVEL | | THREE-YEAR AVERAGE ADJUSTED EBITDA PERCENT (60% Weighting) | | | NON-NEW MACHINE SALES IN 2023 (40% Weighting) | | AWARD PAYOUT (AS A % OF TARGET) | | Maximum | | 7.70% | | | $536M | | 200% | | Target | | 6.15% | | | $432M | | 100% | | Threshold (no payouts below this level) | | 4.60% | | | $406M | | 50% | |
Adjusted EBITDA Percent is equal to net income (loss) before interest, income taxes, depreciation, and amortization, plus the addback of restructuring and certain other charges, divided by net sales. Non-New Machine Sales is defined as any sales generated from anything other than new machines, including, but not limited to sales from used equipment, aftermarket parts, rental, training, and field service work. Relative TSR is measured against the Russell 2000 Index. TSR (for the Company and the comparator group) is defined as stock price appreciation (calculated using the 20-trading day average closing stock price at the beginning and end of the three-year performance period) assuming any dividends are reinvested on the ex-dividend date over the three-year performance period. Depending on our relative TSR performance, the level of payout can be adjusted up or down by up to 20% (If negative, the TSR portion of payout cannot exceed target of 100%), with a performance schedule consistent with the Company’s pay-for-performance philosophy and current market practices. The payout schedule for the relative TSR modifier of the performance share grants is as follows: PERFORMANCE PERCENTILE RANK | | LTI PAYOUT MODIFICATION | | Above 75th Percentile | | 20% | | 60th to 75th Percentile | | 10% | | 40th to 60th Percentile | | No Change | | 25th to 40th Percentile | | (10)% | | Below 25th Percentile | | (20)% | |
Note: Relative TSR modifier would adjust number of shares vested, and overall LTI payout after applying any modifier is capped at 200% of target. If absolute TSR is negative, the modifier cannot increase the payout. 36
Compensation Discussion and Analysis Performance Shares Vesting in 2021 (2019 Performance Share Grant). The 2019 performance share grant, which is based on a three-year performance period beginning on January 1, 2019 and ending on December 31, 2021, was based on two equally-weighted metrics – Adjusted EBITDA Percent for the year ending December 31, 2021 (“Fiscal Year 2021 Adjusted EBITDA Percent”) and relative TSR as compared to companies in the S&P SmallCap 600 Industrials Index, excluding Commercial Services and Professional Services companies. For these purposes, Fiscal Year 2021 Adjusted EBITDA Percent is equal to net income (loss) before interest, income taxes, depreciation and amortization, plus the addback of certain restructuring and other charges, divided by net sales, and TSR, which is calculated using the 20-trading day average closing stock price at the beginning and end of the three-year performance period, is defined as stock price appreciation plus dividends reinvested on the ex-dividend date over the three-year performance period. The shares earned based on the achievement of the performance goals are awarded on the third anniversary of the grant date, which was February 27, 2022. Other Severance ArrangementsMETRIC
| | Severance Pay Plan. The Company also hasTIERS
| | ACTUAL PERFORMANCE | | AWARD PAYOUT (AS A % OF TARGET) | Fiscal Year 2021 Adjusted EBITDA Percent1 (50% Weighting) | | Threshold: 6.3% Target: 8.4% Maximum: 11.0% | | 6.7% achievement | | 40.7% | Relative TSR (50% Weighting) | | Threshold: 25.0% Target: 50.0% Maximum: 75.0% | | 28.0% achievement | | 34.0% | Combined Payout (as a severance pay plan that establishes a discretionary severance program across% of Target) | | | | | | 37.4% |
(1) | A reconciliation of Adjusted EBITDA including acquisitions (a non-GAAP financial measure) to Net income (loss) (the most directly comparable GAAP financial measure) is included in Annex A to this Proxy Statement as is the Company whereby all severance benefits are provided at the Company’s sole discretion and will be designed to meet the specific facts and circumstancescalculation of each termination. The Board of Directors and the Compensation Committee have the sole authority to authorize any benefits under the plan to any officer of the Company. Other than this discretionary severance pay plan, the Company does not generally have a formal severance plan for other forms of employment termination, exceptAdjusted EBITDA Percent for the Contingent Employment Agreements as described below.years ended December 31, 2021 (i.e., Fiscal Year 2021 Adjusted EBITDA Percent). |
Grant Guideline Development. The Compensation Committee annually sets award guidelines for each executive officer and job classification level based upon survey market median levels, the Company’s executive compensation peer group, and the Company’s recent stock price. LTIP awards to named executive officers were made in the first quarter of 2021. Target grant levels for restricted stock units in 2021 were based on the closing stock price on February 24, 2021 (which was the date of the Board meeting). Target performance share grant levels in 2021 were determined by using a Monte Carlo valuation which was completed by WTW. The grant date fair values of the 2021 equity grants are presented in the Grants of Plan-Based Awards table. Retirement Benefits and Deferred Compensation. To facilitate the long-term service of highly qualified executives and retirement savings, the Company provides the following retirement and deferred compensation plans: 401(k) Retirement Plan. Active, regular, U.S. based employees, who are scheduled to work at least 20 hours per week and completed one hour of service (including the named executive officers), are eligible to participate in The Manitowoc Company, Inc. 401(k) Retirement Plan, which allows employees to build retirement savings on a tax-deferred basis. The plan has a tax-qualified defined contribution savings component, the 401(k) Savings feature, in which participating employees receive a Company safe harbor match. In addition, the plan has a profit-sharing component, in which the Company provides an annual fixed-percentage contribution of between 0% to 4% of eligible compensation. The value of Company annual matching and profit-sharing contributions to the 401(k) Retirement Plan under the Savings feature is presented in the Summary Compensation Table and the All Other Compensation Table. Deferred Compensation. To further assist in attracting and retaining highly qualified employees and to encourage saving for retirement, executive officers and other key employees are eligible to participate in the Deferred Compensation Plan, which may include a Company contribution. Detailed information about the Deferred Compensation Plan is presented in the Non-Qualified Deferred Compensation table and in the narrative following that table. In addition, the value of the Company’s annual contributions to the Deferred Compensation Plan on behalf of the named executive officers is presented in the Summary Compensation Table in the “All Other Compensation” column and in the All Other Compensation Table. Perquisites and Personal Benefits. In order to provide a market competitive total compensation package, the Company provides a limited amount of perquisites and supplemental benefits to our named executive officers. In 2021, the Company provided the following: supplemental long-term disability insurance, car allowance, and tax preparation assistance for Mr. Ravenscroft related to his prior assignment in France. The value of perquisites and supplemental benefits, in total and itemized, provided in 2021 are presented in the Summary Compensation Table and the All Other Compensation Table. 37
Compensation Discussion and Analysis Tax Equalization Payments.Tax equalization payments are made to Mr. Ravenscroft, or to the applicable taxing authority on his behalf, to ensure that, on an after-tax basis, he receives the same level of compensation as if he were subject to taxation only in the United States. The aggregate incremental cost to us of this tax equalization arrangement is shown in the All Other Compensation column of the Summary Compensation Table and in the Other column of the All Other Compensation Table. Employment Arrangements.In February 2021, the Company entered into employment agreements with Messrs. Ravenscroft, Antoniuk, Middleton, Doerr, and Collins (the “Employment Agreements”). The Employment Agreements establish the compensation that the Company will pay to each of the named executive officers while employed and set forth the severance benefits they will receive upon certain terminations of employment, both before or within two years after, a change of control. Before the Company entered into the Employment Agreements, the Company had Contingent Employment Agreements in place with each of the named executive officers, which were terminated when the Company entered into the Employment Agreements. Additional information about the Employment Agreements and Contingent Employment Agreements is set forth below in the Post-Employment Compensation section of this Proxy Statement. Other Executive Compensation Policies and Considerations Stock Ownership Guidelines. The Compensation Committee has established stock ownership guidelines for executive officers. The guidelines, as revised in 2016 due to the value of stock holdings being reduced as a result of the Spin-Off, provide that within the greater of (a) five years from the executive’s start date, or (b) three years from the effective date of the Spin-Off, the executive officer should hold an amount of stock with a value at least equal to the following:
Chief Executive Officer: five times base salary
Other Executive Officers: three times base salary
Stock ownership includes shares owned outright, restricted stock, restricted stock units, and stock equivalents held in deferred compensation and/or retirement plans. Additionally, one-half of the guideline amount can be met by vested, in-the-money stock options held by the executive officer. As of December 31, 2018, none of the named executive officers were required to meet such guidelines due to their tenure with the Company, but all of the named executive officers were projected to be in compliance with such guidelines.
If an executive officer does not meet the relevant ownership guideline on the applicable measurement date, the executive officer must retain all net shares from the exercise of stock options and the vesting of restricted shares, restricted stock units and performance shares until compliance is achieved.
Stock Awards Granting Policy. In 2018,2021, based on the approval of the Compensation Committee, the Company granted stock awards to its executive officers and other eligible key employees. In 2018,2021, stock awards to executive officers consisted of stock options and performance shares and with respect to Mr. Ruck, restricted stock units. Annual stock awards are generally granted in February. Stock awards are also used to attract executives and key employees, and, as such, stock awards are at times granted to executives and key employees at the time they become executives or key employees of the Company. In such cases, the grant date would be the date employment commences or the date the Compensation Committee approves the awards. In all cases,If the Company grants stock options, then the exercise price of stock options is the closing trading price on the grant date. As previously noted, in April 2018, Stock Ownership Guidelines. The Compensation Committee has established stock ownership guidelines for our executive officers. The guidelines provide that within five years from the Company madeexecutive’s start date or promotion date, the executive officer should hold an amount of stock with a special equity-based award ofvalue at least equal to the following: Chief Executive Officer: five times base salary Other Executive Officers: three times base salary Stock ownership includes shares owned outright, restricted stock, restricted stock units, to Mr. Ruckperformance stock adjusted for expected achievement based on current performance trends, and stock equivalents held in connectiondeferred compensation and/or retirement plans. Additionally, one-half of the guideline amount can be met by vested, in-the-money stock options held by the executive officer. As of December 31, 2021, all named executive officers were in compliance with his employment withsuch guidelines. If an executive officer does not meet the Company.relevant ownership guideline on the applicable measurement date, the executive officer must retain all net shares from the exercise of stock options and the vesting of restricted shares, restricted stock units, and performance shares until compliance is achieved. Securities Trading Policy. The Company maintains an Insider Trading Policy that imposes specific standards on directors, executive officers, and key employees of the Company. The policy is intended not only to forbid such persons from trading in Company stock on the basis of inside information, but to avoid even the appearance of improper conduct on the part of such persons. The policy also prohibits directors, executive officers, and employees from pledging their holdings of Company securities, trading in puts, calls, and fromother derivative securities on stock of the Company, and purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging transactions involving Companyor offsetting any decrease in the market value of the Company’s securities. In addition to the specific restrictions set forth in the policy, the policy requires that all transactions in Company stock by such persons and by others in their households be pre-cleared by the Corporate Secretary’s office. The only exception to the pre-clearance requirement is regular, ongoing acquisitions of Company stock resulting from continued participation in employee benefit plans that the Company or its agents administer. Pay ClawbacksClawbacks.. OurThe Company’s Chief Executive Officer and Chief Financial Officer are subject to any clawbacks that may be required under Section 304 of the Sarbanes-Oxley Act of 2002.
Tax Deductibility of Executive Compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), generally limits the Company’s federal income tax deduction to $1 million per person per year for compensation paid to certain executive officers, including each of our named executive officers. Prior to 2018, compensation that qualified as performance-based compensation under Section 162(m) was fully deductible provided certain requirements of Section 162(m) were satisfied. However, as a result of changes made by the Tax Cuts and Jobs Act, for our 2018 fiscal year, only performance-based compensation that was paid pursuant to a binding contract in effect on November 2, 2017 could be exempt from the $1 million deduction limit.
During 2018, we took appropriate actions to preserve the deductibility of performance-based compensation granted prior to November 2, 2017. However, because we believe that many different factors influence a well-rounded, comprehensive executive compensation program, as discussed above under “Compensation Program Objectives and Philosophy,” the Compensation Committee did not limit, and does not intend to limit in future years, the compensation of our executive officers to a level that is fully deductible under Section 162(m).
Use of an Independent Compensation Consultant. The Compensation Committee engaged Willis Towers Watson, an executive consulting firm, as its independent compensation consultant to provide advice on compensation trends and market information to assist the Compensation Committee in fulfilling its duties, including the following responsibilities: review executive compensation and advise of changes to be considered to improve effectiveness consistent with our compensation philosophy; provide market data and recommendations on Chief Executive Officer and executive compensation; review materials for Compensation Committee meetings and attend Compensation Committee meetings; and advise the Compensation Committee on best practices for governance of executive compensation as well as areas of possible concern or risk in the Company’s programs.
