| | | | | | TABLE OF CONTENTS 
 COOPER TIRE & RUBBER COMPANYNOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO THE STOCKHOLDERS: The 20172020 Annual Meeting of Stockholders of Cooper Tire & Rubber Company (the “Company”) will be held at The Westin Detroit Metropolitan Airport, McNamara Terminal, 2501 Worldgateway Place, Detroit, Michigan 48242 on Friday, May 5, 2017,8, 2020, at 10:00 a.m., Eastern Daylight Time, for the following purposes: | (1)
| To elect eightnine Directors of the Company for the ensuing year. |
(2)
| To ratify the selection of the Company’s independent registered public accounting firm for the year ending December 31, 2017.2020. |
| (3)
| To approve, on a non-binding advisory basis, the Company’s named executive officer compensation. |
| (4) | To recommend, on a non-binding advisory basis, the frequency of advisory votes on the Company’s named executive officer compensation. |
| (5)
| To transact such other business as may properly come before the Annual Meeting or any postponement(s) or adjournment(s) thereof. |
As part of our precautions regarding the coronavirus (or COVID-19), the Annual Meeting will be a “virtual” meeting. The Company is making its proxy materials available electronically as the primary means of furnishing proxy materials to stockholders, who can participate in the meeting online at www.virtualshareholdermeeting.com/CTB2020 at the appointed date and time. This virtual approach to the Annual Meeting also provides a convenient way to access the Company’s proxy materials and vote, enables greater stockholder participation in the proceedings and reduces the cost and environmental impact of the Annual Meeting to the Company. Only holders of Common Stock of record at the close of business on March 10, 2017,13, 2020, are entitled to notice of and to vote at the Annual Meeting. To participate in this year’s virtual Annual Meeting, you will need the 16-digit stockholder control number located on the Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied your proxy materials, to log in to the Annual Meeting at www.virtualshareholdermeeting.com/CTB2020. Please keep your stockholder control number in a safe place so it is available to you for the meeting. Using this control number, you will be able to listen to the meeting live, submit questions and vote online. The Company encourages you to access the Annual Meeting before the start time of 10:00 a.m., Eastern Daylight Time on Friday, May 8, 2020. Please allow ample time for online check-in, which will begin at 9:45 a.m., Eastern Daylight Time, on Friday, May 8, 2020. BY ORDER OF THE BOARD OF DIRECTORS Stephen Zamansky, Senior Vice President, General Counsel and& Secretary Findlay, Ohio March 20, 201726, 2020 Please mark, date, and sign the enclosed proxy and return it promptly in the enclosed addressed envelope, which requires no postage. In the alternative, you may vote by Internet or telephone. See page 23 of the proxy statement for additional information on voting by Internet or telephone. If you are present and vote in person at the Annual Meeting, the enclosed proxy card will not be used.TABLE OF CONTENTS Table of Contents TABLE OF CONTENTS
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TABLE OF CONTENTS COOPER TIRE & RUBBER COMPANY 701 Lima Avenue, Findlay, Ohio 45840 March 20, 201726, 2020PROXY STATEMENT
GENERAL INFORMATION AND VOTING This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Cooper Tire & Rubber Company (the “Company,” “Cooper Tire,” “our,” “we,” or “us”) to be used at the Annual Meeting of Stockholders of the Company to be held on May 5, 2017,8, 2020, at 10:00 a.m., Eastern Daylight Time, at The Westin Detroit Metropolitan Airport, McNamara Terminal, 2501 Worldgateway Place, Detroit, Michigan 48242.Time. This proxy statement and the related form of proxy were first mailed or made available to stockholders on or about March 20, 2017.26, 2020. Purpose of Annual Meeting The purpose of the Annual Meeting is for stockholders to act on the matters outlined in the notice of Annual Meeting on the cover page of this proxy statement. These matters consist of (1) the election of eightnine Directors, (2) the ratification of the selection of the Company’s independent registered public accounting firm for the year ending December 31, 2017,2020, (3) the approval, on a non-binding advisory basis, of the Company’s named executive officer compensation, (4) the recommendation, on a non-binding advisory basis, of the frequency of advisory votes on the Company’s named executive officer compensation, and (5)(4) the transaction of such other business as may properly come before the Annual Meeting or any postponement(s) or adjournment(s) thereof. As part of our precautions regarding the coronavirus (or COVID-19), the Annual Meeting will be a “virtual” meeting, as permitted by Delaware law and our Bylaws. A virtual annual meeting format is expected to facilitate and increase stockholder attendance and participation by enabling stockholders to participate fully and equally from any location around the world. We remain sensitive to concerns regarding virtual meetings generally from investor advisory groups and other stockholder rights advocates who have voiced concerns that virtual meetings may diminish stockholder voice or reduce accountability. Our Bylaws provide that our annual meetings may be held by means of remote communication, subject to such guidelines and procedures as the Board may adopt from time to time. Accordingly, we have designed the procedures for our virtual meeting format to comply with these requirements and to enhance, rather than constrain, stockholder access, participation and communication. In preparation for the virtual Annual Meeting, (i) we will implement reasonable measures to verify that each person deemed present and permitted to vote at the Annual Meeting is a stockholder or proxy holder, (ii) we will implement reasonable measures to provide stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to stockholders, if any, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) we will maintain a record of any votes or other action taken by stockholders or proxy holders at the meeting. Additionally, the online format allows stockholders to communicate with us during the meeting so they can ask appropriate questions of our Board or management in accordance with the rules of conduct for the meeting and as described under “General Information and Voting-Questions.” During the live Q&A session of the meeting, we will answer questions as they come in. Information regarding the ability of stockholders to ask questions during the Annual Meeting and related rules of conduct at the Annual Meeting will be posted on our investor relations page (investors.coopertire.com) in advance of the Annual Meeting. Similarly, matters addressing technical and logistical issues, including technical support during the Annual Meeting and related to accessing the Annual Meeting’s virtual meeting platform, will be available at www.virtualshareholdermeeting.com/CTB2020. Attendance and Participation Our completely virtual Annual Meeting will be conducted on the internet via live webcast. You will be able to participate in the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CTB2020. You also will be able to vote your shares electronically at the Annual Meeting. TABLE OF CONTENTS All stockholders of record at the close of business on March 13, 2020 (the “record date”), or their duly appointed proxies, may participate in the Annual Meeting. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials (“Notice”), on your proxy card or on the instructions that accompanied your proxy materials. The Company encourages you to access the Annual Meeting before the start time of 10:00 a.m., Eastern Daylight Time on Friday, May 8, 2020. Please allow ample time for online check-in, which will begin at 9:45 a.m., Eastern Daylight Time, on Friday, May 8, 2020. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting. Stockholders may submit questions during the Annual Meeting. If you wish to submit a question, you may do so by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/CTB2020, type your question into the “Ask a Question” field, and click “Submit.” Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. Questions regarding personal matters, including those related to employment or products are not pertinent to meeting matters and therefore will not be answered. We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual Annual Meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Stockholder Meeting log-in page. Each share of the Company’s Common Stock will be entitled to one vote on each matter. Only stockholders of record at the close of business on March 10, 2017, (the “record date”)the record date will be eligible to vote at the Annual Meeting. Meeting online at www.virtualshareholdermeeting.com/CTB2020. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials (“Notice”), on your proxy card or on the instructions that accompanied your proxy materials. The Company encourages you to access the Annual Meeting before the start time of 10:00 a.m., Eastern Daylight Time on Friday, May 8, 2020. Please allow ample time for online check-in, which will begin at 9:45 a.m., Eastern Daylight Time, on Friday, May 8, 2020. As of the record date, there were 52,910,82350,266,057 shares of Common Stock outstanding. The holders of a majority of the shares of Common Stock issued and outstanding, and present in person or represented by proxy, constitute a quorum. Abstentions and “broker non-votes” with respect to a proposal will be counted to determine whether a quorum is present at the Annual Meeting. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and the organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. “Broker non-votes” occur when an organization that holds shares for a beneficial owner has not received voting instructions with respect to the proposal from the beneficial owner. Whether such organization has the discretion to vote those shares on a particular proposal depends on the ballot item. If the organization that holds your shares does not have discretion and you do not give the organization instructions, the votes will be “broker non-votes,” which may have the same effect as votes against the proposal. Below is a summary of the vote threshold required for passage of each agenda item and the effect of abstentions and “broker non-votes.”
Agenda Item 1.1. Except in the case of a contested election, each nominee for election as a Director who receives a majority of the votes cast with respect to such Director’s election by stockholders will be elected as a Director. In the case of a contested election, the nominees for election as Directors who receive the greatest number of votes will be elected as Directors. Abstentions and “broker non-votes” are not counted for purposes of the election of Directors.
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Agenda Item 2.2. Although the Company’s independent registered public accounting firm may be selected by the Audit Committee of the Board of Directors without stockholder approval, the Audit Committee will consider the affirmative vote of a majority of the shares of Common Stock having voting power present in person or represented by proxy at the Annual Meeting to be a ratification by the stockholders of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017.2020. As a result, abstentions will have the same effect as a vote cast against the proposal. As a routine matter, we do not expect “broker non-votes” with respect to this proposal.
Agenda Item 3. Although the advisory vote to approve named executive officer compensation is non-binding, the advisory vote allows our stockholders to express their opinions regarding named executive officer compensation. The Board will consider the affirmative vote of a majority of the shares of Common Stock having voting power present in person or represented by proxy at the Annual Meeting as approval of the compensation of the Company’s named executive officers for fiscal 2016.year 2019. Abstentions are counted as votes against and “broker non-votes” are not counted for purposes of the advisory vote to approve named executive officer compensation. As a result, if you own shares through a bank, broker-dealer, or similar organization, you must instruct your bank, broker-dealer, or other similar organization to vote in order for them to vote your shares.Agenda Item 4. Although
Shares held in your name as the advisorystockholder of record may be voted electronically during the Annual Meeting. If you choose to vote to recommend the frequency of advisory votes on the Company’s named executive officer compensation is non-binding, the advisory vote allows our stockholders to express their opinions regarding the frequency of stockholder votes regarding the Company’s named executive officer compensation. The Board will consider the option receiving the greatest number of votes (every one, two or three years) of theyour shares of Common Stock having voting power present in person or represented by proxy atonline during the Annual Meeting, asplease follow the frequency recommended by stockholders. However, because this vote is advisory and not bindinginstructions provided on the Board ofNotice to log in to www.virtualshareholdermeeting.com/CTB2020. You will need the 16-digit control number included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials. Even if you plan to participate in the Annual Meeting, the Company strongly recommends that you vote your shares in any way,advance as described below so that your vote will be counted if you later decide not to attend the Board may decide that it is in the best interests of our stockholders and our Company to hold an advisory vote on named executive officer compensation more or less frequently than the option recommended by our stockholders. Abstentions and “broker non-votes” will have no effect on this proposal.Annual Meeting electronically. Stockholders may vote by completing, properly signing, and returning the accompanying proxy card, or by attendingparticipating and voting electronically at the Annual Meeting.Meeting online at www.virtualshareholdermeeting.com/CTB2020. If you properly complete and return your proxy card in time to vote, your proxy (one of the individuals named in the proxy card) will vote your shares as you have directed. If you sign and return the proxy card but do not indicate specific choices as to your vote, your proxy will vote your shares (i) to elect the nominees listed under “Nominees for Director,” (ii) for the ratification of the selection of the Company’s independent registered public accounting firm and (iii) for approval of the compensation of the Company’sCompany's named executive officers for fiscal year 2016 and (iv) for advisory votes on the Company’s named executive officer compensation to occur “every year.”2019. Stockholders of record and participants in certain defined contribution plans sponsored by the Company (see below) may also vote by using a touch-tone telephone to call 1-800-690-6903, or by the Internet by accessing the following website:http://www.proxyvote.com. Voting instructions, including your stockholder account number and personal proxy control number, are contained on the accompanying proxy card. You will also use this accompanying proxy card if you are a participant in the following defined contribution plans sponsored by the Company: | ● | Spectrum Investment Savings Plan; |
| ● | Pre-Tax Savings Plan (Texarkana Represented Employees); or |
| ● | Pre-Tax Savings Plan (Findlay Represented Employees). |
Spectrum Investment Savings Plan; Pre-Tax Savings Plan (Texarkana Represented Employees); or Pre-Tax Savings Plan (Findlay Represented Employees). Those stockholders of record who choose to vote by telephone or Internet must do so no later than 11:59 p.m., Eastern Daylight Time, on May 4, 2017.7, 2020. All voting instructions from participants in the defined contribution plans sponsored by the Company and listed above must be received no later than 5:0011:59 p.m., Eastern Daylight Time, on May 3, 2017.5, 2020.
A stockholder may revoke a proxy by filing a notice of revocation with the Secretary of the Company, or by submitting a properly executed proxy card bearing a later date. A stockholder may also revoke a previously executed proxy (including one submitted by Internet or telephone) by attendingparticipating and voting electronically at the Annual Meeting online at www.virtualshareholdermeeting.com/CTB2020, after requesting that the earlier proxy be revoked. AttendanceOnline participation at the Annual Meeting, without further action on the part of the stockholder, will not operate to revoke a previously granted proxy card. If
TABLE OF CONTENTS Our Board is comprised of members with a variety of qualifications, skills, business knowledge and experiences, backgrounds, viewpoints and expertise to provide effective oversight of management and the shares are heldCompany. Board of Directors | | | 10 | | | 9 | | | 5 | Audit Committee | | | 4 | | | 4 | | | 4 | Compensation Committee | | | 4 | | | 4 | | | 4 | Nominating and Governance Committee | | | 4 | | | 4 | | | 3 |
The Company is committed to environmental responsibility and the health and safety of its employees, contractors and the community, as well as the long-term, sustainable health and growth of the Company. The Company's organization structure allows it to supervise and audit, using a combination of internal and external resources, environmental activities, planning and programs to promote compliance with applicable environmental, health and safety (“EHS”) requirements and Company standards. Additionally, the Company has implemented a global EHS management system to predictably and sustainably manage EHS and to hold management accountable for non-compliance. The Company also participates in activities concerning general industry environmental matters, including being a founding member of the Tire Industry Project and the Global Platform for Sustainable Natural Rubber. TABLE OF CONTENTS At Cooper Tire, we strive to attract, engage and retain the most talented and high-performing employees. We provide an environment where the most outstanding people in the nameworld feel welcome, respected and valued for who they are and for their contributions. We are passionate about helping to raise the level of a bank, brokerrespect and inclusion in our communities. We are an equal employment opportunity employer. We embrace and encourage Cooper Tire people's differences in age, color, disability, ethnicity, family or marital status, gender identity or expression, language, national origin, physical and mental ability, political affiliation, race, religion, sexual orientation, socio-economic status, veteran status and other holdercharacteristics that make each of record,them unique. RECOGNIZED FOR BOARDROOM DIVERSITY The Company has been honored by the stockholder must obtain a proxy executed in his or her favor fromWomen’s Forum of New York and 2020 Women on Boards for raising the holder of record to be able to vote at the Annual Meeting.AGENDA ITEM 1
ELECTION OF DIRECTORS
In accordance with the Restated Certificate of Incorporation of the Company, thebar for gender-diverse boards. The Company's Board of Directors includes 30 percent female representation, exceeding the national average.
RECOGNIZED FOR LGBTQ EQUALITY The Company earned a score of 100% on the Human Rights Campaign’s Corporate Equality Index, a national benchmarking survey and report measuring corporate policies and practices related to LGBTQ equality in the workplace, and has fixed the total number of Directors to be elected at the Annual Meeting at eight. All eight of our Directors standing for reelection have a term that expires at this Annual Meeting and each has consented to stand for reelection. At this Annual Meeting, eight Directors are being elected to serve for a term of office that will expire at the Annual Meeting of Stockholders in 2018. In the event that anybeen named one of the nominees becomes unavailableBest Places to serve as a Director before the Annual Meeting, the Board of Directors may designate a new nominee, and the persons named as proxies will voteWork for that substitute nominee.LGBTQ Equality. TABLE OF CONTENTS The Board of Directors recommends that stockholders vote FOR the eight nominees for Director.
NOMINEES FOR DIRECTOR | AGENDA ITEM 1 | | | | ELECTION OF DIRECTORS | | |  | | THOMAS P. CAPO | Non-Executive Chairman
In accordance with the Restated Certificate of Incorporation of the Board,Former Chairman of the Board,Dollar Thrifty Automotive Group, Inc. | | Mr. Capo, age 66, served as Chairman ofCompany, the Board of Dollar Thrifty Automotive Group, Inc., a vehicle rental company, from October 2003Directors has fixed the total number of Directors to November 2010.be elected at the Annual Meeting at nine. Mr. Capo, was a Senior Vice President and Treasurer of DaimlerChrysler Corporation, an automobile manufacturer, from November 1998 until August 2000. From November 1991 to October 1998, he was Treasurer of Chrysler Corporation, an automobile manufacturer. Prior to holding these positions, Mr. Capo served as Vice President and Controller of Chrysler Financial Corporation, a finance company. Mr. Capo currently serves as a director of Lear Corporation, and, until its sale in November 2012, hewho has served as a director of Dollar Thrifty Automotive Group, Inc. Mr. Capo has a B.S. in Accounting and Finance, an M.A. in Economics, and an M.B.A. in Finance, each from the University of Detroit Mercy. Mr. Capo’s public company board and committee experience, includingDirector since 2007, is not standing for reelection when his current term expires at the board chairman level, executive managementAnnual Meeting. All nine of our Directors standing for reelection have a term that expires at this Annual Meeting and leadership experience, especiallyeach has consented to stand for reelection. At this Annual Meeting, nine Directors are being elected to serve for a term of office that will expire at the Annual Meeting of Stockholders in finance, treasury, capital markets, M & A, strategy development, capital restructuring, financial reporting and compliance, including his service2021. In the event that any of the nominees becomes unavailable to serve as a public company treasurer and controller, and education qualify him to continue serving as a member ofDirector before the Annual Meeting, the Board of Directors.Directors may designate a new nominee, and the persons named as proxies will vote for that substitute nominee. | | | | | The Board of Directors recommends that stockholders vote FOR the nine nominees for Director. | |
NOMINEES FOR DIRECTOR (CONT.) | | | | | |  | | STEVEN M. CHAPMAN |
Group Vice President,
China and Russia,
Cummins, Inc. | | | | | | Mr. Chapman, age 63,66, has served as Group Vice President, China and Russia, for Cummins, Inc. since 2009. Cummins designs, manufactures, and markets diesel engines and related components and power systems. Mr. Chapman has been with Cummins since 1985 and served in various capacities, including as Group Vice President, Emerging Markets & Businesses, President of Cummins’ International Distribution Business, Vice President of International, and Vice President of Southeast Asia and China. He is also a senior advisor to the US-China Industrial Cooperation Partnership, a private equity fund managed by Goldman Sachs. Mr. Chapman graduated from St. Olaf College with a B.A. in Asian Studies and from Yale University with a M.P.P.M. in Management. Mr. Chapman’s education, board member experience, and business management experience in operations and international operations qualify him to continue serving as a member of the Board of Directors. |
| |  Director Since 2016 | 2006 | | | | | |  | | SUSAN F. DAVIS |
Former Executive Vice President,
Asia-Pacific Region,
Johnson Controls | | | | | | Ms. Davis, age 63,66, served as Executive Vice President of the Asia-Pacific Region for Johnson Controls from September 2015 until her retirement in October 2016. Johnson Controls is a globally diversified technology and industrial leader serving customers in more than 150 countries. Ms. Davis has served in positions of increasing responsibility within Johnson Controls. She was named Vice President of Organizational Development in 1993. The following year, she was appointed Corporate Vice President of Human Resources and was named Executive Vice President of Human Resources in 2005. She was named Executive Vice President & Chief Human Resources Officer in 2012. She joined the company in 1985, following its acquisition of Hoover Universal, where she began her career in 1983 as a strategic planner for the automotive seating and plastics machinery business. Ms. Davis holds a Master of Business Administration (MBA) degree from the University of Michigan. She graduated magna cum laude with a Master of Arts degree and magna cum laude with a Bachelor of Arts, both from Beloit College. She holds a Master of Business Administration (MBA) degree from the University of Michigan. Ms. Davis currently serves as director of Quanex Corporation.Corporation, and as an advisor to Colorado State University. Ms. Davis’s education, board member experience, and business management experience qualify her to continue serving as a member of the Board of Directors. |
TABLE OF CONTENTS NOMINEES FOR DIRECTOR (CONT.) | | | | Ms. Dickson, age 55, is currently serving as President, Manitoba Harvest, a global company that manufactures and markets plant-based-protein food and beverages. Ms. Dickson joined Manitoba Harvest in December 2019, after the acquisition of the business by Tilray, Inc. Prior to Manitoba Harvest, Ms. Dickson served as Senior Vice President for Mattel, Inc., a global learning, development, and play company, and President of its American Girl subsidiary from February 2016 through December 2018. Prior to Mattel, Ms. Dickson served as Chief Marketing Officer for News America Marketing, Inc., a consumer-focused marketing business from February 2015 through February 2016. Prior to News America Marketing, Inc., Ms. Dickson served in increasingly responsible roles over more than 23 years, at General Mills, Inc., a global manufacturer and marketer of branded consumer foods. Her leadership there included Vice President, Marketing Excellence, and Vice President / Business Unit Director for global brands including Betty Crocker, Pillsbury, and Old El Paso. Ms. Dickson holds a B.S. degree from the United States Air Force Academy, and a Master of Business Administration (MBA) from Univ. of California, Los Angeles. She served as an officer in the U.S. Air Force, where she achieved the rank of Captain. Ms. Dickson’s education, business leadership, business management and marketing experience qualify her to continue as a member of the Board of Directors. |
NOMINEES FOR DIRECTOR (CONT.) | | | | | |  | | JOHN J. HOLLAND |
President,
Greentree Advisors LLC | | | | | | Mr. Holland, age 67,70, has served as President of Greentree Advisors LLC since 2005. Greentree Advisors LLC provides business advisory services. Mr. Holland served as President of The International Copper Association (ICA) from 2012 to 2015. The ICA is a marketing and trade organization for the global copper industry. Mr. Holland served as President, Chief Operating Officer, and Chief Financial Officer of MMFX Technologies Corporation from September 2008 until October 2009. MMFX Technologies is an inventor and manufacturer of nano technology steel. Prior to that, he was Executive Vice President and Chief Financial Officer of Alternative Energy Sources, Inc., an ethanol producer, from August 2006 until June 2008. Mr. Holland previously was employed by Butler Manufacturing Company, a producer of pre-engineered building systems, supplier of architectural aluminum systems and components, and provider of construction and real estate services for the non-residential construction market, from 1980 until his retirement in 2004. Prior to his retirement from Butler, Mr. Holland served as Chairman of the Board from 2001 to 2004, as Chief Executive Officer from 1999 to 2004, and as President from 1999 to 2001. Mr. Holland is also a director of SAIA, Inc., (formerly SCS Transportation, Inc.), and Cornerstone Building Brands, Inc. (formerly NCI Buildings Systems Inc.). Mr. Holland holds B.S. and MBA degrees from the University of Kansas. Mr. Holland’s education, board member experience, and business management experience in operations and accounting, including his service as a chief executive officer and chief financial officer, qualify him to continue serving as a member of the Board of Directors. |
TABLE OF CONTENTS NOMINEES FOR DIRECTOR (CONT.) | |  Director Since 2016 | 2003 | | | | | |  | | BRADLEY E. HUGHES |
President and& Chief Executive Officer | | | | | | Mr. Hughes, age 55,58, has served as President & Chief Executive Officer since September 2016. He previously served the Company as Senior Vice President and Chief Operating Officer from January 2015 to September 2016; Senior Vice President and President-International Tire Operations from July 2014 to January 2015; Senior Vice President and Chief Financial Officer from SeptemberJuly 2014 to December 2014; Senior Vice President, Chief Financial Officer and Treasurer from July 2014 to September 2014; Vice President, Chief Financial Officer and Treasurer from November 2013 to July 2014 and Vice President and Chief Financial Officer from November 2009 to November 2013. Mr. Hughes was previously employed at Ford Motor Co. where he worked as Global Product Development Controller for Ford in Dearborn, Michigan; as Finance Director for Ford’s South America Operations in Sao Paulo, Brazil; as Director of European Business Strategy and Implementation, Cologne, Germany; as European Manufacturing Controller, Cologne, Germany; and in other corporate finance and treasury positions.July 2014. Mr. Hughes has a B.A. in business from Miami University and an MBA from the University of Michigan. Mr. Hughes’s education, extensive knowledge of the Company, international operations and business management experience qualify him to continue serving as a member of the Board of Directors. |
| | | | | | | Director Since | 2016Ms. Joubert, age 53, has served as Chief Financial Officer of Molson Coors Brewing Company since 2016. Molson Coors is a leading global brewer. Ms. Joubert was Executive Vice President and Chief Financial Officer of MillerCoors from 2012-2016 and served in a variety of increasingly responsible finance leadership roles at MillerCoors since 2003. A native of South Africa, Ms. Joubert holds bachelor’s degrees in commerce and accounting from the University of Witwatersrand in Johannesburg. She also serves on the Board of Directors of MillerCoors and Coors Brewing Company, subsidiaries of Molson Coors. Ms. Joubert’s education, board member experience, business management and finance experience qualify her to continue serving as a member of the Board of Directors. |
TABLE OF CONTENTS NOMINEES FOR DIRECTOR (CONT.) | | | |  | | GARY S. MICHEL | Senior Vice
President and Chief Executive Officer
President, Residential Heating, Ventilation
and Air Conditioning (HVAC) and Supply,
Ingersoll RandJELD-WEN Holding, Inc. | | | | | | Mr. Michel, age 54,57, has served as President and Chief Executive Officer of Ingersoll Rand’sJELD-WEN Holding, Inc. since June 2018. He also serves on JELD-WEN’s Board of Directors. JELD-WEN is one of the world's largest door and window manufactures with facilities in 20 countries. The company designs, produces and distributes an extensive range of interior and exterior doors, wood, vinyl and aluminum windows and related products used in new construction and remodeling of residential HVAC & Supply business since 2011; which includes brands suchand commercial structures. Prior to JELD-WEN, Mr. Michel served as Trane, American Standard, Ameristar,President and Nexia. Ingersoll Rand isCEO of Honeywell International Inc.’s Home and Building Technologies Strategic Business Unit, a $13 billion global business that enhances the qualitydeveloper of connected products and comfort of air insoftware for homes and buildings; transports and protects food and perishables, and increases industrial productivity and efficiency.buildings, from October 2017 until May 2018. Prior to Honeywell, Mr. Michel was with Ingersoll-Rand Company, a 32-year veterandiversified manufacturer and services provider of Ingersoll Rand, is a Senior Vice President of the companyclimate and refrigeration systems, industrial technologies and small electric vehicles, for more than three decades, serving most recently as senior vice president and president, Residential HVAC and Supply. He also servesserved as a member of its enterprise leadership team. He also leadsteam and led the Ingersoll Rand Sales Excellence Initiative, as well as serving as a co-lead of the company’s enterprise sustainability efforts. Mr. Michel began his tenure with Ingersoll Rand as an application engineer and went on to hold product, sales, and business management roles before moving into a series of leadership positions across various geographic and market segments, culminating in his current role. Mr. Michel holds a Bachelor of Science degree in Mechanical Engineering from Virginia Polytechnic Institute and State University and an MBA degree from the University of Phoenix. Mr. Michel’s education, board member experience, and business management experience qualify him to continue serving as a member of the Board of Directors. |
| | Director Since | 2015 | | | | | BRIAN C. WALKER  | | JOHN H. SHUEY | Former Chairman of the Board,
President and Chief Executive Officer
Amcast Industrial CorporationHerman Miller, Inc. | | | | | | Mr. Shuey,Walker, age 71, joined Amcast Industrial Corporation, a producer of aluminum components for the automotive industry and plumbing products for the construction industry, in 1991 as Executive Vice President. He was elected President and Chief Operating Officer in 1993, a director in 1994, Chief Executive Officer in 1995, and Chairman in 1997. Mr. Shuey58, served as Chairman of the Board, President and Chief Executive Officer through February 2001. Prior to joining Amcast,of Herman Miller, Inc., a global provider of office furniture and services, from 2004 until his retirement in 2018. Mr. ShueyWalker joined Herman Miller, Inc. in 1989 and served in various capacities, including as chief financial officer for two Fortune 500 companies.Chief Financial Officer, and Executive Vice President. Mr. Shuey has beenWalker holds a private investor since February 2001. Mr. Shuey has a B.S.bachelor's degree in Industrial Engineeringaccounting from Michigan State University and is a certified public accountant. Mr. Walker is also a director of Briggs and Stratton Corporation, Universal Forest Products, Inc. and Gentex Corporation, and serves as an MBA degree, both fromOperating Partner in Strategic Leadership with the University of Michigan.private equity firm, Huron Capital. Mr. Shuey’sWalker’s education, board member experience, and business management and financial managementfinance experience including service as chief financial officer for two Fortune 500 companies, as well as his service as a chief executive officer and in numerous leadership positions for many organizations, qualify him to continue serving as a member of the Board of Directors. | | | | | | | Director Since | 1996 |
TABLE OF CONTENTS NOMINEES FOR DIRECTOR (CONT.) | | | |  | | ROBERT D. WELDING |
Former Non-Executive Chairman,
Public Safety Equipment (Int’l) Limited | | | | | | Mr. Welding, age 68,71, served as the Non-Executive Chairman of Public Safety Equipment (Int’l) Limited, a manufacturer of highway safety and enforcement products, from January 2009 until his retirement in May 2010. Prior to that, he was President, Chief Executive Officer, and a director of Federal Signal Corporation, a manufacturer of capital equipment, from November 2003 until his retirement in 2007. Prior to holding those positions, Mr. Welding was Executive Vice President of BorgWarner, Inc., a U.S. automotive parts supplier, and Group President of BorgWarner’s Driveline Group from November 2002 until November 2003, and was President of BorgWarner’s Transmission Systems Division from 1996 to November 2002. Mr. Welding graduated from the University of Nebraska with a B.S. in Mechanical Engineering, holds an MBA from the University of Michigan, and is a graduate of Harvard Business School’s Advanced Management Program. Mr. Welding’s education, board member experience, and business management experience in strategy development, operations leadership, continuous improvement, product development, technology, and corporate leadership qualify him to continue serving as a member of the Board of Directors. | | | | | | | Director Since | 2007 |
Note: The beneficial ownership of the Directors and nominees in the Common Stock of the Company is shown in the table presented under the heading “Security Ownership of Management” in this proxy statement. TABLE OF CONTENTS | | | | | | RATIFICATION OF THE SELECTION OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | | Ernst & Young LLP served as the independent registered public accounting firm of the Company in 2019 and has been retained by the Audit Committee to do so in 2020. In connection with the audit of the 2020 financial statements, the Company has engaged Ernst & Young LLP to perform audit services for the Company. The Board of Directors has directed that management submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. | | | | Stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain the firm. In such event, the Audit Committee may retain Ernst & Young LLP, notwithstanding the fact that the stockholders did not ratify the selection, or select another nationally recognized public accounting firm without resubmitting the matter to the stockholders. Even if the selection is ratified, the Audit Committee reserves the right in its discretion to select a different nationally recognized public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. | | | | | The Board of Directors recommends that stockholders vote FOR the ratification of the selection of the Company’s independent registered public accounting firm. | |
AGENDA ITEM 2RATIFICATIONTABLE OF THE SELECTION OF THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP served as the independent registered public accounting firm of the Company in 2016 and has been retained by the Audit Committee to do so in 2017. In connection with the audit of the 2017 financial statements, the Company has engaged Ernst & Young LLP to perform audit services for the Company. The Board of Directors has directed that management submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting.
Stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain the firm. In such event, the Audit Committee may retain Ernst & Young LLP, notwithstanding the fact that the stockholders did not ratify the selection, or select another nationally recognized public accounting firm without resubmitting the matter to the stockholders. Even if the selection is ratified, the Audit Committee reserves the right in its discretion to select a different nationally recognized public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
The Board of Directors recommends that stockholders vote FOR the ratification of the selection of the Company’s independent registered public accounting firm.CONTENTS
AGENDA ITEM 3
PROPOSAL TO APPROVE, ON A NON-BINDING ADVISORY BASIS, THE
COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION
The Board of Directors is aware of the significant interest in executive compensation matters by investors and the general public. The Company is submitting this proposal, commonly known as a “say-on-pay” proposal, to stockholders. The Company is currently conducting say-on-pay votes every year and expects to hold the next say-on-pay vote in connection with its 2018 Annual Meeting of Stockholders, subject to the Board of Directors’ consideration of the outcome of the vote on Agenda Item 4 described in this proxy statement. As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, we are asking you to cast a non-binding advisory vote to approve the Company’s named executive officer compensation through the consideration of the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Our Compensation Committee has overseen the development and implementation of a compensation program that is discussed more fully in “Compensation Discussion and Analysis” and “Executive Compensation,” including the summary tables and narrative sections of this proxy statement.
| | | | | | PROPOSAL TO APPROVE, ON A NON-BINDING ADVISORY BASIS, THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION | | | | The Board of Directors is aware of the significant interest in executive compensation matters by investors and the general public. The Company is submitting this proposal, commonly known as a “say-on-pay” proposal, to stockholders. The Company is currently conducting say-on-pay votes every year and expects to hold the next say-on-pay vote in connection with its 2021 Annual Meeting of Stockholders. As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, we are asking you to cast a non-binding advisory vote to approve the Company’s named executive officer compensation through the consideration of the following resolution: | | | | “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” | | | | Our Compensation Committee has overseen the development and implementation of a compensation program that is discussed more fully in “Compensation Discussion and Analysis” and “Executive Compensation,” including the summary tables and narrative sections of this proxy statement. | | | | The Company’s compensation program emphasizes a pay-for-performance philosophy. Performance-based annual cash incentive and cash and equity long-term incentive programs, collectively, are the majority of the targeted annual compensation for our named executive officers. These programs are designed to: | | | | • | Drive the long-term financial and operational performance of the Company; | | | | • | Deliver value to our stockholders; | | | | • | Recognize and reward corporate, group and individual performance; | | | | • | Provide a pay package that reflects our judgment of the value of each officer’s position in the marketplace and the Company; and | | | | • | Attract and retain strong executive leadership. | | | | In executing a philosophy which begins with creating long-term value to stockholders, the Compensation Committee has established a framework for executive compensation that promotes a culture of performance and accountability with due consideration to risk management, transparency, and the need to adjust to rapidly changing market conditions. The program is heavily weighted toward pay at risk, with limited executive perquisites and benefits and clear line of sight to the link between important Company strategic goals and the rewards for achieving those objectives. | | | | To further promote alignment with the interests of stockholders and a culture of enduring performance and accountability, the Company's executives have stock ownership requirements and are bound by a clawback policy which allows for the recoupment of incentive payments in certain circumstances. The fully independent Compensation Committee believes that the executive compensation program is an essential factor in the Company's strengthening of its leadership team and competitive position in the marketplace, both of which lead to business continuity and long-term value creation. | | | | Because your vote is advisory, it will not be binding upon the Company, the Compensation Committee, or the Board of Directors. However, we value stockholders’ opinions, and the Board expects to carefully consider the outcome of the advisory vote on named executive officer compensation. | | | | | The Board of Directors recommends that the stockholders vote FOR approval, on a non-binding advisory basis, of the compensation of the Company’s named executive officers for fiscal year 2019. | |
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS This section describes Cooper Tire’s executive compensation philosophy, program design, components, and decision making process for the compensation of the named executive officers listed below. Bradley E. Hughes | | | President & Chief Executive Officer | Christopher J. Eperjesy | | | Senior Vice President & Chief Financial Officer | Stephen Zamansky | | | Senior Vice President, General Counsel & Secretary | John J. Bollman | | | (Former) Senior Vice President & Chief Human Resources Officer |
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| Mr. Bollman joined the Company on March 21, 2017 and terminated his employment with the Company on December 2, 2019, and Mr. Zamansky has been overseeing the Company's human resources operations on an interim basis, in addition to his other responsibilities, since such date. |
COMPANY PERFORMANCE HIGHLIGHTS Cooper Tire responded well to challenging conditions, delivering improved operating profit, operating profit margin and operating cash flows in 2019. Operating profit was $174 million, or 6.3 percent of sales, with operating profit margin improving throughout the year from 4.3 percent in the first quarter to 8.5 percent in the fourth quarter. Additionally, operating cash flow improved by $33 million, which helped fund our strategic initiatives. All of this was achieved despite headwinds from net new tariffs and restructuring costs. Over the past year, we have continued to make significant progress on our strategic plan initiatives: Expanding our retail presence: A key initiative is to make Cooper Tire products available at a greater number of retail points where consumers want to shop for tires. In the U.S., we have added thousands of additional points of sale over the last 12 months, including added or expanded business with key national retailers and strong growth on e-commerce platforms. Securing strategic Original Equipment (OE) fitments: We have been selectively pursuing strategic OE tire fitments, and have since announced multiple fitments with luxury auto brand Mercedes-Benz. Expanding our Truck and Bus Radial (TBR) business: Another key strategy includes the expansion of our TBR tire business driven by the introduction of a Cooper TBR tire lineup to augment our Roadmaster brand. This Cooper Tire brand launched and immediately got off to a strong start in both the replacement and OE markets. Accelerating the cadence of compelling new product launches: Cooper Tire has been working hard to increase the pace of new product introductions to assure that we continually have fresh, compelling new products hitting the market, especially in key segments. We’ve been delivering on this promise with new product launches such as the Discoverer AT3, Starfire Solarus, and Discoverer EnduraMax. Building out a digital marketing capability and enhancing brand awareness: Cooper Tire has developed a digital marketing capability with a dedicated team focused on leveraging digital to drive our business. We have continued to invest in consumer brand awareness efforts and launched a new campaign including television, digital and print advertising featuring our new Uncle Cooper spokesperson. Strengthening our global manufacturing footprint: Cooper has been evaluating and upgrading our global manufacturing footprint to have the right technology and capabilities, with the right production capacity in the right locations, while also enhancing the competitiveness of our cost structure. In 2019, we ceased light vehicle tire production at our high-cost Melksham, England plant and transitioned production of these tires to other, lower-cost facilities in our network. In Asia, we launched a joint venture TBR tire plant in Vietnam. Finally, in early 2020, in Latin America, we bought out our joint venture partner in Mexico to take full ownership to better leverage that low-cost facility. TABLE OF CONTENTS COMPENSATION HIGHLIGHTS The Company's compensation program emphasizes a pay-for-performance philosophy. The performance-based annual cash incentive and long-term cash and equity incentive programs, collectively, are the majority of the targeted annual compensation for our named executive officers. These programs are designed to: | ● | drive the long-term financialDrive the short and operational performance of the Company; |
| ● | deliver value to our stockholders; |
| ● | recognize and reward corporate, group and individual performance; |
| ● | provide a pay package that reflects our judgment of the value of each officer’s position in the marketplace and the Company; and |
| ● | attract and retain strong executive leadership. |
In executing a philosophy which begins with creating long-term financial and operational performance of the Company;
Deliver value to stockholders,our stockholders; Recognize and reward corporate, group and individual performance; Provide a pay package that reflects our judgment of the Compensation Committee has established a framework for executive compensation that promotes a culturevalue of performance and accountability with due consideration to risk management, transparency, and the need to adjust to rapidly changing market conditions. The program is heavily weighted toward pay at risk, with limited executive perquisites and benefits and clear line of sight to the link between important Company strategic goals and the rewards for achieving those objectives.To further promote alignment with the interests of stockholders and a culture of enduring performance and accountability, the Company’s executives have stock ownership requirements and are bound by a clawback policy which allows for the recoupment of incentive payments in certain circumstances. The fully independent Compensation Committee believes that the executive compensation program is an essential factor in the Company’s strengthening of its leadership team and competitiveeach officer's position in the marketplace both of which lead to business continuity and long-term value creation.
Because your vote is advisory, it will not be binding upon the Company, the Compensation Committee, or the Board of Directors. However, we value stockholders’ opinions, and the Board will carefully considerCompany; and
Attract and retain strong executive leadership. The table below reflects the outcome of the advisory vote on2019 compensation package (base salary, target annual incentive plan (“AIP”) award and target long-term incentive plan (“LTIP”) award for each named executive officerofficer. We believe this table provides a simple and straightforward picture of 2019 compensation. The Board of Directors recommends that the stockholders vote FOR approval, on a non-binding advisory basis, of the compensation of the Company’s named executive officers for fiscal year 2016.
AGENDA ITEM 4
TO RECOMMEND, ON A NON-BINDING ADVISORY BASIS, THE FREQUENCY OF ADVISORY
VOTES ON THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATON
Section 14A of the Exchange Act requires the Company to include in its proxy statement a non-binding advisory vote on the Company’s named executive officer compensation not less frequently than once every three years. Section 14A also requires us to include in our proxy statement this year a separate non-binding advisory vote regarding whether the non-binding advisory vote on named executive officer compensation should be held every one, two or three years. The proposal gives stockholders the opportunity to cast a non-binding, advisory vote to determine the frequency of advisory votes on the Company’s named executive officer compensation.
The Board of Directors has concluded that holding an annual advisory vote has been and will continue to be the most effective means for conducting and responding to a say-on-pay vote. Conducting an annual stockholder vote on named executive officer compensation provides stockholder input on named executive officer compensation practices and allows the Company to respond to stockholders concerns on an annual basis.
The accompanying proxy card allows stockholders to recommend that the advisory vote on the Company’s named executive officer compensation occur every one, two, or three years, or to abstain from voting on the matter. You are not voting to approve or disapprove the Board’s recommendation. The option receiving the greatest number of votes (every one, two or three years) will be considered the frequency recommended by stockholders. Because the vote is advisory, it will not be binding upon the Company, the Compensation Committee or the Board of Directors. However, we value stockholders’ opinions, and the Board will carefully consider the outcome of the advisory vote on the frequency of the advisory vote on named executive officer compensation.
The Board of Directors recommends that the stockholders vote for an advisory vote on the Company’s named executive officer compensation to occur EVERY YEAR.
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Cooper Tire’s executive compensation program for its named executive officers is driven by our financial and strategic goals and the principle of pay for performance. The compensation program, which primarily consists of a base salary and performance-based cash incentive and equity awards, is built upon many of the principles and governance practices highlighted below.
Bradley E. Hughes | | | $995,000 | | | $1,194,000 | | | $3,980,000 | | | $6,169,000 | Christopher J. Eperjesy | | | $500,000 | | | $375,000 | | | $950,000 | | | $1,825,000 | Stephen Zamansky | | | $480,000 | | | $312,000 | | | $792,000 | | | $1,584,000 | John J. Bollman | | | $425,000 | | | $276,250 | | | $616,250 | | | $1,317,500 |
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| Executive Compensation Design and Governing Principles | | | | | | ● | Pay is tied to performance: | | | | | | | - | Approximately 83%Salary in effect as of the CEO’s target annual compensation and 70% of the other named executive officers’ target annual compensation is at-risk and varies with performance against incentive goals as well as performance of Company stock. | | | | | | | - | There is an appropriate balance of annual and long-term incentives, and metrics used in the annual plan are different from the metrics used in the long-term incentive plan. | | | | | | | - | The annual incentive plan12/31/2019 for theall named executive officers with the exception of Mr. Bollman whose salary is reflected as of 12/2/2019, the date he left the Company. |
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| AIP target percentage multiplied by the base salary in effect at the end of the year. The actual target award is based uponon salary actually earned during the achievement of established corporate performance goals.year. |
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| | | | | | - | Two-thirdsLTIP target percentage multiplied by the base salary in effect at the end of the long-term opportunityyear. The actual 2019-2021 grant is based on the achievementLTIP target percentage multiplied by base salary at the time of established corporate performance goals.the grant. |
AIP results were approved at 119.4% of target | | | Performance against pre-established operating profit and free cash flow targets resulted in a formulaic outcome relative to target levels. The Committee made adjustments for certain unique and non-recurring events as described below, resulting in payout levels at 119.4% of target. | The 2019 measurement period for the LTIP was approved at 87.7% of target | | - | Dividend equivalents are not accrued or paid on performance awards that are not notionally earned. | | | | | | ● | Executives who participate in the long-term incentive plan are required to meet minimum levels of stock ownership and status of stock ownership is reviewed on an annual basis. | | | | | | ● | None of the named executive officers has an employment agreement. | | | | | | ● | Executive officers, including named executive officers, receive the same group benefits as other salaried employees, including health, life insurance, disability, and retirement benefits. They are also eligible for a non-qualified supplementary benefit plan designed to restore 401(k) benefits lost due to Internal Revenue Code (“Code”) statutory limits and a deferred compensation plan which does not provide any fixed, above-market earnings opportunity. | | | | | | ● | Executive officer perquisites are limited and reviewed annually. There are no tax gross-ups on perquisites other than for travel expenses of a spouse when accompanying an executive to participate in business-related activities. | | | | | | ● | The Company maintainsdelivered net income and return on invested capital results which resulted in a “double trigger” requirementformulaic outcome relative to target levels. The Committee made adjustments for change in control severance benefitscertain unique and for the acceleration of time-based equity awards, including restricted stock units and stock options (provided the awards are assumed or replaced with substantially equivalent awards). | | | | | | ● | There are no excise tax gross-up provisions upon a change in control. | | | | | | ● | The Compensation Committee generally designs and administers the executive compensation programs to maximize tax deductibility of executive compensation paid to the named executive officers. | | | | | | Benchmarking Philosophy and Risk Management | | | | | | ● | The Compensation Committee references the market median with respect to establishing compensation levels for the named executive officers. | | | | | | ● | To align with investor expectations and changes in the Company’s business and market practice, compensation peer groups are regularly evaluated. | | | | | | ● | The Compensation Committee monitors all equity grants under the 2014 Incentive Compensation Plan, and the Company’s three-year average burn rate is below the mean burn rate for the Russell 3000 companies in GICS group 2510. | | | | | | ● | The compensation program risk evaluation process is formalized, including an annual review of plansnon-recurring events as described below, resulting in the “Compensation-Related Risk Assessment” on page 23. Risk mitigation is incorporated into plan design, including capping both annual and long-term incentive plan payouts. | | | | | | ● | The Compensation Committee regularly reviews all formsnotionally earned awards at 87.7% of compensation, including all cash and equity-based compensation grants, non-qualified account balances, and payments due upon termination of employment. | | | | | | ● | The Board has an established policy for recoupment of annual and long-term incentive compensation in the event of a restatement of reported financial results or if an employee has engaged in unethical conduct detrimental to the Company. | | | | | | ● | The Board has adopted an anti-hedging and anti-pledging policy. | | | | | | ● | Our executive compensation consultant is retained directly by and reports to the Compensation Committee, does not provide any services to management, and had no prior relationship with our CEO or any other named executive officer. | | | target. |
TABLE OF CONTENTS
2016 Financial Results
The Company ended 2016 in a very strong position, increasing year-over net income by 16.7% from $213 million to $248 million and year-over-year operating profit by 8.4% from $354 million to $384 million. The Company also delivered a record operating profit margin of 13.1% of sales and an increase in unit volume of 2.6% from 2015 to 2016. In addition to these accomplishments, we remained good stewards of capital as reflected in the return on invested capital shown below.
Subsequent to the setting of annual targets for the 2016 plan year, the Company made the decision to offer a lump-sum pension settlement opportunity to certain former employees to reduce future pension liability. As a result of such offers, which were paid out of pension plan assets, the Company incurred non-cash pension settlement charges of $11.5 million. The Compensation Committee determined to exclude the impact of such charges from the calculation of incentive awards. The performance results shown below include an $11.5 million adjustment for the successful consummation of the lump-sum pension settlements.
Corporate Performance Metrics* | | 2016 Targets | | 2016 Performance
Results | | 2016 Reported
Results | | | | | | | | | | Operating Profit | | $370,000,000 | | $395,849,000 | | $384,387,000 | | | | | | | | | | Free Cash Flow | | $75,000,000 | | $111,063,000 | | $111,063,000 | | | | | | | | | | Net Income | | $227,000,000 | | $256,087,000 | | $248,381,000 | | | | | | | | | | Return on Invested Capital | | 15.0% | | 19.4% | | 18.9% |
| * | For more information about how these performance metrics are calculated and reconciliations to amounts presented in the 2016 Form 10-K, see “Incentive Compensation – Performance Metrics for 2016” on pages 15 and 16. |
Our Executive Officer Compensation Program Is Administered by the Compensation Committee
The Compensation Committee is responsible for performing the duties of the Board of Directors relating to the compensation of our executive officers and other senior management. During 2016, our named executive officers were Mr. Bradley E. Hughes, President and Chief Executive Officer; Mr. Roy V. Armes, former Chairman, Chief Executive Officer, and President; Ms. Ginger M. Jones, Senior Vice President and Chief Financial Officer; Ms. Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer; and Mr. Stephen Zamansky, Senior Vice President, General Counsel and Secretary. Mr. Hughes was named President and Chief Executive Officer effective September 1, 2016, following Mr. Armes’s retirement on August 31, 2016. Prior to that date, Mr. Hughes served as our Senior Vice President and Chief Operating Officer. Subsequent compensation information will reflect Mr. Armes’s employment for a partial year.
With input, as appropriate, from management and our outside executive compensation consultant, the Compensation Committee reviews and approves all elements of our executive compensation program. Management is responsible for making recommendations to the Compensation Committee regarding executive officer compensation (except with respect to the CEO’s compensation) and effectively implementing our executive compensation program, as approved by the Compensation Committee.
The Compensation Committee retained Exequity LLP as its executive compensation consultant in 2016 and utilized data from Aon Hewitt, an outside compensation consultant, for pay benchmarking.
Additional information about the role and processes of the Compensation Committee is presented under the heading “Executive Compensation Consultant Disclosure” and “Meetings of the Board of Directors and Its Committees - Compensation Committee” in this proxy statement.
Executive Compensation Philosophy and Approach
The Cooper Tire executive officer compensation program is designed to deliver value to our stockholders by driving long-term financial and operational performance. To accomplish this goal, we have structured our executive compensation program to attract, motivate, and retain the caliber of leadership required to meet these objectives. In the following sections, we will address our benchmarking process and philosophy, how we set compensation levels, and the separate, but integrated elements of our program.
Compensation Peer Groups
The Compensation Committee annually analyzes market benchmark data regarding base salary and annual and long-term incentive opportunities and periodically evaluates market benchmark data regarding other compensation elements. The Compensation Committee uses benchmarking data to assess market pay levels and program design. For each element of compensation and in the aggregate, the Committee sets compensation targets near the middle of the range offered by comparable companies.
Peer Group for Pay Level Benchmarking - For 2016 officer pay level, we engaged Aon Hewitt to provide general industry data on 104 companies with revenues between $1.57 billion and $5.9 billion. The median revenue of these 104 companies was approximately $3.06 billion. As an additional benchmark, we also conducted a review and analysis of compensation data for the CEO and CFO positions in the peer group listed below using 2016 proxy information.
Peer Group for Program Design Benchmarking - For purposes of benchmarking executive compensation program design, the Committee periodically reviews a group of 17 companies (listed below) whose annual revenues range from approximately 50% to 250% of our revenues and who generally have similar characteristics with respect to capital-intensive manufacturing, producing and marketing a consumer-branded product, focusing on technology-driven products, and managing international operations. The median revenue for the following companies was $3.3 billion in 2016.
American Axle & Manufacturing Holdings | Kennametal Inc. | Cooper-Standard Holdings Inc. | Leggett & Platt Incorporated | Crane Co. | Lennox International, Inc. | Dana Holding Corp. | Snap-on Incorporated | Dover Corp. | SPX Corp. | Flowserve Corporation | Steelcase Inc. | Gentex Corp. | The Timken Company | Harley-Davidson, Inc. | Tower International, Inc. | Harsco Corporation | |
Our Compensation Levels Are Set Considering Business Needs, Market Data and Other Factors
We use a comprehensive and structured approach in setting the compensation framework for all executive positions. We begin with a review of the Company’s overall strategy and the particular role each executive position is expected to play in achieving the goals of the Company. Starting with this foundation and with the assistance of the Compensation Committee’s executive compensation consultant, we obtain and review relevant market benchmark data for each position regarding base salary, annual cash incentive opportunities, and long-term incentive award levels. We then determine an appropriate range of compensation for each position by assessing the market data in conjunction with the valuation of the position’s impact and importance in setting and achieving the strategic objectives of the Company. Informed by a review of all current and previously granted forms of compensation, competitive market data, organization strategies, and individual performance assessments, the Compensation Committee uses its judgment, rather than a formulaic approach, in setting target compensation for each named executive officer each year.
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COMPONENTS OF COMPENSATION
Elements of Our Compensation Program
We believe that our executive compensation program, by element and in total, best achieves our objectives. The majority of each named executive officer’sofficer's compensation opportunity is based on the achievement of important financial and strategic goals established at the beginning of the respective performance period. The primary elements of our executive compensation program, all key to the attraction, retention, and motivation of our named executive officers, are shown in the following table: | | | | | Base Salary | | | To value the competencies, skills, experience, and performance of individual executives. | | | Cash. Not “at risk.” Based on responsibility, internal equity, experience and performance. Reviewed annually. | | | | | | Annual Incentive CompensationPlan (AIP) | | | To motivate and reward executives for thebased on achievement of targetedagainst pre-established financial goals. | | | Cash award. Performance-based and “at risk.” Amount earned will vary based upon results achieved againston the extent to which annual goals (operating profit and free cash flow in 2016).are achieved. | | | | | | Long-Term Incentive CompensationPlan (LTIP) | | | To motivate and reward executivesthe named executive officers for the achievement of long-term goals and creation of stockholder value. | | Equity | A mix of equity and cash awards. Performance-basedawards, and “at risk.” Amount earned will vary depending upon results achieved against long-term incentive goals (net income and return on invested capital in 2016) and in the caseAward mix consists of restricted stock units (“RSUs”), performance-based stock units restricted stock units(“PSUs”), and stock option awards, Company stock performance.performance-based cash (“Performance Cash”), each weighted approximately one-third of the total award. |
Approximately 84% of the Chief Executive Officer’s (“CEO's”) target annual compensation and 70% of the other named executive officers' target annual compensation, on average, is at-risk and varies based on performance against incentive goals as well as the performance of Company stock. Pay Mix: Chief Executive Officer Pay Mix: “Other Named Executive Officer” Average COMPENSATION BEST PRACTICES The following table summarizes the current compensation best practices we have implemented, as well as those practices we avoid because we believe they do not serve the interests of our stockholders. ✔ | | | | Pay for performance | Non-Qualified Benefits✔ | | To attract | Generally provide named executive officers the levelsame welfare and retirement benefits as full-time employees | ✔ | | | Have robust stock ownership guidelines for senior executives | ✔ | | | The Compensation Committee directly engages a fully independent compensation consultant | ✔ | | | Have a robust clawback policy | ✔ | | | Generally maintain double trigger requirement for change in control severance benefits | ✔ | | | Mitigate risk in plan design and annually review plans and practices |
TABLE OF CONTENTS ✘ | | | Enter into employment agreements with the named executive officers | ✘ | | | Allow hedging or pledging of talent requiredCooper Tire & Rubber Company stock | ✘ | | | Provide dividend equivalents on performance awards that are not notionally earned | ✘ | | | Provide tax gross-ups upon a change in control | ✘ | | | Reprice or reload stock options |
At last year's Annual Meeting, stockholders voted approximately 92% in favor of our “say-on-pay” proposal. The Compensation Committee considered the vote to achieve strategic objectives and to promote continuity of leadership. | | Supplementary benefit plan to make up for qualified plan benefits lost due to limitsbe an endorsement of the Code. OpportunityCooper Tire & Rubber Company's executive compensation program and did not make any changes to participate in a non-qualified deferredour executive compensation plan. policies and practices that were specifically driven by the say-on-pay vote. | | | |
Base SalariesCOMPONENTS OF THE COMPENSATION PROGRAM
Each named executive officer has a target total compensation opportunity comprised of both fixed (base salary) and variable (annual and long-term incentive) compensation. In addition, named executive officers are eligible for welfare and retirement benefits available to employees generally, and a limited amount of other benefits and perquisites. This section describes the different components of our compensation program for named executive officers and describes the process for how compensation decisions are made. We provide market competitive base salaries to attract and retain outstanding talent and to provide a fixed component of pay for our named executive officers. Base salaries are reviewed annually and are determined with consideration to the role of the executive, time in position,the officer's experience, competitive market data regarding similar roles in similar organizations, internal equity, individual performance, budget, and other considerations. The Compensation Committee uses the median of market data as the general reference point for base salary decisions because it believes that the median is the best representation of competitive salaries in the market for similar roles and talent. In settingconsidering base salaries for 2016,2019, the Compensation Committee considered the officer’sofficer's experience in his or herand current role, the impact of his or her role on the Company’sCompany's results, the overall quality and manner in which the officer performs his or herthe role, the financial position of the Company and the value of retention.retention, among other factors.
