UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Trinseo S.A.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Trinseo S.A. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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Trinseo S.A.
Société anonyme
REGISTERED OFFICE:
26-28, rue Edward Steichen
L‑2540
L-2540 Luxembourg
Grand Duchy of Luxembourg
Luxembourg RCS: B 153.149
153.549
PRINCIPAL PLACE OF BUSINESS:
1000 Chesterbrook Boulevard, Suite 300
Berwyn, PA 19312 USA
April [__], 202027, 2021
Dear Shareholder:
We cordially invite you to attend our 2020 Annual General Meeting2021 annual general meeting of Shareholdersshareholders (the “Annual Meeting”"General Meeting") to be held on Tuesday,Monday, June 9, 202014, 2021 at 12:00 p.m. (local time), atto consider the Company’sextraordinary and ordinary resolutions discussed in the attached proxy statement. Due to the COVID-19 pandemic and ongoing travel restrictions and health and safety concerns, the board of directors of Trinseo (the "Board") has decided to again hold the General Meeting via teleconference, without a physical meeting, in accordance with the Luxembourg offices located at 26-28, rue Edward Steichen, L 2540 Luxembourg, Grand Duchylaw dated September 23, 2020 on measures on holding meetings of Luxembourg.*companies and other legal entities ("portant des mesures concernant la tenue de réunions dans les sociétés et dans les autres personnes morales") (as amended). Shareholders will not be able to attend the General Meeting in person. Further details regarding admission to the AnnualGeneral Meeting, via teleconference, as well as the business to be conducted at the meeting is more fully described in the accompanying materials.
In addition to the typical proposals to be voted on at our General Meeting, our board of directors has unanimously approved, and is submitting to our shareholders for approval, several proposals related to a cross-border merger transaction that will, effectively, result in a change of our place of incorporation from Luxembourg to Ireland (see Proposal 1). The proposed transaction would result in you holding shares in an Irish public limited company (Trinseo PLC) rather than a Luxembourg Société anonyme (Trinseo S.A.). As discussed further in the proxy statement, we and the Board believe that Ireland provides the Company a favorable legal and regulatory infrastructure, providing flexibility while continuing to allow access to financial markets and customers, without impacting our business operations or our shareholders. If the proposal is passed, upon effectiveness of the merger, the number of shares you will own in Trinseo PLC will be the same as the number of shares you held in Trinseo S.A. immediately prior to the completion of the transaction.
After the completion of the merger, Trinseo will continue to conduct the same business operations as were conducted prior to the merger, but with Trinseo PLC as the parent company. We expect the ordinary shares of Trinseo PLC to be listed on the New York Stock Exchange under the symbol "TSE," the same symbol under which your shares in Trinseo S.A. are currently listed. After completion of the transaction, we will remain subject to the U.S. Securities and Exchange Commission reporting requirements and the applicable corporate governance rules of the New York Stock Exchange, and we will continue to report our financial results in U.S. dollars and under U.S. generally accepted accounting principles.
We are also asking our shareholders to approve several additional proposals related to the merger. Proposals 3 and 4 are advisory proposals where we are asking our shareholders to approve, on an advisory basis, the Trinseo PLC articles of association to be in effect at the time of the merger, and certain sections of the Trinseo PLC articles of association which would represent material changes to Trinseo S.A.'s current articles of association. Proposal 5 seeks approval of the creation of distributable profits of Trinseo PLC under Irish law by reducing the entire share premium created from the issuance and allotment of ordinary shares of Trinseo PLC pursuant to the merger (or such lesser amount as the Trinseo PLC Board may approve). If this proposal is not approved by shareholders, Trinseo PLC will not be able to pay dividends, make other distributions, or repurchase shares unless and until distributable profits are otherwise generated.
We are also asking our shareholders to approve an amendment to our current Luxembourg articles of association as amended and restated on June 20, 2018 (the "Articles"), to be effective prior to the merger, to increase the size of our Board to thirteen directors (Proposal 2), and to vote to elect the thirteenth director nominee, Victoria Brifo, a talented candidate the Board has unanimously voted to nominate for election at this meeting (see Proposal 7).
We describe in detail the cross-border merger and other actions we expect to take in the attached Notice of 2020 Annual General Meeting of Shareholders and proxy statement. We encourage you to read this entire document carefully. You should carefully consider "Risk Factors" beginning on page 12 for a discussion of risks related to the merger before voting. We have also made available a copy of our Annual Report on Form 10‑K10-K for our fiscal year ended December 31, 2019.2020. We encourage you to read the Form 10‑K,10-K, which includes information on our operations and products, as well as our audited financial statements.
WeThe Board unanimously recommends that you vote to approve the merger and the other proposals described in the accompanying proxy statement.
As in previous years, we will again be using the “Notice"Notice and Access”Access" method of providing proxy materials to shareholders via the Internet. We believe that this process provides shareholders with a convenient and quick way to access the proxy materials and vote, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. We will mail to most of our shareholders a Notice of Internet Availability of Proxy Materials for the AnnualGeneral Meeting containing instructions on how to access our proxy statement and Annual Report and vote electronically via the Internet. Each notice will also contain instructions on how to receive a paper copy of the proxy materials. All shareholders who do not receive a notice will receive a paper copy of the proxy materials by mail or an electronic copy of the proxy materials by email.
Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the AnnualGeneral Meeting, we encourage you to consider the matters presented in the proxy statement and vote as soon as possible. Instructions for Internet and telephone voting are included with the Notice of Internet Availability of Trinseo’sTrinseo's Proxy Materials for the AnnualGeneral Meeting. If you prefer, you can request to receive proxy materials by mail, including a proxy card, and vote by mail by completing and signing the enclosed proxy card and returning it in the envelope provided.
Sincerely yours,
Frank A. Bozich
President and Chief Executive Officer
*We are actively monitoring the public health and travel concerns relating to the COVID-19 coronavirus outbreak and the protocols imposed by Luxembourg, U.S., and other governments that may impact our ability to hold our Annual Meeting in person. In the event it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for participation at the meeting in accordance with the Grand Ducal Regulation of Luxembourg dated March 20, 2020 (as may be amended or supplemented from time to time), which includes the exclusive use of (i) written or electronic voting forms, (ii) proxies to be granted to a proxyholder appointed by the Company or (iii) virtual means such as video-conference or any other telecommunication means that permits the identification of the participants to the meeting. Details will be posted in the “Investor Relations” section of our website, investor.trinseo.com, and filed with the Securities and Exchange Commission in advance of the Annual Meeting.
Trinseo S.A.
Annual General Meeting of Shareholders
Luxembourg, Grand Duchy of Luxembourg
June 9, 2020
14, 2021
12:00 p.m. CEST
Via teleconference
Trinseo S.A.
Société anonyme
REGISTERED OFFICE:
26-28, rue Edward SteichenL 2540L-2540 Luxembourg
Grand Duchy of Luxembourg
Trinseo S.A.
Société anonyme
REGISTERED OFFICE:
L‑2540 Luxembourg
Grand Duchy of Luxembourg
Luxembourg RCS: B 153.149153.549
Principal executive offices of Trinseo S.A.
1000 Chesterbrook Boulevard, Suite 300
Berwyn, Pennsylvania 19312 USA
+1 610-240‑3200610-240-3200
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To the Shareholders of Trinseo S.A.:
Notice is hereby given that an Annual General Meetingannual general meeting of Shareholdersshareholders (the "General Meeting") of Trinseo S.A. (“("we,” “Trinseo”" "Trinseo" or the “Company”"Company") will be held on Tuesday,Monday, June 9, 2020,14, 2021, at 12:00 p.m., local time Central European Summer Time, for the purposes described below and in further detail in the proxy statement accompanying this notice. This year’s meeting will be held at the Company’s Luxembourg offices located at 26-28, rue Edward Steichen, L 2540 Luxembourg, Grand Duchy of Luxembourg. We intend to hold the Annual Meeting in person, but we are actively monitoring the public health and travel concerns relatingDue to the COVID-19 coronavirus outbreakpandemic and ongoing travel restrictions and health and safety concerns, the protocols that Luxembourg, U.S. and other local governments may impose that impact our abilityboard of directors of Trinseo (the "Board") has decided to hold an in-person Annual Meeting. In the event it is not possible or advisable toagain hold the AnnualGeneral Meeting in person, we will announce alternative arrangements for participation at thevia teleconference, without a physical meeting, in accordance with the Grand Ducal RegulationLuxembourg law dated September 23, 2020 on measures on holding meetings of Luxembourg dated Marchcompanies and other legal entities ("portant des mesures concernant la tenue de réunions dans les sociétés et dans les autres personnes morales") (as amended). Shareholders will not be able to attend the General Meeting in person. Only shareholders of record at the close of business on April 20, 2020 (as2021 (the record date for the General Meeting) may attend. All shareholders must register to attend the General Meeting teleconference. Shareholders may register by going to the Company's voting website, www.proxyvote.com, entering their 16-digit control number found on their proxy card or in their General Meeting materials, and click on the box labeled "Register for Meeting." Shareholders who register to attend the General Meeting will be amendedgiven dial-in information for the teleconference, and when dialing into the General Meeting will be asked to confirm their name and control number prior to admission into the teleconference.
If you are a shareholder of record, you may vote your shares during the General Meeting. Beneficial shareholders who held their shares through a broker, bank or supplementedother nominee on the record date for the General Meeting, who wish to vote their shares by proxy during the General Meeting must register in advance. To register, beneficial holders must first obtain a legal proxy, executed in their favor, from timetheir broker, bank or other nominee. Proof of such legal proxy (e.g., a forwarded email from the beneficial holder's broker, bank or other nominee with the legal proxy attached, or an image of the legal proxy attached to time),the email) must be sent via email to F21MTGS@trinseo.com and labeled "Legal Proxy" in the subject line. Requests to vote at the General Meeting must be received no later than 6:00p.m. CEST, on Monday, June 7, 2021. Beneficial holders will receive a confirmation of registration by email and may vote at the General Meeting.
The General Meeting is being held for the purpose of approving two extraordinary resolutions, which includesrequire approval from two-thirds (2/3) of the exclusive usevotes cast in person or by proxy at the General Meeting. Approval of (i) written or electronic voting forms, (ii) proxiesthese extraordinary resolutions are required to be grantedreviewed by a Luxembourg notary. The General Meeting is also being held for the purpose of approving thirteen ordinary resolutions, which require either approval of a majority of the shares represented in person or by proxy at the General Meeting, or require advisory approval by shareholders.
First, for the purpose of approving extraordinary resolutions in order:
Table of our website, investor.trinseo.com, and filed with the Securities and Exchange Commission (the “SEC”) in advance of the Annual Meeting.Contents
First,Second, for the purpose of approving ordinary resolutions in order:
1.
2.
3.
4. 2020;
5. an annual dividend in the amount of all interim dividends declared and distributed since the Company's last annual general meeting of shareholders;
6. 2020;
7. 2021;
8. To approve, as required by Luxembourg law, an annual dividend in the amount of all interim dividends declared since the Company’s last annual general meeting of shareholders;
9. To approve a new share repurchase authorization to repurchase the Company’s shares; and
10. To approve an amendment to the Company’s Omnibus Incentive Plan.
Second,Third, for the purpose of approving or authorizing any other business properly brought before the Annual General Meeting of Shareholders.Meeting.
It is expected that the Notice of Annual General Meeting and this proxy statement will first be available to shareholders on or about April [__], 2020.30, 2021. On or before April 30, 2020,2021, the Company will also begin mailing a Notice of Internet Availability of Trinseo’sTrinseo's Proxy Materials to shareholders informing them that this proxy statement and voting instructions are available online. As more fully described in that Notice, all shareholders may choose to access proxy materials on the Internet or may request to receive paper copies of the proxy materials.
Shareholders of record at the close of business on April 20, 20202021 are entitled to notice of, and entitled to vote at, the Annual General Meeting and any adjournments or postponements thereof. ToWhether or not you expect to attend the Annual General Meeting, you must demonstrateplease complete, sign, date, and promptly return the enclosed proxy card in the envelope that you were awe or your bank or brokerage firm have provided. Your prompt response will ensure that your ordinary shares of Trinseo shareholder as ofS.A. are represented at the close of business on April 20, 2020 or hold a validGeneral Meeting. You can change your vote and revoke your proxy forby following the Annual Meeting from such a shareholder.procedures described in this proxy statement.
By Order of the Board of Directors | ||
Angelo N. ChaclasSenior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary April |
Important Notice Regarding the Availability of Proxy Materials for the AnnualGeneral Meeting To Be Held on June 9, 2020:14, 2021: our proxy statement is attached. Financial and other information concerning Trinseo areis contained in our Annual Report to shareholders for the fiscal year ended December 31, 2019.2020. The proxy statement and our fiscal 20192020 Annual Report to shareholders are available on the Investor Relations section of our website at www.investor.trinseo.com. Additionally, you may access our proxy materials at www.proxyvote.com, a site that does not have “cookies”"cookies" that identify visitors to the site.
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Table of Contents |
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Proxy Statement | 1 | |
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Questions and Answers About the General Meeting and the Proxy Materials | 2 | |
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| 5 | |
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Summary of Merger Proposals | 8 | |
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Risk Factors | 12 | |
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Material Tax Considerations Relating to the Merger | 15 | |
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Description of Trinseo Plc Shares | 23 | |
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Proposal 1 | 35 | |
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Proposal 2 | 39 | |
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Proposal 3 | 40 | |
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Proposal 4 | 57 | |
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Proposal 5 | 59 | |
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Proposal 6 | 60 | |
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Proposal 7 | 74 | |
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Corporate Governance | 75 | |
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Board Structure and Committee Composition | 78 | |
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80 | ||
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82 | ||
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83 | ||
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Securities Authorized for Issuance under Equity Compensation Plans | 85 | |
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85 | ||
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Proposal 8 | 86 | |
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Compensation Discussion and Analysis | 87 | |
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Executive Compensation | 98 | |
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CEO Pay Ratio | 108 | |
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109 | ||
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| 110 | |
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Proposal 10 | 111 | |
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Proposal 11 | 112 | |
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Proposal 12 | 113 | |
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Proposal 13 | 113 | |
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Audit Committee Matters | 114 | |
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116 | ||
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116 | ||
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117 | ||
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Householding | 117 | |
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Appendix A | 118 | |
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Appendix B | 140 | |
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Appendix C | 173 | |
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The Board of Directors (the “Board”) of Trinseo S.A. solicits your proxy for the 2020 Annual General Meeting of Shareholders (the “Annual Meeting”) to be held on June 9, 2020,14, 2021, and at any adjournments or postponements of the AnnualGeneral Meeting, for the purposes set forth in the Notice of the Annual General Meeting of Shareholders included in this proxy statement. As used in this proxy statement, the terms “we,” “us,” “our” “Company”"we," "us," "our" "Company" or “Trinseo”"Trinseo" refer to Trinseo S.A. proxyProxy materials, including this proxy statement and the Annual Report for our fiscal year ended December 31, 2019 (“2020 ("fiscal 2019”2020") are being first provided to shareholders on or before April 27, 2020.30, 2021. Our registered address is 26-28, rue Edward Steichen, L 2540 Luxembourg, Grand Duchy of Luxembourg.
1 2021 Proxy Statement
QUESTIONS AND ANSWERS ABOUT THEANNUALGENERAL MEETING AND THE PROXY MATERIALS
Questions and Answers about the Annual Meeting and the Proxy Materials
QUESTIONS AND ANSWERS ABOUT THE GENERAL MEETING AND THE PROXY MATERIALS | ||||
When and where
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We will hold the General Meeting at 12:00 p.m., local time, on Monday, June 14, 2021. Due to the COVID-19 pandemic and ongoing travel restrictions and health and safety concerns, the Board has decided to again hold the General Meeting via teleconference, without a physical meeting, in accordance with the Luxembourg law dated September 23, 2020 on measures on holding meetings of companies and other legal entities ("portant des mesures concernant la tenue de réunions dans les sociétés et dans les autres personnes morales") (as amended). Shareholders will not be able to attend the General Meeting in person, only by teleconference. All shareholders must register if they wish to attend the General Meeting via teleconference. Shareholders may register by going to the Company's voting website, www.proxyvote.com, entering their 16-digit control number found on their proxy card or in their proxy materials, and click on the box labeled "Register for Meeting." Shareholders who register to attend the General Meeting will be given dial-in information for the teleconference, and when dialing into the General Meeting will be asked to confirm their name and control number prior to admission into the teleconference.
Why did I receive
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We provide access to our proxy materials over the Internet. On or about April 30, 2021 we commenced mailing of a Notice of Internet Availability of Proxy Materials to our shareholders of record and beneficial owners. The Notice explains how to access the proxy materials on the Internet and how to vote your proxy for the General Meeting.
If you received the Notice by mail and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting printed materials included in the Notice.
What will shareholders vote on at the
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Shareholders will be asked to vote on:
20202021 Proxy Statement 2
We do not expect any other matters to be presented at the General Meeting. If other matters are properly presented for voting, the persons named as proxies will vote in accordance with their best judgment on those matters.
Who is entitled to vote at the
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Shareholders of record as of the close of business on April 20, 2021 are entitled to vote at the General Meeting. On that date, there were 38,734,493 of our ordinary shares outstanding. Each ordinary share is entitled to one vote.
What is a shareholder of record?
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If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the shareholder of record for those shares. As the shareholder of record, you have the right to vote your shares.
If your shares are held in a stock brokerage account or by a bank, or other holder of record, you are considered the beneficial owner of shares held in street name. Your broker, bank, or other holder of record is the shareholder of record for those shares. As the beneficial owner, you have the right to direct your broker, bank, or other holder of record on how to vote your shares.
What constitutes a quorum for consideration of proposals at the
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Under our Articles, the holders of a majority of the ordinary shares outstanding and entitled to vote at the General Meeting shall constitute a quorum for the transaction of business at the General Meeting. Ordinary shares represented in person (via teleconference) or by proxy will be counted for purposes of determining whether a quorum is present. Abstentions and broker non-votes (if any) will be treated as present at the General Meeting and will be counted for quorum purposes.
How many votes are required to elect directors and to adopt the other proposals at the
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The proposals related to the extraordinary resolutions to approve the Merger (Proposal 1) and to amend the Articles to increase the size of the Board (Proposal 2) require the affirmative vote of two-thirds of the votes validly cast in person or by proxy at the General Meeting. The election of directors and each of the other proposals related to the ordinary resolutions to be voted on require the affirmative vote of a majority of the ordinary shares represented in person or by proxy at the General Meeting and entitled to vote. Advisory votes (Proposals 3, 4, 8 and 9) are deemed approved if passed by a majority of votes cast in person or by proxy at the General Meeting, and entitled to vote. For advisory votes, the Board takes the voting results under advisement.
How do I vote?
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If you are a shareholder of record, you may vote your shares during the General Meeting. If you do not wish to vote during the meeting or if you will not be attending the General Meeting, you
may vote by telephone, or over the Internet, by following the instructions provided in the Notice of Internet Availability of Proxy Materials. If you requested a printed copy of the proxy materials, you may also complete, sign, and date your proxy card and return it in the prepaid envelope that was included with the printed materials.
Beneficial shareholders who held their shares through a broker, bank or other nominee on the record date, who wish to vote their shares by proxy during the General Meeting must register in advance. To register, beneficial holders must first obtain a legal proxy, executed in their favor, from their broker, bank or other nominee. Proof of such legal proxy (e.g., a forwarded email from the beneficial holder's broker, bank or other nominee with the legal proxy attached, or an image of the legal proxy attached to the email) must be sent via email to F21MTGS@trinseo.com and labeled "Legal Proxy" in the subject line. Requests to vote at the General Meeting must be received no later than 6:00p.m. CEST, on Monday, June 7, 2021. Beneficial holders will receive a confirmation of registration by email that they may vote at the General Meeting.
If you are a beneficial holder and do not wish to vote during the meeting, you may vote by following the instructions provided in the Notice of Internet Availability of Proxy Materials you received from the shareholder of record of your shares. If you requested a printed copy of the proxy materials, you should have received a proxy card and voting instructions from the shareholder of record of your shares.
If you are a shareholder of record and submit a signed proxy card for the General Meeting but do not fill out the voting instructions, the persons named as proxy holders will vote the shares represented by your proxy as follows: (1) "FOR" approval of the Common Draft Terms and entry into the Merger; (2) "FOR" the amendment to the Company's Articles to increase the size of its board of directors; (3) subject to approval of the Merger Proposal, "FOR" approval, on an advisory basis, of the Proposed Constitution to be in effect at the time of the Merger; (4) subject to approval of the Merger Proposal, "FOR" approval, on an advisory basis, of the material changes reflected in the Proposed Constitution; (5) subject to approval of the Merger Proposal, "FOR" approval of the creation of distributable profits of Trinseo plc under Irish law by reducing the entire share premium of Trinseo PLC (or such lesser amount as may be approved by the board of directors of Trinseo PLC) resulting from the allotment and issue of ordinary shares of Trinseo PLC pursuant to the Merger (6) "FOR" the election of twelve directors specifically named in the proxy statement, each to serve for a term of one year expiring at the 2022 annual general meeting; (7) "FOR" the election of Ms. Victoria Brifo, subject to approval of the Board Increase Proposal; (8) "FOR" the proposal regarding advisory approval of the compensation paid by the Company to its named executive officers; (9) "1 YEAR" with respect to the advisory vote on the compensation of our named executive officers; (10) "FOR" approval of changes to the Company's director compensation program; (11) "FOR" approval of the Luxembourg Statutory Accounts; (12) "FOR" approval of the allocation of the results of the year ended December 31, 2020; (13) "FOR" the granting and discharge of the Company's directors and auditor for the performance of their respective duties during the year ended
20203 2021 Proxy Statement 3
December 31, 2020; (14) "FOR" ratification of the appointment of PwC Luxembourg to be the Company's independent auditor for all statutory accounts required by Luxembourg law for the year ending December 31, 2021; and (15) "FOR" ratification of the appointment of PwC to be the Company's independent registered public accounting firm for the year ending December 31, 2021.
If there are not sufficient votes to approve one or more of the proposals at the General Meeting, in accordance with the Company's Articles, the chair may adjourn the General Meeting to permit the further solicitation of proxies. Additionally, under Luxembourg law, the Board may adjourn the General Meeting for up to four weeks. The persons named as proxies will vote those proxies for such adjournment, unless marked to be voted against the proposal, to permit the further solicitation of proxies. Abstentions and broker non-votes, if any, will not have any effect on the result of the vote for adjournment. If any nominee should become unavailable, your shares will be voted for another nominee selected by the Board or for only the remaining nominees. If your shares are held in the name of a broker or nominee and you do not instruct the broker or nominee how to vote with respect to the election of directors or if you abstain or withhold authority to vote on any matter, your shares will not be counted as having been voted on those matters, but will be counted as in attendance at the meeting for purposes of a quorum.
If you do not vote your shares, you will not have a say on the important issues to be voted upon at the General Meeting.
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What happens if I abstain from voting on a matter or my broker withholds my vote? |
For extraordinary resolutions (Proposals 1 and 2) and advisory votes (Proposals 3, 4, 8 and 9), abstentions and broker non-votes (described below) are not counted and will have no effect. For each other matter to be considered at the Annual Meeting, abstentions are treated as shares that are represented and entitled to vote, so abstaining has the same effect as a negative vote. Shares held by brokers that do not have discretionary authority to vote on a particular proposal and that have not received voting instructions from their customers are not counted as being represented or entitled to vote on the General Meeting, abstentions are treated as shares that are represented and entitled to vote, and therefore abstaining will have the same effect as a negative vote.
A broker non-vote occurs when a broker does not have discretion to vote on a particular non-routine proposal and the broker has not received instructions from their customers as to how to vote on such proposal. Such broker non-votes are not counted as being represented or entitled to vote on such non-routine proposal, which has the effect of reducing the number of affirmative votes needed to approve the proposal.
Should I submit a proxy even if I plan to attend the
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To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the General Meeting
2020 Proxy Statement 4
Tablevia teleconference. If you attend the General Meeting and are a shareholder of Contentsrecord, you may also submit your vote during the meeting, and any previous votes that you submitted will be superseded by the vote that you cast during the General Meeting. Internet and phone voting will be cut-off at 11:59 p.m., Eastern Time, on Thursday, June 10, 2020.
QUESTIONS AND ANSWERS ABOUT THEANNUAL MEETING AND THE PROXY MATERIALS
Can I revoke my proxy?
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Your proxy may be revoked by giving notice of revocation to Trinseo in writing, by accessing the Internet site, by using the toll-free telephone number, or during the General Meeting via teleconference. A shareholder may also change his or her vote by executing and returning to the Company a later-dated proxy, by submitting a later-dated electronic vote through the Internet site, by using the toll-free telephone number or during the General Meeting via teleconference.
The Internet and telephone procedures for voting and for revoking or changing a vote are designed to authenticate shareholders' identities, to allow shareholders to give their voting instructions and to confirm that shareholders' instructions have been properly recorded.
Who will bear the cost of soliciting votes for the
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We will bear the expense of the solicitation of proxies for the General Meeting. Solicitation of proxies may be made by mail, in person or telephone by officers, directors and other employees of the Company. We have hired Okapi Partners LLC to aid in the solicitation of proxies. It is estimated that the fee for Okapi Partners LLC will be approximately $35,000 plus reasonable out-of-pocket costs and expenses. Such fee will be paid by the Company.
We will reimburse the Company's banks, brokers, and other custodians, nominees and fiduciaries for their reasonable costs in the preparation and mailing of proxy materials to shareholders.
A shareholder may also choose to vote electronically by accessing the Internet site stated on the Notice of Internet Availability or by using the toll-free telephone number stated on the Notice of Internet Availability. Shareholders that vote through the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, which will be borne by the shareholder.
20202021 Proxy Statement 5 4
PROPOSAL 1QUESTIONS AND ANSWERS ABOUT THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER |
Proposal 1–Election of Class II Directors
Why do you want to merge Trinseo S.A. with and into Trinseo PLC? |
Our Board believes that giving effect to the Merger will be in the best interests of the Trinseo group and our shareholders. In arriving at this determination, our Board consulted with Trinseo S.A.'s management along with its legal and tax advisors and considered various factors in its deliberations. Our Board concluded that the Merger is likely to result in benefits to the Trinseo group and our shareholders, including: (i) simplifying regulatory requirements, (ii) increasing flexibility on capital deployment such as increased authority to issue new shares or repurchase shares, (iii) providing dividend withholding tax benefits to shareholders and (iv) providing the Trinseo group with operational efficiencies and reduction of its operating and administrative costs. The Merger will also complement the Company's proposed plan to create a global business services center in Ireland. The Board believes that the Irish regime represents a more flexible and favorable legal and regulatory environment for the Company, with beneficial financial and legal infrastructure, without causing any material change to the Company's current business operations, reporting requirements or share listing.
If Trinseo S.A. shareholders approve this proposal, the Merger will effectively change the legal domicile of Trinseo's parent entity from Luxembourg to Ireland and will result in other changes of a legal nature, the most significant of which are described below under the caption "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3. For further detail, see "Proposal 1: The Merger—Reasons for the Merger" and "Risk Factors."
When is the Merger expected to be completed? |
We currently expect to complete the Merger in October 2021. However, until the issuance of a final order (the "Final Order") by the High Court of Ireland (the "Irish High Court") under the European Communities (Cross-Border Mergers) Regulations 2008 (S.I. No. 157 of 2008), as amended from time to time (the "Irish Regulations"), which we need in order to complete the Merger, the Merger may be abandoned or delayed by Trinseo S.A., even if the Merger has been approved by Trinseo S.A. shareholders and all other conditions to the Merger (other than the approval of the Irish High Court) have been satisfied or waived. For further detail, see "Proposal 1: The Merger—Amendment, Termination or Delay."
Do I have appraisal or redemption rights with respect to the Trinseo S.A. shares I own? |
There are no applicable appraisal rights, and the Trinseo S.A. shares are not redeemable.
How will Trinseo PLC shares differ from Trinseo S.A. shares? |
Your rights as a Trinseo S.A. shareholder are currently governed by Luxembourg law and our Articles. Following the Merger, you will become a Trinseo PLC shareholder and your rights as a Trinseo PLC shareholder will be governed by Irish law and the Proposed Constitution of Trinseo PLC. The legal system governing companies organized under Irish law differs from the legal system governing companies organized under Luxembourg law. As a result, while many of the principal attributes of Trinseo S.A. shares and Trinseo PLC shares will be similar under Luxembourg and Irish law, differences will exist. We summarize your rights as a Trinseo PLC shareholder under "Description of Trinseo PLC shares" and provide a summary comparison of your rights as a Trinseo S.A. shareholder and Trinseo PLC shareholder under the heading "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3. A copy of the Proposed Constitution is attached as Annex B to this Proxy Statement.
Other Matters Related to Trinseo S.A. Shareholders
Will the Merger dilute my economic interest? |
No. Trinseo S.A. shareholders will receive a Trinseo PLC ordinary share for every Trinseo S.A. ordinary share they own, on a one-for-one basis. No preferred shares of Trinseo PLC will be issued as a result of the Merger.
If the Merger is approved, do I have to take any action to participate in the Merger? |
No. At the date the Merger is deemed effective by the Irish High Court (the "Effective Date"), you will receive, through the transfer agent, an ordinary share of Trinseo PLC for every ordinary share of Trinseo S.A. that you then hold, on a one-for-one basis, without any further action on your part. For further detail, see "Proposal 1: The Merger—No Action Required to Cancel Trinseo S.A. shares and Receive Trinseo PLC shares."
Whom should I contact if I have questions about the Merger? |
If you have any questions concerning the information contained in this Proxy Statement, you may contact Trinseo S.A.'s Investor Relations by email at investorrelations@trinseo.com or by telephone at +1 610-240-3221.
Tax Matters Related to Trinseo S.A. Shareholders
Please refer to "Material Tax Considerations Relating to the Merger" for a description of the material U.S. federal income tax, Irish tax and Luxembourg tax consequences of the Merger to Trinseo S.A. shareholders and Trinseo PLC shareholders. Determining the actual tax consequences of the Merger to you may be complex and will depend on your specific situation. We urge you to consult your personal tax advisors.
5 2021 Proxy Statement
QUESTIONS AND ANSWERS ABOUT THE MERGER
Is the Merger taxable to me? |
U.S. Federal Income Tax Consequences to U.S. Taxpayers
The Merger is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. If the Merger is so treated as a "reorganization", (i) a U.S. Holder will not recognize any gain or loss as a result of the Merger, (ii) a U.S. Holder's adjusted tax basis in the Trinseo PLC shares received will be equal to the adjusted tax basis of the Trinseo S.A. shares exchanged therefor and (iii) the holding period of the Trinseo PLC shares received as a result of the exchange will include the holding period of Trinseo S.A. shares surrendered in the Merger. For further detail, see "Material Tax Considerations Relating to the Merger—Material U.S. Tax Considerations."
Irish Tax Consequences to Ireland Taxpayers
It is anticipated that the Merger should not be a taxable event from an Irish tax perspective. As a result, it is anticipated that the Merger should not give rise to any Irish capital gains tax consequences for Trinseo S.A. shareholders. For further detail, see "Material Tax Considerations Relating to the Merger—Material Irish Tax Considerations."
Luxembourg Tax Consequences to Luxembourg Taxpayers
We believe that (i) Trinseo S.A. shareholders who are not resident in Luxembourg will generally not be subject to Luxembourg (corporate) income tax in respect of the Merger, subject to certain exceptions, and (ii) Trinseo S.A. shareholders who are resident in Luxembourg may be subject to Luxembourg (corporate) income tax in respect of the Merger, depending on the tax regime applicable to such holder. For further detail, see "Material Tax Considerations Relating to the Merger—Material Luxembourg Tax Considerations."
Will there be Irish stamp duty on the Merger or on the transfer of Trinseo PLC shares after the Merger? |
No stamp duty will be payable on the Merger. Irish stamp duty may, depending upon the manner in which Trinseo PLC shares are held, be payable in respect of transfers of Trinseo PLC shares after the Merger. It is expected that for the majority of transfers of Trinseo PLC shares, there should not be any stamp duty. Transfers of Trinseo PLC shares effected by means of the transfer of book-entry interests held in "street name" in Depository Trust Company ("DTC") should not be subject to Irish stamp duty, subject to confirmation by the Irish Revenue Commissioners in advance of the Merger. However, if a shareholder holds their Trinseo PLC shares directly rather than beneficially through a bank, broker or other nominee at DTC, any transfer of the Trinseo PLC shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the Trinseo PLC shares acquired). For further detail, see "Material Tax Considerations Relating to the Merger—Material Irish Tax Considerations."
Impact of the Merger on Trinseo S.A.
Will the Merger affect Trinseo S.A.'s operations? |
No. The Merger will not change Trinseo S.A.'s day-to-day operations, how we manage our business or how we serve our customers.
How will the Merger affect Trinseo S.A.'s financial reporting? |
The Merger will not affect Trinseo S.A.'s current reporting obligations in the United States. After the Merger, Trinseo PLC will continue to prepare financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), which are reported in U.S. dollars, and will file reports on Forms 10-K, 10-Q and 8-K with the SEC. Following the Merger, we will no longer file our financial statements with the Luxembourg authorities other than the final accounts up to the Effective Date. Following the Effective Date we will be required to prepare and make available to you financial statements prepared in accordance with Irish law.
Will the Merger have any impact on Trinseo PLC's ability to pay dividends or repurchase shares? |
Under Irish law, Trinseo PLC may only pay dividends, make other distributions and, generally effect share repurchases and redemptions from "distributable profits" shown in Trinseo PLC's unconsolidated financial statements prepared in accordance with the Companies Act 2014 of Ireland, as amended (the "Irish Companies Act") and filed with the Irish Companies Registration Office.
Immediately following the Merger, Trinseo PLC will not have any distributable profits. Accordingly, you are being asked to approve the Distributable Profits Proposal, to enable, subject to the effectiveness of the Merger, the creation of distributable profits of Trinseo PLC under Irish law by reducing the entire share premium of Trinseo PLC (or such lesser amount as may be approved by the Trinseo PLC board of directors) resulting from the allotment and issue of Trinseo PLC shares pursuant to the Merger, such that the reserve resulting from the cancellation of such share premium will be treated as distributable profits.
In addition to the approval of Trinseo S.A. shareholders, the Distributable Profits Proposal also requires the approval of the Irish High Court. If the Distributable Profits Proposal is approved by Trinseo S.A. shareholders, and the Merger becomes effective, Trinseo PLC intends to seek the approval of the Irish High Court for the creation of distributable profits as soon as practicable following the Effective Date. Although Trinseo S.A. is not aware of any reason why the Irish High Court would not approve the Distributable Profits Proposal, such approval is a matter of judicial discretion and there is no guarantee that approval will be provided.
2021 Proxy Statement 6
QUESTIONS AND ANSWERS ABOUT THE MERGER
While the Trinseo S.A. Board recommends that Trinseo S.A. shareholders vote for the Distributable Profits Proposal, the passing of the Distributable Profits Proposal is not a condition to the Merger. If the Distributable Profits Proposal is not approved by Trinseo S.A. shareholders and the Irish High Court, Trinseo PLC will not be able to pay dividends, make other distributions and, generally, effect share repurchases and redemptions until such time as it has otherwise generated sufficient distributable profits from its operational activities following the Merger.
For further detail, see "Risk Factors" and "Proposal 5: The Distributable Profits Proposal."
Is the Merger a |
The Merger is in principle a taxable transaction for Trinseo S.A. pursuant to which gains and or losses may be recognized for Luxembourg corporate income tax purposes. However, Trinseo S.A. expects that no Luxembourg corporate income tax will be due as a result of the Merger, due to a combination of (i) the application of the Luxembourg "participation exemption" in respect of gains derived from certain qualifying participations in subsidiaries, and (ii) the availability of tax loss carry forwards.
Trinseo S.A. does not believe that the Merger will be a taxable event from an Irish tax perspective. As a result, it is anticipated that the Merger will not give rise to any Irish capital gains tax consequences for Trinseo S.A.
7 2021 Proxy Statement
SUMMARY OF MERGER PROPOSALS
Summary of |
This summary highlights selected information from this Proxy Statement concerning the Merger Proposal. It does not contain all of the information that may be important to you. To understand the Merger more fully, and for a more complete legal description of the Merger, you should carefully read the entire Proxy Statement, including the Annexes. The Common Draft Terms, in the form attached as Annex A to this Proxy Statement, is the legal document that governs the Merger. The Proposed Constitution substantially in the form attached to this Proxy Statement as Annex B, will govern Trinseo PLC upon completion of the Merger. We encourage you to read those documents carefully.
Parties to the Merger
Trinseo S.A. Trinseo S.A. (NYSE: TSE) is a public limited liability company (société anonyme) formed in 2010 and existing under the laws of Luxembourg. We are a leading global materials company and manufacturer of plastics, latex binders and synthetic rubber, including various advanced specialty products and sustainable solutions. Our products are incorporated into a wide range of our customers' products throughout the world, including products for automotive applications, tires, carpet and artificial turf backing, coated paper, specialty paper and packaging board, food packaging, appliances, medical devices, consumer electronics and construction applications, among others. The Company's registered office is at 26-28, rue Edward Steichen, L 2540 Luxembourg, Grand Duchy of Luxembourg.
Trinseo PLC. Trinseo Limited was incorporated as a private limited company under the laws of Ireland on May 27, 2015 as "Tribus Investments Limited" and was renamed "Trinseo Limited" on April 7, 2021. Prior to the Effective Date, Trinseo Limited will be re-registered as an Irish public limited company and renamed "Trinseo PLC". To date, Trinseo Limited has not engaged in any business or conducted any activities other than in connection with its formation and the Merger. The registered office of Trinseo PLC will be Sir John, Rogerson's Quay, Riverside One, Dublin 2, D02 X576, Ireland and Trinseo PLC's telephone number will be +1-610-240-3200.
The Merger
Trinseo S.A. shareholders are being asked to approve the Merger in accordance with the Common Draft Terms at the General Meeting. Contingent upon the approval of the Common Draft Terms, and assuming the other conditions to the Merger in the Common Draft Terms are satisfied or waived, on the Effective Date Trinseo S.A. shareholders will receive an ordinary share of Trinseo PLC for every ordinary share of Trinseo S.A. that they then hold, on a one-for-one basis. As a result of the Merger, Trinseo PLC will become our new public holding company with a NYSE trading symbol of "TSE".
Steps Required to Effect the Merger
On June 14, 2021, we will hold the General Meeting to allow shareholders of record to vote on the Merger proposals, including approval of the Merger and the Common Draft Terms.
Luxembourg.
After the Merger Proposal and resolution to enter into the Merger has been approved by Trinseo S.A. shareholders at the General Meeting, the following steps must be taken in Luxembourg in order to effect the Merger:
Ireland.
Following shareholder approval, the following steps must occur for Trinseo PLC to complete the Merger:
2021 Proxy Statement 8
SUMMARY OF MERGER PROPOSALS
Effectiveness. If all of the conditions are satisfied or waived (and we do not abandon the Merger before obtaining the Irish High Court's Order), the Merger will take effect on the Effective Date. We currently anticipate the Merger to be effective in October 2021. Once the Merger takes effect as provided for in the Irish Regulations, it may not be declared null and void, and the Final Order specifying the Effective Date shall constitute conclusive evidence of the effectiveness of the Merger.
In connection with the Merger, the following steps will occur by operation of law on the Effective Date:
As a result of the Merger, Trinseo S.A. shareholders will become Trinseo PLC shareholders, and Trinseo S.A. will cease to exist.
After the Merger, you will own an interest in a company that will continue to conduct the same functions as conducted by Trinseo S.A. before the Merger. The number of Trinseo PLC shares you will own immediately following the Merger will be the same as the number of Trinseo S.A. shares you owned immediately before the Merger.
Upon completion of the Merger, we will remain subject to SEC reporting requirements and will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. GAAP. As required by Irish law, in connection with annual general meetings of Trinseo PLC commencing with its 2022 annual general meeting, the Trinseo PLC Irish statutory accounts will also be made available to Trinseo PLC shareholders.
Reasons for the Merger (See page 36)
Our Board believes that giving effect to the Merger will be in the best interests of the Trinseo group and our shareholders. In arriving at this determination, our Board consulted with Trinseo S.A.'s management along with its legal and tax advisors and considered various factors in its deliberations. Our Board concluded that the Merger will simplify our regulatory and governance requirements, provide dividend withholding tax benefits to shareholders, allow for increased flexibility to allocate capital through share issuances or repurchases, and provide Trinseo with other operational efficiencies and cost reductions. The Merger will also complement the Company's proposed plan to create a global business services center in Ireland. If Trinseo S.A. shareholders approve this proposal, the Merger will effectively change Trinseo S.A.'s legal domicile from Luxembourg to Ireland and will result in other changes of a legal nature, the most significant of which are described below under the caption "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3.
We cannot assure you that the anticipated benefits of the Merger will be realized. In addition to the potential benefits described above, the Merger will expose us and you to some risks. These risks include, but are not limited to: changes to your rights as a Trinseo S.A. shareholder; the potential application of stamp duty on the transfer of Trinseo PLC shares after the Merger; the potential application of Irish dividend withholding tax; and the potential application of Irish capital acquisitions tax to a gift or inheritance of Trinseo PLC shares.
For further detail, see "Proposal 1: The Merger—Reasons for the Merger" and "Risk Factors" for more information.
Tax Considerations of the Merger (See page 15)
U.S. Federal Income Tax. The Merger is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. If the Merger is so treated as a "reorganization", (i) a U.S. Holder will not recognize any gain or loss as a result of the Merger, (ii) a U.S. Holder's adjusted tax basis in the Trinseo PLC shares received will be equal to the adjusted tax basis of the Trinseo S.A. shares exchanged therefor and (iii) the holding period of the Trinseo PLC shares received as a result of the exchange will include the holding period of Trinseo S.A. shares surrendered in the Merger.
9 2021 Proxy Statement
SUMMARY OF MERGER PROPOSALS
Irish Tax. It is anticipated that the Merger should not be a taxable event from an Irish tax perspective. As a result, it is anticipated that the Merger should not give rise to any Irish capital gains tax consequences for Trinseo S.A. shareholders. No stamp duty will be payable on the Merger. Irish stamp duty may, depending upon the manner in which Trinseo PLC shares are held, be payable in respect of transfers of Trinseo PLC shares after the Merger. It is expected that for the majority of transfers of Trinseo PLC shares following the Merger, no stamp duty should arise. Transfers of Trinseo PLC shares effected by means of the transfer of book-entry interests in DTC should not be subject to Irish stamp duty, subject to confirmation by the Irish Revenue Commissioners in advance of the Merger. However, if a shareholder holds their Trinseo PLC shares directly rather than beneficially through DTC, any transfer of the Trinseo PLC shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired). For further detail, see "Material Tax Considerations Relating to the Merger—Material Irish Tax Considerations."
Luxembourg Tax. We believe that (i) Trinseo S.A. shareholders who are not resident in Luxembourg will generally not be subject to Luxembourg (corporate) income tax in respect of the Merger, subject to certain exceptions, and (ii) Trinseo S.A. shareholders who are resident in Luxembourg may be subject to Luxembourg (corporate) income tax in respect of the Merger, depending on the tax regime applicable to such holder. For further detail, see "Material Tax Considerations Relating to the Merger—Material Luxembourg Tax Considerations."
You should consult your personal tax advisors concerning the tax consequences of receiving, holding, disposing of, and receiving dividends on, Trinseo PLC shares received pursuant to the Merger.
Comparison of Rights of Shareholders and Governance (See page 40)
Your rights as a Trinseo S.A. shareholder are currently governed by Luxembourg law and our Articles. Following the Merger, you will become a Trinseo PLC shareholder and your rights as a Trinseo PLC shareholder will be governed by Irish law and the Proposed Constitution. The legal system governing companies organized under Irish law differs from the legal system governing companies organized under Luxembourg law. As a result, while many of the principal attributes of Trinseo S.A. shares and Trinseo PLC shares will be similar under Luxembourg and Irish law, differences will exist.
We summarize your rights as a Trinseo PLC shareholder under "Description of Trinseo PLC shares" and provide a summary comparing your rights as a Trinseo S.A. shareholder and a Trinseo PLC shareholder under the heading "Comparison of Rights of Shareholders and Governance" in Proposal 3. A copy of the Proposed Constitution is attached as Annex B to this Proxy Statement.
Stock Exchange Listing
The Merger is not expected to affect our stock exchange listing on the New York Stock Exchange (the "NYSE"). Trinseo S.A. shares are expected to continue to trade on the NYSE until the Effective Date. Immediately following the Effective Date, Trinseo PLC shares will be listed on the NYSE under the symbol "TSE," the same symbol under which Trinseo S.A. shares are currently listed.
Upon completion of the Merger, we will remain subject to SEC reporting requirements, the mandates of the Sarbanes-Oxley Act of 2002 and the applicable corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. GAAP.
Accounting Treatment of the Merger (See page 38)
Under U.S. GAAP, the Merger represents a transaction between entities under common control. Assets and liabilities transferred between entities under common control are accounted for at historical cost. Accordingly, the assets and liabilities of Trinseo PLC will be reflected at their carrying amounts in the accounts of Trinseo S.A. at the time of the Merger .
Irish Constitution Proposal
We are asking shareholders to approve, by non-binding advisory vote, the Proposed Constitution of Trinseo PLC, in the form attached hereto as Annex B (Proposal 3). The Proposed Constitution is the governing document which will be in effect at the time the Merger is completed. If the Merger is not approved, this proposal will have no effect, but the Merger is not conditioned on the separate approval of this advisory proposal. We are asking shareholders to vote for the Proposed Constitution on an advisory basis, to allow shareholders the opportunity to vote for the Proposed Constitution separately from the Merger Proposal. A comparison of the rights of Trinseo S.A. shareholders under our existing Articles and Luxembourg law to the rights of Trinseo PLC shareholders under the Proposed Constitution and Irish law is set forth in detail in the language of the proposal. We encourage you to read these differences carefully when making your decision on how to vote.
We strongly encourage all shareholders that vote "for" the Merger Proposal to also vote "for" the Irish Constitution Proposal, to allow the Company to proceed with the Merger as intended and set forth in the Merger Proposal.
2021 Proxy Statement 10
SUMMARY OF MERGER PROPOSALS
Advisory Constitution Proposals
We are also asking shareholders to vote, on a non-binding advisory basis, to approve certain differences between our Articles and the Proposed Constitution (Proposal 4). These differences are being presented as three separate advisory proposals, and pertain to (a) changes in our authorized share capital; (b) changes in our share issuance authority and preemptive rights, and (c) changes to the advance notice provision for shareholder director nominations. If the Merger is not approved, this proposal will have no effect, but the Merger is not conditioned on the separate approval of these advisory proposals.
We strongly encourage shareholders who vote "for" the Merger Proposal to also vote "for" these three advisory proposals. We believe these provisions are necessary to adequately address the needs of Trinseo PLC following the Merger.
Description of Distributable Profits
Under Irish law, Trinseo PLC may only pay dividends, make other distributions and, generally, effect share repurchases and redemptions from "distributable profits" shown in Trinseo PLC's unconsolidated financial statements prepared in accordance with the Irish Companies Act and filed with the Irish Companies Registration Office.
Immediately following the Merger, Trinseo PLC will not have any distributable profits of its own. Accordingly, you are being asked to approve the Distributable Profits Proposal (Proposal 5), to enable, subject to the effectiveness of the Merger, the creation of distributable profits of Trinseo PLC under Irish law by reducing the entire share premium of Trinseo PLC as created by the Merger (or such lesser amount as may be approved by the Trinseo PLC Board). Trinseo PLC must also seek approval from the Irish High Court.
The Trinseo S.A. Board recommends that Trinseo S.A. shareholders vote for the Distributable Profits Proposal, though it is not a condition to the Merger. If the Distributable Profits Proposal is not approved by Trinseo S.A. shareholders and the Irish High Court, Trinseo PLC will not be able to pay dividends, make other distributions and, generally, effect share repurchases and redemptions until such time as it has otherwise generated sufficient distributable profits from its operational activities following the Merger.
Recommendation of the Board
Our Board recommends that Trinseo S.A. shareholders vote "FOR" the Merger Proposal, "FOR" the Irish Constitution Proposal, "FOR" the Advisory Constitution Proposals and "FOR" the Distributable Profits Proposal.
11 2021 Proxy Statement
RISK FACTORS
Risk Factors |
Before you decide how to vote, you should carefully consider the following risk factors related to the Merger, in addition to the other information contained in this Proxy Statement, including, without limitation, our Form 10-K and subsequent filings with the SEC.
Your rights as a Trinseo S.A. shareholder will change as a result of the Merger due to differences between Irish law and Luxembourg law.
Your rights as a Trinseo S.A. shareholder are currently governed by Luxembourg law and our Articles. Following the Merger, you will become a Trinseo PLC shareholder and your rights as a Trinseo PLC shareholder will be governed by Irish law and the Proposed Constitution. The legal system governing companies organized under Irish law differs from the legal system governing companies organized under Luxembourg law. As a result, while many of the principal attributes of Trinseo S.A. shares and Trinseo PLC shares will be similar under Luxembourg and Irish law, differences will exist, which, in some cases, may provide fewer protections for Trinseo PLC shareholders. We summarize your rights as a Trinseo PLC shareholder under "Description of Trinseo PLC shares" and provide a summary comparing your rights as a Trinseo S.A. shareholder and a Trinseo PLC shareholder under the heading "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3.
Attempted takeovers of Trinseo PLC will be subject to the Irish Takeover Rules and will be under the supervisory jurisdiction of the Irish Takeover Panel.
Following the completion of the Merger, Trinseo PLC will be subject to the Irish Takeover Panel Act 1997, as amended, and the Irish Takeover Rules promulgated thereunder, which regulate the conduct of takeovers of, and certain other relevant transactions affecting, Irish public limited companies listed on certain stock exchanges, including the NYSE.
Under the Irish Takeover Rules, if an acquisition of Trinseo PLC shares were to increase the aggregate holding of the acquirer and its concert parties to a level that represents 30% or more of the voting rights of Trinseo PLC, the acquirer and, in certain circumstances, its concert parties would be required (except with the consent of the Irish Takeover Panel) to make an offer for the outstanding Trinseo PLC shares at a price not less than the highest price paid by the acquirer or its concert parties for Trinseo PLC shares during the previous 12 months. This requirement would also be triggered by an acquisition of Trinseo PLC shares by a person holding (together with its concert parties) Trinseo PLC shares that represent between 30% and 50% of the voting rights in the company if the effect of such acquisition were to increase that person's percentage of the voting rights by 0.05% within a 12-month period.
For a description of certain takeover provisions applicable to Trinseo PLC, see "Description of Trinseo PLC shares—Irish Takeover Rules" beginning on page 29.
Anti-takeover provisions in the Proposed Constitution could make an acquisition of Trinseo PLC more difficult, limit attempts by Trinseo PLC shareholders to replace or remove our directors and management team and limit the market price of Trinseo PLC shares.
The Proposed Constitution will contain provisions that may delay or prevent a change of control, discourage bids at a premium over the market price of Trinseo PLC shares and adversely affect the market price of Trinseo PLC shares and the voting and other rights of Trinseo PLC shareholders. These provisions include: (1) permitting the Trinseo PLC board of directors (the "Trinseo PLC Board") to issue preference shares without shareholder approval, with such rights, preferences and privileges as they may designate; (2) allowing the Trinseo PLC Board to adopt a shareholder rights plan upon such terms and conditions as it deems expedient; (3) establishing an advance notice procedure for shareholder proposals to be brought before the annual general meeting, including proposed nominations of persons for election to the Trinseo PLC Board; (4) permitting the Trinseo PLC Board or directors to fill vacancies on the Trinseo PLC Board in certain circumstances; and (5) imposing particular approvals and other requirements in relation to certain business combinations. For a description of certain takeover provisions applicable to Trinseo PLC, see "Description of Trinseo PLC shares—Irish Takeover Rules" beginning on page 29.
These provisions do not make Trinseo PLC immune from takeovers. However, these provisions may frustrate or prevent any attempts by shareholders to replace or remove the management team by making it more difficult for shareholders to replace members of the Trinseo PLC Board.
If the Distributable Profits Proposal is not approved by Trinseo S.A. shareholders and the Irish High Court, Trinseo PLC will not be able to pay dividends, make other distributions and, generally, effect share repurchases and redemptions until such time as it has otherwise generated sufficient distributable profits from its operational activities following the Merger.
Under Irish law, Trinseo PLC may only pay dividends, make other distributions and, generally, effect share repurchases and redemptions from "distributable profits" shown in Trinseo PLC's unconsolidated financial statements prepared in accordance with the Irish Companies Act and filed with the Irish Companies Registration Office.
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RISK FACTORS
Immediately following the Merger, Trinseo PLC will not have any distributable profits. Accordingly, you are being asked to approve the Distributable Profits Proposal, to enable, subject to the effectiveness of the Merger, the creation of distributable profits of Trinseo PLC under Irish law by reducing the entire share premium of Trinseo PLC (or such lesser amount as may be approved by the Trinseo PLC Board) resulting from the allotment and issuance of Trinseo PLC shares pursuant to the Merger, such that the reserve resulting from the cancellation of such share premium will be treated as distributable profits.
In addition to the approval of Trinseo S.A. shareholders, the Distributable Profits Proposal also requires the approval of the Irish High Court. If the Distributable Profits Proposal is approved by Trinseo S.A. shareholders prior to the Effective Date and the Merger becomes effective, Trinseo PLC intends to seek the approval of the Irish High Court for the Distributable Profits Proposal as soon as practicable following the Effective Date. Although Trinseo S.A. is not aware of any reason why the Irish High Court would not approve the Distributable Profits Proposal, such approval is a matter of judicial discretion and there is no guarantee that such approval will be forthcoming.
If the Distributable Profits Proposal is not approved by Trinseo S.A. shareholders and the Irish High Court, Trinseo PLC will not be able to pay dividends, make other distributions and, generally, effect share repurchases and redemptions until such time as it has otherwise generated sufficient distributable profits from its operational activities following the Merger.
We may choose to abandon or delay the Merger. In addition, we may not be able to receive the requisite governmental approvals to consummate the Merger.
We currently expect to complete the Merger in October 2021. However, our Board may delay the Merger for a significant time or may abandon the Merger after the General Meeting and before the issuance of the Final Order because, among other reasons, of a determination by our Board that completing the Merger is no longer in our best interest or the best interests of Trinseo S.A. shareholders or may not result in the benefits we expect. Additionally, we may not be able to obtain the requisite court or other approvals. For further detail, see "Proposal 1: The Merger—Conditions to the Consummation of the Merger" and "Proposal 1: The Merger—Amendment, Termination or Delay."
If Trinseo PLC shares are not eligible for deposit and clearing within the facilities of DTC, then transactions in Trinseo PLC shares may be disrupted.
The facilities of DTC are a widely used mechanism that allow for rapid electronic transfers of securities between the participants in the DTC system, which include many large banks and brokerage firms.
Upon the completion of the Merger, Trinseo PLC shares will be eligible for deposit and clearing within the DTC system. We expect to enter into arrangements with DTC whereby Trinseo PLC will agree to indemnify DTC for any Irish stamp duty that may be assessed upon it as a result of its service as a depositary and clearing agency for Trinseo PLC shares. We expect that these actions, among others, will result in DTC agreeing to accept the shares for deposit and clearing within its facilities upon completion of the Merger.
DTC is not obligated to accept Trinseo PLC shares for deposit and clearing within its facilities at the closing of the Merger and, even if DTC does initially accept the Trinseo PLC shares, it will generally have discretion, as it currently has with regard to Trinseo S.A. shares, to cease to act as a depositary and clearing agency for the shares. If DTC determined prior to the completion of the Merger that Trinseo PLC shares are not eligible for clearance within the DTC system, then we would not expect to complete the transactions contemplated by this Proxy Statement in their current form. However, if DTC determined at any time after the completion of the Merger that Trinseo PLC shares were not eligible for continued deposit and clearance within its facilities, then we believe Trinseo PLC shares would not be eligible for continued listing on a U.S. securities exchange and trading in Trinseo PLC shares would be disrupted. Although we expect Trinseo PLC would pursue alternative arrangements to preserve its listing and maintain trading, any such disruption could have a material adverse effect on the trading price of Trinseo PLC shares.
Transfers of Trinseo PLC shares, other than by means of the transfer of book-entry interests in the DTC, may be subject to Irish stamp duty.
