DEF 14A of Johnson Controls International plc
Filed Jan 19, 2018 · FY20170001193125-18-014557
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| 3. | To authorize the Company and/or any subsidiary of the Company to make market purchases of Company shares. |
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| 4. | To determine the price range at which the Company can re-allot shares that it holds as treasury shares (special resolution). |
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| 5. | To approve, in a non-binding advisory vote, the compensation of the named executive officers. |
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| 6. | To approve the Directors’ authority to allot shares up to approximately 33% of issued share capital. |
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| 7. | To approve the waiver of statutory pre-emption rights with respect to up to 5% of issued share capital (special resolution). |
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| 8. | By separate resolutions to approve (a) the reduction of Company capital and (b) a clarifying amendment to the Company’s Articles of Association to facilitate the capital reduction (special resolutions). |
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| 9. | To act on such other business as may properly come before the meeting or any adjournment thereof. |
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This notice of annual general meeting and proxy statement and the enclosed proxy card are first being sent on or about January 19, 2018 to each holder of record of the Company’s ordinary shares at the close of business on January 3, 2018. The record date for the entitlement to vote at the Annual General Meeting is January 3, 2018 and only registered shareholders of record on such date are entitled to notice of, and to attend and vote at, the Annual General Meeting and any adjournment or postponement thereof. During the meeting, management will also present the Company’s Irish Statutory Accounts for the fiscal year ended September 30, 2017. Whether or not you plan to attend the meeting, please complete, sign, date and return the enclosed proxy card to ensure that your shares are represented at the meeting. Shareholders of record who attend the meeting may vote their shares personally, even though they have sent in proxies. In addition to the above resolutions, the business of the Annual General Meeting shall include prior to the proposal of the above resolutions, the consideration of the Company’s statutory financial statements and the report of the directors and of the statutory auditors and a review by the shareholders of the Company’s affairs. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and our Irish Statutory Accounts are available to shareholders at www.proxyvote.com and are also available in the Investor Relations section of our website at www.johnsoncontrols.com. By Order of the Board of Directors, John Donofrio Executive Vice President and General Counsel January 19, 2018 PLEASE PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD. THE PROXY IS REVOCABLE AND IT WILL NOT BE USED IF YOU: GIVE WRITTEN NOTICE OF REVOCATION TO THE PROXY PRIOR TO THE VOTE TO BE TAKEN AT THE MEETING; SUBMIT A LATER-DATED PROXY; OR ATTEND AND VOTE PERSONALLY AT THE MEETING. ANY SHAREHOLDER ENTITLED TO ATTEND AND VOTE AT THE MEETING MAY APPOINT ONE OR MORE PROXIES USING THE ENCLOSED PROXY CARD (OR THE FORM IN SECTION 184 OF THE COMPANIES ACT 2014) TO ATTEND, SPEAK AND VOTE ON THAT SHAREHOLDER’S BEHALF. THE PROXY NEED NOT BE A SHAREHOLDER. PROXIES MAY BE APPOINTED VIA THE INTERNET OR PHONE IN THE MANNER SET OUT IN THE ENCLOSED PROXY CARD. ALTERNATIVELY THEY MAY BE APPOINTED BY DEPOSITING THE ENCLOSED PROXY CARD (OR OTHER VALID SIGNED INSTRUMENT OF PROXY) WITH JOHNSON CONTROLS INTERNATIONAL PLC C/O BROADRIDGE, 51 MERCEDES WAY, EDGEWOOD, NY 11717 BY 5:00 P.M., EASTERN STANDARD TIME, ON MARCH 6, 2018 (WHICH WILL THEN BE FORWARDED TO JOHNSON CONTROLS INTERNATIONAL PLC’S REGISTERED ADDRESS ELECTRONICALLY) OR WITH JOHNSON CONTROLS INTERNATIONAL PLC, ONE ALBERT QUAY, CORK, IRELAND BY 5:00 P.M. LOCAL TIME ON MARCH 6, 2018. IF YOU WISH TO APPOINT A PERSON OTHER THAN THE INDIVIDUAL SPECIFIED IN THE ENCLOSED PROXY CARD, PLEASE CONTACT OUR COMPANY SECRETARY AND ALSO NOTE THAT YOUR NOMINATED PROXY MUST ATTEND THE MEETING IN PERSON IN ORDER FOR YOUR VOTES TO BE CAST.
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| Proxy Statement Summary | 1 | | Agenda Items | 3 | | Proposal Number One – Election of Directors | 3 | | Proposal Number Two – Appointment of Auditors | 12 | | Audit and Non-Audit Fees | 12 | | Audit Committee Report | 14 | | Proposal Number Three – Market Purchases of Own Shares | 15 | | Proposal Number Four – Share Re-allotment Price Range Authorization | 17 | | Proposal Number Five – Advisory Vote on Executive Compensation | 18 | | Proposal Number Six – Approval of Share Allotment Authority | 19 | | Proposal Number Seven – Approval of Waiver of Pre-emption Rights | 21 | | Proposal Number Eight – Approval of Reduction of Capital | 23 | | Governance of the Company | 25 | | Board of Directors | 26 | | Compensation of Non-Employee Directors | 37 | | Committees of the Board | 38 | | Compensation Discussion & Analysis | 41 | | CD&A Executive Summary | 43 | | CD&A Program Details | 49 | | Executive Compensation Tables | 71 | | Summary Compensation Table | 71 | | Grants of Plan-Based Awards Table | 74 | | Outstanding Equity Awards Table | 76 | | Option Exercise and Stock Vesting Table | 78 | | Non-Qualified Deferred Compensation Table | 80 | | Potential Payments Table | 81 | | Questions and Answers | 85 | | Non-GAAP Reconciliations | 95 |
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Unless we have indicated otherwise, in this proxy statement references to the “Company,” “Johnson Controls”, “we,” “us,” “our” and similar terms refer to Johnson Controls International plc and its consolidated subsidiaries.
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| 2018 Proxy Statement | i |
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PROXY STATEMENT SUMMARY Annual General Meeting
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| Time and Date: | 3:00 pm, local time, on March 7, 2018 | | Place: | The Merrion Hotel, 24 Upper Merrion Street, Dublin 2, Ireland | | Record Date: | January 3, 2018 | | Voting: | Shareholders on the record date are entitled to one vote per share on each matter to be voted upon at the Annual General Meeting | | Admission: | All shareholders are invited to attend the Annual General Meeting. Registration will commence on the day of the meeting. |
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Proposals to be Voted Upon
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| | Board Recommendation | | 1. Elect, by separate resolution, each nominee to the Board of Directors. | FOR each nominee | | 2. To approve and ratify, by separate resolutions, the appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company and to authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration. | FOR both 2(a) and 2(b) | | 3. To authorize the Company and/or any subsidiary of the Company to make market purchases of Company shares. | FOR | | 4. To determine the price range at which the Company can re-allot shares that it holds as treasury shares. | FOR | | 5. To approve, in a non-binding advisory vote, the compensation of the named executive officers. | FOR | | 6. To approve the Directors’ authority to allot shares up to approximately 33% of issued share capital | FOR | | 7. To approve the waiver of statutory pre-emption rights with respect to up to 5% of issued share capital | FOR | | 8. To approve (a) the reduction of Company capital and (b) a clarifying amendment to the Company’s Articles of Association to facilitate the capital reduction | FOR both 8(a) and 8(b) |
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The Nominees to our Board of Directors We are asking you to vote FOR all the director nominees listed below. All current directors except Mr. del Valle Perochena attended at least 90% of the Board and committee meetings on which he or she sits. Mr. del Valle Perochena attended 70% of such meetings, and did not attend at least 75% of the meetings due to his absence from one Board and one committee meeting to be present at the birth of his child. Detailed information regarding these individuals, along with all other Board nominees, is set forth under Proposal Number One. Summary information is set forth below.
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| 2018 Proxy Statement | 1 |
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| Nominee and Principal Occupation | Age | Director Since | Independent | Current Committee Membership | | Michael E. Daniels Retired Senior Vice President of Global Technology at IBM | 63 | 2010 | ✓ | Compensation (chair); Executive | | W. Roy Dunbar Founder and Chief Executive Officer, Sustainable Star, LLC | 56 | 2017 | ✓ | Compensation | | Brian Duperreault President and Chief Executive Officer of AIG | 70 | 2016 | ✓ | Governance | | Gretchen R. Haggerty Former Executive Vice President & Chief Financial Officer of United States Steel Corporation | 62 | N/A | ✓ | N/A - First time nominee | | Simone Menne Former Chief Financial Officer, Boehringer Ingelheim | 57 | N/A | ✓ | N/A - First time nominee | | George R. Oliver Chairman and Chief Executive Officer of Johnson Controls | 57 | 2012 | | Executive | | Juan Pablo del Valle Perochena Chairman of Mexichem | 45 | 2016 | ✓ | Governance | | Jürgen Tinggren Former Chief Executive Officer and Director of Schindler Group | 59 | 2014 | ✓ | Audit (chair); Executive | | Mark Vergnano President, Chief Executive Officer and Director, The Chemours Company | 59 | 2016 | ✓ | Audit | | R. David Yost Former Chief Executive Officer of AmerisourceBergen | 70 | 2009 | ✓ | Compensation | | John D. Young Group president of Pfizer Innovative Health | 53 | 2017 | ✓ | Audit |
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Non-Binding Advisory Vote on Executive Compensation Proposal number five is our annual advisory vote on the Company’s executive compensation philosophy and program. Detailed information regarding these matters is included under the heading “Compensation Discussion & Analysis,” and we urge you to read it in its entirety. Our compensation philosophy and structure for executive officers remains dedicated to the concept of paying for performance and continues to be heavily weighted with performance-based awards.
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AGENDA ITEMS PROPOSAL NUMBER ONE – ELECTION OF DIRECTORS Upon the recommendation of the Governance Committee, the Board has nominated for election at the Annual General Meeting a slate of 11 nominees, all of whom, except Ms. Gretchen R. Haggerty and Ms. Simone Menne, currently serve on our Board. Biographical information regarding each of the nominees is set forth below. We are not aware of any reason why any of the nominees will not be able to serve if elected. The term of office for members of the Board of Directors commences upon election and terminates upon completion of the first Annual General Meeting of Shareholders following election. David P. Abney and Natalie A. Black, who have served as a directors since September 2016, each have informed the Board of Directors of their decision to not stand for reelection. Both Mr. Abney and Ms. Black will retire from the Board effective as of the conclusion of the Company’s 2018 Annual General Meeting of Shareholders.
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| | | | Director Since | Other Public Directorships | | | Age: | 63 | March 2010 | Thomson Reuters SS&C Technologies, Inc. | | | Committee: | Compensation, Executive | | | | | Independent: | Yes | | | | Michael E. Daniels | | | | |
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Prior to his retirement in March 2013, Mr. Daniels was the Senior Vice President and Group Executive of IBM Services, a business and IT services company with operations in more than 160 countries around the world. In this role, Mr. Daniels had worldwide responsibility for IBM’s Global Services business operations in outsourcing services, integrated technology services, maintenance, and Global Business Services, the consulting and applications management arm of Global Services. Since he joined IBM in 1976, Mr. Daniels held a number of leadership positions in sales, marketing, and services, and was general manager of several sales and services businesses, including IBM’s Sales and Distribution operations in the United States, Canada and Latin America, its Global Services team in the Asia Pacific region, Product Support Services, Availability Services, and Systems Solutions. Mr. Daniels serves as a director of Thomson Reuters, a provider of intelligent information for businesses, and SS&C Technologies, a provider of specialized software, software enabled-services and software as a service solutions to the financial services industry.
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| ∎ | Senior Leadership Experience: Decades of senior leadership experience at IBM |
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| ∎ | Industry Experience: Broad and extensive global business experience in a wide range of global roles as an executive at IBM, including decades of experience in the service space |
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| ∎ | Technology, Cyber Security and IT: Deep understanding of critical areas of enterprise service functions and information technology, including cyber security |
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| ∎ | International: Experience as a senior manager of a global organization as well as international experience living and working in a variety of cultures |
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| ∎ | Talent Management: Experience leading global teams at IBM and in service on the compensation committee of public companies |
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| | | | Director Since | Other Public Directorships | | | Age: | 56 | June 2017 | Humana, Inc. SiteOne Landscape Supplies | | | Committee: | Compensation | | | | | Independent: | Yes | | | | W. Roy Dunbar | | | | |
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Mr. Dunbar was Chairman of the Board of Network Solutions, a technology company and web service provider, and was the Chief Executive Officer from January 2008 until October 2009. Mr. Dunbar also served as the President of Global Technology and Operations for MasterCard Incorporated from September 2004 until January 2008. Prior to MasterCard, Mr. Dunbar worked at Eli Lilly and Company for 14 years, serving as President of Intercontinental Operations, and earlier as Chief Information Officer. He currently serves as a member of the board of directors of Humana and SiteOne Landscape Supply, Inc. and previously served on the boards of Lexmark International and iGate.
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| ∎ | Senior Leadership Experience: Extensive experience leading across functional disciplines |
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| ∎ | International: Significant experience as a leader and director across US and international markets |
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| ∎ | Talent Management: Experience in global leadership and service as a director on the compensation committees of multiple companies |
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| ∎ | Multi-Disciplinary: Career-spanning depth of experience across numerous disciplines including healthcare, information technology, payments, insurance and renewable energy |
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| | | | Director Since | Other Public Directorships | | | Age: | 69 | March 2004 | American International Group, Inc. | | | Committee: | Governance | | | | | Independent: | Yes | | | | Brian Duperreault | | | | |
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Mr. Duperreault is President, Chief Executive Officer and a Director of American International Group, Inc. (AIG). Prior to assuming this role in May 2017, he was Chairman and Chief Executive Officer of Hamilton Insurance Group, Ltd., a Bermuda-based holding company of property and casualty
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insurance and reinsurance operations in Bermuda, the US and the UK. He served as President and Chief Executive Officer of Marsh & McLennan Companies, Inc. from January 2008 until his retirement in December 2012. Before joining Marsh, he served for four years as non-executive Chairman of ACE Limited, an international provider of insurance and reinsurance products, Chief Executive Officer of ACE Limited from October 1994 through May 2004, and as its President from October 1994 through November 1999. Prior to joining ACE, Mr. Duperreault served in various senior executive positions with American Insurance Group and its affiliates from 1978 to 1994. Mr. Duperreault is Vice Chairman of the Board of Blue Marble Microinsurance, a member of the Boards of the International Insurance Society, the IESE Business School, the Insurance Information Institute and the Bermuda Institute of Ocean Sciences, and is a former Member of the Association of The Metropolitan Opera, New York. He is the former Chairman of the Board of Overseers of the School of Risk Management of St. John’s University, New York.
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| ∎ | Senior Leadership Experience: Extensive experience as a CEO, executive officer and board member of multiple Fortune 500 companies |
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| ∎ | Corporate Governance: Experience serving as lead director and on the governance committees of multiple public companies |
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| ∎ | Financial: Deep financial acumen as CEO and senior leader in insurance and risk management industries |
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| ∎ | International: Significant experience as CEO and director on multiple global companies |
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| ∎ | Risk Management: Deep understanding of risk management gained over a career in the insurance industry |
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| ∎ | Talent Management: Experience leading global teams at a number of Fortune 500 companies |
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| | | | Director Since | Other Public Directorships | | | Age: | 62 | First time nominee | USG Corporation | | | Committee: | N/A | | Teleflex Incorporated | | | Independent: | Yes | | | | Gretchen R. Haggerty | | | | |
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Ms. Haggerty, 62, retired in August 2013 after a 37-year career with United States Steel Corporation, an integrated global steel producer, and its predecessor, USX Corporation, which, in addition to its steel production, also conducted energy operations, principally through Marathon Oil Corporation. From March 2003 until her retirement, she served as Executive Vice President & Chief Financial Officer and also served as Chairman of the U. S. Steel & Carnegie Pension Fund and its Investment Committee. Earlier, she served in various financial executive positions at U. S. Steel and USX, beginning in November 1991 when she became Vice President & Treasurer. Ms. Haggerty is currently a director of USG Corporation, a leading manufacturer of building materials, and Teleflex Incorporated, a global provider of medical technology products.
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| ∎ | Senior Leadership Experience: Decades of senior leadership experience at United States Steel Corporation and USX Corporation |
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| ∎ | Financial: Deep financial acumen as CFO and senior finance leader in steel and energy industries |
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| ∎ | Corporate Governance: Experience serving on the board of directors of multiple international companies |
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| ∎ | International: Significant knowledge of the global marketplace gained from her business experience and background |
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| ∎ | Talent Management: Experience leading global teams |
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| | | | Director Since | Other Public Directorships | | | Age: | 57 | First time nominee | Bayerische Motoren Werke AG | | | Committee: | N/A | | Deutsche Post DHL Group | | | Independent: | Yes | | | | Simone Menne | | | | |
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Ms. Menne served as Chief Financial Officer at Boehringer Ingelheim GmbH, Germany’s second largest pharmaceutical company, from September 2016 to December 2017. She previously served as the Chief Financial Officer at Deutsche Lufthansa AG (“Lufthansa”) from January 2016 to August 2016 and as a member of its Executive Board from July 2012 to August 2016. She also served as Chief Officer of Finances and Aviation Services at Lufthansa from July 2012 to January 2016. Prior thereto she served in a number of roles or increasing responsibility at Lufthansa from 1989 to 2012. She currently serves on the Supervisory Boards of Bayerische Motoren Werke AG and Deutsche Post DHL Group. She previously served on the Börsensachverständigenkommission (Exchange Experts Commission, BSK) of Deutsche Börse AG.
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| ∎ | Senior Leadership Experience: Decades of senior leadership experience at Lufthansa and Boehringer Ingelheim |
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| ∎ | Corporate Governance: Experience serving on the supervisory boards of multiple international companies |
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| ∎ | Financial: Deep financial acumen as CFO and senior finance leader in transportation and pharmaceutical industries |
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| ∎ | International: Significant knowledge of the global marketplace gained from her business experience and background |
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| ∎ | Talent Management: Experience leading global teams |
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| | | | Director Since | Other Public Directorships | | | Age: | 57 | September 2012 | Raytheon Company | | | Committee: | Executive | | | | | Independent: | No | | | | George R. Oliver | | | | |
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Mr. Oliver became our Chairman and Chief Executive Officer in September 2017. He previously served as our President and Chief Operating Officer following the completion of the merger with Johnson Controls, Inc. in September 2016. Prior to that, Mr. Oliver was Tyco’s Chief Executive Officer, a position he held since September 2012. He joined Tyco in July 2006, serving as president of Tyco Safety Products from 2006 to 2010 and as president of Tyco Electrical & Metal Products from 2007 through 2010. He was appointed president of Tyco Fire Protection in 2011. Before joining Tyco, he served in operational leadership roles of increasing responsibility at several General Electric divisions. Mr. Oliver also serves as a director on the board of Raytheon Company, a company specializing in defense, security and civil markets throughout the world, and is a trustee of Worcester Polytechnic Institute, his alma mater.
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| ∎ | Senior Leadership Experience: Extensive leadership experience over several decades as an executive at Tyco (now the Company) and GE |
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| ∎ | Industry Experience: Nearly a decade of experience with Tyco, first as president of several of its business units and then as CEO |
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| ∎ | International: Experience as a director, CEO and a senior manager of global organizations |
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| ∎ | Talent Management: Experience leading global teams at Johnson Controls, Tyco and GE |
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| ∎ | Executive Insight: Mr. Oliver offers valuable insights and perspective on the day to day management of the Company’s affairs |
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| | | | Director Since | Other Public Directorships | | | Age: | 45 | September 2016 | Mexichem, S.A.B. | | | Committee: | Governance | | Elementia S.A.B. | | | Independent: | Yes | | Grupo Lala S.A.B. | | | | | | Grupo Pochteca S.A.B. | | Juan Pablo del Valle Perochena | | | | |
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Mr. Perochena has been the Chairman of Mexichem, S.A.B. de C.V., a chemical and petrochemical producer and seller and a subsidiary of Kaluz, S.A. de C.V., since April 2011. He joined our Board in
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September 2016 upon the completion of the merger with Johnson Controls, Inc. He has been a Board member of Mexichem since 2001, and serves on the boards of Kaluz, S.A. de C.V., Elementia S.A. de C.V., Grupo Lala S.A.B., and Grupo Pochteca, S.A.B. de C.V.
