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Preliminary Proxy Statement |
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☐ | Definitive Additional Materials |
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April 4, 2019 |
Boris Elisman | James A. Buzzard | |
Chairman of the Board, President and Chief Executive Officer | Lead Independent Director |
Item 1: | To elect ten directors identified in this Proxy Statement for a term expiring at the 2020 Annual Meeting; |
Item 2: | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2019; |
Item 3: | To approve, by non-binding advisory vote, the compensation of our named executive officers; |
Item 4: | To approve an amendment to our Restated Certificate of Incorporation to affirm the Company’s majority voting standard for uncontested director elections; |
Item 5: | To approve the 2019 ACCO Brands Corporation Incentive Plan; and |
Item 6: | To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
Proposals | Board Recommendations | Page No. | ||||
Item 1 | Election of ten directors | FOR each nominee | 5 | |||
Item 2 | Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2019 | FOR | 20 | |||
Item 3 | Approval, by non-binding advisory vote, of the compensation of our named executive officers | FOR | 54 | |||
Item 4 | Approval of an amendment to our Restated Certificate of Incorporation to affirm the Company’s majority voting standard for uncontested director elections | FOR | 55 | |||
Item 5 | Approval of the 2019 ACCO Brands Corporation Incentive Plan | FOR | 56 |
• | Declassified Board of Directors - all directors elected annually |
• | Lead Independent Director |
• | 90% of our directors are independent |
• | Fully independent Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee |
• | Executive sessions of non-employee directors held at each regularly scheduled quarterly board meeting |
• | All directors attended over 85% of Board and committee meetings held in 2018 |
• | Majority voting standard for election of directors in uncontested elections |
• | No rights or “poison pill” plan |
• | All directors and executive officers have met or are on track to meet stock ownership guidelines |
• | Annual vote to ratify independent auditors |
• | Hedging, pledging and short sales of company stock are prohibited |
• | Base Salary Earnings - $945,000 |
• | 2018 Annual Incentive Plan Payout - $0 (no payout due to failure to achieve annual performance goals) |
• | 2016-2018 Long-Term Incentive Plan Performance Cash Payout - $665,438 (payout driven by above target performance over the three-year performance cycle) |
• | 2018-2020 Long-Term Incentive Plan Equity Grant - $3,029,248 (represents grant date fair value) |
• | Retirement and All Other Compensation - $42,333 |
• | 2018 say-on-pay proposal approved by 96.9% of stockholders voting at meeting |
• | 81% of CEO target compensation is at-risk based on financial performance measures or stock price appreciation |
• | Effective January 1, 2019, no excise tax gross-up on executive severance plan payments |
• | Double-trigger change-in-control provisions in executive severance plan |
• | Three-year performance period for long-term performance-based incentive awards |
• | Performance metrics aligned with business strategy and stockholder value creation |
• | Incentive compensation “clawback” policy |
• | No employment agreements for U.S.-based executive officers |
• | Independent compensation consultant |
• | Annual compensation risk assessment |
• | Incentive compensation plan and practices include good corporate governance features such as: |
○ | Double-trigger vesting of equity in event of a change-in-control |
○ | One-year minimum vesting with multi-year vesting requirements on equity incentives |
○ | No discretion to accelerate vesting upon events other than death or disability |
○ | Dividend equivalents payable only if underlying grant vests |
○ | No liberal share recycling |
○ | No stock option repricing, cash buyouts, or discounted stock options |
• | FOR the election of each director nominee (Proxy Item 1); |
• | FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2019 (Proxy Item 2); |
• | FOR the approval, on an advisory non-binding basis, of the compensation of our named executive officers (Proxy Item 3); |
• | FOR the approval of an amendment to our Restated Certificate of Incorporation to affirm the Company’s majority voting standard for uncontested director elections (Proxy Item 4); and |
• | FOR the approval of the 2019 ACCO Brands Corporation Incentive Plan (Proxy Item 5) |
Boris Elisman | James A. Buzzard | Kathleen S. Dvorak | Pradeep Jotwani | Robert J. Keller | Thomas Kroeger | Ron Lombardi | Graciela Monteagudo | Hans Michael Norkus | E. Mark Rajkowski | |
Director Since | 2013 | 2012 | 2010 | 2014 | 2005 | 2009 | 2018 | 2016 | 2009 | 2012 |
Age | 56 | 64 | 62 | 64 | 65 | 70 | 55 | 52 | 72 | 60 |
Gender | M | M | F | M | M | M | M | F | M | M |
Ethnically Diverse | ✓ | ✓ | ||||||||
Senior Operating Executive Expertise | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||
Senior Financial Executive Expertise | ✓ | ✓ | ✓ | |||||||
Senior Marketing/Sales Executive Expertise | ✓ | ✓ | ✓ | ✓ | ||||||
Senior HR/Compensation/Talent Development Expertise | ✓ | |||||||||
Consumer Brand Expertise | ✓ | ✓ | ✓ | ✓ | ||||||
Operating Knowledge of Company’s Industry | ✓ | ✓ | ✓ | ✓ | ✓ | |||||
Public Company Directorship Experience | ✓ | ✓ | ✓ | |||||||
Enterprise Level Information Technology Expertise | ✓ | ✓ | ✓ | ✓ | ||||||
International Market Development Expertise | ✓ | ✓ | ✓ | ✓ | ✓ | |||||
Corporate Strategy Development Expertise | ✓ | ✓ | ✓ | ✓ | ||||||
Corporate Governance Expertise | ✓ | ✓ | ||||||||
Risk Management Expertise | ✓ | ✓ |
(a) | the director is a current employee of the Company or any of its subsidiaries, or has an immediate family member who is a current executive officer of the Company or any of its subsidiaries; |
(b) | the director is a former employee, or any immediate family member is a former executive officer, of the Company or its subsidiaries, until three years after the employment has ended; |
(c) | the director (1) is a current partner or employee of the firm that is the Company’s internal or external auditor; (2) has been within the last three years, or has an immediate family member that has been within the last three years, a partner or employee of such firm and worked on the Company’s audit during that time; or (3) has an immediate family member who is currently, or within the last three years has been, an employee of such firm and participates in the audit, assurance or tax compliance (but not tax planning) practice; |
(d) | the director or an immediate family member has been within the last three years employed as an executive officer of another company where any of the Company’s present executive officers serves or has served at the same time on that company’s compensation committee; |
(e) | in any year, the director or any immediate family member receives, or in any twelve-month period within the last three years has received, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on future service); and |
(f) | the director is a current employee, or any immediate family member is a current executive officer, of a company that makes payments to, or receives payments from, the Company for property or services in an amount that exceeds, in any of the last three fiscal years, the greater of $1 million or 2% of the other company’s consolidated gross revenues. |
• | Governance Committee: In addition to overseeing our ERM procedures, our Governance Committee also oversees management’s administration of the Company’s corporate social responsibility and environmental sustainability programs, corporate governance policies and practices, including anti-corruption and bribery, and product safety, and periodically reviews the structure of our Board’s committees and charters to ensure appropriate oversight of risk. |
• | Audit Committee: Our Audit Committee oversees the financial risks associated with the preparation of the Company’s financial statements and our financial compliance activities, including the adequacy of our internal controls over financial reporting, our disclosure controls and procedures and our information technology general controls. The Audit Committee also oversees management actions and controls related to cyber and data security risks, disaster recovery and business continuity. |
• | Finance Committee: Our Finance Committee assists in monitoring and overseeing financial risks with respect to the Company’s capital structure, investments, use of derivatives and hedging instruments, currency exposure and other business and financing plans and policies. |
• | Compensation Committee: Our Compensation Committee considers risk and structures our executive compensation programs with an eye to providing incentives to appropriately reward executives for growing stockholder value without undue risk taking. It reviews, at least annually, the relationship between the Company’s ERM and corporate strategy and executive compensation. See “Compensation Discussion and Analysis--Discussion and Analysis--Compensation Risk Assessment.” Oversight of the Company’s succession planning and management development is also handled by the Compensation Committee. |
Members | The members of the Audit Committee are Ms. Dvorak (Chairperson), Mr. Lombardi, and Mr. Rajkowski. Each member meets the independence standards of our Corporate Governance Principles and the NYSE and the independence standards under Rule 10A‑3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each member meets the financial literacy requirements of the NYSE and has been determined by the Board of Directors to be “audit committee financial experts” as defined in Item 407(d)(5)(ii) of Regulation S‑K under the Exchange Act. |
Number of Meetings Last Year | Eleven |
Primary Functions | Oversees (1) the integrity of our financial statements and our accounting and financial reporting processes, (2) the independence and qualifications of our independent auditors, (3) the performance of the independent auditors and our internal audit function, and (4) our compliance with legal and regulatory requirements not specifically delegated to other Board committees. As part of its responsibilities, the Audit Committee, among other things: |
• | retains and oversees an independent, registered public accounting firm to serve as the Company’s independent auditors to audit our financial statements and monitors the independence and performance of our independent auditors; |
• | approves the scope of audit work and reviews reports and recommendations of our independent auditors; |
• | meets separately with our independent auditors on a quarterly basis; |
• | reviews internal audit staffing levels, qualifications and annual expense budgets, and oversees our internal audit function; |
• | reviews the annual internal audit plan, summaries of key reports and updates on the results of internal audit work; |
• | pre-approves all audit and permissible non-audit services to be provided by our independent auditors in accordance with policies and procedures established and maintained by the Audit Committee; |
• | reviews and discusses with management our financial statements and quarterly and annual reports to be filed with the SEC, including any significant issues regarding financial statement presentation and judgments, as well as our earnings announcements and related materials; |
• | reviews and discusses with management major issues regarding accounting and auditing principles and practices, significant changes in the Company’s selection or application of accounting principles and the effect of any pending or newly implemented regulatory and accounting initiatives on the Company’s financial statements; |
• | reviews and discusses with management the adequacy and effectiveness of our disclosure controls and procedures and our internal control over financial reporting, including any material weaknesses, significant deficiencies or changes in internal controls; |
• | discusses with our independent auditors our annual and quarterly financial statements; |
• | oversees management’s policies and procedures related to (i) managing risks associated with the preparation of the Company’s financial statements, (ii) data security risks, including cybersecurity threats and data integrity, (iii) business continuity and disaster recovery, and (iv) financial risk assessment and risk management, and discusses with management the Company’s major financial risk exposures and the steps taken to monitor and control such exposures; |
• | establishes and oversees procedures for receiving and responding to concerns regarding accounting, internal control over financial reporting and auditing matters; and |
• | reviews and approves (or ratifies where appropriate) certain related-party transactions. |
Members | The members of the Compensation Committee are Messrs. Kroeger (Chairperson), Jotwani and Norkus and Ms. Monteagudo. Each member meets the independence standards of our Corporate Governance Principles and the NYSE, as well as qualifies as a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act and as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). |
Number of Meetings Last Year | Seven |
Primary Functions | Oversees compensation and benefit programs for our executive officers and other members of senior management with a view towards attracting, motivating, and retaining high-quality leadership and compensating those individuals in a manner that is aligned with stockholders’ interests, consistent with competitive practices, commensurate with performance and in compliance with the requirements of appropriate regulatory bodies. As part of its responsibility the Compensation Committee, among other things: |
• | considers say-on-pay vote outcomes and shareholder engagement feedback on executive compensation; |
• | reviews and approves, at least biennially, the compensation peer group used to establish executive pay levels and design practices and assess performance; |
• | establishes the Company’s compensation philosophy; |
• | annually reviews and recommends to the Board of Directors the compensation of our CEO and evaluates his performance; |
• | establishes and approves the compensation for our other executive officers; |
• | administers, reviews and exercises the Board of Directors’ authority with respect to equity-based, and annual and long-term incentive compensation plans of the Company; determines and approves, or recommends for approval, grants of awards under such plans to executive officers; and delegates, at its discretion, to the CEO the authority to grant equity-based and incentive awards to non-executive employees; |
• | exercises the Board of Directors’ authority with respect to the oversight and, where applicable, administration of the Company’s health and benefit and defined benefit, retirement and supplemental retirement plans, including the Company’s 401(k) plan; |
• | exercises the Board of Directors’ authority with respect to employment, compensation, severance and change-in-control arrangements or agreements with executive officers, and, if applicable, other key employees as it may determine, and oversees management’s administration of such agreements or arrangements; |
• | oversees the succession planning and management development processes for all executive officers and makes recommendations to the Board of Directors in connection with succession planning for our CEO; |
• | assesses risk management with respect to the Company’s executive compensation policies and practices; |
• | periodically reviews the incentive compensation recoupment or forfeiture policies applicable to the Company’s executive officers and from time-to-time updates or make recommendations to the Board regarding updates to such policies; and |
• | establishes and reviews guidelines requiring our executives and other officers to maintain certain levels of stock ownership in the Company. |
Members | The members of the Governance Committee are Messrs. Jotwani (Chairperson), and Kroeger and Ms. Monteagudo. Each member meets the independence standards of our Corporate Governance Principles and the NYSE. |
Number of Meetings Last Year | Seven |
Primary Functions | Develops and oversees the Company’s corporate governance policies and provides advice with respect to corporate governance, the rights and interests of stockholders, and the organization, evaluation and functioning of the Board of Directors and its committees. The Governance Committee also identifies, reviews and recommends candidates for election to the Board of Directors and its committees. As part of its responsibility, the Governance Committee, among other things: |
• | annually reviews and, if desirable, recommends changes to the Company’s Corporate Governance Principles; |
• | reviews and provides recommendations with respect to the composition and structure of the Board of Directors and the duties, powers, composition and structure of the Board’s committees; |
• | establishes and reviews criteria relating to the qualifications, candidacy, service and tenure of directors and the procedures for the consideration of director candidates recommended by the Company’s stockholders; |
