The accompanying notice of meeting and proxy statement describe the matters to be voted on at the meeting. You will be asked to elect directors, to ratify the appointment of the independent accountants, to cast an advisory vote to approve executive compensation, and to approve an amendment to the Certificate2016 Stock Incentive Plan of IncorporationAdvanSix Inc. and By-Laws to eliminate the supermajority voting requirement.its Affiliates, as Amended and Restated.

 

YOUR VOTE IS IMPORTANT. We encourage you to read the proxy statement and vote your shares as soon as possible. Stockholders may vote via the Internet, by telephone, by completing and returning a proxy card or voting instruction form or by scanning the QR code provided on the Notice of Internet Availability of Proxy Materials, the next page in the Notice of Annual Meeting of Stockholders or on the proxy card. Specific voting instructions are set forth in the proxy statement and on both the Notice of Internet Availability of Proxy Materials and proxy card.

On behalf of the Board of Directors, thank you for your continued support of AdvanSix.

The Nominating and Governance Committee is responsible for nominating a slate of director nominees who collectively have the complementary experience, qualifications, skills and attributes to guide the Company and function effectively as a Board. The Committee believes that each of the nominees has key personal attributes that are important to an effective board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative fashion, and the ability and commitment to devote significant time and energy to their service on the Board and its Committees.

Listed below are other key experiences, qualifications and skills of our director nominees that are relevant and important in light of AdvanSix’s businesses and structure.

The Nominating and Governance Committee also considered the specific experience described in the biographical details that follow in determining to nominate the individuals below for election as directors. Mr. Marberry is also independent of the Company and management. See “Director Independence” on page 1112 of this proxy statement.

AdvanSix is committed to strong corporate governance policies, practices and procedures designed to make the Board more effective in exercising its oversight role. The following sections provide an overview of our corporate governance structure, including the independence and other criteria we use in selecting director nominees, our Board leadership structure, and the responsibilities of the Board and each of its Committees. Our Corporate Governance Guidelines, among other key governance materials, help guide our Board and management in the performance of their duties and are regularly reviewed by the Board.

These documents are available free of charge on our website or by writing to AdvanSix Inc., 300 Kimball Drive, Suite 101, Parsippany, New Jersey 07054, c/o Corporate Secretary. Our Code of Conduct applies to all directors, officers (including the Chief Executive Officer, Chief Financial Officer and Controller) and employees. Amendments to, or waivers of, the Code of Conduct granted to any of our directors or executive officers will be published on our website.

The primary functions of our Board of Directors are:

 

 

The Board of Directors held seven meetings during 2018.2019. During this period, all of the directors then serving attended or participated in 100% of the meetings of the Board and all Committees of the Board on which each such director served.

 

 

Our Board of Directors has adopted Corporate Governance Guidelines which outline our corporate governance policies and procedures, including, among other topics, director responsibilities, Board committees, management succession and performance evaluations of the Board.

 

Our Corporate Governance Guidelines provide that the positions of Chairman and Chief Executive Officer are to be held by separate individuals. Mr. Marberry currently serves as Independent Chairman of the Board who, in accordance with the Corporate Governance Guidelines, meets the independence requirements established by the NYSE. The Chairman, among other responsibilities, works with the Chief Executive Officer and the Board to prepare Board meeting agendas and schedules, acts as liaison to other independent members of the Board, and presides at Board meetings.

 

We believe that the current Board leadership structure is an appropriate structure for the Company and its stockholders at this time. The sharing of responsibilities allows, on the one hand, the Chief Executive Officer to focus her energy on strategy and management of the Company and its operations, and on the other hand, the Board to focus on oversight of strategic planning and risk management of the Company. The Board of Directors believes that Mr. Marberry’s service as the Independent Chairman of the Board is in the best interests of the Company and its stockholders at this time.

The Board’s Chairman acts as chair at all Board meetings and is responsible for establishing the agenda for each Board meeting. In addition, the Chairman serves as liaison between management and the independent directors to provide feedback from executive sessions and to call and preside at meetings of the non-employee directors when necessary and appropriate.

The Audit Committee seeks to ensure the exercise of appropriate professional skepticism by the independent accountants by reviewing and discussing, among other things, management and auditor reports regarding significant estimates and judgments and the results of peer quality review and PCAOB inspections of the independent accountants. The Audit Committee also reviews and pre-approves all audit and non-audit services provided to AdvanSix by the independent accountants in order to determine that such services would not adversely impact auditor independence and objectivity. At each in-person meeting, the Audit Committee also holds an executive session as well as separate private sessions with representatives of our independent accountants, our Chief Financial Officer, our General Counsel, our Controller, and our Senior Director, Internal Audit.

The Audit Committee approved the engagement of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2019.2020.

