UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENTWashington, D.C. 20549
SCHEDULE 14A INFORMATION
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Stoneridge, Inc.
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STONERIDGE, INC.
9400 East Market Street39675 MacKenzie Drive, Suite 400
Warren, Ohio 44484Novi, Michigan 48377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We will holdinvite you to attend our 20142017 Annual Meeting of Shareholders (the “Annual Meeting”) on Tuesday, May 6, 2014,9, 2017, at 11:00 a.m. Eastern Time, at the Cleveland Airport Marriott, 4277 West 150th Street, Cleveland, Ohio 44135.our new corporate headquarters, 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377.
The purpose of the Annual Meeting is to consider and votetake action on the following matters:
1. | Election of eight directors, each for a term of one year; |
2. | Ratification of |
3. |
4. | Advisory approval on the frequency of holding an advisory vote on executive compensation; and |
Any other |
Only shareholders of record at the close of business on March 31, 2014,22, 2017, the record date, are entitled to notice of and to vote at the meetingAnnual Meeting. We urge you to vote your shares on the Internet, by toll-free telephone call or, any adjournment thereof. Shareholders are urged to complete, signif you have requested a paper copy of our proxy materials, by signing, dating and datereturning the enclosed proxy and return itcard in the enclosed envelope or to vote by telephone or Internet.provided.
By order of the Board of Directors, | |
ROBERT M. LOESCH, | |
Secretary |
Dated: April 7, 2014March 30, 2017
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 6, 2014:9, 2017:
This Proxy Statement and the Company’s 20132016 Annual Report to Shareholders are also available atwww.edocumentview.com/www.envisionreports.com/sri.
YOUR VOTE IS IMPORTANT.
PLEASE SUBMITVOTE YOUR SHARES PROMPTLY ON THE INTERNET, BY TOLL-FREE TELEPHONE CALL OR, IF YOU HAVE REQUESTED A PAPER COPY OF OUR PROXY MATERIALS, BY COMPLETINGSIGNING, DATING AND MAILINGRETURNING THE ENCLOSED PROXY CARD OR PROVIDE YOUR VOTE BY TELEPHONE OR INTERNET.IN THE ENVELOPE PROVIDED.
2017 Proxy Statement
Table of Contents
Page |
STONERIDGE, INC.
2014
2017 Proxy Statement Summary
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
We are mailingfurnishing to shareholders our proxy materials, which include this Proxy Statement and our 2016 Annual Report to our shareholdersShareholders, by providing access to them on the Internet atwww.envisionreports.com/sri. On or about April 7, 2014,March 30, 2017 we began mailing shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing important information, including instructions on how to access the proxy materials online and it is also available online atwww.edocumentview.com/sri. how to vote your shares over the Internet. If you receive a Notice, you will not receive a paper or e-mail copy of the proxy materials unless you request one in the manner set forth in the Notice.
The Board of Directors is soliciting proxies in connection with the 20142017 Annual Meeting of Shareholders and encourages you to read thisthe Proxy Statement and vote your shares online,by Internet, by telephone or by mailing your proxy card or voting instruction form.
Stoneridge, Inc. 20142017 Annual Meeting Information
Date and | Tuesday, May |
Location: |
Record Date: |
Voting: | |
entitled to one vote for each Director nominee and one vote for each of the other | |
proposals |
Matters to be Considered:
Management Proposals | Board Vote Recommendation | Page (for more information) | |||
1. | Elect eight directors named in this Proxy Statement | FOR ALL | 5 | ||
2. | Ratify the appointment of Ernst & Young LLP | FOR | 8 | ||
3. | Provide advisory vote on executive compensation | FOR | 11 | ||
4. | Provide advisory vote on the frequency of holding an advisory vote on executive compensation | FOR ONE YEAR | 12 |
Company Performance
(In thousands, except earningsWe delivered a strong financial performance in 2016. Sales growth in our Control Devices segment exceeded our underlying markets through successful product launches including our new shift-by-wire products as we continued executing on our long-term strategy to drive higher content per sharevehicle through system based solutions. We were also able to achieve an expansion of our gross margin and share price)continue to improve our operational efficiency. Our PST segment performance improved as a result of cost reductions and operational improvements despite the continued challenging economic environment on Brazil.
2013 | 2012 | Percent Change | ||||||||||
Net Sales | $ | 947,830 | $ | 938,513 | 1.0 | % | ||||||
Operating Income | 39,704 | 28,729 | 38.2 | % | ||||||||
Net Income | 15,131 | 5,361 | 182.2 | % | ||||||||
Earnings Per Share, Diluted | $ | 0.56 | $ | 0.20 | 180.0 | % | ||||||
Share Price at 12/31 | $ | 12.75 | $ | 5.12 | 149.0 | % |
Net sales increased by $9.3 million and net income increased by $9.8 million7.9% primarily due to higher sales in 2013 comparedour Control Devices segment from higher North American automotive market sales associated with 2012 andlaunch of our closing share price at year end 2013 increased 149% from a year earlier. These improved results are worth noting, however, they were below our consolidated financial performance expectations for the year. Sales performanceshift-by-wire products. This was below our growth targets and was negatively impacted by continuing weak trends in the commercial vehicle markets, market share loss by a significant customer and currency devaluation of the Brazilian real, which were partially offset by continued growthunfavorable foreign currency translation in theour Electronics and PST segments, lower sales volume in our Electronics segment related to North American automotive marketscommercial vehicle products and new program awards in Europe.
Profitability, while significantly above the prior year on a modest revenue increase, was below expectations for 2013 due to unfavorablelower product volume exchange rate fluctuations, operational performance in our Wiring segment, and changes in product mix in our PST segment all of which reduced marginal contributions. Partially offsetting these impacts were reductionsdue to weakness in selling, generalthe Brazilian economy and administrative costs.automotive market.
Income from continuing operations increased by $54.8 million compared to the prior year, which was primarily due to impact of the release of the valuation allowance associated with our U.S. federal, certain state and foreign deferred tax assets of $38.8 million, or $1.37 per diluted share. Excluding the impact of the valuation allowance release, income from continuing operations increased by $16.0 million due to higher sales in our Control Devices segment, a gross margin expansion and improved operational efficiency.
i
(in thousands, except earnings per share and share price) |
2016 |
2015 | ||||||
Net sales | $ | 695,977 | $ | 644,812 | ||||
Operating income | 44,082 | 27,815 | ||||||
Income from continuing operations | 75,574 | 20,777 | ||||||
Loss from discontinued operations | - | (210 | ) | |||||
Net income | 75,574 | 20,567 | ||||||
Net loss attributable to noncontrolling interest | (1,887 | ) | (2,207 | ) | ||||
Net income attributable to Stoneridge, Inc. | 77,461 | 22,774 | ||||||
Diluted earnings per share from continuing operations attributable to Stoneridge, Inc. | $ | 2.74 | $ | 0.82 | ||||
Diluted loss per share from discontinued operations | $ | 0.00 | $ | (0.01 | ) | |||
Diluted earnings per share attributable to Stoneridge, Inc. | $ | 2.74 | $ | 0.81 | ||||
Share Price at December 31 | $ | 17.69 | $ | 14.80 |
Director Nominees
Stoneridge’s Directors are elected for one-year terms by a majority of the votes cast. Below is a summary of the Director nominees.director nominees, who are elected for one-year terms. Additional information about each director nominee and his or her qualifications may be found beginning on page 5 of this Proxy Statement.5.
Committee Memberships | Committee Memberships | ||||||||||||||||||||
Name | Age | Director Since | Primary Occupation | Independent | AC | CC | NCGC | Age | Director Since | Primary Occupation | Independent | AC | CC | NCGC | |||||||
John C. Corey | 66 | 2004 | President and CEO of Stoneridge, Inc. | ||||||||||||||||||
Jonathan B. DeGaynor | 50 | 2015 | President and CEO of Stoneridge, Inc. | ||||||||||||||||||
Jeffrey P. Draime | 47 | 2005 | Self-employed business consultant | ü | ü | ü | 50 | 2005 | Self-employed business consultant | ü | ü | ||||||||||
Douglas C. Jacobs | 74 | 2004 | Executive Vice President-Finance and CFO of Brooklyn NY Holdings, LLC | ü | C | ü | 77 | 2004 | Chief Financial Officer and Treasurer, Brownstone Services LLC | ü | C | ü | |||||||||
Ira C. Kaplan | 60 | 2009 | Managing Partner of Benesch, Friedlander, Coplan & Arnoff LLP | ü | ü | ü | 62 | 2009 | Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP | ü | ü | ü | |||||||||
Kim Korth | 59 | 2006 | President and CEO of Dickten Masch Plastics, LLC and TECHNIPLASTM | ü | C | ü | 62 | 2006 | President and CEO of Dickten Masch Plastics, LLC and TECHNIPLASTM | ü | C | ü | |||||||||
William M. Lasky | 66 | 2004 | Former President and CEO of Accuride Corporation | L | ü | ü | C | 69 | 2004 | Former President and CEO of Accuride Corporation | L | ü | C | ||||||||
George S. Mayes, Jr. | 55 | 2012 | Executive Vice President and COO of Diebold, Inc. | ü | ü | 58 | 2012 | Self-employed business consultant | ü | ü | |||||||||||
Paul J. Schlather | 61 | 2009 | Self-employed business consultant | ü | ü | 64 | 2009 | Self-employed business consultant | ü | ü |
AC | Audit Committee | C | Committee Chairperson | |||
CC | Compensation Committee | L | Lead Independent Director | |||
NCGC | Nominating | |||||
Ratification of the appointment of Ernst & Young LLP
As a matter of good governance, weWe are asking our shareholders to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2014. Below is summary information with respect to the fees billed to us for services provided to us during the years ended December 31, 2013 and 2012.2017. For more information, see page 8 of this Proxy Statement.8.
2013 | 2012 | |||||||
Audit Fees | $ | 1,654,130 | $ | 1,454,846 | ||||
Tax Fees | 380,200 | 463,896 | ||||||
Total Fees | $ | 2,034,330 | $ | 1,918,742 |
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Executive Compensation Highlights
Our executive compensation program is designed to attract, retain, motivate and reward talented executives who advance our strategic, operational and financial objectives and, thereby, enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
· | Attract and retain talented executive officers by providing a compensation package that is competitive with that offered by similarly situated companies; |
· | Create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals; and |
· | Align total compensation with the objectives and strategies of our business and shareholders. |
Key elements of our 20132016 compensation program arewere as follows:
· | Base Salary. Base salary has been targeted at the 50th percentile of our |
· | Annual Incentive Plan (AIP). The |
· | Long-Term Incentive |
Additionally, during 2013, we implemented a Share Ownership policy for our executive officers whereby the CEO, CFO and other executive officers must retain our common shares equal in market value to five, four and three times, respectively, their annual base salaries.
For more information related to our executive compensation program, see page 15 of this Proxy Statement.17.
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PROXY STATEMENT
The Board of Directors (the “Board”) of Stoneridge, Inc. (the “Company”) is sending you this Proxy Statement to ask for your vote as a Stoneridge shareholder on certain matters to be voted on at our Annual Meeting of Shareholders (“Annual Meeting”) to be held on Tuesday, May 6, 2014,9, 2017, at 11:00 a.m. Eastern Time, at Stoneridge Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377. We are mailing shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access the Cleveland Airport Marriott, 4277 West 150th Street, Cleveland, Ohio 44135. This Proxy Statementproxy materials and the accompanying notice and proxy will be mailedhow to youvote online on or about April 7, 2014.March 30, 2017.
Annual Report; Internet Availability
A copy ofAs permitted by SEC rules, we are furnishing our Annual Report to Shareholders for the fiscal year ended December 31, 2013, is enclosed with this Proxy Statement. Additionally,proxy materials, which include this Proxy Statement and our 2016 Annual Report to Shareholders, forto shareholders by providing access to the fiscal year ended December 31, 2013 are availableproxy materials on the Internet atwww.edocumentview.com/www.envisionreports.com/sri.
Solicitation of Proxies
The Board is making this solicitation of proxies and we will pay the cost of the solicitation. We have retained Georgeson Inc., at an estimated cost of $8,000, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. In addition to the solicitation of proxies by mail by Georgeson Inc., our employees may solicit proxies by telephone, facsimile or electronic mail.
Proxies; Revocation of Proxies
The common shares represented by your proxy will be voted in accordance with the instructions as indicated on your proxy. In the absence of any such instructions, they will be voted to (a) elect the director nominees set forth under “Election of Directors”; (b) ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2014; and2017; (c) approve the compensation paid toof our Named Executive Officers. Officers; and (d) select “1 YEAR” on the frequency of an advisory vote on executive compensation.
Revocation of Proxies
Your presence at the Annual Meeting, of Shareholders, without further action, will not revoke your proxy. However, if you are a registered shareholder you may revoke your proxy at any time before it has been exercised by signing and delivering a later-dated proxy or by giving notice to the Company in writing at our address indicated on the attached Notice of Annual Meeting of Shareholders or in the open meeting. by:
· | signing and delivering a later-dated proxy; |
· | voting again by Internet or telephone prior to 1:00 a.m. EDT on May 9, 2017 (only the latest vote you submit will be counted); |
· | giving notice to the Company in writing at our address indicated on the attached Notice of Annual Meeting of Shareholders (the notification must be received by the close of business on May 8, 2017); or |
· | by voting in person at the Annual Meeting after requesting that the earlier proxy be revoked. |
If you hold your common shares in “street name”, in order to change or revoke your voting instructions you must follow the specific voting directions provided to you by your bank, broker or other holder of record.
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Voting Eligibility
Only shareholders of record at the close of business on the record date, March 31, 2014,22, 2017, are entitled to receive notice of the Annual Meeting of Shareholders and to vote the common shares held on the record date at the meeting. On the record date, our outstanding voting securities consisted of 28,330,03127,910,263 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.
Voting
Voting ProceduresThe Board is asking for your proxy in advance of the Annual Meeting. Giving your proxy means you authorize the individuals designated as proxies to vote your common shares at the Annual Meeting in the manner you direct. You may give your proxy or otherwise vote your common shares in one of several ways, depending on how you hold your shares.
