DEF 14A of Carlisle Companies Inc
Filed Mar 19, 2024 · FY20230001193125-24-070684
YOUR VOTE IS IMPORTANT
| Compensation Tables and Other Matters | | | 43 | | | A. | Executive Officer Compensation Disclosure Tables | 43 | | | B. | Pay Versus Performance Disclosure | 52 | | | C. | Pay Ratio Disclosure | 56 | | Compensation Committee Interlocks and Insider Participation | | | 57 | | Proposal 4: | Approval of the Company’s Amended and Restated Incentive Compensation Program | | 58 | | | A. | Background | 58 | | | B. | Summary of the 2024 Program | 58 | | | C. | United States Federal Income Tax Consequences | 61 | | | D. | Future Benefits Under the 2024 Program | 63 | | | E. | Prior Benefits Under the 2022 Program | 63 | | | F. | Overhang and Burn Rate | 63 | | | G. | Securities Authorized for Issuance Under Equity Compensation Plans | 64 | | Proposal 5: | Advisory Vote to Approve the Company’s Named Executive Officer Compensation | | 65 | | Audit Committee Report | | | 67 | | Proposal 6: | Ratification of the Appointment of Independent Registered Public Accounting Firm | | 68 | | | A. | Fees Paid to Independent Registered Public Accounting Firm | 68 | | | B. | Audit Committee Pre-Approval of Audit and Non-Audit Services | 68 | | Stockholder Proposals for the 2025 Annual Meeting of Stockholders | | | 70 | | Voting by Proxy | | | 70 | | Householding | | | 70 | | Other Matters | | | 71 | | Appendix A: | Amended and Restated Certificate of Incorporation | | A-1 | | Appendix B: | Amended and Restated Bylaws | | B-1 | | Appendix C: | 2024 Incentive Compensation Program | | C-1 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The number of members of the Board is currently 10 directors. The Company’s Charter provides for a classified Board of Directors under which the Board is divided into three classes of directors, with each class as nearly equal in number as possible. Three directors are to be elected at the Annual Meeting. If elected, each nominee will serve for a three-year term expiring at the 2027 Annual Meeting of Stockholders or until his or her successor is duly elected and qualified. All of the nominees are currently serving as directors and have agreed to be named in this Proxy Statement and to serve if elected. Although the Company knows of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxy holders intend to vote your Shares for any substitute nominee proposed by the Board. Alternatively, in lieu of designating a substitute nominee, the Board may reduce the number of directors. Under the Company’s Statement of Corporate Governance Guidelines and Principles, a director is required to submit his or her resignation at the Company’s Annual Meeting of Stockholders following the earlier of the date when he or she reaches age 72 or has completed 18 consecutive years of service on the Board. The Company’s Bylaws provide for a majority vote standard in uncontested director elections, which means each director nominee must receive a majority of the votes cast with respect to that nominee at the Annual Meeting. For this purpose, a “majority of the votes cast” means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” such nominee. In an uncontested election, if any incumbent director who is nominated for reelection does not receive a majority of the votes cast, the director must promptly tender his or her offer of resignation to the Board for consideration. In such event, the Board may accept such offer of resignation and either decrease the number of directors on the Board or fill the vacancy with a new director, refuse to accept such offer of resignation or take other appropriate action. The Company’s Bylaws provide that directors will be elected by a plurality of the votes cast in contested elections. The resignation policy set forth in the Company’s Bylaws does not apply to contested elections. The Board of Directors recommends that you vote “FOR” the election of each of the three nominees listed below. Unless otherwise specified, valid proxies will be voted “FOR” the election of each of the three nominees listed below.
ELECTION OF DIRECTORS
| A. | Business Experience of Directors |
Director Nominees
Director Nominees The table below sets forth certain information relating to each director nominee, as furnished to the Company by the nominee. Except as otherwise indicated, each nominee has had the same principal occupation or employment during the past five years.
Director Nominees
| Name | Age | Principal Occupation, Business Experience and Other Directorships | Period of Service as a Director and Expiration of Term | | James D. Frias | 67 | Retired; former Chief Financial Officer, Treasurer and Executive Vice President (from January 2010 through March 2022) and Corporate Controller (from June 2001 through December 2009) of Nucor Corporation, a manufacturer of steel and steel products for North America and international markets. | February 2015 to date. Term expires 2024. | | Maia A. Hansen | 55 | Retired; former Chief Operating Officer (from June 2022 through January 2024) and Senior Vice President, Operations & Supply Chain (from March 2020 to May 2022) of Athersys, Inc., a clinical-stage biotechnology company. Prior to Athersys, Ms. Hansen was a Senior Partner (from July 2013 to March 2020) and Partner (from July 2006 to June 2013) of McKinsey & Company, a global management consulting firm serving leading businesses, governments and non-governmental and not-for-profit organizations. | February 2020 to date. Term expires 2024. | | Corrine D. Ricard | 60 | Senior Vice President – Digital Strategy and Transformation (since January 2024), The Mosaic Company, a leading global producer and marketer of concentrated phosphate and potash. Previously, Ms. Ricard served as President (from November 2019 to December 2023) of Mosaic Fertilizantes, a business segment of The Mosaic Company that produces and sells phosphate and potash-based crop nutrients and animal feed ingredients in Brazil, and Senior Vice President – Commercial (from February 2017 to October 2019), Senior Vice President – Human Resources (from April 2012 to February 2017), Vice President – International Sales and Distribution (from March 2011 to April 2012), Vice President – Business Development (from March 2007 to March 2011) and Vice President – Supply Chain (from October 2004 to March 2007) of The Mosaic Company. Prior to Mosaic, Ms. Ricard worked for Cargill, Inc., a global producer of agricultural products, in various roles, including supply chain, product management and international sales. | February 2016 to date. Term expires 2024. |
Continuing Directors
Continuing Directors The table below sets forth certain information relating to each continuing director, as furnished to the Company by the director. Except as otherwise indicated, each director has had the same principal occupation or employment during the past five years.
