UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒ | ||
Filed by a Party other than the Registrant ☐ | ||
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| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under §240.14a-12 | |
| ROGERS CORPORATION | ||
| (Name of Registrant as Specified In Its Charter) | ||
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||
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The Annual Meeting of Shareholders of Rogers Corporation, a Massachusetts corporation, will be held on Thursday, May 4, 2017,7, 2020, at 10:8:30 a.m., local time, at the Hyatt Regency Boston Harbor, 101 Harborside Drive, Boston, Massachusetts 02128Rogers’ Global Headquarters, located at 2225 W. Chandler Blvd., Chandler, Arizona 85224 for the following purposes:
| 1. | To elect seven members of the Board of Directors for the ensuing year: Keith L. Barnes, |
| 2. | To vote on a non-binding advisory resolution to approve the 2019 compensation of the |
| 3. |
To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Rogers Corporation for the fiscal year ending December 31, |
| To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
Shareholders entitled to receive notice of and to vote at the meeting are determined as of the close of business on Tuesday,Thursday, March 7, 2017,5, 2020, the record date fixed by the Board of Directors for such purpose.
We intend to hold our Annual Meeting of Shareholders in person. However, we are actively monitoring coronavirus (COVID-19) developments, and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments are imposing and may continue to impose. For that reason, we reserve the right to change the date, time, and means of holding the annual meeting. If we take this step, we will announce the decision to do so in advance, and details will be issued by press release, posted on our proxy website and filed with the SEC as additional soliciting materials.
Your vote is important and Rogers Corporation strongly encourages you to vote. Regardless of whether you plan to attend the meeting, you can be sure your shares are represented at the meeting if you are a shareholder of record by promptly voting electronically over the Internet or by telephone or by marking, dating, signing, and returning your completed proxy card in the pre-addressed, postage-paid return envelope (which will be provided to those shareholders who request to receive paper copies of these materials by mail), or, if your shares are held in a street name, by returning your completed voting instruction card to your broker. If, for any reason, you desire to revoke or change your proxy, you may do so at any time before it is exercised. The proxy is solicited by the Board of Directors of Rogers Corporation.
We cordially invite you to attend the meeting.
By Order of the Board of Directors
Jay B. Knoll, Senior Vice President, Corporate Development, General Counsel & Corporate Secretary
March 22, 201727, 2020
Proxy Statement Table of Contents
ii
Proxy Statement
We are providing you with this proxy statement and proxy card (by mail, email, or over the Internet) in connection with the solicitation of proxies by the Board of Directors of Rogers Corporation (“Rogers,” “Company,” “Registrant,” “we” or, when used in the possessive form, “our”) for the Annual Meeting of Shareholders to be held on Thursday, May 4, 2017,7, 2020, at 10:8:30 ama.m. local time, at 2225 W. Chandler Blvd., Chandler, Arizona 85224.
We intend to hold our Annual Meeting of Shareholders in person. However, we are actively monitoring coronavirus (COVID-19) developments, and we are sensitive to the Hyatt Regency Boston Harbor, 101 Harborside Drive, Boston, Massachusetts 02128.public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments are imposing and may continue to impose. For that reason, we reserve the right to change the date, time, and means of holding the annual meeting. If we take this step, we will announce the decision to do so in advance, and details will be issued by press release, posted on our proxy website and filed with the SEC as additional soliciting materials.
What is the “Notice Regarding the Availability of Proxy Materials” (the “Notice”) and why did I receive it but no proxy materials by mail or email?
Unless you have requested that we provide a copy of our proxy materials (including our 20162019 annual report) to you by mail or email, we are providing only the Notice to you by mail or email. The Notice will instruct you as to how you may access and review the proxy materials on the Internet. The Notice will also instruct you as to how you may access your proxy card to vote over the Internet. If you received the Notice by mail or email and would like to receive a paper copy of our proxy materials, free of charge, please follow the instructions included in the Notice. This proxy statement is dated March 22, 201727, 2020 and distribution of the Notice to shareholders is scheduled to begin on or about March 22, 2017.27, 2020. We have adopted this procedure pursuant to rules adopted by the Securities and Exchange Commission (“SEC”) in order to conserve natural resources and reduce our costs of printing and distributing the proxy materials, while providing a convenient method for shareholders to access the materials and vote.
What is the purpose of the Annual Meeting of Shareholders?
| 1. | To elect seven members of the Board of Directors for the ensuing year: Keith L. Barnes, Bruce D. Hoechner, Carol R. Jensen, Ganesh Moorthy, Jeffrey J. Owens, Helene Simonet, and Peter C. Wallace. (See pages 4-5 for additional information.) |
| 2. | To vote on a non-binding advisory resolution to approve the 2019 compensation of the named executive officers (“NEOs”) of Rogers Corporation. (See page 33 for additional information.) |
| 3. | To ratify the appointment of PricewaterhouseCoopers LLP(“PwC”)as the independent registered public accounting firm of Rogers Corporation for the fiscal year ending December 31, 2020. (See pages 34-35 for additional information.) |
| 4. | To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. As of the date of this proxy statement, the Company is not aware of any other business to come before the meeting. |
Who can vote at the Annual Meeting of Shareholders?
If you are a shareholder of record as of the close of business on March 7, 20175, 2020 (the “record date”), you are entitled to vote at the meeting and any adjournment or postponement thereof. As of that date, 18,087,38418,661,815 shares of Rogers’ capital stock (also referred to as common stock), $1 par value per share, were outstanding.
You are entitled to one vote for each share owned as of the close of business on the record date.
How do I get admitted to the Annual Meeting of Shareholders?
Attendance at the meeting will be limited to the following:
Shareholders that hold shares of our capital stock in their own name (as “shareholders of record”) as of the record date;
Shareholders that beneficially own shares of our capital stock through a bank, brokerage firm, dealer or other similar organization as nominee (in “street name”) as of the record date;
Director nominees and members of Company management who will facilitate the meeting.
You will need an admission ticket or proof of ownership to enter the meeting. An admission ticket is attached to your proxy card if you are a shareholder of record. If your shares are held in street name, you must present proof of your ownership of our capital stock, such as a bank or brokerage account statement, to be admitted to the meeting. Please note that if you hold your shares in street name and plan to vote in person at the meeting, you will also need to bring a legal proxy from your nominee and present it to the inspector of elections with your ballot.
All shareholders also must present a form of photo identification, such as a driver’s license, in order to be admitted to the meeting.
How do I vote shares held under my name?
If you are a shareholder of record, you may instruct the Company on how to vote your shares by:
using the Internet voting site listed on the proxy card or Notice;
using the toll-free telephone number listed on the proxy card; or
marking, signing, dating and returning the proxy card by mail.
You may also attend the meeting and vote your shares in person at the meeting.
How do I vote shares not held under my name?
If your shares are held in street name by a nominee, the Notice or proxy materials, as applicable, are being forwarded to you by that organization, and you should follow the instructions for voting as set forth on that organization’s voting instruction card. Shares held in employees’ or former employees’ 401(k) plans (the “Rogers Employee Savings and Investment Plan”) may be voted in a similar manner.
