SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
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Preliminary Proxy Statement | ||
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x | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 | |
CURTISS-WRIGHT CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Dear Valued Stockholder:
You are cordially invited to attend the annual meeting of stockholders of Curtiss-Wright Corporation to be held on Thursday, May 6, 2021,5, 2022, at the Homewood Suites by Hilton, 125 Harbour Place Drive, Davidson, North Carolina 28036, commencing at 1:00 p.m. local time.time (the “Annual Meeting”).
We intend to hold the annual meeting of stockholdersAnnual Meeting in person.person again this year. The proxies that we solicit give you the opportunity to vote on all scheduled matters that come before the annual meeting. Whether or not you plan to attend, you can be sure that your shares are represented by promptly voting and submitting your proxy by phone or by internet as described in the following materials. If you want proxy materials mailed to you, you can make a request by completing, signing, dating and returning your proxy card enclosed with those materials in the postage-paid envelope providedprovided. Please refer to you.the accompanying Notice of Annual Meeting and Proxy Statement for further important information about the Annual Meeting.
In addition, we continue to actively monitor developments in relation to the COVID-19 pandemic and the related recommendations and protocols issued and that may be issued by public health authorities and governments. The health and well-being of our employees and stockholders is a high priority, and we are sensitive to the public health and travel concerns our stockholders may have. Accordingly, if we determine that it is not possible to hold our annual meeting of stockholdersAnnual Meeting in person, we will announce alternative arrangements for the meeting, which may include a change in venue or holding the meeting virtually. We will announce any such change and the details on how to participate both by press release and by posting details on our website at https://investors.curtisswright.com/governance/annual-meeting, which will also be filed with the SEC as proxy material. If you are planning to attend our annual meeting of stockholders,the Annual Meeting, please check our website the week of the meeting. As always, we encourage you to vote your shares by proxy prior to the annual meeting of stockholders.Annual Meeting.
The global economic effects associated with the COVID-19 pandemic have been unprecedented in their scope and depth. We have been following, and will continue to follow, all recommendations of the CDC and other agencies to maximize the safety and well-being of our employees. Throughout this crisis, our unwavering focus has been on striking a balance between doing everything we can to keep our workplace as safe as possible and stabilizing our business during this time of economic disruption. Curtiss-Wright has faced many challenges over our 90-year history and, as with previous downturns, we believe we have the ability to emerge from this crisis an even stronger company.
The Notice of Annual Meeting and the Proxy Statement, which follow this letter, provide information concerning matters to be considered and acted upon at the
annual meeting. We will present a brief report on our business followed by a question and answer period at the annual meeting.
In accordance with rules adopted by the U.S. Securities and Exchange Commission, we are using the internet as our primary means of furnishing proxy materials to our stockholders. Accordingly, most stockholders will not receive paper copies of our proxy materials. We will instead send our stockholders a notice with instructions for accessing the proxy materials and voting electronically over the internet or by telephone. The notice also provides information on how stockholders may request paper copies of our proxy materials. We believe electronic delivery of our proxy materials will help us reduce the environmental impact and costs of printing and distributing paper copies and improve the speed and efficiency by which our stockholders can access these materials.
Finally,
Over the past two years, the global economic effects associated with the COVID-19 pandemic have been unprecedented in their scope and depth. Throughout this crisis, we have been following, and will continue to follow, all recommendations of the CDC and other agencies to maximize the safety and well-being of our employees. Our unwavering focus has been on striking a balance between doing everything we can to keep our workplace as safe as possible and stabilizing our business during this time of economic disruption evidenced by our strong financial performance in fiscal year 2021. Curtiss-Wright has faced many challenges over our long and illustrious history and, as with previous downturns, we believe we will emerge from this crisis an even stronger company.
We are also resolutely focused on strengthening our culture and our workplace–putting greater emphasis on diversity, equity and inclusion, talent acquisition and development, and the employee experience. We’re also continuing to integrate environmental, social and governance (ESG) priorities into the core of Curtiss-Wright’s culture. We are committed to ensuring our business practices are sustainable. And we will do our part to respond to the ongoing environmental and social issues, so the state of our planet and our communities is healthier tomorrow than it is today.
I wishlook forward to your participation in the Annual Meeting. Meanwhile, I would note that, as I reflect on my first year as Curtiss-Wright’s CEO, I’m incredibly thankful for the entire Curtiss-Wright team working beside me across the globe today as we execute our Pivot to Growth strategy to create stockholder value. I want to thank Albert Smith, who will retire at our 2021 annual meeting of stockholders after 15 years of distinguished service and leadership as a member of our Board of Directors.Directors; our progress this year simply would not have been possible without their dedicated leadership. I’m grateful to have such an extraordinary team of individuals as partners in leading this company.
On behalf of your Board of Directors, management, and our employees, I would like to express our appreciation for your continued support.
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| LYNN M. BAMFORD |
CURTISS-WRIGHT CORPORATION
130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the holders of the common stock of Curtiss-Wright Corporation:
Notice is hereby given that the annual meeting of stockholders (the “Annual Meeting”) of Curtiss-Wright Corporation, a Delaware corporation (the “Company”), will be held on Thursday, May 6, 2021,5, 2022, at the Homewood Suites by Hilton, 125 Harbour Place Drive, Davidson, North Carolina 28036, commencing at 1:00 p.m.pm local time, for the following purposes:
(1) | To elect the ten | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) | To approve on an advisory | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) | To consider and transact such other business as may properly come before the Annual Meeting. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Only record holders of the Company’s common stock at the close of business on March 12, 2021,11, 2022, the record date for the Annual Meeting, are entitled to notice of and to vote at the Annual Meeting. A list of stockholders will be available for examination by any stockholder(s) at the Annual Meeting and during normal business hours at the offices of the Company, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036, during the ten days preceding the Annual Meeting date.
The Company cordially invites all stockholders to attend the Annual Meeting in person. Stockholders who plan to attend the Annual Meeting in person are nevertheless requested to vote their shares electronically over the Internet, or by telephone, or if you receive a proxy card in the mail, by mailingsigning, dating and returning the completed proxy card in the postage-paid envelope provided, to make certain that their vote will be represented at the Annual Meeting should they be prevented unexpectedly from attending.
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| By Order of the Board of Directors, | |
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March | PAUL J. FERDENZI |
We intend to hold the annual meeting of stockholders in person. ButAs always, but especially given public health concerns related to the COVID-19 pandemic, we urge you to consider votingvote by proxy in advance of the meeting through one of the remote methodsAnnual Meeting as described in this Notice of Annual Meeting and the Proxy Statement, which follows this letter,whether or not you currently plan to attend the Annual Meeting in lieu of attending the meeting in person.
In addition, we continue to actively monitor developments in relation to the COVID-19 pandemic and the related recommendations and protocols issued and that may be issued by public health authorities and governments. The health and well-being of our employees and stockholders is a high priority, and we are sensitive to the public health and travel concerns our stockholders may have. Accordingly, if we determine that it is not possible to hold our annual meeting of stockholders in person, we will announce alternative arrangements for the meeting, which may include a change in venue or holding the meeting virtually. We will announce any such change and the details on how to participate both by press release and by posting details on our website at https://investors.curtisswright.com/governance/annual-meeting, which will also be filed with the SEC as proxy material. If you are planning to attend our annual meeting of stockholders,Annual Meeting, please check our website the week of the meeting. As always, we encourage you to vote your shares by proxy prior to the annual meeting of stockholders.Annual Meeting.
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY SUBMIT YOUR PROXY ELECTRONICALLY OVER THE INTERNET OR BY TELEPHONE, OR IF YOU RECEIVE A PAPER PROXY CARD, PLEASE FILL IN, SIGN AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on Thursday, May 6, 2021.5, 2022. A Notice and Proxy Statement and combined Business Review/2020 Annual Report on Form 10-K to security holders are available at: www.proxyvote.com..
TABLE OF CONTENTS
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Director Qualifications, Experiences, Backgrounds, and Diversity | 12 | ||||||
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR |
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OTHER MATTERS WHICH MAY BE PRESENTED FOR ACTION AT THE MEETING |
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The following is a summary that highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information you should consider, and before voting, you are urged to carefully read the entire Proxy Statement.
Voting Matters and Vote Recommendations
The Company currently expects to consider three items of business at the 20212022 Annual Meeting. The following table lists those items of business and the Board of DirectorsBoard’s vote recommendation.
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Proposal | Board | Reasons for Recommendation | More Information | |||||
(1) | Election of the ten | FOR ALL | The Board and the Committee on Directors and Governance believe the nominees possess the skills, experience, qualifications, and diversity to effectively monitor performance, provide oversight and support management’s execution of the Company’s long-term strategy. | Page | ||||
(2) | Ratification of the independent registered public accounting firm | FOR | Based on their assessment, the Board and the Audit Committee believes that the appointment of Deloitte & Touche LLP is in the best interests of the Company and its stockholders. | Page | ||||
(3) | Advisory | FOR | The Company’s executive compensation program incorporates several compensation governance best practices and reflects the Company’s commitment to pay for performance. | Page | ||||
Set forth below is summary information concerning the Company’s director nomineesDirector Nominees who are being voted on at the Annual Meeting.
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Name | Age | Director | Principal Occupation | Independent |
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David C. Adams | 67 | 2013 | Executive Chairman, Curtiss-Wright Corporation; Former Chief Executive Officer, Curtiss-Wright Corporation | No |
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| 68 | 2013 | Executive Chairman, Curtiss-Wright Corporation; Former Chief Executive Officer, Curtiss-Wright Corporation | No |
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Lynn M. Bamford | 57 | 2021 | President and Chief Executive Officer, Curtiss-Wright Corporation | No |
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| 58 | 2021 | President and Chief Executive Officer, Curtiss-Wright Corporation | No |
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Dean M. Flatt | 70 | 2012 | Former President and Chief Operating Officer, Honeywell International’s Defense and Space business | Yes |
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| 71 | 2012 | Former President and Chief Operating Officer, Honeywell International’s Defense and Space business | Yes |
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S. Marce Fuller | 60 | 2000 | Former President and Chief Executive Officer, Mirant Corporation | Yes |
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| 61 | 2000 | Former President and Chief Executive Officer, Mirant Corporation | Yes |
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Bruce D. Hoechner | 61 | 2017 | President and Chief Executive Officer, Rogers Corporation | Yes |
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| 62 | 2017 | President and Chief Executive Officer, Rogers Corporation | Yes |
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Glenda J. Minor | 64 | 2019 | Chief Executive Officer and Principal, Silket Advisory Services | Yes |
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| 65 | 2019 | Chief Executive Officer and Principal, Silket Advisory Services | Yes |
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Anthony J. Moraco | 61 | N/A | Former Chief Executive Officer and member of the Board of Directors, Science Applications International Corporation | Yes |
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| 62 | 2021 | Former Chief Executive Officer and member of the Board of Directors, Science Applications International Corporation | Yes |
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Admiral (Ret.) | 72 | 2008 | Retired Commander of U.S. Fleet Forces Command; Former Vice Chief of Naval Operations | Yes |
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| 73 | 2008 | Retired Commander of U.S. Fleet Forces Command; Former Vice Chief of Naval Operations | Yes |
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Robert J. Rivet | 67 | 2011 | Former Executive Vice President, Chief Operations and Administrative Officer, Advanced Micro Devices, Inc. | Yes |
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| 68 | 2011 | Former Executive Vice President, Chief Operations and Administrative Officer, Advanced Micro Devices, Inc. | Yes |
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Peter C. Wallace | 66 | 2016 | Former Chief Executive Officer, Gardner Denver Inc. | Yes |
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| 67 | 2016 | Former Chief Executive Officer, Gardner Denver Inc. | Yes |
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Corporate Governance Highlights
The Company is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and executive leadership accountability, and helps build public trust in the Company. As part of the Company’sthis commitment, to high ethical standards, the Board has adopted best practices in corporate governance, including the following:
Board Independence
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• | 8 out of 10 director nominees are independent | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | 100% independent | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Executive Chairman and CEO are the only management Director nominees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lead Independent Director
• | Consults with Chairman regarding setting Board meeting agendas, and consults with all Board committees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Serves as liaison between the Chairman and the independent directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Facilitates communication between and among the independent directors and management | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Presides at all Board meetings where Chairman is not present, including executive sessions of the independent directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Is available, when appropriate, for consultation and direct communication with stockholders | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Coordinates annual Board performance review of Chief Executive Officer | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Leads the discussion of Board’s self-assessment and evaluation of results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Board Practices
• | Annual election of directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Annual Board and committee evaluations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Regular executive sessions of non-management directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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• | Robust risk oversight with Board and committee roles | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Best Practices
• | Comprehensive Code of Conduct and Corporate Governance Principles | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Anti-hedging and pledging policy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Annual Say-on-Pay Vote | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Clawback Policy for Incentive Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Robust | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Strong pay-for-performance philosophy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Succession Planning Process | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20202021 Financial Performance Highlights
In 2020,2021, Curtiss-Wright continued to take steps to mitigate the impact of the COVID-19 pandemic on our fiscal 2021 financial performance, including effective cost control measures and strong working capital management. Despite the sustained challenging operating environment, the Company performed very well in fiscal 2021, with strong increases in sales, profitability, and operating income.
In 2021, the Company’s three-year total shareholder return (TSR) ranked eightninth or the 50th43rd percentile among the Company’s peer group. TSR is the change in the Company’s common stockCommon Stock share price plus dividends from the beginning of the measurement period to the end (three years,
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1/1/20182019 to 12/31/2020)2021). The Company’s 20202021 financial performance for executive compensation included:
• | Adjusted operating income was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Adjusted operating margin was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Working capital as a percentage of sales was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company’s financial performance above excludes the performance of acquisitions consummated during the performance period, as well as otherincludes adjustments referenced in the Company’s fourth quarter 20202021 earnings release furnished to the SEC on February 25, 2021.24, 2022.
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Executive Compensation Practices Highlights
The Executive Compensation Committee is firmly committed to implementing a compensation program that aligns management and stockholder interests, encourages executives to drive sustainable stockholder value creation, and helps retain key personnel. In 2020,2021, the Company received 96% stockholder support for the Company’s “Say-on-Pay” vote, which the Executive Compensation Committee considers to be among the most important items of feedback about the Company’s executive compensation program. The Company recognizes and rewards its executive officers through compensation arrangements that directly link their pay to the Company’s performance, and the Company ensures a strong alignment of interests with its stockholders by including a significant amount of performance basedperformance-based compensation in the overall mix of pay. The Company’s pay mix includes base salary, an annual incentive cash bonus plan, and a long-term incentive plan under which the Company grants time-based restricted stock units and performance-based cash and stock units. Key elements of the Company’s pay practices are as follows:
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What Curtiss-Wright Does | What Curtiss-Wright Doesn’t Do | |||||
• | Aligns pay and performance using measures of financial and operating performance including use of relative TSR | • | No NEO employment agreements | |||
| • | Does not engage in executive compensation practices that encourage excessive risk | |||||
• | Balances short-term and long-term incentives using multiple performance measures that focus on profitable top line growth | • | No short sales, hedging, or pledging of Curtiss-Wright stock permitted | |||
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| • | No reloading, re-pricing or backdating stock options | ||
• | Places maximum caps on incentive payout consistent with market competitive practice | • | No tax gross-ups on change-in-control benefits for executives hired or promoted after January 2008 | |||
• | Establishes rigorous stock ownerships guidelines for NEOs and Board members including a 50% mandatory hold on net shares until ownership guidelines are met for NEOs | • | No dividends on unvested or unearned performance units/shares | |||
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• | Includes a claw back policy on all incentive compensation | • | No excessive severance and/or change in control provisions | |||
• | Uses an independent external compensation consultant to review and advise on executive compensation |
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• | Uses double trigger Change in Control Agreements for equity vesting under the Corporation’s | |||||
The Company believes that a commitment to positive environmental, social and governance-related business practices strengthens its businesses, increases the Company’s connection with its
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stockholders,all stakeholders, and helps the Company better serve its customers and the communities in which the Company operates. The Company’s commitment to social responsibility extends to the environment, trade compliance, responsible sourcing, human rights, labor practices and our employees’ health and safety. More information is available within the Sustainability section of the Company’s website atwww.curtisswright.com/company/sustainability/. The Company also sees in these commitments additional ways of creating value for the Company’s stockholders, current and prospective employees, customers and other stakeholders. The Company demonstrates its commitments through its corporate social responsibility program (“CSR”). The CSR program outlines the Company’s commitments, guidelines, and policies, which governs the Company’s behavior and its business practices.
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The CSR program consists of three inter-related activity areas that are mutually supportive of each other:
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| We conduct business in an environmentally conscious, socially responsible and ethical manner, including efforts to mitigate climate change and promote sustainability, while protecting the health and safety of the Company’s workers and community. | |||||
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| • | We comply with all applicable environmental, health and safety (EHS) laws and regulations. | |||
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| • | We encourage environmental and safety certifications for our manufacturing facilities. | |||
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| • | We conduct third-party EHS audits to verify that we are meeting our regulatory compliance requirements. | |||
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| • | In early 2021, we started to compile | |||
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| • | We protect the environment by conserving energy and water, minimizing waste and emissions, and promoting recycling and renewable energy to reduce adverse environmental impacts. We partner with a | |||
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| • | In early 2021, we launched a company-wide EHS Management System (EHS MS). The EHS MS details the required practices to maintain a proactive risk-based approach to identify and control risks, comply with regulatory requirements, and continuously improve performance. Implementation of the EHS MS | |||
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| • | We utilize safe technologies, training programs, effective risk management practices, and sound science in our operations to minimize risk to employees. | |||
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| We believe a diverse and inclusive workforce creates a richer culture, enhances performance, and attracts the best talent. | ||||||
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| • | We build a culture of inclusion with a focus on leadership, eliminating systemic barriers and fostering engagement. We partner with a third-party employment engagement survey provider to survey our world-wide employees concerning our work environments. | |||
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| • | We promote ongoing career development for employees to encourage innovation and engagement through constructive reviews and various talent/leadership development initiatives. | |||
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| • | We offer a tuition reimbursement program for those employees seeking to improve or complete their education consistent with their career paths. | |||
| • | We are committed to providing a safe and healthy work environment for our global employee base, guided by a strong set of core | |||||||
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| We promote the well-being of the communities in which the Company’s employees work and live. | ||||||
Community Involvement |
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| • | We encourage employee involvement through charitable donations and volunteer programs. | ||
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| • | Our Code of Conduct includes several important provisions on human rights, including prohibitions on the use of child labor or forced, bonded or indentured labor in our operations, as well as compliance with all applicable laws, including environmental. | |||
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| • | We are committed to responsible sourcing of materials for our products by not directly purchasing conflict minerals and not having direct relationships with mines or smelters that process these minerals. | |||
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| • | We maintain a strict supplier code of conduct that sets expectations about supplier behavior. | |||
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| • | We conduct global workforce training programs on ethics and anti-bribery/trade compliance and we offer a global, 24/7 anonymous ethics hotline. | |||
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| • | We conduct EH&S and financial audits of our facilities worldwide to ensure compliance with all applicable laws, regulations, policies, and procedures. | |||
In support of the CSR, the Company maintains the following policies aimed at protecting the environment, health and safety, ethics and compliance with laws, respect for human rights, and supply chain management, all of which are available within the Governance section of the Company’s website at investors.curtisswright.com/governance/governance-documents/or by sending a request in writing to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036:
• | Corporate Social Responsibility | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Code of Conduct | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Code of Conduct - Suppliers and Customers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Conflict Minerals Policy Statement | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | California Transparency in Supply Chains Act of 2010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Environmental, Health and Safety Policy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Human Trafficking and Slavery, including a Modern Slavery Statement | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By adhering to the principles contained in the CSR program, the Company enriches the economic, social, and environmental aspects of the communities in which the Company’s employees live and work, which enhances the profitability of the Company and benefits the Company’s stockholders, employees, stockholders, and customers.
6
Background to the Solicitation
The Company considers shareholder feedback an important contributor to corporate governance and strategic matters considered by the Board of Directors of the Company (the “Board” or “Board of Directors”). Following its 2021 Investor Day, the Company engaged with many of its stockholders and prospective stockholders regarding the Company’s business, new Pivot to Growth strategy, financial condition, governance, capital allocation preferences and other topics of interest to stockholders.
On January 10, 2022, a representative of Saddle Point Management L.P. (together with its affiliates, “Saddle Point”) contacted the Company, seeking a meeting with management. Between January 11, 2022 and January 31, 2022, the Company engaged in a number of discussions with representatives of Saddle Point. On January 31, 2022, Saddle Point submitted to the Company a notice of nomination of four director candidates. In the notice of nomination, Saddle Point disclosed it was the beneficial owner of 114,577 shares of our Common Stock, which constituted approximately 0.298% of the Company’s outstanding Common Stock as of January 31, 2022. On February 2, 2022, Saddle Point submitted to the Company a notice of two precatory proposals to be brought by Saddle Point before the Annual Meeting.
Between February 3, 2022 and March 1, 2022, the Company and the Board continued to engage with Saddle Point, including interviewing two Saddle Point director nominees. The Board determined, after thoughtful consideration and based on the recommendation of the Committee on Directors and Governance, that Saddle Point’s director nominees did not bring strengths to the Board that would enhance the expertise and qualifications already represented on the Board and that it was not in the best interests of the Company to nominate any of the Saddle Point nominees on management’s slate at the Annual Meeting. The Board also determined that Saddle Point’s precatory proposals were not in the best interests of stockholders. The Company informed Saddle Point of the Board’s view, following extensive analysis by management and the Company’s advisors, that Saddle Point’s investment thesis and analysis did not reflect a full understanding of the value of the businesses Saddle Point sought to have divested or of the ability of the Board and management to best manage the Company’s portfolio.
On March 2, 2022, the Company filed its preliminary proxy statement with the SEC, disclosing Saddle Point’s nominations and precatory proposals. Representatives of Saddle Point continued to seek to engage with the Company, and management engaged in additional conversations with representatives of Saddle Point.
On March 8, 2022, Saddle Point delivered to the Company a letter withdrawing its director nominations and precatory proposals and confirming that Saddle Point is not nominating any director for election or proposing any business at the Annual Meeting.
On March 9, 2022, the Company issued a press release announcing Saddle Point had withdrawn its director nominations and precatory proposals.
7
CURTISS-WRIGHT CORPORATION
130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036
This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Curtiss-Wright Corporation, a Delaware corporation (the “Company”), for use at the annual meeting of stockholders of the Company (the “Annual Meeting”) to be held on Thursday, May 6, 2021,5, 2022, at 1:00 p.m. local time, at the Homewood Suites by Hilton, 125 Harbour Place Drive, Davidson, North Carolina 28036, and at any adjournments or postponements thereof.
INTERNET AVAILABILITY OF PROXY MATERIALS
Pursuant to the rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), the Company is furnishing proxy materials to its stockholders primarily via the internet, rather than mailing paper copies of these materials to each stockholder. On or about March 26, 2021,25, 2022, the Company will mail to each stockholder of record as of March 12, 202111, 2022 (other than those stockholders who previously had requested paper delivery of proxy materials) a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review the proxy materials, including a Notice and Proxy Statement and the Company’s combined Business Review/20202021 Annual Report on Form 10-K filed with the SEC. The Notice of Internet Availability of Proxy Materials also contains instructions on how to request a paper copy of the proxy materials. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a paper copy of the proxy materials unless you request one. If you would like to receive a paper copy of the proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. You can also choose to receive future proxy materials by email by following the instructions included in the Notice of Internet Availability of Proxy Materials. This will help the Company reduce the environmental impact and costs of printing and distributing paper copies and improve the speed and efficiency by which the Company’s stockholders can access these materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy-voting site. Your election to receive proxy materials by email will remain in effect until you revoke it. The Company may at its discretion voluntarily choose to mail or deliver a paper copy of the proxy materials, including a Notice and Proxy Statement and the combined Business Review/2020Company’s 2021 Annual Report on Form 10-K filed with the SEC, to one or more stockholders.
INFORMATION CONCERNING THE ANNUAL MEETING
Mailing and Solicitation. A Notice and Proxy Statement and combined Business Review/2020the Company’s 2021 Annual Report on Form 10-K and accompanying form of proxy card attached hereto are being distributed or made available via the internet to the Company’s stockholders on or about March 26, 2021.25, 2022. For information about stockholders’ eligibility to vote at the Annual Meeting, please see “Record Date and Outstanding Stock” below. The Company will pay the cost of the solicitation of proxies. The solicitation is to be made primarily by mail but may be supplemented by telephone calls and personal solicitation by officers and other employees of the Company. The Company will reimburse banks and nominees for their expenses in forwarding proxy materials to the Company’s beneficial owners.
Proxies. Whether or not you plan to attend the Annual Meeting, the Company requests that you vote prior to the Annual Meeting: (i) via the internet, by following the instructions provided in the Notice of Internet Availability of Proxy Materials, (ii) via telephone, by following the instructions provided in the Notice of Internet Availability of Proxy Materials, or (iii) via mail, by completing, signing, dating and mailing a paper proxy card in a postage-paid return envelope, which a stockholder can request as outlined in the Notice of Internet Availability of Proxy Materials. A control number, contained in the Notice of Internet Availability of Proxy Materials, is designed to verify your identity, and allow you to vote your shares, and confirm that your voting instructions have been properly recorded.
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If your shares are registered directly in your name, you are the holder of record of these shares and the Company is sending a Notice of Internet Availability of Proxy Materials directly to you. As the holder of record, you have the right to vote by one of the three ways mentioned above or in person at the Annual Meeting. If your shares are held in “street name”, your bank, broker, or other nominee will send to you a Notice of Internet Availability of Proxy Materials. As a holder in street name, you have the right to direct your bank, broker, or other nominee how to vote by submitting voting instructions in the manner directed by your bank, broker, or other nominee. If you hold shares in street name and you wish to vote in person at the Annual Meeting, you must obtain a proxy issued in your name from your bank, broker, or other nominee and bring that proxy to the Annual Meeting.
Broker non-votes. Under the rules of the New York Stock Exchange (“NYSE”), a bank, broker, or other nominee who holds shares in “street name” for customers is precluded from exercising voting discretion with respect to the approval of non-routine matters (so called “broker non-votes”) in the absence of specific instructions from such customers. The (1) election of Directors (see Proposal One) and (3) the advisory (non-binding) vote to approve the compensation of the Company’s named executive officers (See Proposal Three) are considered “non-routine” matters under applicable NYSE rules. Therefore, a bank, broker, or other nominee is not entitled to vote the shares of Company common stock unless the beneficial owner has given instructions. As such, there may be broker non-votes with respect to these proposals. On the other hand, the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 20212022 (see Proposal Two) is considered a “routine” matter under applicable NYSE rules. Therefore, a bank, broker, or other nominee will have discretionary authority to vote the shares of Company common stock if the beneficial owner has not given instructions and no broker non-votes will occur with respect to this proposal.
Voting In Accordance With Instructions. The shares represented by your properly submitted proxy received by mail, telephone, Internet, or in person will be voted in accordance with your instructions. If you are a registered holder and you do not specify in your properly submitted proxy how the shares represented thereby are to be voted, your shares will be voted:
(1) | “FOR” the election as Directors of the nominees proposed (see Proposal One), | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | “FOR” the ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) | “FOR” the compensation of the Company’s named executive officers under the proposal regarding the advisory (non-binding) vote to approve the compensation of the Company’s named executive officers (see Proposal Three). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
If your shares are held in street name and you do not specify how the shares represented thereby are to be voted, your bank, broker, or other nominee may exercise its discretionary authority to vote on Proposal Two only.
The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting, but if other matters are properly brought before the Annual Meeting, shares represented by properly completed proxies received by mail, telephone, internet, or in person will be voted in accordance with the judgment of the persons named as proxies.
