UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Cooper Tire & Rubber Company
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COOPER TIRE & RUBBER COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
The 20152016 Annual Meeting of Stockholders of Cooper Tire & Rubber Company (the “Company”) will be held at The Westin Detroit Metropolitan Airport, McNamara Terminal, 2501 Worldgateway Place, Detroit, Michigan 48242 on Friday, May 8, 2015,6, 2016, at 10:00 a.m., Eastern Daylight Time, for the following purposes:
| (1) | To elect |
| (2) | To ratify the selection of the Company’s independent registered public accounting firm for the year ending December 31, |
| (3) | To approve, on a non-binding advisory basis, the Company’s named executive officer compensation. |
| (4) | To transact such other business as may properly come before the Annual Meeting or any postponement(s) or adjournment(s) thereof. |
Only holders of Common Stock of record at the close of business on March 23, 2015,14, 2016, are entitled to notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen Zamansky,
Senior Vice President,
General Counsel and Secretary
Findlay, Ohio
March 27, 201522, 2016
Please mark, date, and sign the enclosed proxy and return it promptly in the enclosed addressed envelope, which requires no postage. In the alternative, you may vote by Internet or telephone. See page 2 of the proxy statement for additional information on voting by Internet or telephone. If you are present and vote in person at the Annual Meeting, the enclosed proxy card will not be used.
TABLE OF CONTENTS
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RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |||||
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COOPER TIRE & RUBBER COMPANY
701 Lima Avenue, Findlay, Ohio 45840
March 27, 201522, 2016
| PROXY STATEMENT |
GENERAL INFORMATION AND VOTING
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Cooper Tire & Rubber Company (the “Company,” “Cooper Tire,” “our,” “we,” or “us”) to be used at the Annual Meeting of Stockholders of the Company to be held on May 8, 2015,6, 2016, at 10:00 a.m., Eastern Daylight Time, at The Westin Detroit Metropolitan Airport, McNamara Terminal, 2501 Worldgateway Place, Detroit, Michigan 48242. This proxy statement and the related form of proxy were first mailed or made available to stockholders on or about March 27, 2015.22, 2016.
The purpose of the Annual Meeting is for stockholders to act on the matters outlined in the notice of Annual Meeting on the cover page of this proxy statement. These matters consist of (1) the election of sevennine Directors, (2) the ratification of the selection of the Company’s independent registered public accounting firm for the year ending December 31, 2015,2016, (3) the approval, on a non-binding advisory basis, of the Company’s named executive officer compensation, and (4) the transaction of such other business as may properly come before the Annual Meeting or any postponement(s) or adjournment(s) thereof.
Each share of the Company’s Common Stock will be entitled to one vote on each matter. Only stockholders of record at the close of business on March 23, 2015,14, 2016, (the “record date”) will be eligible to vote at the Annual Meeting. As of the record date, there were 58,066,40155,526,781 shares of Common Stock outstanding. The holders of a majority of the shares of Common Stock issued and outstanding, and present in person or represented by proxy, constitute a quorum. Abstentions and “broker non-votes” with respect to a proposal will be counted to determine whether a quorum is present at the Annual Meeting.
If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and the organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. “Broker non-votes” occur when an organization that holds shares for a beneficial owner has not received voting instructions with respect to the proposal from the beneficial owner. Whether such organization has the discretion to vote those shares on a particular proposal depends on the ballot item. If the organization that holds your shares does not have discretion and you do not give the organization instructions, the votes will be “broker non-votes,” which may have the same effect as votes against the proposal.
Below is a summary of the vote threshold required for passage of each agenda item and the effect of abstentions and “broker non-votes.”
Agenda Item 1.1. Except in the case of a contested election, each nominee for election as a Director who receives a majority of the votes cast with respect to such Director’s election by stockholders will be elected as a Director. In the case of a contested election, the nominees for election as Directors who receive the greatest number of votes will be elected as Directors. Abstentions and “broker non-votes” are not counted for purposes of the election of Directors.
Agenda Item 2.2. Although the Company’s independent registered public accounting firm may be selected by the Audit Committee of the Board of Directors without stockholder approval, the Audit Committee will consider the affirmative vote of a majority of the shares of Common Stock having voting power present in person or represented by proxy at the Annual Meeting to be a ratification by the stockholders of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2015.2016. As a result, abstentions will have the same effect as a vote cast against the proposal. As a routine matter, we do not expect “broker non-votes” with respect to this proposal.
Agenda Item 3. Although the advisory vote to approve named executive officer compensation is non-binding, the advisory vote allows our stockholders to express their opinions regarding officer compensation. The Board will consider the affirmative vote of a majority of the shares of Common Stock having voting power present in person or represented by proxy at the Annual Meeting as approval of the compensation of the Company’s named executive officers for fiscal 2014.2015. Abstentions are counted as votes against and “broker non-votes” are not counted for purposes of the advisory vote to approve named executive officer compensation. As a result, if you own shares through a bank, broker-dealer, or similar organization, you must instruct your bank, broker-dealer, or other similar organization to vote in order for them to vote your shares.
Stockholders may vote by completing, properly signing, and returning the accompanying proxy card, or by attending and voting at the Annual Meeting. If you properly complete and return your proxy card in time to vote, your proxy (one of the individuals named in the proxy card) will vote your shares as you have directed. If you sign and return the proxy card but do not indicate specific choices as to your vote, your proxy will vote your shares (i) to elect the nominees listed under “Nominees for Director,” (ii) for the ratification of the selection of the Company’s independent registered public accounting firm, and (iii) for approval of the compensation of the Company’s named executive officers for fiscal year 2014.2015.
Stockholders of record and participants in certain defined contribution plans sponsored by the Company (see below) may also vote by using a touch-tone telephone to call 1-800-690-6903, or by the Internet by accessing the following website:http://www.proxyvote.com.www.proxyvote.com.
Voting instructions, including your stockholder account number and personal proxy control number, are contained on the accompanying proxy card. You will also use this accompanying proxy card if you are a participant in the following defined contribution plans sponsored by the Company:
·Spectrum Investment Savings Plan
·Pre-Tax Savings Plan (Texarkana Represented Employees)
·Pre-Tax Savings Plan (Findlay Represented Employees)
Those stockholders of record who choose to vote by telephone or Internet must do so no later than 11:59 p.m., Eastern Daylight Time, on May 7, 2015.5, 2016. All voting instructions from participants in the defined contribution plans sponsored by the Company and listed above must be received no later than 5:00 p.m., Eastern Daylight Time, on May 6, 2015.4, 2016.
A stockholder may revoke a proxy by filing a notice of revocation with the Secretary of the Company, or by submitting a properly executed proxy card bearing a later date. A stockholder may also revoke a previously executed proxy (including one submitted by Internet or telephone) by attending and voting at the Annual Meeting, after requesting that the earlier proxy be revoked. Attendance at the Annual Meeting, without further action on the part of the stockholder, will not operate to revoke a previously granted proxy card. If the shares are held in the name of a bank, broker or other holder of record, the stockholder must obtain a proxy executed in his or her favor from the holder of record to be able to vote at the Annual Meeting.
ELECTION OF DIRECTORS
In accordance with the Restated Certificate of Incorporation of the Company, the Board of Directors has fixed the total number of Directors to be elected at the Annual Meeting at seven. Mr. Richard Wambold, who has served as a Director since 2003, is not standing for reelection when his current term expires at the Annual Meeting.nine. All sevennine of our Directors standing for reelection have a term that expires at this Annual Meeting and each has consented to stand for reelection. At this Annual Meeting, sevennine Directors are being elected to serve for a term of office that will expire at the Annual Meeting of Stockholders in 2016.2017. In the event that any of the nominees becomes unavailable to serve as a Director before the Annual Meeting, the Board of Directors may designate a new nominee, and the persons named as proxies will vote for that substitute nominee.
The Board of Directors recommends that stockholders vote FOR the sevennine nominees for Director.
| NOMINEES FOR DIRECTOR |
 | ROY V. ARMES | Chairman of the Board, | |||||
| Chief Executive Officer, and President | |||||||
| Mr. Armes, age | |||||||
| Director Since | 2007 |
| |||||
NOMINEES FOR DIRECTOR (CONT.)
| 3 |
| NOMINEES FOR DIRECTOR (CONT.) |
 | THOMAS P. CAPO | Former Chairman of the Board, | |||||
| Dollar Thrifty Automotive Group, Inc. | |||||||
| Mr. Capo, age | |||||||
|
| ||||||
| Director Since | 2007 | ||||
 | STEVEN M. CHAPMAN | Group Vice President, | ||||
China and Russia,
| ||||||
Cummins, Inc. | ||||||
| Mr. Chapman, age | ||||||
|
| |||||
NOMINEES FOR DIRECTOR (CONT.)
| Director Since | 2006 |
| NOMINEES FOR DIRECTOR (CONT.) |
 | SUSAN F. DAVIS | Executive Vice President, | |||
| Asia-Pacific Region for Johnson Controls | |||||
| Ms. Davis, age 62, has served as Executive Vice President of the Asia-Pacific Region for Johnson Controls since 2015. Johnson Controls is a globally diversified technology and industrial leader serving customers in more than 150 countries. Ms. Davis has served in positions of increasing responsibility within Johnson Controls. She was named Vice President of Organizational Development in 1993. The following year, she was appointed Corporate Vice President of Human Resources and was named Executive Vice President of Human Resources in 2005. She was named Chief Human Resources Officer in 2012. She joined the company in 1985, following its acquisition of Hoover Universal, where she began her career in 1983 as a strategic planner for the automotive seating and plastics machinery business. Ms. Davis holds a Master of Business Administration (MBA) degree from the University of Michigan. She graduated magna cum laude with a Master of Arts degree and magna cum laude with a Bachelor of Arts, both from Beloit College. Ms. Davis currently serves as director of Quanex Corporation and vice chair of the Human Resources Policy Association. Ms. Davis’ education, board member experience, and business management experience qualify her to continue serving as a member of the Board of Directors. | |||||
| Director Since | 2016 | ||||
 | JOHN J. HOLLAND | President, |
| ||
| Greentree Advisors LLC | |||||
| Mr. Holland, age | |||||
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| ||||
| Director Since | 2003 |
| NOMINEES FOR DIRECTOR (CONT.) | ||||||
 | JOHN F. MEIER | Former Chairman of the Board | ||||
| and Chief Executive Officer, | ||||||
Libbey Inc. | ||||||
| Mr. Meier, age | ||||||
| Director Since | 1997 |
| ||||
 | GARY S. MICHEL | Senior Vice President and | ||||
| President, Residential Heating, Ventilation | ||||||
| and Air Conditioning (HVAC), | ||||||
| Ingersoll Rand | ||||||
| Mr. Michel, age 53, has served as President of Ingersoll Rand’s residential HVAC business since 2011; which includes brands such as Trane, American Standard, Ameristar, and Nexia Home Intelligence. Ingersoll Rand is a $13 billion global business that enhances the quality and comfort of air in homes and buildings; transports and protects food and perishables, and increases industrial productivity and efficiency. Mr. Michel, a 30-year veteran of Ingersoll Rand, is a Senior Vice President of the company and also serves as a member of its enterprise leadership team. He also leads the Ingersoll Rand Sales Excellence Initiative, as well as serving as a co-lead of the company’s enterprise sustainability efforts. Mr. Michel began his tenure with Ingersoll Rand as an application engineer and went on to hold product, sales, and business management roles before moving into a series of leadership positions across various geographic and market segments, culminating in his current role. Mr. Michel holds a Bachelor of Science degree in Mechanical Engineering from Virginia Polytechnic Institute and State University and a Master of Business Administration (MBA) degree from the University of Phoenix. | ||||||
| Director Since | 2015 | |||||
NOMINEES FOR DIRECTOR (CONT.)
| 6 |
| NOMINEES FOR DIRECTOR (CONT.) | |||||||||
| |||||||||
 | JOHN H. SHUEY | Former Chairman of the Board, | |||||||
President and Chief Executive Officer, | |||||||||
| Amcast Industrial Corporation | |||||||||
| Mr. Shuey, age | |||||||||
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| ||||||||
| Director Since | 1996 | ||||
 | ROBERT D. WELDING | Former Non-Executive Chairman, | ||||
| Public Safety Equipment (Int’l) Limited | ||||||
| Mr. Welding, age | ||||||
| Director Since | 2007 |
| ||||
| Note: The beneficial ownership of the Directors and nominees in the Common Stock of the Company is shown in the table presented under the heading “Security Ownership of Management” in this proxy statement. |
Note: The beneficial ownership of the Directors and nominees in the Common Stock of the Company is shown in the table presented under the heading “Security Ownership of Management” in this proxy statement.
RATIFICATION OF THE SELECTION OF THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP served as the independent registered public accounting firm of the Company in 20142015 and has been retained by the Audit Committee to do so in 2015.2016. In connection with the audit of the 20152016 financial statements, the Company has engaged Ernst & Young LLP to perform audit services for the Company. The Board of Directors has directed that management submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting.
Stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain the firm. In such event, the Audit Committee may retain Ernst & Young LLP, notwithstanding the fact that the stockholders did not ratify the selection, or select another nationally recognized public accounting firm without resubmitting the matter to the stockholders. Even if the selection is ratified, the Audit Committee reserves the right in its discretion to select a different nationally recognized public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
The Board of Directors recommends that stockholders vote FOR the ratification of the selection of the Company’s independent registered public accounting firm.
PROPOSAL TO APPROVE,approve, ON A NON-BINDING ADVISORY BASIS,
NAMED EXECUTIVEexecutive OFFICER COMPENSATIONcompensation
The Board of Directors is aware of the significant interest in executive compensation matters by investors and the general public. The Company is submitting this proposal, commonly known as a “say-on-pay” proposal, to stockholders. The Company is currently conducting say-on-pay votes every year and expects to hold the next say-on-pay vote in connection with its 20162017 Annual Meeting of Stockholders. As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, we are asking you to cast a non-binding advisory vote to approve the Company’s named executive officer compensation through the consideration of the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Our Compensation Committee has overseen the development and implementation of a compensation program that is discussed more fully in “Compensation Discussion and Analysis” and “Executive Compensation,” including the summary tables and narrative sections of this proxy statement.
The Company’s compensation program emphasizes a pay-for-performance philosophy. Performance-based annual cash incentive and long-term incentive programs, collectively, are the majority of the targeted annual compensation for our named executive officers. These programs are designed to:
Drive the long-term financial and operational performance of the Company;
| · | Drive the long-term financial and operational performance of the Company; |
Deliver value to our stockholders;
| · | Deliver value to our stockholders; |
Recognize and reward corporate, group and individual performance;
| · | Recognize and reward corporate, group and individual performance; |
Provide a pay package that reflects our judgment of the value of each officer’s position in the marketplace and the Company; and
| · | Provide a pay package that reflects our judgment of the value of each officer’s position in the marketplace and the Company; and |
| · | Attract and retain strong executive leadership. |
Attract and retain strong executive leadership.
In executing a philosophy which begins with creating long-term value to stockholders, the Compensation Committee has established a framework for executive compensation that promotes a culture of performance and accountability with due consideration to risk management, transparency, and the need to adjust to rapidly changing market conditions. The program is heavily weighted toward pay at risk, with limited executive perquisites and benefits and clear line of sight to the link between important Company strategic goals and the rewards for achieving those objectives.
To further promote alignment with the interests of stockholders and a culture of enduring performance and accountability, the Company’s executives have stock ownership requirements and are bound by a clawback policy which allows for the recoupment of incentive payments in certain circumstances. The fully independent Compensation Committee believes that the executive compensation program is an essential factor in the Company’s strengthening of its leadership team and competitive position in the marketplace, both of which lead to business continuity and long-term value creation.
Because your vote is advisory, it will not be binding upon the Company, the Compensation Committee, or the Board of Directors. However, we value stockholders’ opinions, and the Board will carefully consider the outcome of the advisory vote on named executive officer compensation.
The Board of Directors recommends that the stockholders vote FOR approval, on a non-binding advisory basis, of the compensation of the Company’s named executive officers for fiscal year 2014.
COMPENSATION DISCUSSION AND ANALYSIS
Cooper Tire’s executive compensation program for its named executive officers is driven by our financial and strategic goals and the principle of pay for performance. The compensation program, which primarily consists of a base salary and performance-based cash incentive and equity awards, is built upon many of the principles and governance practices highlighted below.
Compensation Design and Levels
Pay is tied to performance:
| Compensation Design and Levels | |||
| · | Pay is tied to performance: | ||
| - | Approximately | ||
| - | There is an appropriate balance of annual and long-term |
| - | The annual incentive plan is based upon the achievement of established corporate or business unit performance goals. |
| - |
|
Two-thirds of the long-term opportunity is based on the achievement of established corporate performance goals. |
| - | Dividend equivalents are not accrued or paid on performance awards that are not notionally earned. | ||
| · | To facilitate a comprehensive view of all current and previously granted forms of compensation, tally sheets are used by the Compensation Committee. | ||
| · | Compensation peer groups are evaluated periodically to align with investor expectations and changes in the Company’s business and market practice. | ||
| · | The Compensation Committee references the market median with respect to establishing compensation levels for the named executive officers. | ||
| · | Executive officers, including named executive officers, receive the same group benefits as other salaried employees, including health, life insurance, disability, and retirement benefits; they are also eligible for a non-qualified supplementary benefit plan designed to restore 401(k) benefits lost due to Internal Revenue Code statutory limits and a deferred compensation plan, which is legally required to limit participation and does not provide any fixed, above-market earnings opportunity. | ||
| · | Executive officer perquisites are limited and reviewed annually by the Compensation Committee. There are no tax gross-ups on any perquisites, other than for travel costs of spouses who accompany executives to participate in business-related activities. | ||
| · | The Company maintains a double trigger requirement for change in control severance benefits and for the acceleration of time-based equity awards, including restricted stock units and stock options (provided the awards are assumed or replaced with substantially equivalent awards). | ||
| · | Except for Mr. Armes, whose employment agreement was entered into in 2006, there are no excise tax gross-up provisions upon a change in control. | ||
| · | The Company’s three-year average burn rate is below the mean burn rate for the Russell 3000 companies in GICS group 2510. | ||
| Executive Compensation Policies and Practices | |||
| · | Executives who participate in the long-term incentive plan are required to meet minimum levels of stock ownership. | ||
| · | The Board has an established policy for recoupment of annual and long-term incentive compensation in the event of a restatement of reported financial results or if an employee has engaged in unethical conduct detrimental to the Company. | ||
| · | Except for Mr. Armes, none of the named executive officers have an employment agreement. | ||
| · | The process used to evaluate risks associated with the compensation program is formalized with an annual review of compensation plans, practices, and policies. Risk mitigation is incorporated into plan design, including capping both annual and long-term incentive plan payouts. | ||
| · | The Compensation Committee generally designs and administers the executive compensation programs to maximize tax deductibility of executive compensation paid to the named executive officers. | ||
| · | Our executive compensation consultant is retained directly by and reports to the Compensation Committee, does not provide any services to management, and had no prior relationship with our Chief Executive Officer or any other named executive officer. | ||
| · | The Board has adopted an anti-hedging and anti-pledging policy. | ||
To facilitate a comprehensive view of all current and previously granted forms of compensation, tally sheets are used by the Compensation Committee.
Compensation peer groups are evaluated periodically to align with investor expectations and changes in the Company’s businesses and market practice.
The Compensation Committee references the market median with respect to establishing compensation levels for executive officers.
Executive officers receive the same benefits as full-time employees, including health, life insurance, disability, and retirement benefits; other than a non-qualified supplementary benefit plan designed to restore 401(k) benefits lost due to Internal Revenue Code statutory limits and a deferred compensation plan, which is legally required to limit participation and does not provide any fixed, above-market earnings opportunity.
Executive officer perquisites are limited and reviewed annually by the Compensation Committee. There are no tax gross-ups on any perquisites, other than imputed income associated with travel costs of spouses who accompany executives to participate in business-related activities.
The Company maintains a double trigger requirement for changeentered 2015 on the heels of selling its ownership interest in control severance benefits and for the acceleration of time-based equity awards, including restricted stock units and stock options (provided the awards are assumed or replaced with substantially equivalent awards).
Except for Mr. Armes, whose employment agreement was entered into in 2006, there are no excise tax gross-up provisions upon a change in control.
The Company’s total potential dilution and 3-year average burn rate are below the median of the Company’s 4-digit GICS group.
Executive Compensation Policies and Practices
Executive officers are required to achieve and maintain minimum levels of stock ownership.
The Board has an established policy for recoupment of annual and long-term incentive compensation in the event of a restatement of reported financial results or if an employee has engaged in unethical conduct detrimental to the Company.
Except for Mr. Armes, none of the named executive officers have an employment agreement.
The process used to evaluate risks associated with the compensation program is formalized with an annual review of compensation plans, practices, and policies. Risk mitigation is incorporated into plan design, including capping both annual and long-term incentive plan payouts.
The Compensation Committee generally designs and administers the executive compensation programs to maximize tax deductibility of executive compensation paid to the named executive officers.
Our executive compensation consultant is retained directly by and reports to the Compensation Committee, does not provide any services to management, and had no prior relationship with our Chief Executive Officer or any other named executive officer.
The Board has adopted an anti-hedging and anti-pledging policy.
2014 Opportunities, Challenges, and Results
2014 was a year of unique challenges and opportunities which the Company navigated to deliver the second best operating profit in its history. Rebounding from the terminated merger agreement with Apollo Tyres Ltd., the Company took prompt action to resolve its relationship with the Chengshan Group Company Ltd., (the “Chengshan Group”) entering into an agreement in January 2014 to either sell the Company’s interest in Cooper Chengshan (Shandong) Tire Company Ltd. (“CCT”) or to purchase the Chengshan Group’s 35% interest.
As the CCT resolution evolved, the Companyjoint venture and the industry were confronted withexpectation of new tariffs on Chinese tire importspassenger and light truck tires imported into the U.S. from China, each of which presented unique challenges and opportunities throughout the year. Numerous steps were taken around the globe to transform and enhance the business, and the market reaction to the unknown impact on supply and demand. Despite these significant challenges, the Company delivered $141,940,000 in free cash flow and $300,458,000 inachieved record-setting operating profit exceeding the solid operating profit performance of 2013. The Company also marked its 100-year anniversary in 2014, honoring its long-standing relationships with generations of employees$354 million and generations of customers with celebrations of the Company’s rich history ina 6.8% unit volume increase across all of its communities around the world.
Annual and long-term performance targets for 2014 were established very shortly after entering into the agreement with the Chengshan Group regardingregions, excluding CCT ownership. With the outcome and timing of the ownership issue unknown, the 2014 performance targets were established including CCT for the full year. The performance results below reflect an adjustment to results due to the sale of CCT at the end of November 2014.from prior years. In addition to the adjusted results for 2014,financial achievements, which are shown as “Performance Results,” the 2014 results as reportedreflected in the Company’s Form 10-K are set forth below.results shown below, the Company made significant investments in its manufacturing facilities around the world, with a continued focus on producing and selling more high-value, high-margin products and enhancing worldwide competitiveness.