It is expected that for the majority of transfers of Trinseo PLC shares, no stamp duty should arise. Transfers of Trinseo PLC shares effected by means of the transfer of book-entry interests in DTC should not be subject to Irish stamp duty, subject to confirmation by the Irish Revenue Commissioners in advance of the Merger. However, if a shareholder holds their Trinseo PLC shares directly rather than beneficially through DTC, any transfer of the Trinseo PLC shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired).
A Trinseo PLC shareholder who directly holds Trinseo PLC shares of record may transfer those shares into his or her own broker account to be held through DTC (or vice versa) and this should not give rise to Irish stamp duty provided that there is no change in the beneficial ownership of the shares as a result of the transfer and the transfer is not in contemplation of a sale of the shares by a beneficial owner to a third party.
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RISK FACTORS
Due to the potential Irish stamp duty charge on transfers of Trinseo PLC shares held outside DTC, those Trinseo S.A. shareholders who do not hold their Trinseo S.A. shares through DTC (or through a broker who in turn holds such shares through DTC) should, upon completion of the Merger, consider holding Trinseo PLC shares received by them through DTC.
For further detail, see "Material Tax Considerations Relating to the Merger—Material Irish Tax Considerations."
You should consult your personal tax advisors as to the tax consequences of disposing of Trinseo PLC shares received pursuant to the Merger.
Dividends you receive after the Merger may be subject to Irish dividend withholding tax ("DWT"), subject to exemptions.
As an Irish tax resident company, we may be required to deduct DWT (currently at the rate of 25%) from dividends paid on Trinseo PLC shares unless Trinseo PLC shareholders qualify for a DWT exemption. Trinseo PLC shareholders resident in the EU, and other countries with which Ireland has a tax treaty (which includes the United States) should generally be eligible for an exemption from DWT, provided that, in each case, they file a valid DWT Form with the Irish Revenue Commissioners. However, Trinseo PLC shareholders residing in other countries may be subject to DWT. For further detail, see "Material Tax Considerations Relating to the Merger—Material Irish Tax Considerations."
You should consult your personal tax advisors as to the tax consequences of receiving dividends on Trinseo PLC shares.
Trinseo PLC shares received by means of a gift or inheritance may be subject to Irish capital acquisitions tax ("CAT"), subject to any exemptions and reliefs.
CAT could apply to a gift or inheritance of Trinseo PLC shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because Trinseo PLC shares are regarded as property situated in Ireland as the share register of Trinseo PLC must be held in Ireland. The person who receives the gift or inheritance has primary liability for CAT. For further detail, see "Material Tax Considerations Relating to the Merger—Material Irish Tax Considerations."
We recommend that you consult your personal advisors to consider your estate planning needs, including transfers of Trinseo PLC shares to family members and charitable organizations.
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
Material Tax Considerations Relating to the Merger |
Material U.S. Federal Income Tax Considerations
The following is a general discussion of the material U.S. federal income tax consequences of the Merger to U.S. Holders (as defined below) of Trinseo S.A. shares, and of the subsequent ownership and disposition of Trinseo PLC shares received by such U.S. Holders in the Merger. This discussion does not address any U.S. federal income tax consequences of the Merger to non-U.S. Holders, except to the limited extent discussed below under "U.S. Federal Income Tax Consequences of the Merger to Trinseo S.A. Shareholders—Material Tax Consequences to Non-U.S. Holders".
This discussion is based on provisions of the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder (whether final, temporary, or proposed), administrative rulings of the U.S. Internal Revenue Service (the "IRS"), and judicial decisions all as in effect on the date hereof, and all of which are subject to differing interpretations or change, possibly with retroactive effect. This discussion does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder as a result of the Merger or as a result of the ownership and disposition of Trinseo PLC shares. In addition, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular U.S. Holders nor does it take into account the individual facts and circumstances of any particular U.S. Holders that may affect the U.S. federal income tax consequences to such U.S. Holder, and accordingly, is not intended to be, and should not be construed as, tax advice. This discussion does not address the U.S. federal 3.8% Medicare tax imposed on certain net investment income or any aspects of U.S. federal taxation other than those pertaining to the income tax (including any gift, estate or alternative minimum tax), nor does it address any tax consequences arising under any U.S. state and local tax laws. U.S. Holders should consult their own tax advisors regarding such tax consequences in light of their particular circumstances.
No ruling has been requested or will be obtained from the IRS regarding the U.S. federal income tax consequences of the Merger or any other related matter; thus, there can be no assurance that the IRS will not challenge the U.S. federal income tax treatment described below or that, if challenged, such treatment will be sustained by a court.
This summary is limited to considerations relevant to U.S. Holders that hold Trinseo S.A. shares, and, following consummation of the Merger, Trinseo PLC shares, as "capital assets" within the meaning of section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be important to U.S. Holders in light of their individual circumstances, including U.S. Holders subject to special treatment under the U.S. tax laws, such as, for example:
As used in this Proxy Statement, the term "U.S. Holder" means a beneficial owner of Trinseo S.A. shares, and, after the Merger, Trinseo PLC shares received in the Merger, that is, for U.S. federal income tax purposes:
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
As used in this Proxy Statement, the term "non-U.S. Holder" means a beneficial owner of Trinseo S.A. shares, and, after the Merger, Trinseo PLC shares received in the Merger, other than a U.S. Holder or an entity or arrangement treated as a partnership for U.S. federal income tax purposes.
If a partnership, including for this purpose any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, is a beneficial owner of Trinseo S.A. shares, and, following consummation of the Merger, Trinseo PLC shares received in the Merger, the U.S. federal income tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. A U.S. Holder that is a partnership and the partners in such partnership should consult their own tax advisors with regard to the U.S. federal income tax consequences of the Merger and the subsequent ownership and disposition of Trinseo PLC shares received in the Merger.
THIS SUMMARY DOES NOT PURPORT TO BE A COMPREHENSIVE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. TRINSEO S.A. SHAREHOLDERS AND TRINSEO PLC SHAREHOLDERS SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER AND OF THE OWNERSHIP AND DISPOSITION OF TRINSEO PLC SHARES AFTER THE MERGER, INCLUDING THE APPLICABILITY AND EFFECTS OF U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS.
U.S. Federal Income Tax Consequences of the Merger to Trinseo S.A. and Trinseo PLC
For U.S. federal income tax purposes, the Merger is intended to qualify as a "reorganization" within the meaning of Section 368(a)(1)(F) of the Code, i.e. a "mere change in identity, form, or place of organization of one corporation." Assuming that the Merger is treated as a reorganization under Section 368(a)(1)(F), neither Trinseo S.A. nor Trinseo PLC are expected to recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger.
U.S. Federal Income Tax Consequences of the Merger to Trinseo S.A. Shareholders
Material Tax Consequences to U.S. Holders
Assuming that the Merger is treated as a reorganization under Section 368(a)(1)(F), (i) a U.S. Holder will not recognize any gain or loss as a result of the Merger, (ii) a U.S. Holder's adjusted tax basis in the Trinseo PLC shares received will be equal to the adjusted tax basis of the Trinseo S.A. shares exchanged therefor and (iii) the holding period of the Trinseo PLC shares received as a result of the exchange will include the holding period of Trinseo S.A. shares surrendered in the Merger.
Material Tax Consequences to Non-U.S. Holders
A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on gain realized, if any, on the exchange of Trinseo S.A. shares for Trinseo PLC shares in the Merger.
U.S. Federal Income Tax Consequences to U.S. Holders of the Ownership and Disposition of Trinseo PLC shares
The following discussion is a summary of certain material U.S. federal income tax consequences of the ownership and disposition of Trinseo PLC shares to U.S. Holders who receive such Trinseo PLC shares pursuant to the Merger.
Distributions on Trinseo PLC shares
The gross amount of any distribution on Trinseo PLC shares that is made out of Trinseo PLC's current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) generally will be included in the gross income of a U.S. Holder as ordinary dividend income on the date such distribution is actually or constructively received by such U.S. Holder. Any such dividends paid to corporate U.S. Holders generally will not qualify for the dividends-received deduction that may otherwise be allowed under the Code. In general, the dividend income would be treated as foreign source, passive income for U.S. federal foreign tax credit limitation purposes.
Dividends received by non-corporate U.S. Holders (including individuals), subject to the discussion below under "—Passive Foreign Investment Company Status," from a "qualified foreign corporation" may be eligible for reduced rates of taxation, provided that certain holding period requirements and other conditions are satisfied. For these purposes, a non-U.S. corporation will be treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the United States. U.S. Treasury guidance indicates that shares listed on the NYSE (which the Trinseo PLC shares are expected to be) will be considered readily tradable on an established securities market in the United States. There can be no assurance that Trinseo PLC shares will be considered readily tradable on an established securities market in future years. Trinseo PLC will not
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
constitute a qualified foreign corporation for purposes of these rules if it is a passive foreign investment company, or "PFIC," for the taxable year in which it pays a dividend or for the preceding taxable year. For further details, see the discussion below under "—Passive Foreign Investment Company Status."
The amount of any dividend paid in foreign currency will be the U.S. dollar value of the foreign currency distributed by Trinseo PLC, calculated by reference to the exchange rate in effect on the date the dividend is includible in the U.S. Holder's income, regardless of whether the payment is in fact converted into U.S. dollars on the date of receipt. Generally, a U.S. Holder should not recognize any foreign currency gain or loss if the foreign currency is converted into U.S. dollars on the date the payment is received. However, any gain or loss resulting from currency exchange fluctuations during the period from the date the U.S. Holder includes the dividend payment in income to the date such U.S. Holder actually converts the payment into U.S. dollars will be treated as ordinary income or loss. That currency exchange income or loss (if any) generally will be income or loss from U.S. sources for foreign tax credit limitation purposes.
To the extent that the amount of any distribution made by Trinseo PLC on Trinseo PLC shares exceeds Trinseo PLC's current and accumulated earnings and profits for a taxable year (as determined under U.S. federal income tax principles), the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the U.S. Holder's Trinseo PLC shares, and to the extent the amount of the distribution exceeds the U.S. Holder's tax basis, the excess will be taxed as capital gain recognized on a sale or exchange as described below under "—Sale, Exchange, Redemption or Other Taxable Disposition of Trinseo PLC shares."
It is possible that Trinseo PLC is, or at some future time will be, at least 50% owned by U.S. persons. Dividends paid by a foreign corporation that is at least 50% owned by U.S. persons may be treated as U.S. source income (rather than foreign source income) for foreign tax credit purposes to the extent the foreign corporation has more than an insignificant amount of U.S. source income. The effect of this rule may be to treat a portion of any dividends paid by Trinseo PLC as U.S. source income. Treatment of the dividends as U.S. source income in whole or in part may limit a U.S. holder's ability to claim a foreign tax credit with respect to foreign taxes payable or deemed paid in respect of the dividends paid by Trinseo PLC or on other items of foreign source, passive income for U.S. federal foreign tax credit limitation purposes.
Sale, Exchange, Redemption or Other Taxable Disposition of Trinseo PLC shares
Subject to the discussion below under "—Passive Foreign Investment Company Status," a U.S. Holder generally will recognize gain or loss on any sale, exchange, redemption, or other taxable disposition of Trinseo PLC shares in an amount equal to the difference between the amount realized on the disposition and such U.S. Holder's adjusted tax basis in such Trinseo PLC shares. Any gain or loss recognized by a U.S. Holder on a taxable disposition of Trinseo PLC shares generally will be capital gain or loss and will be long-term capital gain or loss if the Trinseo PLC shareholder's holding period in such Trinseo PLC shares exceeds one year at the time of the disposition. Preferential tax rates may apply to long-term capital gains of non-corporate U.S. Holders (including individuals). The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder on the sale or exchange of Trinseo PLC shares generally will be treated as a U.S. source gain or loss.
Passive Foreign Investment Company Status ("PFIC")
Notwithstanding the foregoing, certain adverse U.S. federal income tax consequences could apply to a U.S. Holder if Trinseo PLC is treated as a PFIC for any taxable year during which such U.S. Holder holds Trinseo PLC shares. A non-U.S. corporation, such as Trinseo PLC, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year in which, after the application of certain look-through rules, either (i) 75% or more of its gross income for such year is "passive income" (as defined in the relevant provisions of the Code) or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year consists of assets which produce or are held for the production of passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains.
Trinseo PLC is not currently expected to be treated as a PFIC for U.S. federal income tax purposes, but this conclusion is a factual determination made annually and, thus, is subject to change. With certain exceptions, Trinseo PLC shares would be treated as stock in a PFIC with respect to a U.S. Holder if Trinseo PLC were a PFIC at any time during that U.S. Holder's holding period in such U.S. Holder's Trinseo PLC shares. There can be no assurance that Trinseo PLC will not be treated as a PFIC for any taxable year or at any time during a U.S. Holder's holding period.
If Trinseo PLC were to be treated as a PFIC, unless a U.S. Holder elects to be taxed annually on a mark-to-market basis with respect to its Trinseo PLC shares or the U.S. Holder makes an effective qualified electing fund election, gain realized on any sale or exchange of such Trinseo PLC shares and certain distributions received with respect to such Trinseo PLC shares could be subject to additional U.S. federal income taxes, plus an interest charge on certain taxes treated as having been deferred under the PFIC rules. In addition, dividends received with respect to Trinseo PLC shares would not constitute qualified dividend income eligible for preferential tax rates if Trinseo PLC is treated as a PFIC for the taxable year of the distribution or for its preceding taxable year. If a U.S. Holder makes an effective qualified electing fund election, or QEF Election, the U.S. Holder will be required to include in gross income each year, whether or not we make distributions, as capital gains, such U.S. Holder's pro rata share of Trinseo PLC's net capital gains and, as ordinary income, such U.S. Holder's pro rata share of our earnings in excess of Trinseo PLC's net capital gains. We do not currently intend to
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provide the information necessary for U.S. holders to make QEF Elections if we are treated as a PFIC for any taxable year. U.S. Holders should consult their own tax advisors regarding the application of the PFIC rules to their investment in Trinseo PLC shares.
Information Reporting and Backup Withholding
U.S. Holders that own at least five percent of the Trinseo S.A. shares (by vote or value) or Trinseo S.A. shares with a tax basis of $1,000,000 or more immediately before the Merger will be required to file certain Section 368(a) reorganization statements. Trinseo S.A. shareholders should consult their tax advisors about the other information reporting requirements that could be applicable to the exchange of Trinseo S.A. shares for Trinseo PLC shares in the Merger.
In general, information reporting requirements will apply to dividends received by U.S. Holders of Trinseo PLC shares, and the proceeds received on the disposition of Trinseo PLC shares effected within the United States (and, in certain cases, outside the United States), in each case, other than U.S. Holders that are exempt recipients (such as corporations). Backup withholding (currently at a rate of 24%) may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number (generally on an IRS Form W-9 provided to the paying agent or the U.S. Holder's broker) or is otherwise subject to backup withholding.
Certain U.S. Holders holding specified foreign financial assets with an aggregate value in excess of the applicable dollar threshold are required to report information to the IRS relating to Trinseo PLC shares, subject to certain exceptions (including an exception for Trinseo PLC shares held in accounts maintained by U.S. financial institutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return, for each year in which they hold Trinseo PLC shares. Such U.S. Holders should consult their own tax advisors regarding information reporting requirements relating to their ownership of Trinseo PLC shares.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or credit against a holder's U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.
Material Irish Tax Considerations
Irish Tax Considerations
The following is a summary of the material Irish tax consequences of the Merger for certain beneficial owners of Trinseo S.A. shares in connection with the Merger, including the ownership and disposal of Trinseo PLC shares received by such holders pursuant to the Merger. This discussion is based on Irish tax laws and the practice of the Irish Revenue Commissioners in effect on the date of this Proxy Statement, all of which are subject to differing interpretations or change, possibly with retroactive effect. This summary does not purport to be a complete analysis or listing of all potential Irish tax considerations that may apply to a holder as a result of the Merger or as a result of the ownership and disposition of Trinseo PLC shares by a holder. In addition, this discussion does not address all aspects of Irish taxation that may be relevant to particular holders nor does it take into account the individual facts and circumstances of any particular holder that may affect the Irish tax consequences to such holder. Accordingly, this summary is not intended to be, and should not be construed as, tax advice. This discussion does not address Irish pay related social insurance, nor does it address any tax consequences specific to stock options, free shares or warrants. The summary is not exhaustive, and Trinseo S.A. shareholders should consult their tax advisors about the Irish tax consequences (and tax consequences under the laws of other relevant jurisdictions) of the transactions and of the acquisition, ownership and disposal of Trinseo PLC shares.
There can be no assurance that the Irish tax authorities will not challenge the Irish tax treatment described below or that, if challenged, such treatment will be sustained by a court.
The summary applies only to Trinseo S.A. shareholders who will own Trinseo PLC shares as capital assets and does not apply to other categories of Trinseo S.A. shareholders, such as dealers in securities, trustees, insurance companies, collective investment schemes, pension funds and Trinseo S.A. shareholders who have, or who are deemed to have, acquired their Trinseo PLC shares by virtue of an Irish office or employment (performed or carried on in Ireland).
Irish Capital Gains Tax ("CGT")
The rate of tax on chargeable gains (where applicable) in Ireland is 33%.
Non-resident Trinseo PLC shareholders
Trinseo PLC shareholders who are neither resident nor ordinarily resident in Ireland for Irish tax purposes and do not hold their Trinseo PLC shares in connection with a trade carried on by such Trinseo PLC shareholders through an Irish branch or agency will not be liable for Irish tax on chargeable gains realized on a subsequent disposal of their Trinseo PLC shares.
Trinseo S.A. shareholders who are neither resident nor ordinarily resident in Ireland for Irish tax purposes and do not hold their Trinseo S.A. shares in connection with a trade carried on by such Trinseo S.A. shareholders through an Irish branch or agency will not
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
be liable for Irish tax on chargeable gains on the cancellation of their Trinseo S.A. shares, or on receipt of Trinseo PLC shares pursuant to the Merger.
Irish resident Trinseo PLC shareholders
The receipt by a Trinseo S.A. shareholder who is either resident or ordinarily resident in Ireland for Irish tax purposes or who holds their Trinseo S.A. shares in connection with a trade carried on in Ireland through a branch or agency of Trinseo PLC shares pursuant to the Merger will generally have the following consequences for such Trinseo S.A. shareholders.
The receipt of Trinseo PLC shares should be treated as a reconstruction for the purposes of Irish CGT. Accordingly, such Trinseo S.A. shareholders should not be treated as having made a disposal of their Trinseo S.A. shares for the purposes of Irish CGT to the extent that they receive Trinseo PLC shares. Instead, Trinseo PLC shares should be treated as the same asset as Trinseo S.A. shares in respect of which they are issued and treated as acquired at the same time and for the same acquisition cost as those Trinseo S.A. shares for Irish tax purposes. A chargeable gain or allowable loss should therefore only arise on a subsequent disposal of Trinseo PLC shares.
A subsequent disposal of Trinseo PLC shares by a Trinseo PLC shareholder who is resident or ordinarily resident in Ireland for Irish tax purposes or who holds his, her or its Trinseo PLC shares in connection with a trade carried on by such person through an Irish branch or agency will, subject to the availability of any exemptions and reliefs, generally be within the charge to Irish CGT.
A Trinseo PLC shareholder who is an individual and who is temporarily not resident in Ireland may, under Irish anti-avoidance legislation, still be liable to Irish tax on any chargeable gain realized upon a subsequent disposal of Trinseo PLC shares during the period in which such individual is a non-resident.
Stamp Duty
The rate of stamp duty (where applicable) on transfers of shares of Irish incorporated companies is 1% of the price paid or the market value of the shares acquired, whichever is greater. Where Irish stamp duty arises, it is generally a liability of the transferee.
No stamp duty will be payable on the Merger. Irish stamp duty may, depending upon the manner in which Trinseo PLC shares are held, be payable in respect of transfers of Trinseo PLC shares after the Merger.
Shares held through DTC
A transfer of Trinseo PLC shares effected by means of a transfer of book-entry interests in Trinseo PLC shares within the facilities of DTC will not be subject to Irish stamp duty, subject to confirmation from the Irish Revenue Commissioners in advance of the Merger.
Shares Held Directly and Shares Held Outside of DTC or Transferred Into or Out of DTC
A transfer of Trinseo PLC shares where any party to the transfer holds such shares directly (i.e., outside of DTC) may be subject to Irish stamp duty. Shareholders wishing to transfer their shares into (or out of) DTC may do so provided that:
Due to the potential Irish stamp charge on transfers of Trinseo PLC shares, it is strongly recommended that those Trinseo S.A. shareholders who do not hold their Trinseo S.A. shares through DTC should arrange for the transfer of their Trinseo S.A. shares into DTC as soon as possible and before the Merger is effected. It is also strongly recommended that any person who wishes to acquire Trinseo PLC shares after the Effective Date of the Merger acquires such Trinseo PLC shares through DTC.
Withholding Tax on Dividends
Distributions made by Trinseo PLC will, in the absence of one of many exemptions, be subject to Irish DWT currently at a rate of 20%.
For DWT purposes, a distribution includes any distribution that may be made by Trinseo PLC to Trinseo PLC shareholders, including cash dividends, non-cash dividends and additional stock taken in lieu of a cash dividend. Where an exemption does not apply in respect of a distribution made to a particular Trinseo PLC shareholder, Trinseo PLC is responsible for withholding DWT prior to making such distribution.
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
General Exemptions
Irish domestic law provides that a non-Irish resident Trinseo PLC shareholder is not subject to DWT on dividends received from Trinseo PLC if such Trinseo PLC shareholder is beneficially entitled to the dividend and is either:
and provided, in all cases noted above Trinseo PLC or, in respect of Trinseo PLC shares held through DTC, any qualifying intermediary appointed by Trinseo PLC, has received from the Trinseo PLC shareholder, where required, the relevant Irish Revenue Commissioners DWT forms (the "DWT Forms") prior to the payment of the dividend. In practice, in order to ensure sufficient time to process the receipt of relevant DWT Forms, the Trinseo PLC shareholder where required should furnish the relevant DWT Forms to:
Links to the various DWT Forms are available at: http://www.revenue.ie/en/tax/dwt/forms/index.html
The information on such website does not constitute a part of, and is not incorporated by reference into, this Proxy Statement.
Such forms are generally valid, subject to a change in circumstances, until December 31 of the fifth year after the year in which such forms were completed.
For non-Irish resident Trinseo PLC shareholders who cannot avail themselves of one of Ireland's domestic law exemptions from DWT, it may be possible for such Trinseo PLC shareholders to rely on the provisions of a double tax treaty to which Ireland is party to reduce the rate of DWT.
Trinseo PLC shares Held by Residents of "Relevant Territories"
Trinseo PLC shareholders who are residents of "relevant territories," must satisfy the conditions of one of the exemptions referred to above under the heading "—General Exemptions", including the requirement to furnish valid DWT forms, in order to receive dividends without suffering DWT. If such Trinseo PLC shareholders hold their Trinseo PLC shares through DTC, they must provide the appropriate DWT forms to their brokers (so that such brokers can further transmit the relevant information to a qualifying intermediary appointed by Trinseo PLC) before the record date for the dividend (or such later date before the dividend payment date as may be notified to the Trinseo PLC shareholder by the broker). If such Trinseo PLC shareholders hold their Trinseo PLC shares directly, they must provide the appropriate DWT forms to Trinseo PLC's transfer agent at least seven business days before the record date for the dividend. It is strongly recommended that such Trinseo PLC shareholders complete the appropriate DWT Forms and provide them to their brokers or Trinseo PLC's transfer agent, as the case may be, as soon as possible after receiving their Trinseo PLC shares.
If any Trinseo PLC shareholder who is resident in a "relevant territory" receives a dividend from which DWT has been withheld, the Trinseo PLC shareholder may be entitled to a refund of DWT from the Irish Revenue Commissioners provided the Trinseo PLC shareholder is beneficially entitled to the dividend.
Trinseo PLC shares Held by Residents of Ireland
Most Irish tax resident or ordinarily resident Trinseo PLC shareholders (other than Irish resident companies that have completed the appropriate DWT forms) will be subject to DWT in respect of dividends paid on their Trinseo PLC shares.
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
Shareholders that are residents of Ireland, but are entitled to receive dividends without DWT, must complete the appropriate DWT Forms and provide them to their brokers (so that such brokers can further transmit the relevant information to a qualifying intermediary appointed by Trinseo PLC) before the record date for the dividend (or such later date before the dividend payment date as may be notified to the Trinseo PLC shareholder by the broker) (in the case of Trinseo PLC shares held through DTC), or to Trinseo PLC's transfer agent at least seven business days before the record date for the dividend (in the case of Trinseo PLC shares held directly).
Trinseo PLC shares Held by Other Persons
Trinseo PLC shareholders that do not fall within any of the categories specifically referred to above may nonetheless fall within other exemptions from DWT. If any Trinseo PLC shareholders are exempt from DWT, but receive dividends subject to DWT, such Trinseo PLC shareholders may apply for refunds of such DWT from the Irish Revenue Commissioners.
Trinseo PLC will rely on information received directly or indirectly from brokers and its transfer agent in determining where Trinseo PLC shareholders reside, whether they have provided the required DWT Forms.
Income Tax on Dividends Paid on Trinseo PLC shares
Irish income tax may arise for certain persons in respect of dividends received from Irish resident companies.
A Trinseo PLC shareholder that is not resident or ordinarily resident in Ireland and that is entitled to an exemption from DWT generally has no liability to Irish Income Tax or the universal social charge on a dividend from Trinseo PLC. An exception to this position may apply where such Trinseo PLC shareholder holds Trinseo PLC shares through a branch or agency in Ireland through which a trade is carried on.
A Trinseo PLC shareholder that is not resident or ordinarily resident in Ireland and that is not entitled to an exemption from DWT generally has no additional liability to Irish income tax or the universal social charge. An exception to this position may apply where the Trinseo PLC shareholder holds Trinseo PLC shares through a branch or agency in Ireland through which a trade is carried. The DWT deducted by Trinseo PLC discharges the liability to Irish income tax.
Irish resident or ordinarily resident Trinseo PLC shareholders may be subject to Irish tax and/or the universal social charge on dividends received from Trinseo PLC. Credit should be available against this Irish tax for any DWT declared by Trinseo PLC. Such Trinseo PLC shareholders should consult their own tax advisors.
Withholding Tax on Share Repurchases
It is anticipated that Irish DWT should not generally apply to payments made by Trinseo PLC on the redemption or repurchase of its own shares. This is because an Irish tax resident company that is a quoted company is not treated as making a distribution for Irish tax purposes on making payments to redeem, repay or repurchase its own shares, provided the redemption or repurchase does not form part of a scheme or arrangement the main purpose (or one of the main purposes of which) is to enable shareholders to participate in the profits of the company without receiving a dividend.
Capital Acquisitions Tax
Irish capital acquisitions tax ("CAT") is comprised of principally gift tax and inheritance tax. CAT could apply to a gift or inheritance of Trinseo PLC shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because Trinseo PLC shares are regarded as property situated in Ireland as the share register of Trinseo PLC must be held in Ireland. The person who receives the gift or inheritance has primary liability for CAT.
CAT is currently levied at a rate of 33% above certain tax-free thresholds. The appropriate tax-free threshold is dependent upon (i) the relationship between the donor and the donee and (ii) the aggregation of the values of previous gifts and inheritances received by the donee from persons within the same group threshold. Gifts and inheritances passing between spouses are exempt from CAT. Trinseo PLC shareholders should consult their own tax advisors as to whether CAT is creditable or deductible in computing any domestic tax liabilities.
Material Luxembourg Tax Considerations
The information set out below is a general summary of certain material Luxembourg tax consequences in connection with the Merger. This summary is not a comprehensive or complete description of all the Luxembourg tax considerations that may be relevant for a particular Trinseo S.A. shareholder and it does not address the tax consequences that may arise in any jurisdiction other than Luxembourg in connection with the Merger. For Luxembourg tax purposes, a Trinseo S.A. shareholder may include an individual who or an entity that does not have the legal title to the Trinseo S.A. shares, but to whom nevertheless Trinseo S.A. shares, or the income thereof, are attributed based either on such individual or entity holding a beneficial interest in Trinseo S.A. shares or based on specific statutory provisions.
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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER
This summary is based on the tax laws of Luxembourg as in effect on the date of this Proxy Statement, including regulations, rulings and decisions of Luxembourg and its taxing and other authorities available in printed form on or before this date and now in effect, and as applied and interpreted by Luxembourg courts, without prejudice to any developments or amendments introduced at a later date and implemented with or without retroactive effect.
Any reference in this summary to Luxembourg or Luxembourg tax law are to the European part of the Grand Duchy of Luxembourg and its law, respectively, only.
As this summary is intended as general information only, Trinseo S.A. shareholders should consult their own tax advisors as to the Luxembourg or other tax consequences of the Merger, including the application to their particular situations of the tax considerations discussed below.
This summary does not address the tax consequences for any Trinseo S.A. shareholder:
Taxation of Exchange of Trinseo S.A. shares for Trinseo PLC shares pursuant to the Merger
Luxembourg Resident Trinseo S.A. Shareholders
A Trinseo S.A. shareholder who is resident or deemed to be resident in Luxembourg for purposes of Luxembourg taxation (a "Luxembourg Resident"), may be subject to Luxembourg corporate income tax and Luxembourg municipal business tax in respect of the exchange of Trinseo S.A. shares for Trinseo PLC shares pursuant to the Merger, depending on the tax regime applicable to such holder.
Non-Luxembourg Resident Trinseo S.A. Shareholders
A Trinseo S.A. shareholder who is not, nor deemed to be, a Luxembourg Resident, (a "Non-Luxembourg Resident") is generally not subject to Luxembourg income tax or Luxembourg corporate income tax (as applicable) in respect of the exchange of Trinseo S.A. shares for Trinseo PLC shares pursuant to the Merger, provided that:
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DESCRIPTION OF TRINSEO PLC SHARES
Description of Trinseo PLC Shares |
The following description of the share capital of Trinseo PLC, including the Trinseo PLC ordinary shares to be issued in the Merger, is a summary. This summary does not purport to be complete and, along with the other statements in this section, is qualified in its entirety by reference to, and is subject to, the complete text of the Proposed Constitution that will be in effect on completion of the Merger, which will be substantially in the form filed as Annex B to this Proxy Statement. You are urged to read the Proposed Constitution and relevant provisions of the Irish Companies Act for a more complete understanding of the rights conferred by Trinseo PLC shares. The following summary is not a description of the Proposed Constitution currently in effect.
There are differences between our Articles and the Proposed Constitution. Certain provisions of Trinseo S.A.'s current Articles will not be replicated in the Proposed Constitution, and certain provisions that will be included in the Proposed Constitution are not in Trinseo S.A.'s current Articles. For further detail, see the section captioned "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3, beginning on page 40.
Except where otherwise indicated, the description below reflects the Proposed Constitution as such document will be in effect as of the Effective Date.
Capital Structure
The rights of and restrictions applicable to the share capital of Trinseo PLC are prescribed in the Proposed Constitution, subject to the Irish Companies Act.
Authorized Share Capital
Trinseo PLC has an authorized share capital of US$50,000,000 and €25,000, comprised of 4,000,000,000 ordinary shares of US$0.01 each, 1,000,000,000 preferred shares of €0.01 each, and 25,000 deferred ordinary shares of €1.00 each.
The authorized share capital includes 25,000 deferred ordinary shares of €1.00 each, which were created solely to satisfy minimum statutory capital requirements that apply to all Irish public limited companies. The holders of the deferred ordinary shares are not entitled to receive any dividend or distribution, to attend, speak or vote at any general meeting, and effectively have no rights to participate in the assets of Trinseo PLC on a winding-up.
Immediately following completion of the Merger, Trinseo PLC will have an issued share capital comprising such number of Trinseo PLC ordinary shares as will be equal to the number of Trinseo S.A. ordinary shares issued immediately prior to completion of the Merger (excluding any treasury shares held by Trinseo S.A.), together with the 25,000 deferred ordinary shares. Each Trinseo PLC ordinary share will be entitled to one vote.
Under the Proposed Constitution, Trinseo PLC may issue new shares in Trinseo PLC up to its maximum authorized share capital. The authorized share capital may be increased or reduced by a resolution approved by a simple majority of the votes cast at a general meeting of shareholders of Trinseo PLC, referred to under Irish law as an "ordinary resolution".
Under Irish law, the directors of a company may issue new ordinary or preferred shares without shareholder approval once authorized to do so by the constitution or by an ordinary resolution adopted by the shareholders at a general meeting. The authorization may be granted for a maximum period of five years, at which point it must be renewed by the shareholders by an ordinary resolution. The Proposed Constitution authorizes the Trinseo PLC Board to allot shares in Trinseo PLC with an aggregate par value amount up to the maximum of its authorized but unissued share capital as at the date of adoption of the Proposed Constitution without approval from shareholders for a period of five years from the date of adoption of the Proposed Constitution.
Under the Proposed Constitution, the Trinseo PLC Board will be authorized to issue preferred shares with discretion as to the terms attaching to the preferred shares, including as to voting, dividend and conversion rights and priority relative to other classes of shares with respect to dividends and upon a liquidation. As described in the preceding paragraph, the authority to issue new shares in Trinseo PLC extends until five years from the date of the adoption of the Proposed Constitution, at which time it will expire unless renewed by Trinseo PLC's shareholders.
Notwithstanding this authority, under the Irish Takeover Rules (as defined below) the Trinseo PLC Board would not be permitted to issue any shares in Trinseo PLC, including ordinary or preferred shares, during a period when an offer has been made for Trinseo PLC or is believed to be imminent unless the issue falls within one of the exceptions described in the section below captioned "—Anti-Takeover Measures—Frustrating Action".
While Trinseo PLC does not have any current specific plans, arrangements or understandings, written or oral, to issue any preferred shares for any purpose, we are continually evaluating our financial position and analyzing the possible benefits of issuing additional debt securities, equity securities, convertible securities or a combination thereof in connection with, among other things: (i) repaying indebtedness; (ii) financing acquisitions; or (iii) strengthening our balance sheet. The availability of preferred shares gives us flexibility to
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DESCRIPTION OF TRINSEO PLC SHARES
respond to future capital raising, financing and acquisition needs and opportunities without the delay and expense associated with holding an extraordinary general meeting of Trinseo PLC's shareholders to obtain further approval.
Irish law does not recognize fractional shares held of record. Accordingly, the Proposed Constitution does not provide for the issuance of fractional shares, and our official Irish share register will not reflect any fractional shares.
Issued Share Capital
The Merger will result in each Trinseo S.A. ordinary share being cancelled and an equivalent number of Trinseo PLC ordinary shares being issued to the former Trinseo S.A. shareholders on a one-for-one basis.
In addition, 25,000 Trinseo PLC deferred ordinary shares will be held by MSFD Nominees Limited, to meet the Irish statutory minimum capital requirements of an Irish public limited company. The deferred ordinary shares will remain outstanding following the completion of the Merger and will continue to be held thereafter by MSFD Nominees Limited until redeemed at par or surrendered. These Trinseo PLC deferred ordinary shares (i) will not have any voting rights; (ii) will not entitle the holders thereof to any dividends or other distributions of Trinseo PLC; and (iii) will not entitle the holders thereof to participate in the surplus assets of Trinseo PLC on a winding-up beyond, in total, the nominal value of such Trinseo PLC deferred ordinary shares held (subject to the prior repayment of the amount paid-up on each of the Trinseo PLC shares plus an additional amount of $5,000,000 in cash per Trinseo PLC ordinary share). Accordingly, these Trinseo PLC deferred ordinary shares will not dilute the economic ownership of Trinseo PLC shareholders.
Under the Proposed Constitution, subject to the Irish Companies Act, the Trinseo PLC Board (or an authorized committee of the Trinseo PLC Board) is authorized to approve the allotment, issue, grant and disposal of, or otherwise deal with, shares, options, equity awards, rights over shares, warrants, other securities and derivatives (including unissued shares) in or of Trinseo PLC to such persons, at such times and on such terms as it thinks fit (including specifying the conditions of allotment of shares for the purposes of the Irish Companies Act).
Preemptive Rights
Under Irish law, certain statutory preemption rights apply automatically in favor of shareholders where shares are to be issued for cash. As permitted by Irish law, Trinseo PLC has opted to disapply these preemption rights in the Proposed Constitution, such that the Trinseo PLC Board will be authorized to allot shares of any class in Trinseo PLC with an aggregate par value amount up to the maximum of its authorized but unissued share capital as at the date of adoption of the Proposed Constitution without approval from Trinseo PLC's shareholders for a period of five years from the date of adoption of the Proposed Constitution.
Irish law requires this disapplication to be renewed at least every five years by 75% of the votes cast at a general meeting of shareholders, referred to under Irish law as a "special resolution". If the disapplication is not renewed, new equity shares in Trinseo PLC issued for cash must be offered to existing shareholders of Trinseo PLC on a pro rata basis to their existing shareholdings before the shares may be issued to any new shareholders.
Statutory preemption rights do not apply (i) where shares are issued for non-cash consideration (such as in a share-for-share acquisition); (ii) to the issue of non-equity shares (that is, shares that have the right to participate only up to a specified amount in any income or capital distribution); or (iii) where shares are issued pursuant to an employee stock option or similar equity plan.
Dividends
Under Irish law, Trinseo PLC will be able to declare dividends and make distributions only out of "distributable profits". Distributable profits are the accumulated realized profits of Trinseo PLC that have not previously been utilized in a distribution or capitalization less accumulated realized losses that have not previously been written off in a reduction or reorganization of capital, and include reserves created by way of a reduction of capital. In addition, no distribution or dividend may be paid or made by Trinseo PLC unless the net assets of Trinseo PLC are equal to, or exceed, the aggregate of Trinseo PLC's called-up share capital plus its undistributable reserves and the distribution does not reduce Trinseo PLC's net assets below such aggregate. Undistributable reserves include the undenominated capital, the capital redemption reserve fund and the amount by which Trinseo PLC's accumulated unrealized profits that have not previously been utilized by any capitalization exceed Trinseo PLC's accumulated unrealized losses that have not previously been written off in a reduction or reorganization of capital.
The determination as to whether Trinseo PLC has sufficient distributable profits to fund a dividend must be made by reference to its "relevant financial statements". The "relevant financial statements" will be either the last set of unconsolidated annual audited financial statements or other financial statements properly prepared in accordance with the Irish Companies Act, which give a "true and fair view" of Trinseo PLC's unconsolidated financial position and accord with accepted accounting practice and have been filed with the Irish Companies Registration Office.
The mechanism as to who declares a dividend and when a dividend becomes payable is governed by the Proposed Constitution. The Proposed Constitution authorizes the Trinseo PLC Board to declare interim dividends without approval from Trinseo PLC's shareholders if it considers that the financial position of Trinseo PLC justifies such payment. The Trinseo PLC Board may also
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DESCRIPTION OF TRINSEO PLC SHARES
recommend a dividend to be approved and declared by Trinseo PLC's shareholders at a general meeting. No dividend issued may exceed the amount recommended by the Trinseo PLC Board. The Proposed Constitution provides that dividends may be paid in cash, property or paid-up shares. Any cash payment may be made by check or warrant or sent by any electronic or other means of payment.
Except as otherwise provided by the rights attached to shares in Trinseo PLC, all shares in Trinseo PLC will carry a pro rata entitlement to the receipt of dividends. Unless provided for by the rights attached to shares in Trinseo PLC, no dividend or other monies payable by Trinseo PLC in respect of a share in Trinseo PLC shall bear interest.
If a dividend cannot be paid to a holder of shares in Trinseo PLC or otherwise remains unclaimed, the Trinseo PLC Board may pay it into a separate Trinseo PLC account and Trinseo PLC will not be a trustee in respect thereof. A dividend that remains unclaimed for a period of six years from the date of its declaration will be forfeited and will revert to Trinseo PLC.
Share Repurchases, Redemptions and Conversions
Repurchases and Redemptions
The Proposed Constitution provides that Trinseo PLC may purchase its own shares and redeem outstanding redeemable shares. Under the Irish law, shares can only be purchased or redeemed out of: (i) distributable profits; or (ii) the proceeds of a new issue of shares made for the purpose of the purchase or redemption.
Under the Irish Companies Act, a company may purchase its own shares either (i) "on-market" on a recognized stock exchange, which includes the NYSE; or (ii) "off-market" (i.e., otherwise than on a recognized stock exchange).
For Trinseo PLC to make "on-market" purchases of shares in Trinseo PLC, Trinseo PLC's shareholders must provide general authorization to Trinseo PLC to do so by way of an ordinary resolution. For so long as a general authority is in force, no additional shareholder authority for a particular "on-market" purchase is required. Such authority can be given for a maximum period of five years before it is required to be renewed and must specify: (i) the maximum number of shares that may be purchased; and (ii) the maximum and minimum prices that may be paid for the shares by specifying particular sums or providing a formula.
For an "off-market" purchase, the proposed purchase contract must be authorized by special resolution of the shareholders before the contract is entered into.
Separately, Trinseo PLC can redeem (as opposed to purchase) its redeemable shares once permitted to do so by the Proposed Constitution (without the requirement for additional shareholder authority). The Proposed Constitution provides that, unless the Trinseo PLC Board determines otherwise, any Trinseo PLC share that Trinseo PLC has agreed to acquire shall be automatically converted into a redeemable share. Accordingly, for purposes of the Irish Companies Act, unless the Trinseo PLC Board determines otherwise, the acquisition of Trinseo PLC shares by Trinseo PLC will technically be effected as a redemption of those Trinseo PLC shares. If the Proposed Constitution did not contain such provision, acquisitions of Trinseo PLC shares by Trinseo PLC would require to be effected as "on-market" or "off-market" purchases, as described above.
Repurchased and redeemed shares may be cancelled or held as treasury shares, provided that the par value of treasury shares held by Trinseo PLC at any time must not exceed 10% of the par value of Trinseo PLC's company capital (comprising the aggregate of all amounts of par value plus share premium paid for Trinseo PLC's shares plus certain other sums, which may be credited as such).
Trinseo PLC cannot exercise any rights in respect of any treasury shares. Treasury shares can either be held in treasury, re-issued "on-market" or "off-market" or cancelled. Depending on the circumstances of their acquisition, treasury shares may be held indefinitely or require to be cancelled after one or three years. The re-issue of treasury shares requires to be made pursuant to a valid and subsisting shareholder authority given by way of a special resolution.
Purchases by Subsidiaries
Under Irish law, a subsidiary of Trinseo PLC may purchase shares in Trinseo PLC either "on-market" or "off market," provided such purchases are authorized by Trinseo PLC's shareholders as outlined above. The redemption option is not available to a subsidiary of Trinseo PLC.
The number of shares in Trinseo PLC held by Trinseo PLC's subsidiaries at any time will count as treasury shares and will be included in any calculation of the 10% permitted treasury share threshold, as described above. While a subsidiary holds any of our shares, it cannot exercise voting rights in respect of those shares. The acquisition of our shares by a subsidiary must be funded out of distributable profits of the subsidiary.
Consolidation and Division; Subdivision
Under the Irish Companies Act, Trinseo PLC may, by ordinary resolution, consolidate and divide all or any of its share capital into shares of larger par value than its existing shares, or subdivide its shares into smaller amounts.
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DESCRIPTION OF TRINSEO PLC SHARES
Reduction of Share Capital
Trinseo PLC may reduce its share capital by way of a court approved procedure that also requires approval by special resolution of Trinseo PLC's shareholders at a general meeting.
Lien on Shares, Calls on Shares and Forfeiture of Shares
The Proposed Constitution provides that Trinseo PLC will have a first and paramount lien on every share that is not a fully paid-up share for an amount equal to the unpaid portion of such share. Subject to the terms of their allotment, directors may call for any unpaid amounts in respect of any shares in Trinseo PLC to be paid, and if payment is not made, the shares may be forfeited.
These provisions are customary in the constitution of an Irish public company limited by shares.
General Meetings of Shareholders
Trinseo PLC must hold its annual general meeting no more than nine months after its accounting year end (which is currently December 31).
In addition to any SEC mandated resolutions, the business of Trinseo PLC's annual general meeting is required to include: (a) the consideration of Trinseo PLC's statutory financial statements; (b) the review by shareholders of Trinseo PLC of Trinseo PLC's affairs; (c) the election and reelection of directors in accordance with the Proposed Constitution; (d) the appointment or reappointment of the Irish statutory auditors; (e) the authorization of the directors to approve the remuneration of the statutory auditors; and (f) the declaration of dividends (other than interim dividends).
The Proposed Constitution provides that the Trinseo PLC Board may convene general meetings of the Trinseo PLC's shareholders at any place they so designate. All general meetings, other than annual general meetings, are referred to as "extraordinary general meetings" at law.
If a general meeting is held outside Ireland, Trinseo PLC has a duty, at its expense, to make all necessary arrangements to ensure that Trinseo PLC's shareholders can by technological means participate in any such meeting without leaving Ireland.
The Proposed Constitution requires that notice of an annual general meeting of Trinseo PLC's shareholders must be delivered to the shareholders at least 21 clear days before the meeting. Shareholders must be notified of all general meetings (other than annual general meetings) at least 14 clear days prior to the meeting (provided that, in the case of an extraordinary general meeting for the passing of a special resolution, at least 21 clear days' notice is required). "Clear days" means calendar days and excludes (1) the date on which a notice is given, or a request received; and (2) the date of the meeting itself. The Company will continue to be bound by U.S. securities regulations governing notice & proxy statement delivery.
Calling Special Meetings of Shareholders
The Proposed Constitution provides that general meetings of shareholders may be called on the order of the Trinseo PLC board. Under Irish law, one or more shareholders representing at least 10% of the paid-up share capital of Trinseo PLC carrying voting rights have the right to requisition the holding of an extraordinary general meeting.
Serious Loss of Capital
If the directors of Trinseo PLC become aware that the assets of Trinseo PLC are half or less of the amount of Trinseo PLC's called-up share capital, the directors must convene an extraordinary general meeting of Trinseo PLC no later than 28 days after the earliest day on which that fact is known to a director (and the general meeting must be convened for a date not later than 56 days from that day). The meeting must be convened for the purpose of considering whether any, and if so what, measures should be taken to address the situation.
Quorum for Meetings of Shareholders
Under the Proposed Constitution, holders of at least a simple majority of the shares issued and entitled to vote at a general meeting constitute a quorum.
The necessary quorum at a separate general meeting of the holders of any class of shares is holders of at least a simple majority of that class of shares issued and entitled to vote.
Voting Rights
Under the Proposed Constitution, each Trinseo PLC shareholder is entitled to one vote for each Trinseo PLC share that they hold as of the record date for the meeting. A holder of the deferred ordinary shares is not entitled to a vote. No voting rights can be exercised in respect of any shares held as treasury shares, including shares held by subsidiaries.
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DESCRIPTION OF TRINSEO PLC SHARES
All resolutions at an annual general meeting or other general meeting will be decided on a poll.
On a poll every Trinseo PLC shareholder who is present, in person or by proxy, at the general meeting, is entitled to one vote for every Trinseo PLC share held by such Trinseo PLC shareholder.
On a separate general meeting of the holders of any class of shares, all votes will be taken on a poll and each holder of shares of the class will, on a poll, have one vote in respect of every share of that class held by such shareholder.
Under the Irish Companies Act and the Proposed Constitution, certain matters require "ordinary resolutions", which must be approved by at least a majority of the votes cast, in person or by proxy, by shareholders at a general meeting, and certain other matters require "special resolutions", which require the affirmative vote of at least 75% of the votes cast, in person or by proxy, by shareholders at a general meeting.
An ordinary resolution is needed (among other matters) to remove a director, provide, vary or renew the directors' authority to allot shares and to appoint directors (where appointment is by shareholders).
A special resolution is needed (among other matters) to: alter a company's constitution, exclude statutory preemptive rights on allotment of securities for cash (up to five years); reduce a company's share capital; re-register a public company as a private company (or vice versa); and approve a scheme of arrangement.
Cumulative voting is not recognized under Irish law.
Variation of Rights Attaching to a Class of Shares
Under the Proposed Constitution and the Irish Companies Act, any variation of class rights attaching to our issued shares must be approved by a special resolution of our shareholders of the affected class or with the consent in writing of the holders of three-quarters of all the votes of that class of shares.
Inspection of Books and Records
Generally, the register of Trinseo PLC's shareholders may be inspected during business hours (1) for free, by Trinseo PLC's shareholders; and (2) for a fee by any other person.
Documents may be copied for a fee.
The service contracts, if any, of Trinseo PLC's directors can be inspected by Trinseo PLC's shareholders without charge and during business hours. A "service contract" includes any contract under which such a director undertakes personally to provide services to the company or a subsidiary company, whether in that person's capacity as a director, an executive officer or otherwise. Service contracts with an unexpired term of less than three years are not required to be kept for inspection.
Trinseo PLC's shareholders have the right to receive a copy of the Proposed Constitution.
Trinseo PLC's shareholders may also inspect, without charge and during business hours, the minutes of meetings of the shareholders and obtain copies of the minutes for a fee.
In addition, the published annual statutory financial statements of Trinseo PLC are required to be available for Trinseo PLC's shareholders at a general meeting and a shareholder is entitled to a copy of these financial statements. Shareholders have a right to receive financial statements of subsidiaries that have previously been produced to an annual general meeting of such subsidiary in the preceding ten years. The auditors' report must be circulated to the Trinseo PLC's shareholders with the financial statements prepared in accordance with Irish law at least 21 days before the annual general meeting.
Under Irish law, the shareholders of a company do not have the right to inspect the corporate books of a subsidiary of that company.
Acquisitions
Shareholder Approval of Merger or Consolidation
Irish law recognizes the concept of a statutory merger in three situations: (1) a domestic merger where an Irish private limited company merges with another Irish company (not being a public limited company) under Part 9 of the Irish Companies Act; (2) a domestic merger where an Irish public limited company merges with another Irish company under Part 17 of the Irish Companies Act; and (3) a cross-border merger, where an Irish company merges with another company based in the European Economic Area ("EEA") under the European Communities (Cross-border Merger) Regulations 2008 of Ireland.
Under Irish law and subject to applicable U.S. securities laws and the NYSE's rules and regulations, where Trinseo PLC proposes to acquire another company, approval of Trinseo PLC's shareholders is not required, unless effected as a direct domestic merger or direct cross-border merger as referred to above.
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DESCRIPTION OF TRINSEO PLC SHARES
Under Irish law, where another company proposes to acquire Trinseo PLC, the requirement for the approval of Trinseo PLC's shareholders depends on the method of acquisition.
Schemes of Arrangement
Under Irish law, schemes of arrangement are arrangements or compromises between a company and any class of shareholders or creditors, and are used in certain types of reconstructions, amalgamations, capital reorganizations or takeovers (similar to a merger in the United States). Such arrangements require the approval of: (i) a majority in number of shareholders or creditors (as the case may be) representing 75% in value of the creditors or each class of creditors or shareholders or each class of shareholders present and voting either in person or by proxy at a special meeting convened by order of the court; and (ii) the Irish High Court.
Once approved by the requisite shareholder and creditor majority, sanctioned by the Irish High Court and becoming effective, all shareholders and/or, as the case may be, creditors of the relevant class are bound by the terms of the scheme. Dissenting shareholders and/or, as the case may be, creditors have the right to appear at the Irish High Court hearing and make representations in objection to the scheme.
Takeover Offer
The Irish Companies Act also provides that where (i) a takeover offer is made for shares, and (ii) following the offer, the offeror has acquired or contracted to acquire not less than 80% of the shares to which the offer relates, the offeror may require the other shareholders who did not accept the offer to transfer their shares on the terms of the offer.
A dissenting shareholder may object to the transfer on the basis that the offeror is not entitled to acquire its shares or to specify terms of acquisition different from those in the offer by applying to the court within 30 days of the date on which notice of the transfer was given. In the absence of fraud or oppression, and subject to strict compliance with the terms of the statute, the court is unlikely to order that the acquisition shall not take effect, but it may specify terms of the transfer that it finds appropriate.
A minority shareholder is also entitled in similar circumstances to require the offeror to acquire his or her shares on the terms of the offer.
Statutory Mergers
It is also possible for Trinseo PLC to be acquired by way of a domestic or cross-border statutory merger, as described above. Such mergers must be approved by a special resolution of shareholders. If the consideration being paid to shareholders is not all in the form of cash, dissenting shareholders may be entitled, in certain circumstances, to require that their shares be acquired for cash.
Related-Party Transactions
Trinseo PLC will be subject to the rules of the NYSE and the SEC regarding related-party transactions.
Under Irish law, certain transactions between Trinseo PLC and any director of Trinseo PLC are prohibited unless approved by Trinseo PLC's shareholders, such as loans, credit transactions and substantial property transactions. This prohibition extends to transactions with close personal relations and companies controlled by any such director.
Shareholder Suits
Under Irish law, the power to initiate a lawsuit on behalf of the company is generally a matter for its board of directors, and shareholders' rights to initiate a derivative lawsuit on behalf of the company are limited.
The central question at issue in deciding whether a shareholder may be entitled to bring a derivative action is whether, unless the action is brought, a wrong committed against the company would go unredressed.
The principal case law in Ireland indicates that to bring a derivative action, a person must first establish a prima facie case: (a) that the company is entitled to the relief claimed; and (b) that the action falls within one of the five exceptions derived from case law, as follows: (1) where an ultra vires or illegal act is perpetrated; (2) where more than a bare majority is required to ratify the "wrong" complained of; (3) where the shareholders' personal rights are infringed; (4) where a fraud has been perpetrated upon a minority by those in control; or (5) where the justice of the case requires.
While Irish law only permits a shareholder to bring a derivative action and initiate a lawsuit on behalf of the company in limited circumstances, it does permit a shareholder whose name is on the register of shareholders of a company to apply for a court order where the company's affairs are being conducted or the powers of the company's directors are being exercised: (1) in a manner oppressive to him or her or any of the shareholders; or (2) in disregard of his or her or their interests as shareholders.
Oppression connotes conduct that is burdensome, harsh and wrongful. Furthermore, the oppression or the disregard of interests must result from either the conduct of the affairs of the company or the exercise of the powers of the directors.
This is a statutory remedy and an Irish court has wide discretion to make such order as it sees fit.
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DESCRIPTION OF TRINSEO PLC SHARES
Lawsuits brought by a shareholder on behalf of the company must be brought exclusively in the courts of Ireland when they are related to or in connection with a derivative claim, an alleged breach of fiduciary or other duty by a director, officer or employee of Trinseo PLC or any other claim against Trinseo PLC or its directors, officers and employees under Irish law or pursuant to the constitution.
Disclosure of Interests in Shares
The Schedule 13D and Schedule 13G reporting regime will continue to apply to Trinseo PLC as it will have its shares registered under Section 12 of the Exchange Act.
Under the Irish Companies Act, a person must notify us if, as a result of a transaction, the person will become interested in three percent or more of our voting shares, or if as a result of a transaction a person who was interested in three percent or more of our voting shares ceases to be so interested. Under the Irish Companies Act, an "interest" is broadly defined and includes direct and indirect holdings, beneficial interests and, in some cases, derivative interests. Furthermore, a person's interests are aggregated with the interests of related persons and entities (including controlled companies). Where a person is interested in three percent or more of our voting shares, the person must notify us of any alteration of his or her interest that brings his or her total holding through the nearest whole percentage number, whether an increase or a reduction. The relevant percentage figure is calculated by reference to the aggregate nominal value of the voting shares in which the shareholder is interested as a proportion of the entire nominal value of our issued share capital (or any such class of share capital in issue). Where the percentage level of the person's interest does not amount to a whole percentage, this figure is rounded down to the next whole number. We must be notified within five business days of the transaction or alteration of the shareholder's interests that gave rise to the notification requirement. If a person fails to comply with these notification requirements, the person's rights in respect of any of our shares it holds will not be enforceable, either directly or indirectly, by action or legal proceeding. However, such person may apply to the court to have the rights attaching to such shares reinstated.
In addition, Irish law provides that a company may, by notice in writing, require a person whom the company knows or reasonably believes to be or to have been within the three preceding years, interested in its issued voting share capital to: (1) confirm whether this is or is not the case; and (2) if this is the case, to give further information that it requires relating to his or her interest and any other interest in the company's shares of which he or she is aware.
