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NOTICE OF 20142017 ANNUAL MEETING OF SHAREHOLDERS |
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| NOTICE OF 2017 ANNUAL MEETING OF SHAREHOLDERS |
LIBBEY INC.
P.O. Box 10060
300 Madison Avenue
Toledo, Ohio 43699-0060
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| NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | |
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| Libbey Corporate Showroom | Wednesday, May 17, 2017 | |
| 335 North St. Clair Street | 2:00 p.m. Eastern Daylight Saving Time | |
| Toledo, Ohio 43604 | | |
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| Record Date: Close of business on March 20, 2017 | |
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NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
Tuesday, May 13, 2014
2 p.m., local time
P.O. Box 10060
300 Madison Avenue
Toledo, Ohio 43699-0060
The Annual Meeting of shareholders of Libbey Inc. (“Libbey” or the “Company”) will be held on Tuesday, May 13, 2014, at 2 p.m., eastern daylight savings time, at the Libbey Corporate Showroom located at 335 North St. Clair Street, Toledo, Ohio.
At the meeting, shareholders will:
elect three directors, each for a term of three years;
vote, on an advisory and non-binding basis, to approve executive compensation;
vote, on an advisory basis, to recommend the payfrequency of our named executives;advisory votes on executive compensation;
vote to ratify the appointment of ErnstDeloitte & YoungTouche LLP as Libbey’sour independent auditors for ourthe 2017 fiscal year ending December 31, 2014;year; and
transact such other business as properly may come before the meeting.
You are entitled to vote at the meeting if you were an owner of record of Libbey Inc. common stock at the close of business on March
14, 2014.20, 2017. If your ownership is through a broker or other intermediary, you will need to have proof of your stockholdings in order to be admitted to the meeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice.
We have elected to take advantage of Securities and Exchange Commission rules that allow us to furnish proxy materials to shareholders on the internet. On or about the date of this letter, we began mailing a Notice of Internet Availability of Proxy Materials to shareholders of record at the close of business on March 20, 2017. At the same time, we provided those shareholders with access to our online proxy materials and filed our proxy materials with the Securities and Exchange Commission.
Whether or not you plan to attend the meeting, we hope you will vote as soon as possible.
By Order of the Board of Directors,
April 4, 2017
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You can vote in one of four ways: |
| | Visit the website listed on your proxy card to voteVIA THE INTERNET
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| | Call the telephone number on your proxy card to voteBY TELEPHONE
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| | Sign, date and return your proxy card in the enclosed envelope to voteBY MAIL
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| | Attend the meetingIN PERSON
PROXY STATEMENT SUMMARY |
PROXY STATEMENT SUMMARY
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| Meeting Date: | |  |
PROXY STATEMENT SUMMARY
Meeting Details
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When:
| | Tuesday,Wednesday, May 13, 201417, 2017, at 2 p.m., local time
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Where:
Location: | | Libbey Corporate Showroom 335 North St. Clair Street Toledo, Ohio 43604 |
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| Record Date: | Close of business on March 20, 2017 |
Voting Proposals and Board Recommendations
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Proposal:
Proposal | | Voting Options | | Board Recommendation |
Election of William A. Foley, Theo Killion and Deborah G. Miller to serve as Class III directors. | | For, Withhold (as to any nominee) or Abstain
| | FOReach of Messrs.
Foley and Killion and Ms. Miller
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No. 2 — Advisory Say-on-Pay:
RESOLVED,that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executives, as disclosed in the proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, pursuant to Item 402 of Regulation S-K.
| | For, Against or Abstain
| | FOR
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No. 3 — Ratification of Independent Auditor:
Ratification of the appointment of Ernst & Young LLP as Libbey’s independent auditors for the 2014 fiscal year.
| | For, Against or Abstain
| | FOR
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Governance Highlights
Board Leadership.In 2011, we separated the roles of Chairman of the Board and Chief Executive Officer.
Director Independence. In August 2013, we increased the size of our Board from nine to ten, when our Board elected Ginger Jones to serve on the Board. In November 2013, Richard I. Reynolds retired as Executive Vice President, Strategy Program Management, and notified the Board that he will retire from the Board at our annual meeting of shareholders on May 13, 2014. In January 2014, Terence P. Stewart notified the Board that he will not seek reelection at the May 13, 2014 Annual Meeting of shareholders. Our Board has nominated Theo Killion to stand for election at the May 13, 2014 Annual Meeting of shareholders. Upon Mr. Killion’s election to the Board, eight of our nine directors will be independent, as defined in the NYSE MKT Company Guide.
2013 Executive Pay Aligns withLibbey 2015 and Shareholder Interests
Financial highlights. When we announced ourLibbey 2015strategy in mid-2012, we articulated four overarching financial goals:
| 1. | Grow revenue by low- to mid- single digits;
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| 2. | Deliver sustainable adjusted EBITDA margins of 15-18%;
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| 3. | Improve net debt to adjusted EBITDA ratio to 2.5-3.0X; and
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| 4. | Achieve return on invested capital of 11-13%.
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For definitions of the terms “adjusted EBITDA,” “adjusted EBITDA margin,” “net debt to adjusted EBITDA ratio” (which we also refer to as “debt, net of cash, to adjusted EBITDA”) and “return on invested capital,” see Appendix A.
During 2013, we achieved all but one of these goals:
In spite of a 0.8% decline in sales that was partially attributable to our decision to exit some unprofitable sales as we realigned our North American capacity, net income increased by more than 300%, from $7.0 million in 2012 to $28.5 million in 2013; earnings before interest and taxes (EBIT) increased by 46%, from $50.4 million in 2012 to $73.7 million in 2013; and adjusted earnings before interest, taxes, depreciation and amortization (which we refer to as adjusted EBITDA) for 2013 hit a record high of $134.4 million, compared to $132.4 million for 2012.
In addition, our adjusted EBITDA margin for 2013 grew to 16.4%, well within our target range of 15-18%, and our ratio of debt, net of cash, to adjusted EBITDA declined to 2.8x, positioning us well for future growth opportunities. Finally, we achieved return on invested capital of 14.7%, well north of our targeted range of 11-13%.
Executive pay highlights.In the fall of 2012, our Compensation Committee commissioned its first executive pay study since 2008. The analysis covered our top officers, comparing their pay to pay levels of a general industry peer group in terms of base pay, target annual bonus opportunity, target total cash, long-term incentives and target total direct compensation. For further information about the peer group and the market study methodology, see“Compensation-Related Matters – Compensation Discussion and Analysis – How does Libbey determine the forms and amounts of executive pay? – Process for Setting 2013 Executive Pay”.
The market study disclosed that base salaries for most executives were generally within a reasonable range of the median, but that annual and long-term incentive opportunities for most of the named executives were below median, driving their target total direct compensation opportunities below a reasonable range of the median. In order to ensure that we maintain market-competitive pay programs to motivate our executives to achieve ourLibbey 2015 strategy, in February 2013, our Compensation Committee made the following adjustments to base salaries and target annual and long-term incentive opportunities of the named executives:
(ii)
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Named Executive | | Increase in
Annual Base
Salary
(%) | | 2012 SMIP(1)
Target
Opportunity
(%) | | 2013 SMIP
Target
Opportunity
(%) | | 2012 LTIP(2)
Target
Opportunity
(%) | | 2013 LTIP
Target
Opportunity
(%) |
Stephanie A. Streeter Chief Executive Officer | | | | 3.4 | | | | | 90 | | | 100 | | 180 | | 250 |
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Sherry Buck VP,Chief Financial Officer | | | | 4.0 | | | | | 60 | | | 65 | | 110 | | 140 |
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Richard I. Reynolds EVP, Strategy Program
Management | | | | 0.0 | | | | | 75 | | | 75 | | 140 | | 140 |
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Daniel P. Ibele VP, GM, U.S. and Canada | | | | 2.5 | | | | | 60 | | | 65 | | 110 | | 140 |
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Susan A. Kovach VP, General Counsel &
Secretary | | | | 7.4 | | | | | 45 | | | 50 | | 80 | | 95 |
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Timothy T. Paige VP, Human Resources | | | | 2.0 | | | | | 45 | | | 50 | | 80 | | 95 |
(1) | The SMIP is our annual incentive plan, also known as the senior management incentive plan.
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(2) | The LTIP is our long-term incentive plan.
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Throughout 2013, our non-management directors discussed the transformation that Libbey began when Ms. Streeter joined us in July 2011. They also discussed the fact that Ms. Streeter is a highly attractive candidate for CEO positions with companies that are much larger than Libbey. While recognizing that we have made great strides in executing our strategy, improving our profitability and positioning us for future growth, they also acknowledged that considerable work remains to be done to return Libbey to sustained, profitable growth. Our non-management directors believe that Ms. Streeter is best able to lead us in this transformative period.
Accordingly, our independent directors charged the Compensation Committee with working with its independent consultant and independent outside counsel to develop a special retention award designed to induce Ms. Streeter to continue to lead Libbey and the execution by Libbey of its long-term strategic goals through 2018.
After more than a year of reviewing different alternatives and after consulting with the other non-management directors, the Compensation Committee approved a CEO Retention Award Agreement pursuant to which the Company issued to Ms. Streeter 240,829 stock appreciation rights (which we refer to as SARs) in December 2013 and issued to Ms. Streeter 115,687 restricted stock units (which we refer to as RSUs) in February 2014. These awards are subject to cliff vesting on December 31, 2018, in order to maximize the handcuffs on Ms. Streeter and ensure that no value is actually delivered to her unless she serves the entire desired period of retention. Although the value of the SAR and RSU awards at their respective grant dates was intended to be $2.5 million each, the value, if any, that Ms. Streeter will realize upon vesting will be entirely dependent on the value of Libbey stock on December 31, 2018. If and when vested, both the SARs and the RSUs will be settled in cash, with the amount to be paid to Ms. Streeter being equal to (a) in the case of the SARs, the product of the number of SARs and the amount by which the closing price of Libbey common stock on the date of exercise, which may be up to five years after December 31, 2018, exceeds $21.29, which was the closing price of Libbey common stock on the date of grant, and (b) in the case of the RSUs, the product of the number of RSUs and the closing price of Libbey common stock on December 31, 2018.
Although the Committee and the other independent directors believe the CEO Retention Award Agreement and the awards of SARs and RSUs made under it are in the best interest of our shareholders, they nevertheless view the CEO Retention Award Agreement, and the grants of SARs and RSUs made under it, as extraordinary in nature, and they do not currently anticipate entering into any additional special retention agreements with the CEO.
Finally, in February 2014, our Compensation Committee assessed our performance under our 2013 SMIP. For all of the named executives other than Mr. Ibele, payouts under the 2013 SMIP were dependent on company-wide performance. For Mr. Ibele, half of his payout under the 2013 SMIP was dependent on company-wide performance, with the other half being dependent on the performance of his region (U.S. and Canada). As with the other named executives, the amount earned was subject to potential modification (up or down) by as much as 25% of the amount
(iii)
earned, depending on individual performance, as reflected in individual performance review scores for 2013. For example, an individual performance review score of 3 signifies successful achievement of expectations, as a result of which the executive’s payout typically should not be modified. An individual performance review score significantly below 3 typically would signify that the executive’s payout should be reduced by as much as 25%. Similarly, an individual performance review score significantly higher than 3 typically would signify that the executive’s payout should be increased by as much as 25%.
The applicable performance measures, the results and the resulting payout percentages (determined applying the payout scale described on page 31 below and unmodified for individual performance) for the named executives were as follows:
2013 SMIP.For the named executives other than Mr. Ibele, the extent to which we achieved targeted company-wide adjusted EBITDA represented 60% of their respective target SMIP opportunities, with the extent to which we achieved company-wide adjusted cash earnings representing the remaining 40% of their target opportunities. We achieved company-wide adjusted EBITDA in 2013 of $135.0 million, representing 95% of targeted adjusted EBITDA. Additionally, we achieved company-wide adjusted cash earnings equal to $134.6 million, or 97% of targeted cash earnings, resulting in an unmodified payout percentage equal to 92% of the target opportunity for that measure.
For Mr. Ibele, the extent to which we achieved the company-wide performance metrics represented a total of 50% of his target SMIP opportunity, while the extent to which his region (U.S. and Canada) achieved regional adjusted EBITDA and regional cash earnings targets represented the other 50% of his target opportunity. In that connection, his region achieved $88.2 million of adjusted EBITDA, or 93% of target, for an 83% unmodified payout percentage. The region also achieved $83.0 million of adjusted cash earnings, or 93% of target, for an 83% unmodified payout percentage.
Because the individual performance scores for each of the named executives fell within the 2.5 to 3.5 range, the Committee determined that adjustments to the payouts for individual performance were not warranted for any of the named executives, and, as a result, the average weighted payout percentages for the combined performance measures were as follows:
For named executives other than Mr. Ibele: Weighted Average Company-wide Performance as % of Target = 95.8% Combined Payout as % of Target = 89.0% For Mr. Ibele: Weighted Average Company-wide Performance as % of Target = 95.8% Combined Payout as % of Target = 89.0% x 50% = 44.5% 86.0% Weighted Average Regional Performance as % of Target = 93.0% Combined Payout as % of Target = 83.0% x 50% = 41.5%
2011 LTIP Performance Cash.In February 2014, our Compensation Committee also reviewed our performance under the performance cash component of the 2011 LTIP, which covered the three-year performance cycle ended December 31, 2013. Payouts for all of the named executives were determined based solely on company-wide performance over the performance cycle. Applying the payout scale described on page 33 below, the Committee determined that the Company achieved adjusted EBITDA over the performance cycle of $386.3 million, or 99.7% of target, resulting in payouts equal to 99.3% of the target opportunities for the respective named executives.
(iv)
Finally, in February 2013, our Compensation Committee adopted a new LTIP that includes a performance cash component using performance measures that are more closely aligned with ourLibbey 2015 strategy. Under the performance cash component of the 2013 LTIP, there are two new performance measures, each of which represents 50% of the named executives’ respective target opportunities under that component of the 2013 LTIP. The new performance measures are as follows:
A profitability metric – namely, our adjusted EBITDA margin, expressed as a percentage and calculated by dividing adjusted EBITDA by net sales; and
A financial leverage metric – namely, the ratio of debt, net of cash, to adjusted EBITDA.
The extent to which we achieve these metrics will be determined over the three-year performance cycle ending December 31, 2015.
Executive Pay Practices.The table below highlights our current executive pay practices, including practices we have implemented in order to drive performance and practices that we have not implemented because we do not believe they would serve our shareholders’ long-term interests:
What We Do
ü | We tie pay to performance by ensuring that a significant portion of executive pay is performance-based and at-risk. We set clear financial goals for corporate and regional performance, and we differentiate based on individual performance against objectives determined early in the year.
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ü | We review market data relative to our peer group of companies and general industry, and we utilize tally sheets to ensure that compensation opportunities are consistent with the intent of our Compensation Committee.
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ü | We mitigate undue risk by placing substantial emphasis on long-term incentives and utilizing caps on potential payouts under both our annual and long-term incentive plans, clawback provisions in our Omnibus Incentive Plan, reasonable retention strategies, performance targets and appropriate Board and management processes to identify and manage risk.
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ü | We have modest post-employment and change in control arrangements that apply to our executive officers, with severance multiples of less than or equal to 2.5X.
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ü | We utilize “double-trigger” vesting of equity awards and non-equity incentives after a change in control.
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ü | We provide only minimal perquisites that we believe have a sound benefit to our business.
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ü | We have stock ownership/ retention requirements to enhance the alignment of our executives’ interests with those of our shareholders.
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ü | Our Compensation Committee retains an external, independent compensation consultant and advisors.
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What We Don’t Do
× | We do not provide tax gross-ups except on relocation assistance.
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× | We do not maintain compensation programs that we believe create undue risks for our business.
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× | We do not provide significant additional benefits to executive officers that differ from those provided to all other U.S. employees.
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× | We do not permit repricing of stock options or SARs, nor do we permit buyouts of underwater stock options or SARs.
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× | We do not permit hedging, pledging and engaging in transactions involving derivatives of our stock.
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(v)
TABLE OF CONTENTS
(vi)
(vii)
LIBBEY INC.
PROXY STATEMENT
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to Be Held on May 13, 2014.
We have elected to provide access to our proxy materials both by sending you this full set of proxy materials, including a notice of annual meeting, proxy card and 2013 Annual Report to Shareholders, and by notifying you of the availability of our proxy materials on the Internet. The notice of annual meeting, proxy statement and 2013 Annual Report to Shareholders are available athttps://www.proxyvote.com.
We have sent you this proxy statement because our Board of Directors is asking you to give your proxy (that is, the authority to vote your shares) to our proxy committee so that they may vote your shares on your behalf at our annual meeting of shareholders. The members of the proxy committee are Stephanie A. Streeter and Susan A. Kovach. They will vote your shares as you instruct.
We will hold the meeting in the Libbey Corporate Showroom located at 335 North St. Clair Street, Toledo, Ohio. The meeting will be held on May 13, 2014, at 2 p.m., eastern daylight savings time. This proxy statement contains information about the matters being voted on and other information that may be helpful to you.
We began the mailing to shareholders of this proxy statement and the enclosed proxy on or about March 31, 2014.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Who may vote?
You may vote if you were a holder of Libbey Inc. (which we refer to as we, our, Libbey or the Company) common stock at the close of business on March 14, 2014.
What may I vote on, what are my voting options and how does the Board recommend that I vote?
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Proposal:
| | Voting Options
| | Board Recommendation
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No. 1 — Election of Directors:
Election of William A. Foley, Theo Killion and Deborah G. MillerSteve Nave to serve as Class III directors
| | For, Withhold (as to any nominee) or Abstain | |
FOR each of Messrs. Mr. Foley, and Killion and Ms. Miller and Mr. Nave |
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| | For, Against or Abstain
| | FOR
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RESOLVED,that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executives, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, pursuant to Item 402 of Regulation S-K.S-K | | For, Against or Abstain | | FOR |
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Recommend, on an advisory and non-binding basis, the frequency - every 3 years, 2 years or 1 year - with which shareholders of the Company should have future advisory say-on-pay votes | | 3 years, 2 years, 1 year or Abstain | | 1 YEAR |
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| | For, Against or Abstain
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Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as Libbey’s independent auditors for the 20142017 fiscal year.year | | For, Against or Abstain | | FOR |
Governance Highlights
William A. Foley was appointed CEO (in addition to his role as Chairman of the Board). Mr. Foley has been a member of our Board since 1994 and Chairman since 2011.
John C. Orr, a member of our Board since 2008, was appointed to the newly created role of Lead Independent Director.
Of our eight current directors:
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| ◦ | Seven are independent as defined in the NYSE MKT Company Guide |
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| ◦ | Three have tenures of less than five years |
In light of Theo Killion's retirement from the Board, our Board has nominated Steve Nave to stand for election at the 2017 Annual Meeting.
Financial and Operational Highlights
In 2016, we focused on transforming our business to become a faster-moving, market-focused company with improved margins and greater cash flow. We made substantial operational and organizational improvements to drive strategic priorities, address a number of legacy issues, and better position ourselves for sustainable, profitable growth:
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| ◦ | In addition to strengthening our relationships with customers, we ramped up our new product development and conducted significant market research to ensure that we can bring to market the innovative products that our customers want; |
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| ◦ | We launched two new foodservice stemware collections, Neo and Contour, using our state-of-the-art ClearFire® glass composition; |
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| ◦ | We began development of our e-commerce strategy; |
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| ◦ | We started our furnace consolidation effort to optimize our capacity footprint and better align our capacity with demand; and |
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| ◦ | We streamlined our product portfolio and improved inventory control processes. |
While we made significant progress with respect to our strategic priorities, our business was impacted by a number of headwinds. Declining restaurant traffic, an increasing shift of retail sales away from traditional brick-and-mortar stores toward e-commerce, a highly competitive pricing environment, foreign currency fluctuation, and a work stoppage at our Toledo manufacturing facility all impacted our financial results.
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| ◦ | 2016 net sales of $793.4 million reflected a decrease of 3.5% from prior year, primarily due to foreign currency fluctuation. |
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| ◦ | Net income was $10.1 million in 2016, compared to $66.3 million in 2015, reflecting the non-repeating $43.8 million tax benefit included in 2015. |
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| ◦ | Our Adjusted EBITDA (calculated as shown in Appendix A) for 2016 was $109.8 million, compared to $116.1 million in 2015. |
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| ◦ | Our stock price decreased from $21.32 on December 31, 2015 to $19.46 on December 31, 2016, reflecting annual total shareholder return (TSR) of (6)%, as shown in the chart below. |
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| Company / Index | Base Period Dec 2011 | Indexed Returns Years Ending |
| Dec 2012 | Dec 2013 | Dec 2014 | Dec 2015 | Dec 2016 |
| Libbey Inc. | 100 | 151.88 | 164.84 | 246.78 | 169.64 | 158.93 |
| Russell 2000 Index | 100 | 116.35 | 161.52 | 169.43 | 161.95 | 196.45 |
| Peer Group | 100 | 118.33 | 173.49 | 156.65 | 155.96 | 203.80 |
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| Peer Group |
| Actuant Corporation | | Ethan Allen Interiors Inc. | | Lifetime Brands, Inc. |
| Barnes Group Inc. | | Flexsteel Industries, Inc. | | Lindsay Corporation |
| Bassett Furniture Industries, Inc. | | Graco, Inc. | | Myers Industries, Inc. |
| Callaway Golf Company | | Helen of Troy Limited | | Oxford Industries, Inc. |
| Chart Industries, Inc. | | Integra LifeSciences Holdings Corp. | | Trex Company, Inc. |
| Coherent, Inc. | | iRobot Corporation | | TriMas Corporation |
| ESCO Technologies Inc. | | La-Z-Boy Incorporated | | |
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| ◦ | We fell short of target with respect to the financial performance measures under our 2016 Senior Management Incentive Plan ("SMIP") and our 2014 Long-Term Incentive Plan ("LTIP") |
Despite our mixed financial performance, we remained committed to returning value to our shareholders:
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| ◦ | We distributed $12.1 million of free cash flow through share repurchases and dividends; |
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| ◦ | We repaid $24.4 million of debt; and |
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| ◦ | We reduced trade working capital (defined as net inventory plus net accounts receivable less accounts payable) by $17.3 million. |
Executive Pay Highlights
Leadership Transitions. In January 2016, Stephanie Streeter resigned her position as CEO to pursue other opportunities and William A. Foley was appointed CEO in addition to his existing role as Chairman of the Board. In his role as CEO, Mr. Foley was awarded a pay package that includes:
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| ◦ | Initial base salary of $825,000; |
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| ◦ | 2016 SMIP target opportunity equal to 100% of actual base earnings; |
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| ◦ | 2016 LTIP target opportunity equal to 300% of annual base salary; and |
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| ◦ | Prorated target opportunities under performance cash component of the 2014 LTIP and 2015 LTIP equal to $326,700 and $653,400, respectively. |
Mr. Foley does not have an employment agreement, retention agreement, or change in control agreement with the Company, nor is he eligible to participate in the Company's Executive Severance Compensation Policy.
In connection with Ms. Streeter's departure, she and the Company entered into a Mutual Separation Agreement and Release providing for separation payments and benefits consistent with her employment agreement. In addition to accrued benefits, Ms. Streeter's separation compensation and benefits include:
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| ◦ | Severance equal to 2x base salary + 2x annual incentive target; |
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| ◦ | Prorated annual incentive under the 2016 SMIP, based on forecasted Company performance; |
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| ◦ | Prorated performance cash incentives under the 2014 LTIP, 2015 LTIP and 2016 LTIP, based on forecasted Company performance; |
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| ◦ | Accelerated vesting of all cash-settled RSUs and cash-settled SARs; |
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| ◦ | Accelerated vesting of all other unvested equity awards scheduled to vest by June 30, 2016; |
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| ◦ | Outplacement services for 24 months, not to exceed $75,000 in total; and |
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| ◦ | Continuation of health and life insurance benefits for 18 months. |
In March 2016, the Company and James H. White mutually agreed that he would leave the Company effective March 31, 2016. In connection with his departure, Mr. White received separation compensation and benefits according to the Executive Severance Compensation Policy and the agreements under which he had been granted equity awards and performance cash award opportunities.
Incentive Plan Targets. In setting the named executives' target opportunities under the 2016 SMIP and 2016 LTIP, the Compensation Committee elected not to increase the target opportunities from the prior year plans for any of the named executives.
Salary Increases. Effective April 1, 2016, each of the non-CEO named executives received a 2.0% base salary increase. Effective June 1, 2016, the Committee approved an additional 7.8% increase to Ms. Cerioli's base salary.
2016 SMIP Results. The Committee assessed our performance under our 2016 SMIP in February 2017. Payouts under the 2016 SMIP were dependent on two equally weighted company-wide financial performance measures: growth in net sales (revenue growth) and adjusted cash earnings (calculated as shown in Appendix B). Even though the Committee approved certain adjustments to revenues and adjusted cash earnings (as more fully described on page 24) in order to disregard the impact (positive or negative) of special items that, at the time the budget was submitted to the Board of Directors for approval, either were not foreseen or were foreseen but were not included in the budget because the occurrence of the event was substantially uncertain at that time, the Committee took notice of the decline in total shareholder return over the 2016 fiscal year. As a result, although management had achieved revenue growth in excess of 95% of budgeted revenue growth (even before adjusting for special items), the Committee believed it was appropriate to limit the payout under the revenue growth metric to a threshold (40%) payout, as a result of which the combined payout under both performance metrics was limited to not more than 69.5%. 2014 LTIP Performance Cash Results. In February 2017, our Compensation Committee also reviewed our performance under the performance cash component of the 2014 LTIP, which covered the three-year performance cycle ended December 31, 2016. Payouts for all of the named executives were determined based 50% on company-wide adjusted EBITDA margin over the performance cycle and 50% on the ratio of company-wide year-end net debt to adjusted EBITDA over the performance cycle. Applying the payout scales described under "Compensation-Related Matters - What pay did Libbey's executives receive for 2016?" below, the Committee approved payouts equal to 74.4% of the target opportunities for the named executives. Adjusted EBITDA margin and net debt to adjusted EBITDA ratio are calculated as shown in Appendix A.
Executive Pay Practices. The table below highlights our current executive pay practices, including practices we have implemented in order to drive performance and practices that we have not implemented because we do not believe they would serve our shareholders’ long-term interests:
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| | | | |
| What We Do | | What We Don't Do |
| ü | We tie pay to performance by ensuring that a significant portion of executive pay is performance-based and at-risk. We set clear financial goals for corporate performance, and we differentiate based on individual performance against objectives determined early in the year. | | x
| We do not regularly provide tax gross-ups except on relocation assistance. |
| | x | We do not maintain compensation programs that we believe create undue risks for our business. |
| ü | Periodically, we review market data relative to our peer group of companies, and we utilize tally sheets to ensure compensation opportunities are consistent with the Compensation Committee's intent. | | x | We do not provide significant additional benefits to executive officers that differ from those provided to all other U.S. employees. |
| | x | We do not permit repricing of stock options or SARs, nor do we permit buyouts of underwater stock options or SARs. |
| ü | We mitigate undue risk by emphasizing long-term incentives and using caps on potential payouts under both our annual and long-term incentive plans, clawback provisions in our Omnibus Incentive Plan, reasonable retention strategies, performance targets and appropriate Board and management processes to identify and manage risk. | |
| | x | We do not permit hedging, pledging or engaging in transactions involving derivatives of our stock. |
| | x | Effective with Mr. Foley's hire on January 12, 2016, we do not have an employment agreement or change in control agreement with our CEO, nor is our CEO covered by our Executive Severance Compensation Policy. |
| ü | We have modest post-employment and change in control arrangements that apply to our executive officers, with severance multiples of less than or equal to 2x. | |
| ü | We utilize "double-trigger" vesting of equity awards and non-equity incentives after a change in control. | | |
| x | We do not have employment agreements with our non-CEO executive officers. |
| ü | We provide only minimal perquisites that we believe have a sound benefit to our business. | |
| ü | We have stock ownership / retention requirements to enhance alignment of our executives’ interests with those of our shareholders. | | | |
| ü | Our Compensation Committee retains an external, independent compensation consultant and other external advisors as needed. | | | |
TABLE OF CONTENTS
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| Page |
| QUESTIONS AND ANSWERS ABOUT THE MEETING | |
| Who may vote? | |
| What may I vote on, what are my voting options, and how does the Board recommend that I vote? | |
| How do I vote? | |
| May I change my vote? | |
| How many outstanding shares of Libbey common stock are there? | |
| How big a vote do the proposals need in order to be adopted? | |
| What constitutes a quorum? | |
| How will votes be counted? | |
| What are broker non-votes? | |
| How will voting be conducted on other matters raised at the meeting? | |
| When must shareholder proposals be submitted for the 2018 Annual Meeting? | |
| |
| LIBBEY CORPORATE GOVERNANCE | |
| Proposal 1 - Election of Directors | |
| Who are the members of our Board of Directors? | |
| How is our Board leadership structured? | |
| Does Libbey have Corporate Governance Guidelines? | |
| What are the roles of the Board's committees? | |
| How does our Board oversee risk? | |
| How does our Board select nominees for the Board? | |
| How does our Board determine which directors are independent? | |
| How often did our Board meet during fiscal 2016? | |
| Certain Relationships and Related Transactions | |
| How do shareholders and other interested parties communicate with the Board? | |
| Are Libbey's directors required to attend Libbey's annual meeting of shareholders? | |
| |
| COMPENSATION-RELATED MATTERS | |
| Proposal 2 - Advisory Say-on-Pay | |
| Proposal 3 - Say-on-Pay Frequency | |
| Compensation Discussion and Analysis | |
| Executive Summary | |
| Compensation Philosophy | |
| In what forms did Libbey deliver pay to its executives in 2016, and what purpose do the various forms of pay serve? | |
| How does Libbey determine the forms and amounts of executive pay? | |
| What pay did Libbey's executives receive for 2016? | |
| What is the Compensation Committee's policy regarding deductibility of compensation? | |
| Does Libbey assess compensation-related risks? | |
| Potential payments upon termination or change in control | |
| Compensation Committee Interlocks and Insider Participation | |
| Compensation Committee Report | |
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| Page |
| Tables | |
| Summary Compensation Table | |
| Grants of Plan-Based Awards Table | |
| Outstanding Equity Awards at Fiscal Year-End Table | |
| Option Exercises and Stock Vested for Fiscal 2016 Table | |
| Pension Benefits in Fiscal 2016 Table | |
| Nonqualified Deferred Compensation in Fiscal 2016 Table | |
| Potential Payments Upon Termination of Employment Table | |
| Non-Management Directors' Compensation in 2016 | |
| Director Compensation for Year Ended December 31, 2016 Table | |
| |
| AUDIT-RELATED MATTERS | |
| Proposal 4 - Ratification of Auditors | |
| Who are Libbey's auditors? | |
| What fees did Libbey pay to its auditors for Fiscal 2016 and Fiscal 2015? | |
| Report of the Audit Committee | |
| |
| STOCK OWNERSHIP | |
| Who are the largest owners of Libbey stock? | |
| How much stock do our directors and officers own? | |
| Section 16(a) Beneficial Ownership Reporting Compliance | |
| |
| GENERAL INFORMATION | |
| Certain Legal Proceedings | |
| Other Business | |
| Solicitation Costs | |
| Reports to Shareholders | |
| |
| APPENDIX A | |
| APPENDIX B | |
|
| |
| QUESTIONS AND ANSWERS ABOUT THE MEETING |
|
| | |
| LIBBEY INC. | |
| |  |
| PROXY STATEMENT | |
We have sent you this proxy statement because our Board of Directors is asking you to give your proxy (the authority to vote your shares) to our proxy committee so that they may vote your shares on your behalf at our annual meeting of shareholders. The members of the proxy committee are Veronica (Ronni) L. Smith and Susan A. Kovach. They will vote your shares as you instruct.
We will hold the meeting in the Libbey Corporate Showroom located at 335 North St. Clair Street, Toledo, Ohio, on May 17, 2017, at 2 p.m., eastern daylight saving time. This proxy statement contains information about the matters being voted on and other information that may be helpful to you.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Who may vote?
You may vote if you were a holder of the common stock of Libbey Inc. at the close of business on March 20, 2017.
A complete list of shareholders entitled to vote at the Annual Meeting will be maintained at the Company’s principal executive offices at 300 Madison Avenue, Toledo, Ohio, for a period of at least 10 days before the Annual Meeting.
What may I vote on, what are my voting options and how does the Board recommend that I vote?
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| | | | |
| Proposal | | Voting Options | | Board Recommendation |
| | |
Election of William A. Foley, Deborah G. Miller and Steve Nave to serve as Class III directors | | For, Withhold (as to any nominee) or Abstain | | FOR each of Mr. Foley, Ms. Miller and Mr. Nave |
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RESOLVED, that the stockholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executives, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, pursuant to Item 402 of Regulation S-K | | For, Against or Abstain | | FOR |
| | |
Recommend, on an advisory and non-binding basis, the frequency - every 3 years, every 2 years or 1 year - with respect to which shareholders should have future non-binding say-on-pay votes | | 3 years, 2 years, 1 year or Abstain | | 1 YEAR |
| | | | |
Ratification of the appointment of Deloitte & Touche LLP as Libbey’s independent auditors for the 2017 fiscal year | | For, Against or Abstain | | FOR |
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| QUESTIONS AND ANSWERS ABOUT THE MEETING | |
If you are a registered shareholder, you may vote in any of the following ways: |
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( | |
Vote by telephone: Call on a touch-tone telephone, toll-free 1-800-690-6903, 24 hours a day, seven days a week, until 11:59 p.m., eastern daylight savingssaving time, on May 12, 2014.16, 2017. Make sure you have your proxy card, available,notice document or email that you received and follow the simple instructions provided. |
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Vote over the internet: Go towww.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m., eastern daylight savingssaving time, on May 12, 2014.16, 2017. Make sure you have youravailable the proxy card, availablenotice document or email that you received and follow the simple instructions provided. |
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* | |
Vote by mail: Mark,If you received printed copies of the proxy materials by mail, you may mark, date and sign the enclosed proxy card and return it in the enclosed, postage-paid envelope.envelope that was provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity. |
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Vote in person at the annual meeting: Bring the enclosed proxy card, notice document or email you received and bring other proof of identification and request a ballot at the meeting. |
Shares held jointly by two or more registered shareholders may be voted by any joint owner unless we receive written notice from another joint owner denying the authority of the first joint owner to vote those shares.
Shares Held in Street Name
If you hold your shares in street name — in other words, you hold your shares through a broker or other nominee — you will receive from your broker a notice regarding availability of proxy materials that will tell you how to access our proxy materials and provide voting instructions to your broker over the internet. It also will tell you how to request a paper or e-mail copy of our proxy materials. If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposals on which your broker does not have discretionary authority to vote, including Proposals 1
and 2.through 3.
Shares Held Through 401(k) Plan
If you participate in
the Libbey Retirement Savings Plan, which we refer to asone of our 401(k)
plan,plans, and if you have investments in the Libbey Inc. stock fund and have an e-mail address provided by Libbey for business purposes, you will receive an e-mail message at your Libbey-provided e-mail address containing instructions that you must follow in order for shares in your account to be voted. If you participate in
one of our 401(k)
plan,plans, have investments in the Libbey Inc. stock fund and do not have an e-mail address provided by Libbey for business purposes, you will receive instructions from the trustee of the
applicable 401(k) plan that you must follow in order for shares in your account to be voted.
If you are a shareholder of record, you may, at any time before your shares are voted at the annual meeting, change your vote or revoke your proxy by: sending us a proxy card dated later than your last vote;
notifying the Secretary of Libbey in writing; or
If you hold your shares in street name through a broker or other nominee, you should contact your broker or nominee to determine how to change your vote or revoke your proxy.
How many
outstanding shares of Libbey common stock are
there?outstanding?
At the close of business on March
14, 2014,20, 2017, there were
21,407,37421,902,950 shares of Libbey common stock outstanding. Each share of common stock is entitled to one vote.
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How big a vote do the proposals need in order to be adopted?
Provided that a quorum is present either in person or by proxy at the Annual Meeting, Proposals 1 through 34 must receive the required votes set forth below: |
| | |
Proposal | | Required Vote |
| |
Proposal 1 — Election of William A. Foley, Theo Killion and Deborah G. Miller and Steve Nave as Class III directors | | Since the election of directors is uncontested, each director must receive the vote of the majority of the votes cast with respect to such director’s election. |
| | |
| Proposal 2 — Advisory Say-on-Pay | | The affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. |
| |
Proposal 3 — RatificationFrequency of Independent AuditorsFuture Say-on-Pay Votes | | The affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. |
| | |
| Proposal 4 — Ratification of Independent Auditors | | The affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. |
What constitutes a quorum?
Under our By-laws, the holders of a majority of the total shares issued and outstanding, whether present in person or represented by proxy, will constitute a quorum, permitting business to be transacted at the meeting.
How will votes be counted?
Votes cast in person or by proxy will be tabulated by the inspector of elections appointed for the meeting and will determine whether a quorum is present. Abstentions will be counted as shares that are present and entitled to vote for purposes of determining whether a quorum is present. For purposes of determining whether the shareholders have approved a matter, abstentions are not treated as votes cast ‘‘for,’’ ‘‘against’’ or ‘‘withheld,’’ and therefore will have no effect on the outcome of any of Proposals 1 –
3.4. Additionally, broker non-votes will not be considered as present and entitled to vote with respect to
eitherany of
ProposalProposals 1
or Proposal 2.– 3. The common stock outstanding on the record date held by the trustee under Libbey’s 401(k)
planplans will be voted by the trustee in accordance with
written instructions from participants in
that plan or, asthose plans. Votes will not be cast with respect to those shares
in the plans for which no instructions are
received, in a uniform manner as a single block in accordance with the instructions received with respect to the majority of shares of the plan for which instructions were received.
What are broker non-votes?
If you hold your shares in street name through a broker or other nominee, your broker or nominee may not be permitted to vote your shares with respect to certain matters, including Proposals 1
and 2,– 3, unless you give your broker or nominee specific instructions as to how to vote. Non-voted shares on non-routine matters are called broker non-votes. They will not be counted in determining the number of shares necessary for approval but will be counted in determining whether there is a quorum.
How will voting be conducted on other matters raised at the meeting?
The proxy committee will vote on other matters that properly come before the meeting in accordance with the Board’s recommendation or, if no recommendation is given, in the discretion of the proxy committee.
When must shareholder proposals be submitted for the
20152018 Annual Meeting?
A shareholder desiring to submit a proposal for inclusion in our Proxy Statement for our
2018 Annual Meeting
to be held in 2015 must deliver the proposal so that we receive it no later than December
3, 2014.5, 2017. Any proposal submitted outside the processes of Rule 14a-8 under the Exchange Act will be considered untimely if submitted after February
18, 2018. A shareholder desiring to nominate one or more directors for election at our 2018 Annual Meeting must deliver the written nomination no earlier than January 17, 2018, and no later than February 16,
2015. We request that all2018. All such proposals
must be addressed to Susan A. Kovach, Vice President, General Counsel and Secretary, Libbey Inc., 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060.
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| LIBBEY CORPORATE GOVERNANCE | |  |
LIBBEY CORPORATE GOVERNANCE
|
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PROPOSAL 1 — ELECTION OF DIRECTORS |
Our Board of Directors, which currently has
teneight directors, is divided into three classes. The term of office for members of Class III of the Board of Directors will expire on the date of the Annual Meeting in
2014. When Richard I. Reynolds retired from his position as Executive Vice President, Strategy Program Management, he expressed his decision to likewise retire from his position as a member of the Board, effective at our 2014 Annual Meeting. Subsequently, Terence P. Stewart, a long-time member of the Board, notified the Board that he wished to retire effective at our 2014 Annual Meeting and, as a result, he2017. Theo Killion will not stand for reelection at
our 2014 Annual Meeting.Uponthe meeting. Instead, the Board has, based upon the recommendation of the Nominating and Governance Committee, of the Board, the Board has determined that Theo Killion possesses the desired knowledge and experiencenominated Steve Nave to serve on the Board. Accordingly, the Board has nominated Mr. Killion, as well as Mr. Foley and Ms. Miller,stand for election to Class III. Upon the retirements of Mr. ReynoldsIII along with William A. Foley and Mr. Stewart and the addition of Mr. Killion to the Board, our Board of Directors will have nine directors, and each of Class I, Class II and Class III of the Board will include three directors.
With respect to Class III, thoseDeborah G. Miller.
Those persons who are elected to Class III as directors at the 20142017 Annual Meeting will hold office until their terms expire on the date of the 20172020 Annual Meeting or until the electiontheir successors are elected and qualification of their successors.qualified. The terms of office of the members of Class I and Class II of the Board of Directors will expire on the date of the Annual Meeting in 20152018 and 2016,2019, respectively. Information regarding Messrs.Mr. Foley, and Killion and Ms. Miller and Mr. Nave is set forth below under‘‘Libbey Corporate Governance — Who are the members of our Board of Directors?’’ Only
Messrs.Mr. Foley,
and Killion and Ms. Miller
and Mr. Nave will be nominated for election as directors at the Annual Meeting. Each has consented to being named in this proxy statement and to serve if elected, and we expect each to be available to serve. If any of them becomes unavailable to serve
prior tobefore the Annual Meeting, the proxy will be voted for a substitute nominee or nominees designated by the Board, or the number of directors may be reduced.
Shares represented by proxies
in the accompanying form will be voted for the election of these three nominees unless authority to vote for any or all of these nominees is withheld. A shareholder entitled to vote for the election of directors may withhold authority to vote for any or all of the nominees.
The Board of Directors recommends a vote FOR
each of
Messrs.Mr. Foley,
Ms. Miller and
Killion and Ms. Miller.Mr. Nave.
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PROPOSAL 2 — ADVISORY SAY-ON-PAY VOTE
|
We are providing shareholders the opportunity to cast a non-binding, advisory vote with respect to the following resolution:
RESOLVED, that the shareholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executives, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, pursuant to Item 402 of Regulation S-K.
Our 2013 executive pay program, which is discussed below under‘‘Compensation-Related Matters — Compensation Discussion and Analysis’’and related tables and narrative, contemplates the delivery of executive pay that is performance-based and market-driven, as demonstrated in the table below:
| | |
Pay Objective
| | Supportive Components of 2013 Pay Program
|
Support our business strategy; drive long-term performance and shareholder value
| | • Annual and long-term incentive plan performance measures focused on increasing adjusted EBITDA and profitability and reducing financial leverage
• Consistent with ourLibbey 2015strategy, annual incentive plan financial component for regional general managers is weighted 50% at the company-wide level and 50% at the regional level to ensure line of sight
• Individual objectives heavily focused on development and execution of ourLibbey 2015strategy
|
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| | |
Pay Objective
| | Supportive Components of 2013 Pay Program
|
Align interests of executives and shareholders
| | • Annual and long-term incentive plans that are performance-based
• For named executives, 57% to 63% of target pay opportunity is “at risk”
• Growth in our stock price is required in order to deliver any value to named executives pursuant to non-qualified stock options, which we refer to as NQSOs, and SARs
• RSUs directly align interests of executives and shareholders
• Stock ownership/ retention guidelines designed to require our executives to own meaningful amounts of our stock
|
| |
Attract and retain highly-talented and experienced senior executives who are key to implementing our strategy and achieving future success | | • Market-driven total pay package
• NQSO and RSU grants that vest ratably over four years
• With respect to our CEO, a special, one-time retention award of cash-settled SARs that were issued in December 2013 and cash-settled RSUs that were issued in February 2014, each of which cliff-vests on December 31, 2018
|
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Align executive pay program with corporate governance best practices | | • Limited perquisites (tax return preparation and financial planning, executive health screening program, limited ground transportation and airline club membership), but no tax gross-ups on these perquisites
• Limited income protection through severance pay arrangements
• No tax gross-ups except on relocation assistance
• Stock ownership/ retention guidelines designed to require executives to own meaningful amounts of our stock
• Annual and long-term incentive awards and RSU, SAR and NQSO awards are subject to clawback
|
We believe that our 2013 executive pay program links directly to ourLibbey 2015 strategy. The quantitative performance metrics under both our 2013 SMIP and the performance cash component of our 2013 LTIP are directly tied to improving adjusted EBITDA, cash generation, profitability and financial leverage, all of which are critical to ourLibbey 2015strategy and returning Libbey to consistent, profitable growth.
Additionally, as the charts on page (ii) of the Proxy Statement Summary show, the payouts to our named executives under our 2013 SMIP and the performance cash component of our 2011 LTIP are consistent with our performance in 2013, as the amounts paid under our 2013 SMIP were 86% to 89% of target, representing slightly less (93% to 97%) than target performance, and the amounts paid under the performance cash component of our 2011 LTIP were 99.3% of target, representing performance at 99.7% of target.
Because your vote is advisory, it will not be binding on Libbey, our Compensation Committee or our Board of Directors. However, we value the opinions of our shareholders, and our Compensation Committee and Board will carefully consider the outcome of this vote.
The Board of Directors recommends a vote FOR
the approval, on an advisory basis, of the resolution.
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PROPOSAL 3 — RATIFICATION OF AUDITORS
|
The Audit Committee has appointed Ernst & Young LLP to serve as our independent auditors for our 2014 fiscal year. Although ratification by the shareholders is not required by law, the Board of Directors believes that you should be given the opportunity to express your views on the subject. Unless otherwise directed, proxies in the accompanying form will be voted for ratification.
The Board of Directors recommends a vote FOR this proposal.
STOCK OWNERSHIP
Who are the largest owners of Libbey stock?
The following table shows information with respect to the persons we know to be beneficial owners of more than 5% of our common stock as of December 31, 2013:
| | | | | | | | | | |
Name and Address of Beneficial Owner | | Amount and Nature of
Beneficial Ownership | | Percent of Class |
Zesiger Capital Group LLC(1) | | | | |
460 Park Avenue, 22nd Floor | | | | |
New York, NY 10022 | | 1,218,875 | | 5.7% |
| | |
RBC Global Asset Management (U.S.) Inc.(2) | | | | |
100 South Fifth Street, Suite 2300 | | | | |
Minneapolis, MN 55402 | | 1,167,210 | | 5.5% |
| | |
Robeco Investment Management, Inc. DBA Boston Partners(3) | | | | |
One Beacon Street | | | | |
Boston, MA 02108 | | 1,114,720 | | 5.2% |
(1) | Amendment No. 10 to Schedule 13G filed with the SEC on behalf of Zesiger Capital Group LLC (‘‘Zesiger’’), an investment advisor, indicates that, as of December 31, 2013, Zesiger was the beneficial owner of 1,218,875 common shares, with sole dispositive power as to all such common shares and sole voting power as to 954,250 common shares. The schedule further states that all securities reported in the schedule are held in discretionary accounts that Zesiger manages, and that no single client of Zesiger owns more than 5% of the class.
|
(2) | Schedule 13G filed with the SEC on behalf of RBC Global Asset Management (U.S.) Inc. (‘‘RBC’’), an investment advisor, indicates that, as of December 31, 2013, RBC was the beneficial owner of 1,167,210 common shares, with sole dispositive power as to 490 of such shares, shared dispositive power as to 1,166,720, sole voting power with respect to 490 common shares and shared voting power with respect to 745,810 common shares.
|
(3) | Amendment No. 2 to Schedule 13G filed with the SEC on behalf of Robeco Investment Management, Inc. DBA Boston Partners, an investment advisor, indicates that, as of December 31, 2013, Boston Partners was the beneficial owner of 1,114,720 common shares, with sole dispositive power as to all such shares and sole voting power with respect to 814,120 common shares. The schedule further states that all securities reported in the schedule are held in discretionary accounts.
|
How much Libbey stock do our directors and officers own?
Stock Ownership Guidelines
Non-Management Director Stock Ownership Guidelines. We have stock ownership guidelines that are applicable to non-management directors. For individuals who were non-management directors as of May 6, 2010, when we revised the guidelines, the deadline for compliance is May 6, 2015. For individuals subsequently becoming non-management directors, the deadline will be the fifth anniversary of the date on which they become non-management directors. We refer to the deadline as the Compliance Deadline.
Under the guidelines, a non-management director must, on or before the applicable Compliance Deadline, own Libbey common stock and/or its equivalents, as described below, in an amount at least equal to four times the amount of the annual cash retainer payable to the director for service on the Board of Directors (excluding the cash retainer or fees payable for service on any committee of the Board). We refer to this amount as the Ownership Threshold.
In determining whether a non-management director has achieved his or her Ownership Threshold, we include:
Shares of Libbey common stock held by the non-management director; and
“Phantom stock” into which deferred compensation is deemed invested under any deferred compensation plan for non-management directors.
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| |  |
If a non-management director achieves the Ownership Threshold on any date prior to his or her Compliance Deadline, that director generally will be deemed to continue to comply with the Ownership Threshold even if the value of his or her shares subsequently declines as a result of a decline in the closing price of Libbey common stock. A non-management director who has achieved the Ownership Threshold subsequently may sell or dispose of shares as long as the non-management director retains at least the minimum number of shares that s/he was required to hold when s/he first achieved the Ownership Threshold. If the non-management director’s share ownership drops below that Ownership Threshold, his or her holdings will be re-valued based on the then-current market price of Libbey common stock, and s/he will be required to achieve the Ownership Threshold based on his or her re-valued holdings.