Corporate Performance Metrics* | 2014 Targets | 2014 Performance Results | 2014 Reported Results | |||
Operating Profit | $325,000,000 | $306,358,000 | $300,458,000 | |||
Free Cash Flow | $152,000,000 | $145,740,000 | $141,940,000 | |||
Net Income | $186,000,000 | $160,174,000 | $213,578,000 | |||
Return on Invested Capital | 15% | 13.6% | $11.9% | |||
The actual results against 2015 targets are as follows:
| Corporate Performance Metrics* | 2015 Targets | 2015 Performance Results | |||
| Operating Profit | $280,000,000 | $354,480,000 | |||
| Free Cash Flow | $50,000,000 | $94,624,000 | |||
| Net Income | $164,000,000 | $212,766,000 | |||
| Return on Invested Capital | 13.3% | 18.0% | |||
| * | For more information about how these performance metrics are calculated and reconciliations to amounts presented in Form 10-K, see “Incentive Compensation – Performance Metrics for |
Our Executive Officer Compensation Program Is Administered by the Compensation Committee
The Compensation Committee is responsible for performing the duties of the Board of Directors relating to the compensation of our executive officers and other senior management. The named executive officers covered in this year’s proxy is an expanded list due to a management transition in 2014. During 2014,2015, our named executive officers were:were Mr. Roy V. Armes, Chairman, Chief Executive Officer, and President; Ms. Ginger M. Jones, Vice President and Chief Financial Officer as of December 3, 2014; Mr. Bradley E. Hughes, former Vice President & Chief Financial Officer, replacing Hal Miller as Senior Vice President and President International Tire Operations effective July 1, 2014; Mr. Christopher E. Ostrander, Senior Vice President and President Americas Tire Operations;Officer; Ms. Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer; Mr. Bradley E. Hughes, Senior Vice President and Chief Operating Officer; and Mr. Stephen Zamansky, Senior Vice President, General Counsel and Secretary; and Mr. Harold C. Miller, Vice President and President International Tire Operations who, after resigning his officer position on June 30, 2014, served as Executive Advisor to the Chief Executive Officer, providing support in the resolution of the ownership of CCT and other transition matters. Mr. Miller retired from the Company effective January 2, 2015, and Mr. Ostrander subsequently resigned his position effective February 6, 2015.
With input, as appropriate, from management and our outside executive compensation consultant, the Compensation Committee reviews and approves all elements of our executive compensation program. Management is responsible for making recommendations to the Compensation Committee regarding executive officer compensation (except with respect to Mr. Armes’ compensation) and effectively implementing our executive compensation program, as approved by the Compensation Committee.
The Compensation Committee retained Exequity LLP as its executive compensation consultant in 20142015 and utilized data from Aon Hewitt, an outside compensation consultant, for pay benchmarking.
Additional information about the role and processes of the Compensation Committee is presented under the heading “Executive Compensation Consultant Disclosure” and “Meetings of the Board of Directors and Its Committees—Committees - Compensation Committee” in this proxy statement.
Executive Compensation Philosophy and Approach
The Cooper Tire executive officer compensation program is designed to deliver value to our stockholders by driving long-term financial and operational performance. To accomplish this goal, we have structured our executive compensation program to attract, motivate, and retain the caliber of leadership required to meet these objectives. In the following sections, we will address our benchmarking process and philosophy, how we set compensation levels, and the separate, but integrated elements of our program.
Compensation Peer Groups
The Compensation Committee annually analyzes market benchmark data regarding base salary and annual and long-term incentive opportunities and periodically evaluates market benchmark data regarding other compensation elements. The Compensation Committee uses benchmarking data to assess: 1)assess market pay levels and 2) program design. The benchmarking groups represent the kinds of companies that have similar characteristics and may compete with Cooper Tire for executive leadership positions. For each element of compensation and in the aggregate, the Committee sets compensation targets near the middle of the range offered by comparable companies.
Peer Group for Pay Level Benchmarking - For 2015 officer pay level, we engaged Aon Hewitt in 2013 to provide general industry data on 179 companies with109 companieswith revenues between $2.1$1.75 billion and $9.9 billion. The$7.0 billion.The median revenue of these 179109 companies was approximately $4.2$3.57 billion.
Peer Group for Program DesignBenchmarking - For purposes of benchmarking executive program design, the Committee periodically reviews a peer group of 14 companies with(listed below) whose annual revenues in the range offrom approximately 50% to 200%250% of our revenues was used. In additionand who have similar characteristics with respect to comparable revenues, selection criteria included whether the company is a durable goods or capital intensive manufacturer, offerscapital-intensive manufacturing, producing and marketing a consumer-branded product, focusesfocusing on technology-driven product development,products, and managesmanaging international operations. Each of the following peer group companies met four of the five criteria.
Borg Warner Inc. | Lennox International | |
Dana Holding Corp. | NACCO Industries, Inc. | |
Dover Corp. | Snap-on Incorporated | |
Flowserve Corporation | SPX Corp. | |
Harley-Davidson, Inc. | Steelcase Inc. | |
Harsco Corporation | Tenneco | |
Leggett & Platt Incorporated | Timken Co. |
Our Compensation Levels Are Set Considering Business Needs, Market Data and Other Factors
We use a comprehensive and structured approach in setting the compensation framework for all executive positions. We begin with a review of the Company’s overall strategy and the particular role each executive position is expected to play in achieving the goals of the Company. Starting with this foundation and with the assistance of the Compensation Committee’s executive compensation consultant, we obtain and review relevant market benchmark data for each position regarding base salary, annual cash incentive opportunities, and long-term incentive award levels. We then determine an appropriate range of compensation for each position by assessing the market data in conjunction with the valuation of the position’s impact and importance in setting and achieving the strategic objectives of the Company.
To facilitate a comprehensive view of all current and previously granted forms of compensation for each named executive officer, tally sheets are used by the Compensation Committee. Informed by tally sheet data, competitive market data, organization strategies, and individual performance assessments, the Compensation Committee uses its judgment, rather than a formulaic approach, in setting target compensation for each named executive officer each year.
Elements of Our Compensation Program
We believe that our executive compensation program, by element and in total, best achieves our objectives. The majority of each named executive officer’s compensation opportunity is based on the achievement of important financial and strategic goals established at the beginning of the respective performance period. The primary elements of our executive compensation program, all key to the attraction, retention, and motivation of our named executive officers, are shown in the following table:
| Element | Purpose | |||
| Nature of Component | ||||
| Base Salary | To value the competencies, skills, experience, and performance of individual executives. | Cash. Not “at risk.” Reviewed annually. | ||
| Annual Incentive Compensation | To motivate and reward executives | Cash award. Performance-based and “at risk.” Amount earned will vary based upon results achieved against annual goals (operating profit and free cash flow in | ||
| Long-Term Incentive Compensation | To motivate and reward executives |
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| Non-Qualified Benefits | To attract the level of talent required to achieve strategic objectives and to promote continuity of leadership. | Supplementary benefit plan to make up for |
We provide market competitive base salaries to attract and retain outstanding talent and to provide a fixed component of pay for our named executive officers. Base salaries are reviewed annually and are determined with consideration to the role of the executive, time in position, competitive market data regarding similar roles in similar organizations, individual performance, budget, and other considerations. The Compensation Committee uses the median of market data as the general reference point for base salary decisions because it believes that the median is the best representation of competitive salaries in the market for similar roles and talent.
In setting base salaries for 2014,2015, the Compensation Committee considered the officer’s experience in his or her current role, the impact of his or her role on the Company’s results, the overall quality and manner in which the officer performs his or her role, the financial position of the Company, and the value of retention.
With input from management and its executive compensation consultant, the Compensation Committee reviews and discusses annual corporate and business unit performance targets and the appropriateness of these performance metrics and targets considering the following primary factors prior to approval:
Expected performance based upon the annual operating plan as approved by the Board;
| · | Expected performance based upon the annual operating plan as approved by the Board; |
The economic environment in which we expect to operate during the year, including risk factors;
| · | The economic environment in which we expect to operate during the year, including risk factors; |
The achievement of financial results expected to enhance stockholder value; and
| · | The achievement of financial results expected to enhance stockholder value; and |
| · | The strategic goals and initiatives of the Company. |
The strategic goals and initiatives of the Company.
In 2014, the Compensation Committee implementedthen establishes a bonus pool approach to preserveaimed at preserving the ability to deduct compensation paid under the annual incentive plan and the performance-based long-term incentive programs. The bonus pool approach establishes a maximum dollar amount and a maximum number of share units that can be paid to the Chief Executive Officer and certain other named executive officers from which the Compensation Committee may exercise negative discretion in determining the actual amounts paid under the annual and long-term incentive plans. The Compensation Committee exercised such negative discretion for 20142015 to adjust the amounts awarded consistent with the financial and operating performance of the Company in connection with the metrics, goals, and targets described below. Please also see the section titled “Other Program Design Elements – Tax Deductibility of Executive Compensation” on pages 20 and 21 for additional information regarding the pool.pool structure and approach.
Annual Incentive Compensation
Target Opportunity
At target levels of achievement, the Annual Incentive Plan (AIP) is designed to approximate the market median of awards for executives in similar roles in similar organizations. At the highest level of achievement, the annual cash incentive opportunity for our named executive officers was 200% of the target opportunity in 2014.2015. At a threshold level of performance, the incentive opportunity was 50% of the target in 2014,2015, with no incentive earned if performance was below the threshold achievement level.
The Compensation Committee uses the median of general industry market data as the general reference point for target annual cash incentive opportunities because it believes that the median is the best representation of competitive annual cash incentive levels in the market for similar roles and talent. With regard to setting individual annual cash incentive opportunity levels, the Compensation Committee has the discretion to adjust the target opportunity levels as it deems appropriate. Typical reasons for adjusting an individual officer’s target annual cash incentive opportunity level above or below the market median include how long the officer has been in his or her current role, the impact of the role upon the organization, and the multiple of salary needed to bring the total cash compensation of the executive to a competitive level.
Presented below are the target incentive awards for the named executive officers in 2014:2015 using base salary dollars for the period of January 1, 2015, through December 31, 2015, and using AIP target percentages for the full period;
| 2015 Target Incentive | ||||
| Named Executive Officer | $ | (% of Salary) | ||
| Mr. Armes | $1,544,526 | 140% | ||
| Ms. Jones | $352,500 | 75% | ||
| Ms. Harmon | $269,007 | 65% | ||
| Mr. Hughes | $504,296 | 90% | ||
| Mr. Zamansky | $270,895 | 65% | ||
| 2014 Target Incentive | ||||
Executive | $ | (% of Salary) | ||
Mr. Armes | $1,393,208 | 130% | ||
Ms. Jones | $28,007 | 75% | ||
Mr. Hughes | $373,374 | 75% | ||
Ms. Harmon | $241,057 | 60% | ||
Mr. Miller | $283,815 | 70% | ||
Mr. Ostrander | $330,822 | 75% | ||
Mr. Zamansky | $236,129 | 60% | ||
Performance Metrics for 20142015
The performance metrics under the 20142015 Annual Incentive Plan (“AIP”) for Messrs. Armes, Hughes, and Zamansky and Mss. Jones and Harmon were:the named executive officers were 60% Corporate Operating Profit and 40% Corporate Free Cash Flow. For Mr. Miller, the weighted full-year 2014 performance metrics were 40% Corporate Operating Profit, 37.5% Corporate Free Cash Flow, and 22.5% International Tire Division Operating Profit. For Mr. Ostrander, the 2014 performance metrics were 45% North America Tire Division Operating Profit, 35% Corporate Free Cash Flow, and 20% Corporate Operating Profit. The potential payout on each of the financial metrics ranged from 0% to 200% of target. The table below summarizes the threshold, target, and maximum goals as compared to actual results:
Performance Metric | Threshold Goal | Target Goal | Maximum Goal | Performance Result | Results as a Percent of Target | |||||||||||||
Corporate Operating Profit | $ | 200,000,000 | $ | 325,000,000 | $ | 400,000,000 | $ | 306,358,000 | 94% | |||||||||
Corporate Free Cash Flow | $ | 105,600,000 | $ | 152,000,000 | $ | 180,000,000 | $ | 145,740,000 | 96% | |||||||||
International Tire Division Operating Profit | $ | 70,600,000 | $ | 103,500,000 | $ | 137,400,000 | $ | 80,466,000 | 78% | |||||||||
Americas Tire Division Operating Profit | $ | 157,000,000 | $ | 254,000,000 | $ | 313,000,000 | $ | 274,837,000 | 108% | |||||||||
| Performance Metric | Threshold Goal | Target Goal | Maximum Goal | Performance Result | Results as a Percent of Target | |||||
| Corporate Operating | $170,000,000 | $280,000,000 | $350,000,000 | $354,480,000 | 200% | |||||
| Profit | ||||||||||
| Corporate Free | $0 | $50,000,000 | $80,000,000 | $94,624,000 | 200% | |||||
| Cash Flow |
Following
Corporate operating profit is a calculation of Operating Profit for 2014:equal to operating profit from the Company’s financial statements.
| Corporate | Americas | International | ||||||||||
Operating Profit From Company Financial Statements | $ | 300,458,000 | $ | 274,837,000 | $ | 74,566,000 | ||||||
Loss of Operating Profit Due to Sale of Ownership Interest in Subsidiary | 5,900,000 | 0 | 5,900,000 | |||||||||
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Operating Profit Results for Compensation Purposes | $ | 306,358,000 | $ | 274,837,000 | $ | 80,466,000 | ||||||
Corporate free cash flow is defined as cash provided by continuing operations plus proceeds from sale of assets, less capital expenditures and dividends, from the Company’s financial statements, less capital expenditures and dividends.
Following is athe calculation of corporate free cash flow for 2014:2015:
| Cash Provided by Continuing Operations | $ | 300,314,000 | ||
| Plus: Proceeds From Sale of Assets | 1,651,000 | |||
| Less: Capital Expenditures | (182,544,000 | ) | ||
| Less: Dividends | (24,797,000 | ) | ||
| Corporate Free Cash Flow | $ | 94,624,000 |
Cash Provided by Continuing Operations | $ | 319,084,000 | ||
Plus: Net Income Due to Sale of Ownership Interest in Subsidiary | 3,800,000 | |||
Plus: Proceeds From Sale of Assets | 1,248,000 | |||
Less: Capital Expenditures | (145,041,000 | ) | ||
Less: Dividends | (33,351,000 | ) | ||
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Corporate Free Cash Flow | $ | 145,740,000 | ||
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Presented below are the actual incentive awards for the named executive officers in 2014:2015 based upon eligible earnings for the period of January 1, 2015 through December 31, 2015, the target bonus percentage levels for the same period, and an AIP achievement level of 200%:
| 2015 Actual Incentive | ||||||||
| 2014 Actual Incentive | ||||||||
Executive | $ | (% of Target) | ||||||
| Named Executive Officer | $ | (% of Salary) | ||||||
Mr. Armes | $1,292,897 | 92.8% | $3,089,052 | 280.0% | ||||
Ms. Jones | $25,990 | 92.8% | $705,000 | 150.0% | ||||
| Ms. Harmon | $538,015 | 130.0% | ||||||
Mr. Hughes | $346,491 | 92.8% | $1,008,592 | 180.0% | ||||
Ms. Harmon | $223,701 | 92.8% | ||||||
Mr. Miller | $245,928 | 86.7% | ||||||
Mr. Ostrander | $370,521 | 112.0% | ||||||
Mr. Zamansky | $219,128 | 92.8% | $541,790 | 130.0% | ||||
Long-Term Incentive Compensation
The Compensation Committee approves long-term incentive awards for the named executive officers and other senior officersexecutives of the Company. Long-term incentive awards are granted and can only be granted under the Cooper Tire & Rubber Company 2014 Incentive Compensation Plan, which allows for a variety of forms of long-term incentives.
For 2014,2015, awards of restricted stock options,units (“RSUs”), performance-based stock units, and performance-based cash were granted, with each weighted approximately 33.33%one-third of the total award. In determining the appropriate form or mix of long-term performance awards, the Compensation Committee considers such factors as the motivational impact of various components, alignment with stockholder interests, the affordability of certain awards, and other business objectives which may prescribe or suggest the form or mix of awards at a particular time in the business cycle.
Award Grant Timing and Pricing
For current executives in the plan, the grant date is typically the date of our February Compensation Committee meeting. For most new executives, the grant date may be as of, or shortly after, the hiring date of the newly eligible executive. The methodology to determine the number of options or shares to grant and to establish the exercise price of equity-based awards is to average the high and low trading price of our common stock, as quoted on the New York Stock Exchange, on the date of grant.
Performance-Based Stock Units and Performance-Based Cash
Key design features of our performance-based stock units and performance-based cash grants include:
| · | One-year measurement periods within a three-year performance period; | |
| · | At the start of each year, specific financial metrics are set; | |
| · | At the end of each year within a three-year performance period, performance-based stock units and performance-based cash can be notionally earned if financial targets for the awards have been achieved; | |
| · | Payout opportunities can range from 0% to 200% of the target award opportunity; | |
| · | Notionally earned performance-based stock units and performance-based cash, if any, vest and are payable at the end of the three-year cycle, with performance-based stock units payable in shares of common stock and performance-based cash settled in cash; and | |
| · | Dividend equivalents, which are credited to notionally earned performance-based stock units, are reinvested into additional stock units and paid at the end of the three-year cycle with the underlying and vested performance-based stock units. Performance-based stock units that have not been notionally earned do not receive dividend equivalents. |
One-year measurement periods within a three-year performance period;
At the start of each year, specific financial metrics are set;
At the end of each year in a three-year performance period, performance-based stock units and performance-based cash can be notionally earned if financial metrics for the awards have been achieved;
Payout opportunities can range from 0% to 200% of the target award opportunity;
Notionally earned performance-based stock units and performance-based cash, if any, vest and are payable at the end of the three-year cycle, with performance-based stock units payable in shares of common stock and performance-based cash settled in cash; and
Dividend equivalents, which are credited to notionally earned performance-based stock units, are reinvested into additional stock units and paid at the end of the three-year cycle with the underlying and vested performance-based stock units. Performance-based stock units that have not been notionally earned do not receive dividend equivalents.
Since the performance period for each performance-based grant is three years, participants can have overlapping three-year award opportunities active at any time.
The financial metrics for the 20142015 measurement period of the 2012-2014, the 2013-2015, 2014-2016, and the 2014-20162015-2017 performance periods approved by the Compensation Committee at the beginning of 20142015 were as follows:
Metric | Weighting | |
Net Income | 80% | |
Return on Invested Capital | 20% |
The Compensation Committee selected these performance metrics because net income and prudent management of capital are essential to the strategic and financial goals of the Company over theeach measurement period and the full three-year performance period. The ultimate value of earned performance-based stock units is based on the Company’s financial results and the stock price, which aligns with long-term stockholder value creation. The ultimate value of earned performance-based cash is based on the Company’s financial results.
For purposes of the performance-based stock units and the performance-based cash awards, the following table summarizes the threshold, target, and maximum performance goals for 20142015 for the 2012-2014, 2013-2015, 2014-2016, and the 2014-20162015-2017 performance periods, as compared to the performance results:
Performance Metric | Threshold Goal | Target Goal | Maximum Goal | Performance Result | Results as a Percent of Target | Threshold Goal | Target Goal | Maximum Goal | Performance Result | Results as a Percent of Target | ||||||||||
Net Income | $114,000,000 | $186,000,000 | $228,000,000 | $160,174,000 | 86% | $100,000,000 | $164,000,000 | $200,000,000 | $212,766,000 | 200.0% | ||||||||||
Return on Invested Capital | 11% | 15% | 18% | 13.6% | 88% | |||||||||||||||
| Return on | 11.0% | 13.3% | 16.0% | 18.0% | 200.0% | |||||||||||||||
| Invested Capital | ||||||||||||||||||||
Following is the calculation for net income:
Net Income | $ | 213,578,000 | ||
Gain on Sale of Ownership Interest in Subsidiary, Net of Taxes | (55,704,000 | ) | ||
Loss of Net Income Due to Sale of Ownership Interest in Subsidiary | 2,300,000 | |||
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| $ | 160,174,000 |
Return on invested capital is calculated by dividing operating profit from the Company’s financial statements, less income tax and the tax impact of net interest expense, by an average of debt and equity. The average of debt and equity is calculated by taking the sum of the balance at the end of fiscal year 20132014 and the balance at the end of each quarter in fiscal year 20142015 and dividing by five.
Following is the calculation of return on invested capital for 2014:2015:
Numerator: | ||||||||
Operating Profit | $ | 300,458,000 | $ | 354,480,000 | ||||
Loss of Operating Profit Due to Sale of Ownership Interest in Subsidiary | 5,900,000 | |||||||
Income Tax Expense | (111,697,000 | ) | (118,224,000 | ) | ||||
Income Tax Expense Related to Gain on Sale of Interest in Subsidiary | 21,767,000 | |||||||
Income Tax Expense Related to Loss of Operating Profit Due to | (2,100,000 | ) | ||||||
Net Interest Tax Effect | (7,405,000 | ) | (7,648,000 | ) | ||||
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| $ | 206,923,000 | |||||||
| $ | 228,608,000 | |||||||
Denominator: | ||||||||
Average of Debt and Equity | $ | 1,518,283,000 | $ | 1,272,227,000 | ||||
Corporate Return on Invested Capital | 13.6 | % | 18.0% | |||||
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Performance-Based Stock Units
For the 2014-20162015-2017 performance period, the Compensation Committee granted individual target award opportunities for performance-based stock units, a portion of which could be notionally earned in 2014.2015.
Presented below are the target numbers of performance-based stock units for the 20142015 measurement period (or “tranche”) of the 2012-2014, the 2013-2015, 2014-2016, and the 2014-20162015-2017 performance periods.
| Target Performance-Based Stock Unit Award For 2015 | ||||||||||||
| Target Performance-Based Stock Unit Award For 2014 | ||||||||||||
Officer | 2012-2014 Long-Term Incentive Performance Period | 2013-2015 Long-Term Incentive Performance Period | 2014-2016 Long-Term Incentive Performance Period | |||||||||
| Named Executive Officer | 2013-2015 Long-Term Incentive Performance Period | 2014-2016 Long-Term Incentive Performance Period | 2015-2017 Long-Term Incentive Performance Period | |||||||||
Mr. Armes | 22,901 | 17,032 | 20,695 | 17,034 | 20,695 | 15,408 | ||||||
Ms. Jones | 0 | 0 | 0 | — | — | 2,497 | ||||||
| Ms. Harmon | 2,392 | 2,736 | 1,844 | |||||||||
Mr. Hughes | 4,630 | 3,142 | 3,869 | 3,144 | 3,869 | 3,096 | ||||||
Ms. Harmon | 3,926 | 2,391 | 2,736 | |||||||||
Mr. Miller | 3,926 | 2,523 | 2,915 | |||||||||
Mr. Ostrander | 4,054 | 2,769 | 3,409 | |||||||||
Mr. Zamansky | 3,680 | 2,246 | 2,588 | 2,248 | 2,588 | 1,844 | ||||||
Performance-Based Cash
For the 2014-20162015-2017 performance period, the Compensation Committee also granted individual target award opportunities for performance-based cash, a portion of which could be notionally earned in 2014.2015.