• | identifies and evaluates potential director candidates and recommends nominees for election or re-election as members of the Board of Directors; |
• | establishes and reviews criteria and qualifications for membership on the Board’s committees and recommends directors for membership on such committees; |
• | together with our Lead Independent Director, manages the annual performance review process of the Board of Directors and the Board’s committees; |
• | annually reviews and, if desirable, makes recommendations regarding compensation arrangements for non-employee directors, and administers the Company’s non-employee director deferred compensation plan; |
• | develops, recommends and periodically reviews the non-employee director stock ownership guidelines; and |
• | oversees management’s administration of the Company’s ERM, as well as the Company’s corporate social responsibility and environmental sustainability programs. |
Members | The members of the Finance Committee are Mr. Rajkowski (Chairperson), Ms. Dvorak, Mr. Lombardi and Mr. Norkus. Each member meets the independence standards of our Corporate Governance Principles and the NYSE. |
Number of Meetings Last Year | Six |
Primary Functions | Assists the Board of Directors in fulfilling its responsibilities to monitor and oversee the Company’s financial affairs with respect to the Company’s capital structure, investments, business and financing plans and policies, as well as financing requirements. The Finance Committee also evaluates specific financial proposals, plans, strategies, transactions and other initiatives. As part of its responsibility the Finance Committee, among other things: |
• | reviews the capital structure and financing requirements of the Company, as well as the Company’s debt ratings and bank credit facility arrangements, and makes recommendations to management concerning the Company’s liquidity needs; |
• | reviews and approves the Company’s policies related to use of hedging and derivative instruments, including, among other things, approving any future authorizations for the Company and its subsidiaries to enter into swaps; |
• | reviews and makes recommendations to management regarding the annual business plan; |
• | reviews and makes recommendations to management on any proposals for equity and debt transactions under consideration, including, but not limited to, issuances, repurchases, redemptions, retirements and recapitalizations; |
• | reviews and makes recommendations to management on any strategic actions under consideration, including any proposed acquisitions, divestitures, mergers, strategic alliances, investments or other actions to maintain or enhance stockholder value; |
• | reviews and makes recommendations to management regarding the Company’s dividend policy; and |
• | annually reviews the funding and investment performance of the Company’s defined benefit, retirement and supplemental retirement plans, including the Company’s 401(k) plan. |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | ||||||||||||
James A. Buzzard | 115,000 | 105,000 | — | 220,000 | ||||||||||||
Kathleen S. Dvorak | 110,000 | 105,000 | — | 215,000 | ||||||||||||
Pradeep Jotwani | 100,000 | 105,000 | 4,875 | 209,875 | ||||||||||||
Robert J. Keller | 90,000 | 105,000 | 1,000 | 196,000 | ||||||||||||
Thomas Kroeger | 105,000 | 105,000 | 5,000 | 215,000 | ||||||||||||
Ron Lombardi(1) | 73,500 | 124,562 | 5,000 | 203,062 | ||||||||||||
Graciela Monteagudo | 90,000 | 105,000 | — | 195,000 | ||||||||||||
Hans Michael Norkus | 100,000 | 105,000 | 2,500 | 207,500 | ||||||||||||
E. Mark Rajkowski | 100,000 | 105,000 | 5,000 | 210,000 |
Name | Restricted Stock Units (RSUs) | Stock Options | ||||||
James A. Buzzard | 35,952 | — | ||||||
Kathleen S. Dvorak | 76,108 | — | ||||||
Pradeep Jotwani | 56,306 | — | ||||||
Robert J. Keller | 38,690 | 140,783 | ||||||
Thomas Kroeger | 47,640 | — | ||||||
Ron Lombardi | 10,310 | — | ||||||
Graciela Monteagudo | 24,327 | — | ||||||
Hans Michael Norkus | 62,838 | — | ||||||
E. Mark Rajkowski | 62,838 | — |
2017 | 2018 | ||||||
Audit fees(1) | $ | 5,623,000 | $ | 3,927,000 | |||
Audit-related fees(2) | 5,000 | 90,000 | |||||
Tax fees(3) | 388,000 | 257,000 | |||||
All other fees(4) | 35,000 | 24,000 | |||||
Total | $ | 6,051,000 | $ | 4,298,000 |
(1) | Audit fees include fees for the audit of our annual financial statements, the audit of the effectiveness of the Company’s internal control over financial reporting, the review of the financial information included in our Form 10-Q quarterly reports filed with the SEC and services performed in connection with statutory audits and regulatory filings or engagements. The audit fees for 2018 decreased substantially from 2017. The 2017 fees included the audit of the Company’s accounting for the assets acquired and liabilities assumed in connection with the Esselte Group Holdings AB acquisition. |
(2) | Audit-related fees include professional services related to the performance of the audit and are primarily agreed upon procedures and compliance audits required under various local international regulations. |
(3) | Tax fees consist principally of professional services rendered for domestic and international tax compliance work. |
(4) | All other fees relate primarily to compilation of financial statements for a number of international legal entities. |
Beneficial Ownership | ||||||||||||||||||||
Name | Number of Shares | Number of Shares Subject to Options(1) | Number of Shares Subject to RSUs(2) | Total | Percent | |||||||||||||||
The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355(3) | 9,790,535 | — | — | 9,790,535 | 9.6 | % | ||||||||||||||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746(4) | 8,969,226 | — | — | 8,969,226 | 8.8 | % | ||||||||||||||
Wellington Management Group LLP 280 Congress St. Boston, MA 02210(5) | 7,920,008 | — | — | 7,920,008 | 7.8 | % | ||||||||||||||
BlackRock, Inc. 55 East 52nd St New York, NY 10055(6) | 7,488,996 | — | — | 7,488,996 | 7.3 | % | ||||||||||||||
JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017(7) | 5,439,655 | — | — | 5,439,655 | 5.3 | % | ||||||||||||||
James A. Buzzard | 78,458 | — | 35,952 | 114,410 | * | |||||||||||||||
Kathleen S. Dvorak | 18,478 | — | 76,108 | 94,586 | * | |||||||||||||||
Boris Elisman(8) | 805,994 | 872,129 | 91,561 | 1,769,684 | 1.7 | % | ||||||||||||||
Pradeep Jotwani | — | — | 56,306 | 56,306 | * | |||||||||||||||
Robert J. Keller | 237,264 | 140,783 | 38,691 | 416,738 | * | |||||||||||||||
Thomas Kroeger(9) | 40,008 | — | 47,640 | 87,648 | * | |||||||||||||||
Ron Lombardi | — | — | 10,311 | 10,311 | * | |||||||||||||||
Graciela Monteagudo | — | — | 24,328 | 24,328 | * | |||||||||||||||
Hans Michael Norkus(10) | 114,408 | — | 62,838 | 177,246 | * | |||||||||||||||
E. Mark Rajkowski(11) | 58,169 | — | 62,838 | 121,007 | * | |||||||||||||||
Neal V. Fenwick(12) | 549,465 | 257,043 | 20,124 | 826,632 | * | |||||||||||||||
Cezary Monko | — | 32,915 | — | 32,915 | * | |||||||||||||||
Pamela R. Schneider(8) | 86,933 | 154,463 | 16,702 | 258,098 | * | |||||||||||||||
Thomas W. Tedford | 153,233 | 151,063 | 28,173 | 332,469 | * | |||||||||||||||
All directors and executive officers as a group (19 persons)(8) | 2,466,223 | 1,938,357 | 609,647 | 5,014,227 | 4.9 | % |
* | Less than 1% |
(1) | Indicates the number of shares of common stock issuable upon the exercise of options exercisable on or before April 30, 2019 (within 60 days after March 1, 2019). |
(2) | Indicates the number of shares subject to vested RSUs or RSUs that may vest on or before April 30, 2019 (within 60 days after March 1, 2019). For members of our Board of Directors, these units represent the right to receive one share of common stock upon cessation of service as a director. |
(3) | Based solely on a Schedule 13G/A filed with the SEC on February 11, 2019 by The Vanguard Group. Of these shares, The Vanguard Group has sole voting power over 102,389 shares, has shared voting power over 20,400 shares, sole dispositive power over 9,680,190 shares, and shared dispositive power over 110,345 shares. |
(4) | Based solely on a Schedule 13G/A filed with the SEC on February 8, 2019 by Dimensional Fund Advisors LP. Of these shares, Dimensional Fund Advisors LP has sole voting power over 8,611,721 shares and sole dispositive power over all of the shares. Dimensional Fund Advisors LP disclaims beneficial ownership of shares reported as beneficially owned. |
(5) | Based solely on a Schedule 13G/A filed with the SEC on February 12, 2019 by Wellington Management Group LLP on its own behalf and on behalf of certain affiliates. Wellington Management Group LLP does not have sole dispositive or voting power over any of the shares, has shared voting power over 5,621,998 of the shares and has shared dispositive power over all of the shares. |
(6) | Based solely on a Schedule 13G/A filed with the SEC on February 4, 2019 by BlackRock, Inc., on its own behalf and on behalf of certain affiliates. Of these shares, BlackRock, Inc. has sole voting power over 7,167,901 of the shares and sole dispositive power over all of the shares. |
(7) | Based solely on a Schedule 13G/A filed with the SEC on January 16, 2019 by JPMorgan Chase & Co. Of these shares, JPMorgan Chase & Co. has sole voting power over 4,740,880 shares, sole dispositive power over 5,417,928 shares, and shared dispositive power over 933 shares. |
(8) | Includes 7,077, 5,145 and 43,656 shares beneficially owned by Mr. Elisman, Ms. Schneider and all directors and officers as a group, respectively, through the Company’s 401(k) plan as of January 14, 2019. |
(9) | Mr. Kroeger shares voting power and dispositive power over 12,188 shares with his wife, as co-trustees of a family trust. |
(10) | Includes 25,552 phantom stock units under the Deferred Plan which may be settled, at Mr. Norkus’ election, in cash or shares of common stock upon cessation of his service as a director. |
(11) | Includes 29,537 shares owned by Mr. Rajkowski’s wife. |
(12) | Includes 26,740 shares owned by Mr. Fenwick through the Company’s 401(k) plan as of January 14, 2019 and 2,500 shares held by Mr. Fenwick’s wife. |
• | Boris Elisman, Chairman of the Board, President and Chief Executive Officer |
• | Neal V. Fenwick, Executive Vice President and Chief Financial Officer |
• | Thomas W. Tedford, Executive Vice President, President, ACCO Brands North America |
• | Cezary Monko, Executive Vice President, President, ACCO Brands Europe, Middle East and Africa |
• | Pamela R. Schneider, Senior Vice President, General Counsel and Corporate Secretary |
• | For the 2018 AIP: increased the weight of net sales and working capital efficiency measures each to 20% and decreased the weight on adjusted operating income to 60%. |
• | For the 2018-2020 LTIP PSU: added a net sales growth measure weighted 20%, decreased the weight on the adjusted free cash flow measure to 30%, and retained the adjusted earnings per share measure weighted 50%. |
• | A 2.2% increase in his base salary to $950,000 effective April 1, 2018; |
• | The continuation of his AIP award target at 120% of his base salary; and |
• | The grant of a long-term equity award with an aggregate target award grant value of $2,300,000 for peer group benchmarking purposes. (This compares with an aggregate grant-date fair value of approximately $3 million shown in the 2018 Summary Compensation Table.) |
Ÿ At-Will Employment - The Company does not maintain individual employment contracts or individual change-in-control agreements with its executive officers, except for Mr. Monko who is based in Poland where it is common practice for an executive to have an individual employment contract. |
Ÿ Target Compensation at Peer Group Market Median - The Compensation Committee typically targets all components of compensation at or near the median of our Peer Group; actual pay may be greater-than or less-than median based upon performance and experience. |
Ÿ Pay-for-Performance - A significant portion of our executive officer compensation is variable and at-risk, with actual amounts paid based on performance; for 2018, 81% of CEO’s total target compensation was at-risk. |
Ÿ Variety of Performance Measures - Our short- and long-term compensation programs use a variety of complementary measures so executive officers do not focus on one measure at the expense of other measures. |
Ÿ Award Caps - To encourage executive officers to focus equally on short- and long-term performance goals, target awards in our short- and long-term incentive compensation programs both provide a maximum payout at 150% of target, which is conservative to market norms. |
Ÿ Blend of Corporate and Business Segment Performance - Our short- and long-term compensation programs contain financial performance measures that focus on both business segment and company-wide performance. |
Ÿ Incentive Payout - Annual Review Relative to Peer Group - The Compensation Committee reviews short- and long-term incentive payouts relative to the performance of our Peer Group companies on an annual basis. |
Ÿ Compensation Committee Negative Discretion - The Compensation Committee may apply negative discretion to reduce an executive officer’s compensation based upon performance or unintended consequences. |
Ÿ Double-Trigger Equity Award Vesting Upon Change-in-Control - No automatic vesting of equity awards upon a change-in-control. Both a change-in-control and an involuntary termination of employment or termination by executive for “good reason” must occur for equity awards to vest. |
Ÿ Double-Trigger Change-in-Control Provision in Executive Severance Plan - Both a change-in-control and an involuntary termination of employment or termination by executive for “good reason” must occur to receive cash severance payment. |
Ÿ Change-in-Control Taxes - No excise tax gross-up provision in the executive severance plan beginning in 2019. |
Ÿ Minimum Vesting - Full-value equity awards are subject to a three-year vesting or performance period. |
Ÿ Limited Perquisites - The Company generally limits its use of perquisites. |
Ÿ Prohibition on Stock Option Re-pricing - Re-pricing of underwater stock options is prohibited without stockholder approval. |
Ÿ Stock Ownership Guidelines - Stock ownership guidelines for executive officers include a requirement to retain 50% of net shares received through equity awards until the guidelines are satisfied; the Company does not include unexercised, vested NQSOs, or unearned and unvested PSUs in calculating guideline attainment levels. |
Ÿ Clawback or Forfeiture of Incentive Payments Policy - The Company has a policy to recoup incentive compensation paid or payable to executive officers if either the payment was based on financial results that were subsequently restated (regardless of whether the officer was responsible for the restatement), or if the officer engages in willful or intentional misconduct. |
Ÿ Prohibition on Hedging and Pledging - Company policy prohibits executive officers and directors from hedging or pledging Company stock. |
Ÿ Independent Compensation Committee - The Compensation Committee is comprised entirely of independent members of our Board of Directors. |
Ÿ External Compensation Consultant - The Compensation Committee engages an independent executive compensation consultant who acts solely at the direction of the Compensation Committee. |
Ÿ Tally Sheets Review - The Compensation Committee reviews a total summary of current and historical compensation for our named executive officers to ensure pay is aligned with market, individual performance and Company performance. |
Compensation Components | |
Annual Compensation | Base Salary - fixed earnings based on the Compensation Committee’s assessment of competitive market data, the position, and the incumbent executive officer’s experience, skills, knowledge and performance; provides an appropriate level of financial certainty. |
Annual Incentives - variable performance-based cash compensation earned if annual financial objectives established by the Compensation Committee are achieved, with above-target payouts for above-target performance and below-target or no payouts for performance that falls short of established goals. | |
Long-Term Compensation1 | Performance Stock Units and/or Performance Cash - equity and/or cash awards that reward the achievement of long-term financial performance goals which contribute to the creation of stockholder value over the long-term, with above-target payouts for above-target performance and below-target or no payouts for performance that falls short of established goals. |
Stock Options - equity awards that align management with stockholders’ interest in share price appreciation. | |
Restricted Stock Units - equity awards that encourage retention while aligning management with stockholders’ interests through stock ownership. | |
Benefits | The Company provides retirement, health and welfare plans that are the same as offered to all other salaried employees in the same geography. In addition, executive officers receive life insurance and long-term disability coverage and some executive officers receive certain limited perquisites. |
1 The Compensation Committee determines annually the long-term compensation mix based on a variety of factors, such as participant eligibility, share availability under the Incentive Plan, Peer Group practices, cost and cash flow impact to the Company.
