$95.13 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Kaiser Aluminum Corporation
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LETTER TO OUR STOCKHOLDERS
FROM OUR EXECUTIVE CHAIRMAN, OF THE BOARD AND OUR LEAD INDEPENDENT DIRECTOR
OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER
April 29, 2020
Dear Stockholder:
On behalf of our Board of Directors and management team, we thank you for your continued support of Kaiser Aluminum.Aluminum Corporation. It is our pleasure to invite you to attend the Annual Meeting of Kaiser Aluminum CorporationStockholders to be held at the Company’sour corporate office, located at 27422 Portola Parkway,1550 West McEwen Drive, Suite 200, Foothill Ranch, California 92610,500, Franklin, Tennessee, on Wednesday, June 10, 2020,7, 2023, at 9:00 a.m., local time. Central Time. While the Company doeswe do not expect to make a separate presentation, we expect our directors and officers to be present at the Annual Meeting and available to respond to any questions you may have.
Your vote is very important to us. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares as promptly as possible. Details of the business to be conducted at the Annual Meeting are included in this proxy statement, which we encourage you to read carefully. You may submit your voting instructions over the Internet or by telephone as indicated on the enclosed proxy card or by completing, signing and dating the enclosed proxy card and returning it by mail in the accompanying envelope. If you plan to attend the Annual Meeting, please review the information on attendance provided on in this proxy statement.
We would like to share with you several areas of particular significance in advance of our Annual Meeting and in connection with our distribution of this proxy statement:
PERFORMANCE HIGHLIGHTS AND BUSINESS STRATEGY
We believe 2022 was a pivotal time in significant business and economic uncertainty, challenges and potential opportunities. We do not know how long the pandemic will last, what implications it will have on our business or what type of economic conditions we will experienceKaiser’s evolution as we look forward. However,established the necessary groundwork to position the Company for long-term, sustainable growth amid numerous challenges including unprecedented supply chain disruptions, inflationary cost pressures and historically high labor turnover. While these headwinds negatively affected our financial results in 2022, we do knowanticipate that for more than two decades, our business model, consistentgo-forward strategy and core values have positioned us well for unexpected adversity,focused execution will lead to improved performance as we continue through 2023.
For the full year 2022, we reported net sales of $3.4 billion and we are preparedconversion revenue of $1.4 billion. Our net sales and conversion revenue increased 31% and 24%, respectively, compared to address2021, primarily as a result of our acquisition of Alcoa Warrick LLC (“Warrick”) at the challenges and potential opportunities presentedend of the first quarter 2021 coupled with strength in our aerospace/high strength products. Net sales were partially offset by the pandemic. Our Board is closely overseeing the Company’s initiatives in responding to the COVID-19 pandemicsignificant supply chain challenges we experienced, particularly within our beverage and it continues to focus on the Company’s long-term goals and responsibilities.
We are diligently working to offset inflationary pressures through pricing actions, cost reduction efforts and efficiency improvement projects. While our efforts will take time to manifest, we are confident in Spokane, Washingtonour ability to execute given our solid market position. We are a key supplier in diverse end markets (aerospace/high strength, packaging, automotive and general industrial) with strong secular growth characteristics, strong customer relationships and multi-year contracts with key
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strategic partners. Demand trends supporting secular demand growth are largely sustainability-driven including the first halfconversion from plastic to aluminum beverage and food packaging and light weighting in applications such as aircraft and transportation to increase fuel efficiency. Additionally, we believe we are poised to benefit from strong secular growth in global passenger air travel and North American industrial demand given the continued trend of 2019,re-shoring for domestic supply.
In our Packaging operations, we completed the transformational acquisition of Warrick on March 31, 2021, marking our strategic re-entry into the resurging North American aluminum packaging market. In response to the supply chain issues that negatively affected our performance in 2022, we successfully diversified our supply base and refined our strategy to better capitalize on the long-term growth opportunity ahead of us. After augmenting Warrick's existing management team with several seasoned Kaiser leadership members, we remain highly focused on accelerating the integration of Warrick into our operating system. Further, we made solid progress working with customers of our Packaging operations to negotiate improvements to commodity price adjustments to mitigate the impact of the General Motors strikeinflationary and volatile commodity costs on our business and improve our margin profile. We are also prioritizing investments for growth through our roll coat capacity expansion project, which is expected to convert approximately 25% of our current output to higher margin coated products by mid-to-late 2024 and drive margin improvement. We remain very excited about Warrick’s long-term potential and competitive positioning in the second halfpackaging market. In addition, our team once again delivered strong safety performance in 2022 even as we experienced high turnover.
We remain committed to supporting the growth of our business in 2023 while concurrently continuing our track record of returning cash to stockholders through quarterly cash dividends, which we have paid for 16 consecutive years without reduction or suspension. In April 2023, our Board declared a quarterly dividend of $0.77 per share, underscoring the year,confidence our Board and reduced salesmanagement have in our long-term strategy for profitable growth and efficiency relatedincreasing stockholder value. Further, we have a strong projected capital expenditure budget of approximately $170 to the significant number$190 million for 2023, 60% of automotive model changeovers in 2019.
CORPORATE SUSTAINABILITY
We manage our business for long-term success in a manner that will provide increased capacity, redundancy, efficiencyis economically, environmentally and operational security for key bottleneck operationssocially responsible. We believe our products are part of the carbon solution and efforts to limit global warming to below a 2° C threshold by 2050 given aluminum is an infinitely recyclable, sustainable material. We strive to optimize the use of recycled or scrap aluminum and invest in the Trentwood facility's process flow. We willour business to increase operating efficiencies as we continue to monitor market conditionsidentify new initiatives to determinereduce the timingcarbon intensity of our products and actively evaluate new technologies as they become available.
In 2022, we continued to build on the various modules contained within this strategic project includingcore elements of our sustainability initiatives and advance our environmental, social and governance (“ESG”) disclosures and programming. Since 2021, we have established greenhouse gas ("GHG") emissions intensity reduction goals and further aligned our disclosures with both the initial $145 million investmentSustainability Accounting Standards Board (“SASB”) framework and Task Force on Climate-Related Financial Disclosures (“TCFD”). Additionally, we expanded environmental disclosures to include operational metrics for Warrick, water program case studies for Trentwood, energy consumption, waste information and sustainability goals and highlights focused on GHG emissions intensity, reduction goals, plans and progress. Further, we enhanced disclosures focused on cybersecurity, the Kaiser Aluminum Women’s Leadership Program and our corporate ESG-related policies. We also continued our participation in a new plate stretcher.
BOARD OVERSIGHT OF STRATEGY
Our Board remains actively focused on overseeing the Company’sour business strategies, risk management, talent development, succession planning and the development and execution of our long-term strategy, including with respect to ESG matters. By expanding our ESG Committee charter, our Board supports ESG engagement as we continue our focus on climate-related risks, opportunities and disclosures, further supporting the Company’sstrategic positioning of our company as a responsible and resilient organization positioned for long-term strategy. In addition to ongoing programs embedded withingrowth and profitability.
We continued proactively engaging with all our enterprise risk management programs, additional areas of focusstakeholders in 2022, including environmental socialgroups, state and governance matters, are reviewed by local government agencies, stockholders, industry and business peers, our employees and their representatives to advance our
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management withand Board’s understanding of opportunities, issues, concerns and challenges towards collective improvement for a more sustainable future. By providing oversight of our ESG programming and initiatives, our Board throughout the year.
In addition, we continued long-term growth through our regularly scheduled meetings, including a dedicated annual strategic planning session, and throughout the year.
CORPORATE GOVERNANCE AND SUCCESSION PLANNING
At Kaiser Aluminum, we believe effective corporate governance means ongoing and thoughtful evaluation of our governance structure, including our Board recognizesand Board committees, with a strong emphasis on the importance of integrity, competence and is committeddiversity to board refreshmentleadership, character and succession planning that ensuresculture. We maintain a robust and multi-tiered Board and committee annual assessment process including an annual corporate governance survey of management and non-management employees to measure internal perceptions on a broad range of topics, including our directors possess a composite set of skills, experienceculture, corporate values and qualifications necessary to successfully review, challenge and help shape the Company’s strategic direction. We have a mandatory retirement policy that provides that unless otherwise approved by our Board, no individual may be nominated for election or re-election as a director if the individual would be age 75 or older at the time the term would begin. Our Nominating and Corporate Governance Committee also regularly evaluates the size and compositioneffectiveness of our Board.
BOARD COMPOSITION
Our Board is highly independent, engaged and diverse in perspectives and backgrounds as reflected by its composition, which is currently 92%82% independent, 35% gender24% ethnically diverse and 17% ethnically18% gender diverse. This structure underscores the Board’s belief that the Company is best served when it cancommitment to draw upon members with a varietyunique set of perspectivesskills and experiences that we believe are highly complementary to exercise strong and experienced oversight. We have aour company strategies. Our policy of encouragingencourages diversity of gender, ethnicity, age and background, as well as a range of tenures among our director nomineeson the Board, to ensure both continuity and fresh perspectives on our Board.
BOARD REFRESHMENT AND SUCCESSION PLANNING
Our Board maintains a continued focus on identifying critical board skills needed to support our corporate strategy and succession planning process. The ESG Committee of our Board oversees, among other things, the COVID-19 pandemicsuccession planning for our executive officers, other than our CEO, whose succession is discussed routinely during Board executive sessions, and the leadership and development training of key employees with the potential to succeed our executive officers, including the progression and development of these key employees. Senior management, including our CEO, also meet monthly to review and set strategy and monitor performance metrics, including the evaluation and review of internal and external diverse candidates, internal promotions, our various talent development programs and platforms, anticipated retirements and succession planning to ensure the identification and development of the next wave of qualified leaders. Further, the Nominating and Corporate Governance Committee plans for the orderly succession of our Lead Independent Director and of the Chairs of our Board committees, providing for the identification of potential successors, their development and the transition of responsibilities. As a result of the management and execution of our Board's succession plans, a leadership transition of our Board's Nominating and Corporate Governance Committee occurred in March 2023 and the role of our Lead Independent Director will be transitioned to Michael C. Arnold following our 2023 Annual Meeting of Stockholders.
We also have an impacta Director Designation Agreement with the United Steelworkers (“USW”) pursuant to which the USW has the right to nominate at least 40% of our Board members . We believe this agreement has facilitated a constructive dialogue and collaboration with the USW on business conditionsmatters important to the USW, its members and the Company, including our Board’s skill matrix, Board succession, planning and future nominations.
SUMMARY
Our corporate values of being a preferred investment, preferred supplier, preferred employer, preferred customer, and valued corporate citizen serve as the foundation of our strategic initiatives. We remain intently focused on continuing to
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pursue cost reductions in our operations, as well as improving efficiencies and implementing commercial actions to increase our commitmentprofitability and margins. We believe the strategy we have in place will lead to the sustainability ofimproved performance in 2023 and beyond. While our businessefforts will take time to manifest fully, we are confident in our ability to execute given our solid market position as a key supplier, focus on diverse end markets with strong secular growth characteristics, deep customer relationships and creating long-term shareholder value for our stakeholders remains a critical and an integral part of our corporate values.multi-year contracts with strategic partners. We will continue to manage our business for long-term success in a manner that we believe is economically, environmentally and socially responsible. Our interim 2019 Sustainability Report captures the highlightsresponsible as a good corporate citizen and steward of capital. We thank our sustainability culture and initiatives that we continue to develop as good stewards ofstockholders, our environment and resources.
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Keith A. Harvey | Jack A. Hockema | Alfred E. Osborne, Jr., Ph.D. | ||
President and Chief Executive Officer | Executive Chairman of the Board | Lead Independent Director |
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Kaiser Aluminum Corporation
1550 West McEwen Drive, Suite 200
Franklin, Tennessee 37067
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
NOTICE IS HEREBY GIVEN that the 20202023 Annual Meeting of Stockholders (the "Annual Meeting") of Kaiser Aluminum Corporation will be held at the company's corporate office, located at 27422 Portola Parkway,1550 West McEwen Drive, Suite 200, Foothill Ranch, California 92610,500, Franklin, Tennessee, on
(3) To make a recommendation, on a non-binding, advisory basis, as to the frequency of future advisory votes on the compensation of our named executive officers; (4) To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2023; and (5) |
To consider such other business as may properly come before |
Information concerning the matters to be acted upon at the Annual Meeting is set forth in the accompanying Proxy Statement. This notice and the accompanying proxy materials are being mailed or made available to stockholders on or about April 29, 2020.
The close of business on
AprilWe urge stockholders to vote by proxy by submitting voting instructions
over the Internet or by telephone as indicated on the enclosed proxy card or bycompleting, signing and dating the enclosed proxy card and returning it by mailin the accompanying envelope, which does not require postage if mailed in theUnited States.By Order of the Board of Directors | |
John M. Donnan | |
Executive Vice President, | |
Officer and | |
April 28, 2023 | |
Franklin, Tennessee |
PROPOSALS AND BOARD RECOMMENDATIONS
Proposal 1 - Election of Directors
The board of directors recommends a vote "FOR ALL" of the persons
nominated by the board of directors.Additional information about each director and his or her qualifications may be found beginning on page 5.
Name | Age | Director Since | Primary Occupation | Independent | Committee Membership | |
Jack A. Hockema | 73 | 2001 | Chief Executive Officer ("CEO") and Chairman of the Board, Kaiser Aluminum Corporation | Ÿ | Executive (Chair) | |
Lauralee E. Martin | 69 | 2010 | Retired Chief Executive Officer and President, HCP, Inc. | ü | Ÿ | Audit (Chair) |
Ÿ | Compensation | |||||
Ÿ | Executive | |||||
Ÿ | Talent Development | |||||
Brett E. Wilcox | 66 | 2006 | Chief Executive Officer, Cvictus | ü | Ÿ | Audit |
Ÿ | Compensation | |||||
Ÿ | Executive | |||||
Ÿ | Talent Development (Chair) |
Name | Age | Director Since | Primary Occupation | Independent | Committee Membership | |
Jack A. Hockema | 76 | October 2001 | Executive Chairman of the Board | | Executive (Chair) | |
Lauralee E. Martin | 72 | September 2010 | Retired Chief Executive Officer and President, HCP, Inc. | | | Audit (Chair) |
| Compensation | |||||
| Executive | |||||
| ESG | |||||
Brett E. Wilcox | 69 | July 2006 | Chief Executive Officer, Cvictus Inc. | | | Audit |
| Compensation | |||||
| Executive | |||||
| ESG (Chair) | |||||
Kevin W. Williams | 61 | September 2021 | President and Chief Executive Officer, GAA Manufacturing and Supply Chain Management | | | Audit |
• | Compensation | |||||
Proposal 2 - Advisory Vote to ApprovedApprove Named Executive Officer Compensation
The board of directors recommends a vote "FOR" the approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement.
Additional information about executive compensation may be found beginning on page 13.
Proposal 3 - Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation
The board of directors recommends a vote for the option of “EVERY 1 YEAR” as the frequency of future advisory votes on the compensation of our named executive officers.
Additional information about the named executive officer compensation advisory votes may be found beginning on page 17.
Proposal 4 - Ratification of Appointment of Independent Registered Public Accounting Firm
The board of directors recommends a vote "FOR" the ratification of the audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2020.
Additional information about the independent registered public accounting firm may be found beginning on page 16.
PROXY STATEMENT SUMMARY
We believe 2022 was pivotal in our strategic priorities,evolution as we have achieved a strong, industry-leading business, evidenced again in 2019 by excellent resultslaid the necessary groundwork to position our company for long-term, sustainable growth despite the numerous challenges we encountered, including unprecedented supply chain disruptions, inflationary cost pressures and a number of important milestones, despite formidable headwinds.historically high labor turnover, which negatively impacted our financial performance. This summary highlights information contained elsewhere in this Proxy Statement. This summaryStatement but does not contain all of the information that you should consider. We encourage you to read the entire Proxy Statement for more information about these topics prior to voting.
COMPANY OVERVIEW | | Leading North American producer of highly engineered aluminum mill products that are part of the carbon solution |
| Focus on demanding applications for aerospace, | |
| Integral “pass-through” business model | |
| Long-standing | |
| Differentiation through | |
| Commitment to sustainable practices remains a critical and integral part of corporate strategy |
2022 PERFORMANCE HIGHLIGHTS | | Managed significant supply chain disruptions, integration challenges, inflationary cost pressure and historically high labor turnover |
| Focused on cost reduction efforts through ongoing efforts to improve efficiencies as operations stabilize | |
| Initiated commercial actions to | |
| Prioritized investments in our growth through roll coat capacity expansion project at our Warrick facility | |
| Refined Warrick strategy with commitment to support growth in our Packaging business | |
| Positioned company for strong future growth | |
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Maintained | ||
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| Conversion Revenue (2) |
| Adjusted EBITDA (2) |
| Net Loss Per Diluted Share (1) |
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| $29.6 |
| $8.7 |
| $1.4 |
| $141.9 |
| $1.86 |
| $0.55 |
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RECORD | RECORD | RECORD | RECORD | |||||||||||
Shipments | Net Sales | Net Income | Adjusted Net Income* | Value Added Revenue* | Adjusted EBITDA* | Earnings Per Share | Adjusted Earnings Per Share* | |||||||
625 | $1,514 | $62 | $111 | $856 | $213 | $3.83 | $6.85 | |||||||
Million lbs | Million | Million | Million | Million | Million |
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BALANCED CAPITAL ALLOCATION PRIORITIES | | Organic Investments | |
| Investments of approximately $1.1 billion in the business since 2007 (~2x depreciation) | ||
| Long-term sustaining capital of ~60% of depreciation (varies by year) | ||
| Inorganic Growth | ||
| Opportunistic investment for strategic value creation | ||
| Regular Dividends | ||
| >$463 million returned to stockholders since 2007 | ||
| Share Repurchases | ||
| Deployed excess cash beyond recession contingency needs through share repurchases | ||
| ~$474 million returned to stockholders through share repurchases since 2007 |
BOARD OF DIRECTORS | | Diverse and highly independent Board |
| Ongoing commitment to board refreshment - | |
| Robust and multi-tiered Board and Committee annual assessment process | |
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Continuing focus on identifying critical skills needed to support execution of company strategy and board succession planning | ||
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Continued strong support for | ||
| Rigorous director nomination process, including directors nominated by USW under our Director Designation Agreement |
ESG HIGHLIGHTS | | On track to meet our goals to reduce our total Scope 1 and 2 emissions intensity by 20%, Scope 3 estimated emissions intensity by 35%, and Scope 1, 2 and 3 estimated emissions intensity by 30%, compared, in each case, to 2019 | ||
| Furthered commitment to | |||
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Transformational project to enable Warrick to source electricity from a utility with cleaner grid factor and access to renewable energy | ||||||
| Continued diversification of Warrick's primary aluminum supplies to sources with lower carbon footprints | |||||
| Continued optimization of our use of recycled and scrap aluminum, which saves more than 90% of the energy generally required by primary aluminum production | |||||
| Maintained strong safety and quality performance in 2022 despite historically high turnover rate | |||||
| Launched Kaiser Aluminum Women's Leadership Program | |||||
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Increased transparency by making our EEO-1 report publicly available |
EXECUTIVE COMPENSATION | | Over 80% of CEO |
| Approximately 55% to | |
| Compensation programs supported by best practices and aligned with our strategic objectives and stockholder interests | |
| Continued stockholder support for | |
EXECUTIVE COMPENSATION HIGHLIGHTS
Our incentive programs are designed to “pay for performance,” and it is expected that payouts may be impacted during difficult business/economic conditions. The compensation committee, based on our management's recommendation, did not make any adjustments to our existing incentive programs despite the numerous challenges we encountered in the letter from2022, including unprecedented supply chain disruptions, inflationary cost pressures and labor turnover, which negatively impacted our Chairmanfinancial performance and Lead Independent Director,resulted in no payout under our success over the years has been driven by2022 short-term incentive plan and no performance shares earned under our people, a highly focused and consistent strategy to drive steady continuous improvement and our pursuit of the following six key strategic initiatives that align our actions with our corporate values to ensure that our2020 – 2022 long-term success is driven by practices that are economically, environmentally and socially responsible:
As described in further detail in the “Executive Compensation - Compensation Discussion and Analysis” section of this Proxy Statement, or CD&A, our 20192022 compensation structureprogram was developed and designed to:
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In 2019,2022, the compensation of our named executive officers consisted primarily of the following components:
Because grants under our long-term incentive program are outstanding for three years, at any time we have three over-lapping long-term incentive programs outstanding and theoutstanding. The underlying metrics applicable to the performance shares can vary as our compensation committee assesses the effectiveness of our outstanding programs, metrics critical to our long-term success, feedback from our stockholders and compensation trends. The following table describes the performance share metrics (described more fully below) we used for our 2017-2019, 2018-20202020–2022, 2021– 2023 and 2019-20212022– 2024 long-term incentive programs:
Performance Share Metrics | 2017-2019 | 2018-2020 | 2019-2021 |
Relative TSR | 40% | 30% | 60% |
Total Controllable Cost | 40% | 40% | 40% |
Economic Value Added ("EVA") | 20% | 30% |
Performance Share Metrics |
| 2020-2022 |
| 2021-2023 |
| 2022-2024 |
Relative Total Shareholder Return ("TSR") |
| 60% |
| 60% |
| 60% |
Total Controllable Cost |
| 20% |
| 20% |
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Adjusted EBITDA Margin |
| 20% |
| 20% |
| 40% |
The compensation committee, working with the compensation committee’sits independent compensation consultant, Meridian Compensation Partners, LLC (referred to herein as Meridian), reviews, evaluates and updates our compensation peer group, which includes companies in both similar and different industries, at least annually. For 2019, our2022, the compensation committee approved the 34-companya new 26-company peer group more fully described in our CD&A section withto account for the increased company size and scope resulting from our acquisition of Warrick. As of November 2021, the new custom peer group had (1) market capitalizationscapitalization ranging from $489approximately $696 million to approximately $11.6$12.9 billion and a median market capitalization of approximately $2.2$3.4 billion, and (2) trailing 12 months revenues ranging from $736 million$1.5 billion to approximately $3.7$6.8 billion and median revenue of approximately $1.7$3.4 billion. Our market capitalization and revenue, both as of December 31, 2019 and revenues for 20192022, were $1.8$1.2 billion and $1.5$3.4 billion, respectively. Due to the differences in size among the companies in our peer group, Meridian uses a regression analysis to adjust survey data results based on our revenue as compared to the revenue of other companies in our peer group.
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Pay for Performance
The table below summarizes the performance metrics under our 20192022 short-term incentive and 2019-20212022 –2024 long-term incentive plans:
Incentive Program | Performance Metric | Weighting | Modifier* | Impact on Multiplier |
Short-Term Incentive Plan | Adjusted EBITDA | 100% | Safety (TCIR & LCIR) | +/- 10% |
Quality | +/- 10% | |||
Delivery | +/- 10% | |||
Cost | +/- | |||
Individual | +/- | |||
Long-Term Incentive Plan | Relative TSR | 60% | ||
Adjusted EBITDA Margin | 40% |
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* The safety modifier is measured using our total case incident rate ("TCIR") and lost-time case incident rate ("LCIR"), the quality modifier is measured using our no-fault claim rate, the delivery modifier is measured by our on-time delivery rate, and the cost modifier is measured by our manufacturing efficiency. As noted, the individual modifier is discretionary and, with respect to our executive officers, only used in exceptional and rare instances approved by the compensation committee.
The following summarizes our performance against the metrics under our 20192022 short-term incentive and 2017-20192020- 2022 long-term incentive plans:
2022 Short-Term Incentive
FEATURES | |||
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Pay for performance | |||
| Adjusted EBITDA target determined based on return on net assets (excluding cash) using our adjusted pre-tax operating income | ||
| Modifiers for safety, quality, delivery and cost performance establishing a strong linkage to strategic non-financial results | ||
| In exceptional | ||
| No payout unless we: | ||
(1) | achieve the threshold Adjusted EBITDA | ||
(2) | generate positive adjusted net income | ||
| Maximum payout capped at | ||
| Rigorous financial performance goals |
As previously discussed, we did not achieve the threshold Adjusted EBITDA performance required for a payout under our 2022 STI program. While our end markets remained strong in 2022 and commercial aerospace demand continue to strengthen, our Adjusted EBITDA performance for 2022 was lower than our Adjusted EBITDA during the prior two years due to the negative impact of a number of factors, including (i) the continuation of our supply chain challenges, such as the continuing impact of the declaration of force majeure by Warrick’s primary magnesium supplier and ultimately the cessation of all magnesium deliveries from that supplier that led to our declaration of force majeure at Warrick, (ii) molten metal supply issues that negatively impacted Warrick, (iii) the inflationary environment and significant corresponding increases in costs, (iv) a planned outage at our Trentwood rolling mill in Spokane, Washington, and (v) a challenging labor market contributing to inefficiencies and historically high turnover rates. As a result, no payouts were earned under our 2022 STI program.
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Annual Performance Award Payouts under Short-Term Incentive Plans for our Named Executive Officers
The Adjusted EBITDA targets under our | ||
by another 10.6%. The table on the right illustrates our annual Adjusted EBITDA performance multiplier for the last three years under our short-term incentive plans before the application of modifiers. See Appendix A to this Proxy Statement for reconciliations of GAAP to non-GAAP measures. The final multipliers under our short-term incentive plan, after the application of modifiers (where applicable) for 2020, 2021, and 2022 were 0.51x, 0.65x and 0.00x, respectively. The final multipliers for the 2020 and 2021 short-term incentive plans reflect the impact of our performance against demanding modifiers in a very challenging business environment. |
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2020- 2022 Long-Term Incentive
FEATURES | ||||
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Three-year performance period | |||
| Includes retention features by utilizing time-vested restricted stock units | ||
| Pay for performance by utilizing performance shares subject to demanding metrics | ||
| Performance metrics: | ||
(1) | 20% based on Adjusted EBITDA margin | ||
(2) | 20% based on controllable cost | ||
(3) | 60% based on relative TSR | ||
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Payout for relative TSR performance is capped at target if TSR is negative | |||
| Payout at target for controllable cost performance only if we offset inflation | ||
| No windfall upon a change in control for performance shares - only shares earned based on performance through the date of the change in control will vest |
We did not achieve the performance thresholds for Adjusted EBITDA margin, controllable cost or relative TSR under the 2020-2022 long-term incentive plan. As discussed in more detail below, for the 2020-2022 performance period, the impact of the COVID-19 pandemic and continued operational challenges significantly and negatively impacted our ability to achieve the required level of performance for each of the performance metrics under the 2020-2022 long-term incentive plan. Accordingly, no performance shares were earned under the 2020-2022 long-term incentive plan.
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Annual Performance Award Payouts under Long-Term Incentive Plans
The table below reflects our annual performance award payouts for the last three years under our completed long-term incentive plans.
Metric | 2015-2017 Plan | 2016-2018 Plan | 2017-2019 Plan | |||||||||
Weighting | Multiplier | Weighted Multiplier | Weighting | Multiplier | Weighted Multiplier | Weighting | Multiplier | Weighted Multiplier | ||||
TSR | 100 | % | 1.7x | 1.7x | 60 | % | 0.9x | 0.5x | 40 | % | 1.9x | 0.8x |
Cost | 40 | % | 1.18x | 0.5x | 40 | % | 0.9x | 0.4x | ||||
EVA | 20 | % | 0.0x | 0.0x | ||||||||
Plan Multiplier | 1.7x | 1.0x | 1.1x |
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| 2018-2020 Plan | 2019-2021 Plan | 2020-2022 Plan | ||||||||||||
Metric |
| Weighting |
| Multiplier | Weighted | Weighting |
| Multiplier | Weighted Multiplier | Weighting |
| Multiplier | Weighted Multiplier | |||
Relative TSR |
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| 30 | % | 1.24x | 0.37x |
| 60 | % | 0.52x | 0.31x |
| 60 | % | 0.00x | 0.00x |
Cost |
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| 40 | % | 0.04x | 0.02x |
| 40 | % | 0.00x | 0.00x |
| 20 | % | 0.00x | 0.00x |
EVA |
|
| 30 | % | 0.00x | 0.00x |
| 0 | % | 0.00x | 0.00x |
| 0 | % | 0.00x | 0.00x |
Adjusted EBITDA Margin |
|
| 0 | % | 0.00x | 0.00x |
| 0 | % | 0.00x | 0.00x |
| 20 | % | 0.00x | 0.00x |
Plan Multiplier |
|
|
|
| 0.39x |
|
|
| 0.31x |
|
|
| 0.00x |
Performance Share Award Payouts Based on Relative TSR
For our 2020-2022 long-term incentive compensation program, 60% of the performance shares issued to our named executive officers were subject to our TSR performance over the applicable three-year performance period compared to the TSR of the other companies comprising the S&P SmallCap 600 Materials and S&P MidCap 400 Materials Indices.
In considering constituents for the S&P SmallCap 600 Materials and S&P MidCap 400 Materials Indices, S&P Dow Jones Indices currently looks for companies (1) with market capitalization of between $750 million and $4.6 billion and between $4.6 billion and $12.7 billion, respectively, (2) meeting certain float requirements, (3) with a U.S. domicile, (4) required to file Securities and Exchange Commission ("SEC") annual reports, and (5) listed on a major U.S. exchange, among other factors. The beginning and ending stock prices used to determine our TSR are calculated using the 20-trading day average preceding the beginning and end of the performance period.
For the 2020 to 2022 performance period, the factors that impacted our Adjusted EBITDA and financial performance also negatively impacted our TSR performance. As a result, we did not achieve the threshold TSR percentile ranking required for a payout and no performance shares were earned under the 2020-2022 relative TSR metric.
The chart below illustrates the performance share award payouts based on our relative TSR performance for the 2015-2017, 2016-20182018-2020, 2019-2021 and 2017-20192020- 2022 long-term incentive programs:
| |||||
The performance share multiplier is determined by using straight line interpolation based on our TSR percentile ranking within our comparison group based on the table | |||||
Percentile Ranking | Multiplier | ||||
< 25th | 0.0x | ||||
25th | 0.5x | ||||
50th | 1.0x | ||||
75th | 1.5x | ||||
Performance Share Award Payout Based on Controllable Cost
For our 2017-20192020-2022 long-term incentive compensation program, 40%20% of the performance shares issued to our named executive officers were subject to a controllable cost performance metric that required our company to reduce controllable costs to offset underlying inflation over the three-year performance period to achieve the target payout of performance shares subject to the controllable cost metric. A 9% reduction of controllable costs after offsetting underlying inflation over the same three-year period would result in payout of performance shares equal to two times target and an increase of controllable costs of 9% or more would result in no payout of performance shares subject to the controllable cost metric.
vi
controllable costs after offsetting underlying inflation over the same three-year period would result in payout of performance shares equal to two times target and an increase of controllable costs of 6% or more over the three-year performance period would result in no payout of performance shares subject to the controllable cost metric.