Continuing Directors
| Name | Age | Principal Occupation, Business Experience and Other Directorships | Period of Service as a Director and Expiration of Term | | Robin J. Adams | 70 | Retired; former Vice Chairman (from March 2012 to April 2013), Chief Financial Officer (from April 2004 to March 2012) and Chief Administrative Officer (from April 2004 to April 2013) of BorgWarner Inc., a leading global supplier of highly engineered systems and components, primarily for vehicle powertrain applications. Prior to BorgWarner, Mr. Adams served as Executive Vice President-Finance and Chief Financial Officer (from July 1999 to April 2004) of American Axle & Manufacturing Holdings, Inc., a manufacturer of automotive driveline and drivetrain components and systems. Former director of Delphi Technologies PLC (from December 2017 to October 2020) and BorgWarner Inc. (from April 2005 to April 2013). | October 2009 to date. Term expires 2025. | | Robert G. Bohn | 70 | Retired; former Chairman (from January 2000 to February 2011) and President and Chief Executive Officer (from November 1997 to December 2010) of Oshkosh Truck Corporation, a global manufacturer of specialty vehicles and bodies for access equipment, defense, fire and emergency and commercial uses. Director of The Manitowoc Company, Inc. (since May 2014). Former director of Graco Inc. (from June 1999 to January 2008), Parker-Hannifin Corporation (from August 2010 to January 2021) and Pontem Corporation (from December 2022 to August 2023). | April 2008 to date. Term expires 2026. |
Continuing Directors
| Name | Age | Principal Occupation, Business Experience and Other Directorships | Period of Service as a Director and Expiration of Term | | Jonathan R. Collins | 47 | Senior Vice President, eCommerce (since April 2023) of Parts Town Unlimited, a global technology innovation-driven distributor of genuine OEM (original equipment manufacturer) foodservice, residential appliance and HVAC equipment repair parts. Prior to Parts Town, Mr. Collins served as Vice President, eCommerce Global Components (from March 2020 to March 2023) of Arrow Electronics Inc., a global provider of electronic components and comprehensive computing solutions. Prior to Arrow, Mr. Collins was General Manager and Head of eCommerce (from May 2019 to March 2020) of The Goodyear Tire & Rubber Company, one of the world’s leading manufacturers of tires. Prior to Goodyear, Mr. Collins was Vice President and Head of eCommerce (from September 2016 to April 2019) of Mylan N.V., a leading global pharmaceutical company offering products in approximately 165 countries. Prior to Mylan, Mr. Collins served as Senior Director of eCommerce-International and M&A (from April 2013 to September 2016) of W.W. Grainger, Inc., a leading distributor of maintenance, repair and operating supplies and other related products and services, and Director of Digital Strategy and User Experience (from February 2012 to November 2012) of Anixter International Inc., a global supplier of communications and security products and electrical and electronic wire and cable. | September 2016 to date. Term expires 2025. | | D. Christian Koch | 59 | Chair of the Board (since May 2020), Director, President and Chief Executive Officer (since January 2016) and Chief Operating Officer (from May 2014 to December 2015) of the Company. Previously, Mr. Koch served as Group President of Carlisle Diversified Products (from June 2012 to May 2014), President of Carlisle Brake & Friction (from January 2009 to June 2012), and President of Carlisle Asia Pacific (from February 2008 to January 2009). Director of The Toro Company (since April 2016). | January 2016 to date. Term expires 2025. |
Continuing Directors
| Name | Age | Principal Occupation, Business Experience and Other Directorships | Period of Service as a Director and Expiration of Term | | C. David Myers | 60 | Retired; former President – Building Efficiency (from December 2005 to September 2014) of Johnson Controls Inc., a global diversified technology and industrial company. Former President and Chief Executive Officer, as well as a director (from February 2004 to December 2005), of York International Corporation, a provider of heating, ventilating, air conditioning and refrigeration products and services, until York was acquired by Johnson Controls in December 2005. Prior to 2004, Mr. Myers held other positions with increasing responsibility at York, including serving as President, Executive Vice President and Chief Financial Officer. Mr. Myers also previously served as a Senior Manager at KPMG LLP. Director of The Manitowoc Company, Inc. (since March 2016) and The Boler Company (since January 2017). Former director of First American Funds (from September 2019 to December 2023). | May 2023 to date. Term expires 2025. | | Gregg A. Ostrander | 71 | Retired; former Executive Chairman (from January 2008 to June 2010), Chairman, President and Chief Executive Officer (from April 2001 to January 2008) and President and Chief Executive Officer (from January 1994 to April 2001) of Michael Foods, Inc., a major food service and retail food company that produces products for food service distributors, chain restaurants and retail grocery and club stores. Former director of Arctic Cat Inc. (from April 1994 to August 2012), Hearthside Food Solutions LLC (from October 2014 to May 2018) and Michael Foods, Inc. (from April 2001 to June 2014). | August 2008 to date. Term expires 2026. | | Jesse G. Singh | 58 | Chief Executive Officer (since June 2016) of The AZEK Company, a leading manufacturer of building products. Previously, Mr. Singh served in a variety of leadership roles, including international positions, at 3M Corporation, a global diversified technology company. Prior to 3M, Mr. Singh spent several years in general management, marketing and account management positions for General Electric Company, a multinational conglomerate, and Arthur Andersen, a professional services firm. | December 2017 to date. Term expires 2026. |
Continuing Directors
| B. | Specific Experience and Skills of Directors |
Continuing Directors
The Board of Directors has identified nine specific areas of experience or attributes that qualify an individual to serve as a member of the Board in light of the Company’s businesses and corporate structure. In addition, the Board is committed to including for consideration qualified candidates with diverse backgrounds, including diversity of gender, race and ethnicity. In accordance with its charter, the Corporate Governance and Nominating Committee has consistently included diversity as a desired qualification when conducting searches for director nominees. The composition of the Board reflects its emphasis on diversity. The table below shows the experience or attributes held by each director nominee and continuing member of the Board of Directors, as well as the gender, racial and ethnic diversity represented on the Board. The narrative discussion that follows the table describes in greater detail the specific experience, qualifications, attributes and skills of each director nominee and continuing member of the Board of Directors. The table below and the narrative discussion that follows the table are not intended to be exhaustive descriptions of the experience, qualifications, attributes and skills of each director nominee and continuing member of the Board of Directors, as each of them also contributes other important experience, qualifications, attributes and skills that are not reflected below.
Continuing Directors
| | Notable Multi- Industry Experience | Significant Experience in Company Specific Industries* | Experience as Chair/ CEO of Multi- National Business | Experience as CFO of Multi- National Business | Meets Definition of “Audit Committee Financial Expert” | Experience with International Business Issues | Mergers & Acquisitions Expertise | Manufacturing Experience | Corporate Governance Experience | Diversity | | Mr. Adams | | | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Mr. Bohn | ✓ | ✓ | ✓ | | | ✓ | ✓ | ✓ | ✓ | | | Mr. Collins | ✓ | | | | | ✓ | ✓ | | ✓ | African American | | Mr. Frias | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | Hispanic | | Ms. Hansen | | ✓ | | | ✓** | ✓ | ✓ | | | Female | | Mr. Koch | ✓ | ✓ | ✓ | | | ✓ | ✓ | ✓ | ✓ | | | Mr. Myers | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Mr. Ostrander | ✓ | | ✓ | | | ✓ | ✓ | ✓ | ✓ | | | Ms. Ricard | ✓ | | | | | ✓ | ✓ | ✓ | ✓ | Female | | Mr. Singh | ✓ | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | Asian |
Continuing Directors
| * Building products, medical, aerospace and/or defense. |
Continuing Directors
| ** The relevant experience of Ms. Hansen is described on page 14. |
Continuing Directors
Mr. Adams has 30 years of experience with multi-national manufacturing companies with multiple business segment operating structures. As the principal financial officer of publicly traded companies for 20 years prior to his retirement in April 2013, Mr. Adams gained significant experience with public financial markets, financial reporting requirements and public company merger and acquisition transactions. In addition, Mr. Adams has more than 18 years of experience as a director of a number of other public companies and, as a result, is thoroughly familiar with the duties and responsibilities of public company boards of directors, including the duties and responsibilities of the members of audit and compensation committees. Mr. Bohn served as Chairman, President and Chief Executive Officer of Oshkosh Corporation, a global manufacturer engaged in several industrial businesses. In these positions, Mr. Bohn gained significant experience with merger and acquisition transactions, the evaluation of manufacturing opportunities in several countries, and board governance and performance. Mr. Collins currently serves as Senior Vice President, eCommerce of Parts Town Unlimited, a global technology innovation-driven distributor of genuine OEM (original equipment manufacturer) foodservice, residential appliance and HVAC equipment repair parts. Prior to joining Parts Town, Mr. Collins served as Vice President, eCommerce Global Components of Arrow Electronics Inc., a global provider of electronic components and comprehensive computing solutions. Previously, Mr. Collins was General Manager and Head of eCommerce of The Goodyear Tire & Rubber Company, one of the world’s leading manufacturers of tires. Mr. Collins also served as Vice President and Head of eCommerce of Mylan N.V., a leading global pharmaceutical company offering products in approximately 165 countries. Mr. Collins has more than 18 years of experience in digital marketing and eCommerce with a range of international industrial companies. Mr. Frias served as the principal financial officer for 12 years and has a total of more than 30 years of experience in treasury, finance and accounting positions at Nucor Corporation, one of the largest and most diversified steel and steel products companies in the world, prior to his retirement in June 2022. In these positions, Mr. Frias gained substantial experience with mergers and acquisitions, joint venture transactions, the development of new facilities and the commercialization of new technology. Ms. Hansen served as Chief Operating Officer of Athersys, Inc., a clinical-stage biotechnology company. Previously, Ms. Hansen served as Senior Vice President, Operations & Supply Chain of Athersys. Prior to joining Athersys, Ms. Hansen served for more than six years as Senior Partner of McKinsey & Company, a global management consulting firm serving leading businesses, governments and non-governmental and not-for-profit organizations. Ms. Hansen has gained significant experience reviewing and analyzing financial statements and working with industrial companies on product development, digital manufacturing, sourcing strategy and execution to improve profitability and adapt to