• | Total compensation pay mix includes a market-aligned balance of short- and long-term incentive compensation elements where pay is both fixed (base salary) and performance-based (short- and long-term incentives), with sufficient fixed compensation so that employees are not unduly focused on financial performance; |
• | The mix of LTIP award types encourage value creation, retention, and stock price appreciation; |
• | Financial performance targets for the short- and long-term incentives are the same for executives and employees alike, and include Company-wide performance measures, incentivizing consistent behavior across the Company; |
• | Multiple and varied performance measures for each of the short- and long-term incentives encourage executives to focus their efforts on driving balanced performance across the multiple key financial measures; |
• | Short- and long-term incentive awards are capped at 150% of target award opportunity; |
• | Change-in-control and severance benefits are aligned with market norms; |
• | Competitive stock ownership guidelines are in place, requiring long-term ownership of Company stock by executive management; |
• | An anti-hedging/anti-pledging policy for all employees and a clawback policy for executive management are in place; and |
• | The Compensation Committee is advised by an independent compensation consultant. |
• | Type of business - includes companies with the following characteristics: |
○ | Global operations and manufacturing |
○ | Business-to-business sales models in similar markets as the Company |
○ | Products sold through stores and distributors, specifically excluding chemical, heavy machinery and other non-comparable manufacturers |
• | Size of business - includes companies with the following characteristics: |
○ | Revenue size one-half to three times the size of our revenue |
○ | Market capitalization one-half to four times the size of our market capitalization |
Armstrong World Industries, Inc. | Interface, Inc. | Steelcase Inc. |
Brady Corporation | Kimball International, Inc. | The Scotts Miracle-Gro Company |
Deluxe Corporation | Knoll, Inc. | The Toro Company |
Essendant Inc. | Libbey Inc. | Tupperware Brands Corporation |
Fortune Brands Home & Security, Inc. | Logitech International SA | UniFirst Corporation |
G&K Services, Inc. 1 | NACCO Industries, Inc. | VeriFone Systems, Inc. |
Helen of Troy Limited | Pitney Bowes Inc. | Zebra Technology Corporation |
Herman Miller, Inc. | Plantronics, Inc. | |
HNI Corporation | Snap-on Incorporated |
Name | Prior Base Salary ($) | New Base Salary ($) | % Change | |||||||||
Boris Elisman | $ | 930,000 | $ | 950,000 | 2.2 | % | ||||||
Neal V. Fenwick | $ | 530,450 | $ | 546,364 | 3.0 | % | ||||||
Thomas W. Tedford | $ | 530,450 | $ | 546,364 | 3.0 | % | ||||||
Cezary Monko 1 | $ | 542,445 | $ | 558,719 | 3.0 | % | ||||||
Pamela R. Schneider | $ | 438,250 | $ | 453,589 | 3.5 | % |
Name | Target AIP as % of Salary (100% of Target) | Maximum AIP as % of Salary (150% of Target) | Target AIP Award Opportunity ($) | ACCO Brands Adjusted Operating Income Weight | ACCO Brands Working Capital Efficiency Weight | ACCO Brands Net Sales Weight | Business Segment Adjusted Operating Income Weight | Business Segment Working Capital Efficiency Weight | Business Segment Net Sales Weight | |||||||||||||||||||||||||||
Boris Elisman | 120.00 | % | 180.0 | % | 1,134,000 | 60 | % | 20 | % | 20 | % | |||||||||||||||||||||||||
Neal V. Fenwick | 70.00 | % | 105.0 | % | 379,670 | 60 | % | 20 | % | 20 | % | |||||||||||||||||||||||||
Thomas W. Tedford | 70.00 | % | 105.0 | % | 379,670 | 40 | % | 20 | % | 20 | % | 20 | % | |||||||||||||||||||||||
Cezary Monko | 70.00 | % | 105.0 | % | 388,254 | 40 | % | 20 | % | 20 | % | 20 | % | |||||||||||||||||||||||
Pamela R. Schneider | 60.00 | % | 90.0 | % | 269,853 | 60 | % | 20 | % | 20 | % |
• | Adjusted operating income is operating income as reported in accordance with U.S. GAAP, adjusted to exclude certain one-time and non-comparable items primarily associated with transaction and integration related expenses, restructuring charges, and unusual items, as well as incentive compensation expense. |
• | Net sales is revenue calculated in accordance with U.S. GAAP. |
• | Working capital efficiency measures working capital productivity over a twelve-month period of time, expressed as a percentage of sales. |
Name | ACCO Brands Adjusted Operating Income | ACCO Brands Working Capital Efficiency | ACCO Brands Net Sales | Business Segment Adjusted Operating Income | Business Segment Working Capital Efficiency1 | Business Segment Net Sales | ||||||||||
Boris Elisman | $ | 261.2M | 19.25 | % | $ | 2,029M | ||||||||||
Neal V. Fenwick | $ | 261.2M | 19.25 | % | $ | 2,029M | ||||||||||
Thomas W. Tedford | $ | 261.2M | North America $179.4M | U.S. 16.60% Canada 18.78% | North America $1,009.5M | |||||||||||
Cezary Monko | $ | 261.2M | EMEA $66.0M | EMEA 11.70% | EMEA $605.8M | |||||||||||
Pamela R. Schneider | $ | 261.2M | 19.25 | % | $ | 2,029M |
Name | Target AIP Award Opportunity ($) | Actual AIP Award ($) | AIP Award as % of Target Award | AIP Award as % of Base Salary | ||||||||||||
Boris Elisman | 1,134,000 | 0 | 0 | % | 0 | % | ||||||||||
Neal V. Fenwick | 379,670 | 0 | 0 | % | 0 | % | ||||||||||
Thomas W. Tedford | 379,670 | 0 | 0 | % | 0 | % | ||||||||||
Cezary Monko 1 | 388,254 | 296,626 | 76.4 | % | 53.5 | % | ||||||||||
Pamela R. Schneider | 269,853 | 0 | 0 | % | 0 | % | ||||||||||
1 Mr. Monko’s AIP is reflected in U.S. dollars converted from Polish Zloty using the 2018 average conversion rate of 0.2775. |
• | Due to below threshold performance for total Company adjusted operating income, working capital efficiency, and net sales, Messrs. Elisman and Fenwick, and Ms. Schneider did not receive an AIP award payout. |
• | Due to below threshold performance for total Company adjusted operating income and below threshold performance by the North American business segment on its adjusted operating income, its net sales, and its working capital efficiency, Mr. Tedford did not receive an AIP award payout. |
• | As a result of below threshold performance for total Company adjusted operating income and above target performance by the EMEA business segment for its adjusted operating income, its net sales, and its working capital efficiency, Mr. Monko received an AIP payout equal to 76.4% of his AIP award target opportunity. |
Cumulative Adjusted Free Cash Flow 1 (50% Weight) 109.2% Payout | Cumulative Adjusted Earnings Per Share 1 (50% Weight) 124.8% Payout | Payout as % of PSUs Granted | ||||||||||||||||||||||||||
Name | PSUs Granted | Target Shares | Earned Shares 2 | Target Shares | Earned Shares 2 | Total Shares Earned 2 | ||||||||||||||||||||||
Boris Elisman | 211,789 | 105,895 | 118,332 | 105,894 | 135,235 | 253,567 | 117.0 | % | ||||||||||||||||||||
Neal V. Fenwick | 46,547 | 23,274 | 26,008 | 23,273 | 29,722 | 55,730 | 117.0 | % | ||||||||||||||||||||
Thomas W. Tedford | 65,166 | 32,583 | 36,410 | 32,583 | 41,612 | 78,022 | 117.0 | % | ||||||||||||||||||||
Cezary Monko | — | — | — | — | — | — | — | |||||||||||||||||||||
Pamela R. Schneider | 38,634 | 19,317 | 21,587 | 19,317 | 24,670 | 46,257 | 117.0 | % |
1 Cumulative adjusted free cash flow and cumulative adjusted earnings per share is the sum of adjusted free cash flow and adjusted earnings per share for each of the 2016, 2017, and 2018 fiscal years, respectively. Adjusted free cash flow is defined as net cash provided by operations as reported in accordance with U.S. GAAP, plus cash proceeds from any sale of operating assets and cash payments related to any debt refinancing or business acquisition or disposition, less capital expenditures, and further adjusted to exclude any adverse cash consequences from tax assessments related to pre-acquisition transactions (including related interest payments, net of tax). Adjusted earnings per share is defined as adjusted net income as reported, divided by the weighted average fully diluted outstanding shares of the Company’s common stock for the relevant year. Adjusted net income excludes restructuring expenses, transaction and integration costs, and other one-time and non-recurring items and is adjusted to an effective tax rate.
2 The earned shares include dividend equivalents accumulated on the underlying PSU grant.
The settled Performance Cash awards are summarized in the table below:
Cumulative Adjusted Free Cash Flow 1 (50% Weight) 109.2% Payout | Cumulative Adjusted Earnings Per Share 1 (50% Weight) 124.8% Payout | Total | Payout | |||||||||||||||||||||||||
Name | Performance Cash Opportunity ($) | Target LTIP Cash ($) | Earned LTIP Cash ($) | Target LTIP Cash ($) | Earned LTIP Cash ($) | Performance Cash Earned ($) | as % of Performance Cash Opportunity | |||||||||||||||||||||
Boris Elisman | 568,750 | 284,375 | 310,538 | 284,375 | 354,900 | 665,438 | 117.0 | % | ||||||||||||||||||||
Neal V. Fenwick | 125,000 | 62,500 | 68,250 | 62,500 | 78,000 | 146,250 | 117.0 | % | ||||||||||||||||||||
Thomas W. Tedford | 175,000 | 87,500 | 95,550 | 87,500 | 109,200 | 204,750 | 117.0 | % | ||||||||||||||||||||
Cezary Monko | — | — | — | — | — | — | — | |||||||||||||||||||||
Pamela R. Schneider | 103,750 | 51,875 | 56,648 | 51,875 | 64,740 | 121,388 | 117.0 | % |
1 See footnote 1 in the 2016-2018 LTIP PSU table above.
See 2018 Option Exercises and Stock Vested table for further details on the 2016-2018 LTIP PSUs and see the 2018 Summary Compensation Table for the 2016-2018 Performance Cash earned by the named executive officers.
Timing of Equity Grants
Annual equity awards are granted to executive officers and other eligible employees, and are typically made at the Company’s regular meeting of the Board of Directors during the first quarter of each year. Off-cycle (non-annual) awards may be made if our CEO and the Compensation Committee deem it necessary for newly-promoted employees, strategic new hires, or in other special or unique circumstances. The award is determined by the CEO and the Compensation Committee in advance of the actual effective date of the grant. The effective date for an off-cycle award is the first business day of the month following a newly hired/promoted eligible employee’s effective date of hire or promotion, as the case may be.
Retirement Benefits
Defined Contribution - 401(k) - United States
All of the Company’s named executive officers (other than Mr. Monko) were participants in the Company’s U.S. tax-qualified 401(k) retirement savings plan during 2018. The Company’s 401(k) program matches employee contributions up to 6% of eligible plan compensation, with a total employer contribution of 6% (100% match on the first 6% of an employee’s contribution). These matching contributions apply to all participating employees, including our named executive officers (other than Mr. Monko). The amount of benefits provided to our named executive officers in the form of 401(k) plan contributions is included in the “All Other Compensation” column of the 2018 Summary Compensation Table and related footnotes.
Defined Benefit - Pension - United States and United Kingdom
The ACCO Brands Corporation Pension Plan for U.S. Salaried and Certain U.S. Hourly Paid Employees (the “ACCO U.S. Pension”) was frozen in the first quarter of 2009. As a result, none of the executive officers that participate in the ACCO U.S. Pension have accrued any additional benefits under this plan since that time. The pension decrease for Messrs. Elisman and Fenwick, who were in the ACCO U.S. Pension at the time the plan was frozen and who remain eligible for pension disbursements upon retirement, was due largely to an increase in the discount rate assumptions. In addition, Mr. Fenwick is also entitled to a pension benefit under the ACCO United Kingdom Pension Plan (“ACCO U.K. Pension”) in which he participated until April 1, 2006. Mr. Fenwick was eligible to participate in the ACCO U.K. Pension based on his prior employment with the Company in Europe. The pension decrease for Mr. Fenwick’s ACCO U.K. Pension was also largely attributable to an increase in the discount rate assumptions for the ACCO U.K. Pension. For more information, see “2018 Summary Compensation Table” and “Pension Benefits.”
Retirement Plan - Poland
Mr. Monko is entitled to a pension benefit under the Company’s Polish broad-based defined benefit pension plan upon retirement on or after age 65. The plan provides for a one-time lump sum payment in an amount equal to three-times the employee’s monthly average base salary in effect over the last three months of his or her employment, subject to taxation. There are no vesting service requirements or early retirement provisions for this benefit. Mr. Monko must be working for the Company at the time of his retirement in order to receive this benefit. For more information, see “2018 Summary Compensation Table” and “Pension Benefits.”
Health and Other Benefits
The employee medical and welfare benefits provided to executive officers are offered through broad-based plans available to all employees in the given geography.
Perquisites
The Compensation Committee limits the use of perquisites as an element of compensation for executive officers, unless the perquisite is common practice in a given geography. Most of our perquisites are legacy in nature. The costs to the Company and a description of personal benefits provided to our named executive officers are included in the “All Other Compensation” column of the 2018 Summary Compensation Table and related footnotes.
Executive Severance Policy
The Company does not provide individual employment contracts for executive officers, unless having an employment contract is a common practice in a given geography. All of the Company’s executive officers, including the named executive officers, currently participate in the Company’s Executive Severance Plan (the “ESP”), which is administered by the Compensation Committee. Though Mr. Monko has an employment contract, which is governed by Polish law, his severance benefits are established by the ESP.
The ESP provides severance benefits to the Company’s executive officers and a limited number of other key executives in the event their employment is terminated either involuntarily at any time, or voluntarily for “good reason” within 24 months after a change-in-control. The ESP does not apply if the executive’s employment is terminated for cause or voluntarily (other than for “good reason” following a change-in-control). The ESP is intended to help the Company attract and retain executives in a talent marketplace where such employment protections are commonly offered, including among our Peer Group.
Under the ESP, executives receive enhanced benefits if a termination of employment follows a change-in-control of the Company. The change-in-control cash severance benefits are “double-triggered,” meaning that both a change-in-control and an involuntary termination of employment or termination by the executive for “good reason” must occur to receive payment.
The ESP provides for benefit tiers, with tier-one providing greater benefits than tier-two, and tier-two providing greater benefits than tier-three. Management recommends ESP participants and their respective benefit tier to the Compensation Committee for its consideration and final approval. Messrs. Fenwick, Tedford and Monko are currently eligible for tier-two benefits and Ms. Schneider is currently eligible for tier-three benefits. Effective April 1, 2019, Mr. Elisman became eligible for tier-one benefits which provide for (i) 24 months of base salary and 2 times target bonus upon an involuntary termination and (ii) 2.99 years of base salary and target bonus plus a pro-rated bonus at target in the year of termination in the event of a change-in-control termination as provided in the ESP. The Compensation Committee may change the tier of any executive officer at any time prior to his or her date of termination in its sole discretion.
For further details, see “Potential Payments upon Termination or Change-in-Control” and the related tables.
Amended Executive Severance Plan
The Company amended the ESP effective January 1, 2019. Certain changes were effective immediately, while changes related to the amount of change-in-control severance will take effect on January 11, 2021. The key changes to the ESP are as follows:
• | Provisions requiring the “gross-up” of the excise tax that is imposed by the Code on certain amounts payable following a change-in-control were eliminated. Instead, such amounts will be reduced to the maximum amount that is not treated as a “golden parachute” payment under the Code, but only if the reduced amount, after income tax, is at least equal to the amount that would have been paid without the reduction, after application of the income tax and the excise tax; |
• | The amount of the annual bonus used to calculate an executive officer’s severance in the event of a change-in-control will be equal to his or her target bonus, rather than the higher of the target bonus or projected bonus based upon financial results through the date of termination; |
• | The executive officer will be entitled to severance benefits upon a change-in-control if he or she is terminated without cause within six months prior to the change-in-control, in addition to any termination within 24 months following the change-in-control. Previously, an executive officer who was terminated prior to a change-in-control had to demonstrate that the termination was at the request of another party involved in the change-in-control, or was otherwise in contemplation of the change-in-control; and |
• | Any severance paid is explicitly subject to the Company’s recoupment or forfeiture of incentive payments policy. |
Executive Stock Ownership Guidelines
To further align executive officers’ interests with those of our stockholders, the Company maintains stock ownership guidelines (“Executive Ownership Guidelines”) which apply to all executive officers, as follows:
Title | Number of Shares | or a | Multiple of Base Salary | (whichever is lower) | |
Chief Executive Officer | 500,000 | 6.0X | |||
Chief Financial Officer and Presidents | 125,000 | 3.0X | |||
Other Executives | 60,000 | 2.0X |
Executive officers are generally expected to achieve their respective ownership goals within five years of becoming an officer. If an executive is promoted to a higher level requiring greater stock ownership, he or she has five years from the date of such promotion to achieve the new level. All executive officers attained or are on track to attain the guidelines within the required time frame.
Shares counting towards ownership targets include shares held by the executive officer personally in both retirement and non-retirement accounts, shares beneficially owned through a trust, spouse and/or dependent child, unvested RSUs, and earned but not yet vested PSUs. Attainment is achieved at either the lower of a multiple of salary or a number of shares, which the Compensation Committee believes reduces the impact of stock price volatility.
Following the vesting of PSUs or RSUs, or the exercise of stock options, executive officers who have not yet met their applicable stock ownership goals (in number of shares or value) are expected to retain at least 50% of the net value of shares of stock received (e.g., the net value after deduction of the exercise price and all applicable tax and other required withholding). Subject to the Company’s insider-trading policy, an executive officer may reduce his or her share ownership so long as his/her ownership is maintained at or above the required ownership levels.
The Compensation Committee has the discretion to remedy any deficiency if ownership goals are not met on a timely basis. Remedies may include providing a portion of annual incentive awards in Company stock or similar actions. The Compensation Committee may also consider other factors, including general equity market conditions and the Company’s then-current stock price when determining the need for any remedies.
Prohibitions on Hedging, Pledging and Similar Transactions
Hedging and similar monetization transactions by directors and employees, including executive officers, can lead to a misalignment between the objectives of these individuals and the objectives of our stockholders. Similarly, stock pledges by directors and executive officers could detrimentally impact our stockholders if they are used as part of a hedging strategy or in the event of a forced sale of our stock, such as to meet a margin call. Accordingly, under our insider trading policy:
• | directors and employees, including our executive officers, are prohibited from engaging in hedging transactions, including through prepaid forward contracts, equity swaps, collars and exchange funds; |
• | directors and executive officers are prohibited from trading in puts, calls, exchange-traded options or similar securities involving our stock; |
• | directors and employees, including executive officers, are prohibited from engaging in short sales of our stock; and |
• | directors and executive officers are prohibited from holding our securities in margin accounts or otherwise pledging our securities as collateral for a loan, and all other employees must receive pre-clearance from the Company in order to do so. |
Our insider trading policy does not provide for exceptions or waivers to these prohibitions.