 

 

The CompensationC&LD Committee has sole authority to retain a compensation consultant to assist the CompensationC&LD Committee in the evaluation of director, CEO orand senior management compensation, but only after considering all factors relevant to the consultant’s independence from management. In addition, the CompensationC&LD Committee is directly responsible for approving the consultant’s compensation, evaluating its performance, and terminating its engagement. Under the CompensationC&LD Committee’s established policy, its consultant cannot provide any other services to AdvanSix. In November 2017,2018, the CompensationC&LD Committee retainedengaged Pearl Meyer LLP ("Pearl Meyer") as its independent compensation consultant.consultant for 2019. Pearl Meyer has served as the C&LD Committee's independent compensation consultant since November 2017.

 

The CompensationC&LD Committee regularly reviews the services provided by its compensation consultant and performs an annual assessment to determine whether the compensation consultant is independent. The CompensationC&LD Committee and its advisors annually conduct a specific review of the relationship with Pearl Meyer in advance of their engagement for the upcoming year. As a result of this review, the CompensationC&LD Committee determined that Pearl Meyer is independent in providing AdvanSix with executive compensation consulting services and that Pearl Meyer’s work for the CompensationC&LD Committee does not raise any conflicts of interest, consistent with SEC rules and NYSE listing standards.

 

In making this determination, the CompensationC&LD Committee reviewed information provided by its compensation consulting firm on the following factors:

 

In particular, the CompensationC&LD Committee noted that Pearl Meyer's services were limited to executive and non-employee director compensation consulting. Specifically, Pearl Meyer does not provide, nor has it provided, directly or indirectly through affiliates, any non-executive compensation services. The CompensationC&LD Committee will continue to monitor the independence of its compensation consultant on a periodic basis.

 

The CompensationC&LD Committee's independent compensation consultant compiles information and provides advice regarding the components and mix (short-term/long-term; fixed/variable; cash/equity) of the executive compensation programs of AdvanSix and its Compensation Peer Group (see pages 24-25 of this proxy statement for further detail regarding the Compensation Peer Group) and analyzes the relative performance of AdvanSix and the Compensation Peer Group with respect to stock performance and the financial

independent compensation consultant reports to the CompensationC&LD Committee Chair, has direct access to CompensationC&LD Committee members, and attends CompensationC&LD Committee meetings either in person or by telephone.

The CompensationC&LD Committee considers input from senior management in making determinations regarding the overall executive compensation program and the individual compensation of the executive officers. As part of AdvanSix’s annual planning process, the CEO CFO, and Chief Human Resources OfficerCFO develop targets for AdvanSix’s incentive compensation programs and present them to the CompensationC&LD Committee. These targets are reviewed by the CompensationC&LD Committee to ensure alignment with our strategic and annual operating plans, taking into account the targeted year-over-year and multi-year improvements as well as identified opportunities and risks. The CEO recommends base salary adjustments and cash and equity incentive award levels for AdvanSix’s other executive officers, but does not provide recommendations on her own compensation. The CEO's recommendations are based on performance appraisals (including an assessment of the achievement of pre-established financial and non-financial management objectives determined by the CompensationC&LD Committee with input from the full Board) together with a review of supplemental performance measures and prior compensation levels relative to performance. The CEO presents to the CompensationC&LD Committee and the full Board her evaluation of each executive officer’s contribution and performance over the past year, strengths and development needs and actions, and presents to the Nominating and Governance Committee and the full Board succession plans for each of the executive officers.

 

While senior management has primary responsibility for managing risk, the Board, as a whole, has responsibility for risk oversight, while the relevant Committees review specific risk areas and report to the full Board as appropriate. The Board exercises its oversight through periodic management updates on the financial and operating results of AdvanSix, including its annual operating plans and strategic planning, and provides input to management with respect to ordinary course, business and commercial operating risks as well as related prospective risks. In addition, management reports to the Board and each Committee periodically on specific, material risks as they arise or as requested by individual Board members.

On a periodic basis, management reports to each of the Committees and full Board, as applicable, on its Enterprise Risk Management ("ERM") program. These presentations are designed to provide the Committees and full Board with adequate visibility into business risks and enable the Board to effectively exercise its oversight function. Through its ERM program, management identifies the most significant risks facing the Company and ensures that, where possible, it deploys adequate risk mitigation strategies. The Board providesand Committees provide oversight and guidance to management to ensure that the ERM process appropriately identifies the risks facing AdvanSix and its operations, and that adequate risk mitigation steps are implemented where appropriate.

 

The specific risk areas of focus for the Board and each of its Committees are summarized below. In addition, each Committee meets in executive session as well as in separate private sessions with key management personnel and representatives of outside advisors. For example, during 2019, the Senior Director, Internal Audit meetsmet in private sessions with the Audit Committee, and the Vice President of Integrated Supply Chain and the Directors of HSE and Process Safety Management meetmet in private sessions with the Nominating and Governance Committee. During 2020, these private sessions with the Vice President of Integrated Supply Chain and, as applicable from time to time, the Directors of HSE and Process Safety Management, have continued with the newly established HSE&S Committee.

