DEF 14A of Air Products & Chemicals, Inc.
Filed Dec 8, 2023 · FY20230001308179-23-001066
Selection of Directors
Selection of Directors
Selection of Directors
| Name and Current or Previous Position | | Minority | Female | Tenure (Full Years) | Committees | | | | | | | | | | AF | CGN | E | MDC | | | Tonit M. Calaway – Independent Executive Vice President and Chief Administrative Officer, General Counsel and Secretary of BorgWarner Inc. | | | 1 | | | | | | | Charles Cogut – Independent Retired Partner, Simpson, Thacher & Bartlett LLP | | | 8 | | | | | | | Lisa A. Davis – Independent Former Member of the Managing Board for Siemens AG and Former Chair and CEO of Siemens Corporation USA | | | 3 | | | | | | | Seifollah Ghasemi Chairman, President and Chief Executive Officer of Air Products and Chemicals, Inc. | | | 10 | | | | | | | Jessica Trocchi Graziano – Independent Senior Vice President and Chief Financial Officer of United States Steel Corporation | | | 0 | | | | | | | David H.Y. Ho – Independent Chairman and Founder of Kiina Investment Ltd. | | | 10 | | | | | | | Edward L. Monser – Independent Retired President and Chief Operating Officer of Emerson Electric Co. | | | 10 | | | | | | | Matthew H. Paull – Independent Retired Senior Executive Vice President and Chief Financial Officer of McDonald’s Corporation | | | 10 | | | | | | | Wayne T. Smith – Independent Retired Chairman and Chief Executive Officer of BASF Corporation | | | 2 | | | | |
Selection of Directors
| AF | Audit and Finance | CGN | Corporate Governance and Nominating | | Chair | | E | Executive | MDC | Management Development and Compensation | | Member |
Selection of Directors
| 2024 PROXY STATEMENT | 9 |
Selection of Directors
The Board is composed of a diverse group of leaders in their respective fields. Our directors have leadership experience at major domestic and international companies with operations inside and outside of the United States. Our directors also have experience on other companies’ boards, which provides an understanding of different business processes, challenges, strategies and approaches to problem-solving. Our directors have substantial experience in key aspects of our operations, finance and capital management and government relations as well as in the market sectors we serve, including the energy, electronics and chemicals industries. Our directors also possess extensive experience in functional areas that are important to the execution of their oversight responsibilities, including corporate governance, accounting and financial reporting, information technology, mergers and acquisitions, investor relations and legal affairs. We believe all of our directors have personal traits such as candor, integrity, commitment and collegiality that are essential to effective corporate governance. The Board believes its current members reflect a diverse array of skills, perspectives and experience as well as ethnic, gender and geographic diversity. For additional information, please refer to our directors’ skills matrix and other information below.
Board Snapshot
Board Snapshot
Board Snapshot
| Independence 89% Independent 8 Independent 1 Not Independent | Diversity 56% Diverse 5 Diverse 4 Other | Tenure 6 years Average Tenure 5 Medium-Tenured Directors (6 to 10 years) 4 Newer Directors (5 years or less) |
Director Qualifications and Skills
Director Qualifications and Skills The Board possesses a broad range of qualifications and skills that facilitate strong oversight of Air Products’ management and strategy. The following matrix identifies the primary skills that the Corporate Governance and Nominating Committee and the Board considered in connection with the re-nomination of the incumbent directors.*
Director Qualifications and Skills
| | | Calaway | Cogut | Davis | Ghasemi | Graziano | Ho | Monser | Paull | Smith | | | Accounting/Financial Reporting | | | | | | | | | | | | Corporate Governance | | | | | | | | | | | | Diverse Director | | | | | | | | | | | | Executive Leadership | | | | | | | | | | | | Finance and Capital Management | | | | | | | | | | | | Government Relations | | | | | | | | | | | | Human Capital Management | | | | | | | | | | | | Industry/Operations | | | | | | | | | | | | Information Technology | | | | | | | | | | | | International Experience | | | | | | | | | | | | Investor Relations | | | | | | | | | | | | Large Industrial Projects | | | | | | | | | | | | Legal Affairs | | | | | | | | | | | | Logistics Experience | | | | | | | | | | | | Mergers & Acquisitions | | | | | | | | | | | | Oil and Gas Experience | | | | | | | | | | | | Technology | | | | | | | | | |
Director Qualifications and Skills
| * The absence of a mark does not necessarily indicate that the director does not possess that qualification or skill. |
Director Qualifications and Skills
| 10 | |
Director Biographies
Director Biographies Information follows about the age and business experience of the director nominees and the particular experience, qualifications, attributes and skills that led the Board to conclude that each nominee should continue to serve as a director. All of the nominees are currently directors of the Company.
Director Biographies
| Age: 55 Director Since: 2022 Committees: ●Corporate Governance and Nominating ●Management Development and Compensation | Tonit M. Calaway INDEPENDENT Executive Vice President, Chief Administrative Officer, General Counsel and Secretary of BorgWarner Inc. | | | Background Tonit M. Calaway has served as the Executive Vice President, Chief Administrative Officer, General Counsel and Secretary of BorgWarner Inc. since October 2020. Prior to that, Ms. Calaway served as Executive Vice President, Chief Legal Officer and Secretary of BorgWarner Inc. from 2018, where she oversaw the global legal function, and from 2016 through 2018 as Executive Vice President and Chief Human Resources Officer of BorgWarner, where she managed all aspects of human resources for employees around the globe, including compensation and benefits, talent management, labor, employment and related management issues. Before joining BorgWarner in 2016, Ms. Calaway held various positions during her approximately 18-year career at Harley-Davidson, Inc., including Vice President of Human Resources, where she guided company-wide leadership development, compensation and benefits, labor relations and diversity initiatives, and President of The Harley-Davidson Foundation. Ms. Calaway currently serves as a director of W.P. Carey Inc. since 2020. She previously served as a director of Astronics Corporation. Ms. Calaway is a graduate of the University of Wisconsin – Milwaukee and received her Juris Doctorate from the University of Chicago Law School. She is a member of the State Bar of Wisconsin. Qualifications Ms. Calaway brings significant human resources, operations, governance, international and legal expertise to the Air Products Board. |
Director Biographies
| Age: 76 Director Since: 2015 Committees: ●Audit and Finance ●Corporate Governance and Nominating | Charles Cogut INDEPENDENT Retired Partner, Simpson Thacher & Bartlett LLP | | | Background Charles “Casey” Cogut is a retired partner of Simpson Thacher & Bartlett LLP. Mr. Cogut joined the New York-based law firm in 1973 and served as a partner from 1980 to 2012. For many years he was a leading member of the firm’s merger and acquisitions and private equity practices. He specialized in domestic, international and cross-border mergers and acquisitions, the representation of special committees of boards of directors, buyouts and other transactions involving private equity firms. In addition, he regularly advised boards of directors with respect to corporate governance matters and fiduciary responsibilities. From 1990 to 1993, he served as senior resident partner in the firm’s London office. Mr. Cogut received his J.D. in 1973 from the University of Pennsylvania Law School after graduating summa cum laude from Lehigh University in 1969. He is a member of the Board of Advisors of the University of Pennsylvania Carey Law School. He also is the Vice Chair of the Board of Trustees and a member of the Executive Committee of Cold Spring Harbor Laboratory. Mr. Cogut previously served as a director of The Williams Companies, Inc. Qualifications Mr. Cogut brings to the Board expertise in corporate governance and fiduciary responsibilities of directors. He also has extensive experience in multi-jurisdictional mergers and acquisitions and other complex transactions. He has been recognized as one of the leading corporate lawyers in the United States. |
Director Biographies
| 2024 PROXY STATEMENT | 11 |
Director Biographies
| Age: 60 Director Since: 2020 Committees: ●Corporate Governance and Nominating ●Executive ●Management Development and Compensation (Chair) | Lisa A. Davis INDEPENDENT Former Member of the Managing Board and CEO of Gas and Power for Siemens AG | | | Background Lisa A. Davis served from August 2014 to February 2020 as a member of the Managing Board for Siemens AG with responsibility as CEO for Siemens Gas and Power, which included Power Generation, Power Services, Oil and Gas, Transmission and New Fuels, and operated in over 80 countries. During her tenure at Siemens, she also served as Chair and Chief Executive Officer of Siemens Corporation USA and as a member of the Board of Directors of Siemens Gamesa Renewable Energy SA. From 2012 to August 2014, Ms. Davis served as Executive Vice President, Strategy, Portfolio & Alternative Energy of Royal Dutch Shell, UK. Prior to that, Ms. Davis served in various capacities and leadership positions with Royal Dutch Shell, Texaco USA and Exxon Corporation in upstream and downstream operations and project development. Ms. Davis currently serves on the Board of Directors of Penske Automotive Group, Inc., Phillips 66 and C3.ai, Inc. She previously served as a director of Kosmos Energy Ltd. Ms. Davis holds a Bachelor of Science degree in Chemical Engineering from the University of California, Berkeley. Qualifications Ms. Davis has significant experience leading large, multi-faceted international businesses. She also has extensive experience leading teams in developing world-scale energy and environmental projects as well as experience with public company board service in the U.S. and Europe. Ms. Davis will provide the Board with a solid understanding of these types of projects, which represent an important and growing portion of our business. |
Director Biographies
