| THE NOMINATING, SUSTAINABILITY AND GOVERNANCE COMMITTEE
| THE NOMINATING, SUSTAINABILITY AND GOVERNANCE COMMITTEE HAS THE PURPOSE AND RESPONSIBILITIES TO: | | |
| · | Identify individuals believed to be qualified to become Board members, consistent with criteria approved by the Board, and to select, or recommend to the Board, the nominees to stand for election as directors at the Annual General Meeting of shareholders or, if applicable, at a special meeting of shareholders. |
| · | Develop and recommend to the Board standards to be applied in making determinations as to the absence of material relationships between the Company and a director. |
| · | Identify Board members qualified to fill vacancies on any committee of the Board (including the Committee) and to recommend that the Board appoint the identified member or members to the respective committee. |
| · | Develop and recommend to the Board a set of Board corporate governance guidelines as well as a code of ethics for senior financial officers and a general code of conduct, anti-trust and anti-corruption policy applicable to the Company and (as deemed appropriate) its subsidiaries, and to review those guidelines and policies at least once a year. |
| · | Review all proposed waivers of the Company’s Code of Conduct and Code of Ethics for senior financial officers. |
| · | Review recent developments in corporate governance practices, published criteria and laws & regulations applicable to the Company, and advise the Board on such developments. |
| · | Review the Company’s strategies, activities and policies regarding sustainability and other ESG related matters and make recommendations to the Board, in particular review of the Company’s Sustainability Report and ISS review of the Company’s governance and practices (if any). |
| · | Prepare and issue an evaluation of the Committee’s performance. |
| · | Report to the Board on a regular basis, and not less than once per year. |
| · | Conduct annual board and committee effectiveness evaluations and establish procedures for the Committee to exercise oversight of the evaluation of the Board. |
| · | Perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the nomination of Board and committee members. |
| · | Develop and recommend to the Board standards to be applied in making determinations as to the absence of material relationships between the Company and a director. |
| · | Identify Board members qualified to fill vacancies on any committee of the Board (including the Committee) and to recommend that the Board appoint the identified member or members to the respective committee. |
| · | Establish procedures for the Committee to exercise oversight of the evaluation of the Board. |
| · | Develop and recommend to the Board a set of Board corporate governance guidelines as well as a code of ethics for senior financial officers and a general code of conduct, anti-trust and anti-corruption policy applicable to the Company and (as deemed appropriate) its subsidiaries, and to review those guidelines and policies at least once a year. |
| · | Review all proposed waivers of the Company’s Code of Conduct and Code of Ethics for senior financial officers. |
| · | Review recent developments in corporate governance practices, published criteria and laws & regulations applicable to the Company, and advise the Board on such developments. |
| · | Review the Company’s strategies, activities and policies regarding sustainability and other environmental, social and governance (“ESG”) related matters and make recommendations to the Board, in particular review of the Company’s Sustainability Report and ISS review of the Company’s governance and practices (if any). |
| · | Prepare and issue an evaluation of the Committee’s performance. |
| · | Report to the Board on a regular basis, and not less than once per year. |
| · | Perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the nomination of Board and committee members. |
Orion Engineered Carbons 2021 Proxy Statement 27Orion Engineered Carbons 2022 Proxy Statement 29 Stock Ownership Policy for Directors In order to evidence the financial alignment of the Company’s directors with the interest of the Company’s shareholders, the Board has established a stock ownership policy for directors. Under these guidelines,this guideline, each director is required to own Common Shares that have a fair market value (determined as of each Annual General Meeting of the Company’s shareholders) equal to five times (5x) the annual cash retainer paid to the applicable independent director, and each incumbent director shall have five (5) years from the implementation of the policy in 2019 (and any new director shall have five (5) years from his or her initial appointment or election to the Board) within which to satisfy the foregoing stock ownership policy. See the share ownership of each director under “Security Ownership of Certain Beneficial Owners” in this Proxy Statement. No Compensation Committee Interlocks andor Insider Participation None of our executive officers serves as a member of the board of directors or the compensation committee of any other company that has any executive officers serving as a member of our Board or Compensation Committee. Certain Relationships and Related Party Transactions Review and Approval of Transactions with Related Persons The Board has adopted a Policy Regarding Transactions with Related Parties (the “Related Party Transaction Approval Policy”), which requires that all Related Party Transactions are subject to approval or ratification in accordance with the Company’s policy, and that an Independent Committee review and approve or take such other action it may deem appropriate with respect to (a) Related Party Transactions, (b) any material amendment, modification, extension or termination of a Related Party Transaction, (c) any amendment, modification, extension or termination of a transaction that thereby will become a Related Party Transaction, and (d) the handling and resolution of any disputes arising in connection with Related Party Transactions. The Board has assigned this task to the Audit Committee as independent committee. The Related Party Transaction Approval policy defines a “Related Party Transaction” as (i) a transaction in which the Company or one or more of its subsidiaries is a participant and which involves an amount exceeding $120,000, in which any director, officer, greater than 5% shareholder of the Company or any other “related person” (as defined in Item 404 and included below), has or will have a direct or indirect material interest, (ii) any material amendment, modification, extension or termination of the Registration Rights Agreement the Company is a party to, and (iii) any other transaction for which disclosure will be required pursuant to Item 404. | | In determining whether to approve or ratify any Related Party Transaction, the Independent Committeeindependent committee or the disinterested members of the Board, as the case may be, shall consider all factors that are relevant to the Related Party Transaction, including, without limitation, the following: ·The terms of the Related Party Transaction;
·The related person’s interest in the Related Party Transaction;
·The purpose and timing of the Related Party Transaction;
·The nature of the involvement of the Company and its subsidiaries in the Related Party Transaction and whether the Company or its subsidiaries (as applicable) have demonstrable business reasons to enter into the Related Party Transaction;
·Whether the Related Party Transaction would impair the independence of a director;
·Whether the Related Party Transaction involves any potential reputational or other risk issues; and
·Any other information the Independent Committee deems relevant.
| · | The terms of the Related Party Transaction; |
| · | The related person’s interest in the Related Party Transaction; |
| · | The purpose and timing of the Related Party Transaction; |
| · | The nature of the involvement of the Company and its subsidiaries in the Related Party Transaction and whether the Company or its subsidiaries (as applicable) have demonstrable business reasons to enter into the Related Party Transaction; |
| · | Whether the Related Party Transaction would impair the independence of a director; |
| · | Whether the Related Party Transaction involves any potential reputational or other risk issues; and |
| · | Any other information the Independent Committee deems relevant. |
In the event that the Company becomes aware of a Related Party Transaction that was not approved under thisthe Policy, such Related Party Transaction will be reviewed in accordance with thisthe Policy as promptly as reasonably practicable. The Independent Committee will consider all of the relevant facts and circumstances, evaluate all options available to the Company, including ratification, amendment or termination of such Related Party Transaction and take such course of action as the Independentindependent Committee deems appropriate under the circumstances. The policy supplements the conflict of interest provisions in our Code of Conduct and Code of Ethics for Senior Financial Officers. Related Party Transactions In fiscal year 2020, Orion and its subsidiaries had no transactions, nor are there any currently proposed transactions, inAs of December 31, 2021, related parties with which Orion or its subsidiaries was, orentered into the below transactions concerned (i) Deutsche Gaßrußwerke (DGW), a joint venture company of Orion that is to be, a participantaccounted for using the equity method, and (ii) Arcelor Mittal S.A., whose Luxembourg branch is chaired by Mr. Michel Wurth, one of our current directors. The transactions concerned the amount involved exceeds $120,000 and any related person (as defined above) had or will have a direct or indirect material interest reportable under SEC rules.following:
(in Million $) | DGW | Arcelor Mittal S.A. | Total | Trade Receivables | 0.6 | 0.0 | 0.6 | Trade Payables | 24.9 | 0.0 | 24.9 | Purchases | 111.9 | 1.2 | 113.1 | Sales and Revenue | 5.7 | 0.0 | 5.7 |
Contacting the Board Any shareholder or any other interested party who wishes to communicate directly with our Board or the non-managementnon-executive directors as a group may do so by corresponding with Investor Relations at the following address: Investor Relations, Orion Engineered Carbons S.A., 4501 Magnolia Cove1700 City Plaza Drive, Suite 106, Kingwood,300, Spring, Texas 77345,77389, or via e-mail at investor- relations@orioncarbons.com.investor-relations@orioncarbons.com. The Company will forward any such communication to the intended recipients, unless the communication is clearly of a marketing nature or is unduly hostile, threatening, illegal or similarly inappropriate. |
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Executive Officers
30 Executive Officers Set forth below is information regarding the Company’s current executive officers. Name | Age | Title | Corning F. Painter | 58 | Chief Executive Officer | Lorin Crenshaw | 45 | Chief Financial Officer | Sandra Niewiem | 45 | Senior Vice President, Global Specialty Carbon Black and EMEA Region | Pedro Riveros | 50 | Senior Vice President, Global Rubber Carbon Black and Americas Region | Carlos Quinones | 56Name | Age | Title | Corning F. Painter | 59 | Chief Executive Officer | Lorin Crenshaw(1) | 46 | Chief Financial Officer (until October 27, 2021) | Robert Hrivnak | 61 | Interim Chief Financial Officer (from October 27,2021 until April 18, 2022) | Jeffrey Glajch | 59 | Chief Financial Officer (from April 18, 2022) | Sandra Niewiem | 46 | Senior Vice President, Global Specialty Carbon Black and EMEA Region | Pedro Riveros | 51 | Senior Vice President, Global Rubber Carbon Black and Americas Region | Carlos Quinones | 57 | Senior Vice President, Global Operations |
| (1) | Mr. Crenshaw resigned from the Company in 2021. His last day as an employee of the Company was November 21, 2021, and his last day as CFO was October 27, 2021. |
Corning F. Painter. Mr. Painter became the CEO of Orion Engineered Carbons in September 2018. He is responsible for setting strategy and policy, developing leadership talent, meeting customer and shareholder commitments, and setting company culture. Prior to joining Orion, he was the Executive Vice President for Industrial Gases at Air Products and Chemicals, a global industrial gas company from 2014 until he left the company in 2018. Prior to that he was Senior Vice Present of the Merchant Gases division of Air Products from 2013 to 2014. Mr. Painter joined Air Products in 1984 as a participant in a career development program and held various positions including Vice President, Global Electronics, Senior Vice President, Corporate Strategy and Technology, and Senior Vice President Supply Chain (operations, engineering, procurement, safety). He was based overseas in Asia and Europe for ten years. Mr. Painter has served on numerous non-profit boards. He is a Certified Professional Engineer and holds a B.S. in chemical engineering degree from Carnegie Mellon University. Lorin Crenshaw.Robert Hrivnak. Mr. CrenshawHrivnak joined Orion in November 2019August 2020 and was appointed Interim Chief Financial Officer in October 2021. Mr. Hrivnak has over 2030 years of diversifiedexperience as an accomplished financial experience, including more than 10 years in senior leadership positions with global chemical companies. Immediately prior toexecutive. Mr. Hrivnak joined Orion from Clearwater Paper, a manufacturer of paper products, where he served as Chief Financial Officer and Chief Accounting Officer. Prior to Clearwater, he served as Chief Accounting Officer of Albemarle Corporation’sItron, Inc., a global lithiumpublic technology and services company providing products and services to utilities and municipalities. Mr. Hrivnak is a Certified Public Accountant (CPA) and holds a BS business and accounting from May 2016 to October 2019Ohio State and also earlier served in several key management roles including Treasurer and Heada MBA from the University of Investor Relations while at Albemarle from January 2014 to April 2016.Wisconsin.
Jeffrey Glajch.Mr. Crenshaw alsoGlajch joined Orion on April 18, 2022 as Chief Financial Officer. Mr. Glajch has over 1030 years of experience with investment management firms Citigroup Asset Managementleading corporate finance and Prudential Capital Group. Mr. Crenshawaccounting control functions for both public and private companies. Prior to joining Orion, he served as CFO for 13 years for Graham Corporation, a leading designer and manufacturer of vacuum and heat transfer equipment for energy markets and process industries. Prior to Graham Corporation, he held senior financial roles at a number of companies. Glajch holds an MBA from Purdue University, a Master’smaster’s degree in business administrationchemical engineering from ColumbiaClarkson University and a Bachelor of Sciencebachelor’s degree in Business Administrationchemistry from Florida A&MCarnegie-Mellon University. | | Sandra Niewiem. Dr. Niewiem was appointed Senior Vice President Global Specialty Carbon Black and EMEA Region in September 2019. Dr. Niewiem joined Orion in December 2013 and previously held the position of Vice President Global Product Management and Business Development Specialty Carbon Black. She has over 19 years of experience in process industries, engineering and industrial goods, and more than 13 years in management consulting at a global consulting firm. Dr. Niewiem holds an Economics Doctorate from European Business School and a Master’s in business administration from James Madison University, Virginia. Pedro Riveros. Mr. Riveros joined Orion Engineered Carbons in the current role in June 2019. Immediately prior to Orion, he served in multiple business leadership roles at Air Products from 1994 to 2019 where his key areas of expertise included Business Strategy, Margin Enhancement, Productivity and Supply Chain Management. He has 25 years of experience in varied general management and business management roles in the industrial gas and chemicals area both in North and South America. Mr. Riveros holds a Bachelor’s degree in mechanical engineering from Rensselaer Polytechnic Institute.Institute, New York. Carlos Quinones. Mr. Quinones joined Engineered Orion Carbons in the current role in June 2019. Immediately prior to joining Orion, he held multiple Operations leadership positions at Air Products from 2015 to 2019. Prior to Air Products, Mr. Quinones held positions of increasing leadership responsibilities in the chemical industry experience with Praxair, Rohm and Haas/Dow Chemical, and Arco Chemical. Mr. Quinones holds a Bachelor of Science degree in Mechanical Engineering from Texas A&M University. |
Orion Engineered Carbons 2021 Proxy Statement 29
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information regarding the beneficial ownership of our Common Shares as of April 29, 2021,
Orion Engineered Carbons 2022 Proxy Statement 31 Security Ownership of Certain Beneficial Owners The following table sets forth certain information regarding the beneficial ownership of our Common Shares as of April 28, 2022, by (i) each of our directors and named executive officers, individually, (ii) all of our directors and executive officers as a group, and (iii) each person known to our management to be the beneficial owner of more than 5% of the outstanding Common Shares. Name and Address of Beneficial Owner(1) | Common Shares Beneficially Owned | Percent | 5% Shareholders: | | | AllianceBernstein L.P.(2) | 6,622,599 | 10.9% | BlackRock, Inc.(3) | 4,046,221 | 6.6% | Wellington Management Group LLP(4) | 3,709,144 | 6.1% | T. Rowe Price Associates, Inc.(5) | 3,600,497 | 5.9% | Directors and Named Executive Officers(6): | | | Corning F. Painter(7) | 330,840 | * | Paul Huck(7)(8) | 33,150 | * | Dan F. Smith(7)(8) | 33,150 | * | Carlos Quinones(7) | 27,897 | * | Kerry A. Galvin(7)(8) | 22,996 | * | Hans-Dietrich Winkhaus(7)(8) | 18,648 | * | Didier Miraton(7)(8) | 18,150 | * | Lorin Crenshaw(7) | 17,445 | * | Mary Lindsey(8) | 9,832 | * | Yi Hyon Paik(8) | 9,832 | * | Michel Wurth(8) | 9,832 | * | Sandra Niewiem(7) | 5,763 | * | Pedro Riveros(7) | 5,761 | * | All executive officers and directors as a group: | | | (13) persons | 543,296 | 0.9% |
| * | Represents less than 1% of the number of Common Shares outstanding. |
| (1) | Beneficial ownership is determined in accordance with SEC rules. The percentage of Common Shares beneficially owned is based on 60,992,259 Common Shares of outstanding as of April 29, 2021. |
| (2) | As reported in a Schedule 13G/A filed by AllianceBernstein L.P. (“AllianceBernstein L.P.”) on February 8, 2021. Pursuant to the Schedule 13G/A, AllianceBernstein L.P. is an investment adviser organized in Delaware. According to the Schedule 13G/A, the Common Shares were acquired solely for investment purposes on behalf of client discretionary investment advisory accounts and the address of the principal office of AllianceBernstein. L.P. is 1345 Avenue of the Americas, New York NY 10105. |
| (3) | As reported on February 2, 2021 by (i) BlackRock, Inc., an investment adviser organized in New York (“BLK”). According to the Schedule 13G certain funds and accounts managed by BLK have the right to receive dividends and proceeds from the sale of the Common Shares. According to the Schedule 13G, the address of the principal office of each such entity is 55 East 52nd Street, New York NY 10055. |
| (4) | As reported in a Schedule 13G/A filed on February 3, 2021 by (i) Wellington Management Group LLP, a holding company organized in Massachusetts (“WMG”), (ii) Wellington Group Holdings LLP, a holding company organized in Delaware (“WGH”), (iii) Wellington Investment Advisors Holdings LLP, a holding company organized in Delaware (“WIAH”), and (iv) Wellington Management Company LLP, an investment adviser organized in Delaware (“WMC”). According to the Schedule 13G/A, the Common Shares are owned of record by clients of one more investment advisers directly or indirectly owned by WMG and those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, the Common Shares. According to the Schedule 13G/A, no such client is known to have such right or power with respect to more than 5% of the Common Shares. According to the Schedule 13G/A, WIAH is owned by WGH and WGH is owned by WMG, and the address of the principal office of each such entity is c/o Wellington Management Group Company LLP, 280 Congress Street, Boston MA 02210. |
| (5) | As reported in a Schedule 13G filed by T. Rowe Price Associates, Inc. (“T. Rowe”) on February 16, 2021. Pursuant to the Schedule 13G, T. Rowe is a registered investment adviser, organized in Maryland. According to the Schedule 13G, the clients of T. Rowe, including investment companies registered under the Investment Company Act of 1940 and separately managed accounts, have the right to receive or the power to direct the receipt of dividends from the sale of the Common Shares and no client has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of more than 5% of the outstanding Common Shares.Name and Address of Beneficial Owner(1) | Common Shares Beneficially Owned | Percent | 5% Shareholders: | | | T. Rowe Price Associates, Inc.(2) | 4,568,931 | 7.5% | William Blair Investment Management, LLC(3) | 4,196,079 | 6.9% | BlackRock, Inc.(4) | 3,999,900 | 6.6% | Pzena Investment Management, LLC(5) | 3,395,766 | 5.6% | Directors and Executive Officers: | | | Kerry A. Galvin(7) | 34,893 | * | Robert Hrivnak(6) | 2,500 | * | Paul Huck(7) | 53,497 | * | Mary Lindsey(7) | 25,179 | * | Didier Miraton(7) | 23,497 | * | Sandra Niewiem(6) | 7,241 | * | Yi Hyon Paik(7) | 15,179 | * | Corning F. Painter(6) | 480,437 | * | Carlos Quinones(6) | 33,572 | * | Pedro Riveros(6) | 10,797 | * | Dan F. Smith(7) | 58,497 | * | Hans-Dietrich Winkhaus(7) | 23,995 | * | Michel Wurth(7) | 15,179 | * | Directors and Executive Officers as a group (13 persons):(8) | 749,570 | |
| * | Represents less than 1% of the number of Common Shares outstanding. |
| (1) | Beneficial ownership is determined in accordance with SEC rules. The percentage of Common Shares beneficially owned is based on 60,749,265 Common Shares of issued as of April 28, 2022. |
| (2) | As reported in a Schedule 13G/A filed by T. Rowe Price Associates, Inc. on February 14, 2022. Pursuant to the Schedule 13G, T. Rowe Price Associates, Inc. is an investment adviser organized in Delaware. According to the Schedule 13G/A, the Common Shares were acquired in the ordinary course of business and the address of the principal office of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. The number of shares beneficially owned by T. Rowe Price Associates, Inc. with sole voting power amounts to 1,587,301 and the number of shares beneficially owned with sole dispositive power amounts to 4,568,931. |
| (3) | As reported on February 9, 2022 by William Blair Investment Management, LLC. Pursuant to the Schedule 13G, William Blair Investment Management, LLC is an investment advisor organized in Delaware. According to the Schedule 13G, the Common Shares were acquired and are held in the ordinary course of business. According to the Schedule 13G, the address of the principal office of William Blair Investment Management, LLC, is 150 North Riverside Plaza, Chicago, IL 60606. The number of shares beneficially owned by William Blair Investment Management, LLC with sole voting power amounts to 3,111,812 and the number of shares beneficially owned with sole dispositive power amounts to 4,196,079. |
| (4) | As reported in a Schedule 13G filed on February 3, 2022 by BlackRock, Inc. Pursuant to the Schedule 13G, BlackRock, Inc. is a parent holding company or control person organized in Delaware. According to the Schedule 13G, the Common Shares were acquired and are held in the ordinary course of business. According to the Schedule 13G, the address of the principal office of BlackRock Inc. is 55 East 52nd Street, New York, NY, 10055. The number of shares beneficially owned by BlackRock Inc. with sole voting power amounts to 3,942,797 and the number of shares beneficially owned with sole dispositive power amounts to 3,999,900. |
| (5) | As reported in a Schedule 13G filed by Pzena Investment Management, LLC on January 22, 2022. Pursuant to the Schedule 13G, Pzena Investment Management, LLC is a registered investment adviser, organized in Delaware. According to the Schedule 13G, the Common Shares were acquired and are held in the ordinary course of business and the address of the principal office of Pzena Investment Management, LLC is 320 Park Avenue, 8th Floor, New York, NY 10022. The number of shares beneficially owned by Pzena Investment Management, LLC with sole voting power amounts to 2,596,819 and the number of shares beneficially owned with sole dispositive power amounts to 3,395,766. |
| (6) | Includes the shares of restricted stock and/or restricted stock units that have vested or will vest, and will be converted to shares with voting rights, on or before June 30, 2022. The RSUs held by the executive officers exclude vested RSUs that have not been converted to shares and do not allow for voting rights. Under these agreements, units vest ratably over a 3-year period but are not converted to beneficially owned shares with voting rights until the end of the three-year period. |
| (7) | This amount includes 5,347 restricted shares granted to the reporting person on July 1, 2021, that will vest on the day prior to the 2022 Annual General Meeting. |
| (8) | Section 16(a) of the Securities Exchange Act of 1934 requires our Directors, executive officers, and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in ownership of our securities. Based solely on our review of the copies of Forms 3 and 4 (and any amendments) filed with the SEC and the written representations of our Directors and executive officers, we believe that during fiscal year 2021 our Directors and executive officers complied with all Section 16(a) filing requirements, except for late Form 4 filings for Mr. Riveros and Quinones, relating to the vesting of their restricted stock on December 21, 2021, which were filed on December 27, 2021. |
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the principal office of T. Rowe is 100 East Pratt Street, Baltimore MD 21202. |
| (6) | The RSUs held by theExchange Act requires our officers, directors and executive officers that are outstanding and vest within 60 days of April 30, 2021 are deemed outstanding for the purposes of computing the percentage of sharespersons who own more than 10% of our Common Stock ownedShares to file reports of ownership and changes in ownership with the SEC. These officers, directors and 10% shareholders are also required by such person or group, butSEC rules to furnish the Company with copies of all Section 16(a) reports they file.32 Proposal 2—Advisory Vote on Executive Compensation The Company is seeking a non-binding advisory vote from its shareholders to approve the compensation paid to our NEOs for 2021, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. This vote is commonly referred to as the “Say-on-Pay” vote. In accordance with the requirements of the SEC, we are not deemedproviding our shareholders with an opportunity to be outstandingexpress their views on the compensation paid to our NEOs in a non-binding, advisory vote. The Company’s core compensation philosophy is to align executive compensation with our shareholders’ interests and our annual and long- term performance. This includes linking executives’ pay to their performance and the Company’s overall annual and long-term performance. Our Board and the Compensation Committee are dedicated to ensuring that our executive compensation programs reflect best practices in numerous ways, including by making a portion of compensation performance-based to maximize both short- and long-term shareholder value. The Board believes the Company’s compensation programs are well-tailored to align executive officers’ interest with those of our shareholders, retain executive talent and reward performance. We encourage our shareholders to read the “Compensation Discussion and Analysis” section in this Proxy Statement, which describes (i) the processes our Compensation Committee used to determine the structure and amounts of the compensation of our NEOs for 2021 and (ii) how our executive compensation philosophy, policies and procedures operate and are designed to achieve our compensation objectives. The Compensation Committee and the Board believe that our executive compensation strikes the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our NEOs to dedicate themselves to value creation for our shareholders. In accordance with Section 14A of the Exchange Act and the related rules of the SEC, we are asking our shareholders to approve the following resolution regarding the compensation of our NEOs: RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the proxy statement for the purposeCompany’s 2022 Annual General Meeting of computingShareholders. Although this advisory vote is non-binding, the percentageBoard and the Compensation Committee will review and consider the voting results when making future decisions regarding our NEOs’ compensation and related executive compensation programs. Required Vote Resolutions at the Annual General Meeting of sharesShareholders are adopted by a simple majority of our Common Stock owned by any other personthe votes validly cast, regardless of the proportion of the issued share capital of the Company present or group.represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE, ON A NON-BINDING ADVISORY BASIS, FOR THE APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION PAID FOR 2021. | |
| (7) | IncludesOrion Engineered Carbons 2022 Proxy Statement 33 Proposal 3—Approval of the sharesCompensation of the Board of Directors of the Company We are asking our shareholders to approve the following resolution regarding the compensation of the Board of Directors of the Company: RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve to remunerate the members of the Board during the financial year that ends on December 31, 2022 as follows: (i) each non-executive director shall receive a cash retainer of $100,000 and restricted stock and/or restricted stock units that have vested or will vest on or before June 30, 2021. |
| (8) | This amount includes 9,832Common Shares of restricted shares grantedthe Company with a value of $100,000 at the time of issuance, with such awards generally subject to vesting only if the reporting person on July 1, 2020, that will vest on June 23, 2021. |
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than 10% of our Common Shares to file reports of ownership and changes in ownership with the SEC. These officers, directors and 10% shareholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports they file.