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| ∎ | Senior Leadership Experience: Significant experience as an executive officer and board member of several Mexican companies |
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| ∎ | Industry Experience: Deep knowledge of the manufacturing industry from his experiences at Mexichem |
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| ∎ | International: Significant knowledge of the global marketplace gained from his business experience and background |
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| ∎ | Construction and Real Estate Development: Mr. del Valle Perochena’s service with Kaluz, S.A. de C.V. gives him unique insight into the construction industry and real estate development. |
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| ∎ | Talent Management: Experience leading global teams |
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| | | | Director Since | Other Public Directorships | | | Age: | 59 | March 2014 | Sika AG Group | | | Committee: | Audit | | | | | Independent: | Yes | | | | Jürgen Tinggren | | | | |
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Mr. Tinggren joined our Board in March 2014. He was the chief executive officer of the Schindler Group, a global provider of elevators, escalators and related services, through December 2013 and was a member of the board of directors of Schindler from March 2014 to 2016. He joined the Group Executive Committee of Schindler in April 1997, initially with responsibility for Europe and thereafter for the Asia/Pacific region and the Technology and Strategic Procurement. In 2007, he was appointed Chief Executive Officer and President of the Group Executive Committee of the Schindler Group. Mr. Tinggren also serves on the Board of OpenText Corporation, the Sika AG Group and is a Trustee of The Conference Board. From 2011 to 2014 he was a director of Schenker-Winkler Holding.
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| ∎ | Senior Leadership Experience: Extensive global business experience as the CEO and a senior leader of Schindler |
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| ∎ | International: Experience as senior executive and director of European based organizations, deep understanding of international markets |
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| ∎ | Industry Experience: Deep understanding of building services, industrial products and installation and service businesses |
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| ∎ | Financial: Deep financial understanding as CEO of Schindler |
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| ∎ | Business Development/M&A: Significant experience with mergers and acquisitions |
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| ∎ | Talent Management: Experience leading global teams as CEO of Schindler |
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| | | | Director Since | Other Public Directorships | | | Age: | 59 | September 2016 | The Chemours Company | | | Committee: | Audit | | | | | Independent: | Yes | | | | Mark Vergnano | | | | |
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Mr. Vergnano has been the President, Chief Executive Officer and a director of the Chemours Company, a titanium technologies, fluoroproducts, and chemical solutions producer, since July 2015. He joined our Board in September 2016 upon the completion of the merger with Johnson Controls, Inc. Previously, Mr. Vergnano served as Executive Vice President, E. I. du Pont de Nemours and Company from 2009 to June 2015. While at DuPont, he served as group vice president—Safety & Protection from 2006 to 2009, vice president and general manager—DuPont Surfaces and Building Innovations from 2005 to 2006, and vice president and general manager—DuPont Nonwovens from 2003 to 2005. Mr. Vergnano joined DuPont in 1980 as a process engineer and held a variety of manufacturing, technical and management assignments in DuPont’s global organization. Mr. Vergnano also serves as the Chairman of the Board of Directors for the National Safety Council.
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| ∎ | Senior Leadership Experience: Extensive global business experience as an executive and CEO of Chemours and DuPont |
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| ∎ | International: Experience as senior executive of a multinational company |
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| ∎ | Industry Experience: Deep understanding of the operations, global sales and marketing in the chemical manufacturing industry |
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| ∎ | Financial: Deep financial understanding as CEO of Chemours |
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| ∎ | Talent Management: Experience leading global teams as CEO of Chemours and in managing a variety of business units at DuPont |
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| | | | Director Since | Other Public Directorships | | | Age: | 70 | March 2009 | Marsh & McLennan Companies, Inc. | | | Committee: | Compensation | | Bank of America | | | Independent: | Yes | | | | R. David Yost | | | | |
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Mr. Yost served as Director and Chief Executive Officer of AmerisourceBergen, a comprehensive pharmaceutical services provider, from August 2001 to June 2011 when he retired. He was Chairman and Chief Executive Officer of AmeriSource Health Corporation from May 1997 to August 2001, and
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President and Chief Executive Officer of AmeriSource from May 1997 to December 2000. Mr. Yost also held a variety of other positions with AmeriSource Health Corporation and its predecessors from 1974 to 1997. Mr. Yost also serves as a director of Marsh & McLennan Companies, Inc. and Bank of America, and is a member of the Board of the United States Air Force Academy Endowment, and serves on its Executive Committee.
Skills and Qualifications
| ∎ | Senior Leadership Experience: Extensive leadership experience gained as the CEO and a director of AmerisourceBergen |
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| ∎ | Corporate Governance: Significant corporate governance experience serving as a director of multiple public companies |
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| ∎ | Risk Management: Exposure to complex risk management concepts gained as a director of Marsh & McLennan and Bank of America |
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| ∎ | Talent Management: Experience leading global teams as CEO of AmerisourceBergen |
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| | | | Director Since | Other Public Directorships | | | Age: | 53 | December 2017 | | | | Committee: | Audit | | | | | Independent: | Yes | | | | John D. Young | | | | |
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Mr. Young has served as Group President of Pfizer Innovative Health since January 2018. From June 2016 to January 2018 he served as Group President, Pfizer Essential Health. He was Group President, Global Established Pharma Business for Pfizer from January 2014 until June 2016 and President and General Manager, Pfizer Primary Care from June 2012 until December 2013. He also served as Pfizer’s Primary Care Business Unit’s Regional President for Europe and Canada from 2009 until June 2012 and U.K. Country Manager from 2007 until 2009.
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| ∎ | Senior Leadership Experience: Extensive experience as a business leader with 30 years’ experience with Pfizer |
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| ∎ | Financial: Experience leading large business units at Pfizer |
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| ∎ | International: Significant experience in a number of senior global positions at Pfizer |
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| ∎ | Innovation and Technical Expertise: Specialized expertise in developing healthcare solutions in a variety of medical disciplines |
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| ∎ | Talent Management: Experience leading global teams |
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Election of each Director requires the affirmative vote of a majority of the votes properly cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy. Each Director’s election is the subject of a separate resolution and shareholders are entitled to one vote per share for each separate Director election resolution. The Board unanimously recommends that shareholders vote FOR the election of each nominee for Director to serve until the completion of the next Annual General Meeting.
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PROPOSAL NUMBER TWO – APPOINTMENT OF AUDITORS AND AUTHORITY TO SET REMUNERATION PricewaterhouseCoopers LLP (“PwC”) served as our independent auditors for the fiscal year ended September 30, 2017. The Audit Committee has selected and appointed PwC to audit our financial statements for the fiscal year ending September 30, 2018. The Board, upon the recommendation of the Audit Committee, is asking our shareholders to ratify the appointment of PwC as our independent auditors for the fiscal year ending September 30, 2018 and to authorize the Audit Committee of the Board of Directors to set the independent auditors’ remuneration. Although approval is not required by our Memorandum and Articles of Association or otherwise, the Board is submitting the selection of PwC to our shareholders for ratification because we value our shareholders’ views on the Company’s independent auditors. If the appointment of PwC is not approved by shareholders, it will be considered as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the appointment is approved, the Audit Committee in its discretion may select a different independent auditor at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders. Representatives of PwC will attend the Annual General Meeting and will have an opportunity to make a statement if they wish. They will also be available to answer questions at the meeting. For independent auditor fee information, information on our pre-approval policy of audit and non-audit services, and the Audit Committee Report, please see below. The ratification of the appointment of the independent auditors and the authorization for the Audit Committee to set the remuneration for the independent auditors requires the affirmative vote of a majority of the votes properly cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy. The Audit Committee and the Board unanimously recommend a vote FOR these proposals.
Board of Directors
Board of Directors Mission of the Board of Directors: What the Board Intends to Accomplish The mission of Johnson Controls’ Board is to promote the long-term value and health of Johnson Controls in the interests of the shareholders and set an ethical “tone at the top.” To this end, the Board provides management with strategic guidance, and also ensures that management adopts and implements procedures designed to promote both legal compliance and the highest standards of honesty, integrity and ethics throughout the organization.
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| | Focus Areas of Our Board: Strategy and Operations: | | | Ensuring that processes are in place designed to maintain the integrity and ethical conduct of the Company; reviewing and approving strategic plans and profit plans; reviewing corporate performance and staying apprised of relations with shareholders | | | Talent: | | | Overseeing and evaluating management’s systems and senior management performance and compensation; and providing advice and counsel to senior management and plan for effective succession | | | Governance and Risk Management: | | | Overseeing and evaluating management’s systems and processes for the identification, assessment, management, mitigation, and reporting of major risks; establishing corporate governance standards | | | Board Composition and Effectiveness: | | | Recommending candidates to the shareholders for election to the Board; setting standards for Director qualification, orientation and continuing education; reviewing and assessing the Board’s leadership structure; and undertaking an annual performance evaluation regarding the effectiveness of the Board |
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Board Responsibilities All corporate authority resides with the Board as fiduciaries of the Company’s shareholders, except for those matters reserved to the shareholders. The Board has retained oversight authority—defining and overseeing the implementation of and compliance with standards of accountability and monitoring the effectiveness of management policies and decisions in an effort to ensure that the Company is managed in such a way to achieve its objectives. The board delegates its authority to management for managing the everyday affairs of the company. The board requires that senior management review major actions and initiatives with the board prior to implementation. Management, not the Board, is responsible for managing the Company. Board Leadership The Board’s leadership structure generally includes a combined Chairman and CEO role with a strong, independent non-executive lead director. The Board believes our overall corporate governance measures help ensure that strong, independent directors continue to effectively oversee our management and key issues related to strategy, risk and integrity; executive compensation; CEO evaluation; and succession planning. In choosing generally to combine the roles of Chairman and CEO, the Board takes into consideration the importance of in-depth, industry-specific knowledge and a thorough understanding of our business environment and risk management practices in setting agendas and leading the Board’s discussions. Combining the roles also provides a clear leadership structure for the management team and serves as a vital link between management and the Board. This allows the Board to perform its oversight role with the benefit of management’s perspective on our business strategy and all other aspects of the business. Because our CEO has an in-depth knowledge of the complexity of a large and diversified international company, our businesses and their management structures, and our overall company strategy—all of which are of critical importance to our performance—the Board believes that our CEO generally is best suited to serve as Chairman and help ensure that the independent directors’ attention is devoted to the issues of greatest importance to Johnson Controls and our shareholders. Our Board periodically reviews its determination to have a single individual act both as Chairman and CEO. Johnson Controls continues to have a strong governance structure, which includes:
Board of Directors
| ∎ | a designated lead independent Director with a well-defined role (Mr. Jürgen Tinggren); |
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| ∎ | a Board entirely composed of independent members, with the exception of Mr. Oliver; |
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| ∎ | annual election of Directors by a majority of votes represented at the Annual General Meeting; |
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| ∎ | committees that are entirely composed of independent Directors; and |
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| ∎ | established governance and ethics guidelines. |
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The lead Director acts as an intermediary between the Board and senior management. Among other things, the lead Director’s duties include:
Board of Directors
| ∎ | In collaboration with Mr. Oliver, developing Board and committee meeting schedules to assure that there is sufficient time for discussion of all agenda items and to ensure that topics deemed important by the independent directors are included in Board discussions and sufficient executive sessions are scheduled as needed; |
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| ∎ | Calling meetings of the independent directors; |
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| ∎ | Developing the agenda for and chairing executive sessions of independent directors; |
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| ∎ | Serving as principal liaison between the independent directors and Mr. Oliver on sensitive issues; |
Board of Directors
| ∎ | Serving as chairman of meetings of the Board when Mr. Oliver is not present; |
Board of Directors
| ∎ | In collaboration with Mr. Oliver, consulting with the appropriate members of senior management about what information pertaining to the Company’s finances, operations, strategic alternatives, compliance and members of management is to be sent to the Board in conjunction with meetings and between meetings; and |
Board of Directors
| ∎ | If requested by the Company’s major stockholders, making himself reasonably available for direct communication. |
Board of Directors
Board Oversight of Risk The Board’s role in risk oversight at Johnson Controls is consistent with Johnson Controls’ leadership structure, with management having day-to-day responsibility for assessing and managing Johnson Controls’ risk exposure and the Board and its committees providing oversight in connection with those efforts, with particular focus on the most significant risks facing Johnson Controls. The Board performs its risk oversight role in several ways. Board meetings regularly include strategic overviews by the CEO that describe the most significant issues, including risks, affecting Johnson Controls. In addition, the Board is regularly provided with business updates from the leaders of Johnson Controls’ business units, and updates from the General Counsel and other functional leaders. The Board reviews the risks associated with Johnson Controls’ financial forecasts, business plan and operations. These risks are identified and managed in connection with Johnson Controls’ robust enterprise risk management (“ERM”) process. The Company’s ERM process provides the enterprise with a common framework and terminology to ensure consistency in identification, reporting and management of key risks. It is also directly linked to the strategic planning process, and includes a formal process to identify and document the key risks to Johnson Controls perceived by a variety of stakeholders in the enterprise. The results of the ERM process are presented to the Board at least annually. The Board has delegated to each of its committees responsibility for the oversight of specific risks that fall within the committee’s areas of responsibility. For example:
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| ∎ | The Audit Committee reviews and discusses with management the Company’s major financial reporting, tax, accounting, internal controls, information technology and compliance risk exposures and the steps management has taken to monitor and control such exposures; |
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| ∎ | The Compensation Committee reviews and discusses with management the extent to which the Company’s compensation policies and practices create or mitigate risks for the Company; and |
Board of Directors
| ∎ | The Governance Committee reviews and discusses with management the implementation and effectiveness of the Company’s corporate governance policies and EHS programs, oversees the ERM process and is deeply involved in key management succession planning. |
Board of Directors
Board Capabilities The Johnson Controls Board as a whole is strong in its diversity, vision, strategy and business judgment. It possesses a robust collective knowledge of management and leadership, business
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operations, crisis management, risk assessment, industry knowledge, accounting and finance, corporate governance and global markets. The culture of the Board is such that it can operate swiftly and effectively in making key decisions and facing major challenges. Board meetings are conducted in an environment of trust, open dialogue and mutual respect that encourages constructive commentary. The Board strives to be informed, proactive and vigilant in its oversight of Johnson Controls and protection of shareholder assets. Board Committees To conduct its business the Board maintains three standing committees: Audit, Compensation and Governance, and each of these NYSE required committees are entirely composed of independent Directors. The Board also maintains an Executive Committee comprised of the Chairman, lead Director and each committee chair that meets at least annually to review the Company’s retirement plans and other matters as delegated to it by the Board. Assignments to, and chairs of, the Audit and Compensation Committees are recommended by the Governance Committee and selected by the Board. The independent Directors as a group elect the members and the chair of the Governance Committee. All committees report on their activities to the Board. The lead Director may also convene “special committees” to review discrete matters that require the consideration of a Board committee, but do not fit within the mandate of any of the standing committees. Special committees report their activities to the Board. To ensure effective discussion and decision making while at the same time having a sufficient number of independent Directors for its three standing committees, the Board is normally constituted of between ten and thirteen Directors. The minimum and maximum number of Directors is set forth in Johnson Controls’ Articles of Association. The Governance Committee reviews the Board’s governance guidelines annually and recommends appropriate changes to the Board. Board Meetings The Board meets at least four times annually, and additional meetings may be called in accordance with our Articles of Association. Frequent board meetings are critical not only for timely decisions but also for Directors to be well informed about Johnson Controls’ operations and issues. One of these meetings will be scheduled in conjunction with the Annual General Meeting of shareholders and Board members are required to be in attendance at such meeting either in person or by telephone. The lead Director and the chair of the Board are responsible for setting meeting agendas with input from the other Directors. Committee meetings are normally held in conjunction with Board meetings. Major committee decisions are reviewed and approved by the Board. The Board chair and committee chairs are responsible for conducting meetings and informal consultations in a fashion that encourages informed, meaningful and probing deliberations. Presentations at Board meetings are concise and focused, and they include adequate time for discussion and decision-making. An executive session of independent Directors, chaired by the lead Director, is held at least annually, and in practice at most Board meetings. Directors receive the agenda and materials for regularly scheduled meetings in advance. Best efforts are made to make materials available as soon as one week in advance, but no later than three days in advance. When practical, the same applies to special meetings of the Board. Directors may ask for additional information from, or meetings with, senior managers at any time.