Presented below are the target performance-based cash awards for the 20142015 tranche of the 2012-2014, the 2013-2015, 2014-2016, and the 2014-20162015-2017 performance periods:
| Target Performance-Based Cash Award For 2015 | ||||||||||||
| Target Performance-Based Cash Award For 2014 | ||||||||||||
Officer | 2012-2014 Long-Term Incentive Performance Period | 2013-2015 Long-Term Incentive Performance Period | 2014-2016 Long-Term Incentive Performance Period | |||||||||
| Named Executive Officer | 2013-2015 Long-Term Incentive Performance Period | 2014-2016 Long-Term Incentive Performance Period | 2015-2017 Long-Term Incentive Performance Period | |||||||||
Mr. Armes | $357,823 | $451,111 | $495,834 | $451,111 | $495,834 | $564,000 | ||||||
Ms. Jones | $0 | $0 | $0 | — | — | $91,389 | ||||||
| Ms. Harmon | $63,334 | $65,550 | �� | $67,500 | ||||||||
Mr. Hughes | $72,334 | $83,233 | $92,692 | $83,234 | $92,692 | $113,334 | ||||||
Ms. Harmon | $61,334 | $63,333 | $65,550 | |||||||||
Mr. Miller | $61,334 | $66,822 | $69,828 | |||||||||
Mr. Ostrander | $63,334 | $73,333 | $81,667 | |||||||||
Mr. Zamansky | $57,500 | $59,500 | $62,000 | $59,500 | $62,000 | $67,500 | ||||||
Amounts Notionally Earned for the 20142015 Measurement Period
In 2014,2015, there was an opportunity to notionally earn performance-based stock units and performance-based cash granted under the 2012-2014,2013-2015, the 2013-2015,2014-2016, and the 2014-20162015-2017 performance periods. Presented below are the performance-based stock units (PBUs) and the performance cash notionally earned for the 20142015 measurement period.
| 2015 Measurement Period | |||||||||||||||||||||||||||||||||||||
| 2014 Measurement Period | 2013-2015 Performance Period | 2014-2016 Performance Period | 2015-2017 Performance Period | ||||||||||||||||||||||||||||||||||
| 2012-2014 Performance Period | 2013-2015 Performance Period | 2014-2016 Performance Period | |||||||||||||||||||||||||||||||||||
Officer | PBUs | Performance Cash | PBUs | Performance Cash | PBUs | Performance Cash | |||||||||||||||||||||||||||||||
| Named Executive Officer | PBUs | Performance Cash | PBUs | Performance Cash | PBUs | Performance Cash | |||||||||||||||||||||||||||||||
Mr. Armes | 18,825 | $294,131 | 14,000 | $370,813 | 17,011 | $407,576 | 34,068 | $902,222 | 41,390 | $991,668 | 30,816 | $1,128,000 | |||||||||||||||||||||||||
Ms. Jones | 0 | $0 | 0 | $0 | 0 | $0 | — | — | — | — | 4,994 | $182,778 | |||||||||||||||||||||||||
| Ms. Harmon | 4,784 | $126,668 | 5,472 | $131,100 | 3,688 | $135,000 | |||||||||||||||||||||||||||||||
Mr. Hughes | 3,806 | $59,459 | 2,583 | $68,418 | 3,180 | $76,193 | 6,288 | $166,468 | 7,738 | $185,384 | 6,192 | $226,668 | |||||||||||||||||||||||||
Ms. Harmon | 3,227 | $50,417 | 1,965 | $52,060 | 2,249 | $53,882 | |||||||||||||||||||||||||||||||
Mr. Miller | 3,227 | $50,417 | 2,074 | $54,928 | 2,396 | $57,399 | |||||||||||||||||||||||||||||||
Mr. Ostrander | 3,332 | $52,061 | 2,276 | $60,280 | 2,802 | $67,130 | |||||||||||||||||||||||||||||||
Mr. Zamansky | 3,025 | $47,265 | 1,846 | $48,909 | 2,127 | $50,964 | 4,496 | $119,000 | 5,176 | $124,000 | 3,688 | $135,000 | |||||||||||||||||||||||||
Amounts Earned for the 2012-20142013-2015 Performance Period
The table below summarizes the awards which were notionally earned in 20122014 and 20142015 for the now completed 2012-20142013-2015 performance period. These awards were paid in shares of common stock and cash in early 2015.2016. There were no awards notionally earned by the named executive officers in 2013 under the 2012-2014 and the 2013-2015 plans.
| 2013-2015 Performance Period | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2012-2014 Performance Period | 2013 Measurement Period | 2014 Measurement Period | 2015 Measurement Period | 2013-2015 Total Earned | |||||||||||||||||||||||||||||||||||||||||||||
| 2012 Measurement Period | 2013 Measurement Period | 2014 Measurement Period | 2012-2014 Total Earned | 0% Achievement | 82.2% Achievement | 200.0% Achievement | |||||||||||||||||||||||||||||||||||||||||||
| 200% Achievement | 0% Achievement | 82.2% Achievement | PBUs | Performance Cash | |||||||||||||||||||||||||||||||||||||||||||||
Officer | PBUs | Performance Cash | PBUs | Performance Cash | PBUs | Performance Cash | |||||||||||||||||||||||||||||||||||||||||||
| Named Executive Officer | PBUs | Performance Cash | PBUs | Performance Cash | PBUs | Performance Cash | PBUs | Performance Cash | |||||||||||||||||||||||||||||||||||||||||
Mr. Armes | 45,802 | $ | 715,646 | 0 | $ | 0 | 18,825 | $ | 294,131 | 64,627 | $ | 1,009,777 | — | — | 14,000 | $370,813 | 34,068 | $902,222 | 48,068 | $1,273,035 | |||||||||||||||||||||||||||||
Ms. Jones | 0 | $ | 0 | 0 | $ | 0 | 0 | $ | 0 | 0 | $ | 0 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Ms. Harmon | — | — | 1,965 | $52,060 | 4,784 | $126,668 | 6,749 | $178,728 | |||||||||||||||||||||||||||||||||||||||||
Mr. Hughes | 9,260 | $ | 144,668 | 0 | $ | 0 | 3,806 | $ | 59,459 | 13,066 | $ | 204,127 | — | — | 2,583 | $68,418 | 6,288 | $166,468 | 8,871 | $234,886 | |||||||||||||||||||||||||||||
Ms. Harmon | 7,852 | $ | 122,668 | 0 | $ | 0 | 3,227 | $ | 50,417 | 11,079 | $ | 173,085 | |||||||||||||||||||||||||||||||||||||
Mr. Miller | 7,852 | $ | 122,668 | 0 | $ | 0 | 3,227 | $ | 50,417 | 11,079 | $ | 173,085 | |||||||||||||||||||||||||||||||||||||
Mr. Ostrander | 8,108 | $ | 126,668 | 0 | $ | 0 | 3,332 | $ | 52,061 | 11,440 | $ | 178,729 | |||||||||||||||||||||||||||||||||||||
Mr. Zamansky | 7,360 | $ | 115,000 | 0 | $ | 0 | 3,025 | $ | 47,265 | 10,385 | $ | 162,265 | — | — | 1,846 | $48,909 | 4,496 | $119,000 | 6,342 | $167,909 | |||||||||||||||||||||||||||||
In accordance with the regulations established by the Securities and Exchange Commission for the 2015 Summary Compensation Table, the “Stock Awards” column for 2015 shows only the performance stock unit tranches granted each calendar year, and thein 2015. The “Non-Equity Incentive Plan Compensation” column for 2015 shows the cash amounts notionally earned in 20122014 and 20142015 for the now completed 2012-20142013-2015 performance period because these cash amounts became nonforfeitable and were fully earned after the end of 2014.2015. Likewise, in the 2015 Grants of Plan-Based Awards Table, the Estimated Future Payouts Under Non-Equity Incentive Awards column shows the performance cash tranches for each calendar year.performance period.
Restricted Stock OptionsUnits
The size of the restricted stock optionunit grants werewas determined with reference to the competitive benchmarking described on page 11,12, the historic and recentCooper Tire stock price, for the Company’s stock, as well as individual performance and other long-term considerations.
The restricted stock optionsunits granted in 20142015 generally vest in equal installments of one-third per year beginning one year after the date of grant and are presented in the “2014“2015 Grants of Plan-Based Awards Table” that follows the Summary Compensation Table. The option term is 10 years, after which, if not exercised, the option expires.
Effective July 1, 2014, the Committee approved an award of 75,000 restricted stock units (“RSUs”) to Mr. Armes and an award of 15,000 RSUs each to Ms. Harmon and Messrs. Hughes, Miller, Ostrander, and Zamansky. As previously described, 2014 was a year of transition related to the terminated merger agreement with Apollo Tyres Ltd., the uncertainty of the CCT transaction, and new leadership responsibilities that were assumed as of July 1, 2014. These awards, which vest over a two-year period, were made to promote retention and an orderly transition of leadership and to quickly re-establish the equilibrium and focus needed to address the challenges and opportunities of 2014. The 15,000 RSUs granted to Mr. Ostrander were forfeited upon his resignation effective February 6, 2015.
In order to attract high caliber leadership and promote management continuity among our named executive officers, we provide the following retirement benefits:
401(k) |
Pension |
Non-Qualified Supplementary Benefit |
For the executives who participate in the Company’s long-term incentive plan, including the named executive officers, retirement eligibility is the earlier of the date the executive becomes age 65, or the date the sum of his or her years of continuous employment with the Company and his or her age equals at least 70 years.
The actuarial change from 20132014 in our named executive officers’ pension benefit is presented in the “2014“2015 Summary Compensation Table” on page 24. Detailed information about these pension plans is also presented in the “2014“2015 Pension Benefits Table” and related disclosures on page 31.30.
Executive Deferred Compensation Plan
In order to provide executives an opportunity to defer earned salary or cash incentive awards, the Company offers a non-qualified deferred compensation plan. The plan allows selected senior management employees, including our named executive officers, to elect to defer receipt of up to 80% of their base salary and up to 100% of their annual incentive compensation each year (subject to an aggregate $10,000 minimum per year), until a date or dates chosen by the participant. We do not make matching or other employer contributions to the Executive Deferred Compensation Plan. Amounts deferred into this plan are credited to a notional account that is notionally invested in the same investment vehicles offered in the Company’s 401(k) Planplan and/or Cooper Tire stock, at the participant’s election. The plan does not provide any fixed, above-market earnings opportunity. Detailed information about this plan is presented in the “2014“2015 Non-Qualified Deferred Compensation Table” and related footnotes. This plan is compliant with and
administered in accordance with the rules and regulations of Section 409A of the Internal Revenue Code, as are all other plans of the Company that have an element of deferred compensation.
Perquisites and Other Compensation
We provide a limited annual allowance of $15,000 to cover the cost of financial planning services and an annual executive physical for our named executive officers. There is minimal use of the Company plane for personal use, and we do not provide a tax gross-up on the imputed income associated with any personal use of the Company plane by an executive. It is the Company’s policy to reimburse for and to gross up the imputed income associated with the travel costs of spouses who accompany the executives to participate in business-related activities. The value of the noted perquisites is presenteddetailed in the footnote to the “All Other Compensation” column of the 20142015 Summary Compensation Table.Table on page 24.
Requirements to Maintain a Minimum Level of Stock Ownership
We believe that our named executive officers, whose business decisions impact our operations and results, should obtain and maintain a reasonable equity ownership in the Company. Toward that end, the Compensation Committee has established stock ownership guidelines for our named executive officers as outlined below:
| Officer | |||||
| Ownership Guideline | Targeted Achievement Date | |||
| Mr. Armes |
| January 1, 2013 | |||
| Ms. Jones |
| December 3, 2019 | |||
| Ms. Harmon | 3X Base Salary | December 16, 2014 | |||
| Mr. Hughes |
| November 18, 2014 | |||
| Mr. Zamansky |
|
| ||
|
| April 4, 2016 |
If any of our named executive officers diddo not (or do not) satisfy the stock ownership guidelines in a timely manner, then the Compensation Committee may take action, including requiring that 50% of an executive’s annual cash incentive be paid in stock; requiring that the executive retain 50% of the net after-tax shares following the exercise of any stock options or upon the vesting of other equity awards; requiring that 50% of the executive’s long-term incentive awards be paid in stock; or reducing the executive’s long-term incentive grants. All named executive officers other than Ms. Jones, whose target achievement date is December 3, 2019, havehad met their respective ownership requirements.requirements as of March 1, 2016.
Clawback Policy
Our Board has adopted a policy that permits us to recoup the incentive compensation paid to our executives in certain circumstances. Under this policy, if the Company significantly restates its reported financial results, the Board will review the circumstances that caused such restatement, consider issues of accountability and oversight, and analyze the impact of such restatement on compensation paid or awarded to Company employees. If the restatement is the result of fraud or misconduct, the Board may elect to recover all annual cash incentive awards, long-term incentive awards, and other incentive-based compensation paid to the employees who engaged in such fraud or misconduct. Additionally, for participants in the Company’s long-term incentive plans, the Board may elect to recover amounts paid out to the extent the Company’s performance results were over-stated as a result of such restatement, and, for all participants, the Board may adjust any unvested or notionally earned amounts related to the relevant measurement period(s) to reflect the restatement. If the restatement is not the result of fraud or misconduct, the Board may adjust any unvested or notionally earned amounts related to the relevant measurement period(s) to reflect the restatement. The policy also provides that if the Board determines that any employee has engaged in unethical conduct detrimental to the Company, the Board may seek recoupment of all annual cash incentives, long-term incentives, or other incentive-based compensation paid to such employee during the period(s) of such unethical behavior, and cancel all unvested or notionally earned incentive-based compensation related to such period(s). Recovery under the Clawback Policy is in addition to any recoupment required or permitted by law, including the Sarbanes-Oxley Act of 2002 and common law, or by contract.
Hedging and Pledging Transactions
In order to align the interests of the Company’s officers and Directors with those of its stockholders and to address a potential appearance of improper or inappropriate conduct, the Board of Directors has adopted a policy with respect to hedging and pledging of Common Stock or other equity securities of the Company (“Company Securities”). This anti-hedging policy prohibits Company officers and Directors, including certain family membersspouses of such persons, from hedging Company Securities, including short-selling, options, puts, calls, collars and exchange funds, as well as derivatives such as swaps, forwards and futures, or pledging or otherwise encumbering Company Securities as collateral for indebtedness. Persons subject to this policy will be afforded a reasonable opportunity to unwind or otherwise terminate any prohibited hedging transactions or arrangements existing as of the time such person becomes subject to the policy.
Tax Deductibility of Executive Compensation
The financial reporting and income tax consequences of the compensation elements are considered by the Compensation Committee when it analyzes the design and level of compensation. The Compensation Committee balances its objective of ensuring effective and competitive compensation packages with the desire to maximize the tax deductibility of compensation.
Regulations issued under Section 162(m) of the Internal Revenue Code provide that compensation in excess of $1 million paid to the Chief Executive Officer and certain other named executive officers will not be deductible unless it meets specified criteria for being “performance-based.” The Compensation Committee generally designs and administers the executive incentive programs of the Company to qualify for the performance-based exemption. It also reserves the right to provide compensation that does not meet the exemption criteria if, in its sole discretion, it determines that doing so advances the business objectives of the Company.
In 2014, the Compensation Committee implemented a bonus pool approach to preserve the ability to deduct compensation paid under the AIP and the performance-based long-term incentive programs. The bonus pool approach establishes a maximum dollar amount and a maximum number of share units that can be paid to the Chief Executive Officer and certain other named executive officers. For 2014,2015, the bonus pool formula was based on the greater of a percentage4% of Operating Profit or 5% of Net Cash Provided from Continuing Operations for the AIP and the greater of a percentage3% of Cumulative Operating Profit or 4% of Cumulative Net Cash Provided from Continuing Operations for performance-based stock units and 1.5% of Cumulative Operating Profit or 2.0% of Cumulative Net Cash Provided from Continuing Operation for performance-based cash under the long-term incentive programs. Within the limits of the
pool, the Compensation Committee determinesdetermined the amounts paid under the annual and long-term incentive plans, as described above.previously described.
Employment Agreement and Change in Control Plan
The Company has an employment agreement with Mr. Armes that specifies minimum pay levels and provides severance benefits in certain circumstances (both with and without a change in control). The terms of Mr. Armes’ employment agreement were negotiated in the light of market benchmark data provided in 2006 by Towers Watson, cost and other considerations, and were set to attract him to join the Company. The terms of the original agreement dated December 19, 2006, were amended and restated on December 22, 2008, with respect to be in full compliance with Section 409A of the Internal Revenue Code. Mr. Armes’ base salary as of December 31, 2014,2015, was $1,080,000.$1,112,000.
As a tool to facilitate attraction and retention of key executive talent, the Company also has a change in control plan that covers each of the other named executives. Under this plan, benefits are received only in the event that an actual change in control and termination occurs, or termination occurs during a time when the Company is party to a definitive agreement, the consummation of which would result in a change in control, and thus are not considered part of annual compensation. We believe that a change in control plan maintains productivity, facilitates a long-term commitment to the organization, and encourages retention when, and if, we are confronted with the potential disruptive impact of a change in control of the Company.
See “Potential Payments Upon Termination or Change in Control” beginning on page 3433 for more information regarding these arrangements.
Compensation Plan for 20152016
When setting executive compensation for 2015,2016, the Compensation Committee took into account the results of the stockholder advisory vote on named executive officer compensation that occurred at the 20142015 Annual Meeting of Stockholders. As a substantial majority (approximately 95%96%) of the votes cast approved the compensation program described in our 20142015 proxy statement, the Compensation Committee applied the same general principles in determining the amounts and types of executive compensation for 20152016 as described below.
Base pay levels are set with reference to individual roles, impact, individual performance, and median levels of competitive market pay as determined by peer group and general market comparisons.comparisons as described on page 13.
Annual cash incentive opportunity levels are benchmarked against competitive norms as measured against general industry data for similar executive positions. Individual annual cash incentive opportunity levels are adjusted, if warranted, to maintain competitive compensation packages for our named executive officers.
The long-term incentive opportunity for 20152016 includes one-third performance-based stock units, one-third performance-based cash, and one-third RSUs. The replacement of stock options with RSUs in the 2015 plan is based upon a review of the award mix from the standpoint of motivation, retention, achieving stock ownership guidelines, and other factors. As with the stock options which were granted in 2014, the RSUs vest in equal installments of one-third per year beginning one year after grant. Individual long-term incentive targets are benchmarked against appropriate market data and adjusted, if warranted, to maintain competitive compensation opportunity for our named executive officers.
Executive Compensation Consultant Disclosure
During the 20142015 fiscal year, the Compensation Committee engaged Exequity LLP to serve as an executive compensation consultant. Exequity provides research, data analysis, survey information and design expertise in developing compensation programs for executives. In addition, Exequity keeps the Compensation Committee apprised of regulatory developments and market trends related to executive compensation practices. A representative of Exequity typically attends meetings of the Compensation Committee and is available to participate in executive sessions. The Compensation Committee has considered the independence-related factors enumerated by the NYSE and the SEC and has concluded that Exequity is independent. In addition, the Compensation Committee has concluded that the work of Exequity in 20142015 did not raise any conflicts of interest.
Compensation-Related Risk Assessment
The Compensation Committee periodically reviews the incentive plan policies and practices that apply to all of our non-represented employees to determine whether such policies and practices are reasonably likely to have a material adverse effect on the company. As part of this process, during 2015, the Compensation Committee, with the assistance of management and the human resources department, conducted a formal assessment of these compensation plans and practices. After conducting this assessment, both management and the Compensation Committee have determined that none of our compensation policies and practices creates any risks that are reasonably likely to have a material adverse effect on the company.
The following report has been submitted by the Compensation Committee of the Board of Directors:
The Compensation Committee of the Board of Directors has reviewed and discussed the Company’s Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s definitive proxy statement on Schedule 14A for its 20152016 Annual Meeting, which is incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014,2015, each as filed with the Securities and Exchange Commission.
The foregoing report was submitted by the Compensation Committee of the Board and shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A promulgated by the Securities Exchange Commission or Section 18 of the Exchange Act.
Respectfully submitted,
John F. Meier, Chairman
Richard L. WamboldSteven M. Chapman
Robert D. Welding
The following tables and narratives provide, for the fiscal year ended December 31, 2014,2015, descriptions of the cash compensation paid by the Company, as well as certain other compensation awarded, paid or accrued, during 20142015 to our named executive officers, including:
Mr. Roy V. Armes, Chairman, Chief Executive Officer, and President;
| · | Mr. Roy V. Armes, Chairman, Chief Executive Officer, and President; |
Ms. Ginger M. Jones, Vice President and Chief Financial Officer;
| · | Ms. Ginger M. Jones, Vice President and Chief Financial Officer; |
Mr. Bradley E. Hughes, Senior Vice President and Chief Operating Officer; and
| · | Ms. Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer; Mr. Bradley E. Hughes, Senior Vice President and Chief Operating Officer; and Mr. Stephen Zamansky, Senior Vice President, General Counsel and Secretary; who were our most highly compensated executive officers other than Mr. Armes and Ms. Jones, who were employed by the Company as of December 31, 2015. |
Ms. Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer; Mr. Harold C. Miller, Vice President and President International Tire Operations; Mr. Christopher E. Ostrander, Senior Vice President and President Americas Operations; and Mr. Stephen Zamansky, Senior Vice President, General Counsel and Secretary, who were our other most-highly compensated executive officers other than Messrs. Armes and Hughes and Ms. Jones who were employed by the Company as of December 31, 2014.
20142015 SUMMARY COMPENSATION TABLE
The following table shows compensation information for 2012, 2013, 2014, and 20142015 as applicable, for our named executive officers.
