DEF 14A of Metallus Inc.
Filed Mar 12, 2024 · FY20230001193125-24-065030
Director nominees
Director nominees
Director nominees
| Name | Age | Director since | Principal occupation | Independent | Current committee memberships | | | Other public company boards | | | | | | | Audit | Compensation | Nominating and Corporate Governance | | | Class I nominees — term expiring at the 2027 annual meeting | | | | | | | | | | Mary Ellen Baker | 65 | 2022 | Retired EVP and Head of Business Services, Citizens Bank | ● | ● | | | 1 | | Jamy P. Rankin | 60 | 2023 | Retired President and Chief Executive Officer, Ford Component Sales, LLC | ● | ● | | | 1 | | Ronald A. Rice | 61 | 2015 | Retired President and Chief Operating Officer, RPM International Inc. | ● | | | ● | 0 | | Michael S. Williams | 63 | 2021 | President and Chief Executive Officer, Metallus Inc. | | | | | 0 | | Class II nominee — term expiring at the 2025 annual meeting | | | | | | | | | | Melissa M. Miller | 52 | | Executive Vice President and Chief Human Resources Officer, Arconic Corporation | ● | | | | 1 |
Election of directors
Election of directors The company currently has eleven members on its Board of Directors, divided into three classes for purposes of election, with three-year terms of office ending in successive years. The term of office of the Class I directors expires at the 2024 annual meeting. The Board of Directors has nominated each of Mary Ellen Baker, Jamy P. Rankin, Ronald A. Rice and Michael S. Williams for election as a Class I director at the 2024 annual meeting of shareholders, to serve for a term of three years expiring at the 2027 annual meeting of shareholders or until his or her successor is duly elected and qualified (or until his or her earlier death, resignation or removal). Mses. Baker and Rankin and Messrs. Rice and Williams each currently serves as a director and has agreed to continue serving if elected. Ms. Rankin was first appointed by the Board to serve as a director in August 2023, upon the recommendation of the Nominating and Corporate Governance Committee. To fill a vacancy on the Board, the Nominating and Corporate Governance Committee facilitated a director search process, during which several candidates were identified and interviewed in a formal evaluation process. Ms. Rankin was identified for consideration as a candidate through the board advisory services provided by Deloitte’s Center for Board Effectiveness. Following the identification of Ms. Rankin as a potential candidate, members of the Board of Directors interviewed her, she completed a questionnaire providing information relating to her experience, background and other factors, and the Nominating and Corporate Governance Committee reviewed her qualifications, conducted further interviews and reference checks and ultimately recommended that she be appointed to the Board. Ms. Rankin will stand for election by shareholders for the first time at the 2024 annual meeting of shareholders. Diane C. Creel, whose three-year term expires at the 2025 annual meeting, has notified the company of her intention to retire from the Board of Directors immediately prior to the 2024 annual meeting of shareholders, in accordance with the Board’s retirement age policy as set forth in the company’s Corporate Governance Guidelines. The company appreciates the many contributions Ms. Creel has made during her decade of service as a member of the Board of Directors and Chair of the Compensation Committee. To fill the vacancy that will be created upon Ms. Creel’s retirement, the Board of Directors has nominated Melissa M. Miller for election as a Class II director at the 2024 annual meeting of shareholders, to serve for a term of one year (the remaining term for the Class II directors) expiring at the 2025 annual meeting of shareholders or until her successor is duly elected and qualified (or until her earlier death, resignation or removal). Ms. Miller has agreed to stand for election at the 2024 annual meeting of shareholders and to serve as a member of the Board of Directors if elected. In order to fill the vacancy on the Board of Directors that was anticipated to arise upon Ms. Creel’s retirement, the Nominating and Corporate Governance Committee facilitated a director search process, and several candidates were identified and interviewed in a formal evaluation process. Ms. Miller was identified for consideration as a candidate by an incumbent independent member of the Board. Following the identification of Ms. Miller as a potential candidate, members of the Board of Directors interviewed her and she completed a questionnaire providing information relating to her experience, background and other factors. The Nominating and Corporate Governance Committee reviewed her qualifications, conducted further interviews and a reference check and ultimately recommended that she be nominated for election as a director at the 2024 annual meeting of shareholders. If any of the nominees is unable to stand for election, the Board of Directors may designate a substitute. Shares represented by proxies may be voted for the substitute but will not be voted for more than five nominees. Directors are elected by a plurality of the votes cast. The five nominees receiving the greatest number of votes will be elected. Pursuant to the majority voting policy of the Board of Directors, as set forth in its Corporate Governance Guidelines, any director who receives a greater number of “withhold” votes than votes “for” his or her election in an uncontested election will submit his or her resignation to the Board of Directors promptly after the certification of the election results. The Nominating and Corporate Governance Committee will consider and provide its recommendation to the Board of Directors regarding, and the Board of Directors will then consider and act upon, the tendered resignation in light of any factors they consider appropriate, including the director’s qualifications and contributions to the Board of Directors, as well as any reasons given by shareholders regarding why they withheld votes from the director. The Board of Directors is required to determine whether to accept or reject the tendered resignation within 90 days following the election and to promptly disclose its decision, as well as the reasons for rejecting any tendered resignation, if applicable. Holders of Metallus common shares are entitled to cast one vote for each share held on the record date for up to five nominees for director. A shareholder may not cumulate his or her shares in voting for director nominees. For example, a shareholder who owns 100 Metallus common shares may vote 100 shares for each of the five nominees. The shareholder may not, however, vote more than 100 shares for any one nominee, or vote for more than five nominees. Shares represented by proxy will be voted FOR these nominees unless specified otherwise in the voting instructions.
Election of directors
| | Your Board of Directors recommends a vote for these nominees. |
Our knowledgeable Board of Directors
Our knowledgeable Board of Directors Our directors and director nominees have diverse skills, qualifications and experiences that enable them to effectively oversee the management of the company’s business affairs. Our directors represent the interests of Metallus’ stakeholders and help to drive strategic decisions for the company’s long-term success.
Our knowledgeable Board of Directors
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mary Ellen Baker | | ● | ● | | | ● | | ● | | ● | | | ● | | Nicholas J. Chirekos | | ● | ● | | | | | ● | ● | | | ● | | | Diane C. Creel | ● | ● | ● | ● | ● | | ● | ● | ● | ● | ● | ● | ● | | Randall H. Edwards | ● | ● | | ● | ● | | | ● | ● | | ● | | | | Kenneth V. Garcia | ● | ● | ● | ● | | ● | ● | ● | | | | | ● | | Ellis A. Jones | | ● | ● | | ● | | | | ● | ● | ● | | ● | | Melissa M. Miller | | ● | | | | | ● | ● | ● | ● | ● | ● | ● | | Donald T. Misheff | ● | ● | ● | | | | | ● | ● | | | ● | | | Jamy P. Rankin | ● | ● | ● | ● | ● | | ● | | ● | | ● | ● | ● | | Ronald A. Rice | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Michael S. Williams | ● | ● | | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Randall A. Wotring | | ● | ● | | ● | ● | ● | ● | ● | ● | ● | | | | * With respect to the directors and director nominees listed in the foregoing table as diverse, four identify as women, three identify as Black and one identifies as Hispanic/ Latino. | | | | | | | | | | | | | |
Our knowledgeable Board of Directors
Biographical information on each of the nominees and a description of his or her qualifications to serve as a director, as well as similar information about the other directors whose terms will continue following the annual meeting, is provided in the pages that follow. All information is as of February 29, 2024, unless otherwise indicated. As noted previously, Diane C. Creel has notified the company of her intention to retire from the Board of Directors immediately prior to the 2024 annual meeting of shareholders, in accordance with the Board’s retirement age policy as set forth in the company’s Corporate Governance Guidelines.
Nominees for election as Class I directors to serve a three-year term expiring at the 2027 annual meeting of shareholders
Nominees for election as Class I directors to serve a three-year term expiring at the 2027 annual meeting of shareholders
Nominees for election as Class I directors to serve a three-year term expiring at the 2027 annual meeting of shareholders
| | Mary Ellen Baker | | | | Age: 64 Term: Expires in 2024; director since 2022 Committee: Audit Other public company boards: Ms. Baker has been a director of NCR Atleos Corporation since October 2023. Business experience: Ms. Baker retired in July 2022 from her position as Executive Vice President and Head of Business Services for Citizens Bank (one of the oldest and largest financial services firms in the United States, offering a broad range of retail and commercial banking products and services to more than five million individuals, small businesses, middle-market companies, large corporations and institutions), a position which she had held since June 2016. Previously, she was Executive Vice President of Enterprise Services at PNC Financial Services Group, Inc. (one of the largest diversified financial services institutions in the United States). | | | | Jamy P. Rankin | | | | Age: 60 Term: Expires in 2024; director since 2023 Committee: Audit Other public company boards: Ms. Rankin has been a director of Motorcar Parts of America, Inc. since 2021. Business experience: Ms. Rankin retired from her position as President and Chief Executive Officer of Ford Component Sales, LLC (a wholly-owned subsidiary of Ford Motor Company and the sole arm of the Ford Motor Company authorized to sell genuine Ford components and assemblies to original equipment manufacturers and the aftermarket) in 2016. Previously, she held various leadership roles at Ford Motor Company, including as global director of strategy and vehicle personalization and executive director of dealer development. Prior to joining Ford in 2001, Ms. Rankin led marketing and sales organizations at Case New Holland and Navistar. | | | | Ronald A. Rice | | | | Age: 61 Term: Expires in 2024; director since 2015 Committees: Nominating and Corporate Governance Other public company boards: None Business experience: Mr. Rice retired in 2018 from his position as President and Chief Operating Officer of RPM International Inc. (a manufacturer of specialty coatings, sealants and building materials and provider of related services for industrial and consumer markets globally), a position he had held since 2008. Previously, Mr. Rice held a variety of increasingly responsible positions with RPM from 1995 to 2008. He began his career with The Wyatt Company, an actuarial consulting firm, known today as Willis Towers Watson, in 1985. | |
Nominees for election as Class I directors to serve a three-year term expiring at the 2027 annual meeting of shareholders
| CEO or chairperson experience | Public company board experience | Financial expertise | Sales/ marketing | Relevant end market expertise | Technology/ cyber/ IT | Human resources/ compensation/ industrial relations | Mergers and acquisitions | Global | Sustainability | Manufacturing operations | Metals industry experience | Diversity | | | | | | | | | | | | | | |
Nominees for election as Class I directors to serve a three-year term expiring at the 2027 annual meeting of shareholders
| | Michael S. Williams | | | | Age: 63 Term: Expires in 2024; director since 2021 Committee: None Other public company boards: None Business experience: Mr. Williams is the President and Chief Executive Officer of Metallus Inc., a position he has held since January 1, 2021. Prior to his current position, Mr. Williams was CEO of Bayou Steel Group (a U.S. producer of structural steel and merchant bar) from May 2019 to September 2019. Prior to joining Bayou Steel, Mr. Williams served as President Outokumpu Americas for Outokumpu Oyj (a global leader in the stainless steel industry) from 2015 to 2019. Before that, Mr. Williams held a number of leadership roles at US Steel Corporation (a Fortune 500 company and leading integrated steel producer) from 2006 to 2015, including Senior Vice President, North American Flat Rolled and, most recently, Senior Vice President, Strategic Planning and Business Development. Earlier in his career, Mr. Williams served as Vice President of Commercial Products at Special Metals Corporation (a leader in the invention, production and supply of high-nickel alloys) and, prior to that, as Chairman and Chief Executive Officer of Ormet Corporation (a manufacturer of foil, sheet, billet and other aluminum products). | |
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
| | Melissa M. Miller | | | | Age: 52 Term: New nominee for election in 2024 Other public company boards: Ms. Miller has been a director of Compass Minerals, Inc. since 2022. Business experience: Ms. Miller is Executive Vice President and Chief Human Resources Officer at Arconic Corporation (a manufacturer of aluminum sheet, plate, extrusions and architectural products), a position she has held since April 2020 when Arconic Corporation separated from Arconic, Inc. (now known as Howmet Aerospace). Prior to her current role, Ms. Miller served as Vice President, Human Resources, Global Rolled Products for Arconic, Inc. from October 2017 through March 2020. Ms. Miller joined Alcoa (the predecessor company to Arconic, Inc.) in 2005 and held multiple leadership roles with a broad spectrum of progressive human resources responsibilities, including HR strategy development and implementation, talent management, workforce planning, succession planning, employee engagement, HR technology and employee and labor relations. | |
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
| CEO or chairperson experience | Public company board experience | Financial expertise | Sales/ marketing | Relevant end market expertise | Technology/ cyber/ IT | Human resources/ compensation/ industrial relations | Mergers and acquisitions | Global | Sustainability | Manufacturing operations | Metals industry experience | Diversity | | | | | | | | | | | | | | |
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
| Continuing directors | | | | Class II - Term expiring 2025 | | | | | Kenneth V. Garcia | | | | Age: 54 Term: Expires in 2025; director since 2021 Committees: Audit; Compensation Other public company boards: None Business experience: Mr. Garcia is an executive fellow with Q2 Software Inc. (a financial experience company dedicated to providing digital banking and lending solutions to banks, credit unions, alternative finance, and fintech companies in the U.S. and internationally), a position he has held since November 2019. In this role, Mr. Garcia assists the board of directors and executive leadership team of Q2 Software with long-term planning related to M&A, talent and its product roadmap. Prior to his current role, Mr. Garcia co-founded and served as president of PrecisionLender from May 2009 through October 2019, when PrecisionLender was acquired by Q2 Software. Earlier in his career, he was chief financial officer and general counsel with Ecovation, Inc. (a waste stream technology company using patented technologies). | | | | Ellis A. Jones | | | | Age: 58 Term: Expires in 2025; director since 2021 Committee: Audit; Nominating and Corporate Governance Other public company boards: Mr. Jones was formerly a director of Arconic Corporation. Business experience: Mr. Jones retired in April 2023 from his position as vice president and chief sustainability officer with The Goodyear Tire and Rubber Company (a global manufacturer of tires and engineered products), a position he had held since October 2021. Prior to this role, he had served in various progressive leadership positions with Goodyear since 2003, including as vice president of global environmental, health, safety, sustainability and business continuity, senior director of global environmental, health, safety and sustainability, manufacturing director for its race tire division and finance director of its North American tire division. Mr. Jones also previously served as the finance director of office property and casualty insurance at Nationwide Mutual Insurance Company. He began his career in various finance roles with Goodyear. | | | | Donald T. Misheff | | | | Age: 67 Term: Expires in 2025; director since 2014 Committee: Audit (Chairperson) Other public company boards: Mr. Misheff was formerly a director of Trinseo S.A. and a director and non-executive Chairman of the Board of FirstEnergy Corp. Business experience: Mr. Misheff was Managing Partner of the Northeast Ohio offices of Ernst & Young LLP (a public accounting firm), from 2003 until his retirement in 2011. He began his career at Ernst & Young in 1978 and has more than 30 years of experience in taxation and in performing, reviewing and overseeing financial statement audits for a wide range of public companies and advising those companies on financial and corporate governance issues. | |
