| 5. | To transact such other business as may properly come before the 20172018 Annual Meeting. |
Shareholders of record as of the close of business on February 28, 20172018 are cordially invited to attend and are entitled to vote at the 20172018 Annual Meeting. However, whether or not you expect to attend the 20172018 Annual Meeting in person, you are requested to properly complete the proxy card online atwww.proxypush.com/mtw www.proxyvote.com or to obtain, complete, date, sign, and promptly return a hard copy of the proxy card, which can be obtained by request through the website, toll free number or email address noted above. By Order of the Board of Directors 
Louis F. Raymond
Senior Vice President, General Counsel and Secretary Manitowoc,Milwaukee, Wisconsin
TABLE OF CONTENTS
THE MANITOWOC COMPANY, INC. 2400 South 44th StreetOne Park Plaza
P.O. Box 6611270 West Park Place, Suite 1000
Manitowoc,Milwaukee, Wisconsin 54221-006653224
(920)684-4410 SOLICITATION AND VOTING This Proxy Statement is furnished by the Board of Directors (the “Board of Directors” or “Board”) of The Manitowoc Company, Inc., a Wisconsin corporation (referred to in this Proxy Statement as the “Company,” “we” or “our”), to the shareholders of the Company in connection with a solicitation of proxies for use at the 20172018 Annual Meeting of Shareholders (the “2017“2018 Annual Meeting”) to be held at 9:00 a.m., Central Daylight Time, on Tuesday, May 2, 2017,1, 2018, at the Holiday Inn Manitowoc,The Pfister Hotel, located at 4601 Calumet424 East Wisconsin Avenue, Manitowoc,Milwaukee, Wisconsin 54220,53202, and at any and all adjournments or postponements thereof. This Proxy Statement and the accompanying materials are being provided to shareholders on or about March 17, 2017.22, 2018. Introductory Note
On March 4, 2016, the Company completed thespin-off of its former wholly-owned subsidiary, Manitowoc Foodservice, Inc. (NYSE:MFS) (now known as Welbilt, Inc. (NYSE:WBT)), as an independent, publicly-traded company (thespin-off transaction is referred to throughout the Proxy Statement as the “Separation”). As of the effective date of the Separation, Barry L. Pennypacker became the Company’s President and Chief Executive Officer, succeeding Kenneth W. Krueger, who had been serving in those roles on an interim basis; Mr. Krueger continues with the Company as Chair of the Board. Effective immediately upon the effectiveness of the Separation: José María Alapont, Anne M. Cooney, C. David Myers, Mr. Pennypacker and John C. Pfeifer became directors of the Company; Roy V. Armes and Keith D. Nosbusch retired from the Board of Directors; Dino J. Bianco, Joan K. Chow and Cynthia M. Egnotovich left the Company’s Board to become directors of MFS; and Robert G. Bohn, Donald C. Condon, Jr. and Jesse A. Lynn continued on in their service as directors for the Company. Unless the context indicates otherwise, discussions in this Proxy Statement regarding corporate performance and the compensation of executive officers and directors relate to the Company and not MFS.
Who can vote? On February 28, 2017,2018, the record date for determining shareholders entitled to vote at the 20172018 Annual Meeting, there were outstanding 140,481,93135,425,271 shares of Company common stock, $0.0l par value $0.01 per share (the “common stock”“Common Stock”). Each share outstanding on the record date is entitled to one vote on all matters presented at the meeting. How to vote Any shareholder entitled to vote may vote in person or by duly executed proxy. Shareholders of record will have the option to vote by written proxy or electronically via either the Internetinternet or a touch-tone telephone. Instructions on how to vote are set forth in the Proxy Materials sent to shareholders. Shareholders may access and complete the proxy card online atwww.proxypush.com/mtw. www.proxyvote.com. In order to vote online, a shareholder will need the control number provided to the shareholder along with the Notice of Meeting. The Company is offering electronic services both as a convenience to its shareholders and as a step towards reducing costs. Shareholders not wishing to use electronic voting methods may continue to cast votes by returning their signed and dated proxy card. How to obtain meeting materials All Proxy Materials for the 20172018 Annual Meeting, including this Proxy Statement and the 20172018 Annual Report to Shareholders, are available on the Internetinternet atwww.proxydocs.com/mtw. www.proxyvote.com. All shareholders have been
separately provided an “Important Notice Regarding the Availability of Proxy Materials.” As indicated in that Notice, if you want to receive a paper or email copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request as instructed in that Notice on or before April 22, 201721, 2018 to facilitate timely delivery. Proxies A proxy may be revoked at any time before it is exercised by filing a written notice of revocation with the Secretary of the Company, by delivering a duly executed proxy bearing a later date, or by voting in person at the 20172018 Annual Meeting. Attendance at the 20172018 Annual Meeting will not in itself constitute revocation of a proxy. The shares represented by all properly executed unrevoked proxies received in time for the 20172018 Annual Meeting will be voted as specified on the proxies. Shares held for the accounts of participants in the Company’s Dividend Reinvestment Plan and The Manitowoc Company, Inc. 401(k) Retirement Plan (for which the proxies will serve as voting instructions for the shares) will be voted in accordance with the instructions of participants or otherwise in accordance with the terms of those Plans. If no direction is given on a properly executed unrevoked proxy, it will be votedFOReach of the nineseven director nominees,FORratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017,2018, FOR approval of the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the Executive Compensation sections of this Proxy Statement, andFOR holding future advisory votesEVERY YEAR to approve named executive officer compensation.AGAINST the shareholder proposal regarding a simple majority vote standard.
The cost of soliciting proxies will be borne by the Company. Solicitation will be made principally by distribution via mail and the Internetinternet pursuant to the rules of the Securities and Exchange Commission (“SEC”), but also may be made by email, telephone, facsimile, or other means of communication by certain directors, officers, employees, and agents of the Company. The directors, officers, and employees will receive no compensation for these proxy solicitation efforts in addition to their regular compensation, but may be reimbursed for reasonableout-of-pocket expenses in connection with the solicitation. The Company will request persons holding shares in their names for the benefit of others or in the names of their nominees to send Proxy Materials to and obtain proxies from their principals and will reimburse such persons for their expenses in so doing. Required Quorum To be effective, a matter presented for a vote of shareholders at the 20172018 Annual Meeting must be acted upon by a quorum (i.e., a majority of the votes entitled to be cast represented at the 20172018 Annual Meeting in person or by proxy). Abstentions, shares for which authority is withheld to vote for director nominees, and broker non-votes (non-votes (i.e., proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owners or other persons entitled to vote shares as to a matter with respect to which the brokers or nominees do not have discretionary power to vote) will be considered present for the purpose of establishing a quorum. Once a share is represented at the 20172018 Annual Meeting, it is deemed present for quorum purposes throughout the meeting or any adjourned or postponed meeting, unless a new record date is or must be set for theany adjourned or postponed meeting. Your Broker needs your approval to vote certain matters We remind you that your broker may not vote your shares in its discretion in the election of directors (Proposal 1); therefore, you must vote your shares if you want them to be counted in the election of directors. In addition, your broker is also not permitted to vote your shares in its discretion regarding matters relating to executive compensation (Proposals 3 and(Proposal 3) or on the shareholder proposal (Proposal 4). However, your broker may vote your shares in its discretion on routine matters such as the ratification of the Company’s independent registered public accounting firm (Proposal 2). 2
Required Vote Proposal 1:Election of Directors. Directors are elected by a majority of the votes cast by the holders of shares entitled to vote in the election at a meeting at which a quorum is present, assuming the election is uncontested (the(a plurality voting standard applies in contested elections). For this purpose, a majority of votes cast means that the number of votes cast “for” a director’s election must exceed the number of votes cast “withhold”“withheld” with respect to that director’s election. Any shares not voted (whether by brokernon-vote or otherwise) will have no effect on the election of directors. Pursuant to the Company’s Restated By-laws, any nominee who receives fewer votes cast “for” his or her election than votes cast “withhold”“withheld” is required to promptly tender his or her resignation to the Chair of the Board following certification of the shareholder vote. The Corporate Governance Committee of the Board of Directors will promptly consider the resignation, and make a recommendation to the Board of Directors as to whether to accept or reject such resignation. Proposal 2:Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2018. The affirmative vote of a majority of the votes cast on the Proposalproposal by the holders of shares entitled to vote at the meeting at which a quorum is present is required for ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017, provided that a majority of the outstanding shares of the Company’s Common Stock are voted on the Proposal. Assuming that proviso is met, any2018. Any shares not voted (whether by brokernon-vote or otherwise, except abstentions) have no impact on the vote. Shares of common stockCommon Stock as to which holders of shares abstain from voting will be treated as votes against ratification.
Proposal 3:Advisory vote to approve the compensation of the Company’s named executive officers. The affirmative vote of a majority of the votes cast on the Proposalproposal (assuming a quorum is present) is required to approve the advisory vote on the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the Executive Compensation sections of this Proxy Statement. Abstentions and brokernon-votes will not be included in the votes cast and thus will have no effect other than not providing the Company with your view on the Proposal.proposal. Although the outcome of this advisory vote is not binding on the Company, the Compensation Committee and the Board of Directors will review and consider the outcome of the vote when making future compensation decisions pertaining to the Company’s named executive officers. Proposal 4: AdvisoryShareholder proposal regarding a simple majority vote related to the frequencystandard.The affirmative vote of future advisory votes to approve the compensationa majority of the Company’s named executive officers. The shareholders’ recommendationvotes cast on how often (every year, every two years, or every three years) the advisory voteshareholder proposal (assuming a quorum is present) is required for it to approve the compensation of the Company’s named executive officers should be held will be the frequency receiving the greatest number of votes.gain approval, if properly presented. Abstentions and brokernon-votes will not be included in the votes cast and thus will have no effect other than not providing the Company with your view on the Proposal. Although the outcome of this advisory vote is not binding on the Company, the Board of Directors will review and consider the outcome of the vote when considering how often to hold advisory votes to approve named executive officer compensation.proposal. The Board of Directors recommends a vote: “FOR”“FOR” the election of the nine seven directors named in the Proposal; “FOR”proposal 1; “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm;“FOR”approval of the compensation of the Company’s named executive officers; and “FOR”AGAINST” the shareholder proposal regarding a frequency of “EVERY YEAR” (i.e., “1 Year” on the proxy card or voting instruction) for futurenon-binding shareholder advisory votes to approve the compensation of the Company’s named executive officers. simple majority vote standard. 3
1. | PROPOSALS REQUIRING YOUR VOTE
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PROPOSAL 1 ELECTION OF DIRECTORS All nineseven of the Company’s directors are to be elected at the 2017 Annual Meeting because the classification of the Board will have been completely phased out as of the 20172018 Annual Meeting. The nominees to the Board are Ms. Cooney and Messrs. Alapont, Bohn, Condon, Krueger, Lynn, Myers, Pennypacker and Pfeifer, all of whom are currently directors. Information regarding each nominee is set forth below. If elected, each individual will hold office for aone-year term expiring at the 20182019 Annual Meeting of Shareholders, subject to the limit discussed in the following sentence, or until their respective successors are duly elected and qualified. Pursuant to the Company’s Corporate Governance Guidelines, when a director reaches the age of 72, the director will resign from the Board at the first annual meeting held after reaching that age. The election of directors is determined by a majority of the votes cast, if the election is uncontested. Shares represented by proxies in the accompanying form will be voted for the election of the nominees listed below, unless a contrary direction is indicated. The nominees have indicated that they are able and willing to serve as directors. However, if any of the nominees should be unable to serve, which management does not contemplate, it is intended that the proxies will vote for the election of such other person or persons as management may recommend. As also explained in the Corporate Governance Committee Report, in identifying candidates for the BoardThe following sets forth certain information, as of Directors, the Corporate Governance Committee considers foremost the qualifications and experience that the Board believes would best suitFebruary 28, 2018, about the Board’s needs created by each particular vacancy. As part of the process, the Corporate Governance Committee and the Board endeavor to have a Board comprised of individuals with diverse backgrounds, viewpoints, and life and professional experiences, provided such individuals should all have a high level of management and/or financial experience and expertise. In this process, the Board of Directors and the Corporate Governance Committee do not discriminate against any candidate on the basis of race, color, national origin, gender, religion, disability, sexual orientation or gender identity.
A description of the particular experience, qualifications, attributes and skills that led the Board of Directors to conclude that each of the nominees should continue to serve as a director of the Company follows the biographical information of each nominee below.
Nominees for aOne-Year Term Expiringelection at the 2018 Annual Meeting of Shareholders
Meeting. All nineseven nominees were recommended to the Board by the Corporate Governance Committee. José María Alapont, 66, has been a director of the Company since 2016 and serves as a member of the Company’s Audit and Corporate Governance Committee. Mr. Alapont served as the President and Chief Executive of Federal-Mogul Corporation, an automotive and industrial equipment supplier, from 2005 until he retired in 2012. Mr. Alapont also served as a director of Federal-Mogul until 2013. Prior to joining Federal-Mogul, Mr. Alapont served as Chief Executive Officer and as a director of Fiat Iveco, S.p.A., the global manufacturer and supplier of commercial trucks, buses, vans,off-road, firefighting and defense vehicles, from 2003 until 2005. Previously, Mr. Alapont held executive positions with increasing responsibility at Ford Motor Company, the global automotive vehicle manufacturer, at Delphi Corporation, an automotive parts manufacturing company, and at Valeo S.A., an automotive supplier. Mr. Alapont currently serves as a director of Hinduja Automotive Limited and was a director of Mentor Graphics Corporation until 2012. Mr. Alapont earned an Industrial Technical Engineering degree from la Escuela de Ingenieros Tecnicos de Valencia and a B.A. from Universidad de Valencia.
Mr. Alapont’s more than 40 years of senior executive and board experience in global automotive manufacturing and operations make him a valuable contributor to the Company’s Board of Directors. Culturally diverse, he has an appreciation for global business models, has strong manufacturing and supply chain experience, and has successfully led businesses as an operating executive.
4
Robert G. Bohn, 64, has been a director of the Company since 2014 and serves on the Company’s Corporate Governance Committee as Chair and on the Compensation Committee. He served as Chief Executive Officer of Oshkosh Corporation, a leading manufacturer of access equipment, specialty vehicles, and truck bodies for the primary markets of defense, concrete placement, refuse collection, and fire and emergency vehicles, from 1997 until 2010, and as its Chair of the Board from 2000 to 2011. Mr. Bohn joined Oshkosh Corporation in 1992 as Group Vice President, and also served as its President from 1994 to 2007 and as its Chief Operating Officer from 1994 to 1997. Prior to joining Oshkosh Corporation, he held various executive positions with Johnson Controls, Inc. from 1985 to 1992. He also serves as a Directordirector of Carlisle Companies Inc., Parker Hannifin Corporation and Menasha Corporation. Mr. Bohn’s extensive experience in growth strategy development and execution, international market development, acquisitions integration, and maximizing operational efficiency make him qualified to serve on the Company’s Board.
Donald M. Condon, Jr., 67,68, has been a director of the Company since 2010 and serves on the Company’s Compensation Committee as Chair and on the Audit Committee. Mr. Condon is President (2012 to present) of IDSM Distribution Services, Inc., a family-owned company providing distribution services. He also serves as a director and Chief Development Officer of Continental Carbon Company, an affiliate of China Synthetic Rubber Company and Taiwan Cement Corporation, which are public companies. Mr. Condon previously served as Senior Vice President (2006-2012) of Olefins and Corporate Business Development for Westlake Chemical Corporation, an owner and operator of facilities for the manufacture of petrochemicals, plastics and fabricated plastic products. Prior to joining Westlake, Mr. Condon held executive positions in the petrochemical, plastics, oil and gas, and industrial fabrication business with Titan Chemicals Corp. Bhd. (2003-2006), Conoco (1993-2003), and E.I. DuPont De Nemours (1974-1993). While at Titan Chemicals, Mr. Condon was Managing Director and Chief Executive Officer, and he led the company when it went public on the Malaysian Stock Exchange (Bursa Malaysia) and the NYSE in 2005, and continued to serve as a director until 2010. Mr. Condon also serves as Chair of the Advisory Board of the Nicholas Center for Finance at the University of Wisconsin-Madison, Director of the Depression and Bipolar Support Alliance of Greater Houston, and is a National Association of Corporate Directors (“NACD”) Board Leadership Fellow, NACD’s highest accreditation for boardroom leadership. Mr. Condon’s more than 40 years of senior executive and board experience in management, finance, operations, strategy and corporate development in the chemical, industrial and energy industries make him a valuable contributor to the Company’s Board of Directors.
Anne M. Cooney, 56,58, has been a director of the Company since 2016 and serves as a member of the Company’s Audit and Compensation Committees. She has served since 2014 as President, Process Industries and Drives of Siemens Industry, Inc., a division of Siemens AG, a multinational conglomerate primarily engaged in industrial engineering, electronics, energy, healthcare and infrastructure activities. Since joining Siemens in 2001, Ms. Cooney has held a variety of high-level management positions, including serving as Chief Operating Officer, Siemens Healthcare Diagnostics from 2011 until 2014, and as President, Drives Technologies of Siemens Industry, Inc. from 2008 until 2011. She previously held various positions with increasing responsibility at General Electric Company and also served as Vice President, Manufacturing of Aladdin Industries, LLC. Ms. Cooney earned a B.S. from Gannon University and an M.B.A. from Emory University. Ms. Cooney brings senior management and operational experience to the Company’s Board of Directors. Her extensive background and leadership experience in various segments of large manufacturing companies make her qualified to serve on the Company’s Board of Directors. Kenneth W. Krueger, 60,61, has been a director of the Company since 2004, currently serves as the Board Chair and served as the interim President and Chief Executive Officer of the Company from October 2015 until the effectiveness of the Separation.March 2016. Mr. Krueger was the Chief Operating Officer (2006 to 2009) and Executive Vice President (2005 to 2006) of Bucyrus International, Inc., a global leader in mining equipment manufacturing. Mr. Krueger also was the Sr. Vice President and Chief Financial Officer (2000 to 2005) of A. O. Smith 5
Corporation, a global manufacturer of water heating and water treatment systems, and Vice President, Finance and Planning, Hydraulics, Semiconductor Equipment and Specialty Controls Group (1999 to 2000) of Eaton Corporation. Mr. Krueger also serves as a director of Douglas Dynamics, Inc. and Albany International Corporation. Mr. Krueger has extensive financial, accounting and operations experience. He has served as a chief financial officer and chief operating officer of publicly-traded companies and has other significant senior management experience. His experience and background in finance and accounting in a publicly-traded manufacturing company bring great focus to the Company’s accounting, auditing and internal controls. Mr. Krueger’s operations leadership experience in the heavy manufacturing industry, coupled with his experience in accounting and finance, make him a valued adviser as a member of the Company’s Board of Directors and as the current Chair.
Jesse A. Lynn, 46, has been a director of the Company since April 2015 and currently serves on the Audit Committee and Corporate Governance Committee. He has been General Counsel of Icahn Enterprises L.P. (a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, mining, real estate and home fashion) since January 2015. From 2004 to January 2015, Mr. Lynn was Assistant General Counsel of Icahn Enterprises. Prior to joining Icahn Enterprises, Mr. Lynn worked as an associate in the New York office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in its business and finance department from 2000 until 2004. From 1996 until 2000, Mr. Lynn was an associate in the corporate group at Gordon Altman Butowsky Weitzen Shalov & Wein. Mr. Lynn is a director of Herbalife Ltd. Carl C. Icahn has non-controlling interests in Herbalife and the Company through the ownership of securities. Mr. Lynn received a B.A. in 1992 from the University of Michigan and a J.D. in 1996 from the Boston University School of Law.
Mr. Lynn was originally elected as a director pursuant to an agreement between the Company and Mr. Icahn and his affiliated entities, as described in “Corporate Governance Committee Report — Consideration of Candidates for the Board Who Are Incumbent Directors” below. As General Counsel to a diversified holding company with investments in many companies, Mr. Lynn’s significant legal background and experience bring a valuable perspective to the Board, Audit Committee and the Corporate Governance Committee.
C. David Myers, 53,54, has been a director of the Company since 2016 and serves as the Chair of the Company’s Audit Committee. He is retired as President —– Building Efficiency of Johnson Controls, Inc., a global diversified technology and industrial company, in 2014 after serving in such role since 2005. Mr. Myers previously served as President and Chief Executive Officer, as well as a director, of York International Corporation, a provider of heating, ventilating, air conditioning, and refrigeration products and services, from 2004 until York was acquired by Johnson Controls in 2005. Prior thereto, he held other positions with increasing responsibility at York, including serving as Executive Vice President and Chief Financial Officer. Mr. Myers previously served as a Senior Manager at KPMG LLP. Mr. Myers serves as a Member on the Children’s Hospital of Wisconsin board. Mr. Myers earned a B.S. from Pennsylvania State University. Mr. Myers brings senior management, accounting, and financial controls experience to the Company’s Board of Directors. The foundation of Mr. Myers’ financial controls and accounting expertise is from when he served as a senior manager at KPMG and continued through his service as Chief Financial Officer of York. His background and experience in finance, accounting, and senior management in various segments of large manufacturing companies make him qualified to serve on the Company’s Board of Directors.
Barry L. Pennypacker56,, 57, has served as the Company’s President and Chief Executive OfficeOfficer since SeparationMarch 2016 after having joined the Company in December 2015 as President and Chief Executive Officer of the Company’s Crane business. Prior to joining the Company, Mr. Pennypacker served as Founder, President, and Chief Executive Officer of Quantum Lean LLC, a privately held manufacturer and supplier of precision components since 2013. Prior to that, he was President, Chief Executive Officer and a director of Gardner 6
Denver, Inc., a manufacturer and marketer of engineered industrial machinery and related parts and services, from 2008 to 2012. Prior to joining Gardner Denver, Mr. Pennypacker served in positions of increasing responsibility at Westinghouse Air Brake Technologies, The Stanley Works and Danaher Corporation. Mr. Pennypacker was originally appointed as a director in 2016 pursuant to the terms of the offer letter he received in connection with joining the Company. Prior to joining the Company, his results-focused leadership style led the transformation of several complex businesses through continuous process improvements as well as delivering significant operational and financial performance improvements. In addition to serving as the Company’s President and Chief Executive Officer, Mr. Pennypacker’s deep industrial expertise, coupled with the successful execution of numerous lean initiatives throughout his career, qualifies him to serve on the Company’s Board of Directors.
John C. Pfeifer, 51,52, has been a director of the Company since 2016 and serves as a member of the Company’s Compensation and Corporate Governance Committees. He has served as corporate Vice President and President —- Mercury Marine, a subsidiary of the Brunswick Corporation, a global designer, manufacturer and marketer of recreation products including marine engines, boats, fitness equipment and billiards, since 2014. Mr. Pfeifer previously served as Vice President —- Global Operations for Mercury Marine from 2012 until 2014 and as President, Brunswick Marine in EMEA from 2008 until 2012. Prior to joining Brunswick in 2006 as President, Asia Pacific Group, Mr. Pfeifer held various executive level positions with increasing responsibility at ITT Corporation, a diversified manufacturer. Mr. Pfeifer earned a B.A. from the University of Michigan. Mr. Pfeifer has extensive management and operational experience in the international operations of large, diversified manufacturers. His experience in international market development, integration and maximizing operational efficiency make him qualified to serve on the Company’s Board of Directors. The Board of Directors recommends a vote “FOR” the election of each of the nineseven above nominees.
PROPOSAL 2 PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 20172018 The Audit Committee and the Board of Directors have appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017,2018, and ask that the shareholders ratify that appointment. A representative of PricewaterhouseCoopers LLP is expected to be present at the 20172018 Annual Meeting to respond to appropriate questions and to make a statement if he or she desires to do so. Although ratification is not required by the Company’s Restated By-laws or otherwise, the Board of Directors is submitting the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20172018 to its shareholders for ratification as a matter of good corporate practice and because the Board values the input of its shareholders on this matter. As previously pointed out,described, a majority of the votes cast on the Proposalproposal by the holders of shares entitled to vote at the 20172018 Annual Meeting is required for ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017, provided that a majority of the outstanding shares of the Company’s Common Stock are voted on the Proposal.2018. If the shareholders fail to ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee will consider it as a direction by shareholders to consider the appointment of a different independent registered public accounting firm. Nevertheless, the Audit Committee will still have the discretion to determine whom to appoint as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2018. Even if the appointment of PricewaterhouseCoopers LLP is ratified, the Audit Committee, in its discretion, may select a different independent registered 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. 7
The Board of Directors recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2018.
PROPOSAL 3 PROPOSAL 3
ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S
NAMED EXECUTIVE OFFICERS As explained in detail in the Compensation Discussion and Analysis and Compensation Committee Report sections of this Proxy Statement, through our executive compensation program we seek to align the interests of our executives with the interests of our shareholders and Company performance, as well as to motivate our executives to maximize long-term total returns to our shareholders. In accordance with rules adopted bySection 14A of the SEC,Securities Exchange Act of 1934, we are asking our shareholders to approve, on ana non-binding, advisory basis, the compensation of our named executive officers. The Company currently holds these votes annually (and is holding an advisory vote at the 2017 Annual Meeting regarding the frequency of future votes; see Proposal 4).annually. We believe the 20162017 actual compensation paid to the named executive officers is commensurate with the Company’s 20162017 performance and is aligned with the interests of our shareholders. Accordingly, we ask your indication of support“FOR” approval of the compensation of the Company’s named executive officers as described in this Proxy Statement by voting in favor of the following resolution: RESOLVEDRESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED. Although the outcome of this advisory vote is not binding on the Company, the Compensation Committee and the Board of Directors will review and consider the outcome of the vote when making future compensation decisions pertaining to the Company’s named executive officers. In seeking your approval of the compensation of the named executive officers, we direct you to the Compensation Discussion and Analysis section, including its Executive Summary, and the Executive Compensation section. The Board of Directors recommends a vote “FOR” approval of the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the Executive Compensation sections of this Proxy Statement.
PROPOSAL 4 PROPOSAL 4
ADVISORY VOTE RELATED TO HOLDING FUTURE ADVISORY VOTES EVERY YEAR TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERSSHAREHOLDER PROPOSAL
Pursuant to SEC rules, publicly-traded companies are required to hold an advisory vote of their shareholders
The following proposal and supporting statement was submitted by Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, who holds at least every six years200 shares of Common Stock, and has been included exactly as we received it, in accordance with the rules of the SEC: Proposal 4 – Simple Majority Vote RESOLVED, Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. It is important that our company take each step necessary to adopt this proposal topic completely. Shareowners are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to “What Matters in Corporate Governance” by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the frequencyHarvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a status quo management. This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill and Macy’s. The proponents of future advisory votesthese proposals included Ray T. Chevedden and William Steiner. Currently a 1%-minority can frustrate the will of our 66%-shareholder majority. In other words a 1%-minority could have the power to approve named executive officer compensation. The last suchprevent shareholders from improving the quality our corporate governance. Currently the role of Manitowoc shareholders is diminished because management can declare as worthless a 66%-vote of shareholders on certain issues. This shareholder proposal is necessary due to the failure of our Directors to give adequate oversight regarding this well-established issue of corporate governance. Please vote was held byto improve management accountability to shareholders: Simple Majority Vote – Proposal 4 * * * * Statement in Opposition to the Company at the 2011 Annual Meeting of Shareholders. Advisory votes to approve named executive officer compensation may be held every one, two or three years. The Company currently holds advisory votes every year to approve named executive officer compensation. The Board is recommending that the Company continue to hold advisory votes every year to approve named executive compensation.Shareholder Proposal The Company’s compensation philosophy seeks to maximize returns to its shareholders.
The Board of Directors has considered this shareholder proposal and recommends you vote AGAINST it. For the appropriate intervalreasons described below, the Board believes that the proposal is not in the best interests of the Company and our shareholders. We support simple majority voting standards in most cases, as evidenced by the requirements for future advisorythe election of individuals to our Board of Directors. In the past several years, we have taken steps to increase our shareholders’ ability to influence the election of directors by amending our Restated By-laws to both require the annual election of each director and to require a majority of votes cast, rather than a plurality of votes, to elect each director in an uncontested election. As a result, our shareholders currently have a great ability to influence the selection and/or retention of our directors.
