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24, 2021
contains details of the business to be conducted during the Annual General Meeting and describes our corporate governance policies and practices. We continue to be considered a smaller reporting company. As such, we have elected to adopt the scaled disclosure requirements afforded to smaller reporting companies, while still communicating material information and our perspectives to our shareholders. In addition to communicating information and our perspectives, we also believe in the value of listening to our shareholders. Shareholder feedback also helps us prioritize our efforts and enhance our transparency.
| | Note About Forward-Looking Statements This Proxy Statement includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our Forms 10-K and 10-Q. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. | | |
The Annual General Meeting will be a “hybrid” meeting of shareholders, meaning shareholders will be able to attend the Annual General Meeting as well as vote during the live webcast of the meeting by visiting
www.virtualshareholdermeeting.com/cwco2021 or attend the meeting in person at the offices of Aquilex, Inc., 5810 Coral Ridge Drive, Suite 220, Coral Springs, FL 33076. Upon logging into the meeting website for the live webcast, a telephone number will be displayed for shareholders to utilize to pose questions along with a question box to submit questions in writing. Shareholders will need to have the 16-digit control number included on their Notice of Internet Availability, their proxy card or the instructions that accompanied their proxy materials to be admitted personally or virtually to the Annual General Meeting or to access the phone number for questions. The phone number for questions is provided solely for the convenience of asking questions during the meeting. Although shareholders have the option to attend the meeting in person, in the interest of health and safety, we strongly encourage shareholders desiring to attend the meeting to do so via the Internet.Abstentions2021.
Shareholders may, by electronic means via the Internet, by telephone or by mail, appoint a proxy to vote Shares before the meeting as more fully described below:
III Directors
until the third succeeding Annual General Meeting.
Directors — For Informational Purposes — Not to Be Elected at the 2021 Annual General Meeting
1992. From 1983 to 1989, Mr. Finlay was a partner with a Canadian law firm located in Regina, Canada. Mr. Finlay has served as the Cayman Islands’ representative to the International Company and Commercial Law Review and is a former editor of the Cayman Islands Law Bulletin.
Mr. Finlay has been named a Board Leadership Fellow by the National Association of Corporate Directors since 2019.
Information Regarding Group III Directors — For Information Purposes — Not to Be Elected at the 2016 Annual General Meeting
Wilmer F. Pergande, age 76, has been a director of our Company since 1978 and Chairman since 2009. He has 50 years of management, sales and engineering experience in the desalination industry. Mr. Pergande is the principal of WF Pergande Consulting LLC and currently provides consulting engineering services in metallurgy, fluid dynamics and chemical separation technologies. He retired in 2006 as the Global Leader for Desalination and Process Equipment for GE Infrastructure, Water and Process Technologies, which position he held since 2002. Mr. Pergande previously held the position of Vice President of Special Projects of Osmonics Inc. and Chief Executive Officer of a desalination subsidiary of Osmonics Inc., a publicly traded water treatment and purification company, until its acquisition by General Electric Co. Before joining Osmonics, Mr. Pergande was the Chief Executive Officer of Licon International Inc., a publicly traded manufacturer of liquid chemical separation, purification and processing equipment. Previously, Mr. Pergande was the President of Mechanical Equipment Company Inc. (MECO) for 14 years and held engineering, sales and executive managerial positions with AquaChem Inc., both companies being manufacturers of seawater desalination equipment. He has a Bachelor Degree in Mechanical Engineering from Marquette University and Post Graduate Studies in Metallurgy from the University of Wisconsin. Mr. Pergande served three terms as a Director of the International Desalination Association, in which he held the positions of Treasurer and Secretary.
Mr. Pergande was selected to serve as a member of our Board of Directors because of his management and engineering experience in the desalinization industry, and for his organizational, sales and marketing skills.
Leonard J. Sokolow, age 59, became a director of our Company on June 1, 2006. From November 1999 until January 2008, Mr. Sokolow was Chief Executive Officer and President, and a member of the Board of Directors, of vFinance Inc., a publicly-traded financial services company, which he cofounded. Mr. Sokolow was the Chairman of the Board of Directors and Chief Executive Officer of vFinance Inc. from January 2007 until July 2008, when it merged into National Holdings Corporation, a publicly traded financial services company. From July 2008 until July 2013, Mr. Sokolow was President of National Holdings Corporation, and from July 2008 until July 2014 he has been Vice-Chairman of the Board of Directors of National Holdings
Corporation. From July 2014 until December 2015, Mr. Sokolow was a consultant and partner at Caribou LLC, a strategic advisory services firm. Since January 1, 2016, Mr. Sokolow has been Chief Executive Officer and President of Newbridge Financial Inc. and Chairman of its principal subsidiary, Newbridge Securities Corporation. Mr. Sokolow was Founder, Chairman and Chief Executive Officer of the Americas Growth Fund Inc., a closed-end 1940 Act management investment company, from 1994 to 1998. From 1988 until 1993, Mr. Sokolow was an Executive Vice President and the General Counsel of Applica Inc., a publicly-traded appliance marketing and distribution company. From 1982 until 1988, Mr. Sokolow practiced corporate, securities and tax law and was one of the founding attorneys and a partner of an international boutique law firm. From 1980 until 1982, he worked as a Certified Public Accountant for Ernst & Young and KPMG Peat Marwick. Since January 2016 Mr. Sokolow has served as a member of the Board of Directors of Safety Quick Lighting & Fans Corp. (SQFL) and Chairman of its Audit Committee, and since April 2010 and August 2013, respectively, he has served as a Director and the Chairman of the Audit Committee of Alberta Oilsands Inc. (TSX-V: AOS).
Mr. Sokolow was selected to serve as a member of our Board of Directors because of his experience as a director and principal executive officer, his legal, accounting, auditing and consulting background, and his qualifications to serve as our “audit committee financial expert.”
Raymond Whittaker, age 62, has served as a director of our Company since 1988. Mr. Whittaker was the Managing Director of TransOcean Bank & Trust Ltd., a bank and trust company located in the Cayman Islands and a subsidiary of Johnson International Inc., a bank holding company located in Racine, Wisconsin from 1984 to December 2000. He is now the principal of his own company and management firm, FCM Ltd. On August 25, 2014, Mr. Whittaker was recognized as a Governance Fellow by the National Association of Corporate Directors (“NACD”) upon completion of NACD’s Governance Program and in recognition of an ongoing commitment to exemplary board leadership. Mr. Whittaker continues to participate in various NACD programs.
Mr. Whittaker was selected to serve as a member of our Board of Directors because of his management, financial and banking experience.
The Board of Directors has determined that the directordirectors nominated for re-election and all of the directors whose terms will continue after the Meeting other than(with the exception of Mr. McTaggart,McTaggart) are “independent” as such term is defined by the applicable listing standards of The NASDAQ Stock Market LLC (“NASDAQ”).
The Board of Directors based this determination primarily on a review of the responses of the directors to questions regarding their employment, affiliations, family and other relationships.
2020.
