ITRON, INC.
2111 N. Molter Road
Liberty Lake, Washington 99019
NOTICE OF ANNUAL MEETING OF SHAREHOLDERSNotice of 2020 Annual Meeting of Shareholders
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When: May 7, 2020 at 2:00 p.m., Central Time | Where: Virtual Meeting – see details below | Who Can Vote: Shareholders of Itron’s common stock as of the record date, March 2, 2020 | Attending the Meeting: Shareholders who wish to attend the meeting in person should review the instructions set forth below under “Attending the Annual Meeting.” |
TO BE HELD ON MAY 10, 2018
NOTICE IS HEREBY GIVENIn response to uncertainties regarding the coronavirus (COVID-19) situation and our responsibility to the public health and travel concerns of our shareholders, as well as the protocols that federal, state, and local governments may impose, we are holding our annual meeting via a “virtual” format. Therefore, we cordially invite you to electronically attend the Annual Meeting of Shareholders of Itron, Inc. (Itron or Company), which will be held on May 7, 2020, at the Houston Marriott Marquis Hotel in the Kingwood Room, at 1777 Walker Street, Houston, Texas, 77010, at 4:2:00 p.m., local time,Central Time. We are pleased to announce that this year’s annual meeting will be a virtual meeting via live webcast on Thursday, May 10, 2018,the Internet. You will be able to attend the annual meeting, vote and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/ITRI2020. You will need to have your 16-Digit Control Number included on your Notice or your proxy card (if you received a printed copy of the proxy materials) to join the annual meeting. As always, we encourage you to vote your shares prior to the annual meeting. The annual meeting will be held for the following purposes:
Items of Business:
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The Board of Directors has established the close of business on March 5, 2018 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting or any adjournment or postponement thereof.
Members of the Company’s management will not make any formal presentation as part of the annual meeting, but will be available to address questions from shareholders, as appropriate. In addition, we expect all of our director nominees together with those directors continuing in office will attend the annual meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER ANNUAL MEETING TO BE HELD ON MAY 10, 2018:
Our proxy statement is attached. Financial and other information concerning Itron is contained in our Annual Report to Shareholders for the 2017 fiscal year. The proxy statement and our Annual Report are available for all shareholders atwww.edocumentview.com/ITRI
Important notice regarding the availability of proxy materials for the shareholder annual meeting to be held on May 7, 2020. Our 2020 proxy statement is attached and, along with the Annual Report, is available for all shareholders at https://materials.proxyvote.com. Financial and other information concerning Itron is contained in our Annual Report for the 2019 fiscal year. |
Your vote is very important.important. To ensure representation at the annual meeting, shareholders are urged to vote as promptly as possible. To vote your shares, please refer to the voting instruction form on the website noted above, or review the section titled “Quorum and Voting” beginning on page two ofin the accompanying proxy statement. Any shareholder attending the annual meeting may vote in person (virtually) even if that shareholder has returned a proxy.
By Order of the Board of Directors, | |
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| Sarah E. Hlavinka |
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Corporate Secretary | |
Liberty Lake, Washington March 23, 2020 |
Liberty Lake, Washington
March 23, 2018
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S AUDIT FEES AND SERVICES | ||||
This proxy statement is being furnished to shareholders of Itron, Inc. (the Company or Itron) in connection with the solicitation by our Board of Directors of proxies for use at the 20182020 Annual Meeting of Shareholders. The meeting willis scheduled to be held in the Kingwood Room of the Houston Marriott Marquis Hotel, locatedon May 7, 2020, at 1777 Walker Street, Houston, Texas, 77010, at 4:2:00 p.m., local time, on Thursday, May 10, 2018,Central Time, via live webcast through the link, for the purposes listed in the accompanying Notice of Annual Meeting of Shareholders. You will need the 16-digit control number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable). We have made these materials available to you over the Internet, or have delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies for use at the 2020 Annual Meeting. This solicitation is for proxies for use at the annual meeting or at any reconvened meeting after an adjournment or postponement of the annual meeting. The Company’s principal executive office is at 2111 North Molter Road, Liberty Lake, Washington 99019.
You are entitled to attend the virtual annual meeting only if you were a shareholder of record as of the Record Date for the annual meeting, or you hold a valid proxy for the annual meeting. You may attend the annual meeting, vote, and submit a question during the annual meeting by visiting www.virtualshareholdermeeting.com/ITRI2020 and using your 16-digit control number to enter the meeting. If you are not a shareholder of record but hold shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the Record Date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the virtual annual meeting.
Internet Availability of Annual Meeting Materials
Our proxy materials will be available for you to access over the Internet. On or about March 29, 2018,27, 2020, we will mail to our shareholders a Notice of Internet Availability of Proxy Materials (Notice) directing shareholders to the website provided on the Notice where they can access our proxy materials and view instructions on how to vote via the Internet or by phone. The Notice will also provide instructions for obtaining paper copies of the proxy materials and a proxy card, if requested by a shareholder.