Signatures in Certain Cases. If a stockholder is a corporation or unincorporated entity such as a partnership or limited liability company, the enclosed proxy should be signed in its corporate or other entity name by an authorized officer or person and his or her title should be indicated. If shares are registered in the name of two or more trustees or other persons, the proxy must be signed by a majority of them. If shares are registered in the name of a decedent, the proxy should be signed by the executor or administrator and his or her title should follow the signature.
Revocation of Proxies. Whether the proxy is submitted via the internet, telephone, or mail, stockholders have the right to revoke their proxies at any time before a vote is taken. If your shares are registered in your name, you may revoke your proxy (1) by notifying the Corporate Secretary of the Company in writing at the Company’s address given above, (2) by executing a new proxy bearing a later date or by submitting a new proxy by telephone or the internet on a later date, provided the new proxy is received by Broadridge Financial Solutions Inc. (which will have a representative present at the Annual Meeting) before the vote, (3) by attending the Annual Meeting and voting in person, or (4)
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by any other method available to stockholders by law. If your shares are held in street name, you should contact the record holder to obtain instructions if you wish to revoke your vote before the Annual Meeting.
Record Date and Outstanding Stock. The close of business on March 12, 202111, 2022 has been fixed as the record date of the Annual Meeting, and only stockholders of record at that time will be entitled to vote. The only capital stock of the Company issued and outstanding is the common stock, par value $1.00 per share (the “Common Stock”). As of March 12, 2021,11, 2022, there were 40,918,91038,432,177 shares of Common Stock issued and outstanding constituting all the capital stock of the Company entitled to vote at the Annual Meeting. Each stockholder is entitled to one vote for each share of Common Stock held.
Quorum. The presence, in person or by properly executed proxy, of the holders of a majority of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
Required Vote.
Election of Directors: A plurality of the Common Stock present in person or represented by proxy (and eligible to vote), at a meeting in which a quorum is present. However, under our corporate governance guidelines, in an uncontested election where the only nominees are those recommended by the Board, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election is required to tender his or her resignation following certification of the stockholder vote. The Committee on Directors and Governance is required to make recommendations to the Board with respect to any such letter of resignation. The Board is required to take action with respect to this recommendation and to disclose their decision-making process. Full details of this policy are set out under “Proposal One: Election of Directors” on page 1011 of this Proxy Statement.
Ratification of Deloitte & Touche LLP: The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy (and eligible to vote), at a meeting in which a quorum is present.
Advisory (non-binding vote) to approve the compensation of the Company’s named executive officers: The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy (and eligible to vote), at a meeting in which a quorum is present.
Calculating Votes. Under the Delaware General Corporation Law, an abstaining vote and a broker non-vote are counted as present and eligible to vote and are, therefore, included for purposes of determining whether a quorum is present at the Annual Meeting.
With respect to election of directors (see Proposal One), if you “withhold” authority to vote with respect to one or more director nominees, your vote will have no effect on the election of such nominees. Broker non-votes will have no effect on the election of the nominees.
With respect to the ratification of Deloitte & Touche LLP (see Proposal Two), if you “abstain”from voting with respect to this Proposal, your vote will have the same effect as a vote “against” the Proposal. A bank, broker, or other nominee may exercise discretion to vote shares as to which instructions are not given on this Proposal and accordingly, no “broker non-votes” will occur with respect to this Proposal.
With respect to the advisory vote to approve executive compensation (see Proposal Three), if you “abstain”from voting with respect to this Proposal, your vote will have the same effect as a vote “against” such Proposal. Broker non-votes will not be counted as having voted either for or against this Proposal.
Dissenter’s Rights of Appraisal. The stockholders have no dissenter’s rights of appraisal under the Delaware General Corporation Law, the Company’s Restated Certificate of Incorporation, or the Company’s Amended and Restated By-Laws with respect to the matters to be voted on at the Annual Meeting.
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PROPOSAL ONE: ELECTION OF DIRECTORS
At the date of this Proxy Statement, the Board of Directors of the Company (the “Board” or “Board of Directors”) consists of ten members, eight of whom are non-employee Directors. However, Albert E. Smith, who is presently a Director of the Company, has advised the Board of his decision to retire from the Board after almost 15 years of service. Mr. Smith’s term will expire just prior to the Annual Meeting. Mr. Smith served on the Board with great distinction.
The Committee on Directors and Governance of the Board of Directors has recommended, and our full Board of Directors has nominated, David C. Adams, Lynn M. Bamford, Dean M. Flatt, S. Marce Fuller, Bruce D. Hoechner, Glenda J. Minor, Anthony J. Moraco, John B. Nathman, Robert J. Rivet, and Peter C. Wallace, each currently serving Directors, to be elected to the Board for a one-year term. Pursuant to the Company’s Restated Certificate of Incorporation and in connection with the promotion of Lynn M. Bamford to President and Chief Executive Officer of the Company on January 1, 2021, the Board acting through a majority of Directors increased its membership by electing Ms. Bamford as a director on January 1, 2021. Additionally, the Committee on Directors and Governance of the Board has recommended, and our full Board has also nominated Anthony J. Moraco to be elected to the Board for a one-year term. Mr. Moraco is not currently serving as a Director of the Company and has never served in such capacity for the Company in the past. The Committee on Directors and Governance used the services of a third-party executive search firm to assist in identifying and evaluating Mr. Moraco as a nominee for Director. In the event that any nominee should become unavailable for election, the persons named in the proxy may vote for the election of a substitute nominee.
Directors will be elected by a plurality of votes properly cast (in person or by proxy) at the Annual Meeting. This means that a person will be elected who receives the first through ninthtenth highest number of votes, even if he or she receives less than a majority of the votes cast. Therefore, stockholders who do not vote or withhold their vote from one or more of the proposed nominees and do not vote for another person, will not affect the outcome of the election provided that a quorum is present at the Annual Meeting. However, under our corporate governance guidelines, in an uncontested election of Directors where the only nominees are those recommended by the Board (which is the case for the election of Directors at this Annual Meeting), any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election (a “Majority Withheld Vote”) is required to tender his or her resignation following certification of the stockholder vote. The Committee on Directors and Governance must promptly consider the resignation offer and a range of possible responses based on the circumstances that led to the Majority Withheld Vote, if known, and make a recommendation to the Board. The Board will act on the Committee on Directors and Governance recommendation within 90 days following certification of the stockholder vote. Thereafter, the Board will promptly disclose its decision-making process and decision regarding whether to accept the Director’s resignation (or the reason(s) for rejecting the resignation offer, if applicable) in a Form 8-K filed with the SEC. Any Director who tenders his or her resignation pursuant to this provision will not participate in the Committee on Directors and Governance recommendation or the Board action regarding whether to accept or reject the resignation offer.
As further discussed in the section titled “Broker non-votes” on page 89 of this Proxy Statement, if you own shares of Common Stock through a bank, broker or other holder of record, you must instruct your bank, broker, or other holder of record how to vote in order for them to vote your shares of Common Stock so that your vote can be counted on this Proposal One.
10RECOMMENDATION OF THE BOARD OF DIRECTORS
Overview of Curtiss-Wright’s Current Board of Directors
The Board believes there are general requirements for service as a member of the Board that are applicable to all directors as laid out below, and other specialized characteristics that should be represented on the Board as a whole but not necessarily by each director. The specific qualifications, skills, experiences, and backgrounds of our directors are detailed in the section titled “Director Qualifications, Experiences, Backgrounds, and Diversity” on page 12 of this Proxy Statement.
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Our Directors Exhibit: | Board Composition: | |
High integrity | Independent Directors: 8 of 10 | |
Loyalty to the Company and commitment to its success | Average Company Board Tenure: | |
Proven record of success | Average Age: | |
Knowledge of corporate governance and practices | Diversity of gender, race or |
Our Directors Bring to the Boardroom:
High level of leadership experience
Specialized industry experience
Financial expertise
Extensive knowledge of the Company
Set forth in the table below is a summary of the current Board’s collective qualifications, experiences, backgrounds, and diversity:
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Director Qualifications, Experiences, Backgrounds, and Diversity
The Company’s director nominees have substantial leadership, management, and industry experience and expertise in various fields. This diversity of experience and background of our director nominees, illustrated in the skills matrix and director nominees’ biographies that follow, is brought to bear in Board deliberations, during which multiple perspectives are considered in developing dynamic solutions to achieve the Company’s strategic priorities to reduce complexity, drive returns, and advance sustainably.
The skills matrix below summarizes the specific qualifications, skills, experiences, and backgrounds of each director nominee. While each director nominee is generally knowledgeable in each of these areas, an “X” in the skills matrix below indicates that the item is a specific qualification, skill, experience or attribute that the director nominee brings to the Board. The lack of an “X” for a particular item does not mean that the director nominee does not possess that qualification, skill, experience or attribute. Because the skills matrix is only a summary, it does not include all the qualifications, skills, experiences, backgrounds, and diversity that each director nominee offers.
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| Director | Audit Committee Financial Expert |
Knowledge of Company’s Business and Industry | Extensive M&A Experience |
International Experience | Other Public Company Board Experience | Current or Former CEO | Senior Leadership Experience | Gender/Ethnic Diversity | |||||||||||||||||||||||||||||||||||||||
| X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||
| Lynn M. Bamford | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||
| Dean M. Flatt | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||
| S. Marce Fuller | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||
| Bruce D. Hoechner | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||
| Glenda J. Minor | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||
| Anthony J. Moraco | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||
| John B. Nathman | X | X | |||||||||||||||||||||||||||||||||||||||||||||
| Robert J. Rivet | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||
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| X | X | X | X | X | X |
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Information Regarding Nominees
Set forth below is information with respect to the nominees for Directors. Such information includes the principal occupation of each nominee for Director during, at least, the past five years, as well as a brief description of the particular experience, qualifications, attributes or skills that qualify the nominee to serve as a Director of the Company.
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| David C. Adams, age Mr. Adams has been an employee of the Company for more than | |
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| Lynn M. Bamford, age Ms. Bamford has been an employee of the Company for more than | |
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| Dean M. Flatt, age | |
Mr. Flatt has an in-depth understanding of the aerospace | ||
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| S. Marce Fuller, age | |
Ms. Fuller has an in-depth understanding of the power generation industry, evidenced by her past employment at Southern Energy and Mirant Corporation, both leading power generation companies. At these companies, Ms. Fuller served at times in increasing levels of managerial responsibility, beginning with Vice President at Southern Energy and then as President and Chief Executive Officer of both Southern Energy and Mirant Corporation. Ms. Fuller’s ability to lead a company at the highest level of management, coupled with her in-depth knowledge of the power generation industry, one of the Company’s largest markets, provides the Company a competitive advantage in seeking new opportunities and platforms for its power generation industry products and services. She is also financially literate in accordance with NYSE listing standards. | ||
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| Bruce D. Hoechner, age | |
Mr. Hoechner has many years of broad leadership experience across numerous geographies, businesses, and functions with particularly strong international | ||
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| Glenda J. Minor, age | |
Ms. Minor has many years of broad financial and international leadership experience across different industries and different continents, which have provided her with an in-depth understanding of the preparation and analysis of financial statements, and invaluable experience in capital market transactions, accounting, treasury, investor relations, financial and strategic planning, and business expansion. She is also financially literate in accordance with NYSE listing standards and an “audit committee financial expert” in accordance with SEC regulations. Ms. Minor’s extensive financial knowledge will be an invaluable asset to the Board in its oversight of the integrity of the Company’s financial statements and the financial reporting process. Additionally, Ms. Minor’s experience in mergers and acquisitions and business expansion provides the Company a competitive advantage in seeking new strategic business opportunities and platforms for its products and services. | ||
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| Anthony J. Moraco, age | |
Mr. Moraco has an in-depth understanding of the aerospace and defense industry, evidenced by his past employment at SAIC and Leidos, as well as his previous leadership roles at the Boeing Company Space & Intelligence Mission Systems and Phantom Works. In addition, Mr. Moraco has extensive experience in U.S. government contracting. Mr. Moraco’s market knowledge, leadership skills, financial acumen, and operational management ability proven during his tenure as CEO of SAIC and as an executive of Leidos, along with his prior public company board experience, enhances Mr. Moraco’s contributions and | ||
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| Admiral (Ret.) John B. Nathman, age Admiral Nathman’s strong leadership, coupled with an in-depth understanding of U.S. government spending, especially defense spending and military products, evidenced by 37 years of service in high-level commands in the United States Navy, provides the Company a competitive advantage in seeking new opportunities and platforms for its defense industry products and services. | |
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| Robert J. Rivet, age | |
Mr. Rivet has 35 years of broad financial and international leadership experience across different technology industries, which has provided him an in-depth understanding of the preparation and analysis of financial statements, | ||
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| Peter C. Wallace, age | |
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Mr. Wallace has a wide and varied background as a senior executive, including having served as CEO of several leading companies in global industrial equipment manufacturing, | ||
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Directorships at Public Companies
The following table sets forth any directorships at other public companies and registered investment companies held by each Director and nominee for Director at any time during the past five years.
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Name of Director | Company | |
David C. Adams | Snap-On Incorporated (since 2016) | |
Dean M. Flatt | Ducommun Incorporated (since 2009) | |
Bruce D. Hoechner | Rogers Corporation (since 2011) | |
Glenda J. Minor | Albemarle Corporation (since 2019) | |
Anthony J. Moraco | Science Applications International Corporation (until 2019) | |
Peter C. Wallace | Applied Industrial Technologies, Inc. (since 2005) |
There are no family relationships between any of the Company’s Directors, executive officers, or persons nominated or chosen by the Company to become a director or executive officer.
None of the Company’s Directors, executive officers, or persons nominated or chosen by the Company to become a director has been, during the past ten years: (i) involved in any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time; (ii) convicted of any criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction or Federal or State authority, permanently or temporarily enjoined, barred, suspended, or otherwise limited from involvement in any type of business, securities, futures, commodities, or banking activities; (iv) found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; (v) subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, related to an alleged violation of securities or commodities law or regulation; any law or regulation respecting financial institutions or insurance companies; or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (vi) the subject of, or a party to, any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity of the Commodity Exchange Act or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member.
For information concerning compensation of our Directors, please see “Compensation of Directors” on page 5964 of this Proxy Statement.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS ATHAT STOCKHOLDERS VOTE “FOR THE ELECTION OF EACHALL” OF THE COMPANY’S DIRECTOR NOMINEES FOR DIRECTORLISTED ABOVE (PROPOSAL 1).
STRUCTURE AND PRACTICES OF THE BOARD OF DIRECTORS
Corporate Governance Guidelines and ComplianceCode of Conduct
The Board of Directors has adopted corporate governance guidelines that provide the framework for the governance of the Company.Company and contains a code of conduct that applies to every Director. The corporate governance guidelines are available within the Corporate Governance section of the Company’s website athttps://investors.curtisswright.com/governance/governance-documents or by sending a request in writing to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036.
The corporate governance guidelines address, among other things, standards for Director independence, meetings of the Board, executive sessions of the Board, committees of the Board, the compensation of Directors, duties of Directors to the Company and its stockholders, and the Board’s role in management succession.succession, and includes policies on, among other things, conflicts of interest, corporate opportunities, and insider trading. The BoardCommittee on Directors and Governance reviews these principles and other aspects of governance annually.at least annually and is amended as the Board deems appropriate upon the recommendation of the Committee on Directors and Governance for updates in response to changing regulatory requirements and as business circumstances warrant.
The Company also maintains a code of conduct that applies to every employee, including the Company’s Executive Chairman, President and Chief Executive Officer, Chief Financial Officer, and Corporate Controller. The Company’s code of conduct includes policies on, among other things, employment, conflicts of interest, financial reporting, the protection of confidential information, insider trading and hedging, and requires strict adherence to all laws and regulations applicable to the conduct of the Company’s business. The Company’s code of conduct is available within the Corporate Governance section of the Company’s website at https://investors.curtisswright.com/governance/governance-documents or by sending a request in writing to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. The Company reviews the code of conduct at least annually and is amended as appropriate for updates to changing regulatory requirements and as business circumstances warrant.
The Company designed the corporate governance guidelines and the code of conduct to ensure that its business is conducted in a consistently legal and ethical manner. The Company will disclose any waivers or amendments of the codes of conduct pertaining to Directors or the Company’s Chief Executive Officer, Chief Financial Officer, and Corporate Controller on its website at www.curtisswright.com in accordance with applicable law and the requirements of the NYSE corporate governance standards. To date, no waivers have been requested or granted and no amendments have been made requiring disclosure.
To enhance understanding of and compliance with the Company’s code of conduct, the Company has undertaken several additional steps. Through a third-party provider, the Company maintains an on-line training program that is annually circulated to all Company employees in order to enhance the Company’s culture of ethical business practices. In addition, although all employees are encouraged to personally report any ethical concerns without fear of retribution, the Company, through a third-party provider, maintains the Company’s Hotline (the “Hotline”), a global, toll-free telephone and web-based system through which employees may report concerns confidentially and anonymously. The Hotline facilitates the communication of ethical concerns and serves as the vehicle through which employees may communicate with the Audit Committee confidentially and anonymously regarding any accounting, internal controls or auditing concerns.
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The Board has regularly scheduled meetings each year, and special meetings are held as necessary. In addition, management and the Directors communicate informally on a variety of topics, including suggestions for Board or committee agenda items, recent developments, and other matters of interest to the Directors. Each Director has full access to management.
A meeting of the Company’s non-employee Directors in executive session without any employee Directors or members of management present is scheduled at every regularly scheduled Board meeting. During 2020,2021, the non-employee Directors met sevenfour times in executive session. In May 2018, Albert E. Smith was appointed by the Board to serve as Lead Independent Director for such executive sessions for a term of three years being renewed every year until 2021, or until his successor is appointed. The Board renewed Mr. Smith’s term as Lead Independent Director in May 2020. In February 2021, S. Marce Fuller was appointed by the Board to serve as Lead Independent Director effective May 2021 for2021; Ms. Fuller is expected to serve a three-year term, of three years being renewed every year until 2024 or until her successor is appointed.subject to reappointment on an annual basis. The Lead Independent Director reviews the agenda items from the meeting with all non-employee Directors and leads discussions with the independent Board members and coordinates follow up discussions with management. For a further discussion on the position of Lead Independent Director, please read the section titled “Board Leadership Structure”beginning on page 2225 of this Proxy Statement.
Directors are expected to attend all meetings of the Board and each committee on which they serve. In 2020,2021, the Board held teneight meetings and committees of the Board held a total of 1816 meetings. During 2020,2021, no Director attended less than 75% of the aggregate number of meetings of the Board of Directors and of the committee or committees on which he or she served, during the period that he or she served.
The Company does not have a formal policy with respect to Director attendance at the annual meeting of stockholders. The Company believes that the potential expense involved with requiring all non-employee Directors to attend the annual meeting of stockholders outweighs the benefit of such attendance because meeting agenda items are generally uncontested, nearly all shares voted are voted by proxy, and stockholder attendance at the meetings is traditionally very low. Accordingly, no non-employee Directors attended the Company’s 2020 annual meeting of stockholders. David C. Adams, the Company’s then Chairman and Chief Executive Officer, did attend the Company’s 2020 annual meeting of stockholders. Mr. Adams, the Company’s Executive Chairman and Ms. Lynn M. Bamford, the Company’s President and Chief Executive Officer, will attendattended the Company’s 2021 annual meeting of stockholders. Barring unforeseen circumstances (including matters relating to the COVID-19 pandemic), some of the Directors standing for re-election (including our Chief Executive Officer and Executive Chairman) are expected to be present at the 2022 annual meeting of stockholders where they will be available for questions.
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The Company believes communications between the Board and the Company’s stockholders, employees, and other interested parties is an important part of the corporate governance process. Stockholders, employees, and other interested parties wishing to contact the Board directly may initiate in writing any communication with: (i) the Board, (ii) any committee of the Board, (iii) the non-employee Directors as a group, or (iv) any individual non-employee Director by sending the communication to Lead Independent Director, c/o Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. The name of any specific intended Board recipient should be noted in the communication. However, priorPrior to forwarding any correspondence, the Lead Independent Director will review such correspondencecorrespondence. Any communications received by the Lead Independent Director regarding concerns relating to accounting, internal controls or auditing matters will promptly be brought to the attention of the Audit Committee and will be handled in accordance with the procedures established by the Audit Committee to address these matters. However, the Lead Independent Director, in his or her discretion, will not forward certain items if they are deemed inappropriate for submission, including, without limitation, solicitations, commercial advertisements, communications that do not relate directly or indirectly to be of a commercial naturethe Company’s business or that relate to improper or irrelevant topics, or are sent in bad faith.
The corporate governance guidelines provide independence standards generally consistent with the New York Stock Exchange listing standards. These standards specify the criteria by which the independence of the Company’s Directors will be determined and require the Board annually to determine affirmatively that each independent Director has no material relationship with the Company other than as a Director. The Board has adopted the standards set out in the corporate governance guidelines, which are posted within the Corporate Governance section of the Company’s website at
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https://investors.curtisswright.com/governance/governance-documents, for its evaluation of the materiality of any Director relationship with the Company. To assist in the Board’s determination, each Director completed a questionnaire designed to identify any relationship that could affect the Director’s independence. Based on the responses received from the Directors to the questionnaires and the standards described above, the Board has determined that the following nominees for Directors are “independent” as required by the New York Stock Exchange listing standards and the Board’s corporate governance guidelines: Dean M. Flatt, S. Marce Fuller, Bruce D. Hoechner, Glenda J. Minor, Anthony J. Moraco, John B. Nathman, Robert J. Rivet, and Peter C. Wallace. Mr. Adams and Ms. Bamford do not meet the corporate governance guidelines independence test and NYSE independence listing standards due to their current positions as Executive Chairman and President and Chief Executive Officer of the Company, respectively. The Board has also determined that Anthony J. Moraco, a non-Director nominee, is “independent” as required by the New York Stock Exchange listing standards and the Board’s corporate governance guidelines. In making the determination that Messrs. Flatt and Wallace are “independent”, the Board considered the fact that these Directors are presently a director of certain entities in which the Company at various times has purchased goods and/or services. The Board determined that this relationship as a director is not material and, thus, did not affect their independence, because each of them do not participate in the day-to-day management of those entities, and do not receive any remuneration as a result of the goods and/or services being sold. Moreover, the transactions involved payments that are individually and in the aggregate immaterial to the revenues of each entity and the expenses of the Company. There were no other transactions, relationships, or arrangements not otherwise disclosed that were considered by the Board of Directors in determining whether any of the Directors are independent.
All members of the Audit Committee, the Executive Compensation Committee, the Finance Committee, and the Committee on Directors and Governance are independent Directors as defined in the New York Stock Exchange listing standards and in the standards in the Company’s corporate governance guidelines.
The corporate governance guidelines contain a code of conduct that applies to every Director. The Company also maintains a code of conduct that applies to every employee, including the Company’s Executive Chairman, President and Chief Executive Officer, Chief Financial Officer, and Corporate Controller. The Company designed the corporate governance guidelines and the code of conduct to ensure that its business is conducted in a consistently legal and ethical manner. The corporate governance guidelines include policies on, among other things, conflicts of interest, corporate opportunities, and insider trading. The Company’s code of conduct applicable to all of its employees includes policies on, among other things, employment, conflicts of interest, financial reporting, the
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protection of confidential information, insider trading and hedging, and requires strict adherence to all laws and regulations applicable to the conduct of the Company’s business. The Company will disclose any waivers or amendments of the codes of conduct pertaining to Directors or the Company’s Chief Executive Officer, Chief Financial Officer, and Corporate Controller on its website at www.curtisswright.comin accordance with applicable law and the requirements of the NYSE corporate governance standards. To date, no waivers have been requested or granted and no amendments have been made requiring disclosure. The Company’s code of conduct is available within the Corporate Governance section of the Company’s website at https://investors.curtisswright.com/governance/governance-documents or by sending a request in writing to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Davidson, North Carolina 28036.
In order to enhance understanding of and compliance with the Company’s code of conduct, the Company has undertaken several additional steps. Through a third-party provider, the Company maintains an on-line training program that is annually circulated to all Company employees in order to enhance the Company’s culture of ethical business practices. In addition, although all employees are encouraged to personally report any ethical concerns without fear of retribution, the Company, through a third-party provider, maintains the Company’s Hotline (the “Hotline”), a toll-free telephone and web-based system through which employees may report concerns confidentially and anonymously. The Hotline facilitates the communication of ethical concerns and serves as the vehicle through which employees may communicate with the Audit Committee of the Board confidentially and anonymously regarding any accounting or auditing concerns.
The Board of Directors has an Audit Committee, an Executive Compensation Committee, a Committee on Directors and Governance, and a Finance Committee. The Board has adopted a written charter for each of these committees. Each committee reviews its charter at least annually, and as regulatory developments and business circumstances warrant. Each of the committees considers revisions to its respective charter from time to time to reflect evolving best practices. The full text of each charter is available within the Corporate Governance section of the Company’s website athttps://investors.curtisswright.com/governance/governance-documents or by sending a request in writing to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. The current membership of each committee is as follows:
Director | Audit | Executive | Committee | Finance | ||||||||||||||||||||||||
Dean M. Flatt |
| X | X | (1) | ||||||||||||||||||||||||
| S. Marce Fuller | X | X | (1) | |||||||||||||||||||||||||
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Bruce D. Hoechner | X | X | ||||||||||||||||||||||||||
| Glenda J. Minor | X | X | ||||||||||||||||||||||||||
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| X |
| X | |||||||||||||||||||||||||
| John B. Nathman | X | X | (1) | |||||||||||||||||||||||||
Robert J. Rivet | X | (1) | X | |||||||||||||||||||||||||
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| X |
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| X | ||||||||||||||||||||||||||
(1) | Denotes Chairperson | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Audit Committee.The Audit Committee presently consists of four non-employee directors. The Audit Committee met six times during 2020.2021. Each member of the Audit Committee meets the independence requirements of the New York Stock Exchange, Rule 10A-310A- 3 under the Securities Exchange Act of 1934, and the Company’s corporate governance guidelines. In accordance with New York Stock Exchange requirements, the Board in its business judgment has determined that each member of the Audit
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Committee is financially literate, knowledgeable, and qualified to review financial statements. The Board has also determined that at least two members of the Audit Committee, Robert J. Rivet and Glenda J. Minor, are an “audit committee financial expert” as defined in the rules of the SEC.
The Audit Committee’s primary responsibilities include assisting the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and the financial reporting
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process; the systems of internal accounting and financial controls; the qualifications and performance of the Company’s internal audit function and internal auditors; the annual independent audit of the Company’s financial statements; the appointment and retention (subject to stockholder ratification), compensation, performance, qualifications, and independence of the Company’s independent registered public accounting firm; enterprise risk assessment and management; review of the Company’s information security and technology program (including cybersecurity); the Company’s compliance with legal and regulatory requirements (including environmental matters) and ethics program; and the impact of COVID-19 on the Company and the Company’s actions in response.
Executive Compensation Committee.The Executive Compensation Committee presently consists of four non-employee directors. The Executive Compensation Committee met sixseven times during 2020.2021. Each member of the Executive Compensation Committee meets the independence requirements of the New York Stock Exchange for board and committee service and the Company’s corporate governance guidelines. In addition to satisfying all other applicable independence requirements, all members of the Executive Compensation Committee qualify as “non-employee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934.
The Executive Compensation Committee’s primary responsibilities includes determining the total compensation, including base salary and shortshort- and long termlong-term incentive compensation and all benefits and perquisites, of the Chief Executive Officer and recommends to the full Board the total compensation levels for the remaining executive officers of the Company.all Named Executive Officers. The Executive Compensation Committee also oversees the administration of the Company’s executive compensation programs, including any compensation actions taken in response to the COVID-19 pandemic, and further reviews and evaluates compensation arrangements to assess whether they could encourage undue risk taking. In fulfilling its responsibilities, the Executive Compensation Committee may retain a consultant and during 2020,2021, the Executive Compensation Committee used the services of Frederic W. Cook & Co., Inc., an independent compensation consultant, to assist and guide the Executive Compensation Committee. For a discussion concerning the process and procedures for the consideration and determination of executive compensation and the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation, see “Compensation Discussion and Analysis” beginning on page 3134 of this Proxy Statement.