| Age: 79 Director Since: 2013 Committees: ●Executive (Chair) | Seifollah (“Seifi”) Ghasemi Chairman, President and Chief Executive Officer of the Company | | | Background Seifi Ghasemi became Chairman, President and Chief Executive Officer of the Company in July 2014. In this role, he is focused on setting the strategy and policies of the Company, developing leadership and meeting shareholder commitments. Mr. Ghasemi is a member of The Business Council, an association of the chief executive officers of the world’s most important business enterprises. In 2020, he was appointed to the Board of Directors of the US-India Strategic Partnership Forum. In 2019 he was elected to the Board of Directors of the US-China Business Council. Mr. Ghasemi also was the recipient of the 2017 biennial International Palladium Medal from the Société de Chimie Industrielle for his distinguished contributions to the chemical industry. Prior to joining Air Products, from 2001 to 2014, Mr. Ghasemi served as Chairman and Chief Executive Officer of Rockwood Holdings, Inc., a global leader in lithium and advanced materials. From 1997 to 2001, he held leadership roles at GKN, a global industrial company, including positions as director of the Main Board of GKN, plc and Chairman and Chief Executive Officer of GKN Sinter Metals, Inc. and Hoeganes Corporation. Earlier in his career, Mr. Ghasemi spent nearly 20 years with The BOC Group in positions including director of the Main Board of BOC Group, plc, President of BOC Gases Americas and Chairman and Chief Executive Officer of BOC Process Plants, Ltd. and Cryostar. He served as non-executive Chairman of Versum Materials, Inc. until its acquisition by Merck KGaA in October 2019. Mr. Ghasemi earned his undergraduate degree from Abadan Institute of Technology and holds an M.S. degree in mechanical engineering from Stanford University. He also was awarded an honorary Doctor of Science degree from Lafayette College in 2017 and an honorary Doctor of Engineering degree from Stevens Institute of Technology in 2018. Qualifications Mr. Ghasemi brings to the Board strong leadership and extensive management and operating experience, including deep experience in the industrial gases and specialty chemicals industries, and a solid understanding of key end markets for the Company. His prior executive leadership of an international chemical company also provides substantial experience in governance and portfolio management, strategic planning, talent management and international operations. He provides the Board with candid insights into the Company’s industry, operations, management team and strategic opportunities and threats. |
Director Biographies
| 12 | |
Director Biographies
| Age: 50 Director Since: 2023 Committees: ●Audit and Finance ●Corporate Governance and Nominating | Jessica Trocchi Graziano INDEPENDENT Senior Vice President and Chief Financial Officer of United States Steel Corporation | | | Background Ms. Graziano has served as Senior Vice President and Chief Financial Officer of United States Steel Corporation since August 2022. In this role, Ms. Graziano leads all aspects of United States Steel Corporation’s finance, including financial planning and analysis, corporate accounting, tax, treasury, pension investments and investor relations, as well as corporate strategy, labor relations, real estate and sales and operations planning functions. Before joining United States Steel Corporation, Ms. Graziano spent eight years with United Rentals, Inc., the world’s largest equipment rental provider, culminating in her position as Executive Vice President and Chief Financial Officer from 2018 through July 2022. In this role, she was responsible for all finance functions and participated in making key operational, acquisition and global expansion decisions. Previously, Ms. Graziano spent five years at Revlon, Inc. where she advanced through positions of increasing responsibility before being named Senior Vice President, Chief Accounting Officer and Corporate Controller. Prior to Revlon, she served in a variety of senior leadership roles in the areas of internal audit, financial reporting and financial planning and analysis. Ms. Graziano earned a Bachelor of Science degree in Accountancy from Villanova University and completed her Master of Business Administration in Finance from Fairfield University. She is a certified public accountant. Qualifications Ms. Graziano has deep financial and operational expertise. Her background adds significant value as we drive our core industrial gas business and execute our clean hydrogen megaprojects around the world. |
Director Biographies
| Age: 64 Director Since: 2013 Committees: ●Audit and Finance ●Management Development and Compensation | David H.Y. Ho INDEPENDENT Chairman and Founder of Kiina Investment Ltd. | | | Background David H.Y. Ho is Chairman and Founder of Kiina Investment Ltd., a venture capital firm that invests in start-up companies in the technology, media and telecommunications industries. Mr. Ho previously served as Chairman of Greater China for Nokia Siemens Networks, President of Greater China for Nokia Corporation and Senior Vice President of the Nokia Networks Business Group. He has also held senior leadership roles with Nortel Networks and Motorola in China and Canada. Mr. Ho currently serves as a member of the Board of Directors of Qorvo, Inc., Sun Life Financial Inc. and Sun Life Assurance Company of Canada. After having completed four years of service as a director for DBS Bank Hong Kong Limited, Mr. Ho now serves as a member of the Board of Directors for Singapore based DBS Group Holdings Limited and DBS Bank Limited. Previously, Mr. Ho served as a director of China COSCO Shipping Corporation, nVent Electric plc, Pentair plc, China Mobile Communications Corporation, Dong Fang Electric Corporation, Owens Illinois, Inc. and, prior to its merger with R. F. Micro Devices to form Qorvo, Inc., Triquent Semiconductor, Inc. He also served as a director of China Ocean Shipping Company prior to its merger with China Shipping Group. He holds a Bachelor’s degree in Engineering and a Master’s degree in Management Sciences from the University of Waterloo in Canada. Qualifications Mr. Ho has extensive experience establishing and building businesses in China and in international joint venture operations, government relations and Asian operations and marketing. His background brings significant value to the Company as we execute on our global strategy. He also has executive leadership experience in the electronics and technology industries, which are key customer segments for the Company. |
Director Biographies
| 2024 PROXY STATEMENT | 13 |
Director Biographies
| Age: 73 Director Since: 2013 Lead Director Since: 2021 Committees: ●Corporate Governance and Nominating (Chair) ●Executive ●Management Development and Compensation | Edward L. Monser INDEPENDENT, LEAD DIRECTOR Retired President and Chief Operating Officer of Emerson Electric Co. | | | Background Edward L. Monser was the President of Emerson Electric Co., a global industrial controls products company, from 2010 until his retirement in 2018. At the time of his retirement, Mr. Monser had more than 30 years of experience in senior operational positions at Emerson and played key roles in globalizing the company, having held increasingly senior positions, including Chief Operating Officer from 2001 to 2015 and President of its Rosemount Inc. subsidiary from 1996 to 2001 as well as holding various operations, new product development, engineering and technology positions. Mr. Monser currently serves as a director of Vertiv Holdings Co., a company that provides equipment and services for data centers. He previously served as a director of Canadian Pacific Railway Ltd. Formerly, Mr. Monser was Vice Chairman of the U.S.-India Strategic Partnership Forum, a member of the Economic Development Board for China’s Guangdong Province and a director and Vice Chairman of the U.S.-China Business Council. He holds a Bachelor’s degree in Electrical Engineering from the Illinois Institute of Technology and a Bachelor’s degree in Education from Eastern Michigan University. Qualifications As former president and chief operating officer of a premier global industrial organization, Mr. Monser provides the Board with a solid understanding of industrial operations, supply chain optimization and continuous improvement, extensive experience in international business operations, particularly in emerging markets, and a demonstrated capability in strategic planning and organizational development. |
Director Biographies
| Age: 72 Director Since: 2013 Committees: ●Audit and Finance (Chair) ●Corporate Governance and Nominating ●Executive | Matthew H. Paull INDEPENDENT Retired Senior Executive Vice President and Chief Financial Officer of McDonald’s Corporation | | | Background Matthew H. Paull was Senior Executive Vice President and Chief Financial Officer of McDonald’s Corporation from 2001 until he retired from that position in 2008. Prior to joining McDonald’s in 1993, he was a partner at Ernst & Young where he managed a variety of financial practices during his 18-year career and consulted with many leading multinational corporations. Mr. Paull currently serves as a director of Canadian Pacific Kansas City Limited. He was formerly a director of Chipotle Mexican Grill, Inc., KapStone Paper and Packaging Corporation and WMS Industries Inc. and the lead director of Best Buy Co., Inc. He also served as a member of the Advisory Board of Pershing Square Capital Management, L.P. and as an advisory council member for the Federal Reserve Bank of Chicago. He holds a Master’s degree in Accounting and a Bachelor’s degree from the University of Illinois. He is a certified public accountant. Qualifications Mr. Paull brings to the Board significant financial expertise with a deep understanding of financial markets, corporate finance, accounting and controls and investor relations. As a former chief financial officer of a multinational corporation, he also has extensive experience in international operations and marketing. |
Director Biographies
| 14 | |
Director Biographies
| Age: 63 Director Since: 2021 Committees: ●Audit and Finance ●Executive ●Management Development and Compensation | Wayne T. Smith INDEPENDENT Retired Chairman and Chief Executive Officer of BASF Corporation | | | Background Wayne T. Smith is the retired Chairman and Chief Executive Officer of BASF Corporation. Mr. Smith served in this role from May 2015 through May 2021 and served as a member of the Board of Management Directors of the parent company, BASF SE, from 2012 through May 2021. Prior to his tenure at BASF, which began in 2004, Mr. Smith was vice president and general manager of Specialty Construction Chemicals at W.R. Grace and Company, where he led the strategy development, growth and profitability of that unit worldwide. Before joining W.R. Grace, Mr. Smith served in positions of increasing responsibility with The BOC Group, culminating as vice president and general manager of the company’s Packaged Products business. Mr. Smith currently serves on the Board of Directors of ONEOK, Inc. He is a former director of Inter Pipeline Ltd. Mr. Smith holds a Bachelor of Science degree in Chemical Engineering from Syracuse University and a Master’s in Business Administration from the Wharton School of the University of Pennsylvania. Qualifications Mr. Smith brings decades of general management experience in the chemicals and industrial manufacturing sectors, including extensive industrial gases leadership and operational experience, to the Air Products Board. |