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Strategic planning and succession planning sessions are held annually at a regular Board meeting. The succession planning meeting focuses on the development and succession of not only the CEO but also the other senior executives. The Board’s intent is for Directors to attend all regularly scheduled Board and committee meetings. Directors are expected to use their best efforts to attend regularly scheduled Board and committee meetings in person. All independent Board members are welcome to attend any committee meeting. Board and Committee Calendars A calendar of agenda items for the regularly scheduled Board meetings and all regularly scheduled committee meetings is prepared annually by the chair of the Board in consultation with the lead Director, committee chairs, and all interested Directors. Board Communication Management speaks on behalf of Johnson Controls, and the Board normally communicates through management with outside parties, including shareholders, business journalists, analysts, rating agencies and government regulators. In certain circumstances Directors may also meet with shareholders to discuss specific governance topics. The Board has established a process for interested parties to communicate with members of the Board, including the lead Director. If you have any concern, question or complaint regarding our compliance with any policy or law, or would otherwise like to contact the Board, you can reach the Johnson Controls Board of Directors via email at directors@johnsoncontrols.com. Shareholders, customers, vendors, suppliers and employees can also raise concerns at www.johnsoncontrolsintegrityhelpline.com. Inquiries can be submitted anonymously and confidentially. All inquiries are received and reviewed by the Integrity Helpline manager, who is part of the Compliance function. A report summarizing all items received resulting in cases is prepared for the Audit Committee of the Board. The Integrity Helpline manager directs cases to the applicable department (such as customer service, human resources, or in the case of accounting or control issues, forensic audit) and follows up with the assigned case owner to ensure that the cases are responded to in a timely manner. The Board also reviews non-trivial shareholder communications received by management through the Corporate Secretary’s Office or Investor Relations. Board Advisors The Board and its committees (consistent with the provisions of their respective charters) may retain their own advisors, at the expense of Johnson Controls, as they deem necessary in order to carry out their responsibilities. Board Evaluation The Governance Committee coordinates an annual evaluation process by the Directors of the Board’s performance and procedures, as well as that of each committee. This evaluation leads to a full Board discussion of the results. In connection with the evaluation process:
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| ∎ | each Director submits specific written feedback on the Board’s performance and Board governance and processes; |
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Board of Directors
| ∎ | the lead Director and chair of the Governance Committee informally consult with each of the Directors; |
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| ∎ | the qualifications and performance of all Board members are reviewed in connection with their re-nomination to the Board; |
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| ∎ | the Governance Committee, the Audit Committee and the Compensation Committee each conduct an annual self-evaluation of their performance and procedures, including the adequacy of their charters, and report those results to the Board. |
Board of Directors
Board Compensation and Stock Ownership The Governance Committee periodically reviews the Directors’ compensation and recommends changes in the level and mix of compensation to the full Board. See the Compensation Discussion and Analysis for a detailed discussion of the Compensation Committee’s role in determining executive compensation. To help align Board and shareholder interests, Directors are encouraged to own Johnson Controls common stock or its equivalent, with the guideline set at five times the annual cash retainer. Directors are expected to attain this minimum stock ownership guideline within five years of joining the Board. Once a Director satisfies the minimum stock ownership recommendation, the Director will remain qualified, regardless of market fluctuations, under the guideline as long as the Director does not sell any stock. Directors are each expected to reach the minimum stock ownership level within the recommended time period. Mr. Oliver receives no additional compensation for service as a Director. Director Independence To maintain its objective oversight of management, the board consists of a substantial majority of independent directors. Our Board annually determines the independence of each director and nominee for election as a director based on a review of the information provided by the directors and the executive officers, and a survey by our legal and finance departments. The Board makes these determinations under the NYSE Listed Company Manual’s independence standards and our Corporate Governance Guidelines, which are more restrictive than the NYSE independence standards. Independent directors:
Board of Directors
| ∎ | are not former officers or employees of the Johnson Controls or its subsidiaries or affiliates, nor have they served in that capacity within the last five years; |
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| ∎ | have no current or prior material relationships with Johnson Controls aside from their directorship that could affect their judgment; |
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| ∎ | have not worked for, nor have any immediate family members that have worked for, been retained by, or received anything of substantial value from Johnson Controls aside from his or her compensation as a director; |
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| ∎ | have no immediate family member who is an officer of Johnson Controls or its subsidiaries or has any current or past material relationship with Johnson Controls; |
Board of Directors
| ∎ | do not work for, nor does any immediate family member work for, consult with, or otherwise provide services to, another publicly traded company on whose board of directors Johnson Controls’ CEO or other senior executive serves; |
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Board of Directors
| ∎ | do not serve as, nor does any immediate family member serve as, an executive officer of any entity with respect to which Johnson Controls’ annual sales to, or purchases from, exceed the greater of two percent of either entity’s annual revenues for the prior fiscal year or $1,000,000. |
Board of Directors
| ∎ | do not serve, nor does any immediate family member serve, on either the board of directors or the compensation committee of any corporation that employs either a nominee for director or a member of the immediate family of any nominee for director; and |
Board of Directors
| ∎ | do not serve, nor does any immediate family member serve, as a director, trustee, executive officer or similar position of a charitable or non-profit organization with respect to which the company or its subsidiaries made charitable contributions or payments in excess of the greater of $1,000,000 or two percent of such organization’s charitable receipts in the last fiscal year. |
Board of Directors
Directors meet stringent definitions of independence and for those Directors that meet this definition, the Board will make an affirmative determination that a Director is independent. The Board has determined that all of the Director nominees, with the exception of Mr. Oliver meet these standards and are therefore independent of the Company. Director Service Directors are elected by an affirmative vote of an absolute majority of the votes represented (in person or by proxy) by shareholders at the Annual General Meeting. They are elected to serve for one-year terms (except in instances where a director is elected during a special meeting), ending after completion of the next succeeding Annual General Meeting. If a Director resigns or otherwise terminates his or her Directorship prior to the next Annual General Meeting, the Board may appoint an interim Director until the next Annual General Meeting. Any nominee for Director who does not receive an affirmative vote of an absolute majority of votes represented (in person or by proxy) by shareholders at the Annual General Meeting is not elected to the Board. Each Director must offer to resign from the Board at the Annual General Meeting following his or her 72nd birthday. The Board may, in its discretion, waive this limit in special circumstances. The rotation of committee chairs and members is considered on an annual basis to ensure diversity of Board member experience and variety of perspectives across the committees, but there is no strict committee chair rotation policy. Any changes in committee chair or member assignments are made based on committee needs, Director interests, experience and availability, and applicable regulatory and legal considerations. Moreover, the value of rotation is weighed carefully against the benefit of committee continuity and experience. Directors are also expected to inform the Governance Committee of any significant change in their employment or professional responsibilities and are required to offer their resignation to the Board in the event of such a change. This allows for discussion with the Governance Committee to determine if it is in the mutual interest of both parties for the Director to continue on the Board. The Governance Committee is responsible for the review of all Directors, and where necessary will take action to recommend to shareholders the removal of a Director for performance, which requires the affirmative vote of a majority of the votes represented (in person or by proxy) at a duly called shareholder meeting. Board Tenure Our directors have served an average of 4 years on our Board, with 7 Directors serving for three years or less and 1 Director serving over ten years. The current short tenure of the majority of our
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Board of Directors
Directors is due to the merger between Johnson Controls, Inc. and a subsidiary of Tyco International plc. Four of our current Directors joined our board on September 2, 2016 in connection with the merger and 5 of our current directors served as a directors of Tyco prior to the merger. We believe this combination of boards is a positive, with more experienced Directors from each of legacy Johnson Controls and legacy Tyco having a deep knowledge of their respective companies and our newer Directors bringing fresh ideas and perspectives to board discussions. We continually review our board composition to ensure we maintain the right balance of expertise and diverse viewpoints. We also review our board leadership structure and committee memberships each year, taking into account the guidelines outlined in our Corporate Governance Guidelines. Director Orientation and Education A formal orientation program is provided to new Directors by the Corporate Secretary on Johnson Controls’ mission, values, governance, compliance and business operations. In addition, a program of continuing education is annually provided to incumbent Directors, and it includes review of the Company’s Ethics Policy. Directors are also encouraged to take advantage of outside continuing education relating to their duties as a Director and to subscribe to appropriate publications at the Company’s expense. Other Directorships, Conflicts and Related Party Transactions We recognize the importance of having Directors with significant experience in other businesses and activities; however, Directors are expected to ensure that other commitments, including outside board memberships, do not interfere with their duties and responsibilities as members of the Johnson Controls’ Board. In order to provide sufficient time for informed participation in their Board responsibilities non-executive Directors are required to limit their external directorships of other public companies to three and Audit Committee members are required to limit their audit committee membership in other public companies to two. The Board may, in its discretion, waive these limits in special circumstances. When a Director or the CEO intend to serve on another board, the Governance Committee is required to be notified. The Governance Committee reviews the possibility of conflicts of interest or time constraints and must approve the officer’s or Director’s appointment to the outside board. Each Director is required to notify the Corporate Secretary of any potential conflicts. The CEO may serve on no more than one other public company board. The CEO shall resign or retire from the Board upon resigning or retiring from his role as CEO, following a transition period mutually agreed upon between the CEO and the Compensation Committee. The company has a formal, written procedure intended to ensure compliance with the related party provisions in our Code of Ethics and with our corporate governance guidelines. For the purpose of the policy, a “related party transaction” is a transaction in which we participate and in which any related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Transactions exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a Director’s independence, must be approved by our Governance Committee. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Code of Ethics, must be approved by a majority of disinterested directors, following appropriate disclosure of all material aspects of the transaction. Under the rules of the Securities and Exchange Commission, public issuers such as Johnson Controls must disclose certain “related person transactions.” These are transactions in which Johnson Controls is a participant where the amount involved exceeds $120,000, and a Director, executive officer or holder of more than 5% of our ordinary shares has a direct or indirect material interest. Although Johnson Controls engaged in commercial transactions in the normal course of business with
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Board of Directors
companies where Johnson Controls’ Directors were employed and served as officers, none of these transactions exceeded 1% of Johnson Controls’ gross revenues and these transactions are not considered to be related party transactions. Code of Ethics We have adopted the Code of Ethics, which applies to all employees, officers, and Directors of Johnson Controls. The Code of Ethics meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K and applies to our CEO, Chief Financial Officer and Chief Accounting Officer, as well as all other employees. The Code of Ethics also meets the requirements of a code of business conduct and ethics under the listing standards of the NYSE. The Code of Ethics is posted on our website at www.johnsoncontrols.com under the heading “About—Ethics and Compliance.” We will also provide a copy of the Code of Ethics to shareholders upon request. We disclose any amendments to the Code of Ethics, as well as any waivers for executive officers or Directors on our website at www.johnsoncontrols.com under the heading “About Us—Ethics and Compliance.” The Board of Directors annually certifies their compliance with the Code of Ethics. The Company maintains established procedures by which employees may anonymously report a possible violation of the Code of Ethics. The Audit Committee maintains procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters. The Audit Committee also maintains procedures for employees to report concerns regarding questionable accounting or auditing policies or practices on a confidential, anonymous basis. Nomination of Directors and Board Diversity The Governance Committee, in accordance with the Board’s governance principles, seeks to create a Board that as a whole is strong in its collective knowledge and has a diversity of skills and experience with respect to vision and strategy, management and leadership, business operations, business judgment, crisis management, risk assessment, industry knowledge, accounting and finance, corporate governance and global markets. Although the Johnson Controls Board does not have a specific policy regarding diversity, the Board takes into account the current composition and diversity of the Board (including diversity with respect to race, gender and ethnicity) and the extent to which a candidate’s particular expertise and experience will complement the expertise and experience of other directors. The Governance Committee also considers the Board’s overall composition when considering a potential new candidate, including whether the Board has an appropriate combination of professional experience, skills, knowledge and variety of viewpoints and backgrounds in light of Johnson Controls’ current and expected future needs. In addition, the Governance Committee believes that it is desirable for new candidates to contribute to a variety of viewpoints on the Board, which may be enhanced by a mix of different professional and personal backgrounds and experiences. The Governance Committee periodically reviews these criteria and qualifications to determine any need to revise such criteria and qualifications based upon corporate governance best practices and Johnson Controls’ needs at the time of the review. General criteria for the nomination of Director candidates include:
Board of Directors
| ∎ | the highest ethical standards and integrity; |
Board of Directors
| ∎ | a willingness to act on and be accountable for Board decisions; |
Board of Directors
| ∎ | an ability to provide wise, informed and thoughtful counsel to top management on a range of issues; |
Board of Directors
| ∎ | a history of achievement that reflects superior standards for themselves and others; |
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Board of Directors
| ∎ | loyalty and commitment to driving the success of the Company; |
Board of Directors
| ∎ | an ability to take tough positions while at the same time working as a team player; and |
Board of Directors
| ∎ | individual backgrounds that provide a portfolio of experience and knowledge commensurate with the Company’s needs. |
Board of Directors
The Company also strives to have all non-employee Directors be independent. In addition to having such Directors meet the NYSE definition of independence, the Board has set its own more rigorous standard of independence. The Governance Committee must also ensure that the members of the Board as a group maintain the requisite qualifications under NYSE listing standards for populating the Audit, Compensation and Governance Committees. In addition, the Governance Committee ensures that each member of the Compensation Committee is a “Non-Employee” Director as defined in the Securities Exchange Act of 1934 and is an “outside director” as defined in section 162(m) of the U.S. Code. As provided in its charter, the Governance Committee will consider Director candidates recommended by shareholders. To recommend a Director candidate, a shareholder should write to Johnson Controls’ Secretary at Johnson Controls’ current registered address: One Albert Quay, Cork, Ireland. Such recommendation must include:
Board of Directors
| ∎ | the name and address of the candidate; |
Board of Directors
| ∎ | a brief biographical description, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements set forth above; |
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| ∎ | the candidate’s signed consent to serve as a Director if elected and to be named in the proxy statement; |
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| ∎ | evidence of share ownership of the person making the recommendation; and |
Board of Directors
| ∎ | all of the information required by Article 62 of our Memorandum and Articles of Association to be included in notices for any nomination by a shareholder of an individual for election to the Board. |
Board of Directors
The recommendation must also follow the procedures set forth in Articles 54—68 of our Memorandum and Articles of Association to be considered timely and complete in order to be considered for nomination to the Board. To be considered by the Governance Committee for nomination and inclusion in the Company’s proxy statement for the 2018 Annual General Meeting, shareholder recommendations for Director must be received by Johnson Controls’ Corporate Secretary no later than September 21, 2018. Once the Company receives the recommendation, the Company may deliver a questionnaire to the candidate that requests additional information about the candidate’s independence, qualifications and other information that would assist the Governance Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in the Company’s proxy statement, if nominated. Candidates must complete and return the questionnaire within the time frame provided to be considered for nomination by the Governance Committee. No candidates were recommended by shareholders in connection with the Annual General Meeting. The Governance Committee employs an unrelated search firm to assist the Committee in identifying candidates for Director when a vacancy occurs. The Committee also receives suggestions
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for Director candidates from Board members. All of our nominees for Director are current members of the Board. In evaluating candidates for Director, the Committee uses the qualifications described above, and evaluates shareholder candidates in the same manner as candidates from all other sources. Based on the Governance Committee’s evaluation of the current Directors, each nominee was recommended for election. For More Information We believe that it is important that Johnson Controls’ stakeholders and others are able to review its corporate governance practices and procedures. Our corporate governance guidelines are embodied in a formal document that has been approved by Johnson Controls’ Board of Directors. It is available on our website at www.johnsoncontrols.com under the heading “Investors-Corporate Governance.” We will also provide a copy of the corporate governance principles to shareholders upon request. Our corporate governance guidelines and general approach to corporate governance as reflected in our memorandum and articles of association and our internal policies and procedures are guided by U.S. practice and applicable federal securities laws and regulations and NYSE requirements. Although we are an Irish public limited company, we are not subject to, nor have we adopted, the U.K. Corporate Governance Code or any other non-statutory Irish or U.K. governance standards or guidelines. While there are many similarities and overlaps between the U.S. corporate governance standards applied by us and the U.K. Corporate Governance Code and other Irish/U.K. governance standards or guidelines, there are differences, in particular relating to the extent of the authorization to issue share capital and effect share repurchases that may be granted to the Board and the criteria for determining the independence of directors.
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COMPENSATION OF NON-EMPLOYEE DIRECTORS
COMPENSATION OF NON-EMPLOYEE DIRECTORS Director compensation for fiscal 2017 for non-employee directors consisted of an annual cash retainer of $120,000 and restricted stock units (“RSUs”) with a grant date value of approximately $155,000 and a one-year vesting term. The Lead Director received an additional $30,000 and the chairs of each of standing committees (other than the Lead Director) received an additional fee of $25,000. A Director who is also an employee receives no additional remuneration for services as a Director.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | | Current Directors | | | | | Mr. David Abney | $120,000 | $154,995 | $274,995 | | Ms. Natalie Black (GC) | $145,000 | $154,995 | $299,995 | | Mr. Michael E. Daniels (CC) | $123,057 | $154,995 | $278,052 | | Mr. Juan Pablo del Vale Perochena | $120,000 | $154,995 | $274,995 | | Mr. W. Roy Dunbar | $35,604 | $116,245 | $151,849 | | Mr. Brian Duperreault | $120,000 | $154,995 | $274,995 | | Mr. Jürgen Tinggren(L) (AC) | $145,611 | $154,995 | $300,606 | | Mr. Mark Vergnano | $120,000 | $154,995 | $274,995 | | Mr. R. David Yost | $120,000 | $154,995 | $274,995 | | Mr. John D. Young(3) | $- | $- | $- | | Former Directors | | | | | Mr. Jeffrey Joerres(4) | $131,657 | $154,995 | $286,652 |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
| (L)= | Lead Director | | (AC)= | Audit Committee Chair | | (CC)= | Compensation Committee Chair | | (GC)= | Governance Committee Chair |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
| Fees are pro-rated for the change in compensation described above.(1) |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
| This column reflects the fair value of the entire amount of awards granted to Directors calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718, excluding estimated forfeitures. The fair value of RSUs is computed by multiplying the total number of shares subject to the award by the closing market price of the Company’s ordinary shares on the date of grant. RSUs granted to Board members generally vest and the underlying units are converted to shares and delivered to Board members on the anniversary of the grant date.(2) |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
| Mr. Young became a director on December 7, 2017.(3) |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
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COMPENSATION OF NON-EMPLOYEE DIRECTORS
| Mr. Joerres served as Lead Director and Chair of the Compensation Committee through August 16, 2017.(4) |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Charitable Contributions The Board understands that its members, or their immediate family members, serve as directors, trustees, executives, advisors and in other capacities with a host of other organizations. If Johnson Controls directs a charitable donation to an organization in which a Johnson Controls Director, or their immediate family member, serves as a director, trustee, executive, advisor, or in other capacities with the organization, the Board must approve the donation. Any such donation approved by the Board will be limited to an amount that is less than 2% of that organization’s annual charitable receipts, and less than 2% of Johnson Controls’ total annual charitable contributions. In line with its matching gift policy for employees, going forward Johnson Controls will make an annual matching gift of up to $5,000 for each Director to qualifying charities.
Analysis of 2017 Compensation
The Committee recommends to the independent directors the individual performance modifier for the CEO based on performance against the above strategic initiatives. The CEO recommends to the Committee the individual performance modifier for the NEOs based on performance against the above strategic initiatives. For Messrs. Oliver and Stief, 100% of the financial portion of the AIPP earned is based on performance relative to corporate results. For Messrs. Jackson, Walicki and Williams, 50% of the financial portion of the AIPP earned is based on performance relative to their respective business unit’s results and 50% relative to corporate results. Actual payout can range from zero to two times the target payout percentage for the financial portion, depending on the achievement of goals, with the potential payments increasing as performance improves (though not above two times the target payout percentage). Fiscal Year 2017 AIPP Performance The Compensation Committee set the EBIT growth thresholds, targets and maximums for fiscal year 2017 using analyst consensus earnings estimates for the S&P 500 Industrials. The Committee set the thresholds, targets and maximums for ROS and TWC relative to the Company’s financial strategic plans to ensure it provided competitive incentive compensation based on market competitive performance while continuing to focus on strategic deliverables. The total strategic discretion for fiscal year 2017 was achieved at +25% as the Committee determined that each of the strategic initiative performance criteria were satisfied.
Analysis of 2017 Compensation
| Performance Measures | FY 2017 Goals | | | FY 2017 Performance | FY 2017 Actual Awards (Non-Discretionary Portion) | | | Threshold | Target | Maximum | Actual | | | Corporate | | | | | | | EBIT Growth (60%) | 3.5% | 7.0% | 12.5% | 9.0% | | | ROS (20%) | 11.1% | 11.7% | 12.3% | 11.9% | 108.1% | | TWC (20%) | 12.5% | 12.0% | 11.5% | 14.8% | | | Products, Building Technologies and Solutions | | | | | | | EBIT Growth (60%) | 2.0% | 5.5% | 8.0% | 3.3% | | | ROS (20%) | 10.8% | 11.4% | 12.0% | 11.3% | 59.0% | | TWC (20%) | 11.8% | 11.3% | 10.8% | 13.6% | | | Power Solutions | | | | | | | EBIT Growth (60%) | 2.0% | 5.0% | 8.0% | 6.0% | | | ROS (20%) | 18.9% | 19.9% | 20.9% | 20.3% | 107.5% | | TWC (20%) | 18.9% | 18.1% | 17.3% | 22.5% | |
Analysis of 2017 Compensation
| NEO | Award Target (as a % of Base Salary) | Award Target ($) | FY 2017 Actual Payout Amount ($) | | George R. Oliver | 145% | $1,812,500 | $2,449,142 | | Brian J. Stief | 110% | $816,200 | $1,102,892 | | William C. Jackson | 90% | $763,200 | $797,069 | | Joseph Walicki | 90% | $649,800 | $875,607 | | Jeffrey Williams(1) | 90% | $652,342 | $761,935 | | Alex A. Molinaroli(2) | 160% | $2,595,200 | $0 |
Analysis of 2017 Compensation
| Mr. Molinaroli’s fiscal year 2017 AIPP award was cancelled based on the discretion of the committee per the terms of his Employment Agreement.(2) |
Analysis of 2017 Compensation
Long-Term Incentive Performance Plan (LTIPP) Another key element in the compensation of our executive team is long-term equity incentive awards, which tie a significant portion of compensation to the Company’s performance over time. The design and structure of the long-term incentive performance plan (LTIPP) is reviewed annually to ensure that it remains appropriate for the size and scope of Johnson Controls. In 2017, three different types of long-term incentives were granted to our NEOs:
Analysis of 2017 Compensation
| ∎ | Performance share units (“PSUs”) (weighted 50% of the overall LTIPP target value), which vest at the end of three year-performance period and pay out only if specific performance metrics are met; |
Analysis of 2017 Compensation
| ∎ | Restricted share units (“RSUs) (weighted 25% of the overall LTIPP target value), which vest in equal installments over three years and have a value that changes based on changes in the Company’s share price. |
Analysis of 2017 Compensation
| FY 2017 LTIPP Grant | | | | | | | Value of Share Options | Value of RSUs | Value of PSUs | Total Target Value of Award | | George R. Oliver | $2,062,500 | $2,062,500 | $4,125,000 | $8,250,000 | | Brian J. Stief | $670,750 | $670,750 | $1,341,500 | $2,683,000 | | William C. Jackson | $689,750 | $689,750 | $1,379,500 | $2,759,000 | | Joseph Walicki | $658,000 | $658,000 | $1,316,000 | $2,632,000 | | Jeffrey Williams | $416,500 | $750,500 | $833,000 | $2,000,000 | | Alex A. Molinaroli(1) | $2,861,500 | $2,861,500 | $6,181,000 | $11,904,000 |
Analysis of 2017 Compensation
| Mr. Molinaroli’s fiscal year 2017 share options and RSUs were forfeited as a result of his termination. He will receive a prorated portion of his PSUs at the end of the performance cycle based on our performance and the number of full months worked during the performance period.(1) |
Analysis of 2017 Compensation
Performance Share Units (PSUs) Performance share units (PSUs) help to ensure our executives’ pay is directly linked to the achievement of strong, sustained long-term operating performance.