2020.
| Healthy and Safe Work Environment | | | • Commitment to comply with all applicable health and safety laws, regulations and other requirements to which we subscribe. • Integration of health and safety considerations into business decisions to ensure health and safety of our employees and the community. • Equal employment opportunity hiring practices, policies and management of employees. • Anti-harassment policy that prohibits hostility or aversion towards individuals in protected categories, and prohibits sexual harassment in any form, and details how to report and respond to harassment issues and strictly prohibits retaliation against any employee for reporting harassment. • Since January 1, 2019, we have not been a party to any suits, investigations, inquiries or other proceedings relating to occupational safety and health, nor have any such proceedings been overtly threatened. • During 2019 and 2020, we had no work-related fatalities or occupational diseases and one and four workplace injuries, respectively. | |
| Diversity and Inclusion | | | • Committed to fostering and promoting an inclusive and globally diverse work environment. • Formal policy that forbids discrimination based on protected classifications. • One director is female, representing 12.5% of the non-executive members of the Board. | |
| Prevention of Human Trafficking and Forced and Child Labor | | | • Formal policy that forbids use of forced, debt bonded, indentured labor, involuntary prison labor, slavery or human trafficking in our business or supply chain. • Prohibition on employment of anyone under the age of 16 in any position, and workers under the age of 18 for hazardous work, overtime, or night shift work. | |
| Wage and Hour Standards | | | • Working hours not to exceed the greater of 60 hours per week or the maximum set by local law. • Prohibition on working longer than six consecutive days without at least one day off. • Commitment to comply with applicable wage laws, including those related to minimum wages, overtime hours, and legally mandated benefits. | |
| Freedom of Association and Collective Bargaining | | | • Employees have the right to freely associate or not associate with third party organizations such as labor organizations. • Employees also have the right to bargain or not bargain collectively in accordance with local laws. | |
| Privacy and Data Security | | | • Maintaining privacy policies, management oversight, and accountability structures to protect privacy and personal data. | |
| Business Conduct and Ethics Codes | | | • A strong corporate culture that promotes the highest standards of ethics and compliance for our business; the majority of our directors have an extensive background and experience in risk management. | |
| | | | • Code of Business Conduct and Ethics sets forth principles to guide employee and director conduct. | |
| Business Continuity | | | • As a provider of water, which is essential to life, we have business continuity policies to ensure the safety of our personnel, facilities and critical business functions in case of natural disasters and other emergencies. | |
| Environment | | | • Formal policy to identify principle environmental aspects of our operations, and seek to mitigate waste, emissions, energy and water use and other impacts wherever feasible. • Commitment to environmental protection and conservation of natural resources through innovative processes and continuous improvement methodologies. • Commitment to continue to invest in energy conservation, work to reduce our environmental footprint, and adhere to environmental laws, regulations, policies and goals. | |
| Governance | | | • Strong focus on corporate governance since inception, striving for best practices in corporate governance. | |
| Stakeholder Involvement | | | • Commitment to receive feedback from such stakeholders to help improve ESG-related policies, the implementation thereof and our performance thereunder. | |
| Anti-Bribery and Corruption Policies | | | • Policies prohibiting improper or unauthorized expenditures (including commercial and public bribery) and other improper payment schemes. • Mechanism for confidential reporting of any suspected violations. | |
Director | | Compensation Committee | | Audit Committee | | | Nominations and Corporate Governance Committee | | ||
Linda Beidler-D’Aguilar | | | | | | | | | X | |
Brian E. Butler | | | X | | | | | | C | |
Carson K. Ebanks | | | X | | | | | | X | |
Richard L. Finlay | | | C | | | X | | | | |
Clarence B. Flowers, Jr. | | | X | | | | | | | |
Frederick W. McTaggart | | | | | | | | | | |
Wilmer F. Pergande | | | | | | X | | | X | |
Leonard J. Sokolow | | | | | | C | | | X | |
Raymond Whittaker | | | X | | | X | | | | |
2020.
written charter for the Compensation Committee. The Board of Directors has determined that all members of the Compensation Committee are “independent directors,” as such term is defined under the applicable rules of NASDAQ.
2020.
The Nominations and Corporate Governance Committee’s duties and responsibilities are as set out in the Nominations and Corporate Governance Committee Charter. 2020.
2020:
the applicable requirements of the Public Company Accounting Oversight Board.
Submitted by the Members of the 2015 Audit Committee
Wilmer F. PergandeLeonard J. SokolowRaymond Whittaker
| Submitted by the Members of the 2020 Audit Committee | |
| Richard L. Finlay Wilmer F. Pergande Leonard J. Sokolow Raymond Whittaker | |
program. We have determined that our shareholders should vote on a say-on-pay proposal each year, consistent with the preference expressed by our shareholders at the 20112017 Annual General Meeting of Shareholders.
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Representatives of Marcum LLP are expected to be available at the Annual General Meeting, and will have the opportunity to make a statement and be available to respond to questions.
| | | 2020 | | | 2019 | | ||||||
Audit | | | | $ | 343,750 | | | | | $ | 436,250 | | |
Audit-Related | | | | | — | | | | | | 149,380 | | |
Tax | | | | | 15,500 | | | | | | 14,000 | | |
All Other | | | | | — | | | | | | — | | |
Total | | | | $ | 359,250 | | | | | $ | 595,630 | | |
2015 | 2014 | |||||||
Audit | $ | 345,000 | $ | 345,000 | ||||
Audit-Related | 62,260 | — | ||||||
Tax | 2,000 | 2,000 | ||||||
All Other | — | — | ||||||
Total | $ | 409,260 | $ | 347,000 |
Audit Fees: This category includes the fees for the examination of the Company’s consolidated financial statements and internal controls, review of the Company’s Annual Report on Form 10-K and quarterly reviews of the interim financial statements included in the Company’s Quarterly Reports on Form 10-Q.
the acquisition of 51% of this company in October 2019.
All
Title of Class | Identity of Person or Group | Amount Owned** | Percentage of Class** | |||||||||
Ordinary Shares | Wilmer F. Pergande, Director, Chairman of the Board of Directors(1) | 26,843 | * | |||||||||
Ordinary Shares | Frederick W. McTaggart, Director, President and Chief Executive Officer(2) | 133,629 | * | |||||||||
Ordinary Shares | David W. Sasnett, Director, Executive Vice President and Chief Financial Officer(3) | 13,978 | * | |||||||||
Ordinary Shares | John Tonner, Executive Vice President and Chief Operating Officer(4) | 20,127 | * | |||||||||
Ordinary Shares | Ramjeet Jerrybandan, Vice President of Overseas Operations and Company Secretary(5) | 10,252 | * | |||||||||
Ordinary Shares | Gerard J. Pereira Vice President of Engineering and Technology(6) | 23,856 | * | |||||||||
Ordinary Shares | Brian E. Butler, Director | 16,984 | * | |||||||||
Ordinary Shares | Carson K. Ebanks, Director | 6,307 | * | |||||||||
Ordinary Shares | Richard L. Finlay, Director | 23,091 | * | |||||||||
Ordinary Shares | Clarence B. Flowers, Jr., Director | 21,992 | * | |||||||||
Ordinary Shares | Leonard J. Sokolow, Director(7) | 10,791 | * | |||||||||
Ordinary Shares | Raymond Whittaker, Director | 35,012 | * | |||||||||
Ordinary Shares | Directors and Executive Officers as a Group(8) | 471,840 | 3.18 | % |
Title of Class | | | Identity of Person or Group | | | Amount Owned** | | | Percentage of Class** | | ||||||
Ordinary Shares | | | Amundi(1) | | | | | 828,558 | | | | | | 5.46% | | |
Ordinary Shares | | | BlackRock, Inc.(2) | | | | | 764,514 | | | | | | 5.04% | | |
Ordinary Shares | | | Wilmer F. Pergande, Director, Chairman of the Board of Directors(3) | | | | | 31,151 | | | | | | * | | |
Ordinary Shares | | | Frederick W. McTaggart, Director, President and Chief Executive Officer(4) | | | | | 194,086 | | | | | | 1.28% | | |
Ordinary Shares | | | David W. Sasnett, Executive Vice President and Chief Financial Officer | | | | | 35,058 | | | | | | * | | |
Ordinary Shares | | | Ramjeet Jerrybandan, Executive Vice President and Chief Operating Officer | | | | | 25,804 | | | | | | * | | |
Ordinary Shares | | | Linda Beidler-D’Aguilar, Director(5) | | | | | 6,341 | | | | | | * | | |
Ordinary Shares | | | Brian E. Butler, Director | | | | | 29,063 | | | | | | * | | |
Ordinary Shares | | | Carson K. Ebanks, Director | | | | | 19,621 | | | | | | * | | |
Ordinary Shares | | | Richard L. Finlay, Director | | | | | 63,485 | | | | | | * | | |
Ordinary Shares | | | Clarence B. Flowers, Jr., Director(6) | | | | | 305,125 | | | | | | 2.01% | | |