Transactions with Related Persons
| Director Compensation Program | ($) | | Annual Deferred Stock Award (made immediately following annual meeting)(1) | 160,000 | | Annual Cash Retainer | 130,000 | | Lead Director Retainer | 35,000 | | Audit and Finance Committee Chair Retainer | 25,000 | | Management Development and Compensation Committee Chair Retainer | 20,000 | | Corporate Governance and Nominating Committee Chair Retainer | 15,000 |
Fiscal 2023 Director Compensation
Fiscal 2023 Director Compensation
Fiscal 2023 Director Compensation
| Name(1) | Annual Retainers(2) ($) | Stock Awards(3) ($) | All Other Compensation(4) ($) | Total ($) | | Tonit M. Calaway | 130,000 | 160,000 | — | 290,000 | | Charles Cogut | 130,000 | 160,000 | 15,353 | 305,353 | | Lisa A. Davis | 150,000 | 160,000 | — | 310,000 | | David H.Y. Ho | 130,000 | 160,000 | 500 | 290,500 | | Edward L. Monser | 180,000 | 160,000 | 10,000 | 350,000 | | Matthew H. Paull | 155,000 | 160,000 | 20,357 | 335,357 | | Wayne T. Smith | 130,000 | 160,000 | 10,000 | 300,000 |
Fiscal 2023 Director Compensation
| (1) Jessica Trocchi Graziano was elected to the Board effective December 1, 2023 following completion of fiscal year 2023. | | (2) This column includes annual retainers and committee Chair and Lead Director retainers. Certain directors voluntarily elected to defer some or all of their cash retainers. Any amounts that have been deferred are included in this column. | | (3) This column shows the grant date fair value of the annual deferred stock unit grant for 2023 calculated in accordance with FASB ASC Topic 718. Deferred stock units earned by directors are fully expensed on the Company’s financial statements at the market value of a share of stock on the date of grant. The annual deferred stock unit grant is prorated for directors elected other than at an annual meeting. All deferred stock units credited to directors are fully vested. | | (4) Amounts in this column reflect charitable matching contributions from the Air Products Foundation for Mr. Ho, Mr. Monser and Mr. Smith. For Mr. Cogut, the amount reflects a charitable matching contribution of $10,000 from the Air Products Foundation and $5,353 considered to be above-market interest credited to his Deferred Compensation Program balance. For Mr. Paull, the amount reflects a charitable matching contribution of $7,430.58 from the Air Products Foundation and $12,926 considered to be above-market interest credited to his Deferred Compensation Program balance. Interest is calculated for the Deferred Compensation Program using a Moody’s A-rated Corporate Bond Rate because this is comparable to the rate the Company pays its other creditors on long-term obligations. When this rate exceeds 120% of a rate set by the U.S. Internal Revenue Service for obligations of similar maturity, it is treated as above-market interest even though it is based on a market average for corporate bonds. |
Fiscal 2023 Director Compensation
| 2024 PROXY STATEMENT | 27 |
Fiscal 2023 Director Compensation
| PROPOSAL 2 | Advisory Vote on Executive Officer Compensation The Board recognizes the interest our shareholders have in the Company’s executive compensation program and is committed to strong compensation governance. As a part of that commitment, and in accordance with SEC rules and the preference of our shareholders, we annually ask our shareholders to approve an advisory resolution on the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis and accompanying executive compensation tables and narrative. This proposal, commonly known as a “say on pay” proposal, gives you the opportunity to express your approval or disapproval of our fiscal 2023 executive compensation program by voting for or against the following resolution: RESOLVED, that the compensation of the named executive officers as discussed and disclosed in the Compensation Discussion and Analysis and the executive compensation tables and accompanying narrative is approved. Although the vote is non-binding, the Board and the Management Development and Compensation Committee will review the voting results. If there are a significant number of negative votes, we will seek to understand the concerns that influenced the vote and to address them in making future decisions regarding the Company’s executive compensation program. At the 2023 Annual Meeting of Shareholders, approximately 98.8% of shareholders voted in accordance with the Board’s recommendation that advisory votes on its executive compensation continue to be conducted on an annual basis. As described in the Compensation Discussion and Analysis, our executive officer compensation program is designed to support our long-term business strategy and encourage executive leadership to drive creation of shareholder value. It is aligned with the competitive market for talent, sensitive to Company performance and oriented to long-term incentives to maintain and improve the Company’s long-term profitability. We believe the program delivers reasonable pay that is strongly linked to our performance. | The Board recommends a vote “FOR” this Item. |
Fiscal 2023 Director Compensation
| 28 | |
Fiscal 2023 Director Compensation
Report of the Management Development and Compensation Committee The Management Development and Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis. Based on its review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the proxy statement for the Company’s 2024 Annual Meeting of Shareholders and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
Target Total Direct Compensation
| Officer | Base Salary ($) | Annual Incentive Target ($) | Grant Value of Long-Term Incentives ($) | Target Total Direct Compensation ($) | | Seifi Ghasemi | 1,350,000 | 2,025,000 | 12,125,000 | 15,500,000 | | Melissa N. Schaeffer | 650,000 | 585,000 | 2,000,000 | 3,235,000 | | Sean D. Major | 650,000 | 650,000 | 1,500,000 | 2,800,000 | | Samir J. Serhan | 850,000 | 935,000 | 2,700,000 | 4,485,000 |
Target Total Direct Compensation
| | Type | CEO Target | Other NEO Target | Key Terms | | | Base Salary | | | ●Other NEO target at market median with adjustment based on level of responsibility, experience and individual performance | | | Annual Incentive | | | ●Target payout references market median ●Payout driven by aggressive adjusted earnings per share (“EPS”) target | | | Long-Term Incentives | | | ●Target value based on market median for long-term incentives | | | Performance Shares Restricted Stock Units | | | ●Actual payout based on relative total shareholder return (“TSR”) over a three-year performance period ●50th percentile required for target payout ●Actual value determined by shareholder returns during vesting period ●Restricted stock units (“RSUs”) vest on the fourth anniversary of the grant date |
Incentive Plan Metrics and Goals
Incentive Plan Metrics and Goals In fiscal 2023, the Committee continued to grant incentive compensation opportunities designed to support the Company’s strategies. The Committee supports the Company’s strategies by focusing the Company’s annual incentive program on achieving aggressive adjusted earnings per share targets and environmental, social and governance (“ESG”) objectives. For fiscal 2023, executive officers’ annual incentive awards again were based on adjusted earnings per share, and the adjusted earnings per share targets were translated to adjusted EBITDA targets for the business units below the executive officer level to align rewards with value-creating performance. Target level payouts for fiscal 2023 were conditioned on meeting or exceeding the Company’s adjusted earnings per share goal of approximately 10.2% growth. Beginning in fiscal year 2022, the Committee granted 60% of long-term incentives in performance shares tied to relative TSR against the S&P 500 Index, while performance shares granted in fiscal 2021 are tied to the relative TSR of the Peer Reference Group. This metric reflects the growth in capital that would be experienced from purchasing a share of Company stock and holding it for the performance period while reinvesting any dividends paid. The remaining 40% of long-term incentives was granted in RSUs that will vest on the fourth anniversary of the grant date.
Fiscal 2023 Incentive Compensation
| Annual Incentive Metric | Adjusted Earnings Per Share and ESG Performance | | Performance Shares Metric | Relative TSR Compared to S&P 500 Index | | Long-Term Incentive Value Weighting | 60% Performance Shares | | | 40% Restricted Stock Units with four-year vesting period |
Pay and Performance Alignment
Pay and Performance Alignment In fiscal 2023, the Company continued to execute its growth strategy and announced: plans to construct a large-scale green energy import terminal in Hamburg, Germany; plans with AES to construct a multi-billion dollar green hydrogen production facility in North Texas; the completion of the second phase of the $12 billion gasification and power joint venture in Jazan Economic City, Saudi Arabia; the financial closing of the NEOM joint venture’s planned $8.4 billion green hydrogen-based ammonia production facility in NEOM City, Saudi Arabia; and an agreement with the government of the Republic of Uzbekistan and Uzbekneftegaz JSC to acquire, own and operate a $1 billion natural gas-to-syngas processing facility. The performance measure for the annual incentive awards was adjusted earnings per share and an ESG modifier reflective of the executive officers’ role in advancing the Company’s ESG goals. The payout metrics and calculation methodology are described on pages 37-38. Based on the Company’s performance, the Committee approved an annual incentive award payout factor of 160% for all NEOs. The Committee also determined final payout levels for performance share awards granted in fiscal 2021 with a performance cycle ending at the end of fiscal 2023, which were conditioned on our relative TSR. For the three-year performance period, Air Products delivered a cumulative TSR of 5% and the resultant TSR percentile rank was 7%, which was below the 30th percentile required for a minimum (threshold) payout. The payout metrics and calculation methodology are described on pages 39-40. The charts below compare Air Products’ CEO compensation and TSR to the S&P 500 Materials Sector for 2020 through 2022. Air Products’ CEO Summary Compensation Table pay (left chart) is positioned at the 75th percentile of the market as described on page 36. However, when considering realizable pay for the CEO (right chart), there is a strong alignment between realizable pay and performance over the past three years.