As of March 14, 2014, all of our existing non-management directors, other than Ms. Jones (who joined the Board in August 2013), comply with these stock ownership guidelines.
Executive Stock Ownership Guidelines. In October 2007, we established guidelines pursuant to which our executive officers also are required to achieve ownership of meaningful amounts of equity in Libbey. In late 2012, we modified the guidelines as described below. We refer to the guidelines, as originally established, as the Original Guidelines.
Under the Original Guidelines, each executive officer was required to achieve ownership of a specified number of shares of Libbey common stock equal to a multiple of his or her base salary in effect on January 1, 2008 or, if later, the date on which the executive officer became subject to the guidelines.
The applicable multiples for the executive officers under the Original Guidelines were as follows:
| | | | | |
Executive Officer Title
| | Multiple of
Base Salary |
Chief Executive Officer
| | 5X |
President, Executive Vice President, group or divisional president
| | 3X |
Other Vice Presidents
| | 2X |
Under the Original Guidelines, an executive may achieve the required ownership by a variety of forms of unpledged equity ownership (which we refer to as Qualifying Shares), including outright ownership, by the officer and/or his or her spouse and minor children, of shares of Libbey stock; shares held in 401(k) savings accounts, individual retirement accounts or trust or other estate planning vehicles; shares underlying vested RSUs (even if deferred); and vested, ‘‘in-the-money’’ stock options to the extent of 50% of the required guideline.
The following table shows, for each named executive who was employed by us at December, 31, 2013 and was subject to the Original Guidelines, the applicable guideline and number of Qualifying Shares, excluding vested, ‘‘in-the-money’’ stock options, held as of March 14, 2014:
| | | | |
Named Executive | | Applicable Guideline (Number of Shares) | | Number of Qualifying Shares Held |
Daniel P. Ibele | | 31,061 | | 58,013 |
Susan A. Kovach | | 31,556 | | 52,885 |
Timothy T. Paige | | 29,024 | | 57,729 |
In late 2012, we elected to transition our executive stock ownership guidelines to stock retention guidelines. This decision was made in order to provide greater parity between long-time executive officers and our newer executive officers and to further align our executives’ interests with those of shareholders. Under the retention guidelines, which we refer to as the Retention Guidelines, each executive generally will be required to retain, until his or her separation from service:
50% of the net after-tax shares underlying each grant of RSUs made after January 1, 2013 that subsequently vests; and
50% of the net after-tax shares underlying NQSOs that are granted after January 1, 2013 and that the executive subsequently exercises.
Executives who satisfied the Original Guidelines prior to December 31, 2012 are exempt from the Retention Guidelines until January 2018. During the period between January 2, 2013 and January 1, 2018, those executives are permitted to sell or otherwise dispose of our stock, but only to the extent of any shares in excess of their respective ownership guidelines under the Original Guidelines.
Executives nearing retirement are released from our guidelines on the later to occur of the date that is one year prior to the contemplated retirement date or the date on which the Board is notified of the planned retirement.
Beneficial Ownership Table
The following table shows, as of March 14, 2014, the number of shares of our common stock and percentage of all issued and outstanding shares of our common stock that are beneficially owned by our directors (including Messrs. Reynolds and Stewart, who will not be standing for reelection at our 2014 Annual Meeting of stockholders), the named executives (including Mr. Reynolds, who was no longer employed by us at that date) and our directors and executive officers as a group. Our address, as set forth on the Notice of Annual Meeting of Shareholders, is the address of each director and named executive set forth below. The shares owned by the named executives set forth below include the shares held in their accounts in our 401(k) plan. An asterisk indicates ownership of less than one percent of the outstanding stock.
| | | | | | | | | | |
Name of Beneficial Owner | | Amount and Nature
of Beneficial Ownership | | Percent
of Class |
Sherry Buck(1)(3) | | | | 14,278 | | | * |
Carlos V. Duno(2) | | | | 30,547 | | | * |
William A. Foley(2) | | | | 35,659 | | | * |
Ginger M. Jones | | | | 1,000 | | | * |
Peter C. McC. Howell(2)(4) | | | | 32,059 | | | * |
Daniel P. Ibele(1)(3) | | | | 112,803 | | | * |
Susan A. Kovach(1)(3) | | | | 61,223 | | | * |
Deborah G. Miller(2) | | | | 16,644 | | | * |
Carol B. Moerdyk(2) | | | | 31,459 | | | * |
John C. Orr(2) | | | | 21,342 | | | * |
Timothy T. Paige(1)(3) | | | | 78,348 | | | * |
Richard I. Reynolds(1)(3) | | | | 327,606 | | | 1.53% |
Terence P. Stewart(2) | | | | 44,995 | | | * |
Stephanie A. Streeter(1)(3) | | | | 83,486 | | | * |
Directors and Executive Officers as a Group(1)(2)(3) | | | | 938,221 | | | 4.38% |
(1) | Does not include shares of our common stock that have vested but are deferred under our Executive Deferred Compensation Plan, which we refer to as our EDCP. As of March 14, 2014, each of Messrs. Ibele, Paige and Reynolds and Ms. Streeter, Ms. Buck and Ms. Kovach, and all executive officers as a group, had the following number of shares of our common stock that are vested but deferred under our EDCP:
|
| | | | | | | |
Named Executive
| | Number of
Deferred Shares | | |
S. Buck
| | | | 5,111 | | | |
D. Ibele
| | | | 0 | | | |
S. Kovach
| | | | 15,910 | | | |
T. Paige
| | | | 3,280 | | | |
R. Reynolds
| | | | 82,390 | | | |
S. Streeter
| | | | 0 | | | |
All executive officers as a group
| | | | 106,691 | | | LIBBEY CORPORATE GOVERNANCE |
(2) | Includes the following number of shares of our common stock that are deferred by non-management directors under our 2009 Director Deferred Compensation Plan, which we refer to as our Director DCP, and that are payable as shares of our common stock:
|
| | | | | |
Name of Director
| | Number of
Deferred Shares |
C. Duno
| | | | 21,309 | |
W. Foley
| | | | 0 | |
P. Howell
| | | | 14,421 | |
G. Jones
| | | | 0 | |
D. Miller
| | | | 0 | |
C. Moerdyk
| | | | 0 | |
J. Orr
| | | | 0 | |
T. Stewart
| | | | 30,559 | |
All non-management directors as a group
| | | | 66,289 | |
Does not include the following number of shares of phantom stock that are held by non-management directors pursuant to our deferred compensation plans for outside directors and that are payable in cash:
| | | | | |
Name of Director
| | Number of
Phantom Shares |
C. Duno
| | | | 0 | |
W. Foley
| | | | 11,778 | |
P. Howell
| | | | 5,784 | |
G. Jones
| | | | 0 | |
D. Miller
| | | | 2,192 | |
C. Moerdyk
| | | | 18,453 | |
J. Orr
| | | | 0 | |
T. Stewart
| | | | 54,286 | |
All non-management directors as a group
| | | | 92,493 | |
For more information regarding our deferred compensation plans for non-management directors, see‘‘Compensation-Related Matters — Non-Management Directors’ Compensation in 2013’’below.
(3) | Includes the following number of NQSOs that have been granted to our named executives and all executive officers as a group and that currently are exercisable or will be exercisable on or before May 13, 2014:
|
| | | | | | | |
Named Executive
| | Number of
Outstanding Stock Options
Exercisable Within 60 Days | | |
S. Buck
| | | | 7,395 | | | |
D. Ibele
| | | | 54,790 | | | |
S. Kovach
| | | | 24,248 | | | |
T. Paige
| | | | 28,899 | | | |
R. Reynolds
| | | | 158,526 | | | |
S. Streeter
| | | | 38,440 | | | |
All executive officers as a group
| | | | 332,219 | | | |
(4) | Includes 750 shares held by family members of Mr. Howell. Mr. Howell disclaims any beneficial interest in these shares.
|
In addition to outstanding shares of common stock that our named executives beneficially owned as of March 14, 2014, the named executives and all executive officers as a group have received the following grants of RSUs that have not yet vested:
| | | | | | | |
Named Executive
| | Number of
Unvested RSUs(1) | | |
S. Buck
| | | | 32,612 | | | |
D. Ibele
| | | | 24,903 | | | |
S. Kovach
| | | | 15,301 | | | |
T. Paige
| | | | 14,736 | | | |
R. Reynolds(2)
| | | | 0 | | | |
S. Streeter
| | | | 209,785 | | | |
All executive officers as a group
| | | | 306,664 | | | |
(1) | Of these amounts, a total of 6,339 RSUs with four-year vesting were awarded on February 10, 2011; a total of 11,380 RSUs with four-year vesting were awarded to Ms. Streeter on July 29, 2011; a total of 33,813 RSUs with four-year vesting were awarded on February 17, 2012; a total of 15,333 RSUs with four-year vesting were awarded to Ms. Buck on August 1, 2012; a total of 56,491 RSUs with four-year vesting were awarded on February 11, 2013; a total of 67,621 RSUs with four-year vesting were awarded on February 24, 2014; and a total of 115,687 RSUs, which cliff vest on December 31, 2018, were awarded on February 24, 2014. Except for the 115,687 RSUs that were awarded to Ms. Streeter as a special retention award on February 24, 2014, and that will be settled in cash, one share of our common stock will be issued for each vested RSU. Dividends do not accrue on RSUs until they vest. For further information, see‘‘Compensation-Related Matters — Compensation Discussion and Analysis — In what forms does Libbey deliver pay to its executives, and what purposes do the various forms of pay serve?’’ and the Outstanding Equity Awards at Fiscal Year-End table below.
|
| | |
| | |
| (2) | Pursuant to the RSU agreements under which awards were made to Mr. Reynolds in 2013, vesting was accelerated with respect to RSUs that were granted in 2013. Additionally, in recognition of Mr. Reynolds’s contributions to the Company during his more than 43 years of service to the Company, the Compensation Committee of the Board elected to accelerate vesting, to the date of Mr. Reynolds’s retirement, of all other unvested RSUs that were granted to Mr. Reynolds prior to 2013.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on our review of filings with the Securities and Exchange Commission and written representations that no other reports were required to be filed by the relevant persons, we believe that, during the fiscal year ended December 31, 2013, all officers, directors and greater-than-10% beneficial owners complied, on a timely basis, with the filing requirements applicable to them pursuant to Section 16 of the Exchange Act.
LIBBEY CORPORATE GOVERNANCE
Who are the members of Libbey’s Board of Directors?
Our Board of Directors is divided into three
classes. Each year,classes, with one class
of directors standsstanding for election at
oureach Annual Meeting of shareholders.
Richard I. Reynolds, who was reelected to the Board in 2013, will retire from the Board, and Terence P. Stewart has informed the Board that heTheo Killion will not stand for reelection at our
20142017 Annual Meeting of shareholders.
Based on the recommendation of our Nominating and Governance Committee,Instead, our Board has nominated
Theo Killion,Steve Nave, who will be new to our Board, and William A. Foley and Deborah G. Miller, who are incumbents, for election
by our shareholders at our
20142017 Annual Meeting of shareholders.
Standing for Election – Class III
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Standing for Election - Class III |
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| Chairman since 2011 Director since 1994 | | Director Qualifications: • Consumer product marketing experience, particularly in the glass tableware industry • Significant organizational leadership and management skills • Public company board and corporate governance experience |
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Professional Experience: Mr. Foley has been Libbey's Chief Executive Officer since January 12, 2016. Since 2011, he also has served as Chairman of the Board,Director on which he has served as a director since 1994; Chairman since
August 2011
| | Professional Experience:
1994. Mr. Foley served as Chairman and Chief Executive Officer of Blonder Accents, LLC (sincefrom June 2011)2011 until November 2011 and served as Chairman and Chief Executive Officer of Blonder Company (fromfrom 2008 to 2011). Blonder Company was appointed a receiver in April 2011 in connection with a negotiated sale transaction, and the acquiring company, Blonder Accents LLC, voluntarily filed for protection under Chapter 7 of the U.S. Bankruptcy Code in Decemberuntil June 2011. Previously, Mr. Foley was President and a director of Arhaus, Inc.; co-founder of Learning Dimensions LLC; Chairman and Chief Executive Officer of LESCO Inc.; and Chairman and Chief Executive Officer of Think Well Inc.Inc. Mr. Foley has also fulfilled the roles of Vice President, General Manager for The Scotts Company Consumer Division, and Vice President and GeneralGeneral Manager of Rubbermaid Inc.’s's Specialty Products division. Mr. Foley spentspent the first 14 years of his career with Anchor Hocking Corp. in various positions,, including Vice President of Sales & Marketing. |
| | Education:
Marketing of the Consumer and Industrial Products Group.
Education:Mr. Foley holds a bachelor’sbachelor's degree from Indiana University and an M.B.A.M.B.A. from Ohio University.
Public Company Boards:Boards: Mr. Foley is currently on the Board of Directors of Myers Industries, Inc.Inc. (NYSE: MYE), and has previous experience on the board of LESCO Inc.Director Qualifications:
• Consumer product marketing experience, particularly in the glass tableware industry
• Significant organizational leadership and management skills
• Public company board and corporate governance experience
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Theo Killion
Age 62
Nominated in 2014
| | Professional Experience:
Mr. Killion has served as Chief Executive Officer of Zale Corporation (NYSE: ZLC) since September 2010. Prior to his appointment as Chief Executive Officer, Mr. Killion held a variety of other positions with Zale Corporation, including Interim Chief Executive Officer from January 2010 to September 2010, President from August 2008 to September 2010 and Executive Vice President of Human Resources, Legal and Corporate Strategy from January 2008 to August 2008. From May 2006 to January 2008, Mr. Killion was employed with the executive recruiting firm Berglass+Associates, focusing on companies in the retail, consumer goods and fashion industries. From April 2004 through April 2006, Mr. Killion served as Executive Vice President of Human Resources at Tommy Hilfiger. From 1996 to 2004, he held various management positions with Limited Brands.
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| Deborah G. Miller Age 67 Director since 2003 | |  |
| | Director Qualifications: • Global management experience • Sales and marketing ingenuity • Extensive information technology experience |
| | Education:
Mr. Killion holds a bachelor’s degree and a masters degree in education from Tufts University.
Public Company Boards:
Mr. Killion serves on the boards of directors of Zale Corporation and Express, Inc. (NYSE: EXPR)
Director Qualifications:
• Extensive experience in retail merchandising, business development and strategic planning
• Deep human resources expertise, including in talent identification, evaluation, development and succession planning
• Extensive organizational leadership experience in a complex environment
• Public company board and corporate governance experience
| |
| |
Deborah G. Miller
Age 64
Director since 2003
| | Professional Experience:From 2003 to the present, Ms. Miller has been the Chief Executive Officer ofof Enterprise Catalyst Group, a management consulting firm specializing in high technology and biotechnology transformational applications. Ms. Miller was also President, Chief Executive Officer and Chairman of Ascendent Systems , a provider of enterprise voice mobility solutions, from 2005 to 2007. Ms. Miller has more than 30 years of global management experience, including roles as Chief Executive Officer of Maranti Networks; President and Chief Executive Officer of Egenera; Chief Executive Officer of On Demand Software; and various positions with IBM. Throughout her career, Ms. Miller has contributed to the success of international business enterprises with her innovative approach to sales and marketing.
Education:Ms. Miller holdshas a bachelor’s degree from Wittenberg University, of which she is an Emeritus member of the Board of Directors.
Public Company Boards:Ms. Miller has been a member of the Board of Directors of Sentinel Group Funds, Inc. (SENCX) since 1995. Director Qualifications:
• Global management experience
• Sales and marketing ingenuity
• Strategic planning
• Extensive information technology experience
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| LIBBEY CORPORATE GOVERNANCE | |
Continuing Directors – Classes I and II
| | |
| Steve Nave Age 47 Nominated in 2017 | | Director Qualifications: • Extensive e-commerce experience • Deep knowledge of retail and consumer products industries • Significant executive leadership experience • Brand marketing expertise
|
| | | |
Professional Experience: Mr. Nave currently serves as President and Chief Executive Officer and a director of Bluestem Group Inc., a holding company whose businesses include Bluestem Brands, Inc., a multi-brand, online retailer of a broad selection of name-brand and private label general merchandise through 16 unique retail brands. Mr. Nave has held his current position since November 2014, when a subsidiary of Bluestem Group Inc. acquired Bluestem Brands, Inc. From December 2012 until assuming his current role, Mr. Nave served as President and Chief Executive Officer and a director of Bluestem Brands, Inc. Prior to Bluestem, Mr. Nave held several executive leadership positions with Walmart.com, from its launch in 2000 until 2011, including Chief Financial Officer, Chief Operating Officer, and most recently as its chief executive, as well as serving as a senior officer of Wal-Mart Stores, Inc. From 1995 to 2000 he served in both the Audit and Mergers & Acquisitions practices of Ernst & Young, LLP, serving clients in the Retail & Consumer Products and Technology industries. Mr. Nave previously served on the board of directors of Shopzilla, Inc., a leading source of sales and consumer feedback for online merchants and retail advertisers in the United States and Europe. Education: Mr. Nave has a bachelor’s degree in Accounting from Oklahoma State University. Public Company Boards: None. |
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| Continuing Directors - Classes I and II |
| | | |
| Age 69 Director since 2003 | |
Director Qualifications: • Strategic planning in international organizations • Glass industry experience, both at Vitro S.A. and as a former director of Anchor Glass Container Corporation |
| | | |
Professional Experience:Mr. Duno is the Owner and Chief Executive Officer of Marcia Owen Associates/ Santa Fe StaffingThe Hire Firm (since 2006), the premier recruiting and staffing firm in Northernnorthern New Mexico, and Owner and Chief Executive Officer of CDuno Consulting (since 2004). From 2001 to 2004, Mr. Duno served as Chairman of the Board and Chief Executive Officer of Clean Fuels Technology, a leading developer of emulsified fuels for transportation and power generation applications. Mr. Duno’s glass industry experience began during his six years as President of Business Development and Planning for Vitro S.A. in Monterrey, Mexico from 1995 to 2001. Mr. Duno’s earlier professional experience includesincluded a two-year term as Vice President Strategic Planning for Scott Paper Company and several years with McKinsey & Co. and Eli Lilly.
Education:Mr. Duno holds a B.S. in industrial engineering from the National University of Mexico, and an M.B.A. in finance and an M.S. in industrial engineering, both from Columbia University. He also is certified in leadership and transition coaching by the Hudson Institute of Coaching.
Public Company Boards:None. Director Qualifications:
• Strategic planning in international organizations
• Glass industry experience, both at Vitro S.A. and as a former director of Anchor Glass Container Corporation
• Audit committee financial expert
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Peter C. McC. Howell
Age 64
Class II
Director since 1993
| | Professional Experience:
Since 1997, Mr. Howell has been an advisor to various business enterprises in the areas of acquisitions, marketing and financial reporting, particularly with respect to operations in the People’s Republic of China. Mr. Howell’s positions before 1997 include Chairman and Chief Executive Officer of Signature Brands USA Inc. (formerly Health-O-Meter); President, Chief Executive Officer and a director of Mr. Coffee Inc.; and Chief Financial Officer of Chemical Fabrics Corporation. Mr. Howell also spent 10 years as an auditor for Arthur Young & Co. (now Ernst & Young).
Education:
Mr. Howell holds B.A. and M.A. degrees in economics from Cambridge University and is a Fellow of the Institute of Chartered Accountants of England & Wales.
Public Company Boards:
Since 1989, Mr. Howell has been a director of one or more public companies. His current directorships include Pure Cycle Corporation (NASDAQ: PCYO) (since 2004), and Lite Array Inc. and Global Lite Array Inc., subsidiaries of the publicly held Global-Tech Applied Innovations (NASDAQ: GAI) (since 2001).
LIBBEY CORPORATE GOVERNANCE |
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| Ginger M. Jones Class II Age 52 Director since 2013 | |
• Experience as chief financial officer of a public company with over $2 billion in revenues • Significant executive leadership experience in financial expertise that qualifies himstrategy and experience in public audit functions, resulting in her qualification as an audit committee financial expert • Public company board and corporate governance experience
• Retail and foodservice industry knowledge
• Experience with international businesses operating in Chinaglobal supply chain |
| |
Ginger M. Jones
Age 49
Class II
Director since 2013
| |
| |
Professional Experience:Since 2007, Ms. Jones is the Vice President, Chief Financial Officer of Cooper Tire & Rubber Company (NYSE: CTB), where she has served as senior vice president, chief financial officer ofsince December 2014. She joined Cooper from Plexus Corp. (NASDAQ: PLXS), a global electronic,electronics, engineering and manufacturing services company. Prior to joining Plexus Corp., Ms. Jonescompany, where she served in a variety of financial roles with companies in the consumer packaged goods industryas Chief Financial Officer since 2007 and the software industry.was responsible for all finance, treasury, investor relations and information technology functions. A certified public accountant, Ms. Jones began her career with Deloitte & Touche, culminating in her role as audit manager for audits of middle market companies.
Eduction
Education:She holds a bachelor’s degree in accounting from the University of Utah and an M.B.A. from The Ohio State University Fisher College of Business.
Public Company Boards:None.
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| Eileen A. Mallesch Class II Age 61 Director since 2016 | | • Significant financial and enterprise risk management expertise • Public company board and corporate governance experience • Experience with mergers, acquisitions and divestitures • International business experience • Foodservice and consumer products industry knowledge |
| | | |
Professional Experience: Ms. Mallesch served as chiefSenior Vice President and Chief Financial Officer of the property and casualty insurance business of Nationwide Insurance from 2005 to 2009. Previously, Ms. Mallesch was employed by General Electric, where she served as Senior Vice President and Chief Financial Officer of Genworth Financial Life Insurance Company from 2003 to 2005; Vice President and Chief Financial Officer of GE Financial Employer Services Group from 2000 to 2003; and Controller for GE Americom from 1998 to 2000. Ms. Mallesch’s positions before 2000 include International Business Area Controller, Energy Ventures for Asea Brown Boveri, Inc., a multinational power and automation technologies company, and financial officermanagement positions with PepsiCo, Inc. (NYSE: PEP). Ms. Mallesch is a certified public accountant and began her career as a senior auditor with Arthur Andersen.
Education: Ms. Mallesch holds a bachelor's degree in accounting from City University of a public company with over $2 billion in revenues• Significant executive leadership experience in financial strategyNew York.
Public Company Boards: Ms. Mallesch currently serves on the boards of directors of Fifth Third Bancorp (NASDAQ:FITB) (since 2016), State Auto Financial Corp. (NASDAQ: STFC) (since 2010) and experience in public audit functions, resulting in her qualification as an audit committee financial expert• Experience in global supply chain
Bob Evans Farms, Inc. (NASDAQ: NOBE) (since 2008). |
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LIBBEY CORPORATE GOVERNANCE | |
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| Age 66 Director since 1998 | |
Director Qualifications: • Significant financial expertise, developed through her experience as a CFA and public company chief financial officer • Public company board and corporate governance experience • Executive leadership and U.S. and international operations experience |
| | | |
Professional Experience:Ms. Moerdyk retired from OfficeMax Incorporated (formerly Boise Cascade Office Products Corporation) in 2007. At OfficeMax, she served as Senior Vice President, International from August 2004 until her retirement.retirement. Previously, she held various roles at Boise Cascade Office Products Corporation, including Senior Vice President Administration, Senior Vice President North American and Australasian Contract Operations, and ChiefChief Financial Officer. Ms. Moerdyk began her professional career as an assistantassistant professor of finance at the University of Maryland.
Education:Ms. Moerdyk is a Chartered Financial Analyst and holds a bachelor’s degree from Western Michigan University and a Ph.D. Candidate’s Certificate in finance from the University of Michigan.
Public Company Boards:Ms. Moerdyk has served on the Board of Directors of American Woodmark Corporation (NASDAQ: AMWD) since 2005. Director Qualifications:
• Significant financial expertise, developed through her experience as a CFA and public company chief financial officer
• Audit committee financial expert
• Executive leadership and international operations experience
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| Age 66 Lead Director since 2016 Director since 2008 | |
Director Qualifications: • Extensive international manufacturing and plant management experience • Extensive organizational leadership experience • Public company board and corporate governance experience |
| | | |
Professional Experience:Since
From 2005 until his retirement in December 2015, Mr. Orr has been theserved as President, Chief Executive Officer, and a director of Myers Industries, Inc. (NYSE: MYE), an international manufacturer of polymer products for industrial, agricultural, automotive, commercial and consumer markets. Before assuming his currentthose positions, Mr. Orr was President and Chief Operating Officer of Myers Industries and General Manager of Buckhorn Inc., a Myers Industries subsidiary. Mr. Orr’s earlier career included 28 years with The Goodyear Tire and Rubber Company, where he gained experience in production and plant management at facilities throughout North America and Australia, eventually holding such positions as Director of Manufacturing in Latin America and Vice President Manufacturing for the entire company worldwide.
Education:Mr. Orr holds a B.S. in communication from Ohio University and has additiona l training from Harvard Business School in business strategy, finance and operations.
Public Company Boards:Mr. Orr currently servesserved on the Board of Myers Industries, Inc. (NYSE: MYE). Director Qualifications:
• Extensive international manufacturing and plant management experience
• Extensive organizational leadership experience
• Public company board and corporate governance experience
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Stephanie A. Streeter
Age 56
Class I
Director since 2011
| | Professional Experience:
Ms. Streeter has served as Chief Executive Officer of Libbey since August 1, 2011. Prior from May 2005 to joining Libbey as Co-CEO on July 1, 2011, Ms. Streeter was interim Chief Executive Officer of the United States Olympic Committee from March 2009 to March 2010 and served on its Board of Directors from 2004 to 2009. Ms. Streeter also was employed as Chairman and Chief Executive Officer of Banta Corporation, a NYSE-listed provider of printing, supply chain management and related services that was acquired by R.R. Donnelley & Sons Company (NYSE: RRD) in 2007. She joined Banta in 2001 as President and Chief Operating Officer and was appointed Chief Executive Officer in 2002. Prior to joining Banta, Ms. Streeter was Chief Operating Officer at Idealab. Ms. Streeter also spent 14 years at Avery Dennison Corporation in a variety of product and business management positions, culminating in her role as Group Vice President of Worldwide Office Products from 1996 to 2000.
Education:
Ms. Streeter holds a bachelor’s degree from Stanford University.
Public Company Boards:
A member of the Board of Directors of Banta from 2001 to 2007, Ms. Streeter was elected Chairman in 2004. She currently is a member of the Boards of Directors of The Goodyear Tire & Rubber Company (NYSE: GT) (since 2008) and Kohl’s Corporation (NYSE: KSS) (since 2007).
Director Qualifications:
• Demonstrated executive leadership and management skills
• Public company board and corporate governance experience
• Consumer and business-to-business marketing experience
• Supply chain experience
• Retail industry knowledge
December 2015. |
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How is our Board leadership structured?
Our Board
currently includes ninehas seven non-management directors and one employee director.
EffectiveTheo Killion, who currently serves as a non-management director, will not stand for reelection at the
20142017 Annual Meeting of
shareholders, we will have eight non-management directors and one employee director, as Messrs. Reynolds and Stewart will be retiring and theshareholders. The Board has nominated a new independent director,
Mr. Killion,Steve Nave, for election.
The Board periodically assesses its leadership structure and, when appropriate, changes its leadership structure, to ensure effective, independent oversight of management and facilitate its engagement in, and understanding of, our business. For example, when Ms. Streeter joined the Company and was named our chief executive officer onCEO in August 1, 2011, the Board elected to separate the roles ofseparated the chairman and chief executive officer in orderCEO roles to enable Ms. Streeter to devote herself to becoming familiar with our business, industry and customers. As a result of
|
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| LIBBEY CORPORATE GOVERNANCE |
In connection with Ms. Streeter's departure from the Board’s most recent assessment ofCompany on January 11, 2016, the Board reevaluated its leadership structure and combined Mr. Foley's role as Chairman with his newly appointed role as CEO. Previously, Mr. Foley had served as an independent director on the Board has concluded that continued separationsince 1994 and as independent Chairman of the Board since August 2011. The Board believes that the most effective leadership structure at the present time is for Mr. Foley, an experienced director with a history of overseeing the Company's management, to serve as both Chairman and CEO. Combining the Chairman and CEO roles in Mr. Foley demonstrates to our employees, suppliers, customers and other stakeholders that we are under strong leadership, with a single person, who has extensive institutional and industry knowledge, setting the tone and having primary responsibility for managing our operations.
Recognizing the importance of chairmanindependent Board leadership, the Board also created the role of Independent Lead Director. The Independent Lead Director's duties include:
Advising the Chairman and chiefCEO as to an appropriate schedule of Board meetings, to ensure that the non-employee directors can perform their duties responsibly while not interfering with on-going company operations;
Approving with the Chairman and CEO the information, agenda and schedules for the Board and Committee meetings;
Advising the Chairman and CEO as to the quality, quantity and timeliness of the information submitted by management that is necessary or appropriate for the non-employee directors to effectively and responsibly perform their duties;
Recommending to the Chairman the retention of advisors and consultants to report directly to the Board;
Calling meetings of the non-employee directors;
Developing the agendas for and serving as Chairman of the executive officersessions of the Board's non-employee directors;
Serving as principal liaison between the non-employee directors and the Chairman and CEO on sensitive issues;
Recommending to the Nominating and Governance Committee the membership of various Board Committees, as well as the selection of Committee chairperson;
Serving as Chairman of the Board when the Chairman is appropriate atnot present;
Serving as ex-officio member of each committee and regularly attending committee meetings; and
Lead Independent Director Evaluation of the CEO, including an annual evaluation of the CEO's interactions with the directors and ability to lead and direct the full Board.
The Board chose Mr. Orr to assume this timerole. Mr. Orr has been an independent director on the Board since 2008, serves as the Chair of the Nominating and will enable Ms. Streeter to continue to focus on implementationGovernance Committee, and is a member of ourLibbey 2015 strategythe Audit Committee.
The Board believes that Mr. Foley serving as Chairman and
returning Libbey to profitable growth.CEO and Mr. Orr serving as Independent Lead Director promotes unified leadership while maintaining effective, independent oversight.
Does Libbey have Corporate Governance Guidelines?
Our Board of Directors has adopted Corporate Governance Guidelines that govern the Board of Directors. Our Corporate Governance Guidelines and Code of Business Ethics and Conduct (which applies to all of our employees, officers and directors), as well as the chartersCharters for each of the Audit Committee, the Compensation Committee and the Nominating and Governance committees,Committee, are available on our website ((www.libbey.com)www.libbey.com). They also are available in print, upon request, to any holder of our common stock. Requests should be directed to Corporate Secretary, Libbey Inc., 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060.
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| LIBBEY CORPORATE GOVERNANCE | |
What are the roles of the Board’s committees?
Our Board of Directors currently has the following standing committees: |
| | | | | |
Standing Committee | | Key Functions | | 2016 Meetings |
Audit Committee | | | | 97 |
| | | | | |
| Compensation Committee | | • | Consider the potential impact of our executive pay program on our risk profile | | 5 |
| • | Review executive pay at comparable companies and recommend to the Board pay levels and incentive compensation plans for our executives | | |
| • | Review and approve goals and objectives relevant to the targets of the executive incentive compensation plans | | |
| • | Establish the CEO’s pay, and in determining the long-term incentive compensation component of the CEO’s pay, consider the Company’s performance, relative shareholder return, the value of similar awards to chief executive officers at comparable companies and the awards given to our CEO in prior years | | |
| • Perform an annual evaluation of | Annually evaluate the Compensation Committee's performance and effectiveness of the Compensation Committee | | |
| • | Produce an annual report on executive compensation for inclusion in the proxy statement or annual report on Form 10-K, as required by the SEC | | |
| • | Approve award grants of awards under our equity participation plans and provide oversightoversee and administration ofadminister these plans | | 5 |
| | | | | |
| Nominating and Governance Committee | | • | Develop and implement corporate governance policies and practices relating to corporate governance | | 5 |
| • | Establish a selection process for new directors to meet the needs of the Board, for evaluating and recommending candidates for Board membership, for assessing the Board's performance of the Board and reviewing that assessment with the Board and for establishing objective criteria to evaluate the CEO's performance | | |
| • | Review director pay and recommend to the Board pay levels for our non-management directors | | |
| | • | Review plans for both emergency and orderly succession of the CEO | | 5 |
| | |
| | |
Our Board believes that it is desirable from time to time to rotate committee assignments and leadership. Accordingly, effective upon the conclusion of our 2014 Annual Meeting of shareholders, the leadership and composition of each of our Board’s standing committees will change.
The following table identifies, for each of our non-management directors, the committees on which he or she served in
20132016 and will serve beginning
on May
13, 2014: | | | | | | | | | | | | |
| | | Audit Committee | | Compensation
Committee | | Nominating and
Governance Committee |
Director | | 2013 | | 2014 | | 2013 | | 2014 | | 2013 | | 2014 |
Carlos V. Duno(1)(2) | | Chair | | | | Member | | Chair | | | | Member |
William A. Foley(3)(4) | | | | Member | | | | | | | | Member |
Peter C. McC. Howell(1)(2)(3)(4) | | Member | | Member | | | | | | Chair | | Member |
Ginger Jones(3)(4) | | | | Chair | | | | Member | | | | |
Theo Killion | | | | | | | | | | | | |
Deborah G. Miller(4) | | | | Member | | Member | | Member | | Member | | |
Carol B. Moerdyk(1)(2) | | Member | | | | Chair | | Member | | | | Member |
John C. Orr(2)(3)(4) | | Member | | Member | | | | | | Member | | Chair |
|
| | | | | | | | | | | | |
| | | Audit Committee | | Compensation Committee | | Nominating and Governance Committee |
| Director | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 |
| Carlos V. Duno | | | | | | Chair | | Chair | | Member | | Member |
William A. Foley(1) | | | | | | | | | | | | |
Ginger Jones(2)(3) | | Chair | | Chair | | Member | | Member | | | | |
Theo Killion(3)(4) | | Member | | | | Member | | | | | | |
Eileen A. Mallesch(2)(3) | | Member | | Member | | Member | | Member | | | | |
Deborah G. Miller(3) | | Member | | Member | | | | | | Member | | Member |
| Carol B. Moerdyk | | | | | | Member | | Member | | Member | | Member |
John C. Orr(2)(3) | | Member | | Member | | | | | | Chair | | Chair |
| |
| (1) | For 2013, determinedMr. Foley ceased to be a non-management director on January 12, 2016, when he was appointed as our CEO. Accordingly, Mr. Foley no longer serves on any committees.
|
| |
| (2) | Determined by the Board to be qualified as an audit committee financial expert, as defined in SEC regulations. |
(2) | For 2013, determined
|
| (3) | Determined by the Board to be financially sophisticated and literate and to have accounting and related financial management expertise, as those qualifications are interpreted by the Board in its business judgment. |
(3) | For 2014, determined by the Board to be qualified as an audit committee financial expert, as defined in SEC regulations.
|
| (4) | For 2014, determined by the Board to be financially sophisticated and literate and to have accounting and related financial management expertise, as those qualifications are interpreted by the Board in its business judgment.
Mr. Killion will not stand for reelection at our 2017 Annual Meeting of shareholders. |
|
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| LIBBEY CORPORATE GOVERNANCE |
The Board has determined that all members of
each of its standing committees are independent,
within the meaning ofas defined in SEC regulations and the NYSE MKT Company Guide. The Board also has determined that all members of the Compensation Committee are ‘‘outside directors,’’
within the meaning ofas defined in 26 CFR § 1.162-27.
How does our Board oversee risk?
Our management is responsible for day-to-day risk management and our Board, through the Audit Committee and the Board’s other committees, is responsible for
oversight ofoverseeing our risk management processes. We have
implemented an enterprise-wide risk management program. Our
Vice President, TreasurerDirector, Global Audit and Enterprise Risk Management, who reports to the Audit Committee, has primary responsibility for this
program and reports to our Vice President, Chief Financial Officer.program. We also have an Enterprise Risk Management Steering Committee
consisting ofcomprising members of senior management from across our operations.
Through our enterprise risk management program, we identify, evaluate and address actual and potential risks that may impact our business and our financial results. Our
Vice President, TreasurerDirector, Global Audit and Enterprise Risk Management, routinely reports to our Board
and the Audit Committee with respect to the status of our program and particular risks and risk management strategies.
The Board, through the Nominating and Governance Committee, is responsible for regularly reviewing the Company's succession planning, including but not limited to the Company's plans for emergency and orderly succession of the CEO.
How does our Board select nominees for the Board?
Our Board selects new directors following review and evaluation by the Nominating and Governance Committee, which also proposes and reviews the criteria for membership at least biannually and proposes and reviews the selection process. The Nominating and Governance Committee evaluates governance needs and skill requirements, and solicits input from all Board members and makes its recommendation to the Board.
An invitation to join the Board is extended by theThe Chairman,
on behalf of the Board,
on behalf ofextends invitations to join the Board. A shareholder who wishes to recommend a prospective nominee for the Board may notify our Corporate Secretary or any member of the Nominating and Governance Committee in writing, including
suchany supporting material
as the shareholder deems appropriate. Candidates
for director nominated by shareholders will be given the same consideration as candidates nominated by other sources.
The Board, in its Corporate Governance Guidelines, has determined that Board members must satisfy the following standards and qualifications:
Requisite Characteristics for Board Candidates
|
| | | |
| Requisite Characteristics for Board Candidates | |
| | | |
| | • | | the highest professional and personal ethics and values, consistent with longstandinglong-standing Libbey values and standards | |
| | • | | broad experience at the policy-making level in business, government, education, technology or public interest | |
| | • | | commitment to enhancing shareholder value | |
| | • | | devotion of sufficient time to carry out the duties of Board membership and to provide insight and practical wisdom based upon experience | |
| | • | | expertise in areas that add strategic value to the Board and/Board. For example, e-commerce experience, consumer products experience; omni-channel experience; brand marketing experience; diversity of race, ethnicity, gender, age, cultural background or professional experience; broad international exposure or specific in-depth knowledge of a key geographic growth area; shared leadership model experience; extensive knowledge of the Company's business or in foreign locations strategic to our then-currenta similar type industry or potential future operations. For example, currentmanufacturing environment; mergers and acquisitions; global business integration experience; significant sophisticated financial understanding or recent experience as aexperience; global supply chain expertise; transformative change management experience; information technology or enterprise risk management implementation experience; sitting chief executive officer or chief financial officer of a public company; expertise in the consumer products industry, asset-intensive manufacturing, logistics and/or advanced supply chain management; experience as an executive with a large multinational company or as an expatriate executive in the Far East, Europe or Latin America; management experience in the foodservice industry;financial acumen; investor relations experience; and risk oversight or management or board experience in a highly leveraged environment experience. | |
| | • | | serve on the boards of directors of no more than three other public companies and, if intending to serve on the Audit Committee of the Board, serve on the audit committees of no more than two other public companies | |
In addition, the Board’s Corporate Governance Guidelines set forth the Board’s intention to seek directors who are strategic thinkers, understand complex capital structures and the operational constraints that they create, are members of the boards of directors of other public companies and have experience and expertise in corporate governance, marketing
|
| |
| LIBBEY CORPORATE GOVERNANCE | |
expertise and/or experience in the consumer products industry. Consistent with the Board’s Corporate Governance Guidelines, the Board also seeks directors who, as compared to
then-existingexisting members of the Board, are diverse with respect to geography, employment, age, race or gender. Reflecting this desire to foster a diverse Board,
threefour of our
current non-management directors are women, one non-management director is Hispanic and
Mr. Killion, a nominee for the Board, is African-American. In addition, one non-management director is
British and, through his wide travels around the world, brings us his perspective as to the international business environment, particularly in China.African-American.
Finally, the Board considers
such other relevant factors as it deems appropriate, including the
Board's current composition,
of the Board, the balance of management and independent directors, the need for
Audit Committee or otherparticular subject-matter expertise and the Board’s evaluations of other prospective nominees.
The Nominating and Governance Committee
employed the services ofengaged a third-party search firm to identify and recruit Ms. Moerdyk,
to the Board in 1998Mr. Orr and Mr.
Orr to the Board in 2008, and, underNave. Under its charter, the Nominating and Governance Committee
continues to have thehas authority to
employ the services of aengage third-party search
firmfirms in fulfilling its duties to select nominees to the Board.
How does our Board determine which directors are considered independent?
Pursuant to the Corporate Governance Guidelines approved by the Board, the Board has made a determination as to the independence of each of the members of the Board.Board member's independence. In making this determination, the Board has considered the existence or absence of any transactions or relationships between each director or any member of his or her immediate family and Libbey and its subsidiaries and affiliates, including those reported under‘‘Corporate Governance — Certain Relationships and Related Transactions — What transactions involved directors or other related parties?’’below. The Board also examined the existence or absence of any transactions or relationships between directors or their affiliates and members of Libbey’s senior management or their affiliates. As provided in the Guidelines, the purpose of this review was to determine whether there is any relationship that is inconsistent with a determination that a director is independent of Libbey or its management. Specifically, the Guidelines preclude a determination
by the Board that a director is independentof independence if the director does not meet the independence requirements
set forth in the NYSE MKT Company Guide, since our common stock currently is listed on the NYSE MKT exchange.
As a result of this review, the Board has affirmatively determined that Carlos V. Duno,
WilliamGinger M. Jones, Theo Killion, Eileen A.
Foley, Peter C. McC. Howell, Theo Killion,Mallesch, Deborah G. Miller, Carol B. Moerdyk,
Steve Nave and John C. Orr are independent of Libbey and its management under the standards set forth in the Corporate Governance Guidelines.
In addition, the Board has affirmatively determined that, notwithstanding that Stewart & Stewart provides Libbey with legal services relating to international trade matters, Terence P. Stewart is independent of Libbey and its management, as the fees paid toStewart & Stewart in each of the last three (3) years were less than 5% of the consolidated gross revenues of Stewart & Stewart. Each of Ms. Streeter and Mr. Reynolds (who retired from Libbey on November 30, 2013)Foley is considered to be an inside director because of theirhis employment as senior executivesLibbey's CEO.
Compensation Committee Independence. In determining whether the members of Libbey. For more informationour Compensation Committee are independent, within the meaning established by the NYSE MKT Company Guide, our Board takes into account all factors specifically relevant to a determination of whether any Compensation Committee member has a relationship to us that is material to his or her ability to be independent in connection with respecthis or her duties as a Compensation Committee member. The factors considered include, but are not limited to, the source of compensation paidof the member and whether the member is affiliated with us or one of our subsidiaries or affiliates. After taking into account all of these factors, our Board has determined that all of the members of our Compensation Committee are independent within the meaning established by the NYSE MKT Company Guide.
How often did our Board meet during fiscal 2016?
During 2016, the Board held five regularly scheduled meetings and three special meetings. Each Board member attended 75% or more of the aggregate number of Board meetings and at least 75% of the aggregate number of Board committee meetings that he or she was eligible to Mr. Stewart’s law firm for services provided to Libbey in 2013, see‘‘Corporate Governance — attend.
Certain Relationships and Related Transactions — What transactions involved directors or other related parties?
’’below.How often did our Board meet during fiscal 2013?
During 2013, the Board of Directors held eight meetings, five of which were regularly scheduled meetings and three of which were special meetings. During 2013, each member of the Board of Directors attended 75% or more of the aggregate number of meetings of the Board and at least 75% of the aggregate number of meetings of the committees of the Board that he or she was eligible to attend.
Certain Relationships and Related Transactions — What transactions involved directors or other related parties?
A substantial majority of our directors is independent, as defined in the NYSE MKT Company Guide and our Corporate Governance Guidelines. Our Code of Business Ethics and Conduct, which we refer to as our Code of Ethics, generally prohibits related-party transactions involving directors.
However, our Board permits us to obtain legal services with respect to international trade matters from the law firm of Stewart and Stewart, of which Mr. Stewart is managing partner. During 2013, Stewart and Stewart received fees of approximately $22,394 from us for legal services in connection with various international trade matters. Our Board believes that Libbey’s General Counsel is best suited to select legal counsel for Libbey, so the Board does not require that we seek the approval of the Board, or of any committee of the Board, in connection with our engagement of Stewart & Stewart. Mr. Stewart and our General Counsel are responsible for monitoring whether the fees paid to Stewart & Stewart would render Mr. Stewart not independent, within the meaning of the NYSE MKT Company Guide and our Corporate Governance Guidelines, and for informing the Chairman of the Board and the Nominating and Governance Committee of any issues in that regard.Our Code of Ethics requires that all of Libbey’s directors, officers and other employees avoid conflicts of interest. Related- party transactions that are of the nature and magnitude that they must be disclosed pursuant tounder Item 404(b) of Regulation S-K would be considered transactions that could give rise to a conflict of interest, and therefore are covered by our Code of Ethics. Our
|
| |
| LIBBEY CORPORATE GOVERNANCE |
Code of Ethics requires that conflicts of interest be reported to our Legal Department, and that
theour General Counsel's written concurrence
of our General Counsel is required to waive any conflict of interest. In addition, our Code of Ethics requires that waivers of our Code of Ethics with respect to executive officers or directors may be granted only by the Board of Directors and only if the noncompliance with our Code of Ethics is or would be immaterial or if the Board of Directors otherwise determines that extraordinary circumstances exist and that the waiver is in
theour shareholders' best
interests of our shareholders.interests.
How do shareholders and other interested parties communicate with the Board?
Shareholders and other parties interested in communicating directly with the non-management directors as a group may do so by writing to Non-Management Directors, c/o Corporate Secretary, Libbey Inc., 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060. The Nominating and Governance Committee has approved a process for handling letters that we receive and that are addressed to the non-management members of the Board. Under that process, the Corporate Secretary is responsible for reviewing all such correspondence and regularly forwarding to the non-management members of the Board a summary of all correspondence and copies of all correspondence that, in the
opinion of the Corporate
Secretary,Secretary's opinion, deals with the function of the Board or
its committees
thereof or that the Corporate Secretary otherwise determines requires the
attention of the Board.Board's attention. Directors may, at any time, review a log of all correspondence that we receive and that
areis addressed to the Non-Management Directors or other
Board members
of the Board and request copies of
any suchthat correspondence. Concerns relating to accounting, internal controls or auditing matters are brought immediately to the attention of our internal auditors and Audit Committee and are handled
in accordance withaccording to procedures established by the Audit
Committee with respect to such matters.Committee.
Are Libbey’s Corporate Governance Guidelines, Code of Business Ethics and Conduct and Committee Charters available to shareholders?Our Corporate Governance Guidelines and Code of Business Ethics and Conduct (which applies to all of our employees, officers and directors), as well as the Charters for each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, are available on our website (www.libbey.com). They also are available in print, upon request, to any holder of our common stock. Requests should be directed to Corporate Secretary, Libbey Inc., 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060.
Are Libbey’s directors required to attend Libbey’s Annual Meeting of shareholders?
Our directors are not required to attend our Annual Meeting of shareholders, but we typically hold a Board meeting of the Board at the same location and on the same day as the Annual Meeting. As a result, weWe anticipate that a substantial majority of our directors will attend the Annual Meeting on May 17, 2017. In 2016, all of the Board members attended our Annual Meeting.
|
| |
| COMPENSATION-RELATED MATTERS | |
COMPENSATION-RELATED MATTERS
|
|
PROPOSAL 2 — ADVISORY SAY-ON-PAY VOTE |
We are providing shareholders the opportunity to cast an advisory vote with respect to the following resolution:
RESOLVED, that the shareholders of the Company approve, on an advisory and non-binding basis, the compensation of the Company’s named executives, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, pursuant to Item 402 of Regulation S-K.
|
| | | |
| Pay Objective | | Supportive Components of 2016 Pay Program |
| Support our business strategy; drive long-term performance and shareholder value | | • | Annual and long-term incentive plan performance measures focused on growing our business profitably, improving our ability to generate cash and improving our return on invested capital (ROIC) |
| • | Individual objectives heavily focused on developing and executing our strategy |
| | | |
| Align interests of executives and shareholders | | • | Performance-based annual and long-term incentive plans |
| • | 80% of our CEO's target pay opportunity is "at-risk" |
| • | Growth in our stock price is required in order to deliver any value to named executives under NQSOs and SARs |
| • | RSUs directly align interests of executives and shareholders |
| • | Stock ownership / retention guidelines designed to require our executives to own meaningful amounts of our stock |
| | | |
| Attract and retain highly talented and experienced senior executives who are key to implementing our strategy and achieving future success | | • | Market-driven total pay package |
| • | NQSO and RSU grants that vest ratably over four years, and special "new hire" awards to attract top talent |
| | | |
| Align executive pay program with corporate governance best practices | | • | Limited perquisites (tax return preparation and financial planning, executive health screening program, limited ground transportation and airline club membership) |
| • | Limited severance pay arrangements |
| • | No regular tax gross-ups except on relocation assistance |
| • | Stock ownership / retention guidelines designed to require executives to own meaningful amounts of our stock |
| • | Annual and long-term incentive awards and RSU, SAR and NQSO awards are subject to clawback |
We believe that our 2016 executive pay program linked directly to our corporate strategy. The quantitative performance metrics under both our 2016 SMIP and the performance cash component of our 2016 LTIP were directly tied to revenue growth, improving our ability to generate cash and improving our return on invested capital, all of which are critical to achieving our strategic objectives.