The disclosure must be made within a reasonable period as specified in the relevant notice which may be as short as one or two days. If the recipient of the notice fails to respond within the reasonable time period specified in the notice, we may apply to the Irish High Court for an order directing that the affected shares be subject to certain restrictions, as prescribed by the Irish Companies Act, as follows: (1) any transfer of those shares or, in the case of unissued shares, any transfer of the right to be issued with shares and any issue of shares, shall be void; (2) no voting rights shall be exercisable in respect of those shares; (3) no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder of those shares; and (4) no payment shall be made of any sums due from us on those shares, whether in respect of capital or otherwise.
The court may also order that shares subject to any of these restrictions be sold with the restrictions terminating upon the completion of the sale.
In the event we are in an offer period pursuant to the Irish Takeover Rules, accelerated disclosure provisions apply for persons holding an interest in our securities of one percent or more.
Irish Takeover Rules
Following the completion of the Merger, Trinseo PLC will be subject to the Irish Takeover Panel Act 1997, as amended, and the Irish Takeover Rules promulgated thereunder, or the Irish Takeover Rules, which regulate the conduct of takeovers of, and certain other relevant transactions affecting, Irish public limited companies listed on certain stock exchanges, including the NYSE. The Irish Takeover Rules are administered by the Irish Takeover Panel, which has supervisory jurisdiction over such transactions. Among other matters, the Irish Takeover Rules operate to ensure that no offer is frustrated or unfairly prejudiced and, in the case of multiple bidders, that there is a level playing field. For example, pursuant to the Irish Takeover Rules, the Trinseo PLC Board will not be permitted, without approval from Trinseo PLC's shareholders, to take certain actions that might frustrate an offer for Trinseo PLC once the Trinseo PLC Board has received an approach that may lead to an offer or has reason to believe an offer is, or may be, imminent.
A transaction in which a third party seeks to acquire 30% or more of our voting rights and any other acquisitions of our securities will be governed by the Irish Takeover Panel Act 1997, as amended, and the Irish Takeover Rules and will be regulated by the Irish Takeover Panel. The "General Principles" of the Irish Takeover Rules and certain important aspects of the Irish Takeover Rules are described below.
General Principles
The Irish Takeover Rules are built on the following General Principles which will apply to any transaction regulated by the Irish Takeover Panel: (1) in the event of an offer, all holders of securities of the target company must be afforded equivalent treatment and, if a person acquires control of a company, the other holders of securities must be protected; (2) the holders of securities in the target company must have sufficient time and information to enable them to reach a properly informed decision on the offer; where it advises the holders of
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securities, the board of directors of the target company must give its views on the effects of the implementation of the offer on employment, employment conditions and the locations of the target company's place of business; (3) a target company's board of directors must act in the interests of that company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the offer; (4) false markets must not be created in the securities of the target company, the bidder or any other company concerned by the offer in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted; (5) a bidder can only announce an offer after ensuring that he or she can fulfill in full the consideration offered, if such is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration; (6) a target company may not be hindered in the conduct of its affairs longer than is reasonable by an offer for its securities; and (7) a "substantial acquisition" of securities, whether such acquisition is to be effected by one transaction or a series of transactions, shall take place only at an acceptable speed and shall be subject to adequate and timely disclosure.
Mandatory Bid
Under certain circumstances, a person who acquires shares, or other voting securities, of a company may be required under the Irish Takeover Rules to make a mandatory cash offer for the remaining outstanding voting securities in that company at a price not less than the highest price paid for the securities by the acquirer, or any parties acting in concert with the acquirer, during the previous 12 months. This mandatory bid requirement is triggered if an acquisition of securities would increase the aggregate holding of an acquirer, including the holdings of any parties acting in concert with the acquirer, to securities representing 30% or more of the voting rights in a company, unless the Irish Takeover Panel otherwise consents. An acquisition of securities by a person holding, together with its concert parties, securities representing between 30% and 50% of the voting rights in a company would also trigger the mandatory bid requirement if, after giving effect to the acquisition, the percentage of the voting rights held by that person, together with its concert parties, would increase by 0.05% within a 12-month period. Any person, excluding any parties acting in concert with the holder, holding securities representing more than 50% of the voting rights of a company is not subject to these mandatory offer requirements in purchasing additional securities.
Voluntary Bid; Requirements to Make a Cash Offer and Minimum Price Requirements
If a person makes a voluntary offer to acquire outstanding Trinseo PLC shares, the offer price must not be less than the highest price paid for Trinseo PLC shares by the bidder or its concert parties during the three-month period prior to the commencement of the offer period. The Irish Takeover Panel has the power to extend the "look back" period to 12 months if the Irish Takeover Panel, taking into account the General Principles, believes it is appropriate to do so.
If the bidder or any of its concert parties has acquired Trinseo PLC shares (1) during the 12-month period prior to the commencement of the offer period that represent more than 10% of the outstanding Trinseo PLC shares or (2) at any time after the commencement of the offer period, the offer must be in cash or accompanied by a full cash alternative and the price per Trinseo PLC share must not be less than the highest price paid by the bidder or its concert parties during, in the case of (1) above, the 12-month period prior to the commencement of the offer period or, in the case of (2) above, the offer period. The Irish Takeover Panel may apply this Rule to a bidder who, together with its concert parties, has acquired less than 10% of the total Trinseo PLC shares in the 12-month period prior to the commencement of the offer period if the Irish Takeover Panel, taking into account the General Principles, considers it just and proper to do so.
An offer period will generally commence from the date of the first announcement of the offer or proposed offer.
Substantial Acquisition Rules
The Irish Takeover Rules also contain rules governing substantial acquisitions of shares and other voting securities which restrict the speed at which a person may increase his or her holding of shares and rights over shares to an aggregate of between 15% and 30% of the voting rights of the company. Except in certain circumstances, an acquisition or series of acquisitions of shares or rights over shares representing 10% or more of the voting rights of the company is prohibited, if such acquisition(s), when aggregated with shares or rights already held, would result in the acquirer holding 15% or more but less than 30% of the voting rights of the company and such acquisitions are made within a period of seven days. These rules also require accelerated disclosure of acquisitions of shares or rights over shares relating to such holdings.
Rights of Dissenting Shareholders
Irish law does not generally provide for appraisal rights. However Irish law provides for dissenters' rights in certain situations, as described below: (1) under a takeover offer, an offeror which has acquired or contracted to acquire not less than 80% of the shares to which the offer relates may require the other shareholders who did not accept the offer to transfer their shares on the terms of the offer. Dissenting shareholders have the right to apply to the High Court of Ireland for relief; (2) a takeover scheme of arrangement which has been approved by the requisite shareholder majority and sanctioned by the High Court of Ireland will be binding on all shareholders. Dissenting shareholders have the right to appear at the High Court hearing and make representations in objection to the scheme; and
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(3) in the case of a domestic or cross-border statutory merger, if the consideration being paid to shareholders is not all in the form of cash, dissenting shareholders may, in certain circumstances, be entitled to require that their shares be acquired for cash.
Anti-Takeover Measures
Frustrating Action
Under the Irish Takeover Rules, the Trinseo PLC Board is not permitted to take any action that might frustrate an offer for our shares once the Trinseo PLC Board has received an approach that may lead to an offer or has reason to believe that such an offer is or may be imminent, subject to certain exceptions. Potentially frustrating actions such as (1) the issue of shares, options, restricted share units or convertible securities; (2) material acquisitions or disposals; (3) entering into contracts other than in the ordinary course of business; or (4) any action, other than seeking alternative offers, which may result in frustration of an offer, are prohibited during the course of an offer or at any earlier time during which the Trinseo PLC Board has reason to believe an offer is or may be imminent. Exceptions to this prohibition are available where: (a) the action is approved by our shareholders at a general meeting; or (b) the Irish Takeover Panel has given its consent, where: (i) it is satisfied the action would not constitute frustrating action; (ii) our shareholders holding more than 50% of the voting rights state in writing that they approve the proposed action and would vote in favor of it at a general meeting; (iii) the action is taken in accordance with a contract entered into prior to the announcement of the offer, or any earlier time at which the Board considered the offer to be imminent; or (iv) the decision to take such action was made before the announcement of the offer and either has been at least partially implemented or is in the ordinary course of business.
Shareholder Rights Plan
Although the Proposed Constitution allows the Trinseo PLC Board to adopt a shareholder rights plan and to grant rights to subscribe for Trinseo PLC ordinary shares or preferred shares thereunder, Trinseo S.A. currently has no intention of adopting a shareholder rights plan or issuing share purchase rights. Irish law does not expressly authorize or prohibit companies from issuing share purchase rights or adopting a shareholder rights plan as an anti-takeover measure. However, there is no directly relevant case law on the validity of such plans under Irish law. In addition, such a plan would be subject to the Irish Takeover Rules and the General Principles underlying the Irish Takeover Rules.
Subject to the Irish Takeover Rules and the terms of the Proposed Constitution and any related shareholder approvals, the Trinseo PLC Board also has power to issue any of our authorized and unissued shares on such terms and conditions as it may determine, and any such action should be taken in Trinseo PLC's best interests. It is possible, however, that the terms and conditions of any issue of preference shares could discourage a takeover or other transaction that holders of some or a majority of the Trinseo PLC shares believe to be in their best interests or in which holders might receive a premium for their shares over the then-market price of the shares.
Insider Dealing
The Irish Takeover Rules also provide that no person, other than the bidder, who is privy to confidential price-sensitive information concerning an offer made in respect of the acquisition of a company (or a class of securities) or a contemplated offer shall deal in relevant securities of the target during the period from the time at which such person first has reason to suppose that such an offer, or an approach with a view to such an offer being made, is contemplated to the time of (i) the announcement of such offer or approach; or (ii) the termination of discussions relating to such offer, whichever is earlier.
Corporate Governance
Under Irish law and the Proposed Constitution, the authority for the overall management of Trinseo PLC is vested in the Trinseo PLC Board. The Trinseo PLC Board may delegate any of its powers on such terms as it thinks fit in accordance with the Proposed Constitution and Irish law, although, the Trinseo PLC Board will remain responsible, as a matter of Irish law, for the proper management of the affairs of Trinseo PLC. The directors must ensure that any delegation is and remains appropriate and that an adequate system of control and supervision is in place.
The Trinseo PLC Board will have a standing audit committee, compensation committee, and nominating and governance committee. It is also the intention of Trinseo PLC to assume Trinseo S.A.'s existing code of business conduct and insider trading policy and to adopt governance guidelines in accordance with Irish law and the NYSE.
Directors
Number of Directors
The Proposed Constitution provides that the number of directors will be as the Trinseo PLC board may determine from time to time, at its discretion, but which shall not be less than three. Immediately following the completion of the Merger there will be the same number of directors on the Trinseo PLC Board that sit on the board of Trinseo S.A.
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Appointment of Directors
Directors are elected by ordinary resolution at general meetings, provided that, if there is a contested election (as provided for in the Proposed Constitution), each of the nominees shall be voted upon as a separate resolution and the nominees who shall be elected as directors shall be only those nominees (in number equal to the number of available positions) who receive the highest number of votes of all nominees in favor of their election or re-election.
Under the Proposed Constitution, shareholders have further notification requirements in addition to what is required under Irish law in order to bring a resolution before a meeting of shareholders. For further detail, see the section captioned "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution—Proposing Resolutions at a General Meeting", beginning on page 49.
Election of Directors
Under the Proposed Constitution, starting with the annual general meeting to be held in 2022, any Director whose term expires at an annual general meeting shall stand for re-election at the annual general meeting. Notwithstanding that a Director might not be re-elected at a general meeting, such Director shall nevertheless hold office until the conclusion of that meeting.
Removal of Directors and Vacancies
Under Irish law and the Proposed Constitution, Trinseo PLC's shareholders have the power to remove a director without cause by simple majority resolution. At least 28 clear days' notice of the resolution is given to Trinseo PLC and the shareholder(s) comply with the relevant procedural requirements.
The power of removal is without prejudice to any claim for damages for breach of contract (e.g., employment contract) which the director may have against Trinseo PLC in respect of his or her removal.
Under Irish law, one or more shareholders representing at least 10% of the paid-up share capital of Trinseo PLC carrying voting rights have the right to requisition the holding of an extraordinary general meeting at which such a resolution to remove a director (and appoint a replacement) may be proposed.
The Proposed Constitution provides that vacancies in the board of directors may be filled by the Trinseo PLC Board.
Duration; Dissolution; Rights upon Liquidation
The duration of Trinseo PLC will be unlimited. Trinseo PLC may be dissolved and wound up at any time by way of a shareholders' voluntary winding up or a creditors' winding up. In the case of a shareholders' voluntary winding up, a special resolution of shareholders is required. Trinseo PLC may also be dissolved by way of court order on the application of a creditor, or by the Companies Registration Office as an enforcement measure if it has failed to file certain returns. Trinseo PLC may also be dissolved by the Director of Corporate Enforcement in Ireland where our affairs have been investigated by an inspector and it appears from the report or any information obtained by the Director of Corporate Enforcement that Trinseo PLC should be wound up.
Under the Proposed Constitution, if Trinseo PLC is wound up and the assets available for distribution among the shareholders of Trinseo PLC are insufficient to repay the whole of the paid-up or credited as paid-up share capital, those assets are required to be distributed so that, as nearly as may be, the losses are borne by the shareholders of Trinseo PLC in proportion to the capital paid-up or credited as paid-up at the commencement of the winding up on the shares in Trinseo PLC held by them respectively. If in a winding-up the assets available for distribution among the Trinseo PLC shareholders are more than sufficient to repay the whole of the share capital paid-up or credited as paid- up at the commencement of the winding-up, the excess is required to be distributed among the shareholders in proportion to the capital at the commencement of the winding-up paid- up or credited as paid-up on the said Trinseo PLC shares held by them respectively. The position described above is subject to any special terms and conditions applying to any class of shares.
No Liability for Further Calls or Assessments
The shares to be issued in connection with the Merger will be duly and validly issued and fully paid and non-assessable.
Transfer and Registration of Shares
Trinseo PLC will maintain a share register or otherwise cause a share register to be maintained. The registration in that register will be used to determine which Trinseo PLC shareholders are entitled to vote at meetings of Trinseo PLC shareholders. A Trinseo PLC shareholder who holds shares beneficially will not be the holder of record of such shares. Instead, the depository or other nominee will be the holder of record of those shares.
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Accordingly, a transfer of shares from a person who holds such shares beneficially to a person who also holds such shares beneficially through a depository or other nominee will not be registered in Trinseo PLC's official share register, as the depository or other nominee will remain the record holder of any such shares.
Under the Proposed Constitution, subject to the Irish Companies Act, certificated shares may be transferred upon surrender for cancellation of the share certificate(s) for the shares in question along with an instrument of transfer, duly executed, with such proof of authenticity of the signature as Trinseo PLC or its agents may reasonably require.
A written instrument of transfer is required under Irish law in order to register on Trinseo PLC's official share register any transfer of shares (i) from a person who holds such shares directly to any other person; (ii) from a person who holds such shares beneficially to a person who will hold such shares directly; or (iii) from a person who holds such shares beneficially to another person who will hold such shares beneficially where the transfer involves a change in the depository or other nominee that is the record owner of the transferred shares. An instrument of transfer is also required for a shareholder who directly holds shares to transfer those shares into his or her own broker account (or vice versa). Such instruments of transfer may give rise to Irish stamp duty, which must be paid prior to registration of the transfer on Trinseo PLC's official Irish share register. However, a shareholder who directly holds shares may transfer those shares into his or her own broker account (or vice versa) and this should not give rise to Irish stamp duty provided there is no change in the ultimate beneficial ownership of the shares as a result of the transfer and the transfer is not made in contemplation of a sale of the shares.
Any transfer of shares in Trinseo PLC that is subject to Irish stamp duty will not be registered in the name of the transferee unless an instrument of transfer is duly stamped and provided to the Trinseo PLC transfer agent. Trinseo PLC, in its absolute discretion and insofar as the Irish Companies Act or any other applicable law permits, may, or may provide that a subsidiary of Trinseo PLC will, pay Irish stamp duty arising on a transfer of shares in Trinseo PLC on behalf of the transferee of such shares. If stamp duty resulting from the transfer of shares in Trinseo PLC which would otherwise be payable by the transferee is paid by Trinseo PLC or any of its subsidiaries on behalf of the transferee, then in those circumstances, Trinseo PLC will, on its behalf or on behalf of its subsidiary (as the case may be), be entitled to (i) seek reimbursement of the stamp duty from the transferee; (ii) set-off the stamp duty against any dividends payable to the transferee of those shares; and (iii) to the extent permitted by law claim a first and permanent lien on the shares on which stamp duty has been paid by Trinseo PLC or its subsidiary for the amount of stamp duty paid. Trinseo PLC's lien shall extend to all dividends paid on those shares. Parties to a share transfer may assume that any Irish stamp duty arising in respect of a transaction in Trinseo PLC shares has been paid unless one or both of such parties is otherwise notified by Trinseo PLC.
The Proposed Constitution delegates to Trinseo PLC's secretary, any assistant secretary or a relevant authorized delegate the authority to execute an instrument of transfer on behalf of a transferor.
To help ensure that our official share register is regularly updated to reflect trading of shares in Trinseo PLC occurring through electronic systems, Trinseo PLC intends to regularly produce such instruments of transfer as may be required to effect any transfers of registered interests in shares. These may involve transactions for which it pays stamp duty, subject to the reimbursement and set-off rights described above. In the event that Trinseo PLC notifies one or both of the parties to a share transfer that it believes stamp duty is required to be paid in connection with such transfer and that it will not pay such stamp duty, the parties may either themselves arrange for the execution of the required instrument of transfer (and may request a form of instrument of transfer from Trinseo PLC for this purpose) or request that Trinseo PLC execute an instrument of transfer on behalf of the transferring party in a form determined by Trinseo PLC. In either event, if the parties to the share transfer have the instrument of transfer duly stamped (to the extent required) and then provide it to Trinseo PLC's transfer agent, the transferee named therein will be registered as the registered holder of the relevant shares on Trinseo PLC's official share register (subject to the matters described below).
The registration of transfers may be suspended by our directors at such times and for such period, not exceeding in the whole 30 days in each year, as our directors may from time to time determine.
Indemnification of Directors and Officers
Subject to exceptions, Irish law does not permit a company to exempt a director or certain officers from, or indemnify a director against, liability in connection with any negligence, default, breach of duty or breach of trust by a director in relation to the company.
The exceptions allow a company to: (a) purchase and maintain directors and officers insurance against any liability attaching in connection with any negligence, default, breach of duty or breach of trust owed to the company; and (b) indemnify a director or such other officer against any liability incurred in defending proceedings, whether civil or criminal: (i) in which judgment is given in his or her favor or in which he or she is acquitted; or (ii) in respect of which an Irish court grants him or her relief from any such liability on the grounds that he or she acted honestly and reasonably and that, having regard to all the circumstances of the case, he or she ought fairly to be excused for the wrong concerned.
The Proposed Constitution includes a provision which entitles every director to be indemnified by Trinseo PLC (including by funding any expenditure incurred or to be incurred by him or her) against any loss or liability incurred in his or her capacity as a director to the fullest extent permitted by law. The Proposed Constitution provides that where a person is so indemnified, such indemnity may extend to all costs, losses, expenses and liabilities incurred by him or her. Any funds provided in compliance with Irish law to a director to meet any
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expenditure incurred by him or her in connection with defending himself or in an investigation of any negligence, default, breach of duty or breach of trust by him or her or otherwise, must be given on the basis of an undertaking from the director that the funds will be repaid if he or she is convicted, or judgment is given against him or her.
The Proposed Constitution also provides the Trinseo PLC Board with authority to purchase and maintain insurance at the expense of Trinseo PLC for the benefit of any person who is, or was at any time, a director or other officer or employee of the company or any associated company.
In addition to the provisions of the Proposed Constitution, it is common for a public limited company to enter into separate a deed of indemnity with a director or officer which essentially indemnifies the director or officer against claims brought by third parties to the fullest extent permitted under Irish law. Trinseo PLC intends to enter into such deeds of indemnity with each of its directors and officers. In addition, given the director indemnification limitations arising under Irish law, it is expected Trinseo PLC will procure that one or more of its subsidiaries will enter into indemnification agreements with each of the Trinseo PLC directors indemnifying them in respect of any liability incurred by them while acting as a director of Trinseo PLC.
Limitation on Director Liability
Subject to exceptions, as described above, Irish law does not permit a company to exempt any director or certain officers from any liability arising from negligence, default, breach of duty or breach of trust against the company. One of the exceptions is that an Irish company is permitted to purchase and maintain insurance for a director or executive officer of the company against any such liability.
Separately, in proceedings where negligence, default, breach of duty or breach of trust against a director has or may be established (or in anticipation of any such proceedings), an Irish court has the power to grant a director or other officer relief from liability on the grounds that he or she acted honestly and reasonably and that, having regard to all the circumstances of the case, he or she ought fairly to be excused for the wrong concerned.
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PROPOSAL 1
Proposal 1—The Merger |
Trinseo S.A. shareholders are being asked to approve the Common Draft Terms and the Merger at the General Meeting. Upon the approval thereof, and assuming the other conditions to the Merger are satisfied or waived, Trinseo S.A. shareholders will receive an ordinary share of Trinseo PLC for every ordinary share of Trinseo S.A. that they then hold, on a one-for-one basis.
A cross-border merger of companies from different states within the EEA is governed by Directive 2005/56/EC on Cross-Border Mergers of Limited Liability Companies as repealed and codified by Chapter II, Title II of Directive 2017/1132/EU (the "Directive"), which provides a set of procedures for the merger of companies from different states within the EEA. Because the Merger comes within the scope of the Directive, it must comply with both the Irish Regulations and the relevant provisions of Luxembourg Law, which implemented the Directive in Ireland and Luxembourg, respectively. Although the Directive is binding with respect to the ends it must achieve, each EEA state has a degree of autonomy regarding the means with which it will implement the Directive domestically. Some differences therefore arise between the measures implementing the Directive across EEA jurisdictions, including between Ireland and Luxembourg.
The Merger is to be structured as a "merger by acquisition" under the Irish Regulations and as a "merger by absorption" by Luxembourg Law, the result of which is that all the assets of Trinseo S.A. will be acquired by Trinseo PLC by operation of law and all of the liabilities of Trinseo S.A. will be assumed by Trinseo PLC by operation of law, and Trinseo S.A. will be dissolved without going into liquidation.
Steps Required to Effect the Merger
General Meeting. On June 14, 2021 we will hold the General Meeting to ask shareholders of record to approve the Common Draft Terms and entry into the Merger.
Luxembourg.
In connection with the Merger, the following steps will occur:
After the Merger Proposal and resolution to enter into the Merger has been approved by Trinseo S.A. shareholders at the General
Meeting, the following steps must be taken in Luxembourg in order to effect the Merger:
Ireland.
In connection with the Merger, the following steps will occur:
Effectiveness. If all of the conditions are satisfied or waived (and we do not abandon the Merger before obtaining the Final Order), the Merger will take effect at a time on the Effective Date. We currently anticipate the Merger will take place in October 2021. Once the Merger takes effect as provided for in the Irish Regulations, it may not be declared null and void and the Final Order, specifying the Effective Date, shall constitute conclusive evidence of the effectiveness of the Merger.
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In connection with the Merger, the following steps will occur by operation of law on the Effective Date:
As a result of the Merger, Trinseo S.A. shareholders will become Trinseo PLC shareholders, and Trinseo S.A. will cease to exist.
After the Merger, you will own an interest in a company that will continue to conduct the same functions as conducted by Trinseo S.A. before the Merger. The number of Trinseo PLC shares you will own will be the same as the number of Trinseo S.A. shares you owned immediately before the Merger.
Your rights as a Trinseo S.A. shareholder are currently governed by Luxembourg law and our Articles. Following the Merger, you will become a Trinseo PLC shareholder and your rights as a Trinseo PLC shareholder will be governed by Irish law and the Proposed Constitution. The legal system governing companies organized under Irish law differs from the legal system governing companies organized under Luxembourg law. As a result, while many of the principal attributes of Trinseo S.A. shares and Trinseo PLC shares will be similar under Luxembourg and Irish law, differences will exist.
We discuss these differences in detail below under "Description of Trinseo PLC Shares" and "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3.
Expert Reports
As required by the Directive, Trinseo S.A. and Trinseo PLC have each obtained a report from a local independent expert addressing certain matters as required by the Directive, including the experts' views as to whether the securities exchange ratio in the Merger is fair and reasonable. Each merging company will make its expert's report available to their respective shareholders at least one month before the meeting at which they will vote upon the Merger. For this purpose, as permitted by the Directive, Trinseo S.A. has retained PricewaterhouseCoopers, a Luxembourg co-operative company (Société Cooperative) as its independent expert, and Trinseo PLC has retained PricewaterhouseCoopers, a general irish partnership, as its independent expert. A copy of the experts' reports are available on Trinseo S.A.'s website at trinseo.com.
Reasons for the Merger
Our Board believes that giving effect to the Merger will be in the best interests of the Trinseo group and our shareholders. In arriving at this determination, our Board consulted with Trinseo S.A.'s management along with its legal and tax advisors and considered various factors in its deliberations. Our Board concluded that the Merger is likely to result in benefits to the Trinseo group and its shareholders, including, among other benefits, (i) simplifying regulatory requirements, (ii) increasing flexibility on capital deployment such as increased authority to issue new shares or repurchase shares, (iii) providing dividend withholding tax benefits to shareholders and (iv) providing the Trinseo group with operational efficiencies and reduction of its operating and administrative costs. The Merger will also complement the Company's proposed plan to create a global business services center in Ireland. If Trinseo S.A. shareholders approve this proposal, the Merger will effectively change Trinseo S.A.'s legal domicile from Luxembourg to Ireland and will result in other changes of a legal nature, the most significant of which are described under the caption "Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution" in Proposal 3.
We cannot assure you that the anticipated benefits of the Merger will be realized. In addition to the potential benefits described above, the Merger will expose us and you to some risks. These risks include the following:
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PROPOSAL 1
For further detail, see "Risk Factors."
Amendment, Termination or Delay
Subject to U.S. securities law, Irish law and Luxembourg law constraints, the Common Draft Terms may be amended, modified or supplemented at any time before or after its approval by Trinseo S.A. shareholders at the General Meeting. However, after approval of the Common Draft Terms by Trinseo S.A. shareholders, no amendment, modification or supplement to the Merger may be made or effected that legally requires further approval by Trinseo S.A. shareholders without obtaining such approval.
Our Board may terminate, abandon or delay the Merger, at any time before the issuance of the Final Order, without obtaining the approval of Trinseo S.A. shareholders, even though the Merger may have been approved by such Trinseo S.A. shareholders and all other conditions to the Merger may have been satisfied or waived.
Conditions to the Consummation of the Merger
The Merger will not be completed unless, among other things, the following conditions are satisfied or, if allowed by law, waived:
U.S. Federal Securities Law Consequences
The issuance of Trinseo PLC shares to Trinseo S.A. shareholders in connection with the Merger will not be registered under the Securities Act. Section 3(a)(10) of the Securities Act exempts securities issued in exchange for one or more outstanding securities from the general requirement of registration where the terms and conditions of the issuance and exchange of such securities have been approved by any court of competent jurisdiction, after a hearing upon the fairness of the terms and conditions of the issuance and exchange at which all persons to whom such securities will be issued have a right to appear and to whom adequate notice of the hearing has been given. In determining whether it is appropriate to grant the Final Order confirming scrutiny of the legality of the Merger and setting the Effective Date, the Irish High Court will consider the fairness of the terms and conditions of the Merger to Trinseo S.A. shareholders, such that Trinseo PLC shares issued pursuant to the Merger will constitute an exempt issuance within the meaning of Section 3(a)(10) of the Securities Act.
Upon consummation of the Merger, Trinseo PLC shares will be deemed to be registered under Section 12(g) of the Exchange Act, by virtue of Rule 12g-3 under the Exchange Act, without the filing of any Exchange Act registration statement.
Effective Date and Time of the Merger
The Merger will take effect on the date and time prescribed in the Final Order confirming the scrutiny of the legality of the Merger and determining the fairness of the terms and conditions of the Merger to Trinseo S.A. shareholders and setting the Effective Date. The Final Order specifying the date of effectiveness of the Merger is conclusive evidence of the effectiveness of the Merger.
We intend to propose to the Irish High Court that the Merger take effect in October 2021. The determination of the Effective Date is entirely within the Irish High Court's discretion; however, we are not aware of any reason why it would not grant the requested date.
In the event the conditions to the Merger are not satisfied, the Merger may be abandoned or delayed, even after approval by Trinseo S.A. shareholders. In addition, until the issuance of the Final Order of the Irish High Court, the Merger may be abandoned or delayed by the Trinseo S.A. Board without obtaining the approval of Trinseo S.A. shareholders, even though the Merger may have been approved by such Trinseo S.A. shareholders and all other conditions to the Merger may have been satisfied or waived. For further detail, see "—Amendment, Termination or Delay."
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PROPOSAL 1
Management of Trinseo PLC
When the Merger is completed, the executives and directors of Trinseo S.A. immediately prior to completion of the Merger are expected to be the executives and directors of Trinseo PLC.
Interests of Certain Persons in the Merger
No person who has been a director or executive officer of Trinseo S.A., at any time since the beginning of the last fiscal year, or any associate of any such person, has any substantial interest in the Merger, except for any interest arising from his or her ownership of securities of Trinseo S.A., as the case may be. No such person is receiving any extra or special benefit not shared on a pro rata basis by all other Trinseo S.A. shareholders.
Regulatory Matters
Other than as disclosed in this Proxy Statement and the compliance with U.S. Federal and state securities laws and Luxembourg and Irish corporate law, we are not aware of any further governmental approvals or actions that are required to complete the Merger. We do not believe that any significant regulatory approvals will be required to effect the Merger.
No Action Required to Cancel Trinseo S.A. shares and Receive Trinseo PLC shares
Assuming the Merger becomes effective, Trinseo S.A. will cease to exist and fully paid-up, non-assessable Trinseo PLC shares will be issued to you without any further action on your part. All Trinseo PLC shares will be issued in uncertificated form. Our transfer agent, if you are a registered holder, or your bank or brokerage firm, if you hold your shares in "street name," will make an electronic entry in your name and your ownership of
Trinseo PLC shares will be reflected in your account, which you will be able to access in the same way as today.
Accounting Treatment of the Merger
Under U.S. GAAP, the Merger represents a transaction between entities under common control. Assets and liabilities transferred between entities under common control are accounted for at historical cost. Accordingly, the assets and liabilities of Trinseo PLC will be reflected at their carrying amounts in the accounts of Trinseo S.A. at the time of the Merger.
Effect of the Merger on SEC Filing Obligations and SEC Registrant Status
Upon completion of the Merger, we will remain subject to SEC as a successor to the reporting attributes of Trinseo S.A., and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. GAAP. As required by Irish law, in connection with annual general meetings of Trinseo PLC commencing with the 2022 annual general meeting, the Trinseo PLC Irish statutory accounts will also be made available to Trinseo PLC shareholders.
Required Vote
Approval of the Merger Proposal requires at least two-thirds of the votes validly cast in person or by proxy at the General Meeting, at which at least half of the outstanding shares are present or represented. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Recommendation of the Board
Our Board recommends that Trinseo S.A. shareholders vote "FOR" the Merger Proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE MERGER.
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PROPOSAL 2
Proposal 2—Amendment of the Company's Articles of Association |
Our Board of Directors unanimously recommends that our shareholders approve an amendment to our Articles to increase the number of directors serving on the Company's Board of Directors. If this proposal is approved by shareholders, article 7.1.1 of the Articles will be amended and restated as follows:
7.1.1 The Company shall be managed by the Board, which shall consist of a minimum of three (3) directors and a maximum ofthirteen (13)twelve (12)directors, (each a Director and together, the Directors).
The adoption of this proposed amendment to the Articles will allow the appointment of an additional director to the Board, who is nominated for election by shareholders at this meeting, which the Board believes is in the best interest of Company and its shareholders.
The Articles will be amended if the proposal is approved by shareholders representing two-thirds of the votes validly cast in person or by proxy at the General Meeting. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE ARTICLES OF ASSOCIATION.
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PROPOSAL 3
Proposal 3—Advisory Approval of the |
In connection with adoption of the Merger Proposal, Trinseo S.A. is asking its shareholders to approve, on a non-binding advisory basis, the Proposed Constitution by Trinseo PLC, in the form attached hereto as Annex B (the "Irish Constitution Proposal"). If the Merger Proposal is approved, the Proposed Constitution as set forth in Annex B will be in effect on the Effective Date. The Irish Constitution Proposal is conditioned on the approval of the Merger Proposal. Therefore, if the Merger Proposal is not approved, the Irish Constitution Proposal will have no effect, even if approved by Trinseo S.A. shareholders.
We are asking shareholders to vote on the Irish Constitution Proposal on an advisory basis, to allow shareholders the opportunity to vote for the Proposed Constitution separately from the Merger Proposal. We strongly encourage all shareholders that vote "for" the Merger Proposal to also vote "for" the Irish Constitution Proposal, to allow the Company to proceed with the Merger as intended and set forth in the Merger Proposal.
Comparison of Rights of Shareholders and Governance under the Articles to the Proposed Constitution
Your rights as a Trinseo S.A. shareholder are governed by the Luxembourg law and Trinseo S.A.'s Articles. As a result of the Merger, Trinseo S.A. will be dissolved without going into liquidation and Trinseo S.A. shareholders will become Trinseo PLC shareholders. The rights of Trinseo PLC shareholders will be governed by applicable Irish law, including the Irish Companies Act, and by the Proposed Constitution.
Many of the principal attributes of Trinseo S.A shares and Trinseo PLC shares will be similar. However, there are differences between the rights of Trinseo S.A. shareholders under Luxembourg law and the rights of Trinseo PLC shareholders under Irish law following the Merger. In addition, there are likely to be differences between the Articles and the Proposed Constitution as they will be in effect after the completion of the Merger.
These differences are more particularly described below, but the material differences are generally characterized as follows:
The following is a summary comparison of the rights of Trinseo S.A. shareholders under applicable Luxembourg law and the Articles and the rights such Trinseo S.A. shareholders will have as Trinseo PLC shareholders under the Irish Companies Act and the Proposed Constitution effective immediately following the Merger. The statements in this section are qualified in their entirety by reference to, and are subject to, the detailed provisions of the Articles and the Proposed Constitution as will be in effect after the Merger, substantially in the form attached as Annex B to this Proxy Statement. We encourage you to read those documents carefully. You are also urged to carefully read the relevant provisions of the Luxembourg Law and the Irish Companies Act for a more complete understanding of the differences between being a Trinseo S.A. shareholder and a Trinseo PLC shareholder. A consolidated version of the Irish Companies Act can be accessed online for free at https://www.lawreform.ie/.
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Authorized and Issued Share Capital & Directors Authority to Allot Shares | The authorized share capital of the Company is up to USD $500,000,000 represented by 50,000,000,000 shares. The Company's current issued share capital amounts to USD 487,779.34 represented by 48,777,934 ordinary shares. Approximately 10.4 million ordinary shares are held in Treasury by Trinseo S.A. or a Luxembourg subsidiary. The Company has Luxembourg Law requires a shareholder vote to authorize the Board to issue any amount of its authorized share capital without preemptive rights (preferential subscription rights), for | The authorized share capital of Trinseo PLC is Under Irish law, the directors of a
Under Irish law, statutory preemption rights apply automatically where shares are issued for cash. The Proposed Constitution will permit the Trinseo PLC Board to disapply statutory preemptive rights in any issuance of shares, for a period of five years. The disapplication of preemptive rights must be renewed by shareholders at least every five years by special resolution (75% of votes cast) at a general meeting of shareholders. The Trinseo PLC Board will also be authorized to issue preferred shares with discretion as to the terms attaching to the preferred shares, including as to voting, dividend and conversion rights and priority relative to other classes of shares with respect to dividends and upon a liquidation. | ||
Consolidation and Division | Trinseo S.A. may, by extraordinary resolution, consolidate and divide all or any of its share capital into shares of larger par value than its existing shares, or subdivide its shares into smaller amounts. | Trinseo PLC may, by ordinary resolution, consolidate and divide all or any of its share capital into shares of larger par value than its existing shares, or subdivide its shares into smaller amounts. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||||
Pre-Emption Rights (Generally) | Under Luxembourg Law, shares to be subscribed for in cash must be offered on a preferential basis to the shareholders in proportion of the capital represented by their shares. The pre-emptive subscription rights may be excluded from application to specific share classes which have different rights to participate in distributions or in the
| Under Irish law, certain statutory preemption rights apply automatically in favor of shareholders where shares are to be issued for cash unless those rights are disapplied in the constitution of the | ||||
Board of Directors, Election of Directors and Vacancies on the Board of Directors | Pursuant to the Luxembourg Law, the Board |
Pursuant to the Articles, directors are elected by an ordinary resolution at a general meeting and The Articles provide that vacancies due to resignation or otherwise may be filled on a temporary basis pursuant to the affirmative vote of a majority of the remaining directors. Such decision must be ratified by an ordinary resolution of the next general meeting. | The Irish Companies Act provides for a minimum of two directors on the board of a PLC. The Proposed Constitution provides that the number of directors will be as the Trinseo PLC board may determine from time to time, at its discretion, but which shall not be less than three. Directors are elected on an individual basis by way of separate ordinary resolutions at a general meeting and a simple majority of votes validly cast on such resolution. Where the number of valid nominees exceeds the number of director seats to be filled (a contested election), each of the nominees shall be voted upon as a separate resolution and the nominees who shall be elected as directors shall be only those nominees (in number equal to the number of available positions) who receive the highest number of votes of all nominees in favor of their The Proposed Constitution provides that the Trinseo PLC Directors have the power to appoint a person either to fill a vacancy or as an additional director. Under the Proposed Constitution, starting with the annual general meeting to be held in 2022, any Director whose term expires at an annual general meeting shall stand for | |||
Removal of Directors | Pursuant to the
| Under Irish law and the
|
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PROPOSAL 13
Provision | Trinseo S.A. | Trinseo PLC | ||
Remuneration of Directors | Director's remuneration is set by the shareholders (save potentially for any remuneration paid out as salary to an employee director, which shall be approved by the board of directors). The amount of the fees granted in respect of the financial year to a director, and the amount of any commitments arising or entered into under the same conditions in respect of retirement pensions for former directors should be disclosed in the notes to the stand-alone accounts. | Under Irish law, Trinseo PLC is not required to prepare and submit to shareholders a directors' remuneration report or policy for a vote. Irish law requires, in the case of officers who are also considered directors under Irish law, that employment agreements with a guaranteed term of more than five years be subject to a prior approval of shareholders at a general meeting. | ||
Quorum for Board Meetings | The Trinseo S.A. Board may only validly deliberate and act if a majority of the directors and the chairman of the Board are present or represented. If this quorum is not reached, a second Board meeting must be convened with the same agenda and such reconvened Board meeting may validly deliberate and act if a majority of its members are present or represented. | No business shall be transacted at any meeting of the Trinseo PLC Board unless a quorum is present. The quorum necessary for the transaction of the business of the Board may be fixed by the Board and unless so fixed shall be a majority of the Directors in office. |
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Provision | Trinseo S.A. | Trinseo PLC | ||
Duties of Directors | Under Luxembourg Law, the directors manage its affairs and have the power to take any action they consider necessary or useful to realize its corporate purpose, unless that action is reserved to the shareholders (e.g., approval of the annual accounts) by the Luxembourg Law or the articles of association of the company. The board of directors is thus a company's main decision-making body, and is in charge of determining the guidelines for its management and business development. The directors represent the company, and must exercise their duties with as much care, diligence and skill as would be displayed by a reasonable director in the same circumstances. Although Luxembourg law, unlike common law jurisdictions, contains no such concept as "fiduciary duty" of directors, the directors must also act with loyalty, honesty and in good faith, for the company's exclusive benefit. Hence they must participate in board meetings and manage the company actively. Luxembourg Law sets forth the main specific duties of a director as follows: (a) to prepare each year an inventory indicating the value of the company's assets and debts, with an annex summarizing all the commitments and debts of the company's officers, directors and statutory auditors; (b) to prepare the annual accounts (balance sheet, profit and loss account and annex); (c) to establish a report on the company's business (the Management Report), if required, (d) to submit the annual accounts, the consolidated accounts (if required by law), the Management Report and the report of the person responsible for auditing the company (if any) to the shareholders for approval, within six months after the end of the financial year; and (e) to file the approved annual accounts, the Management Report and the report drawn up by the statutory auditor(s) (in public limited liability companies) with the RESA within one month following their approval by the annual general meeting, and no later than seven months after the end of the financial year. | Under Irish law, a fiduciary relationship exists between the directors and the company. The Irish Companies Act sets out eight principal fiduciary duties for directors, which are derived from common law and equitable principles, as follows: (a) to act in good faith in what the director considers to be the interests of the company; (b) to act honestly and responsibly in relation to the conduct of the affairs of the company; (c) to act in accordance with the company's constitution and to exercise his or her powers only for the lawful purposes; (d) not to misuse the company's property, information and/or opportunity; (e) not to fetter their independent judgement. (f) to avoid conflicts of interest; (g) to exercise due care, skill and diligence; and (h) to have regard to the interests of the company's employees in general and its shareholders. Additional statutory duties of directors include ensuring the maintenance of proper books of account, having annual statutory accounts prepared and audited, maintaining certain registers, making certain filings and disclosing personal interests in securities of, and transactions with, Trinseo PLC. Directors of public limited companies, such as Trinseo PLC also have a specific duty to ensure that the company secretary is a person with the requisite knowledge and experience to discharge the role. Such duties are owed to the company (not to individual shareholders or third parties) and only the company may take an action for breach of duty against a director. On a liquidation, this power may be exercised by the liquidator. In limited situations, shareholders may be able to bring a derivative action on behalf of the company. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Conflict of Interest of Directors | If a director has a direct or indirect financial interest conflicting with that of the company in a transaction which is submitted for approval to the board of directors he or she must advise the board of such interest and cause a record of the statement to be included in the minutes of the meeting. Such director may not participate in deliberations and decision-making in relation to the transaction. Further, a special report must be made in relation to the relevant transaction and presented at the next general meeting, before any other resolution is put to vote. Where, because of conflict of interests, the number of directors required by the articles to decide and vote on the relevant matter is not reached, the board of directors may, unless otherwise provided for by the articles of association, decide to escalate the decision on that matter to the shareholders. The preceding rules do not apply where the decision of the board of the directors relates to ordinary business entered into under normal conditions. | As a matter of Irish law, a director is under a general fiduciary duty to avoid conflicts of interest. An Irish company is required to maintain a register of declared interests, which must be available for shareholder inspection. The Proposed Constitution provides that a director must declare any interest he or she may have in an existing or proposed contract, transaction or arrangement with Trinseo PLC at a meeting of the board of directors or otherwise provide notice to the board of directors, and that no director shall be prevented by his or her office from contracting with the company, provided that he or she has declared the nature of his or her interest in the contract or transaction and the contract or transaction has been approved by a majority of the disinterested directors. | ||
Related Party Transactions | Luxembourg law does not prohibit related party transactions. However, a transaction between the company and one of its directors will be subject to the conflict of interest rules. | Under Irish law, certain transactions between Trinseo PLC and any director of Trinseo PLC are prohibited unless approved by the shareholders, such as loans, credit transactions and substantial property transactions. This prohibition extends to transactions with close personal relations and companies controlled by any such director. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Limited Liability and Indemnification of Directors | The Luxembourg Law provides that directors do not assume any personal obligations for commitments of the company. Directors are liable to the company for the performance of their duties as directors and for any misconduct in the management of the company's affairs. Directors are further jointly and severally liable both to the company and to any third parties for damages resulting from violations of the law or the articles of association of the company. Directors will only be discharged from such liability for violations to which they were not a party, provided no misconduct is attributable to them and they have reported such violations at the first general meeting after they had knowledge thereof. In addition, directors may under specific circumstances also be subject to criminal liability, such as in the case of an abuse of assets. The Articles provide that the Company may indemnify directors and officers, past and present, to the fullest extent permitted by Luxembourg Law against liability and all expenses reasonably incurred or paid by him or her in connection with any claim, action, suit or proceeding in which he/she is involved by virtue of his being or having been a director or officer and against amounts paid or incurred by him or her in the settlement thereof, subject to certain exceptions. | Pursuant to the Proposed Constitution, a person who is or was a director, officer or executive of Trinseo PLC shall generally be entitled to be indemnified by Trinseo PLC against all costs, charges, losses, expenses and liabilities incurred by him or her in the execution and discharge of his duties or in relation thereto to the maximum extent permitted by Irish law. The Irish Companies Act prescribes that any provision which purports to indemnify an officer of the company from liability for negligence or breach of duty is void. However, a director may be indemnified for such a breach of duty or negligence and the company permitted to pay the costs or discharge the liability of a director or the secretary where judgment is given in any civil or criminal action in respect of such costs or liability, or where an Irish court grants relief because the director or secretary acted honestly and reasonably and ought fairly to be excused. Any provision whereby an Irish company seeks to commit in advance to indemnify its directors or secretary over and above the limitations imposed by the Irish Companies Act will be void under Irish law. This restriction does not apply to Trinseo PLC's executives who are not directors or the secretary of Trinseo PLC. Irish law permits a company to purchase and maintain insurance on behalf of its directors. Given the director indemnification limitations arising under Irish law, it is expected Trinseo PLC will procure that one or more of its subsidiaries will enter into indemnification agreements with each of the Trinseo PLC directors indemnifying them in respect of any liability incurred by them while acting as a director of Trinseo PLC. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Derivative Actions | Luxembourg law does not require shareholder approval before legal action may be initiated on behalf of the company. The board of directors has sole authority to decide whether to initiate legal action to enforce the company's rights (other than, in certain circumstances, in the case of an action against board members). Under Luxembourg Law, minority shareholders may bring an action on behalf of the company against board members, provided that at the general meeting of shareholders which voted on the discharge of such board members, they held at least ten per cent. (10%) of the voting rights. Indirect action can in principle be taken in the event of any failure or default (as opposed to a refusal) on the part of the corporate body (typically, the board of directors) responsible to take required action on behalf of the company to exercise or enforce the latter's rights. Although it is clear that such a course of action is recognized in respect of third party creditors (exercising, in this case, the rights of the company itself on behalf of the company), it does not, in principle, apply to minority shareholders insofar as legal literature is reluctant to regard minority shareholders as creditors of the company (a qualifying condition for action). | Under Irish law, the power to initiate a lawsuit on behalf of the company is generally a matter for the board of directors, and shareholders' rights to initiate a derivative lawsuit on behalf of the company are limited. A shareholder may generally be entitled to bring a derivative action is if a wrong committed against the company would go unredressed. The principal case law in Ireland indicates that to bring a derivative action, a person must first establish a prima facie case: (a) that the company is entitled to the relief claimed and (b) that the action falls within one of five exceptions derived from case law. While Irish law only permits a shareholder to bring a derivative action and initiate a lawsuit on behalf of the company in limited circumstances, it does permit a shareholder whose name is on the register of shareholders of a company to apply for a court order where the company's affairs are being conducted or the powers of the company's directors are being exercised in a manner oppressive to him or her or any of the shareholders; or in disregard of his or her or their interests as shareholders. This is a statutory remedy and an Irish court has wide discretion to make such order as it sees fit (the usual remedy is the purchase or transfer of the shares of any shareholder). Lawsuits brought by a shareholder on behalf of the company may be brought exclusively in the courts of Ireland when they are related to or in connection with a derivative claim, an alleged breach of fiduciary or other duty by a director, officer or employee of Trinseo PLC or any other claim against Trinseo PLC or its directors, officers and employees under Irish law or pursuant to the constitution. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Amendment of Governing Documents | Under the Luxembourg Law, amendments to Articles require an extraordinary general meeting of shareholders held in front of a public notary at which at least one half of the share capital is represented. Resolutions will be adopted if approved by at least two-thirds of the votes validly cast (unless otherwise mandatorily required by Luxembourg law). An increase of the commitments of the company's shareholders require the unanimous consent of the shareholders (and bondholders, if any). The Articles provide that for any extraordinary resolutions to be considered at a general meeting the quorum shall be at least one half (50%) of the issued share capital of the Company. Any extraordinary resolution shall be adopted at a quorate general meeting (save as otherwise provided by mandatory law) by a two-thirds (2/3) majority of the votes validly cast on such resolution. In very limited circumstances the Board may be authorized by the shareholders to amend the Articles, albeit always within the limits set forth by the shareholders. This is the case in the context of the Company's authorized share capital within which the Board is authorized to issue further shares or in the context of a share capital reduction and cancellation of shares. The Board is then authorized to appear in front of a notary public to record the capital increase or decrease and to amend the share capital set forth in the Articles. | Irish companies may alter their memorandum and articles of association only by the passing of a special resolution of shareholders. There are no special quorum requirements for such a meeting, outside of the usual quorum requirements that apply for general meetings. | ||
Shareholder Meetings | Pursuant to the Luxembourg Law, at least one general meeting of shareholders must be held each year on the day and at the time indicated in the articles of association of the company. The purpose of such annual general meeting is to approve the annual accounts, allocate the results, proceed to statutory appointments and grant discharge to the directors. The annual general meeting must be held within six months of the end of each financial year. | An Irish company is required to hold an annual general meeting ("AGM") each year at intervals of no more than 15 months from the previous AGM and no later than 9 months after its accounting year end. The business of Trinseo PLC's annual general meeting is required to include: (a) the consideration of Trinseo PLC's statutory financial statements and reports of the directors and auditors thereon; (b) the review by shareholders of Trinseo PLC's affairs; (c) the election and re-election of Directors in in accordance with the Proposed Constitution; (d) the appointment or re-appointment of the statutory auditors; (e) the authorizing of the directors to approve the remuneration of the auditors; and (f) the declaration of dividends (other statutory than interim dividends). Shareholder meetings can be held outside Ireland so long as Trinseo PLC makes all necessary arrangements to ensure that shareholders can by technological means participate in any such meeting without leaving Ireland. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Calling of Special Meetings of Shareholders | Pursuant to Luxembourg Law, the board of directors is obliged to convene a general meeting so that it is held within a period of one month of the receipt of a written request of shareholders representing 10% of the issued capital. Such request must be in writing and indicate the agenda of the meeting. | Under Irish law, one or more shareholders representing at least 10% of the paid-up share capital of Trinseo PLC carrying voting rights have the right to requisition the holding of an extraordinary general meeting. The requisition notice must set out the objects of the meeting and be deposited at the registered office of the company. Upon receipt of any such valid requisition notice, the board of the PLC has 21 days to convene a meeting of shareholders to vote on or consider the matters set out in the requisition notice. This meeting must be held within two months of the deposit of the requisition notice (the "requisition date"). If the PLC board fails to convene the meeting within such 21 day period, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, which meeting must be held within three months of the requisition date. | ||
Proposing Resolutions at a General Meeting | Shareholders holding at least 10% of the share capital of the company may request that one or more additional items be put on the agenda of any general meeting. This request shall be sent to the registered office by registered mail at least five days prior to the holding of the meeting. Under the Articles, shareholders have further notification requirements in addition to what is required under Luxembourg Law in order to bring a resolution before a meeting of shareholders. | Shareholders do not have a general right under Irish law to put items on the agenda of a general meeting of Trinseo PLC (except as described above under "Calling of Special Meetings of Shareholders"). The Proposed Constitution sets out specific requirements that must be complied with where a shareholder proposes to bring any business before a general meeting of Trinseo PLC. Any such proposals will be required to be put to a general meeting only where they fully comply with all the notification and other requirements of the Proposed Constitution and Irish law. For notices relating to the nomination of directors, shareholders must provide, among other things, all information required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest or that is otherwise required pursuant to Regulation 14A under the Exchange Act and the rules and regulations promulgated thereunder. For notices relating to any other business, further information including a comprehensive description of the business desired to be brought before the meeting, the complete text of any proposed resolution and a declaration of any material interest in such business by shareholders and any associated persons are required. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Notice for General Meetings | The Articles require convening notices to be published at least 30 days before the date of the general shareholders meeting. | The Proposed Constitution requires that notice of an annual general meeting of shareholders must be delivered to the shareholders at least 21 clear days before the meeting. Shareholders must be notified of all general meetings (other than annual general meetings) at least 14 clear days prior to the meeting (provided that, in the case of an extraordinary general meeting for the passing of a special resolution, at least 21 clear days' notice is required). Notice periods for general meetings can be shortened if all shareholders entitled to attend and vote at the meeting agree to hold the meeting on short notice. The Company will continue to be bound by U.S. securities regulations governing notice & proxy statement delivery. | ||
Quorum for General Meetings | Ordinary Resolutions: a quorum of at least 50% of the share capital present or represented is required. If said quorum is not met, a second meeting may be convened with the same agenda at which no quorum shall apply. Extraordinary Resolutions: Pursuant to the Articles, for any extraordinary resolutions to be considered at a general meeting the quorum shall generally be at least one half (50%) of the issued share capital. If the said quorum is not present, a second meeting may be convened at which Luxembourg Law does not prescribe a quorum. | Under the Proposed Constitution, no business other than the appointment of a chairman shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business. Under the Proposed Constitution, holders of at least a simple majority of the shares issued and entitled to vote at a general meeting, constitute a quorum. | ||
Serious Loss of Capital | When, after a loss, the net assets of the company are reduced to an amount lower than half of the share capital, the board of directors must convene a general meeting so that it is held no more than two months from the time when they ascertained the loss or should have ascertained it, and that meeting must resolve on the possible dissolution of the company and possibly any other measures included in the agenda. The same rules must be observed when, after a loss, the net assets are reduced to an amount lower than one quarter of the share capital, except that in this case the company must be dissolved if this is approved by one quarter of the votes cast at the meeting. | If the directors of Trinseo PLC become aware that the assets of Trinseo PLC are half or less of the amount of Trinseo PLC's called-up share capital, the directors must convene an extraordinary general meeting of Trinseo PLC not later than 28 days after the earliest day on which that fact is known to a director (and the general meeting must be convened for a date not later than 56 days from that day). The meeting must be convened for the purpose of considering whether any, and if so what, measures should be taken to address the situation. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Voting Rights | The Articles provide that any ordinary resolutions shall be adopted by a simple majority of votes validly cast on such resolution with a quorum of at least 50% of the share capital present or represented. The Articles provide that unless otherwise mandatorily required by law for any extraordinary resolutions to be considered at a general meeting. Any extraordinary resolution shall be adopted at a quorate general meeting (save as otherwise provided by mandatory law) at a two-thirds (2/3) majority of the votes validly cast on such resolution. Extraordinary Resolutions: extraordinary resolutions are required for any of the following matters: (a) an increase or decrease of the authorized or issued capital, (b) a limitation or exclusion of pre-emptive rights, (c) approval of a statutory merger or de-merger, (d) dissolution and (e) an amendment of the articles of association. | Irish law requires approval of certain matters by "special resolution" of the shareholders at a general meeting. A special resolution requires the approval of not less than 75% of the votes of shareholders cast at a general meeting at which a quorum is present. A special resolution is needed (among other matters) to alter a company's constitution, exclude statutory pre-emptive rights on allotment of securities for cash (up to five years), reduce a company's share capital and re-register a public company as a private company (or vice versa). Ordinary resolutions, by contrast, require a simple majority of the votes of shareholders cast at a general meeting at which a quorum is present. An ordinary resolution is needed (among other matters) to remove a director; provide, vary or renew the directors' authority to allot shares and to appoint directors (where appointment is by shareholders). Abstentions are not considered "votes." |
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Provision | Trinseo S.A. | Trinseo PLC | ||
Shareholder Approval of Business Combinations | Any type of business combination that would require an amendment to the articles of association, such as a merger, de-merger, consolidation, dissolution or voluntary liquidation, requires an extraordinary resolution of a general meeting of shareholders. Transactions such as a sale, lease or exchange of substantial company assets require only the approval of the Board. Neither Luxembourg Law nor the Articles contain any provision specifically requiring the board of directors to obtain shareholder approval of the sale, lease or exchange of substantial assets of the Company. | Irish law recognizes the concept of a statutory merger for: (1) a domestic merger where an Irish private limited company merges with another Irish company (not a public limited company); (2) a domestic merger where an Irish public limited company merges with another Irish company; and (3) a cross-border merger, where an Irish company merges with another company based in the European Economic Area. Under Irish law, where Trinseo PLC proposes to acquire another company, approval of Trinseo PLC's shareholders is not required, unless effected as a direct domestic merger or direct cross-border merger as referred to above. Under Irish law, where another company proposes to acquire Trinseo PLC, the requirement for the approval of Trinseo PLC's shareholders depends on the method of acquisition: Schemes of Arrangement Takeover Offers Statutory Mergers Irish law does not generally require shareholder approval for a sale, lease or exchange of all or substantially all of a company's property and assets. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Shareholder Consent to Action Without a Meeting | A shareholder meeting must always be called if the matter to be considered requires a shareholder resolution under Luxembourg Law or the Articles. Pursuant to Luxembourg law, shareholders of a public limited liability company may not take actions by written consent. All shareholder actions must be approved at an actual meeting of shareholders held before a notary public or under private seal, depending on the nature of the matter. Shareholders may vote by proxy. | Under the Proposed Constitution, shareholders may approve a resolution without a meeting if all shareholders sign the written resolution. | ||
Distributions and Dividends | Pursuant to Luxembourg law, dividend distributions may be declared by (i) the shareholder at a general meeting or (ii) the Board in the case of interim dividends. The amount of distributions declared by the annual general meeting of shareholders shall include (i) the amount previously declared by the Board (i.e., the interim distributions for the year of which accounts are being approved), and if proposed (ii) the (new) distributions declared on the annual accounts. Interim dividend distributions may only be made if (i) the interim accounts, no older than two months, indicate sufficient funds available for distribution; (ii) the amount to be distributed may not exceed total net profits since the end of the preceding fiscal year; and (iii) a report of the statutory auditor addressed to the Board confirms that the above conditions have been met. | Under Irish law, dividends and distributions may only be made from profits available for distribution. In addition, under Irish law Trinseo PLC is not permitted to make a distribution or dividend unless its net assets are equal to, or in excess of, the aggregate of its called up share capital plus undistributable reserves and the distribution does not reduce the its net assets below such aggregate. Undistributable reserves includes a company's undenominated capital and the amount by which the company's accumulated unrealized profits, so far as not previously utilized by any capitalization, exceed its accumulated unrealized losses, so far as not previously written off in a reduction or reorganization of capital. Distributable profits generally means accumulated realized profits less accumulated realized losses and includes reserves created by way of capital reduction. The Proposed Constitution authorizes the directors to declare and pay interim dividends without shareholder approval to the extent they appear justified by the profits of Trinseo PLC available for distribution. The Trinseo PLC Board may also recommend a dividend to be approved and declared by the shareholders by ordinary resolution at a general meeting. No dividend issued may exceed the amount recommended by the directors. Dividends may be declared and paid in cash by cheque or warrant or sent by any electronic or other means of payment. |
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Provision | Trinseo S.A. | Trinseo PLC | ||
Repurchases and Redemptions | The Company may repurchase its own shares subject to certain conditions set out in the Luxembourg Law and in particular, subject to the following conditions: (a) an authorization to acquire shares is approved by shareholders, which shall determine the terms and conditions of the proposed acquisition, the maximum number of shares to be acquired, the duration of the period for which the authorization is given and which may not exceed 5 years and, in the case of acquisition for value, the maximum and minimum consideration; (b) the acquisition must pass the "balance sheet test" provided by the Luxembourg Law; (c) only fully paid-up shares may be included in such transaction; and (d)equal treatment of shareholders who are in the same position is to be respected. Listed companies may repurchase their own shares on the stock exchange without an acquisition offer having to be made to the shareholders. The Company must dispose of its acquired shares within 3 years of their acquisition, unless their nominal value does not exceed 10 percent of the subscribed capital. The voting rights attached to acquired shares are suspended and, if the shares are included in the assets shown in the balance sheet, a non-distributable reserve of the same amount must be created among the liabilities of the company. The Board may decide to suspend the economic rights attached to such shares. The shares are not taken into account for determining the quorum and majority conditions for general meetings. | The Proposed Constitution provides that Trinseo PLC may purchase its own shares and redeem outstanding redeemable shares. Under Irish law, shares can only be purchased or redeemed out of: (i) distributable profits; or (ii) the proceeds of a new issue of shares made for the purpose of the purchase or redemption. A company may purchase its own shares either (i) "on-market" on a recognized stock exchange, which includes NYSE; or (ii) "off-market" (i.e., otherwise than on a recognized stock exchange). To make "on-market" purchases of shares, shareholders must provide general authorization to the company to do so by way of an ordinary resolution. Such authority can be given for a maximum period of five years before it requires to be renewed and must specify: (i) the maximum number of shares that may be purchased; and (ii) the maximum and minimum prices that may be paid for the shares by specifying particular sums or providing a formula. For an "off-market" purchase, the proposed purchase contract must be authorized by special resolution of the shareholders before the contract is entered into. Under the Proposed Constitution, the company can redeem (as opposed to purchase) its redeemable shares, without the requirement for additional shareholder authority. The Proposed Constitution provides that, unless the Trinseo PLC Board determines otherwise, any Trinseo PLC share that Trinseo PLC has agreed to acquire shall be automatically converted into a redeemable share. Repurchased and redeemed shares may be cancelled or held as treasury shares, provided that the par value of treasury shares held by Trinseo PLC at any time must not exceed 10% of the company capital of Trinseo PLC. | ||
Reduction of Share Capital | The shareholders may reduce the share capital of the company by extraordinary resolution. The minimum capital requirements (e.g., share capital at least equal to EUR 30,000) must be respected at any time. | Trinseo PLC may, by special resolution, reduce its share capital by way of a court approved procedure that also requires approval by special resolution of Trinseo PLC's shareholders at a general meeting. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Regulation of Takeovers / Anti-takeover measures | The scope of application of the Luxembourg law provisions regarding takeovers and anti-takeover rules is limited to Luxembourg companies listed on a European regulated market. As a result, these rules do not apply to Trinseo S.A. | Takeover offers and certain other transactions in respect of Irish registered public companies listed on certain stock exchanges, including NYSE, are regulated by the Irish Takeover Panel Act 1997, Irish Takeover Rules 2014 (the "Irish Takeover Rules"). The Irish Takeover Rules are administered by the Irish Takeover Panel, which oversees the conduct of such transactions. Trinseo PLC, as an Irish registered public limited company, listed on NYSE is subject to the Irish Takeover Rules and the supervisory jurisdiction of the Irish Takeover Panel. Among other matters, the Irish Takeover Rules operate to ensure that no offer is frustrated or unfairly prejudiced and, in the case of multiple bidders, that there is a level playing field. For example, pursuant to the Irish Takeover Rules, the Trinseo PLC Board will not be permitted to take actions, without shareholder approval, which might result in the frustration of an offer, or potential offer, for the shares of Trinseo PLC once the Trinseo PLC Board has received an approach which might lead to an offer or has reason to believe that an offer is, or may be, imminent. The Proposed Constitution provides the Trinseo PLC Board with the power to establish a rights plan and to grant rights to subscribe for ordinary or preferred shares in Trinseo PLC pursuant to a rights plan. Pursuant to the Irish Takeover Rules, the Trinseo PLC Board will not be permitted, without shareholder approval, to take certain actions that might frustrate an offer for Trinseo PLC once the Trinseo PLC Board has received an approach that may lead to an offer or has reason to believe an offer is, or may be, imminent. The adoption and operation of any rights plan will be subject to the Irish Takeover Rules, which may impact on when a plan can be adopted, or rights issued thereunder. |
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PROPOSAL 3
Provision | Trinseo S.A. | Trinseo PLC | ||
Rights on Liquidation | Under the Articles, the liquidators appointed by the shareholders at the opening of the company's liquidation shall have full power to realize the company's assets and pay its liabilities. Once all the creditors of the company are paid, the liquidators will distribute the remaining proceeds to the company's shareholders on a pro-rata basis of their shareholding in the company. | Under the Proposed Constitution, if Trinseo PLC is wound up and the assets available for distribution among the shareholders of Trinseo PLC are insufficient to repay the whole of the paid-up or credited as paid-up share capital, those assets are required to be distributed so that, as nearly as may be, the losses are borne by the shareholders of Trinseo PLC in proportion to the capital paid-up or credited as paid-up at the commencement of the winding up on the shares in Trinseo PLC held by them respectively. If in a winding-up the assets available for distribution among the Trinseo PLC shareholders are more than sufficient to repay the whole of the share capital paid-up or credited as paid-up at the commencement of the winding-up, the excess is required to be distributed among the shareholders in proportion to the capital at the commencement of the winding-up paid-up or credited as paid-up on the said Trinseo PLC shares held by them respectively. The position described above is subject to any special terms and conditions applying to any class of shares. | ||
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ADVISORY VOTE ON THE IRISH CONSTITUTION PROPOSAL.