Under the rules and practices of the New York Stock Exchange (“NYSE”), if you hold shares through a nominee, your nominee is permitted to vote your shares on certain “routine” matters in its discretion even if the nominee does not receive instructions from you. The proposal to ratify the appointment of PwC is considered a “routine” matter, and your nominee will have discretionary authority to vote your shares if you do not provide instructions as to how your shares should be voted on this proposal. The proposals to elect directors and to approve, on an advisory basis, both the compensation of our NEOs and the frequency of the shareholder vote on the same are “non-routine” matters. The absence of voting instructions from you to your nominee on these “non-routine” matters will result in a “broker non-vote” because the nominee does not have discretionary voting power for those proposals. “Broker non-votes” and “withhold” votes do not constitute votes properly cast favoring or opposing proposals on “non-routine”“non-routine" matters.
How do I vote shares that I hold through the Company’s Global Stock Purchase Plan (“GSPP”)?
Shares owned by employees or former employees as a result of participation in the GSPP may, to the extent such shares are held in the name of the employee or former employee, be voted as set forth in “How do I vote shares held under my name?”. Shares purchased under the GSPP but held in street name by a nominee must be voted in accordance with the instructions for voting in “How do I vote shares not held under my name?”.
How many holders of the Company’s outstanding shares must be present to hold the Annual Meeting of Shareholders?
In order to conduct business at the meeting, it is necessary to have a quorum. The presence, in person or by proxy, of the holders of a majority of the shares of capital stock entitled to vote on a matter at the meeting constitutes a quorum with respect to that matter. “Broker non-votes” and abstentions will be considered present for the purpose of establishing a quorum.
How many votes are required to elect directors? How many votes are required for the other proposals to pass?
| 1. | Election of directors: To be elected, each director requires the affirmative vote of the holders of a plurality of the votes cast. This means that the nominees who receive the highest number of affirmative votes cast will be elected irrespective of how small the number of affirmative votes is in comparison to the total number of shares voted. Our Board has adopted a majority vote policy. Under this policy, any director nominee in an uncontested election who receives a greater number of votes “withheld” for his or her election than votes “for” such election must submit his or her resignation for consideration by our Nominating and Governance Committee and our Board. (See additional discussion on pages 5-6.) Abstentions and “broker non-votes” do not constitute votes properly cast favoring or opposing director elections and, accordingly, will not have any effect on the outcome of this vote. |
| 2. | Advisory vote on NEO compensation: To pass, the proposal to approve, on an advisory basis, the 2019 compensation of our NEOs must be approved by the affirmative vote of the majority of votes properly cast (i.e., the number of shares voted “FOR” the proposal must exceed the number of shares voted “AGAINST” the proposal). |
| 3. | Ratification of PwC appointment: To pass, the proposal to ratify the appointment of PwC must be approved by the affirmative vote of the majority of votes properly cast. Abstentions will not have any effect on the outcome of this proposal, but your nominee will have discretionary authority to vote your shares if you do not provide instructions as to how your shares should be voted on this vote. |
You are strongly encouraged to vote your shares.
How will my shares be voted if I complete and return my proxy card?
Whichever method you use to transmit your instructions, your shares of Rogers’ capital stock will be voted as you direct. If you sign and return the enclosed proxy card or otherwise designate the proxies named on the proxy card to vote on your behalf, but do not specify how to vote your shares, your shares will be voted:
FOR the election of the nominees for director;
FOR the advisory vote to approve the 20162019 compensation of our NEOs;
FOR the ratification of the appointment of PwC as the Company’s independent accounting firm for 2017;2020; and
In accordance with the judgment of the persons voting the proxy on any other matter properly brought before the meeting, if any such matters are properly raised at the meeting.
If I execute a proxy, may I still attend the Annual Meeting of Shareholders to vote in person or choose to change or revoke my vote?
Execution of a proxy will not in any way affect your right to attend the meeting and vote in person.
Any shareholder submitting a proxy has the right to revoke it any time before it is exercised by filing a written revocation with the Corporate Secretary of Rogers, by executing a proxy with a later date, by voting again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the meeting will be counted) or by attending and voting at the meeting.
Who counts the votes?
Votes at the annual meeting will tabulatebe tabulated by the vote and act as inspectors of election appointed by the election.
Company.
Proposal 1: Election of Directors
The directors of Rogers are elected annually by shareholders and hold office until the next Annual Meeting of Shareholders and thereafter until their successors are chosen and qualified. The Board of Directors has been advised that each nominee will serve if elected. If any of these nominees should become unavailable for election, proxies will be voted for the election of such other person, or for fixing the number of directors at a lesser number, as the Board of Directors may recommend. All of the nominees are currently directors of Rogers and all were elected to their present term at the 20162019 Annual Meeting of Shareholders.
Nominees for Director, Director Qualifications and Experience
The biographical information below identifies the primary experience, qualifications, attributes and skills of the seven nominees for director at our 20172020 Annual Meeting of Shareholders.