Additionally, the reduced payouts under our 2016 SMIP (limited to 69.5% of target before application of the modifier for individual performance) and the performance cash component of our 2014 LTIP (at only 74.4% of target) directly reflect our financial performance and the Committee's recognition that, even as we increased our return of cash to shareholders in 2016 through share repurchases and dividends, our total shareholder return for the year was (6.0%).
Because your vote is advisory, it will not be presentbinding on Libbey, our Compensation Committee or our Board of Directors. However, we value the opinions of our shareholders, and our Compensation Committee and Board will carefully consider the outcome of this vote.
The Board of Directors recommends a vote FOR
the approval, on an advisory basis, of the resolution.
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| COMPENSATION-RELATED MATTERS |
|
| | | | |
| PROPOSAL 3 — SAY-ON-PAY FREQUENCY |
This proposal gives shareholders the opportunity to cast an advisory vote on how often we should provide shareholders with future say-on-pay votes. Shareholders may vote to have the say-on-pay vote every year, every two years, or every three years.
We believe a say-on-pay vote should be held once each year, as has been conducted by the Company since 2011. This recommendation is based on a number of considerations, including the following:
In our last frequency advisory vote in 2011, "1 year" received a majority of the votes cast by shareholders.
An annual advisory say-on-pay vote allows our shareholders to provide us with their direct input on our executive compensation as disclosed in the proxy statement every year and will be most useful to the Board.
This advisory vote does not bind our Board of Directors. Regardless of the Board's recommendation and the outcome of the shareholder vote on this proposal, our Board may in the future decide to conduct advisory say-on-pay votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to our executive pay program. The Board will disclose its position on the frequency of future say-on-pay votes no later than August 31, 2017.
Shareholders may cast their advisory vote to conduct future advisory say-on-pay votes every "1 Year," "2 Years," or "3 Years," or "Abstain."
The Board of Directors recommends a vote FOR
holding future say-on-pay votes every "1 YEAR."
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| COMPENSATION-RELATED MATTERS | |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides information regarding our 2016 executive pay program, particularly as it relates to the following individuals, who are our named executives for 2016:
|
| | |
| Named Executive | | Title |
William A. Foley(1) | | Chairman and Chief Executive Officer |
Stephanie A. Streeter(2) | | former Chief Executive Officer |
Sherry Buck(3) | | former Vice President, Chief Financial Officer |
| Annunciata (Nucci) Cerioli | | Vice President, Chief Supply Chain Officer |
| Susan A. Kovach | | Vice President, General Counsel and Secretary |
| Salvador Miñarro Villalobos | | Vice President, General Manager, U.S. and Canada |
James H. White(4) | | former Vice President, Chief Operating Officer |
| |
| (1) | Effective January 12, 2016. |
| |
| (2) | Ms. Streeter's employment ended January 11, 2016. |
| |
| (3) | Ms. Buck's employment ended December 31, 2016. |
| |
| (4) | Mr. White's employment ended March 31, 2016. |
Executive Summary
Financial and Operational Highlights
Throughout 2016, we focused on transforming our business to become a faster-moving, market-focused company with improved margins and greater cash flow. We made substantial operational and organizational improvements to drive strategic priorities, address a number of legacy issues, and better position ourselves for sustainable, profitable growth:
In addition to strengthening our relationships with customers, we ramped up our new product development and conducted significant market research to ensure that we can bring to market the innovative products that our customers want;
| |
| • | In that connection, we launched two new foodservice stemware collections, Neo and Contour, using our state-of-the-art ClearFire® glass composition; |
We began development of our e-commerce strategy;
We started our furnace consolidation effort to optimize our capacity footprint and better align our capacity with demand; and
We streamlined our product portfolio and improved inventory control processes.
We believe that the changes made in 2016 and the additional improvements planned for 2017 will create the momentum necessary to strengthen our Company, create consistent growth and increase our future profitability.
However, we faced significant headwinds, including:
In the foodservice channel of distribution, declining restaurant traffic resulting from a continued move away from dining in restaurants to dining at home;
In the retail channel of distribution, an increasing shift away from brick-and-mortar stores toward e-commerce;
In all of our channels of distribution, a highly competitive pricing environment;
A two-week work stoppage at our Toledo manufacturing facility that negatively impacted gross profit by $4.2 million, net sales by an estimated $7 million to $9 million, and pre-tax income by approximately $7 million to $8 million. Additionally, the estimated lost sales negatively impacted adjusted EBITDA (calculated as shown in Appendices A and B) by approximately $3 million to $4 million;
Significant volatility in foreign currency exchange rates, in particular with respect to the Mexican peso and the euro; and
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| COMPENSATION-RELATED MATTERS |
Prior-year (2015) results that benefited from non-repeating items such as the release in the fourth quarter of 2015 of our U.S. deferred tax valuation allowance, which favorably impacted 2015 net income by approximately $43.8 million.
Faced with those challenges, we delivered the following financial results:
Although 2016 net sales were $793.4 million, a decrease of 3.5% year-over-year (or a decrease of 1.1% excluding the impact of currency), we achieved an increase in net sales in the foodservice channel. Despite ongoing decline in restaurant traffic trends, our U.S. and Canada foodservice sales grew 2.3%, which we believe indicates that Libbey is continuing to win market share.
Net income was $10.1 million in 2016, compared to $66.3 million in 2015.
| |
| • | Our Adjusted EBITDA (calculated as shown on Appendices A and B) for 2016 was $109.8 million, compared to $116.1 million in 2015. |
Our stock price decreased from $21.32 on December 31, 2015 to $19.46 on December 31, 2016, reflecting annual total shareholder return (TSR) of (6)%, as shown in the chart on page (ii).
In addition, we returned $12.1 million to our shareholders through share repurchases and dividends, and we reduced our trade working capital (defined as as net inventory plus net accounts receivable less accounts payable) by $17.3 million compared to the prior year. Trade working capital is calculated as shown in Appendix A. Executive Pay Highlights
At our 2016 Annual Meeting of shareholders, our say-on-pay proposal garnered the support of over 98% of the shares voted. Our Compensation Committee interpreted the results of the vote as an affirmation of our executive pay program and, as a result, the Committee generally retained the same structure for our 2016 executive pay program.
Notable actions taken by the Committee regarding our named executives' pay for 2016 include:
When Mr. Foley was hired as CEO in January, the Committee approved an initial base salary of $825,000, a target SMIP opportunity of 100% and a target LTIP opportunity of 300%, all of which are consistent with the compensation package that had been provided to Ms. Streeter. Because Mr. Foley was retired at the time of his appointment as CEO and intends to retire once again when his employment with Libbey ends (regardless of when or how it ends), the Committee chose not to give Mr. Foley an employment agreement or change in control agreement.
In February, the Committee approved the designs for our 2016 SMIP and the performance cash component of our 2016 LTIP. The 2016 SMIP design uses two performance measures: revenue growth (net sales) and adjusted cash earnings. Like the 2015 LTIP, the performance cash component of the 2016 LTIP is based on a single performance metric: return on invested capital (ROIC). See Appendices A and B for calculations of each of these performance measures.
Also in February, the Committee awarded RSUs and NQSOs with ratable, four-year vesting.
The Committee approved base salary increases, effective April 1, 2016, equal to 2.0% for each of the named executives other than Ms. Streeter and Mr. White (who were no longer employed by the Company at that date) and Mr. Foley.
Effective June 1, 2016, the Committee approved an additional increase in Ms. Cerioli's base salary from $408,002 to $440,004.
The below-target payouts under our incentive plans are a direct result of our below-target performance and the Committee's recognition of the fact that, in spite of our increased return of cash to shareholders through share repurchases and increased dividends in 2016, our total shareholder return for the year was (6.0%):
| |
| • | The Committee believed it appropriate to limit payouts under our SMIP to no more than 69.5% of target before application of any modifier for individual performance. After application of the modifier for individual performance, no named executive received a payout under the SMIP greater than 69.5%. Adjusted cash earnings is calculated as shown in Appendix B. |
| |
| • | Because our adjusted EBITDA margin and net debt to adjusted EBITDA ratio for the 2014-2016 performance cycle were below target, payouts under our 2014 LTIP were only 74.4% of target. Adjusted EBITDA and net debt are calculated as shown in Appendix A. |
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| COMPENSATION-RELATED MATTERS | |
Key Compensation Practices
For a summary of our key executive compensation practices, including practices we use to drive performance and practices we do not use because we do not believe they would serve our shareholders' long-term interests, see page (v).
Executive Compensation Philosophy
Our executive compensation programs are designed to attract, develop and retain global business leaders who can drive financial and strategic objectives and are intended to foster a pay-for-performance culture and maximize long-term shareholder value.
Our Compensation Committee follows these guiding principles when designing our compensation programs:
Competitiveness- Overall, the mix and levels of compensation should be reasonably comparable to appropriate peer companies so that the Company can continue to attract, retain and motivate high performing executives in an environment where companies are increasingly competing for high-caliber talent. Recognizing that Libbey's size, manufacturing asset intensity and multi-channel characteristics make identifying appropriate peer companies especially challenging, the general guideline is to target compensation at the median; however, individual positions may have target compensation mix and/or levels above or below the median depending on an evaluation of relevant factors, including experience, performance, time in position, and what is needed to attract the best talent for key positions, particularly when the Company recruits from much larger companies.
Pay for Performance- Major components of compensation should be tied to the Company's overall performance. Base salary and annual incentive compensation also should be tied to the performance of the individual executive and his or her specific business unit or function.
Values- While the Company’s pay for performance philosophy should reward the achievement of financial and strategic objectives, the manner in which results are achieved is also important in assessing base salary adjustments and annual performance bonus payments. Therefore, while not always directly quantifiable, the manner in which the executive achieves results through collaboration and leadership - in keeping with the Company’s set of core values, notably teamwork, performance, continuous improvement, respect, development, and customer focus - are key considerations in the individual performance review process.
Judgment- In assessing the executive’s contributions to the Company’s performance, the Committee looks to results-oriented performance measures, but also considers the long-term impact of an executive’s decisions. The CEO and Committee use their judgment and experience to evaluate whether an executive’s actions were aligned with the Company’s values and cultural elements.
Accountability for Short- and Long-Term Performance- Annual and long-term incentives should reward an appropriate balance of short- and long-term financial and strategic business results, with an emphasis on managing the business for the long term. Such incentives should have a clear, direct and balanced link to the Company’s financial and strategic objectives.
Alignment to Shareholders’ Interests- Long-term incentives should align the interests of individual executives with the long-term interests of the Company’s shareholders.
Simplicity- The Company strives to the extent practicable to make its compensation programs straightforward, simple to understand, and easy to administer and evaluate for competitiveness and appropriateness.
Reasonableness- Indirect executive compensation programs are designed to be heldreasonable and appropriate, with executive perquisites applied conservatively but judiciously.
In applying these guiding principles, the Committee seeks to ensure that the Company’s executive compensation programs attract, retain and motivate highly talented executives, support achieving the Company’s financial and strategic objectives, and align with shareholder interests generally.
In what forms did Libbey deliver pay to its executives in 2016, and what purposes do the various forms of pay serve?
Generally the structure of our 2016 executive pay program remained the same as our 2015 executive pay program in that the components of pay, and the weight accorded each component, remained the same.
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Core Compensation Elements: Balanced Program with Significant Pay At Risk
The core elements of compensation for which our executives were eligible in 2016 were base salary, an annual cash incentive award under our SMIP, and long-term cash incentive and equity awards under our LTIP. For 2016, the pay opportunities of our named executives were designed to provide a balance of stable and competitive pay in the form of base salary, welfare and retirement benefits and perquisites; equity-based compensation (NQSOs and RSUs) that aligns our executives’ interests with those of shareholders generally and also serves as a retention tool; and equity-based compensation and annual and long-term incentive awards that are designed to motivate our executives to execute our strategy, thereby driving our financial and operational performance. The charts below show the mix of these pay elements and reflect the substantial portions of our named executives’ target pay opportunities that are at risk.
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| Foley Pay Opportunity at Target | | Other Named Executives' Pay Opportunity at Target(1) |
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| (1) | Excludes Ms. Streeter, our former CEO, whose employment ended January 11, 2016. |
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| Type of Pay | | Element | | Key Characteristics | | Objectives |
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| Base salary | | Base salary | | Fixed component; reviewed annually | | Talent attraction and retention |
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| Incentive-Based Pay | | Annual cash incentive award under our 2016 SMIP | | At-risk variable pay opportunity for short-term performance; no guaranteed minimum payout; maximum payout equal to 225% of target | | Talent attraction and retention; motivation; alignment with key business and financial objectives and strategies; alignment with shareholder interests |
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| | Long-term performance cash incentive awards under our 2016 LTIP | | Formula-driven, at-risk cash award that comprises 40% of LTIP opportunity; no guaranteed minimum payout; maximum payout equal to 200% of target | | Talent attraction and retention; motivation; alignment with key business and financial objectives and strategies; alignment with shareholder interests |
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| Time-Based Pay | | NQSOs granted under our 2016 LTIP | | Comprise 20% of LTIP opportunity; exercise price equal to closing stock price on grant date; generally awarded annually; vest ratably over four years beginning on a date not earlier than the first anniversary of the date the award is approved; expire ten years from grant date | | Talent attraction and retention; motivation; alignment with shareholder interests |
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| | RSUs granted under our 2016 LTIP | | Comprise 40% of LTIP opportunity; vest ratably over four years beginning on a date not earlier than the first anniversary of the date the award is approved; no dividends or voting rights with respect to unvested RSUs | | Talent attraction and retention; motivation; alignment with shareholder interests |
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Other Compensation Elements
In addition to the core elements described above, our named executives were also eligible for limited perquisites, welfare and retirement benefits, and separation benefits, all of which support our objective to attract and retain talented executives.
Perquisites: Direct payment or reimbursement of personal financial planning and tax return preparation fees; annual executive physical examination and related services; ground transportation for trips between Toledo, Ohio, and the Detroit, Wayne County Metropolitan airport for the executive when traveling for business purposes and the executive's spouse when traveling together; membership in one airline club of the executive's choice; for executives relocating at Libbey's request, moving and related expenses associated with the move (may also include loss-on-sale protection when necessary to attract talent); and, for Mr. Foley, a housing allowance for housing in the Toledo, Ohio, area since his primary residence is in the Cleveland, Ohio, metropolitan area.
Welfare and retirement benefits: Medical, dental and life insurance benefits for U.S. executives on the same basis as for all U.S. salaried employees; matching contributions to our 401(k) savings plan on the same basis as for all U.S. salaried employees; and, for Ms. Kovach only, retirement benefits under our Salary Plan (a qualified retirement plan for all U.S. salaried employees hired before January 1, 2006) and our Supplemental Retirement Benefit Plan ("SERP") (an excess, non-qualified plan designed to promote substantially identical retirement benefits as the Salary Plan to the extent the Salary Plan cannot provide those benefits due to IRS limitations; no enhanced credit has ever been provided). Company contribution credits under the Salary Plan and the SERP were discontinued at the end of 2012.
Limited income protection: Separation benefits under employment agreements, change in control agreements or our executive severance policy; payable only if employment is terminated under specified circumstances.
How does Libbey determine the forms and amounts of executive pay?
Participants and Tools
The Compensation Committee, consisting entirely of independent directors, is responsible for overseeing the design, development and implementation of our executive pay program. Each year, the Compensation Committee evaluates Libbey's executive compensation program to determine what, if any, changes are appropriate. In making these determinations, the Committee may consult with its independent compensation consultant, management and the Board, as described below; however, the Compensation Committee uses its own judgment in making final decisions regarding the compensation paid to our executives.
The Compensation Committee consults with its independent executive compensation consultant when determined to be appropriate by the Compensation Committee. In 2016, the Compensation Committee retained Exequity, LLP to serve as the Committee’s independent compensation consultant. A representative of Exequity attended the February 2016 and February 2017 meetings at which the Compensation Committee made decisions regarding our executive pay program for 2016 and also advised the Committee in connection with other pay decisions made during the year. All expenses that we incurred in 2016 for services provided by Exequity were attributable to services provided by Exequity to the Compensation Committee in connection with its executive pay decisions.
In compliance with the NYSE MKT Company Guide's disclosure requirements regarding compensation consultant independence, Exequity provided the Compensation Committee with a letter addressing each of six independence factors. Their responses affirm the independence of Exequity and the partners, consultants, and employees who service the Compensation Committee on executive compensation matters.
Our CEO, our Vice President, Human Resources and our Vice President, General Counsel and Secretary attend meetings of, and provide information to, the Compensation Committee and its consultant to assist them in their pay determinations. In addition, management may request that the Compensation Committee convene a meeting, and management may communicate with the Compensation Committee’s consultant to provide the consultant with information or understand the views of, or request input from, the consultant as to pay proposals being submitted by management to the Committee. However, the Compensation Committee meets in executive session, without any member of management present, to discuss and make its final decisions with respect to our executive compensation program.
Our non-CEO executives play no direct role in determining their own pay, except to the extent they assess their own performance against their individual performance objectives as part of our performance appraisal process and to the extent
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that the Vice President, Human Resources, the Vice President, Chief Financial Officer and the Vice President, General Counsel and Secretary provide information to the Compensation Committee with respect to pay programs affecting the entire executive leadership team.
The Compensation Committee sets the performance goals for our SMIP and LTIP based upon input from our CEO, including suggested individual performance objectives and metrics under the SMIP and the performance cash component of the LTIP. In setting our corporate performance objectives and measures, the Committee seeks input from its independent consultant. The Committee also seeks input from our Board in setting our CEO’s individual performance objectives and metrics.
Internal Pay Equity and Wealth Accumulation. In determining awards for current and future performance periods, the Compensation Committee considers internal pay equity within the senior leadership team, but does not consider the impact of, or wealth accumulated as a result of, equity awards made during prior years, since those awards represent pay for services rendered during prior-year periods.
Tally Sheets. In connection with the preparation of our proxy statement each year, the Committee reviews ‘‘tally sheets’’ that summarize, for each executive officer, the compensation paid and equity grants awarded during the prior year, as well as the amounts that would have been payable to each executive officer if the executive officer’s employment had been terminated under a variety of scenarios as of December 31 of the prior year. The Committee uses these ‘‘tally sheets,’’ which are prepared by management and provide substantially the same information as is provided in the tables in this proxy statement, primarily to ensure that our executives’ estimated pay is consistent with the Committee’s intent in adopting the program and for reviewing internal pay equity within the senior leadership team.
Benchmarking and Peer Groups. The Compensation Committee did not rely on peer group benchmarking in setting 2016 compensation. The Compensation Committee engages its independent consultant to conduct a full benchmarking study of the Company's executive compensation and that of its peers approximately every other year. As disclosed in the proxy statement filed in connection with our 2016 Annual Meeting, Exequity conducted a full benchmarking study in the fall of 2014, which the Compensation Committee considered in setting our executives' pay for 2015.
Say-on-Pay Results. At our 2016 Annual Meeting of shareholders, our say-on-pay proposal garnered the support of over 98% of the shares voted. Our Compensation Committee interpreted these results as an affirmation of our executive pay program and, as a result, the Committee generally retained the same structure for our 2016 executive pay program.
Overview of Process for Setting 2016 Executive Pay
Leadership Transition. In connection with Ms. Streeter's termination of employment on January 11, 2016, the Company entered into a Mutual Separation Agreement and Release providing for separation payments and benefits consistent with her employment agreement. These separation payments and benefits are described in detail below under "Potential Payments upon Termination or Change in Control." In connection with hiring Mr. Foley as CEO (in addition to his existing role as Chairman), effective January 12, 2016, the Compensation Committee approved an initial base salary of $825,000, a target SMIP opportunity of 100% and a target LTIP opportunity of 300%, all of which are equivalent to the compensation package that had been provided to Ms. Streeter. In setting Mr. Foley's compensation, the Committee considered the significant responsibilities of the CEO position, Mr. Foley's deep knowledge of our business and over 30 years of experience in the glass tableware and consumer products markets, the critical importance of the CEO in achieving the Company's strategic objectives, market data, and the relationship of his compensation to that of our other executive officers.
Because Mr. Foley was retired at the time of his appointment as CEO and intends to retire once again when his employment with Libbey ends (regardless of when or how it ends), the Committee chose not to give Mr. Foley an employment agreement or change in control agreement. Instead, the Committee chose to provide Mr. Foley with modest separation benefits upon his eventual separation from service with the Company. Additional information regarding Mr. Foley's separation benefits is included below under"Potential Payments upon Termination or Change in Control." Base Salary Adjustments. The Compensation Committee reviews base salaries at least annually. With respect to base salary increases that were implemented in April 2016, the Compensation Committee made its decisions after receiving input from Mr. Foley and Exequity. Taking into account the Company's performance in 2015, Mr. Foley recommended, and the Compensation Committee approved, minimal salary increases of 2.0%, except that Mr. Foley's base salary remained unchanged in light of his limited time in the CEO role. Subsequently, the Committee approved an additional 7.8% increase
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to Ms. Cerioli's base salary effective June 1, 2016 because of her significant contributions to the Company's global supply chain initiatives during the first five months of the year.
Approval of 2016 SMIP and 2016 LTIP Designs. The Compensation Committee approved the Company's 2016 SMIP and the performance component of the Company's 2016 LTIP in February 2016. The material terms of the performance goals under these plans were approved by shareholders at the 2010 Annual Meeting of shareholders and reapproved by shareholders at the 2015 Annual Meeting of shareholders. The SMIP and the performance cash component of the 2016 LTIP are intended to serve as "umbrella" plans and potential funding vehicles for cash bonuses to ensure full tax deductibility of cash bonuses paid to officers who are subject to Internal Revenue Code Section 162(m). Performance under the approved formulas determines the amounts of the bonus pools under the 2016 SMIP and performance cash component of the 2016 LTIP, respectively, and the allocations of the bonus pools set by the Compensation Committee determine the maximum amount of awards to individual participants under the plans. The bonus pool for the 2016 SMIP was established by the Committee at 4% of actual 2016 adjusted EBITDA (excluding special charges, after adjustments for any acquisitions or dispositions, and assuming budgeted exchange rates). The bonus pool under the performance cash component of the 2016 LTIP was established by the Committee at 1% of actual, cumulative adjusted EBITDA (excluding special charges, after adjustments for any acquisitions or dispositions, and assuming budgeted exchange rates) for the performance cycle. The umbrella plans merely set the maximum bonus payout that any named executive may receive under the relevant plans, and the actual bonus paid to each named executive was determined as described under "What pay did Libbey's executives receive for 2016?" below. Equity Grants under our LTIP. The Compensation Committee typically makes awards of RSUs and NQSOs to our senior leadership team under our long-term incentive compensation program each February. The Compensation Committee authorized these awards at its February 2016 meeting, which occurred before we announced financial results for the 2015 fiscal year. The number of RSUs actually awarded was a function of the average closing price of our common stock over a period of 20 consecutive trading days ending on the grant date, and the number of NQSOs granted was a function of the Black-Scholes value (calculated using the average closing price of Libbey Inc. common stock over a period of 20 consecutive trading days ending on the grant date, and capping volatility at 50%) of the NQSOs on the grant date. In each case, the grant date was the first business day after we released our fiscal 2015 financial results.
Awards under our 2016 SMIP and 2014 LTIP. In February 2017, the Compensation Committee, with input from Mr. Foley and Exequity, reviewed and certified our 2016 performance and made the awards under our 2016 SMIP and the performance cash component of our 2014 LTIP (for the 2014-2016 performance cycle). Details regarding the decisions made and payouts awarded are described below under "What pay did Libbey's executives receive for 2016?" Our Equity Grant Practices
As explained above, the Compensation Committee typically makes awards of RSUs and NQSOs in February to our senior leadership team under our LTIP. The Compensation Committee also occasionally makes "sign-on" awards of RSUs and NQSOs to newly hired executives and other key employees. Typically, the number of RSUs and/or NQSOs awarded are determined as described above under "Equity Grants under our LTIP." Occasionally, the sign-on awards include the award of a fixed number of RSUs or NQSOs intended to make the executive whole for equity awards that the executive forfeits when leaving his or her prior employment. None of our named executives received sign-on awards in 2016.
The Compensation Committee has delegated authority to the CEO to make limited grants of NQSOs, RSUs and SARs to senior managers and other employees who are not executive officers or direct reports to the CEO. The CEO’s authority to make these grants was subject to the following limitations and conditions:
For 2016, the maximum number of shares underlying RSUs, NQSOs and/or SARs that the CEO was authorized to award to all eligible individuals was 150,000;
The exercise price of any NQSOs and/or SARs awarded could not be less than the closing price of the Company's common stock on the grant date;
The RSUs, NQSOs and/or SARs awarded could vest no more rapidly than ratably on the first, second and third anniversaries of the grant date;
The CEO was authorized to make awards only outside "quiet periods";
The CEO was required to report at least quarterly to the Compensation Committee regarding the nature and scope of awards made pursuant to this authority; and
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The agreements pursuant to which RSUs, NQSOs, and/or SARs were granted must be in substantially the same form approved by the Committee from time to time.
Potential Impact of Misconduct on Compensation.
Our SMIP and long-term incentive plans are authorized under our 2006 Omnibus Plan. The 2006 Omnibus Plan contains a ‘‘clawback’’ provision that obligates the recipient of a cash or equity award to reimburse us if:
we are required, as a result of misconduct, to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws; and
the award recipient knowingly engaged, or was grossly negligent in engaging, in the misconduct, or knowingly failed, or was grossly negligent in failing, to prevent the misconduct or is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002.
The amount to be reimbursed is the amount of any payment in settlement of an award made under the 2006 Omnibus Plan and earned or accrued during the 12-month period following the first public issuance or filing with the SEC of the financial document embodying the financial reporting requirement in question.
Share Ownership / Retention Guidelines.
What pay did Libbey's executives receive for 2016?
Base Salaries
When the Board appointed Mr. Foley to replace Ms. Streeter in January 2016, the Compensation Committee set his pay package so that it equaled the package then being provided to Ms. Streeter. Accordingly, Mr. Foley's base salary was set at $825,000. At Mr. Foley's request, his base salary will not be increased in 2017.
In February 2016, the Compensation Committee approved minimal base salary increases of 2.0% for each of the non-CEO named executives. For the executives other than Mr. White (who left the Company on March 31, 2016), the increases were effective April 1, 2016 and were as follows:
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| | | Annualized Salary Before Increase | | Annualized Salary After Increase |
| Named Executive | | ($) | | ($) |
| S. Buck | | 475,000 | | 484,500 |
| A. Cerioli | | 400,002 | | 408,002 |
| S. Kovach | | 336,520 | | 343,250 |
| S. Miñarro | | 350,040 | | 357,041 |
In May 13, 2014. 2016, the Committee approved an additional increase to Ms. Cerioli's base salary in recognition of her contributions to the Company's global supply chain initiatives during the first five months of the year. This additional increase, effective June 1, 2016, set Ms. Cerioli's base annual salary at $440,004.
Annual Cash Incentive Award under our SMIP
The Compensation Committee approved our 2016 SMIP design at its February 2016 meeting. Under our 2016 SMIP, each named executive had an opportunity to earn a payout based on the Company's financial performance with respect to two equally weighted metrics: revenue growth (net sales) and adjusted cash earnings (calculated as shown in Appendix B). By contrast, our 2015 SMIP design consisted of three metrics: revenue growth (net sales) (weighted at 33%), adjusted EBIT (weighted at 34%), and trade working capital (defined as net inventory plus net accounts receivable less accounts payable) as a percentage of net sales (weighted at 33%). The Committee believed that replacing the adjusted EBIT and trade working capital productivity measures with the adjusted cash earnings measure, in combination with the revenue growth measure, encourages profitable revenue growth and prudent management of inventory, accounts payable and accounts receivable - all potential consumers of cash if not appropriately managed.
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The targets and payout scales for the Company performance metrics were:
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| Revenue Growth (Net Sales) | | Adjusted Cash Earnings |
Full Year Net Sales (dollars in thousands) | Percent of Targeted Net Sales | Performance Level | Payout Percentage | | Full Year Cash Earnings (dollars in thousands) | Percent of Targeted Cash Earnings | Performance Level | Payout Percentage |
| $880,000 | 104.9% | Maximum | 200% | | $131,076 | 110.0% | Maximum | 200% |
| $839,138 | 100.0% | Target | 100% | | $119,160 | 100.0% | Target | 100% |
| $800,000 | 95.3% | Threshold | 40% | | $95,328 | 80.0% | Threshold | 50% |
| < $800,000 | < 95.3% | Below Threshold | 0% | | < $95,328 | < 80.0% | Below Threshold | 0% |
Because the two metrics were weighted equally, the payout percentages for each metric were averaged to determine the total payout score.
While the 2016 net sales target of $839.1 million was lower than the net sales target under our 2015 SMIP, the Committee believed that the 2016 net sales target was a sufficiently challenging goal that aligned with the Company's annual operating plan and strategic initiatives. When this target was established in February 2016, the Company expected sales growth in 2016 to be limited to approximately 1% in light of the slowing global economy and increasing competitive dynamics - trends that began in 2015 and that were expected to continue in 2016. Additionally, the Company viewed 2016 as a year to invest in market research, new product development and e-commerce strategic planning, all of which would position us for sustainable revenue growth in later years. For these reasons, the Committee set a net sales target representing 2% growth over actual revenue for the 2015 fiscal year. The Committee sought to further ensure the rigor of the revenue growth metric by setting a high payout threshold of 95.3% of target and limiting the amount of a threshold payout to 40%. By comparison, the 2015 SMIP design required achievement of only 94.7% of target to receive a threshold payout, and payout for achieving threshold performance was 50%.
Each of our named executives had a target opportunity under the 2016 SMIP equal to a percentage of his or her actual base salary earned in 2016. The named executives’ 2016 SMIP targets were established based on a budget approved by the Board of Directors.
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| Named Executive | | Target Award as a Percentage of Full-Year Base Salary |
| W. Foley | | 100% |
| S. Streeter | | 100% |
| S. Buck | | 70% |
| A. Cerioli | | 60% |
| S. Kovach | | 50% |
| S. Miñarro | | 60% |
| J. White | | 75% |
On February 6, 2017, the Committee met and reviewed our performance and the performance of our senior leadership team during 2016. The Committee reviewed net sales and adjusted cash earnings for 2016 relative to our targeted net sales and adjusted cash earnings, respectively, for the year. We use constant currency at budgeted exchange rates when calculating our performance under each of these performance measures so that our executives will neither benefit from, nor be harmed by, currency fluctuations, which are not a reflection of the Company's performance.
Under the 2016 SMIP, the Committee may adjust actual results to exclude the impact of extraordinary and unusual items. Examples of special items for which adjustments may be made include merger and acquisition costs, severance payable to executives under our Executive Severance Compensation Policy, hedge ineffectiveness caused by unanticipated changes in regulation, and other similar items that are either not foreseen or are foreseen but are not included in the Company's annual operating plan because the occurrence of the event is substantially uncertain at the time the annual operating plan is submitted to the Board. The Committee believes such adjustments are appropriate so that our executives' pay will not be impacted, positively or negatively, by special items that are not a reflection of our core operating performance. As explained in further detail below, and as shown in the calculations set forth on attached Appendix B, the Committee adjusted net sales and cash earnings to reflect certain special items. While the adjustments to net sales resulted in a net positive impact to the
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payout score for that metric, the adjustments to cash earnings resulted in a net negative impact to the payout score for that metric.
The Committee acknowledged that, in connection with collective bargaining agreement negotiations relating to our Toledo, Ohio manufacturing plant, a work stoppage had adversely impacted 2017 net sales by an estimated $7 million to $9 million and 2017 cash earnings by approximately $1.5 million. And the Committee believed that management should not be penalized for refusing to concede to labor demands that were not in the long-term best interests of the Company. Accordingly, the Committee adjusted each of net sales and cash earnings to neutralize the impact of the work stoppage. Net sales and cash earnings are calculated as set forth on attached Appendix B. In 2013,addition to adjusting for the work stoppage, the Committee believed that it was appropriate to adjust cash earnings (calculated as set forth on attached Appendix B) by other items that did not reflect our core operating performance and were not anticipated or budgeted. As a result, the Committee further adjusted cash earnings (calculated as set forth on attached Appendix B) by the following items: |
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| Item | | Amount of Adjustment to Company-Wide Cash Earnings |
| Expense in connection with executive terminations | | $ | 3,554,000 |
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| Income related to natural gas contract hedge ineffectiveness | | (1,860,000 | ) |
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| 2010 Mexican tax assessment | | 1,085,000 |
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| Total | | $ | 2,779,000 |
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After accounting for these adjustments, revenue growth was $806.9 million or 96.2% of targeted revenue growth for the year and adjusted cash earnings was $118.7 million or 99.6% of targeted adjusted cash earnings for the year. Based on the payout scales above, the payout scores for the revenue growth and adjusted cash earnings metrics (before application of any modifier for individual performance) were:
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| Preliminary Financial Performance Payout Score as % of Target |
| Revenue Growth | | Adjusted Cash Earnings | | Total |
| 47.5 | | 99.0 | | 73.25 |
In recognition of the decline in total shareholder return over the 2016 fiscal year, however, the Committee exercised its discretion to limit the payout percentage under the revenue growth metric to threshold (40.0%). This limitation applied to all executives (except for Ms. Streeter, whose payout had been calculated at the time of her termination in January 2016) and was based solely on the Company's decline in total shareholder return during 2016, as opposed to any individual executive's performance. The resulting payout scores (before application of any modifier for individual performance) were:
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| Final Financial Performance Payout Score as % of Target |
| Revenue Growth | | Adjusted Cash Earnings | | Total |
| 40.0 | | 99.0 | | 69.5 |
Pursuant to the plan design for the 2016 SMIP, an executive's individual award may also be adjusted (up or down) by as much as 25%, depending on his or her individual performance, including with respect to individual objectives approved by the Compensation Committee early in 2016. As a result, an executive who demonstrated exceptional performance in developing and/or implementing a process or tool that may not have impacted the current year’s financial results but is likely to favorably impact future success may be awarded a payout greater than the payout that is based strictly on financial performance measures. Alternatively, an executive whose individual performance did not meet expectations may be awarded a payout less than the payout that is based strictly on financial performance measures. Applying the individual performance modifier also ensured that the executive’s compensation was based not only on the goals achieved, but also on the extent to which the executive demonstrated effective organizational leadership skills in executing our strategy.
Pursuant to the separation and release agreement between Ms. Streeter and the Company, her 2016 SMIP payout amount was calculated at the time of her termination assuming target company performance, with no modifier for individual performance. The Committee received input from Mr. Foley regarding the other named executives' individual performance
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review scores, including an evaluation of the extent to which they achieved their individual objectives. After meeting in executive session with Exequity, the Committee determined that: (a) in light of the Company's performance, the payout amounts earned by each named executive should not be increased, despite any individual extraordinary performance; and (b) based on Ms. Cerioli's individual performance during the second half of 2016, Ms. Cerioli's payout should be reduced by 20%. Accordingly, the named executives received the following payouts under the 2016 SMIP:
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| Named Executive | | SMIP 2016 Payout ($) |
| W. Foley | | 556,000 |
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| S. Streeter | | 24,057 |
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| S. Buck | | 234,554 |
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| A. Cerioli | | 141,670 |
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| S. Kovach | | 118,695 |
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| S. Miñarro | | 148,156 |
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| J. White | | 68,414 |
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Long-Term Performance-Based Compensation
In 2016, each named executive’s long-term incentive opportunity included a cash-based performance component and an award of NQSOs and RSUs. The long-term incentive opportunity is intended to have an aggregate economic value equal to a target percentage of the executive’s base salary. The table below sets forth the target percentage for each of the named executives in 2016.
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| Named Executive | | 2016 Target Long-Term Award as a Percentage of Annualized Base Salary (%) | | 2016 LTIP Performance Cash Target as Percentage of Annualized Base Salary (%) |
| W. Foley | | 300 | | 120 |
| S. Streeter | | 300 | | 120 |
| S. Buck | | 140 | | 56 |
| A. Cerioli | | 120 | | 48 |
| S. Kovach | | 95 | | 38 |
| S. Miñarro | | 120 | | 48 |
| J. White | | 150 | | 60 |
The cash-based performance opportunity provided to our named executives for performance during 2016 consisted of the following components:
A performance component under our 2014 LTIP (for the 2014-2016 performance cycle) that provides for cash awards based on our performance, over the three-year performance cycle, against the following equally weighted performance measures: (1) a profitability measure - namely, the extent to which we achieve our targeted adjusted EBITDA margin over the performance cycle; and (2) a financial leverage measure - namely, the extent to which we achieve our targeted net debt to adjusted EBITDA ratio over the performance cycle. The targeted adjusted EBITDA margin over the performance cycle was 15.3% and the targeted net debt to adjusted EBITDA ratio was 2.82.
A performance component under our 2015 LTIP (for the 2015-2017 performance cycle) and 2016 LTIP (for the 2016-2018 performance cycle) that provides for cash awards if and to the extent we achieve our targeted return on invested capital (ROIC) for each of the three one-year performance periods included in the three-year performance cycle. Because of ROIC's relationship to total shareholder return, using ROIC as a performance measure emphasizes our philosophy that compensation should align with the long-term interests of our shareholders. The scale used to determine the payout score for each of the three one-year performance periods is reset for each performance period to correlate with targeted ROIC for that year. The amount of the final payout, if any, will be determined based on the average of the three discrete, single-year payout scores.
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| ◦ | For any performance cycle of which 2015 is a part, our 2015 ROIC target was 12.9%. We achieved ROIC of 10.9% in 2015, resulting in a payout score for the 2015 calendar year of 0%, as determined according to the following scale: |
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| | Basis Points Above or Below 2015 Targeted ROIC | | Payout Score (%) | |
| | +50 | | 200 | |
| | 0 | | 100 | |
| | -70 | | 50 | |
| | Less than -70 | | 0 | |
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| ◦ | For any performance cycle of which 2016 is a part, our 2016 ROIC target was 10.8%. In setting the target, the Committee considered the Company's prior year performance and alignment with the Company's annual operating plan and long-term strategic initiatives. The slowing global economy, decline in restaurant traffic, shift in retail sales toward e-commerce, and competitive pricing environment of 2015 were expected to continue in 2016. The realities of the business environment led the Company to shift its priorities from aggressive growth toward improving marketing and new product development capabilities and innovation, improving customer relationships, and simplifying the business - all of which would support future sustainable, profitable growth. The Committee believed that a 2016 ROIC target of 10.8% would prove sufficiently challenging to achieve. In February 2017, the Committee determined that we had achieved 2016 ROIC of 9.9%, resulting in a payout score for the 2016 calendar year of 55%, as determined according to the following scale: |
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| | Basis Points Above or Below 2016 Targeted ROIC | | Payout Score (%) | |
| | +100 | | 200 | |
| | 0 | | 100 | |
| | -150 | | 25 | |
| | Less than -150 | | 0 | |
Each of our adjusted EBITDA margin, net debt to adjusted EBITDA ratio and ROIC performance measures is calculated as set forth on Appendix A. For purposes of determining the extent to which the cash award is earned, adjusted EBITDA is calculated as described in Appendix A. Under the LTIP, the Committee may adjust actual results to exclude the impact of extraordinary and unusual items that are not indicative of our core operating performance and were not anticipated or budgeted. For purposes of the 2014 LTIP, the Committee approved the adjustment of 2016 EBITDA by the same special items included in adjusted EBITDA as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016: |
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| Item | | Amount of Adjustment to Company-Wide EBITDA |
| Product portfolio optimization | | $ | 5,693,000 |
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| Income related to natural gas contract hedge ineffectiveness | | (1,860,000 | ) |
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| Toledo Plant work stoppage | | 4,162,000 |
|
| | | |
| Executive terminations | | 4,460,000 |
|
| | | |
| Pension settlements | | 168,000 |
|
| | | |
| Total | | $ | 12,623,000 |
|
Additionally, the Committee adjusted 2016 net debt to neutralize the impact of our use of less cash for share repurchases than was budgeted. This adjustment resulted in a net negative impact to the payout score for the net debt to adjusted EBITDA ratio performance metric.
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| COMPENSATION-RELATED MATTERS | |
The Committee approved these adjustments so that the executives would neither benefit from, nor be harmed by, the impact of items that were not indicative of our core operating performance and were not anticipated or budgeted.
In February 2017, the Compensation Committee reviewed our performance for the three-year performance cycle ended December 31, 2016 and determined that we had achieved an adjusted EBITDA margin of 14.2% over the three-year performance cycle, or 92.2% of our targeted adjusted EBITDA margin of 15.3%, and a net debt to adjusted EBITDA ratio of 3.22 for the three-year performance cycle, or 87.2% of our targeted net debt to adjusted EBITDA ratio of 2.82. The Committee then applied the following scales, which the Committee approved in 2014, to determine the amount earned under the performance cash component of the 2014 LTIP:
|
| | | | | | |
| Adjusted EBITDA Margin | | Net Debt to Adjusted EBITDA Ratio |
Percent of Targeted Adjusted EBITDA Margin | Performance Level | Payout Percentage | | Percent of Targeted Net Debt to Adjusted EBITDA Ratio | Performance Level | Payout Percentage |
| 115% | Maximum | 200 | | 115% | Maximum | 200 |
| 100% | Target | 100 | | 100% | Target | 100 |
| 80% | Threshold | 50 | | 80% | Threshold | 50 |
| <80% | Below Threshold | 0 | | <80% | Below Threshold | 0 |
Because the performance measures were weighted equally, their payout percentages were averaged to determine the final payout score:
|
| | | | |
| Final Payout Score as % of Target |
| Adjusted EBITDA Margin | | Net Debt to Adjusted EBITDA Ratio | | Total |
| 80.6% | | 68.2% | | 74.4% |
Performance cash payouts under our LTIP are not subject to modifications based on individual performance. Payouts were prorated, however, for those executives who were not employed for the entire 2014-2016 performance period.
The final payout amounts received by the named executives under the performance cash component of the 2014 LTIP were:
|
| | | |
| Named Executive | | 2014 LTIP Cash Payout ($) |
W. Foley(1) | | 245,520 |
|
S. Streeter(2) | | 406,027 |
|
| S. Buck | | 151,657 |
|
A. Cerioli(1) | | 72,342 |
|
| S. Kovach | | 90,559 |
|
| S. Miñarro | | 92,950 |
|
J. White(1) | | 58,590 |
|
| |
| (1) | Prorated to reflect the portion of the performance cycle during which the named executive was employed. |
| |
| (2) | Ms. Streeter's payout amount was calculated at the time of her termination based on the most recent forecasts available. The payout amount was then prorated to reflect the portion of the performance cycle during which she was employed. This final payout amount was paid to her in March 2016. |
Stock Options and RSUs
In February 2016, the Compensation Committee awarded to participants in our 2016 LTIP (other than Ms. Streeter) NQSOs and RSUs having an economic value at the time of award equal to 20% and 40%, respectively, of their target long-term incentive opportunities. These NQSOs and RSUs vest ratably over four years beginning on February 17, 2017.
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| COMPENSATION-RELATED MATTERS |
What is the Compensation Committee’s policy regarding deductibility of compensation?
Pursuant to Section 162(m) of the Internal Revenue Code, publicly-held corporations are prohibited from deducting compensation paid to certain executive officers, as of the end of the fiscal year, in excess of $1.0 million, unless the compensation is ‘‘performance-based.’’ The Committee believes that preserving the tax deductibility is an important, but not the sole, objective when designing executive compensation programs. Accordingly, while our 2016 SMIP and the performance cash components of our 2014 LTIP, 2015 LTIP and 2016 LTIP (for the 2014-2016 performance cycle, the 2015-2017 performance cycle and the 2016-2018 performance cycle, respectively) are designed to qualify as “performance-based” compensation, other components of our 2016 executive pay program (base salary and RSUs) are not. Additionally, in certain circumstances the Committee may authorize compensation arrangements that are not tax deductible in whole or in part, but which promote other important objectives such as attracting and retaining key executive leaders who can drive financial and strategic objectives that maximize long-term shareholder value.
Does Libbey assess compensation-related risks?
On an annual basis, management conducts a risk assessment of our compensation policies, practices and plans to determine whether they encourage excessive risk-taking. In addition to reviewing this annual risk-assessment, the Compensation Committee also reviews and discusses, at least annually, the relationship between risk management policies and practices and compensation and evaluates compensation policies and practices that could mitigate any such risk. Examples of features of our compensation program that guard against excessive risk-taking include:
An appropriate mix of fixed and variable, short-term and long-term, and cash and equity compensation;
Compensation Committee discretion regarding individual executive awards;
Oversight by non-participants in the plans;
Long-term compensation awards and vesting periods that encourage a focus on sustained, long-term results;
Executive incentive awards are subject to forfeiture and clawback;
Prohibition against hedging, pledging and engaging in transactions involving derivatives of our stock;
Stock ownership / retention requirements for our executives; and
"Double-trigger" vesting of equity awards and non-equity incentives after a change in control.
The Compensation Committee has determined that our compensation policies, practices and plans do not encourage excessive and unnecessary risk-taking, and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company.
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| COMPENSATION-RELATED MATTERS | |
Potential Payments Upon Termination or Change in Control
Ms. Streeter
We had an employment agreement with Ms. Streeter, whose employment was terminated effective January 11, 2016. Ms. Streeter's termination of employment was treated as a termination without Cause(1) under her employment agreement, which provided for certain separation payments and benefits in the event of such a termination. In establishing those payments and benefits, the Compensation Committee intended to support the objectives of attracting and retaining a talented chief executive officer by providing benefits consistent with competitive market practice, compensating Ms. Streeter for service to us and bridging the gap between employment with us and her next job, and compensating Ms. Streeter in exchange for restrictive covenants that protect Libbey's future interests.
In connection with her termination, we entered into a Mutual Separation Agreement and Release with Ms. Streeter. The separation payments and benefits we provided to Ms. Streeter under that agreement are consistent with the separation payments and benefits provided for in her employment agreement, except with respect to the timing and calculation method of incentive award payments under the 2016 SMIP and the performance cash components of the 2014 LTIP, 2015 LTIP and 2016 LTIP. The employment agreement called for payment of the amounts actually earned, prorated to the date of termination, with payments to be made between January 1 and March 15 of the year following the end of each applicable performance cycle. In the interest of fully and quickly resolving all potential issues related to separation compensation, the Company and Ms. Streeter mutually agreed to estimate the amounts that would be earned based on the most recent forecasts available in January 2016, prorate those estimated amounts to the date of termination, and make the payments to Ms. Streeter in March 2016. Accordingly, Ms. Streeter received the following benefits in connection with her termination:
Accrued Benefits.
Cash severance equal to two times the sum of (a) her annual base salary in effect on the date of termination; and (b) her target 2016 SMIP opportunity, with such amount being payable in equal monthly installments over a period of 24 months.
Annual incentive award under our 2016 SMIP based on Ms. Streeter's base salary earnings for 2016 and forecasted Company performance as of the end of January 2016.
Performance-based cash compensation under our 2014 LTIP, 2015 LTIP and 2016 LTIP, based on forecasted Company performance as of the end of January 2016, and prorated to Ms. Streeter's termination date.
Accelerated vesting of all cash-settled retention RSUs and cash-settled retention SARs.
Accelerated vesting of all other unvested equity awards that were scheduled to vest on or before June 30, 2016.
Executive-level outplacement services selected by Ms. Streeter, with the aggregate cost to Libbey not to exceed $75,000.
Continuation of medical, prescription drug, dental and life insurance benefits for a period of 18 months, with Ms. Streeter continuing to pay employee contributions.
Ms. Streeter's obligations under the Mutual Separation Agreement and Release include:
Our receipt of a release of claims against Libbey;
Confidentiality obligations;
Obligation to assign intellectual property rights;
Obligation to assist with litigation as to which Ms. Streeter has knowledge; and
24-month obligation not to: (a) interfere with customer accounts; (b) compete; (c) divert business opportunities; (d) solicit our employees; nor (e) disparage us.
| |
| (1) | Cause means (a) willful and continuous failure to substantially perform duties; (b) willful and continuous failure to substantially follow and comply with directives of the Board; (c) commission of an act of fraud or dishonesty that results in a material adverse effect on us or commission of an act in material violation of our Code of Business Ethics and Conduct; or (d) willful, illegal conduct or gross misconduct that is materially and demonstrably injurious to us. |
|
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| COMPENSATION-RELATED MATTERS |
Mr. Foley
Mr. Foley is employed at will. He is not covered by an employment agreement or change in control agreement, nor is he eligible to participate in our Executive Severance Pay Plan, our Salary Plan, or our SERP.