Willis Towers Watson was directly engaged by and is accountable to the Compensation Committee, and has not been engaged by management for other services, except as discussed below. During fiscal 2018, Willis Towers Watson was paid $199,829 for executive compensation advice, director compensation advice and other services to the Compensation Committee. During fiscal 2018, Willis Towers Watson was also paid $58,151 for other human resource and accounting services to the Company, and Willis Towers Watson was retained by management for these services.
The Compensation Committee originally selected Willis Towers Watson (formerly known as Towers Watson) in fiscal 2014 to serve as an independent compensation consultant to the Company. This selection occurred after the Compensation Committee had assessed the firm’s independence, taking into consideration the following factors, among others:
The Compensation Committee’s oversight of the relationship between the Company and Willis Towers Watson mitigates the possibility that management could misuse other engagements to influence Willis Towers Watson’s compensation work for the Compensation Committee.
Willis Towers Watson has adopted internal safeguards to ensure that its executive compensation advice is independent.
The Compensation Committee retains ultimate decision-making authority for all executive pay matters and understands Willis Towers Watson’s role is simply that of advisor.
The absence of any significant business or personal relationship between Willis Towers Watson and any of our executives or members of the Compensation Committee.
The foregoing factors are still relevant to the Compensation Committee’s ongoing and annual assessment to continue utilizing the compensation consultant services of Willis Towers Watson. For fiscal 2018, Willis Towers Watson also provided the Compensation Committee with a written assessment of the independence of Willis Towers Watson’s advisory work to the Committee. Based on the foregoing, the Compensation Committee has concluded that the engagement of Willis Towers Watson does not raise any conflict of interest.
Risk Assessment of CoCompensation Practices.mpensation Practices The Compensation Committee is responsible for overseeing the management of risks relating to the Company’s human resources and executive compensation plans and arrangements. In 2018,2021, the Compensation Committee conducted an evaluation of the Company’s compensation arrangements for executive officers and non-executive officer employeesnon-executive officers and the incentives created by such arrangements for 38
Compensation Discussion and Analysis employees to take risks. As a result of this assessment, the Compensation Committee concluded that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee considered the following risk mitigating features of the Company’s compensation program: Pay Mix.Mix. The Company’s executive compensation program primarily consists of base salary, short-term incentive compensation, and long-term incentive compensation. Base salaries are targeted at median, which mitigates the need for our executive officers to take significant risks to earn average compensation. However, we also place a sufficient portion of each executive officer’s pay at risk to ensure that the interests of our executives are well-aligned with those of our shareholders, driving long-term shareholder value. Time Horizon.Horizon Our 2016, 2017. The Company’s 2019, 2020 and 20182021 LTIP awards are based on a three-year performance period, which encourages our employees to focus on sustained performance of the Company over the long-term, rather than taking short-term risks. Performance Goals.Goals Our. The Company’s STIP and LTIP goals are set at levels that are attainable without taking inappropriate risks, but that still require stretch performance. WeThe Company also cap ourcaps its STIP and LTIP payouts toat 200% of the target payout amount for each of ourits executives, which further helps control excessive risk taking at the expense of longer termlonger-term financial success. Stock Ownership Guidelines and Hedging Policies.Policies We have. The Company has stock ownership guidelines in place for each of ourits named executive officers, which further aligns the interests of ourits executive officers with those of our shareholders. WeThe Company also prohibitprohibits employees from pledging their holdings of Company securities and from engaging in hedging transactions involving Company securities. Tax Deductibility of Executive Compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended by the Tax Cuts and Jobs Act of 2017 (“Section 162(m)”), generally limits the Company’s federal income tax deduction to $1 million per person per year for compensation paid to certain executive officers, including each of its named executive officers. However, because the Company believes that many different factors influence a well-rounded, comprehensive executive compensation program, as discussed above, the Compensation Committee did not limit, and does not intend to limit in future years, the compensation of its executive officers to a level that is fully deductible under Section 162(m). COMPENSATION COMMITTEE REPORTCompensation Committee Report
The Compensation Committee has reviewed and discussed this Compensation Discussion and Analysis for fiscal year 20182021 with the Company’s management. Based on this review and discussion, the Compensation Committee recommended to the Board, and the Board has approved, that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20182021 and included in the Company’s Proxy Statement for filing with the SEC. | Compensation Committee | Anne M. Cooney (Chair) | Anne E. Bélec Donald M. Condon, Jr., Chair Roy V. Armes
Anne M. Cooney
| John C. Pfeifer
| EXECUTIVE COMPENSATION TABLESRobert W. Malone
| Summary Compensation Table
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V. SUMMARY COMPENSATION TABLE The following table sets forth the “total compensation” earned by each named executive officer during the fiscal year ended December 31, 2021, and, to the extent that a named executive officer was a named executive officer of the Company for the fiscal years ended December 31, 2020 or December 31, 2019, total compensation for service to the Company during those years. In accordance with SEC rules and guidance, information for fiscal years prior to the year in which an individual first became a named executive officer is not required to be presented. Actual payouts are presented in the “Salary” (before deferrals) and “Non-Equity Incentive Plan Compensation” (2021 STIP award payouts) columns. The grant date fair value of equity-based grants awarded in 2021 is shown in the “Stock Awards” columns. Generally, the actual value realized, if any, will be commensurate with our financial and stock price performance over the next several years. Restricted Stock Units are time based and vest ratably over 3 years. NAME AND PRINCIPAL POSITION | | YEAR | SALARY(1) | BONUS | STOCK AWARDS(2) | OPTION AWARDS(3)(4) | NON-EQUITY INCENTIVE PLAN COMPENSATION (5) | CHANGE IN PENSION VALUE & NONQUALIFIED DEFERRED COMPENSATION EARNINGS | ALL OTHER COMPENSATION(6) | TOTAL | Aaron H. Ravenscroft | | 2021 | $800,000 | $0 | $2,500,009 | $0 | $1,535,200 | $0 | $117,568 | $4,952,777 | President & Chief Executive Officer | | 2020 | $638,077 | $0 | $812,144 | $208,987 | $208,987 | $0 | $965,994 | $2,834,188 | | | 2019 | $480,615 | $0 | $752,977 | $179,533 | $697,500 | $0 | $407,492 | $2,518,118 | David J. Antoniuk | | 2021 | $522,700 | $0 | $1,202,510 | $0 | $752,296 | $0 | $58,564 | $2,536,070 | Executive Vice President & Chief Financial Officer | | 2020 | $542,804 | $0 | $751,227 | $193,312 | $149,362 | $0 | $121,463 | $1,758,168 | | | 2019 | $517,254 | $0 | $744,489 | $177,516 | $729,167 | $0 | $148,366 | $2,316,792 | Thomas L. Doerr, Jr. | | 2021 | $400,000 | $0 | $780,027 | $0 | $460,560 | $0 | $29,128 | $1,669,714 | Executive Vice President, General Counsel and Secretary | | 2020 | $415,385 | $0 | $487,294 | $125,393 | $91,440 | $0 | $30,919 | $1,150,430 | | | 2019 | $392,308 | $0 | $423,555 | $100,988 | $446,400 | $0 | $29,606 | $1,392,856 | Leslie L. Middleton | | 2021 | $388,032 | $0 | $750,014 | $0 | $446,743 | $0 | $40,738 | $1,625,527 | Executive Vice President, Americas and EU Mobile Cranes | | 2020 | $378,982 | $0 | $253,054 | $0 | $63,965 | $0 | $18,942 | $714,944 | | | | | | | | | | | | Terrance L. Collins | | 2021 | $372,600 | $0 | $631,821 | $0 | $429,012 | $0 | $29,514 | $1,462,947 | Executive Vice President, Human Resources | | 2020 | $386,931 | $0 | $394,707 | $101,570 | $85,176 | $0 | $31,055 | $999,440 | | | 2019 | $368,723 | $0 | $457,443 | $109,074 | $415,822 | $0 | $30,270 | $1,381,332 |
(1) | The 2020 earned Salary amount listed for Messrs. Antoniuk, Doerr, and Collins are slightly above their base salary for that year because the Company had 27 pay cycles in the year rather than its normal 26 pay cycles. The amount above base reflects one additional payroll occurring within the 2020 calendar year. |
(2) | The amounts listed in the “Stock Awards” column represent the aggregate grant date fair value of all restricted stock unit, restricted stock, and performance share awards in accordance with ASC Topic 718. All named executive officers received restricted stock units in 2021. For these restricted stock unit awards, fair value is computed by multiplying the total number of shares subject to each award by the closing market price on the date of grant. For performance share awards, fair value is calculated based upon the probable outcome of the performance conditions, consistent with the estimate of the aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC Topic 718. Performance shares are earned based on our financial performance over a three-year period, and vest following the third anniversary of the grant date if performance goals are met. The maximum values of the 2021 grants of performance shares at the grant date, assuming that the highest level of performance conditions are attained, are as follows: Mr. Ravenscroft — $2,500,009; Mr. Antoniuk — $1,202,510; Mr. Doerr — $780,027; Mr. Middleton — $750,014; and Mr. Collins — $631,821. Additional information about the assumptions that we used in valuing equity awards is set forth in Note 16 to the Consolidated Financial Statements for the fiscal year ended December 31, 2018, and, to2021 in our Annual Report on Form 10-K filed with the extent that a named executive officer was a named executive officer of the Company for the fiscal years ended December 31, 2017 or December 31, 2016, total compensation for service to the Company during those years. In accordance with SEC rules and guidance, information for fiscal years prior to the year in which an individual first became a named executive officer is not required to be presented. Actual payouts are presented in the “Salary” (before deferrals) and “Non-Equity Incentive Plan Compensation” (2018 STIP award payouts) columns.
The grant date fair value of equity-based grants awarded in 2018 is shown in the “Stock Awards” and “Options Awards” columns. None of this amount was realized during 2018; instead, the actual value realized, if any, will be commensurate with our financial and stock price performance over the next several years.
| | | | | | | | | | | | | | | | | | | | Name & Principal Position | Year | Salary | Bonus | Stock Awards(1)(2) | Option Awards(3)(4) | Non-Equity Incentive Plan Compensation(5) | Change in Pension Value & Nonqualified Deferred Compensation Earnings | All Other Compensation(6) | Total | Barry L. Pennypacker President & Chief Executive Officer | 2018 | $995,865 | $0 | $1,115,797 | $1,069,672 | $1,725,000 | $0 | $179,848 | $5,086,182 | 2017 | $973,019 | $0 | $1,442,245 | $1,364,948 | $1,907,097 | $0 | $80,472 | $5,767,781 | 2016 | $931,731 | $0 | $1,654,072 | $1,250,000 | $0 | $0 | $28,322 | $3,864,125 | David J. Antoniuk Senior Vice President & Chief Financial Officer | 2018 | $502,115 | $0 | $353,049 | $338,444 | $653,344 | $0 | $91,792 | $1,938,744 | 2017 | $490,000 | $0 | $456,345 | $431,875 | $716,258 | $0 | $47,031 | $2,141,509 | 2016 | $271,385 | $0 | $718,867 | $231,001 | $0 | $0 | $7,491 | $1,228,744 | Aaron H. Ravenscroft Executive Vice President, Cranes | 2018 | $427,961 | $0 | $290,098 | $278,122 | $527,678 | $0 | $291,856 | $1,815,715 | 2017 | $387,115 | $0 | $259,624 | $245,693 | $456,066 | $0 | $219,155 | $1,567,653 | 2016 | $295,673 | $0 | $365,817 | $200,000 | $0 | $0 | $69,096 | $930,586 | Thomas L. Doerr, Jr. Senior Vice President, General Counsel and Secretary | 2018 | $375,000 | $150,000 | $178,511 | $171,148 | $388,125 | $0 | $24,013 | $1,286,797 | Peter A. Ruck Senior Vice President, Business Development | 2018 | $240,615 | $0 | $976,303 | $171,148 | $241,268 | $0 | $16,594 | $1,645,928 |
| (1)
| The amounts listed in the “Stock Awards” column represent the aggregate grant date fair value of all restricted stock unit, restricted stock, and performance share awards in accordance with ASC Topic 718. Mr. Ruck was the only named executive officer who received restricted stock units in 2018. The value attributable to the 2018 grant of restricted stock units to Mr. Ruck was $754,290. For this restricted stock unit award, fair value is computed by multiplying the total number of shares subject to the award by the closing market price on the date of grant. For performance share awards, fair value is calculated based upon the probable outcome of the performance conditions, consistent with the estimate of the aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC Topic 718, and was as follows for 2018 awards: Mr. Pennypacker — $1,115,797; Mr. Antoniuk — $353,049; Mr. Ravenscroft — $290,098; Mr. Doerr — $178,511; and Mr. Ruck — $222,012. Performance shares are earned based on our financial performance over a three-year period, and vest on the third anniversary of the grant date if performance goals are met. The maximum values of the 2018 grants of performance shares at the grant date, assuming that the highest level of performance conditions are attained, are as follows: Mr. Pennypacker — $2,231,593; Mr. Antoniuk — $706,098; Mr. Ravenscroft — $580,195; Mr. Doerr — $357,022; and Mr. Ruck — $444,025. Additional information about the assumptions that we used in valuing equity awards is set forth in Note 16 to the Consolidated Financial Statements for the fiscal year ended December 31, 2018 in our Annual Report on Form 10-K filed with the SEC on February 13, 2019.on February 22, 2022. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
|
(3) | (2)
| The grant date fair value of the 2017 stock awards (which include only performance share awards), as presented in the “Stock Awards” column, is different than the value of such stock awards as of December 31, 2018. Based on the closing price ($14.77) of the Company’s common stock on December 31, 2018, without regard to vesting schedules and assuming target performance with respect to the performance shares, the values of the 2017 stock awards were as follows as of December 31, 2018: Mr. Pennypacker — $696,598; Mr. Antoniuk — $220,413; and Mr. Ravenscroft — $125,397.