| Name, age as of March | Principal Occupation, Business Experience, Directorships and Qualifications | |
Keith L. Barnes Age Director since 2015 Compensation & Organization Committee - Chairperson Nominating | Mr. Barnes is the retired Chairman and | |
Bruce D. Hoechner Age Director since 2011 President and Chief Executive Officer | Mr. Hoechner, who became the Company’s President and Chief Executive Officer and a director in 2011, has many years of broad leadership experience across numerous geographies, businesses and functions in the specialty chemicals industry with particularly strong international business expertise. For over ten years of his career he lived and worked in Singapore, Thailand and | |
Carol R. Jensen Age Director since 2006 Audit Committee Nominating | Ms. Jensen is currently President and Principal Partner of Lightning Ranch Group, a privately held group of companies in ranching, real estate, technology consulting, energy and aviation. She previously served as a director of the Microelectronic Computer Corporation and the American Chamber of Commerce - Denmark. She previously held positions at The Dow Chemical Company (as Vice President of Research & Development of Performance Chemicals 2001-2004); 3M Corporation (as Executive Director of Research & Development 2000-2001, Managing Director of 3M Denmark 1998-2000, and Technical Director of 3M’s Electronic Products business 1990-1998) and IBM Corporation (various research, development, marketing and strategic corporate positions 1979-1990). She was also an adjunct professor of Chemistry at the University of Texas, Austin (1991-1994). In these positions she gained experience in the electronics and Internet industries, the chemical and materials industry, and in research, marketing, development, manufacturing, sales, international business, governance and executive management. This technical background and experience make Ms. Jensen a valuable member of the Company’s Board of Directors and a great resource to its management. | |
Ganesh Moorthy Age Director since 2013 Audit Committee | In February 2016, Mr. Moorthy was named President of Microchip Technology Incorporated, adding that position to the post of Chief Operating Officer, a title he has held since 2009. Microchip is a leading provider of microcontroller, mixed-signal, analog, memory and Flash-IP solutions. He served as Executive Vice President of Microchip from 2006 to 2009. From 2001 to 2006, Mr. Moorthy served as Vice President of several Microchip divisions. From 2010 to 2014, he served as a member of the Board of Directors of Hua-Hong Grace Semiconductor in Shanghai, China. He is also a member of the University of Washington’s Electrical Engineering Board of Advisors. Mr. Moorthy’s extensive background in a number of Rogers’ key industries and his global expertise in business and technology leadership make him well qualified to provide valuable insight to the Board of Directors and management of Rogers. |
Jeffrey J. Owens Age 65 Director since 2017 Audit Committee Compensation & Organization Committee | Mr. Owens most recently served as Executive Vice President and Chief Technology Officer of Delphi Automotive PLC, until his retirement in March 2017. During his over 40-year career at Delphi, Mr. Owens served in a variety of technology, engineering and operating leadership roles, including serving as President of Delphi’s Electronics and Safety Division and during his tenure had international responsibilities. Mr. Owens is also a director of Cypress Semiconductor Corporation. Mr. Owens recently served as Chairman of the Kettering University Board of Trustees and is currently a trustee. Mr. Owens’ global experience and leadership roles in innovation and technology, particularly in the areas of Advanced Mobility and Advanced Connectivity, make him an excellent addition to the Board. |
Helene Simonet Age Director since 2014 Audit Committee - Chairperson Compensation | Ms. Simonet served as Executive Vice President and Chief Financial Officer of Coherent, Inc. from 2002 until her retirement in February 2016. |
Peter C. Wallace Age Director since 2010 Compensation | Mr. Wallace served as Chief Executive Officer and a director of Gardner Denver Inc., an industrial manufacturer of compressors, blowers, pumps and other fluid control products used in numerous global end markets until his retirement in January 2016. He served as President and Chief Executive Officer and a director of Robbins & Myers, Inc. from 2004 until 2013, when the company was acquired by National Oilwell Varco, Inc. Prior to joining Robbins & Myers, he was President and Chief Executive Officer of IMI Norgren Group from 2001 to 2004. Mr. Wallace is a director of Curtiss-Wright Corporation and a director and chairman of the board of Applied Industrial Technologies, Inc. |
None of the nominees for director are subject to any arrangement pursuant to which directors will be elected, nor are there any family relationships between any directors and any of the Company’s executive officers. To the best of our knowledge, there are no pending material legal proceedings in which any of our directors or nominees for director, or any of their associates, is a party adverse to us or any of our affiliates, or hasin which the persons have a material interest adverse to us or any of our affiliates. Additionally, to the best of our knowledge, there have been no events under any bankruptcy act, no criminal proceedings and no judgments, sanctions, or injunctions during the last 10 years that are material to the evaluation of the ability or integrity of any of our directors or nominees for director during the last 10 years.director.
Vote Required
Election of directors: To be elected, byeach director requires the affirmative vote of the holders of a plurality of the votes properly cast. This means thosethat the nominees receivingwho receive the seven highest numbersnumber of affirmative votes at the Annual Meeting of Shareholderscast will be elected even if suchirrespective of how small the number of affirmative votes do not constituteis in comparison to the total number of shares voted. Our Board, however, has adopted a majority vote policy. Under this policy, any director nominee in an uncontested election who receives a greater number of the votes properly cast.“withheld”
for his or her election than votes “for” such election must submit his or her resignation for consideration by our Nominating and Governance Committee and our Board. (See additional discussion on page 3.) Abstentions and “broker non-votes” do not constitute votes properly cast favoring or opposing director elections and, accordingly, will not have any effect on the outcome of this vote.
The Board recommends a vote “FOR” the election of each of the director nominees listed above.
Stock Ownership of Management and Directors
This table provides information about the beneficial ownership of Rogers’ capital stock as of March 7, 2017,5, 2020, by each of the current members of the Board of Directors, the NEOs listed in the “Summary“Fiscal Year 2019 Summary Compensation Table” on page 32,24, and by all current directors and executive officers as a group. Unless otherwise noted, the persons listed below have sole voting and investment power with respect to the shares reported.
| Beneficial Ownership | Beneficial Ownership | |||
| Name of Person or Group | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2) |
| Keith L. Barnes | 2,300 | * | 2,750 | * |
| Michael F. Barry | 13,900 | * | 16,500 | * |
| Robert C. Daigle | 46,680 | * | 15,914 | * |
| Bruce D. Hoechner (3) | 101,169 | * | 114,525 | * |
| Carol R. Jensen (4) | 12,188 | * | 11,288 | * |
| Jay B. Knoll | 5,535 | * | 8,128 | * |
| William E. Mitchell | 4,715 | * | ||
| Michael M. Ludwig | 1,241 | * | ||
| Ganesh Moorthy (4) | 6,400 | * | 7,500 | * |
| Jeffrey J. Owens | 2,050 | * | ||
| Helene Simonet | 4,100 | * | 6,700 | * |
| Janice E. Stipp | 6,414 | * | ||
| Peter C. Wallace | 13,900 | * | 15,032 | * |
| Helen Zhang | 6,775 | * | ||
| All Directors and Executive Officers as a Group (15 Persons) (1) | 269,828 | 1.5 | ||
| Peter B. Williams | 0 | * | ||
Helen Zhang(5) | 0 | * | ||
All Current Directors and Executive Officers as a Group (16 Persons)(1) | 204,904 | 1.09 | ||
* None of our executive officers or directors, individually, owned more than 1.0% of our outstanding capital stock as of March 7, 2017.5, 2020.
| (1) | Represents the total number of currently owned shares and shares acquirable within 60 days of March |
| (2) | Represents the percent ownership of total outstanding shares of capital stock, based on 5, 2020. |
| (3) | Mr. |
| (4) | Ms. Jensen and Mr. Moorthy |
| (5) | Ms. Zhang’s employment as Senior Vice President PES and President Rogers Asia terminated effective August 31, 2019, after which she has served as President Rogers Asia and Senior Strategic Advisor to the Chief Executive Officer. Ms. Zhang is expected to retire from the Company on March 31, 2020. |
Beneficial Ownership of More than Five Percent of Rogers’ Stock
Except as otherwise noted below, this table provides information regarding beneficial ownership of each person known to Rogers to own more than 5% of its outstanding capital stock as of December 31, 20162019 based upon filings by each such person with the SEC on Schedule 13G (including amendments) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless otherwise noted, the beneficial owners have sole voting and dispositive power with respect to the shares listed below.
| Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class (1) |
BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 | 2,042,924 | 11.3 |
Neuberger Group (3) 1290 Avenue of the Americas New York, NY 10104 | 1,517,643 | 8.4 |
The Vanguard Group (4) 100 Vanguard Blvd. Malvern, PA 19355 | 1,510,378 | 8.4 |
| Dimensional Fund Advisors, LP (5) 6300 Bee Cave Road, Building One Austin, TX 78746 | 1,010,156 | 5.6 |
Wellington Group (6) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | 1,000,403 | 5.5 |
| Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class(1) |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 2,758,002 | 14.8% |
The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355 | 1,993,578 | 10.7% |
Neuberger Berman Group LLC(4) 1290 Avenue of the Americas New York, NY 10104 | 1,722,505 | 9.2% |
Janus Henderson Group plc(5) 201 Bishopsgate London EC2M 3AE United Kingdom | 1,190,374 | 6.4% |
| (1) | Based on 5, 2020. |
| (2) | Blackrock, Inc., a parent holding company, reported it has sole voting power with respect to |
| (3) |
| (4) | Neuberger Berman Group LLC, |
| (5) | Janus Henderson Group plc, a parent holding company, reported that it has shared voting power and shared dispositive power with respect to all of the shares listed above. |
Corporate Governance Practices
The Board of Directors has adopted Corporate Governance Guidelines, provisions of our bylaws and other formal policies that establish a framework for our corporate governance practices. In addition to practices described below under “Board of Directors,” our corporate governance practices include the following:
Annual election of all directors.