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
| CEO or chairperson experience | Public company board experience | Financial expertise | Sales/ marketing | Relevant end market expertise | Technology/ cyber/ IT | Human resources/ compensation/ industrial relations | Mergers and acquisitions | Global | Sustainability | Manufacturing operations | Metals industry experience | Diversity | | | | | | | | | | | | | | |
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
| Class III - Term expiring 2026 | | | | | Nicholas J. Chirekos | | | | Age: 65 Term: Expires in 2026; director since 2022 Committee: Audit Other public company boards: Mr. Chirekos has been a director of Peabody Energy Corporation since 2017 and a director of New Gold Inc. since 2019. Business experience: Mr. Chirekos served in various investment banking roles at J.P. Morgan (a global leader in financial services offering solutions to the world’s most important corporations, governments and institutions) from 1987 until his retirement in 2016. Most recently, he served as the managing director, North America head of mining and, prior to that, as the global head of mining and metals. Mr. Chirekos has more than 25 years of experience in investment banking and capital markets, with a focus on the mining industry. | | | | Randall H. Edwards | | | | Age: 65 Term: Expires in 2026; director since 2015 Committee: Compensation; Nominating and Corporate Governance Other public company boards: None Business experience: Mr. Edwards retired in April 2022 from his position as President and Chief Executive Officer of P2 Energy Services, LLC (formerly Premier Pipe, LLC) (a leader in the supply and management of engineered premium oil country tubular goods), a position which he had held since 2015. Previously, he served as President and Chief Operating Officer of Premier Pipe from 2014 to 2015. From 1999 to 2014, Mr. Edwards held various positions with NOV Grant Prideco (a leading supplier of oil field drill stem components), including President of NOV Grant Prideco from 2008 to 2014. He began his career at Wilson Supply, where he managed Wilson’s oil country tubular goods and its drill pipe product line. | | | | Randall A. Wotring | | | | Age: 67 Term: Expires in 2026; director since 2014 Committees: Compensation; Nominating and Corporate Governance (Chairperson) Other public company boards: None Business experience: Mr. Wotring retired from his position as Chief Operating Officer of AECOM Technology Corporation (a premier, fully integrated infrastructure and support services firm and the largest engineering design firm in the world) in October 2020, a position he had held since July 2017. He previously served as President, Technical and Operational Services of AECOM from July 2016 until July 2017; as President, Management Services of AECOM from October 2014 until July 2016; and as Corporate Vice President and President of the Federal Services division of URS Corporation from 2004 until October 2014 when URS was acquired by AECOM. | |
Nominee for election as a Class II director to serve a one-year term expiring at the 2025 annual meeting of shareholders
| CEO or chairperson experience | Public company board experience | Financial expertise | Sales/ marketing | Relevant end market expertise | Technology/ cyber/ IT | Human resources/ compensation/ industrial relations | Mergers and acquisitions | Global | Sustainability | Manufacturing operations | Metals industry experience | Diversity | | | | | | | | | | | | | | |
Director compensation
Director compensation Our non-employee director compensation program is intended to provide fair and competitive compensation and to align the interests of our non-employee directors with the interests of our shareholders. Key features of our non-employee director compensation program include the following:
Director compensation
| • | A significant portion of non-employee director compensation is delivered through equity awards. |
Director compensation
| • | We provide a competitive annual cash retainer and additional retainers for committee chairs, but no meeting fees. |
Director compensation
| • | Overall director compensation is subject to a limit. Pursuant to our Amended and Restated 2020 Equity and Incentive Compensation Plan, the maximum aggregate value of compensation granted in any one calendar year to a non-employee director for his or her service as such may not exceed $500,000 (with equity awards valued for this purpose at grant date fair value for financial reporting purposes). |
Director compensation
| • | Our non-employee directors are subject to robust stock ownership guidelines (five times the annual cash retainer). |
Director compensation
| • | Directors are prohibited from pledging company stock or hedging the economic risk related to such stock ownership. Please see “Corporate governance – Anti-hedging policy” for additional information. |
Director compensation
Our non-employee director compensation program is reviewed periodically by the Compensation Committee and the Board to ensure that director compensation remains appropriate and competitive. In late 2023, the Compensation Committee asked Meridian Compensation Partners (the independent compensation consultant engaged by the Compensation Committee) to conduct a competitive market analysis of the company’s director compensation program relative to the same peer group of companies used by the company for benchmarking executive pay. Meridian’s analysis concluded that the average annual total value of outside director compensation is positioned near median and the structure of the company’s director compensation program is aligned with both peer practices and the broader market. Taking into account Meridian’s analysis and conclusions, the Compensation Committee recommended, and the Board approved, continuing the current compensation program for non-employee directors with no changes for 2024. The compensation program under which non-employee directors were compensated for their services as directors during 2023 is summarized below.
2023 Director compensation table
2023 Director compensation table The following table provides details of non-employee director compensation in 2023:
2023 Director compensation table
| Name(1) | Fees Earned or Paid in Cash (2) | Stock Awards(3) (4) | Total | | Mary Ellen Baker | $90,000 | $117,491 | $207,491 | | Nicholas J. Chirekos | $90,000 | $117,491 | $207,491 | | Diane C. Creel | $105,000 | $117,491 | $222,491 | | Randall H. Edwards | $90,000 | $117,491 | $207,491 | | Kenneth V. Garcia | $90,000 | $117,491 | $207,491 | | Ellis A. Jones | $90,000 | $117,491 | $207,491 | | Donald T. Misheff | $110,000 | $117,491 | $227,491 | | Jamy P. Rankin | $45,000 | $119,392 | $164,392 | | Ronald A. Rice | $180,000 | $117,491 | $297,491 | | Leila L. Vespoli | $30,412 | $0 | $30,412 | | Randall A. Wotring | $105,000 | $117,491 | $222,491 |
2023 Director compensation table
| (1) Michael S. Williams, President and CEO, is not included in this table as he was an employee of the company throughout 2023 and received no additional compensation for his services as a director. |
2023 Director compensation table
| (2) Ms. Vespoli did not stand for re-election in 2023 and Ms. Rankin was appointed as a director effective August 2, 2023. The amounts shown for Ms. Vespoli and Ms. Rankin reflect the annual cash retainer payable to non-employee directors, prorated to reflect the time during which each of them served as a director during 2023. |
2023 Director compensation table
| (3) The amount shown for each director other than Ms. Rankin and Ms. Vespoli is the grant date fair value of 7,125 restricted stock units awarded on May 2, 2023, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. With respect to Ms. Rankin, the amount shown is the grant date fair value of 5,200 restricted stock units awarded on August 2, 2023, the date she was appointed as a director, as computed in accordance with FASB ASC Topic 718. These awards have a one-year vesting period. Ms. Vespoli did not stand for re-election in 2023 and, therefore, did not receive a stock award in 2023. |
2023 Director compensation table
| (4) As of December 31, 2023, Messrs. Chirekos, Edwards, Garcia, Jones, Misheff, Rice and Wotring and Mses. Baker and Creel each held 7,125 unvested restricted stock units, which are scheduled to vest on May 2, 2024, and Ms. Rankin held 5,200 restricted stock units, which are scheduled to vest on August 2, 2024. |
2023 Director compensation table
| No director had any outstanding company stock options. |
Pay for performance
| • | 2023 annual performance award plan (“APA plan”) metrics: (i) adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), (ii) adjusted operating cash flow and (iii) safety, comprised of typical lagging indicators (40 percent of the safety metric) for OSHA recordable and OSHA lost time incident rates and a leading indicator (60 percent of the safety metric) for timely completion of corrective actions related to near miss incidents which have the potential to result in a serious injury or fatality (PSIF action completion rate). Beginning in 2023, safety was shifted from a modifier to a weighted metric in the APA plan to reinforce the strategic importance of improving the company’s safety culture and performance. |
Pay for performance
| • | Solid profitability and improvements to safety management help deliver 2023 APA plan payout at target: Improved operating performance, strong base pricing and solid market demand, as well as substantial insurance recoveries related to unplanned downtime in the second half of 2022, drove full-year profitability above the target performance objectives for 2023 and supported our 2023 adjusted operating cash flow results which, while below threshold for the first-half, exceeded maximum for the second half of the year. This resulted in a mathematically-determined payout percentage (on an unweighted basis) of 145 percent of target on the adjusted EBITDA metric and 100 percent of target on the adjusted operating cash flow metric. Overall performance on the safety metric was above target, with the OSHA recordable rate failing to meet threshold but the OSHA lost time incident rate and the PSIF action completion rate each surpassing the targeted performance objective, resulting in a payout percentage on the safety metric of 118 percent of target. While a total payout of 126.1 percent of target was earned as a formulaic matter based on performance against the metrics established for the 2023 APA plan, the Compensation Committee reviewed such results and exercised discretion to reduce the payout for each of the NEOs to 100 percent of target, reflecting the Committee’s view that it was appropriate to include insurance recoveries in the APA calculation but that such recoveries should not drive an above-target payout. |
Pay for performance
| • | Relative total shareholder return results in maximum payout on 2021-2023 performance shares: NEOs earned a maximum payout of 150 percent of the target number of performance shares granted for the 2021-2023 performance cycle, based on the company’s relative total shareholder return as compared to an identified peer group of steel companies for the one-, two- and three-year periods beginning January 1, 2021 and ended December 31, 2021, 2022 and 2023. Relative total shareholder return for the three-year performance period was achieved at the 100th percentile, with Metallus delivering a cumulative total shareholder return of approximately 333 percent for the January 1, 2021—December 31, 2023 performance period and ranking as the top performer among the identified peer group. The maximum payout earned for the 2021-2023 performance cycle, combined with an approximately 272 percent increase in the company’s share price from the March 1, 2021 grant date to the December 31, 2023 conclusion of the performance period, resulted in a total realized payout to participating NEOs (other than Mr. Williams) equal to approximately 408 percent of the target value of the 2021-2023 performance share award. For Mr. Williams, the total realized payout is equal to approximately 680 percent of the target value of the 2021-2023 performance shares awarded to him, as these performance shares were part of Mr. Williams’ inducement grant awarded on January 5, 2021. From that date to the December 31, 2023 conclusion of the performance period, there was an approximately 453 percent increase in the company’s share price. |
Pay for performance
| performance shares for the NEOs are designed to be earned from 0 percent to 200 percent of target levels depending on the degree to which the closing price performance of the company’s common shares satisfies up to seven specific average per share closing price goals during a performance period running from December 1, 2023 through December 31, 2026. To further enhance retention incentives and promote alignment with shareholder interests, the shares earned, if any, will then pay out in two equal installments in early 2027 and 2028, generally conditioned on continued employment with the company until the applicable vesting date. Due to the design of the Transformation Incentive Grant program, the Committee believes that these performance shares will drive management engagement on transformative initiatives and provide important incentives to the company’s key leaders to creatively and consistently pursue achievement of our most important and transformational strategic goals, supporting value creation over a meaningful time horizon. |
2023 say-on-pay vote and 2024 executive compensation changes
2023 say-on-pay vote and 2024 executive compensation changes In 2023, shareholders approved the compensation of our NEOs with approximately 98 percent of votes cast in favor of our “say-on-pay” proposal. Our Compensation Committee considered the strong results of this advisory vote, plus the changes made to executive compensation programs in recent years, recent shareholder feedback and market data in its annual review of our executive compensation plans. Based on this review and evaluation, for the remainder of 2023 and into 2024, the Compensation Committee has determined to continue to focus the annual incentive plan on profitability, cash flow generation and safety, and to continue to use relative total shareholder return, measured for the one-, two- and three-year periods within a three-year performance cycle, as the metric for the performance shares awarded under the company’s long term incentive plan. In particular, the creation of the Transformational Incentive Grant program was designed independently from any consideration of our 2023 say-on-pay vote results. With respect to the long-term incentive plan’s annual awards, the Committee has determined that all regular long-term incentive grants made in 2024 will continue to be in the form of performance shares and time-based restricted stock units, with the long-term incentive mix for Mr. Williams remaining approximately 60 percent performance shares and 40 percent time-based restricted stock units, and the long-term incentive mix for the other NEOs remaining approximately 50 percent performance shares and 50 percent time-based restricted stock units. Finally, in connection with the annual review of the compensation of the company’s President and CEO, in February 2024 the Compensation Committee recommended and the Board approved for Mr. Williams an increase in (i) annual base salary from $835,000 to $875,000 and (ii) the target value of awards under the company’s long-term incentive plan from $3.0 million to $3.25 million annually. The Compensation Committee’s recommendation to increase the base salary for Mr. Williams and the target value of Mr. Williams’ long-term incentive awards was based on a combination of factors, including his exceptional performance as CEO since joining the company in January 2021 and a finding that the current target total direct compensation for Mr. Williams fell below the market median (as compared to peer group compensation data provided by the Committee’s independent compensation consultant, Meridian Compensation Partners, LLC). There was no increase to the target annual incentive opportunity (as a percentage of base salary) for Mr. Williams for 2024.