Committee on Directors and Governance.The Committee on Directors and Governance presently consists of four non-employee directors. The Committee on Directors and Governance met three times during 2020.2021. The Committee on Directors and Governance primary responsibilities includesinclude developing policy on the size and composition of the Board, oversight responsibility relating to the risks associated with the Company’s Environmental, Social, and Governance requirements (including the Company’s response to climate change and sustainability, employee safety, and human capital such as diversity, equity and inclusion), criteria for Director nomination,nominations, procedures for the nomination process, and compensation paid to Directors. The committee also identifies and recommends candidates for election to the Board. Further, the committee regularly reviews the Company’s corporate governance guidelines and provides oversight of the corporate governance affairs of the Board and the Company consistent with the long-term best interests of the Company and its stockholders. Each member of the Committee on Directors and Governance meets the independence requirements of the New York Stock Exchange and the Company’s corporate governance guidelines.
Finance Committee.The Finance Committee presently consists of four non-employee directors. The Finance Committee met three times during 2020.2021. The Finance Committee’s primary responsibilities includes advising the Board regarding the capital structure of the Company, the Company’s dividend and stock repurchase policies, the Company’s currency risk and hedging programs, and the investment managers and policies relating to the Company’s defined benefit plans. Each member of the Finance Committee meets the independence requirements of the New York Stock Exchange and the Company’s corporate governance guidelines.
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Board and Board Committees Self-Evaluation Process
The Board recognizes that a thorough, constructive self-evaluation process enhances its effectiveness and is an essential element of good corporate governance. Accordingly, the Committee on Directors and Governance oversees an annual self-evaluation process to ensure that the full Board and each of its committees conducts a thorough self-assessment of its performance and solicits feedback for improvement. In addition, the Board and its committees meet regularly in executive session throughout the year to consider areas that may warrant additional focus and
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attention. The Committee on Directors and Governance reviews and reassesses the format and effectiveness of the evaluation process each year and makes changes when considered necessary or appropriate.
During 2020,2021, the evaluations were conducted through the use of a detailed on-line survey designed to offer a thoughtful and substantive reflection on the Board and committees’ performance. The survey considers various topics related to Board and committee composition, structure, effectiveness, performance, and responsibilities, as well as the overall mix of director skills, experience, backgrounds, and diversity. The results of the survey were aggregated, summarized by the General Counsel, and presented to the Board and each committee for discussion in executive session. In addition to providing an opportunity for directors to discuss a wide range of governance-related topics, the evaluation process is used by the Board and each committee to identify opportunities for improvement, make changes to the committee charters, processes and policies, and is linked to the Board’s succession planning activities.
In response to feedback solicited from the Board and committees over the past several years, the Company continues to:
• | Streamline meeting materials to better highlight important information, while maintaining completeness | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Allow sufficient time during Board and committee meetings for discussion, debate, in-depth reviews, and executive sessions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Enhance discussion about areas of emerging risk at Board and Audit Committee meetings, including deep dives on key topics at Board risk oversight sessions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Provide educational opportunities during regularly scheduled meetings and through third-party programs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Focus on particular skills, background, attributes, and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company is focused on strong corporate governance practices and values independent Board oversight as an essential component of strong corporate performance to enhance stockholder value. The Company’s commitment to independent oversight is demonstrated by the independence of all directors, except for our Executive Chairman and our President and Chief Executive Officer who is also a Director.Officer. In addition, as discussed above, all of the members of the Board’s Audit Committee, Finance Committee, Executive Compensation Committee, and Committee on Directors and Governance are independent.
The Board believes that each businessevery company is unique, and therefore, the appropriate board leadership structure will depend upon eacha company’s unique circumstances and needs at thea particular time. Historically, the positions ofBoard has generally determined that stockholders’ interests were best served by having the same individual serve as Board Chairman and Chief Executive Officer of the Company were generally held by the same individual. This practice changed temporarily beginningCompany. Beginning on January 1, 2021, as then Chairman and Chief Executive Officer David C. Adams began a planned 17-month phased retirement. On January 1, 2021, Mr. Adamsretirement in which he resigned from the Chief Executive Officer position, and as of January 1, 2021, Lynn M. Bamford was promoted to the positions of President and Chief Executive Officer and serves asappointed a member of the Board. Mr. Adams will serve as ExecutiveAt that time, the Board determined it would be beneficial to separate the roles of Chairman until his full retirement from the Company in May 2022. The Board believes this temporary division of theand Chief Executive Officer and Board Chairman positionsfor a period of time during thisMs. Bamford’s transition period will contribute to the smooth transition of the Company’s top executive leadership position, to Ms. Bamford, enabling Ms. Bamford to focus her time and energy on running the day-to-day operations of the Company at a time when Ms. Bamford is relatively new to the role, while at the same time ensuringas it also ensured that Mr. Adams’ valuable experience wise judgement, and service would remain available to the Company during the transition period. Following completionHowever, the Board expects to elect Ms. Bamford to the role of Chairwoman following the management transition in May 2022, it is expectedAnnual Meeting once Mr. Adams’
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term as Executive Chairman ends at the positions of Chairman and Chief Executive Officer will again reside in one individual, Ms. Bamford.Annual Meeting, subject to her re-election. The Board believes at that time it will be in the best interest of the Company and its stockholders for one person to serve as Board Chairman and Chief Executive Officer.Officer at this time, and Ms. Bamford has been an employee of the Company for more than 16 years, having served in increasing levels of strategic, operational, and managerial
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responsibility. She possesses in-depth managerial and operational knowledge of the Company and its industries, asis well as the issues, opportunities, and challenges it faces. Thus, she will be best positionedsuited to provide direction and highlight issuesfill that ensure the Board of Directors’ time and attention are focused on the most critical matters. In addition, the Board has determined that this leadership structure is optimal because it believes that having one leader serving as both Chairman and Chief Executive Officer fosters decisive leadership, accountability, effective decision-making, and alignment on corporate strategy. Having one person serve as Chairman and Chief Executive Officer also enhances the Company’s ability to communicate its message and strategy clearly and consistently to its stockholders, employees, customers, and suppliers. In light of Ms. Bamford’srole given her experience and knowledge of the Company’s business and industries, herindustries. The Board believes Ms. Bamford’s ability to speak thenserve as both ChairmanChairwoman and Chief Executive Officer will provide the Company with strong unified leadership. The Board will continue to monitor the appropriateness of this structure.
As Executive Chairman, Mr. Adams fulfillshas fulfilled his responsibilities in chairing the Board through close interaction with the Lead Independent Director. The Board has structured the role of its Lead Independent Director to strike an appropriate balance between well-focused and independent leadership on the Board. The Lead Independent Director serves as the focal point for independent Directors regarding resolving conflicts with the Chief Executive Officer, or other independent Directors, and coordinating feedback to the Chief Executive Officer on behalf of independent Directors regarding business issues and Board management. The Lead Independent Director and Executive Chairman are expected to foster a cohesive Board that supports and cooperates with the Chief Executive Officer’s ultimate goal of creating stockholder value. In this regard, the Lead Independent Director’s responsibilities include, without limitation:among other duties:
• | Convening and presiding over executive sessions attended only by non-employee Directors; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Communicating to the Chief Executive Officer the substance of discussions held during those sessions to the extent requested by the participants; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Serving as a liaison between the Executive Chairman and the Board’s independent Directors on sensitive issues; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Consulting with the Executive Chairman on meeting schedules and agendas, including the format and adequacy of information the independent Directors receive and the effectiveness of the meeting process; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Overseeing the Board’s self-evaluation process; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Presiding at meetings of the Board in the event of the Executive Chairman’s unavailability. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Board believes this governance structure and these practices ensure that strong and independent directors will continue to effectively oversee the Company’s management and key issues related to long-term business plans, long-range strategic issues, risks, and integrity.
The Board of Directors oversees risk to help ensure a successful business at the Company. While the Executive Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and other members of the Company’s senior leadership team are responsible for the assessment and day-to-day management of risk, the Board of Directors is responsible for assessing the Company’s major risks and ensuring that appropriate risk management and control procedures are in place.
The Company relies on a comprehensive enterprise risk management program to aggregate, monitor, measure, and manage risk. The Company’s enterprise risk management program is designed to enable the Board to establish a mutual understanding with management of the effectiveness of the Company’s risk management practices and capabilities, to review the Company’s risk exposure, and to elevate certain key risks for discussion at the Board level. While the Board has the ultimate oversight responsibility for risk management processes, various committees of the Board composed entirely of independent directors also have responsibility for aspects of risk management. The Board and its committees are kept informed by various reports on risk identification and mitigation provided to them on a regular basis, including reports made at the Board and Committee meetings by management.
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The Audit Committee of the Board, acting pursuant to its written charter, serves as the principal agent of the Board in fulfilling the Board’s oversight of risk assessment and management, including with respect to major strategic, operational, financial reporting, legal and compliance, information security, data protection and technology risks (including cybersecurity), and the impact of COVID-19 on the Company and the Company’s actions in response. The Company’s Vice President, Risk and
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Compliance, who reports to the Audit Committee, facilitates the enterprise risk management program and helps ensure that risk management is integrated into the Company’s strategic and operating planning process. The Company’s Vice President, Risk and Compliance, regularly updates the Audit Committee on the Company’s risk management program throughout the year through discussions of individual risk areas, as well as an annual summary of the enterprise risk management process. The Audit Committee reviews with management the risks presented and the steps management has taken to monitor, mitigate, and control such risks. The Chairperson ofIn addition, periodically, but not less than annually, the Audit Committee then reportsreceives a report from the Company’s General Counsel and also the Company’s Chief Ethics Officer relating to, (i) the implementation and effectiveness of the Company’s legal and ethical compliance program and adherence to the full Board onCompany’s Code of Conduct and (ii) all significant compliance investigations undertaken in the risks associatedpast year. Moreover, the Audit Committee also regularly meets in executive session without management present with the Company’s operationsDirector of Internal Audit and the Company’s independent registered public accounting firm to discuss areas of concern.
The Board is also actively engaged in the oversight of the Company’s information security, data protection and technology programs (including cybersecurity). The Company’s Chief Information Officer leads the Company’s cybersecurity risk management program, which is fully integrated into the overall enterprise risk management program and overseen by the Audit Committee. The Audit Committee reviews and receives regular briefings concerning the Company’s cybersecurity risk management program and data protection practices, including discussions of rapidly evolving cyber security threats, cyber security technologies and solutions deployed, major cyber risk areas, policies and procedures to address those risks, and cyber incidents, from the Company’s Chief Information Officer. Program highlights include:
• | Multi-layer strategy of defense in-depth designed to ensure the safety, security and responsible use of information and data. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Security operations center (“SOC”) that monitors all IT assets, resources, and data 24-hours per day, 7-days per week, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Incorporates external expertise to manage the SOC, perform penetration tests, cyber-attack simulation exercises, and log management to review anomalies indicating a possible breach. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Maintain a business continuity program and cyber insurance. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Executive Compensation Committee considers risks in connection with its design of compensation programs and equity compensation plans for the Company’s employees, including the executive officers, includingwhile incorporating features that mitigate risk without diminishing the incentive nature of the compensation. The conclusions of this assessment are set forth in the Compensation Discussion and Analysis under the heading “Risk Consideration in the Overall Compensation Program for 20202021” on page 4752 of this Proxy Statement.
The Finance Committee is responsible for assessing risks related to financing matters such as pension plans, capital structure, currency risk and hedging programs, and equity and debt issuances. issuances, as well as to insurance-related risk management programs.
The Committee on Directors and Governance oversees risk related to the Company’s overall governance, including Board and committee composition, Board size and structure, Directordirector recruitment, Directordirector independence, Directordirector compensation, ethical and business conduct, and the Company’s corporate environmental, social and governance profiles and ratings.ratings, including reviewing the adequacy of the Company’s strategy, policies, practices, programs, procedures, initiatives and training as they relate to the environment (including climate change and sustainability), and health and safety. The Committee on Directors and Governance receives periodic briefings on the Company’s enterprise-level EHS Management System to identify and understand specific risks within the EHS realm so the Board can stay abreast of both emerging and material EHS risks that could have a material impact on the Company.
Each Chairperson of the Board committees delivers a report to the Board, no later than the next scheduled board meeting, regarding matters considered at committee meetings that have taken place since the previous board meeting, including any risks associated with the Company’s operations.
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The Board believes that its leadership structure facilitates its oversight of risk by combining Board committees and majority independent Board composition with an experienced Executive Chairman and Chief Executive Officer who have detailed knowledge of the Company’s business, history, and the complex challenges it faces. The Executive Chairman and Chief Executive Officer’s in-depth understanding of these matters and involvement in the day-to-day management of the Company position them to promptly identify and raise key risks to the Board and focus the Board’s attention on areas of concern. The independent committee chairs and other Directors also are experienced professionals or executives who can and do raise issues for Board consideration and review and are not hesitant to challenge management. The Board believes there is a well-functioning and effective balance between the non-management Directors and the Executive Chairman and Chief Executive Officer that enhances risk oversight.
24Board Role in Strategic Oversight
The Board and management are committed to optimizing the allocation of capital resources for future growth. Management regularly evaluates the Company’s portfolio of businesses and potential corporate development opportunities with the input and collaboration of the Board. The Board regularly reviews and assesses the value proposition and risks of any proposed acquisition, as well as whether our existing business segments should be expanded, curtailed, disposed of, or diversified. In addition, the Board’s Finance Committee provides oversight and focuses on the Company’s capital structure, including organic and inorganic investment options aligned with the Company’s strategies. Accordingly, acquisitions and divestitures are part of our ongoing strategy assessment and execution to maximize long-term stockholder value.
The Board of Directors recognizes that one of its most important responsibilities is to ensure excellence and continuity in the Company’s senior leadership by overseeing the development of executive talent and planning for the effective succession of the Company’s Chief Executive Officer and the other senior members of the Company’s senior leadership team. This responsibility is reflected in the Company’s Corporate Governance Guidelines, which provide for an annual review of CEO succession planning and management development. The Committee on Directors and Governance assists the Board inoversees the succession planning process by reviewing and recommending to the full Boardevaluating candidates for successor to the Chief Executive Officer and to assure that senior management has established and maintains a succession planning process for senior executive positions other than the Chief Executive Officer.
In furtherance of the foregoing, the Company’s Chief Executive Officer provides an annual succession planning report to the Board of Directors, which summarizes the overall composition of the Company’s senior leadership team, including their professional qualifications, tenure, and work experience. The report also identifies internal members of the senior leadership team who are viewed as potential successors to the Chief Executive Officer. Succession planning is also regularly discussed in executive sessions of the Board of Directors. The Company’s directors become familiar with internal potential successors for key leadership positions through various means, including the annual succession planning report and Board of Directors and committee meetings, and less formal interactions throughout the course of the year.
As part of the Company’s succession planning, the Company transitioned to a new generation of leadership during the past twelve months. On January 1, 2021, Ms. Lynn M. Bamford became the Company’s President and Chief Executive Officer and a member of the Board, succeeding Mr. David C. Adams, who resigned after seven years as Chief Executive Officer. In connection with this CEO transition, Mr. Adams will continue as the Company’s Executive Chairman and will remain on the Board until his retirement in May 2022. In addition, in May 2020, Mr. K. Christopher Farkas became the Company’s Chief Financial Officer, upon the resignation of Mr. Glenn E. Tynan from that position. At the same time, Mr. Gary Ogilby was promoted to the role of Vice President and Corporate Controller, succeeding Mr. Farkas upon his promotion to Chief Financial Officer. Furthermore, on January 11, 2021, Mr. Robert Freda became the Company’s Vice President and Treasurer, upon the retirement of Mr. Harry Jakubowitz. Moreover, Mr. Kevin Rayment will be promoted to the role of Vice President and Chief Operating Officer commencing with the retirement of Mr. Thomas P. Quinly in April 2021. All of these appointments were internal promotions and it exemplifies the Board’s ongoing commitment to recruiting, cultivating, and developing executive talent to meet the Company’s organizational and strategic needs.
Additionally, the Board of Directors, with support and recommendations from the Committee on Directors and Governance, oversees the succession of its members. To this end, at least once a year, in
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connection with the annual director nomination and re-nomination process, the Committee on Directors and Governance evaluates each director’s performance, relative strengths and weaknesses, and future plans, including any personal retirement objectives and the potential applicability of the Company’s mandatory retirement policy for directors (which is set forth in the Company’s Corporate Governance Guidelines). As part of that evaluation, the Committee on Directors and Governance also identifies areas of overall strength and weakness with respect to its composition and considers whether the Board of Directors as a whole possesses core competencies in the areas of accounting and finance, management experience with mergers and acquisitions, risk management, industry knowledge, knowledge of technology and cyber-security, marketing, digital marketing and social media, international markets, strategic vision, compensation, and corporate governance, among others.
Director Onboarding and Education
All new Directors participate in the Company’s director onboarding program. The onboarding process includes in-person or virtual meetings with senior leaders to familiarize new directors with the
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Company’s strategic vision, values and culture; operational and financial reporting structure; and legal, compliance, and governance framework.
It is important for directors to stay current and informed on developments in corporate governance best practices to effectively discharge their duties, as well as be exposed to information regarding conditions in the end markets where the Company operates to increase the Directors understanding of the Company’s risks and opportunities. The Company provides its Directors updates from both internal and outside industry experts on corporate governance trends and developments as well as in the Company’s end markets and other issues of importance to the Company at regularly scheduled board and committee meetings. The Board also encourages all Directors to participate in continuing director education programs, either individually or together with other Committee members, andmembers. The Directors are reimbursed for their expenses for such programs.
Stockholder Recommendations and Nominations for Directors
Stockholder Recommendations.Nominations. The Committee on Directors and Governance will consider stockholder recommendationsnominations for Director nominees. A stockholder desiring the committee to consider his or her Director recommendationnominations should deliver a written submission in accordance with the Company’s By-laws to the Committee on Directors and Governance in care of the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. Such submission must include:
(1) | the name and address of such stockholder, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | the name of such nominee, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) | the nominee’s written consent to serve if elected, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) | documentation demonstrating that the nominating stockholder is indeed a stockholder of the Company, including the number of shares of stock owned, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) | a representation (i) that the stockholder is a holder of record of the stock of the Company entitled to vote at such meeting and whether he or she intends to appear in person or by proxy at the meeting, and (ii) whether the stockholder intends or is part of a group that intends to deliver a proxy statement to the Company’s stockholders respecting such nominee or otherwise solicit proxies respecting such nominee, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(6) | a description of any derivative instruments the stockholder owns for which the Company’s shares are the underlying security or any other direct or indirect opportunity the stockholder has to profit from any increase or decrease in the value of the Company’s stock, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(7) | a description of the extent to which the stockholder has entered into any transaction or series of transactions, including hedging, short selling, borrowing shares, or lending shares, with the effect or intent to mitigate loss to or manage or share risk or benefit of changes in the value or price of share of stock of the Company for, or to increase or decrease the voting power or economic interest of, such stockholder with respect to any shares of stock of the Company, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(8) | a description of any proxy, contract, arrangement, understanding, or relationship under which the stockholder has a right to vote any of the shares of stock of the Company or influence the voting over any such shares, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(9) | a description of any rights to dividends on the shares of stock of the Company the stockholder has that are separated or separable from the underlying shares of stock of the Company, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(10) | a description of any performance-related fees (other than asset-based fee) the stockholder is entitled to based on any increase or decrease in the value of the shares of stock of the Company or related derivative instruments, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(11) | to the extent known, the name and address of any other stockholder(s) supporting the nomination on the date of the stockholder’s submission of the nomination to the Committee on Directors and Governance, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(12) | any information relating to the nominee and his or her affiliates that would be required to be disclosed in a proxy solicitation for the election of Directors of the Company pursuant to Regulation 14A under the Securities Exchange Act of 1934, and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(13) | a description of all direct and indirect compensation, and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships between such nominating stockholder or beneficial owner, if any, on the one hand, and the nominee and his or her respective affiliates or associates, or others acting in concert therewith, on the other hand. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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In addition, such submission must be accompanied by a written questionnaire with respect to the background and qualification of the nominee and the background of any other person or entity on whose behalf the nomination is being made. Further, the nominee must also provide a written representation and agreement that such nominee (i) is not and will not become party to (x) any agreement, arrangement, or understanding as to how such prospective nominee will act or vote on any issue or question that has not been disclosed to the Company, or (y) any agreement, arrangement, or understanding as to how such prospective nominee will act or vote on any issue or question that could limit or interfere with such nominee’s ability to comply with such nominee’s fiduciary duties, (ii) is not and will not become party to any agreement, arrangement, or understanding with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director, that has not been disclosed to the Company, and (iii) in such person’s individual capacity and on behalf of any beneficial owner on whose behalf the nomination is being made, would be in compliance with all applicable corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines of the Company. The Committee may require additional information from the nominee to perform its evaluation.
The Committee on Directors and Governance also considers candidates for Board membership as recommended by Directors or executive management. The Committee on Directors and Governance uses the same criteria to evaluate all candidates for Board membership, whether recommended by Directors, executive management, or stockholders. As it deems necessary, the Committee on Directors and Governance may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. In its assessment of each potential nominee, the Committee on Directors and Governance takes into account the skills and characteristics that the Board seeks in its members as well as consideration of the diversity of the Board as a whole. This review includes an assessment of, among other things, a candidate’s knowledge, education, experience, cultural background, including ethnicity, national origin, gender, sexual orientation, and age, and skills in areas critical to understanding the Company and its business, with a commitment to enhancing stockholder value. The Committee on Directors and Governance seeks candidates with the highest professional and personal ethics and values and who will operate in accordance with the Company’s Code of Conduct. The Committee on Directors and Governance also assesses a candidate’s ability to make independent analytical inquiries, and willingness to devote adequate time to Board duties. Director nominees should possess the following experience, attributes, and characteristics:
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Experience (in one or more of the following):
• | High level leadership experience; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Specialized expertise in the industries in which the Company competes; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Financial expertise; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Breadth of knowledge about issues affecting the Company; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Ability and willingness to contribute special competencies to Board activities; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Expertise and experience that is useful to the Company and complementary to the background and experience of other Board members, so that an optimal balance and diversity of Board members may be achieved and maintained. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Personal attributes and characteristics:
• | Personal integrity; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Loyalty to the Company and concern for its success and welfare, and willingness to apply sound independent business judgment; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Awareness of a director’s vital part in the Company’s good corporate citizenship and corporate image; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Willingness to assume fiduciary responsibilities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Although the Committee on Directors and Governance does not have a formal written policy with regard to considering diversity in identifying nominees for directors, it does believe that maintaining a diverse membership with varying backgrounds, skills, expertise and other differentiating characteristics
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promotes inclusiveness, enhances the Board’s deliberations and enables the Board to better represent all of the Company’s constituents. Diversity considerations for a director nominee may vary at any time according to the particular areas of expertise being sought as a complement to the existing Board composition.
The Committee on Directors and Governance annually evaluates the performance of the Board, each of the committees, and each of the members of the Board. It also reviews the size of the Board and whether it would be beneficial to add additional members and/or any new skills or expertise, taking into account the overall operating efficiency of the Board and its committees. If the Board has a vacancy, or if the Committee determines that it would be beneficial to add an additional member, the Committee will take into account the factors identified above and all other factors, which the Committee in its best judgment deems relevant at such time. In this process, the Committee on Directors and Governance will consider potential candidates proposed by other members of the Board, by executive management or by stockholders.
Once an individual has been identified by the Committee on Directors and Governance as a potential candidate, the Committee, as an initial matter, may collect and review publicly available information regarding the individual to assess whether the individual should be considered further. Generally, if the individual expresses a willingness to be considered and to serve on the Board, and the Committee believes that the individual has the potential to be a good candidate, the Committee would seek to gather information from or about the individual, review the individual’s accomplishments and qualifications in light of any other candidates that the Committee might be considering, and, as appropriate, conduct one or more interviews with the individual. In certain instances, Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other individuals that may have greater first-hand knowledge of the candidate’s accomplishments. The Committee’s evaluation process does not vary based on whether or not a prospective candidate is recommended by a stockholder, although, as stated above, the Board may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
The Company approaches stockholder engagement as an integrated, year-round process involving senior management and the investor relations team. The Company welcomes the opportunity to openly engage openly with its stockholders regarding its performance and strategy, and to
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obtain insights and feedback on matters of mutual interest. The Board’s and senior management’s commitment to understanding the interests and perspectives of stockholders is a key component of the stockholder engagement strategy. The Board and senior management are committed to acting according to the best interests of the Company and its stockholders.
The Company engages with stockholders throughout the year to:
• | Provide visibility and transparency into the Company’s business, including senior management’s perspectives on the financial and operational performance, as well as key trends impacting its end markets and other industry developments; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Discuss and seek feedback on the Company’s communications and disclosures; issues that are important to stockholders; hear stockholder expectations for the Company; and share the Company’s views; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Discuss and seek feedback on the Company’s executive compensation and corporate governance policies and practices; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Convey feedback on critical conversations and issues back to senior management and the Board to enhance future disclosure and decision-making. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Throughout the year, the Company meets with research analysts and institutional investors to inform and share the Company’s perspective on its financial and operational performance through its participation in investor conferences, non-conference roadshows, investor days and other formal events where the Company conducts group and one-on-one meetings. The Company also engages with governance representatives of its major stockholders, through conference calls that occur during and outside of the proxy season.
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During 2020,2021, the Company virtually conducted meetings and calls with its top 50 institutional investors representing more than 37%approximately 39% of the Company’s outstanding stock, resulting in substantive engagements with investors holding a significant portion of the Company’s outstanding stock, in addition to conducting meetings with prospective stockholders. In addition, the Company conducted more than 115110 meetings with institutional investors and prospects through industry conferences and non-conference events, as well asexecuted a successful investor day event with virtual attendance by more than 100 members of the investment community, and conducted more than 100 separate conversations by phone. Among the many topics discussed during this ordinary course engagement were the Company’s business, new Pivot to Growth strategy, financial condition, governance, capital allocation preferences and other topics of interest to stockholders and prospective stockholders.
The comments, questions and suggestions offered by the Company’s investors were shared with, and discussed by, the full Board, and their perspectives will inform the Board’s decision-making in 20212022 and beyond.
Stockholder Nominations. A stockholder desiring to nominate a person as Director should deliver a written submission in accordance with the Company’s By-laws to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Davidson, North Carolina 28036. Such submission must include the items listed above under “Stockholder Recommendations and Nominations for Directors” on page 26 in this Proxy Statement Stockholder submissions for Director nominees at the 2022 annual meeting of stockholders must be received by the Corporate Secretary of the Company no earlier than January 7, 2022 and no later than February 4, 2022. Nominee recommendations that are made by stockholders in accordance with these procedures will receive the same consideration as recommendations initiated by the Committee on Directors and Governance.
The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference therein.
Management is responsible for the financial reporting process, including its system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Our independent accountants are responsible for auditing those financial statements and the Company’s internal controls over financial reporting. The Audit Committee is responsible for monitoring and reviewing these processes. The Audit Committee does not have the duty or responsibility to conduct auditing or accounting reviews or procedures. None of the members of the Audit Committee may be employees of the Company. Additionally, the Audit Committee members may not represent themselves to be accountants or auditors for the Company, or to serve as accountants or auditors by profession or experts in the fields of accounting or auditing for the Company. Therefore, the Audit Committee has relied, without independent verification, on management’s representation that the financial statements have been
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prepared with integrity and objectivity and in conformity with generally accepted accounting principles in the United States of America and on the representations of the independent accountants included in their report on the Company’s financial statements.