In early 2016, the Company entered into a letter agreement with Mr. Foley that provides for, among other things, separation benefits under certain circumstances. As with all other named executives, the award agreements relating to grants of RSUs, NQSOs and performance cash opportunities also provide for separation benefits in certain circumstances. There are no conditions to Libbey's obligations to provide separation benefits to Mr. Foley.
Because Mr. Foley was retired at the time of his appointment as CEO and intends to retire once again when his employment with Libbey ends (regardless of when or how it ends), the Compensation Committee chose to provide Mr. Foley with more modest separation benefits compared to those of our other named executives.
If Mr. Foley's employment terminates, other than a termination for Cause, Mr. Foley would be entitled to the following Basic Benefits:
Accrued Benefits; and
For the year in which termination occurs, a prorated award under our SMIP based on actual performance.
If the termination is due to Mr. Foley's death or permanent disability, Mr. Foley would be entitled to the Basic Benefits plus:
A prorated target award under the performance cash component of the LTIP for any performance cycle in effect on the date of death or permanent disability, paid as soon as administratively feasible; and
Immediate vesting of all NQSOs and RSUs.
If the termination is by Libbey without Cause, Mr. Foley would be entitled to the Basic Benefits plus:
As to performance-based cash compensation under our LTIP, payment of the amount actually earned for each performance cycle in effect on the date of termination, prorated to the termination date; provided, however, that the amounts will not be prorated if the termination is in connection with a change in control; and
Immediate vesting of all NQSOs and RSUs scheduled to vest within one year of the termination date; provided, however, that all unvested NQSOs and RSUs will vest if the termination is in connection with a change in control.
If the termination is due to Mr. Foley's resignation, Mr. Foley would be entitled to the Basic Benefits plus:
As to performance-based cash compensation under our LTIP, payment of the amount actually earned for each performance cycle in effect on the date of termination, prorated to the termination date.
Except as in instances of death or permanent disability, amounts paid under our SMIP and the performance cash component of our LTIP will be paid between January 1 and March 15 of the year following the end of the relevant performance cycle.
If Mr. Foley had retired on or before December 31, 2016, all unvested equity awards would have been forfeited.
All Other Named Executives
We do not have employment agreements with our non-CEO named executives. Our non-CEO named executives are, however:
parties to change in control agreements, the forms of which are substantially similar to each other, that provide for payments under the circumstances described below in the event of a termination of employment in connection with a Change in Control; and
covered by our Executive Severance Compensation Policy, which provides for certain separation benefits in the event of termination of employment without Cause absent a Change in Control.
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| COMPENSATION-RELATED MATTERS | |
The terms of award agreements under which awards of RSUs and NQSOs were made provide for acceleration of unvested awards in the event of termination of employment under certain circumstances. Additionally, the terms of award agreements relating to the performance cash components of our 2014 LTIP (for the 2014-2016 performance cycle), 2015 LTIP (for the 2015-2017 performance cycle) and 2016 LTIP (for the 2016-2018 performance cycle) provide for payouts in the event of termination of employment under certain circumstances.
Mr. White's employment ended March 31, 2016. His termination was treated as a termination by Libbey without Cause under the Executive Severance Compensation Policy, and he received severance benefits and payments pursuant to the terms of the Executive Severance Compensation Policy and equity and performance cash agreements. Such severance benefits and payments are consistent with those described below under "Termination without Cause (No Change in Control)" and in the Potential Payments Upon Termination of Employment table on page 48. Ms. Buck voluntarily resigned without Good Reason effective December 31, 2016. Ms. Buck was not entitled to any separation benefits or payments in connection with her resignation.
Because individuals hired after January 1, 2006 are ineligible for participation in the Salary Plan and SERP, Ms. Kovach is our only named executive who is eligible for benefits under the Salary Plan and SERP. As of December 31, 2016, Ms. Kovach was at least age 55 and had at least five years of service with Libbey. As a result, Ms. Kovach would have been eligible to receive a retirement benefit under our Salary Plan and SERP if she had retired on or before December 31, 2016. If Ms. Kovach or any of our other named executives had retired on or before December 31, 2016, all unvested equity awards would have been forfeited.
With respect to all non-CEO named executives, the following table summarizes the trigger events under which payments may be made and/or other benefits provided, the material payments or benefits to be provided, the conditions to our obligations to make the payments and/or provide the benefits, and the reasons why we believe that providing these payments and/or benefits is appropriate under the circumstances described.
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| | | | | | | | | |
| Event | | Benefits | | Conditions to Payment of Benefits | | | Rationale |
| | | | | | | | | |
| Death or Permanent Disability | | • | Accrued Benefits | | | None | | • | To compensate for service to us |
| • | A prorated target award under the LTIP performance cash component for any performance cycle in effect on the date of death or permanent disability | | | | | |
| | | | | • | Aids in attracting and retaining executives |
| • | Accelerated vesting of all unvested RSUs and NQSOs | | | | | • | Consistent with competitive market practice |
| | | | | | | | | |
Quit for Good Reason (No Change in Control) | | • | Accrued Benefits | | | None | | • | To compensate for service to us |
| • | As to performance-based compensation under our LTIP, payment of the amount actually earned for each performance cycle in effect on the date of termination, prorated to the date of termination(1) | | | | | |
| | | | | • | Aids in attracting and retaining executives |
| | | | | | • | Consistent with competitive market practice |
|
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| COMPENSATION-RELATED MATTERS |
|
| | | | | | | | | |
| Event | | Benefits | | Conditions to Payment of Benefits | | | Rationale |
| | | | | | | | | |
| Termination without Cause (No Change in Control) | | • | Accrued Benefits | | • | Release of claims against Libbey | | • | To compensate for service to us and bridge the gap between employment with us and the executive's next job |
| • | For the year in which termination occurs, a prorated SMIP award based on actual performance(1) | | | | |
| | | • | Confidentiality obligations | | |
| | | | |
| • | Base salary continuation for 12 months | | • | Obligation to assign intellectual property rights | | |
| • | Lump sum payment equal to the executive's SMIP target award. Paid on the first payroll date after termination | | | |
| | | • | Obligation to assist with litigation as to which the executive has knowledge | | • | Aids in attracting and retaining executives |
| • | As to LTIP performance-based cash compensation, payment of the amount actually earned for each performance cycle in effect on termination date, prorated to termination date(1) | | | |
| | | | | • | To provide compensation in exchange for restrictive covenants that protect Libbey's future interests |
| • | Immediate vesting of all NQSOs and RSUs scheduled to vest within one year of termination | | • | 12-month obligation not to interfere with customer accounts, compete, divert business opportunities, solicit our employees, or disparage us | | |
| | | |
| • | Continuation of medical, dental, prescription drug and life insurance coverage for 12 months, subject to payment by the executive of premiums at employee rates | | | | |
| | | | | • | Consistent with competitive market practice |
| • | For a period of one year from termination, executive level outplacement services at the rate for Shields Meneley Partners or equivalent | | | |
| | | | | | | | | |
| | | | | | | | | |
Termination without Cause or Quit for Good Reason in connection with a Change in Control | | • | Accrued Benefits | | • | Release of claims against Libbey | | • | Aids in attracting and retaining executives |
| • | For the year in which termination occurs, a prorated SMIP award based on actual performance(1) | | | | |
| | • | Confidentiality obligations | | |
| | | | | • | To provide compensation in exchange for restrictive covenants that protect Libbey’s future interests |
| • | As to LTIP performance cash compensation under, payment of the amount actually earned for each performance cycle in effect on the date of termination(1) | | • | Obligation to assign intellectual property rights | | |
| | | • | Obligation to assist with litigation as to which the executive has knowledge | | |
| • | Accelerated vesting of all unvested equity awards | | | |
| | | | | • | Consistent with competitive market practice |
| | • | Lump-sum payment of two times the sum of the executive’s annual base salary in effect on the date notice of termination is given plus the executive’s target SMIP opportunity for the year in which the notice of termination is given(2) | | | |
| | | | • | 12-month obligation not to interfere with customer accounts, compete, divert business opportunities, solicit our employees, or disparage us | | |
| | • | Executive level outplacement services by a provider approved by Libbey, with the cost being limited to 15% of the executive’s base salary at the time of termination | | | | |
| | • | Financial planning services, with the cost to Libbey not to exceed $10,000 | | | | | |
| | • | Continuation of medical, prescription drug, dental and life insurance benefits for a period of 18 months or until the executive obtains medical or life insurance through a future employer, with the executive continuing to pay the employee’s portion of the cost of such insurance | | | | | |
| | | | | | | | | |
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| COMPENSATION-RELATED MATTERS | |
| |
| (1) | Amounts paid under our SMIP and the performance cash component of our LTIP will be paid between January 1 and March 15 of the year following the end of the relevant performance cycle. |
| |
| (2) | Lump-sum cash payments will be paid no later than five days after termination of employment except to the extent the payments are subject to a six-month delay under Internal Revenue Code Section 409A, in which case payment will be on the first day of the seventh month after the executive's termination of employment. |
Definitions
Unless otherwise specified above, the following definitions apply:
"Accrued Benefits" includes base salary through date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended before the date of termination.
"Cause" means (a) willful and continuous failure to substantially perform duties; (b) willful and continuous failure to substantially follow and comply with directives of the Board; (c) commission of an act of fraud or dishonesty that results in harm to us or failure to comply with a material policy, including our Code of Business Ethics and Conduct; (d) material breach of a material obligation to us; or (e) commission of illegal conduct or gross misconduct that causes harm to us. When used in reference to a termination that is not in connection with a change in control, "Cause" can have any of the previously listed meanings or: conviction of a misdemeanor or felony that is directly related to, or indicates the executive is not suited for, the position the executive occupies with us.
"Change in Control" generally means any of the following events:
A person (other than Libbey, any trustee or other fiduciary holding securities under one of our employee benefit plans, or any corporation owned, directly or indirectly, by our shareholders in substantially the same proportions as their ownership of our common stock) becomes the ‘‘beneficial owner,’’ directly or indirectly, of our securities representing 30% or more of the combined voting power of our then-outstanding securities;
The consummation of a merger or consolidation pursuant to which we are merged or consolidated with any other corporation (or other entity), unless our voting securities outstanding immediately prior to the merger or consolidation continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66 2/3% of the combined voting power of securities of the surviving entity outstanding immediately after the merger or consolidation;
A plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of our assets is consummated; or
During any period of two consecutive years (not including any period prior to the execution of the agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of our Board. Continuing Directors means (i) individuals who were members of the Board at the beginning of Directors attendedthe two-year period referred to above and (ii) any individuals elected to the Board, after the beginning of the two-year period referred to above, by a vote of at least 2/3 of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. However, an individual who is elected to the Board after the beginning of the two-year period referred to above will not be considered to be a Continuing Director if the individual was designated by a person who has entered into an agreement with us to effect a transaction that otherwise meets the definition of a change in control.
A person typically is considered to be the ‘‘beneficial owner’’ of securities if the person has or shares the voting power associated with those securities.
"Good Reason" means (a) the executive ceases to be an officer of the Company; (b) we reduce the executive’s base salary and we do not apply the reduction in the same or similar manner to similarly situated employees; (c) we materially reduce the executive’s annual incentive compensation opportunity and the reduction is not applied in the same or similar manner to similarly situated employees; (d) we materially reduce or eliminate an executive benefit or an employee benefit and we do not apply the reduction to similarly situated employees in the same or similar manner; (e) we materially breach any written agreement between the executive and the Company and we fail to remedy the breach within 60 days after our receipt from the executive of written notice of breach; or (f) we exercise our right not to renew the agreement unless we concurrently exercise our right not to renew the agreements of similarly situated employees.
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| COMPENSATION-RELATED MATTERS |
Compensation Committee Interlocks and Insider Participation
Carlos V. Duno, Ginger M. Jones, Theo Killion, Eileen A. Mallesch and Carol B. Moerdyk served on our Compensation Committee during 2016. None of Mr. Duno, Ms. Jones, Mr. Killion, Ms. Mallesch or Ms. Moerdyk has been an officer or employee of Libbey or its subsidiaries.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with Libbey’s management the Compensation Discussion and Analysis in this proxy statement. Taking all of these reviews and discussions into account, the Compensation Committee has approved the inclusion of the Compensation Discussion and Analysis in this proxy statement and has approved the incorporation by reference of the Compensation Discussion and Analysis in our Annual
Meeting.
AUDIT-RELATED MATTERS
Who are Libbey’s auditors?
Upon the recommendation of the Audit Committee, the Board of Directors has appointed Ernst & Young LLP as Libbey’s independent auditorsReport on Form 10-K for the fiscal year endingended December 31, 2016.
|
| |
| Carlos V. Duno, Chair |
| Ginger M. Jones |
| Theo Killion |
| Eileen A. Mallesch |
| Carol B. Moerdyk |
|
| |
| COMPENSATION-RELATED MATTERS | |
Summary Compensation Table
The following narrative and tables describe the ‘‘total compensation’’ our named executives earned during 2016, 2015 and 2014. The total compensation presented below does not reflect the actual pay received by, or the target pay of, the named executives in 2016, 2015 or 2014. The actual value realized by our named executives in 2016 from NQSOs and RSUs is presented in the Option Exercises and Stock Vested Table on page 44. Target annual and long-term incentive awards for 2016 are presented in the Grants of Plan-Based Awards Table on page 40.
The core components of our named executives' compensation are base salary, an annual cash incentive opportunity pursuant to our SMIP, and a long-term incentive opportunity under our LTIP, which includes performance-based cash compensation and equity awards. In addition to these core components, our executives occasionally receive compensation through sign-on awards, discretionary awards in recognition of outstanding individual contributions, retention awards, or in connection with termination of employment. In 2016, Ms. Streeter and Mr. White received compensation in connection with their terminations of employment. Ms. Buck did not receive any compensation in connection with her resignation.
Ms. Streeter
CEO Retention Award. As indicated in our proxy statement for our 2014 Annual Meeting, we entered into a CEO Retention Award Agreement with Ms. Streeter in December 2013 pursuant to which the Company issued to Ms. Streeter 240,829 cash-settled stock appreciation rights (which we refer to as SARs) in December 2013 and 115,687 restricted stock units (which we refer to as RSUs) in February 2014. These awards were subject to cliff vesting on December 31, 2018. When Ms. Streeter's employment terminated on January 11, 2016, these awards automatically vested under the terms of the agreement. The value of these RSUs and SARs is not included in the "All Other Compensation" column in this Summary Compensation Table because the cumulative grant date fair values were included in the "Stock Awards" and "Option Awards" columns of the Summary Compensation Tables in the years in which they were granted.
At the time the Compensation Committee and other non-management directors approved the CEO Retention Award Agreement, and the awards of SARs and RSUs made under it, the Compensation Committee and other non-management directors believed that the awards were in the best interest of our shareholders. The Committee and the Board believed that it was critical to the Company's transformation from a manufacturing-focused company to a consumer-focused company to ensure that Ms. Streeter's talents continued to be available to steer the transformation. Recognizing that Ms. Streeter's skills and talents may be in high demand from others, and in order to maximize the retention value at the time of the awards, the Committee elected to provide Ms. Streeter with cash-settled retention RSUs and cash-settled SARs, the vesting of which would be accelerated if the company were to elect to terminate her employment without cause before December 31, 2018, when the awards were otherwise scheduled to cliff-vest. The Committee and the Board viewed the CEO Retention Award Agreement, and the grants of SARs and RSUs made under it, as extraordinary in nature, and did not enter into any additional special retention agreements with Ms. Streeter or Mr. Foley, nor do they anticipate entering into any similar agreements with Mr. Foley or any of the other executive officers.
Separation Agreement. We entered into a Mutual Separation Agreement and Release with Ms. Streeter in January 2016 in connection with her termination. The separation payments and benefits we provided to Ms. Streeter under that agreement are consistent with the separation payments and benefits provided for in her employment agreement, except with respect to the timing and calculation method of incentive award payments under the 2016 SMIP and the performance cash components of the 2014 LTIP, 2015 LTIP and 2016 LTIP. The employment agreement called for payment of the amounts actually earned, prorated to the date of termination, with payments to be made between January 1 and March 15 of the year following the end of each applicable performance cycle. In the interest of fully and quickly resolving all potential issues related to separation compensation, the Company and Ms. Streeter mutually agreed to estimate the amounts that would be earned based on the most recent forecasts available in January 2016, prorate those estimated amounts to the date of termination, and make the payments to Ms. Streeter in March 2016. Our expense associated with these payments is reflected in the "Non-Equity Incentive Compensation" column in this Summary Compensation Table.
Mr. White
The payments and benefits provided to Mr. White in connection with his termination were determined in accordance with the Executive Severance Compensation Policy and the award agreements governing awards of RSUs, NQSOs and LTIP performance cash opportunities. The values of those RSUs and NQSOs for which vesting accelerated in connection with Mr. White's termination are not included in the "All Other Compensation" column in this Summary Compensation Table because the cumulative grant date fair values were included in the "Stock Awards" and "Option Awards" columns of the Summary Compensation Tables in the years in which they were granted.
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| COMPENSATION-RELATED MATTERS |
SUMMARY COMPENSATION TABLE
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($)(1) | | Bonus ($)(2) | | Stock Awards ($)(3) | | Option Awards ($)(4) | | Non-Equity Incentive Compensation ($)(5) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | | All Other Compensation ($)(7) | | Total ($) |
| William A. Foley | | 2016 | | 804,185 |
| | 0 |
| | 1,037,687 |
| | 532,688 |
| | 801,520 |
| | 0 |
| | 110,050 |
| | 3,286,130 |
|
| Chairman and Chief | | | | | | | | | | | | | | | | | | |
Executive Officer(8) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Stephanie A. Streeter | | 2016 | | 21,166 |
| | 0 |
| | 0 |
| | 0 |
| | 653,666 |
| | 0 |
| | 3,301,516 |
| | 3,976,348 |
|
| Chief Executive | | 2015 | | 792,438 |
| | 0 |
| | 960,406 |
| | 517,050 |
| | 728,386 |
| | 0 |
| | 73,677 |
| | 3,071,957 |
|
Officer(9) | | 2014 | | 768,750 |
| | 0 |
| | 4,436,131 |
| | 413,043 |
| | 941,390 |
| | 0 |
| | 44,259 |
| | 6,603,573 |
|
| | | | | | | | | | | | | | | | | | | |
| Sherry Buck | | 2016 | | 482,125 |
| | 0 |
| | 257,312 |
| | 143,125 |
| | 386,211 |
| | 0 |
| | 47,115 |
| | 1,315,888 |
|
| Vice President, Chief | | 2015 | | 462,500 |
| | 0 |
| | 245,784 |
| | 132,320 |
| | 221,129 |
| | 0 |
| | 41,651 |
| | 1,103,384 |
|
Financial Officer(10) | | 2014 | | 386,907 |
| | 0 |
| | 217,148 |
| | 112,263 |
| | 311,530 |
| | 0 |
| | 35,988 |
| | 1,063,836 |
|
| | | | | | | | | | | | | | | | | | | |
| Annunciata Cerioli | | 2016 | | 424,670 |
| | 0 |
| | 185,728 |
| | 103,312 |
| | 214,012 |
| | 0 |
| | 60,679 |
| | 988,401 |
|
| Vice President, Chief | | 2015 | | 377,646 |
| | 0 |
| | 244,588 |
| | 77,851 |
| | 86,713 |
| | 0 |
| | 27,435 |
| | 814,233 |
|
| Supply Chain | | 2014 | | 29,170 |
| | 252,289 |
| | 246,591 |
| | 70,866 |
| | 13,714 |
| | 0 |
| | 0 |
| | 612,630 |
|
Officer(11) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Susan A. Kovach | | 2016 | | 341,568 |
| | 0 |
| | 123,696 |
| | 68,809 |
| | 209,254 |
| | 21,812 |
| | 34,191 |
| | 799,330 |
|
| Vice President, | | 2015 | | 334,070 |
| | 0 |
| | 128,214 |
| | 69,025 |
| | 123,403 |
| | 0 |
| | 24,320 |
| | 679,032 |
|
| General Counsel & | | 2014 | | 325,117 |
| | 25,000 |
| | 129,672 |
| | 67,034 |
| | 189,097 |
| | 29,532 |
| | 19,442 |
| | 784,894 |
|
| Secretary | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Salvador Miñarro | | 2016 | | 355,291 |
| | 0 |
| | 162,528 |
| | 90,407 |
| | 241,106 |
| | 0 |
| | 98,845 |
| | 948,177 |
|
| Villalobos | | 2015 | | 373,902 |
| | 0 |
| | 617,047 |
| | 93,409 |
| | 143,209 |
| | 0 |
| | 71,138 |
| | 1,298,705 |
|
| Vice President, | | | | | | | | | | | | | | | | | | |
| General Manager | | | | | | | | | | | | | | | | | | |
U.S. & Canada(12) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| James H. White | | 2016 | | 131,250 |
| | 0 |
| | 304,720 |
| | 169,491 |
| | 127,004 |
| | 0 |
| | 1,041,734 |
| | 1,774,199 |
|
| Vice President, Chief | | 2015 | | 246,591 |
| | 0 |
| | 1,561,933 |
| | 148,879 |
| | 80,949 |
| | 0 |
| | 13,980 |
| | 2,052,332 |
|
Operating Officer(13) | | | | | | | | | | | | | | | | | | |
| |
| (1) | As to Mr. Miñarro for 2015, represents base salary paid from January 1 through March 31, 2015, as well as other fixed components of pay that our Mexican subsidiary was required under Mexican law to pay Mr. Miñarro, totaling $111,372. These amounts were paid to Mr. Miñarro in Mexican pesos, and the amount included in this column was translated to U.S. currency using the interbank exchange rate in effect at the time of payment to Mr. Miñarro. The remaining $262,530 represents the base salary paid to Mr. Miñarro after he assumed his executive officer role on April 1, 2015. |
| |
| (2) | As to Ms. Cerioli for 2014, represents: (a) $70,000 signing bonus; and (b) $182,289 minimum guaranteed incentive under the 2014 SMIP. The balance of Ms. Cerioli's 2014 SMIP award is included in the "Non-Equity Incentive Compensation" column. As to Ms. Kovach for 2014, represents a special award made in April 2014 in recognition of leadership related to our 2014 refinancing. |
| |
| (3) | Represents the grant date fair value, in accordance with FASB ASC Topic 718, with respect to RSUs granted in 2016, 2015 and 2014, respectively. As to Mr. Foley, also represents the grant date fair value, determined in accordance with FASB ASC Topic 718, of awards of stock made to non-management directors on May 10, 2016. On that date, we awarded certain non-management directors stock having a grant date fair value of $80,007, or $17.58 per share. Although Mr. Foley ceased to be a non-management director when he was appointed CEO on January 12, 2016, this stock award was attributable to service as a non-management director during the 2015 fiscal year. As to all RSU awards in 2016, 2015 and 2014 other than the special retention awards of 115,687 cash-settled RSUs made to Ms. Streeter in February 2014, the awards vest ratably over a four-year period from the date of grant. The special retention award of 115,687 cash-settled RSUs made to Ms. Streeter in February 2014 were scheduled to cliff vest on December 31, |
|
| |
| COMPENSATION-RELATED MATTERS | |
2018, however, all 115,687 cash-settled RSUs vested automatically upon Ms. Streeter's termination of employment on January 11, 2016. When Ms. Buck resigned effective December 31, 2016, all unvested RSUs were forfeited. When Mr. White's employment ended on March 31, 2016, vesting was accelerated with respect to all RSUs that otherwise would have vested by March 31, 2017, and all other unvested RSUs were forfeited. For more information, see Footnote 12, ‘‘Employee Stock Benefit Plans,’’ to the consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on March 3, 2017. The actual values realized by the respective named executives depend on the number of RSUs that actually vest and the price of our common stock when the RSUs vest or, in the case of Ms. Streeter's cash-settled RSUs, when they are settled in cash.
| |
| (4) | Represents the grant date fair value, in accordance with FASB ASC Topic 718, with respect to NQSOs granted in 2016, 2015 and 2014, respectively. The awards vest ratably over a four-year period from the date of grant. When Ms. Buck resigned effective December 31, 2016, all unvested NQSOs were forfeited. When Mr. White's employment ended on March 31, 2016, vesting was accelerated with respect to all NQSOs that otherwise would have vested by March 31, 2017, and all other unvested NQSOs were forfeited. For more information, see Footnote 12, ‘‘Employee Stock Benefit Plans,” to the consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on March 3, 2017. The actual values received by the respective named executives depend on the number of NQSOs that actually vest, the number of shares with respect to which NQSOs are exercised and the price of our common stock on the date on which the NQSOs are exercised. |
| |
| (5) | Represents (a) amounts earned by the named executives in 2016, 2015 and 2014 under our SMIP and (b) for 2016, 2015 and 2014, amounts earned by the named executives under the performance cash component of our 2014 LTIP, 2013 LTIP and 2012 LTIP, respectively. The awards under our SMIP were paid in March of 2017, 2016 and 2015, respectively, and the awards under the performance cash component of our 2014 LTIP, 2013 LTIP and 2012 LTIP were paid in March of 2017, March of 2016 and February of 2015, respectively. As to Ms. Streeter for 2016, also includes amounts earned by her under the performance cash component of our 2015 LTIP and 2016 LTIP. The awards to Ms. Streeter under our 2015 SMIP, 2016 SMIP and the performance cash component of our 2013 LTIP, 2014 LTIP, 2015 LTIP and 2016 LTIP were paid to her in March 2016 upon her termination. |
| |
| (6) | Represents the actuarial increase in pension value under our Salary Plan and our SERP. In 2015, the net pension value under our Salary Plan and our SERP declined for all named executives who are participants under those plans; as a result, for 2015 the amount of the actuarial increase is $0. We do not guarantee any particular rate of return on deferred compensation under our Executive Savings Plan ("ESP") or our EDCP. The rate of return depends upon the performance of the fund in which the participant's ESP or EDCP account is deemed invested. Accordingly, the amounts included in this column do not include above-market earnings on nonqualified deferred compensation. Ms. Kovach is the only named executive who is eligible to participate in the Salary Plan and SERP. |
| |
| (7) | For 2016, includes: (i) annual company matching contributions to our 401(k) savings plan (a broad-based plan open to all U.S. salaried employees); (ii) for Ms. Streeter and Mr. White, our expense associated with the compensation payable to them in connection with their terminations of employment; and (iii) the following perquisites: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Named Executive | | EDCP Matching Contribution ($)(a) | | Tax Prep / Financial Planning ($)(b) | | Housing Allowance or Relocation Assistance ($)(c) | | Tax Gross-Up ($)(d) | | Ground Transport ($)(e) | | Airline Club Membership ($) | | Annual Executive Physical Exam ($) | | Legal Fees ($)(f) | | Vacation ($)(g) | | Total ($) |
| W. Foley | | 30,938 |
| | 11,699 |
| | 49,416 |
| | 2,185 |
| | 1,365 |
| | 495 |
| | 2,739 |
| | 0 |
| | 0 |
| | 98,837 |
|
| S. Streeter | | 0 |
| | 537 |
| | 0 |
| | 0 |
| | 109 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 646 |
|
| S. Buck | | 12,113 |
| | 14,000 |
| | 0 |
| | 0 |
| | 1,036 |
| | 479 |
| | 0 |
| | 0 |
| | 3,587 |
| | 31,215 |
|
| A. Cerioli | | 8,800 |
| | 13,772 |
| | 13,551 |
| | 7,949 |
| | 707 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 44,779 |
|
| S. Kovach | | 4,291 |
| | 14,000 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 18,291 |
|
| S. Miñarro | | 0 |
| | 3,255 |
| | 51,192 |
| | 10,195 |
| | 342 |
| | 0 |
| | 0 |
| | 23,126 |
| | 0 |
| | 88,110 |
|
| J. White | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 1,569 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 1,569 |
|
| |
| (a) | Annual company matching contributions to our EDCP |
| |
| (b) | The cost we paid for tax return preparation and financial planning for the respective named executives |
| |
| (c) | As to Mr. Foley, represents an allowance for housing in the Toledo, Ohio area since Mr. Foley's primary home is in the Cleveland, Ohio metropolitan area. As to Ms. Cerioli, represents relocation assistance provided in connection with her hire. As to Mr. Miñarro, represents relocation assistance provided in connection with his promotion to his current role. |
| |
| (d) | As to Mr. Foley and Ms. Cerioli, represents tax gross-ups on a housing allowance and relocation assistance, respectively. As to Mr. Miñarro, represents tax gross-ups on relocation assistance ($7,093) and foreign tax return preparation ($3,102). |
| |
| (e) | Includes our incremental cost for ground transportation for personal and business trips from the Toledo, Ohio, area to the Detroit / Wayne County Metropolitan Airport. For personal trips, includes the entire cost that we incurred for such transportation. For business trips, includes the amount in excess of the amount to which the respective named executives would have been entitled as reimbursement for mileage and parking under our travel policy applicable to all employees. |
|
| |
| COMPENSATION-RELATED MATTERS |
| |
| (f) | Represents payment of legal expenses that Mr. Miñarro incurred in connection with immigration matters relating to his and his family's relocation to the U.S. from Mexico. |
| |
| (g) | Reimbursement of expenses Ms. Buck incurred for a vacation in 2016. |
| |
| (8) | Mr. Foley assumed his role as CEO effective January 12, 2016. |
| |
| (9) | Ms. Streeter's employment ended January 11, 2016. |
| |
| (10) | Ms. Buck's employment ended December 31, 2016. |
| |
| (11) | Ms. Cerioli was hired on December 1, 2014. |
| |
| (12) | Mr. Miñarro was named Vice President, General Manager, U.S. and Canada, on April 1, 2015. He previously served as Vice President, General Manager, Latin America. |
| |
| (13) | Mr. White was hired on July 13, 2015. His employment ended March 31, 2016. |
|
| |
| COMPENSATION-RELATED MATTERS | |
Grants of Plan-Based Awards Table
During 2016, the Compensation Committee granted to our named executives RSUs and NQSOs under our 2006 Omnibus Plan and 2016 LTIP. RSU recipients are not entitled to dividends or voting rights with respect to the common shares underlying the RSUs unless and until they are earned or vested. We do not reprice NQSOs, nor have we repurchased underwater NQSOs. On May 10, 2016, Mr. Foley received an outright grant of common stock under our 2016 Omnibus Plan attributable to his service as a non-management director during the 2015 fiscal year. On February 6, 2017, the Compensation Committee approved the payment of cash awards under our 2016 SMIP and our 2014 LTIP.
This table and accompanying footnotes contain information as to each of these awards, including information as to applicable performance measures for our cash awards, and vesting schedules for RSUs and NQSOs.
GRANTS OF PLAN-BASED AWARDS TABLE
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Estimated Possible Payouts under Non-Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | All Other Option Awards: Number of Securities Underlying Options (#)(4) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards ($)(5) |
Named Executive | | Plan Name | | Award Date(1) | | Grant Date(1) | | Threshold ($) | | Target ($) | | Maximum ($) | | | | |
| W. Foley | | 2016 SMIP | | 1/11/2016 | | | | 165,000 |
| | 825,000 |
| | 1,856,250 |
| | | | | | | | |
| | | 2016 LTIP (cash) | | 1/11/2016 | | | | 247,500 |
| | 990,000 |
| | 1,980,000 |
| | | | | | | | |
| | | 2015 LTIP (cash) | | 1/11/2016 | | | | 326,700 |
| | 653,400 |
| | 1,306,800 |
| | | | | | | | |
| | | 2014 LTIP (cash) | | 1/11/2016 | | | | 81,675 |
| | 326,700 |
| | 653,400 |
| | | | | | | | |
| | | 2016 LTIP (RSUs) | | 1/11/2016 | | 2/25/2016 | | | | | | | | 59,855 |
| | | | | | 957,680 |
|
| | | 2016 LTIP (NQSOs) | | 1/11/2016 | | 2/25/2016 | | | | | | | | | | 126,598 |
| | 17.13 |
| | 532,688 |
|
| | | 2016 Omnibus Plan | | 10/28/2014 | | 5/10/2016 | | | | | | | | 4,551 |
| | | | | | 80,007 |
|
| | | | | | | | | | | | | | | | | | | | | |
| S. Streeter | | 2016 SMIP | | 1/11/2016 | | | |
|
| | 24,057 |
| |
|
| | | | | | | | |
| | | 2016 LTIP (cash) | | 1/11/2016 | | | |
|
| | 9,623 |
| |
|
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| S. Buck | | 2016 SMIP | | 2/8/2016 | | | | 67,498 |
| | 337,488 |
| | 759,348 |
| | | | | | | | |
| | | 2016 LTIP (cash) | | 2/8/2016 | | | | 66,500 |
| | 266,000 |
| | 532,000 |
| | | | | | | | |
| | | 2016 LTIP (RSUs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | 16,082 |
| | | | | | 257,312 |
|
| | | 2016 LTIP (NQSOs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | | | 34,015 |
| | 17.13 | | 143,125 |
|
| | | | | | | | | | | | | | | | | | | | | |
| A. Cerioli | | 2016 SMIP | | 2/8/2016 | | | | 48,720 |
| | 243,601 |
| | 548,102 |
| | | | | | | | |
| | | 2016 LTIP (cash) | | 2/8/2016 | | | | 48,000 |
| | 192,001 |
| | 384,002 |
| | | | | | | | |
| | | 2016 LTIP (RSUs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | 11,608 |
| | | | | | 185,728 |
|
| | | 2016 LTIP (NQSOs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | | | 24,553 |
| | 17.13 | | 103,312 |
|
| | | | | | | | | | | | | | | | | | | | | |
| S. Kovach | | 2016 SMIP | | 2/8/2016 | | | | 34,157 |
| | 170,784 |
| | 384,264 |
| | | | | | | | |
| | | 2016 LTIP (cash) | | 2/8/2016 | | | | 31,970 |
| | 127,878 |
| | 255,756 |
| | | | | | | | |
| | | 2016 LTIP (RSUs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | 7,731 |
| | | | | | 123,696 |
|
| | | 2016 LTIP (NQSOs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | | | 16,353 |
| | 17.13 |
| | 68,809 |
|
| | | | | | | | | | | | | | | | | | | | | |
| S. Miñarro | | 2016 SMIP | | 2/8/2016 | | | | 42,635 |
| | 213,175 |
| | 479,644 |
| | | | | | | | |
| | | 2016 LTIP (cash) | | 2/8/2016 | | | | 42,005 |
| | 168,019 |
| | 336,038 |
| | | | | | | | |
| | | 2016 LTIP (RSUs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | 10,158 |
| | | | | | 162,528 |
|
| | | 2016 LTIP (NQSOs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | | | 21,486 |
| | 17.13 | | 90,407 |
|
| | | | | | | | | | | | | | | | | | | | | |
| J. White | | 2016 SMIP | | 2/8/2016 | | | | 79,931 |
| | 399,656 |
| | 899,226 |
| | | | | | | | |
| | | 2016 LTIP (cash) | | 2/8/2016 | | | | 78,750 |
| | 315,000 |
| | 630,000 |
| | | | | | | | |
| | | 2016 LTIP (RSUs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | 19,045 |
| | | | | | 304,720 |
|
| | | 2016 LTIP (NQSOs) | | 2/8/2016 | | 2/25/2016 | | | | | | | | | | 40,281 |
| | 17.13 | | 169,491 |
|
|
| |
| COMPENSATION-RELATED MATTERS |
| |
| (1) | For Non-Equity Incentive Plan Awards made to all named executives other than Mr. Foley and Ms. Streeter, the Award Date and the Grant Date for awards made under the 2016 SMIP and the performance cash component of the 2016 LTIP are the date on which the Compensation Committee approved the 2016 SMIP and the performance cash component of our 2016 LTIP. For Non-Equity Incentive Plan Awards made to Mr. Foley, the Award Date and the Grant Date are the date on which the Board approved Mr. Foley's participation in, and target opportunities under, the 2016 SMIP and 2016 LTIP. For Non-Equity Incentive Plan Awards made to Ms. Streeter, the Award Date and the Grant Date are the date on which the Board approved the Mutual Separation Agreement and Release pursuant to which Ms. Streeter was awarded these exact amounts. For All Other Stock Awards and All Other Option Awards, the Award Date is the date on which the Compensation Committee took action, and the Grant Date is the date on which we determined the number of NQSOs or RSUs, as the case may be, awarded. The number of NQSOs and RSUs awarded to the named executives in February 2016 under our 2016 LTIP was determined by dividing the target dollar value of the applicable component of equity to be awarded by (a) in the case of NQSOs, the Black-Scholes value of the options, determined using the average closing price of Libbey common stock over a period of 20 consecutive trading days ending on the grant date and capping the volatility at 50%, or (b) in the case of RSUs, the average closing price of Libbey common stock over the 20 consecutive trading-day period ending February 25, 2016. The number of shares of common stock granted to Mr. Foley on May 10, 2016 under our 2016 Omnibus Plan was determined by multiplying the number of shares times $17.58, the closing price of our common stock on the date of the grant. We inform grant recipients of their awards after we determine the number of RSUs and/or NQSOs to be granted. For awards made in February 2016, we determined the number of RSUs and NQSOs to be granted on the first business day after we announced our results of operations for the 2015 fiscal year. |
| |
| (2) | Represents the range of possible cash awards under (a) our 2016 SMIP and (b) the performance cash component of our 2016 LTIP. |
| |
| (a) | Under our SMIP, each named executive is eligible for an annual incentive award in an amount up to 225% of the executive officer’s target award, which in turn is a percentage of the executive’s anticipated full-year base salary, as set forth in the following table: |
|
| | |
| Named Executive | | Target Award as a Percentage of Anticipated Full-Year Base Salary (%) |
| W. Foley | | 100 |
| S. Streeter | | 100 |
| S. Buck | | 70 |
| A. Cerioli | | 60 |
| S. Kovach | | 50 |
| S. Miñarro | | 60 |
| J. White | | 75 |
For all of our named executives, 100% of their opportunity was based on company-wide performance, as reflected in company-wide revenue growth (net sales) and adjusted cash earnings performance metrics. The payout scales with respect to each of the metrics were as follows:
|
| | | | | | | | |
| Revenue Growth (Net Sales) | | Adjusted Cash Earnings |
Full Year Net Sales | Percent of Targeted Net Sales | Performance Level | Payout Percentage | | Full Year Cash Earnings | Percent of Targeted Cash Earnings | Performance Level | Payout Percentage |
| $880,000 | 104.9% | Maximum | 200% | | $131,076 | 110.0% | Maximum | 200% |
| $839,138 | 100.0% | Target | 100% | | $119,160 | 100.0% | Target | 100% |
| $800,000 | 95.3% | Threshold | 40% | | $95,328 | 80.0% | Threshold | 50% |
| < $800,000 | < 95.3% | Below Threshold | 0% | | < $95,328 | < 80.0% | Below Threshold | 0% |
|
| |
| COMPENSATION-RELATED MATTERS | |
| |
| (b) | Under the performance cash component of our 2016 LTIP, each named executive is eligible for a cash award in an amount up to 200% of the named executive’s target award. Each named executive’s target award under the performance cash component is 40% of the named executive’s target award under all components of the relevant LTIP. The target awards are based on the named executives' respective annualized base salaries as of January 1, 2016 (in the case of Mr. Foley, January 12, 2016). Each named executive’s target award under all components of the 2016 LTIP is set forth in the following table: |
|
| | | | |
| Named Executive | | 2016 Target Long-Term Award as a Percentage of Annualized Base Salary (%) | | 2016 LTIP Performance Cash Target as Percentage of Annualized Base Salary (%) |
| W. Foley | | 300 | | 120 |
| S. Streeter | | 300 | | 120 |
| S. Buck | | 140 | | 56 |
| A. Cerioli | | 120 | | 48 |
| S. Kovach | | 95 | | 38 |
| S. Miñarro | | 120 | | 48 |
| J. White | | 150 | | 60 |
The extent to which a payout is earned under the performance cash component of the 2016 LTIP is based on our return on invested capital (ROIC) for each of the three one-year performance periods (calendar years 2016, 2017 and 2018) included in the three-year performance cycle ended December 31, 2018. ROIC is calculated as shown in Appendix A. The scale used to determine the payout score for each of the three one-year performance periods is reset for each performance period to correlate with targeted ROIC for that year. The amount of the final payout, if any, will be determined based on the average of the three discrete, single-year payout scores. The scale used to determine the payout score for the 2016 calendar year is: |
| | | | |
| | Basis Points Above or Below 2016 Targeted ROIC | | Payout Score (%) | |
| | +100 | | 200 | |
| | 0 | | 100 | |
| | -150 | | 25 | |
| | Less than -150 | | 0 | |
| |
| (3) | Represents grants of RSUs made under our 2016 LTIP and, as to Mr. Foley, an outright grant of common stock attributable to his service as a non-management director during 2015. |
| |
| (4) | Represents grants of NQSOs made under our 2016 LTIP. The grants vest 25% per year beginning on February 17, 2016. |
| |
| (5) | Represents the respective grant date fair values, determined in accordance with FASB ASC Topic 718, of the RSUs and NQSOs. |
Outstanding Equity Awards at Fiscal Year-End Table
Our named executives had the following types of equity awards outstanding at the end of the 2016 fiscal year:
NQSOs granted under our 2006 Omnibus Plan and predecessor plans;
RSUs granted under our 2006 Omnibus Plan; and
Cash-settled SARs granted under our 2006 Omnibus Plan.
The following table shows, for each of the named executives, as of December 31, 2016 (a) the number, exercise price and expiration date of NQSOs and cash-settled SARs that were vested but not yet exercised and of NQSOs that were not vested; and (b) the number and market value of RSUs that were not vested.
Mr. White had no outstanding equity awards as of December 31, 2016. Pursuant to the terms of the applicable award agreements, upon termination of Mr. White's employment on March 31, 2016, vesting was accelerated as to all NQSOs and RSUs that otherwise would have vested within one year of his termination date. All other unvested NQSOs and RSUs were forfeited. Vested NQSOs expired on June 29, 2016. For additional information, see footnote (3) to the Potential Payments Upon Termination of Employment table below.
|
| |
| COMPENSATION-RELATED MATTERS |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Option Awards | | Stock Awards |
| Named Executive | | Award Date(1) | | Grant Date(1)(2) | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable(3) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(3)(4) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) |
| W. Foley | | 1/11/2016 | | 2/25/2016 | | 0 |
| | 126,598 |
| | 17.13 |
| | 2/25/2026 | | 59,855 |
| | 1,164,778 |
|
| | | | | | | | | | | | | | | | | |
S. Streeter(6) | | 12/9/2013 | | 12/16/2013 | | 240,829 |
| | 0 |
| | 21.29 |
| | 1/11/2017 | | | | |
| | | | | | | | | | | | | | | | | |
S. Buck(7) | | 7/6/2012 | | 8/1/2012 | | 33,389 |
| | 0 |
| | 13.96 |
| | 3/31/2017 | | 0 |
| | 0 |
|
| | | 2/11/2013 | | 2/22/2013 | | 8,953 |
| | 0 |
| | 19.02 |
| | 2/22/2023 | | 0 |
| | 0 |
|
| | | 2/17/2014 | | 2/24/2014 | | 5,370 |
| | 0 |
| | 23.02 |
| | 2/24/2024 | | 0 |
| | 0 |
|
| | | 2/16/2015 | | 3/2/2015 | | 2,246 |
| | 0 |
| | 38.06 |
| | 3/31/2017 | | 0 |
| | 0 |
|
| | | | | | | | | | | | | | | | | |
| A. Cerioli | | 10/27/2014 | | 12/1/2014 | | 2,746 |
| | 2,745 |
| | 29.50 |
| | 12/1/2024 | | 4,178 |
| | 81,304 |
|
| | | 2/16/2015 | | 3/2/2015 | | 1,321 |
| | 3,963 |
| | 38.06 |
| | 3/2/2025 | | 2,934 |
| | 57,096 |
|
| | | 6/11/2015 | | 6/12/2015 | | | | | | | | | | 1,875 |
| | 36,488 |
|
| | | 2/8/2016 | | 2/25/2016 | | 0 |
| | 24,553 |
| | 17.13 |
| | 2/25/2026 | | 11,608 |
| | 225,892 |
|
| | | | | | | | | | | | | | | | | |
| S. Kovach | | 2/4/2008 | | 2/15/2008 | | 3,621 |
| | 0 |
| | 15.35 |
| | 2/15/2018 | | | | |
| | | 2/7/2011 | | 2/10/2011 | | 3,625 |
| | 0 |
| | 17.00 |
| | 2/10/2021 | | | | |
| | | 2/6/2012 | | 2/17/2012 | | 4,624 |
| | 0 |
| | 13.95 |
| | 2/17/2022 | | | | |
| | | 2/11/2013 | | 2/22/2013 | | 5,177 |
| | 1,725 |
| | 19.02 |
| | 2/22/2023 | | 1,513 |
| | 29,443 |
|
| | | 2/17/2014 | | 2/24/2014 | | 3,207 |
| | 3,206 |
| | 23.02 |
| | 2/24/2024 | | 2,817 |
| | 54,819 |
|
| | | 2/16/2015 | | 3/2/2015 | | 1,172 |
| | 3,513 |
| | 38.06 |
| | 3/2/2025 | | 2,601 |
| | 50,615 |
|
| | | 2/8/2016 | | 2/25/2016 | | 0 |
| | 16,353 |
| | 17.13 |
| | 2/25/2026 | | 7,731 |
| | 150,445 |
|
| | | | | | | | | | | | | | | | | |
| S. Miñarro | | 2/4/2008 | | 2/15/2008 | | 3,200 |
| | 0 |
| | 15.35 |
| | 2/15/2018 | | | | |
| | | 2/9/2009 | | 2/27/2009 | | 3,500 |
| | 0 |
| | 1.01 |
| | 2/27/2019 | | | | |
| | | 2/8/2010 | | 2/11/2010 | | 6,000 |
| | 0 |
| | 10.13 |
| | 2/11/2020 | | | | |
| | | 12/6/2010 | | 12/31/2010 | | 20,000 |
| | 0 |
| | 15.47 |
| | 12/31/2020 | | | | |
| | | 2/7/2011 | | 2/10/2011 | | 7,000 |
| | 0 |
| | 17.00 |
| | 2/10/2021 | | | | |
| | | 2/6/2012 | | 2/17/2012 | | 7,500 |
| | 0 |
| | 13.95 |
| | 2/17/2022 | | | | |
| | | 7/5/2012 | | 8/1/2012 | | 3,597 |
| | 0 |
| | 13.96 |
| | 8/1/2022 | | | | |
| | | 2/11/2013 | | 2/22/2013 | | 5,939 |
| | 1,979 |
| | 19.02 |
| | 2/22/2023 | | 1,734 |
| | 33,744 |
|
| | | 2/17/2014 | | 2/24/2014 | | 3,291 |
| | 3,291 |
| | 23.02 |
| | 2/24/2024 | | 2,891 |
| | 56,259 |
|
| | | 2/16/2015 | | 3/2/2015 | | 1,585 |
| | 4,755 |
| | 38.06 |
| | 3/2/2025 | | 12,521 |
| | 243,659 |
|
| | | 2/8/2016 | | 2/25/2016 | | 0 |
| | 21,486 |
| | 17.13 |
| | 2/25/2026 | | 10,158 |
| | 197,675 |
|
| | | | | | | | | | | | | | | | | |
J. White(8) | | | | | | | | | | | | | | | | |
| |
| (1) | The Award Date is the date on which the Compensation Committee took action, and the Grant Date is the date on which we determined the number of NQSOs or RSUs, as the case may be, awarded. |
| |
| (3) | Represents NQSOs awarded under our 2006 Omnibus Plan. NQSOs granted before 2015 vest 25% on each of the first four anniversaries of the grant date. NQSOs granted in 2015 and 2016 vest 25% per year for four years beginning on February 17th of the year after the grant. |
| |
| (4) | Represents RSUs awarded under our 2006 Omnibus Plan. One share of our common stock underlies each RSU. RSUs granted in 2013, 2014 and on June 12, 2015 vest 25% on each of the first four anniversaries of the grant date. All other RSUs vest 25% per year for four years beginning on February 17th of the year after the grant. |
| |
| (5) | Represents the market value, as of December 31, 2016, of unvested RSUs. We have estimated the market value by multiplying the number of shares of common stock underlying the RSUs by $19.46, the closing price of our common stock on December 30, 2016, the last trading day of 2016. |
|
| |
| COMPENSATION-RELATED MATTERS | |
| |
| (6) | The special retention award of cash-settled SARs made to Ms. Streeter in December 2013 was scheduled to cliff vest on December 31, 2018; however, all 240,829 cash-settled SARs vested automatically upon Ms. Streeter's termination of employment on January 11, 2016. For additional information, see footnote (8) to the Potential Payments Upon Termination of Employment table below. |
| |
| (7) | Pursuant to the terms of the applicable NQSO and RSU award agreements, upon Ms. Buck's resignation on December 31, 2016, all unvested NQSOs and RSUs were forfeited. |
| |
| (8) | Mr. White had no outstanding equity awards as of December 31, 2016. When Mr. White's employment ended on March 31, 2016, vesting was accelerated as to all NQSOs and RSUs that otherwise would have vested within one year of his termination date. All other unvested NQSOs and RSUs were forfeited. Vested NQSOs expired on June 29, 2016. |
Option Exercises and Stock Vested for Fiscal 2016 Table
The following table sets forth information concerning the exercise of stock options by the named executives in 2016 and the value of RSUs that vested in 2016.