2021 Proxy Statement 56
PROPOSAL 4
Proposal 4—Advisory Proposals Concerning the Proposed Constitution of Trinseo PLC |
In connection with the Merger, Trinseo S.A. is asking its shareholders, on a non-binding advisory basis, to vote upon proposals to approve certain governance provisions contained in the Proposed Constitution. These votes are not required by Luxembourg or Irish law, but pursuant to SEC guidance, Trinseo S.A. is required to submit these provisions to its shareholders to allow shareholders the opportunity to present their views on important governance provisions. The shareholder votes regarding these proposals are advisory votes, and are not binding on Trinseo S.A., Trinseo PLC or their respective boards of directors.
Each of the Advisory Constitution Proposals A-C below will be voted on separately. These votes are not contingent on approval
of the Irish Constitution Proposal. However, these proposals are conditioned on the approval of the Merger Proposal. If the Merger Proposal is not approved, these proposals will have no effect, even if approved by Trinseo S.A. shareholders.
We strongly encourage shareholders who vote in favor of the Merger Proposal and the Irish Constitution Proposal to also vote "for" these Advisory Constitution Proposals. In the judgement of the Trinseo S.A. Board, these provisions are necessary to adequately address the needs of Trinseo PLC following the Merger. Furthermore, the Merger is not conditioned on the separate approval of the Advisory Constitution Proposals.
Advisory Constitution Proposal A—Changes in Share Capital
The share capital in the Proposed Constitution has been reduced from the existing share capital under the Articles. The Board believes the share capital in the Proposed Constitution will provide adequate authorized share capital to (i) accommodate the issuance of Trinseo PLC ordinary shares (including giving effect to the Merger) and (ii) provide flexibility for future issuances of shares of Trinseo PLC if determined by the Trinseo PLC board of directors to be in the best interests of Trinseo PLC after the consummation of the Merger without incurring the risk, delay and potential expense incident to obtaining stockholder approval for a particular issuance.
Advisory Constitution Proposal | Current Articles | Proposed Constitution | ||
Advisory Constitution Proposal A—Changes in Share Capital | The authorized share capital of the Company is up to USD $500,000,000 represented by 50,000,000,000 shares. The Company's current issued share capital amounts to USD 487,779.34 represented by 48,777,934 ordinary shares. Each ordinary share is entitled to one vote. Approximately 10.4 million ordinary shares are held in Treasury by Trinseo S.A. or a Luxembourg subsidiary. The Company has no preferred shares authorized, issued and outstanding. | The authorized share capital of Trinseo PLC is US$50,000,000 and €25,000, comprised of 4,000,000,000 ordinary shares, par value US$0.01 per share, 1,000,000,000 preferred shares, par value US$0.01 per share, and 25,000 deferred ordinary shares, par value €1.00 per share. Immediately prior to completion of the Merger, Trinseo PLC will have an issued share capital of 25,000 deferred ordinary shares of €1.00 each, which shares were created solely to satisfy minimum statutory capital requirements that apply to all Irish public limited companies. Immediately following completion of the Merger, Trinseo PLC will have an issued share capital comprising such number of Trinseo PLC shares as will be equal to the number of Trinseo S.A. shares in issue immediately prior to completion of the Merger (excluding any treasury shares held by Trinseo S.A.), together with the 25,000 deferred ordinary shares. Each Trinseo PLC share will be entitled to one vote. The deferred ordinary shares will not be entitled to vote. | ||
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Advisory Constitution Proposal B—Change in Board's discretion to issue shares without waiver of preemptive rights
The Proposed Constitution provides the discretion to the board of directors, in accordance with Irish law, to issue additional shares for cash up to the authorized but unissued share capital (set forth above), without first offering those shares to existing shareholders. This provision represents a material change to the Board's discretion in the Articles. Following the Merger, although the Trinseo PLC Board
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PROPOSAL 4
will have increased discretion to issue shares, Trinseo PLC will remain subject to the rules regarding issuances of more than 20% of its share capital under certain circumstances, set by the NYSE.
Advisory Constitution Proposal | Current Articles | Proposed Constitution | ||
Advisory Constitution Proposal B—Change in Board's discretion to issue shares | Luxembourg Law requires a shareholder vote to authorize the Board to issue any amount of its authorized share capital without preemptive rights (preferential subscription rights), for a period of up to 5 years. In June 2018, shareholders approved authority for the Board to increase its existing share capital up to 20% without pre-emptive rights and up to 100% with pre-emptive rights, until June 2023. An extraordinary resolution of shareholders, taken before a Luxembourg notary, is required to increase the authorized share capital. | Under Irish law, the directors of a company may issue new ordinary or preferred shares without shareholder approval if authorized by shareholders or under its constitution. Shareholders may grant authorization for a maximum period of five years, at which point it must be renewed by the shareholders by an ordinary resolution. The Proposed Constitution authorizes the Trinseo PLC board to issue up to the maximum amount of its authorized but unissued share capital (set forth above), without approval from shareholders, for a period of five years from the date of adoption of the Proposed Constitution. Under Irish law, certain statutory preemption rights apply automatically in favor of shareholders where shares are to be issued for cash. The Proposed Constitution will also permit the Trinseo PLC Board to disapply statutory preemptive rights in any issuance of shares, for a period of five years. The disapplication of preemptive rights must be renewed by shareholders at least every five years by 75% of votes cast at a general meeting of shareholders. The Trinseo PLC Board will also be authorized to issue preferred shares with discretion as to the terms attaching to the preferred shares, including as to voting, dividend and conversion rights and priority relative to other classes of shares with respect to dividends and upon a liquidation. | ||
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Advisory Constitution Proposal C—Change in advance notice requirements for shareholder proposals
The Proposed Constitution provides the for a shorter notice period for which shareholders must present shareholder proposals to nominate directors, for inclusion at Trinseo PLC's next annual general meeting of shareholders. The Board believes this change brings the Proposed Constitution in line with most U.S.-traded public companies, and provides shareholders with a clearer deadline to submit such proposals, rather than a floating deadline tied to the date of the annual meeting.
Advisory Constitution Proposal | Current Articles | Proposed Constitution | ||
Advisory Constitution Proposal C—Change in advance notice requirements for shareholder proposals | Shareholders may nominate board candidates between 120 and 90 days prior to the annual general meeting date and between 90 and 10 days prior to the extraordinary meeting date if such meeting has been called for purposes of electing one or more directors. | For nominations of directors or other business to be property brought before an annual general meeting, shareholders must submit notice within 90 to 120 days prior to the first anniversary of the prior year's proxy statement mailing. | ||
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
EACH OF THE ADVISORY VOTES ON THE IRISH PLC ARTICLES.
2021 Proxy Statement 58
PROPOSAL 5
Proposal 5—Distributable Profits Proposal |
Under Irish law, Trinseo PLC may only pay dividends, make other distributions, or make share repurchases and redemptions from "distributable profits" shown in Trinseo PLC's unconsolidated financial statements prepared in accordance with the Irish Companies Act and filed with the Irish Companies Registration Office.
"Distributable profits" are the accumulated realized profits of Trinseo PLC that have not previously been utilized in a distribution or capitalization less its accumulated realized losses that have not previously been written off in a reduction or reorganization of capital, and include reserves created by way of a reduction of capital.
In addition, under Irish law, no dividend, distribution or share repurchase, or redemption may be paid, made or effected by Trinseo PLC unless the net assets of Trinseo PLC are equal to, or exceed, the aggregate of Trinseo PLC's called-up share capital plus its undistributable reserves and the relevant transaction does not reduce Trinseo PLC's net assets below such aggregate. "Undistributable reserves" include the undenominated capital, the capital redemption reserve fund and the amount by which Trinseo PLC's accumulated unrealized profits that have not previously been utilized by any capitalization exceed Trinseo PLC's accumulated unrealized losses that have not previously been written off in a reduction or reorganization of capital.
Immediately following the Merger, the unconsolidated balance sheet of Trinseo PLC will not contain any distributable profits and "shareholders' equity" on such balance sheet will be comprised entirely of "issued share capital" (equal to the aggregate nominal value of Trinseo PLC shares allotted and issued pursuant to the Merger) and "share premium" (equal to the amount paid-up on such Trinseo PLC shares in excess of the nominal value). You are being asked to approve the Distributable Profits Proposal, to enable, subject to the effectiveness of the Merger, the creation of
distributable profits of Trinseo PLC under Irish law by reducing the entire share premium of Trinseo PLC (or such lesser amount as may be approved by the Trinseo PLC Board) resulting from the allotment and issue of Trinseo PLC shares pursuant to the Merger, such that the reserve resulting from the cancellation of such share premium will be treated as distributable profits.
In addition to the approval of Trinseo S.A. shareholders, the Distributable Profits Proposal also requires the passing of a special resolution by the shareholders of Trinseo PLC (which will be passed by the existing shareholders prior to the Merger) and the approval of the Irish High Court. If the Distributable Profits Proposal is approved by Trinseo S.A. shareholders, Trinseo PLC intends to seek the approval of the Irish High Court for the Distributable Profits Proposal as soon as practicable following the Effective Date. Although Trinseo S.A. is not aware of any reason why the Irish High Court would not approve the Distributable Profits Proposal, such approval is a matter of judicial discretion and there is no guarantee that such approval will be forthcoming.
The Trinseo S.A. Board strongly recommends that shareholders vote for the Distributable Profits Proposal, to increase the likelihood that the proposal will be approved by the Irish High Court. If the Distributable Profits Proposal is not approved by Trinseo S.A. shareholders and the Irish High Court, Trinseo PLC will not be able to pay dividends, make other distributions or effect share repurchases and redemptions until such time as it has otherwise generated sufficient distributable profits from its operational activities following the Merger. However, passage of the Distributable Profits Proposal is not a condition to the Merger.
The Distributable Profits Proposal requires the approval of a majority of the shares represented in person or by proxy at the General Meeting. Broker non-votes will have no effect on the outcome of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE CREATION OF DISTRIBUTABLE RESERVES.
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PROPOSAL 6
Proposal 6—Election of Directors |
Trinseo's Board consists of twelve directors with one-year terms expiring in 2021. Each of the directors are elected for an annual term to serve until the next annual general meeting.
The persons named in the enclosed proxy will vote to elect K'Lynne Johnson, Joseph Alvarado, Frank Bozich, Jeffrey Cote, Pierre-Marie De Leener, Sandra Beach Lin, Jeanmarie Desmond, Matthew Farrell, Philip Martens, Donald Misheff, Henri Steinmetz and Mark Tomkins as directors unless the Proxy is marked otherwise. Each of the nominees has indicated his or her willingness to serve, if elected. However, if a nominee should be unable to serve, the ordinary shares represented by proxies may be voted for a substitute nominee designated by the Board. Management has no reason to believe that any of the above-mentioned persons will not serve his or her term as a director.
Our Board currently consists of 12 directors, the maximum number allowed under our Articles. If shareholders approve the Board Increase Proposal at the General Meeting, our Board size will be increased to 13 directors.
Half of our current directors have served on the Board for less than 4 years, while the average term of service of our directors is approximately 3.5 years.
We are committed to ongoing and regular board refreshment and succession planning. In 2020 two of our longest-tenured directors announced their retirement, and the Board appointed two new independent directors, Ms. Desmond and Mr. Farrell, to fill the vacancies. During 2020 the Board also named K'Lynne Johnson as its new Chair and appointed new chairs of its audit committee and nominating and corporate governance committee.
2021 Director Nominees
The individuals listed below have been nominated and are standing for election at this year’s Annualyear's General Meeting. If elected, they will hold office until our 20212022 annual general meeting of shareholders and until their successors are duly elected and qualified. Each of the nominees in this proposal was previously elected to the Board by shareholders, except Ms. Desmond and Mr. Farrell who were appointed by the Board to fill vacancies. Each of the nominees will cease to be directors if their respective appointments are not approved by a majority of the votes cast by our shareholders.
Director Nominee Skills
The following table highlights certain skills, knowledge and experience held by each current Director nominee. A particular Director may possess other skills, knowledge or experience even though they are not indicated below.
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2020 Proxy Statement 7
Director Nominee | Served Since | Chemicals Industry Experience | Manufacturing/ Related Industry Experience | Chief Executive Experience | Accounting and Financial Experience | Public Company Board Experience | ||||||
K'Lynne Johnson | 2017 | X | X | X | ||||||||
Joseph Alvarado | 2017 | | X | X | X | X | ||||||
Frank Bozich | 2018 | X | X | X | X | |||||||
Jeffrey J. Cote | 2014 | | X | X | X | X | ||||||
Pierre-Marie De Leener | 2014 | X | X | X | ||||||||
Jeanmarie Desmond | 2020 | X | X | | X | | ||||||
Matthew Farrell | 2020 | X | X | X | X | X | ||||||
Sandra Beach Lin | 2019 | X | X | X | | X | ||||||
Philip R. Martens | 2016 | X | X | X | ||||||||
Donald T. Misheff | 2015 | | X | | X | X | ||||||
Henri Steinmetz | 2017 | X | X | |||||||||
Mark Tomkins | 2019 | X | | | X | X | ||||||
Victoria Brifo (1) | — | X | X | |||||||||
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Board Commitment to Diversity
We seek nominees from diverse backgrounds with established strong professional reputations, sophistication, business acumen and experience in the global materials, chemical and related manufacturing industries. We also seek nominees with experience in substantive areas that are important to our business such as chemical industry expertise, international operations; accounting, finance and capital structure; strategic planning and
operational leadership of complex organizations; human resources and development practices; and innovation. In addition, we believe that our nominees should possess the professional and personal qualifications necessary for board service, and we have highlighted particularly noteworthy attributes in each of the biographies of our directors and our nominees below. Twenty-five percent of our directors are women, and one of our directors self-identifies as a member of an underrepresented minority group
2021 Proxy Statement 60
PROPOSAL 16
(meaning an individual who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska
2020 Director Nominees
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Professional Experience:
Mr. Bozich became the Company’s PresidentNative, Native Hawaiian or Pacific Islander). Two of our directors are non-U.S. citizens and Chief Executive Officer in March 2019. From May 2013 until February 2019, Mr. Bozich had been the President and Chief Executive Officer at the SI Group, Inc., a leading global developer and manufacturer of phenolic resins and chemicals used in the production of antioxidants, engineering plastics, fuels and lubes, rubber and pharmaceutical ingredients. Prior to joining SI Group Inc., Mr. Bozich held several executive management positions at BASF Corporation, a multi-national chemicals and manufacturing corporation, including President of BASF's Catalysts Division from 2010 to 2013, Group Vice President of Precious and Base Metal Service, and Group Vice President of the Integration Management Office. Prior to BASF, Mr. Bozich was Group Vice President, Enterprise Technologies and Ventures at Engelhard Corporation, which was acquired by BASF in 2006. He has also held leadership positions at Rohm and Haas; Croda Adhesives, Inc.; and Apex Adhesives, which he founded in 1986.one director maintains dual citizenship.
Education:
Mr. Bozich holds a bachelor's degree in Chemistry and a master's degree in Business Administration from the University of Chicago, as well as a master's degree in Chemistry from the University of Illinois.
Other Public Company Directorships:
Current Directorships-
OGE Energy Corp (NYSE: OGE) since February 2016
Director Qualifications:
Mr. Bozich is an accomplished CEO known for his strong personal leadership and track record of driving business growth and corporate transformation. His breadth of experience in leading chemical businesses in diverse and dynamic global markets is well-suited for the Company’s strategic priorities.
2020 Proxy Statement 8
The election of each director requires the approval of a majority of the shares represented in person or by proxy at the General Meeting. Broker non-votes will have no effect on the outcome of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE ELECTION OF EACH OF THE NOMINEES AS DIRECTOR.
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PROPOSAL 16
2021 Director Nominees
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| K'lynne Johnson Age: 52 Director Since:March 2017 Committee Membership: • Compensation and Talent Development (Chair)
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Professional Experience:
Ms. Johnson served as President and Chief Executive Officer of Elevance Renewable Sciences Inc., a specialty chemicals company, from 2007 to 2015, and as Chairwoman from 2015 to 2016. Ms. Johnson joined Elevance after over 20 years’years' experience working within the oil and petrochemicals industry for Amoco Corporation and BP p.l.c. (joining BP after its merger with Amoco in 1998). During this time she held both operational and functional roles, culminating in her role as Senior Vice President of Global Derivatives within BP’sBP's global Innovene business, which included P&L accountability for multiple global commodity and specialty chemicals businesses. Ms. Johnson also served as director of TPC Group, a manufacturer of products derived from petrochemical raw materials, from 2011 to 2012 before the company was taken private.
Education:
Ms. Johnson graduated from Brigham Young University with a degree in Management and Organizational Behavior (M.O.B.) and a B.S. in Psychology.
Other Public Company Directorships:
Current Directorships-
Directorships—
FMC Corporation (NYSE: FMC) since 2013
Director Qualifications:
Ms. Johnson brings to our Board valuable experience in operational leadership and chemical industry and technological expertise.
20202021 Proxy Statement 9 62
PROPOSAL 16
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| Joseph Alvarado Age: 68 Director Since: Committee Membership: • Audit
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Professional Experience:
From 2010 to 2011, Ms. Beach Lin was President and Chief Executive Officer of Calisolar, Inc., a manufacturer of solar silicon and multicrystalline solar cells. Prior to joining Calisolar, she was Corporate Executive Vice President, then Corporate Executive Vice President, at Celanese Corporation, a global technology and specialty materials company, from 2007 to 2010. Ms. Beach Lin joined Avery Dennison Corporation, a global leader in pressure-sensitive adhesives technology as Group Vice President from 2005 to 2007. Prior to joining Avery Dennison, from 2002 to 2005, she was President, Alcoa Closure Systems International, a division of Alcoa Incorporated, a global aluminum leader. From 1994 to 2001, Ms. Beach Lin held various executive positions at Honeywell International, a Fortune 100 diversified technology and manufacturing leader.
Education:
Ms. Beach Lin graduated with a BBA in General Management from the University of Toledo, Ohio and has an MBA in Marketing and Policy and Control from the University of Michigan.
Other Public Company Directorships:
Current Directorships –
American Electric Power (NYSE: AEP) since 2012
Polyone (NYSE: POL) since 2013
Past Directorships-
WESCO International (NYSE: WCC) from 2002 to 2019
Director Qualifications:
Ms. Beach Lin’s extensive senior executive experience, including as a Chief Executive Officer, leading global businesses in multiple industries provides her with valuable skills to serve on our Board. Ms. Lin has a deep understanding of the specialty chemicals industry, a strong operational foundation and wide-ranging international experience.
2020 Proxy Statement 10
PROPOSAL 1
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Professional Experience:
From February 2011 to April 2015, Mr. Martens served as President and Chief Executive Officer of Novelis, Inc., a leader in aluminum rolled products and can recycling with worldwide operations. He joined Novelis as President and Chief Operating Officer in April 2009. Prior to his employment with Novelis, Mr. Martens served as Senior Vice President of light vehicle systems for ArvinMeritor Inc., a distributor for engine and transmission parts and President and Chief Executive Officer designate of Arvin Innovation, a leading global provider of dynamic motion and control automotive systems. From 1987 to 2005, Mr. Martens held various product development and engineering roles at Ford Motor Company, including his most recent role as a Group Vice President of product creation from 2003 to 2005.
Education:
Mr. Martens has an MBA from University of Michigan and received his B.S. degree in mechanical engineering from Virginia Polytechnic Institute.
Other Public Company Directorships:
Current Directorships-
Graphic Packaging Holding Company (NYSE: GPK) since 2013
Past Directorships-
Plexus Corporation (NASDAQ: PLXS) from 2010 until February 2017
Director Qualifications:
Mr. Martens brings to the Board significant leadership and management experience in global manufacturing operations, along with innovation expertise.
2020 Proxy Statement 11
PROPOSAL 1
|
Professional Experience:
Mr. Misheff served as managing partner from 2003 until his retirement in 2011 of the Northeast Ohio offices of Ernst & Young LLP, a public accounting firm. As the managing partner, Mr. Misheff advised many of the region’s largest companies on financial and corporate governance issues. He began his career with Ernst & Young LLP in 1978 as part of the audit staff and later joined the tax practice, specializing in accounting/financial reporting for income taxes, purchase accounting, and mergers and acquisitions. He has more than 30 years of experience performing, reviewing, and overseeing the audits of financial statements of a wide range of public companies.
Education:
Mr. Misheff graduated from the University of Akron with a B.S. in Accounting.
Other Public Company Directorships:
Current Directorships-
TimkenSteel Corporation (NYSE: TMST) since 2014
First Energy Corp. (NYSE: FE) since 2012
Director Qualifications:
Mr. Misheff brings extensive financial, accounting and public company corporate governance experience to our Board.
2020 Proxy Statement 12
PROPOSAL 1
|
Professional Experience:
Mr. Pappas was the Company’s President and Chief Executive Officer from June 2010 until March 2019, at which time Mr. Pappas transitioned to the role of Special Adviser to Trinseo’s President and CEO, Frank A. Bozich, from March 2019 until his retirement from the Company in May 2019. Mr. Pappas previously served as the Company’s interim Chief Financial Officer from November 2015 until June 2016. Prior to joining Trinseo, Mr. Pappas held a number of executive positions at NOVA Chemicals of increasing responsibility from July 2000 to November 2009, most recently as President and Chief Executive Officer from May 2009 to November 2009, President & Chief Operations Officer from October 2006 to April 2009 and Vice President and President of Styrenics from July 2000 to September 2006. Before joining NOVA Chemicals, Mr. Pappas was Commercial Vice President of DuPont Dow Elastomers where he joined as Vice President of ethylene elastomers in 1995. Mr. Pappas began his chemicals career in 1978 with The Dow Chemical Company where he held various sales and managerial positions until 1995.
Education:
Mr. Pappas holds a B.S. degree in Civil Engineering from the Georgia Institute of Technology and an MBA from the Wharton School of Business at The University of Pennsylvania.
Other Public Company Directorships:
Current Directorships-
FirstEnergy Corp. (NYSE: FE) since 2011
Univar, Inc. (NYSE: UNVR) since 2015
Director Qualifications:
Mr. Pappas is highly qualified to serve on our Board due to his public company board experience and his 40 years of business experience with major companies in the chemical industry, and by his previous leadership of the Company since its formation. In these roles he has also acquired and demonstrated substantial financial expertise which is valuable to the Company’s Board.
2020 Proxy Statement 13
PROPOSAL 1
|
Professional Experience:
From 2016 to 2018, Mr. Steinmetz served as Chief Executive Officer of the Ceramtec Group, a global supplier of advanced ceramics. From 2009 to 2016, Mr. Steinmetz was Executive Director and Chief Executive Officer of Ruetgers N.V., Europe’s leading manufacturer of chemical raw materials made from coal tar. Prior to joining Ruetgers, Mr. Steinmetz was President of Sulzer Metco, a worldwide technology leader in coating materials, from 2004 to 2008, and was an Executive Vice President at Great Lakes Chemical Corporation from 2000 to 2004.
Education:
Mr. Steinmetz graduated with a M.S. in metallurgy from the Technical University Clausthal, Germany and has an MBA from INSEAD Fontainebleau, France.
Other Public Company Directorships:
None
Director Qualifications:
Mr. Steinmetz brings significant global chief executive officer experience and decades of chemical industry experience to our Board.
2020 Proxy Statement 14
PROPOSAL 1
|
Professional Experience:
From 2005 to 2006, Mr. Tomkins was Senior Vice President and Chief Financial Officer of Innovene, at the time, a leading petrochemical and polymers company. Prior to joining Innovene, Mr. Tomkins was Senior Vice President, Chief Financial Officer and Treasurer of Vulcan Materials, a building materials company, from 2001 to 2005. He joined Great Lakes Chemical Corp., a chemical research, production, sales and distribution company as Senior Vice President and Chief Financial Officer from 1998 to 2001. Prior to Great Lakes Chemical, Mr. Tomkins was Vice President of Finance and Business Development for Polymers and Vice President of Finance and Business Development for Electronic Materials at Allied Signal (now Honeywell International). Mr. Tomkins’ previous experience includes service as a director of CVR Energy, Inc., a publicly traded company primarily engaged in petroleum refining and nitrogen fertilizer manufacturing, from 2007 to 2012, as well as a director of private companies in the energy and plastics sectors.
Education:
Mr. Tomkins graduated with a B.S. in Finance and Quantitative Management and has an MBA from Eastern Illinois University.
Other Public Company Directorships:
Current Directorships-
ServiceMaster (NYSE: SERV) since 2015
WR Grace & Co. (NYSE: GRA) since 2006
Director Qualifications:
Mr. Tomkins is a certified public accountant. Mr. Tomkins’ financial, accounting and management expertise, along with his experience on other public and private company boards, qualify him to serve on our board of directors.
2020 Proxy Statement 15
PROPOSAL 1
|
Professional Experience:
Mr. Zide served as a senior advisor to Bain Capital, LP, a private equity investment firm, until his retirement in 2017. Mr. Zide previously served as a Managing Director of Bain Capital from 2001 through 2015. Prior to joining Bain Capital, Mr. Zide was a partner of the law firm of Kirkland & Ellis LLP, where he was a founding member of the New York office and specialized in representing private equity and venture capital firms.
Education:
Mr. Zide received an MBA from Harvard Business School, a Juris Doctorate from Boston University School of Law, and a B.A. degree from the University of Rochester.
Other Public Company Directorships:
Current Directorships-
Sensata Technologies B.V. (NYSE: ST) since 2010
Past Directorships-
HD Supply Holdings, Inc. (NASDAQ: HDS) from 2007 to 2014
Director Qualifications:
Mr. Zide brings to the Board extensive negotiating and financing expertise gained from his training and experience as a legal advisor, and later as a private equity professional and financial advisor. In addition, Mr. Zide has had significant involvement with the Company since its 2010 formation and has served as a director of numerous public and private companies during his career in private equity and law.
2020 Proxy Statement �� 16
PROPOSAL 1
Directors with Terms Expiring in 2021
|
Professional Experience:
Mr. Alvarado served as Chief Executive Officer of Commercial Metals Company (NYSE: CMC), a global manufacturer, recycler and marketer of steel and other metals, from September 2011 until September 2017, and as Chairman of CMC’sCMC's board of directors from January 2013 until January 2018. He joined CMC in April 2010 as Executive Vice President and Chief Operating Officer, was named President and Chief Operating Officer in April 2011, and became President and Chief Executive Officer in September 2011 until his retirement. Prior to joining CMC, he was President and Chief Operating Officer of Lone Star Technologies, Inc. from 2004 to 2007. In June 2007, following the acquisition of Lone Star Technologies, Inc. by United States Steel Corporation, Mr. Alvarado was named President of U.S. Steel Tubular Products, Inc., a division of United States Steel Corporation, a position he held until March 2009. Mr. Alvarado began his career at Inland Steel Company in 1976 and spent 21 years with the company in roles of increasing responsibility. He then served in executive roles with Birmingham Steel Corporation and Ispat North America Inc. until joining Lone Star Technologies.
Education:
Mr. Alvarado has an MBA from Cornell University and a B.A. degree in Economics from University of Notre Dame.
Other Public Company Directorships:
Current Directorships-
Directorships—
Kennametal Inc. (NYSE: KMT) since January 2018
Arcosa, Inc. (NYSE: ACA) since November 2018
PNC Financial Services Group Inc. (NYSE: PNC) since January 2019
Past Directorships-
Directorships—
Commercial Metals Company (NYSE: CMC) from 2013 to January 2018
Spectra Energy Corp (NYSE: SE) from 2011 until February 2017
Director Qualifications:
Mr. Alvarado brings years of experience in a cyclical commodities-driven industry and significant perspective on global manufacturing operations and strategic planning.
202063 2021 Proxy Statement 17
PROPOSAL 16
| ||
| Frank A. Bozich Age: 60 Director Since: Committee Membership: •
|
Professional Experience:
Mr. Bozich became the Company's President and Chief Executive Officer in March 2019. From May 2013 until February 2019, Mr. Bozich had been the President and Chief Executive Officer at the SI Group, Inc., a leading global developer and manufacturer of phenolic resins and chemicals used in the production of antioxidants, engineering plastics, fuels and lubes, rubber and pharmaceutical ingredients. Prior to SI Group Inc., Mr. Bozich held several executive management positions at BASF Corporation, a multi-national chemicals and manufacturing corporation, including President of BASF's Catalysts Division from 2010 to 2013, Group Vice President of Precious and Base Metal Service, and Group Vice President of the Integration Management Office. Prior to BASF, Mr. Bozich was Group Vice President, Enterprise Technologies and Ventures at Engelhard Corporation, which was acquired by BASF in 2006. He has also held leadership positions at Rohm and Haas; Croda Adhesives, Inc.; and Apex Adhesives, which he founded in 1986.
Education:
Mr. Bozich holds a bachelor's degree in Chemistry and a master's degree in Business Administration from the University of Chicago, as well as a master's degree in Chemistry from the University of Illinois.
Other Public Company Directorships:
Current Directorships—
OGE Energy Corp (NYSE: OGE) since February 2016
Director Qualifications:
Mr. Bozich is an accomplished CEO known for his strong personal leadership and track record of driving business growth and corporate transformation. His breadth of experience in leading chemical businesses in diverse and dynamic global markets is well-suited for the Company's strategic priorities.
2021 Proxy Statement 64
PROPOSAL 6
| Jeffrey J. Cote Age: 54 Director Since: May 2014 Committee Membership: • Audit • Compensation and Talent Development |
Professional Experience:
Mr. Cote has served as the Chief Executive Officer and President of Sensata Technologies Holding plc (NYSE: ST) since March 2020. Prior to his appointment as CEO, Mr. Cote served as President and as Chief Operating Officer of Sensata since July 2012 and as Executive Vice President of its Global Sensing Solutions business since November 2015. He joined Sensata as Senior Vice President and Chief Financial Officer in January 2007 and was appointed Executive Vice President in July 2007. From March 2005 to December 2006, Mr. Cote was Chief Operating Officer of the law firm Ropes & Gray. From January 2000 to March 2005, Mr. Cote was Chief Operating, Financial and Administrative Officer of Digitas. Previously he worked for Ernst & Young LLP from 1989 until 1997. Mr. Cote is a certified public accountant.
Education:
Mr. Cote received a B.A. degree in Business Administration and a Master of Accounting from Florida Atlantic University.
Other Public Company Directorships:
Current Directorships-
Directorships—
Sensata Technologies Holding plc (NYSE: ST) since March 2020
Director Qualifications:
Mr. Cote brings significant management, financial and accounting experience to our Board.
202065 2021 Proxy Statement 18
PROPOSAL 16
| Pierre-Marie De Leener Age: 63 Director Since:May 2014 Committee Membership: • Audit
|
Professional Experience:
Mr. De Leener served as interim CEO of Braas Monier Building Group SA from January 2016 to November 2016 and as Chairman of its Board of Directors from June 2014 to March 2017. Prior to that, he served as Executive Vice President for PPG Industries, Inc. from July 2010 until December 2012. From June 2008 until August 2011, Mr. De Leener also served as President of PPG Europe S.A. and as Chief Executive Officer of SigmaKalon Group from 1998 until January 2008.
Education:
Mr. De Leener received a B.S. degree in Economics and Philosophy and a Master of Chemical Engineering degree from Catholic University of Louvain, Belgium.
Other Public Company Directorships:
None
Director Qualifications:
Mr. De Leener brings valuable executive management and chemical industry experience to our Board.
20202021 Proxy Statement 19 66
CORPORATE GOVERNANCEPROPOSAL 6
| Jeanmarie Desmond Age: 54 Director Since: October 2020 Committee Membership: • Audit • Compensation and Talent Development |
Professional Experience:
Ms. Desmond is the former Executive Vice President and Chief Financial Officer of DuPont de Nemours, Inc. and has previously served as Vice President and Co-Controller for DowDuPont and as finance leader for the Specialty Products division following the merger of DuPont with Dow Chemical. Ms. Desmond served in various leadership roles within DuPont in her 30-year career with the company. She also serves on the board and is treasurer of Delaware Prosperity Partnership, a public-private partnership overseeing economic development in Delaware.
Education:
Ms. Desmond received a B.S. in Accounting from Mt. St. Mary's University and is a certified public accountant (inactive).
Other Public Company Directorships:
Current Directorships—
IPG Photogenics Corporation (Nasdaq: IPGP) since 2021
Director Qualifications:
Ms. Desmond brings substantial finance and accounting experience and extensive experience in the chemicals industry to our Board.
67 2021 Proxy Statement
PROPOSAL 6
| Matthew Farrell Age: 64 Director Since: November 2020 Committee Membership: • Compensation and Talent Development • Nominating and Corporate Governance |
Professional Experience:
Mr. Farrell is the Chairman, President and Chief Executive Officer of Church & Dwight Co. Inc. ("Church & Dwight"), serving since 2016 and as Chairman since 2019. Mr. Farrell served as Executive Vice President, Chief Financial Officer and Chief Operating Officer at Church & Dwight since 2014, and as Chief Financial Officer since 2006. Prior to that, Mr. Farrell served as Chief Financial Officer of Alpharma Inc., as Vice President, Investor Relations & Communications at Ingersoll-Rand Ltd., and in various senior financial positions at AlliedSignal Inc. Mr. Farrell began his career with KPMG Peat Marwick LLP, where he was an audit partner.
Education:
Mr. Farrell received a B.S. degree from Manhattan College and is a certified public accountant (inactive).
Other Public Company Directorships:
Current Directorships—
Church & Dwight Co. Inc. (NYSE: CHD) since 2019
Lydall Co., Inc. (NYSE: LDL) since 2003*
Director Qualifications:
Mr. Farrell brings to our Board his experience as a chief executive officer, substantial financial and audit expertise and experience in the chemicals, industrial goods and consumer products industries.
2021 Proxy Statement 68
PROPOSAL 6
| Sandra Beach Lin Age: 63 Director Since: November 2019 Committee Membership: • Compensation and Talent Development • Nominating & Corporate Governance |
Professional Experience:
From 2010 to 2011, Ms. Beach Lin was President and Chief Executive Officer of Calisolar, Inc., a manufacturer of solar silicon and multicrystalline solar cells. Prior to joining Calisolar, she was Executive Vice President, then Corporate Executive Vice President, at Celanese Corporation, a global technology and specialty materials company, from 2007 to 2010. Ms. Beach Lin joined Avery Dennison Corporation, a global leader in pressure-sensitive adhesives technology as Group Vice President from 2005 to 2007. Prior to joining Avery Dennison, from 2002 to 2005, she was President, Alcoa Closure Systems International, a division of Alcoa Incorporated, a global aluminum leader. From 1994 to 2001, Ms. Beach Lin held various executive positions at Honeywell International.
Education:
Ms. Beach Lin graduated with a BBA in General Management from the University of Toledo and has an MBA in Marketing and Policy and Control from the University of Michigan.
Other Public Company Directorships:
Current Directorships—
American Electric Power (NYSE: AEP) since 2012
Avient Corp. (NYSE: AVNT) since 2013
Past Directorships—
WESCO International (NYSE: WCC) from 2002 to 2019
Director Qualifications:
Ms. Beach Lin brings to our Board her experience as a chief executive officer and extensive experience in the global specialty chemicals industry.
69 2021 Proxy Statement
PROPOSAL 6
| Philip R. Martens Age: 61 Director Since: September 2016 Committee Membership: • Compensation • Nominating & Corporate Governance (Chair) |
Professional Experience:
From February 2011 to April 2015, Mr. Martens served as President and Chief Executive Officer of Novelis, Inc., a leader in aluminum rolled products and can recycling with worldwide operations. He joined Novelis as President and Chief Operating Officer in April 2009. Prior to his employment with Novelis, Mr. Martens served as Senior Vice President of light vehicle systems for ArvinMeritor Inc., a distributor for engine and transmission parts and President and Chief Executive Officer designate of Arvin Innovation, a leading global provider of dynamic motion and control automotive systems. From 1987 to 2005, Mr. Martens held various product development and engineering roles at Ford Motor Company, including his most recent role as a Group Vice President of product creation from 2003 to 2005.
Education:
Mr. Martens has an MBA from University of Michigan and received his B.S. degree in mechanical engineering from Virginia Polytechnic Institute.
Other Public Company Directorships:
Current Directorships—
Graphic Packaging Holding Company (NYSE: GPK) since 2013
Past Directorships—
Plexus Corporation (NASDAQ: PLXS) from 2010 until February 2017
Director Qualifications:
Mr. Martens brings to the Board significant leadership and management experience in global manufacturing operations, along with innovation expertise.
2021 Proxy Statement 70
PROPOSAL 6
| Donald T. Misheff Age: 64 Director Since: February 2015 Committee Membership: • Audit • Nominating & Corporate Governance |
Professional Experience:
Mr. Misheff served as managing partner from 2003 until his retirement in 2011 of the Northeast Ohio offices of Ernst & Young LLP, a public accounting firm. As the managing partner, Mr. Misheff advised many of the region's largest companies on financial and corporate governance issues. He began his career with Ernst & Young LLP in 1978 as part of the audit staff and later joined the tax practice, specializing in accounting/financial reporting for income taxes, purchase accounting, and mergers and acquisitions. He has more than 30 years of experience performing, reviewing, and overseeing the audits of financial statements of a wide range of public companies.
Education:
Mr. Misheff graduated from the University of Akron with a B.S. in Accounting.
Other Public Company Directorships:
Current Directorships—
TimkenSteel Corporation (NYSE: TMST) since 2014
First Energy Corp. (NYSE: FE) since 2012
Director Qualifications:
Mr. Misheff brings extensive financial, accounting and public company corporate governance experience to our Board.
71 2021 Proxy Statement
PROPOSAL 6
| Henri Steinmetz Age: 64 Director Since: November 2017 Committee Membership: • Nominating & Corporate Governance • Environmental, Health, Safety, Sustainability & Public Policy |
Professional Experience:
From 2016 to 2018, Mr. Steinmetz served as Chief Executive Officer of the Ceramtec Group, a global supplier of advanced ceramics. From 2009 to 2016, Mr. Steinmetz was Executive Director and Chief Executive Officer of Ruetgers N.V., Europe's leading manufacturer of chemical raw materials made from coal tar. Prior to joining Ruetgers, Mr. Steinmetz was President of Sulzer Metco, a worldwide technology leader in coating materials, from 2004 to 2008, and was an Executive Vice President at Great Lakes Chemical Corporation from 2000 to 2004.
Education:
Mr. Steinmetz graduated with a M.S. in metallurgy from the Technical University Clausthal, Germany and has an MBA from INSEAD Fontainebleau, France.
Other Public Company Directorships:
None
Director Qualifications:
Mr. Steinmetz brings significant global chief executive officer experience and decades of chemical industry experience to our Board.
2021 Proxy Statement 72
PROPOSAL 6
| Mark Tomkins Age: 65 Director Since: November 2019 Committee Membership: • Audit (Chair) • Environmental, Health, Safety, Sustainability & Public Policy |
Professional Experience:
From 2005 to 2006, Mr. Tomkins was Senior Vice President and Chief Financial Officer of Innovene, at the time, a leading petrochemical and polymers company. Prior to joining Innovene, Mr. Tomkins was Senior Vice President, Chief Financial Officer and Treasurer of Vulcan Materials, a building materials and chemical company, from 2001 to 2005. He joined Great Lakes Chemical Corp., a chemical research, production, sales and distribution company as Senior Vice President and Chief Financial Officer from 1998 to 2001. Prior to Great Lakes Chemical, Mr. Tomkins was Vice President of Finance and Business Development for Polymers and Vice President of Finance and Business Development for Electronic Materials at Allied Signal (now Honeywell International). Mr. Tomkins' previous experience includes service as a director of CVR Energy, Inc., a publicly traded company primarily engaged in petroleum refining and nitrogen fertilizer manufacturing, from 2007 to 2012, as well as a director of private companies in the energy and plastics sectors.
Education:
Mr. Tomkins graduated with a B.S. in Finance and Quantitative Management, has an MBA from Eastern Illinois University and is a certified public accountant.
Other Public Company Directorships:
Current Directorships—
Terminix Global Holdings (NYSE: TMX) since 2015
WR Grace & Co. (NYSE: GRA) since 2006
Director Qualifications:
Mr. Tomkins brings significant financial, accounting and management expertise, along with extensive experience on other public and private company boards to Trinseo's Board.
73 2021 Proxy Statement
PROPOSAL 7
Proposal 7—Election of Director |
Conditioned upon shareholder approval of Proposal 2, the Board has nominated Victoria Brifo as its nominee for Director. The persons named in the enclosed proxy will vote to elect Ms. Brifo as director unless the Proxy is marked otherwise. Ms. Brifo has indicated her willingness to serve, if elected, and should she be unable to serve, the ordinary shares represented by proxies may be voted for a substitute nominee designated by the Board. Management has no reason to believe that she will not serve her term as a director. If elected, Ms. Brifo will hold office until our 2022 annual general meeting of shareholders and until her successor is duly elected and qualified. Ms. Brifo will not be elected director if her appointment is not approved by a majority of the shares represented in person or by proxy at the General Meeting. Broker non-votes will have no effect on the outcome of this proposal.
Victoria Brifo
Age: 52
Professional Experience:
Victoria Brifo is Senior Vice President and Chief Human Resources Officer at Air Products and Chemicals, Inc. (NYSE: APD). She is responsible for leading all aspects of the company's Human Resources (HR) organization, including HR Operations, Diversity and Inclusion, Talent Management, and Compensation and Benefits, as well as Global Health and Wellness, and Corporate Aviation and Corporate Transportation. Ms. Brifo has been with Air Products since 2001, starting as a production site leader and progressing through several plant leadership positions before becoming Global Diversity Director in 2005. In 2008 she was named Global Manager of Electronics Operations and moved to the Merchant Gases group in 2011 to lead the Global Generated Gases business. In 2014 Ms. Brifo assumed the role of Global Transformation Leader for Industrial Gases. She was subsequently appointed Vice President, Global Gases, followed by Vice President, Equipment Sales, Plant Support and Central Procurement. Prior to joining Air Products, Ms. Brifo worked at LyondellBasell and Amoco Production Company.
Education:
Ms. Brifo holds degrees in chemical engineering and political science from the Massachusetts Institute of Technology.
Other Public Company Directorships:
None
Director Qualifications:
Ms. Brifo brings significant experience in the chemicals and manufacturing industry, as well as leadership, management and human resources expertise to our board of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF VICTORIA BRIFO AS DIRECTOR.
2021 Proxy Statement 74
CORPORATE GOVERNANCE
Corporate Governance |
Board Nominees.Under its charter, our nominating and corporate governance committee is responsible for recommending to the Board candidates to stand for election to the Board at the Company’sCompany's annual general meeting of shareholders and for recommending candidates to fill vacancies on the Board that may occur between annual general meetings. It is the policy of the Board that directors should possess the highest personal and professional ethics, integrity and values. Board members are expected to become and remain informed about the Company, its business and its industry and rigorously prepare for, attend and participate in all Board and applicable committee meetings. The committee evaluates each individual in the context of the Board as a whole, with the objective of recommending a group that can best perpetuate the success of our business and represent shareholders’shareholders' interests through the exercise of sound judgment using its diversity of experience. In addition, the Board considers, in light of our business and Board composition, each director nominee’snominee's experience, qualifications, attributes and skills that are identified in the biographical information contained under “Proposal 1”.Proposal 6 and Proposal 7.
The nominating and corporate governance committee considers properly submitted recommendations for candidates to the Board from shareholders. Any shareholder may submit in writing nominations of persons for consideration for each shareholder meeting at which directors are to be elected by not later than the 90th calendar day nor earlier than the 120th calendar day before the date of the annual general meeting. Any shareholder recommendations for consideration by the Board should include the candidate’scandidate's name, biographical information, information regarding any relationships between the candidate and the shareholder within the last three years, a statement of recommendation of the candidate from the shareholder, a description of our shares beneficially owned by the shareholder, a description of all arrangements between the candidate and the recommending shareholder and any other person pursuant to which the candidate is being recommended, a written indication of the candidate’scandidate's willingness to serve on the Board, of Directors, any other information required to be provided under securities laws and regulations, and a written indication to provide such other information as the Board may reasonably request. Recommendations should be sent to Angelo N. Chaclas, Corporate Secretary, Trinseo S.A., 1000 Chesterbrook Boulevard, Suite 300, Berwyn, PA 19312. The Board evaluates candidates for the position of director recommended by shareholders or others in the same manner as candidates from other sources. The Board will determine whether to interview any candidates and may seek additional information about candidates from third-party sources. As part of its ongoing succession planning, the Company seeks to identify potential Board nominees on behalf of the Board that meet the Board’sBoard's requirements with respect to diversity, experience, skill, and qualifications.
Board IndependenceIndependence.. Our Corporate Governance Guidelines provide that our Board shall consist of such number of directors who are independent as is required and determined in accordance with applicable laws and regulations and requirements of the New York Stock Exchange ("NYSE").NYSE. The Board evaluates any relationships of each director and nominee with Trinseo and makes an affirmative determination whether or not such director or nominee is independent. Under our Corporate Governance Guidelines, an “independent”"independent" director is one who meets the qualification requirements for being an independent director under applicable laws and the corporate governance listing standards of the NYSE. Our Board reviews any transactions and relationships between each director or any member of his or her immediate family and Trinseo. The purpose of this review is to determine whether there were any such relationships or transactions and, if so, whether they were inconsistent with a determination that the director was independent. The Company maintains a related party transactions policy and conflict of interest policy, as discussed below under "Related Party Transactions." As a result of thisits review, our Board has affirmatively determined that all of our current directors and nominees, except for Messrs.our CEO and President, Frank Bozich, and Pappas, are independent under the governance and listing standards of the NYSE.
Diversity and Board ExpertiseExpertise.. While we do not have a formal policy with respect to diversity, we We believe that diversity considerations are an important element, among many, when identifying director nominees who will best serve the needs of the Company and the interests of our shareholders. We believeThese diversity considerations enable us to provide sound and prudent guidance by developing a Board with a diverse range of talents, ages, skills, character, expertise, professional experiences, and backgrounds.
2020 Proxy StatementRisk Oversight. 20
CORPORATE GOVERNANCE
Risk Oversight. Risk is inherent in every material business activity that we undertake. Our business exposes us to strategic, credit, market, compliance, operational and reputational risks. To support our corporate goals and objectives, risk appetite, and business and risk strategies, we maintain a governance structure that delineates the responsibilities for risk management activities, and the governance and oversight of those activities, between management and our Board. The Board is committed to strong, independent oversight of management and risk through a governance structure that includes other Board committees. Under our structure, it is management’smanagement's responsibility to manage risk and bring to the Board’sBoard's attention risks that are material to Trinseo. The Board has oversight responsibility for the systems established to report and monitor the most significant risks applicable to Trinseo. The Board administers its risk oversight role directly and through its committee structure and the committees’committees' regular reports to the Board at Board
75 2021 Proxy Statement
CORPORATE GOVERNANCE
meetings. The Board divides its risk oversight responsibilities between itself and its committees by having each review or assess key issues or areas of responsibility as follows:
| | |
Board of Directors | • Strategic, financial, and execution risks and exposures associated with our annual and multi-year business plans • Acquisitions and divestures • Capital expenditure and budget planning • Major litigation, investigations, and other matters that present material risk to our operations, plans, prospects, or reputation • Review of enterprise risk management including cybersecurity and information security risk oversight | |
Audit Committee | • Risks associated with financial accounting matters, including financial reporting, accounting, disclosure, and internal controls over financial reporting • Supervision and selection of our external and internal auditors • Our ethics and compliance programs | |
Compensation Committee | • Risks related to the design of our executive compensation programs, plans, and arrangements • Senior management succession planning | |
Nominating and Corporate Governance Committee | • Risks related to our governance structures and processes • Director succession planning | |
Environmental, Health, Safety, Sustainability and Public Policy Committee | • Our environmental, health and safety risk management programs • The alignment of our environmental, health, safety, sustainability, social and public policy program with the | |
| | |
Board Leadership Structure. Under our Corporate Governance Guidelines, our Board may select a Chair of the Board of Directors at any time, who may also be an executive officer of the Company. The Board has chosen to separate the roles of Board Chair and Chief Executive Officer, which the Board believes is currently in the best interest of Trinseo and its shareholders. This structure permits our Chief Executive Officer to devote his attention to leading Trinseo and to executing on our business strategy.