The following proxy materials will be available for you to review online:
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Proposals to Be Voted On at the Annual Meeting
At the annual meeting, we will consider and vote on the following proposals:
| (1) | to elect three directors to the Itron, Inc. Board of Directors, each for a term of three years ending upon our |
| (2) | to approve, on anon-binding advisory basis, the compensation of our named executive officers for the fiscal year ended December 31, |
| (3) | to ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountant for the |
| (4) | to transact any other business that may properly come before the annual meeting. |
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Record Date and Outstanding Shares
Holders of record of our common stock at the close of business on March 5, 2018,2, 2020, are entitled to notice of, and to vote at, the annual meeting. On the record date, there were 39,122,51240,160,958 shares of our common stock outstanding. Each outstanding share of our common stock will entitle its holder to one vote on each of the three directors to be elected and one vote on each other matter to be voted on at the annual meeting. Each of our directors and executive officers intends to vote or direct the vote of all shares of common stock over which he or she has voting control in favor of: (1) the election of the nominees for director; (2) the advisory approval of the compensation we paid our named executive officers in 2017;2019; and (3) the ratification of Deloitte & Touche LLP as our independent registered public accountant.
Each shareholder is entitled to one vote per share of common stock held on each matter to be voted on. Our annual meeting will be through a virtual-only format solely through means of remote communication, and participation by such means shall constitute presence in person at the meeting. The presence at the annual meeting, in person or by proxy, of holders of a majority of the outstanding shares of common stock on the record date will constitute a quorum. AbstentionsAttendance by abstentions and “brokernon-votes” (shares held by a broker or nominee who does not have the authority, express or discretionary, to vote on a particular matter) on any of the proposals to be voted on will be counted only for purposes of determining the presence of a quorum.
How to vote your shares in person and participate at the Annual Meeting
This year’s annual meeting will be held entirely online. Shareholders may participate in the annual meeting by visiting the following website: www.virtualshareholdermeeting.com/ITRI2020. To participate in the meeting, you will need the 16-digit control number included on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. Shares held in your name as the shareholder of record may be voted electronically during the annual meeting. Shares for which you are the beneficial owner but not the shareholder of record also may be voted electronically during the annual meeting. However, even if you plan to attend the annual meeting, the Company recommends that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the annual meeting.
How to vote your shares without attending the Annual Meeting
To vote your shares without attending the meeting, please follow the instructions for Internet or telephone voting on the Notice. If you request printed copies of the proxy materials by mail, you may also vote by signing and submitting your proxy card and returning it by mail, if you are the shareholder of record, or by signing the voter instruction form provided by your bank or broker and returning it by mail, if you are the beneficial owner but not the shareholder of record. This way your shares will be represented whether or not you are able to attend the meeting.
You may vote your shares in one of several ways, depending on how you own your shares.
Registered Shareholders (Shares held in your name)
Registered shareholders can vote in person, by Internet, by telephone, or by mail, by casting their vote as follows:
Accessing the Internet website specified in the Notice of Internet Availability and following the instructions provided on the website (or if printed copies of the proxy materials were requested, as specified in the printed proxy card); or |
Requesting a printed proxy card and either calling the telephone number specified on the proxy card and following the instructions provided on the phone line, or completing, signing, dating, and promptly mailing the proxy card in the envelope provided; or |
Attending and voting in person at the annual meeting. |
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Beneficial Shareholders (Shares held in the name of a broker, bank or other holder of record on your behalf)
If your shares are held in the name of a broker, bank, or other nominee or holder of record, follow the voting instructions on the voting instruction form provided to you by the holder of record to vote your shares.
Proposal One – Election of Directors: Each nominee for director is elected by the vote of the majority of the votes cast with respect to that director’s election (meaning the number of votes cast “for” a nominee must exceed the number of votes cast “against” such nominee). Holders of common stock are not entitled to cumulative votes in the election of directors. Abstentions from voting on this matter will not be counted. Brokers and other holders of record do not have discretionary voting authority to vote your shares in the election of directors, absent voting instructions from you. Therefore, if you are a beneficial shareholder and do not provide voting instructions on proposal number one to the holder of record for your shares, they willnot be voted in the election of directors.
Proposal Two –Say-on-Pay Vote(non-binding): Thenon-binding advisory vote on this proposal will be approved if the majority of votes cast are in favor of the proposal (meaning the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal). Abstentions from voting on this matter will not be counted. Brokers and other holders of record do not have discretionary voting authority to vote your shares for this proposal, absent voting instructions from you. Therefore, if you are a beneficial shareholder and do not provide voting instructions on proposal number two to the holder of record for your shares, they willnotbe voted on this proposal.
Proposal Three – Ratification of Appointment of Independent Auditor: The appointment of Deloitte & Touche LLP as the Company’s independent registered public accountant for 20182020 will be ratified if the majority of the votes cast are in favor of the proposal (meaning the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal). Abstentions from voting on this matter will not be counted. Brokers and other holders of recorddohave discretionary authority to vote shares on this matter. Therefore, there will be no brokernon-votes on the ratification of the Company’s independent registered public accountant.
Unless contrary instructions are specified, if the proxy is completed and submitted (and not revoked) prior to the annual meeting, the shares represented by the proxy will be voted as follows: (i) FOR proposals one, two, and three; and (ii) in accordance with the best judgment of the named proxies on any other matters properly brought before the annual meeting.