Name and Principal Position(1) | Year | Salary | Bonus | Stock Awards(2) | Option Awards(3) | Non-Equity Incentive Plan Compensation(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) | All Other Compensation (6) | Total | |||||||||||||||||||||||||
Roy V. Armes Chairman, Chief Executive Officer, and President |
| 2014 2013 2012 |
| $ $ $ | 1,071,911 1,040,459 1,002,213 |
| $ $ $ | 3,689,147 1,389,298 857,375 |
| $ $ $ | 1,851,910 1,621,496 1,575,950 |
| $ $ $ | 2,302,674 1,454,720 3,045,074 |
| $ $ $ | 8,709 8,334 7,975 |
| $ $ $ | 201,089 320,282 374,665 |
| $ $ $ | 9,125,440 5,834,589 6,863,252 |
| ||||||||||
Ginger M. Jones Vice President and Chief Financial Officer | 2014 | $ | 32,538 | $ | 479,025 | $ | 0 | $ | 25,990 | $ | 0 | $ | 0 | $ | 537,553 | |||||||||||||||||||
Bradley E. Hughes Senior Vice President and Chief Operating Officer |
| 2014 2013 2012 |
| $ $ $ | 497,989 470,700 448,317 |
| $ $ $ | 726,218 273,980 175,094 |
| $ $ $ | 398,144 347,077 263,880 |
| $ $ $ | 550,618 343,452 798,120 |
| $ $ $ | 0 0 0 |
| $ $ $ | 72,164 77,439 114,144 |
| $ $ $ | 2,245,133 1,512,648 1,799,555 |
| ||||||||||
Brenda S. Harmon Senior Vice President and Chief Human Resources Officer |
| 2014 2013 2012 |
| $ $ $ | 401,825 389,663 376,590 |
| $ $ $ | 664,210 225,901 148,922 |
| $ $ $ | 244,844 227,662 241,890 |
| $ $ $ | 396,786 263,860 559,601 |
| $ $ $ | 0 0 0 |
| $ $ $ | 56,895 78,988 86,051 |
| $ $ $ | 1,764,560 1,186,074 1,413,054 |
| ||||||||||
Harold C. Miller Vice President and President International Tire Operations |
| 2014 2013 2012 |
| $ $ $ | 405,904 400,850 382,317 |
| $ $ $ | 691,661 228,164 214,014 |
| $ $ $ | 260,807 247,390 263,880 |
| $ $ $ | 419,013 218,907 637,645 |
| $ $ $ | 7,969 7,626 7,298 |
| $ $ $ | 51,493 79,986 87,686 |
| $ $ $ | 1,836,847 1,182,923 1,592,840 |
| ||||||||||
Christopher E. Ostrander Senior Vice President and President Americas Operations |
| 2014 2013 2012 |
| $ $ $ | 441,238 414,803 394,317 |
| $ $ $ | 692,459 243,597 106,422 |
| $ $ $ | 305,017 305,794 263,880 |
| $ $ $ | 549,249 318,994 512,612 |
| $ $ $ | 0 0 0 |
| $ $ $ | 87,112 87,907 105,407 |
| $ $ $ | 2,075,075 1,371,095 1,382,638 |
| ||||||||||
Stephen Zamansky Senior Vice President, General Counsel and Secretary | 2014 | $ | 393,354 | $ | 651,295 | $ | 266,324 | $ | 381,393 | $ | 0 | $ | 46,922 | $ | 1,739,288 | |||||||||||||||||||
| Name and Principal Position(1) | Year | Salary | Bonus | Stock Awards(2) | Option Awards(3) | Non-Equity Incentive Plan Compensation(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) | All Other Compensation (6) | Total | |||||||||||||||||||||||||||
| Roy V. Armes | 2015 | $ | 1,103,344 | — | $ | 3,654,001 | — | $ | 4,362,087 | $ | 9,100 | $ | 249,154 | $ | 9,377,686 | |||||||||||||||||||||
| Chairman, Chief Executive | 2014 | $ | 1,071,911 | — | $ | 3,689,147 | $ | 1,851,910 | $ | 2,302,674 | $ | 8,709 | $ | 201,089 | $ | 9,125,440 | ||||||||||||||||||||
| Officer, and President | 2013 | $ | 1,040,459 | — | $ | 1,389,298 | $ | 1,621,496 | $ | 1,454,720 | $ | 8,334 | $ | 320,282 | $ | 5,834,589 | ||||||||||||||||||||
| Ginger M. Jones | 2015 | $ | 470,574 | — | $ | 367,309 | — | $ | 705,000 | — | $ | 27,550 | $ | 1,570,433 | ||||||||||||||||||||||
| Vice President and | 2014 | $ | 32,538 | — | $ | 479,025 | — | $ | 25,990 | — | — | $ | 537,553 | |||||||||||||||||||||||
| Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
| Brenda S. Harmon | 2015 | $ | 413,881 | — | $ | 459,835 | — | $ | 716,743 | — | $ | 60,050 | $ | 1,650,509 | ||||||||||||||||||||||
| Senior Vice President and | 2014 | $ | 401,825 | — | $ | 664,210 | $ | 244,844 | $ | 396,786 | — | $ | 56,895 | $ | 1,764,560 | |||||||||||||||||||||
| Chief Human Resources | 2013 | $ | 389,663 | — | $ | 225,901 | $ | 227,662 | $ | 263,860 | — | $ | 78,988 | $ | 1,186,074 | |||||||||||||||||||||
| Officer | ||||||||||||||||||||||||||||||||||||
| Bradley E. Hughes | 2015 | $ | 559,912 | — | $ | 713,325 | — | $ | 1,243,478 | — | $ | 92,377 | $ | 2,609,092 | ||||||||||||||||||||||
| Senior Vice President and | 2014 | $ | 497,989 | — | $ | 726,218 | $ | 398,144 | $ | 550,618 | — | $ | 72,164 | $ | 2,245,133 | |||||||||||||||||||||
| Chief Operating Officer | 2013 | $ | 470,700 | — | $ | 273,980 | $ | 347,077 | $ | 343,452 | — | $ | 77,439 | $ | 1,512,648 | |||||||||||||||||||||
| Stephen Zamansky | 2015 | $ | 416,727 | — | $ | 449,096 | — | $ | 709,699 | — | $ | 56,957 | $ | 1,632,479 | ||||||||||||||||||||||
| Senior Vice President, | 2014 | $ | 393,354 | — | $ | 651,295 | $ | 266,324 | $ | 381,393 | — | $ | 46,922 | $ | 1,739,288 | |||||||||||||||||||||
| General Counsel and | ||||||||||||||||||||||||||||||||||||
| Secretary | ||||||||||||||||||||||||||||||||||||
| (1) | Ms. Jones joined the Company on December 3, |
| (2) | Except as otherwise noted below, the amounts shown do not reflect compensation actually received by the named executive officer. The amounts shown in this column are the aggregate grant date fair values computed in accordance with FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note |
| (3) | The amounts shown do not reflect compensation actually received by the named executive officer. The amounts shown in this column are the aggregate grant date fair values computed in accordance with FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note |
| (4) | The amounts shown in this column for |
| (5) | These amounts represent aggregate changes in the actuarial present value of the named executive officer’s accumulated benefit under our pension plans (including supplemental defined benefit plans). Only Mr. Armes |
| (6) | The amounts shown in this column for |
Amounts received by each named executive officer for 20142015 are identified and quantified in the table below:
Named Executive Officer | Company Contributions To Qualified Defined Contribution Plan | Company Contributions To Non-Qualified Defined Contribution Plan | Personal, Spouse, and Dependent Travel | Tax Gross-up Related to Travel Costs | Financial Planning Services | Executive Physical | Total | |||||||||||||||||||||
Roy V. Armes | $21,190 | $151,075 | $7,039 | $6,785 | $15,000 | - | $201,089 | |||||||||||||||||||||
Ginger M. Jones | - | - | - | - | - | - | - | |||||||||||||||||||||
Bradley E. Hughes | $21,190 | $42,074 | - | - | $8,900 | - | $72,164 | |||||||||||||||||||||
Brenda S. Harmon | $21,190 | $27,311 | - | - | $6,600 | $1,794 | $56,895 | |||||||||||||||||||||
Harold C. Miller | $21,190 | $23,594 | - | - | $6,250 | $459 | $51,493 | |||||||||||||||||||||
Christopher E. Ostrander | $21,190 | $22,380 | $25,008 | $8,280 | $8,195 | $2,059 | $87,112 | |||||||||||||||||||||
Stephen Zamansky | $21,190 | $25,732 | - | - | - | - | $46,922 | |||||||||||||||||||||
| Company | ||||||||||||||||||||||||||||
| Company | Contributions | |||||||||||||||||||||||||||
| Contributions | To | Personal, | Tax | |||||||||||||||||||||||||
| To Qualified | Non-Qualified | Spouse, | Gross-Up | |||||||||||||||||||||||||
| Defined | Defined | and | Related | Financial | ||||||||||||||||||||||||
| Contribution | Contribution | Dependent | to Travel | Planning | Executive | |||||||||||||||||||||||
| Named Executive Officer | Plan | Plan | Travel | Costs | Services | Physical | Total | |||||||||||||||||||||
| Roy V. Armes | $ | 21,620 | $ | 202,413 | $ | 5,024 | $ | 5,097 | $ | 13,733 | $ | 1,267 | $ | 249,154 | ||||||||||||||
| Ginger M. Jones | $ | 21,620 | — | — | — | $ | 2,900 | $ | 3,030 | $ | 27,550 | |||||||||||||||||
| Brenda S. Harmon | $ | 21,620 | $ | 35,376 | — | — | $ | 750 | $ | 2,304 | $ | 60,050 | ||||||||||||||||
| Bradley E. Hughes | $ | 21,620 | $ | 60,914 | $ | 387 | $ | 336 | $ | 9,120 | — | $ | 92,377 | |||||||||||||||
| Stephen Zamansky | $ | 21,620 | $ | 35,212 | $ | 66 | $ | 59 | — | — | $ | 56,957 | ||||||||||||||||
20142015 GRANTS OF PLAN-BASED AWARDS TABLE
The following table shows all plan-based awards granted to our named executive officers during 2014.2015. The option awards and the unvested portion of the stock awards identified in this table are also reported in the “Outstanding Equity Awards at 20142015 Fiscal Year-End Table” below.on page 28. All awards were granted under our 20102014 Incentive Compensation Plan. For a summary of the incentive plan designs, see “Compensation and Discussion Analysis” beginning on page 9.10.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units # | All Other Option Awards: # of Securities Underlying Options # (8) (i) | Exercise of Stock Option Awards ($/share) $ (9) (j) | Closing Price ($/share) $ (10) (k) | Value of Stock and Option Awards $ (11) (l) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name (a) | Type(1) | Grant Date (b) | $ Threshold (2) (c) | $ Target (3) (d) | $ Maximum (4) (e) | # Threshold (5) (f) | # Target (6) (g) | # Maximum (7) (h) | Type(1) | Grant Date (b) | $ Threshold (2) (c) | $ Target (3) (d) | $ Maximum (4) (e) | # Threshold (5) (f) | # Target (6) (g) | # Maximum (7) (h) | All Other Stock Awards: Stock or Units (#) | Value of Stock and Option Awards ($) (8) (i) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roy V. | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | AIP | 2/19/2015 | $ | 772,263 | $ | 1,544,526 | $ | 3,089,052 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Armes | PBU1 | 2/20/2014 | 11,451 | 22,901 | 45,802 | - | - | - | $ | 548,708 | PBU1 | 2/19/2015 | 8,517 | 17,034 | 34,068 | $ | 626,425 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU2 | 2/20/2014 | 8,516 | 17,032 | 34,064 | - | - | - | $ | 408,087 | PBU2 | 2/19/2015 | 10,348 | 20,695 | 41,390 | $ | 761,059 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU3 | 2/20/2014 | 10,348 | 20,695 | 41,390 | - | - | - | $ | 495,852 | PBU3 | 2/19/2015 | 7,704 | 15,408 | 30,816 | $ | 566,629 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU4 | 2/20/2014 | $ | 178,912 | $ | 357,823 | $ | 715,646 | PBU4 | 2/19/2015 | $ | 225,556 | $ | 451,111 | $ | 902,222 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU5 | 2/20/2014 | $ | 225,556 | $ | 451,111 | $ | 902,222 | PBU5 | 2/19/2015 | $ | 247,917 | $ | 495,834 | $ | 991,668 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU6 | 2/20/2014 | $ | 247,917 | $ | 495,834 | $ | 991,668 | PBU6 | 2/19/2015 | $ | 282,000 | $ | 564,000 | $ | 1,128,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 7/1/2014 | 75,000 | $ | 2,236,500 | RSU | 46,224 | $ | 1,699,888 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 2/20/2014 | 151,053 | $ | 23.960 | $ | 23.97 | $ | 1,851,910 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ginger M. | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | - | - | - | AIP | 2/19/2015 | $ | 176,250 | $ | 352,500 | $ | 705,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jones | RSU | 12/3/2014 | 15,000 | - | - | - | $ | 479,025 | PBU3 | 2/19/2015 | 1,249 | 2,497 | 4,994 | $ | 91,827 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bradley E. | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hughes | PBU1 | 2/20/2014 | 2,315 | 4,630 | 9,260 | - | - | - | $ | 110,935 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU2 | 2/20/2014 | 1,571 | 3,142 | 6,284 | - | - | - | $ | 75,282 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU3 | 2/20/2014 | 1,935 | 3,869 | 7,738 | - | - | - | $ | 92,701 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU4 | 2/20/2014 | $ | 36,167 | $ | 72,334 | $ | 144,668 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU5 | 2/20/2014 | $ | 41,617 | $ | 83,233 | $ | 166,466 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU6 | 2/20/2014 | $ | 46,346 | $ | 92,692 | $ | 185,384 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 7/1/2014 | 15,000 | $ | 447,300 | PBU6 | 2/19/2015 | $ | 45,695 | $ | 91,389 | $ | 182,778 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 2/20/2014 | 32,475 | $ | 23.960 | $ | 23.97 | $ | 398,144 | RSU | 7,491 | $ | 275,482 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brenda S. | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | AIP | 2/19/2015 | $ | 134,504 | $ | 269,007 | $ | 538,015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harmon | PBU1 | 2/20/2014 | 1,963 | 3,926 | 7,852 | - | - | - | $ | 94,067 | PBU1 | 2/19/2015 | 1,196 | 2,392 | 4,784 | $ | 87,966 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU2 | 2/20/2014 | 1,196 | 2,391 | 4,782 | - | - | - | $ | 57,288 | PBU2 | 2/19/2015 | 1,368 | 2,736 | 5,472 | $ | 100,616 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU3 | 2/20/2014 | 1,368 | 2,736 | 5,472 | - | - | - | $ | 65,555 | PBU3 | 2/19/2015 | 922 | 1,844 | 3,688 | $ | 67,813 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU4 | 2/20/2014 | $ | 30,667 | $ | 61,334 | $ | 122,668 | PBU4 | 2/19/2015 | $ | 31,667 | $ | 63,334 | $ | 126,668 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU5 | 2/20/2014 | $ | 31,667 | $ | 63,333 | $ | 126,666 | PBU5 | 2/19/2015 | $ | 32,775 | $ | 65,550 | $ | 131,100 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU6 | 2/20/2014 | $ | 32,775 | $ | 65,550 | $ | 131,100 | PBU6 | 2/19/2015 | $ | 33,750 | $ | 67,500 | $ | 135,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 7/1/2014 | 15,000 | $ | 447,300 | RSU | 5,532 | $ | 203,439 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 2/20/2014 | 19,971 | $ | 23.960 | $ | 23.97 | $ | 244,844 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harold C. | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Miller | PBU1 | 2/20/2014 | 1,963 | 3,926 | 7,852 | - | - | - | $ | 94,067 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU2 | 2/20/2014 | 1,262 | 2,523 | 5,046 | - | - | - | $ | 60,451 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU3 | 2/20/2014 | 1,458 | 2,915 | 5,830 | - | - | - | $ | 69,843 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU4 | 2/20/2014 | $ | 30,667 | $ | 61,334 | $ | 122,668 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU5 | 2/20/2014 | $ | 33,411 | $ | 66,822 | $ | 133,644 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU6 | 2/20/2014 | $ | 34,914 | $ | 69,828 | $ | 139,656 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 7/1/2014 | 15,000 | $ | 447,300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 2/20/2014 | 21,273 | $ | 23.960 | $ | 23.97 | $ | 260,807 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher E. | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ostrander | PBU1 | 2/20/2014 | 2,027 | 4,054 | 8,108 | - | - | - | $ | 97,134 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU2 | 2/20/2014 | 1,385 | 2,769 | 5,538 | - | - | - | $ | 66,345 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bradley E. | AIP | 2/19/2015 | $ | 252,148 | $ | 504,296 | $ | 1,008,592 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hughes | PBU1 | 2/19/2015 | 1,572 | 3,144 | 6,288 | $ | 115,621 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU3 | 2/20/2014 | 1,705 | 3,409 | 6,818 | - | - | - | $ | 81,680 | PBU2 | 2/19/2015 | 1,935 | 3,869 | 7,738 | $ | 142,282 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU4 | 2/20/2014 | $ | 31,667 | $ | 63,334 | $ | 126,668 | PBU3 | 2/19/2015 | 1,548 | 3,096 | 6,192 | $ | 113,855 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU5 | 2/20/2014 | $ | 36,667 | $ | 73,333 | $ | 146,666 | PBU4 | 2/19/2015 | $ | 41,617 | $ | 83,234 | $ | 166,468 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU6 | 2/20/2014 | $ | 40,834 | $ | 81,667 | $ | 163,334 | PBU5 | 2/19/2015 | $ | 46,346 | $ | 92,692 | $ | 185,384 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 7/1/2014 | 15,000 | $ | 447,300 | PBU6 | 2/19/2015 | $ | 56,667 | $ | 113,334 | $ | 226,668 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 2/20/2014 | 24,879 | $ | 23.960 | $ | 23.97 | $ | 305,017 | RSU | 7,491 | $ | 275,482 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephen | AIP | 2/20/2014 | $ | 0 | $ | 0 | $ | 0 | AIP | 2/19/2015 | $ | 135,448 | $ | 270,895 | $ | 541,790 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Zamansky | PBU1 | 2/20/2014 | 1,840 | 3,680 | 7,360 | - | - | - | $ | 88,173 | PBU1 | 2/19/2015 | 1,124 | 2,248 | 4,496 | $ | 82,670 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU2 | 2/20/2014 | 1,123 | 2,246 | 4,492 | - | - | - | $ | 53,814 | PBU2 | 2/19/2015 | 1,294 | 2,588 | 5,176 | $ | 95,174 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU3 | 2/20/2014 | 1,294 | 2,588 | 5,176 | - | - | - | $ | 62,008 | PBU3 | 2/19/2015 | 922 | 1,844 | 3,688 | $ | 67,813 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU4 | 2/20/2014 | $ | 28,750 | $ | 57,500 | $ | 115,000 | PBU4 | 2/19/2015 | $ | 29,750 | $ | 59,500 | $ | 119,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU5 | 2/20/2014 | $ | 29,750 | $ | 59,500 | $ | 119,000 | PBU5 | 2/19/2015 | $ | 31,000 | $ | 62,000 | $ | 124,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PBU6 | 2/20/2014 | $ | 31,000 | $ | 62,000 | $ | 124,000 | PBU6 | 2/19/2015 | $ | 33,750 | $ | 67,500 | $ | 135,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 7/1/2014 | 15,000 | $ | 447,300 | RSU | 5,532 | $ | 203,439 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | 2/20/2014 | 21,723 | $ | 23.960 | $ | 23.97 | $ | 266,324 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 26 |
| (1) | AIP = Annual Incentive Plan; PBU1 = Performance-based stock units granted in the |
| (2) | The amounts shown in column (c) with respect to AIP represent the threshold opportunity if all of the performance metrics are met. The threshold payout is based on performance at |
| (3) | The amounts shown in column (d) with respect to AIP represent the target opportunity if all of the performance metrics are met. The amounts shown in column (d) with respect to PBU4, PBU5, and PBU6 represent the amount of performance-based cash that the executive would notionally earn for |
| (4) | The amounts shown in column (e) with respect to AIP represent the maximum opportunity if all of the performance metrics are met. The maximum payout amounts are capped at 200% of the executives’ targeted payout amounts. Maximum payout is earned on performance equal to or exceeding |
| (5) | The amounts shown in column (f) represent the threshold number of performance-based stock units that the executive would notionally earn for |
| (6) | The amounts shown in column (g) represent the target number of performance-based stock units that the executive would notionally earn for |
| (7) | The amounts shown in column (h) represent the maximum number of performance-based stock units that the executive would notionally earn for |
|
|
|
The amounts in column (l) represent the grant date fair value as of the grant date of stock awards |
For more information about the compensation arrangements in which our named executive officers participate, see “Compensation Discussion and Analysis” beginning on page 9.
