DEF 14A of Modine Manufacturing Co
Filed Jul 7, 2023 · FY20230001140361-23-033771
ITEM 1 – ELECTION OF DIRECTORS
ITEM 1 – ELECTION OF DIRECTORS The Board of Directors (the “Board of Directors” or the “Board”) of Modine Manufacturing Company (the “Company” or “Modine”) nominated three current members of the Board, Eric D. Ashleman, Marsha Williams, and William A. Wulfsohn, to stand for election at the 2023 Annual Meeting of Shareholders (the “Annual Meeting”). A third-party search firm identified Mr. Wulfsohn for consideration by the Corporate Governance and Nominating Committee, and Mr. Wulfsohn was appointed to the Board on September 23, 2022. If elected, each director would serve until the 2026 Annual Meeting of Shareholders and the election of his or her successor. The persons appointed as proxies will vote “FOR” the election of these nominees, unless instructions to the contrary are given to them. The nominees have indicated that they are able and willing to serve as directors. While it is not anticipated that any of the nominees will be unable to take office, if that happens, the proxies will vote “FOR” the substitute nominee(s) designated by the Board of Directors. Larry O. Moore is retiring and will not be standing for reelection at the Annual Meeting. Mr. Moore served as a director of the Company since 2010. The Company is grateful to Mr. Moore for his years of dedicated service to the Company and its shareholders. The Company’s Amended and Restated Articles of Incorporation provide that the Board of Directors shall be divided into three classes, as nearly equal in number as possible, serving staggered three-year terms. The Board of Directors currently consists of ten members. Following the Annual Meeting, each class will consist of three directors. In accordance with the Company’s Bylaws, a director shall hold office until (i) the end of such director’s term and until the director’s successor shall have been elected, (ii) there is a decrease in the allowable number of directors, or (iii) his or her death, resignation or removal. Vacancies may be filled by the shareholders or the remaining directors. See Selection of Nominees to the Board of Directors below. The Company’s Bylaws require that each director retire at the close of the term in which he or she attains the age of 72 years, except that the provision will not apply to any director who has been exempted from it by a resolution passed by a two-thirds vote of the Board of Directors. Based on her continued significant contributions to the Board, including as its Chairperson, and her indicated willingness and desire to continue to serve, the Board of Directors unanimously determined to exempt Ms. Williams from the retirement age requirements for purposes of her nomination for election to another term at the Annual Meeting.
2023 Nominees for Director
2023 Nominees for Director Based upon the recommendation of the Governance Committee, the Board approved the nominations of Mr. Eric D. Ashleman, Ms. Marsha C. Williams and Mr. William A. Wulfsohn for election as directors. Mr. Ashleman, Ms. Williams and Mr. Wulfsohn are considered independent under the New York Stock Exchange (“NYSE”) corporate governance listing standards. Mr. Wulfsohn was appointed by the Board in September 2022 following an independent search process to fill a vacant Board position. Mr. Ashleman and Ms. Williams were last elected to the Board in 2020, at which time they each received the support of over 92 percent of the votes cast.
Director Resignation Bylaw
Director Resignation Bylaw Under the Company’s Bylaws, if an incumbent director fails to receive the affirmative vote of a majority of votes cast in an uncontested election, such director is required to promptly tender his or her resignation to the Board. The Nominating Committee will then recommend to the Board whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the recommendation of the Nominating Committee and publicly disclose its decision, and the rationale behind its decision, within 90 days from the date of the certification of the results of the election. The Board of Directors recommends a vote “FOR” Mr. Eric D. Ashleman, Ms. Marsha C. Williams, and Mr. William A. Wulfsohn. Directors in an uncontested election are elected by a majority of the votes cast by holders of shares of the Company’s common stock entitled to vote in the election at a shareholder meeting at which a quorum is present. Because abstentions and broker non-votes are not considered votes cast, they will not have an effect on the vote.
Director Resignation Bylaw
| Nominees for Election as Directors with Terms Expiring in 2026: |
Director Resignation Bylaw
| Eric D. Ashleman Age 56 | Current Position: | Chief Executive Officer and President of IDEX Corporation. Mr. Ashleman became the Chief Executive Officer of IDEX Corporation in December 2020 after becoming President in February 2020. Since 2008, Mr. Ashleman has served in a variety of capacities at IDEX, which is a developer, designer and manufacturer of fluidics systems and specialty engineered products. Prior to becoming the Chief Executive Officer and President of IDEX Corporation, Mr. Ashleman served in the following capacities at IDEX: President of Gast Manufacturing; President, Gast Manufacturing and Global Dispensing; Vice President and Group Executive, Fire, Safety and Diversified Segment; Senior Vice President and Group Executive, Health and Science Technology, and Fire, Safety and Diversified Segments; Senior Vice President and Chief Operating Officer; and President and Chief Operating Officer. Prior to joining IDEX, Mr. Ashleman served as President of Schutt Sports from 2006 to 2008. | | Director since 2019 | Experience: | | | | | | | | Public Company Directorships: | IDEX Corporation |
Director Resignation Bylaw
| Specific Attributes and Skills for Mr. Ashleman: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Business Operations Leadership | Mr. Ashleman has acquired business operations leadership through his many roles at IDEX Corporation, and particularly in his current role as Chief Executive Officer and President, where he is responsible for leading and managing a diversified industrial company. | | Relevant Industry Experience | Mr. Ashleman serves as Chief Executive Officer and President of IDEX Corporation, a global, diversified industrial company that manufactures for and sells into numerous markets also served by the Company, including the automotive, energy and industrial sectors. | | Global Business Experience | Mr. Ashleman has acquired substantial global business experience through his roles with IDEX Corporation, and particularly in his current role as Chief Executive Officer and President, as he leads and manages a global, diversified industrial company. | | Financial Expertise | Mr. Ashleman has acquired significant financial expertise through his roles at IDEX Corporation and through his previous role as President of Schutt Sports. | | Corporate Governance Expertise | Through his roles at IDEX Corporation, including as a member of its Board of Directors, and through his previous role as President of Schutt Sports, Mr. Ashleman has obtained considerable corporate governance expertise. | | Strategic Planning and Execution Expertise | Mr. Ashleman has developed short- and long-term strategic planning and execution expertise through his numerous roles at IDEX Corporation, and through his previous role as President of Schutt Sports. |
Director Resignation Bylaw
| Marsha C. Williams Age 72 | Current Position: | Retired. | | Director since 1999 | Experience: | Ms. Williams retired as Senior Vice President and Chief Financial Officer of Orbitz Worldwide, Inc., an online travel company (July 2007 - December 2010). Prior to joining Orbitz Worldwide, Inc., Ms. Williams was Executive Vice President and Chief Financial Officer (2002 – February 2007) of Equity Office Properties Trust, a real estate investment trust. Prior to that time, Ms. Williams was Chief Administrative Officer of Crate and Barrel and served as Vice President and Treasurer of Amoco Corporation; Vice President and Treasurer of Carson Pirie Scott & Company; and Vice President of The First National Bank of Chicago. | | | Public Company Directorships: | Fifth Third Bancorp; Crown Holdings, Inc.; and Davis Funds | | | | Ms. Williams was previously a Director for Chicago Bridge & Iron N.V. from 1999-2018, and for McDermott International Inc. from 2018-2020 following its acquisition of Chicago Bridge & Iron N.V. |
Director Resignation Bylaw
| Specific Attributes and Skills for Ms. Williams: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Global Business Experience | Ms. Williams was an executive officer of Orbitz Worldwide, Inc. and is currently a director of several public companies with global operations. In these roles, Ms. Williams has accumulated extensive knowledge of global finance, capital management, internal controls and human resources. | | Financial Expertise | As Vice President and Chief Financial Officer of Orbitz Worldwide, Inc., and Executive Vice President and Chief Financial Officer of Equity Office Properties Trust, Ms. Williams gained significant financial acumen relating to complex, global companies. | | Corporate Governance Expertise | Ms. Williams serves on the board of several public companies, and is the former Lead Director of the Fifth Third Bancorp Board of Directors. | | Financial Markets Experience | As the former Vice President and Chief Financial Officer of Orbitz Worldwide, Inc., Executive Vice President and Chief Financial Officer of Equity Office Properties Trust, and current board member of Fifth Third Bancorp, Ms. Williams has significant experience in the financial markets in which the Company competes for financing. | | Strategic Planning and Execution Expertise | Ms. Williams has engaged in all facets of strategic planning and execution, particularly through her roles with Orbitz Worldwide, Inc. and Equity Office Properties Trust. |
Director Resignation Bylaw
| William A. Wulfsohn Age 61 Director since 2022 | Current Position: Experience: | Former Chairman and Chief Executive Officer of Ashland Global Holdings. Mr. Wulfsohn served as Chairman and Chief Executive Officer of Ashland Global Holdings, a global leader in providing specialty chemical solutions to customers in a wide range of customer and industrial markets, from 2015 to 2019. He was also a Director and Non-Executive Chairman of Valvoline Inc., a leading worldwide producer and distributer of premium-branded automotive, commercial and industrial lubricants and automotive chemicals, from 2016 until 2018. His prior employment includes strategic, M&A and international experience in senior roles, including President and Chief Executive Officer at Carpenter Technology Corporation, Senior Vice President, Coatings at PPG Industries and Vice President and General Manager – Nylon System at Honeywell International Inc. | | | Public Company Directorships: | Avient Corporation |
Director Resignation Bylaw
| Specific Attributes and Skills for Mr. Wulfsohn: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Business Operations Leadership | Mr. Wulfsohn acquired his business operations experience as the former Chairman & CEO of Ashland Global Holdings. | | Global Business Experience | Mr. Wulfsohn acquired extensive executive and leadership experience through his roles with Ashland Global Holding and PPG Industries, each of which has extensive global business operations. | | Financial Expertise | Mr. Wulfsohn acquired significant financial expertise through his role at Ashland Global Holdings, where he led an IPO, and through his previous role at Carpenter Technology Corporation. | | Corporate Governance Expertise | In his role as Chairman & CEO of Ashland Global Holdings, and through his directorship experience, Mr. Wulfsohn has acquired significant experience in implementing effective corporate governance practices. | | Financial Markets Experience | As Chairman & CEO of Ashland Global Holdings and as CEO of Carpenter Technology, Mr. Wulfsohn had significant experience in financial markets and with investors. | | Strategic Planning and Execution Expertise | Through his roles at Ashland Global Holdings, Carpenter Technology Corporation, and PPG Industries, Mr. Wulfsohn acquired extensive experience in leading and implementing long- and short-term organizational strategies. |
Director Resignation Bylaw
| Directors Continuing in Service for Terms Expiring in 2025: |
Director Resignation Bylaw
| Neil D. Brinker Age 47 Director since 2020 | Current Position: Experience: | President and Chief Executive Officer of Modine since 2020. Prior to joining Modine, Mr. Brinker was President and Chief Operating Officer of Advanced Energy Industries, Inc. (“AE”) since May of 2020, and joined AE in June of 2018 as its Executive Vice President & Chief Operating Officer. Before joining AE, Mr. Brinker served as a Group President at IDEX Corporation from July 2015 to June 2018 after holding leadership roles at IDEX from April of 2012 to July 2015. Mr. Brinker also held numerous management roles at Danaher Corporation from 2007 to 2012, as well as various operations roles at General Motors from 2001 to 2007. |
Director Resignation Bylaw
| Specific Attributes and Skills for Mr. Brinker: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Business Operations Leadership | Mr. Brinker serves as President and Chief Executive Officer of the Company. He has obtained substantial business operations leadership experience through his roles at AE, IDEX and Danaher. | | Relevant Industry Experience | As an Executive Officer of AE, and a business leader at both IDEX and Danaher, Mr. Brinker has significant experience in leading and transforming diversified industrial companies. | | Global Business Experience | At AE, IDEX and Danaher, and now as President and Chief Executive Officer of Modine, Mr. Brinker’s responsibilities have included global oversight of P&L, operations, M&A, human capital and strategy. | | Strategic Planning and Execution Expertise | In addition to his direct responsibility for M&A activity at AE, IDEX and Danaher, Mr. Brinker has extensive experience in both setting and overseeing the execution of strategy and growth for diversified industrial companies. |
Director Resignation Bylaw
| Katherine C. Harper Age 60 Director since 2022 | Current Position: Experience: | Retired. Ms. Harper retired as Chief Financial Officer of BDP International, a private global logistics and transportation solutions company. Ms. Harper served in this capacity from 2019 until her retirement in 2022. Prior to BDP International, Ms. Harper served as Chief Financial Officer of AgroFresh Solutions, a global public agricultural solutions provider, where she oversaw Finance, Strategy, Business Development and Investor Relations. She was also previously SVP and Chief Financial Officer of Tronox, a global public chemicals and mining company, and held various senior roles with Rio Tinto Group, one of the world’s largest metals and mining corporations. | | | Public Company Directorships: | Sasol Limited (South Africa) |
Director Resignation Bylaw
| Specific Attributes and Skills for Ms. Harper: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Global Business Experience | Ms. Harper has had a distinguished financial career across many global industries including chemicals, mining, industrial manufacturing, distribution and security services. | | Financial Expertise | Ms. Harper is a financial expert with extensive experience in compliance, assurance and enterprise risk management. In addition, Ms. Harper also serves as a member of the audit committee of Sasol. | | Corporate Governance Expertise | In her role as Chief Financial Officer of BDP International, Ms. Harper gained significant experience implementing effective corporate governance practices. In addition, Ms. Harper currently serves on the board and the audit committee of Sasol Limited. | | Financial Markets Experience | As Chief Financial Officer of BDP International, AgroFresh and Tronox, Ms. Harper has significant experience in the public and private financial markets which the companies utilized for financing. | | Strategic Planning and Execution Expertise | Ms. Harper has been heavily engaged in strategic planning activities throughout her career, particularly through her role as SVP and Chief Financial Officer of Tronox and roles with Rio Tinto Group. |
Director Resignation Bylaw