Analysis of 2017 Compensation
| For fiscal year 2017, PSUs were tied to NEO performance over a three-year performance cycle with target opportunities based on pre-tax earnings growth and pre-tax return on invested capital (ROIC), as well as a relative total shareholder return (TSR) modifier. These measures link directly to both our income statement and balance sheet and have a significant impact on long-term stock price and on meeting the investment community’s expectations | TSR Modifier We adopted a Total Shareholder Return Modifier as part of our LTIPP design to better correlate NEO award payouts with our overall stock price and shareholder value. |
Analysis of 2017 Compensation
| Relative TSR Percentile of S&P 500 | Modifier | | <25(th) Percentile | -25% | | 25(th) – 75(th) Percentile | 0% | | 75(th) – 90(th) Percentile | +25% | | >90(th) Percentile | +50% |
Analysis of 2017 Compensation
With respect to fiscal year 2017 Pre-Tax Earnings Growth was 9.3% and Pre-Tax ROIC was +40 bps, which resulted in aggregate performance for fiscal year 2017 of 42.1% of weighted target performance, exclusive of the TSR multiplier. Share Options and Restricted Share Units (RSUs) Awarding share options and RSUs our executive compensation philosophy and the principles of pay for performance. By awarding share options and RSUs, we link long-term incentives directly to our share price. If our share price decreases, so does the value of the executive officer’s compensation. Share options and RSUs also help us maintain competitive compensation levels in the market and retain high-performing employees through multi-year vesting requirements. We valued fiscal year 2017 share options using a Black-Scholes valuation. Their exercise price is equal to the closing price of our common share on the date of the grant. Fifty percent of each share option award vests two years after the date of grant, and the other fifty percent vests three years after the date of grant. Share option vesting is subject to continued employment, with earlier vesting upon retirement, and share options have a ten-year exercise term. The Committee does not permit or engage in “backdating,” repricing or cash buyout of share options. We value RSUs based on the closing price of our share at the date of grant. RSUs generally vest in equal installments over three years. If an executive officer holds unvested RSUs at retirement, that share continues to vest following retirement. With respect to share options and RSUs granted to Messrs. Molinaroli, Oliver and Stief in fiscal 2017 (other than Mr. Stief’s retention RSUs granted on September 14, 2017), (i) so long as such awards have been outstanding for more than one year, (ii) the executive could not have been terminated for cause, and (iii) the executive is retirement eligible (each of Messrs. Molinaroli, Oliver and Stief are retirement eligible), then upon their respective terminations:
Analysis of 2017 Compensation
| ∎ | RSUs will continue to vest according to their original vesting schedule; and |
Analysis of 2017 Compensation
RSU Award for Jeffrey Williams In March 2017, Mr. Williams, who was previously VP Enterprise Operations & Engineering, accepted the officer position of Vice President & President, EMEA & Latin America – Building Technologies and Solutions. In connection with the significant increase in his responsibilities due to his new role, Mr. Williams’ annual incentive target increased from 85% to 90% and he received a one-time RSU grant with a target value of $334,000 which will vest in March 2020. See page 69 for more details regarding Mr. Williams’ global assignment package. Retention Award for Brian J. Stief Under the terms of his previously existing employment agreement and change of control signed prior to the Merger, Mr. Stief was eligible to trigger a “Good Reason” termination (due to changes in reporting relationships and responsibilities) any time prior to September 2019 and receive a cash severance payment of approximately $12 million (plus other benefits). In consideration for Mr. Stief’s agreement to terminate his previously existing change of control agreement, and to incentivize Mr. Stief to remain Executive Vice President and Chief Financial Officer through December 2020, on September 14, 2017, the Committee approved the following retention awards to Mr. Stief under the Johnson Controls International plc 2012 Share and Incentive Plan (the “Plan”):
Analysis of 2017 Compensation
| ∎ | 299,251 RSUs, representing a target value of $12 million, which vest on or about December 7, 2020 (the “Vesting Date”). In the event of Mr. Stief’s death, disability, retirement or involuntary termination prior to the Vesting Date, such retention RSUs would immediately vest in full. However, in the event Mr. Stief remains continuously employed through the Vesting Date, the RSUs will be converted into PSUs if the performance goals established for the award are met at or above target, and they will be paid out in shares based on the level of attainment of such performance goals. These PSUs are subject to the same performance goals as the PSUs granted to all eligible employees in December 2017 under the Company’s LTIPP. If the award is converted into PSUs, then, consistent with the 2018 LTIPP awards, the PSUs may payout up to 200% of the original award in the event the performance goals are satisfied at the maximum level; |
Analysis of 2017 Compensation
| ∎ | 99,750 PSUs, representing a target value of $4 million, which vest on or about December 7, 2020 at the end of a three-year performance period. The retention PSUs will be subject to the same performance criteria as the 2018 LTIPP awards. In the event Mr. Stief retires, or the Company terminates his employment other than for Cause, prior to end of the three-year performance period, he would be entitled to a pro-rated portion of the PSUs at the end of the performance period to the extent the performance criteria are met. In the event of Mr. Stief’s termination due to death or disability, he would be entitled to receive all of the PSUs at the end of the performance period, but only to the extent the performance criteria are met; and |
Analysis of 2017 Compensation
| ∎ | 99,750 RSUs, representing a target value of $4 million, which vest on the third anniversary of the date of grant provided that Mr. Stief remains employed with the Company through the date of vesting. In the event of Mr. Stief’s termination due to death or disability, the RSUs would vest in full. In the event the Company terminates Mr. Stief’s employment other than for Cause, a pro rata portion of such RSUs will vest. Such RSUs would not vest in the event of Mr. Stief’s retirement prior to the third anniversary of the grant date. |
Analysis of 2017 Compensation
In addition, the Committee approved a separate agreement with Mr. Stief, which provides that to the extent the value of the retention RSUs/PSUs (without regard to any dividend equivalent units credited thereon) at the time of vesting is less than $12 million, the Company would pay Mr. Stief a cash payment representing the difference between $12 million and the value of the retention RSUs/PSUs (without regard to dividend equivalents) at the time of vesting. This agreement also includes an acknowledgement of the termination of Mr. Stief’s previously existing change of control agreement. In addition, Mr. Stief is not subject to the Company’s revised change of control and severance policy.
Other Benefits and Policies
| ∎ | Deferred Compensation Plan. We froze the Executive Deferred Compensation Plan and adopted a new Senior Executive Deferred Compensation Plan. The new Senior Executive Deferred Compensation Plan allows participants, including our NEOs, to defer base salary and annual bonus compensation and the associated taxes until retirement or termination of employment to assist such participants with personal financial planning. In addition, certain officers who previously participated in the prior Executive Deferred Compensation Plan and elected to defer their RSU and PSU awards may continue to defer such awards under the new Senior Executive Deferred Compensation Plan. The investment options under the new Senior Deferred Compensation Plan continue to mirror investment options in our 401(k) Plan. |
Other Benefits and Policies
Pay Recoupment Policy Our pay recoupment policy provides that, in addition to any other remedies available to it and subject to applicable law, if the Board or any Committee of the Board determines that any annual or other incentive payment, equity award or other compensation received by an executive officer resulted from any financial result or operating metric that was impacted by the executive officer’s fraudulent or illegal conduct, the Board or a Board Committee could recover from the executive officer that compensation it considered appropriate under the circumstances. The Board has the sole discretion to make any and all determinations under this policy. Insider Trading, Anti-Hedging and Anti-Pledging Policy We maintain an insider trading policy, applicable to all employees and directors. The policy provides that employees may not buy, sell or engage in other transactions in the Company’s stock while aware of material non-public information; buy or sell securities of other companies while aware of material non-public information about those companies that they became aware of as a result of business dealings between the Company and those companies; disclose material non-public information to any unauthorized persons outside of the Company; or engage short sales or hedging transactions through puts, calls, or any other derivative securities involving the Company’s securities. The policy also restricts trading for a limited group of Company employees (including executives and directors) to defined window periods that follow our quarterly earnings releases. In addition, the Company’s directors and executive officers are prohibited from pledging any Company securities held by them or their families as security for a loan, including by holding such securities in a margin account. Executive Severance and Change in Control Policy In an effort to bring our severance and change in control practices more in line with market practice, the Committee has implemented an Executive Severance and Change in Control Policy. As of the end of fiscal year 2017, the policy applied to all new executive hires, promotions and, with respect to executive officers who are currently covered by a pre-existing employment agreement and change in control agreement (e.g., Messrs. Oliver, Jackson, Walicki and Williams), on the termination date specified in such agreement. The Change in Control and Severance Policy has been updated since the end of the fiscal year. As updated, the policy applies to Mr. Oliver as a result of his voluntary termination of his Executive Employment Agreement. Details on the updated policy, approved by the Committee and effective as of December 7, 2017, are shown in bold below.
Other Benefits and Policies
| | Change in Control Termination | Severance | | Triggering Events | ∎ Involuntary termination other than for Cause, permanent disability or death within the period beginning 60 days prior to and ending 2 years following a change in control ∎ Good Reason Resignation within the same time period | ∎ Involuntary termination other than for Cause, permanent disability or death ∎ Good Reason Resignation |
Other Benefits and Policies
| | Change in Control Termination | Severance | | Basis for Cash Severance | Base salary + the greater of the average of the annual bonuses for the three years preceding the change of control or the annual bonus for the most recently completed year Effective December 7, 2017: Base salary + target annual bonus | Base salary + target annual bonus | | Severance Multiple | 3x Effective December 7, 2017: 3x CEO / 2x All Other NEOs) | 1.5x Effective December 7, 2017: 2x CEO / 1.5x All Other NEOs | | Release of Claims | Required | Required | | Benefits Continuation | -Aligned with protection period Effective December 7, 2017: Aligned with severance multiple | 2 years Effective December 7, 2017: Aligned with severance multiple | | Equity Acceleration | ∎ Compensation Committee to provide either for adjustment/assumption of award for a cash settlement ∎ Vest in full upon a subsequent termination without cause or with good reason within two years after the transaction (PSUs based on the higher of actual performance or target) | ∎ Effective December 7, 2017: Pro-rated equity acceleration based on number of days worked during vesting period | | Excise Tax Gross-up Payment | None | None |
Other Benefits and Policies
| | Change in Control Termination | Severance | | Restrictive Covenants | ∎ Perpetual confidentiality covenant ∎ One-year post-termination noncompetition covenant ∎ Two-year post-termination non-solicitation covenant (employees, customers) ∎ Effective December 7, 2017: Unlimited time for non-disparagement, trade secrets and confidential information; 1.5 year post-termination noncompetitive covenant; 2 year post-termination non-solicitation covenant; employee must affirmatively consent to be bound by these covenants as a condition of plan participation | ∎ Perpetual confidentiality covenant ∎ One-year post-termination noncompetition covenant ∎ Two-year post-termination non-solicitation covenant (employees, customers) ∎ Effective December 7, 2017: Unlimited time for non-disparagement, trade secrets and confidential information; 1.5 year post-termination noncompetitive covenant; 2 year post-termination non-solicitation covenant; employee must affirmatively consent to be bound by these covenants as a condition of plan participation |
Employment Agreement with Mr. Molinaroli
Employment Agreement with Mr. Molinaroli In connection with the Merger, the Board appointed Mr. Molinaroli as Chief Executive Officer and Mr. Oliver as President and Chief Operating Officer under the stipulation that Mr. Oliver would succeed Mr. Molinaroli as CEO on March 2, 2018 (the 18-month anniversary of the Merger). The Merger agreement also stipulated that Mr. Molinaroli would become Executive Chairman on September 2, 2016, and would serve in this role for 12 months after which Mr. Oliver would become Chairman and CEO of the Company. In August 2017, the Board of Directors decided to accelerate the transition of the roles of Chairman and CEO such that Mr. Oliver became Chairman and CEO effective September 1, 2017. Mr. Molinaroli also ceased to serve as a member of the Board as of this date. In connection with his termination of employment, Mr. Molinaroli is eligible to receive severance benefits in accordance with his previously existing change of control agreement, including cash severance and pro rata bonus payments of approximately $63 million (as required by his previously existing agreement, Mr. Molinaroli’s severance and prorated bonus are calculated based on his 2016 incentive compensation data). In addition, he is entitled to receive the lump sum value of the employer non-matching contributions he would have accrued through September 2, 2018 (the second anniversary of the Merger) under the Johnson Controls’ 401(k) plan and the Johnson Controls’ Retirement Restoration Plan, and continued medical and welfare benefits until September 2, 2018. In addition, Mr. Molinaroli will be eligible to receive full or partial vesting of specified equity awards according to the terms of the award agreements (although he forfeited his restricted share unit award having a grant date fair value equal to $20 million granted on September 8, 2016 in connection with the Merger). Mr. Molinaroli is subject to a customary covenant not to compete with the Company or solicit employees of the Company for specified periods after his departure.
Employment Agreement with Mr. Molinaroli
| 2018 Proxy Statement | 67 |
Employment Agreement with Mr. Oliver
Employment Agreement with Mr. Oliver Under the terms of Legacy Tyco’s Change in Control Severance Plan for Certain U.S. Officers and Executives (the “Tyco CIC Severance Plan”), Mr. Oliver would have been entitled to severance benefits as a result of the Merger due to his no longer being CEO of the Company. Therefore, in order to facilitate the Merger and the orderly CEO succession plan contemplated thereby, Mr. Oliver and legacy Tyco entered into an employment agreement, dated as of January 24, 2016, which became effective upon the completion of the Merger (the “Oliver Employment Agreement”). The terms of the Oliver Employment Agreement were generally comparable to the amended Molinaroli change of control agreement. During the 33 month period following the Merger date (the “initial employment period”), Mr. Oliver was entitled to a base salary of $1,250,000 per year, a target annual bonus opportunity of 135% of his then-current base salary, and an annual long-term incentive compensation opportunity target of at least $8.25 million. The Oliver Employment Agreement also includes severance provisions that were comparable to Mr. Molinaroli’s during the initial employment period. Mr. Oliver voluntarily terminated the Oliver Employment Agreement on December 8, 2017, and he is now subject to the Company’s revised severance and change in control policy.
Employment Agreements with Other NEOs
Employment Agreements with Other NEOs Messrs Jackson, Walicki and Williams are each party to a previously existing change of control employment agreement that provides for severance benefits in the event of a qualifying termination or a termination due to the executive’s death or disability. The previously existing change of control employment agreements provide that upon a qualifying termination or a termination due to the executive officer’s death or disability within 36 months following the Merger, Messrs. Jackson, Walicki and Williams would be entitled to the following:
Employment Agreements with Other NEOs
| ∎ | A lump sum severance payment equal to three times the executive officer’s annual cash compensation, which includes the executive officer’s annual base salary and the greater of (a) the average of the executive officer’s annualized annual cash bonuses and long-term performance awards for the three fiscal years preceding the change of control, and (b) the sum of the annual cash bonuses and long-term performance awards for the most recently completed fiscal year (such greater amount, “average performance bonus”); |
Employment Agreements with Other NEOs
| ∎ | Payment of a pro rata portion of the executive officer’s average performance bonus (reduced, if the executive officer’s termination occurs on the change of control date, by the amount paid in respect of performance share unit awards as a result of a qualifying termination); |
Employment Agreements with Other NEOs
| ∎ | a cash payment equal to the lump sum value of the additional benefits the executive officer would have accrued for the remainder of the employment period under the Legacy Johnson Controls’ pension plan and the Legacy Johnson Controls’ Retirement Restoration Plan, assuming the executive officer is fully vested in such benefits at the time of termination; and |
Employment Agreements with Other NEOs
| ∎ | continued medical and welfare benefits for two years following termination of employment without cause or with good reason. |
Employment Agreements with Other NEOs
The previously existing change of control employment agreements require Messrs. Jackson, Walicki and Williams to comply with confidentiality provisions during employment and for two years following termination of employment. The Legacy Johnson Controls NEOs would generally have “good reason” to resign under their respective previously existing change of control employment agreements if, as determined in good faith by such executive:
Employment Agreements with Other NEOs
| ∎ | the Company assigned the executive officer to duties inconsistent with the executive officer’s position prior to the merger; |
Employment Agreements with Other NEOs
| 68 | 2018 Proxy Statement |
Employment Agreements with Other NEOs
| ∎ | or the combined company took other actions to reduce the executive officer’s authority or responsibilities; |
Employment Agreements with Other NEOs
| ∎ | the Company breached any provision of the change of control employment agreement relating to salary and any benefits required to be paid or provided following the merger (subject to the acknowledgment in the letter agreement described above); |
Employment Agreements with Other NEOs
| ∎ | the Company required the executive officer to relocate; |
Employment Agreements with Other NEOs
| ∎ | the Company terminated the executive officer’s employment other than as permitted by the change of control employment agreement; or |
Employment Agreements with Other NEOs
| ∎ | the Company requested that the executive officer perform an illegal or wrongful act in violation of the combined company’s code of conduct. |
Employment Agreements with Other NEOs
As a result of the integration of legacy Johnson Controls, Inc. and legacy Tyco, including changes in reporting relationships and responsibilities, the Company believes that Mr. Jackson has the ability to trigger a “good reason” resignation at any time prior to September 2019 and receive the benefits described above. In addition, as described above, as a result of his retention award, Mr. Stief’s previously existing change of control employment agreement was terminated.