The oversight performed by the Audit Committee does not provide it with an independent basis to determine that 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 discussions that the Audit Committee has with management and the independent accountants do not assure that the financial statements are presented in accordance with generally accepted accounting principles, that the audit of the financial statements has been carried out in accordance with generally accepted auditing standards, or that our independent accountants are in fact “independent.”
As more fully described in its charter, the Audit Committee is responsible for, among other items, overseeing the integrity of the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the qualifications and performance of the internal audit function and internal auditors, and the annual independent audit of the Company’s financial statements by the Company’s independent registered public accounting firm, Deloitte & Touche LLP. As part of fulfilling its responsibilities, the Audit Committee reviewed and discussed with management and Deloitte & Touche LLP the audited consolidated financial statements for fiscal year 2020,2021, including
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a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements, as well as the Company’s earnings releases and quarterly and annual reports on Form 10-Q and Form 10-K prior to filing with the SEC. In addition, the Audit Committee reviewed with management, Deloitte & Touche LLP, and the Company’s Director of Internal Audit, the overall audit scope and plans, the results of internal and external audits, evaluations by management and Deloitte & Touche LLP of the Company’s internal controls over financial reporting and the quality of the Company’s financial reporting. The Audit Committee also discussed with Deloitte & Touche LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has also discussed and considered the independence of Deloitte & Touche LLP with representatives of Deloitte & Touche LLP, reviewing as necessary all relationships and services (including non-audit services) that might bear on the objectivity of Deloitte & Touche LLP, and received the written disclosures and the letter required under Rule 3526 of the PCAOB (Communications with Audit Committees Concerning Independence) from Deloitte & Touche LLP. Based on the forgoing, the Audit Committee concluded that Deloitte & Touche LLP is independent from the Company and its management. The Audit Committee schedules separate private sessions, during its regularly scheduled meetings, with Deloitte & Touche LLP and the Company’s Director of Internal Audit, at which candid discussions regarding financial management, accounting, auditing and internal control issues takes place. Deloitte & Touche LLP is also encouraged to discuss any other matters they desire with the Audit Committee, the Director of Internal Audit, and/or the full Board of Directors.
The opinions of Deloitte & Touche LLP are filed separately in the 20202021 Annual Report on Form 10-K and should be read in conjunction with the reading of the financial statements.
Based upon the Audit Committee’s review and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements and footnotes be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,2021, for filing with the SEC.
AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Robert J. Rivet, ChairpersonDean M. Flatt
S. Marce Fuller
Glenda J. Minor
John B. Nathman
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) details the Executive Compensation Committee’s (“Committee”) decisions regarding the compensation programs and practices as they relate to the Company’s Named Executive Officers (“NEOs”). These individuals are identified below along with their offices held during fiscal year 2020:2021:
• | David C. Adams, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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COVID-19 Responsive Actions
Dedicated Curtiss-Wright employees and their commitment to our strong culture allowed us to manage significant headwinds caused by the COVID-19 global pandemic, which were not within executive management’s control, including lower customer demand, supply delivery interruptions, workforce availability issues and many others. Curtiss-Wright employees and our dedicated suppliers have worked hard and efficiently during this difficult period to continue meeting our customers’ needs.
Throughout the COVID-19 pandemic, Curtiss-Wright’s primary focus has been to care for the wellbeing of its employees. Curtiss-Wright also took steps to mitigate the impact of the pandemic on our fiscal 2020 financial performance, including certain cost reductions. Specifically, furloughs, reductions in discretionary spending, and restructuring actions occurred. Some of our businesses reduced their production schedules to align production output with changing customer demand during the pandemic while others continued to operate at full rate production, adding more complexity to managing operations through the pandemic. However, as an “essential business”, Curtiss-Wright maintained a spirit of perseverance, developing ways to manage the numerous operational challenges brought on by the pandemic. These efforts allowed Curtiss-Wright to continue to provide essential products and services to those who operate within critical infrastructure industries. Considering these challenges and despite the actions undertaken by Curtiss-Wright to mitigate the impact of the pandemic on the Company’s financial performance, Curtiss-Wright’s financial performance during fiscal year 2020 generally fell short of our expectations.
20202021 Company Financial Performance
The Company strives to attain top quartile performance compared with its peer group (as later defined in this CD&A), by concentrating on:
• | Leveraging the critical mass and the powerful suite of capabilities it built over the past decade; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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• | Driving operational excellence to improve key financial metrics such as (1) for 2021 (a) short-term financial metrics, including (i) operating | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Exercising financial discipline to drive higher free cash flow. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company also maintains a disciplined and balanced capital allocation strategy–all part of the Company’s effort to improve competitiveness over the long term and generate stronger returns for stockholders.
FiscalOverall, the Company faced a difficult business environment during fiscal 2021, particularly with the ongoing disruption from the COVID-19 pandemic, as well as additional headwinds throughout the year 2020 marked onerelating primarily to lower customer demand, supply chain delivery disruptions, workforce availability issues, and inflationary pressures. The Company continued to take steps to mitigate the impact of the most volatile periodspandemic on our fiscal 2021 financial performance, including effective cost control measures and strong working capital management. Despite these challenges, the Company performed very well in fiscal 2021, with strong increases in sales, profitability, and operating income. As a result, the global macro-economic landscape. The Company acted swiftly to focuswas near or well above target against its annual performance metrics under the annual incentive plan, which resulted in bonus payments for the NEOs under the annual incentive program at above-target level, based on diligent cash managementthe attainment of challenging performance-based targets. However, under the long-term incentive plan, the Company was at or below threshold against its performance targets over the past three-year performance period (2019-2021), as average total sales growth and liquidity and to align our cost structurereturn on invested capital over the performance period was pressured due primarily to the currentsignificant disruption from the COVID-19 environment, which impactedpandemic and its detrimental impact to both our commercial aerospace and general industrial end markets. Current travel restrictions, as well as changes in the propensityAs a result, cash-based performance units payouts for the general public to travel by air as a result2019-2021 performance period was significantly below target level and TSR was less than the 50th percentile of the COVID-19 pandemic, have caused reductions in demand for commercial aircraft, which adversely impacted our net sales and operating results in the commercial aerospace end market. In addition, an overall reduction in business activity as a result of the disruption caused by COVID-19 has led to a decrease in sales to our general industrial end market, which primarily includes industrial vehicles and industrial valve products.peer group.
In 2020,2021, the Company’s three-year total shareholder return (TSR) ranked eightninth or the 50th43rd percentile among the Company’s 16-company14 - company peer group set forth on page 3539 of this Proxy Statement. TSR is the change in the Company’s common stockour Common Stock share price plus dividends from the beginning of
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the measurement period to the end (three years, 1/1/20182019 to 12/31/2020)2021). The Company’s 20202021 financial performance for executive compensation included:
• | Adjusted operating income was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Adjusted operating margin was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Working capital as a percentage of sales was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company’s financial performance above excludes the performance of acquisitions consummated during the performance period, as well as otherincludes adjustments referenced in the Company’s fourth quarter 20202021 earnings release furnished to the SEC on February 25, 2021.24, 2022.
The following charts illustrate how the Company compares against the peer group set forth on page 3539 of this Proxy Statement measuring one and three-year indexed TSR as of December 31, 2020.2021. Indexed TSR means the value at the end of the 1 and 3-year measurement periods of a hypothetical $100 invested at the beginning of the periods.
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20202021 Incentive Payouts
IncentiveAs discussed in the section titled “2021 Company Financial Performance” on page 34 of this CD&A, the Committee believes incentive awards earned by the NEOs for fiscal 20202021 reflect the Company’s commitment to pay for performance. The COVID-19 pandemic impacted our ability to achieve annual incentive compensation targets for our NEOs. Because Company performance, due to the impact of the COVID-19 pandemic, fell below our expectations, our annual incentive compensation was accordingly below target.
• |
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• | Cash-based performance units for the | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Performance Share Units payout for the | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Compensation Practices and Policies
The Committee frequently reviews the Company’s executive compensation program to ensure it supports the Company’s compensation philosophy and objectives and continues to drive corporate performance to achieve the Company’s strategic plan. The Committee continues to implement and maintain best practices for executive compensation. Listed below are some of the best practices the Company follows for all participants of the incentive plans and the practices that the Company does not include in its program:
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What Curtiss-Wright Does | What Curtiss-Wright Doesn’t Do | |||||
• | Aligns pay and performance using measures of financial and operating performance including use of relative TSR | • | No NEO employment agreements | |||
| • | Does not engage in executive compensation practices that encourage excessive risk | |||||
• | Balances short-term and long-term incentives using multiple performance measures that focus on profitable top line growth | • | No short sales, hedging, or pledging of Curtiss-Wright stock | |||
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| • | No reloading, re-pricing or backdating stock options | ||
• | Places maximum caps on incentive payouts consistent with market competitive practice | • | No tax gross-ups on change-in-control benefits for executives hired or promoted after January 2008 | |||
• | Establishes rigorous stock ownerships guidelines for NEOs and Board members including a 50% mandatory hold on net shares until ownership guidelines are met for NEOs | • | No dividends on unvested or unearned performance units/shares | |||
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| • | No excessive perquisites | ||
• | Includes a claw back policy on all incentive compensation | • | No excessive severance and/or change in control provisions | |||
• | Uses an independent external compensation consultant to review and advise on executive compensation |
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• | Uses double trigger Change in Control Agreements for equity vesting under the Corporation’s Long-Term Incentive Plan | |||||
Consideration of Say on Pay Results
The Company provides its stockholders an annual advisory vote to approve its executive compensation program under Section 14A of the Exchange Act. At the 20202021 Annual Meeting of stockholders, 96% of shares voted were in favor of the Company’s executive pay programs (commonly known as Say on Pay).
Stockholder input is important to the Committee. The Company regularly solicits input from its major stockholders on the Company’s executive compensation programs. The Company received
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overall positive feedback regarding the core structure and elements of its executive compensation program. The Company’s investors also were satisfied with the performance of the Company.
The Committee evaluated these results, considered stockholder feedback received by the Company, and took into account many other factors in evaluating the Company’s executive compensation programs as discussed in this CD&A. The Committee also assessed the interaction of our compensation programs with our business objectives, input from its independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook), and review of peer data, each of which is evaluated in the context of the Committee’s fiduciary duty to act as the directors determine to be in the best interests of the Company. While each of these factors bore on the Committee’s decisions regarding our NEOs’ compensation, the Committee did not make any material changes to our 20202021 executive compensation program and policies as the Committee believes that the 20202021 voting results
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as well as investor feedback indicate stockholders’ approval of the NEO’s compensation levels, objectives, program design, and rationale.
Overview of the 20202021 Executive Compensation Program
Compensation Philosophy
The Company’s overall compensation philosophy for all participants and objectives will support and enable:
• | Curtiss-Wright’s vision of achieving top quartile performance compared to its peer group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Pay outcomes aligned company performance with shareholder interests by targeting NEO total direct compensation opportunities at market median, which provides the opportunity for above median pay for above median performance and below median pay for below median performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Incentive Metrics and Targets dictated by the Company’s strategic goals that are: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | Evaluated annually based on financial performance and outlook | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | Modified in terms of weighting and mix as Curtiss-Wright’s performance advances towards or enters the top quartile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | Reviewed and assessed as business conditions change with exceptions possible when aligned with strategic purposes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Long-Term Incentives (LTI) including equity as a key component thereby aligning 70% of NEO’s LTI grant value with shareholder interests through 3-year performance-based vehicles | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Compensation to be a tool for key employee retention and talent development | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation mix
To reinforce the Company’s pay for performance philosophy, nearly two-thirds of targeted total direct compensation for the CEO and greater than one-half for each NEO and all other participants of the incentive plans is contingent upon performance and, therefore, fluctuates with the Company’s financial results and share price. The Committee targets total direct compensation opportunities for the executivegeneral participant group on average to the 50th percentile (median) of the Company’s relevant market and peer data with actual upside and downside pay tied to corresponding performance.
20202021 Target Compensation Mix and “Pay at Risk”
Performance-based compensation includes: annual incentives, equity-based performance share units, and cash-based performance units, which account for approximately 63%62% of the CEO’s total target compensation and on average 52%65% of the total target compensation for the remaining NEO’s.NEO’s and all other participants in the incentive compensation plans.
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Messrs. Tynan and Quinly are excluded fromMr. Adams, included in the “Other Named Executive Officers” chart above, as they were not eligible to participateparticipated in all Companythe Company’s long-term incentive compensation plansplan in fiscal year 2020.2021 at a significantly reduced level given the change in his role (his resignation as Chief Executive Officer on January 1, 2021), but was not granted time-based restricted stock units and instead only received performance-based LTI. This had the effect of causing the percentage of “Performance-Based” compensation of the “Other Named Executive Officers” in the chart above to exceed the percentage of “Performance-Based” compensation of the CEO.
The acronyms PSUs, PUs, and RSUs in the above pie charts mean equity-based performance share units, cash-based performance units, and time-based restricted stock units, respectively, each of which is discussed more fully later in this CDA.
Competitive market data and peer group data
The Committee analyzed competitive market data from two sources:
1. | Peer group; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. | Survey data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Committee utilizes both peer group and industry data when evaluating NEO compensation levels. The peer group data is representative of competitors with similar product lines, markets / industries and relative revenue size. Peer group performance therefore is a key relative measure for the Company’s annual incentive plan and performance-based long-term incentive plan metrics. The Committee, with guidance from FW Cook and Management, adjustedreviewed but did not change the peer
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group used for competitive market assessments in late 2019,2020, which informed 20202021 pay decisions. The final 20202021 peer group approved by the Committee consists of the following 16 companies:
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• | AAR Corp. | • | ITT Corp | |||
• | Aerojet Rocketdyne | • | Kaman Corporation | |||
• | Crane Co. | • | Moog Inc. | |||
• | Cubic | • | Spirit AeroSystems Holdings Inc. | |||
• | EnPro Industries, Inc. | • | Teledyne Technologies Inc. | |||
• | FLIR Systems, Inc.* | • | Transdigm Group Inc. | |||
• | Hexcel Corp. | • | Triumph Group, Inc. | |||
• | IDEX Corporation | • | Woodward, Inc. |
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* | Cubic Corporation and FLIR Systems, Inc. were both acquired in May 2021 and are no longer in the peer group. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | AAR Corp. | • | Kratos Defense & Security Solutions Inc. | |||
• | Aerojet Rocketdyne | • | Maxar Technologies Inc. | |||
• | Ametek, Inc. | • | Mercury Systems Inc. | |||
• | Barnes Group Inc. | • | Moog Inc. | |||
• | BWX Technologies, Inc. | • | Parsons Corporation | |||
• | Crane Co. | • | Teledyne Technologies Inc. | |||
• | Hexcel Corp. | • | TransDigm Group Inc. | |||
• | Huntington Ingalls Industries Inc. | • | Triumph Group Inc. | |||
• | ITT Inc. | • | Woodward Inc. |
While the Committee reviews both peer group data and nationally recognized survey data from third party sources, the Committee primarily relies on peer group data for the CEO and CFO, while placing more focus on nationally recognized executive survey data from third party sources for the other NEOs. The Committee believes that due to the smaller number of peer matches and more robust sample size of the surveys, the latter provides more robust and reliable compensation data for roles other than the CEO and CFO.
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Roles in determining 20202021 Executive Compensation
Summarized in the table below are roles and responsibilities for executive compensation:
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Groups | Roles and Responsibilities | |||
Executive Compensation Committee | • | Determines the compensation levels for all participants including the executive officers annually | ||
| • | Oversees the administration of the Company’s | ||
| • | Reviews competitiveness and business fit of overall | ||
| • | Oversees cost and design of the Company’s retirement plans and recommends changes to the full Board | ||
| • | Selects, oversees, and directs the activities of the external executive compensation consultant and ensures the independence of such consultant | ||
| • | Reviews and evaluates compensation plans and arrangements to assess whether they could encourage undue risk taking | ||
| • | Reviews and approves the personal and financial annual and long term goals and objectives for the executive officers and the Company, evaluates the executive officers and the Company’s performance in light of those goals and objectives, and determines and approves all annual and long-term incentive compensation of the executive officers based on this evaluation | ||
Board Members | • | Oversee design and cost changes to the retirement plans | ||
Independent Committee Consultant | • | Provides advice on officer and board of directors compensation matters | ||
| • | Provides information on competitive market trends in general executive compensation as it impacts officers | ||
| • | Provides proposals for officer compensation programs, program design, including measures, goal-setting, and pay and performance alignment and other topics as the Committee deems appropriate | ||
| • | Is directly accountable to the Committee, which has sole authority to engage, dismiss, and approve the terms of engagement of the compensation consultant | ||
CEO | • | Evaluates performance of the executive officers other than | ||
| • | Makes recommendations to the Committee regarding base salary, annual incentive compensation targets, long-term cash incentive compensation targets, and long-term equity compensation for the executive officers other than | ||
Other Executives: CFO, GC | • | Makes recommendations to the CEO and Committee regarding officer annual and long-term incentive plan design and performance metrics | ||
| • | Provides officer compensation analysis in collaboration with the Committee’s independent consultant | ||
| • | Provides information and recommendations regarding board of director pay with oversight by the Committee’s independent consultant and the | ||
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During 2020,2021, FW Cook did not provide services to the Company other than services provided to the Committee as an independent advisor on executive and non-employee director compensation matters. The Committee assessed the independence of FW Cook in accordance with applicable rules of the New York Stock Exchange and the Securities and Exchange Commission regarding
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independence of advisors to compensation committees. As part of this assessment, the Committee reviewed, among others, the independence and conflict of interest policies of FW Cook as well as FW Cook’s relationship with the Company and the members of the Committee. Based on this review and assessment, it is the Committee and the Company’s belief that the services provided by FW Cook were independent and free from any conflict of interest.
20202021 Compensation Components
The table below summarizes each of the Company’s 20202021 compensation components and its role in the Company’s executive compensation program.
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Compensation | Role in the Executive Compensation Program | |||
Base Salary | • | Provides fixed compensation based on responsibility level, position held, job duties performance, years of experience in the position, and market value | ||
Annual Incentive Compensation | • | Motivates and rewards achieving annual financial and operational business objectives that are linked to the Company’s overall short-term business strategy | ||
Long-Term Incentive Program | • | Motivates | ||
| 1. Performance-based restricted stock units (metric = relative TSR against | |||
| 2. Cash-based performance units (metrics = sales growth and | |||
| 3. Time-based restricted stock units (provided to all participants) – 30% weighted | |||
| • | Promotes stock ownership and aligns incentive awards with stockholder interests | ||
| • | Rewards achievement of longer-term (three year) business objectives that are linked to the Company’s overall longer-term business strategy and total return to stockholders; whereas the time-based restricted stock unit award encourages retention | ||
Employee Stock Purchase Plan | • | Allows substantially all full-time employees the ability to set aside money to purchase stock of the Company | ||
| • | Promotes stock ownership and aligns employees with stockholder interests | ||
Executive Deferred Compensation Plan | • | Permits deferral of compensation in excess of 401(k) statutory limits for tax advantaged savings | ||
| • | Provides officers and other executives with a savings opportunity comparable to other employees | ||
Traditional Defined Benefit Pension Plan | • | Promotes the long-term retention and financial health of | ||
| • | Provides a defined benefit taking into consideration years of service, age and compensation | ||
| Note: The Company’s traditional defined benefit pension plan is closed to new entrants. It will cease to provide accruals to existing participants at the end of 2028. | |||
Restoration (Pension and Savings) Plans | • | Provides competitive retirement benefit | ||
| • | Promotes long-term retention of key executives by providing an increasing value tied directly to length of service | |||
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Compensation | Role in the Executive Compensation Program | |||
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| Note: The Company’s traditional pension plan is closed to new entrants. It will cease to provide accruals to existing participants at the end of 2028. | |||
401(k) Plan | • | Provides all regular domestic employees (full-time and part-time) with the ability to set aside compensation on a pre-tax basis subject to IRS guidelines for investment in various investment vehicles under the plan | ||
| • | Provides added retirement benefit by way of a competitive matching contribution to those employees not participating in the Company’s traditional pension plan | ||
Limited Executive Perquisites | • | Provides a competitive level, business-related benefit to the Company and assists with key aspects of employment: health and financial wellness | ||
Post-Employment Agreements | • | Delivers temporary income following an NEO’s involuntary termination of employment. In the case of change in control, provides continuity of management. | ||
20202021 Compensation Decisions and the Basis for Decisions
Base Salary
Base salary is intended to compensate theemployees, including our NEOs, for performance of core job responsibilities and duties. Base salary drives other pay components in that it is used to determine target values for annual incentive compensation, long-term incentive compensation, retirement benefit calculations, severance protection, and change-in-control benefits.
The Committee determines and approves NEO salaries annually that reflect the value of the position measured by competitive market data, the NEOs’ individual performance, and the individual’s longer-term intrinsic value to the Company.
For 2020,2021, the NEO’s base salaries were increased as shown in the table below:
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NEO | 2019 Base Salary | 2020 Base Salary | % difference | 2020 Base Salary | 2021 Base Salary | % difference | ||||||||||||||||||||||||||||||||||||
Mr. Adams | $ | 1,000,000 | $ | 1,050,000 | 5.0 | % | $ | 1,050,000 | $ | 1,050,000 | 0.0% | |||||||||||||||||||||||||||||||
Mr. Tynan |
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| 576,000 |
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| 576,000 |
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Mr. Quinly | $ | 663,000 | $ | 663,000 | 0.0 | % | ||||||||||||||||||||||||||||||||||||
Ms. Bamford* |
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| 850,000 |
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Mr. Rayment* | N/A | $ | 550,000 | N/A | ||||||||||||||||||||||||||||||||||||||
Mr. Ferdenzi |
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| 470,300 |
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| 485,000 |
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| 485,000 |
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| 500,000 |
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Mr. Farkas | $ | 390,000 | $ | 475,000 | 21.8 | % | $ | 475,000 | $ | 500,000 | 5.3% | |||||||||||||||||||||||||||||||
Mr. Jakubowitz |
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| 297,000 |
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| 297,000 |
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Mr. Farkas’ base salary significantly increased
* | Ms. Bamford and Mr. Rayment were not NEOs in | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Compensation
For 2020,2021, the NEOs participated in the Curtiss-Wright Incentive Compensation Plan, as amended (“ICP”), andwhich is a broad-based management incentive plan that was approved by the CompanyCompany’s stockholders in May 2011.
The Company believes that an important portion of the overall cash compensation for all participants in the NEOsincentive programs should be contingent upon the successful achievement of certain annual corporate financial and individual goals and objectives that contribute to enhanced shareholder value over time. Accordingly, 80% of the NEO’seach participant’s annual incentive target is tied to financial performance, while the remaining 20% is tied to significant individual goals and objectives.
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Similar to the process described above to determine annual base salaries, the Committee annually establishes a target bonus opportunity for each NEO. For 2020,2021, each NEO had the following target bonus opportunity:
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NEO |
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Mr. Adams | 110 | % | |||||
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Mr. |
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Mr. Ferdenzi |
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Mr. Farkas |
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For the 20202021 ICP, the Committee, in consultation with Management and FW Cook selected three financial measures and key individual performance-based objectives for all NEOs as summarized in the table below, which includes respective weightings and rationale for each measure:
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Goal | Weighting | Rationale | ||||||
Corporate Operating | 30% | • | Requires management to increase profitability | |||||
| • | Is easily understood, measurable, and reflects management’s performance | |||||||
| • | Is a key driver of Company business strategy | |||||||
| • | Is correlated with the Company’s TSR | ||||||
Operating Margin; “OM” (a) | 20% | • | Requires management to achieve profitability goals through effective margins | |||||
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| • | Is easily understood, measurable, and reflects management performance | ||||
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| • | Is a key driver of overall Company success and TSR | ||||
Working Capital; “WC” | 30% | • | Requires management to reduce its working capital as a percentage of sales | |||||
| • | Free cash flow enhances shareholder value by allowing Curtiss-Wright for example, to pursue acquisitions, pay dividends, and buy back stock | |||||||
Individual Objectives | 20% | • | Requires a portion of the annual incentive to be based on performance objectives for which each executive is directly responsible | |||||
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| • | Allows for differentiation of awards based on individual contributions | ||||
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| • | Supports leadership development and succession planning | ||||
(a) | Adjusted metric. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ICP Formula
Payout = (30% of Target x OI Performance Rating) + (20% of Target x OM Rating) + (30% of Target x WC Rating)
+ (20% of Target x Individual Rating)
Any adjustments are reviewed by FW Cook, approved by the Committee, and audited by our external and internal audit staff. These adjustments ensure that Management makes decisions based on the best interests of the Company and stockholders. Despite the COVID-19 pandemic and its
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impact on Company operations and financial performance, in 2020,In 2021, the Committee made no adjustments to the financial performance results of the Company.Company other than those that were reflected in the Company’s year-end financial press released furnished to the SEC on February 24, 2022.
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Goal Setting Process
Annual ICP financial performance goals are developed through a rigorous goal setting process to test the validity of the Company’s performance objectives. In reviewing and setting performance targets, the Committee considers the Company’s five-year strategic plan, annual budget, the Company’s compensation structure, historical and forecasted performance for the Company and its peer group, analyst estimates of prospective performance of the Company and its peer group, and the Company’s cost of capital.capital, and industry headwinds and significant uncertainty in the macro-economic environment, including the ongoing COVID-19 pandemic. Individual goals are developed independently between the respective NEO and the CEO. IndividualsIndividual’s goals of the CEO and each other NEO are then presented along with their rationale to the Committee for consideration and approval. All goals are tied to strategic business needs for the coming year and are pushed down through the organization to align all incentive pay participants with Company goals and objectives. The Committee believes that this approach provides consistency and continuity in the execution of the Company’s short-term goals as well as a strategic tie to the accomplishment of the Company’s long-term objectives.
The goals set by the Committee are designed to provide correlating pay for performance while targeting to the 50th percentile. For pay above the 50th percentile, there must be a corresponding level of performance.
20202021 Annual Incentive Compensation (ICP) Payout
No incentive is paid if performance falls below threshold, and payouts are capped and may not exceed 200% of target.
For 2020,2021, the range of OI ($) performance was:
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OI Range of Performance | Corporate | ||||||
Threshold | $ |
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Target |
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Maximum | $ |
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For 2020,2021, the range of OM performance was:
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OM (%) Range of Performance | Corporate | ||||||
Threshold |
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Target |
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For 2020,2021, the range of WC (% of Sales) performance was:
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WC Range of Performance | Corporate | ||||||
Threshold |
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Target |
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Maximum |
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Individual objectives are generally measurable and weighted based on their relative importance to the goals of the business unit and the overall success of the Company. Individual objectives can be quantitative or more subjective as long as they support operational success and reflect management’s strategy. The Committee reviews each NEO’s individual performance. The CEO provides a rating between 1 (one) and 5 (five) for each of the NEOs’ objectives other than himself.herself. A performance rating of 3 (three) equates to 100% of target achievement; a 5 (five) represents 200% of target, or maximum achievement; and a 2 (two) represents 50% of target, or threshold achievement. A participant does not receive an award under the individual component of the ICP for a rating of less than two. Each objective is multiplied by its weighting and then totaled for an overall rating. The overall rating is then multiplied against 20% of the NEO’s ICP target award to derive a payout.
In order to assess the NEOs’ individual performance, the Committee is generally provided with detailed supporting documentation. In awarding a rating to each NEO, the Committee analyzes this
40
supporting justification, and takes into account the Company’s overall performance and the assessment of the Chief Executive Officer.
In 2020,Based on the Committee determined that all NEOs (except Messrs. Tynanindividual assessment scorecards described above and Quinly) would receive the maximum allowable individual rating (5) forconsidering the significant efforts and contribution that they each put forth and leadership qualities that they exemplified to deliver
44
the Company’s strong financial performance in light of the impacts of the COVID-19 pandemic on the Company’s business as well as the general economic environment.environment, the Committee determined that all NEOs achieved an individual rating of 5 (five).