tariffs. Mr. Koch brings to the Board experience in a number of critical areas, including operations, senior leadership, global sales, and mergers and acquisitions. With over 16 years of experience with the Company, Mr. Koch is thoroughly familiar with all of the Company’s businesses and can provide insight on those businesses to the Board. Mr. Myers previously served as President – Building Efficiency of Johnson Controls, Inc., a global diversified technology and industrial company. Prior to joining Johnson Controls, Mr. Myers served as President and Chief Executive Officer, as well as a director, of York International Corporation, a provider of heating, ventilating, air conditioning, and refrigeration products and services, until York was acquired by Johnson Controls. Prior to becoming President and Chief Executive Officer of York, he held other positions at York with increasing responsibility, including serving as President, Executive Vice President and Chief Financial Officer. Mr. Myers previously served as a Senior Manager at KPMG LLP. Mr. Myers serves as a director of The Manitowoc Company, Inc. and is Chair of its Audit Committee and a member of its Corporate Governance and Sustainability Committee. Mr. Myers also serves as a director of The Boler Company (operating as Hendrickson International). Mr. Myers brings to the Board experience in several key areas, including senior management, cybersecurity, accounting and financial controls. The foundation of Mr. Myers’ financial controls and accounting expertise is from when he served as a Senior Manager at KPMG and continued through his service as Chief Financial Officer of York. Mr. Myers has background and experience in finance, accounting and senior management in various segments of large manufacturing companies. Mr. Ostrander previously served as Chairman, President and Chief Executive Officer of Michael Foods, Inc., a major food service and retail food company that produces products for food service distributors, chain restaurants and retail grocery and club stores. Mr. Ostrander has significant experience negotiating corporate merger and acquisition transactions and has served on the boards of directors of multiple public companies and their audit, compensation and governance committees. Ms. Ricard is Senior Vice President – Digital Strategy and Transformation of The Mosaic Company, a leading global producer and marketer of concentrated phosphate and potash. Previously, Ms. Ricard was President of Mosaic Fertilizantes, a business segment of The Mosaic Company that produces and sells phosphate and potash-based crop nutrients and animal feed ingredients. Prior to becoming President of Mosaic Fertilizantes, Ms. Ricard led the commercial and supply chain organizations at The Mosaic Company. Ms. Ricard also previously served as Senior Vice President – Human Resources for Mosaic, and, prior to that role, she held various leadership positions since Mosaic’s formation, including Vice President – International Sales and Distribution, Vice President – Business Development and Vice President – Supply Chain. In these positions, she gained substantial experience with executive management, mergers and acquisitions, joint venture transactions, international commerce and supply chain management. Prior to Mosaic’s formation, Ms. Ricard worked for Cargill, Inc., a global producer of agricultural products, in various roles, including supply chain, product management and international sales. Mr. Singh is Chief Executive Officer of The AZEK Company, a leading manufacturer of building products. Previously, he served in a variety of leadership roles, including international positions at 3M Corporation, a global diversified technology company. Prior to 3M, Mr. Singh spent several years in general management, marketing and account management positions for General Electric Company, a multinational conglomerate, and Arthur Andersen, a professional services firm. In these positions, Mr. Singh gained significant experience in the building products industry and international manufacturing operations.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Director compensation is determined by the Board based on recommendations made by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee reviews director compensation at least every two years and makes recommendations to the Board regarding the form and amount of director compensation, including perquisites and other benefits, and any additional compensation to be paid to the directors for their services. In making its recommendations, the Corporate Governance and Nominating Committee gives due consideration to what is customary compensation for directors of comparable companies, as well as any other factors it deems appropriate that are consistent with the policies and principles set forth in its charter and the Company’s Statement of Corporate Governance Guidelines and Principles. Elements of the Director Compensation Program Directors who are employees of the Company receive compensation as employees of the Company but receive no additional compensation for serving as directors. As discussed more fully below, compensation for non-employee directors is based on an annual service period commencing on the date of each Annual Meeting of Stockholders and is composed of the following elements:
DIRECTOR COMPENSATION
| • | annual retainer fees, which directors may elect to receive partly in Shares; |
DIRECTOR COMPENSATION
| • | additional annual fees for committee service and leadership roles; |
DIRECTOR COMPENSATION
| • | grants of restricted Shares; and |
DIRECTOR COMPENSATION
| • | eligibility to participate in the Deferred Compensation Plan for Non-Employee Directors. |
DIRECTOR COMPENSATION
Compensation Benchmarking The Corporate Governance and Nominating Committee periodically benchmarks non-employee director compensation to ensure the compensation provided to the Company’s non-employee directors is reasonable and competitive with the market. The most recent benchmarking of non-employee director compensation occurred in May 2022, when Willis Towers Watson, the Company’s compensation consultant, presented a director compensation report to the Corporate Governance and Nominating Committee that concluded that while the Company’s director compensation program was generally aligned with market practices, including the mix of cash and stock-based compensation, the Company’s director compensation was below-market at the 25th percentile. As a result, Willis Towers Watson recommended that the Company increase the amount of cash and stock-based compensation paid to the Company’s directors to an amount that would bring the Company’s total director compensation up to the 50th percentile. After considering the report, the Corporate Governance and Nominating Committee recommended, and the Board agreed, to increase the total amount of cash and stock-based compensation paid to the non-employee directors for the one-year period that commenced on May 4, 2022 to the amounts recommended by Willis Towers Watson, as further described below. These amounts remained the same for the one-year period that commenced on May 3, 2023. Annual Fees for Board and Committee Service The Company currently pays an annualized retainer fee of $90,000 to each non-employee director. Each non-employee director may elect to receive one-half of the annual fee in Shares. Directors do not receive meeting attendance fees. The Company also pays an annual fee for service on the Board’s committees. Each member of the Audit Committee currently receives an annualized fee of $15,000 and each member of the Compensation and Corporate Governance and Nominating Committees currently receives an annualized fee of $10,000. The Chair of the Audit Committee currently receives an additional annualized fee of $25,000 and the Chair of the Compensation Committee currently receives an additional annualized fee of $20,000. The Chair of the Corporate Governance and Nominating Committee, who also serves as the Lead Independent Director, currently receives an additional annualized fee of $45,000. Stock-Based Awards Each non-employee director is eligible to participate in the Incentive Compensation Program. The Incentive Compensation Program provides for the grant of stock options, stock appreciation rights, restricted Shares or units or other stock-based awards to non-employee directors. The Board administers the Incentive Compensation Program with respect to awards to non-employee directors and has the discretionary authority to make all award decisions under the Incentive Compensation Program. Each non-employee director nominee or continuing non-employee director is currently eligible to receive a grant of restricted Shares under the Incentive Compensation Program on the date of each Annual Meeting of Stockholders having a grant date fair value of approximately $160,000 (prorated with respect to newly-elected non-employee directors) with a vesting period ending the earlier of: (i) one year from the date of grant; or (ii) upon the director’s retirement from the Board upon reaching age 72 or after completing 18 consecutive years of service on the Board. On May 2, 2023, the Board of Directors granted each eligible director an award of 755 restricted Shares having a grant date fair value of approximately $160,000 based on the closing market price of a Share on that date. Deferred Compensation Plan Under the Deferred Compensation Plan for Non-Employee Directors maintained by the Company, each non-employee director of the Company is entitled to defer up to 100% of the cash fee payable or restricted Shares awarded to him or her. Each participant in the Deferred Compensation Plan for Non-Employee Directors may direct the “deemed investment” of his or her deferral account among the different investment options offered by the Company from time to time. The investment options currently include a fixed rate fund or Share equivalent units for cash fees deferred and Share equivalent units for restricted Shares deferred. All amounts credited to a participant’s account under the Deferred Compensation Plan for Non-Employee Directors vest as follows: (i) for cash fees deferred, such amounts are always 100% vested; and (ii) for restricted Shares deferred, such amounts vest at the end of the vesting period applicable to the restricted Shares deferred. Amounts credited to a participant’s account will generally be paid, or commence being paid, after the participant terminates service as a director. At the participant’s election, payments of deferred cash fees can be made in a lump sum or in quarterly installments over a 10-year period. Payments of deferred restricted Shares under the Deferred Compensation Plan for Non-Employee Directors will be paid in Shares in a lump sum. Payments of deferred cash fees under the Deferred Compensation Plan for Non-Employee Directors are made in cash from the Company’s general assets. Stock Ownership Policy The Board of Directors has adopted a stock ownership policy that requires significant stock ownership by the Company’s non-employee directors. The stock ownership policy requires each non-employee director to own Shares having a market value equal to five times the annual fee amount within five years of him or her becoming a director. Shares for purposes of this policy include Shares, Share equivalent units and any restricted Shares. Once the required market value ownership level is achieved, no further purchases are required in the event the value of the Shares held by a director falls below the ownership level due solely to a decrease in the market value of the Shares. As of December 31, 2023, each of the directors who had been a member of the Board for at least five years as of that date met the policy’s ownership requirement. Director Compensation Table The table below sets forth the compensation paid to each non-employee director who served on the Board in 2023.