Global Assignment Agreement with Mr. Williams
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock/Unit Awards ($)(1) (2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(1)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | George R. Oliver | 2017 | 1,250,000 | - | 6,187,444 | 2,359,750 | 2,449,142 | - | 346,169 | 12,592,506 | | Chairman & Chief Executive Officer | 2016 | 1,018,939 | - | 3,605,930 | 3,550,446 | 1,250,000 | - | 182,560 | 9,607,875 | | | 2015 | 1,000,000 | - | 3,712,813 | 3,982,890 | - | - | 276,248 | 8,971,951 | | Brian J. Stief | 2017 | 742,000 | - | 22,012,083 | 670,473 | 1,102,892 | - | 276,604 | 24,804,052 | | EVP & Chief Financial Officer | 2016 | 60,083 | - | 4,250,255 | - | 1,557,362 | - | - | 5,867,700 | | William C. Jackson | 2017 | 848,000 | - | 2,069,205 | 689,467 | 797,069 | - | 263,026 | 4,666,767 | | VP and President | 2016 | 68,667 | - | 3,000,101 | - | 1,491,959 | - | - | 4,560,727 | | Joseph Walicki | 2017 | 722,000 | - | 1,935,434 | 657,730 | 875,607 | 23,484 | 238,900 | 4,453,155 | | VP and President | | | | | | | | | | | Jeffrey Williams | 2017 | 742,000 | - | 1,583,425 | 416,327 | 761,935 | 34,504 | 604,647 | 4,142,838 | | VP and President | | | | | | | | | | | Former Officer | | | | | | | | | | | Alex A. Molinaroli | 2017 | 1,486,833 | - | 9,042,440 | 2,860,359 | - | 43,494 | 64,849,251 | 78,282,377 | | Former Chairman and Chief Executive Officer | 2016 | 135,167 | - | 27,024,053 | - | 5,449,922 | 733,491 | 13,054,137 | 46,396,770 |
Global Assignment Agreement with Mr. Williams
| Deferred Amounts Included: We have not reduced amounts that we show to reflect a named executive officer’s election, if any, to defer the receipt of compensation into our qualified and nonqualified deferred compensation plans(1) |
Global Assignment Agreement with Mr. Williams
| Stock/Unit Awards and Option Awards: The amounts in columns (e) and (f) reflect the fair value of equity awards granted in fiscal 2017, 2016, and 2015. The equity awards granted in fiscal 2017 to each named executive officer consisted of share options, restricted share units (“RSUs”) and performance-vesting restricted share units (“PSUs”). The amounts in columns (e) and (f) represent the fair value of the entire amount of the award calculated in accordance with Financial Accounting Standards Board ASC Topic 718, excluding the effect of estimated forfeitures. For share options, amounts are computed by multiplying the fair value of the award (as determined under the Black-Scholes option pricing model) by the total number of options granted. For RSUs, fair value is computed by multiplying the total number of shares subject to the award by the closing market price of our ordinary shares on the date of grant. For PSUs, fair value is based on a model that considers the closing market price of our ordinary shares on the date of grant, the range of shares subject to such stock award, and the estimated probabilities of vesting outcomes. The value of PSUs included in the table assumes target performance. The values of the PSUs at the(2) |
Global Assignment Agreement with Mr. Williams
| 2018 Proxy Statement | 71 |
Global Assignment Agreement with Mr. Williams
| grant date if the highest level of performance conditions were to be achieved would be as follows Mr. Oliver—$10,312,430; Mr. Stief—$11,312,452; Mr. Jackson—$3,448,729; Mr. Walicki—$3,193,692; Mr. Williams—$2,082,462; and Mr. Molinaroli—$15,452. Footnote 12 to our audited financial statements for the fiscal year ended September 30, 2017, which appears in our Annual Report on Form 10- K that we filed with the Securities and Exchange Commission on November 21, 2017, includes assumptions that we used in the calculation of the equity award values. In the case of Mr. Stief’s 299,251 retention RSUs granted on September 14, 2017 that may potentially convert to PSUs if the performance goals established for the award are met at or above target, fair value is computed by multiplying the total number of shares subject to the award by the closing market price of our ordinary shares on the date of grant. The values of the retention RSUs at the grant date if the highest level of performance conditions were to be achieved would be $23,999,930. Mr. Molinaroli’s share options with a grant date fair value of $2,860,359 and RSUs with a grant date fair value of $2,861,468 were forfeited in connection with his separation from the Company. |
Global Assignment Agreement with Mr. Williams
| Non-Equity Incentive Plan Compensation: The amounts reported in column (g) for each named executive officer reflect annual cash incentive compensation.(3) |
Global Assignment Agreement with Mr. Williams
| Change In Pension Value: The amounts reported in column (h) for each named executive officer reflect the actuarial increase in the present value of benefits under the qualified defined benefit pension plan established by Johnson Controls, determined as of the measurement dates used for financial statement reporting purposes for fiscal year 2017 and using interest rate and mortality rate assumptions consistent with those reflected in our audited financial statements for the fiscal year ended September 30, 2017. The value that an executive will actually receive under these benefits will differ to the extent facts and circumstances vary from what the calculations assume. Changes in the present value of the named executive officer’s benefits are the result of the assumptions applied (as discussed in the footnotes to the “Pension Benefits as of September 30, 2017” table below). No named executive officer received preferential or above market earnings on nonqualified deferred compensation.(4) |
Global Assignment Agreement with Mr. Williams
| All Other Compensation: The fiscal 2017 amounts reported in column (i) for each named executive officer consist of the following:(5) |
Global Assignment Agreement with Mr. Williams
| Named Executive | Personal Use of Company Aircraft (a) | Expatriate and Relocation Benefits (b) | Tax Gross- Up (c) | Retirement Plan Contributions (d) | CIC Cash Severance (e) | Company Vehicle (f) | Miscellaneous (g) | Total All Other Compensation | | George R. Oliver | 105,290 | 18,244 | 34,560 | 182,325 | - | 5,750 | - | 346,169 | | Brian J. Stief | - | - | | 251,197 | - | 10,606 | 14,801 | 276,604 | | William C. Jackson | - | - | | 232,196 | - | 18,538 | 12,292 | 263,026 | | Joseph Walicki | - | - | | 216,165 | - | 14,852 | 7,883 | 238,900 | | Jeffrey Williams | - | 156,156 | 139,831 | 263,127 | - | 6,333 | 37,100 | 604,647 | | Alex A. Molinaroli | 50,368 | - | | 919,350 | 63,841,816 | 8,192 | 29,525 | 64,849,251 |
Global Assignment Agreement with Mr. Williams
| The Summary Compensation Table reflects, the aggregate incremental pre-tax cost to the Company for personal use of aircraft for fiscal 2017, which was calculated using a method that takes into account the incremental cost of fuel, trip-related maintenance, crew travel expenses, on-board catering, landing fees, trip-related hangar/parking costs and other variable costs. Because our aircraft are used primarily for business travel, the calculation does not include the fixed costs that do not change based on usage, such as pilots’ salaries, the acquisition costs of the Company owned or leased aircraft, and the cost of maintenance not related to trips.(a) |
Global Assignment Agreement with Mr. Williams
| 72 | 2018 Proxy Statement |
Global Assignment Agreement with Mr. Williams
| The Company provided relocation benefits in accordance with company policy to Mr. Oliver in fiscal 2017, to assist his relocation to Johnson Controls headquarters after the Merger. Mr. Williams received relocation benefits as part of his expatriate assignment set forth below.(b) |
Global Assignment Agreement with Mr. Williams
| | Housing | Relocation Benefits | Other Expatriate Benefits & Allowances | Total | | Jeffrey Williams | 53,639 | 68,946 | 33,571 | 156,156 |
Global Assignment Agreement with Mr. Williams
| The amount shown for Mr. Oliver represents a tax gross-up payment made with respect to the relocation benefits disclosed in the preceding footnote. The amount shown for Mr. Williams represents tax equalization payments made to him in connection with his expatriate assignment.(c) |
Global Assignment Agreement with Mr. Williams
| Retirement plan contributions include matching contributions made on behalf of each executive to the Company’s tax-qualified 401(k) plans and Retirement Restoration Plan. In addition, for Mr. Oliver, it includes matching contributions with respect to the legacy Tyco non-qualified Supplemental Savings and Retirement Plan (“SSRP”).(d) |
Global Assignment Agreement with Mr. Williams
| Mr. Molinaroli’s cash severance amount was subject to a 6-month delay pursuant to Code Section 409A and will be paid to him in March 2018.(e) |
Global Assignment Agreement with Mr. Williams
| Amounts reflect costs attributable to the personal use of a vehicle.(f) |
Global Assignment Agreement with Mr. Williams
| Miscellaneous compensation includes payments with respect to club dues for Messrs. Stief, Jackson, Walicki, Williams and Molinaroli and payments with respect to financial planning for Messrs. Stief, Williams and Molinaroli.(g) |
Global Assignment Agreement with Mr. Williams
| 2018 Proxy Statement | 73 |
Global Assignment Agreement with Mr. Williams
Grants of Plan-Based Awards Table The following table summarizes cash-based and equity-based awards for each of the named executive officers that were granted in fiscal year 2017.
Global Assignment Agreement with Mr. Williams
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock(3) (#) | All Other Option Awards: Number of Securities Underlying Options(4) (#) | Exercise or Base Price of Option Awards(5) ($/Share) | Grant Date Fair Value of Stock and Option Awards(6) ($) | | | | Threshold ($)(1) | Target ($)(1) | Maximum ($)(1) | Threshold ($)(2) | Target ($)(2) | Maximum ($)(2) | | | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | | George R. Oliver | NA(7) | 906,250 | 1,812,500 | 3,625,000 | - | - | | - | - | - | N/A | | | 10/7/2016 | - | - | - | - | - | - | - | 284,994 | 41.73 | 2,359,750 | | | 10/7/2016 | - | - | - | - | - | - | 49,424 | - | | 2,062,464 | | | 11/30/2016 | - | - | - | 45,853 | 91,707 | 229,267 | - | - | - | 4,124,981 | | Brian J. Stief | NA(7) | 408,100 | 816,200 | 1,632,400 | - | - | - | - | - | - | N/A | | | 10/7/2016 | - | - | - | - | - | - | - | 80,975 | 41.73 | 670,473 | | | 10/7/2016 | - | - | - | - | - | - | 16,072 | - | - | 670,685 | | | 11/30/2016 | - | - | - | 14,912 | 29,824 | 74,560 | - | - | - | 1,341,484 | | | 9/8/2017 | - | - | - | | | | 399,001 | - | - | 15,999,940 | | | 9/8/2017 | - | - | - | 49,875 | 99,750 | 199,500 | - | - | - | 3.999,975 | | William C. Jackson | NA(7) | 381,600 | 763,200 | 1,526,400 | - | - | - | - | - | - | N/A | | | 10/7/2016 | - | - | - | - | - | - | - | 83,269 | 41.73 | 689,467 | | | 10/7/2016 | - | - | - | - | - | - | 16,528 | - | - | 689,713 | | | 11/30/2016 | - | - | - | 15,334 | 30,669 | 76,672 | - | - | - | 1,379,492 | | Joseph Walicki | NA(7) | 324,900 | 649,800 | 1,299,600 | - | - | - | - | - | - | N/A | | | 10/7/2016 | - | - | - | - | - | - | - | 79,436 | 41.73 | 657,730 | | | 10/7/2016 | - | - | - | - | - | - | 15,767 | - | - | 657,957 | | | 11/30/2016 | - | - | - | 14,200 | 28,401 | 71,002 | - | - | - | 1,277,477 | | Jeffrey Williams | NA(7) | 326,171 | 652,342 | 1,304,683 | - | - | - | - | - | - | N/A | | | 10/7/2016 | - | - | - | - | - | - | - | 50,281 | 41.73 | 416,327 | | | 10/7/2016 | - | - | - | - | - | - | 9,980 | - | - | 416,465 | | | 11/30/2016 | - | - | - | 9,259 | 18,519 | 46,297 | - | - | - | 832,985 | | | 3/8/2017 | - | - | - | - | - | - | 8,118 | - | - | 333,975 | | Former Officer | | | | | | | | | | | | | Alex A. Molinaroli | NA(7) | 1,297,600 | 2,595,200 | 5,190,400 | - | - | - | - | - | - | N/A | | | 10/7/2016 | - | - | - | - | - | - | - | 345,454 | 41.73 | 2,860,359 | | | 10/7/2016 | - | - | - | - | - | - | 68,571 | - | - | 2,861,468 | | | 11/30/2016 | - | - | - | 68,708 | 137,416 | 343,540 | - | - | - | 6,180,972 |
Global Assignment Agreement with Mr. Williams
| 74 | 2018 Proxy Statement |
Global Assignment Agreement with Mr. Williams
| Amounts reported in columns (c) through (e) represent the range of potential cash payments under the annual performance bonuses that could have been earned under the Johnson Controls Annual Incentive Performance Plan for fiscal 2017, as described above under the heading “Annual Incentive Performance Plan (AIPP),” in the Compensation Discussion & Analysis. Threshold amounts assume minimum performance levels are achieved with respect to each performance measure.(1) |
Global Assignment Agreement with Mr. Williams
| Amounts in columns (f) through (h) show the range of potential share payouts for the PSUs granted to our named executive officers assuming that threshold, target and maximum performance conditions are achieved as described in the section titled “Long-Term Incentive Performance Plan” in the Compensation Discussion & Analysis. The number of performance-based share units that are earned, if any, will be based on performance for fiscal years 2017 to 2019 and will be determined after the close of fiscal year 2019.(2) |
Global Assignment Agreement with Mr. Williams
| Amounts in column (i) show the value of the RSUs granted to the named executive officers in October 2016 as described in the section titled “Long-Term Incentive Performance Plan” in the Compensation Discussion & Analysis. These awards vest in equal installments over three years. For Mr. Stief it also includes 399,001 RSUs granted in September 2017 in connection with his retention award as described in the section titled “Retention Award for Brian Stief” in the Compensation Discussion & Analysis. For Mr. Williams it includes 8,118 RSU’s granted in March 2017 in connection with his promotion. 99,750 of Mr. Stief’s retention RSUs and Mr. Williams’ promotion RSUs vest three years from the date of grant. 299,251 of Mr. Stief’s retention RSUs vest in December 2020 and may convert to PSUs after performance results are determined.(3) |
Global Assignment Agreement with Mr. Williams
| Amounts in column (j) show the value of the share options granted for fiscal 2017, as described above under the heading “Long-Term Incentive Performance Plan” in the Compensation Discussion & Analysis. The share options vest 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date, contingent on the NEOs continued employment, and expire, at the latest, on the tenth anniversary of the grant date.(4) |
Global Assignment Agreement with Mr. Williams
| Share Options were granted with an exercise price per share equal to our closing stock price on the date of grant.(5) |
Global Assignment Agreement with Mr. Williams
| Amounts in column (l) show the grant date fair value of the option awards, RSUs and PSUs granted to the named executive officers. These amounts represent the fair value of the entire amount of the award calculated in accordance with Financial Accounting Standards Board ASC Topic 718 (ASC Topic 718), excluding the effect of estimated forfeitures. For grants of share options, amounts are computed by multiplying the fair value of the award (as determined under the Black-Scholes option pricing model) by the total number of options granted. For grants of RSUs, fair value is computed by multiplying the total number of shares subject to the award by the closing market price of our ordinary shares on the date of grant. For grants of PSUs, the reported fair value assumes achievement of target performance, which is the probable outcome of performance conditions and is consistent with the estimate of aggregate compensation cost to be recognized over the service period.(6) |
Global Assignment Agreement with Mr. Williams
| The award reflected in this row is an annual incentive performance award that we granted for the performance period of fiscal year 2017, the material terms of which we describe in the Compensation Discussion & Analysis section titled “Annual Incentive Performance Plan.”(7) |
Global Assignment Agreement with Mr. Williams
| 2018 Proxy Statement | 75 |
Global Assignment Agreement with Mr. Williams
Outstanding Equity Awards at 2017 Fiscal Year-End Table The following table shows, for each of the named executive officers, all equity awards that were outstanding as of September 30, 2017. Dollar amounts are based on the NYSE closing price of $40.29 for the Company’s common stock on September 29, 2017.
Global Assignment Agreement with Mr. Williams
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#)(2) | Market Value of Shares of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | George R. Oliver | | | | | 154,483 | 6,224,120 | 91,707 | 3,694,875 | | | 73,404 | - | $21.22 | 8/18/2018 | | | | | | | 271,177 | - | $13.84 | 10/7/2018 | | | | | | | 199,659 | - | $16.10 | 10/1/2019 | | | | | | | 166,523 | - | $17.79 | 10/12/2020 | | | | | | | 140,097 | - | $21.14 | 10/12/2021 | | | | | | | 353,542 | - | $26.19 | 11/20/2022 | | | | | | | 176,718 | - | $26.19 | 11/20/2022 | | | | | | | 232,497 | 77,499 | $35.86 | 11/20/2023 | | | | | | | 165,924 | 165,922 | $41.86 | 11/25/2024 | | | | | | | 118,567 | 355,701 | $34.82 | 10/12/2025 | | | | | | | - | 248,994 | $41.73 | 10/7/2026 | | | | | | Brian J. Stief | | | | | 627,083 | 25,265,179 | 129,574 | 5,220,536 | | | 37,986 | - | $28.14 | 10/1/2020 | | | | | | | 37,443 | - | $26.30 | 10/7/2021 | | | | | | | 23,334 | - | $25.67 | 10/5/2022 | | | | | | | 15,577 | - | $44.57 | 11/19/2023 | | | | | | | 17,459 | 17,461 | $46.29 | 11/18/2024 | | | | | | | - | 49,519 | $40.42 | 10/7/2025 | | | | | | | - | 80,975 | $41.73 | 10/7/2026 | | | | | | William C. Jackson | | | | | 221,980 | 8,943,588 | 30,669 | 1,235,654 | | | 93,337 | - | $26.30 | 10/7/2021 | | | | | | | 58,390 | - | $25.67 | 10/5/2022 | | | | | | | 44,445 | - | $44.57 | 11/19/2023 | | | | | | | 22,487 | 22,489 | $46.29 | 11/18/2024 | | | | | | | - | 54,223 | $40.42 | 10/7/2025 | | | | | | | - | 83,269 | $41.73 | 10/7/2026 | | | | | | Joseph Walicki | | | | | 172,716 | 6,958,740 | 28,401 | 1,144,276 | | | 14,326 | - | $28.14 | 10/1/2020 | | | | | | | 13,566 | - | $26.30 | 10/7/2021 | | | | | | | 17,473 | - | $25.67 | 10/5/2022 | | | | | | | 12,403 | - | $44.57 | 11/19/2023 | | | | | | | 7,856 | 7,857 | $46.29 | 11/18/2024 | | | | | | | 4,733 | 4,733 | $42.67 | 1/5/2025 | | | | | | | - | 54,307 | $40.42 | 10/7/2025 | | | | | | | - | 79,436 | $41.73 | 10/7/2026 | | | | |
Global Assignment Agreement with Mr. Williams
| 76 | 2018 Proxy Statement |
Global Assignment Agreement with Mr. Williams
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#)(2) | Market Value of Shares of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | Jeffrey Williams | | | | | 197,975 | 7,976,420 | 18,519 | 746,131 | | | 26,047 | - | $26.53 | 10/1/2018 | | | | | | | 37,986 | - | $28.14 | 10/1/2020 | | | | | | | 30,931 | - | $26.30 | 10/7/2021 | | | | | | | 39,831 | - | $25.67 | 10/5/2022 | | | | | | | 19,196 | - | $44.57 | 11/19/2023 | | | | | | | 10,475 | 10,477 | $46.29 | 11/18/2024 | | | | | | | 3,217 | 3,220 | $42.67 | 1/5/2025 | | | | | | | - | 33,343 | $40.42 | 10/7/2025 | | | | | | | - | 50,281 | $41.73 | 10/7/2026 | | | | | | Alex A. Molinaroli | | | | | 739,549 | 29,796,436 | 41,988 | 1,691,705 | | | 146,517 | | $28.14 | 10/1/2020 | | | | | | | 135,664 | | $26.30 | 10/7/2021 | | | | | | | 79,119 | | $25.67 | 10/5/2022 | | | | | | | 70,654 | | $28.32 | 1/23/2023 | | | | | | | 166,119 | | $44.57 | 11/19/2023 | | | | | | | 184,421 | | $46.29 | 11/18/2024 | | | | |
Global Assignment Agreement with Mr. Williams
| Vesting information for each outstanding option award for the named executive officers is described in the table below.(1) |
Global Assignment Agreement with Mr. Williams
| Vesting Date | Exercise Price | George R. Oliver | Brian J. Stief | William C. Jackson | Joseph Walicki | Jeffrey Williams | Alex A. Molinaroli | | | | Number of Shares Underlying Vesting Awards | | | | | | | 2017 | | | | | | | | | 10/12/2017 | $34.82 | 118,567 | | | | | | | 11/20/2017 | $35.86 | 77,499 | | | | | | | 11/20/2017 | $41.86 | 82,961 | | | | | | | 11/18/2017 | $46.29 | | 17,461 | 22,489 | 7,857 | 10,477 | | | 11/18/2017 | $42.67 | | | | 4,733 | 3,220 | | | 10/7/2017 | $40.42 | | 24,759 | 27,111 | 27,153 | 16,671 | | | 2018 | | | | | | | | | 10/12/2018 | $34.82 | 118,567 | | | | | | | 11/20/2018 | $41.86 | 82,961 | | | | | | | 10/7/2018 | $41.73 | 124,497 | 40,487 | 41,634 | 39,718 | 25,140 | | | 10/7/2018 | $40.42 | | 24,760 | 27,112 | 27,154 | 16,672 | | | 2019 | | | | | | | | | 10/7/2019 | $41.73 | 124,497 | 40,488 | 41,634 | 39,718 | 25,141 | | | 10/12/2019 | $34.82 | 118,567 | | | | | |
Global Assignment Agreement with Mr. Williams
| 2018 Proxy Statement | 77 |
Global Assignment Agreement with Mr. Williams
| The amounts in columns (f) and (g) reflect, for each named executive officer, the number and market value of RSUs which had been granted as of September 30, 2017, but which remained subject to additional vesting requirements. Scheduled vesting of all RSUs and the number of shares underlying awards, for each of the named executive officer is as follows:(2) |
Global Assignment Agreement with Mr. Williams
| Vesting Date | George R. Oliver | Brian J. Stief | William C. Jackson | Joseph Walicki | Jeffrey Williams | Alex A. Molinaroli | | | Number of Shares Underlying Vesting Awards | | | | | | | 2017 | | | | | | | | 10/7/2017 | 13,729 | 5,357 | 5,509 | 5,255 | 3,326 | | | 10/8/2017 | 2,746 | | | | | | | 11/18/2017 | | 10,803 | 13,914 | 7,790 | 8,472 | | | 12/7/2017 | | 45,439 | 58,480 | 34,306 | 37,738 | | | 2018 | | | | | | | | 3/2/2018 | | | | | | 739,549 | | 3/8/2018 | | | | | 2,706 | | | 9/28/2018 | 100,545 | | | | | | | 10/7/2018 | 16,475 | 64,744 | 70,536 | 70,382 | 43,349 | | | 2019 | | | | | | | | 3/8/2019 | | | | | 2,706 | | | 9/2/2019 | | 56,691 | 56,691 | 34,014 | 56,691 | | | 9/8/2019 | | 39,691 | 11,340 | 15,713 | 36,953 | | | 10/7/2019 | 16,474 | 5,358 | 5,510 | 5,256 | 3,328 | | | 2020 | | | | | | | | 3/8/2020 | | | | | 2,706 | | | 9/14/2020 | | 99,750 | | | | | | 12/7/2020 | | 299,251 | | | | | | 10/12/2019 | | | | | | |
Global Assignment Agreement with Mr. Williams
| The amounts in columns (h) and (i) reflect, for each named executive officer, the number and market value of PSUs at target which had been granted as of September 30, 2017. The number of shares earned will depend upon actual performance relative to the applicable performance metrics at the end of the performance period. All PSUs will vest on 12/7/2019, except for 99,750 PSUs granted to Mr. Stief which will vest on 12/7/2020.(3) |
Global Assignment Agreement with Mr. Williams
Option Exercises and Stock Vested Table The following table shows, for each of the named executive officers, the amounts realized from options that were exercised and RSUs that vested during fiscal 2017.