The following table details the 20202021 ICP payout to each NEO based on actual financial results for the Company versus target and each NEO’s 20202021 individual performance rating. Payouts are based on base salary rate for portions of the year due to any mid-year base salary increases as discussed above. With regard to the financial payout for the Company, the Company fell short ofgenerally met or exceeded its targets on all three financial measures,targets, which resulted in the payouts in the table below.
In no event may ICP awards for participants be increased on a discretionary basis; however, the Committee does have the discretion to decrease the amount of any award paid to any participant under the ICP. For 2020,2021, the Committee exercised no suchdid not exercise any downward discretion.
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NEO | Target % of | Goal | Weight | Actual | 2020 ICP | 2020 ICP | 2020 ICP | Target % of | Goal | Weight | Actual | 2021 ICP | 2021 ICP | 2021 ICP | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Adams | 110% | Individual Portion | 20% | 5.0 | 200 | % | $ | 231,000 | $ | 462,000 | 110% | Individual Portion | 20% | 5.0 | 200 | % | $ | 231,000 | $ | 462,000 | ||||||||||||||||||||||||||||||||||||||
| OI Portion | 30% | $383M | 0 | % | $ | 346,500 | $ | 0 | OI Portion | 30% | $420M | 150 | % | $ | 346,500 | $ | 519,750 | ||||||||||||||||||||||||||||||||||||||||
| OM Portion | 20% | 16.3% | 91 | % | $ | 231,000 | $ | 210,210 | OM Portion | 20% | 17.0% | 186 | % | $ | 231,000 | $ | 429,660 | ||||||||||||||||||||||||||||||||||||||||
| WC Portion | 30% | 21.9% | 56 | % | $ | 346,500 | $ | 194,040 | WC Portion | 30% | 23.0% | 99 | % | $ | 346,500 | $ | 343,035 | ||||||||||||||||||||||||||||||||||||||||
| Total Payout | $ | 866,250 | Total Payout | $ | 1,754,445 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Tynan | Ineligible |
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Mr. Quinly | Ineligible | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ms. Bamford | 100% | Individual Portion | 20% | 5.0 |
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| 200 | % |
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| $ |
| 170,000 |
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| $ |
| 340,000 | |||||||||||||||||||||||||||||||||||||||
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| OI Portion | 30% | $420M |
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| 150 | % |
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| $ |
| 255,000 |
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| $ |
| 382,500 | ||||||||||||||||||||||||||||||||||||||
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| OM Portion | 20% | 17.0% |
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| 186 | % |
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| $ |
| 170,000 |
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| $ |
| 316,200 | ||||||||||||||||||||||||||||||||||||||
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| WC Portion | 30% | 23.0% |
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| 99 | % |
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| $ |
| 255,000 |
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| 252,450 | ||||||||||||||||||||||||||||||||||||||
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| Total Payout |
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Mr. Rayment | 75% | Individual Portion | 20% | 5.0 | 200 | % | $ | 82,500 | $ | 165,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
| OI Portion | 30% | $420M | 150 | % | $ | 123,750 | $ | 185,625 | |||||||||||||||||||||||||||||||||||||||||||||||||
| OM Portion | 20% | 17.0% | 186 | % | $ | 82,500 | $ | 153,450 | |||||||||||||||||||||||||||||||||||||||||||||||||
| WC Portion | 30% | 23.0% | 99 | % | $ | 123,750 | $ | 122,513 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Payout | $ | 626,588 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Ferdenzi | 65% | Individual Portion | 20% | 5.0 |
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| 200 | % |
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| 63,050 |
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| 126,100 | 65% | Individual Portion | 20% | 5.0 |
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| 200 | % |
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| 65,000 |
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| 130,000 | ||||||||||||||||||||
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| OI Portion | 30% | $383M |
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| 0 | % |
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| $ |
| 94,575 |
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| 0 |
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| OI Portion | 30% | $420M |
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| 150 | % |
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| $ |
| 97,500 |
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| 146,250 | ||||||||||||||||||
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| OM Portion | 20% | 16.3% |
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| 91 | % |
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| $ |
| 63,050 |
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| 57,376 |
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| OM Portion | 20% | 17.0% |
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| 186 | % |
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| $ |
| 65,000 |
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| 120,900 | ||||||||||||||||||
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| WC Portion | 30% | 21.9% |
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| 56 | % |
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| 94,575 |
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| 52,962 |
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| WC Portion | 30% | 23.0% |
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| 99 | % |
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| 97,500 |
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| 96,525 | ||||||||||||||||||
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| Total Payout |
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| $ |
| 236,438 |
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| Total Payout |
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| 493,675 | ||||||||||||||||||||||||||
Mr. Farkas | 60% | Individual Portion | 20% | 5.0 | 200 | % | $ | 57,000 | $ | 114,000 | 70% | Individual Portion | 20% | 5.0 | 200 | % | $ | 70,000 | $ | 140,000 | ||||||||||||||||||||||||||||||||||||||
| OI Portion | 30% | $383M | 0 | % | $ | 85,500 | $ | 0 | OI Portion | 30% | $420M | 150 | % | $ | 105,000 | $ | 157,500 | ||||||||||||||||||||||||||||||||||||||||
| OM Portion | 20% | 16.3% | 91 | % | $ | 57,000 | $ | 51,870 | OM Portion | 20% | 17.0% | 186 | % | $ | 70,000 | $ | 130,200 | ||||||||||||||||||||||||||||||||||||||||
| WC Portion | 30% | 21.9% | 56 | % | $ | 85,500 | $ | 47,880 | WC Portion | 30% | 23.0% | 99 | % | $ | 105,000 | $ | 103,950 | ||||||||||||||||||||||||||||||||||||||||
| Total Payout | $ | 213,750 | Total Payout | $ | 531,650 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Jakubowitz | 45% | Individual Portion | 20% | 5.0 |
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| 200 | % |
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| $ |
| 26,730 |
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| 53,460 | |||||||||||||||||||||||||||||||||||||||
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| OI Portion | 30% | $383M |
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| 0 | % |
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| 40,095 |
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| 0 |
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| Aggregate Payout |
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| 4,697,508 | ||||||||||||||||||||||
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| OM Portion | 20% | 16.3% |
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| 91 | % |
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| $ |
| 26,730 |
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| 24,324 | ||||||||||||||||||||||||||||||||||||||
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| WC Potion | 30% | 21.9% |
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| 56 | % |
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| $ |
| 40,095 |
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| 22,454 | ||||||||||||||||||||||||||||||||||||||
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| Total Payout |
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| 100,238 | ||||||||||||||||||||||||||||||||||||||||||
Key Changes to the Annual Incentive Compensation Design for 20212022
To reinforce the Company’s strategy of focusing on sales growth, the operating margin measure has been changed to organic sales growth (weighted 20%). There were no other changes made to the ICP metrics and weightings for 2021.2022. They will remainbe working capital as a percent of sales (30%), operating income (30%), operating marginorganic sales growth (20%), and individual goals (20%).
Long-Term Incentive Program
The Company’s long-term incentive plan (“LTIP”) is designed to ensure its executive officers and key management employees are focused on longer-term stockholder value creation through incentive compensation that rewards for longer-term (i.e., three years or more) performance.
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In determining the 20202021 LTIP grants, the Committee considered the following factors:
• | Continued focus on creating stockholder value to align executive compensation and stockholder outcomes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Targeting executives’ pay opportunities competitively with the market median | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Rewarding each individual for his or her direct contribution to revenue and profitability of the business | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Listed below are the 2020 Listed below are the 2021 target LTIP values for the NEOs:
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NEO |
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Mr. Adams (a) |
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Mr. |
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Mr. Ferdenzi |
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| 155 | % |
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Mr. Farkas |
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(a) | Mr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
If the NEOs drive Company performance that achieves target levels, payouts will result in values that approximate market median LTIP payments.
Key Changes to the 2021 LTIP Design and GrantsLong-Term Incentive Compensation
There were no changes made to the LTIP award mix, metrics, and weightings for 2021. LTIP grants consisted of equity-based performance share units (“PSUs”), cash-based performance units (“PUs”), and time-based restricted stock units (“RSUs”).
The Committee believes the award mix summarized in the table below provides the proper amount of leverage in the LTIP program. The LTIP components will balance the multiple interests of 1) significant pay at risk, 2) stockholder interests, 3) retention, and 4) internal and external performance goals. The three components chosen will each accomplish a different “mission” in terms of incenting NEO performance.
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Long-Term Incentive | Performance Condition/Vesting | Objective of Design | ||||||
PSUs (40%) | • | Three-year relative TSR against the | • | Aligns pay with relative TSR | ||||
| • | Aligns NEOs’ with shareholders’ interests | |||||||
PUs (30%) | • | Three-year average total sales growth (weighted 60%) and adjusted EPS (weighted 40%) against objectives | • | Focus on internal goals linked to long-term business strategy | ||||
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| • | Use of cash to mitigate dilution and burn rate concerns | |||
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| • | Aligns NEOs’ with shareholders’ interests | |||
RSUs (30%) | • | Cliff vest 100% on the third anniversary of the date of grant | • | Retention | ||||
| • | Stock ownership | |||||||
| • | Strengthens alignment with shareholders | |||||||
Performance Share Units
The target number of PSUs granted is calculated by multiplying the total dollar value of the LTIP grant by the percentage of LTIP grant allocated to PSUs (40% for 2020)2021) and dividing by the closing price of the Company’s common stockour Common Stock as reported on the New York Stock Exchange on the date of the grant. Because Mr. Adams was not granted RSUs as discussed above, his PSU percentage was 50%.
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The payout is determined based on the table below in relation to peer performance. New this year, the Company has capped payout at 100% if absolute TSR is negative.
PSUs | ||||||||||||||||
TSR vs. | Payout as a % of Target | |||||||||||||||
Maximum | ≥ 75th |
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Target |
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| Below Threshold | < 25th | 0 | % | |||||||||||||
(1) |
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| Linear interpolation will apply for performance between disclosed payout levels. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash-Based Performance Units
The target number of PUs granted is calculated by multiplying the total dollar value of the LTIP grant by the percentage of LTIP grant allocated to PUs (30% for 2021)2022). For the 2020-2022 performance period, to reinforce the Company’s strategy of focusing on profitable growth, the ROIC measure for PUs has been changed to adjusted earnings per share (EPS)(weighted 40%), calculated consistently with the Company’s earnings releases, while maintaining total sales growth (weighted 60%)Because Mr. Adams was not granted RSUs as discussed above, his PU percentage was 50%. Moving to adjusted EPS while maintaining a focus on topline growth will continue to align the relationship between the interests of the NEOs with stockholder value.
The number of units vesting can range from 0% to 200% of target. Performance targets for each goal are established at the beginning of the performance period.
Restricted Stock Units
The number of RSUs granted is calculated in the same manner as target number of PSUs and cliff vest in three years.
2018-20202019-2021 Long-Term Incentive Compensation Payouts
Performance Share Units
In February 2021,2022, a PSU payout was made for the February 20182019 PSU grants covering performance for 2018-2020.2019-2021. The payout for PSUs for the performance period 2018-20202019-2021 was a 100%an 88% payout based on achievement of relative TSR at the peer group’s 50th43rd percentile, which ranked eighthninth among peers.
Cash-Based Performance Units
In February 2021,2022, a cash-based performance unit payout was made to Ms. Bamford and Messrs. Adams, Tynan, Quinly,Rayment, Ferdenzi, Farkas, and JakubowitzFarkas based on the cash-based performance unit grants covering the 2018-20202019-2021 performance period. The 2018-20202019-2021 performance targets were based 50%60% on three-year average total sales growth and 50%40% on three-year average return on invested capital (ROIC). The Company believes that total sales growth and ROIC are long-term drivers of stockholder value. No incentive is paid if performance falls below Threshold, and payouts are capped and may not exceed 200% of target.
• | ROIC is calculated as net operating profit after tax (excluding interest expense and other income) divided by average capital (beginning of year and end of year debt and equity) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Total sales growth is calculated by computing the average of the percentage increases in sales in each of the years within the performance period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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For the 2018-20202019-2021 performance period, the target range of average sales growth and ROIC performance was:
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| Sales | ROIC (%) | ||||||||||||
Threshold | 2.0 | 13.6 | ||||||||||||
Target |
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| 4.0 |
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| 14.6 | ||||||||
Maximum | 6.0 | 15.6 | ||||||||||||
| Sales Growth (%) | ROIC (%) | |||||||||
| Threshold | ≥ 3.0 | 14.1 | ||||||||
| Target | 5.0 | 15.1 | ||||||||
| Maximum | < 6.0 | 16.1 | ||||||||
The NEO awards are listed in the Summary Compensation Table in this Proxy Statement under the heading “Non-Equity Incentive Plan Compensation” and detailed below.
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The following table details results for the Company’s cash-based performance unit payouts granted in February 2018.2019. The performance period 2018-20202019-2021 resulted in performance of 19.5%14.1% for ROIC and 2.2%0% for sales growth. This equates to a 200%20% payout based on ROIC performance and a 54%0% payout based on sales growth performance, for a total payout percentage of 127%20%.
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NEO | Target | Payout | Performance | ||||||||||||||||||
Adams | $ | 915,750 | 127 | % | $ | 1,163,003 | |||||||||||||||
Tynan |
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| 318,744 |
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| 127 | % |
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| 404,805 | ||||||
Quinly | $ | 375,000 | 127 | % | $ | 476,250 | |||||||||||||||
Ferdenzi |
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| $ |
| 166,374 |
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| 127 | % |
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| $ |
| 211,295 | ||||||
Farkas | $ | 97,500 | 127 | % | $ | 123,825 | |||||||||||||||
Jakubowitz |
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| 60,564 |
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| 127 | % |
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| 76,916 | ||||||
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NEO | Target | Payout | Performance | ||||||||||||||||||
Mr. Adams | $ | 965,250 | 20 | % | $ | 193,050 | |||||||||||||||
Ms. Bamford |
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| 226,455 |
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| 20 | % |
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| 45,291 | ||||||
Mr. Rayment | $ | 186,000 | 20 | % | $ | 37,200 | |||||||||||||||
Mr. Ferdenzi |
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| 208,274 |
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| 20 | % |
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| 41,655 | ||||||
Mr. Farkas | $ | 107,250 | 20 | % | $ | 21,450 | |||||||||||||||
Key Changes to the 2022 LTIP Design and Grants
There were no changes made to the LTIP award mix, metrics, and weightings for 2022. LTIP grants consisted of equity-based performance share units (“PSUs”), cash-based performance units (“PUs”), and time-based restricted stock units (“RSUs”). For the 2022-2024 performance period, the relative comparison group for the PSUs has been redefined from the S&P MidCap 400 to the Company’s peer group to restore consistency between compensation benchmarking and TSR performance measurement.
Employee Stock Purchase Plan
The Company’s NEOs, along with substantially all other full time Company employees, are eligible to participate in the Curtiss-Wright Corporation Employee Stock Purchase Plan (“ESPP”). The purpose of the ESPP is to encourage employees of the Company and its subsidiaries to increase their ownership in the Company’sour Common Stock. To achieve this purpose, the ESPP provides all participating employees with the opportunity to purchase the Company’sour Common Stock through a payroll deduction at a 15% discount of the market value of the stock, unless (i) the employee owns more than 5% of the Company’sour Common Stock or (ii) the employee has the right to purchase under all Company employee stock purchase plans Companyour Common Stock under the plan that would accrue at a rate which exceeds $25,000 in fair market value for each calendar year in which such right to purchase is outstanding. The ESPP is offered in six-month “offering periods” commencing on January 1 and ending on June 30 (or if on a weekend the preceding trading day) and commencing on July 1 and ending on December 31 (or if on a weekend the preceding trading day) of each year. At the end of each offering period, participant contributions are used to purchase a number of shares of common stockCommon Stock (subject to IRS limits), in an amount equal to 85% of the fair market value of the common stockCommon Stock on the last day of each offering period. An employee who elects to participate in the ESPP will have payroll deductions made on each payday during the six-month period.
During 2020,2021, Ms. Bamford and Messrs. Ferdenzi Farkas, and JakubowitzFarkas participated in the ESPP, purchasing 250, 246,153, 196, and 259196 shares of Common Stock under the plan, respectively. These share purchases are equivalent to the maximum annual contribution limit under the plan for each participating executive.
Executive Deferred Compensation Plan
The NEOs are also eligible to participate in the Company’s non-qualified executive deferred compensation plan that allows participants to defer compensation in excess of certain statutory limits that apply to qualified retirement plans. Each participant may defer up to 25% of their base salary; 50% of their annual performance bonus; and 50% of the cash portion of their long-term cash award. The rate of interest is determined each year according to the average rate on 30-year Treasury bonds for November of the previous calendar year, plus 2.0%. Thus, the rate fluctuates annually. The average 30-year Treasury bond rate for November 20192020 was 2.29%1.94% and money in the Plan earned 4.29%3.94% for 2020.2021. Earnings begin accruing upon deposit and are compounded daily. Earnings are posted to the participants account on the final day of each month. See “Deferred“Deferred Compensation Plans” section on page 5661 in this Proxy Statement. In 2020,2021, Ms. Bamford and Mr. Ferdenzi participated in the executive deferred
4448
deferred compensation plan. Messrs.Mr. Adams Tynan, and Quinly havehas made deferrals in prior years and continuecontinues to accrue benefits under the plan.
Pension Plans
The NEOs (except Mr. Rayment1) also participate in the Curtiss-Wright Corporation Retirement Plan (the “Retirement Plan”) and the Curtiss-Wright Corporation Retirement Benefits Restoration Plan (the “Restoration Plan”). This is consistent with the Company’s philosophy that compensation should promote the long-term retention and financial health of its employees and be competitive with industry peers. The Company’s retirement plans integrate other components of the Company’s executive compensation program by generally including base salary and cash incentive compensation in determining retirement plan benefits.
The Retirement Plan is a tax qualified, defined benefit plan made up of two separate benefits: (1) a traditional, final average pay (FAP) formula component (this benefit was closed to new entrants as of February 1, 2010 and has a 15 year15-year sunset period commencing on January 1, 2014) and (2) a cash balance component (this benefit was closed to future participants and pay credits ceased as of January 1, 2014, although interest continues to accrue on accounts). Both plans are non-contributory and employees hired prior to its close participate in one or both of the benefits, including the NEOs.
On September 1, 1994, the Company amended and restated the Retirement Plan, and any benefits accrued as of August 31, 1994 were transferred into the amended Retirement Plan. The Retirement Plan, as amended, provides for an annual benefit at age 65 of 1.5% times the five yearfive-year final average compensation in excess of social security covered compensation, plus 1% of the five yearfive-year final average compensation up to social security covered compensation, in each case multiplied by the participant’s years of service after September 1, 1994, not to exceed 35. Funds contributed to the Cash Balance portion of the Plan before it was frozen are credited to a notional cash balance account that grows with interest based on the rates each December for 30-Year Treasury Bonds.
As of January 1, 2015, no NEO had accrued any pension benefits prior to the plan merger in 1994: Mr. Adams, Mr. Tynan,Ms. Bamford, Mr. Ferdenzi, Mr. Quinly,and Mr. Farkas and Mr. Jakubowitz commenced their employment with the Company after September 1, 1994, and therefore did not accrue a monthly pension under the Retirement Plan prior to September 1, 1994; however, they continue to accrue a benefit under the amended Retirement Plan. The Company maintains an unfunded, non-qualified defined benefit Restoration Plan under which participants in the Retirement Plan whose compensation or benefits exceed the limits imposed by I.R.C. Sections 401(a) (17) and 415 will receive a supplemental retirement benefit that restores the amount that would have been payable under the Retirement Plan except for the application of such limits.
Since the Company provides a traditional final average pay benefit under the Retirement Plan to Ms. Bamford and Messrs. Adams, Ferdenzi, and Farkas, the Company did not offer any Company-source contributions to these NEO’s under the Company’s 401(k) savings Plan. Because Mr. Rayment transferred to the United States after the FAP component of the Retirement Plan was closed to new entrants, he is eligible for employer matching contributions of 50% on 8% contributed to the Curtiss-Wright Savings and Investment Plan (the “S&I Plan”). The S&I Plan does not match contributions above 8%. Effective January 1, 2014, eligible employees hired after February 1, 2010, the S&I Plan provides a 3% non-elective contribution to employees that do not participate in the Retirement Plan.
The Company maintains an unfunded, non-qualified defined contribution Restoration Plan under which participants in the S&I Plan whose compensation or benefits exceed the limits imposed by I.R.C. Sections 401(a) (17) and 415 will receive a supplemental retirement benefit that restores the 3% non-elective contribution amount that would have been payable under the S&I Plan except for the application of such limits.
1 | Mr. Rayment does not participate in the Retirement Plan and the Restoration Plan because he transferred from the United Kingdom to the United States after those plans were closed to new entrants. |
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Since the Restoration Plan benefits are not funded, in the event of a change in control, the Company has agreed to fund a Rabbi Trust in place through an agreement between the Company and PNC Bank, N.A., dated January 30, 1998, which provides for the payment of the Company’s obligation under the Restoration Plan.
Since the Company provided a traditional final average pay benefit under the Retirement Plan, the Company did not offer any Company-source contributions to NEO’s under the Company’s 401(k) savings Plan. However, NEO’s can elect to defer up to 75% of their own annual cash compensation per year on a tax-deferred basis subject to the IRS Elective Deferral limit within the Company’s 401(k) savings Plan. For 2020,2021, the pre-tax contribution limit was 9.0%, and the after-tax Plan contribution limit for a highly compensated employee was limited to 3.0%.
Executive Perquisites
In addition to the standard benefit plans offered to all employees, the NEOs are eligible for a conservative levellimited number of executive perquisites. Perquisites include financial planning and income tax preparation, a Company automobile or automobile allowance, and executive physicals for the executive and his or her spouse. TheWith the assistance of the Committee’s independent compensation consultant, the Committee and outside Consultant have agreedhas determined that the overall level of perquisites the Company provides to its NEOs is reasonable and consistent with that of its peers.
45Management Continuity Awards
On December 16, 2021, the Company entered into a restricted stock unit agreement with Mr. Ferdenzi. Mr. Ferdenzi received a grant of 5,660 restricted stock units pursuant to the terms and conditions of the LTIP. Each unit is the equivalent of one share of our Common Stock. The agreement provides for the entire grant to vest on December 15, 2026 (five years from the date the agreement was executed), provided that Mr. Ferdenzi does not voluntarily leave the employ of Curtiss-Wright or Mr. Ferdenzi is not otherwise terminated for any reason by the Company. On or prior to December 31, 2025, Mr. Ferdenzi may elect to convert said stock units to an equivalent number of shares of our Common Stock or defer the conversion of the stock units in accordance with Section 409A of the Internal Revenue Code for a period not greater than five (5) years. The agreement also provides for anti-dilutive adjustments in the event of recapitalization, reorganization, merger, consolidation, stock split or any similar change, and for the immediate vesting and conversion of the stock units pro-rata upon Mr. Ferdenzi’s death or disability and in the event of a change-in-control of Curtiss-Wright and Mr. Ferdenzi’s termination of employment within 18 months from the date of such change-in-control.
On December 16, 2021, the Company entered into a restricted stock unit agreement with Mr. Farkas. Mr. Farkas received a grant of 5,660 restricted stock units pursuant to the terms and conditions of the LTIP. Each unit is the equivalent of one share of our Common Stock. The agreement provides for the entire grant to vest on December 15, 2026 (five years from the date the agreement was executed), provided that Mr. Farkas does not voluntarily leave the employ of Curtiss-Wright or Mr. Farkas is not otherwise terminated for any reason by the Company. On or prior to December 31, 2025, Mr. Farkas may elect to convert said stock units to an equivalent number of shares of our Common Stock or defer the conversion of the stock units in accordance with Section 409A of the Internal Revenue Code for a period not greater than five (5) years. The agreement also provides for anti-dilutive adjustments in the event of recapitalization, reorganization, merger, consolidation, stock split or any similar change, and for the immediate vesting and conversion of the stock units pro-rata upon Mr. Farkas’s death or disability and in the event of a change-in-control of Curtiss-Wright and Mr. Farkas’s termination of employment within 18 months from the date of such change-in-control.
The agreements with Messrs. Ferdenzi and Farkas were entered into to help ensure operational continuity of key members of our management team through 2026. The Committee believes this action is important given the management transition in early 2021 with the naming of Lynn M. Bamford as our CEO and the need for continuity as the Company pursues a strategic and ambitious growth strategy. The Committee and the Board received advice and recommendations from its independent compensation consultant FW Cook prior to implementing these agreements.
50
Policies concerning equity-based and other long-term incentive compensation
Equity Ownership and Other Requirements for Senior Executives
To further align the linkage between the interests of the NEOs and those of its stockholders, the Company requires the CEO and all other NEOs to own Company stock denominated as a multiple of their annual salaries as follows: five times annual salary for the CEO and the Executive Chairman, three times annual salary for NEOs that directly report to the CEO, and two times annual salary for all other NEOs.
All share-based long-term incentive plan grants, including any vested stock options (post-2005 grants), are subject to the Guidelines, and 50% of the net proceeds of a stock based grant vested or exercised (current market value of shares less the strike price) must be retained in Company stock. There is no fixed timeframe to achieve the Guidelines. However, until the Guidelines are satisfied, the NEO is only permitted to sell 50% of the vesting award to cover the NEO’s income tax obligations. Once the ownership thresholds are fully met and maintained, the holding limits are removed on any and all earned and vested shares above the ownership guideline.
Clawback Policy
In the event the amount of any incentive compensation award is based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or if a participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 and has committed an offense subject to forfeiture under such statute, the participant must reimburse the Company that portion of the incentive compensation award that was based on the inaccurate data or as provided for in such statute.
Prohibition of Insider Trading, Hedging, and Pledging
The Company maintains an insider trading policy for all of its employees (including the NEOs and other officers) and members of the Board of Directors that prohibits the purchase or sale of Company equity securities while being aware of material, non-public information about the Company as well as the disclosure of such information to others who may trade in equity securities of the Company.
The Company’s Code of Conduct prohibits all employees (including the NEOs and other officers) from purchasing, selling or otherwise utilizing financial instruments, including but not limited to, prepaid variable forward contracts, instruments for the short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a change in the market price of the Company’s equity securities.
Additionally, the Company’s 2014 Omnibus Incentive Plan prohibits members of the Board of Directors and all employees (including the NEOs and other officers) from engaging in the following transactions with respect to Company equity securities from awards under the plan:
• | purchasing, selling, or otherwise utilizing financial instruments, including but not limited to, prepaid variable forward contracts, instruments for the short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a change in the market price of Company equity securities; and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | pledging Company equity securities (including holding Company equity securities in a margin account or otherwise pledging Company equity securities as collateral for a loan). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Policies
Use of Tax Gross-up
The Company has not entered into any NEO Change in Control agreements with tax gross-ups except for the one legacy agreement remaining with Mr. Adams. Upon Mr. Adams’ retirement, the Company will not have any agreements with tax-gross up provisions and the Company does not expect to enter into any new Change in Control agreements containing a tax gross-up provision.
4651
Tax Deductibility
Prior to the Tax Cuts and Jobs Act, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the Company’s CEO and up to three other executive officers other than the CFO. However, certain performance-based compensation was exempt from the deduction limit if specific requirements were met. The Committee structured awards to executive officers under the Company’s ICP and equity awards program to qualify for this exemption. However, the 162(m) exception to the deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers, including the CFO, in excess of $1,000,000 will not be deductible. Qualifying compensation that the Company pays pursuant to a binding contract that was in effect on November 2, 2017 and is not materially modified after that date will continue to be exempt from the deduction limit under a grandfathering rule. While the Company will continue to monitor its compensation programs in light of Section 162(m), as amended, the Committee considers it important to retain the flexibility to design compensation programs that are in the best long-term interests of the Company and its stockholders. As a result, the Committee will continue to take into account the tax and accounting implications (including with respect to the expected lack of deductibility under the revised Section 162(m)) when making compensation decisions, but reserves its right to make compensation decisions based on other factors as well if the Committee determines it is in its best interests to do so. Accordingly, the Company may pay compensation at levels that are not deductible under Section 162(m).