Ordinary Shares | | | Leonard J. Sokolow, Director(7) | | | | | 23,829 | | | | | | * | | |
Ordinary Shares | | | Raymond Whittaker, Director | | | | | 8,687 | | | | | | * | | |
Ordinary Shares | | | Directors and Executive Officers as a Group(8) | | | | | 815,322 | | | | | | 5.37% | | |
Redeemable Preference Shares | | | Kenneth Crowley, Production Manager | | | | | 1,714 | | | | | | 5.69% | | |
Redeemable Preference Shares | | | Todd Redding, VP of Purchasing and Logistics | | | | | 1,550 | | | | | | 5.15% | | |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plans approved by security holders | 149,972 | (1) | $ | 10.52 | (2) | 1,232,428 | (1) | |||||
Equity compensation plans not approved by security holders | — | — | * | |||||||||
Total | 149,972 | (1) | $ | 10.52 | (2) | 1,232,428 | (1) |
Plan category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | |||||||||
Equity compensation plans approved by security holders | | | | | 137,932(1) | | | | | $ | 0.00 | | | | | | 1,008,490 | | |
Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | * | | |
Total | | | | | 137,932 | | | | | $ | 0.00 | | | | | | 1,008,490 | | |
Name | | | Position with Consolidated Water Co. Ltd. | |
Frederick W. McTaggart(1) | | | Director, President and Chief Executive Officer | |
David W. Sasnett | | | Executive Vice President and Chief Financial Officer | |
Ramjeet Jerrybandan | | | Executive Vice President, Chief Operating Officer and Company Secretary | |
John B. Tonner | | | Executive Vice President and Chief | |
Armando V. Averhoff | | | Vice President of Information Technology | |
Jamie Bryan | | | Vice President of Manufacturing | |
Brent A. Brodie | | | Vice President of Sales and Marketing | |
| | Vice President of | ||
Douglas R. Vizzini | | | Vice President of Finance |
59,64, became our Executive Vice President and Chief Financial Officer in June 2006 and also served on our Board of Directors from December 2004 through May 2015. From March 2014 through April 2015, Mr. Sasnett served as a member of the Board of Directors of Ominto Inc. (formerly DubLi, Inc.). In 2005 and 2006, Mr. Sasnett was the Chief Financial Officer of VoIP Inc., a publicly traded provider of communication services utilizing voice over Internet protocol technology. During 2004, he was the Vice President of Finance and Controller for MasTec Inc., a specialty contractor and infrastructure provider traded on the New York Stock Exchange. Mr. Sasnett was the Chief Financial Officer of Catalina Lighting Inc., a publicly traded manufacturer and distributor of residential lighting and other consumer products, from 1996 to 2002. Mr. Sasnett’s experience also encompasses more than 12 years with the auditing and consulting firm of Deloitte & Touche LLP. Mr. Sasnett is a Certified Public Accountant in the state of Florida.John Tonner Mr. Sasnett received his Bachelor of Science in Accounting from the University of Florida.54,53, joined our Company in 1998 as the Operations Engineer in Grand Cayman. He was promoted to Operations Manager (Cayman) in 2005, became our Vice President of Overseas Operations in May 2006, was promoted to Executive Vice President in December 2016 and became our Chief Operating Officer in March 2020. Mr. Jerrybandan was appointed our Company Secretary in 2013. He obtained his Bachelor of Science degree in Industrial Engineering and his Master of Science degree in Engineering Management at the University of the West Indies. Mr. Jerrybandan holds an Advanced Diploma in Business Administration from the Association of Business Executives of London. He also has extensive training in the Information Technology field, including industrial automation systems.and became Executive Vice President in 2013.2013 and became our Chief Commercial Officer in 2016. He is the former President and a partner in Water Consultants International, a leading desalination consulting firm. Mr. Tonner began working in the desalination and water treatment industry in 1985 and worked for the Company’s subsidiary Cayman Water from 1986 until 1990 where he was responsible, among other things, for our Company’s first seawater reverse osmosis plant. He has broad practical and engineering experience involving all commercially viable desalination processes. Mr. Tonner is registered to practice as a Chartered Engineer, Chartered Environmentalist and European Ingenieur. He has more than 30 years of experience with reverse osmosis and membrane technology and has patented reverse osmosis energy recovery techniques. Mr. Tonner has provided due diligence oversight services for the some of the largest desalination projects in Asia, Australia and the Middle East. Mr. Tonner holds an honors degree in Mechanical Engineering from the University of Paisley in Scotland. He has been a member of the International Desalination Association since the late 1980s, serving on the Board of Directors from 1999 until 2004. He is currentlyserved as a Director of the American Membrane Technology Association.Association (AMTA) and
direct sales, indirect distribution, sales representatives, joint ventures and original equipment manufacturers. Mr. Brodie received his Bachelor of Science in Chemical Engineering from the University of Minnesota and his Master of Business Administration (Marketing Emphasis) from the University of Michigan.
Ramjeet Jerrybandan
Gregory S. McTaggartKent State University.
Robert B. Morrison, age 62, was appointedpromoted to Vice President of ProcurementPurchasing and Logistics in November 2010.January 2020. Mr. Morrison holds the designation “Certified Supply Chain Management Professional” andRedding has more than 25 years of experience in the purchasing and logistics field. He joined DesalCo Limitedsupply chain management. This experience includes internal controls, system implementations, domestic as Purchasing Manager in June 1996well as foreign purchasing, shipping, warehousing and held this post until our acquisition of that company in 2003. In March 2003,logistics. Mr. MorrisonRedding previously was promoted tothe Vice President of PurchasingNorth American Operations for Catalina Lighting, a manufacturer and Information Technology, retaining this post until his acceptancedistributor of his current position in 2011.residential lighting. Prior to joining DesalCo Limited,Catalina Lighting Mr. MorrisonRedding was principal Purchasing Officer for the MinistryManager of Works & EngineeringInternal Audit at Carnival Cruise Lines, and he started his career with the accounting firm of the Bermuda government and Purchasing Manager for American-Standard in Toronto, Canada.
Gerard J. Pereira, age 45, was appointed Vice President of Product Technology in September 2010.Grant Thornton. Mr. Pereira obtained hisRedding holds a Bachelor of Science and Master of Science in Chemical EngineeringAccounting from the University of Waterloo, Ontario, Canada and joined Ocean Conversion (Cayman) Limited as Operations Engineer in 1995. He was promoted to Operations Manager of Ocean Conversion (Cayman) Limited in 1998, which post he held until our acquisition of that company. In March 2003, Mr. Pereira was promoted to Vice President of Engineering, retaining this post until his acceptance of the Vice President of Sales & Marketing position in 2008 and subsequently his current position of Vice President of Engineering and Technology in 2012.
Florida.
In this section, we provide an overview and analysis of our compensation program and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making compensation decisions for our Named Executive Officers, as defined under the heading “Additional Information Regarding Executive Compensation.” Specific information regarding the compensation earned by or paid to our Named Executive Officers in 2015 is set forth in a series of tables under the heading “Additional Information Regarding Executive Compensation.” The discussion below is intended to help you understand the detailed information provided in those tables and put that information into context within our overall compensation program.
At our 2015 Annual Meeting of Shareholders, our advisory vote on executive compensation received the approval of 94% of the votes cast for this proposal. In response, the Compensation Committee (the “Committee”) of our Board of Directors determined that we should maintain the components of our compensation program, as discussed in more detail below.
The table below summarizes the elements of the Company’s 2015 executive compensation program and the objectives served by each element. We used multiple metrics in our 2015 compensation program to provide a more complete view of performance, which we intended to capture key business objectives.
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The chart below compares the five-year change in CEO compensation and the change in value of $100 invested in the Company (indexed TSR). For purposes of computing the Company’s indexed TSR, the Company’s quarterly dividends are assumed to be reinvested at the closing price on the dividend payable date. This comparison is used by Institutional Shareholder Services (ISS) to assess alignment of CEO compensation with shareholder return. The chart shows that CEO pay and indexed TSR increased over the period. The trend lines show that indexed TSR has increased at a faster rate than CEO pay.