30
Proposal 2—Advisory Vote on Executive Compensation
The Company is seeking a non-binding advisory vote from its shareholders to approve the compensation paid to our NEOs for 2020, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. This vote is commonly referred to as the “Say-on-Pay” vote. In accordance with the requirements of the SEC, we are providing our shareholders with an opportunity to express their views on the compensation paid to our NEOs in a non-binding, advisory vote.
The Company’s core compensation philosophy is to align executive compensation with our shareholders’ interests and our annual and long-term performance. This includes linking executives’ pay to their performance and the Company’s overall annual and long-term performance.
Our Board and the Compensation Committee are dedicated to ensuring that our executive compensation programs reflect best practices in numerous ways, including by making a portion of compensation performance-based to maximize both short- and long-term shareholder value. The Board believes the Company’s compensation programs are well-tailored to align executive officers’ interest with those of our shareholders, retain executive talent and reward performance. We encourage our shareholders to read the “Compensation Discussion and Analysis” section in this Proxy Statement, which describes (i) the processes our Compensation Committee used to determine the structure and amounts of the compensation of our NEOs for 2020 and (ii) how our executive compensation philosophy, policies and procedures operate and are designed to achieve our compensation objectives. The Compensation Committee and the Board believe that our executive compensation strikes the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our NEOs to dedicate themselves to value creation for our shareholders.
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, we are asking our shareholders to approve the following resolution regarding the compensation of our NEOs:
RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the proxy statement for the Company’s 2021 Annual General Meeting of Shareholders.
Although this advisory vote is non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our NEOs’ compensation and related executive compensation programs.
director serves the full approximate one-year term she/he was appointed for; (ii) the non-executive Chairman of the Board shall receive an additional retainer of $105,000; (iii) the Chairman of the Audit Committee of the Board shall receive an additional retainer of $25,000; (iv) the Chairman of the Compensation Committee of the Board shall receive an additional retainer of $20,000, and (v) the Chairman of the Nominating, Sustainability and Governance Committee shall receive an additional retainer of $20,000. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE BOARD OF DIRECTORS OF THE COMPANY. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE, ON A NON-BINDING ADVISORY BASIS,
FOR THE APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION PAID FOR 2020.
| | |
Orion Engineered Carbons 2021 Proxy Statement 31
Proposal 3—Approval of the Compensation of the Board of Directors of the Company
We are asking our shareholders to approve the following resolution regarding the compensation of the Board of Directors of the Company:
RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve to remunerate the members of the Board during the financial year that ends on December 31, 2021 as follows: (i) each non-executive director shall receive a cash retainer of $100,000 and restricted Common Shares of the Company with a value of $100,000 at the time of issuance, with such awards generally subject to vesting only if the director serves the full approximate one-year term she/he was appointed for; (ii) the non-executive Chairman of the Board shall receive an additional retainer of $105,000; (iii) the Chairman of the Audit Committee of the Board shall receive an additional retainer of $25,000; (iv) the Chairman of the Compensation Committee of the Board shall receive an additional retainer of $20,000, and (v) the Chairman of the Nominating, Sustainability and Governance Committee shall receive an additional retainer of $15,000.
Required Vote
Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account.
| THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL34
OF THE COMPENSATION OF THE BOARD OF DIRECTORS OF THE COMPANY.CD&A Summary
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32
CD&A Summary
Executive Summary Highlighting our Performance | p.34Executive Summary Highlighting our Performance | p.36 | | | Our Executive Compensation Practices and Program | p.36 | | | How Pay is Tied to Performance | p.37 | | | COVID-19 related Actions to Base Salary | p.38 |
COVID-19 related Actions to 2020 STI Plan | | How Pay is Tied to Performance | p.39 | |
Compensation Decisions for 2022 | p.45 | | | Compensation Committee Report | p.48 |
Compensation Highlights | · | Continued emphasis on the strategic emphasis of emerge stronger priorities under the 2021 STI program to position the company for long-term growth. |
| · | Continued Sustainability and Employee Engagement Measures in the 2022 LTI Plan to ensure alignment of our compensation program with our objective to drive long-term shareholder value. |
Our NEOs Orion Engineered Carbons 2022 Proxy Statement 35 Changes to 2021 LTI Measures | p.42 | | | |
Compensation DecisionsDiscussion and Analysis In this Compensation Discussion and Analysis (“CD&A”), we provide an overview of our executive compensation program and describe the material components of our executive compensation program for our 2021 named executive officers (“NEOs”). Our NEOs for 2021 | p.44 | | | Compensation Committee Report | p.46 were:
Compensation Highlights
| · | Recalibration of the Company’s 2020 STI program to better align with the preeminent strategic priority of emerging stronger from the COVID-19 pandemic. | Corning F. Painter | 59 | Chief Executive Officer |
| · | Added Sustainability and Employee Engagement Measures to 2021 LTI Plan to further align our compensation program with our objective to drive long-term shareholder value. | Lorin Crenshaw | 46 | Chief Financial Officer (until October 27, 2021) |
Our NEOs
Our NEOs Corning F. Painter Lorin Crenshaw CEO of Orion Engineered Carbons CFO of Orion Engineered Carbons Sandra Niewiem SVP, Global Specialty Carbon Black and EMEA Region of Orion Engineered Carbons Pedro Riveros SVP, Global Rubber Carbon Black and Americas Region of Orion Engineered Carbons Carlos Quinones SVP, Global Operations of Orion Engineered Carbons
Orion Engineered Carbons 2021 Proxy Statement 33
| Robert Hrivnak | 61 | Interim Chief Financial Officer (from October 27, 2021 until April 18, 2021) |
| Sandra Niewiem | 46 | Senior Vice President, Global Specialty Carbon Black and EMEA Region |
Compensation Discussion and Analysis
In this Compensation Discussion and Analysis (“CD&A”), we provide an overview of our executive compensation program and describe the material components of our executive compensation program for our 2020 named executive officers (“NEOs”). Our NEOs for 2020 were:
Name | Age | Title | Corning F. Painter | 58 | Chief Executive Officer | Lorin Crenshaw | 45 | Chief Financial Officer | Sandra Niewiem | 45 | Senior Vice President, Global Specialty Carbon Black and EMEA Region | Pedro Riveros | 50 | Senior Vice President, Global Rubber Carbon Black and Americas Region | Carlos Quinones | 56 | Pedro Riveros | 51 | Senior Vice President, Global Rubber Carbon Black and Americas Region | Carlos Quinones | 57 | Senior Vice President, Global Operations |
Executive Summary We enjoy a long-standing reputation within the industry for carbon black product and process technology, applications knowledge and innovation. Our goal is to remain at the forefront of the industry in terms of product development by having dedicated applications technology teams, commercial teams and manufacturing facilities. Our long-term success depends on our ability to attract, engage, incentivize and retain highly talented individuals who are committed to our corporate and business strategies. Orion takes a long-term view of performance, growth and value creation as an essential part of our culture, business strategy and compensation approach. Building a business that is resilient to fluctuations in the economy is critical to our success. Although in 2020 the Company delivered Adjusted EBITDA below our initial financial expectations – principally due a steep volume decline in each of our key end markets driven by the COVID-19 induced economic downturn – we finished the year strong from a financial standpoint and ultimately demonstrated the resilience of our business. We believe that through the leadership of our experienced executive team, we performed well in such a challenging economic environment, delivering the second largest annual Adjusted EBITDA margins of 20.9%$268.4M (up 34.2% year over year) and managing net leverage to rise by approximately one turndecline year over year (i.e., from 2.28x3.4x to 3.39x)2.7x while continuing to successfully advance our EPA, safety, sustaining and select growth investments. Our key 20202021 business, safety and sustainability and strategic achievements included the following: | · | Reinstated our dividend; |
| · | Began construction of our Greenfield plant in Huaibei, China; |
| · | Commissioned a new line in our Ravena, Italy plant to serve demand for our higher margin business; |
| · | Continued our top quartile mid-sized chemical company safety performance as measured by our OSHA Recordable Incident Rate of 0.35; |
| · | Commissioned a new air emissions system at our Ivanhoe, Louisiana facility; |
| · | Successfully executed against 14 of 16 critical strategic objectives focused on ensuring the Company emerges stronger from the crisis, with continued emphasis on process improvements, cost reduction, employee training and development, safety and new business opportunities. |
· Our safety performance as measured byIn 2021, we continued to demonstrate our OSHA Incident Rate was 0.19 (2019: 0.48), which is a top-quartile position relative to other mid-sized chemical companies. This result reflected the success of our efforts to improve employee engagement, leadership and analysis of near- miss events. In addition, against the extraordinary, unprecedented backdrop of a global pandemic, our employees showed exceptional discipline in adhering to our COVID-19 safety protocols
| | throughout the year, resulting in having zero work-place transmission of the disease in 2020 – a truly extraordinary accomplishment.
· Demonstrating operational resilience throughout the worst global economic downturn since the 1940s by swiftly activating our business continuity plan for pandemics, based partially on the World Health Organization pandemic preparedness plan, and successfully executing our strategy across the following six core pillars:
(1)
| (1) | Employees: protecting our people; (2) Production: maintaining safe, functioning, productive plants;
(3) Customers: responding to our customers needs both during the second quarter downturn and subsequent second-half surge;
(4) Liquidity: enhancing our financial flexibility and ensuring we maintain strong financial standing across all possible scenarios;
(5) Supply Chain: maintaining adequate access to raw materials amid a credit crisis and often snarled international shipping channels and supply chains; and
(6) Community/ESG: supporting the communities in which we are privileged to operate by providing hospitals and other medical providers with masks and cleaning equipment at several sites.
· Advancing sustainability efforts by commissioning new emissions technology (Orange, Texas plant), upgrading cogeneration technology (Borger, Texas and Qingdao, China plant) and increasing our EcoVadis sustainability ranking percentile from 77% in 2019 to 90% in 2020.
· Successfully executing against 11 critical strategic objectives focused on ensuring the Company emerges stronger from the crisis, with emphasis on process improvements, cost reduction, employee training and development, safety and new business opportunities.
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34
| (2) | Production: maintaining safe, functioning, productive plants; | | | |
Our Compensation Philosophy
| (3) | Customers: Serving our customers’ evolving needs; | | | |
| (4) | Liquidity: enhancing our financial flexibility and ensuring we maintain strong financial standing; | | | |
| (5) | Supply Chain: maintaining adequate access to raw materials despite often snarled international shipping channels and supply chains; and | | | |
| (6) | Community/ESG: supporting the communities in which we are privileged to operate and supporting employees impacted by the flooding in the Cologne area. |
36 Our Compensation Philosophy Our executive compensation program is designed to align with our pay-for-performance philosophy and, accordingly, directly links a substantial portion of annual executive compensation to Company performance. We also believe that the amount of compensation paid to each NEO should reflect the depth of their experience and the quality of their performance. We place a significant emphasis on long-term incentive compensation, designed to link the value created for shareholders with those responsible for the results. We offer a total compensation opportunity that is both competitive with similarly sized companies for our industry and that is internally equitable. Our compensation program is designed to attract, develop and retain business leaders to drive financial and strategic growth and build long-term shareholders value, and to deliver | | competitive compensation for superior Company performance. Likewise, when Company performance falls short of expectations, these variable incentive programs deliver lower levels of compensation. However, the Compensation Committee endeavors to balance pay-for-performance objectives with retention considerations so that, even during a temporary downturn in the economy and the chemicals industry, the program continues to ensure that qualified, successful, performance-driven employees stay committed to increasing our long-term value. Furthermore, to attract and retain highly skilled management, our executive compensation program must remain competitive with those of comparable employers who compete with us for talent. |
Core Principles
The following key principles provide the framework for our executive compensation program:
Pay-for-Performance Competitiveness and Retention Provide base salaries that reflect each NEO’s experience and performance, combined with variable incentive compensation that rewards executives when superior performance is achieved, while subpar performance results in compensation below that of peer companies. Core Principles Provide competitive pay opportunities that attract and retain high quality professionals and reward performance. Accountability for Short- and Long-term Performance Alignment of Shareholders’ Interests Strike an appropriate balance between achieving both short-term and long-term business objectives through compensations awards. Link the interests of our executive officers with those of our shareholders through significant equity-based compensation tied to the achievement of the key metrics ROCE and rTSR in 2020 and in addition Sustainability and Employee Engagement in 2021.
Orion Engineered Carbons 2021 Proxy Statement 35
Orion Engineered Carbons 2022 Proxy Statement 37 Our Executive Compensation Practices We seek to maintain high standards with respect to the governance of executive compensation. Key features of our compensation policies and practices that aim to drive performance and align with stockholder interests are highlighted below: Our Compensation Practices | Our Prohibited Compensation Practices | Pay-for-Performance—We align annual and long-term incentive opportunities with our annual operating plan and shareholder interests. | No Guaranteed Increases—We do not guarantee salary increases for our NEOs. | Align Total Compensation with Our Peers—We position the target total direct compensation levels for our NEOs within the range of the median for our peers. | No Excessive Perquisites or Special Benefits—Our NEOs are only eligible to participate in benefit plans that are generally available to all of our employees, or that are customary benefits for executives within the applicable jurisdiction. | At-Risk Compensation—Our incentive-based compensation represents a significant portion of our executives’ compensation by using a combination of lower base salaries and an emphasis on pay-for-performance. | Only Double-Trigger Change in Control Provisions for Equity Awards—No automatic single trigger accelerated vesting of equity in connection with a change in control. | Annual Review—We conduct an annual review of our executive compensation program to ensure it rewards executives for strong performance, aligns with stockholder interests, and retains top talent. | No Excessive Severance Benefits—We do not provide for cash severance payments to our U.S. based executives other than for our CEO. | Independent Consultant—We use an independent compensation consultant retained by the Compensation Committee. | No Excise Tax Gross-Ups—We do not provide excise tax gross-up payments. | Stock Ownership Guidelines—We have adopted robust stock ownership guidelines for our executive officers. | No Hedging or Pledging—We prohibit the hedging or pledging of the Company’s stock by directors, officers, and employees of the Company. | Mitigate Undue Risk—We utilize a mix of performance metrics, cap potential payments, provide a three-year vesting period for performance stock awards, and conduct an annual compensation risk assessment analysis each year. | No Repricing of Options or TSR targets—We currently do not issue stock options as part of our compensation strategy and we do not reset TSR benchmarks. | Clawback—All equity awards and compensation derived therefrom are subject to clawback in the event of material financial misstatements, violation of applicable restrictive covenants and engaging in misconduct that triggers a for-cause termination. | |
Elements of Our 20202021 Compensation Program
The Compensation Committee has built our executive compensation program upon a framework that includes the components and objectives listed below. The Compensation Committee routinely reviews each component of the executive compensation program to see how it affects target total pay levels and considers pay ranges for similar executive positions among companies in our peer group. Program | Award Type | Objective of Element | Description | Base Salary | Cash | To provide an appropriate base salary mitigating inappropriate risk-taking by providing a fixed, certain and regular level of income. | Base salaries are set at market competitive levels, subject to adjustment for a number of other factors such as merit increases, unique job responsibilities, experience, individual contributions and number of years in the position.
| Annual Short-term Incentive (“STI”) Compensation | Cash | To incentivize and reward performance on key metrics that support the Company’s annual operating plan.
Promote Pay-for-Performance in a competitive way.
Generally targeted competitive levels among companies in our peer group based upon achieving specified performance goals.
| Designed to offer opportunities for cash compensation directly tied to Company performance relative to established performance targets thatand in the Compensation Committee ultimately believes create shareholder value. Annual STI payouts rangechemical sector.Program | Award Type | Objective of Element | Description | Base Salary | Cash | To provide an appropriate base salary mitigating inappropriate risk-taking by providing a fixed, certain and regular level of income. | Base salaries are set at market competitive levels, subject to adjustment for a number of other factors such as merit increases, unique job responsibilities, experience, individual contributions and number of years in the position. | Annual Short-term Incentive (“STI”) Compensation | Cash | To incentivize and reward performance on key metrics that support the Company’s annual operating plan. Promote Pay-for-Performance in a competitive way. Generally targeted competitive levels among companies in our peer group based upon achieving specified performance goals. | Designed to offer opportunities for cash compensation directly tied to Company performance relative to established performance targets that the Compensation Committee ultimately believes create shareholder value. Annual STI payouts ranged from 0% to 150% of the target bonus for 2021, based on performance relative to the designated targets. We pay the annual STI awards during the first quarter following the end of the applicable fiscal year. | Performance-based Restricted Stock Units | Equity Performance Stock Units (PSUs) | To strengthen alignment with shareholders’ interests, 70% of the LTIP is performance-based. | The PSU payout ranges from 0% to 200% of the target number of Common Shares granted based on rTSR (50%), ROCE (25%) , Sustainability (12.5% and Employee Engagement (12.5%) over the three-year performance period. | Time-based Restricted Stock Units | Equity Restricted Stock Units (RSUs) | For retention purposes, 30% of the LTIP is time- based. | RSUs vest one-third on each vesting date, subject to continued employment. | Retirement and other Employee Benefits | | To provide competitive benefits to protect our employees and their covered dependents’ health and welfare, to facilitate strong performance on the job, and enhance productivity. | Executive officers and NEOs are eligible to participate in the same benefit programs that are offered to other salaried employees in their respective jurisdictions, including the 401(k) plan matching benefits, auto allowances, and participation in health and welfare plans. |
38 Compensation Mix: How Pay is Tied to Performance Our executive compensation program directly links the majority of executive compensation opportunity to our financial performance through annual and long-term incentives. The elements of the NEO compensation program have remained relatively consistent year to year, with target bonus, based on performance relative to the designated targets. We pay the annual STI awards during the first quarter following the endcompensation allocated between fixed and variable, cash and non-cash and short-term or long-term components. The Target Compensation Mix chart below describes each of the applicable fiscal year. | Performance-based Restricted Stock Units | Equity Performance Stock Units (PSUs) | To strengthen alignment with shareholders’ interests, 70% ofcompensation elements for the LTIP is performance-based. | The PSU payout ranges from 0% to 200% of the target number of Common Shares granted based on ROCE (50%Chief Executive Officer (“CEO”) and rTSR (50%Interim Chief Financial Officer (“CFO”) over the three-year performance period. | Time-based Restricted Stock Units | Equity Restricted Stock Units (RSUs) | For retention purposes, 30% of the LTIP is time-based. | RSUs vest as to one-third on each grant date anniversary, subject to continued employment on the vesting date. | Retirement and other Employee Benefits | | To provide competitive benefits to protectcurrent NEOs for 2021 as a percent of total target direct compensation. The above excludes Mr. Crenshaw, who resigned from the employeesCompany in 2021 and their covered dependents’ healthforfeited his 2021 STI and welfare, to facilitate strong performance on the job, and enhance productivity. | Executive officers and NEOs are eligible to participate in the same benefit programs that are offered to other salaried employees in their respective jurisdictions, including the 401k plan matching benefits, auto allowances, and participation in health and welfare plans.
|
36LTI incentives.
Compensation Mix: How Pay is Tied to Performance
Our executive compensation program directly links the majority of executive compensation opportunity to our financial performance through annual and long-term incentives. The elements of the NEO compensation program have remained relatively consistent year to year, with target compensation allocated between fixed and variable, cash and non-cash and short-term or long-term components. The Target Compensation Mix chart below describes each of the compensation elements for the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) and other current NEOs for 2020 as a percent of total target direct compensation.
NEOs
18% 12% 28% 42% 21% 20% 20% 39% CEO CFO and Other Current NEOs Base Salary STI LTI - PSUs LTI - RSUs
As illustrated in this chart, our short-term incentive program (“STI”), which is primarily dependent on our financial performance and the performance-basedaccomplishment of critical projects, and the performance- based portion of our long-term incentive plan (“LTIP”), which is linked to the Company’s stock performance, return on capital employed (“ROCE”) and, total shareholder return relative (“rTSR”) to other chemical companies, safety and sustainability and employee engagement together constitute approximately 62% and 49%41%, respectively, of the total target direct compensation of our CEO and other NEOs (on average). The above reflects 2020 target base salary as approved in December of 2019 and does not reflect voluntary mid-year base pay reductions for our NEOs due to the impact and future economic uncertainty of the COVID-19 pandemic.NEOs. | | 20202021 Compensation for NEOs
We believe that the total compensation opportunity for each NEO in 20202021 reflects the depth of their experience, quality of their performance and level of service to the Company and its shareholders. The 20202021 compensation of our NEOs illustrates how a meaningful portion of each executive’s pay is based on performance against our short-term and long-term strategic objectives. |
Base Salary We pay base salaries to attract and retain talented executives and to provide a fixed base of cash compensation. The table below shows the annual salary of each NEO for 2019 and 2020: Named Executive Officer | 2020 Annual Base Salary | 2019 Annual Base Salary | Percentage Increase | Corning F. Painter(1) | $875,500 | $875,500 | N/A | Lorin Crenshaw(1) | $400,000 | 400,000 | N/A | Sandra Niewiem(2) | $287,688 | $251,969 | 12.5% | Pedro Riveros(1) | $330,000 | $330,000 | N/A | Carlos Quinones(1) | $315,000 | $315,000 | N/A |
| (1) | Messrs. Painter, Crenshaw, Riveros and Quinones did not receive a base salary increase for 2020 in response to the economic uncertainty caused by the COVID-19 pandemic.and 2021:Named Executive Officer | 2021 Annual Base Salary ($) | 2020 Annual Base Salary ($)(3) | Percentage Increase | Corning F. Painter | 955,500 | 875,500 | 9.14% | Robert Hrivnak(1) | 249,600 | 240,000 | 4% | Sandra Niewiem(2) | 305,512 | 265,663 | 15% | Pedro Riveros | 353,100 | 330,000 | 7% | Carlos Quinones | 326,340 | 315,000 | 3.6% |
| (1) | Mr. Hrivnak received a monthly allowance of $10,000 in addition to his annual base salary for the period in which he has served as Interim CFO, commencing on November 1, 2021. This allowance is not included in the annual base salary listed above. |
| (2) | Dr. Niewiem’s annual base salary is paid in Euros and is converted in the table above using the conversion rate at December 31, 2021 where 1 Euro = USD 1.134199. |
| (3) | The amounts in this column do not represent the voluntary 10% pay reduction of our NEOs and the 50% pay reduction of our CEO. |
| (2) | Dr. Niewiem was promoted in September 2019 and her increase in her base salary in 2020 reflects a market-based adjustment in alignment with her responsibilities in her new role. Dr. Niewiem’s 2020 annual base salary is paid in Euros and is converted in the table above using the conversion rate of December 31, 2020. |
Orion Engineered Carbons 2021 Proxy Statement 37Orion Engineered Carbons 2022 Proxy Statement 39 For fiscal 2020 base salary determinations, the Compensation Committee reviewed each NEO’s job responsibilities, management experience, individual contributions, tenure and then-current salary, as well as the executive compensation benchmarking data prepared by the independent compensation consultant Korn Ferry.