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The valuesamounts listed in the “Stock“Option Awards” column with respect to 2016 includerepresent the aggregate grant date fair value of performance sharesall option awards granted during the year in accordance with ASC Topic 718. Additional information about the assumptions that we used in valuing equity awards is set forth in Note 17 to the Consolidated Financial Statements for Mr. Pennypacker and the grant date fair values of both restricted stock units and performance shares for Mr. Antoniuk and Mr. Ravenscroft. The grant date fair values of the 2016 performance share awards were as follows: Mr. Pennypacker – $1,654,072; Mr. Antoniuk — $226,889; and Mr. Ravenscroft — $264,653. These values are different than the values of such performance share awards as offiscal year ended December 31, 2018. Based2021 in our Annual Report on Form 10-K filed with the closing price ($14.77)SEC on February 22, 2022. |
(4) | No Stock Options were issued in 2021. |
(5) | Consists of cash awards made under the Company’s common stock on December 31, 2018, without regard to vesting schedules and based on2021 STIP. Reflects the actualamount earned for performance of 40.5% of target with respect to the performance shares, the values of the 2016 performance share awards were as follows as of December 31, 2018: Mr. Pennypacker — $434,725; Mr. Antoniuk — $59,626; and Mr. Ravenscroft — $69,552. | (3)
| The amounts listed in the “Option Awards” column represent the aggregate grant date fair value of all option awards granted during the year in accordance with ASC Topic 718. Additional information about the assumptions that we used in valuing equity awards is set forth in Note 16 to the Consolidated Financial Statements for the fiscal year ended December 31, 2018 in our Annual Report on Form 10-K filed with the SEC on February 13, 2019.during 2021 but not paid until 2022.
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| (4)
| The grant date fair value of the 2016 and 2017 option awards, as presented in the “Option Awards” column, is different than the value of such option awards as of December 31, 2018. Based on the closing price ($14.77) of the Company’s common stock on December 31, 2018 and the exercise prices of the 2016 and 2017 option awards (which were all higher than $14.77) and without regard to vesting schedules, the values of the 2016 and 2017 option awards were as follows as of December 31, 2018: Mr. Pennypacker — $0; Mr. Antoniuk — $0; and Mr. Ravenscroft — $0.
|
| (5)
| Consists of cash awards made under the 2018 STIP. Reflects the amount earned for performance during 2018 but not paid until 2019.
|
| (6) | Consists of the compensation described in the All Other Compensation Table, which follows this table. |
All Other Compensation Table, which follows this table. |
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All Other Compensation Table VI. ALL OTHER COMPENSATION TABLE The following table sets forth the specific items included in the “All Other Compensation” column of the Summary Compensation Table. NAME | | YEAR | COMPANY CONTRIBUTIONS TO DEFINED CONTRIBUTION PLAN(1) | INSURANCE PREMIUMS(2) | SEVERANCE | CAR ALLOWANCE | COMPANY CONTRIBUTIONS UNDER DEFERRED COMPENSATION PLAN(3) | OTHER(4) | TOTAL | Aaron H. Ravenscroft | | 2021 | $17,400 | $792 | $0 | $12,000 | $48,928 | $38,449 | $117,568 | | | 2020 | $17,100 | $792 | $0 | $6,800 | $93,490 | $847,812 | $965,994 | | | 2019 | $16,800 | $792 | $0 | $0 | $100,829 | $289,071 | $407,492 | David J. Antoniuk | | 2021 | $17,400 | $1,640 | $0 | $10,800 | $28,724 | $0 | $58,564 | | | 2020 | $17,100 | $1,640 | $0 | $10,800 | $89,038 | $2,885 | $121,463 | | | 2019 | $16,800 | $1,640 | $0 | $10,800 | $117,060 | $2,067 | $148,366 | Thomas L. Doerr, Jr. | | 2021 | $17,400 | $928 | $0 | $10,800 | $0 | $0 | $29,128 | | | 2020 | $17,100 | $928 | $0 | $10,800 | $0 | $2,091 | $30,919 | | | 2019 | $16,800 | $928 | $0 | $10,800 | $0 | $1,078 | $29,606 | Leslie L. Middleton | | 2021 | $17,400 | $1,033 | $0 | $10,800 | $11,505 | $0 | $40,738 | | | 2020 | $17,100 | $0 | $0 | $1,800 | $0 | $42 | $18,942 | | | | | | | | | | | Terrance L. Collins | | 2021 | $17,400 | $1,314 | $0 | $10,800 | $0 | $0 | $29,514 | | | 2020 | $17,100 | $1,314 | $0 | $10,800 | $0 | $1,842 | $31,055 | | | 2019 | $16,800 | $1,314 | $0 | $10,800 | $0 | $1,356 | $30,270 |
(1) | Consists of contributions made by the Company during the year indicated under The Manitowoc Company, Inc. 401(k) Retirement Plan. As explained in the “All Other Compensation” columnCompensation Discussion and Analysis, this Plan includes both a tax-qualified defined contribution savings component in which the participant receives a Company match, and a profit-sharing component in which the Company provides an annual fixed percentage contribution of the Summary Compensation Table. | | | | | | | | | | | | | | | | | | Name | Year | Company Contributions to Defined Contribution Plan(1) | Insurance Premiums(2) | Tax Preparation Fee Reimbursement | Car Allowance | Company Contributions Under Deferred Compensation Plan(3) | Other(4) | Total | Barry L. Pennypacker | 2018 | $16,200 | $1,438 | $0 | $12,000 | $145,148 | $5,062 | $179,848 | 2017 | $10,600 | $1,438 | $0 | $12,000 | $48,651 | $7,783 | $80,472 | 2016 | $10,600 | $1,023 | $0 | $12,000 | $0 | $4,699 | $28,322 | David J. Antoniuk | 2018 | $16,200 | $1,640 | $0 | $10,800 | $60,919 | $2,233 | $91,792 | 2017 | $10,600 | $1,640 | $0 | $5,400 | $24,500 | $4,891 | $47,031 | 2016 | $6,508 | $683 | $0 | $0 | $0 | $300 | $7,491 | Aaron H. Ravenscroft | 2018 | $16,436 | $792 | $0 | $0 | $44,201 | $230,427 | $291,856 | 2017 | $10,364 | $792 | $380 | $9,000 | $15,485 | $183,134 | $219,155 | 2016 | $10,600 | $396 | $0 | $8,100 | $0 | $50,000 | $69,096 | Thomas L. Doerr, Jr. | 2018 | $11,177 | $928 | $0 | $10,800 | $0 | $1,108 | $24,013 | Peter A. Ruck | 2018 | $0 | $8,494 | $0 | $8,100 | $0 | $0 | $16,594 |
| (1)
| Consists of contributions made by the Company during the year indicated under The Manitowoc Company, Inc. 401(k) Retirement Plan. As explained in the Compensation Discussion and Analysis, this Plan includes both a tax-qualified defined contribution savings component in which the participant receives a Company match, and a retirement plan feature in which the Company provides an annual contribution of between 0% to 4% of eligible compensation to another defined contribution account.
|
(2) | Includes premiums paid for Supplemental Executive Long Term Disability Insurance. |
| (2)
| Includes premiums paid for Supplemental Executive Long Term Disability Insurance for all executives and COBRA reimbursement for Mr. Ruck.
|
| (3) | For 2018, includes the Company’s contributions for 2018, which will be contributed to individual accounts in 2019.
|
For 2017,2021, includes the Company’s contributions for 2017,2021, which (a) were contributed to individual accounts as follows in 2018 – Mr. Pennypacker – $8,100; Mr. Antoniuk – $8,100; and Mr. Ravenscroft – $8,100, and (b) will be contributed to individual accounts as follows in 2019 – Mr. Pennypacker – $40,551; Mr. Antoniuk – $16,400; and Mr. Ravenscroft – $7,385.2022. For 2020, includes the Company’s contributions for 2020, which were contributed to individual accounts in 2021. For 2019, includes the Company’s contributions for 2019, which were contributed to individual accounts in 2020. (4) | For 2021, includes (a) expenses related to personal use of the Company aircraft – Mr. Pennypacker –$3,028 and Mr. Antoniuk – $655; (b) expenses for commercial air flights for officers’ families – Mr. Pennypacker – $1,261, Mr. Antoniuk – $715, Mr. Ravenscroft – $15,508, and Mr. Doerr – $498; (c) in connection with Mr. Ravenscroft’s assignment to France, expatriate benefits (including amounts paid by the Company for rent, housing-related insurance, educational expenses, and car allowance) which were paid in Euros but converted to U.S. dollars at the exchange rates in effect when the payments were made – $207,482; (d) tax preparation fees in connection with Mr. Ravenscroft’s assignment to France – $6,490; (e) personal use of memberships: Mr. Ravenscroft – $181; (f) gross-up payments on taxable fringe benefits – Mr. Pennypacker – $180, Mr. Antoniuk – $46, Mr. Ravenscroft – $767, and Mr. Doerr – $17; and (g) meals and other expenses paid by the Company for the spouses of the named executive officers in connection with the February 2018 Board meeting – Mr. Pennypacker –$593, Mr. Antoniuk – $817, and Mr. Doerr – $593. |
For 2017, includes (a) expenses related to personal use of the Company aircraft – Mr. Pennypacker – $7,604 and Mr. Antoniuk – $4,775; (b) in connection with Mr. Ravenscroft’s assignment to France during November and December 2017, expatriate benefits (including amounts paid by the Company for rent, housing-related insurance, educational– $23,042.66; (b) Vendor (Aires) Global Data Collection service fees: Mr. Ravenscroft - $810; (c) E&Y tax consulting fees: Mr. Ravenscroft - $1,538. (d) Taxable in kind, taxable moving expenses, and car allowance) and moving expenses, which were paid in Euros, but were converted to U.S. dollars for purposes of this table at the fiscal year-end exchange rate of 1 Euro = 1.20030 U.S. dollars – $183,125; and (c) gross-up payments on taxable fringe benefits – Mr. Pennypacker – $179, Mr. Antoniuk – $116, andTax equalization: Mr. Ravenscroft – $9.- $13,059.
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For 2020, includes (a) expenses for commercial air flights for named executive officers’ families as well as meals and other expenses paid by the Company for the named executive officers, and their the spouses in attendance at the February 26, 2020 Board meetings: Mr. Ravenscroft — $923; Mr. Antoniuk — $2,885; Mr. Doerr — $2,091; Mr. Collins — $1,559; (b) in connection with Mr. Ravenscroft’s assignment to France, expatriate benefits (including amounts paid by the Company for rent, housing-related insurance, educational expenses, and car allowance) which were paid in Euros but converted to U.S. dollars at the exchange rates in effect when the payments were made – $735,536 which for 2020 included French taxes incurred for 2019 but paid in 2020 and 2020 French taxes incurred and paid in 2020, plus $105,155 in tax equalization payments representing the aggregate incremental cost to the Company of providing a tax equalization benefit to Mr. Ravenscroft in connection with his service in France, which cost is calculated on an estimated basis because the exact amount of Mr. Ravenscroft’s tax liabilities for 2020 will not be finally determined until after the filing of this Proxy Statement; (d) tax preparation fees in connection with Mr. Ravenscroft’s assignment to France – $6,198; and (e) gift certificate taxable fringe: Mr. Collins — $283; and Mr. Middleton — $42. For 2019, includes (a) expenses for commercial air flights for named executive officers’ families as well as meals and other expenses paid by the Company for the spouses of the named executive officers in connection with attendance at the February 27, 2019 and October 30, 2019 Board meetings – Mr. Antoniuk – $2,067, Mr. Doerr – $1,078, and Mr. Collins – $1,266 (b) in connection with Mr. Ravenscroft’s assignment to France, expatriate benefits (including amounts paid by the Company for rent, housing-related insurance, educational expenses, and car allowance) which were paid in Euros but converted to U.S. dollars at the exchange rates in effect when the payments were made – $208,333, plus $69,323 in tax equalization payments representing the aggregate incremental cost to the Company of providing a tax equalization benefit to Mr. Ravenscroft in connection with his service in France, which cost is calculated on an estimated basis because the exact amount of Mr. Ravenscroft’s tax liabilities for 2019 will not be finally determined until after the filing of this Proxy Statement; and (c) tax preparation fees in connection with Mr. Ravenscroft’s assignment to France – $11,415.