Global Assignment Agreement with Mr. Williams
| | 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 ($) | | (a) | (b) | (c) | (d) | (e)(1) | | George R. Oliver | - | - | 120,727 | 4,977,733 | | Brian Stief | - | - | 23,500 | 1,116,182 | | William C. Jackson | - | - | 67,137 | 3,188,667 | | Joseph Walicki | 39,721 | 548,532 | 3,769 | 180,426 | | Jeffrey Williams | 39,071 | 115,259 | 5,833 | 279,232 | | Alex A. Molinaroli | 97,678 | 480,722 | 262,935 | 12,485,575 |
Global Assignment Agreement with Mr. Williams
| 78 | 2018 Proxy Statement |
Global Assignment Agreement with Mr. Williams
| The amounts in column (e) represent the product of the number of shares a named executive officer acquired on vesting and the closing market price of the shares on the vesting date, plus the value of dividend equivalents released, if any.(1) |
Global Assignment Agreement with Mr. Williams
Pension Benefits As of September 30, 2017 The following table sets forth certain information with respect to the potential benefits to our named executive officers under the Johnson Controls qualified pension plan as of September 30, 2017. Only those named executive officers who participate in the plan are included in the table.
Global Assignment Agreement with Mr. Williams
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(1) ($) | | Joseph Walicki | Johnson Controls Pension Plan | 26.25 | $919,889 | | Jeffrey Williams | Johnson Controls Pension Plan | 30.67 | $1,246,045 | | Alex A. Molinaroli | Johnson Controls Pension Plan | 30.00 | $1,315,073 |
Global Assignment Agreement with Mr. Williams
| Amounts in this column reflect the following assumptions: A calculation date of September 30, 2017, a 3.78% discount rate for the Johnson Controls Pension Plan, retirement occurring at normal retirement age based on Social Security Normal Retirement Age minus three years, and applicability of the 2009 Static Mortality Table for Annuitants per Treasury Regulation 1.430(h)(3)-1(e), that we used for financial reporting purposes as of September 30, 2017. The valuation method used to determine the present value of the accumulated benefit is the same as the method we used for financial reporting purposes as of September 30, 2017. The value that an executive will actually receive under these benefits will differ to the extent facts and circumstances vary from what these calculations assume(1) |
Global Assignment Agreement with Mr. Williams
Johnson Controls Pension Plan. The Johnson Controls Pension Plan is a frozen defined benefit pension plan that provides benefits for most non-union U.S. employees hired before January 1, 2006, including Messrs. Walicki, Williams and Molinaroli. Because Messrs. Oliver, Stief and Jackson were employed by Johnson Controls after January 1, 2006, they are not participants in the Pension Plan. Subject to certain limitations that the Code imposes, the monthly retirement benefit payable under the Johnson Controls Pension Plan to participants, at normal retirement age in a single life annuity, is determined as follows:
Global Assignment Agreement with Mr. Williams
| · | 1.15% of final average monthly compensation times years of benefit service, plus |
Global Assignment Agreement with Mr. Williams
| · | 0.55% of final average monthly compensation in excess of Social Security covered compensation times years of benefit service (up to 30 years) |
Global Assignment Agreement with Mr. Williams
Service after December 31, 2014 does not count as benefit service in this formula. For purposes of this formula, “final average monthly compensation” means a participant’s gross compensation, excluding certain unusual or non-recurring items of compensation, such as severance or moving expenses, for the highest five consecutive years of the last ten consecutive years of employment occurring prior to January 1, 2015. “Social Security covered compensation” means the average of the Social Security wage base for the 35 years preceding a participant’s normal retirement age. Normal retirement age for Johnson Controls Pension Plan participants is age 65.
Global Assignment Agreement with Mr. Williams
| 2018 Proxy Statement | 79 |
Global Assignment Agreement with Mr. Williams
Participants in the Johnson Controls Pension Plan generally become vested in their pension benefits upon completion of five years of service. The Pension Plan does not pay full pension benefits until after a participant terminates employment and reaches normal retirement age. However, a participant who terminates employment may elect to receive benefits at a reduced level at any time after age 55, as follows: If a participant terminates employment prior to age 55 and completing 10 years of service, then the reduction is 5% for each year that benefits begin before their Social Security retirement age; and if a participant terminates employment on or after age 55 and after completing 10 years of service, then the reduction is 5% for each year that benefits begin before the three years preceding the participant’s Social Security retirement age. Mr. Williams is currently eligible for early retirement under the Pension Plan. Non-Qualified Deferred Compensation Table at Fiscal Year-End The following table presents information on the non-qualified deferred compensation accounts of each named executive officer at September 30, 2017.
Global Assignment Agreement with Mr. Williams
| Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(4) ($) | | (a) | (b) | (c) | (d) | (e) | (f) | | George R. Oliver | 133,800 | 170,725 | 182,222 | - | 1,438,711 | | Brian J. Stief | 793,208 | 222,047 | 243,027 | - | 1,261,907 | | William C. Jackson | 3,312,904 | 205,696 | (216,677) | - | 3,306,068 | | Joseph Walicki | 92,783 | 184,365 | 22,348 | - | 303,028 | | Jeffrey Williams | 106,188 | 228,677 | 24,051 | - | 362,543 | | Former Officer | | | | | | | Alex A. Molinaroli | 3,521,368 | 884,900 | 511,334 | - | 23,009,208 |
Global Assignment Agreement with Mr. Williams
| Amounts in column (b) include employee contributions under the Johnson Controls Executive Deferred Compensation Plan and the Johnson Controls Retirement Restoration Plan. The Johnson Controls Executive Deferred Compensation Plan allows participants to defer up to 100% of their annual bonuses, long-term performance share units and restricted share awards. The Retirement Restoration Plan allows executive officers to defer up to 6% of their compensation that is not eligible to be deferred into the Johnson Control 401(k) plan because of qualified plan limits that the Code imposes. All of the amounts shown in columns (b) are also included in the Summary Compensation Table.(1) |
Global Assignment Agreement with Mr. Williams
| Amounts in column (c) include employer contribution under the Retirement Restoration Plan. The Retirement Restoration Plan, also credits participants with an amount equal to the difference between the amount of retirement contributions made under the 401(k) plan and what such retirement contribution would have been without regard to the Code limits. In addition, for Mr. Oliver it also includes Company contributions, respectively, under the Legacy Tyco SSRP, a non-qualified retirement savings plan. Under the terms of the SSRP, an eligible executive may choose to defer up to 50% of his or her base salary and up to 100% of his or her performance bonus. All of the amounts shown in columns (c) are also included in the Summary Compensation Table.(2) |
Global Assignment Agreement with Mr. Williams
| 80 | 2018 Proxy Statement |
Global Assignment Agreement with Mr. Williams
| The Aggregate Earnings reported in column (d) are not “above-market or preferential earnings” and therefore are not required to be reported in the Summary Compensation Table. For Messrs. Oliver, Stief, Jackson, Walicki, Williams, and Molinaroli, the amounts in column (d) reflect all investment earnings, net of fees, on amounts that have been deferred under the Johnson Controls Deferred Compensation Plan and the Johnson Controls Retirement Restoration Plan. Investment earnings include any amounts relating to appreciation in the price of our ordinary shares, and negative amounts relating to depreciation in the price of ordinary shares because the deferred amounts include deferred share units, the value of which is tied to the value of our ordinary shares. In addition, for Mr. Oliver the amounts in column (d) also include earnings or (losses) on his notional account in the Legacy Tyco SSRP. Investment options under the Johnson Controls nonqualified deferred compensation plans include only funds that are available under Johnson Controls tax-qualified 401(k) retirement plans, and investment options under the SSRP include only funds that are available under Tyco’s tax- qualified 401(k) retirement plans.(3) |
Global Assignment Agreement with Mr. Williams
Potential Payments upon Termination and Change in Control The following table summarizes the severance and other enhanced benefits that would have been payable to the named executive officers upon termination of employment or upon the occurrence of a change in control subsequent to the Merger, assuming that the triggering event or events occurred on September 30, 2017. Equity award amounts are based on the closing share price of our ordinary shares of $40.29 on the NYSE on September 29, 2017. The Johnson Controls Inc. and Tyco Merger was deemed to constitute a change in control under the change in control employment agreements and equity compensation plans maintained by Legacy Johnson Controls and under the Legacy Tyco Change in Control Severance Plan for Certain U.S. Officers and Executives (the “CIC Severance Plan”) and equity compensation plans, triggering certain enhanced benefits for a period following the Merger, as described in the footnotes below the following table. The hypothetical benefits shown below under the Change-in-Control columns reflect amounts that would have been payable in connection with a change in control subsequent to the Merger under the arrangements described below. The hypothetical benefits shown below under the “Other Terminations” columns reflect amounts that would have been payable under the various circumstances set forth taking into account the fact that the Merger is treated as a change-in-control under certain plans and agreements applicable to the NEOs.
Global Assignment Agreement with Mr. Williams
| | Change in Control (other than the Merger) | | Other Terminations (including the impact of the Merger as a change in control trigger) | | | | | Name/Form of Compensation | Without Qualified Termination ($) | With Qualified Termination ($) | With Cause ($) | Without Cause/Good Reason Resignation ($) | Voluntary Resignation/ Retirement(6) ($) | Death or Disability ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | George R. Oliver | | | | | | | | Severance(1) | - | 11,097,423 | - | 11,097,423 | - | 11,097,423 | | Benefit Continuation(2) | - | 397,603 | - | 397,603 | - | 369,914 | | Accelerated Vesting of Equity Awards(3)(4) | - | 6,498,061 | - | 6,498,061 | 2,166,716 | 12,252,118 |
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Global Assignment Agreement with Mr. Williams
| | Change in Control (other than the Merger) | | Other Terminations (including the impact of the Merger as a change in control trigger) | | | | | Name/Form of Compensation | Without Qualified Termination ($) | With Qualified Termination ($) | With Cause ($) | Without Cause/Good Reason Resignation ($) | Voluntary Resignation/ Retirement(6) ($) | Death or Disability ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | Brian J. Stief | | | | | | | | Severance(5) | - | - | - | - | - | - | | Benefit Continuation | - | - | - | - | - | - | | Accelerated Vesting of Equity Awards(3)(4) | - | - | - | - | 13,203,320(4) | 30,485,715 | | William C. Jackson | | | | | | | | Severance(1) | - | 13,616,255 | - | 12,003,723 | - | 12,003,723 | | Benefit Continuation(2) | - | 400,281 | - | 66,120 | - | 31,792 | | Accelerated Vesting of Equity Awards(3) | - | 6,958,428 | - | 6,958,428 | 6,958,428 | 10,179,242 | | Joseph Walicki | | | | | | | | Severance(1) | - | 8,939,424 | - | 8,939,424 | - | 8,939,424 | | Benefit Continuation(2) | - | 386,634 | - | 71,893 | - | 45,065 | | Accelerated Vesting of Equity Awards(3) | - | 5,603,976 | - | 5,603,976 | - | 8,103,016 | | Jeffrey Williams | | | | | | | | Severance(1) | - | 9,073,220 | - | 9,073,220 | - | 9,073,220 | | Benefit & Perquisite Continuation(2) | - | 459,778 | - | 229,040 | - | 195,468 | | Accelerated Vesting of Equity Awards(3)(4) | - | 5,901,906 | - | 5,901,906 | 2,688,690 | 8,722,551 |
Global Assignment Agreement with Mr. Williams
| For Mr. Oliver, amounts shown include amounts that would have payable under his employment agreement upon a termination by us without cause or by Mr. Oliver with good reason (a “Tyco qualifying termination of employment”), or a termination due to Mr. Oliver’s death or disability, in each case on September 30, 2017, which was within the agreement’s protected 33 month period following the Merger. These amounts include: (a) a lump sum severance payment equal to three times the sum of Mr. Oliver’s annual base salary and a bonus amount calculated using the greater of his target bonus for the year of termination or his annual bonus for the most recently completed fiscal year; and (b) payment of a prorated portion of the bonus amount for the year of termination. Note, however, that on December 8, 2017, Mr. Oliver agreed to waive any rights he had under his employment agreement and is instead now covered by the Johnson Controls International plc Severance and Change in Control Policy for Officers. For Messrs. Jackson, Walicki and Williams, amounts shown include severance amounts that would have been payable under the executive officers’ respective change in control employment agreements upon a termination by us without cause or by the officer with good reason (a “Legacy Johnson Controls qualifying termination”), or a termination due to the executive officer’s death or disability, in each case on September 30, 2017, which is within the protected 36-month period following the Merger (such protected period, the “employment period”). These amounts include: (a) a lump sum severance payment equal to three times the executive officer’s annual cash compensation, which includes the executive officer’s(1) |
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Global Assignment Agreement with Mr. Williams
| annual base salary and the greater of (i) the average of the executive officer’s annualized annual cash bonuses and long-term performance awards for the three fiscal years preceding the change of control, and (ii) the sum of the annual cash bonuses and long-term performance awards for the most recently completed fiscal year (such greater amount, “average performance bonus”); (b) payment of a pro rata portion of the executive officer’s average performance bonus for the year of the termination. |
Global Assignment Agreement with Mr. Williams
| For Messrs. Jackson, Walicki and Williams, amounts shown include (i) the value of continued medical and welfare benefits through September 2, 2018 following termination of employment without cause or with good reason under the arrangements described in the preceding footnote and (ii) a cash payment equal to the lump sum value of the additional benefits the executive officer would have accrued through September 2, 2018 under pension and/or retirement plans, assuming the executive officer is fully vested in such benefits at the time of termination. For Mr. Oliver, amounts shown include: (i) the value of continued medical and welfare benefits for two years following termination of employment without cause or with good reason and (ii) a cash payment equal to the lump sum value of additional benefits Mr. Oliver would have accrued under retirement plans, assuming he is fully vested in such benefits at the time of termination.(2) |
Global Assignment Agreement with Mr. Williams
| Amounts represent the intrinsic value of unvested equity awards that would have vested upon the indicated triggering event for the named executive officers.(3) |
Global Assignment Agreement with Mr. Williams
| For Messrs. Oliver, Stief and Williams, who were retirement eligible under applicable plans as of September 30, 2017, the value of certain equity awards that would vest on an accelerated basis upon retirement is presented in the table above in column (f). The value of certain equity awards that would continue to vest according to their original vesting schedule upon retirement is not included.(4) |
Global Assignment Agreement with Mr. Williams
| In connection with receiving his retention RSU/PSU award, Mr. Stief agreed to waive any severance benefits he would be entitled to receive under his employment agreement or any company severance policy.(5) |
Global Assignment Agreement with Mr. Williams
| A voluntary resignation is a resignation without good reason as defined under applicable agreements and plans. As a result of the Merger and the integration of Legacy Johnson Controls and Legacy Tyco, including changes in reporting relationships and responsibilities, facts already exist that entitle certain executives of the Company to terminate their employment for good reason during applicable periods as specified in such agreements and plans. Mr. Jackson is one of those executives who currently has good reason to terminate his employment. However, this column shows the benefits he would have received if he had terminated on September 30, 2017 without good reason.(6) |
Global Assignment Agreement with Mr. Williams
As noted above, Messrs. Oliver, Stief and Williams were retirement eligible under applicable plans as of September 30, 2017. For Messrs. Oliver, Stief and Williams, upon the executive’s retirement:
Global Assignment Agreement with Mr. Williams
| i. | the Company is not obligated to pay severance; |
Global Assignment Agreement with Mr. Williams
| ii. | with respect to equity awards granted prior to the Merger or in relation to the merger; |
Global Assignment Agreement with Mr. Williams
| · | for Mr. Oliver, the terms of the equity awards granted prior to September 2, 2016 generally provide that if he were to retire at least one year following the grant of such award, the applicable award would accelerate and vest pro rata based on the number of full months of service completed since the grant date of the award; |
Global Assignment Agreement with Mr. Williams
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Global Assignment Agreement with Mr. Williams
| · | for Messrs. Stief and Williams with respect to share options, the vesting of any unvested share options that were granted to the executive under the Legacy Johnson Controls Omnibus Incentive Plan that were outstanding for at least one full calendar year after the year of grant would accelerate so that all of the options would be exercisable in full (and the executive would forfeit all other options that have not been outstanding for at least one full calendar year after the date of grant); |
Global Assignment Agreement with Mr. Williams
| · | for Messrs. Stief and Williams with respect to RSU awards, (A) for certain awards, the executive would retain his RSUs that had not vested at the time of retirement, and they would continue to vest on the normal vesting schedule, and (B) for certain awards granted in 2015 and 2016, the executive would either vest pro rata in the award based on the number of full months of service completed since the grant of the award or fully vest in the award (however, in each case, the award agreements provide that the executive would not earn the award if he engaged in conduct harmful to the best interests of the Company after his retirement); |
Global Assignment Agreement with Mr. Williams
| iii. | with respect to equity awards granted for fiscal year 2017: |
Global Assignment Agreement with Mr. Williams
| · | for Messrs. Oliver and Stief with respect to share options, the vesting of any unvested share options that were granted to the executive that were outstanding for at least one full calendar year after the year of grant would accelerate so that all of the options would be exercisable in full (and the executive would forfeit all other options that have not been outstanding for at least one full calendar year after the date of grant); |
Global Assignment Agreement with Mr. Williams
| · | for Messrs. Oliver and Stief with respect to RSU awards, (A) for certain awards, the executive would retain his shares of restricted share and RSUs that had not vested at the time of retirement, and they would continue to vest on the normal vesting schedule, and (B) for certain awards granted to Mr. Stief in 2017, he would either fully vest in the award or forfeit the award; |
Global Assignment Agreement with Mr. Williams
| · | for Mr. Williams with respect to share options and RSU awards, the applicable award would accelerate and vest pro rata based on the number of full months of service completed since the grant date of the award; and |
Global Assignment Agreement with Mr. Williams
| · | for Messrs. Oliver, Stief and Williams with respect to PSUs, the executive would earn the units that he held at retirement based on actual performance at the end of the performance period, but the amount would be pro-rated based on the number of full months employment during the performance period. |
Global Assignment Agreement with Mr. Williams
In addition, Mr. Williams and Mr. Walicki would be eligible to receive pension benefits upon retirement. For an estimate of the value of these pension benefits, please see the Pension Benefits Table above.
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Global Assignment Agreement with Mr. Williams
THE ANNUAL GENERAL MEETING – QUESTIONS AND ANSWERS The following questions and answers are intended to address briefly some commonly asked questions regarding the Annual General Meeting. These questions and answers may not address all questions that may be important to you. For more information, please refer to the more detailed information contained elsewhere in this proxy statement, including the documents referred to or incorporated by reference herein. For instructions on obtaining the documents incorporated by reference, see “Where You Can Find More Information.” Why did I receive this Proxy statement? We have sent this notice of annual general meeting and proxy statement, together with the enclosed proxy card or voting instruction card, because our Board of Directors is soliciting your proxy to vote at the Annual General Meeting on March 7, 2018. This proxy statement contains information about the items being voted on at the Annual General Meeting and important information about Johnson Controls. Our 2017 Annual Report on Form 10-K, which includes our consolidated financial statements for the fiscal year ended September 30, 2017 (the “Annual Report”), is enclosed with these materials. Who is entitled to vote? Each holder of Johnson Controls ordinary shares in our register of shareholders (such owners are often referred to as “shareholders of record,” “record holders” or “registered shareholders”) as of the close of business on January 3, 2018, the record date for the Annual General Meeting, is entitled to attend and vote at the Annual General Meeting. On January 3, 2018, there were 926,105,380 ordinary shares outstanding and entitled to vote at the Annual General Meeting. Any Johnson Controls shareholder of record as of the record date who does not receive notice of the Annual General Meeting and proxy statement, together with the enclosed proxy card or voting instruction card and the Annual Report, may obtain a copy at the Annual General Meeting or by contacting Johnson Controls at +353-21-423-5000. We have requested that banks, brokerage firms and other nominees who hold ordinary shares on behalf of the owners of the ordinary shares (such owners are often referred to as “beneficial shareholders” or “street name holders”) as of the close of business on January 3, 2018 forward these materials, together with a proxy card or voting instruction card, to such beneficial shareholders. Johnson Controls has agreed to pay the reasonable expenses of the banks, brokerage firms and other nominees for forwarding these materials. Finally, Johnson Controls has provided for these materials to be sent to persons who have interests in its ordinary shares through participation in Johnson Controls’ retirement savings plans. These individuals are not eligible to vote directly at the Annual General Meeting. They may, however, instruct the trustees of these plans how to vote the ordinary shares represented by their interests. The enclosed proxy card will also serve as voting instructions for the trustees of the plans. How many votes do I have? Every holder of an ordinary share on the record date will be entitled to one vote per share for each matter presented at the Annual General Meeting. Because each Director’s election is the subject of a separate resolution, every holder of an ordinary share on the record date will be entitled to one vote per share for each separate Director election resolution.