ANNUAL INCENTIVE PLAN AWARDS
Incentive Compensation
With input from management and its independent executive compensation consultant, the Compensation Committee reviews and discusses annual corporate and business unit performance metrics and targets, and the appropriateness of these performance metrics and targets considering the following primary factors prior to approval: | ● | Expected performance based upon the annual operating plan as approved by the Board; |
| ● | The economic environment in which we expect to operate during the year, including risk factors; |
| ● | The achievement of financial results expected to enhance stockholder value; and |
| ● | The strategic goals and initiatives of the Company. |
The Compensation Committee also establishes a bonus pool aimed at potentially preserving the ability to deduct compensation paid under the annual incentiveoperating plan as approved by the Board;
The economic environment in which we expect to operate during the year, including risk factors; The achievement of financial results expected to enhance stockholder value; and The strategic goals and initiatives of the performance-based long-term incentive programs. The bonus pool approach establishes a maximum dollar amount and a maximum number of share units that can be paid to the Chief Executive Officer and certain other named executive officers from which the Compensation Committee may exercise negative discretion in determining the actual amounts paid under the annual and long-term incentive plans. The amounts the Compensation Committee approved for payment were below the maximum amounts established under the bonus pool. Please also see the section titled “Other Program Design Elements – Tax Deductibility of Executive Compensation” on pages 21 and 22 for additional information regarding the pool structure and approach.Annual Incentive Compensation
Target Opportunities
Company. The Compensation Committee uses the median of general industry market data from Aon Hewitt's TCM Survey, and proxy data from the Peer Group for the CEO and CFO, as the general reference point for target annual cash incentive opportunities because it believes that the median is the best representation of competitive annual cash incentive levels in the market for similar roles and talent. With regard to setting individual annual cash incentive opportunity levels, the Compensation Committee has the discretion to adjust the target opportunity levels as it deems appropriate. Typical reasons for adjusting an individual officer’sofficer's target annual cash incentive opportunity level above or below the market TABLE OF CONTENTS median include how longthe experience and performance of the officer, has been in his or her current role,internal equity, and the impact of the role upon the organization, and the multiple of salary needed to bring the total cash compensation of the executive to a competitive level.organization. At the highest level of achievement, the annual cash incentive opportunity for our named executive officers was 200% of the target opportunity in 2016.2019. At a threshold level of performance, the incentive opportunity was 50% of the target in 2016,2019, with no incentive earned if performance was below the threshold achievement level. Presented below are the target incentive awards for the named executive officers in 2016 using eligible earnings for the period of January 1, 2016, through December 31, 2016, and using annual incentive plan (AIP) target percentages for the full period.
| Named Executive Officer | | Eligible Earnings | | | Weighted Target Bonus | | Target Incentive | | Mr. Hughes | | | $698,852 | | | | 98.6 | %* | | | $688,967 | | | Mr. Armes | | | $758,955 | | | | 140 | % | | | $1,062,537 | | | Ms. Jones | | | $499,180 | | | | 75 | % | | | $374,385 | | | Ms. Harmon | | | $426,337 | | | | 65 | % | | | $277,119 | | | Mr. Zamansky | | | $430,428 | | | | 65 | % | | | $279,778 | |
*Mr. Hughes’s bonus target changed from 90% to 110% effective with his promotion to President & Chief Executive Officer on September 1, 2016.
LONG-TERM INCENTIVE AWARDS
Performance Metrics for 2016
The performance metrics under the 2016 Annual Incentive Plan for the named executive officers were 65% corporate operating profit and 35% corporate free cash flow. The potential payout for each of the financial metrics ranged from 0% to 200% of target. The table below summarizes the threshold, target, and maximum goals as compared to actual results:
| Performance Metric | | Threshold
Goal | | Target
Goal | | Maximum
Goal | | Performance
Result | | Results as a
Percent of
Target | | | | | | | | | | | | | | Corporate Operating Profit | | $225,000,000 | | $370,000,000 | | $450,000,000 | | $395,849,000 | | 132.3% | | | | | | | | | | | | | | Corporate Free Cash Flow | | $45,000,000 | | $75,000,000 | | $100,000,000 | | $111,063,000 | | 200.0% |
Corporate operating profit is equal to operating profit from the Company’s financial statements, adjusted for one-time non-cash pension settlement charge of $11,462,000.
Corporate free cash flow is defined as cash provided by continuing operations plus proceeds from the sale of assets, less capital expenditures and dividends, from the Company’s financial statements.
Following is the calculation of corporate free cash flow for 2016:
| Cash Provided by Continuing Operations | | $ | 309,795,000 | | | Plus: Proceeds From Sale of Assets | | | 337,000 | | | Less: Capital Expenditures | | | (175,437,000 | ) | | Less: Dividends | | | (23,632,000 | ) | | Corporate Free Cash Flow | | $ | 111,063,000 | |
Presented below are the actual incentive awards for the named executive officers in 2016 based upon eligible earnings for the period of January 1, 2016 through December 31, 2016, the target bonus percentage levels for the same period, and a weighted AIP achievement level of 156%.
| | | | | | | | | | | Named Executive Officer | | Eligible Earnings | | Weighted Target Bonus | | Actual Bonus at 156% | | Mr. Hughes | | $698,852 | | 98.6% | | $ | 1,074,789 | | | Mr. Armes* | | $758,955 | | 140% | | $ | 1,657,558 | | | Ms. Jones | | $499,180 | | 75% | | $ | 584,041 | | | Ms. Harmon | | $426,337 | | 65% | | $ | 432,306 | | | Mr. Zamansky | | $430,428 | | 65% | | $ | 436,454 | |
*Mr. Armes actual bonus reflects amount earned through his retirement date of August 31, 2016.
Long-Term Incentive Compensation
The Compensation Committee approves long-term incentiveLTIP awards on an annual basis for the named executive officers and other senior executives of the Company. Long-term incentiveLTIP awards are granted under the Cooper Tire & Rubber Company 2014 Incentive Compensation Plan, which allows for a variety of forms of long-term incentives.
For 2016,2019, awards of restricted stock units (“RSUs”), performance-based stock units,RSUs, PSUs, and performance-based cashPerformance Cash were granted, with each weighted approximately one-third of the total award. In determining the appropriate form or mix of long-term performanceincentive awards, the Compensation Committee considers such factors as the motivational impact of various components, alignment with stockholder interests, the attraction and retention of executive talent, the affordability of certain awards, and other business objectives which may prescribe or suggest the form or mix of awards at a particular time in the business cycle. Award Grant Timing The size of long-term incentive grants was determined with reference to the competitive benchmarking described on page 19, the Cooper Tire stock price, as well as individual performance and Pricing
For current executives in the plan, thepotential, contributions, and other long-term considerations.
The grant date is typically the date of our February Compensation Committee meeting. For most new executives, the grant date may be as of,as-of, or shortly after, the hiring date of the newly eligible executive. The methodology to determine the number of options or sharesunits to grant and to establish the exercise price of equity-based awards is to average the high and low trading price of our common stock, as quoted on the New York Stock Exchange, on the date of grant. Performance-Based Stock Units and Performance-Based Cash
Key design features of our performance-basedPSUs and Performance Cash grants include: One-year measurement periods within a three-year performance period; At the start of each year, specific financial metrics are set; At the end of each year within a three-year performance period, PSUs and Performance Cash can be notionally earned based on the extent to which financial targets for the awards have been achieved; Payout opportunities can range from 0% to 200% of the target award opportunity; Notionally earned PSUs and Performance Cash, if any, vest and are payable at the end of the three-year cycle, with PSUs payable in shares of common stock and Performance Cash awards settled in cash; Dividend equivalents, which are credited to notionally earned PSUs, are reinvested into additional stock units and paid at the end of the three-year cycle with the underlying and vested PSUs. PSUs that have not been notionally earned do not receive dividend equivalents; and Since the overall performance period for each performance-based cash grants include: | ● | One-year measurement periods within a three-year performance period; |
| ● | At the start of each year, specific financial metrics are set; |
| ● | At the end of each year within a three-year performance period, performance-based stock units and performance-based cash can be notionally earned if financial targets for the awards have been achieved; |
| ● | Payout opportunities can range from 0% to 200% of the target award opportunity; |
| ● | Notionally earned performance-based stock units and performance-based cash, if any, vest and are payable at the end of the three-year cycle, with performance-based stock units payable in shares of common stock and performance-based cash settled in cash; and |
| ● | Dividend equivalents, which are credited to notionally earned performance-based stock units, are reinvested into additional stock units and paid at the end of the three-year cycle with the underlying and vested performance-based stock units. Performance-based stock units that have not notionally earned do not receive dividend equivalents. |
| ● | Since the performance period for each performance-based grant is three years, participants can have overlapping three-year award opportunities active at any time. |
grant is three years, participants can have overlapping three-year award opportunities active at any time. The financial metrics for the 20162019 LTIP measurement period of the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-20182019-2021 performance periods approved by the Compensation Committee at the beginning of 20162019 were net income (80% weighting) and return on invested capital (20% weighting). The Compensation Committee selected these performance metrics because net income and prudent management ofreturn on invested capital are essential earnings and profitability measures related to the strategic and financial goals of the Company over each measurement period and the full three-year performance period. Metrics are typically established in February each year, allowing for incentive targets to be generally aligned with the annual operating plan and to account for anticipated factors which may impact final results. The ultimate value of performance-based stock units is based on the Company’sCompany's financial results and the stock price, which aligns with long-term stockholder value creation. The ultimate value of performance-based cash is based solely on performance against the financial metrics. In 2016,2019, the potential payout on each of the financial metrics rangedincluded a threshold, target, and maximum award level, with a range from 0% to 200% of target.
The following table summarizes the threshold, target, and maximum performance goals for the 2016 measurement period of the 2014-2016, 2015-2017, and 2016-2018 performance periods, as compared to the performance results:
| | | | | | | | | | | | | Performance Metric | | Threshold
Goal | | Target
Goal | | Maximum
Goal | | Performance
Result | | Results as a
Percent of
Target | | | | | | | | | | | | | Net Income | $140,000,000 | | $227,000,000 | | $280,000,000 | | $256,087,000 | | 154.9% | | | | | | | | | | | | | Return on Invested Capital | 11.0% | | 15.0% | | 18.0% | | 19.4% | | 200.0% |
Net income is equal to net income from the Company’s financial statements, as adjusted for a one-time non-cash pension settlement charge of $11,462,000, net of taxes of $3,756,000.
Return on invested capital is calculated by dividing operating profit from the Company’s financial statements, adjusted for a one-time non-cash pension settlement charge of $11,462,000, net of taxes of $3,756,000, less income tax and the tax impact of net interest expense, by an average of debt and equity. The average of debt and equity is calculated by taking the sum of the balance at the end of fiscal year 2015 and the balance at the end of each quarter in fiscal year 2016 and dividing by five, also adjusted for the one-time non-cash pension settlement, net of taxes.
Following is the calculation of return on invested capital for 2016:
| | | | | | | Numerator: | | | | | | Operating Profit | | $ | 384,387,000 | | | One-Time Non-Cash Pension Settlement Charge | | | 11,462,000 | | | Income Tax Expense | | | (119,555,000 | ) | | Net Interest Tax Effect | | | (7,019,000 | ) | | | | $ | 269,275,000 | | | Denominator: | | | | | | Average of Debt and Equity | | $ | 1,389,596,000 | | | | | | | | | Corporate Return on Invested Capital | | | 19.4 | % |
Performance-Based Stock Units
For the 2016-2018 performance period, the Compensation Committee granted individual target award opportunities for performance-based stock units, a portion of which could be notionally earned in 2016.
Presented below are the target numbers of performance-based stock units for the 2016 measurement period (or “tranche”) of the 2014-2016, 2015-2017, and 2016-2018 performance periods.
| | | | | | | | | | | | | | Target Performance-Based Stock Unit
Award For 2016 | Named Executive
Officer | | 2014-2016
Long-Term Incentive
Performance Period | | 2015-2017
Long-Term Incentive
Performance Period | | 2016-2018
Long-Term Incentive
Performance Period | | Mr. Hughes | | 3,869 | | | 3,096 | | | 3,416 | | | Mr. Armes | | 20,695 | | | 15,408 | | | 15,798 | | | Ms. Jones | | — | | | 2,497 | | | 2,557 | | | Ms. Harmon | | 2,736 | | | 1,844 | | | 1,892 | | | Mr. Zamansky | | 2,588 | | | 1,844 | | | 1,910 | |
Performance-Based Cash
For the 2016-2018 performance period, the Compensation Committee also granted individual target award opportunities for performance-based cash, a portion of which could be notionally earned in 2016.
Presented below are the target performance-based cash awards for the 2016 tranche of the 2014-2016, 2015-2017, and 2016-2018 performance periods:
| | | Target Performance-Based Cash
Award For 2016 | Named Executive
Officer | | 2014-2016
Long-Term Incentive
Performance Period | | 2015-2017
Long-Term Incentive
Performance Period | | 2016-2018
Long-Term Incentive
Performance Period | | Mr. Hughes | | $92,692 | | | $113,334 | | | $125,556 | | | Mr. Armes | | $495,834 | | | $564,000 | | | $580,711 | | | Ms. Jones | | — | | | $91,389 | | | $94,000 | | | Ms. Harmon | | $65,550 | | | $67,500 | | | $69,534 | | | Mr. Zamansky | | $62,000 | | | $67,500 | | | $70,200 | |
Amounts Notionally Earned for the 2016 Measurement Period
In 2016, there was an opportunity to notionally earn performance-based stock units and performance-based cash granted under the 2014-2016, the 2015-2017, and the 2016-2018 performance periods. Presented below are the performance-based stock units (“PBUs”) and the performance cash notionally earned for the 2016 measurement period.
| | | | | | | | | | | | | | | | | | 2016 Measurement Period | | | | | 2014-2016
Performance Period | | 2015-2017
Performance Period | | 2016-2018
Performance Period | | Named
Executive Officer | | PBUs | | Performance
Cash | | PBUs | | Performance
Cash | | PBUs | | Performance
Cash | | | Mr. Hughes | | 6,341 | | $151,922 | | 5,074 | | $185,754 | | 5,599 | | $205,786 | | | Mr. Armes* | | 22,613 | | $541,781 | | 16,836 | | $616,264 | | 17,262 | | $634,524 | | | Ms. Jones | | — | | — | | 4,093 | | $149,787 | | 4,191 | | $154,066 | | | Ms. Harmon | | 4,484 | | $107,436 | | 3,022 | | $110,633 | | 3,101 | | $113,966 | | | Mr. Zamansky | | 4,242 | | $101,618 | | 3,022 | | $110,633 | | 3,130 | | $115,058 | |
*Mr. Armes’s PBUs and performance cash values reflect amounts notionally earned through his retirement date of August 31, 2016.
Amounts Earned for the 2014-2016 Performance Period
The table below summarizes the awards which were notionally earned in 2014, 2015 and 2016 for the now completed 2014-2016 performance period. These awards were paid in shares of common stock and cash in early 2017.
| | | | | | | | | | | | | | | | | | | | | | 2014-2016 Performance Period | | | | | | | 2014 Measurement Period | | 2015 Measurement Period | | 2016 Measurement Period | | 2014-2016 Total Earned | | | | | 82.2% Achievement | | 200% Achievement | | 163.9% Achievement | | | | Named Executive
Officer | | PBUs | | Performance
Cash | | PBUs | | Performance
Cash | | PBUs | | Performance
Cash | | PBUs | | Performance
Cash | | | Mr. Hughes | | 3,180 | | $ 76,193 | | 7,738 | | $185,384 | | 6,341 | | $151,922 | | 17,259 | | $413,499 | | | Mr. Armes* | | 17,011 | | $407,576 | | 41,390 | | $991,668 | | 22,613 | | $541,781 | | 81,014 | | $1,941,025 | | | Ms. Jones | | — | | — | | — | | — | | — | | — | | — | | — | | | Ms. Harmon | | 2,249 | | $53,882 | | 5,472 | | $131,100 | | 4,484 | | $107,436 | | 12,205 | | $292,418 | | | Mr. Zamansky | | 2,127 | | $50,964 | | 5,176 | | $124,000 | | 4,242 | | $101,618 | | 11,545 | | $276,582 | |
*Mr. Armes’s PBUs and performance cash values reflect amounts notionally earned through his retirement date of August 31, 2016.
In accordance with the regulations established by the Securities and Exchange Commission for the 2016 Summary Compensation Table, the “Stock Awards” column for 2016 shows only the performance stock unit tranches granted in 2016. The “Non-Equity Incentive Plan Compensation” column for 2016 shows the cash amounts notionally earned in 2014 and 2015 and 2016 for the now completed 2014-2016 performance period because these cash amounts became nonforfeitable and were fully earned after the end of 2016. Likewise, in the 2016 Grants of Plan-Based Awards Table, the Estimated Future Payouts Under Non-Equity Incentive Awards column shows the performance cash tranches for each performance period.
Restricted Stock Units
The size of the restricted stock unit grants was determined with reference to the competitive benchmarking described on page 13,19, the Cooper Tire stock price, as well as individual performance, contributions and other long-term considerations. TABLE OF CONTENTS The restricted stock units granted in 2016 generally vest in equal installments of one-third per year beginning one year after the date of grant and are presented in the “2016 Grants of Plan-Based Awards Table” that follows the Summary Compensation Table.
EXECUTIVE BENEFITS AND PERQUISITES In order to attract high caliber leadership and promote management continuity among our named executive officers, we provide the following retirement benefits: | • | ● | 401(k) Plan. The Company provides a 401(k) retirement savings plan for eligible employees, including the named executive officers. Under the Spectrum Retirement Savings Plan, in which the named executive officers participate, participants may choose to contribute up to the annual limit determined by the Internal Revenue Service (“IRS”). TheIn 2019, the Company currently providesprovided each participant with a stated matching contribution of 100% of the first 1%6% of pay contributed by the employee, and 50% of the next 5% of pay contributed by the employee. In addition, the Company may make a discretionary contribution into the 401(k) plan on behalf of all employees eligible to participate in the Spectrum Retirement Savings Plan, up to the limits determined annually by the IRS. |
| • | ● | Pension Plan. Among the named executive officers, only Mr. Armes has an accrued benefit under the frozen cash balance plan. At “retirement,” as defined under the frozen cash balance plan, a participant who is eligible for an immediate benefit under the cash balance plan may elect his benefit be paid in the form of an annuity or in a lump sum. A participant who terminates prior to eligibility to receive an immediate benefit under the plan will receive an annuity at the time of normal or early retirement unless, within one year of termination of employment, the participant elects a lump-sum payment. |
| ● | Non-Qualified Supplementary Benefit Plan. The Non-Qualified Supplementary Benefit Plan is a non-elective deferred compensation plan. This plan is designed to make up for any qualified retirement plan benefits lost due to limits of the Internal Revenue Code (“Code”), and the named executive officers participate in the Non-Qualified Supplementary Benefit Plan only to the extent that full participation in our qualified plan is restricted by limits under the Code. Mr. Armes, who has an accrued balance under the frozen cash balance plan as noted above, has a balance in the Non-Qualified Supplementary Benefit Plan for the cash balance plan benefits that were lost due to the limits of the Internal Revenue Code, as well as a balance for the 401(k) benefits lost due to IRS limitations. These balances are shown in the “2016 Pension Benefits Table” on page 31. |
For the executivesnamed executive officers who participate in the Company’sCompany's long-term incentive plan, including the named executive officers, retirement eligibility is defined as the earlier of the date the executive becomes age 65, or the date on which the sum of his or herthe named executive officer's years of continuous employment with the Company and his or herthe named executive officer's age equals at least 70 years. The actuarial change from 2015 in our named executive officers’ pension benefit is presented in the “2016 Summary Compensation Table” on page 25. Detailed information about these pension plans is also presented in the “2016 Pension Benefits Table” and related disclosures on page 31.
Executive Deferred Compensation Plan
In order to provide executives an opportunity to defer earned salary or cash incentive awards, the Company offers a non-qualified deferred compensation plan. The plan allows selected senior management employees, including our named executive officers, to elect to defer receipt of up to 80% of their base salary and up to 100% of their annual incentive compensation each year (subject to an aggregate $10,000 minimum per year), until a date or dates chosen by the participant. We do not make matching or other employer contributions to the Executive Deferred Compensation Plan. Amounts deferred into this plan are credited to a notional account that is notionally invested in the same investment vehicles offered in the 401(k) plan and/or Cooper Tire stock, at the participant’s election. The plan does not provide any fixed, above-market earnings opportunity. Detailed information about this plan is presented in the “2016 Non-Qualified Deferred Compensation Table” and related footnotes.
Perquisites and Other Compensation
PERQUISITES AND OTHER COMPENSATION We provide a limited annual allowance of $15,000 to cover the cost of financial planning, servicestax preparation, and an annual executive physical for our named executive officers. There is minimalwas limited use of the Company plane for personal use in 2019, and we do not provide a tax gross-up on the imputed income associated with any personal use of the Company plane by an executive. It is the Company’sCompany's policy to reimburse for and to gross up the imputed income associated with the travel costs of spouses who accompany the executives to participate in business-related activities. The value of the noted perquisites is detailed in the footnote to the “All Other Compensation” column of the 2016Summary Compensation Table. PROCESS FOR DETERMINING EXECUTIVE COMPENSATION COMPENSATION COMMITTEE The Compensation Committee is responsible for performing the duties of the Board related to the compensation of our named executive officers and other senior management. With input, as appropriate, from management and our outside executive compensation consultant, the Compensation Committee reviews and approves all elements of our executive compensation program. COMPENSATION CONSULTANT During the 2019 fiscal year, the Compensation Committee engaged Exequity LLP to serve as its executive compensation consultant. Exequity provides research, data analysis, survey information and design expertise in developing compensation programs for executives, and in 2019 utilized data from Aon plc, an outside compensation consultant, to provide competitive pay benchmarking data. In addition, Exequity keeps the Compensation Committee apprised of regulatory developments and market trends related to executive compensation practices. A representative of Exequity typically attends meetings of the Compensation Committee and is available to participate in executive sessions. The Compensation Committee has considered the independence-related factors enumerated by the NYSE and the SEC and has concluded that Exequity is independent. In addition, the Compensation Committee has concluded that the work of Exequity in 2019 did not raise any conflicts of interest. ROLE OF MANAGEMENT Management is responsible for making recommendations to the Compensation Committee regarding named executive officer compensation (except with respect to the CEO's compensation) and effectively implementing our executive compensation program, as approved and overseen by the Compensation Committee.