Our Compensation Philosophy
| Provide competitive compensation for competitive performance. The Company seeks to offer compensation opportunities that are sufficient to attract talented and experienced managers and to discourage them from seeking other employment opportunities. | Foster non-financial corporate goals. While financial results are the primary commitment the Company makes to shareholders, the compensation program balances financial results with other Company values such as safety, diversity, sustainability and environmental stewardship. Certain components of the program provide flexibility to adjust compensation upwards or downwards for non-financial and strategic goals and to “claw back” compensation in cases of misconduct or restatement of financial results. | Support actions needed to respond to changing business environments. The Company has sought to provide some elements of compensation, such as severance benefits, which give the management team or the Board tools to facilitate decisions about succession planning, divestitures and restructurings or other significant corporate events that may impact the position or employment status of executive officers. |
Fiscal 2023 Total Direct Compensation
| Component | Description | How Amount Determined/ Performance Considerations | Objectives | | Base Salary | Fixed cash payment. | Targeted at market median with adjustment based on level of responsibility, experience and individual performance. | Provide competitive foundational pay. | | Annual Incentive | Short-term incentive, cash payment. | Target payout references market median while actual payout is driven by adjusted EPS. The Committee has discretion to apply an ESG modifier to adjust the Annual Incentive Plan upward or downward for performance against our environmental, social and governance objectives and our safety objectives. | Promote achievement of short-term financial and strategic objectives. | | Performance Shares | Deferred stock units that pay out upon achievement of performance targets. Delivered in shares of stock with dividend equivalents also payable upon vesting. | Target value based on market median for long-term incentives. Actual payout based on relative TSR (compared to the S&P 500 Index) over a three-year performance period. | Promote achievement of longer-term financial objectives; encourage current decisions that promote long-term value creation; align executive officers’ interests with shareholder returns. | | Restricted Stock Units | Deferred stock units that vest on the fourth anniversary of the grant date and pay dividend equivalents accrued upon vesting. | Target value based on market median for long-term incentives. Actual value determined by shareholder returns during vesting period. | Retain executive officers; align executive officers’ interests with shareholder returns. |
Setting Total Direct Compensation Levels for Fiscal 2023
Setting Total Direct Compensation Levels for Fiscal 2023 Overall, the Committee sought to provide total direct compensation target opportunity (base salary, target annual incentive award and long-term incentive award value) for the executive officers (with the exception of the CEO, as described on page 36) that approximated the projected median level for similar positions in the Survey Reference Group. In the case of the CEO, COO and CFO, the projected median level is derived from two data sources—the Survey Reference Group and the Peer Reference Group, each weighted equally. Additional information regarding these peer groups is provided on page 43. Consistent with industry practice, the Company considers total direct compensation within 15% of median to be competitive with market. This margin allows for year-to-year swings in data that can occur based on a number of factors unrelated to underlying compensation strategy. The Company utilizes two peer groups for benchmarking CEO, COO and CFO compensation to ensure that the compensation is reasonably aligned with compensation provided by companies we compete against for talent. The Survey Reference Group is comprised of industrial companies that are similar in revenue size to the Company to benchmark specific pay levels. The Peer Reference Group is comprised of a smaller group of companies in the chemical, industrial, construction, engineering and energy technology services markets with similar capital structures, asset intensity, operating margins and business models. Total direct compensation targets may be established at greater or lesser levels for individual executive officers based on performance factors, experience in the position, retention and succession planning considerations or year-to-year swings in the market reference data.
Setting Total Direct Compensation Levels for Fiscal 2023
| Mr. Ghasemi On May 17, 2023, the Company entered into a new Employment Agreement with Mr. Ghasemi, extending the term of Mr. Ghasemi’s employment as our Chief Executive Officer from September 30, 2025 to September 30, 2028. Commencing September 30, 2024 and on each anniversary date thereafter, the term of the Employment Agreement will be automatically extended by one year, unless either party provides notice of non-renewal at least 30 days prior to the applicable renewal date or the Employment Agreement is otherwise terminated by either party pursuant to its terms. If Mr. Ghasemi’s employment were to terminate after September 30, 2028 without “cause” or for “good reason”, as each such term is defined in the Employment Agreement, he would not be entitled to any cash severance payment under the Separation Program. The Employment Agreement provides that Mr. Ghasemi receive a minimum annual base salary of $1,350,000, which is consistent with the annual base salary Mr. Ghasemi has received since fiscal 2018, and participate in the Company’s Annual Incentive Plan with a minimum target annual incentive award equal to 150% of his base salary with actual awards to be determined by the Committee. Under the Employment Agreement, Mr. Ghasemi also is entitled to receive minimum annual equity compensation awards under the Company’s Long-Term Incentive Plan with a grant date value (determined under the Company’s normal valuation practices) of $7,000,000, apportioned in a manner consistent with the allocation for other executive officers. At the Committee’s direction, its independent compensation consultant, Willis Towers Watson (“WTW”), performed a competitive assessment of Mr. Ghasemi’s total direct compensation at the beginning of fiscal 2023. Taking into consideration WTW’s assessment, the Committee determined that his target total direct compensation should remain positioned at the 75th percentile for the Peer Reference Group to reflect Mr. Ghasemi’s superior performance during his tenure with Air Products. |
Annual Incentive Plan
Annual Incentive Plan Target annual incentive opportunities under the Annual Incentive Plan are intended to be competitive with the market. Targets may be established at greater or lesser levels for individual executive officers based on performance factors, internal equity, experience in the position or year-to-year swings in market data. Actual annual incentive awards may be above or below target depending upon the Company’s fiscal year performance as measured by the performance measures and goals established by the Committee at the beginning of the fiscal year. When performance exceeds the target goals for the performance measures, annual incentive awards may exceed target as well and may exceed market median payouts. Actual annual incentive awards can range from 0% to 240% of target, inclusive of the application of the ESG modifier that we adopted in fiscal 2022. Over the previous five years, executive officer awards have ranged from 95% to 160% of target. Determination of annual incentive awards is a multi-step process, which begins with establishing target opportunities. At the beginning of the fiscal year, the Committee determines executive officer target annual incentive awards as a percentage of each executive officer’s base salary based on the Survey Reference Group and, for the CEO, CFO and COO, a Peer Reference Group competitive assessment. Target bonus opportunities for NEOs (excluding the CEO) increased from fiscal 2022 to 2023 as outlined below.
Annual Incentive Plan
| Officer | 2022 Target (% of Base Salary) | 2023 Target (% of Base Salary)(1) | 2023 Target Value ($) | | Seifi Ghasemi | 150 | 150 | 2,025,000 | | Melissa N. Schaeffer | 75 | 90 | 585,000 | | Sean D. Major | 90 | 100 | 650,000 | | Samir J. Serhan | 90 | 110 | 935,000 |
Annual Incentive Plan
| (1) Target bonus opportunities for Ms. Schaeffer, Mr. Major and Dr. Serhan were increased in fiscal 2023 to align with target bonus opportunities for the Survey Reference Group and, in the case of Ms. Schaeffer and Dr. Serhan, the Peer Reference Group, and to reflect their time in their respective positions. |
Annual Incentive Plan
An executive officer’s actual payout is determined by multiplying the target award by his or her individual payout factor. As a first step in determining an executive officer’s individual payout factor, the Committee determines an initial payout factor derived from the Company’s performance against the performance objectives established by the Committee at the beginning of the fiscal year. For fiscal 2023, the Committee selected rigorous adjusted earnings per share targets as the performance measure for the Annual Incentive Plan in order to incentivize the executive officers to execute the Company’s growth strategy and deliver value to shareholders. Target adjusted earnings per share of $11.30 represented a 10.2% increase from the recast fiscal 2022 adjusted earnings per share of $10.25.(1) The threshold, target and maximum payout factors for the adjusted earnings per share measure are set out below. (Factors are interpolated between points.)
Annual Incentive Plan
| 2023 Adjusted Earnings per Share | Initial Payout Factor % | | <$10.75 | 0 | | $10.75 | 50 | | $11.30 | 100 | | $11.65 | 200 |
Annual Incentive Plan
| (1) Adjusted earnings per share is a non-GAAP financial measure and is defined and reconciled to diluted earnings per share on a GAAP basis in Appendix A. |
Determination of Annual Incentive Plan Payout
Determination of Annual Incentive Plan Payout
Determination of Annual Incentive Plan Payout
| Determine Target Award (beginning of fiscal year) | | Determine Initial Payout Factor (after fiscal year-end) | | Apply ESG modifier by multiplying modifier by Initial Payout Factor (after fiscal year-end) | | Annual Incentive Plan Payout |
Determination of Annual Incentive Plan Payout
For fiscal 2023, our adjusted earnings per share was $11.51, which resulted in an initial payout factor of 160%.
Determination of Annual Incentive Plan Payout
| 2024 PROXY STATEMENT | 37 |
Determination of Annual Incentive Plan Payout
For fiscal 2023, the Company continued the policy of modifying compensation payable under our Annual Incentive Plan based on the Committee’s assessment of our performance against our ESG objectives. This modifier involves adjusting the initial payout factor by a multiple of 0.8 to 1.2. The ESG modifier has the following attributes:
Determination of Annual Incentive Plan Payout
| ● | the ESG modifier reflects the Committee’s consideration of the executive officers’ role in advancing the Company’s safety, culture and diversity and environmental performance; | | ● | the ESG modifier is “universal”, meaning that the same payout adjustment is applied consistently for all executive officers; and | | ● | the maximum award (as a percentage of target) can result in up to a 20% reduction or increase to the payout that would otherwise be earned based on our adjusted EPS performance. |
Determination of Annual Incentive Plan Payout
When determining the 2023 final Annual Incentive Plan payout factor, the Committee applied an ESG modifier of 1.0. The 1.0 ESG modifier reflects the executive officers’ role in advancing the Company’s environmental performance in accordance with its goals regarding emissions intensity reductions and capital investment in energy transition projects, along with the continued progress the Company has made towards its diversity and safety culture objectives. The final payout factor, including the ESG modifier, was 160%.