A retirement policy for directors, which is set forth in Rogers’ Corporate Governance Guidelines, under which directors may not be nominated for election after age 72 unless the Board deems it advisable to do so.
An independent “Lead Director” position.
Regular meetings of non-management directors in executive session, at which the “Lead Director” generally presides.
Active participation by the Board of Directors has determined are “audit committee financial experts” as defined under SEC regulations.
Directors have complete access to all levels of management and are provided with opportunities to meet with members of management on a regular basis.
Board of Directors
Director Independence
Under NYSE listing standards, the Board of Directors is required to determine annually which of its directors are independent based on the absence of any direct or indirect material relationship between the Company and the director. To evaluate the materiality of any such relationship, the Board has adopted categorical independence standards consistent with the NYSE listing standards. In addition, the Board has adopted the following categorical standards, contained in the Rogers Corporation Corporate Governance Guidelines, which identify certain relationships deemed by the Board to be immaterial provided that they satisfy the criteria below:
If a Rogers’Rogers director (other than a member of the Audit Committee) receives direct or indirect annual compensation or other benefits (other than board and committee fees) from Rogers, the amount of such compensation must not exceed $30,000. (ThisThis immateriality standard is not applicable to Audit Committee members, with respect to whomwho may not accept any compensationconsulting, advisory or benefits receivedother compensatory fee from Rogers other than board and committee fees must be evaluated by the Board for materiality.);Rogers;
If a Rogers’Rogers director is an executive officer of another company that does business with Rogers, thethat company’s annual sales to, or purchases from, Rogers must be less than 1% of the revenues of the company for which he or she serves as an executive officer;that company;
If a Rogers’Rogers director is an executive officer of another company which is indebted to Rogers, or to which Rogers is indebted, the total amount of either company’s indebtedness to the other must be less than 1% of the total consolidated assets of the company for which he or she serves as an executive officer; and
If a Rogers’Rogers director serves as an officer, director or trustee of a charitable organization, Rogers’ discretionary charitable contributions to the organization must be less than 1% of that organization’s total annual charitable receipts. (Rogers’
matching of employee charitable contributions will not be included in the calculation of the amount of Rogers’ contributions for this purpose.)
The Board of Directors has determined that all of the current directors, other than Mr. Hoechner, due to his position as President and Chief Executive Officer, satisfy these standards and do not have any direct or indirect material relationship with Rogers. Until his retirement from the Board at the 2016 Annual Meeting of Shareholders, Robert G. Paul was also independent.
Board Leadership Structure
The Company’s bylaws provide that, unless otherwise provided by the directors, the CEO will preside, when present, at all meetings of shareholders and (unlessof the Board, unless, for meetings of the Board, a chairman of the Board of Directors has been appointed and is present) of the directors. If a chairman of the Board of Directors is appointed,present, in which case he or she will preside at all meetings of the Board of Directors at which he or shepreside. There is present. Currently, there iscurrently no chairman of the Board, as for approximately twenty yearswhich is consistent with the Board has selectedBoard’s practice of appointing an independent Lead Director and selecting only directors who are also recently retired, or soon to be retired, Presidents and CEOs of the Company to serve in this capacity.as chairman. Accordingly, our President and CEO, Bruce Hoechner, presides over meetings of our Board of Directors and shareholders.
Additionally, we currently have an independent Lead Director, Peter C. Wallace, whose responsibilities include calling meetings of independent directors, presiding at executive sessions of the non-management directors, and, if not all non-management directors are independent
directors, at meetings of the independent directors, providing periodic feedback to the CEO, reviewing board agendas and being a person whom shareholders can contact should they wish to communicate with the Board. Other independent directors also provide input for board agendas. Our non-management directors hold executive sessions without management present as frequently as they deem appropriate, and generally such an executive session is held at each in-person, regularly scheduled board meeting. The Board currently has three standing committees: (1) Audit, (2) Compensation and Organization, and (3) Nominating and Governance. Each of these committees is comprised solely of independent directors, with each of the three committees having a separate chairperson who participates in the development of committee agendas.
We believe that this leadership structure and compact board size has worked well for the Company. This structure creates an environment in which there are candid disclosures by management about the Company’s performance and a culture in which directors can regularly engage management and each other in active and meaningful discussions about various corporate matters. The Board periodically reviews its leadership structure and developments in the area of corporate governance to ensure that this approach continues to strike the appropriate balance for the Company and our shareholders.
Board Diversity
The Board’s Role in Risk Oversight
The Board has an active role as a whole, and also at the committee level, in overseeing management of the Company’s risks. The entire Board receives regular reports from management concerning areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic risks. Although the Board as a whole is responsible for overseeing the Company’s risk management, each Board committee is responsible for evaluating the risks associated with its area of responsibility and discussing its findings and making recommendations to the Board.Board related to the management of those risks.
The Board considers the most significant risks facing the Company and the Company’s general risk management strategy and evaluates risks to be taken by the Company based on the Company’s strategy and the current business environment. While the Board oversees the Company’s risk management, the Company’s senior management is responsible for the day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our Company and that our board leadership structure supports this approach.
The Board’s Role in Environmental, Social and Governance (ESG) Oversight
Rogers is dedicated to protecting and preserving the environment, protecting our colleagues and communities, and conducting ourselves ethically in all aspects of our business. Additionally, we believe the Company’s products have a direct positive impact
on the environment with applications that serve growing markets such as electric and hybrid electric vehicles and renewable energy. The Company’s applications for variable frequency drives also enable greater energy efficiency across many industries.
Rogers continues to evaluate its sustainability processes and performance as part of an on-going, continuous improvement exercise and expects in 2020 to implement enhancements to Board governance to clarify sustainability oversight, including relating to sustainability goal setting coordinated with the Company’s business strategy and sustainability reporting using SASB and/or other applicable, generally-accepted reporting frameworks. Over the course of 2020, we expect to enhance investor visibility related to the Company’s oversight of ESG issues on our corporate website.
Meetings of the Board and Committees
Board of Directors
The Board of Directors held sevenfive meetings during 2016. All directors attended at least 75% in the aggregate of the meetings held in 2016 of the Board and the committees on which each such director served during his or her tenure as a Board or committee member.2019. Our Corporate Governance Guidelines provide that all directors are expected to attend the Annual Meeting of Shareholders absent an unavoidable conflict. All of the members of the Board of Directors attended the 20162019 Annual Meeting of Shareholders.