Director Compensation Table
Director Compensation Table
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | All Other Compensation ($)(3) | Total ($) | | Robin J. Adams | $140,000 | $160,000 | $0 | $2,301 | $302,301 | | Robert G. Bohn | $110,000 | $160,000 | $0 | $2,301 | $272,301 | | Jonathan R. Collins | $112,500 | $160,000 | $0 | $2,301 | $274,801 | | James D. Frias | $115,000 | $160,000 | $0 | $2,301 | $277,301 | | Maia A. Hansen | $115,000 | $160,000 | $0 | $2,301 | $277,301 | | C. David Myers | $91,250 | $160,000 | $0 | $1,850 | $253,100 | | Gregg A. Ostrander | $155,000 | $160,000 | $29 | $2,301 | $317,330 | | Corrine D. Ricard | $135,000 | $160,000 | $0 | $2,301 | $297,301 | | Jesse G. Singh | $115,000 | $160,000 | $283 | $2,301 | $277,584 |
Director Compensation Table
| (1) The values of the stock awards shown in the table are approximately equal to the grant date fair values of restricted Shares awarded to the directors computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (excluding any effect of estimated forfeitures). On May 2, 2023, each non-employee director serving at that time received a grant of 755 restricted Shares valued at approximately $160,000. These restricted Shares vest on the earlier of one year from the date of grant or upon the director’s retirement from the Board upon reaching the age of 72 or after completing 18 consecutive years of service on the Board. Note 7 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for 2023 contains more information about the Company’s accounting for stock-based compensation arrangements, including the assumptions used to determine the grant date fair values of the awards. The stock awards shown in the table above were the only stock awards outstanding as of December 31, 2023. |
Director Compensation Table
| (2) Represents the portion of interest credited on fees deferred under the Deferred Compensation Plan for Non-Employee Directors that is considered “above market” under the SEC rules. |
Director Compensation Table
| (3) Represents dividends paid on unvested restricted Shares held by the directors. Non-employee directors receive all dividends paid with respect to the restricted Shares during the vesting period. |
Annual Incentive Performance Measures(1)
Annual Incentive Performance Measures(1)
Annual Incentive Performance Measures(1)
| Performance Measure | 2023 | 2022 | Year-over-Year Change Favorable/(Unfavorable) | | Sales | $4.582 billion | $5.437 billion | (15.7)% | | Operating Income Margin | 21.7% | 22.7% | (100) bps | | Average Working Capital as a % of Sales(2) | 18.4% | 18.0% | (40) bps | | Earnings | $729 million | $880 million | (17.2)% |
Annual Incentive Performance Measures(1)
| (1) The results shown in the table reflect certain adjustments as described on pages 35 through 36 . The Company’s 2022 and 2023 performance measures exclude the results of operations of Carlisle Fluid Technologies, which was divested on October 2, 2023, and the results of Carlisle Interconnect Technologies, which was reclassified to discontinued operations effective July 1, 2023. |
Annual Incentive Performance Measures(1)
| (2) Average working capital (defined as the average of the quarter-end balances of receivables, plus inventory, less accounts payable) as a percentage of annual sales (defined as net sales from continuing operations). |
Annual Incentive Performance Measures(1)
The Compensation Committee established the performance measures on which the 2023 annual incentive awards were based, as described on pages 35 through 36. The performance measures were intended to align with the Company’s Vision 2025 strategic goals. As described in this section, the Compensation Committee took the following actions with respect to the compensation of the Company’s named executive officers in 2023:
Annual Incentive Performance Measures(1)
| • | Increased the base salaries of the named executive officers in line with market conditions, as described on page 34; |
Annual Incentive Performance Measures(1)
| • | Paid 2023 annual incentive awards ranging from 21.0% to 130.9% of the target award levels based upon Company-wide and/or Company business unit performance, as described on pages 35 through 36; |
Annual Incentive Performance Measures(1)
| • | Based on the Company’s total stockholder return (Share appreciation plus dividends) for the three-year performance period ended December 31, 2023 of 109.26% relative to the average total stockholder return of the companies comprising the S&P MidCap 400 Index® for the same period of 24.27%, paid performance Shares for the three-year performance period that ended in 2023 at 200% of the target award level based on the Company’s total stockholder return during the period ranking in the 93.06th percentile of the S&P MidCap 400 Index®; and |
Annual Incentive Performance Measures(1)
| • | Issued long-term incentive awards, as described on pages 37 through 38. |
Annual Incentive Performance Measures(1)
The Company’s stockholders will have the opportunity at the Annual Meeting to provide feedback to the Board of Directors on the Company’s executive compensation program by voting to approve or not approve, on an advisory basis, the compensation earned by the named executive officers under the program in 2023 (the “say-on-pay proposal”). The Compensation Committee encourages all of the Company’s stockholders to carefully review this section, including the compensation disclosure tables below, prior to casting their votes on the say-on-pay proposal included as Proposal 5 in this Proxy Statement.
Annual Incentive Performance Measures(1)
| B. | Roles of Compensation Committee, Compensation Consultant and Executive Officers in Determining Executive Compensation |
Annual Incentive Performance Measures(1)
The Compensation Committee renewed the engagement of Willis Towers Watson as its executive compensation consultant for 2023. Willis Towers Watson provides no services to the Company or its management other than services related to the Company’s executive and non-employee director compensation programs. The Compensation Committee has determined that Willis Towers Watson is independent from the Company and its executive officers and that the services provided by Willis Towers Watson do not raise any conflict of interest. In September 2023, Willis Towers Watson presented an executive compensation report to the Compensation Committee covering market trends in: (i) executive compensation; (ii) ESG metrics in incentive plans; (iii) potential compensation-related regulatory changes; (iv) pay versus performance disclosures; and (iv) say-on-pay votes and the respective implications for the Company’s executive compensation program. The Compensation Committee also receives input from Company management in connection with the administration of the Company’s executive compensation program for 2023. In December 2022, Mr. Zdimal, the Company’s Vice President and Chief Financial Officer, provided information and analysis to the Compensation Committee about the financial performance of the Company for 2022 and each of the Company’s operating businesses for which a named executive officer was responsible. Mr. Koch, the Company’s Chair, President and Chief Executive Officer, recommended base salary increases for the named executive officers (other than for himself), and the Compensation Committee approved the recommendations. In addition, the Compensation Committee received input about the refinements made to the performance measures, the threshold, target and maximum performance levels for the performance measures, and the weighting of each performance measure.