Our Corporate Governance Guidelines state that a majority of our directors must be considered independent under relevant NYSE and SEC guidelines. The Nominating and Governance Committee conducts an annual review of the independence of the directors and reports its findings to the full Board.

 

Based on the report and recommendation of the Nominating and Governance Committee, the Board has determined that all of our non-employee directors are independent and satisfy the independence criteria in the applicable NYSE listing standards and SEC rules. In addition, the Board determined that each director who served during 20182019, and who is intended to serve in 2020, on the Audit Committee and/or CompensationC&LD Committee satisfies the enhanced criteria associated with their membership on the Audit Committee and CompensationC&LD Committee, as applicable.

 

For a director to be considered independent, the Board must determine that the director does not have any material relationships with AdvanSix, either directly or indirectly through a family member or as a partner, member, principal or officer of an organization that has a relationship with AdvanSix, other than as a director and stockholder. Material relationships can include vendor, supplier, consulting, legal, banking, accounting, charitable and family relationships, among others.

The Board considered all relevant facts and circumstances in making its independence determinations, including the following:

 

The above information was derived from AdvanSix’s books and records and responses to questionnaires completed by the directors in connection with the preparation of this proxy statement. Based on our review of these materials, none of our non-employee directors had or has any relationship with AdvanSix other than as a director.

The Nominating and Governance Committee consists entirely of independent directors under applicable SEC rules and NYSE listing standards. The Committee seeks individuals qualified to become directors, evaluates the qualifications of individuals suggested or nominated by third parties, including stockholders, and recommends to the Board the nominees to be proposed by AdvanSix for election to the Board. The Committee’s responsibilities include consideration of director candidates in anticipation of upcoming director elections and other potential or expectedin connection with filling Board vacancies.

 

The Committee intends to take into consideration criteria established by the Board as set forth in the Company’s Corporate Governance Guidelines or established by the Committee in the Policy Statement Regarding Director Nominations and Stockholder Communications. In advance of, and at the time of, recommending candidates to the Board, the Committee shall inform the Board of the criteria used in making the recommendation.

 

The Committee annually reviews with the Board the requisite skills and characteristics of Board members, as well as the composition of the Board as a whole. This assessment includes a consideration of independence, diversity, age, skills, experience and industry backgrounds in the context of the needs of the Board and the Company, as well as the ability of current and prospective directors to devote sufficient time to performing their duties in an effective manner. Directors are expected to exemplify the highest standards of personal and professional integrity. In particular, the Committee seeks directors with established strong professional reputations and expertise in areas relevant to the strategy and operations of AdvanSix’s businesses. While AdvanSix’s Corporate Governance Guidelines do not prescribe a diversity policy or standards, as a matter of practice, the Guidelines do prescribe that the Committee will give consideration to diversity when evaluating the composition of the Board and the nomination of director candidates as well as necessary skills and experience and the ability to devote sufficient time to performing duties effectively. Directors are expected to challenge management constructively through active participation and questioning. The Nominating and Governance Committee is committed to enhancing both the diversity of the Board itself and the perspectives that are discussed in Board and Committee meetings.

 

The Committee conducts regular reviews of current directors in light of the considerations described above and past contributions to the Board.

 

Stockholders wishing to recommend a director candidate to the Committee for its consideration should write to the Committee, in care of Corporate Secretary, AdvanSix Inc., 300 Kimball Drive, Suite 101, Parsippany, New Jersey 07054. To receive meaningful consideration, a recommendation should include the candidate’s name, biographical data, and a description of his or her qualifications in light of the above criteria, and the Committee reserves its right to request additional information regarding such candidate in its discretion. Stockholders wishing to nominate a director should follow the procedures set forth in the Company’s By-laws, the Policy Statement regarding Director Nominations and Stockholder Communications, and as described under “Other Information—Director Nominations” in this proxy statement.

 

AdvanSix has not received any nominations under our proxy access by-law in connection with the 20192020 Annual Meeting of Stockholders. See “Other Information—Director Nominations.”

All new directors are invited to participate in ana director onboarding and orientation program, including presentations by senior management to familiarize new directors with the Company’s plans, its financial and accounting practices, its key risk management

topics, its compliance programs, its Code of Conduct, its principal officers, its internal auditors and independent accountants. The directors receive materials or briefing sessions either before or during each Board and Committee meeting. Between meetings, the directors are in frequent communication with the executive management of the Company on matters relating to critical aspects of the Company’s business. The Board also periodically participates in site visits, plant tours and training at AdvanSix’s facilities, as well as informational presentations regarding industry developments and various aspects of the Company's business and operations. Members of the Board may attend, at the Company’s expense, seminars, conferences and other continuing education programs designed for directors of public companies.