Our Amended and Restated Articles of Incorporation contains only one supermajority voting provision, and we believe this provision is in our shareholders’ best interests to maintain since we believe it enhances shareholder value. As permitted by Wisconsin law, Section 4.2 of Article IV of our Amended and Restated Articles of Incorporation provides for the removal of a director by the affirmative vote of two-thirds of the outstanding shares entitled to vote. Unlike many similarly-situated public companies, the ability for our shareholders to remove a director does not require a showing of “cause” nor is it otherwise limited by any other qualification. Removal of directors without cause is an extraordinary shareholder right and should be exercised only in extraordinary circumstances. We believe that a broad consensus of our shareholders should be required to remove directors who have been elected by our shareholders, particularly, as in the case of the Company, all of our directors are elected annually at each annual meeting of the shareholders. Our Restated By-laws effectively contains only one supermajority voting provision also. The affirmative vote of two-thirds of the shares outstanding and entitled to vote is required to amend or repeal three provisions of our Restated By-laws, which relate to (i) the size of the Board of Directors and the annual election of each director; (ii) who can call a special meeting of the shareholders; and (iii) Board vacancies. We believe that the greater than majority vote requirement for these matters is appropriate to assure that significant disruption to our Board of Directors is not made without the consensus of a substantial majority of our shareholders. We believe that the proponent ignores many of the steps the Company has taken to strengthen and improve its corporate governance practices, such as removing our classified or staggered board, implementing a majority of votes cast standard for the election of directors in uncontested elections, terminating our shareholder rights agreement and splitting the role of the Chairperson and the Chief Executive Officer. As part of the Board’s commitment to consider ways in which it can better serve the Company’s corporate governance ideals and its shareholders’ interests, the Board continually monitors governance issues of interest to the Company’s shareholders. The Board believes that the very limited supermajority voting provisions we have help ensure that a broad consensus of shareholders agree on significant corporate changes and provide protection for all shareholders against self-interested actions by one or a few large shareholders. If the simple majority vote standard were adopted as proposed, and only 50.1% of the shares outstanding are present at a shareholders’ meeting, as little as 25.1% of outstanding voting power could approve named executive officer compensationcorporate changes that may negatively impact the interests of our shareholders. We believe that more meaningful voting requirements are appropriate for issues that have a long-lasting effect on our company. The Board recommends a vote AGAINST this shareholder proposal. Unless a contrary choice is specified, proxies solicited by the Board will be voted AGAINST the shareholder proposal. For the foregoing reasons, the Board believes that this proposal is not in the best interests of the Company or our shareholders, and recommends that the advisoryyou vote continue to be held every year, which will allow the Company’s shareholders to annually express their views on our compensation program. The Company values the annual input provided by its shareholders.“AGAINST” this shareholder proposal.
CORPORATE GOVERNANCE 8
Similar to the advisory vote to approve named executive officer compensation, this Proposal is also an advisory vote and is not binding on the Company. However, the Company values the opinions expressed by its shareholders, and will consider the outcome of the advisory votes to approve named executive officer compensation itself and on the frequency of future advisory votes when making decisions on the frequency of future votes.
The Board of Directors recommends a vote for a frequency of “EVERY YEAR” (i.e., “1 Year” on the proxy card or voting instruction) for futurenon-binding shareholder advisory votes to approve the compensation of the Company’s named executive officers.
2. | GOVERNANCE OF THE BOARD AND ITS COMMITTEES
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Governance of the Company CompositionComposition. Currently the Board is comprised of nineseven directors. Under the Company’s Restated By-laws, the number of directors may not be less than seven or more than twelve. The Board of Directors has determined that the followingnon-employee directors — José María Alapont, Robert–Robert G. Bohn, Donald M. Condon, Jr., Anne M. Cooney, Jesse A. Lynn, C. David Myers and John C. Pfeifer —– do not have any material relationships with the Company, other than serving as directors, and that each is independent as defined in the Company’s Corporate Governance Guidelines (which may be viewed on the Company’s website atwww.manitowoc.com)Director Independence Criteria and under applicable law and the New York Stock Exchange listing standards. In addition, Roy V. Armes, Dino J. Bianco, Joan K. Chow, Cynthia M. Egnotovich, and Keith D. Nosbusch, who served asnon-employee directors until the Separation, were also considered independent. In determining whether a director has a material relationship with the Company, the Board has adopted nine criteriaDirector Independence Criteria which may be viewed on the Company’s website atwww.manitowoc.com. www.manitowoc.com. Any director who meets all of the nine criteria will be presumed by the Board to have no material relationship with the Company. Kenneth W. Krueger, who served as Interim President and Chief Executive Officer from October 2015 until the Separation,March 2016, and prior thereto earned special fees totaling $240,000 for services related to the Separation in fiscal 2015,March 2016 spin-off of the Company’s former foodservice business into an independent, public company (the “Spin-Off”), and, as a result, is not considered to be independent. Barry L. Pennypacker, the Company’s President and Chief Executive Officer, is not an independent director. Guidelines.Guidelines. The Company has adopted Corporate Governance Guidelines in order to set forth internal Board policies and procedures. A copy of the current Corporate Governance Guidelines may be viewed on the Company’s website atwww.manitowoc.com. www.manitowoc.com. As set forth in the Corporate Governance Guidelines, all directors are strongly encouraged to attend all annual shareholder meetings of the Company. AllEight of theour nine directors serving at the time attended the 20162017 Annual Meeting of Shareholders.
Ethics. The Company has a Code of Business Conduct that includes a Global Ethics Policy that pertains to all employees, including, but not limited to, the Company’s principal executive officer, principal financial officer, principal accounting officer and controller. A copy of these policies can be viewed at the Company’s website atwww.manitowoc.com. www.manitowoc.com.
Meetings. During the fiscal year ended December 31, 2016,2017, the Board of Directors met ninefive times. All members of the Board attended at least 75 percent of the meetings held by the Board and the committees on which they served. As required by the Company’s Corporate Governance Guidelines, the Board met in executive session at each regular Board meeting during 2016.2017.
Board Leadership Structure. The Board of Directors has determined that the interests of the Company and the Board of Directors are best served at this time by separating the roles of Chair of the Board and Chief Executive Officer of the Company. Among the factors considered by the Board in reaching this conclusion, the 9
Board of Directors believes that with the recent Separation, it is important for Mr. Pennypacker to focus solely on his responsibilities as President and Chief Executive Officer of the Company and that a Board member with a long-standing familiarity with the Company should serve as the Chair of the Board of Directors. The Corporate Governance Guidelines provide that if the Chair of the Board is also the Chief Executive Officer,not an independent director, the chairperson of the Corporate Governance Committee, Robert G. Bohn currently, will serve as the lead director. If for any reason the chairperson of the Corporate Governance Committee is unable to perform the lead director role on a temporary basis, he/she will designate the chairperson of either the Compensation Committee or the Audit Committee to assume the role of lead director on an interim basis. The lead director has the following duties and responsibilities: (a) preside at all meetings of the Board of Directors at which the Chair of the Board is not present, including independent director sessions; (b) call independent director sessions; (c) serve as a liaison between the Chair of the Board and the independent directors; (d) review and approve the agendas for Board meetings, including the schedule of meetings; (e) meet with the Chair of the Board and Chief Executive Officer after each Board meeting to provide feedback to the Chair of the Board and Chief Executive Officer regarding the Board meeting and any other matters deemed appropriate by the independent directors; and (f) such other duties and responsibilities as the Board of Directors may request from time to time.
Committees. The Company has standing Corporate Governance, Audit and Compensation Committees of the Board of Directors, comprised of only independent directors as follows: | | | | | Audit Committee | Compensation Committee | Compensation Committee
| | Corporate Governance Committee | C. David Myers, Chair | | Donald M. Condon, Jr., Chair | | Robert G. Bohn, Chair | José María Alapont | | Robert G. Bohn | | José María Alapont | Donald M. Condon, Jr. | Robert G. Bohn | John C. Pfeifer | Anne M. Cooney | | Jesse A. Lynn | Anne M. Cooney | | | John C. Pfeifer | | John C. Pfeifer | Jesse A. Lynn | | | | |
Risk Oversight The Board of Directors is responsible for the oversight of risk across the entire Company. This responsibility is administered more directly through the Audit Committee of the Board of Directors. As set forth in the Audit Committee Charter, one purpose of the Audit Committee is to assist the Board of Directors in fulfilling its role in the oversight of the risk across the organization and the management and/or mitigation of those risks. On a regular basis in its committee meetings, the Audit Committee specifically reviews the risk factors identified by management that could have a material adverse effect on the business, financial condition or results of operations of the Company. Additionally, the Audit Committee works to identify the Company’s material risks and risk factors through regular meetings and discussions with senior management, the director of internal audit and the Company’s independent auditors. Management reviews with the Audit Committee the potential risks and mitigating strategies related to each of the Company’s key business areas (i.e., market, financial, operational, reputation, competition, legal and regulatory, environmental, health and safety, product liability, public reporting, information systems, employment and labor, and strategic planning). As specific issues arise and are identified, the Audit Committee reviews with management those issues and the controls that have been put in place, as well as the actions taken to address and mitigate those risks. The management of the risks takes place through the following offices based on responsibility: Chief Financial Officer (market, financial, accounting, information systems, public reporting, reputation, regulatory, and strategic planning risks); General Counsel (legal, regulatory, product liability, and insurance risks); Senior Vice President of Human Resources (employment, labor, regulatory, environmental, health, welfare and safety risks); and the mobile and tower segment Executive Vice PresidentsPresident, Cranes (market, operational, and competition risks). 10
Transactions with Related Persons The Company’s policies and procedures regarding the review, approval, and ratification of related party transactions are circumscribedset forth in the director independence criteriaDirector Independence Criteria adopted by the Board and may be viewed on the Company’s website atwww.manitowoc.com, and in the Company’s Code of Business Conduct and Code of Ethics (both of which also may be viewed on the Company’s website atwww.manitowoc.com www.manitowoc.com). The Company’s Code of Ethics specifically requires that (a) without the prior approval of the Chief Executive Officer, the Chief Financial Officer or General Counsel of the Company, no officer or employee will enter into any transaction for or on behalf of the Company with any other person or entity in which the employee or officer has a direct or indirect interest; (b) directors and officers of the Company are required to report annually, on a director and officer questionnaire circulated by the Company, any material interest that such director or officer has in any business enterprise with which the Company conducts business; and (c) any transactions or agreements relating to transactions between the Company and any such business enterprise must be approved by those members of the Company’s Board of Directors who have no interest in the business enterprise, which approval may be a continuing approval. There were no reportable transactions with related parties during 2016.2017.
Corporate Governance Committee The Corporate Governance Committee is also the Company’s nominating committee. The purpose of the Corporate Governance Committee is to assist the Board in its corporate governance responsibilities, including to identify individuals qualified to become Board members, to recommend to the Board for the Board’s selection director nominees and to recommend to the Board the corporate governance principles and guidelines. The Corporate Governance Committee conducts an annual assessment of its own performance and it manages the annual evaluation of the Board. The Corporate Governance Committee has a charter that may be viewed on the Company’s website atwww.manitowoc.com. www.manitowoc.com. All members of the Corporate Governance Committee are independent as defined in the Company’s Corporate Governance Guidelines (which may be viewed at the Company’s website atwww.manitowoc.com),Director Independence Criteria, applicable law and the corporate governance listing standards of the New York Stock Exchange. The Corporate Governance Committee met four times during 2016. For further information, see the Corporate Governance Committee Report below.2017. Audit Committee The purpose of the Audit Committee, is to (A) assist the Board of Directors in fulfilling its oversight of (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, (4) the performance of the Company’s internal audit function and independent auditors, (5) the risk across the organization and the management and/or mitigation of those risks, (6) the Company’s compliance with ethical standards established by law, rule, regulation and Company policy, and (7) the Company’s disclosure processes and procedures; and (B) prepare the report that SEC rules require be included in the Company’s annual Proxy Statement. The Audit Committee conducts an annual evaluation of its own performance. The Audit Committee has a charter, which may be viewed on the Company’s website atwww.manitowoc.com. www.manitowoc.com. All the members of the Audit Committee are “independent,” as defined in the Company’s Corporate Governance Guidelines (whichDirector Independence Criteria, the Audit Committee Charter (both of which may be viewedfound on the Company’s website atwww.manitowoc.com) www.manitowoc.com), applicable law and the corporate governance listing standards of the New York Stock Exchange relating to audit committees. The Board has determined that all members of the Audit Committee are financially literate and that Messrs. Myers and Condon are “audit committee financial experts,” as defined in the Company’s Audit Committee Charter and in the SEC regulations. 11
The Audit Committee met sevenfive times during 2016.2017. For further information, see the Audit Committee Report below. Compensation Committee The Compensation Committee provides assistance to the Board of Directors in fulfilling its responsibility to achieve the Company’s purpose of maximizing the long-term total return to shareholders by ensuring that officers, directors and employees are compensated in accordance with the Company’s philosophy, objectives and policies. The Compensation Committee reviews and approves compensation and benefits policies, strategies and pay levels necessary to support corporate objectives and provides an annual report on executive compensation for inclusion in the Company’s annual Proxy Statement, in accordance with applicable rules and regulations. The Compensation Committee conducts an annual evaluation of its own performance. A copy of the Compensation Committee Charter can be viewed on the Company’s website atwww.manitowoc.com. www.manitowoc.com.
All the members of the Compensation Committee are “independent” as defined in the Company’s Corporate Governance Guidelines,Director Independence Criteria, the Compensation Committee Charter (both of which may be found on the Company’s website atwww.manitowoc.com) www.manitowoc.com), applicable law and the corporate governance listing standards of the New York Stock Exchange relativerelating to compensation committees. The Compensation Committee is primarily responsible for administering the Company’s executive compensation program. As such, the Compensation Committee reviews and approves all elements of the executive compensation program that cover the named executive officers. Management is responsible for making recommendations to the Compensation Committee (except with respect to compensation paid to the Chief Executive Officer) and effectively implementing the executive compensation program, as established by the Compensation Committee. To assist the Compensation Committee with its responsibilities regarding the executive compensation program, the Compensation Committee currently retains Willis Towers Watson as its independent compensation consultant. The Compensation Committee considered the factors set forth in the Compensation Committee Charter and in applicable SEC and New York Stock Exchange rules regarding independence, and does not believe that its retention of Willis Towers Watson has given rise to any conflict of interest. The Compensation Committee’s responsibilities include the following: Acting on behalf of the Board of Directors in setting compensation policy, administering compensation plans and making decisions with respect to the compensation of key Company executives, including the review and approval of merit/other compensation budgets and payouts under incentive plansplans; Reviewing and recommending to the full Board for approval, annual base salary levels, short-term and long-term incentive opportunity levels, executive perquisites, employment agreements (if and when appropriate), benefits, and supplemental benefits of the Chief Executive Officer and other key executives of the CompanyCompany; Annually appraising the performance of the Chief Executive Officer and providing developmental feedback to the Chief Executive Officer and, when appropriate, to other key executives of the organizationorganization; Annually evaluating Chief Executive Officer and other key executives’ compensation levels and payouts against(1) pre-established, measurable performance goals and objectives; and (2) an appropriate comparison groupgroup; and Reviewing and recommending pay levelsthe compensation fornon-employee directors for vote by the full BoardBoard. The Compensation Committee met sevensix times during 2016.2017. For further information, see the Compensation Discussion and Analysis and the Compensation Committee Report below. Nominations of Directors 12
3. | CORPORATE GOVERNANCE COMMITTEE REPORT
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The Corporate Governance Committee has adopted the following policies and procedures regarding consideration of candidates for the Board:Board. Consideration of Candidates for the Board of Directors Submitted by Shareholders. The Corporate Governance Committee will only review recommendations for director nominees from any shareholder beneficially owning, or group of shareholders beneficially owning in the aggregate, at least 5% of the issued and outstanding common stockCommon Stock of the Company for at least one year as of the date that the recommendation was made (a “Qualified Shareholder”). Any Qualified Shareholder must submit its recommendation no later than 120 calendar days before the date of the Company’s Proxy Statement is released to the shareholders in connection with the previous year’s annual meeting for the recommendation to be considered by the Corporate Governance Committee. Any recommendation must be submitted in accordance with the policy in the Corporate Governance Guidelines captioned “Shareholder/Interested Person Communications.”“Communications to the Board of Directors” (which is also described below). In considering any timely-submitted recommendation from a Qualified Shareholder, the Corporate Governance Committee shall have sole discretion as to whether to nominate the individual recommended by the Qualified Shareholder, except that in no event shall a candidate recommended by a Qualified Shareholder who is not “independent” as defined in the Company’s Corporate Governance GuidelinesDirector Independence Criteria and who does not meet the minimum expectations for a director set forth in the Company’s Corporate Governance Guidelines be recommended for nomination by the Corporate Governance Committee. The Corporate Governance Committee did not receive, prior to the deadline noted in the foregoing policy, any recommendations for director nominees from any Qualified Shareholder (as defined in the foregoing policy).Shareholder.
Consideration of Candidates for the Board of Directors who are Incumbent Directors. Prior to the expiration of the term of a director desiring to stand forre-election, the Corporate Governance Committee will evaluate the performance and suitability of the particular director. The evaluation may include the opportunity for other sitting directors to provide input to the Corporate Governance Committee or its chairperson and may include an interview of the director being evaluated. If the director being evaluated is the chairperson of the Corporate Governance Committee, another Corporate Governance Committee member will be appointed by the Corporate Governance Committee to lead the evaluation. The Corporate Governance Committee will make a recommendation to the Board for the Board’s final decision on each director seekingre-election. Mr. Lynn was initially elected as a director in 2015 pursuant to a Settlement Agreement (as subsequently amended, the “Agreement”) among the Company and Carl C. Icahn and various related and associated entities (collectively, the “Icahn Shareholders”). The Icahn Shareholders have disclosed beneficial ownership exceeding 5% of the Company’s common stock. See “OWNERSHIP OF SECURITIES — Stock Ownership of Beneficial Owners of More than Five Percent.” The Agreement provided the Icahn Shareholders with the option to cause the Company to appoint one designee of the Icahn Shareholders to its Board of Directors, subject to approval of the designee by the Company’s Board of Directors. The Agreement provided that the designee, Mr. Lynn, must promptly resign from the Board if the Icahn Shareholders cease to own at least 5% of the Company’s voting shares. Under the Agreement, the Icahn Shareholders agreed to certain standstill provisions with respect to the Company during a defined standstill period. As a result of the Separation and the passage of time, the Agreement has now expired. However, notwithstanding the expiration of the Agreement, as a result of his valuable service to the Company since he joined the Board, Mr. Lynn was nominated forre-election.
Consideration of Candidates for the Board of Directors who are Non-Incumbent Directors. In the event of a vacancy in the Board of Directors, the Corporate Governance Committee will manage the process of searching for a suitable director. The Corporate Governance Committee will be free to use its judgment in structuring and carrying out the search process based on the Corporate Governance Committee’s and the Board’s perception as to what qualifications would best suit the Board’s needs for each particular vacancy. The process may include the consideration of candidates recommended by officers, Board members, shareholders and/or a third party 13
professional search firm retained by the Corporate Governance Committee. The Corporate Governance Committee has sole authority to retain (including to determine the fees and other retention terms) and terminate any third party to be used to identify director candidates and/or evaluate any director candidates. Any candidate should meet the expectations for directors set forth in the Company’s Corporate Governance Guidelines. Strong preference should be given to candidates who are “independent,” as that term is defined in the Corporate Governance GuidelinesCompany’s Director Independence Criteria and the New York Stock Exchange rules, and to candidates who are sitting or former executives of companies whose securities are listed on a national securities exchange and registered pursuant to the Securities Exchange Act of 1934. The Corporate Governance Committee is not required to consider candidates recommended by a shareholder except in accordance with the policy captioned, “Consideration of Candidates for the Board of Directors Submitted by Shareholders” set forth above (and in the Corporate Governance Committee Charter.Charter). If the Corporate Governance Committee determines to consider a candidate recommended by a shareholder, the Committee will be free to use its discretion and judgment as to what deference will be given in considering any such candidate. Director Qualifications and Diversity. The Board of Directors appreciates the value that can come from a diverse representation on the Board of Directors. In identifying candidates for the Board of Directors, the Corporate Governance Committee considers foremost the qualifications and experience that the Corporate Governance Committee believes would best suit the Board’s needs created by each particular vacancy. As part of the process, the Corporate Governance Committee and the Board endeavor to have a Board comprised of individuals with diverse backgrounds, viewpoints, and life and professional experiences, provided such individuals should all have a high level of management and/or financial experience and expertise. In this process, the Board of Directors and the Corporate Governance Committee do not discriminate against any candidate on the basis of race, color, national origin, gender, religion, disability, sexual orientation or gender identity. Shareholder/Interested Party Communications. to the Board of Directors
As set forth in the Company’s Corporate Governance Guidelines, which may be viewed on the Company’s website atwww.manitowoc.com,, any shareholder or interested party may communicate with the Board of Directors in accordance with the following process. If an interested party desires to communicate with the Board of Directors or any member of the Board of Directors, the interested party may send such communication in writing to the Company to the attention of the Director of Investor Relations and/or the General Counsel.our Secretary. Such communication must include the following information in order to be considered for forwarding to the Board of Directors or the applicable director: | 1. | The name, address, and phone number of the interested party; |
| 2. | The basis of the party’s interest in the Company; forCompany (for example, if the interested party is a shareholder, a statement to that effect with the number of shares owned by the shareholder and the length of time that such shares have been beneficially owned;owned); |
| 3. | The identity of the director or directors for whom such communication is intended; |
| 4. | The address where any reply or questions may be sent by the Company, the Board or any Board member; |
| 5. | 5. | Whether such interested party requests that the Company let the interested party know whether or not such communication has been forwarded to the Board or the particular Board member; and |
| 6. | Such other information that the Company may subsequently request in order to verify the foregoing information or to clarify the communication. |
Any communication that the Company’s Director of Investor Relations or General CounselSecretary determines, in his or her discretion, to be or to contain any language that is offensive or to be dangerous, harmful, illegal, illegible, not understandable, or nonsensical, may, at the option of such person, not be forwarded to the Board or any particular director. Any communication from an interested party shall not be entitled to confidential treatment and may be disclosed by the Company or by any Board member as the Company or the Board member sees fit. Neither the Company nor the Board, nor any Board member, shall be obligated to send any reply or 14
response to the interested party, except to indicate to the interested party (but only if the interested party specifically requested such an indication) whether or not the interested party’s communication was forwarded to the Board or the applicable Board member.
Corporate Governance CommitteeAUDIT COMMITTEE REPORT
Robert G. Bohn, Chair
José María Alapont
Jesse A. Lynn
John C. Pfeifer
In connection with its function to oversee and monitor the financial reporting process of the Company, the Audit Committee has done the following: reviewed and discussed the audited financial statements for the fiscal year ended December 31, 20162017 with the Company’s management; discussed with PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, those matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301 (Communications with Audit Committees), and SEC RegulationS-X, Rule2-07 (Communication with Audit Committee); and received the written disclosure and the letter from PricewaterhouseCoopers LLP required by the applicable requirements of the Public Company Accounting Oversight Board, considered whether the provisions ofnon-audit services by PricewaterhouseCoopers LLP are compatible with maintaining PricewaterhouseCoopers LLP’s independence, and discussed with PricewaterhouseCoopers LLP its independence. Based on the foregoing, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016.2017. Fees Billed to the Company by PricewaterhouseCoopers LLP during Fiscal 20162017 and 20152016 Fees billed or expected to be billed by PricewaterhouseCoopers LLP for each of the last two years are listed in the following table: | | | | | | | | | | | Year Ended
December 31, | | Audit
Fees | | Audit
Related
Fees | | Tax Fees | | All Other
Fees | Audit
Fees | Audit
Related
Fees | Tax Fees | All Other
Fees | 2017 | | $2,075,286 | $54,145(1) | $98,000 | $2,700 | 2016 | | $2,475,354 | | $715,944(1) | | $2,001,669(1) | | $1,800 | $2,475,354 | $715,944(2) | $2,001,669(2) | $1,800 | 2015 | | $3,803,000 | | $2,903,000(2) | | $3,979,000(3) | | $1,800 | |
| (1) | SEC comment letter fees. |
(1) | (2) | Includes $644,585 of Audit related fees to the SeparationSpin-Off and $1,814,417 of tax fees related to the Separation.Spin-Off. |
(2) | Includes $2.3 million of audit related fees associated with thecarve-out of the financial statements of MFS as part of the Separation.
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(3) | Includes $3.1 million of tax related fees associated with the legal restructuring to affect the Separation.
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Audit fees include fees for services performed to comply with the standards of the Public Company Accounting Oversight Board (United States), including the recurring audit of the Company’s consolidated 15
financial statements. This category also includes fees for audits provided in connection with statutory filings or services that generally only the principal auditor reasonably can provide to a client, such as procedures related to consents and assistance with a review of documents filed with the SEC. Audit related fees include fees associated with assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements as well as fees associated with the SeparationSpin-Off as described above. Tax fees primarily include fees associated with tax compliance, tax consulting, and domestic and international tax planning as well as fees associated with the SeparationSpin-Off as described above. All other fees primarily include fees associated with an accounting research tool. The Company’s policy and procedures forpre-approval ofAudit Committee Charter requires that the Audit Committee pre-approve all non-audit services to be performed by the Company’s independent registered public accounting firm are set forth in Section III of the Audit Committee Charter.firm. A copy of the Audit Committee Charter may be viewed on the Company’s website atwww.manitowoc.com. www.manitowoc.com. All services performed by PricewaterhouseCoopers LLP that are encompassed in the audit related fees, tax fees, and all other fees were approved by the Audit Committee in advance in accordance with thepre-approval policy and process set forth in the Audit Committee Charter.
Independent Registered Public Accounting Firm In accordance with the recommendation of the Audit Committee, and at the direction of the Board of Directors, the Company has retained PricewaterhouseCoopers LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2017.2018. As set forth in this Proxy Statement, the appointment of PricewaterhouseCoopers LLP is being submitted to the shareholders for ratification at the 20172018 Annual Meeting. A representative of PricewaterhouseCoopers LLP is expected to be present at the 20172018 Annual Meeting to respond to appropriate questions and to make a statement if he or she desires to do so. Audit Committee C. David Myers, Chair José María Alapont
Donald M. Condon, Jr. Anne M. Cooney
Jesse A. Lynn
OWNERSHIP OF SECURITIES 16
5. | EQUITY COMPENSATION PLANS
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The following table summarizes, as of December 31, 2016, the number of shares of the Company’s Common Stock that may be issued under the Company’s equity compensation plans and the number of shares available under such plans pursuant to which grants of options, warrants, and rights to acquire shares may be made fromtime-to-time.
| | | | | | | | | | | | | | | | A | | | B | | | C | | | Plan Category | | Number of securities to be issued upon exercise of
outstanding options,
warrants, and rights | | | Weighted-average exercise
price of outstanding
options, warrants, and
rights | | | Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column A) | | Equity compensation plans not approved by security holders(1) | | | 0 | (2) | | | $0 | (2) | | | 0 | (2) | Equity compensation plans approved by security holders(2)(3) | |
| 3,821,541
1,727,576 22,400 | (3(a))(4)
(3(b))(4) (3(c)) | |
| $4.46
$4.40 $6.39 | (3(a))(4)
(3(b))(4) (3(c)) | |
| 26,025,008
0 0 | (3(a))(4)
(3(a)) (3(c)) | Total | | | 6,584,156 | | | | | | | | 26,025,008 | |
(1) | Reflects the Company’s Deferred Compensation Plan, which is discussed under section 8 — Compensation Discussion and Analysis and Compensation Committee Report under the subsection captioned “Deferred Compensation” under Other Pay Elements and under section 7 —Non-Employee Director Compensation.
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(2) | Column (A) does not include 108,958 common stock units issued under the Deferred Compensation Plan as of December 31, 2016. Each common stock unit under the Deferred Compensation Plan represents the right to receive one share of Company common stock following the participant’s death, disability, termination of service as a director or employee, a date specified by the participant, or the earlier of any such events to occur. Since the common stock units are acquired by participants through a deferral of fees or compensation, there is no “exercise price” associated with the common stock units. Thus, the weighted-average exercise price in column (B) is calculated solely on the basis of outstanding options issued under the 2003 Incentive Stock and Awards Plan (the “2003 Stock Plan”), the 2004Non-Employee Director Stock and Awards Plan (the “2004 Stock Plan”), and the 2013 Omnibus Incentive Plan and does not take into account the common stock units issued under the Deferred Compensation Plan. The operation of the Deferred Compensation Plan requires the plan trustees to make available as and when needed a sufficient number of shares of Company common stock to meet the needs of the plan. Accordingly, since there is no specific number of shares reserved for issuance under the Deferred Compensation Plan, column (C) includes only those shares remaining available for issuance under the 2003 Stock Plan, the 2004 Stock Plan and the 2013 Omnibus Incentive Plan.