For the 2020-2022 performance period, our controllable cost performance was significantly impacted by challenging business conditions, the impact of the COVID-19 pandemic on our end markets, the inflationary environment in 2022, supply chain challenges and corresponding cost increases and a challenging labor environment. As a result, we did not reach our threshold controllable cost performance by offsetting the underlying inflation during the performance period and no performance shares subject to the controllable cost metric were earned.
Performance Share Award Payout Based on EVA
For our 2020-2022 long-term incentive compensation program, 20% of the performance shares grantedissued to our named executive officers were subject to an Adjusted EBITDA margin performance metric, calculated by our Adjusted EBITDA as a percentage of conversion revenue over the three-year performance period. Our conversion revenue is calculated as our net sales less the hedged cost of alloyed metals.
With respect to the 2020-2022 performance shares, the same significant negative factors that impacted our Adjusted EBITDA and cost performance also impacted our Adjusted EBITDA margin performance. As a result, we did not achieve the threshold Adjusted EBITDA margin required for a payout and no performance shares were earned under our 2017-2019the 2020-2022 long-term incentive plan, the payout is determined based on EVA performance, calculated using our adjusted pre-tax operating income in excess of an amount equal to 15% of our net assets.
2022 Total CEO Compensation
As previously noted, the mix of our CEO’s total target compensation is heavily weighted toward performance-based compensation with more than 75%80% of the total target compensation being at-risk (short- and long-term compensation), 57%more than 60% of the total target compensation being long-term, and 64%70% of the long-term target being allocated to performance shares.
The market pay analysis performed by Meridian at the end of 2022 reflected that the total target compensation of our CEO for 2022 was 5%23% below the median of our compensation peer group and that our CEO’s (1) base salary was approximately 8% above9% below the median base salary, (2) short-term incentive target was approximately 28%22% below the median and (3) long-term incentive target was approximately 6% above19% below the median. Regressed Equilar Executive Compensation Survey data receivedThe payout to our CEO under our incentive program was further impacted by the challenging business conditions, including supply chain disruptions. As previously discussed, although the payouts under our compensation committee reflected similar comparisons. Using that information,incentive programs, including the payouts to our CEO, were significantly impacted by the previously described severe business conditions and operational challenges, based on management’s recommendation, the compensation committee did not increase our CEO’s 2019 base salary and, instead allocated a total increase in his 2019 total target compensation of 3% to his short- and long-term incentive compensation targets to bring his short-term incentive closer to the median of our compensation peer group, continue to more heavily allocate his total target compensation to his long-term incentive compensation and continue to increase his at-risk compensation and drive the alignment reflected in our compensation philosophy.
vii
Kaiser Aluminum Corporation
1550 West McEwen Drive, Suite 200
Franklin, Tennessee 37067
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held Onon June 10, 2020
TABLE OF CONTENTS
Page | ||
Proposal 2 - Advisory Vote to Approve Named Executive Officer Compensation | 14 | |
Proposal 3 - Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | 17 | |
Proposal 4 - Ratification of the Selection of our Independent Registered Public Accounting Firm | 17 | |
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Employment-Related Agreements and Certain Employee Benefit Plans | 55 | |
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Potential Payments and Benefits Upon Termination of Employment | 64 | |
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Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on JuneGENERAL QUESTIONS AND ANSWERS
Q: | When is the |
Proxy Statement being sent to stockholders and what is its purpose? | ||
A: | This Proxy |
Q: |
When is the Annual Meeting and where will it be held? |
A: | The Annual Meeting will be held on Wednesday, June |
500, Franklin, Tennessee 37067. | ||
Q: | Who may attend the Annual Meeting? |
A: | All of our stockholders of record may attend the Annual Meeting. |
Q: | Who is entitled to vote? |
A: | Stockholders as of the close of business on April |
Q: | On what am I voting? |
A: | You will be voting on: |
• | the election of four members to our board of directors to serve until our 2026 annual meeting of stockholders; | |
• | the approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement; | |
• | The recommendation, on a non-binding, advisory basis, as to the frequency of future advisory votes on the compensation of our named executive officers; | |
• | the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2023; and | |
• | such other business as may properly come before the Annual Meeting or any adjournments. | |
Q: | How does the board of directors recommend that I vote? |
A: | The board of directors recommends that you vote your shares: | |
• | "FOR ALL" the director nominees identified in "Proposals Requiring Your Vote - Proposal 1 - Election of Directors" below; | |
• | "FOR" the approval , on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement; | |
• | For the option of “EVERY 1 YEAR” as the frequency for future advisory votes on the compensation of our named executive officers; and | |
• | "FOR" the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2023. |
1 - Election of Directors" below;
Q: | How can I vote? |
A: | You can vote at the Annual Meeting or you can vote prior to the Annual Meeting by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy without delay. |
Q: | How do I vote by proxy? |
A: | If you choose to vote your shares by proxy, you have the following options: |
• | Over the Internet: You can vote over the Internet at the website shown on your proxy card. Internet voting will be available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Tuesday, June 6, 2023. | |
• | By telephone: You can vote by telephone by calling the toll-free number shown on your proxy card. Telephone voting will be available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Tuesday, June 6, 2023. | |
• | By mail: You can vote by mail by completing, signing and dating your proxy card and returning it in the enclosed prepaid envelope. | |
Q: | I want to attend the Annual Meeting and vote. How do Iobtain directions to the Annual Meeting? |
A: | You may obtain directions to the Annual Meeting by calling us at |
(629) 252-7040. | ||
Q: | What constitutes a quorum? |
A: | As of April |
2023. | ||
Q: | What are the voting requirements for the proposals? |
A: | There are different voting requirements for the proposals. | |
• | Each director will be elected by an affirmative vote of the majority of the votes cast with respect to the director in an uncontested election. A “majority” of the votes cast with respect to a director means the number of votes for the director exceeds the number of votes withheld from the director. If an incumbent director nominee receives a greater number of votes withheld than in favor of his or her election in an uncontested election, the nominee must promptly tender his or her resignation, and the board of directors will decide, through a process managed by the nominating and corporate governance committee, whether to accept the resignation, taking into account its fiduciary duties to our company and our stockholders. The board of director's explanation of its decision will be promptly disclosed in a Form 8-K furnished to the Securities and Exchange Commission. An election of directors is considered to be contested if there are more nominees for election than positions on the board of directors to be filled by election at the meeting of stockholders. In the event of a contested election, each director will be elected by a plurality vote of the votes cast at such meeting. The election of directors at the Annual Meeting is uncontested. |
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• | The affirmative vote of the holders of a majority of shares of our common stock present or represented by proxy at the Annual Meeting and entitled to vote on the subject matter and actually voted on the proposal is necessary to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement and to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2023. If you abstain from voting on the proposal to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement, the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2023, your shares will not be counted in the vote for such proposal and will have no effect on the outcome of the vote. | |
• | The recommendation, on a non-binding, advisory basis, as to the frequency of future advisory votes on the compensation of our named executive officers will be determined based on the option — EVERY 1 YEAR, EVERY 2 YEARS or EVERY 3 YEARS — that receives the highest number of votes. If you abstain from voting on the proposal to recommend the frequency of future advisory votes on the compensation of our named executive officers, your shares will not be counted in the vote for such proposal and will have no effect on the outcome of the vote. | |
Q: | If my shares are held in "street name" by my broker, will my brokervote my shares for me? |
A: | As discussed above, among our proposals, brokers will have discretionary voting power only with respect to the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for |
Q: | What will happen if the compensation of the company's named executive officers is not approved by the stockholders on an advisory basis? |
A: | Because this is an advisory vote, our board of directors and compensation committee will not be bound by the approval of, or the failure to approve, the compensation of our named executive officers as disclosed in this Proxy Statement. The board of directors and the compensation committee, however, value the opinions that our stockholders express in their votes and expect to consider the outcome of the vote when determining future executive compensation programs. |
Q: | Will the vote to recommend the frequency of future advisory votes on the compensation of the Company’s named executive officers determine the actual frequency of future votes? | |
A: | Because this is an advisory vote, our board of directors and compensation committee will not be bound by the outcome of the vote. The board of directors and the compensation committee, however, value the opinions that our stockholders express in their votes and will consider the outcome of the vote when determining the frequency of future advisory votes on the compensation of our named executive officers. | |
Q: | What will happen if the selection of Deloitte & Touche LLP as ourindependent registered public accounting firm for |
A: | Pursuant to the audit committee charter, the audit committee of our board of directors has sole authority to appoint our independent registered public accounting firm, and the audit committee will not be bound by the ratification of, or failure to ratify, the selection of Deloitte & Touche |
Q: | Can I change my vote after I give my proxy? |
A: | Yes. If you vote by proxy, you can revoke that proxy at any time before voting takes place at the Annual Meeting. You may revoke your proxy by: | |
• | voting again over the Internet or by telephone no later than 11:59 p.m., Eastern Time, on Tuesday, June 6, 2023; | |
• | submitting a properly signed proxy card with a later date; |
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• | delivering, no later than 5:00 p.m., Eastern Time, on Tuesday, June 6, 2023, written notice of revocation to our Secretary, c/o Computershare, P.O. Box 43126, Providence, Rhode Island 02940-5138; or | |
• | attending the Annual Meeting and voting. | |
Your attendance alone will not revoke your proxy. To change your vote, you must also vote at the Annual Meeting. If you instruct a broker to vote your shares, you must follow your broker's directions for changing those instructions. | ||
Q: | What does it mean if I receive more than one proxy card? |
A: | If you receive more than one proxy card, it is because your shares are held in more than one account. You must vote each proxy card to ensure that all of your shares are voted at the Annual Meeting. |
Q: | Who will count the votes? |
A: | Representatives of Computershare, our transfer agent, will tabulate the votes and act as inspectors of election. |
Q: | How much will this proxy solicitation cost? |
A: | We will bear the cost of the solicitation of proxies. We have hired MacKenzie Partners, Inc. to assist us in the distribution of proxy materials and solicitation of votes at a cost not to exceed $10,000, plus out-of-pocket expenses. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to the owners of our common stock. Our officers and regular employees may also solicit proxies, but they will not be specifically compensated for these services. In addition to the use of the mail, proxies may be solicited personally or by telephone by our employees or by MacKenzie Partners. |
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PROPOSALS REQUIRING YOUR VOTE
Proposal 1 - Election of Directors
General
We have a diverse and independent board of directors. Our board of directors currently has 1211 members, consisting of our CEO, our former CEO and 11nine independent directors.
Our current directors are:
Michael C. Arnold | |
Alfred E. Osborne, Jr., Ph.D. | |
David A. Foster | Teresa M. Sebastian |
Richard P. Grimley | Donald J. Stebbins |
Keith A. Harvey | Brett E. Wilcox |
Jack A. Hockema | Kevin W. Williams |
Lauralee E. Martin |
Mr. Hockema, our former CEO, serves as ourExecutive Chairman of the Board, andBoard. Dr. Osborne currently serves as our Lead Independent Director. If each ofDirector, and, in connection with our Class II director nominees is elected, because Ms. Bartholomew is not standing for re-election atboard leadership succession planning, the Annual Meeting, the size of our board of directors has approved the transition of the Lead Independent Director position to Mr. Arnold, which will be reduced from 12 to 11 members.
Our board of directorsBoard represents a breadth of experience and diversity in perspective and background, as reflected in the summary of their collective qualifications below. Additionally, our current directors have a broadbroad range of tenures, from less than one year to almost 19over 20 years of service, with an average tenure of approximately nine8.9 years. We believebelieve this diversity balances institutional knowledge and experience with new perspectives and ideas.
The table below sets forth the knowledge, skills or board experience, demographics and Attributes
KNOWLEDGE, SKILLS OR BOARD EXPERIENCE | Arnold | Foster | Grimley | Harvey | Hockema | Martin | Osborne | Sebastian | Stebbins | Wilcox | Williams |
Other Public Company Board Experience | • | • |
|
| • | • | • | • | • | • |
|
Public Company CEO Experience or Equivalent | • |
|
| • | • | • |
|
| • | • | • |
Industrial Specific / Operations Experience | • |
| • | • | • |
| • | • | • | • | • |
Mergers and Acquisitions | • | • | • | • | • | • | • | • | • | • | • |
International | • | • | • |
| • | • |
| • | • | • | • |
Governance | • | • |
| • | • | • | • | • | • | • |
|
Legal / Regulatory |
|
|
|
|
|
|
| • |
| • |
|
Financial / Accounting | • |
| • | • | • | • | • | • | • | • | • |
Public Policy / Academia |
| • |
|
|
|
| • | • |
| • |
|
Climate-related Risks |
| • |
|
|
| • |
|
|
| • |
|
Cybersecurity Risks | • |
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DEMOGRAPHIC BACKGROUND |
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African American or Black |
|
|
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|
|
| • | • |
|
| • |
White | • | • | • | • | • | • |
|
| • | • |
|
GENDER IDENTITY |
|
|
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|
|
|
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|
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|
Male | • | • | • | • | • |
| • |
| • | • | • |
Female |
|
|
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|
| • |
| • |
|
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|
BOARD TENURE |
|
|
|
|
|
|
|
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|
Years | 1 | 14 | 0 | 2 | 21 | 12 | 16 | 3 | 3 | 16 | 1 |
Our amended and restated certificate of incorporation and bylaws provide for a classified board of directors consisting of three classes. The term of our Class II directors expires at the Annual Meeting; the term of our Class III directors will expire at
5
the 20212024 annual meeting of stockholders; and the term of our Class I directors will expire at the 20222025 annual meeting of stockholders.
Board Refreshment and Director Succession Planning
We are committed to board refreshment andrefreshment. Currently, approximately 55% of our directors have added four highly qualified and independent directors to our board since 2018.a tenure of less than five years. The table below illustrates the tenure of our directors:
Board Tenure | Number of Directors | Percentage |
0-5 Years | 4 | 33% |
6-10 Years | 2 | 17% |
11+ Years | 6 | 50% |
Board Tenure | Number of Directors | Percentage |
0-5 Years | 6 | 55% |
6-10 Years | 0 | 0% |
11+ Years | 5 | 45% |
We thoughtfully plan for director succession and board refreshment. By developing and following a long-term succession plan, the board has an ongoing opportunity to:
The nominating and corporate governance committee also plans for the orderly succession of ourthe executive chair, independent lead director and each of the chairs of our board's five committees, providing for the identification of potential successors, their development and the transition of responsibilities.
Board Composition and Diversity
Bringing together informed directors with different perspectives and backgrounds, in a well-managed and constructive environment, fosters thoughtful and innovative decision-making. We have a policy of encouraging diversity of gender, ethnicity, age and background, as well as a range of tenures on the board to ensure both continuity and fresh perspectives among our directors. Our directors exhibit a balanced mix of tenures, ages, independence and diversity.
Gender Diversity | Ethnic Diversity | Independence | ||
33% | 17% | 92% |
Gender Diversity |
| Ethnic Diversity |
| Independence |
18% |
| 27% |
| 82% |
Nominees for Class II Directors
The nominating and corporate governance committee of our board of directors has recommended, and our board of directors has approved, the nomination of the threefour nominees listed below. The nominees have indicated their willingness to serve as members of the board of directors if elected; however, in case any nominee becomes unavailable for election to the board of directors for any reason not presently known or contemplated, the proxy holders have discretionary authority to vote proxies for a substitute nominee. Proxies cannot be voted for more than threefour nominees.
The boardBoard of directors recommendsDirectors Recommends a voteVote "FOR ALL" of the persons
Set forth below is information about the Class II director nominees, including their ages, present principal occupations, other business experiences,experience, directorships in other public companies in the past five years, membership on committees of our board of directors, and reasons why each individual nominee's specific experience, qualifications, attributes orand skills led the
6
nominating and corporate governance committee to recommend, and our board of directors to conclude, that the nominee should serve as a director of the company.
JACK A. HOCKEMA | |
| |
Executive Chairman of the Board | |
Director since: 2001 | |
Committee: Executive (Chair) | |
Age: | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Mr. Hockema | |
PREVIOUS DIRECTORSHIPS: | |
– Superior Industries International, Inc. (2014-2018) | |
QUALIFICATIONS: | |
Mr. Hockema has more than 30 years of experience with our company and more than 50 years in the metals industries, and, as a result, has a depth of experience in the aluminum and metals industries. Mr. Hockema's substantial experience with our company and in the metals industry allows him to provide a unique perspective to our board of directors regarding our business | |
LAURALEE E. MARTIN | |
| |
Director since: September 2010 | |
Committees: Audit (Chair) | |
Age: | |
Other Public Board Membership: | |
– | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Ms. Martin served as Chief Executive Officer and President of HCP, Inc., a real estate investment trust focusing on properties serving the healthcare industry, from October 2013 to July 2016. Prior to joining HCP, Inc., Ms. Martin served as Chief Executive Officer of the Americas Division of Jones Lang LaSalle, Inc., a financial and professional services firm specializing in real estate services and investment management, from January 2013 to October 2013. She served as Executive Vice President and Chief Financial Officer of Jones Lang LaSalle from January 2002 and was appointed Chief Operating and |
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Financial Officer in October 2005 and served in that capacity until January 2013.She joined Jones Lang LaSalle after 15 years with Heller Financial, Inc., a commercial finance company with international operations, where she was Vice President, Chief Financial Officer, Senior Group President, and President of the Real Estate group. Prior to joining Heller Financial, Ms. Martin held certain senior management positions with General Electric Credit Corporation. | |
PREVIOUS DIRECTORSHIPS: | |
– | |
QUALIFICATIONS: | |
Having served as both the Chief Financial Officer and the head of the real estate lending group at Heller Financial and having served as the Chief Operating and Financial Officer for Jones Lang LaSalle for more than seven and 12 years, respectively, as well as having served as the Chief Executive Officer of the Americas division of Jones Lang LaSalle, Inc. and being the Chief Executive Officer of HCP, Inc., Ms. Martin has significant experience in all aspects of corporate financial and operational matters, including the oversight of complex financial, accounting and corporate infrastructure functions. Her service as a member of the boards of directors of two real estate investment trusts and a major bank holding company have reinforced those qualifications and also have deepened her expertise in corporate governance and matters relating to the Sarbanes-Oxley Act. Ms. Martin also has a deep foundation in evaluating acquisition opportunities, managing banking relationships and investor relations. Ms. Martin's experience and background, qualification as an audit committee financial expert, and understanding of our company's financial statements allow her to provide guidance and insight to our board of directors and management regarding business, strategic, accounting and financial issues. |
BRETT E. | |
| Director since: July 2006 |
Committees: | |
Age: | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Mr. Wilcox has served as Chief Executive Officer of Cvictus, a Canadian company developing a single cell protein and related production process to substitute for soybean meal and fishmeal in animal feed, since September 2018 and has been an active investor in, on the board of directors of, or an executive consultant for, a number of metals and energy companies since 2005. From June 2005 to December 2011, Mr. Wilcox served as Chief Executive Officer of Summit Power Alternative Resources where he managed the development of wind generation and new energy technologies. Prior to that, Mr. Wilcox served as: Chief Executive Officer of Golden Northwest Aluminum Company and its predecessors. Mr. Wilcox has also served as Executive Director of Direct Services Industries, Inc., a trade association of large aluminum and other energy-intensive companies; an attorney with Preston, Ellis & Gates in Seattle, Washington; Vice Chairman of the Oregon Progress Board; Chairman of the Oregon Economic and Community Development Commission; a member of the Oregon Governor's Comprehensive Review of the Northwest Regional Power System; and a member of the Oregon Governor's Task Forces on structure and efficiency of state government, employee benefits and compensation, and government performance and accountability. | |
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QUALIFICATIONS: | |
Mr. Wilcox was selected by the search committee to serve as a director of our company upon our emergence from chapter 11 bankruptcy in 2006 because of his business and financial background and experience, including his experience as the Chief Executive Officer of Golden Northwest Aluminum Company and its predecessors, his experience working successfully with the USW and his experience in the power industries, and because of his qualification as an audit committee financial expert. Mr. Wilcox was designated by the USW as a director candidate in connection with the search process, and, pursuant to the terms of the Director Designation Agreement, | |
KEVIN W. WILLIAMS | |
| Director since: September 2021 |
Committee: Audit and Compensation | |
Age: 61 | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Mr. Williams has served as President and Chief Executive Officer of GAA Manufacturing and Supply Chain Management, a third-party logistics and supply chain management company and one of the country's largest African American-owned businesses, since August 2018. Mr. Williams previously served as President and Managing Director of General Motors of Canada Limited and Vice President and General Manager, Global Service and Parts Operations of General Motors Company. Mr. Williams also held several other senior global roles at GM including chairman, president and managing director of GM de Mexico, Central America and the Cayman Islands; and global executive director of supplier quality and development for GM Worldwide and GM Europe among other assignments. Mr. Williams holds a Bachelor’s degree in business administration and management from Tennessee State University and a Master of Science degree in business administration and management from Central Michigan University. | |
QUALIFICATIONS: | |
The board of directors nominated Mr. Williams to our board because of his extensive manufacturing, automotive and supply chain management expertise as well as experience in labor relations. |
Continuing Directors
Set forth below is information about our continuing directors, including their ages, present principal occupations, other business experiences, directorships in other public companies in the past five years, membership on committees of our board of directors, and reasons why each individual director's specific experience, qualifications, attributes or skills led our board of directors to conclude that the director should serve on our board of directors.
9
Class III Directors
MICHAEL C. ARNOLD | |
| Director since: September 2021 |
Committee: Compensation and Nominating and Corporate Governance | |
Age: | |
Other | |
– AGCO Corporation (2013 - Present) | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Mr. Arnold is retired President and Chief Executive Officer of Ryerson Inc., a processor and distributor of industrial metals, and has previously held various senior management positions with The Timken Company from 1979 to 2010, including Executive Vice President; President, Bearings and Power Transmission Group; President, Industrial Group; Vice President, Bearings and Business Process Advancement; Director, Bearings and Business Process Advancement; and Director, Manufacturing and Technology, Europe, Africa and West Asia (Europe). Mr. Arnold holds a Bachelor’s degree in mechanical engineering and a Master’s degree in sales and marketing from University of Akron. | |
QUALIFICATIONS: | |
The board of directors nominated Mr. Arnold to our board because of his extensive manufacturing and distribution expertise in metals industries and public company board and board leadership experience, as well as his mergers and acquisition and supply chain experience in metals industries. |
DAVID A. FOSTER | |
| Director since: June 2009 |
Committees: ESG and Nominating and Corporate Governance | |
Age: 75 | |
Other affiliations: | |
– Member of board of directors of Evraz North America, d/b/a Oregon Steel Manufacturing (2006 - Present) | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Since May 2017, Mr. Foster has served as Distinguished Associate of Energy Futures Initiative, a non-profit organization conducting objective, fact-based and rigorous technical, economic, financial and policy analyses supported by a multidisciplinary network of experts. Mr. Foster | |
Mr. Foster was Senior Advisor to the Office of the Secretary of the U.S. Department of Energy from June 2014 to January 2017. Prior to that, Mr. Foster was Executive Director of BlueGreen Alliance, a strategic national partnership between labor unions and environmental organizations to expand the job-creating potential of the green economy and improve the rights of workers at home and around the world, from June 2006 to June 2014 and an adjunct faculty member of the University of Minnesota from January 2003 to June 2014. Mr. Foster was also previously a director of the USW for District #11. | |
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QUALIFICATIONS: |
The board of directors nominated Mr. Foster because of his extensive labor experience representing the |
RICHARD P. GRIMLEY | |
| Director since: April 2023 |
Committees: Compensation and ESG | |
Age: 64 | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Mr. | |
QUALIFICATIONS: | |
The |
Class I Directors – Term Expiring at the 2025 Annual Meeting
KEITH A. HARVEY | |
| |
President and Chief Executive Officer | |
Director since: 2020 | |
Committee: Executive | |
Age: 63 | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
For information as to Mr. Harvey, see “Executive Officers” below. | |
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QUALIFICATIONS: |
Mr. |
ALFRED E. OSBORNE, JR. | |
| |
Lead Independent Director | |
Director since: July 2006 | |
Committees: | |
Age: | |
Other Public Board Memberships: | |
– | |
– First Pacific Advisor family of seven funds | |
– | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Dr. Osborne | |
QUALIFICATIONS: | |
Dr. Osborne has served on many boards and board committees of public companies and investment funds over a more than 30-year period. During that time, Dr. Osborne worked extensively on the development of board and director best practices, as well as director training and governance programs sponsored by the UCLA Anderson School of Management. Dr. Osborne was one of the original directors selected by a search committee to serve as a director of our company upon our emergence from chapter 11 bankruptcy in 2006 and was selected because of his public company board experience and governance background. During his service on our board of directors, Dr. Osborne has gained an understanding of our company and the environment in which we operate. Dr. Osborne's experience as a director of public companies, as a member of various board committees of public companies, and as an educator in the fields of business management and corporate governance allows him to draw on his experience and offer guidance to our board of directors and management on issues that affect our company, including governance and board best practices. | |
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TERESA M. SEBASTIAN | |
| |
Director Since: June 2019 | |
Committees: Audit, ESG and Nominating and Corporate Governance | |
Age: 65 | |
Other Public Board | |
– | |
– Terminix Global Holdings (July 2021 – October 2022) | |
DESCRIPTION OF BUSINESS EXPERIENCE: | |
Ms. Sebastian has been the President and Chief Executive Officer of The Dominion Asset Group, an angel investment and | |
Before joining Darden Restaurants, Ms. Sebastian served as Vice President at Veyance Technologies, Inc., a | |
QUALIFICATIONS: | |
The board of directors nominated Ms. Sebastian because of her broad experience and background in management, expertise in corporate governance and matters relating to the Sarbanes-Oxley Act, risk management and compliance, and experience in a wide variety of industries, including manufacturing, finance and data technology. Ms. Sebastian has significant experience in public and private company capital raising, mergers and acquisitions, and global transactions. Her service as a board member of a private company, chair of an audit committee for one of the largest non-profits in the U.S., internal audit executive leadership experience and accounting and financial background reinforce her qualification as an audit committee financial expert, ability to understand our financial statements and ability to provide guidance and insight to our board of directors and management regarding business, risk management, accounting and financial issues. Ms. Sebastian was designated by the USW as a director candidate pursuant to the terms of our Director Designation Agreement (described under “Corporate Governance - Director Designation Agreement”) in connection with our |
DONALD J. | |
| Director Since: June 2019 |
Committees: Compensation (Chair), Executive, and Nominating and Corporate Governance | |
Age: 65 | |
Other Public Board Memberships: | |
–Snap-on Tools (2015 - Present) | |
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DESCRIPTION OF BUSINESS EXPERIENCE: |
Mr. Stebbins served as President and Chief Executive Officer, and also as a director, of Superior Industries International, Inc. ("Superior"), a manufacturer of aluminum wheels for the automotive industry, from May 2014 to December 2018. For two years prior to joining Superior, Mr. Stebbins provided consulting services to various private equity firms. Mr. Stebbins previously served as Chairman, President and Chief Executive Officer of Visteon Corporation, an automotive components manufacturer, from 2008 until 2012, after having served as Visteon’s President and Chief Operating Officer prior to that time. Before joining Visteon, Mr. Stebbins held various positions with increasing responsibility at Lear Corporation, a supplier of automotive seating and electrical distribution systems, including President and Chief Operating Officer–Europe, Asia and Africa, President and Chief Operating Officer–Americas, and Senior Vice President and Chief Financial Officer. Mr. Stebbins holds a Bachelor of Science degree in finance from Miami University and a Master of Business Administration degree from the University of Michigan. |
PREVIOUS DIRECTORSHIPS: |
– |
QUALIFICATIONS: |
The board of directors nominated Mr. Stebbins because of his board and chief executive officer experience and, among his other qualifications, his experience and expertise in the automotive industry, international business, manufacturing, sales, product innovation/development, operations, accounting and finance (including as a chief financial officer), mergers and acquisitions, strategy development, executive compensation and leadership development. |
Proposal 2 - Advisory Vote to Approve Named Executive Officer Compensation
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the Securities Exchange Act of 1934, referred to herein as the Exchange Act, we ask stockholders to vote annually on a non-binding, advisory resolution to approve our named executive officer compensation. The vote is not intended to address any specific component of our executive compensation program, but rather the overall compensation of our named executive officers as described in this Proxy Statement. The text of the resolution is as follows:
RESOLVED, that the compensation paid to the named executive officers of Kaiser Aluminum Corporation, as described in the proxy statement for the company's
The compensation committee, based on our business for further growth and efficiency and we returned over $84 millionmanagement's recommendation, did not make any adjustments to our stockholders through share repurchasesexisting incentive programs despite the numerous challenges we encountered in 2022, including unprecedented supply chain disruptions, inflationary cost pressures and dividends consistent withhistorically high labor turnover, which negatively impacted our capital allocation priorities.
As described in further detail in the CD&A section, our compensation structure was developed to achieve the following objectives, which we believe are critical for enhancing stockholder value and our long-term success and sustainability:
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The compensation committee reviewed our compensation program for 2019.2022. The review included consideration of stockholder feedback, the over 84%approximately 96% approval of the 20192022 advisory vote to approve our named executive officer compensation, and discussions with Meridian and management regarding existing and contemplated market practices, as well as the structure and objectives of each component of our compensation. Upon completion of that review, the compensation committee determined that the compensation of our named executive officers in 20192022 would consist primarily of the following components:
Our board's compensation committee, working with the compensation committee’s independent compensation consultant, Meridian Compensation Partners, LLC (referred to herein as Meridian), reviews, evaluates and updates our compensation peer group, which includes companies in both similar and different industries, at least annually. For 2019, our2022, the compensation committee approved the 34-companya new 26-company peer group more fully described in our CD&A withsection to account for the increased company size and scope resulting from the acquisition of Warrick. As of November 2021, the new custom peer group had (1) market capitalizationscapitalization ranging from $489approximately $696 million to approximately $11.6$12.9 billion and a median market capitalization of approximately $2.2$3.4 billion, and (2) trailing 12 months revenues ranging from $736 million$1.5 billion to approximately $3.7$6.8 billion and median revenue of approximately $1.7$3.4 billion. Our market capitalization and revenue, both as of December 31, 2019 and revenues for 20192022, were $1.8$1.2 billion and $1.5$3.4 billion, respectively. Due to the differences in size among the companies in our peer group, Meridian uses a regression analysis to adjust survey data results based on our revenue as compared to the revenue of other companies in our peer group.