Mr. Zide,Ms. Johnson is our current non-executive ChairmanChair of the Board and has served as a director since 2010. In April 2020, Mr. Zide notified the Board of his decision, if reelected at the Annual Meeting, to retire from the Board and not serve past the Company’s 2021 annual general meeting. Mr. Zide also notified the Board that he intends to immediately step down as Chairman following the Annual Meeting. The nominating and corporate governance committee has recommended that the Board appoint K’Lynne Johnson to serve as Board Chairperson upon Mr. Zide’s retirement from that position. The committee believes2017. Ms. Johnson would bring a wealth of critical skillsbrings significant experience as Chairperson,Chair, including, but not limited to: (i) entrepreneurial and senior public company experience; (ii) expertise in environmental, social and governance issues; and (iii) strategic transformation experience. Ms. Johnson has served on the Board since 2017 and has significant experience in the specialty chemical industry and as a public company director. As described above, the Board has determined that Ms. Johnson meets the definition of an independent director under NYSE listing standards. Furthermore, Ms. Johnson does not serve with any other directors on any other public or private boards and has no prior professional relationship with Mr. Bozich. Following the AnnualGeneral Meeting, the Board will meet to elect a new Chairperson and adjust committee assignments as necessary. Mr. Zide will provide valuable continuity during this anticipated transition in Board leadership.
2020 Proxy Statement 21
CORPORATE GOVERNANCE
Board Attendance. We expect our Board members to prepare for, attend and participate in all Board and applicable committee meetings. Our Board held sevennine meetings in 2019.2020. The audit, compensation, and nominating and corporate governance committees held nine, six and five meetings in 2019,2020, respectively. No Board member attended less than 75% of our Board and committee meetings, as applicable, in 2019.2020.
Due to the travel restrictions and stay-at-home orders in the U.S., Luxembourg and elsewhere during the COVID-19 pandemic, our full Board has not traveled to Luxembourg to attend meetings in person. Like many companies, we continue to hold board meetings via video conference and intend to do so until travel restrictions are lifted, and health and safety concerns have been alleviated.
We do not have a policy for the attendance of our directors at our annual general meeting of shareholders. FiveIn 2020 four directors and no shareholders attended our 2019 annual general meeting, which was held via teleconference pursuant to guidance from the Grand Duchy of shareholders, and no shareholders attended.Luxembourg. Under Luxembourg law, we are required to receive notice by the meeting’smeeting's record date of a shareholder’sshareholder's intention to attend the annual general meeting of shareholders. In 2020 we allowed eligible shareholders in person. Notwithstandingto attend the exceptional circumstances we face this year with regard to the outbreak of COVID-19 and its potential impactteleconference by registering on our Annualvoting website. This year's General Meeting our intention iswill once again be held via teleconference, using the same registration method for shareholders who wish to continue hold our Annual Meeting and allattend. We fully intend to resume holding future annual general meetings of shareholders in person, in Luxembourg.once it is possible for all participants to attend safely.
Executive SessionsSessions.. Our Corporate Governance Guidelines provide that the non-management directors of the Board meet in executive session at least once during each regularly scheduled Board meeting to review matters concerning the relationship of the Board with the management directors and other members of senior management and such other matters as it deems appropriate. Additionally, the Board is required to have least one executive session annually of its independent directors. Mr. ZideMs. Johnson acts as the chair of these executive sessions.
Board Annual Performance Reviews. Pursuant to our Corporate Governance Guidelines the Board annually conducts a self-evaluation of the Board as a whole. In accordance with the written charters of our audit, compensation and nominating and
2021 Proxy Statement 76
CORPORATE GOVERNANCE
corporate governance committees, we also evaluate each committee’scommittee's performance on an annual basis and report to the Board the findings.
Code of Business Conduct. We have adopted a written Code of Business Conduct applicable to all directors, officers and employees and a written Code of Ethics for Senior Financial Employees, applicable to our Chief Executive Officer, Chief Financial Officer, Treasurer, Principal Accounting Officer, Controller, and all employees performing similar functions. These policies are designed to maintain the integrity of our business and financial reporting. These codes cover, among other things, professional conduct, conflicts of interest, accurate recordkeeping and reporting, public communications and the protection of confidential information, as well as adherence to laws and regulations applicable to the conduct of our business. Copies of these codes can be found under the “Corporate Governance”"Corporate Governance" tab on the Investor Relations section of our website, www.investor.trinseo.com by selecting the “Ethics"Ethics and Compliance”Compliance" link and then “supporting"supporting policies.”"
Corporate Governance Guidelines. We have adopted Corporate Governance Guidelines that outline the Board’sBoard's governance policies and practices. The current version of our Corporate Governance Guidelines can be found under the “Corporate Governance”"Corporate Governance" tab on the Investor Relations section of our website, www.investor.trinseo.comby selecting the “Ethics"Ethics and Compliance”Compliance" link and then “supporting"supporting policies.”"
Communications with Directors. Shareholders and other interested parties may communicate directly with the Board, the non-management directors or the independent directors as a group, or specified individual directors by writing to such individual or group c/o Corporate Secretary, Trinseo S.A., 1000 Chesterbrook Boulevard, Suite 300, Berwyn, PA 19312. The Corporate Secretary will forward such communications to the relevant group or individual at or prior to the next meeting of the Board. The Board has instructed our Corporate Secretary to review the correspondence prior to forwarding it, and in his discretion, not to forward certain items if he deems them to be of a commercial or frivolous nature or otherwise inappropriate for the Board’sBoard's consideration. In these cases, he may forward some of the correspondence elsewhere in the Company for review and possible response.
Luxembourg Corporate Governance.As a Luxembourg company, we are subject to laws that can significantly restrict our Board’sBoard's ability to grant certain rights to shareholders under our articles of association.Articles. For example, Luxembourg law:
202077 2021 Proxy Statement 22
BOARD STRUCTURE AND COMMITTEE COMPOSITION
We have a standing audit committee, compensation and talent development committee and a nominating and corporate governance committee with the composition and responsibilities described below. Each committee operates under a charter that has been approved by our Board. A copy of each charter can be found by clicking on “Corporate Governance”"Corporate Governance" and then “Committee Composition”"Committee Composition" in the Investor Relations section of our website, www.investor.trinseo.com. The members of each committee are appointed by the Board and each member serves until his or her successor is elected and qualified, unless he or she is earlier removed or resigns. In addition, from time to time, special committees may be established under the direction of the Board when necessary to address specific issues.
The table below provides information about the membership of our standing audit, compensation and talent development, nominating and corporate governance and our and environmental, health, safety, sustainability and public policy committees during fiscal 2019:2020:
|
|
| ||||||
Name | Audit | Compensation and Talent Development | Nominating and Corporate Governance | Environmental, Health, Safety, Sustainability and Public Policy | ||||
|
| Chair | X | |||||
| X |
| | X | ||||
Frank Bozich | Chair | |||||||
Jeffrey J. Cote § |
| X | X | | | |||
Pierre-Marie De Leener |
| X | X | |||||
|
|
| X | | | |||
Matthew Farrell § | X | X | ||||||
Sandra Beach Lin |
|
| X | X | | |||
Philip R. Martens |
|
| X | Chair* | ||||
Donald T. Misheff § |
| X |
| | X | | ||
| Chair* |
| X | |||||
| | | |
| ||||
|
| | |
| ||||
|
|
| |
* Ms. Johnson was appointed as chair of the compensation committee in February 2019, replacing Mr. Zide.
**
Audit Committee
The purpose of the audit committee is set forth in the audit committee charter. The audit committee’scommittee's primary duties and responsibilities are to:
A copy of the charter, which satisfies the applicable standards of the Securities and Exchange Commission (the “SEC”)SEC and the NYSE is available on our website. The audit committee currently consists of Joseph Alvarado, Jeffrey J. Cote, Pierre-Marie De Leener, Jeanmarie Desmond, Donald T. Misheff and Mark Tomkins. Our Board has determined that Ms. Desmond and each of Messrs. Alvarado, Cote, De Leener, Farrell, Misheff and Tomkins are independent directors pursuant to Rule 10A‑3(b)10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act"), and Section 303A.02 of the New York Stock Exchange Listed Company Manual. EachMs. Desmond and each of Messrs. Cote, Farrell, Misheff
2020 Proxy Statement 23
BOARD STRUCTURE AND COMMITTEE COMPOSITION
and Tomkins is also an “audit"audit committee financial expert”expert" within the meaning of Item 407(d)(5) of Regulation S‑K.S-K. Mr. CoteTomkins also serves as chair of the audit committee.
2021 Proxy Statement 78
BOARD STRUCTURE AND COMMITTEE COMPOSITION
Compensation & Talent Development Committee
The purpose of the compensation and talent development committee (the "compensation committee") is to assist the Board in fulfilling its responsibilities relating to oversight of the compensation of our directors, executive officers and other employees and the administration of our benefits and equity-based compensation programs. The compensation committee reviews and recommends to our Board compensation plans, policies and programs and approves specific compensation levels for all executive officers. The compensation committee currently consists of Jeffrey J. Cote, K’LynneJeanmarie Desmond, Matthew Farrell, K'Lynne Johnson, Sandra Beach Lin and Philip R. Martens and Stephen M. Zide.Martens. Ms. Johnson serves as chair of the compensation committee. A copy of its charter, which satisfies the applicable standards of the SEC and the NYSE, is available on our website. Pursuant to its charter, the compensation committee may delegate to subcommittees of the compensation committee any of the responsibilities of the full committee.
Nominating and Corporate Governance Committee
The purpose of the nominating and corporate governance committee is to (i) identify, screen and review individuals qualified to serve as directors (consistent with criteria approved by our Board) and recommend to our Board candidates for nomination for election at the annual meeting of shareholders or to fill Board vacancies or newly created directorships; (ii) develop and recommend to our Board and oversee the implementation of our corporate governance guidelines; (iii) oversee evaluations of our Board and (iv) recommend to our Board candidates for appointment to board committees. The nominating and corporate governance committee currently consists of K’LynneMatthew Farrell, K'Lynne Johnson, Sandra Beach Lin, Philip R. Martens, Donald T. Misheff and Henri Steinmetz and Stephen M. Zide.Steinmetz. Mr. MisheffMartens serves as chair of the nominating and corporate governance committee. Our Board has adopted a written charter under which the nominating and corporate governance committee operates, which is available on our website.
Environmental, Health, Safety, Sustainability and Public Policy Committee
The Environmental, Health, Safety, Sustainability and Public Policy Committee (the “EHS"EHSS&PP Committee“Committee") was established in 2014, for the purpose of assisting the Board in fulfilling its oversight responsibilities by assessing the effectiveness of programs and initiatives that support the environment, health and safety, sustainability, corporate social responsibility and climate change (“Sustainability”("Sustainability") policies and programs of the Company. Its duties and responsibilities are to:
The EHSEHSS&PP Committee currently consists of Joseph Alvarado, Frank A. Bozich, Pierre-Marie De Leener, Christopher Pappas, Henri Steinmetz and Mark Tomkins. Mr. Bozich serves as chair of the EHSEHSS&PP Committee. A copy of its charter is available on the Company’sCompany's website.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board of directorsBoard or the compensation committee of any other company that has any executive officers serving as a member of our Board or compensation committee.
202079 2021 Proxy Statement 24
OUR COMPANY’SCOMPANY'S EXECUTIVE OFFICERS
Our Company's Executive Officers |
Our Company’s Executive Officers
Biographical information concerning our President and Chief Executive Officer, Frank A. Bozich, who is a nominee to our Board, is set forth above under Proposal 1.6.
David Stasse, Executive Vice President and Chief Financial Officer. Mr. Stasse, age 49,50, was named Executive Vice President and Chief Financial Officer in July 2019. Mr. Stasse joined the Company in July 2013 as Vice President and Treasurer with responsibility for all treasury matters, including cash management, risk management, relationships with rating agencies and commercial banks, and financing matters. During his tenure he added responsibility for Investor Relations and Corporate Finance for the Company. Prior to joining Trinseo, Mr. Stasse was employed by Freescale Semiconductor, Inc., a global semiconductor manufacturer that servesserved the automotive, networking, consumer and industrial markets, where he served as Vice President and Treasurer since July 2008.from 2008 to 2013. Mr. Stasse holds an MBA in Finance from the University of Maryland and a Bachelor of Science degree in Business Logistics from Penn State University.
Angelo N. Chaclas,Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary.Mr. Chaclas, age 56,57, has been the Company’sCompany's Chief Legal Officer, Senior Vice President, and Corporate Secretary since January 2015. Mr. Chaclas also became the Chief Compliance Officer in June 2018. In his role, he provides legal support for all capital markets, transactional, compliance, commercial, regulatory, governance, intellectual property and other operational activities of the Company worldwide. Mr. Chaclas joined the Company in 2010 as Associate General Counsel and Chief Intellectual Property Counsel, where he managed the Company’sCompany's global intellectual property portfolio and supported the legal activities of several of the Company’sCompany's commercial businesses. Prior to joining the Company in 2010, Mr. Chaclas was Deputy General Counsel and Chief Counsel for the software division of Pitney Bowes where he led its Intellectual Property, Technology Law and Procurement legal functions. Mr. Chaclas holds a bachelor’sbachelor's degree in Mechanical Engineering from Tufts University and a Juris Doctorate from Pace University.
Alice L. M. Heezen, Senior Vice President, Human Resources. Ms. Heezen, age 49,50, became the Company’sCompany's Senior Vice President, Human Resources in April 2018 after joining the Company in January 2017 as Director of Human Resources for the Europe, Middle East, and Africa region. Prior to joining the Company, she was Head of Human Resources for ADAMA Agricultural Solutions Europe from July 2013 to December 2016. Ms. Heezen has also held senior HR leadership roles at Fiberweb plc, a London listed global specialty industrial and construction materials business from 2010 to 2013, at BG Group, a global oil and gas company from 2005 to 2009, and at REXAM plc, a global consumer packaging company from 2001 to 2005. Ms. Heezen holds a master’smaster's degree in Social and Organizational Psychology from University of Leiden, The Netherlands.
Nicolas Joly, Vice President of Plastics & Feedstocks. Mr. Joly, age 43, was named Vice President of Plastics & Feedstocks in May 2020. Mr. Joly began at Trinseo in 2010 and has most recently served as Trinseo's Global Director of Polystyrene & Feedstocks since 2017, after serving as Trinseo's Integrated Business Services Director for Europe, Middle East, and Africa region since 2015. In 2012, Mr. Joly was named Product Manager for Polycarbonate Compounds and Blends, before moving on to become Global Product Director for Polycarbonate in 2013. He previously worked at The Dow Chemical Company in 2002 where he held a series of sales and marketing roles in Plastics. He began his career at Procter & Gamble in 2001. Mr. Joly holds a Master of Science in Chemical Engineering from CPE Lyon.
Andre Lanning, Vice President of Strategy, Corporate Development & Marketing Communication. Mr. Lanning, age 55, was named Vice President of Strategy, Corporate Development & Marketing Communication in May 2020. Previously, Mr. Lanning served as Global Business Director for Trinseo's Synthetic Rubber Business. Mr. Lanning brings thirty years of chemical industry experience to Trinseo, joining the business from Advanced Refining Technologies (ART), where he served as Managing Director/CEO of ART Hydroprocessing; a joint venture between WR Grace and Chevron, based in the United States. Throughout his career, Lanning has held several senior business leadership roles, including in the Pulp & Paper, Fertilizer, and Refining Catalyst sectors. Prior to his current role, Mr. Lanning served as Global Business Director for Trinseo's Synthetic Rubber Business. Mr. Lanning holds a Master of Science in Chemical Engineering from the University of Twente, The Netherlands, and a Master of Business Administration from TSM Business School.
Ryan Leib, Vice President and TreTreasurer.asurer. Mr. Leib, age 42,43, joined Trinseo in August of 2013 as Assistant Controller and was promoted to Corporate Controller in 2014. In 2017, he was promoted to Vice President, Global Controller, and Principal Accounting Officer and was named Vice President and Treasurer in July 2019. Prior to joining Trinseo, Mr. Leib was a senior manager with PricewaterhouseCoopers LLP and spent two years in their national office providing client companies with technical guidance on complex accounting issues. Mr. Leib holds a bachelor’sbachelor's degree in accounting from St. Joseph’sJoseph's University and is a Certified Public Accountant.
James Ni, Vice President, Latex Binders. Mr. Ni, age 51, was named Vice President, Latex Binders in September 2020 and had previously served as Asia Pacific (APAC) Business Director, Latex Binders since 2017. Mr. Ni remains Managing Director, APAC, a position in which he provides leadership across the region in driving critical priorities and growth projects. Mr. Ni joined Trinseo as Commercial Director of Trinseo Latex in 2010, and was promoted to Business Director, APAC, in 2012. Prior to joining Trinseo, he worked as Sales Director of Emulsion Polymers at Dow Chemical (China) Co., Ltd. since 1995. During his 15-year tenure there, Mr. Ni was promoted several times and acquired extensive knowledge and experience in resin, polymers and latex business both in China and
2021 Proxy Statement 80
OUR COMPANY'S EXECUTIVE OFFICERS
in the US. Mr. Ni holds a Master of Business Administration (MBA) from Central Michigan University, Graduate School of Business, and a Bachelor of Science in Mechanical Engineering from Shanghai Jiao Tong University.
Francesca Reverberi, Vice President, Engineered Materials & Synthetic Rubber. Ms. Reverberi, age 49, was named Vice President, Engineered Materials & Synthetic Rubber in May 2020. Ms. Reverberi has previously served as Global Business Director of Performance Plastics at Trinseo, with responsibility for the Automotive, Consumer Electronics, Medical, Sheet & Extrusion, and Building & Construction plastics markets. Ms. Reverberi's tenure at Trinseo also includes the position of Business Director of Basic Plastics and prior to that, Global Business Director for Synthetic Rubber. Ms. Reverberi joined Trinseo following the Company's carve-out from The Dow Chemical Company in June 2011. During her time at Dow, Ms. Reverberi served as Product Director for Emulsion Polymers, Europe and the Americas, as well as Commercial Manager in Dow Hydrocarbons Aromatics and Derivatives in Europe, including responsibilities for the C4's business and held several positions in other specialty businesses such as Water Solutions and Chelants. Ms. Reverberi holds a Bachelor and Master of Science in Chemical Engineering from Politecnico di Milano and a Master of Business Administration from SDA Bocconi.
Rainer ScheweSenior , Vice President–President—Supply Chain Services. Schewe, age 57, joined the Company in April 2020 as Senior Vice President–President—Supply Chain Services. Prior to joining Trinseo, Mr. Schewe served as Executive Vice President and Chief Supply Chain Officer for A. Schulman, Inc. (now LyondellBasell Industries). Prior to this role, he served as Vice President and Business Unit Director for Schulman’sSchulman's Custom Performance Colors business in EMEA. Mr. Schewe holds a degree as a State-Certified Engineer in Chemical Engineering from Fresenius Akademie Wiesbaden in Germany, and an Apprenticeship as a Chemical Laboratory Technician from RWTH Aachen in Germany.
2020 Proxy Statement 25
OUR COMPANY’S EXECUTIVE OFFICERS
Bernard M. Skeete, Vice President, Chief Accounting Officer and Global ControllerController.. Mr. Skeete, age 47, joined Trinseo in October 2016 as Chief Audit Executive with responsibility for the Company’sCompany's internal audit and enterprise risk management functions. Previously, Mr. Skeete served as Executive Director of Financial Operations at Comcast Cable from April 2015 to October 2016. Prior to joining Comcast, Mr. Skeete held various positions in corporate audit, controllers and financial planning and analysis with the Campbell Soup Company, with his last position being a Senior Manager of Financial Planning & Analysis for Supply Chain. Mr. Skeete began his career at PricewaterhouseCoopers, where he practiced for over eleven years, most recently as Senior Manager of Assurance & Business Advisory Services. Mr. Skeete holds a bachelor’sbachelor's degree in accounting from St. Joseph’sJoseph's University and is a Certified Public Accountant and Chartered Global Management Accountant.
Timothy J. Thomas, Vice President, Manufacturing and Operations Excellence. Mr. Thomas, age 53,54, has been with the Company since its inception and has previously held positions of increasing responsibility related to the Company’sCompany's manufacturing operations, including Global Business Manufacturing Leader—Latex and Operations Director—Performance Materials. In October 2019, Mr. Thomas was named Vice President—Manufacturing and Operational Excellence. Prior to joining Trinseo, Mr. Thomas served in various roles at The Dow Chemical Company, most recently as Business Manufacturing Leaserleader for Latex Binders. Mr. Thomas holds a bachelor’sbachelor's degree in Chemical Engineering from Youngstown State University.
Diversity of Executive Officers
Similar to our Board diversity, the Company believes a broad range of backgrounds and personal experience help the Company operate, strategize and solve problems more effectively. We believe our executive officers reflect this diversity of viewpoints and backgrounds. Two of our executive officers are women, two self-identify as a member of an underrepresented minority group, and five are non-U.S. citizens.
2020 Proxy Statement 26
Charts do not include our CEO and President, Frank Bozich. Mr. Bozich is reflected in the Board diversity discussion.
81 2021 Proxy Statement
TRANSACTIONS WITH RELATED PERSONS
Transactions with Related Persons |
Our Conflict of Interest Policy is designed to help our directors, executive officers, and employees address situations that may involve a conflict of interest, which may include related party transactions. These include situations in which an individual’sindividual's personal interests are in conflict with the interests of the Company; situations in which an individual or family member receives personal benefits as a result of his or her position with the Company; and situations that may otherwise cast doubt on his or her ability to act objectively with or on behalf of the Company. The Company annually surveys our executive officers and directors regarding potential conflicts of interest. If such conflicts are reported or found, the Legal Department and/or our Chief Compliance Officer will seek to mitigate or eliminate such potential or actual conflicts of interest.
Our audit committee charter requires that the audit committee review and approve all related party transactions. The Company also has a written Related Party Transactions Policy. When related party transactions between us and our officers, directors and principal shareholders and their affiliates, are approved by the audit committee, it does so with the understanding that the terms of such transaction are no less favorable to us than those that we could obtain from unaffiliated third parties.
20202021 Proxy Statement 27 82
STOCK OWNERSHIP INFORMATION
The following table sets forth information regarding the beneficial ownership of our ordinary shares, nominal value $0.01, as of April 1, 2020March 15, 2021 by:
As of April 1, 2020,March 15, 2021, we had 38,237,67838,700,293 ordinary shares outstanding (excluding treasury shares), all of which were held by public investors (including certain of our directors and executive officers), the details of which are reflected in the table below.
Information with respect to beneficial ownership has been furnished by each director, director nominee, executive officer or beneficial owner of more than 5% of our ordinary shares. We have determined beneficial ownership in accordance with SEC rules. These rules generally attribute beneficial ownership of shares to persons who possess sole or shared voting or investment power with respect to such shares. The information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, the number of ordinary shares deemed outstanding includes shares issuable upon exercise of options held by the respective person or group which may be exercised within 60 days after April 1, 2020.March 15, 2021. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person or entity, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person or entity.
The inclusion in the following table does not constitute an admission that the named shareholder is a direct or indirect beneficial owner. Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each shareholder named in the following table possesses sole voting and investment power over the shares listed, except for those jointly owned with that person’sperson's spouse.
2020 Proxy Statement 28
STOCK OWNERSHIP INFORMATION
Name | | Total Number of Shares Beneficially Owned | Percent of Class (1) | | Of Number of Shares Beneficially Owned, Shares which May be Acquired within 60 Days (2) | ||||
M&G Investment Management Limited (3) | 7,671,044 | 19.9% | — | ||||||
BlackRock, Inc. (4) | | 6,493,523 | 16.8% | | — | ||||
AllianceBernstein (5) | 2,453,863 | 6.3% | — | ||||||
Frank A. Bozich | | 104,540 | * | | 77,540 | ||||
David Stasse | 33,066 | * | 8,300 | ||||||
Angelo N. Chaclas | | 50,726 | * | | 35,272 | ||||
Alice L. M. Heezen | 18,621 | * | 16,883 | ||||||
Andre Lanning | | 2,014 | * | | 2,014 | ||||
Timothy M. Stedman | 44,237 | * | 33,432 | ||||||
Joseph Alvarado | | 11,351 | * | | 4,955 | ||||
Jeffrey J. Cote | 15,787 | * | 4,955 | ||||||
Pierre-Marie De Leener | | 18,075 | * | | 4,955 | ||||
Jeanmarie Desmond | 0 | * | — | ||||||
Matthew Farrell | | 12,000 | * | | — | ||||
K'Lynne Johnson | 11,381 | * | 4,955 | ||||||
Sandra Beach Lin | | 4,955 | * | | 4,955 | ||||
Philip R. Martens | 12,870 | * | 4,955 | ||||||
Donald T. Misheff | | 16,195 | * | | 4,955 | ||||
Henri Steinmetz | 26,015 | * | 4,955 | ||||||
Mark Tomkins | | 7,755 | * | | 4,955 | ||||
Victoria Brifo | 0 | * | — | ||||||
All Directors, Nominees and Executive Officers as a Group (24 persons) (6) | | 399,349 | 1.0% | | 229,778 | ||||
| | | | | | | | | |
Name | Total Number of Shares Beneficially Owned | Percent of Class (1) | Of Number of Shares Beneficially Owned, Shares which May be Acquired within 60 Days (2) |
M&G Investment Management Limited (3) | 7,839,044 | 20.5% | - |
BlackRock, Inc. (4) | 6,098,644 | 15.9% | - |
LSV Asset Management (5) | 2,339,025 | 6.1% | - |
AllianceBernstein (6) | 2,056,279 | 5.4% | - |
Frank A. Bozich | 44,813 | * | 17,813 |
David Stasse | 33,230 | * | 10,209 |
Timothy M. Stedman | 44,237 | * | 33,432 |
Angelo N. Chaclas | 47,797 | * | 33,923 |
Alice L. M. Heezen | 7,156 | * | 6,440 |
Joseph Alvarado | 3,396 | * | - |
Jeffrey J. Cote | 12,833 | * | - |
Pierre-Marie De Leener | 10,694 | * | - |
K’Lynne Johnson | 3,427 | * | - |
Sandra Beach Lin | - | * | - |
Philip R. Martens | 4,916 | * | - |
Donald T. Misheff | 8,241 | * | - |
Christopher D. Pappas | 533,517 | 1.4% | 387,584 |
Mark Tomkins | 2,800 | * | - |
Henri Steinmetz | 18,973 | * | - |
Stephen M. Zide | 28,327 | * | - |
All Directors, Nominees and Executive Officers as a Group (21 persons) (7) | 841,459 | 2.2% | 509,983 |
March 15, 2021.
83 2021 Proxy Statement
STOCK OWNERSHIP INFORMATION
(6)On February 18, 2020, AllianceBernstein L.P. filed a Schedule 13G with the SEC reporting beneficial ownership of 2,056,279 of our ordinary shares as of December 31, 2019, with sole voting power over 1,729,6532,075,040 shares, sole dispositive power over 2,055,0582,452,899 shares and shared dispositive power over 1,221964 shares. The address of AllianceBernstein L.P. is 1345 Avenue of the Americas, New York NY 10105.
(7)
20202021 Proxy Statement 29 84
SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS /
DELINQUENT SECTION 16(A) REPORTS
The following table sets forth certain information as of December 31, 20192020 with respect to compensation plans under which ordinary shares of the Company may be issued.
| Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Plan Category | (a) | (b) | (c) |
Equity compensation plans approved by securityholders | 1,548,297 (1) | 48.08 (2) | 2,588,851 |
Equity compensation plans not approved by securityholders | — | — | — |
Total | 1,548,297 | 48.08 | 2,588,851 |
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, among others, to file with the SEC an initial report of ownership of our stock on a Form 3 and reports of changes in ownership on a Form 4 or a Form 5. Persons subject to Section 16 are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. Under SEC rules, certain forms of indirect ownership and ownership of company stock by certain family members are covered by these reporting requirements. When requested, we assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes and will file these reports on their behalf. Based solely on a review of the copies of such forms in our possession, and on written representations from our current directors and executive officers, we believe that all of our executive officers and directors filed the required reports on a timely basis under Section 16(a) during Plan Category Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a) Weighted-average
exercise price of
outstanding options,
warrants and rights
(b) Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c) Equity compensation plans approved by securityholders 2,052,389 (1) 41.19 (2) 1,918,740 Equity compensation plans not approved by securityholders — — — Total 2,052,389 41.19 1,918,740 314,328496,910 restricted stock units, 136,257155,730 performance award stock units, and 1,097,7121,399,749 options to purchase shares that have been granted under the approved Trinseo S.A. Amended & Restated 2014 Omnibus Incentive Plan and remain outstanding as of December 31, 2019.2020. The restricted stock units and performance stock units will result in the issuance of shares immediately upon vesting, with the vesting of performance stock units subject to the Company's attainment of pre-established performance goals. The options to purchase shares will result in the issuance of shares upon exercise.Company’sCompany's performance award stock units and restricted stock units do not have associated exercise prices.2019, except that Christopher Pappas filed one late Form 4 reporting two transactions on an untimely basis, a Form 4 amendment to correct the number of shares reported as directly held and a Form 4 amendment to correct the amount of an RSU award.2020.
202085 2021 Proxy Statement 30
PROPOSAL 28
Proposal 2–Advisory Vote on Named Executive Officer Compensation
The Compensation Discussion and Analysis of this Proxy Statement, which immediately follows this proposal, describes our executive compensation program and the compensation of our named executive officers for fiscal 2020. The Board is asking shareholders to cast a non-binding, advisory vote indicating their approval of that compensation by voting FOR the following resolution:
|
"RESOLVED, that the shareholders of Trinseo S.A. APPROVE, on an advisory basis, the compensation paid to its 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."
As described in detail in the Compensation Discussion and Analysis, we have a total compensation approach focused on performance-based incentive compensation that seeks to:
We believe Trinseo's executive compensation program employs positive governance practices and offer substantial levels of at-risk compensation to meaningfully align shareholder interests with those of our named executive officers.
The Board is asking shareholders to support this proposal, as it does annually. Although the vote we are asking you to cast is non-binding, the compensation committee and the Board value the views of our shareholders as expressed in their votes. The Board and the compensation committee will consider the outcome of the vote when determining future compensation arrangements for our named executive officers.
2020 Proxy Statement 31THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION.
2021 Proxy Statement 86
COMPENSATION DISCUSSION & ANALYSIS
This compensation discussion and analysis (CD&A) section is intended to provide information about our 20192020 compensation objectives and programs for our named executive officers. Our 20192020 named executive officers are listed below (together, our “NEOs”"NEOs"), which list includes threeone former executives, Messrs. Pappas, Niziolek and Yarkadas.executive, Timothy Stedman.
|
| |
Name | Position | |
Frank A. Bozich | President and Chief Executive Officer | |
|
| |
David Stasse | Executive Vice President and Chief Financial Officer | |
|
| |
|
| |
Angelo N. Chaclas | Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary | |
Alice L. M. Heezen | Senior Vice President, Human Resources | |
| Vice President of Strategy, Corporate Development & Marketing Communication | |
Timothy M. Stedman (1) | Former Senior Vice President, | |
| | |
This CD&A is divided into the following sections:Mr. Pappas served as our President and Chief Executive Officer from 2010 until March 2019, at which time Mr. Bozich assumed the role of President and Chief Executive Officer. Mr. Pappas served as Special Advisor to the President and Chief Executive Officer until his retirement from the Company in May 2019.(2)Mr. Niziolek served as our Executive Vice President and Chief Financial Officer from 2016 until his retirement effective July 1, 2019, at which time Mr. Stasse assumed this role.(3)Mr. Stedman’s former title was Senior Vice President and Business President until October 7, 2019, when he assumed the role as Senior Vice President, Strategy and Corporate Development. namedappointed as Special Advisor to the CEO and will leave the company to pursue other opportunities on October 31, 2020.(4)Mr. Yarkadas stepped down from his position as Senior Vice President and Business President effective October 2, 2019, to pursue other opportunities. Mr. Yarkadas served asExecutive Leadership, in connection with a non-executive employeereorganization of the Company's management team, and left the Company until Marchon August 16, 2020.
Executive Summary |
Executive Summary
Business Performance
Our 20192020 results reflected lower than anticipated profitabilitythe global slowdown in economic growth and uncertainty due to slower global economic growth, economic uncertainty and challenging market dynamics. Amidthe COVID-19 pandemic. Despite these conditions, we took appropriate stepswere able to improve our cost structure and optimize working capital, and achieved another year oflimit costs, generate strong cash flow generation. This allowed us to returnand achieve strong results while keeping our employees safe. We again returned significant cash to our shareholders via dividends and share repurchases. Highlights for the year ended December 31, 2019:2020:
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COMPENSATION DISCUSSION & ANALYSIS
• We launched a corporate restructuring program associated with our shift to a global functional structure and business excellence initiatives to drive greater focus on business process optimization and efficiency, and to generate cost savings.
• We announced plans to build a TPE pilot facility in Taiwan, with operations anticipated to begin in 2020, to serve customers in the automotive, consumer electronics, footwear, and medical markets.
• We acquired latex binders production facilities and related infrastructure in Rheinmünster, Germany from Dow, Inc., providing us with manufacturing assets supporting our strategy to grow our Latex Binders business in applications serving the coatings, adhesives, specialty paper, and sealants markets.
For further discussion of our use of non-GAAP measures and a reconciliation to the comparable GAAP measure, see “"Item 7—Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Performance Measures”" in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
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COMPENSATION DISCUSSION & ANALYSIS
Shareholder Approval of Executive Compensation
In 20192020 the compensation of our named executive officers was approved by shareholders with approximately 94% of votes cast in favor. Based on this shareholder support of our executive compensation programs, we and the compensation committee believe our compensation program and practices are well aligned with our shareholders’shareholders' wishes. Our program includes changes we made following our 2018 annual general meeting in which our executive compensation proposal received less than a majority of votes cast. Our Board members, investor relations and legal function engagedperiodically engage with shareholders regarding the structure of our executive compensation programs and corporate governance and we believe our improvement inthe shareholder approvalsupport of our say-on-pay proposalproposals since 2019 indicates our practices accurately represent the desires of our shareholders. We consider the insights we received fromobtained through shareholder engagement and the results of our annual advisory say-on-pay proposal to be a critical componentcomponents to the compensation committee’scommittee's design and oversight of the Company’sCompany's executive compensation programs.
During fiscal 2019,2020, the compensation committee of the Board reviewed our executive compensation peer group and worked to further alignconcluded our peer group adequately aligned our executive officers' pay opportunities for our executive officers with our compensation philosophy. The compensation committee also approved performance metrics for incentive pay that, consistent with prior years, were designed to correlate with the way we evaluate our operational results and reflect measures of performance that drive returns for our stockholders. We will continue to evaluate opportunities to enhance our compensation programs to attract top talent and provide further alignment with the interests of our shareholders.
Compensation Philosophy and Design
Overview
Our executive compensation policies and programs are designed to attract, retain and motivate key executives through competitive and cost-effective programs that reinforce executive accountability and reward the achievement of business and individual results. Executive compensation consists of four main elements: (1) base salary, (2) annual cash incentive awards, (3) long-term incentive compensation, and (4) retirement savings and benefit programs. The relative weighting of each element is aligned with our philosophy of linking pay to performance. A substantial percentage of our executives’executives' compensation is provided in the form of performance-based variable compensation with a greater emphasis on variable components for our senior executives. Annual cash awards are directly linked to corporate results and short-term performance measures, including financial and non-financial goals. Our equity incentive awards align our executives’executives' interests with those of our shareholders and our long-term business objectives. Executive retirement and benefits programs are generally consistent with the broader employee programs offered in the country where an executive primarily provides services to the Company. We provide limited perquisites to our executives and senior management, and such perquisites are only provided to the extent that they reflect particular business needs and objectives.
We strive to provide our NEOs with a compensation package that is market competitive within our industry and recognizes and rewards superior individual and companyCompany performance.
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COMPENSATION DISCUSSION & ANALYSIS
Compensation Mix
The charts below show the 20192020 target mix of compensation between salary and short- and long-term incentive compensation for Mr. Bozich, and for our other NEOs as a group. Long-term incentive compensation remains the largest component of our NEOs’NEOs' compensation in order to incentivize long-term value creation and to provide continued alignment between the interests of our NEOs and shareholders.
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2020 2021 Proxy Statement 34
Maintaining Best Practices Regarding Executive Compensation
Our compensation committee intends to compensate our NEOs in a manner that is consistent with the objectives and design principles outlined above. We have adopted the following compensation practices, which are intended to promote strong corporate governance and alignment with shareholder’sshareholder's interests:
Compensation Committee Practices
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Clawback and Recoupment Policies | We have the right to claw back incentive-based compensation to the extent it was awarded on the achievement of financial results subject to an accounting restatement that should have resulted in the executive receiving a lower amount of compensation had our financial results been properly reported. The Our equity award agreements also provide for the reimbursement of all or part of any annual incentive compensation if there is a breach by the executive of his or her award agreement or any non-competition, non-solicitation, confidentiality or similar covenant or agreement with us or an overpayment of incentive compensation due to inaccurate financial data. | |
Share Ownership | The compensation committee has adopted share ownership Until the ownership requirement is met, the executive must retain as a holding requirement: (i) 50% of the shares issued after vesting and settlement of restricted stock units | |
Mitigate Undue Risk and Risk Assessment | The compensation committee regularly assesses whether our compensation programs and arrangements for our employees encourage excessive risk-taking. We mitigate undue risk in our compensation program by instituting strong governance policies such as capping potential payments, utilizing multiple performance metrics, striking a balance between short- and long-term incentives and adopting share ownership requirements. | |
Compensation at Risk | We grant a high percentage of at-risk compensation to our executive officers. We believe this is essential to creating a culture of pay-for-performance. | |
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Double-Trigger Change-in-Control Provisions | Our executive officers | |
No 280G Gross-Up Provisions | The compensation committee does not permit 280G gross-up provisions in the Company's executive employment agreements and amendments. | |
Anti-Hedging and Pledging Policy | We prohibit our directors, executive officers, and all employees from hedging or pledging the | |
Independent Compensation Consultant | The compensation committee retains and annually reviews the independence of its compensation consultant. | |
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20202021 Proxy Statement 35 90
COMPENSATION DISCUSSION & ANALYSIS
How We Make Compensation Decisions |
Our compensation & talent development committee (the "compensation committee") is responsible for, among other matters: (1) reviewing key executive compensation goals, policies, plans and programs; (2) reviewing the compensation of our executive officers; (3) reviewing and approving employment agreements and other similar arrangements between the Company and our executive officers; and (4) administering our equity-based plans and other incentive compensation plans.
Our Chief Executive Officer and President reviews annually with the compensation committee each NEO’sNEO's performance (other than his own) and recommends to the compensation committee appropriate base salary, annual cash incentive awards and long-term equity incentive awards (to the extent applicable with respect to a particular year) for these NEOs. Based upon the recommendations of our Chief Executive Officer and President, and after considering the objectives of our executive compensation program, as described above, as well as the factors described below under “Use"Use of Benchmarking Comparison Data”Data", the compensation committee approved the annual compensation packages of our executive officers. With respect to our former Chief Executive Officer and President, the compensation committee met in February to review his annual performance and approve his base salary, annual cash incentive awards and grants of long-term equity incentive awards based on the compensation committee’s assessment of his performance. In 2019,2020, the compensation committee also approved Mr. Bozich’sBozich's compensation, including his base salary, annual cash incentive award, long-term equity incentive awards and a one-time cash signing bonus and equity award, upon his appointment as Chief Executive Officer and President in March 2019.awards. See “— "—Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table; Other Narrative Disclosure”Disclosure" for a description of Mr. Bozich’s and our other NEO’seach NEO's employment agreement terms.
In making decisions with respect to any element of a NEO’sNEO's compensation, the compensation committee considered the total compensation that may be awarded to the executive, including salary, annual cash incentive awards and long-term incentive compensation. In addition, in reviewing and approving employment agreements for our NEOs, the compensation committee considered the other benefits to which the officer is entitled by the agreement, including compensation payable upon termination of the executive’sexecutive's employment under a variety of circumstances. Our goal is to award compensation that is competitive to attract and retain highly qualified leaders and that motivates them to drive strong business performance. We believe that our compensation programs align executive and shareholder interests, while allowing compensation to vary based on each executive’sexecutive's individual contributions to the Company and to the Company’sCompany's overall performance.
Use of Independent Compensation Consultant
The compensation committee has retained Willis Towers Watson as its independent compensation consultant. Willis Towers Watson provides the compensation committee with advice on a broad range of executive compensation matters. The scope of their services includes, but is not limited to, the following:
During fiscal 2019,2020, Willis Towers Watson attended all but one of the regularly scheduled meetings of the compensation committee.
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COMPENSATION DISCUSSION & ANALYSIS
In addition to providing the compensation committee with these executive compensation consulting services in 2019,2020 for which it received aggregate fees of $290,000,$208,000, Willis Towers Watson also provided the Company with the following additional services for which it received fees totaling $343,000:$425,000: international actuarial support for pension plans in multiple countries, including global actuarial coordination of results; actuarial support for one of the Company’s domesticCompany's U.S. welfare benefit plans; health and benefit brokerage services,services; and compensation support to management.rewards data surveys. Before Willis Towers Watson undertook any compensation support work for the Company’sCompany's management, the compensation committee was consulted and approved the scope of work.
The compensation committee actively considered the range of the additional services that Willis Towers Watson was already providing to the Company when it made the decision to retain Willis Towers Watson as its independent compensation consultant in 2019.2020. The compensation committee assessed the independence of Willis Towers Watson pursuant to applicable SEC rules and concluded that no conflict of interest exists that would prevent Willis Towers Watson from independently representing the compensation committee.
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Use of Benchmarking Comparison Data
The compensation committee selects a peer group of companies, with assistance from Willis Towers Watson, for use in making compensation decisions with respect to the total mix and amount of compensation. This peer group consists of companies in the chemical and chemical-related industries, as well as companies in the container and packaging and the paper and forest product industries. The compensation committee reviewed various market-based metrics of the peer group that it deemed appropriate, which included enterprise value, revenue, market capitalization, and EBITDA margins, to establish compensation benchmarks.
The compensation committee may annually review the companies included in our peer group and may add or eliminate companies as it determines is appropriate. For 2019,2020, the compensation committee approvedmaintained the removal of A. Schulman, Inc. and Kronos Worldwide, Inc., as it determined that these companies no longer met thesame peer group metrics discussed above.as the prior year. The peer group selected for making fiscal 20192020 compensation decisions consisted of the following 20 companies:
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Ashland Global Holdings Inc. |
| H.B. Fuller Company | Silgan Holdings Inc. | |
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| Kraton Corporation | Stepan Company | |
Cabot Corporation | Methanex Corporation | Tronox Limited | ||
Domtar Corporation | Minerals Technologies Inc. |
| Valvoline Inc. | |
Element Solutions Inc. | NewMarket Corporation |
| Venator Materials PLC | |
Graphic Packaging Holding Company | Olin Corporation |
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| W. R. Grace & Co. | ||
| RPM International Inc. | | ||
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Additionally, the compensation committee reviewed data from Willis Towers Watson to supplement data from the peer group. This data allowed the compensation committee to obtain a broader understanding of market compensation levels. 2020 Compensation Structure & Performance The principal components of our executive compensation program include both short-term and long-term compensation. Short-term compensation consists of an Platform Specialty ProductsPolyOne Corporation2019 Compensation Structure & Performanceexecutive’sexecutive's annual base salary and annual cash incentive award. Long-term compensation may include grants of share-based incentives as determined by the compensation committee. Certain elements of compensation of our NEOs were determined through direct negotiation with the executives at the time of their hiring.
2020 Proxy Statement 37
COMPENSATION DISCUSSION & ANALYSIS
Base Salary
Setting appropriate levels of base pay allows us to attract and retain an executive leadership team that will continue to meet our commitments to customers, sustain profitable growth and create value for our shareholders. The base salaries for our NEOs are determined based on the scope of their responsibilities and our compensation committee members’members' collective knowledge of competitive compensation levels, as well as competitive compensation benchmarking data from Willis Towers Watson based on our peer group and survey data. Base salaries are reviewed annually by the compensation committee and adjusted from time to time to reflect individual responsibilities, performance and experience, as well as market compensation levels.
In 20192020 the compensation committee approved a 2.3%5.7% increase to Mr. Chaclas’Stasse's base salary. There were no increases to base salary approved for Messrs. Pappas, Niziolek, StedmanBozich or Yarkadas.Chaclas, or Ms. Heezen. Under the termsterm of theirhis employment agreements, the Company’s President and Chief Executive Officer,agreement, Mr. Bozich, was entitled to a base salary of $1,000,000 for 2019, the Company’s Executive Vice President and Chief Financial Officer, Mr. Stasse, was entitled to a base salary of $475,000 for 2019, and Ms. Heezen’sLanning's base salary was CHF 380,000458,191.50 for 2019.2020. Mr. Stedman's base salary was increased to CHF 495,000 before his departure from the Company.
Annual Cash Incentive Plan
Our annual cash incentive plan (“("ACI Plan”Plan") is designed to create a pay for performance culture by aligning the compensation program to the achievement of our strategic and business objectives and with shareholder interests. Our business objectives are to: (1) provide a safe working environment; (2) deliver strong recurring profits relative to our industry; (3) effectively manage our working capital; (4) demonstrate effective cost management; and (5) provide EBITDA growth that is stronger than the industry. The actual amount that will be paid in respect of an ACI Plan award is based on a combination of the achievement of Company performance goals as well as individual performance. The performance goals and metrics are reviewed and approved by the compensation committee at the beginning of the year. At the end of the year, the amount paid to each NEO is based on the achievement of the Company performance goals and an assessment of the executive’sexecutive's overall performance.
For 2019,2020, the ACI Plan was designed to align our executives’executives' compensation with the Company’sCompany's business plan and priorities for the year, and reward performance based on the following three components:
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COMPENSATION DISCUSSION & ANALYSIS
We believe that Adjusted EBITDA is a key measure of our financial performance, removing the impacts of our capital structure (such as interest expense), asset base (such as depreciation and amortization) and tax structure as well as other non-recurring items. Therefore, for purposes of the annual cash incentive plan, we define Adjusted EBITDA, which is considered a non-GAAP measure, as net income (loss) from continuing operations before interest expense, net provision for income taxes; depreciation and amortization expense; loss on extinguishment of long-term debt; asset impairment charges; gains or losses on the disposition of businesses and assets, restructuring charges; acquisition related costs and benefits, and other items. Our Adjusted EBITDA performance target metric for the 20192020 ACI Plan awards was set consistent to our 20192020 business plan that was approved by the Board, but which is adjusted to exclude earnings from the Company’sCompany's American Styrenics segment and its Feedstocks segment, and to exclude the impacts of raw material timing. Despite the impact of the COVID-19 pandemic on the global economy, the Company achieved Adjusted EBITDA in line with its business plan for 2020, as well as successfully bidding to acquire certain assets of Arkema S.A., in a transformational acquisition for the Company. See “"Item 7—Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Performance Measures”" of our Annual Report on Form 10‑K10-K for the year ended December 31, 20192020 for more information on our approach to calculating Adjusted EBITDA and a reconciliation to the comparable GAAP measure. We exclude the earnings of our Americas Styrenics segment because as a joint venture the Company does not have direct control of its day-to-day operations. Additionally, we also exclude the earnings of our Feedstocks segment and the impacts of raw material timing because market volatility within this segment and timing impacts are generally outside of our executives’executives' control but can have a significant positive or negative impact on the Company’sCompany's financial performance.
2020 Proxy Statement 38
COMPENSATION DISCUSSION & ANALYSIS
We believe best-in-classindustry-leading environmental, health and safety metrics, as well as individual performance, are important measures for establishing performance objectives and measuring the performance of our NEOs. We are a Responsible Care®Care® company and our environment, health and safety policy states that protecting people and the environment is part of everything we do and every decision we make. Each employee has a responsibility to ensure that our products and operations meet applicable government and Company standards.
The 20192020 ACI Plan includes three key environment, health and safety metrics that we track for our Company—Recordable Injuries as defined by OSHA, Process Safety Incidents as defined by the American Chemistry Council, and Loss of Primary Containment, which defines a containment as any physical device used to contain a chemical or plastic resin as part of our manufacturing processes. Incentive payouts with respect to these metrics are determined based on our achievement rating for Responsible Care®Care® performance and in accordance with the threshold, target and maximum levels set forth in the table below.
In addition, each NEO had individual performance goals that included, depending on the NEO: corporate Adjusted EBITDA; asset, product optimization and customer profitability; organizational effectiveness; people; and cost management. The results achieved against each of these individual goals were assessed by the compensation committee and a percentage rating was assigned to each NEO.
The table below shows the weight and targets of the component metrics, along with the payout opportunity for the ACI Plan.
Performance Goal | Weight of Metric in ACI Plan (%) | Threshold Target | 100% Performance Target | Exceeds Target |
1. Financial Performance |
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2019 EBITDA Target (Per 2019 Business Plan) | 60% | $293M | $333M | $398M |
2. Responsible Care® |
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Recordable Injuries* | 5% | 7 | 5 | 3 |
Loss of Primary Containment* | 5% | 7 | 5 | 3 |
Process Safety Incidents* | 5% | 2 | 1 | 0 |
Responsible Care ® Sub-total | 15% |
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3. Individual Goals | 25% |
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Total Opportunity at Target | 100% |
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Maximum Opportunity | 200% |
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Performance Goal | | Weight of Metric in ACI Plan (%) | | Threshold Target | | 100% Performance Target | | Exceeds Target | |||||
1. Financial Performance | |||||||||||||
2020 Adjusted EBITDA Target (Per 2020 Business Plan) | | 60 | % | $ | 219M | $ | 258M | $ | 323M | ||||
2. Responsible Care® | |||||||||||||
Recordable Injuries* | | 5 | % | | 7 | | 5 | | 3 | ||||
Loss of Primary Containment* | 5 | % | 7 | 5 | 3 | ||||||||
Process Safety Incidents* | | 5 | % | | 2 | | 1 | | 0 | ||||
Responsible Care ® Sub-total | 15 | % | |||||||||||
3. Individual Goals | | 25 | % | | | | | | | ||||
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Total Opportunity at Target | 100 | % | |||||||||||
Maximum Opportunity | | 200 | % | | | | | | | ||||
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The Company’sCompany's financial performance metric was based on an Adjusted EBITDA target of $333$258 million and threshold Adjusted EBITDA target of $293$219 million. ThisThe actual year-end Adjusted EBITDA for purposes of the 20192020 ACI Plan was $252$245 million, which represents the Company’sCompany's year-end Adjusted EBITDA of $352$299 million excluding $119$67 million and $4$5 million in earnings from our joint ventures and Feedstocks segment, respectively, and $24excluding the negative impact of $18 million of unfavorable raw material timing, as described above. Based on our 20192020 audited financial results, our compensation committee determined that our financial performance component
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COMPENSATION DISCUSSION & ANALYSIS
resulted in no86% payout of the Adjusted EBITDA component of the ACI Plan, as set forth in the table below. All payout values in this table are shown as a percentage of target.
| Actual Result | Payout as % of Target | Payout as % of Total Target Bonus |
Financial Performance (Adjusted EBITDA) | $252M | 0% | 0% |
| Actual Result | | Payout as % of Target | | Payout as % of Total Target Bonus | |||||
Financial Performance (Adjusted EBITDA) | $ | 245M | 86 | % | 52 | % | ||||
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Our achievement rating for the Responsible Care®Care® portion of the bonus qualified each NEO for 133%83% of the Responsible Care®Care® component of the ACI Plan, as set forth below. All payout values in this table are shown as a percentage of target.
| Actual Result | Payout as % of Target | Payout as % of Total Target Bonus |
Responsible Care® |
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Recordable Injuries* | 3 | 200% | 10% |
Loss of Primary Containment* | 7 | 0% | 0% |
Process Safety Incidents* | 0 | 200% | 10% |
Responsible Care® Total |
| 133% | 20% |
| Actual Result | | Payout as % of Target | | Payout as % of Total Target Bonus | |||||
Responsible Care® | ||||||||||
Recordable Injuries* | | 9 | | 0 | % | | 0 | % | ||
Loss of Primary Containment* | 6 | 50 | % | 2.5 | % | |||||
Process Safety Incidents* | | 0 | | 200 | % | | 10 | % | ||
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Responsible Care® Total | 83 | % | 12.5 | % | ||||||
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2020 Proxy Statement 39
COMPENSATION DISCUSSION & ANALYSIS
The table below shows the contribution of each performance metric under our ACI Plan to the actual bonus award earned by our NEOs. All values in this table are shown as a percentage of target.
NEO | EBITDA (60%) | Responsible Care (15%) | Individual Goals (25%) | Actual Payout as a % of Target |
Frank A. Bozich | 0% | 133% | 91% | 43% |
Christopher D. Pappas | 0% | 133% | 125% | 51% |
David Stasse | 0% | 133% | 98% | 44% |
Barry J. Niziolek | 0% | 133% | 100% | 45% |
Timothy M. Stedman | 0% | 133% | 108% | 47% |
Angelo N. Chaclas | 0% | 133% | 97% | 44% |
Alice L. M. Heezen | 0% | 133% | 93% | 43% |
Hayati Yarkadas (1) | 0% | 133% | 0% | 20% |
(1) Per the terms of Mr. Yarkadas’s separation agreement, he was entitled to an award based on actual performance under the Responsible Care® and financial performance components of the 2019 ACI Plan but was not entitled to an award based on the individual performance goals component.
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NEO | EBITDA (60%) | Responsible Care (15%) | Individual Goals (25%) | | | Actual Payout as a % of Target | | |||||||||||||||||
Frank A. Bozich | | | 86 | % | | | 83 | % | | | 164 | % | | | | 105 | % | | ||||||
David Stasse | | | 86 | % | | | 83 | % | | | 150 | % | | | | | 101 | % | | | ||||
Angelo N. Chaclas | | | 86 | % | | | 83 | % | | | 147 | % | | | | 101 | % | | ||||||
Alice L. M. Heezen | | | 86 | % | | | 83 | % | | | 112 | % | | | | | 92 | % | | | ||||
Andre Lanning | | | 86 | % | | | 83 | % | | | 125 | % | | | | 95 | % | | ||||||
Timothy M. Stedman | | | 86 | % | | | 83 | % | | | 100 | % | | | | | 89 | % | | | ||||
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During 2019,2020, the target bonus for each NEO under the ACI Plan was based on a percentage of base salary. The table below shows the 20192020 target annual incentive award for each NEO and the actual award payable, based on Company performance metrics and individual performance goals.
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NEO | Target Payout as % of Base Salary | Target Payout Amount | Actual Payout as a % of Target | Actual Payout Amount |
Frank A. Bozich | 130% | $1,079,178 | 43% | $460,000 |
Christopher D. Pappas (1) | 150% | $606,575 | 51% | $310,870 |
David Stasse (2) | 56% | $240,377 | 44% | $106,667 |
Barry J. Niziolek (1) | 70% | $184,992 | 45% | $83,246 |
Timothy M. Stedman (3) | 65% | $314,402 | 47% | $147,376 |
Angelo N. Chaclas | 70% | $311,500 | 44% | $137,839 |
Alice L. M. Heezen (3) | 55% | $210,610 | 43% | $90,825 |
Hayati Yarkadas (3) | 65% | $314,402 | 20% | $62,880 |
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NEO | Target Payout as % of Base Salary | Target Payout Amount | | | Actual Payout as a % of Target | | | Actual Payout Amount | | |||||||||||||||||
Frank A. Bozich | | | 130 | % | | | $ | 1,300,000 | | | | | 105 | % | | | | $ | 1,364,354 | | | |||||
David Stasse | | | 70 | % | | | $ | 350,000 | | | | | | 101 | % | | | | | $ | 355,110 | | | | ||
Angelo N. Chaclas | | | 70 | % | | | $ | 311,500 | | | | | 101 | % | | | | $ | 313,712 | | | |||||
Alice L. M. Heezen (1) | | | 55 | % | | | $ | 223,839 | | | | | | 92 | % | | | | | $ | 205,843 | | | | ||
Andre Lanning (1) | | | 28 | % | | | $ | 137,402 | | | | | 95 | % | | | | $ | 130,822 | | | |||||
Timothy M. Stedman (1) (2) | | | 65 | % | | | $ | 309,251 | (2) | | | | | 89 | % | | | | | $ | 275,111 | | | | ||
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(2) Mr. Stasse’s target payout percentage was pro-rated based on his previous role and appointment as Executive Vice President & Chief Financial Officer. His annual target percentage effective in 2020 will be 70%.