The following report of the Executive Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference therein.
Executive Compensation Committee Report
The Executive Compensation Committee has reviewed and discussed this CD&A (included in this Proxy Statement) with Management. Based upon the Executive Compensation Committee’s review and discussions referred to above, the Executive Compensation Committee recommended that the Board of Directors include this CD&A in the Company’s Proxy Statement for the year ended December 31, 2020,2021, filed with the Securities and Exchange Commission.
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| EXECUTIVE COMPENSATION COMMITTEE | |
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| S. Marce Fuller, Chairperson |
Risk Consideration in the Overall Compensation Program for 20202021
In 2020,2021, the Executive Compensation Committee, with the assistance of Management and the oversight of FW Cook, assessed the Company’s executive and broad-based compensation and benefits programs to determine if the programs’ provisions and operations create undesired or unintentional risk of a material nature. The Executive Compensation Committee concluded in this risk assessment that these programs have been designed and administered in a manner that discourages undue risk-taking by employees, including a number of features of the programs that are designed to mitigate risk, including:
• | Limits on annual and long-term performance awards, thereby defining and capping potential payouts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
52
• | Proportionately greater award opportunity derived from the long-term incentive program compared to annual incentive plan, creating a greater focus on sustained Company performance over time, and providing alignment with shareholder interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
47
• | Use of three distinct long-term equity incentive vehicles—restricted stock units, long-term cash-based performance units, and performance shares—that vest over a number of years, thereby providing strong incentives for sustained operational and financial performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Use of balanced measures, including top and bottom line measures, income and balance sheet statement measures, and short- and long-term measurement periods | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Stock ownership guidelines for senior executives that ensure alignment with stockholder interests over the long term | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Incorporation of an individual performance score, ranging from one 1.0 to five 5.0, as a key factor in the total annual incentive calculation, thereby enabling the Committee to direct a zero payout for the 20% individual-performance component to any executive in any year if the individual executive is deemed to have sufficiently poor performance or is found to have engaged in activities that pose a financial, operational or other undue risk to the Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | A formal clawback policy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Pre-determined commission schedules on sales representatives, thereby defining | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the foregoing reasons, the Committee has concluded that the Company’s compensation policies and practices do not encourage excessive and unnecessary risk-taking, and that the level of risk is appropriate for the best interests of stockholders.
Post-Employment Agreements
Severance Agreements
The Company has At-will severance agreements with Ms. Bamford and Messrs. Adams, Quinly,Rayment, Ferdenzi, Farkas, and Jakubowitz.Farkas. In the case of involuntary termination of employment other than termination for cause (as defined in the agreements), failure to comply with the terms and conditions of the agreement, voluntary resignation of employment by the employee, and voluntary retirement by the employee, these agreements provide in the case of Ms. Bamford and Mr. Adams two years’ base salary and annual target bonus as the payment of severance pay, and, in the case of Messrs. Quinly,Rayment, Ferdenzi Farkas, and Jakubowitz,Farkas, the equivalent of one year’s base salary and annual target bonus to be paid at the time of termination, as well as the continued availability of certain employee health and welfare benefits for a minimum period of one year following termination. The agreements provide that such pay and benefits also would be made available in the case of voluntary retirement or termination of employment that is the direct result of a significant change in the terms or conditions of employment, including a reduction in compensation or job responsibilities. At the employee’s option, the severance pay may be received over the two-year period following termination, in which case the employee benefits would continue in effect for the same period. The agreements further provide that the payment of severance pay and the availability of benefits are contingent upon a number of conditions, including the employee’s performance of his or her obligations pursuant to the agreement, specifically to provide consulting services, release the Company from any employment related claims, and not compete with the Company for a period of 12 months.
Change-in-Control Agreements
The Company has Change-in-Control severance protection agreements with Ms. Bamford and Messrs. Adams, Quinly,Rayment, Ferdenzi, Farkas, and Jakubowitz.Farkas. The agreements with Messrs.Mr. Adams and QuinlyMs. Bamford provide for payment of severance pay equal to three times while Mr.Messrs. Rayment, Ferdenzi and Farkas provides for two and one half times, and Messrs. Farkas and Jakubowitz provides for twoone-half times the sum of the executive’s base salary and the greater of (i) the annual target incentive grant in the year the executive is terminated or (ii) the annual incentive paid under the annual incentive plan immediately prior to the executive’s termination. These amounts shall be paid in a single lump sum cash payment within ten (10) days after the executive’s termination date. The agreements also call for the continued availability of certain employee benefits for a period of two to three years following termination of employment.
53
All agreements have a double trigger, i.e. severance may be paid in the event that (1) there is a change-in-control of the Company, as that term is defined in the agreements, and (2) the covered
48
executive’s employment is formally or constructively terminated by the Company within twenty-four months following the change-in-control. Accordingly, if the Company terminates the employment without “cause” of an NEO during the two-year period following a change-in-control, or if the NEO terminates the NEO’s employment with the Company with “good reason,” then the NEO is entitled to certain compensation and benefits provided for in the agreement. The agreements define “cause” as (a) a conviction of a felony, (b) intentionally engaging in illegal or willful misconduct that demonstrably and materially injures the Company, or (c) intentional and continual failure to substantially perform assigned duties which failure continues after written notice and a 30-day cure period. The agreements also define “good reason” as (a) adverse change in status, title, position, or responsibilities, (b) reduction in salary, (c) relocation of more than 25 miles, (d) the Company’s failure to pay the covered individual in accordance with its compensation policies; or (e) a reduction in benefits. The agreement for Mr. Adams is “grandfathered” to renew automatically each year. All other NEO agreements must be renewed on an annual basis by the Committee. Consistent with best practices, all future executive officer change-in-control agreements elected as executive officers after January 1, 2008, must be approved and renewed annually by the Committee. Due to their retirement, the agreements with Messrs. Tynan and Jakubowitz terminated on their respective retirement date.
In accordance with rules adopted by the Securities and Exchange Commission, the Company is providing the following information concerning the ratio of the Company’s median employee’s annual total compensation to the total annual compensation of the Company’s principal executive officer (“PEO”(PEO”). For fiscal year 2020,2021, the Company’s PEO is David C. Adams.Lynn M. Bamford. The Committee does not use this ratio as it considers appropriate compensation for the PEO. Management does not use this ratio when determining compensation for the rest of the workforce.
The Company identified the median employee by utilizing base salary as of December 1, 20202021 and adding any target bonus to that amount, for all individuals, excluding the PEO, who were employed by the Company on December 31, 2020,2021, the last day of the Company’s payroll year (whether employed on a full-time, part-time, or seasonal basis). In addition, the Company also excluded all independent contractors. The Company further converted all other currencies to U.S. dollars as of December 1, 2020,2021, irrespective of currency fluctuations over the course of the year. Finally, the Company elected to use the de minimisexemption for non-U.S. employees to exclude 4.7%4.9% of the Company’s non-U.S. employees. The list of jurisdictions for which these employees are excluded, the approximate number of employees excluded from each jurisdiction, the total number of U.S. and non-U.S. employees irrespective of any exemption, (data privacy or de minimis), and the total number of U.S. and non-U.S. employees used for the de minimiscalculation are set forth in the table below.
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Jurisdictions | Approximate Number | Total Number of U.S. | Total Number of U.S. | ||||||||||||||||||
India | 96 | 8,514 | 8,514 | ||||||||||||||||||
Costa Rica |
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| 81 |
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France | 65 | ||||||||||||||||||||
Sweden |
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| 39 |
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Singapore | 36 | ||||||||||||||||||||
Portugal |
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| 30 |
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Spain | 17 | ||||||||||||||||||||
Netherlands |
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| 9 |
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Belgium | 4 | ||||||||||||||||||||
Brazil |
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| 7 |
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Poland | 6 | ||||||||||||||||||||
Taiwan |
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| 5 |
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Korea | 6 | ||||||||||||||||||||
Hong Kong |
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| 1 |
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| Jurisdictions | Approximate Number of non-U.S. Employees Excluded | Total Number of U.S. and non-U.S. Employees irrespective of any exemption | Total Number of U.S. and non-U.S. Employees used for de minimis calculation | ||||||
| India | 105 | 8,052 | 7,655 | ||||||
| Costa Rica | 88 | ||||||||
| France | 56 | ||||||||
| Sweden | 38 | ||||||||
| Singapore | 33 | ||||||||
| Portugal | 20 | ||||||||
| Spain | 15 | ||||||||
| Netherlands | 10 | ||||||||
| Poland | 9 | ||||||||
| Brazil | 7 | ||||||||
| Korea | 6 | ||||||||
| Taiwan | 5 | ||||||||
| Belgium | 4 | ||||||||
| Hong Kong | 1 | ||||||||
54
After identifying the median employee, the Company calculated annual total compensation for such employee using the same methodology the Company uses for the named executive officers as set forth in the 20202021 Summary Compensation Table in this Proxy Statement. The total compensation amount for the median employee for 20202021 was determined to be $73,164.$67,544. This total compensation amount was then compared to the total compensation of the PEO disclosed in the Summary Compensation Table, of $8,922,119.$4,491,811. Based on this information for 2020,2021, the ratio of the PEO’s annual total compensation to the annual total compensation of the median employee was 122:67:1.
The Company believes that the ratio calculated above is not reflective of compensation awarded to our PEO in 2020.2021. The total compensation of our PEO disclosed in the Summary Compensation Table includes the change in the actuarial present value of our PEO’s retirement benefits shown under column “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” of the Summary Compensation Table. The pension values for fiscal year 20202021 reflect the impact of changes in interest rates on actuarial present value calculations. Excluding this change in actuarial present value of the PEO’s pension benefit, the ratio would be 75:57:1.
5055
The following table sets forth information concerning the total compensation of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and the other NEOs of the Company who had the highest aggregate total compensation for the Company’s fiscal year ended December 31, 2020.2021.
For Mr. AdamsMs. Bamford and the other NEOs, the amounts shown under the column “Total” are not reflective of the compensation that was awarded to Mr. AdamsMs. Bamford and the other NEOs in fiscal year 2020.2021. These amounts include the change in the actuarial present value of Mr. Adams’Ms. Bamford’s and the other NEOs retirement benefits shown under column “Change in Pension Value and Non-Qualified Deferred Compensation Earnings”. The pension values for fiscal year 20202021 reflect the impact of changes in interest rates on actuarial present value calculations.
Summary Compensation Table
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Name and | Year | Salary | Bonus | Stock Awards ($) | Option | Non-Equity Incentive Plan Compensation | Change in | All Other | Total (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance | Restricted | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual | Long-Term | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David C. Adams – | 2020 | $ | 1,080,769 | $ | 0 | $ | 1,319,964 | $ | 990,014 | $ | 0 | $ | 866,250 | $ | 1,163,003 | $ | 3,461,735 | $ | 40,383 | $ | 8,922,119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chairman and Chief | 2019 | $ | 995,192 | $ | 0 | $ | 1,215,078 | $ | 965,299 | $ | 0 | $ | 1,425,600 | $ | 1,713,563 | $ | 2,830,508 | $ | 39,775 | $ | 9,185,016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Officer | 2018 | $ | 961,538 | $ | 0 | $ | 1,221,036 | $ | 915,710 | $ | 0 | $ | 1,565,314 | $ | 1,482,975 | $ | 1,329,795 | $ | 39,056 | $ | 7,515,425 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Glenn E. Tynan – |
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| 2020 | (i) |
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| $ |
| 505,108 |
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| $ |
| 0 |
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| $ |
| 437,786 |
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| $ |
| 328,298 |
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| $ |
| 0 |
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| $ |
| 0 |
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| $ |
| 404,805 |
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| $ |
| 1,335,495 |
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| $ |
| 27,439 |
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| $ |
| 3,038,931 | ||||||||||||||||||||||
Vice President of Finance |
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| 2019 |
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| $ |
| 572,769 |
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| $ |
| 0 |
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| $ |
| 401,205 |
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| $ |
| 318,786 |
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| $ |
| 0 |
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| $ |
| 555,552 |
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| $ |
| 587,961 |
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| $ |
| 1,499,321 |
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| $ |
| 30,317 |
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| $ |
| 3,965,912 | ||||||||||||||||||||||||
and former Chief Financial Officer |
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| 2018 |
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| $ |
| 559,200 |
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| $ |
| 0 |
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| $ |
| 424,938 |
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| $ |
| 318,737 |
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| $ |
| 0 |
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| $ |
| 649,651 |
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| $ |
| 522,976 |
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| $ |
| 455,782 |
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| $ |
| 33,668 |
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| $ |
| 2,964,952 | ||||||||||||||||||||||||
Thomas P. Quinly – | 2020 | (j) | $ | 219,555 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 476,250 | $ | 1,375,314 | $ | 3,152 | $ | 2,074,271 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice President and | 2019 | $ | 655,577 | $ | 0 | $ | 486,146 | $ | 386,188 | $ | 0 | $ | 669,299 | $ | 712,500 | $ | 1,551,050 | $ | 21,870 | $ | 4,482,630 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Operating Officer | 2018 | $ | 638,666 | $ | 0 | $ | 499,983 | $ | 374,953 | $ | 0 | $ | 747,818 | $ | 608,400 | $ | 548,724 | $ | 9,703 | $ | 3,428,247 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi – |
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| 2020 |
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| $ |
| 500,827 |
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| $ |
| 0 |
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| $ |
| 291,555 |
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| $ |
| 218,728 |
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| $ |
| 0 |
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| $ |
| 236,438 |
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| $ |
| 211,295 |
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| $ |
| 1,408,152 |
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| $ |
| 31,213 |
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| $ |
| 2,898,207 | ||||||||||||||||||||||||
Vice President, General |
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| 2019 |
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| $ |
| 465,992 |
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| $ |
| 0 |
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| $ |
| 262,159 |
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| $ |
| 208,283 |
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| $ |
| 0 |
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| $ |
| 396,181 |
|
| $ |
| 316,111 |
|
| $ |
| 1,333,747 |
|
| $ |
| 18,403 |
|
| $ |
| 3,000,876 | ||||||||||||||||||||||||
Counsel, and Corporate Secretary |
|
| 2018 |
|
| $ |
| 442,165 |
|
| $ |
| 0 |
|
| $ |
| 221,883 |
|
| $ |
| 166,345 |
|
| $ |
| 0 |
|
| $ |
| 459,702 |
|
| $ |
| 272,986 |
|
| $ |
| 248,198 |
|
| $ |
| 100,434 |
|
| $ |
| 1,911,713 | ||||||||||||||||||||||||
K. Christopher Farkas – | 2020 | $ | 463,571 | $ | 0 | $ | 218,398 | $ | 163,819 | $ | 0 | $ | 213,750 | $ | 123,825 | $ | 527,328 | $ | 78,926 | $ | 1,789,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice President and | 2019 | $ | 377,500 | $ | 0 | $ | 135,034 | $ | 107,294 | $ | 0 | $ | 280,137 | $ | 104,838 | $ | 377,081 | $ | 28,122 | $ | 1,410,006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer | 2018 | $ | 322,908 | $ | 0 | $ | 130,042 | $ | 97,531 | $ | 0 | $ | 253,338 | $ | 88,754 | $ | 70,363 | $ | 26,953 | $ | 989,888 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harry S. Jakubowitz – |
|
| 2020 |
|
| $ |
| 308,423 |
|
| $ |
| 0 |
|
| $ |
| 83,148 |
|
| $ |
| 62,340 |
|
| $ |
| 0 |
|
| $ |
| 100,238 |
|
| $ |
| 76,916 |
|
| $ |
| 230,115 |
|
| $ |
| 28,888 |
|
| $ |
| 890,069 | ||||||||||||||||||||||||
Vice President and Treasurer |
|
|
|
|
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Name and | Year | Salary | Bonus | Stock Awards ($) | Option | Non-Equity Incentive Plan Compensation | Change in | All Other | Total (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance | Restricted | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual | Long-Term | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David C. Adams – | 2021 | $ | 1,050,000 | $ | 0 | $ | 1,050,013 | $ | 0 | $ | 0 | $ | 1,754,445 | $ | 193,050 | $ | 0 | $ | 25,910 | $ | 4,073,418 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $ | 1,080,769 | $ | 0 | $ | 1,319,964 | $ | 990,014 | $ | 0 | $ | 866,250 | $ | 1,163,003 | $ | 3,461,735 | $ | 40,383 | $ | 8,922,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $ | 995,192 | $ | 0 | $ | 1,215,078 | $ | 965,299 | $ | 0 | $ | 1,425,600 | $ | 1,713,563 | $ | 2,830,508 | $ | 39,775 | $ | 9,185,016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lynn M. Bamford – President and Chief Executive Officer |
|
| 2021 |
|
| $ |
| 843,654 |
|
| $ |
| 0 |
|
| $ |
| 935,000 |
|
| $ |
| 701,250 |
|
| $ |
| 0 |
|
| $ |
| 1,291,150 |
|
| $ |
| 45,291 |
|
| $ |
| 639,485 |
|
| $ |
| 35,981 |
|
| $ |
| 4,491,811 | ||||||||||||||||||||||||
Kevin M. Rayment – | 2021 | $ | 548,654 | $ | 0 | $ | 439,979 | $ | 330,014 | $ | 0 | $ | 626,588 | $ | 37,200 | $ | 0 | $ | 37,240 | $ | 2,019,675 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi – |
|
| 2021 |
|
| $ |
| 497,692 |
|
| $ |
| 0 |
|
| $ |
| 300,690 |
|
| $ |
| 975,578 |
|
| $ |
| 0 |
|
| $ |
| 493,675 |
|
| $ |
| 41,655 |
|
| $ |
| 0 |
|
| $ |
| 25,886 |
|
| $ |
| 2,335,176 | ||||||||||||||||||||||||
|
| 2020 |
|
| $ |
| 500,827 |
|
| $ |
| 0 |
|
| $ |
| 291,555 |
|
| $ |
| 218,728 |
|
| $ |
| 0 |
|
| $ |
| 236,438 |
|
| $ |
| 211,295 |
|
| $ |
| 1,408,152 |
|
| $ |
| 31,213 |
|
| $ |
| 2,898,208 | |||||||||||||||||||||||||
|
| 2019 |
|
| $ |
| 465,992 |
|
| $ |
| 0 |
|
| $ |
| 262,159 |
|
| $ |
| 208,283 |
|
| $ |
| 0 |
|
| $ |
| 396,181 |
|
| $ |
| 316,111 |
|
| $ |
| 1,333,747 |
|
| $ |
| 18,403 |
|
| $ |
| 3,000,876 | |||||||||||||||||||||||||
K. Christopher Farkas – | 2021 | $ | 496,154 | $ | 0 | $ | 284,947 | $ | 963,800 | $ | 0 | $ | 531,650 | $ | 21,450 | $ | 228,358 | $ | 30,375 | $ | 2,556,734 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $ | 463,571 | $ | 0 | $ | 218,398 | $ | 163,819 | $ | 0 | $ | 213,750 | $ | 123,825 | $ | 527,328 | $ | 78,925 | $ | 1,789,616 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $ | 377,500 | $ | 0 | $ | 135,034 | $ | 107,294 | $ | 0 | $ | 280,137 | $ | 104,838 | $ | 377,081 | $ | 28,122 | $ | 1,410,006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | Includes amounts deferred under the Company’s Savings and Investment Plan and Executive Deferred Compensation Plan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | Includes grants of performance share units as part of the Company’s Long-Term Incentive Plan. The values shown represent the grant date fair value of the grants at target. Performance share units have a maximum payout of 200% of target. The assumptions used in determining the amounts in this column are set forth in Note 16 to our Consolidated Financial Statements in our Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 24, 2022. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Includes grants of time-based restricted stock units as part of the Company’s Long-Term Incentive Plan. The values shown represent the grant date fair value of the grants. Mr. Adams participated in the Company’s long-term incentive compensation plan in 2021 at a significantly reduced level given the change in his role (his resignation as Chief Executive Officer on January 1, 2021) but was not granted time-based restricted stock units and instead only received performance-based LTI. The assumptions used in determining the amounts in this column are set forth in Note 16 to our Consolidated Financial Statements in our Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 24, 2022. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) | Includes payments made based on the Company’s annual Incentive Compensation Plan for performance during the year. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e) | Includes the maturity of cash-based performance unit grants made under the Company’s Long-Term Incentive Plan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(f) | Represents annual change in the actuarial accumulated present value (APV) of accumulated pension benefits. Mr. Rayment does not participate in the U.S. defined benefit plans because he | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
56
transferred from the United Kingdom to the United States after those plans were closed to new entrants. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(g) | Includes personal use of company car, payments for executive physicals, financial counseling, premium payments for executive life insurance paid by the Company during the covered fiscal year for term life insurance and accidental death and disability insurance. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
51
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(h) | Amounts are rounded to the nearest dollar. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company’s executive officers are not employed through formal employment agreements. It is the philosophy of the Committee to promote a competitive at-will employment environment, which would be impaired by lengthy employment arrangements. The Committee provides proper long-term compensation incentives with competitive salaries and bonuses to ensure that senior management remains actively and productively employed with the Company.
The Company believes perquisites for executive officers should be limited in scope and value and aligned with peer group practices as described earlier. As a result, the Company has historically given nominal perquisites. The below table generally illustrates the perquisites the Company provides to its NEOs.
The Company also maintains a policy concerning executive automobiles under which certain officers of the Company are eligible to use Company leased automobiles or receive an equivalent automobile allowance. The NEOs participate in this program. The Company maintains the service and insurance on Company leased automobiles. In addition to the Company automobile policy, the Company also provides all executive officers with financial planning and tax preparation services through The Ayco Company, LP and Ernst & Young Americas LLC. Not all executive officers utilize these services on an annual basis. Finally, all executive officers and their spouses are provided annual physicals through the Mayo Clinic at any one of the clinic’s three locations.
Perquisites and Benefits
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| ||||||||||||||||||||||||||||||||
Name | Automobile (a) | Financial | Executive |
|
| Automobile (a) | Financial | Executive |
|
| ||||||||||||||||||||||||||||||||||||
David C. Adams | $ | 20,319 | $ | 12,000 | $ | 0 |
|
| $ | 5,210 | $ | 12,000 | $ | 580 |
|
| ||||||||||||||||||||||||||||||
Glenn E. Tynan |
|
| $ |
| 10,895 |
|
| $ |
| 12,000 |
|
| $ |
| 0 |
|
| |||||||||||||||||||||||||||||
Thomas P. Quinly | $ | 1,846 | $ | 0 | $ | 0 |
|
| ||||||||||||||||||||||||||||||||||||||
Lynn M. Bamford |
|
| $ |
| 19,994 |
|
| $ |
| 12,790 |
|
| $ |
| 0 |
|
| |||||||||||||||||||||||||||||
Kevin M. Rayment | $ | 16,783 | $ | 0 | $ | 0 |
|
| ||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi |
|
| $ |
| 13,912 |
|
| $ |
| 10,670 |
|
| $ |
| 4,605 |
|
|
|
| $ |
| 13,792 |
|
| $ |
| 9,245 |
|
| $ |
| 781 |
|
| ||||||||||||
K. Christopher Farkas | $ | 13,796 | $ | 12,790 | $ | 1,022 |
|
| $ | 13,870 | $ | 12,790 | $ | 1,689 |
|
| ||||||||||||||||||||||||||||||
Harry S. Jakubowitz |
|
| $ |
| 9,319 |
|
| $ |
| 12,000 |
|
| $ |
| 477 |
|
| |||||||||||||||||||||||||||||
(a) | Represents the personal use of Company-leased automobiles. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company’s executive officers are entitled to receive medical benefits, life and disability insurance benefits, and to participate in the Company’s Savings and Investment Plan, Defined Benefit Plan, Employee Stock Purchase Plan, flexible spending accounts, and disability plans on the same basis as other full-time employees of the Company. Mr. Rayment does not participate in the U.S. defined benefit plans because he transferred from the United Kingdom to the United States after those plans were closed to new entrants.
The Company also offers a nonqualified executive deferred compensation plan, in accordance with Section 409A of the Code, whereby eligible executives, including the NEOs, may elect to defer additional cash compensation on a tax-deferred basis. The deferred compensation accounts are
52
maintained on the Company’s financial statements and accrue interest at the rate of (i) the average annual rate of interest payable on United States Treasury Bonds of 30 years maturity as determined by the Federal Reserve Board, plus (ii) 2%. Earnings are credited to executives’ accounts on a monthly basis.