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2016
|
| | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Named Executive | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting ($)(2) | | Value Realized on Vesting ($)(3) |
| W. Foley | | 0 |
| | 0 |
| | 4,551 |
| | 80,007 |
|
| S. Streeter | | 54,801 |
| | 129,731 |
| | 150,029 |
| | 2,937,568 |
|
| S. Buck | | 0 |
| | 0 |
| | 11,747 |
| | 212,777 |
|
| A. Cerioli | | 0 |
| | 0 |
| | 3,693 |
| | 66,863 |
|
| S. Kovach | | 0 |
| | 0 |
| | 5,586 |
| | 96,832 |
|
| S. Miñarro | | 2,882 |
| | 21,846 |
| | 8,584 |
| | 149,804 |
|
| J. White | | 10,071 |
| | 9,265 |
| | 15,564 |
| | 289,490 |
|
| |
| (1) | Represents the sum of the differences between the market prices and the exercise prices for the respective awards of NQSOs exercised by the named executive officers during 2016. |
| |
| (2) | As to Mr. Foley, represents grant of unrestricted common stock in 2016. As to Ms. Streeter, represents 34,342 RSUs and 115,687 cash-settled RSUs that vested during 2016. As to all other named executives, represents the number of RSUs that vested during 2016. |
| |
| (3) | As to Mr. Foley, represents the value of unrestricted common stock granted in 2016, the value of which was determined by multiplying the number of shares by the closing price of our common stock on the grant date: $17.58. As to all other named executives, represents the value of RSUs, including cash-settled RSUs, that vested during 2016. The value was determined by multiplying the number of shares by the closing price of our common stock on the applicable vesting dates: |
|
| | |
| Vesting Date | | Closing Price ($) |
| January 11, 2016 | | 19.58 |
| February 17, 2016 | | 16.75 |
| February 22, 2016 | | 17.56 |
| February 24, 2016 | | 18.20 |
| March 31, 2016 | | 18.60 |
| June 12, 2016 | | 16.80 |
| August 1, 2016 | | 18.80 |
| December 1, 2016 | | 19.13 |
|
| |
| COMPENSATION-RELATED MATTERS |
Pension Benefits in Fiscal 2016 Table
Executives hired before January 1, 2006 are eligible for benefits under our Salary Plan and our SERP. Of our named executives, only Ms. Kovach is eligible for benefits under the Salary Plan and SERP.
The Salary Plan is a qualified plan, and the SERP is an excess, non-qualified plan designed to provide substantially identical retirement benefits as the Salary Plan to the extent that the Salary Plan cannot provide those benefits due to limitations in the Internal Revenue Code. Benefits under the Salary Plan and SERP are determined by annual contribution credits equal to a percentage of annual earnings plus interest. Ms. Kovach is eligible for a pension benefit under the Salary Plan and SERP under the cash balance formula, which is based upon the value of a notional account that had an opening balance determined in accordance with the final average pay formula described below as of January 1, 1998. Under the cash balance formula, the account balance is increased each year with a contribution amount based on the sum of age and years of service with Libbey and with interest based upon the 30-year Treasury rate.
The final average pay formula is: [(A) x (B) x (C)] + [(D) x (E) x (C)] + [(F) + (A) + (G)]
Where:
(A) Monthly final average earnings for the three highest consecutive calendar years before 2008
(B) 1.212%
(C) Years of credited service up to 35 years
(D) Monthly final average earnings above Social Security Wage base at retirement
(E) 0.176%
(F) 0.5%
(G) Years of credited service over 35 years
Only base salary and amounts earned under the SMIP are included in calculating final average earnings.
The retirement benefit may be adjusted if the employee has more or less than 35 years of credited service or retired before age 65. The Salary Plan and the SERP provide for additional benefit accruals beyond age 65 and for annual annuity benefits as well as an optional lump sum form of benefit. Ms. Kovach is entitled to a benefit computed only in accordance with the cash balance formula. None of our other named executives is eligible for a pension benefit under our Salary Plan or our SERP because their employment with Libbey did not begin before January 1, 2006.
The following table sets forth information concerning the benefits provided to the named executives under the Salary Plan and the SERP as of December 31, 2016, the date that we use for pension plan measurement for financial statement reporting purposes.
PENSION BENEFITS IN FISCAL 2016 TABLE
|
| | | | | | | | | | | |
| Named Executive | | Plan Name | | Number of Years of Credited Service (#)(1) | | Present Value of Accumulated Benefit ($)(2) | | Payments During Last Fiscal Year ($) |
| W. Foley | | N/A | | N/A |
| | N/A |
| | N/A |
|
| S. Streeter | | N/A | | N/A |
| | N/A |
| | N/A |
|
| S. Buck | | N/A | | N/A |
| | N/A |
| | N/A |
|
| A. Cerioli | | N/A | | N/A |
| | N/A |
| | N/A |
|
| S. Kovach | | Salary Plan | | 13.08 |
| | 164,229 |
| | 0 |
|
| | | SERP | | 13.08 |
| | 125,254 |
| | 0 |
|
| S. Miñarro | | N/A | | N/A |
| | N/A |
| | N/A |
|
| J. White | | N/A | | N/A |
| | N/A |
| | N/A |
|
| |
| (1) | Represents actual years of service to Libbey. The plans were frozen at the end of 2012, after which additional pension service is not credited. |
| |
| (2) | Amounts were determined based on the assumptions outlined in our audited financial statements for the year ended December 31, 2016, except that all named executives who are eligible for pension benefits under the Salary Plan are assumed to receive benefits under the cash balance design at their normal retirement age of 65. |
|
| |
| COMPENSATION-RELATED MATTERS | |
Nonqualified Deferred Compensation
The following table sets forth information with respect to our EDCP. The EDCP was the only nonqualified deferred compensation plan under which employees could defer pay earned in 2016:
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2016 TABLE
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Executive Contributions in Last FY | | Registrant Contributions in Last FY | | Aggregate Earnings in Last FY | | Aggregate Withdrawals / Distributions in Last FY | | Aggregate Balance at Last FYE(3) |
| Named Executive | | ($) | | RSUs | | ($)(1) | | RSUs | | ($)(2) | | RSUs | | ($) | | RSUs | | ($) | | RSUs |
| W. Foley | | 30,938 |
| | 0 | | 30,938 |
| | 0 | | 6 |
| | 0 | | 0 |
| | 0 | | 61,881 |
| | 0 |
|
| S. Streeter | | 2,117 |
| | 0 | | 0 |
| | 0 | | (24,001 | ) | | 0 | | (388,925 | ) | | 0 | | 0 |
| | 0 |
|
| S. Buck | | 12,113 |
| | 0 | | 12,113 |
| | 0 | | 2,055 |
| | 131 | | 0 |
| | 0 | | 83,480 |
| | 5,310 |
|
| A. Cerioli | | 68,800 |
| | 0 | | 8,800 |
| | 0 | | 1,830 |
| | 0 | | 0 |
| | 0 | | 79,430 |
| | 0 |
|
| S. Kovach | | 4,291 |
| | 0 | | 4,291 |
| | 0 | | 1,011 |
| | 407 | | 0 |
| | 0 | | 69,922 |
| | 16,530 |
|
| S. Miñarro | | 0 |
| | 0 | | 0 |
| | 0 | | 0 |
| | 0 | | 0 |
| | 0 | | 0 |
| | 0 |
|
| J. White | | 6,563 |
| | 0 | | 0 |
| | 0 | | 839 |
| | 0 | | (40,696 | ) | | 0 | | 0 |
| | 0 |
|
| |
| (1) | The following amounts are included in the column headed ‘‘All Other Compensation’’ in the Summary Compensation Table above: Mr. Foley — $30,938; Ms. Buck — $12,113; Ms. Cerioli — $8,800; Ms. Kovach— $4,291. |
| |
| (2) | Not included in the Summary Compensation Table because earnings are not at an above-market rate. |
| |
| (3) | Of the total amounts in this column, the following amounts are reported as ‘‘Salary’’ or ‘‘Stock Awards’’ in the Summary Compensation Table in this proxy statement for the 2016, 2015 and/or 2014 fiscal years: |
|
| | | | | | |
| Named Executive | | Salary ($) | | Stock Awards ($) |
| W. Foley | | 30,938 |
| | 0 |
|
| S. Streeter | | 381,251 |
| | 0 |
|
| S. Buck | | 35,288 |
| | 0 |
|
| A. Cerioli | | 68,800 |
| | 0 |
|
| S. Kovach | | 10,923 |
| | 0 |
|
| S. Miñarro | | 0 |
| | 0 |
|
| J. White | | 28,875 |
| | 0 |
|
Under the EDCP, our named executives and other members of senior management may defer base pay, cash incentive and bonus compensation and RSUs into an account that is deemed invested in one of 13 measurement funds, including a Libbey common stock measurement fund. RSUs in all events are deemed invested in the Libbey common stock measurement fund. We selected these funds to provide measurement options similar to the investment options provided under our 401(k) plan. Participants make deferral elections with respect to cash pay and RSUs before the year in which they are earned or they vest.
Participants can defer (a) up to 60% of the amount by which base salary exceeds required payroll obligations and 401(k) plan contributions; (b) up to 60% of the amount by which cash incentive or bonus compensation exceeds required payroll obligations; and (c) up to 100% of RSUs that are earned or vest during the year to which the deferral relates. We provide matching contributions on excess contributions of base salary in the same manner as we provide matching contributions under our 401(k) plan. The matching contributions are deemed invested in accordance with the participant’s election as to his or her own contributions.
The balance credited to a participant’s account, including the matching contributions that we make, is 100% vested at all times. However, the EDCP is not funded and, as a result, EDCP account balances are subject to the claims of our creditors.
We must pay the account balance in a lump sum made on, or in installments that begin on, the distribution date elected by the participant. However, if a participant dies before his or her account balance is distributed in full, we must distribute the account balance in a lump sum to the participant’s beneficiaries no later than 60 days after the participant’s death. If a participant ceases to be a Libbey employee before his or her 62nd birthday, we must pay the participant his or her account balance in a lump sum within 60 days after the date of his or her separation from service, unless the participant is a ‘‘specified
|
| |
| COMPENSATION-RELATED MATTERS |
employee’’ for purposes of Internal Revenue Code Section 409A. In that event, we must pay the participant his or her account balance on the first day of the seventh month after his or her separation from service. If a participant ceases to be a Libbey employee on or after his or her 62nd birthday, we must distribute the account balance either in a lump sum or in installments, as elected by the participant, on or beginning on the distribution date elected by the participant. In that event, the distribution date cannot be later than the January 1st immediately following the participant’s 75th birthday. If, however, the executive is a ‘‘specified employee’’ for purposes of Internal Revenue Code Section 409A, we cannot distribute the account balance, or begin distributing the account balance, to the participant before the first day of the seventh month after the participant’s separation from service. Finally, if a change in control, as defined in the EDCP, occurs, a participant’s entire account balance will be distributed to him or her within 30 days after the change in control.
EDCP hardship distributions are permitted, but there are no loan provisions. All EDCP distributions are fully taxable. Rollovers to defer taxes are not permitted.
Potential Payments Upon Termination or Change in Control
The terms of our RSU and NQSO award agreements provide for acceleration of unvested awards in the event of termination of employment under certain circumstances. Additionally, the terms of award agreements relating to the performance cash components of our 2014 LTIP (for the 2014-2016 performance cycle), 2015 LTIP (for the 2015-2017 performance cycle) and 2016 LTIP (for the 2016-2018 performance cycle) provide for payouts in the event of termination of employment under certain circumstances.
Mr. White's employment ended effective March 31, 2016. His termination was treated as a termination by Libbey without Cause under the Executive Severance Compensation Policy, and he received severance benefits and payments pursuant to the terms of the Executive Severance Compensation Policy and the agreements pursuant to which awards of RSUs, NQSOs and performance cash awards were made. The amounts of these severance benefits and payments are set forth under "Involuntary termination without Cause - no change in control triggering event."
Ms. Buck voluntarily resigned effective December 31, 2016. She received no severance benefits or payments in connection with her resignation.
For each of Ms. Streeter, Mr. White and Ms. Buck, the amounts reflected in the table on the following page are the amounts actually payable to each of them in connection with their respective terminations of employment.
With respect to all other named executives, the table provides information with respect to the amounts payable to each of them based upon the following significant assumptions:
We have assumed that the executive's employment terminated on December 31, 2016 under the various scenarios described in the table.
For purposes of illustrating the amounts payable on or in connection with a change in control, we have assumed that a change in control occurred on December 31, 2016, and that the named executive's employment terminated concurrently with the change in control.
Ms. Kovach is the only named executive eligible for benefits under our Salary Plan and SERP. As of December 31, 2016, Ms. Kovach was at least age 55 and had at least five years of service with Libbey. As a result, Ms. Kovach would have been eligible to receive a retirement benefit under our Salary Plan and SERP if she had retired on or before December 31, 2016. If any of our other named executives had retired on or before December 31, 2016, all unvested equity awards would have been forfeited.
|
| |
| COMPENSATION-RELATED MATTERS | |
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT(1)
|
| | | | | | | | | | | | | | | | | | |
| Named Executive | | Cash Severance ($) | | Annual Incentive for Year of Termination ($) | | LTIP Cash ($)(2) | | Acceleration of Unvested Equity Awards ($)(3) | | Misc. Benefits ($) | | Total ($) |
| William A. Foley | | | | | | | | | | | | |
Death or permanent disability(4) | | 0 |
| | 556,000 |
| | 980,100 |
| | 1,459,752 |
| | 0 |
| | 2,995,852 |
|
Voluntary termination(5) | | 0 |
| | 556,000 |
| | 759,550 |
| | 0 |
| | 0 |
| | 1,315,550 |
|
Involuntary termination without Cause - no change in control(6) | | 0 |
| | 556,000 |
| | 759,550 |
| | 364,944 |
| | 0 |
| | 1,680,494 |
|
Involuntary termination without Cause in connection with a change in control(7) | | 0 |
| | 556,000 |
| | 1,459,854 |
| | 1,459,752 |
| | 0 |
| | 3,475,606 |
|
| Involuntary termination for Cause | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Stephanie A. Streeter | | | | | | | | | | | | |
Involuntary termination without Cause - no change in control(8) | | 3,193,000 |
| | 24,057 |
| | 629,609 |
| | 2,978,115 |
| | 106,618 |
| | 6,931,399 |
|
| | | | | | | | | | | | | |
| Sherry Buck | | | | | | | | | | | | |
Voluntary termination without Good Reason - no change in control(9) | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Annunciata Cerioli | | | | | | | | | | | | |
Death or permanent disability(10) | | 0 |
| | 141,670 |
| | 254,404 |
| | 457,987 |
| | 0 |
| | 854,061 |
|
Voluntary termination for Good Reason - no change in control(11) | | 0 |
| | 0 |
| | 176,576 |
| | 0 |
| | 0 |
| | 176,576 |
|
Involuntary termination without Cause - no change in control(12) | | 704,006 |
| | 141,670 |
| | 176,576 |
| | 142,623 |
| | 93,393 |
| | 1,258,268 |
|
Voluntary termination for Good Reason or involuntary termination without Cause - change in control(13) | | 1,408,012 |
| | 141,670 |
| | 314,631 |
| | 457,987 |
| | 106,507 |
| | 2,428,807 |
|
| Involuntary termination for Cause | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Susan A. Kovach | | | | | | | | | | | | |
Death or permanent disability(10) | | 0 |
| | 118,695 |
| | 247,101 |
| | 324,184 |
| | 0 |
| | 689,980 |
|
Retirement(14) | | 0 |
| | 118,695 |
| | 0 |
| | 0 |
| | 289,483 |
| | 408,178 |
|
Voluntary termination for Good Reason - no change in control(11) | | 0 |
| | 0 |
| | 170,540 |
| | 0 |
| | 0 |
| | 170,540 |
|
Involuntary termination without Cause - no change in control(12) | | 514,875 |
| | 118,695 |
| | 170,540 |
| | 121,617 |
| | 88,454 |
| | 1,014,181 |
|
Voluntary termination for Good Reason or involuntary termination without Cause - change in control(13) | | 1,029,750 |
| | 118,695 |
| | 267,688 |
| | 324,184 |
| | 84,585 |
| | 1,824,902 |
|
| Involuntary termination for Cause | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| Salvador Miñarro Villalobos | | | | | | | | | | | | |
Death or permanent disability(10) | | 0 |
| | 148,156 |
| | 292,952 |
| | 582,269 |
| | 0 |
| | 1,023,377 |
|
Voluntary termination for Good Reason – no change in control(11) | | 0 |
| | 0 |
| | 199,709 |
| | 0 |
| | 0 |
| | 199,709 |
|
Involuntary termination without Cause -- no change in control(12) | | 571,266 |
| | 148,156 |
| | 199,709 |
| | 205,905 |
| | 93,393 |
| | 1,218,429 |
|
Voluntary termination for Good Reason or involuntary termination without Cause - change in control(13) | | 1,142,532 |
| | 148,156 |
| | 328,177 |
| | 582,269 |
| | 94,062 |
| | 2,295,196 |
|
| Involuntary termination for Cause | | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
| | 0 |
|
| | | | | | | | | | | | | |
| James H. White | | | | | | | | | | | | |
Involuntary termination without Cause -- no change in control(11) | | 918,750 |
| | 68,414 |
| | 93,209 |
| | 324,295 |
| | 93,808 |
| | 1,498,476 |
|
|
| |
| COMPENSATION-RELATED MATTERS |
| |
| (1) | Represents potential payments pursuant to equity award agreements (including award agreements for cash-settled retention RSUs and cash-settled retention SARs), performance cash award agreements and (a) in the case of the named executives other than Ms. Streeter or Mr. Foley, our Executive Severance Compensation Policy or their respective change in control agreements, as applicable, (b) in the case of Mr. Foley, his Letter Agreement, and (c)in the case of Ms. Streeter, her Mutual Separation and Release Agreement. Only Ms. Kovach was retirement eligible as of December 31, 2016. |
| |
| (2) | As to those triggering events for which we estimated future payouts under the performance cash component of our 2015 LTIP and 2016 LTIP, we estimated the payout under the performance cash component of our 2015 LTIP assuming achievement at 51% of target performance and we estimated the payout under the performance cash component of our 2016 LTIP assuming achievement of 89% of target performance. |
| |
| (3) | For those triggering events that result in acceleration of unvested equity awards: (a) except as to RSUs (including cash-settled RSUs) granted to Ms. Streeter and Mr. White, we have estimated the value of common stock underlying RSUs by multiplying the applicable number of RSUs by $19.46, the closing price of our common stock on December 31, 2016; and (b) except as to RSUs (including cash-settled RSUs) granted to Ms. Streeter and Mr. White, we have determined the in-the-money / intrinsic value of the applicable NQSOs by deducting the respective exercise prices for the NQSOs from $19.46 and multiplying the result (if greater than zero) by the applicable number of NQSOs. As to Ms. Streeter, the values for the RSUs (including cash-settled RSUs), NQSOs and cash-settled SARs were calculated based on the closing price of our common stock on January 11, 2016, which was $19.58. As to Mr. White, the values of the RSUs and NQSOs were calculated based on the closing price of our common stock on March 31, 2016, which was $18.60. |
| |
| (4) | Represents the sum of: |
| |
| (a) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; |
| |
| (b) | under "LTIP Cash," a target award (unprorated because the performance cycle was complete as of December 31, 2016) under the performance cash component of our 2014 LTIP and prorated target awards under the performance cash component of our 2015 LTIP and our 2016 LTIP; and |
| |
| (c) | under "Acceleration of Unvested Equity Awards," the sum of (i) the estimated value, as of December 31, 2016, of common stock underlying all RSUs that were not vested as of December 31, 2016, and (ii) the in-the-money/ intrinsic value, as of December 31, 2016, of all NQSOs that were not vested as of December 31, 2016. |
| |
| (5) | Represents the sum of: |
| |
| (a) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; and |
| |
| (b) | under "LTIP Cash," the sum of the amount actually earned under the performance cash component of our 2014 LTIP and an estimate of the prorated amount that actually would be earned under the performance cash component of each of our 2015 LTIP and 2016 LTIP (estimated as described in footnote (2) above). The prorated amounts actually earned under the performance cash component of our 2015 LTIP and 2016 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle. |
| |
| (6) | Represents the sum of: |
| |
| (a) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; |
| |
| (b) | under "LTIP Cash," the sum of the amount actually earned under the performance cash component of our 2014 LTIP and an estimate of the prorated amount that actually would be earned under the performance cash component of each of our 2015 LTIP and 2016 LTIP (estimated as described in footnote (2) above). The prorated amounts actually earned under the performance cash component of our 2015 LTIP and 2016 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle; and |
| |
| (c) | under "Acceleration of Unvested Equity Awards," the sum of (i) the estimated value, as of December 31, 2016, of common stock underlying RSUs that were not vested as of December 31, 2016 but were scheduled to vest by December 31, 2017, and (ii) the in-the-money/ intrinsic value, as of December 31, 2016, of NQSOs that were not vested as of December 31, 2016 but were scheduled to vest by December 31, 2017. |
| |
| (7) | Represents the sum of: |
| |
| (a) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; and |
| |
| (b) | under "LTIP Cash," the sum of the amount actually earned under the performance cash component of our 2014 LTIP and an estimate of the unprorated amount that actually would be earned under the performance cash component of each of our 2015 LTIP and 2016 LTIP (estimated as described in footnote (2) above). The unprorated amounts actually earned under the performance cash component of our 2015 LTIP and 2016 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle; and |
|
| |
| COMPENSATION-RELATED MATTERS | |
| |
| (c) | under "Acceleration of Unvested Equity Awards," the sum of (i) the estimated value, as of December 31, 2016, of common stock underlying all RSUs that were not vested as of December 31, 2016, and (ii) the in-the-money/ intrinsic value, as of December 31, 2016, of all NQSOs that were not vested as of December 31, 2016. |
| |
| (8) | Represents the sum of: |
| |
| (a) | under "Cash Severance," two times the sum of (a) her annual base salary in effect on the date of termination; and (b) her target 2016 SMIP opportunity, with such amount being payable in equal monthly installments over a period of 24 months; |
| |
| (b) | under "Annual Incentive for Year of Termination," the amount earned under our 2016 SMIP based on Ms. Streeter's base salary earnings for 2016 and forecasted Company performance as of the end of January 2016. This amount was paid to Ms. Streeter in March 2016; |
| |
| (c) | under "LTIP Cash," the sum of the amount actually earned under the performance cash component of our 2014 LTIP, 2015 LTIP and 2016 LTIP, based on forecasted Company performance as of the end of January 2016, and prorated to Ms. Streeter's termination date. This amount was paid to Ms. Streeter in March 2016; |
| |
| (d) | under "Acceleration of Unvested Equity Awards," the sum of (i) the value, as of January 11, 2016, of common stock underlying all cash-settled retention RSUs; (ii) the value, as of January 11, 2016, of common stock underlying stock-settled RSUs scheduled to vest on or before June 30, 2016; and (iii) the in-the-money / intrinsic value, as of January 11, 2016, of all NQSOs scheduled to vest on or before June 30, 2016. Ms. Streeter's cash-settled retention SARs were underwater as of January 11, 2016; and |
| |
| (e) | under "Misc. Benefits," the sum of the maximum cost ($75,000) to be incurred by Libbey to provide executive level outplacement services for two years following termination and the estimated cost (net of contributions by Ms. Streeter at the active employee rate) to provide medical, dental, prescription drug and life insurance coverage for 18 months following termination. |
| |
| (9) | Ms. Buck did not receive any severance payments or benefits in connection with her resignation. |
| |
| (10) | Represents the sum of: |
| |
| (a) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; |
| |
| (b) | under "LTIP Cash," a target award (unprorated because the performance cycle was complete as of December 31, 2016) under the performance cash component of our 2014 LTIP and prorated target awards under the performance cash component of our 2015 LTIP and our 2016 LTIP; and |
| |
| (c) | under "Acceleration of Unvested Equity Awards," the sum of (i) the estimated value, as of December 31, 2016, of common stock underlying all RSUs that were not vested as of December 31, 2016, (iii) the in-the-money/ intrinsic value, as of December 31, 2016, of all NQSOs that were not vested as of December 31, 2016. |
| |
| (11) | Under "LTIP Cash," represents prorated actual awards under the performance cash component of our 2014 LTIP, 2015 LTIP and 2016 LTIP (estimated as described in footnote (2) above). We have prorated the amounts through the assumed date of termination. The prorated amounts actually earned under the performance cash component of our 2015 LTIP and 2016 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle. |
| |
| (12) | Represents the sum of: |
| |
| (a) | under "Cash Severance," salary continuation for 12 months and a lump sum payment in an amount equal to the named executive's target annual incentive compensation, based on the annual base salary and target opportunity percentage in effect on the date of termination; |
| |
| (b) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; |
| |
| (c) | under "LTIP Cash," prorated actual awards under the performance cash component of our 2014 LTIP, 2015 LTIP and 2016 LTIP (estimated as described in footnote (2) above). We have prorated the amounts through the assumed date of termination. The prorated amounts actually earned under the performance cash component of our 2015 LTIP and 2016 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle; |
| |
| (d) | under "Acceleration of Unvested Equity Awards," the sum of (i) the estimated value, as of December 31, 2016, of common stock underlying RSUs that were not yet vested as of December 31, 2016, and were scheduled to vest by December 31, 2017; (ii) the in-the-money / intrinsic value, as of December 31, 2016, of NQSOs that were not yet vested as of December 31, 2016, and were scheduled to vest by December 31, 2017; and |
| |
| (e) | under "Misc. Benefits," the sum of (i) the estimated cost (net of contributions by the named executive, at the active employee rate) of continued medical, dental, prescription drug and life insurance coverage for a period of 12 months following termination, and (ii) executive outplacement services for a period of one year from termination at the rate of $75,000 per year. |
|
| |
| COMPENSATION-RELATED MATTERS |
| |
| (13) | Represents the sum of: |
| |
| (a) | under "Cash Severance," the sum of two times the named executive's annual base salary and two times the named executive’s target award under our 2016 SMIP, at the annual base salary and target incentive opportunity in effect on the date of termination; |
| |
| (b) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; |
| |
| (c) | under "LTIP Cash," the sum of the amount actually earned under the performance cash component of our 2014 LTIP and an estimate (without proration) of the amount the named executive would earn under the performance cash component of each of our 2015 LTIP and our 2016 LTIP (estimated as described in footnote (2) above). The unprorated amounts actually earned under the performance cash component of our 2015 LTIP and 2016 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle; |
| |
| (d) | under "Acceleration of Unvested Equity Awards," the estimated value, as of December 31, 2016, of common stock underlying RSUs not yet vested as of that date and the in-the-money / intrinsic value, as of December 31, 2016, of NQSOs not yet vested as of that date; and |
| |
| (e) | under "Misc. Benefits," the sum of (i) the maximum cost (15% of base salary) to be incurred by Libbey to provide executive level outplacement services for two years after termination; (ii) the estimated cost (net of contributions by the named executive at the active employee rate) of continued medical, dental, prescription drug and life insurance coverage for 18 months following termination; and (iii) and the maximum cost ($10,000) to provide financial planning services to the named executive. |
| |
| (14) | Represents the sum of: |
| |
| (a) | under "Annual Incentive for Year of Termination," the amount actually earned under our 2016 SMIP; and |
| |
| (b) | under "Misc. Benefits," the present value of Ms. Kovach's accumulated benefit under our Salary Plan and SERP at December 31, 2016. |
In addition, if the Compensation Committee were to exercise discretion to accelerate unvested RSUs and NQSOs that were scheduled to vest by December 31, 2017, we estimate that the value, as of December 31, 2016, of the accelerated RSUs would be $111,331, and that the in-the-money / intrinsic value, as of December 31, 2016, of the accelerated NQSOs would be $10,286. We estimated these values in the manner described in footnote (3) above.
|
| |
| COMPENSATION-RELATED MATTERS | |
Non-Management Directors’ Compensation in 2016
Our management directors do not receive additional pay for service on the Board of Directors. Upon his appointment to CEO on January 12, 2016, Mr. Foley was no longer entitled to receive any additional compensation for service as a director. He was, however, entitled to receive the annual equity award granted to non-management directors at the 2016 annual meeting of shareholders, as the award is attributable to service for the 2015 fiscal year. The grant date fair value of this award is included in the Summary Compensation Table above.
Each of our non-management directors receives the following compensation for their service on the board and its committees. For service periods of less than one year, amounts are prorated.
|
| | |
| Element of Compensation | | Annual Compensation Amount |
| Annual Cash Retainer | | $47,500 |
| Lead Independent Director Cash Retainer | | $20,000 |
| Equity Award | | On the date of each annual meeting of shareholders, outright grant of shares of common stock valued at $80,000 on the date of grant |
Committee Chair Cash Retainers (in addition to Committee Member Cash Retainers) | | $12,500 (Audit Committee and Compensation Committee) |
| $6,500 (Nominating and Governance Committee) |
| Committee Member Cash Retainers | | $7,500 (Audit Committee and Compensation Committee) |
| $5,000 (Nominating and Governance Committee) |
| Other Fees | | $500 per one-half day of service |
The Lead Independent Director Cash Retainer replaced the Chairman of the Board Cash Retainer, which was discontinued when we combined the roles of Chairman of the Board and Chief Executive Officer in January 2016.
Pursuant to the Director Deferred Compensation Plan, directors may elect to defer cash and/or equity compensation into any of 13 measurement funds. The Director DCP and the predecessor deferred compensation plans for which non-management directors were eligible are unfunded plans, and the Company does not guarantee an above-market return on amounts deferred under these plans. Amounts deferred under the Director DCP or a predecessor plan are, at the director's election, payable either in a lump sum or in installments over a period of time selected by the director. Amounts deferred under our first deferred compensation plan for outside directors are payable in a lump sum upon the earlier of the director's death or retirement from our Board.
We reimburse our non-management directors for their travel expenses incurred in attending Board or Board committee meetings, and for fees and expenses incurred in attending director education seminars and conferences. The directors do not receive any other personal benefits.
|
| |
| COMPENSATION-RELATED MATTERS |
The table below shows the pay received by our non-management directors in 2016. Compensation received by Mr. Foley in 2016 for his service as a non-management director is included in the Summary Compensation Table above. DIRECTOR COMPENSATION FOR YEAR ENDED DECEMBER 31, 2016
|
| | | | | | | | | | | | | |
| Director | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | | All Other Compensation ($) | | Total ($) |
| Carlos V. Duno | | 72,500 |
| | 80,007 |
| | 0 | | 0 | | 152,507 |
|
| Peter C. McC. Howell | | 16,630 |
| | 80,007 |
| | 0 | | 0 | | 96,637 |
|
| Ginger M. Jones | | 75,000 |
| | 80,007 |
| | 0 | | 0 | | 155,007 |
|
| Theo Killion | | 60,421 |
| | 80,007 |
| | 0 | | 0 | | 140,428 |
|
| Eileen A. Mallesch | | 42,079 |
| | 0 |
| | 0 | | 0 | | 42,079 |
|
| Deborah G. Miller | | 60,693 |
| | 80,007 |
| | 0 | | 0 | | 140,700 |
|
| Carol B. Moerdyk | | 60,000 |
| | 80,007 |
| | 0 | | 0 | | 140,007 |
|
| John C. Orr | | 87,587 |
| | 80,007 |
| | 0 | | 0 | | 167,594 |
|
| |
| (1) | Includes pay deferred into the Libbey common stock measurement fund pursuant to the Director DCP. |
| |
| (2) | Represents the grant date fair value, determined in accordance with FASB ASC Topic 718, of awards of stock made to non-management directors on May 10, 2016. On that date, we awarded certain non-management directors stock having a grant date fair value of $17.58 per share. |
| |
| (3) | We do not maintain a pension plan for our non-management directors. We do not guarantee any particular rate of return on any pay deferred pursuant to our deferred compensation plans. Dividends on pay deferred into the Libbey Inc. phantom stock or measurement fund under our deferred compensation plans for non-management directors accrue only if and to the extent payable to holders of our common stock. Pay deferred into interest-bearing accounts under our deferred compensation plans for non-management directors does not earn an above-market return, as the applicable interest rate is the yield on ten-year treasuries. Pay deferred into other measurement funds under our deferred compensation plans for non-management directors does not earn an above-market return as that pay earns a return only if and to the extent that the net asset value of the measurement fund into which the pay is deemed invested actually increases. |
AUDIT-RELATED MATTERS
|
|
PROPOSAL 4 — RATIFICATION OF AUDITORS |
The Audit Committee has appointed Deloitte & Touche LLP to serve as our independent auditors for our 2017 fiscal year. Although ratification by the shareholders is not required by law, the Board of Directors believes that you should be given the opportunity to express your views on the subject. See‘‘Proposal 3 — RatificationUnless otherwise directed, proxies will be voted for ratification.
The Board of
Auditors’’above.A representativeDirectors recommends a vote FOR this proposal.
Who are Libbey’s auditors?
For our 2016 fiscal year, Deloitte & Touche LLP served as the Company's independent registered public accounting firm. The Audit Committee has appointed Deloitte & Touche LLP to serve as our independent auditors for our 2017 fiscal year.
Representatives of
ErnstDeloitte &
YoungTouche LLP
isare expected to attend the Annual Meeting and will have an opportunity to make a statement if
the representativethey so
desires.desire. The
representativerepresentatives will be available to respond to appropriate questions.
What fees did Libbey pay to its auditors for Fiscal
20132016 and
2012?2015?
For the years ended December 31, 20132015 and December 31, 2012, Ernst2016, Deloitte & YoungTouche LLP served as the Company’sCompany's external auditors. Fees for services rendered by ErnstDeloitte & YoungTouche LLP for the years ended December 31, 20132016 and 2012December 31, 2015 are as follows: | | | | | | | | | | |
Nature of Fees | | 2013 Fees | | 2012 Fees |
Audit Fees(1) | | | $ | 1,189,612 | | | | $ | 1,132,613 | |
Audit Related Fees(2) | | | | 80,000 | | | | | 80,000 | |
Tax Fees(3) | | | | 19,966 | | | | | 0 | |
All Other Fees | | | | 0 | | | | | 0 | |
| | | | | | | | | | |
Total | | | $ | 1,289,578 | | | | $ | 1,212,613 | |
| | | | | | | | | | |
|
| | | | | | | | |
| Nature of Fees | | 2016 Fees | | 2015 Fees |
Audit Fees(1) | | $ | 1,116,444 |
| | $ | 1,112,248 |
|
Audit-Related Fees(2) | | 112,840 |
| | 115,200 |
|
Tax Fees(3) | | 0 |
| | 33,900 |
|
| All Other Fees | | 0 |
| | 0 |
|
| Total | | $ | 1,229,284 |
| | $ | 1,261,348 |
|
| |
| (1) | Audit Fees include fees associated with the annual audit of our internal controls, the annual audit of financial statements, the reviews of our quarterly reports on Form 10-Q and annual report on Form 10-K and statutory audit procedures. |
| |
| (2) | Audit-related fees include fees for audits of our employee benefit plans. The 2015 fees represent payments for the audits of our employee benefit plans for the year ended December 31, 2014, which were performed by Ernst & Young LLP. The 2016 fees represent payments for the audits of our employee benefit plans for the year ended December 31, 2015, which were performed by Deloitte & Touche LLP. |
| |
| (3) | Tax fees include feesare for services providedanalysis that was performed in 2015 on new U.S. tangible property regulations and was contracted and started in 2014, prior to the appointment of Deloitte & Touche LLP as our Mexican subsidiaries for the filing of customs declarations for imports of products into Mexico. independent registered accounting firm. |
All audit-related, tax and other services were pre-approved by the Audit Committee, which concluded that the provision of these services by
ErnstDeloitte &
YoungTouche LLP was compatible with the maintenance of that firm’s independence in the conduct of its audit functions. The Audit Committee’s policy regarding auditor independence requires pre-approval by the Audit Committee of audit, audit-related and tax services on an annual basis. The policy requires that engagements that the auditors or management anticipates will exceed pre-established thresholds must be separately approved. The policy also provides that the Committee will authorize one of its members to pre-approve certain services. The Committee
has appointed
Carlos V. Duno,Ginger Jones, Chair of the Committee, to pre-approve these services.
Report of the Audit Committee
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing by Libbey under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Libbey specifically incorporates this Report by reference therein.
The Audit Committee oversees the integrity of our financial statements on behalf of the Board of Directors; the adequacy of our systems of internal controls; our compliance with legal and regulatory requirements; the qualifications and independence of our independent auditors; and the performance of our independent auditors and of our internal audit function.
In fulfilling its oversight responsibilities, the Audit Committee has direct responsibility for, among other things: confirming the independence of our independent auditors;
appointing, compensating and retaining our independent auditors;
reviewing the scope of the audit services to be provided by our independent auditors, including the adequacy of staffing and compensation;
approving non-audit services;
overseeing management’s relationship with our independent auditors;
overseeing management’s implementation and maintenance of effective systems of internal and disclosure controls;
reviewing our internal audit program; and
together with the Board and its other standing committees, overseeing our enterprise risk management program.
The Audit Committee reviews and discusses with management and the independent auditors all annual and quarterly financial statements
prior tobefore their issuance. The Audit Committee’s discussions with management and the independent auditors include a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
With respect to the audited financial statements for the year ended December 31,
2013,2016, the Audit Committee met both with management and with the independent auditors who are responsible for auditing the financial statements prepared by management and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States. The Audit Committee also met with each of the independent auditors and the internal auditors without management being present. The Audit Committee discussed with the independent auditors and management the results of the independent auditors’ examinations; their judgments as to the quality, not just the acceptability, of our accounting principles; the adequacy and effectiveness of our accounting and financial internal controls; the reasonableness of significant judgments; the clarity of disclosures in the financial statements; and such other matters as are required to be communicated to the Audit Committee under
generally accepted auditing standards, including Accounting Standards Board Statement on Auditing Standards
Standard No. 61,
Communication with Audit Committees. In addition,as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The independent auditors provided the Audit Committee
with the written disclosures and the letter required by applicable requirements of the Public Accounting Oversight Board regarding the independent auditors' communications with the Audit Committee concerning independence, and the Audit Committee has discussed with the independent auditors
the auditors’ independence from management and Libbey, including the matters in the written disclosures required by the Independence Standards Board, Standard No. 1, Independence Discussions with Audit Committees.their independence.
Taking all of these reviews and discussions into account, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31,
2013,2016, for filing with the Securities and Exchange Commission.
Carlos V. Duno, Chair
William A. Foley(1)
Peter C. McC. Howell
Carol B. Moerdyk
John C. Orr
(1) | Appointed to the Audit Committee in October 2013.
|
COMPENSATION-RELATED MATTERS
Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides information regarding our 2013 executive pay program, particularly as it relates to the following individuals, who are our ‘‘named executives’’ for 2013:
| | |
Named Executive
| Ginger M. Jones, Chair | |
Title
| Theo Killion | |
| Eileen A. Mallesch | |
| Deborah G. Miller | |
| John C. Orr | |
|
| |
Stephanie A. Streeter
STOCK OWNERSHIP | |
STOCK OWNERSHIP
Who are the largest owners of Libbey stock?
The following table shows information with respect to the persons we know to be beneficial owners of more than 5% of our common stock as of December 31, 2016, based solely on filings made by such beneficial owners with the SEC:
|
| | | | | | | | | | |
| Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
Frontier Capital Management Co., LLC.(1) | | | | |
| 99 Summer Street | | | | |
| Boston, MA 02110 | | 2,164,994 | | 9.9% |
| | | | | |
RBC Global Asset Management (U.S.) Inc.(2) | | | | |
| 50 South Sixth Street, Suite 2350 | | | | |
| Minneapolis, MN 55402 | | 1,889,001 | | 8.6% |
| | | | | |
BlackRock, Inc.(3) | | | | |
| 55 East 52nd Street | | | | |
| New York, NY 10055 | | 1,292,374 | | 5.9% |
| | | | | |
Dimensional Fund Advisors LP(4) | | | | |
| Building One | | | | |
| 6300 Bee Cave Road | | | | |
| Austin, TX 78746 | | 1,228,844 | | 5.6% |
| | | | | |
Boston Partners(5) | | | | |
| One Beacon Street | | | | |
| Boston, MA 02108 | | 1,195,143 | | 5.5% |
| | | | | |
The Vanguard Group(6) | | | | |
| 100 Vanguard Boulevard | | | | |
| Malvern, PA 19355 | | 1,103,770 | | 5.1% |
Chief Executive Officer
|
| |
Sherry Buck
| |
Vice President, Chief Financial Officer
| |
| (1) | Schedule 13G filed with the SEC on behalf of Frontier Capital Management Co., LLC. ("Frontier"), an investment adviser, indicates that, as of December 31, 2016, Frontier was the beneficial owner of 2,164,994 common shares, with sole dispositive power as to all of such shares, shared dispositive power as to none of such shares, sole voting power as to 758,964 common shares, and shared voting power with respect to no common shares. |
| |
| (2) | Amendment No. 4 to Schedule 13G filed with the SEC on behalf of RBC Global Asset Management (U.S.) Inc. (‘‘RBC’’), an investment adviser, indicates that, as of December 31, 2016, RBC was the beneficial owner of 1,889,001 common shares, with sole dispositive power as to none of such shares, shared dispositive power as to all of such shares, sole voting power with respect to no common shares, and shared voting power with respect to 1,650,102 common shares. |
| |
| (3) | Schedule 13G filed with the SEC on behalf of BlackRock, Inc. ("BlackRock"), a parent holding company, indicates that, as of December 31, 2016, BlackRock was the beneficial owner of 1,292,374 common shares, with sole dispositive power as to all of such shares, shared dispositive power as to none of such shares, sole voting power with respect to 1,241,664 common shares, and shared voting power with respect to no common shares. |
| |
| (4) | Amendment No. 1 to Schedule 13G filed with the SEC on behalf of Dimensional Fund Advisors LP ("Dimensional"), an investment adviser, indicates that, as of December 31, 2016, Dimensional was the beneficial owner of 1,228,884 common shares, with sole dispositive power as to all of such shares, shared dispositive power as to none of such shares, sole voting power with respect to 1,170,018 common shares, and shared voting power with respect to no common shares. |
| |
| (5) | Schedule 13G filed with the SEC on behalf of Boston Partners ("Boston"), an investment adviser, indicates that, as of December 31, 2016, Boston was the beneficial owner of 1,195,143 common shares, with sole dispositive power as to all of such shares, shared dispositive power as to none of such shares, sole voting power with respect to 704,280 common shares, and shared voting power with respect to no common shares. |
| |
| (6) | Schedule 13G filed with the SEC on behalf of The Vanguard Group ("Vanguard"), an investment adviser, indicates that, as of December 31, 2016, Vanguard was the beneficial owner of 1,103,770 common shares, with sole dispositive power as to 1,075,574 of such shares, shared dispositive power as to 28,196 of such shares, sole voting power with respect to 27,994 common shares and shared voting power with respect to 1,700 common shares. |
|
| |
Richard I. Reynolds
| STOCK OWNERSHIP |
How much Libbey stock do our directors and officers own?
Stock Ownership / Retention Guidelines
Non-Management Director Retention Guidelines. In late 2015, we transitioned our non-management director stock ownership guidelines to stock retention guidelines in order to provide greater parity between long-time non-management directors and our newer non-management directors, to further align our non-management directors' interests with those of shareholders, and to further promote our commitment to sound corporate governance. Under our Director Retention Guidelines, each non-management director is generally required to retain, until the first to occur of his or her death or retirement from the Board, 100% of the shares of Libbey common stock issued to him or her on the date of each annual shareholders meeting and all other shares of Libbey common stock that he or she owned as of November 1, 2015 or otherwise may acquire after November 1, 2015. The Director Retention Guidelines do not apply to cash or stock compensation that was deferred by a non-management director, before November 1, 2015, pursuant to any of our deferred compensation plans covering non-management directors if:
Pursuant to the applicable deferral election in effect immediately before November 1, 2015, the deferred compensation is to be distributed on a date that may precede the first to occur of the non-management director's death or retirement from the Board; and
In the case of deferred cash compensation, the cash was deemed invested in "phantom stock" or the Libbey common stock fund pursuant to the applicable deferred compensation plan.
As of March 20, 2017, all of our existing non-management directors are in compliance with the Director Retention Guidelines.
Executive Stock Ownership / Retention Guidelines. In October 2007, we established guidelines pursuant to which our executive officers also are required to achieve ownership of meaningful amounts of equity in Libbey. We refer to the guidelines, as originally established, as the Original Guidelines.
Under the Original Guidelines, each executive officer was required to own a specified number of shares of Libbey common stock equal to a multiple of his or her base salary in effect on January 1, 2008 or, if later, the date on which the executive officer became subject to the guidelines. Ms. Kovach is the only executive officer who remains subject to the Original Guidelines. As of December 31, 2016, she was in compliance with the Original Guidelines.
In late 2012, we transitioned our executive stock ownership guidelines to stock retention guidelines to provide greater parity between long-time executive officers and our newer executive officers and to further align our executives’ interests with those of shareholders. We refer to the new stock retention guidelines as the Executive Retention Guidelines.
Under the Executive Retention Guidelines, each executive is generally required to retain, until his or her separation from service:
50% of the net after-tax shares underlying each grant of RSUs made after January 1, 2013 that subsequently vests; and
50% of the net after-tax shares underlying NQSOs granted after January 1, 2013 that the executive subsequently exercises.
Ms. Kovach is exempt from the Executive Retention Guidelines until January 1, 2018. Until then, she may sell or otherwise dispose of our stock, but only to the extent of any shares in excess of her ownership guideline under the Original Guidelines.
Executives nearing retirement are released from our guidelines on the date the Board is notified of the planned retirement, or one year before the contemplated retirement date, whichever is later.
As of December 31, 2016, Messrs. Foley and Minarro and Ms. Cerioli were in compliance with the Executive Retention Guidelines.
Executive Vice President, Strategy Program Management, until November 30, 2013, when he retired after 43 years of dedicated service |
| |
Daniel P. Ibele
STOCK OWNERSHIP | |
Beneficial Ownership Table
The following table shows, as of March 20, 2017, the number of shares of our common stock and percentage of all issued and outstanding shares of our common stock that are beneficially owned by our directors, the named executives and our directors and executive officers as a group. With respect to those named executives were no longer employed by the Company as of March 20, 2017, the information included in this table is accurate to the best of our knowledge. Our address, as set forth on the Notice of Annual Meeting of Shareholders, is the address of each director and named executive set forth below. The shares owned by the named executives set forth below include the shares held in their accounts in our 401(k) plan. An asterisk indicates ownership of less than one percent of the outstanding stock.
|
| | | | | | |
| Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
Sherry Buck(1)(2)(4) | | 69,538 |
| | | * |
Anunciata (Nucci) Cerioli(1)(2) | | 18,116 |
| | | * |
Carlos V. Duno(3) | | 37,648 |
| | | * |
William A. Foley(1)(2)(3) | | 89,376 |
| | | * |
Ginger M. Jones(3) | | 10,599 |
| | | * |
Theo Killion(3) | | 6,381 |
| | | * |
Susan A. Kovach(1)(2) | | 50,788 |
| | | * |
Eileen A. Mallesch(3) | | 0 |
| | | * |
Deborah G. Miller(3) | | 25,492 |
| | | * |
Salvador Miñarro Villalobos(1)(2) | | 86,596 |
| | | * |
Carol B. Moerdyk(3) | | 38,095 |
| | | * |
John C. Orr(3) | | 29,423 |
| | | * |
Stephanie A. Streeter(1)(2)(4) | | 109,350 |
| | | * |
James H. White(1)(2)(4) | | 10,413 |
| | | * |
Directors and Executive Officers as a Group(1)(2)(3)(4) | | 600,344 |
| | | 2.74% |
Vice President, General Manager, U.S. and Canada
|
| |
Susan A. Kovach
| |
| |
| (1) | Does not include shares of our common stock that have vested but are deferred under our Executive Deferred Compensation Plan, which we refer to as our EDCP. As of March 20, 2017, each of our named executives, and all executive officers as a group, had the following number of shares of our common stock that are vested but deferred under our EDCP: |
|
| | | |
| Named Executive | | Vice President, General CounselNumber of Deferred Shares
|
| S. Buck | | 5,355 |
|
| A. Cerioli | | 0 |
|
| W. Foley | | 0 |
|
| S. Kovach | | 16,670 |
|
| S. Miñarro | | 0 |
|
| S. Streeter | | 0 |
|
| J. White | | 0 |
|
| All executive officers as a group | | 22,025 |
|
| |
| (2) | Includes the following number of NQSOs that have been granted to our named executives and Secretaryall executive officers as a group and that currently are exercisable or will be exercisable on or before May 19, 2017: |
|
| | | |
| Named Executive | | Number of Outstanding Stock Options Exercisable Within 60 Days |
| S. Buck | | 49,958 |
|
| A. Cerioli | | 11,527 |
|
| W. Foley | | 31,650 |
|
| S. Kovach | | 30,014 |
|
| S. Miñarro | | 72,194 |
|
| S. Streeter | | 0 |
|
| J. White | | 0 |
|
| All executive officers as a group | | 210,693 |
|
|
| |
Timothy T. Paige
| | Vice President, Human Resources
STOCK OWNERSHIP |
Executive Summary
2013 Financial and Operational Highlights.As we announced in our 2012 Annual Report, our goal for 2013 was to build a foundation for future growth --Setting the Table for Tomorrow --by continuing to implementLibbey 2015, our cohesive strategic roadmap, announced in July 2012, for improving efficiency and better leveraging our strengths. As the charts set forth on page (ii) of the Proxy Statement Summary demonstrate, we made great strides toward this goal.