Executive compensation highlights
| What we do | What we don’t do | | ✓ Pay for performance | x Provide excise tax gross-ups | | ✓ Establish target pay based on market norms | x Re-price stock options without shareholder approval | | ✓ Deliver total direct compensation primarily through variable pay | x Pay current dividends on any restricted stock units | | ✓ Set challenging short- and long-term incentive award goals | x Provide excessive perquisites | | ✓ Provide strong oversight and regular evaluation of compensation programs, taking into account shareholder feedback and market practices | x Reward executives without a link to performance or creation of shareholder value | | ✓ Maintain robust stock ownership requirements | | | ✓ Include double-trigger vesting in the event of a change in control | | | ✓ Adhere to an incentive compensation recoupment “clawback” policy | | | ✓ Maintain insider trading, anti-hedging and anti-pledging policies with respect to company stock | | | ✓ Offer market-competitive benefits | | | ✓ Consult with an independent advisor on pay | |
Our compensation philosophy
| ✓ | Rewards results linked to short- and long-term performance (pay-for-performance); |
Role of the Compensation Committee: Deciding on compensation
| • | market data provided by the Committee’s independent compensation consultant; and |
Role of the compensation consultant: Advising the Compensation Committee
Role of the compensation consultant: Advising the Compensation Committee The Compensation Committee retains the authority to approve and monitor all compensation and benefit programs (other than broad-based welfare benefit programs). The Committee engages the services of an independent compensation consultant to add rigor in the review process and to provide insight into market trends, as well as to help design potentially new elements of compensation. The consultant analyzes the company’s executive compensation structure and plan designs and assesses whether the compensation program is competitive and supports the goal of aligning the interests of NEOs with those of shareholders, as well as other company interests. The consultant also provides market data directly to the Compensation Committee for its use in determining compensation for NEOs and assessing board compensation. The Committee has retained Meridian Compensation Partners, LLC as its independent compensation consultant. In 2023, Meridian’s primary areas of assistance were:
Role of the compensation consultant: Advising the Compensation Committee
| • | gathering information related to current trends and practices in board of directors and executive compensation; |
Role of the compensation consultant: Advising the Compensation Committee
| • | reviewing information developed by management for the Compensation Committee and providing its input to the Committee; |
Role of the compensation consultant: Advising the Compensation Committee
| • | attending and participating in meetings with the Compensation Committee, as well as briefings with the Committee chairperson and management between regularly scheduled meetings; |
Role of the compensation consultant: Advising the Compensation Committee
| • | advising the Committee with respect to compensation matters related to the company’s President and Chief Executive Officer; |
Role of the compensation consultant: Advising the Compensation Committee
| • | assisting the CEO and human resources leadership in determining compensation recommendations for the NEOs (other than the CEO); |
Role of the compensation consultant: Advising the Compensation Committee
| • | reviewing with management and the Compensation Committee materials to be used in the company’s proxy statement; |
Role of the compensation consultant: Advising the Compensation Committee
| • | reviewing and providing recommendations regarding the company’s benchmarking peer group; and |
Role of the compensation consultant: Advising the Compensation Committee
| • | advising the Committee with respect to short-term and long-term incentive plan design, goal-setting and performance assessment, including alternative plan designs and awards and approaches for long-term incentives to address CEO and executive retention. |
Role of the compensation consultant: Advising the Compensation Committee
While the consultant reports directly to the Compensation Committee, the Committee has authorized the consultant to interact with company management, as needed, on the Committee’s behalf (as was the case specifically in the design and development of the Transformation Incentive Grant program). Meridian works with company management only under the direction of the Compensation Committee and does not provide any other advice or consulting services to the company. The Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and terms of the engagement. Thus, the Committee annually reviews its relationship with its consultant – including services provided, quality of services and associated fees – to help ensure executive compensation consulting independence and effectiveness. The Committee also assesses the independence of the compensation consultant. As part of its annual evaluation of independence, the Committee considered information provided by Meridian, as well as information received from the company’s executive officers and directors regarding any actual, potential, or perceived conflicts of interest with Meridian. Based on the Committee’s review, the Committee believes that the work performed by Meridian during 2023 did not raise a conflict of interest and there were no facts or circumstances that brought its independence into question.
Primary elements of our executive compensation program
| | Compensation element | Link to program objectives | | | Base salary | Provides a stable source of income and is a standard element in executive compensation packages. | | | Annual incentive | Encourages executives to focus on specific corporate performance goals. Target incentive opportunity is set as a percentage of base salary and awards are earned after threshold performance levels are met. Metrics for 2023 include: • Adjusted EBITDA; • Adjusted operating cash flow; and • Safety. | | | Performance shares | Annual grant program: Granted in the form of performance-based restricted stock units, this performance share award links executive compensation to building long-term shareholder value, balances short-term operating focus, and aligns executive management’s long-term financial interests with those of our shareholders. The company’s relative total shareholder return as compared to an identified peer group of steel companies for the one-, two- and three-year periods beginning January 1, 2023 and ending December 31, 2023, 2024 and 2025, respectively, is used to determine whether (and how many) performance shares are earned. Performance shares earned are payable in shares at the conclusion of the three-year performance period. | | | | Transformation Incentive Grant program: Granted in the form of performance-based restricted stock units, these performance shares may be earned from 0% to 200% of target levels depending on the degree to which the closing price performance of the company’s common shares satisfies up to seven specific average per share closing price goals during a performance period running from December 1, 2023 through December 31, 2026. Performance shares earned will pay out in two equal installments in early 2027 and 2028, generally conditioned on continued employment with the company until the applicable vesting date. These performance shares are intended to drive management engagement on transformative initiatives, further aligning executive compensation with the investment interests of the Company’s shareholders by motivating and rewarding management initiative and action to the extent they help create substantial additional shareholder value, while also supporting retention of key leadership over the next approximately four years. | | | Restricted stock units | Rewards long-term shareholder value creation. Three-year cliff vesting promotes retention and enhances executive stock ownership. |
Primary elements of our executive compensation program
| | Retirement and savings | Helps attract and retain executive talent. NEOs receive retirement benefits through several plans: • Qualified and nonqualified defined contribution plans; and • Deferred compensation plan*. | | | Other benefits | Helps attract and retain executive talent. NEOs are eligible to participate in the benefit plans available to salaried employees including medical and dental benefits and life, accidental death and disability insurance. Perquisites are limited in amount and are not grossed up for taxes, and the Compensation Committee limits eligibility and use. | | | Severance and change in control agreements | Helps ensure NEOs remain focused on creating sustainable performance. Agreements protect the company and the NEOs from risks by providing: • Economic stability; • Death or disability payments; and • Double-trigger payments and benefits upon a qualifying termination of employment in the event of a change in control. | | | * Effective December 31, 2021, the deferred compensation plan for salaried employees was frozen and no deferrals will be credited under the plan with respect to any compensation earned on or after January 1, 2022. | |
Analysis of 2023 compensation
| • | Advice of an independent compensation consultant; and |
Analysis of 2023 compensation
| • | Market pay practices as reflected by a compensation peer group as well as external executive compensation data, studies and trends. |
Peer groups
Peer groups In 2021, the Compensation Committee requested that its independent compensation consultant, Meridian Compensation Partners, LLC, conduct a comprehensive review of the previously adopted compensation peer group to verify whether the current peers are appropriate on a go-forward basis for purposes of benchmarking the pay of our CEO and CFO. On the basis of its 2021 review, as well as another high-level review in 2023, Meridian has advised that the current compensation peer group remains appropriate and recommended no changes. This compensation peer group consists of 18 steel and related-industry companies that are generally within an appropriate revenue and market capitalization range. At the time Meridian conducted its review in mid-2023, Metallus was positioned at the 36th percentile of the compensation peer group for revenues and the 43rd percentile for market capitalization.
Peer groups
| 2023 Compensation Peer Group Companies | | | ATI Inc. | L.B. Foster Corporation | | Barnes Group | Materion Corporation | | Carpenter Technology Corporation | NN, Incorporated | | Century Aluminum Corporation | Olympic Steel, Incorporated | | Columbus McKinnon Corporation | Ryerson Holding Corporation | | Enerpac Tool Group Corp. | Radius Recycling** | | Enviri Corporation* | SunCoke Energy, Incorporated | | Haynes International Inc. | TriMas Corporation | | Kaiser Aluminum Corporation | Worthington Industries, Incorporated | | * Previously known as Harsco Corporation | ** Previously known as Schnitzer Steel Industries, Inc. |
Peer groups
Guidelines for CEO and CFO salaries, annual incentives, regular long-term incentives and target total direct compensation are initially based on or near the 50th percentile of compensation peer group data for those roles. With respect to the other NEOs, external general industry surveys of compensation practices for positions with similar levels of responsibilities remain the primary comparative information used for setting target compensation, with guidelines for salaries, annual incentives, long-term incentives and target total direct compensation for these NEOs initially based on or near the 50th percentile of general industry data. We did not select the companies that comprise any of these survey groups, and the component companies’ identities were not a material factor in our compensation analysis. The company may provide target compensation above or below the 50th percentile for a particular position, based on factors such as the executive’s operating responsibilities, experience level, retention risk, tenure, internal equity and performance in the position. The company establishes compensation levels in this way for two reasons:
Peer groups
| • | first, this approach sets fair and reasonable pay levels needed to attract and retain qualified executives; and |
Peer groups
| • | second, it requires excellent individual performance and company performance for pay that is higher than that indicated in the compensation peer group or general industry data, as applicable, for comparable roles. |
Peer groups
In addition to the compensation peer group described above, the company also uses an identified peer group of steel companies to measure relative total shareholder return performance for the performance shares component of the long-term incentive program. This peer group of steel companies, which is not used for purposes of benchmarking compensation, was initially selected by the Compensation Committee based on recommendations from Meridian in 2020 and is focused more on our comparators for investor capital without concern for revenue size, which is a significant factor in selecting the compensation peer group as it influences pay levels. With the assistance of Meridian, the Compensation Committee reviews this peer group of steel companies on an annual basis for continued appropriateness prior to awarding performance shares for the next performance cycle. Other than the removal of one steel company peer which was the subject of an acquisition in 2020, the Compensation Committee has not made any changes to the peer group of steel companies used to measure relative total shareholder return performance. For the 2023-2025 performance share cycle, the peer group of steel companies consisted of the following 16 companies:
Peer groups
| 2023-2025 Performance Shares Peer Group of Steel Companies | | | ATI Inc. | Olympic Steel, Inc. | | Ampco-Pittsburgh Corporation | Reliance Steel & Aluminum Company | | Ascent Industries Co.* | Ryerson Holding Corporation | | Carpenter Technology Corporation | Radius Recycling* | | Commercial Metals Company | Steel Dynamics, Inc. | | Friedman Industries, Incorporated | United States Steel Corporation | | Haynes International, Inc. | Universal Stainless & Alloy Products, Inc. | | Nucor Corporation | Worthington Industries, Incorporated | | * Ascent Industries was previously known as Synalloy Corporation and Radius Recycling was previously known as Schnitzer Steel Industries, Inc. | |
CEO compensation
CEO compensation In setting Mr. Williams target pay for 2023, the Compensation Committee reviewed data provided by Meridian regarding target total direct compensation (base salary, target annual incentives and regular target long-term incentive grants) for CEOs of the company’s peer group. Following this review, in February 2023, the Compensation Committee recommended and the Board approved for Mr. Williams an increase in (i) annual base salary from $800,000 to $835,000 and (ii) the target value of awards under the company’s long-term incentive plan from $2.4 million to $3.0 million annually, with 60 percent of the target value being awarded in the form of performance shares and 40 percent of the target value in time-based restricted stock units. The Compensation Committee’s recommendation to increase the base salary and target value of long-term incentive awards for Mr. Williams was based on a combination of factors, including his exceptional performance as CEO since joining the company in January 2021 and a finding that the current target total direct compensation for Mr. Williams fell below the market median (as compared to the peer group data provided by Meridian). Upon recommendation of the Committee and with the approval of the Board, there was no increase to the target annual incentive opportunity (as a percentage of base salary) for Mr. Williams for 2023.
Annual incentive
Annual incentive The company’s annual incentive provides the NEOs the opportunity to earn rewards based on achieving corporate performance goals established in advance by the Compensation Committee. It is intended to focus the NEOs on specific performance goals in the current year. For the NEOs, the annual incentive is delivered through the APA plan.