57
Grants of Plan-Based Awards
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Plan | Grant | Estimated Future Payouts Under | Estimated Future | All Other | All Other | Exercise | Grant | Plan | Grant | Estimated Future Payouts Under | Estimated Future | All Other | All Other | Exercise | Grant | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number | Threshold | Target | Max | Threshold | Target | Max | Number | Threshold | Target | Max | Threshold | Target | Max | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David C. Adams | ICP (a) | 3/19/2020 | $ | 577,500 | $ | 1,155,000 | $ | 2,310,000 |
|
| ICP (a) | 3/18/2021 | $ | 577,500 | $ | 1,155,000 | $ | 2,310,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (b) | 3/19/2020 | 990,000 | $ | 495,000 | $ | 990,000 | $ | 1,980,000 |
|
| LTI (b) | 3/18/2021 | 1,050,000 | $ | 525,000 | $ | 1,050,000 | $ | 2,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (c) | 3/19/2020 | 7,993 | 15,986 | 31,972 | $ | 1,319,964 |
|
| LTI (c) | 3/18/2021 | 4,369 | 8,737 | 17,474 | $ | 1,050,013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (d) | 3/19/2020 | 11,990 | $ | 990,014 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Glenn E. Tynan (e) | ICP (a) |
|
| 3/19/2020 |
|
|
|
| $ |
| 0 |
|
| $ |
| 0 |
|
| $ |
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lynn M. Bamford | ICP (a) |
|
| 3/18/2021 |
|
|
|
| $ |
| 425,000 |
|
| $ |
| 850,000 |
|
| $ |
| 1,700,000 |
|
|
|
|
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|
|
|
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|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (b) |
|
| 3/19/2020 |
|
| 328,320 |
|
| $ |
| 164,160 |
|
| $ |
| 328,320 |
|
| $ |
| 656,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LTI (b) |
|
| 3/18/2021 |
|
| 701,250 |
|
| $ |
| 350,625 |
|
| $ |
| 701,250 |
|
| $ |
| 1,402,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (c) |
|
| 3/19/2020 |
|
|
|
|
|
|
|
|
|
| 2,651 |
|
| 5,302 |
|
| 10,604 |
|
|
|
|
|
|
|
| $ |
| 437,786 |
|
| LTI (c) |
|
| 3/18/2021 |
|
|
|
|
|
|
|
|
|
| 3,890 |
|
| 7,780 |
|
| 15,560 |
|
|
|
|
|
|
|
| $ |
| 935,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (d) |
|
| 3/19/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,976 |
|
|
|
|
|
| $ |
| 328,298 |
|
| LTI (d) |
|
| 3/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,835 |
|
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|
|
|
| $ |
| 701,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas P. | ICP (a) | 3/19/2020 | $ | 0 | $ | 0 | $ | 0 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin M. Rayment | ICP (a) | 3/18/2021 | $ | 206,250 | $ | 412,500 | $ | 825,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (b) | 3/19/2020 | 0 | $ | 0 | $ | 0 | $ | 0 |
|
| LTI (b) | 3/18/2021 | 330,000 | $ | 165,000 | $ | 330,000 | $ | 660,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (c) | 3/19/2020 | 0 | 0 | 0 | $ | 0 |
|
| LTI (c) | 3/18/2021 | 1,831 | 3,661 | 7,322 | $ | 439,979 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (d) | 3/19/2020 | 0 | $ | 0 |
|
| LTI (d) | 3/18/2021 | 2,746 | $ | 330,014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi | ICP (a) |
|
| 3/19/2020 |
|
|
|
| $ |
| 157,625 |
|
| $ |
| 315,250 |
|
| $ |
| 630,500 |
|
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|
|
| ICP (a) |
|
| 3/18/2021 |
|
|
|
| $ |
| 162,500 |
|
| $ |
| 325,000 |
|
| $ |
| 650,000 |
|
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| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (b) |
|
| 3/19/2020 |
|
| 218,690 |
|
| $ |
| 109,345 |
|
| $ |
| 218,690 |
|
| $ |
| 437,380 |
|
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|
|
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|
|
|
|
|
| LTI (b) |
|
| 3/18/2021 |
|
| 225,525 |
|
| $ |
| 112,763 |
|
| $ |
| 225,525 |
|
| $ |
| 451,050 |
|
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|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (c) |
|
| 3/19/2020 |
|
|
|
|
|
|
|
|
|
| 1,766 |
|
| 3,531 |
|
| 7,062 |
|
|
|
|
|
|
|
| $ |
| 291,555 |
|
| LTI (c) |
|
| 3/18/2021 |
|
|
|
|
|
|
|
|
|
| 1,251 |
|
| 2,502 |
|
| 5,004 |
|
|
|
|
|
|
|
| $ |
| 300,690 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (d) |
|
| 3/19/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,649 |
|
|
|
|
|
| $ |
| 218,728 |
|
| LTI (d) |
|
| 3/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,877 |
|
|
|
|
|
| $ |
| 225,578 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (e) |
|
| 12/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,660 |
|
|
|
|
|
| $ |
| 750,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
K. Christopher Farkas | ICP (a) | 3/19/2020 | $ | 142,500 | $ | 285,000 | $ | 570,000 |
|
| ICP (a) | 3/18/2021 | $ | 175,000 | $ | 350,000 | $ | 700,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (b) | 3/19/2020 | 163,800 | $ | 81,900 | $ | 163,800 | $ | 327,600 |
|
| LTI (b) | 3/18/2021 | 213,750 | $ | 106,875 | $ | 213,750 | $ | 427,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (c) | 3/19/2020 | 1,323 | 2,645 | 5,290 | $ | 218,398 |
|
| LTI (c) | 3/18/2021 | 1,186 | 2,371 | 4,742 | $ | 284,947 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (d) | 3/19/2020 | 1,984 | $ | 163,819 |
|
| LTI (d) | 3/18/2021 | 1,779 | $ | 213,800 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harry S. Jakubowitz | ICP (a) |
|
| 3/19/2020 |
|
|
|
| $ |
| 66,825 |
|
| $ |
| 133,650 |
|
| $ |
| 267,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (b) |
|
| 3/19/2020 |
|
| 62,370 |
|
| $ |
| 31,185 |
|
| $ |
| 62,370 |
|
| $ |
| 124,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LTI (e) | 12/16/2021 | 5,660 | $ | 750,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (c) |
|
| 3/19/2020 |
|
|
|
|
|
|
|
|
|
| 504 |
|
| 1,007 |
|
| 2,014 |
|
|
|
|
|
|
|
| $ |
| 83,148 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LTI (d) |
| 3/19/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 755 |
|
|
|
|
|
| $ |
| 62,340 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | Values in this row represent the Company’s annual Incentive Compensation Plan, which were approved on March | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | Values in this row represent annual grants of cash-based performance units made under the Company’s Long-Term Incentive Plan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Values in this row represent annual grants of performance share units as part of the Company’s Long-Term Incentive Plan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) | Values in this row represent annual grants of restricted stock units as part of the Company’s Long-Term Incentive Plan. Mr. Adams was not granted time-based restricted stock units because of the change in his role and instead he only received performance-based LTI. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The NEOs are given dividend credits on their restricted stock unit awards only. These dividends credits are reinvested into the restricted stock unit awards and are subject to the same limitations and restrictions as the original restricted stock unit award. The plan specifically prohibits the re-pricing of
53
options and requires that any equity-based grants be issued based on the closing price of the Company’sour Common Stock as reported by the NYSE on the date of the grant.
The Committee granted cash-based performance units, performance shares, and restricted stock units in March 20202021 to the NEOs.NEOs with the exception of Mr. Adams who was not granted restricted stock units because of the change in his role (his resignation as Chief Executive Officer on January 1, 2021) and instead only received performance-based LTI. The cash-based performance units and performance shares units will mature in December 20222023 and will be paid in early 2023,2024, if the financial goals are attained, and the restricted stock units will vest in March 2023.2024. The values shown in the table reflect the potential value at a target value of one dollar per unit payable at the end of the
58
three-year performance period and one stock unit convertible into one share of Common Stock if the objectives are attained. The chart also reflects the fact that each stock unit may be worth a maximum of approximately two dollars or two shares if all performance targets are substantially exceeded, or nothing at all if performance thresholds are not met.
5459
The following table sets forth the outstanding equity awards of the NEOs. Some of the grants disclosed below are not yet vested and are subject to forfeiture under certain conditions.
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Name | Option Awards | Stock Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of | Number of | Equity | Option | Option | Number | Market | Equity | Equity | Number of | Market | Equity | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
David C. Adams | 6,760 | 786,526 | 9,014 | 1,048,779 | (b) | 8,421 | 1,167,740 | 10,600 | 1,469,902 | (b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,421 | 979,783 | 10,600 | 1,233,310 | (c) | 11,990 | 1,662,653 | 15,986 | 2,216,779 | (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,990 | 1,395,037 | 15,986 | 1,859,971 | (d) | 8,737 | 1,211,560 | (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Glenn E. Tynan |
|
|
|
|
|
|
|
|
|
|
|
| 2,353 |
|
| 273,772 |
|
| 3,137 |
|
| 364,990 | (b) |
| ||||||||||||||||||||||||||||||||||||||||||
Lynn M. Bamford |
|
| 1,976 |
|
| 274,012 |
|
| 2,487 |
|
| 344,872 | (b) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2,781 |
|
| 323,569 |
|
| 3,500 |
|
| 407,225 | (c) |
|
|
| 2,928 |
|
| 406,026 |
|
| 3,905 |
|
| 541,506 | (c) |
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 3,976 |
|
| 462,608 |
|
| 5,302 |
|
| 616,888 | (d) |
|
|
| 5,835 |
|
| 809,139 |
|
| 7,780 |
|
| 1,078,853 | (d) |
| ||||||||||||||||||||||||||||
Thomas P. Quinly | 28,818 | 3,352,974 | (e) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| 8,609 |
|
| 1,193,810 | (e) |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin M. Rayment | 1,623 | 225,061 | 2,042 | 283,164 | (b) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,703 | 374,825 | 3,604 | 499,767 | (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,768 | 322,057 | 3,691 | 429,448 | (b) | 2,746 | 380,788 | 3,661 | 507,671 | (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,369 | 391,983 | 4,241 | 493,440 | (c) | 8,609 | 1,193,810 | (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi |
|
|
|
|
|
|
|
|
|
|
|
| 1,228 |
|
| 142,878 |
|
| 1,638 |
|
| 190,581 | (b) |
|
|
| 1,817 |
|
| 251,963 |
|
| 2,287 |
|
| 317,138 | (b) |
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1,817 |
|
| 211,408 |
|
| 2,287 |
|
| 266,092 | (c) |
|
|
| 2,649 |
|
| 367,337 |
|
| 3,531 |
|
| 489,644 | (c) |
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2,649 |
|
| 308,211 |
|
| 3,531 |
|
| 410,832 | (d) |
|
|
| 1,877 |
|
| 260,284 |
|
| 2,502 |
|
| 346,952 | (d) |
| ||||||||||||||||||||||||||||
|
|
| 5,660 |
|
| 784,872 | (e) |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
K. Christopher Farkas | 720 | 83,772 | 960 | 111,696 | (b) | 936 | 129,795 | 1,178 | 163,353 | (b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 936 | 108,904 | 1,178 | 137,060 | (c) | 1,984 | 275,121 | 2,645 | 366,782 | (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,984 | 230,838 | 2,645 | 307,746 | (d) | 1,779 | 246,694 | 2,371 | 328,787 | (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harry S. Jakubowitz |
|
|
|
|
|
|
|
|
|
|
|
| 447 |
|
| 52,008 |
|
| 596 |
|
| 69,345 | (b) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 528 |
|
| 61,433 |
|
| 665 |
|
| 77,373 | (c) |
| 5,660 | 784,872 | (e) | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 755 |
|
| 87,844 |
|
| 1,007 |
|
| 117,164 | (d) |
| ||||||||||||||||||||||||||||||||||||||||||
(a) | Represents unvested restricted stock units granted as part of the Company’s Long-Term Incentive Plan. Stock price used to determine value is | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | Represents cash value at target of outstanding performance-based share units granted March | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Represents cash value at target of outstanding performance-based share units granted March 19, 2020 as part of the Company’s | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Represents | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5560
(e) | Represents retention grants of restricted stock units. Stock price used to determine value is $138.67, the closing price of our Common Stock on December 31, 2021. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table sets forth information regarding options exercised and stock vested during calendar year 2020.2021.
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Name | Option Awards | Stock Awards (a) | Option Awards | Stock Awards (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Value Realized | Number of Shares | Value Realized | Number of Shares | Value Realized | Number of Shares | Value Realized | |||||||||||||||||||||||||||||||||||||||||||||||||
David C. Adams | 0 | $ | 0 | 16,163 | $ | 2,385,820 | 0 | $ | 0 | 15,890 | $ | 1,843,722 | ||||||||||||||||||||||||||||||||||||||||||||
Glenn E. Tynan |
|
| 0 |
|
| $ |
| 0 |
|
| 5,546 |
|
| $ |
| 818,645 | ||||||||||||||||||||||||||||||||||||||||
Thomas P. Quinly | 0 | $ | 0 | 6,720 | $ | 991,939 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Lynn M. Bamford |
|
| 0 |
|
| $ |
| 0 |
|
| 3,566 |
|
| $ |
| 413,763 | ||||||||||||||||||||||||||||||||||||||||
Kevin M. Rayment | 0 | $ | 0 | 2,627 | $ | 304,815 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi |
|
| 0 |
|
| $ |
| 0 |
|
| 2,981 |
|
| $ |
| 440,025 |
|
| 0 |
|
| $ |
| 0 |
|
| 2,887 |
|
| $ |
| 334,976 | ||||||||||||||||||||||||
K. Christopher Farkas | 0 | $ | 0 | 989 | $ | 145,986 | 0 | $ | 0 | 1,692 | $ | 196,321 | ||||||||||||||||||||||||||||||||||||||||||||
Harry S. Jakubowitz |
|
| 0 |
|
| $ |
| 0 |
|
| 1,053 |
|
| $ |
| 155,433 | ||||||||||||||||||||||||||||||||||||||||
(a) | Stock Awards includes the vesting of the | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Compensation Plans
The following table shows the deferred compensation activity for the NEOs during 2020.2021. This table does not include the nonqualified Restoration Plan since these totals are provided separately in the Pension Benefit Table below.
Non-Qualified Deferred Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Executive | Registrant | Aggregate | Aggregate | Aggregate | Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David C. Adams | $ | 0 | $ | 0 | $ | 229,632 | $ | 0 | $ | 5,478,326 | $ | 0 | $ | 0 | $ | 202,194 | $ | 0 | $ | 5,680,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Glenn E. Tynan |
|
| $ |
| 80,810 |
|
| $ |
| 0 |
|
| $ |
| 63,509 |
|
| $ |
| 0 |
|
| $ |
| 1,534,462 | |||||||||||||||||||||||||||||||||||||||||||||
Thomas P. Quinly | $ | 690,900 | $ | 0 | $ | 101,321 | $ | 1,063,405 | $ | 2,423,232 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lynn M. Bamford |
|
| $ |
| 330,241 |
|
| $ |
| 0 |
|
| $ |
| 21,107 |
|
| $ |
| 0 |
|
| $ |
| 706,334 | |||||||||||||||||||||||||||||||||||||||||||||
Kevin M. Rayment | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul J. Ferdenzi |
|
| $ |
| 188,539 |
|
| $ |
| 0 |
|
| $ |
| 66,737 |
|
| $ |
| 0 |
|
| $ |
| 1,638,825 |
|
| $ |
| 162,944 |
|
| $ |
| 0 |
|
| $ |
| 64,564 |
|
| $ |
| 0 |
|
| $ |
| 1,866,331 | ||||||||||||||||||||
K. Christopher Farkas | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Harry S. Jakubowitz |
|
| $ |
| 0 |
|
| $ |
| 0 |
|
| $ |
| 0 |
|
| $ |
| 0 |
|
| $ |
| 0 | |||||||||||||||||||||||||||||||||||||||||||||
(a) | Amounts reported in this column represent salary and incentive payments deferred in | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Pension Benefit Payable to Executive Officers
The estimated total pension benefit payable under the Curtiss-Wright Retirement Plan and the nonqualified Curtiss-Wright Restoration Plan described above in “Pension Plans” to the NEOs at retirement age 65 is also described in the following table as a total lump sum payable from each of these plans, based on benefits earned through December 31, 2020.2021. Participants must choose to receive benefits under the Retirement Plan and the Restoration Plan either through annuity payments or as a lump sum.
5661
Qualified Pension Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Name | Plan | Number of | Present Value | Payments | Plan | Number of | Present Value | Payments | ||||||||||||||||||||||||||||
David C. Adams | Curtiss-Wright Corporation | 21 | $ | 2,482,218 | $ | 0 | Curtiss-Wright Corporation | 22 | $ | 2,371,250 | $0 | |||||||||||||||||||||||||
Glenn E. Tynan | Curtiss-Wright Corporation |
|
| 20 |
|
| $ |
| 1,843,188 |
|
| $ |
| 0 | ||||||||||||||||||||||
Thomas P. Quinly | Curtiss-Wright Corporation | 15 | $ | 1,241,134 | $ | 0 | ||||||||||||||||||||||||||||||
Lynn M. Bamford | Curtiss-Wright Corporation | 15 |
|
| $ |
| 999,762 | $0 | ||||||||||||||||||||||||||||
Kevin M. Rayment (c) | Curtiss-Wright Corporation | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Paul J. Ferdenzi | Curtiss-Wright Corporation |
|
| 22 |
|
| $ |
| 1,634,245 |
|
| $ |
| 0 | Curtiss-Wright Corporation | 23 |
|
| $ |
| 1,642,380 | $0 | ||||||||||||||
K. Christopher Farkas | Curtiss-Wright Corporation | 12 | $ | 580,097 | $ | 0 | Curtiss-Wright Corporation | 13 | $ | 605,725 | $0 | |||||||||||||||||||||||||
Harry S. Jakubowitz | Curtiss-Wright Corporation |
|
| 19 |
|
| $ |
| 1,289,430 |
|
| $ |
| 0 | ||||||||||||||||||||||
(a) | The Curtiss-Wright Corporation Retirement Plan is a defined benefit pension plan providing qualified retirement benefits to eligible employees of the Curtiss-Wright Corporation. Benefits are based on a formula which takes account of service and the average of the highest five years of a participant’s pay within the last 10 years of employment. Normal retirement is the later of age 65 or three years of service. Unreduced early retirement benefits may be payable if age is greater than 55 and the sum of age and service exceeds 80. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | The present value of the accumulated benefit was determined as of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Mr. Rayment does not participate in the Curtiss-Wright Corporation Retirement Plan because he transferred from the United Kingdom to the United States after plan was closed to new entrants. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Qualified Pension Benefit
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| ||||||||||||||||||||
Name | Plan Name (a) | Number of | Present Value | Payments | Plan Name (a) | Number of | Present Value | Payments | ||||||||||||||||||||||||||||
David C. Adams | Curtiss-Wright Corporation | 21 | $ | 15,898,845 | $ | 0 | Curtiss-Wright Corporation | 22 | $ | 15,198,503 | $0 | |||||||||||||||||||||||||
Glenn E. Tynan | Curtiss-Wright Corporation |
|
| 20 |
|
| $ |
| 7,217,483 |
|
| $ |
| 0 | ||||||||||||||||||||||
Thomas P. Quinly | Curtiss-Wright Corporation | 15 | $ | 6,009,662 | $ | 0 | ||||||||||||||||||||||||||||||
Lynn M. Bamford | Curtiss-Wright Corporation | 15 |
|
| $ |
| 3,332,589 | $0 | ||||||||||||||||||||||||||||
Kevin M. Rayment (c) | Curtiss-Wright Corporation | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Paul J. Ferdenzi | Curtiss-Wright Corporation |
|
| 22 |
|
| $ |
| 4,124,945 |
|
| $ |
| 0 | Curtiss-Wright Corporation | 23 |
|
| $ |
| 4,088,656 | $0 | ||||||||||||||
K. Christopher Farkas | Curtiss-Wright Corporation | 12 | $ | 854,738 | $ | 0 | Curtiss-Wright Corporation | 13 | $ | 1,057,468 | $0 | |||||||||||||||||||||||||
Harry S. Jakubowitz | Curtiss-Wright Corporation |
|
| 19 |
|
| $ |
| 1,109,076 |
|
| $ |
| 0 | ||||||||||||||||||||||
(a) | The Curtiss-Wright Corporation Restoration Plan is a non-qualified retirement plan established to provide benefits that would have been payable under the C-W Retirement Plan but for the limitations imposed by the provisions of the Internal Revenue Code and Employee Retirement Income Security Act. All participants of the C-W Retirement Plan are eligible to participate in the Restoration Plan. Restoration benefits are payable at the same time and otherwise in accordance with the terms and conditions applicable under the C-W Retirement Plan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | The present value of the accumulated benefit was determined as of December 31, 2020, the measurement date used for pension disclosure in the Company’s financial statements pursuant to Accounting Standard Codification 715. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Mr. Rayment does not participate in the Curtiss-Wright Corporation Restoration Plan because he transferred from the United Kingdom to the United States after plan was closed to new entrants. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5762
The Plan benefit formula is described earlier. Elements of compensation that are included in the calculation of a benefit are base salary earned and short and long-term cash incentives earned. The Company has not adopted a policy prohibiting special benefits under the plans. However, historically the Company has not provided any additional years of credited service to any participants in the Plan.
The following table shows the potential incremental value transfer to the NEOs under various employment related scenarios.
Potential Post-Employment Payment
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| ||||||||||||||||||||||||||||||
Termination Scenario | David C. | Glenn E. | Thomas P. | Paul J. | K. Christopher | Harry S. | ||||||||||||||||||||||||||||||||||||
If Retirement or Voluntary Termination Occurred on December 31, 2020 (a)(b) | $ | 7,423,351 | N/A | $ | 1,623,001 | $ | 0 | $ | 0 | $ | 472,059 | |||||||||||||||||||||||||||||||
If Termination for Cause Occurred on December 31, 2020 (c) |
|
| $ |
| 0 |
|
| N/A |
|
| $ |
| 351,357 |
|
| $ |
| 0 |
|
| $ |
| 0 |
|
| $ |
| 5,311 | ||||||||||||||
If Termination Without Cause Occurred on December 31, 2020 (d) | $ | 12,506,815 | N/A | $ | 2,286,001 | $ | 800,250 | $ | 802,072 | $ | 1,024,805 | |||||||||||||||||||||||||||||||
If “Change In Control” Termination Occurred on December 31, 2020 (e) |
|
| $ |
| 16,950,020 |
|
| N/A |
|
| $ |
| 4,871,194 |
|
| $ |
| 3,046,329 |
|
| $ |
| 2,346,976 |
|
| $ |
| 1,603,480 | ||||||||||||||
If Death Occurred on December 31, 2020 (f)(g) | $ | 8,223,352 | N/A | $ | 5,536,623 | $ | 1,845,704 | $ | 1,459,797 | $ | 1,060,748 | |||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||
Termination Scenario | David C. | Lynn M. | Kevin M. | Paul J. | K. Christopher | ||||||||||||||||||||||||||||||
If Retirement or Voluntary Termination Occurred on December 31, 2021 (a)(b) | $ | 8,696,083 | $ | 2,006,998 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||||
If Termination for Cause Occurred on December 31, 2021 (c) |
|
| $ |
| 397,351 |
|
| $ |
| 452,293 |
|
| $ |
| 0 |
|
| $ |
| 0 |
|
| $ |
| 0 | ||||||||||
If Termination Without Cause Occurred on December 31, 2021 (d) | $ | 13,905,203 | $ | 5,730,387 | $ | 961,154 | $ | 822,692 | $ | 846,154 | |||||||||||||||||||||||||
If “Change In Control” Termination Occurred on December 31, 2021(e) |
|
| $ |
| 20,732,003 |
|
| $ |
| 11,128,928 |
|
| $ |
| 5,379,735 |
|
| $ |
| 4,039,900 |
|
| $ |
| 3,902,575 | ||||||||||
If Death Occurred on December 31, 2021 (f)(g) | $ | 9,169,160 | $ | 4,459,889 | $ | 3,238,265 | $ | 2,355,713 | $ | 1,999,258 | |||||||||||||||||||||||||
(a) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | Includes (1) intrinsic value of any unvested/unearned cash-based performance units, restricted stock units, and performance shares on December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Includes incremental value on measurement date (December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) | Includes (1) intrinsic value of any unvested/unearned cash-based performance units, restricted stock units, and performance shares on December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e) | Includes (1) change-in-control severance payout, (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(f) | Includes (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(g) | Depending on circumstances of death, all employees may also be eligible for Accidental Death and Dismemberment (AD&D) insurance payment and Business Travel Accident insurance payment. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5863
The following table sets forth certain information regarding the compensation earned by or granted to each non-employee director who served on the Company’s Board of Directors in 2020.2021. Mr. Adams and Ms. Bamford, the only current directors who are employees of the Company, are not compensated for their services as Board members.
Director Compensation
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Name | Fees Earned | Stock | Option | Non-Equity | Change in | All Other | Total | Fees Earned | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dean M. Flatt | $ | 90,000 | $ | 125,000 | — | — | — | �� | — | $ | 215,000 | $ | 100,000 | $ | 125,000 | — | — | — | — | $ | 225,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. Marce Fuller |
|
| $ |
| 105,000 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 230,000 |
|
| $ |
| 127,500 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 252,500 | ||||||||||||||||||||||||||||||||||||||||||||
Bruce D. Hoechner | $ | 90,000 | $ | 125,000 | — | — | — | — | $ | 215,000 | $ | 90,000 | $ | 125,000 | — | — | — | — | $ | 215,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Glenda J. Minor |
|
| $ |
| 90,000 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 215,000 |
|
| $ |
| 90,000 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 215,000 | ||||||||||||||||||||||||||||||||||||||||||||
Anthony J. Moraco | $ | 67,400 | $ | 35,000 | — | — | — | — | $ | 102,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John B. Nathman | $ | 100,000 | $ | 125,000 | — | — | — | — | $ | 225,000 |
|
| $ |
| 100,000 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 225,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert J. Rivet |
|
| $ |
| 112,500 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 237,500 | $ | 112,500 | $ | 125,000 | — | — | — | — | $ | 237,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Albert E. Smith | $ | 122,500 | $ | 125,000 | — | — | — | — | $ | 247,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Albert E. Smith (c) |
|
| $ |
| 22,500 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 147,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Peter C. Wallace |
|
| $ |
| 90,000 |
|
| $ |
| 125,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ |
| 215,000 | $ | 90,000 | $ | 125,000 | — | — | — | — | $ | 215,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | Represents all fees earned or paid for services as a director, including annual retainer, lead director fee, committee membership fee, and committee chairman retainers, and includes amounts deferred. Directors have a choice to receive all or a portion of their director fees paid in cash, stock, or a combination of the two. Directors also have a choice to defer all or a portion of director fees paid in cash or stock. For fiscal 2021, Mr. Moraco elected to receive all of his director fees in stock, as set forth in the table below. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Name | Stock Award (#)* | Grant Date Fair Value ($) | Pay Date | |||||||||||||
Mr. Moraco | 26 | $ | 3,125 | June 30, 2021 | ||||||||||||
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|
| 26 |
|
| $ |
| 3,125 | June 30, 2021 | |||||||
137 | $ | 16,250 | June 30, 2021 | |||||||||||||
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|
| 25 |
|
| $ |
| 3,125 | September 30, 2021 | |||||||
25 | $ | 3,125 | September 30, 2021 | |||||||||||||
|
|
| 129 |
|
| $ |
| 16,250 | September 30, 2021 | |||||||
23 | $ | 3,125 | December 31, 2021 | |||||||||||||
|
|
| 23 |
|
| $ |
| 3,125 | December 31, 2021 | |||||||
117 | $ | 16,250 | December 31, 2021 | |||||||||||||
* | Shares rounded up to the next whole number of shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | The values shown represent the aggregate grant date fair value for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Mr. Smith retired from the Board and did not stand for election effective as of May 5, 2021. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In 2020,2021, each non-employee Director of the Company was paid an annual retainer of $65,000 plus $12,500 for each committee for which such director is a member. The chairpersons of the Audit Committee, Committee on Directors and Governance, Executive Compensation Committee, and Finance Committee of the Board of Directors were paid an additional annual retainer of $22,500, $10,000,
64
$10,000, $15,000, and $10,000, respectively. The Lead Independent Director was paid an additional annual retainer of $22,500. In 2020,Based on peer and market data and advice from FW Cook, beginning in 2022, (i) the annual Board retainer was increased to $75,000, (ii) the annual equity award was increased to $135,000 with a restriction period lowered from three-years to a one-year period, (iii) the Lead Independent Director annual retainer was increased to $25,000, and (iv) the annual retainers for the chairpersons of the Committee on Directors and Governance and Finance Committee of the Board electedof Directors were each increased to defer any compensation review due to the financial impact of the pandemic on the Company’s financial performance and share price.$12,500. Pursuant to the Company’s 2014 Omnibus Incentive Plan, the Company’s non-employee Directors may elect to receive their annual retainer, Chairperson fee, committee membership fees, and Lead Independent Director fee in the form of Companyour Common Stock, cash, or both and may elect to defer the receipt of such stock or cash.
In addition to the annual retainer and meeting fees described above, under the Company’s 2014 Omnibus Incentive Plan, the Company, acting through the Committee on Directors and Governance, has the discretionary authority to make equity grants to non-employee Directors. Effective February 2021,With respect to fiscal 2022, each non-employee Director was granted 1,085967 shares of restricted Common Stock effective February 2022 based on a market value of $125,000$135,000 on the grant date with such shares subject to forfeiture based upon failing to remain on the Board for a three-yearone-year period. The Company grantsIn addition to the foregoing, the Company’s policy is to award each newly-appointed Director upon appointment a grant of restricted Common Stock valued at $35,000 based on the market value of the Common Stock on the grant date with such shares subject to forfeiture based upon failing to remain on the Board for a five-year period. Each Director must also accumulate a total position in the Company’s Common Stock with a value of five times the annual retainer.
59
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act and the rules thereunder of the SEC require the Company’s Directors, Officers, and beneficial owners of more than 10% of the Common Stock to file reports of their ownership and changes in ownership of Common Stock with the Commission. Personnel of the Company generally prepare these reports on behalf of the Directors and Officers on the basis of information obtained from each Director and Officer. Based solely on a review of these reports filed with the SEC and on the written representations from the Directors and Officers, the Company believes that all reports required by Section 16(a) of the Securities and Exchange Act to be filed during the year ended December 31, 20202021 were filed on time with one exception.time. A Form 5 for Robert F. Freda reporting exempt transactions covering exempt purchases of Common Stock at various times throughout 2021 through a dividend reinvestment account was filed on February 8, 2022. Due to an administrative oversight included in this Form 5 were shares acquired on December 31, 2020 under the partCompany’s ESPP. At the time of this purchase Mr. Freda was not an executive officer of the Company, David C. Adams did not timely report an RSU grant on March 19, 2020 through the Company’s 2014 Omnibus Incentive Plan. Such unintentionally omitted transaction was subsequently reported in a Form 4 that was filed on February 5, 2021.Company.