Meetings of Non-Management Directors
The Board holds regularly scheduled sessions for the non-management directors of the Company (all of whom the Board has determined to be independent) without management present. These meetings are presided over by the Lead Director, or, in the absence of the Lead Director, another independent director. The non-management directors may meet without management present at other times as determined by the Lead Director. On May 6, 2016,9, 2019, Mr. MitchellWallace was appointed Lead Director for a one yearone-year term, and our directors are evaluating who will replace Mr. Mitchell upon his retirement when his term expiresexpiring on May 4, 2017.the date of the 2020 Annual Meeting of Shareholders. Anyone wishing to contact our non-management directors may contact the Lead Director or the non-management directors as a group in writing at Rogers Corporation, 2225 West Chandler Boulevard, Chandler, AZ 85224, Attention: Lead Director.
Committee Membership
The following table illustrates the current membership of each committee and the number of meetings held in 2016:2019:
| Name | Board | Audit | Compensation and Organization | Nominating and Governance | Audit | Compensation and Organization | Nominating and Governance |
| Keith L. Barnes | Ÿ | Ÿ | Chair | • | |||
| Michael F. Barry | Ÿ | Chair | • | ||||
| Bruce D. Hoechner | Ÿ | ||||||
| Carol R. Jensen | Ÿ | Ÿ | • | • | |||
| William E. Mitchell* | Ÿ | Ÿ | |||||
| Ganesh Moorthy | Ÿ | • | Chair | ||||
| Jeffrey J. Owens | • | ||||||
| Helene Simonet | Ÿ | Chair | Ÿ | Chair | • | ||
| Peter C. Wallace | Ÿ | Ÿ | Chair | • | |||
| Number of Meetings in 2016 | 7 | 8 | 7 | 4 | |||
| Number of Meetings in 2019 | 9 | 5 | |||||
All directors attended at least 95% in the Company’s retirement policy, Mr. Mitchell will retire fromaggregate of the meetings held in 2019 of the Board of Directors when his term expiresand committees on May 4, 2017.which they served.
Audit Committee
The Audit Committee has been established in accordance with the Exchange Act and related SEC regulations. The Audit Committee’s authority and responsibilities, which are set forth in a written charter adopted by the Board, include oversight of the Company’s financial reporting function, internal audit function and internal controls, and risk management, selection, evaluation and oversight of the Company’s independent auditor, and assessment and review of compliance, investigations and legal matters. The Board of
Directors has determined that each member of the Committee is “independent” in accordance with the NYSE’s listing standards and SEC regulations. In addition, the Board of Directors has also determined that Messrs.Mr. Barry and Mitchell and Ms. Simonet are “audit committee financial experts” in accordance with SEC regulations and that all of the Audit Committee members are financially literate in accordance with NYSE listing standards. From January 1, 2016 until his retirement on May 6, 2016, Mr. Paul served on the Audit Committee. During this time, he (i) met the independence criteria above, (ii) was financially literate in accordance with NYSE listing standards and (iii) was an “audit committee financial expert” in accordance with SEC regulations.
Compensation and Organization Committee
The Compensation and Organization Committee’s authority and responsibilities, which are set forth in a written charter adopted by the Board, include review and evaluation of the Company’s compensation philosophy, establishment of the compensation of our CEO and other executive officers, oversight with respect to the company’s equity incentive and stock-based plans and material employee benefit plans and review of succession plans for the CEO and other senior leadership positions.
During 2016,2019, the Compensation and Organization Committee was comprised of non-management directors who were each: (i) independent as defined under the NYSE listing standards and as determined by the Board of Directors, and (ii) “non-employee directors” for purposes of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and (iii) “outside directors” for purposes of Section 162(m) of the Internal Revenue Code. From January 1, 2016 until his retirement on May 6, 2016, Mr. Paul served on the Compensation and Organization Committee, and he also met the criteria listed in items (i), (ii) and (iii) above during this time.amended.
Nominating and Governance Committee
The Nominating and Governance Committee hasCommittee’s authority and responsibilities, which are set forth in a written charter adopted by the Board, that include developing and recommending to the Board criteria for board and committee membership, evaluating and presenting to the Board its determinations with respect to director independence and satisfaction of other requirements, overseeing Rogers’ corporate governance policies and practices, developing and recommending to the Board an annual Board and committee evaluation process, and overseeing director orientation and training programs.
The Board of Directors has determined that each member of this committee is “independent” in accordance with the NYSE’s listing standards.
The Nominating and Governance Committee leads the search for individuals qualified to become board members and identifies potential directors from several sources, including executive search firms retained by the committee, incumbent directors, management, and shareholders. See “Shareholder Proposals and Other Shareholder Business at the 20182021 Annual Meeting of Shareholders” for additional information regarding shareholder nominations of director candidates.
Directors’ Compensation
Directors who are employees of Rogers receive no additional compensation for their services as directors. Accordingly, Mr. Hoechner received no compensation for his service on the Board of Directors during 2016. In 2016,2019. The Compensation and Organization Committee periodically reviews the Company’s non-management director compensation for non-management directors consistedprogram, with the assistance of an annual retainerits compensation consultant(s) and meeting fees and equity awards as described inmakes recommendations to the table below.Board regarding the same.
The table below shows the total compensation earned by our non-management directors during 2016.2019. Each component of director compensation is summarized following the table.
| Name | Retainer and Fees Earned (1) | Fair Value of Deferred Stock Unit Awards (2) | Total | Retainer Earned(1) | Fair Value of Deferred Stock Unit Awards(2) | Total |
| Keith L. Barnes | $54,000 | $100,000 | $154,000 | $83,750 | $144,866 | $228,616 |
| Michael F. Barry | $73,003 | $100,000 | $173,003 | $82,945 | $144,866 | $227,811 |
| Carol R. Jensen | $59,500 | $100,000 | $159,500 | $76,250 | $144,866 | $221,116 |
| William E. Mitchell | $73,500 | $100,000 | $173,500 | |||
| Ganesh Moorthy | $60,500 | $100,000 | $160,500 | $80,850 | $144,866 | $225,716 |
| Robert G. Paul (3) | $27,073 | $0 | $27,073 | |||
| Jeffrey J. Owens | $77,088 | $144,866 | $221,954 | |||
| Helene Simonet | $67,898 | $100,000 | $167,898 | $90,000 | $144,866 | $234,866 |
| Peter C. Wallace | $66,000 | $100,000 | $166,000 | $84,355 | $144,866 | $229,221 |
| (1) |
| (2) | The fair value of Deferred Stock Unit Awards is the same as the compensation cost reported in Rogers’ financial statements. All Deferred Stock Units awarded to directors are fully vested as of the award date. On May |
Annual Retainer
Non-management directors earned an annual retainer of $40,000$65,000 in 2016. The Lead Director and any chairperson of a board committee earned an2019, together with additional annual retainer amount in 2016retainers as follows: (i) Lead Director - $15,000;$16,500; (ii) Audit CommitteeCommittee: Chairperson - $10,000;$20,000; Other Member - $7,500; (iii) Compensation and Organization CommitteeCommittee: Chairperson - $7,500;$15,000; Other Member - $5,000; (iv) Nominating and Governance CommitteeCommittee: Chairperson - $5,000.$10,000;
Other Member - $3,750. The annual retainer for non-management directors and committee chairpersons is pro-rated for directors who serve for only a portion of the year and is normally paid quarterly in June and December.advance.