Annual Base Salary Actions Related to COVID-19
Due to the economic uncertainty of the COVID-19 pandemic, no 2020 increases to base salary were processed for our NEOs, except for Dr. Niewiem, who received a market-based adjustment in accordance with her promotion. Further, all NEOs except our CEO voluntarily elected to take a 10% reduction in their base salary effective May 1, 2020 and lasting through December 31, 2020. Our CEO elected to take a 50% reduction in his base salary effective May 1, 2020 and lasting through December 31, 2020. The base salary figures above do not reflect the voluntary reduction in base pay, however this reduction is reflected in the year to date base salary included in the Summary Compensation Table on page 47.
For fiscal year 2021 base salary determinations, the Compensation Committee reviewed each NEO’s job responsibilities, management experience, individual contributions, tenure and then-current salary, as well as the executive compensation benchmarking data prepared by the independent compensation consultant Korn Ferry (“KF”). Annual Short-term Incentive (“STI”) Compensation STI compensation is designed to offer opportunities for cash compensation directly tied to our performance relative to established performance targets that the Compensation Committee believes create shareholder value. We provide opportunities for our executives to earn annual cash incentive awards that reward performance achievements for the year. Performance goals are objective and based on our business strategy and budget approved by the Compensation Committee. Our STI Plan is designed to: | · | focus executives on key financial and strategic goals that support our annual operating plan; |
| · | link short-term pay to our annual performance; |
| · | put a meaningful portion of compensation at risk based on our financial success; |
| · | incentivize and motivate executives to achieve our short-term strategic and financial objectives that we believe will drive long-term value creation; and |
| · | provide a competitive level of target annual compensation to attract and retain key talent. |
At the beginning of 2021, the Compensation Committee reviewed the annual target awards opportunities for Messrs. Painter, Riveros and Quinones and Ms. Niewiem which are fixed in each of the NEO’s employment agreements and offer letters and affirmed that no changes were needed. Mr. Hrivnak was granted an additional monthly allowance effective with his appointment as Interim CFO. This allowance is considered as eligible compensation for bonus calculation purposes. The target annual compensation to attractincentive award opportunities for our NEOs, consistent with the requirements of their employment agreements and retain key talent.offer letters are as follows: Name(1) | Target Bonus as a Percentage of Base Salary |
At the beginning of 2020, the Compensation Committee reviewed the annual target awards opportunities which are fixed in each of the NEO’s employment agreements and offer letters and affirmed that no changes were needed. The target annual incentive award opportunities for our NEOs, consistent with the requirements of their employment agreements and offer letters are as follows:
Name
| Target Bonus as a Percentage of
Base Salary
| Corning F. Painter | 100% | Lorin Crenshaw | 65% | Corning F. Painter | 100% | Robert Hrivnak | 40% | Sandra Niewiem | 50% | Pedro Riveros | 50% | Carlos Quinones | 50% |
STI payouts range from 0% – 200% of the NEO’s target annual bonus depending on the results achieved as compared to the threshold, target, and maximum for each performance metric, calculated and awarded independently, such that one portion of the STI award may be earned even if the threshold level of performance for the other measure is not achieved. The performance targets and payout terms applied to each NEO is based on the Compensation Committee’s determination that each is integral to the overall success of the Company. Performance at the threshold level results in a payout at 50% of target STI, performance at the target level results in a payout at 100% and performance at the maximum level results in a maximum payout at 200%. We use linear interpolation to determine STI payouts for performance between the three levels. Our NEOs may not defer payment of any portion of their STI payout and Orion does not sponsor any deferred compensation program that would permit such a deferral.
The Compensation Committee established the following performance metrics and weightings for the 2020 STI:
| (1) | Mr. Crenshaw’s target 2021 bonus of 65% of his base salary for 2021 was forfeited upon his resignation from the Company in October 2021. |
MeasureSTI payouts range from 0% – 150% of the NEO’s target annual bonus. Half of the annual target bonus is determined by the EBITDA, Safety and Sustainability results achieved as compared to the threshold, target, and maximum for each performance metric, calculated and awarded independently, such that one portion of the STI award may be earned even if the threshold level of performance for the other measure is not achieved. Performance at the threshold level results for the EBITDA, Safety and Sustainability metrics result in a payout at 50% of target STI, performance at the target level results in a payout at 100% and performance at the maximum level results in a maximum payout at 200%. For these three measures, we use linear interpolation to determine STI payouts for performance between the three levels.
The remaining half of the bonus calculation is based on the successful execution of key projects designed to provide a mix of short-term and long-term benefits. These projects focused on cost reduction, process improvements, employee training and development, safety and new business opportunities. The performance targets and payout terms applied to each NEO is the same as all employees of Orion and based on the Compensation Committee’s determination that each measure is integral to the overall success of the Company. Our NEOs may not defer payment of any portion of their STI payout and Orion does not sponsor any deferred compensation program that would permit such a deferral.
The Compensation Committee established the following performance metrics and weightings for the 2021 STI: Measure | Weight | Threshold Level (50% Payout) | Target Level (100% Payout) | Maximum Level (200% Payout) | EBITDA | 45% | $202.5 MM | $225.0 MM | $247.5 MM | Safety | 2.5% | OSHA Recordables 3 | OSHA Recordables 2 | OSHA Recordables 1 | Sustainability | 2.5% | Ecovadis Score 61 | Ecovadis Score 63 | Ecovadis Score 65 |
Weight
| Threshold Level
(50% Payout) | Target Level
(100% Payout) | Maximum Level
(200% Payout) | EBITDA | 95.0% | $244.4 MM | $271.6 MM | $298.8 MM | Safety
| 2.5%
| OSHA
Recordables (7)
| OSHA
Recordables (5)
| OSHA
Recordables (3)
| Sustainability
| 2.5%
| Ecovadis Score
(61) | Ecovadis Score
(63) | Ecovadis Score
(65) |
3840
Rationale Behind the Performance Measures The Compensation Committee establishes the STI performance goals, where applicable, based on our Board approved business plan and strategic priorities. Our 20202021 goals were set at the beginning of the year, reflecting our expectations about the performance of our business. We believe our performance metrics (and resulting compensation) reflect a focused, but well-balanced view of performance that supports our expectations to drive strong business results, provide sound risk management and lead to long- term shareholder value. The Compensation Committee chose thesethe combination of three performance measures (Adjusted EBITDA, Safety and Sustainability) and the execution of key projects for our 2020 STI2021STI to align with our key business goals and objectives and to align generally with our operating plan. The Compensation Committee chose the relative weights of the performance measures based on the desire to emphasize financial results while maintaining a focus on certain non-financial objectives. The EPS and NWC measures from the 2019 STIP were replaced by Adjusted EBITDA in 2020 as part of an effort by our Compensation Committee desires to harmonize all Orion employees’ STI Plan measures and efforts. More specifically, · The target level of Adjusted EBITDA was established based on our 2020 operating plan. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization.
· The target for safety was set as an improvement from 2018 and 2019 levels (5 and 8 injuries respectively).
| | · The target for Sustainability was set as an improvement from 2018 and 2019 levels (52 and 62 respectively based on EcoVadis’ scoring methodology) and considering that the scoring criteria is tightened each year.
· The maximum performance levels for Adjusted EBITDA, Safety and Sustainability were set at levels that the Compensation Committee believed to be reasonably attainable but only as the result of exceptional performance.
· Safety and sustainability metrics form a part of the STI because they are critical to our success as an organization. The Compensation Committee believes that there is an inherent alignment between Orion’s sustainability agenda and the successful achievement of its strategic and operational goals.
| · | The target level of Adjusted EBITDA was established based on our 2021 operating plan. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. |
| · | The target for safety was based on improvement over 2019, 2020 and 2021 and reflecting top quartile performance levels for the Chemical Industry. |
| · | The target for Sustainability was set as an improvement from 2018, 2019 and 2020 levels (52,62 and respectively based on EcoVadis’ scoring methodology) and considering that the scoring criteria is tightened each year. |
| · | The maximum performance levels for Adjusted EBITDA, Safety and Sustainability were set at levels that the Compensation Committee believed to be reasonably attainable but only as the result of exceptional performance. |
| · | Safety and sustainability metrics form a part of the STI because they are critical to our success as an organization. The Compensation Committee believes that there is an inherent alignment between Orion’s sustainability agenda and the successful achievement of its strategic and operational goals. |
| · | The target for Emerge Stronger was 100% completion of the actions which corresponded with a maximum payout potential of 100%. |
The Compensation Committee retains discretion to take into account extraordinary or infrequently occurring events, or significant corporate transactions in deciding whether to adjust the performance metrics for the STI. The Compensation Committee also retains discretion in determining the actual STI amount paid, in order to ensure that the STI remains consistent with its stated objectives. Performance Against Our 20202021 STI Plan Measures The following table summarizes the Company’s performance against its 20202021 STI targets as originally established by the Compensation Committee: |
Measure | Weight | Threshold Level (50% Payout) | Target Level (100% Payout) | Maximum Level (200% Payout) | 2020 Actual | Payout% | EBITDA | 95.0% | $244.4 MM | $271.6 MM | $298.8 MM | $200.0 MM | 0.00% | Safety | 2.5% | OSHA Recordables (7) | OSHA Recordables (5) | OSHA Recordables (3) | OSHA Recordables (3) | 5.00% | Sustainability | 2.5% | Ecovadis Score (61) | Ecovadis Score (63) | Ecovadis Score (65) | Ecovadis Score 63 | 2.50% | Total | 100.0% | | | | | 7.50% |
Measure | Weight | Threshold Level (50% Payout) | Target Level (100% Payout) | Maximum Level (200% Payout) | 2020 Actual | Payout % | EBITDA | 45.0% | $202.5 MM | $225.0 MM | $247.5 MM | $268.4 MM | 90.00% | Safety | 2.5% | OSHA Recordables 3 | OSHA Recordables 2 | OSHA Recordables 1 | OSHA Recordables 6 | 0.00% | Sustainability1 | 2.5% | Ecovadis Score 61 | Ecovadis Score 63 | Ecovadis Score 65 | Ecovadis Score 63 | 0.00% | Total | 50.0% | | | | | 90.0% |
| (1) | There was no payout due to other performance factors. |
As shown in the table above, in 20202021 we fell short ofexceeded our Adjusted EBITDA goal, with actual results on this measure commensurate with a zeromaximum payout for our NEOs. Our Safety performance against our Safetyfell short of the threshold and Sustainability goals equated to an overall payout of 7.5% on these factors. 2020 STI Plan Actions Related to COVID-19
The Compensation Committee retains discretion to take into account extraordinary or infrequently occurring events. In June 2020,zero payout. Our Sustainability performance was in line with the target measure, however, the Compensation Committee assessed thatapplied negative discretion to the Sustainability measure due to other performance factors.
Emerge Stronger/Key Projects In 2020 we modified our STI program to incent completing specific improvement projects. We found this to be an effective way to link variable compensation to specific actions and decided to maintain an aspect of this in our 2021 plan design. Results for the remaining 50% of the calculation are summarized in the facetable below. The calculation is based on the number of projects successfully executed (numerator) divided by the total number of projects (denominator). The maximum award for this portion of the pandemiccalculation is 100% and there were new priorities for the company. These priorities included reducing fixed costs and driving long-term improvements during this period of reduced demand. It consulted with Korn Ferry and managementis no multiplier to consider numerous factors to inform a recalibration of the Company’s 2020 STI program toincrease percentage payable above 100%. | | better align with the preeminent strategic priority of emerging stronger from the crisis.
Ultimately, management and the committee designed a plan to align incentives to appropriate actions (“Emerge Stronger Targets”) in the context of the pandemic. The Emerge Stronger Targets had a maximum payout of 50% and any combination of Emerge Stronger and a payout from the initial plan was also capped at 50%. These actions were focused on emerging from the pandemic stronger than before the crisis. A recently completed employee engagement survey also helped to inform certain objectives.
The KPIs related to the Emerge Stronger Targets were designed to provide a mix of short-term and long-term benefits. They were focused on cost reduction, process improvements, employee training and development, safety and new business opportunities.
|
Orion Engineered Carbons 2021 Proxy Statement 39Orion Engineered Carbons 2022 Proxy Statement 41
KPI Description | KPI target | Achieved |
The KPIs were also selected to be particularly appropriate given the pandemic. For example, reducing fixed costs were a clear priority given the decrease in demand. Work process improvements related to pricing, digital order processing, and time to confirm orders enhanced our agility, which proved to be valuable during the pandemic. Staying the course on employee training and taking actions on our employee survey outcome, despite the pandemic, demonstrated our commitment to talent development and was also a great investment in time when the pace of business was
| | slower. Selling new products always adds value, but our goal was to get new products qualified while our customers’ labs were less busy given the reduced level of economic activity. The specific projects were selected to address concrete tactical opportunities and to be achievable within six months with a focused effort.
The Emerge Stronger Targets, related KPIs and actual payout results (capped at 100% for each KPI, respectively) are shown in the table below:
| Leadership and Conflict Resolution Training | 90% course completion by June 30th | Yes | Interface of SAP to SalesForce.com Tool | Global Go-Live by Q3 2021 | Yes | Implementation of Statistical Forecasting Tool | Go-Live by May 31, 2021 Complete accuracy assessment by September 30, 2021 Define improvement plan by December 31, 2021 | Yes | Credit Block Reduction | 65% reduction by July 1, 2021 | Yes | Launch Predictive Maintenance Software Pilot | Successful Launch at Brazil plant | Yes | Replace Manual Tasks with Robotic Process Automation | Go-live with 2 RPA cases | Yes | Eliminate Non-Value Added tasks/ processes at our Kalscheuren plant | Minimum of 8,000 hours of Non-Value Added tasks to eliminate by December 31, 2021 | Yes | Reduce Customer Complaint Resolution Time | Median of 35 days for product and 14 days for service complaints | Yes | Implement FlexGate from Product Innovation to Commercialization | Technical Go-Live by April 15, 2021 Business Go-Live by May 31, 2021 Complete Phase 2 Go-Live, Portfolio Management, SalesForce.com, Laboratory Information Management System, SAP and data migration by Q4 2021 | No | Identify New Business Opportunities | Achieve 10 New Products and 35 New Customers with Commercial Sales Achieve $3MM sales target | Yes | Simplify Data Collection Process for New Customers in our Global Trade Compliance System | Achieve 50% reduction of manual tasks by September 1, 2021 | Yes | Completion of One Pain Point Project by Business Process Owners (BPOs) | 90% of BPOs to complete one Pain Point Project | Yes | Automate Vendor Managed Owned inventory in U.S. and EMEA | Achieve 3 major accounts by December 31, 2021 | Yes |
KPI Measure | KPI Target | KPI Actual Achievement | KPI Payout Result | Financial
Reduce sales & administration and production-related fixed costs
| $15 MM | $23.2 MM | 100% | Competitiveness
Reduce stock keeping units at Kalscheuren, Germany and North American plants
| >40% at Kalscheuren;
>25% across our North American plants
| 41% at Kalscheuren;
27% at North American plants
| 100% | Competitiveness
Self-generate power for Borger, TX plant
| Completion by 12/31/2020 | Completed by 12/31/2020 | 100% | Competitiveness
Reduce out of specification inventory at Kalscheuren plant
| Proprietary% | Reduced off-spec by a greater than target amount | 100% | Critical Upskilling
Complete specific project management training courses
| 100% completion of identified professionals by 12/31/2020 | 93% completed by 10/31/2020 | 0% | Critical Upskilling
Complete specific IT professional certification training courses
| 90% completion by 12/31/2020 | 100% completed by 12/31/2020 | 100% | Critical Upskilling
Transition internal legal compliance training programs to new e-learning platform
| Completion by 12/31/2020 | Completed by 12/31/2020 | 100% | Critical Upskilling
Implement a new digital performance and goal management platform (Human Resources Information System)
| Launch module by 12/31/2020 | Launched by 12/31/20 | 100% | New Business
Successfully apply for funding (~€2 MM) to the European Institute of Innovation and Technology for advanced work related to battery technology.
| Approval by 12/21/2020 | Approved by 12/31/2020 | 100% | New Business
Achieve new sales orders from defined list of prioritized new product offerings
| 12 commercial sales orders | > 12 commercial sales orders | 100% | Safety
Accelerate actioning on safety observation reports in plants
| 90% closed within 30 days | 90% closed within < 30 days | 100% | Efficient work processes
Reduce inefficiencies in pricing process
| 50% reduction in process steps | > 50% reduction | 100% | Efficient work processes
Reduce low value added activity in plants (e.g. transferring data)
| 10% time savings across all plant based employees | > 10% time savings | 100% | Efficient work processes
Increase percentage of customer conversion to digital order platform
| Proprietary number of customers converted to digital order platform | Target achieved | 100% | Efficient work processes
Reduce average time to confirm domestic orders
| Time to confirm orders (proprietary) | Target achieved | 100% | Total Payout% | | | 93.3% |
40
Considerable focus was placed on the Emerge Stronger projects throughout the second half of the year. All of them were achieved except project training (a small number of the training programs were not completed on time). Select other KPIs were significantly exceeded, such as sales and administration and production-related fixed cost reduction. The achievement levels related to the KPIs
| | underlying the Emerge Stronger Targets were determined based on a scorecard that resulted in a score commensurate with a 46.87%43.75% STI payout. After adding the Adjusted EBITDA measure payout 90.0%, and the Safety and Sustainability measure payoutpayouts of 7.5%0.0%, which was included in our initial STI plan, the score exceeded 50%, hence the Compensation Committee applied a 50% cap138.75% to each NEO’s target bonus in 2020.2021.
|
The following table illustrates the actual payout level for the 2020The following table illustrates the actual payout level for the 2021 STI for each of our NEOs:
Name | Position | Target Bonus as Percentage of Base Salary | Actual 2020 STI Plan Payout | Percentage of Annual Base Salary at December 31, 2020(1) | Corning F. Painter | CEO | 100% | $437,500 | 50% | Lorin Crenshaw | CFO | 65% | $130,000 | 32.5% | Sandra Niewiem | SVP, Global Specialty Carbon Black and EMEA Region | 50% | $71,922 | 25% | Pedro Riveros | SVP, Global Rubber Carbon Black and Americas Region | 50% | $82,500 | 25% | Carlos Quinones | SVP, Global Operations | 50% | $78,750 | 25% |
| (1) | The 2020 STI payouts are based on the annual base salaries per December 31, 2020, and do not include the voluntary salary reductions of our NEOs that became effective mid-year.NEOs:Name | Position | Target Bonus as Percentage of Base Salary | Actual 2021 STI Plan Payout ($) | Percentage of Annual Base Salary at December 31, 2021 | Corning F. Painter | CEO | 100% | 1,326,234 | 138.8% | Robert Hrivnak1 | CFO | 40% | 151,390 | 60.7% | Sandra Niewiem2 | SVP, Global Specialty Carbon Black and EMEA Region | 50% | 212,025 | 69.4% | Pedro Riveros | SVP, Global Rubber Carbon Black and Americas Region | 50% | 245,051 | 69.4% | Carlos Quinones | SVP, Global Operations | 50% | 226,480 | 69.4% |
| 1. | Mr. Hrivnak’s bonus is calculated using his annual base salary as of April 1, 2021, plus a $10,000 monthly allowance received for the two months in 2021 while serving as interim CFO. All other NEOs’ bonuses are calculated using their annual base salary as of January 1, 2021, which aligns with the Company’s policy to increase salaries effective January 1 for NEOs and April 1 for non-NEOs annually. |
| 2. | Dr. Niewiem’s bonus is paid in Euros and has been converted to US Dollars using the December 31, 2021 exchange rate of USD 1.134199. |
LTIP Program The purpose of our LTIP is to incentivize our executives to increase shareholder value over the long-term, to align their interests with our shareholders through ownership and to provide retention through vesting criteria and to have competitive compensation to attract and retain our leadership. A portion of annual LTIPs are issued as PSUs, which are contingent on the successful completion of both performance-based and time-based requirements before any payout occurs, further strengthening the link between individual pay opportunities and our performance. A portion of our LTIP is issued as RSUs which ensures the retention of key executives, management and high potential individuals. In determining annual equity award opportunities, the Compensation Committee determines a target value for the individual awards which are then converted into a number of Common Shares based on our average stock price during the fourth fiscal quarter in the prior year with vesting typically tied to a three-year period commencing as of January 1 of the year of grant. Existing executive equity ownership levels are generally not a factor in the Compensation Committee’s granting of LTIP awards.
202042
2021 LTIP Awards The LTI awards granted by the Compensation Committee for 20202021 were designed to provide our NEOs longer-term incentive | | opportunities that are competitive with our general industry and chemicals peer groups and reflect our overall executive compensation philosophy of aligning pay with performance. With respect to the 20202021 LTIP awards, 70% of the target value was awarded in PSUs which vest based on satisfaction of specified performance targets over a three-year period, and 30% of the target value was awarded as RSUs with one-third vesting annually, in each case, subject to continued employment through the applicable vesting date. The Compensation Committee approves the amount of each annual LTIP award, which is based on a percentage of the NEO’s base salary. The target value of our CEO’s annual LTIP award is fixed at 300% of his then current base salary, as per his employment agreement. Each NEO’s award opportunity (other than the CEO) is determined prior to the beginning of the performance period assigned to his or her position based on market comparisons for similar positions, using both peer group and general industry market data, in addition to an evaluation of the executive’s individual performance over the prior year. The Compensation Committee did not make any changes to our 20202021 LTI Plan in response to the COVID-19 pandemic.Plan. The target value of the 20202021 LTI awards for each of our NEOs as set by the Compensation Committee (other than with respect to the CEO which is fixed in his employment agreement) was as follows: |
Name | Position | Target | Target $ | PSUs # | RSUs # | Corning F. Painter | CEO | 3x base salary | 2,866,500 | 131,078 | 56,176 | Robert Hrivnak | Interim CFO | 0.25 base salary | 62,400 | 1,971 | 1,971 | Sandra Niewiem | SVP, Global Specialty Carbon Black and EMEA Region | 0.5x base salary | 152,756 | 6,173 | 2,646 | Pedro Riveros | SVP, Global Rubber Carbon Black and Americas Region | 0.5x base salary | 176,550 | 8,120 | 3,480 | Carlos Quinones | SVP, Global Operations | 0.5x base salary | 163,170 | 7,511 | 3,219 |
Name | Position | Target | Target $ | PSUs # | RSUs # | Corning F. Painter | CEO | 3x base salary | $2,626,500 | 101,859 | 43,654 | Lorin Crenshaw | CFO | 1x base salary | $400,000 | 15,512 | 6,648 | Sandra Niewiem | SVP, Global Specialty Carbon Black and EMEA Region | .5x base salary | $165,000 | 4,830 | 2,070 | Pedro Riveros | SVP, Global Rubber Carbon Black and Americas Region | .5x base salary | $165,000 | 6,399 | 2,742 | Carlos Quinones | SVP, Global Operations | .5x base salary | $157,500 | 6,108 | 2,618 |
Orion Engineered Carbons 2021 Proxy Statement 41
The 2020 LTIP grants to our NEOs were approved by the Compensation Committee under our shareholder approved 2014 Omnibus Incentive Compensation Plan (the “Plan”). The 2020 award agreements provide for settlement in Common Shares or cash at the conclusion of the three-year performance period.