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Global Assignment Agreement with Mr. Williams
What is the difference between holding shares as a shareholder of record and as a beneficial owner? Most of our shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially. SHAREHOLDER OF RECORD If your shares are registered directly in your name, in our share register operated by our transfer agent, Wells Fargo Bank, N.A., or its successor, you are considered, with respect to those shares, the shareholder of record and these proxy materials are being sent to you directly by us. As the shareholder of record, you have the right to grant your voting proxy to the persons named in the proxy card (see “How Do I Appoint and Vote via a Proxy?” below), or to grant a written proxy to any other person, which person does not need to be a shareholder, or to attend and vote in person at the Annual General Meeting. We have enclosed a proxy card for you to use in which you can elect to appoint the officers of the Company named therein as your proxy. BENEFICIAL OWNER If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares and are also invited to attend the Annual General Meeting. However, since you are not the shareholder of record, you may only vote these shares in person at the Annual General Meeting if you follow the instructions described below under “Admission to the Annual General Meeting” and “How do I vote?” Your bank, broker or other nominee has enclosed a voting instruction card for you to use in directing your bank, broker or other nominee as to how to vote your shares, which may contain instructions for voting by telephone or electronically. How do I vote? A proxy card is being sent to each shareholder of record as of the record date. If you hold your shares in the name of a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or nominee when voting your shares. Otherwise, you can vote in the following ways:
Global Assignment Agreement with Mr. Williams
| ∎ | By Mail: If you are a holder of record, you can vote by marking, dating and signing the appropriate proxy card and returning it by mail in the enclosed postage-paid envelope. If you beneficially own your ordinary shares, you can vote by following the instructions on your voting instruction card. |
Global Assignment Agreement with Mr. Williams
| ∎ | By Internet or Telephone: You can vote over the Internet at www.proxyvote.com by following the instructions on the proxy card or the voting instruction card or in the Notice of Internet availability of proxy materials previously sent to you. If you are not a holder of record, you can vote using a touchtone telephone by calling 1-800-454-8683. |
Global Assignment Agreement with Mr. Williams
| ∎ | At the Annual General Meeting: If you are planning to attend the Annual General Meeting and wish to vote your ordinary shares in person, we will give you a ballot at the meeting. Shareholders who own their shares in “street name” are not able to vote at the Annual General Meeting unless they have a proxy, executed in their favor, from the holder of record of their shares. |
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Global Assignment Agreement with Mr. Williams
Even if you plan to be present at the Annual General Meeting, we encourage you to complete and mail the enclosed card to vote your ordinary shares by proxy. Telephone and Internet voting facilities for shareholders will be available 24 hours a day and will close at 11:59 p.m., Eastern Standard Time, on March 6, 2018. How do I appoint and vote via a proxy? If you properly fill in your proxy card appointing an officer of the Company as your proxy and send it to us in time to vote, your proxy, meaning one of the individuals named on your proxy card, will vote your shares as you have directed. You may also grant a written proxy to any other person by filling in the proxy card and identifying the person, which person does not need to be a shareholder, or attend and vote in person at the Annual General Meeting. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board of Directors “FOR” each Director and “FOR” each of the agenda items listed above. If a new agenda item or a new motion or proposal for an existing agenda item is presented to the Annual General Meeting, the Company officer acting as your proxy will vote in accordance with the recommendation of our Board of Directors. At the time we began printing this proxy statement, we knew of no matters that needed to be acted on at the Annual General Meeting other than those discussed in this proxy statement. Whether or not you plan to attend the Annual General Meeting, we urge you to submit your proxy. Returning the proxy card or submitting your vote electronically will not affect your right to attend the Annual General Meeting. You must return your proxy cards by the times and dates set forth below under “Returning Your Proxy Card” in order for your vote to be counted. What if I return my proxy or voting instruction card but do not mark it to show how I am voting? Your shares will be voted according to the specific instructions you have indicated on your proxy or voting instruction card. If you sign and return your proxy or voting instruction card but do not indicate specific instructions for voting, you instruct the proxy to vote your shares, “FOR” each Director and “FOR” all other proposals. For any other matter which may properly come before the Annual General Meeting, and any adjournment or postponement thereof, you instruct, by submitting proxies with blank voting instructions, the proxy to vote in accordance with the recommendation of the Board of Directors. May I change or revoke my vote after I return my proxy or voting instruction card? You may change your vote before it is exercised by:
Global Assignment Agreement with Mr. Williams
| ∎ | If you voted by telephone or the Internet, submitting subsequent voting instructions through the telephone or Internet; |
Global Assignment Agreement with Mr. Williams
| ∎ | Submitting another proxy card (or voting instruction card if you beneficially own your ordinary shares) with a later date; or |
Global Assignment Agreement with Mr. Williams
| ∎ | If you are a holder of record, or a beneficial owner with a proxy from the holder of record, voting in person at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
Your presence without voting at the meeting will not automatically revoke your proxy, and any revocation during the meeting will not affect votes previously taken. If you hold your shares in the name of a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or nominee in revoking your previously granted proxy.
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Global Assignment Agreement with Mr. Williams
What does it mean if I receive more than one proxy or voting instruction card? It means you have multiple accounts at the transfer agent and/or with banks and stockbrokers. Please vote all of your shares. Beneficial owners sharing an address who are receiving multiple copies of the proxy materials and Annual Report will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all shareholders at the shared address in the future. In addition, if you are the beneficial owner, but not the record holder, of our shares, your broker, bank or other nominee may deliver only one copy of the proxy statement and Annual Report to multiple shareholders who share an address unless that nominee has received contrary instructions from one or more of the shareholders. We will deliver promptly, upon written or oral request, a separate copy of the proxy statement and Annual Report to a shareholder at a shared address to which a single copy of the documents was delivered. Shareholders who wish to receive a separate written copy of the proxy statement, now or in the future, should submit their request to us by telephone at +353-21-423-5000 or by submitting a written request to Johnson Controls Shareholder Services, Johnson Controls International plc, One Albert Quay, Cork, Ireland. What vote is required to approve each proposal at the Annual General Meeting? Johnson Controls intends to present proposals numbered one through eight for shareholder consideration and voting at the Annual General Meeting. The vote required to approve each proposal is described below:
Global Assignment Agreement with Mr. Williams
| 1. | By separate resolutions, to elect the following individuals as Directors for a period of one year, expiring at the end of the Company’s Annual General Meeting of Shareholders in 2019: |
Global Assignment Agreement with Mr. Williams
| (a) Michael E. Daniels | (b) W. Roy Dunbar | (c) Brian Duperreault | | (d) Gretchen R. Haggerty | (e) Simone Menne | (f) George R. Oliver | | (g) Juan Pablo del Valle Perochena | (h) Jürgen Tinggren | (i) Mark Vergnano | | (j) R. David Yost | (k) John D. Young | |
Global Assignment Agreement with Mr. Williams
| The election of each director nominee requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
| 2. | To ratify the appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company and to authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration, which in each case, requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
| 3. | To authorize the Company and/or any subsidiary of the Company to make market purchases of Company shares, which requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
| 4. | To determine the price range at which the Company can re-allot shares that it holds as treasury shares (Special Resolution), which requires the affirmative vote of at least 75% of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
| 5. | To approve, in a non-binding advisory vote, the compensation of the named executive officers, which will be considered approved with the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. The advisory vote on executive compensation is non-binding, meaning that our Board of Directors will not be obligated to take any compensation actions or to adjust our executive compensation programs or policies as a result of the vote. |
Global Assignment Agreement with Mr. Williams
| 6. | To approve the authorization for the Board of Directors to issue shares up to 33% of its issued share capital, which requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
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Global Assignment Agreement with Mr. Williams
| 7. | To approve the authorization for the Board of Directors to issue shares for cash up to a maximum of approximately 5% of issued share capital (Special Resolution), which requires the affirmative vote of at least 75% of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
| 8. | By separate resolutions to approve (a) a reduction of the Company’s capital and (b) a clarifying amendment to the Company’s Articles of Association to facilitate the capital reduction, (Special Resolutions) which each require the affirmative vote of at least 75% of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Global Assignment Agreement with Mr. Williams
What is the quorum requirement for the Annual General Meeting? In order to conduct any business at the Annual General Meeting, holders of a majority of Johnson Controls’ ordinary shares which are outstanding and entitled to vote on the record date must be present in person or represented by valid proxies. This is called a quorum. Your shares will be counted for purposes of determining if there is a quorum, whether representing votes for, against or abstained, or broker non-votes, if you:
Global Assignment Agreement with Mr. Williams
| ∎ | are present and vote in person at the meeting; |
Global Assignment Agreement with Mr. Williams
| ∎ | have voted by telephone or the Internet; OR |
Global Assignment Agreement with Mr. Williams
| ∎ | you have submitted a proxy card or voting instruction form by mail. |
Global Assignment Agreement with Mr. Williams
What is the effect of broker non-votes and abstentions? Abstentions and broker non-votes are considered present for purposes of determining the presence of a quorum. Abstentions and broker non-votes will not be considered votes properly cast at the Annual General Meeting. Because the approval of all of the proposals is based on the votes properly cast at the Annual General Meeting, abstentions and broker non-votes will not have any effect on the outcome of voting on these proposals. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular agenda item because the broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares with respect to “routine” matters, they do not have discretionary power to vote your shares on “non-routine” matters pursuant to the rules of The New York Stock Exchange (the “NYSE”). We believe the following proposals will be considered non-routine under NYSE rules and therefore your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you: Proposal No. 1 (Election of Directors) and Proposal No. 5 (Advisory Vote on Executive Compensation) Therefore your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you. How will voting on any other business be conducted? Other than matters incidental to the conduct of the Annual General Meeting and those set forth in this proxy statement, we do not know of any business or proposals to be considered at the Annual General Meeting. If any other business is proposed and properly presented at the Annual General Meeting, the proxy holders must vote in accordance with the instructions given by the shareholder. You may specifically instruct the proxy holder how to vote in such a situation. In the absence of specific instructions, by signing the proxy, you instruct the proxy holder to vote in accordance with the recommendations of the Board of Directors.
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Global Assignment Agreement with Mr. Williams
Important notice regarding the availability of proxy materials for the Annual General Meeting: Our proxy statement for the Annual General Meeting and the form of proxy card are available at www.proxyvote.com. As permitted by SEC rules, we are making this proxy statement available to our shareholders electronically via the Internet. On January 19, 2018, we first mailed to our shareholders a Notice containing instructions on how to access this proxy statement and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy statement. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. Returning Your Proxy Card Shareholders who are voting by mail should complete and return the proxy card as soon as possible. In order to assure that your proxy is received in time to be voted at the meeting, the proxy card must be completed in accordance with the instructions and received at one of the addresses set forth below by the dates and times specified: Ireland: By 5:00 p.m., local time, on March 6, 2018 by hand or mail at: Johnson Controls International plc One Albert Quay Cork, Ireland United States: By 5:00 p.m., Eastern Standard Time, on March 6, 2018 by mail at: Broadridge Financial Solutions c/o Vote Processing 51 Mercedes Way Edgewood, NY 11717 If your shares are held beneficially in “street name,” you should return your proxy card or voting instruction card in accordance with the instructions on that card or as provided by the bank, brokerage firm or other nominee who holds Johnson Controls shares on your behalf. Admission to the Annual General Meeting All shareholders are invited to attend the Annual General Meeting. For admission to the Annual General Meeting, shareholders of record should bring the admission ticket attached to the enclosed proxy card to the Registered Shareholders check-in area, where their ownership will be verified. Those who have beneficial ownership of shares held by a bank, brokerage firm or other nominee should come to the Beneficial Owners check-in area. Beneficial owners who wish to vote in person at the Annual General Meeting are requested to obtain a “legal proxy” executed in their favor, from their broker, bank,
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Global Assignment Agreement with Mr. Williams
nominee or other custodian that authorizes you to vote the shares held by them on your behalf. In addition, you must bring to the Annual General Meeting an account statement or letter from the broker, bank or other nominee indicating that you are the owner of the shares. Registration will begin at 2:00 pm, local time, and the Annual General Meeting will begin at 3:00 pm, local time. Johnson Controls Annual Report The Johnson Controls International plc 2017 Annual Report containing our audited consolidated financial statements with accompanying notes is available on the Company’s Web site in the Investor Relations Section at www.johnsoncontrols.com. Copies of these documents may be obtained without charge by contacting Johnson Controls by phone at +353-21-423-5000. Copies may also be obtained without charge by contacting Investor Relations in writing, or may be physically inspected, at the offices of Johnson Controls International plc, One Albert Quay, Cork, Ireland. Presentation of Irish Statutory Accounts The Company’s Irish Statutory Accounts for the fiscal year ended September 30, 2017, including the reports of the Directors and auditors thereon, will be presented at the Annual General Meeting. The Company’s Irish Statutory Accounts have been approved by the Board of Directors of the Company. There is no requirement under Irish law that such statements be approved by shareholders, and no such approval will be sought at the Annual General Meeting. The Company’s Irish Statutory Accounts are available with the proxy statement, the Company’s Annual Report on Form 10-K and other proxy materials at www.proxyvote.com, and in the Investor Relations section of the Company’s website at www.johnsoncontrols.com. Costs of Solicitation We will pay the cost of solicitation of proxies. We have engaged Mackenzie Partners as the proxy solicitor for the Annual General Meeting for an approximate fee of $12,500, plus expenses. In addition to the use of the mails, certain of our Directors, officers or employees may solicit proxies by telephone or personal contact. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares. We are furnishing this proxy statement to our shareholders in connection with the solicitation of proxies by our Board of Directors for use at an Annual General Meeting of our shareholders. We are first mailing this proxy statement and the accompanying form of proxy to shareholders beginning on or about January 19, 2018. Shareholder Proposals for the 2019 Annual General Meeting In accordance with the rules established by the SEC, as well as under the provisions of our Memorandum and Articles of Association, any shareholder proposal submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”) intended for inclusion in the proxy statement for next year’s Annual General Meeting must be received by Johnson Controls no later than September 21, 2018. Such proposals should be sent to our Secretary at our registered address, which is: One Albert Quay, Cork, Ireland. To be included in the proxy statement, the proposal must comply with the requirements as to form and substance established by the SEC and our Articles of Association, and must be a proper subject for shareholder action under applicable law. Any shareholder proposal that is not submitted for inclusion in the proxy statement but is instead sought to be presented directly at the 2019 Annual General Meeting must be received by the Secretary at the
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Global Assignment Agreement with Mr. Williams
address listed above no earlier than December 5, 2018. Securities and Exchange Commission rules permit management to vote proxies in its discretion in certain cases if the shareholder does not comply with this deadline and in certain other cases notwithstanding the shareholder’s compliance with this deadline. New proposals or motions with regard to existing agenda items are not subject to such restrictions and can be made at the meeting by each shareholder attending or represented. Note that if specific voting instructions are not provided to the proxy, shareholders who submit a proxy card instruct the proxy to vote their shares in accordance with the recommendations of the Board of Directors with regard to the items appearing on the agenda. Where You Can Find More Information We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy these materials at the SEC reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on their public reference room. Our SEC filings are also available to the public at the SEC’s Web site (www.sec.gov). The SEC’s Web site contains reports, proxy statements and other information regarding issuers, like us, that file electronically with the SEC. You may find our reports, proxy statements and other information at the SEC Web site. In addition, you can obtain reports and proxy statements and other information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. We maintain a Web site on the Internet at www.johnsoncontrols.com. We make available free of charge, on or through our Web site, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after such material is filed with the SEC. This reference to our Internet address is for informational purposes only and shall not, under any circumstances, be deemed to incorporate the information available at such Internet address into this proxy.
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Global Assignment Agreement with Mr. Williams
Security Ownership of Certain Beneficial Owners and Management The following table sets forth the number of registered shares beneficially owned as of January 10, 2018 by each current director, each director nominee, each named executive officer and the directors and executive officers of Johnson Controls as a group.
Global Assignment Agreement with Mr. Williams
| Beneficial Owner | Title | Number of Ordinary Shares Beneficially Owned(1)(2) | Pct of Class | Cash Settled Stock Units(3) | | David P. Abney | Director | 9,526 | * | - | | Natalie A. Black | Director | 3,865 | * | - | | Michael E. Daniels | Director | 64,841 | * | - | | Roy Dunbar | Director | 2,810 | * | - | | Brian Duperreault | Director | 28,842 | * | - | | Gretchen R. Haggerty | Director Nominee | - | * | - | | William Jackson | Named Executive Officer | 378,327 | * | 73,603 | | Simone Menne | Director Nominee | - | * | - | | Alex A. Molinaroli | Former Chairman and CEO(4) | 1,680,503 | * | 217,143 | | George R. Oliver | Chairman and CEO | 2,672,646 | * | - | | Juan Pablo del Valle Perochena | Director | 3,865 | * | - | | Brian Stief | Named Executive Officer | 195,590 | * | 76,359 | | Jürgen Tinggren | Director | 21,625 | * | - | | Mark Vergnano | Director | 15,449 | * | - | | Joseph A. Walicki | Named Executive Officer | 156,075 | * | - | | Jeffrey M. Williams | Named Executive Officer | 233,519 | * | - | | R. David Yost | Director | 46,786 | * | - | | John D. Young(5) | Director | 1,037 | * | - | | All current Directors and executive officers as a group (20 persons) | | 3,975,163 | * | - |
Global Assignment Agreement with Mr. Williams
* Less than 1.0% (1) The number shown reflects the number of ordinary shares owned beneficially as of January 10, 2018, based on information furnished by the persons named, public filings and Johnson Control’s records. A person is deemed to be a beneficial owner of ordinary shares if he or she, either alone or with others, has the power to vote or to dispose of those ordinary shares. Except as otherwise indicated below and subject to applicable community property laws, each owner has sole voting and sole investment authority with respect to the shares listed. To the extent indicated in the notes below, ordinary shares beneficially owned by a person include ordinary shares of which the person has the right to acquire beneficial ownership within 60 days after January 10, 2018. There were approximately 926,123,000 Johnson Controls ordinary shares outstanding on such date. (2) Includes the maximum number of shares for which these individuals can acquire beneficial ownership upon (i) the exercise of share options that are currently vested or will vest within 60 days of January 10, 2018 as follows: Mr. Jackson, 268,259; Mr. Molinaroli, 1,018,663; Mr. Oliver, 2,177,135; Mr. Stief, 174,019; Mr. Walicki, 110,100; and Mr. Williams, 198,051. (3) Reflects ordinary share equivalents under deferred and equity based compensation plans. Each stock unit is intended to be the economic equivalent of one ordinary share of Johnson Controls
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Global Assignment Agreement with Mr. Williams
International plc ordinary share. Units are settled in the form of cash and are not settled in the form of ordinary shares. These amounts are not included in the amounts in the “Number of Ordinary Shares Beneficially Owned” column. (4) Mr. Molinaroli left his role as Chairman and CEO effective September 1, 2017. (5) Mr. Young became a director on December 7, 2017. The following table sets forth the information indicated for persons or groups known to the Company to be beneficial owners of more than 5% of the outstanding ordinary shares.
Global Assignment Agreement with Mr. Williams
| Name and Address of Beneficial Owner | Number of Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares Outstanding | | Dodge & Cox, 555 California Street 40(th) Floor San Francisco, CA 94104 | 74,394,418(1) | 8.04% | | The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 | 57,509,967(2) | 6.13% | | BlackRock, Inc., 55 East 52(nd) Street, New York, NY 10055 | 56,082,625(3) | 6.00% | | Capital Group Companies, 333 South Hope Street Los Angeles, CA 90071 | 47,105,396(4) | 5.05% |
Global Assignment Agreement with Mr. Williams
(1) Based solely on the information reported by Dodge & Cox in a Notification of Holdings under Irish law provided to the Company on December 29, 2017 and reporting ownership as of December 22, 2017, Dodge & Cox, together with its affiliates, held an interest in 65,273,649 ordinary shares. (2) The amount shown for the number of ordinary shares over which The Vanguard Group exercised investment discretion was provided pursuant to the Schedule 13G/A filed February 24, 2017 with the SEC, indicating beneficial ownership as of December 31, 2016. (3) The amount shown for the number of ordinary shares over which BlackRock, Inc. exercised investment discretion was provided pursuant to the Schedule 13G/A filed January 25, 2017 with the SEC, indicating beneficial ownership as of December 31, 2016. (4) Based solely on the information reported by Capital Group Companies in a Notification of Holdings under Irish law provided to the Company on September 19, 2017 and reporting ownership as of September 18, 2017. On such date, Capital Group Companies, together with its affiliates, held an interest in 47,105,396 ordinary shares. Section 16(A) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and Directors and persons who beneficially own more than 10% of Johnson Controls’ ordinary shares to file reports of ownership and changes in ownership of such ordinary shares with the SEC and NYSE. These persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. As a matter of practice, the Company’s administrative staff assists officers and Directors in preparing initial reports of ownership and reports of changes in ownership and files those reports on their behalf. Based on the Company’s review of the copies of such forms it has received, as well as information provided and representations made by the reporting persons, other than the exception noted below, Johnson Controls believes that all of its officers, Directors and beneficial owners of more than 10% of its ordinary shares complied with Section 16(a) during the Company’s fiscal year ended September 30, 2017.
