CORPORATE GOVERNANCE AND COMMITTEES
General
Our business and affairs are managed under the direction of the Board of Directors in accordance with the Virginia Stock Corporation Act and our Articles of Incorporation and Bylaws. Members of the Board of Directors are kept informed of our business through discussions with the Chairman, President, and Chief Executive Officer and other officers, by reviewing materials provided to them and by participating in meetings of the Board of Directors and its committees. The corporate governance practices we follow are summarized below.
Corporate Governance Guidelines
The Board of Directors has adopted written Corporate Governance Guidelines that set forth the practices of the Board of Directors with respect to the qualification and selection of directors, director orientation and continuing education, director responsibilities, Board of Directors composition and performance, director access to management and independent advisors, director compensation, management evaluation and succession, evaluation of the Board of Directors' performance, and various other issues. The Corporate Governance Guidelines are available to shareholders and the public free of charge under the “Governance”“Investors - Corporate Governance” section of our Internet website at http://investor.universalcorp.com/corporate-governance.cfmcorporate-governance. A printed copy is available to any shareholder free of charge upon written request directed to Investor Relations at the address provided on page 56 of this Proxy Statement.
Code of Conduct
The Board of Directors has adopted a written Code of Conduct applicable to our directors, officers, and employees, and the directors, officers, and employees of each of our subsidiaries and controlled affiliates. The Code of Conduct satisfies the NYSE requirements for a “Code of Business Conduct and Ethics” and the SEC definition of a “Code of Ethics for Senior Financial Officers.” The Code of Conduct addresses such topics as protection and proper use of company assets, compliance with applicable laws and regulations, accuracy and preservation of records, accounting and financial reporting, conflicts of interest, and insider trading. The Code of Conduct is available to shareholders and the public free of charge onunder the “Compliance” section of our Internet website at http://www.universalcorp.com/complianceCompliance. A printed copy is available to any shareholder free of charge upon written request directed to Investor Relations at the address provided on page 56 of this Proxy Statement.
Director Independence
The Board of Directors, in its business judgment, has determined that each member of the Board of Directors, except Mr. G. Freeman, our Chairman, President, and Chief Executive Officer, is independent as defined by the NYSE listing standards and our Corporate Governance Guidelines. In reaching this conclusion and as set forth in the independence standards of our Corporate Governance Guidelines, the Board of Directors evaluated each director or nominee for director in light of the specified independence tests set forth in the NYSE listing standards. In addition, the Board of Directors considered whether we and our subsidiaries conduct business and have other relationships with organizations of which certain members of the Board of Directors or members of their immediate families are or were directors or officers. There has been no such business or relationships for the past three fiscal years.
Executive Sessions
The independent directors of the Board of Directors meet in executive session at least annually without management or employee directors present. Such executive sessions may be scheduled either before or after each regularly scheduled Board of Directors meeting. Although designated to meet at least annually, during fiscal year 2021 the independent directors met in executive session five times. The independent directors designate the Lead Independent Director, who is responsible for presiding over the executive sessions of the independent directors. For fiscal year 2018, the independent directors designated Mr. E. Mooreas the Lead Independent Director. The Lead Independent Director is responsible for advising the Chairman, President, and Chief Executive Officer of the outcome of any decisions reached or suggestions made at these sessions. Executive sessions where non-employee directors meet on an informal basis may be scheduled either before or after each regularly scheduled Board of Directors meeting.
As noted below, Mr. Johnson has served as Lead Independent Director for this year.
Communications with Directors
Interested parties may at any time direct communications to the Board of Directors as a whole, to the Lead Independent Director, or to any individual member of the Board of Directors, through our Internet website or by contacting our Secretary. The “Corporate“Investors - Corporate Governance - Contact the Board” section of our Internet website athttp://investor.universalcorp.com/contactboard.cfmcorporate-governance/contact-the-board contains an e-mail submission form established for submitting communications to directors. Communications can also be delivered by mail by sending requests to our Corporate Secretary, whose address is on page 56 of this Proxy Statement.
Shareholders making such communications are encouraged to state that they are shareholders and provide the exact name in which their shares of Common Stock are held and the number of shares held. Each individual communicating with the
Board of Directors will receive a written acknowledgment from or on behalf of our Secretary after receipt of the communication sent in the manner described above. After screening such communications for issues unrelated to shareholder interests, our Secretary will distribute communications to the intended recipient(s) as appropriate. The process for such screening has been approved by our independent directors.
Board and Committee Meeting Attendance
During fiscal year 2018,2021, there were sixseven meetings of the Board of Directors. Each director attended 75% or more of the total number of meetings of the Board of Directors and of the committees on which they served.
Board Leadership Structure and Role in Risk Oversight
Board Leadership Structure
The Board of Directors does not have a policy on whether or not the role of the Chief Executive Officer and Chairman should be separate or, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. We operate with one individual, Mr. G. Freeman, serving as Chairman of the Board, President, and Chief Executive Officer. Mr. G. Freeman was elected by the Board of Directors as President on December 12, 2006, Chief Executive Officer on April 1, 2008 and Chairman of the Board on August 5, 2008. Prior to his election as our President and Chief Executive Officer, Mr. G. Freeman served as our General Counsel and Secretary from February 1, 2001 until November 2005, when he was elected Vice President. The Board of Directors believes that because Mr. G. Freeman has unique and extensive experience and understanding of our business, he is well situated to lead and execute strategy and business plans to maximize shareholder value by having a combined role of Chairman of the Board, President, and Chief Executive Officer.
The Company's Corporate Governance Guidelines permit the individual who serves as Chief Executive Officer to serve as Chairman of the Board of Directors. In order to ensure that independent directors continue to play a leading role in our governance, however, the Board of Directors established the position of a Lead Independent Director in our Corporate Governance Guidelines. Mr. E. Moore currently serves as our Lead Independent Director.
The Lead Independent Director is elected by the independent directors and ensures that (i) the Board of Directors operates independently of management, and (ii) directors and shareholders have an independent leadership contact. The Lead Independent Director, who must satisfy our independence standards, is responsible for presiding over the executive sessions of the independent directors and performing such other duties as may be delegated to the position by the Board of Directors. The Lead Independent Director also has the following additional roles and responsibilities:
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Ÿ | chair Board of Directors meetings when the Chairman of the Board of Directors is not present or when there is a potential conflict of interest; |
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Ÿ | call meetings and set agendas for executive sessions of the independent directors; |
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Ÿ | preside over meetings of the independent directors and, as appropriate, provide prompt feedback to the Chief Executive Officer and Chairman of the Board of Directors; |
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Ÿ | serve as a liaison between the independent directors and the Chief Executive Officer and Chairman of the Board of Directors and senior management to report or raise matters; |
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Ÿ | serve as a “sounding board” and mentor to the Chief Executive Officer and Chairman of the Board of Directors; and |
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Ÿ | perform such other duties and responsibilities as may be delegated to the Lead Independent Director by the Board of Directors from time to time. |
•chair Board of Directors meetings when the Chairman of the Board of Directors is not present or when there is a potential conflict of interest;
•call meetings and set agendas for executive sessions of the independent directors;
•preside over meetings of the independent directors and, as appropriate, provide prompt feedback to the Chief Executive Officer and Chairman of the Board of Directors;
•serve as a liaison between the independent directors and the Chief Executive Officer and Chairman of the Board of Directors and senior management to report or raise matters;
•serve as a “sounding board” and mentor to the Chief Executive Officer and Chairman of the Board of Directors; and
•perform such other duties and responsibilities as may be delegated to the Lead Independent Director by the Board of Directors from time to time.
Mr. Johnson currently serves as our Lead Independent Director. The Board of Directors historically has elected a Lead Independent Director each year for a one year term commencing at the conclusion of the applicable Annual Meeting. Mr. Johnson, therefore, will serve as Lead Independent Director until the conclusion of the 2021 Annual Meeting.
The Board of Directors also has five standing committees: the Audit Committee, the Compensation and GovernanceCommittee, the Executive Committee, the Finance Committee, theand Pension Investment Committee, and the ExecutiveNominating and Corporate Governance Committee. Each committee has a separate chairman and each of the Audit, and Compensation, and Nominating and Corporate Governance Committees are composed solely of independent directors.
Given our current circumstances, relative size and operating strategies, we believe having a combined Chairman of the Board of Directors and Chief Executive Officer, as well as having a Lead Independent Director and independent standing committees, is the most appropriate structure for us and our shareholders. We believe this structure demonstrates clear leadership to our employees, shareholders, and other interested parties and eliminates potential for redundancies and confusion. The Lead Independent Director protects the role of the independent directors by providing leadership to the independent directors and working closely with the Chief Executive Officer and Chairman of the Board of Directors.
As part of the Board of Directors' annual assessment process, the Board of Directors evaluates our board leadership structure to ensure that it remains appropriate for us. The Board of Directors recognizes that there may be circumstances in the future that would lead it to separate the roles of Chief Executive Officer and Chairman of the Board of Directors, but believes that the absence of a policy requiring either the separation or combination of the roles of Chairman and Chief Executive Officer provides the Board of Directors with the flexibility to determine the best leadership structure for us.
Board of Directors' Role in Risk Oversight
The Board of Directors is responsible for our risk oversight. Management is responsible for our risk management, including providing oversight and monitoring to ensure our policies are carried out and processes are executed in accordance with our performance goals and risk tolerances. In carrying out its risk oversight function, each of the five standing committees of the Board of Directors is responsible for risk oversight within their area of responsibility and regularly reports to the Board of Directors. In addition, management holds regular meetings in which they identify, discuss, and assess financial risk from current macro-economic, industry, and company-specific perspectives.
The Audit Committee is responsible for discussing with management, the independent registered public accounting firm and the internal auditors our policies and procedures with respect to risk assessment and risk management. As part of its regular reporting process, management reports and reviews with the Audit Committee our material risks, including (i) proposed risk factors and other public disclosures, and (ii) mitigation strategies and our internal controls over financial reporting. The Audit Committee also engages in regular periodic discussions with the Chief Financial Officer and other members of management regarding risks as appropriate.
In April, 2021, the Board of Directors approved amendments to the Audit Committee’s charter to delegate oversight responsibility to the Audit Committee for the Company’s information security risk management program and to review annually with management the program and information security and technology risks (including cybersecurity).
The Finance and Pension Investment Committee assists the Board of Directors in control of our financial policies and resources and monitors our financial strategic direction. As part of its responsibilities, the Finance and Pension Investment Committee oversees our financial policies, including financial risk management, and reviews and approves significant financial policies and transactions.
It also has oversight of the investments in our ERISA-regulated pension and savings plans.
In addition to the Audit Committee and Finance and Pension Investment Committee, each of the other committees of the Board of Directors considers risks within its area of responsibility. Theresponsibility and regularly reports to the Board of Directors on issues related to the Company’s risk profile. For example, the Compensation and Governance Committee considers succession planning human resources risks, corporate governance risks, and risks that may be a result of our executive compensation programs. The Pension Investment Committeeprograms, and has oversight responsibility for the Company’s review of compensation policies and procedures to determine whether they present significant risks. In addition, the investments in our ERISA - regulated pensionNominating and savings plans. EachCorporate Governance Committee considers risks related to corporate governance, environmental, and social responsibility issues, succession planning risk regarding the members of the committees regularly reports to the Board of Directors.
Directors and, jointly with the Compensation Committee, they consider succession planning risk regarding our Chief Executive Officer.
We believe the current leadership structure of the Board of Directors supports the risk oversight functions described above by providing independent leadership at the committee level, with ultimate oversight by the full Board of Directors as led by the Chairman of the Board of Directors and Chief Executive Officer and the Lead Independent Director.
Compensation Risk Assessment
As part of its oversight of our executive compensation program, the Compensation and Governance Committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on our risk profile. The Compensation Committee has implemented compensation program design features to mitigate the risk that our compensation programs encourage misconduct or imprudent risk-taking. In addition, we review all of our compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to us. At the Compensation and Governance Committee's direction, our Senior Vice President and Chief Financial Officer and his staff, our Vice President, General Counsel, and Secretary, and a member of our internal audit team, conducted a risk review assessment of our compensation programs in fiscal year 2018.2021. The Compensation and Governance Committee reviewed the findings of the assessment and concluded (i) that our compensation programs are designed with the appropriate balance of risk and reward in relation to our overall business strategy and (ii) that the balance of compensation elements discourages excessive risk taking. The Compensation and Governance Committee, therefore determined that the risks arising from our compensation policies and practices for employees are not reasonably likely to have a material adverse effect on the Company. The Compensation Committee also concluded that the performance measures and performance targets do not encourage excessive or unnecessary risk taking.risk-taking. In its discussions, the Compensation and Governance Committee considered the attributes of our programs, including:
•the balance between annual and longer-term performance opportunities;
•the balance between performance-based and non-performance basednon-performance-based pay;
•alignment of our programs with business strategies focused on long-term growth and sustained shareholder value, ensuring the performance goals established for senior management reflect the objectives set by the Compensation and Governance Committee to increase focus on the achievement of the Company's strategic plan;
•The Company's strong corporate values and business practices and policies that include a code of conduct, a global compliance program, and programs that support a sustainable supply chain, including environmental, social, corporate governance and ethical standards;
•placement of an appropriate portion of our executive pay “at risk” and dependent upon the achievement of specific corporate and individual performance goals that are objectively determined with verifiable results. These corporate goals have pre-established thoughtful threshold, target and maximum award limits;
•the use of multiple performance metrics that are based on the general performance of the corporation and the use of economic profit as a risk adjustedrisk-adjusted metric;
•the use of rolling three-year Performance Shares to lengthen the overall measurement period;
•the Compensation and Governance Committee's ability to exercise negative discretion and to consider non-financial and other qualitative performance factors in determining actual compensation payouts;
•stock ownership guidelines that are reasonable and align executives' short- and long-term interests with those of our shareholders;
•the recoupment policy to authorize the potential recovery or adjustment of cash incentive awards and long-term equity awards paid to named executive officers and other recipients in the event there was a restatement of incorrect financial results and upon the occurrence of certain specified events; and
•the policy prohibiting the use of hedging and derivatives trading by executives and directors.
Effective with the long-term equity awards granted inIn fiscal year 2013,2020, the CompensationCompany engaged Willis Towers Watson to review the overall design and Governance Committee suspended the inclusion of SARs in the Company's portfolio of equity awards. An executive holding SARs receives financial benefit when the stock price increases, but does not have the corresponding downside if the stock price declines. The Compensation and Governance Committee determined that this may incentivize executivesalignment to pursue short-term or riskier strategies and, therefore, no longer represents an effective componentmarket of our executive compensation program.
programs, including compensation philosophy, annual and long-term incentive plans, stock ownership guidelines, benefit plans and executive perquisites, severance policies, corporate governance, and outside director practices. Following their benchmarking review and audit of the Company’s executive compensation, Willis Towers Watson found that the Company’s executive programs were with the Company’s peer group and the industry in which the Company competes, and any recommended changes were intended to improve market alignment for program design and governance. One such recommended change, as announced in the Company’s Form 8-K filed with the SEC on May 29, 2020, is with respect to the adoption by the Company of a "double-trigger" severance plan for its executive officers in connection with a potential change-in-control of the Company, which previously was applicable to only certain executive officers. As previously announced, adoption of the Change in Control Severance Policy (the “Change in Control Policy”) proposed by Willis Towers Watson, and reviewed and recommended by the Compensation Committee, was approved by the Board of Directors of the Company and effective as of May 26, 2020. For a full description of the Change in Control Policy, please see the section “Change of Control Agreements” on page 45 of this Proxy Statement.
Committees of the Board
Audit Committee
The responsibilities of the Audit Committee include the review of the scope and the results of the work of the independent registered public accounting firm and internal auditors, the review of the adequacy of internal accounting controls, and the selection, appointment, compensation, and oversight of our independent registered public accounting firm.firm, and oversight of the Company’s information security risk management program. The Audit Committee operates under a written charter last amended by the Board of Directors on April 20, 2009.19, 2021. The Audit Committee's charter is available under the “Governance”“Corporate Governance” section of our Internet website at http://investor.universalcorp.com/corporate-governance.cfmcorporate-governance.
The members of the Audit Committee are Messrs. E. MooreLawton (Chairman), Adams, L. Freeman, Lawton,Sledd and Sledd.Tullidge and Ms. Williams. The Board of Directors has determined that each of the Audit Committee members is independent as defined under the applicable independence standards set forth in regulations of the SEC and the NYSE listing standards. The Board of Directors has also determined that all of the Audit Committee members are financially literate as defined by the NYSE listing standards. Finally, in accordance with the applicable regulations of the SEC, the Board of Directors has further determined that the Audit Committee contains at least one “audit committee financial expert” as defined by such regulations. That person is Mr. E. Moore,Lawton, the Chairman of the Audit Committee. The fact that the Board of Directors did not identify additional Audit Committee members as “audit committee financial experts” does not in any way imply that other members do not meet that definition.
The Audit Committee met sixseven times during fiscal year 2018.2021. Additional information with respect to the Audit Committee is discussed below in the section entitled “Audit Information” on page 5970 of this Proxy Statement.
Compensation Committee
The current members of the Compensation Committee are Mr. Johnson (Chairman), Mrs. Cantor, Mr. L. Freeman and Mr. Lawton. The Compensation Committee performs the responsibilities of the Board of Directors relating to compensation of our executives, including establishing and maintaining a competitive compensation program for our directors and executives in order to attract, retain and motivate key contributors to our success. The Compensation Committee's responsibilities include, among others, reviewing and setting or approving corporate goals and objectives relevant to compensation of the Chief Executive Officer and other executive officers, evaluating the performance of the Chief Executive Officer and our other executive officers in light of those goals and objectives, and determining and approving compensation levels for the Chief Executive Officer and our other executive officers based on this evaluation; making recommendations to the Board of Directors with respect to annual and long-term incentive compensation plans; evaluating the performance of, and determining the salaries, incentive compensation, and executive benefits for senior management; and administering our equity-based and other executive compensation plans.
On April 9, 2019, the Board of Directors approved changes to the Company’s Bylaws and to the charter of the formerly-named Executive Compensation, Nominating and Corporate Governance Committee. The purpose of the approved changes was, in part, to divide the Executive Compensation, Nominating and Corporate Governance Committee into two committees: the Compensation Committee and the Nominating and Corporate Governance Committee. The Board approved such changes in consideration of best practices with respect to corporate governance by creating a separate committee dedicated to corporate governance and director nominating responsibilities. Such changes also resulted in the Compensation Committee being dedicated to compensation matters. The Compensation Committee operates under the written charter amended and approved by the Board of Directors on April 9, 2019. The charter, as well as the Company’s amended Bylaws, are available under the “Corporate Governance” section of our Internet website at http://investor.universalcorp.com/corporate-governance.
The Chairman of the Compensation Committee works with management to establish the agenda for Compensation Committee meetings. Data and materials are prepared for review by the Compensation Committee using market data from both broad-based and targeted national and regional compensation surveys. Competitive industry analysis is enhanced through review of peer company proxy data, professional research consortiums, and nationally recognized compensation databases provided by the Compensation Committee's external compensation consultant.
The Compensation Committee periodically meets with certain members of management in order to assess progress toward meeting long-term objectives approved by the Board of Directors. The Compensation Committee reviews the performance and compensation of the Chief Executive Officer with input from both the full Board of Directors and the Chief Executive Officer's self-evaluation. The Compensation Committee approves the compensation of the other executive officers, based upon the evaluation and recommendation of the Chief Executive Officer. Where it deems appropriate, the Compensation Committee engages its independent compensation consultant or other appropriate advisors to analyze compensation trends and competitiveness of pay packages and to support the Compensation Committee's duty to establish each of the executive officers' targeted overall compensation levels.
The Compensation Committee reports regularly to the Board of Directors on matters relating to the Compensation Committee's responsibilities. For additional information regarding the compensation-related activities of the Compensation Committee, see the sections entitled “Compensation Discussion and Analysis” and “Report of the Compensation Committee” beginning on pages 28 and 46 of this Proxy Statement, respectively.
The Board of Directors has determined that the members of the Compensation Committee are “non-employee directors” (within the meaning of Rule 16b-3 of the Exchange Act), “outside directors” (within the meaning of former Section 162(m) of the Internal Revenue Code) and “independent directors” (as defined under the applicable NYSE listing standards and our Corporate Governance Guidelines). In addition, no Compensation Committee member is a current or former employee of ours or any of our subsidiaries. While the Compensation Committee's charter does not specify qualifications required for members, Mr. Johnson has been a member of other public company boards of directors and is a former chief executive officer of public companies, Mr. L. Freeman has extensive experience as a former senior executive officer of a large international tobacco products manufacturer, Mrs. Cantor possesses extensive legal, investment, and financial skills as well as significant public company directorship experience, and Mr. Lawton has had significant experience as a senior executive of a public company. The Compensation Committee met three times during fiscal year 2021.
In performing its responsibilities with respect to executive compensation decisions, the Compensation Committee receives information and support from our Human Resources Department and a nationally-recognized executive compensation consultant. For fiscal year 2021, Willis Towers Watson served as an independent, executive compensation consultant to the Compensation Committee and had aggregate fees for fiscal year 2021 of approximately $40,800 for these services. Willis Towers Watson provides consultancy services to the Company regarding its International Savings Plan and certain administrative services related to our retirees' health reimbursement accounts. These additional consultancy services are not of appreciable significance to the Company, are managed by separate groups within Willis Towers Watson with no direct reporting responsibility to the executive compensation group, and each of these consultancy groups have separate physical locations. In addition, Willis Towers Watson was engaged to perform these separate services after completion of a comprehensive bid process. For more information with respect to the Compensation Committee's compensation consultant, see “Compensation Discussion and Analysis” beginning on page 28 of this Proxy Statement.
Executive Committee
The Executive Committee has the authority to act for the Board of Directors on most matters during the intervals between Board of Directors meetings. The members of the Executive Committee are Messrs. G. Freeman (Chairman), Adams, L. Freeman, E. MooreJohnson and Johnson.Lawton. The Executive Committee met twothree times during fiscal year 2021.
Finance and Pension Investment Committee
On April 9, 2019, the Board of Directors approved changes to the Company’s Bylaws and to the charters of the formerly named Finance Committee and Pension Investment Committee. The purpose of the approved changes was, in part, to combine the Finance Committee and the Pension Investment Committee into one committee: the Finance and Pension Investment Committee. The Board approved such changes in consideration of certain overlapping interests between the two former committees, as well as efficiencies with respect to the functions of the two separate committees. The Finance and Pension Investment Committee operates under the written charter approved by the Board of Directors on April 9, 2019. The charter, as well as the Company’s amended Bylaws, are available under the “Corporate Governance” section of our Internet website at 2018http://investor.universalcorp.com/corporate-governance.
CompensationThe Finance and GovernancePension Investment Committee
has the responsibility of establishing our financial policies and controlling our financial resources. In addition, it retains and monitors the performance of an investment manager and, with the assistance of the investment manager, establishes investment objectives and policies, and monitors the performance of investments, of the retirement plans and other qualified employee benefit plans of Universal Leaf Tobacco Company, Incorporated, which we refer to as Universal Leaf. The members of the CompensationFinance and Pension Investment Committee are Mr. Sledd (Chairman), Mrs. Cantor, Messrs. G. Freeman and Tullidge and Ms. Williams. The Finance and Pension Investment Committee met four times during fiscal year 2021 and took action by unanimous consent once during the fiscal year.
Nominating and Corporate Governance Committee
As noted above, on April 9, 2019, the Board of Directors approved changes to the Company’s Bylaws and to the charter of the formerly-named Executive Compensation, Nominating and Corporate Governance Committee. The purpose of the approved changes was, in part, to divide the Executive Compensation, Nominating and Corporate Governance Committee into two committees: the Compensation Committee and the Nominating and Corporate Governance Committee. The Board approved such changes in consideration of best practices with respect to corporate governance by creating a separate committee dedicated to corporate governance and director nominating responsibilities. The Nominating and Corporate Governance Committee operates under the written charter approved by the Board of Directors on April 9, 2019, and last amended April 19, 2021 for minor clarifications. The charter, as well as the Company’s amended Bylaws, are Messrs. Johnson (Chairman), L. Freemanavailable under the “Corporate Governance” section of our Internet website at http://investor.universalcorp.com/corporate-governance.
The Nominating and Mrs. Cantor. The Compensation andCorporate Governance Committee performs a two-fold function. First, the responsibilitiesNominating and Corporate Governance Committee is responsible, subject to approval of the Board of Directors, relatingfor determining and developing criteria for Board of Directors membership, for identifying specific individuals qualified to compensation of our executives. The Compensation and Governance Committee's responsibilities include reviewing and setting or approving corporate goals and objectives relevant to compensationbe members of the Chief Executive OfficerBoard of Directors, and other executive officers, evaluating the performance of the Chief Executive Officer and our other executive officers in light of those goals and objectives, and determining and approving compensation levels for the Chief Executive Officer and our other executive officers based on this evaluation; making recommendations to the Board of Directors with respect to annualsuch nominations. Second, the Nominating and long-term incentive compensation plans; evaluating the performance of, and determining the salaries, incentive compensation, and executive benefits for senior management; and administering our equity-based and other executive compensation plans.
The Chairman of the Compensation andCorporate Governance Committee works with our Chief Financial Officer to establish the agendais responsible for Compensationdeveloping and Governance Committee meetings. The Chief Financial Officer and management personnel reporting to him prepare data and materials for review by the Compensation and Governance Committee using market data from both broad-based and targeted national and regional compensation surveys. Competitive industry analysis is enhanced through review of peer company proxy data, professional research consortiums, and nationally recognized compensation databases provided by the Compensation and Governance Committee's external compensation consultant.
The Compensation and Governance Committee periodically meets with the Chief Financial Officer and other members of executive management in order to assess progress toward meeting long-term objectives approved by the Board of Directors. The Compensation and Governance Committee reviews the performance and compensation of the Chief Executive Officer with input from both the full Board of Directors and the Chief Executive Officer's self evaluation. The Compensation and Governance Committee approves the compensation of the other executive officers, based upon the evaluation and recommendation of the Chief Executive Officer. Where it deems appropriate, the Compensation and Governance Committee engages its independent compensation consultant or other appropriate advisors to analyze compensation trends and competitiveness of pay packages and to support the Compensation and Governance Committee's duty to establish each of the executive officers' targeted overall compensation levels.
The Compensation and Governance Committee reports regularlyrecommending to the Board of Directors on matters relatinga set of corporate governance principles applicable to the CompensationCompany, overseeing the Company’s environmental and Governance Committee's responsibilities. In addition,social responsibility and sustainability programs and practices, and overseeing the Compensationevaluation of the Board of Directors and its acting committees. The Nominating and Corporate Governance Committee followsmonitors developments in, and makes recommendations to the Board of Directors concerning, corporate governance practices, including following regulatory and legislative developments, and considers corporate governance best practices in performing its duties. For additional information regarding the compensation-related activitiesThe members of the Compensation and Governance Committee, see the sections entitled “Compensation Discussion and Analysis” and “Report of the Executive Compensation, Nominating and Corporate Governance Committee” beginning on pages 20and 36of this Proxy Statement, respectively.
The Board of Directors has determined that the members of the Compensation and Governance Committee are “non-employee directors” (within the meaning of Rule 16b-3 of the Exchange Act), “outside directors” (within the meaning of Section 162(m) of the Internal Revenue Code) and “independent directors” (as defined under the applicable NYSE listing standards and our Corporate Governance Guidelines). In addition, no Compensation and Governance Committee member is a current or former employee of ours or any of our subsidiaries. While the Compensation and Governance Committee's charter does not specify qualifications required for members, Mr. Johnson has been a member of other public company boards of directors and is a former chief executive officer of public companies, Mr. L. Freeman has extensive experience as a former senior executive officer of a large international tobacco products manufacturer, and Mrs. Cantor possesses extensive legal, investment,(Chairman), Messrs. Johnson, Sledd, Tullidge and financial skills as well as significant public company directorship experience.Ms. Williams. The CompensationNominating and Corporate Governance Committee met fourthree times during fiscal year 2021.
2018.
In performing its responsibilities with respect to executive compensation decisions, the Compensation and Governance Committee receives information and support from our Human Resources Department and a nationally-recognized executive compensation consultant. For fiscal year 2018, Willis Towers Watson Public Limited Company, whom we refer to as Willis Towers Watson, served as an independent, executive compensation consultant to the Compensation and Governance Committee and received aggregate fees for fiscal year 2018 of approximately $8,000 for these services. Management does not engage an outside compensation consultant and did not engage Willis Towers Watson to provide any other services of significance to the Company. Willis Towers Watson does provide consultancy services to the Company regarding its health and welfare benefit plans and International Savings Plan. These additional consultancy services are managed by separate groups within Willis Towers Watson wth no direct reporting responsibility to the executive compensation group and each of these consultancy groups have separate physical locations. In addition, Willis Towers Watson was engaged to perform these separate services after completion of a comprehensive bid process. For more information with respect to the Compensation and Governance Committee's compensation consultant, see “Compensation Discussion and Analysis” beginning on page 20 of this Proxy Statement.
The Compensation and Governance Committee also acts as our nominating committee. The Compensation and Governance Committee develops qualifications for director candidates, recommends to the Board of Directors persons to serve as directors, and monitors developments in, and makes recommendations to the Board of Directors concerning, corporate governance practices. The Compensation and Governance Committee operates under a written charter last amended by the Board of Directors on April 9, 2013. The Compensation and Governance Committee's charter is available under the “Governance” section of our Internet website at http://investor.universalcorp.com/corporate-governance.cfm.
The CompensationNominating and Corporate Governance Committee employs several methods for identifying and evaluating director nominees. The CompensationNominating and Corporate Governance Committee considers candidates for Board of Directors membership suggested by its members, other Board of Directors members, and by management, and the Compensation and Governance Committee will also consider candidates suggested by our shareholders. The CompensationNominating and Corporate Governance Committee periodically assesses whether any vacancies on the Board of Directors are expected due to retirement or otherwise and in the event that vacancies are anticipated, the CompensationNominating and Corporate Governance Committee considers possible director candidates. The CompensationNominating and Corporate Governance Committee may also has the authority to retain a third-party executive search firm to identify candidates upon request ofshould the CompensationNominating and Corporate Governance Committee from time-to-timedeem it necessary based upon the director membership criteria described in the Corporate Governance Guidelines.Guidelines and the Nominating and Corporate Governance Committee’s own assessment of the perceived needs of the Board of Directors at that point in time. Shareholders entitled to vote for the election of directors may submit candidates for formal consideration by the CompensationNominating and Corporate Governance Committee in connection with an Annual Meeting if we receive timely written notice, in proper form, for each such recommended director nominee. If the notice is not timely and in proper form, the nominee will not be considered by the CompensationNominating and
Corporate Governance Committee. To be timely for the 20192022 Annual Meeting, the notice must be received within the time frame set forth in the section entitled “Proposals for 20192022 Annual Meeting” on page 6273 of this Proxy Statement. To be in proper form, the notice must include each nominee's written consent to be named as a nominee and to serve if elected, and information about the shareholder making the nomination and the person nominated for election. These requirements are more fully described in our Bylaws and Corporate Governance Guidelines.