We no longer maintain a defined benefit pension plan or retiree medical program that covers members of senior management. Retirement benefits to our senior management, including our named executive officers, are provided through a defined contribution retirement program consisting of a 401(k) plan (which we refer to as our Savings Plan) and a nonqualified and unsecured deferred compensation plan (which we refer to as our Restoration Plan) intended to restore benefits that would be payable to designated participants in our Savings Plan but for the limitations on benefit accruals and payments imposed by the Internal Revenue Code of 1986, as amended (referred herein as the Code).
For 2019, approximately 75%2022, over 80% of the target total compensation of our CEO and our COO, and approximately 55% to 68%70% of the target total compensation of our other named executive officers, consisted of at-risk compensation, which we define as compensation that either (1) will be realized, if at all, only if certain financial performance levels are achieved as in the case of our annual short-term incentive and the portion of our long-term incentive consisting of performance shares or (2) is time-based as in the case of the portion of our long-term incentive compensation consisting of restricted stock units.
Our compensation structure also supports our corporate governance practices, which further align the interests of senior management and our stockholders. The table below sets forth the best practice compensation features we have adopted as of 2019.
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Best Practice Compensation Features
What We Do | What We Don't Do | |||
| DO align pay and performance by linking a significant portion of total compensation to company performance, including financial, safety, quality, delivery and cost performance, as well as individual performance | | NO compensation or incentives that encourage unnecessary or excessive risk taking | |
| DO balance both short-term (one-year) and long-term (three-year) performance across our incentive programs | | NO repricing or buyout of "underwater" stock options or appreciation rights without stockholder approval | |
| DO enhance retention with time-based, three-year cliff vesting for restricted stock unit awards | | NO pledging of our securities | |
| DO subject the vesting of | | NO hedging or speculative transactions involving our securities | |
| DO maintain rigorous stock ownership guidelines (6x base salary/base retainer for CEO | | NO guaranteed payout for cash incentive compensation | |
| DO maintain a clawback policy for both equity and cash awards | | NO excessive perquisites or other benefits | |
| DO cap payouts for awards under both | | NO evergreen equity plan provisions | |
| DO appoint a compensation committee comprised solely of independent directors | | NO dividend equivalents on unearned performance shares | |
| DO use an independent compensation consultant | | NO gross-up payments |
We believe our incentive compensation programs are designed to demand continuous improvement in our year-over-year results for our named executive officers to realize the same year-over-year financial benefit under our compensation plans.improvement. We also believe that design emphasizing the importance of successful execution of each of our six key strategic initiatives is important to our long-term success and aligns the interests of our named executive officers with our stockholders. Our key strategic initiatives are to:
We urge our stockholders to review our CD&A which describes our compensation philosophy and programs in detail and to approve the compensation of our named executive officers. While this vote to approve our named executive officer compensation is non-binding and solely advisory in nature, our board of directors and the compensation committee value the opinions of our stockholders and expect to consider the outcome of the vote when determining future executive compensation programs. We hold this advisory vote to approve our named executive officer compensation on an annual basis, and the next such vote is expected to be conducted at our 20212024 annual meeting.
The board of directors recommends a vote "FOR" the approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement.
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Proposal 3 – Advisory Vote on the Frequency of Future Advisory Votes to Approve Named Executive Officer Compensation
In accordance with the Dodd-Frank Act and Section 14A of the Exchange Act, we ask stockholders to vote once every six years on an advisory, non-binding resolution regarding the frequency of future advisory votes to approve named executive compensation. The vote is intended to obtain the recommendation of stockholders as to whether an advisory vote to approve the compensation of our named executive officers should occur every one, two, or three years. Stockholders may also abstain with respect to this proposal.
After careful consideration of this proposal, our board of directors has determined that an annual advisory vote to approve the compensation of our named executive officers is the most appropriate alternative for our company. We believe that an annual advisory vote to approve named executive officer compensation will (1) allow us to obtain information on stockholders’ views on executive compensation on a more consistent basis, (2) provide our board of directors and compensation committee with frequent input from stockholders on executive compensation, and (3) advance our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices. Accordingly, our board of directors recommends the submission to our stockholders of an advisory vote to approve named executive officer compensation on an annual basis.
While this vote on the frequency of future advisory votes to approve named executive officer compensation is non-binding and solely advisory in nature, our board of directors and the compensation committee value the opinions that our stockholders express in their votes and will consider the outcome of the vote when determining the frequency of future advisory votes to approve the compensation of our named executive officers. The next frequency vote is expected to occur at the 2029 annual meeting.
The board of directors recommends a vote for the option of “EVERY 1 YEAR” as the frequency of future advisory votes on the compensation of our named executive officers. In accordance with the Dodd-Frank Act and Section 14A of the Exchange Act, we ask stockholders to vote once every six years on an advisory, non-binding resolution regarding the frequency of future advisory votes to approve named executive compensation. The vote is intended to obtain the recommendation of stockholders as to whether an advisory vote to approve the compensation of our named executive officers should occur every one, two, or three years. Stockholders may also abstain with respect to this proposal.
The board of directors recommends a vote for the option of “EVERY 1 YEAR” as the frequency of future advisory votes on the compensation of our named executive officers.
Proposal 4 - Ratification of the Selection of our Independent Registered Public Accounting Firm
Pursuant to the audit committee charter, the audit committee has the sole authority to retain an independent registered public accounting firm for our company. The board of directors requests that the stockholders ratify the audit committee's selection of
Deloitte & Touche LLP as our independent registered public accounting firm forThe audit committee will not be bound by the ratification of, or failure to ratify, the selection of
Deloitte & Touche LLP,The board of directors recommends a vote "FOR" the ratification of the audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2020.
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CORPORATE GOVERNANCE
Our board of directors is responsible for providing effective governance over the affairs of our company. Our corporate governance practices are designed to align the interests of our board of directors and management with those of our stockholders and to promote honesty, integrity and our corporate values throughout the company. Highlights of our corporate governance practices are described below.
A copy of the current charter, as approved by our board of directors, for each of the executive committee, audit committee, compensation committee, nominating and corporate governance committee and talent developmentESG committee, and a copy of each of our corporate governance guidelines and our code of business conduct and ethics, which applies to all of our directors and employees, including our executive officers, are available on our website at
Corporate Governance Highlights
Highlights of our corporate governance practices are described below:
Board Structure | | Highly independent - |
| Independent audit, | |
| Diverse in perspective and background - | |
| Separate CEO and Chairman roles | |
| Strong lead independent director | |
Board Practices and Policies | | Strong commitment to board |
| ||
Regular executive session of independent directors without management present at every | ||
| Oversight of management activities, including annual risk management assessment | |
| Directors encouraged and invited to attend meetings of committees of which they are not members | |
| Directors are prohibited from serving on more than three other boards of public companies or public investment funds without board approval | |
| Robust annual board and | |
| Policy encourages diversity of gender, ethnicity, age and background, as well as a range in tenure to ensure both continuity and fresh perspectives | |
Accountability | | Regular extensive engagement by management with stockholders to discuss our performance, governance structure, compensation practices and |
| Majority vote standard in uncontested director elections | |
| Annual governance surveys to assess our culture and the effectiveness of our training | |
| Encourage reporting of illegal or unethical behavior, including the use of InTouch, a third-party reporting program | |
| No related-party transactions requiring disclosure under Section 404(a) of Regulation S-K | |
Share Ownership / Compensation | | “Pay for performance” compensation structure |
| Robust equity ownership and retention requirements for executives and directors | |
| Prohibition of hedging and pledging of our shares | |
| Robust clawback policies in our incentive compensation plans |
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Board Leadership Structure
In July 2020, in connection with Mr. Hockema, ourHarvey’s succession as CEO, serves aswe separated the roles of CEO and Chairman of the Board of our company and Mr. Hockema, our former CEO, became Executive Chairman of the Board. Dr. Osborne currently serves as our Lead Independent Director.Director, and, in connection with our board leadership succession planning, the board of directors has approved the transition of the Lead Independent Director position to Mr. Arnold, which will be effective following the Annual Meeting. We believe that Mr. Hockema's substantial experience with our company and in the metals industries, the independence of the other directors, our governance structure and the interaction between and among Mr.Messrs. Hockema, our Lead Independent DirectorHarvey, Osborne and Arnold and the other directors make our board leadership structure the most appropriate for our company and our stockholders. As a result of his substantial experience with our company and in the metals industries, Mr. Hockema is uniquely qualified to provide clear leadership for our company and a single point of accountability.
Our corporate governance guidelines and governance structure require a Lead Independent Director to be selected by a majority of the independent directors when the Executive Chairman of the board is not independent, thereby ensuring that there is independent leadership within our board of directors and allowing our independent directors to function as a body distinct from management and evaluate the performance of Mr. HockemaHarvey and our management independently and objectively. The responsibilities of our Lead Independent Director include:
Each of the audit, compensation, ESG and nominating and corporate governance and talent development committees consists solely of independent directors. The chair of each committee of our board of directors serves as a liaison to keep our full board of directors and our CEO apprised of the work performed by their respective committees at each of our regularly scheduled board meetings and as otherwise required. Finally, under our bylaws, special meetings of our board of directors may be called by the Chairman, our CEO or a majority of our board members, 11 of 12 of whom are currently independent.
Under our corporate governance guidelines, each member of our board of directors may submit items to be included on the agenda for any meeting of our board of directors and raise subjectstopics that are not on the agenda at any meeting of our board of directors. In addition, our independent directors, representing nine of our 11 directors, are required to meet at least quarterly in executive sessions at which only independent directors are present. Additionally, we encourage direct communication among our directors and with our CEO before, during and after formal board and committee meetings and facilitate those communications around all of our scheduled meetings. Our directors also have full access to our officers, employees and advisors.
Risk Oversight
We have policies in place to identify, assess and manage potential risks and to continually review the procedures that we have designed and implemented to mitigate those risks. We believe that our board of directors provides effective oversight of the risk management function. Under its charter, the audit committee of our board of directors is responsible for discussing our risk management policies, including, without limitation, the steps taken and to be taken to monitor and control our major financial risk exposures. The compensation committee of our board of directors is responsible for assessing risks associated with our compensation policies and incentivizing the conduct of our business in a manner consistent with our corporate values and implementing our clawback policies. The ESG committee of our board of directors is responsible for overseeing our ESG risks, including overseeing our overall approach to ESG principles and related disclosures, reviewing and evaluating the succession planning of our executive officers (other than the CEO), and reviewing the diversity of our management and workforce and our approach to diversity, equity and inclusion. Our Executive Vice President, Chief Administrative Officer and
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General Counsel, working with a committee of other members of senior management, oversees our climate-related risk management approach, and we report regularly to the ESG committee and the full board of directors.
In addition, our full board of directors is actively engaged in the review and assessment of our risk management policies, conducts a comprehensive review at least annually during a regularly scheduled board meeting and routinely requests that specific risk-related items be included on board and committee meeting agendas, including by way of example, the COVID-19 pandemic, our COVID-19 contingency planning and health and safety measures implemented to protect our employees.agendas. We also engage in an ongoing enterprise risk management process pursuant to which we formally identify, categorize and assess our risks and risk mitigation strategies and routinely update the audit committee and ourthe full board of directors regarding this process.
Information Security
We employ information systems to support our business. As is the case for other manufacturing companies of comparable size and scope, we, from time to time, experience attempted cyber-attacks on our information system. We also face risks associated with other potential significant failures or disruptions of our information technology networks. We utilize a risk-based, multi-layered information security approach following the National Institute of Standards and Technology Cybersecurity Framework and have adopted and implemented an approach to identify and mitigate information security risks that we believe is commercially reasonable for manufacturing companies of our size and scope, including many of the best practices of the National Institute of Standards and Technology Cybersecurity Framework.
Our Director - Kaiser Protect is responsible for overseeing our cybersecurity program across our company and reports directly to our Chief Information Officer (“CIO”), who is responsible for the usability, implementation and management of our information and computing systems. At least monthly, our senior management reviews our information security performance and recent cybersecurity industry trends and risks with our CIO and Director - Kaiser Protect, Management also reports these updates to the audit committee at least twice a year with two of such reports reviewed with the full board of directors. The audit committee is responsible for the review of risks relating to our information technology system, including cybersecurity, emerging cybersecurity developments and threats and our strategy for mitigating cybersecurity risks. Our entire board of directors is responsible for overseeing management’s risk assessment and risk management processes designed to monitor and mitigate information security risks.
We regularly engage independent third parties to test our information security processes and systems as part of our overall enterprise risk management. We also periodically engage in tabletop exercises with third-party consultants to better prepare us for potential cyber threats. In addition, we conduct annual information security training to ensure employees are aware of information security risks and to enable them to take steps to mitigate those risks. As part of this program, we also take reasonable steps to ensure our executive management and employees who may come into possession of confidential financial information receive appropriate information security awareness training.
We have not experienced a material information security breach. In addition, to date, no attempted cyber-attack or other attempted intrusion on our information technology networks has resulted in a material adverse impact on our operations or financial results, or in any penalties or settlements. In the event an attack or other intrusion were to be successful, we have a response team of internal and external resources engaged and prepared to respond. We also have a cyber risk insurance policy to help us mitigate risk exposure by offsetting costs involved with recovery and remediation in the event of a successful attack or other intrusion.
Director Independence
Our corporate governance guidelines require that a majority of the members of our board of directors satisfy the independence requirements set forth in the rules of the Nasdaq Stock Market. We refer to these requirements as the general independence criteria. Additionally, the audit committee charter, compensation committee charter and nominating and corporate governance committee charter require that all respective committee members satisfy the general independence criteria. There are no family relationships among our officers or directors.
Based upon information requested from and provided by each of our directors concerning his or her background,their backgrounds, employment and affiliations, including family relationships, our board of directors has determined that each of Mmes. Bartholomew, Liggett, Martin and Sebastian and Messrs. Arnold, Foster, Gerard, Hassey,Grimley Osborne, Stebbins, Van LeeuwenWilcox and Wilcox,Williams, representing 11nine of our 1211 directors, satisfies the general independence criteria. The twelfth director, Mr.two remaining directors, Messrs. Harvey and Hockema, cannotdo not meet the independence requirementcriteria as our CEO.CEO and former CEO, respectively. In making such determination, our board of directors considered the relationships that each of our directors hadhave with our company and all other facts and circumstances our
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board of directors deemed relevant in determining the independence of each of our directors in accordance with the general independence criteria.
Director Designation Agreement
On July 6, 2006, we entered into a Director Designation Agreement with the USW under which the USW has certain rights to designate board candidates for nomination. We believe that:
Accordingly, in connection with the renewal and ratification of a new five-year collective bargaining agreement with members of the USW at our Spokane, Washington and Newark, Ohio facilities, in December 2019, the Director Designation Agreement which was set to expire on December 31, 2020 was extended to December 31, 2025. Under the Director Designation Agreement, as amended, the USW generally has the right to designate for nomination the minimum number of director candidates necessary to ensure that, assuming the nominated candidates are elected by our stockholders, at least 40% of the members of our board of directors have been nominated by the USW, except that we have the ability to increase the size of the board of directors from 10 to up to 12 members without increasing the number of candidates that the USW has the right to designate for nomination.
The Director Designation Agreement contains requirements as to the timeliness, form and substance of the notice the USW must give to the nominating and corporate governance committee in order to nominate candidates. The nominating and corporate governance committee is required to determine in good faith whether each properly submitted candidate satisfies the qualifications set forth in the Director Designation Agreement. Pursuant to the terms of the Director Designation Agreement, if the nominating and corporate governance committee determines that a nominated candidate satisfies the qualifications, the committee will, unless otherwise required by its fiduciary duties, recommend the candidate to our board of directors for inclusion in the slate of directors to be recommended by the board of directors in our proxy statement. Similarly, the board of directors will, unless otherwise required by its fiduciary duties, accept the recommendationdesignation for nomination and include the candidate in the slate of directors that the board of directors recommends. Notwithstanding the foregoing, the USW may not nominate an incumbent candidate without our approval.
In addition, the Director Designation Agreement provides that, so long as our board of directors maintains an audit committee, executive committee or nominating and corporate governance committee, each of these committees will, unless otherwise required by the fiduciary duties of our board of directors, include at least one director nominated by the USW (provided at least one director nominated by the USW is qualified to serve on the applicable committee as determined in good faith by our board of directors). Current members of our board of directors that have been nominated by the USW are Mmes. Bartholomew and Sebastian and Messrs. Foster, GerardGrimley and Wilcox.Wilcox and Ms. Bartholomew's tenure will end at the Annual Meeting.
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Board Committees
Currently, our board of directors has five standing committees: an executive committee; an audit committee; a compensation committee; an ESG committee; and a nominating and corporate governance committee; and a talent development committee.
The following table sets forth the current chair and members of each committee of our board of directors and the number of meetings each committee held during
Committee | Members | Number of Meetings Held in 2019 | Number of Times Acted By Unanimous Written Consent | |||
Executive Committee | Jack A. Hockema (Chair) | - | 2 | |||
Lauralee E. Martin | ||||||
Alfred E. Osborne, Jr. | ||||||
Brett E. Wilcox | ||||||
Thomas M. Van Leeuwen | ||||||
Audit Committee | Lauralee E. Martin (Chair) | 6 | - | |||
Carolyn Bartholomew | ||||||
Emily Liggett | ||||||
Alfred E. Osborne, Jr. | ||||||
Teresa M. Sebastian | ||||||
Thomas M. Van Leeuwen | ||||||
Brett E. Wilcox | ||||||
Compensation | Thomas M. Van Leeuwen (Chair) | 7 | 6 | |||
Committee | L. Patrick Hassey | |||||
Lauralee E. Martin | ||||||
Donald J. Stebbins | ||||||
Brett E. Wilcox | ||||||
Nominating and | Alfred E. Osborne, Jr. (Chair) | 7 | 1 | |||
Corporate Governance | David Foster | |||||
Committee | Teresa M. Sebastian | |||||
Donald J. Stebbins | ||||||
Thomas M. Van Leeuwen | ||||||
Talent Development | Brett E. Wilcox (Chair) | 2 | - | |||
Committee | Carolyn Bartholomew | |||||
David Foster | ||||||
L. Patrick Hassey | ||||||
Emily Liggett | ||||||
Lauralee E. Martin |
Committee | Members | Number of Meetings | ||||
Executive Committee | Jack A. Hockema (Chair) | — | ||||
Michael C. Arnold (1) | ||||||
Keith A. Harvey | ||||||
Lauralee E. Martin | ||||||
Alfred E. Osborne, Jr. | ||||||
Donald J. Stebbins | ||||||
Brett E. Wilcox | ||||||
Audit Committee | Lauralee E. Martin (Chair) | 6 | ||||
Emily M. Liggett (2) | ||||||
Teresa M. Sebastian | ||||||
Thomas M. Van Leeuwen (3) | ||||||
Brett E. Wilcox | ||||||
Kevin W. Williams | ||||||
Compensation | Donald J. Stebbins (Chair) | 6 | ||||
Committee | Michael C. Arnold | |||||
Richard P. Grimley (4) | ||||||
Lauralee E. Martin | ||||||
Thomas M. Van Leeuwen (3) | ||||||
Brett E. Wilcox | ||||||
ESG Committee | Brett E. Wilcox (Chair) | 5 | ||||
David A. Foster | ||||||
Leo W. Gerard (5) | ||||||
Richard P. Grimley (4) | ||||||
Emily M. Liggett (2) | ||||||
Lauralee E. Martin | ||||||
Teresa M. Sebastian | ||||||
Nominating and | Alfred E. Osborne, Jr. (Chair) (1) | 5 | ||||
Corporate Governance | Michael C. Arnold (1) | |||||
Committee | David A. Foster | |||||
Teresa M. Sebastian | ||||||
Donald J. Stebbins | ||||||
Thomas M. Van Leeuwen (3) |
___________________
(1) | Mr. Arnold was appointed as Chair of the nominating and corporate governance committee and joined the executive committee in March 2023. |
(2) | Ms. Liggett served as a member of the audit and ESG committees until June 2022. |
(3) | Mr. Van Leeuwen served as a member of the audit, compensation and nominating and corporate and governance committees until June 2022. |
(4) | Mr. Grimley became a member of the compensation and ESG committees in March 2023. |
(5) | Mr. Gerard served as a member of the ESG committee until June 2022. |
Executive Committee
The executive committee of our board of directors manages our business and affairs requiring attention prior to the next regular meeting of our board of directors. However, the executive committee does not have the power to (1) approve or adopt, or recommend to our stockholders, any action or matter expressly required by law to be submitted to our stockholders for approval, (2) adopt, amend or repeal the bylaws of our company, or (3) take any other action reserved for action by our
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board of directors pursuant to a resolution of our board of directors or otherwise prohibited to be taken by the executive committee by law or pursuant to our amended and restated certificate of incorporation or bylaws. The executive committee of our board of directors is comprised of the chairman of the board of directors and the chair of each of the other outstanding committees of our board of directors.
The executive committee charter requires that a majority of the members of the executive committee satisfy the general independence criteria. In addition, the members of the executive committee must include the chairman of our board of directors and at least one of the directors nominated by the USW. The executive committee is currently comprised of theour CEO, executive chairman of ourthe board of directors, lead independent director and the chair of each of the other standing committees of the board of directors.
Audit Committee
The audit committee of our board of directors oversees our accounting and financial reporting practices and processes and the audit of our financial statements on behalf of our board of directors. The audit committee is responsible for appointing, compensating, retaining and overseeing the work of our independent accounting firm. Other duties and responsibilities of the audit committee include:
The audit committee charter requires that all members of the audit committee satisfy the general independence criteria. The charter also requires that no audit committee membermembers may have participated in the preparation of our financial statements during the three years prior to his or hertheir appointment as a member and that each audit committee member be able to read and understand fundamental financial statements, including a balance sheet, an income statement and a cash flow statement. Additionally, at least one member of the audit committee must have had past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience which results in that individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities, and that member or another member must have sufficient education or experience to have acquired the attributes necessary to meet the criteria of an "audit committee financial expert," as that term is defined in the rules promulgated by the SEC.Securities and Exchange Commission. In addition, the members of the audit committee must include at least one of the directors nominated by the USW so long as at least one such director nominated by the USW is appropriately qualified.
Our board of directors has determined that all seven members of the audit committee during 2022 (1) meet the general independence criteria, the heightened independence criteria for members of the audit committee set forth in the rules of the Nasdaq Stock Market and the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act, and (2) are able to read and understand fundamental financial statements. Our board of directors has also determined that no member of the audit committee participated in the preparation of our financial statements during the three years prior to their appointment as members of the committee. Finally, our board of directors has determined that Mmes. Liggett, Martin and Sebastian and Messrs. Van Leeuwen and Wilcox satisfyeach member of the audit committee satisfies the financial sophistication criteria described above and satisfysatisfies the criteria necessary to serve as the "audit committee financial expert," in each case based on his or her experience described in "Proposals Requiring Your Vote - Proposal 1 - Election of Directors" above.
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Compensation Committee
General
The compensation committee of our board of directors establishes and administers our policies, programs and procedures for compensating our senior management, including determining and approving the compensation of our executive officers. Other duties and responsibilities of the compensation committee include:
The compensation committee solicits the views of our CEO on compensation matters, including as they relate to our compensation of theour executive officers and other members of senior management, including those reporting to our CEO. The compensation committee has retained Meridian to advise the compensation committee on all matters related to compensation of our CEO and other members of senior management. The compensation committee has reviewed the factors that could affect, and has assessed, Meridian's independence. Based on this review, the compensation committee has determined there are no conflicts of interest that have been raised by Meridian's work.
Meridian's services include (1) providing competitive market data and related assessments of executive compensation as background against which the compensation committee considers executive compensation, (2) preparing and reviewing tally and compensation summary sheets for our named executive officers, (3) apprising the compensation committee of trends and best practices associated with executive and director compensation, (4) providing support with respect to legal, regulatory and accounting considerations impacting compensation and benefit programs, (5) the development and review of a list of compensation peer group companies, and (6) attending meetings of the compensation committee and our board of directors when requested. These services are typically directed by the compensation committee and coordinated with our human resources department.
The compensation committee charter requires that all members of the compensation committee satisfy the general independence criteria and the heightened independence criteria for members of the compensation committee set forth in the rules of the Nasdaq Stock Market, as well as qualify as "non-employee directors" within the meaning of Rule 16b-3 promulgated under the Exchange Act. Our board of directors has determined that all five members of the compensation committee during 2022 meet the applicable independence criteria.
The compensation committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and may delegate to the subcommittee any or all of the powers and authority of the committee.
Compensation Committee Interlocks and Insider Participation
None of Ms. Martin or Messrs. Hassey, Quinn, Stebbins, Van Leeuwen or Wilcox, the members of the compensation committee during
ESG Committee
The ESG committee of our board of directors coordinates the environmental, social and governance efforts among all the board committees and assists the board of directors in discharging its responsibilities relating to management succession planning and oversight of leadership and talent development. We consider leadership, our corporate values and succession planning priorities throughout the company and recognize that, over the long term, our commitment to the sustainability of our business and creation of long-term value for our stakeholders provide competitive advantages.
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The ESG committee reviews and evaluates (1) the succession planning for our executive officers, other than our CEO, whose succession is discussed routinely during board executive sessions, and (2) the leadership and development training of key employees with the potential to succeed our executive officers, including the progression and development of such key employees. In addition, the ESG committee provides more focused oversight of (1) the company’s strategic ESG activities and initiatives, consistent with our corporate values, and (2) our executive succession planning, human capital development, the diversity of our management and workforce and our diversity, equity, inclusion and belonging ("DEIB") initiatives. The ESG committee is also responsible for (1) the review, on a periodic basis, of our corporate values and key initiatives supporting our corporate values, (2) the coordination with the nominating and corporate governance committee on governance matters impacting our ESG principles (3) the oversight of the preparation and publication of our annual sustainability reports, (4) the oversight of ESG-related risks, including climate-related risks and opportunities, and review of those risks and opportunities with the full board of directors, (5) the review of our ESG strategies and initiatives, including internal and external metrics and goals with respect to greenhouse gas emissions and other related ESG metrics, (6) the review of our ESG performance and (7) the review of emerging trends and investor expectations regarding ESG topics. The ESG committee meets with our CEO to review its observations and management’s criteria for evaluating the performance and advancement potential of key employees and regularly reports its activities to our board of directors.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee of our board of directors identifies individuals qualified to become members of our board of directors, recommends candidates to fill vacancies and newly-created positions on our board of directors, recommends director nominees for election by stockholders at the annual meetings of stockholders and develops and recommends to our board of directors our corporate governance guidelines.
We believe that the nominating and corporate governance committee considers an appropriate range of criteria in assessing candidates for a position on the board of directors. Our corporate governance guidelines require that the criteria utilized by the corporate governance committee in assessing such candidates include factors such as judgment, diversity, integrity, experience with businesses and other organizations of comparable size, the interplay of a candidate's experience with the experience of other members of the board of directors and anything else that may bear upon the extent to which a candidate would be a desirable addition to our board of directors and any committees of our board of directors. The policies relating to the recommendation of director candidates adopted by the nominating and corporate governance committee are designed to ensure flexibility with respect to the process of evaluating candidates and do not establish specific minimum qualifications that an individual must meet to become a member of our board of directors. The nominating and corporate governance committee believes that our company is best served when it can draw from a variety of experiences and backgrounds provided by members of our board of directors. However, the nominating and corporate governance committee also believes that our company is best served when each memberthe members of the board of directors:
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Other duties and responsibilities of the nominating and corporate governance committee include:
The nominating and corporate governance committee has adopted policies and procedures by which our stockholders may submit director candidates to the nominating and corporate governance committee for consideration. If the nominating and corporate governance committee receives, by a date not less than 120, nor more than 150, calendar days before the anniversary of the date that the proxy statement was mailed to stockholders in connection with our previous year's annual meeting, a recommendation for a director nominee from a stockholder or group of stockholders that beneficially owned more than 5% of our outstanding common stock for at least one year as of the date of the recommendation, then such director candidate will be considered and evaluated by the nominating and corporate governance committee for the annual meeting immediately succeeding the date that proper written notice was timely delivered to and received by the nominating and corporate governance committee. When the date of our annual meeting of stockholders changes by more than 30 calendar days from the previous year's annual meeting, the written notice of the recommendation for the director candidate will be considered timely if, and only if, it is received by the nominating and corporate governance committee no later than the close of business on the tenth calendar day following the first day on which notice of the date of the upcoming annual meeting is publicly disclosed by us.
Written notice from an eligible stockholder or group of eligible stockholders to the nominating and corporate governance committee recommending a director candidate must contain or be accompanied by:
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The notice must be signed by each stockholder submitting the proposal and the director candidate. The notice must be sent to the following address by registered or certified mail: Kaiser Aluminum Corporation, Attn: Corporate Secretary (Nominating and Corporate Governance Committee), 27422 Portola Parkway,1550 West McEwen Drive, Suite 200, Foothill Ranch, California 92610-2831.
The nominating and corporate governance committee charter requires that all members of the nominating and corporate governance committee satisfy, and all members of the Nominating and Corporate Governance Committee during 2022 satisfied, the general independence criteria. In addition, the members of the nominating and corporate governance committee must include at least one of the directors nominated by the USW.
Board and Committee Meetings and Consents in
During
Annual Meetings of Stockholders
Members of our board of directors are expected to make reasonable efforts to attend our annual meetings of stockholders. All of our directors then serving attended our
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Annual Performance Reviews
We conduct robust annual board and committee assessments using internal and/or external resources. Under our corporate governance guidelines, our board of directors is required to conduct an annual self-evaluation to determine whether our board of directors and its committees are functioning effectively. The charter for each committee of our board of directors also
In addition to the evaluation performed by the nominating and corporate governance committee, our nominating and corporate governance committee periodically engage an independent third party to engage in discussions with respect to whether an incumbent director should be nominated for re-election to the boardeach of directors upon expiration of such director's term, in 2019, our board of directors conducted an annual self-evaluation through the completion of an open-ended survey by each of our directors.individually. The results from the survey wereinterviews are summarized and reviewed with the nominating and corporate governance committee and the full board.board of directors. The Executive Chairman and the Lead Independent Director also meet with each director individually to discuss board and committee performance. In addition, we meetcoordinate with the USW not less than annually to discuss (i) our most recent assessment of strategic board skills, experience, attributes of all directors, (ii) desired strategic board skills, experience, attributes and priorities in the context of anticipated vacancies and upcoming elections and (iii) each board member nominated by the USW and contemplated future USW nominees in light of these considerations.