Shareholders of Record
If your common shares are registered directly in your name with the Company’s transfer agent, you are a record holder:considered the “shareholder of record” of those shares and you may:
· | By Telephone.You may vote by |
· | By Internet.You may vote your shares by |
· |
· | In Person.You may vote your shares by attending the Annual Meeting in person and submitting your proxy card as instructed (if you have requested paper copies of our proxy materials) or completing a ballot that will be distributed at the |
If you are a “street name” holder:Street Name Holders
· | You must vote your common shares through the procedures established by your bank, broker, or other holder of record. Your bank, broker, or other holder of record has enclosed or otherwise provided a voting instruction card for you to use in directing the bank, broker, or other holder of record how to vote your common shares. |
· | You may vote at the meeting, however, to do so you will first need to ask your bank, broker or other holder of record to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting and hand it in with a signed ballot that you can request at the meeting. You will not be able to vote your common shares at the meeting without a legal proxy and signed ballot. |
If you do not instruct your broker, bank or other nominee on how to vote your shares, it will have discretionary authority, under New York Stock Exchange (“NYSE”) rules, to vote your shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2017 (Proposal 2). However, your broker, bank or other nominee will not be permitted to vote your shares (a “broker non-vote”) on the election of directors (Proposal 1) the advisory vote to approve our executive compensation (Proposal 3) or the advisory vote to approve the frequency of holding an advisory vote on our executive compensation (Proposal 4).
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common shares as of February 28, 2014,2017, by: (a) our directors and nominees for election as directors; (b) each other person who is known by us to own beneficially more than 5% of our outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) all of our executive officers and directors as a group.
Name of Beneficial Owner | Number of Shares Beneficially Owned(1) | Percent Of Class | ||||||
Systematic Financial Management, LP(2) | 2,557,890 | 9.0 | % | |||||
The Goldman Sachs Group, Inc. (3) | 2,005,111 | 7.1 | ||||||
BlackRock, Inc.(4) | 1,858,860 | 6.6 | ||||||
JPMorgan Chase & Co.(5) | 1,430,300 | 5.0 | ||||||
John C. Corey(6) | 821,938 | 2.9 | ||||||
Jeffrey P. Draime(7) | 403,514 | 1.4 | ||||||
George E. Strickler(8) | 338,429 | 1.2 | ||||||
Thomas A. Beaver(9) | 160,181 | * | ||||||
William M. Lasky(10) | 110,880 | * | ||||||
Michael D. Sloan(11) | 110,105 | * | ||||||
Richard P. Adante(12) | 97,900 | * | ||||||
Paul J. Schlather(13) | 89,877 | * | ||||||
Ira C. Kaplan(14) | 39,952 | * | ||||||
Douglas C. Jacobs(15) | 35,160 | * | ||||||
Kim Korth(16) | 29,900 | * | ||||||
George S. Mayes, Jr.(17) | 18,420 | * | ||||||
All Executive Officers and Directors as a Group (15 persons) | 2,295,656 | 8.1 | % |
_______________________
Name of Beneficial Owner | Number of Shares Beneficially Owned(1) |
Percent Of Class | ||||||
NWQ Investment Management Company, LLC(2) | 1,866,902 | 6.7 | % | |||||
BlackRock, Inc.(3) | 1,741,145 | 6.2 | ||||||
Pzena Investment Management, LLC.(4) | 1,545,651 | 5.5 | ||||||
Dimensional Fund Advisors(5) | 1,542,745 | 5.5 | ||||||
The Goldman Sachs Group, Inc.(6) | 1,407,330 | 5.0 | ||||||
Jeffrey P. Draime(7) | 427,329 | 1.5 | ||||||
George E. Strickler(8) | 324,322 | 1.2 | ||||||
Thomas A. Beaver(9) | 125,763 | * | ||||||
William M. Lasky(10) | 114,695 | * | ||||||
Michael D. Sloan(11) | 114,623 | * | ||||||
Paul J. Schlather(12) | 103,652 | * | ||||||
Ira C. Kaplan(13) | 49,667 | * | ||||||
Douglas C. Jacobs(14) | 48,975 | * | ||||||
Kim Korth(15) | 43,715 | * | ||||||
George S. Mayes, Jr.(16) | 32,735 | * | ||||||
Peter Kruk(17) | 42,047 | * | ||||||
Jonathan B. DeGaynor(18) | 21,855 | * | ||||||
Robert R. Krakowiak | - | * | ||||||
All Executive Officers and Directors as a Group (17 persons) | 1,486,445 | 5.3 | % |
_______________________ |
* Less than 1%.
(1) | Unless otherwise indicated, the beneficial owner has sole voting and investment power over such common shares. |
(2) | According to a Schedule 13G filed with the Securities and Exchange Commission (“SEC”) by |
(3) | According to a Schedule 13G filed with the SEC by BlackRock, Inc. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
(4) | According to a Schedule 13G filed with the SEC by Pzena Investment Management, LLC. The address of Pzena Investment Management, LLC is 320 Park Avenue, 8th Floor, New York, New York 10022. |
(5) | According to a Schedule 13G filed with the SEC by Dimensional Fund Advisors LP, all securities reported are owned by commingled funds, group trusts and separate accounts to which it or its subsidiaries serve as investment advisor, sub-advisor and/or manager. Dimensional Fund Advisors LP has disclaimed beneficial ownership of all such securities. The address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
3 |
(6) | According to a Schedule 13G filed with the SEC by The Goldman Sachs Group, Inc., the filing reflects the securities beneficially owned by certain operating units (collectively the “Goldman Sachs Reporting |
(7) | Represents 347,714 common shares held in trust for the benefit of Draime family members, of which Mr. Draime is trustee, |
(8) |
(9) |
(10) |
(11) |
(12) | Represents |
(13) | Includes 42,465 common shares owned by Mr. Kaplan directly and 7,202 restricted common shares subject to forfeiture (which vested on March 4, 2017). |
(14) |
(15) |
(16) |
(17) |
(18) | Includes 21,855 time-based share units which vest and are |
4 |
PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors has been fixed at eight. At the Annual Meeting, of Shareholders, shareholders will elect eight directors to hold office until our next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the nominees identified below be elected to the Board. John C. Corey, the Company’s President and Chief Executive Officer,Jonathan B. DeGaynor has an employment agreement with the Company which provides that during the term of the agreement Mr. Coreyhe shall be entitled to be nominated for election to the Board. At our Annual Meeting, of Shareholders, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the eight nominees hereinafter named.
Directors are elected by a plurality of the votes cast at the Annual Meeting. Broker non-votes and abstaining votes will be counted as “present” for purposes of determining whether a quorum has been achieved at the Annual Meeting, but will not be counted as “For” or “Withheld” from any nominee. “Plurality” means that the director nominees who receive the greatest number of votes cast are elected, up to the maximum number of directors to be elected at the meeting. The maximum number to be elected is eight. Shares not voted will have no impact on the election of directors. Unless proper voting instructions are to “Withhold” authority for any or all nominees, the proxy given will be voted “For” each of the nominees for director.
Majority Voting Principle. Under our Corporate Governance Guidelines, any nominee for director in an uncontested election who receives a greater number of votes “Withheld” from his or her election than votes “For” his or her election must promptly offer his or her resignation. The Board’s Nominating and Corporate Governance Committee will then consider the resignation and recommend to the Board whether to accept or reject it. The Board will act on the Committee’s recommendation within 90 days after the Annual Meeting, and the Board’s decision will be publicly disclosed on Form 8-K. Any director who offers his or her resignation may not participate in the Board’s discussion or vote.
The director nominees are identified below. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board expects that proxies will be voted for the election of a substitute nominee designated by the Board. The following information is furnished with respect to each person nominated for election as a director.
The Board of Directors recommends that you vote FOR the following nominees.
Nominees to Serve for a One-Year Term Expiring in 20152018
| Mr.
|
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Jeffrey P. Draime | Mr. Draime,
Mr. Draime served in various roles with the Company from 1988 through 2001, including operations, sales, quality control, product costing, and marketing.
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Douglas C. Jacobs | Mr. Jacobs, privately held investment advisory company established to manage the assets of a
Mr. Jacobs has served as a director and member of the Audit Committee of the Board of CalAtlantic Group Inc., a national residential home builder, which was formed as a result of the merger of Standard Pacific Corporation and Ryland Homes in October 2015. Prior to the merger, Mr. Jacobs has served as a director of Standard Pacific Corporation, a national residential home builder in southern California, since 1998 and
Mr. Jacobs qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Jacobs should serve as a director because he provides valuable business experience and judgment to the Board, which strengthens the Board’s collective qualifications, skills and experience.
| |
Ira C. Kaplan
| Mr. Kaplan,
Mr. Kaplan counsels clients in governance and business matters in his role at the law firm. In addition to his legal and management experience described above, the Company believes that Mr. Kaplan should serve as a director because he brings thoughtful analysis, sound judgment and insight to best practices to the Board, in addition to his professional experiences, which strengthens the Board’s collective qualifications, skills and experience.
| |
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6 |
Kim Korth
| Ms. Korth,
Ms. Korth is a member of the
Ms. Korth has several decades of experience in corporate governance issues, organizational design, and development of strategies for growth and improved financial performance for automotive suppliers. In addition to the knowledge and experience described above, the Company believes that Ms. Korth should serve as a director because she provides insight to industry trends and expectations to the Board, which strengthens the Board’s collective qualifications, skills and experience.
|
William M. Lasky
| Mr. Lasky,
In addition to his professional experience described above, the Company believes that Mr. Lasky should serve as a director because he provides in-depth industry knowledge, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience. | |
|
7 |
George S. Mayes, Jr.
| Mr. Mayes,
Mr. Mayes has extensive experience in lean manufacturing and Six Sigma processes and has managed manufacturing facilities in Canada, Mexico, France, Hungary, Brazil, China, Poland, Italy and the United States.
The Company believes that Mr. Mayes should serve as a director because he provides
| |
Paul J. Schlather | Mr. Schlather,
Mr. Schlather qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Schlather should serve as a director because he provides financial analysis and business acumen to the Board, which strengthens the Board’s collective qualifications, skills and experience.
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PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
The Audit Committee of the Board currently expects to appointanticipates appointing Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2014.2017. For 2013,2016, Ernst & Young was engaged by us to audit our annual financial statements, assess our internal control over financial reporting and to perform audit-related and tax services. We expect that representatives of Ernst & Young will be present at the Annual Meeting, of Shareholders, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions from shareholders.
The Board seeks an indication from our shareholders of their approval or disapprovalAudit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the Company’s financial statements. As a matter of good corporate governance, the Audit Committee’sCommittee requests that shareholders ratify its anticipated appointmentselection of Ernst & Young to serve as our independent registered public accounting firm for the 2014 fiscal year. The submission of this matter for approval2017.
Although ratification by shareholders is not legally required, however, the Board believes that the submission is an opportunity for the shareholders to provide feedback to the Board on an important issue of corporate governance. If our shareholders do not approve the appointment of Ernst & Young, the appointment of our independent registered public accounting firm will be re-evaluated by the Audit Committee, but will not require the Audit Committee to appoint a different accounting firm. If our shareholders do approve the appointment of Ernst & Young,selection is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year2017 if it determines that such a change would be in the best interestinterests of the Company and itsour shareholders.
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Approval of this proposal requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to be voted on the proposal at our Annual Meeting of Shareholders.Meeting. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on the proposal and will not have a positive or negative effect on the outcome of this proposal, however, there should be no broker non-votes on this proposal because brokers should have the discretion to vote uninstructed common shares on this proposal.
The Board of Directors recommends that you vote FOR Proposal Two.
Service Fees Paid to the Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees billed by and paid to Ernst & Young by fee category forFor the fiscal years ended December 31, 20132016 and 2012.2015 we retained Ernst & Young to provide services in the following categories and amounts. The Audit Committee has considered the scope and fee arrangements for all services provided by Ernst & Young, taking into account whether the provision of non-audit-related services is compatible with maintaining Ernst & Young’s independence.
2013 | 2012 | 2016 | 2015 | |||||||||||||
Audit Fees | $ | 1,654,130 | $ | 1,454,846 | $ | 1,899,800 | $ | 1,496,515 | ||||||||
Audit Related Fees | 145,900 | - | ||||||||||||||
Tax Fees | 380,200 | 463,896 | 374,700 | 193,662 | ||||||||||||
Total Fees | $ | 2,034,330 | $ | 1,918,742 | $ | 2,420,400 | $ | 1,690,177 |
Audit Fees.Audit fees include feesservices associated with the annual audit of our consolidated financial statements, the assessmentaudit of our internal control over financial reporting, as integrated with the annual audit of our financial statements, the quarterly reviews of the financial statements included in our SEC Form 10-Q filings, international statutory and regulatory audits and generalother services that are normally provided by the independent accountants in connection with regulatory filings. The increase in audit fees in 2016 primarily relates to various additional audit services including the release of Company’s valuation allowance on its U.S. federal, certain state and foreign deferred tax assets and the Company’s headquarter relocation.
Audit-related fees. Audit related fees include services associated with assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements which includes assistance with the implementation of new regulatory pronouncements.in financial due diligence related to mergers and acquisitions.
Tax Fees.Tax fees relate to tax compliance and bothplanning, domestic and international tax advisory services.compliance and tax advice. The increase in tax fees in 2016 primarily relates to tax due diligence for mergers and acquisitions.
Pre-Approval PolicyPolicies and Procedures
The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services to be performed for the Company by its independent registered public accounting firm. Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee also pre-approves particular services on a case-by-case basis. In accordance with this policy, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee. The Chairman may pre-approve services and then inform the Audit Committee at the next scheduled meeting.
All services provided by Ernst & Young during fiscal year 2013,2016, as noted in the previous table, were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described above.
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In accordance with its written charter, the Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting, our reporting practices, and the quality and integrity of the financial reports and other financial information provided by us to any governmental body or to the public. Management is responsible for the financial statements and the financial reporting process, including assessing the systemeffectiveness of the Company’s internal controls.control over financial reporting. The independent registered public accounting firm is responsible for conducting audits and reviews of our financial statements in accordance with standards established by the Public Company Accounting Oversight Board, expressing an opinion on our auditedthe conformity of the Company’s financial statements in accordance with generally accepted accounting principles, and auditsauditing and reporting on the Company’s effectiveness of our internal controlcontrols over financial reporting. The Audit Committee is comprised of five directors, each of whom is “independent” for audit committee purposes under the listing standards of the New York Stock Exchange (“NYSE”).NYSE.
