Washington,(Rule 14a-101)INFORMATION REQUIRED IN PROXY STATEMENT(Amendment No. ) ☑ ☒ partyParty other than the Registrant ☐Check the appropriate box:☐ ☐Preliminary Proxy Statement ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ☑☒Definitive Proxy Statement ☐ Definitive Additional Materials ☐ Soliciting Material under§240.14a-12Pursuant to §240.14a-12EASTMAN CHEMICAL COMPANY(Name of Registrant as Specified In Its Charter)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):☒ ☑No fee required. ☐ ☐Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and0-11 ☐ (1)Title of each class of securities to which transaction applies:(2)Aggregate number of securities to which transaction applies:(3)Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):(4)Proposed maximum aggregate value of transaction:(5)Total fee paid:☐Fee paid previously with preliminary materials. ☐Check box if any partfeeEastman Board of Directors, I invite you to attend the 2024 Annual Meeting of Stockholders. Our meeting will be held virtually on May 2, 2024, at 11:30 a.m. (EDT) via live webcast, though stockholders may log-in beginning at 11:15 a.m. (EDT). We encourage you to access the Annual Meeting prior to the start time. The business to be considered and voted upon at the meeting is offsetexplained in this proxy statement. A copy of Eastman’s 2023 Annual Report to Stockholders is also included with these materials.1 providedwell as our actions to reduce costs by Exchange Act Rule 0-11(a)(2)$200 million.identifywe immediately put the filing for whichcash to work through the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedulecombination of net debt reduction and the date of its filing.share repurchases.(1)Amount Previously Paid:(2)Form, Schedule or Registration Statement No.:(3)Filing Party:(4)Date Filed:
March 19, 2018
Dear Fellow Stockholder:
Our 2018As always, we encourage you to participate in this year’s Annual Meeting of Stockholders will be heldby attending the meeting virtually or voting your shares in the Cumberland Amphitheatreadvance for each of the MeadowView Marriott Conference Resort & Convention Center, 1901 Meadowview Parkway, Kingsport, Tennessee,items on May 3, 2018 at 11:30 a.m. Doors to the meeting will open at 10:30 a.m. The business to be considered and voted upon at the meeting is explained in this proxy statement. A copy of Eastman’s 2017 Annual Report to Stockholders is also included with these materials.
Your vote is important for this year’s annual meeting, regardless of the number of shares you own.agenda. Signing and returning a proxy card or submitting your proxy by Internet or telephone in advance of the meeting will not prevent you from voting in person,electronically during the meeting if you attend virtually, but will assure that your vote is counted if you are unable to attend the meeting.meeting online. Whether you choose to vote by proxy cardmail, online or by telephone, or the Internet, I urgeencourage you to vote as soon as possible.If you are a record holder of Eastman stock, an admission ticket for the meeting is included with your proxy card or electronic form of proxy. Please bring this ticket with you if you plan to attend the meeting in person. If you received our proxy materials from a broker or bank and do not have an admission ticket but wish to attend the meeting, please call (423) 229-4647.
2 | 2024 Proxy Statement |
“The Board and management remain intensely focused on the implementation and execution of the Company’s long-term strategy to create new growth opportunities to deliver sustainable value to customers, consumers, and stockholders.” | March 21, 2024 Dear fellow Eastman Stockholders: Our commitment to creating long-term value As Company stewards, the Board is focused on developing and supporting strategies and approaches that will deliver strong financial performance. As a Board, one of our highest priorities is to position Eastman for long-term sustainable growth. The Board is highly engaged in the execution of the Company’s compelling long-term strategy that will be a catalyst for creating value for stockholders. As Lead Director, I can assure you the Board is excited by the progress made in 2023 on the Company’s innovation-driven growth strategy. Integrating sustainability into our strategy As part of our core duties, the Board is responsible for oversight of the strategic and operational direction of the Company, as well as risks associated with our strategy. The Company’s strategy is designed not only to generate profitable growth, but also to integrate sustainability initiatives that are expected to serve as a key driver of that growth. Over the past year, Eastman has made significant progress in advancing the Company’s initiatives bringing the long-term strategy into clearer focus. During 2023, the Company made significant progress on its sustainability goals, including the completion of construction, commissioning, and start-up activities for its new molecular recycling facility in Kingsport, Tennessee, as well as the advancement of its two other planned material-to-material molecular recycling facilities. Using technology with a lower carbon footprint, these facilities will enable the Company to recycle hard-to-recycle plastic waste that is currently being incinerated or sent to landfills. The Board believes these bold and ambitious projects position Eastman as a leader in a circular economy and will create a new vector of growth for the Company. Additional detail around these and other initiatives can be found within the pages of this proxy statement. I encourage you to also review Eastman’s sustainability report, A Better Circle, which can be found in the Sustainability section of the Company’s website. |
2024 Proxy Statement | 3 |
Letter from our Lead Director |
4 | 2024 Proxy Statement |
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Notice of Annual Meeting and Proxy Statement
ITEM 3 | ||||||||
2024 Proxy Statement | 5 |
Table of Contents |
2018 Proxy Statement
Eastman Chemical Company
200 South Wilcox Drive
Kingsport, Tennessee 37662
(423) 229-2000
To Ourour Stockholders:
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By order of the Board of Directors
David A. Golden
Chief Legal & Sustainability Officer
and Corporate Secretary
March 19, 2018
Meeting information
Thursday, May |
TIME: 11:30 a.m. (EDT) |
& Convention Center
Cumberland Amphitheatre
1901 Meadowview Parkway
Kingsport, Tennessee 37660
How to Vote by Proxy
Only stockholders of record at the close of business on March 15, 2018 are entitled to notice of, and to vote at, the meeting.It is important that your shares be represented and voted at the meeting. Please vote by proxy in one of these ways:
LOCATION: Virtually at https://register.proxypush.com/emn | |||||||||||||||||||||||
1 | 2 | 3 | |||||||||||||||||||||||||||||||||||||||
Elect Directors. To elect ten directors to serve until the 2025 Annual Meeting of Stockholders and their successors are duly elected and qualified. | Ratify appointment of independent registered public accounting firm. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2024. | Advisory approval of executive compensation. To approve, on an advisory basis, the compensation of certain of the Company’s executive officers. | |||||||||||||||||||||||||||||||||||||||
The Board recommends a vote FOR each director nominee | The Board recommends a vote FOR this proposal | The Board recommends a vote FOR this proposal |
How to vote by proxy Only stockholders of record at the close of business on March 12, 2024 are entitled to notice of, and to vote at, the meeting. It is important that your shares be represented and voted at the meeting. Please vote by proxy in one of these ways: | By order of the Board of Directors, KELLYE L. WALKER Executive Vice President, Chief Legal Officer and Corporate Secretary March 21, 2024 This Notice and Proxy Statement are first being sent to stockholders on or about March 21, 2024. Our 2023 Annual Report on Form 10-K is being sent with this Notice and Proxy Statement. | |||||||||||||
BY INTERNET | By Internet at the web address shown on your proxy card, electronic form of proxy, or voting instruction form (if you received the proxy materials by mail from a broker or bank). | |||||||||||||
BY PHONE | Use the toll-free telephone number shown on your proxy card, electronic form of proxy, or voting instruction form (if you received the proxy materials by mail from a broker or bank). | |||||||||||||
Mark, sign, date, and promptly return or submit your proxy card, electronic form of proxy, or voting instruction form (in the postage-paid envelope provided if you are returning a paper proxy card). | ||||||||||||||
2024 Proxy Statement | 7 |
Driven by more than 100 years of continuous innovation, Eastman is bringing sustainable materials to market and delivering financial value to our stockholders while scaling positive societal impact for our stakeholders. | ||||||||
Who is Eastman? | ||||||||||||||||||||||||||||||||
Business Segments: | ||||||||||||||||||||||||||||||||
Advanced Materials | ||||||||||||||||||||||||||||||||
Additives & Functional Products | ||||||||||||||||||||||||||||||||
Chemical Intermediates | ||||||||||||||||||||||||||||||||
Fibers | 100+ Years of innovation | $9.2 Billion revenue in 2023 | 14,000 global team members | 100+ Countries where customers are served | ||||||||||||||||||||||||||||
Global Headquarters | ||||||||||||||||||||||||||||||||
Kingsport, Tennessee, USA | ||||||||||||||||||||||||||||||||
8 | 2024 Proxy Statement |
About the company |
Our innovation-driven growth model is succeeding | ||
Our model has delivered results and we have demonstrated our portfolio can grow above our underlying markets with products that have higher margins and drive strong mix upgrade. | ||
Circular economy is a new vector of growth | ||
We have an opportunity to deliver attractive growth by addressing the plastic waste crisis and reducing our impact on climate change at the same time through our molecular recycling technologies. In late 2023, Eastman completed construction and began commissioning and start-up activities for our new molecular recycling facility in Kingsport, Tennessee. We also have announced two additional projects – one to be located in France, and another facility to be located in the United States. | ||
Strengthening execution to convert growth to value | ||
We continue to make investments with the goal of driving the top line and translating it to the bottom line, including an integrated business planning system that will enable us to support growth while keeping inventory levels low. We are also transforming our operations by modernizing and digitizing our capabilities to improve our reliability and cost competitiveness. | ||
Sustainability is integrated into how we win | ||
We have the responsibility and opportunity to join others to help address climate change, lead mainstream circularity as an economic model, and help build a more inclusive and equitable world. | ||
Power of cash flow and the balance sheet | ||
We have developed a record of strong cash flow in almost every environment, returning cash to our stockholders, and otherwise putting cash to work in a disciplined manner. |
2024 Proxy Statement | 9 |
About the company |
Unique, innovation-driven growth modeldelivers consistent, sustainable value | Significant integration and scale enable innovation, reliability, and cost advantage Advantaged growth and execution capability and culture Aggressive and disciplined portfolio management | ||||
10 | 2024 Proxy Statement |
About the company |
Informationsociety.
Business | Growth Product Platforms | Circular | Caring for Society | Climate | ||||||||||
Advanced Materials | Specialty Plastics Circular Economy Solutions (Renew) | |||||||||||||
Next Generation Copolyester Innovation | ||||||||||||||
SaflexTM EV Platform | ||||||||||||||
Window Film | ||||||||||||||
Additives & Functional Products | TetrashieldTM High Performance Polyester Coatings | |||||||||||||
EastaPureTM Semiconductor Materials | ||||||||||||||
Biodegradable Personal Care Microbeads | ||||||||||||||
Fibers | NaiaTM Filament (Circular Textiles and Renew) | |||||||||||||
Corporate | AventaTM Biodegradable Polymers | |||||||||||||
Sustainable Infrastructure (Decarbonization) |
Proxy Statementricher purpose using our two advanced circular recycling technologies — carbon renewal and Annual Meeting
polyester renewal. A circular economy focuses on making the most of the world’s resources — minimizing waste and maximizing value by providing end-of-life solutions to reduce, reuse, and recycle products and materials that typically end up in landfills and our waterways.
2024 Proxy Statement | 11 |
About the company |
12 | 2024 Proxy Statement |
About the company |
FOUR STRATEGIC PILLARS While Eastman is a materials innovator, our true purpose is to enhance the quality of life in material ways, and we pursue that goal with intentionality, accountability, and outcome-based metrics. To that end, our I&D strategy is centered on four strategic pillars, each with target objectives designed to build an inclusive, diverse, high-performing organization. In 2023, we carried out a range of initiatives to advance these pillars. | |||||
1 | Mitigate unconscious bias | ||||
We strive to build inclusive leadership behaviors at all levels so every team member can bring their full, authentic self to work and contribute fully. To do so, we use experiential workshops, educational resources, and scorecards that equip leaders and their teams to recognize and mitigate the impact of unconscious biases. These initiatives provide a strong foundation for increasing engagement, driving results, and promoting innovation. | |||||
2 | Foster an inclusive culture | ||||
True inclusion requires intentional actions that enable every team member to operate authentically at their best. To create an inclusive environment, we invest in Eastman Resource Groups (ERGs), learning opportunities, and systems and processes that promote allyship and encourage full engagement. Our goal is to ensure everyone who works at Eastman feels valued for what they bring to the business and fully accepted for who they are. | |||||
3 | Build inclusive teams | ||||
Innovative recruiting and hiring practices help us source and attract a broader pool of talent, opening pathways for the people we need. To that end, we have strengthened our sourcing strategies, selection processes, and benefit programs to attract diverse talent, bring underrepresented groups to above industry levels, and meet the needs of a diverse world. These efforts include expanding our work with external partners, educating hiring managers on unintended barriers, and inviting candidates before they join the Company to build relationships with members of ERGs. | |||||
4 | Accelerate diversity in leadership | ||||
Eastman offers a range of personal and professional development opportunities to support the career aspirations of all team members. To address gaps in leadership representation, we prepare underrepresented colleagues for leadership roles through targeted development programs and inclusive talent review processes. We also provide tools and resources to boost leaders’ personal inclusiveness and the inclusivity of their teams. | |||||
2024 Proxy Statement | 13 |
About the company |
EBIT | Adjusted EBIT |
14 | 2024 Proxy Statement |
About the company |
Mitigating climate change | Target Year | |||||||
•Reduce our Scope 1 and 2 greenhouse gas emissions by one-third by 2030 to achieve carbon neutrality by 2050* | 2030 | |||||||
•100% of NAR and EU purchased electricity will be renewable by 2030 | 2030 | |||||||
* Results are reduction since baseline year | ||||||||
Mainstreaming circularity | ||||||||
•Recycle more than 500 million pounds (225,000 MT) of plastic waste annually by 2030 via molecular recycling technologies, with a commitment to recycle 250 million pounds (110,000 MT) annually by 2025 | 2025 | |||||||
Caring for society | ||||||||
•100% of growth R&D spend aligns with sustainable macro trends to create materials that improve the quality of life for people around the world | 2030 | |||||||
•Achieve gender parity in alignment with our commitment to Paradigm for Parity® | 2030 | |||||||
•Be a leader for U.S. racial equity within our industry sector | 2030 |
2024 Proxy Statement | 15 |
Proposal | Board recommendation | |||||||||||||
Proposal 1: Election of Directors Stockholders are being asked to vote on the election of ten directors to serve until the 2025 Annual Meeting of Stockholders. The terms of office of all current directors will expire at the 2024 Annual Meeting, and each of those directors, other than Edward L. Doheny II and Charles K. Stevens III, both of whom will be retiring as of the date of the Annual Meeting, has been nominated for re-election for a one year term. | PAGE 17 | |||||||||||||
Proposal 2: Ratification of appointment of independent registered public accounting firm The Audit Committee of the Board of Directors has appointed PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2024. Stockholders are being asked to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP. | PAGE 45 | |||||||||||||
Proposal 3: Advisory approval of executive compensation Stockholders have the right to vote to approve, on an advisory basis, the compensation of the Company’s named executive officers (“NEOs”) as disclosed pursuant to the compensation disclosure rules of the SEC. This advisory vote is commonly referred to as the “say-on-pay” vote. | PAGE 49 | |||||||||||||
A proxy As it is only a legal designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written or electronic document, that document is also called a proxy, a proxy card, or a form of proxy.
By completing and returning your proxy (either by returningsummary, please review the paper proxy card, by submitting your proxy electronically by Internet, or by telephone), you appoint Curtis E. Espeland, the Company’s Chief Financial Officer, and David A. Golden, the Company’s Chief Legal & Sustainability Officer and Corporate Secretary, to represent you at the meeting and direct them to vote your shares at the meeting. Shares of common stock represented by proxy will be voted by the proxy holders at the meeting in accordance with your instructions as indicated in the proxy.If you properly execute and return your proxy (in paper form, electronically by the Internet, or by telephone) but do not indicate any voting instructions, your shares will be voted in accordance with the recommendations of the Board as to the matters identified in thiscomplete proxy statement and inbefore you vote, including the best judgment ofsection “Additional Information About the proxy holders asAnnual Meeting” for information on how to any other matters.
If your shares are registered in your name, you are a stockholder of record.Stockholders of record may vote by proxy in one of three ways:
by telephone: call (888) 693-8683 and follow the instructions on your proxy card or electronic form of proxy;
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by mail (if you received a paper proxy card): mark, sign, date, and mail your proxy card in the enclosed postage-paid envelope.
If you received the “Important Notice Regarding the Availability of Proxy Materials”, follow the instructions on that notice to access an electronic form of proxy. Internet and telephone voting procedures are designed to authenticate stockholder identities, to allow stockholders to give voting instructions, and to confirm that stockholders’ instructions have been recorded properly.
If your shares are held in “street name” through a broker, bank, or other holder of record, you will receive instructions from that registered holder that you must follow in order for your shares to be voted for you by that record holder. Telephone and Internet voting may be offered to stockholders who own their shares through certain brokers or banks.
2018 Proxy Statement 1
Information about the Meeting and Voting
If you give a proxy, you may revoke it at any time before its exercise at the meeting by:
giving written notice of revocation to the Corporate Secretary of the Company;
executing and delivering a later-dated, signed proxy card or submitting a later-dated proxy by Internet or by telephone before the meeting; or
voting in person at the meeting.
All written notices of revocation or other communications with respect to revocation of proxies should be sent to Eastman Chemical Company, P.O. Box 431, Kingsport, Tennessee 37662-0431, Attention: Corporate Secretary, so that they are received before the meeting.
Record Date; Stockholders Entitled to Vote; Voting Rights
The record date for the 2018 Annual Meeting of Stockholders is March 15, 2018. Stockholders of record of common stock at the close of business on the record date are entitled to receive notice of the meeting and to vote at the meeting. The record date is established by the Board as required by Delaware law. If your shares are held in “street name” through a broker, bank, or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the meeting.
On the record date, there were 142,758,750 shares of common stock issued and outstanding. Holders of common stock are entitled to one vote on each of the eleven director-nominees and one vote on each other matter voted upon at the meeting for each share of common stock they hold of record on the record date.
Quorum; Abstentions and Broker Non-Votes
The presence, in person or by proxy, of the holders of a majority of the shares of common stock entitled to vote at the meeting is necessary to constitute a quorum to conduct business. Abstentions and “broker non-votes” will be counted as present and entitled to vote for purposes of determining a quorum. A “broker non-vote” occurs when a registered holder holding shares in “street name” for a beneficial owner does not vote on a particular proposal because the registered holder does not have discretionary voting power for that particular item and has not received voting instructions from the beneficial owner. Brokers which have not received voting instructions from their clients cannot vote on their clients’ behalf on the election of directors, the advisory approval of executive compensation, or the advisory vote on the stockholder proposal, but may, although they are not required to, vote their clients’ shares on the ratification of the appointment of the independent registered public accounting firm.
Votes Required for Approval of Matters to be Considered
Each director nominee who receives a majority of votes cast (number of shares voted “for” exceeds the number of shares voted “against”) will be elected as a director. With respect to the election of directors, stockholders may (1) vote “for” all eleven of the nominees, (2) vote “against” all eleven of the nominees, (3) vote “against” any individual nominee or nominees but vote “for” the other nominee(s), or (4) “abstain” from voting on one or more nominees. Shares not present, in person or by proxy, at the meeting and abstentions will have no effect on the outcome of the election of directors. Similarly, broker non-votes will not be considered to be votes cast and therefore will have no effect on the outcome of the election of directors.
The affirmative vote of a majority of the votes cast is required for the advisory approval of executive compensation, the ratification of the appointment of the independent registered public accounting firm, and the advisory approval of the stockholder proposal. With respect to each of these items, stockholders may (1) vote “for,” (2) vote “against,” or (3) “abstain” from voting. Abstentions and broker non-votes will not be considered to be votes cast and therefore will have no effect on the outcome of the vote on these matters.
2 2018 Proxy Statement
Information about the Meeting and Voting
We will bear the cost of soliciting proxies and the cost of the meeting. In addition to the solicitation of stockholders by mail and electronic means, proxies may be solicited by telephone, facsimile, personal contact, and similar means by our directors, officers, or employees, none of whom will be specially compensated for these activities. We have also contacted brokerage houses, banks, nominees, custodians, and fiduciaries which can be identified as record holders of common stock. Such holders, after inquiry by us, have provided certain information concerning beneficial owners not objecting to the disclosure of such information and the quantities of proxy materials and annual reports needed to supply such materials to beneficial owners, and we will reimburse such record holders for the expense of providing such beneficial ownership information and of mailing or otherwise delivering proxy materials and annual reports to beneficial owners. We have retained Georgeson LLC to assist with the solicitation of proxiesattend, submit questions, and vote projections for a fee of $23,500 plus reimbursement of out-of-pocket expenses.
Matters to be Acted Upon atduring the Meeting Not Included in Proxy Statement
We do not expect any business to be acted upon at the meeting other than as described in this proxy statement. If, however, other matters are properly brought before the meeting, the persons appointed as proxies will have the discretion to vote or act on those matters for you according to their best judgment.
Stockholder Proposals for the 2019 Annual Meeting
In accordance with the rules of the SEC, if you wish to submit a proposal for presentation at Eastman’s 2019 Annual Meeting of Stockholders, it must be received by the Company at its principal executive offices no later than November 22, 2018 in order to be included in the Company’s proxy materials for its 2019 Annual Meeting of Stockholders. Any such proposal should be sent to Eastman Chemical Company, P.O. Box 431, Kingsport, Tennessee 37662-0431, Attention: Corporate Secretary.
In addition, our Bylaws require that a proposal to be submitted by a stockholder for a vote of the Company’s stockholders at an annual meeting of stockholders, whether or not also submitted for inclusion in the Company’s proxy materials, must be preceded by adequate and timely notice to the Corporate Secretary of the Company. To be adequate, the notice must set forth certain information specified in our Bylaws about the stockholder and the proposal. The Bylaws are available through the “Investors — Corporate Governance” section of the Company’s website, and also will be provided to any stockholder upon written request to Eastman Chemical Company, P.O. Box 431, Kingsport, Tennessee 37662-0431, Attention: Investor Relations. To be timely, the notice must be delivered to the Corporate Secretary of the Company no earlier than 150 days and not later than 120 days prior to the day of the month on which the notice of the immediately preceding year’s annual meeting of stockholders was first sent to the stockholders of the Company. If, as expected, notice of the 2018 Annual Meeting of Stockholders is first sent to stockholders on March 22, 2018, then such advance notice must be delivered no earlier than October 23, 2018 and not later than November 22, 2018.
Nominations by Stockholders for Election to the Board of Directors and Stockholder Nomination Proxy Access
Our Bylaws provide that nominations by stockholders of persons for election to the Board may be made by giving adequate and timely notice to the Corporate Secretary of the Company. The Nominating and Corporate Governance Committee of the Board will consider persons properly and timely nominated by stockholders and recommend to the full Board whether any such nominees should be included with the Board’s nominees for election by stockholders. In addition, our proxy access Bylaw provision allows qualifying stockholders to include their director nominees in the Company’s proxy materials by giving adequate and timely notice to the Corporate Secretary.See “Nominating and Corporate Governance Committee — Director Nominations” later in this proxy statement. To be adequate, the nomination notice or the notice of proxy access
2018 Proxy Statement 3
Information about the Meeting and Voting
nomination, as applicable, must set forth certain information specified in our Bylaws about each stockholder submitting a nomination and each person being nominated. The Bylaws are available through the “Investors — Corporate Governance” section of the Company’s website, and also will be provided to any stockholder upon written request to Eastman Chemical Company, P.O. Box 431, Kingsport, Tennessee 37662-0431, Attention: Investor Relations. To be timely, the nomination notice and the notice of proxy access nomination each must be delivered to the Corporate Secretary of the Company no earlier than 150 days and not later than 120 days prior to the day of the month on which the notice of the immediately preceding year’s annual meeting of stockholders was first sent to the stockholders of the Company. If, as expected, notice of the 2018 Annual Meeting of Stockholders is first sent to stockholders on March 22, 2018, then such notice must be delivered no earlier than October 23, 2018 and not later than November 22, 2018.
Annual Report to Stockholders, Annual Report on Form 10-K, and Corporate Governance Materials
Our Annual Report to Stockholders for 2017, including our consolidated financial statements for the year ended December 31, 2017, is being mailed and delivered electronically to stockholders, and made available on the Internet at the Company’s website(www.eastman.com) and atwww.ReadMaterial.com/EMN, concurrently with this proxy statement. The Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed with the SEC is also available on the Internet on the Company’s website and on the SEC’s website(www.sec.gov).
We also make available free of charge, through the “Investors — Corporate Governance” section of the Eastman website, the Company’s Corporate Governance Guidelines, the Charters of each of the Committees of the Board, and Codes of Business Conduct and Ethics for our directors, officers, and employees. Such materials are also available in print upon written request of any stockholder to Eastman Chemical Company, P.O. Box 431, Kingsport, Tennessee 37662-0431, Attention: Investor Relations.
Communications to the Board of Directors
We believe that communication and engagement with the Company’s stockholders and other interested parties is an essential component of the Company’s corporate governance practices. We have adopted a Board Stockholder Communication and Engagement Policy to facilitate communication between stockholders and other interested parties and the Board. Stockholders and other interested parties may send communications to the Board, any individual director, or the independent directors as a group in writing by mail or email to: Board of Directors, Eastman Chemical Company, c/o Corporate Secretary, P.O. Box 1976, Kingsport, Tennessee 37662-1976, email: corpsecy@eastman.com. Stockholders should indicate in the “ATTN:” line of the envelope or the subject line of the email, as applicable, whether the communication is directed to the Board, an individual director, or the independent directors as a group.
The Board Stockholder Communication and Engagement Policy is available in the “Investors — Corporate Governance” section of the Eastman website (www.eastman.com).
4 2018 Proxy Statement
Stock Ownership of Directors and Executive Officers
Common Stock
Unless otherwise noted, the table below sets forth certain information regarding the beneficial ownership of Eastman common stock as of December 31, 2017 by each director (which includes each director nominee) and by each executive officer named in the Summary Compensation Table (under “Executive Compensation — Compensation Tables” below, referred to as the “named executive officers”) and by the directors, the named executive officers, and the other executive officers as a group.