(3)
2020 Proxy Statement 40
COMPENSATION DISCUSSION & ANALYSIS
Long-Term Equity Incentive Compensation
Our compensation committee approved equity grants to certain key employees, including the NEOs, which were awarded in February and March 2019.2020. Each of our NEOs except Mr. Pappas, received an equity award comprised of three types of awards: options to purchase our ordinary shares (30%), RSUs (30%), and PSUs (40%). The total award is based on a target percentage of their base salary, as shown in the table below. These awards are subject to time-based vesting conditions, with RSUs vesting in full on the third anniversary of the date of grant, PSUs vesting in full on the third anniversary of the date of grant, subject to the Company’sCompany's relative TSRtotal shareholder return ("TSR") performance, and
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COMPENSATION DISCUSSION & ANALYSIS
options vesting in three equal annual installments beginning on the first anniversary of the date of grant. In each case, vesting is generally subject to the NEO’sNEO's continuous employment with us on the applicable vesting date.
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NEO | LTI Target % | LTI Target Amount |
Frank A. Bozich (1) | 275% | $2,750,000 |
Christopher D. Pappas (2) | 480% | $5,760,000 |
David Stasse (3) | 80% | $296,362 |
Barry J. Niziolek | 175% | $927,500 |
Timothy M. Stedman (4) | 135% | $652,990 |
Angelo N. Chaclas | 150% | $667,500 |
Alice L. M. Heezen (4) | 108% | $410,400 |
Hayati Yarkadas (4) | 135% | $652,990 |
NEO | | LTI Target % | | LTI Target Amount | |||
Frank A. Bozich | 275 | % | $ | 2,750,000 | |||
David Stasse | | 150 | % | $ | 750,000 | ||
Angelo N. Chaclas | 150 | % | $ | 667,500 | |||
Alice L. M. Heezen (1) | | 108 | % | $ | 439,539 | ||
Andre Lanning (1) | 32 | % | $ | 137,397 | |||
Timothy M. Stedman (1) | | 155 | % | $ | 821,725 | ||
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(2) Mr. Pappas's annual LTI target was 480%. Mr. Pappas’s 2019 equity awards were modified to reflect his partial term as Chief Executive Officer and President, and for his service as Special Advisor to the President and Chief Executive Officer during 2019. As a result, the composition of his equity award was revised as follows: options (3%), RSUs (40%), and PSUs (57%). The grant date fair value of his 2019 equity awards was $4,875,660. See “Executive Compensation—Grant of Plan Based Awards Table.” For a more detailed description of the treatment of Mr. Pappas’s unvested RSUs and PSUs, and valuation of vested RSUs and PSUs, see “Executive Compensation—Summary Compensation Table.”
(3) Mr. Stasse's annual LTI target in his previous role was 80% of salary in 2019 and in his role as Chief Financial Officer his LTI target was increased to 150% of salary effective January 1, 2020.
(4)
Since 2017 the Board has granted PSUs as part of each NEO’sNEO's target equity compensation package to increase the percentage of at-risk, long-term incentive-based compensation. We believe the use of PSUs, in a higher concentration of equity compensation as compared to the RSU and stock option components, provides greater alignment between our executive compensation program and the creation of shareholder value through the Company’sCompany's long-term strategic initiatives. In addition, our Board considers the stock options to be performance-based because a stock option will only have value to the extent that our stock price increases after the date the stock option is granted.
2020 Proxy Statement 41
COMPENSATION DISCUSSION & ANALYSIS
PSUs granted under the 2014 Omnibus IncentiveEquity Plan will vest on the third anniversary of the grant date, subject to the Company’sCompany's relative TSR performance, assuming the reinvestment of dividends, against the performance of 4749 other chemical companies with shares traded on a major U.S. stock exchange and that have a market capitalization exceeding $500 million at the time the award is granted. The peer group for the 20192020 PSU grants is as follows:
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Air Products and Chemicals, Inc. |
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| PPG Industries, Inc. | ||
Albemarle Corporation |
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| PQ Group Holdings Inc. | ||
Ashland Global Holdings Inc. |
| H.B. Fuller Company | Quaker Houghton Corporation |
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Axalta Coating Systems Ltd. |
| Huntsman Corporation | RPM International Inc. |
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Balchem Corporation |
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| Sensient Technologies Corporation | ||
Cabot Corporation | Innospec Inc. | Sociedad Quimica y Minera de Chile S.A. | |||
Celanese Corporation | International Flavors & Fragrances Inc. | Stepan Company | |||
CF Industries Holdings, Inc. | Koppers Holdings Inc. | The Chemours Company | |||
Chase Corporation | Kronos Worldwide, Inc. | The Mosaic Company | |||
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| Linde plc | The Scotts Miracle-Gro Company | ||
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| Livent Corporation | The Sherwin-Williams Company | ||
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| LyondellBasell Industries N.V. |
| Tredegar Corporation | ||
Eastman Chemical Company | Minerals Technologies Inc. |
| Tronox Limited | ||
Ecolab Inc. | NewMarket Corporation | Valvoline Inc. | |||
Element Solutions Inc | Olin Corporation | W. R. Grace & Co. | |||
Ferro Corporation |
| Orion Engineered Carbons S.A. | Westlake Chemical Corporation | ||
| PolyOne Corporation (now Avient) |
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The number of 20192020 PSUs that will vest based on the achievement of performance goals will be as follows:
| TSE Performance | Payout % | ||||
Metric | Threshold | Target | Maximum | Threshold | Target | Maximum |
2019 – 2021 TSE TSR | 25th | 50th | 75th | 50% | 100% | 200% |
TSE Performance | Payout % | |||||||||||
Metric | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||
2020 - 2023 TSE TSR (relative to Performance Peer Group) | 25th Percentile | 50th Percentile | 75th Percentile | 50% | 100% | 200% | ||||||
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Regardless of the targets above, vesting is capped at 100% of target if the Company’sCompany's TSR is negative for the performance period. Additionally, the total value of the awards delivered at vesting is capped at three times the target shares multiplied by the grant date share price. Because we assume reinvestment of dividends, dividend equivalents accrue during the performance period. However, dividend equivalents will be paid only if and to the extent the PSUs vest, since we do not believe the executives should receive the benefit of such dividend earnings if the performance criteria associated with the PSU award is not otherwise met. The PSU awards
95 2021 Proxy Statement
COMPENSATION DISCUSSION & ANALYSIS
granted to NEOs in 20172018 did not meet the minimum performance threshold requirement and therefore none of these awards vested in 2020. Based on TSR performance as of December 31, 2019, the PSU awards granted to NEOs in 2018 are also not expected to vest.2021.
Other Compensation and Tax Matters
Other Compensation Matters |
Retirement Benefits
Our qualified U.S. savings plan (the “401(k) plan”"401(k) plan") provides for (1) annual discretionary Company contributions and (2) employer matching contributions to be credited to participants’participants' accounts. The U.S.-based NEOs participate in this plan on the same basis as our other employees. We also maintain a non-qualified U.S. savings and deferral plan in which each of our U.S.-based NEOs may participate. This plan allows participants to defer a portion of their compensation on a pre-tax basis, with matching contributions from the Company that are payable at a future date based on the terms of the plan. Additionally, the plan provides for discretionary Company contributions in connection with earnings that are in excess of the limitations set forth in the 401(k) Plan.
Our NEOs do not participate or have account balances in any qualified or non-qualified defined benefit pension plans sponsored by the Company, with the exception of Ms. Heezen, Mr. Lanning and Messrs.Mr. Stedman, and Yarkadas, who participateparticipated in our Switzerland-based defined contribution retirement plan.
Pursuant to the terms of Mr. Pappas’s employment agreement, he was entitled to a retirement benefit payable in the form of a cash lump sum upon his retirement or other termination of employment in an amount determined
2020 Proxy Statement 42
COMPENSATION DISCUSSION & ANALYSIS
in accordance with a formula contained in his employment agreement, as described in more detail under “Executive Compensation—Pension and Other Postretirement Benefits—Supplemental Employee Retirement Benefit” below. None of our other Our NEOs do not participate in any supplemental employee retirement plan or have such a plan provided by their agreement.
Severance Benefits
Our NEOs are eligible for severance benefits under their employment agreements upon certain terminations of employment. The agreements provide the NEOs, except Mr. PappasStasse, Mr. Chaclas and Mr. Bozich,Ms. Heezen with severance benefits in an amount equal to 1.5 times the sum of the executive’sexecutive's annual base salary and target bonus paid monthly over 18 months. Mr. Bozich’sLanning's agreement provides severance benefits in an amount equal to 1.0 times the sum of his annual base salary and target bonus paid monthly over 18 months. Mr. Bozich's employment agreement provides him with severance benefits, upon certain terminations of employment, in an amount equal to 22.0 times the sum of his annual base salary and target bonus paid monthly over 24 months. Mr. Pappas was not entitled to any severance benefits in connection with his retirement.
We provide change-in-control severance benefits to certain executives, including our current NEOs. These change-in-control severance benefits are designed to minimize the distraction and uncertainty that could affect key management in the event we become involved in a transaction that could result in a change in control of the Company and to enable the executives to impartially evaluate such a transaction. These change-in-control benefits are structured with “double trigger”"double trigger" terms. Under the terms of these agreements, each NEO is entitled to a lump sum payment equal to the severance benefits set forth above (rather than payment of severance benefits in installments) if the NEO experiences a termination ofNEO's employment is terminated other than for cause"Cause" or in the eventif the NEO resigns for "good reason," as defined in the agreements, within two years following a change-in-controlchange in control of the Company. The compensation committee does not permit 280G gross-up provisions in its executive employment agreements or amendments.
On October 2, 2019, Mr. YarkadasStedman was appointed as Special Advisor to the CEO and Executive Leadership, in connection with a reorganization of the Company's management team, effective May 1, 2020, and left the Company on August 16, 2020. In connection with his termination, Mr. Stedman entered into a separation agreement with the Company’sCompany's subsidiary, Trinseo Europe GmbH, pursuant to which he is entitled to receive (i)received a severance paymentamount equal to one year’s1.5 times the sum of his base salary subject toand target cash bonus, which is being paid in equal monthly installments for a downward adjustment under certain circumstances (ii)period of eighteen (18) months after his 2019 ACI Plan bonus based on the financial performance and Responsible Care metrics, and (iii)final date of employment. Mr. Stedman also received continued health and welfare benefits as provided in his employment contract or required by local law.contract. Mr. Yarkadas terminatedStedman was paid a pro-rata portion of his ACI award for 2020 based on his final date of employment. Mr. Stedman's outstanding unvested LTI awards continued to vest under the Amended & Restated 2014 Omnibus Incentive Plan (the "Equity Plan") through his final date of employment. Any outstanding unvested LTI awards that remained unvested as of the final date of employment were forfeited, including Mr. Stedman's equity retention award granted in 2018. Any vested stock options were exercisable in accordance with the Company on March 16, 2020 and receivedterms of the full severance payment described in item (i) above.Equity Plan.
Other Compensation
Each NEO is eligible to participate in our generally-applicable benefit plans, such as savings, medical, dental, group life, disability and accidental death and dismemberment insurance, in accordance with country practices. Additionally, the Company may offer certain perquisites to certain executives when appropriate or necessary to recruit or retain talented and qualified individuals. As a Company that operates worldwide, we often offer certain types of perquisites to our executives, such as moving or commuting expenses or tuition payments for executives’executives' children, in order to compensate individuals who relocate. See the footnotes to the “Summary"Summary Compensation Table”Table" and the “"Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table; Other Narrative Disclosure”" below for more details regarding the other compensation paid to our NEOs.
Anti-Hedging and Pledging Policy
The Board has adopted a policy prohibiting hedging transactions and disallowing pledging transactions subject to certain narrow exceptions. Pursuant to this policy, no officer, director or employee may engage in short sales, hedging or monetization transactions, such as zero-cost collars and forward sale contracts, puts, calls, or other derivative securities including options, warrants, convertible
2021 Proxy Statement 96
COMPENSATION DISCUSSION & ANALYSIS
securities, stock appreciation rights or similar securities. This prohibition does not apply to exercise of Company stock options. Officers, directors and employees are also prohibited from maintaining Company securities in a margin account. No officer, director or employee of the Company may pledge Company securities as collateral for a loan without first showing financial capacity to repay the loan and obtaining preapproval from the Company’sCompany's Chief Compliance Officer.
Tax and Accounting Considerations
Prior to January 1, 2018, Section 162(m) of the Code imposed a limit of $1,000,000 on the amount that a publicly-traded company may deduct for federal income tax purposes in any taxable year for compensation paid to our CEO and the three other highest-paid NEOs, other than our CFO, who are employed as of the end
2020 Proxy Statement 43
COMPENSATION DISCUSSION & ANALYSIS
of the year. To the extent that compensation was “performance-based” within the meaning of Section 162(m) or to the extent that compensation meeting certain requirements is paid during a limited period of time following our IPO, the Section’s limitations did not apply. To qualify as performance-based, compensation must, among other things, be paid pursuant to a shareholder approved plan upon the attainment of objective performance criteria.
On December 22, 2017, the Tax Cuts and Jobs Act amended Section 162(m) to eliminate the exemption for performance-based compensation under Section 162(m). These amendments made all compensation paid to a covered employee in excess of $1 million nondeductible, including post-termination and post-death payments, severance, deferred compensation and payments from nonqualified plans. The Tax Cuts and Jobs Act also provided a transition rule that does not apply these amendments to Section 162(m) to written binding contracts in effect on November 2, 2017 and not subsequently amended or modified.
Our compensation committee believes that the tax deductibility of compensation is an important factor, but not the sole factor, in setting executive compensation policies and in rewarding superior executive performance. The Company has not historically needed to rely on Section 162(m) due to the large amount of its executives’ compensation services performed outside the United States. Therefore, its compensation programs have not been materially impacted by the changes to Section 162(m).
In determining variable compensation program designs, our compensation committee also considers other tax and accounting implications of particular forms of compensation, such as the implications of Section 409A of the Code governing deferred compensation arrangements and favorable accounting treatment afforded certain equity-based plans that are settled in shares.
Timing of Awards
We regularly award annual equity grants to our executive officers in February of each year, so as to provide a pre-set schedule for our equity grants that won’twon't be impacted by events external or internal to the Company. In 2019 we granted certain awards in March to coincide with Mr. Bozich’s appointment as Chief Executive Officer and President. New hires may, depending on the timing of their hire, be eligible for a grant at the next board meeting following his or her hire.
Compensation Committee Report
Compensation Committee Report |
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis section (the “CD&A”"CD&A") required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the compensation committee recommended to the Board that the CD&A be included in this proxy statement on Schedule 14A.
THE COMPENSATION COMMITTEE
K’LynneK'Lynne Johnson, Chair
Jeffrey J. Cote
Jeanmarie Desmond
Matthew Farrell
Sandra Beach Lin
Phillip
Philip R. Martens
Stephen M. Zide
202097 2021 Proxy Statement 44
EXECUTIVE COMPENSATION
Executive Compensation |
The following table sets forth information regarding the compensation paid to or earned by our NEOs for the years ended December 31, 2020, 2019 2018 and 2017,2018, as applicable. For additional information, please read the footnotes and narrative disclosures that follow the table.
Name and Principal Position | Year | Salary ($) | Bonus ($)(3) | Stock Awards ($)(4) | Option Awards ($)(5) | Non-Equity Incentive Plan Compensation ($)(6) | Changes in Pension Value and Non-qualified Deferred Compensation Earnings ($)(7)(8) | All Other Compensation ($)(9) | Total ($) |
Frank A. Bozich President and Chief Executive Officer | 2019 | 830,137 | 538,244 | 4,050,985 | 824,675 | 460,000 | - | 165,557 | 6,869,598 |
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Christopher D. Pappas (1) Former President and Chief Executive Officer | 2019 | 404,384 | - | 4,170,247 | 143,795 | 310,870 | - | 208,901 | 5,238,196 |
2018 | 1,200,000 | - | 4,239,343 | 1,725,105 | 843,750 | 492,829 | 168,206 | 8,669,233 | |
2017 | 1,150,000 | - | 3,913,374 | 1,621,518 | 2,448,324 | 762,155 | 196,378 | 10,091,749 | |
David Stasse Executive Vice President & Chief Financial Officer | 2019 | 427,748 | - | 207,447 | 88,775 | 106,667 | - | 51,751 | 882,390 |
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Barry J. Niziolek Former Executive Vice President & Chief Financial Officer | 2019 | 264,274 | - | 671,542 | 277,850 | 83,246 | - | 71,869 | 1,368,782 |
2018 | 530,000 | - | 682,665 | 277,787 | 178,544 | - | 69,081 | 1,738,077 | |
2017 | 525,000 | - | 589,216 | 244,127 | 512,412 | - | 66,272 | 1,937,027 | |
Timothy M. Stedman (2) Senior Vice President, Strategy and Corporate Development | 2019 | 483,696 | - | 472,337 | 195,429 | 147,376 | 171,309 | 3,902 | 1,474,049 |
2018 | 491,693 | 261,212 | 1,876,672 | 208,234 | 155,805 | 341,112 | 110,475 | 3,445,203 | |
2017 | 483,408 | 463,054 | 395,595 | 163,885 | 415,291 | 145,531 | 122,911 | 2,189,675 | |
Angelo N. Chaclas Senior Vice President and Chief Legal Officer | 2019 | 445,000 | - | 483,250 | 199,953 | 137,839 | - | 60,867 | 1,326,908 |
2018 | 435,000 | - | 448,224 | 182,397 | 142,553 | - | 58,079 | 1,266,253 | |
2017 | 420,000 | - | 410,597 | 170,110 | 515,960 | - | 57,939 | 1,574,606 | |
Alice L. M. Heezen (2) Senior Vice President, Human Resources | 2019 | 382,926 | - | 299,177 | 123,778 | 90,825 | 103,793 | - | 1,000,500 |
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Hayati Yarkadas (2) Former Senior Vice President and Business President | 2019 | 483,696 | - | 472,337 | 195,429 | 62,880 | - | 48,926 | 1,263,268 |
2018 | 491,693 | 348,282 | 1,876,672 | 208,234 | 151,011 | 353,404 | 120,095 | 3,549,391 | |
2017 | 483,408 | 284,956 | 395,595 | 163,885 | 408,040 | 144,513 | 141,363 | 2,021,760 |
Name and Principal Position | | Year | | Salary ($) (2) | | Bonus ($) (3) | | Stock Awards ($) (4) | | Option Awards ($) (5) | | Non-Equity Incentive Plan Compensation ($) (6) | | Changes in Pension Value and Non-qualified Deferred Compensation Earnings ($) (7)(8) | | All Other Compensation ($) (9) | | Total ($) | ||||||||||
Frank A. Bozich | 2020 | 882,692 | — | 1,935,997 | 826,322 | 1,364,354 | — | 26,554 | 5,035,919 | |||||||||||||||||||
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President and Chief Executive | 2019 | 830,137 | 538,244 | 4,050,985 | 824,675 | 460,000 | — | 165,557 | 6,869,598 | |||||||||||||||||||
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Officer | ||||||||||||||||||||||||||||
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David Stasse | | 2020 | | 472,596 | | — | | 528,002 | | 225,363 | | 355,110 | | 326 | | 51,784 | | 1,330,174 | ||||||||||
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Executive Vice President & | | 2019 | | 427,748 | | — | | 207,447 | | 88,775 | | 106,667 | | — | | 51,751 | | 882,390 | ||||||||||
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Angelo N. Chaclas | 2020 | 420,611 | — | 469,935 | 200,569 | 313,712 | 6,599 | 51,407 | 1,462,833 | |||||||||||||||||||
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Senior Vice President and | 2019 | 445,000 | — | 483,250 | 199,953 | 137,839 | — | 60,867 | 1,326,908 | |||||||||||||||||||
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Chief Legal Officer | 2018 | 435,000 | — | 448,224 | 182,397 | 142,553 | — | 58,079 | 1,266,253 | |||||||||||||||||||
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Alice L. M. Heezen (1) | | 2020 | | 406,980 | | — | | 297,616 | | 127,027 | | 205,843 | | 215,271 | | — | | 1,252,738 | ||||||||||
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Senior Vice President, | | 2019 | | 382,926 | | — | | 299,177 | | 123,778 | | 90,825 | | 103,793 | | — | | 1,000,500 | ||||||||||
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Human Resources | | | | | | | | | | |||||||||||||||||||
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Andre Lanning | 2020 | 441,788 | 267,750 | 92,510 | 39,705 | 130,822 | 420,903 | 5,355 | 1,398,832 | |||||||||||||||||||
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Vice President of Strategy, | ||||||||||||||||||||||||||||
Corporate Development & | ||||||||||||||||||||||||||||
Marketing Communication | ||||||||||||||||||||||||||||
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Timothy M. Stedman (1) | | 2020 | | 445,000 | | — | | 556,400 | | 237,481 | | 275,111 | | 288,099 | | 375,519 | | 2,177,610 | ||||||||||
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Former Senior Vice President, | | 2019 | | 483,696 | | — | | 472,337 | | 195,429 | | 147,376 | | 171,309 | | 3,902 | | 1,474,049 | ||||||||||
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Strategy & Corporate Development | | 2018 | | 491,693 | | 261,212 | | 1,876,672 | | 208,234 | | 155,805 | | 341,112 | | 110,475 | | 3,445,203 | ||||||||||
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Year | RSU Grant | Grant Date Fair Value ($) | RSUs Forfeited upon Retirement (#) | Vested RSUs (#) | Value of Vested RSUs on Settlement Date ($) |
2019 | 33,869 | 1,727,996 | 31,988 | 1,881 | 83,140 |
2018 | 21,281 | 1,728,017 | 13,006 | 8,275 | 365,755 |
2017 | 22,695 | 1,621,558 | 6,305 | 16,390 | 724,438 |
Further, under the terms of the 2014 Omnibus Incentive Plan, Mr. Pappas’s PSU awards were prorated based on his retirement date, resulting in forfeiture of the following awards, which remaining PSUs will vest based on the Company’s achievement of certain performance metrics:
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Year | PSU Grant | Grant Date Fair Value ($) | PSUs Forfeited upon Retirement (#) | PSUs Remaining (#) |
2019 | 45,221 | 2,442,251 | 43,965 | 1,256 |
2018 | 28,374 | 2,511,326 | 17,340 | 11,034 |
2017 | 30,259 | 2,291,817 | 8,406 | 21,853 |
(2)
Proxy Statement 45
2020. Mr. Bozich agreed to reduce his pay during the quarter by 50%, while Messrs. Stasse and Chaclas agreed to reduce their pay during the quarter by 25%.
Stedman.
2021 Proxy Statement 98
EXECUTIVE COMPENSATION
2020.
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NEO | 401k Plan ($)(i) | Non-qualified deferred comp plan ($)(ii) | Dependent Education ($)(iii) | Relocation Services ($)(iv) | Tax Gross-up ($)(v) | Other ($)(vi) | Total ($) |
Frank A. Bozich | 18,596 | - | - | 103,852 | 42,792 | 318 | 165,557 |
Christopher D. Pappas | 20,173 | 188,570 | - | - | - | 159 | 208,901 |
David Stasse | 25,213 | 26,157 | - | - | - | 381 | 51,751 |
Barry J. Niziolek | 27,272 | 44,375 | - | - | - | 222 | 71,869 |
Timothy M. Stedman | - | - | - | - | - | 3,902 | 3,902 |
Angelo N. Chaclas | 25,299 | 35,187 | - | - | - | 381 | 60,867 |
Alice L. M. Heezen | - | - | - | - | - | - | - |
Hayati Yarkadas | - | - | 36,902 | - | 12,024 | - | 48,926 |
NEO | | 401k Plan ($) (i) | | Non-qualified deferred comp plan ($) (ii) | | Relocation Services ($) (iii) | | Tax Gross-up ($) (iv) | | Severance Payments ($) (v) | | Other ($) (vi) | | Total ($) | ||||||||
Frank A. Bozich | 22,373 | — | 2,230 | 1,570 | — | 381 | 26,554 | |||||||||||||||
David Stasse | | 25,658 | | 25,745 | | — | | — | | — | | 381 | | 51,784 | ||||||||
Angelo N. Chaclas | 25,445 | 25,581 | — | — | — | 381 | 51,407 | |||||||||||||||
Alice L. M. Heezen | | — | | — | | — | | — | | — | | — | | — | ||||||||
Andre Lanning | — | — | — | — | — | 5,355 | 5,355 | |||||||||||||||
Timothy M. Stedman | | — | | — | | — | | — | | 375,519 | | — | | 375,519 | ||||||||
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(iv)
(v)
agreement.
202099 2021 Proxy Statement 46
EXECUTIVE COMPENSATION
Grant of Plan-Based Awards Table |
The following table shows all plan-based awards granted to the NEOs during 2019.2020. All equity awards were granted under our 2014 Omnibus Incentivethe Equity Plan as a target percentage of each NEOs base salary with the target value of the equity award comprised of stock options (30%), RSUs (30%), and PSUs (40%). See “"Compensation Discussion and Analysis—Compensation Elements—Long-Term Equity Incentive Compensation”" for more information regarding the 20192020 equity awards. All NEOs earned cash incentive awards for 20192020 performance under the Company’sCompany's ACI Plan. See “"Compensation Discussion and Analysis—Compensation Elements—Annual Cash Incentive Plan”" above.
Mr. Bozich’s 2019 grant reflects an additional one-time off-cycle equity award with a grant date fair value of $2 million, to compensate for the forfeiture of certain compensation from his previous employer. This additional equity award was comprised of RSUs (50%) and PSUs (50%), with the RSUs vesting in full on the third anniversary of the date of grant and PSUs vesting on the third anniversary of the grant, subject to achieving certain performance metrics. See “—Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table; Other Narrative Disclosure” below for a more information concerning this award.
Mr. Pappas’s 2019 grant was modified to reflect his partial term as Chief Executive Officer and President, and for his service as Special Advisor to the President and Chief Executive Officer during 2019. As a result, the composition of his equity award was revised as follows: options (3%), RSUs (40%), and PSUs (57%). The grant date fair value of his equity awards for 2019 was $4,875,660. Pursuant to the terms of the 2014 Omnibus Incentive Plan, upon his retirement Mr. Pappas’s 2019 RSU and PSU awards were prorated based on his retirement date, resulting in cancellation of 31,988 RSUs and 43,965 PSUs.
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Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All other stock awards: Number of shares of stock or units (#)(3) | All other option awards: Number of securities underlying options (#)(4) | Exercise or Base Price of Option Awards ($/sh) | Closing Stock Price on Grant Date ($/sh) | Grant Date Fair Value of Stock and Option Awards ($) |
Frank A. Bozich |
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Options | 3/4/2019 | - | - | - |
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RSUs | 3/4/2019 | - | - | - |
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| 35,819 | - | - | 50.95 | 1,824,978 |
PSUs | 3/4/2019 | - | - | - | 20,609 | 41,217 | 82,434 |
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ACI Plan | 1/1/2019 | - | 1,079,178 | 2,158,356 |
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| - | - | - | - | - |
Christopher D. Pappas |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 9,346 | 51.02 | - | 143,795 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 33,869 | - | - | 51.02 | 1,727,996 |
PSUs | 3/4/2019 | - | - | - | 22,611 | 45,221 | 90,442 |
| - | - | 50.95 | 2,442,251 |
ACI Plan | 1/1/2019 | - | 606,575 | 1,213,151 |
|
|
| - | - | - | - | - |
David Stasse |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 5,770 | 51.02 | - | 88,775 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 4,066 | - | - | 51.02 | 207,447 |
ACI Plan | 1/1/2019 | - | 240,377 | 480,754 |
|
|
| - | - | - | - | - |
Barry J. Niziolek |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 18,059 | 51.02 | - | 277,850 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 5,454 | - | - | 51.02 | 278,263 |
PSUs | 3/4/2019 | - | - | - | 3,641 | 7,282 | 14,564 |
| - | - | 50.95 | 393,279 |
ACI Plan | 1/1/2019 | - | 184,992 | 369,984 |
|
|
| - | - | - | - | - |
Timothy M. Stedman |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 12,702 | 51.02 | - | 195,429 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 3,836 | - | - | 51.02 | 195,713 |
PSUs | 3/4/2019 | - | - | - | 2,561 | 5,122 | 10,244 |
| - | - | 50.95 | 276,624 |
ACI Plan | 1/1/2019 | - | 314,402 | 628,805 |
|
|
| - | - | - | - | - |
2020 Proxy Statement 47
EXECUTIVE COMPENSATION
| | Estimated Future Payouts Under Non-Equity Plan Awards (1) | | Estimated Future Payouts Under Equity Plan Awards (2) | | | | | | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | All other stock awards: Number of shares of stock or units (#) (3) | | All other option awards: Number of securities underlying options (#) (4) | | Exercise or Base Price of Option Awards ($/sh) | | Closing Stock Price on Grant Date ($/sh) | | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||
Frank A. Bozich | |||||||||||||||||||||||||||||||||||||
Options | 2/25/2020 | — | — | — | — | — | — | — | 125,743 | 24.30 | — | $ | 826,322 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs | 2/25/2020 | — | — | — | — | — | — | 33,951 | — | — | 24.30 | $ | 825,009 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PSUs | 2/25/2020 | — | — | — | 22,634 | 45,267 | 90,534 | — | — | — | 24.30 | $ | 1,110,988 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACI Plan | 1/1/2020 | — | 1,300,000 | 2,600,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
David Stasse | | | | | | | | | | | | | |||||||||||||||||||||||||
Options | | 2/25/2020 | | — | | — | | — | | — | | — | | — | | — | | 34,294 | | 24.30 | | — | | 225,363 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs | | 2/25/2020 | | — | | — | | — | | — | | — | | — | | 9,259 | | — | | — | | 24.30 | | 224,994 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PSUs | | 2/25/2020 | | — | | — | | — | | 6,173 | | 12,346 | | 24,692 | | — | | — | | — | | 24.30 | | 303,008 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACI Plan | | 1/1/2020 | | — | | 350,000 | | 700,000 | | — | | — | | — | | — | | — | | — | | — | | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Angelo N. Chaclas | |||||||||||||||||||||||||||||||||||||
Options | 2/25/2020 | — | — | — | — | — | — | — | 30,521 | 24.30 | — | 200,569 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ��� | | | | | |
RSUs | 2/25/2020 | — | — | — | — | — | — | 8,241 | — | — | 24.30 | 200,256 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PSUs | 2/25/2020 | — | — | — | 5,494 | 10,988 | 21,976 | — | — | — | 24.30 | 269,678 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACI Plan | 1/1/2020 | — | 311,500 | 623,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Alice L. M. Heezen | | | | | | | | | | | | | |||||||||||||||||||||||||
Options | | 2/25/2020 | | — | | — | | — | | — | | — | | — | | — | | 19,330 | | 24.30 | | — | | 127,027 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs | | 2/25/2020 | | — | | — | | — | | — | | — | | — | | 5,219 | | — | | — | | 24.30 | | 126,822 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PSUs | | 2/25/2020 | | — | | — | | — | | 3,480 | | 6,959 | | 13,918 | | — | | — | | — | | 24.30 | | 170,795 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACI Plan | | 1/1/2020 | | — | | 223,839 | | 447,678 | | — | | — | | — | | — | | — | | — | | — | | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Andre Lanning | |||||||||||||||||||||||||||||||||||||
Options | 2/25/2020 | — | — | — | — | — | — | — | 6,042 | 24.30 | — | 39,705 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs | 2/25/2020 | — | — | — | — | — | — | 3,807 | — | — | 24.30 | 92,510 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACI Plan | 1/1/2020 | — | 137,402 | 274,805 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Timothy M. Stedman | | | | | | | | | | | | | |||||||||||||||||||||||||
Options | | 2/25/2020 | | — | | — | | — | | — | | — | | — | | — | | 36,138 | | 24.30 | | — | | 237,481 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs | | 2/25/2020 | | — | | — | | — | | — | | — | | — | | 9,757 | | — | | — | | 24.30 | | 237,095 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PSUs | | 2/25/2020 | | — | | — | | — | | 6,505 | | 13,010 | | 26,020 | | — | | — | | — | | 24.30 | | 319,304 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACI Plan | | 1/1/2020 | | — | | 309,251 | | 618,503 | | — | | — | | — | | — | | — | | — | | — | | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Angelo N. Chaclas |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 12,996 | 51.02 | - | 199,953 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 3,925 | - | - | 51.02 | 200,254 |
PSUs | 3/4/2019 | - | - | - | 2,620 | 5,240 | 10,480 |
| - | - | 50.95 | 282,997 |
ACI Plan | 1/1/2019 | - | 311,500 | 623,000 |
|
|
| - | - | - | - | - |
Alice L. M. Heezen |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 8,045 | 51.02 | - | 123,778 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 2,430 | - | - | 51.02 | 123,979 |
PSUs | 3/4/2019 | - | - | - | 1,622 | 3,244 | 6,488 |
| - | - | 50.95 | 175,199 |
ACI Plan | 1/1/2019 | - | 210,610 | 421,219 |
|
|
| - | - | - | - | - |
Hayati Yarkadas |
|
|
|
|
|
|
|
|
|
|
|
|
Options | 2/26/2019 | - | - | - |
|
|
| - | 12,702 | 51.02 | - | 195,429 |
RSUs | 2/26/2019 | - | - | - |
|
|
| 3,836 | - | - | 51.02 | 195,713 |
PSUs | 3/4/2019 | - | - | - | 2,561 | 5,122 | 10,244 |
| - | - | 50.95 | 276,624 |
ACI Plan | 1/1/2019 | - | 314,402 | 628,805 |
|
|
| - | - | - | - | - |
2021 Proxy Statement 100
Narrative Disclosure to Summary Compensation
Table and Grants of Plan-Based Awards Table; Other Narrative DisclosureContents
EXECUTIVE COMPENSATION
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table; Other Narrative Disclosure |
Employment Agreements with Current Executives
Each NEO is employed by us pursuant to a written agreement of employment. We entered into new executive employment agreements with Mr. Bozich in December 2018, Mr. Stasse in April 2019, and withMr. Chaclas in January 2020, Ms. Heezen in June 2019. We have previously entered into2019 and Mr. Lanning in May 2020. Mr. Bozich's employment agreementsagreement provides for an initial three-year term, which may be terminated with at least one year prior written notice. Mr. Stedman in September 2015Stasse's and with Mr. Chaclas in September 2014. All employmentChaclas' agreements provide for an initial term of three yearsone year and are subject to automatic one-year extensions beginning on the expiration of the initial term. Automatic extension of the agreementsterm, which may be terminated with at least 90 days' prior written notice from the executive or the Company stating the intent not to extend the employment term, except for Mr. Bozich’s agreement which may be terminated with at least one year prior written notice.term.
Under the terms of their agreements, Messrs. Bozich, Stasse, StedmanChaclas and ChaclasLanning and Ms. Heezen are entitled to receive minimum annual base salaries in 20192020 of $1,000,000, $475,000, $445,000, CHF 480,000, $445,000,458,191.50 and CHF 380,000, respectively. These salaries are subject to annual review by the Board (or a committee thereof) during the first 90 days of each calendar year, and the base salary in respect of such calendar year may be increased above, but not decreased below, its level for the preceding calendar year. Each NEO is also entitled to participate in our employee and fringe benefit plans as may be in effect from time to time on the same general basis as our other employees.
Under their employment agreements, Messrs. Bozich, Stasse, StedmanChaclas and ChaclasLanning and Ms. Heezen had target bonus opportunities under our ACI Plan equal to 130%, 65%, 65%55%, 65%,28% and 55%, respectively, of their base salaries. Mr. Stasse’s bonus percentage for 2019 was adjusted to 56% based on his ACI Plan bonus opportunity in his prior role before his appointment as Executive Vice President & Chief Financial Officer. For 2019,2020, these payouts were paid belownear or slightly above target primarily due to the Company’sCompany's financial performance versusnear target, as well as for outstanding personal performance of those NEOs involved in the year.Company's successful bid to acquire certain assets of Arkema S.A. and in light of their performance despite challenges presented by the COVID-19 pandemic. See “"Compensation Discussion and Analysis—20192020 Compensation Structure and Performance —AnnualPerformance—Annual Cash Incentive Plan”Plan" for additional details on how the cash incentive awards were determined.
Under his employment agreement, Mr. Bozich was entitled to a one-time lump-sum cash signing bonus of $538,244 and a one-time off-cycle equity award with a grant date fair value of $2 million upon his appointment as Chief Executive Officer and President in March 2019, which was intended to compensate Mr. Bozich for the forfeiture of certain compensation from his previous employer. The cash bonus fully vests
2020 Proxy Statement 48
EXECUTIVE COMPENSATION
on the two-year anniversary of his start date with the Company, subject to his continued employment with the Company. Prior to such time, in the event that Mr. Bozich’s employment with the Company terminates as a result of a termination by the Company for cause or he terminates his employment with the Company without good reason, he will be required to repay the pro-rata unvested portion of the bonus to the Company. Mr. Bozich’s equity grant was comprised of 50% RSUs and 50% PSUs, with the RSUs vesting in full on the third anniversary of the date of grant and PSUs vesting on the third anniversary of the date of grant, subject to achieving certain performance metrics.
Additionally, under his employment agreement, Mr. Stedman was entitled to a staggered signing bonus to be paid on the first, second, and third anniversaries of his employment, and was contingent on his continued employment through his anniversary dates. This staggered signing bonus was negotiated by Mr. Stedman to compensate him for forfeited equity compensation that he would have received had he stayed with his previous employer. Mr. Stedman received his final signing bonus installment in 2018.
Prior to becoming part of our executive leadership team, Mr. Chaclas was eligible to participate in incentive programs not available to our other NEOs. The cash incentive for these plans was paid out in in 2016 and 2017, the years following the last annual EBITDA target for each plan.
Employment Arrangements with Former Executives
We entered into an executive employment agreement with Mr. Pappas in 2010, with his employment commencing on June 17, 2010 and having an initial term of three years. On April 11, 2013, the agreement with Mr. Pappas was amended and restated with retroactive effect as of January 2, 2013 and was extended until June 30, 2017. On March 30, 2016, Mr. Pappas’s agreement was amended again and was extended to December 31, 2018. On December 21, 2017, the agreement with Mr. Pappas was amended and restated again with no fixed term. On December 20, 2018, Mr. Pappas’s employment agreement was amended to remove a gross-up provision and revise the term of his agreement to end one to three months after his successor was employed. Mr. Pappas retired from the Company effective May 3, 2019.
Mr. NiziolekStedman entered into an employment agreement with the Company on June 13, 2016in January 2020 with an initial term of one year, and subject to automatic one-year extensions beginning on the expiration of the initial term. The automatic extension of the agreement could be terminated with at least 90 days’days' prior written notice from Mr. NiziolekStedman or the Company stating their intent not to extend the employment term. Mr. Niziolek retired fromStedman was appointed as Special Advisor to the CompanyCEO and Executive Leadership, effective JulyMay 1, 2019.
Mr. Yarkadas had entered into an employment agreement2020, in connection with us in November 2015. Effective October 2, 2019, Mr. Yarkadas elected to step down from his position in order to pursue other opportunitiesa reorganization of the Company's management team, and entered into a separation agreement with the Company as described below in Executive Compensation—Other Compensation and Benefits—Severance Benefits. Mr. Yarkadas terminated his employment withleft the Company on MarchAugust 16, 2020.
Under theirhis employment agreements,agreement, during 20192020 Mr. PappasStedman was entitled to receive an annual base salary of $1,200,000CHF 495,000 and Mr. Niziolek was entitled to receive an annual base salary of $530,000. Mr. Yarkadas is entitled to receive an annual base salary of CHF 480,000. Under their employment agreements, Messrs. Pappas, Niziolek and Yarkadas, hada target bonus opportunitiesopportunity under our annual cash incentive plan equal to 150%, 70%, and 65%, respectively, of theirhis base salaries. Each ofsalary. Mr. Pappas’s and Mr. Niziolek’sStedman's annual incentive plan paymentspayment for 2019 were2020 was eligible for payout underpursuant to the retirement terms of the ACI Plan. For 2019, these payouts were paid below target, primarily duehis separation agreement. Mr. Stedman's amount was prorated pursuant to the Company’s financial performance versus target for the year, and Messrs. Pappas’s and Niziolek’s amounts were prorated based on their retirement date.terms of his separation agreement. See “"Compensation Discussion and Analysis—20192020 Compensation Structure and Performance —AnnualPerformance—Annual Cash Incentive Plan”Plan" for additional details on how the cash incentive awards were determined.
Additionally, under Mr. Yarkadas’s employment agreement, as part of his relocation to Zurich, Switzerland, the Company pays the tuition for the international school education, grossed-up for tax at the marginal rate, for a period of 4 and 7 years for his oldest and youngest child, respectively. For fiscal 2019, the Company paid $36,902 in tuition for Mr. Yarkadas’s youngest child for which Mr. Yarkadas also received $12,024 in tax gross-ups.
Equity Awards under Amended & Restated 2014 Omnibus Incentive Plan
Each of our NEOs participated in our 2014 Omnibus IncentiveEquity Plan (the “Equity Plan”) in 2019.2020. Messrs. Bozich, Stasse, Stedman, Chaclas and Lanning and Ms. Heezen received an annual target equity incentive award under the planEquity Plan of 275%, 80%, 135%150%, 150%, 32% and 108% respectively, of their base salaries. Messrs. Pappas,
2020 Proxy Statement 49
EXECUTIVE COMPENSATION
Niziolek, and YarkadasMr. Stedman received an annual target equity incentive award under the planEquity Plan of 480%, 175% and 135%, respectively,155% of theirhis base salaries. Except for Mr. Pappas,salary, which awards were forfeited pursuant to the terms of his separation agreement. The value of the equity award is split among stock options (30%), RSUs (30%), and PSUs (40%).
RSUs granted under the Equity Plan will vest in full on the third anniversary of the grant date, generally subject to the executive’sexecutive's continued employment with the Company on the vesting date. Upon a termination of employment due the employee’semployee's death or disability prior to the vesting date, or termination without cause within 2 years of a change in control, the RSUs will vest in full. Upon the employee’semployee's retirement or upon termination of employment by the Company without cause in connection with a restructuring or redundancy prior to the vesting date, the RSUs will vest in part, prorated based on the employee’semployee's termination date. In the event the employee voluntarily resigns or is terminated for cause, all unvested RSUs will be forfeited. Beginning in 2017, eachEach award holder wasis entitled to an amount equal to any cash dividend or repayment of equity paid by the Company upon one ordinary share for each RSU held by the award holder (“("dividend equivalents”equivalents"). Award holders have no right to receive the dividend equivalents unless and until the associated RSUs vest. The dividend equivalents will be payable in cash and will not accrue interest.
101 2021 Proxy Statement
EXECUTIVE COMPENSATION
PSUs granted under the Equity Plan will vest on the third anniversary of the grant date, subject generally to the executive’sexecutive's continued employment and to the Company’sCompany's relative total shareholder return (“TSR”("TSR") performance, assuming the reinvestment of dividends, against the performance of 4749 other chemical companies with shares traded on a major U.S. stock exchange and that have a market capitalization exceeding $500 million dollars at the time the award is granted. The amount of PSUs that will vest are generally as follows:
Trinseo Percentile Ranking Relative to Peer Group | | % of Target Shares Vested* | ||
Under 25th percentile |
| | 0 | % |
25th percentile |
| 50 | % | |
50th percentile |
| | 100 | % |
75th percentile |
| 200 | % | |
| | | | |
Regardless of the foregoing targets, vesting of the PSUs is capped at 100% of target if the Company’sCompany's TSR is negative for the three-year performance period. Additionally, the total value of the awards delivered at vesting is capped at three times the target shares multiplied by the grant date share price. Because the Company assumes reinvestment of dividends, dividend equivalents accrue during the performance period. However, dividend equivalents will be paid only if, and to the extent, the PSUs vest, since we do not believe the executives should receive the benefit of such dividend earnings if the performance criteria associated with the PSU award is otherwise not met.
Upon a termination of employment due to the employee’semployee's death or disability prior to the vesting date, the performance vesting requirements will be deemed to have been met and a pro-rated portion of the PSUs will vest based on the employee’semployee's termination date. Upon an employee’semployee's retirement, a pro-rated portion of the PSUs will vest based on the employee’semployee's termination date, subject to meeting the performance vesting requirements. If an employee is terminated without cause within 2 years of a change in control, the PSUs will vest based on a meeting the performance vesting requirements during the performance period ending on the date of the change in control. In the event the employee voluntarily resigns or is terminated for cause, all unvested PSUs will be forfeited.
The option awards issued under the Equity Plan, which contain an exercise term of nine years from the grant date, vest in three equal annual installments beginning on the first anniversary the grant date, generally subject to the employee remaining continuously employed on the applicable vesting date. Upon a termination of employment due to the employee’semployee's death or disability prior to the vesting date, or termination without cause within 2 years of a change in control, the options will vest immediately. Upon employee’sthe employee's retirement or a termination of employment by the Company without cause in connection with a restructuring or redundancy prior to a vesting date, the options will continue to vest on the original vesting schedule. In the event the employee voluntarily resigns or is terminated for cause, all vested and unvested options will be forfeited.
20202021 Proxy Statement 50 102
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal Year-End Table |
The table below sets forth certain information regarding outstanding and unvested equity awards held by the NEOs as of December 31, 2019.2020. The awards below represent RSUs, PSUs, and options issued under our Amended & Restated 2014 Omnibus Incentive Plan.
|
| Option Awards | Stock Awards | ||||||
Name | Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options (#)(2) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#)(3) | Market value of shares or units of stock that have not vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested ($)(5) |
Frank A. Bozich | 3/4/2019 | — | 53,440 | 50.95 | 3/4/2028 | 35,819 | 1,332,825 | 41,217 | 1,533,685 |
Christopher D. Pappas (1) | 3/4/2019 | — | — | — | — | — | — | 1,256 | 46,736 |
| 2/26/2019 | — | 9,346 | 51.02 | 2/26/2028 | — | — | — | — |
| 2/22/2018 | 25,795 | 51,590 | 81.20 | 2/22/2027 | — | — | 11,034 | 410,575 |
| 2/16/2017 | 52,446 | 26,223 | 71.45 | 2/16/2026 | — | — | 21,853 | 813,150 |
| 2/22/2016 | 162,319 | — | 26.97 | 2/22/2025 | — | — | — | — |
| 2/27/2015 | 91,891 | — | 18.14 | 2/27/2024 | — | — | — | — |
David Stasse | 2/26/2019 | — | 5,770 | 51.02 | 2/26/2028 | 4,066 | 151,296 | — | — |
| 9/14/2018 | — | — | — | — | 2,668 | 99,276 | 2,668 | 99,276 |
| 2/22/2018 | 1,282 | 2,565 | 81.20 | 2/22/2027 | 2,468 | 91,834 | — | — |
| 2/16/2017 | 1,265 | 1,265 | 71.45 | 2/16/2026 | 2,554 | 95,034 | — | — |
| 2/22/2016 | 2,346 | — | 26.97 | 2/22/2025 | — | — | — | — |
| 6/25/2015 | 846 | — | 27.81 | 6/25/2024 | — | — | — | — |
| 2/27/2015 | — | — | 18.14 | 2/27/2024 | — | — | — | — |
Barry J. Niziolek | 3/4/2019 | — | — | — |
| — | — | 606 | 22,549 |
| 2/26/2019 | — | 18,059 | 51.02 | 2/26/2028 | — | — | — | — |
| 2/22/2018 | 4,153 | 8,308 | 81.20 | 2/22/2027 | — | — | 2,030 | 75,536 |
| 2/16/2017 | 7,896 | 3,948 | 71.45 | 2/16/2026 | — | — | 3,543 | 131,835 |
| 6/22/2016 | 27,404 | — | 47.45 | 6/22/2025 | — | — | — | — |
Timothy M. Stedman | 3/4/2019 | — | — | — | — | — | — | 5,122 | 190,590 |
| 2/26/2019 | — | 12,702 | 51.02 | 2/26/2028 | 3,836 | 142,738 | — | — |
| 9/14/2018 | — | — | — | — | 8,672 | 322,685 | 8,672 | 322,685 |
| 2/22/2018 | 3,113 | 6,228 | 81.20 | 2/22/2027 | 2,569 | 95,592 | 3,425 | 127,444 |
| 2/16/2017 | 5,300 | 2,651 | 71.45 | 2/16/2026 | 2,294 | 85,360 | 3,059 | 113,825 |
| 2/22/2016 | 15,020 | — | 26.97 | 2/22/2025 | — | — | — | — |
Angelo N. Chaclas | 3/4/2019 | — | — | — | — | — | — | 5,240 | 194,980 |
| 2/26/2019 | — | 12,996 | 51.02 | 2/26/2028 | 3,925 | 146,049 | — | — |
| 2/22/2018 | 2,727 | 5,455 | 81.20 | 2/22/2027 | 2,250 | 83,723 | 3,000 | 111,630 |
| 2/16/2017 | 5,502 | 2,751 | 71.45 | 2/16/2026 | 2,381 | 88,597 | 3,175 | 118,142 |
| 2/22/2016 | 7,992 | — | 26.97 | 2/22/2025 | — | — | — | — |
| 2/27/2015 | 7,892 | — | 18.14 | 2/27/2024 | — | — | — | — |
Alice L. M. Heezen | 3/4/2019 | — | — | — | — | — | — | 3,244 | 120,709 |
| 2/26/2019 | — | 8,045 | 51.02 | 2/26/2028 | 2,430 | 90,420 | — | — |
| 2/22/2018 | 1,315 | 2,631 | 81.20 | 2/22/2027 | 1,085 | 40,373 | 1,447 | 53,843 |
| 2/16/2017 | 752 | 377 | 71.45 | 2/16/2026 | 760 | 28,280 | — | — |
Hayati Yarkadas | 2/26/2019 | — | 4,234 | 51.02 | 2/26/2028 | — | — | — | — |
| 2/22/2018 | 3,113 | 3,114 | 81.20 | 2/22/2027 | — | — | — | — |
| 2/16/2017 | 5,300 | 2,651 | 71.45 | 2/16/2026 | 2,294 | 85,360 | 3,059 | 113,825 |
| 2/22/2016 | 22,530 | — | 26.97 | 2/22/2025 | — | — | — | — |
Name Frank A. Bozich David Stasse Angelo N. Chaclas Alice L. M. Heezen Andreas Lanning Timothy Stedman (5) Option Awards Stock Awards Grant
Date Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Options (#) (1)
Unexercisable Option
Exercise
Price ($) Option
Expiration
Date Number of
shares or
units of
stock that
have not
vested
(#) (2) Market value
of shares or
units of
stock that
have not
vested
($) (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) 2/25/2020 — 125,743 24.30 2/25/2029 33,951 1,738,631 45,267 2,318,123 3/4/2019 17,813 35,627 50.95 3/4/2028 35,819 1,834,291 41,217 2,110,723 2/25/2020 — 34,294 24.30 2/25/2029 9,259 474,153 12,346 632,239 2/26/2019 1,923 3,847 51.02 2/26/2028 4,066 208,220 — — 9/14/2018 — — — — 2,668 136,628 2,668 136,628 2/22/2018 2,564 1,283 81.20 2/22/2027 2,468 126,386 — — 2/16/2017 2,530 — 71.45 2/16/2026 — — — — 2/22/2016 2,346 — 26.97 2/22/2025 — — — — 6/25/2015 846 — 27.81 6/25/2024 — — — — 2/27/2015 — — 18.14 2/27/2024 — — — — 2/25/2020 — 30,521 24.30 2/25/2029 8,241 422,022 10,988 562,695 3/4/2019 — — — — — — 5,240 268,340 2/26/2019 4,332 8,664 51.02 2/26/2028 3,925 200,999 — — 2/22/2018 5,454 2,728 81.20 2/22/2027 2,250 115,223 3,000 153,630 2/16/2017 8,253 — 71.45 2/16/2026 — — — — 2/22/2016 7,992 — 26.97 2/22/2025 — — — — 2/27/2015 7,892 — 18.14 2/27/2024 — — — — 2/25/2020 — 19,330 24.30 2/25/2029 5,219 267,265 6,959 356,370 3/4/2019 — — — — — 3,244 166,125 2/26/2019 2,681 5,364 51.02 2/26/2028 2,430 124,440 — — 2/22/2018 2,630 1,316 81.20 2/22/2027 1,085 55,563 1,447 74,101 2/16/2017 1,129 — 71.45 2/16/2026 — — — — 2/25/2020 — 6,042 24.30 2/25/2029 3,807 $ 194,956 — — — — — — — — — — — This table reflects Mr. Pappas’s awards outstanding following his retirement in May 2019. A prorated portion of Mr. Pappas’s RSU awards vested upon his retirement pursuant to the terms of the plan. The realized value of the RSUs which vested upon his retirement was $1,173,333, based on the market price on the date of settlement. See “Executive Compensation–Options Exercised and Shares Vested Table” below.(2) (3) (5) The market value of the RSU and PSU awards was calculated using the Company’s closing stock price on December 31, 2019 of $37.21.103
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Options Exercised and Shares Vested Table |
The following table shows the number of options exercised and the number of shares acquired through the vesting of RSU awards by our NEOs during 2019.2020.
| Option Awards | Share Awards | ||
Name | Number of Options Exercised (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Frank A. Bozich | — | — | — | — |
Christopher D. Pappas (1) | — | — | 118,315 | 5,937,980 |
David Stasse | — | — | 6,190 | 321,385 |
Barry J. Niziolek (2) | — | — | 19,143 | 509,651 |
Timothy M. Stedman | — | — | 8,494 | 441,008 |
Angelo N. Chaclas | — | — | 9,038 | 469,253 |
Alice L. M. Heezen | — | — | — | — |
Hayati Yarkadas | — | — | 8,494 | 441,008 |
| Option Awards | | Share Awards | ||||||||||
| | | | | | | | | | | | | |
Name | | Number of Options Exercised (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | |||||
Frank A. Bozich | — | — | — | — | |||||||||
David Stasse | | — | | — | | 2,554 | | 74,526 | |||||
Angelo N. Chaclas | — | — | 2,381 | 69,478 | |||||||||
Alice L. M. Heezen | | — | | — | | 760 | | 22,177 | |||||
Andre Lanning | — | — | — | — | |||||||||
Timothy M. Stedman | | 15,020 | | 15,020 | (1) | | 2,294 | | 66,939 | ||||
| | | | | | | | | | | | | |
(2) Mr. Niziolek retired effective July 1, 2019. Pursuant toexercise was $1 greater than the terms of his award agreement, 4,786 RSUs vested upon his retirement were held for six months and settled on January 2, 2020. The RSUs are valued as of such date.exercise price.
U.S. Non-Qualified Deferred Compensation Table |
The following table summarizes the activity during 2019,2020, as well as the year-end account balances, in our non-qualified savings and deferred compensation plan for Messrs. Bozich, Pappas, Stasse Niziolek and Chaclas. Ms. Heezen and Messrs. Stedman and YarkadasMr. Lanning are based in Switzerland, as was Mr. Stedman prior to his termination, and did notnone were eligible to participate in this plan. The plan allows eligible employees, including the NEOs, to defer a portion of their compensation (up to 75% of base salary and up to 100% of annual cash incentive awards) on a pre-tax basis with a matching contribution from the Company, payable at a future date based on specific plan parameters. Additionally, the plan provides for discretionary company contributions in connection with earnings in excess of the limits under the Company’sCompany's 401(k) plan. While the plan is unfunded, amounts deferred under the plan are credited with earnings based on the performance of selected investment vehicles that are available in the open market. The plan is available to all U.S. employees who satisfy certain eligibility requirements, including the NEOs. An eligible participant can elect to receive a distribution under the plan in the form of a lump sum payment upon separation from service with the Company. Additionally, a participant may elect to receive a distribution at a specified future date in either a single lump sum or a series of annual installments over a period of 5 to 10 years. However, this latter distribution option is only available for the elective deferral of a participant’sparticipant's base salary and annual cash incentive award. Company matching and discretionary contributions must be paid as a lump sum at separation from employment.