TABLE OF CONTENTS The Compensation Committee annually analyzes market benchmark data regarding base salary and annual and long-term incentive opportunities and periodically evaluates market benchmark data regarding other compensation elements. The Compensation Committee uses benchmarking data to assess market pay levels and program design. For each element of compensation and in the aggregate, the Committee targets compensation levels at the median of the range offered by comparable companies. Peer Group for Pay Level Benchmarking - For named executive officer pay levels in 2019, we engaged Aon, plc to provide general industry data from their Total Compensation Measurement (TCM) Survey on 145 companies with revenues from $1.4 billion to $5.6 billion. The median revenue of these 145 companies was approximately $2.8 billion (by comparison, Cooper Tire's revenue for 2019 was about $2.75 billion). The company identities were not a material element in the analysis. Peer Group for Program Design Benchmarking - As an additional benchmark of compensation data for the CEO and CFO positions, and for purposes of benchmarking executive compensation program design, the Compensation Committee periodically reviews a group of 18 companies (listed below) whose annual revenues range from approximately 50% to 250% of our revenues and who generally have similar characteristics to Cooper Tire with respect to capital-intensive manufacturing, producing and marketing a branded product, focusing on technology-driven products, and managing international operations. At the May 2018 Compensation Committee meeting, the Committee decided to remove Dana Incorporated and Dover Corporation due to their revenue size exceeding the revenue range and added Briggs & Stratton, LCI Industries, and the Toro Company because these companies generally met the criteria for inclusion. The median revenue for the following companies was approximately $2.9 billion. American Axle & Manufacturing Holdings | | | LCI Industries | Briggs & Stratton Corp. | | | Leggett & Platt Incorporated | Cooper-Standard Holdings Inc. | | | Lennox International, Inc. | Crane Co. | | | Snap-on Incorporated | Flowserve Corporation | | | SPX Corp. | Gentex Corporation | | | Steelcase Inc. | Harley-Davidson, Inc. | | | The Timken Company | Harsco Corporation | | | The Toro Company | Kennametal Inc. | | | Tower International, Inc.1 |
1
| Acquired on September 30, 2019 |
BASE SALARY The 2019 base salaries for the named executive officers were adjusted consistent with our compensation philosophy of targeting base salaries at the median of the competitive market, as well as the considerations described earlier. The 2019 adjustments and salaries for our named executive officers were: Bradley E. Hughes | | | $966,400 | | | $28,600 | | | 3.0% | | | $995,000 | Christopher J. Eperjesy1 | | | $500,000 | | | $— | | | —% | | | $500,000 | Stephen Zamansky | | | $465,000 | | | $15,000 | | | 3.2% | | | $480,000 | John J. Bollman2 | | | $415,000 | | | $10,000 | | | 2.4% | | | $425,000 |
1
| Mr. Eperjesy joined the Company on December 10, 2018. No adjustment was made to his base salary in 2019. |
2
| Mr. Bollman terminated employment with the Company on December 2, 2019. This was his base salary at the time of such termination. |
TABLE OF CONTENTS 2019 FINANCIAL RESULTS At the time the Compensation Committee was setting 2019 targets for the AIP and LTIP, certain new tariffs on tires being imported into the U.S. from China were being implemented or contemplated. In particular, on February 15, 2019, the same day these targets were set, anti-dumping and countervailing duties totaling 42.16 percent were imposed on the Company's truck and bus radial (“TBR”) tire imports into the U.S. from China. In addition, effective September 24, 2018, the Company was subject to a 10 percent tariff on passenger, light truck and TBR tires, raw materials and tire-manufacturing equipment imported into the U.S. from China pursuant to Section 301 of the Trade Act of 1974. The impact of these 10 percent tariffs were included in the Company's plans and the incentive targets. However, it was expected that these tariffs might increase, decrease or be eliminated due to trade negotiations between the U.S. and China. The tariff rate was increased from 10 percent to 25 percent on May 10, 2019. Given the uncertainty and changing nature of these specific tariffs at the time the 2019 targets were being set, their large potential impact on the Company and its 2019 results, the limited ability to adapt to them in the very short time after their implementation, and the difficulty in quickly adjusting the Company’s plans and incentive targets for them, the Compensation Committee determined at the time it set the 2019 targets to not reflect the impact of these new and increased tariffs in the performance targets, but to instead adjust 2019 performance results for the impact of these tariffs, as well as any pricing actions that the Company implemented to offset their effects. In accordance with this decision made at the time the targets were set, the Compensation Committee excluded the impact of these tariffs, as well as tire pricing actions to offset their impact, from the 2019 performance results for the purpose of calculating incentive award payouts. In addition, on December 17, 2018, U.S. Customs and Border Protection published a final rule announcing regulatory changes to duty drawback that are part of the Trade Facilitation and Trade Enforcement Act of 2015. The enactment of the Modernized Drawback Final Rule included several changes, including changes allowing the Company to obtain the refund of certain duties it had previously paid. Under the rule, recovery of duties is allowable for up to five years subsequent to the incurrence of the duty. For the Company, the change in regulations allowed for a greater population of tire exports from the U.S. to be utilized to offset duties on tires imported into the U.S. However, because duty drawback claims require detailed matching of import and export activity as part of the filings, the amount of the potential duty drawback opportunity was not known at the time the 2019 performance targets were set. The Company was able to recognize $20,091 of such recovered duties in the fourth quarter of 2019. Since these duty drawbacks were an offset of the Company's increased duty costs on tires imported to the U.S. from China, the Compensation Committee determined to exclude these duty drawbacks from the 2019 performance results for the purpose of calculating incentive award payouts. In total, the net impact of the new anti-dumping and countervailing duties on TBR tires and increased Section 301 tariffs enacted/increased in 2019, net of tariff-related price increases and duty drawback recoveries, reduced operating profit by $18,401 ($13,083 net of tax). The net impact of these tariff items has been excluded from the Company's performance results, as defined below. In addition, subsequent to the setting of targets for 2019, the Compensation Committee determined to exclude the impact of a non-cash pension settlement charge from the 2019 performance results for the purpose of calculating incentive award payouts, as such charge was deemed non-representative of the continuing operations of the Company. In 2019, the Company decided to cease light vehicle tire production at its U.K. plant, resulting in the elimination of approximately 300 roles. This decision did not directly impact the U.K. pension plan. However, due to the volume of departures from the U.K. operations, the U.K. pension plan had a higher than normal volume of lump-sum distributions in 2019. Due to the amount of lump-sum distributions out of the U.K. pension plan, in accordance with U.S. GAAP, the Company was required to recognize a non-cash settlement charge of $4,262 (before and after-tax) as a component of other pension and post-retirement benefit expense. The impact of the U.K. pension settlement charge has been excluded from the Company's LTIP performance results, as defined below. 2019 AIP PERFORMANCE The performance metrics under the 2019 AIP for the named executive officers were weighted 65% corporate operating profit and 35% corporate free cash flow. These metrics were selected because profitability and cash flow generated from ongoing operations are key indicators of business performance in a capital intensive business. The table below summarizes the threshold, target, and maximum goals as compared to results: Corporate Operating Profit | | | $155,000,000 | | | $228,000,000 | | | $300,000,000 | | | $192,856,000 | | | 75.9% | Corporate Free Cash Flow | | | ($35,000,000) | | | $15,000,000 | | | $65,000,000 | | | $80,005,000 | | | 200% |
TABLE OF CONTENTS The following is the calculation of corporate operating profit for 2019 AIP purposes: Operating Profit, as reported | | | $174,455,000 | Plus: Excluded Net Tariff Expense | | | 18,401,000 | Corporate Operating Profit | | | $192,856,000 |
Corporate free cash flow is defined as cash provided by continuing operations plus proceeds from the sale of assets, less capital expenditures and dividends, from the Company's financial statements. The following is the calculation of corporate free cash flow for 2019 for AIP purposes: Cash Provided by Continuing Operations | | | $290,593,000 | Plus: Proceeds from Sale of Assets | | | 119,000 | Plus: Excluded Net Tariff Expense, net of tax | | | 13,083,000 | Less: Capital Expenditures | | | (202,722,000) | Less: Dividends | | | (21,068,000) | Corporate Free Cash Flow | | | $80,005,000 |
Presented below are the actual incentive award payouts for the named executive officers in 2019 based upon eligible earnings for the period of January 1, 2019 through December 31, 2019, the target AIP percentage levels for the same period, and a weighted AIP achievement level of 119.4%. Bradley E. Hughes | | | $987,556 | | | 120% | | | $1,185,067 | | | $1,414,970 | Christopher J. Eperjesy | | | $500,000 | | | 75% | | | $375,000 | | | $447,750 | Stephen Zamansky | | | $476,096 | | | 65% | | | $309,462 | | | $369,498 | John J. Bollman1 | | | $388,630 | | | 65% | | | $252,610 | | | $0 |
1
| Mr. Bollman terminated his employment with the Company on December 2, 2019. He did not receive a 2019 AIP award. |
LTIP PERFORMANCE The performance metrics for the 2019 measurement period of the 2017-2019, 2018-2020, and 2019-2021 performance periods approved by the Compensation Committee at the beginning of 2019 were Net Income (80% weighting) and Return on Invested Capital (20% weighting). The following table summarizes the threshold, target, and maximum performance goals for the 2019 measurement period as compared to the performance results: Net Income | | | $60,000,000 | | | $117,000,000 | | | $175,000,000 | | | $113,749,000 | | | 97.1% | Return on Invested Capital | | | 11.0% | | | 15.0% | | | 18.0% | | | 11.0% | | | 50.0% |
The following is the calculation of Net Income for 2019 LTIP purposes: Net Income, as reported | | | $96,404,000 | Plus: Excluded Net Tariff Expense, net of tax | | | 13,083,000 | Plus: UK Pension Settlement Charge, net of tax | | | 4,262,000 | Net Income | | | $113,749,000 |
Return on invested capital is calculated by dividing after tax operating profit from the Company's financial statements by the Company's total invested capital. Invested capital is the average of ending debt and equity for the last five quarters. TABLE OF CONTENTS The following is the calculation of return on invested capital for 2019 LTIP purposes: Numerator:
| | | | Operating Profit, as reported | | | $174,455,000 | Plus: Excluded Net Tariff Expense | | | 18,401,000 | Operating Profit | | | $192,856,000 | | | | | Income before Income Taxes, as reported | | | $109,672,000 | Plus: UK Pension Settlement Charge | | | 4,262,000 | Income before Income Taxes | | | $113,934,000 | | | | | Income Tax Provision, as reported | | | $11,355,000 | Income before Income Taxes | | | $113,934,000 | Effective Income Tax Rate | | | 10.0% | | | | | Income Tax Expense on Operating Profit | | | $19,220,600 | Total | | | $173,635,400 | Denominator:
| | | | Average of Debt and Equity | | | $1,582,749,000 | Return on Invested Capital | | | 11.0% |
Performance-Based Stock Units For the 2019-2021 performance period, the Compensation Committee granted individual target award opportunities for PSUs, a portion of which could be notionally earned in 2019. Presented below are the target numbers of PSUs for the 2019 measurement period of the 2017-2019, 2018-2020, and 2019-2021 performance periods. Mr. Hughes | | | 9,830 | | | 11,095 | | | 12,910 | Mr. Eperjesy | | | — | | | — | | | 3,173 | Mr. Zamansky | | | 1,959 | | | 2,206 | | | 2,563 | Mr. Bollman | | | 1,055 | | | 1,720 | | | 2,010 |
Performance-Based Cash Units For the 2019-2021 performance period, the Compensation Committee also granted individual target award opportunities for Performance Cash, a portion of which could be notionally earned in 2019. Presented below are the target Performance Cash awards for the 2019 measurement period of the 2017-2019, 2018-2020, and 2019-2021 performance periods: Mr. Hughes | | | $375,000 | | | $401,363 | | | $429,511 | Mr. Eperjesy | | | — | | | — | | | $105,556 | Mr. Zamansky | | | $74,719 | | | $79,796 | | | $85,250 | Mr. Bollman | | | $45,302 | | | $62,223 | | | $66,861 |
TABLE OF CONTENTS Amounts Notionally Earned for the 2019 Measurement Period In 2019, there was an opportunity to notionally earn PSUs and Performance Cash granted under the 2017-2019, 2018-2020, and 2019-2021 performance periods. Presented below are the PSUs and the Performance Cash notionally earned for the 2019 measurement period based on the weighted performance results for 2019 of 87.7 percent. Mr. Hughes | | | 8,621 | | | $328,875 | | | 9,731 | | | $351,996 | | | 11,323 | | | $376,682 | Mr. Eperjesy | | | — | | | — | | | — | | | — | | | 2,783 | | | $92,573 | Mr. Zamansky | | | 1,719 | | | $65,529 | | | 1,935 | | | $69,982 | | | 2,248 | | | $74,765 | Mr. Bollman | | | — | | | — | | | — | | | — | | | — | | | — |
Amounts Earned for the 2017-2019 Performance Period The table below summarizes the awards which were notionally earned in 2017, 2018, and 2019 for the now completed 2017-2019 performance period. These awards were paid in shares of common stock and cash in early 2020. Mr. Hughes | | | — | | | — | | | 4,296 | | | $163,875 | | | 8,621 | | | $328,875 | | | 12,917 | | | $492,750 | Mr. Eperjesy | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Mr. Zamansky | | | — | | | — | | | 857 | | | $32,653 | | | 1,719 | | | $65,529 | | | 2,576 | | | $98,182 | Mr. Bollman | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
In accordance with the regulations established by the Securities and Exchange Commission for the 2019 Summary Compensation Table, on page 25.the “Stock Awards” column for 2019 shows only the PSU awards granted in 2019. The “Non-Equity Incentive Plan Compensation” column for 2019 shows the cash amounts notionally earned in 2017, 2018 and 2019 for the now completed 2017-2019 performance period because these cash amounts became nonforfeitable and were fully earned after the end of 2019. Likewise, in the Grants of Plan-Based Awards Table, the Estimated Future Payouts Under Non-Equity Incentive Plan Awards column shows the performance cash earning opportunities for each performance period. Restricted Stock Units The RSUs granted in 2019 generally vest in equal annual installments of one-third per year beginning one year after the date of grant and are presented in the Grants of Plan-Based Awards Table. Other Program Design ElementsTABLE OF CONTENTS Requirements to Maintain a Minimum Level of Stock Ownership
COMPENSATION POLICIES AND PRACTICES STOCK OWNERSHIP AND RETENTION GUIDELINES We believe that our named executive officers, whose business decisions impact our operations and results, should obtain and maintain a reasonable equity ownership in the Company. Toward that end, the Compensation Committee has established stock ownership guidelines for our named executive officers as outlined below: below for the named executive officers who were still serving as of December 31, 2019: OfficerBradley E. Hughes | | Ownership Guideline | 5x base salary | Targeted Achievement Date | Mr. Hughes | | 5X Base Salary | | September 1, 2021 | Mr. ArmesChristopher J. Eperjesy | | 5X Base Salary | 3x base salary | January 1, 2013 | | December 10, 2023 | Ms. JonesStephen Zamansky | | 3X Base Salary | 3x base salary | December 3, 2019 | Ms. Harmon | | 3X Base Salary | | December 16, 2014 | Mr. Zamansky | | 3X Base Salary | | April 4, 2016 |
If any of our named executive officers do not satisfy the stock ownership guidelines in a timely manner, the Compensation Committee may take action, includingincluding: requiring that 50% of an executive’sexecutive's annual cash incentive be paid in stock; requiring that the executive retain 50% of the net after-tax shares following the exercise of any stock options or upon the vesting of other equity awards; requiring that 50% of the executive’sexecutive's long-term incentive awards be paid in stock; or reducing the executive’sexecutive's long-term incentive grants. All continuing named executive officers hadhave met or on track to meet their respective ownership requirements as of March 1, 2017.Clawback Policy
OurFebruary 28, 2020.
CLAWBACK POLICY Effective December 2, 2019, our Board has adopted aan updated policy that permits us to recoup the incentive compensation paid to our executives and other employees in certain circumstances. Under this policy, if the Company significantly restates its reportedis required to prepare an accounting restatement due to material noncompliance with any financial results, the Board will review the circumstances that caused such restatement, consider issues of accountability and oversight, and analyze the impact of such restatement on compensation paid or awarded to Company employees. If the restatement is the result of fraud or misconduct,reporting requirement under U.S. federal securities laws, the Board may electreasonably, and in good faith, determine that any covered individual who received incentive-based compensation is subject to reasonable efforts to recover all annual cash incentiveexcessive incentive-based compensation. The Board may also direct the Company and its subsidiaries to use prompt and reasonable efforts to equitably adjust the amount of unpaid but notionally earned performance-based stock units or other performance-based awards long-term incentive awards, and other incentive-based compensation paid(plus any amount attributable to the employees whosuch awards). In addition, if a covered individual has been found to have engaged in such fraud or misconduct. Additionally, for participants in the Company’s long-term incentive plans,detrimental activity, the Board may electdirect the Company to reduce, cancel, or recover amounts paid outany incentive-based compensation. This policy applies broadly to employees who participate in the annual or short-term cash incentive compensation programs, as well as employees who may have been granted equity, equity-based or long-term incentive cash awards and allows for recovery for up to three fiscal years prior to the extent the Company’s performance results were overstated as a result of such restatement, and, for all participants, the Board may adjust any unvested or notionally earned amounts related to the relevant
measurement period(s) to reflect the restatement. If the restatement is not the result of fraud or misconduct, the Board may adjust any unvested or notionally earned amounts related to the relevant measurement period(s) to reflect the restatement. The policy also provides that ifyear in which the Board determines that any employeea triggering event has engaged in unethical conduct detrimental to the Company, the Board may seek recoupment of all annual cash incentives, long-term incentives, or other incentive-based compensation paid to such employee during the period(s) of such unethical behavior, and cancel all unvested or notionally earned incentive-based compensation related to such period(s).occurred. Recovery under the Clawback Policy is in addition to any recoupment required or permitted by law, including theThe Sarbanes-Oxley Act of 2002 and common law, or by contract.
Hedging
RISK MITIGATION IN PLAN DESIGN The Compensation Committee periodically reviews the incentive plan policies and Pledging Transactionspractices that apply to all of our non-represented employees to determine whether such policies and practices are reasonably likely to have a material adverse effect on the Company. As part of this process, for 2019, the Compensation Committee, with the assistance of management and the human resources department, conducted a formal assessment of these compensation plans and practices. After conducting this assessment, both management and the Compensation Committee have determined that none of our compensation policies and practices create any risks that are reasonably likely to have a material adverse effect on the Company. HEDGING AND PLEDGING COMPANY SECURITIES In order to align the interests of the Company’sCompany's officers and Directors with those of its stockholders and to address athe potential appearance of improper or inappropriate conduct, the Board of Directors has adopted a policy with respect to hedging and pledging of Common Stock or other equity securities of the Company (“Company Securities”). This anti-hedging policy prohibits Company officers and Directors, including certain family members of such persons, from hedging Company Securities, including short-selling, options, puts, calls, collars and exchange funds, as well as derivatives such as swaps, forwards and futures, or pledging or otherwise encumbering Company Securities as collateral for indebtedness. Persons subject to this policy will be afforded a reasonable opportunity to unwind or otherwise terminate any prohibited hedging transactions or arrangements existing as of the time such person becomes subject to the policy. Tax Deductibility of Executive Compensation
The financial reporting and income tax consequences of the compensation elements are considered by the Compensation Committee when it analyzes the design and level of compensation. The Compensation Committee balances its objective of ensuring effective and competitive compensation packages with the desire to maximize the tax deductibility of compensation.
Regulations issued under Section 162(m) of the Internal Revenue Code provide that compensation in excess of $1 million paid to the Chief Executive Officer and certain other named executive officers will not be deductible unless it meets specified criteria for being “performance-based.” The Compensation Committee generally designs and administers the executive incentive programs of the Company to potentially qualify for the performance-based exemption. It also reserves the right to provide compensation that does not meet the exemption criteria if, in its sole discretion, it determines that doing so advances the business objectives of the Company.
In 2014, the Compensation Committee implemented a bonus pool approach to preserve the ability to deduct compensation paid under the AIP and the performance-based long-term incentive programs. The bonus pool approach establishes a maximum dollar amount and a maximum number of share units that can be paid to the Chief Executive Officer and certain other named executive officers and excludes certain merger, acquisition, divestiture, or similar expenses. The bonus pool formula for the 2016 AIP was based on the greater of 4% of operating profit or 5% of net cash provided by operating activities; the bonus pool formula for aggregate performance cash awarded under the 2016-2018 long-term incentive plan was based on the greater of 1.5% of cumulative operating profit for 2016, 2017, and 2018 or 2% of cumulative net cash provided by operating activities for 2016, 2017, and 2018; and the bonus pool for aggregate performance-based stock units awarded under the 2016-2018 long-term incentive plan was based upon 3% of cumulative operating profit for 2016, 2017, and 2018 or 4% of cumulative net cash provided by operating activities for 2016, 2017, and 2018, the greater of which is divided by the fair market value of the stock on the last day of the performance period. Within the limits of the respective bonus pools, the Compensation Committee determined the amounts paid under the annual and long-term incentive plans as previously described.TABLE OF CONTENTS
Employment Agreements and Change in Control PlanEMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL PAYMENTS The Company has no current employment agreements with any of the named executive officers. As a tool to facilitate attraction and retention of key executive talent, the Company has a change in control plan that covers each of the named executives.executive officers. Under this plan, benefits are received only in the event that an actual change in control and a qualifying termination occurs, or a qualifying termination occurs during a time when the Company is party to a definitive agreement, the consummation of which would result in a change in control, and thus such benefits are not considered part of annual compensation. We believe that a change in control plan maintains productivity, facilitates a long-term commitment to the organization, and encourages retention when,if, and if,when, we are confronted with the potential disruptive impact of a change in control of the Company. See “Potential Payments Upon Termination or Change in Control” beginning on page 33 for more information regarding these arrangements.
Compensation Plan for 2017EFFECT OF TAX AND ACCOUNTING CONSIDERATIONS ON COMPENSATION DESIGN When settingdesigning our executive compensation programs, we consider the accounting and tax impacts of our decisions. In so doing, we intend to strike a balance between designing appropriate and competitive compensation programs for 2017,our executives, maximizing the tax deductibility of such compensation, and, to the extent reasonably possible, avoiding adverse accounting effects. The Compensation Committee believes that potential tax deductions should not be permitted to compromise our ability to design and maintain executive compensation arrangements that will attract, retain, and appropriately motivate the executive talent needed for the Company to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes. In 2014, the Compensation Committee took into accountimplemented a bonus pool approach to potentially preserve the resultsability to deduct compensation paid under the incentive plans, as previously described, under Code Section 162(m). The bonus pool approach establishes a maximum dollar amount and maximum number of share units that can be paid to the Chief Executive Officer and certain other named executive officers and excludes certain merger, acquisition, divestiture, or similar expenses. The bonus pool formula for aggregate performance cash awarded under the 2017-2019 long-term incentive plan was based on the greater of 1.5% of cumulative operating profit for 2017, 2018, and 2019 or 2% of cumulative net cash provided by operating activities for 2017, 2018, and 2019; and the bonus pool for aggregate performance-based stock units awarded under the 2017-2019 long-term incentive plan was based upon 3% of cumulative operating profit for 2017, 2018, and 2019 or 4% of cumulative net cash provided by operating activities for 2017, 2018, and 2019, the greater of which is divided by the fair market value of the stockholder advisory votestock on named executive officer compensation that occurred at the 2016 Annual Meeting of Stockholders. As a substantial majority (approximately 94%)last day of the votes cast approvedperformance period. Within the compensation program described in our 2016 proxy statement,limits of the respective bonus pools, the Compensation Committee applied the same general principles in determiningdetermined the amounts and types of executive compensation for 2017 as described below.Base pay levels are set with reference to individual roles, impact, individual performance, and median levels of competitive market pay as determined by general market comparisons as described on page 14.
Annual cash incentive opportunity levels are benchmarked against competitive norms as measured against general industry data for similar executive positions. Individual annual cash incentive opportunity levels are adjusted, if warranted, to maintain competitive compensation packages for our named executive officers.
The long-term incentive opportunity for 2017 includes approximately one-third performance-based stock units, one-third performance-based cash, and one-third RSUs. Individual long-term incentive targets are benchmarked against appropriate market data and adjusted, if warranted, to maintain competitive compensation opportunity for our named executive officers.
Executive Compensation Consultant Disclosure
During the 2016 fiscal year, the Compensation Committee engaged Exequity LLP to serve as an executive compensation consultant. Exequity provides research, data analysis, survey information and design expertise in developing compensation programs for executives. In addition, Exequity keeps the Compensation Committee apprised of regulatory developments and market trends related to executive compensation practices. A representative of Exequity typically attends meetings of the Compensation Committee and is available to participate in executive sessions. The Compensation Committee has considered the independence-related factors enumerated by the NYSE and the SEC and has concluded that Exequity is independent. In addition, the Compensation Committee has concluded that the work of Exequity in 2016 did not raise any conflicts of interest.
Compensation-Related Risk Assessment
The Compensation Committee periodically reviewspaid under the incentive plan policies and practices that apply to allplans. The Code Section 162(m) exception for “performance-based compensation” has been repealed, effective for taxable years beginning after December 31, 2017, unless certain transition relief for certain compensation arrangements in place as of our non-represented employees to determine whether such policies and practicesNovember 2, 2017 is available.
Additional tax considerations are reasonably likely to have a material adverse effect onfactored into the company. As part of this process, during 2016, the Compensation Committee, with the assistance of management and the human resources department, conducted a formal assessment of these compensation plans and practices. After conducting this assessment, both management and the Compensation Committee have determined that nonedesign of our compensation policiesprograms, including compliance with the requirements of Section 409A of the Code, which may impose additional taxes on participants in certain arrangements involving deferred compensation, and practices creates any risksSections 280G and 4999 of the Code, which affect the deductibility of, and impose certain additional excise taxes on, certain payments that are reasonably likely to havemade upon or in connection with a material adverse effect on the Company.change of control.
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COMPENSATION COMMITTEE REPORT The following report has been submitted by the Compensation Committee of the Board of Directors: The Compensation Committee of the Board of Directors has reviewed and discussed the Company’s Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be both included in the Company’s definitive proxy statement on Schedule 14A for its 20172020 Annual Meeting which isand incorporated by reference ininto the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2019, each as filed with the Securities and Exchange Commission. The foregoing report was submitted by the Compensation Committee of the Board and shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A promulgated by the Securities Exchange Commission or Section 18 of the Exchange Act. Respectfully submitted,
Robert D. Welding, Chairman
Steven M. Chapman
Susan F. Davis
Brian C. Walker
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The following tables and narratives provide for the fiscal year ended December 31, 2016, descriptions of the cash compensation paid by the Company, as well as certain other compensation awarded, paid or accrued, during 2016 to our 2019 named executive officers. Mr. Zamansky and Mr. Bollman were our most highly compensated (and only) executive officers other than Mr. Hughes and Mr. Eperjesy. Each of the named executive officers including: | ● | Mr. Bradley E. Hughes, Chief Executive Officer and President; |
| ● | Mr. Roy V. Armes, former Chairman, Chief Executive Officer and President; |
| ● | Ms. Ginger M. Jones, Senior Vice President and Chief Financial Officer; |
| ● | Ms. Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer and Mr. Stephen Zamansky, Senior Vice President, General Counsel and Secretary; who were our most highly compensated executive officers other than Messrs. Hughes and Armes and Ms. Jones, who were employed by the Company as of December 31, 2016. |
was employed by the Company as of December 31, 2019, with the exception of Mr. Bollman who terminated on December 2, 2019. 2016 SUMMARY COMPENSATION TABLE The following table shows compensation information for 2014, 2015,2017, 2018, and 20162019, as applicable, for our named executive officers. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal
Position(1) | | Year | | Salary | | Bonus | | Stock
Awards(2) | | Option
Awards(3) | | Non-Equity
Incentive Plan
Compensation(4) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings(5) | | All Other
Compensation
(6) | | Total | | | | | | | | | | | | | | | | | | | | | | | | Bradley E. Hughes | | 2016 | | $ | 693,038 | | | | $ | 1,883,319 | | | | | $ | 1,488,288 | | | | | | | | $ | 158,554 | | | | $ | 4,223,199 | | | | Chief Executive Officer, | | 2015 | | $ | 559,912 | | — | | $ | 713,325 | | | — | | $ | 1,243,478 | | | | | — | | | $ | 92,377 | | | | $ | 2,609,092 | | | | and President | | 2014 | | $ | 497,989 | | — | | $ | 726,218 | | $ | 398,144 | | $ | 550,618 | | | | | — | | | $ | 72,164 | | | | $ | 2,245,133 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Roy V. Armes | | 2016 | | $ | 758,955 | | | | $ | 3,650,084 | | | | | $ | 3,598.583 | | | | $ | 9,510 | | | $ | 176,127 | | | | $ | 8,193,259 | | | | Former Chairman, | | 2015 | | $ | 1,103,344 | | — | | $ | 3,654,001 | | | — | | $ | 4,362,087 | | | | $ | 9,100 | | | $ | 249,154 | | | | $ | 9,377,686 | | | | Chief Executive | | 2014 | | $ | 1,071,911 | | — | | $ | 3,689,147 | | $ | 1,851,910 | | $ | 2,302,674 | | | | $ | 8,709 | | | $ | 201,089 | | | | $ | 9,125,440 | | | | Officer, and President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ginger M. Jones | | 2016 | | $ | 499,036 | | | | $ | 467,771 | | | | | $ | 584,041 | | | | | | | | $ | 109,142 | | | | $ | 1,659,990 | | | | Senior Vice President and | | 2015 | | $ | 470,574 | | — | | $ | 367,309 | | | — | | $ | 705,000 | | | | | — | | | $ | 27,550 | | | | $ | 1,570,433 | | | | Chief Financial Officer | | 2014 | | $ | 32,538 | | — | | $ | 479,025 | | | — | | $ | 25,990 | | | | | — | | | | — | | | | $ | 537,553 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brenda S. Harmon | | 2016 | | $ | 426,312 | | | | $ | 446,560 | | | | | $ | 724,725 | | | | | | | | $ | 91,161 | | | | $ | 1,688,758 | | | | Senior Vice President and | | 2015 | | $ | 413,881 | | — | | $ | 459,835 | | | — | | $ | 716,743 | | | | | — | | | $ | 60,050 | | | | $ | 1,650,509 | | | | Chief Human Resources | | 2014 | | $ | 401,825 | | — | | $ | 664,210 | | $ | 244,844 | | $ | 396,786 | | | | | — | | | $ | 56,895 | | | | $ | 1,764,560 | | | | Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen Zamansky | | 2016 | | $ | 430,401 | | | | $ | 443,767 | | | | | $ | 713,036 | | | | | | | | $ | 82,521 | | | | $ | 1,669,725 | | | | Senior Vice President, | | 2015 | | $ | 416,727 | | — | | $ | 449,096 | | | — | | $ | 709,699 | | | | | | | | $ | 56,957 | | | | $ | 1,632,479 | | | | General Counsel and | | 2014 | | $ | 393,354 | | — | | $ | 651,295 | | $ | 266,324 | | $ | 381,393 | | | | | — | | | | 46,922 | | | | $ | 1,739,288 | | | | Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Bradley E. Hughes
President & Chief Executive Officer
| | | 2019 | | | $987,556 | | | $— | | | $2,414,238 | | | $— | | | $1,907,720 | | | $— | | | $147,191 | | | $5,456,705 | | | 2018 | | | $958,479 | | | $— | | | $2,084,621 | | | $— | | | $1,352,760 | | | $— | | | $68,081 | | | $4,463,941 | | | 2017 | | | $927,791 | | | $— | | | $1,748,491 | | | $— | | | $412,422 | | | $— | | | $173,797 | | | $3,262,501 | Christopher J. Eperjesy
Senior Vice President & Chief Financial Officer
| | | 2019 | | | $500,000 | | | $— | | | $881,638 | | | $— | | | $447,750 | | | $— | | | $14,322 | | | $1,843,710 | | | 2018 | | | $30,137 | | | $175,000 | | | $459,375 | | | $— | | | $21,450 | | | $— | | | $— | | | $685,962 | | | 2017 | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | Stephen Zamansky
Senior Vice President, General Counsel & Secretary
| | | 2019 | | | $476,096 | | | $— | | | $479,654 | | | $— | | | $467,680 | | | $— | | | $46,614 | | | $1,470,044 | | | 2018 | | | $460,752 | | | $— | | | $459,169 | | | $— | | | $429,951 | | | $— | | | $29,180 | | | $1,379,052 | | | 2017 | | | $444,723 | | | $— | | | $442,159 | | | $— | | | $245,633 | | | $— | | | $69,689 | | | $1,202,204 | John J. Bollman
(Former) Senior Vice President & Chief Human Resources Officer
| | | 2019 | | | $388,630 | | | $— | | | $359,815 | | | $— | | | $59,527 | | | $— | | | $24,249 | | | $832,221 | | | 2018 | | | $411,055 | | | $— | | | $287,049 | | | $— | | | $253,559 | | | $— | | | $29,016 | | | $980,679 | | | 2017 | | | $306,300 | | | $50,000 | | | $681,200 | | | $— | | | $— | | | $— | | | $35,345 | | | $1,072,845 |
(1)
| (1) | Ms. JonesMr. Eperjesy joined the Company on December 3, 2014.10, 2018. Mr. Armes retired fromBollman joined the Company on August 31, 2016.March 21, 2017 and terminated his employment with the Company on December 2, 2019, and Mr. Hughes was appointed Chief Executive Officer and President effective September 1, 2016. He previously served as Senior Vice President and Chief Operating Officer.Zamansky has been overseeing the Company's human resources operations on an interim basis, in addition to his other responsibilities, since such date. |
| (2)
| Except as otherwise noted below, the amounts shown do not reflect compensation actually received by the named executive officer. The amounts shown in this column for 2019 are the aggregate grant date fair values computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASCASC”) Topic 718. The assumptions made in the valuation are discussed in Note 1314 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the twelve months ended December 31, 2016.2019. At maximum performance levels under the 2016 tranche2019 measurement period of the 2014-2016 Long-Term Incentive Plan,2017-2019 PSUs, the grant date value for each of the named executive officers was as follows: Mr. Hughes, $284,449;$654,088; Mr. Armes, $1,521,496; Ms. Jones,Eperjesy, $0; Ms. Harmon, $201,151;Mr. Zamansky, $130,352; and Mr. Zamansky $190,270.Bollman, $70,200. At maximum performance levels under the 2016 tranche2019 measurement period of the 2015-2017 Long-Term Incentive Plan,2018-2020 PSUs, the grant date value for each of the named executive officers was as follows: Mr. Hughes, $227,618;$738,261; Mr. Armes, $1,132,796; Ms. Jones, $183,579; Ms. Harmon, $135,571;Eperjesy, $0; Mr. Zamansky, $146,787; and Mr. Zamansky, $135,571.Bollman, $114,449. At maximum performance levels under the 2016 |
tranche of the 2016-2018 Long-Term Incentive Plan,2019 measurement period of the 2019-2021 PSUs, the grant date value for each of the named executive officers was as follows: Mr. Hughes, $251,144; Mr. Armes, $1,161,469; Ms. Jones, $187,991; Ms. Harmon, $139,100; and Mr. Zamansky, $140,423.