In discharging its oversight responsibility as to the audit process, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2013,2016, with management, including 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. The Audit Committee also discussed with our independent registered public accounting firm, Ernst & Young, the matters required to be discussed by Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by theunder Public Company Accounting Oversight Board in Rule 3200T.Auditing Standard No. 16,Communications with Audit Committees. The Audit Committee has received the written disclosures and letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence. The Audit Committee discussed Ernst & Young’s independence with Ernst & Young. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence. Management has the responsibility for the preparation of our financial statements and Ernst & Young has the responsibility for the examination of those statements.
The Audit Committee discussed with our internal auditorInternal Audit Director and Ernst & Young the overall scope and plans for their respective audits. The Audit Committee meetsalso met with the internal audit directorInternal Audit Director and Ernst & Young, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of the Company’s financial reporting.
Based on the above-referenced review and discussions with management, the internal audit directorInternal Audit Director and Ernst & Young, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements for fiscal 20132016 be included in the Company’s Annual Report on Form 10-K filed with the SEC.
The Audit Committee | |
Douglas C. Jacobs, Chairman | |
Ira C. Kaplan | |
William M. Lasky | |
George S. Mayes, Jr. | |
Paul J. Schlather |
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The Company providesAs required by Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) we provide our shareholders with the opportunity to cast an annual advisory non-binding vote to approve the compensation of itsour Named Executive Officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables) (a “say-on-pay proposal”)“Say-On-Pay” proposal). We believe that it is appropriate to seek the views of shareholders on the design and effectiveness of the Company’s executive compensation program.
At the Company’s 20132016 Annual Meeting of Shareholders, 74%97% of the votes cast supportedon the Company’s 2013 say-on-paySay-On-Pay proposal voted in favor of the proposal. The Compensation Committee believes this affirmed shareholders’ support of the Company’s approach to executive compensation.
Our goal for the executive compensation program is to attract, motivate, and retain a talented, entrepreneurial and creative team of executives to provide operational and strategic leadership for the Company’s success in competitive markets. We seek to accomplish this goal in a way that rewards performance and is aligned with our shareholders’ long-term interests. We believe that our executive compensation program, which emphasizes performance-based compensation and long-term equity awards, satisfies this goal and is strongly aligned with the long-term interests of our shareholders.
Base compensation is aligned to be competitive in the industry in which we operate. Performance-based compensation (cash and equity) represents 60-80%60-75% of each executive officer’s target compensation opportunity, with long-term incentives representing the majoritylargest portion of compensation. Targets for incentive compensation are based on financial performance targets and increasing shareholder value. The Compensation Committee retains the services of an independent compensation consultant to advise on competitive compensation and compensation practices.
The Board recommends that shareholders vote FOR the following resolution:
“RESOLVED that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee. The Board and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future decisions regarding executive compensation arrangements.compensation.
The affirmative vote of a majority of the common shares present or represented by proxy and voting at the annual meetingAnnual Meeting will constitute approval of this non-binding resolution. If you own common shares 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 common shares so that your vote can be counted on this proposal. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on this proposal and will not have a positive or negative effect on the outcome of this proposal.
The Board of Directors recommends that you vote FOR Proposal Three.
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PROPOSAL FOUR: SAY ON PAY FREQUENCY
As required under the Dodd-Frank Act and Section 14A of the Exchange Act, we are also asking you to cast an advisory (non-binding) vote recommending the frequency with which we should hold future shareholder advisory votes on the compensation of our named executive officers.
This advisory vote, commonly known as a “Say-on-Frequency” vote, gives you the opportunity to express your views about how frequently (but at least once every three years) we should conduct a Say-on-Pay vote. You may vote for future Say-on-Pay votes to be held every “1 YEAR,” “2 YEARS” or “3 YEARS” or abstain from voting in response to this proposal.
We believe you should vote for us to conduct Say-on-Pay votes every year (1 YEAR). Before you vote, we encourage you to consider the following:
· | a vote every year provides shareholders with the most immediate and direct way to provide input with respect to the Company’s current compensation arrangements; |
· | a vote every year promotes the highest degree of transparency regarding our compensation structure; |
· | a vote every year is consistent with best practices and good corporate governance; |
· | many of the leading shareholder advisory firms and institutional shareholders have publicly announced their support for annual Say-on-Pay votes; and |
· | the majority of the Company’s shareholders voted in 2011 (the last Say-on-Frequency vote) to have a Say-on-Pay vote every year (i.e., for 1 Year) and subsequent to that vote the Company has included a Say-on-Pay vote every year. |
For these reasons, the Board recommends that shareholders vote for us to conduct the required shareholder advisory vote on named executive officer compensation every year (1 YEAR) on Proposal Four.
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Corporate Governance Documents and Committee Charters
The Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ Audit, Compensation, and Nominating and Corporate Governance committees are posted on our website atwww.stoneridge.com. Written copies of these documents are available without charge to any shareholder upon request. Requests should be directed to Investor Relations at ourthe address listed on the Notice of Annual Meeting of Shareholders.
Corporate Ethics Hotline
We established a corporate ethics hotline as part of our Whistleblower Policy and Procedures to allow persons to lodge complaints about accounting, auditing and internal control matters, and to allow an employee to lodge a concern, confidentially and anonymously, about any accounting and auditing matter. Information about lodging such complaints or making such concerns known is contained in our Whistleblower Policy and Procedures, which is posted on our website atwww.stoneridge.com.
Director Independence
The NYSE rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board has not adopted categorical standards of independence. The Board has determined that the following directors and nominees for election ofas a director are independent:
Jeffrey P. Draime | Kim Korth | George S. Mayes, Jr. |
Douglas C. Jacobs | William M. Lasky | Paul J. Schlather |
Ira C. Kaplan |
Annual Board and Committee Self Evaluations
Our Corporate Governance guideline requires that the Board and each committee conduct an annual self-evaluation. The self-evaluations are intended to facilitate a candid assessment and discussion by the Board and each committee of its effectiveness as a group in fulfilling its responsibilities. Each year the Board and each committee conducts a self-evaluation/assessment using questionnaires to facilitate the evaluation. The Board and each Committee then reviews a summary of the questionnaires in connection with discussions to determine which areas the Board and Committee would like to focus on during the coming year to enhance its effectiveness.
The Board of Directors’ Role in Risk Oversight
It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to us. The Audit Committee regularly reviews enterprise-wide risk management, which includes treasury risks (commodity pricing, foreign(foreign exchange rates, and credit and debt exposures), financial and accounting risks, legal and compliance risks, and other risk management functions. The Compensation Committee considers risks related to the attraction and retention of talent and related to the design of compensation programs and arrangements. The full Board considers strategic risks and opportunities and regularly receives reports from management on risk and from the committees regarding risk oversight in their areas of responsibility.
Compensation Policies and RiskAnti-Hedging Policy
Our policiesInsider Trading Policy prohibits Company directors, officers and overall compensation practices for allkey employees do not create risks that are reasonably likelycovered by the pre-clearance procedures of the Insider Trading Policy from engaging in hedging transactions designed to have a material adverse affectoffset decreases in the market value of the Company’s securities, including transactions in put options, call options or other derivative securities, on the Company. The compensation policies are generally consistent for all of our business units.
In addition, incentives are not designed,an exchange or in any other organized market, prepaid variable forwards, equity swaps, collars and do not create, risks that are reasonably likely to have a material adverse effect on the Company as all incentives reward growth and profitability. Our various incentive programs are based on our consistent growth and continued profitability, relying, for example, on the total return on investment, operating profit and total shareholder return. As such, they do not encourage employees to take risks to the detriment or benefit of our results in order to receive incentive compensation, nor are they reasonably likely to have a material adverse effect on the Company.exchange funds.
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Anti-Pledging Policy
Our Insider Trading Policy prohibits directors, officers and key employees covered by the pre-clearance provisions of the Insider Trading Policy from holding Company securities in a margin account or pledging Company securities as collateral for a loan.
The Board of Directors
In 2013,2016 the Board held eightnine meetings. Each Board member except Mr. Mayes, attended at least 75% of the meetings of the Board and of the committees on which he or she serves. Our policy is that directors are to attend the Annual Meeting of Shareholders. All of our current directors attended the 20132016 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the lead independent director by the independent directors to preside at the executive sessions of the independent directors. It is theThe Board’s practice to have the independent directors meet regularly in executive session. All directors, except Mr. Corey,DeGaynor, the Company’s President and Chief Executive Officer (“CEO”),CEO, are independent.
Leadership of the Board
The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board as the Board believes it is in the best interest of the Company and our shareholders to make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Board has determined that having an independent director serve as Chairman is in the best interest of the Company and our shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits our President and CEO to devote more time to focusfocusing on the strategic direction and management of our day-to-day operations.
Committees of the Board
The Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Each member of the Audit, Compensation, and Nominating and Corporate Governance Committees is independent as defined under the listing standards of the NYSE. The table below shows the composition of the Board’s committees:
Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | |||
Douglas C. | Jeffrey P. Draime | Jeffrey P. Draime | |||
Ira C. Kaplan | Douglas C. Jacobs | Ira C. Kaplan | |||
William M. Lasky | Kim | Kim Korth | |||
George S. Mayes, Jr. | William M. Lasky | William M. | |||
Paul J. Schlather | |||||
___________________
* Committee Chairperson
Audit Committee.
This committee held eight meetings in 2013.2016. Information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report,” included in this Proxy Statement. The Board has determined that each Audit Committee member is financially literate under the listing standards of the NYSE. The Board also determined that Mr. Jacobs and Mr. Schlather each qualify as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002. In addition, under the Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the Audit Committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.
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Compensation Committee.Committee
This committee held four meetings in 2013.2016. Each member of our Compensation Committee meets the independence requirements of the NYSE, including the enhanced independence requirements applicable to Compensation Committee members under NYSE rules, effective July 1, 2013, is a non-employee director under Rule 16b-3 of the Securities Exchange Act of 1934 and is an outside director under Section 162(m) of the Internal Revenue Code. The Compensation Committee is responsible for establishing and reviewing our compensation philosophy and programs with respect to our executive officers; approving executive officer compensation and benefits; recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans; and certain other compensation matters, including director compensation. RecommendationsOur CEO makes recommendations regarding compensation of other officers are made to the Compensation Committee by our CEO.Committee. The Compensation Committee can exercise its discretion in modifying any amount presented by our CEO. The Compensation Committee regularly reviews the total compensation obligations to each of our executive officers. During 2013,2016, the Compensation Committee retained Total Rewards Strategies LLC to provide compensation related consulting services. Specifically, the compensation consultant provided relevant market data, current trends in executive and director compensation and advice on program design. In accordance with its charter, the Compensation Committee may delegate power and authority as it deems appropriate for any purpose to a subcommittee of not fewer than two members.
Nominating and Corporate Governance Committee.
This committee held two meetings in 2013.2016. The purpose of the Nominating and Corporate Governance Committee is to evaluate the qualifications of director nominees, to recommend candidates for election as directors, to make recommendations concerning the size and composition of the Board, to develop and implement our corporate governance policies and to assess the effectiveness of the Board.
Nominations and Nomination Process
It is the policy of the Nominating and Corporate Governance Committee to consider individuals recommended by shareholders for membership on the Board. If a shareholder desires to recommend an individual for membership on the Board, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484,39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before January 15 for consideration by thethis committee for that year’s election of directors at the Annual Meeting of Shareholders.
In order for a recommendation to be considered by the Nominating and Corporate Governance Committee, the Recommendation Notice must contain, at a minimum, the following:
· | the name and address, as they appear on the Company’s books, and telephone number of the shareholder making the recommendation, including information on the number of common shares owned and date(s) acquired, and if such person is not a shareholder of record or if such common shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity; |
· | the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience, and qualifications of that individual; |
· | a written acknowledgment by the individual being recommended that he or she has consented to the recommendation and consents to the Company undertaking an investigation into that individual’s background, experience, and qualifications in the event that the Nominating and Corporate Governance Committee desires to do so; |
· | any information not already provided about the person’s background, experience and qualifications necessary for us to prepare the disclosure required to be included in our proxy statement about the individual being recommended; |
· | the disclosure of any relationship of the individual being recommended with us or any of our subsidiaries or affiliates, whether direct or indirect; and |
· | the disclosure of any |
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The Nominating and Corporate Governance Committee determines, and periodically reviews with the Board, the desired skills and characteristics for directors as well as the composition of the Board as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, age, skill, and experience in the context of the needs of the Board. Directors should share our values and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board activities and the willingness to do so. The Nominating and Corporate Governance Committee does not have a formal policy specifically focusing on the consideration of diversity; however, diversity is one of the factors that the Nominating and Corporate Governance Committee considers when identifying candidates and making its recommendations to the Board. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the Nominating and Corporate Governance Committee will evaluate such recommended nominees considering the additional information regarding them contained in the Recommendation Notices. When seeking candidates for the Board, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management and third-party search firms. Ultimately, the Nominating and Corporate Governance Committee will recommend to the Board prospective nominees who the Nominating and Corporate Governance Committee believes will be effective, in conjunction with the other members of the Board, in collectively serving the long-term best interests of our shareholders.
The Nominating and Corporate Governance Committee recommended to the Board each of the nominees identified in "Election“Election of Directors" startingDirectors” beginning on page 5 of this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
None of the members of the Board’s Compensation Committee served as an officer at any time or as an employee during 2013. Additionally,2016. In addition, no Compensation Committee interlocks existed during 2013.2016.
Communications with the Board of Directors
The Board believes that it is important for interested parties to have the ability to send communications to the Board. Persons who wishwishing to communicate with the Board may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484.39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377. The envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or certain specified individual directors (such as the lead independent director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.
Transactions with Related Persons
There were no reportable transactions involving related persons in 2013.2016.