The CompensationNominating and Corporate Governance Committee evaluates all director candidates in accordance with the director membership criteria described in the Corporate Governance Guidelines. The CompensationNominating and Corporate Governance Committee does not differentiate between Board of Directors candidates submitted by shareholders and candidates submitted by its members, other Board of Directors members or those submitted by shareholdersmanagement with respect to evaluating candidates. All Board of Directors candidates are considered based upon various criteria, such as their broad-based business skills and experience, prominence and reputation in their profession, their global business and social perspective, concern for the long-term interests of the shareholders, knowledge of our industry or related industries, diversity, and personal and professional integrity, ethics, and judgment - all in the context of an assessment of the perceived needs of the Board of Directors at that point in time. Because theThe needs of the Board of Directors change from time to time, therefore the CompensationNominating and Corporate Governance Committee evaluates the totality of the merits of each prospective nominee that it considers and has not established specific minimum qualifications that must be met by potential new directors. The Board of Directors, however, believes that as a matter of policy there should be a substantial majority of independent directors on the Board of Directors.
It also is important to the CompensationNominating and Corporate Governance Committee that the members of the Board of Directors work together in a cooperative fashion. When considering a director standing for re-election as a nominee, in addition to the attributes described above, the CompensationNominating and Corporate Governance Committee also considers that individual's past contribution and future commitment to us. The CompensationNominating and Corporate Governance Committee will also seek to ensure that the Board of Directors, and consequently the Audit Committee, have at least three independent members that satisfy the NYSE financial and accounting experience requirements and at least one member who qualifies as an audit committee financial expert.
After completing potential director nominees' evaluations, the CompensationNominating and Corporate Governance Committee makes a recommendation to the full Board of Directors as to the persons who should be nominated by the Board of Directors, and the Board of Directors determines the nominees after considering the recommendation and report of the CompensationNominating and Corporate Governance Committee. There is no difference in the manner by which the CompensationNominating and Corporate Governance Committee evaluates prospective nominees for director based upon the source from which the individual was first identified.
In conjunction with the Nominating and Corporate Governance Committee’s recent evaluation of Board of Directors succession risk and current practices with respect to director retention, the Committee proposed an amendment to the Corporate Governance Guidelines to increase the age at which directors will not be nominated for reelection. Benchmarking statistics on board refreshment practices and the Nominating and Corporate Governance Committee’s assessment of the Company’s board refreshment practices, the current tenure of existing directors, and other factors supported increasing the director retirement age from 72 years to 75 years. The Board of Directors approved the amended Corporate Governance Guidelines on April 19, 2021.
Messrs.Ms. Cantor, Mr. Sledd and Mr. Tullidge, and Mrs. CantorJr. were each recommended by the CompensationNominating and Corporate Governance Committee for nomination for election at the Annual Meeting as directors to serve a three-year term until their respective successors are elected and qualified, or until their earlier resignation or removal. The CompensationNominating and Corporate Governance Committee did not receive any Board of Director recommendations from any shareholder in connection with the Annual Meeting.
Finance Committee
The retirement age amendment to the Corporate Governance Guidelines had no effect on the Nominating and Corporate Governance Committee’s recommendation of directors nominated for election at the Annual Meeting.
The Finance Committee has the responsibility of establishing our financial policies and controlling our financial resources. The members of the Finance Committee are Mrs. Cantor (Chairman), and Messrs. Adams, G. Freeman, E. Moore, and Sledd. The Finance Committee met two times during fiscal year 2018.
Pension Investment Committee
The Pension Investment Committee retains and monitors the performance of an investment manager and, with the assistance of the investment manager, establishes investment objectives and policies, and monitors the performance of investments of the retirement plans and other qualified employee benefit plans of Universal Leaf Tobacco Company, Incorporated, which we refer to as Universal Leaf. The members of the Pension Investment Committee are Messrs. Sledd (Chairman), Adams, Lawton, and Mrs. Cantor. The Pension Investment Committee met four times during fiscal year 2018.
Annual Meeting Attendance
We expect and encourage each member of the Board of Directors to attend our Annual Meetings when it is reasonably practical for the director to do so. It is possible that, due to concerns regarding the ongoing COVID-19 pandemic, members of our Board may attend the 2021 Annual Meeting by telephone or electronic means. All persons serving as Board members at the time attended the Company’s 2020 Annual Meeting of Shareholders.
Board's Role in Environmental, Social and Governance (ESG) Matters
Corporate responsibility is an important priority for the Board of Directors and the Company. We have a long history of strong commitment to being an ethical and responsible company acting with integrity and respect for each other, our communities and the environment. The Board of Directors considered such commitment when it approved the charter for the Nominating and Corporate Governance Committee on April 9, 2019. In the charter, the Board of Directors tasked the Nominating and Corporate Governance Committee with the responsibility for overseeing our environmental and social responsibility and sustainability programs and practices, including considering potential long- and short-term trends and impacts that environmental and social responsibility and sustainability issues may have related to Universal’s business.
The Nominating and Corporate Governance Committee is also responsible for overseeing the Company’s public reporting on environmental and social responsibility and sustainability programs and practices. The Company’s current programs and practices are comprehensively discussed on our Internet website in our “Practices” section at http://www.universalcorp.com/Practices and our "Impact" section at http://www.universalcorp.com/Impact, and in our publicly-released annual Sustainability Reports. Our annual Sustainability Reports build on upon our existing communications with metrics, facts, and figures that represent our business throughout the world, and touch on such important issues as supply chain integrity, environmental impacts, social impacts and good agricultural practices. Our 2020 Sustainability Report is our most current report, having been publicly released in December 2020, and we encourage you to read it. Data disclosed in the 2020 Sustainability Report reflects activities that occurred during fiscal year 2020, and had been prepared in accordance with the GRI Standards: Core option and the Agricultural Products SASB standard. We intend to publicly release our 2021 Sustainability Report in December 2021, which will build on the disclosures and metrics included in our 2020 Sustainability Report.
In addition to the 2020 Sustainability Report, the Company has implemented other ESG policies and procedures, including an updated Environmental Policy and a Human Rights Policy. Our policies and Sustainability Reports can be found on our website at http://www.universalcorp.com/Practices/EnvironmentalPerformance and http://www.universalcorp.com/Practices/SocialResponsibility.
Human Capital Management
We believe our employees are among our most important resources and we rely on them to execute our business plan with integrity and efficiency. Investing in human capital is critical to our continued success. Our employees enable us to be a leading global supplier of leaf tobacco and other agri-products. We strive to foster a diverse and inclusive workplace; attract, retain, and develop talented personnel; and keep our employees safe and healthy.
Our Board of Directors believes that human capital management is an important component of our continued growth and success and is essential to our ability to attract, retain, and develop talented and skilled employees. We pride ourselves on a culture that respects co-workers and values concern for others. Our Nominating and Corporate Governance Committee and our Compensation Committee both have important roles with respect to human capital management. The Nominating and Corporate Governance Committee oversees and reviews our ESG programs, which include important policies and practices related to human rights, diversity and inclusion, prohibitions against discrimination, and other policies related to our workforce. The Compensation Committee has oversight of compensation, benefits, and retention and development processes, including an annual review of the Company's succession planning and leadership development program.
We maintain a variety of initiatives, programs and practices to support our workforce. In addition to offering competitive base salaries and wages, each of our global operations provides benefits that are designed to attract and retain our employees. These benefits vary depending on the location, seniority and employment status of our employees, and can include medical insurance, long-term disability insurance, retirement benefits, and similar programs. Employee training and development of both technical and leadership skills are also integral aspects of our human capital strategy. We provide employees with a range of development opportunities that vary by location and seniority of employees, such as online training, live classes, and mentoring to assist with career advancement. To further develop leadership skills, we maintain specific leadership programs for aspiring leaders and new supervisors, managers, and directors. As a requirement of our human capital management approach, we keep the health and safety of our employees at the forefront of our business efforts. We are committed to the prevention of injury and illness in the workplace through strong health and safety management, employee empowerment and accountability, and strict compliance with health and safety regulations. We also utilize other health and safety initiatives to ensure our facilities remain safe for our employees, such as the use of health and safety Key Performance Indicators across our operations that allow for in-depth data analysis and monitoring.
We are committed to protecting the human rights of our employees and have policies in place to support this effort, including relating to whistleblowing, harassment, equal employment and compliance with local labor laws. Our Board of Directors also adopted our Code of Conduct and Anti-Corruption Compliance Manual to promote ethical behavior throughout the Company and address violations of ethical standards. The Code and Manual apply directly to all employees, officers, and directors attendedin the Universal family of companies. The Board of Directors also adopted our Human Rights Policy, which defines the high ethical and social standards we implement across our global operations. We support these rights and programs through compliance communications, face-to-face and online training, and through an anonymous compliance hotline that we maintain globally. Our compliance hotline is available to all our employees and any other interested parties 24 hours a day, 7 days a week, by internet or phone. The Board of Directors oversees our global compliance program and receives reports from our Chief Compliance Officer at each Board of Directors meeting.
2017 Annual Meeting.
COMPENSATION DISCUSSION AND ANALYSIS
Fiscal Year 2021 Compensation Discussion and Analysis
This Compensation Discussion and Analysis and the executive compensation tables that follow describe the compensation of the Company’s named executive officers:
•George C. Freeman, III, Chairman, President and Chief Executive Officer;
•Airton L. Hentschke, Senior Vice President and Chief Operating Officer;
•Johan C. Kroner, Senior Vice President and Chief Financial Officer;
•Preston D. Wigner, Vice President, General Counsel and Secretary; and
•Theodore G. Broome, Executive Vice President and Sales Director, Universal Leaf.
We refer to these five executives as our named executive officers. Information about named executive officers’ salaries and any changes thereto in fiscal year 2021 can be found under “Base Salaries” on page 39. Information about annual cash incentive targets and awards appears under “Annual Cash Incentives Awards” beginning on page 40. Information about long-term targets and awards appears under “Long-Term Equity Participation” beginning on page 42.
Executive Summary
Guiding Philosophy
Universal Corporation is a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents that sources and processes leaf tobacco and plant based ingredients. Tobacco has been our principal focus since our founding in 1918, and we are the leading global leaf tobacco supplier. The largest portion of the Company'sour business involves procuring and processing leaf tobacco for manufacturers of consumer tobacco products throughout the world. As such,Through our plant-based ingredients platform, we provide a variety of value added manufacturing processes to produce high-quality, specialty vegetable and fruit-based ingredients for the food and beverage end markets. Our business is subject to risks, including changes in general economic, political, market, and weather conditions, as well as government regulation, and fluctuations in foreign exchange rates. Our executive compensation program therefore, reflects a strong tie of pay to performance in order to link the interests of executive officers to the interests of shareholders and promote the creation of long-term shareholder value.
The goal of our executive compensation and benefits program is to attract, motivate, reward, and retain the management talent required to achieve our business objectives, at compensation levels that are fair, equitable and competitive with those of comparable companies. This goal is furthered by the Compensation and Governance Committee's policy of linking compensation to individual and corporate performance and by encouraging significant stock ownership by senior management in order to support our business strategy and align the financial interests of management with those of the shareholders.
The following objectives serve as guiding principles for all compensation decisions:
Compensation•compensation should be set based on the responsibilities, skills, experience and achievements of each executive officer, taking into account competitive market rates;
Compensation•compensation should be linked to strategic objectives and to individual and corporate performance by aligning our executive compensation program to company-wide performance, which we define in terms of economic performance and increases in shareholder value;
There•there should be an appropriate mix and weighting among base salary, cash incentives and equity awards, such that an adequate amount of each executive officer's total compensation is performance-based or “at risk.” Further, as an executive's responsibilities increase, the portion of “at risk” compensation for the executive should increase as a percentage of total compensation;
Compensation•compensation should avoid any arrangements that pay for failure;
Compensation•compensation programs should be designed to provide appropriate performance incentives without encouraging executives to take excessive risks in managing the business and which emphasize our commitment to our core values;
Strong•strong emphasis should be placed on equity-based compensation and equity ownership in order to align the financial interests of senior management with those of the shareholders and to ensure the proper focus on long-term business strategies;
•strong emphasis on equity compensation also reinforces other long-term business goals including our commitment to high ethical, social and environmental standards in supporting our sustainable operations and supply chain; and
Compensation•compensation goals and objectives should be transparent and easy to communicate, both internally and externally. Shareholders should be supplied with clear, comprehensive compensation disclosure.
Company Performance
Fiscal year 2021 was highlighted by a good performance in our Tobacco Operations segment, as well as building upon our broader plant-based agri-products services platform with our fiscal year 2021 acquisition of Silva International Inc.
Despite fewer carryover crop sales and shipment delays in North America, an African Burley crop size that was downConsolidated revenues increased by more than 40%$73.4 million (4%) over the prior fiscal year, as revenues from our Ingredients Operations segment increased $118.6 million. Our Tobacco Operations segment benefited from increased shipments, as well as favorable currency remeasurement and a $10 million reduction in income from the timing of receipt of distributions of unconsolidated subsidiaries, we delivered good results again this year. foreign currency exchange comparisons.
Fiscal year 2021
Net income for the fiscal year ended March 31, 2018,2021, was $105.7$87.4 million, or $4.14$3.53 per diluted share, compared with $71.7 million, or $2.86 per diluted share, for the prior fiscal year. The results for the fiscal year 2017'sended March 31, 2021 included:
•$6.7 million of transaction and acquisition purchase accounting costs for the Silva acquisition;
•$17.8 million of restructuring and impairment costs for various operations in both the Tobacco and Ingredients segments;
•$4.2 million for reversal of a portion of the contingent consideration for the FruitSmart acquisition;
•$1.8 million of interest expense related to an uncertain tax matter at a foreign subsidiary; and
•$4.4 million of income tax benefit for final tax regulations regarding the treatment of dividends paid by a foreign subsidiary.
These items reduced diluted earnings per share by $0.72 for the fiscal year ended March 31, 2021.
Fiscal year 2020
As noted above, net income of $106.3for the fiscal year ended March 31, 2020, was $71.7 million, or $0.88$2.86 per diluted share. The results for the fiscal year 2017 resultsended March 31, 2020 included:
•$6.8 million of transaction and acquisition purchase accounting costs for the FruitSmart acquisition;
•$6.3 million of restructuring and impairment costs for the Tobacco and Ingredients segments;
•$2.8 million of income tax benefit for an income tax settlement charge related to operations at a foreign subsidiary.
These items reduced diluted earnings per share by $0.63 for the fiscal year ended March 31, 2020.
Consolidated operating income, which included a one-time reduction of earnings available to common shareholders of $74.4 million, or $2.99 per diluted share, from the conversionrestructuring and impairment costs and transaction and acquisition purchase accounting costs for cashfiscal years 2021 and 2020, as well as the fiscal year 2021 reversal of the remaining outstanding sharescontingent consideration liability for the FruitSmart acquisition, was $147.8 million, an increase of our Series B 6.75% Convertible Perpetual Preferred Stock under$21.4 million compared to the mandatory conversionprior fiscal year.
The combined Tobacco and Ingredients Operations reportable segments operating income, which includes equity in January 2017. Operating incomepretax earnings (loss) of $171.5unconsolidated affiliates and excludes restructuring and impairment costs in both fiscal years, was $169.2 million for the fiscal year ended March 31, 2018, was down $6.9 million compared to the fiscal year ended March 31, 2017. Segment operating income, which excludes non-recurring items, was $180.6 million for fiscal year 2018, a decrease2021, an increase of $7.9$31.1 million from the prior fiscal year.
The additional reportable segment operating income from the FruitSmart and Silva acquisitions, as well as a favorable remeasurement and currency variance, largely accounted for the improved comparison to fiscal year 2020.
The following charts show a five-year history of our diluted earnings per share and our operating income:
•During fiscal year 2018,2021, we generated $83.2$220.4 million in net cash flows from our operations, returned $76.3$75.2 million to shareholders through dividends and common share repurchases, and continued to maintain our strong balance sheet.
•Over the last three fiscal years, we have strengthened our balance sheet by generating $520generated close to $400 million in net cash flow from operations returning almost $380and returned over $255 million to shareholders through a combination of dividends and share repurchases while maintaining debt below $450 million. During fiscal year 2018, we repurchased 403,224 shares of Common Stock at an aggregate cost of $21.6 million.repurchases.
•Net debt as a percentage of totalnet capitalization was approximately 12%25% at March 31, 2018,2021, up from 11%22% at March 31, 2017. Over the last five fiscal years, we have maintained our2020, primarily reflecting lower cash balances. Our net debt as a percentage of total capitalization remains at a relatively low level for the Company.very manageable level.
The following charts show a five-year history of our net cash flow from operations, our funds returned to shareholders, and our net debt as a percentage of total capitalization:net capitalization.
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• | During fiscal year 2018, we approved our 47th consecutive annual dividend increase on our Common Stock. In addition, on May 23, 2018, we announced a 36% increase in our dividend, thereby raising our annual per share dividend to $3.00.
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•In May 2018, we announced an enhanced capital allocation strategy that included a 36% increase in the dividend, raising our annual per share dividend to $3.00. In May 2021, we announced our 51st consecutive annual dividend increase, increasing our annual Common Stock per share dividend to $3.12. Based on the March 31, 2021 closing price of $48.50 for our Common Stock, as quoted on the NYSE, on March 29, 2018, the last trading day of fiscal year 2018, our Common Stock decreased approximately 13.5% in value over the last five fiscal years compared to the market closing price of $56.04 at March 31, 2013.dividend yield was 5.22%.
The following charts show a five-year history of our dividends declared per share of Common Stock and the market price of our Common Stock:Stock on the last business day of each fiscal year:
•We continued to advance our goal of providing compliant leaf produced in a sustainable and competitive manner for our customers, and we maintained our position as the leading global leaf tobacco supplier. We have also been positioning our company for the future by investing in strengthening our plant-based agri-products services platform.
We believe our compensation philosophy is appropriate and aligned with the interests of our shareholders, as demonstrated by our Common Stock performance. The following performance graph compares the cumulative total shareholder return on our Common Stock for the last three fiscal years with the cumulative total return for the same period of the Standard & Poor's Smallcap 600 Index and the peer group index. The peer group represents Alliance OnePyxus International, Inc. The graph assumes that $100 was invested in Universal Corporation Common Stock at the end of the Company's 20152018 fiscal year, and in each of the comparative indices, in each case with dividends reinvested.
Executive Compensation
The Compensation and Governance Committee, Board of Directors and management of Universalthe Company take pride in our performance-based compensation program that attracts and remain committed to maintaining the integrity of the program in good timesretains top management talent, reinforces ownership, and bad.emphasizes performance as a basis for compensation. Our executive compensation program primarily consists of moderate base salary and variable at-risk annual cash and equity incentive awards that are benchmarked to the 50th percentile of the peer group market. While the Compensation and Governance Committee utilizes market data and other statistical information on executive compensation, it is not over-reliant on such data. The Committee recognizes its responsibility to avoid the tendency to permit “benchmarking”benchmarking to be a contributor to escalating executive compensation. Over the last eighttwo years, the base salary of our Chief Executive Officer has increased by an average of only 2.15%2.8% per year. For fiscal year 2018,2022, increases in the total direct opportunity compensation of our Chief Executive Officer and our named executive officers were limited towere 1.5%, except for our Chief Executive Officer who received an increase of 5.87%. This initial increase was warranted as Mr. G. Freeman's compensation remains below the 50th percentile of our peer group. For fiscal year 2019, the increase in total direct opportunity compensation of our Chief Executive Officer was limited to 2%.
The following charts show the relative components of total compensation for our Chief Executive Officer and our other named executive officers in terms of Base Salary, Short-Term Performance Pay, and Long-Term Performance Pay:
(1)Base Salary is the actual amount paid in fiscal year 2021. Short-Term Performance Pay is the actual amount earned in fiscal year 2021 based on performance. Long-Term Performance Pay is the value on the grant date of Restricted Stock Units and Performance Shares awards granted in fiscal year 2021. See Summary Compensation Table for the amounts of all elements of reportable compensation described in this section.
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(1)(2)This chart excludes the Chief Executive Officer.
| Base Salary is the actual amount paid in fiscal year 2018. Short-Term Performance Pay is the actual amount earned in fiscal year 2018 based on performance. Long-Term Performance Pay is the value on the grant date of restricted stock units and Performance Shares awards granted in fiscal year 2018. See Summary Compensation Table for the amounts of all elements of reportable compensation described in this section. |
Our annual cash incentive payments under the Annual Incentive Plan (i.e., our Short-Term Performance Pay) are based on the Company's achievement against pre-established performance goals for adjusted diluted earnings per share and adjusted economic profit. In fiscal 2019, the Company announced an enhanced capital allocation strategy that included exploring strategic acquisitions to enhance profitability, growth and shareholder value. In fiscal 2021, the Compensation Committee incorporated an acquisition performance modifier (the "Acquisition Performance Modifier") into the annual cash incentive program. The financial performance measures and the threshold, and maximum payout opportunities under the core annual cash incentive program for the named executive officers did not change. However, the Compensation Committee applied the Acquisition Performance Modifier to adjust the incentive plan cash bonus payout based upon the performance goal established with respect to the Company's recent acquisition. In fiscal year 2018,2021, our reported performance was better than expectedstrong and we exceeded our performance goals on a Company-wide basis. However the performance of the recent acquisition did not achieve the aggressive pre-Covid-19 target. This resulted in the aggregate. That performance corresponded to a total weighted payout of 110.55% of an executive's individual target cash bonus opportunity amount based on104% for the pre-approved percent-of-target performance tables. The weighted payout is lower than last year's payout of 131.05% due largely to an increase innamed executive officers. Additional information about the performance target for adjusted earnings per shareAnnual Cash Incentive award and the reduced generation of economic profit.
Acquisition Performance Modifier are on pages 40 to 42.
No one form of compensation will perfectly align the financial interests of senior management with those of the shareholders, but we believe ourthe equity award program plays a significant role in striving to achieve the appropriate balance. Stock ownership, supported by our equity award program (i.e., our Long-Term Performance Pay), is the most effective way to ensure that management is properly motivated to create long-term shareholder value. To that end, we maintain robust stock ownership guidelines applicable to all named executive officers and other equity award participants.executive officers. As of the record date, June 12, 2018,8, 2021, all of our current named executive officers, except Mr. Kroner, who became a named executive officer as of September 1, 2018, are well in excess of their ownership targets and collectively hold beneficial ownership of almost 1.9%approximately 2.1% of our Common Stock. Our named executive officers in the aggregate beneficially own as of the record date approximately $30.2$28.9 million of Common Stock equating to approximately 11.0eight times their combined base salaries. As significant long-term shareholders, our executives are exposed to the same risks thatas are our investors are.investors.
We do donot use, offer, or provide our executives with many of the types of perquisites that other companies offer their executives, such as:
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ž •personal use of corporate aircraft;
| ž •company cars or vehicle allowances;
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ž•membership dues in social organizations;
| ž •employment, severance or retention agreements; or
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ž•excise tax gross-ups;
| ž •other tax reimbursements.
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ž •any other tax gross-ups;
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We currently maintain only threeIn fiscal 2021, we implemented the Change of Control Agreements with our named executive officers, eachPolicy applicable to senior management. Please see the section “Change of which contains a “double trigger” as well as non-competition and non-solicitation clauses, but do not contain any obligations to gross-up severance payments. Control Agreements” on page 45 of this Proxy Statement for further information.
We have a recoupment or “clawback” provision applicable to all performance-based compensation, and we have adoptedcompensation. We also maintain a policy prohibiting hedging and derivatives trading in our Common Stock.
Stock (please see the section “Prohibitions on Hedging” on page 37 of this Proxy Statement for further information).
At the 20172020 Annual Meeting of Shareholders, 93%approximately_97% of the votes cast supported our executive compensation policies and procedures for our named executive officers. Given the high level of support from our shareholders, as demonstrated by the results of their vote, we did not make any significant changes in our policies or programs in response to their vote.
Compensation and GovernanceCommittee Activities in Fiscal Year 20182021
In fiscal year 2018,2021, the Compensation and Governance Committee reviewed the existing mix, form and calibration of the executive compensation programs and confirmed its commitment to the principles and structure it followed during fiscal year 2017.2020. Some of the significant actions the Compensation and Governance Committee undertook in fiscal year 2021 included:
•2018 included:Reaffirmed the fiscal year 2020 comprehensive compensation assessment performed by Willis Towers Watson of all of the Company’s executive compensation plans, programs and policies, including the long-term and short term incentive award program structure;
Reviewed•Reaffirmed the Company's Enhanced Succession Planningpeer group for use beginning with fiscal year 2021 as part of the peer group review and Leadership Development Program to ensure continuityevaluation performed by Willis Towers Watson;
•Reviewed our Directors compensation program with Willis Towers Watson and development of Company leadership.
Began discussing enhancementsadopted changes to the processprogram to be consistent with our peer group and current market practice;
•Adopted a key strategic compensation modifier (the Acquisition Performance Modifier) which would adjust the short-term incentive payout percentage based upon the performance goal established by the Compensation Committee for the recent acquisition;
•Approved the performance goal and metrics for the Acquisition Performance Modifier;
•Adopted the broad based double-trigger Change in Control Policy to eligible executives as recommended by Willis Towers Watson as part of evaluating Board of Directors' skillsits comprehensive compensation evaluation and experience in order to assess needs in connection with the selection and nomination of membersreview of the Board of Directors.compensation program;
Evaluated the impact on the Company of the enactment of the Tax Cuts and Jobs Act, including the changes in Section 162(m) of the Internal Revenue Code;
•Reaffirmed the Compensation and Governance Committee's objective of setting total direct opportunity compensation for our executives at levelslevels competitive with the market median for executives in comparable positions at companies of comparable size, complexity, and operational characteristics;
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Ÿ | Evaluated the mix of pay to ensure that the appropriate balance among base salary, annual cash incentives, and long-term performance-based award opportunities is maintained; |
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Ÿ | Evaluated alternative performance metrics and reaffirmed the use of adjusted earnings per share as a performance goal in both the annual incentive and long-term performance award program; |
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Ÿ | Reviewed the performance targets and calibration ranges for economic profit and adjusted earnings per share to reflect current and anticipated business conditions and to ensure adequate performance stretch in the annual incentive plan and performance-based stock unit goals; |
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Ÿ | Reaffirmed that 5-year restricted stock units and 3-year performance-based stock units, which we refer to as Performance Shares, are appropriate forms of long-term incentive awards. |
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Ÿ | Reaffirmed the stock ownership guidelines for all of our directors, officers and the officers of Universal Leaf, with a title of Senior Vice President or above, and monitored compliance with the guidelines; |
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Ÿ | Conducted a review and assessment of potential risks arising from our compensation policies and programs; |
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Ÿ | Reaffirmed the “clawback” provision in our performance-based awards; |
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Ÿ | Reaffirmed a policy prohibiting our executives and directors from hedging or engaging in any derivatives trading in respect to shares of our Common Stock and generally prohibiting pledging of securities. This policy serves to enhance our long-standing policy prohibiting insider trading by executives and directors while in the possession of material information that is not available to the public; and |
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Ÿ | Reaffirmed a commitment to provide very limited perquisites to executives. |
•Evaluated and reviewed compensation tally sheets of all the named executive officers;
•Evaluated the mix of pay to ensure that the appropriate balance among base salary, annual cash incentives, and long-term performance-based award opportunities is maintained;
•Evaluated performance metrics and reaffirmed the use of economic profit and adjusted earnings per share as performance goals in the annual incentive plan and adjusted earnings per share as a performance goal in the long-term performance award program;
•Reviewed and approved the performance targets and calibration ranges for economic profit and adjusted earnings per share to reflect current and anticipated business conditions and to ensure adequate performance stretch in the annual incentive plan and performance-based stock unit goals;
•Reaffirmed that restricted stock units and performance-based stock units, which we refer to as Performance Shares, are appropriate forms of long-term incentive awards;
•Reaffirmed the stock ownership guidelines for all of our directors, named executive officers, and other executive officers and directors of our operating subsidiary, and monitored compliance with the guidelines;
•Discussed the Company's succession planning and leadership development program to ensure continuity and development of Company leadership;
•Conducted a review and assessment of potential risks arising from our compensation policies and programs;
•Reaffirmed the “clawback” provision in our performance-based awards; and
•Reaffirmed a commitment to provide very limited perquisites to executives.
Retaining Experts to Aid in Discharge of Duties
The Compensation and Governance Committee has sole authority to retain experts, consultants and other advisors to aid in the discharge of its duties. The Compensation and Governance Committee meets privately with its independent outside advisor from time to time without management present to discuss developments and best practices inand conduct assessments of executive compensation matters. All work completed by the outside advisor, whether for the Compensation and Governance Committee or management, is subject to the approval of the Compensation Committee. In fiscal 2021, Willis Towers Watson conducted a formal review and Governance Committee.assessment of the Company's executive compensation plans and policies, including the executive compensation program structure and the change in control severance policies. Willis Towers Watson had aggregate fees of approximately $40,800 for executive compensation services in fiscal 2021. The Compensation and Governance Committee does not delegate authority to its outside advisor. In fiscal year 2018, Willis Towers Watson was engaged by the Company to providealso provided consulting services for the Company's health and welfare benefit plans and International Savings Plan at an estimated annualand provided administrative services to establish Health Reimbursement Accounts for retirees. The total cost offor these additional services was approximately $270,000. This total includes direct fee payments by the Company of approximately $145,000 and commissions of approximately $125,000 that were paid directly to Willis Towers Watson by the carrier.$96,100. The comparative increase from the previous year was also impacted by special projects involving the Company’s retiree healthcare plan. The Compensation and Governance Committee assessed the independence of Willis Towers Watson pursuant to Item 407(e)(3)(iv) of Regulation S-K and concluded that no conflict of interest exists that would prohibit Willis Towers Watson from independently representing the Compensation and Governance Committee.
Peer Group Analysis
On an annual basis, the Compensation and Governance Committee determines the total compensation target for each of our executive officers. The Compensation and Governance Committee then sets the mix of the different components of compensation desired to achieve the total compensation target. From time to time, the Compensation and Governance Committee requests that its outside advisor benchmark the component totals to confirm that such amounts are within reason of our peer group. The Compensation and Governance Committee targets the 50th percentile in measuring competitiveness.