| (3) | The amounts shown do not reflect compensation actually received by the named executive officer. The amounts shown in this column are the aggregate grant date fair values computed in accordance with FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note 13 to our Consolidated Financial Statements for the twelve months ended December 31, 2016.officers was as follows: Mr. Hughes, $859,031; Mr. Eperjesy, $211,131; Mr. Zamansky, $170,542; and Mr. Bollman, $133,745. |
| (4)(3)
| The amounts shown in this column for 20162019 represent payouts in cash for performance under our annual cash incentive program and the performance-based cash notionally earned for the 2014, 20152017, 2018 and 2016 tranches2019 measurement periods of the 2014-2016 long-term incentive plan.2017-2019 Long-Term Incentive Plan. This reporting reflects the fact that notionally earned amounts are not actually earned by the named executive officers until the completion of the full three –yearthree-year performance period. As discussed under “Compensation Discussion and Analysis” above, these amounts were based on achievement of certain financial goals. See “Compensation Discussion and Analysis” beginning on page 11 for more information about our annual cash incentive program and the performance-based component of the long-term incentive program. |
| (5) | These amounts represent aggregate changes in the actuarial present value of Mr. Armes’s accumulated benefit under our pension plans (including supplemental defined benefit plans). Only Mr. Armes participated in the now frozen pension plan; and none of the named executive officers received above-market earnings on deferred compensation balances from prior years. |
| (6)(4)
| The amounts shown in this column for 20162019 represent other compensation and perquisites, including Company contributions to qualified and non-qualified defined contribution plans, and the incremental cost of executive physicals, expense allowances, financial planning services, personal use of Company aircraft and spouse and dependent travel. The Company contributions to the non-qualified plan include contributions made in 20172020 for the 20162019 plan year. Personal use of the Company plane is limited and charged based upon Cooper Tire’s operating costs. |
TABLE OF CONTENTS Amounts received by each named executive officer for 20162019 are identified and quantified in the table below: | | | | | | | | | | | | | | | | | Named Executive Officer | | Company
Contributions
To Qualified
Defined
Contribution
Plan | | Company
Contributions
To
Non-Qualified
Defined
Contribution
Plan | | Personal,
Spouse,
and
Dependent
Travel | | Tax
Gross-Up
Related
to Travel
Costs | | Financial
Planning
Services | | Executive
Physical | | Total | | Bradley E. Hughes | | $20,208 | | $126,605 | | $367 | | $318 | | $9,315 | | $1,741 | | $158,554 | | Roy V. Armes | | $9,275 | | $126,104 | | $22,468 | | $5,822 | | $6,100 | | $6,358 | | $176,127 | | Ginger M. Jones | | $20,208 | | $82,715 | | — | | — | | $4,540 | | $1,679 | | $109,142 | | Brenda S. Harmon | | $20,208 | | $61,620 | | $468 | | $406 | | $6,625 | | $1,834 | | $91,161 | | Stephen Zamansky | | $20,208 | | $62,313 | | | | | | — | | — | | $82,521 |
Bradley E. Hughes | | | $16,800 | | | $106,783 | | | $7,099 | | | $5,544 | | | $10,015 | | | $950 | | | $147,191 | Christopher J. Eperjesy | | | $12,522 | | | $— | | | $— | | | $— | | | $1,800 | | | $— | | | $14,322 | Stephen Zamansky | | | $16,800 | | | $28,239 | | | $— | | | $— | | | $1,575 | | | $— | | | $46,614 | John J. Bollman | | | $16,800 | | | $— | | | $— | | | $— | | | $6,300 | | | $1,149 | | | $24,249 |
2016 GRANTS OF PLAN-BASED AWARDS TABLE
The following table shows all plan-based awards granted to our named executive officers during 2016.2019. The unvested portion of the stock awards identified in this table are also reported in the “Outstanding Equity Awards at 2016 Fiscal Year-End Table” on page 29.30. All awards were granted under our 2014 Incentive Compensation Plan. For a summary of the incentive plan designs, see “Compensation and Discussion Analysis” beginning on page 11. Bradley E. Hughes | | | AIP | | | $592,534 | | | $1,185,067 | | | $2,370,134 | | | — | | | — | | | — | | | — | | | $— | | | | | | PSU1 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 4,915 | | | 9,830 | | | 19,660 | | | — | | | $327,044 | | | PSU2 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 5,548 | | | 11,095 | | | 22,190 | | | — | | | $369,131 | | | PSU3 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 6,455 | | | 12,910 | | | 25,820 | | | — | | | $429,516 | | | Cash1 | | | 2/14/2019 | | | $187,500 | | | $375,000 | | | $750,000 | | | — | | | — | | | — | | | — | | | $— | | | Cash2 | | | 2/14/2019 | | | $200,682 | | | $401,363 | | | $802,726 | | | — | | | — | | | — | | | — | | | $— | | | Cash3 | | | 2/14/2019 | | | $214,756 | | | $429,511 | | | $859,022 | | | — | | | — | | | — | | | — | | | $— | | | RSU | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | 38,730 | | | $1,288,547 | Christopher J. Eperjesy | | | AIP | | | 2/14/2019 | | | $187,500 | | | $375,000 | | | $750,000 | | | — | | | — | | | — | | | — | | | $— | | | PSU1 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | — | | | $— | | | PSU2 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | — | | | $— | | | PSU3 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 1,587 | | | 3,173 | | | 6,346 | | | — | | | $105,566 | | | Cash1 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | — | | | $— | | | Cash2 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | — | | | $— | | | Cash3 | | | 2/14/2019 | | | $52,778 | | | $105,556 | | | $211,112 | | | — | | | — | | | — | | | — | | | $— | | | RSU | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | 9,519 | | | $316,697 | Stephen
Zamansky | | | AIP | | | 2/14/2019 | | | $154,731 | | | $309,462 | | | $618,924 | | | — | | | — | | | — | | | — | | | $— | | | PSU1 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 980 | | | 1,959 | | | 3,918 | | | — | | | $65,176 | | | PSU2 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 1,103 | | | 2,206 | | | 4,412 | | | — | | | $73,394 | | | PSU3 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 1,282 | | | 2,563 | | | 5,126 | | | — | | | $85,271 | | | Cash1 | | | 2/14/2019 | | | $37,360 | | | $74,719 | | | $149,438 | | | — | | | — | | | — | | | — | | | $— | | | Cash2 | | | 2/14/2019 | | | $39,898 | | | $79,796 | | | $159,592 | | | — | | | — | | | — | | | — | | | $— | | | Cash3 | | | 2/14/2019 | | | $42,625 | | | $85,250 | | | $170,500 | | | — | | | — | | | — | | | — | | | $— | | | RSU | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | 7,689 | | | $255,813 | John J. Bollman | | | AIP | | | 2/14/2019 | | | $126,305 | | | $252,610 | | | $505,220 | | | — | | | — | | | — | | | — | | | $— | | | PSU1 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 528 | | | 1,055 | | | 2,110 | | | — | | | $35,100 | | | PSU2 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 860 | | | 1,720 | | | 3,440 | | | — | | | $57,224 | | | PSU3 | | | 2/14/2019 | | | $— | | | $— | | | $— | | | 1,005 | | | 2,010 | | | 4,020 | | | — | | | $66,873 | | | Cash1 | | | 2/14/2019 | | | $22,651 | | | $45,302 | | | $90,604 | | | — | | | — | | | — | | | — | | | $— | | | Cash2 | | | 2/14/2019 | | | $31,112 | | | $62,223 | | | $124,446 | | | — | | | — | | | — | | | — | | | $— | | | Cash3 | | | 2/14/2019 | | | $33,431 | | | $66,861 | | | $133,722 | | | — | | | — | | | — | | | — | | | $— | | | RSU | | | 2/14/2019 | | | $— | | | $— | | | $— | | | — | | | — | | | — | | | 6,030 | | | $200,618 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future
Payouts Under
Non-Equity Incentive
Plan Awards | | Estimated Future
Payouts Under
Equity Incentive
Plan Awards | | | | | | | | | Name
(a) | | Type(1) | | Grant
Date
(b) | | $
Threshold
(2)
(c) | | $
Target
(3)
(d) | | $
Maximum
(4)
(e) | | #
Threshold
(5)
(f) | | #
Target
(6)
(g) | | #
Maximum
(7)
(h) | | All Other
Stock Awards:
Number of
Shares of
Stock or
Units
(#) | | Value of
Stock and
Option
Awards
($)
(8)
(i) | | Bradley E. | | AIP | | 2/18/2016 | | $ | 344,484 | | | $ | 688,967 | | | $ | 1,377,934 | | | | | | | | | | | | | | | | | | | | | | | Hughes | | PBU1 | | 2/18/2016 | | | | | | | | | | | | | | | 1,935 | | | | 3,869 | | | | 7,738 | | | | | | | $ | 142,224 | | | | | PBU2 | | 2/18/2016 | | | | | | | | | | | | | | | 1,548 | | | | 3,096 | | | | 6,192 | | | | | | | $ | 113,809 | | | | | PBU3 | | 2/18/2016 | | | | | | | | | | | | | | | 1,708 | | | | 3,416 | | | | 6,832 | | | | | | | $ | 125,572 | | | | | PBU4 | | 2/18/2016 | | $ | 46,346 | | | $ | 92,692 | | | $ | 185,384 | | | | | | | | | | | | | | | | | | | | | | | | | PBU5 | | 2/18/2016 | | $ | 56,667 | | | $ | 113,334 | | | $ | 226,668 | | | | | | | | | | | | | | | | | | | | | | | | | PBU6 | | 2/18/2016 | | $ | 62,778 | | | $ | 125,556 | | | $ | 251,112 | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 43,380 | | | $ | 1,501,714 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Roy V. | | AIP | | 2/18/2016 | | $ | 531,269 | | | $ | 1,062,537 | | | $ | 2,125,074 | | | | | | | | | | | | | | | | | | | | | | | Armes | | PBU1 | | 2/18/2016 | | | | | | | | | | | | | | | 10,348 | | | | 20,695 | | | | 41,390 | | | | | | | $ | 760,748 | | | | | PBU2 | | 2/18/2016 | | | | | | | | | | | | | | | 7,704 | | | | 15,408 | | | | 30,816 | | | | | | | $ | 566,398 | | | | | PBU3 | | 2/18/2016 | | | | | | | | | | | | | | | 7,899 | | | | 15,798 | | | | 31,596 | | | | | | | $ | 580,734 | | | | | PBU4 | | 2/18/2016 | | $ | 247,917 | | | $ | 495,834 | | | $ | 991,668 | | | | | | | | | | | | | | | | | | | | | | | | | PBU5 | | 2/18/2016 | | $ | 282,000 | | | $ | 564,000 | | | $ | 1,128,000 | | | | | | | | | | | | | | | | | | | | | | | | | PBU6 | | 2/18/2016 | | $ | 290,356 | | | $ | 580,711 | | | $ | 1,161,422 | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 47,394 | | | $ | 1,742,203 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ginger M. | | AIP | | 2/18/2016 | | $ | 187,193 | | | $ | 374,385 | | | $ | 748,770 | | | | | | | | | | | | | | | | | | | | | | | Jones | | PBU2 | | 2/18/2016 | | | | | | | | | | | | | | | 1,249 | | | | 2,497 | | | | 4,994 | | | | | | | $ | 91,790 | | | | | PBU3 | | 2/18/2016 | | | | | | | | | | | | | | | 1,279 | | | | 2,557 | | | | 5,114 | | | | | | | $ | 93,995 | | | | | PBU5 | | 2/18/2016 | | $ | 45,695 | | | $ | 91,389 | | | $ | 182,778 | | | | | | | | | | | | | | | | | | | | | | | | | PBU6 | | 2/18/2016 | | $ | 47,000 | | | $ | 94,000 | | | $ | 188,000 | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,671 | | | $ | 281,986 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brenda S. | | AIP | | 2/18/2016 | | $ | 138,560 | | | $ | 277,119 | | | $ | 554,238 | | | | | | | | | | | | | | | | | | | | | | | Harmon | | PBU1 | | 2/18/2016 | | | | | | | | | | | | | | | 1,368 | | | | 2,736 | | | | 5,472 | | | | | | | | 100,575 | | | | | PBU2 | | 2/18/2016 | | | | | | | | | | | | | | | 922 | | | | 1,844 | | | | 3,688 | | | | | | | | 67,785 | | | | | PBU3 | | 2/18/2016 | | | | | | | | | | | | | | | 946 | | | | 1,892 | | | | 3,784 | | | | | | | $ | 69,550 | | | | | PBU4 | | 2/18/2016 | | $ | 32,775 | | | $ | 65,550 | | | $ | 131,100 | | | | | | | | | | | | | | | | | | | | | | | | | PBU5 | | 2/18/2016 | | $ | 33,750 | | | $ | 67,500 | | | $ | 135,000 | | | | | | | | | | | | | | | | | | | | | | | | | PBU6 | | 2/18/2016 | | $ | 34,767 | | | $ | 69,534 | | | $ | 139,068 | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,676 | | | $ | 208,650 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen | | AIP | | 2/18/2016 | | $ | 139,889 | | | $ | 279,778 | | | $ | 559,556 | | | | | | | | | | | | | | | | | | | | | | | Zamansky | | PBU1 | | 2/18/2016 | | | | | | | | | | | | | | | 1,294 | | | | 2,588 | | | | 5,176 | | | | | | | $ | 95,135 | | | | | PBU2 | | 2/18/2016 | | | | | | | | | | | | | | | 922 | | | | 1,844 | | | | 3,688 | | | | | | | | 67,785 | | | | | PBU3 | | 2/18/2016 | | | | | | | | | | | | | | | 955 | | | | 1,910 | | | | 3,820 | | | | | | | $ | 70,212 | | | | | PBU4 | | 2/18/2016 | | $ | 31,000 | | | $ | 62,000 | | | $ | 124,000 | | | | | | | | | | | | | | | | | | | | | | | | | PBU5 | | 2/18/2016 | | $ | 33,750 | | | $ | 67,500 | | | $ | 135,000 | | | | | | | | | | | | | | | | | | | | | | | | | PBU6 | | 2/18/2016 | | $ | 35,100 | | | $ | 70,200 | | | $ | 140,400 | | | | | | | | | | | | | | | | | | | | | | | | | RSU | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,730 | | | $ | 210,635 | |
TABLE OF CONTENTS
| (1)
| AIP = Annual Incentive Plan; PBU1PSU1 = Performance-based stock units granted in the 2016 tranche2019 measurement period of the 2014-20162017-2019 Long-Term Incentive Plan; PBU2PSU2 = Performance-based stock units granted in the 2016 tranche2019 measurement period of the 2015-20172018-2020 Long-Term Incentive Plan; PBU3PSU3 = Performance-based stock units granted in the 2016 tranche2019 measurement period of the 2016-20182019-2021 Long-Term Incentive Plan; PBU4Cash1 = Performance-based cash granted in the 2016 tranche2019 measurement period of the 2014-20162017-2019 Long-Term Incentive Plan; PBU5Cash2 = Performance-based cash granted in the 2016 tranche2019 measurement period of the 2015-20172018-2020 Long Term Incentive Plan; PBU6Cash3 = Performance-based cash granted in the 2016 tranche2019 measurement period of the 2016-20182019-2021 Long Term Incentive Plan; RSU = Restricted Stock Units. |
| (2)
| The amounts shown in column (c) with respect to AIP represent the threshold opportunity if all of thefor each performance metrics are met.metrics. The threshold payout is based on performance at 61% of the corporate operating profit of $155,000,000 and achievement of corporate free cash flow of $45,000,000.$(35,000,000). The amounts shown in column (c) with respect to PBU4, PBU5,Cash1, Cash2, and PBU6Cash3 represent the threshold amount of performance-based cash that the executive would notionally earn for 20162019 performance under the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-20182019-2021 measurement periods of our Long-Term Incentive Plan, if the 20162019 performance is $140,000,000$60,000,000 for corporate net income and return on invested capital is 11.0of 11 percent. If the 20162019 performance is below the applicable targets,threshold levels, our executives would not receive any payout of the performance-based cash awarded to them. |
| (3)
| The amounts shown in column (d) with respect to AIP represent the target opportunity if allboth of the performance metrics are met. The target payout is based on corporate operating profit of $228,000,000 and achievement of corporate free cash flow of $15,000,000. The amounts shown in column (d) with respect to PBU4, PBU5,Cash1, Cash2, and PBU6Cash3 represent the amount of performance-based cash that the executive would notionally earn for 20162019 performance under the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-20182019-2021 measurement periods of our Long-Term Incentive Plan, if the 20162019 performance is at 100%$117,000,000 for corporate net income and a return on invested capital of 15 percent of target (the payout is 100%100 percent of the executives’ targeted payout amounts). |
| (4)
| The amounts shown in column (e) with respect to AIP represent the maximum opportunity if allboth of the maximum-level performance metrics are met. The maximum payout amounts are capped at 200%200 percent of the executives’ targeted payout amounts. Maximum payout is earned on performance equal to or exceeding $450,000,000$300,000,000 for the corporate operating profit and achieving or exceeding corporate free cash flow of $100,000,000.$65,000,000. The amounts shown in column (e) with respect to PBU4, PBU5,Cash1, Cash2, and PBU6Cash3 represent the maximum amount of performance-based cash that the executive would notionally earn for 20162019 performance under the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-182019-2021 measurement periods of our Long-Term Incentive Plan. The payout amounts are capped at 200%200 percent of the executives’ targeted payout amounts. Maximum payout is earned on performance equal to or exceeding $280,000,000$175,000,000 for corporate net income and a return on invested capital of or exceeding 18.018 percent. |
| (5)
| The amounts shown in column (f) represent the threshold number of performance-based stock units that the executive would notionally earn for 20162019 performance under the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-20182019-2021 measurement periods of our Long-Term Incentive Plan, if the 20162019 performance is $140,000,000$60,000,000 for corporate net income and a return on invested capital targets is 11.0of 11 percent (in each case, the payout would have been 50%50 percent of the executives’ targeted payout amounts). If the 20162019 performance is below the applicable targets, our executives would not receive any payout of the performance-based stock units awarded to them. |
| (6)
| The amounts shown in column (g) represent the target number of performance-based stock units that the executive would notionally earn for 20162019 performance under the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-20182019-2021 measurement periods of our Long-Term Incentive Plan, if the 20162019 performance is $227,000,000$117,000,000 for corporate net income and a return on invested capital target is 15.0of 15 percent (the payout is 100%100 percent of the executives’ targeted payout amounts). |
| (7)
| The amounts shown in column (h) represent the maximum number of performance-based stock units that the executive would notionally earn for 20162019 performance under the 2014-2016, 2015-2017,2017-2019, 2018-2020, and 2016-20182019-2021 measurement periods of our Long-Term Incentive Plan. Maximum payout is earned on performance equal to or exceeding $280,000,000$175,000,000 of corporate net income and a return on invested capital of or exceeding 18.018 percent. The maximum payout amounts are capped at 200%200 percent of the executives’ targeted payout amounts. |
| (8)
| The amounts in column (l)shown represent the grant date fair value as of the grant date of stock awards determined pursuant to FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note 1314 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the twelve months ended December 31, 2015.2019. |
For more information about the compensation arrangements in which our named executive officers participate, see “Compensation Discussion and Analysis” beginning on page 11.13.TABLE OF CONTENTS
OUTSTANDING EQUITY AWARDS AT 2016 FISCAL YEAR-END TABLE The following table shows all outstanding equity awards (stock options, performance-based stock units that have not been earned, and unvested restricted stock units) held by our named executive officers at the end of 2016.| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable(1) | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(1) | | Option
Exercise
Price
($) | | Grant Date | | Option
Expiration
Date | | | Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(2) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3) | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(4) | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(3)(4) | | | | | | | | | | | | | | | | | | | | | | | | Bradley E. | | | 26,760 | | | | | | $ | 25.425 | | | February 21, 2013 | | February 21, 2023 | | | — | | — | | — | | — | | Hughes | | | 21,650 | | | 10,825 | | | $ | 23.960 | | | February 20, 2014 | | February 20, 2024 | | | — | | — | | — | | — | | | | | | | | | | | | | | | | | | | | 66,965 | | | $2,601,597 | | | 9,928 | | $385,703 | | | | | 48,410 | | | 10,825 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Roy V. Armes | | | | | | 50,351 | | | $ | 23,960 | | | February 20, 2014 | | August 31, 2021 | | | — | | | | — | | | — | | | | — | | | | | | — | | | | | | | | | | | | | | | — | | | | — | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | 144,776 | | | | $5,624,538 | | | | | | | | | | | | | | | | 50,351 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ginger M. | | | | | | | | | | | | | | | | | | 41,614 | | | | $1,616,685 | | | 7,611 | | | | $295,687 | | | Jones | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brenda S. | | | 18,000 | | | — | | | $ | 22.970 | | | February 23, 2011 | | February 23, 2021 | | | — | | | | — | | | — | | | | — | | | Harmon | | | 17,553 | | | | | | $ | 25.425 | | | February 21, 2013 | | February 21, 2023 | | | — | | | | — | | | — | | | | — | | | | | | 13,314 | | | 6,657 | | | $ | 23.960 | | | February 20, 2014 | | February 20, 2024 | | | — | | | | — | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | 19,381 | | | | $752,964 | | | 5,628 | | | | $218,648 | | | | | | 48,867 | | | 6,657 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen | | | — | | | | | | | | | | | | | | | — | | | | — | | | — | | | | — | | | Zamansky | | | | | | 7,241 | | | $ | 23.960 | | | February 20, 2014 | | February 20, 2024 | | | — | | | | — | | | — | | | | — | | | | | | — | | | | | | | | | | | | | | | 19,466 | | | | $756,247 | | | 5,664 | | | | $220,046 | | | | | | — | | | 7,241 | | | | | | | | | | | | | | | | | | | | | | | | |
Bradley E. Hughes | | | 26,760 | | | — | | | $25.425 | | | 2/21/2013 | | | 2/20/2023 | | | — | | | — | | | — | | | — | | | | 32,475 | | | — | | | $23.96 | | | 2/20/2014 | | | 2/19/2024 | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | 98,344 | | | $2,827,391 | | | 36,915 | | | $1,061,307 | | | | 59,235 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Christopher J. Eperjesy | | | | | | | | | | | | | | | | | | 27,712 | | | $796,721 | | | 6,346 | | | $182,448 | | Stephen Zamansky | | | | | | | | | | | | | | | | | | 19,554 | | | $562,178 | | | 7,332 | | | $210,795 | | John J. Bollman | | | | | | | | | | | | | | | | | | — | | | $— | | | — | | | $— | |
| (1)
| The stock options vestvested in one-third increments on each of the first three anniversaries of the grant date (which grant date was February 23, 2011 for the options expiring February 23, 2021, February 21, 2013 for the options expiring on February 21, 2023 and February 20, 2014 for the stock options expiring on February 20, 2024).grant. |
| (2)
| Includes dividend equivalent units earned on outstanding restricted stock units. The amounts reported in this column will vest: for Mr. Hughes, as to 3,45813,098 units on February 17, 2017,14, 2020, as to 3,16910,232 units on February 18, 2017,15, 2020, as to 11,10511,422 units on September 1, 2017,February 15, 2020, as to 11,34114,652 units on December 31, 2017,2020, as to 3,45713,098 units on February 17, 2018,14, 2021, as to 3,16911,421 units on February 18, 2018,15, 2021, as to 11,105 units on September 1, 2018, as to 5,59911,323 units on December 31, 2018,2021, and as to 3,45713,098 units on February 17, 2019,14, 2022; for Mr. Eperjesy, as to 11,105 units on September 1, 2019; for Mr. Armes, as to 15,9873,220 units on February 17, 2017,14, 2020, as to 15,7663,220 units on February 18, 2017,14, 2021, as to 15,987 units on February 28, 2017, as to 15,766 units on February 28, 2017, as to 15,987 units on February 28, 2017, as to 48,0212,783 units on December 31, 2017,2021, as to 15,9873,219 units on February 17, 2018,14, 2022, as to 15,766 units on February 18, 2018, as to 17,26215,270 units on December 31, 2018, as to 15,987 units on February 17, 2019; for Ms. Jones, as to 2,588 units on February 17, 2017, as to 2,556 units on February 18, 2017, as to 15,397 units on December 3, 2017, as to 9,149 units on December 31, 2017, as to 2,588 units on February 17, 2018, as to 2,557 units on February 18, 2018, as to 4,191 units on December 31, 2018, as to 2,588 units on February 17, 2019; for Ms. Harmon, as to 1,916 units on February 17, 2017, as to 1,889 units on February 18, 2017, as to 6,757 units on December 31, 2017, as to 1,915 units on February 17, 2018, as to 1,888 units on February 18, 2018, as to 3,101 units on December 31, 2018, as to 1,915 units on February 17, 2019;10, 2022; and for Mr. Zamansky, as to 2,5532,601 units on February 17, 2017,14, 2020, as to 2,7982,043 units on February 15, 2020, as to 2,272 units on February 15, 2020, as to 2,916 units on December 31, 2020, as to 2,601 units on February 14, 2021, as to 2,043 units on February 15, 2020, as to 2,272 units on February 15, 2021, as to 2,248 units on December 31, 2021, as to 2,601 units on February 14, 2022. |
on February 18, 2017, as to 6,757 units on December 31, 2017, as to 2,552 units on February 17, 2018, as to 2,798 units on February 18, 2018, as to 3,130 units on December 31, 2018, as to 2,552 units on February 17, 2019.
| (3)
| Value is based on the closing price of our common stock of $38.85$28.75 on December 30, 2016,31, 2019, as reported on the New York Stock Exchange. |
| (4)
| Reflects the target payout opportunity for 20172020 and 20182021 performance periods under the 2015-20172018-2020 and 2016-20182019-2021 measurement periods of our Long-Term Incentive Plan. The target payout opportunities for 20172020 under the 2015-20172018-2020 measurement period (3,096(11,095 units for Mr. Hughes, 2,4970 units for Ms. Jones, 1,844 units for Ms. Harmon,Mr. Eperjesy, and 1,8442,206 units for Mr. Zamansky), if earned, will vest on December 31, 2017.2020. The target payout opportunities for each of 20172020 and 20182021 under the 2016-20182019-2021 measurement period (3,416(12,910 and 3,41612,910 units for Mr. Hughes, 2,5573,173 and 2,557 for Ms. Jones, 1,892 and 1,892 units for Ms. Harmon, and 1,910 and 1,9103,173 units for Mr. Zamansky,)Eperjesy, and 2,563 and 2,563 units for Mr. Zamansky), if earned will vest on December 31, 2018.2021. In the event of death, disability, or retirement during a measurement period, performance awards under the Long-Term Incentive plans are prorated for a period of time that the grantee was employed during the measurement period. Retirement is defined as the earlier of age 65 or the date on which the grantee’s years of age and service equal 70. |
2016 OPTION EXERCISES AND STOCK VESTED TABLE The following table shows our named executive officers’ exerciseexercises of stock options, plus the value realized at exercise by each named executive officer, and restricted stock awards that vested, plus the value realized by each named executive officer as a result of such vesting, during 2016.| | | Option Awards | | Stock Awards | | Name | | Number of
Shares
Acquired
on Exercise
(#) | | Value
Realized
on Exercise
($) | | Number of
Shares
Acquired
on Vesting
(#) | | Value
Realized
on Vesting
($)(1) | | (a) | | (b) | | (c) | | (d) | | (e) | | Bradley E. Hughes | | | — | | | | — | | | | 19,718 | | | | $704,480 | | | Roy V. Armes | | | 92,024 | | | | $3,672,770 | | | | 102,218 | | | | $3,667,342 | | | Ginger M. Jones | | | — | | | | — | | | | 2,525 | | | | 91,531 | | | Brenda S. Harmon | | | — | | | | — | | | | 16,323 | | | | $573,747 | | | Stephen Zamansky | | | 13,397 | | | | $523,005 | | | | 15,914 | | | | $557,449 | |
Bradley E. Hughes | | | — | | | $— | | | 43,695 | | | $1,345,115 | Christopher J. Eperjesy | | | — | | | $— | | | — | | | $— | Stephen Zamansky | | | — | | | $— | | | 10,287 | | | $343,262 | John J. Bollman | | | — | | | $— | | | 5,817 | | | $183,107 |
| (1)
| These amounts represent the fair market value of our common stock on the vesting date or distribution date multiplied by the number of shares that vested or were distributed. |
TABLE OF CONTENTS
2016 PENSION BENEFITS TABLEThis table shows the actuarial present value of accumulated benefits payable to, and the number of years of service credited to Mr. Armes, who was the only named executive officer with a benefit under our now frozen defined benefit plan. Mr. Armes had a cash balance plan benefit under the Spectrum Retirement Plan, and a related supplementary benefit under the Non-Qualified Supplementary Benefit Plan.
| Name | | Plan Name | | Number of
Years
Credited
Service | | | Present
Value of
Accumulated
Benefit | | Payments
During
Last Fiscal
Year | | | (a) | | (b) | | (c) | | | (d) | | (e) | | | Roy V. Armes | | Spectrum Retirement Plan | | 9 | | | | $45,800 | | | | $0 | | | | | Non-Qualified Supplementary Benefit Plan – DB Account | | 9 | | | | $175,042 | | | | $0 | |
For purposes of the amounts reflected above under column (d), we have used the same assumptions that we use for financial reporting purposes under generally accepted accounting principles, except that we have assumed that the retirement age for Mr. Armes was his normal retirement age of 65. Mr. Armes has retired on August 31, 2016. His actual benefit under the qualified and non-qualified plans will be determined under the provisions of those plans as they apply to all participants. See Note 10 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the twelve months ended December 31, 2016, for details as to our valuation method and the material assumptions applied in quantifying the present value of the current accrued benefit. See also our discussion of pension and postretirement benefits under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” beginning on page 28 of the Company’s Form 10-K for the year ended December 31, 2016.