Name | Number of Shares of Common Stock Beneficially Owned(1)(2) | ||||
Mark J. Costa | 657,653 | (3) | |||
Curtis E. Espeland | 281,262 | (4) | |||
Brad A. Lich | 102,405 | (5) | |||
Lucian Boldea | 27,730 | (6) | |||
Stephen G. Crawford | 41,924 | (7) | |||
Humberto P. Alfonso | 6,128 | (8) | |||
Gary E. Anderson | 17,271 | (9) | |||
Brett D. Begemann | 7,193 | (10) | |||
Michael P. Connors | 12,005 | (11) | |||
Stephen R. Demeritt | 17,732 | (12) | |||
Robert M. Hernandez | 46,683 | (13) | |||
Julie F. Holder | 6,252 | (14) | |||
Renée J. Hornbaker | 17,925 | (15) | |||
Lewis M. Kling | 11,693 | (16) | |||
James J. O’Brien | 2,177 | ||||
David W. Raisbeck | 25,091 | (17) | |||
Directors, named executive officers, and other executive officers as a group (22 persons) | 1,707,561 | (18) |
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2024 Proxy Statement |
ITEM 1 Election of Directors | ||||||||
Stockholders are being asked to Majority vote standard for Election of Directors. The Company’s amended and restated bylaws (the “Bylaws”) provide that directors are elected by a |
2018 Proxy Statement 5
Stock Ownership of Directors and Executive Officers
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6 2018 Proxy Statement
Stock Ownership of Directors and Executive Officers
Director and Executive Stock Ownership Expectations; No Hedging or Pledging of Company Stock
Eastman has stock ownership expectations for its directors and executive officers. These persons are expected to acquire and maintain a stake in the Company valued at $262,500 for non-employee directors (five times the portion of the annual retainer fee designated as “service retainer”), five times annual base pay for the Chief Executive Officer, and two and one-half times annual base pay for the other executive officers. Directors and executive officers are expected to attain these levels of stock ownership within five years of first becoming a director or an executive officer. Hypothetical units of the Eastman common stock fund that are credited to an executive’s account under the Eastman Executive Deferred Compensation Plan (the “EDCP”) and to a director’s account under the Directors’ Deferred Compensation Plan (the “DDCP”) are counted with shares of common stock actually owned for purposes of determining stock ownership under the director and executive ownership expectations.See “Director Compensation” note (4) and “Executive Compensation — Compensation Tables — 2017 Nonqualified Deferred Compensation” later in this proxy statement.
Company directors and executive officers are prohibited from use of derivative financial instruments to hedge or mitigate their exposure to changes in the market price of Eastman common stock, and are prohibited from pledging Eastman common stock as security or collateral for loans or in margin brokerage accounts.
The table below shows the number of shares of common stock and EDCP and DDCP common stock units owned under the ownership expectations as of December 31, 2017 by each director and each named executive officer. All directors and executive officers have met or are on schedule to meet their ownership expectations.
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2018 Proxy Statement 7
The following table sets forth information about persons we know to be the beneficial owners of more than five percent of Eastman common stock as of December 31, 2017.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||||||
The Vanguard Group, Inc. | 13,865,811 | (2) | 9.71 | % | ||||||
BlackRock, Inc. | 12,147,844 | (3) | 8.50 | % |
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8 2018 Proxy Statement
Proposals to be Voted on at the Annual Meeting
Item 1 — Election of Directors
Stockholders are being asked to vote on the election of eleven directors to serve until the 2019 Annual Meeting of Stockholders and their successors are duly elected and qualified. The terms of office of all twelve current directors will expire at the 2018 Annual Meeting, and eleven of those directors have been nominated for reelection for a one-year term. As previously reported, Gary E. Anderson, who has served as a director since 2007, has notified the Board of Directors that he will not stand for reelection at the Annual Meeting. If any nominee is unable or unwilling to serve (which we do not anticipate), the persons designated as proxies will vote your shares for the remaining nominees and for another nominee proposed by the Board or, as an alternative, the Board could reduce the number of directors to be elected at the Annual Meeting.
Majority Vote Standard for Election of Directors. The Company’s Bylaws provide that directors are elected by a majority of votes cast by stockholders. If a nominee who is serving as a director is not reelected by a majority of votes cast at a meeting, under Delaware law the director would continue to serve on the Board as a “holdover director.” However, under the director election provision of our Bylaws, any incumbent director who is a holdover director whose successor has not been elected by stockholders would be required to offer to resign from the Board. The Nominating and Corporate Governance Committee would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board would act on the recommendation and publicly disclose its decision and rationale within 90 days from the date the election results are certified. The director who tenders his or her resignation would not participate in the Board’s decision. If a nominee who was not already serving as a director was not elected by a majority of votes cast by stockholders at an annual meeting, under Delaware law that nominee would not become a director and would not serve on the Board as a holdover director.
Set forth below is certain information about background, skills, and expertise of each director nominated for election relevant to their service as a director.
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2024 Proxy Statement | 17 |
2018 Proxy Statement 9
Item 1 — Election of Directors — Nominees for Director
(For One-Year Term Expiring Annual Meeting 2019)
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Item 1 — Election of Directors — Nominees for Director
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Item 1 — Election of Directors — Nominees for Director
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Item 1 — Election of Directors — Nominees for Director
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Item 1 — Election of Directors — Nominees for Director
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Item 1 — Election of Directors — Nominees for Director
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2018 Proxy Statement 15
Item 1 — Election of Directors — The Board of Directors and Corporate Governance
Integrity, honesty, and demonstrated adherence to high ethical standards; Business acumen, experience with business administration processes and principles, and the ability to exercise sound judgment in matters that relate to the current and long-term objectives of the Company; The ability to express opinions, raise difficult questions, and make informed, independent judgments; Knowledge, experience, and skills in at least one specialty area, for example: | The ability to devote sufficient time to prepare for and attend Board meetings (the Company's Corporate Governance Guidelines assume that service on up to one other public company board of directors for any director who is the chief executive officer of a public company and up to three other public company boards of directors if a director is not the chief executive officer of a public company will not impair a director’s service on the Board); Willingness and ability to work with other members of the Board in an open and constructive manner; The ability to communicate clearly and persuasively; and Diversity with respect to other characteristics, which may include, at any time, gender, race and ethnicity, geographic origin, sexual orientation, gender identity, or personal, educational, and professional experience and thought. | ||||||||||||||||
•Accounting or finance, •Corporate management, •Marketing, •Manufacturing, •Technology / cybersecurity, •Information systems, | •Risk management, •International business, •Sustainability / ESG, or •Legal, governmental, or environmental policies compliance expertise; | ||||||||||||||||
Recent Board Leadership Changes in 2023 | ||||||||||||||||||||||||||||||||
•New Lead Director •New Compensation and Management Development Committee Chair •New Environmental, Safety and Sustainability Committee Chair •New Nominating and Corporate Governance Committee Chair | ||||||||||||||||||||||||||||||||
Skills enhanced in the past 6 years | ||||||||||||||||||||||||||||||||
Cybersecurity | Supply Chain Logistics | Risk Management | Financial Reporting | |||||||||||||||||||||||||||||
18 | 2024 Proxy Statement |
Item 1 Election of Directors |
The Board held five meetings during 2017. Each director attended at least 75% of the aggregate of the total number of meetingsthen-current composition of the Board and the total number of meetings held by all Committeeschallenges and needs of the Board on which he or she served. The Board meets immediately before each annual meeting of stockholders, and the directorsas a whole in attendance at such Board meeting attend the annual meeting of stockholders. All directorswho attended the May Board meeting in person attended the 2017 Annual Meeting of Stockholders.
The Chair ofan effort to ensure that the Board provides leadership to the Boardis comprised of a diverse group of members who, individually and works with the Board to define its structure and activities in the fulfillment of its responsibilities. The Company believes that the members of the Board possess considerable experience and unique knowledge of the challenges and opportunities the Company may face from time to time, and therefore are in thecollectively, best position to evaluateserve the needs of the Company and how bestits stockholders. In general, and in giving due consideration to organize the capabilities of our directors and senior executives to meet those needs at any time. As a result, the Company believes that the decision as to who should serve as Chair and as Chief Executive Officer, and whether the offices should be combined or separate, is properly the responsibilitycomposition of the Board, the desired attributes of individual directors, including those of any nominees of stockholders, are as described under “Board composition and refreshment.”
1 | Assess the Board’s needs | |||||||
The NCG Committee annually reviews the composition and size of our Board, ensuring the directors possess the skills, knowledge, and understanding necessary for the Board to successfully perform its role in corporate governance. The Committee considers both the short-term and long-term strategies of the Company to determine what skills and experiences are required of the Board. | ||||||||
2 | Identify candidates | |||||||
If the NCG Committee determines that there is a need for a new candidate either in the event of an open seat or a skill gap, individuals may be identified through a variety of methods, including by our directors, management, stockholders and/or an independent search firm. | ||||||||
3 | Review and evaluate candidates | |||||||
The NCG Committee will consider not only an individual's qualities, performance, and professional responsibilities, but also the then current composition of the Board and the challenges and needs of the Board as a whole at that time. | ||||||||
4 | Interview candidates | |||||||
The NCG Committee and the CEO review candidate profiles to identify candidates' skills, experience, and background that best align with the Company's strategy and would add value to the Board. Candidates are initially interviewed by the NCG Committee Chair and the Lead Director and if selected to advance, with the NCG Committee members and CEO in-person. Due diligence is performed, including background and conflicts checks, review of director commitment levels, references from other directors and the independent search firm. | ||||||||
5 | Recommend candidate to the Board | |||||||
The NCG Committee recommends to the Board the candidate that best fits the needs of the Board. The Board reviews the recommendation and approves the candidate's appointment to the Board. Following Board approval, the new director will complete an onboarding process and will stand for election by stockholders at the next annual meeting. |
2024 Proxy Statement | 19 |
Item 1 Election of Directors |
Independence | Diversity of skills, experience, gender and ethnicity, and thought | Age | ||||||
20 | 2024 Proxy Statement |
Item 1 Election of Directors |
Effective July 1, 2014,strategy as well as international business experience. The Company believes the Board designated Chief Executive Officeris equipped by its composition and director Mark J. Costaculture to serve as Chair, having determined that this waseffectively oversee key risks and challenges the appropriate time for the appointment and the most efficient manner to facilitate effective communication between managementCompany faces. The NCG Committee and the Board use the following matrix in their review of each director’s skills and provide strong and consistent leadership as well as a unified voice for the Company. In addition, the Board believes that currently combining the roles of Chair and Chief Executive Officer helps ensure that the Chief Executive Officer understands and can effectively and efficiently oversee the implementation of the recommendations and decisions of the Board.
In order to give a significant voice to our non-management directors and to reinforce effective, independent leadership on the Board, when the same person holds the Chief Executive Officer and Chair positions or if the Chair is not otherwise independent, the Company’s Bylaws and Corporate Governance Guidelines provide that the Company shall have a Lead Director. The Lead Director’s responsibilities, which are described in more detail in the Company’s Corporate Governance Guidelines, include:
calling, setting agendas for, and presiding over executive sessions of the non-management directors at each regularly scheduled meeting of the Board, or at such other times as the non-management directors may determine;
Experience and Qualifications | |||||||||||||||||||||||||||||||||||
International / Emerging Markets. Facilitates an understanding of diverse business environments and economic conditions associated with our global business. | |||||||||||||||||||||||||||||||||||
Accounting / Financial Reporting. Builds the skills necessary to oversee and help facilitate accurate, transparent and reliable financial reporting and development of effective internal controls. | |||||||||||||||||||||||||||||||||||
Information Technology/Cybersecurity. Provides critical insight into information technology systems and solutions and risks associated with technology and cybersecurity matters. | |||||||||||||||||||||||||||||||||||
ERM / Risk Management. Enables directors to understand, effectively anticipate and oversee the most significant risks facing the Company. | |||||||||||||||||||||||||||||||||||
Human Capital / Talent Management. Develops organizational perspective on effective approaches to attracting, training, developing and retaining a diverse workforce. | |||||||||||||||||||||||||||||||||||
Logistics / Global Supply Chain. Fosters an understanding of the importance of global supply chain management on manufacturing and distribution capabilities. | |||||||||||||||||||||||||||||||||||
Chemicals Industry. Builds a foundation for understanding the complexity of the Company’s products, competitive environment and regulatory challenges. | |||||||||||||||||||||||||||||||||||
R&D / Innovation. Assists in understanding the complexities and costs of developing and bringing new products to market. | |||||||||||||||||||||||||||||||||||
Manufacturing / Operations Safety. Experience with complex, global manufacturing operations helps drive processes to ensure the safety of our employees and communities in which we operate. | |||||||||||||||||||||||||||||||||||
Government / Regulatory. Familiarity with highly regulated industries provides critical insight into navigating the challenges of operating in complex global political and regulatory environments. | |||||||||||||||||||||||||||||||||||
Mergers & Acquisitions / Capital Markets. Experience with capital markets, capital allocation and complex strategic transactions aids in the development and implementation of strategic objectives. | |||||||||||||||||||||||||||||||||||
Sustainability / Environment. Facilitates an understanding of environmental challenges and solutions necessary to design and execute a long-term strategy focused on a circular economy. | |||||||||||||||||||||||||||||||||||
Executive Leadership. Enables an understanding of the numerous challenges, opportunities and risks associated with managing a large- scale, global organization. | CFO | COO | CAO | CEO | SVP | SVP | CFO | CEO | CEO | VICE CHAIR | |||||||||||||||||||||||||
calling special meetings of the full Board or the non-employee, independent directors;
presiding over Board meetings in the absence of the Chair;
2024 Proxy Statement | 21 |
collaborating and consulting with the Chair and Chief Executive Officer and other senior management concerning and approving or directing the approval of agendas, schedules, and materials for Board meetings;
acting as a liaison between the independent directors and the Chair; and
being available with the Chair for consultation and direct communication with stockholders.
Item 1 Election of Directors |
Robert M. Hernandez has served as Lead
16 2018 Proxy Statement
Humberto P. Alfonso Retired Executive Vice President & Chief Financial Officer, Information Services Group | |||||||||||||||||
Director: Since January 2011 Age: 66 Committees: •Audit (Chair) •Environmental, Safety and Sustainability •Finance | |||||||||||||||||
Experience and skills: International / Emerging Markets | Accounting / Financial Reporting | ERM / Risk Management | Logistics / Global Supply Chain | Mergers & Acquisitions / Capital Markets | |||||||||||||||||
Skills and expertise: Mr. Alfonso’s experience includes various senior financial positions held during his career that provide a solid platform for his service to lead the Audit Committee’s oversight of the Company’s financial reporting process and its internal and disclosure controls and of the work of the independent registered public accounting firm. In addition, Mr. Alfonso’s substantial senior level management experience brings significant operational insight to the Board. Background: •Information Services Group, a global technology research and advisory firm ◦2021 – 2023 (retired): Executive Vice President and Chief Financial Officer •Yowie Group Ltd., a confectionary company ◦2017 – 2018: Director ◦2016 – 2018: Chief Executive Officer, Global •The Hershey Company, a chocolate and cocoa products company ◦2013 – 2015 (retired): President, International | ◦2011 - 2013: Executive Vice President, Chief Financial Officer, and Chief Administrative Officer ◦2007 - 2011: Senior Vice President and Chief Financial Officer ◦2006 - 2007: Vice President, Finance and Planning, North American Commercial Group ◦2006 (joined Hershey) - 2006: Vice President, Finance and Planning, U.S. Commercial Group •Cadbury Schweppes, a multi-national confectionary company ◦held a variety of finance positions ◦2005 - 2006: Executive Vice President Finance and Chief Financial Officer of Cadbury Schweppes Americas Beverages ◦2003 - 2005: Vice President Finance, Global Supply Chain •Pfizer, Inc., a biopharmaceutical company ◦held a number of senior financial positions Other Current Public Company Directorships •The Kraft Heinz Company | ||||||||||||||||
Brett D. Begemann Retired Chief Operating Officer of Crop Science Division of Bayer AG | |||||||||||||||||
Director: Since February 2011 Lead Director: Since May 2023 Age: 63 Committees: •Compensation and Management Development •Environmental, Safety and Sustainability •Finance •Nominating and Corporate Governance | |||||||||||||||||
Experience and skills: International / Emerging Markets | ERM / Risk Management | Logistics / Global Supply Chain | Chemicals Industry | Manufacturing / Operations Safety | Government / Regulatory | |||||||||||||||||
Skills and expertise: Mr. Begemann’s substantial and varied experience as an executive of an international public company brings to the Board a significant depth of knowledge in global biotechnology and chemicals businesses. His wide-ranging experience and knowledge allow him to contribute to the Board and its Committees significant insight into a number of functional areas critical to Eastman. Background: •Bayer AG, a German global life sciences company ◦2018 - 2021 (retired): Chief Operating Officer for the Crop Science Division, with core competencies in the areas of health care and agriculture | •Monsanto Company, an agrochemical company ◦2013 - 2018 (acquired by Bayer AG): President and Chief Operating Officer, responsible for worldwide sales and operations, corporate affairs, and global business organization ◦2012 - 2013: President and Chief Commercial Officer ◦2009 - 2012: Executive Vice President and Chief Commercial Officer ◦2007 - 2009: Executive Vice President, Global Commercial ◦1983 - 2007: served in the company’s sales and marketing organization | ||||||||||||||||
22 | 2024 Proxy Statement |
Item 1 — Election of Directors — The Board of Directors and Corporate Governance
We believe that the foregoing structure, policies, and practices, when combined with the Company’s other governance policies and procedures, provide appropriate opportunities for oversight, discussion, and evaluation of decisions and direction from the Board.
The Board maintains oversight responsibility for the management of the Company’s risks, and oversees an enterprise-wide approach to risk management, designed to provide a holistic view of organizational objectives, including strategic objectives, to improve long-term organizational performance, to prioritize and manage identified risks, and to enhance stockholder value. A fundamental part of risk management is not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The full Board reviews with management its process for managing enterprise risk. Additionally, the Audit Committee is charged with overseeing our risk assessment and management process each year, including ensuring that management has instituted processes to identify major risks and has developed plans to manage such risks and reviewing with management the identified most significant risks and management’s plans for addressing and mitigating the potential effects of such risks. During the Company’s risk management review process, risk is assessed throughout our entire business, and is reported to a management corporate risk committee comprised of members of our various business units and control functions. Risks that are identified as “high-level” risks are reported to the Audit Committee and thereafter assigned, as appropriate, to various of the Board’s Committees, or to the Board as a whole, for further review, analysis, and development of appropriate plans for management and mitigation.
While the Board maintains the ultimate oversight responsibility for risk management and responsibility for risk management oversight of certain specific areas, each of the various Committees of the Board have been assigned responsibility for risk management oversight of specific identified areas. In particular, and in addition to its responsibility to conduct an annual assessment of the risk management process and report its findings to the Board, the Audit Committee maintains responsibility for overseeing risks related to the Company’s financial reporting, audit process, internal controls over financial reporting and disclosure controls and procedures, and cyber security and security of Company information. The Finance Committee has oversight responsibility related to the Company’s financial position and financing activities, including such areas as capital structure, raw material and energy costs, availability, and price volatility and hedging, large capital projects, pension obligations and funding, and acquisitions, divestitures, and joint ventures. The Health, Safety, Environmental and Security Committee assists the Board in fulfilling its oversight responsibility with respect to health, safety, environmental, security, sustainability, and political activities issues that affect the Company and works closely with the Company’s legal and regulatory management with respect to such matters. In addition, in setting compensation, the Compensation and Management Development Committee endeavors to develop a program of incentives that encourage an appropriate level of risk-taking behavior consistent with the Company’s long-term business strategy and also reviews the leadership development of our employees. Finally, the Nominating and Corporate Governance Committee conducts an annual assessment of nominees to our Board and is charged with developing and recommending to the Board corporate governance principles and policies and Board Committees structure, leadership, and membership, including those related to, affecting, or concerning the Board’s and its Committees’ risk oversight.