Stockholder Engagement
We value stockholder viewsfeedback and insights and believe that accountability to stockholders is an essential component of good governance. We engage in ongoing, proactive discussions of a variety of topics including our strategy and performance, business operations, capital allocation, corporate governance and environmental matters, with significant stockholders throughout the year. Such discussions are held year-round and include our CEO, andExecutive Chairman, of the BoardLead Independent Director and/or other members of senior management.management as requested by our stockholders. In addition to providing our perspective and seeking feedback on topics specific to our company, we invite discussion on any other topics or trends stockholders may wish to discuss with us. The feedback provided by stockholders is reported to the full board of directors. TheOur board of directors reviews the feedback and determines whether additional discussion and actions are necessary by the full board or any board committees. In 2019,2022, in addition to interactions regarding our financial performance, we engaged with stockholders representing approximately 60%50% of shares outstanding on matters relating to our long-term business strategy and performance, corporate governance,performance; operations, including our Packaging business; board structure and leadership succession planning; executive compensation and corporate responsibility. In addition, we utilize investor surveys to provide us with additional insight into the perceptions of our broader investor-base, across a wide range of topics.annual Sustainability Report as well as related ESG matters. This information is also reviewed by members of our senior management and the full board of directors. The feedback from our stockholders continues to reflect that they are generally satisfied with our performance and the design of our executive compensation program.
Sustainable Value Creation
We manage our business for long-term success in a manner that is economically, environmentally and socially responsible. We issued our inaugural Sustainability Report in 2019 and an interim 2019 Sustainability Report in early 2020 to highlight our culture and sustainability initiatives. Below are highlights of our efforts to continue to be a valued corporate citizen:
Environmental | |
● | On track to meet our goals to reduce our total Scope 1 and 2 emissions intensity by 20%, Scope 3 estimated emissions intensity by 35%, and Scope 1, 2 and 3 estimated emissions intensity by 30%, compared, in each case, to 2019 levels by 2030 |
● | Expanded environmental disclosures in 2021 Sustainability Report to include operational metrics of Warrick, case studies of Trentwood's water program, and waste information |
● | Continued transformational project to enable Warrick to source electricity from utility with a cleaner grid factor and access to renewable energy |
● | Continued to diversify Warrick's primary aluminum supplies to sources with lower carbon footprints |
● | Continued to optimize our use of recycled and scrap aluminum |
● | Further aligned with SASB reporting standards for the metals and mining sector through inclusion of enhanced information in our 2021 Sustainability Report |
● | Completed climate risk assessment and scenario analysis consistent with the TCFD framework and subsequently published our inaugural TCFD report in March 2023 |
● | Maintained strong product quality performance |
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Social | |
● | Maintained strong safety performance, including a record lost time incident rate performance, in a challenging labor market with historical high turnover rate |
● | Launched our Women’s Leadership Program |
● | Enhanced cybersecurity and social disclosures in our most recent Sustainability Report, including providing a link to our EEO-1 Report |
● | Continued to expand recruiting strategy to include more diverse candidates |
● | Continued to attract, develop, promote and retain qualified people from all cultures and segments of the population |
● | Continued to focus on talent development across the organization to attract, motivate and retain productive and engaged employees and to ensure consistency of culture and strategic direction |
● | Continued to incorporate diversity, equity, inclusion and belonging training and awareness into training and development programs and platforms |
● | Continued significant participation in charitable outreach as well as contribution to and sponsorship of community-driven organizations and events |
Governance | ||
● | Maintained corporate governance best practices, including: | |
● | 82% Independent Board | |
● | Separate CEO and Chairman | |
● | Diverse Board - over 30% gender or ethnic diversity in membership | |
● | Ongoing commitment to refreshment, including the planned transition of the Nominating and Corporate Governance Committee chairmanship in March 2023 and Lead Independent Director role immediately following the Annual Meeting | |
● | Robust and multi-tiered board and committee annual assessment process | |
● | Rigorous director nominating process, including for directors nominated by USW under our Director Designation Agreement | |
● | Continued development of internal benchmarking and goals to help integrate ESG principles into our strategies and initiatives | |
● | Continued annual employee surveys, which gauge effectiveness of our corporate governance measures as well as employees' perception of our culture and values | |
● | Continued to actively engage with stockholders owning approximately 50% of our outstanding shares |
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2023 and Beyond
We recognize that long-term excellence requires sustainable business practices and strong governance. Accordingly, we intend to continue our efforts to advance our sustainability and governance as a company, including our efforts to:
Environmental | Social | Governance | |||
● | Identify strategies to further reduce our overall GHG emissions and intensity | ● | Focus on the health and safety of our employees | ● | Assure Board refreshment and the continued alignment of overall Board skill sets with the evolving needs and strategies of our company |
● | |||||
Invest in our | |||||
● | Leverage and incorporate well-established DEIB best practices, including employee resource groups and other initiatives | ● | Maintain strong Board oversight of risk management and ESG matters | |||
● | Optimize our | ● | Focus on talent development across the organization to | ● | Assure independence and diversity of our Board and Board committees | |
● | Continue to enhance future disclosures to align with SASB and | ● | Treat all employees with dignity and | ● | Actively engage with stockholders | |
● | Update our progress related to | |||||
● | Implement new systems and | |||
Stock Ownership Guidelines and Securities Trading Policy
Our stock ownership guidelines require our non-employee directors to own company stock equal to six times their annual base retainer within five years of becoming a member of our board of directors. For purposes of measuring our non-employee directors' compliance with our stock ownership guidelines, restricted stock is valued at the closing price of our common stock on the grant date and all other shares of common stock purchased or acquired are valued at the purchase price of such shares. Currently, each of our non-employee directors satisfies the applicable stock ownership requirements under the stock ownership guidelines. Our stock ownership guidelines also apply to senior management. For additional information regarding our stock ownership guidelines, see "Executive Compensation - Stock Ownership Guidelines."
Our securities trading policy prohibits our directors, and employees, including our named executive officers, and independent directors, and members of their immediate families, from purchasing financial instruments to hedge or offset, or otherwise engaging in transactions designed to hedge or offset, decreases in the market value of our equity securities, whether granted as part of compensation to, or otherwise held directly or indirectly by, such director or employee. Prohibited transactions include short sales, options, puts, calls and derivative instruments such as swaps, forwards, collars and futures. Our securities trading policy also prohibits our directors, and employees, including our named executive officers, and independent contractors, and members of their immediate families, from buying our securities on margin (other than purchases where the related margin borrowings are effected solely for the purpose of paying the option exercise price upon the exercise of an option to purchase shares from the company, which are typically referred to as “cashless exercises”) or, holding our securities in a margin account, and from pledging our securities as collateral for a loan or any other obligations.
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Risks Arising from Compensation Policies and Practices
Our compensation policies and practices, discussed more fully below, are designed to create and maintain alignment between our employees and stockholders by rewarding employees, including our senior management, for achieving strategic goals that successfully drive our operations and enhance stockholder value and to preclude the taking of unreasonable risks through the use of incentive compensation that rewards decisions that result in strong performance in both the short- andshort-and long-term. We do not believe that our compensation policies and practices encourage decisions or actions which are likely to have a material adverse effect on our company. Our determination is based on, among other factors, the following:
Stockholder Communications with the Board of Directors
Our stockholders may communicate with our board of directors as a group or with the chair of the executive committee, audit committee, compensation committee or nominating and corporate governance committee by sending an email to boardofdirectors@kaiseraluminum.com, execchair@kaiseraluminum.com, auditchair@kaiseraluminum.com, compchair@kaiseraluminum.com, or nominatingchair@kaiseraluminum.com, respectively, or by writing to such group or person at Kaiser Aluminum Corporation, Attn: Corporate Secretary (Board of Directors), 27422 Portola Parkway,1550 West McEwen Drive, Suite 200, Foothill Ranch, California 92610-2831.500, Franklin, Tennessee37067. Communications that are intended specifically for any other group of directors or for any individual director, such as the independent directors as a group or the Lead Independent Director, should be sent to the attention of our corporate secretary at the address above or via email to corpsecretary@kaiseraluminum.com and should clearly state the individual director or group of directors that is the intended recipient of the communication.
Our corporate secretary will review each communication and determine whether or not the communication is appropriate for delivery. Communications that, in the judgment of our corporate secretary, are clearly of a marketing nature, that advocate that our company engage in illegal activity, that do not reasonably relate to our company or our business or that are similarly inappropriate will not be furnished to the intended recipient. If, in the judgment of the corporate secretary, any communication pertains to an accounting matter, it will be forwarded to our compliance officer.
Communications that, in the judgment of our corporate secretary, are appropriate for delivery will, unless requiring immediate attention, be assembled and delivered to the intended recipients on a periodic basis, generally at or in advance of each regularly scheduled meeting of our board of directors. Any communication that, in the judgment of our corporate secretary, requires immediate attention will be promptly delivered. In no case will the corporate secretary provide anyone but a member of our board of directors with access to any such communication, except as noted above with respect to communications pertaining to accounting matters.
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EXECUTIVE OFFICERS
The following table sets forth the names and ages of each of our executive officers and the positions they held as of
AprilName | Age | Position(s) | ||
Keith A. Harvey | 63 | President and | ||
Neal E. West | 64 | Executive Vice President and Chief Financial Officer | ||
John M. Donnan | 62 | Executive Vice President, | ||
Jennifer S. Huey | 42 | |||
Vice President and Chief Accounting Officer | ||||
Mark R. Krouse | 71 | Vice President - Human Resources | ||
Del L. Miller | 63 | Vice President – Treasury, Risk and Procurement | ||
Raymond D. Parkinson | 64 | Senior Vice President - Advanced Engineering | ||
Blain A. Tiffany | 64 | Executive Vice President – Sales and Marketing | ||
Jason D. Walsh | 43 | Executive Vice President - Manufacturing | ||
Brant W. Weaver | 48 | Vice President - Strategic Development |
Set forth below are brief descriptions of the business experience of each of our executive officers.
Keith A. Harvey
has served as our President andNeal E. West
has served as our Executive Vice President and Chief Financial Officer since March 2021 and as Senior Vice President and Chief Financial OfficerJohn M. Donnan
has served as our Executive Vice President,Jennifer S. Huey
has served as our Vice President and Chief Accounting Officer since March 2019. Ms. Huey joined our company in January 2014 as Director, Consolidation and External Reporting. Prior to joining Kaiser, Ms. Huey was the SEC Reporting Manager at Mindspeed Technologies, Inc. Previously, she served as Manager in the Assurance and Advisory Business Service group of Ernst & Young LLP. Ms. Huey has a Bachelor of Arts degree in Economics from the University of California, Berkeley and a Master of Science degree in Accountancy from the University of Virginia. Ms. Huey is also a Certified Public Accountant.32
Mark R. Krouse
has served as our Vice President - Human Resources since September 2013. Prior to joining Kaiser, Mr. Krouse served as Vice President, Human Resources of Samsung C&T Engineering and Construction, Americas from January 2012 to August 2013. Mr. Krouse was also an Adjunct Professor of California State University, Fullerton from September 2007 to June 2010. In addition, Mr. Krouse held various human resources positions, including Vice President, Human Resources, with Fluor Corporation from 1976 to 2006. Mr. Krouse holds a Master of Science degree in International Administration and a Bachelor of International Relations degree, both from the University of Southern California.Del L. Miller has served as our Vice President – Metal Strategy since October 2022. He previously served as Vice President – Treasury, Risk and Procurement from December 2020 to October 2022 and Vice President and Treasurer from April 2017 to December 2020. Mr. Miller joined Kaiser in 1997 and has held numerous positions of increasing responsibility, including Treasurer and Vice President - Commodity Risk Management from June 2015 to April 2017, Vice President and Treasurer from April 2017 to August 2018 and Vice President – Procurement and Metal Management from August 2018 to December 2020. Prior to joining Kaiser, he worked for Commonwealth Aluminum with responsibility for managing commodity and financial price risks. His background also includes over 10 years with Coors and Coors-related companies with positions of increasing responsibility in accounting, purchasing, and commodity risk management. Mr. Miller holds a Master of Business Administration degree in Finance from the University of Denver and a Bachelor of Science degree in Accounting from Colorado State University. He is a Certified Public Accountant (inactive).
Raymond D. Parkinson
has served as our Senior Vice President - Advanced Engineering since January 2020. He previously served as Vice President - Advanced Engineering from 2001 to January 2020. Dr. Parkinson joined Kaiser in 1986 as technical director for extruded products and has more than 30 years of experience in sales, operations, quality control, engineering and research and development in diverse manufacturing environments. Dr. Parkinson has a Ph.D. in metallurgy, as well as Bachelor’s and Master’s degrees in Engineering, from Imperial College in the United Kingdom and a Master of Business Administration from St. Mary’s College. Dr. Parkinson is also a Fellow of the Institute of Materials, Minerals and Mining.Blain A. Tiffany has served as Executive Vice President – Sales and Marketing since April 2022. Mr. Tiffany previously served as Senior Vice President – Sales and Marketing from January 2020 to April 2022 and as Vice President – Sales & Marketing, High Strength and General Engineering Products from July 2014 to December 2020. Mr. Tiffany joined Kaiser in 2013 as Vice President - Marketing, Hard Alloy Extrusions, Pipe and Tube. Prior to joining Kaiser, Mr. Tiffany held several senior management positions during his 34 years in metals distribution. He was most recently with A.M. Castle & Co. where during his 13 years with the company he served as President of the Steel Plate division, President of the Aerospace division and President of the Industrial division. He holds a Bachelor of Science degree in Business Administration from Almeda College and completed the Strategic Metals Management Program at the Olin Business School Washington University in St. Louis, Missouri.
Jason D. Walsh has served as our Executive Vice President – Manufacturing since April 2022. Mr. Walsh previously served as Senior Vice President – Manufacturing from August 2020 to April 2022 , as Senior Vice President – Flat Rolled Products from June 2018 to August 2020, as Vice President and General Manager – Automotive and Soft Alloy from January 2017 to June 2018, as Vice President and General Manager – Automotive from February 2017 to December 2017, and as Vice President – Financial, Planning and Analysis from April 2012 to January 2017. Mr. Walsh joined Kaiser in 2006 as Manager, Financial Planning & Analysis and served as Group Controller, Common Alloy Products and Director, Financial Planning & Analysis. Prior to joining Kaiser, he held positions of increasing responsibility in manufacturing operations with Caterpillar Inc. He holds a Master of Business Administration degree in Finance from the University of Chicago and a Bachelor of Science degree in Mechanical Engineering from the University of Illinois at Urbana-Champaign.
Brant W. Weaver
has served as our Vice President - Strategy Development since January 2020. He previously served as Vice President - Soft Alloy Extrusion Manufacturing from June 2018 to January 2020, as Senior Director - Kaiser Production System from June 2016 to May 2018, and as Director - Aerospace Sales from December 2011 to May 2016. He joined the company in 2006 as a Kaiser Production System Manager and has held numerous positions of increasing responsibility. Prior to joining Kaiser, Mr. Weaver was an Associate Vice President at National City Bank. Prior to National City Bank, he was the Quality Manager at Lincoln Financial Group. Mr. Weaver holds a Masters of Business Administration and a Bachelor of Science with a major in Accounting from Indiana Wesleyan University.33
EXECUTIVE COMPENSATION
Compensation Committee Report
The compensation committee has reviewed and discussed with management the Compensation Discussion and AnalysisCD&A section included below. Based on its review and discussions with management, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K filed on February 25, 2020.
This report is submitted by the members of the compensation committee of the board of directors:
Compensation Committee
Donald J. Stebbins (Chair)
Michael C. Arnold
Richard P. Grimley
Lauralee E. Martin
Brett E. Wilcox
Kevin W. Williams
Compensation Discussion and Analysis
Introduction
This section provides:
Name | Title | |
Keith A Harvey | CEO (principal executive officer) | |
John M. Donnan | Executive Vice President, | |
Neal E. West | Executive Vice President and Chief Financial Officer (principal financial officer) | |
Jason D. | Executive Vice President - | |
Blain A. Tiffany | Executive Vice President - Sales and |
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2022 Performance Highlights
We believe 2022 was pivotal in our evolution as we laid the necessary groundwork to position our company for long-term, sustainable growth despite the numerous challenges we encountered, including unprecedented supply chain disruptions, inflationary cost pressures and historically high labor turnover. Our results for 2022 reflected significant supply chain issues specifically related to magnesium and molten metal supply challenges at our Warrick operation that resulted in reduced packaging and plate shipments in the third quarter 2022 coupled with the planned outage at our Trentwood operation. Higher inflationary driven costs during the year, which we partially offset through pricing actions, cost reduction efforts and efficiency improvement projects, further affected results.
The table below highlights our 2022 financial performance:
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Shipments |
| Net Sales |
| Net Loss (1) |
| Adjusted Net Loss (2) |
| Conversion Revenue (2) |
| Adjusted EBITDA (2) |
| Net Loss Per Diluted Share (1) |
| Adjusted Loss Per Diluted Share (2) |
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1.3 |
| $3.4 |
| $29.6 |
| $8.7 |
| $1.4 |
| $141.9 |
| $1.86 |
| $0.55 |
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Billion lbs |
| Billion |
| Million |
| Million |
| Billion |
| Million |
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_____________
(1) | Our results reflected significant supply chain issues specifically related to our magnesium and molten metal supply at our Warrick facility and reduced packaging and plate shipments in the third quarter 2022 due to the magnesium related force majeure coupled with the planned outage at our Trentwood facility. In addition, higher inflationary driven costs during the year, which we attempted to aggressively offset through pricing actions, cost reduction efforts and efficiency improvement projects, further affected results. |
(2) | See Appendix A to this Proxy Statement for reconciliations of measures from generally accepted accounting principles (“GAAP”) to non GAAP. While our use of terms such as earnings before interest, tax, depreciation and amortization (“EBITDA”), “adjusted” or “Conversion Revenue” are not intended to be (and should not be relied on) in lieu of the comparable captions under GAAP to which these metrics are reconciled, those terms are intended to provide greater clarity of the impact of certain material items on the GAAP measure and are not intended to imply those terms should be excluded. |
While 2022 was a highly challenging year amid unprecedented supply chain disruptions and ongoing inflationary cost pressures, we believe we have made remarkable progress to position our company for success, including:
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Looking ahead, we remain intently focused on continuing to pursue cost reductions in our operations, improving efficiencies and implementing commercial actions to increase our margins. We believe the strategy we have in place should lead to improved performance in the first half of 2019, the impact of the General Motors strikeyear ahead. While our efforts will take time to manifest fully, we are confident in the second half of the year,our ability to execute given our solid market position as a key supplier, focus on diverse end markets with strong secular growth characteristics, deep customer relationships and reduced sales and inefficiencies related to the significant number of automotive model changeovers. The table below highlights our 2019 financial performance.
RECORD | RECORD | RECORD | RECORD | |||||||||||
Shipments | Net Sales | Net Income | Adjusted Net Income* | Value Added Revenue* | Adjusted EBITDA* | Earnings Per Share | Adjusted Earnings Per Share* | |||||||
625 | $1,514 | $62 | $111 | $856 | $213 | $3.83 | $6.85 | |||||||
Million lbs | Million | Million | Million | Million | Million |
Capital Allocation
Our capital allocation strategy focuses on organic growth, external growth and returning cash to stockholders through dividenddividends and share repurchases. In 2019, we continuedrepurchase.
We continue to invest in capital projectsour business to further enhance manufacturing efficiency, product quality and capacitycapability. Since 2007, we have invested approximately $1.1 billion in our business organically at approximately two times depreciation and increased ourwith sustaining capital of approximately 60% of depreciation.
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We use a strategic filter to review all potential acquisitions. We will not engage in an acquisition unless it has a strategic rational that passes the strategic filter.
We also expect to continue to pay regular dividends. Since 2007, we have returned over $935 million to stockholders through quarterly dividend for the ninth consecutive year.
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Overview of the Compensation Committee
The compensation committee of our board of directors is comprised entirely of independent directors. By design, members of the compensation committee also serve on other board committees, including the executive committee, the audit committee, the nominating and corporate governance committee and the talent developmentESG committee. We believe this structure helps coordinate the efforts of the respective committees. The compensation committee's primary duties and responsibilities are to establish and implement our compensation policies and programs for senior management. While the nominating and corporate governance committee has the responsibility to evaluate the overall performance of our CEO, the compensation committee coordinates with and assists the nominating and corporate governance committee in that evaluation.
The compensation committee has the authority under its charter to engage the services of outside advisors, experts and others to assist it. Pursuant to that authority, the compensation committee engaged Meridian to advise it on all matters related to compensation of our CEO and other members of senior management, including the other named executive officers.
The compensation committee meets formally and informally throughout the year. Informal meetings frequently occur when our directors are together for meetings of our full board of directors and telephonicallyvirtually at the request of one or more committee members. Our CEO, other members of our management and outside advisors may be invited to attend all or a portion of a compensation committee meeting depending on the nature of the agenda items; however, neither our CEO nor any other member of management votes on items before the compensation committee.
The compensation committee works with our senior management and Meridian to determine the agenda for its formal meetings and to prepare meeting materials. The compensation committee and our board of directors also solicit the views of our CEO on compensation matters, including, among others:
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Objectives of our Compensation Structure
Our compensation structure was developed to achieve the following objectives, which we believe are critical for enhancing stockholder value and to our long-term success and sustainability:
Design of our
Our
In addition to focusing on "pay for performance," our
Periodically, but not less than annually, each element of compensation is reviewed and considered by the compensation committee and our board of directors both individually and collectively with the other elements of compensation to ensure that each element is consistent with the objectives of both our comprehensive compensation structure and that particular
39
element of compensation. The compensation committee and our board of directors share suggestions or concerns identified in the course of that review with senior management and Meridian, who address the suggestions or concerns in a manner that is satisfactory to the compensation committee and our board of directors. This process occurs over a series of meetings of the compensation committee and our board of directors and executive sessions of the independent directors without members of management present.
In designing the overall compensation program and each individual element of compensation for senior management, including our named executive officers, the compensation committee considers the following factors, among others:
The compensation committee generally uses tally and other summary sheets that provide a summary of the compensation history of our CEO and those members of our senior management reporting to our CEO. These tally and information sheets include a historical summary of base salary, annual bonus and equity awards.
In reviewing and deliberating our
The review included discussions with Meridian and management regarding existing and contemplated market practices, as well as the structure and objectives of each component of our compensation program.
The compensation committee also reviews the compensation and benefit practices, as well as levels of pay, of a compensation peer group of companies. Working with Meridian, the compensation committee selects for inclusion in our compensation peer group companies that are determined to:
The compensation committee, working with the compensation consultant,Meridian, reviews, evaluates and updates theour compensation peer group, which includes companies in both similar and different industries, at least annually. For
40
million to approximately $11.6$12.9 billion and a median market capitalization of approximately $2.2$3.4 billion, and (2) trailing 12 months revenues ranging from $736 million$1.5 billion to approximately $3.7$6.8 billion and median revenue of approximately $1.7 billion:
Allegheny Technologies Incorporated | Louisiana-Pacific Corporation | |
Arconic Corporation | Mueller Industries, Inc, | |
Cabot Corporation | Resolute Forest Products Inc. | |
Carpenter Technology Corporation | Ryerson Holding Corporation | |
Clearwater Paper Corporation | Schnitzer Steel Industries, Inc. | |
Commercial Metals Company | Silgan Holdings Inc. | |
Donaldson Company, Inc. | SPX FLOW, Inc. | |
Greif, Inc. | The TimKen Company | |
Hillenbrand, Inc. | Trinseo PLC | |
Howmet Aerospace Inc. | Valmont Industries, Inc. | |
ITT Inc. | Watts Water Technologies, Inc. | |
John Bean Technologies Corporation | Woodward, Inc. | |
Kennametal Inc. | Worthington Industries, Inc. |
Due to the differences in size among the companies in our peer group, Meridian uses a regression analysis to adjust survey data results based on our revenue as compared to the revenue of other companies in our peer group. Importantly, the compensation committee recognizes that we compete for talent with companies much larger than those included in our compensation peer group.us. These larger companies, including Aleris, Arconic, Constellium, Novelis and Sapa,Norsk Hydro, aggressively recruit the most highly qualified talent in critical functions. As a result, to attract and retain talent, the compensation committee may from time to time determine that it is in the best interests of our company and our stockholders to provide compensation packages that deviate from targeted pay levels. For
41
Principal Elements of
The table below summarizes the elements of our named executive officers' compensation in
Principal Elements | |||||||
Element | Form | Objective | Performance Metric | ||||
Base Salary | Cash | • | Provide a competitive, fixed compensation upon which our named executive officers can rely. | • | No performance metric. | ||
Short-Term Incentives | Cash | • | Create financial incentive for | • | Adjusted EBITDA | ||
achieving or exceeding company | • | Modifiers for safety, | |||||
performance goals. | quality, delivery, cost | ||||||
and individual | |||||||
performance. | |||||||
Long-Term Incentives | Restricted Stock Units | • | Create financial incentive for | • | No performance metric | ||
continued employment with our | (retention based and "at | ||||||
company through three-year cliff | risk" to the extent | ||||||
vesting. | underlying performance | ||||||
impacts stock price). | |||||||
Performance Shares | • | Create financial incentive for | • | 60%: Relative TSR | |||
achieving or exceeding long-term | (compared to peer | ||||||
performance goals. | companies in the S&P | ||||||
600 SmallCap Materials | |||||||
and 400 MidCap | |||||||
Materials Indices). | |||||||
• | 40%: Adjusted EBITDA | ||||||
Margin performance | |||||||
Each compensation element is discussed in detail below.
2022 base salary
The compensation committee annually reviews base salaries for our CEO and other executive officers, including our other named executive officers, and determines whether a change is appropriate. In reviewing base salaries, the compensation committee considers factors, including, among others:
Our intent is to fix base salaries at levels consistent with the design of our overall compensation program for the particular year. In
42
Executive Vice Presidents and the increased responsibilities associated with his promotion to Chief Financial Officer. assumption of sales and marketing responsibility and manufacturing responsibility for our Warrick operations, respectively.
Base salariessalary rates for our named executive officers in
Name | 2019 Base Salary | |||
Jack A. Hockema | $ | 915,000 | ||
Keith A. Harvey | $ | 552,000 | ||
John M. Donnan | $ | 438,800 | ||
Neal West* | $ | 425,000 | ||
Raymond D. Parkinson* | $ | 363,100 | ||
Daniel J. Rinkenberger** | $ | 468,000 |
Name |
| 2021 Base Salary |
|
| 2022 Base Salary Rate |
| ||
Keith A. Harvey |
| $ | 900,000 |
|
| $ | 935,000 |
|
John M. Donnan |
| $ | 475,000 |
|
| $ | 495,000 |
|
Neal E. West |
| $ | 470,000 |
|
| $ | 490,000 |
|
Jason D. Walsh |
| $ | 437,800 |
|
| $ | 465,000 |
|
Blain A. Tiffany |
| $ | 373,200 |
|
| $ | 425,000 |
|
2022 short-term incentive
The table below summarizes the performance metrics under our 20192022 short-term incentive plan:
Incentive Program | Performance Metric | Weighting | Modifier* | Impact on Multiplier | |||||
Short-Term Incentive Plan | Adjusted EBITDA | 100% | Safety (TCIR & LCIR) | +/- 10% | |||||
Quality | +/- 10% | ||||||||
Delivery | +/- 10% | ||||||||
Cost | +/- | ||||||||
Individual | +/- |
_______________
* The safety modifier is measured using our total case incident rate ("TCIR")TCIR and lost-time case incident rate ("LCIR"),LCIR, the quality modifier is measured using our no-fault claim rate, the delivery modifier is measured by our on-time delivery rate, and the cost modifier is measured by our manufacturing efficiency. As noted, the individual modifier is discretionary and only used in exceptional and rare instances approved by the compensation committee.
FEATURES | |||
| |||
Pay for performance | |||
| Adjusted EBITDA target determined based on return on net assets (excluding cash) using our adjusted pre-tax operating income | ||
| Modifiers for safety, quality, delivery and cost performance establishing a strong linkage to strategic non-financial results | ||
| In exceptional | ||
| No payout unless we: | ||
(1) | achieve the threshold Adjusted EBITDA | ||
(2) | generate positive adjusted net income | ||
| Maximum payout capped at | ||
| Rigorous financial performance goals |
Our 2019 short-term incentive plan, which we refer to as our 20192022 STI Plan was an annual cash incentive plan designed to reward participants for achieving certain Adjusted EBITDA performance goals determined based on designated returns on our adjusted net assets (excluding cash) using our adjusted pre-tax operating income. The structure, terms and objectives of the 2019 STI Plan were generally consistent with those of the short-term incentive plan approved by the compensation committee in 2018, except for the annual increase of the Adjusted EBITDA targets. Consistent with the short-term incentive plan approved by the compensation committee in 2018,2021, our 20192022 STI Plan also included modifiers for safety, quality, delivery and cost performance and permitted, subject to the maximum payout opportunity described below,above, adjustments to individual payouts, in exceptional and rare instances, up to plus or minus 100%,25% for our named executive officers, based on actual performance, including individual facilityand/or functional area
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performance as well as performance against other strategic initiatives. Named executive officers not meeting individual and/or functional area performance. Individualsperformance goals or not meeting individual performance goalsachieving other strategic initiatives could receive a reduced or even no, payout and individuals meeting or exceeding individual and/or functional area performance goals or achieving other strategic initiatives could receive increased payouts;payouts, up to 25%; provided, however, that for our named executive officers, no increase could exceed the maximum payout opportunity of three2.5 times the target.
Consistent with our objective of aligning senior management and our stockholders by rewarding our senior management for achieving strategic goals that successfully drive our operations and enhance our stockholder value, our
For 2022, our product quality, our relationships with our customers, manufacturing efficiency and individual accountability, in addition to financial performance, our
Name | Below Threshold | Threshold | Target | Maximum | Actual | |||||||||||||||||
Jack A. Hockema | — | $ | 361,500 | $ | 723,000 | $ | 2,169,000 | $ | 692,634 | |||||||||||||
Keith A. Harvey | — | $ | 240,000 | $ | 480,000 | $ | 1,440,000 | $ | 459,840 | |||||||||||||
John M. Donnan | — | $ | 157,750 | $ | 315,500 | $ | 946,500 | $ | 302,249 | |||||||||||||
Neal West | — | $ | 150,000 | $ | 300,000 | $ | 900,000 | $ | 287,400 | |||||||||||||
Raymond D. Parkinson | — | $ | 73,200 | $ | 146,400 | $ | 439,200 | $ | 140,251 |
The Adjusted EBITDA targets under our | ||
by 10.6%. The table on the right illustrates our annual Adjusted EBITDA performance multiplier for the last three years under our short-term incentive plans before the application of modifiers. See Appendix A to this Proxy Statement for reconciliations of GAAP to non-GAAP measures. After the application of modifiers, the final multipliers under our short-term incentive plan for 2020, 2021, and 2022 were 0.51x, 0.65x and 0.00x, respectively. |
|
The Adjusted EBITDA Multiplier under our 2019 Short-Term Incentive Plan is the lowest in the last three years despite our record Adjusted EBITDA performance due to our annually increased Adjusted EBITDA targets. After the application of modifiers, the final multipliers under our short-term incentive planresults for 2017, 2018,2020 and 2019 were 1.51x, 1.18x and 0.96x, respectively, each reflecting2021 reflect the impact of our performance against demanding modifiers.