Mr. Armes’s benefit under the Spectrum Retirement Plan may be paid in the form of an annuity, or in a lump sum, as he elects. A participant may receive the amount of his or her benefit in a lump sum payment upon termination of employment, subject to any Code Section 409A provisions. Payment of the benefit in an annuity form may not generally commence until the participant has reached age 55. The amount payable is not reduced by Social Security benefits payable to the participant.
2016 NON-QUALIFIED DEFERRED COMPENSATION TABLE
This table shows certain information for 2016 for each of our named executive officers under our non-qualified deferred compensation plans and programs. As noted above, Mr. Armes was the only named executive officer who had a benefit under the Non-Qualified Supplementary Plan that is related to the now frozen defined benefit (cash balance) plan.
| Name | | Executive
Contributions
($)(1) | | Company
Contributions
($)(2) | | Aggregate
Earnings
($)(3) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
12/31/16
($)(4) | | Bradley E. Hughes | | | — | | | | $126,605 | | | | $3,746 | | | | — | | | | $329,800 | | | Non-Qualified Supplementary Benefit Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Roy V. Armes | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan | | | — | | | | $126,104 | | | | $18,097 | | | | — | | | | $1,145,231 | | | Deferred Restricted Stock Units | | | — | | | | — | | | | $130,557 | | | | — | | | | $3,507,572 | | | | | | | | | | | | | | | | | | | | | | | | | Ginger M. Jones | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan | | | — | | | | $82,715 | | | | $298.00 | | | | — | | | | $104,957 | | | | | | | | | | | | | | | | | | | | | | | | | Brenda S. Harmon | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan | | | — | | | | $61,620 | | | | $8,365 | | | | — | | | | $292,793 | | | | | | | | | | | | | | | | | | | | | | | | | Stephen Zamansky | | | | | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan | | | — | | | | $62,313 | | | | $1,873 | | | | — | | | | $159,983 | |
| (1) | The amounts reported as Executive Contributions are fully reported in the 2016 Summary Compensation Table. |
| (2) | The amounts reported as Company Contributions include amounts with respect to both base salary and annual incentive compensation earned by each named executive officer for 2016. These amounts include contributions made in 2017 with respect to 2016. All of these amounts are reported as All Other Compensation in the 2016 Summary Compensation Table. |
| (3) | None of the amounts reported as Aggregate Earnings are reported in the 2016 Summary Compensation Table. |
| (4) | The Aggregate Balance at December 31, 2016, includes deferred compensation which was reported in the Summary Compensation Table for this year and prior year proxies. The amounts are $376,316 for Mr. Hughes, $1,190,104 for Mr. Armes, $94,061 for Ms. Jones, $204,367 for Ms. Harmon, and $113,993 for Mr. Zamansky.
|
For more information about our non-qualified deferred compensation programs, see “Compensation Discussion and Analysis” beginning on page 11.
Non-Qualified Supplementary Benefit Plan
The Non-Qualified Supplementary Benefit Plan is a non-elective deferred compensation plan. The named executive officers participate in the Non-Qualified Supplementary Benefit Plan only to the extent that full participation in our qualified 401(k) plan (the Spectrum Investment Savings Plan) is restricted by limits under the Internal Revenue Code. Mr. Armes has an accrued benefit This table shows certain information for 2019 for each of our named executive officers under the frozen cash balance plan.our non-qualified deferred compensation plans and programs. Bradley E. Hughes | | | $— | | | $106,783 | | | $13,406 | | | $— | | | $688,713 | Christopher J. Eperjesy | | | $— | | | $— | | | $— | | | $— | | | $— | Stephen Zamansky | | | $— | | | $28,239 | | | $13,357 | | | $— | | | $293,836 | John J. Bollman | | | $— | | | $— | | | $251 | | | $— | | | $12,381 |
(1)
| The amounts reported as Executive Contributions are fully reported in the 2019 Summary Compensation Table. |
(2)
| The amounts reported as Company Contributions include amounts with respect to both base salary and annual incentive compensation earned by each named executive officer for 2019. These amounts include contributions made in 2020 with respect to 2019. All of these amounts are reported as All Other Compensation in the 2019 Summary Compensation Table. |
(3)
| None of the amounts reported as Aggregate Earnings are reported in the 2019 Summary Compensation Table. |
(4)
| The Aggregate Balance at December 31, 2019, includes deferred compensation and Company contributions which were reported in the Summary Compensation Table for this year and prior year proxy statements. |
For more information about our non-qualified deferred compensation programs, see “Compensation Discussion and Analysis” beginning on page 13.
TABLE OF CONTENTS
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL We are generally obligated to provide our named executive officers with certain payments or other forms of compensation upon a termination of employment or a change in control. The forms of such termination can involve voluntary termination, retirement, involuntary termination without cause, for cause termination, termination following a change in control, and the disability or death of the executive. The disclosure below describes the circumstances under which we may be obligated to provide our named executive officers (other than Mr. Armes)Bollman) with payments or compensation. Additionally, the tables below reflect the estimated amounts of payments or compensation each of our named executive officers (other than Mr. Armes)Bollman) may receive under particular circumstances in the event of termination of such named executive officer’s employment. Payments to Mr. Armes
We were a party to an employment agreementBollman did not receive any additional compensation in connection with Mr. Armes. The initial term of employment for Mr. Armes was for three years beginning January 1, 2007, which term was automatically extended for one additional year commencing each January 1 after the commencement of the initial term. The employment agreement contains non-competition and non-solicitation provisions that extend for two years after any termination of employment. Certain compensation awards granted to Mr. Armes were also governed by the applicable compensation plans and award agreements. Below is a description of the payments or compensation Mr. Armes is entitled to as a result of his employment with us terminating on August 31, 2016.
Payments Made Upon Retirement
Mr. Armes received his then current base salary, to the extent unpaid through his termination from the Company.
PAYMENTS MADE UPON DEATH, DISABILITY, OR RETIREMENT Upon (1) retirement by a named executive officer who is eligible to retire or (2) death or disability, named executive officers receive the following: Prorated incentive (annual and long-term) compensation through the date plus the prorated portion of our annual and long-term incentive compensation programstermination based upon actual performance through the end of the applicable measurement period(s) to be distributed in accordance with the terms of the plans. Additionally, all outstandingplans; Accrued and vested retirement benefits; Upon death or disability, stock options (or similar equity awards) will remain outstandingfully vest and are exercisable in accordance with their terms. The vesting and distribution of restrictedfor twelve (12) months; upon retirement, stock units will beoptions continue to vest in accordance with the terms of the grants. He will also receive any accruedplans and vestedare exercisable for five (5) years from the date of retirement; and Unvested restricted stock unit awards vest upon retirement benefits, including under(provided they were granted at least six months before the Company’s Non-Qualified Supplementary Benefit Plan.Payments to Other Named Executive Officers
Payments Made Upon Retirement, Death, or Disability
Upon (i) retirement by a named executive officer who is eligible to retire or (ii)date) and upon death or disability, named executive officers receiveand in each such case, are distributable in accordance with participant elections under the following:
| ● | Prorated incentive (annual and long-term) compensation through the date of termination based upon actual performance through the end of the applicable measurement period(s) to be distributed in accordance with the terms of the plans; |
| ● | Accrued and vested retirement benefits; |
| ● | Upon death or disability, stock options fully vest and are exercisable for twelve (12) months; upon retirement, stock options continue to vest in accordance with the terms of the plans and are exercisable for five years from the date of retirement; and |
| ● | Unvested restricted stock unit awards vest upon retirement, death, or disability and are distributable in accordance with participant elections under the terms of the plan. |
terms of the plan.
PAYMENTS MADE UPON VOLUNTARY OR INVOLUNTARY TERMINATION WITHOUT CAUSE
Payments Made Upon Voluntary or Involuntary Termination Without Cause
Upon voluntary or involuntary termination without cause, named executive officers are entitled to payment of any earned and unpaid base pay as of the date of termination and vested benefits in accordance with the terms of the applicable plans. | ● | Notionally earned performance units and cash under long-term compensation plans and annual incentive plans for completed performance periods vest in full upon certification by the Compensation Committee. |
| ● | Vested stock options at the date of termination are exercisable for thirty (30) days for voluntary termination; ninety (90) days for involuntary termination without cause. |
Payments Made Upon Termination for Cause
completed performance periods vest in full upon certification by the Compensation Committee. Vested stock options at the date of termination are exercisable for thirty (30) days for voluntary termination; ninety (90) days for involuntary termination without cause. PAYMENTS MADE UPON TERMINATION FOR CAUSE Upon termination for cause, named executive officers are entitled to payment of any earned and unpaid base pay as of the date of termination and vested benefits in accordance with the terms of the applicable plans. All unpaid notionally earned annual and long-term compensation, stock options, and unvested restricted stock units are immediately forfeited.
TABLE OF CONTENTS Payments Made in Connection with a Change in Control
PAYMENTS MADE IN CONNECTION WITH A CHANGE IN CONTROL Following a change in control or a qualified pre-change in control termination such as when the Company is party to a definitive agreement the consummation of which would result in a change in control, named executive officers are entitled to receive the following payments and benefits: Benefits upon closing of the change in control or a qualified termination under a potential change in control. | ● | Payment of notionally earned and unpaid annual and long-term incentive compensation; |
| ● | Prorated target for annual or long-term incentive compensation that is not notionally earned; |
| ● | If the time-based restricted stock units or stock option awards are not assumed by the successor upon the change in control, the restricted stock units and stock options vest upon the change in control. Stock options remain exercisable for 90 days following termination. Restricted stock units and stock options may be converted to cash if the acquiring company does not assume responsibility for the obligation; and |
| ● | Upon a qualified termination under a potential change in control only, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment of restricted stock units in accordance with the participant elections under terms of the plan and stock options are exercisable for 90 days following termination. |
Payment of notionally earned and unpaid annual and long-term incentive compensation; Prorated target for annual or long-term incentive compensation that is not notionally earned; If the time-based restricted stock units or stock option awards are not assumed by the successor upon the change in control, the restricted stock units and stock options vest upon the change in control. Stock options remain exercisable for ninety (90) days following termination. Restricted stock units and stock options may be converted to cash if the acquiring company does not assume responsibility for the obligation; and Upon a qualified termination under a potential change in control only, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment of restricted stock units in accordance with the participant elections under terms of the plan and stock options are exercisable for ninety (90) days following termination. Additional benefits upon a termination without cause or a voluntary termination due to good reason within two years after a change in control. | ● | Prorated annual incentive compensation from the date of the beginning of the performance period through the date of termination for awards or programs in which the executive participates at target levels; |
Prorated annual incentive compensation from the date of the beginning of the performance period through the date of termination for awards or programs in which the executive participates at target levels; If the time-based restricted stock units or stock option awards are assumed by the successor upon the change in control, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment in accordance with the terms of the applicable plans (stock options will be subject to exercise for ninety (90) days following termination); An amount equal to three times the sum of the chief executive officer’s annual base pay plus target annual incentive compensation at the greater of the amount at termination or immediately prior to the change in control; two times the sum for all other named executive officers. Thirty-six (36) months for Mr. Hughes and twenty-four (24) months for all other named executive officers of continuation of life, accident, and health benefits, subject to mitigation; Outplacement services for twelve (12) months, in an amount up to 15% of the named executive officer’s base salary; and The Company will reduce the executive’s payments and/or benefits under the plan, to the extent necessary so that no portion of the total payments is subject to the Section 280G excise tax; provided, however, that the foregoing reduction shall not be made if the total payments to be provided to the executive, determined on an after-tax basis, exceed 110% of the amount calculated without such reduction. In any event, there is no tax gross-up for excise taxes. 2020 Proxy Statement 33
| ● | If the time-based restricted stock units or stock option awards are assumed by the successor upon the change in control, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment in accordance with the terms of the applicable plans (stock options will be subject to exercise for 90 days following termination); |
TABLE OF CONTENTS | ● | Three times the sum of the chief executive officer’s base pay plus target annual incentive compensation at the greater of the amount at termination or immediately prior to the change in control; two times the sum for all other named executive officers. |
| ● | 24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation; |
| ● | Outplacement services for 12 months, in an amount up to 15% of the named executive officer’s base salary; and |
| ● | If the parachute payments on an after-tax basis exceed 110% of the parachute payments that would have been received calculated without a reduction to the “Section 280G safe harbor limit,” the payments are not cut back to the “Section 280G safe harbor limit,” otherwise they are cut back. In any event, there is no tax gross-up for excise taxes. |
All post-termination payments are conditioned upon the execution by the executive at the time of termination of a release of all claims against the Company.Tabular Disclosure
Company by the executive at the time of termination. TABULAR DISCLOSURE Except as otherwise indicated, the amounts shown in the tables below assume that a named executive officer was terminated and, as applicable, a change in control occurred as of December 31, 2016,2019, and that the price of our Common Stock equals $38.85,$28.75, which was the closing price of our Common Stock on December 30, 2016,31, 2019, as reported on the New York Stock Exchange. Actual amounts that we may pay to any named executive officer upon termination of employment, however, can only be determined at the time of such named executive officer’s actual separation from Cooper Tire & Rubber Company.Tire.
Bradley E. Hughes The following table shows the potential payments upon termination under various circumstances for Bradley E. Hughes, President & Chief Executive Officer and President.| | | | | | | | | | | | | | | | | | | | Benefits and Payments
Upon Termination | | Retirement
on
12/31/16
(A) | | Termination
by Death
on
12/31/16 | | Termination
by
Disability
on
12/31/16 | | Termination
Without
Cause or
for Good
Reason on
12/31/16 | | Termination
for Cause
or Without
Good
Reason on
12/31/16 | | Termination
Subsequent
to a Change
in Control
on
12/31/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Compensation(2) | | $ | — | | | | 1,074,789 | | | | 1,074,789 | | | | 1,074,789 | | | | 1,074,789 | | | | 1,074,789 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | | $ | — | | | | | | | | | | | | | | | | | | | | 5,362,200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive - Performance-Based Stock Units and Cash(4) | | $ | — | | | | 2,366,982 | | | | 2,366,982 | | | | 1,090,655 | | | | | | | | 2,366,982 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options(5) | | $ | — | | | | 869,566 | | | | 869,566 | | | | 869,566 | | | | | | | | 869,566 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(6) | | $ | — | | | | 1,943,432 | | | | 1,943,432 | | | | | | | | | | | | 1,943,432 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan and Non-Qualified Supplementary Benefit Plan(7)(B) | | $ | — | | | | 329,800 | | | | 329,800 | | | | 329,800 | | | | 329,800 | | | | 329,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Deferred Compensation Plan | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Life, Accident, and Health Insurance(8) | | $ | — | | | | | | | | | | | | | | | | | | | | 37,917 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retiree Medical and Life Insurance(9) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Excise Tax Gross-Up(10) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement Services(11) | | $ | — | | | | | | | | | | | | | | | | | | | | 135,000 | | | Total | | $ | — | | | | 6,584,569 | | | | 6,584,569 | | | | 3,364,810 | | | | 1,404,589 | | | | 12,119,686 | |
Compensation:
| | | | | | | | | | | | | | | | | | | Base Salary(1) | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | Annual Incentive Compensation(2) | | | — | | | 1,414,970 | | | 1,414,970 | | | 1,414,970 | | | 1,414,970 | | | 1,414,970 | Cash Severance - Base Salary and Target Annual Incentive Compensation Multiple(3) | | | — | | | — | | | — | | | — | | | — | | | 6,567,000 | Long-Term Incentive-Performance-Based Stock Units and Cash(4) | | | — | | | 2,516,809 | | | 2,516,809 | | | 865,954 | | | — | | | 2,516,809 | Stock Options(5) | | | — | | | 244,532 | | | 244,532 | | | 244,532 | | | — | | | 244,532 | Restricted Stock Units(6) | | | — | | | 2,080,609 | | | 2,080,609 | | | — | | | — | | | 2,080,609 | Benefits and Perquisites:
| | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan(7) | | | — | | | 688,713 | | | 688,713 | | | 688,713 | | | 688,713 | | | 688,713 | Executive Deferred Compensation Plan | | | — | | | — | | | — | | | — | | | — | | | — | Life, Accident, and Health Insurance(8) | | | — | | | — | | | — | | | — | | | — | | | 58,221 | Outplacement Services(9) | | | — | | | — | | | — | | | — | | | — | | | 149,250 | Total | | | $— | | | $6,945,633 | | | $6,945,633 | | | $3,214,169 | | | $2,103,683 | | | $13,720,104 |
| (A)
| Not eligible for retirement at 12/31/16.19. |
| (B) | Not eligible to participate in Pension Plan. |
TABLE OF CONTENTS Roy V. ArmesChristopher J. EperjesyThe following table shows the potential payments upon termination under various circumstances for Roy V. Armes, Former Chairman, Chief Executive Officer, and President.| | | | | | | | | | | | | | | Benefits and Payments
Upon Termination | | Retirement on
12/31/16
(A) | | Termination
by Death
on
12/31/16 | | Termination
by
Disability
on
12/31/16 | | Termination
Without
Cause or
for Good
Reason on
12/31/16 | | Termination
for Cause
or Without
Good
Reason on
12/31/16 | | Termination
Subsequent
to a Change
in Control
on
12/31/16 | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Compensation(2) | | $ | 1,657,558 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive - Performance-Based Stock Units and Cash(4) | | $ | 10,038,170 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options(5) | | $ | 749,726 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(6) | | $ | 6,595,875 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan and Non-Qualified Supplementary Benefit Plan(7) | | $ | 1,320,273 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Deferred Compensation Plan | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Life, Accident, and Health Insurance(8) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retiree Medical and Life Insurance(9) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Excise Tax Gross-Up(10) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement Services(11) | | $ | — | | | | | | | | | | | | | Total | | $ | 20,361,602 | | | | | | | | | | | |
| (A) | Mr. Armes retired on 8/31/16. |
Ginger M. Jones
The following table shows the potential payments upon termination under various circumstances for Ginger M. Jones,Christopher J. Eperjesy, Senior Vice President and& Chief Financial Officer.
| | | | | | | | | | | | | | | | | | | | Benefits and Payments
Upon Termination | | Retirement
on
12/31/16
(A) | | Termination
by Death
on
12/31/16 | | Termination
by
Disability
on
12/31/16 | | Termination
Without
Cause or
for Good
Reason on
12/31/16 | | Termination
for Cause
or Without
Good
Reason on
12/31/16 | | Termination
Subsequent
to a Change
in Control
on
12/31/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Compensation(2) | | $ | — | | | | 584,041 | | | | 584,041 | | | | 584,041 | | | | 584,041 | | | | 584,041 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | | $ | — | | | | | | | | | | | | | | | | | | | | 1,721,885 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive - Performance-Based Stock Units and Cash(4) | | $ | — | | | | 1,004,890 | | | | 1,004,890 | | | | | | | | | | | | 1,004,890 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options(5) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(6) | | $ | — | | | | 1,098,484 | | | | 1,098,484 | | | | | | | | | | | | 1,098,484 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan and Non-Qualified Supplementary Benefit Plan(7)(B) | | $ | — | | | | 104,957 | | | | 104.957 | | | | 104,957 | | | | 104,957 | | | | 104,957 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Deferred Compensation Plan | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Life, Accident, and Health Insurance(8) | | $ | — | | | | | | | | | | | | | | | | | | | | 35,803 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retiree Medical and Life Insurance(9) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Excise Tax Gross-Up(10) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement Services(11) | | $ | — | | | | | | | | | | | | | | | | | | | | 76,500 | | | Total | | $ | — | | | | 2,792,372 | | | | 2,792,372 | | | | 688,998 | | | | 688,998 | | | | 4,626,560 | |
Compensation:
| | | | | | | | | | | | | | | | | | | Base Salary(1) | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | Annual Incentive Compensation(2) | | | — | | | 447,750 | | | 447,750 | | | 447,750 | | | 447,750 | | | 447,750 | Cash Severance - Base Salary and Target Annual Incentive Compensation Multiple(3) | | | — | | | — | | | — | | | — | | | — | | | 1,750,000 | Long-Term Incentive-Performance-Based Stock Units and Cash(4) | | | — | | | 172,584 | | | 172,584 | | | — | | | — | | | 172,584 | Stock Options(5) | | | — | | | — | | | — | | | — | | | — | | | — | Restricted Stock Units(6) | | | — | | | 716,709 | | | 716,709 | | | — | | | — | | | 716,709 | Benefits and Perquisites:
| | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan(7) | | | — | | | — | | | — | | | — | | | — | | | — | Executive Deferred Compensation Plan | | | — | | | — | | | — | | | — | | | — | | | — | Life, Accident, and Health Insurance(8) | | | — | | | — | | | — | | | — | | | — | | | 34,488 | Outplacement Services(9) | | | — | | | — | | | — | | | — | | | — | | | 75,000 | Total | | | $— | | | $1,337,043 | | | $1,337,043 | | | $447,750 | | | $447,750 | | | $3,196,531 |
| (A)
| Not eligible for retirement at 12/31/16. |
| (B) | Not eligible to participate in Pension Plan.19. |
Brenda S. Harmon
The following table shows the potential payments upon termination under various circumstances for Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer.