PSUs
2020 PSU awards are deemed earned based (i) 50% on our ROCE and (ii) 50% on rTSR (our total relative shareholder return measured over the last quarter of the three-year performance period and the last quarter of the preceding year of the three-year performance period as compared to the average of the total relative stockholder return of the S&P SmallCap 600 Index and the S&P 600 Chemicals Index for the same three-year period). In each case over the three- year performance period from 2020 – 2022.
The 2021 LTIP grants to our NEOs were approved by the Compensation Committee under our shareholder approved 2014 Omnibus Incentive Compensation Plan (the “Plan”). The 2021 award agreements provide for settlement in Common Shares or cash at the conclusion of the three-year performance period. PSUs 2021 PSU awards are deemed earned based (i) 50% on rTSR (our total relative shareholder return measured over the last quarter of the three-year performance period and the last quarter of the preceding year of the three-year performance period as compared to the average of the total relative stockholder return of the S&P SmallCap 600 Index and the S&P 600 Chemicals Index for the same three-year period); (ii) 25% on our ROCE; (iii) 12.5% on Sustainability; and, (iv) 12.5% on Employee Engagement. In each case over the three- year performance period from 2021 – 2023. The ultimate number of PSUs to be earned with respect to any PSU granted is determined at the end of the performance period depending on actual results as compared to the target performance metrics, and ranges from 0% to 200% of the target number of PSUs granted. If our rTSR is at the average of the two applicable indices, then that portion of the PSU award will be earned at target level. However, the number of Common Shares earned in respect of the PSUs tied to the achievement of rTSR is capped at 100% of the target number of PSUs granted if the Company’s total shareholder return is negative during the performance period, regardless of rTSR performance. Our ROCE measure is based on the average of the last two years during the three-year performance period. Due to competitive reasons, we are not disclosing the ROCE targets.
2020 PSUs will have the opportunity to vest upon the determination date (January 1, 2023) based on the actual results at the end of the three-year period and require that the recipients continue to be employed by the Company through the determination date.
Changes to 2021 LTI Measures
To better align our LTI program with shareholder interests and key strategic priorities, we have added two additional PSU non- financial measures: Sustainability and Employee Engagement. Each will be measured by an independent rating firm evaluating improvement over a 2020 baseline index. The 2021 PSU awards are deemed earned based (i) 50% on rTSR; (ii) 25% on our ROCE; (iii) 12.5% based on Sustainability; and.(iv) 12.5% based on Employee Engagement. We believe this combination of incentives further aligns our compensation program with our objective to drive long-term shareholder value.
PSUs Vesting Based on 2018–2020 Performance Period
December 31, 2020, marks the end of the three-year performance period for the 2018 LTIP awards. The 2018 PSUs were based 50% on Adjusted EBITDA and 50% on rTSR (as compared to the 2018 peer group) for the three-year performance period and such metrics, the target levels and performance-payout ranges for such awards were
set and approved by the Compensation Committee in January 2018. The PSUs expired without value as actual performance failed to eclipse the entry level threshold under both the Adjusted EBITDA and rTSR metrics. The tables below summarize the 2018 LTIP awards to our NEOs and the actual 2018 LTIP results for the three-year performance period ending December 31, 2020 relative to target.
Name
| 2018 PSUs
Target Number of
Units Awarded
| 2018 PSUs
Actual Number of
Units Earned
| Corning F. Painter(1) | N/A | N/A | Lorin Crenshaw(2) | N/A | N/A | Sandra Niewiem(3) | 2,153 | — | Pedro Riveros(2) | N/A | N/A | Carlos Quinones(2) | N/A | N/A |
| (1) | Mr. Painter was hired in September 2018, and received an initial RSU award but no PSUs for the commencement year of his employment. |
| (2) | Messrs. Crenshaw, Riveros and Quinones were not with the Company in 2018. |
| (3) | Dr. Niewiem’s target PSUs did not earn a payout due to the company not satisfying the performance goal as shown in the table below. |
2018 LTI Plan Measure | Target | Threshold | Actual Result | Actual Payout | Adjusted EBITDA(1) | $903 MM | $768 MM | $761 MM | 0% | rTSR(2) | -10.56% | -25.56% | -29.68% | 0% |
| (1) | Based on three-year cumulative Adjusted EBITDA. |
| (2) | rTSR is, with respect to any company, (1)PSU granted is determined at the sumend of (a) the company’sperformance period depending on actual results as compared to the target performance metrics, and ranges from 0% to 200% of the target number of PSUs granted.If our rTSR is at the average closing share priceof the two applicable indices, then that portion of the PSU award will be earned at target level. However, the number of Common Shares earned in respect of the PSUs tied to the achievement of rTSR is capped at 100% of the target number of PSUs granted if the Company’s total shareholder return is negative during the performance period, regardless of rTSR performance. Our ROCE measure is based on the Company’s annual achievement percentage with the opportunity to earn 1/3 payout for each calendar year. Due to competitive reasons, we are not disclosing the ROCE targets. Our Sustainability measure is based on performance versus a third party Sustainability Index to measure the Company’s industry specific percentile ranking. Our Employee Engagement measure is based on performance versus a third party Employee Effectiveness measure of the Company’s industry specific percentile ranking as compared to top performing companies. 2021 PSUs will have the opportunity to vest upon the determination date (December 31, 2023) based on the actual results at the end of the three-year period and require that the recipients continue to be employed by the Company through the determination date. RSU and PSU Vesting Based on 2019–2021 Performance Period December 31, 2021, marks the end of the three-year performance period for the 2019 LTIP awards. The 2019 LTIP Awards were based 30% on RSUs and 70% based on PSUs. The RSUs vested ratably 1/3 each year over the fourth quarterthree year period and converted to shares as of the end of the full three year period. The PSUs were based 50% rTSR (as compared to the 2019 peer group) and 50% based on ROCE for the three-year performance period and such metrics, the target levels and performance- payout ranges for such awards were set and approved by the Compensation Committee in January 2019. The rTSR portion of the PSUs expired without value as actual performance failed to eclipse the entry level threshold. The ROCE portion eclipsed the gate for 2019 resulting in a payout but fell below in 2020 minus the company’s average closing share price over the fourth quarter of 2019 (in each case adjusted for stock dividend distributions and stock splits, using the closing price as reported2021. The tables on the applicable national stock exchangenext page summarize the 2019 LTIP awards to our NEOs and computed in U.S. dollars) and (b) non-stock dividend distributions declared during the Performance Period and reinvested inactual 2019 LTIP results for the company’s shares on the ex-dividend date, divided by (2) the company’s average closing share price over the fourth quarter of 2019 (adjusted for stock dividend distributions and stock splits, using the closing price as reported on the applicable national stock exchange and computed in U.S. dollars). |
Compensation Consultant Role: How Executive Pay is Established
The Compensation Committee, in consultation with management and with the advice and recommendation of the Compensation Committee’s independent compensation consultant, endeavors to establish levels of compensation that are competitive in the marketplace taking into account our pay-for-performance philosophy and core principle of driving growth of long-term shareholder value.
Since the Company’s initial public offering in July 2014, the Compensation Committee has engaged Korn Ferry (“KF”) as its independent compensation consultant. In developing our compensation program and policies and setting pay levels, KF has assisted the Compensation Committee with reviewing elements of executive pay against a comparison peer group, as discussed below and advising the Compensation Committee on evolving best practices. In addition, from time to time, the Company purchases a compensation database from KF to use as a guideline for establishing competitive market pay rates and salaries. The
42three-year performance period ending December 31, 2021 relative to target.
Orion Engineered Carbons 2022 Proxy Statement 43 Name | 2019 PSUs Target Number of Units Awarded | 2019 PSUs Actual Number of Units Earned | Corning F. Painter | 70,489 | 7,460 | Robert Hrivnak(1) | N/A | N/A | Sandra Niewiem | 2,765 | 293 | Pedro Riveros | 2,347 | 248 | Carlos Quinones | 2,464 | 261 |
| (1) | Mr. Hrivnak was not with the Company in 2019. |
The 2019 rTSR and ROCE measures earned the following payouts: 2019 PSU Award rTSR Actual Achievement and Payout for the Three- Year Performance Period(1) | Orion rTSR | -23.70% | Index rTSR | 53.01% | Threshold (85% of Index) | 45.06% | Actual Payout | 0.00% |
| (1) | For rTSR, the Company’s achievement percentage of rTSR for the Performance Period relative to the average of TSR percentage results for the Performance Period of two published indices: S&P SmallCap 600 Index, and the S&P 600 Chemicals Index (the average of the two percentage results, the “Average Index Total Shareholder Return”). |
2019 PSU Award ROCE Actual Achievement and Payout for the Three-Year Performance Period (1) | Year | Target | Threshold | Actual Achievement | Actual Payout | Actual Payout based on 50% ROCE Measure | 2021 | 21.9% | 18.62% | 19.5% | 21.16% | 10.85% | 2020 | 21.9% | 18.62% | 10.6% | 0.00% | 0.00% | 2019 | 21.9% | 18.62% | 14.9% | 0.00% | 0.00% |
| (1) | Return on Capital Employed is calculated by total Adjusted Earnings Before Interest and Taxes for the Performance Period divided by the total Capital Employed during the Performance Period. |
Compensation Consultant Role: How Executive Pay is Established The Compensation Committee, in consultation with management and with the advice and recommendation of the Compensation Committee’s independent compensation consultant, endeavors to establish levels of compensation that are competitive in the marketplace taking into account our pay-for-performance philosophy and core principle of driving growth of long-term shareholder value. Since the Company’s initial public offering in July 2014, the Compensation Committee has engaged KF as its independent compensation consultant. In developing our compensation program and policies and setting pay levels, KF has assisted the Compensation Committee with reviewing elements of executive pay against a comparison peer group, as discussed below and advising the Compensation Committee on evolving best practices. In addition, from time to time, the Company purchases a compensation database from KF to use as a guideline for establishing competitive market pay rates and salaries. The Compensation Committee has evaluated the independence of KF and concluded that KF did not provide any other compensation services to the Company during 2020,2021, and was qualified to serve as an independent consultant to the Compensation Committee. Compensation Committee Process and Management Risk The Compensation Committee, which is comprised entirely of independent directors, is responsible for overseeing our executive compensation program. The Compensation Committee determines and approves all compensation and payment levels for the CEO and our other senior officers, including the other NEOs. The Compensation Committee performs an annual review of the CEO’s goals and his performance in achieving such goals in each fiscal year and keeps the Board apprised of such evaluations. Our CEO reviews the performance of our other senior officers, including the NEOs (other than himself), and makes recommendations to the Compensation Committee regarding the compensation for those executive officers.
44 The Compensation Committee, with input from KF, determines each element of compensation for the CEO. The Compensation Committee also determines each element of compensation for the other NEOs based on consideration of each individual’s leadership qualities, operational performance, business responsibilities, tenure with the Company, current compensation arrangements and long-term potential to enhance shareholder value as well as input from KF and the CEO. The Compensation Committee is under no obligation to follow these recommendations. Executive officers and others may participate in discussions with the Compensation Committee when invited to do so. | | The Compensation Committee also approves all salary increases, STI awards and LTIP grants for our NEOs. Use of Peer Group Data The Compensation Committee utilized KF to identify a peer group for the Company to perform an annual review of our executive compensation and to assess the competitiveness of our executive compensation program. Orion’s philosophy for senior executive pay, including NEO pay, is to provide target total compensation that is competitive with our peer group and general industry market data as provided by KF. We do not benchmark our NEO compensation to any specified level, and compensation levels of executives in our peer group is just one factor considered when setting compensation levels. In addition to market data, other factors, such as an individual’s experience, responsibilities, performance and long-term strategic value to Orion, are also considered by the Compensation Committee when making recommendations and decisions on compensation. For 2020,2021, KF provided market data on a peer group of companies consisting of 15 companies with revenues between $261$293 million and $2.9$3.4 billion (median revenues of $1.7$1.4 billion). Peer group compensation data was limited to information that is publicly reported and such data was used to evaluate the major components of compensation for our NEOs, including base pay, target annual bonus opportunity and long-term incentive opportunities. In accordance with the foregoing process and analysis, the Compensation Committee approved the following peer group of 15 companies in the Specialty Chemicalsspecialty chemicals industry to provide a reference for pay decisions for 2020, and setting of 2021 compensation:2021. The Compensation Committee annually reviews peer group companies to reflect merger & acquisition activity in the industry. | | |
Tronox Holdings PLC | Minerals Technologies Inc. | HB Fuller Company |
Tronox Holdings PLC | Minerals | The Stepan Co. | Kraton Corporation | Ferro Corporation | Sensient Technologies Corporation | Innospec Inc. | Chase Corporation | Ecovyst, Inc. | HB Fuller Company | The Stepan Co. | Kraton Corporation | Ferro Corporation | Sensient Technologies Corporation | Innospec Inc. | Chase Corporation | PQ Group Holdings | WR Grace Corporation | Cabot Corporation | Avient Corporation | GCP Applied Technologies Inc. | Balchem Corporation | | | |
Pay Decision Factors The Compensation Committee considers a number of factors when evaluating the pay levels of its NEOs. Factors include but are not limited to: | · | market reference data from our compensation peer group; |
| · | the NEO’s level of responsibility, performance, leadership, and experience; |
| · | the number of years the NEO has held the position; |
| · | the Company’s 2021 performance; |
| · | overall business strategy and business model; |
| · | the Company’s expected growth trajectory and constraints; |
| · | performance against our business tenets and long-term strategy; |
| · | rTSR and long-term shareholder value; and |
| · | the then-current economic environment. |
·market reference data from our compensation peer group;
·theEach NEO’s level of responsibility, performance, leadership, and experience;
·the number of years the NEO has held the position;
·the Company’s 2020 performance;
·overall business strategy and business model;
·the Company’s expected growth trajectory and constraints;
·performance against our business tenets and long-term strategy;
·rTSR and long-term shareholder value; and
·the then current economic environment.
| | The Compensation Committee determined that the salary adjustment for Ms. Niewiem should be made despite the pandemic, beyond this that each NEO’s then currentthen-current target compensation provided the executive with an appropriate compensation opportunity, and later determined, based on the Company’s fiscal 20202021 performance, that each NEO’s total fiscal 20202021 compensation was appropriate in light of overall Company performance, the NEO’s personal performance, responsibility, experience and relative total shareholder return for 2020.2021. For NEOs who are promoted or hired externally into their role, and whose total direct compensation is not competitive at the time of their promotion or hire, our philosophy is to bring such NEO’s compensation to benchmark levels used by the Committee generally over a three- yearthree-year period.
Compensation Decisions for 2022 We conducted our annual review of market competitiveness of the compensation of our executive officers. As part of this review, we made market-based adjustments to the base salaries of our named executive officers.
Orion Engineered Carbons 2022 Proxy Statement 45 The table below sets forth the base salary, target STI and target LTI incentive opportunities for 2022 for each of our named executive officers. Name | 2022 Merit Increase | 2022 Market Adjustment | Total 2022 Adjustment | 2022 Base Salary $ | 2022 STI Target | 2022 LTI Target | Corning F. Painter1 | 3.60% | 1.06% | 4.66% | 1,000,000 | 100% | 350% | Robert Hrivnak | 3.60% | 6.58% | 10.18% | 275,000 | 40% | 25% | Sandra Niewiem2 | 3.40% | 11.60% | 15.00% | 350,039 | 50% | 50% | Pedro Riveros | 3.60% | 3.40% | 7.00% | 377,817 | 50% | 50% | Carlos Quinones | 3.60% | 6.40% | 10.00% | 358,974 | 50% | 50% |
| (1) | The committee approved an increase in Mr. Painter’s LTI target award in 2022 to 350% (from 300% in 2021) based on benchmarking/recommendations from KF. |
Orion Engineered Carbons 2021 Proxy Statement 43
Compensation Decisions for 2021
We conducted our annual review of market competitiveness of the compensation of our executive officers. As part of this review, we made market-based adjustments to the base salaries of our named executive officers and also to the LTI target for Mr. Crenshaw.
The table below sets forth the base salary, target STI and target LTI incentive opportunities for 2021 for each of our named executive officers.
Name | 2021 Merit Increase | 2021 Market Adjustment | Total 2021 Adjustment | 2021 Base Salary | 2021 STI Target | 2021 LTI Target | Corning F. Painter | 3.00% | 6.14% | 9.14% | $955,500 | 100% | 300% | Lorin Crenshaw | 3.00% | 3.00% | 6.00% | $424,000 | 65% | 150%(1) | Pedro Riveros | 3.00% | 4.00% | 7.00% | $353,100 | 50% | 50% | Sandra Niewiem | 3.00% | 12.00% | 15.00% | $330,841 | 50% | 50% | Carlos Quinones | 3.00% | 0.6% | 3.60% | $326,340 | 50% | 50% |
| (1) | The committee approved an increase in Mr. Crenshaw’s LTI target award in 2021 to 150% (from 100% in 2020) based on benchmarking/recommendations from Korn Ferry. | (2) | Dr. Niewiem’s salary is paid in Euros and has been converted to US Dollars using the December 31, 2021 exchange rate of USD 1.134199. |
Health and Welfare Benefits and Retirement Benefits Our NEOs are generally eligible to participate in our broad-based employee benefit programs, which include certain retirement benefits based on the applicable individual’s jurisdiction, with matching contributions to a tax-qualified defined contribution plan for our NEOs in the U.S. and contributions to a defined contribution plan consistent with employees generally for our NEOs in Germany, group life insurance, long-term disability coverage, other group welfare benefit plans, and to receive an auto allowance per local norms, if applicable. We believe these benefits are required to remain competitive with our peers for executive talent. We do not provide any NEOs with excessive perquisites or other personal benefits. Employment Agreements Certain of the NEOs are party to an employment agreement describing the general terms of their employment with Orion. We believe these arrangements provide certainty to both Orion and the executive as to their rights and obligations to each other, including restrictive covenants and non-compete agreements. Corning F. Painter Mr. Corning F. Painter, our Chief Executive Officer, has an employment agreement (the “Painter Employment Agreement”) with the Company, which does not have a fixed term. The Painter Employment Agreement provides for a base salary, which is $875,500$955,500 annually at December 31, 2020,2021, participation in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 100% of base salary and annual LTI award with a target value equal to 300% of base salary.salary (increased to 350% as of January 1, 2022). The Painter Employment Agreement provided for a one-time sign on bonus of $410,000 (paid in 2018) and an initial RSU grant with a value of $1,000,000 on the date of grant, generally subject to vesting over three years. Mr. Painter is also eligible for | | welfare and retirement benefits commensurate with the benefits offered to all other Orion employees, customary relocation benefits (which were paid in 2018), and certain severance benefits which are described below. Lorin Crenshaw
Robert Hrivnak Mr. Lorin Crenshaw,Robert Hrivnak, our Interim Chief Financial Officer has entered intoand Chief Accounting Officer, is an offer letter which describes the terms of his employment, including his at-will status.employee. Mr. Crenshaw’sHrivnak’s base salary at December 31, 20202021 was $400,000$249,600 annually and he is eligible to participate in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 65%40% of base salary and annual LTI award with a target value equal to 100%25% of base salary. The offer letter provided for a one-time sign on bonus of $180,000 ($100,000 paid in 2019,Starting October 27, 2021, Mr. Hrivnak serves as Interim CFO and $80,000 paid in 2020) and a one-time grant of 10,689 RSUs upon his hire in 2019 with a value of $200,000 on the date of grant, subjecthe receives an additional monthly allowance equal to vesting over three years.$10,000. Mr. CrenshawHrivnak is also eligible for welfare and retirement benefits commensurate with the benefits offered to all other Orion employees, and customary relocation benefits.benefits (which were paid in 2020). Mr. CrenshawHrivnak is also party to a restrictive covenants agreement that limits his ability to compete and/orwith and solicit employees of Orion during his employment and for a period of one year thereafter. Sandra Niewiem Dr. Sandra Niewiem, our SVP Global Specialties and EMEA Region, has entered into an employment agreement which governs the terms of her employment. Dr. Niewiem’s employment agreement is governed by German law and reflects customary terms of employment in such jurisdiction. Dr. Niewiem’s base salary at December 31, 20202021 was $287,688$330,840 annually, and she was eligible to participate in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 50% of base salary and annual LTI award with a target value equal to 50% of base salary. Dr. Niewiem is also eligible for welfare and retirement benefits commensurate with the benefits offered to all other Orion employees in Germany. |
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Pedro Riveros Mr. Pedro Riveros, our SVP Global Rubber Carbon Black and Americas Region, is an at-will employee. Mr. Riveros’ base salary at December 31, 2021 was $353,100 annually and he is eligible to participate in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 50% of base salary and annual LTI award with a target value equal to 50% of base salary. Mr. Riveros received a one-time grant of 17,284 RSUs upon his hire in 2019 with a value of $155,037 on the date of grant, subject to vesting over three years. Mr. Riveros is also eligible for welfare
46 Pedro
and retirement benefits commensurate with the benefits offered to all other Orion employees, and customary relocation benefits (which were paid in 2019). Mr. Riveros is also party to a restrictive covenants agreement that limits his ability to compete with and solicit employees of Orion during his employment and for a period of one year thereafter. Carlos Quinones Mr. Carlos Quinones, our Senior Vice President – Global Operations, is an at-will employee. Mr. Quinones’ base salary at December 31, 2021 was $326,240 annually. He is eligible to participate in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 50% of base salary and annual LTI award with a target value equal to 50% of base salary. Mr. Quinones received a one- time grant of 17,284 RSUs upon his hire in 2019, with a value of $155,037 on the date of grant, subject to vesting over three years. Mr. Quinones is also eligible for welfare and retirement benefits commensurate with the benefits offered to all other Orion employees, and customary relocation benefits. Mr. Quinones is also party to a restrictive covenants agreement that limits his ability to compete with and solicit employees of Orion during his employment and for a period of one year thereafter. Additional information on the terms and conditions of these agreements are described in the section entitled “Potential Payments and Benefits upon Termination or Change in Control” below. Tax and Accounting Considerations Generally, Section 162(m) of the Internal Revenue Code disallows a tax deduction to any publicly held corporation for any individual remuneration in excess of $1.0 million paid in any taxable year to its chief executive officer, chief financial officer, any of the corporation’s three most highly compensated executive officers for the prior fiscal year, or any individual who was one of the foregoing executives in any prior year. The Committee considers the applicability of Section 162(m) and accounting impact of compensation in designing our compensation programs but also considers numerous factors alongside the objectives of the executive compensation program and our compensation philosophy that may in some cases lead to the payment of compensation that is not deductible. Mr. Pedro Riveros, our SVP Global Rubber Carbon Black and Americas Region, is an at-will employee. Mr. Riveros’ base salary at December 31, 2020 was $330,000 annually and he is eligible to participate in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 50% of base salary and annual LTI award with a target value equal to 50% of base salary. Mr. Riveros received a one-time grant of 17,284 RSUs upon his hire in 2019 with a value of $155,037 on the date of grant, subject to vesting over three years. Mr. Riveros is also eligible for welfare and retirement benefits commensurate with the benefits offered to all other Orion employees, and customary relocation benefits. Mr. Riveros is also party to a restrictive covenants agreement that limits his ability to compete and/or solicit employees of Orion during his employment and for a period of one year thereafter.