| David J. Wilson Age 54 Director since 2022 | Current Position: Experience: | President and Chief Executive Officer of Columbus McKinnon Corporation. Mr. Wilson is President and Chief Executive Officer of Columbus McKinnon Corporation, one of the world's largest producers of intelligent motion equipment for lifting, positioning, and securing all kinds of large materials. Prior to joining Columbus McKinnon, Mr. Wilson led the significant transformation of Flowserve Corporation’s Pumps Division while serving as its President. Prior to Flowserve, Mr. Wilson served as the President of SPX FLOW’s Industrial Segment and before that, SPX Corporation’s Industrial Segment. | | | Public Company Directorships: | Columbus McKinnon Corporation |
Director Resignation Bylaw
| Specific Attributes and Skills for Mr. Wilson: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Business Operations Leadership | Mr. Wilson serves as President and Chief Executive Officer of Columbus McKinnon Corporation. Mr. Wilson also gained significant business operations leadership experience in his roles as President of Flowserve Corporation, President of SPX Flow’s Industrial Segment and President of SPX Corporation’s Industrial Segment. | | Relevant Industry Experience | Mr. Wilson has an extensive understanding of highly engineered equipment and technologies, including engineered flow components such as heat pumps and heat exchangers. Mr. Wilson also has experience in the heating, ventilation and air conditioning markets and the power transmission and generation markets. | | Global Business Experience | Mr. Wilson’s experience at SPX included the leadership of multiple global operating businesses along with tenure as an expatriate living in China for six years where he developed extensive global P&L management experience. | | Financial Expertise | Mr. Wilson has developed substantial financial expertise through his roles at Columbus McKinnon Corporation, Flowserve Corporation and SPX Corporation. | | Technological Experience | Through his engineering background and his roles at Flowserve Corporation and SPX Corporation, Mr. Wilson has acquired significant experience in application-based technology. | | Strategic Planning and Execution Expertise | Mr. Wilson has been heavily engaged in strategic planning activities throughout his career, particularly through his numerous roles with SPX where he led several successful corporate development initiatives. |
Director Resignation Bylaw
| Directors Continuing in Service for Terms Expiring in 2024: | | | | Dr. Suresh V. Garimella Age 59 Director since 2011 | Current Position: Experience: | President, University of Vermont. Dr. Garimella was appointed President of the University of Vermont (“UVM”) in 2019. Under his leadership, UVM has achieved record enrollment figures and grown its research funding by nearly 50 percent. Since 2018, Dr. Garimella has been a member of the National Science Board (“NSB”), which oversees the National Science Foundation and serves as an independent body of advisers to both the President of the United States and Congress on science and technology policy. He chairs the NSB’s Committee on Strategy. He also serves on the Sandia National Laboratories’ Research Advisory Board, and is a Fellow of the National Academy of Inventors. From 2014 to 2019, Dr. Garimella was Executive Vice President for Research and Partnerships at Purdue University, where he was Goodson Distinguished Professor of Mechanical Engineering and Founding Director of the Cooling Technologies Research Center. Dr. Garimella also served as a Jefferson Science Fellow at the U.S. Department of State and as a Senior Fellow for Energy and Climate Partnership of the Americas for five years. Dr. Garimella received his Bachelor of Technology from Indian Institute of Technology, Madras, India, his Master of Science from The Ohio State University, and his Ph.D. from the University of California at Berkeley, all in Mechanical Engineering. |
Director Resignation Bylaw
| Specific Attributes and Skills for Dr. Garimella: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Technological Expertise | Dr. Garimella is a renowned expert in thermal management and heat transfer technology, which is central to the success of the Company. | | Strategic Planning and Execution Expertise | In his current position, Dr. Garimella is responsible for setting the strategy for the UVM to achieve its mission and vision, all in collaboration with the University’s Board of Trustees. Dr. Garimella has promoted the UVM’s longstanding commitment to sustainability, a commitment that was underscored in July 2020 when the University’s Board of Trustees voted unanimously to divest the University’s endowment of fossil fuel investments. Previously, he was deeply engaged with the development and execution of Purdue University’s strategic plans and, in particular, the plans relating to the University’s strategic research initiatives and partnerships, both within and outside the United States. In addition, Dr. Garimella is Chair of the NSBs Committee on Strategy, which is responsible for setting short- and long-term strategy and objectives for the National Science Foundation. |
Director Resignation Bylaw
| Christopher W. Patterson Age 69 Director since 2010 | Current Position: Experience: | Retired. Mr. Patterson retired as President and Chief Executive Officer of Daimler Trucks North America LLC, a leading producer of heavy-duty and medium-duty trucks and specialized commercial vehicles in North America. Mr. Patterson served in this capacity from 2005 until his retirement in 2009. Prior to this, he held senior positions, including as Senior Vice President, Service & Parts, with Freightliner LLC (predecessor to Daimler Trucks North America), and other international, commercial truck producers. | | | Public Company Directorships: | Finning International Inc., Vancouver, B.C. (Canada) |
Director Resignation Bylaw
| Specific Attributes and Skills for Mr. Patterson: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Business Operations Leadership | Mr. Patterson gained his business operations leadership experience as President and Chief Executive Officer of Daimler Trucks North America LLC and brings extensive strategic sales and marketing experience to the Company’s Board. |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Relevant Industry Experience | Mr. Patterson has a significant understanding of commercial truck markets and the operations of global commercial vehicle Original Equipment Manufacturers (OEMs). | | Global Business Experience | Mr. Patterson’s extensive executive and leadership experience, as described above, gives him valuable insight into the complexities, challenges and issues facing global manufacturing businesses. | | Corporate Governance Expertise | Mr. Patterson has significant corporate governance experience from his role as President and Chief Executive Officer of Daimler Trucks North America LLC. In addition, Mr. Patterson serves on the board of another public company and serves on the boards of several privately-held companies. In these board roles, Mr. Patterson serves on audit and compensation committees, as well as a safety, environment, and social responsibility committee of a publicly traded company. Through these engagements, Mr. Patterson has gained a significant understanding of corporate governance matters. | | Strategic Planning and Execution Expertise | Through his many roles at Daimler Trucks North America LLC, and particularly in his position as President and Chief Executive Officer, Mr. Patterson obtained significant experience in establishing and executing on that entity’s short- and long-term strategic plans. |
Director Resignation Bylaw
| Christine Y. Yan Age 57 Director since 2014 | Current Position: Experience: | Retired. Ms. Yan retired from Stanley Black & Decker, Inc., a diversified global provider of power and hand tools and, Engineered Fastening Systems, for Automotive and other industries in November 2018. Ms. Yan held several executive roles with the company, including Vice President of Integration, Stanley Black & Decker, Inc.; President of Asia, Stanley Black & Decker, Inc.; President of Storage and Workspace Systems; integration leader of Stanley Engineered Fastening Group; President of the Americas business of Stanley Engineered Fastening; and President of Stanley Engineered Fastening’s Global Automotive business. | | | Public Company Directorships: | Onsemi; Ansell Limited; and Cabot Corporation |
Director Resignation Bylaw
| Specific Attributes and Skills for Ms. Yan: |
Director Resignation Bylaw
| Expertise | Discussion of Skills and Attributes | | Business Operations Leadership | Ms. Yan gained her business operations experience as the leader of various business units within Stanley Black & Decker, Inc. | | Relevant Industry Experience | Ms. Yan gained experience in vehicular, electronics and general industrial sectors through her roles as President of Asia of Stanley Black and Decker, President of Americas and President of Global Automotive of Stanley Engineered Fastening. | | Global Business Experience | Ms. Yan has gained a significant understanding of a variety of industrial markets through her experience as President of Asia, President of Storage and Workplace Systems, and President of Americas for Stanley Black & Decker, Inc. | | Corporate Governance Expertise | In addition to her tenure as a director of Modine, Ms. Yan serves on the board of three other public companies. | | Technological Expertise | Ms. Yan’s engineering background and past positions at Stanley Black & Decker, Inc. have provided her with significant exposure to and experience with technologically sophisticated business operations. | | Strategic Planning and Execution Expertise | Ms. Yan has acquired substantial expertise in strategic planning as the leader of numerous significant business units within Stanley Black & Decker, Inc. |
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS Employees of Modine do not receive any compensation for serving on the Board. Non-employee directors, including the Chairperson of the Board, are entitled to receive the following: an annual retainer of $90,000, payable quarterly; an additional annual retainer of $12,500 for acting as Chair of the HCC Committee, an additional annual retainer of $10,000 for acting as Chair of the Governance Committee, an additional annual retainer of $7,500 for acting as Chair of the Technology Committee, and an additional annual retainer of $15,000 for acting as Chair of the Audit Committee; reimbursement for travel, lodging, and related expenses incurred in attending Board and/or committee meetings; and travel-accident and director and officer liability insurance. The Amended 2020 Incentive Compensation Plan (the “2020 Incentive Plan”) gives discretion to the Board, or a committee of the Board, to grant stock options and stock awards to non-employee directors. Under the 2020 Incentive Plan, the maximum value of stock awards that can be granted to a non-employee director per year is $300,000. The Board or the HCC Committee, as applicable, has broad discretionary authority to set the terms of awards under the 2020 Incentive Plan. It is the current practice of the Board of Directors to evaluate compensation and make grants of restricted stock units to each non-employee director annually. For the 2023 fiscal year, non-employee directors, including the Board Chairperson, were entitled to receive stock awards of approximately $130,000. The Chairperson was also entitled to additional equity compensation with a value of approximately $100,000. Consistent with this, the Company granted each non-employee director of the Company (other than the Chairperson) 10,682 restricted stock units in July 2022. The Company granted Ms. Williams, the Chairperson, 18,898 restricted stock units at the same time. As Chairperson, Ms. Williams, among other duties, generally attends all meetings of the Board’s committees but does not receive any attendance fee for those meetings. Directors have the option of deferring either or both of their cash fees and/or equity compensation in accordance with the Company’s Non-Employee Director Compensation Policy. For cash compensation, the directors may elect to defer up to 100 percent of their annual retainer and fees into the Modine Manufacturing Company Directors Deferred Compensation Plan and receive an investment return on the deferred funds as if the funds were invested in permitted mutual funds. The directors’ deferred compensation accounts are unsecured obligations of the Company. Distributions commence following termination of service as a director. For fiscal 2023, the directors were entitled to defer their equity compensation by electing in advance to defer the settlement date of their restricted stock units until a director’s termination of service or a fixed date. Absent such an election, the restricted stock units are settled on the one-year anniversary of the grant date. Messrs. Ashleman and Patterson, and Ms. Yan all elected to defer the settlement date of their July 2022 restricted stock unit awards until a later date.
2023 Director Compensation Table
2023 Director Compensation Table The following table sets forth compensation paid to non-employee members of the Company’s Board of Directors in fiscal 2023:
2023 Director Compensation Table
| Name | Fees Paid in Cash ($) | Stock Awards ($)(1)(2) | Change in Pension Value ($)(3) | Total ($) | | Eric D. Ashleman | 88,750 | 130,000 | NA | 218,750 | | Charles P. Cooley (4) | 25,000 | 0 | NA | 25,000 | | Suresh V. Garimella | 96,250 | 130,000 | NA | 226,250 | | Katherine C. Harper | 100,000 | 130,000 | NA | 230,000 | | Larry O. Moore | 88,750 | 130,000 | NA | 218,750 | | Christopher W. Patterson | 101,250 | 130,000 | NA | 231,250 | | Marsha C. Williams | 88,750 | 229,989 | 0(5) | 318,739 | | David J. Wilson | 88,750 | 130,000 | NA | 218,750 | | William A. Wulfsohn (6) | 45,000 | 0 | NA | 45,000 | | Christine Y. Yan | 98,750 | 130,000 | NA | 228,750 |
2023 Director Compensation Table
| (1) In July 2022, all of the independent directors at that time, other than Ms. Williams, were granted 10,682 shares of restricted stock units. As explained above, the Company granted 18,898 shares of restricted stock units to Ms. Williams at the same time. |
2023 Director Compensation Table
| (2) Represents the aggregate grant date fair value of stock grants computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. The assumptions used to determine the value of the awards are discussed in Note 5 of the Notes to Consolidated Financial Statements contained in the Company’s Form 10-K for the fiscal year ended March 31, 2023. |
2023 Director Compensation Table
| (3) Represents the change in pension value between the end of fiscal 2022 and the end of fiscal 2023 under the Modine Manufacturing Company Director Emeritus Retirement Plan. The change in pension value is solely a result of the change in the interest rate used to calculate the present value of the pension benefit under the Director Emeritus Retirement Plan because no benefits otherwise continue to accrue under that plan. The Company used discount rates of 5.2 percent and 3.9 percent, respectively, to calculate the present value of the pension benefit obligation at March 31, 2023, and March 31, 2022. |
2023 Director Compensation Table
The Board of Directors adopted the Director Emeritus Retirement Plan pursuant to which any person, other than an employee of the Company, who was or became a director of Modine on or after April 1, 1992 and who retired from the Board would be paid a retirement benefit equal to the annualized sum directors were paid for their service to the Company as directors (including Board meeting attendance fees but excluding any applicable committee attendance fees) in effect at the time such director ceased his or her service as a director. The retirement benefit continues for the period of time equal in length to the duration of the director’s Board service. If a director dies before retirement or after retirement during such period, his or her spouse or other beneficiary would receive the benefit. In the event of a change in control (as defined in the Director Emeritus Retirement Plan) of Modine, each eligible director, or his or her spouse or other beneficiary entitled to receive a retirement benefit through him or her, would be entitled to receive a lump-sum payment equal to the present value of the total of all benefit payments that would otherwise be payable to such director under the Director Emeritus Retirement Plan. The retirement benefit is not payable if the director, directly or indirectly, competes with the Company or if the director is convicted of fraud or a felony and such fraud or felony is determined by disinterested members of the Board of Directors to have damaged Modine. Effective July 1, 2000, the Director Emeritus Retirement Plan was frozen with no further benefits accruing under it. Ms. Williams accrued pension benefits under the Director Emeritus Retirement Plan until it was frozen on July 1, 2000.