 

AdvanSix has no specific policy regarding director attendance at its Annual Meeting of Stockholders, although it is expected that each of our directors will attend absent extenuating circumstances. Generally, Board and Committee meetings are held immediately following the Annual Meeting of Stockholders. All of our directors then serving attended our 20182019 Annual Meeting of Stockholders andStockholders. All of our directors are expected to attend the 20192020 Annual Meeting of Stockholders.

The CompensationC&LD Committee reviews and makes recommendations to the Board regarding the form and amount of compensation for non-employee directors. Directors who are employees of AdvanSix receive no compensation for service on the Board. AdvanSix’s director compensation program is designed to enable continued attraction and retention of highly qualified directors and is designed to account for the time, effort, expertise and accountability required for active Board membership.

 

In general, the CompensationC&LD Committee and the Board believe that annual compensation for non-employee directors should consist of both a cash component, designed to compensate members for their service on the Board and its Committees, and an equity component, designed to align the interests of directors and stockholders and, by vesting over time, to create an incentive for continued service on the Board. The compensation program was approved by our Board upon the recommendation of our CompensationC&LD Committee, in consultation with its independent compensation consultant, who conducted a comprehensive review of peer group and market data in order to alignassess total director compensation, consisting of cash retainer fees and annual equity awards, with the median of our peer group and to align the elements of our director compensation program with our peer group, including the recommended mix of at least fifty percent of total compensation in equity. There were noIn response to a request for a competitive review of our director compensation program for 2020, the independent compensation consultant determined that total director compensation was below the median of the peer group (as described on page 24 of this proxy statement) and proposed adjustments for the C&LD Committee's consideration in order to align with the median of the peer group. In light of challenging and dynamic market conditions, the C&LD Committee and the full Board determined to defer any changes to the director compensation program for 2019.2020, except that the Chair of the newly established HSE&S Committee will receive an additional $10,000 annual cash retainer. In addition, our 2016 Stock Incentive Plan, as amended and restated, if approved at the Annual Meeting, will implement an annual limit of $750,000 on total director compensation, including both cash and equity components.

 

Each non-employee director is eligible for an annual equity grantsgrant in the form of full-value stock awards. For 2018,2019, each non-employee director was granted an award in the form of restricted stock units ("RSUs") with a grant date fair value of approximately $90,000. These annual stock grants are awarded following each Annual Meeting of Stockholders and vest one year from the date of grant.

In September 2017, the Board, upon the recommendation of the CompensationC&LD Committee, adopted the AdvanSix Inc. Deferred Compensation Plan (the “DCP”), effective January 1, 2018. The DCP is a nonqualified deferred compensation plan under which our directors may elect to defer up to a maximum of 100% of their cash retainer fees. Company contributions may not be made to the accounts of non-employee directors. Until a director meets his or her stock ownership requirements, as described below under “Stock Ownership Guidelines,” the only investment option available to a director who elects to participate is the AdvanSix stock unit fund. After satisfaction of the stock ownership requirements, a director may elect to allocate his or her deferrals to any investment option under the DCP. Any deferrals under the AdvanSix stock unit fund are irrevocably allocated to such fund. Any dividends applicable to deferrals under the AdvanSix stock unit fund are credited in the form of additional stock units. Under the Plan, each director’s account will be payable in

lump sum or installments upon a scheduled distribution date or the participant’s separation from service or death in accordance with the director’s elections, the terms of the DCP and subject to Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"). Distributions will be made in cash, with the exception of amounts held in the AdvanSix stock unit fund which will be distributed in shares of Company common stock, par value $0.01 per share ("Common Stock"). Deferrals by directors to the AdvanSix stock unit fund are reported as Other Stock-Based Holdings in the Stock Ownership Information table on page 15.16.

 

Director stock ownership guidelines have been adopted under which each non-employee director, while serving as a director of AdvanSix, must hold Common Stock (including restricted shares, RSUs, holdings in the Company stock unit fund under the DCP, and/or Common Stock equivalents) with a market value of at least five times the annual base cash retainer (or $400,000). Until a director has met the applicable ownership requirement, he or she is required to hold 100% of the shares (net of taxes) received upon the vesting of RSUs. As of April 1, 2019, all of our directors, other than2020, Mr. Hughes, haveMarberry has attained the prescribed ownership threshold. Directors have five years from appointment or election to the Board to attain the prescribed ownership threshold and all current directors are within the five-year period to attain the ownership threshold.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our website at www.AdvanSix.com under the heading “Investors” (see “SEC Filings”) immediately after they are filed with or furnished to the SEC.

AdvanSix is a proud member of the American Chemistry Council ("ACC") and, as an ACC Responsible Care® company, has a sharp focus on safety and advancing a sustainable enterprise, supported by approximately 1,4851,520 dedicated employees. Since 1988, Responsible Care® has helped ACC member and partner companies improve the health and safety of employees, the communities in which they operate, and the environment. We engage in open and honest dialogue with our key stakeholders including employees, investors, business partners, public authorities and communities to discuss their concerns, present our actions and communicate results.