Shares represented at the annual meeting by properly signed proxies will be voted at the annual meeting in accordance with the instructions given in the proxy. A shareholder may revoke a proxy at any time before the vote. Mere attendance at the annual meeting will not revoke a proxy. A proxy may be revoked only by:
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attending the annual meetingandvoting in person. |
If the annual meeting is postponed or adjourned for any reason, at any subsequent reconvening of the annual meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the annual meeting (except for any proxies that have at that time effectively been revoked or withdrawn).
For the 20182020 annual meeting, we have retained Innisfree M&A IncorporatedBroadridge Financial Solutions, Inc. to aid in the solicitation of proxies. We will bear the cost of such solicitation of proxies, which we estimate will be approximately $10,000, plus expenses. Proxies may be solicited by personal contact, mail, email, telephone, or facsimile. In addition, we may reimburse brokerage firms and other persons representing beneficial owners of our common stock for their reasonable expenses in forwarding solicitation materials to the beneficial owners. Our directors, officers, and employees may also solicit proxies personally or by telephone, without additional compensation.
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PROPOSAL 1 – ELECTION OF DIRECTORS
The Board of Directors (Board) is divided into three classes, with each director holding office for a three-year term or until his or her successor has been duly elected and qualified, or until his or her death, resignation or removal from office. At the 20182020 Annual Meeting of Shareholders (Annual Meeting), shareholders are being asked tore-elect three Class 21 directors for terms of three years or until their death, resignation, or removal from office or their successors are duly elected and qualified. Unless authority is withheld, the persons named as proxies will vote for the election of the nominees listed below. If any of the nominees become unavailable to serve, the persons named as proxies will have discretionary authority to vote for a substitute nominee.
Our Board has nominated the following persons for election to the Board. Each nominee is currently a director and has indicated that he or she is willing and able to continue to serve as a director.
Class 21 (to serve until the 20212023 annual meeting)
Philip C. Mezey
Daniel S. Pelino
Timothy
Jerome J. Lande
Frank M. LeydenJaehnert
Gary E. Pruitt
We have concluded that each of the nominees forre-election, as well as the other directors who will continue in office, have the skills, experience, knowledge, and personal attributes that are necessary to effectively serve on our Board. As described below in their biographies and the section “Director and Director Nominee Qualifications” that follows, the qualifications of our directors and director nominees support our conclusion that each of the individuals should serve as a director in light of our current business operations and structure.
The Board recommends that shareholders vote “FOR” the election of each of the Class 1 director nominees. |
THE BOARD RECOMMENDS THAT YOU VOTEFOR
THE ELECTION OF EACH OF THE THREE NOMINEES FOR DIRECTOR.
MORE INFORMATION ABOUT OUR DIRECTORS
RetiringClass 1 Director Nominees – Three Year Terms That Will Expire in 2023
Jerome J. Lande | Director since: 2015 | Other Current Public Directorships: CONMED Corporation |
Age: 44 | Independent | |
Jerome Lande joined Scopia Capital Management LP (Scopia), an asset management firm and one of Itron’s principal minority shareholders, in April 2016 and is currently a Partner and Head of Special-Situation Investments. He was previously the Managing Partner of Coppersmith Capital Management LLC (Coppersmith), an asset management firm focused on equity investing in small to mid-cap markets and in long-term value creation, which he co-founded in April 2012. Prior to co-founding Coppersmith, Mr. Lande was a partner of MCM Capital Management, LLC, the general partner of MMI Investments, LP, a small-cap investment fund founded in 1996 to employ private equity investing methodologies in public equities, and where Mr. Lande oversaw research, trading and activism from 1998 to 2011. Prior to that time, he was associated with other equity investment firms where he was directly involved with corporate development as well as equity growth. Until the completion of a merger on December 7, 2018, Mr. Lande served as a member of the board of directors and the nomination and governance committee of Forest City Realty Trust, Inc. (NYSE: “FCEA”), a national real estate company. Mr. Lande is a member of the board of directors of CONMED Corporation (NASDAQ: “CNMD”), a public global medical technology company, where he also serves on the compensation and strategy committees. | ||
Qualifications: Mr. Lande brings to the Board financial and investing acumen gained through his many years of experience at several equity investment firms, including his current employer Scopia (and affiliates), which is a principal minority shareholder of the Company. | ||
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Frank M. Jaehnert | Director since: 2015 | Other Current Public Directorships: Nordson Corporation; Briggs & Stratton Corporation |
Age: 62 | Independent | |
From 1995 until his retirement in 2013, Frank Jaehnert held several roles with Brady Corporation (NYSE: “BRC”), a publicly traded manufacturer and marketer of complete solutions that identify and protect premises, products and people. These roles included President and Chief Executive Officer from 2003 to 2013, Senior Vice President and President of a business line from 2002 to 2003, and Vice President and Chief Financial Officer from 1996 to 2001. Prior to joining Brady Corporation, Mr. Jaehnert held various financial and management positions for Robert Bosch GmbH, a German multinational engineering and electronics company. Mr. Jaehnert serves on the board of directors of Nordson Corporation (NASDAQ: “NDSN”), which he joined in 2012, and Briggs & Stratton Corporation (NYSE: “BGG”), which he joined in 2014. NDSN and BGG are both publicly traded large manufacturing companies. Mr. Jaehnert also serves on the NDSN executive committee and as the chair of the NDSN audit committee and on the BGG audit and nominating and governance committees. | ||