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The table below sets forth the possible payouts that could have been earned by our named executive officers at each performance level and the actual amounts earned by them under the 2022 STI Plan.
Name |
| Below |
|
| Threshold |
| Target |
| Maximum |
| Actual | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Keith A. Harvey |
|
| — |
|
|
| $ | 472,500 |
|
|
|
| $ | 945,000 |
|
|
|
| $ | 2,362,500 |
|
|
|
| $ | — |
|
|
John M. Donnan |
|
| — |
|
|
| $ | 177,500 |
|
|
|
| $ | 355,000 |
|
|
|
| $ | 887,500 |
|
|
|
| $ | — |
|
|
Neal E. West |
|
| — |
|
|
| $ | 175,000 |
|
|
|
| $ | 350,000 |
|
|
|
| $ | 875,000 |
|
|
|
| $ | — |
|
|
Jason D. Walsh |
|
| — |
|
|
| $ | 150,000 |
|
|
|
| $ | 300,000 |
|
|
|
| $ | 750,000 |
|
|
|
| $ | — |
|
|
Blain A. Tiffany |
|
| — |
|
|
| $ | 125,000 |
|
|
|
| $ | 250,000 |
|
|
|
| $ | 625,000 |
|
|
|
| $ | — |
|
|
2022-2024 long-term incentives
The table below summarizes the performance metrics under our 2019-20212022-2024 long-term incentive plan:
Incentive Program | Performance Metric | Weighting | ||
Long-Term Incentive Plan | TSR | 60% | ||
Adjusted EBITDA margin | 40% |
FEATURES | ||||
| ||||
Three-year performance period | ||
| Includes retention features by utilizing time-vested restricted stock units representing approximately 30% of the long-term incentive target of our CEO and 40% of our other named executive officers | |
| Pay for performance by utilizing performance shares subject to demanding metrics | |
| Performance metrics: | |
(1) | 40% based on | |
(2) | 60% based on relative TSR | |
| Payout for relative TSR performance is capped at target if TSR is negative | |
| ||
No windfall upon a change in control for performance shares - only shares earned based on performance through the date of the change in control will vest |
We believe that consistent execution of our strategy over multi-year periods will lead to an increase in our stockholder return.TSR. We use equity awards to provide our named executive officers with an incentive to focus on long-term stockholder value creation. Our long-term incentive program for
Since 2014, we have implemented long-term incentive programs with a performance metric based on TSR. In 2016,2020, we expanded our TSR peer group from companies in the S&P SmallCap 600 Materials Index to companies in both the S&P SmallCap 600 Materials Sector and S&P MidCap 400 Materials Sector Indices. We added costAdjusted EBITDA margin as a performance metric. metric in 2020.
Our
45
The
For 60% of the performance shares granted under our
Percentile Ranking | Multiplier | |||
< 25th | 0.0x | |||
25th | 0.5x | |||
50th | 1.0x | |||
75th | 1.5x | |||
≥ 90th | 2.0x |
In considering constituents for the S&P SmallCap 600 Materials and S&P MidCap 400 Materials Indices, S&P Dow Jones Indices currently looks for companies (1) with market capitalizationscapitalization of between $450$750 million and $2.1$4.6 billion and between $4.6 billion and $12.7 billion, respectively, (2) meeting certain float requirements, (3) with a U.S. domicile, (4) required to file Securities and Exchange Commission ("SEC") annual reports, with the SEC, and (5) listed on a major U.S. exchange, among other factors. The materials sector includes companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, and metals, minerals and mining companies.
For the remaining 40% of the performance shares granted under our
For 2022, the annualized controllable cost increase is equal to or greater than 2% after offsetting underlying inflation;
The table below sets forth the target monetary value under our
Name |
| Target Monetary |
| Number of |
| Number of | ||||||||||||
|
|
|
|
|
|
| ||||||||||||
Keith A. Harvey |
|
| $ | 3,270,000 |
|
|
|
|
| 9,964 |
|
|
|
|
| 23,250 |
|
|
John M. Donnan |
|
| $ | 850,000 |
|
|
|
|
| 3,453 |
|
|
|
|
| 5,180 |
|
|
Neal E. West |
|
| $ | 850,000 |
|
|
|
|
| 3,453 |
|
|
|
|
| 5,180 |
|
|
Jason D. Walsh |
|
| $ | 385,000 |
|
|
|
|
| 1,564 |
|
|
|
|
| 2,346 |
|
|
Blain A. Tiffany |
|
| $ | 360,000 |
|
|
|
|
| 1,462 |
|
|
|
|
| 2,194 |
|
|
____________
46
Name (1) | Target Monetary Value | Number of Restricted Stock Units (2) | Number of Performance Shares (at Target) (3) | ||||||||||
Jack A. Hockema | $ | 2,204,000 | 8,488 | 18,024 | |||||||||
Keith A. Harvey | $ | 1,133,000 | 4,000 | 9,699 | |||||||||
John M. Donnan | $ | 602,600 | 3,223 | 3,849 | |||||||||
Neal E. West | $ | 575,000 | 3,075 | 3,673 | |||||||||
Ray D. Parkinson | $ | 293,600 | 1,570 | 1,875 |
Name | Below Threshold | Threshold | Target | Maximum | ||||||||||
Jack A. Hockema | — | 9,012 | 18,024 | 36,048 | ||||||||||
Keith A. Harvey | — | 4,849 | 9,699 | 19,398 | ||||||||||
John M. Donnan | — | 1,924 | 3,849 | 7,698 | ||||||||||
Neal E. West | — | 1,836 | 3,673 | 7,346 | ||||||||||
Ray D. Parkinson | — | 937 | 1,875 | 3,750 |
Name |
| Below Threshold |
|
| Threshold |
| Target |
| Maximum | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Keith A. Harvey |
|
| — |
|
|
|
| 11,625 |
|
|
|
|
| 23,250 |
|
|
|
|
| 46,500 |
|
|
John M. Donnan |
|
| — |
|
|
|
| 2,590 |
|
|
|
|
| 5,180 |
|
|
|
|
| 10,360 |
|
|
Neal E. West |
|
| — |
|
|
|
| 2,590 |
|
|
|
|
| 5,180 |
|
|
|
|
| 10,360 |
|
|
Jason D. Walsh |
|
| — |
|
|
|
| 1,173 |
|
|
|
|
| 2,346 |
|
|
|
|
| 4,692 |
|
|
Blain A. Tiffany |
|
| — |
|
|
|
| 1,097 |
|
|
|
|
| 2,194 |
|
|
|
|
| 4,388 |
|
|
The number of performance shares, if any, earned based on the level of performance achieved during the three-year performance period will vest on the later to occur of
March 5,The threshold, target and maximum number of performance shares that may be earned, if at all, in
In addition to the restricted stock units reflected in the table, Messrs. Walsh and Tiffany each received an additional grant of 1,224 and 692 restricted stock units, respectively, on April 15, 2022 in connection with their promotions to recognize the increased complexity of their respective positions as a result of the Warrick acquisition and increase retention as the company moves forward with the execution of our strategic initiatives. The additional grants were intended to bridge the difference between their then existing and the new target monetary values under the 2022-2024 LTI Program resulting from the promotions. The terms and conditions applicable to these restricted stock units are the same as the terms and conditions described above in Note (1) above.
Upon a change in control, all the restricted stock units granted to the executives will vest, howevervest. However, the number of performance shares earned, if any, will be determined based on the performance level achieved against the underlying metrics applicable to the outstanding performance shares during the performance period through the date of the change in control ensuring that our named executive officers will only be rewarded for performance supporting strategic goals that successfully drive our operations and enhance our stockholder returns. We believe this structure (1) aligns the interests of our named executive officers with our stockholders, and (2) drives the performance required to meet our strategic initiatives and enhanceenhances stockholder returns,alignment, particularly when considering that the performance shares issued to our named executive officers have an economic value equal to at least 50%60% of each named executive officer's long-term incentive target (65% and 67%(70% for Messrs. Hockema andMr. Harvey, respectively), and that the performance shares earned, if any, upon a change in control will only be earned if the required performance level is achieved.
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Results for 2017-20192020 - 2022 Performance Period
Similar to the grant of restricted stock under2022 - 2024 LTI Program, our long-term incentive program for
As previously discussed, despite the significant impact of severe business conditions, the COVID-19 pandemic, numerous operational challenges, inflationary cost pressures and labor turnover on our 2020-2022 LTI Program, the compensation committee, based on management’s recommendation, did not make any adjustments to the 2020-2022 LTI Program to mitigate the impact on the payout. Looking at each year sequentially, our financial performance for 2020 reflected a strong first quarter before the negative impact during the balance of the year driven by a COVID-19 pandemic related decline in demand for our products primarily related to large commercial aerospace as we aggressively flexed costs to align with lower volumes. In 2021, our operations continued to be significantly impacted by the continued severe business conditions resulting from the COVID-19 pandemic and supply chain disruptions. Finally, while our end markets remained strong in 2022 and commercial aerospace demand continued to strengthen, as previously discussed, our operations continued to be significantly impacted by a number of factors, including (i) the continuation of our supply chain challenges, such as the continuing impact of the declaration of force majeure by Warrick’s primary magnesium supplier and ultimately the cessation of all magnesium deliveries from that supplier that lead to our declaration of force majeure at Warrick, (ii) molten metal supply issues that negatively impacted Warrick, (iii) the inflationary environment and significant corresponding increases in costs, and (iv) a planned outage at our Trentwood rolling mill, all of which negatively impacted our financial performance and had corresponding negative impacts on our 2020 - 2022 LTI Program. As a result of all of these negative impacts to our operations, we were unable to reach the threshold performance required for a payout under the relative TSR, cost or Adjusted EBITDA margin performance metrics under the 2020-2022 LTI Program.
For the 2020 to 2022 performance period, the factors that impacted our Adjusted EBITDA and financial performance also negatively impacted our TSR performance, resulting in no payout under the 2020-2022 relative TSR metric. Our TSR is calculated based on the return of the 20-trading-day average closing prices between the beginning and the end of the applicable performance period, using the formula below. The average prices are based upon daily asset values, which represent adjusted stock prices for dividends reinvested throughout the period.
TSR = | (Ending Average – Beginning Average) |
Beginning Average |
The calculation for the 2017 to 20192020 - 2022 TSR is as follows:
TSR = | $ | = |
$ |
The beginning average price of $81.30 is based upon the 20-trading-day average closing stock prices of our common stock, assuming all dividends are reinvested as of the ex-dividend date, from December 2, 2016 to December 30, 2016. The ending average price of $119.96$112.08 is based upon the 20-trading-day average closing stock prices of our common stock, assuming all dividends are reinvested as of the ex-dividend date, from December 3, 2019 to December 31, 2019. The ending average price of $87.88 is based upon the 20-trading-day average closing stock prices of our common stock, assuming all dividends are reinvested as of the ex-dividend date, from December 2, 2022 to December 30, 2022 (since December 31, 2022 is a non-trading day). We paid out $6.60$8.64 per share of dividends during the 2017 to 20192020 - 2022 performance period.
Our TSR of 47.55%-21.59% for the 2017 to 20192020 through 2022 performance period ranked #5#52 out of the 3358 companies in the S&P SmallCap 600 Materials Index,and S&P MidCap 400 Materials Indices, or the 88th11th percentile, resulting in ano payout of 192% of the target performance shares withunder the relative TSR performance metric.
48
The chart below illustrates the performance share award payouts based on our relative TSR performance for the 2015-2017, 2016-20182018-2020, 2019-2021 and 2017-20192020-2022 long-term incentive programs:
| The performance shares earned |
The beginning and ending stock prices used to determine our TSR are calculated using the 20-trading day average preceding the beginning and end of the performance period. | |||
The performance share multiplier is determined by using straight line interpolation based on our TSR percentile ranking within our comparison group based on the table to the right: | Percentile Ranking | Multiplier | |
< 25th | 0.0x | ||
25th | 0.5x | ||
50th | 1.0x | ||
75th | 1.5x | ||
≥ 90th | 2.0x | ||
For 20% of the 2017 to 2019 performance period, we achieved ashares granted under the 2020 - 2022 LTI Program, the payout was determined based on our total controllable cost reduction of 1% in excess ofperformance that required our company to reduce controllable costs to offset underlying inflation comparedover the three-year performance period to achieve the baseline 2016 controllable cost, resulting in atarget payout of 85% of the target performance shares withsubject to the controllable cost metric. Controllable costs are generally defined as our variable conversion costs which adjust with our product volume and mix plus corporate and plant overhead. Controllable costs also (1) include benefits because we believe that management is required to take actions to influence benefit costs over the performance period and (2) exclude, among other things, major maintenance, research and development and enterprise resource planning costs to ensure that we continue to invest in the future of our company. A 6% reduction of controllable costs after offsetting underlying inflation over the same three-year period would result in payout of performance shares equal to two times target and an increase of controllable costs of 6% or more over the three-year performance period would result in no payout of performance shares subject to the controllable cost metric.
For the 2020-2022 performance period, despite our aggressive cost flexing to align with lower production volumes, our controllable cost performance was significantly impacted by the inflationary environment, supply chain challenges and corresponding cost increases related to the COVID-19 pandemic. As a result, we were unable to reach our threshold controllable cost performance by offsetting the underlying inflation during the performance period and no performance shares subject to the controllable cost metric were earned.
For the remaining 20% of the performance shares granted under the 2017-20192020 - 2022 LTI Program, the payout was determined based on our EVAAdjusted EBITDA margin performance, calculated by our Adjusted EBITDA as a percentage of conversion revenue over the excess of our adjusted pre-tax operating incomethree-year performance period. Our conversion revenue is calculated as reported in our public filings in excess of an amount equal to 15% of our net assets. We believesales less the hedged cost of alloyed metals. During the 2020-2022 performance period, the same significant negative factors that positive EVA, while significantly impacted by market conditions, requires exceptionalour Adjusted EBITDA performance and incentivizes capital efficiency and value creation, as well as increasingly higher targets asalso impacted our Adjusted EBITDA margin performance. As a result, of our investments. As previously discussed, we did not achieve the threshold performanceAdjusted EBITDA margin required for a payout of theand no performance shares withwere earned under the EVA performance metric.
49
Retirement benefits
We no longerdo not maintain a defined benefit pension plan or retiree medical program that covers members of senior management. Retirement benefits to our senior management, including our named executive officers, are currently provided through a defined contribution retirement program consisting of the following two principal plans:
The defined contribution retirement program has the following three primary components, which are discussed more fully below:
Under the terms of our Restoration Plan, cash balances are maintained in a "rabbi trust" where they remain subject to the claims of our creditors and are otherwise invested in funds designated by each individual from a menu of possible investments. In addition, the cash balances maintained in the rabbi trust are forfeited if the individual is terminated for cause.
The compensation committee believes the Savings Plan and the Restoration Plan support the objectives of our comprehensive compensation structure, including the ability to attract and retain senior and experienced mid- to late-career executives for critical positions within our organization. Each of these plans is discussed more fully below.
Perquisites
Our use of perquisites as an element of compensation is very limited and largely based on business-related entertainment needs. We do not view perquisites as a significant element of our comprehensive compensation structure but do believe that they can be used in conjunction with base salary to attract, motivate and retain individuals in a competitive environment. During
Consideration of the 20192022 Advisory Vote to Approve Named Executive Officer Compensation
We provide our stockholders with the opportunity to cast an annual vote to approve our named executive officer compensation. At our
Stock Ownership Guidelines
In order to further align the interests of senior management, including our named executive officers, with those of our stockholders, we have stock ownership guidelines, which are set forth in our corporate governance guidelines. Under those guidelines, members of our senior management are expected to hold common stock having a value equal to a multiple of their base salary as determined by their position. The guidelines provide for a target multiple of six times base salary for our CEO and President and COOCEO and three times base salary for the other named executive officers. Each member of senior management covered by our stock ownership guidelines is expected to retain at least 75% of the net shares resulting from equity compensation awards until he or she achieves the applicable ownership level required by the stock ownership guidelines. The
50
ownership guidelines are expected to be met within five years. Each of our named executive officers has satisfied the applicable stock ownership requirements under the stock ownership guidelines.
For purposes of measuring compliance with our stock ownership guidelines (1) restricted stock and restricted stock units are valued at the closing price of the company's common stock on the grant date, (2) performance shares are valued using the target number of performance shares and the closing price of our common stock on the grant date, and (3) all other shares of common stock purchased or acquired by members of our senior management are valued at the purchase price of the shares.
Securities Trading Policy
Our securities trading policy prohibits our directors, and employees, including our named executive officers, or independent contractors from purchasing financial instruments, including options and other derivative arrangements, to hedge or offset, or otherwise engaging in transactions designed to hedge or offset, decreases in the market value of our equity securities, whether granted as part of compensation to, or otherwise held directly or indirectly by, such director, employee, or employee.independent contractor. Prohibited transactions include short sales, options, puts, calls and derivative instruments such as swaps, forwards, collars and futures. Our securities trading policy also prohibits our directors, and employees, including our named executive officers, and independent contractors from buying our securities on margin (other than purchases where the related margin borrowings are effected solely for the purpose of paying the option exercise price upon the exercise of an option to purchase shares from the company, which are typically referred to as “cashless exercises”) or, holding our securities in a margin account, and from pledging our securities as collateral for a loan or any other obligations.
Clawback Policy
Pursuant to the terms of our clawback policy, in the event we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under U.S. federal securities laws, we will use reasonable efforts to recover all excess incentive-based compensation from any then-current or former key employees, including our named executive officers, (i) who received incentive-based compensation and (ii) determined by our board of directors to have willfully committed an act of fraud or dishonesty or recklessness in the performance of their duties that contributed to the noncompliance that resulted in our obligation to prepare the restatement. In addition, our short-term incentive plans and equity grant documents under our long-term incentive plans contain forfeiture and clawback provisions that provide for the forfeiture of outstanding awards and the return of paid or vested awards if a participant, during employment or within one year after the termination of employment, (or, in the case of equity awards, within one year after the latest vest date of the applicable equity award) engages in certain detrimental activities, including (1) violation of our Code of Business Conduct and Ethics, (2) conduct resulting in an accounting restatement due to material noncompliance with any financial reporting requirement under U.S. federal securities laws, (3) activity that results in termination of employment for cause, (4) disclosure of our confidential information without authorization, (5) activity that competes with our company, and (6) solicitation of our employees.
We plan to implement a revised/new clawback policy after the Nasdaq listing standards are finalized in connection with the recent promulgation by the Securities and Exchange Commission of final clawback rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Employment Contracts, Termination of Employment Arrangements and
Change-in-Control ArrangementsAs discussed more fully below, on September 17, 2019,July 31, 2020, we entered into an amended and restated employmentseverance agreement with Mr. HockemaHarvey in connection with his appointment as CEO. The severance agreement, among other things, (i) eliminated our obligation to (i) extendmake excise tax gross up payments to Mr. Harvey in the termevent of his termination in connection with a change in control of our company, (ii) added severance benefits and (iii) increased Mr. Harvey’s termination benefits in connection with a change in control. In lieu of the existing employment agreementgross up payment, the Severance Agreement provides that if any payments to July 15, 2022, (ii) maintain continuity, and (iii) facilitate the our abilityMr. Harvey upon his termination would be subject to implement a chief executive officer succession plan should the our board of directors choose to do so during the extended term without triggering severancefederal excise tax, then such payments under the amended agreement. More specifically, pursuantwould be reduced to the amended agreement,minimum extent necessary so that no portion of such payments, as so reduced, is subject to such tax, except that such a reduction will be made only if priorand to July 15, 2022the extent such reduction would result in an increase in the aggregate payment on an after-tax basis. In the event Mr. Harvey’s employment is terminated without cause or terminated by Mr. Harvey for good reason, Mr. Harvey will be entitled to receive a successor chief executive officerlump-sum payment of two times the sum of his base salary and short-term incentive target, plus the continuation of benefits for two years. In the event Mr. Harvey’s employment is appointed pursuant to a board-approved succession plan,terminated without cause or terminated by Mr. Harvey for good reason within the term of the amended agreement will automatically end upon such appointment, so long as (a) the appointment occurs after July 15, 2020 andperiod beginning ninety (90) days prior to a change in control (as definedand ending on the second anniversary of such change in the amended agreement) and (b) immediately following the appointment,control, Mr. Hockema continues to hold the office of Chairman or is named Executive Chairman and receives annual compensation for his service in either of those capacities at least equivalent to the annual retainer and board meeting fees payable to our Lead Independent Director. As noted, in such event, Mr. Hockema would notHarvey will be entitled to any severance payments underreceive a lump sum payment of two and half times the amended agreement.
51
The compensation committee, working with Meridian, determined that the negotiated terms of the amended agreement were consistent with market practice and in the best interests of our company and stockholders.
As discussed more fully below, certain members of senior management, including four of our named executive officers, continue to have benefits related to terminations of employment in connection with a change in control, by us without cause and by the named executive officer with good reason. These protections limit our ability to downwardly adjustmaterially reduce certain aspects of compensation, including base salaries and target incentive compensation, without triggering the ability of the affected named executive officer to receive termination benefits in connection with a change in control.
2022 Summary Compensation Table
The table below sets forth information regarding compensation for our named executive officers: (1) JackKeith A. Hockema,Harvey, our CEOPresident and Chairman of the BoardCEO (our principal executive officer); (2) Neal E. West, our SeniorExecutive Vice President and Chief Financial Officer (our principal financial officer), (3) Daniel J. Rinkenberger, our former Executive Vice President and Chief Financial Officer (our principal financial officer during a portion of 2019); and (4)(3) each of Keith A. Harvey, John M. Donnan, Jason Walsh and Raymond D. Parkinson,Blain A. Tiffany, our three other most highly compensated executive officers (based on total compensation for 2019)2022). Mr. Rinkenberger retired from
Name and Principal |
| Year |
| Salary |
|
| Stock Awards (1) |
| Non-Equity |
| Change in |
| All Other |
| Total | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Keith A. Harvey, |
| 2022 |
| $ | 926,250 |
|
|
| $ | 3,414,128 |
|
|
|
|
| — |
|
|
|
| $ | 4,854 |
|
|
|
| $ | 778,493 |
|
|
|
| $ | 5,123,725 |
|
|
President and Chief |
| 2021 |
| $ | 893,751 |
|
|
| $ | 3,697,874 |
|
|
|
| $ | 588,600 |
|
|
|
| $ | 5,248 |
|
|
|
| $ | 320,039 |
|
|
|
| $ | 5,505,512 |
|
|
Executive Officer |
| 2020 |
| $ | 686,583 |
|
|
| $ | 1,769,707 |
|
|
|
| $ | 338,877 |
|
|
|
| $ | 81,095 |
|
|
|
| $ | 354,998 |
|
|
|
| $ | 3,231,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
John M. Donnan, |
| 2022 |
| $ | 490,000 |
|
|
| $ | 865,932 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| $ | 729,822 |
|
|
|
| $ | 2,085,754 |
|
|
Executive Vice President, |
| 2021 |
| $ | 469,250 |
|
|
| $ | 2,088,596 |
|
|
|
| $ | 222,360 |
|
|
|
| $ | 12,856 |
|
|
|
| $ | 140,924 |
|
|
|
| $ | 2,933,986 |
|
|
Chief Administrative |
| 2020 |
| $ | 448,700 |
|
|
| $ | 765,849 |
|
|
|
| $ | 182,683 |
|
|
|
| $ | 71,496 |
|
|
|
| $ | 155,777 |
|
|
|
| $ | 1,624,506 |
|
|
Officer and General Counsel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Neal E. West, |
| 2022 |
| $ | 485,000 |
|
|
| $ | 865,932 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| $ | 126,885 |
|
|
|
| $ | 1,477,817 |
|
|
Executive Vice President |
| 2021 |
| $ | 465,000 |
|
|
| $ | 2,065,273 |
|
|
|
| $ | 219,090 |
|
|
|
|
| — |
|
|
|
| $ | 290,926 |
|
|
|
| $ | 3,040,289 |
|
|
and Chief Financial Officer |
| 2020 |
| $ | 443,750 |
|
|
| $ | 741,098 |
|
|
|
| $ | 179,872 |
|
|
|
|
| — |
|
|
|
| $ | 85,501 |
|
|
|
| $ | 1,450,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Jason D. Walsh, |
| 2022 |
| $ | 457,575 |
|
|
| $ | 503,299 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| $ | 353,563 |
|
|
|
| $ | 1,314,437 |
|
|
Executive Vice President - |
| 2021 |
| $ | 434,600 |
|
|
| $ | 466,723 |
|
|
|
| $ | 151,597 |
|
|
|
|
| — |
|
|
|
| $ | 129,846 |
|
|
|
| $ | 1,182,766 |
|
|
Manufacturing |
| 2020 |
| $ | 398,612 |
|
|
| $ | 1,332,768 |
|
|
|
| $ | 99,090 |
|
|
|
|
| — |
|
|
|
| $ | 91,071 |
|
|
|
| $ | 1,921,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Blain A. Tiffany, |
| 2022 |
| $ | 411,008 |
|
|
| $ | 429,537 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| $ | 143,378 |
|
|
|
| $ | 983,923 |
|
|
Executive Vice President - |
| 2021 |
| $ | 370,025 |
|
|
| $ | 386,007 |
|
|
|
| $ | 170,891 |
|
|
|
|
| — |
|
|
|
| $ | 124,945 |
|
|
|
| $ | 1,051,868 |
|
|
Sales and Marketing |
| 2020 |
| $ | 357,875 |
|
|
| $ | 1,372,952 |
|
|
|
| $ | 85,593 |
|
|
|
|
| — |
|
|
|
| $ | 96,606 |
|
|
|
| $ | 1,913,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aggregate Grant Date Fair Value | ||||||||||
|
|
|
|
| ||||||||||
Name |
| Year |
| At Probable |
| At Maximum | ||||||||
|
|
|
|
|
|
| ||||||||
Keith A. Harvey |
| 2022 |
|
| $ | 2,563,402 |
|
|
|
| $ | 5,179,356 |
|
|
John M. Donnan |
| 2022 |
|
| $ | 571,115 |
|
|
|
| $ | 1,153,938 |
|
|
Neal E. West |
| 2022 |
|
| $ | 571,115 |
|
|
|
| $ | 1,153,938 |
|
|
Jason D. Walsh |
| 2022 |
|
| $ | 258,638 |
|
|
|
| $ | 522,581 |
|
|
Blain A. Tiffany |
| 2022 |
|
| $ | 241,885 |
|
|
|
| $ | 488,731 |
|
|
52
* For information regarding the assumptions made in March 2019.
Name and Principal Position | Year | Salary | Stock Awards (1) | Non-Equity Incentive Plan Compensation (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) | All Other Compensation (4) | Total | ||||||||||||||||||||||||
Jack A. Hockema, | 2019 | $ | 915,000 | $ | 3,210,923 | $ | 692,634 | $ | 7,336 | $ | 422,537 | $ | 5,248,430 | ||||||||||||||||||
Chief Executive Officer | 2018 | $ | 915,000 | $ | 3,177,845 | $ | 794,475 | — | $ | 526,551 | $ | 5,413,871 | |||||||||||||||||||
and Chairman of the Board | 2017 | $ | 911,000 | $ | 3,364,576 | $ | 951,300 | — | $ | 501,821 | $ | 5,728,697 | |||||||||||||||||||
Keith A. Harvey, | 2019 | $ | 552,000 | $ | 1,670,451 | $ | 459,840 | $ | 79,931 | $ | 353,657 | $ | 3,115,879 | ||||||||||||||||||
President and Chief | 2018 | $ | 547,750 | $ | 1,657,495 | $ | 529,650 | — | $ | 376,138 | $ | 3,111,033 | |||||||||||||||||||
Operating Officer | 2017 | $ | 532,500 | $ | 4,229,899 | $ | 656,850 | $ | 44,164 | $ | 352,834 | $ | 5,816,247 | ||||||||||||||||||
John M. Donnan, | 2019 | $ | 438,800 | $ | 828,280 | $ | 302,249 | $ | 69,102 | $ | 155,553 | $ | 1,793,984 | ||||||||||||||||||
Executive Vice President - | 2018 | $ | 435,600 | $ | 808,679 | $ | 345,567 | — | $ | 178,993 | $ | 1,768,839 | |||||||||||||||||||
Legal, Compliance and | 2017 | $ | 424,000 | $ | 846,311 | $ | 430,350 | $ | 37,357 | $ | 183,213 | $ | 1,921,231 | ||||||||||||||||||
Human Resources | |||||||||||||||||||||||||||||||
Neal West, | 2019 | $ | 410,333 | $ | 790,330 | $ | 287,400 | — | $ | 64,538 | $ | 1,552,601 | |||||||||||||||||||
Senior Vice President and | |||||||||||||||||||||||||||||||
Chief Financial Officer | |||||||||||||||||||||||||||||||
Ray D. Parkinson, | 2019 | $ | 360,450 | $ | 403,494 | $ | 140,251 | $ | 69,968 | $ | 79,615 | $ | 1,053,778 | ||||||||||||||||||
Senior Vice President - | |||||||||||||||||||||||||||||||
Advanced Engineering | |||||||||||||||||||||||||||||||
Daniel J. Rinkenberger, | 2019 | $ | 117,000 | — | — | $ | 76,761 | $ | 900,221 | $ | 1,093,982 | ||||||||||||||||||||
Former Executive Vice | 2018 | $ | 464,750 | $ | 933,087 | $ | 364,870 | — | $ | 185,492 | $ | 1,948,199 | |||||||||||||||||||
President and Chief | 2017 | $ | 452,700 | $ | 975,928 | $ | 453,000 | $ | 42,841 | $ | 185,496 | $ | 2,109,965 | ||||||||||||||||||
Financial Officer |
Aggregate Grant Date Fair Value | ||||||||||||
Name | Year | At Probable Performance | At Maximum Performance | |||||||||
Jack A. Hockema | 2019 | $ | 2,352,701 | $ | 4,482,476 | |||||||
Keith A. Harvey | 2019 | $ | 1,266,011 | $ | 2,412,082 | |||||||
John M. Donnan | 2019 | $ | 502,403 | $ | 957,210 | |||||||
Neal E. West | 2019 | $ | 479,417 | $ | 913,419 | |||||||
Raymond D. Parkinson | 2019 | $ | 244,751 | $ | 466,305 |
As reflected in the table above, the base salary received by each of our named executive officers, other than Mr. Rinkenberger, as a percentage of their respective total compensation was as follows:
53
All Other Compensation
The table below sets forth information regarding each component of compensation included in the "All Other Compensation" column of the Summary Compensation Table above.