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(3) | Consists of the Company’s: (a) 2013 Omnibus Incentive Plan; (b) 2003 Stock Plan; and (c) 2004 Stock Plan. No new awards may be issued under the 2003 Stock Plan or the 2004 Stock Plan; however, the two plans continue to govern awards outstanding as of the date they were terminated, and the outstanding awards under these plans continue in force and effect until vested, exercised or forfeited pursuant to their terms. The securities remaining available for future issuance pursuant to the 2013 Omnibus Incentive Plan were adjusted in accordance with the plan’s terms in connection with the Separation.
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(4) | Includes stock options, performance share awards issued at target and restricted stock units. Does not include restricted shares. The weighted-average price does not factor in performance share awards or restricted stock units.
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17
6. | OWNERSHIP OF SECURITIES
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Stock Ownership of Beneficial Owners of More than Five Percent The following table sets forth information regarding the beneficial ownership of each person or entity known by the Company to have beneficial ownership of more than 5% of the Company’s outstanding common stock.Common Stock. The shares of Common Stock reflected in the table and notes below have been adjusted to account for the 1-for-4 reverse stock split that was effected on November 17, 2017. | | | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percent
Percent of Class | | Carl C. Icahn
c/o Icahn Capital LP
767 Fifth Avenue, 47th Floor
New York, NY 10153
| | | 10,582,660 | (1) | | | 7.8 | % | The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | 2,709,220 (1) | 7.7% | FVP Master Fund, L.P. c/o dms Corporate Services, Ltd. P.O. Box 1344 dms House 20 Genesis Close Grand Cayman, KY1-1108 Cayman Islands | 9,589,488 | 2,336,623(2) | 6.6% | Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas, 78746 | 2,282,764 (3) | 6.96.5% | Southpoint Master Fund, LP 1114 Avenue of the Americas, 22nd Floor New York, NY 10036 | % 2,164,734 (4) | 6.2% | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | 2,087,730 (5) | 8,184,499 | (3) | | | 5.9 | % |
(1) | The information is based solely on a Schedule 13D/A filed with the SEC by Carl C. Icahn and his affiliated entities on January 16, 2015, as amended on February 9, 2015 and on January 4, 2016. According to the filing, as of January 16, 2015: (i) High River Limited Partnership, a Delaware limited partnership, has sole voting power and sole dispositive power with respect to 2,116,531 shares; (ii) Hopper Investments LLC, a Delaware limited liability company, has shared voting power and shared dispositive power with respect to 2,116,531 shares; (iii) Barberry Corp., a Delaware corporation, has shared voting power and shared dispositive power with respect to 2,116,531 shares; (iv) Icahn Partners Master Fund LP, a Delaware limited partnership, has sole voting power and sole dispositive power with respect to 3,438,929 shares; (v) Icahn Offshore LP, a Delaware limited partnership, has shared voting power and shared dispositive power with respect to 3,438,629 shares; (vi) Icahn Partners LP, a Delaware limited partnership, has sole voting power and sole dispositive power with respect to 5,027,500 shares; (vii) Icahn Onshore LP, a Delaware limited partnership, has shared voting power and shared dispositive power with respect to 5,027,500 shares; (viii) Icahn Capital LP, a Delaware limited partnership, has shared voting power and shared dispositive power with respect to 8,466,129 shares; (ix) IPH GP LLC, a Delaware limited liability company, has shared voting power and shared dispositive power with respect to 8,466,129 shares; (x) Icahn Enterprises Holdings L.P., a Delaware limited partnership, has shared voting power and shared dispositive power with respect to 8,466,129 shares; (xi) Icahn Enterprises G.P. Inc., a Delaware corporation, has shared voting power and shared dispositive power with respect to 8,466,129 shares; (xii) Beckton Corp., a Delaware corporation, has shared voting power and shared dispositive power with respect to 8,466,129 shares; and (xiii) Carl C. Icahn has shared voting power and shared dispositive power with respect to 10,582,660 shares. Mr. Icahn is in a position indirectly to determine the investment and voting decisions made by each of the affiliated entities.5.9%
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(2) | (1) | This information is based solely on a Schedule 13G/A filed with the SEC by The Vanguard Group, Inc. (“Vanguard”) on February 10, 2017.8, 2018. Vanguard reported that it may be deemed to have sole voting power as to 155,25837,075 shares, shared voting power as to 13,9003,475 shares, sole dispositive power with respect to 9,427,0302,671,986 shares and shared dispositive power with respect to 162,45837,234 shares as of December 31, 2016.2017. |
| (2) | This information is based solely on a Schedule 13G filed with the SEC on February 14, 2018 by (i) FVP Master Fund, L.P., a Cayman Islands exempted limited partnership (“FVP Master Fund”), (ii) Firefly Value Partners, LP, a Delaware limited partnership (“Firefly Partners”), which serves as the investment manager of FVP Master Fund, (iii) FVP GP, LLC, a Delaware limited liability company (“FVP GP”), which serves as the general partner of FVP Master Fund, (iv) Firefly Management Company GP, LLC, a Delaware limited liability company (“Firefly Management”), which serves as the general partner of Firefly Partners, and (v) Messrs. Ryan Heslop and Ariel Warszawski, the managing members of FVP GP and Firefly Management (all of the foregoing, collectively, “Firefly”). Firefly reported that it has shared voting and dispositive power with respect to all of these shares as of December 31, 2017. |
| (3) | This information is based solely on a Schedule 13G filed with the SEC by Dimensional Fund Advisors LP (“Dimensional”) on February 9, 2018. Dimensional reported that it may be deemed to have sole voting power as to 2,129,758 shares, no shared voting power with respect to any shares, sole dispositive power with respect to 2,282,764 shares and no shared dispositive power with respect to any shares as of December 31, 2017. |
| (4) | This information is based solely on a Schedule 13G/A filed with the SEC by Southpoint Master Fund, LP, Southpoint Capital Advisors LP, Southpoint Capital Advisors LLC, Southpoint GP, LP, Southpoint GP, LLC and John S. Clark II (collectively, “Southpoint”) on February 14, 2018. Southpoint reported that it has shared voting and dispositive power with respect to all of these shares as of February 12, 2018. |
| (5) | This information is based solely on a Schedule 13G filed with the SEC by BlackRock, Inc. (“BlackRock”) on January 30, 2017.25, 2018. BlackRock reported that it may be deemed to have sole voting power with respect to 7,915,9692,016,980 shares and sole dispositive power with respect to 8,184,4992,087,730 shares as of December 31, 2016.2017. |
18
Stock Ownership of Directors and Management The following table sets forth information regarding the beneficial ownership of Common Stock by each current director and director nominee of the Company, by each current and former executive officer of the Company named in the Summary Compensation Table below, and by the current directors and executive officers of the Company as a group. Unless otherwise indicated, the information is provided as of the Record Date (i.e., February 28, 2017.2018). Each of the persons listed below is the beneficial owner of less than 1% of the outstanding shares of Common Stock, and the current executive officers and directors as a group own approximately 3%1.4% of the outstanding shares of Common Stock. The table also reflects for each person the number of Common Stock units associated with compensation deferred under the Company’s Deferred Compensation Plan. None of the persons named below has pledged any of his/her shares as security. The shares of Common Stock reflected in the table and notes below have been adjusted to account for the 1-for-4 reverse stock split that was effected on November 17, 2017. | | | Name | Number of Shares of Common Stock Beneficially Owned(1) | Number of Deferred Common Stock Units Beneficially Owned(2) | David J. Antoniuk | 49,185(3) | 0 | Robert G. Bohn | 15,119 | 0 | Donald M. Condon, Jr. | 18,660 | 1,932 | Anne M. Cooney | 13,413 | 0 | Kenneth W. Krueger | 42,635 | 5,232 | Thomas G. Musial | 119,677(4)(5) | 2,244 | C. David Myers | 21,017 | 0 | Barry L. Pennypacker | 166,841(6) | 3,901 | John C. Pfeifer | 13,413 | 0 | Aaron H. Ravenscroft | 34,694(7) | 0 | Louis F. Raymond, Former Vice President, General Counsel and Secretary | 62,947(5)(8) | 172 | Lawrence J. Weyers, Former Executive Vice President – Tower Cranes | 141,191(9) | 0 | Total of all current executive officers and directors as a group (11 persons) | 510,865(10)(11) | 13,309 |
| | | | | | | | | Name | | Number of Shares of Common
Stock Beneficially Owned(1) | | | Number of Deferred Common
Stock Units Beneficially Owned(2) | | José María Alapont
| | | 42,182 | (3) | | | 0 | | David J. Antoniuk(1)
| | | 86,311 | (4) | | | 0 | | Robert G. Bohn
| | | 49,007 | (3) | | | 0 | | Donald M. Condon, Jr.
| | | 67,406 | (3) | | | 7,728 | | Anne M. Cooney
| | | 42,182 | (3) | | | 0 | | Kenneth W. Krueger
| | | 161,134 | (3)(5) | | | 20,926 | | Jesse A. Lynn
| | | 46,314 | (3)(6) | | | 0 | | Thomas G. Musial
| | | 410,685 | (7)(11) | | | 8,978 | | C. David Myers
| | | 40,581 | (3) | | | 0 | | Barry L. Pennypacker
| | | 232,703 | (8) | | | 9,016 | | John C. Pfeifer
| | | 42,182 | (3) | | | 0 | | Aaron H. Ravenscroft
| | | 53,208 | (9) | | | 0 | | Lawrence J. Weyers
| | | 152,871 | (10)(11) | | | 0 | | Carl J. Laurino,Former Executive Officer
| | | 41,570 | (6) | | | 0 | | Total of all current executive officers and directors as a group (16 persons)
| | | 3,719,930 | (12) | | | 101,781 | (13) |
(1) | Unless otherwise noted, the specified persons have sole voting power and sole dispositive power as to the indicated shares. |
(2) | The Company has the sole right to vote all shares of common stockCommon Stock underlying the common stockCommon Stock units held in the Deferred Compensation Plan Trust. The independent trustee of the Trust has dispositive power as to such shares. |
(3) | Includes 16,601 restricted share units received February 22, 2017. |
(4) | Includes shares Mr. Antoniuk received at his date of hire, May 31, 2016.
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(5) | Includes 2,60017,299 shares that Mr. KruegerAntoniuk has the right to acquire pursuant to the equity awards planCompany’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 20172018 Annual Meeting.
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(6) | Mr. Laurino is no longer employed with the Company.(4)
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(7) | Includes 199,26062,202 shares that Mr. Musial has the right to acquire pursuant to the equity awards planCompany’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 20172018 Annual Meeting. |
(8) | Includes 154,703 Mr. Pennypacker has the right to acquire pursuant to the equity awards plan within sixty days following the record date for the 2017 Annual Meeting.(5)
|
(9) | Includes 24,752 Mr. Ravenscroft has the right to acquire pursuant to the equity awards plan within sixty days following the record date for the 2017 Annual Meeting.
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19
(10) | Includes 96,226 Mr. Weyers has the right to acquire pursuant to the equity awards plan within sixty days following the record date for the 2017 Annual Meeting.
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(11) | For the following current and former executive officers, includes the indicated number of shares that were held in their respective 401(k) Retirement Plan accounts as of February 28, 2017,2018, as to which they have sole voting power and shared investment power: Mr. Musial — 21,031,– 5,427 and Mr. Weyers — 1,211.Raymond – 4,047. |
(12)(6) | Includes 1,956,884114,763 shares that Mr. Pennypacker has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2018 Annual Meeting. |
| (7) | Includes 19,110 shares that Mr. Ravenscroft has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2018 Annual Meeting. |
| (8) | Includes 30,393 shares that Mr. Raymond has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2018 Annual Meeting. |
| (9) | Includes 30,932 shares that Mr. Weyers has the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2018 Annual Meeting. |
| (10) | Includes 213,374 shares that the Company’s named executive officers have the right to acquire pursuant to the Company’s 2013 Omnibus Incentive Plan within sixty days following the record date for the 2018 Annual Meeting. |
| (11) | Includes 5,427 shares, as of February 28, 2017,2018, held byin the 401(k) Retirement Plan (persons within the group hold sole voting power with respect to 76,261 of these shares, and shared investment power with respect to all of these shares by virtue of the Plan’s administration by an investment committee of benefit management executive officers).Plan. |
(13) | Includes all shares of common stock held within the Deferred Compensation Plan Trust as of February 28, 2017. Certain officers have sole voting power under the Deferred Compensation Plan Trust with respect to 18,682 of these shares.
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Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors and persons owning more than ten percent of the Company’s Common Stock to file reports of ownership and changes in ownership of equity and derivative securities of the Company with the Securities and Exchange Commission and the New York Stock Exchange. To the Company’s knowledge, based on information provided by the reporting persons, all applicable reporting requirements for fiscal year 20162017 were complied with in a timely manner, except as follows: (i) the Forms 4 reporting the March 28, 2016 grants of restricted stock units to Ms. Cooney and Messrs. Alapont, Bohn, Condon, Lynn, Myers and Pfeifer were filed on April 13, 2016, due to an administrative error; (ii) the Forms 4 reporting Mr. Musial’s April 29, 2016 option exercise and the May 2, 2016 option exercises by Messrs. Krueger and Laurino were filed on May 5, 2016, due to a clerical error; and (iii) the Form 4 reporting Mr. Pennypacker’s acquisition of common stock units pursuant to the Company’s Deferred Compensation Plan on September 30, 2016,Krueger’s February 21, 2017 option exercises was filed on October 5, 2016,January 16, 2018 due to a clerical error. NON-EMPLOYEE DIRECTOR COMPENSATION 7. | NON-EMPLOYEE DIRECTOR COMPENSATION
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The annual compensation package fornon-employee directors is designed to attract and retain highly experienced and qualified individuals to serve on the Company’s Board of Directors. Thenon-employee director compensation packageIt is also intended to be competitive relative to general industrial companies of comparable size to the Company. The Compensation Committee typically reviews the market competitiveness of thenon-employee director compensation program every two years. In connection with the retention of Willis Towers Watson in 2014, the program was reviewed in February 2015. The 2015 review did not result in any changes to the compensation program fornon-employee directors. Accordingly, the 20162017 compensation package fornon-employee directors consisted of cash (Board and committee annual retainers and meeting fees)(annual retainers) and equity (restricted stock units)unit) awards. Directors are also entitled to reimbursement of their reasonableout-of-pocket expenses in connection with their travel to and from and attendance at Board and committee meetings and other Company events. An individual director’s actual annual compensation will vary based on committee memberships and committee chair responsibilities, and the number of Board and committee meetings attended. responsibilities. 20
The following table summarizes the 2016 compensation elements provided to the Company’snon-employee directors:
| | | | | Element | | Amount | | Annual Retainer for Board Chair(non-executive)
| | | $125,000 | | Annual Board Member Cash Retainer
| | | $60,000 | | Annual Retainer for Lead Independent Director
| | | $25,000 | | Audit Committee Chairperson Annual Retainer
| | | $15,000 | | Compensation Committee Chairperson Annual Retainer
| | | $12,000 | | Governance Committee Chairperson Annual Retainer
| | | $12,000 | | BoardPer-Meeting Fee
| | | $1,500 | | CommitteePer-Meeting Fee
| | | $1,500 | | Annual Restricted Stock Units Grant(1)
| | | 25,581 shares | (1) |
| (1) | The grant, with a guideline value of $110,000, was granted on March 28, 2016 to allnon-employee directors at that time.
| |
The majorityA significant portion of the target annual compensation package is delivered in the form of equity, which is designed to promote a strong alignment of interests between the Company’snon-employee directors and its shareholders. In 2016,2017, the equity grantaward, consisting of restricted stock units, was set based on the guideline value ($110,000) and the Company’s approximate recent average stock price ending March 28, 2016.of $110,000. The actual grant price and accounting expense was based on a16-daythe 20-day average stock price prior to March 28, 2016. For 2016, the guideline value of the restricted stock unit grant was $110,000. February 22, 2017.
Equity grantsawards made in 20162017 tonon-employee directors were granted out ofunder the Company’s 2013 Omnibus Incentive Plan. The Compensation Committee of the Company’s Board of Directors may, in its discretion, grant awards fromtime-to-time in such amounts as it determines and to suchnon-employee directors as it selects. The restricted stock units vest on the second anniversary of the grant date. The restrictions provide that, unless the Compensation Committee in its discretion determines otherwise, (i) the restricted stock units will be immediately forfeited if the director ceases to be a member of the Board prior to the vesting date for any reason other than the director’s retirement (due to reaching the mandatory retirement age established by the Board), death, or disability;disability, and (ii) the restricted stock units are subject to various transfer restrictions prior to the vesting date.
The following table summarizes the 2017 compensation elements provided to the Company’s non-employee directors: | | Element | Amount | Annual Retainer for Board Chair (Non-Executive) | $125,000 | Annual Retainer for Board Member | $75,000 | Annual Retainer for Lead Independent Director | $25,000 | Annual Retainer for Audit Committee Chair | $20,000 | Annual Retainer for Compensation Committee Chair | $15,000 | Annual Retainer for Governance Committee Chair | $15,000 | Annual Retainer for Audit Committee Member | $10,000 | Annual Retainer for Compensation Committee Member | $7,500 | Annual Retainer for Governance Committee Member | $7,500 | Annual Restricted Stock Unit Grant | $110,000 |
Non-Employee Directors’ Compensation The Boardfollowing table sets forth the total compensation earned by non-employee directors during the fiscal year ended December 31, 2017. | | | | | | | | | | Name | Fees Earned
or Paid in
Cash(1) | Stock
Awards(2) | Option
Awards(3) | Total | José María Alapont(4) | $92,500 | $106,598 | $0 | $199,098 | Robert G. Bohn | $122,500 | $106,598 | $0 | $229,098 | Donald M. Condon, Jr. | $100,000 | $106,598 | $0 | $206,598 | Anne M. Cooney | $92,500 | $106,598 | $0 | $199,098 | Kenneth W. Krueger | $200,000 | $106,598 | $0 | $306,598 | Jesse A. Lynn(4) | $69,375 | $106,598 | $0 | $175,973 | C. David Myers | $95,000 | $106,598 | $0 | $201,598 | John C. Pfeifer | $90,000 | $106,598 | $0 | $196,598 |
| (1) | Includes annual cash retainers for the board chair, board members, committee chairs and committee members. |
| (2) | Reflects the grant date fair value of restricted stock units awarded in 2017, as computed under the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”). The restricted stock units vest on the second anniversary of the grant date. At year end, Ms. Cooney and Messrs. Alapont, Bohn, Condon, Krueger, Lynn, Myers and Pfeifer each had 10,547 restricted stock units outstanding. |
| (3) | No stock options were awarded to directors in 2017. At year end, Mr. Krueger had outstanding stock options to purchase 650 shares of common stock, and no other director had any outstanding stock options. |
| (4) | Both José María Alapont and Jesse A. Lynn tendered their resignations as directors of the Company in February 2018. |
Stock Ownership Guidelines for Non-Employee Directors has implemented The Company’s corporate governance guidelines contain stock ownership guidelines fornon-employee directors, which require directors. The guidelines provide that eachnon-employee director toshould acquire and hold an amount of the Company’s common stock with a value equal to five times suchthe non-employee director’s total annual Board member cash retainer (does not include(excluding any additional retainer for committee chair positions), with compliance measured annually at the first Board meeting fees orin a given year (commencing with the annual committee chairperson retainers). The guideline requiresfirst Board meeting in the stock ownership amount to be met by the end of the fifthsixth full calendar year after the non-employee director is first elected toas a member of the Board. DirectorsBoard), based on each non-employee director’s stock ownership and the stock price as of the close of business on the last day of the preceding calendar year. For purposes of determining stock ownership under the guidelines, unvested restricted stock will be included but unexercised options will not be included. Non-employee directors are required to retain net shares upon vesting of equity awards until achieving the level of stock ownership guideline.established in the guidelines. If a non-employee director has not met the level of stock ownership established in the guidelines as of the end of a given calendar year (commencing as of the end of the fifth calendar year after the non-employee director is first elected as a member of the Board), then the non-employee director must acquire shares during the subsequent calendar year equal in value to at least 50% of the total annual retainer paid or payable to the non-employee director during such subsequent calendar year, determined after tax. As of December 31, 20162017, each of thenon-employee directors was either in compliance or projected to be in compliance with the ownership guidelines based upon projected future awards if continued Board membership and service continues. In addition, underDeferred Compensation Plan
Under the Company’s Deferred Compensation Plan, eachnon-employee director may elect to defer all or any part of the director’shis or her annual retainer, and meeting fees, as well as restricted stock unit awards, for future payment upon death, disability, termination of service as a director, a date specified by the participant, or the earlier of any such date to occur. A director may use the Deferred Compensation Plan as a means of achieving the director’s stock ownership guidelineguidelines applicable to the director by electing to defer a portion of his/his or her compensation under the Company’s Deferred Compensation Plan and investing in stock units (value equivalent to the Company’s stock price). Following the Separation, the Compensation Committeere-evaluated, with the assistance of Willis Towers Watson, the director compensation program. Based upon market trends, it was determined that Board and Committee meeting fees would be eliminated and replaced by annual retainers. The use of retainers is the dominant form of Board and Committee compensation and is seen as best practice that enhances transparency and encourages effectiveness. Effective in 2017 the director compensation program implemented use of annual retainers in lieu of meeting fees.
21
The following table summarizes the 2017 compensation elements provided to the Company’snon-employee directors:
| | | | | Element | | Amount | | Annual Retainer for Board Chair(non-executive)
| | | $125,000 | | Annual Retainer for Board Member
| | | $75,000 | | Annual Retainer for Lead Independent Director
| | | $25,000 | | Annual Retainer for Audit Committee Chair
| | | $20,000 | | Annual Retainer for Compensation Committee Chair
| | | $15,000 | | Annual Retainer for Governance Committee Chair
| | | $15,000 | | Annual Retainer for Audit Committee Member
| | | $10,000 | | Annual Retainer for Compensation Committee Member
| | | $7,500 | | Annual Retainer for Governance Committee Member
| | | $7,500 | | Annual Restricted Stock Units Grant
| | | $110,000 | |
Non-Employee Directors’ Compensation
The following table sets forth the total compensation earned bynon-employee directors during the fiscal year ended December 31, 2016. Mr. Krueger is not included in this table as a result of his service as interim President and Chief Executive Officer until the Separation. Mr. Krueger’s compensation for his service as a director, including the fees earned for serving as Chair of the Board, are included in the Summary Compensation Table below.Non-employee directors currently serving on the Board are listed first, followed by thenon-employee directors that went with Manitowoc Foodservice Inc. or who left the Company’s Board of Directors upon the Separation on March 4, 2016.
| | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned
or Paid in
Cash(1) | | | Stock
Awards(2) | | | Option
Awards(3) | | | Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings | | | All Other
Compensation(4) | | | Total | | José María Alapont | | $ | 64,500 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 174,498 | | Robert G. Bohn | | $ | 111,875 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 221,873 | | Donald M. Condon, Jr. | | $ | 94,500 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 204,498 | | Anne M. Cooney | | $ | 67,500 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 177,498 | | Jesse A. Lynn | | $ | 81,000 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 190,998 | | C. David Myers | | $ | 71,250 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 181,248 | | John C. Pfeifer | | $ | 66,000 | | | | $109,998 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 175,998 | | Roy V. Armes(5) | | $ | 19,500 | | | | $0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 19,500 | | Dino Bianco(5) | | $ | 19,500 | | | | $0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 19,500 | | Joan Chow(5) | | $ | 21,000 | | | | $0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 21,000 | | Cynthia Egnotovich(5) | | $ | 21,000 | | | | $0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 21,000 | | Keith Nosbusch(5) | | $ | 19,500 | | | | $0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 19,500 | |
22
(1) | Includes annual retainer and meeting fees as well as lead director and committee chairperson annual retainer.
|
(2) | Reflects the grant date fair value of restricted stock units awarded in 2016 as computed under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The restricted stock units vest on the second anniversary of the grant date. At year end, directors [and former directors] had outstanding restricted stock units for Company shares as follows: Messrs. Alapont, Myers and Pfeifer and Ms. Cooney — 25,581 each; Mr. Bohn — 30,627; Mr. Condon — 40,267; and Mr. Lynn — 29,713.
|
(3) | No stock options were awarded to directors in 2016.
|
(4) | Travel-related expenses of a director’s spouse or guest are not included in these numbers. Fromtime-to-time, spouses or guests may be invited to accompany the directors at a Company function at the Company’s expense. During 2016, there were no expenses for the spouses of the directors.
|
(5) | Effective upon the Separation, Messrs. Armes and Nosbusch retired as directors, and Ms. Chow, Ms. Egnotovich and Mr. Bianco left the Company Board to become directors of MFS.
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8. | COMPENSATION DISCUSSION AND ANALYSIS AND COMPENSATION COMMITTEE REPORT |
COMPENSATION DISCUSSION AND ANALYSIS AND COMPENSATION COMMITTEE REPORT OverviewCOMPENSATION DISCUSSION AND ANALYSIS
Introduction The compensation discussion and analysis below, which should be read together with the compensation tables located elsewhere in this Proxy Statement, is designed to assist shareholders with understanding the objectives of our executive compensation program, the different components of compensation paid and the basis for our compensation decisions. This discussion focuses on the compensation of the current and former executive officers named in the Summary Compensation Table in this Proxy Statement (the “named executive officers” or NEOs)), who are listed below: Barry L. Pennypacker —– President and Chief Executive Officer David J. Antoniuk —– Senior Vice President and Chief Financial Officer Thomas G. Musial —– Senior Vice President, of Human Resources and Administration Aaron H. Ravenscroft – Executive Vice President, Cranes Lawrence J. Weyers —– Former Executive Vice President, — Tower Cranes Aaron H. Ravenscroft —Louis F. Raymond – Former Vice President, General Counsel and Secretary
Mr. Weyers served as our Executive Vice President, — MobileTower Cranes Kenneth W. Krueger — Former Interim until he resigned effective August 31, 2017, and Mr. Raymond served as our Vice President, General Counsel and Chief Executive Officer and current Chair of the Board
Carl J. Laurino — FormerSecretary until he resigned from those positions effective November 27, 2017. In addition, Mr. Musial will be retiring as our Senior Vice President, Human Resources and Chief Financial Officer
Effect of the Manitowoc Separation on 2016 Compensation Decisions for NEOsAdministration effective July 6, 2018.
As discussed herein, compensation decision making for 2016 differed from prior years in view of special circumstances related to the Separation, which took effect in March 2016. The planned Separation was contemplated as part of the 2016 incentive plan design, as detailed below. In general, compensation for those executives that joined the Company either before or shortly after the Separation (Messrs. Pennypacker, Antoniuk and Ravenscroft) was determined by the Compensation Committee when they joined Manitowoc. No further increases or adjustments to 2016 compensation were made after their respective hire dates. As part of determining 2016 compensation for these NEOs, the Compensation Committee considered competitive data for a company of Manitowoc’s size post-Separation, the executives’ past compensation history, the expected importance and impact of each executive’s role at Manitowoc, and internal equity among other factors.
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Messrs. Musial and Weyers have been executive officers of the Company for several years. Mr. Musial’s 2016 compensation was adjusted to reflect the revised size of Manitowoc, largely through downward adjustments to his long-term incentive grant value, and Mr. Weyer’s compensation remained unchanged.
Upon the Separation, Mr. Krueger’s role as Interim President and Chief Executive Officer ended, after which he continued with the Company asnon-executive Chair of the Board. Further, Mr. Laurino, the Company’s former Senior Vice President and Chief Financial Officer, left the Companymid-year.
Effect of the Manitowoc Separation on Outstanding 2014-2016 Performance Share Plan Cycle
In addition, the 2014-2016 long-term incentive plan (“LTIP”) performance cycle (which ended in December 2016) was interrupted by the Separation. Goals for the 2014-2016 performance cycle were established before the Separation was contemplated. As a result of that timing, the effects of the completion of the Separation and challenges inherent in determining performance relative to the goals set in 2014 (which were based on relative total shareholder return (“TSR”) and economic value added (“EVA”)), the Compensation Committee exercised discretion and determined that the interrupted 2014-2016 performance shares would vest at 100% of target performance (so long as participants remained employed by the Company through December 31, 2016). Although awards were vested at 100% of target, the value of the awards was not permitted to exceed target; the original plan design allowed for payment above target if performance goals were exceeded.