During fiscal year 2017,2020, the Compensation and Governance Committee requested that Willis Towers Watson review and, if necessary, update our then-current peer group list. Willis Towers Watson evaluated the peer group list to discover relevant comparator companies not currently within our peer group and potentially to identify companies currently included in our peer group that may no longer be considered comparable. Characteristics considered in this evaluation included industry relevance, similarity of business operations, markets, relevant size, and market capitalization, as well as business operations conducted in similar environments. Willis Towers Watson did identify changesidentified one change to the peer group list that wouldto better align that list with us in terms of the overall characteristics considered. Although the leaf tobacco industry is highly competitive, Universal and Alliance OnePyxus International, Inc., are the only global, independent, publicly traded competitors. We, therefore, lack true “peers” within our own industry. TheIn fiscal 2021, the Compensation and Governance Committee reviewed the proposed list with Willis Towers Watson and reaffirmed the use of the new peer group list beginning withadopted in the prior fiscal year, 2018. The peer group list consistsconsisting of the following companies:
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Pyxus International, Inc. | Flowers Foods, Inc. | Seaboard Corporation |
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Alliance One International,The Andersons, Inc. | Fresh Del Monte Produce Inc. | SeaboardSeneca Foods Corporation |
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The Andersons,B&G Foods, Inc. | Ingredion Incorporated | Seneca Foods CorporationSunOpta Inc. |
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Cal-Maine Foods, Inc. | Lancaster Colony Corporation | SunOptaTreeHouse Foods, Inc. |
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Darling Ingredients, Inc. | McCormick & Company, Inc. | TreeHouse Foods, Inc. |
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Flowers Foods, Inc. | Sanderson Farms, Inc. | |
Stock Ownership Guidelines
The Compensation and Governance Committee believes that it is important to align the interests of members of senior management with those of our shareholders. While the Compensation and Governance Committee considers this principle when determining the appropriate mix of base salary, annual cash incentive awards, and long-term equity awards, the Compensation and Governance Committee also established stock ownership guidelines that encourage the accumulation and retention of Common Stock.
Our current stock ownership guidelines for senior management are expressed as a multiple of base salary, ranging from 2.5 to 6.0 times base salary. The Compensation and Governance Committee believes this methodology provides for greater
individualization of ownership guidelines. The guidelines work in concert with the long-term incentive plan and are intended to foster strong executive ownership of our Common Stock. The Compensation and Governance Committee believes that it is important to achieve and maintain these guideline amounts as minimum target levels of ownership. The Compensation and Governance Committee reviews compliance with our stock ownership guidelines on an annual basis.
Under our stock ownership guidelines, executives must comply within five years from the date of the executive's appointment to a qualifying position and certain executives are provided additional time when they receive promotions that result in higher ownership targets. The guidelines apply to our named executive officers in the following manner:
| | | | | |
| Ownership Guideline Target |
George C. Freeman, III | 6.0 times base salary |
Airton L. Hentschke | 5.0 times base salary |
DavidJohan C. MooreKroner | 5.0 times base salary |
Preston D. Wigner | 4.0 times base salary |
Theodore G. Broome | 3.5 times base salary |
Only shares beneficially owned (as defined by the SEC's rules and regulations) by our executive officers, excluding such executives' Performance Shares but including the executive officers' restricted stock unit awards (and corresponding dividend equivalent rights), are counted in determining compliance with the guidelines. The table below sets forth each of our named executive officers' 2017stock holdings and value on the record date, June 8, 2021, and the ownership multiple as comparedit pertains to 2018 holdings and value.the ownership guidelines.
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| | Shares held as of June 9, 2017 | | Value of Shares held as of June 9, 2017(1) | | Shares held as of June 12, 2018 | | Value of Shares held as of June 12, 2018(2) | | Actual Ownership as a Multiple of Base Salary |
| | (#) | | ($) | | (#) | | ($) | | (#) |
George C. Freeman, III | | 227,216 |
| | 15,200,750 |
| | 248,304 |
| | 16,065,269 |
| | 17.5 |
|
Airton L. Hentschke | | 41,955 |
| | 2,806,790 |
| | 54,761 |
| | 3,543,037 |
| | 6.1 |
|
David C. Moore | | 78,588 |
| | 5,257,537 |
| | 80,933 |
| | 5,236,365 |
| | 11.4 |
|
Preston D. Wigner | | 39,466 |
| | 2,640,275 |
| | 43,643 |
| | 2,823,702 |
| | 6.9 |
|
Theodore G. Broome | | 33,931 |
| | 2,269,984 |
| | 38,420 |
| | 2,485,774 |
| | 6.4 |
|
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(1)
| Based on $66.90 per share, the closing price of a share of our Common Stock as quoted on the NYSE on June 9, 2017. |
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(2)
| Based on $64.70 per share, the closing price of a share of our Common Stock as quoted on the NYSE on June 12, 2018. |
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| | Shares held as of June 8, 2021 | | Value of Shares held as of June 8, 2021(1) | | Ownership Guideline as a Multiple of Base Salary | | Actual Ownership as a Multiple of Base Salary |
| | (#) | | ($) | | | | |
George C. Freeman, III | | 305,353 | | | 17,395,960 | | | 6.0 | | 17.8 |
Airton L. Hentschke | | 90,487 | | | 5,155,044 | | | 5.0 | | 8.3 |
Johan C. Kroner (2) | | 23,967 | | | 1,365,400 | | | 5.0 | | 2.9 |
Preston D. Wigner | | 49,446 | | | 2,816,939 | | | 4.0 | | 6.5 |
Theodore G. Broome | | 38,702 | | | 2,204,853 | | | 3.5 | | 5.3 |
(1)Based on $56.97 per share, the closing price of a share of our Common Stock as quoted on the NYSE on the record date, June 8, 2021.
(2)Mr. Kroner was promoted to Senior Vice President and Chief Financial Officer as of September 1, 2018.
All of our named executive officers exceed their ownership targets, or are in compliance with our stock ownership guidelines at the present time. Mr. Kroner, who became a named executive officer as of September 1, 2018, has until 2023 to reach his ownership target in accordance with our stock ownership guidelines. As of the record date, June 12, 2018,8, 2021, our named executive officers own approximately 1.9% 2.1% of the outstanding Common Stock. We believe significant stock ownership is the most important factor in aligning the interests of management with those of our shareholders.
In addition, the Compensation and Governance Committee maintains stock ownership guidelines applicable to the non-employee directors. Information with respect to the non-employee directors' stock ownership guidelines is set forth in “Non-Employee Director Stock Ownership Guidelines” on page 5667 of this Proxy Statement.
Limitations on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code (the “Code”) generally precludes a tax deduction by any publicly-held company for compensation paid to any “covered employee” to the extent the compensation paid to such covered employee exceeds $1 million during any taxable year of the Company. The Tax Cuts and Jobs Act was enacted in the United States in December 2017 and included changes to Section 162(m) of the Code effective in 2018. Prior to 2018, “covered employees” included the Chief Executive Officer of the Company and the three other highest paid officers of the Company (other than the Chief Financial Officer). For 2018 and later years, “covered employees” will include the Chief Executive Officer of the Company, the Chief Financial Officer of the Company, the three other highest paid officers of the Company (other than the Chief Executive Officer and the Chief Financial Officer) and any employee who qualified as a “covered person” for any tax year beginning after 2017. For years beginning prior to January 1, 2018, the $1 million deduction limit did not apply to “qualified performance-based compensation” that is based on the attainment of pre-established, objective performance goals established under a stockholder-approved plan. Effective for the years beginning on or after January 1, 2018, there is no exception for “qualified performance-based compensation” from the Section 162(m) limitation. A transition rule however provides that the “qualified performance-based compensation” exemption will continue to apply to awards that are made on or before October 2, 2017, pursuant to a legally binding contract in effect at such time that is not materially modified thereafter. A number of requirements must be met under Section 162(m) of the Code in order for particular compensation to so qualify for the exception such that there can be no assurance that “qualified performance-based compensation" will be fully deductible under all circumstances. We believe that it is important to preserve
flexibility in administering compensation programs to promote various corporate goals. Accordingly, we have not adopted a policy that all compensation must qualify as deductible under Section 162(m) of the Internal Revenue Code. Amounts paid under our compensation programs may not be deductible as the result of Section 162(m). While our policy is generally to preserve corporate tax deductions, by qualifying compensation over $1 million paid to executive officers as performance-based, the Compensation and Governance Committee may from time to time, conclude that certain compensation arrangements are in our best interests and the best interests of our shareholders despite the fact that such arrangements might not, in whole or part, qualify for tax deductibility. We intend to design our executive compensation arrangements to be consistent with our best interests and the interests of our shareholders. To the extent we determine it to be consistent with our best interests and the interests of our shareholders, we intend to preserve, to the extent practicable, the applicability of the transition rule to awards that were granted on or before October 2, 2017. However, there is no guarantee that such transition status can or will be applicable.
Clawback in the Event of Restatements or Ethical Misconduct
All of our cash incentive awards, as well as performance-based equity awards are subject to a recoupment or "clawback" provision. The purpose of the clawback provision is to authorize the potential recovery or adjustment of awards when the performance measures on which such awards were based are restated in a manner that would have decreased the amount of the award had the restated performance measure been used to calculate the original award, or when the award is otherwise deemed inappropriate by the Compensation and Governance Committee due to the occurrence of certain stated events. In the event of a material restatement of our financial statements, we may seek recoupment of incentive compensation and equity awards paid under our incentive plans for all relevant performance periods. The clawback provision applied to all cash incentive and equity awards made during fiscal year 2018.
2021.
Management has also implemented additional effective controls to minimize potential unintended or willful reporting errors. In addition, the Compensation and Governance Committee also has the discretion to reduce or eliminate an executive's incentive compensation and equity awards or seek a recoupment of the same, in the event of ethical misconduct. The Compensation and Governance Committee will review allreviews cash incentive payments, performance-based equity awards, and other performance-based awards that are made to all current and former officers on the basis of having met or exceeded performance goals. Appropriate action will be taken after considering all factors and circumstances.
In addition to the clawback provision, our Benefit Restoration Plan includes a forfeiture provision whereby a participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan, if we terminate the participant's employment as a result of a participant's fraud, dishonesty, or embezzlement where the participant has been materially, unjustly enriched by such conduct.
Prohibitions on Hedging
The Company prohibits all directors, officers and employees from engaging in speculative trading and hedging shares of Company securities, including Common Stock. This includes prohibitions against short-selling Company securities and transactions in any derivative of Company securities, including publicly traded options for hedging and similar transactions. Directors, executive officers and employees are prohibited from writing call or put options relative to the Company’s securities. Further, directors, officers and employees are restricted from buying Company securities on margin or using Company securities as collateral for a loan. In addition, directors and executive officers are prohibited from pledging Company securities without prior approval from the General Counsel and then only if the amount of Company securities pledged is not significant and such director or executive officer can clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities. Additionally, the Company’s Code of Conduct prohibits trading for directors, officers and certain employees during designated blackout periods and requires approval by the Company’s legal department prior to any trade
2017 Stock Incentive Plan
The Universal Corporation 2017 Stock Incentive Plan was approved by the Compensation and Governance Committee and subsequently our shareholders at our 2017 Annual Meeting, approved and adopted the Universal Corporation 2017 Stock Incentive Plan, which we call the 2017 Stock Incentive Plan.Meeting. This plan replaced our 2007 Stock Incentive Plan. The 2017 Stock Incentive Plan serves as the core program for the performance-based compensation components of our named executive officers' total compensation. The 2017 Stock Incentive Plan defines the incentive arrangements for eligible participants and:
•authorizes the granting of annual cash incentive awards, stock options, stock appreciation rights, Performance Shares, restricted stock, restricted stock units and other incentive awards, all of which may be made subject to the attainment of performance goals approved by the Compensation Committee;
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Ÿ | authorizes the granting of annual cash incentive awards, stock options, SARs, Performance Shares, restricted stock, restricted stock units and other incentive awards, all of which may be made subject to the attainment of performance goals approved by the Compensation and Governance Committee; |
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Ÿ | provides for the enumeration of the business criteria on which an individual's performance goals are to be based; |
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Ÿ | establishes the maximum share grants or awards (or, in the case of incentive awards, the maximum compensation) that can be paid to a participant in the 2017 Stock Incentive Plan; and |
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Ÿ | prohibits repricing or the exchange of options or stock appreciation rights without the approval of shareholders. |
•provides for the enumeration of the business criteria on which an individual's performance goals may be based;
•establishes the maximum share grants or awards (or, in the case of incentive awards, the maximum compensation) that can be paid to a participant in the 2017 Stock Incentive Plan; and
•prohibits repricing or the exchange of options or stock appreciation rights without the approval of shareholders.
The Compensation and Governance Committee shallwill continue to administer awards previously granted under the 2007 Stock Incentive Plan.
Components of Executive Compensation
The Compensation and Governance Committee targets a specific mix of compensation components, with the intent to make each component of total direct opportunity compensation competitive with other companies of similar size and operational characteristics while also linking compensation to individual and corporate performance and encouraging stock ownership by senior management. TheIn fiscal 2020, the Compensation Committee engaged its independent advisor to assess the market alignment and Governancecompetitiveness of the Company's executive compensation programs, which included a peer group review, a compensation comparison review and a review of the overall design and alignment to the market of the company's executive compensation programs, including compensation philosophy, annual and long-term incentive plans, stock ownership guidelines, benefit plans and executive perquisites, severance policies, change of control policies, corporate governance and outside directors practices. Based upon this review, the Compensation Committee believes that the various elements of our compensation program effectively achieve the objective of aligning compensation with performance measures that are directly related to our financial goals and creation of shareholder value, without encouraging executives to take unnecessary and excessive risks.
In fiscal 2021, the Compensation Committee incorporated an Acquisition Performance Modifier, which would increase or decrease the payout percentage of the annual cash incentive award based upon financial performance goals established for the Company's recent acquisition.
The major components of our executive compensation program are the following:
Total Direct Opportunity Compensation
•Base salary. Base salary is intended to reflect the market value of an executive officer's role and responsibility, with differentiation for individual capabilities and experience in their positions.
•Annual cash incentive awards.Annual cash incentive awards in the form of market competitive, performance-based, cash bonuses are designed to focus our executives on pre-set goals each year and to drive profitability, growth, and shareholder value.
•Long-term equity participation. Long-term equity participation is designed to recognize executives for their contributions to the Company, to highlight the strategic importance of each executive's role, to promote retention, and to align the interests of management and shareholders in long-term growth and stock performance by rewarding executives for the creation of shareholder value.
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Ÿ | Base salary. Base salary is intended to reflect the market value of an executive officer's role and responsibility, with differentiation for individual capabilities and experience in their positions.
|
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Ÿ | Annual cash incentive awards. Annual cash incentive awards in the form of market competitive, performance-based, cash bonuses are designed to focus our executives on pre-set goals each year and to drive profitability, growth, and shareholder value.
|
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Ÿ | Long-term equity participation. Long-term equity participation is designed to recognize executives for their contributions to the Company, to highlight the strategic importance of each executive's role, to promote retention, and to align the interests of management and shareholders in long-term growth and stock performance by rewarding executives for the creation of shareholder value.
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Total Indirect Compensation
•Other benefits. We believe that providing competitive health and welfare benefits at a reasonable cost is an important part of any employee’s compensation package and promotes employee health. Our named executive officers participate in the same health and welfare benefits as our salaried employees. These health and welfare benefits for fiscal year 2021 included health, dental, vision, life insurance, accidental death and dismemberment insurance, and disability benefits. These benefits, including plan design and cost, are analyzed annually.
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Ÿ | Other benefits. We believe that providing competitive health and welfare benefits at a reasonable cost is an important part of any employee’s compensation package and promotes employee health. Our named executive officers participate in the same health and welfare benefits as our salaried employees. These health and welfare benefits for fiscal year 2018 included health, dental, vision, life insurance, accidental death and dismemberment insurance, and disability benefits. These benefits, including plan design and cost, are analyzed annually.
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Ÿ | Retirement and other post-retirement compensation. Please see "Retirement and Post-Termination Compensation" on page 35•Retirement and other post-termination compensation. Please see "Retirement and Post-Termination Compensation" on page 45 of this Proxy Statement. |
The tables contained in this Proxy Statement set forth amounts for these components applicable to the following executives, who served in the noted capacities at the end of fiscal year 2018: George C. Freeman, III, our Chairman, President, and Chief Executive Officer; Airton L. Hentschke, our Senior Vice President and Chief Operating Officer; David C. Moore, our Senior Vice President and Chief Financial Officer; Preston D. Wigner, our Vice President, General Counsel, and Secretary; and Theodore G. Broome, Executive Vice President and Sales Director of Universal Leaf. We refer to these five executives as our named executive officers.
In determining executive compensation, the Compensation and Governance Committee reviews all components of the Chief Executive Officer's and each other named executive officer's total compensation, including retirement benefits and the costs of all perquisites received to ensure such compensation meets the goals of the program. As a part of this review, the Compensation and Governance Committee considers corporate performance information, compensation survey data, the advice of its independent advisor, and the recommendations of management. The Compensation and Governance Committee also takes into consideration individual and overall company operating performance to ensure executive compensation reflects past performance as well as future potential and adequately differentiates between employees, based on the scope and complexity of the employee's job position, market comparisons, individual performance and experience, and our ability to pay. The Chief Executive Officer's performance is reviewed annually by the Compensation and Governance Committee prior to considering changes in compensation. The Chief Executive Officer's performance is evaluated in light of company performance, as described in greater detail below, and non-financial goals and strategic objectives selected by the Compensation and Governance Committee. Based on its review, the Compensation and Governance Committee believes total compensation for each of the named executive officers is reasonable and not excessive.
In addition, the Compensation and Governance Committee evaluates the amount of compensation apportioned to base salary, annual cash incentive awards, and long-term equity participation, which we refer to as total direct opportunity compensation. The Compensation and Governance Committee sets target levels for each component of total direct opportunity compensation based on its desire to link compensation to individual and corporate performance and to ensure that a sufficient amount of compensation is performance-based or “at risk." The Compensation and Governance Committee set the following target percentages for the components of our named executive officers' total direct opportunity compensation for fiscal year 2022:
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| | Base Salary | | Target Cash Incentive Award | | Target Long-Term Equity Award | | Target Total |
George C. Freeman, III | | 25.0 | % | | 25.0 | % | | 50.0 | % | | 100 | % |
Airton L. Hentschke | | 30.0 | % | | 25.0 | % | | 45.0 | % | | 100 | % |
Johan C. Kroner | | 32.5 | % | | 25.0 | % | | 42.5 | % | | 100 | % |
Preston D. Wigner | | 37.5 | % | | 25.0 | % | | 37.5 | % | | 100 | % |
Theodore G. Broome | | 37.5 | % | | 27.5 | % | | 35.0 | % | | 100 | % |
1. 2019:Base Salaries
|
| | | | | | | | | | | | |
| | Base Salary | | Target Cash Incentive Award | | Target Long-Term Equity Award | | Target Total |
George C. Freeman, III | | 25.0 | % | | 25.0 | % | | 50.0 | % | | 100 | % |
Airton L. Hentschke | | 30.0 | % | | 25.0 | % | | 45.0 | % | | 100 | % |
David C. Moore | | 30.0 | % | | 25.0 | % | | 45.0 | % | | 100 | % |
Preston D. Wigner | | 37.5 | % | | 25.0 | % | | 37.5 | % | | 100 | % |
Theodore G. Broome | | 37.5 | % | | 27.5 | % | | 35.0 | % | | 100 | % |
Based upon the competitive assessment of executive compensation prepared by Willis Towers Watson in fiscal year 2017, the Compensation and Governance Committee made certain adjustments last year in the target percentages of the total direct opportunity compensation of Messrs. Wigner and Broome for fiscal year 2018. These adjustments were made to better align their mix of pay with the 50th percentile of our new peer group. Each of the two executives only received a 1.5% increase in total direct opportunity compensation for fiscal year 2018, although the amount of total direct opportunity compensation apportioned to base salaries increased by a higher percentage.
The Compensation and Governance Committee approved the following base salaries for fiscal years 2017, 2018,2020, 2021 and 20192022 for our named executive officers, which became effective April 1, 2016, 20172019, 2020 and 2018,2021, respectively:
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| | Fiscal Year 2020 | | Fiscal Year 2021 | | Percentage Increase | | Fiscal Year 2022 | | Percentage Increase |
| | ($) | | ($) | | (%) | | ($) | | (%) |
George C. Freeman, III | | 945,500 | | | 964,400 | | | 2.00 | | | 978,900 | | | 1.5% |
Airton L. Hentschke | | 597,700 | | | 609,600 | | | 2.00 | | | 618,800 | | | 1.5% |
Johan C. Kroner | | 463,500 | | | 463,500 | | | — | | | 470,500 | | | 1.5% |
Preston D. Wigner | | 418,500 | | | 426,900 | | | 2.00 | | | 433,400 | | | 1.5% |
Theodore G. Broome | | 400,600 | | | 408,600 | | | 2.00 | | | 414,800 | | | 1.5% |
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| | Fiscal Year 2017 | | Fiscal Year 2018 | | Percentage Increase | | Fiscal Year 2019 | | Percentage Increase |
| | ($) | | ($) | | (%) | | ($) | | (%) |
George C. Freeman, III | | 850,100 |
| | 900,000 |
| | 5.87 | | 918,000 |
| | 2.00 |
Airton L. Hentschke | | 560,500 |
| | 568,900 |
| | 1.50 | | 580,300 |
| | 2.00 |
David C. Moore | | 444,200 |
| | 450,900 |
| | 1.50 | | 459,900 |
| | 2.00 |
Preston D. Wigner | | 340,100 |
| | 398,300 |
| | 17.11 | | 406,300 |
| | 2.00 |
Theodore G. Broome | | 343,800 |
| | 373,900 |
| | 8.75 | | 388,900 |
| | 4.00 |
For fiscal years 2017, 2018,2020, 2021 and 2019,2022, the Compensation and Governance Committee evaluated executive compensation based on a periodic assessmentassessments conducted by Willis Towers Watson of the competitiveness of the executives' salary with salaries of executives in our peer group. We do not benchmark every year. Fiscal years 20182021 and 20192022 base salaries were determined in accordance with the responsibilities, skills and experience of each executive, personal performance of the executive in light of individual levels of responsibility, and the competitiveness of the executive's salary with the salaries of executives in our peer group. While the Compensation and Governance Committee considered each of these factors in their totality, the Compensation and Governance Committee did not assign a specific value to each factor. For purposes of assessing the competitiveness of salaries, in fiscal year 2020, the Compensation and Governance Committee reviewed compensation data for our peer group described above from its independent outside consultant to determine ranges of total compensation and the individual components of such compensation. While theThe Compensation and Governance Committee considered many factors, including the advice of senior management, and the Committee felt it was prudent to increase base salaries of named executive officers for fiscal year 20182021 by 1.5%2.0% (except for Mr. Kroner) and 2.0%1.5% for fiscal year 2019. Mr. Broome received a slightly higher increase for2022. In fiscal year 2019 due to changing responsibilities.2021, Mr. Kroner's base salary remained the same, but his performance-based compensation was increased.
As part of the compensation setting process for fiscal years 20182021 and 2019,2022, the Compensation and Governance Committee met periodically with Mr. G. Freeman, our Chairman, President and Chief Executive Officer, and reviewedreviewing his performance and the Company's performance for fiscal years 2017 and 2018.performance. The Compensation and Governance Committee also evaluated Mr. G. Freeman's compensation level, considering the average base salaries of the chief executive officers at the companies included in the peer group approved for use beginning within fiscal year 2018.2021. The Compensation and Governance Committee believed thisthe new base amount was appropriate and not excessive when viewed in context with chief executive officer compensation for the peer group. The Compensation and Governance Committee also reviewed a variety of compensation surveys and published statistical reports. The Committee also considered affordability within the Company's business plans. After consultation with Willis Towers Watson, as well as management, Mr. G. Freeman's total direct opportunity compensation was increased for fiscal year 20182021 by 5.87%2.0%, or $199,600.$76,600. This total increase was apportioned $49,900$18,900 to base salary, $49,900$18,900 to the target annual cash incentive award and $99,800$37,800 to the target annual long-term incentive award. The Compensation and Governance Committee approved this initial step asFor fiscal year 2022, Mr. G. Freeman's total direct opportunity compensation had fallen well belowwas increased by 1.5% or $57,900. This total increase was apportioned $14,500 to base salary, $14,500 to target annual cash incentive award and $28,900 to the 50th percentiletarget annual long term incentive award.
For fiscal year 2021, the Compensation Committee re-evaluated the apportionment of Mr. Kroner's compensation that was established with his promotion to Senior Vice President and Chief Financial Officer in 2018 between base salary, annual cash incentive awards and the long-term equity participation. The Compensation Committee determined that it should increase Mr. Kroner's performance-based compensation, to better align it with chief financial officers in our peer group, based on the competitive market assessment completed duringand consistent with growth in his new role. After consultation with Willis Towers Watson, as well as management, Mr. Kroner's total direct opportunity compensation was increased for fiscal year 2017. Prior2021 by 15% or $190,200. This total increase was apportioned $0 to this adjustment,base salary, $47,600 to the target annual cash incentive award, and $142,600 to the target annual long-term equity awards. For fiscal year 2022, Mr. G. Freeman'sKroner's total direct opportunity compensation targets had only changedwas increased by an average of 1.56% per annum over1.5% or $21,400. This total increase was apportioned $7,000 to base salary, $5,300 to the past six years.target annual cash incentive award and $9,100 to the target long-term equity award.
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2. | Annual Cash Incentives Awards
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2. Annual Cash Incentive Awards
The Annual Incentive Plan provides that key managerial employees, includingparticipants in the plan include persons who are executive officers of the Company or any Subsidiary (as defined in the Annual Incentive Plan) for purposes of the Exchange Act, selected from time to time by the Compensation Committee to participate in the Annual Incentive Plan. These executive officers, which include our named executive officers, may receive annual cash incentive awards that vary from year to year based upon corporate and individual performance. We believe annual cash incentive awards drive our key employees to strive to maximize shareholder value and provide a means for recognizing individual contribution to our overall results. In fiscal year 2021, the Compensation Committee incorporated an Acquisition Performance Modifier into the annual cash incentive program of the named executive officers (and certain other executives). The core design of the Annual Incentive Plan, including the financial performance measures, the threshold level, and maximum level payout opportunities did not change. However the Compensation Committee adopted the Acquisition Performance Modifier to increase or decrease the cash bonus payout percentage based upon the performance goals established for the recent acquisition. The Acquisition Performance Modifier is further described on pages 41-42, below. The total cash incentive awards earned for fiscal year 20182021 by our named executive officers were approved by the Compensation and Governance Committee on May 25, 2018,20, 2021, and are set forth in the Column, (g), “Non-Equity Incentive Plan Compensation”,Compensation,” in the “Summary Compensation Table” on page 3747 of this Proxy Statement.
Annual cash incentive payments under the Annual Incentive Plan are paid based on the Company's achievements against pre-established performance metrics as set by the Compensation and Governance Committee. The annual cash incentive awards to our named executive officers in fiscal year 20182021 were based 50% on the generation of economic profit, a metric very similar to economic value added, and 50% on the generation of adjusted earnings per share. We use economic profit and adjusted earnings per share, as these performance measures strongly encourage capital discipline and better investment decisions and lead to enhanced cash flow. The Compensation and Governance Committee also believes that these measures are representative of our overall performance, and they provide transparency to investors and enable period-to-period comparability of financial performance. For purposes of the Annual Incentive Plan, we define "economic profit"economic profit is described as consolidated earnings before interest and taxes after certain adjustments, minus a capital charge equal to our weighted average cost of capital times average adjusted funds employed, and we define “adjusted earnings per share” as the fully-diluted earnings per share of Common Stock, adjusted to exclude extraordinary gains and losses, restructuring and impairment, and annual cash incentive award accruals under the Annual Incentive Plan. Economic profit and adjusted earnings per share should not be considered as alternatives to net income or earnings per share determined in accordance with generally accepted accounting principles generally accepted in the United States.
During fiscal year 2018,2020, the Compensation Committee conducted a formal review and Governanceassessment with its independent advisor of the Company's executive compensation program, including the annual incentive and long-term award program. During this review, the Compensation Committee considered alternativereviewed and reaffirmed the performance metrics and reaffirmedperformance goals under the programs including the use of adjusted earnings per share as a performance goal in both the annual incentive and long-term performance award program because adjusted earnings per shareas it is a performance measure that is directly related to our financial goals and is an important driver of shareholder value. The Compensation and Governance Committee recognizes that the short and long-term incentive arrangements are based on similar metrics, but it considers profitability as our key driver of financial health and performance. The Company does not provide forward earnings guidance and is not required to do so. As such, we do not disclose performance targets applicable to our annual incentive plan or our performance shares until after they are earned. We also believe that such disclosure would result in competitive harm to the Company. Our business is not capital intensive and we believe that adequate free cash flow is generated at acceptable levels of profitability.
The executive officers who participateParticipants in the Annual Incentive Plan are eligible to receive an annual cash incentive award equal to a percentage of their base salary in the event certain threshold levels are met for economic profit, a metric very similar to economic value added, and adjusted earnings per share. The following table sets forth the threshold, target and maximum levels for the economic profit and adjusted earnings per share metrics that were applicable for fiscal year 2021 awards under the Annual Incentive Plan:
2018 awards:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Threshold Level | | Target Level | | Maximum Level | | FY 2021 Results |
Economic Profit | | $(61.0) million | | $1.5 million | | $64.0 million | | $17.7 million |
| | | | | | | | |
| | Threshold Level | | Target Level | | Maximum Level | | 2018
Results
|
Economic Profit | | $(61.00) million | | $1.50 million | | $64.00 million | | $0.10 million |
| | | | | | | | |
Adjusted Earnings Per Share | | $2.182.43 per share | | $3.754.00 per share | | $5.325.57 per share | | $4.204.24 per share |
Based on the definition of adjusted earnings per share provided above, a reconciliation of the adjusted earnings per share of $4.20$4.24 achieved for fiscal year 20182021 to our reported diluted earnings per share of $4.14$3.53 is as follows:
| | | | | | | | |
Adjusted Earnings Per Share | | $ | 4.24 | |
| | |
Per share effect of annual cash incentive award accrual excluded from adjusted earnings per share | | (0.09) | |
Per share effect of restructuring and impairment | | (0.72) | |
Per share effect of FruitSmart and Silva results, M&A expenses and purchase accounting adjustment | | (0.07) | |
Per share effect of FruitSmart contingent consideration reversal | | 0.17 | |
Reported Diluted Earnings Per Share | | $ | 3.53 | |
|
| | | | |
Adjusted Earnings Per Share | | $ | 4.20 |
|
| | |
Per share effect of annual cash incentive award accrual excluded from adjusted earnings per share | | (0.09 | ) |
Per share effect of a gain on the sale of previously impaired idle assets | | 0.03 |
|
| | |
Reported Diluted Earnings Per Share | | $ | 4.14 |
|
Although oversupplied markets duringOur diluted earnings per share increased compared to fiscal year 2020 due to strong leaf tobacco shipments in the past threesecond half of fiscal years have been less than optimal, we performed well overyear 2021, the time frameaddition of our plant-based ingredients acquisitions, and our results have been better than anticipated.favorable foreign currency comparisons. Our underlying business and customer relationships remain strong. As we entered this period of oversupply, thetobacco operations continued to perform largely in line with expectations. The Compensation and Governance Committee recognized that our performance would be lower following several years of above average operating profitability. Thelikely stabilize due to carryover crop shipments and processing revenues compared to the prior fiscal year, when COVID-19 adversely impacted our fourth quarter results, therefore the Compensation and Governance Committee therefore, adjustedestablished the performance targets on June 1, 2017May 28, 2020 to better reflect current and anticipated business conditions and to
ensure adequate, yet reasonable, performance stretch in the fiscal year 2021 Annual Incentive Plan goals. The performance targets for adjusted earnings per share were adjustedset to $3.75, $3.50$4.00, $4.10 and $3.95 in$4.20 for fiscal years 2018, 2017,2021, 2020, and 2016,2019, respectively. The performance target for economic profit remained unchanged at $1.5 million throughout the period. The Compensation and Governance Committee believed that these goals better reflected the cyclical market supply imbalance and reinforced management's commitment to taking the appropriate long-term approach to our business.