Review and Approval of Transactions with Related Persons
The Board has adopted a written statement of policy with respect to related party transactions. Under the policy, a related party transaction is a transaction required to be disclosed pursuant to Item 404 of Regulation S-K or any other similar transaction involving the Company or the Company’s subsidiaries and any Company employee, officer, director, 5% shareholder or an immediate family member of any of the foregoing if the dollar amount of the transaction or series of transactions exceeds $25,000. A related party transaction will not be prohibited merely because it is required to be disclosed or because it involves related parties. Pursuant to the policy, such transactions are presented to the Nominating and Corporate Governance Committee for evaluation and approval by the committee, or if the committee elects, by the full Board. If the transaction is determined to involve a related party, the Nominating and Corporate Governance Committee will either approve or disapprove the proposed transaction. Under the policy, in order to be approved, the proposed transaction must be on terms that are fair to the Company and are comparable to market rates, where applicable.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
2013 Overview
During 2013,In this section we describe the compensation program for our Named Executive Officers (NEOs). We also discuss our compensation philosophy, policies and the decisions made by the Compensation Committee of the Board in 2016 as it relates to the compensation of our NEOs.
Named Executive Officers for 2016
Name | Title |
Jonathan B. DeGaynor | President & Chief Executive Officer |
Robert R. Krakowiak | Chief Financial Officer and Treasurer |
George E. Strickler(1) | Executive Vice President |
Michael D. Sloan | Vice President and President of Control Devices |
Thomas A. Beaver | Vice President and President of Global Sales |
Peter Kruk | President of Electronics |
(1) Mr. Strickler also served as the Company's Chief Financial Officer and Treasurer from January 2006 until August 2016. |
2016 Overview
We performed as expected delivering a strong financial performance in 2016. Sales growth in our Control Devices segment exceeded our underlying markets as a result of successful product launches including our new shift-by-wire products as we continue executing on our long-term strategy to drive higher content per vehicle through system based solutions. We were also able to achieve an expansion of our gross margin and continued to improve our operational efficiency. Our PST segment performance improved as a result of cost reductions and operational improvements despite the continued challenging economic environment in Brazil.
The actions of the Compensation Committee (the “Committee”) and our pay-for-performance philosophy functioned such that compensation actually earned by our executives was aligned with our financial performance.performance for 2016. Highlights from the year and our 2013 performance are as follows:
· |
· | Our |
· | We |
· | Net sales increased by 7.9% primarily due to higher sales in our Control Devices segment from higher North American automotive market sales associated with the launch of our shift-by-wire product. This was offset by unfavorable foreign currency translation in our Electronics and PST segments, lower sales volume in our Electronics segment related to North American commercial vehicle products and lower product sales volume in our PST segment due to weakness in the Brazilian economy and automotive market. |
· | Income from continuing operations increased by $54.8 million compared to the prior year. This increase was primarily due to impact of the release of the valuation allowance associated with our U.S. federal, certain state and foreign deferred tax assets of $38.8 million. Excluding the impact of the valuation allowance release, income from continuing operations increased by $16.0 million due to higher sales in our Control Devices segment, a gross margin expansion and improved operational efficiency. |
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As a result:
· |
· | Our |
· | Our Electronics segment exceeded targets for all of their divisional financial metrics and earned 109.6% of target for their divisional portion of the AIP. |
· | Under our long-term incentive plan, our earnings per share |
Compensation Philosophy and Objectives
Our Company’s compensation programs for executive officers are designed to attract, retain, motivate, and reward talented executives who advance our strategic, operational and financial objectives and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
· |
· |
· |
We have a commitment to formulate the components of our compensation program under a pay-for-performance philosophy. A substantial portion of our executive officers’ annual and long-term compensation is tied to quantifiable measures of the Company’s financial performance, and therefore will not be earned if targetedunless at least the minimum threshold performance is not achieved, as demonstrated in the 2013 Overview, above.achieved.
We establishedElements of Compensation
Following are the various componentselements of our 2013executive compensation paymentsprogram and awards to meet ourthe objectives as follows:for including them.
Element | Type | Objective | ||||||||||
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| ||||||||||
Base | Cash - fixed | Attract and retain highly skilled executives by providing market competitive base salary that is aligned with the executive's responsibilities, experience & performance. | ||||||||||
Annual | Cash - variable | Motivate and reward the achievement of individual, division and/or corporate financial and operational strategic objectives. | ||||||||||
Equity and/or Cash - variable | Retain and reward key employees, and align the interests of employees with our shareholders and the long-term success of the Company. | |||||||||||
Benefits & Perquisites | Non-cash | Retain key employees by providing market competitive health, welfare & retirement benefits, and limited perquisites that align with our compensation philosophy. |
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Mix of Compensation
Our executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that closely correlate closely with the achievement of both shorter-termshort-term performance objectives and longer-termlong-term shareholder value. A large partsignificant portion of our executive officers’ annual and long-term performance-based compensation is at-risk. The portion of compensation at-risk, increases with the executivelevel of risk increasing with the officer’s position level. This provides more upside potential andas well as downside risk for more senior positions because these rolesthey have greater influence on our performance as a whole.overall performance.
Total Target Compensation
Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the annual and long-term incentive compensation payout levels based upon the applicable performance achievement and, for long-term awards, the price of our common shares. The following charts show the weighting of each element of total target compensation forIn 2016, the CEO recommended and the other Named Executive Officers (“NEO”). These charts demonstrate our pay-for-performance philosophy, as annual and long-term incentive compensation comprisesCommittee approved no increases to the majoritybase salaries of total target compensation.
Determination of Compensation
Based on the foregoing objectives, we have structured our executive officers’ compensation to provide competitive compensation to attract and retain executive officers, to motivate them to achieve our strategic goals and to reward the executive officers for achieving such goals. The Committee historically retains an independent compensation consultantwho report to assist the Committee. For 2013,CEO. Instead, increases were approved to the Committee retained Total Rewards Strategies LLC (“TRS”)AIP targets, resulting in 5% to assist the Committee10% higher targets. This was done in part to more closely align with the following: keeping it appraised about relevant trends and technical developments during its meetings;strategy of providing consulting advice regarding long-term incentive and change in control arrangements; providing peer group analysis; and providing market data for the CEO position and other executive officers. Additionally, recommendations and evaluations from the CEO are considered by the Committee when setting the compensationa significant portion of the other executive officers.
Our executive officers are eligibleofficers’ pay in the form of performance-based compensation. Comparison to receive two forms of annual cashthe comparator group (the “Comparator Group”) compensation – base salarylevels and an annual incentive award – which together constitute an executive officer’s total annual cash compensation. Please note that “total annual cash compensation,” as discussed in this Compensation Discussion and Analysis, differs from the “Total Compensation” column of the Summary Compensation Table on page 23, which includes long-term incentive, perquisites and other formsmix of compensation valued onwas also a basis consistent with financial statement reporting requirements. The levels of base salary and the annual incentive award for our executive officers are established annually under a program intended to maintain parity with the competitive market for executive officers in comparable positions. Our executive compensation levels are designed to be generally aligned with the 50th - 75thpercentile of competitive market levels (using our peer group) for each position.factor.
There is no pre-established policy or target for the allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews competitive market compensation information provided by our compensation consultant and considers the Company’s historical compensation practices in determining the appropriate level and mix of incentive compensation for each executive position.
Total Target Compensation
Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the annual and long-term incentive compensation payout levels based upon the applicable performance achievement and, for a significant percentage of long-term awards, the price of our common shares and total return to shareholders measured against peer group TSR. The following charts show the weighting of each element of total target compensation for the CEO, and average for the other NEOs.
These charts demonstrate our pay-for-performance philosophy, showing that annual and long-term incentive-based compensation comprises the majority of total target compensation.
Compensation BenchmarkingPolicies & Best Practices
To achieve the goals of aligning executive compensation with Company performance while maintaining strong corporate governance and minimizing risk, the Committee and the Company review and adopt policies and best practices that they believe are in the best interest of the Company and our shareholders. Following are some of the practices that have been adopted over time that we believe help us to achieve these goals.
· | Significant emphasis on performance-based compensation |
· | Use of an independent compensation consultant whose firm does no other work for the Company |
· | Annual benchmarking of compensation mix and levels for executive officers to ensure competitiveness |
· | Use of the Total Shareholder Return metric in the long-term incentive plan to align executive and shareholder interests |
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· | Include caps on both the annual incentive plan and the long-term incentive plan |
· | Provide limited perquisites to executive officers |
· | Maintain robust stock ownership guidelines for our executive officers and non-employee Directors |
· | Established anti-hedging and anti-pledging policies |
· | Recoupment of compensation (“clawback”) policy |
· | Implementation of an annual compensation risk assessment |
The Compensation Committee
The Committee has the responsibility for determining the compensation paid to the Company’s executive officers. In carrying out its responsibilities, among other things, the Committee does the following:
· | Ensures there is a clear, reasonable and logical linkage between executive officer compensation programs and overall Company performance |
· | Considers comparison to the Company’s established Comparator Group and the broader market to ensure appropriate mix and level of competitiveness of compensation |
· | Reviews and approves annual base salary levels, annual incentive plan targets, and long-term incentive plan targets, in alignment with the level and performance of each NEO as well as company performance and market conditions |
· | Reviews, advises on and approves new or revised compensation plans |
Independent Compensation Consultant
The Committee retains the services of an independent compensation consultant to assist the Committee with the following:
· | Appraising of relevant trends and compensation developments in the market |
· | Providing advice regarding issues such as long-term incentives and change in control arrangements and other topics as needed |
· | Providing Comparator Group analysis |
· | Providing market data for the CEO position and other executive officers |
In 2016, the Committee’s compensation consultant was Total Rewards Strategies, LLC (“TRS”).
Management
The Committee considers the recommendations and evaluations of the CEO when setting the compensation of the other executive officers.
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Comparator Group
The comparator group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. Factors used to select the comparator groupComparator Group of companies include, but are not limited to, industry segment, revenue, profitability, number of employees and market capitalization. The Committee reviews and approves the comparator groupComparator Group annually. The companies in the comparator group usedComparator Group in 2013 executive compensation decisions2016 were:
Altra | ||
OSI Systems | ||
Barnes Group | Gentex | Rogers |
Chart Industries | Gentherm | Shiloh Industries |
CIRCOR | Graco | Spartan Motors |
Standard Motor Products | ||
Commercial Vehicle Group | ||
CTS | ||
Dorman Products | Meritor | Wabash National |
In 2012, the median sales revenue for the comparator group was $949 million while our revenue was $939 million.Compensation Benchmarking
TRS provides the Committee with the 50thand 75th percentiles of the comparator group for base salary, cash bonus, long-term incentives and total overall compensation. The Committee uses as a primary reference point the 50th percentile when determining base salary, and annual incentive targets and the 75th percentile when determining long-term incentive targets; each element of pay is adjusted to reflect competitive market conditions. The goal of the executive compensation program is to providetarget overall compensation betweenat the 50th and 75th percentilespercentile of pay practices of the comparatorpeer group of companies. Actual target pay for an individual may be more or less than the referenced percentiles based on the Committee’s evaluation of the individual’s performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial goals are not achieved.
Consideration of Shareholder Advisory Vote on Executive Compensation
At our 20132016 Annual Meeting of Shareholders, our shareholders approved our compensation advisory resolution with 74%97% of the votes cast approvingon the 2012say-on-pay proposal voted for the proposal on the 2015 executive compensation described in our 20132016 Proxy Statement. The Committee believes the shareholders vote affirms the Company’s approach to executive compensation and decided not to materially alter our compensation policies and programs for 2013.compensation.
Elements of CompensationBase Salary
The elements of compensation of our executive officers for 2013 were the following:
Although all executive officers are eligible to participate in the same compensation and benefit programs, only Mr. Corey has compensation thatBase salary is governed by an employment agreement. The terms of Mr. Corey’s employment agreement are described under “Employment Agreements.”
Base Salaries
We use base salary as the foundation of our compensation program for our executive officers. The annual cash incentive compensation awards and long-term incentive awards are based on a percentage of base compensation. The base salary is set at competitive market levels to attract and retain our executive officers. Base salary levels for our executive officers are set on the basis of the executive’s responsibilities, the current general industry and competitive market data, as discussed above. In each case, due consideration is given to personal factors, such as the individual’s experience, competencies, performance and contributions, and to external factors, such as salaries paid to similarly situated executive officers by like-sized companies.companies and in particular our comparator group. The Committee considers the evaluation and recommendation of the CEO in determining the base salary of the other executive officers. The Committee generally approves all executive officer base salaries at its December meeting, which become effective January 1 of the following year. Executive officersofficers’ base salaries remain fixed throughout the year unless a promotion, or other change in responsibilities, occurs. The “Salary” columnor special circumstances occur.
Based on a review of base salaries relative to the comparator group and a desire to shift greater weight to performance-based compensation, the CEO recommended and the Committee approved that there would be no base salary increases in 2016 for the non-CEO executive officers of the Summary Compensation Table lists the NEO’s base salary for 2013.Company.
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Annual Incentive Awards
Our executive officers participate in our Annual Incentive Plan (“AIP”) which provides for annual cash payments based on the achievement of specific financial goals. As described above, the Company believes that a substantial portion of each executive’s overall compensation should be directly tied to quantifiable measures of financial performance. In February 2013,2016, the Committee approved the Company’s 20132016 AIP targets and metrics. The AIP targets are expressed as a percentage of the executive officer’s base salary.
For 2013,2016, the structure of our AIP included both consolidated financial performance metrics and, where appropriate, divisional or functional focused metrics to incentivize specific performance. In addition, in 2016 an individual performance metric was added for executive officers and other direct reports to the CEO as a way to incentivize and reward specific strategic and measurable activities that are particular to each executive officer’s area of responsibility. The individual metrics are considered critical to the achievement of the overall financial and operational metrics.