Item 1 Election of Directors |
Eric L. Butler Retired Executive Vice President and Chief Administrative Officer of Union Pacific Corporation | |||||||||||||||||
Director: Since August 2022 Age: 63 Committees: •Audit •Environmental, Safety and Sustainability •Finance | |||||||||||||||||
Experience and skills: International / Emerging Markets | Accounting / Financial Reporting | ERM / Risk Management | Human Capital / Talent Management | Logistics / Global Supply Chain | Manufacturing / Operations Safety | Mergers & Acquisitions / Capital Markets | |||||||||||||||||
Skills and expertise: Mr. Butler’s substantial senior level management experience, including his previous position as a chief administrative officer, and his background in sales and marketing, supply chain logistics, procurement and purchasing and industrial engineering enable him to bring significant operational insight to the Board. In addition, he also has experience leading human resources, labor relations, and corporate governance functions. Mr. Butler’s extensive experience in the freight transportation industry allows him to provide the Board with unique perspectives on developing a safety-first business culture, customer service, and risk management. Background: •Aswani-Butler Investment Associates, a private equity investment firm ◦Founder and CEO •Union Pacific Corporation (“Union Pacific”), one of the largest freight rail providers in North America | ◦during his 32-year career, he led a wide variety of company functions and initiatives, including marketing and sales, purchasing and supply chain, financial planning and analysis, strategic planning, human resources, industrial engineering and transportation research ◦2016 - 2018 (retired): Executive Vice President and Chief Administrative Officer ◦2012 - 2016: Executive Vice President, Sales and Marketing and Chief Marketing Officer •Federal Reserve Bank of Kansas City, Omaha Branch ◦2013 – 2019: Board appointee ◦2018 – 2020: Chair of the Board Other Current Public Company Directorships •NiSource, Inc. •West Fraser Timber Co. Ltd Certifications / Continuing Director Education •Deloitte Audit Committee symposium | ||||||||||||||||
Mark J. Costa Chief Executive Officer and Board of Directors Chair of Eastman Chemical Company | |||||||||||||||||
Director: Since May 2013 Age: 58 Committees: •None | |||||||||||||||||
Experience and skills: International / Emerging Markets | ERM / Risk Management | Human Capital / Talent Management | Logistics / Global Supply Chain | Chemicals Industry | R&D / Innovation | Manufacturing / Operations Safety | Government / Regulatory | Mergers & Acquisitions / Capital Markets | Sustainability / Environment | |||||||||||||||||
Skills and expertise: Since he joined the Company, Mr. Costa has led a variety of business, marketing, functional, and strategic areas and initiatives. Mr. Costa has senior management, corporate transformation and portfolio management, and business and marketing capability experience and expertise from both his years with the Company and previously as a consultant. We believe the perspective of the Chief Executive Officer of the Company is critical for the Board in order to effectively oversee the affairs of the Company and its strategy for growth. Mr. Costa’s unique knowledge of the opportunities and challenges associated with our business and familiarity with the Company, as well as of the chemical industry and various market participants, make him uniquely qualified to lead and advise the Board as Chair. | Background: •Eastman Chemical Company ◦2014 – Present: Chief Executive Officer ◦2014 – Present: Board of Directors Chair ◦2013 –2014: President ◦2009 - 2012: Executive Vice President, Specialty Polymers, Coatings and Adhesives, and Chief Marketing Officer ◦2008 - 2009: Executive Vice President, Polymers Business Group and Chief Marketing Officer ◦2006 – 2008: Senior Vice President, Corporate Strategy and Marketing •Monitor Group, a global management consulting firm ◦1988 – 2006: Senior Partner; played a crucial role in developing Monitor’s techniques in corporate transformations and portfolio management and designing client business and marketing capability building programs Other Current Public Company Directorships • International Flavors & Fragrances Inc. | ||||||||||||||||
2024 Proxy Statement | 23 |
Item 1 Election of Directors |
Linnie M. Haynesworth Retired Sector Vice President and General Manager of Northrup Grumman Corporation | |||||||||||||||||
Director: Since February 2023 Age: 66 Committees: •Audit •Environmental, Safety and Sustainability •Finance | |||||||||||||||||
Experience and skills: International / Emerging Markets | Information Technology / Cybersecurity | ERM / Risk Management | Logistics / Global Supply Chain | Government / Regulatory | |||||||||||||||||
Skills and expertise: Ms. Haynesworth provides the Eastman Board expertise in technology integration, cybersecurity governance, enterprise strategy, risk management, large complex system development and disruptive technology integration. She formerly served on the board of directors of the Intelligence and National Security Alliance and the Northern Virginia Technology Council. Background: •Northrop Grumman Corporation (“NGC”), and aerospace and defense technology company ◦2016 – 2019 (retired): Mission Systems Sector Vice President and General Manager of the Cyber and Intelligence Mission Solutions Division; had executive responsibility for the overall growth and program activities for the division’s business portfolio, including full spectrum cyber, multi-enterprise data management and integration, as well as mission enabling intelligence, surveillance and reconnaissance (ISR) solutions supporting domestic and international customers | ◦2013 - 2016: Sector Vice President and General Manager of the ISR Division within the former Information Systems sector; led NGC’s Federal and Defense Technologies Division •United States Department of Defense ◦2021 - Present: Member of the Defense Business Board Other Current Public Company Directorships •Automatic Data Processing, Inc. •Micron Technology, Inc. •Truist Financial Corporation Certifications / Continuing Director Education •Certificate in Cybersecurity Oversight | ||||||||||||||||
Julie F. Holder Retired Senior Vice President of The Dow Chemical Company | |||||||||||||||||
Director: Since November 2011 Age: 71 Committees: •Compensation and Management Development •Environmental, Safety and Sustainability •Finance •Nominating and Corporate Governance (Chair) | |||||||||||||||||
Experience and skills: International / Emerging Markets | ERM / Risk Management |Human Capital / Talent Management | Chemicals Industry | Government / Regulatory | Sustainability / Environment | |||||||||||||||||
Skills and expertise: Ms. Holder brings to the Board substantial corporate management experience as well as expertise in international sales and marketing and the chemicals industry through her various senior management positions at The Dow Chemical Company (“Dow”). Ms. Holder’s long history at Dow provides her substantial chemical industry experience across a broad range of functional areas and allows her to offer management and operational insight to the Board with an in-depth understanding of the opportunities and challenges associated with our business. Background: •JFH Insights LLC, a consulting firm (primarily dedicated to leadership coaching for high potential women executives) ◦2009 – Present: Chief Executive Officer; develops and teaches executive education courses designed to help women be more successful in their careers and help senior leadership build a more inclusive corporate culture | •The Dow Chemical Company, a diversified, worldwide manufacturer and supplier of products used primarily as raw materials in the manufacture of customer products and services ◦2007 – 2009 (retired): Senior Vice President, Chief Marketing, Sales and Reputation Officer, U.S. Area Executive Oversight ◦2006 – 2007: Vice President, Human Resources, Public Affairs and Diversity and Inclusion, Latin America Executive Oversight ◦1975 - 2006: various positions with increasing seniority •W. R. Grace & Co., a global supplier of catalysts and engineered materials ◦2016 – 2021 (acquired by Standard Industries Holdings Inc. and no longer publicly-traded): Board of Directors member Certifications / Continuing Director Education •Diligent Climate Leadership Certification | ||||||||||||||||
24 | 2024 Proxy Statement |
Item 1 Election of Directors |
Renée J. Hornbaker Retired Executive Vice President and Chief Financial Officer of Stream Energy | |||||||||||||||||
Director: Since September 2003 Age: 71 Committees: •Compensation and Management Development •Environmental, Safety and Sustainability •Finance (Chair) •Nominating and Corporate Governance | |||||||||||||||||
Experience and skills: International / Emerging Markets | Accounting / Financial Reporting | Information Technology / Cybersecurity | ERM / Risk Management | Manufacturing / Operations Safety | Mergers & Acquisitions / Capital Markets | |||||||||||||||||
Skills and expertise: Ms. Hornbaker’s expertise in a variety of financial and accounting roles, experience in business development, strategy and technology, and service with large global businesses make her a valuable member of the Board. Ms. Hornbaker’s previous service as a chief financial officer and as a senior manager at an accounting firm provide a solid platform for her to advise and consult with the Board on financial and audit-related matters. Background: •Storey & Gates LLC, a consulting firm providing business advisory services including executive coaching and board governance training for boards ◦2018 – Present: Chief Executive Officer •Stream Energy, a retail energy, wireless, and protective services provider ◦2017 – 2019 (sold): Board of Directors member, Board Chair and Compensation Committee Chair ◦2015 – 2017: Chief Financial Officer •Shared Technologies, Inc., a provider of converged voice and data networking solutions ◦2006 – 2011: Chief Financial Officer | •CompuCom Systems, Inc., an information technology services provider ◦2005 – 2006: Consultant to the Chief Executive Officer •Flowserve Corporation, a global provider of industrial flow management products and services ◦1997 - 2004: Vice President and Chief Financial Officer ◦1997 – 1998: Vice President, Chief Information and Development Officer Other Current Public Company Directorships •Berry Corporation Certifications / Continuing Director Education •Certified Public Accountant •NACD Director Certified •NACD Board Leadership Fellow •NACD Cybersecurity Oversight •NACD Climate Oversight •KPMG Board Leadership Conference | ||||||||||||||||
Kim Ann Mink Retired President and Chief Executive Officer of Innophos Holdings, Inc. | |||||||||||||||||
Director: Since July 2018 Age: 64 Committees: •Audit •Environmental, Safety and Sustainability (Chair) •Finance | |||||||||||||||||
Experience and skills: International / Emerging Markets | Accounting / Financial Reporting | ERM / Risk Management | Chemicals Industry | R&D / Innovation | Government / Regulatory | Mergers & Acquisitions / Capital Markets | |||||||||||||||||
Skills and expertise: Dr. Mink provides valuable guidance to the Board with her extensive background and past experience as an executive in the specialty chemical industry and as a chief executive officer overseeing business and developing growth initiatives. Dr. Mink brings specialty materials experience and technical expertise to the Board. Dr. Mink’s proven leadership and deep understanding of key end markets enhance the Board’s innovation-driven growth strategy. Background: •Innophos Holdings, Inc., a leading international producer of performance-critical and nutritional functional ingredients, with applications in food, health, nutrition and industrial specialties markets ◦2015 - 2020 (sold to a private equity firm): President and Chief Executive Officer ◦2016 - 2020: Director ◦2017 - February 2020: Chair of the Board | •The Dow Chemical Company ◦2012 - 2015: Business President, Elastomers, Electrical and Telecommunications ◦2009 – 2012: Global General Manager, Performance Materials; President and Chief Executive Officer of ANGUS Chemical Co. (then a subsidiary of Dow) •Rohm and Haas Company, a chemical manufacturing company (acquired by Dow) ◦1988 - 2009: held roles of increasing responsibility for more than 20 years, including corporate vice president and general manager for the Ion Exchange Resins business Other Current Public Company Directorships •Avient Corporation •Air Liquide | ||||||||||||||||
2024 Proxy Statement | 25 |
Item 1 Election of Directors |
James J. O’Brien Retired Chairman of the Board and Chief Executive Officer of Ashland Inc. | |||||||||||||||||
Director: Since February 2016 Age: 69 Committees: •Compensation and Management Development (Chair) •Environmental, Safety and Sustainability •Finance •Nominating and Corporate Governance | |||||||||||||||||
Experience and skills: International / Emerging Markets | Accounting / Financial Reporting | ERM / Risk Management | Chemicals Industry | Manufacturing / Operations Safety | Government / Regulatory | Mergers & Acquisitions / Capital Markets | |||||||||||||||||
Skills and expertise: Mr. O’Brien brings to the Board extensive knowledge of the chemical industry and substantial experience as a former executive of an international public company that allows him to offer management insight and understanding of industry challenges to the Board. Under his leadership, Ashland was transformed to a global specialty chemical company. His significant experience serving on other public company boards provides valuable insight. | Background: •Ashland Inc., a leading global specialty chemical company ◦2002 - 2014: Chairman of the Board and Chief Executive Officer ◦2001 - 2002: President and Chief Operating Officer; Senior Vice President and Group Operating Officer ◦1976 (joined Ashland) - 2000: served in various positions with increasing responsibility and seniority •Humana Inc., a health insurance company ◦2006 – 2023: Board of Directors member Other Current Public Company Directorships •Albemarle Corporation | ||||||||||||||||
David W. Raisbeck Retired Vice Chairman of Cargill, Incorporated | |||||||||||||||||
Director: Since December 2000 Age: 74 Committees: •Compensation and Management Development •Environmental, Safety and Sustainability •Finance •Nominating and Corporate Governance | |||||||||||||||||
Experience and skills: International / Emerging Markets | ERM / Risk Management | Human Capital / Talent Management | Logistics / Global Supply Chain | Chemicals Industry | Manufacturing / Operations Safety | Mergers & Acquisitions / Capital Markets | |||||||||||||||||
Skills and expertise: Mr. Raisbeck’s depth of experience in the areas of trading and risks related to commodities and raw materials is valuable to our Board and its Finance Committee. Given his professional experience, Mr. Raisbeck has unique capabilities and insight with respect to the managing of risk exposure and execution of financing transactions. His substantial experience serving on the boards of directors of other companies and his varied corporate management experience allows us to leverage his expertise with respect to appropriate oversight and related actions utilized in the Board environment. Background: •Cargill, Incorporated, an agricultural trading and processing company ◦1999 – 2008 (retired): Vice Chairman | ◦1994 – 2009: Director ◦2005 – 2009: Director of CarVal, a distressed asset management company owned by Cargill, and of Black River Asset Management, a hedge fund owned by Cargill ◦1996 - 1999 Executive Supervisor, Human Resources ◦1995 - 1999: Executive Vice President and President, Trading Sector ◦1993 – 1995: President of Cargill’s Trading Sector ◦1988 – 1993: President of Financial Markets Division ◦1971 (joined) – 1987: held a variety of merchandising and management positions focused primarily in the commodity and financial trading businesses | ||||||||||||||||
26 | 2024 Proxy Statement |
Item 1 Election of Directors |
independence
2018 Proxy Statement 17
Item 1 — Election In addition, each non-employee member of Directors — Thethe Board of Directorsmeets the heightened independence standards for our Audit, Compensation and Corporate Governance
Management Development, and NCG Committees. In making these determinations, the Nominating and Corporate GovernanceNCG Committee and the Board reviewed and evaluated all direct and indirect transactions and relationships between the Company and the non-employee directors and their affiliates and immediate family members.
Under the New York Stock Exchange listing standards and Eastman’s Corporate Governance Guidelines, an “independent” director is one who has “no direct or indirect material relationship with the Company or its management” and who: has not been employed by the Company or any of its subsidiaries or affiliates, and who has no immediate family member who has been an executive officer of the Company, within the previous three years (in addition, if a director has been employed by the Company prior to the last three years, the Board will determine in its business judgment whether the director’s past or continuing relationship to the Company and its management would interfere with such director’s exercise of independent judgment); has not received, and whose immediate family member has not received, during any 12-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and Committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); as to the Company’s internal or external auditor, is not, and whose immediate family member is not, a partner; is not employed by; has not been, and whose immediate family member has not been, within the last three years, and is not currently, a partner or employee and personally worked on the Company’s audit; is not and has not in the past three years been employed, and whose immediate family member is not and has not in the past three years been employed, as an executive officer of another company where any of the Company’s present executives at the same time serve or served on that company’s compensation committee; is not an employee of, and whose immediate family member is not an executive officer of, another company that has made payments to, or received payments from, the Company for property or services in an amount that exceeds, in any of the last three fiscal years, the greater of $1 million or 2% of such other company’s consolidated gross revenues; has no personal services contract with the Company, any subsidiary or affiliate of the Company or any executive officer; does not have any other business relationship with the Company or any of its subsidiaries or affiliates (other than service as a director) that the Company would be required to disclose in proxy statements or in annual reports on Form 10-K filed with the SEC; is not an executive officer of another company that is indebted to the Company or to which the Company is indebted and the total amount of either company’s indebtedness to the other is more than 1% of the total consolidated assets of the company that he or she serves as an executive officer; is not an officer, director, or trustee of a charitable organization to which discretionary charitable contributions to the organization by the Company or an affiliate are more than 1% of that organization’s total annual charitable receipts or $100,000, whichever is less; and is not a director, executive officer, partner, or greater than 10% equity holder of an entity that provides advisory, consulting, or professional services to the Company, any of its affiliates, or any executive officer. | ||||||||
2024 Proxy Statement | 27 |
Item 1 Election of Directors |
Board structure and governance | Sustainability | |||||||||||||
•Active Board oversight of risk •Lead Director and strong Committee chair roles with clearly articulated responsibilities •9 out of 10 director nominees are independent •Mandatory director retirement age •Annual Board and Committee self-evaluation process, including individual director evaluations •Executive sessions at each Board meeting led by the Lead Director without the CEO or other management present | •Long-standing commitment to sustainability and other ESG matters •Board oversight of human capital management and culture, including I&D •Comprehensive Sustainability Report in alignment with GRI, SASB, and TCFD frameworks •Established climate strategy and 2030 Commitments, including green house gas emissions reduction targets •I&D Report •Annual independent third-party assessment of pay equity | |||||||||||||
Stockholder rights and engagement | Stock ownership | |||||||||||||
•Annual election of directors •Majority voting for directors •Stockholder proxy access •Active and responsive stockholder engagement process •No stockholder rights plan •No supermajority voting provisions | •Stock ownership guidelines of 5x base salary for CEO •Stock ownership guidelines of 5x annual retainer fee for non-employee directors •Stock ownership guidelines of 2.5x base salary for our other executive officers •No hedging or pledging of Company stock by directors, executive officers, and or employees •Executive Incentive Pay Clawback Policy | |||||||||||||
28 | 2024 Proxy Statement |
Item 1 Election of Directors |
\ | Mark J. Costa Board Chair | Brett D. Begemann Lead Director | ||||||||||||
The Chair of the Board provides leadership and works with the Board to define its structure and activities in the fulfillment of its responsibilities. The Company believes that the members of the Board possess considerable experience and unique knowledge of the challenges and opportunities the Company may face from time to time, and therefore are in the best position to evaluate the needs of the Company and how best to organize the capabilities of our directors and senior executives to meet those needs at any time. As a result, the Company believes that the decision as to whom should serve as Board Chair and as Chief Executive Officer, and whether the offices should be combined or separated, is properly the responsibility of the Board, to be exercised from time to time in appropriate consideration of then-existing facts and circumstances. Our Corporate Governance Guidelines provide the Board the flexibility to determine whether or not the separation or combination of the Board Chair and Chief Executive Officer offices is in the best interests of the Company. Chief Executive Officer and Director Mark J. Costa has served as Board Chair since 2014. The Board has determined that this is the most efficient manner to facilitate effective communication between management and the Board and provide strong and consistent leadership as well as a unified voice for the Company. In addition, the Board believes that combining the roles of Board Chair and Chief Executive Officer helps ensure that the Chief Executive Officer understands and can effectively and efficiently manage the implementation of the recommendations and decisions of the Board. | In order to ensure effective, independent leadership on the Board and appropriate oversight of management, Eastman’s Bylaws and Corporate Governance Guidelines require an independent Lead Director when the same person holds the Chief Executive Officer and Board Chair positions or if the Board Chair is not otherwise independent. The Lead Director’s responsibilities, which are described in more detail in the Company’s Corporate Governance Guidelines, include: •calling, setting agendas for, and presiding over executive sessions of the non-employee, independent directors at each regularly scheduled meeting of the Board, or at such other times as the non-employee, independent directors may determine and briefing the Board Chair on any issues arising from the non-management executive sessions, as appropriate; •calling special meetings of the full Board or the non-employee, independent directors; •presiding over Board meetings in the absence of the Board Chair; •collaborating and consulting with the Board Chair and Chief Executive Officer, the Corporate Secretary, and other senior management concerning and approving or directing the approval of agendas, schedules, and materials for Board meetings; •acting as a liaison between the independent directors and the Board Chair; and •being available with the Board Chair for consultation and direct communication with stockholders. Brett D. Begemann has served as Lead Director since May 2023. | |||||||||||||
2024 Proxy Statement | 29 |
Item 1 Election of Directors |
Audit Committee | |||||
Members: Humberto P. Alfonso (Chair) Eric L. Butler Edward L. Doheny II* Linnie M. Haynesworth Kim Ann Mink Charles K. Stevens III* Meetings in 2023:9 *Retiring effective May 2, 2024 | Duties and Responsibilities The purpose of the Audit Committee is to assist the Board in fulfilling the Board’s oversight responsibilities relating to: •the integrity of the financial statements of the Company and the Company’s system of internal controls over financial reporting and disclosure controls and procedures; •the Company’s management of and compliance with legal and regulatory requirements; •the independence and performance of the Company’s internal auditors; •the qualifications, independence, and performance of the Company’s independent registered public accounting firm; •the retention and termination of the Company’s independent registered public accounting firm, including the approval of fees and other terms of their engagement and the approval of non-audit relationships with the independent registered public accounting firm; and •risk assessment and risk management, including cybersecurity risks. The Board has determined that each member of the Audit Committee is “independent” and “financially literate,” and that Mr. Alfonso is an “audit committee financial expert” under applicable provisions of the New York Stock Exchange’s listing standards and the Exchange Act. A copy of the charter is available on the “Investors — Governance” section of the Company’s website. | ||||
30 | 2024 Proxy Statement |
Item 1 Election of Directors |
Compensation and Management Development Committee | |||||
Members: James J. O’Brien (Chair) Brett D. Begemann Julie F. Holder Renée J. Hornbaker David W. Raisbeck Meetings in 2023:7 | Duties and Responsibilities The purpose of the Compensation and Management Development Committee (the “Compensation Committee”) is to: •establish, administer and oversee the Company’s policies, programs, and procedures for evaluating, developing, and compensating the Company’s executive officers, including oversight of management succession and risk assessment of compensation programs and practices; •oversee the Company’s efforts to attract, develop, and retain talent, including review of I&D initiatives, talent development, succession planning, employee engagement, culture and retention programs; •oversee the Company’s management development and compensation and benefits philosophy and strategy; and •determine the compensation of the Company’s executive officers, review management’s executive compensation disclosures, approve adoption of cash and equity-based incentive compensation plans, and oversee management’s administration of the Company’s benefits plans. The Compensation Committee has exclusive authority to grant stock-based incentive awards under the 2021 Omnibus Stock Compensation Plan and has delegated to the Board Chair and Chief Executive Officer authority to make certain limited stock-based compensation awards to employees other than executive officers. The Compensation Committee receives input from Company management on compensation and benefits matters, and considers such input in establishing and overseeing management’s compensation programs and in determining executive compensation. The Board has determined that each member of the Compensation Committee is “independent” under applicable provisions of the New York Stock Exchange’s listing standards. A copy of the charter is available on the “Investors — Governance” section of the Company’s website. For additional description of the Compensation Committee’s oversight of workforce and senior management development and its processes and procedures for consideration and determination of executive compensation, including the role of management in recommending compensation, see “Executive Compensation — Compensation Discussion and Analysis.” | ||||
2024 Proxy Statement | 31 |
Item 1 Election of Directors |
Nominating and Corporate Governance Committee | |||||
Members: Julie F. Holder (Chair) Brett D. Begemann Renée J. Hornbaker James J. O’Brien David W. Raisbeck Meetings in 2023: 4 | Duties and Responsibilities The purpose of the Nominating and Corporate Governance Committee is to: •identify individuals qualified to become Board members; •recommend to the Board candidates to fill Board vacancies and newly-created director positions; •recommend to the Board whether incumbent directors should be nominated for re-election to the Board upon the expiration of their terms; •review, develop, and recommend to the Board corporate governance principles and practices, and regularly review and evaluate corporate governance guidelines, principles, and practices in light of evolving trends and developments; •review and make recommendations to the Board regarding director compensation (see “Director Compensation”); •oversee the Board’s evaluations; and •recommend committee structures, membership, and chairs and, if the Board Chair is not an independent director, the independent director to serve as Lead Director. The Board has determined that each member of the Nominating and Corporate Governance Committee is “independent” under applicable provisions of the New York Stock Exchange’s listing standards. A copy of the charter is available on the “Investors — Governance” section of the Company’s website. | ||||
Environmental, Safety and Sustainability Committee | ||||||||
Members: Kim Ann Mink (Chair) Humberto P. Alfonso Brett D. Begemann Eric L. Butler Edward L. Doheny II Linnie M. Haynesworth Julie F. Holder Renée J. Hornbaker James J. O’Brien David W. Raisbeck Charles K. Stevens III Meetings in 2023:2 *Retiring effective May 2, 2024 | Duties and Responsibilities The purpose of the Environmental, Safety and Sustainability Committee is to review with management and, where appropriate, make recommendations to the Board regarding: •the Company’s policies and practices concerning health, safety, environmental, security, and sustainability; •the Company’s sustainability strategy, including decarbonization, GHG emission reduction goals and related climate disclosures; and •philanthropy, public policy, and political activities matters. A copy of the charter is available on the “Investors — Governance” section of the Company’s website. | |||||||
32 | 2024 Proxy Statement |
Item 1 Election of Directors |
Finance Committee | |||||
Members: Renée J. Hornbaker (Chair) Humberto P. Alfonso Brett D. Begemann Eric L. Butler Edward L. Doheny II* Linnie M. Haynesworth Julie F. Holder Kim Ann Mink James J. O’Brien David W. Raisbeck Charles K. Stevens III* Meetings in 2023:4 *Retiring effective May 2, 2024 | Duties and Responsibilities The purpose of the Finance Committee is to review with management and, where appropriate, make recommendations to the Board regarding: •the Company’s financial position and financing activities, including consideration of the Company’s financing plans and strategies; •cost of capital; •significant corporate transactions (including acquisitions, divestitures, and joint ventures); •capital expenditures; •financial status of the Company’s defined benefit pension plans; •payment of dividends and issuance and repurchase of stock; and •use of financial instruments, commodity purchasing, insurance, and other hedging arrangements and strategies to manage exposure to financial and market risks. A copy of the charter is available on the “Investors — Governance” section of the Company’s website. | ||||
2024 Proxy Statement | 33 |
Item 1 Election of Directors |
Board | |||||||||||||||||||||||||||||
•The Board maintains oversight responsibility for the management of the Company’s risks, and oversees an enterprise-wide approach to risk management, designed to provide a holistic view of organizational objectives, including strategic objectives, to improve long-term organizational performance, to prioritize and manage identified risks, and to enhance stockholder value. •The full Board reviews with management its process for managing enterprise risk. •While the Board maintains the ultimate oversight responsibility for risk management and for oversight of certain specific risks, each of the various Committees of the Board have been assigned responsibility for risk management oversight of specific identified areas. | |||||||||||||||||||||||||||||
Compensation Committee | Finance Committee | Environmental, Safety and Sustainability Committee | |||||||||||||||||||||||||||
•The Compensation Committee endeavors to develop a program of incentives that encourage an appropriate level of risk-taking behavior consistent with the Company’s long-term business strategy and also reviews the employee development as part of the Company’s succession planning process. | •The Finance Committee has oversight responsibility related to the Company’s financial position and financing activities, including such areas as capital structure, raw material and energy costs, availability, and price volatility and hedging, large capital projects, pension obligations and funding, and acquisitions, divestitures, and joint ventures. | •The Environmental, Safety and Sustainability Committee assists the Board in fulfilling its oversight responsibility with respect to health, safety, environmental, security, public policy and political activities, and the Company’s sustainability strategy, GHG emission reduction goals and related climate disclosures. | |||||||||||||||||||||||||||
Audit Committee | The Nominating and Corporate Governance Committee | ||||||||||||||||||||||||||||
•The Audit Committee is charged with overseeing our risk assessment and management process each year to: (i)ensure that management has instituted processes to identify major risks and has developed plans to manage such risks; and (ii)review with management the most significant risks identified and management’s plans for addressing and mitigating the potential effects of such risks. •The Audit Committee maintains responsibility for overseeing risks related to the Company’s financial reporting, audit process, internal controls over financial reporting and disclosure controls and procedures. | •The Nominating and Corporate Governance Committee conducts an annual assessment of nominees to our Board and is charged with developing and recommending to the Board corporate governance principles and policies and Board Committees structure, leadership, and membership, including those related to, affecting, or concerning the Board’s and its Committees’ risk oversight. | ||||||||||||||||||||||||||||
34 | 2024 Proxy Statement |
Item 1 Election of Directors |
Cybersecurity Risk Oversight The Board is also responsible for the oversight of cybersecurity risk, mitigation strategies and the overall resiliency of the Company’s technology infrastructure. As part of their risk oversight responsibilities, the Board and Audit Committee periodically review third-party assessments of information security standards, any incidents that could have a material impact on the Company’s network, and potential cybersecurity risk disclosures. In 2023, the Board continued to broaden the director skill sets with the addition of a director who has extensive background and experience in cybersecurity governance. The Company has a dedicated Chief Information Officer (“CIO”) and an Information Security Director who are supported by a team of cybersecurity professionals that are responsible for leading the Company-wide cybersecurity program and risk mitigation efforts. The Company's internal audit team provides independent assurance on the overall operations of the Company's cybersecurity program. The Company also engages multiple external parties to conduct cybersecurity maturity and risk assessments. The Company ensures that all employees, including part-time and temporary employees, undergo cybersecurity training and compliance programs at least annually. | ||||||||||||||
2024 Proxy Statement | 35 |
Item 1 Election of Directors |
•2023 OSHA Recordable injury rate decreased by nearly 31% relative to 2022 performance. •2023 Tier 1 process safety incidents decreased by 57% relative to 2022 performance. •Year-over-year, serious injuries & fatalities were reduced by 66%. •Year-over-year, Days Away from Work injuries were reduced by 55%. | ||||||||
36 | 2024 Proxy Statement |
Item 1 Election of Directors |
2024 Proxy Statement | 37 |
Item 1 Election of Directors |
has not been employed
1 | Process Initiated | |||||||
The Lead Director and the Chair of the NCG Committee initiated the evaluation process with the assistance of an independent third-party. | ||||||||
2 | Survey | |||||||
Each director completed an electronic survey with survey questions centered around five core areas of responsibility and oversight: (i) Board composition; (ii) talent oversight and CEO succession; (iii) Board processes and operations; (iv) strategy oversight; and (v) risk management. | ||||||||
3 | Interviews | |||||||
The facilitator conducted individual interviews with each director eliciting candid feedback from the participants in an unrestrained and congenial setting. | ||||||||
4 | Findings | |||||||
The facilitator compiled all the quantitative and qualitative information, benchmarked the Board against national standards and research and provided a thorough and comprehensive written narrative report. The results of the assessment were reviewed with the Lead Director, Chair of the NCG Committee and Board Chair. | ||||||||
5 | Feedback Incorporated | |||||||
The Lead Director shared the results with the full Board and reviewed recommended actions aligning on improvement opportunities for implementation. As a final step, the facilitator then conducted one-on-one conversations with each individual director. |
38 | 2024 Proxy Statement |
Item 1 Election of Directors |
has not received, and whose immediate family member has not received, in any 12-month period within the previous three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service;
as to the Company’s internal or external auditor, is not, and whose immediate family member is not, a partner; is not employed by; has not been, and whose immediate family member has not been, within the last three years, and is not currently, a partner or employee and personally worked on the Company’s audit;
is not and has not in the past three years been employed, and whose immediate family member is not and has not in the past three years been employed, as an executive officer of another company where anyAs part of the Company’s present executives atefforts to ensure directors have the same time serve or served on that company’s compensation committee;
is not an employee of, and whose immediate family member is not an executive officer of, another company that has made paymentsnecessary resources to or received payments from,fulfill their responsibilities to stakeholders, the Company provides continuing education opportunities for property or servicesdirectors to stay informed on trends and developments relevant to Eastman and our industry. Directors also periodically participate in an amount that exceeds, in anyvisits to Eastman operating facilities, which provides opportunities to observe Company culture and develop a deeper understanding of the last three years, the greater of $1 million or 2% of such other company’s consolidated gross revenues;
has no personal services contract with the Company, any subsidiary or affiliatecomplexities of the Company or any executive officer;
does not have any other business relationshipCompany’s manufacturing operations. Directors also regularly interact with the Company or any of its subsidiaries or affiliates (other than service as a director) that the Company would be required to disclose in proxy statements or in annual reports on Form 10-K filed with the SEC;
is not an executive officer of another company that is indebted to the Company or to which the Company is indebted and the total amount of either company’s indebtedness to the other is more than 1%non-executive management employees outside of the total consolidated assetsboardroom as part of the companyBoard’s ongoing succession planning process. In addition, directors receive valuable input from stockholders that he or she serves as an executive officer;
is not an officer, director, or trustee of a charitable organization to which discretionary charitable contributions tohelps inform the organization by the Company or an affiliate are more than 1% of that organization’s total annual charitable receipts or $100,000, whichever is less; and
is not a director, executive officer, partner, or greater than 10% equity holder of an entity that provides advisory, consulting, or professional services to the Company, any of its affiliates, or any executive officer.