Although we failed to achieve top-line growth in 2013 (experiencing instead a 0.8% decline in net sales that was partially attributable to our decision to exit some unprofitable sales as we realigned our North American capacity), we achieved:
net income of $28.5 million, an increase of $21.5 million, or 307%, compared to 2012;
EBIT of $73.7 million, an increase of $23.3 million, or 46.2%, compared to 2012;
record-high adjusted EBITDA of $134.4 million;
adjusted EBITDA margin of 16.4%, within our target range of 15-18% and our highest adjusted EBITDA margin since 2002;
net debt to adjusted EBITDA of 2.8X, within our target range of 2.5-3.0X; and
return on invested capital of 14.7%, well above our target range of 11-13%.
In addition, we continued our trend of positive returns to our shareholders, as can be seen in the performance graph below:
See“How does Libbey determine the forms and amounts of pay?”below for information regarding the peer group referred to in the above graph and table.
Finally, in 2013 we took a number of significant steps to position Libbey for future growth:
In February 2013, we announced a plan to recalibrate our product assortment to adapt to existing market conditions and focus on a more profitable product mix. Pursuant to that plan, we realigned our North American production by reducing capacity in our Shreveport, Louisiana manufacturing facility, and we exited the sale of certain glassware items, enabling us to better leverage available capacity at other locations.
We invested $20 million in an expanded furnace and related equipment at our Monterrey, Mexico facility to enable us to leverage our existing manufacturing footprint and position us for future growth and expansion in our business in Mexico and Latin America.
In November 2013, we announced a $20 million investment that will bring to our operations in Shreveport, Louisiana, new, state-of-the-art technology capable of innovative, proprietary glass-making processes designed to keep us at the forefront of the glass tableware industry.
2013 Executive Compensation Highlights.At our 2013 Annual Meeting of shareholders, our say-on-pay proposal garnered the support of over 96% of the shares voted. Our Compensation Committee interpreted the results of the vote as an affirmation of our executive pay program and, as a result, the Committee generally retained the same structure for our 2013 executive pay program.
However, during 2013 the Committee did take the following notable actions regarding the pay of our named executives:
| |
| (3) | Includes the following number of shares of our common stock that are deferred by non-management directors under our 2009 Director Deferred Compensation Plan, which we refer to as our Director DCP, and that are payable as shares of our common stock: |
|
| | | |
Date
Name of Director | | Action Taken:
Number of Deferred Shares |
February 2013
C. Duno | | • Approved base salary increases, to be effective April 1, 2013, averaging 3.2% and ranging from 0% to 7.4%.
• Approved slightly modified designs for our 2013 SMIP and the performance cash component of our 2013 LTIP. The 2013 SMIP design eliminates the separate payout opportunity for individual performance, choosing instead to use individual performance to differentiate payouts based on company performance through application of an individual performance modifier. Under the performance cash component of the 2013 LTIP, the Committee replaced the adjusted EBITDA performance metric with two performance metrics – one (adjusted EBITDA margin) designed to focus on profitability, and the other (the ratio of net debt to adjusted EBITDA) designed to focus on financial leverage. These performance metrics are consistent with the financial goals articulated as part of ourLibbey 2015strategy (discussed on page (i) of the Proxy Statement Summary) and are distinct from the performance metrics (adjusted EBITDA and cash generation) employed in our 2013 SMIP.
• Awarded RSUs and NQSOs with ratable, four-year vesting.
24,522 |
|
October 2013
W. Foley(a) | | • Approved the accelerated vesting of unvested RSUs and NQSOs upon Mr. Reynolds’s November 30, 2013 retirement in recognition of his significant accomplishments during his more than 43 years of service to Libbey.
0 |
|
December 2013
G. Jones | | • In order to ensure0
|
|
| T. Killion | | 0 |
|
| E. Mallesch | | 0 |
|
| D. Miller | | 0 |
|
| C. Moerdyk | | 0 |
|
| J. Orr | | 0 |
|
| All non-management directors as a group | | 24,522 |
|
Does not include the following number of shares of phantom stock that are held by non-management directors pursuant to our deferred compensation plans for outside directors and that are payable in cash:
|
| | | |
| Name of Director | | Number of Phantom Shares |
| C. Duno | | 0 |
|
W. Foley(a) | | 12,348 |
|
| G. Jones | | 0 |
|
| T. Killion | | 0 |
|
| E. Mallesch | | 0 |
|
| D. Miller | | 2,298 |
|
| C. Moerdyk | | 19,347 |
|
| J. Orr | | 0 |
|
| All non-management directors as a group | | 33,993 |
|
(a) Mr. Foley was a non-management director from 1994 until he assumed the role of CEO on January 12, 2016.
| |
| (4) | Based on last known information as of date of separation from service. For Ms. Streeter’s continued leadership of Libbey untilBuck, that date was December 31, 2018, authorized Libbey to enter into a CEO Retention Award Agreement pursuant to which Libbey granted to2016. For Ms. Streeter, cash-settled SARs having an economic value, at thethat date of grant, equal to $2,500,000 and agreed to grant to Ms. Streeter, in February 2014, cash-settled RSUs having an economic value, at thewas January 11, 2016. For Mr. White, that date of grant, equal to $2,500,000.was March 31, 2016. |
What areIn addition to outstanding shares of common stock that our named executives beneficially owned as of March 20, 2017 or, for those no longer employed by the
objectivesCompany as of
Libbey’sthat date, as of their last date of employment, the named executives and all executive
pay program?Our 2013 executive pay program was structured to achieveofficers as a group have received the following objectives:
grants of RSUs that have not yet vested: |
| • | | |
| Named Executive | | Talent Attraction and Retention Objective. The Compensation Committee and Board believe that attracting and retaining talented executives are critical to achieving ourLibbey 2015strategy and returning Libbey to consistent, profitable growth over the long term. Accordingly, our 2013 executive pay program made use
Number of market-competitive base salaries and incentive opportunities, limited perquisites such as financial and tax planning and executive physical examinations, and limited retention tools such as time-based Unvested RSUs NQSOs and SARs.(1) |
| •S. Buck | | Motivational Objective.As noted elsewhere in this proxy statement, execution of ourLibbey 2015 strategy is critical to returning Libbey to consistent, profitable growth. Accordingly, we structured our 2013 executive pay program to provide market-competitive financial incentive opportunities, including cash awards under our 2013 SMIP and the cash component of our LTIP, to motivate our executives to execute ourLibbey 2015 strategy.
0 |
|
| •A. Cerioli | | Alignment Objective. Our executive pay program was structured to align the interests of our executives with those of our shareholders generally. Our 2013 SMIP and the performance cash component of our LTIP provide meaningful incentive opportunities to ensure that our executives take the necessary actions to achieve our strategy, which we believe will continue to create long-term shareholder value. Additionally, because the value, if any, that our executives will realize upon vesting of the RSUs, NQSOs and SARs included in our 2013 executive pay program fluctuates with our stock price, we believe that these forms of pay, together with the cash incentive opportunities under our 2013 SMIP and our LTIP, significantly align the interests of our named executives and our other shareholders. This alignment can be seen in the following chart, which compares our CEO’s realized pay to the closing price of our stock on December 31st of each year and to the total compensation shown for her under the “Total” column (which we refer to as “SCT Pay”) of the Summary Compensation Table set forth on page 41 of this proxy statement:
16,715 |
|
| W. Foley | | (1)88,670 | SCT Pay is reflected in the “Total” column of the Summary Compensation Table.
|
| S. Kovach | | (2)14,709 | Realized Pay is the sum of (a) base salary; (b) bonus, if any; (c) annual incentive actually paid under our SMIP; (d) performance cash actually paid for the performance cycle, if any, ending on December 31st of the applicable year; (d) the pre-tax compensation earned upon the exercise of NQSOs or SARs during the applicable year; (e) the pre-tax compensation earned on RSUs that vested during the applicable year; and (f) the amounts appearing for the applicable year under the “All Other” column of the Summary Compensation Table.
|
| S. Miñarro | | 24,990 |
|
| S. Streeter | | 0 |
|
| J. White | | 0 |
|
| All executive officers as a group | | 166,338 |
|
| • |
| (1) | Of these amounts, a total of 2,855 RSUs with four-year vesting were awarded on February 24, 2014; a total of 4,178 RSUs with four-year vesting were awarded on December 1, 2014; a total of 12,956 RSUs with four-year vesting were awarded on February 16, 2015; a total of 1,674 RSUs with four-year vesting were awarded on May 18, 2015; a total of 1,875 RSUs with four-year vesting were awarded on June 11, 2015; a total of 4,125 RSUs with four-year vesting were awarded on December 11, 2015; a total of 72,457 RSUs with four-year vesting were awarded on February 8, |
|
| |
| STOCK OWNERSHIP | | Reasonableness Objective. We designed our pay program to balance the need to provide sufficient financial incentives to achieve the three objectives described above with the need to ensure that executive pay is reasonable and appropriate. We generally target pay opportunities at or near the median of our peer group and/ or general industry surveys, with variances from the median generally as a result of time in position, individual performance and anticipated ability to affect our performance.
|
2016; a total of 1,500 RSUs with four-year vesting were awarded on August 18, 2016; and a total of 64,718 RSUs with four-year vesting were awarded on February 6, 2017. One share of our common stock will be issued for each vested RSU. Dividends do not accrue on RSUs until they vest. For further information, see ‘‘Compensation-Related Matters — Compensation Discussion and Analysis — In what forms
diddoes Libbey deliver pay to its executives,
in 2013, and what purposes do the various forms of pay serve?
Balanced Program’’ and the Outstanding Equity Awards at Fiscal Year-End table above.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on our review of filings with
Significant Pay At Risk.For 2013, the
pay opportunitiesSecurities and Exchange Commission and written representations that no other reports were required to be filed by the relevant persons, we believe that, during the fiscal year ended December 31, 2016, all officers, directors and greater-than-10% beneficial owners complied, on a timely basis, with the filing requirements applicable to them pursuant to Section 16 of
our named executives were designed to provide a balance of stable and competitive pay in the
form of base salary, fringe benefits and perquisites; equity-based compensation (NQSOs, RSUs and SARs) that aligns our executives’ interests with those of shareholders generally and also serves as a retention tool; and equity-based compensation and annual and long-term incentive awards that are designed to motivate our executives to execute our strategy, thereby driving our financial and operational performance. The charts below show the mix of these pay elements (excluding the special retention award of SARs made to Ms. Streeter in December 2013) and reflect the substantial portions of our named executives’ target pay opportunities that are at risk:
Exchange Act.
The following table sets forth the forms of pay for which our executive officers were eligible in 2013 and the characteristics of those forms of pay:
| | | | | | | | |
| | | | | Applicable Compensation
Objective |
Form of Pay
| | Key Characteristics
| | Talent Attraction
and Retention | | Motivational | | Alignment with
Shareholder
Interests |
| | | |
Annual cash compensation | | | | | | |
Base salary | | Fixed component; reviewed annually | | X | | | | |
| | | | |
Annual incentive award (SMIP) | | At-risk variable pay opportunity for short-term performance; no guaranteed minimum payout; maximum payout equal to 225% of target | | X | | X | | X |
| | | |
Long-term incentives under our LTIP | | | | | | |
| | | | |
Performance cash awards | | Formula-driven, at-risk cash award that comprises 40% of LTIP opportunity; no guaranteed minimum payout; maximum payout equal to 200% of target | | X | | X | | X |
| | | | |
NQSOs | | Comprise 20% of LTIP opportunity; exercise price equal to closing stock price on date of grant; generally awarded annually; vest ratably at the end of the first four years of a ten-year term | | X | | X | | X |
| | | | |
RSUs | | Comprise 40% of LTIP opportunity; vest ratably at the end of the first four years of a ten-year term; no dividends or voting rights with respect to unvested RSUs | | X | | X | | X |
| | | |
Fringe benefits and limited perquisites | | | | | | |
| | | | |
Medical, dental and life insurance benefits | | Benefits for U.S. executives on the same basis as for all U.S. salaried employees | | X | | | | |
| | | | |
Tax return preparation and financial planning | | Direct payment or reimbursement of fees incurred in connection with personal financial planning and tax return preparation | | X | | | | GENERAL INFORMATION |
| | | | | | | | |
| | | | Applicable Compensation
Objective |
Form of Pay
| | Key Characteristics
| | Talent Attraction
and Retention | | Motivational | | Alignment with
Shareholder
Interests |
| | | | |
Executive health screening | | Annual executive physical examination and related services | | X | | | | |
| | | | |
Limited ground transportation | | Ground transportation for trips between Toledo, Ohio and the Detroit, Wayne County Metropolitan airport for the executive when traveling for business purposes and the executive and his or her spouse when traveling together; maximizes time available for performing services to Libbey and contributes to safety of those returning to Toledo after long and often tiring flights | | X | | | | |
| | | | |
Airline club membership | | Membership in one airline club of the executive’s choice; maximizes time available for performing services to Libbey | | X | | | | |
| | | | |
Relocation assistance | | For executives relocating at Libbey’s request, moving and related expenses associated with the move; when necessary to attract talent, also includes loss-on-sale protection | | X | | | | |
| | | |
Limited income protection | | | | | | |
| | | | |
Retirement Plans | | Qualified plan for all U.S. salaried employees hired before January 1, 2006; company contribution credit discontinued at end of 2012 | | X | | | | |
| | | | |
Supplemental Retirement Benefit Plan, which we refer to as our SERP | | Excess, non-qualified plan designed to provide substantially identical retirement benefits as the Salary Plan to the extent the Salary Plan cannot provide those benefits due to IRS limitations; no enhanced credit has ever been provided; company contribution credit discontinued at end of 2012 | | X | | | | |
| | | | |
401(k) savings plan | | Matching contributions to our 401(k) savings plan on the same basis as for all U.S. salaried employees | | X | | | | |
| | | | |
Separation benefits under employment agreements, change in control agreements or our executive severance policy | | Contingent component payable only if employment is terminated under specified circumstances | | X | | | | |
GENERAL INFORMATION
How does Libbey determine the forms and amounts of executive pay?Compensation Committee Independence. In determining whether the members of our Compensation Committee
Certain Legal Proceedings
We are
independent, within the meaning established by the NYSE MKT Company Guide, our Board takes into account all factors specifically relevant to a determination of whether any Compensation Committee member has a relationship to us that is material to his or her ability to be independentinvolved in
connection with his or her duties as a Compensation Committee member. The factors considered include, but are not limited to, the source of compensation of the member and whether the member is affiliated with us or one of our subsidiaries or affiliates. After taking into account all of these factors, our Board has determined that all of the members of our Compensation Committee are independent within the meaning established by the NYSE MKT Company Guide.
Role of Compensation Consultants. In 2013, the Compensation Committee retained Exequity, LLP to serve as the Committee’s independent compensation consultant. All expense that we incurred in 2013 for services provided by Exequity were attributable to services provided by Exequity to the Compensation Committee in connection with its executive pay decisions.
In compliance with disclosure requirements set forth in the NYSE MKT Company Guide regarding the independence of compensation consultants, Exequity provided the Compensation Committee with a letter addressing each of six independence factors. Their responses affirm the independence of Exequity and the partners, consultants, and employees who service the Compensation Committee on executive compensation matters.
Development and Implementation of the Executive Pay Program. The Compensation Committee of our Board of Directors is responsible for overseeing the design, development and implementation of our executive pay program. The Compensation Committee consults with its independent executive compensation consultant when determined to be appropriate by the Compensation Committee. A representative of Exequity attended the February 2013 meeting at which the Compensation Committee made decisions regarding our executive pay program for 2013 and also advised the Committee in connection with other pay decisions made during the year. Our CEO, our Vice President, Human Resources and our Vice President, General Counsel and Secretary attend meetings of, and provide information to, the Compensation Committee and its consultant to assist them in their pay determinations. In addition, management may request that the Compensation Committee convene a meeting, and management may communicate with the Compensation Committee’s consultant in order to provide the consultant with information or understand the views of, or request input from, the consultant as to pay proposals being submitted by management to the Committee. However, the Compensation Committee meets in executive session, without any member of management being present, to discuss and make its final decisions with respect to our executive compensation program.
Our non-CEO executives play no direct role in determining their own pay, except to the extent they provide the CEO with an assessment of their own performance against their individual performance objectives and to the extent that the Vice President, Human Resources and the Vice President, General Counsel and Secretary provide information to the Compensation Committee with respect to pay programs affecting all members of the senior leadership team.
With respect to our SMIP and our long-term incentive plans, the Compensation Committee sets the performance goals based upon input from our CEO with respect to those goals, including suggested individual performance objectives and metrics under the SMIP and the performance cash component of the LTIP. In setting our corporate performance objectives and measures, the Committee seeks input from its independent consultant. The Committee also seeks input from our Board in setting our CEO’s individual performance objectives and metrics.
In determining awards to be made for current and future performance periods, the Compensation Committee considers internal pay equity within the senior leadership team, but does not consider the impact of, or wealth accumulated as a result of, equity awards made during prior years, since those awards represent pay for services rendered during prior-year periods.
In connection with the preparation of our proxy statement each year, the Committee reviews ‘‘tally sheets’’ that summarize, for each of our executive officers, the compensation paid and equity grants awarded during the prior year, as well as the amounts that would have been payable to each executive officer if the executive officer’s employment had been terminated under a variety of scenarios as of December 31 of the prior year. The Committee uses these ‘‘tally sheets,’’ which are prepared by management and provide substantially the same information as is provided in the tables included in this proxy statement, primarily for purposes of ensuring that our executives’ estimated pay is consistent with the Committee’s intent in adopting the program and for reviewing internal pay equity within the senior leadership team.
Process for Setting 2013 Executive Pay. Generally the structure of our 2013 executive pay program remained the same as our 2012 executive pay program in that the components of pay, and the weight accorded each component, remained the same.
With respect to base salary increases that were implemented in April 2013, the decisions were made by the Compensation Committee at its February 2013 meeting after receiving input from Ms. Streeter and Exequity. Ms. Streeter and a representative of Exequity also provided input into the decisions made by the Compensation Committee in October 2013 to accelerate the vesting of certain RSUs and NQSOs upon Mr. Reynolds’s retirement.
As disclosed in our proxy statement last year, in the fall of 2012 Exequity worked with management to develop a peer group to use as a reference point in setting 2013 executive pay. In developing the peer group, Exequity utilized a database assembled by Equilar in connection with its so-called “Top 25 Survey,” in which participating companies
submit executive compensation data for their 25 most highly compensated executive positions. Initially, we reviewed for inclusion in the peer group public companies having revenues in the range of .5 to 2.0 times our revenues and having businesses that are engaged in manufacturing or that otherwise are asset-intensive. Because we are a multinational manufacturer with asset-intensive operations, we eliminated from the peer group companies that do not have operations outside the U.S., companies that do not have manufacturing operations (i.e., that source substantially all of the products that they sell) and companies that merely have light assembly-type operations. As a result, we identified, and the Compensation Committee approved for use in developing our 2013 executive pay program, the following group of 18 companies:
| | |
Barnes Group | | Integra LifeSciences Holdings
|
Callaway Golf
| | Neenah Paper
|
Coherent
| | Nordson
|
ESCO Technologies
| | Polypore International, Inc.
|
Entegris
| | Tecumseh Products
|
Furniture Brands International Inc.
| | Tempur Pedic International
|
H.B. Fuller
| | TriMas
|
Graco
| | West Pharmaceutical Services
|
Infinera
| | Zep
|
At the time the peer group was selected, we ranked, by revenues, just above the mid-point of the peer group.
Using data submitted by these peer companies in response to Equilar’s 2012 Top 25 Survey as reference points, Exequity compared the compensation of our top officer positions to the peer group in terms of base pay, target annual bonus opportunity, target total cash, long-term incentives and target total direct compensation (target total cash plus long-term incentives). As noted on page (ii) of the Proxy Statement Summary, the market study conducted by Exequity disclosed that base salaries for most executives were generally within a reasonable range of the median, but that annual and long-term incentive opportunities for most named executives were well below median, driving the target total direct compensation opportunities for a number of them well below median. Accordingly, in order to ensure that we maintain market-competitive pay programs in order to achieve our retention, motivational and alignment objectives, in February 2013, our Compensation Committee approved adjustments to base salaries and target annual and long-term incentive opportunities of the named executives as set forth in the table appearing on page (iii) of the Proxy Statement Summary.
In February 2014, the Compensation Committee, with input from Ms. Streeter and Exequity, or, in the case of Ms. Streeter’s pay, Exequity and the other independent directors, reviewed our 2013 performance and made the awards under our 2013 SMIP and the performance cash component of our 2011 LTIP (for the 2011-2013 performance cycle) described on page (iv) of the Proxy Statement Summary. Specifically, the named executives were awarded the following payouts:
| | | | | | | | |
| | | | | | | | | 2011 LTIP |
| | | | | 2013 SMIP Payout | | | | Performance Cash Payout |
Named Executive | | | | ($) | | | | ($) |
| | | | |
S. Buck | | | | 208,737 | | | | 72,213 |
D. Ibele | | | | 202,206 | | | | 136,319 |
S. Kovach | | | | 140,210 | | | | 92,232 |
T. Paige | | | | 133,194 | | | | 89,326 |
R. Reynolds | | | | 303,025 | | | | 250,927 |
S. Streeter | | | | 662,533 | | | | 417,061 |
Our Equity Grant Practices.Grants of equity awards have been made under the following circumstances:
In February of each year, the Compensation Committee typically makes awards of RSUs and NQSOs to our senior leadership team under our long-term incentive compensation program. In February 2013, the Compensation Committee authorized these awards at its meeting, which occurred before we announced financial results for the recently concluded fiscal year. The number of RSUs awarded was a function of the average closing price of our common stock over a period of 20 consecutive trading days ending on the grant date, and the number of NQSOs granted was a function of the Black-Scholes value (calculated using the average closing price of Libbey Inc. common stock over a period of 20 consecutive trading days ending on the grant date, and capping volatility at 50%) of the NQSOs on the grant date. In each case, the grant date was the first business day after we released our fiscal 2012 financial results.
In 2013, the Compensation Committee delegated authority to the Chairman of the Board to make limited grants of NQSOs, restricted stock and RSUs to senior managers and other employees who are not executive officers. The Chairman’s authority to make these grants was subject to the following limitations and conditions:
| ¡ | | The total number of shares that may be granted as NQSOs, restricted stock or RSUs, as the case may be, was limited;
|
| ¡ | | The exercise price of any NQSOs that the Chairman was permitted to award could not be less than the closing price of our common stock on the date of grant;
|
| ¡ | | Grants of NQSOs were not permitted to be made during ‘‘quiet periods’’; and
|
| ¡ | | The Chairman was required to report periodically to the Compensation Committee with respect to the awards made pursuant to this delegation of authority.
|
Potential Impact of Misconduct on Compensation.Our SMIP and long-term incentive plans are authorized under our Omnibus Plan. The Omnibus Plan contains a ‘‘clawback’’ provision that obligates an individual receiving a cash or equity award to reimburse us under certain circumstances. Specifically, reimbursement is required if:
we are required, as a result of misconduct, to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws; and
the individual knowingly engaged, or was grossly negligent in engaging, in the misconduct, or knowingly failed, or was grossly negligent in failing, to prevent the misconduct or is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002.
The amount to be reimbursed is the amount of any payment in settlement of an award made under the Omnibus Plan and earned or accrued during the 12-month period following the first public issuance or filing with the SEC of the financial document embodying the financial reporting requirement in question.
Share Ownership Guidelines. We obligate our non-management directors and our executive officers to achieve or retain ownership of meaningful amounts of equity in Libbey. For further information regarding our stock ownership or retention guidelines for non-management directors and executive officers, see‘‘Stock Ownership — How much Libbey stock do our directors and officers own? — Stock Ownership Guidelines’’above.
What pay did Libbey’s executives receive for 2013?
Base Salaries. In February 2013, the Compensation Committee increased annualized salaries for the named executives, as shown below, effective April 1, 2013:
| | | | | | | | | | |
| | | Annualized | | Annualized |
| | | Salary Before | | Salary After |
| | | Increase | | Increase |
Named Executive | | ($) | | ($) |
| | |
S. Buck | | 350,000 | | 364,000 |
D. Ibele | | 354,000 | | 362,850 |
S. Kovach | | 298,242 | | 320,312 |
T. Paige | | 294,624 | | 300,516 |
R. Reynolds | | 494,796 | | 494,796 |
S. Streeter | | 725,004 | | 750,000 |
Annual Incentive Compensation. Our 2013 SMIP provided each of our named executives with a target annual incentive opportunity equal to a percentage of his or her actual base salary in accordance with the table set forth on page (iii) of the Proxy Statement Summary. The performance measures used for the 2013 SMIP were adjusted EBITDA and adjusted cash earnings. The Committee approved these performance measures for the following reasons:
Given the asset intensity of our business, as well as our relatively high degree of financial leverage over the last few years, the Committee believes that adjusted EBITDA is an appropriate measure of core operating performance, since it is unaffected by capital structure, capital investments and ages of capital assets.
Our ability to generate cash to further de-lever our balance sheet is critical to returning LIbbey to consistent, profitable growth. We believe that use of the adjusted cash earnings performance measure appropriately gauges how well we manage inventory, accounts payable and accounts receivable – all potential consumers of cash if not appropriately managed.
The named executives’ 2013 annual incentive performance targets were established based on a budget approved by the Board of Directors. These targets are disclosed on page (iii) of the Proxy Statement Summary. Weightings of the metrics are as follows:
| | | | | | |
All Named Executives Other than Mr. Ibele | | Mr. Ibele |
Weight | | Financial Performance Measure | | Weight | | Financial Performance Measure |
| 60% | | Company-wide adjusted EBITDA | | 30% | | Company-wide adjusted EBITDA |
| 40% | | Company-wide adjusted cash earnings | | 30% | | Regional adjusted EBITDA |
| | | | 20% | | Company-wide adjusted cash earnings |
| | | | 20% | | Regional adjusted cash earnings |
At the beginning of 2013, the Committee developed the following payout scale to determine the amount of the unmodified payouts indicated on page (iv) of the Proxy Statement Summary for each of the corporate and regional financial performance measures:
| | | | | | | | |
| | | | | | | | | Percent of Targeted EBITDA |
| | | | | Payout Percentage | | | | or Cash Earnings Achieved |
Performance Level | | | | (%) | | | | (%) |
| | | | |
| Below threshold | | | | 0 | | | | Below 80 |
| Threshold | | | | 50 | | | | 80 |
| Target | | | | 100 | | | | 100 |
| Maximum | | | | 200 | | | | 115 |
Payout percentages between threshold, target and maximum performance are linear.
Instead of providing for a separate payout opportunity based on individual performance, we elected to use individual performance to differentiate payouts under our 2013 SMIP. Through application of an individual performance modifier, the payout amounts earned by our named executives with respect to the financial performance measures were subject to potential modification based on individual performance, including with respect to individual objectives approved by the Committee early in the year. As a result, an executive who demonstrates exceptional performance in developing and/or implementing a process or tool that may not have impacted the current year’s financial results but is likely to favorably impact future success may be awarded a payout in excess of the payout that is based strictly on financial performance measures. Additionally, application of the individual performance modifier ensures that the executive’s compensation is based not only on the goals achieved, but also on the extent to which the executive demonstrates effective organizational leadership skills in the execution of our strategy.
While a number of the individual objectives were tied closely to leadership of a variety of initiatives contemplated by ourLibbey 2015strategy, examples of others are as follows:
| | | | |
Named Executive
| | Examples of Individual Objective
|
S. Buck
| | •
| | Achieve financial flexibility to support theLibbey 2015strategy, including by driving debt levels to our target range and developing a tax optimization strategy to reduce cash taxes paid
|
| | |
D. Ibele
| | •
| | Enhance safety programs within the U.S. and Canada region in order to reduce work- related injuries
|
| | |
S. Kovach
| | •
| | Ensure appropriate risk mitigation/ avoidance throughout the year relative to actions taken throughout the year to implement theLibbey 2015strategy
|
| | |
T. Paige
| | •
| | Design and implement a new healthcare program for all U.S. salaried associates
|
| | |
R. Reynolds
| | •
| | Mentor “high-potential” associates around the world
|
| | |
S. Streeter
| | •
| | Enhance leadership development and change management capabilities
|
On February 17, 2014, the Committee met and reviewed our performance and the performance of our senior leadership team during 2013. The Committee reviewed both company-wide and regional adjusted EBITDA for 2013 and company-wide and regional adjusted cash earnings for 2013 relative to our company-wide and regional targeted EBITDA and our targeted cash earnings, respectively, for the year. In each case, the Committee adjusted actual results for special items that the Committee does not believe are indicative of our core operating performance. For example,
the Committee believes that our executives should not be penalized by accounting charges for loss on redemption of debt, given that de-leveraging of our balance sheet through the redemption of our 6.875% senior secured notes is necessary to position Libbey for future growth and, accordingly, is in our shareholders’ best interests. Similarly, the Committee believes that our executives should neither be penalized by, nor profit from, the unanticipated malfunction of one of our furnaces in 2013 and the insurance proceeds received in connection with that malfunction. Additionally, the plan design for the 2013 SMIP contemplated that, to the extent currency fluctuations impact actual results by more than 15%, the impact of the currency fluctuations would be excluded.
A reconciliation of actual company-wide adjusted EBITDA and adjusted cash earnings to targeted company-wide EBITDA and cash earnings is attached as Appendix A.
The Committee received input from Ms. Streeter regarding the other named executives’ individual performance review scores, including an evaluation of the extent to which they achieved their individual objectives, and reviewed the performance evaluation completed by our non-management directors with respect to Ms. Streeter’s performance in 2013, including her performance relative to her individual objectives. After meeting in executive session with Exequity, the Committee determined that the payout amount earned by each named executive with respect to the financial performance measures should not be modified either up or down because each named executive’s individual performance review score fell within a range that signified successful achievement. Accordingly, the Committee determined that the following amounts were earned by the named executives under our 2013 SMIP:
| | | | | |
| | Annual |
| | SMIP Payout |
Named Executive
| | ($) |
| |
S. Buck
| | 208,737 |
D. Ibele
| | 202,206 |
S. Kovach
| | 140,210 |
T. Paige
| | 133,194 |
R. Reynolds
| | 303,025 |
S. Streeter
| | 662,533 |
Long-Term Performance-Based Compensation. In 2013, each named executive’s long-term incentive opportunity included a cash-based performance component and an award of NQSOs and RSUs. The long-term incentive opportunity is intended to have an aggregate economic value equal to a target percentage of the executive’s base salary. The table set forth on page (iii) of the Proxy Statement Summary sets forth the target percentage for each of the named executives in 2013.
During 2013, the cash-based performance opportunity provided to our named executives for performance during 2013 consisted of the following components:
A performance component under our 2011 LTIP (for the 2011-2013 performance cycle) that provided for cash awards if and to the extent we achieved, over the three-year performance cycle, cumulative EBITDA (adjusted as described below) equal to the sum of EBITDA targeted for each of the three years during the performance cycle.
A performance component under our 2012 LTIP (for the 2012-2014 performance cycle) that provides for cash awards if and to the extent we achieve, over the three-year performance cycle, cumulative EBITDA (adjusted as described below) equal to the sum of EBITDA targeted for each of the three years during the performance cycle.
A performance component under our 2013 LTIP (for the 2013-2015 performance cycle) that provides for cash awards based on our performance, over the three-year performance cycle, against the following performance measures that are aligned with the financial goals identified on page (i) of the Proxy Statement Summary:
| ¡ | | A profitability measure – namely, the extent to which we achieve our targeted EBITDA margin over the performance cycle; and
|
| ¡ | | A financial leverage measure – namely, the extent to which we achieve our targeted net debt to adjusted EBITDA ratio over the performance cycle.
|
For purposes of determining the extent to which the cash award is earned, EBITDA is calculated as described in Appendix A and is adjusted to exclude special items that are not indicative of our core operating performance and the impact of any acquisitions or dispositions. Additionally, to the extent that currency fluctuations impact actual results by more than 15%, the impact of the currency fluctuations is excluded.
In February 2014, the Compensation Committee reviewed our performance for the three-year performance cycle ended December 31, 2013 and determined that we had achieved 99.7% of targeted EBITDA for that period. The Committee then applied the following scale, which the Committee approved at the beginning of the year, to determine the amount earned under the performance cash component of the 2011 LTIP:
The scale applied to determine this payout is as follows:
| | | | | | | | |
| | | | | Percentage of | | | | |
| | | | | Cumulative Targeted EBITDA | | | | Payout Percentage |
Performance Level | | | | (%) | | | | (%) |
| | | | |
| Below Threshold | | | | Less than 80 | | | | 0 |
| Threshold | | | | 80 | | | | 50 |
| Target | | | | 100 | | | | 100 |
| Outstanding | | | | 120 | | | | 200 |
Accordingly, the Compensation Committee authorized payments to the participants in the 2011 LTIP (for the 2011-2013 performance cycle) in an amount equal to 99.3% of their respective target awards, as a result of which the named executives received payouts in the following amounts:
| | | | |
| | 2011 LTIP | |
| | Cash Payouts | |
Named Executive
| | ($) | |
| |
S. Buck
| | | 72,213 | |
D. Ibele
| | | 136,319 | |
S. Kovach
| | | 92,232 | |
T. Paige
| | | 89,326 | |
R. Reynolds
| | | 250,927 | |
S. Streeter
| | | 417,061 | |
Stock Options and RSUs. In February 2013, the Compensation Committee awarded to participants in our 2013 LTIP NQSOs and RSUs (each subject to four-year vesting) having an economic value at the time of award equal to 20% and 40%, respectively, of their target long-term incentive opportunities.
Special Retention Award of Cash-Settled SARs. Throughout 2013, our independent directors discussed the transformation that we began when Ms. Streeter joined us in July 2011. They also discussed the fact that Ms. Streeter is a highly attractive candidate for CEO positions with companies that are much larger than Libbey, While recognizing that we have made great strides in executing our strategy, improving our profitability and positioning us for future growth, they also acknowledged that considerable work remains to be done to return Libbey to consistent, profitable growth. And they believe that Ms. Streeter is best able to lead us in this transformative period.
Accordingly, the independent directors charged the Compensation Committee with working with its independent consultant and independent outside counsel to develop a special retention award designed to induce Ms. Streeter to continue to lead Libbey, and the execution by Libbey of its long-term strategic goals, through 2018.
After more than a year of reviewing different alternatives and consulting with the other non-management directors, in December 2013 the Committee authorized Libbey to enter into a CEO Retention Award Agreement with Ms. Streeter. Pursuant to that agreement, the Company issued to Ms. Streeter 240,829 SARs that cliff vest, subject to Ms. Streeter’s continued employment, on December 31, 2018.1 Each SAR will entitle Ms. Streeter to a cash payment equal to the amount by which the closing price of our stock on the date of exercise (which may occur on or before December 16, 2023) exceeds $21.29, the closing price of our stock on the grant date.
In structuring the CEO Retention Award Agreement, the Committee elected, for the following reasons, to award to Ms. Streeter SARs that are not subject to performance conditions and that cliff vest on December 31, 2018:
1 Notwithstanding the five-year cliff vesting feature of the retention SARs, there are limited circumstances under which vesting of the SARs may accelerate automatically. Specifically, vesting of the SARs will accelerate automatically if Ms. Streeter’s employment with the Company is terminated during the retention period as a result of her death or permanent disability, by the Company without Cause or by Ms. Streeter for Good Reason. See footnotes 1 and 2 on page 39 below for the meanings of “Cause” and “Good Reason,” respectively.
The use of SARs that cliff vest on December 31, 2018 maximizes the handcuffs on Ms. Streeter and ensures that no value actually is delivered to her unless she serves the entire desired period of retention.
The Committee and the other non-management directors believe that establishing meaningful performance goals for the five-year retention period, particularly given the current choppy economic environment and the uncertainties inherent in the transformative process underway at the Company, would be quite difficult.
While recognizing that some investors and investor advisory firms take the view that time-based SARs are not “performance-based,” the Committee nevertheless believes that tying the value realized by Ms. Streeter under the SARs to appreciation in Libbey’s stock price appropriately incentivizes her to maximize the value returned to shareholders over the five-year retention period.
Although the Committee and the other independent directors believe the CEO Retention Award Agreement and the awards of SARs and RSUs made under it are in the best interest of our shareholders, they nevertheless view the CEO Retention Award Agreement, and the grants of SARs and RSUs made under it, as extraordinary in nature, and they do not currently anticipate entering into any additional special retention agreements with the CEO.
What is the Compensation Committee’s policy regarding deductibility of compensation?
Pursuant to Section 162(m) of the Internal Revenue Code, publicly-held corporations are prohibited from deducting compensation paid to certain executive officers, as of the end of the fiscal year, in excess of $1.0 million, unless the compensation is ‘‘performance-based.’’ The Committee believes that preserving the tax deductibility is an important, but not the sole, objective when designing executive compensation programs. Accordingly, while our 2013 SMIP and the performance cash component of our 2013 LTIP (for the 2013-2015 performance cycle) are designed to qualify as “performance-based” compensation, other components of our 2013 executive pay program (base salary, RSUs and NQSOs) are not. Additionally, in certain circumstances the Committee may authorize compensation arrangements that are not tax deductible in whole or in part, but which promote other important objectives such as attracting and retaining key executive leaders who can drive financial and strategic objectives that maximize long-term shareholder value.
Potential Payments Upon Termination or Change in Control
We have employment agreements with each of our named executives other than Ms. Buck and Mr. Reynolds, who was not a party to an employment agreement at the time of his retirement and was not entitled to any severance benefits under our Executive Severance Policy because he retiredvarious routine legal proceedings arising in the ordinary course pursuantof our business. In addition, the Company and its subsidiaries are subject to examination by various countries' tax authorities. These examinations may lead to proposed or assessed adjustments to our Salary Plan.
Ms. Buck istaxes. For a partydetailed discussion on tax contingencies, see note 8, Income Taxes, to a changethe Consolidated Financial Statements included in control agreement that provides for payments under the circumstances described below in the event of termination of employment in connection with a change in control. In addition, under our Executive Severance Policy, Ms. Buck is entitled to certain separation benefits in the event of termination of employment without cause in the absence of a change in control. Finally, the terms of award agreements pursuant to which awards of some RSUs, NQSOs and SARs were made provide for acceleration of unvested equity in the event of termination of employment in connection with a change in control.
The following tables summarize the trigger events under which payments may be made and/or other benefits provided under these agreements or plans, the material payments or benefits to be provided, the conditions to our obligations to make the payments and/or provide the benefits, and the reasons why we believe that the provision of these payments and/ or benefits is appropriate under the circumstances described.
Retirement – Mr. Reynolds
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• Accrued benefits(1)
• A prorated target award under our SMIP
• A prorated target award under the performance cash component of any LTIP performance cycle during which his retirement occurred
• Accelerated vesting of all unvested RSUs and NQSOs
| | None
| | • To compensate for service to us
• To recognize for significant accomplishments over 43 years of dedicated service to Libbey
• Consistent with competitive market practice for an employee of Mr. Reynolds’s tenure
|
(1) | Includes base salary through date of termination, earned but unpaid vacation pay as of the date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended prior to the date of termination.
|
Death or Permanent Disability – Named Executives Other Than Ms. Buck and Mr. Reynolds
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• Accrued benefits(1)
• A prorated target award under our SMIP
• A prorated target award under the performance cash component of any LTIP performance cycle during which death or permanent disability occurs
• Accelerated vesting of a pro rata portion of unvested RSUs and NQSOs granted prior to 2013
| | • In the case of death, our receipt of reasonable evidence of the authority of the estate
• In the case of permanent disability, our receipt of a release of claims against Libbey
| | • To compensate for service to us
• Aids in attraction and retention of executive officers
• Consistent with competitive market practice
|
(1) | Includes base salary through date of termination, earned but unpaid vacation pay as of the date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended prior to the date of termination.
|
Death or Permanent Disability – Ms. Buck and Mr. Reynolds
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• Accrued benefits(1)
• A prorated target award under the performance cash component of our 2013 LTIP (for the 2013-2015 performance cycle)
• Accelerated vesting of all unvested RSUs and NQSOs granted in 2013
| | None
| | • To compensate for service to us
• Aids in attraction and retention of executive officers
• Consistent with competitive market practice
|
(1) | Includes base salary through date of termination, earned but unpaid vacation pay as of the date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended prior to the date of termination.
|
Termination without Cause(1) or Quit for Good Reason(2)– Named Executives Other than Ms. Buck and Mr. Reynolds
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• Accrued benefits(3)
• For the year in which termination occurs, a prorated award under our SMIP based on actual performance(4)
• As to performance-based compensation under our LTIP, payment of the amount actually earned for each performance cycle in effect on the date of termination, prorated to the date of termination(4)
• If the employment termination is not in connection with a change in control(5), accelerated vesting of unvested RSUs, NQSOs and SARs that scheduled to vest within one year of termination or, in the case of Ms. Streeter, on or before the next June 30thfollowing the date of termination(6)
| | • Our receipt of a release of claims against Libbey
• Confidentiality obligations
• Obligation to assign intellectual property rights
• Obligation to assist with litigation as to which the executive has knowledge
• Obligation not to interfere with customer accounts for 12 months (24 months in the case of Ms. Streeter)
| | • To compensate for service to us and bridge the gap between employment with us and the executive’s next job
• Aids in attraction and retention of executive officers
• To provide compensation in exchange for restrictive covenants that protect Libbey’s future interests
• Consistent with competitive market practice
|
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• If employment is terminated in connection with a change in control, accelerated vesting of all unvested equity awards(6)
• As to Ms. Streeter, payment of two times (two and one-half times if termination is in connection with a change in control) the sum of her annual base salary in effect on the date of termination and the greater of her target SMIP opportunity or the average of the SMIP awards actually paid to her over the two-year period preceding the date of termination(7)
• As to Messrs. Ibele and Paige and Ms. Kovach, if the employment termination is not in connection with a change in control payment of the greater of the executive’s annual base salary in effect on the date notice of termination is given plus the executive’s target SMIP opportunity for the year in which the notice of termination is given or the amount of severance to which the executive would be entitled under our Executive Severance Policy if the executive did not have an employment agreement(7)
| | • Obligation not to compete for 12 months (24 months in the case of Ms. Streeter)
• Obligation not to divert business opportunities for 12 months (24 months in the case of Ms. Streeter)
• Obligation not to solicit our employees for 12 months (24 months in the case of Ms. Streeter)
• Obligation not to disparage us for 12 months (24 months in the case of Ms. Streeter)
| | |
• As to Messrs. Ibele and Paige and Ms. Kovach, if the employment termination is in connection with a change in control, payment of two times the sum of the executive’s annual base salary in effect on the date notice of termination is given plus the executive’s target SMIP opportunity for the year in which the notice of termination is given(7)
| | | | |
• As to Ms. Streeter, executive level outplacement services by a provider selected by Ms. Streeter, with the cost to Libbey not to exceed $75,000
| | | | |
• As to Messrs. Ibele and Paige and Ms. Kovach, executive level outplacement services by a provider approved by Libbey, with the cost being limited to 15% of the executive’s base salary at the time of termination if the termination is in connection with a change in control
| | | | |
• As to Messrs. Ibele and Paige and Ms. Kovach, if employment is terminated in connection with a change in control, financial planning services, with the cost to Libbey not to exceed $10,000
| | | | |
• As to Ms. Streeter, continuation of medical, prescription drug, dental and life insurance benefits for a period of 18 months or until
| | | | |
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
she obtains medical or life insurance through a future employer, with the executive continuing to pay the employee’s portion of the cost of such insurance
| | | | |
• As to Messrs. Ibele and Paige and Ms. Kovach, continuation of medical, prescription drug, dental and life insurance benefits for a period of 12 months (18 months if employment is terminated in connection with a change in control) or until the executive obtains medical or life insurance through a future employer, with the executive continuing to pay the employee’s portion of the cost of such insurance
| | | | |
(1) | Cause means (a) willful and continuous failure to substantially perform duties; (b) willful and continuous failure to substantially follow and comply with directives of the Board; (c) commission of an act of fraud or dishonesty that results in a material adverse effect on us or commission of an act in material violation of our Code of Business Ethics and Conduct; or (d) willful, illegal conduct or gross misconduct that is materially and demonstrably injurious to us.
|
(2) | Good reason means (a) we materially diminish the executive’s authority, duties or responsibilities, including, in the case of Ms. Streeter, we remove her from the CEO position and/or we cause her to cease reporting directly to the Board, and in the case of the Company’s general counsel, we cause her to cease reporting directly to the CEO; (b) we reduce the executive’s base salary and, in the case of all executives other than Ms. Streeter, we do not apply the reduction in the same or similar manner to specified other executive officers; (c) we reduce the executive’s incentive compensation opportunity by a percentage greater than that applicable to the other executive officers; (d) we reduce or eliminate an executive benefit or an employee benefit and we do not apply the reduction to all other officers in the same or similar manner; (e) in the case of Ms. Streeter, she fails to be elected as a member of the Board; (f) we materially breach the agreement and fail to remedy the breach within 60 days (30 days in the case of Ms. Streeter) after our receipt from the executive of written notice of breach; and (g) in the case of all executive officers other than Ms. Streeter, we exercise our right not to renew the agreement unless we concurrently exercise our right not to renew the agreements of specified other executive officers.
|
(3) | Includes base salary through date of termination, earned but unpaid vacation pay as of the date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended prior to the date of termination.
|
(4) | Amounts paid under our SMIP and the cash component of our LTIP will be paid between January 1 and March 15 of the year following the end of the relevant performance cycle.
|
(5) | Change in control generally means any of the following events:
|
A person (other than Libbey, any trustee or other fiduciary holding securities under one of our employee benefit plans, or any corporation owned, directly or indirectly, by our shareholders in substantially the same proportions as their ownership of our common stock) becomes the ‘‘beneficial owner,’’ directly or indirectly, of our securities representing 30% or morePart II, Item 8 of the combined voting power of our then-outstanding securities;
| • | | The consummation of a merger or consolidation pursuant to which we are merged or consolidated with any other corporation (or other entity), unless our voting securities outstanding immediately prior to the merger or consolidation continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66 2⁄3% of the combined voting power of securities of the surviving entity outstanding immediately after the merger or consolidation;
|
A plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of our assets is consummated; or
During any period of two consecutive years (not including any period prior to the execution of the agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of our Board. Continuing Directors means (i) individuals who were members of the Board at the beginning of the two-year
| period referred to above and (ii) any individuals elected to the Board, after the beginning of the two-year period referred to above, by a vote of at least 2⁄3 of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. However, an individual who is elected to the Board after the beginning of the two-year period referred to above will not be considered to be a Continuing Director if the individual was designated by a person who has entered into an agreement with us to effect a transaction that otherwise meets the definition of a change in control.
|
| A person typically is considered to be the ‘‘beneficial owner’’ of securities if the person has or shares the voting power associated with those securities.
|
(6) | To the extent Internal Revenue Code Section 409A imposes a six-month delay on issuance of the shares underlying RSUs with respect to which vesting is accelerated, the shares are delivered to the executive on the first day of the seventh month after the executive’s employment is terminated.
|
(7) | If we terminate the executive’s employment without cause or the executive terminates his or her employment for good reason and the termination is not in connection with a change in control, then, generally speaking, the cash payments will be made in the form of salary continuation in accordance with our normal payroll practices. To the extent Internal Revenue Code Section 409A imposes a six-month delay on payment, the first installment will be made on the first day of the seventh month after termination and will represent payment for the first six months of severance, and the remaining payments will begin on the first payroll date in the seventh month.
|
Termination without Cause(1) (No Change in Control) – Ms. Buck and, Prior to His Retirement, Mr. Reynolds
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• Accrued Benefits(2)
• Annual and/or long-term incentive compensation, to the extent actually earned and not paid prior to termination, for any performance cycle that ended prior to termination
• Continuation of base salary for 52 weeks
• Continuation of medical, dental, prescription drug and life insurance coverage for 52 weeks, subject to payment by the executive of premiums at employee rates
| | • Our receipt of a release of claims against Libbey
• Confidentiality obligations
• Obligation to assign intellectual property rights
• Obligation to assist with litigation as to which the executive has knowledge
• Obligation not to interfere with customer accounts for 12 months
• Obligation not to compete for 12 months
• Obligation not to divert business opportunities for 12 months
• Obligation not to solicit our employees for 12 months
• Obligation not to disparage us for 12 months
| | • To compensate for service to us and bridge the gap between employment with us and the executive’s next job
• Aids in attraction and retention of executive officers
• To provide compensation in exchange for restrictive covenants that protect Libbey’s future interests
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(1) | Cause means (a) willful and continuous failure to substantially perform duties; (b) willful and continuous failure to substantially follow and comply with directives of the Board; (c) commission of an act of fraud or dishonesty that results in harm to us or failure to comply with a material policy, including our Code of Business Ethics and Conduct; (d) material breach of a material obligation to us; (e) commission of illegal conduct or gross misconduct that causes harm to us; or (f) conviction of a misdemeanor or felony that is directly related to, or indicates the executive is not suited for, the position the executive occupies with us.