Qualifications: Mr. Jaehnert has extensive, broad-based international business and executive management and leadership experience. Mr. Jaehnert is National Association of Corporate Directors (NACD) Directorship Certified™, which is a recognition earned by NACD members and reflects their commitment to continuing education on emerging board issues and to helping to elevate the profession of directorship. Mr. Jaehnert’s diverse background, his experience with geographic expansion and acquisitions, as well as his experience serving on other public company boards bring valuable perspectives to the Board. | ||
Gary E. Pruitt | Director since: 2006 | Other Current Public Directorships: Public Storage, Inc.; PS Business Parks, Inc. |
Age: 70 | Independent | |
In 2010, Gary Pruitt retired as Chairman of Univar N.V. (Univar), a multi-national chemical distribution company based in Bellevue, Washington, and retired as Chief Executive Officer in October 2009. Before joining Univar in 1978, Mr. Pruitt was a chartered accountant with Arthur Andersen from 1973 through 1977. Mr. Pruitt retired in February 2018 as a member of the board of directors, the compensation committee and the nomination and governance committee of Esterline Technologies Corporation, a specialty manufacturer serving in the global aerospace and defense markets that was listed on NYSE under “ESL” until its acquisition in 2019. Mr. Pruitt also served on the board of directors for Premera Blue Cross, a privately held health insurance company. Mr. Pruitt is a trustee of Public Storage, Inc. (a real estate investment trust specializing in self-storage facilities) (NYSE: “PSA”) and PS Business Parks, Inc. (a full-service real estate company) (NYSE: “PSB”). Mr. Pruitt is a Lead Independent Trustee of PSA and also serves as a member of its audit and governance committees. He also is a member of the audit committee of PSB. | ||
Qualifications: Mr. Pruitt brings to the Board his experience as a chief executive officer of a multi-national company and all the business attributes required of that position, along with operational and manufacturing expertise through his various other management positions held with Univar. His public accounting financial background and other public board experiences provide strategic and global perspectives on our business as well. | ||
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Current Class 2 Directors – Class 1 – DecreaseDirectors with Terms That Will Expire in Size of Board2021
Kirby A. Dyess, age 71,
Thomas L. Deitrich | Director since: 2019 | Other Current Public Directorships: None |
Age: 53 | ||
Tom Deitrich is our President and Chief Executive Officer and a member of our Board of Directors. Mr. Deitrich was appointed to his current position and | ||
Qualifications: Mr. Deitrich brings to the Board more than 20 years of executive experience in technology businesses, having held roles in research and development, product management, manufacturing, business development, and general management. As Itron’s prior Chief Operating Officer, Mr. Deitrich has extensive knowledge of Itron’s global operations, including finance, product development, manufacturing, procurement, product management, go-to-market and sales, and strategy. Additionally, Mr. Deitrich has been involved with a number of mergers and acquisitions at Itron. During his tenure at Itron, he has had extensive exposure to global systems and utilities throughout the world. As the only employee director, Mr. Deitrich provides the Board with valuable insight into management’s views and perspectives, as well as the day-to-day operations of Itron. | ||
Daniel S. Pelino | Director since: 2014 | Other Current Public Directorships: None |
Age: 62 | Independent | |
Dan Pelino retired from International Business Machines Corp., the multinational technology company (NYSE: “IBM”) in November 2016, where he had been employed since 1980, most recently as General Manager of IBM’s public sector business, a position he had held since 2012. The public sector business focused on government, education, healthcare and life sciences industries, including IBM’s Smarter Cities initiative. While at IBM, Mr. Pelino held several other positions of escalating responsibility focused on helping organizations, states, and countries transform and digitize their technology systems. Mr. Pelino currently serves on the executive committee for the Patient Centered Primary Care Collaborative and on the board of directors of the Healthcare Executive Network. | ||
Qualifications: Mr. Pelino provides the Board with a strong background in technology, brand marketing, and business innovation and development. With his worldwide experience in governmental business and strategies, he brings a current global business perspective to the Board. In addition, Mr. Pelino’s knowledge of digitized services created for economic development adds invaluable insight to the Company’s smart metering systems and strategies for its utility customers. | ||
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Timothy M. Leyden | Director since: 2015 | Other Current Public Directorships: None |
Age: 68 | Independent | |
Tim Leyden retired in 2015 after eight years with Western Digital Corporation (NASDAQ: “WDC”), a company that manufactures hard-disk drives used to record, store, and recall volumes of data. He served as WDC’s Chief Financial Officer from 2013 until January 2015, President of Western Digital, one of WDC’s two operating subsidiaries, from 2012 to 2013, its Chief Operating Officer from 2010 to 2012, and its Executive Vice President of Finance and Chief Financial Officer from 2007 to 2010. Prior to joining WDC, Mr. Leyden was Vice President and then Senior Vice President of Finance and Chief Financial Officer for Sage Software PLC, a customized software solutions business, from 2001 to 2007. Mr. Leyden serves on the board of directors for Oakgate Technology, Inc., a private company that provides test, validation and benchmarking products and services to the storage industry. He also serves on the board of Oracle Elevator Company, a private company providing maintenance, repair, and modifications to commercial elevators, and on the board of advisors of BlytheCo, a private company that brokers a variety of 3rd party software solutions to all sizes of businesses. These solutions include ERP, CRM and HCM software installations. Mr. Leyden also serves on the Dean’s Advisory Board at the University of California Irvine’s Paul Merage School of Business. | ||