Recoupment or Forfeiture of Incentive Payments Policy
The Company has a policy to “clawback” compensation paid or payable to executive officers in the event of a financial restatement. Under the policy, as revised effective January 1, 2019, executive officers who receive any cash or equity incentive compensation payments may be required to forfeit or reimburse the Company for those payments, as the case may be, in the event that either:
• | the amount was based upon the achievement of financial results that were subsequently the subject of an accounting restatement required by the federal securities laws, and a lower amount would have been paid to the executive officer based on the restated amount, regardless of whether the executive officer was responsible for the restatement; or |
• | the Board of Directors determines that the executive officer engaged in willful or intentional misconduct with respect to the performance of his or her duties, including but not limited to “cause” as defined in the ESP, misappropriation or misuse of corporate assets or opportunities, or confidential information, breach of fiduciary duty owed to the Company, or violation of restrictive covenants. |
In such circumstances the Company may seek to recover from the executive officer, either by repayment of cash or equity incentives already paid or cancellation or forfeiture of outstanding cash or equity incentive compensation awards not yet earned, either the amount by which his or her cash or equity incentive payments exceeded the lower payment that would have been made based on the restated financial results, or, in the case of willful or intentional misconduct, an amount equal to the value of any cash or equity incentive payments received during the three-year period prior to the executive’s termination of employment (or, if longer, the period during which the misconduct existed), or after the termination. The Board may waive or reduce an executive officer’s repayment obligation based upon hardship, the executive officer’s degree of culpability, or such other factors as the Board deems appropriate. Although in revising the clawback policy the Board eliminated the requirement that compensation is subject to clawback as a result of a restatement of financial results only if the executive officer was responsible for the restatement, the Board may take the executive officer’s degree of responsibility for the restatement into account in deciding whether to waive or reduce the repayment obligation.
Deductibility of Executive Compensation
Section 162(m) of the Code limits the annual deductibility of certain (non-performance based) executive compensation to $1 million per covered executive officer. Historically, the $1 million deduction limitation did not apply to compensation that qualified as “performance-based” under Section 162(m). The Company’s compensation philosophy had been to, where appropriate, position executive compensation to qualify for deductibility, except where the underlying executive compensation programs were appropriate and necessary to attract, retain, and motivate senior executives, and that failing to meet deductibility objectives creates more risk for the Company and its value than the financial impact of losing the tax deduction.
The 2017 U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”) repealed the exemption from the $1 million deduction limit under Section 162(m) for performance-based compensation, effective for taxable years beginning after December 31, 2017. As a result, compensation paid to our covered executive officers (including performance-based compensation) in excess of $1 million is not deductible beginning with our 2018 fiscal year, unless the compensation qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. In addition, the 2017 Tax Act expanded the scope of covered employees to include any person who has previously been a named executive officer, even if he or she is not a named executive officer at the time of payment.
COMPENSATION COMMITTEE REPORT
The Compensation Committee oversees the compensation programs of the Company on behalf of the Board of Directors. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management of the Company the Compensation Discussion and Analysis included in this Proxy Statement.
In reliance on the review and discussions referred to above, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and in this Proxy Statement.
Members of the Compensation Committee:
Thomas Kroeger (Chairperson)
James A. Buzzard (until May 15, 2018)
Pradeep Jotwani
Graciela Monteagudo (commencing May 15, 2018)
Hans Michael Norkus
This Compensation Committee Report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||
Name | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Non- Equity Incentive(4) ($) | Change in Pension Value(5) ($) | All Other Comp(6) ($) | Total ($) | |||||||||||||||||
Boris Elisman | 2018 | 945,000 | — | 2,585,294 | 443,954 | 665,438 | 0 | 42,333 | 4,682,019 | |||||||||||||||||
Chairman of the Board, President and Chief Executive Officer | 2017 | 917,500 | — | 2,463,071 | 541,150 | 988,698 | 14,000 | 40,629 | 4,965,048 | |||||||||||||||||
2016 | 860,308 | — | 2,301,665 | — | 986,085 | 8,000 | 36,490 | 4,192,548 | ||||||||||||||||||
Neal V. Fenwick | 2018 | 542,385 | — | 673,961 | 156,831 | 146,250 | 0 | 47,389 | 1,566,816 | |||||||||||||||||
Executive Vice President and Chief Financial Officer | 2017 | 526,587 | — | 619,752 | 184,484 | 307,369 | 747,345 | 47,163 | 2,432,700 | |||||||||||||||||
2016 | 511,308 | — | 505,860 | — | 346,309 | 340,871 | 43,222 | 1,747,570 | ||||||||||||||||||
Thomas W. Tedford | 2018 | 542,385 | — | 829,493 | 193,022 | 204,750 | — | 18,826 | 1,788,476 | |||||||||||||||||
Executive Vice President; President, ACCO Brands North America | 2017 | 524,087 | — | 826,328 | 245,978 | 326,690 | — | 17,122 | 1,940,205 | |||||||||||||||||
2016 | 501,308 | — | 708,205 | — | 325,198 | — | 15,460 | 1,550,171 | ||||||||||||||||||
Cezary Monko | 2018 | 554,649 | — | 518,440 | 120,640 | 296,626 | 3,000 | 28,122 | 1,521,477 | |||||||||||||||||
Executive Vice President; President, Europe, Middle East, Africa | 2017 | 473,686 | — | 526,792 | 156,813 | 335,299 | 19,000 | 24,669 | 1,536,259 | |||||||||||||||||
Pamela R. Schneider | 2018 | 449,754 | — | 518,440 | 120,640 | 121,388 | — | 22,289 | 1,232,510 | |||||||||||||||||
Senior Vice President; General Counsel and Corporate Secretary | 2017 | 432,938 | — | 516,464 | 153,737 | 233,267 | — | 20,357 | 1,356,763 | |||||||||||||||||
2016 | 414,046 | — | 419,864 | — | 258,862 | — | 18,572 | 1,111,344 |
(1) | All of our executive officers, other than Mr. Monko, are paid bi-weekly; Mr. Monko is paid monthly. Mr. Monko’s salary shown in column (c) has been converted from Polish Zloty to U.S. dollars using the average conversion rate of 0.2653 for 2017 and using the average conversion rate of 0.2775 for 2018. See“--Discussion and Analysis--Annual Compensation--Base Salaries” for further details. |
(2) | The amounts shown in column (e) reflect the grant date fair value of RSUs and PSUs granted in 2016, 2017, and 2018 determined in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 7 to the Company’s audited financial statements for each year shown included in the Company’s Annual Reports on Form 10-K filed with the SEC. These awards are described in more detail in the footnotes to the Grants of Plan-Based Awards and the Outstanding Equity Awards at Fiscal Year End tables. The value of the PSUs included in the amounts shown reflects target payout levels, based on the probable outcome of the performance conditions, determined as of the grant date. The maximum value of the PSUs granted is 150% of the target award. The maximum potential 2018 PSU LTIP award value for each of Messrs. Elisman, Fenwick, Tedford, and Monko, and Ms. Schneider is $3,048,609, $717,972, $883,658, $552,285, and $552,285, respectively. The maximum potential 2017 PSU LTIP award value for each of Messrs. Elisman, Fenwick, Tedford, and Monko, and Ms. Schneider is $2,903,232, $659,832, $879,769, $560,860, and $549,863, respectively. The maximum potential 2016 PSU LTIP award value for each of Messrs. Elisman, Fenwick, Tedford, and Ms. Schneider is $2,427,102, $533,429, $746,802, and $442,746, respectively. |
(3) | The amounts shown in column (f) reflect the grant date fair value for the fiscal year ended December 31 for each year shown that is attributable to NQSO grants determined in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 7 to the Company’s audited financial statements for each year shown included in the Company’s Annual Reports on Form 10-K filed with the SEC. In 2016, the Company granted performance-based cash awards rather than NQSOs. |
(4) | The amounts shown in column (g) include: (i) AIP awards, if any, earned under our AIP by each of the named executive officers for each year shown, and (ii) for 2018, amounts earned under the three-year 2016-2018 LTIP Performance Cash award opportunity. The following table provides a detailed reconciliation of these items for 2018: |
Name | 2018 AIP ($) | 2016-2018 LTIP Performance Cash Award ($) | Total ($) | |||||
Mr. Elisman | 0 | 665,438 | 665,438 | |||||
Mr. Fenwick | 0 | 146,250 | 146,250 | |||||
Mr. Tedford | 0 | 204,750 | 204,750 | |||||
Mr. Monko | 296,626 | — | 296,626 | |||||
Ms. Schneider | 0 | 121,388 | 121,388 |
(5) | The amounts shown in column (h) represent the aggregate change (increase) in actuarial present value during each year shown for the named executive officer’s accumulated benefit, if any, provided under the ACCO U.S. Pension, ACCO U.K. Pension, and the Polish retirement plan. None of the named executive officers earned any preferential amounts on their account balances. For 2018, the ACCO U.S. Pension value decreased by $9,000 and $6,000 for Messrs. Elisman and Fenwick, respectively, and the ACCO U.K. Pension value decreased by $488,361 for Mr. Fenwick due to an increase in the discount rate assumption, and the Polish retirement plan value increased for Mr. Monko due to an increase in his salary. For 2017 and 2016, the ACCO U.S. Pension value increased for Messrs. Elisman and Fenwick and the ACCO U.K. Pension value increased for Mr. Fenwick due to a decrease in the discount rate assumption, and for 2017, the Polish retirement plan value increased for Mr. Monko due to an increase in his salary. For Messrs. Elisman and Fenwick, all such amounts fully-vested in prior years. Mr. Tedford and Ms. Schneider were not eligible to participate in the ACCO U.S. Pension prior to the time it was frozen. See “Pension Benefits” for further details. |
(6) | The following table provides details about each component of the “All Other Compensation” shown in column (i) for the fiscal year ended December 31, 2018: |
Name | Automobile(a) ($) | Company Contributions to Defined Contribution Plans(b) ($) | Miscellaneous Perquisites(c) ($) | Total ($) | ||||||||
Mr. Elisman | 13,992 | 16,500 | 11,841 | 42,333 | ||||||||
Mr. Fenwick | 13,992 | 16,500 | 16,897 | 47,389 | ||||||||
Mr. Tedford | — | 16,500 | 2,326 | 18,826 | ||||||||
Mr. Monko | 25,647 | — | 2,475 | 28,122 | ||||||||
Ms. Schneider | — | 16,500 | 5,789 | 22,289 |
(a) | Messrs. Elisman and Fenwick are provided an automobile allowance, subject to taxation. Mr. Monko is provided a company-leased vehicle, subject to taxation for any personal use, the value of which is reflected in U.S. dollars converted from Polish Zloty using the average conversion rate of 0.2775. |
(b) | The amounts represent the Company’s 2018 contribution to the U.S. tax-qualified 401(k) savings plan account for each of the named executive officers. |
(c) | The amounts include the 2018 cost to the Company for premiums paid on excess long-term disability and/or group term life insurance in the amounts of $6,841, $6,738, $2,326, and $5,789 for each of Messrs. Elisman, Fenwick, Tedford, and Ms. Schneider, respectively. For Messrs. Elisman and Fenwick, the amount also includes a matching charitable donation in the amount of $5,000 and $2,500, respectively, made by the Company on behalf of each of these named executive officers. For Mr. Fenwick, the amount also includes $3,250 for income tax preparation fees and $4,409 for personal travel for Mr. Fenwick and certain of his family members. Mr. Monko’s amount of $2,475 represents the excess premium on personal and family medical coverage paid by the Company and is reflected in U.S. dollars converted from Polish Zloty using the 2018 average conversion rate of 0.2775. |
Name | Grant Date of Awards | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) | All Other Option Awards: Number of Securities Underlying Options(4) | Exercise or Base Price of Option Awards ($/Share)(5) | Grant Date Fair Value of Stock and Option Awards ($)(6) | ||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||
Boris Elisman | 03/07/18 | 570,000 | 1,140,000 | 1,710,000 | |||||||||||||||||||||||||||
03/07/18 | 79,267 | 158,534 | 237,801 | 2,032,406 | |||||||||||||||||||||||||||
03/07/18 | 43,127 | 552,888 | |||||||||||||||||||||||||||||
03/07/18 | 118,032 | 12.82 | 443,954 | ||||||||||||||||||||||||||||
Neal V. Fenwick | 03/07/18 | 191,228 | 382,455 | 573,683 | |||||||||||||||||||||||||||
03/07/18 | 18,668 | 37,336 | 56,004 | 478,648 | |||||||||||||||||||||||||||
03/07/18 | 15,235 | 195,313 | |||||||||||||||||||||||||||||
03/07/18 | 41,696 | 12.82 | 156,831 | ||||||||||||||||||||||||||||
Thomas W. Tedford | 03/07/18 | 191,228 | 382,455 | 573,683 | |||||||||||||||||||||||||||
03/07/18 | 22,976 | 45,952 | 68,928 | 589,105 | |||||||||||||||||||||||||||
03/07/18 | 18,751 | 240,388 | |||||||||||||||||||||||||||||
03/07/18 | 51,318 | 12.82 | 193,022 | ||||||||||||||||||||||||||||
Cezary Monko | 03/07/18 | 195,552 | 391,103 | 586,655 | |||||||||||||||||||||||||||
03/07/18 | 14,360 | 28,720 | 43,080 | 368,190 | |||||||||||||||||||||||||||
03/07/18 | 11,720 | 150,250 | |||||||||||||||||||||||||||||
03/07/18 | 32,074 | 12.82 | 120,640 | ||||||||||||||||||||||||||||
Pamela R. Schneider | 03/07/18 | 136,077 | 272,153 | 408,230 | |||||||||||||||||||||||||||
03/07/18 | 14,360 | 28,720 | 43,080 | 368,190 | |||||||||||||||||||||||||||
03/07/18 | 11,720 | 150,250 | |||||||||||||||||||||||||||||
03/07/18 | 32,074 | 12.82 | 120,640 |
(1) | The amounts shown represent the potential AIP earnings for 2018 at threshold, target and maximum performance. The actual amounts earned for 2018 are included in column (g) of the 2018 Summary Compensation Table and further described in footnote (4) thereto. For Mr. Monko, the value has been converted from Polish Zloty to U.S. dollars using the 2018 average conversion rate of 0.2775. |
(2) | The amounts shown represent the threshold, target and maximum number of PSUs that may be earned based on achievement of performance measures established at the commencement of the three-year performance period. |
(3) | The amounts shown represent RSUs which vest on the third anniversary of the grant date. |
(4) | The amounts shown represent NQSOs which vest in three equal annual installments on each of the first three anniversaries of the grant date. |
(5) | The exercise price per share of each NQSO is $12.82, which equals the average of the high and low sales price of a share of the Company’s common stock on the grant date of March 7, 2018. |
(6) | The amounts shown represent the grant date fair value of each equity award determined in accordance with FASB ASC Topic 718. |
Option and SSAR Awards | Stock Awards | |||||||||||||||
Name | Number of Securities Underlying Unexercised Options or SSARs Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (1) (#) | Option or SSARs Exercise Price ($) | Option or SSARs Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units That Have Not Vested (2) ($) | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested (2) ($) | ||||||||
Boris Elisman | 0 | 118,032 | 12.82 | 3/7/2025 | ||||||||||||
38,345 | 76,688 | 12.75 | 3/8/2024 | |||||||||||||
278,514 | 0 | 7.51 | 3/4/2022 | |||||||||||||
294,944 | 0 | 6.12 | 3/5/2021 | |||||||||||||
182,638 | 0 | 7.64 | 2/21/2020 | |||||||||||||
45,163 | 0 | 12.17 | 2/23/2019 | |||||||||||||
43,127 | (3) | 292,401 | 79,267 | (6) | 537,430 | |||||||||||
41,379 | (4) | 280,550 | 75,902 | (7) | 514,616 | |||||||||||
89,476 | (5) | 606,647 | ||||||||||||||
Neal V. Fenwick | 0 | 41,696 | 12.82 | 3/7/2025 | ||||||||||||
13,072 | 26,144 | 12.75 | 3/8/2024 | |||||||||||||
66,313 | 0 | 7.51 | 3/4/2022 | |||||||||||||
81,110 | 0 | 6.12 | 3/5/2021 | |||||||||||||
69,577 | 0 | 7.64 | 2/21/2020 | |||||||||||||
27,098 | 0 | 12.17 | 2/23/2019 | |||||||||||||
15,235 | (3) | 103,293 | 18,668 | (6) | 126,569 | |||||||||||
14,107 | (4) | 95,645 | 17,251 | (7) | 116,962 | |||||||||||
19,665 | (5) | 133,329 | ||||||||||||||
Thomas W. Tedford | 0 | 51,318 | 12.82 | 3/7/2025 | ||||||||||||
17,430 | 34,858 | 12.75 | 3/8/2024 | |||||||||||||
92,838 | 0 | 7.51 | 3/4/2022 | |||||||||||||
6,260 | 0 | 6.12 | 3/5/2021 | |||||||||||||
18,751 | (3) | 127,132 | 22,976 | (6) | 155,777 | |||||||||||
18,809 | (4) | 127,525 | 23,001 | (7) | 155,947 | |||||||||||
27,531 | (5) | 186,660 | ||||||||||||||
Cezary Monko | 0 | 32,074 | 12.82 | 3/7/2025 | ||||||||||||
11,112 | 22,222 | 12.75 | 3/8/2024 | |||||||||||||
11,720 | (3) | 79,462 | 14,360 | (6) | 97,361 | |||||||||||
11,991 | (4) | 81,299 | 14,663 | (7) | 99,415 | |||||||||||
Pamela R. Schneider | 0 | 32,074 | 12.82 | 3/7/2025 | ||||||||||||
10,894 | 21,786 | 12.75 | 3/8/2024 | |||||||||||||
49,735 | 0 | 7.51 | 3/4/2022 | |||||||||||||
17,205 | 0 | 6.12 | 3/5/2021 | |||||||||||||
38,050 | 0 | 7.64 | 2/21/2020 | |||||||||||||
16,994 | 0 | 10.19 | 5/15/2019 | |||||||||||||
11,720 | (3) | 79,462 | 14,360 | (6) | 97,361 | |||||||||||
11,756 | (4) | 79,706 | 14,376 | (7) | 97,469 | |||||||||||
16,322 | (5) | 110,663 |
(1) | NQSOs vest in three equal installments on each of the first three anniversaries of the grant date. The vesting of unexercisable NQSOs could accelerate under the following circumstances: |
Event | Result | |
Disability | Award would vest pro-rata through the date of separation. | |
Retirement | Award would vest pro-rata through the date of separation, provided the separation occurs at least one year after the grant date. | |
Death | Award would vest pro-rata through the date of separation. | |
Change-in-Control | Award is subject to double-trigger vesting as a result of the change-in-control and involuntary termination of employment (as defined in the award agreement). If award meets the definition of replacement award as defined in the award agreement, then no immediate vesting. If award does not meet the definition of replacement award, then the award becomes immediately exercisable. |
(2) | The amounts shown reflect the market value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018. |
(3) | The amounts shown represent time-vested RSUs that vest and convert into the right to receive an equal number of shares of the Company’s common stock on March 7, 2021, provided that the named executive officer is employed by the Company at such time. The vesting of these RSUs could accelerate under the following circumstances: |
Event | Result | |
Involuntary Termination without Cause | Award would vest pro-rata through date of separation, provided separation occurs within 180 days prior to the vesting date. | |
Retirement | Award would vest pro-rata through date of separation, provided the separation occurs at least one year after the grant date. | |
Death or Disability | Award would vest pro-rata through date of separation. | |
Change-in-Control | Award is subject to double-trigger vesting as a result of the change-in-control and involuntary termination of employment as defined in the award agreement. If award meets the definition of replacement award (as defined in the award agreement), then no immediate vesting. If award does not meet the definition of replacement award, award shall vest in full and shall be paid in cash or shares of stock in equivalent cash value as determined by the Compensation Committee. |