Each executive officer participating in the Annual Incentive Plan is eligible to receive an annual cash incentive award based on a percentage of his or her base salary, which we call the target bonus opportunity percentage. The target bonus opportunity percentage for each executive officer, except the Chief Executive Officer, is initially set by our Chief Executive Officer and is based on the executive officer's experience in his or her present position and job responsibilities. Our Chief Executive Officer submits the recommended target bonus opportunity percentages to the Compensation and Governance Committee for its review and approval each year. For our Chief Executive Officer, the Compensation and Governance Committee determines the target bonus opportunity percentage. The Compensation and Governance Committee also reviews its outside advisor's compensation data for our peer group when evaluating the recommended target bonus opportunity percentages.
Each year, the Compensation and Governance Committee approves percent-of-target performance tables for each performance measure. As the Company performance deviates from targeted performance, the percentages in the tables increase or decrease at an accelerated rate. Once the adjusted economic profit and adjusted earnings per share performance measures have been calculated for the applicable fiscal year, the Compensation and Governance Committee compares the calculated performance to the preapproved tables to determine the percentage to apply to the executives' target bonus opportunity amounts. The Compensation and Governance Committee applies the resulting percentage to the target bonus opportunity amount to determine the annual cash incentive award each executive is eligible to receive. Annual cash incentive awards are capped at two times the target bonus opportunity percentage for each criterion, regardless of how much the Company's performance exceeded the target level for either criteria. In addition, the Compensation and Governance Committee reserves the right to exercise negative discretion in adjusting any incentive awards, but the Compensation and Governance Committee has no discretion to increase the awards. The Compensation and Governance Committee does not award any discretionary, non-performance based annual cash incentive awards if the performance goals are not achieved.
In fiscal 2019, the Company announced an enhanced capital allocation strategy that included exploring growth opportunities in adjacent industries and in fiscal 2020, the Company acquired FruitSmart, Inc., as a preliminary step in building and enhancing a plant-based ingredients platform to deliver long-term growth and shareholder value. In May 2020, the Compensation Committee incorporated an Acquisition Performance Modifier which would increase or decrease the cash incentive payout under the core Annual Incentive Plan based upon the performance goals established for FruitSmart, Inc. At that time, the Compensation Committee adopted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as the performance measure. The Committee also approved a percent-of-target table for this performance measure. Once the EBITDA of FruitSmart was calculated, the Committee compared the performance to the pre-approved table and the Compensation Committee applied the resulting achievement percentage to the applicable achievement percentage under the core Annual Incentive Plan.
Using Mr. G. Freeman as an example, wethe Company generated positive economic profit and positive adjusted earnings per share during fiscal year 2018,2021, with adjusted earnings per share and economic profit exceeding the threshold levels. Adjusted earnings per share exceededand target levels under the target level while economic profit fell below target.Annual Incentive Plan. The economic profit and adjusted earnings per share performance measures for the year corresponded to 110.55%114.1% achievement of the target levels on the Compensation and Governance Committee's pre-approved tables. However, while the acquisition's performance generated positive EBITDA, it was less than the aggressive pre-Covid-19 target set by the Compensation Committee. This resulted in an Acquisition Performance Modifier of negative 10%. Therefore, Mr. G. Freeman's cash incentive award114.1% achievement of target for fiscal year 20182021 was therefore, 110.55% of his target bonus opportunityreduced by 10% to 104.1%. Consequently, for fiscal 2021, Mr. G. Freeman's award amount or $995,000.was $1,003,940.
The following table lists the target bonus opportunity percentages, the target bonus opportunity amounts, the maximum bonus opportunity amounts, and the actual cash incentive awards for fiscal year 20182021 for our named executive officers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Target Bonus Opportunity Percentage | | Target Bonus Opportunity Amount | | Maximum Bonus Opportunity Amount(1) | | Actual Percentage Bonus Payout(2) | Actual 2021 Bonus Paid |
| | (%) | | ($) | | ($) | | (%) | ($) |
George C. Freeman, III | | 100 | % | | 964,400 | | | 1,928,800 | | | 104.1% | 1,003,900 | |
Airton L. Hentschke | | 83 | % | | 508,000 | | | 1,016,000 | | | 104.1% | 528,800 | |
| | | | | | | | | |
Johan C. Kroner | | 67 | % | | 356,000 | | | 712,000 | | | 104.1% | 371,200 | |
Preston D. Wigner | | 67 | % | | 284,600 | | | 569,200 | | | 104.1% | 296,300 | |
Theodore G. Broome | | 73 | % | | 299,700 | | | 599,400 | | | 104.1% | 312,000 | |
(1)The Maximum Bonus Opportunity Award is capped at 200% and cannot be increased by the Acquisition Performance Modifier.
(2)Final Percentage payout incorporating the Acquisition Performance Modifier. |
| | | | | | | | | | | | |
| | Target Bonus Opportunity Percentage | | Target Bonus Opportunity Amount | | Maximum Bonus Opportunity Amount | | Actual 2018 Bonus Paid |
| | (%) | | ($) | | ($) | | ($) |
George C. Freeman, III | | 100 | % | | 900,000 |
| | 1,800,000 |
| | 995,000 |
|
Airton L. Hentschke | | 83 | % | | 474,100 |
| | 948,200 |
| | 524,100 |
|
David C. Moore | | 83 | % | | 375,700 |
| | 751,400 |
| | 415,300 |
|
Preston D. Wigner | | 67 | % | | 265,500 |
| | 531,000 |
| | 293,500 |
|
Theodore G. Broome | | 73 | % | | 274,200 |
| | 548,400 |
| | 303,100 |
|
On May 25, 2018,27, 2021, the Compensation and Governance Committee established the performance measures applicable for the annual cash incentive awards to be awarded for fiscal year 2022.
3. 2019Long-Term Equity Participation. The Compensation and Governance Committee reconfirmed its use of adjusted earnings per share and economic profit as the appropriate performance measures for the fiscal year 2019 cash incentive awards. The performance target for adjusted earnings per share was increased for the second year in a row, while the performance target for economic profit remained unchanged.
| |
3. | Long-Term Equity Participation |
The Compensation and Governance Committee administers the Universal Corporation 2017 Stock Incentive Plan and the 2007 Stock Incentive Plan, as amended and restated, pursuant to which the Compensation and Governance Committee grants to key executive officers restricted stock units and Performance Shares based upon a determination of competitive aggregate compensation levels. The primary objectives of issuing long-term equity awards are to encourage significant ownership of Common Stock by management and to providewhich provides long-term financial incentives linked directly to market performance of our Common Stock. Long-termIn addition, long-term equity awards are aligned with the interests of our shareholders as the awards deliver value based on shareholder return and promote retention of management.management, as well as reinforce other long-term business objectives such as the Company's fundamental responsibility to our stakeholders to maintain high ethical, social and environmental standards in support of a sustainable supply chain. The Compensation and Governance Committee believes that significant ownership of Common Stock by senior management is the optimal method to align the interests of management to our shareholders and the shareholders.other stakeholders. Our compensation structure is designed to deliver a significant portion of total direct opportunity compensation in the form of long-term equity awards with 35% to 50% for named executive officers.
With the exception of new hires or promotions, long-term incentives are awarded annually, on a day between two andwithin twelve business days following the public release of our annual earnings. The Compensation and Governance Committee selected this timing, because it enables us to consider the prior year performance of the Company and the participants and our expectations for the next performance period, while also guaranteeing that annual awards will be made after we publicly disclose our performance for the year. The awards also are made as early as practicable in our fiscal year in order to maximize the time period for the incentives associated with the awards. The Compensation and Governance Committee's schedule is determined between six and twelve months in advance, though changes may occur, and the proximity of any awards to market events other than earnings announcements is coincidental.
We currently use restricted stock units and Performance Shares as the preferred forms of long-term equity participation. Restricted stock units are used as a cost-effective addition to the compensation mix because such awards do not require the issuance of Common Stock until vesting. Our use of Performance Shares as a long-term equity award places greater emphasis on our long-term financial performance and subjects a higher percentage of the long-term incentive awards to risk based on such performance. The addition of Performance Shares is intended to focus greater attention and rewards on the key underlying drivers of shareholder value. Performance Sharesvalue, and are granted annually, with overlapping multi-year performance cycles. Performance Shares vest on the last day of the performance period selected by the Compensation and Governance Committee and are earned and paid out based on the Company's achievement of certain performance measures selected by the Compensation and Governance Committee. Performance Shares do
not carry any dividend rights. Similar to annual cash incentive awards under the Annual Incentive Plan, as the actual performance exceeds the performance measure threshold selected by the Compensation and Governance Committee, the amount of Performance Share payout increases, with 100% payout occurring if performance reaches a target level set by the Compensation and Governance Committee. Payout can exceed 100% if the performance exceeds the target level, but it is capped at a maximum of 150%. Conversely, the payout is reduced if actual performance falls short of the selected performance measure target. At the time of vesting, the vested Performance Shares are payable in shares of Common Stock.
For awards granted in fiscal years 2017-2019,2019, 2020 and 2021, the Compensation and Governance Committee selected average adjusted earnings per share as the appropriate criterion for use with Performance Shares and set the performance period at three fiscal years, which began April 1 of each fiscal year. Adjusted earnings per share is calculated in the same manner as it is with Annual Incentive Plan awards. The threshold levels for adjusted earnings per share performance were set based on levels of performance that were believed to be achievable. The target levels for adjusted earnings per share performance were set based on levels of performance that were believed to be aggressive, but obtainable. Given the cyclical nature of our core business and its maturity, it is difficult to set multiple year performance targets. The maximum levels for adjusted earnings per share performance were set based on levels of performance that were believed to be realizable only with exceptional performance. As previously mentioned, we do not disclose performance targets at the time of awards as we believe that to do so would prove detrimental to our business.
For fiscal year 20182021, the Compensation Committee, in connection with the executive compensation assessment performed by Willis Towers Watson, concluded that this structure is aligned with our peer group and industry standards.
For the fiscal year 2021 long-term equity awards awarded in May 2020, the Compensation and Governance Committee determined that one-half should consist of three-year Performance Shares and the remaining one-half should consist of five-year restricted stock units. The Compensation and Governance Committee used an equal mix of Performance Shares and restricted stock units because it believes that such mix represents the appropriate balance for our Company in rewarding stock appreciation and relative shareholder return, while also placing sufficient emphasis on our overall financial performance. Mr. D. MooreThe same structure was awarded onlyapproved by the Compensation Committee for fiscal year 2022. On May 20, 2021, the Compensation Committee adopted the use of three-year cliff vesting restricted stock units as herather than five-year cliff vesting. This change was contemplating retirement in the next 12 to 18 months. In order to allocate compensation among the two forms of equity participation, the Compensationrecommended by Willis Towers Watson and Governance Committee values restricted stock unit awardswas consistent with our peer group and Performance Shares at the faircurrent market value on the date of grant of the equivalent number of shares of Common Stock.practice. All past restricted stock units arewere awarded with five-year cliff vesting, and all fiscal year 2022 restricted stock units were awarded with three-year cliff vesting. All restricted stock units earn dividend equivalent units during such period.the respective vesting periods. These dividend equivalent units only vest when the underlying award of restricted stock units vest. In addition, our named executive officers have additional vesting restrictions or holding period requirements on their restricted stock unit awards in order to preserve deductibility underaccordance with Section 162(m)409(a) of the Internal Revenue Code.
On June 3, 2014,1, 2017, we awarded Performance Shares for the three-year performance period from April 1, 20142017 through March 31, 2017.2020. Those awards vested on March 31, 20172020 and the payout was approved by the Compensation Committee on May 26, 2017.28, 2020. The performance measure was the three-year average adjusted earnings per share with earnings per share calculated in the same manner as it is with the Annual Incentive Plan awards. We generated average adjusted earnings per share for the performance period covering fiscal years 20152018 through 20172020 that exceeded the threshold, but fell below the target levels and maximum levels. The following table sets forth the threshold, target and maximum levels for the adjusted earnings per share metrics applicable for the fiscal year 20152018 award:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Threshold Level | | Target Level | | Maximum Level | | Average 2018-2020 Result |
Average Adjusted Earnings per Share | | $ | 2.48 | | | $ | 4.05 | | | $ | 4.91 | | | $ | 4.17 | |
|
| | | | | | | | | | | | | | | | |
| | Threshold Level | | Target Level | | Maximum Level | | Average 2015-2017 Result |
Average Adjusted Earnings per Share | | $ | 2.83 |
| | $ | 4.40 |
| | $ | 5.26 |
| | $ | 4.12 |
|
A reconciliation of average adjusted earnings per share of $4.12$4.17 for the performance period covering fiscal years 20152018 through 20172020 is as follows:
|
| | | | |
Fiscal Year 2015 | | $ | 4.25 |
|
Fiscal Year 2016 | | 4.05 |
|
Fiscal Year 2017 | | 4.05 |
|
3-year Average Adjusted Earnings Per Share | | $ | 4.12 |
|
| | | | | | | | |
Fiscal Year 2018 | | $ | 4.20 | |
Fiscal Year 2019 | | 4.87 | |
Fiscal Year 2020 | | 3.45 | |
3-year Average Adjusted Earnings Per Share | | $ | 4.17 | |
The average adjusted earnings per share performance measure for the performance period exceeded the threshold level, but fell below the target level on the Compensation and Governance Committee's pre-approved percent-of-target performance table. The payouts of the fiscal year 20152018 Performance Share awards were, therefore, made at 86.00%106% of the target award levels.
The following table lists the target Performance Share opportunities, the maximum Performance Share opportunities and the actual number of shares of Common Stock paid out:
|
| | | | | | | | | | | | | | | | | | | |
| | Actual Payout as a % of Target | | Target Award at Grant (Shares) | | Maximum Award at Grant (Shares) | | Actual Award (Shares) | | Target Award Value at Grant(1) | | Actual Award Value(2) |
George C. Freeman, III | | 86.0% | | 15,000 |
| | 22,500 |
| | 12,900 |
| | $ | 696,150 |
| | $ | 847,530 |
|
Airton L. Hentschke | | 86.0% | | 4,200 |
| | 6,300 |
| | 3,612 |
| | $ | 194,922 |
| | $ | 237,308 |
|
David C. Moore | | 86.0% | | 5,900 |
| | 8,850 |
| | 5,074 |
| | $ | 273,819 |
| | $ | 333,362 |
|
Preston D. Wigner | | 86.0% | | 3,900 |
| | 5,850 |
| | 3,354 |
| | $ | 180,999 |
| | $ | 220,358 |
|
Theodore G. Broome | | 86.0% | | 3,050 |
| | 4,575 |
| | 2,623 |
| | $ | 141,551 |
| | $ | 172,331 |
|
| |
(1)
| This column represents grant date fair value determined in accordance with FASB ASC Topic 718. Amounts for Performance Shares are determined assuming a price per share of $46.41 which represents a discount to the closing price of $52.68 as of the date of grant due to the lack of dividend rights. |
| |
(2)
| This column represents market value based on the May 26, 2017 stock price of $65.70 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Actual Payout as a % of Target | | Target Award at Grant (Shares) | | Maximum Award at Grant (Shares) | | Actual Award (Shares) | | Target Award Value at Grant(1) | | Actual Award Value(2) |
George C. Freeman, III | | 106.0% | | 12,800 | | | 19,200 | | | 13,568 | | | $ | 772,736 | | | $ | 592,379 | |
Airton L. Hentschke | | 106.0% | | 6,050 | | | 9,075 | | | 6,413 | | | $ | 365,239 | | | $ | 279,992 | |
Johan C. Kroner | | 106.0% | | 400 | | | 600 | | | 424 | | | $ | 24,148 | | | $ | 18,512 | |
Preston D. Wigner | | 106.0% | | 2,850 | | | 4,275 | | | 3,021 | | | $ | 172,055 | | | $ | 131,897 | |
Theodore G. Broome | | 106.0% | | 2,500 | | | 3,750 | | | 2,650 | | | $ | 150,925 | | | $ | 115,699 | |
On (1)June 1, 2017This column represents grant date fair value determined in accordance with FASB ASC Topic 718. Amounts for Performance Shares are determined assuming a price per share of $60.37 which represents a discount to the closing price of $66.90 as of the date of grant due to the lack of dividend rights.
(2),This column represents market value based on the May 28, 2020 stock price of $43.66
In fiscal year 2021, the Compensation and Governance Committee granted Performance Shares and restricted stock units to key executives pursuant to the 20072017 Stock Incentive Plan. The Compensation and Governance Committee granted 39,100a total of 63,050 Performance Shares and 48,70063,050 restricted stock units to 2615 executives. The number of Performance Shares and restricted stock units granted to our named executive officers on June 1, 2017,in fiscal 2021, were as follows:
| | | | | | | | | | | | | | |
| | Performance Shares | | Restricted Stock Units |
George C. Freeman, III | | 21,525 | | | 21,525 | |
Airton L. Hentschke | | 10,200 | | | 10,200 | |
Johan C. Kroner | | 6,775 | | | 6,775 | |
Preston D. Wigner | | 4,775 | | | 4,775 | |
Theodore G. Broome | | 4,250 | | | 4,250 | |
|
| | | | | | |
| | Performance Shares | | Restricted Stock Units |
George C. Freeman, III | | 12,800 |
| | 12,800 |
|
Airton L. Hentschke | | 6,050 |
| | 6,050 |
|
David C. Moore | | — |
| | 9,600 |
|
Preston D. Wigner | | 2,850 |
| | 2,850 |
|
Theodore G. Broome | | 2,500 |
| | 2,500 |
|
Mr. D. Moore was awarded only restricted stock units as he was contemplating retirement in the next 12 to 18 months. Additional details regarding the fiscal year 20182021 equity participation awards for each of our named executive officers is set forth in the “Grants of Plan-Based Awards” table on page 3949 of this Proxy Statement.
The Compensation and Governance Committee believes employee benefits are an essential component of our competitive total compensation package. These benefits are designed to attract and retain our employees. The named executive officers may participate in the same benefit plans as our salaried employees, which include health, dental, vision and life insurance, disability benefits, and our 401(k) savings plan. Our 401(k) savings plan includes a defined company match component, and we have disclosed all company matches for our named executive officers in Column (i), “All Other Compensation”, in the “Summary Compensation Table”, and separately disclosed each amount in Footnote 5 to that table on page 37pages 47 and 48 of this Proxy Statement.
In addition, we provide certain other benefits to our executives, including our named executive officers. The Compensation and Governance Committee believes these other benefits provide security for current and future needs of the executives and their families and therefore assist in attracting and retaining them. These other benefits are structured to be within the competitive range relative to our peer group. In general, we do not provide our executives with many of the types of perquisites that other companies offer their executives, such as the personal use of a corporate aircraft, car allowances, social memberships or club dues, or preventative health evaluations. We also do not utilize tax gross-ups. The Compensation and Governance Committee re-evaluates and has approved the very limited types of perquisites that we offer on a regular basis. The additional benefits we provide or have provided to some of our executives during fiscal year 20182021 consist of financial planning and tax preparation services and matching gifts from the followingCompany's charitable foundation and are included in the amounts set forth in Column (i), “All Other Compensation”, in the “Summary Compensation Table”, and separately disclosed in Footnote 5 to that table on page 37pages 47 and 48 of this Proxy Statement: financial planningStatement.
5. Retirement and tax preparation services and matching gifts from the Company's charitable foundation.Post-Termination Compensation
| |
5. | Retirement and Post-Termination Compensation |
Our named executive officers are covered by a defined benefit retirement plan, a supplemental retirement plan, deferred income plans, and a 401(k) savings plan. Certain of ourOur named executive officers are also havecovered by the Change of Control Agreements addressing a change of control in our company.Policy. Additional details and all amounts earned by our named executive officers or contributed by us to our named executive officers through those benefits are disclosed in this Proxy Statement where noted below.
A. Defined Benefit Retirement Plan
Our salaried employees, including our named executive officers also participate in a defined benefit retirement plan, the Employees' Retirement Plan of Universal Leaf Tobacco Company, Incorporated and Designated Affiliated Companies, which we refer to as the Pension Plan.
Further detail regarding the Pension Plan and disclosure of the estimated value of pension benefits for our named executive officers is set forth in the “Pension Benefits” table and related footnotes beginning on page 4353 of this Proxy Statement.
B. Benefit Restoration Plan
To the extent benefits payable to our employees at retirement pursuant to the Pension Plan exceed amounts that may be payable under applicable provisions of the Internal Revenue Code, such benefits will be paid under our supplemental retirement plan called the Universal Leaf Tobacco Company, Incorporated 1996 Benefit Restoration Plan, which we refer to as the Benefit Restoration Plan. Further information about the Benefit Restoration Plan is set forth in the "Pension Benefits" table and related footnotes beginning on page 4353 of this Proxy Statement.
C. Deferred Income Plans
We offer all employees, including our named executive officers, the opportunity to participate in the Employees' 401(k) Savings Plan of Universal Leaf Tobacco Company, Incorporated and Designated Affiliated Companies, which we refer to as the 401(k) Plan. We also have a non-qualified deferred plan available to certain executives. Further information about the 401(k) Plan and the non-qualified deferred plan is set forth under "Non-Qualified Deferred Compensation" beginning on page 4555 of this Proxy Statement.
D. Change of Control Agreements
We doDuring fiscal year 2021, we did not offer severance agreements to our named executive officers, nor havedid we offeredoffer them agreements for employment or retention with our company. However, to ensure that we will have the continued dedicated service of certain named executive officers notwithstanding the possibility, threat, or occurrence of a change of control, we have change of control agreements, which we refer to asin May 2020, following an executive compensation evaluation performed by Willis Towers Watson, the Compensation Committee reviewed and proposed for adoption by the Company the "double-trigger" Change of Control Agreements.Policy. This Change of Control Policy provides eligible executives with the opportunity to receive severance benefits if a Change in Control of the Company occurs in combination with other specified events, a change recommended by Willis Towers Watson to align with market practices. The purpose and intent of this Policy is to attract and retain key executives and to improve productivity by reducing distractions resulting from a potential Change in Control situation, all of which are in the best interest of the Company and its shareholders. The Compensation Committee submitted the adoption of the Policy to the Board of Directors for approval, and Governance Committee believes that
the Board of Directors approved, effective May 26, 2020, the establishment of the Policy. Following the establishment of the Change of Control Policy, the Company terminated its existing Change of Control Agreements servewith Mr. G. Freeman and Mr. Wigner on May 26, 2020, since both Mr. G. Freeman and Mr. Wigner are eligible executives under the Policy.
The Compensation Committee believes that this Policy serves the best interests of Universal Corporation and our shareholders by ensuring that if a hostile or friendly change of control is ever under consideration, our executives are able to perform their duties and responsibilities and advise the Board of Directors about the potential transaction in the best interests of shareholders, without being unduly influenced by the distracting uncertainty and risk associated with a change of control, such as fear of the economic consequences of losing their jobs as a result of a change of control. The terms and conditions inof the Change of Control AgreementsPolicy are described under "Summary of Termination Payments and Benefits" beginning on page 4757 of this Proxy Statment.Statement.
Advisory Votes on Executive Compensation
At the 2017 Annual Meeting of Shareholders, a large majority of our shareholders approved, on a non-binding basis, the holding of the non-binding vote on the compensation of our named executive officers on an annual basis. We are including the non-binding advisory resolution approving the compensation of our named executive officers in this Proxy Statement. See "Proposal Two" on page 69 of this Proxy Statement.
As required by theThe Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the subsequent rules and regulations promulgated by the SEC, we are includingrequire a non-binding advisory resolution approving the compensation of our named executive officers.officers, which we have implemented on an annual basis. The vote on this proposal will beis non-binding, on us and the Board and will not be construed as overruling a decision by usthe Company or the Board of Directors. This vote will not create or imply any change to our fiduciary duties or create or imply any additional fiduciary duties for us or the Board of Directors. However, the Board of Directors values the opinions that our shareholders express in their votes and will consider the outcome of the vote when making future decisions on named executive officer compensation as it deems appropriate.
At the 20172020 Annual Meeting of Shareholders, almost 93% approximately 97%of the shares cast on the proposal were voted for the non-binding advisory resolution approving the compensation of our named executive officers. The Board of Directors believes that the voting results indicate our shareholders' overwhelming approval of our named executive officer compensation objectives, program and rationale. As a result, theThe Board of Directors implemented the same objectives, program and rationale for the compensation of our named executive officers in fiscal year 2018,2021, as disclosed in the “Compensation Discussion and Analysis”, the compensation tables and the accompanying narrative on pages 2028 through 3664 in this Proxy Statement.
At the 2017 Annual Meeting of Shareholders, a large majority of our shareholders approved, on a non-binding basis, the holding of the non-binding vote on the compensation of our named executive officers on an annual basis. As previously disclosed, the Board of Directors and management determined to implement an annual advisory vote on the compensation of our named executive officers. As a result, we are including the non-binding advisory resolution approving the compensation of our named executive officers again in this Proxy Statement. See "Proposal Two" on page 58 of this Proxy Statement.
REPORT OF THE EXECUTIVE COMPENSATION
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
We have reviewed and discussed the “Compensation Discussion and Analysis” section of this Proxy Statement with management. Based on that review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in this Proxy Statement.
| | | | | |
| COMPENSATION COMMITTEE |
| |
| EXECUTIVE COMPENSATION, NOMINATING AND |
| CORPORATE GOVERNANCE COMMITTEE |
| |
| Thomas H. Johnson, Chairman |
| Diana F. Cantor |
| Lennart R. Freeman |
| Michael T. Lawton |
Richmond, Virginia
May 25, 201820, 2021
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee (Messrs. Johnson, L. Freeman and Governance CommitteeLawton and Ms. Cantor), during fiscal year 20182021 or as of the date of this Proxy Statement is or has been a Universal officer or employee, and none of our executive officers served on the Compensation and Governance Committeecompensation committee or board of any company that employed any member of our Compensation and Governance Committee or Board of Directors.