| | | | | | | | | | | | | | | | | | | | Benefits and Payments
Upon Termination | | Retirement
on
12/31/16
(A) | | Termination
by Death
on
12/31/16 | | Termination
by
Disability
on
12/31/16 | | Termination
Without
Cause or
for Good
Reason on
12/31/16 | | Termination
for Cause
or Without
Good
Reason on
12/31/16 | | Termination
Subsequent
to a Change
in Control
on
12/31/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Compensation(2) | | $ | 432,306 | | | | 432,306 | | | | 432,306 | | | | 432,306 | | | | 432,306 | | | | 432,306 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | | $ | — | | | | | | | | | | | | | | | | | | | | 1,418,092 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive - Performance-Based Stock Units and Cash(4) | | $ | 1,514,021 | | | | 1,514,021 | | | | 1,514,021 | | | | 1,514,021 | | | | | | | | 1,514,021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options(5) | | $ | 836,410 | | | | 836,410 | | | | 836,410 | | | | 836,410 | | | | | | | | 836,410 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(6) | | $ | 369,969 | | | | 369,969 | | | | 369,969 | | | | | | | | | | | | 369,969 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan and Non-Qualified Supplementary Benefit Plan(7)(B) | | $ | 292,793 | | | | 292,793 | | | | 292,793 | | | | 292,793 | | | | 292,793 | | | | 292,793 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Deferred Compensation Plan | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Life, Accident, and Health Insurance(8) | | $ | — | | | | | | | | | | | | | | | | | | | | 29,168 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retiree Medical and Life Insurance(9) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Excise Tax Gross-Up(10) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement Services(11) | | $ | — | | | | | | | | | | | | | | | | | | | | 64,459 | | | Total | | $ | 3,445,499 | | | | 3,445,499 | | | | 3,445,499 | | | | 3,075,530 | | | | 725,099 | | | | 4,957,218 | |
| (A) | Eligible for retirement at 12/31/16. |
| (B) | Not eligible to participate in Pension Plan. |
Stephen Zamansky The following table shows the potential payments upon termination under various circumstances for Stephen Zamansky, Senior Vice President, General Counsel and& Secretary. | | | | | | | | | | | | | | | | | | | | Benefits and Payments
Upon Termination | | Retirement
on
12/31/16
(A) | | Termination
by Death
on
12/31/16 | | Termination
by
Disability
on
12/31/16 | | Termination
Without
Cause or
for Good
Reason on
12/31/16 | | Termination
for Cause
or Without
Good
Reason on
12/31/16 | | Termination
Subsequent
to a Change
in Control
on
12/31/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Compensation(2) | | $ | — | | | | 436,454 | | | | 436,454 | | | | 436,454 | | | | 436,454 | | | | 436,454 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | | $ | — | | | | | | | | | | | | | | | | | | | | 1,431,706 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Incentive - Performance-Based Stock Units and Cash(4) | | $ | — | | | | 1,474,452 | | | | 1,474,452 | | | | 729,651 | | | | | | | | 1,474,452 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options(5) | | $ | — | | | | 107,818 | | | | 107,818 | | | | 107,818 | | | | | | | | 107,818 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(6) | | $ | — | | | | 372,183 | | | | 372,183 | | | | | | | | | | | | 372,183 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan and Non-Qualified Supplementary Benefit Plan(7)(B) | | $ | — | | | | 159,983 | | | | 159,983 | | | | 159,983 | | | | 159,983 | | | | 159,983 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Deferred Compensation Plan | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Life, Accident, and Health Insurance(8) | | $ | — | | | | | | | | | | | | | | | | | | | | 24,018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retiree Medical and Life Insurance(9) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Excise Tax Gross-Up(10) | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement Services(11) | | $ | — | | | | | | | | | | | | | | | | | | | | 65,078 | | | Total | | $ | — | | | | 2,550,890 | | | | 2,550,890 | | | | 1,433,906 | | | | 596,437 | | | | 4,071,692 | |
Compensation:
| | | | | | | | | | | | | | | | | | | Base Salary(1) | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | Annual Incentive Compensation(2) | | | — | | | 369,498 | | | 369,498 | | | 369,498 | | | 369,498 | | | 369,498 | Cash Severance - Base Salary and Target Annual Incentive Compensation Multiple(3) | | | — | | | — | | | — | | | — | | | — | | | 1,584,000 | Long-Term Incentive-Performance-Based Stock Units and Cash(4) | | | — | | | 500,728 | | | 500,728 | | | 172,645 | | | — | | | 500,728 | Stock Options(5) | | | — | | | — | | | — | | | — | | | — | | | — | Restricted Stock Units(6) | | | — | | | 413,713 | | | 413,713 | | | — | | | — | | | 413,713 | Benefits and Perquisites:
| | | | | | | | | | | | | | | | | | | Non-Qualified Supplementary Benefit Plan(7) | | | — | | | 293,836 | | | 293,836 | | | 293,836 | | | 293,836 | | | 293,836 | Executive Deferred Compensation Plan | | | — | | | — | | | — | | | — | | | — | | | — | Life, Accident, and Health Insurance(8) | | | — | | | — | | | — | | | — | | | — | | | 33,748 | Outplacement Services(9) | | | — | | | — | | | — | | | — | | | — | | | 72,000 | Total | | | $— | | | $1,577,775 | | | $1,577,775 | | | $835,979 | | | $663,334 | | | $3,267,523 |
| (A)
| Not eligible for retirement at 12/31/16.19. |
| (B) | Not eligible to participate in Pension Plan. |
TABLE OF CONTENTS 40
Mr. Bollman terminated his employment with the Company on December 2, 2019. He did not receive any additional or enhanced benefits or payments associated with the termination. He would not have been eligible to receive any post termination benefits effective December 31, 2019 since he was no longer employed with the Company. Footnotes for Tabular Disclosure | (1)
| As of December 31, 2016,2019, the amount of base salary payable to the named executive officers for services rendered during 20162019 has been paid. |
| (2)
| Amounts shown are actual amounts payable in early 2017,2020, if any, based upon achieved performance metrics established for 20162019 although the payments could be different for a termination during the year under the various listed terminations. |
| (3)
| Mr. Hughes would receive three (3) times the sum of base salary as of the end of 20162019 plus target annual cash incentive compensation for termination due to change in control. Other named executive officers would receive an amount equal to two (2) times the sum of the same amount. Any required reduction due to a Section 280G related excise tax “Cap” for other named executives due to a change in control adjusts the cash severance. |
| (4)
| Amounts shown are based on the performance-based stock units and performance-based cash notionally earned as of December 31, 2016,2019, as part of the 2014-2016,2017-2019, the 2015-2017,2018-2020, and the 2016-20182019-2021 long-term incentive programs’ performance-based grants. Units were valued at the closing price of our common stock at December 31, 2016.2019. |
| (5)
| Total in-the-money/intrinsic dollar value of vested and non-vested stock options for change in control. Total in-the-money/intrinsic dollar value of vested and non-vested stock options for retirement, disability, or death with specific periods for exercise. |
| (6)
| Total dollar value of vested and non-vested restricted stock units for retirement, disability, death, and termination in connection with a change in control. Total dollar value of only vested restricted stock units for termination with cause or without good reason. When restricted stock units become vested, the grantee shall receive shares of common stock equal to the number of restricted units granted in addition to dividend equivalents earned. The common stock is to be delivered on the date specified by the granteeCompany in their restricted stock award agreement. |
| (7)
| All vested Non-Qualified Supplementary Benefit Plan retirement plus investment savings benefits are payable to all participants upon termination. |
| (8)
| Present value of 24 months’thirty-six (36) months for Mr. Hughes and twenty-four (24) months for all other named executive officers of coverage offor Company-provided life, accident, and health benefits. |
| (9)
| The amount shown reflects the total amount payable for outplacement assistance for, Ms. Harmon, Ms. Jones, and Messrs.Mr. Hughes, andMr. Eperjesy, Mr. Zamansky, which is equal to 15% of current base salary. |
For 2019, the ratio of the annual total compensation of Mr. Hughes, our President & Chief Executive Officer (“CEO Compensation”), to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries (other than Mr. Hughes) (“Median Annual Compensation”), was 91 to 1. We note that, due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this pay ratio disclosure is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions described below. In this summary, we refer to the employee who received the Median Annual Compensation as the “Median Employee.” For purposes of this disclosure, the date used to identify the Median Employee was October 31, 2017 (the “Determination Date”). We have used the same Median Employee as we did in 2018 and 2019, because there has not been a change in our employee population or employee compensation arrangements that we reasonably believe would significantly impact our pay ratio disclosure. For purposes of this pay ratio disclosure, CEO Compensation was determined to be $5,456,705 which amount represents the total compensation reported for Mr. Hughes under the “Summary Compensation Table” for 2019. Median Annual Compensation was determined to be $59,764 and was calculated by totaling for our Median Employee all applicable elements of compensation for 2019 in accordance with Item 402(c)(2)(x) of Regulation S-K. To identify the Median Employee, we measured compensation for the period beginning on January 1, 2017 and ending on October 31, 2017 for 9,053 U.S. and non-U.S. employees, representing all full-time, part-time, seasonal and temporary employees for us and our consolidated subsidiaries as of the Determination Date. This number does not include any independent contractors or “leased” workers, as permitted by the applicable SEC rules. This compensation measurement was calculated by totaling, for each employee, annual compensation which is defined as base salary, overtime wages, production allowances, commissions and bonus which represents the consistently applied compensation measure that we used for our pay ratio determination. Specifically excluded from the consistently applied compensation measure were relocation expense, severance payments and ex-patriate allowances. Further, we did not utilize any statistical sampling or cost-of-living adjustments for purposes of this pay ratio disclosure. A portion of our employee workforce (full-time and part-time) identified above worked for less than the full fiscal year due to commencing employment after January 1, 2017. In determining the Median Employee, we annualized the total compensation for such individuals (but avoided creating full-time equivalencies) based on reasonable assumptions and estimates relating to our employee compensation program. 2016 TABLE OF CONTENTS DIRECTOR COMPENSATION DIRECTOR COMPENSATION TABLE Name
(a) | | Fees Earned or
Paid in Cash
($)(1)
(b) | | Stock
Awards
($)(2)
(c) | | Option
Awards
($)(3)
(d) | | Total
($)
(h) | | Thomas P. Capo | | $128,750 | | $125,000 | | — | | $253,750 | | Steven M. Chapman | | $100,000 | | $125,000 | | — | | $225,000 | | Susan F. Davis | | $75,000 | | $125,000 | | — | | $200,000 | | John J. Holland | | $120,000 | | $125,000 | | — | | $245,000 | | John F. Meier* | | $115,000 | | $125,000 | | — | | $240,000 | | Gary S. Michel | | $100,000 | | $125,000 | | — | | $225,000 | | John H. Shuey | | $100,000 | | $125,000 | | — | | $225,000 | | Robert D. Welding | | $112,000 | | $125,000 | | — | | $237,000 |
Thomas P. Capo | | | $237,000 | | | $125,000 | | | $— | | | $362,000 | Steven M. Chapman | | | $100,000 | | | $125,000 | | | $— | | | $225,000 | Susan F. Davis | | | $100,000 | | | $125,000 | | | $— | | | $225,000 | Kathryn P. Dickson | | | $100,000 | | | $125,000 | | | $— | | | $225,000 | John J. Holland | | | $120,000 | | | $125,000 | | | $— | | | $245,000 | Tracey I. Joubert | | | $100,000 | | | $125,000 | | | $— | | | $225,000 | Gary S. Michel | | | $100,000 | | | $125,000 | | | $— | | | $225,000 | Brian C. Walker | | | $100,000 | | | $125,000 | | | $— | | | $225,000 | Robert D. Welding | | | $115,000 | | | $125,000 | | | $— | | | $240,000 |
| (1)
| The amounts listed under “Fees Earned or Paid in Cash” represent the compensation amounts discussed in the narration below. The non-employee Directors who deferred the following amounts of fees reported in column (b) initially into phantom stock units under our Directors’ deferral plan, as described below: Mr. Capo, $0;below, were Mr. Chapman, $100,000;who deferred $100,000, Ms. Davis, $0; Mr. Holland, $60,000; Mr. Meier, $28,750; Mr. Michel, $0; Mr. Shuey, $0;Dickson, who deferred $50,000, Ms. Joubert, who deferred $50,000, and Mr. Welding, $0.Walker, who deferred $50,000. |
(2)
| (2) | These amounts are the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 9 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the twelve monthsyear ended December 31, 2016,2019, for details as to the assumptions used to determine the fair value of the phantom stock awards. The non-employee Directors had phantom stock awards outstanding as of December 31, 2016,2019, for the following number of shares: Mr. Capo, 50,598;65,366; Mr. Chapman, 104,546;130,378; Ms. Davis, 3,820;16,674; Ms. Dickson, 4,150; Mr. Holland, 106,192; Mr. Meier, 94,239;123,236; Ms. Joubert, 9,395; Mr. Michel, 3,820;16,674; Mr. Shuey, 19,377;Walker, 5,453; and Mr. Welding, 66,275.81,685. Each non-employee Director, received an annual grant of phantom stock awards of: 3,785.64,105.09 units on May 6, 2016.3, 2019. The entire grant date fair value (including amounts reported for 2016)2019) of the phantom stock awards issued to each of the non-employee Directors in 20162019 was $125,000. |
*Mr. Meier resigned from the Board on January 10, 2017.
Our Board of Directors makes compensation decisions for our non-employee Directors upon the recommendation of the Nominating and Governance Committee. Compensation of Directors is reviewed on an annual basis utilizing information on benchmarks and trends in director compensation, together with a recommendation, provided by an independent consultant. Except as noted in the footnotes above, our non-employee Directors received the following compensation on an annual basis for the period January 1, 20162019 through December 31, 2016 | ● | Each non-employee Director received an annual retainer of $100,000. There were no fees for attendance at meetings of the Board of Directors and meetings of the Committees of the Board of Directors; |
| ● | The non-executive Chairman of the Board received an additional annual fee of $125,000 for serving in that capacity, beginning on September 1, 2016 when Mr. Capo was appointed to such position. |
| ● | The Lead Director received an additional annual fee of $20,000 for serving in that capacity; this position was suspended upon Mr. Capo’s appointment as the non-executive chairman of the Board on September 1, 2016. |
| ● | The Chair of the Audit Committee received an additional annual fee of $20,000 for serving in that capacity; |
| ● | The Chair of the Compensation Committee received an additional annual fee of $15,000 for serving in that capacity; and |
2019:
Each non-employee Director received an annual retainer of $100,000. There were no fees for attendance at meetings of the Board of Directors or meetings of the Committees of the Board of Directors, or for serving as a member of a Committee;
| ● | The Chair of the Nominating and Governance Committee received an additional annual fee of $12,000 for serving in that capacity.
|
The non-executive Chairman of the Board received an additional annual fee of $125,000 for serving in that capacity; The Chair of the Audit Committee received an additional annual fee of $20,000 for serving in that capacity; The Chair of the Compensation Committee received an additional annual fee of $15,000 for serving in that capacity; and The Chair of the Nominating and Governance Committee received an additional annual fee of $12,000 for serving in that capacity. Additionally, each non-employee Director received an annual grant of phantom stock units in an amount equal to $125,000 divided by the average of the highest and the lowest quoted selling price of a share of the Company’s common stock, as reported on the New York Stock Exchange Composite Tape, on the grant date for that particular year. In 2019, the grant date was the date of the Annual Meeting, May 3, 2019. Also, effective May 9, 2014, the Company changed the Share Ownership Guidelines for non-employee Directors from unit-based to monetary-based. All Directors are required to own at least $500,000 of our common stock, excluding options, and have five years from the date they join the Board to meet this requirement. As of the date of this proxy statement, each of our Directors, except Gary Michel, who joined the Board in October 2015, and Susan Davis, who joined the Board in February 2016, hashave served for 5 or more years, have met this requirement. Our non-employee Directors also participate in our Amended and Restated 1998 non-employee Directors Compensation Deferral Plan, which we refer to as the Directors’ deferral plan. The Directors’ deferral plan permits our non-employee Directors to defer some or all of the fees payable to them for service on the Board of Directors. The amounts that our TABLE OF CONTENTS non-employee Directors defer, and dividend equivalents on those amounts, are converted to phantom stock units and credited to a bookkeeping account established for this purpose, or are invested in various alternative investment funds available from time to time. Deferred amounts may be transferred from phantom stock units into the alternative investment funds, but not back into phantom stock units. The amount of alternative investment funds will be equal to (1) the amount of phantom stock units to be transferred multiplied by (2) the average of the highest and the lowest quoted selling price of a share of our common stock, as reported on the New York Stock Exchange Composite Tape, on the date the phantom stock units were transferred (or, if there were no sales on the date the phantom stock units were transferred, the next preceding date during which a sale of our common stock occurred). Phantom stock units are settled in cash upon a Directors termination of service as a director, unless otherwise elected. MEETINGSTHE BOARD’S ROLE IN RISK OVERSIGHTThe Board evaluates risk both collectively and as a function of its respective committees, including general oversight of (i) achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance shareholder value, and sustainability objectives; (ii) the financial exposure of the Company; (iii) risk exposure as related to overall Company portfolio and impact on earnings; (iv) information technology security and risk; (v) compliance with environmental, health, safety and other laws and regulations and (vi) all systems, processes, and organizational structure and people responsible for finance and risk functions. Our Audit Committee assists our Board in fulfilling its oversight responsibilities by regularly reviewing risks associated with financial and accounting matters, as well as those related to financial reporting. In this regard, our Audit Committee monitors compliance and regulatory requirements and internal control systems. Our Audit Committee also reviews the process by which enterprise risk management is undertaken by the Company Our Compensation Committee assists the Board with risk oversight through its review of compensation programs to help ensure such programs do not encourage excessive risk-taking. The Compensation Committee reviews base compensation levels and incentive compensation to confirm the Company has appropriate practices in place to support the retention and development of the employees necessary to achieve the Company’s business goals and objectives. Our Nominating and Governance Committee oversees the Company's risk management process and assists the Board with risk oversight through its oversight of the Company’s Environment, Social, Governance (ESG) matters. The Company’s ESG Executive Committee, which is chaired by one of the Company’s named executive officers, has oversight and responsibility for monitoring the environmental, health, safety, social, governance and other sustainability risks and opportunities related to the Company and its operations, as well as other sustainability matters. The ESG Executive Committee reports regularly to the Nominating and Governance Committee on the Company’s sustainability matters, including its commitment to environmental responsibility, the health and safety of its employees, contractors and the community, and social and governance programs, policies and efforts. The Board receives regular updates from these committees regarding their activities and also regularly reviews other risks, including risks of a more strategic nature. Key risks associated with the strategic plan of the Company are reviewed annually at a designated meeting of the Board and on an ongoing basis throughout the year. The Board reviews the Company's top risks and efforts to address them every quarter. The involvement of the full Board in setting the Company’s business strategy is a key part of its assessment of management’s appetite for risk and also in determination of what constitutes an appropriate level of risk for the Company. While our Board and its committees oversee risk management, the senior management team of the Company is charged with managing risk. The Company has a strong enterprise risk management process for identifying, assessing and managing risk, as well as monitoring the performance of risk mitigation strategies. The governance of this process is effected through the executive sponsorship of our senior management, and is led by officers and senior managers responsible for working across the business to manage enterprise level risks, identify emerging risks, and provides training on key risks, such as anti-corruption and cyber security training at all levels of the Company. These leaders meet routinely and provide regular updates to our Board and its committees throughout the year. The Board administers its risk oversight function as a component of its duties, but not in any capacity that has a specific effect on its leadership structure. TABLE OF THE CONTENTS BOARD OF DIRECTORS AND ITS COMMITTEES In connection with the retirement of Mr. Armes, the Company’s former Chairman, Chief Executive Officer and President, and the election of Mr. Hughes as President & Chief Executive Officer, and President,on September 1, 2016, the Board determined to split the positions of Chairman and Chief Executive Officer, which previously had both been held by Mr. Armes. As a result, on September 1, 2016, Mr. Hughes became President, Chief Executive Officer President and a Director of the Company, and Mr. Capo was appointed non-executive Chairman of the Board. In connection with this change, the position of independent Lead Director was suspended. The Board has determined that this leadership structure, with Mr. Capo serving as thehaving a non-executive Chairman of the Board and Mr. Hughes serving as a Director and the Chief Executive Officer, is the most effective structure for the Company at this time. The Board believes that having an independent director serve as non-executive Chairman of the Board and Mr. Hughes serving as the Chief Executive Officer strikes an effective balance between management and independent director participation in the Board process. Although the Board believes that the existing leadership structure is currently in the best interests of the Company, the Board recognizes that no single leadership structure may be appropriate in all circumstances. Accordingly, the Board considers this issue as part of the succession planning process and considers it at least annually, including each time it elects the Chief Executive Officer. The Company’s governance guidelines provide the Board with the flexibility to continue to separate the positions of Chairman of the Board and Chief Executive Officer, or to combine the roles in the future if the Board determines that such a leadership structure would be a more efficient and effective structure for our Board, our business, our employees, and our stockholders. The Board evaluates risk both collectively and as a function
Code of its respective committees, including general oversight of (i) the financial exposure of the Company, (ii) risk exposure as related to overall Company portfolio and impact on earnings, (iii) oversight for information technology security and risk, and (iv) all systems, processes, and organizational structure and people responsible for finance and risk functions. The Board administers its risk oversight function as a component of its duties, but not in any capacity that has a specific effect on its leadership structure.Conduct
Our Board has adopted a written Code of Conduct for our Directors, officers (including our principal executive officer, principal financial officer, and principal accounting officer) and employees. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding certain amendments to or waivers from our Code of Conduct by filing Current Reports on Form 8-K with the Securities and Exchange Commission, or promptly disclosing on our website any such amendments or waivers. We will make any amended Code of Conduct available at the Investor Relations/Governance link on our website athttp://www.coopertire.comus.coopertire.com/. The information contained on or accessible through the Company’s website is not incorporated by reference in this proxy statement and should not be considered a part of this proxy statement.
Hedging and Pledging Transactions In order to align the interests of the Company’s officers and Directors with those of its stockholders and to address athe potential appearance of improper or inappropriate conduct, the Board of Directors has adopted a policy with respect to hedging and pledging of Common Stock or other equity securities of the Company (“Company Securities”).Securities. This anti-hedging policy prohibits Company officers and Directors, including certain family members of such persons, from hedging Company Securities, including short-selling, options, puts, calls, collars and exchange funds, as well as derivatives such as swaps, forwards and futures, or pledging or otherwise encumbering Company Securities as collateral for indebtedness. Persons subject to this policy will be afforded a reasonable opportunity to unwind or otherwise terminate any prohibited hedging transactions or arrangements existing as of the time such person becomes subject to the policy. During 2016,2019, our Board of Directors held five Board meetings, four meetings of our Audit Committee, fivefour meetings of our Compensation Committee, and fourthree meetings of our Nominating and Governance Committee. Each Director attended more than 75% of the aggregate number of meetings of the Board of Directors and meetings of Committees on which such Director served during the past fiscal year during their tenure on the Board. The Board holds regular executive sessions without management present. Mr. Capo, the non-executive Chairman of the Board, presides at all Board meetings, including executive sessions. TABLE OF CONTENTS Determination of Independence of Directors The NYSE’s Corporate Governance Listing Standards require that all listed companies have a majority of independent directors. For a director to be “independent” under the NYSE listing standards, the board of directors of a listed company must affirmatively determine that the director has no material relationship with the Company, or its subsidiaries or affiliates, either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company or its subsidiaries or affiliates. The Board has adopted the NYSE listing standards as its categorical standards for making director independence determinations. In making independence determinations, the Board has broadly considered all relevant facts and circumstances from the standpoint of both the Director and others. The Board has considered that we, our employees or our affiliates may have engaged in transactions or relationships with companies with which our Directors are associated. These transactions or relationships include purchasing products from companies for which our Directors are employees of or are on the board of directors. After these considerations, and in accordance with the NYSE listing standards, the Board has affirmatively determined that each Director serving during 2016,2019, other than Messrs. Armes andMr. Hughes, has no material relationship with us (either directly or as a partner, stockholder, officer or officerDirector of an organization that has a relationship with us).
Additionally, the Board has determined that each of Mr. Capo, Mr. Chapman, Ms. Davis, Ms. Dickson, Mr. Holland, Ms. Joubert, Mr. Michel, Mr. Walker and Messrs. Capo, Chapman, Holland, Michel, Shuey andMr. Welding is “independent” under the NYSE listing standards, which provide that a Director is not independent if: | ● | The Director is, or has been within the last three years, one of our employees, or an immediate family member is, or has been within the last three years, one of our executive officers; |
| ● | The Director has received, or has an immediate family member who has received, during any 12- month period within the last three years, more than $120,000 in direct compensation from us, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
| ● | (1) The Director is a current partner or employee of a firm that is our internal or external auditor; (2) the Director has an immediate family member who is a current partner of such a firm; (3) the Director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (4) the Director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on our audit within that time; |
| ● | The Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; or |
| ● | The Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, us for property or services in an amount which, in any of the last three fiscal years exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. |
The BoardDirector is, or has also determinedbeen within the last three years, one of our employees, or an immediate family member is, or has been within the last three years, one of our executive officers; The Director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from us, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); (1) The Director is a current partner or employee of a firm that Mr. Meieris our internal or external auditor; (2) the Director has an immediate family member who is a current partner of such a firm; (3) the Director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (4) the Director or an immediate family member was “independent” underwithin the NYSE listing standards during his tenurelast three years a partner or employee of such a firm and personally worked on our audit within that time; The Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; or The Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, us for property or services in 2016 and until he resigned froman amount which, in any of the Board in January 2017.last three fiscal years exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. We have a separately designated standing Audit Committee, which was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee currently consists of Directors Holland (Chairman), Capo, MichelDickson, Joubert, and Shuey.Michel. All members have been determined to be financially literate and to be “independent” under the NYSE’s Corporate Governance Listing Standards and the Exchange Act. The Board has determined that Directors Holland Capo, and ShueyJoubert each qualifies as an “audit committee financial expert” due to histheir business experience and educational background described on pages 3background. The Audit Committee, among other things: Assists the Board of Directors in fulfilling its oversight responsibilities with respect to 6the integrity of our financial statements and compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and performance of the independent registered public accounting firm and our internal audit function; and Prepares the Audit Committee’s report included in this proxy statement. The Audit Committee: | ● | Assists the Board of Directors in fulfilling its oversight responsibilities with respect to the integrity of our financial statements and compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and performance of the independent registered public accounting firm and our internal audit function; and |
| ● | Prepares the Audit Committee’s report included in this proxy statement. |
The functions of the Audit Committee are set forth in an Audit Committee Charter, which was adopted by the Board on February 4, 2004 and amended and restated on May 11, 2012, and is available on our website. In 2016,2019, we did not have TABLE OF CONTENTS any related person transactions, but our Audit Committee will review and discuss any related person, insider, or affiliated party transactions pursuant to the Audit Committee Charter. It is the written policy of the Company that the Audit Committee will review and discuss reports and disclosures of insider and affiliated party transactions.
Compensation Committee We have a standing Compensation Committee, which is comprised of Directors Welding (Chairman), Chapman, Davis and DavisWalker each of whom is “independent” under the NYSE’s Corporate Governance Listing Standards and the Exchange Act. Compensation decisions for the Company’s senior officers and other key executives are made by our Compensation Committee, and actions of the Committee are reported to the Board of Directors after each meeting. The Compensation Committee: | ● | Establishes the remuneration (base salary, annual and long-term cash, and equity-based incentive compensation, perquisites, and benefits) of our Chief Executive Officer and approves the remuneration (as described for the Chief Executive Officer) of the Company’s senior officers and other key executives, including reviewing and approving the corporate financial goals and objectives relevant to the remuneration arrangements; |
| ● | Reviews the cash and equity-based compensation plans for officers and senior management and makes or recommends changes to the Board of Directors as it deems appropriate; |
| ● | Reviews and approves any executive employment agreements, severance pay plans, deferred compensation plans, and similar plans and arrangements and the executives to whom they apply; |
| ● | Oversees regulatory compliance with respect to compensation matters; and |
| ● | Establishes stock ownership guidelines for the Company’s officers and other key executives and reviews compliance with those guidelines. |
Committee, among other things: Establishes the remuneration (base salary, annual and long-term cash, and equity-based incentive compensation, perquisites, and benefits) of our Chief Executive Officer and approves the remuneration (as described for the Chief Executive Officer) of the Company’s senior officers and other key executives, including reviewing and approving the corporate financial goals and objectives relevant to the remuneration arrangements; Reviews the cash and equity-based compensation plans for officers and senior management and makes or recommends changes to the Board of Directors as it deems appropriate; Reviews and approves any executive employment agreements, severance pay plans, deferred compensation plans, and similar plans and arrangements and the executives to whom they apply; Oversees regulatory compliance with respect to compensation matters; and Establishes stock ownership guidelines for the Company’s officers and other key executives and reviews compliance with those guidelines. The Compensation Committee has engaged Exequity LLP, an independent executive compensation consulting firm, to review and provide guidance regarding our total compensation program for named executive officers for 20172020 and to assist the Committee in monitoring and assessing compensation trends for senior management personnel, including the Chief Executive Officer. The agenda for meetings of the Compensation Committee is determined by its Chairman with the assistance of our Senior Vice President and Chiefhead of Human Resources Officer.Resources. Compensation Committee meetings are regularly attended by our Chief Executive Officer and our Senior Vice President and Chiefhead of Human Resources Officer.Resources. At each regular meeting, the Compensation Committee meets in executive session. The Compensation Committee’s Chairman reports on the Committee’sCommittee's actions and decisions on executive compensation matters to the Board of Directors. Independent advisorsadvisers and our Human Resources Department support the Compensation Committee in its duties and, along with our Chief Executive Officer and Senior Vice President and Chiefhead of Human Resources, Officer, may be delegated authority to fulfill certain administrative duties regarding the compensation programs. The Compensation Committee has authority under its charter to retain, approve fees for and terminate advisors,advisers, consultants, and agents as it deems necessary to assist in the fulfillment of its responsibilities. The Compensation Committee reviews the total fees paid to our outside consultants to ensure that they maintain their objectivity and independence when rendering advice to the Compensation Committee. Nominating and Governance Committee We have a standing Nominating and Governance Committee, which is currently comprised of Directors Capo (Chairman), ShueyChapman, Michel and Welding,Walker, each of whom is “independent” under the New NYSE’s Corporate Governance Listing Standards. The Nominating and Governance Committee: | ● | Recommends candidates for membership on the Board; and |
| ● | Ensures that the Board acts within the governance guidelines and that the governance guidelines remain appropriate. |
Committee, among other things: Recommends candidates for membership on the Board; Ensures that the Board acts within the governance guidelines and that the governance guidelines remain appropriate; Provides oversight of the Company's sustainability efforts; and Performs an annual assessment of the performance of the Board. The Nominating and Governance Committee will consider candidates for Board membership proposed by our stockholders or other parties. Any recommendation must be in writing, accompanied by a description of the proposed TABLE OF CONTENTS nominee’s qualifications and other relevant biographical information, and an indication of the consent of the proposed nominee to serve. The recommendation should be addressed to the Nominating and Governance Committee of the Board of Directors, Attention: Secretary, Cooper Tire & Rubber Company, 701 Lima Avenue, Findlay, Ohio 45840. As of the date of this proxy statement, we have not received any director nominee recommendations from any stockholders. The Nominating and Governance Committee uses a variety of sources to identify candidates for Board membership, including current members of the Board, our executive officers, individuals personally known to members of the Board and our executive officers and, as described above, our stockholders, as well as, from time to time, third party search firms. Mr. Hughes who was elected to the Board in September 2016 was recommended to the Board by the Nominating and Governance Committee as part of the CEO succession planning process. The Nominating and Governance Committee may consider candidates for Board membership at its regular or special meetings held throughout the year. The Nominating and Governance Committee uses the same manner and process for evaluating every candidate for Board membership regardless of the original source of the candidate’s nomination. Once the Nominating and Governance Committee has identified a prospective candidate, the Nominating and Governance Committee makes an initial determination whether to conduct an initial evaluation of the candidate, which consists of an interview by the Chair of the Nominating and Governance Committee. The Nominating and Governance Committee currently has not set specific, minimum qualifications or criteria for nominees that it proposes for Board membership, but evaluates the entirety of each candidate’s credentials. The Nominating and Governance Committee believes, however, that we will be best served if our Directors bring to the Board, a variety of experience and diverse backgrounds and, among other things, diversity with respect to background, experience, viewpoint, national origin, race, gender and skills, as well as, demonstrated integrity, executive leadership, and financial, marketing, or other business knowledge and experience. The Chair communicates the results of initial evaluation of candidates to the other Nominating and Governance Committee members, the Chairman of the Board or Lead Director, as applicable, and the Chief Executive Officer. If the Nominating and Governance Committee determines, in consultation with the Chairman of the Board or Lead Director, as applicable, and the Chief Executive Officer, that further consideration of the candidate is warranted, members of our senior management gather additional information regarding the candidate. The Nominating and Governance Committee or members of our senior management then conduct background and reference checks and any final interviews, as necessary, of the candidate. At that point, the candidate is invited to meet and interact with the members of the Board who are not on the Nominating and Governance Committee. The Nominating and Governance Committee then makes a final determination whether to recommend the candidate to the Board for Board membership. Neither the Nominating and Governance Committee nor the Board of Directors has a formal policy with regard to the consideration of diversity in identifying director nominees; however, how a specific nominee contributes to the diversity of the Board of Directors is considered by both the Nominating and Governance Committee and the Board of Directors in determining candidates for the Board.