Carlos Quinones
Mr. Carlos Quinones, our Senior Vice President – Global Operations, is an at-will employee. Mr. Quinones’ base salary at December 31, 2020 was $315,000 annually. He is eligible to participate in the Company’s STI and LTIP, with an annual target bonus opportunity equal to 50% of base salary and annual LTI award with a target value equal to 50% of base salary. Mr. Quinones received a one- time grant of 17,284 RSUs upon his hire in 2019, with a value of $155,037 on the date of grant, subject to vesting over three years. Mr. Quinones is also eligible for welfare and retirement benefits commensurate with the benefits offered to all other Orion employees, and customary relocation benefits. Mr. Quinones is also party to a restrictive covenants agreement that limits his ability to compete and/or solicit employees of Orion during his employment and for a period of one year thereafter.
Additional information on the terms and conditions of these agreements are described in the section entitled “Potential Payments and Benefits upon Termination or Change in Control” below.
Tax and Accounting Considerations
Generally, Section 162(m) of the Internal Revenue Code disallows a tax deduction to any publicly held corporation for any individual remuneration in excess of $1.0 million paid in any taxable year to its chief executive officer, chief financial officer, any of the corporation’s three most highly compensated executive officers for the prior fiscal year, or any individual who was one of the foregoing executives in any prior year. The Committee considers the applicability of Section 162(m) and accounting impact of compensation in designing our compensation programs but also considers numerous factors alongside the objectives of the executive compensation program and our compensation philosophy that may in some cases lead to the payment of compensation that is not deductible.
Stock Ownership Guidelines
Ownership of our Common Shares by our directors and executive officers is very important to align their interests with those of our shareholders. The Board has adopted guidelines requiring that our executive officers acquire and continuously hold a specified minimum level of our Common Shares. For our executive officers, we express these requirements as a multiple of annual base salary. The minimum stock ownership requirements by level are as follows:
Stock Ownership Guidelines Ownership of our Common Shares by our directors and executive officers is very important to align their interests with those of our shareholders. The Board has adopted guidelines requiring that our executive officers acquire and continuously hold a specified minimum level of our Common Shares. For our executive officers, we express these requirements as a multiple of annual base salary. The minimum stock ownership requirements by level are as follows: Stock Ownership Guidelines | Chief Executive Officer | 5X Base Salary | Chief Financial Officer | 3X Base Salary | Senior Vice Presidents | 2X Base Salary | Director | 5X Annual Board Director Fee |
Upon the appointment or election of a new director or executive officer, that person will be expected to reach full compliance with these requirements by the date that is five years after his or her first appointment or election. Anti-Hedging, Pledging and Insider Trading Policy Our directors and executive officers are required to comply with our Insider Trading Policy and may not use any strategies or products (such as derivative securities or short-selling techniques) to hedge against the potential decrease of our Common Shares, or enter into any form of hedging or monetization transaction involving our Common Shares. Our Insider Trading Policy prohibits the pledging of any Company stock as security by our directors or executive officers, and prohibits our employees, including our NEOs, from placing Company securities in a margin account with a broker-dealer at any time when the individual is aware of material, nonpublic information or is otherwise not permitted to trade in Company securities. Recoupment Policy Each of the LTI awards issued to our executives, including our NEOs, from placing Company securities in a margin account with a broker-dealer at any time when the individual is aware of material, nonpublic information or is otherwise not permitted to trade in Company securities. Recoupment Policy
Each of the LTI awards issued to our executives, including our NEO, includes a recoupment (clawback) provision. The agreements provide that the Company shall have the right to determine in its sole discretion to recoup and the executive will be required to repay the Company, the value of any Common Shares or cash delivered in settlement of any award in the following three circumstances:
| · | if the Company restates its financial statements materially downward; |
| · | the executive violates any non-competition, non-solicitation and confidentiality restrictions to which he or she is subject; or |
| · | the executive’s employment is terminated for cause. |
| · | if the Company restates its financial statements materially downward; |
| · | the executive violates any non-competition, non-solicitation and confidentiality restrictions to which he or she is subject; or |
| · | the executive’s employment is terminated for cause. |
Orion Engineered Carbons 2021 Proxy Statement 45
Compensation Risk Assessment The Compensation Committee of the Board provides risk oversight with respect to compensation of the Company’s employees, including the NEOs and other key officers. We believe we have established a short- and long-term compensation program that properly incentivizes desired performance and mitigates inappropriate risk-taking.
Orion Engineered Carbons 2022 Proxy Statement 47 The Compensation Committee oversees the Company’s executive compensation program and annually reviews the program against the Company’s strategic goals, industry practices and emerging trends in order to ensure alignment with shareholder interests. The Compensation Committee believes that our performance-based bonus and equity programs provide executives with incentives to create long-term shareholder value. As part of this evaluation, the Compensation Committee considers whether the program components encourage or otherwise promote the taking of inappropriate or unacceptable risks that could threaten the Company’s long-term value. Based on this review, the Compensation Committee believebelieves that many features of the Company’s compensation program which are designed to effectively promote the creation of long-term value, discourage behavior that leads to excessive risk, and mitigate the material risks associated with executive and other compensation programs. These features for 20202021 are as follows: · A mix of elements so that the compensation mix is not overly focused on either short-term or long-term incentives.
· Our STI program is based on financial metrics that are objective and drive long-term shareholder value. Moreover, the Compensation Committee attempts to set ranges for these measures that encourage success without encouraging excessive risk-taking to achieve short-term results.
· Our compensation program does not allow for unlimited payments, and annual incentive award caps limit the extent that employees could potentially profit by taking on excessive risk.
| | · A significant portion of our LTIP (70%) is issued as PSUs based on ROCE and rTSR which are objective and drive long-term shareholder value.
· Our 2020 PSUs vest based on a three-year performance period which encourages executives to attain sustained performance over several years, rather than performance in a single period.
· We have robust stock ownership guidelines which align the interests of our executive officers with the long-term interests of our shareholders and encourage our executives to execute our strategies for growth in a prudent manner.
· The demonstrated ability to make timely changes to the executive compensation program as needed.
| · | A mix of elements so that the compensation mix is not overly focused on either short-term or long-term incentives. |
| · | Our STI program is based on financial metrics that are objective and drive long-term shareholder value. Moreover, the Compensation Committee attempts to set ranges for these measures that encourage success without encouraging excessive risk-taking to achieve short-term results. |
| · | Our compensation program does not allow for unlimited payments, and annual incentive award caps limit the extent that employees could potentially profit by taking on excessive risk. |
| · | A significant portion of our LTIP (70%) is issued as PSUs based on ROCE and rTSR which are objective and drive long-term shareholder value. |
| · | Our 2021 PSUs vest based on a three-year performance period which encourages executives to attain sustained performance over several years, rather than performance in a single period. |
| · | We have robust stock ownership guidelines which align the interests of our executive officers with the long-term interests of our shareholders and encourage our executives to execute our strategies for growth in a prudent manner. |
| · | The demonstrated ability to make timely changes to the executive compensation program as needed. |
Based on its most recent review, management and the Compensation Committee do not believe that the compensation policies and practices of the Company create risks that are reasonably likely to have a material adverse effect on the Company. Report of the Compensation Committee The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. | Dan F. Smith (Chair) | | Paul Huck | | Didier Miraton | | |
Dan F. Smith (Chair)
Paul Huck
Didier Miraton
The foregoing report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
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Compensation of Our Named Executive Officers and Directors
48 Compensation of Our Named Executive Officers and Directors Summary Compensation Table The following table provides information concerning compensation of our NEOs – our Chief Executive Officer, our Chief Financial Officer, the three most highly compensated other executive officers of Orion at the end of 2020. Name and Principal Position | Year | Base Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Non-Equity Incentive Compensation Plan(4) ($) | All Other Compensation(5) ($) | Total ($) | Corning F. Painter Chief Executive Officer | 2020 | 612,850 | — | 1,820,368 | 437,750 | 11,400 | 2,882,368 | 2019 | 875,500 | — | 2,626,500 | 240,763 | 11,200 | 3,753,963 | Lorin Crenshaw Chief Financial Officer | 2020 | 388,308 | 80,000 | 277,221 | 130,000 | 108,387 | 983,916 | 2019 | 53,846 | 100,000 | 266,668 | 11,917 | 23,605 | 456,036 | Sandra Niewiem SVP, Carbon Black and EMEA Region | 2020 | 268,509 | — | 86,319 | 69,089 | 47,142 | 471,058 | 2019 | 225,175 | — | 103,027 | 39,498 | 42,584 | 410,284 | Pedro Riveros SVP, Global Rubber Carbon Black and Americas Region | 2020 | 320,354 | — | 114,353 | 82,500 | 11,400 | 528,607 | 2019 | 175,154 | — | 457,500 | 43,313 | 119,966 | 795,933 | Carlos Quinones SVP, Global Operations | 2020 | 305,792 | — | 109,162 | 78,750 | 11,400 | 505,104 |
| (1) | All NEOs except our CEO voluntarily elected to take a 10% reduction in their base salary effective May 1, 2020. Our CEO voluntarily elected to take a 50% reduction in his base salary effective May 1, 2020. |
| (2) | The amount included in this column for Mr. Crenshaw reflects the remaining payment in 2020 of a $180,000 sign-on cash bonus that was payable pursuant to the terms of his offer letter entered into in connection with the commencement of his employment in November 2019. |
| (3) | Reflects LTIP RSU/PSU awards based on average 4th quarter 2019 closing share price. |
| (4) | Represents the annual cash incentive award accrued by December 31, 2020 in respect of the 2020 performance year under our STI Plan and payable in calendar year 2021. |
| (5) | Amounts in this column represent the following benefits available to our NEOs including matching benefits to 401(k) contributions:– our Chief Executive Officer, our Chief Financial Officer, the three most highly compensated other executive officers of Orion at the end of 2021. Name and Principal Position | Year | Base Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Non-Equity Incentive Compensation Plan(4) ($) | All Other Compensation(7) ($) | Total ($) | Corning F. Painter Chief Executive Officer | 2021 | 955,500 | — | 3,603,048 | 1,326,234 | 14,500 | 5,899,282 | 2020 | 612,850 | — | 1,820,368 | 437,750 | 11,400 | 2,882,368 | 2019 | 875,500 | — | 2,626,500 | 240,763 | 11,200 | 3,753,963 | Lorin Crenshaw(5) Chief Financial Officer (until October 27, 2021) | 2021 | 375,077 | 500 | 804,045 | — | 14,500 | 1,194,122 | 2020 | 388,308 | 80,000 | 277,221 | 130,000 | 108,387 | 983,916 | 2019 | 53,846 | 100,000 | 266,668 | 11,917 | 23,605 | 456,036 | Robert Hrivnak Chief Financial Officer (from October 27, 2021) | 2021 | 247,200 | — | 170,797 | 151,390 | 14,500 | 583,888 | Sandra Niewiem(6) SVP, Carbon Black and EMEA Region | 2021 | 305,512 | — | 169,690 | 212,025 | 46,352 | 733,580 | 2020 | 268,509 | — | 86,319 | 69,089 | 47,142 | 471,058 | 2019 | 225,175 | — | 103,027 | 39,498 | 42,584 | 410,284 | Pedro Riveros SVP, Global Rubber Carbon Black and Americas Region | 2021 | 353,100 | — | 223,201 | 245,051 | 14,500 | 835,853 | 2020 | 320,354 | 50,000 | 114,353 | 82,500 | 11,400 | 578,607 | 2019 | 175,154 | — | 457,500 | 43,313 | 119,966 | 795,933 | Carlos Quinones SVP, Global Operations | 2021 | 326,340 | — | 206,461 | 226,480 | 14,500 | 773,781 | 2020 | 305,792 | — | 109,162 | 78,750 | 11,400 | 505,104 |
(1) | In response to the COVID-19 pandemic, Dr. Niewiem and Messers. Riveros, Crenshaw and Quinones elected to take a 10% reduction in base salary effective May 1, 2020. Mr. Painter voluntarily elected to take a 50% reduction in his base salary effective May 1, 2020. Base salary was restored to pre-reduction levels on January 1, 2021. |
Name and Principal Position | Year | Retirement Contributions ($) | Car Lease ($) | Relocation(1) ($) | Total ($) | Corning F. Painter Chief Executive Officer | 2020 | 11,400 | — | — | 11,400 | 2019 | 11,200 | — | — | 11,200 | Lorin Crenshaw Chief Financial Officer | 2020 | 10,260 | — | 98,127 | 108,387 | 2019 | 615 | — | 22,990 | 23,605 | Sandra Niewiem(2) SVP, Carbon Black and EMEA Region | 2020 | 40,265 | 6,877 | — | 47,142 | 2019 | 37,288 | 5,296 | — | 42,584 | Pedro Riveros SVP, Global Rubber Carbon Black and Americas Region | 2020 | 11,400 | — | — | 11,400 | 2019 | — | — | 119,966 | 119,966 | Carlos Quinones Former SVP, Global Operations | 2020 | 11,400 | — | — | 11,400 |
| (1) | The amounts in this column represent relocation costs in connection with Messrs. Crenshaw’s and Riveros’ business-related relocations to Houston, Texas, which are consistent with the Company’s standard Relocation Policy offered to all employees who receive a relocation package.(2) | The amount included in this column for Messrs. Crenshaw and Hrivnak include sign-on cash bonuses of $180,000 and $25,000, respectively. Mr. Crenshaw received a $500 vaccination bonus along with our CEO, NEOs and U.S. based employees. Our CEO and NEOs excluding Mr. Crenshaw decided to refund their vaccination bonus to the Company. At the time of these decisions, Mr. Crenshaw had already left the Company. Mr. Riveros received a $50,000 recognition award in 2020 that was not previously reported. |
(3) | Reflects the fair market value of target RSUs and PSUs at grant date. The grant date fair value of these awards was calculated in accordance with FASB ASC 718, Compensation – Stock Compensation (“FASB ASC 718”) which, for PSUS, is based on the probable outcome of the performance conditions. See Note M to our consolidated financial statements included in our 2021 Annual Report, regarding assumptions underlying valuations of equity awards. The value for each PSU award, granted under the LTI Plan, as of the grant date, assuming the maximum level of performance, is $,5,134,325 $2,362,110 and $1,815,797 for Mr. Painter for 2021, 2020 and 2019 respectively, $77,204 for Mr. Hrivnak for 2021, $240,796, $112,008 and $71,226 for Mrs. Niewiem for 2021, 2020 and 2019 respectively, $318,060, $148,393 and $60,974 for Mr. Riveros for 2021, 2020 and 2019 respectively and $294,206 and $141,645 for Mr. Quinones for 2021 and 2020 respectively. Mr. Hrivnak was not a NEO in the years prior to 2021 and Mr. Quinones was not a NEO in the years prior to 2020. Mr. Crenshaw forfeited his 2019, 2020 and 2021 PSUs upon his resignation from the Company. |
| (2) | Dr. Niewiem’s retirement contribution amount reflects ordinary contributions to the defined contribution plan generally maintained for our employees in Germany. |
Orion Engineered Carbons 2021 Proxy Statement 47
Grants of Plan-Based Awards for 2020
| | | Estimated Future Payouts Under | Estimated Future Payouts Under | All Other | | | | | Non-Equity Incentive Plan | Equity Incentive Plan | Stock | | | | | Awards(1) | Awards(2) | Awards: | Grant Date | | | | | | | | | | Number | Fair Value | | | | | | | | | | of Shares of | of Stock | | Grant | Type of | Threshold | Target | Maximum | Threshold | Target | Maximum | Stock or | Awards(4) | | Date | Award | ($) | ($) | ($) | (#) | (#) | (#) | Units(3) | ($) | Corning F. Painter | | STI | 437,750 | 875,500 | 1,751,000 | | | | | | | 9/30/2020 | PSU | | | | 50,930 | 101,859 | 203,718 | | 1,274,256 | | 9/30/2020 | RSU | | | | | | | 43,654 | 546,112 | Lorin Crenshaw | | STI | 200,000 | 400,000 | 800,000 | | | | | | | 9/30/2020 | PSU | | | | 7,756 | 15,512 | 31,024 | | 194,055 | | 9/30/2020 | RSU | | | | | | | 6,648 | 83,166 | Sandra Niewiem | | STI | 69,089 | 138,177 | 276,354 | | | | | | | 9/30/2020 | PSU | | | | 2,415 | 4,830 | 9,660 | | 60,423 | | 9/30/2020 | RSU | | | | | | | 2,070 | 25,896 | Pedro Riveros | | STI | 82,500 | 165,000 | 330,000 | | | | | | | 9/30/2020 | PSU | | | | 3,200 | 6,399 | 12,798 | | 80,051 | | 9/30/2020 | RSU | | | | | | | 2,742 | 34,302 | Carlos Quinones | | STI | 78,750 | 157,500 | 315,000 | | | | | | | 9/30/2020 | PSU | | | | 3,054 | 6,108 | 12,216 | | 76,411 | | 9/30/2020 | RSU | | | | | | | 2,618 | 32,751 |
| (1) | Actual non-equity incentive plan payouts for 2020 are discussed in the section “Target Compensation Mix 2020”. |
| (2) | PSU equity awards granted in 2020 have a three-year cliff vest to achievement of established performance metrics. |
| (3) | RSUs granted in 2020 are scheduled to vest as to 1/3 on each of January 1, 2021, January 1, 2022, and January 1, 2023. |
| (4) | Represents the grant date fair value of stock awards as computed in accordance with FASB ASC 718-10. |
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Outstanding Equity Awards at December 31, 2020
The following table provides information on RSUs and PSUs granted under the Plan to each of our NEOs and outstanding at December 31, 2020.
Name | RSUs Grant Date(1) | Number of RSUs That Have Not Vested (#) | Market Value of RSUs That Have Not Vested(2) ($) | PSUs Grant Date(3) | Number of PSUs That Have Not Vested(4) (#) | Market Value of PSUs That Have Not Vested(2) ($) | Corning F. Painter | 9/30/2020 | 43,654 | 748,230 | 9/30/2020 | 50,930 | 872,932 | | 7/16/2019 | 45,314 | 776,673 | 7/16/2019 | 35,245 | 604,091 | | 11/2/2018(5) | 11,939 | 204,634 | — | — | — | Lorin Crenshaw | 9/30/2020 | 6,648 | 113,947 | 9/30/2020 | 7,756 | 132,938 | | 11/4/2019 | 511 | 8,764 | 11/4/2019 | 895 | 15,332 | | 11/4/2019(5) | 7,126 | 122,140 | — | — | — | Sandra Niewiem | 9/30/2020 | 2,070 | 35,480 | 9/30/2020 | 2,415 | 41,393 | | 7/16/2019 | 790 | 13,541 | 7/16/2019 | 1,383 | 23,696 | Pedro Riveros | 9/30/2020 | 2,742 | 46,998 | 9/30/2020 | 3,200 | 54,839 | | 7/16/2019 | 670 | 11,484 | 7/16/2019 | 1,174 | 20,114 | | 6/30/2019(5) | 11,523 | 197,499 | — | — | — | Carlos Quinones | 9/30/2020 | 2,618 | 44,873 | 9/30/2020 | 3,054 | 52,346 | | 7/16/2019 | 704 | 12,067 | 7/16/2019 | 1,232 | 21,116 | | 6/30/2019 | 11,523 | 197,499 | — | — | — |
| (1) | These RSUs reflect the time-based portion of the 2020 LTI Program. The RSUs vest in equal annual installments over three years with vesting commencing as of January 1. RSUs will be settled in Common Shares. |
| (2) | The value of RSUs and PSUs that have not vested is based on the closing stock price of $17.14 per Common Share on(4) | Represents the annual cash incentive award earned by December 31, 2020, the last trading day of 2020. |
| (3) | PSUs vest upon the date the Compensation Committee determines the actual results for the applicable three-year performance period and generally require the recipient to continue to be employed through the determination date. The PSUs will be settled in Common Shares. The performance period for the 2020 PSUs is January 1, 2020 to December 31, 2022, for the 2019 PSUs is January 1, 2019 to December 31, 2021 and for the 2018 PSUs is January 1, 2018 to December 31, 2020. |
| (4) | Values in this column represent the target number of PSUs awarded to each NEO for 2020 and 2019, and for 2018 PSUs represents actual number of units earned but not yet settled in Common Shares as of December 31, 2020. |
| (5) | Messrs. Painter, Crenshaw and Riveros each received a sign-on RSU grant that vests in equal installments over three years, subject to continued employment. For Mr. Painter, 11,939 RSUs will vest on November 2, 2021 for Mr. Crenshaw, 3,563 RSUs will vest on November 4 in each of 2021 and 2022; and for Mr. Riveros, 5,761 RSUs will vest on June 30 in each of 2021 in respect of the 2021 performance year under our STI Plan and paid in calendar year 2022. |
Option Exercises and Stock Vested for 2020
The following table sets forth as to each of the NEOs information on exercises of options to purchase our Common Shares and the vesting of restricted shares of our Common Shares during 2020.