AdvanSix’s Integrity and Compliance program reflects our core values and helps our employees, representatives, contractors, consultants, and suppliers meet a high standard of business conduct globally. At the core of the Integrity and Compliance program is the AdvanSix Code of Conduct that applies across the Company to all directors, officers (including the Chief Executive Officer, Chief Financial Officer and Controller) and employees. The Code of Conduct serves as a set of baseline requirements that enables employees to recognize and be aware of how to report compliance, integrity, and legal issues. It also outlines our organization’s pledge to operate in a safe, ethical and compliant manner, promote a positive workplace, respect each employee, promote development

through training that broadens work-related skills, and value diversity of perspectives and ideas. The Code of Conduct provides guidance and outlines expectations in a number of key integrity and compliance areas, including the prohibition of sexual or other unlawful forms of harassment, avoiding conflicts of interest, our commitment to health, safety and environmental matters, maintaining accurate books and records, anti-corruption and proper business practices, trade compliance, insider trading, data privacy, respect for human rights, and the appropriate use of information technology and social media. One of the hallmarks of a successful enterprise is a transparent culture of integrity and compliance, as well as a commitment to health, safety and environmental matters. Operating with integrity enhances our ability to operate safely, sustain the credibility of our brand, maintain a strong reputation, and build a track record of growth and performance.

All AdvanSix employees are required to participate in Code of Conduct training and certify that they will comply with the Code of Conduct. In addition, directors and executive officers certify, on an annual basis, their recognition of the Code of Conduct and their commitment to act in accordance with its requirements. In connection with our quarterly and annual SEC reporting, certain key members of management similarly certify as to their compliance with the Code of Conduct as well as confirmation of their responsibility to report suspected violations of law, Company policy and the Code of Conduct. In addition to the Code of Conduct, our Integrity and Compliance program provides comprehensive training on a periodic basis, or more frequently, as needed, regarding key compliance topics, develops training scenarios, provides mechanisms for employees and third parties to report concerns, and ensures timely and fair reviews of integrity and compliance concerns.

It is critical that we understand the issues that are important to our stockholders and address, as appropriate, their interests in a meaningful and effective manner. As a result, we engage with our stockholders on a regular basis to discuss a range of topics including our performance, risk management, executive compensation, and corporate governance. Continuous dialogue and engagement with our stockholders helps us understand how they view us, set goals and expectations for our performance, and identify emerging issues that may affect our strategies, corporate governance, compensation practices or other aspects of our operations. Our stockholder and investor outreach includes investor road shows, analyst meetings, and investor conferences. We also communicate with stockholders and other stakeholders through various media, including our annual report and SEC filings, proxy statement, news releases, our website as well as our conference calls for our quarterly earnings releases. Our CEO, CFO, Director of Investor Relations and other members of management meet periodically with investors to discuss the Company and its financial and business performance.

In addition, we conduct comprehensive governance and compensation outreach efforts with stockholders representing more than 50% of our shares outstanding to provide updates regarding our business, our compensation philosophy as well as an overview of our governance and compensation framework. From these outreach efforts, as well as meetings held with stockholders, we received positive feedback regarding our governance and compensation regime and our willingness to engage with our stockholders on issues that are important to them. We intend to continue these efforts in connection with our Annual Meeting as well as throughout the remainder of the year.

In this Compensation Discussion and Analysis (“CD&A”), we discuss the compensation philosophy, programs and practices adopted by the CompensationC&LD Committee of the Board of Directors of AdvanSix for senior executive officers and review the various objectives and elements of AdvanSix’s executive compensation program, its alignment with performance and the 20182019 compensation decisions regarding our Named Executive Officers (“NEOs”).

For purposes of this CD&A and the disclosure that follows, the following are AdvanSix’s executive officers and our NEOs for 2018:2019:

In 2018,2019, we once again faced a broad set of challenges and opportunities. Operationally, the year began with a significant weather event, which our team successfully managed through, demonstrating our resiliency and grit as well as our steadfast focus on safe and stable operations. These efforts culminated with our fourth quarter plant utilization rates reaching the highest level of any quarter since our spin-off in 2016. Throughout, we remained committed to our HSE values and reinvestment in our businessopportunities as we executednavigated a difficult end-market environment. Despite the global slowdown in demand, we continued to benefit from our low-cost position and remain focused on executing against our high-return growthstrategic priorities. Last year saw several strategic investments that position the Company for long-term success.

As we drivelook forward, we remain focused on driving safe, stable and sustainable operations, enhancing our long-term growth capabilities, making smart investments in the business through high-return reinvestment, build outto drive higher returns and continuing to drive levers within our inorganic pipeline and capabilities, and return excess cash to shareholders. In addition, we were pleased to have published our inaugural sustainability report in November 2018 demonstrating our commitment to sustainable operations at AdvanSix.control for long-term value creation.