The mix of total compensation elements for the Named Executive Officers in 2015, as a percentage of total compensation, is set forth in the table and charts below.
Fixed Compensation (as a % of Total Compensation) | Variable Compensation (as a % of Total Compensation) | |||||||||||||||
Named Executive Officer | Base Salary | Benefits & Other Compensation | Annual Cash Incentives | Annual Equity Incentives | ||||||||||||
CEO | 41 | % | 2 | % | 36 | % | 21 | % | ||||||||
CFO | 57 | % | 3 | % | 23 | % | 17 | % | ||||||||
COO | 58 | % | 3 | % | 23 | % | 17 | % | ||||||||
VP Overseas Ops. | 60 | % | 6 | % | 22 | % | 12 | % | ||||||||
VP Eng. & Tech. | 61 | % | 7 | % | 20 | % | 12 | % |
The Committee is responsible for establishing, implementing and continually monitoring adherence with our compensation philosophy; maintaining competitive compensation; and structuring compensation to achieve our compensation objectives. Generally, the types of compensation and benefits we provide to our Named Executive Officers are similar to those provided to our other executive officers.
The Committee believes that compensation paid to our Named Executive Officers should be directly aligned with our performance, and that compensation should be structured to ensure that a significant portion of our Named Executives Officers’ compensation opportunities are directly related to achievement of our financial and operational goals. These goals include meeting revenue and profitability targets, securing new projects and keeping current on the industry’s engineering advances in seawater conversion technology, all of which impact shareholder value. The Committee evaluates both performance and compensation to ensure that we maintain our ability to attract and retain highly skilled and motivated employees in key positions and that the compensation provided to key employees remains competitive relative to our Peer Companies (identified below).
The Committee believes executives at peer companies typically receive base salary, an annual bonus and equity-based compensation, with top executives (i.e., Chief Executive Officers and Chief Financial Officers) also receiving severance payments and, at times, payments upon a change of control. Accordingly, for 2015, the Committee determined that the compensation packages that we provided to our executives, including our Named Executive Officers, should include a mix of base salary and incentive-based cash compensation, with our Chief Executive Officer and Chief Financial Officer also receiving severance payments, and our Chief Financial Officer also receiving severance payments upon a change of control. Beginning in 2015, all executive officers also became eligible to receive long-term equity compensation consisting of shares of our common stock earned over time and upon the satisfaction of Company performance goals.
Based on the foregoing philosophy and objectives, the Committee has structured our Named Executive Officers’ base salary and incentive-based compensation to motivate executives to achieve our business goals and reward them for achieving those goals.
In setting the base salaries in the employment agreements of our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, the Committee determined the approximate total average annual cash compensation paid to executives performing similar functions at our Peer Companies.
In determining and considering adjustments to the base salaries in the employment agreements of our Vice Presidents, our Chief Executive Officer reviewed the average annual salaries paid to executives with similar levels of responsibility within our Peer Companies, taking into account the very limited availability of persons possessing the requisite skills and experience in the local labor market, and gave his recommendation to the Committee. The Committee compared the suggested annual base salary for each of our Vice Presidents to the annual base salaries paid to executives performing similar functions at comparable companies. Given that the suggested annual base salaries for our Vice Presidents were similar to that paid to executives within the Peer Companies, the Committee approved the salaries recommended by our Chief Executive Officer.
A significant amount of the total compensation paid to our Named Executive Officers is allocated to incentive-based compensation, as a result of the philosophy and objectives mentioned above.
In 2014, in furtherance of our compensation philosophy and objectives, the Committee re-engaged the POE Group Inc. (“POE”), an outside executive compensation consulting firm determined to be independent by the Committee, to conduct a review of, and recommend changes to, our total compensation program for our most highly compensated executive officers. A representative of POE attended Committee meetings at the invitation of the Committee Chairman and was also in contact directly with the Committee from time to time. POE provided the Committee with assistance and advice in the review of the Company’s salary structure, annual and equity incentive awards and other related executive pay issues. In addition, POE provided advice regarding marketplace trends and best practices relating to competitive pay levels. POE did not provide any
services to the Company other than its services as the Committee’s independent compensation consultant, and POE did not receive any fees or compensation from the Company other than the fee it received as the independent compensation consultant. POE did not provide any services to the Company in 2015. The Committee confirmed that POE’s work for the Committee did not create any conflicts of interest.
In 2014, the Committee, with the assistance of POE, determined our peer group (our “Peer Companies”) to include the following 12 comparably sized companies, all of which are located in the U.S. These 12 companies also constituted our 2015 peer group. The companies generally fall within the following parameters for 2015:
The assessment provided by POE included comparative compensation information for executive officers at our Peer Companies that was used for our executive compensation benchmarking and performance benchmarking. We believe that this peer group provides a valid benchmark comparison to our Company.
Metric | Peer Median* | CWCO* | CWCO Percentile Rank | |||||||||
Revenue | $ | 91,000 | $ | 57,000 | 25.0 | % | ||||||
Market Capitalization | $ | 229,000 | $ | 181,000 | 41.7 | % | ||||||
Net Income | $ | 6,000 | $ | 8,000 | 58.3 | % | ||||||
Total Assets | $ | 233,000 | $ | 162,000 | 41.7 | % |
Based upon POE’s report and analysis, our Board of Directors and the Committee have concluded that our compensation plans for 2015 are comparable to the compensation paid by our Peer Companies.
Our Chief Executive Officer determines the base salary and establishes the individual performance goals for our Chief Financial Officer and our Chief Operating Officer. The Committee must approve any compensation components for our Vice Presidents, Chief Operating Officer and Chief Financial Officer other than base salary. Our Chief Executive Officer is not involved with the setting of compensation for himself.
We have determined that our shareholders should vote on a Say-on-Pay proposal each year, consistent with the preference expressed by our shareholders at our 2011 Annual General Meeting of Shareholders. Accordingly, we conducted a Say-on-Pay vote at our 2015 Annual General Meeting of Shareholders. While this vote was not binding on the Company, our Board of Directors or the Committee, we believe that it is important for our shareholders to have an opportunity to vote on executive compensation as a means to express their views regarding our executive compensation philosophy, our compensation policies and programs and our decisions regarding executive compensation. Our Board of Directors and the Committee value the opinions of our shareholders, and, to the extent that there is any significant vote against the compensation of our Named Executive Officers, we will consider our shareholders’ concerns and the Committee will evaluate
whether any actions are necessary to address those concerns. In addition to the advisory vote on executive compensation, we are committed to ongoing engagement with our shareholders on executive compensation and corporate governance issues.
At the 2015 Annual General Meeting of Shareholders, approximately 94% of the votes cast on the advisory vote on executive compensation proposal were cast in favor of our Named Executive Officer compensation as disclosed in the proxy statement. Our Board of Directors and the Committee reviewed these final vote results and determined that, given the level of support, the Company should maintain the components of our compensation program, as discussed in more detail below.
For the fiscal year ended December 31, 2015,2020, the principal components of compensation for our Named Executive Officers were:
Base salaries
Name and Principal Parties | | | Year | | | Salary ($) | | | Non-Equity Incentive Plan Compensation ($)(1) | | | Stock Awards ($)(2) | | | All Other Compensation ($)(3) | | | Total ($) | | ||||||||||||||||||
Frederick W. McTaggart Chief Executive Officer | | | | | 2020 | | | | | | 496,100 | | | | | | 144,762 | | | | | | 248,050 | | | | | | 17,400 | | | | | | 906,312 | | |
| | | 2019 | | | | | | 468,025 | | | | | | 404,123 | | | | | | 234,013 | | | | | | 16,800 | | | | | | 1,122,961 | | | ||
David W. Sasnett Executive VP & Chief Financial Officer | | | | | 2020 | | | | | | 365,750 | | | | | | 80,000 | | | | | | 109,725 | | | | | | 17,400 | | | | | | 572,875 | | |
| | | 2019 | | | | | | 355,000 | | | | | | 148,500 | | | | | | 106,500 | | | | | | 16,800 | | | | | | 626,800 | | | ||
Ramjeet Jerrybandan Executive VP & Chief Operating Officer | | | | | 2020 | | | | | | 357,000 | | | | | | 100,000 | | | | | | 107,100 | | | | | | 17,400 | | | | | | 581.500 | | |
| | | 2019 | | | | | | 340,000 | | | | | | 150,000 | | | | | | 102,000 | | | | | | 16,800 | | | | | | 608,800 | | |
Base salaries are reviewed annually and increased based upon: (i) a need to realign base salaries with market levels for the same positions at comparable companies; (ii) an internal review of the executive’s compensation, both individually and relative to other executive officers; (iii) the individual performance of the executive; and (iv) an assessment of whether significant corporate goals were achieved. Additionally, we may adjust base salaries as warranted throughout the year for promotions or other changes in the scope or breadth of an executive’s role or responsibilities.