2023 Director Compensation Table
| (4) Mr. Cooley resigned from the Board in July 2022. |
2023 Director Compensation Table
| (5) The change in pension value for Ms. Williams was ($366). |
2023 Director Compensation Table
| (6) Mr. Wulfsohn joined the Board in September 2022. |
Executive Summary
| • | Set CEO and CFO compensation at or near the median of Modine’s Compensation Peer Group and the median of a broad survey of manufacturing companies, weighted equally, and compensation for the other NEOs at or near the median of a broad survey of manufacturing companies in order to meet its objective of offering competitive compensation, utilizing an analysis provided by Farient. |
Executive Summary
| • | Approved three distinct incentive plans under the fiscal 2023 Management Incentive Plan (“MIP”) relative to the Company as a whole and each of the business segments. |
Executive Summary
| • | Approved Adjusted EBITDA Margin and Adjusted EBITDA Growth as the performance metrics for all plans under the fiscal 2023 MIP. These performance goals drive alignment with inherent business characteristics. |
Executive Summary
| • | Approved Average Cash Flow Return on Invested Capital (“Cash Flow ROI”) and Average Annual Adjusted EBITDA Growth as the performance metrics for the Long-Term Incentive Plan (the “LTIP”) for fiscal 2023. |
Executive Summary
| • | Reviewed the composition of the Company’s Compensation Peer Group used for CEO compensation, overall executive pay program design, and the Performance Peer Group used for company performance comparisons. |
Pay for Performance
| • | A significant portion of compensation tied to performance, including short-term and long-term incentives tied to strong financial/operational performance; |
Pay for Performance
| • | Use of performance measures for incentives that balance strong growth and returns and provide a direct link to shareholder value over time; |
Pay for Performance
| • | A significant weighting on long-term incentives, particularly performance stock or cash; and |
Market Benchmarking of Executive Pay
Market Benchmarking of Executive Pay The HCC Committee has historically used a peer group, to which we refer in this proxy statement as the “Compensation Peer Group,” to target total pay and each element of compensation at the median of such Compensation Peer Group and at the median of a broad survey of manufacturing companies, weighted equally, for the CEO and CFO. For the other NEOs, the HCC Committee has used a broad survey of manufacturing companies to target total pay and each element of compensation at the median of that survey and uses such survey data because the publicly available Compensation Peer Group information does not provide adequate data for such other NEO positions. The HCC Committee believes that targeting the median is an objective way of ensuring that the Company’s executive compensation practices are competitive and reasonable relative to the broader market. Actual pay may vary from the median based on differences in individual performance, job responsibilities, tenure and experience for the individuals being compared, as well as based on actual performance of the Company. In addition, the HCC Committee, starting with fiscal 2021, has also used a larger peer group, to which we refer in this proxy statement as the “Performance Peer Group,” to evaluate long-term financial performance data and as a goal-setting reference. All companies in the Compensation Peer Group are also included in the Performance Peer Group. Use of Peer Groups Compensation Peer Group The HCC Committee reviewed the Compensation Peer Group composition used to set pay for fiscal 2023. As a group, these peers have characteristics and markets like those of the Company. These characteristics and markets are as follows:
Market Benchmarking of Executive Pay
| • | U.S.-headquartered companies traded on major U.S. exchanges involved in these industries: industrial machinery; construction machinery and heavy trucks; agriculture and farm machinery; auto parts and equipment; electrical components and equipment; and building products (HVAC-related); |
Market Benchmarking of Executive Pay
| • | Companies with revenue between $700 million and $4.5 billion, with proxy pay data size adjusted to approximate pay for a company with revenue of $2.1 billion as estimated at the time of the executive pay benchmarking used to set fiscal 2023 pay; and |
Market Benchmarking of Executive Pay
| • | Technology-intensive companies with a strong focus on OEM suppliers, distributed product expertise and global industrial customers in the vehicular and industrial/commercial (e.g., Heating, ventilation, air conditioning, and refrigeration “HVAC&R”) arena. |
Market Benchmarking of Executive Pay
Based on its review, the HCC Committee made two changes to the composition of the peer group used to set fiscal 2023 pay to better align the peer group with the Company’s reorganization of business into two segments. Harsco Corporation was removed as its business became less relevant due to acquisition and divestiture activity, and nVent Electric plc was added as it fits within the desired peer group characteristics. The following is the Company’s current Compensation Peer Group:
Market Benchmarking of Executive Pay
| Allison Transmission Holdings, Inc. | Lennox International Inc. | Standex International Corporation | | Commercial Vehicle Group, Inc. | Meritor, Inc.* | Stoneridge, Inc. | | Donaldson Company, Inc. | Mueller Industries, Inc. | Titan International, Inc. | | Enerpac Tool Group Corp. | nVent Electric plc | Welbilt, Inc.* | | EnerSys Inc. | Regal Rexnord Corporation ** | Woodward Inc. | | Hubbell Incorporated | SPX Corporation | |
Market Benchmarking of Executive Pay
* Meritor, Inc. and Welbilt, Inc. were acquired after the pay analyses for fiscal 2023 and will be removed for future peer groups. ** Regal Beloit Corporation merged with Rexnord Process and Motion Control (PMC) and continues as Regal Rexnord Corporation. The HCC Committee uses the publicly available Compensation Peer Group data to assist in the evaluation of the:
Market Benchmarking of Executive Pay
| • | Compensation levels of the Company’s CEO and CFO; and |
Market Benchmarking of Executive Pay
| • | Company’s compensation practices. |
Market Benchmarking of Executive Pay
Performance Peer Group The HCC Committee also reviewed the composition of the Performance Peer Group that it uses to evaluate and set performance goals for fiscal 2023. This group consists of approximately 75 companies, generally in the vehicle and capital goods manufacturing industries and generally with revenues between $750 million and $5.0 billion, which includes all of the companies in the Compensation Peer Group. Minor adjustments were made to this group, generally to remove companies that were acquired or involved in bankruptcy proceedings, and to add new companies that were not previously on the list. The Performance Peer Group is compiled through a collaboration between the Company’s Finance department and Farient from a group of companies that are used for other Company performance benchmarking purposes, with the final composition of the Performance Peer Group subject to approval of the HCC Committee. For both fiscal 2022 and 2023, the performance goal data gathered from the Performance Peer Group has been used as a reference by the HCC for setting MIP and LTIP performance goals. Use of Compensation Survey Data The HCC Committee used the 2021 Mercer U.S. Executive Benchmark Database (the “Database”), which compiles data of manufacturing companies with revenues between approximately $1.0 billion and $2.5 billion to evaluate competitive pay levels of certain corporate officers and other key employees in addition to those of the CEO and CFO, and with revenues approximating each business unit to evaluate competitive pay levels of certain officers and other key employees who are heads of business units. Survey pay data was size adjusted to approximate pay for an approximately $2.1 billion revenue company at the time of benchmarking for corporate officers and key corporate employees, and to approximate pay for business units with revenue similar to those of Modine’s business units for officers and key employees who are heads of business units. Mercer did not identify, and the HCC Committee was not aware of, the identities of the companies whose information is reflected in the Database. The HCC Committee recognizes that the Company attracts employees from a broad range of companies and its comparison data reflects that fact. The HCC Committee does not use the survey data in a formulaic manner. If the compensation of a particular NEO is substantially greater or less than the median in the survey for the same position, the HCC Committee takes the survey information into account when setting base salary, short-term and long-term incentive target values, but also exercises its discretion, taking into consideration the individual’s performance, tenure, experience and changes in job responsibilities. The overall resulting pay positioning for the corporate officers and other key employees as a group is slightly below the median of the market data as defined above.
Description of Executive Compensation Program
| • | All elements of executive compensation, including base salary, targeted annual incentives (cash-based), and targeted long-term incentives (both equity- and cash-based), are set to levels that the HCC Committee believes ensure that executives are fairly, but not excessively, compensated; |
Description of Executive Compensation Program
| • | Compensation must be linked to the interests of shareholders and the most effective means of ensuring this linkage is by granting equity incentives such as stock awards, stock options and performance stock or cash awards; |
Elements of Executive Compensation for Fiscal 2023
| Pay Element | Competitive Positioning | Program Objectives | Time Horizon | Performance Measures for Fiscal 2023 | | Base Salary | Compares to 50th percentile, but use of judgment to determine actual pay | Attract and retain key personnel; reward for individual performance | Annual | Individual performance Length of time in the position and overall experience Consistency of performance Changes in job responsibility | | Management Incentive Plan | | Motivate and reward for achieving objectives | Annual | Adjusted EBITDA Margin % (50%) Adjusted EBITDA Growth (50%) | | Long-Term Incentive Plan (% of total Long-Term Incentive Plan Value) | Compares to 50th percentile, but use of judgment to determine actual pay | | | | | Performance Cash Awards (45%) | | Align executive’s returns with those of shareholders Encourage long-term retention Reward for superior long-term performance | 3-year performance period with payout upon results certification | Three-year average Cash Flow ROI (50%) Three-year Average Annual Adjusted EBITDA Growth (50%) | | Retention Restricted Stock Unit Awards (35%) | | Reward employees for their continued commitment to the Company | 3-year ratable vesting starting on 1st anniversary of grant | Retention | | Stock Options (20%) | | Focus executives on driving long-term performance | 3-year ratable vesting starting on 1st anniversary of grant (10-year term) | Stock price appreciation |
Short-Term, Performance-Based Cash Award
Short-Term, Performance-Based Cash Award The MIP is Modine’s broadly applicable short-term, performance cash award plan designed to motivate and reward the Company’s leaders. All NEOs participate in the MIP. The HCC Committee’s objectives for the MIP are to encourage continuous (short-term) operational improvements with metrics that also drive total shareholder return. The HCC Committee believes the MIP metrics should be challenging, but achievable, and well-defined so they are understood by the MIP participants and, accordingly, actively drive results. To better align with the Company’s reorganization into two business segments, the Company approved three distinct plans under the MIP for fiscal 2023: (1) a Corporate plan based on the metrics of the Company as a whole, (2) a plan specific to the metrics of the Climate Solutions business segment, and (3) a plan specific to the metrics of the Performance Technologies business segment. All the NEOs participate in the general corporate plan regarding the MIP for fiscal 2023, and Mr. McGinnis also participates in the plan specific to the Climate Solutions business segment. Within each of the three plans, the HCC Committee approved the use of two independent and equally-weighted performance goals. As in fiscal 2022, the MIP continued to use the Adjusted EBITDA Growth metric for the fiscal 2023 MIP but replaced the Free Cash Flow Margin (“FCF%”) metric used in fiscal 2022 with Adjusted EBITDA Margin. Adjusted EBITDA Growth is the simple arithmetic percentage change in Adjusted EBITDA for fiscal 2023 less Adjusted EBITDA for fiscal 2022, with that amount divided by Adjusted EBITDA for fiscal 2022. Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by “Net Sales” as reported externally for the Company’s financial statements. Adjusted EBITDA represents “Operating Income” plus “Depreciation and Amortization Expenses”, both as reported for the Company’s audited financial statements, plus or minus Permitted Adjustments. Permitted Adjustments include restructuring-related expenses, acquisition- and divestiture-related costs and adjustments and certain other gains and charges. The impact of the adoption of new U.S. GAAP accounting standards and significant changes in the Company’s accounting methods is another Permitted Adjustment. The Committee’s charter permits the Committee to agree to disregard any Permitted Adjustments if, in the Committee’s assessment, disregarding any of them would result in an award that is inconsistent with the spirit and intent of the plan, and at variance with the unadjusted results from the perspective of the shareholders. Notwithstanding the foregoing, the HCC Committee has negative discretion to reduce the amounts otherwise payable under the MIP but may not increase such amount. The HCC Committee chose to replace the FCF% metric with Adjusted EBITDA Margin because the focus on margin growth in addition to earnings growth fully aligns the MIP with the Company’s key priorities. The HCC Committee chose to continue to use the Adjusted EBITDA Growth metric to incentivize increased earnings and shareholder return. In addition, the HCC Committee believes that these two measures are closely correlated with Total Shareholder Return, aligning the Company’s MIP measures with shareholder interests. The HCC Committee considered the Company’s business plan, as well as seven years of historical performance results for the Performance Peer Group companies when setting the Adjusted EBITDA Margin and Adjusted EBITDA Growth goals. As a result, for the fiscal 2023 MIP, the HCC Committee approved the following specific levels of goals with respect to each MIP plan for fiscal 2023 in which an NEO participates: The specific levels for the MIP metrics for fiscal 2023 with respect to the Corporate plan were as follows:
Short-Term, Performance-Based Cash Award
| | Weight | Threshold | Target | Maximum | Actual | | Adjusted EBITDA Margin | 50% | 8.0% | 8.75% | ≥10.0% | 9.2% | | Adjusted EBITDA Growth | 50% | 5.0% | 10.0% | 23.0% | 33.5% | | Payout as a % of Target | N/A | 10% | 100% | 200% | 169% |
Short-Term, Performance-Based Cash Award
The specific levels for the MIP metrics for fiscal 2023 with respect to the Climate Solutions business segment plan were as follows:
Short-Term, Performance-Based Cash Award
| | Weight | Threshold | Target | Maximum | Actual | | Adjusted EBITDA Margin | 50% | 11.5% | 12.5% | ≥13.5% | 14.3% | | Adjusted EBITDA Growth | 50% | 5.0% | 10.0% | 17.5% | 45.9% | | Payout as a % of Target | N/A | 10% | 100% | 200% | 200% |
Short-Term, Performance-Based Cash Award
Assuming Threshold achievement for each metric under each plan, each of the NEOs would receive 10 percent of the Target amount. Assuming Maximum level achievement for each metric, each of the NEOs would receive 200 percent of the Target amount. The Company pays amounts between the Threshold and Target and/or between Target and Maximum levels on a linear basis for achievement above Threshold and below Maximum. Assuming achievement of the Target level for each metric, the NEOs would receive the following percentages of base salary:
Short-Term, Performance-Based Cash Award
| MIP Target Payout for NEOs (Percentage of Base Salary) | | | Mr. Brinker | 100% | | Mr. Lucareli | 75% | | Ms. Stein | 60% | | Mr. Agen | 60% | | Mr. McGinnis* | 65% |
Short-Term, Performance-Based Cash Award
*For Mr. McGinnis, 50% of the target payout would be attributable to the Corporate plan with the remaining 50% of the target payout attributable to the Climate Solutions segment plan. As illustrated above, for purposes of the MIP metrics for the Corporate plan, the Company’s Adjusted EBITDA Margin for fiscal 2023 was 9.2 percent (above target), and Adjusted EBITDA Growth was 33.5 percent (maximum). As a result, the Committee approved of a payment for the Corporate MIP participants at 169 percent of Target. For purposes of the MIP metrics for the Climate Solutions plan, the Company’s Adjusted EBITDA Margin for fiscal 2023 was 14.3 percent (maximum), and Adjusted EBITDA Growth was 45.9 percent (maximum). As a result, the Committee approved a payment for the Climate Solutions MIP participants at 200 percent of Target.