Annual incentive
| The Compensation Committee generally determines target award opportunity levels for the NEOs based on our compensation peer group for the CEO and CFO and external surveys for positions with similar levels of responsibility for the remaining NEOs. For 2023, the Committee increased Mr. Westbrooks’ target annual incentive opportunity from 70 to 75 percent of base salary, Ms. Syrvalin’s target annual incentive opportunity from 55 to 60 percent of base salary, and Mr. Raketich’s target annual incentive opportunity from 50 to 60 percent of base salary following a review of the scope of their responsibilities and peer group and/or market data, as applicable, for comparable roles. Mr. Williams did not receive a target annual incentive opportunity increase for 2023. Actual awards earned under the APA can be higher or lower than the target opportunity based on the results for each performance measure and the extent to which the Committee may use discretion to adjust the final payout levels for the awards. Performance measures factor the award from zero to 200 percent. For 2023, the Committee determined to continue to utilize adjusted EBITDA and adjusted operating cash flow as the primary performance measures under the APA and to shift safety from a performance modifier to a weighted metric, with a 50 percent weighting on adjusted EBITDA, a 30 percent weighting on adjusted operating cash flow and, for the NEOs, a 20 percent weighting on safety. | Linking pay to performance The Compensation Committee established adjusted EBITDA as the primary performance measure under the annual incentive plan because it believes this adjusted non-GAAP measure is closely correlated with the creation of shareholder value. Adjusted operating cash flow was established as a secondary performance measure to encourage a focus on working capital discipline and cash generation to drive profitable growth. The inclusion of a safety metric reinforces our commitment to the health and safety of our people while the shift to a weighted metric comprising 20 percent of the target opportunity for the NEOs reinforces the strategic importance of, and accountability for, improving the company’s safety culture and performance. |
Annual incentive
| | Annual incentive | | | Target opportunity as a percent of base salary | | Michael S. Williams | 100% | | Kristopher R. Westbrooks | 75% | | Kristine C. Syrvalin | 60% | | Kevin A. Raketich | 60% |
2023 annual performance award decisions
2023 annual performance award decisions Payouts under the APA plan for 2023 were determined by the following factors:
2023 annual performance award decisions
| • | earnings measured by adjusted EBITDA; |
2023 annual performance award decisions
| • | adjusted operating cash flow; and |
2023 annual performance award decisions
| • | safety. |
2023 annual performance award decisions
The performance against the metrics established for the 2023 APA plan resulted in an initial, formulaic total payout calculation (on a weighted basis) of 126.1 percent of target. The following charts show performance targets and actual performance levels for each of the metrics in the 2023 APA plan.
2023 annual performance award decisions
| | | Dollars in millions. Payout percentage is expressed as the percent of target opportunity on a weighted basis. |
2023 annual performance award decisions
For the 2023 APA plan, the target performance objective for adjusted EBITDA was set above actual adjusted EBITDA results under the 2022 APA, and the target performance objective for adjusted operating cash flow was similarly set above actual adjusted operating cash flow results delivered in 2022. The target performance objectives reflected expectations at the time these objectives were established in early 2023 for increased ship tons as production normalized following unplanned downtime and lower levels of production in 2022, an increase in base sales prices but lower surcharge revenue per ton, accompanied by continued risk of supply chain disruptions and inflationary pressures. In light of these expectations, the Compensation Committee felt that the 2023 target performance objectives established for both the adjusted EBITDA measure and the adjusted operating cash flow measure would be challenging, but attainable. With respect to the safety metric, target performance objectives for the OSHA recordable and OSHA lost time incident rates for 2023 were set at the same levels established as the target performance objectives for 2022, which were significantly better than actual performance results for 2022. The PSIF action completion rate was a new metric for 2023 and the target performance objective was set at a rate substantially above actual performance on this metric in 2022. The Compensation Committee felt that achieving the targeted safety performance objectives would be challenging, requiring substantially improved performance on all measures, but attainable. Improved operating performance, strong base pricing and solid market demand, as well as substantial insurance recoveries related to unplanned downtime in the second half of 2022, drove full-year profitability above the target performance objectives established for 2023 and supported our 2023 adjusted operating cash flow results which, while below threshold for the first half, exceeded maximum for the second half of the year. In calculating adjusted EBITDA and adjusted operating cash flow performance for purposes of the 2023 APA plan for all participants, as an initial matter, the Committee determined not to exclude the insurance recoveries received in 2023, as the Committee recognized that maximizing these recoveries required substantial effort during 2023 by cross-functional teams across the company and was in the best interest of shareholders, supporting the company’s actions to return capital to shareholders and invest in the business. Actual performance on the adjusted EBITDA metric of $200.3 million was above the target performance objective of $183.9 million, resulting in a payout calculation of 145 percent of target on an unweighted basis. With respect to the adjusted operating cash flow metric, at the beginning of the year a target was established for the first half and the second half of the year in order to drive cash flow management throughout the year, with the final payout calculated as the average of the calculated payout for the two six-month periods. Adjusted operating cash flow performance in 2023 was driven primarily by profitability and working capital discipline. Actual adjusted operating cash flow of $28.8 million in the first six-month period failed to meet the threshold performance objective of $34.6 million, resulting in no payout for the first six-month period, while adjusted operating cash flow of $132.3 million in the second six-month period exceeded the maximum performance objective of $128.4 million, resulting in a 200 percent calculated payout for the second six-month period. Taking the average of the calculated payouts for the two six-month periods, the final payout calculation on the adjusted operating cash flow metric was 100 percent of target on an unweighted basis. With respect to the safety metric, the company ended the year with an OSHA recordable rate of 2.94 and a lost time incident rate of 0.22, failing to meet the threshold performance objective for the OSHA recordable rate of 1.80 or less but meeting the maximum performance objective for the OSHA lost-time incident rate of 0.22. Additionally, the company achieved a PSIF action completion rate of 71 percent in 2023, above the target performance objective of 65 percent. Performance on the OSHA recordable and OSHA lost time incident rates, each of which comprised 20 percent of the overall safety metric, resulted in payout calculations of 0 percent and 200 percent of target, respectively, on an unweighted basis. Performance on the PSIF action completion rate, which comprised 60 percent of the overall safety metric, resulted in a payout calculation of 130 percent of target on an unweighted basis. Overall, the safety metric was achieved at 118 percent of target on an unweighted basis. For the 2023 APA plan, the adjusted EBITDA metric was defined as EBITDA (as used for external financial reporting purposes) adjusted for APA plan purposes to exclude: mark-to-market remeasurement gains or losses; the effect of changes in tax law, accounting principles or other laws or provisions affecting reported results; and the effects of any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spinoff, split-up, combination, liquidation, facility shutdown, dissolution, sale or disposition of assets, stock or debt refinancing, impairment, goodwill or other similar transaction. With respect to the adjusted operating cash flow metric, as noted previously, a target was established for the first half and the second half of the year, with the final payout calculated as the average of the calculated payout for these two six-month periods. The adjusted operating cash flow metric was defined as net cash provided or used by operating activities (or operating cash flow) excluding changes in other current assets and other current liabilities, cash provided or used by financing activity, taxes, interest and capital expenditures; changes in applicable accounting principles, tax laws or regulations; and the effects of any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spinoff, split-up, combination, liquidation, facility shutdown, dissolution, sale or disposition of assets, stock or debt refinancing, impairment, goodwill or other similar transaction. As noted above, the target safety metric was defined as an OSHA recordable case rate of 1.50, an OSHA lost time case rate of 0.27, a PSIF action completion rate of 65 percent, and zero fatalities. The OSHA recordable case rate is a measure of injury frequency and is calculated as the total number of work-related injuries and illnesses that require medical treatment beyond first aid per 100 full-time employees during the calendar year. The OSHA lost time case rate is a measure of injury severity and is calculated as the total number of work-related injuries and illnesses that result in a lost workday beyond the initial date of the injury per 100 full-time employees during the calendar year. The PSIF action completion rate is a leading indicator that measures whether timely corrective actions have been taken to address near miss incidents which have the potential to result in a serious injury or fatality (a “PSIF”). In calculating the PSIF action completion rate, only corrective actions that are completed within a defined time window are considered “timely” and therefore credited towards the completion rate, meaning that no credit is received toward the completion rate for actions completed too early or too late.
2023 annual performance award decisions
| | 2023 APA payouts | | | | Target opportunity as a percent of base salary | 2023 Award | | Michael S. Williams | 100% | $800,000 | | Kristopher R. Westbrooks | 75% | $361,579 | | Kristine C. Syrvalin | 60% | $213,675 | | Kevin A. Raketich | 60% | $195,850 |
2023 annual performance award decisions
While a total payout of 126.1 percent of target was earned as a formulaic matter based on performance against the metrics established for the 2023 APA plan, the Compensation Committee reviewed and considered such results and exercised discretion to reduce the payout for each of the NEOs to 100 percent of target, reflecting the Committee’s view that it was appropriate to include insurance recoveries in the APA calculation but that such recoveries should not drive a payout above target. Accordingly, the payout awarded to each of the eligible NEOs under the APA plan for 2023, as set forth in the above table, was calculated as 100 percent times the product of (x) the target opportunity percentage for such NEO (as set forth in the table above) and (y) the salary paid to such NEO during 2023. Except as described in the foregoing paragraph, the Compensation Committee did not make any discretionary adjustments to the APA plan awards for any of the NEOs. For information about the APA opportunities awarded to each of the NEOs in 2023, see the “2023 Grants of plan-based awards table.”
Long-term incentives
Long-term incentives Consistent with the prior year, two different types of long-term incentive grants were awarded to the NEOs in February 2023 as part of the regular annual compensation program:
Long-term incentives
| • | Performance shares, which are performance-based restricted stock units generally earned based on the company’s relative total shareholder return, as compared to an identified peer group of steel |
Long-term incentives
| companies, for the one-, two- and three-year periods beginning January 1, 2023 and ending December 31, 2023, 2024 and 2025, respectively, with any earned units payable in shares at the conclusion of the three-year performance period; and |
Long-term incentives
| • | Restricted stock units, which generally “cliff” vest at the end of a three-year period and have a value that changes based on changes in the company’s stock price. |
Long-term incentives
For Mr. Williams, the Compensation Committee reviewed and the Board approved a 60/40 mix of performance shares and restricted stock units. For the other NEOs, the Compensation Committee approved a 50/50 mix of performance shares and restricted stock units to focus the NEOs on creation of long-term shareholder value, while addressing retention considerations. The Compensation Committee believes these grants, in total, provide a balanced emphasis on shareholder value creation and retention of executive management over the course of a full business cycle. These grants also serve to balance the short-term operating focus of the company and align executive management’s long-term financial interests with those of the company’s shareholders. The value of the entire long-term incentive grant is at risk and linked directly to the price of the company’s common stock. The size of the long-term incentive grants and the allocation of grant value among the long-term incentive grant types are based on a combination of market practice, internal equity considerations and the relative importance of the objectives underlying each of the grant types. In addition, on December 15, 2023, the Board of Directors approved a Transformation Incentive Grant program pursuant to which each of the NEOs was awarded a special grant of performance-based restricted stock units. These performance shares may be earned from 0% to 200% of target levels depending on the degree to which the closing price performance of the company’s common shares satisfies up to seven specific average per share closing price goals during a performance period running from December 1, 2023 through December 31, 2026, and will pay out in two equal installments in early 2027 and 2028, generally conditioned on continued employment with the company until the applicable vesting date. As such, these awards are intended to drive management engagement on transformative initiatives, further aligning executive compensation with the investment interests of the Company’s shareholders by motivating and rewarding management initiative and action only to the extent they help create substantial additional shareholder value, while also supporting retention of key leadership. For additional information about Transformation Incentive Grant program awards to each of the NEOs in 2023, see “2023 Long-term incentive decisions – Transformation Incentive Grant program” below and the “2023 Grants of plan-based awards table.”
2023 Long-term incentive decisions
2023 Long-term incentive decisions
Annual grant program
| | Long-term incentives | | | | | | | | Target grant opportunity | Number of restricted stock units | Value of restricted stock units(1) | Number of performance shares | Value of performance shares (at target)(2) | Total value of award | | Michael S. Williams | $3,000,000 | 65,300 | $1,230,905 | 98,000 | $2,266,740 | $3,464,995 | | Kristopher R. Westbrooks | $675,000 | 18,400 | $346,840 | 18,400 | $425,592 | $772,432 | | Kristine C. Syrvalin | $600,000 | 16,300 | $307,255 | 16,300 | $377,019 | $684,274 | | Kevin A. Raketich | $635,000 | 17,300 | $326,105 | 17,300 | $400,149 | $726,254 |
Annual grant program
| (1) The value of restricted stock units as shown in this table is equal to the closing price of Metallus common shares on the date of grant multiplied by the number of restricted stock units granted. |
Annual grant program
| (2) The value of performance shares as shown in this table was determined using a lattice valuation model, the Monte Carlo Simulation, multiplied by the target number of performance shares granted, which was the probable outcome on the grant date. This is not the value considered by the Committee in determining the number of performance shares to be awarded. Additional information is provided below regarding the basis for determining the number of restricted stock units and target performance shares granted. |
Annual grant program
The Compensation Committee generally determines target grant opportunity levels for the NEOs based on our compensation peer group for the CEO and CFO and external surveys for positions with similar levels of responsibility for the remaining NEOs. Following a review of this peer group and/or market data, as applicable, the Committee determined for 2023 to increase the target grant opportunity for Mr. Westbrooks by approximately 8 percent, for Ms. Syrvalin by approximately 36 percent and for Mr. Raketich by approximately 47 percent. For Ms. Syrvalin and Mr. Raketich in particular, the significant increase in target long-term incentive grant opportunities reflects a decision by the Committee to achieve target total direct compensation in line with market data for comparable roles by allocating more compensation to target long-term incentive opportunities, thereby reinforcing the objective of long-term shareholder value creation and further aligning our executives’ interests with those of our shareholders. The target value for each grant is converted to a number of restricted stock units and a number of target performance shares based on a calculated average stock price over a defined period prior to the grant. The Compensation Committee used the average closing price over the five trading days immediately preceding the March 1, 2023 grant date in determining the number of restricted stock units and target performance shares to be granted in 2023. The Compensation Committee typically makes annual grants of long-term incentives at its first regularly scheduled meeting of each year, when the Committee determines all elements of the NEOs’ compensation for the year. Board and committee meetings are generally scheduled at least a year in advance.