EXECUTIVE COMPENSATION
The individuals named below include the Chairman, President, and Chief Executive Officer, the Chief Financial Officer and the other named executive officers as of March 31, 2018.2021. Information relating to total compensation is provided, where applicable, for the fiscal years ended March 31, 2016, 2017,2019, 2020 and 2018.2021.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | Salary(1) | | Stock Awards(2) | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | | All Other Compensation(5) | | Total |
| | | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
(a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
George C. Freeman, III | | 2021 | | 964,400 | | | 1,678,735 | | | — | | | 1,003,900 | | | 1,501,209 | | | 23,617 | | | 5,171,861 | |
Chairman, President and Chief Executive Officer | | 2020 | | 945,500 | | | 1,807,757 | | | — | | | 685,500 | | | 1,110,615 | | | 18,369 | | | 4,567,741 | |
| | 2019 | | 918,000 | | | 2,315,596 | | | — | | | 1,102,500 | | | 984,516 | | | 25,775 | | | 5,346,387 | |
| | | | | | | | | | | | | | | | |
Airton L. Hentschke | | 2021 | | 609,600 | | | 795,498 | | | — | | | 528,800 | | | 374,560 | | | 14,399 | | | 2,322,857 | |
Senior Vice President and Chief Operating Officer | | 2020 | | 597,700 | | | 857,456 | | | — | | | 361,100 | | | 282,733 | | | 15,017 | | | 2,114,006 | |
| | 2019 | | 580,300 | | | 1,096,213 | | | — | | | 580,800 | | | 220,831 | | | 17,197 | | | 2,495,341 | |
| | | | | | | | | | | | | | | | |
Johan C. Kroner(1) | | 2021 | | 463,500 | | | 528,383 | | | — | | | 371,200 | | | 215,040 | | | 17,200 | | | 1,595,323 | |
Senior Vice President and Chief Financial Officer | | 2020 | | 463,500 | | | 442,382 | | | — | | | 224,000 | | | 197,859 | | | 21,938 | | | 1,349,679 | |
| | 2019 | | 377,100 | | | 341,616 | | | — | | | 263,700 | | | 86,456 | | | 19,721 | | | 1,088,593 | |
| | | | | | | | | | | | | | | | |
Preston D. Wigner | | 2021 | | 426,900 | | | 372,403 | | | — | | | 296,300 | | | 385,945 | | | 14,355 | | | 1,495,903 | |
Vice President, General Counsel, and Secretary | | 2020 | | 418,500 | | | 398,690 | | | — | | | 202,300 | | | 286,555 | | | 15,152 | | | 1,321,197 | |
| | 2019 | | 406,300 | | | 511,156 | | | — | | | 325,200 | | | 222,217 | | | 15,510 | | | 1,480,383 | |
| | | | | | | | | | | | | | | | |
Theodore G. Broome | | 2021 | | 408,600 | | | 331,458 | | | — | | | 312,000 | | | 450,176 | | | 14,350 | | | 1,516,584 | |
Executive Vice President and Sales Director | | 2020 | | 400,600 | | | 357,728 | | | — | | | 213,000 | | | 397,825 | | | 14,146 | | | 1,383,299 | |
Universal Leaf Tobacco Co., Inc. | | 2019 | | 388,900 | | | 455,729 | | | — | | | 342,500 | | | 297,571 | | | 15,495 | | | 1,500,195 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | Salary(1) | | Stock Awards(2) | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | | All Other Compensation(5) | | Total |
| | | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
(a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
George C. Freeman, III | | 2018 | | 900,000 |
| | 1,629,056 |
| | — |
| | 995,000 |
| | 167,046 |
| | 20,097 |
| | 3,711,199 |
|
Chairman, President, and Chief Executive Officer | | 2017 | | 850,100 |
| | 1,619,161 |
| | — |
| | 1,114,100 |
| | 381,524 |
| | 28,774 |
| | 3,993,659 |
|
| | 2016 | | 841,700 |
| | 1,727,171 |
| | — |
| | 939,300 |
| | 108,740 |
| | 21,266 |
| | 3,638,177 |
|
| | | | | | | | | | | | | | | | |
Airton L. Hentschke | | 2018 | | 568,900 |
| | 769,984 |
| | — |
| | 524,100 |
| | 119,876 |
| | 13,406 |
| | 1,996,266 |
|
Senior Vice President and Chief Operating Officer | | 2017 | | 560,500 |
| | 801,721 |
| | — |
| | 612,100 |
| | 142,445 |
| | 15,758 |
| | 2,132,524 |
|
| | 2016 | | 555,000 |
| | 853,937 |
| | — |
| | 516,200 |
| | 112,978 |
| | 22,557 |
| | 2,060,672 |
|
| | | | | | | | | | | | | | | | |
David C. Moore | | 2018 | | 450,900 |
| | 642,240 |
| | — |
| | 415,300 |
| | 294,263 |
| | 15,219 |
| | 1,817,922 |
|
Senior Vice President and Chief Financial Officer | | 2017 | | 444,200 |
| | 634,041 |
| | — |
| | 485,100 |
| | 380,586 |
| | 14,990 |
| | 1,958,917 |
|
| | 2016 | | 439,800 |
| �� | 675,430 |
| | — |
| | 409,000 |
| | 119,558 |
| | 15,576 |
| | 1,659,364 |
|
| | | | | | | | | | | | | | | | |
Preston D. Wigner | | 2018 | | 398,300 |
| | 362,720 |
| | — |
| | 293,500 |
| | 50,470 |
| | 13,708 |
| | 1,118,698 |
|
Vice President, General Counsel, and Secretary | | 2017 | | 340,100 |
| | 424,441 |
| | — |
| | 342,800 |
| | 94,100 |
| | 14,958 |
| | 1,216,399 |
|
| | 2016 | | 336,700 |
| | 453,503 |
| | — |
| | 289,000 |
| | 33,135 |
| | 13,316 |
| | 1,125,654 |
|
| | | | | | | | | | | | | | | | |
Theodore G. Broome | | 2018 | | 373,900 |
| | 318,175 |
| | — |
| | 303,100 |
| | 232,519 |
| | 13,876 |
| | 1,241,570 |
|
Executive Vice President and Sales Director | | 2017 | | 343,800 |
| | 324,880 |
| | — |
| | 386,200 |
| | 214,437 |
| | 13,293 |
| | 1,282,610 |
|
Universal Leaf Tobacco Co., Inc. | | 2016 | | 340,400 |
| | 347,364 |
| | — |
| | 325,500 |
| | 126,380 |
| | 13,319 |
| | 1,152,963 |
|
(1)Salary amounts include cash compensation earned by each named executive officer during fiscal years 2019, 2020 and 2021, where applicable, as well as any amounts earned in such fiscal years, but contributed into the 401(k) Plan and/or deferred at the election of the named executive officer into our deferred compensation program. For a discussion of the deferred compensation program and amounts deferred by the named executive officers in fiscal year 2021, including earnings on amounts deferred, see “Non-qualified Deferred Compensation” beginning on page 55 of this Proxy Statement. | |
(1)
| Salary amounts include cash compensation earned by each named executive officer during fiscal years 2016, 2017, and 2018, where applicable, as well as any amounts earned in such fiscal years, but contributed into the 401(k) Plan and/or deferred at the election of the named executive officer into our deferred compensation program. For a discussion of the deferred compensation program and amounts deferred by the named executive officers in fiscal year 2018, including earnings on amounts deferred, see “Non-qualified Deferred Compensation” beginning on page 45 of this Proxy Statement. |
| |
(2)
| The amount represents the aggregate grant date fair value of stock or options awarded in the applicable fiscal year in accordance with FASB ASC Topic 718. This amount does not reflect our accounting expense for these award(s) during the year and does not correspond to the actual cash value that will be recognized by the named executive officer when received. Performance Share awards do not have dividend rights and therefore reflect a lower grant date fair value than the closing price of our Common Stock on the date of grant. For fiscal years 2016, 2017, and 2018 Performance Share awards, the grant date fair market value per share was $45.06, $49.17 and $60.37, respectively. Amounts for fiscal years 2016, 2017, and 2018 include Performance Share awards calculated at target levels. If these Performance Share awards paid at maximum (150% of target), the aggregate grant date fair value of all stock awards for each of the named executive officers would have been at the time of the grant: for fiscal year 2016, Mr. G. Freeman: $2,130,458; Mr. Hentschke: $1,053,328; Mr. D. Moore: $833,140; Mr. Wigner: $559,394; and Mr. Broome: $428,472; for fiscal year 2017, Mr. G. Freeman: $1,998,999; Mr. Hentschke: $989,796; Mr. D. Moore: $782,780; and Mr. Wigner: $524,010; and Mr. Broome: $401,094; and for fiscal year 2018, Mr. G. Freeman: $2,015,424; Mr. Hentschke: $952,603; Mr. D. Moore: $642,240; Mr. Wigner: $448,747; and Mr. Broome: $393,637.(2)The amount represents the aggregate grant date fair value of stock or options awarded in the applicable fiscal year in accordance with FASB ASC Topic 718. This amount does not reflect our accounting expense for these award(s) during the year and does not correspond to the actual cash value that will be recognized by the named executive officer when received. Performance Share awards do not have dividend rights and therefore reflect a lower grant date fair value than the closing price of our Common Stock on the date of grant. For fiscal years 2019, 2020 and 2021 Performance Share awards, the grant date value per share was $57.17, $50.16, and $34.33, respectively. Amounts for fiscal years 2019, 2020 and 2021 include Performance Share awards calculated at target levels. If these Performance Share awards paid at maximum (150% of target), the aggregate grant date fair value of all stock awards for each of the named executive officers would have been at the time of the grant: for fiscal year 2019, Mr. G. Freeman: $2,852,994; Mr. Hentschke: $1,350,620; Mr. Kroner: 420,849; Mr. Wigner: $629,783; and Mr. Broome: $561,493; for fiscal year 2020, Mr. G. Freeman: $2,222,831; Mr. Hentschke: $1,054,334; Mr. Kroner: $543,956; Mr. Wigner: $490,232; and Mr. Broome: $439,865; and for fiscal year 2021, Mr. G. Freeman: $2,048,212; Mr. Hentschke: $970,581; Mr. Kroner: $644,676; Mr. Wigner: $454,366; and Mr. Broome: $404,409. Assumptions used in the calculation of these award amounts are included in Notes 1 and 13 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended March 31, 2016, in Notes 1 and 12 to the consolidated financial statements, included in our Annual Report on Form
|
10-K for the year ended March 31, 2017, in Notes 1 and 12 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended March 31, 2018,2019, in Notes 1 and 15 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended March 31, 2020, in Notes 1 and 15 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended March 31, 2021, and incorporated by reference into this Proxy Statement.
Beginning in fiscal year 2007, fair value expense for stock-based compensation was recognized ratably over the period from grant date to the earlier of (a) the vesting date of the award, or (b) the date the grantee is eligible to retire without forfeiting the award. For employees who are already eligible to retire at the date an award is granted, the total fair value of the award is recognized as expense at the date of grant. Information on individual equity awards granted to the named executive officers in fiscal year 20182021 is set forth in the section entitled “Grants of Plan-Based Awards” on page 3949 of this Proxy Statement.
| |
(3)(3)The amounts represent cash awards to the named executive officers under our performance-based annual cash incentive plan for fiscal years 2019, 2020 and 2021, where applicable, which is discussed in the section entitled “Annual Cash Incentives Awards” beginning on page 40 of this Proxy Statement. While such amounts were earned for fiscal years 2019, 2020 and 2021 performance, they were not paid to the named executive officers until June 14, 2019, June 15, 2020 and June 15, 2021 respectively. (4)The amounts represent the actuarial increases in the present values of the named executive officers' benefits under our pension plans during fiscal years 2019, 2020 and 2021, as applicable, determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. For all named executive officers the amounts only reflect changes in pension value because they had no above market interest earnings for fiscal years 2019, 2020, and 2021. For additional information on our pension plans, see the section entitled “Retirement and Post-Termination Compensation” on page 45 of this Proxy Statement and the tables entitled “Pension Benefits” on page 53 of this Proxy Statement and “Non-qualified Deferred Compensation” on page 55 of this Proxy Statement. For a full description of the pension plan assumptions used by us for financial reporting purposes for fiscal years 2019, 2020 and 2021 see Note 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021, and incorporated by reference into this Proxy Statement. (5)The table below reflects the types and dollar amounts of perquisites, additional compensation, and other personal benefits provided to the named executive officers during fiscal year 2021. For purposes of computing the dollar amounts of the items listed below, we used the actual out-of-pocket costs to us of providing the perquisite or other personal benefit to the named executive officer. The named executive officers paid any taxes associated with these benefits without reimbursement from us. Each perquisite and personal benefit included in the table below is described in more detail in the narratives immediately following the table: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Column (i) Components | | G.C. Freeman, III | | A.L. Hentschke | | J.C. Kroner | | P.D. Wigner | | T.G. Broome | | | ($) | | ($) | | ($) | | ($) | | ($) | Professional Fees (a) | | 4,200 | | | — | | | 1,450 | | | — | | | — | | 401(k) Match (b) | | 14,417 | | | 14,399 | | | 14,250 | | | 14,355 | | | 14,350 | | Matching Gifts (c) | | 5,000 | | | — | | | 1,500 | | | — | | | — | | Home Leave - Expatriates (d) | | — | | | | | — | | | — | | | — | | TOTALS | | 23,617 | | | 14,399 | | | 17,200 | | | 14,355 | | | 14,350 | |
(a)Financial Planning and Tax Preparation Services. Only Mr. G. Freeman and Mr. Kroner are eligible to be reimbursed for financial planning and tax preparation services they incur during the fiscal year, subject to an annual cap of $15,000. All reimbursed amounts paid to these named executive officers during fiscal year 2021 pursuant to our financial planning and tax preparation policy are individually disclosed in the perquisites table above. (b)401(k) Company Match. Each named executive officer is eligible to participate in the 401(k) Plan, which offers them an opportunity to defer income and receive matching contributions from us subject to certain limits. Company contributions made to the named executive officers during fiscal year 2021 are set forth in the table above. Information about the 401(k) Plan is set forth in the section entitled “Deferred Income Plans” beginning on page 45 of this Proxy Statement. (c)Matching Gifts. Each named executive officer is eligible to participate in our matching gifts program in which our charitable foundation matches employees' contributions to charities. The maximum amount applicable to all participants that can be matched in any fiscal year of our foundation is $5,000 per participant. The named executive officers participated in the matching gifts program in amounts set forth above. (d)Home Leave - Expatriates. Mr. Hentschke is a Brazilian expatriate working in our Richmond, Virginia headquarters and is entitled to one round-trip, economy class airline ticket per year for himself and his dependents. Mr. Hentschke did not have any Home Leave in fiscal year 2021. | The amounts represent cash awards to the named executive officers under our performance-based annual cash incentive plan for fiscal years 2016, 2017 and 2018, where applicable, which is discussed in the section entitled “Annual Cash Incentives Awards” beginning on page 31 of this Proxy Statement. While such amounts were earned for fiscal years 2016, 2017 and 2018 performance, they were not paid to the named executive officers until and June 8, 2016, June 12, 2017, and June 12, 2018, respectively. |
| |
(4)
| The amounts represent the actuarial increases in the present values of the named executive officers' benefits under our pension plans during fiscal years 2016, 2017 and 2018, as applicable, determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. For all named executive officers, the amounts only reflect changes in pension value because they had no above market interest earnings for fiscal years 2016, 2017 and 2018. For additional information on our pension plans, see the section entitled “Retirement and Post-Termination Compensation” on page 35 of this Proxy Statement and the tables entitled “Pension Benefits” on page 43 of this Proxy Statement and “Non-qualified Deferred Compensation” on page 45 of this Proxy Statement. For a full description of the pension plan assumptions used by us for financial reporting purposes for fiscal years 2016, 2017 and 2018, see Note 10 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018, and incorporated by reference into this Proxy Statement. |
| |
(5)
| The table below reflects the types and dollar amounts of perquisites, additional compensation, and other personal benefits provided to the named executive officers during fiscal year 2018. For purposes of computing the dollar amounts of the items listed below, we used the actual out-of-pocket costs to us of providing the perquisite or other personal benefit to the named executive officer. The named executive officers paid any taxes associated with these benefits without reimbursement from us. Each perquisite and personal benefit included in the table below is described in more detail in the narratives immediately following the table: |
|
| | | | | | | | | | | | | | | |
Column (i) Components | | G.C. Freeman, III | | A.L. Hentschke | | D.C. Moore | | P.D. Wigner | | T.G. Broome |
| | ($) | | ($) | | ($) | | ($) | | ($) |
Professional Fees (a) | | 3,600 |
| | — |
| | 1,635 |
| | — |
| | — |
|
401(k) Match (b) | | 13,997 |
| | 13,406 |
| | 13,584 |
| | 13,708 |
| | 13,876 |
|
Matching Gifts (c) | | 2,500 |
| | — |
| | — |
| | — |
| | — |
|
Home Leave - Expatriates (d) | | — |
| | — |
| | — |
| | — |
| | — |
|
TOTALS | | 20,097 |
| | 13,406 |
| | 15,219 |
| | 13,708 |
| | 13,876 |
|
| |
| Financial Planning and Tax Preparation Services. Only two of our named executive officers are eligible to be reimbursed for financial planning and tax preparation services they incur during the year, subject to an annual cap of $15,000. All reimbursed amounts paid to our named executive officers during fiscal year 2018 pursuant to our financial planning and tax preparation policy are individually disclosed in the perquisites table above.
|
| |
(b)
| 401(k) Company Match. Each named executive officer is eligible to participate in the 401(k) Plan, which offers them an opportunity to defer income and receive matching contributions from us subject to certain limits. Company contributions made to the named executive officers during fiscal year 2018 are set forth in the table above. Information about the 401(k) Plan is set forth in the section entitled “Deferred Income Plans” beginning on page 35 of this Proxy Statement.
|
| |
(c)
| Matching Gifts. Each named executive officer is eligible to participate in our matching gifts program in which our charitable foundation matches employees' contributions to charities. The maximum amount applicable to all participants that can be matched in any fiscal year of our foundation is $5,000 per employee. Each of the named executive officers participated in the matching gifts program in amounts equal to or below the maximum amount.
|
| |
(d)
| Home Leave - Expatriates. Mr. Hentschke is a Brazilian expatriate working in our Richmond, Virginia headquarters and is entitled to one round-trip, economy class airline ticket per year for himself and his dependents.
|
GRANTS OF PLAN-BASED AWARDS
The following table presents information regarding grants of plan-based awards to the named executive officers during the fiscal year ended March 31, 20182021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units(3) | | All Other Option Awards: Number of Securities Underlying Options | | Exercise or Base Price of Option Awards | | Market Price of Option Awards on Grant Date | | Grant Date Fair Value of Stock and Option Awards(4) |
| Threshold | | Target | | Max. | | Threshold | | Target | | Max. | | | | | |
| | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($/Sh) | | ($/Sh) | | ($) |
(a & b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | | (m) |
| | | | | | | | | | | | | | | | | | | | | | |
George C. Freeman, III | | | | | | | | | | | | | | | | | | | | |
5/28/20 | | 0 | | | 964,400 | | | 1,928,800 | | | | | | | | | | | | | | | | | |
| | | | | | | | 0 | | | 21,525 | | | 32,288 | | | | | | | | | 43.66 | | | 738,953 | |
| | | | | | | | | | | | | | 21,525 | | | | | | | 43.66 | | | 939,782 | |
| | | | | | | | | | | | | | | | | | | | | | |
Airton L. Hentschke | | | | | | | | | | | | | | | | | | | | |
5/28/2020 | | 0 | | | 508,000 | | | 1,016,000 | | | | | | | | | | | | | | | | | |
| | | | | | | | 0 | | | 10,200 | | | 15,300 | | | | | | | | | 43.66 | | | 350,166 | |
| | | | | | | | | | | | | | 10,200 | | | | | | | 43.66 | | | 445,332 | |
| | | | | | | | | | | | | | | | | | | | | | |
Johan C. Kroner | | | | | | | | | | | | | | | | | | | | |
5/28/2020 | | 0 | | 356,000 | | | 712,000 | | | | | | | | | | | | | | | | | |
| | | | | | | | 0 | | | 6,775 | | | 10,163 | | | | | | | | | 43.66 | | 232,586 | |
| | | | | | | | | | | | | | 6,775 | | | | | | | 43.66 | | 295,797 | |
Preston D. Wigner | | | | | | | | | | | | | | | | | | | | |
5/28/2020 | | 0 | | | 284,600 | | | 569,200 | | | | | | | | | | | | | | | | | |
| | | | | | | | 0 | | | 4,775 | | | 7,163 | | | | | | | | | 43.66 | | | 163,926 | |
| | | | | | | | | | | | | | 4,775 | | | | | | | 43.66 | | | 208,477 | |
| | | | | | | | | | | | | | | | | | | | | | |
Theodore G. Broome | | | | | | | | | | | | | | | | | | | | |
5/28/2020 | | 0 | | | 299,700 | | | 599,400 | | | | | | | | | | | | | | | | | |
| | | | | | | | 0 | | | 4,250 | | | 6,375 | | | | | | | | | 43.66 | | | 145,903 | |
| | | | | | | | | | | | | | 4,250 | | | | | | | 43.66 | | | 185,555 | |
(1).Amounts represent potential annual cash incentive awards for fiscal year 2021. The actual amount of the annual cash incentive award earned by each named executive officer for fiscal year 2021 is reported in Column (g), “Non-Equity Incentive Plan Compensation,” in the “Summary Compensation Table” on page 47 of this Proxy Statement. For additional information with respect to the annual cash incentive awards under the Incentive Plan, see the section entitled “Annual Cash Incentives Awards” beginning on page 40 of this Proxy Statement.
(2)Amounts represent potential vesting of Performance Shares granted during fiscal year 2021. Performance Shares vest in the event the three-year performance measures corresponding to the Performance Shares are met or exceeded. For additional information with respect to Performance Shares granted pursuant to our Stock Incentive Plan, see the section entitled “Long-Term Equity Participation” beginning on page 42 of this Proxy Statement and in Column (g) in the table entitled “Outstanding Equity Awards at Fiscal Year End” on page 50 of this Proxy Statement.
(3)Amounts represent the award of restricted stock units. Each restricted stock unit will convert one-for-one into shares of Common Stock upon vesting. Additional information with respect to restricted stock unit awards is set forth in the section entitled “Long-Term Equity Participation” beginning on page 42 of this Proxy Statement, and in Column (i) in the table entitled “Outstanding Equity Awards at Fiscal Year End” on page 50 of this Proxy Statement.
(4)Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. The full grant date fair value of the Performance Shares is calculated at the target performance level and will vest, if at all, at the end of a three-year measurement period, if certain performance targets are met. Amounts for Performance Share awards are determined assuming a price per share of $34.33 as of May 28, 2020, which represents a discount to the closing price of Common Stock as of the date of grant due to the lack of dividend rights. Each Performance Share will convert one-for-one into a share of Common Stock upon vesting if the performance target is met. Grant date fair value for the restricted stock unit awards is based on the grant date fair value of the underlying shares of Common Stock. The assumptions used in determining the grant date fair values of these awards are set forth in Note 15 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021, and incorporated by reference into this Proxy Statement.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units(3) | | All Other Option Awards: Number of Securities Underlying Options | | Exercise or Base Price of Option Awards | | Market Price of Option Awards on Grant Date | | Grant Date Fair Value of Stock and Option Awards(4) |
| Threshold | | Target | | Max. | | Threshold | | Target | | Max. | | | | | |
| | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($/Sh) | | ($/Sh) | | ($) |
(a & b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | | (m) |
| | | | | | | | | | | | | | | | | | | | | | |
George C. Freeman, III | | | | | | | | | | | | | | | | | | | | |
| | 0 |
| | 900,000 |
| | 1,800,000 |
| | | | | | | | | | | | | | | | |
6/1/2017 | | | | | | | | 0 |
| | 12,800 |
| | 19,200 |
| | | | | | | | 66.90 |
| | 772,736 |
|
6/1/2017 | | | | | | | | | | | | | | 12,800 |
| | | | | | 66.90 |
| | 856,320 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Airton L. Hentschke | | | | | | | | | | | | | | | | | | | | |
| | 0 |
| | 474,100 |
| | 948,200 |
| | | | | | | | | | | | | | | | |
6/1/2017 | | | | | | | | 0 |
| | 6,050 |
| | 9,075 |
| | | | | | | | 66.90 |
| | 365,239 |
|
6/1/2017 | | | | | | | | | | | | | | 6,050 |
| | | | | | 66.90 |
| | 404,745 |
|
| | | | | | | | | | | | | | | | | | | | | | |
David C. Moore | | | | | | | | | | | | | | | | | | | | |
| | 0 |
| | 375,700 |
| | 751,400 |
| | | | | | | | | | | | | | | | |
6/1/2017 | | | | | | | | 0 |
| | 0 |
| | 0 |
| | | | | | | | — |
| | — |
|
6/1/2017 | | | | | | | | | | | | | | 9,600 |
| | | | | | 66.90 |
| | 642,240 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Preston D. Wigner | | | | | | | | | | | | | | | | | | | | |
| | 0 |
| | 265,500 |
| | 531,000 |
| | | | | | | | | | | | | | | | |
6/1/2017 | | | | | | | | 0 |
| | 2,850 |
| | 4,275 |
| | | | | | | | 66.90 |
| | 172,055 |
|
6/1/2017 | | | | | | | | | | | | | | 2,850 |
| | | | | | 66.90 |
| | 190,665 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Theodore G. Broome | | | | | | | | | | | | | | | | | | | | |
| | 0 |
| | 274,200 |
| | 548,400 |
| | | | | | | | | | | | | | | | |
6/1/2017 | | | | | | | | 0 |
| | 2,500 |
| | 3,750 |
| | | | | | | | 66.90 |
| | 150,925 |
|
6/1/2017 | | | | | | | | | | | | | | 2,500 |
| | | | | | 66.90 |
| | 167,250 |
|
| |
| Amounts represent potential annual cash incentive awards for fiscal year 2018. The actual amount of the annual cash incentive award earned by each named executive officer for fiscal year 2018 is reported in Column (g), “Non-Equity Incentive Plan Compensation,” in the “Summary Compensation Table” on page 37 of this Proxy Statement. For additional information with respect to the annual cash incentive awards under the Incentive Plan, see the section entitled “Annual Cash Incentives Awards” beginning on page 31 of this Proxy Statement. |
| |
(2)
| Amounts represent potential vesting of Performance Shares granted during fiscal year 2018. Performance Shares vest in the event the three-year performance measures corresponding to the Performance Shares are met or exceeded. For additional information with respect to Performance Shares granted pursuant to our Stock Incentive Plan, see the section entitled “Long-Term Equity Participation” beginning on page 33 of this Proxy Statement and in Column (g) in the table entitled “Outstanding Equity Awards at Fiscal Year End” on page 40 of this Proxy Statement. |
| |
(3)
| Amounts represent the award of restricted stock units. Each restricted stock unit will convert one-for-one into shares of Common Stock upon vesting. Additional information with respect to restricted stock unit awards is set forth in the section entitled “Long-Term Equity Participation” beginning on page 33 of this Proxy Statement, and in Column (i) in the table entitled “Outstanding Equity Awards at Fiscal Year End” on page 40 of this Proxy Statement. |
| |
(4)
| Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. The full grant date fair value of the Performance Shares is calculated at the target performance level and will vest, if at all, at the end of a three-year measurement period, if certain performance targets are met. Amounts for Performance Share awards are determined assuming a price per share of $60.37, which represents a discount to the closing price of Common Stock as of the date of grant due to the lack of dividend rights. Each Performance Share will convert one-for-one into a share of Common Stock upon vesting if the performance target is met. Grant date fair value for the restricted stock unit awards is based on the grant date fair value of the underlying shares of Common Stock. The assumptions used in determining the grant date fair values of these awards are set forth in Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018, and incorporated by reference into this Proxy Statement. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table presents information concerning the number and value of outstanding restricted stock units and Performance Shares held by the named executive officers as of March 31, 20182021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name and Grant Date | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable | | Option Exercise Price | | Option Expiration Date | | PSA's Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) | | Number of Shares or Units of Stock That Have Not Vested(1) | | Market Value of Shares or Units of Stock That Have Not Vested(2) |
| | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
George C. Freeman, III | | | | | | | | | | | | | | | | |
June 2, 2016 | | | | | | | | | | | | | | 19,532 | | | 1,152,193 | |
June 1, 2017 | | | | | | | | | | | | | | 15,649 | | | 923,135 | |
May 25, 2018 | | | | | | | | | | | | | | 20,048 | | | 1,182,632 | |
May 24, 2019 | | | | | | | | | | | | | | 18,482 | | | 1,090,253 | |
May 28, 2020 | | | | | | | | | | | | | | 22,704 | | | 1,339,309 | |
May 25, 2018 | | | | | | | | | | 18,800 | | | 1,109,012 | | | | | |
May 24, 2019 | | | | | | | | | | 16,550 | | | 976,285 | | | | | |
May 28, 2020 | | | | | | | | | | 21,525 | | | 1,269,760 | | | | | |
| | | | | | | | | | | | | | | | |
Airton L. Hentschke | | | | | | | | | | | | | | | | |
June 2, 2016 | | | | | | | | | | | | | | 9,671 | | | 570,492 | |
June 1, 2017 | | | | | | | | | | | | | | 7,395 | | | 436,231 | |
May 25, 2018 | | | | | | | | | | | | | | 10,436 | | | 615,620 | |
May 24, 2019 | | | | | | | | | | | | | | 8,767 | | | 517,165 | |
May 28, 2020 | | | | | | | | | | | | | | 10,759 | | | 634,673 | |
May 25, 2018 | | | | | | | | | | 8,900 | | | 525,011 | | | | | |
May 24, 2019 | | | | | | | | | | 7,850 | | | 463,072 | | | | | |
May 28, 2020 | | | | | | | | | | 10,200 | | | 601,698 | | | | | |
| | | | | | | | | | | | | | | | |
Johan C. Kroner | | | | | | | | | | | | | | | | |
June 2, 2016 | | | | | | | | | | | | | | 663 | | | 39,110 | |
June 1, 2017 | | | | | | | | | | | | | | 490 | | | 28,905 | |
May 25, 2018 | | | | | | | | | | | | | | 2,109 | | | 124,410 | |
September 17, 2018 | | | | | | | | | | | | | | 1,159 | | | 68,369 | |
May 24, 2019 | | | | | | | | | | | | | | 4,521 | | | 266,694 | |
| | | | | | | | | | | | | | | | |
May 28, 2020 | | | | | | | | | | | | | | 7,146 | | | 421,543 | |
May 25, 2018 | | | | | | | | | | 1,800 | | | 106,182 | | | | | |
September 17, 2018 | | | | | | | | | | 1,000 | | | 58,990 | | | | | |
May 24, 2019 | | | | | | | | | | 4,050 | | | 238,910 | | | | | |
May 28, 2020 | | | | | | | | | | 6,775 | | | 399,657 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name and Grant Date | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable | | Option Exercise Price | | Option Expiration Date | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) | | Number of Shares or Units of Stock That Have Not Vested(1) | | Market Value of Shares or Units of Stock That Have Not Vested(2) |
| | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Preston D. Wigner | | | | | | | | | | | | | | | | |
June 2, 2016 | | | | | | | | | | | | | | 5,121 | | | 302,088 | |
June 1, 2017 | | | | | | | | | | | | | | 3,483 | | | 205,462 | |
May 25, 2018 | | | | | | | | | | | | | | 4,867 | | | 287,104 | |
May 24, 2019 | | | | | | | | | | | | | | 4,076 | | | 240,443 | |
May 28, 2020 | | | | | | | | | | | | | | 5,037 | | | 297,133 | |
May 25, 2018 | | | | | | | | | | 4,150 | | | 244,809 | | | | | |
May 24, 2019 | | | | | | | | | | 3,650 | | | 215,314 | | | | | |
May 28, 2020 | | | | | | | | | | 4,775 | | | 281,677 | | | | | |
| | | | | | | | | | | | | | | | |
Theodore G. Broome | | | | | | | | | | | | | | | | |
June 2, 2016 | | | | | | | | | | | | | | 3,918 | | | 231,123 | |
June 1, 2017 | | | | | | | | | | | | | | 3,056 | | | 180,273 | |
May 25, 2018 | | | | | | | | | | | | | | 4,337 | | | 255,840 | |
May 24, 2019 | | | | | | | | | | | | | | 3,658 | | | 215,785 | |
May 28, 2020 | | | | | | | | | | | | | | 4,483 | | | 264,452 | |
May 25, 2018 | | | | | | | | | | 3,700 | | | 218,263 | | | | | |
May 24, 2019 | | | | | | | | | | 3,275 | | | 193,192 | | | | | |
May 28, 2020 | | | | | | | | | | 4,250 | | | 250,708 | | | | | |
(1).Amounts in Column (g) represent Performance Shares. Performance Shares vest at the end of their corresponding three-year performance period if certain performance targets are met or exceeded. Amounts in Column (g) assume 100% vesting of the award, which represents the target amount payable. Each Performance Share converts one-for-one into a share of Common Stock upon vesting if the performance target is met. See “Compensation Discussion and Analysis” beginning on page 28 of this Proxy Statement. Amounts in Column (i) represent unvested restricted stock units and accumulated dividend equivalent rights. Restricted stock units have five-year cliff vesting, meaning all restricted stock units vest on the fifth anniversary of the date they are granted. At the time of vesting, restricted stock units are automatically converted into an equal number of shares of Common Stock. Restricted stock unit awards accumulate dividend equivalent rights, which track actual dividend amounts and are added to the total number of restricted stock units to be converted into shares of Common Stock at the time of vesting. These dividend equivalent units only vest when the underlying restricted stock units vest.