Discretionary Bonuses
Discretionary Bonuses In addition to amounts paid under the Annual Incentive Plan, from time to time we pay discretionary cash bonuses as recruitment or retention incentives or in recognition of outstanding performance. No discretionary bonuses were paid to the Company’s NEOs for fiscal 2023.
Long-Term Incentives
Long-Term Incentives The Committee believes long-term incentive compensation is the most critical part of the executive officers’ compensation because it creates alignment with shareholders and promotes achievement of long-term financial and strategic objectives. The success of the Company’s business and resulting value for our shareholders is predominantly built on stable, long-term relationships with customers and substantial capital investments that reap returns over a long-term time horizon through technological differentiation, cost control and operational efficiencies. Reflecting this long-term business model, the Committee emphasizes long-term incentive compensation designed to ensure that the decisions being made today build value for the long-term and reward sustainable growth, disciplined capital investment, sustainable cost reduction and consistent operational excellence. For fiscal 2023, the Committee selected two components for our executive officers’ long-term incentives: performance shares, which are conditioned on relative TSR performance compared to the S&P 500 Index over a three-year period (for fiscal 2023-2025); and RSUs, which link executive officers’ interests directly to shareholder returns and provide a strong retention incentive. For fiscal 2023 we continued our practice of using a mix of long-term incentive value composed of 60% performance shares and 40% RSUs. The Committee chose this mix to provide a balance of stock-based compensation to encourage above-market performance and talent retention. Because both components of an executive officer’s long-term incentive opportunity are delivered in stock-based awards, their value is based on our stock price, which serves the Committee’s objective of creating alignment with shareholders. The Committee determined the level of long-term incentive grants for fiscal 2023 at the beginning of the fiscal year. Prior to making the grants, the Committee established an intended long-term incentive value for each executive officer. When setting these intended values, the Committee considered the Survey and Peer Reference Group competitive data and target total direct compensation opportunities. It is the Committee’s intent that the long-term incentive value and total direct compensation opportunity for Mr. Ghasemi be at the 75th percentile of the Peer Reference Group to reflect Mr. Ghasemi’s superior performance throughout his tenure with Air Products. It is the Committee’s intent that for executive officers other than our CEO, the long-term incentive value approximate the market median and the total direct compensation opportunity for such executive officers approximate the market median level when combined with base salary and target Annual Incentive Plan awards.
Long-Term Incentives
| 38 | |
Long-Term Incentives
Individual performance or other factors may result in awards that are above or below the market median. These factors include tenure and experience, succession planning and retention, subjective evaluations of performance, historical grant levels and other recent compensation actions with respect to the individual such as special retention awards. For fiscal 2023, all intended long-term incentive values approximated the projected market median (except for the CEO value, which remained positioned at the 75th percentile). The actual value realized may differ significantly (up or down) from the intended value due to Company stock price performance over the life of the awards and the extent to which performance goals are met in the case of performance shares.
Long-Term Incentives
| Officer | Intended Long-Term Incentive Value ($) | | Seifi Ghasemi | 12,125,000 | | Melissa N. Schaeffer | 2,000,000 | | Sean D. Major | 1,500,000 | | Samir J. Serhan | 2,700,000 |
Performance Shares
Performance Shares
Fiscal 2023 Performance Share Grants
Fiscal 2023 Performance Share Grants In fiscal 2023, performance shares made up the majority of the long-term incentives granted to our executive officers. Performance shares entitle the recipient to one share of Company stock and accumulated dividend equivalents for each performance share earned upon the satisfaction of performance objectives and other conditions to earning the award. Performance shares are granted each year with overlapping three-year performance cycles. The awards are paid out at the end of the three-year period based on the achievement of specified performance goals. Payouts of performance shares range from 0% to 200% of the target level of shares awarded. The target level for fiscal 2023 grants (60% of the total intended long-term incentive value for each executive officer) was converted to a number of deferred stock units based on the average NYSE closing stock price for the 10 trading days preceding the grant date. The actual number of performance shares earned is determined by multiplying the target number of shares by a payout factor, which is subject to adjustment by the Committee within a narrow range (+/-15 percentage points) to address performance factors that may not be reflected in relative TSR results. Fiscal 2023 performance shares were granted conditioned upon the Company’s three-year TSR percentile rank compared to the TSR of S&P 500 Index companies over the three-year performance period (fiscal 2023-2025). Beginning in fiscal 2022, the Committee changed the relative TSR comparator group for performance shares from Peer Reference Group companies to the S&P 500 Index due to the Committee’s determination that the S&P 500 Index represents a broader and more comprehensive relative benchmark for shareholder value creation. The payout factor for performance share grants will be determined in accordance with the following schedule (with payout factors interpolated between levels):
Fiscal 2023 Performance Share Grants
| Company’s TSR Percentile Rank | Payout Factor%(1) | | >75th percentile | 200 | | 50th percentile | 100 | | 30th percentile | 30 | | <30th percentile | 0 |
Fiscal 2023 Performance Share Grants
| (1) The Committee may increase or decrease the payout factor by up to 15 percentage points. |
Fiscal 2023 Performance Share Grants
The target number of fiscal 2023 performance shares granted to each NEO was as follows:
Fiscal 2023 Performance Share Grants
| Officer | Target Performance Shares | | Seifi Ghasemi | 24,047 | | Melissa N. Schaeffer | 3,966 | | Sean D. Major | 2,974 | | Samir J. Serhan | 5,354 |
Fiscal 2023 Performance Share Grants
| 2024 PROXY STATEMENT | 39 |
Fiscal 2021-2023 Performance Shares Payout
Fiscal 2021-2023 Performance Shares Payout In November 2023, the Committee also determined final payout levels for performance share awards granted in fiscal 2021 with a performance cycle concluding at the end of fiscal 2023. For the three-year performance period, our TSR was 5% and the TSR percentile rank compared to our fiscal 2021 Peer Reference Group was 7%, which was below the 30th percentile required for a minimum (threshold) payout. This resulted in a payout factor of 0% for the fiscal 2021-2023 performance cycle.
Fiscal 2021-2023 Performance Shares Payout
| Officer | Target Performance Shares Grant | Performance Shares Earned | | Seifi Ghasemi | 24,117 | 0 | | Melissa N. Schaeffer | 724 | 0 | | Sean D. Major | 3,069 | 0 | | Samir J. Serhan | 4,385 | 0 |
Restricted Stock Units
Restricted Stock Units Each RSU entitles the recipient to receive one share of Company stock upon payout, generally at the end of a four-year vesting period. RSUs are conditioned upon continued employment during the vesting period but are subject to special vesting rules for terminations due to death, disability or retirement or terminations covered by the Executive Separation Program described on page 52. Upon vesting, RSUs also entitle the holder to receive dividend equivalents equal to the amount of dividends paid on a share of Company stock during the vesting period. The vesting conditions provide an incentive for retention, and the value of this compensation element increases or decreases in direct proportion to our TSR. The value of RSUs granted to the executive officers in fiscal 2023 is reflected in the Summary Compensation Table and the Grants of Plan-Based Awards Table, which appear on pages 45 and 47, respectively. The target level for fiscal 2023 grants (40% of the total intended long-term incentive value for each executive officer) was converted to a number of deferred stock units based on the average NYSE closing stock price for the 10 trading days preceding the grant date. In fiscal 2023, we granted RSUs to our NEOs as follows:
Restricted Stock Units
| Officer | RSUs | | Seifi Ghasemi | 16,031 | | Melissa N. Schaeffer | 2,644 | | Sean D. Major | 1,983 | | Samir J. Serhan | 3,569 |
Restricted Stock Units
| 4 | Employee Benefit Plans and Other Compensation |
Restricted Stock Units
Our employee benefit programs are offered and designed to be competitive and to provide reasonable security for employees. Welfare and retirement benefits are offered at essentially the same level to all U.S. salaried employees, including executive officers.
Severance and Change in Control Arrangements
Severance and Change in Control Arrangements Executive officer severance and change in control arrangements are provided to support major corporate and management transitions. The Committee believes these arrangements provide benefits to the Company and its shareholders. The Committee periodically reviews these arrangements in depth for market competitiveness and appropriateness for the Company’s business.
Severance
Severance All executive officers participate in the Executive Separation Program. This program is intended to facilitate changes in the leadership team by establishing terms for the separation of an executive officer in advance, allowing for a smooth transition of responsibilities when it is in the best interests of the Company. The program provides severance benefits and vesting of certain long-term incentives upon involuntary termination other than for “cause” or voluntary termination for “good reason” (as each term is defined in the applicable severance agreement) in exchange for certain post-employment restrictions designed to protect the Company. Details of the program are provided on page 52.
Change in Control Arrangements
Change in Control Arrangements To enable the management team to negotiate effectively for shareholders without concern for their own future in the event of any actual or threatened change in control of the Company, the Company has entered into individual change in control severance agreements for each of the executive officers. Consistent with compensation governance best practices, our change in control agreements are “double-trigger”, which means that each executive officer will receive specific rights and benefits if, following a change in control, his or her employment is terminated by the Company without “cause” or the executive officer terminates his or her employment for “good reason” (as each term is defined in the applicable severance agreement) in exchange for certain post-employment restrictions designed to protect the Company. Details of these agreements are described on pages 54-55.
Roles of the Committee, Compensation Consultant and Management in the Compensation Process
Roles of the Committee, Compensation Consultant and Management in the Compensation Process
Committee Responsibilities
Periodically, the Committee also undertakes an extensive review of the competitiveness and appropriateness of certain pay practices such as severance and change in control arrangements.