(4) | The amounts shown represent time-vested RSUs that vest and convert into the right to receive an equal number of shares of the Company’s common stock on March 8, 2020, provided that the named executive officer is employed by the Company at such time. The vesting of these RSUs could accelerate under the same conditions as described in footnote (3) above. |
(5) | The amounts shown represent time-vested RSUs that vest and convert into the right to receive an equal number of shares of the Company’s common stock on March 2, 2019, provided that the named executive officer is employed by the Company at such time. The vesting of these RSUs could accelerate under the same conditions as described in footnote (3) above. |
(6) | The amounts shown represent unearned and unvested PSUs for the 2018-2020 LTIP PSU award cycle at a threshold level of performance. The vesting of these unearned PSUs could accelerate under the following circumstances: |
Event | Result | |
Involuntary Termination without Cause | Award would vest pro-rata at actual performance through the date of separation, provided the termination occurs after June 30 of the last year in the three-year performance period. | |
Retirement | Award would vest pro-rata through date of separation based upon actual performance, provided the separation occurs at least one year after the grant date. | |
Death and Disability | Award would vest pro-rata through the date of separation based upon target performance. | |
Change-in-Control | Award is subject to double-trigger vesting as a result of the change-in-control and involuntary termination of employment (as defined in the award agreement). If award meets the definition of replacement award (as defined in the award agreement), then no immediate vesting. If award does not meet the definition of replacement award, award shall vest in full at target or greater (if performance deemed above target by the Compensation Committee) and shall be paid in cash or shares of stock in equivalent cash value as determined by the Compensation Committee. |
(7) | The amounts shown represent unearned and unvested PSUs for the 2017-2019 LTIP PSU award cycle at a threshold level of performance. The vesting of these unearned PSUs could accelerate under the same conditions as described in footnote (6) above. |
Name | NQSO Awards Number of Shares Acquired on Exercise (1) (#) | NQSO Awards Value Realized on Exercise (1) ($) | Stock Awards Number of Shares Acquired on Vesting (2),(3) (#) | Stock Awards Value Realized on Vesting (2),(3) ($) | ||||||||||||
Boris Elisman | 47,600 | 233,272 | 331,817 | 2,742,934 | ||||||||||||
Neal V. Fenwick | 31,400 | 92,316 | 74,467 | 622,322 | ||||||||||||
Thomas W. Tedford | 164,228 | 946,468 | 104,254 | 871,249 | ||||||||||||
Cezary Monko | — | — | — | — | ||||||||||||
Pamela R. Schneider | — | — | 60,209 | 496,296 |
(1) | For Mr. Elisman, the value represents the difference between the strike price of $8.93 and $13.83, the fair market value of the Company’s common stock on February 16, 2018 when 47,600 NQSOs were exercised. For Mr. Fenwick, the value represents the difference between the exercise price of $8.93 and $11.87, the fair market value of the Company’s common stock on May 14, 2018 when 31,400 NQSOs were exercised. For Mr. Tedford, the value represents the difference between the strike price of $12.17 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 19,231 NQSOs, and the difference between the strike price of $8.93 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 28,600 NQSOs, and the difference between the strike price of $7.64 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 48,921 NQSOs, and the difference between the strike price of $6.12 and $13.53, the fair market value of the Company’s common stock on February 15, 2018, the date of exercise for 67,476 NQSOs. |
(2) | The number of shares and values shown for Messrs. Elisman, Fenwick, and Tedford, and Ms. Schneider include 84,023, 20,006, 28,008, and 15,005 RSUs, respectively, which vested on March 4, 2018. The realized value was $1,062,891, $253,076, $354,301, and $189,813, respectively, calculated based upon the fair market value of the Company’s common stock of $12.65 per share on the vesting date. |
(3) | The number of shares and values shown for Messrs. Elisman, Fenwick, Tedford, and Ms. Schneider also include 247,794, 54,461, 76,246, and 45,204 PSUs, respectively, from the three-year 2016-2018 LTIP PSU cycle that were earned and vested on December 31, 2018. The realized value was $1,680,043, $369,246, $516,948, and $306,483, respectively, calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018. |
CEO Annual Total Compensation | $ | 4,682,019 | ||
Median Employee Annual Total Compensation | $ | 46,589 | ||
Pay Ratio of CEO to Median Employee Compensation | 100:1 |
• | 5% De Minimis Exception. We excluded a total of 328 employees comprising all of the employees from the following countries: Czech Republic (128 employees), Portugal (110 employees), and Italy (90 employees). The excluded employees represent less than 5% of our total employee population. |
• | Acquisition Exception. We excluded 242 individuals employed by two affiliated companies of GOBA Internacional, S.A. de C.V. since we completed this acquisition in July 2018. |
Name | Plan Name | Years of Credited Service (1) (#) | Present Value of Accumulated Benefit (2) ($) | Payments During Last Fiscal Year ($) | ||||
Boris Elisman | ACCO U.S. Pension | 4 | 96,000 | — | ||||
Neal V. Fenwick | ACCO U.K. Pension | 22 | 5,460,609 | — | ||||
ACCO U.S. Pension | 3 | 79,000 | — | |||||
Thomas W. Tedford | N/A | |||||||
Cezary Monko | Polish Retirement Plan | N/A | 103,000 | — | ||||
Pamela R. Schneider | N/A |
(1) | Years of Credited Service for the ACCO U.S. Pension are shown through March 6, 2009, the date on which the ACCO U.S. Pension plan was frozen. Mr. Fenwick participated in the ACCO U.K. Pension until April 1, 2006. Vesting service, which determines vesting and eligibility for early retirement benefits, continues to grow. As of December 31, 2018, vesting service is 9.75 years greater (absent any break-in-service or termination) than credited service shown in the table above. Years of credited service are not applicable under the Polish Retirement Plan. |
(2) | Amounts reported above as the actuarial present value of accumulated benefits under the ACCO U.S. Pension are computed using the interest and mortality assumptions that the Company applies to amounts reported in its financial statements, and are assumed to be payable at age 65. Despite the plan being frozen, the value of the benefit changes due to the assumptions utilized in these calculations. For 2018, the present value of the accumulated pension benefit decreased since the prior year is directly related to an increase in the discount rate. The interest rate assumption is 4.38%. The mortality table assumption for the ACCO U.S. Pension is based upon the Aggregate RP-2006 Mortality Table projected using the Projection Scale MP-2018. Amounts reported above as the actuarial present value of accumulated benefit for Mr. Fenwick under the ACCO U.K. Pension assumes an interest rate of 2.8%, an inflation rate of 3.2%, an exchange rate (as of December 31, 2018) of $1.2705 to one British Pound and utilizes the SAPS S2 Tables using CMI 2017 future improvements, subject to an underpin of 1.25% per annum. Amounts reported above as the actuarial present value of accumulated benefit for Mr. Monko under the Poland Statutory Retirement Obligation assumes an interest rate of 3.05%, a salary increase assumption (for projection purposes) of 3.0% per annum, and a Polish Zloty exchange rate on December 31, 2018 of $0.2661. |
• | Involuntary Termination: 21 months of base salary and one year of target bonus for Messrs. Elisman, Fenwick, Tedford and Monko; 18 months of base salary and one year of target bonus for Ms. Schneider. |
• | Change-in-Control Termination: 2.25 times base salary plus 2.25 times bonus for the year of separation for Messrs. Elisman, Fenwick, Tedford and Monko; 2 times base salary plus 2 times bonus for the year of separation for Ms. Schneider. The bonus amount is based on the greater of: (i) a target bonus for the year of the named executive officer’s termination, or (ii) the bonus that would be paid using the Company’s most recent financial performance outlook report that is available as of the named executive officer’s termination date. The executive would also receive a pro-rata annual bonus for the year of the executive’s termination up through and including the termination effective date calculated in the manner described in the preceding sentence. |
• | Outplacement services in an amount not to exceed $30,000. |
• | A gross-up payment for any “golden parachute” excise tax that may be payable by the named executive officer under Section 4999 of the Code, plus any income and employment taxes on the gross-up payment, with respect to the severance payments and other benefits due to them (whether under the ESP or otherwise), unless the amount of any “excess parachute payments” paid or payable by them does not exceed 330% of the executive’s “base pay” as determined pursuant to Section 280G of the Code, in which case the gross-up payment is not paid and the severance and other golden parachute payments would be reduced so that no amount would constitute an “excess parachute payment” for purposes of Sections 280G and 4999 of the Code. Mr. Monko is not subject to Sections 280G and 4999 of the Code. |
• | Any amounts payable under the ESP are reduced by amounts payable to a named executive officer under any other severance plan applicable to the named executive officer or agreement that has been entered into between the Company and the named executive officer. |
• | a change-in-control without termination of employment; |
• | termination of employment by the executive officer for retirement; |
• | termination of employment by the Company without cause; |
• | following (or in certain circumstances preceding) a change-in-control, a termination of employment by the Company without “cause” or by the executive officer for “good reason”; or |
• | termination of employment as a result of death or disability. |
Change in Control without Termination ($) | Termination by Executive for Retirement ($) | Termination by Company without Cause ($) | Termination by the Company without Cause or by the Executive for “Good Reason” Following a Change in Control ($) | Death ($) | Disability ($) | |||||||||||||||||||
Payments and Benefits Compensation: | ||||||||||||||||||||||||
Cash Severance(1) | 0 | 0 | 2,802,500 | 4,702,500 | 0 | 0 | ||||||||||||||||||
Annual Incentive(1) | 0 | 0 | 0 | 1,140,000 | 0 | 0 | ||||||||||||||||||
Benefits: | ||||||||||||||||||||||||
Continuation of Benefits(2) | 0 | 0 | 25,833 | 33,214 | 0 | 0 | ||||||||||||||||||
Outplacement Services | 0 | 0 | 30,000 | 30,000 | 0 | 0 | ||||||||||||||||||
Additional 401(k) Plan Contributions(3) | 0 | 0 | 0 | 37,125 | 0 | 0 | ||||||||||||||||||
Long-Term Incentive Awards Acceleration: | ||||||||||||||||||||||||
Value of Non-Qualified Stock Options(4)(7) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Value of Restricted Stock Units(5)(7) | 1,179,595 | 743,530 | 743,530 | 1,179,595 | 823,639 | 823,639 | ||||||||||||||||||
Value of Performance Stock Units(6)(7) | 2,104,084 | 686,150 | 686,150 | 2,104,084 | 1,044,436 | 1,044,436 | ||||||||||||||||||
Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | 0 | 0 | ||||||||||||||||||||||
Total | 3,283,679 | 1,429,680 | 4,288,013 | 9,226,518 | 1,868,075 | 1,868,075 |
Change in Control without Termination ($) | Termination by Executive for Retirement ($) | Termination by Company without Cause ($) | Termination by the Company without Cause or by the Executive for “Good Reason” Following a Change in Control ($) | Death ($) | Disability ($) | |||||||||||||||||||
Payments and Benefits Compensation: | ||||||||||||||||||||||||
Cash Severance(1) | 0 | 0 | 1,338,592 | 2,089,842 | 0 | 0 | ||||||||||||||||||
Annual Incentive(1) | 0 | 0 | 0 | 382,455 | 0 | 0 | ||||||||||||||||||
Benefits: | ||||||||||||||||||||||||
Continuation of Benefits(2) | 0 | 0 | 19,005 | 24,435 | 0 | 0 | ||||||||||||||||||
Outplacement Services | 0 | 0 | 30,000 | 30,000 | 0 | 0 | ||||||||||||||||||
Additional 401(k) Plan Contributions(3) | 0 | 0 | 0 | 37,125 | 0 | 0 | ||||||||||||||||||
Long-Term Incentive Awards Acceleration: | ||||||||||||||||||||||||
Value of Non-Qualified Stock Options(4)(7) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Value of Restricted Stock Units(5)(7) | 332,266 | 184,022 | 184,022 | 332,266 | 212,321 | 212,321 | ||||||||||||||||||
Value of Performance Stock Units(6)(7) | 487,053 | 155,945 | 155,945 | 487,053 | 240,324 | 240,324 | ||||||||||||||||||
Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | 0 | 0 | ||||||||||||||||||||||
Total | 819,319 | 339,967 | 1,727,564 | 3,383,176 | 452,645 | 452,645 |
Change in Control without Termination ($) | Termination by Executive for Retirement ($) | Termination by Company without Cause ($) | Termination by the Company without Cause or by the Executive for “Good Reason” Following a Change in Control ($) | Death ($) | Disability ($) | |||||||||||||||||||
Payments and Benefits Compensation: | ||||||||||||||||||||||||
Cash Severance(1) | 0 | 0 | 1,338,592 | 2,089,842 | 0 | 0 | ||||||||||||||||||
Annual Incentive(1) | 0 | 0 | 0 | 382,455 | 0 | 0 | ||||||||||||||||||
Benefits: | ||||||||||||||||||||||||
Continuation of Benefits(2) | 0 | 0 | 25,194 | 32,393 | 0 | 0 | ||||||||||||||||||
Outplacement Services | 0 | 0 | 30,000 | 30,000 | 0 | 0 | ||||||||||||||||||
Additional 401(k) Plan Contributions(3) | 0 | 0 | 0 | 37,125 | 0 | 0 | ||||||||||||||||||
Long-Term Incentive Awards Acceleration: | ||||||||||||||||||||||||
Value of Non-Qualified Stock Options(4)(7) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Value of Restricted Stock Units(5)(7) | 441,316 | 0 | 176,432 | 441,316 | 288,593 | 288,593 | ||||||||||||||||||
Value of Performance Stock Units(6)(7) | 623,446 | 0 | 0 | 623,446 | 311,776 | 311,776 | ||||||||||||||||||
Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | 0 | 0 | ||||||||||||||||||||||
Total | 1,064,762 | — | 1,570,218 | 3,636,577 | 600,369 | 600,369 |
Change in Control without Termination ($) | Termination by Executive for Retirement ($) | Termination by Company without Cause ($) | Termination by the Company without Cause or by the Executive for “Good Reason” Following a Change in Control ($) | Death ($) | Disability ($) | |||||||||||||||||||
Payments and Benefits Compensation: | ||||||||||||||||||||||||
Cash Severance(1) | 0 | 0 | 1,312,627 | 2,049,305 | 0 | 0 | ||||||||||||||||||
Annual Incentive(1) | 0 | 0 | 0 | 375,036 | 0 | 0 | ||||||||||||||||||
Benefits: | ||||||||||||||||||||||||
Continuation of Benefits(2) | 0 | 0 | 4,153 | 5,339 | 267,883 | 133,942 | ||||||||||||||||||
Outplacement Services | 0 | 0 | 30,000 | 30,000 | 0 | 0 | ||||||||||||||||||
Additional 401(k) Plan Contributions(3) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Long-Term Incentive Awards Acceleration: | ||||||||||||||||||||||||
Value of Non-Qualified Stock Options(4)(7) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Value of Restricted Stock Units(5)(7) | 160,763 | 49,299 | 49,299 | 160,763 | 71,069 | 71,069 | ||||||||||||||||||
Value of Performance Stock Units(6)(7) | 393,552 | 132,554 | 132,554 | 393,552 | 197,461 | 197,461 | ||||||||||||||||||
Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | 0 | 0 | ||||||||||||||||||||||
Total | 554,315 | 181,853 | 1,528,633 | 3,013,995 | 536,413 | 402,472 |
Change in Control without Termination ($) | Termination by Executive for Retirement ($) | Termination by Company without Cause ($) | Termination by the Company without Cause or by the Executive for “Good Reason” Following a Change in Control ($) | Death ($) | Disability ($) | |||||||||||||||||||
Payments and Benefits Compensation: | ||||||||||||||||||||||||
Cash Severance(1) | 0 | 0 | 952,537 | 1,451,485 | 0 | 0 | ||||||||||||||||||
Annual Incentive(1) | 0 | 0 | 0 | 272,153 | 0 | 0 | ||||||||||||||||||
Benefits: | ||||||||||||||||||||||||
Continuation of Benefits(2) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Outplacement Services | 0 | 0 | 30,000 | 30,000 | 0 | 0 | ||||||||||||||||||
Additional 401(k) Plan Contributions(3) | 0 | 0 | 0 | 33,000 | 0 | 0 | ||||||||||||||||||
Long-Term Incentive Awards Acceleration: | ||||||||||||||||||||||||
Value of Non-Qualified Stock Options(4)(7) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Value of Restricted Stock Units(5)(7) | 269,829 | 152,932 | 152,932 | 269,829 | 174,703 | 174,703 | ||||||||||||||||||
Value of Performance Stock Units(6)(7) | 389,650 | 129,955 | 129,955 | 389,650 | 194,862 | 194,862 | ||||||||||||||||||
Change-in-Control Compensation Reduction or Federal Excise Tax and Gross-up/Forfeiture(8) | 0 | 0 | ||||||||||||||||||||||
Total | 659,479 | 282,887 | 1,265,424 | 2,446,117 | 369,565 | 369,565 |
(1) | Represents 2018 base salary and annual incentive opportunity at target performance, calculated according to the terms of the ESP. |
(2) | Represents the approximate value of the employer subsidy to broad-based health and welfare employee benefit plans for the named executive officer’s benefit during the severance period. For Mr. Monko, the Company’s disability policy for employees in Poland provides for a one-time lump sum payment from the Company in an amount equal to three-times the employee’s monthly average base salary in effect over the last three months of his or her employment, subject to taxation. Polish law also requires, in the event of termination of employment as a result of death, for the Company to make a one-time lump sum payment in an amount equal to six-times the employee’s monthly average base salary in effect over the last six months of his or her employment, subject to taxation. |
(3) | Represents the maximum annual Company contribution to the named executive officer’s account under the Company’s 401(k) Plan during the severance period. Mr. Monko is not eligible to participate in the Company’s 401(k) Plan. |
(4) | Reflects the excess of the fair market value as of December 31, 2018 of the underlying shares over the exercise price of all unvested options, the vesting of which accelerates in connection with the specified event. The amounts shown reflect the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018. |
(5) | Reflects the fair market value as of December 31, 2018 of the shares underlying all unvested RSUs which vest in connection with the specified event. The amounts shown reflect the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018. |
(6) | Reflects the unvested fair market value as of December 31, 2018 of the shares underlying unvested PSUs which would vest in connection with the specified event. This value does not include the 2016-2018 LTIP PSU award which vested on December 31, 2018. The amounts shown reflect the value as calculated based on the $6.78 closing price of the Company’s common stock on December 31, 2018. |
(7) | For RSUs, PSUs and NQSOs granted in 2016 and thereafter, in the event of a change-in-control without termination, if the award is replaced with an award of the same or greater value and with the same or not less favorable terms and conditions, the award is subject to double-trigger vesting. If the RSU or PSU award is not replaced, the award shall vest in full at target performance or greater and is paid out in cash or shares of stock of equivalent cash value. If the NQSO is not replaced, it shall become immediately exercisable. The value in the table assumes the awards are not replaced upon a change-in-control and reflect the full vesting of the award, with the PSU awards vesting at target performance. |
(8) | Upon a change-in-control of the Company, the named executive officer may be subject to a reduction in compensation or may incur certain excise taxes pursuant to Section 4999 of the Code, as described above. Mr. Monko is not subject to Sections 280G and 4999 of the Code. |