Annual Incentive Performance Measures(1)
| C. | Philosophy and Material Elements of Executive Compensation Program; 2023 Compensation Actions |
Annual Incentive Performance Measures(1)
The material elements of the total direct compensation provided to executives under the Company’s executive compensation program are: (i) base salary; (ii) an annual cash bonus opportunity expressed as a percentage of each executive’s base salary; and (iii) a long-term, stock-based award, the expected value of which is also expressed as a percentage of base salary. While each element of compensation paid to executive officers is significant, the annual cash bonus and the long-term, stock-based award have the potential to be the largest amounts of the total compensation paid to executive officers. The following table shows the guiding principles for the Company’s executive compensation program and how the program complies with these principles:
Annual Incentive Performance Measures(1)
| Principle | How the Program Complies | | Provide competitive total direct compensation opportunity. | • Executive total direct compensation opportunity is managed between the first and third quartiles of companies similar in size to the Company. • The total direct compensation opportunity within the range varies by executive. • Performance-based pay opportunity (short-and long-term incentives) plays a predominant role in competitive total pay positioning. | | Reward performance that is consistent with key strategic and stockholder goals. | • Annual incentive plan incorporates earnings and other financial measures aligned with stockholder interests. • Performance Share awards incorporate total stockholder return as a performance measure. • Inappropriate risk taking is not encouraged. | | Balance performance measures and, where appropriate, emphasize overall corporate, operating business and division performance. | • Annual incentive plan incorporates corporate and operating business and division level performance measures. |
Annual Incentive Performance Measures(1)
| Principle | How the Program Complies | | Serve as a retention tool for key executive talent, provide a balance of liquidity and reward executives for superior performance. | • Executive compensation program provides a mix of base salary, annual incentives tied to performance and stock-based awards with vesting restrictions. • Performance Share awards incorporate total stockholder return as a performance measure. | | Be transparent, simple to administer and easy to communicate. | • Formula-based structure includes pre-set performance measures, weightings and timing. |
Annual Incentive Performance Measures(1)
Compensation Benchmarking The Compensation Committee periodically benchmarks executive compensation to ensure the compensation provided to the Company’s executive officers is reasonable and competitive with the market. The Executive Compensation Competitiveness Review (the “Compensation Report”) presented to the Compensation Committee in September 2023 by Willis Towers Watson benchmarked the total pay arrangements of the Company’s executive officers through a competitive market analysis and found that total direct compensation to the executive officers is aligned with the Company’s compensation philosophy of managing total direct compensation between the first and third quartiles of companies of similar size. Willis Towers Watson considers any individual variation in total direct compensation within 20% of target market positioning within a competitive range. The Compensation Report also noted other important factors when evaluating pay levels beyond market data, including an individual’s: (i) performance; (ii) experience or tenure in position; (iii) contribution to the success of the business; (iv) strategic impact; and (v) retention risk. Any variation above or below the guidelines is within reason and explained by experience, strategic impact and scope of executive responsibility. For purposes of its analysis, Willis Towers Watson used data from its 2023 U.S. General Industry Executive Compensation Survey, aged to September 1, 2023 and size-adjusted using linear regression analysis, to predict market rates for an organization of the Company’s size based on total Company or business unit revenues, as appropriate. Base Salaries Base salaries provide a baseline level of compensation to executive officers for carrying out the day-to-day duties and responsibilities of their positions. The Compensation Committee reviews and adjusts base salary levels each year. During the review and adjustment process, the Compensation Committee considers:
Annual Incentive Performance Measures(1)
| • | the duties and responsibilities of each executive officer position; |
Annual Incentive Performance Measures(1)
| • | the executive officer pay relative to the base salaries of senior officers and other employees of the Company; and |
Annual Incentive Performance Measures(1)
| • | whether the base salary levels are competitive, based on a comparison of the current base salary with the market base salary. |
Annual Incentive Performance Measures(1)
The Compensation Committee reviews the named executive officer base salaries in December each year. Any base salary increases approved in December become effective for the succeeding year. In December 2022, the Compensation Committee approved 2023 base salary increases for the Company’s named executives (other than Mr. Selbach) based generally on trends in the market indicating salary increases in the range of 4% to 6%. Effective January 1, 2023, Mr. Selbach was promoted to Executive Vice President, Secretary and General Counsel. In recognition of Mr. Selbach’s new position and retention, the Compensation Committee reviewed and increased Mr. Selbach’s base salary by 12%. 2023 Annual Incentive Awards Annual incentive compensation calculated under the Incentive Compensation Program is based on the overall performance of the Company or a Company business unit compared to pre-established performance measures. For 2023, the Compensation Committee first established a target annual incentive award expressed as a percentage of each named executive’s base salary. The 2023 target awards were 130% of base salary for Mr. Koch, 80% of base salary for Messrs. Zdimal and Selbach and 75% of base salary for Messrs. Berlin and Ready. The Compensation Committee then selected the performance measures on which the 2023 annual incentive awards would be based. The measures adopted for 2023 annual incentive awards available to Messrs. Koch, Zdimal and Selbach were the Company’s consolidated: (i) sales; (ii) operating income margin; (iii) average working capital as a percentage of sales; and (iv) earnings. The measures adopted for 2023 annual incentive awards available to the other named executive officers were: (i) sales; (ii) operating income margin; (iii) average working capital as a percentage of sales, each as reported by their respective business units; and (iv) the Company’s consolidated earnings. The Compensation Committee believes that each of these respective performance measures tracks whether the Company and its core businesses are operating efficiently and with a view toward long-term, sustainable growth. The Compensation Committee believes that superior performance under these measures will ultimately benefit the Company’s stockholders through increased profits, dividends and Share value. Finally, the Compensation Committee established threshold, target and maximum levels of performance for each of the measures and determined that 50% of the target annual incentive award would be paid for threshold level performance, 100% of the target annual incentive award would be paid for target level performance and 200% of the target annual incentive award would be paid for performance at or above the maximum level. Under the program adopted by the Compensation Committee, the Company’s performance under each of the measures was independently determined from the other measures, so that an annual incentive award was determined for the actual level of performance under each measure. The annual incentive awards under each measure were then combined to determine the aggregate annual incentive award. The Compensation Committee approved threshold, target and maximum performance levels for 2023 based on the Company’s 2022 adjusted performance. The tables below show the threshold, target and maximum performance levels for each of the performance measures established by the Compensation Committee for 2023 as well as the Company’s adjusted performance in 2023 and 2022. All of the performance levels for the consolidated Company and Consolidated Earnings for Carlisle Interconnect Technologies, Inc. (“CIT”) and Carlisle Weatherproofing Technologies (“CWT”) initially established for 2023 were adjusted to exclude the results of CIT (reclassified to discontinued operations effective July 1, 2023) and Carlisle Fluid Technologies, Inc. (“CFT”) (sold on October 2, 2023). In addition, the performance levels for sales, operating income margin and average working capital as a percentage of sales for CWT initially established for 2023 were adjusted to exclude the results of Ultimate RB which was divested in the first quarter of 2023. The results shown below for both 2023 and 2022 reflect the Company’s publicly reported results, excluding results of operations of acquisitions made and dispositions completed (including the associated acquisition and disposal costs incurred during the respective year) as well as results of operations of businesses reclassified to discontinued operations in 2023. The 2023 results have also been adjusted to exclude: (i) asset impairment charges of approximately $1.4 million (pre-tax) at CWT and approximately $700,000 (pre-tax) at CIT; (ii) restructuring costs of approximately $5.0 million (pre-tax) at Carlisle Construction Materials (“CCM”), approximately $500,000 (pre-tax) at CWT and approximately $7.0 million (pre-tax) at CIT; and (iii) accounts payable of approximately $20 million at CWT for a purchase accounting adjustment in connection with the Henry acquisition. The 2022 results were adjusted to exclude approximately $28.0 million (pre-tax) in asset impairment charges at CWT, approximately $6.2 million (pre-tax) in restructuring charges and facility rationalization costs at CWT, CIT and CFT, approximately $0.3 million (pre-tax) in casualty losses at CWT and approximately $1.4 million in casualty insurance recoveries at CFT. The Compensation Committee approved the adjustments because they are generally nonrecurring or were not anticipated when the respective performance measures were approved at the beginning of the year.