The AIP metrics, weighting, metric performance elements, weighting, target metrics,targets, and achievement for our NEOs for 2016 are summarized as follows:
Weight | Target Metric | Achievement | ||||||||
For Mr. Corey & Mr. Strickler: | ||||||||||
Consolidated Metrics including PST: | ||||||||||
Operating profit | 60 | % | $50.1 million | 0 | % | |||||
Free cash flow | 40 | % | $26.1 million | 0 | % | |||||
For Mr. Adante & Mr. Beaver: | ||||||||||
Consolidated Metrics excluding PST: | ||||||||||
Operating profit | 60 | % | $41.6 million | 0 | % | |||||
Free cash flow | 40 | % | $20.2 million | 102 | % | |||||
For Mr. Sloan: | ||||||||||
Consolidated Metrics excluding PST: | ||||||||||
Operating profit | 18 | % | $41.6 million | 0 | % | |||||
Free cash flow | 12 | % | $20.2 million | 102 | % | |||||
Divisional Metrics: | ||||||||||
Operating income | 42 | % | $31.7 million | 103 | % | |||||
Free cash flow | 28 | % | $19.0 million | 133 | % |
For Mr. DeGaynor | Weight | Metric Target | Achievement |
Consolidated Metrics: | |||
Operating Income | 60% | $44.2 million | 104% |
Free Cash Flow | 20% | $31.3 million | 130% |
Return on Invested Capital | 20% | 16.7% | 105% |
For Mr. Strickler, Mr. Krakowiak and Mr. Beaver: | Weight | Metric Target | Achievement |
Consolidated Metrics: | |||
Operating Income | 40% | $44.2 million | 104% |
Free Cash Flow | 20% | $31.3 million | 130% |
Return on Invested Capital | 20% | 16.7% | 105% |
Individual Performance | |||
Mr. Strickler | 20% | 100% | 125% |
Mr. Krakowiak | 20% | 100% | 100% |
Mr. Beaver | 20% | 100% | 100% |
For Mr. Sloan: | Weight | Metric Target | Achievement |
Consolidated Metrics: | |||
Operating Income | 30% | $44.2 million | 104% |
Free Cash Flow | 15% | $31.3 million | 130% |
Return on Invested Capital | 15% | 16.7% | 105% |
Individual Performance | 20% | 100% | 150% |
Divisional Metrics: | |||
Operating Income | 10% | $63.2 million | 98% |
Free Cash Flow | 5% | $37.8 million | 92% |
Return on Invested Capital | 5% | 44.4% | 98% |
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For Mr. Kruk: | Weight | Metric Target | Achievement |
Consolidated Metrics: | |||
Operating Income | 30% | $44.2 million | 104% |
Free Cash Flow | 15% | $31.3 million | 130% |
Return on Invested Capital | 15% | 16.7% | 105% |
Individual Performance | 20% | 100% | 75% |
Divisional Metrics: | |||
Operating Income | 10% | $18.5 million | 80% |
Free Cash Flow | 5% | $12.1 million | 120% |
Return on Invested Capital | 5% | 32.8% | 75% |
The consolidated and divisional financial performance target metricsmetric targets were based on our 20132016 business plan and were intended to be aggressivechallenging but achievable based on industry conditions known at the time they were established. Under the 20132016 AIP, the minimum level for achievement for the consolidated and divisional financial metrics was based on 80% of target while the maximum level was based on 130% of target.
The following table provides the 20132016 AIP targettargets and achievement as a percent of base salary and as a dollar amount and the dollar achievement for our NEOs:NEOs. In 2016, the AIP targets as a percent of base salary for Mr. Strickler, Mr. Beaver, Mr. Sloan and Mr. Kruk were increased. This was part of the overall strategy mentioned previously to hold base salary constant for 2016 while shifting a greater portion of total compensation to be more directly performance-based. This also more closely aligned the total cash compensation for this group with the peer group total cash compensation levels.
Target Percent of Base Salary | Target | Achieved | ||||||||||
John C. Corey | 95 | % | $ | 665,000 | $ | - | ||||||
George E. Strickler | 70 | % | 250,250 | - | ||||||||
Thomas A. Beaver | 50 | % | 150,000 | 61,200 | ||||||||
Richard P. Adante | 50 | % | 118,125 | - | ||||||||
Michael D. Sloan | 55 | % | 133,870 | 124,151 |
Executive Officer | Percent Salary | Percent of Base Salary | Target Bonus | Achieved Bonus | ||||||||||||
Jonathan B. DeGaynor | 100 | % | 131.0 | % | $ | 549,996 | $ | 720,720 | ||||||||
Robert R. Krakowiak(1) | 65 | % | 83.6 | % | 89,667 | 115,275 | ||||||||||
George E. Strickler | 75 | % | 100.2 | % | 288,075 | 384,753 | ||||||||||
Michael D. Sloan | 65 | % | 84.3 | % | 200,200 | 259,599 | ||||||||||
Thomas A. Beaver | 55 | % | 70.7 | % | 174,350 | 224,144 | ||||||||||
Peter Kruk(2) | 50 | % | 57.5 | % | 118,663 | 133,799 |
(1) | Mr. Krakowiak's 2016 AIP bonus is prorated to reflect his employment start date of August 29, 2016. |
(2) | Mr. Kruk is based in Sweden and is paid in Swedish Krona. For purposes of this proxy statement, his compensation has been converted to USD using the average of the foreign currency exchange rates on the last day of each month of the 2016 reporting year. |
For each performance metric, specific levels of achievement for minimum, target, and maximum were set as described above. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and at minimum, 50% payout is achieved. Below the minimum, target, no incentive compensation is earned.earned under the plan. Minimum achievement under the Operating Income metric is required for the other metrics to payout above their minimum levels. The AIP prorates incentive compensation payout earned between the minimum and maximum levels. At its discretion due to the underperformance of our Wiring segment, the Compensation Committee determined that no AIP would be paid to Mr. Adante.levels is prorated. The payment of compensation under the 20132016 plan was subject to our overall performance and is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
In addition to AIP, the Committee approved modest discretionary bonuses for the executive officers in recognition of their accomplishments in 2016 related to multiple special projects, such as the headquarters move from Warren, Ohio to Novi, Michigan, the resulting changes in staff, as well as successful acquisition activity. These discretionary bonuses are included in the “Bonus” column of the Summary Compensation Table.
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Long-Term Incentive Awards
We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. Under our Long-Term Incentive Plan (“LTIP”), all executive officers may be granted share options, restricted common shares and other equity-based awards. Under our Long-Term Cash Incentive Plan (“LTCIP”), all executive officers may be granted awards payable in cash. We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. The long-term awards are calculated based on the fair value of the shares, shares equivalent or cash at the time of grant. In 2013, all2016, we used the following long-term awards were granted under the LTIP.incentive vehicles to provide grants to our executive officers.
· | Share-Based Units (Units): Units provide strong retention value by granting the recipients the right to receive common shares (on a one-for-one basis for the number of units granted) after a three year vesting period, provided that the executive officer is still employed by the Company. |
· | Performance-Based Shares - Total Shareholder Return: These awards may vest based on our TSR over a three year period relative to the TSR of our 2016 peer group over the same period. The following table shows the payout levels associated with each quartile performance level. TSR below the 25th percentile of the peer group results in no payout. The maximum payout is 150% when performance meets or exceeds the 75th percentile. In between, the 25th and 75th percentiles, the awards are prorated. We believe the use of the TSR metric effectively aligns executive and shareholder interests. If vested, performance shares related to the TSR metric will be paid by the issuance on a one-for-one basis of common shares. |
Stoneridge TSR Versus Peer Group | Payout % of Target Award |
75th Percentile to 100th Percentile | 150% |
25th Percentile to 74th Percentile | 2.0 X Stoneridge Percentile Rank |
< 25th Percentile | 0% |
· | Performance Based Shares - Earnings Per Share: In 2016, we granted performance based shares that vest after three years based on performance relative to a pre-determined threshold, target and maximum cumulative EPS metric. Below the threshold, no payout will be earned. The maximum payout is 150% of target. The target cumulative EPS for 2016 was set using the Board-approved budget, with an additional 10% added for each of the next two years in the vesting period. The threshold is set at 70% of target and the maximum is set at 130%. Provided the executive officer remains employed, and depending on annual EPS performance, the number of performance shares vested prorates between minimum and maximum amounts. Actual EPS performance below the minimum level results in no vested performance shares for the annual performance period. If vested, performance shares related to the EPS metric will be paid by the issuance on a one-for-one basis of common shares. |
Threshold | Target | Maximum | |
Cumulative EPS | $2.85 | $4.07 | $5.29 |
The percentages are typically representativefollowing chart shows the allocation of the competitive market dataLTIP awards that were granted in 2016:
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The Committee determines the value of the annual grant to the executive officers by considering the comparison to our Comparative Group obtained during the annual compensation review process, described above. For 2013,as well as the Committee reaffirmed that in order to remain competitive in the overall compensation packages, the long-term incentive awards should approximate the 75th percentile of comparative market data. The expected awards are subject to adjustment based on differences in the scope of the executive officer’sexecutives’ responsibilities, performance and ability.potential contributions. The targeted value of 2016 LTIP grants were established as listed in the table below.
Long-term equity-based incentives are an important tool for retaining executive talent. For 2013, we granted to our executive officers time-based restricted common shares under the LTIP equal to the equivalent of 60% of the fair value calculation based on the 75th percentile of comparative market data. If the executive officer remains an employee at the end of the three year vesting period, the time-based restricted common shares will vest and no longer be subject to forfeiture on that date.
Executive Officer | Targeted Value 2016 Grant | Target as a Percent of Base Salary | ||||||
Jonathan B. DeGaynor | $ | 1,100,000 | 200 | % | ||||
Robert R. Krakowiak | 500,000 | 125 | % | |||||
George E. Strickler | 575,000 | 150 | % | |||||
Michael D. Sloan | 350,000 | 114 | % | |||||
Thomas A. Beaver | 325,000 | 103 | % | |||||
Peter Kruk | 275,000 | 111 | % |
The grant date fair value of the time-based restricted common sharesunits is included in the “Stock Awards” column of the Summary Compensation Table. TheTable, and the time-based restricted common sharesunits awarded in 20132016 are included in the “All Other Stock Awards” column of the Grants of Plan-Based Awards table.
Long-term equity-based incentives are also key to linking our executive officers’ overall compensation to shareholder return. For 2013, we granted performance-based restricted common share awards under the LTIP to our executive officers targeting approximately 20% The grant date fair value of the long-term incentive fair value calculation based onperformance shares awarded in 2016 is included in the 75th percentile of comparative market data. The awards are subject to forfeiture based on our total shareholder return (“TSR”) over a three year period, when compared to TSR for a Peer Group of companies over the same period. If our TSR is equal to the 50th percentile“Stock Awards” column of the Peer Group TSRSummary Compensation Table. The performance the target number of common shares will vest and no longer be subject to forfeiture. If our TSR is less than the 25th percentile (minimum) of the Peer Group TSR performance, all common shares will be forfeited and if our TSR is equal to the 75th percentile (maximum) or greater of the Peer Group TSR performance, all common shares will vest and no longer be subject to forfeiture. Provided the executive officer remains employed, and depending on TSR performance, the number of common shares no longer subject to forfeiture prorates between the 25th and 75th percentile. The 2013 Peer Group for TSR is comprised of a subset of companies from the executive compensation comparator group and is comprised of the following companies:
In 2013 we also granted performance-based awards under our LTCIP to our executive officers targeting approximately 20% of the long-term incentive fair value calculation based on the 75th percentile of comparative market data. The awards are payable in cash equivalent to the number of shares earned at the fair market value of our common shares on the date of vesting (“Phantom Shares”). The awards are subject to forfeiture based on our actual annual earnings per share (“EPS”) over three annual performance periods, when compared to minimum, target and maximum annual EPS amounts over the same period. For the 2013 grants, the annual performance period target EPS was or will be set using our Board approved annual budget at the first regular meeting of each year in the performance period. Minimum EPS is generally established at 70% of target and maximum EPS is generally established at 130% of target for each annual performance period. The annual EPS metric for the 2013 performance period was established at a target of $0.94. The metrics are intended to be aggressive but achievable based on industry conditions known at the time they are established. Provided the executive officer remains employed, and depending on annual EPS performance, the number of Phantom Shares no longer subject to forfeiture prorates between minimum and maximum amounts. Actual EPS performance below the minimum level results in no earned Phantom Shares for the annual performance period. For the 2013 annual performance period, achievement was below the minimum level. The performance-based restricted common shares and Phantom Shares awarded in 20132016 are included in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table.
The Committee’s practice has been to approve the long-term incentive awards at the first regular meeting of the calendar year. Awards in 2013 were granted at the February 2013 meeting, the first regularly scheduled meeting. As a general practice, awards under the long-term incentive plans are approved once a year unless a situation arises whereby a compensation package is approved for a newly hired or promoted executive officer and equity-based compensation is a component. Mr. Krakowiak was hired on August 29, 2016 and was awarded shares that day in the same proportion of time-based and performance shares as the other 2016 grants and with a three-year vesting period.
2014 Grant of Performance Based Shares
The performance period for the performance shares that were granted in 2014 ended on December 31, 2016. The shares vested on March 25, 2017, as shown below. These shares are included for each NEO in the “Outstanding Equity Awards at Year-End” table.
2014 LTIP Grant - Performance Period Results | |||||
Award Type & Metric | Grant Date | Vest Date | Allocation of Shares | Performance Results (2014-2016) | Payout |
Time-Based RSU | 3/25/2014 | 3/25/2017 | 50% | n/a | 100% |
Performance Shares - EPS | 3/25/2014 | 3/25/2017 | 40% | 108.4% of Performance Target | 114% of target |
Performance Shares - TSR | 3/25/2014 | 3/25/2017 | 10% | 84th %ile of Peer Group, 150% of target | 150% of target |
The TSR peer group for the 2014 grant consisted of the following companies. Accuride was acquired during the performance period and therefore was excluded from the final calculation.
Accuride | American Axle & Manufacturing | Commercial Vehicle Group |
CTS | EnPro Industries | Esterline Technologies |
Gentex | Graco | Littelfuse |
Meritor, Inc. | Modine Manufacturing | Standard Motor Products |
Superior Industries International | Titan International |
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Perquisites
We provide executive officers with perquisites that we and the Committee believe are reasonable and consistent with itsthe overall compensation program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites provided to executive officers.
Perquisites that are provided to executive officers are different by individual and could include an auto allowance, fully paid premiums for healthcare coverage,spousal travel and country club dues. The incremental costs of the perquisites listed above for the NEOs are included in the “All Other Compensation” column of the Summary Compensation Table.