| 27 |
OUTSTANDING EQUITY AWARDS AT 20142015 FISCAL YEAR-END TABLE
The following table shows all outstanding equity awards (stock options, performance-based stock units that have not been earned, and unvested restricted stock units) held by our named executive officers at the end of 2014.2015.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Grant Date | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3)(4) | |||||||||||||||||||
Roy V. Armes | 106,220 | — | $ | 18.705 | March 9, 2010 | March 9, 2020 | — | — | — | — | ||||||||||||||||||
| 103,000 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | |||||||||||||||||||
| 143,334 | 71,666 | $ | 15.625 | February 23, 2012 | February 23, 2022 | — | — | — | — | |||||||||||||||||||
| 41,673 | 83,346 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | |||||||||||||||||||
| 151,053 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||
| 106,512 | $ | 3,690,641 | 58,424 | $ | 2,024,392 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 394,227 | 306,065 | |||||||||||||||||||||||||||
Ginger M. | 15,046 | $ | 521,344 | — | — | |||||||||||||||||||||||
Jones | ||||||||||||||||||||||||||||
Bradley E. | 22,600 | — | $ | 18.705 | March 9, 2010 | March 9, 2020 | — | — | — | — | ||||||||||||||||||
Hughes | 22,000 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | ||||||||||||||||||
| 24,000 | 12,000 | $ | 15.625 | February 23, 2012 | February 23, 2022 | — | — | — | — | |||||||||||||||||||
| 8,920 | 17,840 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | |||||||||||||||||||
| 32,475 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||
| 20,864 | $ | 722,938 | 10,882 | $ | 377,061 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 77,520 | 62,315 | |||||||||||||||||||||||||||
Brenda S. | 19,500 | — | $ | 18.705 | March 9, 2010 | March 9, 2020 | — | — | — | — | ||||||||||||||||||
Harmon | 18,000 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | ||||||||||||||||||
| 22,000 | 11,000 | $ | 15.625 | February 23, 2012 | February 23, 2022 | — | — | — | — | |||||||||||||||||||
| 5,851 | 11,702 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | |||||||||||||||||||
| 19,971 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||
| 19,315 | $ | 669,265 | 7,864 | $ | 272,488 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 65,351 | 42,673 | |||||||||||||||||||||||||||
Harold C. | — | $ | 18.705 | March 9, 2010 | March 9, 2020 | — | — | — | �� | — | ||||||||||||||||||
Miller | 13,000 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | ||||||||||||||||||
| — | 12,000 | $ | 15.625 | February 23, 2012 | February 23, 2022 | — | — | — | — | |||||||||||||||||||
| 6,358 | 12,716 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | |||||||||||||||||||
| 21,273 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||
| 19,571 | $ | 678,135 | 8,353 | $ | 289,731 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 19,358 | 45,989 | |||||||||||||||||||||||||||
Christopher E. | 22,000 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | ||||||||||||||||||
Ostrander | 24,000 | 12,000 | $ | 15.625 | February 23, 2012 | February 23, 2022 | — | — | — | — | ||||||||||||||||||
| 7,859 | 15,718 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | |||||||||||||||||||
| 24,879 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||
| 39,111 | $ | 1,355,196 | 9,587 | $ | 332,190 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 53,859 | 52,597 | |||||||||||||||||||||||||||
Stephen | 13,100 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | ||||||||||||||||||
Zamansky | 22,000 | 11,000 | $ | 15.625 | February 23, 2012 | February 23, 2022 | — | — | — | — | ||||||||||||||||||
| 6,156 | 12,312 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | |||||||||||||||||||
| 21,723 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||
| 25,823 | $ | 894,767 | 7,424 | $ | 257,242 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 41,256 | 45,035 | |||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Grant Date | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) |
Equity | |||||||||||||||||||||||
| Roy V. Armes | — | 41,673 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | ||||||||||||||||||||||
| — | 100,702 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | |||||||||||||||||||||||
| 174,317 | $ | 6,597,909 | 51,511 | $ | 1,949,691 | |||||||||||||||||||||||||||
| — | 142,375 | |||||||||||||||||||||||||||||||
| Ginger M. Jones | 27,784 | $ | 1,051,624 | 4,994 | $ | 189,023 | ||||||||||||||||||||||||||
| Brenda S. | 18,000 | — | $ | 22.970 | February 23, 2011 | February 23, 2021 | — | — | — | — | ||||||||||||||||||||||
| Harmon | 11,702 | 5,851 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | ||||||||||||||||||||||
| 6,657 | 13,314 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | |||||||||||||||||||||||
| 24,667 | $ | 933,646 | 6,424 | $ | 243,148 | |||||||||||||||||||||||||||
| 36,359 | 19,165 | |||||||||||||||||||||||||||||||
| Bradley E. | 17,840 | 8,920 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | ||||||||||||||||||||||
| Hughes | 10,825 | 21,650 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | ||||||||||||||||||||||
| 34,174 | $ | 1,293,498 | 10,061 | $ | 380,809 | |||||||||||||||||||||||||||
| 28,665 | 30,570 | |||||||||||||||||||||||||||||||
| Stephen | — | 6,156 | $ | 25.425 | February 21, 2013 | February 21, 2023 | — | — | — | — | ||||||||||||||||||||||
| Zamansky | 14,482 | $ | 23.960 | February 20, 2014 | February 20, 2024 | — | — | — | — | |||||||||||||||||||||||
| — | 24,246 | $ | 917,724 | 6,276 | $ | 237,547 | ||||||||||||||||||||||||||
| — | 20,638 | |||||||||||||||||||||||||||||||
| 28 |
| (1) | The stock options vest in one-third increments on each of the first three anniversaries of the grant date (which grant date was |
| (2) | Includes dividend equivalent units earned on outstanding restricted stock units. The amounts reported in this column will vest: for Mr. Armes, as to |
| (3) | Value is based on the closing price of our common stock of |
| (4) | Reflects the target payout opportunity for |
| 29 |
20142015 OPTION EXERCISES AND STOCK VESTED TABLE
The following table shows our named executive officers’ exercise of stock options, plus the value realized at exercise by each named executive officer, in addition toand restricted stock awards that vested, plus the value realized by each named executive officer as a result of such vesting, during 2014.2015.
| Option Awards | Stock Awards | |||||||||||
Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($)(1) (c) | ||||||||
Roy V. Armes | - | $ - | 65,998 | $2,427,076 | ||||||||
Ginger M. Jones | - | $ - | 0 | $0 | ||||||||
Bradley E. Hughes | - | $ - | 13,435 | $492,953 | ||||||||
Brenda S. Harmon | - | $ - | 11,348 | $416,946 | ||||||||
Harold C. Miller | 30,334 | $818,350 | 11,318 | $936,826 | ||||||||
Christopher E. Ostrander | - | $ - | 30,425 | $885,860 | ||||||||
Stephen Zamansky | - | $ - | 17,289 | $551,869 | ||||||||
| Option Awards | Stock Awards | |||||||||||||||
| Number of | Number of | |||||||||||||||
| Shares | Value | Shares | Value | |||||||||||||
| Acquired | Realized | Acquired | Realized | |||||||||||||
| on Exercise | on Exercise | on Vesting | on Vesting | |||||||||||||
| Name | (#) | ($) | (#) | ($)(1) | ||||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||||
| Roy V. Armes | 557,917 | $21,989,102 | 103,961 | $3,713,190 | ||||||||||||
| Ginger M. Jones | — | — | — | — | ||||||||||||
| Brenda S. Harmon | 52,500 | $2,008,650 | 18,912 | $672,972 | ||||||||||||
| Bradley E. Hughes | 80,600 | $3,044,928 | 20,940 | $748,109 | ||||||||||||
| Stephen Zamansky | 65,653 | $2,444,918 | 24,969 | $938,724 | ||||||||||||
| (1) | These amounts represent the market value of our common stock on the vesting date or distribution date multiplied by the number of shares that vested or were distributed. |
20142015 PENSION BENEFITS TABLE
This table shows the actuarial present value of accumulated benefits payable to, and the number of years of service credited to each of ourMr. Armes, who is the only named executive officers under our defined benefit plans, both qualified and non-qualified. Only Mr. Armes and Mr. Miller are eligible forofficer with a benefit under these plans.our now frozen defined benefit plan. Mr. Armes has a cash balance plan benefit under the Spectrum Retirement Plan, and a related supplementary benefit under the Non-Qualified Supplementary Benefit Plan.
Name (a) | Plan Name (b) | Number of Years Credited Service (c) | Present Value of Accumulated Benefit (d) | Payments During Last Fiscal Year (e) | Plan Name (b) | Number of (c) | Present Value of Accumulated (d) | Payments During Last Fiscal Year (e) | ||||||||||||||
Roy V. Armes | Spectrum Retirement Plan | 8 | $41,941 | $0 | Spectrum Retirement Plan | 9 | $43,828 | $0 | ||||||||||||||
Non-Qualified Supplementary Benefit Plan – DB Account | 8 | $160,291 | $0 | Non-Qualified Supplementary Benefit Plan – DB Account | 9 | $167,504 | $0 | |||||||||||||||
Harold C. Miller | Spectrum Retirement Plan | 12 | $126,277 | $0 | ||||||||||||||||||
Non-Qualified Supplementary Benefit Plan – DB Account | 12 | $58,785 | $0 | |||||||||||||||||||
For purposes of the amounts reflected above under column (d), we have used the same assumptions that we use for financial reporting purposes under generally accepted accounting principles, except that we have assumed that the retirement age for our named executive officers is their normal retirement age of 65. Mr. Armes has announced his intention to retire on August 31, 2016. His actual benefit under the qualified and non-qualified plans will be determined under the provisions of those plans as they apply to all participants. See Note 12 to our Consolidated Financial Statements for the twelve months ended December 31, 2014,2015, for details as to our valuation method and the material assumptions applied in quantifying the present value of the current accrued benefit. See also our discussion of pension and postretirement benefits under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” beginning on page 2831 of the Company’s Form 10-K.
Under the Spectrum Retirement Plan, which is a noncontributory defined benefit plan, we have a cash balance plan that was frozen as of June 30, 2009. This plan covers eligible non-union employees in the United States who were employed by Cooper Tire on or before June 30, 2009, other than those participants grandfathered in the defined benefit pension plan who had reached age 40 and had at least 15 years of service as of January 1, 2002. Mr. Armes and Mr. Miller are the only named executive officers who participated in the cash balance pension plan in 2014.
| 30 |
Upon retirement, a participant’s benefit under the cash balance plan will be paid in the form of an annuity, or in a lump sum, upon the election of the participant. A participant may receive the amount of his or her benefit in a lump sum payment upon termination of employment, subject to any Code Section 409A provisions. Payment of the benefit in an annuity form may not generally commence until the participant has reached age 55. The amount payable is not reduced by Social Security benefits payable to the participant.
Mr. Armes and Mr. Miller also participate in the Cooper Tire & Rubber Company Non-Qualified Supplementary Benefit Plan. As noted on pages 19 and 20, the non-qualified plan provides benefits solely due to the limits of the Internal Revenue Code.
20142015 NON-QUALIFIED DEFERRED COMPENSATION TABLE
This table shows certain information for 20142015 for each of our named executive officers under our non-qualified deferred compensation plans and programs. As noted above, Mr. Armes is the only named executive officer who has a benefit under the Non-Qualified Supplementary Plan that is related to the now frozen defined benefit (cash balance) plan.
Name | Executive Contributions ($)(1) | Company Contributions ($)(2) | Aggregate Earnings ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/14 ($)(4) | Executive Contributions ($)(1) | Company Contributions ($)(2) | Aggregate Earnings ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/15 ($)(4) | ||||||||||||||||||||
Roy V. Armes | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $151,075 | $6,352 | $0 | $1,015,804 | — | $202,413 | $13,343 | — | $1,001,030 | ||||||||||||||||||||
Deferred Restricted Stock Units | $0 | $0 | $966,851 | $0 | $3,057,586 | — | — | $319,430 | — | $3,377,015 | ||||||||||||||||||||
Ginger M. Jones | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $0 | $0 | $0 | $0 | — | $21,944 | — | — | $21,944 | ||||||||||||||||||||
Bradley E. Hughes | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $42,074 | $1,100 | $0 | $226,300 | |||||||||||||||||||||||||
Brenda S. Harmon | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $27,311 | 53,569 | $0 | $209,795 | — | $35,376 | $18,191 | — | $222,808 | ||||||||||||||||||||
Harold C. Miller | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $23,594 | $1,331 | $0 | $209,838 | |||||||||||||||||||||||||
Executive Deferred Compensation Plan | $0 | $0 | $44,939 | $0 | $918,973 | |||||||||||||||||||||||||
Deferred Restricted Stock Units | $0 | $0 | $38,056 | $0 | $120,201 | |||||||||||||||||||||||||
Christopher E. Ostrander | ||||||||||||||||||||||||||||||
| Bradley E. Hughes | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $22,380 | $613 | $0 | $140,570 | — | $60,914 | $2,505 | — | $199,449 | ||||||||||||||||||||
Stephen Zamansky | ||||||||||||||||||||||||||||||
Non-Qualified Supplementary Benefit Plan | $0 | $25,732 | $480 | $0 | $85,133 | — | $35,212 | $1,184 | — | $95,797 | ||||||||||||||||||||
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| (1) | The amounts reported as Executive Contributions are fully reported in the |
| (2) | The amounts reported as Company Contributions include amounts with respect to both base salary and annual incentive compensation earned by each named executive officer for |
| (3) | None of the amounts reported as Aggregate Earnings are reported in the |
| (4) | The Aggregate Balance at December 31, |
For more information about our non-qualified deferred compensation programs, see “Compensation Discussion and Analysis” beginning on page 9.10.
Non-Qualified Supplementary Benefit Plan
The Non-Qualified Supplementary Benefit Plan is a non-elective deferred compensation plan. The named executive officers participate in the Non-Qualified Supplementary Benefit Plan only to the extent that full participation in our qualified 401(k) plan (the Spectrum Investment Savings Plan) is restricted by limits under the Internal Revenue Code. Mr. Armes and Mr. Miller havehas an accrued benefit under the frozen cash balance plan.
Non-Qualified Deferred Compensation Plan
The Executive Deferred Compensation Plan is an elective deferred compensation plan which allows certain executive officers, including the named executive officers, to defer receipt of up to 80% of base salary and 100% of cash awards earned under annual and long-term incentive plans, subject to minimum $10,000 annual deferral for each element of compensation. The Company does not make matching or other employer contributions to the Executive Deferred Compensation Plan.
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Each year, participants in the Executive Deferred Compensation Plan have the opportunity to make an election with respect to the subsequent year, choosing the amounts they will defer for the subsequent year, the form of distribution for the deferred amounts, and the allocation among investment preferences which determine credited earnings or losses on the deferred amounts. The available investment preferences include the same investment opportunities provided in the Company’s qualified 401(k) plan as well as Cooper stock.
We credit deferred compensation in bookkeeping accounts established for the Executive Deferred Compensation Plan. Based on the participant’s election, deferred amounts are credited with earnings or debited with losses as if the deferred amounts were invested in our stock or the funds offered within the 401(k) plan. Distributions of deferred accounts, made in accordance with each participant’s election and generally made upon termination of employment, can be made in the form of a lump sum, up to 10 annual installments, or a combination of both. Participants may also change their distribution elections subject to distribution delays. This Plan is compliant with and administered in accordance with the rules and regulations of Section 409A of the Internal Revenue Code.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We are generally obligated to provide our named executive officers with certain payments or other forms of compensation upon a termination of employment or a change in control. The forms of such termination can involve voluntary termination, retirement, involuntary termination without cause, for cause termination, termination following a change in control, and the disability or death of the executive. The disclosure below describes the circumstances under which we may be obligated to provide our named executive officers with payments or compensation. Additionally, the tables below reflect the estimated amounts of payments or compensation each of our named executive officers may receive under particular circumstances in the event of termination of such named executive officer’s employment.
Payments to Mr. Armes
We are a party to an employment agreement with Mr. Armes. The initial term of employment for Mr. Armes was for three years beginning January 1, 2007, which term is automatically extended for one additional year commencing each January 1 after the commencement of the initial term until the year in which Mr. Armes’ 64th64th birthday occurs, unless either Mr. Armes or we give prior notice by September 30th that the term will not be extended. The employment agreement contains non-competition and non-solicitation provisions that extend for two years after any termination of employment. Certain compensation awards granted to Mr. Armes are also governed by the applicable compensation plans and award agreements. Below is a description of the payments or compensation Mr. Armes is entitled to pursuant to his employment agreement when his employment with us is terminated, including upon his announced retirement on August 31, 2016, or upon a change in control.
Payments Made Upon Retirement
If
Mr. Armes retires during the term ofhas announced his employment agreement,intention to retire effective August 31, 2016. Upon such retirement, he will be entitled to a single lump sum cash payment within 30 days following his termination date equal to his then current base salary, to the extent unpaid through his termination date, plus the prorated portion of our annual and long-term incentive compensation programs in which he participates. The prorated portion of the annual incentive and long-term incentive compensation will be calculated using thebased upon actual performance of the applicable metrics through the end of the most recent fiscal quarter.applicable measurement period(s) to be distributed in accordance with the terms of the plans. Additionally, all outstanding and vested stock options (or similar equity awards) will remain outstanding and exercisable in accordance with their terms. The vesting and distribution of restricted stock units will be in accordance with the terms of the grants. He will also receive any accrued and vested retirement benefits, including under the Company’s Non-Qualified Supplementary Benefit Plan to which he is entitled.Plan.
Payments Made Upon Death or Disability
In the event of Mr. Armes’ death or termination of employment due to disability, he or his beneficiaries or estate will be entitled to payment of a full target annual incentive, a prorated long-term performance based incentive compensation payout based on actual performance through the end of the most recent fiscal quarter, and 24 months’ continuation of life and accident benefits and health benefits followed by eligible COBRA benefits, as well as distribution of any unpaid vested restricted stock unit award.
Payments Made Upon Termination for Cause or Without Good Reason
Upon a termination for cause or without good reason, Mr. Armes is entitled to payment of any earned and unpaid base pay as of the date of termination and vested benefits in accordance with the terms of the applicable plans.
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Payments Made Upon Termination Without Cause or for Good Reason
Mr. Armes is entitled to certain separation benefits and payments upon an involuntary termination without cause or a voluntary termination due to good reason (as defined in the employment agreement). These payments and benefits include the following:
Prorated portion of long-term performance based incentive compensation based on actual performance through the end of the most recent fiscal quarter;
| · | Prorated portion of long-term performance based incentive compensation based on actual performance through the end of the most recent fiscal quarter; |
Lump sum payment of $75,000 plus two times the sum of his base pay and average annual incentive compensation earned over the prior three years;
| · | Lump sum payment of $75,000 plus two times the sum of his base pay and average annual incentive compensation earned over the prior three years; |
Accelerated vesting of all then unvested time-based restricted stock unit awards payable in accordance with the terms of the applicable plans;
| · | Accelerated vesting of all then unvested time-based restricted stock unit awards payable in accordance with the terms of the applicable plans; |
Stock option awards that are vested at the date of termination, subject to exercise for 90 days following termination; and
| · | Stock option awards that are vested at the date of termination, subject to exercise for 90 days following termination; and |
| · | 24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation. |
24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation.
Payments Made in Connection with a Termination Following a Change in Control
Mr. Armes is entitled to certain separation benefits and payments upon a termination without cause or a voluntary termination due to good reason within two years following a change in control. These payments and benefits upon termination include the following:
Prorated portion of long-term performance based incentive compensation based on actual performance through the end of the most recent fiscal quarter;
| · | Prorated portion of long-term performance based incentive compensation based on actual performance through the end of the most recent fiscal quarter; |
Lump sum payment of $75,000 plus two times the sum of his base pay and average annual incentive compensation earned over the prior three years;
| · | Lump sum payment of $75,000 plus two times the sum of his base pay and average annual incentive compensation earned over the prior three years; |
Accelerated vesting of all then unvested time-based restricted stock unit and stock option awards with payment made in accordance with the terms of the applicable plans (stock options will be subject to exercise for 90 days following termination) or the Company may pay the value in cash; however, if the successor company has not assumed the obligation at the date of the change in control, vesting will occur at the time of the change in control;
| · | Accelerated vesting of all then unvested time-based restricted stock unit and stock option awards with payment made in accordance with the terms of the applicable plans (stock options will be subject to exercise for 90 days following termination) or the Company may pay the value in cash; however, if the successor company has not assumed the obligation at the date of the change in control, vesting will occur at the time of the change in control; |
24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation; and
| · | 24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation; and |
| · | A tax gross-up for excise taxes, if the parachute payments exceed 110% of the “Section 280G safe harbor limit,” resulting from payments triggered as a result of a change in control. If the parachute payments do not exceed 110% of the “Section 280G safe harbor limit,” the payments are cut-back to the “Section 280G safe harbor limit” and there is no tax gross-up for excise taxes. |
A tax gross-up for excise taxes, if the parachute payments exceed 110% of the “Section 280G safe harbor limit,” resulting from payments triggered as a result of a change in control. If the parachute payments do not exceed 110% of the “Section 280G safe harbor limit,” the payments are cut-back to the “Section 280G safe harbor limit” and there is no tax gross-up for excise taxes.
All post-termination payments are conditioned upon the execution by Mr. Armes at the time of termination of a release of all claims against the Company.
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Payments to Other Named Executive Officers
Payments Made Upon Retirement, Death, or Disability
Upon (i) retirement by a named executive officer who is eligible to retire or (ii) death or disability, named executive officers receive the following:
Prorated incentive (annual and long-term) compensation through the date of termination based upon actual performance through the end of the applicable measurement period(s) to be distributed in accordance with the terms of the plans;
| · | Prorated incentive (annual and long-term) compensation through the date of termination based upon actual performance through the end of the applicable measurement period(s) to be distributed in accordance with the terms of the plans; |
Accrued and vested retirement benefits;
| · | Accrued and vested retirement benefits; |
Upon death or disability, stock options fully vest and are exercisable for twelve (12) months; upon retirement, stock options continue to vest in accordance with the terms of the plans and are exercisable for five years from the date of retirement; and
| · | Upon death or disability, stock options fully vest and are exercisable for twelve (12) months; upon retirement, stock options continue to vest in accordance with the terms of the plans and are exercisable for five years from the date of retirement; and |
| · | Unvested restricted stock unit awards vest upon retirement, death, or disability and are distributable in accordance with participant elections under the terms of the plan. |
Unvested restricted stock unit awards vest upon retirement, death, or disability and are distributable in accordance with participant elections under the terms of the plan.
Payments Made Upon Voluntary or Involuntary Termination Without Cause
Upon voluntary or involuntary termination without cause, named executive officers are entitled to payment of any earned and unpaid base pay as of the date of termination and vested benefits in accordance with the terms of the applicable plans.
Notionally earned performance units and cash under long-term compensation plans and annual incentive plans for completed performance periods vest in full upon certification by the Compensation Committee.
| · | Notionally earned performance units and cash under long-term compensation plans and annual incentive plans for completed performance periods vest in full upon certification by the Compensation Committee. |
| · | Vested stock options at the date of termination are exercisable for thirty (30) days for voluntary termination; ninety (90) days for involuntary termination without cause. |
Vested stock options at the date of termination are exercisable for thirty (30) days for voluntary termination; ninety (90) days for involuntary termination without cause.
Payments Made Upon Termination for Cause
Upon termination for cause, named executive officers are entitled to payment of any earned and unpaid base pay as of the date of termination and vested benefits in accordance with the terms of the applicable plans. All unpaid notionally earned annual and long-term compensation, stock options, and unvested restricted stock units are immediately forfeited.
Payments Made in Connection with a Change in Control
Following a change in control or a qualified pre-change in control termination such as when the Company is party to a definitive agreement the consummation of which would result in a change in control, named executive officers are entitled to receive the following payments and benefits:
Benefits upon closing of the change in control or a qualified termination under a potential change in control.
| · | Payment of notionally earned and unpaid annual and long-term incentive compensation; |
| · | Prorated target for annual or long-term incentive compensation that is not notionally earned; |
| · | If the time-based restricted stock units or stock option awards are not assumed by the successor upon the change in control, the restricted stock units and stock options vest upon the change in control. Stock options remain exercisable for 90 days following termination. Restricted stock units and stock options may be converted to cash if the acquiring company does not assume responsibility for the obligation; and |
Payment of notionally earned and unpaid annual and long-term incentive compensation;
| 35 |
Prorated target for annual or long-term incentive compensation that is not notionally earned;
| · | Upon a qualified termination under a potential change in control only, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment of restricted stock units in accordance with the participant elections under terms of the plan and stock options are exercisable for 90 days following termination. |
If the time-based restricted stock units or stock option awards are not assumed by the successor upon the change in control, the restricted stock units and stock options vest upon the change in control. Stock options remain exercisable for 90 days following termination. Restricted stock units and stock options may be converted to cash if the acquiring company does not assume responsibility for the obligation; and
Upon a qualified termination under a potential change in control only, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment of restricted stock units in accordance with the participant elections under terms of the plan and stock options are exercisable for 90 days following termination.
Additional benefits upon a termination without cause or a voluntary termination due to good reason within two years after a change in control.