Deferred Stock Unit Awards
Deferred Stock Unit Awards were granted to non-management directors as set forth in the table above. These awards were fully vested on the grant date. The stock subject to these awards is scheduled to be issued on the 13-month anniversary of the grant date unless the director elects to defer the receipt of these shares.
Perquisites and Reimbursable Expenses
Rogers does not provide its non-management directors with any perquisites. Rogers does reimbursereimburses its directors for expenses associated with attending any board or committee meetings and attending certain other meetings in their capacity as board or committee members. The Board of Directors established a Directors’ Education and Training Allowance Policy to provide reimbursement of up to $10,000 during any two-year period to each non-management directorsdirector for the reasonable costs to attend education and training programs, as well as membership fees in any appropriaterelevant professional organizations, in all such cases reflective of the director’s duties to the Board, the director’s background and experience, and developments relevant to corporate governance and to the Company’s operations.
Director Stock Ownership Guidelines
The Company’s Corporate Governance Guidelines provide that a non-management director’s ownership of Company stock should be equal to at least five times the director’s base annual retainer by the fifth anniversary of the first annual meeting of shareholders after such person becomes a non-management director. As of March 7, 2017, all of our directors except Mr. Barnes, who joined the Board of Directors in late 2015,5, 2020, Messrs. Barry, Moorthy, and Wallace, Ms. Jensen, and Ms. Simonet held shares exceeding these ownership guidelines. Messrs. Barnes and Owens are making progress toward meeting our stock ownership guidelines.
Management directors are subject to the stock ownership guidelines applicable to executive officers, which are discussed in “2016“2019 Compensation - ShareStock Ownership and Retention Guidelines; Prohibition on Hedging”Guidelines” on page 30.22.
2020 Director Compensation Market Adjustments
In late 2019, the Compensation and Organization Committee recommended that the Board approve certain changes to Rogers’ director compensation program following a review of director compensation at the peer group companies. To align the Company’s director compensation program more closely with the compensation packages for directors in the peer group (which were last updated effective at the 2018 Annual Meeting of Shareholders), both of whom are in their first five years of service, the Board, effective from the term beginning at the Annual Meeting, approved an increase in the fair value of the Deferred Stock Unit Award granted to each non-management director from $140,000 for all directors to $160,000 for the Lead Director and $150,000 for all other non-management directors; confirmed the annual cash retainer for non-management directors at $65,000, and addressed the other cash retainers as follows: (i) Lead Director -$20,000 (from $16,500); (ii) Audit Committee: Chairperson - $20,000 (unchanged); Other Member - $9,000 (from $7,500); (iii) Compensation and Organization Committee: Chairperson - $15,000 (unchanged); Other Member - $5,000 (unchanged); and (iv) Nominating and Governance Committee: Chairperson - $10,000 (unchanged); Other Member - $4,000 (from $3,750).
Audit Committee Report
The Audit Committee oversees and monitors the Company’s financial reporting process and systems of internal accounting and financial controls on behalf of the Board of Directors. In fulfilling these responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 20162019 (the “2016“2019 Form 10-K”). The Audit Committee discussed with PwC, Rogers’ independent registered public accounting firm, the matters required to be discussed with the independent registered public accounting firm under generally accepted auditing standards, including Auditing Standard No. 1301. In addition, the Audit Committee has received the written disclosures and the letter from PwC required by the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and has discussed its independence with PwC.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board approved, the inclusion of the audited financial statements in the 20162019 Form 10-K for filing with the Securities and Exchange Commission.
The Audit Committee’s responsibility is one of oversight, and it recognizes that management is responsible for preparing the Company’s financial statements and that the Company’s independent registered public accounting firm is responsible for auditing those financial statements. Consequently, in carrying out its oversight responsibilities, the Audit Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the work of the Company’s independent registered public accounting firm. In giving its recommendation to the Board, the Audit Committee has relied on (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States, and (ii) the report of the Company’s independent registered public accounting firm with respect to such financial statements.
| Audit Committee: | Helene Simonet, Chairperson |
| Michael F. Barry, Member | |
| Carol R. Jensen, Member | |
Compensation Discussion and Analysis
Overview of Business and Results
Rogers Corporation designs, develops, manufactures and sells high-qualityhigh-performance and high-reliability engineered materials and components for mission critical applications.to meet our customers' demanding challenges. We operate principally three strategic business segments -operating segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). The remaining operations, which represent our non-core businesses, are reported in the Other operating segment. We have a history of innovation and have established the Rogers Innovation CenterCenters for our leading research and development activities. Rogers was foundedactivities in 1832Chandler, Arizona; Burlington, Massachusetts; Eschenbach, Germany; and incorporatedSuzhou, China. We are headquartered in Massachusetts in 1927. In August 2016,Chandler, Arizona.
Our growth strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence. As a market-driven organization, we announced plans to relocateare focused on growth drivers, including advanced mobility and advanced connectivity. More specifically, the key trends currently affecting our global headquarters from Rogers, Connecticut to Chandler, Arizona. The move will build upon our presence in Arizona, where we have significant business and manufacturing operations. Rogers operates manufacturing facilitiesinclude, in the United States, China, Germany, Belgium, Hungaryautomotive industry, the increasing use of advanced driver assistance systems (ADAS) and South Korea, with joint venturesincreasing electrification of automotive vehicles, including electric and sales offices worldwide.hybrid electric vehicles (EV/HEV) and new technology adoption in the telecommunications industry, including next generation wireless infrastructure. In addition to our focus on advanced mobility and advanced connectivity in the automotive and telecommunications industries, we sell into a variety of other markets, including general industrial, portable electronics, connected devices, aerospace and defense, mass transit, and renewable energy.
In 2016, Rogers reported2019 as compared to 2018, our net sales of $656.3 million. Net sales for the full year 2015 were $641.4increased 2.2% to $898.3 million, which included $18.6 million from divested non-core assets. Net sales during 2016 were unfavorably impacted by $7.8 milliongross margin decreased approximately 40 basis points to 35.0%, operating income as a result of currency fluctuations. In addition, 2016 net sales were favorably impacted by $5.4 millionpercentage of net sales from DeWAL Industries (“DeWAL”)decreased approximately 50 basis points to 12.3% and operating income decreased 2.0% to $110 million.
The ACS operating segment designs, develops, manufactures and sells circuit materials and solutions enabling high-performance and high-reliability connectivity for applications in wireless infrastructure (e.g., which we acquired in November 2016.power amplifiers, antennas and small cells), automotive (e.g., ADAS, telematics and thermal solutions), aerospace and defense (e.g. antenna systems, communication systems and phased array radar systems), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and IP infrastructure) markets.