VII. GRANTS OF PLAN-BASED AWARDS IN 2021 The following table sets forth the 2021 STIP awards and 2021 LTIP awards. Any STIP awards earned in 2021 were paid in the first quarter of 2021. Other than the equity awards disclosed below, there were no other equity-based incentive awards granted to the named executive officers in 2021. | | | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS | ALL OTHER SHARE AWARDS: NUMBER OF SHARES OF | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES | EXERCISE OR BASE PRICE OF OPTION | GRANT DATE FAIR VALUE OF STOCK AND | NAME | | AWARD TYPE | GRANT DATE | THRESHOLD ($)(1) | TARGET ($)(1) | MAXIMUM ($)(1) | THRESHOLD (#)(2) | TARGET (#)(2) | MAXIMUM (#)(2) | STOCK OR UNITS (#)(3) | UNDERLYING OPTIONS (#)(4) | AWARDS ($/SH)(4) | OPTION AWARDS(5) | Aaron H. Ravenscroft | | STIP | | $400,000 | $800,000 | $1,600,000 | | | | | | | | | | Performance Shares | 2/24/2021 | | | | 33,034 | 66,068 | 132,136 | | | | $1,250,007 | | | Restricted Stock Units | 2/24/2021 | | | | | | | 73,790 | | | $1,250,003 | David J. Antoniuk | | STIP | | $196,013 | $392,025 | $784,050 | | | | | | | | | | Performance Shares | 2/24/2021 | | | | 15,890 | 31,779 | 63,558 | | | | $601,259 | | | Restricted Stock Units | 2/24/2021 | | | | | | | 35,493 | | | $601,251 | Thomas L. Doerr, Jr. | | STIP | | $120,000 | $240,000 | $480,000 | | | | | | | | | | Performance Shares | 2/24/2021 | | | | 10,307 | 20,614 | 41,228 | | | | $390,017 | | | Restricted Stock Units | 2/24/2021 | | | | | | | 23,023 | | | $390,010 | Leslie L. Middleton | | STIP | | $116,400 | $232,800 | $465,600 | | | | | | | | | | Performance Shares | 2/24/2021 | | | | 9,911 | 19,821 | 39,642 | | | | $375,013 | | | Restricted Stock Units | 2/24/2021 | | | | | | | 22,137 | | | $375,001 | Terrance L. Collins | | STIP | | $111,780 | $223,560 | $447,120 | | | | | | | | | | Performance Shares | 2/24/2021 | | | | 8,349 | 16,697 | 33,394 | | | | $315,907 | | | Restricted Stock Units | 2/24/2021 | | | | | | | 18,649 | | | $315,914 |
For 2016, includes (a) expenses related to personal use(1)
| These amounts represent potential payments under the 2021 STIP; the actual amounts received (if any) are shown in the Summary Compensation Table above. The threshold amount reflects the total of the Company aircraft – Mr. Pennypacker – $2,619 and Mr. Antoniuk – $293; (b) personal usethreshold payment levels that represent 50% of memberships: Mr. Pennypacker – $1,970; (c) Mr. Ravenscroft’s signing bonus – $50,000; and (d) gross-up paymentsthe target amount. The maximum amount reflects the total amount of maximum payment levels that represent 200% of the target amount. |
(2) | These amounts represent potential payouts under the 2021 LTIP. The threshold amount reflects the total of the threshold payout levels that represent 50% of the target amount. The maximum amount reflects the total amount of maximum payout levels that represent 200% of the target amount. |
(3) | The restricted stock units vest ratably over a three-year period, commencing on taxable fringe benefits – Mr. Pennypacker – $110 and Mr. Antoniuk – $7.the first anniversary of the grant date. |
(4)
| No Stock options were issued in 2021 |
(5) | Reflects the grant date fair value of the awards granted in 2021 as computed under ASC Topic 718. |
VIII. OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END The following table sets forth the stock options, restricted stock units, and performance share awards previously granted to the named executive officers relating to our common stock that were outstanding at the end of 2021. | | OPTION AWARDS(1)(2) | STOCK AWARDS(1),(3) | NAME | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE(4) | OPTION EXERCISE PRICE ($)(5) | OPTION GRANT DATE | OPTION EXPIRATION DATE | NUMBER OF SHARES OF STOCK THAT HAVE NOT VESTED (#)(6)(7)(9) | MARKET VALUE OF SHARES OF STOCK THAT HAVE NOT VESTED ($)(8) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)(7)(9)(10) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(8) | Aaron H. Ravenscroft | | 24,753 | 0 | | $17.40 | 3/28/2016 | 3/28/2026 | | | | | | | | | 20,205 | 0 | | $25.68 | 2/22/2017 | 2/22/2027 | | | | | | | | | 17,760 | 0 | | $32.98 | 2/20/2018 | 2/20/2028 | | | | | | | | | 14,829 | 7,418 | | $18.40 | 2/27/2019 | 2/27/2029 | | | | | | | | | 13,019 | 26,044 | | $12.37 | 2/26/2020 | 2/26/2030 | | | | | | | | | | | | | | | 103,007 | | $1,914,900 | 115,513 | | $2,147,387 | David J. Antoniuk | | 21,851 | 0 | | $22.80 | 5/31/2016 | 5/31/2026 | | | | | | | | | 35,516 | 0 | | $25.68 | 2/22/2017 | 2/22/2027 | | | | | | | | | 21,612 | 0 | | $32.98 | 2/20/2018 | 2/20/2028 | | | | | | | | | 14,663 | 7,334 | | $18.40 | 2/27/2019 | 2/27/2029 | | | | | | | | | 12,043 | 24,090 | | $12.37 | 2/26/2020 | 2/26/2030 | | | | | | | | | | | | | | | 63,350 | | $1,177,677 | 78,090 | | $1,451,693 | Thomas L. Doerr, Jr. | | 10,929 | 0 | | $32.98 | 2/20/2018 | 2/20/2028 | | | | | | | | | 8,341 | 4,173 | | $18.40 | 2/27/2019 | 2/27/2029 | | | | | | | | | 7,811 | 15,627 | | $12.37 | 2/26/2020 | 2/26/2030 | | | | | | | | | | | | | | | 40,064 | | $744,790 | 49,943 | | $928,440 | Leslie L. Middleton | | 10,025 | 0 | (9) | $17.40 | 3/28/2016 | 3/28/2026 | | | | | | | | | 4,490 | 0 | | $25.68 | 2/22/2017 | 2/22/2027 | | | | | | | | | 4,809 | 0 | | $32.98 | 2/20/2018 | 2/20/2028 | | | | | | | | | 4,635 | 2,318 | | $18.40 | 2/27/2019 | 2/27/2029 | | | | | | | | | | | | | | | 32,953 | | $612,596 | 32,747 | | $608,767 | Terrance L. Collins | | 13,279 | 0 | | $28.24 | 4/10/2018 | 4/10/2028 | | | | | | | | | 9,009 | 4,507 | | $18.40 | 2/27/2019 | 2/27/2029 | | | | | | | | | 6,327 | 12,658 | | $12.37 | 2/26/2020 | 2/26/2030 | | | | | | | | | | | | | | | 34,434 | | $640,128 | 41,824 | | $777,508 |
Grants of Plan-Based Awards in 2018(1)
| The following table sets forth the 2018 STIPnumber of shares of common stock underlying option awards and equitystock awards has been adjusted, with respect to awards granted prior to November 17, 2017, to account for the 1-for-4 reverse stock split that was effected on November 17, 2017. |
(2) | Consists of options to purchase common stock of the Company under the Company’s 2013 Omnibus Incentive Plan. Any STIP awards earned |
(3) | Consists of restricted stock units and performance shares granted under the 2013 Omnibus Incentive Plan. |
(4) | Unless otherwise noted in 2018 were paidthese footnotes, all unvested stock options referenced in this table vest 33% per year beginning on the first quarteranniversary of 2019. Other than the equity awards disclosed below, there were no other equity-based incentive awards granted togrant date and continuing on each subsequent anniversary until the third anniversary of the grant date. |
(5) | The exercise price equals the closing market price of our common stock on the date of grant. |
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Outstanding Equity Awards at 2021 Fiscal Year-End (6) | The grant dates and vesting dates for all restricted stock units that our named executive officers in 2018.held at December 31, 2021 are as follows: |
| | | | | | | | | | | | | Name | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Share Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh)(4) | Grant Date Fair Value of Stock and Option Awards(5) | Threshold ($)(1) | Target ($)(1) | Maximum ($)(1) | Threshold (#)(2) | Target (#)(2) | Maximum (#)(2) | Barry L. Pennypacker | STIP | | $500,000 | $1,000,000 | $2,000,000 | | | | | | | | Stock Options | 2/20/2018 | | | | | | | | 68,306 | $32.98 | $1,069,672 | Performance Shares | 2/20/2018 | | | | 8,145 | 32,578 | 65,156 | | | | $1,115,797 | David J. Antoniuk | STIP | | $189,375 | $378,750 | $757,500 | | | | | | | | Stock Options | 2/20/2018 | | | | | | | | 21,612 | $32.98 | $338,444 | Performance Shares | 2/20/2018 | | | | 2,577 | 10,308 | 20,616 | | | | $353,049 | Aaron H. Ravenscroft | STIP | | $152,950 | $305,900 | $611,800 | | | | | | | | Stock Options | 2/20/2018 | | | | | | | | 17,760 | $32.98 | $278,122 | Performance Shares | 2/20/2018 | | | | 2,118 | 8,470 | 16,940 | | | | $290,098 | Thomas L. Doerr, Jr. | STIP | | $112,500 | $225,000 | $450,000 | | | | | | | | Stock Options | 2/20/2018 | | | | | | | | 10,929 | $32.98 | $171,148 | Performance Shares | 2/20/2018 | | | | 1,303 | 5,212 | 10,424 | | | | $178,511 | Peter A. Ruck | STIP | | $93,500 | $187,000 | $374,000 | | | | | | | | Stock Options | 4/10/2018 | | | | | | | | 10,929 | $28.24 | $171,148 | Performance Shares | 4/10/2018 | | | | 1,741 | 6,964 | 13,928 | | | | $222,012 | Restricted Stock Units | 4/10/2018 | | | | | | | 26,710 | | | $754,290 |
NAME | GRANT DATE | VESTING DATE | NUMBER OF UNITS/AWARDS | Aaron H. Ravenscroft | 2/27/2019 | 2/27/2022 | 4,023 RSUs | | (1)
| These amounts represent potential payments under the 2018 STIP; the actual amounts received (if any) are shown in the Summary Compensation Table above. The threshold amount reflects the total of the threshold payment levels that represent 50% of the target amount. The maximum amount reflects the total amount of maximum payment levels that represent 200% of the target amount.
| 2/26/2020 | 2/26/2022 | 8,084 RSUs |
| (2)
| These amounts represent potential payouts under the 2018 LTIP. The threshold amount reflects the total of the threshold payout levels that represent 25% of the target amount. The maximum amount reflects the total amount of maximum payout levels that represent 200% of the target amount.
| | | 2/26/2023 | 8,086 RSUs |
| (3)
| The stock options vest over a three-year period, commencing on the first anniversary of the grant date.
| | 2/24/2021 | 2/24/2022 | 24,594 RSUs |
| (4)
| The exercise price equals the closing market price of our common stock on the date of grant.
| | | 2/24/2023 | 24,595 RSUs |
| (5)
| Reflects the grant date fair value of the awards granted in 2018 as computed under ASC Topic 718.