2017 Executive Summary Financial Performance was BelowAbove Targeted Goals Fiscal yearThe Company’s financial results in 2017 demonstrate strong operational improvements in the Company’s core business. Despite a 2% decline in revenue compared to 2016, was a challenging year for the Company delivered a $49.2 million increase in several respects, as demand for our products was below expectations, similar to many manufacturers in the same or similar market segments in which the Company operates. In addition, beyond the Separation, management took several difficult steps intended to position the Company for future success when market conditions improve, such as restructuring our business units to more accurately represent the needsAdjusted EBITDA and operating cash flow improvement of our customers and the products which they require. We believe these actions put the Company on the path to improved financial and operational performance going forward.over $200 million.
| | | Key Business Results | | Impact on Pay Decisions | • Sales decreased by 13.5% to $1.6 billion from $1.9 billion in 2015
• Adjusted Operating Loss of $(27.4) million compared to Adjusted Operating Income of $15.3 million in 2015
• Operating Cash Flow from Continuing Operations was a use of cash of $(122.4) million compared to a use of cash of $(25.5) million in 2015
| | • There was not any payout on the Short-Term Incentive Plan (“STIP”) awards, reflecting performance that was below targeted financial performance and minimum threshold.
• The performance share award granted in 2014 for the 2014 through 2016 performance period was determined by the Compensation Committee and Board of Directors to be at 100% because of the Company split and the 2014 goals were based on a consolidated Company, not a separated Company.
• There were no salary increases for the named executive officers for 2016
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Consistent with our emphasis on performance-based pay, a significant proportion of our named executive officers’ target annual pay opportunity is based on financial results (relative to specific goals) and sharestock price appreciation over time. Commensurate with the Company’s 20162017 performance, acrossshort-term incentive awards for 2017 were paid out above target. | | Key Business Results | Impact on Pay Decisions | • Adjusted EBITDA increased to $67.4 million from $18.2 million in 2016, despite a 2% decline in revenue. • Operating Cash Flow from Continuing Operations provided cash of $78.5 million compared to a use of cash of $(122.4) million in 2016, a $200.9 million improvement, year-over-year. | • Short-term incentive awards (under the 2017 short-term incentive plan) were earned at 194.9% of target, reflecting above target financial performance. • Salary increases for certain named executive officers for 2017. |
A reconciliation of Adjusted EBITDA (a non-GAAP financial measure) to Net income (loss) from continuing operations (the most directly comparable GAAP financial measure) is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (on page 34) of the organization there was no annual incentive payoutsCompany’s Annual Report on Form 10-K for the performance periodyear ended December 31, 2016.2017.
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Our Executive Pay Program Strongly AlignsPay-For-Performance and Applies MarketGovernance Best Practices Our executive compensation program is intended to reflectreflects a strongpay-for-performance design and incorporates many marketgovernance best practices. SubjectOver the past several years (subject to certain unusual factors related to the Separation, over the past several years,Spin-Off), the Company’s executive compensation program design and practices have evolved to better support our changing business and talent needs, as well as to reflect market practices and trends. In particular, as summarized below, we have improved the linkage oflinked the pay program to key metrics of our business strategy and shareholder value creation.creation through our short-term and long-term incentive plans. The Company’s approach is to apply a comprehensive perspective in selecting performance measures and setting goals for both the annualshort-term and long-term incentive plans. As a result of the foregoing considerations, the performance metrics used in our annualshort-term incentive plan and the financial measures used in our long-term incentive plan in connection with our performance share grants have continued to adapt along with our business strategy fromyear-to-year to best reflect the direct accountabilities assigned to the management team for a particular year (short-term incentives) and for several years (long-term incentives). While we did not grant performance shares in 2015 due to the intended Separation, we resumed granting such awards in 2016. 20162017 Incentive Plan Design
The 2017 short-term incentive plans,plan (“STIP”) and the 2017 long-term incentive plan (“LTIP”), collectively, cover a range of key financial measures that we believe will increase shareholder value over time. The 2016 STIP was based on operating marginstime while also emphasizing the importance of maintaining adequate liquidity for working capital requirements and free cash flow. Grants of long-term incentives compensation in 2016 returned to our practice prior to the Separation of awarding both stock options and performance shares (“PSUs”), weighted equally.future investment opportunities. The performance measures used in the 20162017 STIP and the 2016 long-term incentive (“LTIP”)2017 LTIP award design arewere as follows: | | | 2016 Short-Term/Annual | | 2017 Short-Term Incentive Plan | | 20162017 Long-Term Incentive Plan | • Operating Margin Adjusted EBITDA (weighted 50%), which motivatesis a focus on profitable sales generated from operationsuseful measure of the Company’s annual operating performance, measures gross profit, less selling, general and administrative expenses, plus depreciation and restructuring charges. • Free Cash Flow (50%(weighted 50%), which measures liquidity by taking operating cash flow minusfrom continuing operations, less capital expenditures, excluding Spin-Off and one-time costs and tax settlements, other than costs associated with the consolidation of the Company’s manufacturing facilities in Manitowoc, Wisconsin into its Shady Grove, Pennsylvania facility. | | • For performancePerformance shares (weighted 50%(50% of the targeted value of the LTIP grant), there are earned based on the results of two equally weighted measures: • Relative Total Shareholder Return (TSR)(“TSR”) (weighted 50%), which aligns payouts to our relative TSR performance, and assesses the Company’s relative TSR to the S&P SmallCap 600 Industrials Index, and • Weighted Average Return on Invested Capital (ROIC) Adjusted EBITDA Percent for the year ending December 31, 2019 (“Fiscal Year 2019 Adjusted EBITDA Percent”) (weighted 50%), which encourages effective managementis equal to gross profit, less selling, general and administrative expenses, plus depreciation and restructuring charges, divided by net sales, and is a measure of both income (through the numerator,Company’s annual operating profit) and the balance sheet (through the denominator, invested capital)performance. • Stock options (weighted 50%(50% of the targeted value of the LTIP grant) which vest in equal installments over three years, commencing on the first anniversary of the grant date, and have value only as the stock price increases. |
Incentive Plan Design Changes for 20172018 We continually monitor our executive compensation program and consider modifications that will allow us to drive achievement of our business strategy, meet our talent needs, and maintain market competitive plans to maximize long-term stockholdershareholder value. In this regard,designing our 2018 STIP and LTIP, we made changes toutilized the annual incentivessame performance measures utilized in our 2017 STIP and long-term incentives for the 2017 incentive award opportunities. These changes were designed to better align with our 2017one-year objectives (annual incentives). For the 2017 annual incentive,LTIP, as we moved to adjusted EBITDA (50% weighting) and free cash flow (50% weighting) for senior management as compared to thebelieve that these performance measurements that were used in 2016 which were operating margin (50% weighting) and free cash flow (50% weighting). For the 2017 long-term incentive awards for senior management, we continued with stock options (50% weighting) and performance shares (50% weighing); however, the performance share measures were changed to 25
Relative Total Shareholder return compared with the relevant peer group (50% weighting) and adjusted EBITDA (50% weighting) for the3-year performance period as compared to 2016 performance share measures of 50% Total Shareholder Return and 50% Return on Invested Capital. The performance shares will be based on a3-year performance period from January 1, 2017 to December 31, 2019. We believe these measures continue to capture our key financial drivers of success and incorporate more fundamental financialthat use of consistent performance measures, with target goals.the goal of improvement in such performance measures over time, ensures that our executive compensation program is aligned with the interests of our shareholders, including maximizing long-term returns to our shareholders.
| | | 2017 Short-Term/Annual Incentive | | 2017 Long-Term Incentive | • Adjusted EBITDA (weighted 50%), which is a useful measure of the Company’s annual operating performance
• Free Cash Flow (weighted 50%), which measures liquidity by taking operating cash flow minus capital expenditures
| | • For performance shares (weighted 50% of the targeted value of the LTIP grant), there are two equally weighted measures:
• Relative Total Shareholder Return (TSR) (weighted 50%), which aligns payouts to our relative TSR performance, and assesses the3-year Manitowoc relative TSR to the S&P 600 Industrials Index
• Adjusted EBITDA (weighted 50%), which measures gross profit, less selling, general and administrative expenses, plus depreciation and restructuring charges and a measure of the Company’s annual operating performance
• Stock options (weighted 50% of the targeted value of the LTIP grant) which vest in equal installments over four years
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Governance Best Practices Our executive compensation program is intended to reflectreflects a strongpay-for-performance design and incorporates many governance best practices, asincluding those listed below: Using multiple performance measures in the annual incentiveconnection with short-term and long-term incentive awards duplicating specific measures. Limiting both annual incentive and performance share payouts to 200% of target, which incentives are only earned if actual performance results significantly outperform the targeted goals.
| • | Limiting both short-term incentive and performance share payouts to 200% of target |
Having annualshort-term incentive payouts which vary commensurate with the Company’s performance (the 2014, 2015 and 2016 awards did not pay out based on Corporate performance) and which reflect the Company’s performance versus goals during the respective annual periods.periods Using relative TSR as a metric for performance share grants, tying payouts to increasing shareholder value (in view of the Separation, performance shares were not granted in 2015, but we returned to the use of performance shares in 2016). Generally, not using solely time-vesting restricted stock or restricted stock units (“RSUs”) for executive officers, other than in the appropriate circumstances such as in 2015 in connection with the intended Separation and in 2016 for newly-hired executive officers.
Providing long-term incentives to executive officers through equity basedequity-based awards that are “at risk” (except when appropriate to use time-vesting such as in 2015 when LTIP grants utilized time-vesting restrictions due to circumstances attendant to the then-contemplated Separation and restricted stock units which were granted to newly hired executive officers), since they are only earned if specific performance goals are achieved or if the stock price appreciates. 26
General avoidance of change in control (CIC) excise taxgross-ups or single-trigger cash severance provisions; eliminated all excise taxgross-ups and single-trigger cash severance provisions and committed to no new or amended executive officer CIC agreements with excise taxgross-ups or single-trigger cash severance provisions. Maintaining stock holding requirementsownership guidelines for executive officers which require that if an officer is not in compliance, the officer must retain all net shares from the exercise of stock options and vesting of restricted stock units or performance shares until the officer is in compliance. Annually reviewing Chief Executive Officerpay-for-performance and officer pay tally sheets with analysis of alignment of pay to relative TSR performance as well as details of recent annual compensation, outstanding long-term incentives, retirement benefits and potential CIC severance payments.
Periodically contactingcommunicating with major shareholders regarding our pay practices which in 2016, did not reveal any material concerns with any executive compensation practices. Providing a limited amount of perquisites to officers.executive officers Having a policy prohibiting employees from pledging their holdings of Company securities and from engaging in hedging transactions involving Company securities.securities The Compensation Committee’s engagement of an independent compensation consultant, Willis Towers Watson, to assist with review of the Company’s executive compensation program.program 2016
2017 Say-on-Pay Advisory Vote In 2016,2017, oursay-on-pay advisory vote received support from approximately 91%98% of the shares voted. We believe that this result demonstrates our shareholders’ strong endorsement of the executive compensation program design, decisions and policies. Our shareholder vote was one of many factors considered by the Compensation Committee in reviewing the Company’s executive compensation program. We continue to maintain an ongoing dialogue with our shareholders to help ensure our executive compensation program is aligned with the interests of our shareholders. Compensation Program Administration The Compensation Committee of the Board of Directors is primarily responsible for administering the Company’s executive compensation program. As such, the Compensation Committee reviews and approves all elements of the executive compensation program that cover the named executive officers. This review includes an annual consideration of the Company’s business strategy and talent needs and alignment of compensation to performance and shareholder interests. The Compensation Committee engages an independent compensation consultant. During fiscal 2014, the Compensation Committee hired, and it continues to engage, Willis Towers Watson as an independent compensation consultant to assist the Compensation Committee with its duties, including anyits review of the executive compensation program. Additional information about the role and processes of the Compensation Committee is presented in the Corporate Governance of the Board and its Committees — Compensation Committee section. section of this Proxy Statement. Compensation Program Objectives and Philosophy Our executive compensation program is intended to align the interests of our executives with the interests of our shareholders as well as to motivate our executives to maximize long-term total returns to our shareholders. For these reasons, the Compensation Committee designs the executive compensation program consistent with market typical/best practices to ensure alignment between executive pay and Company performance. An important element of the compensation program design is to provide incentive-based compensation that is directly tied to Company performance. The Compensation Committee annually reviews the key elements of the program considering the Company’s business strategy and talent needs. Our executive compensation program seeks to provide competitive total compensation 27
opportunities at the lowest possible cost to the Company for the opportunities provided, to attract, motivate and retain highly-qualified executives critical to the achievement of the Company’s financial and strategic goals.
Key objectives and elements of theour compensation philosophy include the following: | • | | Paying for performance. A significant portion of the compensation paid to an executive is incentive-based and “at risk,” which can be earned based on the achievement of the Company’s financial goals and/or stock price appreciation. As noted above, performance shares were reintroduced to the long-term incentive plans for 2016. (Incentive awards based on achievement of specific goals are capped at 200% of the targeted award opportunity.)
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| • | | Providing market competitive compensation. Pay levels are targeted to be, on average, at market median levels based on individual factors (such as experience, length of service, and individual performance), internal structure and internal and external equity, business needs, Company performance, comparable positions at general industrial companies of similar size, and other factors.
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| • | | Encouraging long service. The Company offers several retirement and savings plans, which are payable after retirement from the Company and provide employees with the opportunity to earn Company contributions or savepre-tax dollars for retirement.
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| • | | Facilitating executive stock ownership. Long-term incentive awards to executives are solely equity-based, and executive officers are subject to stock ownership requirements, including a retention requirement, to ensure meaningful ongoing alignment with shareholders’ interests and market best practice.
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Paying for performance. A significant portion of the target compensation awarded to our named executive officers is incentive-based and “at risk,” meaning it is only earned if specific financial goals are achieved or, in the case of stock options, if the stock price appreciates over the next several years following the grant date. Incentive awards based on achievement of specific goals are capped at 200% of the targeted award opportunity. Providing market competitive compensation. Pay levels are targeted to be, on average, at market median levels based on individual factors (such as experience, length of service, and individual performance), internal structure and internal and external equity, business needs, Company performance, comparable positions at general industrial companies of similar size, and other factors. Encouraging long-term service. The Company offers retirement and savings plans, including the Company’s 401(k) Retirement Plan and Deferred Compensation Plan, which are payable after retirement from the Company and provide employees with the opportunity to earn Company contributions or save pre-tax dollars for retirement. Promoting executive stock ownership. Long-term incentive awards to executive officers are solely equity-based, and executive officers are subject to stock ownership guidelines to ensure meaningful ongoing alignment with shareholders’ interests and market best practice. Actual total compensation can vary from target compensation based on the individual’s performance and the Company’s financial and stock price performance. In accordance with SECSecurities and Exchange Commission (“SEC”) rules, the Summary Compensation Table shows the grant date fair value of LTIP grants, which grant date fair value is often very different from the actual realized and realizable/current values (if any amount is even earned) of such awards. The Committee annually reviews officer pay tally sheets detailing the past several years of actual and target compensation, outstanding long-term incentive awards (including the potential realizable value at various stock prices), accumulated deferred compensation balances, and potentialchange-in-control severance amounts. In connection with itsour executive compensation determinations, the Company reviewswe review third-party market survey data among comparable companies and broader market trends/developments, as provided by the Compensation Committee’s compensation consultant. ForWillis Towers Watson. In setting market-based pay levels, the Company reviewedCompensation Committee reviews market data provided from surveys ofcomparably-sized general industrial companies; acompanies. A specific peer group wasis not typically used, although comparator groups wereare used when considering specific components of compensation. Survey data of comparable positions is analyzed annually in considering adjustments to base salaries and target short-term and long-term incentive award opportunities. Survey data is also reviewed periodically to help maintain the competitiveness of all elements of compensation. The Majority of Target Compensation is Typically Performance-Based Consistent with the Company’s pay philosophy, the majority of the target total direct compensation (i.e., the sum of base salary and target STIP and LTIP award grant date values) of the active named executive officers is only earned if specific financial goals are achieved or, in the case of stock options, if the stock price appreciates over the next several years following the grant date. Specifically, in 2017, performance-based incentive award opportunities represented, on average, 69% of the target total direct compensation for the active named executive officers and reflected the use of stock options and performance shares. (For these purposes, the active named executive officers are the named executive officers who were still executive officers of the Company on December 31, 2017 – Messrs. Pennypacker, Antoniuk, Musial and Ravenscroft.) | | | Consistent with Company’s pay philosophy, the majority of the named executive officers’ target total direct compensation (i.e., sum of base salary, target STIP and LTIP grant date values) is typically only earned if specific financial goals are achieved or, in the case of stock options, if the stock price appreciates over the next several years following the grant date. Specifically, in 2016, performance-based incentive award opportunities represented, on average, 75.6% of the named executive officers’ target total direct compensation and reflect the use of stock options and performance shares.
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Incentive award opportunities have typically been provided through a combination of annualshort-term and long-term incentive opportunities, covering multiple financial and stock price performance measures. Incentive performance goals are set to directly align to our business strategy and long-term shareholder value creation, with target goals typically set at levels higher than the last year’s actual results.creation. STIP Award Payouts Vary Commensurate with Company Performance The Company has a history of STIP payouts being commensurate with the Company’s performance, as demonstrated over the last six years. Specifically, payouts for corporate performance ranged from 0% to 194.9% of target (an average of 70.5% of target). | | | 
The Company has a history of STIP payouts being commensurate with the Company’s performance, as demonstrated over the last six years. Specifically, payouts for Corporate performance ranged from 0% to 131.5% of target (an average of 58.2% of target).
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LTIP Awards are Typically Tied to Company Performance Long-term incentive awards are intended to align the interests of executives with those of the Company shareholders by allowing executives to share in the growth and financial success of the Company, as reflected in the Company’s stock price Return on Invested Capital (“ROIC”) and other performance measures. In addition, long-term incentive awards have facilitated the attraction, retention and motivation of executives and key employees. In the several years before the Separation was contemplated, all the2017, long-term incentive award opportunityopportunities for senior executives ofnamed executive officers were provided through equity-based awards and are “at-risk,” requiring the Company had been“at-risk” — requiring achievement of specific multi-year financialperformance goals or stock price appreciation. While time-vesting RSUs were used in 2015 due to the challenges of setting performance targets as a result of the then-pending Separation, in 2016 the Company maintained the use of stock options (weighted at 50% of the LTIP award) but replaced RSUs by returning to the use of performance shares (weighted at 50% of the LTIP award).
The 20162017 grant mix was delivered as follows: | | | | | 2016
| | | 2017 Award Type (Weighting) | Performance Measure | Performance Measure
| | Performance/Vesting Period | | | | Stock Options (50%) | | ▪ Stock price appreciation (only have value if price increases) | | Four-year graded vesting;Three-year ratable vesting (33.33% per year), commencing on the first anniversary of the grant date; expire 10 years after grant | | | | Performance Shares (50%) | | ▪ 50% Relative TSR as compared to the S&P SmallCap 600 Industrials Index ▪ 50% ROICFiscal Year 2019 Adjusted EBITDA Percent | | Vesting basedThree-year performance period ending on December 31, 2019; performance duringshare awards vest upon completion of the three-year performance period, if performance level isgoals are met | | |
Chief Executive Officer Pay is Aligned with Company Performance
Compensation of Current Chief Executive Officer
As contemplated when he was hired in December 2015, Mr. Pennypacker became the President and Chief Executive Officer of The Manitowoc Company, Inc. upon the Separation in March 2016. His compensation arrangements in that role were determined under the terms of an offer letter, which provided for an annual base salary of $950,000 and eligibility to participate in the 2013 Omnibus Incentive Plan. Mr. Pennypacker’s 2016 target annual incentive award was 100% of his base salary (with the possibility of any payment being below target but above 0% of target and above target up to 200%); as noted herein, due to Company performance, no
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annual incentive was earned in 2016. The arrangements also provided that upon Separation, Mr. Pennypacker would receive a grant ofnon-qualified stock options with a value of $1,250,000 (based on the20-day average of the Company’s stock price prior to the grant date) and a grant of performance shares with a targeted value of $1,250,000; the performance shares may be earned (from 0% to 200%) based on actual Company performance in the 2016 to 2018 performance period. Mr. Pennypacker is eligible for future long-term incentive awards under the 2013 Omnibus Incentive Plan.
Compensation of Former Interim President and Chief Executive Officer
In connection with Mr. Krueger’s service as President and Chief Executive Officer of the Company on an interim basis from October 2015 until the Separation, he received a base salary at an annual rate of $900,000. In 2015, he also received an award of RSUs, valued at $900,005, which vested on thesix-month anniversary of the grant date. The Compensation Committee determined these amounts based on market values, the duration of assignment and the time and energy expended. Given that Mr. Krueger was serving on an interim basis, he was not eligible for a STIP award or other benefits in 2016 or 2015, other than health-related benefits. While he served as interim President and Chief Executive Officer, Mr. Krueger did not receive any additional compensation for serving as a director. Following the Separation, Mr. Krueger’s was compensated in accordance with the Company’s director compensation program and he received $163,375 in director fees, including $125,000 for service as Chair of the Board, as well as a grant of 25,581 RSUs, with a guideline value of $110,000, as described above in“Non-Employee Director Compensation.”
Compensation Elements We believe the executive compensation program described in more detail below, by element and in total, best achieves our objectives. The following table presents a summary of each element of our executive compensation program. | | | | | Element | | Purpose | | Characteristics | Element | Purpose | Characteristics | Base Salary | | Establish a certain element of pay for an individual’s competencies, skills, experience and performance relative to his/his or her current job | | Not at risk; eligible for annual performance-based merit increasesincrease consideration and adjustments for changes in job responsibilities | Short-Term Incentives | | Motivate and reward the achievement of annual Company financial goals aligned to the key strategic objectives for the year | | Performance-based (variable) cash opportunity; amount earned will vary based on actual financial results achieved | Long-Term Incentives | | Motivate and reward the achievement of specific longer term financial goals: relative TSR performance and ROIC for the 2016 performance share awards, and stock price appreciation over time for the stock options granted in 2016goals | | All of the award opportunity is performance-based or “at-risk,” with the amount realized, if any, realized by the executive dependent upon multi-year financial results and stock price performance | Retirement Benefits and Deferred Compensation | | Encourage longlong-term service with the Company by providing retirement plan contributions that can grow in value over an executive’s career and opportunities to defer compensation | | Both fixed and variable aspects; contributions drive growth of funds and future payments | Perquisites and Personal Benefits and Perquisites
| | Provide additional financial security and other enhanced benefits fora competitive pay package that helps attract and retain qualified executives, (perquisitesthough perquisites are limited)limited | | Generally fixed; actual cost is based on participation and usage | Change in Control (“CIC”) Continued Employment and Severance Benefits | | Provide continuity of the leadership team leading up to and after a change in control | | Contingent component; provides for continued employment upon a CIC and severance benefits if an executive’s employment is terminated following a CIC |
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In setting total compensation, a consistent approach is applied for all executive officers. Executive officers may also receive base salary and incentive pay increases at the time of promotions. In connection with promotions, the Compensation Committee may increase base salary and target incentive award percentages and make additional incentive grants. Additional detail regarding each pay element is presented below. Other than the Change in Control Severance Arrangements (the “Contingent Employment Agreements”) described below, the Company does not have employment agreements with any of the named executive officers.
Base Salaries. Salaries are reviewed annually, and adjustments, if any, are based on consideration of the Company’s overall budget for base salaries for the year, individual factors (competencies, skills, experience, and performance), internal equity, and market pay practice data. For fiscalThe following table shows, for each named executive officer, such named executive officer’s 2017 base salary, the percentage increase in such named executive officer’s base salary (compared to his 2016 in view of the salary freeze that was in effect in 2014base salary) and the modest increasesreason for such increase in 2015, the Compensation Committee determined that no base salary increases were warranted. As noted above, as to the newly hired executive officers, compensation was determined by the Compensation Committee as they joined the Company. No further increases or adjustments to 2016 compensation were made after their respective hire dates. As part of determining 2016 compensation for these NEOs, the Compensation Committee considered competitive data for a company of Manitowoc’s size post-Separation, the executives’ past compensation history, the expected importance and impact of each executive’s role within the Company, and internal equity among other factors. Based upon the survey data provided by the Compensation Committee’s compensation consultant, the base salaries for the named executive officers, on average, continued to approximate the median of base salaries of comparable positions, considering an individual’s experience, performance and other factors.salary:
| | | | Named Executive Officer | 2017 Base Salary | 2017 Base Salary Percentage Increase (Compared to
2016 Base Salary) | Reason for Increase in
Base Salary | Barry L. Pennypacker | $978,500 | 3.00% | Market-Based Adjustment | David J. Antoniuk | $490,000 | N/A | N/A | Thomas G. Musial | $426,300 | N/A | N/A | Aaron H. Ravenscroft | $390,000 | 4.00% | Market-Based Adjustment | Lawrence J. Weyers | $446,250 | 5.00% | Market-Based Adjustment | Louis F. Raymond | $300,000 | 28.23% | Promotion to Vice President and General Counsel |
Incentive Plans.Plans. The Company provides annualshort-term and long-term incentive award opportunities to motivate the achievement of theits business strategy by specifying key metrics of success. In order to strongly drive results and align performance and payouts, the incentive plans each: Include multiple performance measures; Have target performance goals set based on forecasts/budget, business conditions, prior year’s performance, probability of achievement and other factors; Vary payouts commensurate with performance results (with potential payouts capped at 200% of the target award opportunity for goal-based plans); and Cover different time periods, with annualshort-term incentive plans covering one year and long-term incentive plans typically covering three years, (or more for stock options) with an ongoing stock ownership requirement. In order to best drive success, and motivate management, we believe a combination of performance measures should be used.used to ensure that management is motivated and rewarded for managing the Company’s overall financial health and driving long-term sustainable growth in value for the Company’s shareholders. As such, the annualshort-term incentive plan and performance share component of the long-term incentive plan each use two or more performance metrics, which may change fromyear-to-year to reflect the critical areas of focus for the respectiveapplicable performance period. The Compensation Committee believes that, collectively, the performance metrics used will best drive long-term shareholder value and align management rewards to the Company’s business strategy. Short-Term Incentives. Annual Short-term incentive awards are made under the 2013 Omnibus Incentive Plan and are referred to in this Proxy Statement as STIP awards. Annual or short-term incentivesSTIP awards, which are measured on an annual basis, reward eligible participants for maximizing shareholder value. The 2016 STIP award was based 50% on operating margin and 50% on free cash flow performance. TheseIn establishing the performance metrics for the 2017 STIP, the Compensation Committee retained the free cash flow metric (50%) and replaced the operating margin metric used in 2016 with Adjusted EBITDA (50%). The free cash flow (50%) and Adjusted EBTIDA (50%) metrics were selected to focus the executive team on profitable sales (operating margin)increasing shareholder value over time and debt reduction (free cash flow), which are near-term prioritiesmaintaining adequate liquidity for the Company. working capital requirements and future investment opportunities. For all of the named executive officers, other than Mr. Krueger, the 20162017 STIP awards were based on overall Company performance. For executive officers who were business unit presidents, 50%performance (rather than a combination of their award was based on business unit performance and 50% on overall Company performance. performance). The 20162017 target annualshort-term incentive award percentages assigned to the Company’s named executive officers ranged from 50% to 100% of base salary, based on the position’s responsibilities and business 31
impact, and subject to proration for those who joined the Company after the performance period had already begun. impact. Awards earned under the 2017 STIP can range from 0% to 200% of an individual’s target award opportunity based on actual results versus the target performance goals for the year, and the Compensation Committee may exercise discretion to reduce the incentive award otherwise earned by a participant in any year based on individual or other performance factors determined by the Committee. Earned awards, if any, are fully paid out after the end of the year.