Talent Development Stockholder Engagement The Board believes that talent management and employee development are vital to the success of Eastman’s innovation-driven growth strategy. Accordingly, the Board regularly monitors leadership quality, employee morale, and talent development through one-on-one meetings with key senior managers, senior management presentations at Board and Committees meetings, and other meetings before and after Board and Committees meetings. The Board values input from stockholders on all matters related to Eastman. The Board receives periodic updates from management on stockholder engagement efforts that provide further insight to stockholder interests and concerns. To create opportunities for directors to receive feedback from the Company’s stockholders, directors may engage directly with stockholders of the Company from time to time. Director Orientation Continuing Education All new directors take part in a director orientation, which includes written material and presentations, individual meetings with fellow directors and key leaders and employees, to familiarize such directors with, among other things, the Company’s business, strategic plans, significant financial, accounting and risk management issues, compliance programs, Code of Business Conduct and Ethics, corporate governance guidelines, principal officers, independent auditors and advisors and securities trading and reporting. Directors, Executive Officers,directors, executive officers, and Related PersonsAs described above, atrelated personspast transactions involving the Company in which non-employeenon-employee directors and their affiliates (including immediate family members and other firms, corporations, or entities with which the director has a relationship) have or had a direct or indirect interest. The Board also reviews any such transactions and relationships in which executive officers of the Company or members of their immediate families have or had an interest. Written Company policies require approval by the Board (in the case of the Chief Executive Officer) or senior management (in the case of all other employees) of each Company transaction in which an employee has a direct or indirect financial or other personal interest, and restrict reporting relationships between immediate family member employees.18 2018 Proxy Statement
Item 1 — Election of Directors — Board Committees
In the most recent such review, the Board considered purchases and sales of products and services in the ordinary course of business to and from a companycompanies of which a non-employee director is an executive officer and a payment by a third-party to a partnership of which a non-employee director is a partner for professional services to the third-party for which the Company paid fees to the third party.directors are or were officers. Each such transaction was below the thresholds of the categorical standards listed above and determined by the Board not to be a material transaction or relationship.
2024 Proxy Statement | 39 |
Item 1 Election of Directors |
members. Consistent with our related person transaction policy as described above, our NCG Committee and Board reviewed this matter.
of the Board, and the Codes of Business Conduct and Ethics for our directors, officers, and employees. Such materials are also available in print upon written request of any stockholder to Eastman Chemical Company, P.O. Box 431, Kingsport, Tennessee 37662-0431, Attention: Investor Relations.
40 | 2024 Proxy Statement |
Cash Retainer | |||||
Cash fees for 2023 were paid according to the following schedule: | |||||
Non-Employee Director Annual Retainer | $120,000 | ||||
Lead Director Retainer | $40,000 | ||||
Chair Retainer — Audit Committee | $25,000 | ||||
Chair Retainer — Compensation and Management Development Committee | $20,000 | ||||
Chair Retainer — Nominating and Corporate Governance Committee | $15,000 | ||||
Chair Retainer — Finance Committee | |||||
Chair Retainer — Environmental, Safety and Sustainability Committee | |||||
“Event” Fee (Per Event)* | $1,500 | ||||
Restricted Stock Awards | |||||
Non-Employee Director Annual Award | $110,000 | ||||
Director (one-time award upon initial election to the Board) | $10,000 |
2024 Proxy Statement | 41 |
Director compensation |
42 | 2024 Proxy Statement |
Director compensation |
Audit Committee.non-employee directors for 2023. The membersonly director who is an employee of the Company (Mr. Costa, our CEO) received no additional compensation for his service on the Board.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||
Humberto P. Alfonso Audit Committee Chair | $145,000 | $110,061 | $60,000 | $315,061 | |||||||||||||
Brett D. Begemann Lead Independent Director | $156,667 | $110,061 | $60,000 | $326,728 | |||||||||||||
Eric L. Butler | $123,000 | $110,061 | $60,000 | $293,061 | |||||||||||||
Edward L. Doheny II | $120,000 | $110,061 | $60,000 | $290,061 | |||||||||||||
Linnie M. Haynesworth | $111,729 | $120,073 | $54,365 | $286,167 | |||||||||||||
Julie F. Holder Nominating and Corporate Governance Committee Chair | $146,500 | $110,061 | $60,000 | $316,561 | |||||||||||||
Renée J. Hornbaker Finance Committee Chair | $141,000 | $110,061 | $60,000 | $311,061 | |||||||||||||
Kim A. Mink Environmental, Safety and Sustainability Committee Chair | $131,500 | $110,061 | $60,000 | $301,561 | |||||||||||||
James J. O’Brien Compensation and Management Development Committee Chair | $140,834 | $110,061 | $60,000 | $310,895 | |||||||||||||
David W. Raisbeck | $140,000 | $110,061 | $60,000 | $310,061 | |||||||||||||
Charles K. Stevens III | $120,000 | $110,061 | $60,000 | $290,061 | |||||||||||||
2024 Proxy Statement | 43 |
Director compensation |
44 | 2024 Proxy Statement |
ITEM 2 Ratification of Appointment of Independent Registered Public Accounting Firm | ||||||||
The Audit Committee of the Board has appointed PricewaterhouseCoopers LLP (“PwC”) to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2024. In making this appointment, the Audit Committee has determined that the retention of PwC continues to be in the best interests of Eastman and its stockholders. PwC has served as the Company’s independent auditor since 1993. The Audit Committee believes PwC’s tenure as the Company’s independent registered public accounting firm has provided the firm with a deep understanding of the Company's business. PwC's tenure and knowledge of the Company's business has served to enhance the audit processes and overall audit quality, which are aided by: •Robust auditor independence controls; •Deep Company and industry knowledge; and •Annual evaluation of independence, performance, and qualifications. The stockholders are being asked to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2024. If the stockholders fail to ratify this appointment, the Audit Committee may, but is not required to, reconsider whether to retain that firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. A representative of PwC is expected to attend the Annual Meeting and will have the opportunity to make a statement on behalf of the firm if he desires to do so. The representative is also expected to be available to respond to appropriate questions from stockholders. | ||||||||
The Board of Directors recommends that you vote “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as Eastman’s independent registered public accounting firm for the year ending December 31, 2024. | ||||||||
2024 Proxy Statement | 45 |
Item 2 Ratification of appointment of independent registered public accounting firm |
the integrity of the financial statements of the Company and the Company’s system of internal controls and disclosure controls and procedures;
the Company’s management of and compliance with legal and regulatory requirements;
the independence and performance of the Company’s internal auditors;
the qualifications, independence, and performance of the Company’s independent registered public accounting firm;
the retention and termination ofPwC served as the Company’s independent registered public accounting firm includingfor the approval ofyears ended December 31, 2022 and 2023, and has billed the Company the following amounts for fees and other termsrelated expenses for professional services rendered during 2022 and 2023:
(IN THOUSANDS) | For the Year Ended December 31, 2022 | For the Year Ended December 31, 2023 | ||||||||||||
Audit Fees and Expenses(1) | $ | 5,455 | $ | 5,599 | ||||||||||
Audit-Related Fees and Expenses(2) | 95 | 85 | ||||||||||||
Tax Fees and Expenses(3) | 3,808 | 2,231 | ||||||||||||
All Other Fees and Expenses(4) | 195 | 270 | ||||||||||||
Total | $ | 9,553 | $ | 8,185 |
risk assessment(4)All other fees and risk management.
The Board of Directors has determined that each member
46 | 2024 Proxy Statement |
Item 2 Ratification of appointment of independent registered public accounting firm |
of the Audit Committee
2018 Proxy Statement 19
Item 1 — Election of Directors — Board Committees
such non-audit services with the accounting firm’s independence. At the beginning of the year, the Audit Committee reviewed and approved all known audit and non-audit services and fees to be provided by and paid to PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm. During the year, specific audit and non-audit services or fees not previously approved by the Audit Committee were approved in advance by the Audit Committee or by the Chair of the Audit Committee pursuant to delegated authority.
Of the
Committee.
2024 Proxy Statement | 47 |
Item 2 Ratification of appointment of independent registered public accounting firm |
20 2018 Proxy Statement
Item 1 — Election of Directors — Board Committees
financial statements, and the internal controls and disclosure controls and procedures that support management’s accounting and disclosure judgments and the certifications of the Chief Executive Officer and the Chief Financial Officer that the financial statements of the Company fairly present, in all material respects, the financial condition, results of operations, and cash flows of the Company.
Gary E. Anderson
Stephen R. Demeritt
Renée J. Hornbaker
James J. O’Brien
Nominating and Corporate Governance Committee. The members of the Nominating and Corporate Governance Committee are Messrs. Raisbeck (Chair), Begemann, Connors, Hernandez and Kling and Ms. Holder. The Nominating and Corporate Governance Committee held four meetings during 2017. The purpose of the Nominating and Corporate Governance Committee is to:
identify individuals qualified to become Board members;
recommend to the Board candidates to fill Board vacancies and newly-created director positions;
recommend to the Board whether incumbent directors should be nominated for reelection to the Board upon the expiration of their terms;
review, develop, and recommend corporate governance principles and practices, and regularly review and evaluate corporate governance trends and developments;
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ITEM 3 Advisory Approval of Executive Compensation | ||||||||
The Dodd-Frank Wall Street Reform and The Company’s strategy for business and financial growth from sustainable innovation, market engagement, and differentiated technologies and applications development leverages the capabilities of our employees to innovate and execute our growth strategy while remaining committed to maintaining a strong financial position with appropriate financial flexibility and liquidity. Our pay-for-performance compensation philosophy supports this strategy by stressing the importance of corporate and individual performance (i) in meeting strategic and business goals for growth, (ii) creating value through innovation, and (iii) driving financial strength and flexibility, while remaining able to meet changing employee, business, and market conditions. Our executive compensation program is designed to attract and retain a talented and creative team of executives who will provide disciplined leadership for the Company’s success in dynamic, competitive markets. The Company seeks to accomplish this by motivating executives with an appropriate mix of compensation elements to drive value for all stakeholders. Please read the “Executive Compensation — Compensation Discussion and Analysis” section of this proxy statement for additional details about our executive compensation philosophy and programs, including information about the compensation of our NEOs for 2023, as detailed in the tables and narrative. The say-on-pay vote gives stockholders the opportunity to indicate their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, objectives, and practices described in this proxy statement. Stockholders are being asked to approve the compensation of the NEOs as disclosed in the “Executive Compensation” section of this proxy statement, including the Compensation Discussion and Analysis, compensation tables, and related narrative disclosure. Because this vote is advisory, it will not be binding on the Compensation and Management Development Committee (the “Compensation Committee”), the Board, | ||||||||
The Board recommends that you vote “ | ||||||||
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recommend committee structures, membership,
The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is “independent” under applicable provisions of the New York Stock Exchange’s listing standards.
Director Nominations. The Nominating and Corporate Governance Committee is responsible for reviewing and recommending to the Board potential directors who possess the skills, knowledge, and understanding necessary to be
2018 Proxy Statement 21
Item 1 — Election of Directors — Board Committees
valued members of the Board in order to assist it in successfully performing its role in corporate oversight and governance. The Nominating and Corporate Governance Committee considers not only an individual director’s or possible nominee’s qualities, performance, and professional responsibilities, but also the then-current composition of the Board and the challenges and needs of the Board as a whole in an effort to ensure that the Board, at any time, is comprised of a diverse group of members who, individually and collectively, best serve the needs of the Company and its stockholders. In general, and in giving due consideration to the composition of the Board at that time, the desired attributes of individual directors, including those of any nominees of stockholders, are as follows:
integrity and demonstrated high ethical standards;
experience with business administration processes and principles;
the ability to express opinions, raise difficult questions, and make informed, independent judgments;
knowledge, experience, and skills in at least one specialty area, for example:
accounting or finance,
corporate management,
marketing,
manufacturing,
technology,
executive compensation information systems,
the chemical industry,
international business, or
legal or governmental affairs;
the ability to devote sufficient time to prepare for and attend Board meetings (it is assumed that service on up to three other boards of directors will not impair a director’s service on the Company’s Board; the Nominating and Corporate Governance Committee reviews instances in which a director serves on more than three other for-profit companies’ boards of directors);
willingness and ability to work with other members of the Board in an open and constructive manner;
the ability to communicate clearly and persuasively; and
diversity with respect to other characteristics, which may include, at any time, gender, ethnic background, geographic origin, or personal, educational and professional experience.
The Nominating and Corporate Governance Committee will consider persons nominated by stockholders and recommend to the full Board whether such nominee should be included with the Board’s nominees for election by stockholders. Our Bylaws contain provisions that address the process (including the required information and deadlines) by which a stockholder or group of stockholders may nominate an individual for consideration by the Nominating and Corporate Governance Committee to stand for election at an annual meeting of stockholders. In addition, the proxy access provision in our Bylaws provides that, under certain circumstances, a stockholder, or a group of up to 20 stockholders, owning 3% or more of our outstanding common stock continuously for at least the previous three years may nominate and include director nominees constituting up to 20% of the number of directors then serving on the Boarddetailed in the Company’s proxy materials, provided that such stockholder(s)tables and nominee(s) satisfynarrative in the disclosure and other requirements set forth in our Bylaws. In order to usefollowing sections of this proxy access Bylaw provision, stockholders are required to hold shares until the date of the applicable annual meeting. For additional information on how stockholders may submit nominees for election to the Board,
22 2018 Proxy Statement
Item 1 — Election of Directors — Board Committees
The Board and the Nominating and Corporate Governance Committee have from time to time utilized the services of director search firms to assist in the identification of qualified potential director nominees.
Compensation and Management Development Committee. The members of the Compensation and Management Development Committee (the “Compensation Committee”) are Messrs. Begemann (Chair), Connors, Hernandez, Kling, and Raisbeck and Ms. Holder.statement. The Compensation Committee held six meetings during 2017. The purposeestablishes and oversees the administration of the Compensation Committee is to establish and administer the Company’s policies, programs, and procedures for evaluating, developing, and compensating our executive officers. What follows is a summary of compensation philosophy and objectives for executive officers, the relationship of corporate performance to executive compensation, and the basis for the compensation of executive officers. This CD&A provides compensation information for our named executive officers (“NEOs”) listed below.
Name | Years of Credited Service | Position | |||||||||
Mark J. Costa | 18 | Chief Executive Officer | |||||||||
William T. McLain, Jr. | 23 | Executive Vice President and Chief Financial Officer | |||||||||
Brad A. Lich | 22 | Executive Vice President and Chief Commercial Officer | |||||||||
Stephen G. Crawford | 40 | Executive Vice President, Manufacturing and Chief Sustainability Officer | |||||||||
B. Travis Smith | 31 | Senior Vice President, Additives & Functional Products | |||||||||
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Executive compensation |
In 2023, the Company placed an emphasis on improving operating cash flow, operating processes and safety performance, cost management, as well as the completion and start-up of our new molecular recycling facility in Kingsport, Tennessee. For 2023, Eastman generated revenue of $9.2 billion, earnings before interest and taxes (“EBIT”) of $1.3 billion, adjusted EBIT of approximately $1.1 billion, and operating cash flow (“OCF”) of approximately $1.4 billion. The Company returned approximately $525 million to stockholders through dividends and share repurchases in 2023. In addition, the Company’s innovation and market development platform enabled the Company to close more than $600 million of new business in 2023. In addition to the new molecular recycling facility in Kingsport, Tennessee, the Company continues to make progress on two additional material-to-material molecular recycling facilities. A planned second molecular recycling facility in Normandy, France is expected to use Eastman’s polyester renewal technology to recycle up to 110,000 metric tons annually of hard-to-recycle plastic waste. The Company is also planning to build a third molecular recycling facility, which will be located in the United States. The advancement of these three projects reinforces our commitment towards making a significant contribution to the plastic waste and climate crises. | |||||||||||||||||
Generated operating cash flow of approximately $1.4 billion in 2023 | |||||||||||||||||
Returned approximately $525 million to stockholders through dividends and share repurchases. | |||||||||||||||||
Reduced costs by approximately $200 million | |||||||||||||||||
Completed construction of groundbreaking methanolysis facility in Kingsport, Tennessee that is the centerpiece of the Company's innovative molecular recycling solution that builds on our strategy to enable a circular economy. | |||||||||||||||||
Strong Pay and Performance Alignment The Compensation Committee believes that a significant portion of our executives’ total compensation should be “at risk” and performance-based. Consistent with this pay-for-performance philosophy and compensation program design, 100% of the incentive compensation approved by the Compensation Committee for the NEOs was performance-based and at-risk. At-risk, performance-based compensation is only earned if the threshold level of targeted business and individual performance is met. The Compensation Committee believes it is also important to establish an appropriate balance between the short-term and long-term focus of executives, and in the types of performance incented and risks encouraged, as well as to align their interests with those of stockholders, by providing a meaningful portion of their compensation in the form of equity-based pay. | ||||||||||||||
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Executive compensation |
2023 CEO Earned or Accrued Pay1 | Summary Compensation Table | |||||||||||||
Actual Base Salary Paid | $1,360,810 | $1,360,810 | ||||||||||||
Actual Non-Equity Incentive Plan Paid | $1,597,050 | $1,597,050 | ||||||||||||
2023 Performance Share Awards2 | $8,071,944 | $11,208,310 | ||||||||||||
2023 Option Grant2,3 | $682,426 | $2,472,937 | ||||||||||||
Change in Pension Value and Nonqualified Deferred Compensation Earnings | $543,510 | $543,510 | ||||||||||||
All Other Compensation | $415,273 | $415,273 | ||||||||||||
Total | $12,671,013 | $17,597,890 |
Salary | Non-Equity Incentive Award | Performance Shares | |||||||||||||||
Options | Change in Pension value | All Other Compensation |
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Executive compensation |
leverage all major components of compensation to provide total target executive compensation levels that compete well in the marketplace; | attract and retain highly-qualified executives by providing incentive opportunities for the attainment of the Company’s strategic business objectives and to achieve superior performance; | provide appropriate short-term and long-term incentives to reward the attainment of short-term and long-term corporate and individual objectives consistent with corporate growth strategy and objectives; | ensure performance targets are appropriately challenging and properly aligned with business strategy and stockholder interests; and | maintain balance in the types of corporate and individual performance incented and the levels and types of risks managers are encouraged to evaluate and take. |
Performance | Value Creation | Market Strength | |||||||||||||||||||||
Corporate and individual performance in meeting strategic and business goals for growth | Innovation that converts market complexity into sustainable value | Financial strength and flexibility, while remaining able to meet changing employee, business, and market conditions |
Quantified Performance | Inclusion and Diversity | Environment, Health and Safety | Stakeholder Interest | |||||||||||||||||||||||||||||
Quantified corporate financial and business performance | Eastman’s commitment to building and maintaining an inclusive and diverse workplace | Promoting a strong culture of safety and sustainability | Creating long-term value for all stakeholders | |||||||||||||||||||||||||||||
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Executive compensation |
What we do | What we don’t do | |||||||||||||
Oversight and decisions by a Compensation Committee comprised solely of independent directors with significant executive compensation and management experience who understand drivers of long-term corporate performance. Use an independent compensation consultant to the Compensation Committee with no conflicts of interest. Annual assessment by the Compensation Committee of potential risks associated with the compensation program. Benchmark executive pay and overall program design and use competitive peer company data in making decisions about all components of pay. Significant portion of pay based on corporate and individual performance. Robust stock ownership expectations. Executive pay recoupment (or “clawback”) policy. “Double trigger” change-in-control vesting of outstanding stock-based pay awards. Regular dialogue with investors and proxy advisory firms about executive pay program and practices. | Target a specific percentile of competitive peer company pay to set executive pay. Reprice or change performance targets for stock options or other long-term stock-based incentive awards after those awards are granted without stockholder approval. Include value of equity awards in pension benefit calculations. Allow pledging or hedging of Company stock by our executive officers. “Gross-up” taxes for any imputed income on limited executive perquisites. “Gross-up” tax payments, or accelerate equity vesting without termination following change-in-control, under limited change-in-control severance arrangements. | |||||||||||||
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Executive compensation |
Eastman has a history of actively engaging with our stockholders. We believe that strong corporate governance should include consistent dialogue with investors. We solicit feedback on our corporate governance, executive compensation programs, disclosure practices, and environmental and social impact programs and goals. Investor feedback is shared with our Compensation Committee. As described in “Item 3 — Advisory Approval of Executive Compensation”, at the 2024 Annual Meeting, stockholders will again have the opportunity to indicate their views on the compensation of our NEOs by an advisory “say-on-pay” vote. At the Company’s 2023 Annual Meeting of Stockholders, 91.8% of the votes cast on the say-on-pay proposal were voted in favor of the proposal. The Compensation Committee considered the annual say-on-pay vote in its subsequent compensation design decisions. During our investor engagement in 2023, we received limited communications of concerns related to our current executive compensation program and practices. After considering the result of the say-on-pay vote and subsequent investor communications, the Compensation Committee did not make any significant changes in the structure of the Company’s executive compensation program for 2023. The Compensation Committee will continue to consider the results of future say-on-pay proposals and other investor input, and other appropriate executive compensation and corporate governance developments, when making compensation decisions for our executive officers. | |||||
At the Eastman 2023 Annual Meeting of Stockholders, the annual say-on pay vote was approved by stockholders with a 91.8% vote in favor of the proposal. | |||||
2024 Proxy Statement | 55 |
Executive compensation |
CEO Pay mix | Other NEOs Pay mix | ||||
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Executive compensation |
2024 Proxy Statement | 57 |
Executive compensation |
•Air Products and Chemicals, Inc. •Ashland Global Holdings Inc. •Ball Corporation •Celanese Corporation •Danaher Corporation •Dover Corporation | •DuPont de Nemours •Eaton Corporation Plc •Ecolab Inc. •FMC Corporation •The Goodyear Tire and Rubber Company •Mosaic Company | •Parker-Hannifin Corporation •PPG Industries Inc. •Sealed Air Corporation •Rockwell Automation, Inc. •The Sherwin-Williams Company •Trane Technologies Plc | ||||||||||||
The Board of Directors has determined that each member of the Compensation Committee is “independent” under applicable provisions of the New York Stock Exchange’s listing standards.
2018 Proxy Statement 23
Item 1 — Election of Directors — Board Committees
Company. The Compensation Committee concluded that Aon Hewitt is independent of the Compensation Committee and of Company management and has no conflicts of interest in its performance of services to the Committee.
The Compensation Committee has reviewed and discussed with management the “Compensation Discussion and Analysis” which appears later in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC and in this proxy statement.
Compensation and Management Development Committee
Brett D. Begemann (Chair)
Michael P. Connors
Robert M. Hernandez
Julie F. Holder
Lewis M. Kling
David W. Raisbeck
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Executive compensation |
Health, Safety, Environmental and Security Committee. All of the directors except Mr. Costa are members, and Ms. Holder is the Chair, of the Health, Safety, Environmental and Security Committee. The Health, Safety, Environmental and Security Committee held two meetings during 2017. The purpose of the Health, Safety, Environmental and Security Committee is to review with management and, where appropriate, make recommendations to the Board regarding the Company’s policies and practices concerning health, safety, environmental, security, sustainability, and political activities matters.
24 2018 Proxy Statement
Item 1 — Election of Directors — Director Compensation
Director compensation is determined by the Board of Directors based upon the recommendation of the Nominating and Corporate Governance Committee and the Committee’s compensation consultant. The Board uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve as directors. In setting the compensation of non-employee directors, the Nominating and Corporate Governance Committee and the Board consider the significant amount of time that the Board and its Committees are expected to expend, the skills, knowledge, and understanding needed for service on the Board, and the types and amounts of director pay of other similar public companies (including the compensation peer comparison companies listed under “our Executive Compensation — Compensation Discussion and Analysis — Review of 2017 Executive Compensation”). The Nominating and Corporate Governance Committee and the Board annually review non-employee directorProgram
The following table provides information concerning compensation paid to the Company’s non-employee directors for 2017. Directors who are also employees of the Company (Mr. Costa) receive no additional compensation for their service as directors.