• | PSUs represent the principal component of long-term equity incentive compensation for our named executive officers. These grants are indicative of our pay-for-performance philosophy, as discussed under the heading “Compensation Discussion and Analysis--Discussion and Analysis--Executive Compensation Philosophy.” PSUs focus management on long-term financial performance, aligning management and stockholders’ interests regarding the creation of stockholder value. |
• | RSUs and NQSOs serve as important management retention tools and further align management with stockholders’ interests, including our stockholders’ interest in share price appreciation. |
• | One-year minimum vesting. The period required for vesting of an equity-based award under the Plan may not be less than one year, other than as the Compensation Committee may otherwise specify in the case of the death or disability, or where awards have been assumed by the Company in connection with a merger or other business combination, or as otherwise may apply in the event of a change in control under the Plan. In addition, awards covering up to five percent of the shares available under the Plan may have a vesting period of less than one year. This exception is generally used to provide awards to non-employee directors which are fully vested at the time of grant. |
• | Limited discretionary authority to accelerate vesting. The Compensation Committee will not have discretion to accelerate the vesting of any portion of an award, except in cases of termination by reason of death or disability. |
• | Non-employee director compensation. The value (determined under applicable accounting standards for financial reporting purposes) of a non-employee director’s total compensation from the Company in a calendar year, including awards from the Plan, may not exceed $500,000. |
• | Dividends and dividend equivalents. Rights to dividends and dividend equivalents may be made a part of certain awards, subject to such terms, conditions and restrictions as the Compensation Committee may establish. Any crediting of dividends or dividend equivalents shall be subject to the same restrictions and conditions as the underlying award. Dividends or dividend equivalents credited with respect to awards subject to the achievement of performance goals will only be paid to the extent the award vests and the performance goals are achieved, and dividends or dividend equivalents with respect to any award subject to a time-based vesting schedule will only be paid to the extent the award vests. |
• | Fungible share ratio. The Plan contains a “fungible share ratio.” Under the ratio, full-value awards made from the Plan (i.e., generally awards other than stock options and stock appreciation rights (“SARs”)) are counted against the share reserve as 2.00 shares for each share of stock subject to an award, while any stock options and SARs issued under the Plan are counted against the share reserve on a 1:1 basis. |
• | No liberal share recycling. Shares that are surrendered or withheld to pay an award’s exercise price or withholding taxes cannot be added back to the shares available under the Plan. Likewise, any shares reacquired by the Company with the amount received from stock option exercises will not be added to the pool of available shares under the Plan. Also, shares not issued upon exercise or settlement of a stock-settled SAR will not be added back to the pool of available shares. |
• | No repricing or cash buy-out without stockholder approval. No stock option or SAR may be re-priced or substituted or exchanged for cash or as consideration for the grant of a new award with a lower exercise price without stockholder approval, except as may be permitted in connection with an event described below under the heading “--Adjustments” or in the event of a change in control. (However, options and SARs may be settled by a cash payment that does not exceed the difference between the fair market value of the shares subject to the option or SAR and the strike price.) |
• | No liberal change of control definition. The Plan does not have a “liberal” change-in-control definition. A change in control is deemed to occur only upon completion, rather than stockholder approval, of a transaction. |
• | No evergreen provision. The number of shares available for grant under the Plan is capped, and there is no formula providing for any automatic increase in the number of shares available. |
• | No discounted stock options or SARs. The Plan prohibits the granting of stock options or SARs at strike prices that are less than the fair market value of our common stock on the date of grant. |
• | Three-year vesting and performance periods. Since 2005, annual equity grants to executive officers, including our CEO, have been subject to a minimum three-year vesting period. RSUs are currently subject to a minimum three-year cliff vesting period and grants of NQSOs vest one-third per year over three years. In addition, awards of PSUs have been subject to an overall three-year performance cycle. |
• | High proportion of CEO’s compensation subject to performance conditions. In 2017 and 2018, 60% of our CEO’s target equity-based compensation was subject to achievement of financial performance measures. In 2017 and 2018, 82% and 81%, respectively, of our CEO’s total target compensation was variable and at risk as it was subject to the achievement of financial performance measures and share price appreciation. |
• | No hedging or pledging. Our insider trading policy, which applies to shares acquired through grants made under the Plan, prohibits our directors and employees from engaging in hedging transactions or pledging their shares. For further information on this policy, see “Compensation Discussion and Analysis--Discussion and Analysis--Prohibitions on Hedging, Pledging and Similar Transactions.” |
• | Post vesting/exercise holding requirements. Our executive officers are required to hold a specified number of shares or dollar value of equity granted to them under the Plan. Prior to attaining the required threshold level, they may liquidate no more that 50% of the net shares remaining after the exercise of a stock award or the vesting of shares granted under the Plan; after attaining the required threshold, they may sell shares, subject to our insider trading policy, so long as they maintain the required threshold number of shares or dollar value. For further information on this policy, see “Compensation Discussion and Analysis--Discussion and Analysis--Executive Stock Ownership Guidelines.” |
• | Any shares of common stock covered by an award that are not issued or are cancelled because the award expires or is forfeited or terminated (for example, for a failure to vest or to achieve applicable performance conditions) will be again available for award and will not be considered as having been made subject to an award. |
• | Any shares surrendered or withheld as payment for all or a portion of the exercise price of a stock option, or surrendered or withheld in satisfaction of withholding taxes with respect to an award, will not be again available for award. |
• | The exercise or settlement of an SAR will reduce the shares available under the Plan by the total number of shares to which the exercise or settlement relates, and not just the net amount of shares actually issued upon exercise or settlement. Shares not issued upon exercise or settlement of an SAR will not be again available for award. |
• | Any shares that are reacquired by the Company with the amount received upon the exercise of stock options will not be added to the pool of shares available for awards under the Plan. |
• | Awards partially or wholly settled in cash will only reduce the number of shares available for issuance under the Plan to the extent shares are issued. |
• | Shares of common stock issued in connection with awards that are assumed, converted or substituted pursuant to a merger or other business combination will not reduce the number of shares available for issuance under the Plan. |
• | All options and SARs held by the participant will immediately become vested and exercisable, and will continue to be exercisable for the lesser of five years or the remaining term of the options and SARs, unless death occurs in the final year of the term, in which case the exercise of such options or SARs can occur for up to one additional year from the date of death; and |
• | All restricted stock or RSUs held by the participant will become unrestricted or nonforfeitable and payable; and |
• | A prorated portion of all performance shares and PSUs held by the participant will become unrestricted or nonforfeitable and payable, as applicable, with respect to the number of performance shares or PSUs that could have become earned and vested based on the deemed attainment of performance at the target level, with such number of performance shares or PSUs prorated based on the portion of the performance period that elapsed through the date of the participant’s termination. |
• | All options and SARs held by the participant will continue to vest and be exercisable in accordance with their original vesting terms (as if the termination of employment or service had not occurred) and shall remain exercisable until the expiration of the term of the option or SAR; and |
• | All restricted stock or RSUs held by the participant will continue to vest in accordance with their original vesting terms (as if the termination of employment or service had not occurred); and |
• | A prorated portion of all performance shares and PSUs held by the participant will become unrestricted or nonforfeitable and payable, as applicable, with respect to the number of performance shares or PSUs that would have become earned and vested based on the actual attainment of performance objectives set forth in the award over the applicable performance period, with such number of performance shares or PSUs prorated based on the portion of the performance period that elapsed through the date of the participant’s termination. |
• | Upon termination due to a divestiture occurring after the first anniversary of the date of grant, all options and SARs held by a participant will become immediately vested and exercisable with respect to a prorated portion of the number of shares subject to the options or SARs, and will remain exercisable until the expiration of the term of the option or SAR, with such proration based on the portion of the restriction period that elapsed through the date of the participant’s termination; and |
• | Upon termination due to a divestiture occurring after the first anniversary of the date of grant, all restricted stock and RSUs held by a participant will become unrestricted or nonforfeitable and payable with respect to a prorated portion of the number of shares subject to the restricted stock awards and RSUs with such proration based on the portion of the restriction period that elapsed through the date of the participant’s termination; and |
• | Upon termination due to a divestiture occurring after the first anniversary of the date of grant, a prorated portion of all performance shares and PSUs held by the participant will become unrestricted or nonforfeitable and payable, as applicable, with respect to the number of performance shares or PSUs that could have become earned or vested based on the deemed attainment of performance at the target level, with such number of performance shares or PSUs prorated based on the portion of the performance period that elapsed through the date of the participant’s termination. |
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 security holders | 4,125,067 | $ | 9.46 | 2,913,102 | (1) | |||||
Equity compensation plans not approved by security holders | 0 | 0 | 0 | |||||||
Total | 4,125,067 | $ | 9.46 | 2,913,102 | (1) | |||||
(1) | These are shares available for grant as of December 31, 2018 under the Existing Plan pursuant to which the Compensation Committee of the Board of Directors or the Board of Directors may make various stock-based awards, including grants of options, SARs, restricted stock, restricted stock units, performance shares and performance stock units. In addition to these shares, shares covered by outstanding awards under the Existing Plan that were forfeited or otherwise terminated may become available for grant under the Existing Plan and, to the extent such shares have become available as of December 31, 2018, they are included in the table as available for grant. If the Plan is approved by stockholders, awards will no longer be granted under the Existing Plan. |
April 4, 2019 | By order of the Board of Directors |
Pamela R. Schneider | |
Senior Vice President, General Counsel | |
and Corporate Secretary |
ACCO BRANDS CORPORATION | |||
By: | |||
Name: Pamela R. Schneider | |||
Title: Senior Vice President, General Counsel and Corporate Secretary | |||
Article 1. | Establishment, Purpose, and Duration |
Article 2. | Definitions |
(a) | “Affiliate” shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company) that is affiliated with the Company through stock or equity ownership or otherwise, and either is (i) wholly owned by the Company through stock or equity ownership or otherwise, or (ii) designated as an Affiliate for purposes of this Plan by the Committee. |
(b) | “Applicable Laws” means the legal requirements relating to the administration of equity plans or the issuance of share capital by a company, applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, other U.S. federal and state laws, the Code, any stock exchange rules and regulations that may from time to time be applicable to the Company, and the applicable laws, rules and regulations of any other country or jurisdiction where Awards are granted under this Plan, as such laws, rules, regulations, interpretations and requirements may be in place from time to time. |
(c) | “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Stock Units, Cash-Based Awards, or Other Stock-Based Awards, in each case subject to the terms of this Plan and the applicable Award Agreement. |
(d) | “Award Agreement” means either: (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including in each case any amendment or modification thereof. The Committee may provide for the use of electronic, Internet, or other non-paper Award Agreements, and the use of electronic, Internet, or other non-paper means for the acceptance thereof and actions thereunder by a Participant. |
(e) | “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. |
(f) | “Board” or “Board of Directors” means the Board of Directors of the Company. |
(g) | “Business Combination” means the consummation of a reorganization, merger, amalgamation or consolidation or sale or other disposition of all or substantially all of the assets of the Company. |
(h) | “Cash-Based Award” means an Award, denominated in cash, granted to a Participant as described in Article 10. |
(i) | “Cause” means if the Participant: |
(i) | Is a participant in the Company Executive Severance Plan on the date of the Participant’s termination of employment, the meaning ascribed to such term in the Executive Severance Plan as in effect on such date; or |
(ii) | Is not a participant in the Company’s Executive Severance Plan on the date of his termination of employment, such definition as is specified in the Participant’s applicable Award Agreement, or if no such definition is specified in the Participant’s applicable Award Agreement, “Cause” shall mean, (1) a material breach by the Participant of those duties and responsibilities, which breach is demonstrably willful and deliberate on the Participant’s part, is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach, (2) the conviction of the Participant of a felony, or (3) dishonesty or willful misconduct in connection with the Participant’s employment or services, including any breach of the Company’s Code of Conduct (as in effect from time to time). |
(j) | “Change in Control” means, unless otherwise specified in an Award Agreement or an Other Agreement, |
(i) | The acquisition by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of Beneficial Ownership of voting securities of the Company where such acquisition causes such Person to own thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), provided, however, that for purposes of this paragraph (i), the following acquisitions shall not be deemed to result in a Change in Control: (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) any acquisition by the Company or a Subsidiary of the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation or other legal entity controlled, directly or indirectly, by the Company, or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of paragraph (iii) below; |
(ii) | Individuals who, as of the Effective Date, constitute the Board (such individuals, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; |
(iii) | A Business Combination excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who were the Beneficial Owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, (B) no Person Beneficially Owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or |
(iv) | Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. |
(k) | “Change in Control Price” means the closing price of a Share on the last trading day before the Change in Control occurs or, if so determined by the Committee, the value of all compensation to be paid to the holder of a Share pursuant to the terms of the transaction constituting the Change in Control. |
(l) | “Change in Control Period” means the period commencing on the date of a Change in Control and ending on the twenty-four (24) month anniversary of such date. |
(m) | “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision, as well as any applicable interpretative guidance issued related thereto. |
(n) | “Committee” means the Compensation Committee of the Board or such other committee designated by the Board to administer all or a portion of this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. The Board may take any action under this Plan that would otherwise be the responsibility of the Committee. |
(o) | “Company” means ACCO Brands Corporation, a Delaware corporation, and any successor thereto as provided in Article 20. |
(p) | “Director” means any individual who is a member of the Board of Directors of the Company. |
(q) | “Disability” means: |
(i) | If the Participant is a participant in the Executive Severance Plan or is a non-employee Director, “disability” as such term is defined in the Executive Severance Plan as then in effect; |
(ii) | If (i) does not apply, then |
(A) | for an Employee employed in the United States, “disability” as such term is defined in the Company’s then-current long term disability income insurance policy that applies to the Employee which continues for a period of twelve (12) consecutive months; |
(B) | for an Employee employed outside the United States, if there is a Company long term disability policy or program or local disability regulation applicable to the Employee, “disability” as such term is defined in such Company policy or program or local disability regulation; or |
(C) | if there is not a Company long term disability policy or program or local disability regulation applicable to the Employee, then a definition approved by the Committee; |
(r) | “Effective Date” has the meaning set forth in Section 1.1. |
(s) | “Employee” means any non-union individual who performs services for and is designated as an employee of the Company, Affiliate and/or Subsidiary on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate and/or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate and/or Subsidiary during such period. |
(t) | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. |
(u) | “Executive Severance Plan” means the ACCO Brands Corporation Executive Severance Plan as in effect from time to time. |