Engagement of Compensation Consultant
Engagement of Compensation Consultant The Committee retains an external compensation consultant to provide independent advice, information and analysis on executive compensation. The Committee has established several practices to ensure the external consultant’s independence, candor and objectivity. The consultant is engaged by, has its compensation set by and reports directly to the Committee, frequently meets separately with the Committee (with no members of management present) and consults with the Committee Chair in between meetings. At each Committee meeting management reports fees paid for executive compensation consulting services performed by the consultant to the Committee, and the Committee approves in advance the executive compensation consulting services to be performed. The Committee retained WTW as its external consultant for fiscal 2023. Aggregate fees for WTW’s executive compensation consulting services provided to the Committee were $277,600. During fiscal 2023, WTW also performed global retirement plan actuarial, administrative and consulting, global investment consulting, health care exchange and aviation insurance brokering services for the Company and provided “Talent & Rewards” data surveys and proxy review services in addition to the work performed for the Committee. The aggregate fees for those services were $1,693,700. The decision to hire WTW for actuarial services was made over a decade ago after an extensive bid process. WTW is one of the few firms that is able to provide these services on a global basis. The decisions to hire WTW for the health care exchange, health care consulting and insurance brokering services were made by the responsible functional managers after a competitive bidding process. The decision to hire WTW for the global investment consulting services for our pension plans was made by the Pension Investment Committee and members of our Treasury and Human Resources functions after a competitive bidding process.
Engagement of Compensation Consultant
| During fiscal 2023, WTW provided advice and analysis to the Committee on total direct compensation for individual executive officers, peer group composition, incentive plan performance measures, compensation program design, pay versus performance disclosure and external trends and developments. WTW also provided an analysis of the alignment of pay delivered under the Company’s executive officer compensation program with its performance compared to peer group pay and performance, a governance and regulatory update, a third-party independent review of the Company’s executive compensation disclosures and an assessment of the potential relationship between the Company’s compensation program and risk-taking by management. Independence Assessment The Committee assessed WTW’s independence and concluded that there are no conflicts of interest that would prevent WTW from independently advising the Committee. In making this determination, the Committee considered, among other things, the fees paid for services provided to management as a percentage of WTW’s consolidated revenues, policies and procedures established by WTW to mitigate conflicts of interest and the lack of business and personal relationships between WTW team members and the Company’s executive officers and Committee members. |
Benchmarking
Benchmarking The Committee believes that a threshold characteristic of reasonable compensation is that it is aligned with compensation provided by companies the Company competes against for talent. In preparation for determining fiscal 2023 compensation, the Committee benchmarked executive officer compensation levels to evaluate the competitiveness of the program and as a reference for establishing compensation levels for fiscal 2023. The Committee uses two peer groups for benchmarking, which it reviews annually.
Peer Groups
Peer Groups
Peer Groups
| Name | Criteria | Purpose | Source | | Survey Reference Group | Broad group of industrial companies with $7-13 billion in annual revenue | Benchmark competitive executive officer direct compensation levels at target | WTW and Mercer surveys | | Peer Reference Group | Chemical; industrial; and construction, engineering and energy technology services companies with similar capital structure, asset intensity and profitability to the Company | Benchmark competitive direct compensation levels for CEO, COO and CFO, pay practice and pay for performance assessment and to determine performance share relative TSR for performance share grants made through fiscal 2021 | Compiled from proxy statement filings |
Peer Groups
For purposes of assessing competitiveness and recommending compensation levels for fiscal 2023, the Committee used survey data from WTW and Mercer compensation databases on a group of industrial companies with annual revenue of $7 to $13 billion (the “Survey Reference Group”). In light of the Company’s fiscal 2023 revenues of $12.6 billion, the Survey Reference Group for 2024 will be revised to consider industrial companies with annual revenue of $6 to $25 billion. The Survey Reference Group is representative of the companies the Company competes against for talent and is used by the Company for various compensation benchmarking purposes, not just executive officer compensation. A list of companies included in the Survey Reference Group is provided in Appendix B. Prior to the beginning of the fiscal year, the Committee reviewed an assessment of each NEO’s compensation level relative to the Survey Reference Group based on similar functional responsibilities. The assessment identified median, 25th and 75th percentile levels for base salary, target annual incentive, target long-term incentives and target total direct compensation. Annual and long-term incentive levels reflected a three-year average to reduce volatility in results. The Committee also reviewed proxy data compiled from the Peer Reference Group, which is a smaller group of companies that are competitors of the Company or are similar to the Company in that they are chemical, industrial and construction, engineering and energy technology services companies with similar capital structures, asset intensity, operating margins and business models (the “Peer Reference Group”). Peer Reference Group companies are generally similar in revenue size to the Company, however certain companies with higher revenues are included based on similarity of business model. The Committee used the Peer Reference Group for benchmarking specific pay practices and for assessing alignment of pay with performance. In addition, the Committee also uses the Peer Reference Group to assess competitive compensation levels for CEO, COO and CFO total direct compensation. Because proxy data does not necessarily reflect similar positions to the other executive officers, only the Survey Reference Group is used to benchmark pay levels for them. The Peer Reference Group was also used for determining the Company’s relative TSR performance for purposes of performance share payouts on grants made prior to fiscal 2022. The fiscal 2023 Peer Reference Group consisted of the following companies:
Peer Groups
| AECOM Technology Corporation | Ecolab Inc. | Linde plc. | | Baker Hughes Company | EMCOR Group, Inc. | MasTec, Inc. | | Celanese Corporation | Fluor Corporation | Parker-Hannifin Corporation | | Dover Corporation | Fortive Corporation | PPG Industries, Inc. | | DuPont de Nemours, Inc. | Illinois Tool Works Inc. | Quanta Services, Inc. | | Eastman Chemical Company | Ingersoll Rand Inc. | TechnipFMC plc |
Peer Groups
The Peer Reference Group used to assess executive compensation for fiscal 2024 (the “2024 Peer Reference Group”) has been revised as follows to more closely align with the criteria set forth above:
Peer Groups
| ● | Six peers have been added: Eaton Corporation plc, Emerson Electric Co., Johnson Controls International plc, NextEra Energy, Inc., Occidental Petroleum Corporation and Schlumberger Limited. | | ● | Three companies, AECOM Technology Corporation, EMCOR Group, Inc. and MasTec, Inc., have been removed as they are less comparable to Air Products’ business than the newly added peer members. |
Peer Groups
The updates to the composition of the 2024 Peer Reference Group are not expected to materially affect the overall positioning of compensation relative to market peers.
Peer Groups
| 2024 PROXY STATEMENT | 43 |
Risk Assessment
| ● | the Company does not use highly leveraged short-term incentives that drive risky investments at the expense of long-term Company value; | | ● | the Company’s compensation programs reward consistent, long-term performance by heavily weighting compensation to long-term incentives; | | ● | concentration of long-term incentive compensation in awards based on relative TSR combined with overlapping grant cycles strengthens executives’ incentive to foster stable, long-term performance; | | ● | cash incentive awards are capped at sustainable levels, and the Committee has discretion to reduce awards, including for non-financial considerations; | | ● | the Company enforces substantial executive officer stock ownership and holding requirements; and | | ● | the Company has recoupment policies applicable to incentive compensation that permit the Company to cancel awards and recoup certain gains in the event of an accounting restatement or conduct that is detrimental to the Company. |
Fiscal 2023 Summary Compensation Table
Fiscal 2023 Summary Compensation Table
Fiscal 2023 Summary Compensation Table
| Officer and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | Changes in Pension Value and Nonqualified Deferred Compensation Earnings(5) ($) | All Other Compensation(6) ($) | Total ($) | | Seifi Ghasemi, Chairman, President and Chief Executive Officer | 2023 | 1,350,000 | — | 17,074,629 | 3,240,000 | 11,675 | 401,795 | 22,078,099 | | | 2022 | 1,350,000 | — | 13,752,750 | 3,057,750 | 15,047 | 307,558 | 18,483,105 | | | 2021 | 1,401,923 | — | 10,232,039 | 1,923,750 | 13,911 | 247,387 | 13,819,010 | | Melissa N. Schaeffer, Senior Vice President and Chief Financial Officer | 2023 | 626,923 | — | 2,816,085 | 936,000 | 425 | 72,467 | 4,451,900 | | | 2022 | 550,000 | — | 1,499,772 | 622,875 | 329 | 104,268 | 2,777,244 | | | 2021 | 380,513 | — | 307,263 | 210,900 | 210 | 35,778 | 934,664 | | Sean D. Major, Executive Vice President, General Counsel and Secretary | 2023 | 626,923 | — | 2,111,813 | 1,040,000 | 2,320 | 89,144 | 3,870,200 | | | 2022 | 550,000 | 500,000 | 1,750,161 | 747,450 | 2,813 | 56,285 | 3,606,709 | | | 2021 | 571,154 | — | 1,302,074 | 470,250 | 2,063 | 64,718 | 2,410,259 | | Samir J. Serhan, Chief Operating Officer | 2023 | 838,462 | — | 3,801,539 | 1,496,000 | 2,305 | 526,587 | 6,664,893 | | | 2022 | 776,923 | 1,500,000 | 3,125,450 | 1,087,200 | 2,722 | 897,239 | 7,389,534 | | | 2021 | 713,462 | — | 1,860,315 | 598,500 | 2,314 | 308,015 | 3,482,606 |