Certain Relationships and Related Transactions
The Company’s legal department is primarily responsible for identifying relationships and transactions in which the Company and a director, any nominee for director, executive officer or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by them, are participants to determine whether any of these related persons had or will have a direct or indirect material interest. In order to identify potential related person transactions, the Company’s legal department annually prepares and distributes to all directors, nominees for directors, and executive officers a written questionnaire, which includes questions intended to elicit information about any related person transactions. Further enhancing the Company’s commitment to identify any transactions with related persons, the Company’s finance department adopted a related party transactions policy, which requires each of the business units to identify and disclose to the Company’s corporate controller and general counsel all related person transactions on a quarterly basis or on such shorter intervals as the situation arises.
The Company’s corporate governance guidelines, applicable to Directors, and the Company’s code of conduct, applicable to all employees of the Company, including executive officers (copies of which may be viewed within the Corporate Governance section of the Company’s website at
65
https://investors.curtisswright.com/governance/governance-documents and are available in print, without charge, upon written request to the Company’s Corporate Secretary), prohibits such individuals from engaging in specified activities without prior approval. These activities typically relate to conflict of interest situations where a director, executive officer, an employee, or member of their immediate family may have significant financial or business interests in another company competing with or doing business with the Company, or who stands to benefit in some way from such a relationship or activity. If a director or executive officer believes that, as a result of a transaction with the Company, he or she has an actual or potential conflict of interest with the Company, he or she must promptly notify the Company’s General Counsel. In case of a transaction involving a director, he or she must also notify the Chairperson of the Committee on Directors and Governance (or in case of a transaction involving the Chairperson of the Committee on Directors and Governance, notify the other members of the Committee on Directors and Governance).
The Board of Directors has responsibility for reviewing and approving or ratifying related person transactions to the extent a director, nominee for director, executive officer or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by them, are participants. To the extent that a proposed related-person transaction may involve a director, such individual may not participate in any decision by the Board that in any way relates to the matter that gives rise to the conflict of interest. The Company’s corporate controller and general counsel has responsibility for reviewing and approving or ratifying all other transactions in which the Company and any other employee (other than an executive officer) or his or her immediate family members has a direct or indirect material interest.
Neither the corporate governance guidelines nor code of conduct specify the standards to be applied by the Board of Directors or the Company’s corporate controller and general counsel, as applicable, in reviewing transactions with related persons. However, the Company expects that in
60
general the Board of Directors or the Company’s corporate controller and general counsel, as applicable, will consider all of the relevant facts and circumstances, including, if applicable, but not limited to: (i) the benefits to the Company; (ii) the impact on a Director’s independence in the event the related person is a Director, an immediate family member of a Director, or an entity in which a Director is a partner, shareholder, or executive officer; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; and (v) the terms available for similar transactions with unrelated third parties.
During fiscal year 2020,2021, there were no proceedings to which any of our Directors, executive officers, affiliates, holders of more than five (5%) percent of our Common Stock, or any associate (as defined in the Proxy Rules) of the foregoing were adverse to the Company or any of its subsidiaries. During fiscal year 2020,2021, none of our Directors, nominees for directors, executive officers, holders of more than five (5%) percent of our Common Stock, or any members of their immediate family had a direct or indirect material interest in any transactions or series of transactions with the Company in which the amount involved exceeded or exceeds $120,000.
Compensation Committee Interlocks and Insider Participation
During fiscal year 2020:
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of February 19, 202118, 2022 for the beneficial ownership of common stockCommon Stock by (a) each stockholder who, to the Company’s knowledge, is the beneficial owner of more than 5% of the outstanding shares of any class of Common Stock, (b) each current Director of the Company, (c) each nominee for election as a Director of the Company, (d) each of the executive officers of the Company named in the Summary Compensation Table above (the “Named Executive Officers”), and (e) all current Directors and executive officers of the Company as a group. The percentages in the third column are based on 40,945,63738,452,909 shares of Common Stock issued and outstanding on February 19, 2021.18, 2022. In each case, except as otherwise indicated in the footnotes to the table, the shares shown in the second column are owned directly or indirectly by the individuals or members of the group named in the first column, with sole voting and dispositive power. For purposes of this table, beneficial ownership is determined in accordance with the federal securities laws and regulations. Inclusion in the table of shares not owned directly by the Director or Named Executive
66
Officer does not constitute an admission that such shares are beneficially owned by the Director or Named Executive Officer for any other purpose.
61
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Name of Beneficial Owner | Number of Shares |
|
| Percentage | |||||||||||||||||||
BlackRock, Inc. | 3,619,693 | (a | ) | 9.4 | % | ||||||||||||||||||
The Vanguard Group |
|
| 3,548,502 |
|
| (b | ) |
|
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|
|
| 9.2 | % |
| ||||||||
Boston Partners | 1,984,513 | (c | ) | 5.2 | % | ||||||||||||||||||
David C. Adams |
|
| 76,454 | 2 |
|
|
| (d | )(e) |
|
|
|
|
| * | ||||||||
Lynn M. Bamford | 32,991 | (d | )(e) | * | |||||||||||||||||||
K. Christopher Farkas |
|
| 15,874 |
|
| (d | )(e) |
|
|
|
|
| * | ||||||||||
Paul J. Ferdenzi | 31,096 | (d | )(e) | * | |||||||||||||||||||
Dean M. Flatt |
|
| 9,494 |
|
| (d | )(g) |
|
|
|
|
| * | ||||||||||
S. Marce Fuller | 11,446 | (d | )(g)(i) | * | |||||||||||||||||||
Bruce D. Hoechner |
|
| 887 |
|
| (d | )(f)(g) |
|
|
|
|
| * | ||||||||||
Glenda J. Minor | 808 | (d | )(f)(g) | * | |||||||||||||||||||
Anthony J. Moraco |
|
| 1,769 |
|
| (d | )(f) |
|
|
|
|
| * | ||||||||||
John B. Nathman | 9,430 | (d | )(g) | * | |||||||||||||||||||
Kevin M. Rayment |
|
| 27,253 |
|
| (d | )(e) |
|
|
|
|
| * | ||||||||||
Robert J. Rivet | 11,845 | (d | )(g)(i) | * | |||||||||||||||||||
Peter C. Wallace |
|
| 4,984 |
|
| (d | )(f)(g) |
|
|
|
|
| * | ||||||||||
Directors and Executive Officers as a group (15 persons) | 237,439 | (h | ) | * | |||||||||||||||||||
* | Less than 1%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | Address is 40 East | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | Address is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. The information as to the beneficial ownership of Common Stock by The Vanguard Group was obtained from Amendment No. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Address is | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) | Address is c/o Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Includes 42,015 shares held in a revocable trust of Mr. Adams, over which he has sole voting and investment power. |
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(e) | Includes shares of time-based restricted Common Stock owned by the Named Executive Officers as follows (and subject to forfeiture under the Company’s 2005 Long-Term Incentive Plan and 2014 Omnibus Incentive Plan, as applicable) that vest on the third anniversary of the date of grant: David C. Adams, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Includes shares of restricted Common Stock owned by the Directors as follows (and subject to forfeiture under the Company’s 2014 Omnibus Incentive Plan): Bruce D. Hoechner, 417; Glenda J. Minor, 308; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Does not include shares of Common Stock granted to the Directors (under the Company’s 2005 Stock Plan for Non-Employee Directors and 2014 Omnibus Incentive Plan, as applicable) that he or she has elected to defer receipt of until a later period as the Director neither has nor shares voting or investment power with respect to these shares and is not deemed the beneficial owner, as follows: Dean M. Flatt, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Includes shares of Common Stock as indicated in the preceding footnotes. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share total rounded down to the next whole number of shares respecting fractional shares purchased pursuant to a broker-dividend reinvestment plan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed the firm of Deloitte & Touche LLP (“Deloitte”) to act as the Company’s independent registered public accounting firm for its fiscal year ending December 31, 2021,2022, subject to the ratification by the Company’s stockholders at this Annual Meeting as required by the By-laws of the Company. The Board of Directors requests that stockholders ratify such appointment. If the stockholders fail to ratify the appointment of Deloitte, our Audit Committee will appoint another independent registered public accounting firm to perform such duties for the current fiscal year and submit the name of such firm for ratification by our stockholders at the next Annual Meeting of stockholders. Deloitte has been retained as the Company’s independent registered public accounting firm since 2003.
The Audit Committee annually reviews Deloitte’s performance in deciding whether to retain Deloitte or engage a different independent registered public accounting firm. In making such determination, the Audit Committee considers, among other things, (i) an evaluation of Deloitte’s historical and recent performance on the Company’s audit; (ii) Deloitte’s capability and expertise in handling the breadth and complexity of the Company’s worldwide operations; (iii) recent Public Company Oversight Board (PCAOB) reports on Deloitte and its peer firms; (iv) appropriateness of Deloitte’s fees for audit and non-audit services, on both an absolute basis and as compared to its peer firms; and (v) the benefits of having a long-tenured auditor such as (1) a higher quality audit due to Deloitte’s institutional knowledge and deep understanding of the Company’s business, accounting policies and practices, and internal control over financial reporting; (2) an efficient fee structure as
3 | 8,609 of these shares of time-based restricted stock vest on February 5, 2024 pursuant to a Restricted Stock Unit Agreement entered into between the Company and Ms. Bamford on February 6, 2019. | |||
4 | 5,660 of these shares of time-based restricted stock vest on December 15, 2026 pursuant to a Restricted Stock Unit Agreement entered into between the Company and Mr. Farkas on December 16, 2021. | |||
5 | 5,660 of these shares of time-based restricted stock vest on December 15, 2026 pursuant to a Restricted Stock Unit Agreement entered into between the Company and Mr. Ferdenzi on December 16, 2021. | |||
6 | 8,609 of these shares of time-based restricted stock vest on February 5, 2024 pursuant to a Restricted Stock Unit Agreement entered into between the Company and Mr. Rayment on February 6, 2019. |
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Deloitte’s fees are competitive with peer companies because of Deloitte’s familiarity with the Company’s business and industry; and (3) avoiding the costs and disruptions, including management time and distractions, associated with bringing on a new independent auditor. Based on this evaluation, the Audit Committee believes that the continued retention of Deloitte to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders.
Representatives of Deloitte are expected to be present at the Annual Meeting to make such statements and answer such questions as are appropriate.
Ratification of the appointment of Deloitte will require the affirmative vote of at least a majority inof the voting interestpower of the stockholders present in person or by proxy (and eligibleand entitled to vote) and votingvote at the Annual Meeting, assuming the presence of a quorum. As further discussed in the section titled “Broker non-votes” on page 89 of this Proxy Statement, if you own shares of Common Stock through a bank, broker or other holder of record and you do not instruct your bank, broker or other holder of record on how to vote on this “routine” proposal, your bank, broker or other holder of record will nevertheless have authority to vote your shares on this “routine” proposal in your banks’, brokers’ or other holders’ of record discretion.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDSRATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP ASTHE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMFOR THE FISCAL YEAR ENDING DECEMBER 31, 2021
Disclosure about Fees
The following table presents the aggregate fees billed by our independent registered public accountants, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates for the audit of our annual financial statements for the calendar years ended December 31, 20202021 and 2019,2020, as well as other services provided during those periods:
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| 2020 | 2019 | 2021 | 2020 | ||||||||||||||||||||||||
Audit Fees (a) | $ | 3,820,000 | $ | 4,023,000 | $ | 3,820,000 | $ | 3,820,000 | ||||||||||||||||||||
Audit-Related Fees (b) |
|
| — |
|
| $ |
| 46,000 |
|
| — |
|
| — | ||||||||||||||
Tax Fees (c) | $ | 331,000 | $ | 261,000 | $ | 211,000 | $ | 331,000 | ||||||||||||||||||||
All Other Fees (d) |
|
| $ |
| 6,000 |
|
| $ |
| 6,000 |
|
| $ |
| 6,000 |
|
| $ |
| 6,000 | ||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Total | $ | 4,157,000 | $ | 4,336,000 | $ | 4,037,000 | $ | 4,157,000 | ||||||||||||||||||||
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| ||||||||||||||||||||||||
(a) | Audit Fees consist of fees billed for services rendered for the annual audit of our consolidated financial statements, audit of the effectiveness of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, review of condensed consolidated financial statements included in the Company’s quarterly reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings or engagements. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) | Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements that are not reported under the caption “Audit Fees”. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) | Tax Fees consist of fees billed for services rendered for tax compliance, tax advice, and tax planning. The fees for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) | All Other Fees for | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-Approval Policy for Audit and Non-Audit Services
The Audit Committee has adopted a policy to pre-approve audit and permissible non-audit services provided by the independent accountants. The Audit Committee will consider annually and, if appropriate, approve the scope of the audit services to be performed during the fiscal year as outlined in an engagement letter proposed by the independent accountants. To facilitate the prompt handling of certain matters, the Audit Committee delegates to the Chief Financial Officer the authority to approve in advance all audit and non-audit services below $500,000 to be provided by the independent accountants so long as no individual service exceeds $100,000. For permissible non-audit services, we
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submit to the Audit Committee, at least quarterly, a list of services and a corresponding budget estimate that we recommend the Audit Committee engage the independent accountant to provide. We routinely inform the Audit Committee as to the extent of services provided by the independent accountants in accordance with this pre-approval policy and the fees incurred for the services performed to date. During fiscal year 2020,2021, all of the Audit-Related Fees, Tax Fees, and All Other Fees in the table above were approved by the Audit Committee. The Company believes that none of the time expended on Deloitte & Touche LLP’s engagement to audit the Company’s financial statements for fiscal 20202021 and 20192020 was attributable to work performed by individuals other than Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates full-time, permanent employees.
64RECOMMENDATION OF THE BOARD OF DIRECTORS
PROPOSAL THREE: ADVISORY (NON-BINDING) VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
Overview
The Board of Directors is committed to excellence in governance. As part of that commitment, and as required by Section 14A(a)(1) of the Securities Exchange Act of 1934, as amended, the Board of Directors is providing the stockholders with an opportunity to provide an advisory vote to approve executive compensation (commonly known as a “Say-on-Pay” proposal). The Board of Directors recognizes that providing stockholders with an advisory vote to approve executive compensation may produce useful information on investor sentiment with regard to the Company’s executive compensation programs. At the 20202021 Annual Meeting of stockholders, 96% of the shares voted were in favor of the advisory resolution concerning the compensation of the Named Executive Officers. The Company’s next Say-on-Pay vote after this Annual Meeting will occur at the 20222023 Annual Meeting of Stockholders and each year thereafter until anotherStockholders. The Company’s next frequency vote on frequency occurs, whichSay-on-Pay will be no later thanalso occur at the 2023 Annual Meeting of stockholders. The Company’s executive compensation program and practices are fully described in the “Compensation Discussion and Analysis” section and other table and narrative disclosures in this Proxy Statement.
Compensation Objectives
As generally described in the above “Compensation Discussion and Analysis” section of this Proxy Statement, the Company’s executive compensation program is designed to attract and retain high quality executives and to align the interest of management with the interests of stockholders by rewarding both short and long-term performance.
Company Performance
FiscalOverall, the Company faced a difficult business environment during fiscal 2021, particularly with the ongoing disruption from the COVID-19 pandemic, as well as additional headwinds throughout the year 2020 marked onerelating primarily to lower customer demand, supply chain delivery disruptions, workforce availability issues, and inflationary pressures. The Company continued to take steps to mitigate the impact of the most volatile periodspandemic on our fiscal 2021 financial performance, including effective cost control measures and strong working capital management. Despite these challenges, the Company performed very well in fiscal 2021, with strong increases in sales, profitability, and operating income. As a result, the global macro-economic landscape. The Company acted swiftly to focuswas near or well above target against its annual performance metrics under the annual incentive plan, which resulted in bonus payments for the NEOs under the annual incentive program at
70
above-target level, based on diligent cash managementthe attainment of challenging performance-based targets. However, under the long-term incentive plan, the Company was at or below threshold against its performance targets over the past three-year performance period (2019-2021), as average total sales growth and liquidity and to align our cost structurereturn on invested capital over the performance period was pressured due primarily to the currentsignificant disruption from the COVID-19 environment, which impactedpandemic and its detrimental impact to both our commercial aerospace and general industrial end markets. Current travel restrictions, as well as changes in the propensity for the general public to travel by air as a result of the COVID-19 pandemic, have caused reductions in demand for commercial aircraft, which adversely impacted our net sales and operating results in the commercial aerospace end market. In addition, an overall reduction in business activity as a result of the disruption caused by COVID-19 has led to a decrease in sales to our general industrial end market, which primarily includes industrial vehicles and industrial valve products. As a result, cash-based performance units payouts for the Company’s financial2019-2021 performance during fiscal year 2020 generally fell shortperiod was significantly below target level and TSR was less than the 50th percentile of our expectations.peer group.
Incentive awards earned by the Named Executive Officers for fiscal 20202021 reflect the Company’s operating performance and the Company’s commitment to pay for performance. The Company’s 20202021 financial performance for executive compensation included:
• | Adjusted operating income was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Adjusted operating margin was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Working capital as a percentage of sales was | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company’s financial performance above excludes the performance of acquisitions consummated during the performance period, as well as otherincludes adjustments referenced in the Company’s fourth quarter 20202021 earnings release furnished to the SEC on February 25, 2021.24, 2022.
The Company urges its stockholders to read the above “Compensation Discussion and Analysis” section of this Proxy Statement, which describes in more detail how the Company’s executive compensation policies and procedures operate and are designed to achieve the Company’s compensation objectives, as well as the Summary Compensation Table and related compensation tables and narratives which provide detailed information on the compensation of the Named Executive Officers. The Executive Compensation Committee believes that the policies and procedures articulated in the above “Compensation Discussion and Analysis” section of this Proxy Statement are effective in
65
achieving the Company’s goals and that the compensation of the Named Executive Officers reported in this Proxy Statement has supported and contributed to the Company’s success.
The Board recommends that stockholders continue to support this compensation program by voting on the following resolution:
“RESOLVED, that the stockholders of Curtiss-Wright Corporation approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers, as disclosed in the Proxy Statement for the 20212022 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables and accompanying narrative disclosure therein.”
This vote is advisory, and therefore not binding on the Company, the Executive Compensation Committee, or the Board of Directors. It will not overrule any decisions made by the Board of Directors or the Executive Compensation Committee or require the Board of Directors or the Executive Compensation Committee to take any specific action. The Board of Directors and the Executive Compensation Committee value the opinions of the stockholders, and, to the extent there is any significant vote against the Named Executive Officers compensation as disclosed in this Proxy Statement, the Board of Directors will consider the stockholder concerns and the Executive Compensation Committee will evaluate whether any actions are necessary to address those concerns.
Adoption of this resolution will require the affirmative vote of at least a majority inof the voting interestpower of the stockholders present in person or by proxy (and eligibleand entitled to vote) and votingvote at the Annual Meeting, assuming the presence of a quorum.Meeting. As further discussed in the section titled “Broker non-votes” on page 89 of this Proxy Statement, if you own shares of Common Stock through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares of Common Stock so that your vote can be counted on this Proposal Three.
71
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”“FOR” APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT (PROPOSAL 3).
HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS
The SEC has adopted rules governing the delivery of annual disclosure documents that permit us to send a single set of our Notice of Internet Availability of Proxy Materials, and for those stockholders that received a paper copy of the proxy materials in the mail, a single set of our annual report and proxy statement, to any household at which two or more stockholders reside if we believe that the stockholders are members of the same family, unless we have received contrary instructions from one or more of the stockholders. This rule benefits both stockholders and the Company. It reduces the volume of duplicate information received and helps to reduce our expenses. Each stockholder will continue to receive a separate proxy card if they received a paper copy of the proxy materials in the mail. If your household received a single set of such disclosure documents for this year, but you would prefer to receive your own copy now or in the future, please contact our transfer agent, Broadridge Financial Solutions, Inc., by calling their toll-free number, 1-800-542-1061, or writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717. A separate copy of such disclosure documents will be promptly provided to you upon receipt of your request. Stockholders sharing an address who are receiving multiple copies of the Notice of Internet Availability of Proxy Materials or our proxy statement and annual report, as applicable, and who wish to receive a single copy of such materials in the future, please contact Broadridge Financial Solutions, Inc. as indicated above.
66
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR 20222023 ANNUAL MEETING
Pursuant to regulations of the SEC, stockholders who intend to submit proposals for inclusion in our proxy materials for the 20222023 Annual Meeting must do so no later than November 26, 2021.25, 2022. This requirement is separate from the SEC’s other requirements that must be met to have a stockholder proposal included in our proxy statement.Proxy Statement. In addition, this requirement is independent of certain other notice requirements of our Amended and Restated By-laws described below. All stockholder proposals and notices should be submitted to Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. The attached proxy card grants the proxy holder discretionary authority to vote on any matter raised and presented at the Annual Meeting. Pursuant to amended SEC Rule 14a-4(c)(1), we will exercise discretionary voting authority to the extent conferred by proxy with respect to stockholder proposals received after February 10, 2022.8, 2023.
If a stockholder of record wishes to nominate Directors or bring other business to be considered by stockholders at the 20222023 Annual Meeting, such proposals may only be made in accordance with the following procedure. Under our current Amended and Restated By-laws, nominations of Directors or other proposals by stockholders must be made in writing to our offices no later than February 4, 20222023 and no earlier than January 7, 2022.5, 2023. However, if the date of the 20222023 Annual Meeting is advanced by more than 30 days or delayed by more than 70 days from the anniversary date of the 20212022 Annual Meeting, then such nominations and proposals must be delivered in writing to the Company no earlier than 120 days prior to the 20222023 Annual Meeting and no later than the close of business on the later of (i) the 90th day prior to the 20222023 Annual Meeting, or (ii) if the first public announcement of the date of such advanced or delayed annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of the 20222023 Annual Meeting is first made.
Please note that these requirements relate only to matters proposed to be considered for the 2022 Annual Meeting. They are separate from the SEC’s requirements to have stockholder proposals included in the Company’s 20222023 proxy statement.
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In addition to satisfying the foregoing requirements under our Amended and Restated By-laws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 5, 2023.
20202021 ANNUAL REPORT ON FORM 10-K
Any stockholder wishing to receive, without charge, a copy of the Company’s 20202021 Annual Report on Form 10-K (without exhibits) filed with the SEC on February 24, 2022, should write to the Corporate Secretary, Curtiss-Wright Corporation, 130 Harbour Place Drive, Suite 300, Davidson, North Carolina 28036. Exhibits to the Form 10-K will be furnished upon written request and payment of the Company’s expenses in furnishing such documents. The Company’s 20202021 Annual Report on Form 10-K is also available free of charge through the Investor Relations section of the Company’s website athttps://investors.curtisswright.com/financials/sec-filings/default.aspx.default.aspx.
6773
OTHER MATTERS WHICH MAY BE PRESENTED
FOR ACTION AT THE MEETING
The Board of Directors does not intend to present for action at this Annual Meeting any matter other than those specifically set forth in the Notice of Annual Meeting. If any other matter is properly presented for action at the Annual Meeting, it is the intention of persons named in the proxy to vote thereon in accordance with their judgment pursuant to the discretionary authority conferred by the proxy.
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| By Order of the Board of Directors | |
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| Paul J. Ferdenzi |
Dated: March 24, 202125, 2022
6874
CURTISS-WRIGHT CORPORATION
C/O BROADRIDGE
P.O. BOX 1342
BRENTWOOD, NY 11717
  | SCAN TO VIEW MATERIALS & VOTE |   |
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE IN PERSON
You may vote these shares in person by attending the annual meeting. Directions to the meeting are available at www.proxyvote.com.
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |
| KEEP THIS PORTION FOR YOUR RECORDS | |
| DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| CURTISS-WRIGHT CORPORATION | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||
| The Board of Directors recommends you vote FOR the following: | |||||||||||||||||
| 1. | Election of Directors | o | o | o | |||||||||||||
| Nominees: | |||||||||||||||||
| 01) | David C. Adams | 06) | Glenda J. Minor | ||||||||||||||
| 02) | Lynn M. Bamford | 07) | Anthony J. Moraco | ||||||||||||||
| 03) | Dean M. Flatt | 08) | John B. Nathman | ||||||||||||||
| 04) | S. Marce Fuller | 09) | Robert J. Rivet | ||||||||||||||
| 05) | Bruce D. Hoechner | 10) | Peter C. Wallace | ||||||||||||||
| The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | ||||||||||||||
| 2. | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2021 | o | o | o | |||||||||||||
| 3. | An advisory (non-binding) vote to approve the compensation of the Company’s named executive officers | o | o | o | |||||||||||||
| NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||||||||||||||||
| CURTISS-WRIGHT CORPORATION | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||
| The Board of Directors recommends you vote FOR the following: | |||||||||||||||||
| 1. | Election of Directors | o | o | o | |||||||||||||
| Nominees: | |||||||||||||||||
| 01) | David C. Adams | 06) Glenda J. Minor | |||||||||||||||
| 02) | Lynn M. Bamford | 07) Anthony J. Moraco | |||||||||||||||
| 03) | Dean M. Flatt | 08) John B. Nathman | |||||||||||||||
| 04) | S. Marce Fuller | 09) Robert J. Rivet | |||||||||||||||
| 05) | Bruce D. Hoechner | 10) Peter C. Wallace | |||||||||||||||
| The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | ||||||||||||||
| 2. | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2022 | o | o | o | |||||||||||||
| 3. | An advisory (non-binding) vote to approve the compensation of the Company’s named executive officers | o | o | o | |||||||||||||
| NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||||||||||||||||
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | |||||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on Thursday, May 6, 2021. 5, 2022.
A Notice and Proxy Statement and combined Business Review/20202021 Annual Report on Form 10-K to security holders are available at www.proxyvote.com.
CURTISS-WRIGHT CORPORATION
Annual Meeting of Stockholders
May 6, 20215, 2022 1:00 PM
This proxy is solicited by the Board of Directors
The undersigned hereby constitutes and appoints DAVID C. ADAMS, LYNN M. BAMFORD, KEVIN M. RAYMENT and K. CHRISTOPHER FARKAS, and each of them, as proxies of the undersigned, with full power to appoint histheir substitute, and authorizes each of them to represent and to vote all shares of common stock, par value $1.00 per share, of Curtiss-Wright Corporation (the “Company”) which the undersigned is entitled to vote at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, May 6, 2021,5, 2022, at the Homewood Suites by Hilton, 125 Harbour Place Drive, Davidson, North Carolina 28036, commencing at 1:00 PM local time, or any adjournment or postponement thereof, with all the powers the undersigned would have if personally present, respecting the matters described in the accompanying proxy statement and, in their discretion, on other matters which may properly come before the meeting. When properly executed, this proxy will be voted in the manner directed herein by the undersigned stockholder(s).
If no direction is given, this proxy will be voted FOR the Director nominees listed in Proposal One and FOR Proposals Two and Three. In their discretion, the proxies are each authorized to vote upon such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. A stockholder wishing to vote in accordance with the Board of Directors’ recommendations need only sign and date this proxy and return it in the enclosed envelope.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying Notice of Annual Meeting of Stockholders, the proxy statement with respect thereto, and the Company’s 20202021 Annual Report on Form 10-K filed with the Securities and Exchange Commission, and Business Review to Stockholders and hereby revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at any time before it is exercised.
Continued and to be signed on reverse side