| | | 2/24/2024 | 24,601 RSUs |
|
David J. Antoniuk
| 2/27/2019 | 2/27/2022 | 3,978 RSUs | | 2/26/2020 | 2/26/2022 | 7,477 RSUs | | | 2/26/2023 | 7,480 RSUs | | 2/24/2021 | 2/24/2022 | 11,829 RSUs | | | 2/24/2023 | 11,829 RSUs | | | 2/24/2024 | 11,835 RSUs | Thomas L. Doerr, Jr. | 2/27/2019 | 2/27/2022 | 2,263 RSUs | | 2/26/2020 | 2/26/2022 | 4,850 RSUs | | | 2/26/2023 | 4,852 RSUs | | 2/24/2021 | 2/24/2022 | 7,673 RSUs | | | 2/24/2023 | 7,673 RSUs | | | 2/24/2024 | 7,677 RSUs | Leslie L. Middleton | 2/27/2019 | 2/27/2022 | 1,258 RSUs | | 2/26/2020 | 2/26/2022 | 3,368 RSUs | | | 2/26/2023 | 3,370 RSUs | | 2/24/2021 | 2/24/2022 | 7,378 RSUs | | | 2/24/2023 | 7,379 RSUs | | | 2/24/2024 | 7,380 RSUs | Terrance L. Collins | 2/27/2019 | 2/27/2022 | 2,444 RSUs | | 2/26/2020 | 2/26/2022 | 3,929 RSUs | | | 2/26/2023 | 3,930 RSUs | | 2/24/2021 | 2/24/2022 | 6,215 RSUs | | | 2/24/2023 | 6,216 RSUs | | | 2/24/2024 | 6,218 RSUs |
Outstanding Equity Awards at 2018 Fiscal Year-End(7)
| The following table sets forthdates of expiration of the performance period and the vesting dates for all performance shares that our named executive officers held at December 31, 2021 are as follows: |
NAME | INCENTIVE PLAN UNDER WHICH PERFORMANCE SHARES WERE GRANTED | DATE OF EXPIRATION OF PERFORMANCE PERIOD | VESTING DATE | NUMBER OF SHARES | | Aaron H. Ravenscroft | 2019 LTIP | 12/31/2021 | 2/27/2022 | | 9,024 | | | 2020 LTIP | 12/31/2022 | 2/26/2023 | | 40,421 | | | 2021 LTIP | 12/31/2023 | 2/24/2024 | | 66,068 | | David J. Antoniuk | 2019 LTIP | 12/31/2021 | 2/27/2022 | | 8,922 | | | 2020 LTIP | 12/31/2022 | 2/26/2023 | | 37,389 | | | 2021 LTIP | 12/31/2023 | 2/24/2024 | | 31,779 | | Thomas L. Doerr, Jr. | 2019 LTIP | 12/31/2021 | 2/27/2022 | | 5,076 | | | 2020 LTIP | 12/31/2022 | 2/26/2023 | | 24,253 | | | 2021 LTIP | 12/31/2023 | 2/24/2024 | | 20,614 | | Leslie L. Middleton | 2019 LTIP | 12/31/2021 | 2/27/2022 | | 2,820 | | | 2020 LTIP | 12/31/2022 | 2/26/2023 | | 10,106 | | | 2021 LTIP | 12/31/2023 | 2/24/2024 | | 19,821 | | Terrance L. Collins | 2019 LTIP | 12/31/2021 | 2/27/2022 | | 5,482 | | | 2020 LTIP | 12/31/2022 | 2/26/2023 | | 19,645 | | | 2021 LTIP | 12/31/2023 | 2/24/2024 | | 16,697 | |
(8) | The market value is calculated by multiplying the closing price of our common stock options, restricted stock units, restricted stock awards, andon December 31, 2021 ($18.59) by the number of unvested shares. |
(9) | Includes performance share awards previously granted toin 2019 under the named executive officers relating to our common stock that were outstanding2013 Omnibus Incentive Plan. The performance period expired at the end of 2018. | | | | | | | | | | | | Option Awards(1)(2) | Stock Awards(1)(3) | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(4) | Option Exercise Price ($)(5) | Option Grant Date | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#)(6) (7) | Market Value of Shares of Stock that Have Not Vested($)(8) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(7) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(8) | | Barry L. Pennypacker | 77,351 37,412 0 | 77,352(9) 74,837 68,306 | $17.40 $25.68 $32.98 | 3/28/2016 2/22/2017 2/20/2018 | 3/28/2026 2/22/2027 2/20/2028 | 29,433(10) | $434,731 | 79,741(11)(12) | $1,177,775 | | David J. Antoniuk | 10,925 11,837 0 | 10,926(9) 23,679 21,612 | $22.80 $25.68 $32.98 | 5/31/2016 2/22/2017 2/20/2018 | 5/31/2026 2/22/2027 2/20/2028 | 25,615(10)(13) | $378,334 | 25,231(11)(12) | $372,662 | | Aaron H. Ravenscroft | 12,376 6,734 0 | 12,377(9) 13,471 17,760 | $17.40 $25.68 $32.98 | 3/28/2016 2/22/2017 2/20/2018 | 3/28/2026 2/22/2027 2/20/2028 | 10,523(10)(13) | $155,425 | 16,960(11)(12) | $250,499 | | Thomas L. Doerr, Jr. | 0 | 10,929 | $32.98 | 2/20/2018 | 2/20/2028 | 11,000(14) | $162,470 | 5,212(12) | $76,981 | | Peter A. Ruck | 0 | 10,929 | $28.24 | 4/10/2018 | 4/10/2028 | 26,710(15) | $394,507 | 6,964(12) | $102,858 | |
| (1)
| The number of shares of common stock underlying option awards and stock awards has been adjusted, with respect to awards granted prior to November 17, 2017, to account for the 1-for-4 reverse stock split that was effected on November 17, 2017.
|
| (2)
| Consists of options to purchase common stock of the Company under the Company’s 2013 Omnibus Incentive Plan and 2003 Incentive Stock and Awards Plan.
|
| (3)
| Consists of restricted stock awards, restricted stock units and performance shares granted under the 2013 Omnibus Incentive Plan.
|
| (4)
| Unless otherwise noted in these footnotes, all unvested stock options referenced in this table vest 33% per year beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the third anniversary of the grant date.
|
| (5)
| The exercise price equals the closing market price of our common stock on the date of grant, as adjusted, for awards granted prior to November 17, 2017, to account for the 1-for-4 reverse stock split.
|
| (6)
| The grant dates and vesting dates for all restricted stock awards and restricted stock units that our named executive officers held at December 31, 2018 are as follows:
|
| | | | Name
| Grant Date
| Vesting Date
| Number of Units/Awards
| David J. Antoniuk
| 5/31/2016
| 5/31/2019
| 21,578 Restricted Stock Units
| Aaron H. Ravenscroft
| 3/28/2016
| 3/28/2019
| 5,814 Restricted Stock Units
| Thomas L. Doerr, Jr.
| 11/20/2017
| 11/20/2020
| 11,000 Restricted Stock Units
| Peter A. Ruck
| 4/10/2018
| 4/10/2020
| 13,355 Restricted Stock Units
| 4/10/2018
| 4/10/2021
| 13,355 Restricted Stock Units2021 at 37.4% of target.
|
| (7)
| The dates of expiration of the performance period and the vesting dates for all performance shares that our named executive officers held(10) | Includes performance share awards granted in 2020 and 2021 under the 2013 Omnibus Incentive Plan. The performance periods expire at the end of 2022 and 2023 respectively. As of December 31, 2021, the performance trends for both grants are at December 31, 2018 are as follows: |
| | | | | Name
| Incentive Plan Under
Which Performance
Shares Were Granted
| Date of Expiration of
Performance Period
| Vesting Date
| Number of
Shares
| Barry L. Pennypacker
| 2016 LTIP
| 12/31/2018
| 3/28/2019
| 29,433
| 2017 LTIP
| 12/31/2019
| 2/22/2020
| 47,163
| 2018 LTIP
| 12/31/2020
| 2/20/2021
| 32,578
| David J. Antoniuk
| 2016 LTIP
| 12/31/2018
| 5/31/2019
| 4,037
| 2017 LTIP
| 12/31/2019
| 2/22/2020
| 14,923
| 2018 LTIP
| 12/31/2020
| 2/20/2021
| 10,308
| Aaron H. Ravenscroft
| 2016 LTIP
| 12/31/2018
| 3/28/2019
| 4,709
| 2017 LTIP
| 12/31/2019
| 2/22/2020
| 8,490
| 2018 LTIP
| 12/31/2020
| 2/20/2021
| 8,470
| Thomas L. Doerr, Jr.
| 2018 LTIP
| 12/31/2020
| 2/20/2021
| 5,212
| Peter A. Ruck
| 2018 LTIP
| 12/31/2020
| 2/20/2021
| 6,964
|
| (8)
| The market value is calculated by multiplying the closing price of our common stock on December 31, 2018 ($14.77) by the number of unvested shares.
|
| (9)
| Vests 25% per year beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the fourth anniversary of the grant date.
|
| (10)
| Includes performance share awards granted in 2016 under the 2013 Omnibus Incentive Plan. The performance period expired at the end of 2018. Actual performance for the 2016 grant was at 40.5% of target and will be paid in 2019 after certification by the Compensation Committee.
|
| (11)
| Includes performance share awards granted in 2017 under the 2013 Omnibus Incentive Plan. The performance period expires at the end of 2019. As of December 31, 2018, the performance trend was above threshold level, so the number of shares appearing here is the number of shares that would be awarded assuming target performance is achieved, pursuant to SEC requirements.
|
IX. OPTION EXERCISES AND STOCK VESTED IN FISCAL 2021 The following table presents, for each named executive officer, the stock awards vested during 2021. | | OPTION AWARDS(1) | STOCK AWARDS | NAME | | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | VALUE REALIZED ON EXERCISE ($) | NUMBER OF SHARES ACQUIRED ON VESTING (#)(2) | VALUE REALIZED ON VESTING ($)(3) | Aaron H. Ravenscroft | | 0 | $0 | 12,104 | $199,547 | David J. Antoniuk | | 0 | $0 | 11,453 | $188,915 | Thomas L. Doerr, Jr. | | 0 | $0 | 7,112 | $117,189 | Leslie L. Middleton | | 0 | $0 | 4,625 | $76,083 | Terrance L. Collins | | 0 | $0 | 6,371 | $105,225 |
(1) | (12)
| Includes performance share awards granted in 2018 under the 2013 Omnibus Incentive Plan. The performance period expires at the end of 2020. As of December 31, 2018, the performance trend was above threshold level, so the number of shares appearing here is the number of shares that would be awarded assuming target performance is achieved, pursuant to SEC requirements.
|
| (13)
| Includes restricted stock units granted in 2016 under the 2013 Omnibus Incentive Plan. These restricted stock units vest on the third anniversary of the grant date.
|
| (14)
| Includes restricted stock units granted in 2017 under the 2013 Omnibus Incentive Plan. These restricted stock units vest on the third anniversary of the grant date.
|
| (15)
| Includes restricted stock units granted in 2018 under the 2013 Omnibus Incentive Plan. These restricted stock units vest 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date.
|
Option Exercises and Stock Vested in Fiscal 2018
During 2018,2021, no named executive officer exercised any stock options or had anyoptions. |
(2) | Represents one third of the 2019 and 2020 restricted stock awards that vested.unit awards. |
(3) |
Non-Qualified Deferred Compensation
The following table sets forth information with respect toRepresents the fair market value of the restricted stock units on their respective vesting dates. Fair market value is determined based on the closing price of the Company’s common stock on the applicable vesting date.
|
45
Potential Payments Upon Termination or Change in Control X. NON-QUALIFIED DEFERRED COMPENSATION The following table sets forth information with respect to the Company’s Deferred Compensation Plan, a non-qualified plan, as of December 31, 2021. NAME | | EXECUTIVE CONTRIBUTIONS IN LAST FY(1) | REGISTRANT CONTRIBUTIONS IN LAST FY(2) | AGGREGATE EARNINGS (LOSS) IN LAST FY | AGGREGATE WITHDRAWALS / DISTRIBUTIONS | AGGREGATE BALANCE AT LAST FYE(3) | Aaron H. Ravenscroft | | $92,199 | $48,928 | $146,087 | $0 | $922,411 | David J. Antoniuk | | $89,611 | $28,724 | $94,793 | $0 | $1,045,379 | Thomas L. Doerr, Jr. | | $0 | $0 | $0 | $0 | $0 | Leslie L. Middleton | | $11,641 | $11,505 | $1,194 | $0 | $12,835 | Terrance L. Collins | | $0 | $0 | $0 | $0 | $0 |
(1) | Reflects elective deferrals of compensation earned or payable in 2021. These amounts are also included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the Summary Compensation Table (as applicable). |
(2) | The Company’s contributions for 2021 will be contributed to individual accounts in 2022. These amounts are also included in the “All Other Compensation” column of the Summary Compensation Table and the “Company Contributions Under Deferred Compensation Plan, a non-qualified plan, asPlan” column of December 31, 2018.the All Other Compensation Table. |
(3) | | | | | | Name | Executive Contributions in Last FY(1) | Registrant Contributions in Last FY(2)(3) | Aggregate Earnings (Loss) in Last FY | Aggregate Withdrawals / Distributions | Aggregate Balance at Last FYE(3)(4) | Barry L. Pennypacker | $145,148 | $145,148 | $(160,124) | $0 | $144,373 | David J. Antoniuk | $121,837 | $60,919 | $(12,682) | $0 | $161,155 | Aaron H. Ravenscroft | $58,445 | $44,201 | $(4,117) | $0 | $93,061 | Thomas L. Doerr, Jr. | $0 | $0 | $0 | $0 | $0 | Peter A. Ruck | $0 | $0 | $0 | $0 | $0 |
| (1)
| Reflects elective deferrals of compensation earned or payable in 2018. These amounts are also included in
| Of the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the Summary Compensation Table (as applicable). |
| (2)
| The Company’s contributions for 2018 will be contributed to individual accounts in 2019. These amounts are also included in the “All Other Compensation” column of the Summary Compensation Table and the “Company Contributions Under Deferred Compensation Plan” column of the All Other Compensation Table.