All of our executive officers were eligible to earn annual incentive compensation in the form of a cash bonus in 2015. The annual incentive compensation is performance based, with payout ofgranted under these awards tied to the Company’s achievement of specific yearly net income, revenue and operating margin performance objectives, as well as individual performance for the year to the extent discussed below.
Incentive awards for our executive officers for 2015 were determined using four corporate performance measures and targets established for each measure. Such incentive based compensation was structured to provide for a range of payouts corresponding to a range of Company performance outcomes against the performance measures.
Our executive officers were eligible to earn varyingmay be greater or lesser than these amounts of incentive compensation for 2015(or even zero) based upon the Company’s achievement of the (1) minimum threshold, (2) target or (3) upper amount that was set for each of the short-term performance measures. The following table sets forth the range of percentages of base salary each executive officer was eligible to receive as incentive compensation based upon the relative achievement of each of these amounts:
Named Executive Officer | Below Threshold | Threshold | Target | Maximum | ||||||||||||
Frederick W. McTaggart Chief Executive Officer | 0 | % | 35 | % | 70 | % | 109 | % | ||||||||
David W. Sasnett Executive VP & Chief Financial Officer | 0 | % | 15 | % | 30 | % | 47 | % | ||||||||
John Tonner Executive VP & Chief Operating Officer | 0 | % | 15 | % | 30 | % | 49 | % | ||||||||
Ramjeet Jerrybandan VP Overseas Operations | 0 | % | 12.5 | % | 25 | % | 41 | % | ||||||||
Gerard J. Pereira VP Engineering & Technology | 0 | % | 12.5 | % | 25 | % | 41 | % |
The Committee established the 2015 corporate performance measures for the Company based on the 2015 financial performance estimates approved by the Company’s Board and the Company’s historical performance. Setting performance measures involves both selecting the performance metrics that will be used to drive short-term business performance and establishing the performance targets for each of those metrics. The 2015 annual bonus for each Named Executive Officer was calculated by the Board of Directors based upon its assessment of the Company’s performance in the areas set forth in the table below, with a weighting assigned to each factor for each of the Named Executive Officers noted. The Committee set the corporate performance goals at levels it believed require strong performance for a target payout and superior performance for an upper payout. The four corporate performance criteria, and the respective weighting assigned to each for our Named Executive Officers, are set forth in the table below.
Weighting of Short-Term Performance Measures | ||||||||||||||||||||
Net Income(1) | Revenue(2) | Operating Margin(3) | Mexico Project(4) | Individual | ||||||||||||||||
Frederick W. McTaggart Chief Executive Officer | 40 | % | 30 | % | 10 | % | 10 | % | 10 | % | ||||||||||
David W. Sasnett Executive VP & Chief Financial Officer | 40 | % | 30 | % | 10 | % | 10 | % | 10 | % | ||||||||||
John Tonner Executive VP & Chief Operating Officer | 20 | % | 20 | % | 40 | % | 10 | % | 10 | % | ||||||||||
Ramjeet Jerrybandan VP Overseas Operations | 30 | % | 20 | % | 40 | % | 0 | % | 10 | % | ||||||||||
Gerard J. Pereira VP Engineering & Technology | 20 | % | 20 | % | 40 | % | 10 | % | 10 | % |
The Committee selected these four performance measures to capture the most important aspects of the top- and bottom-line performance of the Company relative to the long-term financial performance target measures.
The relative percentagesannual renewal and has since been extended through December 31, 2021. Under the terms of the thresholdemployment agreement, Mr. Sasnett is entitled to an annual base salary and upperannual and long-term incentive compensation if certain performance amountsgoals are met. Our Compensation Committee establishes Company performance goals and our Chief Executive Officer establishes Mr. Sasnett’s individual performance goals. If our Chief Executive Officer or the Company decides not to extend the target amount for each performance measure, and the Company's 2015 performance with respect to each measure, are set forth in the table below.
Performance Measure | Threshold | Target | Upper | Company’s 2015 Results | ||||||||||||
Net Income | 75 | % | 100 | % | 125 | % | 119 | % | ||||||||
Revenue | 90 | % | 100 | % | 110 | % | 103 | % | ||||||||
Operating Margin | 90 | % | 100 | % | 110 | % | 111 | % |
The impactterm of the Company's 2015 performance with respect to eachemployment agreement, the term of the performance measuresemployment agreement will expire on the 2015 short-term incentive bonus for each Named Executive Officer, based upon the relative weightings assigned to these performance measures for each Executive, is as follows:
Performance Measure | Frederick W. McTaggart | David W. Sasnett | John Tonner | Ramjeet Jerrybandan | Gerard J. Pereira | |||||||||||||||
Net Income | 55 | % | 55 | % | 27 | % | 41 | % | 27 | % | ||||||||||
Revenues | 36 | % | 36 | % | 24 | % | 24 | % | 24 | % | ||||||||||
Operating Margin | 17 | % | 17 | % | 70 | % | 70 | % | 70 | % | ||||||||||
Mexico Project Goal | 0 | % | 0 | % | 0 | % | N/A | 0 | % | |||||||||||
Individual Goals | 10 | % | 5 | % | 10 | % | 10 | % | 10 | % | ||||||||||
Total percentage of target amounts achieved | 118 | % | 113 | % | 131 | % | 145 | % | 131 | % | ||||||||||
Incentive compensation payable assuming target amounts were achieved | $ | 317,118 | $ | 91,350 | $ | 85,050 | $ | 45,063 | $ | 42,000 | ||||||||||
Incentive compensation earned for 2015 | $ | 374,805 | $ | 103,400 | $ | 111,690 | $ | 65,355 | $ | 55,155 | ||||||||||
Incentive compensation as a percentage of base salary | 83 | % | 34 | % | 39 | % | 36 | % | 33 | % |
The Board has the discretion to pay anyDecember 31 of our executives a bonus in addition to the bonus amount payable under our short term incentive compensation plan if it determines the executive’s accomplishments during the year meritedin which such additional compensation. In 2015, the Board electeddecision is made, and we will be obligated to pay Mr. McTaggart and Sasnett, in cash, a severance payment equal to his base salary on the expiration date.