Restricted stock units
Restricted stock units Restricted stock units represent an interest in Metallus stock and are settled in shares after a three-year “cliff” vesting schedule. Restricted stock units serve to both reward and retain executives, as the value of the shares is linked to the stock price when the shares vest, generally on the third anniversary of the grant. For information about time-based restricted stock units awarded to the NEOs in 2023, see the “2023 Grants of plan-based awards table.”
Performance shares
Performance shares Performance shares are how we generally refer to performance-based restricted stock units earned, in the case of the annual grant program, based on the company’s relative total shareholder return as compared to an identified peer group of steel companies. The overall vesting period is generally three years from January 1 of the first year in the performance cycle to December 31 in the third year of the performance cycle, with relative total shareholder return measured for the one-, two- and three-year periods beginning January 1 of the first year in the performance cycle and ending December 31 of the first, second and third years in the performance cycle, respectively, creating effectively a “nested” 1-year, 2-year, and 3-year plan. Relative total shareholder return is calculated for each nested performance period by taking the beginning and ending price points based off of a 20-trading day average closing stock price as of December 31. A payout will be calculated based on performance for each of the three nested performance periods. For any payout to be earned for a nested performance period, relative total shareholder return must be achieved at least at the 25th percentile of the identified peer group. If the 25th percentile performance level is not attained, then no payout will be earned. For the 2021-2023 performance cycle, the payout earned can range from 50 percent to 150 percent of the target number of performance shares granted, based upon actual performance for the performance period, as follows (with payout based on interpolation between levels above the threshold):
Performance shares
| Level | Performance (Percentile) | Payout (Percent of Target) | | Threshold | 25th | 50% | | Target | 50th | 100% | | Maximum | 75th | 150% |
Performance shares
To better align with market practice, the Committee modified the payout structure for performance shares beginning with the 2022–2024 performance cycle by adding a 200 percent maximum payout opportunity if the company’s relative total shareholder return is at or above the 90th percentile of the identified peer group; provided, however, that regardless of the performance percentile achieved, if relative total shareholder return for the three-year performance period is negative, any resulting payout will be limited to 150 percent. Accordingly, for the 2022-2024 and the 2023-2025 performance cycles, the payout earned can range from 50 percent to 200 percent of the target number of performance shares granted, based upon actual performance for the performance period, as follows (with payout based on interpolation between levels above the threshold):
Performance shares
| Level | Performance (Percentile) | Payout (Percent of Target) | | Threshold | 25th | 50% | | Target | 50th | 100% | | Above Target | 75th | 150% | | Maximum | 90th | 200% |
Performance shares
For the 2021-2023 and 2022-2024 performance cycles, the average of the payouts calculated for each of the three “nested” performance periods will determine the number of performance shares earned and payable in shares at the conclusion of the three-year performance period. Unlike prior performance cycles where the three “nested” performance periods were weighted equally in calculating the final payout, for the 2023-2025 performance cycle the one- and two-year “nested” periods will each have a 25 percent weighting and the three-year “nested” period will have a 50 percent weighting when determining the number of performance shares earned at the conclusion of the three-year performance cycle. The Committee believes that this change in the weightings of the “nested” performance periods supports the objective of the company’s long-term incentive plan to link executive compensation to building long-term shareholder value. 2023-2025 performance cycle. For this award, for the first performance period ended December 31, 2023, relative total shareholder return was achieved at approximately the 57th percentile of the identified peer group, resulting in a preliminary payout calculation of 114.3 percent of target for the first “nested” performance period in the 2023-2025 performance cycle. Any payout remains subject to vesting and certification by the Committee following the conclusion of the three-year performance period. For information about performance shares awarded to the NEOs in 2023, see the “2023 Grants of plan-based awards table.” 2022-2024 performance cycle. For this award, for the first performance period ended December 31, 2022, relative total shareholder return was achieved at approximately the 44th percentile of the identified peer group, resulting in a preliminary payout calculation of 87.5 percent of target for the first “nested” performance period in the 2022-2024 performance cycle. For the second performance period ended December 31, 2023, relative total shareholder return was achieved at the 43rd percentile of the identified peer group, resulting in a preliminary payout calculation of 85.7 percent of target for the second “nested” performance period in the 2022-2024 performance cycle. Any payout remains subject to vesting and certification by the Committee following the conclusion of the three-year performance period. 2021-2023 performance cycle. For this award, for the first performance period ended December 31, 2021, relative total shareholder return was achieved at the 100th percentile of the identified peer group, resulting in a preliminary payout calculation of 150 percent of target for the first “nested” performance period in the 2021-2023 performance cycle. For the second performance period ended December 31, 2022, relative total shareholder return was also achieved at the 100th percentile of the identified peer group, resulting in a preliminary payout calculation of 150 percent of target for the second “nested” performance period in the 2021-2023 performance cycle. For the third and final performance period ended December 31, 2023, relative total shareholder return was again achieved at the 100th percentile of the identified peer group, with Metallus delivering a cumulative total shareholder return of approximately 331 percent for the January 1, 2021—December 31, 2023 performance period and ranking as the top performer among the identified peer group, resulting in a preliminary payout calculation of 150 percent of target for the third “nested” performance period in the 2021-2023 performance cycle. Taking the average of the payouts calculated for each of the three “nested” performance periods, the Compensation Committee awarded a payout equal to 150 percent of target for the 2021-2023 performance cycle, resulting in the number of performance shares set forth in the table below being earned by participating NEOs for the 2021-2023 performance cycle. The maximum payout earned for the 2021-2023 performance cycle, combined with an approximately 272 percent increase in the company’s share price from the initial grant date on March 1, 2021 to the December 31, 2023 conclusion of the performance period, resulted in a total realized payout to participating NEOs (other than Mr. Williams) equal to approximately 408 percent of the target value of the 2021-2023 performance share award. For Mr. Williams, the total realized payout is equal to approximately 680 percent of the target value of the 2021-2023 performance shares awarded to him, as these performance shares were part of Mr. Williams’ inducement grant awarded on January 5, 2021. From that date to the December 31, 2023 conclusion of the performance period, there was an approximately 453 percent increase in the company’s share price.
Performance shares
| | 2021-2023 performance cycle | | | | | | | Performance shares awarded at target | Grant date value of performance shares awarded at target(1) | Percent of performance shares earned(2) | Number of performance shares earned(3) | Value of performance shares earned at 12/31/2023(4) | | Michael S. Williams | 423,400 | $2,188,978 | 150% | 635,100 | $14,893,095 | | Kristopher R. Westbrooks | 40,400 | $348,248 | 150% | 60,600 | $1,421,070 | | Kristine C. Syrvalin | 22,400 | $193,088 | 150% | 33,600 | $787,920 | | Kevin A. Raketich | 12,900 | $111,198 | 150% | 19,350 | $453,758 |
Performance shares
| (1) This reflects the grant date value of performance shares awarded for the 2021-2023 performance cycle to Mr. Williams on January 5, 2021 and to the other NEOs on March 1, 2021, at which dates the closing price per share of Metallus common stock was $5.17 and $8.62, respectively. |
Performance shares
| (2) The percent of performance shares earned is expressed as a percentage of the target performance share award and calculated as the average of the payouts for the company’s relative total shareholder return as compared to an identified peer group of steel companies (determined by reference to a Compensation Committee-approved matrix) for each of the three “nested” performance periods in the 2021-2023 performance cycle. |
Performance shares
| (3) Performance shares earned are payable in shares. |
Performance shares
| (4) The closing price per share of Metallus common stock on December 29, 2023, the last trading day of the 2021-2023 performance cycle, was $23.45. |
Transformation Incentive Grant program
| Average Share Price Goal | Payout Percentage | | Less than $35.00 | 0% | | $35.00 | 50% | | $37.50 | 75% | | $40.00 | 100% | | $42.50 | 125% | | $45.00 | 150% | | $47.50 | 175% | | $50.00 or greater | 200% |
Transformation Incentive Grant program
| | Number of performance shares at target | | Michael S. Williams | 80,000 | | Kristopher R. Westbrooks | 40,000 | | Kristine C. Syrvalin | 40,000 | | Kevin A. Raketich | 40,000 |
Retirement and other benefits
| • | The company maintains frozen qualified and nonqualified defined benefit plans that provide for a targeted percentage of salary and annual incentive income that will continue through retirement. The nonqualified defined benefit plan in which Mr. Raketich participates is the supplemental executive retirement program for executive officers (“SERP”). The SERP provides for a benefit based on final average earnings with offsets for benefits provided under the company’s other retirement programs. In November 2019, the qualified and nonqualified defined benefit plans were amended to provide that no additional benefits would accrue for any remaining active participants after December 31, 2020. Messrs. Williams and Westbrooks and Ms. Syrvalin are not eligible to participate in the defined benefit plans. Their retirement savings are provided solely through the defined contribution plans. |
Severance agreements
Severance agreements In addition to retirement income programs described above, the company may provide termination-related payments to individual executives through severance agreements, in the event of involuntary termination without cause, whether before or after a change in control. Severance agreements are provided based on competitive market practice and the company’s desire to ensure some level of income continuity should an executive’s employment be terminated without cause. The company believes providing for such income continuity results in greater management stability and less unwanted and disruptive management turnover. The level of severance benefits reflects the company’s perception of competitive market practice for the NEOs’ positions, based on assessments conducted by the Compensation Committee’s consultant. Severance pay was established as a multiple of base salary and annual incentive compensation. The Committee did not target specific dollar values. The amounts of potential payouts are outlined in the “Termination scenarios for NEOs” table below.
Other compensation program features
In determining whether an executive has met the applicable ownership targets, the company considers all shares owned by the executive plus restricted stock units still subject to forfeiture, but not shares that are subject to unexercised options or performance shares still subject to forfeiture. As of February 29, 2024, each of the NEOs had achieved the established guideline. Each NEO is required to retain shares (net of tax withholding) earned under the company’s long-term incentive plan until the ownership target is achieved.
2023 Summary compensation table
2023 Summary compensation table The following table sets forth information concerning compensation for our NEOs for the fiscal years ended December 31, 2023, 2022 and 2021, as applicable:
2023 Summary compensation table
| Name and principal position | Year | Salary | Stock awards(1) | Option awards | Non-equity incentive plan compensation(2) | Change in pension value and nonqualified deferred compensation earnings(3) | All other compensation(4) | Total | | Michael S. Williams | 2023 | $827,708 | $5,275,245 | $0 | $827,708 | $0 | $43,195 | $6,973,856 | | CEO and President | 2022 | $800,000 | $3,161,442 | $0 | $600,800 | $0 | $41,948 | $4,604,190 | | | 2021 | $800,000 | $4,593,890 | $0 | $1,672,000 | $0 | $95,948 | $7,161,838 | | Kristopher R. Westbrooks | 2023 | $482,105 | $1,661,232 | $0 | $361,579 | $0 | $22,635 | $2,527,551 | | Executive Vice President and | 2022 | $460,688 | $1,026,720 | $0 | $242,184 | $0 | $27,773 | $1,757,365 | | Chief Financial Officer | 2021 | $445,665 | $795,476 | $0 | $652,008 | $0 | $22,683 | $1,915,832 | | Kristine C. Syrvalin | 2023 | $356,125 | $1,573,074 | $0 | $213,675 | $0 | $24,089 | $2,166,963 | | Executive Vice President, | 2022 | $323,750 | $581,808 | $0 | $147,097 | $0 | $15,258 | $1,067,913 | | General Counsel and | 2021 | $300,000 | $441,056 | $0 | $285,000 | $0 | $17,994 | $1,044,050 | | Chief Human Resources Officer | | | | | | | | | | Kevin A. Raketich | 2023 | $326,417 | $1,615,054 | $0 | $195,850 | $81,797 | $21,984 | $2,241,102 | | Executive Vice President and | 2022 | $307,125 | $564,696 | $0 | $126,858 | $0 | $27,221 | $1,025,900 | | Chief Commercial Officer | 2021 | $292,585 | $254,001 | $0 | $269,124 | $0 | $16,954 | $832,664 |
2023 Summary compensation table
| (1) The amounts shown in this column represent, for 2023, the grant date fair value (calculated in accordance with FASB ASC Topic 718) of (a) awards pursuant to the annual grant program made on March 1, 2023 of (i) restricted stock units and (ii) performance shares (subject to being earned based upon achievement of the established performance objectives) and (b) awards of performance shares pursuant to the Transformation Incentive Grant program made on December 15, 2023 (subject to being earned based upon the achievement of certain specific average per share closing price goals). The fair value of RSUs is equal to the closing price of Metallus common shares on the date of grant multiplied by the number of RSUs granted. The fair value of performance shares is determined using a lattice valuation model, the Monte Carlo Simulation. For additional information regarding the Monte Carlo Simulation, please refer to Note 2 in the Notes to Consolidated Financial Statements in the company’s Annual Report on Form 10-K for the year ended December 31, 2023. With respect to performance share awards under the annual grant program, the amounts shown assume target achievement of the established performance objectives, which was the probable outcome on the grant date. Should performance equal or exceed the maximum goals for the 2023 performance shares, the grant date fair value for such awards would be as follows: Mr. Williams - $4,533,480; Mr. Westbrooks - $851,184; Ms. Syrvalin - $754,038 and Mr. Raketich - $800,298. With respect to performance share awards under the Transformation Incentive Grant program, the amounts shown assume target achievement of the average per share closing price goals, which was the probable outcome on the grant date. Should performance equal or exceed the maximum average per share closing price goals, the grant date fair value for such awards would be as follows: Mr. Williams - $3,555,200 Mr. Westbrooks - $1,777,600; Ms. Syrvalin - $1,777,600 and Mr. Raketich - $1,777,600. |
2023 Summary compensation table
The restricted stock units granted to the NEOs will vest in full on March 1, 2026, in each case generally provided the named executive officer remains continuously employed by the company through that date. For more information about the operation of the performance shares awarded pursuant to the annual grant program in 2023 to the NEOs and the performance shares awarded pursuant to the Transformation Incentive Grant program to the NEOs, see “Analysis of 2023 compensation — Long-term incentives — 2023 Long-term incentive decisions” in the Compensation discussion and analysis section of this proxy statement.