Long-Term Incentive Compensation
Long-Term Incentive Compensation The long-term incentive element of the Company’s executive compensation program is intended to attract, retain and motivate key employees who directly impact the performance of the Company over a timeframe greater than a year. Long-term compensation may be equity or cash-based, or a combination of each, and in any event, is structured so that the interests of the Company’s executive officers, and other key employees are directly aligned with the interests of shareholders. The long-term portion of the compensation package provides an incentive that rewards superior long-term performance and provides financial consequences for underperformance. Performance Cash under the Long-Term Incentive Plan for Performance Period Ending in 2023 The performance period for performance cash under the long-term incentive compensation plan initiated in October 2020 was completed as of March 31, 2023. The amount of the potential award varied based upon the achievement of Threshold, Target or Maximum performance levels. The Company used two measures to determine payouts – three-year average Cash Flow ROI and three-year Average Annual Revenue Growth (“Revenue Growth”). For purposes of the performance cash awards, Cash Flow ROI means adjusted free cash flow, which is net cash provided by operating activities less expenditures for property, plant and equipment, plus cash interest, which is cash paid for interest expense related to outstanding debt, with the total amount divided by average capital employed. The calculation of Cash Flow ROI is based on a three-year average Cash Flow ROI for fiscal 2021 through fiscal 2023 with average capital employed determined over five points (i.e., the last day of each fiscal quarter and prior fiscal year-end) and is subject to Permitted Adjustments similar to those described above with respect to the MIP. Revenue Growth is the simple three-year average of the Company’s annual change in revenue over the performance period, as reported for the Company’s audited financial statements. Each metric for performance cash awards is calculated independently of the other metric, and each was weighted at 50 percent of the total award. The Threshold performance goal was the minimum performance goal that must have been achieved by the Company for the NEOs to earn a payout under the awards. The performance goals for the LTIP metrics for performance cash awards for the period ending in fiscal 2023 were set in May 2020 and considered the long-term performance of the Compensation Peer Group, which was the comparator group at that time. The performance goals were as follows:
Long-Term Incentive Compensation
| | Weight | Threshold | Target | Maximum | Actual | | Cash Flow ROI | 50% | 7% | 10.5% | ≥14% | 10.2% | | Average Annual Revenue Growth | 50% | 3% | 8.0% | ≥13% | 7.0% | | Payout as a % of Target | N/A | 10% | 100% | 200% | 86% |
Long-Term Incentive Compensation
For the performance period ended in fiscal 2023, the Company’s three-year average Cash Flow ROI was 10.2 percent, which resulted in a payout equal to 46 percent of Target for the Cash Flow ROI metric. The Company’s three-year average Revenue Growth was 7.0 percent, which resulted in a payout equal to 40 percent of Target. Overall, both metrics were weighted equally, and the payout under the LTIP for the performance cash was 86 percent of the Target for the total award. Grants under the Long-Term Incentive Plan for Plan Commencing in Fiscal 2023 and Ending in Fiscal 2025 As it did in fiscal 2022, in fiscal 2023, the HCC Committee approved long-term performance grants as a percentage of base salary and included the use of performance cash awards as part of the Company’s long-term incentive compensation plan. For fiscal 2023, the Company’s long-term incentive plan included: Performance Cash Awards (45 percent of long-term incentive dollars at Target). Performance cash was adopted for three long-term incentive plan cycles as a result of the Committee’s, and the overall Board of Director’s, concern that the preferred Stock Option and Retention Restricted Stock Unit Award grant would have resulted in excessive dilution from the shareholder’s perspective, owing to a historically depressed share price in the depths of the pandemic. Performance cash is earned by achieving corporate financial goals over a three-year period (ending March 31, 2025) and will be paid after the end of that three-year period. Payout levels vary based upon the achievement of Threshold, Target or Maximum goals in each of the Cash Flow ROI and Average Annual Adjusted EBITDA Growth metrics, as described below. Once earned, the performance cash awards are not subject to any restriction. Determinations of the achievement of performance goals for the performance cash awards are not made until the Company’s audited financial statements covering the last year in the performance period are completed and the results for the fiscal year are announced publicly. Stock Options (20 percent of long-term incentive dollars at Target). The HCC Committee believes that stock options focus executives on driving long-term performance. Stock options have an exercise price equal to the fair market value of the common stock on the effective date of the grant, so recipients recognize a value only if and to the extent that the value of the common stock increases. The stock options granted in fiscal 2023 vest in three equal annual installments commencing on the first anniversary of the effective date of the grant. The vesting schedule for stock options was changed from four years to three years beginning with fiscal 2023’s grant to align the vesting schedule with the most prevalent vesting schedule in the Company’s Compensation Peer group and align all equity vesting with the 3-year performance period of the LTIP. The stock options expire ten years from the date of grant. Retention Restricted Stock Unit Awards (35 percent of long-term incentive dollars at Target). Retention restricted stock unit awards reward employees for their continued commitment to the Company. The Company grants the employees restricted stock units which vest in three equal annual installments commencing on the first anniversary of the effective date of the grant. The vesting schedule for restricted stock units was changed from four years to three years beginning with fiscal 2023’s grant to align the vesting schedule with the most prevalent vesting schedule in the Company’s Compensation Peer group and align all equity vesting with the 3-year performance period of the LTIP. As in fiscal 2022, the HCC Committee continued to utilize the Cash Flow ROI and Average Annual Adjusted EBITDA Growth metrics for the award of performance cash awards. These two metrics drive alignment of management and shareholders’ interests both as a measure of capital efficiency and free cash flow generation and in achieving the Company’s earnings growth targets. Each metric for performance cash awards is weighted at 50 percent and is calculated independently of the other metric. The Threshold performance goal is the minimum performance goal that must be achieved by the Company for the participants to earn cash pursuant to a performance cash award. For purposes of the LTIP, Cash Flow ROI has the same meaning set forth in the section above titled Performance Cash under the Long-Term Incentive Plan for Performance Period Ending in 2023, provided the calculation of such metric will be based on a three-year period beginning with fiscal 2023 and ending with fiscal 2025. Average Annual Adjusted EBITDA Growth means the simple three-year average of Adjusted EBITDA Growth during the fiscal 2023 to fiscal 2025 performance period. Adjusted EBITDA Growth is calculated as set forth in the section above titled Short-Term, Performance-Based Cash Award. For the fiscal 2023 through fiscal 2025 LTIP, the HCC Committee considered the Company’s business plan as well as seven years of historical performance results for the Performance Peer Group when setting the Cash Flow ROI and Average Annual Adjusted EBITDA Growth goals. As a result, the HCC Committee made no adjustments to the Threshold, Target or Maximum levels, or the payout percentages, compared to the fiscal 2022 through fiscal 2024 LTIP, for Cash Flow ROI or Average Annual Adjusted EBITDA Growth. The HCC Committee set the payout percentages for Cash Flow ROI and Average Annual Adjusted EBITDA Growth to the same level as the payout percentages for fiscal 2022 with respect to both metrics. The goals at the Threshold, Target, and Maximum levels are intended to incentivize participants to achieve the Threshold level and strive for greater performance beyond the Threshold level. The specific three-year performance goals for the LTIP metrics for performance cash awards granted in fiscal 2023 are as follows:
Long-Term Incentive Compensation
| | Threshold | Target | Maximum | | Cash Flow ROI | 7% | 10.5% | ≥14% | | Average Annual Adjusted EBITDA Growth | 2% | 7% | ≥12% |
Long-Term Incentive Compensation
The specific levels of performance cash award metrics are set forth below:
Long-Term Incentive Compensation
| Performance | Cash Flow ROI (50%) | Average Annual Adjusted EBITDA Growth (50%) | | Threshold | 10% of Target Awards | 10% of Target Awards | | Target | 100% of Target Awards | 100% of Target Awards | | Maximum | 200% of Target Awards | 200% of Target Awards |
Long-Term Incentive Compensation
If actual Cash Flow ROI or Average Annual Adjusted EBITDA Growth for the performance period is between Threshold and Target and/or between Target and Maximum, the amount of performance cash earned will be determined on a linear basis. If either the Company’s actual Cash Flow ROI or Average Annual Adjusted EBITDA Growth does not meet the Threshold for the performance period, no performance cash will be earned under that performance cash award metric. If either the Company’s actual Cash Flow ROI or Average Annual Adjusted EBITDA Growth exceeds the Maximum for the performance period, only the Maximum percentage of the Target amount of performance cash for that metric will be earned. Notwithstanding the foregoing, the HCC Committee retains the discretion to decrease the amount of performance cash earned under the LTIP. The Company uses Cash Flow ROI (a measure indicative of the cash flow return and efficiency of invested capital) to evaluate its financial performance, so the HCC Committee used the Cash Flow ROI metric to incentivize management to continue to improve the Company’s financial performance. Similarly, because Average Annual Adjusted EBITDA Growth is a key measure of growth of the earnings of the Company, the HCC Committee used the Average Annual Adjusted EBITDA Growth metric to incentivize management to create additional shareholder value through increased earnings of the Company. For both metrics, the HCC Committee set the Threshold level at what it believed to be an acceptable return and set the Maximum level at what it believed to be exceptional performance with each corresponding to an appropriate competitive payout level. Achievement and payout for each measure is calculated and paid out independently of the other measure. As mentioned above, the HCC Committee and, for Mr. Brinker, the Board, approves the grants for each NEO under the long-term incentive plan as a percentage of base salary. Assuming achievement of the Target level for each metric under the performance cash awards, the NEOs would receive the following percentages of base salary in total grants under the long-term incentive plan approved in fiscal 2023:
Long-Term Incentive Compensation
| LTIP Target Payout for NEOs (Percentage of Base Salary) | | | Mr. Brinker | 300% | | Mr. Lucareli | 175% | | Ms. Stein | 110% | | Mr. Agen | 100% | | Mr. McGinnis | 110% |
Long-Term Incentive Compensation
The percentages for Mr. Brinker, Mr. Agen, and Mr. McGinnis increased from fiscal year 2022 to better align this compensation element with external benchmark data, including the Compensation Peer Group data and the Database. The percentages for Mr. Lucareli and Ms. Stein were unchanged from those for fiscal 2022. The table below sets forth the number of shares subject to stock options and the number of restricted stock units issued to each NEO in fiscal 2023 as well as the value of performance cash that would be earned upon achievement of each of the long-term incentive plan metrics on March 31, 2025:
Long-Term Incentive Compensation
| | | | Performance Cash Awards | | | | | Shares Subject to Stock Options (#) | Shares of Restricted Stock Units (#) | Threshold | Target | Maximum | | Mr. Brinker | 78,037 | 76,954 | $121,500 | $1,215,000 | $2,430,000 | | Mr. Lucareli | 29,210 | 28,804 | $45,478 | $454,781 | $909,562 | | Ms. Stein | 13,083 | 12,901 | $20,369 | $203,693 | $407,386 | | Mr. Agen | 11,113 | 10,959 | $17,303 | $173,025 | $346,050 | | Mr. McGinnis | 14,243 | 14,046 | $22,176 | $221,760 | $443,520 |
Executive Compensation in Fiscal 2024
Executive Compensation in Fiscal 2024 As it did for fiscal 2023, the HCC Committee approved a fiscal 2024 MIP program including three distinct incentive plans – one Corporate plan for the corporate leadership team, and two segment-specific plans, one each for our Climate Solutions and Performance Technologies businesses. Executive leadership at the segment level will participate in both the Corporate Plan and the appropriate segment-specific plan (with participation in each plan weighted equally 50/50), while all other participants will be assigned to the appropriate Business Segment or Corporate plan. For fiscal 2024, the HCC Committee determined there would be no change to the performance measures for the fiscal 2024 MIP for all three plans. For fiscal 2024, the HCC Committee approved the Company’s changes to the mix of LTIP vehicles. The new LTIP mix going forward for the NEOs and other Officers at target will be 80% performance stock awards and 20% retention restricted stock unit awards, with the intent of reinforcing the commitment to a performance-driven culture at Modine and increasing the direct link of pay to changes in shareholder value. This compares to fiscal years 2022 and 2023 LTIP mix at target of 45% performance cash awards, 35% retention restricted stock awards and 20% stock option awards, and to the fiscal year 2021 LTIP mix at target of 40% performance cash awards, 40% retention restricted stock awards and 20% stock option awards. The prior use of performance cash awards was temporary with the intent of mitigating the impact on share dilution during a period of low stock prices. Now with a higher stock price, the Company has returned to the use of performance stock awards instead of performance cash awards. The vesting schedule for retention restricted stock unit awards will remain the same with the awards vesting over a 3-year period. Performance stock awards will have a three-year performance period, which is the same duration as the prior year performance cash awards. Further, the HCC Committee determined there would be no change to the fiscal 2024-2026 performance award measures which will continue to be three-year average Cash Flow ROI and three-year Average Adjusted EBITDA Growth, equally weighted.