2023 Consolidated Company Performance Measures
2023 Consolidated Company Performance Measures
2023 CIT Performance Measures
2023 CIT Performance Measures
2023 CWT Performance Measures
2023 CWT Performance Measures
For Mr. Ready
| Name | 2023 Annual Incentive Award ($)(1) | 2023 Annual Incentive Award (% of base salary) | 2023 Annual Incentive Award (% of target incentive award) | | Mr. Koch | $382,200 | 27.3% | 21.0% | | Mr. Zdimal | $110,000 | 16.8% | 21.0% | | Mr. Berlin | $761,800 | 98.2% | 130.9% | | Mr. Ready | $441,000 | 73.5% | 98.0% | | Mr. Selbach | $110,000 | 16.8% | 21.0% |
For Mr. Ready
| (1) This amount is also reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 43. |
For Mr. Ready
2023 Long-Term, Stock-Based Awards The Compensation Committee makes annual stock-based awards each year at its first regularly scheduled meeting held in January or February. All stock-based awards are made under the Incentive Compensation Program, which imposes certain restrictions, as described below, on the terms of the awards. In February 2023, the Compensation Committee awarded stock options, performance Shares and time-vested restricted Shares to the named executives in the amounts shown in the Grants of Plan-Based Awards Table on page 45. The number of Shares included in the 2023 awards was determined using a formula-based approach. First, the Compensation Committee established a target award opportunity for 2023, expressed as a percentage of base salary, for the named executives based on each executive’s position and the long-term incentive award market range for that position: 525% of base salary for the Chair, President and Chief Executive Officer, 200% of base salary for the Chief Financial Officer and the General Counsel and 150% of base salary for the other named executives. The Compensation Committee then determined the appropriate blend of the types of equity awards to be included in each named executive’s stock-based award. For 2023, the Compensation Committee elected to use a blend of stock options, performance Shares and time-vested restricted Shares (each weighted one-third of a named executive’s target award opportunity) for all the named executives (other than Mr. Selbach) to support the Company’s pay-for-performance programs and the alignment of executive and stockholder interests. The Compensation Committee did not include stock options having a 10-year term in Mr. Selbach’s annual stock-based awards due to his contemplated retirement within the 10-year option term. For this reason, Mr. Selbach’s award was comprised solely of time-vested restricted Shares. For purposes of calculating the number of stock options, performance Shares and time-vested restricted Shares included in each named executive’s stock-based award, the Compensation Committee used the Black-Scholes-Merton option pricing model for valuing stock options and the closing market price of a Share on the date of grant for valuing performance Shares and time-vested restricted Shares. All employees awarded stock options, performance Shares and restricted Shares are subject to a non-competition agreement that prohibits the employee from competing with the Company for one year following his or her termination of employment. The stock options awarded in February 2023 will vest in equal annual installments over three years. The time-vested restricted Shares awarded in February 2023 will become vested on the third anniversary of the award date. The performance Shares awarded in February 2023 will become vested on the third anniversary of the award date and will be earned based on the total return to the Company’s stockholders (Share appreciation measured using the average of the closing market prices for a Share for the first 10 and last 10 trading days of the performance period plus dividends) relative to the total stockholder return of the companies comprising the S&P MidCap 400 Index® over the three-year performance period ending December 31, 2025 in accordance with the following table:
For Mr. Ready
| Relative Total Stockholder Return | Percentage of Performance Shares Earned | | Below 25th percentile | 0% | | 25th percentile | 50% | | 50th percentile | 100% | | 75th percentile or above | 200% |
For Mr. Ready
If the Company’s total stockholder return falls between the 25th and 50th percentiles or between the 50th and 75th percentiles, the number of performance Shares earned will be determined by linear interpolation. Dividends will accrue during the three-year performance period and will be paid on performance Shares that are earned. The Compensation Committee included stock options in the awards to encourage the named executives to increase stockholder value over the 10-year term of the options. The Compensation Committee included time-vested restricted Shares in the awards not only to encourage the named executives to increase stockholder value but also, where applicable, to remain employed with the Company. The Compensation Committee added performance Shares to further link executive compensation to the performance of the Company and to align the interests of the executives with the Company’s stockholders. The Incentive Compensation Program contains certain restrictions on the terms of all stock-based awards. For example, all stock options must be granted with an option exercise price that is equal to or greater than the fair market value of the Shares on the date of award. The Incentive Compensation Program also expressly prohibits resetting the option exercise price of stock options. These restrictions ensure that any options awarded under the Incentive Compensation Program will have value to the executives only if the market price of the Shares increases after the date of the award. The Compensation Committee grants annual stock-based awards, including stock options, each year at its first regularly scheduled meeting held in January or February to coincide with compensation adjustments effective at the beginning of each year. The Compensation Committee is aware that the meeting during which it makes such annual stock-based awards precedes the date the Company releases its fourth quarter and annual financial results. While the Company does not time the release of its fourth quarter and annual financial results for the purpose of affecting the value of executive compensation, the Compensation Committee recognizes that the release could affect the market value of the Company’s stock and the underlying value of the stock-based awards made to executives at the meeting. The Compensation Committee believes that executives will not necessarily gain over the long run from the short-term benefit of a positive release because the Company’s stock price fluctuates over time and because all of the awards have multi-year vesting schedules and stock options have historically been held for several years prior to exercise. In addition, any gain from a positive benefit in some years will be offset by earnings releases in other years that negatively affect the market value of the Shares. Stock Ownership Policy The Compensation Committee believes that ownership of Shares by executive officers aligns their interests with those of the Company’s stockholders, enhances retention of executives by providing them an opportunity to accumulate a meaningful ownership interest in the Company and focuses executives on building stockholder value over the long term. Therefore, the Compensation Committee maintains a stock ownership policy for the Company’s executive officers, including the named executive officers. The policy, which is applicable to all of the Company’s Section 16 officers, has the following ownership requirements:
For Mr. Ready
The policy also has a retention requirement under which an executive officer must retain at least one-half of the after-tax value realized from the vesting of restricted Shares, the exercise of stock options or the receipt of earned performance Shares until the executive officer has satisfied the policy’s ownership requirement. Each executive officer subject to the policy has five years from first becoming subject to the policy to attain the ownership requirement and once the ownership requirement is met, no further accumulation is required in the event the value of the Shares falls below the ownership requirement due solely to a decrease in the market value of the Shares. Ownership for purposes of the policy includes Shares owned directly or under an employee benefit plan, all restricted Shares and all Shares deferred under the Nonqualified Deferred Compensation Plan. Ownership does not include any performance Share awards or any Shares subject to stock options. As of February 29, 2024, the Chair, President and Chief Executive Officer, the other named executive officers and each of the remaining individuals who had been a Section 16 officer for at least five years as of that date met the policy’s ownership requirement.