Employment Agreements
We use employment agreements in limited situations. In 2006,2015, we entered into a negotiated employment agreement with Mr. Corey that providedDeGaynor which remains in effect. This agreement provides for a minimum base salary of $525,000,$500,000; participation in the annual incentive plan at a minimum target of 70%100% of base salary; a monthly car allowance; reimbursement of country club dues and a one-time initiation fee; reimbursement of Mr. Corey’s premium on his life insurance policy;auto allowance, participation in the Company’s customary benefit plans and reimbursement of out-of-pocket healthcare expenses not to exceed $5,000 per covered family member onincluding an annual basis.executive physical; and participation in the long-term incentive plan. In addition, if Mr. CoreyDeGaynor is terminated by the Company without cause, the Companywe will be obligated to providepay him the sum of his annual base salary and target annual incentive as severancewell as health and welfare benefits for one year.
Mr. Kruk has an employment contact that was implemented when he joined the sameCompany in 2009 and which is typical for employees in Sweden. The contract provides for compensation and benefits described below under “Potential Change in Controlalignment with general Company practices. Additionally, it requires the Company to provide a 6 month notice period to terminate Mr. Kruk’s employment for any reason other than breach of contract. During the 6 month period, we would be obligated to pay Mr. Kruk’s salary and Other Post-Employment Payments.”benefits. In addition, he would be entitled to a severance payment in the amount of one year’s salary.
The Company has not entered into an employment agreement with any other NEO.
Severance Plan
We adopted thehave an Officers’ and Key Employees’ Severance Plan (the “Severance Plan”) in October 2009.. The NEOs covered under the Severance Plan include Mr. Strickler, Mr. Beaver, Mr. Sloan and Mr. Adante.Krakowiak. If a covered executive is terminated by us without cause, we will be obligated under the Severance Plan to pay the executive’s salary for 12 months (18 months in the case of the Chief Financial Officer, Mr. Strickler) and continue health and welfare benefits coverage over the same period of time. Mr. Corey’sDeGaynor’s severance protection is provided in his employment agreement as described below under “Potential Changeabove. Mr. Kruk’s severance protection is provided in Control and Other Post-Employment Payments.”his employment contract as described above.
Termination and Change in Control Payments
We have entered into change in control agreements with Mr. Corey,DeGaynor, Mr. Krakowiak, Mr. Strickler, Mr. Sloan, Mr. Beaver, Mr. Sloan, Mr. AdanteKruk and certain other senior management employees. These agreements are designed to promote stability and continuity of senior management, both of which are in the best interest of Stoneridge and our shareholders. Our termination and change in control provisions for the NEOs are summarized below under “Potential Change in Control and Other Post-Employment Payments.”
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (“the Code”) generally disallows a tax deduction to public companies for compensation in excess of $1.0 million that is paid to a company’sCompany’s CEO and the other NEOs.NEOs excluding the CFO. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met.
The Committee believes that it is generally in our best interest to attempt to structure performance-based compensation, including performance share award grants and annual incentive awards, to NEOs whose compensation may be subject to Section 162(m) of the Code in a manner that satisfies the statute’s requirements. Currently, all performance-based compensation is designed to be deductible under Section 162(m) of the Code; however, in the future, the Committee may determine that it is appropriate to pay performance-based compensation, which is not deductible.
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Accounting Treatment of Compensation
As one of many factors, the Committee considers the financial impact in determining the amount of and allocation of the different pay elements, including FASBFinancial Accounting Standards Board (“FASB”) ASC Topic 718 Stock Compensation.
Share Ownership Guidelines
In February 2013, theThe Committee approvedhas established share ownership guidelines for our executive officers to enhance the linkage between the interests of our executive officers and those of our shareholders. These guidelines provide that the CEO, CFO and other executive officers must retain Company common shares equal in market value to five, four and three times, respectively, of their annual base salaries. The executive officers have a five year accumulation period from implementation, hire, or promotion to achieve compliance and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached.
Clawback Policy
The Company adopted a clawback policy which provides for recoupment of performance-based executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under federal securities laws. The policy applies to current and former executives and requires reimbursement or forfeiture of any excess performance-based compensation received by an executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement.
Compensation Risk Assessment
The Compensation Committee reviews the Company’s incentive compensation structure practices for all employees to evaluate any risks associated with the Company’s compensation programs.
As part of the evaluation, the Compensation Committee reviews a compensation risk assessment that was prepared by Company management and its independent compensation consultant. The compensation risk assessment analyzed all Company compensation programs for various categories of compensation related risk.
The Compensation Committee considered, among other factors, the design of the incentive compensation programs, which are closely aligned to corporate performance, the mix of short term and long term compensation, the maximum payout levels for short term and long term incentives, the distribution of compensation between equity and cash, and other factors that mitigate risk.
The Compensation Committee determined that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
We have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
The Compensation Committee | |
Kim Korth, Chairwoman | |
Jeffrey P. Draime | |
Douglas C. Jacobs | |
William M. Lasky |
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The following table provides information regarding the compensation of our Chief Executive Officer, our Chief Financial Officer,Officers, and our three most highly compensated executive officers for 2013.2016.
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
John C. Corey | 2013 | $ | 700,000 | $ | 2,119,624 | $ | - | $ | 114,247 | $ | 2,933,871 | |||||||||||||
President & Chief Executive | 2012 | 700,000 | 1,615,216 | 156,757 | 90,164 | 2,562,137 | ||||||||||||||||||
Officer | 2011 | 700,000 | 2,088,904 | - | 74,949 | 2,863,853 | ||||||||||||||||||
George E. Strickler | 2013 | 357,500 | 663,366 | - | 37,710 | 1,058,576 | ||||||||||||||||||
Executive Vice President, | 2012 | 357,500 | 497,982 | 57,820 | 32,260 | 945,562 | ||||||||||||||||||
Chief Financial Officer & Treasurer | 2011 | 357,500 | 774,916 | - | 31,801 | 1,164,217 | ||||||||||||||||||
Thomas A. Beaver | 2013 | 300,000 | 402,490 | 61,200 | 29,299 | 792,989 | ||||||||||||||||||
Vice President & President | 2012 | 287,000 | 359,094 | 111,094 | 27,287 | 784,475 | ||||||||||||||||||
of Global Sales | 2011 | 287,000 | 343,764 | 77,490 | 25,314 | 733,568 | ||||||||||||||||||
Michael D. Sloan | 2013 | 243,400 | 285,660 | 124,151 | 9,210 | 662,421 | ||||||||||||||||||
Vice President & President | 2012 | 234,000 | 257,200 | 20,378 | 11,469 | 523,047 | ||||||||||||||||||
of the Control Devices Division | 2011 | 234,000 | 277,959 | - | 10,219 | 522,178 | ||||||||||||||||||
Richard P. Adante(4) | 2013 | 236,250 | 412,012 | - | 13,589 | 661,851 | ||||||||||||||||||
Vice President of Operations | 2012 | 225,000 | 334,360 | 41,176 | 8,909 | 609,445 | ||||||||||||||||||
2011 | 140,788 | - | - | 2,655 | 143,443 |
Name and Principal | Stock | Non-Equity Incentive | All Other | |||||||||||||||||||||||
Position | Year | Salary ($) | Bonus ($) | (1) | Awards ($) | (2) | Compensation ($) | (3) | Compensation ($) | (4) | Total ($) | |||||||||||||||
Jonathan B. DeGaynor | 2016 | $ | 550,000 | $ | - | $ | 1,095,793 | $ | 720,720 | $ | 25,864 | $ | 2,392,377 | |||||||||||||
President & Chief Executive | 2015 | 378,846 | 1,732,934 | 371,144 | 16,828 | 2,499,752 | ||||||||||||||||||||
Officer | ||||||||||||||||||||||||||
Robert R. Krakowiak | 2016 | 137,949 | 2,500 | 509,626 | 115,275 | 1,450 | 766,799 | |||||||||||||||||||
Chief Financial Officer & Treasurer | ||||||||||||||||||||||||||
George E. Strickler | 2016 | 384,100 | 10,000 | 572,860 | 384,753 | 29,301 | 1,381,015 | |||||||||||||||||||
Executive Vice President(5) | 2015 | 384,100 | 588,120 | 263,404 | 22,777 | 1,258,401 | ||||||||||||||||||||
2014 | 374,700 | 639,960 | 209,832 | 32,168 | 1,256,660 | |||||||||||||||||||||
Michael D. Sloan | 2016 | 308,000 | 20,000 | 348,578 | 259,599 | 6,908 | 943,085 | |||||||||||||||||||
Vice President & President of | 2015 | 308,000 | 346,086 | 258,980 | 4,389 | 917,455 | ||||||||||||||||||||
Control Devices | 2014 | 297,500 | 363,183 | 147,028 | 6,887 | 814,598 | ||||||||||||||||||||
Thomas A. Beaver | 2016 | 317,000 | 5,000 | 323,745 | 224,144 | 26,975 | 896,865 | |||||||||||||||||||
Vice President & President of | 2015 | 317,000 | 321,204 | 155,278 | 23,265 | 816,747 | ||||||||||||||||||||
Global Sales | 2014 | 309,200 | 497,494 | 123,680 | 24,720 | 955,094 | ||||||||||||||||||||
Peter Kruk(6) | 2016 | 237,326 | 814 | 273,817 | 133,799 | 95,174 | 740,930 | |||||||||||||||||||
President of Electronics | 2015 | 237,326 | 301,863 | 38,334 | 13,649 | 591,172 | ||||||||||||||||||||
2014 | 232,672 | 359,688 | 72,594 | 12,977 | 677,930 |
(1) | The amount shown for each NEO in the “Bonus” column is attributable to a discretionary bonus awarded for 2016 performance. |
(2) | The amounts included in the “Stock Awards” column represent the grant date fair value of restricted common share, phantom share, share units and |
The amount shown for each NEO in the “Non-Equity Incentive Plan Compensation” column is attributable to an annual incentive award earned under the AIP in the fiscal year listed. |
The amounts shown for |
Auto Allowance | 401(k) Match | Group Term Life Insurance | Club Dues | Health Insurance Premium | Life Insurance Including Gross-up | Healthcare Costs Including Gross-up | Relocation Including Gross-up | Total | ||||||||||||||||||||||||||||
Mr. Corey | $ | 14,400 | $ | 7,650 | $ | 14,478 | $ | - | $ | 2,120 | $ | 22,436 | $ | 13,617 | $ | 39,546 | $ | 114,247 | ||||||||||||||||||
Mr. Strickler | 9,000 | 7,650 | 10,135 | 5,000 | 5,925 | - | - | - | 37,710 | |||||||||||||||||||||||||||
Mr. Beaver | 14,400 | 7,650 | 4,356 | - | 2,893 | - | - | - | 29,299 | |||||||||||||||||||||||||||
Mr. Sloan | - | 5,458 | 1,632 | - | 2,120 | - | - | - | 9,210 | |||||||||||||||||||||||||||
Mr. Adante | - | 7,142 | 6,447 | - | - | - | - | - | 13,589 |
Group | ||||||||||||||||||||||||
Auto | 401(k) | Term | Country | Spousal | Wellness | Retirement | ||||||||||||||||||
Executive Officer | Allowance | Match | Life Ins | Club | Travel | Incentive | Other | Total | ||||||||||||||||
Jonathan B. DeGaynor | 14,400 | 7,950 | 2,622 | 367 | 525 | 25,864 | ||||||||||||||||||
Robert R. Krakowiak | 1,000 | 450 | 1,450 | |||||||||||||||||||||
George E. Strickler | 9,000 | 7,950 | 6,858 | 5,000 | 493 | 29,301 | ||||||||||||||||||
Michael D. Sloan | 1,925 | 4,483 | 501 | 6,908 | ||||||||||||||||||||
Thomas A. Beaver | 14,400 | 7,950 | 4,625 | 26,975 | ||||||||||||||||||||
Peter Kruk | 15,975 | 79,199* | 95,174 |
*A required contribution to Mr. Kruk’s defined contribution retirement plan. The terms of the retirement plan are established by a collective bargaining agreement, which covers all Company employees in Sweden. The Company contributes 30% of Mr. Kruk’s total cash earnings on an annual basis.