The Company’s financial results reflected the significant impact associated with certain extraordinary events, such as the unprecedented weather eventshortages and delays in the first quarterdelivery of 2018cumene and the Hopewell investigation,PES supplier disruption and shutdown, which were driven by external conditions and were not reflective of operational performance.performance, as well as one-time restructuring charges in connection with the closure of the Pottsville films plant and the new strategic alliance with Oben Group. Consistent with its compensation philosophy, the CompensationC&LD Committee evaluated the Company’s reported financial results, balanced with the strong operational performance, and approved 20182019 Short-Term Incentive payouts to NEOs at 35.2%46.5% of target opportunity.

As a result of our strong operational and financial performance since the spin-off in October 2016, AdvanSix total stockholder return has significantly outperformed both the broader markets and chemical industry peers.compensation peer group.

Our executive compensation program received substantial support and was approved, on an advisory basis, by 97%98% of votes cast at our 20182019 Annual Meeting of Stockholders. Our CompensationC&LD Committee and the other members of our Board believe that this level of approval is indicative of our stockholders’ strong support of our executive compensation program, philosophy and goals and the decisions made with respect to the structure of our executive compensation program and the compensation of our NEOs.

 

In setting total compensation to meet these key objectives, we seek to achieve the optimal balance between: (1) fixed and variable (or “at-risk”) pay elements; (2) short-term and long-term pay elements; and (3) cash and equity-based elements.

 

The factors applicable to our NEOs that generally shape our assessment of compensation and help achieve our key objectives include: (1) compensation history, in total and for each element of compensation; (2) operational and financial performance of AdvanSix; (3) future leadership development and potential; (4) our performance relative to the competitive marketplace; (5) individual performance record; (6) relative level of responsibility within AdvanSix and the impact of the NEO’s position on Company performance; (7) trends and best practices in executive compensation; and (8) industry and macroeconomic conditions.

For a discussion of certain of our CompensationC&LD Committee processes and procedures with respect to executive compensation, please see "Board Committee Oversight of Executive Compensation and Outside Compensation Consultant" on page 9.10.

In establishing our compensation program for 2018,2019, our CompensationC&LD Committee took some of the following key actions:

The following charts illustrate the approximate target mix of base salary, short-term incentive awards and long-term incentive awards for our CEO and our other NEOs in 2018,2019, highlighting the performance-driven focus of our executive compensation program which emphasizes at risk, performance-based pay:

The following is a summary of the main elements of our 20182019 compensation program, a description of each element and an explanation as to why we pay each element:

As part of our executive compensation program, our CompensationC&LD Committee is committed to regular review and consideration of best practices in governance and executive compensation. Our CompensationC&LD Committee has adopted the following policies and practices.

The CompensationC&LD Committee believes it is important to understand the relevant market for executive talent to ensure that AdvanSix’s executive compensation program is competitive and supports the attraction and retention of highly qualified executives. The CompensationC&LD Committee also believes that market information is useful as one relevant factor in assessing the reasonableness of compensation paid to our executive officers.

The CompensationC&LD Committee utilizes its independent compensation consultant to advise with respect to establishing its peer group of companies for use in connection with compensation benchmarking, review of market practices and relative performance evaluations. The following selection criteria were used in determining the peer group: size (revenues and market capitalization generally within the range of 0.33 - 3x AdvanSix’s revenue and market capitalization), industry (chemicals industry), operating complexity (focused on organizations with vertical integration), location/geographic reach (U.S. based organizations with global distribution) and availability of data (publicly traded companies). In addition, given the frequent M&A activity in the chemicals industry, the independent compensation consultant targeted a group of 15 - 20 companies so that the peer group included a sufficient number of companies to provide a robust data set. On a regular basis, at the CompensationC&LD Committee's direction, the independent compensation consultant evaluates the peer group and proposes modifications for the CompensationC&LD Committee's consideration to eliminate companies that were acquired or no longer meet the peer group selection criteria and to add new companies to ensure that we can continue to maintain a robust data set from the peer group.

As compared to the peer group, AdvanSix ranked at approximately the 50th45th percentile with respect to total revenues and at approximately the 25th10th percentile with respect to market capitalization.  capitalization based on the data provided by our independent compensation consultant.

In February 2019,2020, the CompensationC&LD Committee approved a modification to the peer group, as recommended by its independent compensation consultant, to eliminate A. Schulman, which was acquiredtwo peer companies, Innophos Inc. and Omnova Solutions Inc., upon the closing of their acquisitions in 2018.  2020, and to add American Vanguard Corporation.

Base salaries are intended to attract and compensate high-performing and experienced leaders and are determined based on scope of responsibility, years of experience and performance, with reference to market data (but are not targeted to a specific competitive position). On February 26, 2018,10, 2019, based on an assessment of Ms. Kane's performance and, in consultation with the independent compensation consultant, and a review of peer group data for compensation benchmarking, the CompensationC&LD Committee approved a 9.49% merit-based salary increase to Ms. Kane, a 6% merit-based salary increase to Mr. Preston and a 3% merit-based salary increase to Mr. Quitmeyer, Mr. Bellamy and Mr. Gramm, resulting in the following annual base salaries of our NEOs, effective March 26, 2018: Ms. Kane, $675,000; Mr. Preston, $435,660; Mr. Quitmeyer, $529,163; Mr. Bellamy, $349,247; and Mr. Gramm, $285,748.