Prorated annual incentive compensation from the date of the beginning of the performance period through the date of termination for awards or programs in which the executive participates at target levels;
| · | Prorated annual incentive compensation from the date of the beginning of the performance period through the date of termination for awards or programs in which the executive participates at target levels; |
If the time-based restricted stock units or stock option awards are assumed by the successor upon the change in control, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment in accordance with the terms of the applicable plans (stock options will be subject to exercise for 90 days following termination);
| · | If the time-based restricted stock units or stock option awards are assumed by the successor upon the change in control, accelerated vesting of all then unvested time-based restricted stock units and stock option awards with payment in accordance with the terms of the applicable plans (stock options will be subject to exercise for 90 days following termination); |
Two times the sum of the named executive officer’s base pay plus target annual incentive compensation at the greater of the amount at termination or immediately prior to the change in control;
| · | Two times the sum of the named executive officer’s base pay plus target annual incentive compensation at the greater of the amount at termination or immediately prior to the change in control; |
24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation;
| · | 24 months’ continuation of life, accident, and health benefits followed by retiree medical and life insurance coverage to the extent eligible, subject to mitigation; |
Outplacement services for 12 months, in an amount up to 15% of the named executive officer’s base salary; and
| · | Outplacement services for 12 months, in an amount up to 15% of the named executive officer’s base salary; and |
| · | If the parachute payments on an after-tax basis exceed 110% of the parachute payments that would have been received calculated without a reduction to the “Section 280G safe harbor limit,” the payments are not cut back to the “Section 280G safe harbor limit,” otherwise they are cut back. In any event, there is no tax gross-up for excise taxes. |
If the parachute payments on an after-tax basis exceed 110% of the parachute payments that would have been received calculated without a reduction to the “Section 280G safe harbor limit,” the payments are not cut back to the “Section 280G safe harbor limit,” otherwise they are cut back. In any event, there is no tax gross-up for excise taxes.
All post-termination payments are conditioned upon the execution by the executive at the time of termination of a release of all claims against the Company.
Tabular Disclosure
Except as otherwise indicated, the amounts shown in the tables below assume that a named executive officer was terminated and, as applicable, a change in control occurred as of December 31, 2014,2015, and that the price of our Common Stock equals $34.65,$37.85, which was the closing price of our Common Stock on December 31, 2014,2015, as reported on the New York Stock Exchange. Actual amounts that we may pay to any named executive officer upon termination of employment, however, can only be determined at the time of such named executive officer’s actual separation from Cooper Tire & Rubber Company.
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Roy V. Armes
The following table shows the potential payments upon termination under various circumstances for Roy V. Armes, Chairman, Chief Executive Officer, and President.
Benefits and Payments Upon Termination | Retirement on 12/31/14 (A) | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | Retirement on 12/31/15 (A) | Termination by Death on 12/31/15 | Termination by Disability on 12/31/15 | Termination Without Cause or for Good Reason on 12/31/15 | Termination for Cause or Without Good Reason on 12/31/15 | Termination Subsequent to a Change in Control on 12/31/15 | ||||||||||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||||||||||||||||||
Base Salary(1) | $ | - | $ | — | ||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | - | 1,292,897 | 1,292,897 | 1,292,897 | 1,292,897 | 1,292,897 | $ | 3,089,052 | 3,089,052 | 3,089,052 | 3,089,052 | 3,089,052 | 3,089,052 | ||||||||||||||||||||||||||||||||||
Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | $ | - | 4,952,492 | 4,952,492 | $ | 5,739,576 | 5,739,576 | |||||||||||||||||||||||||||||||||||||||||
Long-Term Incentive - Performance-Based Stock Units and Cash(4) | $ | - | 5,149,528 | 5,149,528 | 5,149,528 | 5,149,528 | $ | 9,009,688 | 9,009,688 | 9,009,688 | 9,009,688 | 9,009,688 | ||||||||||||||||||||||||||||||||||||
Stock Options(5) | $ | - | 9,879,094 | 9,879,094 | 9,879,094 | 9,879,094 | $ | 1,958,211 | 1,958,211 | 1,958,211 | 1,958,211 | 1,958,211 | ||||||||||||||||||||||||||||||||||||
Restricted Stock Units(6) | $ | - | 5,673,695 | 5,673,695 | 5,673,695 | 3,057,585 | 5,673,695 | $ | 6,590,821 | 6,590,821 | 6,590,821 | 6,590,821 | 3,377,053 | 6,590,821 | ||||||||||||||||||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plan and Non-Qualified Supplementary Benefit Plan(7) | $ | - | 1,176,095 | 1,176,095 | 1,176,095 | 1,176,095 | 1,176,095 | $ | 1,168,534 | 1,168,534 | 1,168,534 | 1,168,534 | 1,168,534 | 1,168,534 | ||||||||||||||||||||||||||||||||||
Executive Deferred Compensation | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 33,742 | 33,742 | 33,742 | 33,742 | ||||||||||||||||||||||||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Excise Tax Gross-Up(11) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(12) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
| Executive Deferred Compensation Plan | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Life, Accident, and Health Insurance(8) | $ | — | 34,397 | 34,397 | 34,397 | 34,397 | ||||||||||||||||||||||||||||||||||||||||||
| Retiree Medical and Life Insurance(9) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Excise Tax Gross-Up(10) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Outplacement Services(11) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | - | 23,205,051 | 23,205,051 | 28,157,543 | 5,526,577 | 28,157,543 | $ | 21,816,306 | 21,850,703 | 21,850,703 | 27,590,279 | 7,634,639 | 27,590,279 | ||||||||||||||||||||||||||||||||||
(A) Not eligible for retirement at 12/31/14.
| (A) | Eligible for retirement at 12/31/15. Mr. Armes intends to retire 8/31/16. |
Ginger M. Jones
The following table shows the potential payments upon termination under various circumstances for Ginger M. Jones, Vice President and Chief Financial Officer.
Benefits and Payments Upon Termination | Retirement on 12/31/14 (A) | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | ||||||||||||||||||
Compensation: | ||||||||||||||||||||||||
Base Salary(1) | $ | - | ||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | - | 25,990 | 25,990 | 25,990 | 25,990 | 25,990 | |||||||||||||||||
Cash Severance-Base Salary and | $ | - | 1,187,509 | |||||||||||||||||||||
Long-Term Incentive-Performance- | $ | - | ||||||||||||||||||||||
Stock Options(5) | $ | - | ||||||||||||||||||||||
Restricted Stock Units(6) | $ | - | 521,344 | 521,344 | 521,344 | |||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||
Pension Plan and Non-Qualified | $ | - | ||||||||||||||||||||||
Executive Deferred Compensation | $ | - | ||||||||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 33,970 | |||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | ||||||||||||||||||||||
Excise Tax Gross-Up(11) | $ | - | ||||||||||||||||||||||
Outplacement Services(12) | $ | - | 70,500 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | - | 547,334 | 547,334 | 25,990 | 25,990 | 1,839,313 | |||||||||||||||||
(A) Not eligible for retirement at 12/31/14.
(B) Not eligible to participate in Pension Plan.
Bradley E. Hughes
The following table shows the potential payments upon termination under various circumstances for Bradley E. Hughes, Senior Vice President and Chief Operating Officer.
| Benefits and Payments Upon Termination | Retirement on 12/31/15 (A) | Termination by Death on 12/31/15 | Termination by Disability on 12/31/15 | Termination Without Cause or for Good Reason on 12/31/15 | Termination for Cause or Without Good Reason on 12/31/15 | Termination Subsequent to a Change in Control on 12/31/15 | ||||||||||||||||||
| Compensation: | ||||||||||||||||||||||||
| Base Salary(1) | $ | — | ||||||||||||||||||||||
| Annual Incentive Compensation(2) | $ | — | 705,000 | 705,000 | 705,000 | 705,000 | 705,000 | |||||||||||||||||
| Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | $ | — | 1,085,837 | |||||||||||||||||||||
| Long-Term Incentive - Performance-Based Stock Units and Cash(4) | $ | — | 371,801 | 371,801 | 371,801 | |||||||||||||||||||
| Stock Options(5) | $ | — | ||||||||||||||||||||||
| Restricted Stock Units(6) | $ | — | 862,602 | 862,602 | 862,602 | |||||||||||||||||||
| Benefits and Perquisites: | ||||||||||||||||||||||||
| Pension Plan and Non-Qualified Supplementary Benefit Plan(7)(B) | $ | — | 21,944 | 21,944 | 21,944 | 21,944 | 21,944 | |||||||||||||||||
| Executive Deferred Compensation Plan | $ | — | ||||||||||||||||||||||
| Life, Accident, and Health Insurance(8) | $ | — | 34,971 | |||||||||||||||||||||
| Retiree Medical and Life Insurance(9) | $ | — | ||||||||||||||||||||||
| Excise Tax Gross-Up(10) | $ | — | ||||||||||||||||||||||
| Outplacement Services(11) | $ | — | 70,500 | |||||||||||||||||||||
| Total | $ | — | 1,961,347 | 1,961,347 | 726,944 | 726,944 | 3,152,655 | |||||||||||||||||
Benefits and Payments Upon Termination | Retirement on 12/31/14 (A) | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | ||||||||||||||||||
Compensation: | ||||||||||||||||||||||||
Base Salary(1) | $ | - | ||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | - | 346,491 | 346,491 | 346,491 | 346,491 | 346,491 | |||||||||||||||||
Cash Severance-Base Salary and | $ | - | 1,785,000 | |||||||||||||||||||||
Long-Term Incentive-Performance- | $ | - | 1,010,865 | 1,010,865 | 666,566 | 1,010,865 | ||||||||||||||||||
Stock Options(5) | $ | - | 1,922,816 | 1,922,816 | 1,922,816 | 1,922,816 | ||||||||||||||||||
Restricted Stock Units(6) | $ | - | 523,250 | 523,250 | 523,250 | |||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||
Pension Plan and Non-Qualified | $ | - | 226,300 | 226,300 | 226,300 | 226,300 | 226,300 | |||||||||||||||||
Executive Deferred Compensation | $ | - | ||||||||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 34,147 | |||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | ||||||||||||||||||||||
Excise Tax Gross-Up(11) | $ | - | ||||||||||||||||||||||
Outplacement Services(12) | $ | - | 76,500 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | - | 4,029,722 | 4,029,722 | 3,162,173 | 572,791 | 5,925,368 | |||||||||||||||||
| (A) | Not eligible for retirement at 12/31/15. |
(A) Not eligible for retirement at 12/31/14.
(B) Not eligible to participate in Pension Plan.
| (B) | Not eligible to participate in Pension Plan. |
Brenda S. Harmon
The following table shows the potential payments upon termination under various circumstances for Brenda S. Harmon, Senior Vice President and Chief Human Resources Officer.
Benefits and Payments Upon Termination | Retirement on 12/31/14 (A) | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | Retirement on 12/31/15 (A) | Termination by Death on 12/31/15 | Termination by Disability on 12/31/15 | Termination Without Cause or for Good Reason on 12/31/15 | Termination for Cause or Without Good Reason on 12/31/15 | Termination Subsequent to a Change in Control on 12/31/15 | ||||||||||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||||||||||||||||||
Base Salary(1) | $ | - | $ | — | ||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | - | 223,701 | 223,701 | 223,701 | 223,701 | 223,701 | $ | 538,015 | 538,015 | 538,015 | 538,015 | 538,015 | 538,015 | ||||||||||||||||||||||||||||||||||
Cash Severance-Base Salary and | $ | - | 1,296,000 | |||||||||||||||||||||||||||||||||||||||||||||
Long-Term Incentive-Performance- | $ | - | 817,211 | 817,211 | 565,254 | 817,211 | ||||||||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | $ | — | 1,376,760 | |||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Incentive - Performance-Based Stock Units and Cash(4) | $ | 1,187,957 | 1,187,957 | 1,187,957 | 1,187,957 | 1,187,957 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options(5) | $ | - | 1,541,797 | 1,541,797 | 1,541,797 | 1,541,797 | $ | 780,886 | 780,886 | 780,886 | 780,886 | 780,886 | ||||||||||||||||||||||||||||||||||||
Restricted Stock Units(6) | $ | - | 523,250 | 523,250 | 523,250 | $ | 500,756 | 500,756 | 500,756 | 500,756 | ||||||||||||||||||||||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plan and Non-Qualified | $ | - | 209,795 | 209,795 | 209,795 | 209,795 | 209,795 | $ | 222,808 | 222,808 | 222,808 | 222,808 | 222,808 | 222,808 | ||||||||||||||||||||||||||||||||||
Executive Deferred Compensation | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 26,646 | |||||||||||||||||||||||||||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Excise Tax Gross-Up(11) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(12) | $ | - | 60,750 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
| Executive Deferred Compensation Plan | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Life, Accident, and Health Insurance(8) | $ | — | 27,445 | |||||||||||||||||||||||||||||||||||||||||||||
| Retiree Medical and Life Insurance(9) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Excise Tax Gross-Up(10) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Outplacement Services(11) | $ | — | 62,580 | |||||||||||||||||||||||||||||||||||||||||||||
Total | $ | - | 3,315,754 | 3,315,754 | 2,540,547 | 433,496 | 4,699,149 | $ | 2,320,422 | 3,230,422 | 3,230,422 | 2,729,666 | 760,823 | 4,697,207 | ||||||||||||||||||||||||||||||||||
(A) Not eligible for retirement at 12/31/14.
| (A) | Eligible for retirement at 12/31/15. |
(B) Not eligible to participate in Pension Plan.
| (B) | Not eligible to participate in Pension Plan. |
Harold C. MillerBradley E. Hughes
The following table shows the potential payments upon termination under various circumstances for Harold C. Miller, Vice President and President International Tire Operations.
Benefits and Payments Upon Termination | Retirement on 12/31/14 | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | ||||||||||||||||||
Compensation: | ||||||||||||||||||||||||
Base Salary(1) | $ | - | ||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | 245,928 | 245,928 | 245,928 | 245,928 | 245,928 | 245,928 | |||||||||||||||||
Cash Severance-Base Salary and | $ | - | 1,378,530 | |||||||||||||||||||||
Long-Term Incentive-Performance- | $ | 832,466 | 832,466 | 832,466 | 565,254 | 832,466 | ||||||||||||||||||
Stock Options(5) | $ | 802,520 | 802,520 | 802,520 | 802,520 | 802,520 | ||||||||||||||||||
Restricted Stock Units(6) | $ | 643,451 | 643,451 | 643,451 | 120,201 | 120,201 | 643,451 | |||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||
Pension Plan and Non-Qualified | $ | 268,623 | 268,623 | 268,623 | 268,623 | 268,623 | 268,623 | |||||||||||||||||
Executive Deferred Compensation | $ | 918,973 | 918,973 | 918,973 | 918,973 | 918,973 | 918,973 | |||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 25,724 | |||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | 54,716 | |||||||||||||||||||||
Excise Tax Gross-Up(11) | $ | - | ||||||||||||||||||||||
Outplacement Services(12) | $ | - | 60,818 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 3,711,961 | 3,711,961 | 3,711,961 | 2,921,499 | 1,553,725 | 5,231,749 | |||||||||||||||||
ChristopherBradley E. Ostrander
The following table shows the potential payments upon termination under various circumstances for Christopher E. Ostrander,Hughes, Senior Vice President and President Americas Operations.Chief Operating Officer.
Benefits and Payments Upon Termination | Retirement on 12/31/14 (A) | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | Retirement on 12/31/15 (A) | Termination by Death on 12/31/15 | Termination by Disability on 12/31/15 | Termination Without Cause or for Good Reason on 12/31/15 | Termination for Cause or Without Good Reason on 12/31/15 | Termination Subsequent to a Change in Control on 12/31/15 | ||||||||||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||||||||||||||||||
Base Salary(1) | $ | - | $ | — | ||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | - | 370,521 | 370,521 | 370,521 | 370,521 | 370,521 | $ | — | 1,008,592 | 1,008,592 | 1,008,592 | 1,008,592 | 1,008,592 | ||||||||||||||||||||||||||||||||||
Cash Severance-Base Salary and | $ | - | 1,592,500 | |||||||||||||||||||||||||||||||||||||||||||||
Long-Term Incentive-Performance- | $ | - | 887,012 | 887,012 | 583,649 | 887,012 | ||||||||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | $ | — | 2,147,000 | |||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Incentive - Performance-Based Stock Units and Cash(4) | $ | — | 1,709,046 | 1,709,046 | 571,825 | 1,709,046 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options(5) | $ | - | 1,448,711 | 1,448,711 | 1,448,711 | 1,448,711 | $ | — | 810,331 | 810,331 | 810,331 | 810,331 | ||||||||||||||||||||||||||||||||||||
Restricted Stock Units(6) | $ | - | 1,179,243 | 1,179,243 | 1,179,243 | $ | — | 644,510 | 644,510 | 644,510 | ||||||||||||||||||||||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plan and Non-Qualified | $ | - | 140,570 | 140,570 | 140,570 | 140,570 | 140,570 | $ | — | 199,449 | 199,449 | 199,449 | 199,449 | 199,449 | ||||||||||||||||||||||||||||||||||
Executive Deferred Compensation | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 33,230 | |||||||||||||||||||||||||||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Excise Tax Gross-Up(11) | ||||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(12) | $ | - | 68,250 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
| Executive Deferred Compensation Plan | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Life, Accident, and Health Insurance(8) | $ | — | 35,393 | |||||||||||||||||||||||||||||||||||||||||||||
| Retiree Medical and Life Insurance(9) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Excise Tax Gross-Up(10) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Outplacement Services(11) | $ | — | 84,750 | |||||||||||||||||||||||||||||||||||||||||||||
Total | $ | - | 4,026,057 | 4,026,057 | 2,543,451 | 511,091 | 5,720,037 | $ | — | 4,371,928 | 4,371,928 | 2,590,197 | 1,208,041 | 6,639,071 | ||||||||||||||||||||||||||||||||||
(A) Not eligible for retirement at 12/31/14.15.
(B) Not eligible to participate in Pension Plan.
Stephen Zamansky
The following table shows the potential payments upon termination under various circumstances for Stephen Zamansky, Senior Vice President, General Counsel and Secretary.
Benefits and Payments Upon Termination | Retirement on 12/31/14 (A) | Termination by Death on 12/31/14 | Termination by Disability on 12/31/14 | Termination Without Cause or for Good Reason on 12/31/14 | Termination for Cause or Without Good Reason on 12/31/14 | Termination Subsequent to a Change in Control on 12/31/14 | Retirement on 12/31/15 (A) | Termination by Death on 12/31/15 | Termination by Disability on 12/31/15 | Termination Without Cause or for Good Reason on 12/31/15 | Termination for Cause or Without Good Reason on 12/31/15 | Termination Subsequent to a Change in Control on 12/31/15 | ||||||||||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||||||||||||||||||
Base Salary(1) | $ | - | $ | — | ||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Compensation(2) | $ | - | 219,128 | 219,128 | 219,128 | 219,128 | 219,128 | $ | — | 541,790 | 541,790 | 541,790 | 541,790 | 541,790 | ||||||||||||||||||||||||||||||||||
Cash Severance-Base Salary and | $ | - | 1,296,000 | |||||||||||||||||||||||||||||||||||||||||||||
Long-Term Incentive-Performance- | $ | - | 767,404 | 767,404 | 529,867 | 767,404 | ||||||||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary and Average Annual Incentive Compensation Multiple(3) | $ | — | 1,389,690 | |||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Incentive - Performance-Based Stock Units and Cash(4) | $ | — | 1,135,706 | 1,135,706 | 408,786 | 1,135,706 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options(5) | $ | - | 930,382 | 930,382 | 930,382 | 930,382 | $ | — | 283,799 | 283,799 | 283,799 | 283,799 | ||||||||||||||||||||||||||||||||||||
Restricted Stock Units(6) | $ | - | 757,103 | 757,103 | 757,103 | $ | — | 500,756 | 500,756 | 500,756 | ||||||||||||||||||||||||||||||||||||||
Benefits and Perquisites: | ||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plan and Non-Qualified | $ | - | 85,133 | 85,133 | 85,133 | 85,133 | 85,133 | $ | — | 95,797 | 95,797 | 95,797 | 95,797 | 95,797 | ||||||||||||||||||||||||||||||||||
Executive Deferred Compensation | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Life, Accident, and Health Insurance(9) | $ | - | 22,421 | |||||||||||||||||||||||||||||||||||||||||||||
Retiree Medical and Life Insurance(10) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Excise Tax Gross-Up(11) | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services(12) | $ | - | 60,750 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
| Executive Deferred Compensation Plan | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Life, Accident, and Health Insurance(8) | $ | — | 23,642 | |||||||||||||||||||||||||||||||||||||||||||||
| Retiree Medical and Life Insurance(9) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Excise Tax Gross-Up(10) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Outplacement Services(11) | $ | — | 63,180 | |||||||||||||||||||||||||||||||||||||||||||||
Total | $ | - | 2,759,150 | 2,759,150 | 1,764,510 | 304,261 | 4,138,321 | $ | — | 2,557,848 | 2,557,848 | 1,330,172 | 637,587 | 4,034,630 | ||||||||||||||||||||||||||||||||||
(A) Not eligible for retirement at 12/31/14.15.