Awards
Effective in 2015, on January 1 of each year all of our executive officers are granted rights to receive aThe actual number of shares of common stock in the futurethat may be earned by our Named Executive Officers under our long-term incentive compensation plan. The aggregate number of shares each executive is eligible to receive is initiallyprogram varies based upon the following formula (the “Long Term Share Formula”), and subsequently adjusted based uponfinancial performance of the Company’s actual performanceCompany relative to itsthe long-term financial performance measures:
Of
Named Executive Officer | | | Option Awards | | | Stock Awards | | ||||||||||||||||||
| Number of shares acquired on exercise | | | Value realized on exercise | | | Number of shares acquired on vesting | | | Value realized on vesting ($) | | ||||||||||||||
Frederick W. McTaggart | | | | | — | | | | | | — | | | | | | 22,229 | | | | | | 267,859 | | |
David W. Sasnett | | | | | — | | | | | | — | | | | | | 9,811 | | | | | | 118,223 | | |
Ramjeet Jerrybandan | | | | | — | | | | | | — | | | | | | 8,212 | | | | | | 98,955 | | |
Named Executive Officer | | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | | | Equity incentive plan awards: market value of unearned shares, units or other rights that have not vested ($) | | ||||||
Frederick W. McTaggart | | | | | 3,345(1) | | | | | | 40,307(1) | | |
| | | | | 10,035(2) | | | | | | 120,922(2) | | |
| | | | | 5,072(3) | | | | | | 61,118(3) | | |
| | | | | 7,609(4) | | | | | | 91,688(4) | | |
David W. Sasnett | | | | | 1,521(1) | | | | | | 18,328(1) | | |
| | | | | 4,567(2) | | | | | | 55,032(2) | | |
| | | | | 2,244(3) | | | | | | 27,040(3) | | |
| | | | | 3,366(4) | | | | | | 40,560(4) | | |
Ramjeet Jerrybandan | | | | | 1,458(1) | | | | | | 17,569(1) | | |
| | | | | 4,374(2) | | | | | | 52,707(2) | | |
| | | | | 2,190(3) | | | | | | 26,390(3) | | |
| | | | | 3,286(4) | | | | | | 39,596(4) | | |
only offer defined contribution plans.
Bonus % | Number of Shares Granted | |||||||||||
Time Vesting(1) | Performance Based(2) | |||||||||||
Frederick W. McTaggart Chief Executive Officer | 50 | % | 10,604 | 10,604 | ||||||||
David W. Sasnett Executive VP & Chief Financial Officer | 30 | % | 4,277 | 4,277 | ||||||||
John Tonner Executive VP & Chief Operating Officer | 30 | % | 3,982 | 3,982 | ||||||||
Ramjeet Jerrybandan VP Overseas Operations | 20 | % | 1,688 | 1,688 | ||||||||
Gerard J. Pereira VP Engineering & Technology | 20 | % | 1,573 | 1,573 |
The long-term performance measures selected by the Board of Directors and the specific rationale for selecting each measure are set forth below:
The respective weighting assigned to each long-term performance measure for our Named Executive Officers are set forthupon termination or Change in the table below.
Weighting of Long-Term Performance Measures | ||||||||||||
Three-Year Cumulative Operating Cash Flow | Three-Year Cumulative Earnings Per Share | Three-Year Cumulative Revenues | ||||||||||
Frederick W. McTaggart Chief Executive Officer | 20 | % | 40 | % | 40 | % | ||||||
David W. Sasnett Executive VP & Chief Financial Officer | 20 | % | 40 | % | 40 | % | ||||||
John Tonner Executive VP & Chief Operating Officer | 20 | % | 40 | % | 40 | % | ||||||
Ramjeet Jerrybandan VP Overseas Operations | 20 | % | 40 | % | 40 | % | ||||||
Gerard J. Pereira VP Engineering & Technology | 20 | % | 40 | % | 40 | % |
Under our long term incentive compensation plan our executive officers are eligibleControl, as defined below, pursuant to earn varying numbers of shares of our common stock based upon the Company’s achievement of the (1) minimum threshold, (2) target or (3) upper amount that has been established for each of the long-term performance measures. The following table sets forth the number of shares each executive officer is eligible to receive as incentive compensation based upon the relative achievement of each of these amounts:
Named Executive Officer | Below Threshold | Threshold | Target | Maximum | ||||||||||||
Frederick W. McTaggart Chief Executive Officer | 0 | 5,302 | 10,604 | 16,754 | ||||||||||||
David W. Sasnett Executive VP & Chief Financial Officer | 0 | 2,139 | 4,277 | 6,758 | ||||||||||||
John Tonner Executive VP & Chief Operating Officer | 0 | 1,991 | 3,982 | 6,292 | ||||||||||||
Ramjeet Jerrybandan VP Overseas Operations | 0 | 844 | 1,688 | 2,667 | ||||||||||||
Gerard J. Pereira VP Engineering & Technology | 0 | 787 | 1,573 | 2,485 |
As with every employer in the Cayman Islands, we are required by the National Pension Law to provide a pension plan for our employees in the Cayman Islands. We belong to the Cayman Islands Chamber Pension Plan, the Ocean Conversion Staff Pension Plan and the Fidelity Pension Plan in the Cayman Islands. The Chamber Pension Plan is a non-profit entity that is administered by the Bank of Butterfield; the Ocean Conversion Staff Pension Plan has as its trustee Colonial Private Trustee Limited and is administered by the British Caymanian Insurance Company Ltd.; and the Fidelity Pension Plan is administered by Fidelity Pension Services (Cayman) Limited, who are also the trustees of the plan.
Under the Cayman Islands National Pensions Law, all employees between the ages of 18 and 60 must contribute a specified minimum percentage of their earnings to a pension plan. Since June 1, 2002, all employees must contribute 5% of their earnings to a pension plan. An employee also has the option of contributing more than the prescribed minimum. We are required to match the contribution of the first 5% of each participating employee’s salary to a maximum of $72,000. Employees earning more than $72,000 are not
required to make contributions on amounts over $72,000. All contributions by our employees are collected by us and paid into the various pension plans on a monthly basis.
All three plans are defined contribution plans, and as such the amount that an employee receives upon retirement is directly related to the amount contributed to the plan by the employee while working. Once an employee retires (employees become eligible for retirement at age 60 in the Cayman Islands), an employee has the following options for receiving benefits:
Pursuant to their respective employment agreements, our Chief Executive Officer, Chief Financial Officer, Vice President of Overseas Operations and Vice President of Engineering & Product Technology were each provided with an automobile expense allowance of $1,150 per month in 2015. Pursuant to the employment agreement with our Chief Operating Officer, we provided him with an automobile expense allowance of $1,000 per month in 2015.
Our Named Executive Officers’ employment agreements may be terminated upon the occurrence of the following:
Named Executive Officer | | | Salary ($) | | | Medical Insurance ($) | | | Total Compensation ($) | | |||||||||
Frederick W. McTaggart(1) | | | | | 2,000 | | | | | | 62,519 | | | | | | 64,519 | | |
David W. Sasnett(2) | | | | | 1,000 | | | | | | 25,982 | | | | | | 26,982 | | |
Ramjeet Jerrybandan(3) | | | | | 2,000 | | | | | | 55,056 | | | | | | 57,056 | | |
If
to approveOur Chief Executive Officer’s, Chief Financial Officer’s and setting the terms of such severance arrangements, the Committee recognizes that executives, especially highly ranked executives, often face challenges securing new employment following termination. TheseChief Operating Officer’s employment agreements provide for a lump sum severance payment equal to 24 months, to our Chief Executive Officer, a lump sum severance payment of 12 months to our Chief Financial Officer and a lump sum severance payment equal to six months, to our Chief Operating Officer,respectively, of their then current respective base salaries if their employment is terminated without cause or if their employment agreements are not renewed. The Committee negotiated our Chief Executive Officer’sthese severance packagepackages to provide himthem with an amount equal to histheir base salary for the length of histheir non-competition arrangementarrangements with us. Based uponThe following table sets forth the data reviewed by the Committee, we believetotal amount of severance payments that our Chief Executive Officer’s, Chief Financial Officer’swould be made to Messrs. McTaggart, Sasnett and Chief Operating Officer’s severance packages are generally in line with severance packages offered to chief executive officers, chief financial officers and chief operating officersJerrybandan if their employment agreements were terminated without cause as of comparable companies.
Name | | | Severance ($) | | |||
Frederick W. McTaggart | | | | | 1,488,300 | | |
David W. Sasnett | | | | | 731,500 | | |
Ramjeet Jerrybandan | | | | | 178,500 | | |
The Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for 2015 and this proxy statement.
Submitted by the Members of the 2015 Compensation CommitteeCarson K. EbanksRichard L. FinlayClarence B. Flowers, Jr.Raymond Whittaker
The following table summarizes the compensation of (1) our Chief Executive Officer, (2) our Chief Financial Officer and (3) our three other most highly compensated executive officers based upon total compensation (collectively, our “Named Executive Officers”) for the fiscal years ended December 31, 2015, 2014 and 2013.