Director Compensation for Year Ended December 31, 2017
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total($) | ||||||||||||||||||||||||||||
Humberto P. Alfonso | $ | 128,000 | $ | 85,062 | $0 | $0 | $0 | $ | 60,000 | $ | 273,062 | ||||||||||||||||||||||||
Gary E. Anderson | 105,000 | 85,062 | 0 | 0 | 0 | 60,000 | 250,062 | ||||||||||||||||||||||||||||
Brett D. Begemann | 125,000 | 85,062 | 0 | 0 | 0 | 60,000 | 270,062 | ||||||||||||||||||||||||||||
Michael P. Connors | 105,000 | 85,062 | 0 | 0 | 0 | 60,000 | 250,062 | ||||||||||||||||||||||||||||
Stephen R. Demeritt | 105,000 | 85,062 | 0 | 0 | 0 | 60,000 | 250,062 | ||||||||||||||||||||||||||||
Robert M. Hernandez | 145,000 | 85,062 | 0 | 0 | 0 | 60,000 | 290,062 | ||||||||||||||||||||||||||||
Julie F. Holder | 129,000 | 85,062 | 0 | 0 | 0 | 60,000 | 274,062 | ||||||||||||||||||||||||||||
Renée J. Hornbaker | 117,000 | 85,062 | 0 | 0 | 0 | 60,000 | 262,062 | ||||||||||||||||||||||||||||
Lewis M. Kling | 120,000 | 85,062 | 0 | 0 | 0 | 60,000 | 265,062 | ||||||||||||||||||||||||||||
James J. O’Brien | 106,500 | 85,062 | 0 | 0 | 0 | 60,000 | 251,562 | ||||||||||||||||||||||||||||
David W. Raisbeck | 120,000 | 85,062 | 0 | 0 | 0 | 60,000 | 265,062 |
2018 Proxy Statement 25
Item 1 — Election of Directors — Director Compensation
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Mark J. Costa Chief Executive Officer | 2023 Target compensation: $17,093,747 | |||||||||||||||||||
William T. McLain, Jr. Executive Vice President and | 2023 Target compensation: $4,985,132 | |||||||||||||||||||||
Brad A. Lich Executive Vice President and Chief Commercial Officer | 2023 Target compensation: $5,679,829 | |||||||||||||||||||||
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26 2018 Proxy Statement
Item 1 — Election of Directors — Director Compensation
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2018 Proxy Statement 27
Item 2 — Advisory Approval of Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) provides stockholders with the right to vote to approve, on an advisory (nonbinding) basis, the compensation of the Company’s named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC. This advisory vote is commonly referred to as the “say-on-pay” vote. In the Company’s advisory say-on-pay vote at the 2017 Annual Meeting, 92% of votes cast were “for” approval of the executive compensation as disclosed in the 2017 Annual Meeting proxy statement. The Compensation Committee considered the outcome of this vote in its establishment and oversight of the compensation of the executive officers during 2017, as further discussed in “Executive Compensation — Compensation Discussion and Analysis” later in this proxy statement.
The Company’s business strategy for value creating business and financial growth from innovation, market development, and differentiated technologies and applications development leverages the capabilities of its employees to innovate and execute its growth strategy while remaining committed to maintaining a strong financial position with appropriate financial flexibility and liquidity. Our compensation philosophy supports this strategy by stressing the importance of pay for corporate and individual performance in meeting strategic and business goals for growth, innovative value creation and financial strength and flexibility, while maintaining flexibility to meet changing employee, business, and market conditions. Our executive compensation program is designed to attract and retain a talented and creative team of executives who will provide disciplined leadership for the Company’s success in dynamic, competitive markets. The Company seeks to accomplish this by motivating executives with an appropriate mix of compensation elements. Please read the “Executive Compensation — Compensation Discussion and Analysis” section of this proxy statement for additional details about our executive compensation philosophy and programs, including information about the compensation of our named executive officers for 2017 as detailed in the tables and narrative.
The say-on-pay vote gives stockholders the opportunity to indicate their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers disclosed and the philosophy, objectives, and practices described in this proxy statement.
Because this vote is advisory, it will not be binding on the Compensation Committee, the Board, or the Company. However, the Compensation Committee and the Board value the opinions of the Company’s stockholders, and the Compensation Committee will consider the outcome of the vote in its establishment and oversight of the compensation of the executive officers.
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28 2018 Proxy Statement
Compensation Discussion and Analysis
This “Compensation Discussion and Analysis” is intended to provide context for the executive compensation information detailed in the tables and narrative in the following sections of this proxy statement. The Compensation and Management Development Committee of the Board of Directors (the “Compensation Committee” or the “Committee”) establishes and oversees the administration of the policies, programs, and procedures for evaluating, developing, and compensating our senior management, and determines the components, structure, forms, terms, and amounts of the compensation of our executive officers. What follows is a summary of compensation philosophy and objectives for executive officers, the relationship of corporate performance to executive compensation, and the bases for the compensation of executive officers.
Overview
As described in detail below, the Compensation Committee believes that the compensation of the executive officers is appropriate based on Eastman’s performance and the competitive market. For 2017, the compensation of the executive officers named in the “Summary Compensation Table” below (the “named executive officers”) consisted of three principal elements: base salary, annual incentive pay opportunities, and long-term stock-based incentive awards in the form of stock options, performance shares, and restricted stock units. Base salary helps us to attract and retain executive talent and is the fixed element of our pay program. The Company uses annual incentive pay opportunities to tie executive compensation to the attainment of key Company and individual objectives. Long-term stock-based incentive pay is designed to align executive compensation with the long-term interests of the Company’s stockholders, focus on achievement of strategic long-term financial objectives, and further attract and retain an outstanding executive team. The Compensation Committee believes that this mix of executive pay components strikes an appropriate balance between the short- and long-term focus of the executives and the types of performance incented and risks encouraged, and aligns the interests of executive officers with those of other stockholders.
Our compensation program includes and does not include the following practices and features:
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Stephen G. Crawford Executive Vice President, Manufacturing and Chief Sustainability Officer | 2023 Target compensation: $4,361,029 | |||||||||||||||||||||
B. Travis Smith Senior Vice President , Additives & Functional Products | 2023 Target compensation: $3,403,755 | |||||||||||||||||||||
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Executive compensation |
2018 Proxy Statement 29
Executive Compensation — Compensation Discussion and Analysis
For 2017,Primary components of our executive officers were compensated based on the competitive market, the Company’s financial, business, and stockholder value performance and its businesses’ performance compared to annual and longer-term performance standards established by the Compensation Committee, and the individual performance of each executive.
Following the Compensation Committee’s review of market competitive pay levels and targeted total compensation of the executive officers, certain executive officer base salaries were increased up to 11% to keep executive salaries at competitive levels compared to executives with similar positions at peer companies.
Executive officers received annual incentive pay awards from 81% to 108% of target amounts as a result of the Company’s below target adjusted earnings from operations and above target free cash flow, the Committee’s discretionary reduction of the cash payout pool to reflect overall corporate performance, and the Committee’s evaluation of each executive’s organizational and individual performance compared to expectations.
Executive officers received payouts of common stock at 140% of target award levels under previously awarded long-term performance shares as a result of the Company’s three-year (2015-2017) total stockholder return ranking in the 2nd quintile of compared companies and the Company attaining an average return on capital of 10.80% (compared to a target return goal of 10.51%).
Executive officers received stock option grants and long-term performance share and restricted stock unit awards which directly link future compensation to stockholder and capital returns and as retention incentives.
In addition, in 2017 the Compensation Committee:
Updated the companies used for executive and director compensation benchmarking to make the group more appropriate for Eastman’s recent and continuing transition to a more specialty global chemical company.
Updated the companies used for measurement of relative shareholder return in 2017-2019 performance share awards from companies in previous performance periods to make the group more appropriate for Eastman’s continuing transition to a more specialty global chemical company.
Management Compensation Philosophy, Objectives, and Program
Our Business. Eastman is a global advanced materials and specialty additives company that produces a broad range of products found in items people use every day. The Company sells differentiated products into diverse markets and geographic regions. Eastman’s objective is to be an outperforming specialty chemical company with consistent earnings growth and strong cash flow. Eastman works with customers to meet their needs in existing and new markets through the development of innovative products and technologies. Management believes that the Company can deliver consistent financial results by leveraging the Company’s unique innovation-driven growth model consisting of applications development, world-class technology platforms, and relentless market engagement. The Company also benefits from significant integration and scale, aggressive and disciplined portfolio management, and aggressive cost management. A consistent increase in earnings is expected to result from both organic (internal) growth initiatives and strategic inorganic (external growth through acquisitions complementary or additive to existing products and joint ventures) initiatives.
In 2017 the Company’s products and operations were managed and reported in four operating segments: Additives & Functional Products (“AFP”), Advanced Materials (“AM”), Fibers, and Chemical Intermediates (“CI”). This reporting structure reflects the Company’s organizational structure and management supporting the Company’s continuing strategy to increase emphasis on specialty businesses and products. In addition to these segments, the Company manages certain costs and initiatives at the corporate level, including various research and development initiatives. Eastman had 2017 revenues of $9.5 billion, compared to 2016 revenues of $9.0 billion.
30 2018 Proxy Statement
Executive Compensation — Compensation Discussion and Analysis
Our Compensation Philosophy. The Company’s strategy for value creating business and financial growth from innovation, market development, and differentiated technologies and applications development leverages the capabilities of its employees to innovate and execute its growth strategy while remaining committed to maintaining a strong financial position with appropriate financial flexibility and liquidity. Our compensation philosophy supports this strategy by stressing the importance of pay for corporate and individual performance in meeting strategic and business goals for growth, innovative value creation and financial strength and flexibility, while maintaining flexibility to meet changing employee, business, and market conditions. Our executive compensation program is designed to attract and retain a talented and creative team of executives who will provide disciplined leadership for the Company’s success in dynamic, competitive markets. The Company seeks to accomplish this by motivating executives with an appropriate mix of compensation elements.
As described below, our compensation program has been designed so that a significant portion of compensation is based on the measures of performance that we believe are most relevant to our corporate business strategy and significant to investors, including cumulative total shareholder return and return on capital for multi-year periods, annual adjusted earnings from operations, cash from operations and free cash flow, and multi-year stock price appreciation. Performance goals for each of these measures are designed to be challenging so that payouts at target levels will only occur if target performance is achieved (as evidenced by the below target payout pool for 2017 annual cash incentive compensation and above target 2015-2017 performance share payouts described below under “Annual Incentive Pay — Unit Performance Plan” and “Long-Term Performance Shares”).
Our Compensation Objectives. Within the management compensation program, our primary objectives are to:
Provide the appropriate amount of annual pay that allows us to compete for talent.
Attract and retain highly-qualified executives by providing incentive opportunities for the attainment of the Company’s strategic business objectives, while providing financial incentives to achieve superior performance.
Provide appropriate short-term and long-term incentives to reward the attainment of short-term and long-term corporate and individual objectives consistent with corporate growth strategy and objectives.
Ensure performance targets are appropriately challenging and properly aligned with business strategy and stockholder interests.
Maintain balance in the types of corporate and individual performance incented and the levels and types of risks managers are encouraged to evaluate and take.
Primary Components of our Management Compensation Program and How Each Component Complements our Philosophy and Objectives.Our management compensation program has three primary components:
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components — annual base salary, annual cash incentive compensation opportunity, and long-term stock-based incentive compensation opportunity. The Compensation Committee, with input from management and the Compensation Committee’s independent compensation consultant, designs, administers, and assesses the effectiveness of all executive compensation elements againstconsidering the market and our
2018 Proxy Statement 31
Executive Compensation — Compensation Discussion and Analysis
overall compensation philosophy and objectives. The Compensation Committee’s assessment includes a review of the value of each element of pay and of total pay on a recognized and a realizable basis. The table below describes each principal element of executive pay, how the Compensation Committee determines the amount or size of such compensation, and itsthe primary linkscompensation objectives applicable to the objectiveseach type of our compensation philosophy.
Component | Vesting or Performance Period | How Pay is Determined | Why We Pay Each Component | ||||||||||||||||||
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Annual Base Salary | Ongoing | Comparable pay for similar jobs at comparator companies Scope of responsibilities Work experience Comparable pay of other Eastman executives and for other Eastman jobs Individual performance | Recognize job responsibilities and contributions Attract and retain executive talent | ||||||||||||||||||
Annual Incentive Compensation Opportunity | 1 year | Target awards are set as a percent of salary based on competitive data for similar jobs Payouts based on business and individual performance compared to pre-set expectations and targets | |||||||||||||||||||
Long-Term Incentive Compensation Opportunity | (performance shares and restricted stock units performance period and option vesting period) and 10 years (option exercise period) | Target awards are a targeted dollar value based on competitive data; individual awards based on business and individual performance, contribution, and long-term potential Payouts and appreciation based on long-term capital returns and stock price appreciation | Motivate attainment of long-term corporate performance resulting in stock price appreciation Encourage ownership mindset by aligning interests with stockholders Attract and retain executive talent | ||||||||||||||||||
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Executive compensation |
At the start of the year | } | } | ||||||||||||||||
Compensation Committee establishes corporate performance measures and | Compensation Committee tracks corporate and individual performance; considers appropriate adjustments to GAAP corporate performance measures | |||||||||||||||||
Name | Title | as % of Base Salary* | ||||||
Mark J. Costa | Chief Executive Officer | 150 | % | |||||
William T. McLain, Jr. | Executive Vice President and Chief Financial Officer | 100 | ||||||
Brad A. Lich | Executive Vice President and Chief Commercial Officer | 100 | % | |||||
Stephen G. Crawford | Executive Vice President, Manufacturing and Chief Sustainability Officer | 85 | % | |||||
B. Travis Smith | Senior Vice President, Additives & Functional Products | 85 | % |
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Executive compensation |
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Executive compensation |
2023 Adjusted earnings before interest and taxes (50%) | 0.78% of Target Performance | ||||||||||
2023 Operating cash flow (50%) | |||||||||||
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Executive compensation |
NEO | Accomplishments | UPP Payout | |||||||||
Mark J. Costa | •Provided critical leadership in driving the Company’s initiatives to improve overall safety performance and building a culture with employee safety as a foundation of the Company’s operational strategy, which efforts resulted in significant year-over-year safety performance improvements in 2023. •Maintained the Company's strategic focus on innovation, which resulted in more than $600 million of new multi-year business wins from market development and innovations. •Managed challenges related to weak demand and aggressive customer de-stocking in 2023, and placed a strategic emphasis on cash flow generation, which efforts contributed to the Company delivering operating cash flow of approximately $1.4 billion for 2023. | UPP Payout as Percent of Target: 78% Target Payout: $2,047,500 Actual Payout: $1,597,050 | |||||||||
William T. McLain, Jr. | •Helped lead organizational efforts across the Finance organization to generate strong operating cash flow of approximately $1.4 billion, which was approximately $400 million higher than 2022. •Provided key leadership in the successful and efficient divestiture of the Company’s Texas City, Texas operations for approximately $490 million, while maintaining operational flexibility. •Demonstrated strong cost management leadership across teams that helped achieve an overall cost savings of approximately $200 million. | UPP Payout as Percent of Target: 86% Target Payout: $800,000 Actual Payout: $686,400 | |||||||||
Brad A. Lich | •Demonstrated the strength of the Eastman innovation driven growth model by delivering $765 million in earnings in Advanced Materials and Fibers segments while navigating a challenging demand environment in certain end markets in 2023. •Provided essential leadership in delivering margin improvements in key end markets that helped offset demand weakness. •Effectively led inventory management efforts that helped the Company achieve its operating cash flow goal for 2023 | UPP Payout as Percent of Target: 78% Target Payout: $830,000 Actual Payout: $647,400 | |||||||||
Stephen G. Crawford | •Provided leadership and set expectations for an operations team that delivered significant improvements in safety performance in 2023, with best-ever performance in the personal and process safety metrics. •Despite project-related challenges, led the completion of construction, commissioning and start-up activities for the Company’s new molecular recycling facility in Kingsport, Tennessee. •Led an operations’ team that significantly improved global manufacturing facility reliability. | UPP Payout as Percent of Target: 78% Target Payout: $578,000 Actual Payout: $450,840 | |||||||||
B. Travis Smith | •Led an Additives & Functional Products (“AFP”) segment team that continued to progress top growth programs in milestone realization and customer engagement despite the difficult external environment. •Delivered on full year cost management commitments and led AFP segment team that delivered significant contributions to cash in 2023, exceeding internal targets, through aggressive inventory reductions. •Provided essential leadership to drive disciplined price management to help offset weak demand and deliver on cost reduction commitments. | UPP Payout as Percent of Target: 78% Target Payout: $527,000 Actual Payout: $411,060 |
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Executive compensation |
Stock Options | Granted under the Company’s Omnibus Plan, stock options create a direct link between compensation of key Company managers and long-term performance of the Company through appreciation of stock price. | ||||
Performance Shares | Awarded under the Omnibus Plan to provide an incentive for key managers to earn stock awards by meeting specified multi-year business or individual performance goals. | ||||
Other Stock-Based Incentive Pay | Under the Omnibus Plan, the Compensation Committee may also award additional stock-based compensation (with or without restrictions), including restricted stock units, performance units, stock appreciation rights, and additional stock options with performance-based or other conditions to vesting. | ||||
Stock Ownership Expectations | Established for executive officers to encourage long-term stock ownership and the holding of shares awarded under the Omnibus Plan or acquired upon exercise of options. Over a five-year period, executive officers are expected to accumulate stock with a value of two and one-half times their annual base salary (five times base salary for the Chief Executive Officer) in Company stock and stock equivalents. See “Information about Stock Ownership.” All executive officers have met or are on schedule to meet their ownership expectations. | ||||
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Executive compensation |
Eastman common stock based on the Company’s multi-year performance on the following two measures:
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Executive compensation |
ESG Goals | Target | ||||
Climate Change — Decrease Actual GHG Emissions | Reduce by 17.1% to 25.2% or better from 2017 baseline target | ||||
Circularity — Millions of Pounds of Waste Plastic Recycled | 215 — 250 million pounds or better in the aggregate by 2025 | ||||
I&D Goals | |||||
U.S. Diversity Representation Total Professional (Business and Technical & Leadership) Population Goals | 21% — 25% or better (People of Color) | ||||
Gender Representation Total Professional (Business and Technical & Leadership) Population | 41% — 42% or better (Female) | ||||
The Compensation Committee will use its judgement in determining the Modifier to be applied to the 2023-2025 Performance Share Award, using the following guidelines: •Target or better performance in all 4 measures = +10% •Target or better performance in 3 of the 4 measures = +7.5% •Target or better performance in 2 of the 4 measures = +5% •Target or better performance in 1 of the 4 measures = +2.5% •If all measures are below targeted performance, then the award will be reduced by (-5.0%). |
Eastman TSR Relative to Comparison Companies | Weighted Return on Capital | |||||||||||||||||||
≥ 7.26 to 8.00% | 8.01 to 8.75% | 8.76 to 9.50% | 9.51 to 10.25% | 10.26 to 11.50% | > 11.01% | |||||||||||||||
0-19% (5th quintile) | — | — | — | 0.20 | 0.30 | 0.40 | ||||||||||||||
20-39% (4th quintile) | — | 0.20 | 0.40 | 0.60 | 0.80 | 0.90 | ||||||||||||||
40-49% (3rd quintile) | 0.40 | 0.60 | 0.80 | 1.00 | 1.20 | 1.40 | ||||||||||||||
50-59% (3rd quintile) | 0.60 | 0.80 | 1.00 | 1.30 | 1.50 | 1.70 | ||||||||||||||
60-79% (2nd quintile) | 1.00 | 1.20 | 1.40 | 1.70 | 1.90 | 2.10 | ||||||||||||||
80-99% (1st quintile) | 1.00 | 1.80 | 2.00 | 2.30 | 2.40 | 2.50 |
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Executive compensation |
Performance Years | Target Return on Capital | Total Stockholder Return (“TSR”) Target Quintile | ||||||
2021, 2022, and 2023 | 8.51% | 3rd Quintile 50 — 59% |
Weighted Return on Capital | ||||||||||||||||||||
Eastman TSR Relative to Comparison Companies | ≥ 6.51 to 7.50% | 7.51 to 8.50% | 8.51 to 9.50% | 9.51 to 10.50% | 10.51 to 11.50% | > 11.51% | ||||||||||||||
0-19% (5th quintile) | 0.00 | 0.00 | 0.00 | 0.20 | 0.30 | 0.40 | ||||||||||||||
20-39% (4th quintile) | 0.00 | 0.20 | 0.40 | 0.60 | 0.80 | 0.90 | ||||||||||||||
40-49% (3rd quintile) | 0.40 | 0.60 | 0.80 | 1.00 | 1.20 | 1.40 | ||||||||||||||
50-59% (3rd quintile) | 0.60 | 0.80 | 1.00 | 1.30 | 1.50 | 1.70 | ||||||||||||||
60-79% (2nd quintile) | 1.00 | 1.20 | 1.40 | 1.70 | 1.90 | 2.10 | ||||||||||||||
80-99% (1st quintile) | 1.00 | 1.80 | 2.00 | 2.30 | 2.40 | 2.50 |
2024 Proxy Statement | 69 |
Executive compensation |
Performance Share Award Cycle | 2019-2021 | 2020-2022 | 2021-2023 | Average Payout | ||||||||||
Year of Payout | 2022 | 2023 | 2024 | |||||||||||
Payout Percentage of Target | 100 | % | 100 | % | 80 | % | 93 | % |
32 2018 Proxy Statement
it is appropriate that the Chief Executive Officer use corporate aircraft whenever possible for both business and personal travel (and for his family when they are traveling with him). This is: (i) to allow travel time to be used productively for the Company, (ii) for security, health, and safety reasons (consistent with recommendations of a periodic, third-party Personal Vulnerability Security Assessment), and (iii) to ensure that Mr. Costa can be immediately available to respond to business priorities from any location around the world. This personal use is accounted for and reviewed by the Compensation —Committee. In connection therewith, the NCG Committee authorized the Company to enter into an aircraft time sharing agreement (the “Agreement”) with Mr. Costa in 2023. Under the Agreement, Mr. Costa is permitted to utilize Company aircraft from time to time on an “as needed and as available” basis. For any personal flights operated under this Agreement, Mr. Costa will reimburse the Company for the aggregate incremental cost of his personal use of Company aircraft under the Agreement. All personal flights not reimbursed under the Agreement will be included in the “Summary Compensation Discussion and Analysis
MixTable” as a perquisite. See “Summary Compensation Table-All Other Compensation” for a summary of Total Target Compensation. The following charts illustrate the percentageaggregate incremental costs to the Company of target total compensationMr. Costa’s personal aircraft use in 2023.
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Executive compensation |
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Risk employee misconduct.
•The compensation of our executive officers is not overly-weighted toward short-term incentives. For instance, our CEO’s and the other named executive officer’sNEOs’ target annual cash incentive pay opportunitycompensation opportunities for 2017 was 12%2023, as a percentage of total annual target compensation, ranged from 20% for the CEO to 15%an average of his total target compensation. Moreover, annual31% for all other NEOs. Annual cash incentive pay awards are capped at 200% of an executive’s target award opportunity to protect against disproportionately large short-term incentives, and the Compensation Committee has broad discretion in determining the amount of the variable cash payout to each executive based upon individual performance and other factors, including whether an executive has caused Eastman to take excessive risk.
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2018 Proxy Statement 33
Executive Compensation — Compensation Discussion and Analysis
Executive |
•Our stock ownership expectations are for the CEO to hold Eastman stock and stock-equivalents having a value of at least five times base annual pay and for the other executive officers to hold Eastman stock and stock-equivalents having a value of at least two-and-one-half times their respective base annual pay. We also prohibit our executive officers from entering into arrangements designed to hedge their exposure to changes in the market price of Eastman stock or from pledging Eastman stock as security or collateral for loans or in margin brokerage accounts. See “Information about Stock Ownership — Stock Ownership of Directors and Executive Officers — Director and Executive Stock Ownership Expectations; No Hedging or Pledging of Company Stock.” These policies ensure that each executive will have a significant amount of personal wealth tied to the long-term performance of Eastman stock and that their interests will remain aligned with those of our stockholders.
•A significant portion of executives’ long-term incentive compensation opportunities consist of performance share awards. Performance share award payouts are tied to how Eastman performs on certain metrics identified by the Compensation Committee as appropriately driving long-term stockholder value over a three-year period. This approach focuses management on sustaining the Company’s long-term performance. These awards also have overlapping performance periods, thereby discouraging excessive risk-taking in the near-term because such behavior could jeopardize the potential long-term payouts under other awards. To further ensure that there is not a significantan incentive for excessive risk-taking, the payout of these awards has been capped at 250% of target for each of the 2015-2017, 2016-2018 and 2017-2019three-year performance periods.
•The variety of corporate and individual performance metrics evaluated by the Compensation Committee to determine various forms of long-term and short-term incentive pay (including operating earnings, earnings per share,EBIT, cash flow, free cash flow,OCF, return on capital, employee safety, and total stockholder returnTSR relative to peer companies) is designed to minimize the risk that executives will focus excessive attention on a single area of performance or performance measure.
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Review of 2017 Executive Compensation
The Compensation Committee reviewed overall compensation of the Chief Executive Officer and the other executive officers and determined each component of executive compensation for 2017 as described below. As part of this review, the Compensation Committee:
Reviewed the value of each type of compensation and benefit for each executive officer, including annual incentive pay opportunities and long-term stock-based compensation awards, perquisites and personal benefits, deferred accounts, and retirement plans and determined that the amounts, individually and in the aggregate, were appropriate and in line with external market and internal comparisons.
34 2018 Proxy Statement
Executive Compensation — Compensation Discussion and Analysis
Considered the estimated value of outstanding unvested, unexercised, and unrealized stock-based awards in its review of the types and values of each executive officer’s compensation.
Determined the amount and forms of compensation considering:
Company and individual performance,
compensation relative to that for similar positions in other companies,
the mix of short- and long-term compensation, and total compensation, relative to other Eastman executive officers and employees,
whether the features of each form of compensation are appropriately balanced in terms of the types of corporate and individual performance being incented, the levels and types of risk they encourage managers to evaluate and take, and whether the compensation encourages managers to take unnecessary risks,
background information and recommendations from the Company’s management compensation organization and from the external compensation consultant engaged by the Compensation Committee, and
the recommendations of the Chief Executive Officer regarding pay for the other executive officers.