On February 24, 2020, based on performance assessments and, in consultation with the independent compensation consultant, a review of peer group data for compensation benchmarking, the C&LD Committee proposed merit-based salary increases for Ms. Kane and Mr. Preston to better align with competitive market practices, but each of Ms. Kane and Mr. Preston deferred any adjustment for 2020 in light of challenging and dynamic market conditions, with consideration of any such increase deferred until 2021. The following are the annual base salaries of our NEOs, effective March 30, 2020: Ms. Kane, $810,000; Mr. Preston, $449,000; Mr. Quitmeyer, $545,500; and Mr. Gramm, $294,500.

Short-term incentive awards are intended to motivate and reward executives for achieving annual corporate and individual goals in key areas of financial and operational performance.

In February 2018,2019, the CompensationC&LD Committee established the metrics for the short-term incentive plan for 20182019 to ensure alignment with the Company’s business objectives and compensation philosophy while also taking into consideration a review of peer group data confirmed by its independent compensation consultant.

Under the operational plan established for 2018,2019, our NEOs had the opportunity to earn a cash payment based on Company financial performance measured over the period from January 1, 20182019 to December 31, 2018 and individual merit-based performance.2019. The Company performance metrics for 20182019 were based on the following metrics:

Under our short-term incentive plan, actual performance results are subject to further adjustment for the cumulative effect of changes in accounting treatment, impact of acquisitions and divestitures, discontinued operations, restructuring charges and other unusual events. Based on actual results for 2018,2019, our performance was below threshold results with respect to the EBITDA and Production Volume performance metrics. In assessing these results, the CompensationC&LD Committee generally consideredexcluded the significant impact of the restructuring charges associated with the Pottsville plant closure and certain extraordinary, unusual and one-time items, such as the unprecedented weather eventshortages and delays in delivery of cumene and the first quarter of 2018, thatPES supplier disruption, which were driven by external conditions, that management could not control or directly influence and that were not reflective of Company performance. In recognition

Our adjusted performance resulted in a payout of 46.5% of the strong operating plant performance outside of the extraordinary external events, which culminated in fourth quarter 2018 plant utilization rates reaching the highest level of any quarter since the spin-off in 2016, the Compensation Committee determined that Production Volume would be adjusted upward by 1.7%, capped at an amount equal to threshold achievement of 2,043 million lbs. There were no discretionary adjustments made for EBITDA or Working Capital Turns.target award opportunity.

Based on achievement of Company financial performance metrics and related adjustments, as described above, and a review of each NEO's individual performance for 2018,2019, which was concluded to be strong and in-line with expectations, the CompensationC&LD Committee approved payouts under our 20182019 short-term incentive plan as follows:

Payments under the 20182019 short-term incentive compensation program were made in the first quarter of 20192020 following approval of performance results by the CompensationC&LD Committee.

 

The CompensationC&LD Committee believes strongly in using long-term incentive compensation to reinforce key companyCompany objectives such as promoting the achievement of long-term performance goals, focusing on the significance of stockholder return, encouraging executive retention, and promoting executive stock ownership. In determining the overall opportunity and mix of long-term incentive awards, the CompensationC&LD Committee considers various factors, including competitive market positioning against comparable peer group executives, peer group long-term incentive award practices, potential economic value realized, and timing of vesting and related matters. The NEOs’ total target award values for their 20182019 long-term incentive awards were determined as a specified percentage of their annual base salary effective on January 1, 2018. The target award values for our named executive officers was as follows: Ms. Kane, 375%;$2,632,500; Mr. Preston, 150%;$877,239; Mr. Quitmeyer, 150%;$912,806; Mr. Bellamy, 100%;$412,112; and Mr. Gramm, 100%. $315,752.

In addition to the annual and long-term compensation programs described above, we provide our executive officers with the benefits, retirement plans and limited perquisites summarized below.

In November 2017, our CompensationC&LD Committee adopted the AdvanSix Inc. Executive Severance Pay Plan (“Severance Plan”) for executive officers. The purpose of the Severance Plan is to provide financial protection upon loss of employment at market competitive rates. The severance terms for the NEOs were established in connection with peer group market practices and data provided by our compensation consultant. We believe these arrangements are necessary to attract and retain our executives and ensure continuity of management.

The Severance Plan provides participants with certain severance benefits in the event of a covered termination, which includes: (i) an involuntary termination of employment by the Company, subject to certain exceptions enumerated in the Severance Plan; and (ii) voluntary termination of employment by a participant for Good Reason, as defined in the Severance Plan.