We believe that Board tenure diversity is important and directors with many years of service provide the Board with a deep knowledge of our Company, while newer directors lend fresh perspectives. Within the past four and a half years, the Company has added six new directors. The average tenure of all Directors is 7.7 years.
Availability of Governance Guidelines, Code of Conduct, and Committee Charters Our governance guidelines, Code of Conduct, and the charters for the Audit Committee, Compensation Committee, and Nominating and Governance Committee are available at the Investor Relations/Investors/Governance link on our website at http://www.coopertire.comus.coopertire.com/. In addition, stockholders may request a free printed copy of any of these materials by contacting: Cooper Tire & Rubber Company
Attention: Corporate Secretary
701 Lima Avenue
Findlay, Ohio 45840
(419) 423-1321 TABLE OF CONTENTS Stockholder and Interested Party Communications with the Board Our Board has adopted a process by which stockholders or interested parties may send communications to the Board, the non-employee Directors as a group, or any of the Directors. Any stockholder or interested party who wishes to communicate with the Board, the non-employee Directors as a group, or any Director may send a written communication addressed to: Board of Directors —- Stockholder and Interested Party Communications Attention: Corporate Secretary Cooper Tire & Rubber Company 701 Lima Avenue Findlay, Ohio 45840 The Secretary will review and forward each written communication (except, in his sole determination, those communications clearly of a marketing nature, those communications better addressed by a specific Company department, or those communications containing complaints regarding accounting, internal auditing controls, or auditing matters) to the full Board, the Board Chairman, the non-employee Directors as a group, or the individual Director(s) specifically addressed in the written communication. The Secretary will discard written communications clearly of a marketing nature. Written communications better addressed by a specific Company department will be forwarded to such department, and written communications containing complaints regarding accounting, internal auditing controls, or auditing matters will be forwarded to the Chairman of the Audit Committee. Director Attendance at Annual Meetings Our Board does not have a specific policy regarding Director attendance at our Annual Meetings. All of our then serving Directors except for Mr. Michel, attended our 20162019 Annual Meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Directors Chapman, Davis, MeierWalker and Welding served as members of the Compensation Committee during 2016.2019. During 2016,2019, none of the members of the Compensation Committee was one of our or our subsidiaries’ officers or employees, was formerly one of our or our subsidiaries’ officers or had any relationship requiring disclosure pursuant to Item 404 of Regulation S-K. Additionally, during 2016,2019, none of our executive officers or Directors was a member of the board of directors, or on a committee thereof, of any other entity such that the relationship would be construed to constitute a committee interlock within the meaning of the rules of the Securities and Exchange Commission. RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP served as the Company’s independent registered public accounting firm for 2016,2019 and has been appointed by the Audit Committee to continue in that capacity during 2017.2020. The Audit Committee’s decision to appoint Ernst & Young LLP has been ratified by the Board and will be recommended to the stockholders for ratification at the Annual Meeting. Ernst & Young LLP has advised the Company that neither the firm nor any of its members or associates has any direct or indirect financial interest in the Company. During 2016,2019, Ernst & Young LLP rendered both audit services, including an audit of the Company’s annual financial statements, and certain non-audit services. There is no understanding or agreement between the Company and Ernst & Young LLP that places a limit on audit fees since the Company pays only for services actually rendered and at what it believes are customary rates. Professional services rendered by Ernst & Young LLP are approved by the Audit Committee both as to the advisability and scope of the service, and the Audit Committee also considers whether such services would affect Ernst & Young LLP’s continuing independence. TABLE OF CONTENTS Ernst & Young LLP’s aggregate fees billed for 20152018 and 20162019 for professional services rendered by them for the audit of the Company’s annual financial statements, the audit of the effectiveness of the Company’s internal control over financial reporting required by the Sarbanes-Oxley Act of 2002, the review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings or engagements for those years are listed below. 2015 – $2,007,0922018 - $2,454,110 | 2016 – $2,253,325 | | 2019 - $2,412,180 |
Ernst & Young LLP’s aggregate fees billed for 20152018 and 20162019 for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, and are not reported under “Audit Fees” above, were: 2015 – $199,0512018 - $166,355 | 2016 – $227,145 | | 2019 - $144,322 |
Audit-related fees included fees for employee benefit plan audits and accounting consultation. All audit-related services were pre-approved.
Tax Fees Ernst & Young LLP’s aggregate fees billed for 20152018 and 20162019 for professional services rendered by them for tax compliance, tax advice, and tax planning were: 2015 – $328,3532018 - $1,202,513 | 2016 – $405,988 | | 2019 - $1,228,760 |
Tax fees in 20152018 and 20162019 represented fees primarily for international tax planning and domestic and foreign tax compliance. All tax services were pre-approved.Ernst & Young LLP’s aggregate fees billed in 20152018 and 20162019 for products and services provided by them, other than those reported above under “Audit Fees,” “Audit-Related Fees,” and “Tax Fees,” were as follows: 2015 –2018 - $0 | 2016 – $0 | | 2019 - $247,428 |
Other fees in 2019 represented fees for organizational optimization services. Audit Committee Pre-Approval Policies and Procedures The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services expected to be performed by the Company’s independent registered public accounting firm, including the scope of and fees for such services. Requests for audit services, audit-related services, tax services, and permitted non-audit services, each as defined in the policy, must be approved prior to the performance of such services. The policy prohibits the Company’s independent registered public accounting firm from providing certain services described in the policy as prohibited services. Generally, requests for independent registered public accounting services are submitted to the Audit Committee by the Company’s Director of External Reportingprincipal accounting officer (or other member of the Company’s senior financial management) and the Company’s independent registered public accounting firm for consideration at the Audit Committee’s regularly scheduled meetings. Requests for additional services in the categories mentioned above may be approved at subsequent Audit Committee meetings to the extent that none of such services are performed prior to their approval. The Chairman of the Audit Committee is also delegated the authority to approve independent registered public accounting firm services requests provided that the pre-approval is reported at the next meeting of the Audit Committee. All requests for independent registered public accounting firm services must include a description of the services to be provided and the fees for such services. TABLE OF CONTENTS Auditor Attendance at 2017the 2020 Annual Meeting Representatives of Ernst & Young LLP will be present atparticipate in the Annual Meeting of Stockholders and will be available online to respond to appropriate questions and to make a statement if they desire to do so. AUDIT COMMITTEE REPORT This report is submitted by all members of the Audit Committee, for inclusion in this proxy statement, with respect to the matters described in this report. The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited financial statements contained in the Company’s Annual Report on Form 10-K, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Committee reviewed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Committee by the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), including PCAOB Auditing Standard No. 1301, Communications With Audit Committees, the rules of the Securities and Exchange Commission, and other applicable regulations. The Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. The Committee has concluded that the independent registered public accounting firm is, in fact, independent of the Company. The Committee discussed with the Company’s senior internal auditing executive and independent registered public accounting firm the overall scope and plans for their respective audits. The Committee meets with the senior internal auditing executive and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls including internal controls over financial reporting, and the overall quality of the Company’s financial reporting. The Committee held four meetings during the fiscal year 2016.2019. In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016,2019, for filing with the Securities and Exchange Commission. Submitted by the Audit Committee of the Company’s Board of Directors:
John J. Holland, Chairman
Thomas
Kathryn P. Capo
Dickson
Tracey I. Joubert
Gary S. Michel John H. Shuey
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BENEFICIAL OWNERSHIP OF SHARES The information in the table below sets forth those persons (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by the Company to be the beneficial owners of more than 5% of the Company’s Common Stock as of February 28, 20172020 (except as noted below). The table does not include information regarding shares held of record, but not beneficially, by Delaware Charter Guarantee & Trust Company, dba Principal Trust Company, the trustee of the Cooper Tire & Rubber Company Spectrum Investment Savings Plan and other defined contribution plans sponsored by the Company or a subsidiary of the Company. As of December 31, 2016,February 28, 2020, those plans held 1,379,4911,014,724 shares, or 2.60%2.02% of the Company’s outstanding Common Stock. The trustee, in its fiduciary capacity, has no investment powers and will vote the shares held in the plans in accordance with the instructions provided by the plan participants. If no such instructions are received, the provisions of the plans direct the trustee to vote such participant shares in the same manner in which the trustee was directed to vote the majority of the shares of the other participants who gave directions as to voting. | | | | | | | | | Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of
Beneficial Ownership | | Percent of
Class | | Common Stock | | The Vanguard Group(1) | | 4,484,679 | | 8.51% | | Common Stock | | BlackRock, Inc.(2) | | 3,850,474 | | 7.31% | | Common Stock | | RE Advisers Corporation and National Rural and Electric Cooperative Association(3) | | 2,965,302 | | 5.63% |
Common Stock | | | BlackRock, Inc.(1) | | | 7,782,951 | | | 15.49% | Common Stock | | | The Vanguard Group(2) | | | 5,157,866 | | | 10.26% | Common Stock | | | Dimensional Fund Advisors LP(3) | | | 4,075,032 | | | 8.11% |
| (1) | The Vanguard Group filed a Schedule 13G/A with the SEC on February 10, 2017, indicating that as of December 31, 2016, The Vanguard Group had sole voting power with respect to 65,288 shares, shared voting power with respect to 5,979 shares, sole dispositive power with respect to 4,416,180 shares, and shared dispositive power with respect to 68,499 shares. The Vanguard Group has indicated that it is an investment advisor. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. |
| (2)
| BlackRock, Inc. filed a Schedule 13G/A with the SEC on January 23, 2017,February 4, 2020, indicating that as of December 31, 2016,2019, BlackRock, Inc. had sole voting power with respect to 3,720,4137,638,834 shares and sole dispositive power with respect to 3,850,4747,782,951 shares. BlackRock, Inc. has indicated that it is a parent holding company. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(2)
| (3) | RE Advisers Corporation and National Rural Electric Cooperative Association jointlyThe Vanguard Group filed a Schedule 13G13G/A with the SEC on February 14, 2017,12, 2020, indicating that as of December 31, 2016, they2019, The Vanguard Group had sole voting power with respect to 2,965,30248,633 shares, andshared voting power with respect to 8,007 shares, sole dispositive power with respect to 2,965,3025,107,931 shares, and shared dispositive power with respect to 49,935 shares. RE Advisers CorporationThe Vanguard Group has indicated that it is an investment adviseradvisor. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. |
(3)
| Dimensional Fund Advisors LP, filed a Schedule 13G with the SEC on February 12, 2020, indicating that as of December 31, 2019, Dimensional Fund Advisors LP, had sole voting power with respect to 3,940,960 shares and National Rural Electric Cooperative Associationsole disposition power with respect to 4,075,032 shares. Dimensional Fund Advisors LP, has indicated that it is a parent holding company.an investment adviser. The address of RE Advisers Corporation and National Rural Electric Cooperative AssociationDimensional Fund Advisors LP is 4301 Wilson Boulevard, Arlington, VA 22203.Building One, 6300 Bee Cave Road, Austin, TX 78746. |
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SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS The information that follows is furnished as of February 28, 2017,2020, to indicate beneficial ownership by our executive officers and Directors as a group and each named executive officer and Director, individually, of our Common Stock in accordance with Rule 13d-3 under the Exchange Act, as well as ownership of certain other Company securities and ownership of our Common Stock plus certain other Company securities: | Name of Beneficial Owner | | Amount and
Nature of
Beneficial
Ownership of
Common Stock | | Percent of
Class | | Ownership of Other
Securities | | Ownership of Common
Stock and Other Securities | | Percent
of Class | | Roy V. Armes | | 50,351 shs | (1) | | * | | 316,969 shs | (3)(4) | | 367,320 | shs(1)(3)(4) | | * | | Thomas P. Capo | | 0 shs | | | * | | 50,598 shs | (2) | | 50,598 | shs (2) | | * | | Steven M. Chapman | | 2,631 shs | (2) | | * | | 104,546 shs | (2) | | 107,177 | shs (1)(2) | | * | | Susan F. Davis | | 0 shs | | | * | | 3,820 shs | (2) | | 3,820 | shs (1)(2) | | * | | Ginger M. Jones | | 13,119 shs | | | * | | 44,938 shs | (3)(4) | | 58,057 | shs (3)(5) | | * | | Brenda S. Harmon | | 121,088 shs | (1) | | * | | 33,542 shs | (3)(4) | | 154,630 | shs (1)(3)(4) | | * | | John J. Holland | | 3,946 shs | | | * | | 106,192 shs | (2) | | 110,138 | shs (1)(2) | | * | | Bradley E. Hughes | | 171,176 shs | (1) | | * | | 107,260 shs | (3)(4) | | 278,436 | shs (1)(3)(4) | | * | | Gary S. Michel | | 0 shs | | | * | | 3,820 shs | (2) | | 3,820 | shs (1)(2) | | * | | John H. Shuey | | 0 shs | | | * | | 12,827 shs | (2) | | 12,827 | shs (2) | | * | | Robert D. Welding | | 1,500 shs | | | * | | 66,275 shs | (2) | | 67,775 | shs (2) | | * | | Stephen Zamansky | | 36,789 shs | | | * | | 33,182 shs | (3)(4) | | 69,971 | shs (3)(4) | | * | | | | | | | | | | | | | | | | | All executive officers and Directors as a group (11 persons) | | 350,249 shs | (1) | | 66% | | 567,000 shs | (2) | | 917,249 | shs (1)(2) | | 1.74% |
John J. Bollman5 | | | 6,841 shs | | | * | | | — shs(3)(4) | | | 6,841 shs(3)(4) | | | * | Thomas P. Capo | | | — shs | | | * | | | 19,609 shs(2) | | | 19,609 shs(2) | | | * | Steven M. Chapman | | | 2,631 shs | | | * | | | 130,378 shs(2) | | | 133,009 shs(2) | | | * | Susan F. Davis | | | — shs | | | * | | | 16,674 shs(2) | | | 16,674 shs(2) | | | * | Kathryn P. Dickson | | | — shs | | | * | | | 4,150 shs(2) | | | 4,150 shs(2) | | | * | Christopher J. Eperjesy | | | 2,182 shs | | | * | | | 36,084 shs(3)(4) | | | 38,266 shs(3)(4) | | | * | John J. Holland | | | 4,042 shs | | | * | | | 123,236 shs(2) | | | 127,278 shs(2) | | | * | Bradley E. Hughes | | | 266,262 shs(1) | | | * | | | 125,134 shs(3)(4) | | | 391,396 shs(1)(3)(4) | | | * | Tracey I. Joubert | | | — shs | | | * | | | 9,395 shs(2) | | | 9,395 shs(2) | | | * | Gary S. Michel | | | — shs | | | * | | | 16,674 shs(2) | | | 16,674 shs(2) | | | * | Brian C. Walker | | | — shs | | | * | | | 5,453 shs(2) | | | 5,453 shs(2) | | | * | Robert D. Welding | | | 3,000 shs | | | * | | | 81,685 shs(2) | | | 84,685 shs(2) | | | * | Stephen Zamansky | | | 66,572 shs | | | * | | | 24,891 shs(3)(4) | | | 91,463 shs(3)(4) | | | * | All executive officers and Directors as a group (13 persons) | | | 351,530 shs(1) | | | 0.70% | | | 593,363 shs(2)(3)(4) | | | 944,893 shs(1)(2)(3)(4) | | | 1.88% |
(1)
| Includes 59,235 shares obtainable on exercise of stock options by Mr. Hughes within 60 days following February 28, 2017, which2020. These options have not been exercised, as follows: Brenda S. Harmon – 55,524; and Bradley E. Hughes – 59,235.exercised. |
(2)
| Pursuant to the Amended and Restated 1998 non-employee Directors Compensation Deferral Plan described above under “Director Compensation”, the following Directors have been credited with the following number of phantom stock units as of February 28, 2015:2020: Thomas P. Capo – 50,598;- 19,609; Steven M. Chapman – 104,546;- 130,378; Susan F. Davis – 3,820;- 16,674; Kathryn P. Dickson - 4,150; John J. Holland – 106,192;- 123,236; Tracey I. Joubert - 9,395; Gary S. Michel – 3,820; John H. Shuey – 12,827;- 16,674; Brian C. Walker - 5,453; and Robert D. Welding – 66,275.- 81,685. The holders do not have voting or investment power over these phantom stock units. |
(3)
| Includes the following number of restricted stock units for each of the following executive officers: Ginger M. Jones – 31,598; Brenda S. Harmon – 11,353;John J. Bollman - 0; Christopher J. Eperjesy - 33,301; Bradley E. Hughes – 72,889;- 86,178; and Stephen Zamansky – 11,632.- 17,137. The holders do not have voting or investment power over these restricted stock units. The agreements pursuant to which the restricted stock units were granted provide for accrual of dividend equivalents and deferral of the receipt of the underlying shares until a date selected by the executive at the time of the grant.equivalents. At that time, an executive’s restricted stock unit account will be settled through delivery to the executive on the date selected of a number of shares of our Common Stock corresponding to the number of restricted stock units awarded to the executive, plus shares representing the value of dividend equivalents. |
(4)
| Includes the number of performance-based stock units that were notionally earned by each of the following executive officers for 2014, 2015 and 20162017 through 2019 net income and operating cash flowreturn on invested capital performance plus accrued dividend equivalents. The holders do not have voting or investment power over these performance-based stock units. Ginger M. Jones – 13,340; Brenda S. Harmon – 22,189;John J. Bollman - 0; Christopher J. Eperjesy - 2,783; Bradley E. Hughes – 34,371;- 38,956; and Stephen Zamansky – 21,550.- 7,754. |
(5)
| John J. Bollman's information reflects balances as of his departure date, December 2, 2019. |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s Directors, executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of Common Stock of the Company. Based solely upon a review of such reports and the representation of such Directors and officers, the Company believes that all reports due for Directors and officers during or for the year 2016 were timely filed.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 20182021 Any stockholder who intends to present a proposal at the Company’s 2021 Annual Meeting in 2018 and who wishes to have the proposal included in the Company’s proxy statement and form of proxy for that Annual Meeting must deliver the proposal to the Secretary of the Company, at the Company’s principal executive offices, so that it is received no later than November 20, 2017.26, 2020. In addition, if a stockholder intends to present a proposal at the Company’s 20182021 Annual Meeting without the inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Company on or between December 20, 201726, 2020 and January 19, 2018,25, 2021, in accordance with the Bylaws, proxies solicited by the Board for the 2018Company’s 2021 Annual Meeting will confer discretionary authority to vote on the proposal if presented at the 2021 Annual Meeting.
INCORPORATION BY REFERENCE The Compensation Committee Report that begins on page 2426 of this proxy statement, disclosure regarding the Company’s Audit Committee and Audit Committee’s financial expert that begins on page 4540 of this proxy statement, and the Audit Committee Report on page 5145 of this proxy statement shall not be deemed to be incorporated by reference by any general statement incorporating this proxy statement by reference into any filing under the Securities Act of 1933, which we refer to as the Securities Act, or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or under the Exchange Act.
Only one Notice of Internet Availability of Proxy Materials or 20162019 Annual Report and proxy statement is being delivered to multiple stockholders sharing an address unless the Company received contrary instructions from one or more of the stockholders. If a stockholder at a shared address to which a single copy of the Notice of Internet Availability of Proxy Materials or 20162019 Annual Report and proxy statement were delivered wishes to receive a separate copy of the Notice of Internet Availability of Proxy Materials or 20162019 Annual Report or proxy statement, he or she should contact the Company’s Director of Investor Relations Department at 701 Lima Avenue, Findlay, Ohio 45840 or (419) 423-1321. The stockholder will be delivered, without charge, a separate copy of the Notice of Internet Availability of Proxy Materials or 20162019 Annual Report or proxy statement promptly upon request. If stockholders at a shared address currently receiving multiple copies of the Notice of Internet Availability of Proxy Materials or 20162019 Annual Report and proxy statement wish to receive only a single copy of these documents, they should contact the Company’s Director of Investor Relations Department in the manner provided above.
SOLICITATION AND OTHER MATTERS The Board of Directors is not aware of any other matters that may come before the Annual Meeting. However, if any other matters properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy in accordance with their judgment on such matters. The solicitation of proxies is being made by the Company, and the Company will bear the cost of the solicitation. The Company has retained Georgeson, 199 Water Street, 26 th Floor, New York, New York, to aid in the solicitation of proxies, at an anticipated cost to the Company of approximately $7,000,$7,500 plus expenses. The Company also will reimburse brokers and other persons for their reasonable expenses in forwarding proxy material to the beneficial owners of the Company’s stock. In addition to the solicitation by use of the mails, solicitations may be made by telephone, facsimile, email or by personal calls, and it is anticipated that such solicitation will consist primarily of requests to brokerage houses, custodians, nominees, and fiduciaries to forward soliciting material to beneficial owners of shares held of record by such persons. If necessary, officers and other employees of the Company may by telephone, facsimile, email or personally, request the return of proxies. Please mark, execute, and return the accompanying proxy, or vote by telephone or Internet, in accordance with the instructions set forth on the proxy form, so that your shares may be voted at the Annual Meeting. For information on how to obtain directions to be able to attendparticipate in the Annual Meeting and vote in person,online, please contact the Company’s Secretary at 701 Lima Avenue, Findlay, Ohio 45840 or (419) 424-4319.
TABLE OF CONTENTS You may obtain copies of the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, free of charge upon written request to the Company at 701 Lima Avenue, Findlay, Ohio 45840, Attention: Secretary or call (419) 424-4319. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THESTOCKHOLDER MEETING TO BE HELD ON MAY 5, 20178, 2020 This proxy statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 20162019 and our 20162019 Annual Report, are available free of charge at http://www.proxyvote.com.BY ORDER OF THE BOARD OF DIRECTORS Stephen Zamansky Senior Vice President, General Counsel and& Secretary March 20, 2017
26, 2020
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| | 
COOPER TIRE & RUBBER COMPANY
ATTN: CORPORATE SECRETARY
701 LIMA AVENUE
FINDLAY, OH 45840-0550
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|
| | | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | E20346-P89256-Z69610 | KEEP THIS PORTION FOR YOUR RECORDS | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
| | | | | | | | | | | | | | | | | COOPER TIRE & RUBBER COMPANY | For
All | Withhold
All | For All
Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ITEMS 1, 2 AND 3. | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | | | | | | Vote on Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | To elect as Directors of Cooper Tire & Rubber Company for a term expiring in 2018, the nominees listed below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01) Thomas P. Capo | 06) Gary S. Michel | | | | | | | | | | | | | 02) Steven M. Chapman | 07) John H. Shuey | | | | | | | | | | | | | 03) Susan F. Davis | 08) Robert D. Welding | | | | | | | | | | | | | 04) John J. Holland | | | | | | | | | | | | | | 05) Bradley E. Hughes | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote on Proposals | | | | For | Against | Abstain | | | | | | | | | | | | | 2. | To ratify the selection of the Company’s independent registered public accounting firm for the year ending December 31, 2017. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | 3. | To approve, on a non-binding advisory basis, the Company’s named executive officer compensation. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “1 YEAR” ON ITEM 4: | 1 Year | 2 Years | 3 Years | Abstain | | | | | | | | | | | | | 4. | To recommend, on a non-binding advisory basis, the frequency of advisory votes on the Company’s named executive officer compensation. | ☐ | ☐ | ☐ | ☐ | | | | | | | | | | | | | The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s).For non-Plan participants, if no direction is made, this proxy will be voted FOR Items 1, 2 and 3 and 1 Year on Item 4. If any other matters properly come before the Annual Meeting, the persons named in this proxy will vote in their discretion. | | | | | | | | | | | | | | | | | | | | | | | For address changes and/or comments, please check this box and write them on the back where indicated. | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | Please indicate if you plan to attend this meeting. | ☐ | ☐ | | | | | | | | | | | | | | | Yes | No | | | | | | | | | | | | | | | | | | | | | | | | | | 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 sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | | | | Signature (Joint Owners) | Date | | | | | | | | | | | | | | | | | | | | |
V.1.1
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and2020 Proxy Statement Shareholder Letter and 10-K Report are available at www.proxyvote.com.
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| | | | | | | | | Proxy Card - Cooper Tire & Rubber Company | | THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | OF COOPER TIRE & RUBBER COMPANY FOR | THE ANNUAL MEETING OF STOCKHOLDERS
| TO BE HELD ON MAY 5, 2017 | | | | | | | The undersigned hereby appoints Bradley E. Hughes, Ginger M. Jones and Stephen Zamansky, or any of them or their substitutes, as proxies, each with the power to appoint his or her substitutes, and hereby authorizes them to represent and vote, as designated herein, all the shares of common stock of Cooper Tire & Rubber Company held of record by the undersigned at the close of business on March 10, 2017, with all powers that the undersigned would possess if personally present, at the Annual Meeting of Stockholders to be held at The Westin Detroit Metropolitan Airport, McNamara Terminal, 2501 Worldgateway Place, Detroit, Michigan 48242, on Friday, May 5, 2017, at 10:00 a.m. EDT, or any reconvened Annual Meeting following any adjournment(s) or postponement(s) of the Annual Meeting.
| | | | | | For stockholders, this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s). If no direction is indicated, this proxy will be voted“FOR” each of the director nominees named herein,“FOR”the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm,“FOR”the approval of, on a non-binding advisory basis, the Company’s named executive officer compensation and for an advisory vote on the Company’s named executive officer compensation to occur every“1 YEAR”. The proxies are authorized to take action in accordance with their judgment upon any other business that may properly come before the Annual Meeting, or any reconvened Annual Meeting following any adjournment(s) or postponement(s) of the Annual Meeting.
| | | | | | Principal Trust Company is Trustee under the following defined contribution plans (the “Plans”) sponsored by Cooper Tire & Rubber Company: Spectrum Investment Savings Plan, Pre-Tax Savings Plan (Texarkana), and Pre-Tax Savings Plan (Findlay). This proxy card is also soliciting voting instructions on behalf of the Board of Directors of Cooper Tire & Rubber Company from Plan participants to direct the Trustee to vote the shares of common stock of Cooper Tire & Rubber Company held in the participants’ accounts under such Plans in accordance with their instructions.
| | | | | | YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE. FOR STOCKHOLDERS, YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, BUT THE PROXIES CANNOT VOTE THESE SHARES UNLESS YOU SIGN, DATE AND RETURN THIS PROXY CARD. FOR PLAN PARTICIPANTS, IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, YOU WILL NEED TO MARK THE “FOR” BOXES FOR PROPOSALS 1, 2 AND 3, AND “1 YEAR” ON ITEM 4.
| | | | | | PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
| | | | | | | | | Address Changes/Comments: | | | | | | | | | | | | | | | | | | | | | | | | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
| | | | | | | | | | (Continued and to be voted on the reverse side) | | | | | | | |
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