For 2017, the Compensation Committee compared total annual cash compensation opportunity (base salary and target incentive pay opportunity) levels and the value and mix of long-term stock-based incentive pay opportunity levels for the Company’s executive officers with those of the following companies, taking into account differences in the relative size and businesses of these companies. Companies were selected with assistance from Aon Hewitt based upon similarity of their industry, number of employees, revenues, number and type of commercialized products, and market capitalization with Eastman. In 2016 the Committee reviewed with Aon Hewitt and made changes to its compensation benchmarking peer group for 2017 given recent changes to the business, products, strategy for growth, and size of the Company and to make the group more appropriate for Eastman’s continuing transition to a larger, more specialty global chemical company.
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2018 Proxy Statement 35
Executive Compensation — Compensation Discussion and Analysis
Evaluation of StockholderSay-on-Pay Vote Results
As described in “Item 2 — Advisory Approval of Executive Compensation” of this proxy statement, at the 2018 Annual Meeting stockholders will again have the opportunity to indicate their views on the compensation of our named executive officers by an advisory“say-on-pay” vote. At the Company’s 2017 Annual Meeting 92% of the votes cast on thesay-on-pay proposal were voted in favor of the proposal. The Compensation Committee considered this vote result as general approval of the Company’s approach to executive compensation. Therefore, it did not make any significant changes in the structure of our executive compensation program for 2017. Instead, the Committee focused on refining select elements of the program, as summarized above under “Overview”. The Compensation Committee will continue to consider the results of futuresay-on-pay proposals, and other appropriate executive compensation and corporate governance developments, in future years when making compensation decisions for our named executive officers.
Elements of our Executive Compensation
Annual Cash Compensation — Base Salary and Incentive Pay
How Base Salary and Annual Incentive Pay Levels Are Determined. For executive officers, targeted total cash compensation is intended to be competitive with comparable pay for similar jobs when target levels of corporate, business and functional organization, and individual performance are achieved. The targeted levels of cash compensation are based upon information provided by Aon Hewitt and from publicly available information. For 2017, a significant portion of each executive officer’s total pay was variable, as shown in the charts under “Mix of Total Target Compensation”. Depending upon Company, business and functional unit, and individual performance, executive officers could receive more or less than their target amount.
As requested by the Compensation Committee, Aon Hewitt provided benchmarking analyses of the total cash compensation for executives with similar positions at the comparator companies listed above. Aon Hewitt also advised the Compensation Committee of general market cash compensation practices and trends. In determining each executive officer’s targeted total cash compensation, the Compensation Committee considered this benchmarking data and also applied its judgment in considering the competitive market for executive talent, comparative pay levels of other executive officers, relative cash compensation of other jobs in the Company, and differences between the Company’s executive positions and those of the comparator companies. For 2017, the Compensation Committee set the targeted cash pay for executives within a range of 10% above or below the median level of the total targeted cash compensation for comparable positions at the comparator companies, with exceptions for changes in individual scope of responsibilities, corporate performance, and time and experience in position.
Base Salary. In late 2016 and early 2017, after reviewing market competitive pay levels and the targeted total cash compensation of the executive officers, the Compensation Committee determined that base salary increases were appropriate for each of the executive officers because their targeted total cash compensation was below the median of the comparator companies. In addition to external comparisons, the Committee considered the cash compensation levels of each executive officer relative to that of each other executive officer. Even with these increases in base salary, our executive officers’ total annual compensation for 2017 consisted primarily of variable compensation. The base salary amounts reported in the “Salary” column of the Summary Compensation Table were determined by the Committee based on the Committee’s target total cash compensation decisions for 2017.
36 2018 Proxy Statement
Executive Compensation — Compensation Discussion and Analysis
Annual Incentive Pay — Unit Performance Plan. For 2017, the variable portion of cash compensation paid to approximately 900 management level employees, including the executive officers, was determined under the Unit Performance Plan (the “UPP”). Under the UPP, the Compensation Committee sets a cash payout pool target amount at the beginning of each year, with the total available payout ranging from 0 to 200 percent of target amount depending on the Company’s financial performance. Notwithstanding the payout pool calculated based on actual corporate financial performance against the pre-set target measures, the Committee reserves discretion to adjust the total payout pool amount to reflect overall corporate performance, business and financial conditions and other corporate objectives. The total UPP award pool is determined after the end of the performance year as the aggregate of the UPP payouts for each participant if the individual’s organizational and individual performance were at target levels multiplied by a “performance factor” determined by calculated actual corporate performance compared to thepre-set performance goals, subject to adjustment for overall corporate performance and business and financial conditions.
2017 UPP named executive officer target opportunities. Consistent with our compensation objectives, as employees assume greater responsibilities more of their pay is linked to Company and individual performance. Variable UPP cash pay targets (expressed as a percentage of base salary) are established at the beginning of the performance year based on job responsibilities, relative targets for other Company positions, and comparator company practices. For the named executive officers, the target annual UPP incentive opportunities for 2017 were as follows:
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2017 UPP Company performance measure and targets. The 2017 UPP payout pool was determined based 75% on Company adjusted earnings from operations (“EFO”) and 25% on free cash flow (“FCF”).
EFO under the 2017 UPP is earnings from operations as adjusted by the Compensation Committee for certain cost, charge, and income items that were not included in the Company’s targeted financial performance under management’s annual business plan as approved by the Board in early 2017 (the “annual business plan”) and that were excluded from operating earnings in thenon-GAAP financial measures disclosed by the Company in its quarterly and annual public disclosures of financial results as non-core or unusual items. The selection of adjusted EFO as a measure of 2017 corporate performance was intended to focus management level employees on bothtop-line revenue and bottom-line earnings and to allow measurement of UPP performance throughout the year based upon reported Company quarterly financial results. The Committee chose adjusted EFO to tie the performance measure and targets to the strategy and corresponding annual business plan targets on which UPP participant performance would be evaluated in 2017.
2018 Proxy Statement 37
Executive Compensation — Compensation Discussion and Analysis
FCF under the 2017 UPP is GAAP cash provided by operating activities less GAAP cash used in additions to properties and equipment, subject to adjustment for any unusual items that the Committee considers distortive of free cash flow and that were not included in the Company’s targeted performance under the annual business plan. FCF reflects the cash generated in the current year that enables the Company to invest in innovation in the core businesses and inorganic growth through acquisitions, and allows measurement of performance throughout the year based upon reported Company quarterly financial results.
In establishing the 2017 UPP EFO and FCF performance targets, the Committee considered the targeted 2017 financial and strategic performance under the annual business plan. The UPP payout pools were set for above-target payout if the Company exceeded target annual business plan performance and below-target payout if performance did not meet target annual business plan EFO and FCF.
2017 UPP Company performance and payout pool. Near target adjusted EFO and above target FCF and the Committee’s exercise of its discretion to adjust the payout pool to reflect overall corporate performance resulted in a below target payout pool for 2017. The 2017 UPP threshold, target, and maximum adjusted EFO and FCF targets and corresponding payout multiples, actual adjusted EFO and FCF, the Committee’s adjustment to the calculated total payout pool, and resulting payout multiples for the UPP award pool are described and shown below.
Adjusted EFO for 2017 was $1.631 billion and FCF for 2017 was $1.008 billion ($1.657 billion cash provided by operating activities less $649 million cash used in additions to properties and equipment), resulting in a calculated “performance factor” under the UPP of .99X of target for executives and other senior managers. The calculation of EFO under the UPP for 2017 was adjusted to exclude from GAAP operating earnings as an unusual item net costs resulting from the disruption of manufacturing operations in the Kingsport site’s coal gasification area in fourth quarter 2017 and as non-core itemsmark-to-market pension and other postretirement benefit net gain and asset impairments and restructuring charges. These adjustments increased the calculated EFO under the UPP by $99 million and the UPP award pool by $4.6 million. The Committee exercised its discretion to adjust the calculated total payout pool to reflect overall corporate performance by reducing the total payout pool amount by $2.8 million due to the impact on business and financial results of the coal gasification incident, resulting in a total UPP award pool for all management level employees of .90X of target ($33 million).
38 2018 Proxy Statement
Executive Compensation — Compensation Discussion and Analysis
The chart below shows the multiples of target UPP payouts for each of 2015 (the sole corporate performance measure for 2015 was adjusted EFO), 2016 and 2017.
Multiple of UPP Target Payout 2015-2017
2017 UPP named executive officer payouts. The Compensation Committee determined the portions of the overall UPP award pool to be allocated to the CEO and to the other executive officers as a group. The Chief Executive Officer, in consultation with the other executive officers, determined the allocation of the overall UPP award pool to the various organizations within the Company for payouts to other management-level employees. The allocation was based on their assessment of the performance of each organization relative to objectives established at the beginning of the performance year.
Once each organization’s portion of the overall award pool was determined, management within each organization (the Chief Executive Officer and the Compensation Committee in the case of the executive officers other than the CEO and, in the case of the Chief Executive Officer, the Compensation Committee) allocated the organization’s portion of the Company award pool for individual payouts, based upon individual performance against the financial, organizational, and strategic performance objectives and expectations established at the beginning of the performance year.
The Compensation Committee determined the CEO’s payout based upon the Compensation Committee’s assessment of his individual performance as described below. The portion of the overall UPP award pool allocated to the other executive officers which was paid to the named executive officers was based upon the CEO’s and the Committee’s assessment of each executive’s individual performance as described below.
For 2017, the following corporate performance objectives were established for the CEO and the other executive officers based upon targeted 2017 performance under the annual business plan, with no specific weighting among the corporate performance objectives for the purpose of evaluating individual performance. Actual performance against these objectives was assessed by the Compensation Committee (for the CEO) and by the CEO and the Compensation Committee (for the other executive officers) as part of their determination of the amounts of the individual payouts:
Measure | Target | Actual | ||
Adjusted earnings from operations* | $1.635 billion | $1.631 billion | ||
Adjusted earnings per share* | $7.30 | $7.61 | ||
Free cash flow* | ³$1 billion | $1.008 billion | ||
Employee safety — days away from work | £0.12 | 0.20 | ||
OSHA recordable injuries (measured per 200,000 hours worked) | £0.54 | 0.71 |
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2018 Proxy Statement 39
Executive Compensation — Compensation Discussion and Analysis
Additionally, each of the executive officers had individual performance commitments specific to each executive’s area of responsibility, with no specific weighting among the commitments. Performance of the CEO (as assessed by the Compensation Committee) and of the other named executive officers (as assessed by the CEO and the Compensation Committee) was as follows:
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Executive Compensation — Compensation Discussion and Analysis
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The Compensation Committee determined that, based upon actual corporate performance against targets as listed above, each named executive’s individual performance and leadership that contributed to this performance was satisfactory and met or exceeded expectations for purposes of determining his allocated individual portion of the respective award pools. The Compensation Committee also evaluated each executive’s individual performance against his individual commitments as described above, and concluded that each named executive’s individual performance was overall at or above target levels for purposes of determining their individual portions of the respective award pools.
Based upon the amount of the UPP award pool allocated to the CEO and to the other executive officers, respectively, and the assessments of the CEO’s and other executives’ individual performance against established goals and expectations as described above, the Compensation Committee determined the amounts of the individual payouts from the allocated portions of the UPP award pools based upon the Committee’s judgment of overall Company performance and performance of applicable business or functional units, each individual executive’s overall contribution and leadership, and external business conditions and circumstances, as follows:
Named Executive Officer | UPP Payout | Target UPP Payout | UPP Payout as % of Target | ||||||||||||
Mark J. Costa | $ | 1,449,000 | $ | 1,610,000 | 90 | % | |||||||||
Curtis E. Espeland | 612,000 | 679,500 | 90 | % | |||||||||||
Brad A. Lich | 511,000 | 567,000 | 90 | % | |||||||||||
Lucian Boldea | 458,000 | 424,000 | 108 | % | |||||||||||
Stephen G. Crawford | 390,000 | 360,500 | 108 | % |
2018 Proxy Statement 41
Executive Compensation — Compensation Discussion and Analysis
The 2017 UPP payouts to the named executive officers are reported in the“Non-Equity Incentive Plan Compensation” column of theSummary Compensation Table below.
Stock-Based Incentive Pay
Equity-Based Compensation Program. Equity-based compensation is designed to facilitate stock ownership in order to link senior managers’ pay to the Company’s long-term performance to further align those managers’ interests with the interests of other stockholders. Important elements of the executive equity-based compensation program are:
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How Stock-Based Incentive Pay Levels Are Determined. The Compensation Committee establishes the annual value and mix of total stock-based incentive pay opportunities by considering recommendations from Aon Hewitt based on long-term compensation survey data for the comparator companies listed under “Review of 2017 Executive Compensation”.
As requested by the Compensation Committee, Aon Hewitt provides benchmarking analysis of this long-term stock-based compensation information, and also advises the Compensation Committee of general market stock-based incentive compensation practices and trends.
The Compensation Committee also regularly reviews with Aon Hewitt the potential realizable value of each named executive officer’s outstanding unvested, unexercised, and unrealized stock-based awards compared to similar pay of executives at the comparator companies in determining stock-based incentive pay opportunity levels.
For 2017, stock options and performance shares were awarded at a target opportunity level intended to align total stock-based compensation with themid-range of comparable stock-based compensation of the comparator companies.
Stock Options. In 2017, the Compensation Committee determined to provide approximately 25% of the value of each executive officer’s stock-based compensation in the form of stock options. The Compensation Committee grants time-based vesting stock options with an exercise price equal to the market price of the underlying stock on the grant date, and on the date of its authorization of grants it sets a grant date that is on or after the date of approval of the grant. In determining the size and terms of option awards, the Compensation Committee used the services of Aon Hewitt to derive
42 2018 Proxy Statement
Executive Compensation — Compensation Discussion and Analysis
values of options using a variation of the Black-Scholes option-pricing model. In addition, Aon Hewitt advises the Compensation Committee on the design of retention and performance incentive features of option grants. Computation of the value of option awards is comparable to values determined under FASB ASC Topic 718 and reported in the “2017 Grants of Plan-Based Awards” table below.
Long-Term Performance Shares. Other than the executives who received restricted stock unit awards as described below, the other 75% of each executive officer’s 2017 stock-based compensation was in the form of performance shares. Shares of Company common stock are paid under performance shares based on the Company’s multi-year performance based on two measures:
a return on capital target established at the beginning of the three-year performance period, and
the Company’s total return to stockholders (change in stock price plus dividends declared during the performance period, assuming reinvestment of dividends) relative to a peer group of industrial companies.
The return on capital target is established considering corporate and strategic business plans and expectations for the performance period. Performance relative to the total return to stockholders target is determined by the Company’s quintile placement relative to the peer group of industrial companies at the end of the three-year performance period. If earned, awards are paid after the end of the performance period in unrestricted shares of Eastman common stock. Consistent with recent and ongoing changes to the Company’s business, products, and strategy for growth, the Committee designed the 2015-2017 and the 2016-2018 performance shares with greater weight on relative total stockholder return and less relative reward for higher levels of return on capital than for prior periods to reflect the strategic emphasis on specialty businesses and products and, as described in “Overview”, removed certain companies (The Chemours Company and Rayonier Advanced Materials) from and added certain companies (Celanese Corporation, Westlake Chemical Corporation, and Huntsman Corporation) to the peer group of industrial companies (the group of companies within the “Materials Sector” classified as Chemical companies from the Standard and Poor’s Super Composite 1500 Index) used in measurement of relative total shareholder return for purposes of the 2017-2019 performance shares. Although the actual payout of the performance share awards in 2017 will not be determinable until after the end of the performance period in 2019, a grant date fair value of such awards is reported in the 2017 “Stock Awards” column of theSummary Compensation Table, the range of possible share payouts is reported in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column of the “2017 Grants of Plan-Based Awards” table, and the targets and payout matrix is included in the form of the 2017-2019 performance share award filed as Exhibit 10.23 to the Company’s 2016 Annual Report on Form10-K.
In early 2018, the Compensation Committee reviewed performance results and approved a payout of shares to the executive officers under performance shares previously awarded for the 2015-2017 performance period. The payouts to the named executive officers under the 2015-2017 performance shares are reported in the “Stock Awards” column of the “2017 Option Exercises and Stock Vested” table below. The following tables show the targets and the payout matrix for the 2015-2017 performance shares:
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Weighted Return on Capital | ||||||||||||||||||||||||||||||
Eastman TSR Relative to Comparison Companies | ³ 7.50 to 9.0% | 9.01 to 10.5% | 10.51 to 12.0% | 12.01 to 13.5% | 13.51 to 15.0% | > 15% | ||||||||||||||||||||||||
0-19% (5th quintile) | 0.0 | 0.0 | 0.0 | 0.2 | 0.3 | 0.4 | ||||||||||||||||||||||||
20-39% (4th quintile) | 0.0 | 0.2 | 0.4 | 0.6 | 0.8 | 0.9 | ||||||||||||||||||||||||
40-49% (3rd quintile) | 0.4 | 0.6 | 0.8 | 1.0 | 1.2 | 1.4 | ||||||||||||||||||||||||
50-59% (3rd quintile) | 0.6 | 0.8 | 1.0 | 1.3 | 1.5 | 1.7 | ||||||||||||||||||||||||
60-79% (2nd quintile) | 1.0 | 1.2 | 1.4 | 1.7 | 1.9 | 2.1 | ||||||||||||||||||||||||
80-99% (1st quintile) | 1.0 | 1.8 | 2.0 | 2.3 | 2.4 | 2.5 |
2018 Proxy Statement 43
Executive Compensation — Compensation Discussion and Analysis
Payouts for the 2015-2017 performance period to the named executive officers ranged from 4,658 shares to 86,717 shares, and represented 140% of each executive’s target award (of a possible 250% of the target award) based upon the Company’s total stockholder return ranking in the 2nd quintile of the compared companies and an average return on capital of 10.80%. Measurement of return on capital under the performance shares was based on reported GAAP earnings, and did not exclude items excluded in thenon-GAAP financial measures disclosed by the Company.
Restricted Stock Unit Awards. From time to time, the Committee grants special cash or equity awards for recognition of sustained valuable performance or to retain key individuals who have critical skills of strategic importance.
The Compensation Committee awarded restricted stock units to each of named executive officer Stephen G. Crawford and one other executive officer on February 28, 2017. These awards, which will vest and be paid in unrestricted shares of Company common stock on February 28, 2020, subject to each executive’s continued employment, were awarded as retention incentive and as recognition and incentive for their continued leadership.
The Compensation Committee set the values and terms of these awards to be consistent with recent similar special retention and performance incentive awards to executive officers.
Stock-Based Incentive Awards in 2017. In 2017, the named executive officers were awarded stock options, performance shares, and restricted stock units as described above in the numbers of shares below:
M.J. Costa | C.E. Espeland | B.A. Lich | L. Boldea | S.G. Crawford | ||||||||||||||||
Ten-Year Stock Options (underlying shares) | 167,959 | 37,468 | 38,760 | 23,687 | 18,304 | |||||||||||||||
Three-Year Performance Shares (target payout shares) | 74,304 | 16,576 | 17,147 | 10,479 | 8,098 | |||||||||||||||
Restricted Stock Units (underlying shares) | — | — | — | — | 12,700 |
Executive Perquisites and Personal Benefits
The Company provides only limited perquisites to our named executive officers, and those perquisites are designed to provide specific benefits. The Compensation Committee annually reviews the types and amount of perquisites provided to executives, and tax treatment of those perquisites for both the Company and the executive officers. Perquisites provided to executives for 2017 were:
personal umbrella liability insurance coverage,
home security system,
non-business travel on corporate aircraft by executives, their families, and invited guests when seats are available and the aircraft is otherwise being used for Company business, and
supplemental long-term disability insurance for a portion of executives’ annual cash compensation not replaced in the event of their disability under theall-employee long-term disability insurance plan.
In addition, in light of the significant time demands on our Chief Executive Officer, the Compensation Committee has determined that it is appropriate that the Chief Executive Officer use corporate aircraft whenever possible for both business and personal travel (and for his family when they are traveling with him). This personal use is accounted for and periodically reviewed by the Compensation Committee.
There are no taxgross-up payments made by the Company for any imputed income to the executive officers on perquisites or personal benefits.
Executive Termination andChange-in-Control Agreements
The Company believes that severance protections in the context of achange-in-control transaction can play a valuable role in attracting and retaining key executive officers, and that the occurrence, or potential occurrence, of achange-in-control
44 2018 Proxy Statement
Executive Compensation — Compensation Discussion and Analysis
transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that manychange-in-control transactions result in significant organizational changes, particularly at the senior executive level. In order to eliminate such a distraction and encourage our executive officers to remain focused on maximizing value when their prospects for continued employment following a transaction are often uncertain, we provide certain of our executive officers with severance benefits if their employment is terminated by the Company without “cause” or by the executive for “good reason” in connection with achange-in-control. Detailed information regarding thesechange-in-control severance agreements and the benefits they provide is included in the “Termination andChange-in-Control Arrangements” section of this proxy statement.
The Compensation Committee evaluates the level of severance benefits payable to each executive officer, and considers these severance protections an important part of executives’ compensation and consistent with practices of peer companies. Consistent with recommendations from Aon Hewitt and current market and peer company practices, the Compensation Committee has approved and the Company has entered intochange-in-control severance agreements with the named executive officers and certain other executive officers that provide for payments of no more than three-times base salary plus target annual variable cash pay opportunity for the CEO andtwo-times base salary plus target annual variable cash pay opportunity for other executive officers and which do not provide for any tax “gross up” payments to executives.
Tax Treatment of Executive Officer Compensation
Historically, the Compensation Committee has sought to preserve the Company’s ability to deduct compensation paid to the Company’s Chief Executive Officer and other executive officers for tax purposes to the extent possible while also maintaining the flexibility to compensate such officers in accordance with the Company’s compensation philosophy.
For tax years prior to 2018, Section 162(m) of the Internal Revenue Code generally limited the deductibility to the Company of annual compensation (other than qualified “performance-based” compensation) in excess of $1 million paid to certain of the Company’s executive officers. Base salaries, variable cash compensation under the UPP, any bonus payments outside the UPP, and stock and stock-based compensation payable other than solely based on corporate performance conditions were generally subject to the $1 million limit on tax deductible compensation. Compensation attributable to stock options and performance shares could qualify for deductibility under Section 162(m). Changes in tax laws (and interpretations of those laws), as well as other factors beyond the Company’s control, also affected the deductibility of executive compensation. In addition, the Committee could determine that corporate objectives justified the cost of being unable to deduct annual and long-term incentive compensation. For these and other reasons, the Company did not necessarily in all circumstances limit executive compensation to the amount which was permitted to be deductible as an expense of the Company under Section 162(m).
A portion of named executive officer compensation for 2017 wasnon-deductible to the Company under Section 162(m). The anticipated amount of the Company’s taxes fornon-deductible compensation in 2017 is approximately $450,000 and the additional tax cost of suchnon-deductible compensation has been determined by the Committee to be reasonable relative to total executive compensation cost and in context of overall compensation objectives.
For tax years starting in 2018, the “performance-based” compensation exception to the $1 million deduction limitation under Section 162(m) has been repealed. In general, all compensation (other than certain grandfathered compensation) in excess of $1 million to anyone who has served as a named executive officer in 2017 or later will be non-deductible. The Compensation Committee will continue to retain the discretion to paynon-deductible amounts. The Compensation Committee believes that such flexibility best serves the interests of the Company and its stockholders by allowing the Committee to recognize and motivate executive officers as circumstances warrant.
2018 Proxy Statement 45
Executive Compensation — Compensation Discussion and Analysis
Compensation Recoupment “Clawback” Policy
The Sarbanes-Oxley Act of 2002, Company policy, and pending provisions of the Dodd-Frank Act govern the process for reimbursement by executive officers of certain cash bonus or other incentive-based or equity-based compensation (sometimes referred to as “clawback”) received following public disclosure of an accounting restatement due to material noncompliance by the Company with any financial reporting requirements. In addition, certain outstanding awards under our Omnibus Long-Term Compensation Plans require reimbursement of certain amounts from awards following an accounting restatement due to material noncompliance by the Company with any financial reporting requirement.
The Compensation Committee has adopted an additional executive clawback policy which requires that, if the Company is required to prepare an accounting restatement due to material noncompliance with financial reporting requirements, then any current and former executive officers who willfully committed an act of fraud, dishonesty, or recklessness that contributed to the noncompliance would be required to repay the amount of incentive-based compensation paid or granted to that executive within three years before the accounting restatement that was in excess of the amount that would have been paid or granted to that executive if the restated financial statements had originally been prepared and disclosed. The clawback policy was adopted in advance of final rules or regulations (“Final Regulations”) expected to be adopted by the SEC and listing requirements expected to be adopted by the New York Stock Exchange that would implement the incentive-based compensation recovery requirements of the Dodd-Frank Act. We expect that the clawback policy will remain operative until it may be amended to conform to any requirements that may be contained in the Final Regulations and, if necessary, the clawback policy will be interpreted and administered consistent with such Final Regulations.
46 2018 Proxy Statement
Executive Compensation —Compensation Tables
The following Summary Compensation Table provides information concerning compensation of the individuals serving as Eastman’s Chief Executive Officer and Chief Financial Officer during 20172023 and the Company’s three other most highly compensated executive officers who were serving as executive officers at December 31, 2017 (the2023, who are collectively the “named executive officers” (“NEOs”).