28 |
Mr. |
(6) | Mr. Kruk is based in Sweden and is paid in Swedish Krona. For purposes of this proxy statement, his compensation, unless otherwise stated, has been converted to U.S. dollars using the average of the twelve foreign currency exchange rates on the last day of each month of each reporting year. |
Grants of Plan-Based Awards in 2016
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) (3) | All Other Stock Awards: Number of Shares of | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock or Units(#)(4) | Awards ($)(5) | |||||||||||||||||||||||||
John C. Corey | $ | 332,500 | $ | 665,000 | $ | 1,330,000 | ||||||||||||||||||||||||||||
2/4/13 | 33,400 | 66,800 | 100,200 | 200,300 | $ | 1,713,480 | ||||||||||||||||||||||||||||
2/4/13 | 33,400 | 66,800 | 100,200 | 406,144 | ||||||||||||||||||||||||||||||
George E. Strickler | 125,125 | 250,250 | 500,500 | |||||||||||||||||||||||||||||||
2/4/13 | 10,450 | 20,900 | 31,350 | 62,700 | 536,294 | |||||||||||||||||||||||||||||
2/4/13 | 10,450 | 20,900 | 31,350 | 127,072 | ||||||||||||||||||||||||||||||
Thomas A. Beaver | 75,000 | 150,000 | 300,000 | |||||||||||||||||||||||||||||||
2/4/13 | 6,350 | 12,700 | 19,050 | 38,000 | 325,274 | |||||||||||||||||||||||||||||
2/4/13 | 6,350 | 12,700 | 19,050 | 77,216 | ||||||||||||||||||||||||||||||
Michael D. Sloan | 66,935 | 133,870 | 267,740 | |||||||||||||||||||||||||||||||
2/4/13 | 4,500 | 9,000 | 13,500 | 27,000 | 230,940 | |||||||||||||||||||||||||||||
2/4/13 | 4,500 | 9,000 | 13,500 | 54,720 | ||||||||||||||||||||||||||||||
Richard P. Adante | 59,063 | 118,125 | 236,250 | |||||||||||||||||||||||||||||||
2/4/13 | 6,500 | 13,000 | 19,500 | 38,900 | 332,972 | |||||||||||||||||||||||||||||
2/4/13 | 6,500 | 13,000 | 19,500 | 79,040 |
___________________
Executive Officer | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or | Grant Date Fair Value of Stock and Option | ||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Awards | ||||||||||||||||||
($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | ($)(4) | ||||||||||||||||||
Jonathan B. DeGaynor | $ | 274,998 | $ | 549,996 | $ | 1,099,991 | |||||||||||||||||||
3/4/2016 | 22,935 | 45,870 | 68,805 | 37,530 | $ | 1,095,793 | |||||||||||||||||||
Robert R. Krakowiak | 44,833 | 89,667 | 179,333 | ||||||||||||||||||||||
8/29/2016 | 7,742 | 15,484 | 23,226 | 12,669 | 509,626 | ||||||||||||||||||||
George E. Strickler | 144,037 | 288,075 | 576,150 | ||||||||||||||||||||||
3/4/2016 | 11,990 | 23,980 | 35,970 | 19,620 | 572,860 | ||||||||||||||||||||
Michael D. Sloan | 100,100 | 200,200 | 400,400 | ||||||||||||||||||||||
3/4/2016 | 7,295 | 14,590 | 21,885 | 11,940 | 348,578 | ||||||||||||||||||||
Thomas A. Beaver | 87,175 | 174,350 | 348,700 | ||||||||||||||||||||||
3/4/2016 | 6,775 | 13,550 | 20,325 | 11,090 | 323,745 | ||||||||||||||||||||
Peter Kruk | 59,332 | 118,663 | 237,326 | ||||||||||||||||||||||
3/4/2016 | 5,730 | 11,460 | 17,190 | 9,380 | 273,817 |
(1) | The amounts shown reflect awards granted under our |
(2) | The amounts shown reflect grants of |
(3) | The amounts shown reflect grants of |
The amounts included in “Fair Value of Awards” column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see |
29 |
Outstanding Equity Awards at Year-End
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Incentive | Equity | |||||||||||||||||||||||||||
Plan | Incentive | |||||||||||||||||||||||||||
Awards: | Plan Awards: | |||||||||||||||||||||||||||
Number of | Market or | |||||||||||||||||||||||||||
Number | Market | Unearned | Payout Value | |||||||||||||||||||||||||
Number of | of Shares | Value of | Shares, | of Unearned | ||||||||||||||||||||||||
Securities | or Units | Shares or | Units | Shares, Units | ||||||||||||||||||||||||
Underlying | of Stock | Units of | or Other | or Other | ||||||||||||||||||||||||
Unexercised | Option | Option | That | Stock That | Rights That | Rights That | ||||||||||||||||||||||
Options | Exercise | Expiration | Have Not | Have Not | Have Not | Have Not | ||||||||||||||||||||||
Name | Exercisable (#) | Price ($) | Date | Vested (#) | Vested ($)(1) | Vested (#) | Vested ($)(1) | |||||||||||||||||||||
John C. Corey | 10,000 | $ | 15.725 | 5/10/2014 | 74,400 | (2) | $ | 948,600 | 74,400 | (5) | $ | 948,600 | ||||||||||||||||
94,200 | (3) | 1,201,050 | 94,200 | (6) | 1,201,050 | |||||||||||||||||||||||
200,300 | (4) | 2,553,825 | 100,200 | (7) | 1,277,550 | |||||||||||||||||||||||
100,200 | (8) | 1,277,550 | ||||||||||||||||||||||||||
George E. Strickler | - | - | - | 27,600 | (2) | 351,900 | 27,600 | (5) | 351,900 | |||||||||||||||||||
29,000 | (3) | 369,750 | 29,100 | (6) | 371,025 | |||||||||||||||||||||||
62,700 | (4) | 799,425 | 31,350 | (7) | 399,713 | |||||||||||||||||||||||
31,350 | (8) | 399,713 | ||||||||||||||||||||||||||
Thomas A. Beaver | - | - | - | 12,200 | (2) | 155,550 | 12,300 | (5) | 156,825 | |||||||||||||||||||
20,900 | (3) | 266,475 | 21,000 | (6) | 267,750 | |||||||||||||||||||||||
38,000 | (4) | 484,500 | 19,050 | (7) | 242,888 | |||||||||||||||||||||||
19,050 | (8) | 242,888 | ||||||||||||||||||||||||||
Michael D. Sloan | - | - | - | 9,900 | (2) | 126,225 | 9,900 | (5) | 126,225 | |||||||||||||||||||
15,000 | (3) | 191,250 | 15,000 | (6) | 191,250 | |||||||||||||||||||||||
27,000 | (4) | 344,250 | 13,500 | (7) | 172,125 | |||||||||||||||||||||||
13,500 | (8) | 172,125 | ||||||||||||||||||||||||||
Richard P. Adante | - | - | - | 19,500 | (3) | 248,625 | 19,500 | (6) | 248,625 | |||||||||||||||||||
38,900 | (4) | 495,975 | 19,500 | (7) | 248,625 | |||||||||||||||||||||||
19,500 | (8) | 248,625 |
___________________
STOCK AWARDS | |||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||
Jonathan B. DeGaynor | 29,500 | (3) | $ | 521,855 | 119,640 | (8) | $ | 2,116,432 | |
43,710 | (4) | 773,230 | 43,785 | (9) | 774,557 | ||||
37,530 | (5) | 663,906 | |||||||
Robert R. Krakowiak | 12,669 | (6) | 224,115 | 14,780 | (10) | 261,458 | |||
George E. Strickler | 27,400 | (2) | 484,706 | 33,172 | (7) | 586,813 | |||
23,400 | (3) | 413,946 | 42,900 | (8) | 758,901 | ||||
19,620 | (5) | 347,078 | 22,890 | (9) | 404,924 | ||||
Michael D. Sloan | 15,600 | (2) | 275,964 | 18,761 | (7) | 331,882 | |||
13,770 | (3) | 243,591 | 25,245 | (8) | 446,584 | ||||
11,940 | (5) | 211,219 | 13,925 | (9) | 246,333 | ||||
Thomas A. Beaver | 21,300 | (2) | 376,797 | 25,796 | (7) | 456,331 | |||
12,780 | (3) | 226,078 | 23,430 | (8) | 414,477 | ||||
11,090 | (5) | 196,182 | 12,935 | (9) | 228,820 | ||||
Peter Kruk | 15,400 | (2) | 272,426 | 18,647 | (7) | 329,865 | |||
12,010 | (3) | 212,457 | 22,020 | (8) | 389,534 | ||||
9,380 | (5) | 165,932 | 10,940 | (9) | 193,529 | ||||
(1) |
(2) | These time-based |
(3) | These time-based |
(4) | These time-based |
(5) | These |
(6) | These time-based share units vest on August 29, 2019. |
(7) | These performance shares |
(8) | These performance shares are scheduled to vest on |
30 |
These |
These |
Option Exercises and Stock
Shares Vested in 2016
Stock Awards(1) | ||||||||
Number of Shares | Value Realized | |||||||
Name | Acquired on Vesting (#) | on Vesting ($) | ||||||
John C. Corey | 121,600 | $ | 784,928 | |||||
George E. Strickler | 40,600 | 262,073 | ||||||
Thomas A. Beaver | 22,400 | 144,592 | ||||||
Michael D. Sloan | 15,600 | 100,698 | ||||||
Richard P. Adante | - | - |
___________________
Stock Awards(1) | ||||||
Executive Officer | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||
Jonathan B. DeGaynor | - | $ | - | |||
Robert R. Krakowiak | - | - | ||||
George E. Strickler | 108,561 | 1,201,410 | ||||
Michael D. Sloan | 46,749 | 517,356 | ||||
Thomas A. Beaver | 65,867 | 728,930 | ||||
Peter Kruk | 9,249 | 102,356 |
(1) | The number of shares includes |
31 |
Potential Change in Control and Other Post-Employment Payments
In December 2011, weWe have entered into a 2011 Amended and Restated Change in Control Agreement (the “CIC Agreement”), eliminating the with certain executive officers. There is no excise tax gross-up payment with certain NEOs and certain other senior management employees.under the CIC Agreements. Our change in control agreements were designed to provide for continuity of management in the event of change in control of the Company. We think it is important for our executives to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe our arrangements are consistent with market practice. For our NEOs covered under a CIC Agreement we set the level of benefits, as described below, to remain competitive with our select peer group. All payments under the CIC Agreement are conditioned on a non-compete, non-solicitation and non-disparagement agreement. The CIC Agreements replaced and superseded change in control agreements we previously entered into with these employees.
We believe that the CIC Agreements should compensate executives displaced by a change in control and not serve as an incentive to increase personal wealth. Therefore, our CIC Agreements are “double trigger” arrangements. In order for the executives to receive the payments and benefits set forth in the agreement, both of the following must occur:
· | a change in control of the Company; and |
· | a triggering event: |
· | the Company separates NEO from service, other than in the case of a termination for cause, within two years of the change in control; or |
· | NEO separates from service for good reason (defined as material reduction in NEO’s title, responsibilities, power or authority, or assignment of duties that are materially inconsistent to previous duties, or material reduction in NEO’s compensation and benefits, or require NEO to work from any location more than 100 miles from previous location) within two years of the change in control. |
In March 2015, we entered into a Change in Control Agreement with Mr. DeGaynor as part of his employment agreement. The terms of this Change in Control Agreement are substantially similar to that described above. If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to our CEO and CFO:Mr. DeGaynor:
· |
· |
· | an amount equal to the pro rata amount of annual incentive compensation |
· | continued life and health insurance benefits for twenty-four months following termination. |
If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. Beaver,Strickler:
· | three times the greater of Mr. Strickler’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; |
· | three times the greater of Mr. Strickler’s maximum annual incentive compensation he would have been entitled to at the time of a triggering event or at the occurrence of a change in control, in each case based upon the assumption that personal and Company targets or performance goals were achieved in that year at the maximum level; |
· | an amount equal to the pro rata amount of annual incentive compensation Mr. Strickler would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and, |
· | continued life and health insurance benefits for twenty-four months following termination. |
32 |
If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. SloanKrakowiak , Mr. Beaver and Mr. Adante:Sloan:
· | two times the greater of the NEO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; |
· | two times the greater of the NEO’s average annual incentive award over the last three completed fiscal years or the last five completed fiscal years; |
· | an amount equal to the pro rata amount of annual incentive compensation the NEO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and |
· | continued life and health insurance benefits for twenty-four months following termination. |
Upon a change in control as defined in our LTIP,by the Amended and Restated Long-Term Incentive Plan (“2006 LTIP”), restricted common shares included on the “Outstanding Equity Awards at Year-End” tableand performance-based restricted shares granted under that are not performance-basedplan vest immediately and are no longer subject to forfeiture;forfeiture. Upon a change in control as defined by the 2016 LTIP, restricted shares and performance-based restricted common shares and phantom shares included on the “Outstanding Equity Awards at Year End” table vest and are no longergranted under that plan remain subject to forfeiture based on target achievement levels.under the original terms of the grant unless a triggering event, as described above, occurs within two years of the effective date of the change in control.
In October 2009, we adopted the Officers’ and Key Employees’We have a Severance Plan (the “Severance Plan”).Plan. The NEOs covered under the Severance Plan include Mr. Strickler, Mr. Beaver,Krakowiak, Mr. SloanBeaver and Mr. Adante.Sloan. If we terminate a covered executive without cause, we will be obligated under the Severance Plan to pay the executive’s salary for 12 monthsone year (18 months in the case of the Chief Financial Officer, Mr. Strickler) and continue health and welfare benefits coverage over the same period of time. Mr. Corey’sDeGaynor’s severance protection is provided in his employment agreement as described above.
No severance is payable if the NEO’s employment is terminated for “cause,” if they resign, or upon death.