Global Assignment Agreement with Mr. Williams
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Global Assignment Agreement with Mr. Williams
ANNEX I NON-GAAP RECONCILIATIONS Financial Summary In the first quarter of fiscal 2017, the Company began evaluating the performance of its business units primarily on segment earnings before interest, taxes and amortization (EBITA), which represents income from continuing operations before income taxes and noncontrolling interests, excluding general corporate expenses, intangible asset amortization, net financing charges, significant restructuring and impairment costs, and the net mark-to-market adjustments related to pension and postretirement plans. Historical information has been revised to present the comparable periods on a consistent basis. Also in the first quarter of fiscal 2017, the Company began reporting the Automotive Experience business as a discontinued operation, which required retrospective application to previously reported financial information. As a result, the segment EBITA amounts shown below are for continuing operations and exclude the Automotive Experience business. In addition, the financial results for the twelve months ended September 30, 2016 include only the September results for the Tyco business as the merger closed September 2, 2016.
Global Assignment Agreement with Mr. Williams
| (in millions; unaudited) | Twelve Months Ended September 30, | | | | | | 2017 | | 2016 | | | | Actual | Adjusted Non-GAAP | Actual | Adjusted Non-GAAP | | Net sales(1) | | | | | | Building Technologies & Solutions | $22,835 | $22,801 | $14,184 | $14,204 | | Power Solutions | 7,337 | 7,337 | 6,653 | 6,653 | | Net sales | $30,172 | $30,138 | $20,837 | $20,857 | | Segment EBITA(1) | | | | | | Building Technologies & Solutions | $2,831 | $3,018 | $1,427 | $1,537 | | Power Solutions | 1,427 | 1,428 | 1,327 | 1,336 | | Segment EBITA | 4,258 | 4,446 | 2,754 | 2,873 | | Corporate expenses(2) | (768) | (465) | (607) | (367) | | Amortization of intangible assets(3) | (489) | (382) | (116) | (111) | | Mark-to-market gain (loss) for pension and postretirement plans(4) | 420 | - | (393) | - | | Restructuring and impairment costs(5) | (367) | - | (288) | - | | EBIT(6) | 3,054 | 3,599 | 1,350 | 2,395 | | EBIT margin | 10.1% | 11.9% | 6.5% | 11.5% | | Net financing charges(7) | (496) | (479) | (289) | (288) | | Income from continuing operations before income taxes | 2,558 | 3,120 | 1,061 | 2,107 | | Income tax provision(8) | (705) | (468) | (197) | (360) | | Income from continuing operations | 1,853 | 2,652 | 864 | 1,747 | | Income from continuing operations attributable to noncontrolling interests(9) | (199) | (193) | (132) | (169) | | Net income from continuing operations attributable to JCI | $1,654 | $2,459 | $732 | $1,578 |
Global Assignment Agreement with Mr. Williams
| This document contains financial information regarding adjusted net sales, adjusted segment EBITA and adjusted segment EBITA margins, which are non-GAAP performance measures. The(1) |
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Global Assignment Agreement with Mr. Williams
| Company’s definition of adjusted segment EBITA excludes special items because these costs are not considered to be directly related to the underlying operating performance of its business units. Management believes these non-GAAP measures are useful to investors in understanding the ongoing operations and business trends of the Company. |
Global Assignment Agreement with Mr. Williams
The following is the twelve months ended September 30, 2017 and 2016 reconciliation of net sales, segment EBITA and segment EBITA margin as reported to adjusted net sales, adjusted segment EBITA and adjusted segment EBITA margin (unaudited):
Global Assignment Agreement with Mr. Williams
| (in millions) | Building Technologies & Solutions | | Power Solutions | | Consolidated JCI plc | | | | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | | Net sales as reported | $22,835 | $14,184 | $7,337 | $6,653 | $30,172 | $20,837 | | Adjusting items: | | | | | | | | Nonrecurring purchase accounting impacts | (34) | 20 | - | - | (34) | 20 | | Adjusted net sales | $22,801 | $14,204 | $7,337 | $6,653 | $30,138 | $20,857 | | Segment EBITA as reported | $2,831 | $1,427 | $1,427 | $1,327 | $4,258 | $2,754 | | Segment EBITA margin as reported | 12.4% | 10.1% | 19.4% | 19.9% | 14.1% | 13.2% | | Adjusting items: | | | | | | | | Transaction costs | 33 | 16 | 1 | 1 | 34 | 17 | | Integration costs | 78 | 20 | - | - | 78 | 20 | | Nonrecurring purchase accounting impacts | 26 | 69 | - | - | 26 | 69 | | Unfavorable arbitration award | 50 | - | - | - | 50 | - | | Other | - | 5 | - | 8 | - | 13 | | Adjusted segment EBITA | $3,018 | $1,537 | $1,428 | $1,336 | $4,446 | $2,873 | | Adjusted segment EBITA margin | 13.2% | 10.8% | 19.5% | 20.1% | 14.8% | 13.8% |
Global Assignment Agreement with Mr. Williams
| Adjusted Corporate expenses for the twelve months ended September 30, 2017 exclude $241 million of integration costs, $58 million of transaction costs and $4 million of separation costs. Adjusted Corporate expenses for the twelve months ended September 30, 2016 exclude $184 million of transaction costs, $51 million of separation costs and $5 million of other costs.(2) |
Global Assignment Agreement with Mr. Williams
| Adjusted amortization of intangible assets for the twelve months ended September 30, 2017 excludes $107 million of nonrecurring asset amortization related to Tyco purchase accounting. Adjusted amortization of intangible assets for the twelve months ended September 30, 2016 excludes $5 million of nonrecurring asset amortization related to Tyco purchase accounting.(3) |
Global Assignment Agreement with Mr. Williams
| The twelve months ended September 30, 2017 pension and postretirement mark-to-market gain of $420 million is excluded from the adjusted non-GAAP results. The twelve months ended September 30, 2016 pension and postretirement mark-to-market loss of $393 million is excluded from the adjusted non-GAAP results.(4) |
Global Assignment Agreement with Mr. Williams
| The twelve months ended September 30, 2017 restructuring and impairment costs of $367 million are excluded from the adjusted non-GAAP results. The twelve months ended September 30, 2016 restructuring and impairment costs of $288 million are excluded from the adjusted non-GAAP results.(5) |
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| Management defines earnings before interest and taxes (EBIT) as income from continuing operations before net financing charges, income taxes and noncontrolling interests.(6) |
Global Assignment Agreement with Mr. Williams
| Adjusted net financing charges for the twelve months ended September 30, 2017 exclude $17 million of transaction costs related to the debt exchange offers. Adjusted net financing charges for the twelve months ended September 30, 2016 exclude $1 million of integration costs.(7) |
Global Assignment Agreement with Mr. Williams
| Adjusted income tax provision for the twelve months ended September 30, 2017 excludes the non-cash tax charge of $457 million related to establishment of a deferred tax liability on the outside basis difference of the Company’s investment in certain subsidiaries of the Scott Safety business, pension and postretirement mark-to-market gain of $126 million, change in the deferred tax liability related to the outside basis of certain nonconsolidated subsidiaries of $53 million, change in assertion over permanently reinvested earnings of $33 million and net valuation allowance adjustments in various legal entities of $27 million, partially offset by the tax benefits of tax audit settlements of $191 million, changes in entity tax status of $101 million, restructuring and impairment costs of $63 million, integration costs of $57 million, Tyco nonrecurring purchase accounting impacts of $35 million and transaction costs of $12 million. Adjusted income tax provision for the twelve months ended September 30, 2016 excludes the tax benefits of loss on mark-to-market pension and postretirement of $119 million, restructuring and impairment costs of $76 million, Tyco nonrecurring purchase accounting impacts of $20 million, transaction costs of $18 million, other costs of $4 million, integration costs of $2 million and separation costs of $1 million, partially offset by the tax provision of $77 million due to the merger with Tyco.(8) |
Global Assignment Agreement with Mr. Williams
| Adjusted income from continuing operations attributable to noncontrolling interests for twelve months ended September 30, 2017 excludes the noncontrolling interest impact of $4 million for mark-to-market pension gain and $2 million for valuation allowance adjustments. Adjusted income from continuing operations attributable to noncontrolling interests for the twelve months ended September 30, 2016 excludes the noncontrolling interest impact of $16 million for restructuring and impairment costs, $11 million for mark-to-market pension loss and $10 million for transaction/integration costs.(9) |
Global Assignment Agreement with Mr. Williams
2016 Supplemental Combined Information As a result of the reverse merger between JCI and Tyco, which closed on September 2, 2016, the Company is providing supplemental combined financial information. As supplemental information that management believes will be useful to investors, the Company has provided unaudited selected historical information which combines JCI’s historical Building Efficiency business with historical Tyco results of operations as if these businesses had been operated together during the periods presented. The merger is accounted for as a reverse acquisition with JCI considered to be acquiring Tyco for accounting purposes. As a result, the amounts reflected in Column A in the below table present the historical results of JCI, revised for the reporting changes described within footnote 1 above. The amounts in Column B reflect the impact of the special items, as set forth in the notes to the table and within footnote 1 above. The amounts in Column C reflect the inclusion of Tyco’s historical results for the period prior to the merger on an adjusted basis. For the avoidance of doubt, this supplemental combined information is not intended to be, and was not, prepared on a basis consistent with the unaudited pro forma condensed combined financial information in Exhibit 99.3 to the Company’s Current Report on Form 8-K/A filed October 3, 2016 with the U.S. Securities and Exchange Commission (the “Pro Forma 8-K/A Filing”), which provides the pro forma financial information required by Item 9.01(b) of Form 8-K. The supplemental combined information is intentionally different from, but does not supersede, the pro forma financial information in the Pro Forma 8-K/A Filing.
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Global Assignment Agreement with Mr. Williams
In addition, the supplemental combined information does not purport to indicate the results that actually would have been obtained had the JCI and Tyco businesses been operated together on the basis of the new segment structure during the periods presented, or which may be realized in the future. Amounts Adjusted for Certain Special Items The supplemental combined information includes line items, such as net sales, income from continuing operations before income taxes, income tax provision, noncontrolling interest, net income and diluted EPS, that have been adjusted for the special items set forth in the notes to the table. Such amounts should be viewed in addition to, and not in lieu of, net sales, income from continuing operations before income taxes, income tax provision, noncontrolling interest, net income and diluted EPS and other financial measures on an unadjusted basis. In addition, per share amounts presented in the tables take into account the effects of (i) the issuance of ordinary shares to JCI shareholders in connection with the merger, and (ii) the consolidation of Tyco ordinary shares immediately prior to the merger. As a result, share counts reflect shares outstanding as of September 2, 2016 immediately following the consummation of the merger transaction. The Company’s management believes that these adjusted amounts, when considered together with the unadjusted amounts, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionate positive or negative impact on results in any particular period. The Company’s management also believes that these adjusted amounts enhance the ability of investors to analyze trends in the Company’s underlying business and to better understand the Company’s performance. In addition, the Company may utilize adjusted amounts as guides in forecasting, budgeting and long-term planning processes and to measure operating performance for compensation purposes. Adjusted amounts should be considered in addition to, and not as a substitute for, or superior to, unadjusted amounts.
Global Assignment Agreement with Mr. Williams
| (in millions, except per share data; unaudited) | Twelve Months Ended September 30, 2016 | | | | | | A | B | C | D | | Net sales | | | | | | Building Technologies & Solutions | $14,184 | $20 | $8,712 | $22,916 | | Power Solutions | 6,653 | - | - | 6,653 | | Net sales | $20,837 | $20 | $8,712 | $29,569 | | Income from continuing operations | | | | | | Building Technologies & Solutions | $1,427 | $110 | $1,365 | $2,902 | | Power Solutions | 1,327 | 9 | - | 1,336 | | Segment EBITA | 2,754 | 119 | 1,365 | 4,238 | | Corporate expenses | (607) | 240 | (174) | (541) | | Amortization of intangible assets | (116) | 5 | (319) | (430) | | Mark-to-market loss for pension and postretirement plans | (393) | 393 | - | - | | Restructuring and impairment costs | (288) | 288 | - | - | | EBIT | 1,350 | 1,045 | 872 | 3,267 | | EBIT margin | 6.5% | | | 11.0% | | Net financing charges | (289) | 1 | (161) | (449) | | Income from continuing operations before income taxes | 1,061 | 1,046 | 711 | 2,818 | | Income tax provision | (197) | (163) | (119) | (479) | | Noncontrolling interest | (132) | (37) | 3 | (166) | | Net income | $732 | $846 | $595 | $2,173 | | Diluted weighted average shares | 672.6 | | | 940 | | Diluted earnings per share | $1.09 | | | $2.31 |
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Global Assignment Agreement with Mr. Williams
A—Johnson Controls, as reported. B—Adjusted to exclude special items because these costs are not considered to be directly related to the underlying operating performance of the Company. Management believes these non-GAAP measures are useful to investors in better understanding the ongoing operations and business trends of the Company. The special items are described by line item in footnote 1 above. The income tax provision and noncontrolling interest adjustments are a result of the special items discussed in footnote 1. C—Includes Tyco adjusted non-GAAP results for the eleven months ended September 2, 2016, as if the merger occurred October 1, 2015. Tyco’s first three fiscal quarters of 2016 ended on the last Friday of December, March and June, while JCI’s fiscal quarters ended on the last day of each such month. Because the historical statements of income of each company represent full and equivalent quarterly periods, no adjustments were made to align the fiscal quarters. The income tax provision also includes an adjustment to arrive at an annualized 17% tax rate for fiscal 2016 as a combined company. D—Combined financial information as if the merger with Tyco was completed on October 1, 2015. Reflects annual 17% tax rate and 940 million share count. Diluted Earnings Per Share Reconciliation This document contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include transaction/integration/separation costs, nonrecurring purchase accounting impacts related to the Tyco merger, mark-to-market gain or loss for pension and postretirement plans, restructuring and impairment costs, an unfavorable arbitration award and discrete tax items. The Company excludes these items because they are not considered to be directly related to the underlying operating performance of the Company. Management believes these non-GAAP measures are useful to investors in understanding the ongoing operations and business trends of the Company.
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Global Assignment Agreement with Mr. Williams
A reconciliation of diluted earnings per share as reported to diluted adjusted earnings per share for the respective periods is shown below (unaudited):
Global Assignment Agreement with Mr. Williams
| | Net Income Attributable to JCI plc | | Net Income Attributable to JCI plc from Continuing Operations | | | | Twelve Months Ended September 30, | | Twelve Months Ended September 30, | | | | 2017 | 2016 | 2017 | 2016 | | Earnings (loss) per share as reported for JCI plc | $1.71 | $(1.29) | $1.75 | $1.09 | | Adjusting items: | | | | | | Transaction costs | 0.12 | 0.29 | 0.12 | 0.29 | | Related tax impact | (0.01) | (0.03) | (0.01) | (0.03) | | Integration costs | 0.34 | 0.03 | 0.34 | 0.03 | | Related tax impact | (0.06) | - | (0.06) | - | | Separation costs | 0.09 | 0.70 | - | 0.08 | | Related tax impact | - | (0.06) | - | - | | Nonrecurring purchase accounting impacts | 0.14 | 0.11 | 0.14 | 0.11 | | Related tax impact | (0.04) | (0.03) | (0.04) | (0.03) | | Mark-to-market loss (gain) for pension and postretirement plans/settlement losses | (0.44) | 0.75 | (0.44) | 0.58 | | Related tax impact | 0.13 | (0.22) | 0.13 | (0.18) | | Restructuring and impairment costs | 0.39 | 0.91 | 0.39 | 0.41 | | Related tax impact | (0.07) | (0.14) | (0.07) | (0.11) | | Unfavorable arbitration award | 0.05 | - | 0.05 | - | | Discrete tax items | 0.32 | 2.93 | 0.30 | 0.11 | | Adjusted earnings per share for JCI plc* | $2.67 | $3.94 | $2.60 | $2.35 |
Global Assignment Agreement with Mr. Williams
| May not sum due to rounding.* |
Global Assignment Agreement with Mr. Williams
The following table reconciles the denominators used to calculate basic and diluted earnings per share for JCI plc (in millions; unaudited):
Global Assignment Agreement with Mr. Williams
| | Twelve Months Ended September 30, | | | | 2017 | 2016 | | Weighted Average Shares Outstanding for JCI plc | | | | Basic weighted average shares outstanding | 935.3 | 667.4 | | Effect of dilutive securities: | | | | Stock options, unvested restricted stock and unvested performance share awards | 9.3 | 5.2 | | Diluted weighted average shares outstanding | 944.6 | 672.6 |
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Global Assignment Agreement with Mr. Williams
| JOHNSON CONTROLS INTERNATIONAL PLC ONE ALBERT QUAY CORK, IRELAND | | | | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | | | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | | | VOTE BY PHONE - 1-800-690-6903 | | | Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. | | | VOTE BY MAIL | | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
Global Assignment Agreement with Mr. Williams
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | E35101-P00230-Z71489 | KEEP THIS PORTION FOR YOUR RECORDS | | | DETACH AND RETURN THIS PORTION ONLY | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | |
Global Assignment Agreement with Mr. Williams
| JOHNSON CONTROLS INTERNATIONAL PLC Ordinary Business | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals one through eight: | | | | | | | | | | | | 1. | By separate resolutions, to elect the following individuals as Directors for a period of one year, expiring at the end of the Company’s Annual General Meeting of Shareholders in 2019: | | | | | | | | | | | | Nominees: | | For | Against | Abstain | | | | | | | | 1a. Michael E. Daniels | | ☐ | ☐ | ☐ | Special Business | | For | Against | Abstain | | | 1b. W. Roy Dunbar | | ☐ | ☐ | ☐ | 3. To authorize the Company and/or any subsidiary of the Company to make market purchases of Company shares. | | ☐ | ☐ | ☐ | | | 1c. Brian Duperreault | | ☐ | ☐ | ☐ | 4. To determine the price range at which the Company can re-allot shares that it holds as treasury shares (Special Resolution). | | ☐ | ☐ | ☐ | | | 1d. Gretchen R. Haggerty | | ☐ | ☐ | ☐ | 5. To approve, in a non-binding advisory vote, the compensation of the named executive officers. | | ☐ | ☐ | ☐ | | | 1e. Simone Menne | | ☐ | ☐ | ☐ | 6. To approve the Directors' authority to allot shares up to approximately 33% of issued share capital. | | ☐ | ☐ | ☐ | | | 1f. George R. Oliver | | ☐ | ☐ | ☐ | 7. To approve the waiver of statutory pre-emption rights with respect to up to 5% of issued share capital (Special Resolution). | | ☐ | ☐ | ☐ | | | 1g. Juan Pablo del Valle Perochena | | ☐ | ☐ | ☐ | 8.a To approve the reduction of Company capital (Special Resolution). | | ☐ | ☐ | ☐ | | | 1h. Jürgen Tinggren | | ☐ | ☐ | ☐ | 8.b To approve a clarifying amendment to the Company's Articles of Association to facilitate the capital reduction (Special Resolution). | | ☐ | ☐ | ☐ | | | 1i. Mark Vergnano | | ☐ | ☐ | ☐ | | | | | | | | 1j. R. David Yost | | ☐ | ☐ | ☐ | | | | | | | | 1k. John D. Young | | ☐ | ☐ | ☐ | | | | | | | 2.a | To ratify the appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company. | | ☐ | ☐ | ☐ | | | | | | | | | | | | | Please indicate if you plan to attend this meeting. | | Yes ☐ | No ☐ | | | 2.b | To authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration. | | ☐ | ☐ | ☐ | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | Date | | | |