The Company’s actual 20162017 performance was below the threshold performance levelresults were between target and maximum for all CompanyAdjusted EBITDA and business unit measures,above maximum for free cash flow, resulting in a no payout for any participants.of 194.9% of target. Presented below are the specific threshold, target, and maximum performance levels for the 20162017 STIP Company metrics,awards, as well as 20162017 actual results (dollars in millions): | | | | | | | | | | | | | | Measure (Weighting) | | Threshold | | Target | | Maximum | | 2016 Actual | | Resulting Award
as % of Target(3) | | Threshold
(50% payout) | Target (100% payout) | Maximum (200% payout) | 2017 Actual | Resulting Award
as % of Target(3) | Operating Earnings (50%)(1) | | | 4 | % | | | 6 | % | | | 7 | % | | | (1.7 | %) | | | 0.0 | % | | Free Cash Flow (50%)(2) | | $ | 40.0 | | | $ | 104.3 | | | $ | 123.3 | | | ($ | 163.3 | ) | | | 0.0 | % | | Adjusted EBITDA (50%)(1)(4) | | $20.0 | $45.0 | $70.0 | $67.4 | 189.8% | Free Cash Flow (50%)(2)(5) | | $0.0 | $10.0 | $35.0 | $49.6 | 200.0% | Total Payout as a Percent of Target | | | | | | | | | | | 0.0% | | | 194.9% |
(1) | “Operating Margin”Adjusted EBITDA” equals earnings before interest, taxesgross profit, less selling, general and amortization, minus corporateadministrative expenses, divided by net sales.plus depreciation and restructuring charges. |
(2) | “Free Cash Flow” equals operating cash flow from continuing operations, less capital expenditures, (in millions).excluding Spin-Off and one-time costs and tax settlements, other than costs associated with the consolidation of the Company’s manufacturing facilities in Manitowoc, Wisconsin into its Shady Grove, Pennsylvania facility. |
(3) | Straight-line interpolation is used for calculating the payout between the specific performance levels. |
| (4) | A reconciliation of Adjusted EBITDA (a non-GAAP financial measure) to Net income (loss) from continuing operations (the most directly comparable GAAP financial measure) is included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (on page 34) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
| (5) | A reconciliation of Free Cash Flow (a non-GAAP financial measure) to Net cash provided by operating activities of continuing operations (the most directly comparable GAAP financial measure) is included in Annex A to this Proxy Statement. |
The lack of actual incentive2017 STIP award payouts for the named executive officers in 2016 is reflectedare presented in the Summary Compensation Table, in the column,“Non-Equity“Non-Equity Incentive Plan Compensation.”Compensation” column. The potential dollar range of the 20162017 STIP awards byfor each named executive officer is presented in the Grants of Plan-Based Awards table. Use of Discretion. The Compensation Committee did not use discretion to pay awards under the 2017 STIP that would not have otherwise been earned. The STIP allows the Compensation Committee is permitted to apply discretion in considering potential adjustments (e.g., certain accounting charges such as bad debt and inventory reserve expenses as well as research and development costs) presented by management in order to assess performance of continuing operations. In practice, the Compensation Committee has made a limited number of adjustments, which, for awards to be earned by executives during a particular year, must be determined no later than the Compensation Committee’s February meeting. The Compensation Committee reviews the actual results for a year and considers and approves potential adjustments in accordance with the STIP.adjustments. With respect to the executive officers of the Company, these adjustments for a plan year must be made no later than the February Compensation Committee meeting of that year. Long-Term Incentives.Incentives. Long-term incentive award grants are made under the 2013 Omnibus Incentive Plan, which was approved by shareholders at the 2013 Annual Meeting.Plan. Long-term incentive awards are intended to align the interests of executives with those of shareholders by allowing executives to share in the growth and financial success of the Company, as reflected in the Company’s stock price and other performance measures. In addition, long-term incentive awards facilitate the attraction, retention and motivation of executives and key employees. InOur general practice (other than in unusual circumstances, such as in 2015 when the several years leading upCompany made time-based awards of restricted stock units due to the announcementdifficulty of setting long-term performance targets as a result of the Separation,Spin-Off) is for all of the senior executives’our named executive officers’ long-term award opportunity had been“at-risk”incentive awards to be “at risk”— requiring achievement of specific multi-year financial goals or stock price appreciation andappreciation—rather than being solely time-based awards. In 2017, the long-term incentive awards to our named executive officers had not received time-based restricted stock grants since 2010. In 2015, given the difficultyconsisted of setting long-term performance targets due to the Separation, executive officers were granted50% stock options and time-based RSUs (that vest 100% on the third anniversary of the grant date). In
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addition, in April 2015, the Company also made an equity-based retention award to certain key employees, including Messrs. Musial, Laurino and Weyers, to provide additional incentives for the employees to continue in employment and contribute toward the successful completion of the Separation; such award vests on the second anniversary of the Separation if the individual is continuously employed by the Company (or MFS) through that date (Mr. Laurino’s award vested in connection with his severance agreement, which is discussed below). As described above, in 2016, the Company returned to its prior practice of granting 100% of its LTIP as“at-risk” compensation, including 50% performance shares, and 50% stock options.all of which are considered “at risk.”
Stock Options.Options. Stock options align executives’ interests with those of shareholders, since options only have realizable value if the price of the Company’s stock increases relative to the grant/exercise price. Stock options granted to the named executive officers and other eligible employees during fiscal 20162017 have the following terms: Exercise price is the closing trading price on the grant date; Vest annually in 25% increments beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the fourth anniversary; and
| • | Vest annually in 33.33% increments beginning on the first anniversary of the grant date; and |
Expire 10 years after the grant date. Restricted Stock Units. The Company did grant RSUs in 2016. In 2016,See information below under “Retention Awards.” Performance Shares. Performance share award opportunities were provided to the Company granted the newly hirednamed executive officers time-based restricted stock units that vest 100% onin 2017 to directly align the third anniversary of the grant date. Performance Shares. In 2016, the Company returnedshares earned, if any, to granting performance shares to executives that can be earned based on the achievement of specific multi-year goals. The goals and the performance period were established by the Compensation Committee at the time of the award grant.
2016 Performance Share Grant —The 2016 performance share grant iswas based on performance on two equally weighted metrics during the three-year performance period; first,period – Return on Invested Capital (“ROIC”) and second, relative Total Shareholder ReturnTSR as compared to companies in the S&P SmallCap 600 Industrials Index. ROIC forFor these purposes, of the performance sharesROIC is equal to three-year weighted average ROIC, defined as Net Operating Profit After Tax, (“NOPAT”), excluding the impact of the SeparationSpin-Off andone-time related costs, divided by average invested capital derived as equity plus interest bearing debt, less cash and marketable securities.securities, and TSR is defined as stock price appreciation plus dividends reinvested on theex-dividend date date.
In establishing the performance share metrics under the 2017 LTIP, the Compensation Committee retained the relative TSR metric and replaced the ROIC metric used in 2016 with Adjusted EBITDA Percent for the year ending December 31, 2019, which is referred to herein as “Fiscal Year 2019 Adjusted EBITDA Percent.” The ROIC metric was replaced with Fiscal Year 2019 Adjusted EBITDA Percent to emphasize the importance of long-term profitability and to focus the executive team on improving overall company performance on a year-to-year basis. The 2017 performance share grant, which will vest upon completion of the three-year performance period ending on December 31, 2019 if performance goals are met, was based on two equally weighted metrics – Fiscal Year 2019 Adjusted EBITDA Percent and relative performance isTSR as compared to companies in the S&P SmallCap 600 Industrials Index. For these purposes, Fiscal Year 2019 Adjusted EBITDA Percent is equal to gross profit, less selling, general and administrative expenses, plus depreciation and restructuring charges, divided by net sales, and TSR, which is calculated using the 20-trading day average closing stock price at the beginning and end of the three-year performance period, is defined as stock price appreciation plus dividends reinvested on the ex-dividend date over the three-year performance period. To emphasize the importance of generating returns for shareholders,long-term profitability and to focus the executive team on improving overall company performance on a year-to-year basis, 50% of the performance shares wereshare grant was based on achieving3-year average ROIC. a certain Fiscal Year 2019 Adjusted EBITDA Percent. The schedule for these awards is provided below: | Performance Level | | Manitowoc’s 3-Year Weighted
Average ROIC | | Award
Payout (as a % of
Target) | Fiscal Year 2019
Adjusted EBITDA Percent | Award
Payout (as a % of
Target) | Maximum | | 8% | | 200% | 7.5% | 200% | Target | | 6% | | 100% | 6.0% | 100% | Threshold | | 4% | | 25% | | Threshold (no payouts below this level) | | 4.5% | 25% |
For the 50% of the 20162017 performance share grant that was based on relative TSR, the Compensation Committee determined a performance schedule consistent with the Company’spay-for-performance philosophy and current market practices, with pay approximating median levels at the target award opportunity level, relative 33
TSR performance at the 50th percentile of the S&P 600 Industrials Index.level. The payout schedule for the relative TSR portion of the performance share grants is as follows:
| | | | | Performance
Level
| | | Performance Level | Manitowoc’s Relative TSR Performance | | Award
Payout (as a % of
Target) | Maximum | | 75 th Percentile | | 200% | Target | | 50 th Percentile | | 100% | Threshold (no payouts below this level) | | 25 th Percentile | | 25% |
If TSR is negative, the TSR portion of the performance share payout cannot exceed the target.
2014 Performance Share GrantRetention Awards. In 2014, prior toJanuary 2017, the contemplation of the Separation, performance shares were granted that originally were based on performance over the three-year performance period from January 1, 2014 through December 31, 2016 on the following two equally-weighted measures: (i)3-year cumulative EVA®, a metric developed by Stern Stewart & Co. that measures the economic profit generated by a business; and (ii)3-year TSR performance relative to a comparator group of direct peers and industrial companies, which was disclosed in the Company’s previous Proxy Statements.
Concurrent with the Separation, the Compensation Committee re-evaluated these performance measures and, due to challenges related to the calculation of the results on such measures on account of the Separation, the Compensation Committee exercised discretion and determined that vesting of the 2014 performance shares would be solely based on service through December 31, 2016. As a result, for employees who met the service condition, the 2014 performance shares paid out at 100% of target.
Retention Awards. In April 2015, as the Separation was being contemplated, the Company also made equity-based retention awards of restricted stock units to certain key employees, including Messrs. Musial, Laurino andMr. Weyers, to provide additional incentiveincentives for the employees to continue intheir employment and contribute towardwith the successful completion of the contemplated Separation.Company. These awardsrestricted stock units vest 100% on the secondfirst anniversary of the Separation if such employees remain continuously employed bygrant date. Mr. Weyers forfeited 4,750 of these restricted stock units (as adjusted for the Company or Manitowoc. Mr. Laurino’s award was paid out1-for-4 reverse stock split) in accordance with his severance agreement, which is discussed below.described below under “Lawrence J. Weyers Severance Agreement.”
Grant Guideline Development.Development. Consistent with the Company’s past practice, the Compensation Committee annually sets award guidelines for each executive officer and job classification level based upon survey market median levels and the Company’s recent average stock price. This year, LTIP awards to named executive officers were made shortly after the Separation to executive officers serving at that time, and were generally downward adjusted to account for differences in the size and scopefirst quarter of position responsibilities post-Separation. Grants to named executive officers who joined the Company during 2016 were made on each individual’s start date.2017. The approximate20-trading-day average closing price ending on the date of the February Compensation Committee meeting is generally used for determining the grant levels.levels and was used for determining the grant levels in 2017. The actual grant price and accounting expense were determined at the date of grant. The accounting fair value of performance shares based on relative TSR [and ROIC] was determined using a Monte Carlo Simulation in accordance with FASB ASC Topic 718, which resulted in an accounting fair value that was higher than the stock price at grant. As a result of the accounting valuations, the weighting, based on the fair value at grant, is higher for performance shares than the guideline value-weighting of 60%. The grant date fair value of the 20162017 equity grants are presented in the Grants of Plan-Based Awards table. The ultimate value if any, that will be realized, if any, is not determinable at the date of grant. Retirement Benefits. and Deferred Compensation. To facilitate the longlong-term service of highly-qualified executives and retirement savings, the Company provides the following retirement benefits.and deferred compensation plans: Supplemental Executive Retirement Plan (SERP). Executives may be selected by the Compensation Committee to be eligible to participate in the nonqualified Supplemental Executive Retirement Plan (“SERP”). 34
, although no executive officer of the Company, except Mr. Musial, participates in the SERP and it is not anticipated that any such officer will participate in the future. An executive is not eligible to participate in the SERP until the executive has at least five years of credited service with the Company and/or its subsidiaries;subsidiaries and additional criteria for participation may be considered by the Compensation Committee. During 2016, of the named executive officers, only Messrs. Laurino and Musial participated in the SERP. Benefits provided under the SERP are intended to provide a life annuity equal to 55% of a participant’s five-year final average pay (salary plus STIP-relatedactual bonus awards). When a participant becomes eligible for a distribution from the SERP, the participant may elect to receive the distribution in a singlelump-sum or over a period not to exceed ten years. For any executive who became a participant after 2008, and whose projected total service at his or her target retirement date is less than 25 years, the 55% target retirement benefit will be prorated based on the projected total service years divided by 25. The actuarial change from 20152016 in the named executive officer’sMr. Musial’s SERP benefits is presented in the Summary Compensation Table. Detailed information about the SERP is presented in the Pension Benefits Table.table. To better align the benefits under the SERP with the Company’s long-term compensation policy and market standards, in December 2017, the Board of Directors approved changes to the SERP intended to reduce the annual percentage increase in a participant’s account balance. 401(k) Retirement Plan. Active, regular, full-time,non-union, U.S. based employees (including the named executive officers) are eligible to participate in The Manitowoc Company, Inc. 401(k) Retirement Plan, which allows employees to build retirement savings on atax-deferred basis. The plan has atax-qualified defined contribution savings component, the 401(k) Savings feature, in which participating employees receive a Company match. In addition, the plan has a Retirement Plan feature, in which the Company provides an annual contribution of from 0% to 4% of eligible compensation to another defined contribution account. There are no employee contributions to the Retirement Plan feature. Contributions under the Retirement Plan feature are based on the STIP bonusaward achievement, subject to a cap, and are reviewed and approved by the Company’s Retirement Committee. The value of Company annual matching contributions to The Manitowoc Company, Inc.the 401(k) Retirement Plan under the Savings Plan feature is presented in the Summary Compensation Table. Perquisites/Deferred Compensation. To further assist in attracting and retaining highly-qualified employees, to facilitate stock ownership and to encourage saving for retirement, executive officers and other key employees are eligible to participate in the Deferred Compensation Plan, which may include a Company contribution. Detailed information about the Deferred Compensation Plan is presented in the Non-Qualified Deferred Compensation table and in the narrative following that table. In addition, the value of the Company’s annual contributions to the Deferred Compensation Plan on behalf of the named executive officers is presented in the Summary Compensation Table in the “All Other Benefits.Compensation” column and in the All Other Compensation Table.
Perquisites and Personal Benefits.In order to provide a market competitive total compensation package, the Company provides a limited amount of perquisites and supplemental benefits to executives.our named executive officers. In 2016,2017, the Company provided the following: supplemental long-term disability insurance, tax preparation, car allowance, spouse/guest travel, club membershipgift certificates in connection with service awards based on tenure, expatriate benefits (including rent, housing-related insurance, educational expenses, car allowance, and moving expenses) and limited personal use of aircraft. The value of perquisites and supplemental benefits, in total and itemized, provided in 20162017 are presented in the Summary Compensation Table and the All Other Compensation Table. New executive officers are typically provided with relocation services in accordance with Company policies. In addition, Mr. Ravenscroft was granted a $50,000 signing bonus upon joining the Company.
Change in Control Severance Arrangements. In order to facilitate attraction and retention of highly-qualified executives, the Company has arrangements (“Contingent Employment Agreements”) with the continuing named executive officers and certain other key executives, which provide for the executives’ continued employment (for a three-year period for the Chief Executive OfficerMr. Pennypacker and for atwo-year period for the other executives) upon a change in control. In addition, the arrangements provide for certain severance benefits in the event the executive is terminated without “cause” (as defined in the agreements)Contingent Employment Agreements) prior to the end of the employment period (as such, the agreementsContingent Employment Agreements have a “double trigger”). For named executive officers other than the Chief Executive Officer, theThe severance amount is two years (three years for the Chief Executive Officer) and for all named executive officers there is no excise taxgross-up. Stock Ownership Guidelines
The Compensation Committee has established stock ownership guidelines for executive officers. The guidelines, as revised in 2016 due to the value of stock holdings being reduced as a result of the Separation, provide that within the greater of (a) five years from the executive’s start date, or (b) three years from the effective date of the Separation, the executive officer should hold an amount of stock with a value at least equal to the following:
Chief Executive Officer: five times base salary
Other Executive Officers: three times base salary
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Stock ownership includes shares owned outright, restricted stock (including RSUs), and stock equivalents held in deferred compensation/retirement arrangements. Additionally,one-half of the guideline amount can be met by vested,in-the-money stock options held by the executive. As of December 31, 2016, each of the continuing named executive officers was in compliance, or on track to be in compliance. If an executive does not meet the relevant ownership requirement on the applicable measurement date, the executive must retain all net shares from the exercise of stock options and the vesting of restricted shares, RSUs and performance shares until compliance is achieved.
Other Pay Elements
Deferred Compensation.To further assist in attracting and retaining highly-qualified employees, to facilitate stock ownership and to encourage saving for retirement, executive officers and other key employees are eligible to participate in the Deferred Compensation Plan. Eligible participants may elect to defer up to 40%benefits would consist of base salary, annual incentive bonus compensation (calculated at the target level), and upother benefits that the executive otherwise would have been entitled to 100% of awards to be paid under the STIP.
Credits to deferred compensation accounts for key employees may also include a contribution by the Company. This contribution equals the amount of compensation deferred by the key employee for the plan year (subject to a maximum of 25% of eligible compensation) multiplied by a rate equalif his employment had not been terminated prior to the rate of variable retirement plan contributions that the participant received from the Company for therespective three or two year under the 401(k) Retirement Plan plus 1%. If the Company does not make a contribution to the 401(k) Retirement Plan, there will not be any Company contribution to the key employees under the Deferred Compensation Plan.
Deferred amounts can be invested into a variety of accounts, which mirror the performance of several different mutual funds offeredchange in the 401(k) Retirement Plan, as well as the Company Stock Fund (which includes only common stock of the Company). Transfers between the Company Stock Fund and the other funds are not permitted. Key employee participants are not required to direct any minimum amount of deferred compensation into the Company Stock Fund.
control employment period. The value of the Company’s annual contributions to the Deferred Compensation Plan on behalf of the named executive officersFurther detail regarding these agreements is presented in the SummaryPost-Employment Compensation Table. Detailed information about the Deferred Compensation Plan is presented in theNon-Qualified Deferred Compensation Table.section of this Proxy Statement. Other Severance Arrangements Severance Pay Plan. The Company also has a severance pay plan that establishes a discretionary severance program across the Company whereby all severance benefits are provided at the Company’s sole discretion and will be designed to meet the specific facts and circumstances of each termination. The Board of Directors hasand the Compensation Committee have the sole authority to authorize any benefits under the plan to any elected officer of the Company. Other than this discretionary severance pay plan, the Company does not generally have a formal severance plan for other forms of employment termination, except for the Contingent Employment Agreements and the severance agreements with Mr. Weyers, Mr. Raymond and Mr. Musial, in each case as described below. Severance Agreements. In 2017, the Company entered into severance agreements with Mr. Weyers and Mr. Raymond in connection with their departure from the Company. Additionally, in February 2018, the Company entered into a severance agreement with Mr. Laurino, which is describedMusial in connection with his retirement from the Executive CompensationCompany in July 2018. For additional information regarding the severance agreements with Mr. Weyers, Mr. Raymond and Mr. Musial, see the Lawrence J. Weyers Severance Agreement section, of this Proxy Statement.the Louis F. Raymond Severance Agreement section and the Thomas G. Musial Severance Agreement section, respectively. Other Executive Compensation Policies and Considerations Stock Ownership Guidelines. The Compensation Committee has established stock ownership guidelines for executive officers. The guidelines, as revised in 2016 due to the value of stock holdings being reduced as a result of the Spin-Off, provide that within the greater of (a) five years from the executive’s start date, or (b) three years from the effective date of the Spin-Off, the executive officer should hold an amount of stock with a value at least equal to the following: Chief Executive Officer: five times base salary Other Executive Officers: three times base salary Stock ownership includes shares owned outright, restricted stock, restricted stock units, and stock equivalents held in deferred compensation and/or retirement plans. Additionally, one-half of the guideline amount can be met by vested, in-the-money stock options held by the executive officer. As of December 31, 2017, each of the continuing named executive officers was in compliance, or on track to be in compliance, with such guidelines. If an executive officer does not meet the relevant ownership guideline on the applicable measurement date, the executive officer must retain all net shares from the exercise of stock options and the vesting of restricted shares, restricted stock units and performance shares until compliance is achieved.
Stock Awards Granting Policy. In 2016, shortly after the Separation, and2017, based on the approval of the Compensation Committee, the Company granted stock awards to its executive officers and other eligible key employees serving at the time.employees. In 2016,2017, stock awards to executive officers and other key employees consisted of stock options and performance shares, as described above.and, with respect to Mr. Weyers, restricted stock units. Annual stock awards are generally granted in February, but given the date of the Separation, were granted in March for 2016.February. Stock awards are also used to attract executives and key employees, and, as such, stock awards are at times granted to executives and key employees at the time they become executives or key employees of the Company, as was the case for Messrs. Antoniuk and Ravenscroft in 2016.Company. In such cases, the grant date would be the date employment commences or the date the Compensation Committee approves the awards. In all cases, the exercise price of stock options is the 36
closing trading price on the grant date. Additionally, as previously noted, in April 2015,January 2017, the Company made special equity-based retention awards (restricted stock)stock units) to certain key employees to provide additional incentives for the employees to continue intheir employment and contribute towardwith the successful completion of the contemplated Separation.Company. Securities Trading Policy.The Company maintains an Insider Trading Policy that imposes specific standards on directors, officers and key employees of the Company. The policy is intended not only to forbid such persons from trading in Company stock on the basis of inside information, but to avoid even the appearance of improper conduct on the part of such persons. The policy also prohibits employees from pledging their holdings of Company securities and from engaging in hedging transactions involving Company securities. In addition to the specific restrictions set forth in the policy, the policy requires that all transactions in Company stock by such persons and by others in their households bepre-cleared by the Corporate Secretary’s office. The only exception to thepre-clearance requirement is regular, ongoing acquisitions of Company stock resulting from continued participation in employee benefit plans that the Company or its agents administer. Pay Clawbacks. In addition to any right of recoupment against our Chief Executive Officer or Chief Financial Officer pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, we intend to recoup executive officer compensation, or a portion thereof, to the extent required under rules to be adopted by the SEC and New York Stock Exchange, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. We will implement a policy that complies with such rules.if any. Tax Deductibility of Executive Compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”(“Section 162(m)”), limits the Company’s federal income tax deduction to $1,000,000$1 million per year for compensation paid to its Chief Executive Officercovered executives. For compensation paid for the 2017 fiscal year, our covered executives were Messrs. Pennypacker, Musial and certain other highly compensated executive officers. QualifiedRavenscroft. Prior to 2018, compensation that qualified as performance-based compensation is not, however, subject to the deduction limit, under Section 162(m) was fully deductible provided certain requirements of Section 162(m) arewere satisfied. CertainAs such, we structured certain cash and equity awards that we granted during 2017 and prior years under the 2013 Omnibus Incentive Plan and the 2003 Plans are intendedIncentive Stock and Awards Plan to qualify for the performance-based compensation exception under Section 162(m); however, the time-vesting RSUs and retention-related restricted shares that were granted in 2015 in view of the anticipated Separation do not so qualify, nor do the performance shares that were originally granted in 2014 and were modified following the Separation to only vest based on continued service. The Compensation Committee believes its decisions related toreduce the impact of the Separation$1 million deduction limit, although the Compensation Committee has always had the discretion to award compensation that may not be fully deductible. As a result of changes made by the Tax Cuts and Jobs Act, starting with our 2018 fiscal year, only performance-based compensation that is paid pursuant to a binding contract in effect on equity awards were appropriate givenNovember 2, 2017 will be exempt from the unusual circumstances$1 million deduction limit. Accordingly, any compensation that we pay in the future pursuant to new compensation arrangements entered into after November 2, 2017, even if performance-based, will count towards the $1 million deduction limit. In addition, the $1 million deduction limit will apply to a broader group of executives, including any individual who serves as our Chief Executive Officer or Chief Financial Officer at any time on or after January 1, 2018, plus any executive who is among our three most highly compensated executive officers for any fiscal year beginning with 2018. Because many different factors influence a well-rounded, comprehensive executive compensation program, and as a result of the Separationchanges made to Section 162(m) by the Tax Cuts and the related difficulties in crafting meaningful performance metrics in view of the many changes due to the Separation. It is the Compensation Committee’s intent to preserve the deductibility of executive compensation to the extent reasonably practicable and consistent with the best interests of the Company and its shareholders. However, should the Committee determine that it may be in the best interests of shareholders to grant compensation to executives that does not qualify as performance-based compensation, the Committee may do so.
COMPENSATION COMMITTEE REPORT
Approval of Compensation Discussion and Analysis. Management of the Company has prepared the foregoing Compensation Discussion and AnalysisJobs Act, some of the compensation program for namedwe provide to our executive officers. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis for fiscal year 2016 (included in this Proxy Statement) with the Company’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors of the Company, and the Board has approved, that the Compensation Discussion and Analysisofficers might not be incorporated by reference in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016, and included in the Company’s Proxy Statement for filing with the SEC.deductible.
Use of an Independent Compensation Consultants. Consultant. The Compensation Committee engaged Willis Towers Watson, an executive consulting firm, as its independent compensation consultant to provide advice on compensation trends and market information to assist the 37
Compensation Committee in fulfilling its duties, including the following responsibilities: review executive compensation and advise of changes to be considered to improve effectiveness consistent with our compensation philosophy; provide market data and recommendations on Chief Executive Officer and executive compensation; review materials for Compensation Committee meetings and attend Compensation Committee meetings; and advise the Compensation Committee on best practices for governance of executive compensation as well as areas of possible concern or risk in the Company’s programs.
Willis Towers Watson was directly engaged by and is accountable to the Compensation Committee, and has not been engaged by management for other services, except as discussed below. During fiscal 2016,2017, Willis Towers Watson was paid $159,887$89,659 for executive compensation advice, director compensation advice and other services to the Compensation Committee. During fiscal 2016,2017, Willis Towers Watson was also paid $24,713$315,087 for other human resource and accounting services to the Company; and Willis Towers Watson was retained by management for these services. The Compensation Committee originally selected Willis Towers Watson (formerly known as Towers Watson) in fiscal 2014 to serve as an independent compensation consultant to The Manitowoc Company, Inc.the Company. This selection occurred after the Compensation Committee had assessed the firm’s independence, taking into consideration the following factors, among others: The Compensation Committee’s oversight of the relationship between the Company and Willis Towers Watson mitigates the possibility that management could misuse other engagements to influence Willis Towers Watson’s compensation work for the Compensation Committee. Willis Towers Watson has adopted internal safeguards to ensure that its executive compensation advice is independent. The Compensation Committee retains ultimate decision-making authority for all executive pay matters, and understands Willis Towers Watson’s role is simply that of advisor. The absence of any significant business or personal relationship between Willis Towers Watson and any of our executives or members of the Compensation Committee. The foregoing factors are still relevant to the Compensation Committee’s ongoing and annual assessment to continue utilizing the compensation consultant services of Willis Towers Watson. For fiscal 2016,2017, Willis Towers Watson has also provided the Compensation Committee with a written assessment of the independence of Willis Towers Watson’s advisory work to the Committee. Based on the foregoing, the Compensation Committee has concluded that the engagement of Willis Towers Watson does not raise any conflict of interest. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed this Compensation Discussion and Analysis for fiscal year 2017 with the Company’s management. Based on this review and discussion, the Compensation Committee recommended to the Board, and the Board has approved, that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and included in the Company’s Proxy Statement for filing with the SEC. Compensation Committee Donald M. Condon, Jr., Chair Robert G. Bohn Anne M. Cooney John C. Pfeifer
Risk Assessment of Compensation Practices The Compensation Practices.During 2013, Pay Governance LLC,Committee is responsible for overseeing the management of risks relating to the Company’s human resources and executive compensation plans and arrangements. In 2017, the Compensation Committee’s former independent compensation consultant, worked with the Company to complete a comprehensive risk assessment of the executive compensation program, includingCommittee conducted an evaluation of the governance, philosophy, program structureCompany’s compensation arrangements for executive officers and mix,non-executive officer employees and plan design. In 2014, the findingsincentives created by such arrangements for employees to take risks. As a result of the 2013 riskthis assessment, were reviewed by the Compensation Committee and Willis Towers Watson. The 2014 review considered both changes in the Company’s incentive plans since the time of the 2013 review, as well as changes in the external environment for executive compensation plans. In 2015, Willis Towers Watson updated for the Committee the findings of the 2014 review with the focus being on the changes to the Company’s compensation programs (mainly the LTIP) and any potential impact on the risk assessment. These reviews foundconcluded that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. TheIn reaching this conclusion, the Compensation Committee considered the following risk assessment included various business leaders, including the headsmitigating features of finance, legal and human resources.