(v) | “Fair Market Value” or “FMV” means the average of the high and low sales price of a Share on the New York Stock Exchange, Inc. composite tape (or if Shares are not then traded on the New York Stock Exchange, on the stock exchange or over-the-counter market on which Shares are principally trading), on the date of measurement, and if there were no trades on such measurement date, on the first day on which a trade occurs next succeeding such measurement date; provided that for purposes of determining the amount payable with respect to an Award in connection with a Change of Control pursuant to Article 17, the Fair Market Value of a Share shall be not less than the value of the consideration to be paid for a Share pursuant to the terms of the transaction constituting the Change of Control, as determined by the Committee. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, or for purposes of determining the Fair Market Value of securities or other property other than Shares, the determination of Fair Market Value shall be made by the Committee in such manner as it deems appropriate. |
(w) | “Full-Value Award” means an Award other than in the form of an ISO, NQSO, or SAR, and which is settled by the issuance of fully paid Shares or, to the extent provided by the Committee, settled in whole or in part in cash rather than Shares, but shall not include any Award (i) that is not denominated in Shares or stock units or (ii) for which the terms of the Award provide for settlement only in cash. |
(x) | “Grant Date” means the date on which the Committee approves the grant of an Award by Committee action or such later date as specified in advance by the Committee. |
(y) | “Grant Price” means the price used to determine whether there is any payment due upon exercise of the SAR. The Grant Price of any SAR will be at least the greater of the Fair Market Value of a Share at the time the grant is effective or the par value of a Share. |
(z) | “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision. |
(aa) | “Involuntary Termination” means the Company’s, Affiliate’s and/or Subsidiary’s termination of a Participant’s employment or service other than for Cause. |
(bb) | “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements. |
(cc) | “Non-Tandem SAR” means an SAR that is granted independently of any Option, as described in Article 7. |
(dd) | “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6. |
(ee) | “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option. The Option Price will be at least the greater of the Fair Market Value of a Share at the time the grant is effective or the par value of a Share. |
(ff) | “Other Agreement” means either (i) an applicable employment or other written agreement between the Company and a Participant or (ii) an applicable employment or other written agreement between an Affiliate or a Subsidiary and a Participant which, in either case, has been approved by the Board or Committee or executed by the person who is the Chief Executive Officer, the President, the Chief Financial Officer, or the General Counsel of the Company. |
(gg) | “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10. |
(hh) | “Participant” means any eligible individual as set forth in Article 5 to whom an Award is granted. |
(ii) | “Performance Measures” means measures on which the performance goals are based. |
(jj) | “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award. |
(kk) | “Performance Share” means an Award under Article 9 and subject to the terms of this Plan, denominated in fully paid Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria or Performance Measure(s), as applicable, have been achieved. |
(ll) | “Performance Stock Unit” means an Award under Article 9 and subject to the terms of this Plan, denominated in units (and no Shares are actually awarded to the Participant on the Grant Date), the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria or Performance Measure(s), as applicable, have been achieved. |
(mm) | “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or the occurrence of other events as determined by the Committee, in its discretion). |
(nn) | “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof. |
(oo) | “Plan” means this 2019 ACCO Brands Corporation Incentive Plan. |
(pp) | “Plan Year” means a twelve-month period beginning with January 1 of each year. |
(qq) | “Replacement Award” shall have the meaning set forth in Section 17.1(a)(ii). |
(rr) | “Restricted Stock” means an Award under Article 8 and subject to the terms of this Plan, denominated in fully paid Shares. |
(ss) | “Resignation for Good Reason” means a resignation for “good reason”: |
(i) | If the Participant is a participant in the Company Executive Severance Plan on the date of the Participant’s “separation from service,” as defined by Section 409A, the meaning ascribed to such term in the Executive Severance Plan as in effect on such date; or |
(ii) | If the Participant is not on the date of such “separation from service,” as defined by Section 409A, a participant in the Company’s Executive Severance Plan, such definition as is specified in the Participant’s Award Agreement. |
(tt) | “Restricted Stock Unit” means an Award under Article 8, and subject to the terms of this Plan denominated in units (and no Shares are actually awarded to the Participant on the Grant Date). |
(uu) | “Retirement” means: |
(i) | the Participant’s termination of employment on or after attaining age 55 and completion of either (A) at least five years of service with the Company, an Affiliate and/or a Subsidiary without a break in service (due to a termination of employment and re-employment) of more than one year or (B) at least five years of continuous service with the Company, an Affiliate and/or a Subsidiary; provided, that Retirement shall not include a termination of employment for Cause, or |
(ii) | retirement from service as a member of the Board by a non-employee Director after five or more years of service as a Non-employee Director of the Company (together with any prior service as an Employee). |
(vv) | “Section 16 Insider” means an individual who is, on the relevant date, an executive officer or Director of the Company as determined by the Board or Committee in accordance with Section 16 of the Exchange Act. |
(ww) | “Share” means a registered share of common stock of the Company, par value $.01 per share, or such other par value as may be in effect from time to time. |
(xx) | “Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, pursuant to the terms of Article 7. |
(yy) | “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns 50% or more of the voting stock in one of the other corporations in such chain, except that with respect to Incentive Stock Options, “Subsidiary” means “subsidiary corporation” as defined in Section 424(f) of the Code. For purposes of this definition of “Subsidiary”, references to a corporation and its voting stock shall also mean any other form of entity and its voting equity interests. |
(zz) | “Tandem SAR” means an SAR that is granted in connection with a related Option pursuant to Article 7, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be forfeited). |
Article 3. | Administration |
(a) | Discretionary Authority. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions (including the terms and conditions set forth in Award Agreements), granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any provision of this Plan or any Award Agreement, and, subject to Article 18, adopting modifications and amendments to this Plan or any Award Agreement, including accelerating the vesting of any Award (subject to the limitations in Section 3.4) or extending the post-termination exercise period of an Award (subject to the limitations of Code Section 409A), and any other modifications or amendments that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate. |
(b) | Settlement of Awards. To the extent determined by the Committee, any Award may be settled in whole or in part in cash rather than Shares, regardless of whether the Award Agreement specified settlement in Shares. The Committee may arrange for payment to be made on the Participant’s behalf as part of an Award or otherwise. |
(c) | Board and Committee Action. Notwithstanding the foregoing, members of the Board or the Committee who are either eligible for Awards or have been granted Awards may vote on any and all matters, including matters affecting the administration of this Plan or the grant of Awards pursuant to this Plan. However, no such member shall act upon the granting of a specific Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board or the Committee during which action is taken with respect to the granting of an Award to him or her. |
(d) | Awards to Non-employee Directors. Notwithstanding the foregoing, the amount, form, and timing of the grant of Awards to non-employee Directors shall be determined by the Board unless the Board otherwise delegates any or all of these functions to a committee or committees of the Board. |
Article 4. | Shares Subject to This Plan and Maximum Awards |
(a) | Subject to adjustment as provided in Section 4.3, the maximum number of Shares available for grant to Participants under this Plan (the “Share Authorization”) shall be: |
(i) | 11,775,000 Shares; plus |
(ii) | the number of Shares subject to outstanding awards as of the Effective Date under the ACCO Brands Corporation Incentive Plan (As Amended and Restated Effective May 12, 2015) that on or after the Effective Date cease for any reason to be subject to such awards (other than in connection with the exercise or settlement of the awards including shares withheld to satisfy the exercise price or tax withholding obligations) on the basis of: (A) one share for each such share issued as an Option or SAR and (B) 2.06 Shares for each such Share issued as a Full-Value Award. |
(b) | All Shares of the Share Authorization may be granted as Full-Value Awards. |
(c) | The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be 11,775,000 Shares. |
(a) | Shares tendered or attested to in payment of the Exercise Price of an Option shall not be added back to the applicable limit; |
(b) | Any Shares withheld by the Company to satisfy the tax withholding obligation shall not be added back to the applicable limit (without implying that the withholding of Shares is a permissible way to satisfy the obligation), and if an amount is withheld for payment of taxes from an Award settled partly in Shares and partly in cash, a number of Shares with a value equal to the portion of the withholding that corresponds to the portion of the Award settled in Shares shall be treated as issued and shall not be added back to the applicable limit; |
(c) | Shares that are reacquired by the Company with the amount received upon the exercise of an Option shall not be added back to the applicable limit; and |
(d) | The aggregate Shares with respect to which an SAR settled in Shares is exercised, rather than the number of Shares actually issued, shall reduce the applicable limit. |
(a) | In the event of any corporate event or transaction (including, but not limited to, a change in the authorized number of Shares of the Company or the capitalization of the Company) such as an amalgamation, a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, division, consolidation or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of issued Shares or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, and other value determinations applicable to outstanding Awards. |
(b) | The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards that are otherwise permissible under this Plan to reflect, or related to, such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan. Notwithstanding the foregoing, all Awards will be subject to the minimum vesting requirement of one year as described in Section 3.4. |
(c) | Subject to the provisions of Article 18 and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any amalgamation, merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate (including, but not limited to, a conversion of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44 or subsequent accounting guidance), subject to compliance with the rules under Code Sections 422 and 424, as and where applicable. The Committee shall provide to Participants reasonable written notice (which may include, without limit, notice by electronic means) within a reasonable time of any such determinations it makes, but the failure to give such notice shall not preclude any such action from taking effect. |
Article 5. | Eligibility and Participation |
Article 6. | Stock Options |
(a) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent that an Option is not then exercisable, the Option shall immediately become vested and exercisable with respect to all Shares covered by the Participant’s Option, and the Option shall remain exercisable until the earlier of (i) the expiration of the term of the Option, or (ii) 5 years after the date of such termination; provided, however that an Option (other than an ISO) may be exercised within one year following the date of death even if later than the expiration of the term of such Option. In the case of the Participant’s death, the Participant’s beneficiary or estate may exercise the Option. |
(b) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent an Option is not then exercisable, the Option shall continue to vest and become vested and exercisable in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred) and shall remain exercisable until the expiration of the term of the Option. |
(c) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, the Option shall become vested and exercisable with respect to a number of Shares (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or continuously providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date, and shall remain exercisable until the expiration of the term of the Option. |
(d) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than those set forth in subsections (a), (b) and (c) above, all then vested and exercisable Options shall remain exercisable from the date of such termination until the earlier of (i) the expiration of the term of the Option, or (ii) 90 days after the date of such termination. Such Options shall only be exercisable to the extent that they were exercisable as of such termination date and all unvested Options shall be immediately forfeited. |
Article 7. | Stock Appreciation Rights |
(a) | The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by |
(b) | The number of Shares with respect to which the SAR is exercised. |
(a) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent that an SAR is not then exercisable, the SAR shall immediately become vested and exercisable, and the SAR shall remain exercisable until the earlier of (i) the expiration of the term of the SAR, or (ii) 5 years after the date of such termination; provided, however that the SAR may be exercised within one year following the date of death even if later than the expiration of the term of such SAR. In the case of the Participant’s death, the Participant’s beneficiary or estate may exercise the SAR. |
(b) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent an SAR is not then exercisable, the SAR shall continue to vest and become vested and exercisable in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred) and shall remain exercisable until the expiration of the term of the SAR. |
(c) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, the SAR shall become vested and exercisable with respect to a number of Shares (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or continuously providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date, and shall remain exercisable until the expiration of the term of the SAR. |
(d) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than those set forth in subsections (a), (b) and (c) above, all then vested and exercisable SARs shall remain exercisable from the date of such termination until the earlier of (i) the expiration of the term of the SAR, or (ii) 90 days after the date of such termination. Such SARs shall only be exercisable to the extent that they were exercisable as of such termination date and all unvested SARs shall be immediately forfeited. |
Article 8. | Restricted Stock and Restricted Stock Units |
(a) | Involuntary Termination. This termination event applies only to Participants who are Employees. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates by reason of an Involuntary Termination by the Participant at any time during the six month period preceding the specified vesting date in the Award Agreement but after the first anniversary of the Grant Date, a number of Shares of Restricted Stock or Restricted Stock Units, as the case may be, shall become vested (rounded up to the next integer) equal to the fraction the number of which is the number of days that the Participant was continuously employed from the Grant Date through the date of such Involuntary Termination and the denominator of which is the number of days from the Grant Date through such specified vesting date. |
(b) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment, or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent any Shares of Restricted Stock or Restricted Stock Units, as the case may be, are not then vested, all Shares of Restricted Stock or all Restricted Stock Units, as the case may be, shall immediately become fully vested on the date of such termination and any restrictions shall lapse. |
(c) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent any Award covering Shares of Restricted Stock or Restricted Stock Units, as the case may be, are not then vested, the Award shall continue to vest and become vested in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred). |
(d) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, a number of Restricted Stock or Restricted Stock Units shall become vested (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or continuously providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date. |
(e) | Other Termination. These termination event apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than as described in subsections (a) through (d), all unvested Shares of Restricted Stock or all unvested Restricted Stock Units, as the case may be, shall be immediately forfeited to the Company. |
(f) | Satisfaction of Performance Goals. In any situation in which the number of Shares of Restricted Stock, or Restricted Stock Units, to which a Participant is entitled depends upon the satisfaction of performance goals, the treatment of the Award upon a termination of employment or service shall be governed by the provisions of Section 9.6. |
Article 9. | Performance Stock Units/Performance Shares |
(a) | Involuntary Termination. This termination event applies only to Participants who are Employees. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates during the last six months of a Performance Period but after the first anniversary of the Grant Date by reason of an Involuntary Termination by the Participant, the Participant shall receive a payout of the Performance Stock Units and/or Performance Shares equal to the product of (i) the fraction the numerator of which is the number of days that the Participant was continuously employed from the first day of the Performance Period through the date of such termination of employment or service and the denominator of which is the number of days in the Performance Period multiplied by (ii) the number of Performance Stock Units and/or Shares that could have become earned and vested determined after the close of the Performance Period based upon the extent to which the Performance Measures or other performance goals were actually achieved, and the Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested. |