Employment and Post-Employment Benefits
Employment and Post-Employment Benefits General Benefit The NEOs receive the same basic employee benefits that are offered by the Company to all salaried employees within the region where the individual resides. These benefits include medical and dental coverage, disability insurance and life insurance. The cost of these benefits is partially borne by the employee, including each NEO. The Company does not generally provide perquisites to any of the NEOs. Retirement Benefits for U.S. Employees The Company offers retirement benefits to its employees through tax-qualified plans, including the Modine Manufacturing Company 401(k) Retirement Plan (formerly known as the Modine 401(k) Plan for Salaried Employees), which is an employee and employer funded “Safe Harbor” plan. In recent years, the Company has contributed to participant 401(k) accounts (including NEO participants) a Safe Harbor Matching Contribution equal to 100 percent of the first 3 percent of compensation that an employee contributes to the Plan as an Elective Deferral for the Plan Year, plus 50 percent of the next 3 percent of compensation that an employee contributes as an Elective Deferral for the Plan Year. For eligible NEOs and eligible senior managers whose eligible compensation exceeds the IRS annual compensation limit, the Company has applied this matching formula to the applicable over-the-limit compensation and this amount is contributed to the Modine Deferred Compensation Plan. The Company did not make any additional contributions to the Modine Manufacturing Company 401(k) Retirement Plan for fiscal 2023. While the Modine Manufacturing Company 401(k) Retirement Plan “Safe Harbor” contribution is available to the Company’s eligible employees in the U.S., each individual participant’s 401(k) plan balance may vary due to a combination of differing annual amounts contributed by the employee, the investment choices of the participant (the same investment choices are available to all participants in the plan) and the number of years the person has participated in the 401(k) plan. Additionally, each eligible NEO’s and senior manager’s Deferred Compensation Plan balance may vary due to a combination of differing annual amounts contributed by the employee, the employee’s annual eligible compensation, the investment choices of the participant (the same investment choices are available to all eligible NEOs and senior managers in the plan) and the number of years the employee has participated in the Deferred Compensation Plan. In fiscal 2023, the Company made matching contributions to an NEO’s account under the 401(k) Retirement Plan equal to the sum of 100 percent of the first 3 percent of compensation an NEO elected to contribute to the 401(k) Retirement Plan and 50 percent of the next 3 percent of compensation an NEO elected to contribute to the 401(k) Retirement Plan. In fiscal 2023, the Company made contributions to the NEOs’ accounts under the Deferred Compensation Plan equal to the sum of 100 percent of the NEOs’ first 3 percent of eligible compensation in excess of the compensation limits applicable to 401(k) Plans and the NEOs (“over-the-limit compensation”) and 50 percent of the NEO’s next 3 percent of eligible over-the-limit compensation. The Company’s defined benefit pension plan, which is frozen, is more fully described in the Pension Benefits Table for Fiscal 2023 below. Mr. Lucareli and Mr. Agen participate in the Company’s defined benefit pension plan. Mr. Brinker, Ms. Stein, and Mr. McGinnis joined the Company after the defined benefit pension plan was closed to new participants. In addition to the employee benefits applicable to U.S. employees in general, certain highly compensated employees of the Company, including the NEOs, may participate in the Deferred Compensation Plan. The Deferred Compensation Plan is a nonqualified plan that allows a highly compensated employee to defer up to 50 percent of their base salary and up to 50 percent of their bonus. Compensation deferred pursuant to the Deferred Compensation Plan is an asset of the Company. The sums deferred do not earn a preferential rate of return and the investment alternatives are generally the same as the 401(k) Retirement Plan. Payments out of the Deferred Compensation Plan are not made until termination of service or retirement. As part of the Company’s objective of restoring in this plan amounts that exceeded the allowable Company match and Company contributions to the 401(k) Retirement Plan because of statutory limits, the Company contributes an amount equal to the amount of the employer match and employer contribution that was not allowed to be contributed to the 401(k) Retirement Plan for such individuals due to statutory limits. Severance Plan The Company has a severance plan that was last updated by the HCC Committee in fiscal 2012 (the “Severance Plan”) for members of the officer-level Executives as recommended to the Committee by the Company’s CEO, to ensure consistent treatment of individuals in such positions in the event of an involuntary termination of employment without cause. The Severance Plan provides that such individuals would be paid their annual base salary at the time of termination in installment payments over the course of the year following termination and would be eligible to elect Company-paid COBRA continuation coverage for one year following termination. In order to receive these benefits, participants are required to release the Company from any and all liability. Additionally, the Severance Plan provides certain benefits in the event of an NEO’s termination of employment in connection with a change in control of the Company. See Potential Post-Employment Payments below for additional information about benefits under the Severance Plan. All NEOs other than Mr. Brinker (who has a separate employment and change in control agreement) are covered under the Severance Plan; provided, however, Mr. Lucareli is not entitled to certain benefits in the event of his termination of employment in connection with a change in control of the Company under the Severance Plan as he has entered into a separate change in control agreement with the Company (see Potential Post-Employment Payments below for more information).
Employment Agreements
Employment Agreements The Company has an employment agreement with Mr. Brinker. See Potential Post-Employment Payments below for additional information about benefits in the event of a termination of employment under Mr. Brinker’s employment agreement. Effective as of August 31, 2020, the Company entered into certain CEO Transition Retention Agreement Letters with Messrs. Lucareli and Agen and Ms. Stein to provide a retention incentive for such NEOs through the transition of the CEO role from Thomas A. Burke, the former President and Chief Executive Officer of the Company, to Mr. Brinker. The CEO Transition Retention Agreement Letters provided for a cash award incentive and a grant of retention restricted stock units to each of the foregoing NEOs if they remain employed with the Company until August 4, 2022 (unless terminated earlier by the Company without Good Cause). The cash award incentive under the CEO Transition Retention Agreement Letters for each of the applicable NEOs was equal to fifty percent (50%) of the NEO’s base salary as of August 4, 2022 and the grant of retention restricted stock units (“Transition Retention Grants”) was equal, based on grant date fair value, to fifty percent (50%) of each applicable NEO’s target value of his or her prevailing annual LTIP award as of August 4, 2022, based on the closing stock price of the Company on August 3, 2022. Messrs. Lucareli and Agen and Ms. Stein received their cash award incentives and their Transition Retention Grants in fiscal 2023, the value and grant date fair value of which has been included in the Summary Compensation Table. The Transition Retention Grants will not vest until the second anniversary after the date of grant. Ms. Stein’s Transition Retention Grant was forfeited in connection with her voluntary termination of employment. The Company has entered into change in control agreements with Mr. Brinker and Mr. Lucareli and certain other key employees. The purpose of these agreements is to ensure continuity and, in the case of a change in control, the continued dedication of key employees during any period of uncertainty due to a proposed or pending change in control of the Company. See Potential Post-Employment Payments below for additional information about benefits in the event of a change in control under the employment agreements and the change in control agreements.
Tax Implications for NEOs
Tax Implications for NEOs The HCC Committee generally seeks to structure compensation amounts and plans so that they do not result in penalties for the NEOs under the Internal Revenue Code of 1986, as amended (the “Code”). For example, Section 409A of the Code imposes substantial penalties and results in the loss of any tax deferral for nonqualified deferred compensation that does not meet the requirements of that section. The HCC Committee has generally structured the elements of the Company’s compensation program so that they are either not characterized as nonqualified deferred compensation under Section 409A or meet the distribution, timing and other requirements of Section 409A. Without these steps, certain elements of compensation could result in substantial tax liability for the NEOs. Section 280G and related provisions of the Code impose substantial excise taxes on so-called “excess parachute payments” payable to certain executives upon a change in control and results in the loss of the compensation deductions for such payments by the executive’s employer. When the Company entered into the change in control agreement with Mr. Lucareli, which was entered into prior to 2009, the HCC Committee structured the change in control payment to include a gross up for excise taxes imposed under Section 280G in order to preserve the after-tax value of those payments to him. The portion of the Severance Plan applicable in a change in control, which is applicable to those joining the Company’s senior management on or after the date of adoption of the Severance Plan, does not provide excise tax gross ups in the event of a change in control.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table sets forth compensation awarded to, earned by, or paid to the Company’s NEOs, which include (i) the Principal Executive Officer, (ii) the Principal Financial Officer, and (iii) the three most highly compensated executive officers, serving as officers as of the end of fiscal 2023.