Name | Executive Contributions in 2019 ($)(1) | Company Contributions in 2019 ($)(2) | Aggregate Earnings in 2019 ($)(3) | Aggregate Withdrawals/ Distributions in 2019 ($) | Aggregate Balance as of December 31, 2019($)(4) |
Christopher D. Pappas | 55,385 | 188,570 | 117,892 | 3,839,158 | — |
David Stasse | — | 26,157 | 1,470 | — | 84,895 |
Barry J. Niziolek | — | 44,375 | 1,485 | — | 90,315 |
Angelo N. Chaclas | — | 35,187 | 4,837 | — | 139,852 |
Name | | Executive Contributions in 2020 ($) (1) | | Company Contributions in 2020 ($) (2) | | Aggregate Earnings in 2020 ($) (3) | | Aggregate Withdrawals/ Distributions in 2020 ($) | | Aggregate Balance as of December 31, 2020 ($) (4) | ||||||
Frank Bozich | — | — | — | — | — | |||||||||||
David Stasse | $ | 25,188 | $ | 25,745 | $ | 326 | $ | — | $ | 110,409 | ||||||
Angelo N. Chaclas | $ | 23,825 | $ | 25,581 | $ | 6,599 | $ | — | $ | 186,055 | ||||||
| | | | | | | | | | | | | | | | |
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EXECUTIVE COMPENSATION
Pension and Other Postretirement Benefits |
Pension and Other Postretirement Benefits
Switzerland Retirement Plan
The Switzerland retirement plan is a fully insured defined contribution pension plan. Future retirement benefits are calculated based on accumulated savings at retirement, which consists of savings contributions made by the employee and the Company, and an annually credited interest rate that is contingent upon investment results. Actual retirement benefits will be dependent on investment results, actual rate of interest applied on the savings capital, potential future changes in plan regulation and/or legal changes and future salary changes. The amount of pensionable salary is calculated using base pay plus the annual target bonus amount minus a coordination amount that reflects the maximum social security pension in place at the time, and is subject to a statutory maximum. Employee and Company contributions are based on the employee’semployee's age and determined in accordance with the percentage of pensionable salary as follows:
Name | Employee saving contributions in % of pensionable salary | Employer saving contributions in % of pensionable salary |
Alice L. M. Heezen | 8.00% | 8.00% |
Timothy M. Stedman | 8.00% | 8.00% |
Hayati Yarkadas | 8.00% | 8.00% |
Name | | Employee saving contributions in % of pensionable salary | | Employer saving contributions in % of pensionable salary | |||
Alice L. M. Heezen | 8.00 | % | 8.00 | % | |||
Andre Lanning | | 10.00 | % | | 10.00 | % | |
Timothy M. Stedman | 8.00 | % | 8.00 | % | |||
| | | | | | | |
In addition, the Company pays the total premiums for risk benefits and other costs. Benefits are paid as a monthly annuity, lump sum or a combination of these two payment forms.
Supplemental Employee Retirement Benefit
In 2010, we entered into an employment contract with Mr. Pappas which included a provision for non-qualified supplemental employee retirement benefits. Mr. Pappas is 100% vested in these benefits and the accrued benefits, if not subject to Section 409A, would otherwise be due to be paid to Mr. Pappas in a lump sum within 30 days after his termination of employment. The amount payable to Mr. Pappas with respect to his supplemental employee retirement benefits is determined based on his years of Service Credit and his average base salary and target bonus for the three full calendar years prior to his termination. The accrued benefits are equal to the Basic Percentage times the average of his base salary plus target bonus for the three full calendar years prior to his termination (the “Final Average Pay”) plus the Supplemental Percentage times the Final Average Pay reduced by the 36‑month rolling average Social Security Taxable Wage Base as of the date of termination. The Basic Percentage and Supplemental Percentage are determined based on Mr. Pappas’s years of Service Credit, which are 425% and 120%, respectively.
The employment agreement with our Chief Executive Officer and President, Mr. Bozich does not provide for any non-qualified supplemental employee retirement plan benefits.
The following table shows the actuarial present value of accumulated pension and other post-retirement benefits as of December 31, 2019:2020:
Name | Plan Name | Number of Years of Credited Service (#)(2) | Present Value of Accumulated Benefit ($)(3) | Payments During 2019 ($) |
Christopher D. Pappas | Supplemental Employee Retirement Plan | 30.0 | — | 15,517,190 |
Timothy M. Stedman (1) | Switzerland Retirement Plan | 4.5 | 813,214 | — |
Hayati Yarkadas (1) | Switzerland Retirement Plan | 4.5 | 497,804 | — |
Alice L. M. Heezen (1) | Switzerland Retirement Plan | 3.5 | 520,981 | — |
Name | Plan Name | | Number of Years of Credited Service (#) | | Present Value of Accumulated Benefit ($) (1) (2) (3) | | Payments During 2020 ($) | |||||
Alice L. M. Heezen | Switzerland Retirement Plan | 5.5 | $ | 215,271 | — | |||||||
Andre Lanning | Switzerland Retirement Plan | | 1.5 | $ | 288,099 | | — | |||||
Timothy M. Stedman | Switzerland Retirement Plan | n/a | $ | 420,903 | — | |||||||
| | | | | | | | | | | | |
(2) The years of credited service for Mr. Pappas are determined pursuant to his employment agreement, under which he was granted 6 years of Service Credit at the start of his employment and on each anniversary date, until he reached a maximum of 30 years. Mr. Pappas was paid his accrued benefits 6 months following his retirement date.
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EXECUTIVE COMPENSATION
2020.
| Discount rate | | Salary increase | ||||
Switzerland Retirement Plan | 0.06 | % | 2.0 | % | |||
| | | | | | | |
| Discount rate | Salary increase |
Switzerland Retirement Plan | 0.25% | 2.25% |
Payments upon Termination or Change in Control |
Payments upon Termination or Change in Control
Messrs. Bozich, Stasse and Chaclas
In the event of an executive’sexecutive's termination of employment for any reason, Messrs. Bozich, Stasse and Chaclas will each be entitled to receive any unpaid base salary through the date of termination and all accrued and vested benefits under our vacation and other benefit plans and, except in the case of a termination by us for “cause”"cause" or by the executive without “good reason”"good reason" (each, as defined in the executive’sexecutive's employment agreement), (i) any annual bonus earned but unpaid with respect to the calendar year ending on or preceding the date of termination and (ii) a pro rata target bonus for the calendar year of termination.
In addition to the severance benefits described above, upon termination of an executive without “cause”"cause" or by the executive for “good"good reason,”" the executive will be entitled to receive the following severance benefits, subject to the executive’sexecutive's timely execution of a general release of claims.
In the case of Mr. Bozich, in the event of his termination by the Company without “cause”"cause" or if Mr. Bozich terminated his employment for “good reason”"good reason", Mr. Bozich would be entitled to receive a severance amount equal to 2.0 times his annual base salary and target bonus, payable in equal monthly installments over the 24-month period following his termination. Additionally, Mr. Bozich is eligible to receive
105 2021 Proxy Statement
EXECUTIVE COMPENSATION
continued health benefits for a period of 24 months following such termination, provided, however, that if he obtains other employment that offers group health benefits, such continued insurance coverage will terminate, or enrolls in coverage through Medicare, a spousal plan, or an insurance exchange other than COBRA, the Company will pay Mr. Bozich the amount equivalent to the Company’sCompany's share of COBRA premiums for 24 months as if Mr. Bozich had enrolled in COBRA.
In the case of Messrs. Stasse and Chaclas, each will be entitled to receive, subject to his timely execution of a general release of claims (i) an amount equal to 1.5 times the sum of his respective base salary and target bonus, payable in equal monthly installments over the 18 month period following such termination, and (ii) 18 months of health benefits continuation, provided, however, that if he obtains other employment that offers group health benefits, such continued insurance coverage will terminate. To the extent that any executive experiences a termination of employment by us without “cause”"cause" or by the executive for “good reason”"good reason" within two years following a “change"change in control”control" (as defined in the agreements), the cash severance benefits described above will be (or would have been) paid to such executive in a cash lump sum as opposed to in installments.
For Messrs. Bozich, Stasse and Chaclas, to the extent that any payments that are considered to be contingent on a change in control would be subject to Sections 280G and 4999 of the Code, such payments will be reduced if the net benefit to them on an after-tax basis would be greater than receiving the full value of all payments and paying the excise tax. The amounts in the table assume that the full amounts were paid to the executives, without any limitation.
To the extent that any portion of either Messrs. Bozich’s, Stasse’sBozich's, Stasse's or Chaclas' severance amount due to a termination of employment by us without “cause”"cause" or by the executive for “good reason”"good reason" constitutes nonqualified deferred compensation for purposes of Section 409A of the Internal Revenue Code, any payment scheduled to occur during the first 60 days following his termination of employment shall not be paid until the 60th day following his termination.
The agreements with Messrs. Bozich, Pappas, Stasse and Chaclas contain a non-competition covenant that prohibits the executive from competing against us for a period of two years following termination of employment, and for one year in the case of Messrs. Niziolek and Chaclas.employment. These agreements also contain non-solicitation provisions that prohibit the executive from actively soliciting our employees, customers or suppliers during the period of employment and for a period of two years (and a period of one year, in the case of Messrs. Niziolek and Chaclas) following termination of employment. The executives are also subject to perpetual confidentiality restrictions that protect our proprietary information, developments and other intellectual property.
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EXECUTIVE COMPENSATION
Messrs. StedmanMs. Heezen and Yarkadas and Ms. HeezenMr. Lanning
In the event of termination of his or her employment for any reason, Messrs. Stedman and Ms. Heezen and Mr. Lanning will each be entitled to receive any unpaid base salary through thetheir date of termination and all accrued and vested benefits under our vacation and other benefit plans and, except in the case of a termination by us for “cause”"cause" or by the executive (i) any annual bonus earned but unpaid with respect to the calendar year ending on or preceding the date of termination; and (ii) an amount equal to the pro-rata portion of hisher target bonus for the calendar year of termination. Mr. Stedman and Ms. Heezen and Mr. Lanning will also each receive payments required by applicable law upon a termination by reason of disability, as described in the table below.
In addition to the severance benefits described above, upon termination of Mr. Stedman or Ms. Heezen or Mr. Lanning by us without “cause”"cause", each will each be entitled to receive severance benefits, subject to his or her timely execution of a general release of claims inclaims. Ms. Heezen's and Mr. Lanning's severance benefits will be an amount equal to 1.5 times and 1.0 times, respectively, of the sum of his or hertheir annual base salary and target bonus.bonus, payable in equal monthly installments over the 18-month period following such termination. To the extent that they experiencehe or she experiences a termination of employment by us without “cause”"cause" or by him or her for “good reason”"good reason" within two years following a “change"change in control”control" (as defined in his or hertheir agreement), the cash severance benefits described above will be paid in a cash lump sum as opposed to in installments.
On October 2, 2019, Mr. Yarkadas entered into a separation agreement with the Company’s subsidiary, Trinseo Europe GmbH, pursuant to which he is entitled to receive (i) a severance payment equal to one year’s salary, subject to a downward adjustment to the extent his employment extends beyond September 30, 2020 (ii) his 2019 ACI Plan bonus based on the financial performance and Responsible Care metrics, and (iii) continued health and welfare benefits as provided in his employment contract or required by local law. Mr. Yarkadas terminated his employment as of March 16, 2020 and received the severance payment described in (i) above.
The agreements for Messrs. StedmanMs. Heezen and Yarkadas eachMr. Lanning contain a non-competition covenant that prohibits each executive from competing against us, and non-solicitation provisions that prohibit each executive from actively soliciting our employees, customers or suppliers, for a period of 18 months, and for Ms. Heezen, 24 months,two years, following his or her termination of employment. Each executive isMs. Heezen and Mr. Lanning are also subject to perpetual confidentiality restrictions that protect our proprietary information, developments and other intellectual property.
Potential Payments
The following table provides examples of the potential payments upon termination or upon a termination following a change in control to our NEOs, as if such event(s) took place on December 31, 20192020 (the last business day of our most recent fiscal year). The amounts reflected in this table were determined in accordance with each NEO’sNEO's then existing employment agreement.
Amounts shown do not include (i) accrued but unpaid salary and vested benefits, including pension (as described above) and (ii) other benefits earned or accrued by the named executive officer during his or her employment that are available to all salaried employees and that do not discriminate in scope, terms or operations in favor of executive officers. With respect to any termination of employment, each NEO is entitled to receive accrued but unpaid base salary through the date of termination of employment, accrued but unpaid vacation and pension benefits (as described above) through such date, and, in the case of a termination due to death, earned but unpaid bonus, if any, for the immediately preceding calendar year and a pro-rata bonus for the year of termination.
20202021 Proxy Statement 55 106
EXECUTIVE COMPENSATION
Name | Termination Trigger | | Cash Separation Payment ($) (1) | | Health and Welfare Benefits ($) (2) | | Value of Previously Unvested Equity Awards ($) (3) | | Value of Insurance Benefit ($) (4) | | 2020 Target Cash Compensation ($) (5) | | Cash Separation Payment Multiple | ||||||||
Frank A. Bozich | Termination for Cause | — | — | — | — | — | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Termination Without Cause | 4,600,000 | 21,190 | 5,069,523 | — | 2,300,000 | 2 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Death | — | — | 9,126,388 | 500,000 | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Disability | — | 21,190 | 9,126,388 | 250,000 | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Change in Control | 4,600,000 | 21,190 | 11,705,537 | — | 2,300,000 | 2 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
David Stasse | Termination for Cause | | — | | — | | — | | — | | — | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Termination Without Cause | | 1,275,000 | | 21,190 | | 1,435,845 | | — | | 850,000 | | 1.5 | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Death | | — | | — | | 2,205,305 | | 500,000 | | — | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Disability | | — | | 21,190 | | 2,205,305 | | 250,000 | | — | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Change in Control | | 1,275,000 | | 21,190 | | 2,705,118 | | — | | 850,000 | | 1.5 | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
Angelo N. Chaclas | Termination for Cause | — | — | — | — | — | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Termination Without Cause | 1,134,750 | 13,327 | 1,190,577 | — | 756,500 | 1.5 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Death | — | — | 2,082,266 | 500,000 | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Disability | — | 13,327 | 2,082,266 | 250,000 | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Change in Control | 1,134,750 | 13,327 | 2,617,502 | — | 756,500 | 1.5 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Alice L. M. Heezen | Termination for Cause | | — | | — | | — | | — | | — | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Termination Without Cause | | 946,229 | | — | | 734,318 | | — | | 630,820 | | 1.5 | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Death | | — | | — | | 1,270,581 | | — | | — | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Disability | | — | | — | | 1,270,581 | | — | | — | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Change in Control | | 946,229 | | — | | 1,606,594 | | — | | 630,820 | | 1.5 | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
Andre Lanning | Termination for Cause | — | — | — | — | — | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Termination Without Cause | 628,126 | — | 218,014 | — | 628,126 | 1.0 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Death | — | — | 362,115 | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Disability | — | — | 362,115 | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Change in Control | 628,126 | — | 362,115 | — | 628,126 | 1.0 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Name | Termination Trigger | Cash Separation Payment ($)(1) | Health and Welfare Benefits ($)(2) | Value of Previously Unvested Equity Awards ($)(3) | Value of Insurance Benefit ($)(4) | 2019 Target Cash Compensation ($)(5) | Cash Separation Payment Multiple |
Frank A. Bozich | Termination for Cause | — | — | — | — | — | — |
Termination Without Cause | 3,818,630 | 42,613 | 382,169 |
| 1,909,315 | 2 | |
Death | — | — | 1,815,570 | 500,000 | — | — | |
Disability | — | 42,613 | 1,815,570 | 250,000 | — | — | |
Change in Control | 3,818,630 | 42,613 | 2,958,953 |
| 1,909,315 | 2 | |
David Stasse | Termination for Cause | — | — | — | — | — | — |
Termination Without Cause | 1,002,188 | 31,960 | 249,901 | — | 668,126 | 1.5 | |
Death | — | — | 511,536 | 500,000 |
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Disability | — | 31,960 | 511,536 | 250,000 |
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Change in Control | 1,002,188 | 31,960 | 569,653 |
| 668,126 | 1.5 | |
Timothy M. Stedman | Termination for Cause | — | — | — | — | — | — |
Termination Without Cause | 1,197,148 | — | 344,390 | — | 798,098 | 1.5 | |
Death | — | — | 1,093,805 | — | — | — | |
Disability | — | — | 1,093,805 | — | — | — | |
Change in Control | 1,197,148 | — | 1,485,062 | — | 798,098 | 1.5 | |
Angelo N. Chaclas | Termination for Cause | — | — | — | — | — | — |
Termination Without Cause | 1,134,750 | 20,097 | 189,821 | — | 756,500 | 1.5 | |
Death | — | — | 592,325 | 500,000 | — | — | |
Disability | — | 20,097 | 592,325 | 250,000 | — | — | |
Change in Control | 1,134,750 | 20,097 | 791,611 | — | 756,500 | 1.5 | |
Alice L. M. Heezen | Termination for Cause | — | — | — | — | — | — |
Termination Without Cause | 890,304 | — | 82,109 | — | 593,536 | 1.5 | |
Death | — | — | 238,086 | — | — | — | |
Disability | — | — | 238,086 | — | — | — | |
Change in Control | 890,304 | — | 350,568 | — | 593,536 | 1.5 | |
Hayati Yarkadas | Termination for Cause | — | — |
| — | — | — |
Termination Without Cause | 1,197,148 | — | 89,587 | — | 798,098 | 1.5 | |
Death | — | — | 214,319 | — | — | — | |
Disability | — | — | 214,319 | — | — | — | |
Change in Control | 1,197,148 | — | 221,347 | — | 798,098 | 1.5 |
2020107 2021 Proxy Statement 56
CEO PAY RATIO
CEO Pay Ratio |
In 2019Based on a review of our internal records, we believe there were no significant changes to the global employee population or employee compensation arrangements in 2020. Therefore, the Company updated its comparison ofused the same median employee for the 2020 CEO pay ratio calculation identified in 2019 to calculate this year's pay ratio, and calculated the pay of its employees, consistent with SEC rules. As of December 31, 2019,total annual compensation for this employee using the Company determined that total number of employeessame methodology as used for our named executive officers. Total compensation for 2020 for our CEO was 2,582. To identify$5,035,919, and the median employee, the Company chose target total cash compensation as the consistently applied compensation measure. To make this calculation, the Company reviewed cash compensation of all employees of the Company as of December 31, 2019 and annualized pay for those employees who commenced work during 2019 and any employee who was on unpaid leave for a portion of 2019. The Company used a valid statistical sampling methodology to identify a population of employees whose target total cash compensation was within a 2% range of the median. From this sample, the Company identified the median employee and determined that person’semployee's total compensation was $84,362.$84,959. Therefore, as further described in the table below, the Company’s 2019Company's 2020 ratio of CEO pay to median worker pay is 81:59:1.
Compensation Element | CEO ($) | Median Employee ($) |
Annual Salary | 830,137 | 67,065 |
Overtime (OT), Double Time (DT), and Shift Differential (SD) | — | 9,161 |
Salary (including OT, DT and SD) | 830,137 | 76,226 |
Bonus | 538,244 | — |
Fair Value of Stock Awards | 4,050,985 | — |
Fair Value of Option Awards | 824,675 | — |
Non-equity Incentive Plan Compensation | 460,000 | 1,216 |
Change in Pension Value | — | — |
All Other Compensation | 165,557 | 6,920 |
Summary Compensation Table Totals | 6,869,598 | 84,362 |
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2019 CEO Pay Ratio | 81:1 |
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Compensation Element | | CEO ($) | | Median Employee ($) | |||
Annual Salary | $ | 882,692 | $ | 71,015 | |||
Overtime (OT), Double Time (DT), and Shift Differential (SD) | $ | — | $ | 6,167 | |||
Salary (including OT, DT and SD) | $ | 882,692 | $ | 77,182 | |||
Bonus | $ | — | $ | 1,000 | |||
Fair Value of Stock Awards | $ | 1,935,997 | $ | — | |||
Fair Value of Option Awards | $ | 826,322 | $ | — | |||
Non-equity Incentive Plan Compensation | $ | 1,364,354 | $ | 2,137 | |||
Change in Pension Value | $ | — | $ | — | |||
All Other Compensation | $ | 26,554 | $ | 4,640 | |||
Summary Compensation Table Totals | $ | 5,035,919 | $ | 84,959 | |||
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2020 CEO Pay Ratio | 59:1 | ||||||
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SEC rules for identifying the median employee allow companies to adopt a variety of methodologies, and to use reasonable estimates and assumptions that reflect their compensation practices. As such, pay ratios reported by other companies may not be comparable to the Company's pay ratio reported above.
20202021 Proxy Statement 57 108
PROPOSAL 9
Proposal 9—Advisory Vote on the Frequency of Shareholder Votes on Executive Compensation |
Pursuant to SEC rules, the Company is providing its shareholders a separate non-binding advisory vote to recommend whether an advisory vote on named executive officer compensation should occur every one, two or three years.
The Board has determined that an advisory vote on executive compensation that occurs every year remains the most appropriate alternative for our Company and recommends an annual vote for the advisory vote on executive compensation. In formulating its recommendation, the Board considered that an annual advisory vote on executive compensation provides the highest level of communication with our shareholders by allowing our shareholders to provide us with their direct input on our named executive officer compensation, as disclosed in the proxy statement, every year.
In the future, we may determine that a less frequent advisory vote is appropriate, either in response to the vote of our shareholders on this proposal or for other reasons.
Shareholders may cast their vote on the preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when voting on this proposal.
Although this advisory vote on frequency is not binding on Trinseo's Board of Directors, the Board values shareholder views as to what is an appropriate frequency for advisory say-on-pay votes, and welcomes the shareholders' recommendation on this question. If a plurality of votes is cast in favor of an interval other than one year, the Board intends to consider such alternative frequency prior to determining the frequency for say-on-pay votes to be submitted to shareholders in the future.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE OPTION
OF ONCE EVERY YEAR ("1 YEAR") AS THE RECOMMENDED FREQUENCY OF AN ADVISORY VOTE
ON NAMED EXECUTIVE OFFICER COMPENSATION.
109 2021 Proxy Statement
DIRECTOR COMPENSATION
For each of our non-employee directors, our director compensation program consists of an annual cash retainer payment of $90,000, and an annual equity retainer of restricted stock units with a grant date fair value of $120,000, which vest on the one-year anniversary of their grant date. Additionally, the Board’sBoard's non-employee chair receives an additional annual cash retainer of $100,000. The non-employee chairs of the audit committee, compensation committee, and nominating and corporate governance committee receive additional annual cash retainers of $25,000, $15,000, and 10,000, respectively.
Our directors are subject to the Company's share ownership guidelines, which stipulate that each director must hold five (5) times their annual cash retainer in Trinseo shares within five (5) years from the later of January 1, 2016 or the date of becoming a Board member. All directors subject to the guidelines are in compliance.
The following table sets forth information concerning the compensation earned by our directors during fiscal 2019.2020.
| Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($)(4) | Total ($) |
Joseph Alvarado | 90,000 | 120,000 | — | 210,000 |
Jeffrey J. Cote | 115,000 | 120,000 | — | 235,000 |
Pierre-Marie De Leener | 90,000 | 120,000 | — | 210,000 |
K’Lynne Johnson | 100,625 | 120,000 | — | 220,625 |
Sandra Beach Lin | 10,250 | — | — | 10,250 |
Philip R. Martens | 90,000 | 120,000 | — | 210,000 |
Donald T. Misheff | 100,000 | 120,000 | — | 220,000 |
Christopher Pappas | 60,000 | 120,000 | — | 180,000 |
Henri Steinmetz | 90,000 | 120,000 | 15,758 | 225,758 |
Mark Tomkins | 10,250 | — | — | 10,250 |
Stephen M. Zide | 194,375 | 120,000 | — | 314,375 |
| Fees Earned or Paid in Cash ($) (1) | | Stock Awards ($) (2) (3) | | All Other Compensation ($) (4) | | Total ($) | ||||||
Joseph Alvarado | $ | 78,750 | $ | 120,000 | $ | — | $ | 198,750 | |||||
Jeffrey J. Cote | $ | 96,667 | $ | 120,000 | $ | — | $ | 216,667 | |||||
Pierre-Marie De Leener | $ | 78,750 | $ | 120,000 | $ | — | $ | 198,750 | |||||
Jeanmarie Desmond | $ | 22,500 | $ | — | $ | — | $ | 22,500 | |||||
Matthew Farrell | $ | 15,000 | $ | — | $ | — | $ | 15,000 | |||||
K'Lynne Johnson | $ | 147,375 | $ | 120,000 | $ | — | $ | 267,375 | |||||
Sandra Beach Lin | $ | 78,750 | $ | 120,000 | $ | — | $ | 198,750 | |||||
Philip R. Martens | $ | 80,333 | $ | 120,000 | $ | — | $ | 200,333 | |||||
Donald T. Misheff | $ | 85,917 | $ | 120,000 | $ | — | $ | 205,917 | |||||
Henri Steinmetz | $ | 78,750 | $ | 120,000 | $ | 25,494 | $ | 224,244 | |||||
Mark Tomkins | $ | 82,708 | $ | 120,000 | $ | — | $ | 202,708 | |||||
Christopher Pappas | $ | 56,250 | $ | 120,000 | (5) | $ | — | $ | 176,250 | ||||
Stephen Zide | $ | 88,250 | $ | 120,000 | (5) | $ | — | $ | 208,250 | ||||
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In March 2020, each director voluntarily agreed to temporarily reduce their quarterly cash stiped by 50% during the second quarter of 2020 to support the Company's initiatives in light of the uncertainty created by the effects of the COVID-19 and its economic impact on the Company.
10-K.
20202021 Proxy Statement 58 110
PROPOSAL 310
Proposal 10—Approval of Changes to Director Compensation Program |
Luxembourg law requires our shareholders to approve our non-executive director compensation program. Our Board periodically evaluates its non-executive director compensation program to ensure that it is designed to remain competitive so that we can continue to attract and retain a qualified and diverse Board. Our Board is requesting shareholder approval to change the Company's non-executive director program in order to increase each director's annual equity retainer from $120,000 to $130,000. In addition, the Board is requesting shareholder approval to change the retainer paid to its non-executive Chair from $100,000 to $130,000.
Proposal 3–ApprovalAn analysis by Willis Towers Watson found our overall director compensation, and the retainer paid to our Board Chair, was below the current median for our peer group. See "Compensation Discussion and Analysis—How We Make Compensation Decisions—Use of Benchmarking Comparison Data" for a list of our current peer group. Therefore, this increase in equity compensation will allow us to continue to attract and retain talented and experienced board members, including our Chair, while also recognizing the increasing oversight responsibilities of our directors and in particular our Chair.
We believe maintaining competitive levels of director compensation can also provide for greater Board diversity by attracting a wider pool of director candidates. Additionally, by more heavily weighting our equity compensation component over our cash component, as more of our peers do, we are providing greater alignment between our Board's interests and those of our shareholders.
If approved by a majority of the Company’s Luxembourg Statutory Accounts
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shares represented in person or by proxy at the General Meeting, the increase to each non-executive directors' equity retainer would be reflected in such directors' 2021 restricted stock unit grant, and the increases to the Board Chair cash retainer increases would be made effective July 1, 2021. Broker non-votes will have no effect on the outcome of this proposal.
2020 Proxy Statement 59THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE PROPOSED CHANGE TO THE DIRECTOR COMPENSATION PROGRAM.
111 2021 Proxy Statement
PROPOSALS 4 & 5PROPOSAL 11
Proposal 4–Resolution on the Allocation of the Results of the Financial Year Ended December 31, 2019
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Pursuant to Luxembourg Law, the Luxembourg Statutory Accounts must be submitted each year to shareholders for approval at the annual general meeting of shareholders.
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Proposal 5– ApprovalThe Luxembourg Statutory Accounts are prepared in accordance with Luxembourg GAAP and consist of a balance sheet, a profit and loss account and the notes for Trinseo. There is no statement of movements in equity or statement of cash flows included in the Luxembourg Statutory Accounts under Luxembourg GAAP. Profits earned by the subsidiaries of Trinseo are not included in the Luxembourg Annual Accounts unless such amounts are distributed to Trinseo. The Luxembourg Statutory Accounts as of and for the year ended December 31, 2020, show total assets of $702.5 million and profits for the year then ended of $132.4 million. The shareholders of the GrantingCompany are being asked to approve the Luxembourg Statutory Accounts including, in light of Dischargethe profits reflected therein, an annual dividend in the amount of the aggregate interim dividends which have already been paid to shareholders.
The Company has declared four interim dividends since the Company's last annual general meeting of shareholders, in the amount of $0.08 per share, declared on February 18, 2021 which was paid on April 22, 2021, $0.08 per share, declared on December 16, 2021 and paid on January 21, 2021, $0.40 per share declared on September 24, 2020 and paid on October 22, 2020, and $0.40 per share declared on June 10, 2020 and paid on July 23, 2020. In accordance with Luxembourg Law, the shareholders of the Company are being asked to approve the Luxembourg Statutory Accounts, including the amount of the interim dividends which have already been paid to shareholders.
The Consolidated Accounts are prepared in accordance with U.S. GAAP, including a footnote reconciliation of equity and net income (loss) to International Financial Reporting Standards as adopted by the European Union ("IFRS"), and consist of a balance sheet, statement of operations, statement of changes in shareholders' equity, statement of cash flows and the accompanying notes.
The Consolidated Accounts present the financial position and results of operations for Trinseo and all of its subsidiaries as if the individual entities were a single company. As of December 31, 2020, the Consolidated Accounts show IFRS total equity of $587.4 million and IFRS net income of $8.1 million for the year then ended.
Trinseo's Luxembourg Statutory Accounts will be made available to shareholders no later than 30 days prior to the DirectorsGeneral Meeting and Auditor forwill remain posted until the Performanceconclusion of Their Respective Duties During the Financial Year Ended December 31, 2019
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General Meeting. Shareholders may view Trinseo's Luxembourg Statutory Accounts at Trinseo's registered office, or online at our investor relations website, www.investor.trinseo.com.
Pursuant to Luxembourg Law, following shareholder approval of the Luxembourg Statutory Accounts, such accounts must be filed with the Luxembourg trade registry as public documents. If Trinseo does not receive approval of the Luxembourg Statutory Accounts by a majority of the shares represented in person or by proxy at the General Meeting, we cannot make this filing with the Luxembourg trade registry.
2020 Proxy Statement 60THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE LUXEMBOURG STATUTORY ACCOUNTS.
2021 Proxy Statement 112
PROPOSALS 12 AND 13
Proposal 12—Resolution on the Allocation of the Results of the Financial Year Ended December 31, 2020 |
Pursuant to Luxembourg Law, shareholders must decide how to allocate the results of the previous financial year based on the approved Luxembourg Statutory Accounts. In the event the Company has profits, the Company's Board of Directors may propose to the shareholders to either declare an annual dividend and, if not yet fully distributed as interim dividends over the financial year under review, distribute those profits or retain such earnings. In the event of losses, the Board generally proposes that such losses be carried forward to the following year.
The Luxembourg Statutory Accounts show profits for the year ended December 31, 2020 of $132,427,477.06.
In light of the amounts already distributed as interim dividends (as described in Proposal 11 above) the Board unanimously recommends shareholders approve an annual dividend in the amount of the aggregate interim dividends which have already been paid to the shareholders and to retain and carry forward the remaining earnings (corresponding to the difference between the profits for the financial year and the annual dividend) to the following year. The approval of this proposal does not preclude the Board from approving interim dividends from profits earned after December 31, 2020 within the parameters provided under our Articles and Luxembourg Law.
This proposal requires the approval of a majority of the shares represented in person or by proxy at the General Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE FORGOING ALLOCATION OF THE RESULTS OF THE FINANCIAL YEAR
ENDED DECEMBER 31, 2020.
Proposal 13—Approval of the Granting of Discharge to the Directors and Auditor for the Performance of Their Respective Duties During the Financial Year Ended December 31, 2020 |
Pursuant to Luxembourg Law, the shareholders must decide whether to give discharge to the directors and auditor for the performance of their duties during the previous financial year at the time the annual accounts of such year are presented to the shareholders for approval.
The granting of discharge to the directors and auditor bars the shareholders from holding the directors and auditor liable in relation to factual matters revealed by and contained in the Luxembourg Statutory Accounts.
This proposal requires the approval of a majority of the shares represented in person or by proxy at the General Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE GRANTING OF DISCHARGE TO THE DIRECTORS AND AUDITOR
FOR THE PERFORMANCE OF THEIR RESPECTIVE DUTIES DURING THE
FINANCIAL YEAR ENDED DECEMBER 31, 2020.
113 2021 Proxy Statement
AUDIT COMMITTEE MATTERS
Audit Committee Matters |
We operate in accordance with a written charter adopted by the Board and reviewed annually by the audit committee, a copy of which is available on our website, www.investor.trinseo.com, under the “Corporate"Corporate Governance—Committee Composition”Composition" section. We are responsible for overseeing the quality and integrity of Trinseo’sTrinseo's accounting, auditing and financial reporting practices. In accordance with the rules of the SEC and the NYSE, the audit committee is composed entirely of members who are independent, as defined by the listing standards of the NYSE. Further, the Board has determined that threefive of its members, Ms. Desmond and Messrs. Cote, Farrell, Misheff and Tomkins, are each audit committee financial experts as defined by the rules of the SEC.
The audit committee met nine times during fiscal 20192020 with Trinseo’sTrinseo's management and PwC, Trinseo’sTrinseo's independent registered public accounting firm, including, but not limited to, meetings held to review and discuss the annual audited and quarterly financial statements and the Company’sCompany's earnings press releases.
We believe that we fully discharged our oversight responsibilities as described in our audit charter, including with respect to the audit process. We received the written disclosures and the letter from PwC pursuant to Rule 3526, Communication with Audit Committees Concerning Independence, of the Public Company Accounting Oversight Board (“PCAOB”("PCAOB") concerning any relationships between PwC and Trinseo and the potential effects of any disclosed relationships on PwC’sPwC's independence and discussed with PwC its independence. We discussed with management, the internal auditors and PwC, Trinseo’sTrinseo's matters including internal control over financial reporting and the internal audit function’sfunction's organization, responsibilities, budget and staffing. We reviewed with both PwC and our internal auditors their audit plans, audit scope, identification of audit risks and the results of their audit efforts.
We discussed and reviewed with PwC the matters required to be discussed by Auditing Standard No. 1301, “Communications"Communications with Audit Committees,”" as adopted by the PCAOB and, with and without management present, discussed and reviewed the results of PwC’sPwC's examination of Trinseo’sTrinseo's financial statements. We also discussed the results of the internal audit examinations with and without management present.
Audit and Other Fees
Audit and Other Fees |
The following table shows the fees for professional services rendered by PricewaterhouseCoopers LLP (“PwC”("PwC") for the year ended December 31, 2020 (fiscal 2020) and the year ended December 31, 2019 (fiscal 2019) and the year ended December 31, 2018 (fiscal 2018):
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| 2019 | 2018 |
Audit fees(1) | $6,419,000 | $6,444,000 |
Audit-related fees(2) | $3,065,000 | $656,000 |
Tax fees(3) | $2,621,000 | $2,578,000 |
All other fees(4) | $4,000 | $129,000 |
Total fees | $12,109,000 | $9,807,000 |
| 2020 | | 2019 | ||||
Audit fees (1) | $ | 5,289,000 | $ | 6,419,000 | |||
Audit-related fees (2) | $ | 4,990,000 | $ | 3,065,000 | |||
Tax fees (3) | $ | 203.000 | $ | 2,621,000 | |||
All other fees (4) | $ | 5,000 | $ | 4,000 | |||
Total fees | $ | 10,487,000 | $ | 12,109,000 | |||
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systems, financial due diligence, pension plan audits, and various other agreed upon procedures.
We pre-approve all audit services and all permitted non-audit services by PwC, including engagement fees and terms. Our policies prohibit the Company from engaging PwC to provide any services relating to bookkeeping
2020 Proxy Statement 61
AUDIT COMMITTEE MATTERS
or other services related to accounting records or financial statements, financial information system design and implementation, appraisal or valuation services, fairness opinions or contribution-in-kind reports, actuarial services, internal audit outsourcing, any management function, legal services or expert services not related to the audit, broker-dealer, investment adviser, or investment banking services or human resource consulting. In addition, we evaluate whether the Company’sCompany's use of PwC for permitted non-audit services is compatible with maintaining PwC’sPwC's independence. We concluded that PwC’sPwC's provision of non-audit services, all of which we approved in advance, was compatible with its independence.
2021 Proxy Statement 114
AUDIT COMMITTEE MATTERS
We reviewed the audited consolidated financial statements of Trinseo as of December 31, 20192020 with management and PwC. Management has the responsibility for the preparation of Trinseo’sTrinseo's financial statements, and PwC has the responsibility for the audit of those statements.
Based on these reviews and discussions with management and PwC, we recommended to the Board that Trinseo’sTrinseo's audited financial statements be included in its Annual Report on Form 10‑K10-K for fiscal 20192020 for filing with the SEC. We have reviewed and evaluated the performance of PwC, and as a result have selected PwC as the independent registered public accounting firm for fiscal 2020,2021, subject to ratification by Trinseo’sTrinseo's shareholders. We have also reviewed and evaluated the performance of PwC Luxembourg, and as a result have selected PwC Luxembourg as the independent auditor for all of Trinseo’sTrinseo's statutory accounts required under Luxembourg law for fiscal 2020,2021, subject to ratification by Trinseo’sTrinseo's shareholders.
Audit Committee
Mark Tomkins, Chair
Jeffrey J. Cote Chair
Jeanmarie Desmond
Joseph Alvarado
Pierre-Marie De Leener
Donald T. Misheff
Mark Tomkins
2020115 2021 Proxy Statement 62
PROPOSALS 6 & 714 AND 15
The audit committee of our Board has proposed to appoint PwC Luxembourg to be our independent auditor for the year ending December 31, 2021 for all statutory accounts as required by Luxembourg Law for the same period. The audit committee has further recommended that such appointment be submitted for approval by our shareholders at the General Meeting.
Representatives of PwC Luxembourg will be available at the General Meeting, will be given the opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions from you.
This proposal requires the approval of a majority of the Independent Auditorshares represented in person or by proxy at the General Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE APPOINTMENT OF PWC LUXEMBOURG AS INDEPENDENT AUDITOR FOR
ITS LUXEMBOURG ACCOUNTS.
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Proposal 7–RatificationThe audit committee of Appointmentour Board has proposed to appoint PwC to be our independent registered public accounting firm for the year ending December 31, 2021 for Trinseo's consolidated financial statements. The audit committee has further recommended that such appointment be submitted for approval by our shareholders at the General Meeting.
Representatives of PwC will be available at the General Meeting, will be given the opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions from you.
This proposal requires the approval of a majority of the Independent Registered Public Accounting Firm
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2020 Proxy Statement 63THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF APPOINTMENT OF PWC AS ITS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Proposal 8–Declaration of Annual Dividend in the Amount Already Paid by Interim Dividends Declared During Financial Year
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2020 Proxy Statement 64
PROPOSAL 9
Proposal 9–Authorization of Repurchase Program
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2020 Proxy Statement 65
PROPOSAL 10
Proposal 10–Adoption of Amendment to Omnibus Incentive Plan
Background
Our Board is recommending approval of an amendment to the Company’s Amended and Restated 2014 Omnibus Incentive Plan (the “Plan”) solely to increase the number of shares authorized for issuance under the Plan by 680,000 shares, to 6,000,000 shares. The Board believes this is necessary to ensure that the Company has a sufficient number of ordinary shares available under the Plan to attract and retain the services of key individuals essential to the Company’s long-term growth and success.
The recent economic disruption related to the COVID-19 coronavirus outbreak has caused a significant decline in global equity markets, including the market value of the Company’s ordinary shares. We had anticipated seeking shareholder approval for an increase in the number of shares available for issuance under the Plan at our 2021 annual general meeting of shareholders, but we have determined that the number of shares remaining under the Plan will be insufficient to provide equity incentive awards to the Company’s employees, directors and executive officers next year. The increase to authorized shares sought by this amendment will allow the Company to continue to grant awards to employees in 2021, based on the current market price of its ordinary shares. The Board believes that these types of awards align the interests of employees with those of our shareholders, and believes it is important to maintain a sufficient number of shares in the Plan for this purpose. The Board is recommending that shareholders approve this amendment to the Plan so the Company may continue to effectively utilize its equity incentive programs to reward and incentivize its employees.
The following summary of the Plan, as amended, is qualified in its entirety by the complete text of the amended and restated Plan contained in Appendix A to this proxy statement. In 2014, the Board adopted and implemented the Plan in connection with our initial public offering. In 2019, our shareholders approved amendments to the Plan to provide for authorization of additional shares, as well as amendments to certain key provisions to better protect shareholder interests and promote effective governance practices. Currently, the Plan includes the following terms:
• a minimum vesting requirement of 12 months for all awards, subject to exceptions discussed below for death or disability, or a five percent carveout set by the Company;
• no liberal recycling of shares for net exercise or tax withholdings;
• dividends and dividend equivalents are subject to the same vesting requirements as the award;
• no automatic replenishment of shares;
• options may not be priced lower than fair market value on the grant date; and
• no repricing of “underwater” options; and
• no automatic grants to any participant.
Purpose
The purpose of the Plan is to advance the interests of the Company by motivating performance through incentive compensation that ties the interests of our directors, executive officers, and senior employees with those of our shareholders. The Plan also is intended to encourage participant ownership in the Company, attract and retain talent, and enable participants to participate in the long-term growth and financial success of the Company.
Eligibility and Participation
Our key employees, directors, consultants and advisors are eligible to participate in the Plan. The Company’s most recent Awards were granted to 114 employees and 10 executive officers in February 2020. Our Company has historically granted each of our non-executive directors annual equity retainer grants under the Plan.
Shares Subject to the Plan
The total number of ordinary shares available for Awards under the Plan is currently 5,320,000, which may consist of authorized and unissued shares or treasury shares. Approval of this proposal would add 680,000 ordinary shares to the Plan share reserve.
2020 Proxy Statement 66
PROPOSAL 10
The maximum number of our ordinary shares subject to stock options and the maximum number of shares of our ordinary shares subject to stock appreciation rights, or SARs, that may be granted to any participant in the Plan in any calendar year is each 900,000 shares. The maximum number of our ordinary shares subject to other awards that may be granted to any participant in the Plan in any calendar year is 450,000 shares and the maximum amount payable to any participant in the Plan in any calendar year is $5,000,000 under a cash award.
Shares withheld in the satisfaction of tax withholding requirements or as payment of the exercise or purchase price, or purchased by the Company using proceeds from the Awards, are prohibited from being returned to the Plan’s share reserve for future issuance. The gross number of SAR Awards granted under the Plan, versus the net number of shares delivered under the SAR Award, are deducted from the number of shares remaining available for issuance under the Plan. Any shares underlying Awards settled in cash, or that otherwise expire or become unexercisable without having been exercised, or that are otherwise forfeited or repurchased by the Company due to the failure to vest, may be returned to the share reserve for the Plan for future issuance.
The following table includes information regarding the outstanding equity Awards and shares available for future awards under Plan as of April 1, 2020:
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(1) Full-Value Awards are a grant of one or more ordinary shares or a right to receive one or more ordinary shares in the future (including restricted stock, restricted stock units, performance stock and performance stock units). The Company’s Full-Value Awards have consisted of RSUs and PSUs.
See the Company’s “Equity Compensation Plan Information” in this proxy statement for more information on the Company’s equity usage during 2019.
Awards
The Plan authorizes grants of a variety of types of Awards to maintain flexibility. The Plan permits the granting of:
• Stock options, which may be incentive stock options (“ISOs”) as defined in Section 422 of the Internal Revenue Code or non-qualified stock options (“NQOs”)
• stock appreciation rights (“SAR”)
• restricted stock
• restricted stock units (“RSU”)
• performance awards
• other stock-based awards (collectively referred to as “Awards”)
Administration
The Plan is administered by our compensation committee. Our compensation committee has the authority to, among other things, interpret the Plan, determine eligibility for, grant and determine the terms of awards under the Plan, determine the form of settlement of awards (whether in cash, shares of our ordinary shares or other property), and do all things necessary or appropriate to carry out the purposes of the Plan. Our compensation committee’s determinations under the Plan are conclusive and binding.
Types of Awards
Stock Options. Stock options granted under the Plan may be either NQOs or ISOs. The price of any stock option granted may not be less than the fair market value (or in the case of certain ISOs, 110% of the fair market value) of the Company’s ordinary shares on the date the stock option is granted. The stock option price is payable in cash or certified check, ordinary shares of the Company, through a broker-assisted cashless exercise, by any other method approved by the compensation committee, or any combination of the foregoing. The standard form of payment of the exercise price is by delivery of cash by a broker-dealer as a cashless exercise. The participant will have the rights of a shareholder after giving written notice of exercise and paying the option price, once the shares are recorded as having been issued and transferred.
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The compensation committee determines the terms of each stock option grant (including the vesting schedule) at the time of the grant. All stock options will terminate no later than 10 years (or, in the case of certain ISOs, five years) from the date of the grant. To the extent necessary to comply with Section 409A of the Internal Revenue Code, stock options will not include any feature allowing deferral of income beyond the date of exercise (other than through the receipt of restricted stock at exercise).
Stock Appreciation Rights. A SAR entitles the participant, upon settlement, to receive a payment based on the excess of the value of an ordinary share of the Company on the date of settlement over the base price of the SAR, multiplied by the number of SARs being settled. SARs may be granted alone or in addition to other Awards. The base price of a SAR may not be less than the fair market value (as defined in the Plan) of an ordinary share of the Company on the date of grant. The compensation committee will determine the vesting requirements and the payment and other terms of a SAR. Vesting may be based on the continued service of the participant for specified time periods or on the attainment of specified business performance goals established by the compensation committee or both. SARs may be payable in cash or in ordinary shares of the Company. A SAR will terminate no later than 10 years from the date of the grant. A SAR will be forfeited or terminated under the same circumstances as stock options under the Plan, unless otherwise provided in an Award agreement or determined by the compensation committee. To the extent necessary to comply with Section 409A of the Internal Revenue Code, SARs will not include any feature allowing deferral of income beyond the date of exercise.
Restricted Stock. A restricted stock Award represents ordinary shares of the Company that are issued subject to restrictions on transfer and vesting requirements as determined by the compensation committee. Vesting requirements may be based on, among other things, the continued service of the participant for specified time periods or on the attainment of specified business performance goals established by the compensation committee. Restricted stock will be subject to restrictions for a period set forth in the Award agreement. The compensation committee may provide for an accelerated lapse of the restriction period in an Award agreement upon specified events or standards. Subject to the transfer restrictions and vesting requirements of the Award, the participant will have the same rights as one of the Company’s shareholders, including all voting and dividend rights, during the restriction period, although the compensation committee may provide that restricted stock certificates will be held in escrow during the restriction period (and forfeited or distributed depending on whether applicable performance goals or service restrictions have been met).
Restricted Stock Units. An Award of restricted stock units, or RSUs, provides the participant the right to receive a payment based on the value of an ordinary share of the Company. RSUs may be subject to such vesting requirements, restrictions and conditions to payment as the compensation committee determines are appropriate. Vesting requirements may be based on, among other things, the continued service of the participant for a specified time period or on the attainment of specified business performance goals established by the compensation committee. RSUs will be subject to restrictions for a period set forth in the Award agreement, which period generally will be a minimum of three years from the date of grant. RSU Awards are payable in cash or in ordinary shares of the Company. Participants receiving RSUs will not have, with respect to such RSUs, any of the rights of a shareholder of the Company, although participants may receive dividend equivalents.
Performance Awards. An Award of performance units provides the participant the right to receive cash or ordinary shares of the Company if specified terms and conditions are met. Participants receiving performance awards will not have, with respect to such performance units, any of the rights of a shareholder of the Company. Performance Awards will be subject to restrictions for a period set forth in the Award agreement, which period generally is expected to be a minimum of three years from the date of grant.
Other Stock-Based Awards. Our compensation committee is authorized to make other stock Awards or Awards based on or settled in ordinary shares, which may be subject to other terms and conditions, which may vary from time to time and among participants, as the compensation committee in its discretion may determine.
Other Award Terms and Considerations
No Repricing or Reloads. The Plan specifically prohibits repricing of outstanding stock options or SARs without prior shareholder approval. The Company’s proposed amendment to the Plan also prohibits the
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substitution, or “reload” of outstanding stock options and SARS and reloads of outstanding stock options without prior shareholder approval. Under the proposed amendment, the Plan would also prohibit without prior shareholder approval the substitution or buyout of the stock options or SARS for cash, when the exercise price for such a stock option is below the current fair market value or the base value from which appreciation under such SARs are to be measured is below the current fair market value.
Vesting; Termination of Employment or Service. Our compensation committee has the authority to determine the vesting schedule applicable to each award, and to accelerate the vesting or exercisability of any award, except that the compensation committee may only issue Awards that vest or become exercisable within twelve (12) months or longer from the grant date, except in the event of Participants’ death or disability or a five percent (5%) or more carve-out set by the Company.
Our compensation committee will determine the effect of termination of employment or service on an award. Unless otherwise provided by our compensation committee, upon a termination of a participant’s employment or service, all unvested stock options and SARs then held by the participant will terminate and all other unvested awards will be forfeited and all vested stock options and SARs then held by the participant will remain outstanding for three months following such termination, or twelve (12) months in the case of death or permanent disability, or, in each case, until the applicable expiration date, if earlier. All stock options and SARs held by a participant immediately prior to the participant’s termination of employment or service will immediately terminate if such termination is for cause, as defined in the Plan, or occurs in circumstances that would have constituted grounds for the participant’s employment or service to be terminated for cause, in the determination of the compensation committee.
Dividend Equivalents. The compensation committee may provide for the payment of amounts (on terms and subject to conditions established by it) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award. Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A. Dividends or dividend equivalent amounts payable in respect to Awards shall be subject to the identical time-based vesting and performance conditions as the underlying Award and cannot be paid out unless and until all vesting and performance conditions of the underlying Award are met. Additionally, the compensation committee is prohibited from accruing and paying dividends and dividend equivalents on Awards of stock options or SARs.
Non-Transferability of Awards. Awards under the Plan may not be transferred other than by the laws of descent and distribution, unless, for awards other than ISOs, otherwise provided by the compensation committee.
Recovery of Compensation. The compensation committee may cancel, rescind, withhold or otherwise limit or restrict any award at any time under the Plan if the participant is not in compliance with the provisions of the Plan or any award thereunder or if the participant breaches any agreement with our Company with respect to non-competition, non-solicitation or confidentiality. Our compensation committee also may recover any award or payments or gain in respect of any award under the Plan in accordance with its applicable Company’s clawback or recoupment policy, or as otherwise required by applicable law or applicable stock exchange listing standards. See “Compensation Discussion and Analysis-Compensation Philosophy and Design-Compensation Committee Practices” for more information on the Company’s clawback and recoupment policies.
Certain Transactions; Certain Adjustments. In the event of a consolidation, merger or similar transaction or series of related transactions, including a sale or other disposition of shares of our ordinary shares, in which our Company is not the surviving corporation or that results in the acquisition of all or substantially all of our then outstanding shares of ordinary shares by a single person or entity or by a group of persons and/or entities acting in concert, a sale of all or substantially all of our assets or our dissolution or liquidation, our compensation committee may, among other things, provide for the continuation or assumption of outstanding awards, for new grants in substitution of outstanding awards, for the accelerated vesting or delivery of shares under awards or for a cash-out of outstanding awards, in each case on such terms and with such restrictions as it deems appropriate. Except as our compensation committee may otherwise determine, awards not assumed in
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connection with such a transaction will terminate automatically and, in the case of outstanding restricted stock, will be forfeited automatically upon the consummation of such covered transaction.
In the event of a stock dividend, stock split or combination of shares, including a reverse stock split, recapitalization or other change in our capital structure that constitutes an equity restructuring within the meaning of FASB ASC 718, our compensation committee will make appropriate adjustments to the maximum number of shares of our ordinary shares that may be delivered under, and the ISO and individual share limits included in, the Plan, and will also make appropriate adjustments to the number and kind of shares or securities subject to awards, the exercise prices of such awards or any other terms of awards affected by such change. Our compensation committee will also make the types of adjustments described above to take into account distributions and other events other than those listed above if it determines that such adjustments are appropriate to avoid distortion in the operation of the Plan.
Amendment; Termination. The compensation committee will be able to amend the Plan or outstanding awards, or terminate the Plan as to future grants of awards, except that the compensation committee will not be able to alter the terms of an award if it would affect materially and adversely a participant’s rights under the award without the participant’s consent (unless expressly provided in the Plan or the right to alter the terms of an award was expressly reserved by our compensation committee at the time the award was granted). Shareholder approval will be required for any amendment to the Plan to the extent such approval is required by law, including applicable stock exchange requirements.
Benefits under the Plan
New Plan Benefits. The compensation committee has discretionary authority to grant Awards pursuant to the Plan, and there is no provision for automatic grants. Therefore, future benefits that would be received by directors, executive officers and other employees under the Plan, as amended, are currently not determinable.
Certain Historical Grants under the Plan. As of April 1, 2020, the following table sets forth the number of shares subject to RSU, PSU and stock options Awards that have been granted to the below individuals or groups under the Plan (since its inception in June 2014).
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(1)Ordinary shares underlying RSU, PSU and stock option awards granted under the Plan.
(2)Includes all equity awards granted under the Plan while an executive officer of the Company.
Tax Treatment of Awards under the Plan
The following discussion of the United States federal income tax implications of Awards under the Plan is based on the provisions of the Internal Revenue Code (and any relevant rulings and regulations issued under the Internal Revenue Code) as of the date of this proxy statement, which are subject to change at any time (possibly with retroactive effect). The tax law is technical and complex, and the discussion below represents only a general summary. It is not intended to be, nor should it be construed to be, legal or tax advice. Shareholders should consult their own professional advisers as to the effects of state, local or foreign laws and regulations to which they may be subject.
Non-qualified stock options. A NQO results in no taxable income to the optionee or deduction to the Company at the time it is granted. An optionee exercising such a stock option will, at that time, realize taxable
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compensation in the amount of the difference between the stock option price and the then fair market value of the ordinary shares. Subject to the applicable provisions of the Internal Revenue Code, a deduction for federal income tax purposes will be allowable to the Company in the year of exercise in an amount equal to the taxable compensation recognized by the optionee.
The optionee’s basis in such ordinary shares is equal to the sum of the stock option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the ordinary shares will be a long-term or short-term gain (or loss), depending upon the holding period of the ordinary shares.
Incentive Stock Options. An ISO results in no taxable ordinary income to the optionee or deduction to the company at the time the ISO is granted or exercised. However, the excess of the fair market value of the ordinary shares acquired over the stock option price is an item of adjustment in computing the alternative minimum taxable income of the optionee. If the optionee holds the ordinary shares received as a result of an exercise of an ISO for at least two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the ordinary shares is treated as a long-term capital gain. If the ordinary shares are disposed of during this period, however (i.e., a “disqualifying disposition”), then the optionee will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the ordinary shares received upon exercise of the stock option over the stock option price (or, if less, the excess of the amount realized upon disposition over the stock option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be a short-term capital gain. In such case, the Company will be entitled to a deduction, generally in the year of such a disposition, for the amount includible in the optionee’s income as compensation. The optionee’s basis in the ordinary shares acquired upon exercise of an ISO is equal to the stock option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
Stock Appreciation Rights. Generally, the recipient of a SAR will not recognize taxable income at the time the SAR is granted. When the participant receives the appreciation inherent in the SAR, either in cash or stock, the amount of the cash, or the value of the stock, as applicable, will be taxed as ordinary income to the participant at the time it is received. In general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of a SAR. However, upon the settlement of the SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the participant is required to recognize as a result of the settlement.
Other Awards. The current United States federal income tax consequences of other Awards authorized under the Plan are generally in accordance with the following: (1) the fair market value of restricted stock is generally subject to ordinary income tax at the time the restrictions lapse (unless the participant elects taxation at grant, pursuant to Section 83(b)) and (2) the amount of cash paid (or the fair market value of the ordinary shares issued) to settle RSUs and performance units is generally subject to ordinary income tax. In each of the foregoing cases, the Company will generally be entitled to a corresponding federal income tax deduction at the same time the participant recognizes ordinary income.