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(2) | Includes base salary through date of termination, earned but unpaid vacation pay as of the date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended prior to the date of termination.
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Termination without Cause(1) or Quit for Good Reason(2) in connection with Change in Control(3) – Ms. Buck
| | | | |
Benefits
| | Conditions to Payment of Benefits
| | Rationale
|
• Accrued Benefits(4)
• For the year in which termination occurs, a prorated award under our SMIP based on actual performance(5)
• As to performance-based compensation under our LTIP, payment of the amount actually earned for each performance cycle in effect on the date of termination, prorated to the date of termination(5)
• Accelerated vesting of all unvested equity awards(6)
• Payment of two times the sum of the executive’s annual base salary in effect on the date notice of termination is given plus the executive’s target SMIP opportunity for the year in which the notice of termination is given(6)
• Executive level outplacement services by a provider approved by Libbey, with the cost being limited to 15% of the executive’s base salary at the time of termination
• Financial planning services, with the cost to Libbey not to exceed $10,000
• Continuation of medical, prescription drug, dental and life insurance benefits for a period of 12 months (18 months if employment is terminated in connection with a change in control) or until the executive obtains medical or life insurance through a future employer, with the executive continuing to pay the employee’s portion of the cost of such insurance
| | • Our receipt of a release of claims against Libbey
• Confidentiality obligations
• Obligation to assign intellectual property rights
• Obligation to assist with litigation as to which the executive has knowledge
• Obligation not to interfere with customer accounts for 12 months
• Obligation not to compete for 12 months
• Obligation not to divert business opportunities for 12 months
• Obligation not to solicit our employees for 12 months
• Obligation not to disparage us for 12 months
| | • Aids in attraction and retention of executive officers
• To provide compensation in exchange for restrictive covenants that protect Libbey’s future interests
• Consistent with competitive market practice
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(1) | Cause means (a) willful and continuous failure to substantially perform duties; (b) willful and continuous failure to substantially follow and comply with directives of the Board; (c) commission of an act of fraud or dishonesty that results in a material adverse effect on us or commission of an act in material violation of our Code of Business Ethics and Conduct; or (d) willful, illegal conduct or gross misconduct that is materially and demonstrably injurious to us.
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(2) | Good reason means (a) we materially diminish the executive’s authority, duties or responsibilities; (b) we reduce the executive’s base salary and we do not apply the reduction in the same or similar manner to specified other executive officers; (c) we reduce the executive’s incentive compensation opportunity by a percentage greater than that applicable to the other executive officers; (d) we reduce or eliminate an executive benefit or an employee benefit and we do not apply the reduction to all other officers in the same or similar manner; (e) we materially breach the agreement and fail to remedy the breach within 60 days after our receipt from the executive of written notice of breach; and (f) we exercise our right not to renew the agreement unless we concurrently exercise our right not to renew the agreements of specified other executive officers.
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(3) | Change in control generally means any of the following events:
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A person (other than Libbey, any trustee or other fiduciary holding securities under one of our employee benefit plans, or any corporation owned, directly or indirectly, by our shareholders in substantially the same proportions as their ownership of our common stock) becomes the ‘‘beneficial owner,’’ directly or indirectly, of our securities representing 30% or more of the combined voting power of our then-outstanding securities;
| • | | The consummation of a merger or consolidation pursuant to which we are merged or consolidated with any other corporation (or other entity), unless our voting securities outstanding immediately prior to the merger or consolidation continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66 2⁄3% of the combined voting power of securities of the surviving entity outstanding immediately after the merger or consolidation;
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A plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of our assets is consummated; or
| • | | During any period of two consecutive years (not including any period prior to the execution of the agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of our Board. Continuing Directors means (i) individuals who were members of the Board at the beginning of the two-year period referred to above and (ii) any individuals elected to the Board, after the beginning of the two-year period referred to above, by a vote of at least 2⁄3 of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. However, an individual who is elected to the Board after the beginning of the two-year period referred to above will not be considered to be a Continuing Director if the individual was designated by a person who has entered into an agreement with us to effect a transaction that otherwise meets the definition of a change in control.
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A person typically is considered to be the ‘‘beneficial owner’’ of securities if the person has or shares the voting power associated with those securities.
(4) | Includes base salary through date of termination, earned but unpaid vacation pay as of the date of termination, any amounts to which the executive is entitled under any retirement savings plan, equity participation plan, medical benefit plan or employment policy and any incentive compensation earned but not yet paid for a performance period ended prior to the date of termination.
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(5) | Amounts paid under our SMIP and the cash component of our LTIP will be paid between January 1 and March 15 of the year following the end of the relevant performance cycle.
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(6) | To the extent Internal Revenue Code Section 409A imposes a six-month delay on issuance of the shares underlying RSUs with respect to which vesting is accelerated, the shares are delivered to the executive on the first day of the seventh month after the executive’s employment is terminated.
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Compensation Committee Interlocks and Insider Participation
Carlos V. Duno, Deborah G. Miller and Carol B. Moerdyk served on our Compensation Committee during 2013. None of Mr. Duno, Ms. Miller or Ms. Moerdyk has been an officer or employee of Libbey or its subsidiaries.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with Libbey’s management the Compensation Discussion and Analysis set forth in this proxy statement. Taking all of these reviews and discussions into account, the Compensation Committee has approved the inclusion of the Compensation Discussion and Analysis in this proxy statement and has approved the incorporation by reference of the Compensation Discussion and Analysis in ourCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
Carol B. Moerdyk, Chair
Carlos V. Duno
Deborah G. Miller
2016.
Summary Compensation TableThe following narrative and tables describe the ‘‘total compensation’’ earned during 2013 and 2012 by Ms. Buck and during 2013, 2012 and 2011 by Ms. Streeter, Messrs. Ibele, Reynolds and Paige and Ms. Kovach.
The total compensation presented below does not reflect the actual pay received by, or the target pay of, the named executives in 2013, 2012 or 2011. The actual value realized by our named executives in 2013 from NQSOs and RSUs is presented in the Option Exercises and Stock Vested Table below. Target annual and long-term incentive awards for 2013 are presented in the Grants of Plan-Based Awards Table below.
SUMMARY COMPENSATION TABLE
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Name and Principal Position | | Year | | Salary
($) | | Bonus
($)(1) | | | Stock
Awards
($)(2) | | | Option
Awards
($)(3) | | | Non-Equity
Incentive
Compensation
($)(4) | | | Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5) | | | All Other
Compensation
($)(6) | | | Total
($) | |
| | | | | | | | | |
Sherry Buck | | 2013 | | 360,500 | | | 0 | | | | 198,968 | | | | 100,423 | | | | 280,950 | | | | 0 | | | | 81,553 | | | | 1,022,394 | |
Vice President, Chief | | 2012 | | 145,833 | | | 87,500 | | | | 285,398 | | | | 205,748 | | | | 79,557 | | | | 0 | | | | 17,405 | | | | 821,441 | |
Financial Officer(7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Daniel P. Ibele | | 2013 | | 360,638 | | | 0 | | | | 201,251 | | | | 101,567 | | | | 338,525 | | | | 0 | | | | 20,049 | | | | 1,022,030 | |
Vice President, | | 2012 | | 340,691 | | | 0 | | | | 147,744 | | | | 70,396 | | | | 450,984 | | | | 197,685 | | | | 15,437 | | | | 1,222,937 | |
General Manager, | | 2011 | | 317,558 | | | 0 | | | | 154,343 | | | | 68,636 | | | | 153,380 | | | | 104,482 | | | | 16,542 | | | | 814,941 | |
U.S. and Canada(8) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Susan A. Kovach | | 2013 | | 314,795 | | | 0 | | | | 115,052 | | | | 58,065 | | | | 232,442 | | | | 0 | | | | 18,685 | | | | 739,039 | |
Vice President, | | 2012 | | 298,242 | | | 25,000 | | | | 100,328 | | | | 47,806 | | | | 319,606 | | | | 82,986 | | | | 13,737 | | | | 887,705 | |
General Counsel & | | 2011 | | 296,246 | | | 0 | | | | 104,431 | | | | 46,436 | | | | 98,816 | | | | 42,463 | | | | 14,370 | | | | 602,762 | |
Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Timothy T. Paige | | 2013 | | 299,043 | | | 0 | | | | 113,664 | | | | 57,358 | | | | 222,520 | | | | 0 | | | | 25,972 | | | | 718,557 | |
Vice President, | | 2012 | | 293,180 | | | 0 | | | | 97,162 | | | | 46,297 | | | | 309,874 | | | | 115,155 | | | | 17,904 | | | | 879,572 | |
Human Resources | | 2011 | | 286,913 | | | 0 | | | | 101,133 | | | | 44,976 | | | | 99,983 | | | | 71,521 | | | | 18,013 | | | | 622,539 | |
| | | | | | | | | |
Richard I. Reynolds | | 2013 | | 453,563 | | | 0 | | | | 281,287 | | | | 141,964 | | | | 553,952 | | | | 0 | | | | 37,883 | | | | 1,468,649 | |
Executive Vice | | 2012 | | 491,193 | | | 0 | | | | 785,354 | | | | 134,755 | | | | 880,136 | | | | 0 | | | | 20,846 | | | | 2,312,284 | |
President, Strategy | | 2011 | | 476,322 | | | 0 | | | | 292,230 | | | | 129,957 | | | | 310,354 | | | | 40,984 | | | | 21,541 | | | | 1,271,388 | |
Program Management(9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Stephanie A. Streeter | | 2013 | | 743,751 | | | 0 | | | | 735,998 | | | | 2,718,936 | | | | 1,079,594 | | | | 0 | | | | 41,538 | | | | 5,319,817 | |
Chief Executive Officer | | 2012 | | 718,754 | | | 0 | | | | 529,835 | | | | 252,461 | | | | 1,432,665 | | | | 0 | | | | 50,521 | | | | 2,984,236 | |
| | 2011 | | 350,001 | | | 340,000 | | | | 352,113 | | | | 350,001 | | | | 0 | | | | 0 | | | | 167,102 | | | | 1,559,217 | |
(1) | As to Ms. Buck for 2012, represents her minimum guaranteed award under our 2012 SMIP; the balance of Ms. Buck’s award under our 2012 SMIP is included under the ‘‘Nonequity Incentive Plan Compensation’’ column. As to Ms. Kovach in 2012, represents a special award made in May 2012 in recognition of leadership relating to our 2012 refinancing. As to Ms. Streeter for 2011, represents the sum of (a) her minimum guaranteed incentive in the amount of $315,000 and (b) a discretionary award in the amount of $25,000.
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(2) | Represents the grant date fair value, in accordance with FASB ASC Topic 718, with respect to RSUs granted in 2013, 2012 and 2011, respectively. With respect to all awards made in 2013, 2012 and 2011 other than the award made to Mr. Reynolds in August 2012, the awards vest ratably over a four-year period from the date of grant. With respect to the award made to Mr. Reynolds in August 2012, 100% of these shares vested upon his retirement. For more information, see Footnote 12, ‘‘Employee Stock Benefit Plans,’’ to the consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2014. The actual values realized by the respective named executives depend on the number of RSUs that actually vest and the price of our common stock when shares of our common stock are issued in settlement of the RSUs.
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(3) | Represents the grant date fair value, in accordance with FASB ASC Topic 718, with respect to NQSOs and cash-settled SARs granted in 2013, 2012 and 2011, respectively. With respect to all awards other than a ‘‘new hire’’ award of 15,750 NQSOs made to Ms. Buck in August 2012 and the special retention award of 240,829 cash-settled SARs made to Ms. Streeter in December 2013, the awards vest ratably over a four-year period from the date of grant. A ‘‘new hire’’ award of 15,750 NQSOs made to Ms. Buck in August 2012 is scheduled to cliff vest on August 1, 2016, and the special retention award of 240,829 cash-settled SARs made to Ms. Streeter in December 2013 is scheduled to cliff vest on December 31, 2018. For more information, see Footnote 12, ‘‘Employee Stock Benefit Plans,” to the consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2014. The actual values received by the respective named executives depend on the number of NQSOs and cash-settled SARs that actually vest, the number of shares with respect to which NQSOs and cash-settled SARs are exercised and the price of our common stock on the date on which the NQSOs and cash-settled SARs are exercised.
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(4) | Represents (a) amounts earned by the named executives in 2013, 2012 and 2011 under our SMIP and (b) for 2013 and 2012, amounts earned by the named executives under the cash component of our 2011 LTIP and 2010 LTIP, respectively. The awards under our SMIP were paid in March of 2014 and February of 2013 and 2012, respectively; the awards under the cash component of our 2011 LTIP were paid in February of 2014; and the awards under the cash component of our 2010 LTIP were paid in February of 2013. As to Ms. Buck in 2012, represents the amount by which the annual incentive award actually earned under our 2012 SMIP exceeds the minimum annual incentive that we committed to pay her when we hired her.
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(5) | Represents the actuarial increase in pension value under our Salary Plan and our SERP. Because the net pension value under our Salary Plan and SERP declined during 2013 for all named executives who are participants under those plans, the amount of the actuarial increase is $0. We do not guarantee any particular rate of return on deferred compensation under our Executive Savings Plan (which we refer to as our ESP) or EDCP. The rate of return depends upon the performance of the fund in which the participant’s ESP or EDCP account is deemed invested. Accordingly, the amounts included in this column do not include above-market earnings on nonqualified deferred compensation. Ms. Buck and Ms. Streeter are not eligible participants under our Salary Plan or SERP.
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(6) | Includes the following: (a) annual company matching contributions to our 401(k) savings plan (a broad-based plan open to all U.S. salaried employees); (b) annual company matching contributions to our EDCP; (c) the cost that we paid for tax return preparation and financial planning for the respective named executives; (d) our incremental cost for ground transportation for personal and business trips from the Toledo, Ohio area to the Detroit/ Wayne County Metropolitan airport; (e) the annual premiums that we paid to provide executives with supplement long-term disability coverage in 2012 (after which this perquisite was discontinued) and 2011; (f) for Mr. Ibele in 2011, for Mr. Ibele and Ms. Buck in 2012, and for Mr. Ibele, Ms. Buck and Ms. Streeter in 2013, airline club memberships; (g) for Ms. Streeter in 2012 and 2013, and for Mr. Paige in 2013, the cost of an executive physical examination; (h) for Ms. Streeter in 2011, reimbursement equal to 50% of the legal expenses she incurred in negotiating her employment agreement; and (i) for Ms. Streeter (in 2011), and Ms. Buck (in 2012 and 2013), relocation assistance, including, for Ms. Streeter, loss-on-sale protection in 2011, and tax gross-ups on relocation assistance other than Ms. Streeter’s loss-on-sale-protection. For Mr. Reynolds, the amounts under this heading exclude the value of RSUs and NQSOs as to which vesting was accelerated, because the cumulative grant date fair values have been included under the columns ‘‘Stock Awards’’ and ‘‘Option Awards’’ in this table and in the Summary Compensation Tables included in our proxy statements filed in 2011 through 2013.
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The following table provides additional detail with respect to the perquisites that we provided to our named executives in 2013:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Named
Executive | | | | | | | | EDCP
Matching
Contribution
($) | | | | | | | | Tax Return
Preparation/
Financial
Planning
($) | | | | | | | | Relocation
Assistance
($) | | | | | | | | Relocation
Assistance
Tax Gross-Up
($) | | | | | | | | Ground
Transport
($)(a) | | Annual
Executive
Physical
Examination
($) | | Airline Club
Membership
($) | | | | Total
($) |
S. Buck | | | | | | | | | | 6,370 | | | | | | | | | | | 11,000 | | | | | | | | | | | 44,670 | | | | | | | | | | | 6,093 | | | | | | | | | | | 948 | | | | | 0 | | | | | 450 | | | | | | | 69,531 | |
D. Ibele | | | | | | | | | | 0 | | | | | | | | | | | 3,138 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | | | | | | | 1,261 | | | | | 0 | | | | | 350 | | | | | | | 4,749 | |
S. Kovach | | | | | | | | | | 3,230 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | | | | | | | 182 | | | | | 0 | | | | | 0 | | | | | | | 3,385 | |
T. Paige | | | | | | | | | | 2,522 | | | | | | | | | | | 4,638 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | | | | | | | 397 | | | | | 3,116 | | | | | 0 | | | | | | | 10,673 | |
R. Reynolds | | | | | | | | | | 11,133 | | | | | | | | | | | 11,450 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | 0 | | | | | 0 | | | | | | | 22,583 | |
S. Streeter | | | | | | | | | | 0 | | | | | | | | | | | 25,000 | | | | | | | | | | | 0 | | | | | | | | | | | 0 | | | | | | | | | | | 1,529 | | | | | 1,808 | | | | | 450 | | | | | | | 28,787 | |
| (a) | Includes (i) for personal trips, the entire cost that we incurred for such transportation and (ii) for business trips, the amount in excess of the amount to which the respective named executives would have been entitled as reimbursement for mileage and parking under our travel policy applicable to all employees.
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(7) | Ms. Buck joined us on August 1, 2012 as Vice President, Chief Financial Officer.
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(8) | Mr. Ibele was named Vice President, General Manager, U.S. and Canada, on August 1, 2012. He previously served as Vice President, Global Sales and Marketing.
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(9) | Mr. Reynolds was named Executive Vice President, Strategy Program Management, on August 1, 2012. In 2011 through July 2012, he served as Executive Vice President, Chief Financial Officer. He retired on November 30, 2013 after 43 years with Libbey.
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Grants of Plan-Based Awards Table
During 2013, the Compensation Committee granted to our named executives RSUs and NQSOs under our Omnibus Plan and 2013 LTIP. Recipients of RSUs are not entitled to dividends or voting rights with respect to the common shares underlying the RSUs unless and until they are earned or vested. We do not engage in repricing of NQSOs, nor have we repurchased underwater NQSOs. On February 17, 2014, the Compensation Committee approved the payment of cash awards under our 2013 SMIP and our 2011 LTIP.
Information with respect to each of these awards, including information with respect to the performance measures applicable to the cash awards under our 2013 SMIP and 2013 LTIP, and vesting schedules with respect to RSUs and NQSOs, is set forth, on a grant-by-grant basis, in the table and footnotes that follow.
GRANTS OF PLAN-BASED AWARDS TABLE
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Estimated Possible Payouts under Non-
Equity Incentive Plan Awards(2) | | | All Other
Stock
Awards:
Number of
Shares of | | All Other
Option
Awards:
Number of
Securities | | Exercise or
Base Price | | Grant Date
Fair Value of
Stock and | |
| | | | | | | | | | | | | | | | Stock or | | Underlying | | of Option | | Option | |
Named Executive | | Plan Name | | Award Date(1) | | Grant Date(1) | | Threshold
($) | | Target
($) | | Maximum
($) | | | Units
(#)(3) | | Options
(#)(4) | | Awards
($/Sh) | | Awards
($)(5) | |
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S. Buck | | 2013 SMIP | | 2/11/2013 | | | | 58,581 | | 234,325 | | | 527,231 | | | | | | | | | | | |
| | 2013 LTIP (cash component) | | 2/11/2013 | | | | 98,000 | | 196,000 | | | 392,000 | | | | | | | | | | | |
| | 2013 LTIP (RSUs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | 10,461 | | | | | | | 198,968 | |
| | 2013 LTIP (NQSOs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | | | 11,937 | | 19.02 | | | 100,423 | |
| | | | | | | | | | |
D. Ibele | | 2013 SMIP | | 2/11/2013 | | | | 58,604 | | 234,415 | | | 527,434 | | | | | | | | | | | |
| | 2013 LTIP (cash component) | | 2/11/2013 | | | | 99,120 | | 198,240 | | | 396,480 | | | | | | | | | | | |
| | 2013 LTIP (RSUs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | 10,581 | | | | | | | 201,251 | |
| | 2013 LTIP (NQSOs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | | | 12,073 | | 19.02 | | | 101,567 | |
| | | | | | | | | | |
S. Kovach | | 2013 SMIP | | 2/11/2013 | | | | 39,350 | | 157,398 | | | 354,146 | | | | | | | | | | | |
| | 2013 LTIP (cash component) | | 2/11/2013 | | | | 56,666 | | 113,332 | | | 226,664 | | | | | | | | | | | |
| | 2013 LTIP (RSUs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | 6,049 | | | | | | | 115,052 | |
| | 2013 LTIP (NQSOs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | | | 6,902 | | 19.02 | | | 58,065 | |
| | | | | | | | | | |
T. Paige | | 2013 SMIP | | 2/11/2013 | | | | 37,381 | | 149,522 | | | 336,425 | | | | | | | | | | | |
| | 2013 LTIP (cash component) | | 2/11/2013 | | | | 55,979 | | 111,957 | | | 223,914 | | | | | | | | | | | |
| | 2013 LTIP (RSUs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | 5,976 | | | | | | | 113,664 | |
| | 2013 LTIP (NQSOs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | | | 6,818 | | 19.02 | | | 57,358 | |
| | | | | | | | | | |
R. Reynolds | | 2013 SMIP | | 2/11/2013 | | | | 85,043 | | 340,172 | | | 765,387 | | | | | | | | | | | |
| | 2013 LTIP (cash component) | | 2/11/2013 | | | | 42,333 | | 84,665 | | | 169,330 | | | | | | | | | | | |
| | 2013 LTIP (RSUs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | 14,789 | | | | | | | 281,287 | |
| | 2013 LTIP (NQSOs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | | | 16,875 | | 19.02 | | | 141,964 | |
| | | | | | | | | | |
S. Streeter | | 2013 SMIP | | 2/11/2013 | | | | 185,938 | | 743,751 | | | 1,673,440 | | | | | | | | | | | |
| | 2013 LTIP (cash component) | | 2/11/2013 | | | | 362,502 | | 725,004 | | | 1,450,008 | | | | | | | | | | | |
| | 2013 LTIP (RSUs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | 38,696 | | | | | | | 735,998 | |
| | 2013 LTIP (NQSOs) | | 2/11/2013 | | 2/22/2013 | | | | | | | | | | | | 44,154 | | 19.02 | | | 371,455 | |
| | Omnibus Plan (SARs) | | 12/9/2013 | | 12/16/2013 | | | | | | | | | | | | 240,829 | | 21.29 | | | 2,347,481 | |
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(1) | For Non-Equity Incentive Plan Awards, the Award Date and the Grant Date for awards made under the 2013 SMIP are the date on which the Compensation Committee approved the 2013 SMIP. The Award Date and the Grant Date for awards made under the cash component of the 2013 LTIP are the date on which the Compensation Committee approved the 2013 LTIP. For All Other Stock Awards and All Other Option Awards, the Award Date is the date on which the Compensation Committee took action, and the Grant Date is the date on which we determined the number of NQSOs, RSUs or cash-settled SARs, as the case may be, awarded. The number of NQSOs and RSUs awarded to the named executives in February 2013 under our 2013 LTIP was determined by dividing the target dollar value of the applicable component of equity to be awarded by (a) in the case of NQSOs, the Black-Scholes value of the options, determined using the average closing price of Libbey common stock over a period of 20 consecutive trading days ending on the grant date and capping the volatility at 50%, as of February 22, 2013, or (b) in the case of RSUs, the average closing price of Libbey common stock over the 20 consecutive trading-day period ending February 22, 2013. The number of cash-settled SARs awarded to Ms. Streeter pursuant to the CEO Retention Award Agreement was determined by dividing $2,500,000 by the Black-Scholes value, determined in the same manner as with respect to awards of NQSOs, as of December 16, 2013. We inform grant recipients of their awards after we determine the number of RSUs, NQSOs and/or SARs to be granted. For awards made in February 2013, we determined the number of RSUs and NQSOs to be granted on the first business day after we announced our results of operations for the 2012 fiscal year.
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(2) | Represents the range of possible cash awards under (a) our SMIP for performance during 2013 and (b) the cash component of our 2013 LTIP.
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| (a) | Under our SMIP, each named executive is eligible for an annual incentive award in an amount up to 225% of the executive officer’s target award, which in turn is a percentage of the executive’s anticipated full-year base salary, as set forth in the following table:
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| | | | | |
| | Target Award as a |
| | Percentage of |
| | Anticipated Full-Year |
| | Base Salary |
Named Executive
| | (%) |
| |
S. Buck
| | 65 |
D. Ibele
| | 65 |
S. Kovach
| | 50 |
T. Paige
| | 50 |
R. Reynolds
| | 75 |
S. Streeter
| | 100 |
Prior to 2013, our SMIP comprised two separate payout opportunities – one based on company and region performance and the other based on achievement of individual objectives. In February 2013, the Compensation Committee adopted a new plan design for our 2013 SMIP in order to more closely tie payouts under the plan to company and region performance. Under the 2013 SMIP, the only payout opportunity is based on company and region performance, although the amount of the payout may be modified up or down by 25% based on individual performance, as described below. Accordingly, the amount disclosed under the ‘‘Threshold’’ column represents only 25% of target performance (reflecting the maximum downward impact of the individual modifier), while the amount disclosed under the “Maximum” column represents 225% of target performance (reflecting the maximum upward impact of the individual modifier). As noted under‘‘Compensation Discussion and Analysis — Executive Summary — 2013 Executive Compensation Highlights’’and‘‘Compensation Discussion and Analysis — What pay did Libbey’s executives receive for 2013?,’’the performance metrics under the financial performance component included the ratio of adjusted EBITDA to targeted EBITDA and the ratio of adjusted cash earnings to targeted cash earnings.
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For all of our named executives other than Mr. Ibele, 100% of their opportunity was based on company-wide performance, as reflected in company-wide adjusted EBITDA and adjusted cash earnings performance metrics. For Mr. Ibele, 50% of his opportunity was based on company-wide performance, and the other 50% of his opportunity was based on the performance of the U.S. and Canada region (including the U.S. Sourcing segment) of which Mr. Ibele is general manager. In each case, the payout scale with respect to the each of the adjusted EBITDA performance metric and the adjusted cash earnings metric was:
| | | | |
Approximate Percent of Targeted EBITDA (%) | | | | Payout as a
Percentage of Target
(%) |
| | |
| 80 | | | | 50 |
| 100 | | | | 100 |
| 115 | | | | 200 |
| (b) | Under the cash component of our 2013 LTIP, each named executive is eligible for a cash award in an amount up to 200% of the named executive’s target award. In the case of Mr. Reynolds, the target award is prorated to reflect his retirement on November 30, 2013. Each named executive’s target award under the cash component is 40% of the named executive’s target award under all components of the relevant LTIP. Each named executive’s target award under all components of the 2013 LTIP is set forth in the following table:
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| | | | | | | | |
| | | | | 2013 Target Long-Term Award | | | | 2013 LTIP Performance Cash |
| | | | | as a Percentage of Annualized | | | | Target as Percentage of |
| | | | | 1/1/2013 Base Salary | | | | Annualized 1/1/2013 Base Salary |
Named Executive | | | | (%) | | | | (%) |
| | | | |
S. Buck | | | | 140 | | | | 56 |
D. Ibele | | | | 140 | | | | 56 |
S. Kovach | | | | 95 | | | | 38 |
T. Paige | | | | 95 | | | | 38 |
R. Reynolds | | | | 140 | | | | 17 |
S. Streeter | | | | 250 | | | | 100 |
| | | | | | | | |
There are two performance metrics used to determine the extent to which a payout is earned under the cash component of the 2013 LTIP, with each performance metric representing 50% of an executive’s target award under the plan. The two performance metrics are (a) our average adjusted EBITDA margin, expressed as a percentage and calculated by dividing adjusted EBITDA by net sales, for the three one-year performance periods (calendar years 2013, 2014 and 2015) included in the three-year performance cycle ended December 31, 2015, and (b) the ratio of year-end net debt to average adjusted EBITDA for the three one-year performance periods included in the three-year performance cycle ended December 31, 2015. The scales to be used to determine the amount, if any, of the payouts are:
| | | | | | | | | | | | | | | | | | | | |
| | | % of Targeted EBITDA Margin Achieved | | | | Payout % | | | | | | | | If Targeted Net Debt to Adjusted EBITDA is Reduced By: | | | | Payout % | | |
| | | 115 | | | | 200 | | | | | | | | 115 | | | | 200 | | |
| | | 100 | | | | 100 | | | | | | | | 100 | | | | 100 | | |
| | | 80 | | | | 50 | | | | | | | | 80 | | | | 50 | | |
| | | Less than 80 | | | | 0 | | | | | | | | Less than 80 | | | | 0 | | |
(3) | Represents grants of RSUs made pursuant to our 2013 LTIP. The grants vest 25% per year beginning on February 22, 2014. Pursuant to the award agreements, Mr. Reynolds’s award vested automatically upon his retirement since he was at least age 65.
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(4) | Represents grants of NQSOs made pursuant to our 2013 LTIP in February 2013 and, in the case of Ms. Streeter, a special retention grant of cash-settled SARs made in December 2013 pursuant to our Omnibus Incentive Plan. The February 2013 grants vest 25% per year beginning on February 22, 2014. The December 2013 special retention grant of SARs to Ms. Streeter cliff vests on December 31, 2018. Pursuant to the award agreements under which the February 2013 grants of NQSOs were issued, Mr. Reynolds’s award vested automatically upon his retirement since he was at least age 65.
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(5) | Represents the respective grant date fair values, determined in accordance with FASB ASC Topic 718, of the RSUs, NQSOs and cash-settled SARs.
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Outstanding Equity Awards at Fiscal Year-End Table
Our named executives had the following types of equity awards outstanding at the end of the 2013 fiscal year:
NQSOs granted under our Omnibus Plan and predecessor plans;
RSUs granted under our Omnibus Plan; and
Cash-settled SARs granted under our Omnibus Plan.
The following table shows, for each of the named executives, (a) the number, exercise price and expiration date of NQSOs and cash-settled SARs that, as of December 31, 2013, were vested but not yet exercised and of NQSOs and cash-settled SARs that, as of December 31, 2013, were not vested; and (b) the number and market value of RSUs that were not vested as of December 31, 2013:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
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| | | | | | | | | Option Awards | | | Stock Awards |
| | | | | | | | |
Named Executive | | Award Date(1) | | | Grant Date(1) | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(3) | | Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(4) |
| | | | | | | | |
S. Buck | | | 7/6/2012 | | | | 8/1/2012 | | | 4,410 | | 28,979 | | | 13.96 | | | | 8/1/2022 | | | 15,333 | | 321,993 |
| | | 2/11/2013 | | | | 2/22/2013 | | | 0 | | 11,937 | | | 19.02 | | | | 2/22/2023 | | | 10,461 | | 219,681 |
| | | | | | | | |
D. Ibele | | | 12/10/2004 | | | | | | | 11,000 | | 0 | | | 20.39 | | | | 12/11/2014 | | | | | |
| | | 12/8/2005 | | | | | | | 11,000 | | 0 | | | 11.79 | | | | 12/8/2015 | | | | | |
| | | 2/5/2007 | | | | 2/16/2007 | | | 5,597 | | 0 | | | 12.80 | | | | 2/17/2017 | | | | | |
| | | | | | | | | | 5,294 | | 0 | | | 12.80 | | | | 2/17/2017 | | | | | |
| | | 2/4/2008 | | | | 2/15/2008 | | | 4,988 | | 0 | | | 15.35 | | | | 2/15/2018 | | | | | |
| | | 2/9/2009 | | | | 2/12/2009 | | | 11,361 | | 0 | | | 1.07 | | | | 2/12/2019 | | | | | |
| | | 2/8/2010 | | | | 2/11/2010 | | | 4,581 | | 1,526 | | | 10.13 | | | | 2/11/2020 | | | | | |
| | | 2/8/2010 | | | | 5/6/2010 | | | | | | | | | | | | | | | 2,894 | | 60,774 |
| | | 2/7/2011 | | | | 2/10/2011 | | | 2,679 | | 2,679 | | | 17.00 | | | | 2/10/2021 | | | 4,539 | | 95,319 |
| | | 2/6/2012 | | | | 2/17/2012 | | | 1,703 | | 5,106 | | | 13.95 | | | | 2/17/2022 | | | 7,943 | | 166,803 |
| | | 2/11/2013 | | | | 2/22/2013 | | | 0 | | 12,073 | | | 19.02 | | | | 2/22/2023 | | | 10,581 | | 222,201 |
| | | | | | | | |
S. Kovach | | | 12/10/2004 | | | | | | | 9,500 | | 0 | | | 20.39 | | | | 12/11/2014 | | | | | |
| | | 2/4/2008 | | | | 2/15/2008 | | | 3,621 | | 0 | | | 15.35 | | | | 2/15/2018 | | | | | |
| | | 2/8/2010 | | | | 2/11/2010 | | | 3,278 | | 1,092 | | | 10.23 | | | | 2/11/2020 | | | | | |
| | | 2/8/2010 | | | | 5/6/2010 | | | | | | | | | | | | | | | 2,760 | | 57,960 |
| | | 2/7/2011 | | | | 2/10/2011 | | | 1,813 | | 1,812 | | | 17.00 | | | | 2/10/2021 | | | 3,071 | | 64,491 |
| | | 2/6/2012 | | | | 2/17/2012 | | | 1,156 | | 3,468 | | | 13.95 | | | | 2/17/2022 | | | 5,394 | | 113,274 |
| | | 2/11/2013 | | | | 2/22/2013 | | | 0 | | 6,902 | | | 19.02 | | | | 2/22/2023 | | | 6,049 | | 127,029 |
| | | | | | | | |
T. Paige | | | 12/10/2004 | | | | | | | 6,500 | | 0 | | | 20.39 | | | | 12/11/2014 | | | | | |
| | | 12/8/2005 | | | | | | | 8,000 | | 0 | | | 11.79 | | | | 12/8/2015 | | | | | |
| | | 2/5/2007 | | | | 2/16/2007 | | | 4,504 | | 0 | | | 12.80 | | | | 2/17/2017 | | | | | |
| | | | | | | | | | 4,128 | | 0 | | | 12.80 | | | | 2/17/2017 | | | | | |
| | | 2/4/2008 | | | | 2/15/2008 | | | 3,995 | | 0 | | | 15.35 | | | | 2/15/2018 | | | | | |
| | | 2/9/2009 | | | | 2/12/2009 | | | 1,207 | | 0 | | | 1.07 | | | | 2/12/2019 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Option Awards | | | Stock Awards |
| | | | | | | | |
Named Executive | | Award Date(1) | | | Grant Date(1) | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(3) | | Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(4) |
| | | 2/8/2010 | | | | 2/11/2010 | | | 4,116 | | 1,371 | | | 10.13 | | | | 2/11/2020 | | | | | |
| | | 2/8/2010 | | | | 5/6/2010 | | | | | | | | | | | | | | | 2,600 | | 54,600 |
| | | 2/7/2011 | | | | 2/10/2011 | | | 1,756 | | 1,755 | | | 17.00 | | | | 2/10/2021 | | | 2,975 | | 62,475 |
| | | 2/6/2012 | | | | 2/17/2012 | | | 1,120 | | 3,358 | | | 13.95 | | | | 2/17/2022 | | | 5,223 | | 109,683 |
| | | 2/11/2013 | | | | 2/22/2013 | | | 0 | | 6,818 | | | 19.02 | | | | 2/22/2023 | | | 5,976 | | 125,496 |
| | | | | | | | |
R. Reynolds | | | 12/10/2004 | | | | | | | 13,500 | | 0 | | | 20.39 | | | | 12/11/2014 | | | | | |
| | | 12/8/2005 | | | | | | | 13,500 | | 0 | | | 11.79 | | | | 12/8/2015 | | | | | |
| | | 2/5/2007 | | | | 2/16/2007 | | | 15,690 | | 0 | | | 12.80 | | | | 2/17/2017 | | | | | |
| | | | | | | | | | 14,707 | | 0 | | | 12.80 | | | | 2/17/2017 | | | | | |
| | | 2/4/2008 | | | | 2/15/2008 | | | 13,984 | | 0 | | | 15.35 | | | | 2/15/2018 | | | | | |
| | | 2/9/2009 | | | | 2/12/2009 | | | 30,627 | | 0 | | | 1.07 | | | | 2/12/2019 | | | | | |
| | | 2/8/2010 | | | | 2/11/2010 | | | 16,464 | | 0 | | | 10.13 | | | | 2/11/2020 | | | | | |
| | | 2/7/2011 | | | | 2/10/2011 | | | 10,145 | | 0 | | | 17.00 | | | | 2/10/2021 | | | | | |
| | | 2/6/2012 | | | | 2/17/2012 | | | 13,034 | | 0 | | | 13.95 | | | | 2/17/2022 | | | | | |
| | | 2/11/2013 | | | | 2/22/2013 | | | 16,875 | | 0 | | | 19.02 | | | | 2/22/2023 | | | | | |
| | | | | | | | |
S. Streeter | | | 6/21/2011 | | | | 7/29/2011 | | | 15,191 | | 15,191 | | | 15.47 | | | | 7/29/2021 | | | 11,380 | | 238,980 |
| | | 2/6/2012 | | | | 2/17/2012 | | | 6,105 | | 18,314 | | | 13.95 | | | | 2/17/2022 | | | 28,485 | | 598,185 |
| | | 2/11/2013 | | | | 2/22/2013 | | | 0 | | 44,154 | | | 19.02 | | | | 2/22/2023 | | | 38,696 | | 812,616 |
| | | 12/9/2013 | | | | 12/16/2013 | | | 0 | | 280,829 | | | 21.29 | | | | 12/16/2023 | | | | | |
(1) | The Award Date is the date on which the Compensation Committee took action, and the Grant Date is the date on which we determined the number of NQSOs, SARs or RSUs, as the case may be, awarded. Until 2006, the Award Date and the Grant Date typically were the same.
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(2) | See‘‘Compensation Discussion and Analysis — How does Libbey determine the forms and amounts of executive pay? — Our Equity Grant Practices’’for information as to how we determine the number of NQSOs, SARs and RSUs awarded to our named executives. We inform grant recipients of their awards after we have determined the number of NQSOs, cash-settled SARs and/or RSUs to be granted to them. For awards made in February 2013, the grant date was the first business day after we announced our results of operations for the 2012 fiscal year.
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(3) | Represents RSUs awarded pursuant to our Omnibus Plan. One share of our common stock underlies each RSU.
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(4) | Represents the market value, as of December 31, 2013, of unvested RSUs. We have estimated the market value by multiplying the number of shares of common stock underlying the RSUs by $21.00, the closing price of our common stock on December 31, 2013, the last trading day of 2013.
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(5) | Upon Mr. Reynolds’s retirement, vesting was accelerated as to all NQSOs and RSUs that had not previously vested.
|
The following table shows the vesting schedules with respect to those NQSOs and cash-settled SARs that were not yet exercisable, and those RSUs that were not yet vested, as of December 31, 2013:
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| | |
| | | | | | |
Option Awards (NQSOs and SARs) Vesting Schedule
| | Stock Awards (RSU) Vesting Schedule
|
Grant Date
| | Vesting Schedule
| | Grant Date
| | Vesting Schedule
|
2/11/2010
| | 75% were vested as of February 11, 2013; an additional 25% are scheduled to vest on February 11, 2014
| | 5/6/2010
| | 75% were vested as of February 11, 2013; an additional 25% are scheduled to vest on February 11, 2014
|
2/10/2011 | | 50% were vested as of February 10, 2013; an additional 25% are scheduled to vest on each of February 10, 2014 and February 10, 2015.
| | 2/10/2011 | | 50% were vested as of February 10, 2013; an additional 25% are scheduled to vest on each of February 10, 2014 and February 10, 2015.
|
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7/29/2011 | | 50% were vested on June 30, 2013; an additional 25% are scheduled to vest on each of June 30, 2014 and June 30, 2015.
| | 7/29/2011 | | 50% were vested on June 30, 2013; an additional 25% are scheduled to vest on each of June 30, 2014 and June 30, 2015.
|
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2/17/2012 | | 25% were vested on February 17, 2013; an additional 25% are scheduled to vest on each of February 17, 2014, February 17, 2015 and February 17, 2016.
| | 2/17/2012 | | 25% were vested on February 17, 2013; an additional 25% are scheduled to vest on each of February 17, 2014, February 17, 2015 and February 17, 2016.
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8/1/2012 | | As to 17,639 NQSOs, 25% were vested on August 1, 2013; an additional 25% are scheduled to vest on each of August 1, 2014, August 1, 2015 and August 1, 2016. As to 15,750 NQSOs, 100% are scheduled to vest on August 1, 2016.
| | 8/1/2012 | | As to 17,639 NQSOs, 25% were vested on August 1, 2013; an additional 25% are scheduled to vest on each of August 1, 2014, August 1, 2015 and August 1, 2016. As to 15,750 NQSOs, 100% are scheduled to vest on August 1, 2016.
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2/22/2013 | | 25% are scheduled to vest on each of February 22, 2014, February 22, 2015, February 22, 2016 and February 22, 2017.
| | 2/22/2013 | | 25% are scheduled to vest on each of February 22, 2014, February 22, 2015, February 22, 2016 and February 22, 2017.
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12/16/2013 | | 100% of the SARs cliff vest on December 31, 2018. All SARs will be settled in cash.
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Option Exercises and Stock Vested for Fiscal 2013 Table
The following table sets forth information concerning the exercise of stock options by the named executives in 2013 and the value of RSUs that vested in 2013.
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2013
| | | | | | | | | | | | | | | | | | | | |
Named Executive | | Number of Shares
Acquired on Exercise
(#) | | Value Realized on
Exercise
($)(1) | | Number of Shares Acquired
on Vesting
($)(2) | | Value Realized on
Vesting
($)(3) |
S. Buck | | 0 | | 0 | | | | 5,111 | | | | | 127,571 | |
D. Ibele | | 0 | | 0 | | | | 10,577 | | | | | 195,228 | |
S. Kovach | | 5,420 | | 110,080 | | | | 8,733 | | | | | 161,111 | |
T. Paige | | 5,000 | | 107,975 | | | | 8,313 | | | | | 153,369 | |
R. Reynolds | | 0 | | 0 | | | | 107,010 | | | | | 2,349,167 | |
S. Streeter | | 0 | | 0 | | | | 15,186 | | | | | 311,970 | |
(1) | Represents the sum of the differences between the market prices and the exercise prices for the respective awards of NQSOs exercised by the named executive during the fiscal year.
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(2) | Represents the number of RSUs that vested during 2013. Includes 5,111 shares, receipt of which was deferred by Ms. Buck pursuant to our EDCP. Pursuant to the EDCP, each named executive had the opportunity to defer receipt of shares underlying RSUs vesting during the year. Deferred shares accrue dividends, but Libbey did not pay any dividends on its common stock in 2013. One share of Libbey common stock will be issued for each share underlying RSUs deferred pursuant to the EDCP. Shares that are deferred will be distributed upon the date of distribution elected by the named executive pursuant to, or as otherwise contemplated by, the EDCP.
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(3) | Represents the value of RSUs vested (even if deferred under the EDCP) during 2013. For RSUs that vested during 2013, the value was determined by multiplying the number of shares by the closing price of our common stock on the applicable vesting dates ($18.44 for RSUs vesting on February 10, 2013 and February 11, 2013; $18.37 for RSUs vesting on February 12, 2013; $18.90 for RSUs vesting on February 17, 2013; $24.19 for RSUs vesting on June 30, 3013; $24.96 for RSUs vesting on August 1, 2013; $23.00 for RSUs vesting on November 29, 2013; and $22.62 for RSUs vesting on November 30, 2013).
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Retirement Plans
Executives hired before January 1, 2006 are eligible for benefits under our Salary Plan and our SERP. The Salary Plan is a qualified plan, and the SERP is an excess, non-qualified plan that is designed to provide substantially identical retirement benefits as the Salary Plan to the extent that the Salary Plan cannot provide those benefits due to limitations set forth in the Internal Revenue Code. Prior to January 1, 1998, the Salary Plan and the SERP provided that benefits would be determined based upon the highest consecutive three-year annual earnings. Effective January 1, 1998, the Salary Plan and the SERP were amended to provide that benefits no longer will be based upon the highest consecutive three-year annual earnings but will be determined by annual contribution credits equal to a percentage of annual earnings plus interest. Employees who were active employees, were at least age 45, had at least 10 years of service as of December 31, 1997, and had a combined age and years of service of at least 65 as of December 31, 1997, are eligible for a pension benefit under the Salary Plan and SERP based on the greater of two benefit formulas: (1) the cash balance formula, which is based upon the value of a notional account that had an opening balance determined in accordance with the final average pay formula described below as of January 1, 1998, or (2) the final average pay formula described below. Under the cash balance formula, the account balance is increased each year with a contribution amount based on the sum of age and years of service with Libbey and with interest based upon the 30-year Treasury rate.
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| | |
The final average pay formula is as follows: [(A) × (B) × (C)] + [(D) × (E) × (C)] + [(F) × (A) × (G)]
Where:
(A) Monthly final average earnings for the three highest consecutive calendar years prior to 2008
(B) 1.212%
(C) Years of credited service up to 35 years
(D) Monthly final average earnings above Social Security Wage base at retirement
(E) 0.176%
(F) 0.5%
(G) Years of credited service over 35 years
Only base salary and amounts earned under the SMIP are included in the calculation of final average earnings.
The retirement benefit may be adjusted if the employee has more or less than 35 years of credited service or retires prior to age 65. The Salary Plan and the SERP provide for additional benefit accruals beyond age 65 and for annual annuity benefits as well as an optional lump sum form of benefit. The lump sum option is designed to be equivalent in value to that of the lifetime annual annuity benefit. Mr. Reynolds was an active employee, was at least age 45 and had more than 20 years of service as of December 31, 1997. Accordingly, Mr. Reynolds received a pension benefit under the Salary Plan and SERP based on the greater of the two benefit formulas described above. Mr. Ibele, Ms. Kovach and Mr. Paige are entitled to a benefit computed only in accordance with the cash balance formula. Neither Ms. Buck nor Ms. Streeter is eligible for a pension benefit under either the Salary Plan or the SERP, because their employment with Libbey did not begin before January 1, 2006.
The following table sets forth information concerning the benefits provided to the named executives under the Salary Plan and the SERP as of December 31, 2013, the date that we use for pension plan measurement for financial statement reporting purposes.