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
Frederick W. McTaggart Chief Executive Officer | 2015 | 453,025 | 399,805 | 226,513 | 18,000 | 1,097,343 | ||||||||||||||||||
2014 | 453,026 | 381,685 | — | 17,400 | 852,111 | |||||||||||||||||||
2013 | 411,841 | 308,883 | 173,458 | 16,800 | 910,982 | |||||||||||||||||||
David W. Sasnett Executive VP & Chief Financial Officer | 2015 | 304,500 | 120,000 | 91,350 | 14,400 | 530,250 | ||||||||||||||||||
2014 | 300,000 | 108,325 | — | 13,800 | 422,125 | |||||||||||||||||||
2013 | 285,525 | 100,000 | — | 13,200 | 398,725 | |||||||||||||||||||
John Tonner Executive VP & Chief Operating Officer | 2015 | 283,500 | 111,690 | 85,050 | 12,600 | 492,840 | ||||||||||||||||||
2014 | 275,215 | 94,935 | — | 12,000 | 382,150 | |||||||||||||||||||
2013 | 245,725 | 70,000 | — | 11,400 | 327,125 | |||||||||||||||||||
Ramjeet Jerrybandan VP Overseas Operations | 2015 | 180,250 | 65,355 | 36,050 | 18,000 | 299,655 | ||||||||||||||||||
2014 | 175,000 | 56,870 | — | 17,400 | 249,270 | |||||||||||||||||||
2013 | 166,320 | 50,000 | — | 16,800 | 233,120 | |||||||||||||||||||
Gerard J. Pereira VP Engineering & Technology | 2015 | 168,000 | 55,155 | 33,600 | 18,000 | 274,755 | ||||||||||||||||||
2014 | 157,293 | 47,180 | — | 17,400 | 221,873 | |||||||||||||||||||
2013 | 152,712 | 45,815 | — | 16,800 | 215,327 |
Under the terms of Mr. McTaggart’s employment agreement, through the year ended December 31, 2013 his bonus was to be paid 75% in cash and 25% in Ordinary Shares, valued at the market price at the close of trading on December 31, of the relevant fiscal year. As a result, Mr. McTaggart received 12,302 common shares with a value of $173,458 in connection with his bonus for 2013.
On January 1, 2004, we entered into a three-year employment agreement with Frederick W. McTaggart, our President and Chief Executive Officer. This agreement is subject to extension each year upon mutual agreement such that the term will be for three years from January 1 of the next following year, which is currently through December 31, 2017. If we terminate Mr. Frederick McTaggart without cause, he is entitled to twice his current annual base salary.
Mr. McTaggart is also entitled to an automobile expense allowance, which amounted to $14,400, $13,800 and $13,200 in 2015, 2014 and 2013, respectively. This allowance increases on January 1 of each year by $50 per month.
Effective January 1, 2008, we entered into a two-year employment agreement with Mr. Sasnett, our Executive Vice President and Chief Financial Officer, which has since been extended through December 31, 2017. Under the terms of the employment agreement, Mr. Sasnett is entitled to an annual base salary and a performance bonus if certain performance goals are met. Prior to 2014, these performance goals were established by the Company’s Chief Executive Officer. Beginning in 2014, the Company’s Compensation Committee establishes Company performance goals and the Chief Executive Officer establishes Mr. Sasnett’s individual performance goals. If the Chief Executive Officer of the Company or the Company decides not to extend the term of the employment agreement, the term of the employment agreement will expire on December 31 of the year in which such decision is made, and the Company will be obligated to pay Mr. Sasnett, in cash, a severance payment equal to his base salary on the expiration date.
Mr. Sasnett is also entitled to an automobile expense allowance, which amounted to $14,400, $13,800 and $13,200 in 2015, 2014 and 2013, respectively. This allowance increases on January 1 of each year by $50 per month.
Effective September 1, 2011, we entered into an employment agreement with Mr. Tonner. Under the terms of this employment agreement, Mr. Tonner is entitled to an annual base salary and a performance bonus pursuant to the completion of certain performance goals. Prior to 2014, these performance goals were established by the Company’s Chief Executive Officer. Beginning in 2014, the Company’s Compensation Committee establishes Company performance goals and the Chief Executive Officer establishes Mr. Tonner’s individual performance goals.
Pursuant to the terms of the employment agreement, Mr. Tonner is entitled to an automobile expense allowance, which amounted to $12,600, $12,000 and $11,400 in 2015, 2014 and 2013, respectively. This allowance increases on January 1 of each year by $50 per month during the term of this agreement.
Effective January 1, 2008, we entered into an employment agreement with Mr. Jerrybandan. Under the terms of this employment agreement, Mr. Jerrybandan is entitled to an annual base salary and a performance bonus pursuant to the completion of certain performance goals. Prior to 2014, these performance goals were established by the Company’s Chief Executive Officer. Beginning in 2014, the Company’s Compensation Committee establishes Company performance goals and the Chief Executive Officer establishes Mr. Jerrybandan’s individual performance goals.
Pursuant to the terms of the employment agreement, Mr. Jerrybandan is entitled to an automobile expense allowance, which amounted to $14,400, $13,800 and $13,200 in 2015, 2014 and 2013, respectively. This allowance increases on January 1 of each year by $50 per month during the term of this agreement.
Effective January 1, 2008, we entered into an employment agreement with Mr. Pereira. Under the terms of this employment agreement, Mr. Pereira is entitled to an annual base salary and a performance bonus pursuant to the completion of certain performance goals. Prior to 2014, these performance goals were established by the Company’s Chief Executive Officer. Beginning in 2014, the Company’s Compensation Committee establishes Company performance goals and the Chief Executive Officer establishes Mr. Pereira’s individual performance goals.
Pursuant to the terms of the employment agreement, Mr. Pereira is entitled to an automobile expense allowance, which amounted to $14,400, $13,800 and $13,200 in 2015, 2014 and 2013, respectively. This allowance increases on January 1 of each year by $50 per month during the term of this agreement.
The following table summarizes the outstanding option awards as of December 31, 2015, for each Named Executive Officer.
Number of Securities Underlying Unexercised Options at Fiscal Year End | Option Exercise Price(1) | Option Grant Date | Option Expiration Date(2) | |||||||||||||||||
Named Executive Officer | Exercisable | Unexercisable | ||||||||||||||||||
Frederick W. McTaggart | 23,333 | — | 10.68 | 02/22/11 | 02/22/17 | |||||||||||||||
David W. Sasnett | 14,383 | — | 10.68 | 02/22/11 | 02/22/17 | |||||||||||||||
John Tonner | 10,600 | — | 9.11 | 07/15/11 | 07/15/17 | |||||||||||||||
Ramjeet Jerrybandan | 5,901 | — | 10.68 | 02/22/11 | 02/22/17 | |||||||||||||||
Gerard J. Pereira | 9,442 | — | 10.68 | 02/22/11 | 02/22/17 |
The following table provides information for each of the Named Executive Officers on stock option exercises during the year ended December 31, 2015, including the number of shares acquired upon exercise and the value realized, before payment of any applicable withholding tax and broker commissions.
Option awards | ||||||||
Named Executive Officer | Number of shares acquired on exercise | Value realized on exercise | ||||||
Frederick W. McTaggart | — | — | ||||||
David W. Sasnett | 11,883 | 19,745 | ||||||
John Tonner | 7,400 | 28,022 | ||||||
Ramjeet Jerrybandan | 5,901 | 4,017 | ||||||
Gerard J. Pereira | 3,925 | 8,439 |
No shares vested to the Named Executive Officers during the year ended December 31, 2015.
We do not have any defined benefit plans and only offer defined contribution plans.
We do not have any non-qualified deferred contribution plans or other deferred compensation plans.
The section below describes the payments that may be made to the Named Executive Officers upon termination or Change in Control, as defined below, pursuant to individual agreements. For payments made to a participant upon a retirement other than in connection with termination or a Change in Control, see “Pension Benefits” above.