| | | Option Awards | Stock Awards | Name | Position | Year | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Corning F. Painter | CEO | 2020 | — | — | 22,009 | 337,579 | Lorin Crenshaw | CFO | 2020 | — | — | 3,819 | 58,369 | Sandra Niewiem | SVP, Global Specialty Carbon Black and EMEA Region | 2020 | — | — | 2,519 | 28,395 | Pedro Riveros | SVP, Global Rubber Carbon Black and Americas Region | 2020 | — | — | 6,096 | 66,637 | Carlos Quinones | SVP, Global Operations | 2020 | — | — | 6,289 | 70,335 |
| (1) | Represents the pretax value realized on stock awards that vested during the fiscal year, computed by multiplying the number of shares acquired on vesting by the closing price of common stock on the vesting date.(5) | Mr. Crenshaw resigned from the Company in 2021. His last day as an employee of the Company was November 21, 2021 and his last day as CFO was October 27, 2021. Mr. Crenshaw forfeited his 2021 STI bonus as a result of his resignation. |
Orion Engineered Carbons (6) | Dr. Niewiem’s salary is paid in Euros and has been converted to US Dollars using the December 31, 2021 exchange rate of USD 1.134199. |
(7) | Amounts in this column represent the following benefits available to our NEOs, including relocation, matching benefits to 401(k) contributions and assignment allowances: |
Orion Engineered Carbons 2022 Proxy Statement 49 Name and Principal Position | Year | Retirement Contributions ($) | Car Lease ($) | Relocation(1) ($) | Total ($) | Corning F. Painter Chief Executive Officer | 2021 | 14,500 | — | — | 14,500 | 2020 | 11,400 | — | — | 11,400 | 2019 | 11,200 | — | — | 11,200 | Lorin Crenshaw Chief Financial Officer (until October 27, 2021) | 2021 | 14,500 | — | — | 14,500 | 2020 | 10,260 | — | 98,127 | 108,387 | 2019 | 615 | — | 22,990 | 23,605 | Robert Hrivnak Chief Financial Officer (from October 27, 2021) | 2021 | 14,500 | — | — | 14,500 | Sandra Niewiem(2) SVP, Carbon Black and EMEA Region | 2021 | 39,917 | 6,434 | — | 46,352 | 2020 | 40,265 | 6,877 | — | 47,142 | 2019 | 37,288 | 5,296 | — | 42,584 | Pedro Riveros SVP, Global Rubber Carbon Black and Americas Region | 2021 | 14,500 | — | — | 14,500 | 2020 | 11,400 | — | — | 11,400 | 2019 | — | — | 119,966 | 119,966 | Carlos Quinones Former SVP, Global Operations | 2021 | 14,500 | — | — | 14,500 | 2020 | 11,400 | — | — | 11,400 |
(1) | The amounts in this column represent relocation costs in connection with Messrs. Crenshaw and Riveros business-related relocations to Houston, Texas, which are consistent with the Company’s standard Relocation Policy offered to all employees who receive a relocation package. |
(2) | Dr. Niewiem’s retirement contribution amount reflects ordinary contributions to the defined contribution plan generally maintained for our employees in Germany. |
Grants of Plan-Based Awards for 2021 | Grant Date | Approval Date | Type of Award | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) | Grant Date Fair Value of Stock Awards(4) ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Corning F. Painter | | | STI | 477,750 | 955,500 | 1,911,000 | | | | | | 10/6/2021 | 01/21/2021 | PSU | | | | 65,539 | 131,078 | 262,156 | | 2,567,163 | 10/6/2021 | 01/21/2021 | RSU | | | | | | | 56,176 | 1,035,885 | Lorin Crenshaw(5) | | | STI | 137,800 | 275,600 | 551,200 | | | | | | 10/6/2021 | 01/21/2021 | PSU | | | | 14,626 | 29,251 | 58,502 | | 572,881 | 10/6/2021 | 01/21/2021 | RSU | | | | | | | 12,536 | 231,164 | Robert Hrivnak(6) | | | STI | 49,920 | 99,840 | 199,680 | | | | | | 10/6/2021 | 01/21/2021 | PSU | | | | 986 | 1,971 | 3,942 | | 38,602 | 10/6/2021 | 01/21/2021 | RSU | | | | | | | 1,971 | 36,345 | 11/1/2021 | 10/23/2021 | RSU | | | | | | | 5,000 | 95,850 | Sandra Niewiem | | | STI | 76,378 | 152,756 | 305,512 | | | | | | 10/6/2021 | 01/21/2021 | PSU | | | | 3,087 | 6,173 | 12,346 | | 120,898 | 10/6/2021 | 01/21/2021 | RSU | | | | | | | 2,646 | 48,792 | Pedro Riveros | | | STI | 88,275 | 176,550 | 353,100 | | | | | | 10/6/2021 | 01/21/2021 | PSU | | | | 4,060 | 8,120 | 16,240 | | 159,030 | 10/6/2021 | 01/21/2021 | RSU | | | | | | | 3,480 | 64,171 | Carlos Quinones | | | STI | 81,585 | 163,170 | 326,340 | | | | | | 10/6/2021 | 01/21/2021 | PSU | | | | 3,756 | 7,511 | 15,022 | | 147,103 | 10/6/2021 | 01/21/2021 | RSU | | | | | | | 3,219 | 59,358 |
(1) | Actual non-equity incentive plan payouts for 2021 are discussed in the section “Target Compensation Mix 2021”. |
(2) | PSU equity awards granted in 2021 have a three-year cliff vesting upon achievement of established performance metrics. |
(3) | RSUs granted in 2021 are scheduled to vest as to 1/3rd on each of January 1, 2022, January 1, 2023, and January 1, 2024. |
(4) | Represents the grant date fair value of stock awards as computed in accordance with FASB ASC 718. |
(5) | Mr. Crenshaw forfeited his STI payment and 18,352 RSUs and 37,823 PSUs as a result of his resignation. |
(6) | Mr. Hrivnak received an additional RSU grant on November 1, 2021, upon the commencement of his interim CFO role. These RSUs vest in equal installments over three years, subject to continued employment. |
50 Our CEOOutstanding Equity Awards at December 31, 2021
The following table provides information on RSUs and PSUs granted under the Plan to Median Employee Pay Ratio for 2020 was 35:1each of our NEOs and outstanding at December 31, 2021. Name(1) | Grant Date
| Number of Shares or Units of Stock That Have Not Vested(2) | Market Value of Shares or Units of Stock That Have Not Vested(3) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | (#) | ($) | (#) | ($) | Corning F. Painter | 10/6/2021 | 56,176 | 1,031,391 | 131,078 | 1,804,944 | 9/30/2020 | 43,654 | 801,487 | 101,859 | 935,066 | Robert Hrivnak | 10/6/2021 | 1,971 | 36,188 | 971 | 18,094 | 11/1/2021 | 5,000 | 91,800 | — | — | 9/30/2020 | 623 | 11,438 | 923 | 5,719 | Sandra Niewiem | 10/6/2021 | 2,646 | 48,581 | 6,173 | 85,002 | 9/30/2020 | 2,070 | 38,005 | 4,830 | 44,339 | Pedro Riveros(5) | 10/6/2021 | 3,480 | 63,893 | 8,120 | 111,812 | 9/30/2020 | 2,742 | 50,343 | 6,399 | 58,743 | 6/30/2019 | 5,761 | 105,778 | — | — | Carlos Quinones(5) | 10/6/2021 | 3,219 | 59,101 | 7,511 | 103,426 | 9/30/2020 | 2,618 | 48,066 | 6,108 | 56,071 | 6/30/2019 | 5,761 | 105,778 | — | — |
We believe
(1) | Mr. Crenshaw forfeited his 18,352 RSUs and 37,823 PSUs as a result of his resignation and is therefore not included in this table. |
(2) | These RSUs reflect the time-based portion of the 2021 LTI Program. The RSUs vest in equal annual installments over three years. RSUs will be settled in Common Shares at the end of the three-year period. |
(3) | The value of RSUs and PSUs that have not vested is based on the closing stock price of $18.36 per Common Share on December 31, 2021, the last trading day of 2021. |
(4) | Values in this column represent the target number of PSUs awarded to each NEO for 2021 and 2020. PSUs vest upon the date the Compensation Committee determines the actual results for the applicable three-year performance period and generally require the recipient to continue to be employed through the determination date. The PSUs will be settled in Common Shares. The performance period for the 2021 PSUs is from January 1, 2021 to December 31, 2023 and for the 2020 PSUs is from January 1, 2020 to December 31, 2022. |
(5) | Messrs. Riveros and Quinones each received a sign-on RSU grant on June 30, 2019, that vests in equal installments over three years, subject to continued employment. For Messrs. Riveros and Quinones, 5,761 RSUs will vest on June 30 of 2022. |
Option Exercises and Stock Vested for 2021 The following table sets forth as to each of the NEOs information on exercises of options to purchase our executive compensation program must be consistent and internally equitable to motivate our employees to perform in ways that enhance shareholder value. We are committed to internal pay equity,Common Shares and the Compensation Committee monitors the relationship between the payvesting of restricted shares of our executive officers and the pay of our non-executive employees. As of December 31, 2020, the Company employed 1,448 persons.Common Shares during 2021. In accordance with SEC requirements, the median paid employee may be identified once every three years if there has been no change to employee population or compensation arrangements that would result in a significant change to our pay ratio disclosure. As there were no significant changes in our employee population nor our employee compensation in 2020 that significantly impact our pay ratio disclosure, the employee representing the median-paid employee is the same employee that we had identified in 2019 to calculate our 2019 CEO pay ratio.
For 2020, we identified the median employee by using the annualized 2020 COLA-adjusted compensation for all individuals who were employed by us (whether employed on a full-time, part- time, or seasonal basis) on December 31, 2020, the last pay day of our fiscal year.
To determine the total annual compensation for the CEO and median employee for purposes of the CEO pay ratio, the following pay elements were considered:
Name | Position | Year | Option Awards | Stock Awards | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Corning F. Painter | CEO | 2021 | — | — | 36,560 | 633,563 | Lorin Crenshaw(2) | CFO (until October 27, 2021) | 2021 | — | — | 6,035 | 109,354 | Robert Hrivnak | CFO (from October 27, 2021) | 2021 | — | — | 208 | 3,565 | Sandra Niewiem | SVP, Global Specialty Carbon Black and EMEA Region | 2021 | — | — | 1,085 | 18,597 | Pedro Riveros | SVP, Global Rubber Carbon Black and Americas Region | 2021 | — | — | 7,010 | 130,809 | Carlos Quinones | SVP, Global Operations | 2021 | — | — | 6,986 | 130,397 |
(1) | Represents the pre-tax value realized on stock awards that vested during the fiscal year, computed by multiplying the number of shares acquired on vesting by the closing price of common stock on the vesting date or the preceding trading date if the market is closed on the vesting date. |
(2) | The 6,035 shares for Mr. Crenshaw include the 3rd tranche of his 2019 sign-on RSUs, the third tranche of his annual 2019 RSU award, and the second tranche of the annual 2020 RSU award. He forfeited the remaining ranches including 18,352 RSUs and 37,823 PSUs as a result of his resignation. |
· 2020 Annualized base salary
· Accrued 2020 Short-Term Incentive (“STI”) Compensation
· 2020 PSUs granted
· 2020 RSUs granted
For 2020:
· the median of the annual total compensation of all employees of our Company (other than our CEO), was $81,667; and
· the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in thisOrion Engineered Carbons 2022 Proxy Statement was $2,882,368.
· Based on this information, the ratio of the annual total compensation of Mr. Painter, our CEO, to the median of the annual total compensation of all employees was 35 to 1.
We believe that the above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In addition, because the SEC rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
| | Potential Payments and Benefits Upon Termination or Change in Control
NEO Employment Agreements and Offer Letters
Corning F. Painter
The Painter Employment Agreement provides certain severance benefits to be provided to Mr. Painter in the event of involuntary termination of his employment. In the event that, Orion terminates Mr. Painter’s employment other than for cause, or if he resigns for Good Reason (as defined below), Mr. Painter will be entitled to receive the following severance benefits: (1) cash severance in an amount equal to the sum of Mr. Painter’s then current salary plus his target annual cash bonus for the year in which the termination occurs, and (2) subject to Mr. Painter’s timely election, one year of continued health care coverage with premiums to be paid at active employee rates (or cash payments in lieu thereof). In addition, in such circumstances Mr. Painter’s 2018 sign-on RSU grant will immediately vest in full to the extent it is then unvested.
In the event that Orion terminates Mr. Painter without cause or he resigns for Good Reason within one year following a “change in control” of Orion (as defined in Orion’s 2014 Omnibus Incentive Compensation Plan), Mr. Painter will be entitled to enhanced severance benefits as follows: (1) cash severance equal to three times his then current salary plus his target annual cash bonus for the year in which the termination occurs, (2) three years of company paid health care coverage with premiums (or cash
payments in lieu thereof), and (3) all equity-based awards granted to Mr. Painter within the initial twelve (12) months following his start date, which includes his 2018 RSU grant and 2019 RSU.
If Mr. Painter’s employment is terminated as a result of his death or disability, he will be entitled to prorated severance benefits based on the remaining portion of the fiscal year in which such termination occurs and his 2018 RSU grant will vest in full. Any cash severance payable to Mr. Painter must be paid in equal monthly installments, except in case of death, in which case payments shall be made in a lump sum. All severance benefits (other than in the case of his death) are subject to Mr. Painter’s execution of a release of claims in favor of Orion and continued compliance with certain restrictive covenants for the duration of the severance period (one year, or three years if termination occurs within one year following a Change in Control), including non-competition, non-solicitation of employees, non-disparagement and confidentiality restrictions.
The Painter Employment Agreement provides that “Good Reason” means one of the following events, without Mr. Painter’s consent: (1) his position, duties, or authority are materially diminished; (2) his annual base salary is reduced or another material element of his compensation is reduced or eliminated; (3) he is relocated to an office that is more than 100 miles from Houston; or (4) a breach of any of the material terms of his employment agreement or any other agreement between Mr. Painter and Orion, subject to the applicable notice and cure periods.
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5051
Our CEO to Median Employee Pay Ratio for 2021 was 68:1 We believe our executive compensation program must be consistent and internally equitable to motivate our employees to perform in ways that enhance shareholder value. We are committed to internal pay equity, and the Compensation Committee monitors the relationship between the pay of our executive officers and the pay of our non-executive employees. As of December 31, 2021, the Company employed 1,475 persons. In accordance with SEC requirements, the median paid employee may be identified once every three years if there has been no change to employee population or compensation arrangements that would result in a significant change to our pay ratio disclosure. As there were no significant changes in our employee population nor our employee compensation in 2021 that significantly impact our pay ratio disclosure, the employee representing the median- paid employee is the same employee that we had identified in 2020 to calculate our 2020 CEO pay ratio. For 2021, we identified the median employee by using the annualized 2021 COLA-adjusted compensation for all individuals who were employed by us (whether employed on a full-time, part- time, or seasonal basis) on December 31, 2021, the last pay day of our fiscal year. To determine the total annual compensation for the CEO and median employee for purposes of the CEO pay ratio, the following pay elements were considered: ·2021 Annualized base salary ·Accrued 2021 STI Compensation ·2021 PSUs granted ·2021 RSUs granted For 2021: ·the median of the annual total compensation of all employees of our Company (other than our CEO), was $86,308; and ·the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $5,899,282. ·Based on this information, the ratio of the annual total compensation of Mr. Painter, our CEO, to the median of the annual total compensation of all employees was 68 to 1. We believe that the above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In addition, because the SEC rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. | | Potential Payments and Benefits Upon Termination or Change in Control NEO Employment Agreements and Offer Letters Corning F. Painter The Painter Employment Agreement provides certain severance benefits to be provided to Mr. Painter in the event of involuntary termination of his employment. In the event that, Orion terminates Mr. Painter’s employment other than for Cause (as defined below), or if he resigns for Good Reason (as defined below), Mr. Painter will be entitled to receive the following severance benefits: (1) cash severance in an amount equal to the sum of Mr. Painter’s then current salary plus his target annual cash bonus for the year in which the termination occurs, and (2) subject to Mr. Painter’s timely election, one year of continued health care coverage with premiums to be paid at active employee rates (or cash payments in lieu thereof). In addition, in such circumstances Mr. Painter’s 2018 sign-on RSU grant will immediately vest in full to the extent it is then unvested. In the event that Orion terminates Mr. Painter without cause or he resigns for Good Reason within one year following a “change in control” of Orion (as defined in Orion’s 2014 Omnibus Incentive Compensation Plan), Mr. Painter will be entitled to enhanced severance benefits as follows: (1) cash severance equal to three times his then current salary plus his target annual cash bonus for the year in which the termination occurs, (2) three years of company paid health care coverage with premiums (or cash payments in lieu thereof ), and (3) all equity-based awards granted to Mr. Painter within the initial twelve (12) months following his start date, which includes his 2018 RSU grant and 2019 RSU. If Mr. Painter’s employment is terminated as a result of his death or disability, he will be entitled to prorated severance benefits based on the remaining portion of the fiscal year in which such termination occurs. Any cash severance payable to Mr. Painter must be paid in equal monthly installments, except in case of death, in which case payments shall be made in a lump sum. All severance benefits (other than in the case of his death) are subject to Mr. Painter’s execution of a release of claims in favor of Orion and continued compliance with certain restrictive covenants for the duration of the severance period (one year, or three years if termination occurs within one year following a Change in Control), including non-competition, non-solicitation of employees, non-disparagement and confidentiality restrictions. The Painter Employment Agreement provides that “Cause” means one of the following events: (1) his conviction, whether following trial or by plea of guilty or nolo contendere (or similar plea) in a criminal proceeding (a) on a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion, or any other crime involving moral turpitude, (b) on a felony charge or (c) on an equivalent charge to those in clauses (a) and (b) in |
52 Lorin Crenshaw/Pedro Riveros/Carlos Quinones
Messrs. Crenshaw, Riveros and Quinones’ employment is “at- will” and may be terminated at any time without triggering a contractual requirement for severance benefit, however, in the event that, Orion terminates the executive’s employment other than for cause, if they resign for “good reason” (as defined in the RSU grant agreement), or the executive’s employment is otherwise terminated as a result of death or disability, the 2019 sign-on RSU granted to the executive will immediately vest in full to the extent it is then unvested.
Sandra Niewiem
Dr. Niewiem is not entitled to any specific severance in the event of an involuntary termination of her employment, however, upon any such termination, she may be eligible to severance in accordance with German law, which is typically negotiated at the time of termination and is dependent on the specific facts and circumstances at the time of departure.
jurisdictions which do not use those designations; (2) his continued material failure to perform his duties after notice from Orion; (3) his engagement in illegal conduct or gross misconduct, in either case, that causes material financial or reputational harm to Orion; (4) his material violation of Orion’s codes of conduct or any other Orion policy as in effect from time to time; or (5) his breach of any of the material terms of any agreement with Orion, in the case of (2), (4) and (5), subject to his failure to remedy to the reasonable satisfaction of the Company within 30 days after written notice is delivered by the Company to him setting forth in reasonable detail the basis of “Cause,” if such act is curable, as determined in good faith by Orion. An event will not constitute Cause unless the Company gives him notice of termination within 90 days after the Board becomes aware that an event constituting Cause has occurred describing in reasonable detail the event constituting Cause. The Painter Employment Agreement provides that “Good Reason” means one of the following events, without Mr. Painter’s consent: (1)his position, duties, or authority are materially diminished; (2) his annual base salary is reduced or another material element of his compensation is reduced or eliminated; (3) he is relocated to an office that is more than 100 miles from Houston; or (4) a breach of any of the material terms of his employment agreement or any other agreement between Mr. Painter and Orion, subject to the applicable notice and cure periods. Pedro Riveros/Carlos Quinones Messrs. Riveros and Quinones’ employment is “at- will” and may be terminated at any time without triggering a contractual requirement for severance benefit, however, in the event that, Orion terminates the executive’s employment other than for cause, if they resign for “good reason” (as defined in the RSU grant agreement), or the executive’s employment is otherwise terminated as a result of death or disability, the 2019 sign-on RSU granted to the executive will immediately vest in full to the extent it is then unvested. Robert Hrivnak Mr. Hrivnak’s employment is “at- will” and may be terminated at any time without triggering a contractual requirement for severance benefit. Sandra Niewiem Dr. Niewiem is not entitled to any specific severance in the event of an involuntary termination of her employment, however, upon any such termination, she may be eligible to severance in accordance with German law, which is typically negotiated at the time of termination and is dependent on the specific facts and circumstances at the time of departure. | | Except as described above, none of the other NEOs are entitled to any severance or change in control benefits, nor is any NEO entitled to any gross-up for any penalty taxes incurred in connection with a change in control of Orion or similar event. Equity Award Provisions Our 2014 Omnibus Incentive Compensation Plan provides the Compensation Committee with flexibility as to the treatment of outstanding equity awards in the event of a change in control of Orion or similar transaction, except as may otherwise be provided | | in the individual’s award agreement. We generally do not provide for acceleration of vesting of any outstanding equity awards in the event of a change in control, nor do we provide for accelerated vesting upon termination of employment except in limited circumstances such as sign-on equity grants as described below. As described above, the sign-on RSU grants issued to our CEO in 2018 and our CFO in 2019 will automatically vest in full if the executive’s employment is terminated by reason of death, disability, termination by Orion without cause, or resignation by the executive for good reason. With respect to the PSUs issued to our NEOs, if the recipient’s employment is terminated by Orion without cause or as a result of the executive’s death, disability, termination by the Company without Cause, or normal retirement,a resignation by the Participant with Good Reason, all outstanding PSU awardsPSUs are eligible to vest based on actual performance at the end of the performance period, on a prorated basis based on the number of completed months of employment during the performance period prior to the termination date. In case of retirement, the NEOs will receive similar treatment of their PSUs if they worked at least one year since the beginning of the three-year performance period. If they worked less than one year since the beginning of the performance period and their employment terminates due to retirement within that first year, all PSUs will forfeit.