PENSION BENEFITS IN FISCAL 2013 TABLE
| | | | | | | | | | | | | | | | | |
Named Executive | | Plan Name | | Number of Years of
Credited Service
(#)(1) | | Present Value of
Accumulated Benefit
($)(2) | | Payments During Last
Fiscal Year
($)(3) |
S. Buck | | N/A | | N/A | | | | N/A | | | | | N/A | |
D. Ibele | | Salary Plan | | 30.58 | | | | 416,743 | | | | | 0 | |
| | SERP | | 30.58 | | | | 249,571 | | | | | 0 | |
S. Kovach | | Salary Plan | | 10.08 | | | | 133,105 | | | | | 0 | |
| | SERP | | 10.08 | | | | 105,579 | | | | | 0 | |
T. Paige | | Salary Plan | | 18.58 | | | | 282,628 | | | | | 0 | |
| | SERP | | 18.58 | | | | 142,918 | | | | | 0 | |
R. Reynolds | | Salary Plan | | 43.75 | | | | N/A | | | | | 1,646,246 | |
| | SERP | | 43.75 | | | | 2,638,263 | | | | | 0 | |
S. Streeter | | N/A | | N/A | | | | N/A | | | | | N/A | |
(1) | Represents actual years of service to Libbey and Owens-Illinois, Inc., our former parent company. The plans were frozen at the end of 2012, after which additional pension service is not credited.
|
(2) | Amounts were determined based on the assumptions outlined in our audited financial statements for the year ended December 31, 2013, except that assumptions relating to expected retirement age are as follows: Mr. Reynolds is assumed to have retired immediately, since he retired on November 30, 2013. All others who are eligible for pension benefits under the Salary Plan are assumed to receive benefits under the cash balance design at their normal retirement age of 65. For Mr. Reynolds, payment of the amount set forth under this column with respect to the SERP is subject to a six-month delay pursuant to Internal Revenue Code Section 409A.
|
(3) | Includes the lump sum benefit paid to Mr. Reynolds, pursuant to the Salary Plan, upon his retirement.
|
Nonqualified Deferred Compensation
The following table sets forth information with respect to our ESP and our EDCP. The ESP was the only nonqualified deferred compensation plan under which employees could defer pay earned prior to January 1, 2009. The EDCP was the only nonqualified deferred compensation plan under which employees could defer pay earned in 2013:
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2013 TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Executive Contributions
in Last FY | | Registrant Contributions
In Last FY | | | Aggregate Earnings
In Last FY | | Aggregate Withdrawals/
Distributions
In Last FY | | Aggregate Balance
At Last FYE(3) | |
Named Executive | | ($) | | | RSUs | | ($)(1) | | | RSUs | | | ($)(2) | | | RSUs | | ($) | | | RSUs | | ($) | | | RSUs | |
S. Buck | | | 7,432 | | | 0 | | | 6,370 | | | | 0 | | | | (12) | | | 0 | | | 0 | | | 0 | | | 13,789 | | | | 5,111 | |
D. Ibele | | | 0 | | | 0 | | | 0 | | | | 0 | | | | 3,009 | | | 0 | | | 0 | | | 0 | | | 12,413 | | | | 0 | |
S. Kovach | | | 3,203 | | | 0 | | | 3,203 | | | | 0 | | | | 4,375 | | | 0 | | | 0 | | | 0 | | | 44,047 | | | | 15,910 | |
T. Paige | | | 17,522 | | | 0 | | | 2,522 | | | | 0 | | | | 7,745 | | | 0 | | | 0 | | | 0 | | | 45,112 | | | | 3,280 | |
R. Reynolds | | | 11,133 | | | 0 | | | 11,133 | | | | 0 | | | | 147,472 | | | 0 | | | (422,516) | | | 0 | | | 255,382 | | | | 82,390 | |
S. Streeter | | | 0 | | | 0 | | | 0 | | | | 0 | | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | | 0 | |
(1) | The following amounts are included in the column headed‘‘All Other Compensation’’in the Summary Compensation Table above: Ms. Kovach — $3,203; Mr. Paige — $2,522; Mr. Reynolds — $11,133.
|
(2) | Not included in column headed‘‘Change in Pension Value and Nonqualified Deferred Compensation Earnings’’in the Summary Compensation Table because earnings are not at an above-market rate.
|
(3) | Of the total amounts shown in this column, the following amounts have been reported as ‘‘Salary’’ or ‘‘Stock Awards’’ in the Summary Compensation Table in this proxy statement for the 2013, 2012 and/or 2011 fiscal years:
|
| | | | | | | | | | |
Named Executive | | Salary
($) | | Stock Awards
($) |
S. Buck | | | | 7,432 | | | | | 71,350 | |
D. Ibele | | | | 0 | | | | | 0 | |
S. Kovach | | | | 8,422 | | | | | 0 | |
T. Paige | | | | 22,475 | | | | | 0 | |
R. Reynolds | | | | 38,619 | | | | | 1,250,118 | |
S. Streeter | | | | 0 | | | | | 0 | |
The ESP, which was frozen at the end of 2008, was a mirror plan of our qualified 401(k) savings plan. Its purpose was to restore certain benefits that would have been available to executives under our 401(k) plan but for IRS limitations on qualified plans. These limits include the annual maximum recognizable compensation for retirement plans and the restrictions on excess contributions by highly compensated employees. In addition to restoring the benefits (including the benefit of our matching contribution) that otherwise would be lost by virtue of these IRS limitations on qualified plans, the ESP and EDCP enable executives to save additional amounts, including RSUs, on a tax-deferred basis.
Under the EDCP, our named executives and other members of senior management may elect to defer base pay, cash incentive and bonus compensation and RSUs into an account that is deemed invested in one of 13 measurement funds, including a Libbey common stock measurement fund. RSUs in all events will be deemed invested in the Libbey common stock measurement fund. We selected these funds to provide measurement options similar to the investment options provided under our 401(k) plan. Participants make deferral elections with respect to cash pay and RSUs prior to the year in which they are earned or they vest.
Participants can defer (a) up to 60% of the amount by which base salary exceeds required payroll obligations and 401(k) plan contributions; (b) up to 60% of the amount by which cash incentive or bonus compensation exceeds required payroll obligations; and (c) up to 100% of RSUs that are earned or vest during the year to which the deferral relates. We provide matching contributions on excess contributions of base salary in the same manner as we provide matching contributions under our 401(k) plan. The matching contributions are deemed invested in accordance with the participant’s election as to his or her own contributions.
The balance credited to a participant’s account, including the matching contributions that we make, is 100% vested at all times. However, the EDCP is not funded and, as a result, EDCP account balances are subject to the claims of our creditors.
We are obligated to pay the account balance in a lump sum made on, or in installments that begin on, the distribution date elected by the participant. However, if a participant dies prior to the date on which his or her account balance is distributed in full, we are obligated to distribute the account balance in a lump sum to the participant’s beneficiaries no later than 60 days after the participant’s death. If a participant ceases to be an employee of Libbey prior to his or her 62nd birthday, we are obligated to pay the participant his or her account balance in a lump sum within 60 days after the date of his or her separation from service, unless the participant is a ‘‘specified employee’’ for purposes of Internal Revenue Code Section 409A. In that event, we are obligated to pay the participant his or her account balance on the first day of the seventh month after his or her separation from service. If a participant ceases to be an employee of Libbey on or after his or her 62nd birthday, we are obligated to distribute the account balance either in a lump sum or in installments, as elected by the participant, on or beginning on the distribution date elected by the participant. In that event, the distribution date cannot be later than the January 1st immediately following the participant’s 75th birthday. If, however, the executive is a ‘‘specified employee’’ for purposes of Internal Revenue Code Section 409A, we cannot distribute the account balance, or begin distributing the account balance, to the participant prior to the first day of the seventh month after the participant’s separation from service. Finally, if a change in control, as defined in the EDCP, occurs, a participant’s entire account balance will be distributed to him or her within 30 days after the date of the change in control.
EDCP hardship distributions are permitted, but there are no loan provisions. All EDCP distributions are fully taxable. Rollovers to defer taxes are not permitted.
Potential Payments Upon Termination or Change in Control
As discussed under‘‘Compensation Discussion and Analysis — Potential Payments Upon Termination or Change in Control,’’we have agreements with named executives and an Executive Severance Policy pursuant to which our named executives may be entitled to severance payments and/or other benefits upon termination of their employment, including in connection with a change in control of Libbey.
The following tables provide information with respect to the amounts payable to each of the named executives based upon the following significant assumptions:
We have assumed that the employment of the respective named executives was terminated on December 31, 2013 under the various scenarios described in that table, except that no amounts would have been payable to Mr. Reynolds because he retired on November 30, 2013.
For purposes of illustrating the amounts payable on or in connection with a change in control of Libbey, we have assumed that a change in control occurred on December 31, 2013, and we have assumed that the employment of the respective named executives was terminated concurrently with the change in control.
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Named Executive | | Cash
Severance
($) | | Annual
Incentive for
Year of
Termination
($) | | LTIP Cash
($) | | Acceleration of
Unvested
Equity Awards
($) | | Misc. Benefits
($) | | Total
($) |
Sherry Buck | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Death or permanent disability(2) | | | | 0 | | | | | 208,737 | | | | | 72,213 | | | | | 769,321 | | | | | 0 | | | | | 1,050,271 | |
Voluntary termination for Good Reason – no change in control triggering event(3) | | | | 0 | | | | | 208,737 | | | | | 72,213 | | | | | 0 | | | | | 0 | | | | | 280,950 | |
Involuntary termination without Cause – no change in control triggering event(4) | | | | 364,000 | | | | | 208,737 | | | | | 72,213 | | | | | 199,203 | | | | | 19,869 | | | | | 864,022 | |
Voluntary termination for Good Reason or involuntary termination without Cause – change in control triggering event(5) | | | | 1,021,200 | | | | | 208,737 | | | | | 220,226 | | | | | 769,321 | | | | | 94,404 | | | | | 2,313,888 | |
Involuntary termination for Cause | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | |
| | | | | | |
Daniel P. Ibele | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Death or permanent disability(2) | | | | 0 | | | | | 234,414 | | | | | 297,034 | | | | | 542,138 | | | | | 0 | | | | | 1,073,586 | |
Voluntary termination for Good Reason or involuntary termination without Cause – no change in control triggering event(6) | | | | 598,703 | | | | | 202,206 | | | | | 296,073 | | | | | 259,921 | | | | | 49,869 | | | | | 1,406,772 | |
Voluntary termination for Good Reason or involuntary termination without Cause – change in control triggering event(7) | | | | 1,197,405 | | | | | 202,206 | | | | | 296,073 | | | | | 632,302 | | | | | 94,232 | | | | | 2,422,218 | |
Involuntary termination for Cause | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | |
| | |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Named Executive | | Cash
Severance
($) | | Annual
Incentive for
Year of
Termination
($) | | LTIP Cash
($) | | Acceleration of
Unvested
Equity Awards
($) | | Misc. Benefits
($) | | Total
($) |
Susan A. Kovach | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Death or permanent disability(2) | | | | 0 | | | | | 157,397 | | | | | 194,278 | | | | | 361,872 | | | | | 0 | | | | | 713,547 | |
Voluntary termination for Good Reason or involuntary termination without Cause – no change in control triggering event(6) | | | | 480,468 | | | | | 140,210 | | | | | 193,628 | | | | | 190,744 | | | | | 44,727 | | | | | 1,049,777 | |
Voluntary termination for Good Reason or involuntary termination without Cause – change in control triggering event(7) | | | | 960,936 | | | | | 140,210 | | | | | 193,628 | | | | | 437,135 | | | | | 80,137 | | | | | 1,812,046 | |
Involuntary termination for Cause | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | |
| | | | | | |
Timothy T. Paige | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Death or permanent disability(2) | | | | 0 | | | | | 149,522 | | | | | 188,889 | | | | | 351,317 | | | | | 0 | | | | | 689,728 | |
Voluntary termination for Good Reason or involuntary termination without Cause – no change in control triggering event(6) | | | | 450,774 | | | | | 133,194 | | | | | 188,259 | | | | | 183,442 | | | | | 49,862 | | | | | 1,005,530 | |
Voluntary termination for Good Reason or involuntary termination without Cause – change in control triggering event(7) | | | | 901,548 | | | | | 133,194 | | | | | 188,259 | | | | | 411,350 | | | | | 84,870 | | | | | 1,719,221 | |
Involuntary termination for Cause | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | |
| | | | | | |
Richard I. Reynolds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retirement(8) | | | | 0 | | | | | 303,025 | | | | | 524,713 | | | | | 2,134,001 | | | | | 0 | | | | | 2,961,739 | |
| | | | | | |
Stephanie A. Streeter | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Death or permanent disability(2) | | | | 0 | | | | | 743,751 | | | | | 997,596 | | | | | 1,609,202 | | | | | 0 | | | | | 3,350,549 | |
Voluntary termination for Good Reason or involuntary termination without Cause – no change in control triggering event(6) | | | | 3,000,000 | | | | | 662,533 | | | | | 994,656 | | | | | 628,942 | | | | | 104,804 | | | | | 5,390,935 | |
Voluntary termination for Good Reason or involuntary termination without Cause – change in control triggering event(7) | | | | 3,750,000 | | | | | 662,533 | | | | | 994,656 | | | | | 1,950,326 | | | | | 104,804 | | | | | 7,462,319 | |
Involuntary termination for Cause | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | |
(1) | Represents potential payments pursuant to: (a) in the case of the named executives other than Ms. Buck, their respective employment agreements, and (b) in the case of Ms. Buck, our Executive Severance Policy or her change in control agreement, as applicable. No amounts would have been payable to Mr. Reynolds under any employment agreement, change in control agreement or severance policy, because Mr. Reynolds retired on November 30, 2013.
|
(2) | Represents the sum of:
|
| (a) | under the column headed ‘‘Annual Incentive for Year of Termination,’’ (i) in the case of the named executives other than Ms. Buck, a target award under our 2013 SMIP; and (ii) in the case of Ms. Buck, the amount actually earned by her under our 2013 SMIP;
|
| (b) | under the column headed ‘‘LTIP Cash,’’ (i) in the case of the named executives other than Ms. Buck, a target award under the cash component of our 2011 LTIP (for the 2011 – 2013 performance cycle) and prorated target awards under the cash component of our 2012 LTIP (for the 2012 – 2014 performance cycle) and our 2013 LTIP (for the 2013 – 2015 performance cycle); and (ii) in the case of Ms. Buck, the amount actually earned under the cash component of our 2011 LTIP (for the 2011 – 2013 performance cycle); and
|
| (c) | under the column headed ‘‘Acceleration of Unvested Equity Awards,’’ in the case of the named executives other than Ms. Buck, the sum of (i) the estimated value, as of December 31, 2013, of common stock underlying a pro rata portion of RSUs that were not vested on December 31, 2013, and (ii) the in-the-money/ intrinsic value, as of December 31, 2013, of a pro rata portion of the NQSOs that were not vested on December 31, 2013. In the case of Ms. Buck, represents the sum of (i) the estimated value, as of December 31, 2013, of common stock underlying RSUs that were granted in 2013 and are scheduled to vest on or before December 31, 2014, and (ii) the in-the-money/ intrinsic value, as of December 31, 2013, of NQSOs that were granted in 2013 and are scheduled to vest on or before December 31, 2014. As to Ms. Buck, this column does not include the value of unvested RSUs and NQSOs granted prior to 2013, since the decision to accelerate vesting remains in the discretion of the Compensation Committee. If the Compensation Committee were to elect to accelerate vesting of all unvested RSUs and NQSOs that were granted prior to 2013 and were held by Ms. Buck as of December 31, 2013, then as of that date the estimated value of the common stock underlying RSUs would equal $429,324, and the in-the-money/ intrinsic value of accelerated NQSOs would equal $235,059.
|
We have estimated the value of common stock underlying RSUs by multiplying the applicable number of RSUs by $21.00, the closing price of our common stock on December 31, 2013. We have determined the in-the-money/ intrinsic value of the applicable NQSOs by deducting the respective exercise prices for the NQSOs from $21.00 and multiplying the result by the applicable number of NQSOs.
(3) | Represents the sum of (a) under the column headed ‘‘Annual Incentive for Year of Termination,’’ the amount actually earned under our 2013 SMIP; and (b) under the column headed ‘‘LTIP Cash,’’ the amount actually earned under the cash component of our 2011 LTIP (for the 2011 – 2013 performance cycle).
|
(4) | Represents the sum of:
|
| (a) | under the column headed ‘‘Cash Severance,’’ salary continuation for 52 weeks;
|
| (b) | under the column headed ‘‘Annual Incentive for Year of Termination,’’ the amount actually earned under our 2013 SMIP;
|
| (c) | under the column headed ‘‘LTIP Cash,’’ the amount actually earned under the cash component of our 2011 LTIP (for the 2011 – 2013 performance cycle); and
|
| (d) | under the column headed ‘‘Misc. Benefits,’’ the estimated cost (net of contributions by Ms. Buck, at the active employee rate) of continued medical, dental, prescription drug and life insurance coverage for a period of 12 months following termination.
|
(5) | Represents the sum of:
|
| (a) | under the column headed ‘‘Cash Severance,’’ the sum of two times Ms. Buck’s annual base salary and two times Ms. Buck’s target award under our 2013 SMIP;
|
| (b) | under the column headed ‘‘Annual Incentive for Year of Termination,’’ the amount actually earned under our 2013 SMIP;
|
| (c) | under the column headed ‘‘LTIP Cash,’’ the sum of the amount actually earned under the performance component of our 2011 LTIP (for the 2011 – 2013 performance cycle) and an estimate of the prorated amount Ms. Buck would earn under the cash component of each of our 2012 LTIP (for the 2012 – 2014 performance cycle) and our 2013 LTIP (for the 2013 – 2015 performance cycle);
|
| (d) | under the column headed ‘‘Acceleration of Unvested Equity Awards,’’ the estimated value, as of December 31, 2013, of common stock underlying RSUs not yet vested as of that date and the in-the-money/ intrinsic value, as of December 31, 2013, of NQSOs not yet vested as of that date; and
|
| (e) | under the column headed ‘‘Misc. Benefits,’’ the sum of (i) the maximum cost (15% of base salary) to be incurred by Libbey to provide executive level outplacement services for two years after termination; (ii) the estimated cost (net of contributions by Ms. Buck at the active employee rate) of continued medical, dental, prescription drug and life insurance coverage for 18 months following termination; and (iii) and the maximum cost ($10,000) to provide financial planning services to Ms. Buck.
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We have estimated the payouts under the cash component of our 2012 LTIP (for the 2012 – 2014 performance cycle) and 2013 LTIP (for the 2013 – 2015 performance cycle) assuming achievement of target levels of performance and have prorated them through the assumed date of termination. The prorated amounts actually earned under the cash component of our 2012 LTIP and 2013 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle.
We have estimated the value, as of December 31, 2013, of unvested RSUs by multiplying the number of RSUs by $21.00, the closing price of our common stock on December 31, 2013. We have determined the in-the-money/ intrinsic value of unvested NQSOs as of December 31, 2013, by deducting the respective exercise prices for the NQSOs from $21.00 and multiplying the result by the applicable number of NQSOs.
(6) | Represents the sum of:
|
| (a) | under the column headed ‘‘Cash Severance,’’ the sum of (i) in the case of the applicable named executives other than Ms. Streeter, 52 weeks of salary continuation and a target award under our 2013 SMIP; and (ii) in the case of Ms. Streeter, 104 weeks of salary continuation and a target award under our 2013 SMIP;
|
| (b) | under the column headed ‘‘Annual Incentive for Year of Termination,’’ the amount actually earned under our 2013 SMIP;
|
| (c) | under the column headed ‘‘LTIP Cash,’’ the sum of the amount actually earned under the performance component of our 2011 LTIP (for the 2011 – 2013 performance cycle) and an estimate of the prorated amount that would be earned under the cash component of each of our 2012 LTIP (for the 2012 – 2014 performance cycle) and our 2013 LTIP (for the 2013 – 2015 performance cycle);
|
| (d) | under the column headed ‘‘Acceleration of Unvested Equity Awards,’’ (i) in the case of the applicable named executives other than Ms. Streeter, the sum of the estimated value, as of December 31, 2013, of common stock underlying RSUs scheduled to vest on or before December 31, 2014 and the in-the-money/ intrinsic value, as of December 31, 2013, of NQSOs scheduled to vest on or before December 31, 2014; and (ii) in the case of Ms. Streeter, the sum of the estimated value, as of December 31, 2013, of common stock underlying RSUs scheduled to vest on or before June 30, 2014 and the in-the-money/ intrinsic value, as of December 31, 2013, of NQSOs scheduled to vest on or before June 30, 2014;
|
| (e) | under the column headed ‘‘Misc. Benefits,’’ (i) in the case of the applicable named executives other than Ms. Streeter, the sum of the estimated cost to be incurred by Libbey to provide executive level outplacement services for two years following termination and the estimated cost (net of contributions by the named executive) to provide medical, dental, prescription drug and life insurance coverage for 12 months following termination; and (ii) in the case of Ms. Streeter, the sum of the maximum cost ($75,000) to be incurred by Libbey to provide executive level outplacement services for two years following termination and the estimated cost (net of contributions by Ms. Streeter at the active employee rate) to provide medical, dental, prescription drug and life insurance coverage for 18 months following termination.
|
| (f) | We have estimated the payouts under the cash component of our 2012 LTIP (for the 2012 – 2014 performance cycle) and 2013 LTIP (for the 2013 – 2015 performance cycle) assuming achievement of target levels of performance and have prorated them through the assumed date of termination. The prorated amounts actually earned under the cash component of our 2012 LTIP and 2013 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle.
|
| (g) | We have estimated the value, as of December 31, 2013, of unvested RSUs by multiplying the number of RSUs by $21.00, the closing price of our common stock on December 31, 2013. We have determined the in-the-money/ intrinsic value of unvested NQSOs as of December 31, 2013, by deducting the respective exercise prices for the NQSOs from $21.00 and multiplying the result by the applicable number of NQSOs.
|
(7) | Represents the sum of:
|
| (a) | under the column headed ‘‘Cash Severance,’’ (i) in the case of each of the applicable named executives other than Ms. Streeter, the sum of two times the named executive’s annual base salary and two times the named executive’s target award under our 2013 SMIP, and (ii) in the case of Ms. Streeter, the sum of two and one-half times her annual base salary and two and one-half times a target award under our 2013 SMIP;
|
| (b) | under the column headed ‘‘Annual Incentive for Year of Termination,’’ the amount actually earned under our 2013 SMIP;
|
| (c) | under the column headed ‘‘LTIP Cash,’’ the sum of the amount actually earned under the performance component of our 2011 LTIP (for the 2011 – 2013 performance cycle) and an estimate of the prorated amount that would be earned under the cash component of each of our 2012 LTIP (for the 2012 – 2014 performance cycle) and our 2013 LTIP (for the 2013 – 2015 performance cycle);
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| (d) | under the column headed ‘‘Acceleration of Unvested Equity Awards,’’ the estimated value, as of December 31, 2013, of common stock underlying RSUs not yet vested as of that date and the in-the-money/ intrinsic value, as of December 31, 2013, of NQSOs not yet vested as of that date; and
|
| (e) | under the column headed ‘‘Misc. Benefits,’’ (i) in the case of each of the applicable named executives other than Ms. Streeter, the sum of the maximum cost (15% of base salary) to be incurred by Libbey to provide executive level outplacement services for two years after termination, the estimated cost (net of contributions by the named executive at the active employee rate) to provide medical, dental, prescription drug and life insurance coverage for 18 months following termination, and the maximum cost ($10,000) to provide financial planning services to the named executive; and (ii) in the case of Ms. Streeter, the sum of the maximum cost ($75,000) to be incurred by Libbey to provide executive level outplacement services for two years following termination and the estimated cost (net of contributions by Ms. Streeter at the active employee rate) to provide medical, dental, prescription drug and life insurance coverage for 18 months following termination.
|
We have estimated the payouts under the cash component of our 2012 LTIP (for the 2012 – 2014 performance cycle) and 2013 LTIP (for the 2013 – 2015 performance cycle) assuming achievement of target levels of performance and have prorated them through the assumed date of termination. The prorated amounts actually earned under the cash component of our 2012 LTIP and 2013 LTIP would be paid between January 1 and March 15 of the calendar year following conclusion of the applicable performance cycle.
We have estimated the value, as of December 31, 2013, of unvested RSUs by multiplying the number of RSUs by $21.00, the closing price of our common stock on December 31, 2013. We have determined the in-the-money/ intrinsic value of unvested NQSOs as of December 31, 2013, by deducting the respective exercise prices for the NQSOs from $21.00 and multiplying the result by the applicable number of NQSOs.
(8) | Represents the sum of:
|
| (a) | under the column headed “Annual Incentive for Year of Termination,” the amount actually earned under our 2013 SMIP;
|
| (b) | under the column headed “LTIP Cash”, the amount actually earned under the performance cash component of our 2011 LTIP (for the 2011-2013 performance cycle) and an estimate of the prorated amount Mr. Reynolds would earn under the cash component of our 2012 LTIP (for the 2012-2014 performance cycle) and our 2013 LTIP (for the 2013-2015 performance cycle); and
|
| (c) | under the column headed “Acceleration of Unvested Equity Awards,” the sum of (i) the value, as of November 30, 2013 (the date on which Mr. Reynolds actually retired), of common stock underlying RSUs with respect to which vesting was accelerated to his retirement date and the in-the-money/ intrinsic value, as of November 30, 2013, of NQSOs with respect to which vesting was accelerated to his retirement date.
|
We have estimated the payouts under the performance cash component of our 2012 LTIP (for the 2012-2014 performance cycle) and 2013 LTIP (for the 2013-2015 performance cycle) assuming achievement of target levels of performance and have prorated them to the date of Mr. Reynolds’s retirement. The prorated amounts actually earned under the performance cash component of our 2012 LTIP and 2013 LTIP would be paid between January 1 and March 15 of the calendar following conclusion of the applicable performance cycle.
We have estimated the value, as of November 30, 2013, of unvested RSUs by multiplying the number of RSUs by $23.00, the closing price of our common stock on November 29, 2013, the last trading day on which Mr. Reynolds was an active employee. We have determined the in-the-money/ intrinsic value of unvested NQSOs as of November 30, 2013, by deducting the respective exercise prices for the NQSOs from $23.00 and multiplying the result by the applicable number of NQSOs.
Non-Management Directors’ Compensation in 2013
Our management directors do not receive additional pay for service on the Board of Directors. In 2013, we reviewed the pay of our non-management directors, by comparing their pay to general survey information provided by the National Association of Corporate Directors and to the peer group described in “How does Libbey determine the forms and amounts of executive pay? – Process for Setting 2013 Executive Pay.” Effective on May 1, 2013, we adjusted the pay of all non-management directors other than the Chairman of the Board; we adjusted the Chairman’s pay effective August 1, 2013. The following table shows the amounts payable, on an annualized basis, under our non-management director pay program as of January 1, 2013, May 1, 2013, and August 1, 2013, respectively:
| | | | | | |
Pay Type | | Effective January 1, 2013 | | Effective May 1, 2013 | | Effective August 1, 2013 |
| | | |
| Annual Cash Retainer | | $40,500 | | $47,500 | | No change |
| | | |
| Chairman of the Board Cash Retainer | | $60,000, with an additional
$25,000 being payable until July 31, 2013 | | $85,000 | | $80,000 |
| | | |
| Equity Award | | On the date of each annual meeting of shareholders, outright grant of shares of common stock valued at $52,500 on the date of grant | | On the date of each annual meeting of shareholders, outright grant of shares of common stock valued at $60,000 on the date of grant | | No change |
| | | |
| Audit Committee Chair Cash Retainer | �� | $10,000 per year, in addition to Audit Committee Member Retainer | | $12,500 per year, in addition to Audit Committee Member Retainer | | No change |
| | | |
| Compensation Committee Chair Cash Retainer | | $7,500 per year, in addition to Compensation Committee Member Retainer | | $12,500 per year, in addition to Compensation Committee Member Retainer | | No change |
| | | |
| Nominating and Governance Committee Chair Cash Retainer | | $5,000 per year, in addition to Nominating and Governance Committee Member Retainer | | $6,500 per year, in addition to Nominating and Governance Committee Member Retainer | | No change |
| | |
| | |
| | | | | | |
Pay Type | | Effective January 1, 2013 | | Effective May 1, 2013 | | Effective August 1, 2013 |
| Audit Committee Member Cash Retainer | | $6,500 | | $7,500 | | No change |
| | | |
| Compensation Committee Member Cash Retainer | | $6,000 | | $7,500 | | No change |
| | | |
| Nominating and Governance Committee Member Cash Retainer | | $5,000 | | $5,000 | | No change |
| | | |
| Other Fees | | $500 per half day of special Board or committee business performed at the request of the Board | | No change | | No change |
We also maintain stock ownership guidelines for non-management directors. For more information with respect to our stock ownership guidelines for non-management directors, see‘‘Stock Ownership — How much Libbey stock do our directors and officers own? — Stock Ownership Guidelines’’above.
Directors may elect, pursuant to the Director DCP, to defer cash and/or equity compensation into any of 13 measurement funds. The Director DCP, as well as the predecessor deferred compensation plans under which non-management directors were eligible to participate, are unfunded plans, and the Company does not guarantee an above-market return on amounts deferred under any of these plans. Amounts deferred under the Director DCP, as well as under a predecessor plan, are, at the election of the applicable director, payable either in a lump sum or in installments over a period of time selected by the director. Amounts deferred under our first deferred compensation plan for outside directors are payable in a lump sum upon retirement from our Board or, if earlier, upon death of the director.
In addition to paying the compensation listed above, we reimburse our non-management directors for their travel expenses incurred in attending meetings of the Board or its committees, as well as for fees and expenses incurred in attending director education seminars and conferences. The directors do not receive any other personal benefits.
In 2013, our non-management directors received the following pay:
DIRECTOR COMPENSATION FOR YEAR ENDED DECEMBER 31, 2013
| | | | | | | | | | | | | | | | | | | | | | | | | |
Director | | Fees Earned or
Paid in Cash
($)(1) | | Stock Awards
($)(2) | | Change in Pension Value and
Nonqualified Deferred
Compensation Earnings
($)(3) | | All Other Compensation
($) | | Total
($) |
Carlos V. Duno | | | | 71,375 | | | 59,993 | | 0 | | 0 | | | | 131,368 | |
William A. Foley | | | | 134,500 | | | 59,993 | | 0 | | 0 | | | | 194,493 | |
Peter C. McC. Howell | | | | 64,125 | | | 59,993 | | 0 | | 0 | | | | 124,118 | |
Ginger M. Jones | | | | 11,875 | | | 0 | | 0 | | 0 | | | | 11,875 | |
Deborah G. Miller | | | | 57,875 | | | 59,993 | | 0 | | 0 | | | | 117,868 | |
Carol B. Moerdyk | | | | 71,375 | | | 59,993 | | 0 | | 0 | | | | 131,368 | |
John C. Orr | | | | 58,000 | | | 59,993 | | 0 | | 0 | | | | 117,993 | |
Richard I. Reynolds(4) | | | | 3,958 | | | 0 | | 0 | | 17,738 | | | | 21,696 | |
Terence P. Stewart(5) | | | | 45,750 | | | 59,993 | | 0 | | 0 | | | | 105,743 | |
(1) | Includes pay deferred into the Libbey common stock measurement fund pursuant to the Director DCP.
|
(2) | Represents the grant date fair value, determined in accordance with FASB ASC Topic 718, of awards of stock made to each non-management director on May 14, 2013. On that date, we awarded each non-management director stock having a grant date fair value of $59,993. Messrs. Duno, Howell and Stewart elected to defer receipt of a portion or all of the stock pursuant to the Director DCP.
|
(3) | We do not maintain a pension plan for our non-management directors. We do not guarantee any particular rate of return on any pay deferred pursuant to our deferred compensation plans. Dividends on pay deferred into the Libbey Inc. phantom stock or measurement fund under our deferred compensation plans for non-management directors accrue only if and to the extent payable to holders of our common stock. Pay deferred into interest-bearing accounts under our deferred compensation plans for non-management directors does not earn an above-market return, as the applicable interest rate is the yield on ten-year treasuries. Pay deferred into other measurement funds under our deferred compensation plans for non- management directors does not earn an above-market return as that pay earns a return only if and to the extent that the net asset value of the measurement fund into which the pay is deemed invested actually increases.
|
(4) | Mr. Reynolds has continued to serve as member of the Board following his November 30, 2013 retirement as Executive Vice President, Strategy Program. Accordingly, he was paid 1/12th of the annual cash retainer payable to non-management members of the Board. Additionally, Mr. Reynolds provided consulting services to us in December through the Blake Leath Group; fees paid by Libbey to the Blake Leath Group for Mr. Reynolds’s consulting services are included under the columns headed “Fees Earned or Paid in Cash” and “Total.”
|
(5) | For additional information with respect to compensation payable to Mr. Stewart’s law firm for services provided to Libbey, see‘‘Corporate Governance — Certain Relationships and Related Transactions — What transactions involved directors or other related parties?’’
|
OTHER MATTERS
Certain Legal Proceedings
We are not a party to any litigation, the outcome of which, if decided adversely to us, reasonably could be expected to have a material adverse effect on Libbey.
Other Business
As of the date of this proxy statement, neither the Board nor management knows of any other business that will be presented for consideration at the Annual Meeting. However, if other proper matters are presented at the meeting, it is the intention of the proxy committee to take such action as shall be in accordance with their judgment on such matters. All other matters to be voted upon by shareholders will require a majority vote of common stock represented in person or by proxy.
General InformationAvailability of List of Shareholders:
A complete list of shareholders entitled to vote at the Annual Meeting will be maintained at the Company’s principal executive offices at 300 Madison Avenue, Toledo, Ohio for a period of at least 10 days prior to the Annual Meeting.
The Company has retained Georgeson Shareholder to solicit the submission of proxies authorizing the voting of shares in accordance with the Board’s recommendations. The Company has agreed to pay a fee of $8,000, plus expenses for out-of-pocket costs, for Georgeson’s services. Certain of the Company’s officers and employees may solicit the submission of proxies authorizing the voting of shares in accordance with the Board of Directors’ recommendations, but no additional remuneration will be paid by the Company for the solicitation of those proxies. Such solicitations may be made by personal interview, telephone or telegram. Arrangements have been made with Corporate Investor Communications, Inc. to perform a broker-nominee search. Arrangements also have been made with brokerage firms and others for the forwarding of proxy solicitation materials to the beneficial owners of common stock, and the Company will reimburse them for reasonable
out-of- pocketout-of-pocket expenses incurred in connection therewith. The Company will pay the cost of preparing and mailing this proxy statement and other costs of the proxy solicitation made by the Company’s Board of Directors.
Reports to
Shareholders:The Company has mailedShareholders
We are pleased to take advantage of SEC rules that permit issuers to furnish their proxy materials to shareholders on the internet. Shareholders may request a paper copy of this proxy statement and
a copy of its 2013the 2016 Annual Report
to each shareholder entitled to vote at the Annual Meeting. Included in the 2013 Annual Report are the Company’s consolidated financial statements for the year ended December 31, 2013.by:
|
| |
| Internet | www.proxyvote.com |
| Telephone | 1-800-579-1639 |
| Email | sendmaterial@proxyvote.com |
A copy of the Company’s Annual Report on Form 10-K for the year ended December 31,
2013,2016, including the consolidated financial statements, as filed with the Securities and Exchange Commission, may be obtained without charge by sending a written request to Libbey Inc., Attention: Investor Relations,
Kenneth A. Boerger, Vice President and Treasurer, 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060.
By Order of the Board of Directors,
Toledo, Ohio
March 31, 2014
April 4, 2017
|
| |
| APPENDIX A | |  |
(dollars in thousands)
|
| | | | | | | | |
| | | Year ended December 31, 2016 |
| | | As Reported | | For LTIP Incentive Calculations |
| Revenue | | | | |
| Reported net sales | | $ | 793,420 |
| | $ | 793,420 |
|
| | | | | |
| Adjusted EBITDA | | | | |
| Reported net income | | $ | 10,073 |
| | $ | 10,073 |
|
| Add: Interest expense | | 20,888 |
| | 20,888 |
|
| Add: Provision for income taxes | | 17,711 |
| | 17,711 |
|
| Earnings before interest and income taxes (EBIT) | | 48,672 |
| | 48,672 |
|
| Add: Depreciation and amortization | | 48,486 |
| | 48,486 |
|
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | | 97,158 |
| | 97,158 |
|
| Add: Special items before interest and taxes | | | | |
| Pension settlement | | 168 |
| | 168 |
|
| Product portfolio optimization | | 5,693 |
| | 5,693 |
|
| Work Stoppage | | 4,162 |
| | 4,162 |
|
| Executive terminations | | 4,460 |
| | 4,460 |
|
| Derivatives | | (1,860 | ) | | (1,860 | ) |
| Adjusted EBITDA | | $ | 109,781 |
| | $ | 109,781 |
|
| | | | | |
| Adjusted EBITDA margin | | | | |
| Adjusted EBITDA | | $ | 109,781 |
| | $ | 109,781 |
|
| Net sales | | $ | 793,420 |
| | $ | 793,420 |
|
| Adjusted EBITDA margin | | 13.8 | % | | 13.8 | % |
| | | | |
| Debt net of cash to Adjusted EBITDA ratio | | | | |
| Debt | | $ | 407,840 |
| | $ | 407,840 |
|
| Plus: Unamortized discount and finance fees | | 4,480 |
| | 4,480 |
|
| Gross debt | | 412,320 |
| | 412,320 |
|
| Cash | | 61,011 |
| | 61,011 |
|
| Less: Share repurchases below budgeted amount | | — |
| | 8,000 |
|
| Debt net of Cash | | $ | 351,309 |
| | $ | 359,309 |
|
| Adjusted EBITDA | | $ | 109,781 |
| | $ | 109,781 |
|
| Debt net of cash to adjusted EBITDA ratio | | 3.2 |
| | 3.3 |
|
| | | | | |
|
| | | | | | | | |
| | | Year ended December 31, 2016 |
| | | As Reported | | For LTIP Incentive Calculations |
| Return on Invested Capital (ROIC) | | | | |
| Defined as: After tax adjusted income from operations (using a 30% tax rate) over ending working capital (accounts receivable-net plus inventory-net, less accounts payable) plus net book value of property, plant and equipment | | | | |
| Income from operations | | $ | 45,310 |
| | $ | 45,310 |
|
| Add: Adjustments | | | | |
| Product portfolio optimization charge | | 5,693 |
| | 5,693 |
|
| Work stoppage | | 4,162 |
| | 4,162 |
|
| Executive terminations | | 4,460 |
| | 3,554 |
|
| Pension settlement charges | | 168 |
| | — |
|
| Mexico tax assessment | | — |
| | 1,085 |
|
| Adjusted income from operations | | 59,793 |
| | 59,804 |
|
| Add: Impact of currency to reflect results at budgeted exchange rates | | — |
| | 4,574 |
|
| Adjusted income from operations at budgeted exchange rates | | 59,793 |
| | 64,378 |
|
| Factor to apply for taxes | | 70 | % | | 70 | % |
| After tax adjusted income from operations at budgeted exchange rates | | $ | 41,855 |
| | $ | 45,065 |
|
| | | | | |
| Invested capital | | | | |
| Property, plant and equipment, net | | $ | 256,392 |
| | $ | 256,392 |
|
| Add: Impact of currency to reflect results at budgeted exchange rates | | — |
| | 4,174 |
|
| Property, plant and equipment, net at budgeted exchange rates | | 256,392 |
| | 260,566 |
|
| Accounts receivable - net | | 85,113 |
| | 85,113 |
|
| Inventories - net | | 170,009 |
| | 170,009 |
|
| Less: Accounts payable | | 71,582 |
| | 71,582 |
|
| Trade Working Capital | | 183,540 |
| | 183,540 |
|
| Add: Adjustments | | | | |
| Inventory impact of work stoppage at Toledo, Ohio plant | | — |
| | 2,694 |
|
| Inventory impact of product portfolio optimization | | — |
| | 5,693 |
|
| Adjusted trade working capital | | 183,540 |
| | 191,927 |
|
| Add: Impact of currency | | — |
| | 4,616 |
|
| Adjusted trade working capital at budgeted exchange rates | | 183,540 |
| | 196,543 |
|
| Total adjusted invested capital at budgeted exchange rates | | $ | 439,932 |
| | $ | 457,109 |
|
| | | | | |
| ROIC | | 9.5 | % | | 9.9 | % |
| | | | | |
APPENDIX B
(dollars in thousands)
|
| | | | | | | | |
| | | Year ended December 31, 2016 |
| | | As Reported | | For SMIP Incentive Calculations |
| Revenue | | | | |
| Reported net sales | | $ | 793,420 |
| | $ | 793,420 |
|
| Add: Sales impact of work stoppage at Toledo, Ohio plant | | — |
| | 7,245 |
|
| Adjusted net sales | | 793,420 |
| | 800,665 |
|
| Add: Impact of currency to reflect results at budgeted exchange rates | | — |
| | 6,263 |
|
| Adjusted net sales at budgeted exchange rates | | $ | 793,420 |
| | $ | 806,928 |
|
| | | | | |
| | | | | |
| Adjusted EBITDA | | | | |
| Reported net income | | $ | 10,073 |
| | $ | 10,073 |
|
| Add: Interest expense | | 20,888 |
| | 20,888 |
|
| Add: Provision for income taxes | | 17,711 |
| | 17,711 |
|
| Earnings before interest and income taxes (EBIT) | | 48,672 |
| | 48,672 |
|
| Add: Depreciation and amortization | | 48,486 |
| | 48,486 |
|
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | | 97,158 |
| | 97,158 |
|
| Add: Special items before interest and taxes | | | | |
| Pension settlement | | 168 |
| | — |
|
| Product portfolio optimization | | 5,693 |
| | 5,693 |
|
| Work Stoppage | | 4,162 |
| | 4,162 |
|
| Executive terminations | | 4,460 |
| | 3,554 |
|
| Derivatives | | (1,860 | ) | | (1,860 | ) |
| 2010 Mexican tax assessment | | — |
| | 1,085 |
|
| Adjusted EBITDA | | 109,781 |
| | 109,792 |
|
| Add: Impact of currency to reflect results at budgeted exchange rates | | — |
| | 4,609 |
|
| Adjusted EBITDA at budgeted exchange rates | | 109,781 |
| | 114,401 |
|
| | | | | |
| | | | | |
| Change in Trade Working Capital | | | | |
| Change in accounts receivable - net | | $ | 9,266 |
| | $ | 9,266 |
|
| Change in inventories - net | | 8,018 |
| | 8,018 |
|
| Change in accounts payable | | 22 |
| | 22 |
|
| Change in trade working capital | | 17,306 |
| | 17,306 |
|
| Add: Adjustments | | | | |
| Inventory impact of work stoppage at Toledo, Ohio plant | | — |
| | (2,694 | ) |
| Inventory impact of product portfolio optimization | | — |
| | (5,693 | ) |
| Adjusted change in trade working capital | | 17,306 |
| | 8,919 |
|
| Add: Impact of currency | | — |
| | 4,616 |
|
| Adjusted change in trade working capital at budgeted exchange rates | | $ | 17,306 |
| | $ | 4,303 |
|
| | | | | |
| Adjusted Cash Earnings | | | | |
| Adjusted EBITDA at budgeted exchange rates | | $ | 109,781 |
| | $ | 114,401 |
|
| Adjusted change in trade working capital at budgeted exchange rates | | 17,306 |
| | 4,303 |
|
| Adjusted cash earnings at budgeted exchange rates | | $ | 127,087 |
| | $ | 118,704 |
|
| | | | | |
|
| | | | |
| | | 2013 |
Adjusted EBITDA
| | | | | |
Reported net income
| | | $ | 28,459 | |
Add: Interest expense
| | | | 32,006 | |
Add: Provision for income taxes
| | | | 13,241 | |
| | | | | |
Earnings before interest and income taxes (EBIT)
| | | | 73,706 | |
Add: Depreciation and amortization
| | | | 43,969 | |
| | | | | |
Earnings before interest, taxes, depreciation and amortization (EBITDA)
| | | | 117,675 | |
Add: Special items before interest and taxes
| | | | | |
Loss on redemption of debt
| | | | 2,518 | |
Restructuring charges
| | | | 4,845 | |
Abandoned property
| | | | 1,781 | |
Furnace malfunction
| | | | 4,594 | |
Pension settlement charge
| | | | 2,252 | |
Executive retirement
| | | | 736 | |
Other adjustment
| | | | 572 | |
| | | | | |
Adjusted EBITDA
| | | $ | 134,973 | |
| | | | | |
| |
Adjusted EBITDA margin
| | | | | |
Adjusted EBITDA
| | | $ | 134,973 | |
Net sales
| | | | 818,811 | |
| | | | | |
Adjusted EBITDA margin
| | | | 16.5% | |
| | | | | |
| |
Net Debt to Adjusted EBITDA
| | | | | |
Debt
| | | $ | 411,903 | |
Less: Carrying value adjustment on debt related to Interest Rate Agreement
| | | | (1,324) | |
Gross debt
| | | | 413,227 | |
Cash
| | | | 42,208 | |
| | | | | |
Debt net of Cash
| | | $ | 371,019 | |
Debt net of cash to adjusted EBITDA ratio
| | | | 2.8 | |
| | | | | |
| |
Return on Invested Capital
| | | | | |
Reported income from operations
| | | | 72,499 | |
Add: Special items before interest and taxes
| | | | | |
Restructuring charges(1)
| | | | 6,544 | |
Abandoned property
| | | | 1,781 | |
Furnace malfunction
| | | | 8,350 | |
Pension Settlement
| | | | 2,252 | |
Executive retirement
| | | | 736 | |
| | | | | |
Adjusted income from operations
| | | | 92,162 | |
Income tax @ 30%
| | | | 27,649 | |
| | | | | |
Adjusted income from operations after tax
| | | $ | 64,513 | |
| | |
| | |
| | | | | |
Add:
| | | | | |
Accounts receivable
| | | $ | 94,549 | |
Inventories
| | | | 163,121 | |
Less: Accounts payable
| | | | 79,620 | |
Less: Receivable on furnace malfunction insurance claim
| | | | 5,000 | |
| | | | | |
Working Capital
| | | | 173,050 | |
Property, plant and equipment - net
| | | | 265,662 | |
| | | | | |
Invested capital
| | | $ | 438,712 | |
Return on invested capital
| | | | 14.7% | |
| | | | | |
| |
(1) - Includes accelerated depreciation of $1.7 million.
| | | | | |
| |
Adjusted Cash Earnings
| | | | | |
Earnings before interest, taxes, depreciation and amortization (EBITDA)
| | | $ | 117,675 | |
Change in working capital(2)
| | | | (5,363) | |
| | | | | |
Cash earnings
| | | | 112,312 | |
Add: Special items before interest and taxes
| | | | | |
Loss on redemption of debt
| | | | 2,518 | |
Restructuring charges
| | | | 4,845 | |
Abandoned property
| | | | 1,781 | |
Furnace malfunction
| | | | 4,594 | |
Pension settlement charge
| | | | 2,252 | |
Executive retirement
| | | | 736 | |
Receivable on furnace malfunction insurance claim
| | | | 5,000 | |
Other adjustment
| | | | 572 | |
| | | | | |
Adjusted cash earnings
| | | $ | 134,610 | |
| | | | | |
| |
(2) - Working capital equals net accounts receivable plus net inventories less accounts payable
| | | | | |
| | | | |
LIBBEY INC.
P.O. BOX 10060
TOLEDO, OH 43699-0060
| | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Electronic Delivery of Future PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | |
| LIBBEY INC. P.O. BOX 10060 TOLEDO, OH 43699-0060
| | |
|
| | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | KEEP THIS PORTION FOR YOUR RECORDS |
| | DETACH AND RETURN THIS PORTION ONLY |
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | For
All
| | Withhold
All
| | For All
Except
| | | | |
| | | | | For All | Withhold All | For All Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | |
| | The Board of Directors recommends you vote FOR the following Class III Directors: | | | | | | | |
| | 1. | Election of Directors | | o | o | o | | | | | | | | | |
| | The Board of Directors recommends you vote
FOR the following: | Nominees | | | | | | | | | | | | | |
| | 1.01 | William A. Foley 02 Deborah G. Miller 03 Steve Nave | | Election of Directors | | | | ¨ | | ¨ | | ¨ | | | | | | | | | |
| | | | Nominees | | | | | | | | | | | | | | | | | | |
| | | |
| | 01 | | William A. Foley 02 Theo Killion 03 Deborah G. Miller | | |
| | | | | |
| | The Board of Directors recommends you vote FOR proposals 2 and 3. | | For | | Against | | Abstain | | |
| | | | | | |
| | 2. | | Approve, by non-binding vote, 2013 compensation paid to the company’s named executive officers. | | ¨NOTE:
| | ¨ | | ¨ | | |
| | | | | | |
| | 3. | | Ratification of the appointment of Ernst & Young LLP as Libbey’s independent auditors for the fiscal year ending December 31, 2014. | | ¨ | | ¨ | | ¨ | | |
| | | | |
| | NOTE: The Directors up for election are Class III directors. At the meeting shareholders will transact such other business as properly may come before the meeting. | | | | | | |
| | | The Board of Directors recommends you vote FOR the following proposal: | | For | Against | Abstain | | | | | | | | | | | | | | | | | | |
| | | 2. | Approve, on an advisory and non-binding basis, the 2016 compensation of the Company’s named executives. | | o | o | o | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | The Board of Directors recommends you vote 1 YEAR on the following proposal: | 1 year | 2 years | 3 years | Abstain | | | | | | | | | |
| | 3. | Recommend, on an advisory and non-binding basis, the frequency of future advisory votes on executive compensation. | o | o | o | o | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | The Board of Directors recommends you vote FOR the following proposal: | | For | Against | Abstain | | | | | | | | | |
| | 4. | Ratification of the appointment of Deloitte & Touche LLP as Libbey’s independent auditors for the 2017 fiscal year. | | o | o | o | | | | | | | | | |
| | | | | | | |
| | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | | | | | | | |
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| | | | | | | | | | | | | | | |
| | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Annual Report, Notice & Proxy Statement is/are available atwww.proxyvote.com.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com. |
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| Annual Meeting of Shareholders May 13, 201417, 2017 2:00 PM This proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) Stephanie A. StreeterVeronica (Ronni) L. Smith and Susan AlleneA. Kovach, or either of them, as proxies, each with the power to appoint her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of LIBBEY INC. that the shareholder(s) is/are entitled to vote at the Annual Meeting of shareholder(s)shareholders to be held at 02:00 PM, EDT on May 13, 2014,17, 2017, at the Libbey Corporate Showroom, 335 N. St. Clair Street, Toledo, Ohio, 43604, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. | |
| Continued and to be signed on reverse side | | |