Qualifications: Mr. Leyden brings to the Board a mix of financial and operational experience (in both hardware and software industries), in addition to a background that includes mergers and acquisitions and integration experience related to the assimilation of acquired companies into both WDC and Sage Software. His prior experience with overseeing global manufacturing, engineering, marketing, and sales operations, when combined with his financial and accounting background, adds a depth of international insight to the Board. | ||
Class 3 Director Nominees – Directors With Terms That Will Expire in 2022
Lynda L. Ziegler | Director since: 2013 | Other Current Public Directorships: None |
Age: 67 | Independent | |
Lynda Ziegler was elected Vice Chair of the Board in April 2015, and then Chair of the Board in September 2016. She was elected to a second term as Chair of the Board at the 2019 annual meeting. In September 2012, Ms. Ziegler retired from Southern California Edison (SCE), one of the largest electric utilities in the U.S. (and a customer of Itron), whose parent is Edison International. During her tenure at SCE, she held various management positions related to customer program offerings, customer service, development, communication and implementation of energy efficiency programs, marketing and communication of smart meters, and generally led all aspects of delivering power to almost 5 million customers. From 2006 to 2011, Ms. Ziegler was Senior Vice President of Customer Service, and from January 1, 2011 until her retirement in September of 2012, she served as Executive Vice President of Power Delivery Services, where she was responsible for transmission and distribution construction and maintenance, customer service, information technology (IT), and support services including procurement and real estate management. In the past, she has served on the advisory committee for power delivery and utilization at the Electric Power Research Institute and was a founding member of the Board of the Association for Women in Water and Energy. | ||
Qualifications: Ms. Ziegler brings to the Board her extensive background with public utilities, especially with her recent responsibilities in the industry related to smart meters and customer relations from the utility perspective. Her breadth of knowledge of software services, transmission and distribution construction and maintenance, IT, and business development adds to the diverse business backgrounds of our other members of the Board. | ||
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Thomas S. Glanville | Director since: 2001 | Other Current Public Directorships: Mitcham Industries, Inc. |
Age: 61 | Independent | |
Thomas Glanville has been the Managing Partner of Eschelon Advisors, LP and affiliates, providing energy and private equity investment and advisory services since 2003. From 1999 to 2002, Mr. Glanville served as Vice President of Technology and New Ventures for Reliant Energy, Inc., one of the world’s largest international energy services companies, and its affiliate, Reliant Resources, Inc. In September 2015, he was appointed to the board of directors of Mitcham Industries, Inc. (NASDAQ: “MIND”), a publicly-traded technology company for the oceanographic, hydrographic, defense, seismic, and security industries, where he also serves as chair of the board’s audit committee. He currently serves on the board of directors for Strand Energy, L.C., a privately-held oil and gas exploration and production company, and Crescent Pass Energy, LLC, a private oil and gas production company. He served as Chairman of the Texas TriCities Chapter of the National Association of Corporate Directors (Houston, Austin, San Antonio) from 2011 through 2016. | ||
Qualifications: Mr. Glanville brings to the Board financial expertise, industry-related experience through his association with Reliant Energy, energy sector exposure through the Eschelon entities and Mitcham Industries, and technology skills that include his involvement with electric metering studies and research while he was Vice President of Technology and New Ventures for Reliant Energy. | ||
Diana D. Tremblay | Director since: 2015 | Other Current Public Directorships: None |
Age: 60 | Independent | |
Diana Tremblay retired from General Motors Company, the motor vehicle manufacturer and distributor multinational corporation (NYSE: “GM”) in September 2017. She had been with that company since 1977, and during her tenure at GM, she held a variety of positions in engineering, manufacturing and labor relations, including direct operational responsibility for over 50,000 employees. From July 2013 until her retirement, Ms. Tremblay served as Vice President of Global Business Services, where she was charged with streamlining administrative processes around the world to improve service quality, reduce complexity, and achieve cost efficiencies in such areas as finance, human resources, real estate, purchasing, asset management, and master data. From December 2009 to July 2013, Ms. Tremblay held the position of Vice President of Manufacturing at GM. | ||
Qualifications: Ms. Tremblay brings to the Board her broad business experience that includes her previous roles at GM as an engineer, plant manager, head of manufacturing, and lead labor relations negotiator, which together with her knowledge of business services and global manufacturing processes, provide additional international, administrative and manufacturing perspectives to the Board. | ||
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Snapshot of Directors will be reduced from eleven to nine members.and Director Nominees
Nominees to Serve until 2021 (Class 2)
Philip C. Mezey(age 58) has been a director since 2013. Effective January 1, 2013, he was elected Itron’s President and Chief Executive Officer, and was previously President and Chief Operating Officer of Itron’s Energy segment from March 2011 until December 31, 2012. Mr. Mezey joined Itron in March 2003 as Managing Director of Software Development for Itron’s Energy Management Solutions Group as part of Itron’s acquisition of Silicon Energy Corp., where he had most recently served as its Senior Vice President of Product Development and Strategy. Mr. Mezey was promoted to Group Vice President and Manager of Software Solutions in 2004. In 2005, he became Senior Vice President Software Solutions, and in 2007 Mr. Mezey became Senior Vice President and Chief Operating Officer Itron North America.