Section 162(m). Section 162(m) of the Code imposes a $1 million limit on the amount that a publicly-traded corporation may deduct for compensation paid to the principal executive officer, the principal financial officer or one of the Company’s other three most highly compensated executives. Prior to 2018, “Performance-Based Compensation,” as defined under Internal Revenue Service rules and regulations, was excluded from this $1 million limitation. The Tax Reform and Jobs Act of 2017 (the “Act”) eliminated the ability of companies to rely on the “Performance-Based Compensation” exception and the $1 million limitation on deductibility generally was expanded to include all named executive officers (including the principal financial officer). Accordingly, although the Plan continues to include provisions relating to Performance-Based Compensation, we do not believe that the Performance-Based Compensation exception from Section 162(m) of the Code will apply to future awards under the Plan. We do believe, however, that certain Awards granted under the Plan prior to the changes made by the Act may continue to qualify for the Performance-Based Compensation exception and that certain Awards granted under the Plan may qualify for transition relief applicable to certain arrangements in place on November 2, 2017, subject in all cases to the compensation committee’s ability to modify Awards. Finally, as a Luxembourg company, the impact of the US Section 162(m) deduction limitations may be of limited impact on the Company.
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Section 409A. Section 409A of the Internal Revenue Code imposes certain requirements on non-qualified deferred compensation arrangements. These include requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions may be made only on specified dates or on or following the occurrence of certain events (e.g., the individual’s separation from service or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain officers and other individuals, Section 409A requires that such individual’s distributions of non-qualified deferred compensation in connection with a separation from service commence no earlier than six months after such individual’s separation from service.
We intend that Awards granted under the Plan will either comply with or be exempt from Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder. Awards subject to Section 409A, but not compliant with Section 409A, could result in accelerated taxation of the Awards and an additional 20% tax and interest charge tax to the participant. These potential penalties on the participant could reduce the value of grants subject to Section 409A and adversely affect the Company’s ability to achieve the Plan’s purposes.
Section 280G. Under certain circumstances, accelerated vesting, exercise or payment of awards under the Plan in connection with a change-in-control of the Company might be deemed an “excess parachute payment” for purposes of the golden parachute payment provisions of Section 280G of the Internal Revenue Code. To the extent it is so considered, the participant holding the Award would be subject to an excise tax equal to 20% of the amount of the excess parachute payment, and the Company would be denied a tax deduction for the excess parachute payment.
Approval of the Amendment
If the amendment to the Plan is approved by the shareholders, it will become effective on the date of the Annual Meeting. Our Board intends to cause the additional shares of common stock that would become available for issuance to be registered on a Form S-8 Registration Statement to be filed with the SEC at our expense. If shareholders do not approve this proposal, the amendment will not become effective and the Plan will continue in its current form.
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2020 Proxy Statement 72
SHAREHOLDER PROPOSALS & DIRECTOR NOMINATIONS /
HOUSEHOLDING
CERTAIN ITEMS
A shareholder who intends to nominate a director or present a proposal at the 20212022 annual general meeting of shareholders and who wishes the nomination or proposal to be included in the proxy materials for that meeting pursuant to Rule 14a‑814a-8 under the Securities Exchange Act of 1934, as amended, must submit the proposal in writing to us so that it is received by our Corporate Secretary no later than December 30, 2020.31, 2021. In addition, pursuant to our Articles, one or more shareholders representing at least ten percent (10%) of our ordinary shares outstanding may submit written proposals to the Company for inclusion on the agenda for the 20212022 annual general meeting of shareholders if such written proposals are received by the Company at least 22 days before our 20212022 annual general meeting of shareholders. Written proposals may be mailed to us at Trinseo S.A., 1000 Chesterbrook Boulevard, Suite 300, Berwyn, Pennsylvania 19312 Attn: Corporate Secretary. A shareholder who intends to nominate a director or present any other proposal at the 20212022 annual general meeting of shareholders but does not wish the proposal to be included in the proxy materials for that meeting must provide written notice of the nomination or proposal to us no earlier than 120 days and no later than 90 days before our 20212022 annual general meeting of shareholders. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements. Our Articles of Association describe the requirements for submitting proposals at the annual general meeting. The notice must be given in the manner and must include the information and representations required by our Articles of Association.Articles.
Householding |
SEC rules permit a single set of annual reports and proxy statements to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure is referred to as householding. While the Company does not household in mailings to its shareholders of record, a number of brokerage firms with account holders who are Company shareholders have instituted householding. In these cases, a single proxy statement and annual report will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once a shareholder has received notice from his or her broker that the broker will be householding communications to the shareholder’sshareholder's address, householding will continue until the shareholder is notified otherwise or until the shareholder revokes his or her consent. If at any time a shareholder no longer wishes to participate in householding and would prefer to receive a separate proxy statement and annual report, he or she should notify his or her broker. Any shareholder can receive a copy of the Company’sCompany's proxy statement and annual report by contacting the Company at its registered office at 26-28, rue Edward Steichen, L-2540 Luxembourg, Grand Duchy of Luxembourg, Attention: Secretary or by accessing it on the Company’sCompany's website at www.trinseo.com.
Shareholders who hold their shares through a broker or other nominee who currently receive multiple copies of the proxy statement and annual report at their address and would like to request householding of their communications should contact their broker.
Certain Items |
Certain items required by Regulation S-K are attached hereto as Annexes A-C.
117 2021 Proxy Statement
ANNEX A
ANNEX A
COMMON DRAFT TERMS OF MERGER
2021 Proxy Statement 118
ANNEX A
DATED 23 APRIL 2021
CROSS-BORDER MERGER
Between
TRINSEO LIMITED
AND
TRINSEO S.A.
COMMON DRAFT TERMS OF MERGER
119 2021 Proxy Statement
APPENDIX A
Appendix A–Amendment to Omnibus Incentive PlanTHESE COMMON DRAFT TERMS OF MERGER are made between:
AMENDED AND RESTATED
2014 OMNIBUS INCENTIVE PLAN
1.DEFINED TERMS
Exhibit A, which isa public limited company (société anonyme) incorporated by reference, definesunder the terms used in the Plan and sets forth certain operational rules related to those terms.
2.PURPOSE
The Plan has been established to advance the interestslaws of the Grand Duchy of Luxembourg and registered with the Luxembourg Trade and Company by providing forRegister under number B 153.549, having its registered address at 26-28 rue Edward Steichen, L-2540 Luxembourg, Grand Duchy of Luxembourg (the "
PURSUANT TO the grant to Participants of Stock-based Awards.
3.ADMINISTRATION
The Administrator has discretionary authority, subject only to the express provisions of the Plan,Irish Regulations (as defined below), the provisions of the Luxembourg Law (as defined below) and the provisions of the Directive (as defined below).
1. Interpretation
In these Common Draft Terms unless the context otherwise requires or unless otherwise specified:
"Assets" means all assets held by the Transferor Company as at the Effective Time;
"Business" means the business of the Transferor Company as carried on at the Effective Time;
"Business Day" means a day (other than a Saturday or Sunday) on which clearing banks are generally open for business in the Grand Duchy of Luxembourg and Ireland;
"Common Draft Terms" means the present common draft terms of the Cross-Border Merger meaning the common draft terms pursuant to interpretArt. 1021.1(1) of the Plan; determine eligibilityLuxembourg Law;
"Constitution" means the constitution of the Successor Company;
"CRO" means the Irish Companies Registration Office;
"Cross-Border Merger" means a merger of a national limited liability company with a limited liability company from another EU Member State, as provided for by the Directive, the Irish Regulations and grant Awards; determine, modifythe Luxembourg Law;
"Directive" means Directive 2005/56/EC of the European Parliament and of the Council of Ministers of 26 October 2005 on Cross-Border Mergers of Limited Liability Companies as repealed and codified by Chapter II, Title II of Directive 2017/1132/EU of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law and the relevant local laws applicable to merging companies;
"Directors' Explanatory Report" has the meaning given to it in clause 2.3(a);
"Effective Time" means 4:15 p.m. Eastern Standard Time, immediately after the close of trading on NYSE, 12 October 2021 or waivesuch other date as may be agreed by the Merging Companies, subject to the approval of the Irish Court;
"EGM" has the meaning given to it in clause 13.1;
"Final Order" means the order made by the Irish Court (defined below) under Regulation 14 of the Irish Regulations pursuant to which the Irish Court approves the completion of the Merger, confirms that the terms and conditions of any Award; determine the form of settlement of Awards (whether in cash, shares of Stock or other property); prescribe forms, rulesMerger are fair (both procedurally and procedures relatingsubstantively) to the Plan;Trinseo Shareholders, and otherwise dofixes the Effective Time;
"Irish Independent Expert" has the meaning given to it in clause 8.2;
"Irish Court" means the High Court of Ireland;
"Irish Regulations" means the European Communities (Cross-Border Mergers) Regulations 2008 (S.I. No. 157 of 2008), as amended from time to time;
"Liabilities" means all things necessary or appropriate to carry out the purposesliabilities of the Plan. DeterminationsTransferor Company as at the Effective Time;
"Luxembourg Independent Expert" has the meaning given to it in clause 8.2.;
"Luxembourg Law" means the law of 10 august 1915 on commercial companies, (Loi du 10 août 1915 concernant les sociétés sommerciales), as amended from time to time;
"Luxembourg Official Gazette" means the Recueil Electronique des Sociétés et Associations, or "RESA";
"Merger" means the proposed Cross-Border Merger (by acquisition) of the Administrator madeTransferor Company into the Successor Company under the Plan will be conclusiveterms and will bind all parties.
4.LIMITS ON AWARDS UNDER THE PLAN
(a)Number of Shares. The maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan is 6,000,000 shares. Up to the total number of shares available for Awards to employee Participants may be issued in satisfaction of ISOs, but nothing in this Section 4(a) will be construed as requiring that any, or any fixed number of, ISOs be awarded under the Plan. The limitsconditions set forth in this Section 4(a)these Common Draft Terms, by which the Assets and Liabilities shall be construed to comply with Section 422transfer by universal succession of the Code. For purposes of this Section 4(a), the shares of Stock withheld by the Company in payment of the exercise price or purchase price (including any nominal value payable in respect of an Award) of the Award, in satisfaction of tax withholding requirements with respecttitle to the Award, or purchased by theSuccessor Company using proceeds from Awards are prohibited from being returned back to the Plan’s share reserve for future issuance. The gross number of SAR awards granted under the Plan, as opposed to the net number of shares actually delivered under the SAR Award, will be deducted from the number of shares remaining available for issuance pursuant to the Awards granted under the Plan. For the avoidance of doubt, any shares of Stock underlying Awards settled in cash or that otherwise expire or become unexercisable without having been exercised or that are forfeited to or repurchased by the Company due to the failure to vest may be returned to the Plan for future issuance. To the extent consistent with the requirements of Section 422 and the regulations thereunder, and with other applicable legal requirements (including applicable stock exchange requirements), Stock issued under awards of an acquired company that are converted, replaced or adjusted in connection withTransferor Company will cease to exist as at the acquisition shall not reduce the number of shares of Stock available for Awards under the Plan.Effective Time;
(b)Type of Shares. Stock delivered by the Company under the Plan may be newly issued Stock or treasury Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan.
(c)Individual Limits. The following additional limits will apply to Awards of the specified type granted, or in the case of Cash Awards, payable to any person in any calendar year:
(1)Stock Options: 900,000 shares of Stock.
20202021 Proxy Statement 74 120
(2)"SARs: 900,000 shares of Stock.
(3)Merger Proxy StatementAwards other than Stock Options, SARs or Cash Awards: 450,000 shares of Stock.
(4)Cash Awards: $5,000,000.
In applying" means the foregoing limits, (i) all Awards of the specified type grantedproxy statement to be furnished to the same person in the same calendar year will be aggregated and made subject to one limit; (ii) the limits applicable to Stock Options and SARs refer to the number of shares of Stock subject to those Awards; (iii) the share limit under clause (3) refers to the maximum number of shares of Stock that may be delivered, or the value of which could be paid in cash or other property, under an Award or Awards of the type specified in clause (3) assuming a maximum payout; and (iv) the dollar limit under clause (4) refers to the maximum dollar amount payable under an Award or Awards of the type specified in clause (4) assuming a maximum payout. The foregoing provisions will be construed in a manner consistent with Section 162(m), including, without limitation, where applicable, the rules under Section 162(m) pertaining to permissible deferrals of exempt awards.
5.ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among key Employees and Directors of, and consultants and advisors to, the Company and its Affiliates who are in a position to contribute significantly to the success of the Company and its Affiliates. Eligibility for ISOs is limited to individuals described in the first sentence of this Section 5 who are employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code. Eligibility for Stock Options other than ISOs is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Stock Option to the Company or to a subsidiary of the Company that would be described in the first sentence of Treas. Regs. §1.409A-1(b)(5)(iii)(E).
6.RULES APPLICABLE TO AWARDS
(a)All Awards.
(1)Award Provisions. The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjustedTrinseo Shareholders in connection with the acquisition may containEGM at which such shareholders will be asked to adopt the resolution to enter into the Merger in accordance with these terms and conditions that are inconsistent withof the terms and conditions specified herein, as determined by the Administrator.Common Draft Terms;
(2)"Term of PlanMerging Companies." means the Successor Company and the Transferor Company (each as defined above), and " No Awards mayMerging Company" shall be made after ten years fromconstrued accordingly as the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.context so requires;
(3)"TransferabilityMFSD Nominees." means a private limited company incorporated in Ireland (registered number 87439), whose registered office is at Riverside One, Sir John Rogerson's Quay, Dublin 2;
"PwC Ireland" means PricewaterhouseCoopers, Neither ISOs nor, excepta general Irish partnership with its principal place of business at One Spencer Dock, North Wall Quay, Dublin 1;
"PwC Luxembourg" means PricewaterhouseCoopers, a Luxembourg co-operative company (Société Cooperative);
"NYSE" means the New York Stock Exchange;
"RCS" means the Luxembourg Trade and Company Register;
"Revised Constitution" means the constitution of the Successor Company to be in effect as of the Effective Time, substantially in the form of Schedule 2 hereto;
"Schedules" means the schedules annexed to these Common Draft Terms, and "Schedule" shall be construed accordingly as the Administrator otherwise expressly providescontext so requires;
"Share Exchange Ratio" means the share exchange ratio for the Merger as described in clause 4.1(b);
"Shareholder Resolution" means the special resolution of the shareholders of the Successor Company to be passed in order to approve these Common Draft Terms, as provided for by Regulation 10 of the Irish Regulations;
"Successor Company's Financial Statements" means the audited abridged financial statements of the Successor Company dated 31 December 2020;
"Successor Company New Shares" means ordinary shares of US$0.01 each in the capital of the Successor Company to be issued to the Trinseo Shareholders on consummation of the Merger in accordance with the third sentenceShare Exchange Ratio;
"Successor Company Ordinary Shares" has the meaning given to it in clause 3.2(e)(ii)(A);
"Transferor Company's Financial Statements" means the unaudited interim non-consolidated balance sheet of this Section 6(a)(3)the Transferor Company dated 31 January 2021;
"Transferor Company Shares" means all shares of the Transferor Company issued and outstanding immediately prior to completion of the Merger, as described as at the date of these Common Draft Terms, in clause 3.3(b);
"Trinseo Equity Plans" means the United States law governed Amended and Restated 2014 Omnibus Incentive Plan;
"Trinseo Group" means the group of companies whose ultimate parent is the Transferor Company;
"Trinseo Shareholders" means the shareholders of the Transferor Company;
(4)Vesting, etc. The Administrator will determine the time or times at which an Award will vest or become exercisable and the terms on which a Stock Option or SAR will remain exercisable. Except in the eventreason of the Participant’s deathfact that they are preceded by words indicating a particular class of acts, matters or disability or a five percent (5%) carve-out of the number of shares of Stock that may be delivered in satisfaction of Awards under the Plan (as defined in Section 4(a)), all Awards will only vest or become exercisable after a minimum of twelve months from the grant date. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Employment ceases:things and
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(A)Immediately upon the cessationgeneral words shall not be given a restrictive meaning by reason of the Participant’s Employment and except as provided in (B) and (C) below, each Stock Option and SARfact that is then heldthey are followed by particular examples intended to be embraced by the Participantgeneral words and any reference to the word "include" or by the Participant’s permitted transferees, if any, will cease"including" is to be exercisable and will terminate and allconstrued without limitation;
(B)Subject to (C) and (D) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisablethat provision as in force for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4),time being and will thereupon immediately terminate.
(C)All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment due to his or her death or by the Company due to his or her Permanent Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of twelve (12) months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(D)All Stock Options and SARs (whether or not exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the termination is for Cause or occurs in circumstances that in the sole determination of the Administrator would have constituted grounds for the Participant’s Employment to be terminated for Cause.
(5)Additional Restrictions. The Administrator may cancel, rescind, withhold or otherwise limit or restrict any Award at any time if the Participant is not in compliance with all applicable provisions of the Award agreement and the Plan, or if the Participant breaches any agreement with the Company or its Affiliates with respect to non-competition, non-solicitation or confidentiality. Without limiting the generality of the foregoing, the Administrator may recover Awards made under the Plan and payments under or gain in respect of any Award in accordance with any applicable Company clawback or recoupment policy, as such policy may be amended and in effect from time to time in accordance with the terms of these Common Draft Terms or as otherwise requiredthat document;
(6)full effect as if they were incorporated in the body of these Common Draft Terms and the expressions "Taxesthese Common Draft Terms." and "the Common Draft Terms" as used in any of the Schedules shall mean these Common Draft Terms and any reference to "these Common Draft Terms" shall be deemed to include the Schedules.
(7)Dividend Equivalents, Etc. The Administrator may provide, consistent with the requirements of the Articles, for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award, except for Awards of Stock Options or SARs, for which such payments shall be prohibited. Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A. Dividends or dividend equivalent amounts payable in respect of Awards shall be subject to the identical time-based vesting and performance conditions as the underlying Award and cannot be paid unless and until all vesting and performance conditions of the underlying Award are met. Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such additional limits or restrictions as the Administrator may impose, consistent with the requirements of the Articles.
(8)Rights Limited. Nothing in the Plan will be construed as giving any personMerging Companies reserve the right to continued employment or servicewithdraw from the Merger at any time prior to the issuance of the Final Order.
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an elementTransferor Company shall also pass from the Transferor Company to the Successor Company under universal succession of damages intitle at the event of a termination of Employment for any reason, even if the termination is in violation of an obligationEffective Time.
Merging Companies
(10)Coordination with Other Plans. Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates. For example, but without limiting the generalityexpiration of the foregoing awards under other compensatory plans or programsnotice period, it is proposed that the Shareholder Resolution is passed in order to approve these Common Draft Terms, as provided for by Regulation 10 of the Irish Regulations.
("Legal Capital Changes").
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(11)Section 409A. Each Award will contain such terms as the Administrator determines, and will be construed and administered, such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements.
(12)Fair Market Value. In determining the fair market value of any share of Stock under the Plan, the Administrator will make the determination in good faith consistent with the rules of Section 422 and Section 409A, to the extent applicable.
(b)Stock Options and SARs.
(1)Time And Manner Of Exercise. Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator), which may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award. A Stock Option or SAR exercised by any person other than the Participant will not be deemed to have been exercised until the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so. Effective Time.
(2)Exercise Price. The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise will be no less than 100% (or in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of the Stock subject toSuccessor Company and on the Award, determinedfair market value of the Transferor Company. In evaluating these components in the determination of the Share Exchange Ratio and in establishing the conditions of the Merger generally, the Successor Company and the Transferor Company used the Successor Company's Financial Statements (as defined above) and the Transferor Company's Financial Statements (as defined above). In that regard, the Merging Companies took into consideration that, as of the date of grant,the Successor Company's Financial Statements, the Successor Company had no retained profits or such higher amountlosses.
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or SARs for cash, as applicable, shall be prohibited when
(3)Successor Company's issued share capitalPayment Of Exercise Price. Where the exercise of an Award is to be accompanied by payment, paymentexercise priceMerger, the Successor Company will increase its issued share capital which, immediately prior to the Merger, will consist, as a result of the Legal Capital Changes, of 25,000 deferred ordinary shares of €1.00 each by allotting and issuing the Successor Company New Shares.by cash or check acceptableissued at a premium to their nominal value equal in aggregate to the Administrator or by such other legally permissible means, if any,difference between the market capitalisation of the Transferor Company ("Market Cap") at the Effective Time and the nominal value of the Successor Company New Shares at the Effective Time.maydetailed in Schedule 3, the total share premium would be acceptable toUSD$2,828,352,240.78 and, based on the Administrator.
(4)Maximum Term. Stock Optionsallotment and SARs will have a maximum term not to exceed ten (10) years fromissuance of 44,429,033 Successor Company New Shares (being the number of issued shares in the Transferor Company at the date of grant (or five (5) years fromthese Common Draft Terms), the dateshare premium per share would be USD$63.66.
7.EFFECT OF CERTAIN TRANSACTIONS
(a)Mergers, etc. Except as otherwise provided in an Award agreement, the following provisions will apply in the event of a Covered Transaction:
(1)Assumption or Substitution. If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may (but, for the avoidance of doubt, need not) provide (i) for the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.
(2)Cash-Out of Awards. Subject to Section 7(a)(5) below the Administrator may (but, for the avoidance of doubt, need not) provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable discretion) timesshall the number of Successor Company New Shares change to reflect any such difference in Market Cap as the exchange ratio is fixed.
The Successor Company will assume all of the aggregate exercise or purchase price, if any,Transferor's Company's obligations under the AwardTrinseo Equity Plans. At the Effective Time, the rights of beneficiaries to receive shares, share options or such portion (inother equity awards under the caseTrinseo Equity Plans will be converted to equivalent rights to receive ordinary shares, share options or other equity awards in the Successor Company. The Trinseo Equity Plans will be amended in connection with the Merger only to the extent necessary to effect the substitution of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need notSuccessor Company for the Transferor Company with regard to the Transferor Company's obligations pursuant to the Trinseo Equity Plans.
The composition of the board of directors of the Successor Company shall be amended with effect from the Effective Time with the result that the composition of the board of directors of the Successor Company with effect from the Effective Time shall be the same as the termsboard of payment to holdersdirectors of Stock) and other terms, and subject to such conditions, as the Administrator determines; it being understood that if the exercise or purchase price (or base value) of an Award is equal to or greater than the fair market value of one share of Stock, the Award may be cancelled with no payment due hereunder.
(3)Acceleration of Certain Awards. Subject to Section 7(a)(5) below, the Administrator may (but, for the avoidance of doubt, need not) provide that any Award requiring exercise will become exercisable, in full or in part and/or that the delivery of any shares of Stock remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance AwardsTransferor Company immediately prior to the extent consisting of Stock Units)Effective Time.
(4)Termination of Awards Upon Consummation of Covered Transaction. Except as the Administrator may otherwise determine in any case, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) upon consummation of the Covered Transaction, other than Awards assumed pursuant to Section 7(a)(1) above.
(5)Additional Limitations. Any share of Stock and any cashgranted, paid or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied)given in connection with the Covered Transaction. ForMerger to any directors, supervisory board members, or managers of the Merging Companies nor to any auditors or independent experts assisting with the Merger, nor to any third party involved in the intended Merger.
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Section 7(a)(2) aboveto the shareholders of the Successor Company on the Common Draft Terms. Accordingly, no advantage is granted and no amount or acceleration under Section 7(a)(3) abovebenefit has been or will be paid or given to the Irish Independent Expert except for its fees.
As at the date of these Common Draft Terms, the Transferor Company has no agency workers and the Successor Company has no agency workers.
(b)Changes in and Distributions With Respect to Stock.
(1)Basic Adjustment Provisions. InTransferor Company, the eventTransferor Company's Financial Statements (that is the unaudited interim non-consolidated balance sheet of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other changethe Transferor Company dated 31 January 2021).
(2)Certain Other Adjustments. The Administrator may also make adjustmentsformat of the type describedlast adopted annual accounts and (ii) in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of ISOs under Section 422, the requirements of Section 409A, and for the performance-based compensation rules of Section 162(m), where applicable.accordance with Luxembourg law. Accordingly, such unaudited interim
(3)Continuing Application of Plan Terms. References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.
8.LEGAL CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. The Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933, as amended, or any applicable state or non-U.S. securities law. Any Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of stock certificates. In the event that the Administrator determines that Stock certificates will be issued to Participants under the Plan, the Administrator may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.
9.AMENDMENT AND TERMINATION
The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that, except as otherwise expressly provided in the Plan, the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted. Any amendments to the Plan will be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code and applicable stock exchange requirements), as determined by the Administrator.
10.OTHER COMPENSATION ARRANGEMENTS
20202021 Proxy Statement 79 126
The existencenon-consolidated balance shall constitute the "merger accounting statement" for the purposes of Regulation 11(3) of the Plan orIrish Regulations and Art. 1021-7(1) 3° of the grantLuxembourg Law.
For information purposes only, the Assets recorded in the Transferor Company's Financial Statements had a book value of USD $701,092,176.93 on 31 January 2021.
11.MISCELLANEOUS
(a)Waiver of Jury Trial. By accepting an Award under the Plan, each Participant waivesassume such liability without any right of recourse against the Transferor Company.
Based on the above, the Assets and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or whichLiabilities recorded in the future may be deliveredTransferor Company's Financial Statements for information purposes had a net book value of USD $637,954,506.27 on 31 January 2021.
(b)Limitationdirectors of Liability. Notwithstanding anythingthe Merging Companies. The resolution of the EGM of the Transferor Company is not subject to the contrary in the Plan, neither the Company, norapproval of any Affiliate, nor the Administrator, nor any person acting on behalfother corporate body of the Company, any Affiliate, orTransferor Company. The resolutions to enter into the Administrator, willMerger shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award.
12.ESTABLISHMENT OF SUB-PLANS127
The Administrator may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Administrator will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as it deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as it deems necessary or desirable. All supplements so established will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction (as determined by the Administrator).
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13.GOVERNING LAW
(a)Certain Requirementsadopted by at least two thirds of Corporate Law. Awards willthe votes cast with no less than half of the issued share capital present or represented at the EGM. Should the quorum not be granted and administered consistentmet, a second EGM shall be convened by means of notices published in accordance with the requirementsarticles of applicable lawassociation of the Grand DuchyTransferor Company. Resolutions at the second EGM shall be valid regardless of the proportion of share capital represented at that meeting. At both meetings, resolutions must be adopted by at least two -thirds (2/3) of the votes cast
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Each Merging Company shall do, sign or execute, or procure to be done, signed or executed all such other acts, deeds, documents and things as may be necessary or desirable in respect of the Merger and the transfer of the Assets and Liabilities to the Successor Company pursuant to these Common Draft Terms.
Each of the provisions of these Common Draft Terms are separate and severable and enforceable accordingly and if at any date any provision is adjudged by any court of competent jurisdiction to be void or unenforceable the validity, legality and enforceability of the remaining provisions hereof and of that provision in any other jurisdiction shall not in any way be affected or impaired thereby.
The provisions of these Common Draft Terms which shall not have been performed at the Effective Time shall, to the extent possible and to the extent that this does not contravene the legal rules governing the Merger, remain in full force and effect notwithstanding the Effective Time.
These Common Draft Terms shall be binding upon and enure to the benefit of the respective Merging Companies hereto and their respective personal representatives, successors and permitted assigns.
These Common Draft Terms contain the whole agreement between the Merging Companies relating to the issuancetransactions provided for in these Common Draft Terms and supersede all previous agreements (if any) between such Merging Companies in respect of stocksuch matters and the consideration to be received therefor, and with the applicable requirementseach of the stock exchangesMerging Companies acknowledges that in agreeing to enter into these Common Draft Terms it has not relied on any representations or warranties except for those contained in these Common Draft Terms.
No variation of these Common Draft Terms shall be valid unless it is in writing and signed by or on behalf of each of the Merging Companies hereto, or unless it is required pursuant to an order of the Irish Court or other trading systems on whichLuxembourg or Irish authorities.
These Common Draft Terms have been drawn up in English and are followed by a French version. In case of discrepancies between these versions, the Stock is listed or entered for trading, in each case as determined by the Administrator.English version shall prevail.
These Common Draft Terms shall be governed by and construed in accordance with the domestic substantive laws of Ireland save to the State of Pennsylvania without giving effect to any choice or conflict of laws provision or ruleextent that would cause the application of the domestic substantive laws of Ireland would be contrary to the mandatory rules of the laws of Luxembourg, in which case and to that extent, only the laws of Luxembourg shall apply. Each of the Merging Companies hereto hereby agrees that the courts of Ireland shall have jurisdiction to hear and determine any other jurisdiction.
(c)Jurisdiction. By accepting an Award, each Participant will be deemed to (a) have submittedsuit, action or proceedings that may arise out of or in connection with these Common Draft Terms and for such purposes irrevocably and unconditionallysubmits to the jurisdiction of the federal and state courts located within the geographic boundariessuch courts.
129 2021 Proxy Statement
2020 Proxy Statement 81
SIGNED for and on behalf of TRINSEO LIMITED | ||
/s/ Angelo Chaclas Angelo Chaclas Director Date: 23 April 2021 | ||
SIGNED for and on behalf of TRINSEO S.A. | ||
/s/ Frank Bozich Frank Bozich Director and authorized representative Date: 23 April 2021 |
2021 Proxy Statement 130
APPENDIX ASchedule 1
Constitution of Successor Company
131 2021 Proxy Statement
EXHIBIT A
Definition of Terms
The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
“Administrator”: Table of Contents
COMPANIES ACT 2014
PRIVATE COMPANY LIMITED BY SHARES
CONSTITUTION
OF
TRINSEO LIMITED
(As adopted by Special Resolution on 31 March 2021)
McCann FitzGerald
Solicitors
Riverside One
Sir John Rogerson's Quay
Dublin 2
2021 Proxy Statement 132
CONSTITUTION
of
Trinseo Limited
(As adopted by Special Resolution on 31 March 2021)
Lien
Allotment
133 2021 Proxy Statement
Shares
Proceedings at General Meetings
“Affiliate”: Any corporation or other entity that stands in a relationship tosection 183(6) is any time before the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c)commencement of the Code, provided that, for purposes of determining treatmentmeeting or, as a single employer under Section 414(b) and Section 414(c)the case may be, the taking of the Code, “50%” shall replace “80%” in the applicable stock ownership requirements under such sections of the Codepoll.
Single-Member Company
“Articles”: The articles of association of the Company.
“Award”: Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Stock Units, including Restricted Stock Units.
(vi) Performance Awards.
(vii) Cash Awards.
(viii) Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise based on Stock.
“Board”: The Board of Directors of the Company.
“Cash Award”: An Award denominated in cash.
“Cause”: In the case of any Participant who is party to an employment or severance-benefit agreement that contains a definition of “Cause,” the definition set forth in such agreement will apply with respect to such Participant under the Plan for so long as such agreementthe Company has only one member:
Directors
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Financial Statements
Notices
(a)Subject to the Act and except where otherwise expressly provided in this constitution, any notice, communication, document or information to be given, served or delivered in pursuance of this constitution may be given to, served on or delivered to any member by the Company:
135 2021 Proxy Statement
proving such giving, service or delivery, it shall be sufficient to prove that such cover was properly addressed, pre-paid and posted or given to delivery agents.
Indemnity
2021 Proxy Statement 136
PRIVILEGED AND CONFIDENTIAL
We, the several persons whose names and addresses are subscribed, wish to be formed into a company in pursuance of this constitution, and we agree to take the number of shares in the capital of the Company set opposite our respective names.
Names, Addresses and Descriptions of Subscribers | | Number of Shares taken by each Subscriber. | ||
Khizar Khan | 50 | |||
185 Rathmines Road Lower Dublin 6 | ||||
Galileo Platinum Holdings Limited | | 100 | ||
185 Rathmines Road Lower Dublin 6 | | |||
| | | | |
Total Shares taken 150 Ordinary Shares
Signature in writing of the above subscriber(s), attested by witness as provided for below;
Dated: this 26th day of May 2015
Witness to the above signatures:
Name: Michelle Neary
Address: 185 Rathmines Road Lower Dublin 6
137 2021 Proxy Statement
PRIVILEGED AND CONFIDENTIAL
Schedule 2
Revised Constitution of the Successor Company
2021 Proxy Statement 138
PRIVILEGED AND CONFIDENTIAL
Schedule 3
Estimated Share Premium Calculation
The share premium will be computed by using the market capitalisation of the Transferor Company on the NYSE immediately following the Merger and deducting the nominal value of the share capital issued in the Merger.
For the purposes of the Common Draft Terms, the share premium has been provisionally calculated on the basis of an estimated market capitalisation of USD$2,828,796,531.11 on 31 March 2021, as detailed below:
TRINSEO S.A. | | |||
Share Price on 31 March 2021 | $ | 63.67 | ||
Outstanding Shares (1) | | 44,429,033 | ||
Total Market Capitalisation | $ | 2,828,796,531.11 | ||
Less: | | |||
Nominal Value of Share Capital | $ | 444,290.33 | ||
Share Premium | $ | 2,828,352,240.78 | ||
Share Premium per Share | $ | 63.66 | ||
| | | | |
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ANNEX B
ANNEX B—CONSTITUTION OF TRINSEO PLC |
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ANNEX B
COMPANIES ACT 2014
PUBLIC LIMITED COMPANY
MEMORANDUM
AND
ARTICLES OF ASSOCIATION
OF
TRINSEO PLC
Effective as of [ · ] 2021
141 2021 Proxy Statement
ANNEX B
COMPANIES ACT 2014
PUBLIC LIMITED COMPANY
MEMORANDUM OF ASSOCIATION
OF
TRINSEO PLC
2021 Proxy Statement 142
ANNEX B
143 2021 Proxy Statement
ANNEX B
And it is hereby declared that the word "company" in this clause, except where used in reference to this Company, shall be deemed to include any person, partnership or other body of persons whether incorporated or not incorporated and whether domiciled in the State or elsewhere and that the objects of the Company as specified in each of the foregoing paragraphs of this clause shall be separate and distinct objects and shall not be in anywise limited or restricted by reference to or inference from the terns of any other paragraph or the name of the Company.
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APPENDIX ACompanies Act 2014
PUBLIC LIMITED COMPANY
ARTICLES OF ASSOCIATION
of
Trinseo PLC
agreement between(adopted by Special Resolution dated [ · ] 2021)
PRELIMINARY
"Act" | means the Companies Act 2014 and every statutory modification and re-enactment thereof for the time being in force. | |
"Acts" | means the Act and all statutory instruments which are to be read as one with, or construed or read together as one with the Act. | |
"Address" | includes, without limitation, any number or address used for the purposes of communication by way of electronic mail or other electronic communication. | |
"Articles" or "Articles of Association" | means these articles of association of the Company, as amended from time to time by Special Resolution. | |
"Assistant Secretary" | means any person appointed by the Secretary from time to time to assist the Secretary. | |
"Auditors" | means the statutory auditors for the time being of the Company. | |
"Board" | means the board of directors for the time being of the Company. | |
"clear days" | means, in relation to a period of notice, that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect. | |
"Company" | means the above-named company. | |
"Court" | means the Irish High Court. | |
"Cross Border Merger" | means a merger of a national limited liability company with a limited liability company from another EU Member State, as provided in Title II of Directive (EU) 2017/1132 and as implemented in the relevant EU Member States; | |
"Directors" | means the directors for the time being of the Company. | |
"dividend" | includes interim dividends and bonus dividends. | |
"electronic communication" | shall have the meaning given to those words in the Electronic Commerce Act 2000. | |
"electronic signature" | shall have the meaning given to those words in the Electronic Commerce Act 2000. | |
"Exchange" | means any securities exchange or other system on which the Shares of the Company may be listed or otherwise authorised for trading from time to time. |
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"Exchange Act" | means the Securities Exchange Act of 1934 of the United States of America. | |
"Member" | means a person who has agreed to become a Member of the Company and whose name is entered in the Register of Members as a registered holder of Shares. | |
"Memorandum" | means the memorandum of association of the Company as amended from time to time by Special Resolution. | |
"Merger" | means the proposed Cross-Border Merger (being a merger by acquisition under Irish law) of Trinseo S.A. into the Company, by which the all assets and liabilities held by Trinseo S.A at the Merger Effective Time shall transfer by universal succession of title to the Company and Trinseo S.A. will cease to exist as at the Merger Effective Time; | |
"Merger Effective Time" | means the effective time of the Merger; | |
"month" | means a calendar month. | |
"Ordinary Resolution" | means an ordinary resolution of the Company's Members within the meaning of Section 191 of the Act. | |
"Original Adoption Date" | means [·]. | |
"paid-up" | means paid-up as to the nominal value and any premium payable in respect of the issue of any Shares and includes credited as paid-up. | |
"Redeemable Shares" | means redeemable shares in accordance with Section 64 of the Act. | |
"Register of Members" or "Register" | means the register of Members of the Company maintained by or on behalf of the Company, in accordance with the Acts and includes (except where otherwise stated) any duplicate Register of Members. | |
"registered office" | means the registered office for the time being of the Company. | |
"Seal" | means the common seal of the Company or (where relevant) the official securities seal kept by the Company pursuant to the Act. | |
"Secretary" | means the person appointed by the Board to perform any or all of the duties of secretary of the Company and includes an Assistant Secretary and any person appointed by the Board to perform the duties of secretary of the Company. | |
"Share" and "Shares" | means a share or shares in the capital of the Company. | |
"Special Resolution" | means a special resolution of the Company's Members within the meaning of Section 191 of the Act. |
“Code”: 2021 Proxy Statement The U.S. Internal Revenue Code 146
SHARE CAPITAL; ISSUE OF SHARES
“Compensation Committee”: Compensation CommitteeDirectors are, for the purposes of Section 1021 of the Board.Act, generally and unconditionally authorised to exercise all powers of the Company to allot and issue relevant securities (as defined by the said Section 1021) up to the amount of Company's authorized but unissued share capital at the Original Adoption Date and to allot and issue any Shares purchased or redeemed by or on behalf of the Company pursuant to the provisions of the Act and held as treasury shares and this authority shall expire five years from the Original Adoption Date.
SHAREHOLDER RIGHTS PLAN
“Company”:147 2021 Proxy Statement
ORDINARY SHARES
PREFERRED SHARES
DEFERRED ORDINARY SHARES
2021 Proxy Statement 148
ISSUE OF WARRANTS
CERTIFICATES FOR SHARES
REGISTER OF MEMBERS
149 2021 Proxy Statement
TRANSFER OF SHARES
2021 Proxy Statement 150
REDEMPTION AND REPURCHASE OF SHARES
VARIATION OF RIGHTS OF SHARES
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LIEN ON SHARES
2021 Proxy Statement 152
CALLS ON SHARES
FORFEITURE
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NON-RECOGNITION OF TRUSTS
TRANSMISSION OF SHARES
AMENDMENT OF MEMORANDUM OF ASSOCIATION;
CHANGE OF LOCATION OF REGISTERED OFFICE; AND
ALTERATION OF CAPITAL
2021 Proxy Statement 154
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
GENERAL MEETINGS
155 2021 Proxy Statement
NOTICE OF GENERAL MEETINGS
2021 Proxy Statement 156
“Date of Adoption”: The earlier of the date the Plan was approved by the Company’s stockholders or adopted by the Board, as determined by the Compensation Committee.
“Director”: A member of the Board.
“Employee”: Any person who is employed by the Company or an Affiliate.
“Employment”: A Participant’s employment or other service relationship with the Company and its Affiliates. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or an Affiliate. If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates. Notwithstanding the foregoing and the definition of “Affiliate” above, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations, after giving effect to the presumptions contained therein) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election will be deemed a part of the Plan.
“ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of Section 422. Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless, as of the date of grant, it is expressly designated as an ISO.
“NSO”: A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422.
“Participant”: A person who is granted an Award under the Plan.
“Performance Award”: An Award subject to Performance Criteria. The Administrator in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify.
2020 Proxy Statement 83
APPENDIX APROCEEDINGS AT GENERAL MEETINGS
157 2021 Proxy Statement ADVANCE NOTICE OF MEMBER BUSINESS AND NOMINATIONS OF DIRECTORS 2021 Proxy Statement 158 159 2021 Proxy Statement 2021 Proxy Statement 160 VOTES OF MEMBERS PROXIES AND CORPORATE REPRESENTATIVES 161 2021 Proxy Statement an individual Member of the Company. The Company may require evidence from the body corporate of the due authorisation of such person to act as the representative of the relevant body corporate.“Performance Criteria”: Specified criteria,
mere continuationbusiness left unfinished, or which might have be transacted, at the meeting from which the adjournment took place. When a general meeting is adjourned for thirty days or more, notice of Employmentthe adjourned meeting shall be given as in the case of an original meeting; save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned general meeting.mere passageamended resolution may properly be put to a vote at that meeting.satisfactiondate of the meeting or adjourned meeting at which the vote was taken, as the Chairman of the meeting directs, and any business other than that on which a poll has been demanded may be proceeded with pending the taking of the poll.
a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable measure or measures of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis orderived in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures, strategic alliances, licensespart from the value of any class or collaborations; spin-offs, split-ups andseries of Shares or other securities of the like; reorganizations; recapitalizations, restructurings, financings (issuanceCompany;
equity)entity shall be deemed to have a short position in a security of the Company if such person or refinancings; manufacturingentity, directly or process development;indirectly, through any contract, arrangement, relationship, understanding or environmental health and/otherwise, has the opportunity to profit or safety metrics. A Performance Criterionshare in any profit derived from any decrease in the value of such security), profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any targetsproportionate interest of such Proponent in the securities of the Company held, directly or indirectly, by any general or limited partnership, or any limited liability company, of which such Proponent is a general partner or managing member or, directly or indirectly, beneficially owns an interest in such general partner or managing member.thereto determinedto the background and qualification of such nominee (and in the case of a nomination under clause (c) of Article 100, the background of any other person or entity on whose behalf the nomination is being made), which questionnaire shall be provided by the Administrator need not be basedSecretary promptly upon an increase,written request, and a positive or improved result or avoidance of loss. Towritten representation and agreement, in the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide,form provided by the deadlineSecretary promptly upon written request, that otherwise appliessuch person (A) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or vote on any issue or question (a "Voting Commitment") that has not been disclosed to the establishmentCompany in the questionnaire or (ii) any Voting Commitment that could limit or interfere with such person's ability to comply, if elected as a director of the Company, with such person's fiduciary duties under applicable law; (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the Company that has not been disclosed therein; and (C) except as otherwise disclosed in the questionnaire, would be in compliance, if elected as a director of the Company, and will comply with, all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company.Award intendedseries of preferred shares or any agreement among Members or other agreement approved by the Board, and subject always to qualifythe Act and these Articles (including without limitation the requirements of Article 156), only persons who are nominated in accordance with the procedures set forth in Articles 101 and 102 shall be eligible to serve as Directors of the Company. If the Chairman of a general meeting determines that a proposed nomination was not made in compliance with Articles 101 and 102, she shall declare to the meeting that nomination is defective and such defective nomination shall be disregarded. Notwithstanding the foregoing provisions of these Articles, if the Member (or a qualified representative of the Member) does not appear at the general meeting to present her nomination, such nomination shall be disregarded.exception,meeting.
Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusualDirectors or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period that affect the applicable Performance Criterion or Criteria.
DIRECTORS“Permanent Disability”: In the case of any Participant who is party to an employment or severance-benefit agreement that contains a definition of “Permanent Disability” (or similar term), the definition set forth in such agreement will apply with respect to such Participant under the Plan for so long as such agreement is in effect. In the case of any other Participant, “Permanent Disability” shall mean a disability that would entitle a Participant to long-term disability benefits under the Company’s long-term disability plan to which the Participant participates. Notwithstanding the foregoing, however,persons in the casealternative.any Award that is subject to Section 409A and is payable upon a Participant’s Permanent Disability, the Participant shall be treated as having a Permanent Disability only if the Participant’s condition also satisfies the definition of “disability” in Treasury Regulation 1.409A-3(i)(4).
“Plan”: The Trinseo S.A. Omnibus Incentive Plan asBoard from time to time amendedat its absolute discretion, but which shall not be less than three (3) Directors.effect.
DIRECTORS' INTERESTS“Restricted Stock”: Stock subjectgoing to, restrictions requiring that itattending and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or otherwise in connection with the business of the Company, or to receive a fixed allowance in respect thereof as may be redelivereddetermined by the Board from time to time, or offereda combination partly of one such method and partly the other.saleor undertaking any special mission on behalf of, the Company other than her ordinary routine work as a Director. Any fees paid to a Director who is also counsel or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to her remuneration as a Director.specified conditions are not satisfied.
“Restricted Stock Unit”: A Stock Unitthe Director or officer of the Company knows this interest then exists, or in any other case, at the first meeting of the Board after learning that she is or as to which the delivery of Stockhas become so interested or cash in lieu of Stock is, subject(b) by providing a general notice to the satisfactionDirectors declaring that she is a director or an officer of, specified performance or other vesting conditions.
2021 Proxy Statement 162 Company or in which the “SAR”: A right entitling the holder upon exercise to receivehas an amount (payableinterest in, cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SARa person and is to be measured.regarded as interested in any transaction or arrangement made with that person, and after giving such general notice it shall not be necessary to give special notice relating to any particular transaction.“Section 409A”: Section 409ATable of ContentsCode.
“Section 422”: Section 422Company may be interested as shareholder or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by her as a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or Member of such other company; provided that she has declared the Code.
“Section 162(m)”: Section 162(m)nature of her position with, or interest in, such company to the Code.Board in accordance with Article 119.
POWERS AND DUTIES OF DIRECTORS
2020163 2021 Proxy Statement
MINUTES
DELEGATION OF THE BOARD'S POWERS
EXECUTIVE OFFICERS
2021 Proxy Statement 84 164
“Stock Option”: An option entitlingholder to acquire sharesDirectors shall meet together for the despatch of Stock upon paymentbusiness, convening, adjourning and otherwise regulating their meetings and procedures as they think fit. Questions arising at any meeting shall be decided by a majority of votes of the exercise price.
RESIGNATION AND DISQUALIFICATION OF DIRECTORS APPOINTMENT OF DIRECTORS“Stock Unit”: An unfundedDirectors present at a meeting at which there is a quorum. Each Director shall have one vote.unsecured promise, denominatedplaces as may be provided for in shares of Stock, to deliver Stock or cash measuredresolutions adopted by the valueBoard. No additional notice of Stocka regularly scheduled meeting of the Board shall be required.future.appointment of any Director, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and qualified to be a Director.“Unrestricted Stock”: The office of a Director shall be vacated:Stock not subjectrestrictions underclaim such Director may have for damages for breach of any contract of service between her and the termsCompany.
Award.Company commencing with the first annual general meeting of the Company following the Original Adoption Date, the term of each Director shall expire and each of them shall be eligible for re-election. A Director whose term expires at a general meeting shall retain office until the close of that meeting (including any adjournment thereof).
2020165 2021 Proxy Statement 85
then such election shall be considered a "Contested Election". Subject always to the Acts, in a Contested Election each of the Director Nominees shall be voted upon as a separate resolution and the Director Nominees who shall be elected as Directors shall be only those Director Nominees (in number equal to the Available Director Positions) who receive the highest number of votes of all Director Nominees in favour of their election or re-election, provided that no such resolutions shall be proposed where there is no Available Director Position at the commencement of the general meeting or no Available Director Position arises during the course of the general meeting.
SECRETARY
SEAL
DIVIDENDS, DISTRIBUTIONS AND RESERVES
2021 Proxy Statement 166
CAPITALISATION
167 2021 Proxy Statement
ACCOUNTS
AUDIT
NOTICES
2021 Proxy Statement 168
169 2021 Proxy Statement
UNTRACED HOLDERS
DESTRUCTION OF DOCUMENTS
WINDING UP
2021 Proxy Statement 170
Members shall be more than sufficient to repay the whole of the share capital paid up or credited as paid up at the commencement of the winding up, the excess shall be distributed among the Members in proportion to the capital at the commencement of the winding up paid up or credited as paid up on the said Shares held by them respectively. Provided that this Article shall not affect the rights of the Members holding Shares issued upon special terms and conditions.
INDEMNITY
171 2021 Proxy Statement
agreement, any insurance purchased by the Company, any vote of Members or disinterested directors, or pursuant to the direction (however embodied) of any court of competent jurisdiction, or otherwise, both as to action in her or his official capacity and as to action in another capacity while holding such office, or (b) of the power of the Company to indemnify any person who is or was an employee or agent of the Company or of another company, joint venture, trust or other enterprise which she or he is serving or has served at the request of the Company, to the same extent and in the same situations and subject to the same determinations as are hereinabove set forth with respect to a director, executive or trustee. As used in this Article 191.5, references to the "Company" include all constituent companies in a consolidation or merger in which the Company or a predecessor to the Company by consolidation or merger was involved. The indemnification provided by this Article shall continue as to a person who has ceased to be a director, executive or trustee and shall inure to the benefit of the heirs, executors, and administrators of such a person.
FINANCIAL YEAR
DISPUTE RESOLUTION
2021 Proxy Statement 172
ANNEX C
ANNEX C
RELEVANT TERRITORIES
1. | Albania | 38. | Lithuania | |||
2. | Armenia | 39. | Luxembourg | |||
3. | Australia | 40. | Macedonia | |||
4. | Austria | 41. | Malaysia | |||
5. | Bahrain | 42. | Malta | |||
6. | Belarus | 43. | Mexico | |||
7. | Belgium | 44. | Moldova | |||
8. | Bosnia & Herzegovina | 45. | Montenegro | |||
9. | Botswana | 46. | Morocco | |||
10. | Bulgaria | 47. | Netherlands | |||
11. | Canada | 48. | New Zealand | |||
12. | Chile | 49. | Norway | |||
13. | China | 50. | Pakistan | |||
14. | Croatia | 51. | Panama | |||
15. | Cyprus | 52. | Poland | |||
16. | Czech Republic | 53. | Portugal | |||
17. | Denmark | 54. | Qatar | |||
18. | Egypt | 55. | Romania | |||
19. | Estonia | 56. | Russia | |||
20. | Ethiopia | 57. | Saudi Arabia | |||
21. | Finland | 58. | Serbia | |||
22. | France | 59. | Singapore | |||
23. | Georgia | 60. | Slovak Republic | |||
24. | Germany | 61. | Slovenia | |||
25. | Ghana | 62. | South Africa | |||
26. | Greece | 63. | Spain | |||
27. | Hong Kong | 64. | Sweden | |||
28. | Hungary | 65. | Switzerland | |||
29. | Iceland | 66. | Thailand | |||
30. | India | 67. | Turkey | |||
31. | Israel | 68. | Ukraine | |||
32. | Italy | 69. | United Arab Emirates | |||
33. | Japan | 70. | United Kingdom | |||
34. | Kazakhstan | 71. | United States | |||
35. | Korea | 72. | Uzbekistan | |||
36. | Kuwait | 73. | Vietnam | |||
37. | Latvia | 74. | Zambia |
173 2021 Proxy Statement
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on June 10, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on June 10, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SHAREHOLDER MEETING REGISTRATION To vote and/or attend the meeting, go to the "Register for Meeting" link at www.proxyvote.com. TRINSEO S.A. 26-28, RUE EDWARD STEICHEN L-2540 LUXEMBOURG GRAND DUCHY OF LUXEMBOURG TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D47721-S21010 TRINSEO S.A. Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting. The following materials are available at www.proxyvote.com. Notice and Proxy Statement and Annual Report THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR proposals 1-8 and 10-15, and “ONE YEAR” for proposal 9: For Against Abstain For Against Abstain 1. To approve the proposed merger of the Company into Trinseo PLC, an Irish public limited company, in accordance with the common draft terms of merger whereby Trinseo PLC will acquire all assets and liabilities of the Company by universal succession of title, and the Company will cease to exist. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 2 Years ! ! ! ! ! ! ! ! 3 Years ! ! ! ! ! ! ! ! Abstain 6g. Jeanmarie Desmond 2. To approve an amendment to Article 7.1.1 of the Company’s Articles to increase the size of the Company’s Board to a maximum of thirteen (13) directors. Subject to approval of Proposal 1, to consider and approve, on a non-binding advisory basis, the proposed Memorandum and Articles of Association of Trinseo PLC (the “Proposed Constitution”) which will be in effect at time of the Merger and which will effectively replace our Articles. Subject to approval of Proposal 1, to consider and vote upon separate proposals to approve, on a non-binding advisory basis, the following differences between our Articles and the Proposed Constitution: 4a. Upon the effective date of the Merger, under the Proposed Constitution, Trinseo PLC will have a share capital of (i) 4,000,000,000 ordinary shares, par value $0.01 per share, (ii) 1,000,000,000 preferred shares, par value $0.01 per share and (iii) 25,000 deferred ordinary shares par value €1.00 per share, in comparison to the Articles which provides for a share capital of up to 50,000,000,000 shares, par value $0.01 per share; 4b.Under the Proposed Constitution, the board of directors of Trinseo PLC will have discretion to issue up to the authorized but unissued amount of Trinseo PLC’s share capital for cash without preemptive rights for a period of five years from adoption, in comparison to the Articles which permit the Board to issue up to 20% of the existing share capital without offering those shares to existing shareholders and up to 100% of the existing share capital with preemptive rights, until 2023; 4c. Under the Proposed Constitution, shareholders wishing to nominate persons for election to the Board or to properly bring other business before an Annual General Meeting of Shareholders must give timely notice to Trinseo PLC, which must be received not less than 90 nor more than 120 days prior to the first anniversary of the date Trinseo PLC’s proxy statement for the prior year was first mailed to shareholders, in comparison to the Articles under which shareholders may bring nominations for directors for vote at an Annual Meeting if submitted 90 to 120 days prior to the Annual Meeting date. Subject to the approval of the Proposal 1, to approve the creation of distributable profits of Trinseo PLC under Irish law by reducing the entire share premium of Trinseo PLC resulting from the allotment and issue of ordinary shares of Trinseo PLC pursuant to the Merger. To elect twelve (12) directors specifically named in the proxy statement, each to serve for a term of one year expiring at the 2022 Annual General Meeting: 6h. Matthew Farrell 3. 6i. Philip Martens 4. 6j. Donald Misheff 6k. Henri Steinmetz ! ! ! 6l. Mark Tomkins 7. Subject to approval of Proposal 2, to elect Ms. Victoria Brifo as our thirteenth director, to serve for a term of one year expiring at the 2022 Annual General Meeting. 8. To approve, on an advisory basis, the compensation paid by the Company to its named executive officers. ! ! ! 1 Year ! ! For ! Against ! Abstain 9. To approve, on an advisory basis, the frequency of advisory votes on the compensation of our named executive officers. ! ! ! ! ! ! ! ! ! ! ! ! 5. 10. 11. To approve changes to the Company’s director compensation program. To approve the Company’s annual accounts prepared in accordance with accounting principles generally accepted in Luxembourg for the year ended December 31, 2020 and its consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States including a footnote reconciliation of equity and net income to International Financial Reporting Standards for the year ended December 31, 2020. To approve the allocation of the results of the year ended December 31, 2020, including but not limited to the declaration of an annual dividend in the amount of all interim dividends declared and distributed since the Company’s last Annual General Meeting of Shareholders. To approve the granting and discharge of the Company’s directors and auditor for the performance of their respective duties during the year ended December 31, 2020. To ratify the appointment of PricewaterhouseCoopers Société cooperative to be the Company’s independent auditor for all statutory accounts required by Luxembourg law for the year ending December 31, 2021. To ratify the appointment of PricewaterhouseCoopers LLP to be the Company’s independent registered public accounting firm for the year ending December 31, 2021. 6. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 6a. K’Lynne Johnson 12. ! ! ! ! ! ! ! ! ! ! ! ! 6b. Joseph Alvarado 13. 6c. Frank A. Bozich 14. 6d. Jeffrey Cote 6e. Pierre-Marie De Leener 15. 6f. Sandra Beach Lin NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 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 [PLEASE SIGN WITHIN BOX] Date
D47722-S21010 TRINSEO S.A. Annual General Meeting of Shareholders June 14, 2021 12:00 P.M. C.E.S.T. This proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) Frank Bozich, David Stasse and Angelo Chaclas, or each of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the Ordinary Shares of TRINSEO S.A. that the shareholder(s) is/are entitled to vote at the Annual General Meeting of Shareholders to be held at 12:00 P.M., C.E.S.T. on June 14, 2021, via teleconference, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side