2023 Summary compensation table
| (2) The amounts shown in this column for 2023 represent cash payouts earned by the NEOs under the Annual Performance Award plan. For additional information, see “Analysis of 2023 compensation – Annual incentive – 2023 Annual performance award decisions” in the Compensation discussion and analysis section of this proxy statement. |
2023 Summary compensation table
| (3) The amount shown in this column for 2023 represents the increase in the present value of benefits payable to Mr. Raketich under the company’s Retirement Plan (the “Qualified Plan”) and Supplemental Pension Plan (the “Supplemental Plan”) from December 31, 2022 to December 31, 2023. The amounts were calculated using the same assumptions used in 2022 and included in the footnotes of the “2022 Pension benefits table,” except that the calculation as of December 31, 2023 utilized a discount rate of 5.44%, while a discount rate of 5.67% was used for the calculation as of December 31, 2022. The increase in the present value of $81,797 for Mr. Raketich is comprised of $30,628 from the use of the lower discount rate and $51,169 due to the passage of time. The increase is not due to the accrual of any additional benefit service, as both the Qualified Plan and the Supplemental Plan were frozen with no additional benefit accruals after December 31, 2020. Messrs. Westbrooks and Williams and Ms. Syrvalin are not eligible for company-paid pension benefits. For additional information, please see “Pension benefits” and “2023 Pension benefits table” in this proxy statement. |
2023 Summary compensation table
| (4) The amounts shown in this column for 2023 are broken down in detail in the following table (a): |
2023 Summary compensation table
| Name | Annual company contribution to SIP plan(b) | Annual company contribution to post-tax savings benefit(c) | Personal use of company’s country club memberships(d) | Life insurance(e) | Other | | Michael S. Williams | $14,850 | $22,397 | $0 | $5,948 | $0 | | Kristopher R. Westbrooks | $14,850 | $6,845 | $196 | $745 | $0 | | Kristine C. Syrvalin | $14,850 | $7,795 | $0 | $1,445 | $0 | | Kevin A. Raketich | $14,850 | $5,547 | $250 | $1,337 | $0 |
2023 Summary compensation table
| (a) The company does not provide tax gross-ups for executive benefits. |
2023 Summary compensation table
| (b) The “SIP plan” refers to the Savings and Investment Pension Plan, which is the company’s qualified defined contribution plan for salaried employees. |
2023 Summary compensation table
| (c) The “post-tax savings benefit” is the company’s non-tax qualified restoration benefit for salaried employees whose contributions and benefits in qualified retirement plans are limited by Section 415 of the Internal Revenue Code. |
2023 Summary compensation table
| (d) Amounts shown for personal use of country club memberships include pro-rated amounts of company-paid annual membership dues attributed to the personal use of country clubs by the NEO. There are no incremental costs to the company for other personal expenses associated with such personal use, as all such costs are borne by the executive. |
2023 Summary compensation table
| (e) The amounts shown represent imputed income for the cost of pre-tax term life insurance (which is provided by the company for all salaried employees equal to one time their annual salary) for the portion that exceeds the IRS pre-tax limit of $50,000. |
2023 Grants of plan-based awards table
2023 Grants of plan-based awards table The following table sets forth information concerning awards already paid or potentially payable to our NEOs with respect to the short-term and long-term incentive award opportunities granted in 2023:
2023 Grants of plan-based awards table
| Name | Approval date | Grant date | Estimated possible payouts under non-equity incentive plan awards | | | Estimated future payouts under equity incentive plan awards | | | All other stock awards: number of shares of stock or units | Grant date fair value of stock and option awards(5) | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Michael S. Williams | 2/8/2023 | 3/1/2023 APA(1) | $0 | $835,000 | $1,670,000 | | | | | | | | 2/8/2023 | 3/1/2023 RSUs(2) | | | | | | | 65,300 | $1,230,905 | | | 2/8/2023 | 3/1/2023 Perf RSUs(3) | | | | 49,000 | 98,000 | 196,000 | | $2,266,740 | | | 12/15/2023 | 12/15/2023 Perf RSUs(4) | | | | 40,000 | 80,000 | 160,000 | | $1,777,600 | | Kristopher R. Westbrooks | 2/8/2023 | 3/1/2023 APA(1) | $0 | $365,250 | $730,501 | | | | | | | | 2/8/2023 | 3/1/2023 RSUs(2) | | | | | | | 18,400 | $346,840 | | | 2/8/2023 | 3/1/2023 Perf RSUs(3) | | | | 9,200 | 18,400 | 36,800 | | $425,592 | | | 12/15/2023 | 12/15/2023 Perf RSUs(4) | | | | 20,000 | 40,000 | 80,000 | | $888,800 | | Kristine C. Syrvalin | 2/8/2023 | 3/1/2023 APA(1) | $0 | $217,800 | $435,600 | | | | | | | | 2/8/2023 | 3/1/2023 RSUs(2) | | | | | | | 16,300 | $307,255 | | | 2/8/2023 | 3/1/2023 Perf RSUs(3) | | | | 8,150 | 16,300 | 32,600 | | $377,019 | | | 12/15/2023 | 12/15/2023 Perf RSUs(4) | | | | 20,000 | 40,000 | 80,000 | | $888,800 | | Kevin A. Raketich | 2/8/2023 | 3/1/2023 APA(1) | $0 | $198,600 | $397,201 | | | | | | | | 2/8/2023 | 3/1/2023 RSUs(2) | | | | | | | 17,300 | $326,105 | | | 2/8/2023 | 3/1/2023 Perf RSUs(3) | | | | 8,650 | 17,300 | 34,600 | | $400,149 | | | 12/15/2023 | 12/15/2023 Perf RSUs(4) | | | | 20,000 | 40,000 | 80,000 | | $888,800 |
2023 Grants of plan-based awards table
| (1) “APA” reflects the annual incentive opportunity available to each NEO under the Annual Performance Award plan at threshold, target and maximum performance levels for the 2023 performance period. See “Analysis of 2023 compensation – Annual incentive” and “Analysis of 2023 compensation – 2023 Annual performance award decisions” in the Compensation discussion and analysis section of this proxy statement for additional information. |
2023 Grants of plan-based awards table
| (2) “RSUs” refers to restricted stock units granted to each NEO on the grant date indicated. Restricted stock units reported in this table will vest in full on March 1, 2026, in each case generally provided the executive maintains continuous employment with the company through that date. For additional information, see “Analysis of 2023 compensation – Long-term incentives” and “Analysis of 2023 Compensation – Long-term incentives – 2023 Long-term incentive decisions” in the Compensation discussion and analysis section of this proxy statement. |
2023 Grants of plan-based awards table
| (3) The “3/1/2023 Perf RSUs” amounts reported in this table indicate threshold, target and maximum award opportunities for the performance shares granted to the NEOs on March 1, 2023 pursuant to the annual grant program. For additional information, see “Analysis of 2023 Compensation – Long-term incentives” and “Analysis of 2023 Compensation – Long-term incentives – 2023 Long-term incentive decisions” in the Compensation discussion and analysis section of this proxy statement. |
2023 Grants of plan-based awards table
| (4) The “12/15/2023 Perf RSUs” amounts reported in this table indicate threshold, target and maximum award opportunities for the performance shares granted to the NEOs on December 15, 2023 pursuant to the Transformation Incentive Grant program. For additional information, see “Analysis of 2023 Compensation – Long-term incentives” and “Analysis of 2023 Compensation – Long-term incentives – 2023 Long-term incentive decisions” in the Compensation discussion and analysis section of this proxy statement. |
2023 Grants of plan-based awards table
| (5) The amounts shown in this column reflect the fair value on the date of grant of RSUs and performance shares granted in 2023, computed in accordance with FASB ASC Topic 718. The fair value of RSUs is equal to the closing price of Metallus common shares on the date of grant multiplied by the number of RSUs granted. The fair value of performance shares is determined using a lattice valuation model, the Monte Carlo Simulation, multiplied by the target number of performance shares granted, which was the probable outcome on the grant date. For additional information regarding the Monte Carlo Simulation, please refer to Note 2 in the Notes to Consolidated Financial Statements in the company’s Annual Report on Form 10-K for the year ended December 31, 2023. |
2023 Grants of plan-based awards table
Grants made in 2023 are described more fully in the “Compensation discussion and analysis” section of this proxy statement. For more information concerning the amount of salary and incentive compensation in proportion to total compensation for the NEOs, see “Analysis of 2023 compensation — 2023 target pay mix” in the Compensation discussion and analysis section of this proxy statement.