Mr. Mezey brings to the Board more than thirteen years of experience in research and development, manufacturing, and business development for metering software and related services. While at Silicon Energy Corp., he managed the marketing department and was directly involved with a number of mergers and acquisitions prior to Itron’s acquisition of that company. During his tenure at Itron, he has had extensive exposure to international systems and utilities throughout the world, and, as the only employee director, Mr. Mezey provides the Board with valuable insight into management’s views and perspectives, as well as theday-to-day operations of Itron.
Daniel S. Pelino (age 60) has been a director since November 2014. Mr. Pelino retired from International Business Machines Corp., the multinational technology company (NYSE: “IBM”) in November 2016, where he had been employed since 1980, most recently as General Manager of IBM’s public sector business, a position he had held since 2012. The public sector business focused on government, education, healthcare and life sciences industries, including IBM’s Smarter Cities initiative. While at IBM, Mr. Pelino held several other positions of escalating responsibility focused on helping organizations, states, and countries transform and digitize their technology systems. Mr. Pelino currently serves on the executive committee for the Patient Centered Primary Care Collaborative and on the board of directors of the Healthcare Executive Network.
Mr. Pelino provides the Board with a strong background in technology, brand marketing, and business innovation and development. With his worldwide experience in governmental business and strategies, he brings a current global business perspective to the Board. In addition, Mr. Pelino’s knowledge of digitized services created for economic development adds invaluable insight to the Company’s smart metering systems and strategies for its utility customers.
Timothy M. Leyden (age 66) has been a director since March 2015. Mr. Leyden retired in 2015 after eight years with Western Digital Corporation (NASDAQ: “WDC”), a company that manufactures hard-disk drives used to record, store, and recall volumes of data. He served as WDC’s Chief Financial Officer from 2013 until January 2015, President of Western Digital, one of WDC’s two operating subsidiaries, from 2012 to 2013, its Chief Operating Officer from 2010 to 2012, and its Executive Vice President of Finance and Chief Financial Officer from 2007 to 2010. Prior to joining WDC, Mr. Leyden was Vice President and then Senior Vice President of Finance and Chief Financial Officer for Sage Software PLC, a customized software solutions business, from 2001 to 2007. Mr. Leyden serves on the board of directors of Oakgate Technology, Inc., a privately-held company that provides test, validation and benchmarking products and services to the storage industry. He also serves on the board of directors of Virtium LLC, a private company that provides storage and memory innovation for various imbedded industrial segments.
Mr. Leyden brings to the Board a mix of financial and operational experience (in both hardware and software industries), in addition to a background that includes mergers and acquisitions and integration experience related to the assimilation of acquired companies into both WDC and Sage Software. His prior experience with overseeing global manufacturing, engineering, marketing, and sales operations, when combined with his financial and accounting background, adds a depth of international insight to the Board.
Directors Continuing in Office until 2019 (Class 3)
Lynda L. Ziegler (age 65) has been a director since February 2013 and was elected Vice Chair of the Board in April 2015, and then Chair of the Board in September 2016. In September 2012, Ms. Ziegler retired from Southern California Edison (SCE), one of the largest electric utilities in the U.S. (and a customer of Itron), whose parent is Edison International. During her tenure at SCE, she held various management positions related to customer program offerings, customer service, development, communication and implementation of energy efficiency programs, marketing and communication of smart meters, and generally led all aspects of delivering power to almost 5 million customers. From 2006 to 2011, Ms. Ziegler was Senior Vice President of Customer Service, and from January 1, 2011 until her retirement in September of 2012, she served as Executive Vice President of Power Delivery Services, where she was responsible for transmission and distribution construction and maintenance, customer service, information technology (IT), and support services including procurement and real estate management. In the past, she has served on the advisory committee for power delivery and utilization at the Electric Power Research Institute and was a founding member of the Board of the Association for Women in Water and Energy.
Ms. Ziegler brings to the Board her extensive background with public utilities, especially with her recent responsibilities in the industry related to smart meters and customer relations from the utility perspective. Her breadth of knowledge of software services, transmission and distribution construction and maintenance, IT, and business development adds to the diverse business backgrounds of our other members of the Board.
Thomas S. Glanville (age 59) has been a director since May 2001. Since 2003, Mr. Glanville has been the Managing Partner of Eschelon Advisors, LP and affiliates, providing energy and private equity investment and advisory services. From 1999 to 2002, Mr. Glanville served as Vice President of Technology and New Ventures for Reliant Energy, Inc., one of the world’s largest international energy services companies, and its affiliate, Reliant Resources, Inc. In September 2015, he was appointed to the board of directors of Mitcham Industries, Inc. (NASDAQ: “MIND”), a publicly traded technology company for the oceanographic, hydrographic, defense, seismic, and security industries, where he also serves as chair of the board’s audit committee. He currently serves on the board of directors of a privately-held oil and gas exploration and production company, Strand Energy, LLC. He served as Chairman of the Texas TriCities Chapter of the National Association of Corporate Directors (Houston, Austin, San Antonio) from 2011 through 2016.