Fiscal 2023 Summary Compensation Table
| (1) Fiscal 2023 reflects base salary increases for Dr. Serhan from $800,000 to $850,000 and for Ms. Schaeffer and Mr. Major from $550,000 to $650,000, in each case effective December 26, 2022. | | (2) This column includes discretionary bonuses paid to Mr. Major and Dr. Serhan in fiscal 2022, in connection with the contributions each provided to achieving the October 2021 financial closing of the first phase of the Jazan gasification project. | | (3) Amounts in this column represent the grant date fair value of RSUs and performance share awards granted in the fiscal year indicated, disregarding any estimate of forfeitures related to time-based vesting. Generally, the expense for these awards is recognized over the vesting or performance period unless the recipient is eligible for retirement and the award vests upon retirement, in which case the expense may be required to be recognized entirely in the year of grant. The valuation models and assumptions applicable to these grant date fair values are set forth in Note 20, Share-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, which was filed with the SEC on November 16, 2023. The amounts shown may not correspond to the actual value that will be realized by the executive officers. The grant date fair values of the performance shares are based upon the grant date probable outcomes of satisfying the performance conditions stipulated in the grants. The maximum grant date values of performance share grants are reflected in the table below. Maximum values use the NYSE closing stock price on the date of grant at the maximum calculated payout of 200% as well as the maximum discretion that could be applied of 15%. For additional information on awards made in fiscal 2023, see the Grants of Plan-Based Awards Table and Outstanding Equity Awards Table on pages 47 and 48, respectively. |
Fiscal 2023 Summary Compensation Table
| 2024 PROXY STATEMENT | 45 |
Fiscal 2023 Grants of Plan-Based Awards Table
Fiscal 2023 Grants of Plan-Based Awards Table
Fiscal 2023 Grants of Plan-Based Awards Table
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (#) | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) | | Officer | Award Type | Grant Date | Threshold | Target | Maximum | Threshold Target | Maximum | | | | Seifi Ghasemi | Annual Incentive Plan | | 0 | 2,025,000 | 4,860,000 | | | | | | | Performance Shares | 12/1/2022 | | | | 0 24,047 | 51,701 | | 12,072,315 | | | Restricted Stock Units | 12/1/2022 | | | | | | 16,031 | 5,002,313 | | Melissa N. Schaeffer | Annual Incentive Plan | | 0 | 585,000 | 1,404,000 | | | | | | | Performance Shares | 12/1/2022 | | | | 0 3,966 | 8,527 | | 1,991,051 | | | Restricted Stock Units | 12/1/2022 | | | | | | 2,644 | 825,034 | | Sean D. Major | Annual Incentive Plan | | 0 | 650,000 | 1,560,000 | | | | | | | Performance Shares | 12/1/2022 | | | | 0 2,974 | 6,394 | | 1,493,037 | | | Restricted Stock Units | 12/1/2022 | | | | | | 1,983 | 618,775 | | Samir J. Serhan | Annual Incentive Plan | | 0 | 935,000 | 2,244,000 | | | | | | | Performance Shares | 12/1/2022 | | | | 0 5,354 | 11,511 | | 2,687,869 | | | Restricted Stock Units | 12/1/2022 | | | | | | 3,569 | 1,113,671 |
Fiscal 2023 Grants of Plan-Based Awards Table
The Grants of Plan-Based Awards Table reports the dollar value of cash (non-equity) incentive awards and the number and value of equity awards granted to each executive officer during fiscal 2023. With regard to cash incentives, this table reports the range of potential value that could have been obtained by the executive officer; whereas the Summary Compensation Table reports the actual value realized for fiscal 2023. Equity amounts represent the grant date values of the awards determined under FASB ASC Topic 718 for purposes of financial statement reporting, which are based on probable outcomes.
Outstanding Equity Awards at 2023 Fiscal Year-End Table
Outstanding Equity Awards at 2023 Fiscal Year-End Table
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| | Option Awards(1) | | | | | Stock Awards | | | | | | Option Grant Date | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock Held that have not Vested (#)(2) | Market Value of Shares or Units of Stock held that have not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Officer | | Exercisable | Unexercisable | | | | | | | | Seifi Ghasemi | | | | | | 63,784 | 18,076,385 | 99,609 | 28,229,190 | | | 7/1/2014 | 165,235 | 0 | 120.69 | 6/28/2024 | | | | | | | 12/1/2014 | 43,358 | 0 | 134.54 | 12/1/2024 | | | | | | Melissa N. Schaeffer | | | | | | 4,970 | 1,408,498 | 13,751 | 3,897,033 | | Sean D. Major | | | | | | 8,273 | 2,344,568 | 12,491 | 3,539,949 | | Samir J. Serhan | | | | | | 12,727 | 3,606,832 | 22,398 | 6,347,593 |
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| (1) Grant dates for all stock options are shown in the first column. All stock options have an exercise price equal to the closing market value on the grant date and became exercisable in three consecutive, equal installments on the first, second and third anniversary of the grant date. They generally remain exercisable until 10 years after the grant date; however, except as described below, exercisable options generally expire 90 days after a voluntary termination of employment. Options granted more than one year prior to an executive officer’s termination due to death, disability or retirement continue to become and remain exercisable for their full term. If an executive officer’s termination is covered by the Executive Separation Program described on page 52, the terms of that Program regarding treatment of equity compensation will apply. Mr. Ghasemi’s Employment Agreement provides that, upon his death, disability, involuntary termination without “cause”, voluntary termination for “good reason” or the conclusion of the term of his Employment Agreement, his options will not terminate but will continue to become and be exercisable through the end of their term. (See page 52 for the definition of these terms under his Employment Agreement). Stock options are subject to special vesting rules upon a change in control of the Company as described on pages 54-55. | | (2) This column reflects unvested RSUs which, upon vesting, entitle the holder to a share of Company common stock and dividend equivalents accumulated since the date of grant. This column reflects four-year RSUs granted to executive officers on December 2, 2019, December 1, 2020, December 1, 2021 and December 1, 2022. All RSUs are subject to special vesting rules for terminations covered by the Executive Separation Program described on page 52 or upon a change in control as described on pages 54-55. | | (i) Unvested RSUs granted in fiscal 2020, 2021, 2022 and 2023 are as follows: |
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| Officer | FY20 | FY21 | FY22 | FY23 | Total | | Seifi Ghasemi | 16,820 | 16,078 | 14,855 | 16,031 | 63,784 | | Melissa N. Schaeffer | 223 | 483 | 1,620 | 2,644 | 4,970 | | Sean D. Major | 2,354 | 2,046 | 1,890 | 1,983 | 8,273 | | Samir J. Serhan | 2,859 | 2,923 | 3,376 | 3,569 | 12,727 |
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| (3) These amounts are based on the 2023 fiscal year-end NYSE closing stock price of $283.40. | | (4) This column reflects performance shares granted in fiscal 2021, fiscal 2022 and fiscal 2023. The payout of these shares is conditioned upon performance during three-year cycles ending on September 30, 2023, September 30, 2024 and September 30, 2025, respectively. The awards will be paid following the end of the relevant performance period as indicated in the chart below. The fiscal 2021 award was scored below threshold performance resulting in no payout. The dollar values and share counts for fiscal 2022 and fiscal 2023 awards are shown in the Outstanding Equity Awards Table at 215% (maximum) payout levels, based on the Company’s current total shareholder return percentile rank compared to the S&P 500 Index for their respective performance periods. |
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| 48 | |
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| | Fiscal 2021-2023 Unearned Performance Shares at End of Performance Period | | | | Officer | 09/30/2023 | 09/30/2024 | 09/30/2025 | | Seifi Ghasemi | 0 | 47,908 | 51,701 | | Melissa N. Schaeffer | 0 | 5,224 | 8,526 | | Sean D. Major | 0 | 6,097 | 6,394 | | Samir J. Serhan | 0 | 10,887 | 11,511 |
Fiscal 2023 Option Exercises and Stock Vested Table
Fiscal 2023 Option Exercises and Stock Vested Table
Fiscal 2023 Option Exercises and Stock Vested Table
| | Option Awards | | Stock Awards | | | Officer | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | Seifi Ghasemi | — | — | 28,916 | 9,126,802 | | Melissa N. Schaeffer | — | — | 352 | 111,101 | | Sean D. Major | — | — | 3,043 | 960,418 | | Samir J. Serhan | — | — | 4,915 | 1,551,329 |
Fiscal 2023 Option Exercises and Stock Vested Table
| (1) The shares in this column include RSUs granted to all executive officers in fiscal 2019 that vested in December 2022 and performance shares granted to all executive officers in fiscal 2020 that vested in December 2022. | | (2) The following dividend equivalents were paid on the shares acquired but are not included in the Value Realized on Vesting: |
Fiscal 2023 Option Exercises and Stock Vested Table
| Officer | Dividend Equivalents Paid ($) | | Seifi Ghasemi | 617,660 | | Melissa N. Schaeffer | 7,501 | | Sean D. Major | 64,397 | | Samir J. Serhan | 104,988 |
Fiscal 2023 Nonqualified Deferred Compensation Table
Fiscal 2023 Nonqualified Deferred Compensation Table Amounts shown in this table are provided under the Company’s nonqualified Deferred Compensation Plan.