2023 Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value ($)(5) | All Other Compensation ($)(6) | Total ($) | | Neil D. Brinker | 2023 | 882,750 | - | 944,995 | 540,016 | 2,414,355 | NA | 42,016 | 4,824,132 | | President and CEO | | | | | | | | | | | | 2022 | 825,846 | - | 730,618 | 417,282 | - | NA | 39,694 | 2,013,440 | | | 2021 | 258,462 | - | 2,090,225 | 132,033 | 266,667 | NA | 183,984 | 2,931,370 | | Michael B. Lucareli | 2023 | 563,567 | 288,750(7) | 1,147,780 | 202,133 | 1,162,545 | 0 | 27,240 | 3,392,015 | | EVP, CFO | | | | | | | | | | | | 2022 | 510,615 | - | 321,554 | 183,650 | - | 0 | 25,099 | 1,040,918 | | | 2021 | 514,204 | - | 520,001 | 260,212 | 507,726 | 14,691 | 11,653 | 1,828,486 | | Sylvia A. Stein | 2023 | 403,406 | 205,750(7) | 590,514 | 90,534 | 534,401 | NA | 17,505 | 1,842,110 | | VP, GC, Corp. Sec. and | | | | | | | | | | | Chief Compliance Officer | 2022 | 376,292 | - | 146,679 | 83,778 | - | NA | 18,695 | 625,443 | | | 2021 | 344,850 | - | 145,203 | 72,658 | 248,298 | NA | 9,231 | 820,240 | | Brian J. Agen | 2023 | 376,937 | 192,250(7) | 519,076 | 76,902 | 475,951 | 0 | 18,037 | 1,659,153 | | VP, HR | | | | | | | | | | | | 2022 | 351,554 | - | 112,148 | 64,049 | - | 0 | 17,515 | 545,266 | | Eric S. McGinnis | 2023 | 439,242 | 0 | 396,483 | 98,562 | 703,730 | NA | 21,018 | 1,659,035 | | President, Climate Solutions | | | | | | | | | | | | 2022 | 261,769 | 25,000 | 889,874 | 259,379 | - | NA | 9,893 | 1,445,915 |
2023 Summary Compensation Table
| (1) The salary amounts include amounts deferred at the NEO’s option through contributions to the Modine 401(k) Retirement Plan and the Modine Deferred Compensation Plan. |
2023 Summary Compensation Table
| (2) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for retention restricted stock unit awards (inclusive of any Mid-Year Retention Grants and Transition Retention Grants). The assumptions used to determine the fair value of the awards are discussed in Note 5 of the Notes to Consolidated Financial Statements contained in the Company’s Form 10-K for the fiscal year ended March 31, 2023. |
2023 Summary Compensation Table
| (3) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for grants of stock options. The assumptions used to determine the value of the options are discussed in Note 5 of the Notes to Consolidated Financial Statements contained in the Company’s Form 10-K for the fiscal year ended March 31, 2023. The actual value, if any, that an optionee will realize upon the exercise of an option will depend on the excess of the market value of the Company’s common stock over the exercise price on the date the option is exercised, which cannot be determined until the option is exercised. |
2023 Summary Compensation Table
| (4) The amounts in the “Non-Equity Incentive Plan Compensation” column include payments under the MIP and the performance cash awards for the fiscal 2021 - 2023 performance cycle. The amount reported in the “Non-Equity Incentive Plan Compensation” column includes the following fiscal 2023 MIP awards: $1,493,538 for Mr. Brinker, $715,345 for Mr. Lucareli, $409,529 for Ms. Stein, $382,658 for Mr. Agen, and $527,370 for Mr. McGinnis. The amount reported in the “Non-Equity Incentive Plan Compensation” column also includes the following payments on LTIP performance cash awards for fiscal 2021 - 2023: $227,040 for Mr. Brinker (was pro-rated), $447,200 for Mr. Lucareli, $124,872 for Ms. Stein, and $93,293 for Mr. Agen. Finally, Mr. Brinker’s and Mr. McGinnis’s amounts also include payments on their Make Whole performance cash awards of $693,777 and $176,360, respectively. |
2023 Summary Compensation Table
| (5) Represents the change in pension value between the end of fiscal 2022 and the end of fiscal 2023 for the NEOs who participate in the Modine Manufacturing Company Pension Plan. For purposes of calculating the change in benefit values from year to year, the discount rates used to determine the present value of the benefit were 5.2 percent as of March 31, 2023, and 3.9 percent as of March 31, 2022. The change in pension value of the Salaried Pension Plan for Mr. Lucareli and Mr. Agen was ($39,741), and ($27,804), respectively. |
2023 Summary Compensation Table
| (6) The amounts set forth in this column for fiscal 2023 include: |
2023 Summary Compensation Table
| • | Company matching contributions to participant accounts in the 401(k) Retirement Plan (“401(k) Company Match”) equal to 100 percent of the amount contributed to the plan by the employee for up to 3 percent of annual income, and 50 percent of the amount contributed to the plan by the employee for up to an additional 3 percent of annual income, subject to the maximum contribution limit to the plan ($20,500 in calendar year 2022 and $22,500 in calendar year 2023); |
2023 Summary Compensation Table
| • | Company contributions to the Deferred Compensation Plan equal to the amount of the Company match on salary that could not be contributed to the 401(k) Retirement Plan, because of statutory limits (“Company Excess Match/Contribution Overflow to Deferred Compensation Plan”); |
2023 Summary Compensation Table
| • | Company payment of long-term disability insurance premiums (“Long-Term Disability Insurance Premiums”); |
2023 Summary Compensation Table
| • | Company payment of life insurance premiums (“Life Insurance Premiums”); |
2023 Summary Compensation Table
| • | Severance payments; and |
2023 Summary Compensation Table
| • | Perquisites and other personal benefits. |
2023 Summary Compensation Table
| Name | 401(k) Company Match ($) | Company Excess Match / Contribution Overflow to Deferred Compensation Plan ($) | Long-Term Disability & Life Insurance Premiums ($) | Severance ($) | Perquisites ($) | Total ($) | | Neil D. Brinker | 14,175 | 25,324 | 2,517 | - | - | 42,016 | | Michael B. Lucareli | 14,543 | 11,090 | 1,607 | - | - | 27,240 | | Sylvia A. Stein | 12,243 | 4,112 | 1,150 | - | - | 17,505 | | Brian J. Agen | 14,021 | 2,941 | 1,075 | | - | 18,037 | | Eric S. McGinnis | 14,068 | 5,698 | 1,252 | - | - | 21,018 |
2023 Summary Compensation Table
| (7) Cash portion of award incentive earned under the previously-referenced CEO Transition Retention Agreement Letters. |
Grants of Plan-Based Awards for Fiscal 2023
Grants of Plan-Based Awards for Fiscal 2023 In fiscal 2023, the Company granted stock options, retention restricted stock units, performance cash and short-term cash incentives as Plan-Based Awards. Stock options have an exercise price equal to the fair market value of the Company’s common stock on the date of grant. Stock options granted in fiscal 2023 vest in three annual installments commencing one year after the date of grant. The stock options expire ten years from the date of grant. Except for the Mid-Year Retention Grants and Transition Retention Grants, retention restricted stock units granted in fiscal 2023 vest in three annual installments commencing one year after the date of grant. Further details regarding the performance cash and short-term cash incentives (MIP awards) are described in the Compensation Discussion and Analysis section above. The following table sets forth information about grants of awards made in the fiscal year ending March 31, 2023, to the NEOs.
Grants of Plan-Based Awards for Fiscal 2023
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts of Performance-based Awards Under Equity Incentive Plan Awards | | | All Other Stock Awards; Number of Shares of Stock or Units (#) (1) | All Other Option Awards; Number of Securities Underlying Options (#) (1) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | | | Threshold ($) | Target ($) | Max ($) | Threshold (#) | Target (#) | Max (#) | | | | | | Neil D. | NA(2) | 88,375 | 883,750 | 1,767,500 | | | | | | | NA | | Brinker | 6/6/22(3) | 121,500 | 1,215,000 | 2,430,000 | | | | | | | NA | | | 6/6/22 | | | | | | | 76,954 | | | 944,995 | | | 6/6/22 | | | | | | | | 78,037 | 12.28 | 540,016 | | Michael B. | NA(2) | 42,328 | 423,281 | 846,563 | | | | | | | NA | | Lucareli | 6/6/22(3) | 45,478 | 454,781 | 909,562 | | | | | | | NA | | | 6/6/22 | | | | | | | 28,804 | | | 353,713 | | | 6/6/22 | | | | | | | | 29,210 | 12.28 | 202,133 | | | 8/4/22(4) | | | | | | | 37,626 | | | 505,317 | | | 10/19/22(5) | | | | | | | 19,563 | | | 288,750 | | Sylvia A. | NA(2) | 24,233 | 242,325 | 484,650 | | | | | | | NA | | Stein | 6/6/22(3) | 20,369 | 203,693 | 407,386 | | | | | | | NA | | | 6/6/22 | | | | | | | 12,901 | | | 158,424 | | | 6/6/22 | | | | | | | | 13,083 | 12.28 | 90,534 | | | 8/4/22(4) | | | | | | | 16,853 | | | 226,336 | | | 10/19/22(5) | | | | | | | 13,940 | | | 205,754 | | Brian J. | NA(2) | 22,643 | 226,425 | 452,850 | | | | | | | NA | | Agen | 6/6/22(3) | 17,303 | 173,025 | 346,050 | | | | | | | NA | | | 6/6/22 | | | | | | | 10,959 | | | 134,577 | | | 6/6/22 | | | | | | | | 11,113 | 12.28 | 76,902 | | | 8/4/22(4) | | | | | | | 14,315 | | | 192,250 | | | 10/19/22(5) | | | | | | | 13,025 | | | 192,249 | | Eric S. | NA(2) | 28,584 | 285,838 | 571,675 | | | | | | | NA | | McGinnis | 6/6/22(3) | 22,176 | 221,760 | 443,520 | | | | | | | NA | | | 6/6/22 | | | | | | | 14,046 | | | 172,485 | | | 6/6/22 | | | | | | | | 14,243 | 12.28 | 98,562 | | | 10/19/22(5) | | | | | | | 15,176 | | | 223,998 |
Grants of Plan-Based Awards for Fiscal 2023
| (1) Stock options and restricted stock units are made under the 2020 Incentive Compensation Plan. |
Grants of Plan-Based Awards for Fiscal 2023
| (2) These are the fiscal 2023 MIP awards, short-term incentive cash awards. |
Grants of Plan-Based Awards for Fiscal 2023
| (3) These are the fiscal 2023 performance cash awards, long-term performance cash awards granted under the fiscal 2023 LTIP for fiscal 2023 - 2025. |
Grants of Plan-Based Awards for Fiscal 2023
| (4) Transition Retention Grants in the form of RSUs that vest 100 percent on the second anniversary of grant. |
Grants of Plan-Based Awards for Fiscal 2023
| (5) Mid-Year Retention RSU grants that vest 100 percent on the one-year grant anniversary. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#)(2) | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(3) | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(3) | | Neil D. | 11,420 | 11,423 | 11.19 | 12/1/30 | 126,271 | 2,910,547 | - | - | | Brinker | 11,109 | 33,330 | 17.79 | 6/4/31 | | | | | | | - | 78,037 | 12.28 | 6/6/32 | | | | | | Michael B. | 10,651 | - | 14.94 | 6/2/24 | 145,031 | 3,342,965 | - | - | | Lucareli | 15,285 | - | 11.39 | 6/2/25 | | | | | | | 27,065 | - | 10.00 | 5/31/26 | | | | | | | 17,842 | - | 15.90 | 6/1/27 | | | | | | | 20,131 | - | 17.90 | 5/30/28 | | | | | | | 22,152 | 7,385 | 13.26 | 5/29/29 | | | | | | | 39,188 | 39,189 | 6.62 | 10/2/30 | | | | | | | 4,889 | 14,669 | 17.79 | 6/4/31 | | | | | | | - | 29,210 | 12.28 | 6/6/32 | | | | | | Sylvia A. | 8,888 | - | 17.90 | 5/30/28 | 63,585 | 1,465,634 | - | - | | Stein | 9,777 | 3,259 | 13.26 | 5/29/29 | | | | | | | 10,942 | 10,943 | 6.62 | 10/2/30 | | | | | | | 2,230 | 6,692 | 17.79 | 6/4/31 | | | | | | | - | 13,083 | 12.28 | 6/6/32 | | | | | | Brian J. | 3,192 | - | 14.94 | 6/2/24 | 53,268 | 1,227,827 | - | - | | Agen | 4,842 | - | 11.39 | 6/2/25 | | | | | | | 8,765 | - | 10.00 | 5/31/26 | | | | | | | 6,847 | - | 15.90 | 6/1/27 | | | | | | | 6,643 | - | 17.90 | 5/30/28 | | | | | | | 7,302 | 2,437 | 13.26 | 5/29/29 | | | | | | | 8,174 | 8,177 | 6.62 | 10/2/30 | | | | | | | 1,705 | 5,116 | 17.79 | 6/4/31 | | | | | | | - | 11,113 | 12.28 | 6/6/32 | | | | | | Eric S. | 8,096 | 4,173 | 12.62 | 8/25/31 | 46,311 | 1,067,469 | - | - | | McGinnis | 2,071 | 6,213 | 12.62 | 8/25/31 | | | | | | | - | 14,243 | 12.28 | 6/6/32 | | | | |
Outstanding Equity Awards at Fiscal Year End
| (1) The options vest in four equal annual installments commencing on the first anniversary of the date of grant, except options awarded in fiscal 2023 vest in three annual installments. |
Outstanding Equity Awards at Fiscal Year End
| (2) All of these shares are restricted stock unit awards. Other than Mid-Year Retention Grants and Transition Retention Grants, all restricted stock units granted prior to fiscal 2023 vest in four equal annual installments commencing one year after the date of grant, and awards granted in fiscal 2023 vest in three annual installments. The market value of the awards was determined by multiplying the number of restricted stock units by $23.05, the closing price of the Company’s common stock on the NYSE on March 31, 2023 (the last trading day of fiscal 2023). The Mid-Year Retention Grants vest in full on the one-year anniversary of the date of grant but only if the performance conditions are met and the Transition Retention Grants vest in full on the second anniversary of the date of grant. See Compensation Discussion and Analysis – Equity Incentives – Long-Term Incentive Compensation for a description of retention restricted stock unit awards. |
Outstanding Equity Awards at Fiscal Year End
The restricted stock units vest as follows:
Outstanding Equity Awards at Fiscal Year End
| | Shares vesting for | | | | | | | Neil Brinker (#) | Michael Lucareli (#) | Sylvia Stein (#) | Brian Agen (#) | Eric McGinnis (#) | | May 20, 2023 | 6,719 | | | | | | May 29, 2023 | | 6,205 | 2,739 | 2,046 | | | June 4, 2023 | 10,267 | 4,518 | 2,061 | 1,576 | | | June 6, 2023 | 25,394 | 9,505 | 4,257 | 3,616 | 4,635 | | August 25, 2023 | | | | | 8,852 | | October 2, 2023 | | 19,637 | 5,483 | 4,096 | | | October 19, 2023 | | 19,563 | 13,940 | 13,025 | 15,176 | | December 1, 2023 | 5,898 | | | | | | February 23, 2024 | | | | | 4,400 | | June 4, 2024 | 10,267 | 4,518 | 2,061 | 1,576 | | | June 6, 2024 | 25,394 | 9,505 | 4,257 | 3,616 | 4,635 | | August 4, 2024 | | 37,626 | 16,853 | 14,315 | | | August 25, 2024 | | | | | 1,918 | | October 2, 2024 | | 19,639 | 5,485 | 4,099 | | | December 1, 2024 | 5,898 | | | | | | June 4, 2025 | 10,268 | 4,521 | 2,062 | 1,576 | | | June 6, 2025 | 26,166 | 9,794 | 4,387 | 3,727 | 4,776 | | August 25, 2025 | | | | | 1,919 |
Outstanding Equity Awards at Fiscal Year End
| (3) No performance stock awards remain outstanding. |
Option Exercises and Stock Vested for Fiscal 2023
Option Exercises and Stock Vested for Fiscal 2023 Each of the stock prices set forth below was the closing price of the Company’s common stock on the NYSE on the date the restrictions lapsed, and the shares vested.