ACS recorded $277.8 millionnet sales increased by 7.6% in 2019 compared to 2018. The increase in net sales in 2016, a 3.8% increase from $267.6 million inwas primarily driven by higher net sales in 2015. Fluctuations in currency exchange rates unfavorably impacted5G wireless infrastructure and aerospace and defense markets, partially offset by lower net sales in 2016 by 1.0% as compared with 2015 net sales.
Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets. These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation and printing markets; customized silicones used in flex heater and semiconductor thermal applications for general industrial, portable electronics, automotive, mass transit. aerospace and defense and medical markets; polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for general industrial, automotive and aerospace and defense markets.
EMS net sales increased by 5.9% in 2019 compared to 2018. The increase in net sales was primarily due to the $15.0 million of net sales in the first half of the year related to Griswold, which we acquired in July 2018, as well as higher net sales in the portable electronics market, partially offset by lower net sales in the general industrial market. Net sales were unfavorably impacted by the effects of trade tensions in 2019. Net sales were additionally unfavorably impacted by $5.9 million, or 1.7%, due to the depreciation in value of the Chinese renminbi, South Korean won and euro relative to the U.S. dollar.
The PES operating segment designs, develops, manufactures and sells ceramic substrate materials, busbars and cooling solutions for a variety of applications in EV/HEV, general industrial, mass transit, renewable energy, aerospace and defense and wired infrastructure markets.
PES net sales decreased by 11.1% in 2019 compared to 2018. The decrease in net sales was primarily driven by lower net sales in the general industrial, vehicle electrification, EV/HEV power interconnects and renewable energy markets, partially offset by higher net sales in the mass transit and power semiconductor substrate EV/HEV markets. Net sales were impacted by unfavorable currency exchange rate fluctuations of $8.4 million, or 3.8%, due to the depreciation in 2016.value of the euro and Chinese renminbi relative to the U.S. dollar.
Named Executive Officers for 2019
Our Named Executive Officers (NEOs) for fiscal year 2019 are as follows:
| Name | Title | |
| Bruce D. Hoechner | President and Chief Executive Officer | |
| Michael M. Ludwig | Senior Vice President, Chief Financial Officer and Treasurer | |
| Robert C. Daigle | Senior Vice President and Chief Technology Officer | |
| Jay B. Knoll | Senior Vice President, Corporate Development, General Counsel and Corporate Secretary | |
| Peter B. Williams | Senior Vice President of Global Operations and Supply Chain* | |
| Helen Zhang | Vice President Power Electronic Solutions, and President Rogers Asia** | |
* Mr. Williams joined Rogers in this role on July 22, 2019.
** Ms. Zhang was Senior Vice President and General Manager, Power Electronics Solutions and President, Rogers Asia through August 31, 2019, before taking the position of President, Rogers Asia and Senior Strategic Advisor to the Chief Executive Officer until her expected retirement on March 31, 2020.
Key Compensation Actions and Decisions
At our 20162019 Annual Meeting of Shareholders, 96%approximately 99% of the shares voted were voted in favor of our 20152018 NEO compensation package.compensation. Accordingly, in 2016,2019, we maintained our commitment to the use of at-risk compensation (base salary and awards(awards under our Long-Term Incentive Program (“LTIP”) and Annual Incentive Compensation Plan (“AICP”)) and to, pay for performance, compensation transparency, and the pursuit of pay practices competitive with those of our peers:peers.
Base Salary: Base salaries are targeted around the median of our LTIPpeer group but did not increase base pay or target payouts under our AICP. Accordingly, at-riskwill take into account experience and performance.
At-risk Compensation: At-risk compensation made up approximately 77%82% of our CEO’s target total direct compensation in 2019, approximately the same as 2018. For our remaining NEOs, other than Mr. Williams (who joined Rogers in 2019), at-risk compensation in 2019 made up approximately 67% of their target total direct compensation, on average, the same as 2018.
Performance-based Pay: Performance-based pay made up approximately 56% of our CEO’s target compensation in 2016, up from approximately 76%2019 compared to 57% in 2015. For our remaining NEOs, at-risk compensation in 20162018 and made up approximately 63%41% of their target compensation, on average, up from approximately 61% in 2015.
Role of Compensation and our Decision MakingOrganization Committee and the Decision-Making Process
The Compensation and Organization Committee (the “Committee” for purposes of this section) began its consideration of 20162019 executive compensation by evaluating our compensation philosophy. The Committee affirmed our existing philosophy, indicatingreinforcing that our approach to compensation is fundamentally defined by our effortsobjective to efficiently recruit, retain and motivate the right executives to achieve outstanding business performance and create shareholder value. Specifically, the Committee seeks to provide competitive base paysalaries for our NEOs, and to leverage short-term and long-term variable compensation--compensation in line with performance--performance to appropriately reward our NEOs for the value they create. To achieve these goals, we seek to provide opportunity for our executive officers and other senior managers to earn compensation that is competitive with other technology companies of comparable size, global reach and complexity. In addition, we strongly emphasize a culture of pay for performance in order to provide incentives and accountability for our executive officers and other senior managers in working toward the achievement of our financial, strategic and operational objectives. Accordingly, the Committee considers market compensation (overall and by element), Company performance, and individual performance, along with cost reasonableness, in establishingsetting executive compensation.compensation levels.
Role of Management
The Committee, in making any and all executive compensation decisions, solicits input from management, as appropriate, with respect to individual and Company performance. The Committee receives recommendations and evaluations with respect to NEO compensation and performance from Mr. Hoechner (other than with respect to his own compensation). While Mr. Hoechner does not make a recommendation to the Committee with respect to his own compensation, he provides the Committee with a summary
of his annual performance. The Committee considers this assessment in conjunction with materials provided by the Company’s Chief Human ResourceResources Officer regarding Mr. Hoechner’s performance and recommended compensation. The Committee evaluates this input, as well as the input of the Consultantcompensation data provided by its compensation consultant, as it independently makes its assessments and compensation decisions.
Role of the ConsultantCompensation Consultants
The Committee is authorized to select and retain its own independent compensation consultant. In 2016, the Committee engaged the Consultant to provide independent compensation advice, perspectiveconsultant, and data. Among other things, the Consultantsince 2017 has retained Compensia, Inc. (“Compensia” or “Consultant”). During its engagement, Compensia has advised the Compensation Committee on changes to the peer group and survey data it uses when establishing executive compensation and evolving best pay practices and pay ratio disclosure and provided benchmarkingcompetitive market data and recommendations on NEOexecutive officer compensation. In addition, the Consultant annually assesses our compensation program’s potential for risk and its competitiveness relative to our industry and our peers and advises the Committee with respect to these issues. The Consultant did not provide any services to the Company and was not paid for services to the Company other than for those related to work for the Committee during 2016. The Committee annually reviews the independence of the Consultant as part of its standard governance practices and has determined that the Consultant is independent.
independent and that its work does not raise any conflict of interest.