(2)Based on the closing price of $58.99 for our Common Stock, as quoted on the NYSE on March 31, 2021, the last trading day of fiscal year 2021.
|
| | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name and Grant Date | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable | | Option Exercise Price | | Option Expiration Date | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) | | Number of Shares or Units of Stock That Have Not Vested(1) | | Market Value of Shares or Units of Stock That Have Not Vested(2) |
| | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
George C. Freeman, III | | | | | | | | | | | | | | | | |
May 24, 2013 | | | | | | | | | | | | | | 17,484 |
| | 847,974 |
|
June 3, 2014 | | | | | | | | | | | | | | 17,375 |
| | 842,688 |
|
May 22, 2015 | | | | | | | | | | | | | | 19,838 |
| | 962,143 |
|
June 2, 2016 | | | | | | | | | | | | | | 16,468 |
| | 798,698 |
|
June 1, 2017 | | | | | | | | | | | | | | 13,194 |
| | 639,909 |
|
May 22, 2015 | | | | | | | | | | 17,900 |
| | 868,150 |
| | | | |
June 2, 2016 | | | | | | | | | | 15,450 |
| | 749,325 |
| | | | |
June 1, 2017 | | | | | | | | | | 12,800 |
| | 620,800 |
| | | | |
| | | | | | | | | | | | | | | | |
Airton L. Hentschke | | | | | | | | | | | | | | | | |
May 24, 2013 | | | | | | | | | | | | | | 3,486 |
| | 169,071 |
|
June 3, 2014 | | | | | | | | | | | | | | 4,865 |
| | 235,953 |
|
May 22, 2015 | | | | | | | | | | | | | | 9,810 |
| | 475,785 |
|
June 2, 2016 | | | | | | | | | |
|
| |
|
| | 8,154 |
| | 395,469 |
|
June 1, 2017 | | | | | | | | | | | | | | 6,236 |
| | 302,446 |
|
May 22, 2015 | | | | | | | | | | 8,850 |
| | 429,225 |
| | | | |
June 2, 2016 | | | | | | | | | | 7,650 |
| | 371,025 |
| | | | |
June 1, 2017 | | | | | | | | | | 6,050 |
| | 293,425 |
| | | | |
| | | | | | | | | | | | | | | | |
David C. Moore | | | | | | | | | | | | | | | | |
May 24, 2013 | | | | | | | | | | | | | | 6,847 |
| | 332,080 |
|
June 3, 2014 | | | | | | | | | | | | | | 6,832 |
| | 331,352 |
|
May 22, 2015 | | | | | | | | | |
| |
| | 7,757 |
| | 376,214 |
|
June 2, 2016 | | | | | | | | | |
| |
| | 6,448 |
| | 312,728 |
|
June 1, 2017 | | | | | | | | | | | | | | 9,896 |
| | 479,956 |
|
May 22, 2015 | | | | | | | | | | 7,000 |
| | 339,500 |
| | | | |
June 2, 2016 | | | | | | | | | | 6,050 |
| | 293,425 |
| | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name and Grant Date | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable | | Option Exercise Price | | Option Expiration Date | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) | | Number of Shares or Units of Stock That Have Not Vested(1) | | Market Value of Shares or Units of Stock That Have Not Vested(2) |
| | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Preston D. Wigner | | | | | | | | | | | | | | | | |
May 24, 2013 | | | | | | | | | | | | | | 4,568 |
| | 221,548 |
|
June 3, 2014 | | | | | | | | | | | | | | 4,516 |
| | 219,026 |
|
May 22, 2015 | | | | | | | | | | | |
|
| | 5,209 |
| | 252,637 |
|
June 2, 2016 | | | | | | | | | | | |
|
| | 4,318 |
| | 209,423 |
|
June 1, 2017 | | | | | | | | | | | | | | 2,938 |
| | 142,493 |
|
May 22, 2015 | | | | | | | | | | 4,700 |
| | 227,950 |
| | | | |
June 2, 2016 | | | | | | | | | | 4,050 |
| | 196,425 |
| | | | |
June 1, 2017 | | | | | | | | | | 2,850 |
| | 138,225 |
| | | | |
| | | | | | | | | | | | | | | | |
Theodore G. Broome | | | | | | | | | | | | | | | | |
May 24, 2013 | | | | | | | | | | | | | | 3,545 |
| | 171,932 |
|
June 3, 2014 | | | | | | | | | | | | | | 3,532 |
| | 171,302 |
|
May 22, 2015 | | | | | | | | | |
|
| |
|
| | 3,991 |
| | 193,563 |
|
June 2, 2016 | | | | | | | | | |
|
| |
| | 3,304 |
| | 160,244 |
|
June 1, 2017 | | | | | | | | | | | | | | 2,577 |
| | 124,985 |
|
May 22, 2015 | | | | | | | | | | 3,600 |
| | 174,600 |
| | | | |
June 2, 2016 | | | | | | | | | | 3,100 |
| | 150,350 |
| | | | |
June 1, 2017 | | | | | | | | | | 2,500 |
| | 121,250 |
| | | | |
| |
(1)
| Amounts in Column (g) represent Performance Shares. Performance Shares vest at the end of their corresponding three-year performance period if certain performance targets are met or exceeded. Amounts in Column (g) assume 100% vesting of the award, which represents the target amount payable. Each Performance Share converts one-for-one into a share of Common Stock upon vesting if the performance target is met. See “Compensation Discussion and Analysis” beginning on page 20 of this Proxy Statement. Amounts in Column (i) represent unvested restricted stock units and accumulated dividend equivalent rights. Restricted stock units have five-year cliff vesting, meaning all restricted stock units vest on the fifth anniversary of the date they are granted. At the time of vesting, restricted stock units are automatically converted into an equal number of shares of Common Stock without restriction, except in the case of certain executives who are named executive officers at the time of vesting, in which case some shares may remain restricted until the executives are no longer named executive officers or they retire in order to attempt to preserve the Section 162(m) deduction. Restricted stock unit awards accumulate dividend equivalent rights, which track actual dividend amounts and are added to the total number of restricted stock units to be converted into shares of Common Stock at the time of vesting. These dividend equivalent units only vest when the underlying restricted stock units vest. |
| |
(2)
| Based on the closing price of $48.50 for our Common Stock, as quoted on the NYSE on March 29, 2018, the last trading day of fiscal year 2018. |
OPTION EXERCISES AND STOCK VESTED
The following table presents information concerning the vesting of stock awards for the named executive officers during the fiscal year ended March 31, 2018.2021. There were no other exercises of options, SARs,stock appreciation rights, or similar instruments for the named executive officers during the fiscal year ended March 31, 20182021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock Awards | | Option Awards |
Name | | Number of Shares Acquired on Vesting | | Value Realized on Vesting | | Number of Shares Acquired on Exercise | | Value Realized on Exercise |
| | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (d) | | (e) |
George C. Freeman, III(1) | | 35,878 | | | 1,559,741 | | | — | | | — | |
Airton L. Hentschke(1) | | 17,445 | | | 758,340 | | | — | | | — | |
Johan. C. Kroner(1) | | 424 | | | 18,512 | | | — | | | — | |
Preston D. Wigner(1) | | 8,879 | | | 385,900 | | | — | | | — | |
Theodore G. Broome(1) | | 7,139 | | | 310,342 | | | — | | | — | |
(1).Amounts represent the number of shares of Common Stock underlying stock awards vesting in fiscal year 2021. The amounts in Column (b) represent the vesting of restricted stock awards that were granted in fiscal year 2016 and the vesting of Performance Shares that were granted in fiscal year 2018.
|
| | | | | | | | | | | | |
| | Stock Awards | | Option Awards |
Name | | Number of Shares Acquired on Vesting(1) | | Value Realized on Vesting | | Number of Shares Acquired on Exercise | | Value Realized on Exercise |
| | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (d) | | (e) |
George C. Freeman, III | | 33,905 |
| | 2,254,865 |
| | — |
| | — |
|
Airton L. Hentschke | | 5,608 |
| | 371,040 |
| | — |
| | — |
|
David C. Moore | | 13,306 |
| | 884,906 |
| | — |
| | — |
|
Preston D. Wigner | | 8,136 |
| | 540,752 |
| | — |
| | — |
|
Theodore G. Broome | | 7,102 |
| | 472,424 |
| | — |
| | — |
|
| |
| Amounts represent the number of shares of Common Stock underlying stock awards vested during fiscal year 2018. The amounts in Column (b) represent the vesting of restricted stock awards that were granted in fiscal year 2013 and the vesting of Performance Shares that were granted in fiscal year 2015. |
PENSION BENEFITS
The following table shows the actuarial present value of accumulated benefits as of March 31, 2018,2021, under each of our defined benefit plans, which are our only defined benefit plans that provide for payments or other benefits to the named executive officers at, following, or in connection with retirement.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service(1) | | Present Value of Accumulated Benefit(2) | | Payments During Last Fiscal Year |
| | | | (#) | | ($) | | ($) |
(a) | | (b) | | (c) | | (d) | | (e) |
George C. Freeman, III | | Pension Plan | | 23.75 | | | 1,061,526 | | | — | |
| | Benefit Restoration Plan | | 23.75 | | | 9,069,164 | | | — | |
Airton L. Hentschke | | Pension Plan | | 8.25 | | | 324,393 | | | — | |
| | Benefit Restoration Plan | | 8.25 | | | 1,135,300 | | | — | |
Johan. C. Kroner | | Pension Plan | | 27.75 | | | 815,154 | | | — | |
| | Benefit Restoration Plan | | 27.75 | | | 215,600 | | | — | |
Preston D. Wigner | | Pension Plan | | 18.00 | | | 673,385 | | | — | |
| | Benefit Restoration Plan | | 18.00 | | | 1,385,748 | | | — | |
Theodore G. Broome | | Pension Plan | | 25.00 | | | 1,505,054 | | | — | |
| | Benefit Restoration Plan | | 25.00 | | | 2,355,563 | | | — | |
(1)We have not granted, and we do not have a policy with respect to granting, extra years of service to named executive officers under the Pension Plan or the Benefit Restoration Plan. Additional information with respect to the Pension Plan and the Benefit Restoration Plan is set forth in the section entitled “Retirement and Post-Termination Compensation” beginning on page 45 of this Proxy Statement.
|
| | | | | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service(1) | | Present Value of Accumulated Benefit(2) | | Payments During Last Fiscal Year |
| | | | (#) | | ($) | | ($) |
(a) | | (b) | | (c) | | (d) | | (e) |
George C. Freeman, III | | Pension Plan | | 20.75 |
| | 725,856 |
| | — |
|
| | Benefit Restoration Plan | | 20.75 |
| | 5,808,494 |
| | — |
|
Airton L. Hentschke | | Pension Plan | | 5.25 |
| | 154,559 |
| | — |
|
| | Benefit Restoration Plan | | 5.25 |
| | 427,010 |
| | — |
|
David C. Moore | | Pension Plan | | 40.25 |
| | 1,830,146 |
| | — |
|
| | Benefit Restoration Plan | | 40.25 |
| | 5,950,326 |
| | — |
|
Preston D. Wigner | | Pension Plan | | 15.00 |
| | 418,900 |
| | — |
|
| | Benefit Restoration Plan | | 15.00 |
| | 745,516 |
| | — |
|
Theodore G. Broome | | Pension Plan | | 22.00 |
| | 1,077,535 |
| | — |
|
| | Benefit Restoration Plan | | 22.00 |
| | 1,637,510 |
| | — |
|
| |
(1)
| We have not granted, and we do not have a policy with respect to granting, extra years of service to named executive officers under the Pension Plan or the Benefit Restoration Plan. Additional information with respect to the Pension Plan and the Benefit Restoration Plan is set forth in the section entitled “Retirement and Post-Termination Compensation” beginning on page 35 of this Proxy Statement. |
| |
(2) | Present value was determined assuming retirement at age 65 for the Pension Plan and Benefit Restoration Plan. The present value calculation used an interest rate consistent with assumptions used for our financial reporting under FASB ASC Topic 715 and a postretirement mortality assumption table for the Consumer Goods and Food & Drink Industry that is based on recent mortality data and closely tracks the actual mortality experience of our plans. Other assumptions made in the valuation are discussed in our Annual Report on Form 10-K for the year ended March 31, 2018, in the section entitled “Pension and Other Postretirement Benefit Plans,” the section entitled “Critical Accounting Estimates and Assumptions,” and in Note 10Present value was determined assuming retirement at age 65 for the Pension Plan and Benefit Restoration Plan. The present value calculation used an interest rate consistent with assumptions used for our financial reporting under FASB ASC Topic 715 and a postretirement mortality assumption table for the Consumer Goods and Food & Drink Industry that is based on recent mortality data and closely tracks the actual mortality experience of our plans. Other assumptions made in the valuation are discussed in our Annual Report on Form 10-K for the year ended March 31, 2021, in the section entitled “Pension and Other Postretirement Benefit Plans,” the section entitled “Critical Accounting Estimates and Assumptions,” and in Note 13 to the consolidated financial statements, and are incorporated by reference into this Proxy Statement.
|
Retirement Benefits
Our named executive officers are covered by the Pension Plan, the Benefit Restoration Plan, deferred income plans, and the 401(k) Plan. WeOur named executive officers are also havecovered by a Change of Control Agreements with some of our named executive officersPolicy addressing a change of control in our company. Additional details, and all amounts earned by our named executive officers or contributed by the companyCompany to our named executive officers through those plans, are disclosed in this Proxy Statement.
Defined Benefit Retirement Plan. Our salaried employees, including our named executive officers, participate in the Pension Plan, which is a defined benefit retirement plan. The Pension Plan is a company-funded, qualified plan under the Internal Revenue Code, with the purpose of providing a fixed benefit for the life of the participant (and/or the spouse if the joint and survivor option is elected) beginning at the time of the participant's retirement or termination. The Pension Plan also has survivor benefits for the participant's spouse.
Effective January 1, 2014, the Pension Plan was changed to implement a new benefit formula for credited service accrued beginning January 1, 2014. The revised benefit formula is based on a compensation average for all compensation earned (often referred to as a Career Average) on or after January 1, 2014 multiplied by a designated percentage. The Excess Benefit portion of the formula was eliminated. The normal retirement benefit under the Pension Plan for service accrued beginning January 1, 2014 is calculated as follows:
|
| | | | | | | | | | |
Benefit: | Designated Percentage of Average Compensation for All Years | Multiplied by | Years of service beginning January 1, 2014 |
The Pension Plan benefit for credited service accrued through December 31, 2013 is a percentage of the participant's average compensation, multiplied by the participant's credited years of service under the Pension Plan prior to the change described above. Average compensation is calculated by taking the highest average of annual salary and annual cash incentive awards for any three consecutive calendar-year periods during the participant's participation in the Pension Plan. The normal retirement benefit under the Pension Plan for service accrued through December 31, 2013 is calculated as follows:
|
| | | | | | | | | | |
Base Benefit: | Designated Percentage of Average Compensation | Multiplied by | All years of service through December 31, 2013 |
PLUS |
Excess Benefit: | Designated Percentage of Average Compensation less Covered Compensation | Multiplied by | Participant's first 35 years of service through December 31, 2013
|
Covered compensation, for purposes of the excess benefit, is defined as the average of the Social Security Taxable Wage Base for the 35 calendar-year period ending December 31, 2013.
Benefits are paid as a straight life annuity for the participant's lifetime for a single participant, or a 50% joint and survivor annuity, if elected, for married participants for their joint lifetime. Benefits are normally payable when the participant reaches age 65; however, participants may begin receiving early retirement benefits when they reach age 55 and elect to retire with at least five years of service. If benefits are paid prior to age 65, the benefit is reduced based on the participant's age. Prior to 2014, the benefit reduction for early retirement was based on the participant's age and years of service. This was changed as of January 1, 2014 to a more standard reduction schedule that is based only on age.
Benefit Restoration Plan. To the extent benefits payable to our employees at retirement pursuant to the Pension Plan exceed amounts that may be payable under applicable provisions of the Internal Revenue Code, such benefits will be paid under our supplemental retirement plan called the Universal Leaf Tobacco Company, Incorporated 1996 Benefit Restoration Plan, which we refer to as the Benefit Restoration Plan. The Benefit Restoration Plan is a non-qualified defined benefit pension plan that provides eligible individuals the difference between the benefits they would actually accrue under the Pension Plan, but for the maximum benefit limitations and the limitation on compensation pursuant to the Internal Revenue Code that may be recognized under the Pension Plan and deferrals of their compensation under our two non-qualified deferred income plans, which are defined and discussed below. Benefits under the Benefit Restoration Plan are paid in one lump sum payment at retirement and benefits under the Deferred Income Plans are paid out at or after retirement in accordance with the election option chosen by a participant prior to deferral except where Section 409A restrictions apply. The purpose of the Benefit Restoration Plan is not to provide employees with additional benefits but to ensure that our employees who earn more than the amounts set forth in the Internal Revenue Code for maximum benefit limitations receive a retirement benefit that is proportionately equivalent to the benefit provided to our other salaried employees participating in the Pension Plan. We maintain the Pension Plan and Benefit Restoration Plan to ensure an overall competitive compensation and benefits offering and to attract and retain top talent. Our Compensation and Governance Committee believes it is essential that our overall compensation and benefits, including retirement benefits, be competitive in the market.
Retirement benefits under the Benefit Restoration Plan mirror those of the Pension Plan and as such, identical changes to the Pension Plan described in the previous section were implemented to this plan effective January 1, 2014. The Compensation and Governance Committee approved all changes to both the Pension Plan and the Benefit Restoration Plan after completing their evaluation and ensuring that the reduction in retirement benefits were consistently applied to all participants, inclusive of our named executive officers.
The retirement benefit under the Benefit Restoration Plan is paid in a lump sum. Like the Pension Plan, the benefit payable under the Benefit Restoration Plan normally is distributed when the participant reaches age 65. Participants may receive an early distribution of their retirement benefit when they reach age 55 and elect to retire with at least five years of service, but such early retirement benefit is reduced based on the participant's age. Prior to 2014, the benefit reduction for early retirement was based on the participant's age and years of service. This was changed as of January 1, 2014 to a more standard reduction schedule that is based only on age.
NON-QUALIFIED DEFERRED COMPENSATION
We offer all employees, including our named executive officers, the opportunity to participate in our qualified deferred compensation plan, the 401(k) Plan. Participants can contribute percentages on a monthly basis up to 100% of total compensation excluding annual cash incentive awards, subject to statutory limitations. We match the monthly contributions up to 5% on a monthly basis, subject to a 20172020 calendar year contribution limit of $13,500.$19,500. All of our named executive officers participated in the 401(k) Plan in fiscal year 2018.
2021.
In addition to our 401(k) Plan, we have a non-qualified deferred income plan available to certain executives: The Universal Leaf Tobacco Company, Incorporated Deferred Income Plan, which replaced a predecessor plan frozen prior to January 1, 2005 to comply with Section 409A of the Internal Revenue Code (the(together the DIP plan)Plan). The DIP Plan is designed to permit participants to accumulate additional income for retirement and other personal financial goals through the deferral of their annual cash incentive award and portions of their salary. Deferred compensation arrangements are common executive programs and we believe that these arrangements help us in the recruitment and retention of executive talent for which we are competing.
The DIP Plan is a non-qualified savings plan, with eligibility based on a participant's position in the Company and certain of its subsidiaries. Participants elect to make contributions through the deferral of up to 50% of their salary, and up to 100% of their annual incentive award. The Company does not provide any contribution or match to the DIP Plan. The DIP Plan is unfunded and unsecured by us and provides the participants a variety of investment options from which to choose. No named executive officers deferred income in eitherthe DIP Plan in fiscal year 2018.
years 2021, 2020 or 2019.
The following table presents information concerning our deferred compensation plans that provide for the deferral of compensation of the named executive officers on a basis that is not tax qualified.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in FY 2021(1) | | Registrant Contributions in FY 2021(2) | | Aggregate Earnings in FY 2021(3) | | Aggregate Withdrawals/ Distributions(4) | | Aggregate Balance at FYE 2021(5) |
| | ($) | | ($) | | ($) | | ($) | | ($) |
George C. Freeman, III | | — | | | — | | | 293,872 | | | — | | | 1,344,688 | |
Airton L. Hentschke | | — | | | — | | | 21,562 | | | — | | | 254,742 | |
Johan C. Kroner | | — | | | — | | | — | | | — | | | — | |
Preston D. Wigner | | — | | | — | | | 6,491 | | | — | | | 24,305 | |
Theodore G. Broome | | — | | | — | | | — | | | — | | | — | |
(1)Amounts represent a portion of base salary and annual incentive awards deferred into the DIP Plan.
(2)The DIP Plan does not provide for company matches or contributions.
(3)Amounts represent earnings on funds held for named executive officers in the DIP Plan except for Mr. Hentschke, Mr. Kroner and Mr. Broome. Mr. Hentschke, Mr. Kroner and Mr. Broome have not elected to defer income under the DIP Plan. The amount shown for Mr. Hentschke represents the estimated earnings on his vested balance in the Company's Brazil Previleaf Pension Plan (PPP). The PPP is a defined contribution plan established by the Company for eligible employees of one of our Brazilian subsidiaries. Mr. Hentschke has not been an active member of the PPP since his transfer to the United States in January 2013, and therefore no longer receives Company contributions to the PPP.
(4)The DIP Plan permits withdrawals under certain circumstances, including hardship, and participants may elect to have annual deferrals distributed from the DIP Plan upon retirement or after a specified number of years after the compensation is deferred.
(5)Amounts represent the balances at the end of fiscal year 2021 in the DIP Plan for named executive officers. The fair market value of Mr. Hentschke's vested balance in the Company's Brazil PPP is included, and reflects also a foreign exchange impact. Executive contributions are included in the aggregate balance that are reported as compensation to the named executive officers in the “Summary Compensation Table” in our 2020 Proxy Statement and 2019 Proxy Statement are as follows: Mr. G. Freeman: $0 (2020) and $0 (2019), Mr. Hentschke: $0 (2020) and $0 (2019), Mr. Kroner: $0 (2021) and $0 (2020), Mr. Wigner: $0 (2020) and $0 (2019), and Mr. Broome: $0 (2020) and $0 (2019).
|
| | | | | | | | | | | | | | | |
Name | | Executive Contributions in FY 2018(1) | | Registrant Contributions in FY 2018(2) | | Aggregate Earnings in FY 2018(3) | | Aggregate Withdrawals/ Distributions(4) | | Aggregate Balance at FYE 2018(5) |
| | ($) | | ($) | | ($) | | ($) | | ($) |
George C. Freeman, III | | — |
| | — |
| | 112,010 |
| | — |
| | 1,048,019 |
|
Airton L. Hentschke | | — |
| | — |
| | 22,539 |
| | — |
| | 312,960 |
|
David C. Moore | | — |
| | — |
| | 30,252 |
| | — |
| | 605,333 |
|
Preston D. Wigner | | — |
| | — |
| | 1,576 |
| | — |
| | 17,790 |
|
Theodore G. Broome | | — |
| | — |
| |
| | — |
| | — |
|
| |
| Amounts represent a portion of base salary and annual incentive awards deferred into the DIP Plans. |
| |
(2)
| The DIP Plans do not provide for company matches or contributions. |
| |
(3)
| Amounts represent earnings on funds held for named executive officers in the DIP Plans except for Mr. Hentschke and Mr. Broome. Mr. Hentschke and Mr. Broome have not elected to defer income under the DIP Plans. The amount shown for Mr. Hentschke represents the estimated earnings on his vested balance in the Company's Brazil Previleaf Pension Plan (PPP). The PPP is a defined contribution plan established by the Company for eligible employees of one of our Brazilian subsidiaries. Mr. Hentschke has not been an active member of the PPP since his transfer to the United States in January 2013 and therefore no longer receives Company contributions to the PPP. |
| |
(4)
| The DIP Plans permit withdrawals under certain circumstances including hardship, and participants may elect to have annual deferrals distributed from the DIP Plans upon retirement or after a specified number of years after the compensation is deferred. |
| |
(5)
| Amounts represent the balances at the end of fiscal year 2018 in the DIP Plans for named executive officers. The fair market value of Mr. Hentschke's vested balance in the Company's Brazil PPP is also included. Executive contributions included in the aggregate balance that are reported as compensation to the named executive officers in the “Summary Compensation Table” in our 2017 Proxy Statement and 2016 Proxy Statement are as follows: Mr. G. Freeman: $0 (2017) and $0 (2016), Mr. Hentschke: $0 (2017) and $0 (2016), Mr. D. Moore: $0 (2017) and $0 (2016), Mr. Wigner: $0 (2017) and $0 (2016), and Mr. Broome: $0 (2017) and $0 (2016). |
In addition to our qualified and non-qualified deferred compensation plans, the Company has takentook the appropriate actions to potentially maximize the deductibility of its compensation and benefit programs and avoid the limitations on deductibility under Section 162(m) of the Internal Revenue Code. The Tax Cut and Jobs Act was enacted in the United States in December 2017 and included changes to Section 162(m). Additional information about Section 162(m) is set forth in the section entitled “Limitations on Deductibility of Compensation” on page 2636 of this Proxy Statement.
The vesting of certain restricted stock units awards to Mr. G. Freeman was subject to Code Section 162(m) and certain payments have been deferred until Mr. G. Freeman retires. The following table presents information concerning those deferrals.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in FY 2021 | | Registrant Contributions in FY 2021 | | Aggregate Earnings in FY 2021(1) | | Aggregate Withdrawals/ Distributions | | Aggregate Balance at FYE 2021(2) |
| | ($) | | ($) | | ($) | | ($) | | ($) |
George C. Freeman, III | | — | | | — | | | 633,277 | | | — | | | 2,104,586 | |
(1)Amount represents earnings and change in market value during fiscal year 2021.
(2)Amount represents market value of the restricted stock units based on the March 31, 2021 closing price of stock on the NYSE of $58.99.
|
| | | | | | | | | | | | | | | |
Name | | Executive Contributions in FY 2018 | | Registrant Contributions in FY 2018 | | Aggregate Earnings in FY 2018(1) | | Aggregate Withdrawals/ Distributions | | Aggregate Balance at FYE 2018(2) |
| | ($) | | ($) | | ($) | | ($) | | ($) |
George C. Freeman, III | | — |
| | — |
| | (590,323 | ) | | — |
| | 1,458,880 |
|
| |
| Amount represents earnings and change in market value during fiscal year 2018. |
| |
(2)
| Amount represents market value of the restricted stock units on March 31, 2018. |
SUMMARY OF TERMINATION PAYMENTS AND BENEFITS
Potential Payments Upon Termination or Change of Control
During fiscal year 2018, we maintainedIn May 2020, at the recommendation of the Compensation Committee, the Board approved and adopted the Change of Control Agreements with only Messrs. G. Freeman, D. Moore,Policy. Participants in the Change of Control Policy (“Participants”) are selected by the Compensation Committee, from time to time, from among the officers and Wigner. Mr. D. Moore's Agreement will expire upon his retirement on August 31, 2018.other key employees of the Company and any company controlled by, controlling or under common control of the Company (“Affiliated Companies”) and shall be designated as “Category 1” Participants, “Category 2” Participants, or “Category 3” Participants. The terms and conditions in the Change of Control AgreementsPolicy depend on the designation of the Participant.
Currently, Mr. George C. Freeman III, the Company’s Chairman, President, and Chief Executive Officer, is designated as a Category 1 Participant. The other named executive officers are identical for eachdesignated as Category 2 Participants, and certain other executive officer who has such an agreement.
officers are designated as Category 2 or 3 Participants.
A “change of control” is defined in the Change of Control Agreements,Policy, and is generally deemed to have occurred if:
•any individual, entity, or group acquires 20% or more of either the outstanding shares of Common Stock or the combined voting power of our outstanding voting securities;
| |
Ÿ | any individual, entity, or group acquires 20% or more of either the outstanding shares of Common Stock or the combined voting power of our outstanding voting securities; |
| |
Ÿ | a majority of our directors are replaced; |
| |
Ÿ | we reorganize, merge, consolidate, or sell all or substantially all of our assets except for certain situations in which control of outstanding shares of Common Stock or outstanding voting securities is maintained; or |
| |
Ÿ | our shareholders approve a complete liquidation or dissolution of Universal Corporation. |
•a majority of our directors are replaced;
•we reorganize, merge, consolidate, or sell all or substantially all of our assets except for certain situations in which control of outstanding shares of Common Stock or outstanding voting securities is maintained; or
•our shareholders approve a complete liquidation or dissolution of the Company.
The Change of Control Agreements:Policy:
•does not contain any obligation to gross-up severance payments for potential excise taxes incurred by the Participant;
| |
Ÿ | do not contain any obligation to gross-up severance payments for potential excise taxes incurred by the executive officer; |
| |
Ÿ | contain a “double trigger” instead of a “single trigger,” meaning that payments are not made until there is a change of control and the executive officer is effectively terminated within three years of the change of control; |
| |
Ÿ | contain non-competition and non-solicitation clauses; and |
| |
Ÿ | contain certain administrative elements intended to address the requirements of Section 409A of the Internal Revenue Code applicable to deferred compensation. |
•contains a “double trigger” instead of a “single trigger,” meaning that payments are not made until there is a change of control and the Participant is terminated within three years of the change of control or, in limited circumstances, within thirty days prior to a change in control; and
•contain certain administrative elements intended to address the requirements of Section 409A of the Internal Revenue Code applicable to deferred compensation.
The Change of Control Agreements providePolicy provides that if the executive officer will have generally the same authority, duties, and responsibilities during the three years after a change of control of Universal Corporation or until the executive officer's normal retirement at age 65 (if earlier), as such executive officer did immediately prior to the change of control. Each Change of Control Agreement also provides for the payment, during such period, of an annual base salary and annual cash incentive award at least at the same levels as prior to the change of control. Each executive officer will also participate at least at the same levels in incentive, savings and retirement plans, and welfare benefit plans as were offered prior to the change of control.
Each Change of Control Agreement provides benefits in the event of the executive's death or disability, or in the event the executive's employment is terminated for “cause” or for “good reason.” If the executive officerParticipant is terminated other than for cause,“cause”, death, or disability within three years afterof the change in control or, in limited circumstances, within thirty days prior to a change ofin control, or if the executive officerParticipant terminates his employment for good reason within such three-year period, the executive officerParticipant is entitled to receive certain severance benefits.Severance benefits, include a lump sumgenerally as follows:
•A cash severance payment based on an amount equal to 2.99the Participant’s designated category:
◦Category 1 Participants receive 2.5 times the sum of histheir then-current annual base salary and the higher of such executive officer's most recent targeted bonus opportunityannual bonus.
◦Category 2 Participants receive 2.0 times the sum of their then-current annual base salary and most recent targeted annual bonus.
◦Category 3 Participants receive 1.0 times the sum of their then-current annual base salary and most recent targeted annual bonus.
•A cash payment equal to twelve times one month of COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) premiums for continued group medical, vision, and dental coverage.
In each case, receipt of any compensation or benefits under our cash incentive plan and such executive officer's prior year's annual cash incentive award. This payment will be made in full if the dateChange of termination of employmentControl Policy is more than three years priorsubject to the executive officer's normal retirement at age 65,Participant’s execution of a severance agreement, which contains a release of claims and itrestrictive covenants (including non-compete, non-solicitation, and confidentiality provisions). If the Participant does not execute the severance agreement, the Participant will be prorated if such period is less than three years. There will be no such payment if the executive officer has reached normal retirement. Severance benefits also include certain other paymentsreceive their previously accrued and benefits, including continuation of benefits under retirement plans, continuation of employee welfarevested benefits, and outplacement services fora pro-rated current year bonus (based on actual performance and paid when other executives are paid).
As a result of the executive officer up toadoption of the Change of Control Policy, the change in control agreements with Messrs. G. Freeman and Wigner were terminated and each became a maximum amountParticipant in the Change of $10,000.Control Policy in accordance with the terms and provisions of the Change of Control Policy.