(B) Not eligible to participate in Pension Plan.
| 41 |
Footnotes for Tabular Disclosure
| (1) | As of December 31, |
| (2) | Amounts shown are actual amounts payable in early |
| (3) | Termination within two years after a change in control: $75,000 lump sum payment in addition to two (2) times the sum of base salary as of the end of |
| (4) | Amounts shown are based on the performance-based stock units and performance-based cash earned as of December 31, |
| (5) | Total in-the-money/intrinsic dollar value of vested and non-vested stock options for change in control. Total in-the-money/intrinsic dollar value of vested and non-vested stock options for retirement, disability, or death with specific periods for exercise. |
| (6) | Total dollar value of vested and non-vested restricted stock units for termination without cause or for good reason (Mr. Armes only), retirement, disability, death, and change in control. Total dollar value of only vested restricted stock units for termination with cause or without good reason. When restricted units become vested, the grantee shall receive shares of common stock equal to the number of restricted units granted in addition to dividend equivalents earned. The common stock is to be delivered on the date specified by the grantee in their restricted stock award agreement. |
| (7) | All vested Non-Qualified Supplementary Benefit Plan retirement plus investment savings benefits are payable to all participants upon termination. |
| (8) |
|
|
(9) | Present value of Company-paid lifetime medical and life insurance valued to age 85. This benefit is only for employees hired before January 1, 2003, who are eligible to retire. |
(10) | Under the terms of the employment agreement with Mr. Armes, this reflects the estimated gross-up payment for excise taxes imposed by |
(11) | The amount shown reflects the total amount payable for outplacement assistance for Ms. Harmon, Ms. Jones, and Messrs. Hughes |
20142015 DIRECTOR COMPENSATION TABLE
Name (a) | Fees Earned or Paid in Cash ($)(1) (b) | Stock Awards ($)(2) (c) | Option Awards ($)(3) (d) | Total ($) (h) | Fees Earned or | Stock | Option | Total | ||||||||
Thomas P. Capo | $90,000 | $125,000 | — | $215,000 | $120,000 | $125,000 | — | $245,000 | ||||||||
Steven M. Chapman | $85,000 | $125,000 | — | $210,000 | $100,000 | $125,000 | — | $220,000 | ||||||||
| Susan F. Davis | $0 | $0 | — | $0 | ||||||||||||
John J. Holland | $92,500 | $125,000 | — | $217,500 | $105,000 | $125,000 | — | $230,000 | ||||||||
John F. Meier | $100,000 | $125,000 | — | $225,000 | $115,000 | $125,000 | — | $240,000 | ||||||||
| Gary S. Michel | $0 | $0 | — | $0 | ||||||||||||
John H. Shuey | $101,250 | $125,000 | — | $226,250 | $115,000 | $125,000 | — | $240,000 | ||||||||
Richard L. Wambold | $92,500 | $125,000 | — | $217,500 | $75,000 | $125,000 | — | $200,000 | ||||||||
Robert D. Welding | $88,000 | $125,000 | — | $213,000 | $112,000 | $125,000 | — | $237,000 | ||||||||
| (1) | The amounts listed under “Fees Earned or Paid in Cash” represent the compensation amounts discussed in the narration below. The Non-Employee Directors deferred the following amounts of fees reported in column (b) initially into phantom stock units under our Directors’ deferral plan, as described below: Mr. Capo, $0; Mr. Chapman, |
| (2) | These amounts are the aggregate grant date fair value in accordance with FASB ASC 718. See Note |
| (3) | The Non-Employee Directors had option awards outstanding as of December 31, |
Our Board of Directors makes compensation decisions for our Non-Employee Directors upon the recommendation of the Nominating and Governance Committee. Except as noted in the footnotes above, our Non-Employee Directors received the following compensation on an annual basis for the period January 1, 20142015 through June 30, 2014:December 31, 2015
Each Non-Employee Director received an annual retainer of $80,000. There were no fees for attendance at meetings of the Board of Directors and meetings of the Committees of the Board of Directors;
| · | Each Non-Employee Director received an annual retainer of $100,000. There were no fees for attendance at meetings of the Board of Directors and meetings of the Committees of the Board of Directors; |
The Lead Director received an annual fee of $15,000 for serving in that capacity;
| · | The Lead Director received an annual fee of $20,000for serving in that capacity; |
The Chair of the Audit Committee received an annual fee of $15,000 for serving in that capacity; and
| · | The Chair of the Audit Committee received an annual fee of $20,000for serving in that capacity; |
| · | The Chair of the Compensation Committee received an annual fee of $15,000 for serving in that capacity; and |
The Chair of the Compensation Committee and Nominating and Governance Committee each received an annual fee of $10,000 for serving in those capacities.
| · | The Chair of the Nominating and Governance Committee received an annual fee of $12,000 for serving in that capacity. |
Additionally, each Non-Employee Director received an annual grant of phantom stock units in an amount equal to $125,000 (increased from the grant in 2013 of $100,000) divided by the average of the highest and the lowest quoted selling price of a share of the Company’s common stock, as reported on the New York Stock Exchange Composite Tape, on the grant date for that particular year.
Effective July 1, 2014, the Company altered the Non-Employee Director compensation program as follows (paid pro rata for 2014):
Each Non-Employee Director received an annual retainer of $100,000. There were no fees for attendance at meetings of the Board of Directors and meetings of the Committees of the Board of Directors;
The Lead Director received an annual fee of $20,000 for serving in that capacity;
The Chair of the Audit Committee received an annual fee of $20,000 for serving in that capacity;
The Chair of the Compensation Committee received an annual fee of $15,000 for serving in that capacity; and
The Chair of the Nominating and Governance Committee received an annual fee of $12,000 for serving in that capacity.
Also, effective May 9, 2014, the Company changed the Share Ownership Guidelines for Non-Employee Directors from unit-based to monetary-based. All Directors are required to own at least $500,000 of our common stock, excluding options, and have five years from the date they join the Board to meet this requirement. As of the date of this proxy statement, each of our Directors, except Gary Michel, who joined the Board in October 2015, and Susan Davis, who joined the Board in February 2016, has met this requirement.
Our Non-Employee Directors also participate in our Amended and Restated 1998 Non-Employee Directors Compensation Deferral Plan, which we refer to as the Directors’ deferral plan. The Directors’ deferral plan permits our Non-Employee Directors to defer some or all of the fees payable to them for service on the Board of Directors. The amounts that our Non-Employee Directors defer, and dividend equivalents on those amounts, are converted to phantom stock units and credited to a bookkeeping account established for this purpose, or are invested in various alternative investment funds available from time to time. Deferred amounts may be transferred from phantom stock units into the alternative investment funds, but not back into phantom stock units. The amount of alternative investment funds will be equal to (1) the amount of phantom stock units to be transferred multiplied by (2) the average of the highest and the lowest quoted selling price of a share of our common stock, as reported on the New York Stock Exchange Composite Tape, on the date the phantom stock units were transferred (or, if there were no sales on the date the phantom stock units were transferred, the next preceding date during which a sale of our common stock occurred).
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Corporate Governance
The Board has determined that the existing leadership structure, with Mr. Armes serving as Chairman of the Board and Chief Executive Officer, and an independent Board member serving as Lead Director, is currently the most efficient and effective structure for the Company.Company through Mr. Armes’ retirement, effective on August 31, 2016. Mr. Capo currently serves as Lead Director. The Board believes that having the Chief Executive OfficerMr. Armes serve as Chairman of the Board and having an independent director serve as Lead Director strikes an effective balance between management and independent director participation in the Board process.
For example, our leadership structure currently provides for our Chief Executive OfficerMr. Armes to serve as our Chairman of the Board because, among other things, he possesses an intimate working knowledge and understanding of our day-to-day business, plans, strategies, and initiatives. Because of this knowledge and understanding, he is in an excellent position to identify strategic opportunities and priorities and to lead the discussion between management and the Board for execution of our strategies and achievement of our objectives.
At the same time, having a Lead Director, when the Chairman of the Board is not an independent director, who has a strong working relationship with our independent directors ensures communication between these directors, which are all of the directors other than Mr. Armes, and the management of the Company. Our Lead Director is elected annually by a majority of the independent directors of the Board to serve until his or her successor is elected or until such earlier time as he or she ceases to be a director, resigns as Lead Director or is replaced as Lead Director by a majority of the independent directors. The specific duties and responsibilities of our Lead Director are described in our Lead Director Responsibilities and Qualifications. Among other things, our Lead Director:
Presides at meetings of the Board in the absence of, or upon the request of, the Chairman of the Board, including all executive sessions of the independent directors;
| · | Presides at meetings of the Board in the absence of, or upon the request of, the Chairman of the Board, including all executive sessions of the independent directors; |
Serves as principle liaison to facilitate communications between other members of the Board and the Chairman of the Board and Chief Executive Officer, without inhibiting direct communications between the Chairman of the Board and other directors;
| · | Serves as principle liaison to facilitate communications between other members of the Board and the Chairman of the Board and Chief Executive Officer, without inhibiting direct communications between the Chairman of the Board and other directors; |
Consults with the Chairman of the Board in the preparation of the Board meeting agendas and in determining the need for special meetings of the Board;
| · | Consults with the Chairman of the Board in the preparation of the Board meeting agendas and in determining the need for special meetings of the Board; |
Advises and consults with the Chairman of the Board and Chief Executive Officer on matters related to corporate governance and Board performance; and
| · | Advises and consults with the Chairman of the Board and Chief Executive Officer on matters related to corporate governance and Board performance; and |
| · | Serves as a liaison to stockholders who request direct communications with the Board. |
Serves as a liaison to stockholders who request direct communications with the Board.
The independent directors of the Board elected Mr. Capo to serve as Lead Director of the Board.
Although the Board believes that the existing leadership structure is currently in the best interests of the Company, the Board recognizes that no single leadership structure may be appropriate in all circumstances. Accordingly, the Board considers this issue as part of the succession planning process and considers it each time it elects the Chief Executive Officer. The Company’s governance guidelines provide the Board with the flexibility to separate the positions of Chairman of the Board and Chief Executive Officer, if in the future, the Board determines that such a leadership structure would be a more efficient and effective structure for our Board, our business, our employees, and our stockholders. In anticipation of Mr. Armes’ retirement and the naming of Bradley E. Hughes as the next Chief Executive Officer, the Board has determined to change the leadership structure by separating the role of the Chairman of the Board and Chief Executive Officer. The Board expects to elect Thomas P. Capo, an independent director, to serve as Non-Executive Chairman of the Board upon Mr. Armes’ retirement.
The Board evaluates risk both collectively and as a function of its respective committees, including general oversight of (i) the financial exposure of the Company, (ii) risk exposure as related to overall Company portfolio and impact on earnings, (iii) oversight for information technology security and risk, and (iv) all systems, processes, and
organizational structure and people responsible for finance and risk functions. The Board administers its risk oversight function as a component of its duties, but not in any capacity that has a specific effect on its leadership structure.
Code of Business Conduct and Ethics
Our Board has adopted a written Code of Business Conduct and Ethics for our Directors, officers (including our principal executive officer, principal financial officer, and principal accounting officer) and employees. We have and intend to continue to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding certain amendments to or waivers from our Code of Business Conduct and Ethics by filing Current Reports on Form 8-K with the Securities and Exchange Commission, and will make any amended Code of Business Conduct and Ethics available at the Investor Relations/Governance link on our website athttp://www.coopertire.com.
Hedging and Pledging Transactions
In order to align the interests of the Company’s officers and Directors with those of its stockholders and to address a potential appearance of improper or inappropriate conduct, the Board of Directors has adopted a policy with respect to hedging and pledging of Common Stock or other equity securities of the Company (“Company Securities”). This anti-hedging policy prohibits Company officers and Directors, including certain family members of such persons, from hedging Company Securities, including short-selling, options, puts, calls, collars and exchange funds, as well as derivatives such as swaps, forwards and futures, or pledging or otherwise encumbering Company Securities as collateral for indebtedness. Persons subject to this policy will be afforded a reasonable opportunity to unwind or otherwise terminate any prohibited hedging transactions or arrangements existing as of the time such person becomes subject to the policy.
Board of Directors
During 2014,2015, our Board of Directors held seventeenfive Board meetings, sixfour meetings of our Audit Committee, eightfive meetings of our Compensation Committee, and three meetings of our Nominating and Governance Committee. Each Director attended more than 75% of the aggregate number of meetings of the Board of Directors and meetings of Committees on which such Director served during the past fiscal year.year during their tenure on the Board.
Determination of Independence of Directors
The NYSE’s Corporate Governance Listing Standards require that all listed companies have a majority of independent directors. For a director to be “independent” under the NYSE listing standards, the board of directors of a listed company must affirmatively determine that the director has no material relationship with the Company, or its subsidiaries or affiliates, either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company or its subsidiaries or affiliates. The Board has adopted the NYSE listing standards as its categorical standards for making director independence determinations.
In making independence determinations, the Board has broadly considered all relevant facts and circumstances from the standpoint of both the Director and others. The Board has considered that we, our employees or our affiliates may have engaged in transactions or relationships with companies with which our Directors are associated. These transactions or relationships include purchasing products from companies for which our Directors are employees of or are on the board of directors. After these considerations, and in accordance with the NYSE listing standards, the Board has affirmatively determined that each Director serving during 2014,2015, other than Mr. Armes, has no material relationship with us (either directly or as a partner, stockholder, or officer of an organization that has a relationship with us).
Additionally, the Board has determined that each Director other than Mr. Armes is “independent” under the NYSE listing standards, which provide that a Director is not independent if:
The Director is, or has been within the last three years, one of our employees, or an immediate family member is, or has been within the last three years, one of our executive officers;
| · | The Director is, or has been within the last three years, one of our employees, or an immediate family member is, or has been within the last three years, one of our executive officers; |
The Director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from us, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
| · | The Director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from us, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
(1) The Director is a current partner or employee of a firm that is our internal or external auditor; (2) the Director has an immediate family member who is a current partner of such a firm; (3) the Director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (4) the Director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on our audit within that time;
| · | (1) The Director is a current partner or employee of a firm that is our internal or external auditor; (2) the Director has an immediate family member who is a current partner of such a firm; (3) the Director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (4) the Director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on our audit within that time; |
The Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; or
| · | The Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; or |
| · | The Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, us for property or services in an amount which, in any of the last three fiscal years exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. |
The Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, us for property or services in an amount which, in any of the last three fiscal years exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.
Audit Committee
We have a separately designated standing Audit Committee, which was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee currently consists of Directors ShueyHolland (Chairman), Capo, Chapman, and Holland.Shuey. All members have been determined to be financially literate and to be “independent” under the NYSE’s Corporate Governance Listing Standards and the Exchange Act. The Board has determined that Directors Shuey,Holland, Capo, and HollandShuey each qualifies as an “audit committee financial expert” due to his business experience and educational background described on pages 4 to 67 of this proxy statement. The Audit Committee:
Assists the Board of Directors in fulfilling its oversight responsibilities with respect to the integrity of our financial statements and compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and performance of the independent registered public accounting firm and our internal audit function; and
| · | Assists the Board of Directors in fulfilling its oversight responsibilities with respect to the integrity of our financial statements and compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and performance of the independent registered public accounting firm and our internal audit function; and |
| · | Prepares the Audit Committee’s report included in this proxy statement. |
Prepares the Audit Committee’s report included in this proxy statement.
The functions of the Audit Committee are set forth in an Audit Committee Charter, which was adopted by the Board on February 4, 2004 and amended and restated on May 11, 2012, and is available on our website. In 2014,2015, we did not have any related person transactions, but our Audit Committee will review and discuss any related person, insider, or affiliated party transactions pursuant to the Audit Committee Charter. It is the written policy of the Company that the Audit Committee will review and discuss reports and disclosures of insider and affiliated party transactions.
Compensation Committee
We have a standing Compensation Committee, which is comprised of Directors Meier (Chairman), Wambold,Chapman, and Welding, each of whom is “independent” under the NYSE’s Corporate Governance Listing Standards and the Exchange Act. Compensation decisions for the Company’s senior officers and other key executives are made by our Compensation Committee, and actions of the Committee are reported to the Board of Directors after each meeting.
The Compensation Committee:
Establishes the remuneration (base salary, annual and long-term cash, and equity-based incentive compensation, perquisites, and benefits) of our Chief Executive Officer and approves the remuneration (as described for the Chief Executive Officer) of the Company’s senior officers and other key executives, including reviewing and approving the corporate financial goals and objectives relevant to the remuneration arrangements;
| · | Establishes the remuneration (base salary, annual and long-term cash, and equity-based incentive compensation, perquisites, and benefits) of our Chief Executive Officer and approves the remuneration (as described for the Chief Executive Officer) of the Company’s senior officers and other key executives, including reviewing and approving the corporate financial goals and objectives relevant to the remuneration arrangements; |
Reviews the cash and equity-based compensation plans for officers and senior management and makes or recommends changes to the Board of Directors as it deems appropriate;
| · | Reviews the cash and equity-based compensation plans for officers and senior management and makes or recommends changes to the Board of Directors as it deems appropriate; |
Reviews and approves any executive employment agreements, severance pay plans, deferred compensation plans, and similar plans and arrangements and the executives to whom they apply;
| · | Reviews and approves any executive employment agreements, severance pay plans, deferred compensation plans, and similar plans and arrangements and the executives to whom they apply; |
Oversees regulatory compliance with respect to compensation matters; and
| · | Oversees regulatory compliance with respect to compensation matters; and |
| · | Establishes stock ownership guidelines for the Company’s officers and other key executives and reviews compliance with those guidelines. |
Establishes stock ownership guidelines for the Company’s officers and other key executives and reviews compliance with those guidelines.
The Compensation Committee has engaged Exequity LLP, an independent executive compensation consulting firm, to review and provide guidance regarding our total compensation program for named executive officers for 20152016 and to assist the Committee in monitoring and assessing compensation trends for senior management personnel, including the Chief Executive Officer.
The agenda for meetings of the Compensation Committee is determined by its Chairman with the assistance of our Senior Vice President and Chief Human Resources Officer. Compensation Committee meetings are regularly attended by our Chief Executive Officer and our Senior Vice President and Chief Human Resources Officer. At each meeting, the Compensation Committee meets in executive session. The Compensation Committee’s Chairman reports on the Committee’s actions and decisions on executive compensation matters to the Board of Directors. Independent advisors and our Human Resources Department support the Compensation Committee in its duties and, along with our Chief Executive Officer and Senior Vice President and Chief Human Resources Officer, may be delegated authority to fulfill certain administrative duties regarding the compensation programs. The Compensation Committee has authority under its charter to retain, approve fees for and terminate advisors, consultants, and agents as it deems necessary to assist in the fulfillment of its responsibilities. The Compensation Committee reviews the total fees paid to our outside consultants to ensure that they maintain their objectivity and independence when rendering advice to the Compensation Committee.
Nominating and Governance Committee
We have a standing Nominating and Governance Committee, which is currently comprised of Directors Welding (Chairman), Capo, Chapman, Meier, and Shuey, each of whom is “independent” under the New York Stock Exchange’s Corporate Governance Listing Standards. The Nominating and Governance Committee:
Recommends candidates for membership on the Board; and
| · | Recommends candidates for membership on the Board; and |
| · | Ensures that the Board acts within the governance guidelines and that the governance guidelines remain appropriate. |
Ensures that the Board acts within the governance guidelines and that the governance guidelines remain appropriate.
The Nominating and Governance Committee will consider candidates for Board membership proposed by our stockholders or other parties. Any recommendation must be in writing, accompanied by a description of the proposed nominee’s qualifications and other relevant biographical information, and an indication of the consent of the proposed nominee to serve. The recommendation should be addressed to the Nominating and Governance Committee of the Board of Directors, Attention: Secretary, Cooper Tire & Rubber Company, 701 Lima Avenue, Findlay, Ohio 45840. As of the date of this proxy statement, we have not received any director nominee recommendations from any stockholders.
The Nominating and Governance Committee uses a variety of sources to identify candidates for Board membership, including current members of the Board, our executive officers, individuals personally known to members of the Board and our executive officers and, as described above, our stockholders, as well as, from time to time, third party search firms. Mr. Michel, who was elected to the Board in December 2015, was recommended to the Nominating and Governance Committee by a third party executive recruiter. Ms. Davis, who was elected to the Board in February 2016, was recommended to the Nominating and Governance Committee by a current member of the Board. The Nominating and Governance Committee may consider candidates for Board membership at its regular or special meetings held throughout the year.
The Nominating and Governance Committee uses the same manner and process for evaluating every candidate for Board membership regardless of the original source of the candidate’s nomination. Once the Nominating and Governance Committee has identified a prospective candidate, the Nominating and Governance Committee makes an initial determination whether to conduct an initial evaluation of the candidate, which consists of an interview by the Chair of the Nominating and Governance Committee. The Nominating and Governance Committee currently has not set specific, minimum qualifications or criteria for nominees that it proposes for Board membership, but evaluates the entirety of each candidate’s credentials. The Nominating and Governance Committee believes, however, that we will be best served if our Directors bring to the Board a variety of experience and diverse backgrounds and, among other things, demonstrated integrity, executive leadership, and financial, marketing, or business knowledge and experience.
The Chair communicates the results of initial evaluation of candidates to the other Nominating and Governance Committee members, the Lead Director, as applicable, and the Chairman of the Board and Chief Executive Officer. If the Nominating and Governance Committee determines, in consultation with the Chairman of the Board and the Chief Executive Officer, that further consideration of the candidate is warranted, members of our senior management gather additional information regarding the candidate. The Nominating and Governance Committee or members of our senior management then conduct background and reference checks and any final interviews, as necessary, of the candidate. At that point, the candidate is invited to meet and interact with the members of the Board who are not on the Nominating and Governance Committee. The Nominating and Governance Committee then makes a final determination whether to recommend the candidate to the Board for Board membership.
Neither the Nominating and Governance Committee nor the Board of Directors has a formal policy with regard to the consideration of diversity in identifying director nominees; however, how a specific nominee contributes to the diversity of the Board of Directors is considered by both the Nominating and Governance Committee and the Board of Directors in determining candidates for the Board.
Availability of Governance Guidelines, Code of Business Conduct and Ethics, and Committee Charters
Our governance guidelines, Code of Business Conduct and Ethics, and the charters for the Audit Committee, Compensation Committee, and Nominating and Governance Committee are available at the Investor Relations/Governance link on our website athttp://www.coopertire.com.
In addition, stockholders may request a free printed copy of any of these materials by contacting:
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Cooper Tire & Rubber Company
Attention: Corporate Secretary
701 Lima Avenue
Findlay, Ohio 45840
(419) 423-1321
Stockholder and Interested Party Communications with the Board
Our Board has adopted a process by which stockholders or interested parties may send communications to the Board, the Non-Employee Directors as a group, or any of the Directors. Any stockholder or interested party who wishes to communicate with the Board, the Non-Employee Directors as a group, or any Director may send a written communication addressed to:
Board of Directors — Stockholder and Interested Party Communications Attention: Corporate Secretary Cooper Tire & Rubber Company 701 Lima Avenue Findlay, Ohio 45840 |
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The Secretary will review and forward each written communication (except, in his sole determination, those communications clearly of a marketing nature, those communications better addressed by a specific Company department, or those communications containing complaints regarding accounting, internal auditing controls, or auditing matters) to the full Board, the Non-Employee Directors as a group, or the individual Director(s) specifically addressed in the written communication. The Secretary will discard written communications clearly of a marketing nature. Written communications better addressed by a specific Company department will be forwarded to such department, and written communications containing complaints regarding accounting, internal auditing controls, or auditing matters will be forwarded to the Chairman of the Audit Committee.
Director Attendance at Annual Meetings
Our Board does not have a specific policy regarding Director attendance at our Annual Meetings. All of our Directors attended our 20142015 Annual Meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Holland, Meier, Chapman, Wambold, and Welding served as members of the Compensation Committee during 2014. Director Holland ceased being a member of the Compensation Committee on May 23, 2014.2015. During 2014,2015, none of the members of the Compensation Committee was one of our or our subsidiaries’ officers or employees, was formerly one of our or our subsidiaries’ officers or had any relationship requiring disclosure pursuant to Item 404 of Regulation S-K. Additionally, during 2014,2015, none of our executive officers or Directors was a member of the board of directors, or on a committee thereof, of any other entity such that the relationship would be construed to constitute a committee interlock within the meaning of the rules of the Securities and Exchange Commission.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP served as the Company’s independent registered public accounting firm for 2014,2015, and has been appointed by the Audit Committee to continue in that capacity during 2015.2016. The Audit Committee’s decision to appoint Ernst & Young LLP has been ratified by the Board and will be recommended to the stockholders for ratification at the Annual Meeting. Ernst & Young LLP has advised the Company that neither the firm nor any of its members or associates has any direct or indirect financial interest in the Company. During 2014,2015, Ernst & Young LLP rendered both audit services, including an audit of the Company’s annual financial statements, and certain non-audit services. There is no understanding or agreement between the Company and Ernst & Young LLP that places a limit on audit fees since the Company pays only for services actually rendered and at what it believes are customary rates. Professional services rendered by Ernst & Young LLP are approved by the Audit Committee both as to the advisability and scope of the service, and the Audit Committee also considers whether such services would affect Ernst & Young LLP’s continuing independence.