For Mr. Ready
Retirement and Group Insurance Benefits The Company provides retirement, health and welfare and other benefits to its executive officers. The Company sponsors the 401(k) Plan, a tax-qualified, defined contribution retirement plan, for the benefit of substantially all of its U.S.-based employees, including the named executives. The 401(k) Plan encourages saving for retirement by enabling participants to save on a pre-tax or an after-tax basis and by providing Company matching contributions. The Company also sponsors the Retirement Plan for Employees of Carlisle, LLC (the “Retirement Plan”), a tax-qualified, defined benefit retirement plan that provides retirement income to eligible employees following their retirement from the Company. The Pension Benefits Table on page 49 shows the lump sum present value as of December 31, 2023 of the accumulated benefit earned by the named executives participating in the Retirement Plan. Section 401(a)(17) of the Internal Revenue Code (the “Code”) limits the amount of annual compensation that tax-qualified plans like the 401(k) Plan and the Retirement Plan may take into account for purposes of determining contributions and benefits. The limit for 2023 was $330,000 and it is subject to adjustment annually for cost-of-living increases. For 2024, the limit is $345,000. The Company maintains the Carlisle, LLC Supplemental Pension Plan (the “Supplemental Pension Plan”) to provide benefits to certain Retirement Plan participants whose benefits are limited by Section 401(a)(17) of the Code and to certain senior management employees who were employed on or after January 1, 2005 and are not eligible to participate in the Retirement Plan. The Pension Benefits Table on page 49 also shows the lump sum present value as of December 31, 2023 of the accumulated benefit earned by the named executives under the Supplemental Pension Plan. As part of the Nonqualified Deferred Compensation Plan, the Company sponsors a supplemental 401(k) Plan to provide covered officers, including the named executives, the opportunity to defer base salary and annual incentive compensation that could not be deferred under the 401(k) Plan due to the Code limitations that apply to the 401(k) Plan. The Company provides a matching contribution equal to 100% of the first 4% of base salary and annual incentive compensation deferred under the supplemental 401(k) Plan. Each participant in the supplemental 401(k) Plan may direct the deferrals of base salary or annual incentive compensation and the matching contributions among the different investment options offered by the Company from time to time. The investment options currently include a fixed rate fund and various stock index funds. All amounts credited to a participant’s account under the supplemental 401(k) Plan are 100% vested and will be paid in a lump sum or installments in accordance with the participant’s election after the participant terminates employment with the Company. A participant may also elect to receive one or more in-service distributions. The named executives also participate in group health, life and other welfare benefit plans on the same terms and conditions that apply to other employees. Except for supplemental long-term disability insurance, the named executives do not receive better insurance programs, vacation schedules or holidays, and perquisites are limited. Post-Termination Employment Benefits The Company has not entered into an employment agreement with any executive officer that provides severance or other benefits following their resignation, termination, retirement, death or disability, except for agreements with certain named executive officers that provide severance benefits in the event of a termination of their employment following a change of control of the Company (the “change of control agreements”). The change of control agreements provide that the executives will not, in the event of the commencement of steps to effect a change of control (defined generally as an acquisition of 20% or more of the outstanding voting Shares or a change in a majority of the Board of Directors), voluntarily leave the employ of the Company until the potential acquirer of the Company or control of the Company has terminated its efforts to effect a change of control or until a change of control has occurred. The Company believes that the change of control agreements protect the interests of the Company’s stockholders by providing financial incentives to executives to represent the best interests of the Company and its stockholders during the periods immediately preceding and following a change of control. In connection with the change of control agreements with Messrs. Koch and Berlin, in the event of any termination of their employment (including due to their resignation) within three years after a change of control (other than due to their death or disability or after their attaining age 65), the change of control agreements provide that they will be entitled to receive three years’ compensation, including bonus, retirement benefits equal to the benefits they would have received had they completed three additional years of employment, continuation of all life, accident, health, savings and other fringe benefits for three years and relocation assistance. The three-year benefit period is reduced if they terminate within three years of the date that they would attain age 65. The severance benefit for Mr. Selbach under his change of control agreement was phased out based on his attaining age 65 in 2020. In addition, the change of control agreements with Messrs. Koch, Berlin and Selbach provide that, notwithstanding death, disability or attainment of age 65, they will become fully vested in all outstanding stock option and restricted Share awards. If any payments to Messrs. Koch, Berlin or Selbach are considered excess “parachute payments” under Section 280G of the Code and the amount of the excess payments is more than 115% of the safe harbor amount determined under Section 280G, then the Company is required to provide a tax gross up for the excise taxes the executive would be required to pay with respect to the excess payments. In the event the amount of the excess payments does not exceed 115% of the safe harbor amount, then the payments to the executive will be reduced by the amount of such excess payments. In September 2012, the Compensation Committee determined that any future change of control agreements would provide severance benefits only in the event an executive is terminated without cause or resigns with good reason within three years after a change of control and the severance benefits would not be reduced based on the executive’s age. In addition, the Company would not provide any tax gross up for excise taxes assessed against any excess parachute payments. The change of control agreements with Messrs. Zdimal and Ready contain these revised terms. The Potential Payments Upon Termination or Change of Control Table on page 50 shows the estimated amounts that would have been payable to the named executives had their employment with the Company terminated as a result of a change of control or otherwise on December 31, 2023. Tax and Accounting Considerations Although the Compensation Committee considers tax deductibility and other tax and accounting considerations in making its compensation program decisions, the Compensation Committee has not adopted a formal policy that requires all compensation paid to the named executives to be fully deductible, and instead the Compensation Committee’s primary consideration is whether the applicable compensation aligns with the Company’s executive compensation principles.
For Mr. Ready
The Compensation Committee has reviewed all components of the Chair, President and Chief Executive Officer’s and the other named executives’ compensation, including salary, annual and long-term incentive compensation, accumulated realized and unrealized stock option and restricted Share gains and the dollar value of all perquisites and other personal benefits as well as the Company’s obligations under its pension plans. Based on this review, the Compensation Committee finds the Chair, President and Chief Executive Officer’s and the other named executives’ total compensation, in the aggregate, to be reasonable and appropriately linked to the Company’s performance. The Compensation Committee therefore recommends that stockholders vote “FOR” the say-on-pay proposal included as Proposal 5 in this Proxy Statement.
COMPENSATION TABLES AND OTHER MATTERS
| Name and Principal Position(s) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | All Other Compensation ($)(3) | Total ($) | | D. Christian Koch, Chair, President and Chief Executive Officer | 2023 | $1,400,000 | $0 | $6,047,757 | $2,432,647 | $382,200 | $365,745 | $400,737 | $11,029,086 | | | 2022 | $1,330,000 | $0 | $4,758,065 | $2,029,110 | $2,939,300 | $75,611 | $385,840 | $11,517,926 | | | 2021 | $1,275,000 | $0 | $4,550,571 | $1,904,761 | $3,049,800 | $47,032 | $215,240 | $11,042,404 | | Kevin P. Zdimal, Vice President and Chief Financial Officer | 2023 | $655,000 | $0 | $2,039,341 | $433,699 | $110,000 | $212,192 | $98,633 | $3,548,865 | | | 2022 | $609,673 | $0 | $1,902,805 | $432,011 | $800,400 | $1,702 | $80,598 | $3,827,189 | | John E. Berlin, President, CIT | 2023 | $776,000 | $0 | $956,865 | $385,098 | $761,800 | $348,633 | $63,808 | $3,292,204 | | | 2022 | $746,000 | $0 | $1,274,230 | $383,606 | $1,119,000 | $30,438 | $52,576 | $3,605,850 | | | 2021 | $724,000 | $0 | $1,233,751 | $364,600 | $406,700 | $54,867 | $52,077 | $2,835,995 | | Frank J. Ready, President, CWT | 2023 | $600,000 | $0 | $740,099 | $297,913 | $441,000 | $46,143 | $25,654 | $2,150,809 | | | 2022 | $577,125 | $0 | $696,956 | $296,868 | $735,800 | $5,449 | $16,035 | $2,328,233 | | Scott C. Selbach, Executive Vice President, Secretary & General Counsel | 2023 | $655,000 | $0 | $1,309,489 | $0 | $110,000 | $150,281 | $135,655 | $2,360,425 | | | 2022 | $586,000 | $0 | $1,001,180 | $301,345 | $747,200 | $115,681 | $109,094 | $2,860,500 | | | 2021 | $563,000 | $0 | $957,881 | $283,487 | $776,900 | $45,918 | $91,825 | $2,719,011 |
COMPENSATION TABLES AND OTHER MATTERS
| B. | Pay Versus Performance Disclosure |
Pay Versus Performance Table
Pay Versus Performance Table —This table shows, for the past four fiscal years, the total compensation for the Company’s named executive officers as set forth in the Summary Compensation Table, the “compensation actually paid” to the Company’s named executive officers (as determined under SEC rules), the Company’s total stockholder return (“TSR”), the TSR of the Company’s peer group, the Company’s net income and the Company’s sales. For further information concerning the Company’s executive compensation policies and practices and how the Company aligns executive compensation with the Company’s performance, refer to the “ Compensation Discussion and Analysis” section of this Proxy Statement.
Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(3) | Average Summary Compensation Table Total for Non-PEO NEOs(2) | Average Compensation Actually Paid to Non- PEO NEOs(3) | Value of Initial Fixed $100 Investment Based On: | | Net Income (millions) | Sales (millions)(5) | | | | | | | Company TSR | Peer Group TSR(4) | | | | 2023 | $11,029,086 | $22,371,211 | $2,838,076 | $4,772,495 | $202.83 | $143.54 | $767.4 | $4,582 | | 2022 | $11,517,926 | $10,823,977 | $2,786,754 | $2,483,408 | $151.07 | $123.28 | $924.0 | $6,580 | | 2021 | $11,042,404 | $33,205,939 | $3,100,858 | $7,168,251 | $157.49 | $141.80 | $421.7 | $4,633 | | 2020 | $7,941,583 | $6,705,688 | $2,124,561 | $1,872,231 | $98.04 | $113.66 | $320.1 | $4,235 |
Pay Versus Performance Table
| (1) D. Christian Koch, the Company’s Chair, President and Chief Executive Officer, served as the Company’s principal executive officer for each of 2023, 2022, 2021 and 2020. |
Pay Versus Performance Table
| (2) The Company’s non-PEO named executive officers for each applicable year were as follows: (i) for 2023, Kevin P. Zdimal, John E. Berlin, Frank J. Ready and Scott C. Selbach; (ii) for 2022, Kevin P. Zdimal, John E. Berlin, Frank J. Ready, Scott C. Selbach, Robert M. Roche and Nicholas J. Shears; (iii) for 2021, Robert M. Roche, John E. Berlin, Nicholas J. Shears and Scott C. Selbach; and (iv) for 2020, Robert M. Roche, John E. Berlin, Nicholas J. Shears and Scott C. Selbach. |
Pay Versus Performance Table
| (3) The adjustments made to the Summary Compensation Table totals to determine “compensation actually paid” are as follows: |
Pay Versus Performance Table
| Year | Executive(s) | Reported Summary Compensation Table Total | Deduct Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Reported Change in the Actuarial Present Value of Pension Benefits(c) | Pension Benefit Adjustments(d) | Compensation Actually Paid | | 2023 | PEO | $11,029,086 | ($8,480,404) | $20,080,891 | ($365,745) | $107,383 | $22,371,211 | | | Non-PEO NEOs | $2,838,076 | ($1,540,626) | $3,630,650 | ($189,312) | $33,708 | $4,772,495 | | 2022 | PEO | $11,517,926 | ($6,787,175) | $6,104,110 | ($75,611) | $64,727 | $10,823,977 | | | Non-PEO NEOs | $2,786,754 | ($1,308,873) | $1,029,556 | ($54,329) | $30,300 | $2,483,408 | | 2021 | PEO | $11,042,404 | ($6,455,332) | $28,573,007 | ($47,032) | $92,892 | $33,205,939 | | | Non-PEO NEOs | $3,100,858 | ($1,572,987) | $5,658,020 | ($61,116) | $43,476 | $7,168,251 | | 2020 | PEO | $7,941,583 | ($6,125,159) | $5,076,183 | ($258,649) | $71,730 | $6,705,688 | | | Non-PEO NEOs | $2,124,561 | ($1,161,541) | $1,011,797 | ($141,714) | $39,128 | $1,872,231 |
Pay Versus Performance Table
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns of the Summary Compensation Table for the applicable year. |
Pay Versus Performance Table
| (b) The amounts deducted or added in calculating the equity award adjustments are as follows: |
Pay Versus Performance Table
| Year | Executive(s) | Year-End Fair Value of Equity Awards Granted during the Year that are Outstanding and Unvested at Year-End | Year-over- Year Change in Fair Value of Equity Awards Granted in Prior Years that are Outstanding and Unvested at Year-End | Fair Value as of Vesting Date of Equity Awards Granted and Vested during the Year | Year-over- Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested during the Year | Deduct Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions during the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | PEO | $11,335,023 | $7,797,080 | $0 | $948,788 | $0 | $0 | $20,080,891 | | | Non-PEO NEOs | $2,045,396 | $1,477,011 | $0 | $108,243 | $0 | $0 | $3,630,650 | | 2022 | PEO | $7,981,469 | ($201,605) | $0 | ($1,675,754) | $0 | $0 | $6,104,110 | | | Non-PEO NEOs | $1,394,035 | ($16,938) | $74,075 | ($205,958) | ($215,658) | $0 | $1,029,556 | | 2021 | PEO | $15,123,725 | $13,629,666 | $0 | ($170,385) | $0 | $0 | $28,573,007 | | | Non-PEO NEOs | $3,439,853 | $2,244,496 | $0 | ($26,328) | $0 | $0 | $5,658,020 | | 2020 | PEO | $5,943,401 | ($843,643) | $0 | ($23,575) | $0 | $0 | $5,076,183 | | | Non-PEO NEOs | $1,061,684 | ($109,159) | $65,890 | ($6,618) | $0 | $0 | $1,011,797 |
Pay Versus Performance Table
| (c) The amounts included in this column are the amounts reported in “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table for each applicable year. |
Pay Versus Performance Table
| (d) The amounts deducted or added in calculating the pension benefit adjustments are as follows: |
Pay Versus Performance Table
| Year | Executive(s) | Service Cost | Prior Service Cost | Total Pension Benefit Adjustments | | 2023 | PEO | $107,383 | $0 | $107,383 | | | Non-PEO NEOs | $33,708 | $0 | $33,708 | | 2022 | PEO | $64,727 | $0 | $64,727 | | | Non-PEO NEOs | $29,952 | $349 | $30,300 | | 2021 | PEO | $92,892 | $0 | $92,892 | | | Non-PEO NEOs | $43,476 | $0 | $43,476 | | 2020 | PEO | $71,730 | $0 | $71,730 | | | Non-PEO NEOs | $39,128 | $0 | $39,128 |
Pay Versus Performance Table
| (4) The peer group TSR represents the TSR of the companies comprising the S&P MidCap 400 Index ® , the same index used by the Company in the performance graph included in its Annual Report on Form 10-K for 2023. |
Pay Versus Performance Table
| (5) This column includes the Company’s publicly reported sales for each of 2023, 2022, 2021 and 2020, excluding sales generated by acquisitions made, dispositions completed and operations reclassified as discontinued operations during the applicable year. |
Relationship Between Compensation Actually Paid and Company Performance
Relationship Between Compensation Actually Paid and Company Performance Compensation Actually Paid, Company TSR and Peer Group TSR. The graph below shows compensation actually paid to the Company’s principal executive officer and the average compensation actually paid to the Company’s other named executive officers for each of 2020, 2021, 2022 and 2023. The graph also shows the Company’s TSR, or how a $100 investment in the Company has grown over the four-year period ending December 31, 2023, as compared to a $100 investment in the S&P MidCap 400 Index ® . The graph assumes the investment of $100 in the Company’s common stock and in the S&P MidCap 400 Index ® as of December 31, 2019 and the reinvestment of all dividends. Compensation Actually Paid and Net Income. The graph below shows compensation actually paid to the Company’s principal executive officer and the average compensation actually paid to the Company’s other named executive officers for each of 2020, 2021, 2022 and 2023. The graph also shows the Company’s net income determined in accordance with U.S. generally accepted accounting principles for each of 2020, 2021, 2022 and 2023. While the Company does not use net income as a performance measure in the overall executive compensation program, net income is correlated with adjusted earnings, to which the Company assigns various weightings when setting goals in the Company’s annual incentive compensation program as described in more detail in the “Compensation Discussion and Analysis” section of this Proxy Statement. Compensation Actually Paid and Sales. The graph below shows compensation actually paid to the Company’s principal executive officer and the average compensation actually paid to the Company’s other named executive officers for each of 2020, 2021, 2022 and 2023. The graph also shows the Company’s publicly reported sales for each of 2020, 2021, 2022 and 2023, excluding sales generated by acquisitions made, dispositions completed and operations reclassified as discontinued operations during the applicable year.
Financial Performance Measures
| C. | Pay Ratio Disclosure |