Name | Year | Savings Plan Contributions | Restoration Plan Contributions | Dividend and Dividend Equivalent Payments | Club Membership Dues | Vehicle Allowance | Vacation | Severance | Total | |||||||||||||||||||||||||||||||||
Jack A. Hockema | 2019 | $ | 30,025 | $ | 167,937 | $ | 210,005 | — | $ | 14,570 | — | — | $ | 422,537 | ||||||||||||||||||||||||||||
2018 | $ | 29,625 | $ | 194,331 | $ | 288,025 | — | $ | 14,570 | — | — | $ | 526,551 | |||||||||||||||||||||||||||||
2017 | $ | 29,092 | $ | 240,709 | $ | 217,450 | — | $ | 14,570 | — | — | $ | 501,821 | |||||||||||||||||||||||||||||
Keith A. Harvey | 2019 | $ | 33,600 | $ | 96,198 | $ | 210,598 | $ | 1,005 | $ | 12,256 | — | — | $ | 353,657 | |||||||||||||||||||||||||||
2018 | $ | 33,000 | $ | 111,552 | $ | 214,830 | $ | 4,500 | $ | 12,256 | — | — | $ | 376,138 | ||||||||||||||||||||||||||||
2017 | $ | 32,400 | $ | 164,700 | $ | 142,314 | $ | 1,164 | $ | 12,256 | — | — | $ | 352,834 | ||||||||||||||||||||||||||||
John M. Donnan | 2019 | $ | 28,000 | $ | 50,437 | $ | 55,900 | $ | 8,532 | $ | 12,684 | — | — | $ | 155,553 | |||||||||||||||||||||||||||
2018 | $ | 27,500 | $ | 59,095 | $ | 72,509 | $ | 7,205 | $ | 12,684 | — | — | $ | 178,993 | ||||||||||||||||||||||||||||
2017 | $ | 27,000 | $ | 75,884 | $ | 57,211 | $ | 10,434 | $ | 12,684 | — | — | $ | 183,213 | ||||||||||||||||||||||||||||
Neal West | 2019 | $ | 16,532 | $ | 17,297 | $ | 18,997 | — | $ | 11,712 | — | — | $ | 64,538 | ||||||||||||||||||||||||||||
Ray D. Parkinson | 2019 | $ | 27,685 | $ | 24,770 | $ | 27,160 | — | — | — | — | $ | 79,615 | |||||||||||||||||||||||||||||
Daniel J. | 2019 | $ | 11,200 | $ | 11,675 | $ | 57,678 | — | $ | 2,572 | $ | 101,096 | $ | 716,000 | $ | 900,221 | ||||||||||||||||||||||||||
Rinkenberger* | 2018 | $ | 27,417 | $ | 64,358 | $ | 83,429 | — | $ | 10,288 | — | — | $ | 185,492 | ||||||||||||||||||||||||||||
2017 | $ | 27,000 | $ | 82,401 | $ | 65,807 | — | $ | 10,288 | — | — | $ | 185,496 |
Name |
| Year |
| Savings Plan |
| Restoration |
| Dividend |
| Club |
| Vehicle |
| Relocation Costs |
|
| Total | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Keith A. Harvey |
| 2022 |
|
| $ | 38,938 |
|
|
|
| $ | 145,182 |
|
|
|
| $ | 138,277 |
|
|
|
|
| — |
|
|
|
| $ | 12,256 |
|
|
| $ | 443,840 |
|
|
| $ | 778,493 |
|
|
|
| 2021 |
|
| $ | 31,763 |
|
|
|
| $ | 113,115 |
|
|
|
| $ | 161,605 |
|
|
|
| $ | 1,300 |
|
|
|
| $ | 12,256 |
|
|
|
| — |
|
|
| $ | 320,039 |
|
|
|
| 2020 |
|
| $ | 34,200 |
|
|
|
| $ | 103,371 |
|
|
|
| $ | 204,795 |
|
|
|
| $ | 376 |
|
|
|
| $ | 12,256 |
|
|
|
| — |
|
|
| $ | 354,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
John M. Donnan |
| 2022 |
|
| $ | 30,767 |
|
|
|
| $ | 40,736 |
|
|
|
| $ | 71,711 |
|
|
|
|
| — |
|
|
|
| $ | 12,684 |
|
|
| $ | 573,924 |
|
|
| $ | 729,822 |
|
|
|
| 2021 |
|
| $ | 28,595 |
|
|
|
| $ | 36,193 |
|
|
|
| $ | 61,025 |
|
|
|
| $ | 2,428 |
|
|
|
| $ | 12,684 |
|
|
|
| — |
|
|
| $ | 140,924 |
|
|
|
| 2020 |
|
| $ | 28,500 |
|
|
|
| $ | 46,595 |
|
|
|
| $ | 62,311 |
|
|
|
| $ | 5,688 |
|
|
|
| $ | 12,684 |
|
|
|
| — |
|
|
| $ | 155,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Neal E. West |
| 2022 |
|
| $ | 18,306 |
|
|
|
| $ | 23,945 |
|
|
|
| $ | 70,580 |
|
|
|
|
| — |
|
|
|
| $ | 14,054 |
|
|
|
| — |
|
|
| $ | 126,885 |
|
|
|
| 2021 |
|
| $ | 17,091 |
|
|
|
| $ | 21,292 |
|
|
|
| $ | 50,578 |
|
|
|
|
| — |
|
|
|
| $ | 14,054 |
|
|
| $ | 187,911 |
|
|
| $ | 290,926 |
|
|
|
| 2020 |
|
| $ | 17,368 |
|
|
|
| $ | 26,769 |
|
|
|
| $ | 27,309 |
|
|
|
|
| — |
|
|
|
| $ | 14,054 |
|
|
|
| — |
|
|
| $ | 85,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Jason D. Walsh |
| 2022 |
|
| $ | 18,516 |
|
|
|
| $ | 18,250 |
|
|
|
| $ | 95,587 |
|
|
|
|
| — |
|
|
|
| $ | 13,021 |
|
|
| $ | 208,189 |
|
|
| $ | 353,563 |
|
|
|
| 2021 |
|
| $ | 17,041 |
|
|
|
| $ | 14,621 |
|
|
|
| $ | 85,163 |
|
|
|
|
| — |
|
|
|
| $ | 13,021 |
|
|
|
| — |
|
|
| $ | 129,846 |
|
|
|
| 2020 |
|
| $ | 17,100 |
|
|
|
| $ | 16,588 |
|
|
|
| $ | 44,361 |
|
|
|
|
| — |
|
|
|
| $ | 13,021 |
|
|
|
| — |
|
|
| $ | 91,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Blain A. Tiffany |
| 2022 |
|
| $ | 19,000 |
|
|
|
| $ | 16,614 |
|
|
|
| $ | 94,237 |
|
|
|
|
| — |
|
|
|
| $ | 13,527 |
|
|
|
| — |
|
|
| $ | 143,378 |
|
|
|
| 2021 |
|
| $ | 14,739 |
|
|
|
| $ | 9,937 |
|
|
|
| $ | 86,742 |
|
|
|
|
| — |
|
|
|
| $ | 13,527 |
|
|
|
| — |
|
|
| $ | 124,945 |
|
|
|
| 2020 |
|
| $ | 18,033 |
|
|
|
| $ | 15,725 |
|
|
|
| $ | 49,322 |
|
|
|
|
| — |
|
|
|
| $ | 49,322 |
|
|
|
| — |
|
|
| $ | 96,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
Grants of Plan-Based Awards in 2019
The table below sets forth information regarding grants of plan-based awards made to our named executive officers except Mr. Rinkenberger, who retiredduring 2022.
|
|
|
|
| Estimated Possible Payouts Under Non- |
| Estimated Future Payouts Under |
| All Other |
| Grant Date | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Name |
| Grant |
|
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| Units |
| Awards (3) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Keith A. Harvey |
|
| — |
|
|
| $ | 472,500 |
|
|
|
| $ | 945,000 |
|
|
|
| $ | 2,362,500 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 9,964 |
| (4) |
|
| $ | 850,726 |
|
| |
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 11,625 |
|
|
|
|
| 23,250 |
|
|
|
|
| 46,500 |
|
|
|
|
| — |
|
|
|
| $ | 2,563,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
John M. Donnan |
|
| — |
|
|
| $ | 177,500 |
|
|
|
| $ | 355,000 |
|
|
|
| $ | 887,500 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 3,453 |
| (4) |
|
| $ | 294,817 |
|
| |
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 2,590 |
|
|
|
|
| 5,180 |
|
|
|
|
| 10,360 |
|
|
|
|
| — |
|
|
|
| $ | 571,115 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Neal E. West |
|
| — |
|
|
| $ | 175,000 |
|
|
|
| $ | 350,000 |
|
|
|
| $ | 875,000 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 3,453 |
| (4) |
|
| $ | 294,817 |
|
| |
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 2,590 |
|
|
|
|
| 5,180 |
|
|
|
|
| 10,360 |
|
|
|
|
| — |
|
|
|
| $ | 571,115 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Jason D. Walsh |
|
| — |
|
|
| $ | 150,000 |
|
|
|
| $ | 300,000 |
|
|
|
| $ | 750,000 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1,564 |
| (4) |
|
| $ | 133,534 |
|
| |
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1,173 |
|
|
|
|
| 2,346 |
|
|
|
|
| 4,692 |
|
|
|
|
| — |
|
|
|
| $ | 258,638 |
|
| |
|
| 4/15/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1,224 |
| (5) |
|
| $ | 111,127 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Blain A. Tiffany |
|
| — |
|
|
| $ | 125,000 |
|
|
|
| $ | 250,000 |
|
|
|
| $ | 625,000 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1,462 |
| (4) |
|
| $ | 124,826 |
|
| |
|
| 3/5/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1,097 |
|
|
|
|
| 2,194 |
|
|
|
|
| 4,388 |
|
|
|
|
| — |
|
|
|
| $ | 241,885 |
|
| |
|
| 4/15/2022 |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 692 |
| (5) |
|
| $ | 62,827 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name | Grant Date | Estimated Possible 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 (#) | Grant Date Fair Value of Stock and Option Awards (3) ($) | ||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||
Jack A. Hockema | — | $ | 361,500 | $ | 723,000 | $ | 2,169,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
3/5/2019 | — | — | — | — | — | — | 8,488 | (4) | $ | 858,222 | |||||||||||||||||||||||||||||||
3/5/2019 | — | — | — | 9,012 | 18,024 | 36,048 | — | $ | 2,352,701 | ||||||||||||||||||||||||||||||||
Keith A. Harvey | — | $ | 240,000 | $ | 480,000 | $ | 1,440,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
3/5/2019 | — | — | — | — | — | — | 4,000 | (4) | $ | 404,440 | |||||||||||||||||||||||||||||||
3/5/2019 | — | — | — | 4,849 | 9,699 | 19,398 | — | $ | 1,266,011 | ||||||||||||||||||||||||||||||||
John M. Donnan | — | $ | 157,750 | $ | 315,500 | $ | 946,500 | — | — | — | — | — | |||||||||||||||||||||||||||||
3/5/2019 | — | — | — | — | — | — | 3,223 | (4) | $ | 325,878 | |||||||||||||||||||||||||||||||
3/5/2019 | — | — | — | 1,924 | 3,849 | 7,698 | — | $ | 502,403 | ||||||||||||||||||||||||||||||||
Neal West | — | $ | 150,000 | $ | 300,000 | $ | 900,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
3/5/2019 | — | — | — | — | — | — | 3,075 | (4) | $ | 310,913 | |||||||||||||||||||||||||||||||
3/5/2019 | — | — | — | 1,836 | 3,673 | 7,346 | — | $ | 479,417 | ||||||||||||||||||||||||||||||||
Ray D. Parkinson | — | $ | 73,200 | $ | 146,400 | $ | 439,200 | — | — | — | — | — | |||||||||||||||||||||||||||||
3/5/2019 | — | — | — | — | — | — | 1,570 | (4) | $ | 158,743 | |||||||||||||||||||||||||||||||
3/5/2019 | — | — | — | 937 | 1,875 | 3,750 | — | $ | 244,751 | ||||||||||||||||||||||||||||||||
Danial J. Rinkenberger | — | — | — | — | — | — | — | — | — |
Change in Control Agreements and Amended and Restated Severance Agreements
In 2002, in connection with Jack A. Hockema
55
executives, including Messrs. Harvey and Donnan, in order to provide them with appropriate protection in the event of a termination of employment agreementin connection with Jack A. Hockema, pursuant to which Mr. Hockema continued his dutiesa change in control or, except as our Presidentotherwise provided, a significant restructuring. As noted below, the Change in Control Agreements with Messrs. Harvey and CEO. On November 9, 2010, we entered into anDonnan were subsequently superseded by the amended and restated employment agreementseverance agreements with Mr. HockemaMessrs. Harvey and Donnan to, extend the term of the existing employment agreement from July 5, 2012 through July 6, 2015, eliminate the automatic renewal provision,among other things, eliminate our obligation to make excise tax gross-upgross up payments to them.
In 2008, we entered into a Change in Control Agreement with Mr. West. In the event of a qualifying change in control termination of employment, Mr. West is entitled to receive (i) a lump sum payment equaling the sum of his base pay and most recent short-term incentive target, (ii) a prorated portion of his short-term incentive target for the year of termination, (iii) a prorated portion of his long-term incentive target in effect for the year of his termination, provided that such target was achieved and (iv) the continuation of welfare benefits and perquisites for one year.
On July 31, 2020, Mr. Harvey became our CEO and entered into an amended and restated severance agreement, which, among other things, (i) eliminated our obligation to make excise tax gross up payments to Mr. Hockema, and modify his long-term incentive compensation to increase the portion of such compensation in the form of performance shares. The agreement was amended and restated on March 5, 2014, primarily to extend the term of the existing employment agreement through December 31, 2016 and modify the calculation of any prorated payment of Mr. Hockema's annual short-term incentive compensation upon the termination of his employment prior to the last day of the applicable fiscal year so that such calculation is based on actual, rather than target, performance, and was amended on March 31, 2014 to permit his 2014 long-term incentive award to provide for prorated payment based on the actual number of days of his employment during the applicable restricted or performance period, rather than full payment,Harvey in the event of his retirement prior to the end of the applicable restricted or performance period. On each of December 31, 2015 and July 15, 2017, the agreement was amended and restated to extend the term through December 31, 2018 and July 15, 2020, respectively. On September 17, 2019, the agreement was again amended and restated to extend the term of the existing employment agreement through July 15, 2022.
On March 5, 2021, the Company and Mr. Donnan entered into an amended and restated severance agreement that provides for the elimination of our obligation to make excise tax gross up payments to Mr. Donnan in the event of his termination in connection with a change in control of the Company. Similar to the amended and restated severance agreement with Mr. Harvey, in lieu of the gross up payment, the amended and restated severance agreement with Mr. Donnan provides that if any payments to Mr. Donnan upon his termination would be subject to a federal excise tax, then such payments would be reduced to the minimum extent necessary so that no portion of such payments, as so reduced, is subject to such tax, except that such a reduction will be made only if and to the extent such reduction would result in an increase in the aggregate payment on an after-tax basis. In the event of a qualifying change in control termination of employment, agreement containsMr. Donnan is entitled to receive (i) a lump sum payment equaling two times the sum of his base pay and most recent short-term incentive target, (ii) a prorated portion of his short-term incentive target for the year of termination, (iii) a prorated portion of his long-term incentive target in effect for the year of his termination, provided that such target was achieved and (iv) the continuation of welfare benefits and perquisites for two years.
In consideration for the severance payment and continuation of benefits, each of Messrs. Harvey, Donnan and West will be subject to non-competition, non-solicitation and confidentiality restrictions following his termination of employment.
Salaried Severance Plan
Messrs. Harvey, Donnan, West, Walsh and ParkinsonTiffany are subject to our severance plan for salaried employees, which we refer to as our Salaried Severance Plan. Mr. Rinkenberger was subject to our Salaried Severance Plan until his retirement in March 2019. Our Salaried Severance Plan provides for payment of a termination allowance and continuation of welfare benefits upon an involuntary separation of employment that is intended to be permanent. The termination allowance and continuation of welfare benefits are not available under our Salaried Severance Plan if:
56
The termination allowance payable to covered employees under our Salaried Severance Plan consists of a lump-sum cash payment equal to the employee's weekly base salary multiplied by a number of weeks (not to exceed 26), which we refer to as the continuation period, determined based on the employee's number of years of full employment. Under our Salaried Severance Plan, welfare benefits are continued following the termination of employment for the shorter of the continuation period and the period commencing on the termination of employment and ending on the date that the employee is no longer eligible for coverage under the Consolidated Omnibus Budget Reconciliation Act, or COBRA. As of December 31, 2019,2022, the continuation periods for Messrs. Harvey, Donnan, West, Walsh and ParkinsonTiffany were 26, 24, 1012, 12, and 2610 weeks, respectively.
For quantitative disclosure regarding estimated payments and other benefits that would have been received by each of Messrs. Hockema, Harvey, Donnan, West, Walsh and ParkinsonTiffany or his estate if his employment had terminated on
2021 Plan we also entered into Change in Control Agreements with certain key executives, including Messrs. Hockema, Harvey, Donnan and Rinkenberger, in order to provide them with appropriate protection in the event of a termination of employment in connection with a change in control or, except as otherwise provided, a significant restructuring. In addition, in 2008, we entered into a Change in Control Agreement with Mr. West. Mr. Hockema's employment agreement discussed above supersedes his Change in Control Agreement, and was amended to, among other things, eliminate our obligation to make excise tax gross up payments to Mr. Hockema. Mr. Rinkenberger's Change in Control Agreement terminated upon his retirement in March 2019.
The Change in Control Agreements applicable to Messrs. Harvey, Donnan and West terminate on the second anniversary of a change in control.
Any person who is selected by the compensation committee to receive benefits under the 20162021 Plan and who is at that time an officer or other key employee of Kaiser or any of our subsidiaries (including a person who has agreed to commence serving in such capacity within 90 days of the date of grant) is eligible to participate in the 20162021 Plan. In addition, certain persons who provide services to us or any of our subsidiaries that are equivalent to those typically provided by an employee (provided that such persons satisfy the definition of “employee” for purposes of a Registration Statement on Form S-8 under the Securities Act of 1933, which we refer to as the "Securities Act") and non-employee directors of Kaiser may also be selected to participate in the 20162021 Plan. As of December 31,
Subject to adjustment as described in the 20162021 Plan, the aggregate number of shares of our common stock available for awards granted under the 20162021 Plan is limited to 1,045,000525,000 shares of our common stock, minusplus (1) the total number of shares remaining available for awards under the 2016 Equity and Incentive Compensation Plan (referred to herein as our 2016 Plan) as of the effective date of the 20162021 Plan one share for every one share subject to an award granted under the predecessor plan between December 31, 2015 and the effective date of the 2016 Plan, plus (2) any shares of our common stock that become available under the 2021 Plan or the 2016 Plan as a result of forfeiture, cancellation, expiration, withholding or cash settlement of awards. As of the date of this Proxy Statement, approximately 496,096597,101 shares of common stock are available for additional awards under the 20162021 Plan.
The 20162021 Plan authorizes the issuance of option rights, appreciation rights, restricted stock, restricted stock units, cash incentive awards, performance shares, performance units and other awards, including awards in the forms of cash, shares of common stock, notes or other property.
Under the 20162021 Plan, any award agreement may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to Kaiser of any gain related to an award as determined by the compensation committee if a participant has engaged in any detrimental activity, either during employment by us or within a specified period after termination of employment.
Under the 20162021 Plan, the compensation committee may permit non-employee directors to elect to receive shares of our common stock in lieu of any or all of the annual cash retainers paid to non-employee directors, including retainers for serving as a committee chair, or Lead Independent Director.
Our board of directors generally may amend the 20162021 Plan from time to time in whole or in part. However, if any amendment (1) would materially increase the benefits accruing to participants under the 20162021 Plan, (2) would materially increase the number of shares or securities which may be issued under the 20162021 Plan, (3) would materially modify the requirements for participation in the 20162021 Plan, or (4) must otherwise be approved by our stockholders in order to comply with applicable law or the rules of the Nasdaq Stock Market, then such amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained. Further, subject to the 20162021 Plan’s prohibition on repricing, the compensation committee generally may amend the terms of any award prospectively or retroactively.
57
Our board of directors may, in its discretion, terminate the 20162021 Plan at any time. Termination of the 20162021 Plan will not affect the rights of participants or their successors under any awards outstanding and not exercised in full on the date of termination. The 20162021 Plan will expire on May 26, 2026.June 3, 2031. No grants will be made under the plan after that date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of the 20162021 Plan.
Savings Plan
We sponsor a tax-qualified profit-sharing and 401(k) plan, our Savings Plan, in which eligible salaried employees may participate. Pursuant to the Savings Plan, employees may elect to reduce their current annual compensation up to the lesser of 75% or the statutorily prescribed limit of $19,500$22,500 in calendar year
We match 100% of the amount an employee contributes to the Savings Plan, subject to a 4% maximum based on the employee's compensation as defined in the Savings Plan. Employees are immediately vested 100% in our matching contributions to our Savings Plan.
We also make annual fixed-rate contributions on behalf of our employees in the following amounts:
As discussed more fully below, the fixed-rate contributions were implemented following the termination of our qualified, defined benefit retirement plan and resulting loss of benefit accruals under that plan. An employee is required to be employed on the last day of the year in order to receive the fixed-rate contribution. Employees are vested 100% in our fixed-rate contributions to the Savings Plan after three years of service.
The total amount of elective, matching and fixed-rate contributions in any year cannot exceed the lesser of 100% of the total of an employee's base salary and short-term incentive award or $56,000$61,000 in
Restoration Plan
We sponsor a nonqualified, deferred compensation plan, our Restoration Plan, in which members of our senior management and highly compensated employees may participate. Eligibility to participate in our Restoration Plan is determined by the compensation committee. The purpose of our Restoration Plan is to restore the benefit of matching and fixed-rate contributions that we would have otherwise paid to participants under our Savings Plan but for the limitations on benefit accruals and payments imposed by the Code. We maintain an account on behalf of each participant in the Restoration Plan, and contributions to a participant's Restoration Plan account to restore benefits under the Savings Plan are made generally in the manner described below:
58
Participants are immediately vested 100% in our matching contributions to the Restoration Plan and are vested 100% in our fixed-rate contributions to our Restoration Plan after three years of service or upon retirement, death, disability or a change of control. Participants do not make contributions to their respective Restoration Plan accounts. A participant is entitled to
We may amend or terminate these matching and fixed-rate contributions at any time by an appropriate amendment to our Restoration Plan. The value of each participant's account under our Restoration Plan changes based upon the performance of the funds designated by the participant from a menu of various money market and investment funds.
59
Outstanding Equity Awards at December 31, 2019
The table below sets forth the information regarding equity awards held by our named executive officers as of
December 31,
|
| Stock Awards | ||||||||||||||||||||||
Name |
| Number of Shares or |
| Market Value or |
| Equity Incentive |
| Equity Incentive | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Keith A. Harvey |
|
|
| 4,250 |
| (2) |
|
| $ | 322,830 |
|
|
|
|
| 10,307 |
| (6) |
|
| $ | 782,920 |
|
|
|
|
|
| 1,833 |
| (3) |
|
| $ | 139,235 |
|
|
|
|
| 4,446 |
| (7) |
|
| $ | 337,718 |
|
|
|
|
|
| 7,407 |
| (4) |
|
| $ | 562,636 |
|
|
|
|
| 17,285 |
| (8) |
|
| $ | 1,312,969 |
|
|
|
|
| 9,964 |
| (5) |
|
| $ | 756,865 |
|
|
|
|
| 23,250 |
| (9) |
|
| $ | 1,766,070 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
John M. Donnan |
|
|
| 3,421 |
| (2) |
|
| $ | 259,859 |
|
|
|
|
| 4,086 |
| (6) |
|
| $ | 310,373 |
|
|
|
|
|
| 3,320 |
| (4) |
|
| $ | 252,187 |
|
|
|
|
| 4,058 |
| (8) |
|
| $ | 308,246 |
|
|
|
|
|
| 10,000 |
| (10) |
|
| $ | 759,600 |
|
|
|
|
| 5,180 |
| (9) |
|
| $ | 393,473 |
|
|
|
|
|
| 3,453 |
| (5) |
|
| $ | 262,290 |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Neal E. West |
|
|
| 3,311 |
| (2) |
|
| $ | 251,504 |
|
|
|
|
| 3,954 |
| (6) |
|
| $ | 300,346 |
|
|
|
|
|
| 3,245 |
| (4) |
|
| $ | 246,490 |
|
|
|
|
| 3,967 |
| (8) |
|
| $ | 301,333 |
|
|
|
|
| 10,000 |
| (10) |
|
| $ | 759,600 |
|
|
|
|
| 5,180 |
| (9) |
|
| $ | 393,473 |
|
| |
|
|
| 3,453 |
| (5) |
|
| $ | 262,290 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Jason D. Walsh |
|
|
| 5,000 |
| (11) |
|
| $ | 379,800 |
|
|
|
|
| 1,357 |
| (6) |
|
| $ | 103,078 |
|
|
|
|
|
| 1,136 |
| (2) |
|
| $ | 86,291 |
|
|
|
|
| 1,830 |
| (8) |
|
| $ | 139,007 |
|
|
|
|
|
| 20,000 |
| (12) |
|
| $ | 1,519,200 |
|
|
|
|
| 2,346 |
| (9) |
|
| $ | 178,202 |
|
|
|
|
|
| 1,498 |
| (4) |
|
| $ | 113,788 |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
| 1,564 |
| (5) |
|
| $ | 118,801 |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
| 1,224 |
| (13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Blain A. Tiffany |
|
|
| 5,000 |
| (14) |
|
| $ | 379,800 |
|
|
|
|
| 1,571 |
| (6) |
|
| $ | 119,333 |
|
|
|
|
|
| 1,316 |
| (2) |
|
| $ | 99,963 |
|
|
|
|
| 1,514 |
| (8) |
|
| $ | 115,003 |
|
|
|
|
|
| 20,000 |
| (12) |
|
| $ | 1,519,200 |
|
|
|
|
| 2,194 |
| (9) |
|
| $ | 166,656 |
|
|
|
|
|
| 1,238 |
| (4) |
|
| $ | 94,038 |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
| 1,462 |
| (5) |
|
| $ | 111,054 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
| 692 |
| (13) |
|
| $ | 52,564 |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards | |||||||||||||||||||||
Number of Shares or Units of Stock That Have Not Vested | Market Value or Shares or Units of Stock That Have Not Vested (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (1) | ||||||||||||||||||
Name | (#) | ($) | (#) | ($) | |||||||||||||||||
Jack A. Hockema | 10,509 | (2) | $ | 1,165,343 | 22,312 | (5) | $ | 2,474,178 | |||||||||||||
8,285 | (3) | $ | 918,724 | 17,594 | (6) | $ | 1,950,999 | ||||||||||||||
8,488 | (4) | $ | 941,234 | 18,024 | (7) | $ | 1,998,681 | ||||||||||||||
Keith A. Harvey | 4,955 | (2) | $ | 549,460 | 12,015 | (5) | $ | 1,332,343 | |||||||||||||
30,000 | (8) | $ | 3,326,700 | 9,467 | (6) | $ | 1,049,796 | ||||||||||||||
3,904 | (3) | $ | 432,915 | 9,699 | (7) | $ | 1,075,522 | ||||||||||||||
4,000 | (4) | $ | 443,560 | ||||||||||||||||||
John. M.Donnan | 3,985 | (2) | $ | 441,897 | 4,760 | (5) | $ | 527,836 | |||||||||||||
3,145 | (3) | $ | 348,749 | 3,757 | (6) | $ | 416,614 | ||||||||||||||
3,223 | (4) | $ | 357,398 | 3,849 | (7) | $ | 426,816 | ||||||||||||||
Neal E. West | 1,052 | (2) | $ | 116,656 | 1,255 | (5) | $ | 139,167 | |||||||||||||
860 | (3) | $ | 95,365 | 1,027 | (6) | $ | 113,884 | ||||||||||||||
3,075 | (4) | $ | 340,987 | 3,673 | (7) | $ | 407,299 | ||||||||||||||
Ray D. Parkinson | 1,936 | (2) | $ | 214,683 | 2,310 | (5) | $ | 256,156 | |||||||||||||
1,532 | (3) | $ | 169,883 | 1,830 | (6) | $ | 202,929 | ||||||||||||||
1,570 | (4) | $ | 174,097 | 1,875 | (7) | $ | 207,919 | ||||||||||||||
Daniel J. Rinkenberger* | 4,596 | (2) | $ | 509,650 | 5,487 | (5) | $ | 608,453 | |||||||||||||
3,629 | (3) | $ | 402,420 | 4,334 | (6) | $ | 480,597 | ||||||||||||||
Reflects the aggregate market value |
60
61
62
Option ExercisedExercises and Stock Vested in 2019
The table below sets forth information regarding the vesting during
|
|
| Stock Awards |
|
| |||||||
Name |
| Number of |
| Value Realized | ||||||||
|
|
|
|
| ||||||||
Keith A. Harvey |
|
|
| 37,005 |
|
|
|
| $ | 2,910,086 |
|
|
John M. Donnan |
|
|
| 4,415 |
|
|
|
| $ | 419,999 |
|
|
Neal E. West |
|
|
| 4,212 |
|
|
|
| $ | 400,688 |
|
|
Jason D. Walsh |
|
|
| 1,464 |
|
|
|
| $ | 139,270 |
|
|
Blain A. Tiffany |
|
|
| 1,693 |
|
|
|
| $ | 160,999 |
|
|
Stock Awards | ||||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||
Jack A. Hockema | 34,102 | $ | 3,709,957 | |||||||
Keith A. Harvey | 42,639 | $ | 4,224,947 | |||||||
John M. Donnan | 9,070 | $ | 986,726 | |||||||
Neal E. West | 2,440 | $ | 265,448 | |||||||
Ray D. Parkinson | 4,402 | $ | 478,893 | |||||||
Daniel J. Rinkenberger* | 10,431 | $ | 1,134,788 |
Pension Benefits as of December 31, 2019
The table below sets forth information regarding the present value as of December 31,
Name |
| Plan Name |
| Number of |
| Present Value of | ||||||||
|
|
|
|
|
|
| ||||||||
Keith A. Harvey |
| Kaiser Aluminum Salaried Employees Retirement Plan |
|
|
| 17.83 |
|
|
|
| $ | 650,972 |
|
|
John M. Donnan |
| Kaiser Aluminum Salaried Employees Retirement Plan |
|
|
| 10.25 |
|
|
|
| $ | 517,635 |
|
|
Neal E. West |
| Kaiser Aluminum Salaried Employees Retirement Plan |
|
|
| — |
|
|
|
|
| — |
|
|
Jason D. Walsh |
| Kaiser Aluminum Salaried Employees Retirement Plan |
|
|
| — |
|
|
|
|
| — |
|
|
Blain A. Tiffany |
| Kaiser Aluminum Salaried Employees Retirement Plan |
|
|
| — |
|
|
|
|
| — |
|
|
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit (1) ($) | |||
Jack A. Hockema | Kaiser Aluminum Salaried Employees Retirement Plan | 11.92 | $344,603 | |||
Keith A. Harvey | Kaiser Aluminum Salaried Employees Retirement Plan | 17.83 | $559,775 | |||
John M. Donnan | Kaiser Aluminum Salaried Employees Retirement Plan | 10.25 | $449,196 | |||
Neal E. West | — | — | ||||
Ray D. Parkinson | Kaiser Aluminum Salaried Employees Retirement Plan | 13.75 | $526,474 | |||
Daniel J. Rinkenberger | Kaiser Aluminum Salaried Employees Retirement Plan | 12.67 | $555,644 |
The Old Pension Plan previously maintained by us was a qualified, defined-benefit retirement plan for our salaried employees who met certain eligibility requirements. Effective December 17, 2003, the PBGC terminated and effectively assumed responsibility for making benefit payments in respect of the Old Pension Plan. As a result of the termination, all benefit accruals under the Old Pension Plan were terminated and benefits available to certain executive officers including Mr. Hockema, were significantly reduced due to the limitation on benefits payable by the PBGC. Benefits payable to participants will be reduced to a maximum of $34,742 annually for retirement at age 62, a lower amount for retirement prior to age 62, and
63
Nonqualified Deferred Compensation for 2019
The table below sets forth, for each of our named executive officers, information regarding his participation in our Restoration Plan during
Name |
| Registrant |
| Aggregate |
| Aggregate | ||||||||||||
|
|
|
|
|
|
| ||||||||||||
Keith A. Harvey |
|
| $ | 145,182 |
|
|
|
| $ | (366,416 | ) |
|
|
| $ | 1,711,844 |
|
|
John M. Donnan |
|
| $ | 40,736 |
|
|
|
| $ | (313,727 | ) |
|
|
| $ | 1,172,656 |
|
|
Neal E. West |
|
| $ | 23,945 |
|
|
|
| $ | (43,480 | ) |
|
|
| $ | 200,537 |
|
|
Jason D. Walsh |
|
| $ | 18,250 |
|
|
|
| $ | (22,643 | ) |
|
|
| $ | 124,244 |
|
|
Blain A. Tiffany |
|
| $ | 16,614 |
|
|
|
| $ | (11,042 | ) |
|
|
| $ | 125,591 |
|
|
Name | Registrant Contributions in Last FY (1) | Aggregate Earnings in Last FY (2)(3) | Aggregate Balance at Last FYE | |||||||||||||||
Jack A. Hockema | $ | 167,937 | $ | 343,711 | $ | 5,103,188 | ||||||||||||
Keith A. Harvey | $ | 96,198 | $ | 212,238 | $ | 1,264,517 | ||||||||||||
John M. Donnan | $ | 50,437 | $ | 154,517 | $ | 994,615 | ||||||||||||
Neal E. West | $ | 17,297 | $ | 17,296 | $ | 127,843 | ||||||||||||
Ray D. Parkinson | $ | 24,770 | $ | 66,532 | $ | 346,890 | ||||||||||||
Daniel J. Rinkenberger (4) | $ | 11,675 | $ | 75,594 | — |
Potential Payments and Benefits Upon Termination of Employment
This section describes, and sets forth quantitative disclosure with respect to, payments and benefits to which our named executive officers except Mr. Rinkenberger, would have been entitled if their employment had terminated on December 31, 2019, the last business day of 2019,2022 under various circumstances. Mr. Rinkenberger retired in March 2019 and the disclosures below reflect the actual payments he received in connection with his retirement.