In the event of a covered termination occurring outside of the Change in Control Period, which is the twenty-four month period following the occurrence of a Change in Control, as defined in the Severance Plan, each participant would be entitled to receive a lump sum cash payment in an amount equal to:

In the event of a covered termination occurring during the Change in Control Period, each participant would be entitled to receive:

Each participant is solely responsible for any tax liabilities incurred by him or her in connection with the Severance Plan. In the event that a participant would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, the Severance Plan includes a “net best” provision whereby a participant would be entitled to the greater after-tax benefit of either: (i) his or her full severance benefits, for which the participant is responsible for the payment of any applicable Section 4999 excise tax; or (ii) his or her severance benefits cut backreduced to the maximum amount that would result in no Section 4999 excise tax for the participant.

The CompensationC&LD Committee may amend or terminate the Severance Plan at any time in accordance with its terms, provided that during the Change in Control Period and during a specified period prior to a Change in Control, the Severance Plan may not be amended or terminated in any manner adverse to the interests of the participants.

The compensation that could be received by our NEOs in connection with various termination scenarios occurring on December 31, 20182019 is set forth below in the section entitled “Potential Payments Upon Termination or Change in Control.”

In connection with the spin-off, we were required to adopt a qualified defined benefit retirement plan with terms materially consistent with the terms of Honeywell’s Retirement Earnings Plan (“Honeywell REP”). In October 2016, our Board adopted the AdvanSix Inc. Retirement Earnings Plan (“Retirement Plan”). Each of our NEOs who was an active participant in the Honeywell REP is a participant in our Retirement Plan and earns a benefit under a formula substantially identical to the formula which applied to the participant under the Honeywell REP, except that any benefit earned under our Retirement Plan will be reduced by the value of benefits accrued through the spin-off date under the Honeywell REP, which remain the responsibility of Honeywell. The material terms of our Retirement Plan are explained below under “Pension Benefits-Fiscal Year 2018.2019.”

We have also adopted a broad-based defined contribution plan, or 401(k) plan. On January 1, 2017, the Company established theThe AdvanSix Inc. Savings Plan (“Savings Plan”). The Savings Plan allows eligible employees to contribute a portion of their cash compensation on a tax-deferred basis to save for their future retirement needs. The Company matches 50% of the first 8% of contributions for employees covered by a collective bargaining agreement and matches 75% of the first 8% of the employee’s contribution election for all other employees. The Company may also provide an additional discretionary retirement savings contribution which is at the sole discretion of the Company. Matching contributions vest after three years of service, including service at Honeywell.

In September 2017, the Board, upon the recommendation of the Compensation Committee,The Company has also adopted the AdvanSix Inc. Deferred Compensation Plan (the "DCP"), effective January 1, 2018. The DCP is a nonqualified deferred compensation plan under which designated eligible executives, including our named executive officers, and directors of the Company may elect to defer annual base salary, bonuses or director’s fees, as applicable. The DCP also permits the Company to make contributions to the accounts of employee participants. Under the DCP, employee participants may elect to defer up to a maximum of 75% of base salary and 90% of bonuses. Participants designate the funds in which their account balances will be deemed to be invested for purposes of determining the amount of earnings and losses to be credited to their accounts. The rate of return earned on a participant’s account balance is based on the actual performance of the funds in which he or she is deemed invested. All amounts credited under the DCP, with the exception of any contributions which may be made by the Company, are immediately vested. The material terms of the DCP are explained below under “Nonqualified Deferred Compensation-Fiscal Year 2018.2019.”

Our NEOs are eligible to participate in Company-wide benefits such as life, medical, dental, accidental death and disability insurance that are competitive with other similarly-sized companies. Our NEOs participate in these programs on the same basis as the rest of AdvanSix’s salaried employees. We also maintain excess liability coverage for senior management personnel, including our NEOs, as well as a relocation program providing for reimbursement of certain relocation expenses.

The CompensationC&LD Committee believes that our executives will more effectively pursue our stockholders’ long-term interests if our executivesthey hold substantial amounts of our stock. Accordingly, our CompensationC&LD Committee has adopted minimum stock ownership guidelines for all executive officers.

Under these guidelines, our executive officers must hold shares of our Common Stock equal in value to the following multiples of their current base salary:

Shares used in determining whether these guidelines are met include shares held personally or beneficially owned and RSUs subject to service-based vesting conditions. Unvested performance stock units and stock options, whether vested or unvested, do not count towards an executive’s ownership. As of April 1, 2020, Mr. Gramm has satisfied the stock ownership guidelines. Executives have five years from the date they become subject to the guidelines to meet the ownership requirement.requirement and all current executive officers, whose stock ownership values have been impacted by recent market conditions, are within the five-year period to attain the ownership threshold. Until an executive has met the applicable ownership requirement, he or she is required to hold 100% of the shares (net of taxes) received upon the vesting of RSUs and PSUs and upon the exercise of stock options.