In the event of a change in control of Orion or similar transaction, the treatment of RSUs is subject to the discretion of the Compensation Committee. We do not provide for single trigger vesting of our PSUs in the event of a change in control of Orion, and instead, any outstanding PSUs shall remain eligible to vest on the earlier of the one-year anniversary of the change in control or the scheduled service vesting date, based on actual achievement of adjusted performance targets through the date of the change in control. If any executive’s employment is terminated by reason of his death, disability, termination by Orion without cause, or resignation by the executive for good reason within one year following a change in control, then the executive’s outstanding PSUs shall immediately vest based on performance through the date of the change in control. |
Orion Engineered Carbons 20212022 Proxy Statement 5153 The following table sets forth the potential payments that would have been due to our named executive officers upon involuntary termination and/or a change of control as of December 31, 2020:2021: Name | Reason for Employment Termination | Estimated Value of Cash Severance Payments(1) ($) | Health Benefits(2) ($) | Estimated Value of PSU Acceleration(3) ($) | Estimated Value of RSU Acceleration(4) ($) | Total ($) | Corning F. Painter | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | 1,751,000 | 20,425 | — | 748,230 | 2,519,655 | Involuntary Termination w/o Cause, or Resignation for Good Reason and a Change in Control | 5,253,000 | 61,275 | 2,954,045 | 1,729,537 | 9,997,857 | Death or Disability | 1,751,000 | — | — | — | 1,751,000 | Lorin Crenshaw | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | — | 122,140 | 122,140 | Involuntary Termination w/o Cause, or Resignation for Good Reason and a Change in Control | — | — | 296,539 | 244,851 | 541,390 | Pedro Riveros | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | — | 197,499 | 197,499 | Involuntary Termination w/o Cause, or Resignation for Good Reason and a Change in Control | — | — | 149,906 | 255,980 | 405,887 | Sandra Niewiem(5) | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | — | — | — | Involuntary Termination w/o Cause, or Resignation for Good Reason and a Change in Control | — | — | 125,019 | 49,020 | 174,040 | Carlos Quinones | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | — | — | — | Involuntary Termination w/o Cause, or Resignation for Good Reason and a Change in Control | — | — | 146,924 | 352,997 | 499,921 |
Name | Reason for Employment Termination | Estimated Value of Cash Severance Payments(1) ($) | Health Benefits(2) ($) | Estimated Value of PSU Acceleration(3) ($) | Estimated Value of RSU Acceleration(4) ($) | Total ($) | Corning F. Painter | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | 1,911,000 | 14,594 | 2,047,163 | — | 3,972,757 | Involuntary Termination w/o Cause, or Resignation for Good Reason after a Change in Control | 5,733,000 | 43,782 | — | — | 5,776,782 | Death or Disability | 1,911,000 | — | 2,047,163 | — | 3,958,163 | Robert Hrivnak | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | 19,606 | — | 19,606 | Involuntary Termination w/o Cause, or Resignation for Good Reason after a Change in Control | — | — | — | — | — | Death or Disability | — | — | 19,606 | | 19,606 | Sandra Niewiem(5) | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | 96,816 | — | 96,816 | Involuntary Termination w/o Cause, or Resignation for Good Reason after a Change in Control | — | — | — | — | — | Death or Disability | — | — | 96,816 | — | 96,816 | Pedro Riveros | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | 127.913 | 105,778 | 233,691 | Involuntary Termination w/o Cause, or Resignation for Good Reason after a Change in Control | — | — | — | — | — | Death or Disability | — | — | 127,913 | — | 127,913 | Carlos Quinones | Involuntary Termination w/o Cause, or Resignation for Good Reason (No CIC) | — | — | 120,643 | 105,778 | 226,421 | Involuntary Termination w/o Cause, or Resignation for Good Reason after a Change in Control | — | — | — | — | — | Death or Disability | — | — | 120,643 | — | 120,643 |
| (1) | Only Mr. Corning F. Painter is entitled to cash severance payments per his employment agreement. Absent a CIC,change in control, Mr. Painter is entitled to a cash payment equal to the sum of his base salary and target bonus for the year of termination, which is payable in installments, subject to execution of a release of claims and continued compliance with restrictive covenants. In the event such termination occurs within one year following a CIC,change in control, the severance is enhanced to three times his base salary plus target bonus. |
| (2) | This amount reflects the estimated cost of continued health care benefits for a period of one year if such termination occurs in the absence of a CIC,change in control, and three years if such termination occurs within one year following a CIC.change in control. |
| (3) | PSUs vest based on achievement of adjusted performance targets through the date of the CICchange in control which has been assumed to be target level for purposes of this disclosure and the amount shown is the value of the accelerated vesting of PSUs on a prorated basis with the numerator being the number of months passed since the vesting commencement data and the denominator being 36. The value is based on the closing stock price of our Common Shares on the NYSE of $17.14$18.36 on December 31, 2020,2021, the last business day of 2020.2021. Such acceleration is also triggered in the event that the termination is due to the executive’s disability or death. |
| (4) | Each of our NEO’s RSUs vestMessrs. Riveros’ and Quinones’ sign-on RSU grant vests in full upon a termination without cause in connection with a CIC,or resignation for good reason and the amount shown includes the value of acceleration of vesting of suchthese RSUs based on the closing stock price of our Common Shares on the NYSE of $17.14$18.36 on December 31, 2020,2021, the last business day of 2010. In addition, Messrs. Painter, Crenshaw, Riveros’ sign-on RSU grant vests in full upon termination without cause or resignation for good reason.2021. |
| (5) | Dr. Niewiem is not entitled to any fixed severance but if she were to be terminated by Orion without cause, she may be eligible to receive severance in accordance with German law, which is typically negotiated at the time of termination and is dependent on the specific facts and circumstances at the time of departure. |
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Director Compensation The Compensation Committee is responsible for evaluating and approving compensation for our directors. The following table contains compensation awarded to or earned by our directors in respect of services performed as a director during 2020.2021. The compensation paid to Mr. Corning F. Painter, our CEO, is disclosed in the Summary Compensation Table below. Mr. Painter did not receive any additional compensation for his services on the Board. Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2)(3)(4) ($) | Total (S) | Kerry A. Galvin(5) | 107,500 | 100,000 | 207,500 | Paul Huck(6) | 132,500 | 100,000 | 232,500 | Mary Lindsey(7) | 50,000 | 100,000 | 150,000 | Didier Miraton | 100,000 | 100,000 | 200,000 | Yi Hyon Paik(7) | 50,000 | 100,000 | 150,000 | Dan F. Smith(8) | 225,000 | 100,000 | 325,000 | Hans-Dietrich Winkhaus | 100,000 | 100,000 | 200,000 | Michel Wurth(7)(9) | 50,000 | 100,000 | 150,000 |
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2)(3) ($) | Total ($) | Kerry Galvin | 115,000 | 100,000 | 215,000 | Paul Huck | 125,000 | 100,000 | 225,000 | Mary Lindsey | 100,000 | 100,000 | 200,000 | Didier Miraton | 100,000 | 100,000 | 200,000 | Yi Hyon Paik | 100,000 | 100,000 | 200,000 | Dan F. Smith | 230,000 | 100,000 | 330,000 | Hans-Dietrich Winkhaus | 100,000 | 100,000 | 200,000 | Michel Wurth(4) | 100,000 | 100,000 | 200,000 |
| (1) | Amounts earned during the fiscal year 20202021 are shown. |
| (2) | The amounts shown reflect the June 24, 2021, grant date fair value of restricted shares of stock granted to our directors for services performed in 2020,2021, determined in accordance with FASB ASC Topic 718. See Note Mnote M. to our consolidated financial statements included in our 20202021 Annual Report regarding assumptions underlying valuations of equity awards. |
| (3) | On July 1, 2020,June 30, 2021, each non-executive director was granted 9,8325,347 shares of restricted stock, valued at $100,000 on June 24, 2021, which was the date of grant,the 2021 Annual General Meeting, for director services for 20202021 which vest on the day prior to the 20212022 Annual General Meeting (vesting date). The grants automatically become fully vested subject to the director’sdirectors’ service as a member of the Board of Directors through the vesting date. |
| (4) | As of December 31, 2020, each of the directors held 9,832 unvested shares of restricted stock. |
| (5) | Ms. Galvin became chairman of the Nominating, Sustainability and Governance Committee on July 1, 2020. |
| (6) | Mr. Huck was chairman of the Audit Committee and chairman of the Nominating, Sustainability and Governance Committee between January 1, 2020 and June 30, 2020. |
| (7) | The directors served on the Board starting from July 1, 2020 onwards (i.e. for six months during 2020). |
| (8) | Mr. Smith served as chairman of the Board and chairman of the Compensation Committee. |
| (9) | Mr. Wurth is a Luxembourg resident, and his fees are subject to a 17% VAT (which equals USD 8,500 for the second half the year 2020)2021). |
As described in the table above, our directors received compensation in 20202021 for their services as a member of the Board as follows: ·Cash payment in respect of meeting fees and annual retainer to each non-executive director of $100,000; | · | Cash payment in respect of meeting fees and annual retainer to each non-executive director of $100,000; |
·The non-executive chairman of the Board received an additional retainer of $105,000; | · | the non-executive chairman of the Board received an additional retainer of $105,000; |
· the chairman of the Audit Committee of the Board received an additional retainer of $25,000; | · | the chairman of the Audit Committee of the Board received an additional retainer of $25,000; |
· the chairman of the Compensation Committee of the Board received an additional retainer of $20,000; | · | the chairman of the Compensation Committee of the Board received an additional retainer of $20,000; |
· the chairman of the Nominating, Sustainability and Governance Committee received an additional retainer of $15,000; | · | the chairman of the Nominating, Sustainability and Governance Committee received an additional retainer of $15,000; |
·each non-executive director (thus excluding Mr. Painter) received a grant of restricted stock with a value of $100,000 on the date of grant, subject to vesting only if the director serves the full term she/he was appointed for by the Annual General Meeting of 2021; | · | each non-executive director (thus excluding Mr. Painter) received a grant of restricted stock with a value of $100,000 on the date of grant, subject to vesting only if the director serves the full term she/he was appointed for by the Annual General Meeting of 2020; |
·Reimbursement for reasonable out-of-pocket expenses incurred for travel in connection with attendance in person at Board or committee meetings; | · | Reimbursement for reasonable out-of-pocket expenses incurred for travel in connection with attendance in person at Board or committee meetings; |
| · | All elements of the director compensation program are paid currently and directors may not defer any portion of their annual compensation, nor does Orion sponsor any program that would allow for a deferral of any such compensation. |
·All elements of the director compensation program are paid currently and directors may not defer any portion of their annual compensation, nor does Orion sponsor any program that would allow for a deferral of any such compensation. During early 2020, the Compensation Committee reviewed the Company’s director compensation compared to director compensation of U.S. public companies in our peer group, as described more fully below, and determined in consultation with its independent compensation consultant, Korn Ferry,KF, that it was appropriate to change the director compensation levels to be more competitive with our peer group and to streamline the compensation program. In line with this, the 2020 Annual General Meeting approved changes to the director compensation program for 20202021 which, subject to a respective shareholder vote, will continue to take effect as of January 2021,2022, (with a $5,000 retainer increase for the chairman of the Nominating, Sustainability and Governance Committee) and will include the following features: · each non-executive director shall receive a cash retainer of $100,000 and restricted Common Shares of the Company in value of $100,000 at the time of issuance, whereby the Common Shares shall only become fully vested if the director serves the full term she/he was appointed for; | · | each non-executive director shall receive a cash retainer of $100,000 and restricted Common Shares of the Company in value of $100,000 at the time of issuance, whereby the Common Shares shall only become fully vested if the director serves the full term she/he was appointed for; |
· the non-executive Chairman of the Board shall receive an additional retainer of $105,000; | · | the non-executive Chairman of the Board shall receive an additional retainer of $105,000; |
·the Chairman of the Audit Committee of the Board shall receive an additional retainer of $25,000; | · | the Chairman of the Audit Committee of the Board shall receive an additional retainer of $25,000; |
· the Chairman of the Compensation Committee of the Board shall receive an additional retainer of $20,000; | · | the Chairman of the Compensation Committee of the Board shall receive an additional retainer of $20,000; |
· the Chairman of the Nominating, Sustainability and Governance Committee of the Board shall receive an additional retainer of $20,000; and | · | the Chairman of the Nominating, Sustainability and Governance Committee of the Board shall receive an additional retainer of $15,000; and |
· no additional meeting or committee fees. | · | no additional meeting or committee fees. |
Orion Engineered Carbons 20212022 Proxy Statement 5355 Proposal 4—Approval of the Annual Accounts of the Company for the Financial Year that Ended on December 31, 2020 2021 Pursuant to Luxembourg law, the annual accounts must be submitted each year to shareholders for approval at the Annual General Meeting of shareholders. Pursuant to Luxembourg law, following shareholder approval of the annual accounts, such accounts must be filed with the Luxembourg trade registry as public documents. We are asking our shareholders to approve the following resolutions regarding the approval of the annual accounts of the Company: RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve, the annual accounts of the Company in accordance with Lux GAAP for the financial year that ended on December 31, 2020,2021, after due consideration of the report from the independent auditor on such annual accounts. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE ANNUAL ACCOUNTS OF THE COMPANY FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2020.2021. | |
5456
Proposal 5—Approval of the Consolidated Financial Statements of the Company for the Financial Year that Ended on December 31, 20202021 Pursuant to Luxembourg law, the consolidated financial statements must be submitted each year to shareholders for approval at the Annual General Meeting of shareholders. Pursuant to Luxembourg law, following shareholder approval of the consolidated financial statements, such consolidated financial statements must be filed with the Luxembourg trade registry as public documents. We are asking our shareholders to approve the following resolution regarding the approval of the consolidated financial statements of the Company: RESOLVED, that the shareholders of the Company hereby approve, the consolidated financial statements of the Company in accordance with USU.S. GAAP for the financial year that ended on December 31, 2020,2021, after due consideration of the report from the independent registered public accounting firm on such consolidated financial statements. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2020.2021. | |
Orion Engineered Carbons 20212022 Proxy Statement 5557 Proposal 6—Allocation of Results and Approval of the Payment of the Interim Dividend by the Company in 2020Financial Year 2021 Pursuant to Luxembourg law, the shareholders must decide how to allocate the results of the previous financial year based on the Luxembourg annual accounts. In the event the Company has profits, the Company’s Board may propose to shareholders to either distribute those profits or retain such earnings. In the event of losses, the Board must generally propose that such losses be carried forward to the following year. We are asking our shareholders to approve the following resolution regarding the allocation of results and the payment of the interim dividends by the Company in 2020:financial year 2021: RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”"Company") hereby resolve to carry forward the loss suffered byapproved that from a profit of the Company corresponding tofor the 2021 Financial Year in the amount of EUR 50,884,068.17 (i) an amount of EUR 10,000,561.74,26,297.00 should be allocated to the legal reserve, (ii) an aggregated amount of EUR 1,094,464.77 has been declared as interim dividends and (iii) an amount of EUR 49,763,306.40 shall be carried forward to the next financial year.year resulting in a total accrued profit carried forward in the amount of EUR 98,981,083.25. The Board further proposes to the shareholders to approve the Interim Dividend paidinterim dividends in the aggregated amount of EUR 1,094,464.77 (including the interim dividend in the amount of USD 1,253,943.90, corresponding to an amount of EUR 1,079,404.23, declared by the Company from its amount available during the 2020 Financial Year of EUR 10,481,282.71 representing and paid in US Dollars in an amount of $12,044,829.40 as interim dividend.on 29 October 2021). The consolidated financial statements together with the report of the independent auditor on such annual accounts are available on the Company’s website and at the registered office of the Company. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE ALLOCATION OF RESULTS AND APPROVAL OF THE PAYMENT OF THE INTERIM DIVIDENDS. DIVIDEND BY THE COMPANY IN 2020.
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58 Proposal 7—Discharge of the Members of the Board of Directors of the Company As in previous years, Luxembourg Law requires that upon approval of the Company’s annual accounts and consolidated financial statements, the Shareholders present at the Annual General Meeting must vote as to whether the members of the Board of Directors during the financial year that ended on December 31, 2020,2021, shall be discharged from any liability in connection with the performance of their mandates, including the management of the Company’s affairs, during such period. We are asking our shareholders to approve the following resolution regarding the discharge of the members of the Company: RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby resolve to discharge the members of the Board of Directors, for the performance of their mandates during the financial year that ended on December 31, 2020,2021, including discharge from any liability in connection with the performance of their mandates, including the management of the Company’s affairs during such period. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE DISCHARGE OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY. | |
Orion Engineered Carbons 20212022 Proxy Statement 5759 Proposal 8—Discharge of the Independent Auditor of the Company Pursuant to Luxembourg law, the shareholders must decide whether to give discharge to the independent auditor, Ernst & Young, Luxembourg, Société anonyme – Cabinet de revision agréé, for the performance of their duties during the previous financial year at the time the annual accounts of such year are presented to the shareholders for approval. The granting of discharge to the independent auditor bars the shareholders from holding the auditors liable in relation to factual matters revealed by and contained in the annual accounts. We are asking our shareholders to approve the following resolution regarding the discharge of the independent auditor of the Company: RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby resolve to discharge the independent auditor from any liability in connection with the performance of its mandate during the financial year that ended on December 31, 2020,2021, including the audit of the Company’s annual accounts and consolidated financial statements for such period. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions, broker non-votes and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE DISCHARGE OF THE INDEPENDENT AUDITOR OF THE COMPANY. | |
5860
Report of the Audit Committee The Audit Committee meets the definition of an audit committee as set forth in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and operates under a written charter adopted by the Board. Each member of the Audit Committee is independent and financially literate in the judgment of the Board and as required by the Sarbanes-Oxley Act and applicable SEC and New York Stock Exchange (“NYSE”) rules. The Board has also determined that Messrs. Huck and Winkhaus qualify as “audit committee financial experts,” as defined under SEC regulations. The Audit Committee meets the definition of an audit committee as set forth in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and operates under a written charter adopted by the Board. Each member of the Audit Committee is independent and financially literate in the judgment of the Board and as required by the Sarbanes-Oxley Act and applicable SEC and New York Stock Exchange (“NYSE”) rules. The Board has also determined that Messrs. Huck and Winkhaus qualify as “audit committee financial experts,” as defined under SEC regulations.
Management is responsible for our internal controls and the financial reporting process. Ernst & Young, the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and internal controls in accordance with standards of the Public Company Accounting Oversight Board (the “PCAOB”) and for issuing reports thereon.
The Audit Committee has reviewed and discussed with management the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2020.
Management is responsible for our internal controls and the financial reporting process. Ernst & Young, the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and internal controls in accordance with standards of the Public Company Accounting Oversight Board (the “PCAOB”) and for issuing reports thereon. The Audit Committee has reviewed and discussed with management the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2021. Further, the Audit Committee has discussed with Ernst & Young the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, including the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2020,2021, critical audit matters disclosed in Ernst & Young’s 20202021 report, Ernst & Young’s responsibility under generally accepted auditing standards, significant accounting policies, significant risks and exposures identified by management, management’s judgments and accounting estimates, any audit adjustments, related party transactions and other unusual | | transactions, the overall adequacy and effectiveness of the Company’s legal, regulatory and ethical compliance programs, including the Company’s Code of Conduct and other information in documents containing audited financial statements as well as other matters. Finally, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young by the applicable requirements of the PCAOB regarding Ernst & Young’s communications with the Audit Committee concerning independence, and has discussed the topic of independence with Ernst & Young. Based on its review and discussion described above, the Audit Committee has recommended to the Board that the audited consolidated financial statements for the fiscal year 2020 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 for filing with the SEC. Paul Huck (Chair)
| Paul Huck (Chair) Kerry Galvin Hans-Dietrich Winkhaus
Mary Lindsey
Hans-Dietrich Winkhaus Mary Lindsey |
The foregoing report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Orion Engineered Carbons 2021 Proxy Statement 59Orion Engineered Carbons 2022 Proxy Statement 61 Proposal 9—Appointment of the Independent Auditor for the Year Ending December 31, 2021
Ernst & Young, Luxembourg, Société anonyme—Cabinet de revision agréé, was the Company’s independent auditor for the fiscal year ended December 31, 2020. At the Annual General Meeting, our shareholders will be asked to approve the appointment of Ernst & Young, Luxembourg, Société anonyme—Cabinet de revision agréé, as the Company’s independent auditor for the fiscal year ending on December 31, 2021, or until such firm’s earlier resignation or removal, for all statutory accounts as required by Luxembourg law, including the annual accounts and consolidated financial statements of the Company.
We are asking our shareholders to approve the following resolution regarding the appointment of an independent auditor (Réviseur d’Entreprises) of the Company for the financial year ending on December 31, 2021.
RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve the appointment of Ernst & Young, Luxembourg, Société anonyme—Cabinet de révision agréé, as independent auditor of the Company for the financial year ending on December 31, 2021
Proposal 9—Appointment of the Independent Auditor for the Year Ending December 31, 2022 Ernst & Young, Luxembourg, Société anonyme—Cabinet de revision agréé, was the Company’s independent auditor for the fiscal year ended December 31, 2021. At the Annual General Meeting, our shareholders will be asked to approve the appointment of Ernst & Young, Luxembourg, Société anonyme—Cabinet de revision agréé, as the Company’s independent auditor for the fiscal year ending on December 31, 2022, or until such firm’s earlier resignation or removal, for all statutory accounts as required by Luxembourg law, including the annual accounts and consolidated financial statements of the Company. We are asking our shareholders to approve the following resolution regarding the appointment of an independent auditor (Réviseur d’Entreprises) of the Company for the financial year ending on December 31, 2022. RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby approve the appointment of Ernst & Young, Luxembourg, Société anonyme—Cabinet de révision agréé, as independent auditor of the Company for the financial year ending on December 31, 2022 for the purpose of all statutory accounts as required by Luxembourg law, including the annual accounts and consolidated financial statements of the Company. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions and nil votes will not be taken into account.
| THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF ERNST & YOUNG, LUXEMBOURG, SOCIÉTÉ ANONYME—CABINET DE
REVISION AGRÉÉ, AS THE COMPANY’S INDEPENDENT AUDITOR.
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60
Proposal 10—Ratification of the Appointment of the Independent Registered Public Accounting Firm for the Year Ending December 31, 2021
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft has been appointed by the Company’s Board as the Company’s independent registered public accounting firm for all matters not required by Luxembourg law for the period from January 1, 2021 until the filling of the Company’s Annual Report on form 10-K on February 18, 2021, and Ernst & Young LLC has been appointed by the Company’s Board as the Company’s independent registered public accounting firm for all matters not required by Luxembourg law effective upon the filling of the Company’s Annual Report on form 10-K on February 18, 2021 for the fiscal year ending on December 31, 2021. At the Annual General Meeting, our shareholders will be asked to ratify the appointment of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as the Company’s independent registered public accounting firm for all matters not required by Luxembourg law for the period from January 1, 2021 until the filling of the Company’s Annual Report on form 10-K on February 18, 2021 and of the appointment of Ernst & Young LLC to be the Company’s independent registered public accounting firms for all matters not required by Luxembourg law effective upon the filling of the Company’s Annual Report on form 10-K on February 18, 2021 for the fiscal year ending on December 31, 2021.
We are asking our shareholders to approve the following resolution regarding the ratification of the appointment of an independent registered public accounting firm of the Company for the financial year ending on December 31, 2021.
RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby ratify the appointment of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as the Company’s independent registered public accounting firm for all matters not required by Luxembourg law for the period from January 1, 2021 until the filling of the Company’s Annual Report on form 10-K on February 18, 2021 and of the appointment of Ernst & Young LLC to be the Company’s independent registered public accounting firm for all matters not required by Luxembourg law effective upon the filling of the Company’s Annual Report on form 10-K on February 18, 2021 for the fiscal year ending on December 31, 2021.
Required Vote
Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG, LUXEMBOURG, SOCIÉTÉ ANONYME—CABINET DE REVISION AGRÉÉ, AS THE COMPANY’S INDEPENDENT AUDITOR. | |
62 THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE
APPOINTMENTS OF ERNST & YOUNG GMBH and ERNST & YOUNG LLCProposal 10—Ratification of the Appointment of the Independent Registered Public Accounting Firm for the Year Ending December 31, 2022
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.Ernst & Young LLC has been appointed by the Company’s Board as the Company’s independent registered public accounting firm for all matters not required by Luxembourg law effective upon the filling of the Company’s Annual Report on form 10-K on April 28, 2022 for the fiscal year ending on December 31, 2022. At the Annual General Meeting, our shareholders will be asked to ratify the appointment of Ernst & Young LLC to be the Company’s independent registered public accounting firms for all matters not required by Luxembourg law for the fiscal year ending on December 31, 2022.