The detailed findings, which were reviewed and discussed with the Committee, found that the Company’s compensation policiesprogram:
Pay Mix. The Company’s executive compensation program primarily consists of base salary, short-term incentive compensation, and practices do not createlong-term incentive compensation. Base salaries are targeted at median, which mitigates the need for our executive officers to take significant risks to earn average compensation. However, we also place a sufficient portion of each executive officer’s pay at risk to ensure that the interests of our executives are well-aligned with those of our shareholders, driving long-term shareholder value. Time Horizon. Our 2016 and 2017 LTIP awards are based on a three-year performance period, which encourages our employees to focus on sustained performance of the Company over the long-term, rather than taking short-term risks. Performance Goals. Our STIP and LTIP goals are set at levels that are reasonably likelyattainable without taking inappropriate risks, but that still require stretch performance. We also cap our STIP and LTIP payouts to 200% of the target payout amount for each of our executives, which further helps control excessive risk taking at the expense of longer term financial success. Stock Ownership Guidelines and Hedging Policies. We have a material adversestock ownership guidelines in place for each of our named executive officers, which further aligns the interests of our executive officers with those of our shareholders. We also prohibit employees from pledging their holdings of Company securities and from engaging in hedging transactions involving Company securities. EXECUTIVE COMPENSATION TABLES 38
effect on the Company. This conclusion was reached based on the Company’s governance practices and program design features as detailed in theSummary Compensation Discussion and Analysis. In particular, we note the following:Table
The Board and the Compensation Committee oversee and govern all elements of executive compensation ensuring risk is appropriately incorporated into the philosophy and program structure.
Incentive compensation plans have been designed consistent with the Company’s business strategy and objectives, as well as market practices, and include limits on the maximum potential payouts for goal-based plans, various performance measures, assessment periods and ongoing stock ownership requirements.
Performance metrics reflect risk and use of capital, quality and sustainability of results and employee line of sight over annual and long-term time horizons.
Compensation plan governance processes clearly define oversight roles to assure that compensation plans are aligned with business goals and risk tolerances.
Compensation Committee
Donald M. Condon, Jr., Chair
Robert G. Bohn
Anne M. Cooney
John C. Pfeifer
SUMMARY COMPENSATION TABLE
The following table sets forth the “total compensation” earned by theeach named executive officersofficer during the fiscal year ended December 31, 2016.2017, and, to the extent that a named executive officer was a named executive officer of the Company for the fiscal years ended December 31, 2016 or December 31, 2015, total compensation for service to the Company during those years. In accordance with SEC rules and guidance, information for fiscal years prior to the timeyear in which an individual first became a named executive officer is not required to be presented. Actual payouts are presented in the “Salary” (before deferrals) and “Non-Equity Incentive Plan Compensation” (2017 STIP award payouts) columns. The grant date fair value of equity-based grants awarded in 2017 is shown in the “Stock Awards” and “Options Awards” columns. None of this amount was realized during 2017; instead, the actual value realized, if any, will be commensurate with our financial and stock price performance over the next several years. The actuarial change in pension value from the preceding year is presented in the “Change in Pension Value & Nonqualified Deferred Compensation Earnings” column. The Company did not provide above-market earnings on non-qualified deferred compensation. Accordingly, the amount in the “Change in Pension Value & Nonqualified Deferred Compensation Earnings” column consists entirely of the change in the actuarial present value of Mr. Musial’s accumulated benefit under the SERP. The amounts included in Mr. Weyers’ and Mr. Raymond’s “Stock Awards” and “Option Awards” columns include grants that were forfeited pursuant to their respective severance agreements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name & Principal Position | | Year | | | Salary | | | Bonus | | | Stock
Awards (1)(2) | | | Option
Awards (1)(3) | | | Non-Equity
Incentive Plan
Compensation(4) | | | Change in
Pension Value
& Nonqualified
Deferred
Compensation
Earnings(5) | | | All Other
Compensation(6) | | | Total | | Barry L. Pennypacker President & CEO | | | 2016 | | | | $931,731 | | | | $0 | | | | $1,654,072 | | | | $1,250,000 | | | | $0 | | | | $0 | | | | $28,213 | | | | $3,864,016 | | David J. Antoniuk Senior Vice President & Chief Financial Officer | | | 2016 | | | | $271,385 | | | | $0 | | | | $718,867 | | | | $231,001 | | | | $0 | | | | $0 | | | | $6,802 | | | | $1,228,055 | | Thomas G. Musial | | | 2016 | | | | $426,300 | | | | $0 | | | | $295,749 | | | | $223,501 | | | | $0 | | | | $612,338 | | | | $32,692 | | | | $1,590,580 | | Senior Vice President, | | | 2015 | | | | $426,300 | | | | $0 | | | | $376,769 | | | | $356,734 | | | | $0 | | | | $561,778 | | | | $32,241 | | | | $1,753,822 | | H.R. Administration | | | 2014 | | | | $420,000 | | | | $0 | | | | $575,421 | | | | $306,684 | | | | $0 | | | | $515,393 | | | | $31,445 | | | | $1,848,943 | | Lawrence J. Weyers Executive Vice President, Tower Cranes | | | 2016 | | | | $425,000 | | | | $0 | | | | $264,653 | | | | $200,000 | | | | $0 | | | | $0 | | | | $31,406 | | | | $921,059 | | Aaron H. Ravenscroft(7) Executive Vice President, Mobile Cranes | | | 2016 | | | | $295,673 | | | | $0 | | | | $365,817 | | | | $200,000 | | | | $0 | | | | $0 | | | | $68,700 | | | | $930,190 | | Kenneth W. Krueger(8) | | | 2016 | | | | $0 | | | | $0 | | | | $111,277 | | | | $0 | | | | $0 | | | | $0 | | | | $166,428 | | | | $277,705 | | | Former Interim President & CEO | | | 2015 | | | | $131,538 | | | | $0 | | | | $1,010,008 | | | | $0 | | | | $0 | | | | $0 | | | | $363,962 | | | | $1,505,508 | | Carl J. Laurino(9) | |
| 2016
|
| |
| $247,984
|
| |
| $0
|
| |
| $523,349
|
| |
| $395,500
|
| |
| $0
|
| |
| $193,602
|
| |
| $389,588
|
| |
| $1,750,023
|
| | Former Senior Vice President | | | 2015 | | | | $463,855 | | | | $0 | | | | $505,106 | | | | $478,321 | | | | $0 | | | | $212,443 | | | | $24,093 | | | | $1,683,818 | | Chief Financial Officer | | | 2014 | | | | $457,000 | | | | $0 | | | | $631,961 | | | | $336,819 | | | | $0 | | | | $359,986 | | | | $13,646 | | | | $1,799,412 | |
39
| | | | | | | | | | | | | | | | | | | | Name & Principal Position | Year | Salary | Bonus | Stock
Awards(1) | Option
Awards(2) | Non-Equity
Incentive Plan
Compensation(3) | Change in
Pension Value
& Nonqualified
Deferred
Compensation
Earnings(4) | All Other
Compensation(5) | Total | Barry L. Pennypacker
President & Chief Executive Officer | 2017 | $973,019 | $0 | $1,442,245 | $1,364,948 | $1,907,097 | $0 | $31,642 | $5,718,951 | 2016 | $931,731 | $0 | $1,654,072 | $1,250,000 | $0 | $0 | $28,213 | $3,864,016 | David J. Antoniuk Senior Vice President & Chief Financial Officer | 2017 | $490,000 | $0 | $456,345 | $431,875 | $716,258 | $0 | $20,775 | $2,115,253 | 2016 | $271,385 | $0 | $718,867 | $231,001 | $0 | $0 | $6,801 | $1,228,054 | Thomas G. Musial Senior Vice President, Human Resources and Administration | 2017 | $426,300 | $0 | $257,881 | $244,051 | $581,601 | $667,449 | $31,104 | $2,208,386 | 2016 | $426,300 | $0 | $295,749 | $223,501 | $0 | $612,338 | $32,691 | $1,590,579 | 2015 | $426,300 | $0 | $376,769 | $356,734 | $0 | $561,778 | $33,090 | $1,754,671 | Aaron H. Ravenscroft
Executive Vice President, Cranes | 2017 | $387,115 | $0 | $259,624 | $245,693 | $456,066 | $0 | $202,869 | $1,551,367 | 2016 | $295,673 | $0 | $365,817 | $200,000 | $0 | $0 | $68,700 | $930,190 | | | | | | | | | | Lawrence J. Weyers(6) Former Executive Vice President, Tower Cranes | 2017 | $311,721 | $0 | $528,757 | $218,394 | $489,229 | $0 | $155,254 | $1,703,355 | 2016 | $425,000 | $0 | $264,653 | $200,000 | $0 | $0 | $31,405 | $921,058 | | | | | | | | | | Louis F. Raymond(7) Former Vice President,
General Counsel and Secretary | 2017 | $364,353 | $0 | $173,083 | $163,795 | $292,350 | $0 | $8,171 | $1,001,752 | | | | | | | | | |
| (1) | The amounts listed in the “Stock Awards” and “Option Awards” columnscolumn represent the aggregate grant date fair value of suchall restricted stock unit, restricted stock and performance share awards in accordance with Accounting Standards CodificationASC Topic 718. Mr. Weyers was the only named executive officer who received restricted stock units in 2017. The value attributable to the 2017 grant of restricted stock units to Mr. Weyers was $298,000. For this restricted stock unit award, fair value is computed by multiplying the total number of shares subject to the award by the closing market price on the date of grant. For performance share awards, fair value is calculated based upon the probable outcome of the performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC Topic 718, (“ASC 718”).and was as follows for 2017 awards: Mr. Pennypacker — $1,442,245; Mr. Antoniuk — $456,345; Mr. Musial — $257,881; Mr. Ravenscroft — $259,624; Mr. Weyers — $230,757; and Mr. Raymond — $173,083. Performance shares are earned based on our financial performance over a three-year period, and the shares earned are not restricted after the performance period. The maximum values of the 2017 grants of performance shares at the grant date, assuming that the highest level of performance conditions are attained, are as follows: Mr. Pennypacker — $2,884,489; Mr. Antoniuk — $912,691; Mr. Musial — $515,762; Mr. Ravenscroft — $519,248; Mr. Weyers — $461,513; and Mr. Raymond — $346,166. Additional information about the assumptions that we used in valuing equity awards is set forth in Note 15 to the Consolidated Financial Statements for the fiscal year ended December 31, 2017 in our Annual Report on Form 10-K filed with the SEC on February 23, 2018. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
(2) | Reflects(2)
| The amounts listed in the “Option Awards” column represent the aggregate grant date fair value of theall option awards granted during the year in each year shown as computed underaccordance with ASC Topic 718. TheAdditional information about the assumptions that we used in valuing equity awards representedis set forth in this column are performance shares, restricted stock units and restricted shares. The valueNote 15 to the Consolidated Financial Statements for the grants of performance shares is basedfiscal year ended December 31, 2017 in our Annual Report on Form 10-K filed with the target number of shares that could be earned if the performance goals are met. The actual number of shares issued at the end of the performance period may be more or less than the target award, depending upon the actual performance in comparison to the target performance goals. For the 2014 grant, in view of the Separation, the Compensation Committee exercised its discretion and paid out the award at 100% of target. The performance period for the 2016 grant is not yet completed. For performance at “maximum,” each named executive officer may earn up to two times the target number of performance shares for the 2016 grants. In fiscal 2015, performance shares were not granted because of the anticipated Separation. Instead, executive officers were granted restricted stock units and retention-related restricted stock. In addition, 86,311 and 46,512 of performance shares were granted to Mr. Antoniuk and Mr. Ravenscroft respectively, each also received restricted stock units (“RSUs”) valued at approximately $292,000 ($500,000 valuepro-rated for hire date) and $100,000, respectively, that vestSEC on the third anniversary of the grant date. See generally “Grants of Plan-Based Awards” table below.February 23, 2018. |
(3) | Reflects the grant date fair value of the awards granted in each year shown as computed under ASC 718. The options expire ten years from the grant date. Options granted vest in 25% increments annually beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the fourth anniversary.(3)
|
(4) | Consists of cash awards made under the Company’s Short-Term Incentive Plan. The amount reflects2017 STIP. Reflects the amount earned for performance during the year indicated2017 but not paid until the next year.2018. |
(5) | Consists of(4)
| Reflects the change in the actuarial present value of the individual’sMr. Musial’s accumulated benefit under the Company’s Supplemental Executive Retirement PlanSERP (e.g., for 2016 this2017, reflects the change from December 31, 20152016 to December 31, 2016)2017). The Company doesdid not provide above-market earnings onnon-qualified deferred compensation. |
(6)(5) | Consists of the compensation includeddescribed in the All Other Compensation Table, which follows this table. |
(7) | The cash signing bonus Mr. Ravenscroft received upon joining the Company is reflected as part of the “Other” compensation in the table above.(6)
|
(8) | Mr. Krueger’s role as interim President and Chief Executive Officer until the Separation. He continues as Chairman of the Board and a director of the Company. Amounts include compensation received as a director in addition to his service as interim President and Chief Executive Officer. |
(9) | Mr. LaurinoWeyers resigned as SeniorExecutive Vice President, and Chief Financial Officer MayTower Cranes effective August 31, 2016.2017. In connection with Mr. Laurino’sWeyers’ departure from the Company, his fiscal 2016 stock and option awards were forfeited andhe received (in addition to other severance amounts) an amount equal to three-quarters of the 2017 STIP award that he would have been eligible to receive, based on actual 2017 performance, if he had remained employed by the Company. Additionally, the vesting of certain equity grants to Mr. Weyers was accelerated, while other equity awards was accelerated.grants that had yet to vest as of the date of his severance agreement were forfeited. See “Carl“Lawrence J. LaurinoWeyers Severance Agreement” below for more information regarding compensationthe payments and benefits received by Mr. LaurinoWeyers in connection with his departure from the Company.
|
| (7) | Mr. Raymond resigned as Vice President, General Counsel and Secretary effective November 27, 2017. In connection with Mr. Raymond’s departure from the Company, he received (in addition to other severance amounts) the full amount of the 2017 STIP award that he would have been eligible to receive, based on actual 2017 performance factors. Additionally, the vesting of certain equity grants to Mr. Raymond was accelerated, while other equity grants that had yet to vest as of the date of his severance agreement were forfeited. See “Louis F. Raymond Severance Agreement” below for more information regarding the payments and benefits received by Mr. Raymond in connection with his departure from the Company. |
40
ALL OTHER COMPENSATION TABLEAll Other Compensation Table
The following table sets forth the specific items included in the “All Other Compensation” column of the Summary Compensation Table. | | | | | | | | | | | | | | | | | | | Name | | Year | | | Company
Contributions
to Defined
Contribution
Plan(1) | | | Insurance
Premiums | | | Tax
Preparation
Fee
Reimbursement | | | Car
Allowance | | | Other(2) | | | Total | | Year | Company
Contributions
to Defined
Contribution
Plan(1) | Insurance
Premiums(2) | Tax
Preparation
Fee
Reimbursement | Car
Allowance | Other(3) | Total | Barry L. Pennypacker | | | 2016 | | | | $10,600 | | | | $1,023 | | | | $0 | | | | $12,000 | | | | $4,590 | | | | $28,213 | | 2017 | td0,600 | td,438 | $0 | td2,000 | $7,604 | $31,642 | Barry L. Pennypacker | | 2016 | td0,600 | td,023 | $0 | td2,000 | $4,590 | td8,213 | | 2017 | td0,600 | $0 | $0 | $5,400 | $4,775 | td0,775 | David J. Antoniuk | | | 2016 | | | | $6,508 | | | | $0 | | | | $0 | | | | $0 | | | | $294 | | | | $6,802 | | 2016 | $6,508 | $0 | $0 | $0 | td93 | $6,801 | Thomas G. Musial | | | 2016 | | | | td0,600 | | | | $6,468 | | | | $4,642 | | | | td0,800 | | | | td82 | | | | $32,692 | | 2017 | td0,600 | $5,092 | $3,920 | td0,800 | $692 | $31,104 | | | | 2015 | | | | td0,600 | | | | $7,079 | | | | $3,736 | | | | td0,800 | | | | td6 | | | | $32,241 | | 2016 | td0,600 | $6,468 | $4,642 | td0,800 | td81 | $32,691 | | | | 2014 | | | | td0,400 | | | | $7,079 | | | | $3,166 | | | | td0,800 | | | | $0 | | | | $31,445 | | 2015 | td0,600 | $7,079 | $3,736 | td0,800 | $875 | $33,090 | Aaron H. Ravenscroft | | 2017 | td0,364 | $0 | $380 | $9,000 | td83,125 | td02,869 | | 2016 | td0,600 | $0 | $0 | $8,100 | $50,000 | $68,700 | Lawrence J. Weyers | | | 2016 | | | | $10,600 | | | | $7,246 | | | | $1,860 | | | | $10,800 | | | | $900 | | | | $31,406 | | 2017 | td0,600 | $5,017 | td,095 | $8,100 | td30,442 | td55,254 | Aaron H. Ravenscroft | | | 2016 | | | | $10,600 | | | | $0 | | | | $0 | | | | $8,100 | | | | $50,000 | | | | $68,700 | | | | Kenneth W. Krueger former Interim President & CEO | | | 2016 | | | | $0 | | | | $0 | | | | $0 | | | | $0 | | | | td66,428 | | | | td66,428 | | | | | | 2015 | | | | $0 | | | | $0 | | | | $0 | | | | $0 | | | | $363,962 | | | | $363,962 | | | | | | | | | | | | | | | | | | | | Carl J. Laurino Former CFO | | | 2016 | | | | $5,220 | | | | $3,164 | | | | td,033 | | | | $5,400 | | | | $374,771 | | | | $389,588 | | | | | | 2015 | | | | $4,407 | | | | $6,328 | | | | $878 | | | | td0,800 | | | | td,680 | | | | td4,093 | | | | | | 2014 | | | | $0 | | | | $987 | | | | $803 | | | | td0,800 | | | | td,056 | | | | td3,646 | | | Lawrence J. Weyers | | 2016 | td0,600 | $7,246 | td,860 | td0,800 | $899 | $31,405 | | 2017 | $6,877 | td,063 | $0 | $0 | td31 | $8,171 |
(1) | (1) | Consists of contributions made by the Company during the year indicated under The Manitowoc Company, Inc. 401(k) Retirement Plan. As explained in the Compensation Discussion and Analysis, this Plan includes both atax-qualified defined contribution savings component in which the participant receives a Company match, and a retirement plan feature in which the Company provides an annual contribution of between0 - 0% to 4% of eligible compensation to another defined contribution account. |
| (2) | Includes premiums paid for Supplemental Executive Long Term Disability Insurance. |
(2) | (3) | For 20162017, includes (a) includes travel expense onexpenses related to personal use of the Company aircraft —– Mr. Pennypacker — $2,619,- $7,604 and Mr. Antoniuk — $293;- $4,775; (b) personal usevalue of memberships:gift certificate for service awards based on tenure – Mr. Pennypacker — $1,970, Mr. Weyers — $899,Musial - $692 and Mr. Musial — $181;Raymond - $231; (c) in connection with Mr. Ravenscroft’s assignment to France during November and December 2017, expatriate benefits (including amounts paid by the Company for rent, housing-related insurance, educational expenses, and car allowance) and moving expenses, which were paid in Euros, but were converted to U.S. dollars for purposes of this table at the fiscal year-end exchange rate of 1 Euro = 1.20030 U.S. dollars - $183,125; and (d) severance pay for Mr. Laurino — $374,771, (d) Mr. Krueger’s directors fees of $163,375; and (e) Mr. Ravenscroft’s signing bonus — $50,000.Weyers – $130,442. |
| For 2015, includes (a) Mr. Krueger — director’s fees of $120,000 and compensation of $240,000 related to his service as the Board’s Separation liaison prior to becoming Interim President and Chief Executive Officer; (b) personal use of membership: Mr. Laurino — $875 and Mr. Musial — $875.
|
| For 2014, includes (a) personal use of Company aircraft and officer’s family travel: Mr. Laurino — $1,012.
|
For 2016, includes (a) expenses related to personal use of the Company aircraft – Mr. Pennypacker - $2,619 and Mr. Antoniuk - $293; (b) personal use of memberships: Mr. Pennypacker – $1,970, Mr. Weyers – $899, and Mr. Musial – $181; and (c) Mr. Ravenscroft’s signing bonus – $50,000. 41For 2015, includes personal use of membership: Mr. Musial – $875.
GRANTS OF PLAN-BASED AWARDSGrants of Plan-Based Awards in 2017
The following table sets forth the 20162017 STIP awards and equity awards granted under the Company’s 2013 Omnibus Incentive Plan. As noted herein, there was not any payout for the 2016Any STIP awards which is a reflection that performance was below targeted financial performance and minimum threshold.earned in 2017 were paid in the first quarter of 2018. Other than the equity awards disclosed below, there were no other equity-based incentive awards granted to the named executive officers in 2016.2017. | | Name | | Award
Type | | Grant
Date | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards | | | Estimated Future
Payouts Under
Equity Incentive Plan
Awards
Number of Shares
of Stock or Units
(#) | | | All Other
Share
Awards:
Number of
Shares of
Stock or
Units (#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options (#) | | | Exercise or
Base Price
of Option
Awards
($/Sh) | | | Grant Date
Fair Value of
Stock and
Option
Awards(1)(2) | | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Share Awards: Number of Shares of Stock or Units (#)(3) | All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(4) | Exercise or
Base Price
of Option
Awards ($/Sh)(5) | Grant Date
Fair Value of
Stock and
Option
Awards(6) | | | | |
| Threshold
($) |
| |
| Target
($) |
| |
| Maximum
($) |
| |
| Threshold
(#) |
| |
| Target
(#) |
| |
| Maximum
(#) |
| | | | | Threshold
($)(1) | Target ($)(1) | Maximum ($)(1) | Threshold (#)(2) | Target (#)(2) | Maximum (#)(2) | Barry L. Pennypacker | | STIP | | | 03/01/2016 | | | | $0 | | | | $950,000 | | | | td,900,000 | | | | | | | | | | | | | | | | STIP | | $489,250 | $978,500 | td,957,000 | | | | | | | | | Stock Options | | | 03/28/2016 | | | | | | | | | | | | | | | | | | | 618,812 | | | | $4.35 | | | | td,691,832 | | Stock Options | 02/22/2017 | | | | | 112,249 | td5.68 | td,364,948 | | | Performance Shares | | | 03/28/2016 | | | | | | | | | | | 72,675 | | | | 290,698 | | | | 581,396 | | | | | | | | | | | $0 | | Performance Shares | 02/22/2017 | | 11,791 | 47,163 | 94,326 | | | td,442,245 | David J. Antoniuk | | STIP | | | 05/31/2016 | | | | $0 | | | | $367,500 | | | | $735,000 | | | | | | | | | | | | | | | | STIP | | td83,750 | $367,500 | $735,000 | | | | | | | | | Stock Options | | | 05/31/2016 | | | | | | | | | | | | | | | | | | | 87,401 | | | | $5.70 | | | | $498,186 | | Stock Options | 02/22/2017 | | | | | 35,516 | td5.68 | $431,875 | | | Performance Shares | | | 05/31/2016 | | | | | | | | | | | 21,578 | | | | 86,311 | | | | 172,622 | | | | | | | | | | | $0 | | Performance Shares | 02/22/2017 | | 3,731 | 14,923 | 29,846 | | | | $456,345 | | | | Restricted Stock Units | | | 05/31/2016 | | | | | | | | | | | | | | | | 39,876 | | | | | | | | $0 | | | Thomas G. Musial | | STIP | | | 03/01/2016 | | | | $0 | | | | td98,410 | | | | $596,820 | | | | | | | | | | | | | | | | STIP | | td38,548 | td77,095 | $554,190 | | | | | | | | | Stock Options | | | 03/28/2016 | | | | | | | | | | | | | | | | | | | 110,644 | | | | $4.35 | | | | $481,301 | | Stock Options | 02/22/2017 | | | | | 20,070 | td5.68 | td44,051 | | | Performance Shares | | | 03/28/2016 | | | | | | | | | | | 12,994 | | | | 51,977 | | | | 103,954 | | | | | | | | | | | $0 | | Performance Shares | 02/22/2017 | | 2,108 | 8,433 | 16,866 | | | | td57,881 | Lawrence J. Weyers | | STIP | | | 03/01/2016 | | | | $0 | | | | $318,750 | | | | $637,500 | | | | | | | | | | | | | | | | | | | Stock Options | | | 03/28/2016 | | | | | | | | | | | | | | | | | | | 99,010 | | | | $4.35 | | | | $430,694 | | | | | Performance Shares | | | 03/28/2016 | | | | | | | | | | | 11,628 | | | | 46,512 | | | | 93,024 | | | | | | | | | | | $0 | | | Aaron H. Ravenscroft | | STIP | | | 03/01/2016 | | | | $0 | | | | td87,500 | | | | $375,000 | | | | | | | | | | | | | | | | STIP | | $97,500 | td95,000 | $390,000 | | | | | | | | | Stock Options | | | 03/28/2016 | | | | | | | | | | | | | | | | | | | 99,010 | | | | $4.35 | | | | $430,694 | | Stock Options | 02/22/2017 | | | | | 20,205 | td5.68 | td45,693 | | | Performance Shares | | | 03/28/2016 | | | | | | | | | | | 11,628 | | | | 46,512 | | | | 93,024 | | | | | | | | | | | $0 | | Performance Shares | 02/22/2017 | | 2,123 | 8,490 | 16,980 | | | | td59,624 | | | | Restricted Stock Units | | | 03/28/2016 | | | | | | | | | | | | | | | | 23,456 | | | | | | | | $0 | | | Kenneth W. Krueger | | Restricted Stock Units | | | 03/28/2016 | | | | | | | | | | | | | | | | 25,581 | | | | | | | | $0 | | | Carl J. Laurino(3) | | STIP | | | 03/01/2016 | | | | $0 | | | | $0 | | | | $0 | | | | | | | | | | | | | | | | | | | Stock Options | | | 03/28/2016 | | | | | | | | | | | | | | | | | | | 195,792 | | | | $4.35 | | | | $851,695 | | | | | Restricted Stock Units (Performance Shares) | | | 03/28/2016 | | | | | | | | | | | | 91,977 | | | | | | | | | | | | $0 | | | Lawrence J. Weyers(7) | | STIP | | td67,344 | $334,688 | $669,376 | | | | | | | | Restricted Stock Units | 01/16/2017 | | | | | 12,500 | | | td98,000 | | Stock Options | 02/22/2017 | | | | | 17,960 | td5.68 | td18,394 | | Performance Shares | 02/22/2017 | | 1,887 | 7,546 | 15,092 | | | | td30,757 | Louis F. Raymond(8) | | STIP | | $75,000 | td50,000 | $300,000 | | | | | | | | Stock Options | 02/22/2017 | | | | | 13,470 | td5.68 | td63,795 | | Performance Shares | 02/22/2017 | | 1,415 | 5,660 | 11,320 | | | | td73,083 |
| (1) | These amounts represent potential payments under the 2017 STIP; the actual amounts received (if any) are shown in the Summary Compensation Table above. The threshold amount reflects the total of the threshold payment levels that represent 50% of the target amount. The maximum amount reflects the total amount of maximum payment levels that represent 200% of the target amount. |
| (2) | These amounts represent potential payouts under the 2017 LTIP and have been adjusted to account for the 1-for-4 reverse stock split which occurred in November 2017 (the “1-for-4 reverse stock split”). The threshold amount reflects the total of the threshold payout levels that represent 25% of the target amount. The maximum amount reflects the total amount of maximum payout levels that represent 200% of the target amount. |
| (3) | This amount has been adjusted to account for the 1-for-4 reverse stock split. |
| (4) | These amounts have been adjusted to account for the 1-for-4 reverse stock split. The stock options vest over a three-year period, commencing on the first anniversary of the grant date. |
| (5) | The exercise price equals the closing market price of our common stock on the date of grant, as adjusted to account for the 1-for-4 reverse stock split. |
| (6) | Reflects the grant date fair value of the awards granted in 20162017 as computed under ASC Topic 718. The options expire ten years from the grant date and vest in 25% increments annually beginning on the first anniversary |
| (7) | Mr. Weyers forfeited 38% of the grant date and continuing on each subsequent anniversary until the fourth anniversary. |
(2) | Reflects the grant date fair valuerestricted stock units, all of the awards granted in 2016 as computed under ASC 718: (i)stock options and all of the performance shares granted to Messrs. Pennypacker, Antoniuk, Musial, Weyers, Ravenscroft and Laurino that vest based on a three-year performance period; (ii) restricted stock units granted to Messrs. Antoniuk and Ravenscroft that vest on the third anniversary of the grant date; and (iii) restricted stock units granted to Mr. Kruegerhim in 2017 in connection with the Company’s director compensation program that vest on the second anniversary of the grant date.