Mr. Glanville brings to the Board financial expertise, industry-related experience through his association with Reliant Energy, energy sector exposure through the Eschelon entities and Mitcham Industries, and technology skills that include his involvement with electric metering studies and research while he was Vice President of Technology and New Ventures for Reliant Energy.
Diana D. Tremblay (age 58) has been a director since May 2015. In September 2017, Ms. Tremblay retired from General Motors Company, the motor vehicle manufacturer and distributor multinational corporation (NYSE: “GM”). She had been with that company since 1977, and during her tenure at GM, she held a variety of positions in engineering, manufacturing and labor relations, including direct operational responsibility for over 50,000 employees. From July 2013 to her retirement, Ms. Tremblay served as Vice President of Global Business Services, where she was charged with streamlining administrative processes around the world to improve service quality, reduce complexity, and achieve cost efficiencies in such areas as finance, human resources, real estate, purchasing, asset management, and master data. From December 2009 to July 2013, Ms. Tremblay held the position of Vice President of Manufacturing at GM.
Ms. Tremblay brings to the Board her broad business experience that includes her previous roles at GM as an engineer, plant manager, head of manufacturing, and lead labor relations negotiator, which together with her knowledge of business services and global manufacturing processes, provide additional international, administrative and manufacturing perspectives to the Board.
Directors Continuing in Office until 2020 (Class 1)
Jerome J. Lande (age 42) has been a director since December 2015. Mr. Lande joined Scopia Capital Management LP (Scopia), an asset management firm and one of Itron’s principal minority shareholders, as the Head of Special-Situation Investments in April 2016 and currently serves as a Partner at Scopia. He was previously the Managing Partner of Coppersmith Capital Management LLC (Coppersmith), an asset management firm focused on equity investing in small tomid-cap markets and in long-term value creation, which heco-founded in April 2012. Prior toco-founding Coppersmith, Mr. Lande was a partner of MCM Capital Management, LLC, the general partner of MMI Investments, LP, asmall-cap investment fund founded in 1996 to employ private equity investing methodologies in public equities, and where Mr. Lande oversaw research, trading and activism from 1998 to 2011. Prior to that time, he was associated with other equity investment firms where he was directly involved with corporate development as well as equity growth. Mr. Lande is a member of the board of directors of CONMED Corporation (NASDAQ: “CNMD”), a public global medical technology company, where he also serves on the compensation and strategy committees.
Mr. Lande brings to the board financial and investing acumen gained through his many years of experience at several equity investment firms, including his current employer Scopia (and affiliates), who is a principal minority shareholder of the Company.
Frank M. Jaehnert (age 60) has been a director since May 2015. From 1995 to his retirement in 2013, Mr. Jaehnert held several roles with Brady Corporation (NYSE: “BRC”), a publicly traded manufacturer and marketer of complete solutions that identify and protect premises, products and people. These roles included President and Chief Executive Officer from 2003 to 2013, Senior Vice President and President of a business line
from 2002 to 2003, and Vice President and Chief Financial Officer from 1996 to 2001. Prior to joining Brady Corporation, Mr. Jaehnert held various financial and management positions for Robert Bosch GmbH, a German multinational engineering and electronics company. Mr. Jaehnert serves on the board of directors of Nordson Corporation (NASDAQ: “NDSN”), which he joined in 2012, and Briggs & Stratton Corporation (NYSE: “BGG”), which he joined in 2014. NDSN and BGG are both publicly traded large manufacturing companies. Mr. Jaehnert also serves on the audit committees of both BGG and NDSN.
Mr. Jaehnert has extensive, broad-based international business and executive management and leadership experience. Mr. Jaehnert’s diverse background, his experience with geographic expansion and acquisitions, as well as his experience serving on other public company boards bring valuable perspectives to the Board.
Gary E. Pruitt (age 68) has been a director since 2006. In 2010, Mr. Pruitt retired as Chairman of Univar N.V. (Univar), a multi-national chemical distribution company based in Bellevue, Washington, and retired as Chief Executive Officer in October 2009. Before joining Univar in 1978, Mr. Pruitt was a chartered accountant with Arthur Andersen from 1973 through 1977. Mr. Pruitt is a member of the board of directors of Public Storage, Inc. (a real estate investment trust specializing in self-storage facilities) (NYSE: “PSA”) and PS Business Parks, Inc. (a full service real estate company) (NYSE: “PSB”). Mr. Pruitt is a Lead Independent Trustee of PSA and also serves as a member of its audit committee and nominating/corporate governance committee. He also is a member of the audit committee of PSB.
Mr. Pruitt brings to the Board his experience as a chief executive officer of a multi-national company and all the business attributes required of that position, along with operational and manufacturing expertise through his various other management positions held with Univar. His public accounting financial background and other public board experiences provide strategic and global perspectives on our business as well.