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We are asking our shareholders to approve the following resolution regarding the ratification of the appointment of an independent registered public accounting firm of the Company for the financial year ending on December 31, 2022. RESOLVED, that the shareholders of Orion Engineered Carbons S.A. (the “Company”) hereby ratify the appointment of Ernst & Young LLC to be the Company’s independent registered public accounting firm for all matters not required by Luxembourg law for the fiscal year ending on December 31, 2022. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions and nil votes will not be taken into account. Orion Engineered Carbons 2021 Proxy Statement 61 | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. | |
Orion Engineered Carbons 2022 Proxy Statement 63 Independent Registered Public Accounting Firm Fees and Services
Proposal 11—Renewal of the existing authorization to the Board of Directors of the Company to Purchase Shares of the Company in the Name and on Behalf of the Company for a Period of Five Years We are asking our shareholders to approve the following resolution regarding the renewal of the existing authorization to the Board of Directors of the Company to purchase shares of the Company in the name and on behalf of the Company for a period of five years from the date of this resolution in accordance with article 430-15 of the Luxembourg law of 10 August 1915 governing commercial companies, as amended and any other applicable laws and regulations. RESOLVED, to authorize the directors of the Company (the “Board of Directors”) with option to delegate to purchase and sell, in the name and on behalf of the Company, shares of the Company in accordance with the conditions set forth by Article 430-15 of the law of 10 August 1915 on commercial companies, as amended, regarding the acquisition of own shares. The fraction of the capital acquired or transferred in the form of a block of shares may amount to the entire program. Such transactions may be carried out at any time, including during a tender offer period, in accordance with applicable laws and regulations. The following provisions shall apply to the purchase by the Company of its own shares: The following table shows the fees paid or accrued by the Company for the audit and other services provided by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft for fiscal year 2020 and 2019:
| 1) | Duration of authorization |
The authorization is valid for a maximum number of 5 years from the date of this resolution or the duration of such further period beyond those 5 years for which it is renewed or extended by the general meeting. ($ in thousands) | 2020 | 2019 | Audit Fees(1) | 2,561 | 2,318 | Audit-Related Fees | — | — | Tax Fees(2) | 78 | 400 | All Other Fees | — | — | Total | $2,639 | $2,718 |
The shares to be purchased by the Company shall be entirely paid up. | 3) | Maximum number of shares to be purchased by the Company |
The maximum number of own shares that the Company may hold at any time directly or indirectly may not have the effect of reducing its net assets (“actif net”) below the amount mentioned in paragraphs 1 and 2 of Article 430-15 of the of the law of 10 August 1915 on commercial companies, as amended,. The redemption of shares by the Company shall be limited to 15% of the shareholding of the Company. | 4) | Purchase modalities and purchase price |
The Board of Directors may acquire shares of the Company at its discretion (i) on the stock exchange or (ii) through a public offer to purchase or tender offer made to all shareholders in the Company ((ii) is hereinafter referred to as a “Public Bid”). In the different scenarios the relevant purchase price for the shares shall be determined as follows: | a) | Acquisition of shares on the stock exchange |
Where own shares are acquired on the stock exchange, the purchase price (excluding ancillary purchase costs) may not be more than 10 % greater or less than the opening auction price of the Company’s shares in NYSE trading (or a comparable successor system) on that day. | b) | Acquisition of shares through a public offer to purchase |
When acquiring shares through a Public Bid the Company may set a fixed purchase price or a price range per share (excluding ancillary purchase costs) within which it is willing to acquire shares. In a Public Bid, the Company may set a deadline for accepting the or making an offer and retain the option and set terms to amend the price range prior to the expiration of the deadline in the event of major price moves. In the case of a price range, the purchase price shall be calculated based on the selling prices given in the shareholders’ acceptances or offers and the acquisition volume set by the Board of Directors once the deadline has expired. In a public offer to purchase, the purchase price offered or price range per share may not be more than 10 % greater or less than the average closing price of shares in NYSE trading (or a comparable successor system) over the last five trading days before the official announcement of the offer. If the Company amends the purchase price range, the last five trading days before the official announcement of the amendment shall be used. 64 In addition to selling them on a stock exchange or in an offer to all shareholders, the Board of Directors is also authorized to use shares in the Company acquired as per the above authorizations as follows: 1) | They may be offered and transferred to third parties in consideration for contributions in kind, particularly as part of mergers or when acquiring companies, branches divisions or participations in companies. |
2) | They may be sold for cash to third parties in private transactions, provided that the price at which they are sold is not 10 % lower than the average closing price of shares in NYSE trading (or a comparable successor system) over the last five trading days before the time of the sale. |
3) | They may be offered to current or former employees of the Company or its affiliates or members of corporate bodies of affiliates or used to service stock options or other equity-based awards granted under any stock option or equity compensation program of the Company that is in force from time to time. Use of this authorization may not exceed 15 % of share capital of the Company, neither at the time of the completion of the initial public offering of the Company nor when it is used. |
4) | To propose to the general meeting of shareholders the cancellation of shares and the corresponding share capital reduction in the Company. |
The volume of the offer to purchase or the tender offer may be limited. If the shares tendered by shareholders exceed the total amount of the offer to purchase or the tender offer, inclusion or acceptance shall be in proportion to the ratio of the total amount of the purchase or tender offer to the total shares tendered by shareholders. Provision may be made to give priority to shareholders tendering smaller quantities of up to 100 shares each. Further conditions may be attached to the offer to purchase or the tender offer. The total amount allocated for the Company’s share repurchase program may not in any event exceed the amount of the Company’s then available equity. The general meeting of the shareholders resolves that all powers are granted to the Board of Directors, with the power to delegate, to ensure the implementation of this authorization. Required Vote Resolutions at the Annual General Meeting of Shareholders are adopted by a simple majority of the votes validly cast, regardless of the proportion of the issued share capital of the Company present or represented at such meeting. Abstentions and nil votes will not be taken into account. | THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR RENEWAL OF THE EXISTING AUTHORIZATION TO THE BOARD OF DIRECTORS OF THE COMPANY TO PURCHASE SHARES OF THE COMPANY IN THE NAME AND ON BEHALF OF THE COMPANY FOR A PERIOD OF FIVE YEARS FROM THE DATE OF THIS RESOLUTION. | (1) | Audit | |
Orion Engineered Carbons 2022 Proxy Statement 65 Independent Registered Public Accounting Firm Fees includeand Services The following table shows the annualfees paid or accrued by the Company for the audit and other services related to the review of quarterly financial information and the issuance of consents in connection with various securities offerings and filings with the SEC. |
| (2) | Tax Fees consist of the aggregate feesprovided by Ernst & Young LLC for professional services rendered byfiscal year 2021and Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft for fiscal year 2020(1):($ in thousands) | 2021 ($) | 2020 ($) | Audit Fees(2) | 2,827 | 2,561 | Audit-Related Fees | — | — | Tax Fees(3) | — | 748 | All Other Fees | 6 | — | Total | 2,833 | 2,639 |
(1) | Orion changed its independent registered public accounting firm from Ernst & young GmbH Wirtschaftsprüfungsgesellschaft to Ernst & Young LLC in February 2021. |
(2) | Audit Fees include the annual audit and services related to the review of quarterly financial information and the issuance of consents in connection with various securities offerings and filings with the SEC. |
(3) | Tax Fees for 2020 consist of the aggregate fees for professional services rendered by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft for federal, state and international tax compliance. |
Policy on Audit Committee Pre-Approval of Audit and international tax compliance. The 2019 amountPermissible Non-Audit Services It is our Audit Committee’s policy to pre-approve all audit, audit- related and permissible non-audit services rendered to us by our independent registered public accounting firm. Consistent with such policy, all of $400K has been reclassified from All Other Fees to appropriately reflect the 2019 tax professionalfees listed above that we incurred for services rendered by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft. |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
It is our Audit Committee’s policy to pre-approve all audit, audit- related and permissible non-audit services rendered to us by our independent registered public accounting firm. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Ernst & Young were pre-approved by our Audit Committee.
The report of Ernst & Young relating to our 2020 consolidated financial statements did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. Moreover, during the fiscal year ended December 31, 2020, there were no (i) disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Ernst & Young, would have caused either Ernst & Young to make reference to the subject matter of the disagreement(s) in connection with their reports on the consolidated financial statements of Orion Engineered Carbons S.A. or (ii) reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
62were pre-approved by our Audit Committee.
The report of Ernst & Young relating to our 2021 consolidated financial statements did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. Moreover, during the fiscal year ended December 31, 2021, there were no (i) disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Ernst & Young, would have caused either Ernst & Young to make reference to the subject matter of the disagreement(s) in connection with their reports on the consolidated financial statements of Orion Engineered Carbons S.A. or (ii) reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
66 Additional Information
One or more Shareholders of record holding at least 10% of the outstanding Common Shares (excluding, for the avoidance of doubt, any Common Shares repurchased by the Company) may add items to the agenda of the Annual General Meeting, including a resolution to appoint a director of the Company, provided that each such item is accompanied by a justification or a draft resolution to be adopted in the Annual General Meeting.Additional Information
Shareholder Proposals and Nominations for Director for the 2022 Annual General Meeting of Shareholders
Shareholder proposals intended for inclusion in next year’s proxy materials related to the 2022 Annual General Meeting of shareholders (the “2022 Annual General Meeting”) pursuant to SEC Rule 14a-8 must be received at the Company’s principal executive offices on or before December 30, 2021, or if the date of the 2022 Annual General Meeting has been changed by more than 30 days from the date of the Annual General Meeting (June 24), then the deadline is a reasonable time before the Company begins to print and send its proxy materials related to the 2022 Annual General Meeting. In addition, one or more shareholders representing at least ten percent (10%) of our Common Shares outstanding may submit written proposals to the Company for inclusion on the agenda for the 2022 Annual General Meeting if such written proposals are received by the Company at least 5 business days before our 2022 Annual General Meeting. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements. Our Articles of Association describe the requirements for submitting proposals at the Annual General Meeting. The notice must be given in the manner and must include the information and representations required by our Articles of Association.
According to the Company’s articles of association, a General Meeting of Shareholders must be convened by the Board of Directors, upon request in writing indicating the agenda, addressed to the Board of Directors by one or several shareholders representing at least ten percent (10%) of the Company’s issued share capital. In such case, a General Meeting of Shareholders must be convened and shall be held within a period of one (1) month from receipt of such request by the Board of Directors at the Company’s registered office by registered mail.
Householding
The SEC’s rules permit us to deliver a single Notice of Internet Availability of Proxy Materials or set of proxy materials to one address shared by two or more of our shareholders. This delivery
| | method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Notice of Internet Availability of Proxy Materials or one set of proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Notice of Internet Availability of Proxy Materials or proxy materials, as requested, to any shareholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Notice of Internet Availability of Proxy Materials or proxy materials, you can request them from Investor Relations by phone at +1 (281) 318-4016, or by or using the internet (https://investor.orioncarbons.com/). You may also send a written request for Proxy Materials to Investor Relations, Orion Engineered Carbons S.A., 4501 Magnolia Cove Drive, Suite 106, Kingwood, TX 77345.
One or more Shareholders of record holding at least 10% of the outstanding Common Shares (excluding, for the avoidance of doubt, any Common Shares repurchased by the Company) may add items to the agenda of the Annual General Meeting, including a resolution to appoint a director of the Company, provided that each such item is accompanied by a justification or a draft resolution to be adopted in the Annual General Meeting. Shareholder Proposals and Nominations for Director for the 2023 Annual General Meeting of Shareholders Shareholder proposals intended for inclusion in next year’s proxy materials related to the 2023 Annual General Meeting of shareholders (the “2023 Annual General Meeting”) pursuant to SEC Rule 14a-8 must be received at the Company’s principal executive offices on or before December 30, 2022, or if the date of the 2023 Annual General Meeting has been changed by more than 30 days from the date of the Annual General Meeting (i.e. June 30), then the deadline is a reasonable time before the Company begins to print and send its proxy materials related to the 2023 Annual General Meeting. In addition, one or more shareholders representing at least ten percent (10%) of our Common Shares outstanding may submit written proposals to the Company for inclusion on the agenda for the 2023 Annual General Meeting if such written proposals are received by the Company at least 5 business days before our 2023 Annual General Meeting. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements. Our Articles of Association describe the requirements for submitting proposals at the Annual General Meeting. The notice must be given in the manner and must include the information and representations required by our Articles of Association. According to the Company’s articles of association, a General Meeting of Shareholders must be convened by the Board of Directors, upon request in writing indicating the agenda, addressed to the Board of Directors by one or several shareholders representing at least ten percent (10%) of the Company’s issued share capital. In such case, a General Meeting of Shareholders must be convened and shall be held within a period of one (1) month from receipt of such request by the Board of Directors at the Company’s registered office by registered mail. Householding The SEC’s rules permit us to deliver a single Notice of Internet Availability of Proxy Materials or set of proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as “householding” and can result in significant | | cost savings. To take advantage of this opportunity, we have delivered only one Notice of Internet Availability of Proxy Materials or one set of proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Notice of Internet Availability of Proxy Materials or proxy materials, as requested, to any shareholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Notice of Internet Availability of Proxy Materials or proxy materials, you can request them from Investor Relations by phone at +1 (281) 318-4016, or by or using the internet (https://investor.orioncarbons.com/financials/Proxy- Statements/default.aspx). You may also send a written request for Proxy Materials to Investor Relations, Orion Engineered Carbons S.A., 1700 City Plaza Drive, Suite 300, Spring, Texas 77389. If you are currently a shareholder sharing an address with another shareholder and wish to receive only one copy of future Notices of Internet Availability of Proxy Materials or proxy materials for your household, please contact Investor Relations at the above phone number. Other Matters We do not know of any matters other than those stated above which are to be brought before the Annual General Meeting. However, if any other matters should be properly presented for consideration and voting, it is the intention of the persons named in the proxy to vote on those matters in accordance with their judgment. Obtaining Copies of the Company’s 20202021 Annual Report Shareholders of the Company may obtain, without charge, a copy of the Company’s annual stand-alone account in accordance with the principles generally accepted in Luxembourg and consolidated financial statements in accordance with the principles generally accepted in the United States as well as the report on Form 10-K for the fiscal year ended December 31, 20202021 by sending a written request for the 20202021 annual report to Investor Relations, Orion Engineered Carbons S.A., 4501 Magnolia Cove1700 City Plaza Drive, Suite 106, Kingwood, TX 77345.300, Spring, Texas 77389. |
Orion Engineered Carbons 20212022 Proxy Statement 6367 Annex A: Non-USNon-U.S. GAAP Measures Adjusted EBITDA (Non-U.S. GAAP Financial Measure) We present certain financial measures that are not prepared in accordance with GAAP or the accounting standards of any other jurisdiction and may not be comparable to other similarly titled measures of other companies. We define Adjusted EBITDA as income from operations before depreciation and amortization, restructuring expenses, consulting fees related to Company strategy, gain related to legal settlement, and includes equity earnings (loss) in affiliated companies, net of tax. Adjusted EBITDA is used by our management to evaluate our operating performance and make decisions regarding allocation of capital because it excludes the effects of items that have less bearing on the performance of our underlying core business. We use Adjusted EBITDA and Net Working Capital as internal measures of performance to benchmark and compare performance among our own operations. We use these measures, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of our business. We believe these measures are useful measures of financial performance in addition to consolidated net income for the period, income from operations (EBIT) and other profitability measures under GAAP because they facilitate operating performance comparisons from period to period and company to company.company and, with respect to Contribution Margin, eliminate volatility in feedstock prices. By eliminating potential differences in results of operations between periods or companies caused by factors such as depreciation and amortization methods historic,historic cost and age of assets, financing and capital structures and taxation positions or regimes, we believe that Adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated. For these reasons, we believe EBITDA-based measures are often used by the investment community as a means of comparison of companies in our industry. By deducting variable costs (such as raw materials, packaging, utilities and distribution costs) from revenue, we believe that Contribution Margins can provide a useful basis for comparing the current performance of the underlying operations In addition, management usesbeing evaluated by indicating the portion of revenue that is not consumed by these measuresvariable costs and therefore contributes to evaluate operating performance,the coverage of all costs and our incentive compensation plan bases incentive compensation payments on Net Working Capital and valuation of PSU awards on Adjusted EBITDA, along with other factors.profits.
Different companies and analysts may calculate measures based on EBITDA, contribution margins and working capital differently, so making comparisons among companies on this basis should be done carefully. Adjusted EBITDA, Contribution Margins and Net Working Capital are not measures of performance under GAAP and should not be considered in isolation or construed as substitutes for revenue, consolidated net income for the period, income from operations, (EBIT), gross profit and other GAAP measures as an indicator of our operations in accordance with GAAP. Adjusted EBITDA (Non-US GAAP Financial Measure)
We define Adjusted EBITDA as income from operations (EBIT) before depreciation and amortization, adjusted for acquisition related expenses, restructuring expenses, consulting fees related to Company strategy, share of profit or loss of joint venture and certain other items. Adjusted EBITDA is used by our management to evaluate our operating performance and make decisions regarding allocation of capital because it excludes the effects of items that have less bearing on the performance of our underlying core business.
Our use of Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for
analysis of our financial results as reported under GAAP. Some of these limitations are: (a) although Adjusted EBITDA excludes the impact of depreciation and amortization, the assets being depreciated and amortized may have to be replaced in the future and thus the cost of replacing assets or acquiring new assets, which will affect our operating results over time, is not reflected; (b) Adjusted EBITDA does not reflect interest or certain other costs that we will continue to incur over time and will adversely affect our profit or loss, which is the ultimate measure of our financial performance and (c) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently. Because of these and other limitations, Adjusted EBITDA should be considered alongside our other GAAP-based financial performance measures, such as revenue, consolidated net income for the period or income from operations (EBIT).
The following table presents a reconciliation of Adjusted EBITDA to consolidated net income for the year ended December 31, 20202021 (in $ MM): Net income | $ 18.2134.7 | Add back income tax expense | 8.151.7 | Add back equityearnings in earnings of affiliated companies, net of tax | (0.5)(0.7) | Income from operations before earnings in affiliated companies and income taxes and equity in earnings of affiliated companies | 25.8185.7 | Add back interest and other financial expense, net | 38.738.0 | ReclassificationAdd back reclassification of actuarial losses from AOCI | 9.94.8 | Earnings before income taxes and finance income/ costsIncome from operations | 74.4228.5 | Add back depreciation amortization and impairmentamortization of intangible assets, right of use assets, and property, plant and equipment | 96.5104.1 | EBITDA | 170.9332.6 | EquityEarnings in earnings of affiliated companies, net of tax | 0.50.7 | Restructuring expenses(1)Cash settlement | 7.6(79.5) | Extraordinary expense items related to COVID-19(2)Release of legal reserve, net | 3.9(3.4) | Long-term incentive plan | 4.45.2 | EPA-related expenses | 5.22.3 | Environmental reserve accrual | 7.2 | Other adjustments(3) | 7.63.3 | Adjusted EBITDA | $200.0268.4 | Thereof Adjusted EBITDA Specialty Carbon Black | $109.9148.4 | Thereof Adjusted EBITDA Rubber Carbon Black | $ 90.1 |
| (1) | Restructuring expenses for the year ended December 31, 2020 are related to our strategic realignment of our worldwide Rubber footprint. |
| (2) | Extraordinary expense items related to COVID-19 reflect costs incurred to address impacts associated with the global coronavirus pandemic. These items include select production costs, expenses related to providing personal protection equipment and costs related to protective measures carried out at our facilities to ensure the safety of our employees, among other expenditures. |
| (3) | Other adjustments (from items with less bearing on the underlying performance of the Company’s core business) in the period ended December 31, 2020 mainly relate to legal fees associated with a dispute concerning intellectual property of $2.7 million, severance costs of $1.5 million, and hurricane related costs of $2.5 million.120.0 |
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ANNUAL GENERAL MEETING OF SHAREHOLDERS OFORION ENGINEERED CARBONS S.A.June 24, 2021IMPORTANT30, 2022IMPORTANT NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL FOR THE ANNUAL GENERAL MEETING: The Notice of Meeting and proxy card are available at http://www.orioncarbons.comRead the Proxy Statement and have the voting instruction form below at hand. Please note that the telephone and Internet voting turns off at 11:59 p.m. CETP.M. EST (05:59 a.m. CET) on June 17, 2021.22, 2022 and voting by hardcopy ballots at 12:00 P.M. EST (06:00 p.m. CET) on June 23, 2022. Vote by Internet: [www.proxydocs.com/OEC]www.Voteproxy.com Vote by Phone: [1-800-454-8683]1-800-454-8683 Vote by Mail: Use the envelope enclosed Please detach along perforated line and mail in the envelope provided if within the United States. 00033330303330000000 7 041618 THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 2 THROUGH 10,11, AND A VOTE “FOR” ALL DIRECTOR NOMINEES IN PROPOSAL 1. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE 1Please mark, sign and date your proxy card and return it in the postage-paid (when mailed in the United States) envelope we have provided or return it to Operations Center, American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, NY 11219-9821 in a separate envelope, postage prepaid. Proxy cards must be received by American Stock Transfer & Trust Company, by no later thanvoting via telephone and internet until June 22, 2022, 11:59 P.M. Central European Time onEST (5:59 A.M. CET), and by voting via hard copy ballots until June 17, 2021.FOR23, 2022, 12:00 P.M. EST (6:00 P.M. CET).FOR AGAINST ABSTAIN 1. Election of the nineten director nominees each for a term ending on the date of the Annual General Meeting of shareholders of the Company called to approve the annual accounts of the Company for the financial year ending on December 31, 2021 0 0 0i.2022 i. Mr. Anthony L. Davisii. Ms. Kerry Galvin 0 0 0ii.0iii. Mr. Paul Huck 0 0 0iii.0iv. Ms. Mary Lindsey 0 0 0iv.0v. Mr. Didier Miraton 0 0 0v.0vi. Mr. Yi Hyon Paik 0 0 0vi.0vii. Mr. Corning F. Painter 0 0 0vii.0viii. Mr. Dan F. Smith 0 0 0viii.0ix. Mr. Hans-Dietrich Winkhaus 0 0 0ix.0x. Mr. Michel Wurth 0 0 0 0 0 02. Approval, on a non-binding advisory basis, of the compensation paid to the Company’s named executive officers for 20202021 (Say-on-Pay vote) as disclosed in the accompanying proxy statement. 0 0 03. Approval of the compensation that shall be paid to the Board of Directors of the Company for the period commencing on January 1, 20212022 and ending on December 31, 20212022 0 0 04. Approval of the annual accounts of the Company for the financial year that ended on December 31, 2020.2021. 0 0 05. Approval of the consolidated financial statements of the Company for the financial year that ended on December 31, 2020.2021. 0 0 06. Allocation of results approval of the payment by the Company of the interim dividend in the amount of $12,044,829.40 during the financial year that ended on December 31, 2020, paid on March 31, 2020.31,2021. 0 0 07. Discharge of the current members of the Board of Directors of the Company for the performance of their mandates during the financial year that ended on December 31, 2020.2021. 0 0 08.0 8. Discharge of the independent auditor of the Company, Ernst & Young, Luxembourg, Société anonyme – Cabinet de revision agréé for the financial year that ended on December 31, 2020.2021. 0 0 0
9.09. Appointment of Ernst & Young, Luxembourg, Société anonyme – Cabinet de revision agréé, to be the Company’s independent auditor (Réviseur d’Entreprises) for all statutory accounts required by Luxembourg law for the financial year ending on December 31, 2021.2022. 0 0 010. Ratification of the appointment of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as the Company’s independent registered public accounting firm for all matters not required by Luxembourg law for the period from January 1, 2021 until the filling of the Company’s Annual Report on form 10-K on February 18, 2021 and of the appointment of Ernst & Young LLC to be the Company’s independent registered public accounting firm for all matters not required by Luxembourg law effective upon the filling of the Company’s Annual Report on form 10-K on February 18, 2021 for the fiscalfinancial year ending on December 31, 2021.2022. 0 0 011. Renewal of the authorization to the Board of Directors of the Company to purchase shares of the Company in the name and on behalf of the Company for a period of five years. 0 0 0This proxy, when properly executed and timely received, will be voted in the manner directed herein. If no instructions are given on this proxy card, then the undersigned shall be deemed to have voted all the Common Shares represented by this proxy card FOR items 2-10, FOR all director nominees in item 1. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. 0Signature of Shareholder Date: Signature of Shareholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
ORION ENGINEERED CARBONS S.A. Proxy for Annual General Meeting of Shareholders on June 24, 202130, 2022 Solicited on Behalf of the Board of DirectorsThe undersigned hereby appoints Kerry A. Galvin, Dan F. Smith, Christian Eggert, Michel Wurth and Carsten Opitz, and each of them, as proxies of the undersigned, each with full power of substitution and power to act alone, to represent and vote as designated on the reverse side, all of the common shares, no par value (the “Common Shares”) of Orion Engineered Carbons S.A. (the “Company”), held of record by the undersigned as of 11:59 P.M. Central European Time on April 29, 2021,28, 2022, at the Annual General Meeting of Shareholders of the Company to be held in Luxembourg, Grand Duchy of Luxembourg, at 2:00 P.M. Central European Time on June 24, 202130, 2022 and at any adjournments or postponements thereof. This proxy is governed by Luxembourg law. Any disputes arising out of or in connection with this proxy shall be submitted exclusively to the courts of the city of Luxembourg, Grand Duchy of Luxembourg.Please mark, sign and date your proxy card and return it in the postage-paid (when mailed in the United States) envelope we have provided or return it to Operations Center, American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, NY 11219-9821 in a separate envelope, postage prepaid. Proxy cards must be received by American Stock Transfer & Trust Company, by no later thanvoting via telephone and internet until June 22, 2022, 11:59 P.M. Central European Time onEST (5:59 A.M. CET), and by voting via hard copy ballots until June 17, 2021.23, 2022, 12:00 P.M. EST (6:00 P.M. CET).(Continued and to be signed on the reverse side.)1.1 14475 |
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