|
(3) | Mr. Laurino forfeited the equity awards granted in 2016 upon his departure from the Company. See “Carl“Lawrence J. LaurinoWeyers Severance Agreement” below for more information regarding the compensation and benefits received by Mr. LaurinoWeyers in connection with his departure from the Company.
|
| (8) | Mr. Raymond forfeited one-third of the stock options and performance shares granted to him in 2017 in connection with his departure from the Company; such forfeitures occurred in early 2018. See “Louis F. Raymond Severance Agreement” below for more information regarding the compensation and benefits received by Mr. Raymond in connection with his departure from the Company. |
42
OUTSTANDING EQUITY AWARDS AT FISCALYEAR-ENDOutstanding Equity Awards at 2017 Fiscal Year-End
The following table sets forth the equitystock options, restricted stock units, restricted stock awards, and performance share awards previously granted to the named executive officers including equity awards of MFS that were received in connection with adjustments relatedrelating to the Separation,our common stock that were outstanding at the end of 2016:2017. | | | | Option Awards(1) | | Stock Awards(2)(3)(4)(5)(6) | | Option Awards(1)(2) | Stock Awards(1)(3) | | Name | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | | MTW
Option
Exercise
Price ($) | | | MFS Option Exercise Price ($) | | | Option
Expiration
Date | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights that Have
Not Vested (#) | | | Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested ($) | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(4) | Option Exercise Price ($)(5) | Option Grant Date | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#)(6) | Market Value of Shares of Stock that Have Not Vested ($)(7) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(8) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(7) | Barry L. Pennypacker | | | 0 | | | | 618,812 | | | | $4.3500 | | | | 0 | | | March 28, 2026 | | | 290,698 | (5) | | | $1,738,374 | (7) | 38,675 0 | 116,028 112,249(9) | 17.40 25.68 | 3/28/2016 2/22/2017 | 3/28/2026 2/22/2027 | - | - | 143,420(10)(11) | $5,642,123 | David J. Antoniuk | | | 0 | | | | 87,401 | | | | $5.7000 | | | | 0 | | | May 31, 2026 | |
| 86,311
39,876 | (3)
(4) | |
| $516,140
$238,458 | (7)
(7) | 5,462 0 | 16,389 35,516(9) | 22.80 25.68 | 5/31/2016 2/22/2017 | 5/31/2026 2/22/2027 | 21,578(12) | $848,879 | 32,354(10)(11) | $1,272,787 | Thomas G. Musial | |
| 23,000
17,900
55,500
41,160
19,350 10,340 7,864 0 |
| |
| 0
0 0 0 6,450
10,340 23,594 110,644 |
| |
| $6.0240
$7.9864
$4.0371
$3.3227
$3.7024
$5.9332
$4.4494 $4.3500 |
| |
| $23.4910
$31.1436 $15.7429 $12.9573 $14.4376 $23.1368 $17.3506 $0 |
| | February 27, 2017
February 15, 2018
February 14, 2021
February 28, 2022
February 26, 2023
February 14, 2024February 17, 2025 March 28, 2026 | |
| 31,020
34,566 59,986 51,977 | (2)
(5) (6) (3) | |
| $392,558
$437,433 $759,123 $310,822 | (7)
(7) (7) (7) | 0 3,837 13,875 10,290 6,450 3,877 3,932 6,915 0 | 0 0 0 0 0 1,293 3,933 20,746 20,070(9) | 31.95 31.95 16.15 13.29 14.81 23.73 17.80 17.40 25.68 | 2/15/2008 2/15/2008 2/14/2011 2/28/2012 2/26/2013 2/14/2014 2/17/2015 3/28/2016 2/22/2017 | 2/15/2018 2/15/2018 2/14/2021 2/28/2022 2/2/2023 2/13/2024 2/17/2025 3/28/2026 2/22/2027 | 11,820(13)(14) | $464,999 | 25,645(10)(11) | $1,008,855 | Lawrence J. Weyers | |
| 8,200
8,900 9,700 7,000 4,260 9,090 5,167 4,689 9,300 0 |
| |
| 0
0 0 0 0 0 1,723 4,689 27,902 99,010 |
| |
| $6.0240
$7.9864 $0.9001 $2.3165 $4.0371 $3.3227 $3.7024 $5.9332 $4.4494 $4.3500 |
| |
| $23.4910
$31.1436 $3.5099 $9.0335 $15.7429 $12.9573 $14.4376 $23.1368 $17.3506 $0 |
| | February 27, 2017
February 15, 2018 February 24, 2019 February 11, 2020 February 14, 2021 February 28, 2022 February 26, 2023 February 14, 2024 February 17, 2025 March 28, 2026 | |
| 14,076
40,870 59,804 46,512 | (2)
(5) (6) (3) | |
| $178,132
$517,210 $756,820 $278,142 | (7)
(7) (7) (7) | | Aaron H. Ravenscroft | | | 0 | | | | 99,010 | | | | $4.3500 | | | | 0 | | | March 28, 2026 | |
| 23,256
46,512 | (5)
(3) | |
| $139,071
$278,142 | (7)
(7) | 6,188 0 | 18,565 20,205(9) | 17.40 25.68 | 3/28/2016 2/22/2017 | 3/28/2026 2/22/2027 | 5,814(12) | $228,723 | 24,363(10)(11) | $958,440 | Kenneth W. Krueger | |
| 4,200
2,600 |
| |
| 0
0 |
| |
| $6.0240
$7.9864 |
| |
| $23.4910
$31.1436 |
| | February 27, 2017
February 15, 2018 | |
| 10,092
25,581 | (4)
(4) | |
| $127,712
$152,974 | (7)
(7) | | Carl J. Laurino | |
| 27,600
18,400 22,712 |
| |
| 0
0 0 |
| |
| $6.0240
$7.9864
$5.9332 |
| |
| $23.4910
$31.1436 $23.1368 |
| | February 27, 2017
February 15, 2018
February 14, 2024 | |
| 34,068
46,340 | (2)
(5) | |
| $431,131
$586,433 | (7)
(7) | | Lawrence J. Weyers(16) | | 0 1,417 2,425 1,750 1,065 2,273 1,723 2,344 6,975 12,376 | 0 0 0 0 0 0 0 0 0 0 | 31.95 31.95 3.60 9.27 16.15 13.29 14.81 23.73 17.80 17.40 | 2/15/2008 2/15/2008 2/24/2009 2/11/2010 2/14/2011 2/28/2012 2/26/2013 2/14/2014 2/17/2015 3/28/2016 | 2/15/2018 2/15/2018 2/24/2019 2/11/2020 2/14/2021 2/28/2022 2/2/2023 8/31/2018 2/17/2025 3/28/2026 | 17,897(13)(14)(15) | $704,068 | 6,460(10) | $254,136 | Louis F. Raymond(17) | | 0 593 5,450 4,500 2,275 1,575 979 594 623 3,094 0 | 0 0 0 0 0 0 0 199 625 9,283 13,470(9) | 31.95 31.95 3.60 9.27 16.15 13.29 14.81 23.73 17.80 17.40 25.68 | 2/15/2008 2/15/2008 2/24/2009 2/11/2010 2/14/2011 2/28/2012 2/26/2013 2/14/2014 2/17/2015 3/28/2016 2/22/2017 | 2/15/2018 2/15/2018 2/24/2019 2/11/2020 2/14/2021 2/28/2022 2/2/2023 2/14/2024 2/17/2025 3/28/2026 2/22/2027 | 2,929(13)(14) | $115,227 | 14,304(10)(11) | $562,719 |
| (1) | The number of shares of common stock underlying option awards and stock awards has been adjusted to account for the 1-for-4 reverse stock split. |
| (2) | Consists of options to purchase common stock of the Company under the Company’s 2013 Omnibus Incentive Plan and 2003 Incentive Stock and Awards PlanPlan. As a result of the Spin-Off, each then-outstanding stock option of the Company was deemed bifurcated into two separate option awards: one covering Company common stock, and those for MFS shares received in connection withone covering Welbilt, Inc. common stock. This table does not include the separation.awards that cover Welbilt, Inc.’s common stock. |
(2) | (3) | Consists of therestricted stock awards, restricted stock units and performance share awardsshares granted in 2014 under the 2013 Omnibus Incentive Plan. These were issued after performance was certified |
| (4) | Unless otherwise noted in these footnotes, all unvested stock options referenced in this table vest 25% per year beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the fourth anniversary of the grant date. |
| (5) | The exercise price equals the closing market price of our common stock on the date of grant, as adjusted to account for the 1-for-4 reverse stock split. |
| (6) | The grant dates and vesting dates for all restricted stock awards and restricted stock units that our named executive officers held at December 31, 2017 are as follows: |
| | | | Name | Grant Date | Vesting Date | Number of Units/Awards | David J. Antoniuk | 5/31/2016 | 5/31/2019 | 21,578 Restricted Stock Units | Thomas G. Musial | 2/17/2015 | 2/17/2018 | 4,321 Restricted Stock Units | 4/08/2015 | 3/04/2018 | 7,499 Restricted Stock Awards | Aaron H. Ravenscroft | 3/28/2016 | 3/28/2019 | 5,814 Restricted Stock Units | Lawrence J. Weyers | 2/17/2015 | 3/01/2018 | 4,541 Restricted Stock Units | 1/16/2017 | 3/01/2018 | 7,750 Restricted Stock Units | 4/08/2015 | 3/04/2018 | 5,606 Restricted Stock Awards | Louis F. Raymond | 2/17/2015 | 2/17/2018 | 685 Restricted Stock Units | 4/08/2015 | 3/04/2018 | 2,244 Restricted Stock Awards |
| (7) | The market value is calculated by multiplying the closing price of our common stock on December 29, 2017 ($39.34) by the Compensation Committee in February 2017. Actualnumber of unvested shares. |
| (8) | The vesting dates/dates of expiration of the performance for the 2014 grant was modified to pay at target in conjunction with the Separation and is reflected in the tableperiod for all officers.performance shares that our named executive officers held at December 31, 2017 are as follows: |
(3) | | | | Name | ConsistsIncentive Plan Under Which Performance Shares Were Granted
| Vesting Date/Date of Expiration of Performance Period | Number of Shares | Barry L. Pennypacker | 2016 LTIP | 12/31/2018 | 72,675 | 2017 LTIP | 12/31/2019 | 70,745 | David J. Antoniuk | 2016 LTIP | 12/31/2018 | 9,969 | 2017 LTIP | 12/31/2019 | 22,385 | Thomas G. Musial | 2016 LTIP | 12/31/2018 | 12,995 | 2017 LTIP | 12/31/2019 | 12,650 | Aaron H. Ravenscroft | 2016 LTIP | 12/31/2018 | 11,628 | 2017 LTIP | 12/31/2019 | 12,735 | Lawrence J. Weyers | 2016 LTIP | 12/31/2018 | 6,460 | Louis F. Raymond | 2016 LTIP | 12/31/2018 | 5,814 | 2017 LTIP | 12/31/2019 | 8,490 |
| (9) | Vests 33% per year beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the third anniversary of the grant date. |
| (10) | Includes performance share awards granted in 2016 under the 2013 Omnibus Incentive Plan. The performance period expires at the end of 2018. Current projectedAs of December 31, 2017, the performance is above target; therefore, in projecting performance as ofyear-end,trend was at the target level, so the number of shares reportedappearing here is the number of shares that would be awarded assuming above target performance.performance is achieved. |
| (11) | Includes performance share awards granted in 2017 under the 2013 Omnibus Incentive Plan. The performance period expires at the end of 2019. As of December 31, 2017, the performance trend was at 150% of the target level, so the number of shares appearing here is the number of shares that would be awarded assuming performance at 150% of target level is achieved. |
(4) | Consists of(12)
| Includes restricted stock units granted in 2016 andunder the 2013 Omnibus Incentive Plan. These restricted stock units vest on the third anniversary of the grant date. |
| (13) | Includes retention-related restricted stock awards granted in 2015 under the 2013 Omnibus Incentive Plan, pursuant to the Company’snon-employee director compensation program.Plan. The restrictions generally lapse on the second anniversary of the grant date.Spin-Off. |
43
(5) | Consists of(14)
| Includes restricted stock units granted in 2016 and 2015 under the 2013 Omnibus Incentive Plan. These restricted stock units vest on the third anniversary of the grant date. |
(6) | Consists of retention related(15)
| Includes restricted stock awardsunits granted in 20152017 under the 2013 Omnibus Incentive Plan. The restrictions lapseThese restricted stock units vest on the secondfirst anniversary of the Separation.grant date. |
| (16) | Reflects acceleration and forfeiture of equity awards in accordance with Mr. Weyers’ severance agreement with the Company. See “Lawrence J. Weyers Severance Agreement” below for additional information. |
(7) | The market value is calculated based on the unvested award amount(17)
| Does not reflect acceleration or forfeiture of equity awards in the preceding column multiplied by the closing stock price on December 30, 2016 of $5.98 foraccordance with Mr. Raymond’s severance agreement with the Company, as such acceleration and $19.33forfeiture occurred in early 2018. See “Louis F. Raymond Severance Agreement” below for MFS.additional information. |
OPTION EXERCISES AND STOCK VESTEDOption Exercises and Stock Vested in Fiscal 2017
The following table presents, for each named executive officer, the stock options exercised and the stock awards vested during 2016. These awards were granted to the named executive officers prior to 2016; consequently, the value realized by the executives was actually earned over several years.2017. | | | | | | | | | | | | | | | | | | Option Awards(1) | | | Stock Awards(2) | | Option Awards | Stock Awards | | | | Number of Shares
Acquired on
Exercise (#) | | | Value Realized on
Exercise ($) | | | Number of Shares
Acquired on
Vesting (#) | | | Value Realized on
Vesting ($) | | Number of Shares
Acquired on
Exercise (#)(1) | Value Realized on
Exercise ($)(2) | Number of Shares
Acquired on
Vesting (#)(3) | Value Realized on
Vesting ($)(4) | Barry L. Pennypacker | | | 0 | | | | $0 | | | | 0 | | | | $0 | | 0 | $0 | 0 | $0 | David J. Antoniuk | | | 0 | | | | $0 | | | | 0 | | | | $0 | | 0 | $0 | 0 | $0 | Thomas G. Musial | | | 207,600 | | | | $731,846 | | | | 15,248 | | | | $47,398 | | 5,750 | $16,921 | 3,878 | $98,346 | Aaron H. Ravenscroft | | 0 | $0 | 0 | $0 | Lawrence J. Weyers | | | 0 | | | | $0 | | | | 4,062 | | | | $12,606 | | 2,051 | $1,935 | 1,760 | $44,634 | Aaron H. Ravenscroft | | | 0 | | | | $0 | | | | 0 | | | | $0 | | | Kenneth W. Krueger | | | 8,800 | | | | $3,898 | | | | 70,043 | | | | $373,090 | | | Carl J. Laurino | | | 384,140 | | | | $1,093,417 | | | | 50,634 | | | | $214,057 | | | Louis. F. Raymond | | 1,300 | $1,227 | 593 | $15,038 |
| (1) | The number of shares acquired on exercise has been adjusted to account for the 1-for-4 reverse stock split. Similar to the Outstanding Equity Awards at 2017 Fiscal Year-End table, this table includes only awards covering Company common stock and does not include awards (issued in connection with the Spin-Off) that cover Welbilt, Inc. common stock. |
(1) | (2) | The dollar value realized by stock option exercises in 20162017 represents the totalpre-tax value realized by the named executive officers upon exercise. The realized amount represents the fair market value of the shares on the date exercised minus the exercise price.price, as adjusted to account for the 1-for-4 reverse stock split. The amounts in the table exclude any stock options over which a named executive officer did not have a pecuniary interest. |
| (3) | The number of shares acquired on vesting has been adjusted to account for the 1-for-4 reverse stock split. |
(2) | (4) | The dollar value realized on vesting forof stock awards represents the fair market value of the shares on the applicable vesting date. |
RETIREMENT ANDNON-QUALIFIED DEFERRED COMPENSATION PLANS
Pension Benefits for Fiscal 2017 (Supplemental Executive Retirement Plan) The following table sets forth information with respect to the Company’s Supplemental Executive Retirement Plan (also referred to herein as the SERP) as of December 31, 2016:2017. | | | | | | | | | | | | | | | | | | | Name | | Plan Name | | | Number of Years
Credited Service(1) (#) | | | Present Value of
Accumulated Benefit ($) | | | Payments During
Last Fiscal Year ($) | | Plan Name | Number of Years
Credited Service (#) (1) | Present Value of
Accumulated Benefit ($) | Payments During
Last Fiscal Year ($) | Thomas G. Musial | | | SERP | | | | 16.58 | | | | $7,416,098 | | | | $0 | | SERP | 17.58 | $8,083,547 | $0 | Carl J. Laurino | | | SERP | | | | 9.00 | | | | $2,217,807 | | | | $0 | | |
(1) | Reflects the number of years since the participant began participating in the plan.SERP. The planSERP was adopted by the Company in 2000. Currently, an executive of the Company is not eligible to participate under the planSERP until the executive has at least five credited years of service with the Company and satisfies other criteria determined by the Compensation Committee. As of December 31, 2016, the named executive officers2017, Thomas G. Musial had the following actual41.42 years of actual service with the Company: Thomas G. Musial — 40.42 years and Carl J. Laurino — 15.99 years.Company. |
44
Under the Company’s Supplemental Executive Retirement Plan,SERP, eligible executives are entitled to receive retirement benefits which are intended to fund a life annuity equal to 55% of a participant’s final average pay at the earlier of normal retirement (age 65) or the first of the month following the date on which the participant’s attained age plus years of service with the Company equals eighty (80).80. A participant’s final five-year average pay is computed by averaging the participant’s projected base salary (including elective deferrals) andnon-equity incentive plan compensation payable for each year for the five consecutive calendar year period when the participant receives or is projected to receive his or her highest average compensation prior to the earlier of normal retirement (age 65) or the first of the month following the date on which the participant’s attained age plus years of service with the Company equals eighty (80).80. Benefits are computed using a straight-life annuity and are not reduced for social security or other offsets. Under the Plan,SERP, an account balance is maintained for each participant, which account reflects (a) an annual contribution credit that is determined by calculating the present value of thelump-sum actuarial equivalent of fifty-five percent (55%)55% of the participant’s five-year final average pay payable as a life annuity, at the earlier of (i) normal retirement (age 65) or (ii) the first of the month following the date on which the participant’s attained age plus years of service with the Company equals eighty (80);80; and (b) an annual increase in the account balance at the end of each year equal to nine percent (9%)9% of the account balance at the beginning of the year.year; provided, however, that under the amendment to the SERP approved by the Board of Directors in December 2017, beginning with the plan year that commenced on January 1, 2018, the annual increase in the account balance will instead be equal to the 10-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System for the first day of that plan year, for any participant who had not yet received at least one installment payment under the SERP before December 31, 2017. When a participant becomes eligible for a distribution under the plan, the participant may elect to receive his/her account balance in alump-sum or over a fixed number of years not to exceed ten (10) years. Currently, the Compensation Committee has determined that an executive will not be eligible to participate under the planSERP until the executive has at least five credited years of service with the Company and/or its subsidiaries and satisfies other criteria determined by the Compensation Committee. Additionally, for any executive who becomes a participant after 2008 and whose projected total service at his or her target retirement date is less than 25 years, the 55% target retirement benefit will be prorated based on the projected total service years divided by 25.
Non-Qualified Deferred Compensation Non-Qualified Deferred Compensation
The following table sets forth information with respect to the Company’s Deferred Compensation Plan, anon-qualified plan, as of December 31, 2016 (Mr. Krueger does not participate in this plan):2017. | | | | | | | | | | | | | | | | | | | | | | Name | | Executive
Contributions
in Last FY(1) | | | Registrant
Contributions
in Last FY | | | Aggregate
Earnings (loss)
in Last FY | | | Aggregate
Withdrawals /
Distributions | | | Aggregate Balance
at Last FYE(2) | | Barry Pennypacker | | | $42,564 | | | | $0 | | | | $9,320 | | | | $0 | | | | $51,884 | | David Antoniuk | | | $13,676 | | | | $0 | | | | $379 | | | | $0 | | | | $14,055 | | Thomas G. Musial | | | $0 | | | | $0 | | | | $130,707 | | | | $0 | | | | $1,809,961 | | Lawrence Weyers | | | $0 | | | | $0 | | | | $4,613 | | | | $0 | | | | $104,211 | | Aaron Ravenscroft | | | $14,225 | | | | $0 | | | | $546 | | | | $0 | | | | $14,771 | | Carl J. Laurino | | | $13,737 | | | | $0 | | | | $20,063 | | | | $764,745 | | | | $0 | |
| | | | | | | | | | | | Name | Executive
Contributions
in Last FY(1) | Registrant
Contributions
in Last FY | Aggregate
Earnings (Loss)
in Last FY | Aggregate
Withdrawals /
Distributions | Aggregate Balance
at Last FYE(2) | Barry L. Pennypacker | $48,651 | $0 | $50,714 | $0 | $151,249 | David J. Antoniuk | $24,500 | $0 | $5,345 | $0 | $43,890 | Thomas G. Musial | $0 | $0 | $243,607 | $0 | $2,053,568 | Aaron H. Ravenscroft | $11,613 | $0 | $4,248 | $0 | $30,632 | Lawrence F. Weyers | $0 | $0 | $23,176 | $0 | $127,387 | Louis F. Raymond | $0 | $0 | $200,899 | $0 | $1,115,338 |
(1) | (1) | Reflects elective deferrals of compensation earned or payable in 2016.2017. These amounts were also included in the Salary“Salary” andNon-Equity “Non-Equity Incentive Plan CompensationCompensation” columns in the Summary Compensation Table.Table (as applicable). |
(2) | (2) | Of the amounts reported in the “Aggregate Balance at Last Fiscal Year End”FYE” column, the following amounts were previously reported in theNon-Qualified Deferred Compensation Tabletable in the Company’s Proxy Statementsproxy statement for its prior2017 annual meetingsmeeting of shareholders: Mr. Pennypacker – $51,884; Mr. Antoniuk – $14,055; Mr. Musial — $1,609,524– $1,809,961; Mr. Ravenscroft – $14,771; and Mr. Laurino — $681,513. Messrs. Pennypacker, Antoniuk, Weyers and Ravenscroft are– $104,211. Mr. Raymond is a named executive officersofficer for the first time in fiscal 20162017 and, therefore, havehas not been included in previous Summarya prior Non-Qualified Deferred Compensation Table.table. |
Eligible participants in the Deferred Compensation Plan may elect to defer up to 40% of base salary and up to 100% of awards to be paid under the STIP. Credits to deferred compensation accounts may also include a Company contribution. This contribution equals the amount of compensation deferred by the participant for the plan year (subject to a maximum of 25% of eligible compensation) multiplied by a rate equal to the rate of variable retirement plan contributions that the participant received from the Company during the year under the 401(k) Retirement Plan, plus 1%. If the Company does not make a contribution to the 401(k) Retirement Plan during the year, there will not be any Company contribution under the Deferred Compensation Plan for that year. Deferred amounts can be invested into a variety of accounts, which mirror the performance of several different mutual funds offered in the 401(k) Retirement Plan, as well as the Company Stock Fund (which includes only the Company’s common stock). Transfers between the Company Stock Fund and the other funds are not permitted. Participants are not required to direct any minimum amount of deferred compensation into the Company Stock Fund. 45
Post-Employment Compensation In 2015, the Company adopted a new form of Contingent Employment Agreement (the “Contingent Employment Agreement”) for its executive officers (and certain other key executives and employees of the Company and certain subsidiaries) to replace the previous similar agreement with such individuals. All of the Company’s executive officers have executed the new Contingent Employment Agreement, although Mr. Krueger did not enter into a Contingent Employment Agreement while he served as Interim President and Chief Executive Officer.Agreement. The Contingent Employment Agreements provide generally that in the event of a “change in control” (as defined in the Agreements) of the Company, each executive officer will continue to be employed by the Company for a period of time (three years in the case of the Chief Executive Officer and two years in the case of the other named executive officers). Under the Contingent Employment Agreements, each executive will remain employed at the same position held as of the change in control date, and will receive a salary at least equal to the salary in effect as of such date, plus all bonuses, incentive compensation, and other benefits extended by the Company to its executive officers and key employees, provided that the plans and bonus opportunity are no less favorable than those that were available prior to a change in control. After a change in control, the executive’sexecutive officer’s compensation would be subject to potential upward adjustment at least annually based upon the executive’sexecutive officer’s contributions and the level of increases provided to other executive officers and employees. Each Contingent Employment Agreement terminates prior to the end of the applicable employment period if the executive officer voluntarily retires from the Company or is terminated by the Company “for cause,” as defined in the Contingent Employment Agreement.
In the event the executive officer is terminated by the Company without cause following a change in control, the executive officer is entitled to participate in certain benefit plans provided by the Company for the remainder of the applicable employment period and receive a monthlyan amount equal to the base salary through the date of termination and benefitsfor the remaining portion of the applicable employment period, all deferred salary and other compensation earned by the executive would have otherwise been paid but forofficer during the termination,course of employment with the Company and the amount of the target cash incentive bonus under all short-term and long-term cash bonus plans maintained by the Company in which the executive officer participates for the fiscal year of termination and for all subsequent fiscal years through the applicable employment period. Upon the executive officer’s termination of employment by the surviving entity without cause, or by the officer for good reason, in either case within 3624 months (36 months in the case of the Chief Executive Officer) following a change in control, all of the executive officer’s equity-based awards that are in effect as of the date of such termination will be vested in full or deemed earned in full (as if the maximum performance goals provided under such award were met, if applicable) effective on the date of such termination (i.e., a “double trigger”); if employment continues, the original vesting schedule will continue to apply. To the extent that equity-based awards are not assumed by the purchaser, successor or surviving entity, or a more favorable outcome is not provided in the applicable plan or award agreement, upon a change in control: (i) stock options, stock-appreciation rights and time-based restricted stock (including restricted stock units) will vest and may be paid out in cash; (ii) performance-based awards will bepro-rated and paid out in cash assuming the greater of target or projected actual performance (based on the assumption that the applicable performance goals continue to be achieved at the same rate through the end of the performance period as they have been at the time of the change in control); (iii) dividend equivalent units will be pro-rated to the extent, if at all, any related award is settled on a pro rata basis and (iii)paid out in cash; and (iv) each other type of equity-based award not mentioned above will be paid out in cash based on the value of the award as of the date of the change in control. In the event the executive officer is terminated by the Company for cause, the executive officer is only entitled to the salary and benefits accrued and vested as of the effective date of the termination. EachExcept as described below, each Contingent Employment Agreement is terminable by either party at any time prior to a change in control. If a named executive officer is terminated by the Company without cause within six months prior to a change in control and it is reasonably demonstrated by the employeeexecutive officer that the termination (i) was at the request of a third party who has taken steps reasonably calculated to effect a change in control; or (ii) otherwise arose in connection with or in anticipation of a change in control, the employeeexecutive officer will be entitled to the severance payment and benefits that he would have otherwise have received if he were terminated by the Company without cause following a change in control. 46
If any of the payments to a named executive officer would constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code and would result in the imposition on the executive officer of an excise tax under Section 4999 of the Internal Revenue Code (the “Excise Tax”), the executive officer is not entitled to any tax gross up amount; however, the executive officer would be entitled to receive the “best net” treatment. Under the “best net” treatment, if theafter-tax amount (taking into account all federal, state and local excise, income and other taxes) that would be retained by the executive officer is less than theafter-tax amount that would be retained by the executive officer if the executive officer were instead to be paid or provided (as the case may be) the maximum amount that the executive officer could receive without being subject to the Excise Tax (the “Reduced Amount”), then the executive officer shall be entitled to receive the Reduced Amount instead of the full amount that would have been subject to the Excise Tax. The Contingent Employment Agreements also provide that if the executive officer is terminated (i) by the Company without cause prior to the end of the applicable employment period; or (ii) by the Company within six months prior to a change in control in anticipation of a change in control as explained above, the executive officer will be prohibited from competing withrendering services to a competitor of the Company for (y) the lesser of two years (three years in the case of the Chief Executive Officer) or the unexpired term of the applicable employment period or (z) two years (three years in the case of the Chief Executive Officer) in the case of a termination fromby the Company within six months prior to a change in control in anticipation of a change in control as described above. The Contingent Employment Agreements define “competitor” as any corporation, person, firm or organization that engages in research and development work, produces and/or sells any product or service that is the same as, functionally equivalent to, or otherwise directly competitive with one made, offered, sold or provided by the Company.