Our Named Executive Officers’ employment agreements may be terminated upon the occurrence of the following:
Additionally, our Chief Financial Officer’s employment agreement may be terminated due to his conviction of a felony or his commission of an act or omission that could result in material harm to us or conduct justifying dismissal under Cayman Islands law. Our other Named Executive Officers’ employment agreements may be terminated due to conduct by such Named Executive Officer justifying dismissal under Cayman Islands law.
Upon termination due to the Named Executive Officer’s inability to discharge his duties due to physical or mental illness for a period of more than 60 days, the Named Executive Officer will be terminated. In the case of all Named Executive Officers other than our Chief Financial Officer and Chief Operating Officer, we will pay such Named Executive Officer $1,000 per year, provide medical insurance for him and his family, and contribute to a pension fund for the Named Executive Officer for a period of two years. In the case of our Chief Financial Officer, we will pay him $1,000 per year and provide medical insurance for him and his family for a period of one year. In the case of our Chief Operating Officer, we will pay him $1,000 per year and provide medical insurance for him and his family for a period of two years.
Assuming our Named Executive Officers’ employment agreements were terminated on December 31, 2015, due to the Named Executive Officer’s inability to discharge his duties due to physical or mental illness for a period of more than 60 days, the compensation due to our Named Executive Officers would be as set forth in the following table.
Named Executive Officer | Salary ($) | Medical Insurance ($) | Pension Fund Contribution ($) | Total Compensation ($) | ||||||||||||
Frederick W. McTaggart | 2,000 | 29,175 | 7,200 | 38,375 | ||||||||||||
David W. Sasnett | 1,000 | 24,052 | — | 25,052 | ||||||||||||
John Tonner | 2,000 | 52,882 | — | 54,882 | ||||||||||||
Ramjeet Jerrybandan | 2,000 | 13,314 | 7,200 | 22,514 | ||||||||||||
Gerard J. Pereira | 2,000 | 37,519 | 7,200 | 46,719 |
If our Chief Financial Officer terminates his employment agreement or if we terminate his employment agreement due to his commission of an act or omission that could result in material harm to us or conduct justifying dismissal under Cayman Islands law, he will forfeit all unvested shares issued pursuant to his employment agreement. If his employment agreement is otherwise terminated or upon a “Change in Control,” as defined below, all unvested shares issued pursuant to his employment agreement will vest immediately.
Upon termination of employment, our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer are entitled to receive severance payments under their employment agreements. Our Chief Executive Officer’s, Chief Financial Officer’s and Chief Operating Officer’s employment agreements provide for a lump sum severance payment equal to 24 months, 12 months and six months, respectively, of their then current respective base salaries if their employment is terminated without cause or if their employment agreements are not renewed. The Committee negotiated these severance packages to provide them with an amount equal to their base salary for the length of their non-competition arrangements with us. The following table sets forth the total amount of severance payments that would be made to Messrs. McTaggart, Sasnett and Tonner if their employment agreements were terminated without cause as of December 31, 2015:
Upon a “Change in Control,” as defined below, our Chief Financial Officer may elect to terminate his employment and receive a lump sum payment equal to three times his then current base salary. In determining whether to approve and setting the terms of such Change in Control arrangement, the Committee recognizes the importance to us and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with rumored or actual fundamental corporate changes. A properly arranged Change in Control provision protects shareholder interests by enhancing employee focus during rumored or actual Change in Control activity through:
Our Chief Financial Officer’s employment agreement provides that, at his election, he may terminate his employment upon a Change in Control and receive a payment of 36 months of his then current base salary. After reviewing the practices of companies represented in the compensation data we obtained, the Committee negotiated our Chief Financial Officer’s Change in Control arrangement to provide him an amount equal to three times his base salary. We believe that our Chief Financial Officer’s Change in Control arrangement is generally in line with such arrangements offered to chief financial officers of comparable companies.
For the purposes of this discussion, a “Change of Control” occurs when: (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, publicly announces that such person or group has become the beneficial owner of more than 50% of the combined voting power (“Controlling Voting Power”) of our then outstanding securities that may be cast for the election of directors and (ii) the persons who were our directors before such event shall cease to constitute a majority of our Board of Directors, or any successor, as the direct or indirect result of any person or group acquiring Controlling Voting Power.
The following table sets forth the total amount of change in control payments that would be made to Mr. Sasnett if his employment agreement was terminated upon a “Change in Control” as of December 31, 2015:
Name | | | Change Control ($) | | |||
David W. Sasnett | | | | 1,097,250 | | |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Brian E. Butler* | 38,550 | 15,800 | 54,350 | |||||||||
Carson K. Ebanks* | 35,200 | 15,200 | 50,400 | |||||||||
Richard L. Finlay*(2) | 46,700 | 15,200 | 61,900 | |||||||||
Clarence B. Flowers, Jr.* | 35,200 | 15,200 | 50,400 | |||||||||
Wilmer F. Pergande*(3) | 138,700 | 19,400 | 158,100 | |||||||||
Leonard J. Sokolow*(4) | 66,700 | 19,400 | 86,100 | |||||||||
Raymond Whittaker*(5) | 65,100 | 18,800 | 83,900 |
* The Board of Directors has determined that each of such persons is an “independent director” under the corporate governance rules of NASDAQ. (1) Represents fair value on the date of grant. (2) Of the $62,950 fees earned or paid in cash, $20,000 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary. (3) Of the $127,100 fees earned or paid in cash, $27,500 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary. Director Compensation Policy Our Chairman of the Board of Directors |
Our Chairman receives an annual cash retainer of $58,000 in addition to the meeting$73,000 and attendance fees paid to each non-executive director.
Each director who is not an executive officer is entitled to an annual cash retainer of $18,000 and an attendance fee$33,000. In addition, under the non-executive directors share plan, the Chairman of $3,000 for eachthe Board of Directors’ meeting attended,Directors and $1,000 for each telephonic Boarddirector who is not an executive officer receives an annual equity retainer in Ordinary Shares worth $32,500 and $30,000, respectively. A Director who is also an executive officer of Directors’ meetings attended.
our Company (i.e. Mr. McTaggart) is not entitled to an annual retainer of cash or equity.
Each director who is a member of the Compensation Committee is entitled tocommittee receive an attendance fee of $1,100 for each Compensation Committee meeting attended, except for the Chairman of the Compensation Committee, who is entitled to $1,850 for each Compensation Committee meeting attended.
annual equity retainer in Ordinary Shares worth $7,200 and $8,400, respectively.
$3,700, respectively. In addition, under the non-executive directors share grant plan, each director receivedcommittee member and the Chairman of the committee receive an annual equity retainer in Ordinary Shares worth the share equivalent$3,600 and $4,200, respectively.
Our Directors who are also executive officers of our Company are not entitled to an annual retainer or any attendance fees.
The Compensation Committee of the Board of Directors consists of Messrs. Ebanks, Finlay, Flowers and Whittaker. No member of the Compensation Committee is, or at any time in the past has been, an officer or employee of the Company or any of its subsidiaries.
Reports
The following graph compares the changes over the last five years in the value of $100 invested in (i) the Company’s Ordinary Shares, (ii) the Standard & Poor’s 500 Stock Index (“S&P 500 Index”) and (iii) ratably in each of the five companies that constitute the Company’s peer group index. The peer group consists of Middlesex Water Company, Connecticut Water Services Inc., American States Water Co., California Water Service Group and Artesian Resources Corporation. The year-end values of each investment are based on share price appreciation without consideration of the reinvestment of all dividends.
Historical stock price performance shown on the performance graph is not necessarily indicative of future stock price performance.
Consolidated Water Co. Ltd. | S&P 500 Index | Peer Group Index | ||||||||||
2010 | 100.00 | 100.00 | 100.00 | |||||||||
2011 | 93.57 | 100.00 | 99.52 | |||||||||
2012 | 80.70 | 113.40 | 113.89 | |||||||||
2013 | 153.76 | 146.97 | 130.62 | |||||||||
2014 | 116.47 | 163.71 | 145.12 | |||||||||
2015 | 133.48 | 162.52 | 159.08 |
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