Option Exercises and Stock Vested for Fiscal 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Neil D. Brinker | | | 6,717 | 55,751(5) | | | | | 10,267 | 120,329(6) | | | | | 5,898 | 124,625(7) | | | | | 24,191 | 642,029(8) | | Michael B. Lucareli | 3,783 | 23,417(1) | 6,202 | 69,834(9) | | | 13,379 | 196,377(2) | 4,431 | 49,893(10) | | | | | 4,518 | 52,951(6) | | | | | 7,691 | 93,138(11) | | | | | 19,637 | 254,103(12) | | Sylvia A. Stein | | | 2,737 | 30,819(9) | | | | | 1,956 | 22,025(10) | | | | | 2,061 | 24,155(6) | | | | | 3,395 | 41,113(11) | | | | | 5,483 | 70,950(12) | | Brian J. Agen | 1,801 | 10,518(3) | 2,045 | 23,027(9) | | | 3,248 | 38,889(4) | 1,463 | 16,473(10) | | | | | 1,576 | 18,471(6) | | | | | 2,536 | 30,711(11) | | | | | 4,096 | 53,002(12) | | Eric S. McGinnis | | | 17,143 | 139,201(13) | | | | | 8,851 | 146,572(14) | | | | | 9,447 | 232,491(15) | | | | | 4,268 | 105,505(16) |
Option Exercises and Stock Vested for Fiscal 2023
| (1) Option exercised on June 1, 2022, at $11.94. The option was granted on June 5, 2012, at a share price of $5.75. |
Option Exercises and Stock Vested for Fiscal 2023
| (2) Option exercised on February 21, 2023, at $25.078019. The option was granted on June 3, 2013, at a share price of $10.40. |
Option Exercises and Stock Vested for Fiscal 2023
| (3) Option exercised on June 2, 2022, at $11.59. The option was granted on June 5, 2012, at a share price of $5.75. |
Option Exercises and Stock Vested for Fiscal 2023
| (4) Option exercised on March 30, 2023, at $22.37321. The option was granted on June 3, 2013, at a share price of $10.40. |
Option Exercises and Stock Vested for Fiscal 2023
| (5) Shares vested on May 20, 2022, at $8.30 per share, the closing price on such date. |
Option Exercises and Stock Vested for Fiscal 2023
| (6) Shares vested on June 4, 2022, at $11.72 per share, the closing price on June 3, 2022. |
Option Exercises and Stock Vested for Fiscal 2023
| (7) Shares vested on December 1, 2022, at $21.13 per share, the closing price on such date. |
Option Exercises and Stock Vested for Fiscal 2023
| (8) Shares vested on March 3, 2023, at $26.54 per share, the closing price on such date. |
Option Exercises and Stock Vested for Fiscal 2023
| (9) Shares vested on May 29, 2022, at $11.26 per share, the closing price on May 27, 2022. |
Option Exercises and Stock Vested for Fiscal 2023
| (10) Shares vested on May 30, 2022, at $11.26 per share, the closing price on May 27, 2022. |
Option Exercises and Stock Vested for Fiscal 2023
| (11) Shares vested on June 8, 2022, at $12.11 per share, the closing price on such date. |
Option Exercises and Stock Vested for Fiscal 2023
| (12) Shares vested on October 2, 2022, at $12.94 per share, the closing price on September 30, 2022. |
Option Exercises and Stock Vested for Fiscal 2023
| (13) Shares vested on May 8, 2022, at $8.12 per share, the closing price on May 6, 2022. |
Option Exercises and Stock Vested for Fiscal 2023
| (14) Shares vested on August 25, 2022, at $16.56 per share, the closing price on such date. |
Option Exercises and Stock Vested for Fiscal 2023
| (15) Shares vested on February 18, 2023, at $24.61 per share, the closing price on February 17, 2023. |
Option Exercises and Stock Vested for Fiscal 2023
| (16) Shares vested on February 23, 2023, at $24.72 per share, the closing price on such date. |
Pension Benefits Table for Fiscal 2023
Pension Benefits Table for Fiscal 2023
Pension Benefits Table for Fiscal 2023
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (1) | Payments During Last Fiscal Year ($) | | Neil D. Brinker | NA | NA | NA | NA | | Michael B. Lucareli | Salaried Pension Plan | 6.6 | 162,949 | - | | Sylvia A. Stein | NA | NA | NA | NA | | Brian J. Agen | Salaried Pension Plan | 9.3 | 119,509 | - | | Eric S. McGinnis | NA | NA | NA | NA |
Pension Benefits Table for Fiscal 2023
| (1) The Company used the following assumptions to determine the present value of accumulated benefit as set forth in the table above: discount rate of 5.2 percent; Mortality: use of Pri-2012 (70 percent Blue Collar/30 percent White Collar Blend) table projected generationally using scale MP-2021 converging to the 2022 Proxy SSA ultimate improvement factors over 10 years for age and 20 year for cohort (post - retirement decrement only); service up to March 31, 2006 and pay up to December 31, 2007 (the plan froze service accumulation on March 31, 2006 and pay changes on December 31, 2007); employees elect to begin payments as soon as they are eligible to receive unreduced benefits; 80 percent of employees elect lump sums from the qualified plan and 20 percent elect annuities. |
Pension Benefits
Pension Benefits The Company’s pension plan, The Modine Manufacturing Company Pension Plan (the “Salaried Pension Plan”), is frozen. Participants in the Salaried Pension Plan no longer earn additional credited service (effective April 1, 2006) and changes in salary for a participant are not considered in determining pension benefits (effective December 31, 2007). The Salaried Pension Plan was formerly a part of competitive compensation for manufacturing companies such as Modine. The Salaried Pension Plan was frozen consistent with contemporary benefit practices. The NEOs who were employed by the Company on or before December 31, 2003, participate on the same basis as other salaried employees in the non-contributory Salaried Pension Plan. Mr. Brinker, Ms. Stein, and Mr. McGinnis do not participate in the Salaried Pension Plan because they joined the Company after December 31, 2003. Retirement benefits are based upon an employee’s earnings for the five highest consecutive calendar years of the last ten calendar years preceding retirement (provided that salary after the plan was frozen is not considered) and on years of service (provided that service after the plan was frozen is not considered). Applicable earnings include salary, bonus, and any amount deferred under the 401(k) Retirement Plan. A minimum of five years of service was required for the benefits to vest. The principal benefit under the Salaried Pension Plan is a lifetime monthly benefit for the joint lives of a participant and his or her spouse based on the employee’s earnings and period of employment. The pension benefit is not subject to offset against Social Security benefits. Employees may retire with unreduced early retirement benefits at age 62 or may be eligible for deferred or other early retirement benefits depending on their age and years of service. In addition, an employee may elect to receive a lump-sum pension benefit if, upon retirement, the sum of the employee’s age plus years of eligible service with the Company equals at least 85. Furthermore, if employed on and before March 31, 2001, an employee who reaches age 62 and who has accumulated thirty or more years of eligible service may request that the accrued benefit be paid immediately in a lump-sum amount, even if he or she elects not to retire at that time. Payment pursuant to the Salaried Pension Plan may be limited by regulation based upon the funded status of the plan. Pension benefits under the Salaried Pension Plan are subject to possible limitations imposed by the Code.
Nonqualified Deferred Compensation Table for Fiscal 2023
Nonqualified Deferred Compensation Table for Fiscal 2023
Nonqualified Deferred Compensation Table for Fiscal 2023
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE ($)(3) | | Neil D. Brinker | - | 25,324 | - | - | 46,105 | | Michael B. Lucareli | 19,395 | 11,090 | (28,706) | - | 542,540 | | Sylvia A. Stein | 5,559 | 4,112 | (2,439) | - | 45,290 | | Brian J. Agen | - | 2,941 | (901) | | 20,471 | | Eric S. McGinnis | - | 5,698 | 63 | - | 5,761 |
Nonqualified Deferred Compensation Table for Fiscal 2023
| (1) Amounts include any deferrals of base salary and such amounts are included in the “Base Salary” column of the Summary Compensation Table. |
Nonqualified Deferred Compensation Table for Fiscal 2023
| (2) Amounts are reported in the Summary Compensation Table. Company matching contributions that could not otherwise be made to the 401(k) Retirement Plan because of statutory limits are made to the Deferred Compensation Plan. |
Nonqualified Deferred Compensation Table for Fiscal 2023
| (3) All executive contributions and contributions by the Company for fiscal 2023 have been reported in the Summary Compensation Table for the current year (i.e., fiscal 2023). In addition to the current year, executive contributions and contributions by the Company with respect to Mr. Lucareli for prior years in which Mr. Lucareli was an NEO have been reported in the Summary Compensation Table in prior years. In total, $172,894 in contributions have been reported for Mr. Lucareli as an NEO in the Summary Compensation Table in prior years. The remainder of the aggregate balance for Mr. Lucareli in the above column reflects earnings (and losses) on those contributions. In addition to the current year, the Company has reported $23,750, $28,745 and $2,593 in contributions in the Summary Compensation Table for Mr. Brinker, Ms. Stein, and Mr. Agen, respectively, prior to fiscal 2023. The remainder of their aggregate balances in the above column reflects contributions prior to their becoming an NEO, if any, and the earnings (and losses) on their contributions. Mr. McGinnis did not make or receive any nonqualified deferred compensation contributions prior to fiscal 2023. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The Deferred Compensation Plan is a nonqualified plan. All of the NEOs currently employed by Modine are eligible to participate in the Deferred Compensation Plan. The Deferred Compensation Plan allows an employee to defer salary in an amount that exceeds the statutory limitations applicable to the 401(k) Retirement Plan. For the 2022 calendar year, an employee could generally contribute no more than $20,500 to the 401(k) Retirement Plan. The Deferred Compensation Plan allows a highly compensated employee to defer up to ten percent of base salary. Salary deferred pursuant to the Deferred Compensation Plan is an asset of the Company. The sums deferred do not earn a preferential rate of return. Company contributions are also made to the Deferred Compensation Plan in an amount equal to the Company match and profit sharing contributions that would otherwise have been contributed to the 401(k) Retirement Plan but for the statutory limits. All of the NEOs who participate in the Deferred Compensation Plan were fully vested in the Company contributions as of March 31, 2023. Payments out of the Deferred Compensation Plan are not made until termination of service or retirement. The investment alternatives available to the NEOs under the Deferred Compensation Plan are selected by the Company and are generally the same as the alternatives available under the 401(k) Retirement Plan but may be changed from time to time. The NEOs are permitted to change their investment elections at any time on a prospective basis. The table below shows the funds available under the plan and their annual rate of return for the fiscal year ended March 31, 2023.