|
| (3)
| Does not include the following amounts, which represent the Company’s contributions for 2017 and were contributed or will be contributed to individual accounts in 2018 and 2019: Mr. Pennypacker – $48,651 ($8,100 contributed in 2018 and $40,551 to be contributed in 2019); Mr. Antoniuk – $24,500 ($8,100 contributed in 2018 and $16,400 to be contributed in 2019); and Mr. Ravenscroft – $15,485 ($8,100 contributed in 2018 and $7,385 to be contributed in 2019). These amounts are also included, with respect to 2017, in the “All Other Compensation” column of the Summary Compensation Table and the “Company Contributions Under Deferred Compensation Plan” column of the All Other Compensation Table.
|
If these amounts were includedreported in the “Aggregate Balance at Last FYE” column, the aggregate balances would befollowing amounts were previously reported in “the Summary Compensation Table” for the years 2019-2021 as follows: Mr. Pennypacker – $193,024;Ravenscroft - $243,247; Mr. Antoniuk – $185,655; Mr. Ravenscroft – $108,546;- $234,821; Mr. Doerr –- $0; and Mr. Ruck –Middleton - $11,505; Mr. Collins - $0.
| (4)
| Of the amounts reported in the “Aggregate Balance at Last FYE” column, the following amounts were previously reported in the Non-Qualified Deferred Compensation table in the Company’s proxy statement for its 2018 annual meeting of shareholders: Mr. Pennypacker - $151,249; Mr. Antoniuk - $43,890; and Mr. Ravenscroft - $30,632. Messrs. Doerr and Ruck were not named executive officers in 2017 and therefore were not included in the Non-Qualified Deferred Compensation table in the Company’s proxy statement for its 2018 annual meeting of shareholders.
|
Eligible participants in the Deferred Compensation Plan may elect to defer up to 40% of base salary and up to 100% of awards to be paid under the STIP. Credits to deferred compensation accounts may also include a Company contribution. This contribution equals the amount of compensation deferred by the participant for the plan year (subject to a maximum of 25% of eligible compensation) multiplied by a rate equal to the rate of variable retirement plan contributions that the participant received from the Company during the year under the 401(k) Retirement Plan, plus 1%. If the Company does not make a contribution to the 401(k) Retirement Plan during the year, there will not be any Company contribution under the Deferred Compensation Plan for that year.
Deferred amounts can be invested into a variety of accounts, which mirror the performance of several different mutual funds offered in the 401(k) Retirement Plan, as well as the Company Stock Fund (which includes only the Company’s common stock). Transfers between the Company Stock Fund and the other funds are not permitted. Participants are not required to direct any minimum amount of deferred compensation into the Company Stock Fund.
Post-Employment Compensation
In 2015, the Company adopted a new form of Contingent Employment Agreement (the “Contingent Employment Agreement”) for its executive officers (and certain other key executives and employees of the Company and certain subsidiaries) to replace the previous similar agreement with such individuals. All of the Company’s executive officers have executed the new Contingent Employment Agreement.
The Contingent Employment Agreements provide generally that in the event of a “change in control” (as defined in the Agreements) of the Company, each executive officer will continue to be employed by the Company for a period of time (three years
|
Eligible participants in the Deferred Compensation Plan may elect to defer up to 40% of base salary and up to 100% of awards to be paid under the STIP. Credits to deferred compensation accounts may also include a Company contribution. For 2021, the Company contribution to the Deferred Compensation Plan consisted of a matching contribution on compensation above certain IRS limits under the 401(k) Retirement Plan. The matching contribution was calculated at the same rate as under the 401(k) Retirement Plan, at 100% on the first 3% of compensation deferred and 50% on the next 2% of compensation deferred. The Company also may make additional contributions at its discretion on an annual basis. Deferred amounts can be invested into a variety of accounts, which mirror the performance of several different mutual funds offered in the 401(k) Retirement Plan, as well as the Company Stock Fund (which includes only the Company’s common stock). Transfers between the Company Stock Fund and the other funds are not permitted. Participants are not required to direct any minimum amount of deferred compensation into the Company Stock Fund. 46
Potential Payments Upon Termination or Change in Control XI. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Post-Employment Compensation As discussed above, in February 2021, the Company entered into individual Employment Agreements with Messrs. Ravenscroft, Antoniuk, Middleton, Doerr, and Collins that, among other things, provide for severance payments following certain terminations of employment, both before and after a change of control. Before the Company entered into the Employment Agreements, each of the named executive officers were party to a Contingent Employment Agreement that provided them with certain rights, including severance payments, following a change of control. This section describes the terms of the Employment Agreements, which superseded the Contingent Employment Agreements effective February 11, 2021, and summarizes the provisions of the Contingent Employment Agreements that were in effect until February 11, 2021. Employment Agreements.The Employment Agreements, which replaced the Contingent Employment Agreements, provide employment terms and severance benefits before and after a change of control. Specifically, the Employment Agreements provide titles for each executive officer and provides that the executive officers will have the normal duties, responsibilities and authority of such positions, subject to expansion or limitation by the Board of Directors’ (or, in the case of executive officers other than the Chief Executive Officer, by the Chief Executive Officer). The Employment Agreements specify the base salaries and benefits that will be provided to each named executive officer during the term of the Employment Agreements, including eligibility for short- and long-term incentive compensation programs, the same other benefits that are made available to other employees in similar positions and reimbursement of reasonable business expenses. The titles and initial base salaries of the named executive officers as specified in the Employment Agreements are listed in the 2021 Executive Compensation section of this Proxy Statement. The base salaries subject to adjustment from time to time as provided in the Employment Agreements. The Employment Agreements do not have a fixed term, but will continue until terminated by the Company or the executive officer. If the executive officer’s employment is terminated by the Company without “cause” (as defined in the Employment Agreement”) or by the executive officer for “good reason” (as defined in the Employment Agreement) prior to a “change of control” (as defined in the Employment Agreement), then, if the executive officer executes a separation agreement, the executive officer will be entitled to (1) severance in the amount of one times (two times, in the case of the Chief Executive Officer) the total of the executive officer’s base salary plus target annual bonus, (2) a pro rata portion of the executive officer’s annual bonus for the year of the termination, based on the Company’s actual performance, (3) Company-paid COBRA coverage for 12 months (24 months in the case of the Chief Executive Officer) and (4) outplacement benefits and assistance for 12 months (24 months in the case of the Chief Executive Officer) up to a cost of $25,000 ($50,000 in the case of the Chief Executive Officer). In addition, unless a more favorable result is provided under the Company’s equity incentive plan or an award agreement, (a) unvested stock options or stock appreciation rights will vest on a pro rata basis and be exercisable for up to 12 months, (b) unvested restricted stock or restricted stock units will vest on a pro rata basis and (c) unearned performance shares or performance share units will be pro-rated and remain eligible to be earned based on actual performance through the end of the performance period. The Employment Agreements define “cause” to include (1) the executive officer’s conviction of, or plea of guilty or nolo contendere to, certain crimes, (2) certain acts of fraud or dishonesty by the executive officer with respect to the Company or its affiliates, (3) the executive officer’s willful misconduct that the Company reasonably believes could be detrimental to the Company in a non-immaterial manner or reflect poorly on the Company, (4) the executive officer’s willful breach of certain sections in the Employment Agreement, (5) the executive officer’s failure to comply with certain Company policies or (6) the executive officer’s material breach of the Employment Agreement. The Employment Agreements define “good reason” to include (1) the executive officer’s primary work location being moved by more than 50 miles, (2) a material reduction or diminution in the executive officer’s principal duties and responsibilities, (3) certain adverse changes in the executive officer’s total target compensation or (4) the Company’s material breach of the Employment Agreement. The Employment Agreements define a “change of control” as the first to occur of (1) any person (subject to specified exceptions) becoming the beneficial owner of 30% or more of the combined voting power of the Company’s then outstanding securities, (2) the Company merging or consolidating with any other entity, subject to exceptions for mergers or consolidations that would not result in a change or more than 60% ownership or in any person acquiring more than 30% of the combined voting power of the Company’s then outstanding securities, (3) the Company or any subsidiary selling, assigning or otherwise transferring more than 50% of the Company’s assets, (4) the Company dissolving and liquidating substantially all of its assets or (5) a change in the majority of the Company’s Board of Directors (excluding changes resulting from new directors whose appointment or nomination was approved by a vote of at least two-thirds of the then-serving continuing directors). 47
Potential Payments Upon Termination or Change in Control If the executive officer’s employment is terminated by the Company without cause or by the executive officer for good reason within the two-year period following a change of control, then, if the executive officer provides a separation agreement, the executive officer will be entitled to (1) severance in the amount of two times (three times, in the case of the Chief Executive Officer) the total of the executive officer’s base salary plus target annual bonus, (2) a pro rata portion of the executive officer’s annual bonus for the year of the termination, based on the Company’s actual performance, (3) health and medical insurance benefits for 24 months (36 months in the case of the Chief Executive Officer) and (4) outplacement benefits and assistance for 24 months (36 months, or such shorter period as may be required to comply with or be exempt from applicable tax regulations, in the case of the Chief Executive Officer), up to a cost of $25,000 ($50,000 in the case of the Chief Executive Officer). In addition, unless a more favorable result is provided under the Company’s equity incentive plan or an award agreement, (a) unvested stock options or stock appreciation rights will vest in full and be exercisable for up to 12 months, (b) unvested restricted stock or restricted stock units will vest in full and (c) unearned performance shares or performance share units will be deemed earned at the target level and fully vested. These change of control termination benefits would also apply if the executive officer’s employment were terminated by the Company without cause within the six months prior to a change of control and the executive officer can reasonably demonstrate that the termination was in connection with or in anticipation of the change of control. The Employment Agreements include customary confidentiality and restrictive covenant provisions, including non-solicitation, non-competition, non-interference and non-disparagement provisions. Severance Arrangements Before Implementation of Employment Agreements. Prior to the implementation of the Employment Agreements, the Company had entered into Contingent Employment Agreements with the named executive officers and certain other key executives, which provided for the executives’ continued employment for a specified “employment period” following a change in control (a three-year period for Mr. Ravenscroft and for a two-year period for the other executives). In addition, the arrangements provided for certain severance benefits in the event the executive was terminated without “cause” (as defined in the Contingent Employment Agreements) prior to the end of the employment period (as such, the Contingent Employment Agreements had a “double trigger”). The severance benefits under the Contingent Employment Agreements would have consisted of continuation of base salary for the remainder of the employment period, annual incentive bonus compensation (calculated at the target level) for the remainder of the employment period, full vesting of outstanding equity awards (assuming maximum performance goals were achieved, if applicable). In addition, before the implementation of the Employment Agreements, the named executive officers were eligible for benefits under the Company’s severance pay plan that established a discretionary severance program across the Company whereby all severance benefits were provided at the Company’s sole discretion. Under the severance pay plan, the Board of Directors and the Compensation Committee had the sole authority to authorize any benefits under the plan to any officer of the Company. As noted above, upon the effective date of the Employment Agreements in February 2021, the Contingent Employment Agreements were terminated and thereafter the only severance benefits that the named executive officers are eligible for are those set forth in the Employment Agreements. Estimated Payments upon a Change of Control The following table presents the estimated payouts that would be made upon a change of control coupled with a termination of employment (other than for cause or retirement), assuming the change of control occurred as of December 31, 2021 based on the terms of the executive officers’ Employment Agreements, which were the agreements in effect as of such date. NAME | | BASE SALARY(1) | ANNUAL INCENTIVE-BASED COMPENSATION(2) | STOCK OPTIONS(3) | RESTRICTED SHARES(4) | PERFORMANCE SHARES(5) | BENEFITS(6) | EXCISE TAX GROSS UP(7) | TOTAL | Aaron H. Ravenscroft | | $2,400,000 | $2,400,000 | $163,403 | $1,747,144 | $1,358,929 | $108,134 | $0 | $8,177,610 | David J. Antoniuk | | $1,045,400 | $784,050 | $151,233 | $1,011,817 | $1,103,818 | $65,452 | $0 | $4,161,771 | Thomas L. Doerr, Jr. | | $800,000 | $480,000 | $97,993 | $650,427 | $680,636 | $64,828 | $0 | $2,773,884 | Leslie L. Middleton | | $776,000 | $465,600 | $440 | $560,172 | $388,258 | $61,580 | $0 | $2,252,051 | Terrance L. Collins | | $745,200 | $447,120 | $79,589 | $538,218 | $619,444 | $64,800 | $0 | $2,494,370 |
(1) | Represents three times Mr. Ravenscroft’s and two years in the casetimes each of the other named executive officers). Under the Contingent Employment Agreements,officer’s base salary on December 31, 2021. |
(2) | Represents three times Mr. Ravenscroft’s and two times each executive will remain employed at the same position held as of the change in control date, and will receive a salary at least equal to the salary in effect as of such date, plus all bonuses,other named executive officer’s target cash incentive compensation under the 2021 STIP. |
48
Potential Payments Upon Termination or Change in Control (3) | Represents the value of unvested stock options based on the closing price ($18.59) of the Company's common stock on December 31, 2021. |
(4) | Represents the value of unvested restricted stock units and other benefits extended byrestricted shares based on the Company to its executive officers and key employees, providedclosing price ($18.59) of the Company’s common stock on December 31, 2021. |
(5) | Amounts shown assume that the plans and bonus opportunity are no less favorable than those that were available prior to a change in control. After a change in control, the executive officer’s compensation would be subject to potential upward adjustment at least annually based upon the executive officer’s contributions and the level of increases provided to other executive officers and employees. Each Contingent Employment Agreement terminates prior to the end of the applicable employment period if the executive officer voluntarily retires from the Company or is terminated by the Company “for cause,” as definedsurviving entity in the Contingent Employment Agreement. Inchange of control did not assume the eventequity-based awards and represent the executive officer is terminated by the Company without cause following a change in control, the executive officer is entitled to participate in certain benefit plans provided by the Companyvalue of (a) performance shares for the remainder2019-2021 performance cycle, which were earned at 37.4%, and (b) other unvested performance shares, prorated and based on performance at year-end, which for the 2020-2022 performance cycle is projected below threshold and is shown at 100% of the applicable employment period and receive an amount equal to the base salary through the date of terminationtarget and for the remaining portion2021-2023 performance cycle is projected at target and is shown at 100% of target. These values are based on the closing price ($18.59) of the applicable employment period, all deferred salary and other compensation earned by the executive officer during the course of employment with the Company and the amount of the target cash incentive bonus under all short-term and long-term cash bonus plans maintained by the Company in which the executive officer participates for the fiscal year of termination and for all subsequent fiscal years through the applicable employment period. Upon the executive officer’s termination of employment byCompany’s common stock on December 31, 2021.