Audit Fees
Ernst & Young LLP’s aggregate fees billed for 20132014 and 20142015 for professional services rendered by them for the audit of the Company’s annual financial statements, the audit of the effectiveness of the Company’s internal control over financial reporting required by the Sarbanes-Oxley Act of 2002, the review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings or engagements for those years are listed below.
| 2014 - $2,080,485 | 2015 – $2,007,092 |
Audit-Related Fees
Ernst & Young LLP’s aggregate fees billed for 20132014 and 20142015 for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, and are not reported under “Audit Fees” above, were:
| 2014 - | 2015 – $199,051 |
Audit-related fees included fees for employee benefit plan audits and accounting consultation. All audit-related services were pre-approved.
Tax Fees
Ernst & Young LLP’s aggregate fees billed for 20132014 and 20142015 for professional services rendered by them for tax compliance, tax advice, and tax planning were:
| 2014 - $197,403 | 2015 – $328,353 |
Tax fees in 20132014 and 20142015 represented fees primarily for international tax planning and domestic and foreign tax compliance. All tax services were pre-approved.
All Other Fees
Ernst & Young LLP’s aggregate fees billed in 20132014 and 20142015 for products and services provided by them, other than those reported above under “Audit Fees,” “Audit-Related Fees,” and “Tax Fees,” were as follows:
| 2014 - $0 | 2015 – $0 |
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services expected to be performed by the Company’s independent registered public accounting firm, including the scope of and fees for such services. Requests for audit services, as defined in the policy, must be approved prior to the performance of such services, and requests for audit-related services, tax services, and permitted non-audit services, each as defined in the policy, must be presented for approval prior to the year in which such services are to be performed to the extent known at that time. The policy prohibits the Company’s independent registered public accounting firm from providing certain services described in the policy as prohibited services.
Generally, requests for independent registered public accounting services are submitted to the Audit Committee by the Company’s Director of External Reporting (or other member of the Company’s senior financial management) and the Company’s independent registered public accounting firm for consideration at the Audit Committee’s regularly scheduled meetings. Requests for additional services in the categories mentioned above may be approved at subsequent Audit Committee meetings to the extent that none of such services are performed prior to their approval. The Chairman of the Audit Committee is also delegated the authority to approve independent registered public accounting services requests provided that the pre-approval is reported at the next meeting of the Audit Committee. All requests for independent registered public accounting services must include a description of the services to be provided and the fees for such services.
Auditor Attendance at 20152016 Annual Meeting
Representatives of Ernst & Young LLP will be present at the Annual Meeting of Stockholders and will be available to respond to appropriate questions and to make a statement if they desire to do so.
This report is submitted by all members of the Audit Committee, for inclusion in this proxy statement, with respect to the matters described in this report.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited financial statements contained in the Company’s Annual Report on Form 10-K, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Committee reviewed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Committee by the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), including PCAOB Auditing Standard No. 16,Communications With Audit Committees, the rules of the Securities and Exchange Commission, and other applicable regulations. The Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. The Committee has concluded that the independent registered public accounting firm is, in fact, independent of the Company.
The Committee discussed with the Company’s senior internal auditing executive and independent registered public accounting firm the overall scope and plans for their respective audits. The Committee meets with the senior internal auditing executive and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls including internal controls over financial reporting, and the overall quality of the Company’s financial reporting. The Committee held sixfour meetings during the fiscal year 2014.2015.
In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014,2015, for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee of the Company’s Board of Directors:
John H. Shuey, Chairman
Thomas P. Capo
Steven M. Chapman
John J. Holland,
ChairmanBENEFICIAL OWNERSHIP OF SHARES
The information in the table below sets forth those persons (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by the Company to be the beneficial owners of more than 5% of the Company’s Common Stock as of February 28, 201529, 2016 (except as noted below).
The table does not include information regarding shares held of record, but not beneficially, by Delaware Charter Guarantee & Trust Company, dba Principal Trust Company, the trustee of the Cooper Tire & Rubber Company Spectrum Investment Savings Plan and other defined contribution plans, sponsored by the Company or a subsidiary of the Company. As of December 31, 2014,2015, those plans held 1,841,6951,447,165 shares, or 3.17%2.59% of the Company’s outstanding Common Stock. The trustee, in its fiduciary capacity, has no investment powers and will vote the shares held in the plans in accordance with the instructions provided by the plan participants. If no such instructions are received, the provisions of the plans direct the trustee to vote such participant shares in the same manner in which the trustee was directed to vote the majority of the shares of the other participants who gave directions as to voting.
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||
Common Stock | Fairpointe Capital LLC(1) | 6,473,272 | 11.16 | % | ||||||
Common Stock | BlackRock, Inc.(2) | 3,693,321 | 6.37 | % | ||||||
Common Stock | National Rural Electric Cooperative Association(3) | 3,556,012 | 6.13 | % | ||||||
Common Stock | LSV Asset Management(4) | 3,426,145 | 5.91 | % | ||||||
Common Stock | The Vanguard Group(5) | 3,175,268 | 5.47 | % | ||||||
| Amount and Nature of | Percent of | |||||
| Title of Class | Name and Address of Beneficial Owner | Beneficial Ownership | Class | |||
| Common Stock | The Vanguard Group(1) | 5,332,005 | 9.51% | |||
| Common Stock | National Rural Electric Cooperative Association(2) | 3,537,812 | 6.28% | |||
| Common Stock | BlackRock, Inc.(3) | 3,498,227 | 6.2% | |||
| Common Stock | LSV Asset Management(4) | 2,909,577 | 5.19% |
| (1) |
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| (2) |
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National Rural Electric Cooperative Association filed a Schedule 13G/A on February |
| (3) | BlackRock, Inc. filed a Schedule 13G with the SEC on January 26, 2016, indicating that as of December 31, 2015, BlackRock, Inc. had sole voting power with respect to 3,368,978 shares and sole dispositive power with respect to 3,498,227 shares. BlackRock, Inc. has indicated that it is a parent holding company. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
| (4) | LSV Asset Management filed a Schedule 13G with the SEC on February 12, |
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SECURITY OWNERSHIP OF MANAGEMENT
The information that follows is furnished as of February 28, 2015,29, 2016, to indicate beneficial ownership by our executive officers and Directors as a group and each named executive officer and Director, individually, of our Common Stock in accordance with Rule 13d-3 under the Exchange Act, as well as ownership of certain other Company securities and ownership of our Common Stock plus certain other Company securities:
| Amount and | |||||||||||||||||||||||||||||||||
| Nature of | |||||||||||||||||||||||||||||||||
| Beneficial | |||||||||||||||||||||||||||||||||
| Ownership of | Percent of | Ownership of Other | Ownership of Common | Percent | |||||||||||||||||||||||||||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock | Percent of Class | Ownership of Other Securities | Ownership of Common Stock and Other Securities | Percent of Class | Common Stock | Class | Securities | Stock and Other Securities | of Class | |||||||||||||||||||||||
Roy V. Armes | 604,467 shs | (1)(2) | 1.04 | % | 306,976shs | (4)(5) | 911,443 shs | (1)(2)(4)(5) | 1.57 | % | 135,503 shs | (1)(2) | * | 343,578 shs | (4)(5) | 479,081 shs | (1)(2)(4)(5) | 1.57% | |||||||||||||||
Thomas P. Capo | 0 shs | * | 66,899shs | (3) | 66,899 shs | (3) | * | 0 shs | * | 46,229 shs | (3) | 46,229 shs | (3) | * | |||||||||||||||||||
Steven M. Chapman | 2,631 shs | (2) | * | 89,648shs | (3) | 92,279 shs | (2)(3) | * | 2,631 shs | (2) | * | 96,750 shs | (3) | 99,381 shs | (2)(3) | * | |||||||||||||||||
| Susan F. Davis | 0 shs | * | 0 shs | 0 shs | * | ||||||||||||||||||||||||||||
Ginger M. Jones | 4,000 shs | * | 22,537shs | (4)(5) | 26,537 shs | (4)(5) | * | 9,663 shs | * | 32,930 shs | (4)(5) | 42,593 shs | (4)(5) | * | |||||||||||||||||||
Brenda S. Harmon | 128,471 shs | (2) | * | 36,165shs | (4)(5) | 164,636 shs | (2)(4)(5) | * | 102,180 shs | (2) | * | 35,251 shs | (4)(5) | 137,431 shs | (2)(4)(5) | * | |||||||||||||||||
John J. Holland | 7,819 shs | (2) | * | 94,045shs | (3) | 101,864 shs | (2)(3) | * | 7,859 shs | (2) | * | 99,363 shs | (3) | 107,222 shs | (2)(3) | * | |||||||||||||||||
Bradley E. Hughes | 189,181 shs | (2) | * | 43,498shs | (4)(5) | 232,679 shs | (2)(4)(5) | * | 143,554 shs | (2) | * | 50,193 shs | (4)(5) | 193,747 shs | (2)(4)(5) | * | |||||||||||||||||
John F. Meier | 6,684 shs | (2) | * | 83,393shs | (3) | 90,077 shs | (2)(3) | * | 6,684 shs | (2) | * | 88,554 shs | (3) | 95,238 shs | (2)(3) | * | |||||||||||||||||
Harold C. Miller | 0 shs | * | 34,358shs | (4)(5) | 34,358 shs | (4)(5) | * | ||||||||||||||||||||||||||
Christopher E. Ostrander | 26,533 shs | * | 35,696shs | (4)(5) | 62,229 shs | (4)(5) | * | ||||||||||||||||||||||||||
| Gary S. Michel | 0 shs | * | 0 shs | 0 shs | * | ||||||||||||||||||||||||||||
John H. Shuey | 0 shs | * | 18,713shs | (3) | 18,713 shs | (3) | * | 0 shs | * | 15,375 shs | (3) | 15,375shs | (3) | * | |||||||||||||||||||
Richard J. Wambold | 5,748 shs | * | 104,461shs | (3) | 110,209 shs | (3) | * | ||||||||||||||||||||||||||
Robert D. Welding | 0 shs | * | 57,602shs | (3) | 57,602 shs | (3) | * | 1,500 shs | * | 61,722 shs | (3) | 63,222 shs | (3) | * | |||||||||||||||||||
Stephen Zamansky | 16,146 shs | * | 41,964shs | (4)(5) | 58,110 shs | (4)(5) | * | 32,076 shs | * | 34,476 shs | (4)(5) | 66,552 shs | (4)(5) | * | |||||||||||||||||||
All executive officers and Directors as a group | 965,147 shs | (1)(2) | 1.66 | % | 965,901shs | (3)(6)(7) | 1,931,049 shs | (1)(2)(3)(6)(7) | 3.33 | % | |||||||||||||||||||||||
| All executive officers and | 441,650 shs | (1)(2) | 0.80% | 904,421 shs | (3) | 1,346,071 shs | (1)(2)(3) | 2.43% | |||||||||||||||||||||||||
| Directors as a group | |||||||||||||||||||||||||||||||||
| (12 persons) | |||||||||||||||||||||||||||||||||
| * | Less than 1% |
| (1) | Includes 397 shares held in the Company’s Spectrum Investment Savings Plan obtainable within 60 days following February 28, 2015. |
| (2) | Includes shares obtainable on exercise of stock options within 60 days following February 28, 2015, which options have not been exercised, as follows: |
| (3) | Pursuant to the Amended and Restated 1998 Non-Employee Directors Compensation Deferral Plan described above under “Director Compensation”, the following Directors have been credited with the following number of phantom stock units as of February 28, 2015: Thomas P. Capo — |
| (4) | Includes the following number of restricted stock units for each of the following executive officers: Roy V. Armes — |
| (5) | Includes the number of performance-based stock units that were notionally earned by each of the following executive officers for |
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SECTION 16(a)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s Directors, executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC and the NYSE initial reports of ownership and reports of changes in beneficial ownership of Common Stock of the Company. Based solely upon a review of such reports and the representation of such Directors and officers, the Company believes that all reports due for Directors and officers during or for the year 20142015 were timely filed.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 20162017
Any stockholder who intends to present a proposal at the Annual Meeting in 20162017 and who wishes to have the proposal included in the Company’s proxy statement and form of proxy for that Annual Meeting must deliver the proposal to the Secretary of the Company, at the Company’s principal executive offices, so that it is received no later than November 28, 2015.22, 2016. In addition, if a stockholder intends to present a proposal at the Company’s 20152017 Annual Meeting without the inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Company on or between December 28, 201522, 2016 and January 27, 2016,21, 2017, in accordance with the Bylaws, proxies solicited by the Board for the 20162017 Annual Meeting will confer discretionary authority to vote on the proposal if presented at the Annual Meeting.
The Compensation Committee Report that begins on page 23 of this proxy statement, disclosure regarding the Company’s Audit Committee and Audit Committee’s financial expert that begins on page 5047 of this proxy statement, and the Audit Committee Report on page 5654 of this proxy statement shall not be deemed to be incorporated by reference by any general statement incorporating this proxy statement by reference into any filing under the Securities Act of 1933 or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
Only one Notice of Internet Availability of Proxy Materials or 20142015 Annual Report and proxy statement is being delivered to multiple stockholders sharing an address unless the Company received contrary instructions from one or more of the stockholders. If a stockholder at a shared address to which a single copy of the Notice of Internet Availability of Proxy Materials or 20142015 Annual Report and proxy statement were delivered wishes to receive a separate copy of the Notice of Internet Availability of Proxy Materials or 20142015 Annual Report or proxy statement, he or she should contact the Company’s Director of Investor Relations at 701 Lima Avenue, Findlay, Ohio 45840 or (419) 423-1321. The stockholder will be delivered, without charge, a separate copy of the Notice of Internet Availability of Proxy Materials or 20142015 Annual Report or proxy statement promptly upon request. If stockholders at a shared address currently receiving multiple copies of the Notice of Internet Availability of Proxy Materials or 20142015 Annual Report and proxy statement wish to receive only a single copy of these documents, they should contact the Company’s Director of Investor Relations in the manner provided above.
SOLICITATION AND OTHER MATTERS
The Board of Directors is not aware of any other matters that may come before the Annual Meeting. However, if any other matters properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy in accordance with their judgment on such matters.
The solicitation of proxies is being made by the Company, and the Company will bear the cost of the solicitation. The Company has retained Georgeson, 199 Water Street, 26th Floor, New York, New York, to aid in the solicitation of proxies, at an anticipated cost to the Company of approximately $7,500, plus expenses. The Company also will reimburse brokers and other persons for their reasonable expenses in forwarding proxy material to the beneficial owners of the Company’s stock. In addition to the solicitation by use of the mails, solicitations may be made by telephone, facsimile, or by personal calls, and it is anticipated that such solicitation will consist primarily of requests to brokerage houses, custodians, nominees, and fiduciaries to forward soliciting material to beneficial owners of shares held of record by such persons. If necessary, officers and other employees of the Company may by telephone, facsimile, or personally, request the return of proxies.
Please mark, execute, and return the accompanying proxy, or vote by telephone or Internet, in accordance with the instructions set forth on the proxy form, so that your shares may be voted at the Annual Meeting. For information on how to obtain directions to be able to attend the Annual Meeting and vote in person, please contact the Company’s Secretary at 701 Lima Avenue, Findlay, Ohio 45840 or (419) 424-4319.
You may obtain copies of the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, free of charge upon written request to the Company at 701 Lima Avenue, Findlay, Ohio 45840, Attention: Secretary or call (419) 424-4319.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 8, 20156, 2016
This proxy statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 20142015 and our 20142015 Annual Report, are available free of charge at http://www.proxyvote.com.
BY ORDER OF THE BOARD OF
DIRECTORS
Stephen Zamansky
Senior Vice President,
General Counsel and Secretary
March 27, 2015
22, 2016
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
May 8, 2015
IMPORTANT:
All stockholders are requested to mark, date, sign, and mail promptly the enclosed proxy for which an envelope is provided, or cast their ballots by Internet or telephone.
| VOTE BY INTERNET -www.proxyvote.com
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.
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M82187-P65112-Z65307 KEEP THIS PORTION FOR YOUR RECORDS
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |||
| E04998-P73853-Z67227 | KEEP THIS PORTION FOR YOUR RECORDS | ||
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY | ||
| COOPER TIRE & RUBBER COMPANY | For | Withhold | For All | 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 A VOTE “FOR” ITEMS 1, 2 AND 3. | All | All | Except | |||||||||||||||
| Vote on Directors | ☐ | ☐ | ☐ | |||||||||||||||
| 1. | To elect as Directors of Cooper Tire & Rubber Company for a term expiring in 2017, the nominees listed below: | |||||||||||||||||
| Nominees: | ||||||||||||||||||
01) | Roy V. Armes | 06) | John F. Meier | |||||||||||||||
02) | Thomas P. Capo | 07) | Gary S. Michel | |||||||||||||||
03) | Steven M. Chapman | 08) | John H. Shuey | |||||||||||||||
04) | Susan F. Davis | 09) | Robert D. Welding | |||||||||||||||
| 05) | John J. Holland | |||||||||||||||||
| Vote on Proposals | For | Against | Abstain | |||||||||||||||
| 2. | To ratify the selection of the Company’s independent registered public accounting firm for the year ending December 31, 2016. | ☐ | ☐ | ☐ | ||||||||||||||
| 3. | To approve, on a non-binding advisory basis, the Company’s named executive officer compensation. | ☐ | ☐ | ☐ | ||||||||||||||
The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s).For non-Plan participants, if no direction is made, this proxy will be voted FOR Items 1, 2 and 3. If any other matters properly come before the Annual Meeting, the persons named in this proxy will vote in their discretion. | ||||||||||||||||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ☐ | |||||||||||||||||
| Please indicate if you plan to attend this meeting. | ☐ ☐ | |||||||||||||||||
| Yes No | ||||||||||||||||||
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Shareholder Letter and 10-K Report are available at www.proxyvote.com.
E04999-P73853-Z67227
| Proxy Card - Cooper Tire & Rubber Company | ||||||||||||||||||||||||||||||||
| THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | ||||||||||||||||||||||||||||||||
THE ANNUAL MEETING OF STOCKHOLDERS | ||||||||||||||||||||||||||||||||
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Principal Trust Company is Trustee under the following defined contribution plans (the “Plans”) sponsored by Cooper Tire & Rubber Company: Spectrum Investment Savings Plan, Pre-Tax Savings Plan (Texarkana), and Pre-Tax Savings Plan (Findlay). This proxy card is also soliciting voting instructions on behalf of the Board of Directors of Cooper Tire & Rubber Company from Plan participants to direct the Trustee to vote the shares of common stock of Cooper Tire & Rubber Company held in the participants’ accounts under such Plans in accordance with their instructions. | ||||||||||||||||||||||||||||||||
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE. FOR STOCKHOLDERS, YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, BUT THE PROXIES CANNOT VOTE THESE SHARES UNLESS YOU SIGN, DATE AND RETURN THIS PROXY CARD. FOR PLAN PARTICIPANTS, IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, YOU WILL NEED TO MARK THE “FOR” BOXES FOR PROPOSALS 1, 2 AND 3. | ||||||||||||||||||||||||||||||||
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. | ||||||||||||||||||||||||||||||||
| Address Changes/Comments: | ||||||||||||||||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Shareholder Letter and 10-K Report are available at www.proxyvote.com.
M82188-P65112-Z65307
Proxy Card - Cooper Tire & Rubber Company
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF COOPER TIRE & RUBBER COMPANY FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 2015
The undersigned hereby appoints Roy V. Armes, Ginger M. Jones and Stephen Zamansky, or any of them or their substitutes, as proxies, each with the power to appoint his or her substitutes, and hereby authorizes them to represent and vote, as designated herein, all the shares of common stock of Cooper Tire & Rubber Company held of record by the undersigned at the close of business on March 23, 2015, with all powers that the undersigned would possess if personally present, at the Annual Meeting of Stockholders to be held at The Westin Hotel, Detroit Metropolitan Airport, 2501 Worldgateway Place, Detroit, Michigan 48242, on Friday, May 8, 2015, at 10:00 a.m. EDT, or any reconvened Annual Meeting following any adjournment(s) or postponement(s) of the Annual Meeting.
For stockholders, this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s). If no direction is indicated, this proxy will be voted “FOR” each of the director nominees named herein,“FOR” the ratification of the selection of Ernst & Young LLP as the Company’s independent auditors and“FOR” the approval, by non-binding vote, of executive compensation. The proxies are authorized to take action in accordance with their judgment upon any other business that may properly come before the Annual Meeting, or any reconvened Annual Meeting following any adjournment(s) or postponement(s) of the Annual Meeting.
Principal Trust Company is Trustee under the following defined contribution plans (the “Plans”) sponsored by Cooper Tire & Rubber Company: Spectrum Investment Savings Plan, Pre-Tax Savings Plan (Texarkana), and Pre-Tax Savings Plan (Findlay). This proxy card is also soliciting voting instructions on behalf of the Board of Directors of Cooper Tire & Rubber Company from Plan participants to direct the Trustee to vote the shares of common stock of Cooper Tire & Rubber Company held in the participants’ accounts under such Plans in accordance with their instructions.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE. FOR STOCKHOLDERS, YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, BUT THE PROXIES CANNOT VOTE THESE SHARES UNLESS YOU SIGN, DATE AND RETURN THIS PROXY CARD. FOR PLAN PARTICIPANTS, IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, YOU WILL NEED TO MARK THE “FOR” BOXES FOR PROPOSALS 1, 2 AND 3.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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(Continued and to be voted on the reverse side)
*** Exercise YourRight to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on May 8, 2015.
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M88644-P65112-Z65307
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ITEMS 1, 2 AND 3. | ||||||||||||||
Vote on Directors | ||||||||||||||
1. |
To elect as Directors of Cooper Tire & Rubber Company for a term expiring in 2016, the nominees listed below: | |||||||||||||
Nominees: | ||||||||||||||
01) |
Roy V. Armes |
05) |
John F. Meier | |||||||||||
| 02) | Thomas P. Capo | 06) | John H. Shuey | |||||||||||
| 03) | Steven M. Chapman | 07) | Robert D. Welding | |||||||||||
| 04) | John J. Holland | |||||||||||||
2. |
To ratify the selection of the Company’s independent registered public accounting firm for the year ending December 31, 2015. | |||||||||||||
3. |
To approve, on a non-binding advisory basis, the Company’s named executive officer compensation. | |||||||||||||
NOTE:Such other business as may properly come before the Annual Meeting or any postponement(s) or adjournment(s) | ||||||||||||||
M88645-P65112-Z65307
M88646-P65112-Z65307
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