Voluntary Termination other than Qualified Retirement
If the employment of a named executive officer (other than Mr. Hockema, who turned 65 and qualified for retirement prior to December 31, 2019) had been voluntarily terminated by him on December 31, 2019,2022, he would have forfeited all of his outstanding incentive awards, including his award under our 20192022 STI Plan and all outstanding shares of restricted stock, restricted stock units and performance shares previously granted to him. In addition, the named executive officer would not have been eligible for severance benefits in such circumstance.
Termination for Cause
If a named executive officer’s employment had been terminated for cause on December 31, 2019,2022, he would have forfeited all of his outstanding incentive awards, including his award under our 20192022 STI Plan and all outstanding restricted stock units and performance shares previously granted to him. In addition, the named executive officer would not have been eligible for severance benefits in such circumstance.
Termination by us without Cause or by Named Executive Officer with Good Reason - No Change in Control
Under Mr. Hockema's employmentHarvey’s amended and restated severance agreement, if Mr. Hockema'sHarvey’s employment had been terminated by us without cause or voluntarily terminated by him for good reason on December 31, 2019,2022, Mr. HockemaHarvey would have been entitled to receive (1) payment of his award under our 20192022 STI Plan, determined based on actual performance, (2) a lump-sum payment in an
Under the 20192022 STI Plan, the awards were conditioned on employment on the date of payment unless employment had been terminated as a result of death, disability or retirement at or after age 65. If employment of any of our named executive officer
64
officers (other than Mr. Hockema)Harvey) had terminated by us without cause or by the named executive officer with good reason on December 31, 2019,2022, he would not have been entitled to receive any payment under the 20192022 STI Plan.
Under our equity award agreements, if the employment of any of our named executive officers had been terminated by us without cause or voluntarily terminated by him for good reason on December 31, 2019,2022, then (1) all restricted stock units granted to him effective March 5, 2017,2020, March 5, 20182021 and March 5, 20192022 and, in the case of Mr. Harvey, July 31, 2020; in the case of Mr. Walsh, June 1, 2018, August 12, 2020 and April 15, 20172022; and in the case of Mr. Tiffany, April 3, 2019, August 12, 2020 and April 15, 2022, would have remained outstanding and would vest on their original vesting dates (or earlier in the event of deathdisability or disabilitydeath or a change in control) and (2) all performance shares granted to him effective March 5, 2017,2020, March 5, 20182021 and March 5, 20192022 and, in the case of Mr. Harvey, July 31, 2020, would have remained outstanding, with the number of shares of common stock, if any, to be received by such named executive officer in respect to such performance shares to be determined based on the performance level achieved during the applicable performance period.
Under our Salaried Severance Plan, if the employment of Messrs. Harvey, Donnan, West, Walsh, or ParkinsonTiffany had been terminated by us without cause on December 31, 2019,2022, the named executive office would have been entitled to (1) a lump-sum payment equal to his weekly base salary multiplied by his continuation period, determined based on his number of years of full employment as of December 31, 2019,2022, and (2) continuation of his welfare benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA.
Termination by us without Cause or by Named Executive Officer with Good Reason - Change in Control
Under Mr. Hockema’sthe amended and restated severance agreements with Messrs. Harvey and Donnan, if the employment agreement, if Mr. Hockema’s employmentof Messrs. Harvey or Donnan had been terminated by us without cause or voluntarily terminated by him for good reason within two years following a change in control on December 31, 2019, Mr. Hockema2022, he would have been entitled to receive (1) payment of his award under our 20192022 STI Plan, determined based on actual performance, (2) a lump-sum payment in an amount equal to 2.822.5 times (two times for Mr. Donnan) the sum of his 20192022 base salary and 20192022 STI Plan incentive target),target, and (3) continuation of his welfare benefits for three years (two years for Mr. Donnan) commencing on December 31, 2019. Under Mr. Hockema’s employment agreement, if2022. If any payments to Mr. HockemaMessrs. Harvey or Donnan upon his termination would be subject to a federal excise tax, by reason of being considered contingent on a change in control, then such payments would be reduced to the minimum extent necessary so that no portion of such payments, as so reduced, is subject to such tax, except that such a reduction wouldwill be made only if and to the extent such reduction would result in an increase in the aggregate payment on an after-tax basis.
Under the Change in Control Agreements, as amended,Agreement with Messrs. Harvey, Donnan andMr. West, if theMr. West’s employment of the named executive officer had been terminated by us without cause or by him for good reason in connection with a change in control on December 31, 2019, such named executive officer2022, he would have been entitled to receive (1) payment of his award under our 20192022 STI Plan, determined based on actual performance, (2) a lump-sum payment equal to two times (in the case of Mr. West, one time) the sum of his 20192022 base salary and 20192022 STI Plan incentive target, (3) continuation of his welfare benefits for two years (in the case of Mr. West, one year)year commencing on December 31, 2019,2022, and (4) continuation of his perquisites for two years (in the case of Mr. West, one year)year commencing on December 31, 2019.
Under our equity award agreements, if the employment of any of our named executive officers had been terminated by us without cause or voluntarily terminated by him for good reason in connection with a change in control on December 31, 2019,2022, then (1) all restricted stock units granted to him effective March 5, 2017,2020, March 5, 20182021 and March 5, 20192022 and, in the case of Mr. Harvey, July 31, 2020; in the case of Mr. Walsh, June 1, 2018, August 12, 2020 and April 15, 20172022; and in the case of Mr. Tiffany, April 3, 2019, August 12, 2020 and April 15, 2022, would have immediately vested, and (2) all performance shares granted to him effective March 5, 2017,2020, March 5, 20182021 and March 5, 20192022 and in the case of Mr. Harvey, July 31, 2020, would have immediately vested, with the number of shares of common stock, if any, to be received by such named executive officer in respect to such performance shares to be determined based on the performance level achieved during the applicable performance period through the change in control on December 31, 2019.
Qualified Retirement
None of our named executive officers reached age 65 during 2011. Under2022. Accordingly, none of the 2019named executive officers would have been entitled to payment pursuant to qualified retirement under our 2022 STI Plan or equity award agreements if Mr. Hockema'shis employment had been terminated as a result of retirement on December 31, 2019, he would have been entitled to payment of his award under the 2019 STI Plan, determined based on actual performance. If December 31, 2019 had not been the last business day of 2019, the award would have been prorated for the actual number of days of his employment in 2019.
65
Disability or Death
Under the 20192022 STI Plan, if the employment of any of our named executive officers had been terminated as a result of deathdisability or disabilitydeath on December 31, 2019,2022, he or his estate would have been entitled to receive a payment under the 20192022 STI Plan, determined based on actual performance. If December 31, 20192022 had not been the last day of 2019,2022, the award would have been prorated for the actual number of days of his employment in 2019.
Under our equity award agreements, if the employment of any of our named executive officers had been terminated as a result of deathdisability or disabilitydeath on December 31, 2019,2022, then (1) all restricted stock units granted to him effective March 5, 2017,2020, March 5, 20182021 and March 5, 20192022 and, in the case of Mr. Harvey, July 31, 2020; in the case of Mr. Walsh, June 1, 2018, August 12, 2020 and April 15, 20172022; and in the case of Mr. Tiffany, April 3, 2019, August 12, 2020 and April 15, 2022, would have immediately vested, and (2) the target number of performance shares granted to him effective March 5, 2017,2020, March 5, 20182021 and March 5, 20192022 and in the case of Mr. Harvey, July 31, 2020, would have immediately vested.
Quantitative Disclosure
The table below sets forth, for each named executive officer, quantitative disclosure regarding estimated payments and other benefits that would have been received by the named executive officer, other than Mr. Rinkenberger, or his estate, if his employment had terminated on
66
Name |
| Triggering Event |
| Payments |
|
| Other |
|
| Equity |
|
| Distribution of |
|
| Total |
| |||||
Harvey |
| Voluntary Termination |
| $ | 89,904 |
|
|
| — |
|
|
| — |
|
| $ | 1,711,844 |
|
| $ | 1,801,748 |
|
|
| Termination for Cause |
| $ | 89,904 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 89,904 |
|
|
| Termination by us without Cause or by NEO with Good Reason |
| $ | 89,904 |
|
| $ | 3,872,066 |
|
| $ | 5,004,885 |
|
| $ | 1,711,844 |
|
| $ | 10,678,699 |
|
|
| Termination by us without Cause or by NEO with Good Reason Following CIC |
| $ | 89,904 |
|
| $ | 4,842,000 |
|
| $ | 2,345,658 |
|
| $ | 1,711,844 |
|
| $ | 8,989,406 |
|
|
| Retirement |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| |||||
|
| Disability (5) |
| $ | 89,904 |
|
| $ | 498,466 |
|
| $ | 6,243,105 |
|
| $ | 1,711,844 |
|
| $ | 8,543,318 |
|
|
| Death (6) |
| $ | 89,904 |
|
| $ | 800,000 |
|
| $ | 6,243,105 |
|
| $ | 1,711,844 |
|
| $ | 8,844,852 |
|
Donnan |
| Voluntary Termination |
| $ | 47,596 |
|
|
| — |
|
|
| — |
|
| $ | 1,172,656 |
|
| $ | 1,220,252 |
|
|
| Termination for Cause |
| $ | 47,596 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 47,596 |
|
|
| Termination by us without Cause or by NEO with Good Reason |
| $ | 47,596 |
|
| $ | 254,266 |
|
| $ | 2,268,884 |
|
| $ | 1,172,656 |
|
| $ | 3,743,402 |
|
|
| Termination by us without Cause or by NEO with Good Reason Following CIC |
| $ | 47,596 |
|
| $ | 1,812,633 |
|
| $ | 1,659,560 |
|
| $ | 1,172,656 |
|
| $ | 4,692,445 |
|
|
| Retirement |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| |||||
|
| Disability (5) |
| $ | 47,596 |
|
| $ | 576,466 |
|
| $ | 2,611,822 |
|
| $ | 1,172,656 |
|
| $ | 4,408,541 |
|
|
| Death (6) |
| $ | 47,596 |
|
| $ | 800,000 |
|
| $ | 2,611,822 |
|
| $ | 1,172,656 |
|
| $ | 4,632,075 |
|
West |
| Voluntary Termination |
| $ | 37,692 |
|
|
| — |
|
|
| — |
|
| $ | 200,537 |
|
| $ | 238,229 |
|
|
| Termination for Cause |
| $ | 37,692 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 37,692 |
|
|
| Termination by us without Cause or by NEO with Good Reason |
| $ | 37,692 |
|
| $ | 124,555 |
|
| $ | 2,247,443 |
|
| $ | 200,537 |
|
| $ | 2,610,227 |
|
|
| Termination by us without Cause or by NEO with Good Reason Following CIC |
| $ | 37,692 |
|
| $ | 891,769 |
|
| $ | 1,645,507 |
|
| $ | 200,537 |
|
| $ | 2,775,505 |
|
|
| Retirement |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| |||||
|
| Disability (5) |
| $ | 37,692 |
|
| $ | 420,963 |
|
| $ | 2,579,302 |
|
| $ | 200,537 |
|
| $ | 3,238,494 |
|
|
| Death (6) |
| $ | 37,692 |
|
| $ | 295,000 |
|
| $ | 2,579,302 |
|
| $ | 200,537 |
|
| $ | 3,112,531 |
|
Walsh |
| Voluntary Termination |
| $ | 35,769 |
|
|
| — |
|
|
| — |
|
| $ | 124,244 |
|
| $ | 160,013 |
|
|
| Termination for Cause |
| $ | 35,769 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 35,769 |
|
|
| Termination by us without Cause or by NEO with Good Reason |
| $ | 35,769 |
|
| $ | 118,281 |
|
| $ | 2,550,098 |
|
| $ | 124,244 |
|
| $ | 2,828,391 |
|
|
| Termination by us without Cause or by NEO with Good Reason Following CIC |
| $ | 35,769 |
|
| $ | 144,835 |
|
| $ | 2,274,782 |
|
| $ | 124,244 |
|
| $ | 2,579,630 |
|
|
| Retirement |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| |||||
|
| Disability (5) |
| $ | 35,769 |
|
| $ | 2,474,964 |
|
| $ | 2,663,991 |
|
| $ | 124,244 |
|
| $ | 5,298,968 |
|
|
| Death (6) |
| $ | 35,769 |
|
| $ | 800,000 |
|
| $ | 2,663,991 |
|
| $ | 124,244 |
|
| $ | 3,624,004 |
|
Tiffany |
| Voluntary Termination |
| $ | 24,519 |
|
|
| — |
|
|
| — |
|
| $ | 125,591 |
|
| $ | 150,110 |
|
|
| Termination for Cause |
| $ | 24,519 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 24,519 |
|
|
| Termination by us without Cause or by NEO with Good Reason |
| $ | 24,519 |
|
| $ | 91,097 |
|
| $ | 2,498,717 |
|
| $ | 125,591 |
|
| $ | 2,739,924 |
|
|
| Termination by us without Cause or by NEO with Good Reason Following CIC |
| $ | 24,519 |
|
| $ | 125,943 |
|
| $ | 2,257,279 |
|
| $ | 125,591 |
|
| $ | 2,533,332 |
|
|
| Retirement |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| |||||
|
| Disability (5) |
| $ | 24,519 |
|
| $ | 420,963 |
|
| $ | 2,630,571 |
|
| $ | 125,591 |
|
| $ | 3,201,644 |
|
|
| Death (6) |
| $ | 24,519 |
|
| $ | 800,000 |
|
| $ | 2,630,571 |
|
| $ | 125,591 |
|
| $ | 3,580,681 |
|
Name | Triggering Event | Payments Earned but Unpaid (1) | Other Benefits (2) | Equity Awards (3) | Distribution of Restoration Plan Balance (4) | Total | ||||||||||
Hockema | Voluntary Termination | N/A | N/A | N/A | N/A | N/A | ||||||||||
Termination for Cause | $ | 87,981 | — | — | — | $ | 87,981 | |||||||||
Termination by us without Cause or by NEO with Good Reason | $ | 780,615 | $ | 3,161,288 | $ | 10,011,334 | $ | 5,103,188 | $ | 19,056,425 | ||||||
Termination by us without Cause or by NEO with Good Reason Following CIC | $ | 780,615 | $ | 4,702,210 | $ | 9,197,671 | $ | 5,103,188 | $ | 19,783,684 | ||||||
Retirement | $ | 780,615 | — | $ | 6,688,714 | $ | 5,103,188 | $ | 12,572,517 | |||||||
Disability (5) | $ | 780,615 | — | $ | 9,727,774 | $ | 5,103,188 | $ | 15,611,577 | |||||||
Death (6) | $ | 780,615 | $ | 50,000 | $ | 9,727,774 | $ | 5,103,188 | $ | 15,661,577 | ||||||
Harvey | Voluntary Termination | $ | 53,077 | — | — | $ | 1,264,517 | $ | 1,317,594 | |||||||
Termination for Cause | $ | 53,077 | — | — | — | $ | 53,077 | |||||||||
Termination by us without Cause or by NEO with Good Reason | $ | 53,077 | $ | 320,752 | $ | 8,512,883 | $ | 1,264,517 | $ | 10,151,229 | ||||||
Termination by us without Cause or by NEO with Good Reason Following CIC | $ | 512,917 | $ | 2,151,882 | $ | 8,075,068 | $ | 1,264,517 | $ | 12,004,384 | ||||||
Retirement | N/A | N/A | N/A | N/A | N/A | |||||||||||
Disability (5) | $ | 512,917 | $ | 786,567 | $ | 8,360,278 | $ | 1,264,517 | $ | 10,924,279 | ||||||
Death (6) | $ | 512,917 | $ | 800,000 | $ | 8,360,278 | $ | 1,264,517 | $ | 10,937,712 | ||||||
Donnan | Voluntary Termination | $ | 42,192 | — | — | $ | 994,615 | $ | 1,036,807 | |||||||
Termination for Cause | $ | 42,192 | — | — | — | $ | 42,192 | |||||||||
Termination by us without Cause or by NEO with Good Reason | $ | 42,192 | $ | 262,243 | $ | 1,251,541 | $ | 994,615 | $ | 3,938,185 | ||||||
Termination by us without Cause or by NEO with Good Reason Following CIC | $ | 344,441 | $ | 1,597,979 | $ | 1,204,025 | $ | 994,615 | $ | 5,402,408 | ||||||
Retirement | N/A | N/A | N/A | N/A | N/A | |||||||||||
Disability (5) | $ | 344,441 | $ | 856,773 | $ | 1,235,774 | $ | 994,615 | $ | 4,774,604 | ||||||
Death (6) | $ | 344,441 | $ | — | $ | 1,235,774 | $ | 994,615 | $ | 3,917,831 | ||||||
West | Voluntary Termination | $ | 45,000 | — | — | $ | 127,843 | $ | 172,843 | |||||||
Termination for Cause | $ | 45,000 | — | — | — | $ | 45,000 | |||||||||
Termination by us without Cause or by NEO with Good Reason | $ | 45,000 | $ | 19,176 | $ | 2,639,135 | $ | 127,843 | $ | 1,443,560 | ||||||
Termination by us without Cause or by NEO with Good Reason Following CIC | $ | 332,400 | $ | 476,798 | $ | 2,465,373 | $ | 127,843 | $ | 2,141,066 | ||||||
Retirement | N/A | N/A | N/A | N/A | N/A | |||||||||||
Disability (5) | $ | 332,400 | 644,885 | $ | 2,578,775 | $ | 127,843 | $ | 2,340,902 | |||||||
Death (6) | $ | 332,400 | $ | 50,000 | $ | 2,578,775 | $ | 127,843 | $ | 1,746,017 | ||||||
Parkinson | Voluntary Termination | $ | 34,913 | — | — | $ | 346,890 | $ | 381,803 | |||||||
Termination for Cause | $ | 34,913 | — | — | — | $ | 34,913 | |||||||||
Termination by us without Cause or by NEO with Good Reason | $ | 34,913 | $ | 199,391 | $ | 1,283,872 | $ | 346,890 | $ | 1,865,066 | ||||||
Termination by us without Cause or by NEO with Good Reason Following CIC | $ | 175,164 | $ | 103,305 | $ | 1,199,246 | $ | 346,890 | $ | 1,824,605 | ||||||
Retirement | N/A | N/A | N/A | N/A | N/A | |||||||||||
Disability (5) | $ | 175,164 | 571,916 | $ | 1,254,575 | $ | 346,890 | $ | 2,348,545 | |||||||
Death (6) | $ | 175,164 | $ | 50,000 | $ | 1,254,575 | $ | 346,890 | $ | 1,826,629 | ||||||
Rinkenberger | Retirement (7) | $ | 101,096 | $ | 716,000 | $ | 1,889,958 | $ | 746,384 | $ | 3,453,438 |
Includes, in the case of (x) termination by us without cause or by the named executive officer with good reason and (y) termination by us without cause or by the named executive officer with good reason following a change in control, any |
67
Pursuant to the terms of the performance shares granted to the named executive officers effective March 5, 2017,2020, March 5, 20182021 and March 5, 2019,2022, and, in the case of Mr. Harvey, July 31, 2020, if the company declares cash dividends on our common stock and the record and payment dates for dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, the named executive officer will also be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued
68
or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery. Accordingly, the table also reflects an amount equal to the cash dividends the named executive officer would have received if the applicable number of performance shares determined as described above had been issued and outstanding and held of record by him from March 5, 2017,2020, March 5, 2018 and2021, March 5, 2019,2022 and July 31, 2020, as applicable, through the issuance and deliver of common shares in respect of such performance shares, assuming in each case that the company does not declare any further cash dividends after December 31, 2019.2022.
Pay Ratio
For the year ended December 31, 2019,2022, (1) the annual total compensation of Mr. Hockema,Harvey, our CEO, was $5,248,430 (the$5,123,725(the same amount as reported for him for 20192022 in the Summary Compensation Table above); (2) the annual total compensation of our median employee (defined below) was $74,554;$67,912; and (3) the resulting ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries (other than Mr. Hockema)Harvey) was 70:75:1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized above. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized below. The assumptions we used are specific to our company and our employee population. As a result, our pay ratio may not be comparable to the pay ratios of other companies. The total compensation of the median employee for the year ended December 31, 20192022 was determined in the same manner as the total compensation shown for Mr. HockemaHarvey in the Summary Compensation Table.
We identified our median employee using the following methodology:
69
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” to our principal executive officers (“PEO”) and to our non-PEO named executive officers and certain financial performance of the Company.
Year |
| Summary Compensation Table (SCT) Total for PEO 1 (1) |
|
| Compensation actually paid to PEO 1 (1)(2)(3) |
|
| SCT Total for PEO 2 (1) |
|
| Compensation actually paid to PEO 2 (1)(2)(4) |
|
| Average SCT Total for non-PEO NEOs (1) |
|
| Average compensation actually paid to non-PEO NEOs (1)(2)(5) |
|
| Value of Initial Fixed $100 Investment based on: |
|
| Net Income (Loss) |
|
| Adjusted EBITDA ($ millions) (8) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TSR |
|
| Peer Group TSR (6) |
|
|
|
|
|
|
| ||||||||||
(a) |
| (b) |
|
| (c) |
|
| (b) |
|
| (c) |
|
| (d) |
|
| (e) |
|
| (f) |
|
| (g) |
|
| (h) |
|
| (i) |
| ||||||||||
2022 |
| $ | 5,123,725 |
|
| $ | 1,614,307 |
|
| N/A |
|
| N/A |
|
| $ | 1,465,483 |
|
| $ | 639,781 |
|
| $ | 75.68 |
|
| $ | 136.42 |
|
| $ | (30 | ) |
| $ | 142 |
| ||
2021 |
| $ | 5,505,512 |
|
| $ | 2,519,794 |
|
| N/A |
|
| N/A |
|
| $ | 2,052,660 |
|
| $ | 1,363,746 |
|
| $ | 90.25 |
|
| $ | 145.27 |
|
| $ | (19 | ) |
| $ | 185 |
| ||
2020 |
| $ | 3,231,260 |
|
| $ | 2,110,286 |
|
| $ | 4,249,853 |
|
| $ | 2,119,022 |
|
| $ | 1,727,323 |
|
| $ | 1,705,476 |
|
| $ | 92.45 |
|
| $ | 122.68 |
|
| $ | 29 |
|
| $ | 154 |
|
______________
Year | | Summary Compensation Table Total for PEO 1 |
| Exclusion of Change in Pension Value for PEO 1 | | Exclusion of Stock Awards | | Inclusion of Equity Values | | Compensation Actually Paid to PEO 1 | ||||||||||||||||||||
2022 | |
| $ | 5,123,725 |
|
|
|
| $ | 4,854 |
|
| |
| $ | 3,414,128 |
|
| |
| $ | (90,436 | ) |
| |
| $ | 1,614,307 |
|
|
2021 | |
| $ | 5,505,512 |
|
|
|
| $ | 5,248 |
|
| |
| $ | 3,697,874 |
|
| |
| $ | 717,404 |
|
| |
| $ | 2,519,794 |
|
|
2020 | |
| $ | 3,231,260 |
|
|
|
| $ | 81,095 |
|
| |
| $ | 1,769,707 |
|
| |
| $ | 729,827 |
|
| |
| $ | 2,110,286 |
|
|
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Year | | End Fair Value of Equity Awards Granted During Year That Remained Unvested as |
| Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO 1 | | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO 1 | | Total Inclusion of Equity Values for PEO 1 | ||||||||||||||||
2022 | |
| $ | 1,755,073 |
|
|
|
| $ | (1,309,747 | ) |
|
|
| $ | (535,762 | ) |
|
|
| $ | (90,436 | ) |
|
2021 | |
| $ | 1,950,797 |
|
|
|
| $ | (1,355,240 | ) |
|
|
| $ | 121,847 |
|
|
|
| $ | 717,404 |
|
|
2020 | |
| $ | 1,906,561 |
|
|
|
| $ | (854,216 | ) |
|
|
| $ | (322,518 | ) |
|
|
| $ | 729,827 |
|
|
Year | | Summary Compensation Table Total for PEO 2 |
| Exclusion of Change in Pension Value for PEO 2 | | Exclusion of Stock Awards | | Inclusion of Equity Values | | Compensation Actually Paid to PEO 2 | ||||||||||||||||||||
2020 | |
| $ | 4,249,853 |
|
|
|
| $ | 6,210 |
|
| |
| $ | 2,997,420 |
|
| |
| $ | 872,799 |
|
| |
| $ | 2,119,022 |
|
|
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Year | | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as |
| Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO 2 | | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO 2 | | Total Inclusion of Equity Values for PEO 2 | ||||||||||||||||
2020 | |
| $ | 2,579,395 |
|
|
|
| $ | (1,084,565 | ) |
|
|
| $ | (622,031 | ) |
|
|
| $ | 872,799 |
|
|
70
Year | | Average Summary Compensation Table Total for non-PEO NEOs |
| Average Exclusion of Change in Pension Value for Non-PEO NEOs | | Exclusion of Stock Awards | | Inclusion of Equity Values | | Average Compensation Actually Paid to non-PEO NEOs | ||||||||||||||||||||
2022 | |
| $ | 1,465,483 |
|
|
|
| $ | 0 |
|
| |
| $ | 666,175 |
|
| |
| $ | (159,527 | ) |
| |
| $ | 639,781 |
|
|
2021 | |
| $ | 2,052,660 |
|
|
|
| $ | 3,214 |
|
| |
| $ | 1,277,523 |
|
| |
| $ | 591,823 |
|
| |
| $ | 1,363,746 |
|
|
2020 | |
| $ | 1,727,323 |
|
|
|
| $ | 17,874 |
|
| |
| $ | 1,053,167 |
|
| |
| $ | 1,049,194 |
|
| |
| $ | 1,705,476 |
|
|
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Year | | Average Year-End Fair Value of |
| Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs | | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs | | Total Average Inclusion of Equity Values for Non-PEO NEOs | ||||||||||||||||
2022 | |
| $ | 375,684 |
|
|
|
| $ | (540,385 | ) |
|
|
| $ | 5,174 |
|
|
|
| $ | (159,527 | ) |
|
2021 | |
| $ | 865,328 |
|
|
|
| $ | (302,341 | ) |
|
|
| $ | 28,836 |
|
|
|
| $ | 591,823 |
|
|
2020 | |
| $ | 1,297,037 |
|
|
|
| $ | (171,015 | ) |
|
|
| $ | (76,828 | ) |
|
|
| $ | 1,049,194 |
|
|
The tables below describe the relationship between compensation actually paid to our PEOs and the average of the compensation actually paid to our non-PEO named executive officers and each of our Adjusted EBITDA, net income and TSR for fiscal years 2020 through 2022, plus the relationship between our TSR and Peer Group TSR for fiscal years 2020 through 2022. For ease of discussion, we have aggregated the compensation of Messrs. Harvey and Hockema for 2020, as each served as our CEO for a portion of 2020. See the section entitled “Executive Compensation - Compensation Discussion and Analysis” for a discussion of compensation paid to our named executive officers and see Appendix A to this Proxy Statement for reconciliations of GAAP to non-GAAP measures.