33 |
Value of Payment Presuming Hypothetical December 31, 20132016 Termination Date
Upon resignation, no payments are due to any NEO in the table below. Assuming the events described in the table below occurred on December 31, 2013,2016, each NEO would be eligible for the following payments and benefits:
Change in | ||||||||||||||||||||
Control and | ||||||||||||||||||||
NEO Resigns | ||||||||||||||||||||
Non- | for Good | |||||||||||||||||||
Termination | Reason or is | |||||||||||||||||||
Termination | Change in | Terminated | ||||||||||||||||||
Without Cause | Control | Without Cause | Disability | Death | ||||||||||||||||
John C. Corey | ||||||||||||||||||||
Base Salary | $ | 1,400,000 | $ | - | $ | 2,100,000 | $ | 175,000 | $ | - | ||||||||||
Annual Incentive Award | - | - | 3,990,000 | - | - | |||||||||||||||
Unvested and Accelerated Restricted Common Shares | 2,440,057 | 4,703,475 | 4,703,475 | 2,440,057 | 2,440,057 | |||||||||||||||
Unvested and Accelerated Performance Restricted Common and Phantom Shares | 1,626,952 | 3,136,500 | 3,136,500 | 1,073,717 | 1,073,717 | |||||||||||||||
Health & Welfare Benefits | 66,835 | - | 66,835 | - | - | |||||||||||||||
Total | $ | 5,533,844 | $ | 7,839,975 | $ | 13,996,810 | $ | 3,688,774 | $ | 3,513,774 | ||||||||||
George E. Strickler | ||||||||||||||||||||
Base Salary | $ | 536,250 | $ | - | $ | 1,072,500 | $ | - | $ | - | ||||||||||
Annual Incentive Award | - | - | 1,501,500 | - | - | |||||||||||||||
Unvested and Accelerated Restricted Common Shares | 812,596 | 1,521,075 | 1,521,075 | 812,596 | 812,596 | |||||||||||||||
Unvested and Accelerated Performance Restricted Common and Phantom Shares | 542,233 | 1,014,900 | 1,014,900 | 352,539 | 352,539 | |||||||||||||||
Health & Welfare Benefits | 24,288 | - | 32,384 | - | - | |||||||||||||||
Total | $ | 1,915,367 | $ | 2,535,975 | $ | 5,142,359 | $ | 1,165,135 | $ | 1,165,135 | ||||||||||
Thomas A. Beaver | ||||||||||||||||||||
Base Salary | $ | 300,000 | $ | - | $ | 600,000 | $ | - | $ | - | ||||||||||
Annual Incentive Award | - | - | 220,946 | - | - | |||||||||||||||
Unvested and Accelerated Restricted Common Shares | 463,641 | 906,525 | 906,525 | 463,641 | 463,641 | |||||||||||||||
Unvested and Accelerated Performance Restricted Common and Phantom Shares | 310,699 | 606,900 | 606,900 | 204,823 | 204,823 | |||||||||||||||
Health & Welfare Benefits | 8,403 | - | 16,805 | - | - | |||||||||||||||
Total | $ | 1,082,743 | $ | 1,513,425 | $ | 2,351,176 | $ | 668,464 | $ | 668,464 | ||||||||||
Michael D. Sloan | ||||||||||||||||||||
Base Salary | $ | 243,400 | $ | - | $ | 486,800 | $ | - | $ | - | ||||||||||
Annual Incentive Award | - | - | 153,464 | - | - | |||||||||||||||
Unvested and Accelerated Restricted Common Shares | 345,678 | 661,725 | 661,725 | 345,678 | 345,678 | |||||||||||||||
Unvested and Accelerated Performance Restricted Common and Phantom Shares | 230,444 | 441,150 | 441,150 | 150,284 | 150,284 | |||||||||||||||
Health & Welfare Benefits | 18,351 | - | 35,745 | - | - | |||||||||||||||
Total | $ | 837,873 | $ | 1,102,875 | $ | 1,778,884 | $ | 495,962 | $ | 495,962 | ||||||||||
Richard P. Adante | ||||||||||||||||||||
Base Salary | $ | 236,250 | $ | - | $ | 274,500 | $ | - | $ | - | ||||||||||
Annual Incentive Award | - | - | 82,352 | - | - | |||||||||||||||
Unvested and Accelerated Restricted Common Shares | 306,931 | 744,600 | 744,600 | 306,931 | 306,931 | |||||||||||||||
Unvested and Accelerated Performance Restricted Common and Phantom Shares | 204,870 | 497,250 | 497,250 | 153,079 | 153,079 | |||||||||||||||
Health & Welfare Benefits | 1,065 | - | 2,221 | - | - | |||||||||||||||
Total | $ | 749,116 | $ | 1,241,850 | $ | 1,600,923 | $ | 460,010 | $ | 460,010 |
Termination Without Cause | Non-Termination Change in Control | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | |||||||||||
Jonathan B. DeGaynor | |||||||||||||||
Base Salary | $ | 550,000 | $ | - | $ | 1,100,000 | $ | 137,500 | $ | - | |||||
Annual Incentive Award | 550,000 | - | 1,100,000 | - | - | ||||||||||
Unvested and Accelerated Restricted | |||||||||||||||
Common Shares and Share Units | 921,428 | 1,958,991 | 1,958,991 | 921,428 | 921,428 | ||||||||||
Unvested and Accelerated Performance | |||||||||||||||
Shares, Restricted Common Shares and | |||||||||||||||
Phantom Shares | 1,025,905 | 2,222,395 | 2,222,395 | 1,025,905 | 1,025,905 | ||||||||||
Health and Welfare Benefits | 23,682 | - | 47,364 | - | - | ||||||||||
Total | $ | 3,071,015 | $ | 4,181,385 | $ | 6,428,750 | $ | 2,084,833 | $ | 1,947,333 | |||||
Robert R. Krakowiak | |||||||||||||||
Base Salary | $ | 400,000 | $ | - | $ | 800,000 | $ | - | $ | - | |||||
Annual Incentive Award | - | - | 230,550 | - | - | ||||||||||
Unvested and Accelerated Restricted | |||||||||||||||
Common Shares and Share Units | 24,902 | - | 224,115 | 24,902 | 24,902 | ||||||||||
Unvested and Accelerated Performance | |||||||||||||||
Shares, Restricted Common Shares and | |||||||||||||||
Phantom Shares | 30,435 | - | 273,912 | 30,435 | 30,435 | ||||||||||
Health and Welfare Benefits | 23,613 | - | 47,226 | - | - | ||||||||||
Total | $ | 478,949 | $ | - | $ | 1,575,803 | $ | 55,336 | $ | 55,336 | |||||
George E. Strickler | |||||||||||||||
Base Salary | $ | 576,150 | $ | - | $ | 1,152,300 | $ | - | $ | - | |||||
Annual Incentive Award | - | - | 1,728,450 | - | - | ||||||||||
Unvested and Accelerated Restricted | |||||||||||||||
Common Shares and Share Units | 772,540 | 1,245,730 | 1,245,730 | 772,540 | 772,540 | ||||||||||
Unvested and Accelerated Performance | |||||||||||||||
Shares, Restricted Common Shares and | |||||||||||||||
Phantom Shares | 845,458 | 1,414,846 | 1,414,846 | 845,458 | 845,458 | ||||||||||
Health and Welfare Benefits | 17,923 | - | 35,846 | - | - | ||||||||||
Total | $ | 2,212,071 | $ | 2,660,576 | $ | 5,577,172 | $ | 1,617,998 | $ | 1,617,998 | |||||
Michael D. Sloan | |||||||||||||||
Base Salary | $ | 308,000 | $ | - | $ | 616,000 | $ | - | $ | - | |||||
Annual Incentive Award | - | - | 443,737 | - | - | ||||||||||
Unvested and Accelerated Restricted | |||||||||||||||
Common Shares and Share Units | 447,858 | 730,774 | 730,774 | 447,858 | 447,858 | ||||||||||
Unvested and Accelerated Performance | |||||||||||||||
Shares, Restricted Common Shares | |||||||||||||||
and Phantom Shares | 489,509 | 830,015 | 830,015 | 489,509 | 489,509 | ||||||||||
Health and Welfare Benefits | 23,251 | - | 46,502 | - | - | ||||||||||
Total | $ | 1,268,618 | $ | 1,560,789 | $ | 2,667,028 | $ | 937,367 | $ | 937,367 |
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Termination Without Cause | Non-Termination Change in Control | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | |||||||||||
Thomas A. Beaver | |||||||||||||||
Base Salary | $ | 317,000 | $ | - | $ | 634,000 | $ | - | $ | - | |||||
Annual Incentive Award | - | - | 335,401 | - | - | ||||||||||
Unvested and Accelerated Restricted | |||||||||||||||
Common Shares and Share Units | 526,322 | 799,057 | 799,057 | 526,322 | 526,322 | ||||||||||
Unvested and Accelerated Performance | |||||||||||||||
Shares, Restricted Common Shares and | |||||||||||||||
Phantom Shares | 566,478 | 892,814 | 892,814 | 566,478 | 566,478 | ||||||||||
Health and Welfare Benefits | 8,362 | - | 16,724 | - | - | ||||||||||
Total | $ | 1,418,162 | $ | 1,691,872 | $ | 2,677,997 | $ | 1,092,800 | $ | 1,092,800 | |||||
Peter Kruk(1) | |||||||||||||||
Base Salary | $ | 224,026 | $ | - | $ | 448,051 | $ | - | $ | - | |||||
Annual Incentive Award | - | - | 154,007 | - | - | ||||||||||
Unvested and Accelerated Restricted | |||||||||||||||
Common Shares and Share Units | 415,131 | 650,815 | 650,815 | 415,131 | 415,131 | ||||||||||
Unvested and Accelerated Performance | |||||||||||||||
Shares, Restricted Common Shares and | |||||||||||||||
Phantom Shares | 451,873 | 734,843 | 734,843 | 451,873 | 451,873 | ||||||||||
Health and Welfare Benefits | - | - | - | - | - | ||||||||||
Total | $ | 1,091,030 | $ | 1,385,658 | $ | 1,987,716 | $ | 867,005 | $ | 867,005 |
(1) | For purposes of this table, conversion of Mr. Kruk’s compensation from Swedish Krona to U.S. dollars was made using the foreign currency exchange rate as of December 31, 2016, the hypothetical termination date being modeled. |
Director Compensation
Non-employee directors are compensated for their services as directors as shown in the chart below.
Schedule of Director Fees | |||
Cash Compensation | |||
Annual Retainer - Director | $ | 75,000 | |
Annual Retainer – Chairman | 145,000 | ||
Additional Compensation: | |||
Audit Committee Chair | 12,500 | ||
Compensation Committee Chair | 10,000 | ||
Nominating & Corporate Governance Committee Chair | 7,500 | ||
Equity Compensation | |||
Targeted Annual Retainer | 95,000 |
The Compensation Committee periodically reviews the compensation paid to the directors and may recommend changes to the full Board for approval, as appropriate. In 2016, the Committee recommended and the Board approved increases to the cash and equity annual retainers for directors.
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DIRECTORS’ COMPENSATION
Cash Compensation
For 2013, the Board approved that each non-employee director of the Company receive an annual retainer of $70,000Directors are reimbursed for serving as our director and attending Board and Committee meetings. The non-executive Chairman receives twice the annual retainer of the other directors. The Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee chairperson receives additional compensation of $10,000, $7,500, and $5,000, respectively, per year. We reimbursereasonable out-of-pocket travel expenses incurred by all directors in connection with attending Board and Committee meetings.
Equity Compensation
Pursuant to the Directors’ Restricted Shares Plan,non-employee directors are eligible to receive awards of restricted common shares. In 20132016, all directors were granted 11,5107,202 restricted common shares. The restrictions for those common shares lapsed on FebruaryMarch 4, 2014.2017.
Director Compensation Table
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Jeffrey P. Draime | $ | 70,000 | $ | 69,981 | $ | 139,981 | ||||||
Douglas C. Jacobs | 80,000 | 69,981 | 149,981 | |||||||||
Ira C. Kaplan | 70,000 | 69,981 | 139,981 | |||||||||
Kim Korth | 77,500 | 69,981 | 147,481 | |||||||||
William M. Lasky | 145,000 | 69,981 | 214,981 | |||||||||
George S. Mayes, Jr. | 70,000 | 69,981 | 139,981 | |||||||||
Paul J. Schlather | 70,000 | 69,981 | 139,981 |
___________________
Non-Employee Director | Fees Earned or Paid in Cash | Stock Awards ($) | (1) | Total ($) | |||||
Jeff Draime | $ | 75,000 | $ 94,994 | $ | 169,994 | ||||
Doug Jacobs | 87,500 | 94,994 | 182,494 | ||||||
Ira Kaplan | 75,000 | 94,994 | 169,994 | ||||||
Kim Korth | 85,000 | 94,994 | 179,994 | ||||||
Bill Lasky | 152,500 | 94,994 | 247,494 | ||||||
George Mayes, Jr. | 75,000 | 94,994 | 169,994 | ||||||
Paul Schlather | 75,000 | 94,994 | 169,994 |
(1) | The amounts included in the “Stock Awards” column represent fair value at grant date of restricted common share awards to directors, computed in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions, see Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, |
Director Share Ownership Guidelines
In December 2013, theThe Board approvedhas established share ownership guidelines for all non-employee directors. These guidelines provide that each director should own Company common shares equal in market value to four times the cash portion of the Board’s annual retainer. The Directors have a five year accumulation period from implementation of the guideline or appointment to the Board to achieve compliance and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached.
Shareholder’s Proposals for 20152018 Annual Meeting of Shareholders
Proposals of shareholders intended to be presented, pursuant to Rule 14a-8 under the Securities Exchange Act, of 1934 (the “Exchange Act”), at our 20152018 Annual Meeting of Shareholders must be received by the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484,39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before December 8, 2014,November 30, 2017, for inclusion in our proxy statement and form of proxy relating to the 20152018 Annual Meeting of Shareholders. In order for a shareholder’s proposal outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) of the Exchange Act, such proposal must be received by the Company at the address listed in the immediately preceding sentence not later than February 21, 2015.14, 2018.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and owners of more than 10% of our common shares, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of our common shares and other equity securities. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a).
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To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2013,2016, all Section 16(a) filing requirements applicable to our executive officers, directors and more than 10% beneficial owners were complied with, except both of Mr. Jacobs filed late five Form 4s related to separate transactionsKruk and Mr. Adante, Mr. Beaver, Mr. Corey,Moore each filed one report late (with respect to one transaction for Mr. Kruk and with respect to two transactions for Mr. Sloan and Mr. Strickler each filed late one Form 4 related to one transaction.Moore).
Other Matters
If the enclosed proxy is executed and returned to us via mail, telephone or Internet, the persons named in it will vote the common shares represented by that proxy at the meeting. The form of proxy permits specification of a vote for the election of directors as set forth under “Election of Directors” above,Directors,” the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees. When a choice has been specified in the proxy, the common shares represented will be voted in accordance with that specification. If no specification is made, those common shares will be voted at the meeting to elect directors as set forth under “Election of Directors” above,, to select “1 YEAR” on the frequency on the say-on-pay advisory vote on executive compensation, and FOR the proposals to (i) ratify the appointment of Ernst & Young as our independent auditorsregistered public accounting firm for the year ending December 31, 2013;2017; and (ii) approve of the advisory resolution on executive compensation.
Director nominees who receive the greatest number of affirmative votes will be elected directors. Broker non-votes and abstaining votes will be counted as “present” for purposes of determining whether a quorum has been achieved at the meeting, but will not be counted in favor of or against any nominee. The voting standards for each of the other known matters to be considered at the meeting are set forth within the above proposals. All other matters to be considered at the meeting require for approval the favorable vote of a majority of the shares entitled to vote and represented at the meeting in person or by proxy.
The holders of shares of a majority of the common shares outstanding on the record date, present in person or by proxy, shall constitute a quorum for the transaction of business to be considered at the Annual Meeting of Shareholders.
If any other matter properly comes before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. We do not know of any other matter that may be presented for action at the meeting and we have not received any timely notice that any of our shareholders intend to present a proposal at the meeting.
By order of the Board of Directors, | |
| |
ROBERT M. LOESCH, | |
Dated: March 30, 2017 | Secretary |
Dated: April 7, 2014
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