|
If the surviving entity in a change of control assumes the equity-based awards, but employment is terminated without cause or by the officer for good reason in either case within 24 months (36 months in the case of Mr. Ravenscroft) following the change of control, awards will be deemed earned in full and as if the performance goals provided under such awards were met at 100% of their target. (6) | Represents three times in the case of Mr. Ravenscroft and two times in the case of each of the other named executive officers, the value of annual benefits (including group life insurance, hospitalization and medical insurance) provided to such named executive officer. Also representing outplacement benefits and assistance for 12 months (24 months in the case of the Chief Executive Officer) followingup to a changecost of $25,000 ($50,000 in control, allthe case of the executive officer’s equity-based awards that are in effectChief Executive Officer). |
(7) | The Company does not provide excise tax gross-ups under the Contingent Employment Agreements. |
Estimated Severance Payments The following table presents the estimated payouts that would be made if upon a termination of employment before a change of control by the Company without “cause” or by the executive for “good reason,” assuming such termination occurred as of December 31, 2021, based on the terms of the Employment Agreements. NAME | | BASE SALARY(1) | | ANNUAL INCENTIVE-BASED COMPENSATION (2) | | STOCK OPTIONS(3) | | RESTRICTED SHARES(4) | | PERFORMANCE SHARES(5) | | BENEFITS(6) | | TOTAL | | Aaron H. Ravenscroft | | $ | 1,600,000 | | $ | 1,600,000 | | $ | 104,866 | | $ | 1,081,169 | | $ | 910,352 | | $ | 88,756 | | $ | 5,385,144 | | David J. Antoniuk | | $ | 522,700 | | $ | 392,025 | | $ | 97,086 | | $ | 663,532 | | $ | 660,298 | | $ | 45,226 | | $ | 2,380,868 | | Thomas L. Doerr, Jr. | | $ | 400,000 | | $ | 240,000 | | $ | 62,871 | | $ | 424,671 | | $ | 428,314 | | $ | 44,914 | | $ | 1,600,770 | | Leslie L. Middleton | | $ | 372,600 | | $ | 232,800 | | $ | 428 | | $ | 353,284 | | $ | 248,071 | | $ | 43,290 | | $ | 1,250,473 | | Terrance L. Collins | | $ | 388,000 | | $ | 223,560 | | $ | 51,134 | | $ | 355,037 | | $ | 346,933 | | $ | 44,900 | | $ | 1,409,563 | |
(1) | Represents two times Mr. Ravenscroft's and one times each of the dateother named executive officer's base salary on December 31, 2021. |
(2) | Represents two times Mr. Ravenscroft's and one times each of suchthe other named executive officer's target cash incentive compensation under 2021 STIP. Under the terms of the Employment Agreements, each executive would also be entitled to a pro-rata portion of the annual bonus earned for the year in which the termination will be vested in full or deemed earned in full (as if the maximum performance goals provided under such award were met, if applicable) effectiveoccurs, based on the date of such termination (i.e., a “double trigger”); if employment continues, the original vesting schedule will continue to apply. To the extent that equity-based awards are not assumed by the purchaser, successor or surviving entity, or a more favorable outcome is not provided in the applicable plan or award agreement, upon a change in control: (i) stock options, stock-appreciation rights and time-based restricted stock (including restricted stock units) will vest and may be paid out in cash; (ii) performance-based awards will be pro-rated and paid out in cash assuming the greater of target or projected actual performance, (based on the assumption that the applicable performance goals continue to be achievedpayable at the same rate through the end of the performance period as they have been at the time of the change in control); (iii) dividend equivalent units will be pro-rated to the extent, if at all, any related award is settledperiod. Assuming that terminations occurred on a pro rata basis and paid out in cash; and (iv)December 31, 2021, each other type of equity-based award not mentioned above will be paid out in cash based on the value of the award as of the date of the change in control. In the event the executive officer is terminated by the Company for cause, the executive officer is only entitled to the salary and benefits accrued and vested as of the effective date of the termination. Except as described below, each Contingent Employment Agreement is terminable by either party at any time prior to a change in control.
If a named executive officer is terminated by the Company without cause within six months prior to a change in control and it is reasonably demonstrated by the executive officer that the termination (i) was at the request of a third party who has taken steps reasonably calculated to effect a change in control; or (ii) otherwise arose in connection with or in anticipation of a change in control, the executive officer will be entitled to the severance payment and benefits that he would have otherwise have received if he were terminated by the Company without cause following a change in control.
If any of the payments to a named executive officer would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code and would result in the imposition on the executive officer of an excise tax under Section 4999 of the Internal Revenue Code (the “Excise Tax”), the executive officer is not entitled to any tax gross up amount; however, the executive officer would be entitled to receive the “best net” treatment. Underamount already shown in the “best net” treatment, if"Non-Equity Incentive Plan" column of the after-tax amount (taking into account all federal, stateSummary Compensation Table pursuant to such provision.
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(3) | Represents the value of the vesting of a pro-rata portion of unvested stock options based on the closing price ($18.59) of the Company's common stock on December 31, 2021. |
(4) | Represents the value of the vesting of a pro-rata portion of unvested restricted stock units based on the closing price ($18.59) of the Company's common stock on December 31, 2021. |
(5) | Represents the value of the vesting of a pro-rata portion of the unearned 2020 and local excise, income and other taxes) that would be retained by2021 performance share units based on the executive officer is less thanclosing price ($18.59) of the after-tax amount that would be retained byCompany's common stock on December 31, 2021 assuming target performance goals were achieved. |
(6) | Represents the executive officer if the executive officer were instead to be paid or provided (as the case may be) the maximum amount that the executive officer could receive without being subjectcost to the Excise Tax (the “Reduced Amount”), thenCompany of providing Company-paid COBRA continuation coverage for 24 months for Mr. Ravenscroft and 12 months for all the other named executive officer shall be entitled to receive the Reduced Amount instead of the full amount that would have been subject to the Excise Tax. The Contingent Employment Agreements also provide that if the executive officer is terminated (i) by the Company without cause prior to the end of the applicable employment period; or (ii) by the Company within sixofficers. Also representing outplacement benefits and assistance for 12 months prior to a change in control in anticipation of a change in control as explained above, the executive officer will be prohibited from rendering services to a competitor of the Company for (y) the lesser of two years (three years(24 months in the case of the Chief Executive Officer) or the unexpired termup to a cost of the applicable employment period or (z) two years (three years$25,000 ($50,000 in the case of the Chief Executive Officer) in the case of a termination by the Company within six months prior to a change in control in anticipation of a change in control as described above. The Contingent Employment Agreements define “competitor” as any corporation, person, firm or organization that engages in research and development work, produces and/or sells any product or service that is the same as, functionally equivalent to, or otherwise directly competitive with one made, offered, sold or provided by the Company.
The Contingent Employment Agreements define “cause” as a conviction based upon the commission of a felony or becoming the subject of a final nonappealable judgment of a court of competent jurisdiction holding that the executive officer is liable to the Company for damages for obtaining a personal benefit in a transaction adverse to the interests of the Company.
The Contingent Employment Agreements define “good reason” as a material diminution in position, authority or title, or the assignment of duties that are materially inconsistent with the executive officer’s position or title as described in the applicable Agreement; a material diminution in base salary or incentive/bonus opportunities; a change of fifty miles from the location of the executive officer’s principal place of employment on the date of the change in control; a material breach by the Company of any of its obligations under the applicable Agreement; and any successor to the principal business of the Company failing or refusing to assume the Company’s obligations under the applicable Agreement.
If the executive officer becomes disabled during the applicable employment period and is unable to perform the regular duties of employment on a full-time basis, the Company will pay the executive officer’s normal salary and benefits for the first six months. If the disability continues beyond six months, the executive officer’s normal salary will be suspended during the period of disability. The executive officer will continue to be eligible for customary benefits as provided by the Company during the term of the executive officer’s disability and until the expiration of the applicable employment period.
Estimated Payments upon a Change in Control
The following table presents the estimated payouts that would be made upon a change in control coupled with a termination of employment (other than for cause or retirement), assuming the change in control occurred as of December 31, 2018.
Name | Base Salary(1) | Annual Incentive-Based Compensation(2) | Stock Options(3) | Restricted Shares(4) | Performance Shares(5) | Benefits(6) | Excise Tax Gross Up(7) | Total | Barry L. Pennypacker | $3,000,000 | $3,000,000 | $0 | $0 | $1,059,522 | $45,786 | $0 | $7,105,308 | David J. Antoniuk | $1,010,000 | $757,500 | $0 | $318,707 | $257,325 | $37,795 | $0 | $2,381,327 | Aaron H. Ravenscroft | $874,000 | $611,800 | $0 | $85,873 | $194,856 | $46,518 | $0 | $1,813,047 | Thomas L. Doerr, Jr. | $750,000 | $450,000 | $0 | $162,470 | $25,660 | $24,471 | $0 | $1,412,601 | Peter A. Ruck | $680,000 | $374,000 | $0 | $394,507 | $34,286 | $20,308 | $0 | $1,503,101 |
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| Represents three times Mr. Pennypacker’s and two times each of the other named executive officer’s base salary on December 31, 2018.
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| (2)
| Represents three times Mr. Pennypacker’s and two times each of the other named executive officer’s target cash incentive compensation under the 2018 STIP..
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| As of December 31, 2018, all stock option exercise prices for the stock options held by the named executive officers were above the closing price ($14.77) of the Company’s common stock on December 31, 2018.
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| Represents the value of vested and unvested restricted stock units and restricted shares based on the closing price ($14.77) of the Company’s common stock on December 31, 2018.
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| Represents the value of (a) performance shares for the 2016-2018 performance cycle, which were earned at approximately 40.5% of target, and (b) other unvested performance shares, prorated and based on performance at year-end, which for the 2017-2019 performance cycle is projected above threshold and is shown at 100% of target and for the 2018-2020 performance cycle is projected above threshold and is shown at 100% of target. These values are based on the closing price ($14.77) of the Company’s common stock on December 31, 2018.
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| Represents three times in the case of Mr. Pennypacker and two times in the case of each of the other named executive officers, the value of annual benefits (including group life insurance, hospitalization and medical insurance) provided to such named executive officer.
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| The Company does not provide excise tax gross-ups under the Contingent Employment Agreements.
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As stated in the Compensation Discussion and Analysis, the Company also has a severance pay plan that establishes a discretionary severance program across the Company whereby all severance benefits are provided at the Company’s sole discretion and will be designed to meet the specific facts and circumstances of each termination. The Board of Directors and the Compensation Committee have the sole authority to authorize any benefits under the plan to any officer of the Company. Other than this discretionary severance pay plan, the Company does not generally have a formal severance plan for other forms of employment termination, except for the Contingent Employment Agreements described under Post-Employment Compensation.