Severance and Change of Control Benefits for the Named Executive Officers
The following tables summarize the value of the termination payments and benefits that each of our named executive officers would receive if their employment had terminated on March 31, 2018,2021, under the circumstances shown. The tables exclude amounts accrued through March 31, 2018,2021, that would be paid in the normal course of continued employment, such as accrued but unpaid salary and earned annual cash incentive award for the fiscal year ended March 31, 2018.2021.
Under our benefit programs, an individual is eligible for retirement after reaching age 55, with at least five years of service. The amounts in the tables for “Retirement” assume that all of our named executive officers have reached age 55 by March 31, 2018,2021, even though that was not the case for Messrs. G. Freeman, Hentschke, Kroner and Wigner.
Summary of Termination Payment and Benefits: George C. Freeman, III
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — | | | — | | | — | | | — | | | — | | | 4,820,000 | |
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 5,687,522 | | | 5,687,522 | | | 5,687,522 | | | — | | | — | | | 5,687,522 | |
Performance Shares(2) | | 3,355,057 | | | 3,355,057 | | | 3,355,057 | | | — | | | — | | | 3,355,057 | |
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 61,748 | | | 35,383 | | | 93,365 | | | 61,748 | | | 61,748 | | | 61,748 | |
401(k) Savings Plan(4) | | 1,063,229 | | | 1,063,229 | | | 1,063,229 | | | 1,063,229 | | | 1,063,229 | | | 1,063,229 | |
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 9,325,254 | | | 4,306,327 | | | 9,325,254 | | | 9,325,254 | | | 9,325,254 | | | 9,325,254 | |
Deferred Income Plan (DIP)(6) | | 84,183 | | | 1,344,688 | | | 1,344,688 | | | 1,344,688 | | | 1,344,688 | | | 1,344,688 | |
Deferred Payment of Restricted Stock(7) | | 2,104,586 | | | 2,104,586 | | | 2,104,586 | | | 2,104,586 | | | 2,104,586 | | | 2,104,586 | |
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(8) | | — | | | 3,100,000 | | | — | | | — | | | — | | | — | |
Long-Term Disability Plan(9) | | — | | | — | | | 578,640 | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Total | | 21,681,579 | | | 20,996,792 | | | 23,552,341 | | | 13,899,505 | | | 13,899,505 | | | 27,762,084 | |
(1)Amount represents cash payment due pursuant to the change in control double trigger (change in control and involuntary termination) provided in the Change of Control Policy. The payments do not include any form of tax gross-up amount because the Change of Control Policy does not provide for such payments.
(2)Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2021. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants remain entitled to previously awarded Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2021 and assuming a payout equating to the target level of performance.
(3)For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2021, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2021, payable for the life of the survivor.
(4)Amounts represent a lump sum distribution at March 31, 2021 from the 401(k) Savings Plan.
(5)Amounts represent a lump sum payment at March 31, 2021 including the balance from the terminated individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct.
(6)Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements.
(7)Amounts represent the value of restricted stock units that vested, but payment was deferred until termination of employment in order to preserve the Section 162(m) deduction. More information regarding these restricted stock units is discussed in the section entitled "Non-Qualified Deferred Compensation" on page 55 of this Proxy Statement. More information on Section 162(m) is discussed in the section entitled “Limitations on Deductibility of Compensation” on page 36 of this Proxy Statement.
(8)Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2021. In case of accidental death, the benefit amount would increase by $5,600,000 (includes AD&D and Business Travel Accident Insurance).
(9)Amounts represent 60% of annual base salary as of March 31, 2021, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65.
|
| | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 5,666,050 |
|
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 4,091,412 |
| | 4,091,412 |
| | 4,091,412 |
| | — |
| | — |
| | 4,091,412 |
|
Performance Shares(2) | | 2,238,275 |
| | 2,238,275 |
| | 2,238,275 |
| | — |
| | — |
| | 2,238,275 |
|
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 48,188 |
| | 29,422 |
| | 80,523 |
| | 48,188 |
| | 48,188 |
| | 48,188 |
|
401(k) Savings Plan(4) | | 629,636 |
| | 629,636 |
| | 629,636 |
| | 629,636 |
| | 629,636 |
| | 629,636 |
|
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 7,105,462 |
| | 2,942,474 |
| | 7,105,462 |
| | 7,105,462 |
| | 7,105,462 |
| | 7,105,462 |
|
Deferred Income Plan (DIP)(6) | | 65,610 |
| | 1,048,019 |
| | 1,048,019 |
| | 1,048,019 |
| | 1,048,019 |
| | 1,048,019 |
|
Deferred Payment of Restricted Stock(7) | | 1,458,880 |
| | 1,458,880 |
| | 1,458,880 |
| | 1,458,880 |
| | 1,458,880 |
| | 1,458,880 |
|
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(8) | | — |
| | 3,100,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(9) | | — |
| | — |
| | 540,000 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Total | | 15,637,463 |
| | 15,538,118 |
| | 17,192,207 |
| | 10,290,185 |
| | 10,290,185 |
| | 22,285,922 |
|
| |
(1)
| Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| |
(2)
| Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2018. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2018 and assuming a payout equating to the target level of performance. |
| |
(3)
| For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2018, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2018, payable for the life of the survivor. |
| |
(4)
| Amounts represent a lump sum distribution at March 31, 2018 from the 401(k) Savings Plan. |
| |
(5)
| Amounts represent a lump sum payment at March 31, 2018 including the balance from the terminated individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(6)
| Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements. |
| |
(7)
| Amounts represent the value of restricted stock units that vested, but payment was deferred until termination of employment in order to preserve the Section 162(m) deduction. More information on Section 162(m) is discussed in the section entitled “Limitations on Deductibility of Compensation” on page 26 of this Proxy Statement. |
| |
(8)
| Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2018. In case of accidental death, the benefit amount would increase by $5,600,000 (includes AD&D and Business Travel Accident Insurance). |
| |
(9)
| Amounts represent 60% of annual base salary as of March 31, 2018, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits: Airton L. Hentschke
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death, or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — | | | — | | | — | | | — | | | — | | | 2,235,200 | |
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 2,774,181 | | | 2,774,181 | | | 2,774,181 | | | — | | | — | | | 2,774,181 | |
Performance Shares(2) | | 1,589,781 | | | 1,589,781 | | | 1,589,781 | | | — | | | — | | | 1,589,781 | |
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 17,961 | | | — | | | 34,547 | | | 17,961 | | | 17,961 | | | 17,961 | |
401(k) Savings Plan(4) | | 393,244 | | | 393,244 | | | 393,244 | | | 393,244 | | | 393,244 | | | 393,244 | |
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 1,027,035 | | | — | | | 1,027,035 | | | 1,027,035 | | | 1,027,035 | | | 1,027,035 | |
Deferred Income Plan (DIP)(6) | | 254,742 | | | 254,742 | | | 254,742 | | | 254,742 | | | 254,742 | | | 254,742 | |
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — | | | 1,600,000 | | | — | | | — | | | — | | | — | |
Long-Term Disability Plan(8) | | — | | | — | | | 365,760 | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Total | | 6,056,944 | | | 6,611,948 | | | 6,439,290 | | | 1,692,982 | | | 1,692,982 | | | 8,292,144 | |
(1)Amount represents cash payment due pursuant to the change in control double trigger (change in control and involuntary termination) provided in the Change of Control Policy. The payments do not include any form of tax gross-up amount because the Change of Control Policy does not provide for such payments.
(2)Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2021. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants remain entitled to previously awarded Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2021 and assuming a payout equating to the target level of performance.
(3)For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2021, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the straight life option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2021.
(4)Amounts represent a lump sum distribution at March 31, 2021 from the 401(k) Savings Plan.
(5)Amounts represent a lump sum payment at March 31, 2021 from the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct.
(6)Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements. In Mr. Hentschke's case, the amounts include his vested account balance in the Company's Brazil Previleaf Pension Plan.
(7)Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2021. In case of accidental death, the benefit amount would increase by $5,353,000 (includes AD&D and Business Travel Accident Insurance).
(8)Amounts represent 60% of annual base salary as of March 31, 2021, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65.
|
| | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death, or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 1,578,724 |
| | 1,578,724 |
| | 1,578,724 |
| | — |
| | — |
| | 1,578,724 |
|
Performance Shares(2) | | 1,093,675 |
| | 1,093,675 |
| | 1,093,675 |
| | — |
| | — |
| | 1,093,675 |
|
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 11,585 |
| | — |
| | 21,794 |
| | 11,585 |
| | 11,585 |
| | 11,585 |
|
401(k) Savings Plan(4) | | 190,548 |
| | 190,548 |
| | 190,548 |
| | 190,548 |
| | 190,548 |
| | 190,548 |
|
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 548,550 |
| | — |
| | 548,550 |
| | 548,550 |
| | 548,550 |
| | 548,550 |
|
Deferred Income Plan (DIP)(6) | | 312,960 |
| | 312,960 |
| | 312,960 |
| | 312,960 |
| | 312,960 |
| | 312,960 |
|
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — |
| | 1,600,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(8) | | — |
| | — |
| | 341,340 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Total | | 3,736,042 |
| | 4,775,907 |
| | 4,087,591 |
| | 1,063,643 |
| | 1,063,643 |
| | 3,736,042 |
|
| |
| Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive's Change of Control Agreement. Mr. Hentschke does not have a Change of Control Agreement. |
| |
(2)
| Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2018. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2018 and assuming a payout equating to the target level of performance. |
| |
(3)
| For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2018, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the straight life option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2018. |
| |
(4)
| Amounts represent a lump sum distribution at March 31, 2018 from the 401(k) Savings Plan. |
| |
(5)
| Amounts represent a lump sum payment at March 31, 2018 from the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(6)
| Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements. In Mr. Hentschke's case, the amounts include his vested account balance in the Company's Brazil Previleaf Pension Plan. |
| |
(7)
| Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2018. In case of accidental death, the benefit amount would increase by $5,129,000 (includes AD&D and Business Travel Accident Insurance). |
| |
(8)
| Amounts represent 60% of annual base salary as of March 31, 2018, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits: DavidJohan C. MooreKroner
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — | | | — | | | — | | | — | | | — | | | 1,639,000 | |
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 527,489 | | | 527,489 | | | 527,489 | | | — | | | — | | | 527,489 | |
Performance Shares(2) | | 803,739 | | | 803,739 | | | 803,739 | | | — | | | — | | | 803,739 | |
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 48,044 | | | 30,712 | | | 81,959 | | | 48,044 | | | 48,044 | | | 48,044 | |
401(k) Savings Plan(4) | | 1,027,613 | | | 1,027,613 | | | 1,027,613 | | | 1,027,613 | | | 1,027,613 | | | 1,027,613 | |
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 184,773 | | | 96,506 | | | 184,773 | | | 184,773 | | | 184,773 | | | 184,773 | |
Deferred Income Plan (DIP)(6) | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — | | | 1,600,000 | | | — | | | — | | | — | | | — | |
Long-Term Disability Plan(8) | | — | | | — | | | 278,100 | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Total | | 2,591,658 | | | 4,086,059 | | | 2,903,673 | | | 1,260,430 | | | 1,260,430 | | | 4,230,658 | |
| | | | | | | | | | | | |
(1)Amount represents cash payment due pursuant to the change in control double trigger (change in control and involuntary termination) provided in the Change of Control Policy. The payments do not include any form of tax gross-up amount because the Change of Control Policy does not provide for such payments..
(2)Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2021. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants remain entitled to previously awarded Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2021 and assuming a payout equating to the target level of performance.
(3)For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2021, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2021.
(4)Amounts represent a lump sum distribution at March 31, 2021 from the 401(k) Savings Plan.
(5)Amounts represent a lump sum payment at March 31, 2021 from the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct.
(6)Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements.
(7)Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2021. In case of accidental death, the benefit amount would increase by $5,961,000 (includes AD&D, voluntary AD&D, and Business Travel Accident Insurance).
(8)Amounts represent 60% of annual base salary as of March 31, 2021, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65.
|
| | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 359,714 |
|
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 1,832,330 |
| | 1,832,330 |
| | 1,832,330 |
| | — |
| | — |
| | 1,832,330 |
|
Performance Shares(2) | | 632,925 |
| | 632,925 |
| | 632,925 |
| | — |
| | — |
| | 632,925 |
|
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 130,930 |
| | 65,465 |
| | 153,673 |
| | 130,930 |
| | 130,930 |
| | 130,930 |
|
401(k) Savings Plan(4) | | 504,417 |
| | 504,417 |
| | 504,417 |
| | 504,417 |
| | 504,417 |
| | 504,417 |
|
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 6,831,619 |
| | 3,193,653 |
| | 6,831,619 |
| | 6,831,619 |
| | 6,831,619 |
| | 6,831,619 |
|
Deferred Income Plan (DIP)(6) | | 76,729 |
| | 605,333 |
| | 605,333 |
| | 605,333 |
| | 605,333 |
| | 605,333 |
|
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — |
| | 1,600,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(8) | | — |
| | — |
| | 270,540 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Total | | 10,008,950 |
| | 8,434,123 |
| | 10,830,837 |
| | 8,072,299 |
| | 8,072,299 |
| | 10,897,268 |
|
| |
| Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. Mr. D. Moore's potential payment is limited as he will retire on August 31, 2018. |
| |
(2)
| Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2018. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2018 and assuming a payout equating to the target level of performance. |
| |
(3)
| For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2018, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2018, payable for the life of the survivor. |
| |
(4)
| Amount represent a lump sum distribution at March 31, 2018 from the 401(k) Savings Plan. |
| |
(5)
| Amounts represent a lump sum payment at March 31, 2018 including the balance from the terminated individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(6)
| Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements. |
| |
(7)
| Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2018. In case of accidental death, the benefit amount would increase by $4,479,800 (includes AD&D and Business Travel Accident Insurance). |
| |
(8)
| Amounts represent 60% of annual base salary as of March 31, 2018, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits: Preston D. Wigner
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — | | | — | | | — | | | — | | | — | | | 1,423,000 | |
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 1,332,230 | | | 1,332,230 | | | 1,332,230 | | | — | | | — | | | 1,332,230 | |
Performance Shares(2) | | 741,800 | | | 741,800 | | | 741,800 | | | — | | | — | | | 741,800 | |
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 39,117 | | | 25,631 | | | 69,586 | | | 39,117 | | | 39,117 | | | 39,117 | |
401(k) Savings Plan(4) | | 893,317 | | | 893,317 | | | 893,317 | | | 893,317 | | | 893,317 | | | 893,317 | |
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 1,427,839 | | | 672,072 | | | 1,427,839 | | | 1,427,839 | | | 1,427,839 | | | 1,427,839 | |
Deferred Income Plan (DIP)(6) | | 24,305 | | | 24,305 | | | 24,305 | | | 24,305 | | | 24,305 | | | 24,305 | |
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — | | | 2,023,000 | | | — | | | — | | | — | | | — | |
Long-Term Disability Plan(8) | | — | | | — | | | 256,140 | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Total | | 4,458,608 | | | 5,712,355 | | | 4,745,217 | | | 2,384,578 | | | 2,384,578 | | | 5,881,608 | |
(1)Amount represents cash payment due pursuant to the change in control double trigger (change in control and involuntary termination) provided in the Change of Control Policy. The payments do not include any form of tax gross-up amount because the Change of Control Policy does not provide for such payments.
(2)Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2021. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants remain entitled to previously awarded Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2021 and assuming a payout equating to the target level of performance.
(3)For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2021, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2021, payable for the life of the survivor.
(4)Amounts represents a lump sum distribution at March 31, 2021 from the 401(k) Savings Plan.
(5)Amounts represent a lump sum payment at March 31, 2021 from the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct.
(6)Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements.
(7)Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2021. In case of accidental death, the benefit amount would increase by $4,135,000 (includes AD&D and Business Travel Accident Insurance).
(8)Amounts represent 60% of annual base salary as of March 31, 2021, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65.
|
| | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 2,068,482 |
|
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 1,045,127 |
| | 1,045,127 |
| | 1,045,127 |
| | — |
| | — |
| | 1,045,127 |
|
Performance Shares(2) | | 562,600 |
| | 562,600 |
| | 562,600 |
| | — |
| | — |
| | 562,600 |
|
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 33,206 |
| | 20,140 |
| | 56,878 |
| | 33,206 |
| | 33,206 |
| | 33,206 |
|
401(k) Savings Plan(4) | | 571,877 |
| | 571,877 |
| | 571,877 |
| | 571,877 |
| | 571,877 |
| | 571,877 |
|
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 1,095,221 |
| | 348,517 |
| | 1,095,221 |
| | 1,095,221 |
| | 1,095,221 |
| | 1,095,221 |
|
Deferred Income Plan (DIP)(6) | | 16,214 |
| | 17,790 |
| | 17,790 |
| | 17,790 |
| | 17,790 |
| | 17,790 |
|
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — |
| | 1,928,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(8) | | — |
| | — |
| | 238,980 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Total | | 3,324,245 |
| | 4,494,051 |
| | 3,588,473 |
| | 1,718,094 |
| | 1,718,094 |
| | 5,394,303 |
|
| |
| Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| |
(2)
| Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2018. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2018 and assuming a payout equating to the target level of performance. |
| |
(3)
| For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2018, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2018, payable for the life of the survivor. |
| |
(4)
| Amounts represents a lump sum distribution at March 31, 2018 from the 401(k) Savings Plan. |
| |
(5)
| Amounts represent a lump sum payment at March 31, 2018 from the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(6)
| Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements. |
| |
(7)
| Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2018. In case of accidental death, the benefit amount would increase by $4,479,800 (includes AD&D and Business Travel Accident Insurance). |
| |
(8)
| Amounts represent 60% of annual base salary as of March 31, 2018, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits: Theodore G. Broome
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — | | | — | | | — | | | — | | | — | | | 1,416,600 | |
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 1,147,473 | | | 1,147,473 | | | 1,147,473 | | | — | | | — | | | 1,147,473 | |
Performance Shares(2) | | 662,163 | | | 662,163 | | | 662,163 | | | — | | | — | | | 662,163 | |
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 99,079 | | | 49,539 | | | 99,079 | | | 99,079 | | | 99,079 | | | 99,079 | |
401(k) Savings Plan(4) | | 633,520 | | | 633,520 | | | 633,520 | | | 633,520 | | | 633,520 | | | 633,520 | |
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 2,425,757 | | | 1,302,634 | | | 2,425,757 | | | 2,425,757 | | | 2,425,757 | | | 2,425,757 | |
Deferred Income Plan (DIP)(6) | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — | | | 1,417,000 | | | — | | | — | | | — | | | — | |
Long-Term Disability Plan(8) | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Total | | 4,967,992 | | | 5,212,329 | | | 4,967,992 | | | 3,158,356 | | | 3,158,356 | | | 6,384,592 | |
(1)Amount represents cash payment due pursuant to the change in control double trigger (change in control and involuntary termination) provided in the Change of Control Policy. The payments do not include any form of tax gross-up amount because the Change of Control Policy does not provide for such payments.
(2)Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2021. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants remain entitled to previously awarded Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2021 and assuming a payout equating to the target level of performance.
(3)For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2021, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2021, payable for the life of the survivor.
(4)Amounts represent a lump sum distribution at March 31, 2021 from the 401(k) Savings Plan.
(5)Amounts represent a lump sum payment at March 31, 2021 including the balance from the terminated individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct.
(6)Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements.
(7)Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2021. In case of accidental death, the benefit amount would increase by $4,125,000 (includes AD&D and Business Travel Accident Insurance).
(8)Long-term disability is not available after age 65.
|
| | | | | | | | | | | | | | | | | | |
Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Acceleration of Equity Awards | | | | | | | | | | | | |
Restricted Stock Units(2) | | 822,026 |
| | 822,026 |
| | 822,026 |
| | — |
| | — |
| | 822,026 |
|
Performance Shares(2) | | 446,200 |
| | 446,200 |
| | 446,200 |
| | — |
| | — |
| | 446,200 |
|
| | | | | | | | | | | | |
Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 71,375 |
| | 35,688 |
| | 84,521 |
| | 71,375 |
| | 71,375 |
| | 71,375 |
|
401(k) Savings Plan(4) | | 414,694 |
| | 414,694 |
| | 414,694 |
| | 414,694 |
| | 414,694 |
| | 414,694 |
|
| | | | | | | | | | | | |
Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(5) | | 1,734,636 |
| | 913,812 |
| | 1,734,636 |
| | 1,734,636 |
| | 1,734,636 |
| | 1,734,636 |
|
Deferred Income Plan (DIP)(6) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — |
| | 1,297,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(8) | | — |
| | — |
| | 224,340 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
Total | | 3,488,931 |
| | 3,929,420 |
| | 3,726,417 |
| | 2,220,705 |
| | 2,220,705 |
| | 3,488,931 |
|
| |
| Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive's Change of Control Agreement. Mr. Broome does not have a Change of Control Agreement. |
| |
(2)
| Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2018. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 31, 2018 and assuming a payout equating to the target level of performance. |
| |
(3)
| For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2018, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive's survivor at March 31, 2018, payable for the life of the survivor. |
| |
(4)
| Amounts represent a lump sum distribution at March 31, 2018 from the 401(k) Savings Plan. |
| |
(5)
| Amounts represent a lump sum payment at March 31, 2018 including the balance from the terminated individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(6)
| Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive's DIP Plan agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive's DIP Plan agreements. |
| |
(7)
| Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2018. In case of accidental death, the benefit amount would increase by $3,944,300 (includes AD&D and Business Travel Accident Insurance). |
| |
(8)
| Amounts represent 60% of annual base salary as of March 31, 2018, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
CEO PAY RATIO FOR FISCAL YEAR 20182021
Company Overview
Universal Corporation is the leadinga global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents, that sources and processes leaf tobacco supplier. We conduct our business worldwide, and on Januaryplant based ingredients. Our employee population was evaluated for the fiscal year 2021 CEO pay ratio as of March 31, 2018,2021, when we had 21,15022,807 employees, with 94%95% of our employee population located outside of the U.S. AllUnited States. We included all full-time, part-time and seasonal employees who arewere employed by consolidated subsidiaries are included.subsidiaries. These employees arewere located in 2625 countries, many of which are in less developed countries and rural areas with lower wage geographies where the average annual salary is significantly less than the average annual salary in the U.S. Our employee population of unskilled, seasonal workers was 13,522,12,413, or approximately 64%54% of the Company’s total employee population.
Methodology
The methodology and the material assumptions, adjustments, and estimates that we have used to calculate the CEO pay ratioidentify our median employee in fiscal year 2021 were as follows:
•We selected JanuaryMarch 31, 20182021 as the determination date, which is withinwas the last three monthsday of our fiscal 20182021 year-end;
•We collected the actual base salary for fullfull-time, part-time, and part-timeseasonal employees (other than Mr. G. Freeman) and actual pay from FebruaryApril 1, 20172020 through JanuaryMarch 31, 20182021 for our seasonal employees;
•Full-time employees that were hired between FebruaryApril 1, 20172020 and JanuaryMarch 31, 20182021 were annualized as permitted by SEC rules;
•Part-time employees who were hired during this same time period with a set schedule were counted using their annualized salary based on the hours hired to work. Part-time employees who have a variable schedule were counted using their actual pay;
•Foreign currency was converted to U.S. dollars using an average of the relevant currency conversion rates over the period FebruaryApril 1, 20172020 through JanuaryMarch 31, 2018;2021; and
•We did not make any cost of living adjustments for any employee located outside of the U.S.
Calculation
Using the methodology described above, we estimated that for fiscal year 2018,2021, our global median employee was an unskilled, seasonal worker located in the Philippines.Mozambique. We then calculated the elements of that employee’s compensation for fiscal year 20182021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in total annual compensation of $1,528.$1,928.
For the total annual compensation of the Company’s Chief Executive Officer (the “CEO”), Mr. G. Freeman, we used the amount reported in the Summary Compensation Table on page 3747 of $3,711,199.$5,171,861. Based on this information, for fiscal year 2018,2021, the estimated ratio of the annual compensation of Mr. G. Freeman to the median annual total compensation of all employees (except Mr. G. Freeman) was 2,4292,683 to 1.
Our Ratio in Context
We are not permitted to annualize the compensation of seasonal workers under the SEC rules. As a result, our pay ratio is inflated due to the global nature of our workforce and our significant reliance on unskilled, seasonal workers during the tobacco processing periods throughout the world.
Also, the median employee only worked for four months during the fiscal year. As a comparison, for fiscal year 2021 we determinedidentified the median U.S. employee was a full-time hourly employee. We calculated the median U.S. employee’s compensation in the same manner as described above, and included all employees whether full-time, part-time, or seasonal.above. This resulted in a total annual compensation of the median U.S. employee for fiscal year 20182021 of $18,038.$34,974. The ratio of the CEO to the median U.S. employee’s total annual compensation was 206148 to 1.
The CEO pay ratios included above are reasonable estimates, calculated in a manner consistent with Item 402(u) of Regulation S-K. Given the different methodologies that various public companies will use to determine an estimate of their CEO pay ratio, the estimated CEO pay ratio information provided herein should not be used as a basis for comparison between companies.
EQUITY COMPENSATION INFORMATION
Shares of Common Stock are authorized for issuance with respect to our compensation plans. The following table sets forth information as of March 31, 2018,2021, with respect to compensation plans under which shares of Common Stock are authorized for issuance.
|
| | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | | Weighted-Average Exercise Price of
Outstanding
Options,
Warrants and Rights
| | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plan |
| | (#) | | ($) | | (#) |
Equity compensation plans approved by shareholders: | | | | | | |
2007 Stock Incentive Plan(2) | |
| |
| | — |
| | — | | | — | |
2017 Stock Incentive Plan | | — | | | — | 992,967 |
| 560,562 | |
Equity compensation plans not approved by shareholders(3) | | — |
| | — |
| | — |
|
Total | | — |
| | — |
| | 992,967560,562 |
|
| |
(1)(1)There are no outstanding options, warrants, and rights. (2)The 2007 Stock Incentive Plan was succeeded and replaced by the 2017 Stock Incentive Plan. As of March 31, 2021, a total of 130,485 shares have been reserved for issuance to fulfill previous outstanding awards under the 2007 Stock Incentive Plan. (3)All of the Company's equity compensation plans have been approved by shareholders.
| There are no outstanding options, warrants, and rights. |
| |
(2)
| The 2007 Stock Incentive Plan was succeeded and replaced by the 2017 Stock Incentive Plan. As of March 31, 2018, a total of 480,886 shares have been reserved for issuance to fulfill previous outstanding awards under the 2007 Stock Incentive Plan. |
| |
(3) | All of the Company's equity compensation plans have been approved by shareholders. |
DIRECTORS' COMPENSATION
The following table presents information relating to total compensation for our non-employee directors for fiscal year 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name(1) | | Fees Earned or Paid in Cash(2) | | Stock Awards(3),(4) | | Option Awards | | Non-Equity Incentive Plan Compensation | | Change in Pension Value And Non-qualified Deferred Compensation Earnings(5) | | All Other Compensation(6) | | Total |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | | | | | | | | | | | | |
Diana F. Cantor | | 88,750 | | | 102,168 | | | — | | | — | | | — | | | — | | | 190,918 | |
Lennart R. Freeman | | 86,562 | | | 102,168 | | | — | | | — | | | — | | | 2,500 | | | 191,230 | |
Thomas H. Johnson | | 98,750 | | | 102,168 | | | — | | | — | | | — | | | — | | | 200,918 | |
Michael T. Lawton | | 95,000 | | | 102,168 | | | — | | | — | | | — | | | 5,000 | | | 202,168 | |
Eddie N. Moore, Jr. | | 48,750 | | | 102,168 | | | — | | | — | | | — | | | 1,000 | | | 151,918 | |
Robert C. Sledd | | 90,937 | | | 102,168 | | | — | | | — | | | — | | | — | | | 193,105 | |
Thomas H. Tullidge, Jr. | | 85,312 | | | 102,168 | | | — | | | — | | | — | | | — | | | 187,480 | |
Jacqueline T. Williams | | 71,562 | | | 136,224 | | | — | | | — | | | — | | | — | | | 207,786 | |
| | | | | | | | | | | | | | |
(1)2018Mr. E. Moore, Jr. retired from the Board on August 4, 2020.
(2):Represents fees paid in cash during fiscal year 2021.
(3)These amounts represent the aggregate grant date fair value of the annual restricted stock unit award recognized in fiscal year 2021 in accordance with FASB ASC Topic 718. These amounts reflect our accounting expense for these awards, and do not correspond to the actual value that will be recognized by each of the non-employee directors. The assumptions used in the calculation of these award amounts are included in Notes 1 and 15 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021, and incorporated by reference into this Proxy Statement.
(4)On August 4, 2020, each non-employee director was awarded 2,400 shares of restricted stock units with the exception of Ms. Williams. Ms. Williams was awarded 3,200 shares which represented an additional prorata amount to reflect her four months of service from April 1, 2020, when she joined the Board, through July 30. The methodology for determining the amount awarded is set forth on page 67 of this Proxy Statement. The grant date fair value of the award for each non-employee director was based on the closing price of $42.57 for our Common Stock as quoted on the NYSE on the grant date.
(5)We do not maintain any defined benefit or actuarial plans for non-employee directors. The company maintains an Outside Directors' 1994 Deferred Income Plan, as amended, which we refer to as the Directors' DIP. The Directors' DIP was frozen at the end of the 2017 plan year. The non-employee directors did not earn above-market or preference earnings on compensation they deferred into the Directors' DIP. Mr. Moore, who retired from the Board in August 2020, was the only Director that was a participant in the Directors' DIP. The table below presents information concerning Mr. Moore's Directors' DIP, which provided for the deferral of compensation on a basis that is not tax qualified.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Director Contributions in FY 2020 | | Registrant Contributions FY 2020(a) | | Aggregate Earnings in FY 2020 | | Aggregate Withdrawals/ Distributions(b) | | Aggregate Balance at 2020 FYE |
| | ($) | | ($) | | ($) | | ($) | | ($) |
| | | | | | | | | | |
Eddie N. Moore, Jr. | | — | | | — | | | 25,742 | | | (8,490) | | | 87,167 | |
(a)We did not match non-employee director deferrals or otherwise contribute to the Directors' DIP.
(b)Mr. Moore withdrew funds after his retirement on August 4, 2020.