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value And Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||||||
Mark J. Costa Chief Executive Officer | 2017 | $ | 1,139,436 | $ | 0 | $ | 9,124,531 | $ | 1,980,237 | $ | 1,449,000 | $ | 448,854 | $ | 347,598 | $ | 14,489,656 | ||||||||||||||||||||||||||||
2016 | 1,102,895 | 0 | 6,295,442 | 1,771,578 | 1,301,300 | 564,900 | 361,952 | 11,398,067 | |||||||||||||||||||||||||||||||||||||
2015 | 1,117,070 | 0 | 5,181,984 | 1,422,197 | 1,673,100 | 251,440 | 231,514 | 9,877,305 | |||||||||||||||||||||||||||||||||||||
Curtis E. Espeland Executive Vice President and Chief Financial Officer | 2017 | 751,506 | 0 | 2,035,533 | 441,748 | 612,000 | 356,010 | 73,631 | 4,270,428 | ||||||||||||||||||||||||||||||||||||
2016 | 736,887 | 0 | 1,445,156 | 406,680 | 723,000 | 436,151 | 75,450 | 3,823,324 | |||||||||||||||||||||||||||||||||||||
2015 | 737,956 | 0 | 2,715,367 | 367,404 | 774,000 | 111,334 | 62,249 | 4,768,310 | |||||||||||||||||||||||||||||||||||||
Brad A. Lich Executive Vice President and Chief Commercial Officer | 2017 | 626,161 | 0 | 2,105,652 | 456,980 | 511,000 | 329,942 | 66,481 | 4,096,216 | ||||||||||||||||||||||||||||||||||||
2016 | 611,007 | 0 | 2,949,348 | 399,056 | 705,000 | 328,834 | 63,900 | 5,057,145 | |||||||||||||||||||||||||||||||||||||
2015 | 620,902 | 0 | 1,165,969 | 319,998 | 668,000 | 140,442 | 51,559 | 2,966,870 | |||||||||||||||||||||||||||||||||||||
Lucian Boldea Senior Vice President, Additives & Functional Products(6) | 2017 | 522,729 | 0 | 1,286,821 | 279,270 | 458,000 | 141,175 | 41,596 | 2,729,591 | ||||||||||||||||||||||||||||||||||||
Stephen G. Crawford Senior Vice President and Chief Technology Officer(6) | 2017 | 512,200 | 0 | 2,013,609 | 215,804 | 390,000 | 367,955 | 42,598 | 3,542,166 | ||||||||||||||||||||||||||||||||||||
2016 | 484,892 | 0 | 767,778 | 216,054 | 341,000 | 372,108 | 43,792 | 2,225,624 | |||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Stock Awards1,2 | Option Awards1 | Non-Equity Incentive Plan Compensation3 | Change in Pension Value And Nonqualified Deferred Compensation Earnings4 | All Other Compensation5 | Total | ||||||||||||||||||||
Mark J. Costa CEO | 2023 | $1,360,810 | $0 | $11,208,310 | $2,472,937 | $1,597,050 | $543,510 | $415,273 | $17,597,890 | ||||||||||||||||||||
2022 | 1,331,575 | 0 | 11,996,462 | 2,825,667 | 0 | 305,653 | 608,774 | 17,068,131 | |||||||||||||||||||||
2021 | 1,319,904 | 0 | 9,781,398 | 2,601,291 | 3,458,250 | 172,210 | 465,808 | 17,798,861 | |||||||||||||||||||||
William T. McLain, Jr. EVP and CFO | 2023 | 795,266 | 0 | 2,773,258 | 611,874 | 686,400 | 250,610 | 88,267 | 5,205,675 | ||||||||||||||||||||
2022 | 766,118 | 0 | 2,844,533 | 670,003 | 0 | 233,768 | 121,925 | 4,636,347 | |||||||||||||||||||||
2021 | 715,370 | 0 | 2,053,574 | 546,142 | 1,278,900 | 519,732 | 77,488 | 5,191,206 | |||||||||||||||||||||
Brad A. Lich EVP and CCO | 2023 | 827,160 | 0 | 3,293,234 | 726,595 | 647,400 | 294,210 | 63,256 | 5,851,855 | ||||||||||||||||||||
2022 | 800,655 | 0 | 2,844,533 | 670,003 | 0 | 56,417 | 126,585 | 4,498,193 | |||||||||||||||||||||
2021 | 765,322 | 0 | 4,486,011 | 661,119 | 1,271,000 | 60,547 | 99,138 | 7,343,137 | |||||||||||||||||||||
Stephen G. Crawford EVP - Mfg. and Chief Sustainability Officer | 2023 | 677,756 | 0 | 2,542,144 | 560,885 | 450,840 | 412,118 | 51,335 | 4,695,078 | ||||||||||||||||||||
2022 | 652,162 | 0 | 2,473,688 | 582,621 | 0 | 351,690 | 102,161 | 4,162,322 | |||||||||||||||||||||
2021 | 613,398 | 0 | 1,837,447 | 488,653 | 1,001,300 | 78,338 | 66,675 | 4,085,811 | |||||||||||||||||||||
B. Travis Smith SVP - Additives & Functional Products | 2023 | 615,689 | 0 | 1,848,839 | 407,916 | 411,060 | 171,295 | 44,353 | 3,499,152 | ||||||||||||||||||||
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2018 Proxy Statement 47
Executive Compensation — Compensation Tables
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48 2018 Proxy Statement
Executive Compensation — Compensation Tables
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The amount reported for Mr. Costa for 2017 is the aggregate change in actuarial present value of the NEO’s accumulated benefit under all defined benefit and actuarial retirement plans, which are the Company’s tax-qualified defined benefit pension plan (the Eastman Retirement Assistance Plan, or “ERAP”) and unfunded, nonqualified retirement plans supplemental to the ERAP that provide benefits in excess of those allowed under the ERAP (the Eastman Unfunded Retirement Income Plan, or “URIP”, and the Eastman Excess Retirement Income Plan, or “ERIP”). These changes in present value are not directly related to final payout potential, and can vary significantly year-over-year based on (i) promotions and corresponding changes in salary; (ii) other one-time adjustments to salary or other reasons; (iii) actual age versus predicted age at retirement; (iv) the interest (or “discount”) rate used to determine present value of benefit; and (v) other relevant factors. A decrease in the discount rate results in an increase in the present value of the accumulated benefit without any increase in the benefits payable to the NEOs at retirement and an increase in the discount rate has the opposite effect.
Name | Non-Business Use of Corporate Aircraft ($) | Personal Umbrella Liability Insurance ($) | Home Security System ($) | Financial Counseling ($) | Supplemental Long-Term Disability Insurance ($) | ||||||||||||
M. J. Costa | $290,169 | $1,260 | $42,482 | $0 | $13,651 | ||||||||||||
W. T. McLain, Jr. | 0 | 1,908 | 31,162 | 9,000 | 6,533 | ||||||||||||
B. A. Lich | 0 | 1,908 | 1,896 | 9,000 | 9,288 | ||||||||||||
S. G. Crawford | 0 | 1,260 | 1,370 | 9,000 | 5,974 | ||||||||||||
B. T. Smith | 0 | 1,908 | 0 | 9,000 | 2,714 |
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2018 Proxy Statement 49
Executive Compensation — Compensation Tables
Executive compensation |
Name | Approval Date (1) | Grant Date (2) |
Estimated Future Payouts Under |
Estimated Future | All Other Stock Awards: Number of Shares of Stock or Units (#)(5) | All Other Option Awards: Number of Securities Underlying Options (#)(6) | Exercise or Base Price of Option Awards ($/Share) (7) | Grant Fair Value of Stock and Awards (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
M. J. Costa | 1/1/2017 | $ | 805,000 | $ | 1,610,000 | $ | 3,220,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 1/1/2017 | 14,861 | 74,304 | 185,760 | $ | 9,124,531 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 2/28/2017 | 167,959 | $ | 80.25 | 1,980,237 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. E. Espeland | 1/1/2017 | 339,750 | 679,500 | 1,359,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 1/1/2017 | 3,315 | 16,576 | 41,440 | 2,035,533 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 2/28/2017 | 37,468 | 80.25 | 441,748 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. A. Lich | 1/1/2017 | 283,500 | 567,000 | 1,134,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 1/1/2017 | 3,429 | 17,147 | 42,868 | 2,105,652 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 2/28/2017 | 38,760 | 80.25 | 456,980 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
L. Boldea | 1/1/2017 | 212,000 | 424,000 | 848,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 1/1/2017 | 2,096 | 10,479 | 26,198 | 1,286,821 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 2/28/2017 | 23,687 | 80.25 | 279,270 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. G. Crawford | 1/1/2017 | 180,250 | 360,500 | 721,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 1/1/2017 | 1,620 | 8,098 | 20,245 | 994,434 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 2/28/2017 | 18,304 | 80.25 | 215,804 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2017 | 2/28/2017 | 12,700 | 1,019,175 |
Name | Approval Date(1) | Grant Date(2) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(3) | Estimated Future Payouts Under Equity Incentive Plan Awards(4) | All Other Option Awards: Number of Securities Underlying Options (#)(5) | Exercise or Base Price of Option Awards ($/Share)(6) | Grant Date Fair Value of Stock and Option Awards(7) | |||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||
M. J. Costa | 1/1/2023 | 511,875 | 2,047,500 | 4,095,000 | ||||||||||||||||||||||||||||||||||
2/13/2023 | 1/1/2023 | 19,258 | 89,868 | 222,532 | $11,208,310 | |||||||||||||||||||||||||||||||||
2/13/2023 | 2/24/2023 | 114,118 | $83.84 | 2,472,937 | ||||||||||||||||||||||||||||||||||
W.T. McLain, Jr. | 1/1/2023 | 200,000 | 800,000 | 1,600,000 | ||||||||||||||||||||||||||||||||||
2/13/2023 | 1/1/2023 | 4,764 | 22,236 | 55,061 | 2,773,258 | |||||||||||||||||||||||||||||||||
2/13/2023 | 2/24/2023 | 28,236 | 83.84 | 611,874 | ||||||||||||||||||||||||||||||||||
B. A. Lich | 1/1/2023 | 207,500 | 830,000 | 1,660,000 | ||||||||||||||||||||||||||||||||||
2/13/2023 | 1/1/2023 | 5,659 | 26,405 | 65,385 | 3,293,234 | |||||||||||||||||||||||||||||||||
2/13/2023 | 2/24/2023 | 33,530 | 83.84 | 726,595 | ||||||||||||||||||||||||||||||||||
S. G. Crawford | 1/1/2023 | 144,500 | 578,000 | 1,156,000 | ||||||||||||||||||||||||||||||||||
2/13/2023 | 1/1/2023 | 4,367 | 20,383 | 50,471 | 2,542,144 | |||||||||||||||||||||||||||||||||
2/13/2023 | 2/24/2023 | 25,883 | 83.84 | 560,885 | ||||||||||||||||||||||||||||||||||
B.T. Smith | 1/1/2023 | 131,750 | 527,000 | 1,054,000 | ||||||||||||||||||||||||||||||||||
2/13/2023 | 1/1/2023 | 3,177 | 14,824 | 36,707 | 1,848,839 | |||||||||||||||||||||||||||||||||
2/13/2023 | 2/24/2023 | 18,824 | 83.84 | 407,916 |
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50 2018 Proxy Statement
Executive Compensation — Compensation Tables
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2018 Proxy Statement 51
Executive Compensation — Compensation Tables
The following table provides information regarding outstanding option grants and stock awards as of December 31, 20172023, held by individuals named in the Summary“Summary Compensation Table.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | |||||||||||||||||||||||||||||||||||||||||
M. J. Costa | 55,000 | $ | 27.82 | 10/26/2019 | ||||||||||||||||||||||||||||||||||||||||||||||
52,000 | 39.84 | 11/1/2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
33,000 | 38.30 | 10/31/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
30,246 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
3,361 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
57,580 | 87.43 | 2/27/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||
68,260 | 34,130 | (4) | 74.46 | 2/26/2025 | ||||||||||||||||||||||||||||||||||||||||||||||
53,831 | 107,662 | (5) | 65.16 | 2/25/2026 | ||||||||||||||||||||||||||||||||||||||||||||||
167,959 | (6) | 80.25 | 2/27/2027 | |||||||||||||||||||||||||||||||||||||||||||||||
236,674 | $ | 21,925,479 | ||||||||||||||||||||||||||||||||||||||||||||||||
C. E. Espeland | 47,000 | 39.84 | 11/1/2020 | |||||||||||||||||||||||||||||||||||||||||||||||
35,000 | 38.30 | 10/31/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
22,685 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
2,521 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
16,227 | 87.43 | 2/27/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||
17,634 | 8,817 | (4) | 74.46 | 2/26/2025 | ||||||||||||||||||||||||||||||||||||||||||||||
12,357 | 24,715 | (5) | 65.16 | 2/25/2026 | ||||||||||||||||||||||||||||||||||||||||||||||
37,468 | (6) | 80.25 | 2/27/2027 | |||||||||||||||||||||||||||||||||||||||||||||||
18,000 | (7) | $ | 1,667,520 | |||||||||||||||||||||||||||||||||||||||||||||||
53,512 | 4,957,352 | |||||||||||||||||||||||||||||||||||||||||||||||||
B. A. Lich | 3,068 | 39.84 | 11/1/2020 | |||||||||||||||||||||||||||||||||||||||||||||||
5,134 | 38.30 | 10/31/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
4,537 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
505 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
9,423 | 87.43 | 2/27/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||
15,358 | 7,680 | (4) | 74.46 | 2/26/2025 | ||||||||||||||||||||||||||||||||||||||||||||||
12,125 | 24,252 | (5) | 65.16 | 2/25/2026 | ||||||||||||||||||||||||||||||||||||||||||||||
38,760 | (6) | 80.25 | 2/27/2027 | |||||||||||||||||||||||||||||||||||||||||||||||
23,500 | (7) | 2,177,040 | ||||||||||||||||||||||||||||||||||||||||||||||||
54,009 | 5,003,394 |
52 2018 Proxy Statement
Executive Compensation — Compensation Tables
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | Name | Number of Securities Underlying Unexercised Options(#) Exercisable | Number of Securities Underlying Unexercised Options(#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
L. Boldea | 3,706 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
412 | 69.73 | 2/27/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,267 | 87.43 | 2/27/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,666 | 1,833 | (4) | 74.46 | 2/26/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,475 | 6,952 | (5) | 65.16 | 2/25/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,687 | (6) | 80.25 | 2/27/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,450 | (7) | 412,248 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24,939 | 2,310,349 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
M. J. Costa | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
102,390 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
102,390 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
102,390 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
161,493 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
161,493 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
161,493 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
167,959 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
167,959 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
167,959 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
185,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
185,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
185,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
201,343 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
201,343 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
201,343 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
185,759 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
185,759 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
185,759 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
87,541 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
87,541 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
87,541 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
33,555 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
33,555 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
33,555 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
127,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
127,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
127,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
W. T. McLain, Jr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,618 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,618 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,618 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,850 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,850 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,850 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,167 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,167 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,167 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,513 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,513 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,513 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
29,025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
29,025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
29,025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,379 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,379 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,379 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31,042 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31,042 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31,042 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B.A. Lich | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,038 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,038 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,038 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
36,377 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
36,377 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
36,377 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38,760 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38,760 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38,760 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
44,924 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
44,924 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
44,924 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
50,336 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
50,336 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
50,336 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
46,440 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
46,440 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
46,440 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22,248 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22,248 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22,248 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. G. Crawford | 2,042 | 69.73 | 2/27/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
227 | 69.73 | 2/27/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,926 | 87.43 | 2/27/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,002 | 3,502 | (4) | 74.46 | 2/26/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,565 | 13,130 | (5) | 65.16 | 2/25/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,304 | (6) | 80.25 | 2/27/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12,700 | (7) | 1,176,528 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
27,226 | 2,522,217 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9,695 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9,695 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9,695 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,304 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,304 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,304 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22,462 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22,462 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22,462 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,764 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,764 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,764 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,058 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,058 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,058 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,444 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,444 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,444 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,918 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,918 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,918 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,041 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,041 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,041 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. T. Smith | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,520 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,520 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,520 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,862 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,862 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,862 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,289 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,289 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,289 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,794 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,794 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,794 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,738 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,738 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,738 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,726 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,726 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,726 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,735 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,735 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,735 |
76 |
2024 Proxy Statement |
Executive compensation |
2024 Proxy Statement | 77 |
Executive compensation |
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2018 Proxy Statement 53
Executive Compensation — Compensation Tables
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The following table summarizes aggregate values realized upon exercise of options by, and payouts of vested stock for 20172023 to, the individuals named in the Summary“Summary Compensation Table.
Option Awards(1) | Stock Awards(2) | ||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting($) | |||||||||||||||||||||
M. J. Costa | 0 | $ | 0 | 86,717 | $ | 8,682,973 | |||||||||||||||||||
C. E. Espeland | 17,100 | 768,135 | 22,403 | 2,243,212 | |||||||||||||||||||||
B. A. Lich | 0 | 0 | 19,512 | 1,953,737 | |||||||||||||||||||||
L. Boldea | 0 | 0 | 4,658 | 466,406 | |||||||||||||||||||||
S. G. Crawford | 3,800 | 161,267 | 8,897 | 890,857 |
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|
Options | Stock Awards(1) | ||||||||||||||||
Name | # of Shares Acquired on Exercise | $ Value Realized on Exercise | # of Shares Acquired on Vesting | $ Value Realized on Vesting | |||||||||||||
M. J. Costa | 0 | $0 | 52,535 | $4,314,174 | |||||||||||||
W. T. McLain, Jr. | 0 | 0 | 11,030 | 905,784 | |||||||||||||
B. A. Lich | 0 | 0 | 13,352 | 1,096,466 | |||||||||||||
S. G. Crawford | 0 | 0 | 9,869 | 810,442 | |||||||||||||
B. T. Smith | 0 | 0 | 12,368 | 1,140,185 |
Name | Plan Name (1)(2) | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($)(3) | Payments During Last Year($) | ||||||||||||||||
M. J. Costa | ERAP | 12 | $ | 167,741 | $ | 0 | ||||||||||||||
ERIP/URIP | 12 | 1,766,700 | 0 | |||||||||||||||||
C. E. Espeland | ERAP | 22 | 377,218 | 0 | ||||||||||||||||
ERIP/URIP | 22 | 1,726,332 | 0 | |||||||||||||||||
B. A. Lich | ERAP | 16 | 237,628 | 0 | ||||||||||||||||
ERIP/URIP | 16 | 1,058,435 | 0 | |||||||||||||||||
L. Boldea | ERAP | 21 | 276,838 | 0 | ||||||||||||||||
ERIP/URIP | 21 | 492,745 | 0 | |||||||||||||||||
S. G. Crawford | ERAP | 34 | 527,492 | 0 | ||||||||||||||||
ERIP/URIP | 34 | 907,702 | 0 |
54 2018 Proxy Statement
Executive Compensation — Compensation Tables
|
Name Number of
Years of Credited
Service (#)
of Accumulated
Benefit ($)(3) Payments
During
Last Fiscal Year($) M. J. Costa ERAP 18 $320,687 $0 ERIP/URIP 18 3,919,362 0 W.T. McLain, Jr. ERAP 23 333,203 0 ERIP/URIP 23 1,512,230 0 B. A. Lich ERAP 22 399,521 0 ERIP/URIP 22 2,045,186 0 S.G. Crawford ERAP 40 809,171 0 ERIP/URIP 40 2,324,751 0 B. T. Smith ERAP 31 374,967 0 ERIP/URIP 31 544,365 0
78 | 2024 Proxy Statement |
Executive compensation |
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2018 Proxy Statement 55
Executive Compensation — Compensation Tables
EDCP account is paid, in cash, in a single lump sum or in up to ten annual installments as elected in advance by the participant. The EDCP also provides for early withdrawal by a participant of amounts in his or her EDCP account in certain limited circumstances.
Name | Executive Contributions in Last Year ($) | Company Contributions in Last Year ($)(1) | Aggregate Earnings in Last ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Year-End($)(3) | ||||||||||||||||||||
M. J. Costa | $ | 0 | $ | 108,392 | $ | 10,277 | $ | 0 | $ | 561,932 | |||||||||||||||
C. E. Espeland | 144,600 | 60,131 | 173,777 | 0 | 1,480,402 | ||||||||||||||||||||
B. A. Lich | 211,500 | 52,981 | 123,803 | 0 | 1,006,040 | ||||||||||||||||||||
L. Boldea | 25,135 | 28,096 | 14,505 | 0 | 107,282 | ||||||||||||||||||||
S. G. Crawford | 298,992 | 29,098 | 38,722 | 0 | 945,024 |
Name | Executive Contributions in Last Fiscal Year ($) | Company Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings (Loss) in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($)(3) | ||||||||||||
M. J. Costa | $0 | $51,212 | $26,428 | $0 | $1,434,541 | ||||||||||||
W.T. McLain, Jr. | 0 | 23,164 | 25,158 | 0 | 208,978 | ||||||||||||
B. A. Lich | 0 | 24,664 | 310,622 | 0 | 2,266,173 | ||||||||||||
S.G. Crawford | 0 | 17,231 | 48,234 | 0 | 1,517,248 | ||||||||||||
B. T. Smith | 16,362 | 14,231 | 29,883 | 0 | 210,760 |
2024 Proxy Statement | 79 |
Executive compensation |
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56 2018 Proxy Statement
Executive(2)Aggregate amounts credited to participant EDCP accounts during 2023. No earnings on deferred amounts are included in the “Summary Compensation — Table” in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column because there were no preferential or above-market earnings on any of the hypothetical investments. Quarterly dividend equivalents of 79 cents per hypothetical share for the first, second, and third quarters and of 81 cents per hypothetical share for the fourth quarter were credited to amounts in individual Eastman stock accounts.
Pursuant to
80 | 2024 Proxy Statement |
Executive compensation |
;
occurs;
2018 Proxy Statement 57
Executive Compensation — Termination andChange-in-Control Arrangements
(iv) accelerate the vesting of the executive’s unvested benefits under the Company’s retirement plans, and pay to the executive a lump sum cash payment equal to the value of such unvested benefits,benefits; and
58 2018 Proxy Statement
2024 Proxy Statement | 81 |
Executive Compensation — Termination andChange-in-Control Arrangements
If a change in ownership occurs (and the Compensation Committee has not exercised its discretion described above) during the term of one or more performance periods for outstanding performance shares, the performance period will immediately terminate and, unless the Committee has already determined actual performance for such period, it will be assumed that the performance objectives have been attained at a level of 100%. Participants will be considered to have earned a prorated share of the awards for such performance period. In addition, upon a change in ownership, all outstanding awards will be valued and cashed out on the basis of the change in ownership price.
Executive compensation |
the performance period.
Form of Payment | M.J. Costa | C. E. Espeland | B. A. Lich | L. Boldea | S. G. Crawford | |||||||||||||||
Cash severance(1) | $ | 8,280,000 | $ | 2,869,000 | $ | 2,394,000 | $ | 1,908,000 | $ | 1,751,000 | ||||||||||
Value of unvested stock-based awards at target(2) | 24,409,858 | 5,813,831 | 5,529,293 | 1,939,510 | 2,731,818 | |||||||||||||||
Health and welfare continuation(3) | 19,192 | 19,192 | 19,192 | 19,192 | 19,192 | |||||||||||||||
Total Payments | $ | 32,709,050 | $ | 8,702,023 | $ | 7,942,485 | $ | 3,866,702 | $ | 4,502,010 |
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2018 Proxy Statement 59
Executive Compensation — Termination andChange-in-Control Arrangements
The following table shows, for each of the named executive officers, the payment that would have been provided under the Omnibus Plans, ifEastman common stock or the stock of its successor is no longer publicly traded on a national securities exchange following the change-in-control).
Form of Payment | M.J. Costa ($) | W.T. McLain, Jr. ($) | B. A. Lich ($) | S.G. Crawford ($) | B. T. Smith ($) | ||||||||||||
Cash severance(1) | $10,237,500 | $3,200,000 | $3,320,000 | $2,516,000 | $2,294,000 | ||||||||||||
Value of unvested stock-based awards at target(2) | 8,953,650 | 2,060,353 | 3,563,306 | 1,848,163 | 798,020 | ||||||||||||
Health and welfare continuation(3) | 43,148 | 33,809 | 38,109 | 37,477 | 32,749 | ||||||||||||
Total Payments | $19,234,298 | $5,294,162 | $6,921,415 | $4,401,640 | $3,124,769 |
Form of Payment | M.J. Costa | C. E. Espeland | B. A. Lich | L. Boldea | S. G. Crawford | ||||||||||||||||||||
Value of unvested stock-based awards at target(1) | $ | 24,409,858 | $ | 5,813,831 | $ | 5,529,293 | $ | 1,939,510 | $ | 2,731,818 |
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29, 2023.
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|
•value of outstanding vested stock-based awards (see the “Outstanding Equity Awards at 2023 Year-End” table),
82 | 2024 Proxy Statement |
|
Executive compensation |
60 2018 Proxy Statement
Executive Compensation — Pay Ratio
consummated, would constitute achange-in-control; or (iii) any person (other than the Company, certain affiliated entities, or certain institutional investors) becomes the beneficial owner of 10% or more of the combined voting power of the Company’s then-outstanding securities.
2024 Proxy Statement | 83 |
Executive compensation |
84 | 2024 Proxy Statement |
Executive compensation |
The Dodd-Frank Act and
employee.”
•As of October 1, 2017,31, 2023, our employee population consistedconsisted of approximately 14,75514,611 individuals (13,864 full-time and 747 other employees) working at our parent companyCompany and consolidated subsidiaries, with 74% of these individuals located in the United States, 15%14% located in Europe (primarily Belgium, the Netherlands, and Germany), 9%8% located in Asia (primarily China, Malaysia, and Singapore) and 2%4% located in Latin America (primarily Mexico and Brazil).
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•We selected October 31, 2023, as the date upon which we would identify the median employee to allow sufficient time to identify the median employee given the global scope of our operations.