CEO PAY RATIO
As required by Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the median annual total compensation of our employees and the annual total compensation of Mr. Pennypacker, our Chief Executive Officer. For the year ended December 31, 2018:
the annual total compensation of our median employee was reasonably estimated to be $56,044; and
the annual total compensation of Mr. Pennypacker was $5,086,182.
Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee is estimated to be 91 to 1.
We identified our median employee using a multi-step process. First, we examined the base salaries and wages of all individuals employed by us on December 31, 2018 (other than Mr. Pennypacker), whether full-time, part-time, or on a seasonal basis to identify the median base salary of all our employees. We annualized wages and salaries for all permanent employees who were hired after January 1, 2018, as permitted by SEC rules, and converted all employees’ salaries or wages into U.S. dollars based on the applicable foreign exchange rate on December 31, 2018. We then calculated the total compensation of each of the employees to whom we paid the median base salary according to the same rules we use to calculate the total compensation of our named executive officers reported in the Summary Compensation Table, which did not include the value of widely available welfare benefits. We selected the individual within such group whose total compensation was at the median to serve as our median employee whose compensation is disclosed above.
To calculate our ratio, we divided Mr. Pennypacker’s annual total compensation by the annual total compensation of our median employee. To calculate Mr. Pennypacker’s annual total compensation, we used the amount reported in the “Total” column of our Summary Compensation Table for 2018.
XII. CEO PAY RATIO As required by Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the median annual total compensation of The Company’s employees and the annual total compensation of Mr. Ravenscroft, the Company’s Chief Executive Officer. For the year ended December 31, 2021: The annual total compensation of our median employee was reasonably estimated to be $53,696; and The annual total compensation of Mr. Ravenscroft was $4,952,777 Based on this information, the ratio of the annual total compensation of the Company’s Chief Executive Officer to the annual total compensation of its median employee is estimated to be 92 to 1. For 2021, we re-identified the Company’s median employee using a multi-step process. First, the Company examined the base salaries and wages of all individuals employed on December 31, 2021 (other than Mr. Ravenscroft), whether full-time, part-time, or on a seasonal basis to identify the median base salary of all employees. The Company annualized wages and salaries for all permanent employees who were hired after January 1, 2021, as permitted by SEC rules, and converted all employees’ salaries or wages into U.S. dollars based on the applicable foreign exchange rate on December 31, 2021. The Company then identified the median base salary and found that multiple employees were paid the median base salary in 2020. The Company selected an individual from this group whom it believed to be representative of the employee population to serve as the Company’s median employee and calculated their total compensation according to the same rules used to calculate the total compensation of the Company’s named executive officers reported in the Summary Compensation Table, which did not include the value of widely available welfare benefits. To calculate the ratio, the Company divided Mr. Ravenscroft’s annual total compensation by the annual total compensation of its median employee. To calculate Mr. Ravenscroft’s annual total compensation, the Company used the amount reported in the “Total” column of its Summary Compensation Table for 2021.
XIII. MISCELLANEOUS Other Matters Management knows of no business that will be presented for action at the 20192022 Annual Meeting other than as set forth in the Notice of Annual Meeting accompanying this Proxy Statement. If other matters do properly come before the 20192022 Annual Meeting, proxies will be voted in accordance with the best judgment of the person or persons exercising authority conferred by such proxies. Shareholder Proposals Proposals that shareholders of the Company intend to present at and have included in the Company’s Proxy Materials for the 20202023 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Rule 14a-8”), must be received no later than November 29, 2019,24, 2022, at the Company’s principal executive offices, One Park Plaza, 11270 West Park Place, Suite 1000, Milwaukee, Wisconsin 53224, directed to the attention of our Secretary. Under the Company’s Restated By-laws, written notice of shareholder proposals for the 20202023 Annual Meeting of Shareholders of the Company that are not intended to be considered for inclusion in the 20202023 Annual Meeting Proxy Materials (shareholder proposals submitted outside the processes of Rule 14a-8) must be received not prior to January 13, 20208, 2023 nor after February 7, 2020,2, 2023, directed to the attention of our Secretary, and such notice must contain the information specified in the Company’s Restated By-laws. Annual Report A copy (without exhibits) of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 20182021 is available online at www.proxyvote.com and also through the Company’s website: www.manitowoc.com. In addition, the Company will provide to any shareholder, without charge, upon written request of such shareholder, an additional copy of such Annual Report and a copy of any other document referenced in this Proxy Statement as being available to a shareholder upon request. Such requests should be addressed to our Secretary, The Manitowoc Company, Inc., One Park Plaza, 11270 West Park Place, Suite 1000, Milwaukee, Wisconsin 53224. Householding Information We haveThe Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders of record who have the same address and last name and do not participate in electronic delivery of Proxy Materials will receive only one copy of our Annual Report and Proxy Statement unless one or more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will reduce ourthe Company’s printing costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect any dividend check mailings. If you and other shareholders of record with whom you share an address currently receive multiple copies of Annual Reports and/or Proxy Statements, or if you hold stock in more than one account and in either case, you wish to receive only a single copy of the Annual Report or Proxy Statement for your household, please contact our Secretary (in writing: The Manitowoc Company, Inc., One Park Plaza, 11270 West Park Place, Suite 1000, Milwaukee, Wisconsin 53224, by telephone: 414-760-4600) with the names in which all accounts are registered. If you participate in householding and wish to receive a separate copy of the 20182021 Annual Report or this Proxy Statement, please contact ourthe Company’s Secretary at the above address or phone number. WeThe Company will deliver the requested documents to you promptly upon your request. Beneficial shareholders can request information about householding from their banks, brokers, or other holders of record.
It is important that proxies be returned promptly. Whether or not you expect to attend by virtual presence online at the 20192022 Annual Meeting, in person, you are requested to complete, date, sign, and return the proxy card as soon as possible. By Order of the Board of Directors | | Thomas L. Doerr, Jr. | SeniorExecutive Vice President, General Counsel and Secretary
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Milwaukee, Wisconsin, March 28, 201924, 2022
Annex A: PROPOSED AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATIONNon-GAAP Reconciliation (text to be deleted is stricken through; text to be added is underlined)
Section 4.2 of Article IV of the AmendedAdjusted EBITDA and Restated Articles of Incorporation, as amended, is hereby amended and restated in its entirety to read as follows:
Section 4.2. Removal of Directors.Adjusted EBITDA Percent
A director may be removed from office if the number of votes cast for removal exceed the number of votes against it, assuming a quorum is present,by affirmative vote of two-thirds (2/3) of the outstanding shares entitled to vote for the election of such director, taken at a meeting of shareholders called for that purpose, and any vacancy so created may be filled by such shareholders.
Annex B: Non-GAAP Reconciliation – Free Cash Flow
The reconciliation provided below reconciles free cash flow withAdjusted EBITDA excluding acquisitions (a non-GAAP adjusted operating cash flow for the year ended December 31, 2018. | (in millions) | Non-GAAP adjusted operating cash flow | $ | 40.1 | Less: Capital expenditures | | (31.7) | Excluding the cash impact of certain non-recurring items | | 9.2 | Free Cash Flow | $ | 17.6 |
In addition, a reconciliation offinancial measure) to Adjusted EBITDA including acquisitions (a non-GAAP adjusted operating cash flowfinancial measure) and further to Net cash used for operating activitiesincome (the most directly comparable GAAP financial measure) is included in Item 7. “Management’s Discussion, and AnalysisAdjusted EBITDA Percent for the years ended December 31, 2021 (in millions).
| YEAR ENDED DECEMBER 31, | | 2021 | Adjusted EBITDA excluding acquisitions | $ | 112.8 | Adjusted EBITDA from acquisitions | | 3.2 | Adjusted EBITDA including acquisitions | | 116.0 | Interest expense and amortization of deferred financing fees | | (30.4) | Provision for income taxes | | (6.1) | Depreciation expense | | (45.5) | Amortization of intangible assets | | (1.4) | Restructuring income | | 1.1 | Asset impairment expense | | (1.9) | Other non-recurring charges(1) | | (21.8) | Other (income) expense – net(2) | | 1.0 | Net income | $ | 11.0 | Net sales | $ | 1,720.2 | Adjusted EBITDA including acquisitions percent | | 6.7% |
(1) | Other non-recurring charges for the year ended December 31, 2021, relate to acquisition costs, certain purchase accounting impacts from the acquisitions, a write-off of a long-term note receivable resulting from the 2014 divestiture of the Company's Chinese joint venture and costs associated with a legal matter with the U.S. Environmental Protection Agency (“EPA”).Costs are included in engineering, selling and administrative expenses or cost of sales. |
(2) | Other (income) expense – net includes net foreign currency gains (losses), other components of net periodic pension costs, costs associated with a legal matter and other miscellaneous items. |
Net Working Capital as a % of Financial Conditionsales The table below shows the reconciliation of Net Working Capital as a % of sales to Adjusted net working capital as a % of sales as of and Results of Operations” (on page 34) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2021. | YEAR ENDED DECEMBER 31, | | | 2021 | | | | As reported | | | Adjustments (1) | | | Adjusted net working capital | | Accounts receivable - net | $ | | 236.1 | | | | (21.6 | ) | | $ | | 214.5 | | Inventories - net | | | 576.8 | | | | (51.8 | ) | | | | 525.0 | | Accounts payable and accrued expenses | | | (413.4 | ) | | | 21.8 | | | | | (391.6 | ) | Working capital | $ | | 399.5 | | | | | | | $ | 347.9 | | Net sales | | | 1,720.2 | | | | (26.7 | ) | | | | 1,693.5 | | Working capital as a % of sales | | | 23.2 | % | | | | | | | 20.5% | |
(1) | Adjustments reflect the impact from the acquired businesses on the year ended December 31, 2021 as reported working capital and net sales and the removal of certain accrued expenses associated with a legal matter with the U.S. EPA. |
Manitowoc ® THE MANITOWOC COMPANY, INC. ONE PARK PLAZA 11270 WEST PARK PLACE, SUITE 1000 MILWAUKEE, WISCONSIN 53224 SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET Before The Meeting - www.proxyvote.comUseGo to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:10:59 p.m. EasternCentral Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would likeform. During The Meeting - Go to reducewww.virtualshareholdermeeting.com/MTW2022 You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:10:59 p.m. EasternCentral Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. THE MANITOWOC COMPANY, INC. ONE PARK PLAZA 11270 WEST PARK PLACE, SUITE 1000 MILWAUKEE, WISCONSIN 53224 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E57141-P18353 KEEPD72787-P65593KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACHDATED. DETACH AND RETURN THIS PORTION ONLY THE MANITOWOC COMPANY, INC. For All Withhold All For All Except To withhold authority to vote for any individual The Board of Directors recommends a vote FOR proposals 1 through 3. All All Except nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. 1.Election1. Election of DirectorsNominees:Directors Nominees: 01)Roy V. Armes05) Anne E. Bélec 02) Robert G. Bohn 03) Anne M. Cooney 04) Amy R. Davis 05) Kenneth W. Krueger02)Krueger 06) Robert G. Bohn06)W. Malone 07) C. David Myers03)Donald M. Condon, Jr.07)Barry L. Pennypacker04)Anne M. Cooney08)Myers 08) John C. PfeiferForAgainstAbstain2.ThePfeifer 09) Aaron H. Ravenscroft For Against Abstain 2. The ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal yearyear ending December 31, 2019.3.An2022. 3. An advisory vote to approve the compensation of the Company's named executive officers.4.A vote to approve a proposed amendment to the Company's Articles of Incorporation.NOTE: If other matters properly come before the meeting or any adjournment or postponement thereof, the undersigned also authorizes the named proxies to vote on such matters in their discretion.YesNoPlease indicate if you plan to attend this meeting.discretion. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,administrator, or other fiduciary, please give full title as such. Joint owners should each signpersonally.sign personally. All holders must sign. If a corporation or partnership, please sign in full corporateorcorporate or partnership name by authorized officer.Signatureofficer. Signature [PLEASE SIGN WITHIN BOX]DateSignature Date Signature (Joint Owners)Date
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. E57142-P18353www.proxyvote.com. D72788-P65593 THE MANITOWOC COMPANY, INC.AnnualINC. Annual Meeting of Shareholders May 7, 20193, 2022 9:00 AM This proxy is solicited by the Board of Directors The undersigned hereby appoints Barry L. PennypackerAaron H. Ravenscroft and Thomas L. Doerr, Jr., and each of them, as proxies for the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of The Manitowoc Company, Inc. that the undersigned is entitled to vote at the meeting and any adjournment or postponement of the meeting upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment or postponement of the meeting, conferring authority upon such true and lawful proxies to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy previously given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AND SUCH SHARES WILL NOT BE VOTED ON PROPOSAL 4. All votes must be received by 5:00 PM, Eastern Time, May 6, 2019.3. All votes for 401(k) participants must be received by 5:0010:59 PM, EasternCentral Time, April 30, 2019.28, 2022. Continued and to be signed on reverse side |
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