The Contingent Employment Agreements define “cause” as a conviction based upon the commission of a felony or becoming the subject of a final nonappealable judgment of a court of competent jurisdiction holding that the executive officer is liable to the Company for damages for obtaining a personal benefit in a transaction adverse to the interests of the Company. The employment agreement defines “cause” generally as any conviction for, or entry of a plea of guilty or nolo contendere with respect to, any felony or any crime involving an act of moral turpitude; engaging in any act involving fraud or theft; neglect or breach of duties or intentional misconduct in discharging such duties; continued absence from duties without consent after receipt of notification, other than absence due to bona fide illness or disability; failure or refusal to comply with the directions of the Chair of the board or with the policies, standards and regulations of the Company, provided that such directions, policies, standards or regulations do not require any action which is illegal or the omission of any action required by applicable law, regulations or licensing standards; conduct, actions, or performance that violates policies concerning ethics or employee conduct; or breach of the agreement. The employment agreement definedContingent Employment Agreements define “good reason” generally as a material diminution in position, authority or title, or the assignment of duties that are materially inconsistent with the executive’sexecutive officer’s position or title as described in the agreement;applicable Agreement; a material diminution in base salary or incentive/bonus opportunities except foracross-the-board temporary salary reductionsopportunities; a change of twenty percent (20%)fifty miles from the location of the executive officer’s principal place of employment on the date of the change in control; a material breach by the Company of any of its obligations under the applicable Agreement; and any successor to the principal business of the Company failing or less similarly affecting other employees.refusing to assume the Company’s obligations under the applicable Agreement.
If the executive had beenofficer becomes disabled during the applicable employment period and is unable to perform histhe regular duties due to hisof employment on a full-time basis, the Company will pay the executive officer’s normal salary and benefits for the first six months. If the disability he wouldcontinues beyond six months, the executive officer’s normal salary will be suspended during the period of disability. The executive officer will continue to receive his standard compensation, reducedbe eligible for customary benefits as provided by any disability payment to which he may be entitled in lieu of such compensation, until the last day ofCompany during the term of the employment agreement. Atexecutive officer’s disability and until the expiration of the term provided for in the agreement, payment of all compensation to the executive under theapplicable employment agreement would immediately cease (except for any payment of compensation accrued but unpaid through that date, COBRA benefits and other benefits to which the executive may be entitled notwithstanding the termination of his employment). If the executive had died during the term, all payments and rights to compensation and benefits under the employment agreement would immediately cease, except for any compensation and benefits accrued but unpaid through the date of his death. period. 47
Estimated Payments upon a Change in Control The following table presents the estimated payouts that would be made upon a change in control coupled with an executive’sa termination of employment (other than for cause or retirement), assuming the change in control occurred as of December 31, 2016. Mr. Krueger was interim Chief Executive Officer until the Separation, March 4, 2016 at that time Mr. Pennypacker took over as Chief Executive Officer.2017. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Base Salary(1) | | | Annual Incentive-
Based
Compensation(2) | | | Stock
Options(3) | | | Restricted Shares(4) | | | Performance
Shares(5) | | | Benefits(6) | | | Excise Tax
Gross Up(7) | | | Total | | Barry Pennypacker | | | $2,850,000 | | | | $2,850,000 | | | | $1,008,664 | | | | $1,738,374 | | | | $579,462 | | | | $76,080 | | | | $0 | | | | $9,102,580 | | David Antoniuk | | | $980,000 | | | | $735,000 | | | | $24,472 | | | | $516,140 | | | | $79,486 | | | | $50,720 | | | | $0 | | | | $2,385,818 | | Thomas Musial | | | $852,600 | | | | $596,820 | | | | $231,637 | | | | $282,710 | | | | $196,359 | | | | $36,324 | | | | $0 | | | | $2,196,450 | | Lawrence Weyers | | | $850,000 | | | | $637,500 | | | | $208,237 | | | | $301,015 | | | | $134,801 | | | | $50,720 | | | | $0 | | | | $2,182,273 | | Aaron Ravenscroft | | | $750,000 | | | | $375,000 | | | | $161,386 | | | | $139,071 | | | | $92,714 | | | | $50,720 | | | | $0 | | | | $1,568,891 | |
Name | Base Salary(1) | Annual Incentive-Based Compensation(2) | Stock
Options(3) | Restricted Shares(4) | Performance
Shares(5) | Benefits(6) | Excise Tax
Gross Up(7) | Total | Barry L. Pennypacker | $2,935,500 | $2,935,500 | $8,980,417 | $0 | $2,833,726 | $39,101 | $0 | $17,724,244 | David J. Antoniuk | $980,000 | $735,000 | $2,041,943 | $848,879 | $554,996 | $31,608 | $0 | $5,192,426 | Thomas G. Musial(8) | $852,600 | $596,400 | $1,811,292 | $464,999 | $506,699 | $17,127 | $0 | $4,249,117 | Aaron H. Ravenscroft | $780,000 | $468,000 | $1,525,212 | $228,723 | $471,962 | $31,774 | $0 | $3,505,671 | Louis F. Raymond(9) | $600,000 | $300,000 | $927,519 | $115,227 | $263,814 | $13,771 | $0 | $2,220,331 |
(1) | Represents three times Mr. Pennypacker’s and two times each of the other executive’snamed executive officer’s base salary on December 31, 2016.2017. |
(2) | Represents three times Mr. Pennypacker’s and two times each of the executive’sother named executive officer’s target cash incentive compensation for two years and three years for Mr. Pennypacker.under the 2017 STIP. |
(3) | Intrinsic value of unvested stock options based on the closing price ($39.34) of the Company’s common stock price on December 31, 2016, of $5.98.29, 2017. |
(4) | Represents the value of restricted stock units and restricted shares based on the closing price ($39.34) of the Company’s common stock price on December 31, 2016 of $5.98.29, 2017. |
(5) | (5) | Represents the value of unvested performance shares, prorated and based on performance atyear-end, which for the 2014-2016 performance cycle is at 100%; and for the 2016-2018 performance cycle is projected at 100% of target, and for the 2017-2019 performance cycle is projected at 150% of target. These values are based on the closing price ($5.98)39.34) of the Company’s common stock on December 31, 2016.29, 2017. |
(6) | Represents three times in the case of Mr. Pennypacker’sPennypacker and two times in the case of each of the other executives,named executive officers, the value of the annual benefits (including group life insurance, hospitalization and medical insurance) provided to the executive.such named executive officer. |
(7) | (7) | The Company does not provide officers excise tax gross-ups under the Contingent Employment Agreements. |
| (8) | gross-ups.The figures in this row represent the estimated payouts that Mr. Musial would have received assuming a change in control and termination occurred as of December 31, 2017. However, the actual payments and benefits Mr. Musial will receive in connection with his retirement from the Company in July 2018 is described below under “Thomas G. Musial Severance Agreement.”
|
| (9) | Mr. Raymond resigned from his position as an executive officer of the Company effective November 27, 2017, but his employment with the Company did not terminate until January 3, 2018. For purposes of this table, we have assumed that Mr. Raymond’s employment was terminated in connection with a change in control as of December 31, 2017. The actual payments and benefits received by Mr. Raymond in connection with the termination of his employment are described below under “Louis F. Raymond Severance Agreement.” |
As stated in the Compensation Discussion and Analysis, the Company also has a formal severance pay plan that establishes a discretionary severance program across the Company whereby all severance benefits are provided at the Company’s sole discretion and will be designed to meet the specific facts and circumstances of each termination. The Board of Directors hasand the Compensation Committee have the sole authority to authorize any benefits under the plan to any elected officer of the Company. Other than this discretionary severance pay plan, the Company does not generally have a formal severance plan or generally provide for benefits related toother forms of employment termination, except for the Contingent Employment Agreements described under Post-Employment Compensation and the severance agreements with Mr. Weyers, Mr. Raymond and Mr. Musial, which are described in the event of a change in control as described above. CarlLawrence J. LaurinoWeyers Severance Agreement section, the Louis F. Raymond Severance Agreement section and the Thomas G. Musial Severance Agreement section, respectively.
Lawrence J. Weyers Severance Agreement On June 30, 2016,August 31, 2017, the Company entered into a severance agreement and release (the “Severance“Weyers Severance Agreement”) with Mr. Laurino.Weyers. Under the Weyers Severance Agreement, Mr. Laurino was paidWeyers is entitled to receive a total of $1,218,006$446,250 in biweekly payments over 26 two-week periods (the “Severance Pay Period”). Payments beginning with the 14th two-week pay period will be subject to reduction by any compensation earned by Mr. Weyers from July 2016 until January 2017.a new employer. Between August 31, 2017 and December 31, 2017, Mr. Laurino was eligible to receiveWeyers received a pro rata sharetotal of any STIP award earned based on actual 2016 performance factors equal toone-half$130,442 in cash severance payments. In addition, Mr. Weyers received $489,229, which represents three-quarters of the 2017 STIP award that he would have been eligible to receivereceived if he had remained employed by the Company.Company, based upon actual 2017 performance factors. The vesting of certain equity grants to Mr. Weyers was accelerated, while other equity grants that had yet to vest as of August 31, 2017 were forfeited. Vested stock options remainedremain exercisable according to the terms of the applicable plan. The exercise period for all vested stock options, including those for which vesting of equity grants to Mr. Laurino was accelerated, other than equity awards granted to him in 2016, all of which were forfeited. Restrictedis twelve months from August 31, 2017. Any vested restricted stock units were transacted and(“RSUs”) will be paid out in cash, equal togenerally at such time as the amountpayouts of RSUs would have been made if Mr. Weyers remained employed by the target award. Company. 48
Mr. LaurinoWeyers is entitled to any vested retirement plan benefits previously accrued, and the Company is paying the balance of his account in its Deferred Compensation Plan and its Supplemental Executive Retirement Plan in accordance with the terms of those planssuch plan and in compliance with Section 409A of the Internal Revenue Code. The CompanyMr. Weyers is also providing Mr. Laurino witheligible for the reimbursement of a portion of thehis monthly health and/or dental insurance coverage under COBRA through 2017,the Severance Pay Period, with the Company’s reimbursement obligation subject to early termination if Mr. LaurinoWeyers is offered health insurance from a new employer prior to the end of the time period designated in the Agreement.Severance Pay Period. The Weyers Severance Agreement also includes a release and customary covenants restricting Mr. LaurinoWeyers from disclosing confidential information, from competing with the Company’s business and from soliciting employees of the Company and its subsidiaries.
Louis F. Raymond Severance Agreement On November 30, 2017, the Company entered into a severance agreement and release (the “Raymond Severance Agreement”) with Mr. Raymond. Mr. Raymond’s employment with the Company terminated on January 3, 2018. Under the Raymond Severance Agreement, Mr. Raymond is entitled to receive a total of $300,000 in biweekly payments over the Severance Pay Period. In addition, Mr. Raymond received $292,350, which represents his full share of the 2017 STIP award that he would have received, based on actual 2017 performance factors. The vesting of certain equity grants to Mr. Raymond was accelerated, while other equity grants that had yet to vest as of January 3, 2018 were forfeited. Vested stock options remain exercisable according to the terms of the applicable plan. The exercise period for all vested stock options, including those for which vesting was accelerated, is twelve months from January 3, 2018. Any vested RSUs will be paid in stock, generally at such time as the payouts of RSUs would have been made if Mr. Raymond remained employed by the Company. Mr. Raymond is entitled to any vested retirement plan benefits previously accrued, and the Company is paying the balance of his account in its Deferred Compensation Plan in accordance with the terms of such plan and in compliance with Section 409A of the Internal Revenue Code. Mr. Raymond is eligible for the reimbursement of a portion of his monthly health and/or dental insurance coverage under COBRA through the Severance Pay Period, with the Company’s reimbursement obligation subject to early termination if Mr. Raymond is offered health insurance from a new employer prior to the end of the Severance Pay Period. The Raymond Severance Agreement also includes a release and customary covenants restricting Mr. Raymond from disclosing confidential information, from competing with the Company’s business and from soliciting employees of the Company and its subsidiaries. Thomas G. Musial Severance Agreement On February 23, 2018, the Company announced that Mr. Musial will be retiring from the Company effective July 6, 2018 (the “Retirement Date”). In connection with his retirement, the Company entered into a severance agreement and release (the “Musial Severance Agreement”) with Mr. Musial. Under the Musial Severance Agreement, the Company agreed to provide Mr. Musial with a paid leave of absence from February 21, 2018 (or another mutually agreed upon date) through June 30, 2018 and an unpaid leave of absence from July 1, 2018 through the Retirement Date. Pursuant to the Musial Severance Agreement, Mr. Musial will be paid $213,149.95 in accordance with the Company’s bi-weekly payroll for the 26-week period from July 1 through December 31, 2018 and a lump sum payment in the amount of $873,915.05 between January 10 and January 31, 2019. In addition, Mr. Musial will be eligible to receive an amount equal to one-third of the amount that he would have received under the 2018 STIP based upon actual 2018 performance factors. Any award earned will be paid out when the 2018 STIP awards are finalized in early 2019. Mr. Musial is also entitled to full accelerated vesting of any equity awarded prior to the Retirement Date that has not yet vested by the Retirement Date, all restricted stock will be transferred immediately without restrictions, and restricted stock units will be paid out in cash, equal to an amount calculated at 100% of the target award, at such times as payments would have otherwise been paid had he remained employed with the Company. Mr. Musial is entitled to any vested retirement plan benefits that he accrued through the Retirement Date, and the Company will pay the balance of his account in its Deferred Compensation Plan in accordance with the terms of such plan. If Mr. Musial elects continued health and/or dental insurance coverage under COBRA, the Company will reimburse 80% of the monthly cost of such coverage to him through December 31, 2019, with the Company’s reimbursement obligation subject to early termination if Mr. Musial is offered health insurance from a new employer prior to the end of 2019. The Musial Severance Agreement also includes a release and customary covenants restricting Mr. Musial from disclosing confidential information, from competing with the Company’s business and from soliciting employees of the Company and its subsidiaries.
CEO PAY RATIO As required by Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the median annual total compensation of our employees and the annual total compensation of Mr. Pennypacker, our Chief Executive Officer. For the year ended December 31, 2017: the annual total compensation of our median employee was reasonably estimated to be $66,040; and the annual total compensation of Mr. Pennypacker was $5,726,392. Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee is estimated to be 87 to 1. We identified our median employee using a multi-step process. First, we examined the base salaries and wages of all individuals employed by us on December 31, 2017 (other than Mr. Pennypacker), whether full-time, part-time, or on a seasonal basis to identify the median base salary of all our employees. We annualized wages and salaries for all permanent employees who were hired after January 1, 2017, as permitted by SEC rules, and converted all employees’ salaries or wages into U.S. dollars based on the applicable foreign exchange rate on December 31, 2017. We then calculated the total compensation of each of the employees to whom we paid the median base salary according to the same rules we use to calculate the total compensation of our named executive officers reported in the Summary Compensation Table, including the value of widely available welfare benefits, such as employer-paid medical, dental and disability insurance. We selected the individual within such group whose total compensation was at the median to serve as our median employee whose compensation is disclosed above. To calculate our ratio, we divided Mr. Pennypacker’s annual total compensation by the annual total compensation of our median employee. To calculate Mr. Pennypacker’s annual total compensation, we used the amount reported in the “Total” column of our Summary Compensation Table for 2017 plus the value of his employer-paid welfare benefits. Such welfare benefits may be excluded from the Summary Compensation Table under SEC rules, but must be included in the ratio since such benefits were included in the annual total compensation of our median employee. MISCELLANEOUS Other Matters Management knows of no business that will be presented for action at the 20172018 Annual Meeting other than as set forth in the Notice of Annual Meeting accompanying this Proxy Statement. If other matters do properly come before the 20172018 Annual Meeting, proxies will be voted in accordance with the best judgment of the person or persons exercising authority conferred by such proxies. Shareholder Proposals Shareholder proposalsProposals that shareholders of the Company intend to present at and have included in the Company’s Proxy Materials for the 20182019 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Rule 14a-8”), must be received no later than November 17, 2017,22, 2018, at the Company’s principal executive offices, 2400 South 44th Street, P.O. Box 66, Manitowoc,One Park Plaza, 11270 West Park Place, Suite 1000, Milwaukee, Wisconsin 54221-0066,53224, directed to the attention of the Secretary, in order to be considered for inclusion in the 2018 Annual Meeting Proxy Materials under the Securities and Exchange Commission’s proxy rules.our Secretary.
Under the Company’s Restated By-laws, written notice of shareholder proposals for the 20172019 Annual Meeting of Shareholders of the Company that are not intended to be considered for inclusion in the 20182019 Annual Meeting Proxy Materials (shareholder proposals submitted outside the processes of Rule14a-8) must be received not less than 50 nor more than 75 days prior to March 18,December 31, 2018 nor after January 25, 2019, directed to the attention of theour Secretary, and such notice must contain the information specified in the Company’s Restated By-laws.
Annual Report A copy (without exhibits) of the Company’s Annual Report to the Securities and Exchange Commission on Form10-K for the fiscal year ended December 31, 20162017 is available online atwww.proxydocs.com/mtw www.proxyvote.com and also through the Company’s website:www.manitowoc.com. www.manitowoc.com. In addition, the Company will provide to any shareholder, without charge, upon written request of such shareholder, an additional copy of such Annual Report and a copy of any other document referenced in this Proxy Statement as being available to a shareholder upon request. Such requests should be addressed to Louis F. Raymond, Vice President, General Counsel andour Secretary, The Manitowoc Company, Inc., P.O. Box 66, Manitowoc,One Park Plaza, 11270 West Park Place, Suite 1000, Milwaukee, Wisconsin 54221-0066.53224. Householding Information We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders of record who have the same address and last name and do not participate in electronic delivery of Proxy Materials will receive only one copy of our Annual Report and Proxy Statement unless one or more of 49
these shareholders notifies us that they wish to continue receiving individual copies. This procedure will reduce our printing costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect any dividend check mailings. If you and other shareholders of record with whom you share an address currently receive multiple copies of Annual Reports and/or Proxy Statements, or if you hold stock in more than one account and in either case, you wish to receive only a single copy of the Annual Report or Proxy Statement for your household, please contact Louis F. Raymond, Vice President, General Counsel andour Secretary (in writing: The Manitowoc Company, Inc., 2400 South 44th Street, P. O. Box 66, Manitowoc,One Park Plaza, 11270 West Park Place, Suite 1000, Milwaukee, Wisconsin 54221-0066,53224, by telephone:920-652-1741) 920-684-4410) with the names in which all accounts are registered. If you participate in householding and wish to receive a separate copy of the 20162017 Annual Report or this Proxy Statement, please contact Louis F. Raymondour Secretary at the above address or phone number. We will deliver the requested documents to you promptly upon your request. Beneficial shareholders can request information about householding from their banks, brokers, or other holders of record. It is important that proxies be returned promptly. Whether or not you expect to attend the 20172018 Annual Meeting in person, you are requested to complete, date, sign, and return the proxy card as soon as possible. By Order of the Board of Directors | | | LOUIS F. RAYMOND | 
| Thomas L. Doerr, Jr. | Senior Vice President, General Counsel and Secretary |
Manitowoc,Milwaukee, Wisconsin, March 18, 2017
22, 2018
50Annex A: Non-GAAP Reconciliation – Free Cash Flow
| | | ANNUAL MEETING OF THE MANITOWOC COMPANY, INC. | | | Date: | | Tuesday, May 2, 2017 | Time: | | 9:00 A.M. (CDT) | Place: | | Holiday Inn, 4601 Calumet Avenue, Manitowoc, Wisconsin |
Please make your marks like this:☒ Use dark black pencil or pen only
Board of Directors Recommends a Vote FOR proposals 1 through 4.
| | | | | | | | | 1:Election of Directors
| | For | | | | Withhold | | Directors
Recommend
| 01 José María Alapont
| | ☐ | | | | ☐ | | For
| 02 Robert G. Bohn
| | ☐ | | | | ☐ | | For
| 03 Donald M. Condon, Jr.
| | ☐ | | | | ☐ | | For
| 04 Anne M. Cooney
| | ☐ | | | | ☐ | | For
| 05 Kenneth W. Krueger
| | ☐ | | | | ☐ | | For
| 06 Jesse A. Lynn
| | ☐ | | | | ☐ | | For
| 07 C. David Myers
| | ☐ | | | | ☐ | | For
| 08 Barry L. Pennypacker
| | ☐ | | | | ☐ | | For
| 09 John C. Pfeifer
| | ☐ | | | | ☐ | | For
| | | | | | | | For | | Against | | Abstain | | | 2: The ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.
| | ☐ | | ☐ | | ☐ | | For | | | | | | 3: An advisory vote to approve the compensation of the Company’s named executive officers.
| | ☐ | | ☐ | | ☐ | | For | | | | | | 4: An advisory vote to hold future advisory votesEVERY YEARto approve the compensation of the Company’s named executive officers; and
| | ☐ | | ☐ | | ☐ | | For | | | | | | 5: Such other business as may properly come before the Annual Meeting.
| | | | | | | | |
| Comments:Please print your comments below.
| |
| | | To attend the meeting and vote your shares in person, please mark this box. | | ☐ | | | Authorized Signatures - This section must be completed for your Instructions to be executed. | | |
| | | | | (in millions) | Please Sign HereNet cash provided by operating activities of continuing operations | | Please Date Above $ 78.5 | Less: Capital expenditures | | $ (28.9) | Please Sign HereExcluding: Spin-Off and one-time costs and tax settlements | $ - | Free Cash Flow | Please Date Above$ 49.6 |
*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 1, 2018. THE MANITOWOC COMPANY, INC. THE MANITOWOC COMPANY, INC. ONE PARK PLAZA 11270 WEST PARK PLACE, SUITE 1000 MILWAUKEE, WISCONSIN 53224 Meeting Information Meeting Type: Annual Meeting For holders as of: February 28, 2018 Date: May 1, 2018 Time: 9:00 AM CDT Location: The Pfister Hotel 424 East Wisconsin Avenue Milwaukee, WI 53202 You are receiving this communication because you hold shares in the company named above. This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). We encourage you to access and review all of the 
THE MANITOWOC COMPANY, INC. ONE PARK PLAZA 11270 WEST PARK PLACE, SUITE 1000 MILWAUKEE, WISCONSIN 53224 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. 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: E37434-P01631 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY THE MANITOWOC COMPANY, INC. For Withhold For All To withhold authority to vote for any individual The Board of Directors recommends a vote FOR proposals 1 through 3 and AGAINST proposal 4. All All Except nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. 1. Election of Directors Nominees: 01) Robert G. Bohn 02) Donald M. Condon, Jr. 03) Anne M. Cooney 04) Kenneth W. Krueger 05) C. David Myers 06) Barry L. Pennypacker 07) John C. Pfeifer ! ! ! For Against Abstain 2. The ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ! ! ! ending December 31, 2018. 3. An advisory vote to approve the compensation of the Company's named executive officers. ! ! ! 4. A shareholder proposal regarding a simple majority vote standard. ! ! ! NOTE: If other matters properly come before the meeting or any adjournment or postponement thereof, the undersigned also authorizes the named proxies to vote on such matters in their discretion. Yes No Please indicate if you plan to attend this meeting. ! ! Please sign exactly as your name(s) appears on your stock certificate.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 helda corporation or partnership, please sign in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full corporate or partnership name of corporation and title ofby authorized officer signing the proxy.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 and Annual Report are available at www.proxyvote.com. E37435-P01631 THE MANITOWOC COMPANY, INC. Annual Meeting of The Manitowoc Company, Inc. to be held on Tuesday,Shareholders May 2, 2017
for Holders as of February 28, 2017
1, 2018 9:00 AM This proxy is being solicited on behalf ofby the Board of Directors | | | | | | | | | | | | | | | 
| | INTERNET
| | VOTE BY: | | | |  | | TELEPHONE
| | | | | | | | | | | | | |
| | | | | | | | Go To | | | | 866-390-5369 | www.proxypush.com/mtw | | | • Cast your vote online.
| | OR | | • Use any touch-tone telephone.
| • View Meeting Documents.
| | | | • Have your Proxy Card/Voting Instruction Form ready.
| | | | | • Follow the simple recorded instructions.
| | |  MAIL
| | |
| | | | | | | OR | | • Mark, sign and date your Proxy Card/Voting Instruction Form.
| | | | | • Detach your Proxy Card/Voting Instruction Form.
| | | | | • Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided.
|
The undersigned hereby appoints Barry L. Pennypacker and Louis F. Raymond,Thomas L. Doerr, Jr., and each of them, as proxies for the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of The Manitowoc Company, Inc. that the undersigned is entitled to vote at the meeting and any adjournment or postponement of the meeting upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment or postponement of the meeting, conferring authority upon such true and lawful proxies to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy previously given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF DIRECTORS IN PROPOSAL 1, FOR THE PROPOSALS 2 AND 3 AND 4, AND AUTHORITY WILL BE DEEMED GRANTED UNDERAGAINST PROPOSAL 5. 4. All votes must be received by 5:00 P.M.p.m., Eastern Time, May 1, 2017. April 30, 2018. All votes for 401(k) participants must be received by 5:00 P.M.p.m., Eastern Time, April 26, 2016.24, 2018. Continued and to be signed on reverse side | | | | | | | | | PROXY TABULATOR FOR | | | | | | | | THE MANITOWOC COMPANY, INC. | | | | | P.O. BOX 8016 | | | | | CARY, NC 27512-9903 | | | | | | | | | | |
| | | | | | | | |  | | Proxy — The Manitowoc Company, Inc.
Proxy/Voting Instructions Solicited on Behalf of the Board of Directors for the Annual Meeting of Shareholders on May 2, 2017.
The undersigned appoints Barry L. Pennypacker and Louis F. Raymond or either of them as proxies for the undersigned, with full power of substitution to vote the shares of stock of The Manitowoc Company, Inc. (“the Company”), of the undersigned at the Annual Meeting of Shareholders of the Company to be held at the Holiday Inn Manitowoc located at 4601 Calumet Ave., Manitowoc, Wisconsin on Tuesday, May 2, 2017 at 9:00 a.m. (CDT).
As set forth in the enclosed proxy materials, the following matters of business are scheduled to be acted upon at the meeting:
| | | 1.
| | The election of nine directors;
| | | 2.
| | The ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
| | | 3.
| | An advisory vote to approve the compensation of the Company’s named executive officers;
| | | 4.
| | An advisory vote to hold future advisory votesEVERY YEARto approve the compensation of the Company’s named executive officers; and
| | | 5.
| | Such other business as may properly come before the Annual Meeting.
| | | The Board of Directors of the Company recommends the following votes:
| | | •
| | FOR election of the nine directors named in the enclosed proxy materials; if elected, each director will serve aone-year term expiring at the Annual Meeting of Shareholders in 2018;
| | | •
| | FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
| | | •
| | FOR approval of the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis and the Executive Compensation sections of the Proxy Statement; and
| | | •
| | FOR holding future advisory votesEVERY YEARto approve the compensation of the Company’s named executive officers.
| | | This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted “FOR” the election of directors in Proposal 1, “FOR” Proposals 2 and 3, “FOR” Proposal 4, and authority will be deemed granted under Proposal 5.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The proxies cannot vote your shares unless you sign and return this card.
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