Use of Peer Group Data
The Committee's use of peer group data demonstrates our focus on efficient recruitment and retention of executives who will drive our business performance and enhance shareholder value at a reasonable cost, while maintaining a competitive market position. The Committee regularly reviews the peer groups it uses to set NEO compensation.
In 2019, the Committee, in consultation with Compensia, determined that three companies in the 2018 peer group (Integrated Device Technology, Inc., Lydall Inc., and Ultra Clean Holdings Inc.) would be removed and replaced by three new companies (Kulicke and Soffa Industries Inc., MKS Instruments Inc., and Quaker Houghton Corporation) for our 2019 NEO compensation analysis, due to the recent acquisitions in the 2018 peer group and changes in revenue and market capitalization. The companies comprising the new peer group, which were selected in consultation with Compensia, are listed below.
| 2019 NEO Compensation Peer Group | |||
| Advanced Energy Industries, Inc. | GCP Applied Technologies, Inc. | MACOM Technology Solutions Holding, Inc. | Quaker Houghton Corporation |
| Brooks Automation, Inc. | II-VI Incorporated | Methode Electronics, Inc. | Semtech Corporation |
| Cabot Microelectronics Corporation | Ingevity Corporation | MKS Instruments Inc. | Silicon Laboratories, Inc. |
| Diodes Incorporated | Knowles Electronics, LLC | Monolithic Power Systems, Inc. | Versum Materials, Inc. |
| Entegris, Inc. | Kulicke and Soffa Industries Inc. | Novanta Inc. | |
| Ferro Corporation | Littelfuse, Inc. | ||
The Committee considered compensation data from the 2017 and 2018 proxy statements of these companies, with slight cost-of-living adjustments, when setting 2019 NEO compensation. Specifically, the Committee considered this peer group data when establishing the overall compensation packages for our NEOs and each element of compensation within those packages for 2019 and, as part of that process, evaluating target total cash compensation for each NEO (defined as base salary and target payments under our AICP) and target total direct compensation for each NEO (defined as base salary and target payments under our AICP and LTIP). In general, the Committee aims to set overall executive compensation, as well as each element of executive compensation, for each NEO around the median of the peer group with variations in each compensation element to account for tenure, experience, performance, responsibilities and expected contribution.
2019 Compensation
Compensation Mix
The Committee believes that executive compensation should include a competitive combination of base salary, annual incentive compensation and long-term incentive compensation that emphasizes performance and balances shorter-term results with execution of longer-term financial and strategic initiatives. The target total direct compensation mix for 20162019 for Mr. Hoechner, our CEO, consisted of approximately 77%82% at-risk compensation, up from approximately 76% in 2015.the same as 2018. Target compensation mix on average for
our other NEOs for 20162019 (other than Mr. Williams, who joined Rogers in 2019) consisted of approximately 63%67% at-risk compensation, up from approximately 61% in 2015.the same as 2018. The charts below illustrate the target pay mix for our CEO and ourthe other NEOs for 2016.
Base Salary
Base salary is the fixed compensation element we provide to our executives forbased on their qualification,qualifications, experience, and regular contribution to the business. Our goal is to ensure that business decisions are in the hands of executives with proven track records, and our ability to efficiently recruit, retain and motivate such talented people depends in part on competitive base salaries. Adjustments or changes to base salary in a given year are dependent upon many factors, including an executive’s tenure, internal equity across the executive
team based on individual roles and contributions, market trends, the Company’s prior year performance, and general affordability based on business results. Base salary is generally subject to annual review, unless circumstances dictate otherwise. Generally, speaking, any base salary adjustments are effective at the beginning of the second quarter of the year and take into account the Company’s prior year performance.year.
| NEO | 2015 Salary | 2016 Salary | Salary % Increase for 2016 | 2018 Base Salary | 2019 Base Salary | Base Salary % Change for 2019 | |
| Bruce D. Hoechner | $625,000 | 0% | $700,000 | $700,000 | 0.0% | ||
| Janice E. Stipp | $400,000(1) | $400,000 | 0% | ||||
| Jay Knoll | $350,000 | 0% | |||||
| Michael M. Ludwig | $420,000 | 0.0% | |||||
| Robert C. Daigle | $345,000 | 0% | $370,000 | $385,000 | 4.1% | ||
| Helen Zhang | $340,700 | 0% | |||||
| Jay B. Knoll | $380,000 | $395,000 | 3.9% | ||||
| Peter B. Williams | - | $380,000 | - | ||||
Helen Zhang(1) | $363,000 | $373,000 | 2.8% | ||||
(1) RepresentsMs. Zhang is expected to retire on March 31, 2020. Year over year change is a result of a change in the annual salary established pursuant to the offer letter, dated October 1, 2015, between the Company and Ms. Stipp.exchange rates.
Annual Incentive Compensation Plan (AICP)
Our AICP is intended to compensate our executives for their annual contributions to the Company’s performance. Consistent with the terms of the AICP, the Committee established a performance goal (the achievement of positive operating income, where operating income is adjusted to exclude restructuring and other non-recurring charges and gains, gains and losses on foreign currency transactions, and the effects of accounting changes and certain tax adjustments) and target and maximum potential payouts early in 2016.2019. The Committee used the peer group and survey data described above when evaluating and determining the target and maximum potential AICP awards for the then-serving NEOs in 2016. The Committee concluded that the base salary percentages (which determine target payouts) for all NEOs should remain consistentearly 2019 and made market adjustments, where warranted by performance, to bring selected executives in line with the 2015 percentages, determining that total target cash compensation payable to the NEOs continued to approximate the market median of the peer groups evaluated bygroup. In June 2019, the Committee.
Company and Mr. Williams entered into an offer letter in connection with his appointment as Senior Vice President of Global Operations and Supply Chain, pursuant to which he was eligible to participate in the AICP for 2019, with a target bonus of 55% of his base salary, with any bonus awarded to be prorated to reflect his start date.
| NEO | 2016 Base Salary | Base Salary Percentage | 2016 Target Payout | 2016 Maximum Payout | 2019 Base Salary | Base Salary Percentage | 2019 Target Payout | 2019 Maximum Payout |
| Bruce D. Hoechner | $625,000 | 100% | $625,000 | $2,500,000 | $700,000 | 100% | $700,000 | $2,500,000 |
| Janice Stipp | $400,000 | 50% | $200,000 | $500,000 | ||||
| Jay Knoll | $350,000 | 50% | $175,000 | $500,000 | ||||
| Michael M. Ludwig | $420,000 | 65% | $273,000 | $750,000 | ||||
| Robert C. Daigle | $345,000 | 50% | $172,500 | $500,000 | $385,000 | 55% | $211,750 | $500,000 |
| Jay B. Knoll | $395,000 | 55% | $217,250 | $500,000 | ||||
| Peter B. Williams | $380,000 | 55% | $209,000 | $500,000 | ||||
| Helen Zhang | $340,700 | 50% | $170,350 | $500,000 | $373,000 | 55% | $205,150 | $500,000 |