(6)Each director is also eligible to participate in our matching gifts program in which our charitable foundation matches directors' contributions to charities. The maximum amount that can be matched in any fiscal year of our foundation is $5,000 per director. The directors participated in the matching gifts program in the amounts set forth above. None of the directors received perquisites, personal benefits, or other compensation in excess of $10,000 for fiscal year 2021. We maintain life insurance policies which fund the Directors' Charitable Award Program discussed in the section below entitled "Director Compensation." We did not incur any costs with respect to the insurance policies during fiscal year 2021.
|
| | | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash(2) | | Stock Awards(3),(4) | | Option Awards | | Non-Equity Incentive Plan Compensation | | Change in Pension Value And Non-qualified Deferred Compensation Earnings(5) | | All Other Compensation(6) | | Total |
| | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | | | | | | | | | | | | |
John B. Adams, Jr.(1) | | 56,750 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 153,238 |
|
Diana F. Cantor | | 54,000 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 150,488 |
|
Lennart R. Freeman | | 52,750 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 149,238 |
|
Thomas H. Johnson | | 47,000 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 143,488 |
|
Michael T. Lawton | | 50,250 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 146,738 |
|
Eddie N. Moore, Jr. | | 65,500 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 161,988 |
|
Robert C. Sledd | | 56,750 |
| | 96,488 |
| | — |
| | — |
| | — |
| | — |
| | 153,238 |
|
| |
| Mr. Adams will retire from the Board of Directors as of August 2, 2018. |
| |
(2)
| Represents fees paid in cash during fiscal year 2018. In previous fiscal years, retainer fees were paid annually following the Annual General Meeting. In fiscal year 2018, these fees were changed to a quarterly payment system. This change in timing of payment reduced the amounts paid during fiscal year 2018 as the year of transition. |
| |
(3)
| These amounts represent the aggregate grant date fair value of the annual restricted stock unit award recognized in fiscal year 2018 in accordance with FASB ASC Topic 718. These amounts reflect our accounting expense for these awards, and do not correspond to the actual value that will be recognized by each of the non-employee directors. The assumptions used in the calculation of these award amounts are included in Notes 1 and 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018, and incorporated by reference into this Proxy Statement. |
| |
(4)
| On August 3, 2017, each non-employee director was awarded 1,550 shares of restricted stock units. The methodology for determining the amount awarded is set forth on page 56 of this Proxy Statement. The grant date fair value of the award for each non-employee director was $96,488, based on the closing price of $62.25 for our Common Stock as quoted on the NYSE on the grant date. As of March 31, 2018, the aggregate amount of common stock, restricted stock, restricted stock units and dividend equivalent units held by each non-employee director was as follows: Mr. Adams held 18,111 shares; Mrs. Cantor held 8,773 shares; Mr. L. Freeman held 7,029 shares; Mr. Johnson held 16,730 shares; Mr. Lawton held 3,767 shares; Mr. E. Moore held 25,138 shares; and Mr. Sledd held 10,045 shares. |
| |
(5)
| We do not maintain any defined benefit or actuarial plans for non-employee directors. The company maintains an Outside Directors' 1994 Deferred Income Plan, as amended, which we refer to as the Directors' DIP. The Directors' DIP was frozen at the end of the 2017 plan year. The non-employee directors did not earn above-market or preference earnings on compensation they deferred into the Directors' DIP. Mr. E. Moore is only active Director that is a participant in the Directors' DIP. The following table presents information concerning the Directors' DIP, which provided for the deferral of compensation on a basis that is not tax qualified: |
|
| | | | | | | | | | | | | | | |
Name | | Director Contributions in FY 2018 | | Registrant Contributions FY 2018(a) | | Aggregate Earnings in FY 2018 | | Aggregate Withdrawals/ Distributions(b) | | Aggregate Balance at 2018 FYE |
| | ($) | | ($) | | ($) | | ($) | | ($) |
| | | | | | | | | | |
Eddie N. Moore, Jr. | | — |
| | — |
| | 6,299 |
| | — |
| | 70,649 |
|
| |
(a)
| We did not match non-employee director deferrals or otherwise contribute to the Directors' DIP. |
| |
(b)
| There were no withdrawals or distributions from the Directors' DIP by active directors. The Directors' DIP permits withdrawals under certain circumstances including hardship, and participants elect to have annual deferrals distributed after a specified number of years after the compensation is deferred. |
| |
(6)
| None of the directors received perquisites, personal benefits, or other compensation in excess of $10,000 for fiscal year 2018. We maintain life insurance policies which fund our Directors' Charitable Award Program. We did not incur any costs with respect to the insurance policies during fiscal year 2018. |
Director Compensation
During fiscal year 2017,2021, the Compensation and Governance Committee reviewed the level of compensation paid to our non-employee directors as the current fees had not changed since 2009.2018. The Committee's independent consultant was engaged to analyze the competitiveness of the Board of DirectorDirectors compensation program utilizing the new peer group list adopted during fiscal year 2017.2020. Based on that review, the Compensation and Governance Committee recognized that the level of compensation had fallen behind the 50th percentile of our peer group. Based on the Committee's review with its independent compensation consultant, the Compensation Committee determined that the following changes with respect to non-employee director compensation were appropriate and consistent with broadly observed market practices. The reviewCompensation Committee also indicated a declinedetermined that, based on its compensation consultant's recommendation, our director compensation levels as amended are reasonable and in the prevalence of board and committee meeting fees.line with our peer group practices. Effective as of the 2017 Annual Meeting of Shareholders,November 2020, a non-employee director receives an annual cash retainer of $65,000$75,000 and an annual equity award equating in value to $100,000.$115,000. In addition, the Chairman of the Audit Committee receives an annual retainer of $20,000, the Chairman of the Compensation Committee receives an annual retainer of $15,000, while the Chairmen of the Finance and Pension Investment Committee, and the CompensationNominating and Governance Committee and the Finance Committee each receives annual retainers of $10,000. All other non-employee$12,500. Non-employee directors serving on the Audit Committee receive annual cash retainers of $7,500, while non-employee$8,750. Non-employee directors serving on the Pension Investment Committee, the Compensation and Governance Committee, the Executive Committee and the FinanceExecutive Committee receive annual cash retainers of $5,000 for each committee$7,500. Non-employee directors serving on which they serve.the Nominating and Governance Committee and the Finance and Pension Investment Committee receive an annual retainer of $5,000. The Lead Independent Director receives an annual cash retainer of $15,000.$22,500. In fiscal 2020, the Compensation Committee made one change to the Board and Committee member meeting fees were discontinued and all cash payments are now made quarterly.of Directors compensation program which was to change the RSUs to one-year cliff vesting from three-year cliff vesting. The Compensation Committee affirmed the Board of Directors compensation program and Governance Committee also eliminated the election for directors to receive their annual board retainer in shares of Common Stock.made no other changes.
In fiscal year 2018,2021, all the non-employee directors received annual restricted stock unit grants equatingpursuant to the 2017 Incentive Stock Plan. The annual equity award grants equaled in value to $100,000, pursuantwith the exception of Ms. Williams. Ms. Williams' grant equated in value to $133,333 which represented an additional prorata amount to reflect her prior four months of service from April 1, 2020, when she joined the 2007 Incentive Stock Plan.Board, through July 30. The Compensation and Governance Committee calculated restricted stock unit grants annually based on the daily, volume-weighted, average price of Common Stock for the period of June 1 to July 31, with the resulting share grant number rounded to the nearest 50 units. All restricted stock units are awarded with three-yearone-year cliff vesting and earn dividend equivalent rights. On August 3, 2017,4, 2020, each non-employee director was awarded 1,5502,400 shares of restricted stock units.
units with the exception of Ms. Williams who was awarded 3,200 shares for her prorata service mentioned above. As of March 31, 2021, the aggregate amount of common stock, restricted stock, restricted stock units and dividend equivalent units held by each non-employee director was as follows: Mrs. Cantor held 15,173 shares; Mr. L. Freeman held 13,429 shares; Mr. Johnson held 23,130 shares; Mr. Lawton held 10,136 shares; Mr. Sledd held 16,445 shares; Mr. Tullidge held 7,040 shares and Ms. Williams held 3,359 shares.
As part of our overall program of charitable giving, we previously offered the directors the opportunity to participate in a Directors' Charitable Award Program, or the Charitable Program. The Charitable Program is funded by life insurance policies purchased by us on the directors. The directors derive no financial or tax benefits from the Charitable Program, because all insurance proceeds and charitable tax deductions accrue solely to us. We, however, will donate up to $1,000,000 in aggregate to one or more qualifying charitable organizations recommended by that director. We make donations in ten equal annual installments, with the first installment to be made at the later of the director's retirement from the Board of Directors or age 72; the remaining nine installments are paid annually, beginning immediately after the director's death. The Charitable Program was re-evaluated in fiscal years 2013 and 2014, and the Compensation and Governance Committee decided to terminate the Charitable Program for all new directors that joined the Board of Directors after 2008.
Two current directors are participants in this program.
Each director is also eligible to participate in our matching gifts program in which our charitable foundation matches directors' contributions to charities. The maximum amount that can be matched in any fiscal year of our foundation is $5,000 per director.
Non-Employee Director Stock Ownership Guidelines
The Compensation and Governance Committee originally adopted share ownership guidelines during fiscal year 2008 applicable to the non-employee directors and were set at three times the annual cash retainer the directors receive as a board member. If the amount of the annual cash retainer changes in the future, the applicable share ownership requirement will automatically adjust proportionately with the change. Non-employee directors have five years to comply with the share ownership guidelines. During fiscal year 2018,2021, the directors' annual cash retainer was increased to $65,000$75,000 and the ownership guideline was raised to five times the annual retainer with effect following the 2017 Annual Meeting of Shareholders and thereforeretainer. Therefore the revised guidelines require that each of our non-employee directors own no less than $325,000$375,000 worth of Common Stock. Only shares of Common Stock beneficially owned (as defined by the SEC's rules and regulations) by our non-employee directors, including the directors' restricted stock and restricted stock units, are counted in determining compliance with the guidelines. All of our non-employee directors meet, exceed their share ownership targets or are in compliance with the stock ownership guidelines as of March 31, 2018. All of our non-employee directors also own shares held directly in their own name.2021.
CERTAIN TRANSACTIONS
Our Board of Directors adopted a written related person transaction policy that governs the review, approval, or ratification of covered related person transactions. The Audit Committee manages this policy. The policy generally provides that we may enter into a related person transaction only if the Audit Committee approves or ratifies such transaction in accordance with the guidelines set forth in the policy and if:
•the transaction is on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party;
| |
Ÿ | the transaction is on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party; |
| |
Ÿ | the transaction is approved by the disinterested members of the Board of Directors; or |
| |
Ÿ | the transaction involves compensation approved by our Compensation and Governance Committee. |
•the transaction is approved by the disinterested members of the Board of Directors; or
•the transaction involves compensation approved by our Compensation Committee.
In the event our management determines to recommend a related person transaction to the Audit Committee, such transaction must be presented to the Audit Committee for approval. After review, the Audit Committee will approve or disapprove such transaction and at each subsequently scheduled Audit Committee meeting our management will update the Audit Committee as to any material change to the proposed related person transaction. In those instances in which our General Counsel, in consultation with our Chief Executive Officer or our Chief Financial Officer, determines that it is not practicable or desirable for us to wait until the Audit Committee meeting, the Chairman of the Audit Committee possesses delegated authority to act on behalf of the Audit Committee. The Audit Committee (or the Chairman) approves only those related person transactions that are in, or are not inconsistent with, Universal Corporation's best interests and the best interests of our shareholders, as the Audit Committee (or the Chairman) determines in good faith.
For purposes of this policy, “related person transaction” is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements, or relationships) in which Universal Corporation (or any of our subsidiaries) was, is, or will be a participant and the amount involved exceeds $120,000 and in which any related person had, has, or will have a direct or indirect interest.
For purposes of determining whether a transaction is a related person transaction, the Audit Committee relies upon Item 404 of Regulation S-K, promulgated under the Exchange Act.
A “related person” is defined as:
| |
Ÿ | any person who is, or at any time since the beginning of our last fiscal year was, one of our directors or executive officers or a nominee to become one of our directors; |
| |
Ÿ | any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; |
| |
Ÿ | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than 5% beneficial owner; and |
| |
Ÿ | any firm, corporation, or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest. |
•any person who is, or at any time since the beginning of our last fiscal year was, one of our directors or executive officers or a nominee to become one of our directors;
•any person who is known to be the beneficial owner of more than 5% of any class of our voting securities;
•any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than 5% beneficial owner; and
•any firm, corporation, or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.
There have been no transactions since the beginning of fiscal year 20182021 between our directors or officers, either directly or indirectly, and us, nor are there any proposed transactions. Additionally, there are no legal proceedings to which any director, officer, or principal shareholder, or any affiliate thereof, is a party that would be material and adverse to us.
PROPOSAL TWO
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Our executive compensation program is designed to incent and reward executives to contribute to the achievement of our business objectives and to attract, retain and motivate talented executives to perform at the highest level and contribute significantly to our success. The program is intended to align the interests of the named executive officers with those of shareholders, provide an appropriate and balanced mix of short-term and long-term compensation elements, and reward the achievement of performance measures that are directly related to our financial goals and the creation of shareholder value, without encouraging unnecessary and excessive risks.
The Compensation and Governance Committee believes that the amounts of fiscal year 20182021 actual total compensation for the named executive officers are consistent with these objectives and the competitive market. Based on its review, which included the executive compensation program review performed by Willis Towers Watson during fiscal year 2020, the Compensation and Governance Committee believes total compensation for each of the named executive officers is reasonable and not excessive. The compensation of the named executive officers is described in the “Compensation Discussion and Analysis,” the compensation tables and the accompanying narrative on pages 2028 to 3664 of this Proxy Statement. The “Compensation Discussion and Analysis” and the accompanying tables and narrative provide a comprehensive review of our executive compensation program and its elements, objectives and rationale. Shareholders are urged to read that disclosure before voting on this proposal.
For the reasons stated above and pursuant to Section 14A of the Securities Exchange Act, the Board of Directors is requesting approval of the following non-binding resolution:
“RESOLVED, that our shareholders approve, on a non-binding advisory basis, the compensation of the named executive officers as disclosed in the Proxy Statement for the 20182021 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the fiscal year 20182021 Summary Compensation Table, the other related tables and the accompanying narrative to these compensation tables on Pages 20pages 28 to 3664 of this Proxy Statement.”
The shareholder vote on this proposal will be non-binding on us and the Board of Directors and will not be construed as overruling a decision by us or the Board of Directors. However, the Board of Directors and the Compensation and Governance Committee value the opinions that shareholders express in their votes and will consider the outcome of the vote when making future executive compensation decisions as they deem appropriate.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
AUDIT INFORMATION
Fees of Independent AuditorsRegistered Public Accounting Firm
Ernst & Young LLP served as our independent registered public accounting firm for the fiscal years ended March 31, 20182021 and 2017.2020. The aggregate amounts of fees billed to us by Ernst & Young LLP for those years were as follows:
| | | | Fiscal Year 2018 | | Fiscal Year 2017 | | Fiscal Year 2021 | | Fiscal Year 2020 |
| | ($) | | ($) | | ($) | | ($) |
| | | | | |
Audit Fees | | | | | Audit Fees | |
Includes fees associated with the integrated audits of our financial statements and internal controls over financial reporting, review of our Annual Report on Form 10-K, reviews of our interim financial statements and Quarterly Reports on Form 10-Q, statutory audits of foreign subsidiaries, and other attestation services related to regulatory filings. For 2018, these services included extensive procedures with respect to accounting and disclosure for the effects of major changes to U.S. corporate income tax law enacted in December 2017. Services in this category also included procedures to support the issuance of a comfort letter related to a universal shelf registration to allow for the public issuance of securities (2018), procedures related to the registration of a shareholder-approved stock award plan (2018), and assistance with review and response to a SEC comment letter related to our 2016 Form 10-K (2017). | | 2,950,682 |
| | 2,714,732 |
| |
Includes fees associated with the integrated audits of our financial statements and internal controls over financial reporting, review of our Annual Report on Form 10-K, reviews of our interim financial statements and Quarterly Reports on Form 10-Q, statutory audits of foreign subsidiaries, and other attestation services related to regulatory filings. For 2021, these services included additional procedures with respect to the accounting for and disclosure of the acquisition of Silva, as well as procedures over Sarbanes-Oxley adoption at FruitSmart. For 2020, these services included additional procedures with respect to the accounting for and disclosure of the acquisition of FruitSmart, as well as procedures related to data migration and business process changes associated with the replacement of an accounting system in a portion of the Company's domestic operations. | | Includes fees associated with the integrated audits of our financial statements and internal controls over financial reporting, review of our Annual Report on Form 10-K, reviews of our interim financial statements and Quarterly Reports on Form 10-Q, statutory audits of foreign subsidiaries, and other attestation services related to regulatory filings. For 2021, these services included additional procedures with respect to the accounting for and disclosure of the acquisition of Silva, as well as procedures over Sarbanes-Oxley adoption at FruitSmart. For 2020, these services included additional procedures with respect to the accounting for and disclosure of the acquisition of FruitSmart, as well as procedures related to data migration and business process changes associated with the replacement of an accounting system in a portion of the Company's domestic operations. | | 2,855,554 | | | 3,079,841 | |
Audit-Related Fees | | | | | Audit-Related Fees | |
Includes fees for services that are reasonably related to the review of our financial statements that are not reported under the category “Audit Fees.” These services include various technical accounting consultations, including the implementation of new revenue recognition accounting guidance procedures performed to certify financial information in certain governmental filings outside the United States and agreed-upon testing and validation procedures related to product costing information developed for two of the Company's operating regions. | | 114,364 |
| | 95,335 |
| |
Includes fees for services that are reasonably related to the review of our financial statements that are not reported under the category “Audit Fees.” These services include various technical accounting consultations, including the implementation of new lease accounting guidance for fiscal year 2020, procedures performed to certify financial information in certain governmental filings outside the United States, and agreed-upon testing and validation procedures related to product costing information developed for two of the Company's operating regions. | | Includes fees for services that are reasonably related to the review of our financial statements that are not reported under the category “Audit Fees.” These services include various technical accounting consultations, including the implementation of new lease accounting guidance for fiscal year 2020, procedures performed to certify financial information in certain governmental filings outside the United States, and agreed-upon testing and validation procedures related to product costing information developed for two of the Company's operating regions. | | 14,488 | | | 65,256 | |
Tax Fees | | | | | Tax Fees | |
Includes fees for corporate tax compliance, tax advice, and tax planning. | | 154,723 |
| | 58,482 |
| Includes fees for corporate tax compliance, tax advice, and tax planning. | | 129,984 | | | 137,991 | |
All Other Fees | | | | | All Other Fees | |
Includes fees for assistance in completing certain governmental filings in countries outside the United States and assistance in establishing evaluation criteria and identifying potential third-party firms to assist with a software implementation project in Brazil (2018). The Audit Committee has concluded that the services covered under this category are compatible with maintaining Ernst & Young LLP's independence with respect to Universal Corporation. | | 121,639 |
| | — |
| |
Includes fees for assistance in completing certain governmental filings in countries outside the United States. For 2020 amounts include fees paid for assistance with research about the agri-products industry. The Audit Committee has concluded that the services covered under this category are compatible with maintaining Ernst & Young LLP's independence with respect to Universal Corporation. | | Includes fees for assistance in completing certain governmental filings in countries outside the United States. For 2020 amounts include fees paid for assistance with research about the agri-products industry. The Audit Committee has concluded that the services covered under this category are compatible with maintaining Ernst & Young LLP's independence with respect to Universal Corporation. | | 23,243 | | | 184,631 | |
Pre-approval Policies and Procedures
We have written guidelines regarding the engagement of our independent registered public accounting firm and all other independent auditors to perform services for us. All audit and non-audit services provided by an independent auditing firm (including its member accounting and law firms outside the United States) to us or any of our wholly-owned or majority-owned affiliates must be pre-approved by the Audit Committee. All audit and non-audit services listed above were pre-approved by the Audit Committee pursuant to the terms of our pre-approval policies and procedures.
A detailed report of all audit and non-audit services planned for the fiscal year is presented to the Audit Committee for its consideration, discussion, and approval. In addition, the Audit Committee pre-approves a spending account to pay the fees for unplanned audit and non-audit services that do not exceed specified dollar thresholds and are consistent in nature and scope with the planned services. The Chairman of the Audit Committee has pre-approval authority with respect to further additional services that exceed the dollar thresholds or are not consistent in nature or scope with the planned services. All services paid through the spending account or pre-approved by the Chairman must be presented to the full Audit Committee at its next scheduled meeting.
Audit Committee Report
In accordance with the Audit Committee Charter, the Audit Committee assists the Board of Directors in fulfilling its responsibility for oversight of the integrity of the accounting, auditing and financial reporting practices of Universal Corporation. Each member of the Audit Committee is “independent” as required by the applicable listing standards of the NYSE and the rules of the SEC. During the fiscal year ended March 31, 2021, the Audit Committee met seven times, and the Audit Committee reviewed and discussed the financial information contained in Universal Corporation’s Annual Report on Form 10-K, interim financial information contained in the Company’s Quarterly Reports on Form 10-Q, and discussed press releases announcing earnings with the Chief Financial Officer and the independent registered public accounting firm prior to public release.
The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or Universal Corporation’s independent registered public accounting firm. Management is responsible for Universal Corporation's internal controls, financial reporting process, and compliance with laws and regulations and ethical business standards. The independent registered public accounting firm is responsible for performing an independent audit of Universal Corporation's consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes on behalf of the Board of Directors.
In this context, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent registered public accounting firm. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding its communication with the Audit Committee concerning independence and discussed with the independent registered public accounting firm its independence from Universal Corporation and management. Moreover, the Audit Committee has considered whether the independent registered public accounting firm's provision of non-audit services to Universal Corporation is compatible with maintaining the independent registered public accounting firm's independence.
In reliance on the reviews and discussions referred to above, the representation of management that the audited financial statements were prepared in accordance with generally accepted accounting principles, and the report of the independent registered public accounting firm to the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Universal Corporation's Annual Report on Form 10-K for the fiscal year ended March 31, 2018,2021, for filing with the Securities and Exchange Commission. By recommending to the Board of Directors that the audited financial statements be so included, the Audit Committee is not opining on the accuracy, completeness, or presentation of the information contained in the audited financial statements.
| | | | | |
| AUDIT COMMITTEE |
| |
| AUDIT COMMITTEE |
| |
| Eddie N. Moore, Jr.,Michael T. Lawton, Chairman
|
| John B. Adams, Jr. |
| Lennart R. Freeman |
| Michael T. Lawton |
| Robert C. Sledd |
| Thomas H. Tullidge, Jr. |
| Jacqueline T. Williams |
Richmond, Virginia
May 25, 2018
28, 2021
The Audit Committee Report does not constitute solicitation material and shall not be deemed filed or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this report by reference therein.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP, an independent registered public accounting firm, as our independent registered public accounting firm for the fiscal year ending March 31, 2019. A2022. Subject to change due to the ongoing COVID-19 pandemic, a representative of Ernst & Young LLP is expected to be present at the Annual Meeting with an opportunity to make a statement and to be available to respond to appropriate questions.
Ernst & Young LLP's principal function is to audit the consolidated financial statements and internal control over financial reporting of the Company and its subsidiaries and, in connection with that audit, to review certain related filings with the SEC and to conduct limited reviews of the financial statements included in our quarterly reports.
Appointment of our independent registered public accounting firm is not required to be submitted to a vote of the shareholders of the Company for ratification by our Bylaws or otherwise. However, the Board of Directors is submitting the appointment of Ernst & Young LLP to the shareholders for ratification as a matter of good corporate practice. If the shareholders do not ratify the appointment, the Audit Committee will consider whether to retain the firm. In such event, the Audit Committee may retain Ernst & Young LLP, notwithstanding the fact that the shareholders did not ratify the appointment or may select another nationally recognized accounting firm without resubmitting the matter to shareholders. Even if the appointment is ratified, the Audit Committee reserves the right, in its discretion, to select a different nationally recognized accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. Under the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder, the Audit Committee is solely responsible for the appointment, compensation and oversight of the work of our independent registered public accounting firm.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS AND AUDIT COMMITTEE RECOMMEND THAT SHAREHOLDERS VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2019.2022.
PROPOSALS FOR 20192022 ANNUAL MEETING
Under the regulations of the Securities Exchange Act, any shareholder desiring to make a proposal to be acted upon at the 20192022 Annual Meeting must cause such proposal to be delivered, in proper form, to our Secretary at the address provided on page 56 of this Proxy Statement no later than February 28, 2019,March 3, 2022 in order for the proposal to be considered for inclusion in our Proxy Statement for that meeting. We anticipate holding the 20192022 Annual Meeting on August 6, 2019.
2, 2022.
Our Bylaws and Corporate Governance Guidelines also prescribe the procedure a shareholder must follow to nominate directors, and our Bylaws prescribe the procedure a shareholder must follow to bring other business, before shareholders' meetings outside of the proxy statement process. For a shareholder to nominate a candidate for director or to bring other business before a meeting, notice must be received by our Secretary not less than 60 days and not more than 90 days prior to the date of the Annual Meeting. Based upon an anticipated date of August 6, 2019,2, 2022 for the 20192022 Annual Meeting, we must receive such notice no later than June 7, 2019,3, 2022, and no earlier than May 8, 2019.4, 2022. Notice of a nomination for director must describe various matters regarding the nominee and the shareholder giving the notice. Notice of other business to be brought before the Annual Meeting must include a description of the proposed business, the reasons therefor, and other specified matters. Any corporate shareholder may obtain a copy of our Bylaws or Corporate Governance Guidelines, without charge, upon written request to our Secretary at the address provided on page 56 of this Proxy Statement. The Bylaws and Corporate Governance Guidelines can also be obtained, free of charge, by visiting the “Corporate Governance” section of our Internet website at http://investor.universalcorp.com/corporate-governance.cfmcorporate-governance.
CERTAIN MATTERS RELATING TO PROXY MATERIALS AND ANNUAL REPORTS
Electronic Access to Proxy Materials and Annual Reports
This Proxy Statement and our fiscal year 20182021 Annual Report are available under the “Investor -“Investors- Financial Information” section of our Internet website at http://investor.universalcorp.com/financials.cfm.financial-information. Paper copies of these documents may be requested by contacting Investor Relations at the address or phone number provided on page 5of6 of this Proxy Statement.
“Householding” of Proxy Materials and Annual Reports for Record Owners
The SEC rules permit us to deliver a single Proxy Statement and Annual Report to any household at which two or more shareholders of record reside at the same address. Each shareholder will continue to receive a separate proxy card. This procedure, known as “householding,” reduces the volume of duplicate information you receive and helps to reduce our expenses. We will deliver promptly upon written or oral request a separate Proxy Statement and Annual Report to a shareholder at a shared address that only received a single set of such materials for this year. If a shareholder whose household only received a single set of materials would prefer to receive his or her own copy of the Proxy Statement and Annual Report, he or she may request the materials by contacting our Secretary at the address or phone number provided on page 56 of this Proxy Statement. If shareholders sharing an address are still receiving multiple copies of the Proxy Statement and Annual Report, he or she may request delivery of only a single copy of such materials by contacting our Secretary at the address or phone number provided on page 56 of this Proxy Statement.
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented for action at the Annual Meeting other than as set forth in this Proxy Statement. However, if any other matters properly come before the Annual Meeting, or any adjournment or postponement thereof, the person or persons voting the proxies will vote them in accordance with their best judgment.
OUR 20182021 ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES A COPY OF OUR FISCAL YEAR 20182021 ANNUAL REPORT (EXCLUDING EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY STATEMENT. ADDITIONAL PRINTED COPIES OF THE FISCAL YEAR 20182021 ANNUAL REPORT CAN BE OBTAINED WITHOUT CHARGE BY CONTACTING US AT THE ADDRESS OR PHONE NUMBER PROVIDED ON PAGE 56 OF THIS PROXY STATEMENT OR BY VISITING OUR INTERNET WEBSITE AT HTTP://INVESTOR.UNIVERSALCORP.COM/CONTACTUS.CFMCONTACT-US. AN ELECTRONIC VERSION OF OUR FISCAL YEAR 2021 ANNUAL REPORT TO SHAREHOLDERS CAN BE OBTAINED WITHOUT CHARGE BY VISITING OUR INTERNET WEBSITE ATHTTP://INVESTOR.UNIVERSALCORP.COM/FINANCIAL-INFORMATION.
By Order of the Board of Directors
Preston D. Wigner, Secretary
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UNIVERSAL CORPORATION ATTN: INVESTOR RELATIONS
9201 FOREST HILL AVENUE
STONY POINT II BUILDING
RICHMOND, VA 23235
C/O BROADRIDGE PO BOX 1342 EDGEWOOD, NY 11717 | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 08/01/2018.2/2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 08/01/2018.2/2021. Have your proxy card in hand when you call and then follow the instructions. |
| VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 1171711717. |
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| CONTROL# | 000000000000000000 |
NAME THE COMPANY NAME INC. - COMMON
THE COMPANY NAME INC. - CLASS A
THE COMPANY NAME INC. - CLASS B
THE COMPANY NAME INC. - CLASS C
THE COMPANY NAME INC. - CLASS D
THE COMPANY NAME INC. - CLASS E
THE COMPANY NAME INC. - CLASS F
THE COMPANY NAME INC. - 401 K
| SHARES |
123,456,789,012.1234 123,456,789,012.1234 123,456,789,012.1234 123,456,789,012.1234 123,456,789,012.1234 123,456,789,012.1234 123,456,789,012.1234 123,456,789,012.1234 |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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The Board of Directors recommends you vote FOR the following nominees: | For All
| Withhold All
| For All Except
| To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. |
1. Election of Directors: | o | o | o | |
Nominees | | | | |
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01 Diana F. Cantor | 02 Robert C. Sledd | 03 Thomas H. Tullidge, Jr. |
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The Board of Directors recommends you vote FOR proposals 2 and 3. | For All
| Withhold
All Against | For All
Except Abstain |
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2. Approve a non-binding advisory resolution approving the compensation of the named executive officers. | o | o | o |
3. Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2019.2022. | o | o | o |
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | | | |
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For address change/comments, mark here. | o | | |
(see reverse for instructions) | | | Investor Address Line 1 | |
| Yes | No | Investor Address Line 2 | |
Please indicate if you plan to attend this meeting | o | o | Investor Address Line 3 | |
| | | Investor Address Line 4 | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 | |
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Signature [PLEASE SIGN WITHIN BOX] | Date | | | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/are available at www.proxyvote.com
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| UNIVERSAL CORPORATION Annual Meeting of Shareholders
August 2, 2018 2:3, 2021 11:00 PMAM Eastern Time
This proxy is solicited by the Board of Directors
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The shareholder(s) hereby appoint(s) Johan C. Kroner and Preston D. Wigner, and David C. Moore, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common stockStock of UNIVERSAL CORPORATION that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholder(s)Shareholders to be held at 02:11:00 PM, ESTAM, ET on August 2, 2018,3, 2021, at Universal Corporation, 9201 Forest Hill Avenue, Stony Point II Building, Richmond, Virginia 23235, and any adjournments or postponements thereof. Due to public health and travel concerns relating to the coronavirus (COVID-19) pandemic, UNIVERSAL CORPORATION may impose additional procedures or limitations on meeting attendees or may decide to hold the Annual Meeting of Shareholders in a different location or solely by means of remote communication, and will announce any such updates through a press release and on its website. |
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction made, this proxy will be voted in accordance with the Board of Directors' recommendations. |
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| Address change/comments: | |
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| (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.
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| Continued and to be signed on reverse side | |