Outstanding equity awards at 2023 year-end table
Outstanding equity awards at 2023 year-end table The following table sets forth information concerning unexercised stock options and stock awards that have not yet vested for each of our NEOs as of December 31, 2023:
Outstanding equity awards at 2023 year-end table
| | Option awards(1) | | | | | Stock awards(2) | | | | | Name | Grant date | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($/share) | Option expiration date | Number of shares or units of stock that have not vested | Market value of shares or units of stock that have not vested | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested | | M. S. Williams | 1/5/2021 | | | | | 423,400 | $9,928,730 | | | | | 3/1/2022 | | | | | 73,900 | $1,732,955 | 73,900 | $1,732,955 | | | 3/1/2023 | | | | | 65,300 | $1,531,285 | 196,000 | $4,596,200 | | | 12/15/2023 | | | | | | | 40,000 | $938,000 | | K. R. Westbrooks | 9/24/2018 | 3,520 | 0 | $14.34 | 9/24/2028 | | | | | | | 3/1/2019 | 24,826 | 0 | $12.45 | 3/1/2029 | | | | | | | 3/2/2020 | 23,626 | 20,750 | $5.26 | 3/2/2030 | | | | | | | 3/1/2021 | | | | | 40,400 | $947,380 | | | | | 3/1/2022 | | | | | 24,000 | $562,800 | 24,000 | $562,800 | | | 3/1/2023 | | | | | 18,400 | $431,480 | 36,800 | $862,960 | | | 12/15/2023 | | | | | | | 20,000 | $469,000 | | K. C. Syrvalin | 1/29/2015 | 2,480 | 0 | $29.00 | 1/29/2025 | | | | | | | 2/15/2017 | 4,452 | 0 | $17.46 | 2/15/2027 | | | | | | | 2/14/2018 | 4,640 | 0 | $16.57 | 2/14/2028 | | | | | | | 3/1/2019 | 5,840 | 0 | $12.45 | 3/1/2029 | | | | | | | 3/2/2020 | 0 | 3,670 | 5.26 | 3/2/2030 | | | | | | | 3/1/2021 | | | | | 22,400 | $525,280 | | | | | 3/1/2022 | | | | | 13,600 | $318,920 | 13,600 | $318,920 | | | 3/1/2023 | | | | | 16,300 | $382,235 | 32,600 | $764,470 | | | 12/15/2023 | | | | | | | 20,000 | $469,000 | | K. A. Raketich | 2/13/2014 | 720 | 0 | $34.26 | 2/13/2024 | | | | | | | 1/29/2015 | 3,200 | 0 | $29.00 | 1/29/2025 | | | | | | | 2/17/2016 | 8,200 | 0 | $7.46 | 2/17/2026 | | | | | | | 2/15/2017 | 7,800 | 0 | $17.46 | 2/15/2027 | | | | | | | 2/14/2018 | 8,400 | 0 | $16.57 | 2/14/2028 | | | | | | | 3/1/2019 | 10,600 | 0 | $12.45 | 3/1/2029 | | | | | | | 3/2/2020 | 19,875 | 6,625 | $5.26 | 3/2/2030 | | | | | | | 3/1/2021 | | | | | 12,900 | $302,505 | | | | | 3/1/2022 | | | | | 13,200 | $309,540 | 13,200 | $309,540 | | | 3/1/2023 | | | | | 17,300 | $405,685 | 34,600 | $811,370 | | | 12/15/2023 | | | | | | | 20,000 | $469,000 |
Outstanding equity awards at 2023 year-end table
| (1) All option awards reported in this table are nonqualified stock options that generally vest ratably 25 percent per year over the four-year period from the date of grant. There were no stock options granted in 2021, 2022 or 2023. |
Outstanding equity awards at 2023 year-end table
| (2) Stock awards reported in this table include performance shares and restricted stock units. |
Outstanding equity awards at 2023 year-end table
Performance shares (reported under the Equity incentive plan awards columns) are performance-based restricted stock units awarded (a) pursuant to the annual grant program on March 1, 2022 and March 1, 2023 and (b) pursuant to the Transformation Incentive Grant program on December 15, 2023. Annual grant program performance shares may be earned based on the company’s relative total shareholder return as compared to an identified peer group of steel companies. The overall vesting period is generally three years from January 1 of the first year in the performance cycle to December 31 in the third year of the performance cycle, with relative total shareholder return measured for the one-, two- and three-year periods beginning January 1 of the first year in the performance cycle and ending December 31 of the first, second and third years in the performance cycle, respectively, creating effectively a “nested” 1-year, 2-year, and 3-year plan. Relative total shareholder return is calculated for each “nested” performance period by taking the beginning and ending price points based off of a 20-trading day average closing stock price as of December 31. For the annual grant program performance shares awarded in 2022, the average payout (determined under a Compensation Committee-approved matrix) for the company’s relative total shareholder return as compared to the identified peer group of steel companies for the one-, two- and three-year “nested” periods beginning January 1, 2022 and ending December 31, 2022, 2023 and 2024, respectively, will be used to determine whether (and how many) performance shares are earned for the 2022–2024 performance cycle. Performance shares earned will be settled in shares following the conclusion of the three-year performance period on December 31, 2024, at such time as the Compensation Committee shall have determined the degree to which the performance metrics have been achieved and the resulting number of performance shares earned. For the annual grant program performance shares awarded in 2023, a payout percentage will be calculated (determined under a Compensation Committee-approved matrix) based on the company’s relative total shareholder return as compared to the identified peer group of steel companies for the one-, two- and three-year “nested” periods beginning January 1, 2023 and ending December 31, 2023, 2024 and 2025, respectively, with the one- and two-year “nested” periods each having a 25 percent weighting and the three-year “nested” period having a 50 percent weighting when determining the final payout percentage and number of performance shares earned for the 2023–2025 performance cycle. Performance shares earned will be settled in shares following the conclusion of the three-year performance period on December 31, 2025, at such time as the Compensation Committee shall have determined the degree to which the performance metrics have been achieved and the resulting number of performance shares earned. The Transformation Incentive Grant program performance shares awarded on December 15, 2023 may be earned depending on the degree to which the closing price performance of the company’s common shares satisfies up to seven specific average per share closing price goals (achieved if the goal price is met or exceeded by the 20-trading-day average closing price for each trading day in any 20-consecutive trading-day period) during a performance period running from December 1, 2023 through December 31, 2026. Performance against these average share price goals will be evaluated after the end of the performance period (or, if earlier, at the time of a change in control of the company, taking into account achievement as of that date, including deemed achievement based on the value of any consideration paid for a common share in the change in control, if applicable). Earned levels of Transformation Incentive Grant performance shares will then pay out in two equal installments in early 2027 and 2028, generally conditioned on continued employment with the company until the applicable vesting date, subject to certain alternative evaluation, vesting and payout terms for situations involving the awardee’s death or disability or termination of employment without cause. The number of shares reported for the performance shares granted to the NEOs on March 1, 2022 reflects the number of shares that would be earned by each NEO assuming target performance is achieved under the established performance objectives; the number of shares reported for the performance shares granted to the NEOs on March 1, 2023 reflects the number of shares that would be earned by each NEO assuming maximum performance is achieved under the established performance objectives; and the number of shares reported for the performance shares granted to the NEOs on December 15, 2023 reflects the number of shares that would be earned by each NEO assuming threshold performance is achieved under the established performance objectives. The settlement for any performance shares earned will be in shares, unless otherwise determined by the Compensation Committee. Restricted stock units were granted to Mr. Williams on January 5, 2021, March 1, 2022 and March 1, 2023 and to Messrs. Westbrooks and Raketich and Ms. Syrvalin on March 1, 2021, March 1, 2022 and March 1, 2023. Each of these grants of restricted stock units generally vests on the third anniversary of their respective grant dates. The market value of all awards reported in this table was determined based upon the closing price of Metallus’ common shares on December 29, 2023, the last trading day of the year, which price was $23.45.
2023 Option exercises and stock vested table
2023 Option exercises and stock vested table The following table sets forth information with respect to the exercise of stock options by and vesting of stock awards for our NEOs during 2023.
2023 Option exercises and stock vested table
| | Option awards (1) | | Stock awards (2) | | | Name | Number of shares acquired on exercise | Value realized on exercise | Number of shares acquired on vesting | Value realized on vesting | | Michael S. Williams | 0 | $0 | 635,100 | $14,893,095 | | Kristopher R. Westbrooks | 35,418 | $524,727 | 123,800 | $2,633,246 | | Kristine C. Syrvalin | 7,340 | $110,831 | 43,000 | $968,212 | | Kevin A. Raketich | 0 | $0 | 47,250 | $992,804 |
2023 Option exercises and stock vested table
| (1) The value realized on the exercise of the options is the difference between exercise price and the fair market value of our common shares on the date of exercise. For this purpose, fair market value is determined by a real-time trading quote from the New York Stock Exchange at the time of exercise. |
2023 Option exercises and stock vested table
| (2) The value realized on vesting for stock awards is calculated by multiplying the number of shares acquired on vesting by the fair market value of Metallus common shares on the vesting date. For purposes of this calculation, the fair market value of restricted stock units that vest is equal to the closing price of our common shares on the vesting date, and the fair market value of performance shares earned for the 2021-2023 performance cycle is equal to the closing price of our common shares on December 29, 2023, the last trading day prior to the end of the performance period on December 31, 2023. |
Pension benefits
Pension benefits
Qualified Plan
Qualified Plan In connection with the spinoff from The Timken Company in 2014, the company adopted a tax-qualified defined benefit retirement plan (the “Qualified Plan”) which is substantially similar to the defined benefit retirement plan maintained by The Timken Company prior to spinoff. Years of service with The Timken Company prior to spinoff count toward years of service under the Qualified Plan. As noted below, benefit accruals under the Qualified Plan were frozen as of December 31, 2020. Pursuant to the Qualified Plan, salaried employees whose age plus years of service equaled or exceeded 50 as of December 31, 2003, participate in a defined benefit plan with a formula of 0.75 percent per year of service times average earnings, including base salary and cash annual incentive compensation, for the highest five non-consecutive years of the ten years preceding retirement (“Final Average Earnings”). For all employees in a defined benefit plan as of December 31, 2003, the formula in effect at the time of service, using Final Average Earnings at retirement, is applied to such service. The benefit is generally payable beginning at age 65 for the lifetime of the employee, with alternative forms of payment available with actuarial adjustments. Participants may retire early for purposes of the Qualified Plan if they meet any of the following eligibility requirements: age 62 and 15 years of service; age 60 and 25 years of service; or any age and 30 years of service. In addition, participants age 55 with at least 15 years of service may retire and receive the portion of their Qualified Plan benefit attributable to service earned after 2003. Benefits for service after December 31, 1991, are reduced for early commencement at a rate of 3 percent per year before the age of 60 for the portion of the benefit attributable to service earned between 1992 and 2003, and 4 percent per year before age 62 for the portion of the benefit attributable to service earned after 2003. Benefits for an NEO who dies while actively employed are payable to the surviving spouse from the defined benefit pension plans at the NEO’s normal retirement date (or on a reduced basis at an early retirement date) if the NEO had at least five years of service. The benefit is equal to 50 percent of the benefit payable if the NEO had terminated employment on the date of his death, survived to the payment date (as elected by his spouse), elected the 50 percent joint and survivor form of payment and died the next day. If the NEO had at least 15 years of service at the time of his death, the benefit is equal to 50 percent of the accrued benefit at time of death payable immediately, but with any applicable early commencement reduction. Only actual years of service with Metallus and, prior to the spinoff, The Timken Company, are counted in calculating pension benefits, except in the case of involuntary termination without cause, in which case up to two additional years of service were credited. During the fourth quarter of 2019, the Qualified Plan was amended to provide that additional benefit accruals for any remaining active participants (including any NEOs participating in the Qualified Plan) would cease as of December 31, 2020. The Qualified Plan was subsequently terminated effective March 31, 2022, with the regulatory approval to proceed with the plan termination process received in late 2023. The company expects to enter into an agreement to purchase a group annuity contract from a highly qualified insurance company to settle all pension obligations under the Qualified Plan in the second quarter of 2024. Shortly thereafter, the selected insurance company will assume responsibility for administration and payment of all remaining benefits under the Qualified Plan.
2023 Pension benefits table
2023 Pension benefits table The following table sets forth the number of years of credited service and actuarial value of the defined benefit pension plans for our NEOs as of December 31, 2023:
2023 Pension benefits table
| Name | Plan name | Number of years of credited service | Present value of accumulated benefit (1) | Payments during last fiscal year | | Michael S. Williams(2) | Supplemental Plan | N/A | $0 | $0 | | | Qualified Plan | N/A | $0 | $0 | | Kristopher R. Westbrooks(2) | Supplemental Plan | N/A | $0 | $0 | | | Qualified Plan | N/A | $0 | $0 | | Kristine C. Syrvalin(2) | Supplemental Plan | N/A | $0 | $0 | | | Qualified Plan | N/A | $0 | $0 | | Kevin A. Raketich | Supplemental Plan | 33.8 | $183,257 | $0 | | | Qualified Plan | 33.8 | $800,982 | $0 |
2023 Pension benefits table
| (1) The “Present Value of Accumulated Benefit” is the present value as of December 31, 2023. Age 62 is the earliest age an unreduced benefit is payable from the plans. The assumptions used to determine the present value include a 5.44% discount rate and updated mortality statistics consistent with the 2021 Society of Actuaries revised mortality projection scale. Benefits for the applicable NEOs were determined assuming no probability of termination, retirement, death or disability before age 62. |
2023 Pension benefits table
| (2) Because Messrs. Williams and Westbrooks and Ms. Syrvalin were hired after January 1, 2004, they do not accumulate any service under either the Supplemental Plan or Qualified Plan. |
2023 Nonqualified deferred compensation table
2023 Nonqualified deferred compensation table Through December 31, 2021, the company maintained a deferred compensation plan that allowed certain employees, including the NEOs, to elect to defer receipt of all or a portion of their salary, employee contributions and company matching contributions that would otherwise be paid out post-tax, and incentive compensation payable in cash, until a specified point in the future. Cash deferrals earn interest quarterly at a rate based on the prime rate plus one percent. Effective December 31, 2021, the deferred compensation plan was frozen, and no deferrals will be credited under the plan with respect to any compensation earned on or after January 1, 2022. The table below sets forth information regarding contributions, earnings and withdrawals during 2023 and the account balances as of December 31, 2023, for the NEOs under the company’s deferred compensation plan:
2023 Nonqualified deferred compensation table
| Name | Executive contributions in 2023(1) | Company contributions in 2023(1) | Aggregate earnings in 2023(2) | Aggregate withdrawals/ distributions in 2023 | Aggregate balance at December 31, 2023(3) | | Michael S. Williams | $0 | $0 | $0 | $0 | $0 | | Kristopher R. Westbrooks | $0 | $0 | $0 | $0 | $0 | | Kristine C. Syrvalin | $0 | $0 | $0 | $0 | $0 | | Kevin A. Raketich | $0 | $0 | $18,765 | $(57,076) | $184,208 |
2023 Nonqualified deferred compensation table
| (1) Effective December 31, 2021, the deferred compensation plan was frozen, and no deferrals will be credited under the plan with respect to any compensation earned on or after January 1, 2022. |
2023 Nonqualified deferred compensation table
| (2) This amount includes interest earned from cash deferrals prior to the freezing of the plan on December 31, 2021. Earnings during this year and previous years were not above market or preferential; therefore, these amounts are not included in the 2023 Summary compensation table. |
2023 Nonqualified deferred compensation table
| (3) The entire amount included in the aggregate balances column was reported as compensation in the summary compensation table for previous years (or would have been had the recipient been identified as a NEO for such years). |
Potential payments upon termination or change in control
Potential payments upon termination or change in control The company has entered into severance agreements with each of its NEOs that provide for compensation in the event of termination of employment under certain circumstances (the “Severance Agreements”). In addition, our NEOs are entitled to post-termination payments or benefits under award agreements entered into under the Amended and Restated 2014 Equity and Incentive Compensation Plan, the Amended and Restated 2020 Equity and Incentive Compensation Plan and, under certain circumstances, under our retirement and benefit plans. The following circumstances would trigger post-termination payments to our NEOs: change in control followed by certain events described below; involuntary termination without cause; retirement; permanent disability and death. For purposes of calculating the payments that would be due to each of our NEOs, the termination scenarios described below assume a December 29, 2023 termination date.
Retirement
Retirement “Retirement” means either: (1) retirement of the NEO prior to age 62, if the Compensation Committee of the Board of Directors determines that such retirement is for the convenience of the company or (2) retirement of the NEO on or after age 62, and, in either case, when the NEO is eligible to retire under a retirement plan of the company (generally, at age 65, age 55 with at least 15 years of service or any age with at least 30 years of service). In addition to retirement benefits shown in the “2023 Pension benefits table” (which are not shown in the following table of termination scenarios), NEOs who retire under the circumstances described above will be entitled to receive prorated payouts of performance shares and continued normal vesting of other unvested equity awards as if the officer had remained in the continuous employ of the company for the remainder of the vesting period; provided, however, that any unvested performance shares awarded pursuant to the Transformation Incentive Grant program will be forfeited in the event of a retirement prior to the applicable vesting date.