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2018 Proxy Statement 61
2024 Proxy Statement | 85 |
Executive compensation |
Independent Registered Public Accounting Firm
The Audit Committee our PEO and our Other NEOs as presented in the “Summary Compensation Table” on page 73, (ii) the “compensation actually paid” to our PEO and our Other NEOs, as calculated pursuant to the SEC’s pay-versus-performance rules, (iii) certain financial performance measures, and (iv) the relationship of the Boardcompensation actually paid to those financial performance measures.
Value of Initial Fixed $100 Investment Based On: | ||||||||||||||||||||||||||||||||
Year (a) | Summary Compensation Table Total for PEO (b)1 | Compensation Actually Paid to PEO (c)1, 2 | Average Summary Compensation Table Total for Other NEOs (d)1 | Average Compensation Actually Paid to Other NEOs (e)1,2 | Total Shareholder Return (f) | Peer Group Total Shareholder Return (g)3 | Net Income ($ millions) (h) | Adjusted EBIT ($ millions) (i)4 | ||||||||||||||||||||||||
2023 | $17,597,890 | $16,978,885 | $4,812,940 | $4,655,315 | $130 | $146 | $896 | $1,097 | ||||||||||||||||||||||||
2022 | 17,068,131 | (12,049,295) | 4,384,699 | (1,407,170) | 113 | 132 | 796 | 1,339 | ||||||||||||||||||||||||
2021 | 17,798,861 | 33,704,535 | 5,398,736 | 8,450,911 | 163 | 149 | 867 | 1,635 | ||||||||||||||||||||||||
2020 | 13,561,990 | 30,582,035 | 3,791,700 | 6,235,050 | 131 | 118 | 489 | 1,216 |
2020 | 2021 | 2022 | 2023 | ||||||||
Curtis E. Espeland | William T. McLain, Jr. | William T. McLain, Jr. | William T. McLain, Jr. | ||||||||
Brad A. Lich | Brad A. Lich | Brad A. Lich | Brad A. Lich | ||||||||
Lucian Boldea | Lucian Boldea | Stephen G. Crawford | Stephen G. Crawford | ||||||||
William T. McLain, Jr. | Stephen G. Crawford | Perry Stuckey III | B. Travis Smith | ||||||||
Kellye L. Walker |
PricewaterhouseCoopers LLP also servedPEO and the Other NEOs as prescribed by SEC rules and as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Company’s independent registered public accounting firmExclusion of Stock Awards and Option Awards columns are the totals from the Stock Awards and Option Awards columns set forth in the “Summary Compensation Table.” Amounts in the Exclusion of Change in Pension Value column reflect the amounts attributable to the Change in Pension Value reported in the “Summary Compensation Table.” Amounts in the Inclusion of Pension Service Cost are based on the service cost for the years ended December 31, 2017 and 2016, and has billed the Company the following amounts for fees and related expenses for professional services rendered during 2017 and 2016:
Audit Fees: $6.28 million,the listed year.
86 | 2024 Proxy Statement |
Executive compensation |
Year | Summary Compensation Table Total for Mark J. Costa ($) | Exclusion of Change in Pension Value for Mark J. Costa ($) | Exclusion of Stock Awards and Option Awards for Mark J. Costa ($) | Inclusion of Pension Service Cost for Mark J. Costa ($) | Inclusion of Equity Values for Mark J. Costa ($) | Compensation Actually Paid to Mark J. Costa ($) | ||||||||||||||||||||||||||
2023 | $ | 17,597,890 | $ | 543,510 | $ | 13,681,247 | $ | 244,054 | $13,361,698 | $16,978,885 |
Year | Average Summary Compensation Table Total for Other NEOs ($) | Average Exclusion of Change in Pension Value for Other NEOs ($) | Average Exclusion of Stock Awards and Options Awards for Other NEOs ($) | Average Inclusion of Pension Service Cost for Other NEOs ($) | Average Inclusion of Equity Values for Other NEOs ($) | Average Compensation Actually Paid to Other NEOs ($) | ||||||||||||||||||||||||||
2023 | $ | 4,812,940 | $ | 282,058 | $3,191,187 | $ | 131,337 | $3,184,283 | $4,655,315 |
Year | Year-End Fair Value of Equity Awards Granted During Covered Fiscal Year That Remained Unvested as of Last Day of Covered Fiscal Year for Mark J. Costa ($) | Change in Fair Value from Last Day of Prior Fiscal Year to Last Day of Covered Fiscal Year of Unvested Equity Awards Granted in Any Prior Fiscal Year for Mark J. Costa ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Mark J. Costa ($) | Change in Fair Value from Last Day of Prior Fiscal Year to Vesting Date of Unvested Equity Awards Granted in Any Prior Fiscal Year that Vested During Covered Fiscal Year for Mark J. Costa ($) | Fair Value at Last Day of Prior Fiscal Year of Equity Awards Forfeited During Covered Fiscal Year for Mark J. Costa ($) | Value of Dividends or Other Earnings Paid on Stock or Option Awards During the Covered Fiscal Year Prior to the Vesting Date Not Otherwise Included for Mark J. Costa ($) | Total - Inclusion of Equity Values for Mark J. Costa ($) | |||||||||||||||||||||||||||||||
2023 | $14,043,473 | ($358,143) | $ | 0 | ($323,632) | $ | 0 | $ | 0 | $13,361,698 |
Year | Average Year- End Fair Value of Equity Awards Granted During Covered Fiscal Year That Remained Unvested as of Last Day of Covered Fiscal Year for Other NEOs ($) | Average Change in Fair Value from Last Day of Prior Fiscal Year to Last Day of Covered Fiscal Year of Unvested Equity Awards Granted in Any Prior Fiscal Year for Other NEOs ($) | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Other NEOs ($) | Average Change in Fair Value from Last Day of Prior Fiscal Year to Vesting Date of Unvested Equity Awards Granted in Any Prior Fiscal Year that Vested During Covered Fiscal Year for Other NEOs ($) | Average Fair Value at Last Day of Prior Fiscal Year of Equity Awards Forfeited During Covered Fiscal Year for Other NEOs ($) | Average Value of Dividends or Other Earnings Paid on Stock or Option Awards During the Covered Fiscal Year Prior to the Vesting Date Not Otherwise Included for Other NEOs ($) | Total - Average Inclusion of Equity Values for Other NEOs ($) | ||||||||||||||||||||||||||||
2023 | $ | 3,275,676 | ($41,433) | $ | 0 | ($49,960) | $0 | $ | 0 | $3,184,283 |
2024 Proxy Statement | 87 |
Executive compensation |
Adjusted Earnings Before Interest and Taxes (EBIT) | ||
Operating Cash Flow | ||
Relative Total Shareholder Return | ||
Return on Invested Capital |
88 | 2024 Proxy Statement |
Executive compensation |
Audit-Related Fees: $928,600,relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Other NEOs, and Eastman Chemical Adjusted EBIT during the four most recently completed fiscal years.
2024 Proxy Statement | 89 |
Tax Fees: $6.37 million, in the aggregate, for the year ended December 31, 2017 and $5.06 million, in the aggregate, for the year ended December 31, 2016 for services related to domestic and international tax planning, tax compliance, including expatriate tax services and preparation of tax returns and claims for refunds, tax advice, assistance with respect to tax audits, and requests for rulings for technical advice from tax authorities.
All Other Fees: $2,700, in the aggregate, for the year ended December 31, 2017 and $1,800, in the aggregate, for the year ended December 31, 2016 for all services other than those covered above under “Audit Fees,” “Audit-Related Fees,” and “Tax Fees.” “All Other Fees” for 2017 and 2016 were for research tools and software access licenses.
As described under“Summary Compensation Table” (under “Audit CommitteeExecutive Compensation — Audit Committee ReportCompensation Tables” earlier in this proxy statement, referred to as the “NEOs”) and by the directors and executive officers as a group.
Name | Number of Shares of Common Stock Beneficially Owned(1)(2) | Percent of Class | ||||||
Mark J. Costa | 1,639,393(3) | 1.4% | ||||||
William T. McLain, Jr. | 200,530(4) | * | ||||||
Brad A. Lich | 372,678(5) | * | ||||||
Stephen G. Crawford | 264,597(6) | * | ||||||
B. Travis Smith | 52,821(7) | * | ||||||
Humberto P. Alfonso | 9,878 | * | ||||||
Brett D. Begemann | 8,020 | * | ||||||
Eric L. Butler | 3,503(8) | * | ||||||
Edward L. Doheny II | 133 | * | ||||||
Linnie M. Haynesworth | 1,507(8) | * | ||||||
Julie F. Holder | 13,266(8) | * | ||||||
Renée J. Hornbaker | 20,688 | * | ||||||
Kim A. Mink | 1,390 | * | ||||||
James J. O’Brien | 3,573(8) | * | ||||||
David W. Raisbeck | 41,605(8) | * | ||||||
Charles K. Stevens III | 5,039(8) | * | ||||||
Directors and executive officers as a group (21 persons) | 2,863,309(9) | 2.4% |
90 | 2024 Proxy Statement |
Information about stock ownership |
The stockholdersan executive’s account under the Executive Deferred Compensation Plan (“EDCP”) and to a director’s account under the DDCP are being askedcounted with shares of common stock actually owned for purposes of determining stock ownership under the director and executive ownership expectations. See “Director Compensation — Directors’ Deferred Compensation Plan” and “Executive Compensation — Compensation Tables — 2023 Nonqualified Deferred Compensation.”
A representative of PricewaterhouseCoopers LLP is expected to attend the 2018 Annual Meeting and will have the opportunity to make a statement on behalf of the firm if he desires to do so. The representative is also expected to be available to respond to appropriate questionsexecutive officers are prohibited from stockholders.
2024 Proxy Statement | 91 |
Information about stock ownership |
Name | Number of Shares of Common Stock and Common Stock Units Owned | |||||
Mark J. Costa | ||||||
William T. McLain, Jr. | 36,690 | |||||
Brad A. Lich | 72,342 | |||||
Stephen G. Crawford |
| |||||
B. Travis Smith | 12,022 | |||||
Humberto P. Alfonso | 51,512 | |||||
Brett D. Begemann | 51,230 | |||||
Eric L. Butler | 4,636 | |||||
Edward L. Doheny II | 14,078 | |||||
Linnie M. Haynesworth | 2,219 | |||||
Julie F. Holder | 25,002 | |||||
Renée J. Hornbaker | 64,808 | |||||
Kim A. Mink | 11,130 | |||||
James J. O’Brien | 18,076 | |||||
David W. Raisbeck | 90,806 | |||||
Charles K. Stevens III | 8,191 |
62 2018 Proxy Statement
Stockholders to Act by Written Consent
Stockholder John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, owner of 50 sharestable below sets forth certain information regarding the beneficial ownership of Eastman common stock as of March 1, 2024 by persons we know to be the beneficial owners of more than five percent of Eastman common stock.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 14,839,678(1) | 12.52% | ||||||
BlackRock, Inc. 50 Hudson Yards New York, New York 10001 | 8,383,444(2) | 7.1% | ||||||
92 | 2024 Proxy Statement |
Q | What Is A Proxy Statement, and How Do I Attend and Vote at the Annual Meeting? | ||||
2024 Proxy Statement | 93 |
Additional information about the annual meeting |
Q | What is a Proxy, and How do I Vote by Proxy at the Annual Meeting? | ||||
By Internet: visit the website www.cesvote.com and follow the instructions on your proxy card or electronic form of proxy. | By telephone: call (888) 693-8683 and follow the instructions on your proxy card or electronic form of proxy. | By mail (if you received a paper proxy card): mark, sign, date, and mail your proxy card in the enclosed postage-paid envelope. | ||||||||||||||||||
Q | How Do I Revoke My Proxy? | ||||
94 | 2024 Proxy Statement |
Additional information about the annual meeting |
Q | What is the Record Date for the Annual Meeting? Which Stockholders Are Entitled to Vote? | ||||
Q | What is A Quorum to Conduct Business at the Annual Meeting? How Are Abstentions and Broker Non-Votes Counted at the Annual Meeting? | ||||
Proposal 4 — Shareholder Right to Act by Written Consent
Shareholders request that our boardhas not received voting instructions from the beneficial owner. Brokers which have not received voting instructions from their clients cannot vote on their clients’ behalf on the election of directors undertake such steps asor the advisory approval of executive compensation, but may, be necessaryalthough they are not required to, permit written consent by shareholders entitledvote their clients’ shares on the ratification of the appointment of the independent registered public accounting firm.
Q | What Votes Are Required for Approval of the Matters to be Considered at the Annual Meeting? | ||||
This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67%-support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. Special thanks are due to the farsighted Eastman Chemical shareholders who gave 51% support for written consent at an earlier Eastman Chemical annual meeting.
Taking action by written consent in lieu of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle. A shareholder right to act by written consent and to call a special meeting are 2 complimentary ways to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. More than 100 Fortune 500 companies provide for shareholders to call special meetings and to act by written consent.
Eastman Chemical shareholders also do nottherefore will have the full right to call a special meeting that is available under Delaware law. According to the lame Eastman Chemical special meeting provision it would take 25% of shares (instead of 10% per Delaware law) to call a special meeting.
Adoption of this proposal would at least give shareholders a better position to engage with the Board and management about improving the qualifications of our directors. For instance there may be an issue with board refreshment. The following directors had long-tenure of more than 14-years:
Stephen Demeritt
Renee Hornbaker
Robert Hernandez
David Raisbeck
Long-tenure can impair the independence of any director no mater how well qualified. Independence is an all-important quality for a director. Plus these directors had an oversized influence on Eastman Chemical with 7 seats on our most important board committees.
Plus long-tenured Robert Hernandez was Lead Director, a position that requires the highest standard of independenceeffect on the entire board. Michael Connors, a director with 12-years tenure, received our highest negative vote — as much as 15-times the negative votes as other directors. (Perhaps Mr. Connors should thus be removed from the Nomination and Executive Pay Committees.)
Please vote for a best practice in corporate governance:
Shareholder Right to Act by Written Consent — Proposal 4
2018 Proxy Statement 63
Item 4 — Advisory Vote on Stockholder Proposal
Responseoutcome of the Company
The Boardelection of Directors has carefully considered the stockholder proposal that the Board act to permit stockholders to act by written consent without a meeting, including that substantially identical proposals were submitted to votes of the Company’s stockholders at the 2012 Annual Meeting of Stockholders and was supported by less than a majority of outstanding shares and again at the 2013 and 2016 Annual Meetings and in neither case received thedirectors.
The Company maintains its demonstrated commitment to corporate governance policies that are in the best interestsappointment of the Company. The Board regularly reviewsindependent registered public accounting firm and the Company’s governance structure, policies,advisory approval of executive compensation. With respect to each of these items, stockholders may (1) vote “for,” (2) vote “against,” or (3) “abstain” from voting. Abstentions and practices, and makes changes that it determinesbroker non-votes will not be considered to be invotes cast and therefore will have no effect on the best interestsoutcome of the vote on these matters.
Q | What Are Proxy Solicitation Costs, and Who Pays Them? | ||||
2024 Proxy Statement | 95 |
Additional information about the annual meeting |
Q | What About Matters Not Included in This Proxy Statement? | ||||
Q | What Is the Deadline for Submission of Stockholder Proposals for the 2025 Annual Meeting of Stockholders? | ||||
Q | What Are the Requirements for Nominations by Stockholders for Election to the Board of Directors and Stockholder Nomination Proxy Access? | ||||
The Board continues to believe that permitting stockholder action by written consent would circumvent the proper and usual process of allowing deliberation at aimmediately preceding year’s annual meeting of stockholders wouldwas first sent to the stockholders of the Company. If, as expected, notice of the 2024 Annual Meeting is first sent to stockholders on March 21, 2024, then such notice must be delivered no earlier than October 22, 2024, and not later than November 21, 2024.
Q | Q. How Do I Access the Company’s Annual Report to Stockholders and Annual Report on Form 10-K? | ||||
96 | 2024 Proxy Statement |
Additional information about the annual meeting |
2024 Proxy Statement | 97 |
(In millions, except per share amounts) | 2023 | 2022 | ||||||
Sales revenue | $9,210 | $10,580 | ||||||
Earnings before interest and taxes (“EBIT”) | 1,302 | 1,159 | ||||||
Adjusted EBIT* | 1,097 | 1,339 | ||||||
Earnings per diluted share | 7.49 | 6.35 | ||||||
Adjusted earnings per diluted share* | 6.40 | 7.88 | ||||||
Net cash provided by operating activities | 1,374 | 975 |
Allowing stockholder action by written consent would resultplace undue reliance on any non-GAAP financial measure, but to consider such measures alongside the most directly comparable GAAP financial measure.
98 | 2024 Proxy Statement |
Annex A |
Allowing stockholder action by written consent would also deny all stockholders rights we believe are important, namely the right to receive accurate and complete information on a proposal in advance and the right to present their opinions on a proposal. It also would deprive both stockholders and the Board of the opportunity to discuss the merits, disadvantages, and implications of a proposal and vote on a proposed action. The Board believes that a meeting at which all stockholders have an opportunity to discuss a proposed action and vote their shares is the most appropriate forum for stockholder action.
Currently, our stockholders have the ability to propose matters for consideration at each annual meeting of stockholders. In addition, the Company’s Certificate of Incorporation and Bylaws permit holders of 25% or more of outstanding shares to call special meetings of stockholders, which right provides our stockholders an additional opportunity to raise appropriate issues for the Company to consider between annual meetings and on which all stockholders can deliberate and vote.
The opportunity for stockholders to call special meetings allows stockholder issues to be considered and acted upon, and provides the appropriate mechanism for stockholder action without sacrificing the right of all stockholders to participate in decision making. It also prevents the solicitation of conflicting or duplicative written consents which could result in confusion and inconsistency of implementation. The Board believes that stockholder democracy could be undermined if some stockholders were permitted to bypass this process and instead act by written consent without a meeting. Moreover, requiring that all proposals be voted on at a meeting guards against abusive actions by individual stockholders that may be damaging to long-term stockholder interests.
64 2018 Proxy Statement
Item 4 — Advisory Vote on Stockholder Proposal
The Board believes that these existing opportunities for stockholder action — either at an annual or special meeting — in which all stockholders may participate in a meaningful way continues to be the best and most appropriate governance practice for the Company.
(Dollars in millions) | 2023 | 2022 | |||||||||
Non-core items impacting EBIT: | |||||||||||
Mark-to-market pension and other postretirement benefits loss, net | $ | 53 | $ | 19 | |||||||
Asset impairments and restructuring charges, net | 37 | 52 | |||||||||
Environmental and other costs | 13 | 15 | |||||||||
Net (gain) loss on divested businesses and transaction costs | (323) | 61 | |||||||||
Adjustments to contingent considerations | — | (6) | |||||||||
Accelerated depreciation | 23 | — | |||||||||
Unusual item impacting EBIT: | |||||||||||
Steam line incident (insurance proceeds) costs, net | (8) | 39 | |||||||||
Total non-core or unusual items impacting EBIT | (205) | 180 | |||||||||
Less: Items impacting provision for income taxes: | |||||||||||
Tax effect for non-core or unusual items | (74) | (11) | |||||||||
Adjustments from tax law changes | — | — | |||||||||
Total items impacting provision for income taxes | (74) | (11) | |||||||||
Total items impacting net earnings attributable to Eastman | $ | (131) | $ | 191 |
2024 Proxy Statement |
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2018 Proxy Statement 65
Annex A |
(Dollars in millions, unaudited) | 2023 | 2022 | |||||||||
Earnings before interest and taxes | $ | 1,302 | $ | 1,159 | |||||||
Mark-to-market pension and other postretirement benefit plans loss, net | 53 | 19 | |||||||||
Asset impairments and restructuring charges, net | 37 | 52 | |||||||||
Environmental and other costs | 13 | 15 | |||||||||
Net (gain) loss on divested businesses and transaction costs | (323) | 61 | |||||||||
Adjustments to contingent considerations | — | (6) | |||||||||
Accelerated depreciation | 23 | — | |||||||||
Steam line incident (insurance proceeds) costs, net | (8) | 39 | |||||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 1,097 | $ | 1,339 | |||||||
Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items | |||||||||||
Earnings before interest and taxes | $ | 1,302 | $ | 1,159 | |||||||
Costs of sales | 15 | 39 | |||||||||
Selling, general and administrative expenses | — | 18 | |||||||||
Asset impairments and restructuring charges, net | 37 | 52 | |||||||||
Other components of post-employment (benefit) cost, net | 53 | 19 | |||||||||
Other (income) charges, net | 13 | 9 | |||||||||
Net (gain) loss on divested businesses | (323) | 43 | |||||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 1,097 | $ | 1,339 |
2023 | |||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman | ||||||||||||||||||||||||||||||
After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 1,302 | $ | 1,087 | $ | 191 | 18 | % | $ | 894 | $ | 7.49 | |||||||||||||||||||||||
Non-Core or Unusual Items: | |||||||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 37 | 37 | 5 | 32 | 0.26 | ||||||||||||||||||||||||||||||
Gain on divested business | (323) | (323) | (98) | (225) | (1.88) | ||||||||||||||||||||||||||||||
Accelerated depreciation | 23 | 23 | 3 | 20 | 0.17 | ||||||||||||||||||||||||||||||
Steam line incident (insurance proceeds) costs, net | (8) | (8) | (2) | (6) | (0.05) | ||||||||||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans loss, net | 53 | 53 | 14 | 39 | 0.33 | ||||||||||||||||||||||||||||||
Environmental and other costs | 13 | 13 | 4 | 9 | 0.08 | ||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items) | $ | 1,097 | $ | 882 | $ | 117 | 13 | % | $ | 763 | $ | 6.40 |
100 | 2024 Proxy Statement |
Annex A |
2022 | |||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman | ||||||||||||||||||||||||||||||
After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 1,159 | $ | 977 | $ | 181 | 19 | % | $ | 793 | $ | 6.35 | |||||||||||||||||||||||
Non-Core or Unusual Items: | |||||||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 52 | 52 | 4 | 48 | 0.39 | ||||||||||||||||||||||||||||||
Loss on divested business and transaction costs | 61 | 61 | (32) | 93 | 0.74 | ||||||||||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans loss, net | 19 | 19 | 5 | 14 | 0.12 | ||||||||||||||||||||||||||||||
Environmental and other costs | 15 | 15 | 4 | 11 | 0.09 | ||||||||||||||||||||||||||||||
Adjustments to contingent considerations | (6) | (6) | (2) | (4) | (0.04) | ||||||||||||||||||||||||||||||
Steam line incident costs, net of insurance proceeds | 39 | 39 | 10 | 29 | 0.23 | ||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items) | $ | 1,339 | $ | 1,157 | $ | 170 | 15 | % | $ | 984 | $ | 7.88 |
2024 Proxy Statement | 101 |
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EASTMAN CHEMICAL COMPANY | PROXY |
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Please sign exactly as your name(s) appears on this proxy. If shares are held jointly, all joint owners should sign. If signing as executor, administrator, attorney, trustee, guardian, or in any other representative capacity, please also give your full title. | ||||
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THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS INDICATED. IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR EACH OF THE NOMINEES IN ITEM 1, FOR ITEMS 2 AND 3 AND AGAINST ITEM 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES IN ITEM 1. | ||||||||||||||||||||||||||
1. | Election of Directors: | |||||||||||||||||||||||||
Nominees for election of eleven directors to serve until the Annual Meeting of Stockholders in 2019 and their successors are duly elected and qualified:
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FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | |||||||||||||||||||||
(1) | HUMBERTO P. ALFONSO | ☐ | ☐ | ☐ | (7) | JULIE F. HOLDER | ☐ | ☐ | ☐ | |||||||||||||||||
(2) | BRETT D. BEGEMANN | ☐ | ☐ | ☐ | (8) | RENÉE J. HORNBAKER | ☐ | ☐ | ☐ | |||||||||||||||||
(3) | MICHAEL P. CONNORS | ☐ | ☐ | ☐ | (9) | LEWIS M. KLING | ☐ | ☐ | ☐ | |||||||||||||||||
(4) | MARK J. COSTA | ☐ | ☐ | ☐ | (10) | JAMES J. O’BRIEN | ☐ | ☐ | ☐ | |||||||||||||||||
(5) | STEPHEN R. DEMERITT | ☐ | ☐ | ☐ | (11) | DAVID W. RAISBECK | ☐ | ☐ | ☐ | |||||||||||||||||
(6) | ROBERT M. HERNANDEZ | ☐ | ☐ | ☐ |
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STOCKHOLDER HEARS THIS SCRIPT
[TEXT OF COMPUTER SCREEN FOR ELECTRONIC DELIVERY OF PROXY STATEMENT AND
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Eastman Chemical Company
[TEXT OF COMPUTER SCREENS FOR INTERNET PROXY VOTING BY REGISTERED STOCKHOLDERS]
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FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | ||||||||||||||||||||||||
(1) | HUMBERTO P. ALFONSO | ❑ | ❑ | ❑ | (6) | JULIE F. HOLDER | ❑ | ❑ | ❑ | ||||||||||||||||||||
(2) | BRETT D. BEGEMANN | ❑ | ❑ | ❑ | (7) | RENÉE J. HORNBAKER | ❑ | ❑ | ❑ | ||||||||||||||||||||
(3) | ERIC L. BUTLER | ❑ | ❑ | ❑ | (8) | KIM ANN MINK | ❑ | ❑ | ❑ | ||||||||||||||||||||
(4) | MARK J. COSTA | ❑ | ❑ | ❑ | (9) | JAMES J. O’BRIEN | ❑ | ❑ | ❑ | ||||||||||||||||||||
(5) | LINNIE M. HAYNESWORTH | ❑ | ❑ | ❑ | (10) | DAVID W. RAISBECK | ❑ | ❑ | ❑ |
❑ FOR | ❑ AGAINST | ❑ ABSTAIN |
❑ FOR | ❑ AGAINST | |||||||||
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| ❑ ABSTAIN |
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