(b) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director, as the case may be, with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the last day of the Performance Period, the Participant shall receive a payout of the Performance Stock Units and/or Performance Shares equal to the product of (i) the fraction the numerator of which is the number of days that the Participant was continuously employed from the first day of the Performance Period through the date of such termination of employment or service and the denominator of which is the number of days in the Performance Period multiplied by (ii) the number of Performance Stock Units and/or Shares that could have become earned and vested based on the deemed attainment of performance at the target level, and the Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested. |
(c) | Retirement. This termination event applies to all Participants. |
(i) | In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates during a Performance Period due to Retirement, the Participant shall receive a prorated payout of the Performance Stock Units and/or Performance Shares, which shall be valued and paid in accordance with paragraph (c)(ii). The prorated payout shall be determined as follows: (A) the total number of Performance Stock Units and/or Performance Shares, as applicable, to which the Participant would be entitled as determined under paragraph (c)(ii) times (B) the fraction the numerator of which is the number of days that the Participant was continuously employed from the first day of the Performance Period through the date of such termination of employment or service due to Retirement and the denominator of which is the number of days in the Performance Period. |
(ii) | The number of Performance Stock Units and/or Performance Shares to which the Participant is entitled, prior to application of the proration formula described in paragraph (c)(i), shall be determined after the close of the Performance Period based upon the extent to which the Performance Measures or other performance goals were actually achieved. The Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested. |
(d) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the last day of the Performance Period, a number of Performance Stock Units and/or Performance Shares shall become vested (rounded up to the next integer) equal to (i) the fraction the numerator of which is the number of days that the Participant was continuously employed or providing services from the first day of the Performance Period through the date of the Divestiture and the denominator of which is the number of days in the Performance Period multiplied by (ii) the number of Performance Stock Units and/or Shares that could have become earned and vested based on the deemed attainment of performance at the target level, and the Participant shall forfeit any Performance Stock Units and/or Performance Shares not becoming so earned and vested. |
(e) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates during a Performance Period for any reason other than as described in subsections (a) through (d), all unvested Performance Stock Units and/or Performance Shares shall be immediately forfeited to the Company. |
Article 10. | Cash-Based Awards and Other Stock-Based Awards |
(a) | Involuntary Termination. This termination event applies only to Participants who are Employees. In the event that a Participant’s employment with the Company, Affiliate and/or any Subsidiary terminates by reason of an Involuntary Termination by the Participant at any time during the six month period preceding the specified vesting date in the Award Agreement but after the first anniversary of the Grant Date, a portion of the Award shall become vested (rounded up to the next integer) equal to the fraction the number of which is the number of days that the Participant was continuously employed from the Grant Date through the date of such Involuntary Termination and the denominator of which is the number of days from the Grant Date through such specified vesting date. |
(b) | Death or Disability. These termination events apply to all Participants. In the event that a Participant’s employment or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates by reason of death or Disability before the specified vesting date in the Award Agreement, to the extent any portion of the Award is not then vested, the entire Award shall immediately become fully vested on the date of such termination and any restrictions shall lapse. |
(c) | Retirement. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director terminates by reason of Retirement from the Company, Affiliate and/or any Subsidiary before the specified vesting date in the Award Agreement, to the extent any portion of the Award is not then vested, the Award shall continue to vest and become vested in accordance with the original vesting terms of the Award Agreement (as if the termination of employment or service had not occurred). |
(d) | Divestiture. This termination event applies to all Participants. In the event that a Participant’s employment or service as a non-employee Director with any Subsidiary terminates upon the occurrence of a transaction, other than a Change in Control, by which the Subsidiary that is the Participant’s principal employer or service recipient ceases to be a Subsidiary of the Company (“Divestiture”) after the first anniversary of the Grant Date but before the specified vesting date in the Award Agreement, a portion of the Award shall become vested (rounded up to the next integer) equal to the fraction the numerator of which is the number of days that the Participant was continuously employed or providing services from the Grant Date through the date of the Divestiture and the denominator of which is the number of days from the Grant Date through such vesting date. |
(e) | Other Termination. These termination events apply to all Participants. In the event that a Participant’s employment, or service as a non-employee Director with the Company, Affiliate and/or any Subsidiary terminates for any reason other than as described in subsections (a) through (d), any unvested portion of the Award shall be immediately forfeited to the Company. |
(f) | Satisfaction of Performance Goals. In any situation in which the amount of the Cash-Based Award or Stock-Based Award to which a Participant is entitled depends upon the satisfaction of performance goals, the treatment of the Award upon a termination of employment or service shall be governed by the provisions of Section 9.6. |
Article 11. | Forfeiture of Awards. |
(a) | Competitive Activity. All outstanding Awards and Shares issued pursuant to an Award held by an Participant, and the proceeds of any such Shares, will be forfeited in their entirety (including as to any portion of an Award or Shares subject thereto that are vested or as to which any repurchase or resale rights or forfeiture restrictions in favor of the Company or its designee with respect to such Shares have previously lapsed) if the Participant violates any of the restrictive covenants agreed to by the Participant as part of the Award Agreement. |
(b) | Termination for Cause. All outstanding Awards and Shares issued pursuant to an Award held by a Participant, and the proceeds of any such Shares, will be forfeited in their entirety (including as to any portion of an Award or Shares subject thereto that are vested or as to which any repurchase or resale rights or forfeiture restrictions in favor of the Company or its designee have previously lapsed) if the Participant’s employment or service is terminated by the Company for Cause; provided, however, that in the event the Committee determines that it is necessary to establish whether grounds exist for termination for Cause, the Award will be suspended during any period required to conduct such determination, meaning that the vesting, exercisability and/or lapse of restrictions otherwise applicable to the Award will be tolled and if grounds for such termination are determined to exist, the forfeiture specified by this subsection (b) will apply as of the date of suspension, and if no such grounds are determined to exist, the Award will be reinstated on its original terms. |
(c) | Failure to Timely Accept Award Agreement. If the terms of an Award Agreement provide that a Participant must execute and return an Award Agreement (or otherwise indicate its acceptance of the Award Agreement) within a specified period of time in order for the Award to be effective, and if the Participant fails to do so within the time period specified, such Award will be forfeited in its entirety unless otherwise determined by the Committee. For the avoidance of doubt, all Awards are made as of their Grant Date. |
(d) | Recoupment and Clawback Policies. All Awards are subject to recoupment and clawback policies of the Company, its Affiliates and/or its Subsidiaries in effect from time to time, which policies may require reduction, cancellation, or forfeiture (including repurchase of Shares for nominal consideration). |
Article 12. | Transferability of Awards |
Article 13. | Director Awards |
Article 14. | Dividends and Dividend Equivalents |
(a) | Any crediting of dividends or dividend equivalents shall be subject to the same restrictions and conditions as the underlying Award. For avoidance of doubt, dividends or dividend equivalents with respect to any Award subject to the achievement of performance goals shall only be paid to the extent the Award vests and the performance goals are achieved, and dividends or dividend equivalents with respect to any Award subject to a time-based vesting schedule shall only be paid to the extent the Award vests. |
(b) | No dividend equivalent granted with respect to an Option or a Stock Appreciation Right may be conditioned, directly or indirectly, upon exercise of such Option or Stock Appreciation Right. |
(c) | To the extent a dividend or dividend equivalent is considered a 409A Award, as defined in Section 21.16, whether or not the underlying Award is also a 409A Award, the right to the dividend or dividend equivalent shall be treated as a separate form of Award that is subject to Section 21.16, and the time of payment of the dividend or dividend equivalent shall comply with Section 409A. |
Article 15. | Beneficiary Designation |
Article 16. | Rights of Participants |
Article 17. | Change in Control |
(a) | Replacement Awards; No Immediate Vesting. |
(i) | An Award shall not vest upon the occurrence of a Change in Control to the extent the Participant receives a Replacement Award as defined below with respect to such Award. |
(ii) | A “Replacement Award” (1) includes an outstanding Award that continues upon and after the occurrence of a Change in Control or (2) an Award provided to a Participant pursuant to Section 4.3 and Article 18 in replacement of an outstanding Award (such replaced Award, a “Replaced Award”) in connection with a Change in Control that satisfies the following conditions: |
(A) | It has a value at least equal to the value of the Replaced Award; |
(B) | It relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control; |
(C) | Its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control); and |
(D) | Upon an Involuntary Termination (not due to Disability) or a Resignation for Good Reason occurring during the Change in Control Period the Replacement Award, to the extent not vested and unrestricted as of such Separation from Service, shall become fully vested and (if applicable) exercisable and free of restrictions, as of the later of the date of termination or the date of the Change in Control. |
(iii) | Such Replacement Awards shall be paid in Shares or cash, in accordance with the original terms of the Award, except that the Committee has the authority to pay all or any portion of the Fair Market Value of any Award denominated in Shares in cash. |
(b) | Vesting if No Replacement Award. To the extent that a Replacement Award is not provided to the Participant, upon the occurrence of a Change in Control: |
(i) | Any and all Options and Stock Appreciation Rights granted hereunder shall become fully vested and immediately exercisable; |
(ii) | Any restrictions imposed on Restricted Stock shall lapse and such Restricted Stock shall become freely transferable; |
(iii) | all Restricted Stock Units shall become fully vested and be settled in full by a payment equal to the Fair Market Value of the Shares underlying the Restricted Stock Units, which shall be paid either in cash or, in the discretion of the Committee, in whole or in part in Shares; and |
(iv) | The payout opportunities attainable at target or, if greater, in the amount determined by the Committee to have been earned thereunder based on performance through the date of the Change in Control, under all outstanding Awards of Performance Stock Units or Performance Shares or other types of performance-based Awards shall be deemed to have been earned for the entire Performance Period(s) as of the effective date of the Change in Control. The vesting of all such earned Awards shall be accelerated as of the effective date of the Change in Control, and in full settlement of such Awards, there shall be paid either the earned amount of an Award denominated in cash, or the Fair Market Value of the earned Shares in the case of an Award denominated in Shares, which shall be paid either in cash or, in the discretion of the Committee, in whole or in part in Shares. |
(c) | Termination of Non-employee Directors. This termination event applies only to Participants who are non-employee Directors. In the event that a Participant’s service as a non-employee Director with the Company terminates during the Change in Control Period for any reason, all of the Participant’s Awards shall be treated in the manner described in subsections (a) and (b). |
Article 18. | Amendment, Modification, Suspension, and Termination |
Article 19. | Withholding |
Article 20. | Successors |
Article 21. | General Provisions |
(a) | Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and |
(b) | Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. |
(a) | Determine which Employees and/or non-employee Directors outside the United States are eligible to participate in this Plan; |
(b) | Modify the terms and conditions of any Award granted to Employees outside the United States to comply with applicable foreign laws; |
(c) | Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 21.11 by the Committee shall be attached to this Plan document as appendices; and |
(d) | Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals. |
(a) | For purposes of this Section 21.16, an Award shall constitute a “409A Award” as used in this Section 21.16 only if and to the extent either: |
(i) | it is an Award (other than an Option, SAR, Performance Share or Restricted Stock) that (A) is not “subject to a substantial risk of forfeiture” as defined in Section 409A (by reason of the Participant having attained eligibility for Retirement or otherwise), and (B) (1) that is actually settled after March 15 of the year following the year in which the Award ceases to be subject to a substantial risk of forfeiture or (2) that the terms of this Plan or the Award provide will be settled after such March 15 or upon or after the occurrence of any event that may occur after such March 15; or |
(ii) | the Committee (after taking into account the definition of Resignation for Good Reason as provided in Section 2(ss), and any applicable exemptions from Section 409A), determines that the Award otherwise constitutes deferred compensation as defined in Section 409A. |
(b) | If any amount becomes payable under any 409A Award by reason of a Participant’s termination of employment, and such Participant incurs a termination of employment as set forth in this Plan (including, without limit, Section 5.4 of this Plan) or the Award that is not a “separation from service,” as defined by Section 409A, then the Participant’s right to such payment, to the extent not already vested, shall be fully vested on the date of the termination of employment, but payment shall be deferred until the earliest of (i) the date the Participant incurs such a separation from service (or six months thereafter if and to the extent required by Section 21.16(d)), (ii) the date that a “change in control event” as defined in Section 409A occurs with respect to the Participant, (iii) the Participant’s death, or (iv) if the terms of the Award provide for payment upon a specific vesting date, such specific vesting date. Notwithstanding anything in this Plan, the Committee shall not exercise its discretion under Section 5.5 in a manner inconsistent with this Section 21.16. |
(c) | If any amount becomes payable under any 409A Award by reason of a Change in Control, and a Change in Control occurs as defined by this Plan or the Award that is not a “change in control event,” as defined by Section 409A, with respect to such Participant, then the Participant’s right to such payment, to the extent not already vested, shall be fully vested on the date of the Change in Control, and the amount of such payment shall be determined as of such date, but payment shall be deferred until the earliest of (i) the date on which a change in control event occurs with respect to the Participant, (ii) the date on which the Participant incurs a separation from service (or six months thereafter to the extent required by Section 21.16(d)), (iii) the Participant’s death, or (iv) if the terms of the Award provide for payment upon a specific vesting date, such specific vesting date. |
(d) | No amount that becomes payable under any 409A Award by reason of a Participant’s separation from service (as determined after the application of Section 21.16(b) and (c)) will be made to a Participant who is a “specified employee” (as defined by Section 409A) until the earlier of: (i) the first day following the sixth month anniversary of the Participant’s separation from service, or (ii) the Participant’s date of death. |
(e) | To the extent that payment of any amount of a 409A Award is required to be deferred to a later date (the “409A Deferral Date”) by reason of Section 409A, all amounts that would otherwise have been paid prior to the 409A Deferral Date shall be paid in a single lump sum on the first business day following the 409A Deferral Date, and the Committee may, in its sole discretion (but shall in no event be required to) permit an earlier payment to a Participant to the extent necessary to alleviate a “severe financial hardship” resulting from an “unforeseeable emergency,” all as defined in Section 409A. |
(f) | For purposes of Section 409A, each “payment” (as defined by Section 409A) made under this Plan shall be considered a “separate payment” for purposes of Section 409A. |
(g) | Any payment with respect to a 409A Award that becomes payable upon a specified vesting date, as defined in this Plan or Award, shall be paid as soon as practical after such vesting date, but not later than the last day of the calendar year in which the vesting date occurs. |
(h) | Notwithstanding the Company’s intentions as set forth above, if any Award granted under this Plan would fail to meet the requirements of Section 409A with respect to such Award, then such Award shall remain in effect and be subject to taxation in accordance with Section 409A. Neither the Company nor any member of the Committee shall have any liability for any tax imposed on a Participant by Section 409A, and, if any tax is imposed on the Participant, the Participant shall have no recourse against the Company or any member of the Committee for payment of any such tax. |
(i) | Anything else contained in this Plan to the contrary notwithstanding, if a non-employee Director elects to defer payment of any Award pursuant to the Amended and Restated ACCO Brands Corporation Deferred Compensation Plan for Non-Employee Directors (the “Deferred Compensation Plan”), such Award shall be considered a 409A Award, and such Award shall be paid at the time and in the manner provided in the Deferred Compensation Plan. |
ACCO Brands Corporation | |||
By: | |||
Name: Pamela R. Schneider | |||
Title: Senior Vice President, General Counsel and Corporate Secretary |
ACCO Brands Corporation Annual Meeting of Stockholders May 21, 2019 9:00 a.m. Meeting Location Address Kemper Lakes Business Center Three Corporate Drive Lake Zurich, IL 60047 Tel: 847.796.4340 Parking Self-parking is available |