Fiscal 2023 Nonqualified Deferred Compensation Table
| Officer | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(4) ($) | | Seifi Ghasemi | — | 203,887 | 98,693 | — | 2,042,300 | | Melissa N. Schaeffer | — | 45,990 | 3,975 | — | 95,019 | | Sean D. Major | 15,000 | 52,219 | 19,853 | — | 424,484 | | Samir J. Serhan | — | 79,783 | 19,863 | — | 425,100 |
Fiscal 2023 Nonqualified Deferred Compensation Table
| (1) Amounts reported in this column were voluntary deferrals of base salary. These amounts also are reported in the Summary Compensation Table. | | (2) Mr. Ghasemi, Ms. Schaeffer, Mr. Major and Dr. Serhan receive a Company contribution credit of their Annual Incentive Plan awards because they receive their primary retirement benefit under the Company’s defined contribution RSP rather than our defined benefit pension plans. Amounts reported in this column are also reported in the Summary Compensation Table. | | (3) A portion of the earnings reflected in this column are reported in the Summary Compensation Table as above-market interest, as described in footnote 5 to such table. | | (4) The following portion of these accumulated balances has been previously reported as compensation in the Summary Compensation Table of the Company’s proxy statements for prior years: |
Fiscal 2023 Nonqualified Deferred Compensation Table
| 2024 PROXY STATEMENT | 49 |
Fiscal 2023 Nonqualified Deferred Compensation Table
| Officer | Amount Previously Reported ($) | | Seifi Ghasemi | 1,542,191 | | Melissa N. Schaeffer | 25,026 | | Sean D. Major | 316,303 | | Samir J. Serhan | 302,466 |
Fiscal 2023 Nonqualified Deferred Compensation Table
The Company provides the tax-qualified RSP to all U.S.-based salaried and certain hourly employees of the Company. Currently, U.S. tax laws limit the amounts that may be contributed to tax-qualified savings plans and the amount of compensation that can be taken into account in computing benefits under the RSP. The Deferred Compensation Plan was amended and restated effective January 1, 2018 to “unlink” the RSP from the Deferred Compensation Plan. Prior to January 1, 2018, elective deferrals to the RSP in excess of the U.S. tax law limits would automatically be deferred into the Deferred Compensation Plan. Effective January 1, 2018, once a participant reaches the U.S. tax law limits in the RSP for elective deferrals such deferrals cease and are not contributed to the Deferred Compensation Plan; rather, Deferred Compensation Plan participants may make a separate deferral election prior to the relevant calendar year to defer amounts of base salary into the Deferred Compensation Plan. The Deferred Compensation Plan is intended to permit participants to defer an amount of base salary and to make up, out of general assets of the Company, an amount substantially equal to certain benefits an employee did not receive under the RSP due to these limits. U.S. employees who participate in the Annual Incentive Plan, including all executive officers, are eligible to participate in the Deferred Compensation Plan. Participants can elect to defer up to 50% of base salary on a before-tax basis and up to 75% of Annual Incentive Plan awards. The Deferred Compensation Plan provides for a Company matching credit for participants in the RSP, including all executive officers, whose Company matching contribution in the RSP is limited by the U.S. tax law limitations. The Deferred Compensation Plan provides for a Company core credit on base salary when such core contribution in the RSP is limited by U.S. tax law limitations and on Annual Incentive Plan awards for employees, including our executive officers, who receive their primary retirement benefit under the RSP. Participants may elect to have their Deferred Compensation Plan balances earn interest at a corporate bond rate or be deemed to be invested in Company stock and earn dividend equivalents and market appreciation on the stock. If a participant chooses the Company stock alternative, his or her account balance will be distributed in shares of Company stock except for dividend equivalents that are distributed in cash. Participants can elect to receive payments of their Deferred Compensation Plan balances in service or in lump sum or in one to 10 equal annual installments following termination from service. The executive officers and certain other executives cannot commence distribution until six months following termination to comply with tax laws.
Fiscal 2023 Nonqualified Deferred Compensation Table
| 50 | |
Fiscal 2023 Nonqualified Deferred Compensation Table
Potential Payments Upon Termination Potential payments to executive officers upon termination vary depending on the exact nature of the termination and, generally, whether the executive officer is retirement eligible at the time of the termination. Retirement eligibility for U.S. employees, including the executive officers except Mr. Ghasemi, generally occurs upon the attainment of age 55 after completing at least five years of service with the Company. Mr. Ghasemi’s Employment Agreement provides that he is eligible for retirement treatment under all equity, equity derivative and incentive awards after three years of employment with the Company. Accordingly, he became eligible for retirement on July 1, 2017. The following discussion explains potential payments to the executive officers under various termination scenarios.
2023 Pay Versus Performance Table and Supporting Narrative
2023 Pay Versus Performance Table and Supporting Narrative As required by pay versus performance rules adopted by the SEC on August 25, 2022 and in effect for the first time for this proxy statement, the below Pay Versus Performance table (“PVP Table”) provides information about compensation for the NEOs identified in this proxy statement, as well as those identified in the proxy statements for our 2023 and 2022 annual meetings (each of the years covered being referred to herein as a “Covered Year”). The PVP Table also provides information about the results for certain financial performance measures during those same Covered Years.
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO($)(1) | Compensation Actually Paid to PEO ($)(1) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(2) | Average Compensation Actually Paid to Non-PEO NEOs ($)(2) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($mm) | Adjusted EPS(4) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(3) | | | | 2023 | $22,078,099 | $27,912,002 | $4,995,664 | $5,633,777 | $102 | $131 | $2,339 | $11.51 | | 2022 | $18,483,105 | $15,443,505 | $4,591,162 | $4,098,471 | $82 | $111 | $2,267 | $10.41 | | 2021 | $13,819,010 | ($8,914,361) | $3,262,282 | ($577,492) | $88 | $126 | $2,115 | $9.02 |
Pay Versus Performance Table
| (1) Reflects compensation for our Chief Executive Officer, Seifi Ghasemi, who served as our Principal Executive Officer (“PEO”) in 2023, 2022 and 2021. | | (2) Reflects compensation for Sean Major, Melissa Schaeffer and Samir Serhan in 2023 and 2022 and Scott Crocco, Sean Major, Melissa Schaeffer and Samir Serhan in 2021, as shown in the Summary Compensation Table for each respective year. |
Pay Versus Performance Table
| (3) The peer group used for TSR comparisons reflects the S&P 500 Materials Sector Index (the “S&P 500 Materials Sector”), which is the same industry index shown in the performance graph comparing cumulative shareholder returns in the Company’s Annual Report on Form 10-K for each of the years reflected in the PVP Table. |
Pay Versus Performance Table
| (4) Adjusted diluted earnings per share (“Adjusted EPS”) is our company-selected measure. Adjusted EPS is a non-GAAP financial measure. Refer to Appendix A for a reconciliation of Adjusted EPS to the most directly comparable GAAP financial measure, diluted earnings per share from continuing operations for 2023. Adjusted EPS was calculated in the same manner in fiscal 2022 and fiscal 2021, except our calculation of Adjusted EPS in fiscal 2023 began excluding the impact of non-service related components of net periodic benefit/ cost for our defined benefit pension plans. Appendix A includes a discussion of this adjustment. For a reconciliation of Adjusted EPS for fiscal 2022 and fiscal 2021 as reported in this table and utilized for compensation decisions made with respect to fiscal 2022 and fiscal 2021 performance, refer to page 36 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. |
Pay Versus Performance Table
To calculate “compensation actually paid” for our CEO and other NEOs the following adjustments were made to Summary Compensation Table total pay.
Pay Versus Performance Table
| | PEO | | | Other NEO Average | | | | Adjustments | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | | Summary Compensation Table Total | $22,078,099 | $18,483,105 | $13,819,010 | $4,995,664 | $4,591,162 | $3,262,282 | | Deduction for amount reported in “Stock Awards” column of the Summary Compensation Table | ($17,074,629) | ($13,752,750) | ($10,232,039) | ($2,909,812) | ($2,125,128) | ($1,262,676) | | Addition of fair value at fiscal year (“FY”) end, of equity awards granted during the FY that remained outstanding and unvested at FY end | $15,061,584 | $10,961,450 | $6,826,317 | $2,566,755 | $1,693,804 | $578,696 | | Addition of fair value at vesting date, of equity awards granted during the FY that vested during the FY | $0 | $0 | $0 | $0 | $0 | $0 |
Pay Versus Performance Table
| 56 | |
Pay Versus Performance Table
| | PEO | | | Other NEO Average | | | | Adjustments | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | | Addition of change in fair value at FY end versus prior FY end for awards granted in prior FY that remained outstanding and unvested at FY end | $3,881,849 | ($5,603,918) | ($19,345,044) | $591,572 | ($603,676) | ($2,186,256) | | Addition of change in fair value at vesting date versus prior FY end for awards granted in prior FY that vested during the FY | $3,359,114 | $4,007,179 | ($1,279,450) | $332,320 | $404,294 | ($153,997) | | Deduction of the fair value at the prior FY end for awards granted in prior FY that failed to meet their vesting conditions during FY | $0 | $0 | $0 | $0 | $0 | ($176,289) | | Addition in respect of any dividends or other earnings paid during applicable FY prior to vesting date of underlying award | $617,660 | $1,363,486 | $1,310,756 | $58,962 | $139,969 | $139,833 | | Deduction for values reported in the “Changes in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table | ($11,675) | ($15,047) | ($13,911) | ($1,683) | ($1,955) | ($851,958) | | Addition for the Service Cost for pension plans attributable to services rendered during the FY | $0 | $0 | $0 | $0 | $0 | $72,874 | | Compensation Actually Paid | $27,912,002 | $15,443,505 | ($8,914,361) | $5,633,777 | $4,098,471 | ($577,492) |
Pay Versus Performance Table
The fair value of performance shares subject to market-based performance measures have been calculated at each valuation date using a Monte Carlo simulation model. The assumptions used to calculate the grant date fair values were updated at each valuation date to reflect the then-current value of each variable.
Pay Versus Performance Table
| 2024 PROXY STATEMENT | 57 |