Nonqualified Deferred Compensation
| Name of Fund | Return for 12 Months Ended March 31, 2023 | | Aberdeen U.S. Small Cap Equity Institutional Fund | -8.22% | | Baird Aggregate Bond Institutional Fund | -4.67% | | DFA US Large Cap Equity Portfolio Institutional Fund | -7.22% | | DFA US Small Cap Fund | -5.16% | | Fidelity 500 Index Fund | -7.74% | | Fidelity Diversified International K6 Fund | -5.33% | | Fidelity Mid Cap Index Fund | -8.74% | | Fidelity Small Cap Index Fund | -11.41% | | Fidelity Total International Index Fund | -4.71% | | Fidelity US Bond Index Fund | -4.78% | | Hartford MidCap R6 Fund | -10.02% | | Vanguard Short-Term Bond Index Admiral Fund | -0.33% | | Allspring Government Money Market Institutional Fund | 2.54% | | T. Rowe Price Retirement I 2005 I Fund | -5.59% | | T. Rowe Price Retirement I 2010 I Fund | -5.69% | | T. Rowe Price Retirement I 2015 I Fund | -5.79% | | T. Rowe Price Retirement I 2020 I Fund | -5.81% | | T. Rowe Price Retirement I 2025 I Fund | -6.29% | | T. Rowe Price Retirement I 2030 I Fund | -6.87% | | T. Rowe Price Retirement I 2035 I Fund | -7.24% | | T. Rowe Price Retirement I 2040 I Fund | -7.61% | | T. Rowe Price Retirement I 2045 I Fund | -7.64% | | T. Rowe Price Retirement I 2050 I Fund | -7.69% | | T. Rowe Price Retirement I 2055 I Fund | -7.76% | | T. Rowe Price Retirement I 2060 I Fund | -7.75% | | T. Rowe Price Retirement Balanced Fund | -5.3% |
POTENTIAL POST-EMPLOYMENT PAYMENTS
| • | the NEO, if a participant in the Salaried Pension Plan or the Nonqualified Deferred Compensation Plan, would be entitled to a distribution of his/her vested benefits under those plans. |
POTENTIAL POST-EMPLOYMENT PAYMENTS
| • | the NEO’s estate, if he or she was a participant in the Salaried Pension Plan or the Nonqualified Deferred Compensation Plan, would be entitled to a distribution of his/her vested benefits under those plans. |
POTENTIAL POST-EMPLOYMENT PAYMENTS
| • | the NEO, if a participant in the Salaried Pension Plan or the Nonqualified Deferred Compensation Plan, would be entitled to a distribution of his/her vested benefits under those plans. |
Potential Payments Upon Termination of Employment or Change in Control Table
Potential Payments Upon Termination of Employment or Change in Control Table
Potential Payments Upon Termination of Employment or Change in Control Table
| Name | Cash Payment ($) | Accelerated Vesting of Equity and Performance Cash ($)(1) | Retirement Plan Benefits: Pension Plan ($) | Perquisites and Continued Benefits ($) | Total ($) | | Neil D. Brinker | | | | | | | Death | 0 | $5,734,114 | NA | NA | $5,734,114 | | Disability | (2) | $5,734,114 | NA | (2) | $5,734,114 | | Involuntary Termination | $1,800,000 | 0 | NA | NA | $1,800,000 | | Termination if Change in Control | $4,459,375 (4) | $5,758,765 | NA | $34,723 (3) | $10,252,862 | | Change in Control (no termination) | NA | NA | NA | NA | NA | | Michael B. Lucareli | | | | | | | Death | 0 | $5,065,941 | $77,853 | NA | $5,143,794 | | Disability | (2) | $5,065,941 | $162,949 | (2) | $5,228,890 | | Involuntary Termination | $577,500 (5) | 0 | $162,949 | $21,985 (6) | $762,434 | | Termination if Change in Control | $2,424,844 (7) | $5,398,109 | $162,949 | $1,993,500 (8) | $9,979,402 | | Change in Control (no termination) | NA | NA | NA | NA | NA | | Sylvia A. Stein | | | | | | | Death | 0 | $1,936,874 | NA | NA | $1,936,874 | | Disability | (2) | $1,936,874 | NA | (2) | $1,936,874 | | Involuntary Termination | $411,500 (5) | 0 | NA | $321 (6) | $411,397 | | Termination if Change in Control | $1,307,650 (9) | $2,192,265 | NA | $482 (3) | $3,500,397 | | Change in Control (no termination) | NA | NA | NA | NA | NA | | Brian J. Agen | | | | | | | Death | 0 | $1,510,055 | $57,098 | NA | $1,567,153 | | Disability | (2) | $1,510,055 | $119,509 | (2) | $1,629,564 | | Involuntary Termination | $384,500 (5) | 0 | $119,509 | $0 (6) | $504,009 | | Termination if Change in Control | $1,221,850(9) | $1,773,751 | $119,509 | $0 (3) | $3,115,110 | | Change in Control (no termination) | NA | NA | NA | NA | NA | | Eric S. McGinnis | | | | | | | Death | 0 | $1,512,991 | NA | NA | $1,512,991 | | Disability | (2) | $1,512,991 | NA | (2) | $1,512,991 | | Involuntary Termination | $448,000 | 0 | NA | $22,289 (6) | $470,289 | | Termination if Change in Control | $1,467,675 (10) | $1,788,847 | NA | $33,433 (3) | $3,289,955 | | Change in Control (no termination) | NA | NA | NA | NA | NA |
Potential Payments Upon Termination of Employment or Change in Control Table
| (1) Amounts represent the vesting of Retention Restricted Awards and certain performance cash awards and the spread value of the stock options at the closing stock price of $23.05 on March 31, 2023 (the last trading day of fiscal 2023). In addition, a prorated portion of the performance cash awards (based on the period worked during each performance period as of March 31, 2023) is illustrated in the events of a change in control termination of employment or termination of employment due to death or permanent disability. In the event of a change in control termination of employment, the pro rata vesting of performance cash awards is illustrated at the Target level of performance for all awards. In the case of death or permanent disability, the pro rata vesting of performance cash awards is illustrated at actual performance of 86% of Target for fiscal 2021 awards, 120% of Target for fiscal 2022 awards, and 190% of Target for fiscal 2023 awards (the current projected achievement). |
Potential Payments Upon Termination of Employment or Change in Control Table
| (2) Paid in accordance with plans available to all salaried employees. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (3) Amount consists of COBRA continuation coverage for eighteen months. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (4) Amount is two and one-half times Base Salary and Target Bonus for fiscal 2023. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (5) Amount is equal to Base Salary. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (6) Amount consists of COBRA continuation coverage for one year. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (7) Amount is equal to (i) two times Base Salary and Target Bonus for fiscal 2023, plus (ii) a pro rata Target Bonus for fiscal 2023. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (8) Amount consists of $38,198 for two years of welfare plan benefits (or the equivalent); $51,975 for two years of Company matching contributions to the 401(k) Retirement Plan and Deferred Compensation Plan; and $1,903,327 for excise tax and gross up. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (9) Amount is equal to (i) two times Base Salary and Target Bonus for fiscal 2023. |
Potential Payments Upon Termination of Employment or Change in Control Table
| (10) Amount is two times Base Salary and Target Bonus for fiscal 2023. |
CEO PAY RATIO
CEO PAY RATIO As a result of the rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), we are providing disclosure regarding the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Brinker as the Company’s Chief Executive Officer. The CEO Pay Ratio included in this information is a reasonable estimate calculated in accordance with Item 402(u) of Regulation S-K. When we calculated our median employee with respect to fiscal 2021, where we used a measurement date of March 31, 2021, our fiscal year end, as of which date we employed, in total, approximately 10,900 individuals worldwide. In determining the employee population from which we identified the median employee, we excluded the 211 employees located in India and 111 employees located in Serbia. Because of changes in the circumstances of the individuals who were our median employees for the fiscal 2021 and fiscal 2022 calculations, which changes the Company determined would result in a material change to our CEO Pay Ratio, for fiscal 2022 and fiscal 2023, the Company identified another employee whose compensation is substantially similar to the previous compensation of the fiscal 2021 median employee for purposes of the calculations. There have been no material changes to our aggregate employee population or our overall employee compensation arrangements since last year. The median employee is a Material Handler based in our Jacksonville, Texas facility. For each of the employees in our employee population, total annual compensation was calculated by compiling total wages, which included base salary, plus any overtime, shift premiums and cash allowances, actually paid to each member of our workforce (including full-time, part-time, seasonal and temporary employees), other than our CEO. When identifying the median employee, consistent with Item 402(u) of Regulation S-K, we included adjustments for annualizing the pay for any full-time and part-time employees who were employed by us for only part of the year. Based on the foregoing, the median of the annual total compensation of the Company’s employees (other than Mr. Brinker) was approximately $30,659 for fiscal 2023. Mr. Brinker’s total annual compensation, as reflected in the Summary Compensation Table, was $4,824,132. This yields a CEO Pay Ratio of 1:157.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE Modine and the HCC Committee strive for alignment between executive compensation and company performance, which we expect will enhance shareholder return over the long-term. This pay-for-performance philosophy is reflected in the design of the compensation program that uses a mix of cash and equity vehicles plus incentives that are tied to strong financial and operational performance measures. Additionally, in prior years, prior to the finalization of the SEC rules on Pay vs. Performance disclosures, with the assistance of our compensation consultant, we have tested the alignment between CEO compensation and total shareholder return to ensure that CEO pay on a performance-adjusted basis is both reasonable and closely correlated to company performance – i.e., Performance-Adjusted Compensation(TM) (“PAC”) has moved up in years of good performance and moved down at times of weaker performance. (PAC is actual salary, actual short-term incentive, and performance-adjusted long-term incentive values over rolling three-year periods).
Pay versus Performance Table
Pay versus Performance Table As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K under the Securities Act, we are providing the following information about the relationship between Compensation Actually Paid" (“CAP”) to our CEOs, or principal executive officers ("PEOs"), and our other NEOs as compared to the Company’s total shareholder return (TSR), the TSR of our selected peer group, our GAAP net income, and our Company-selected performance measure, Adjusted EBITDA. For further information concerning the Company’s performance-based approach to executive compensation and how the Company aligns executive compensation with the Company’s performance, refer to the Compensation Discussion and Analysis of this proxy statement. 2023 Pay vs. Performance Table
Pay versus Performance Table
| | Summary Compensation Table Total for First PEO (1) | Summary Compensation Table Total for Second PEO (2) | Summary Compensation Table Total for Third PEO (3) | Compensation Actually Paid to First PEO (1)(4) | Compensation Actually Paid to Second PEO (2)(4) | Compensation Actually Paid to Third PEO (3)(4) | Average Summary Compensation Table Total for Other NEOs (5) | Average Compensation Actually Paid to Other NEOs (4)(5) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($MM) (7) | Adjusted EBITDA ($MM) (8) | | Year | | | | | | | | | MOD TSR (6) | Peer Group TSR (6) | | | | 2023 | $4,824,132 | N/A | N/A | $8,200,158 | N/A | N/A | $2,138,078 | $3,658,664 | $709.2 | $198.9 | $153.1 | $212.1 | | 2022 | $2,013,440 | N/A | N/A | $712,768 | N/A | N/A | $914,617 | $246,552 | $277.2 | $192.1 | $85.2 | $158.8 | | 2021 | $2,931,370 | $1,828,486 | $5,838,871 | $3,685,253 | $4,207,179 | $5,556,770 | $1,164,622 | $1,789,683 | $454.5 | $193.6 | ($210.7) | $164.8 |
Pay versus Performance Table
| (1) “First PEO” reflects compensation for Modine’s current CEO, Neil Brinker, who assumed the role on December 1, 2020. |
Pay versus Performance Table
| (2) “Second PEO” reflects compensation for Michael Lucareli, who served as interim CEO from August 4, 2020, until December 1, 2020, as well as CFO for the entire fiscal year 2021. |
Pay versus Performance Table
| (3) “Third PEO” reflects compensation for Modine’s former CEO, Thomas Burke, who served in the role until August 4, 2020. |
Pay versus Performance Table
| (4) CAP reflects the SEC methodology, with adjustments for calculating CAP from Summary Compensation Table (“SCT”) values provided in the table below. |
Pay versus Performance Table
| (5) NEOs used for the average NEO for each fiscal year are as follows: |
Pay versus Performance Table
| − | 2023: Michael Lucareli, Eric McGinnis, Sylvia Stein and Brian Agen. |
Pay versus Performance Table
| − | 2022: Michael Lucareli, Eric McGinnis, Sylvia Stein, Brian Agen, Matthew McBurney, and Joel Casterton. |
Pay versus Performance Table
| − | 2021: Sylvia Stein, Matthew McBurney, Joel Casterton, and Scott Bowser. Mr. Lucareli was not included in this year’s average as he served as interim CEO during this year. |
Pay versus Performance Table
| (6) Cumulative TSR is measured as of a beginning date of April 1, 2020 (i.e., March 31, 2020, stock price is the base date for calculation); and peer group TSR reflects values for the S&P 600 Industrials Index, the same benchmark used in our 2023 annual report on Form 10-K. |
Pay versus Performance Table
| (7) Net Income reflects net earnings (loss) attributable to Modine, as disclosed in our financial statements. |
Pay versus Performance Table
| (8) Adjusted EDITDA is defined as “Operating Income” plus “Depreciation and Amortization Expenses,” both as reported externally for the Company’s audited financial statements, plus or minus permitted adjustments. For reconciliations of adjusted EBITDA to the most directly comparable GAAP financial measure, please see the financial tables included in Exhibit 99.1 to both the Current Reports on Form 8-K furnished to the SEC by Modine on May 25, 2022 and May 24, 2023. |
Pay versus Performance Table
Adjustments to Calculate Compensation Actually Paid
Pay versus Performance Table
| | | | Pension Benefits | | Equity Awards | | | | | | | | | Year | Executive | SCT Total | Deduct SCT Change In Pension Value | Add Pension Service Cost | Deduct SCT Stock & Option Awards | Add Year-End Fair Value of Unvested Equity Granted in Year | Add Fair Value Of Equity Vested and Granted in Year | Add Change in Fair Value of Unvested Awards Granted in Prior Years | Add Change in Fair Value of Vested Equity Granted in Prior Years | Deduct Fair Value of Awards Not Meeting Vesting Conditions | Add Dividends Paid on Unvested Equity | Total CAP (1) | | 2023 | First PEO (Brinker) | $4,824,132 | N/A | $0 | ($1,485,011) | $3,070,765 | $0 | $1,195,145 | $595,127 | $0 | $0 | $8,200,158 | | | Avg. Non-PEO NEO | $2,138,078 | $0 | $0 | ($780,496) | $1,417,493 | $0 | $717,756 | $165,833 | $0 | $0 | $3,658,664 | | 2022 | First PEO (Brinker) | $2,013,440 | N/A | $0 | ($1,147,900) | $540,677 | $0 | ($398,489) | ($294,961) | $0 | $0 | $712,768 | | | Avg. Non-PEO NEO | $914,617 | $0 | $0 | ($408,039) | $169,336 | $26,867 | ($259,562) | ($119,480) | ($77,187) | $0 | $246,552 | | 2021 | First PEO (Brinker) | $2,931,370 | N/A | $0 | ($2,222,258) | $2,169,102 | $807,039 | $0 | $0 | $0 | $0 | $3,685,253 | | | Second PEO (Lucareli) | $1,828,486 | ($14,691) | $0 | ($780,213) | $2,007,439 | $0 | $953,896 | $212,262 | $0 | $0 | $4,207,179 | | | Third PEO (Burke) | $5,838,871 | N/A | $0 | $0 | $0 | $0 | $0 | $232,007 | ($514,108) | $0 | $5,556,770 | | | Avg. Non-PEO NEO | $1,164,622 | ($8,278) | $0 | ($278,776) | $494,382 | $0 | $345,139 | $81,547 | ($8,952) | $0 | $1,789,683 |
Pay versus Performance Table
| (1) Columns may not sum due to rounding. |
Relationship Between Compensation Actually Paid (CAP) and Performance Measures
Relationship Between Compensation Actually Paid (CAP) and Performance Measures The Pay versus Performance table above and the charts below illustrate the following:
Relationship Between Compensation Actually Paid (CAP) and Performance Measures
| ■ | CAP to our PEOs (i.e., CEOs) and average NEOs has generally tracked with our TSR performance – CAP has declined in years where TSR has declined, and CAP has increased in years of positive TSR. This alignment reflects the design choices of our compensation program that include a mix of equity incentives and cash incentives tied to key financial performance indicators, which then translate in our market performance. Additionally, CAP values reflect changes in the value of executives’ outstanding equity holdings that fluctuate with changes in our stock price. |
Relationship Between Compensation Actually Paid (CAP) and Performance Measures
| ■ | CAP has also generally tracked with our Adjusted EBITDA, moving directionally together year-over-year. This is influenced by the use of Adjusted EBITDA as a performance measure in our incentive program, and the measure being a key performance measure influencing the value of our stock. Conversely, CAP has not moved in alignment with Net Income due to the measure’s significant fluctuations as a result of accounting requirements. |
Relationship Between Compensation Actually Paid (CAP) and Performance Measures
| ■ | Modine’s TSR has significantly outperformed the Pay versus Performance comparator group, the S&P 600 Industrials Index, over the 3-year period and in the latest year. |