Compensation Actually Paid versus Net Income
The table below describes the relationship between the compensation actually paid to our PEOs and the average of the compensation actually paid to our non-PEO named executive officers and our Net Income for fiscal years 2020 to 2022. We do not use net income as a metric in our incentive compensation plans and programs. Therefore, compensation actually paid to our named executive officers will not necessarily be as heavily influenced by changes in our net income. Nonetheless, the table shows that compensation actually paid to our named executive officers is generally directionally aligned with changes in our Net Income for the time period reported.
71
Compensation Actually Paid versus Adjusted EBITDA
The table below describes the relationship between compensation actually paid to our PEOs and the average of the compensation actually paid to our non-PEO named executive officers and our Adjusted EBITDA for fiscal years 2020 through 2022. The table shows that the compensation actually paid to our named executive officers is generally directionally aligned with changes in our adjusted EBITDA for the time period reported after taking into account Warrick related increases in our adjusted EBITDA in 2021, Warrick related increases in the adjusted EBITDA based performance targets in 2021 and 2022 and challenges faced in 2022 and described in more detail in our CD&A.
Compensation Actually Paid versus TSR
The table below describes the relationship between compensation actually paid to our PEO and the average of the compensation actually paid to our non-PEO NEOs our cumulative TSR for fiscal years 2020 to 2022. The table shows that compensation actually paid to our executive officers is generally directionally aligned with changes in our cumulative total shareholder return for the time period reported.
The table above also describes the relationship between our one-, two- and three-year cumulative TSR compared to the weighted average one-, two- and three-year cumulative TSR of the companies in the S&P 600 SmallCap Materials Index. As previously discussed, our TSR over the last three years was impacted by a series of external issues and challenges initiating with the onset of the COVID-19 pandemic late in the first quarter of 2020 that negatively impacted the end markets for many of our products, including large commercial aerospace applications. In addition, while the S&P 600 SmallCap Materials Index reflects our industry sector, many of the companies included in the index were not as heavily impacted by the COVID-19 pandemic related impact on the aerospace industry.
72
Tabular List of Most Important Performance Measures
The following are the most important financial performance measures used by the Company to link executive compensation actually paid to our NEOs to the Company’s performance for the most recently completed fiscal year.
Most Important Performance Measures |
• Adjusted EBITDA |
• Relative TSR |
• Adjusted EBITDA Margin |
DIRECTOR COMPENSATION
The table below sets forth certain information concerning compensation of our executive chair and non-employee directors who served in
Director Compensation for
Name |
| Fees Earned or |
| Stock Awards (2) |
| All Other Compensation (3) |
| Total | ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Michael C. Arnold |
|
| $ | 115,500 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,791 |
|
|
|
| $ | 256,866 |
|
|
David Foster |
|
| $ | 117,000 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 2,486 |
|
|
|
| $ | 257,061 |
|
|
Leo Gerard (4) |
|
| $ | 106,500 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 1,466 |
|
|
|
| $ | 245,541 |
|
|
Jack A. Hockema |
|
| $ | 256,750 |
|
|
|
|
| — |
|
|
|
| $ | 94,307 |
|
|
|
| $ | 351,057 |
|
|
Emily Liggett (5) |
|
| $ | 13,000 |
|
|
|
|
| — |
|
|
|
| $ | 1,466 |
|
|
|
| $ | 14,466 |
|
|
Lauralee E. Martin |
|
| $ | 138,250 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,507 |
|
|
|
| $ | 279,331 |
|
|
Alfred E. Osborne, Jr., Ph.D. |
|
| $ | 143,250 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,507 |
|
|
|
| $ | 284,331 |
|
|
Teresa M. Sebastian |
|
| $ | 127,750 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,507 |
|
|
|
| $ | 268,831 |
|
|
Donald J Stebbins |
|
| $ | 123,750 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,507 |
|
|
|
| $ | 264,831 |
|
|
Thomas M. Van Leeuwen (6) |
|
| $ | 16,750 |
|
|
|
|
| — |
|
|
|
| $ | 1,466 |
|
|
|
| $ | 18,216 |
|
|
Brett E. Wilcox |
|
| $ | 138,250 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,507 |
|
|
|
| $ | 279,331 |
|
|
Kevin W. Williams |
|
| $ | 112,000 |
|
|
|
| $ | 137,575 |
|
|
|
| $ | 3,791 |
|
|
|
| $ | 253,366 |
|
|
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | All Other Compensation (3) | Total | ||||||||||||||||||||
Carolyn Bartholomew | $ | 78,500 | $ | 110,000 | $ | 2,623 | $ | 191,123 | ||||||||||||||||
David Foster | $ | 76,000 | $ | 110,000 | $ | 2,623 | $ | 188,623 | ||||||||||||||||
Leo Gerard | $ | 47,250 | $ | 82,500 | $ | 538 | $ | 130,288 | ||||||||||||||||
L. Patrick Hassey | $ | 77,500 | $ | 110,000 | $ | 2,623 | $ | 190,123 | ||||||||||||||||
Emily Liggett | $ | 76,500 | $ | 110,000 | $ | 2,623 | $ | 189,123 | ||||||||||||||||
Lauralee E. Martin | $ | 101,250 | $ | 110,000 | $ | 2,623 | $ | 213,873 | ||||||||||||||||
Alfred E. Osborne, Jr., Ph.D. | $ | 103,500 | $ | 110,000 | $ | 2,623 | $ | 216,123 | ||||||||||||||||
Jack Quinn (4) | $ | 13,500 | — | $ | 1,201 | $ | 14,701 | |||||||||||||||||
Teresa M. Sebastian | $ | 68,750 | $ | 110,000 | $ | 1,422 | $ | 180,172 | ||||||||||||||||
Donald J Stebbins | $ | 67,750 | $ | 110,000 | $ | 1,422 | $ | 179,172 | ||||||||||||||||
Thomas M. Van Leeuwen | $ | 98,500 | $ | 110,000 | $ | 2,623 | $ | 211,123 | ||||||||||||||||
Brett E. Wilcox | $ | 93,750 | $ | 110,000 | $ | 2,623 | $ | 206,373 |
73
Director Compensation Arrangements
We periodically review director compensation in relation to other comparable companies and in light of other factors that the compensation committee deems appropriate and discuss director compensation with the full board of directors. During 2019, the market pay analysis performed by Meridian reflected that (i) our non-employee director's total compensation was approximately 5% below the median of the peer group, (ii) our non-employee director's cash retainer was approximately 25% below the median, (iii) our non-employee director's equity retainer was slightly below the median, and (iv) the committee chair retainers were also below the median.
Pursuant to our current director compensation policy, each of our non-employee directors receives the following compensation:
In addition, pursuant to our director compensation policy, ourthe Lead Independent Director receives an additional annual retainer of $15,000,$30,000, the chair of each committee of the audit committeeboard each receives an additional annual retainer of $15,000, and the chairmember of each committee of the compensationboard each receive $7,500 for each committee receives an additional annual retainer of $10,000, the chair of the nominating and corporate governance committee receives an additional annual retainer of $7,500 and the chair of the talent development committee receives an additional annual retainer of $7,500,served, with all such amounts payable at the same time as the annual retainer. The Executive Chairman receives compensation in his role as Executive Chairman in an amount equal to the sum of the annual retainers and meeting fees paid by the Company to its directors for service on the board and the amount of the additional annual retainer paid by the Company to the Lead Independent Director. Each non-employee director may elect to receive shares of common stock in lieu of any or all of his or her annual retainer, including any additional annual retainer for service as the Lead Independent Director or the chair of a committee of the board of directors. Our stock ownership guidelines require our non-employee directors to own company stock equal in value to six times their annual base retainer.
Prior to July 2022, we also paid a fee of $1,500 per day for each meeting of our board of directors attended in person and $750 per day for each such meeting attended by phone or virtually and a fee of $1,500 per meeting for each in-person board committee meeting attended ($2,000 per meeting for each such audit committee meeting) and $750 per meeting for each telephonic board committee meeting attended ($1,000 per meeting for each such audit committee meeting). Following the June 2022 annual meeting, the board approved eliminating meeting fees and replacing them with increased the annual retainer and committee membership fees. The board also approved standardizing the committee chair fees for all committees.
The payment of annual retainers, including any additional annual retainer for service as Lead Independent Director or the chair of a committee of our board of directors, and the annual grant of restricted stock is made each year on the date on which we hold our annual meeting of stockholders, unless our board of directors determines such payment and grant should occur on another date. The number of shares of common stock to be received in the grant of restricted stock, as well as the number of shares of common stock to be received by any non-employee director electing to receive our common stock in lieu of any or all of his or her annual retainer, including any additional annual retainer, is based on the average of the closing prices per share of our common stock for the 20 trading days prior to the date such grant and payments are made.
We reimburse all of our directors for reasonable and customary travel and other disbursements relating to meetings of our board of directors and committees thereof, and non-employee directors are provided accident insurance with respect to company-related business travel.
74
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of
December 31,Plan Category |
| Number of Shares |
| Number of Shares | ||||||||
|
|
|
|
| ||||||||
|
|
| (a) |
| (c) | |||||||
Equity compensation plans approved by stockholders (1) |
|
|
| 680,131 |
| (2) |
|
|
| 612,882 |
| (3) |
Equity compensation plans not approved by stockholders |
|
| N/A |
|
|
|
| N/A |
|
| ||
Total |
|
|
| 680,131 |
| (2) |
|
|
| 612,882 |
| (3) |
Plan Category | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Number of Shares of Common Stock Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares of Common Stock Reflected in Column (a)) | ||||
(a) | (c) | |||||
Equity compensation plans approved by stockholders (1) | 564,950 | (2) | 486,023 | (3) | ||
Equity compensation plans not approved by stockholders | N/A | N/A | ||||
Total | 564,950 | (2) | 486,023 | (3) |
75
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table presents information regarding the number of shares of the company's common stock beneficially owned as of March 31, 2020April 17, 2023 by:
Unless otherwise indicated by footnote, the beneficial owner exercises sole voting and investment power over the shares noted below. The percentage of beneficial ownership for our directors and executive officers, both individually and as a group, is calculated based on
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class | ||||||
Directors and Named Executive Officers | ||||||||
Jack A. Hockema | 40,635 | (3) | * | |||||
Keith A. Harvey | 33,589 | * | ||||||
John M. Donnan | 6,023 | * | ||||||
Neal E. West | 5,027 | (4) | * | |||||
Ray D. Parkinson | 10,176 | (5) | * | |||||
Carolyn Bartholomew | 13,530 | (6) | * | |||||
David Foster | 14,104 | (6) | * | |||||
Leo Gerard | 896 | (6) | * | |||||
L. Patrick Hassey | 9,355 | (6) | * | |||||
Emily Liggett | 2,436 | (6) | * | |||||
Lauralee E. Martin | 18,495 | (6) | * | |||||
Alfred E. Osborne, Jr., PhD | 22,348 | (6)(7) | * | |||||
Teresa Sebastian | 1,303 | (6) | * | |||||
Donald J. Stebbins | 1,777 | (6) | * | |||||
Thomas M. Van Leeuwen | 14,035 | (6) | * | |||||
Brett E. Wilcox | 12,797 | (6) | * | |||||
Daniel J. Rinkenberger (2) | 72,959 | * | ||||||
All current directors and executive officers as a group (21 persons) | 219,140 | (3)(4)(5)(6)(7) | 1.4 | % | ||||
5% Stockholders | ||||||||
BlackRock, Inc. | 2,449,306 | (8) | 15.5 | % | ||||
Vanguard Group, Inc. | 1,842,630 | (9) | 11.7 | % | ||||
Dimensional Fund Advisors LP | 887,558 | (10) | 5.6 | % | ||||
FMR LLC | 832,705 | (11) | 5.2 | % |
Name of Beneficial Owner |
| Amount and Nature of |
| Percent | ||||||||
|
|
|
|
| ||||||||
Directors and Named Executive Officers |
|
|
|
|
|
|
|
|
|
| ||
Keith A. Harvey |
|
|
| 40,494 |
|
|
|
| * |
|
| |
John M. Donnan |
|
|
| 8,429 |
|
|
|
| * |
|
| |
Neal E. West |
|
|
| 3,049 |
| (2) |
|
| * |
|
| |
Jason Walsh |
|
|
| 7,947 |
|
|
|
| * |
|
| |
Blain A. Tiffany |
|
|
| 4,111 |
|
|
|
| * |
|
| |
Jack A. Hockema |
|
|
| 29,909 |
| (3) |
|
| * |
|
| |
Michael C. Arnold |
|
|
| 2,083 |
| (4) |
|
|
|
|
| |
David A. Foster |
|
|
| 18,137 |
| (4) |
|
| * |
|
| |
Richard P. Grimley |
|
|
| 311 |
| (4) |
|
| * |
|
| |
Lauralee E. Martin |
|
|
| 14,002 |
| (4) |
|
| * |
|
| |
Alfred E. Osborne, Jr., PhD |
|
|
| 25,352 |
| (4)(5) |
|
| * |
|
| |
Teresa M. Sebastian |
|
|
| 5,824 |
| (4)(6) |
|
| * |
|
| |
Donald J. Stebbins |
|
|
| 8,631 |
| (4)(7) |
|
| * |
|
| |
Brett E. Wilcox |
|
|
| 18,198 |
| (4) |
|
| * |
|
| |
Kevin W. Williams |
|
|
| 3,153 |
| (4) |
|
| * |
|
| |
All current directors and executive officers as a group (19 persons) |
|
|
| 213,332 |
| (2)(3)(4)(5) |
|
|
| 1.3 | % |
|
5% Stockholders |
|
|
|
|
|
|
|
|
|
| ||
BlackRock, Inc. |
|
|
| 2,645,626 |
| (8) |
|
|
| 16.6 | % |
|
Vanguard Group, Inc. |
|
|
| 1,891,847 |
| (9) |
|
|
| 11.8 | % |
|
Victory Capital Management Inc. |
|
|
| 1,383,255 |
| (10) |
|
|
| 8.7 | % |
|
State Street Corporation |
|
|
| 828,033 |
| (11) |
|
|
| 5.2 | % |
|
* Less than one percent.
(3) Reflects shares of common stock held by the Hockema Family Trust. (4) Includes 1,325 shares of restricted stock for all directors except Mr. Grimley and 311 shares of restricted stock for Mr. Grimley that remained subject to forfeiture as of April 17, 2023 . (5) Includes 3,500 shares of our common stock held by a Keogh plan of which Dr. Osborne is the beneficiary and 500 shares held by the Rahnasto/Osborne Revocable Trust U/A DTD 11/07/1999 of which Dr. Osborne is a co-beneficiary and a co-trustee. (6) Includes 3,318 shares of our common stock held by the Truxton Trust of which Ms. Sebastian is the beneficiary and trustee. (7) Includes 50 shares of our common stock held by a family trust. 76 (8) |
Shares beneficially owned by BlackRock, Inc. |
Our corporate governance guidelines require that our board of directors conduct an appropriate review of all related-party transactions. The charter for the audit committee of our board of directors requires that any related-party transaction required to be disclosed under Item 404 of Regulation S-K must be approved by the audit committee. Neither our board of directors nor the audit committee has adopted any other specific policies or procedures for review or approval of related-party transactions.
AUDIT COMMITTEE REPORT
The audit committee charter requires the audit committee to undertake a variety of activities designed to assist our board of directors in fulfilling its oversight role regarding our independent registered public accounting firm's independence, our financial reporting process, our internal control over financial reporting and our compliance with applicable laws, rules and regulations. These requirements are briefly summarized under "Corporate Governance - Board Committees - Audit Committee" above. The audit committee charter also provides that the independent registered public accounting firm is ultimately accountable to our board of directors and the audit committee, not our management.
Our internal accountants prepare our consolidated financial statements and our independent registered public accounting firm is responsible for auditing those financial statements. The audit committee oversees the financial reporting processes implemented by our management but does not conduct any auditing or accounting reviews. The members of the audit committee are not company employees. Instead, the audit committee relies, without independent verification, on our management's representation that the financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and on the report of our independent registered public accounting firm on our financial statements. The audit committee's oversight does not provide it with an independent basis for determining whether our management has maintained appropriate accounting and financial reporting principles or policies or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit committee's discussions with our management and its accountants do not ensure that the financial statements are presented in accordance with accounting principles generally accepted in the United States of America or that the audit of our financial statements has been carried out in accordance with auditing standards of the Public Company Accounting Oversight Board or that our independent registered public accounting firm is in fact "independent."
We have engaged
Deloitte & Touche LLP as our independent registered public accounting firm to audit and report to our stockholders on our financial statements for77
our independent registered public accounting firm. In the course of these reviews, the audit committee considers, among other things:
Based on its review the audit committee believes that
Deloitte & Touche LLP is independent and that it is in the bestIn accordance with rules of the Securities and Exchange Commission and
Deloitte & ToucheThe audit committee has discussed with management and
Deloitte & Touche LLP significant accounting policies applied by us in our financial statements as well asThe audit committee reviewed and discussed the company's audited financial statements contained in our Annual Report on Form 10-K for the year ended
December 31,The audit committee also received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence and has discussed with Deloitte & Touche LLP its independence.
The audit committee discussed with our internal accountants and Deloitte & Touche LLP the overall scope and plans for their respective audits. The audit committee meets with management, our internal accountants and our independent accountants periodically in separate private sessions to discuss any matter that the audit committee, our management, our internal accountants, the independent accountants or such other persons believe should be discussed privately.
Based on the review and discussions referred to above, the audit committee recommended to our board of directors that our audited financial statements be included in our Annual Report on Form 10-K for the year ended
December 31,78
The audit committee considered whether, and concluded that, the provision by Deloitte & Touche LLP of the services for which we paid the amounts set forth under "Independent Public Accountants - Tax Fees" and "Independent Public Accountants - All Other Fees" below is compatible with maintaining the independence of Deloitte & Touche LLP.
This report is submitted by the members of the audit committee of the board of directors:
Audit Committee
Lauralee E. Martin (Chair)
Teresa M. Sebastian
Brett E. Wilcox
Kevin W. Williams
This Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this Audit Committee Report by reference therein.
INDEPENDENT PUBLIC ACCOUNTANTS
The following table presents fees for professional audit services rendered by Deloitte & Touche LLP for the audit of our annual financial statements for each of
|
| 2022 |
| 2021 | ||||||||
|
|
|
|
| ||||||||
Audit Fees(1) |
|
| $ | 2,844,299 |
|
|
|
| $ | 3,022,310 |
|
|
Audit-Related Fees (2) |
|
| $ | 10,701 |
|
|
|
|
| — |
|
|
Tax Fees (3) |
|
| $ | 8,886 |
|
|
|
| $ | 7,896 |
|
|
All Other Fees (4) |
|
| $ | 1,895 |
|
|
|
| $ | 2,801,895 |
|
|
2018 | 2019 | |||||||||||
Audit Fees(1) | $ | 1,827,000 | $ | 1,794,424 | ||||||||
Audit-Related Fees (2) | $ | 30,800 | $ | 21,216 | ||||||||
Tax Fees (3) | $ | 7,233 | $ | 7,456 | ||||||||
All Other Fees (4) | $ | 4,395 | $ | 310,272 |
The audit committee charter requires that the audit committee pre-approve all audit and non-audit engagements, fees, terms and services in a manner consistent with the Sarbanes-Oxley Act and all rules and applicable listing standards promulgated by the Securities and Exchange Commission and the Nasdaq Stock Market. The audit committee may delegate the authority to grant any pre-approvals of non-audit engagements to one or more members of the audit committee, provided that such member (or members) reports any pre-approvals to the audit committee at its next scheduled meeting. The audit committee has delegated pre-approval authority to its chair. All of the audit fees, audit-related fees, tax fees and other fees for 20192022 were pre-approved by the audit committee.
79
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
DELINQUENT SECTION 16 REPORTS
Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Such persons are required by regulation of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such reports or written representations from certain reporting persons received by us with respect to 2022, we believe that our officers and directors and persons who own more than 10% of a registered class of our equity securities have complied with all applicable filing requirements, except that the Form 4 filed on April 6, 2022 reporting one transaction for Mr. Tiffany was filed one day late.
OTHER MATTERS
We do not know of any other matters to be presented or acted upon at the Annual Meeting. If any other matter is presented at the Annual Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the proxy holders.
STOCKHOLDER PROPOSALS
To be considered for inclusion in our proxy statement for our 20212024 annual meeting of stockholders, proposals of stockholders must be in writing and received by us no later than December 30, 2020.January 5, 2024. To be presented at the 20212024 annual meeting of stockholders without inclusion in our proxy statement for such meeting, proposals of stockholders must be in writing and received by us no later than February 28, 2021March 6, 2024 and no earlier than January 29, 2021,February 4, 2024, in accordance with procedures set forth in our bylaws. Such proposals should be mailed to Kaiser Aluminum Corporation, 27422 Portola Parkway,1550 West McEwen Drive, Suite 200, Foothill Ranch, California 92610-2831500, Franklin, Tennessee 37067 and directed to the corporate secretary.
In addition to satisfying the foregoing requirements and other procedures set forth under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must provide notice that sets forth the information required by Rule 14a-19 of the Exchange Act (including a statement that such stockholder intends to solicit the holders of shares representing at least 67% of the voting power of the Company’s shares entitled to vote on the election of directors in support of nominees other than the Company’s nominees) no later than April 5, 2024 for the 2024 annual meeting; provided, however, that if the date of the 2024 annual meeting is changed by more than 30 calendar days from the anniversary of the Annual Meeting, then the notice must be provided by the later of 60 calendar days prior to the 2024 annual meeting or the 10th calendar day following the day on which public announcement of the date of the 2024 annual meeting is first made
By Order of the Board of Directors | |
John M. Donnan | |
Executive Vice President, | |
Officer and |
Franklin, Tennessee
April 29, 2020
80
Appendix A
Reconciliation of Non-GAAP Measures - Consolidated | |||||||||||
(Unaudited) | |||||||||||
(In millions of dollars, except share and per share amounts) | |||||||||||
Year Ended | |||||||||||
December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Net sales | $ | 1,514.1 | $ | 1,585.9 | $ | 1,397.5 | |||||
Hedged cost of alloyed metal1 | $ | (658.6 | ) | $ | (758.0 | ) | $ | (611.2 | ) | ||
Value added revenue | $ | 855.5 | $ | 827.9 | $ | 786.3 | |||||
GAAP net income | $ | 62.0 | $ | 91.7 | $ | 45.4 | |||||
Interest expense | 24.6 | 22.7 | 22.2 | ||||||||
Other expense, net2 | 20.7 | 0.9 | — | ||||||||
Income tax provision | 18.4 | 28.3 | 87.6 | ||||||||
GAAP operating income | 125.7 | 143.6 | 155.2 | ||||||||
Mark-to-market loss (gain)3 | 5.8 | 17.7 | (19.4 | ) | |||||||
Goodwill impairment | 25.2 | — | 18.4 | ||||||||
Other operating NRR loss (gain)4,5 | 6.9 | (0.4 | ) | 4.9 | |||||||
Operating income, excluding operating NRR items | 163.6 | 160.9 | 159.1 | ||||||||
Depreciation and Amortization | 49.1 | 43.9 | 39.7 | ||||||||
Adjusted EBITDA6 | $ | 212.7 | $ | 204.8 | $ | 198.8 | |||||
GAAP net income | $ | 62.0 | $ | 91.7 | $ | 45.4 | |||||
Operating NRR Items | 37.9 | 17.3 | 3.9 | ||||||||
Non-Operating NRR Items | 26.9 | 6.1 | 4.5 | ||||||||
Tax impact of above NRR Items | (15.8 | ) | (5.8 | ) | (3.1 | ) | |||||
NRR tax charge | — | — | 37.2 | ||||||||
Adjusted net income | $ | 111.0 | $ | 109.3 | $ | 87.9 | |||||
GAAP earnings per diluted share7 | $ | 3.83 | $ | 5.43 | $ | 2.63 | |||||
Adjusted earnings per diluted share7 | $ | 6.85 | $ | 6.48 | $ | 5.09 | |||||
1 Hedged cost of alloyed metal is our Midwest transaction price of aluminum plus the price of alloying elements plus any realized gains and/or losses on settled hedges, related to the metal sold in the referenced period. | |||||||||||
2 2017 restated to reflect the retrospective adoption of Accounting Standards Update ("ASU") 2017-07. | |||||||||||
3 Mark-to-market loss (gain) on derivative instruments for 2019 and 2018 represents the reversal of mark-to-market loss (gain) on hedges entered into prior to the adoption of ASU 2017-12 and settled in 2019 and 2018. Operating income excluding non-run-rate items reflects the realized loss (gain) of such settlements. | |||||||||||
4 NRR is an abbreviation for Non-Run-Rate; NRR items are pre-tax. | |||||||||||
5 Other operating NRR items primarily represent the impact of non-cash net periodic benefit cost (income) related to the salaried VEBA, adjustments to plant-level LIFO, non-cash asset impairment charges, environmental expenses and workers' compensation cost (benefit) due to discounting. | |||||||||||
6 Adjusted EBITDA = Consolidated Operating Income before non-run-rate plus Depreciation and Amortization. | |||||||||||
7 Diluted shares for EPS calculated using treasury method. |
Reconciliation of Non-GAAP Measures - Consolidated
(Unaudited)
(In millions of dollars, except share and per share amounts)
|
|
| |||||||||
| Year Ended December 31, |
| |||||||||
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
Net sales | $ | 3,427.9 |
|
| $ | 2,622.0 |
|
| $ | 1,172.7 |
|
Hedged cost of alloyed metal1 |
| (2,045.2 | ) |
|
| (1,511.0 | ) |
|
| (475.6 | ) |
Conversion revenue | $ | 1,382.7 |
|
| $ | 1,111.0 |
|
| $ | 697.1 |
|
|
|
|
|
|
|
|
|
| |||
GAAP net (loss) income | $ | (29.6 | ) |
| $ | (18.5 | ) |
| $ | 28.8 |
|
Interest expense |
| 48.3 |
|
|
| 49.5 |
|
|
| 40.9 |
|
Other expense (income), net |
| (6.4 | ) |
|
| 38.9 |
|
|
| 1.4 |
|
Income tax (benefit) provision |
| (8.3 | ) |
|
| (5.5 | ) |
|
| 10.0 |
|
GAAP operating (loss) income |
| 4.0 |
|
|
| 64.4 |
|
|
| 81.1 |
|
Mark-to-market (gain) loss2 |
| 1.4 |
|
|
| 1.4 |
|
|
| (2.6 | ) |
Restructuring cost (benefit) |
| 2.2 |
|
|
| (0.8 | ) |
|
| 7.5 |
|
Acquisition cost3 |
| 0.4 |
|
|
| 28.0 |
|
|
| 5.5 |
|
Goodwill impairment |
| 20.5 |
|
|
| - |
|
|
| - |
|
Non-cash asset impairment charge |
| 3.2 |
|
|
| - |
|
|
| - |
|
Other operating NRR loss4,5 |
| 3.3 |
|
|
| 0.3 |
|
|
| 7.7 |
|
Operating income, excluding operating NRR items |
| 35.0 |
|
|
| 93.3 |
|
|
| 99.2 |
|
Depreciation and amortization |
| 106.9 |
|
|
| 91.5 |
|
|
| 52.2 |
|
Adjusted EBITDA6 | $ | 141.9 |
|
| $ | 184.8 |
|
| $ | 151.4 |
|
|
|
|
|
|
|
|
| ||||
GAAP net (loss) income | $ | (29.6 | ) |
| $ | (18.5 | ) |
| $ | 28.8 |
|
Operating NRR items |
| 31.0 |
|
|
| 28.9 |
|
|
| 18.1 |
|
Non-operating NRR items7 |
| (4.6 | ) |
|
| 38.1 |
|
|
| 4.7 |
|
Tax impact of above NRR items |
| (5.5 | ) |
|
| (15.9 | ) |
|
| (5.6 | ) |
Adjusted net (loss) income | $ | (8.7 | ) |
| $ | 32.6 |
|
| $ | 46.0 |
|
|
|
|
|
|
|
|
| ||||
Net (loss) income per share, diluted8 | $ | (1.86 | ) |
| $ | (1.17 | ) |
| $ | 1.81 |
|
Adjusted (loss) earnings per diluted share8 | $ | (0.55 | ) |
| $ | 2.03 |
|
| $ | 2.89 |
|
1 | Hedged cost of alloyed metal is our Midwest transaction price of aluminum plus the price of alloying elements plus any realized gains and/or losses on settled hedges, related to the metal sold in the referenced period. |
2 | Mark-to-market (gain) loss on derivative instruments represents: (i) the reversal of mark-to-market (gain) loss on hedges entered into prior to the adoption of Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities and settled in the periods presented above and (ii) (gain) loss on non-designated commodity hedges. Adjusted EBITDA reflects the realized (gain) loss of such settlements. |
3 | Acquisition costs are non-run-rate acquisition-related transaction items, which include professional fees, as well as non-cash hedging charges recorded in connection with |
4 | NRR is an abbreviation for non-run-rate; NRR items are pre-tax. |
5 | Other operating NRR items primarily represent the impact of adjustments to environmental expenses and net periodic post-retirement service cost relating to Salaried |
6 | Adjusted EBITDA = Consolidated operating income, excluding operating NRR items, plus Depreciation and amortization. |
7 | Non-operating NRR items represents the impact of non-cash net periodic benefit cost related to the Salaried VEBA excluding service cost and debt refinancing charges. |
8 | Diluted shares for EPS are calculated using the treasury stock method and were excluded from the computations in periods of net loss per share as their inclusion would |
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The Proxy Statement contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flow of the company. This Appendix A provides a reconciliation of non-GAAP financial measures to the most directly comparable financial measure. The non-GAAP financial measures used within the Proxy Statement are value added revenue, adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share, which exclude non-run-rate items and ratios related thereto. “Non-run-rate” items are items that, while they may occur from period to period, are particularly material to results, impact costs primarily as a result of external market factors and may not occur in future periods if the same level of underlying performance were to occur. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors.
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