CEO pay ratio
CEO pay ratio For 2023, the ratio of the annual total compensation of the CEO to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries (other than the CEO), as described below (“Median Annual Compensation”), was approximately 70 to 1. We note that, due to our permitted use of reasonable estimates and assumptions in preparing this CEO pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this CEO pay ratio disclosure is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions described below. In this summary, we refer to the employee who received the Median Annual Compensation as the “Median Employee.” For 2023, we identified a new Median Employee. For purposes of this disclosure, the date used to identify the Median Employee was December 31, 2023 (the “Determination Date”). For purposes of calculating the CEO pay ratio, the CEO compensation for 2023 was determined to be $6,990,958, which consists of $6,973,856 (Mr. Williams’ compensation for his service as President and CEO, as reflected in the “Total” column of the 2023 Summary compensation table) plus company-paid health care benefit costs of $17,102. With respect to the Median Employee, the Median Annual Compensation was calculated using the same methodology the company uses to calculate compensation for the named executive officers as set forth in the 2023 Summary compensation table included in this proxy statement, and then adjusted to add the value of company-paid health care benefit costs. The Median Annual Compensation for 2023 was determined to be $100,197. In terms of our selection of the Median Employee, on December 31, 2023, the company employed a total of 1,837 employees (including 1,826 employees based in the United States). The company determined the Median Employee as of December 31, 2023 by identifying total cash compensation for the period beginning on January 1, 2023 and ending on December 31, 2023 for employees who were employed by the company on that date. This group of employees included all full- and part-time employees but excluded our CEO and eleven (11) non-U.S. employees (consisting of employees in Mexico). This group of employees did not include any independent contractors or “leased” workers and did not exclude any employees of businesses acquired by us or combined with us. Further, we did not utilize any statistical sampling or cost-of-living adjustments for purposes of this CEO pay ratio disclosure. A portion of our employee workforce (full-time and part-time) identified above worked for less than the full fiscal year due to commencing employment after January 1, 2023. In determining the Median Employee, we annualized the total compensation for such individuals (but avoided creating full-time equivalencies) based on reasonable assumptions and estimates relating to our employee compensation program, including base salary, bonus payments, equity compensation and any imputed income.
Pay versus performance
Pay versus performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information regarding certain executive pay and performance. The table below shows, for each applicable fiscal year, total compensation (“Summary Compensation Total” or “SCT Total”) as reported in the summary compensation table and “compensation actually paid” (or “CAP”) for our principal executive officer (“PEO”) and as an average of all of our other named executive officers for that year (“Non-PEO NEOs”). Both SCT Total pay and CAP are calculated in accordance with the requirements of Regulation S-K and may differ substantially from the manner in which the Compensation Committee makes decisions regarding executive pay. See “Compensation Discussion and Analysis” for a discussion of the Compensation Committee’s decisions regarding the compensation of our named executive officers. The table below also shows (i) the company’s cumulative total shareholder return (or “TSR”), (ii) the TSR of the S&P 1500 Steel Sub-Industry Index, which we have used as our peer group for purposes of disclosure in the table below, (iii) the company’s net income for the applicable fiscal year, and (iv) the company’s performance with respect to a “company-selected measure” (or “CSM”) which in our assessment represents the single most important financial performance metric used to link compensation actually paid to our named executive officers for the most recently completed fiscal year to the company’s performance. We selected Adjusted EBITDA as the CSM required for disclosure in the table below.
Pay versus performance
| Pay versus Performance | | | | | | | | | | Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO (1) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to non-PEO NEOs (2) | Value of Initial Fixed $100 Investment Based On: | | Net Income (4) | Company Selected Measure Adjusted EBITDA (5) | | | | | | | TSR (3) | 1500 sub-steel index TSR (3) | | | | 2023 | $6,973,856 | $13,906,875 | $2,311,872 | $3,017,016 | $298.35 | $279.40 | $69,400,000 | $200,300,000 | | 2022 | $4,604,190 | $6,379,938 | $1,283,726 | $1,528,508 | $231.17 | $204.07 | $65,100,000 | $172,200,000 | | 2021 | $7,161,838 | $19,694,478 | $1,306,702 | $2,557,052 | $209.92 | $171.34 | $171,000,000 | $245,900,000 | | 2020 | $1,873,734 | $1,152,712 | $1,249,058 | $908,748 | $59.41 | $103.24 | $(61,900,000) | $38,000,000 |
Pay versus performance
| (1) In accordance with the requirements of Item 402(v) of Regulation S-K, CAP is calculated by beginning with the SCT Total as reported in the Summary Compensation Table (the “SCT”) for the applicable fiscal year, then (a) subtracting the grant date fair value of awards reported in the Stock Awards column of the SCT for such year, (b) subtracting the grant date fair value of awards reported in the Option Awards column of the SCT for such year, (c) subtracting the aggregate change in the actuarial present value of the accumulated benefit under defined benefit plans reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column of the SCT for such year, (d) adding the change in fair value of stock and option awards for the applicable fiscal year (as such changes are described below for 2023) and (e) adding the service cost and prior service cost for all defined benefit plans for the applicable fiscal year (as such costs are described below for 2023). |
Pay versus performance
| For purposes of determining CAP, fair value amounts for Stock Awards and Option Awards were calculated in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under GAAP, including the use of a lattice valuation model, the Monte Carlo simulation, to value performance shares. The service cost and prior service cost for defined benefit plans were calculated using the same methodology as used for our financial statements under GAAP. Neither of the individuals serving as PEO during the years covered by the table participated in any defined benefit pension plan sponsored by the company. |
Pay versus performance
| For 2023, 2022 and 2021, Michael S. Williams is included in the table as PEO, and for 2020, Terry L. Dunlap is included in the table as PEO. |
Pay versus performance
| The following is a reconciliation of SCT Total and CAP for the PEO for 2023. Please note that, while similar adjustment information was provided in our 2023 proxy statement for years 2020, 2021 and 2022, under applicable SEC guidance, repeating such adjustment information is not required in this proxy statement because it is not material to our shareholders’ understanding of the information reported in the table above for 2023 or the relationships disclosures provided below. |
Pay versus performance
| PEO Summary: Reconciliation of SCT Total and CAP | | | | | | Year | SCT Total | Subtract Grant Date Fair Value of Stock Awards and Option Awards as Disclosed in the SCT | Add Change in Fair Value of Stock Awards and Option Awards(i) | CAP | | 2023 | $6,973,856 | $(5,275,245) | $12,208,264 | $13,906,875 |
Pay versus performance
The total amount included in the table above as the grant date fair value of stock awards and option awards as disclosed in the SCT reflects the grant date fair value of stock awards as the company did not issue option awards in 2023.
Pay versus performance
| (i) PEO Detail: Change in Fair Value of Stock and Option Awards | | | | | | | | | Year | Year-End Fair Value of Stock Awards and Option Awards Granted in Covered Fiscal Year that Remained Unvested at the End of that Fiscal Year | Vesting Date Fair Value of Stock Awards and Option Awards Granted in Covered Fiscal Year that Vested During that Fiscal Year | Increase or Decrease in Fair Value (from Prior Year End to Covered Year End) for Stock Awards and Option Awards Granted in Prior Years that Remained Unvested at the End of the Covered Fiscal Year | Increase or Decrease in Fair Value (from Prior Year End to Vesting Date) of Stock Awards and Option Awards Granted in Prior Years that Vested During the Covered Fiscal Year | Adjustments for Stock Awards and Option Awards Granted in Prior Years that Failed to Meet Vesting Conditions During the Covered Fiscal Year | Value of Dividends or other Earnings Paid or Accrued on Stock Awards During the Covered Fiscal Year and not Otherwise Reflected in CAP | Total Change in Fair Value of Stock Awards and Option Awards Included in CAP | | 2023 | $6,119,485 | $0 | $2,648,653 | $3,440,126 | $0 | $0 | $12,208,264 |
Pay versus performance
| (2) CAP for the Non-PEO NEOs was calculated in the same manner as described in footnote 1 above for the PEO, except the amounts were averaged for each fiscal year . The Non-PEO NEOs whose average SCT Total and average CAP amounts are included in the table are: |
Pay versus performance
2023 and 2022: Kristopher R. Westbrooks, Kristine C. Syrvalin and Kevin A. Raketich 2021: Kristopher R. Westbrooks, Kristine C. Syrvalin, Kevin A. Raketich, William P. Bryan and Thomas D. Moline 2020: Kristopher R. Westbrooks, Frank A. DiPiero, William P. Bryan and Thomas D. Moline The following is a reconciliation of average SCT Total and average CAP for the Non-PEO NEOs for 2023. Please note that, while similar adjustment information was provided in our 2023 proxy statement for years 2020, 2021 and 2022, under applicable SEC guidance, repeating such adjustment information is not required in this proxy statement because it is not material to our shareholders’ understanding of the information reported in the table above for 2023 or the relationships disclosures provided below.
Pay versus performance
| Non-PEO NEOs Summary: Reconciliation of SCT Total and CAP | | | | | | | | Year | Average SCT Total | Subtract Average Grant Date Fair Value of Stock Awards and Option Awards as Disclosed in the SCT | Subtract Average Change in Pension Value as Disclosed in the SCT | Add Average Change in Fair Value of Stock Awards and Option Awards(i) | Add Average Service Cost and Prior Service Cost for Pension Plans(ii) | Average CAP | | 2023 | $2,311,872 | $(1,616,453) | $(27,266) | $2,348,863 | $0 | $3,017,016 |
Pay versus performance
The total amount included in the table above as the grant date fair value of stock awards and option awards as disclosed in the SCT reflects the grant date fair value of stock awards as the company did not issue option awards in 2023.
Pay versus performance
| (i) Non-PEO NEOs Detail: Average Change in Fair Value of Stock and Option Awards | | | | | | | | | Year | Year-End Fair Value of Stock Awards and Option Awards Granted in Covered Fiscal Year that Remained Unvested at the End of that Fiscal Year | Vesting Date Fair Value of Stock Awards and Option Awards Granted in Covered Fiscal Year that Vested During that Fiscal Year | Increase or Decrease in Fair Value (from Prior Year End to Covered Year End) for Stock Awards and Option Awards Granted in Prior Years that Remained Unvested at the End of the Covered Fiscal Year | Increase or Decrease in Fair Value (from Prior Year End to Vesting Date) of Stock Awards and Option Awards Granted in Prior Years that Vested During the Covered Fiscal Year | Adjustments for Stock Awards and Option Awards Granted in Prior Years that Failed to Meet Vesting Conditions During the Covered Fiscal Year | Value of Dividends or other Earnings Paid or Accrued on Stock Awards During the Covered Fiscal Year and not Otherwise Reflected in CAP | Total Change in Fair Value of Stock Awards and Option Awards Included in CAP | | 2023 | $1,823,400 | $0 | $273,367 | $252,096 | $0 | $0 | $2,348,863 |
Pay versus performance
| (3) Our TSR represents the cumulative investment return of an initial fixed $100 investment in the company’s common stock on December 31, 2019, assuming reinvestment of all dividends. The company’s TSR as reflected in the table above may not be indicative of future performance. Peer group TSR represents the cumulative investment return of an initial fixed $100 investment in the S&P 1500 Steel Sub-Industry Index on December 31, 2019, assuming reinvestment of all dividends. |
Pay versus performance
| (4) Represents net income determined in accordance with GAAP and as reported in our Form 10-K for the applicable fiscal year. |
Pay versus performance
| (5) Represents our Adjusted EBITDA for the applicable fiscal year. We chose this measure of Adjusted EBITDA as the CSM for purposes of the table above because we determined that it was the most important financial performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to our named executive officers for the most recently completed fiscal year to the Company’s performance. Adjusted EBITDA is a non-GAAP measure. For more information about how we calculate Adjusted EBITDA, please see “Analysis of 2023 compensation — Annual incentive — 2023 APA decisions” in the Compensation discussion and analysis section of this proxy statement, as well as Appendix A to this proxy statement. |
Pay versus performance
The following graph illustrates, for the period disclosed in the table above: (a) the relationship between (i) both CAP of the PEO and average CAP of the Non-PEO NEOs and (ii) the company’s TSR; and (b) the relationship between (i) the company’s TSR and (ii) the TSR of the peer group. The following graph illustrates, for the period disclosed in the table above, the relationship between (a) both CAP of the PEO and average CAP of the NEOs, and (b) the company’s net income. The following graph illustrates, for the period disclosed in the table above, the relationship between (a) both CAP of the PEO and average CAP of the Non-PEO NEOs, and (b) the CSM, Adjusted EBITDA. Item 402(v) of Regulation S-K also requires that we provide the following tabular list of at least three (and not more than seven) financial performance measures that we have determined are our most important financial performance measures used to link compensation actually paid to the named executive officers for the most recently completed fiscal year to the Company’s performance. We have also included in the tabular list below one non-financial performance measure, safety, which we consider to be a critically important metric used in our pay-for-performance executive compensation program.
Pay versus performance
| Most Important Performance Measures | | Financial measures | | Adjusted EBITDA | | Adjusted operating cash flow | | Relative total shareholder return | | Absolute stock price appreciation | | Non-financial measures | | Safety |