Director and Director Nominee Qualifications
Our Nominating and Corporate Governance Committee assists the Board in reviewing the business and personal background of each of our directors with respect to our business and business goals. Our skill criteria for our Board members includes a person whowith the following personal criteria: adheres to and demonstrates the highest ethical standards and integrity, in addition to the following: executive leadership experience; functional knowledge of technologypersonal and technology applications; international business experience; knowledge of the utility and energy industry; marketing and sales experience; financial experience gained from a chief financial officer position, a CPA, or other financial reporting background; expertise in manufacturing or software services; experience as an independent board member with a public company; knowledge and experience of executive compensation and benefits; and experience in business integrations, including mergers and acquisitions. In addition, we look for the following personal criteria:professional integrity; an effective negotiator, listener, and team player; a visionary with a strategic and global perspective; a successful leader with a proven record of accomplishments; a problem-solver; an effective decision-maker; and a person who will take a strong interest in the Company. In addition, we believe that certain skills and experience should be represented on the Board, as represented below, although not every Board member must possess all such skills and experience to be considered capable of making valuable contributions to the Board.
Frank Jaehnert | Tom Glanville | Jerome Lande | Tim Leyden | Tom Deitrich | Dan Pelino | Gary Pruitt | Diana Tremblay | Lynda Ziegler | Total | |
Executive leadership experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 9 |
Business development experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 9 |
Financial literacy | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 7 | ||
Public board and governance experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 9 |
Industry expertise | ■ | ■ | ■ | 3 | ||||||
Global experience | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 7 | ||
Manufacturing and/or Supply Chain expertise* | ■ | ■ | ■ | ■ | ■ | ■ | 6 | |||
Technology and Innovation expertise | ■ | ■ | ■ | ■ | ■ | 5 | ||||
Marketing/sales expertise | ■ | ■ | ■ | ■ | ■ | ■ | 6 | |||
Hardware/software services expertise | ■ | ■ | ■ | ■ | 4 | |||||
Government expertise | ■ | ■ | 2 | |||||||
Compensation, Benefits and Talent Management** | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 7 | ||
Mergers and Acquisitions | ■ | ■ | ■ | ■ | ■ | ■ | ■ | 7 |
| * | Has run or overseen manufacturing or supply chain operations. |
| ** | Serves as member of the Compensation Committee of our Board or has overseen compensation and benefits in a management capacity. |
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Our Nominating and Corporate Governance Committee generally considers diversity as one of several factors relating to overall composition when making nominations to our Board. Although we do not have a formal policy governing how diversity is considered, the Nominating and Corporate Governance Committee generally considers diversity by examining the entire Board membership, and,including when making nominations to our Board, reviewing the diversity of the entire Board. The Nominating and Corporate Governance Committee construes Board diversity broadly to include many factors, including, but not limited to, gender, age, and ethnicity. As a result, the Nominating and Corporate Governance Committee strives to ensure that our Board is represented by individuals with a variety of different opinions, perspectives, personal, professional, and industry experience and backgrounds, skills, and expertise. Currently, of the eight independent directors on our Board who are nominees or continuing on the Board after the Annual Meeting, three are either former Chief Financial Officers (CFOs) or former Chief Executive Officers, (CEOs), three are under the age of 60, sixseven have global business experience, and two are women, including our Board Chair.
When the Corporate Governance Committee considers candidates to be recommended to the Board for inclusion on the slate of director nominees for the next annual meeting of shareholders, it creates a matrix for each candidate to address our criteria. The following matrix summarizes the skills and attributes of our directors and director nominees for 2018 that we believe are essential to our business:
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Director Qualifications and Attributes
We have concluded that all of our directors, including the nominees forre-election, have the skills, experience, knowledge, and personal attributes that are necessary to effectively serve on our Board and to contribute to the overall success of our Company. We believe that the diverse background of each of our Board members ensures that we have a Board that has a broad range of industry-related knowledge, experience, and business acumen.See also “CORPORATE GOVERNANCE – Director Nominations by Shareholders” in this proxy statement.
COMPENSATION OF DIRECTORSCompensation of Directors
The Nominating and Corporate Governance Committee annually reviews compensation paid to non-employee directors and makes recommendations for adjustment, as appropriate, to the Board. In 2017,2018, the Company increasedNominating and Corporate Governance Committee recommended, and the aggregate annual retainer for our Board Chair by $20,000, with theapproved, an increase equally divided between cash and equity compensation. Except forin the compensation paid to non-employee directors that was to be effective January 1, 2019. However, in December 2018, the Board Vice Chairelected to delay the implementation of such increase until such time that the Board re-authorized and re-approved any increase. Ultimately, the Value Enhancement Committee members, both of which were established in 2015, as described below,Company did not change the compensation paid to ournon-employee directors has remainedfor the same since 2011.2019 fiscal year. Both equity and cash compensation werepaid to our directors in 2019 was determined using benchmark data from our peer companies provided by the Compensation Committee’s independent compensation consultant, Frederic W. Cook & Co. (F.W. Cook).
Compensation structure for directors(1) | 2019 | ||
Regular retainer (all directors except Messrs. Mezey(2) and Deitrich(2), and Board Chair Ms. Ziegler) | |||
Total annual base retainer(3) | $ | 165,000 | |
Cash | $ | 65,000 | |
Stock | $ | 100,000 | |
Annual committee chair retainer (cash) | |||
Compensation | $ | 15,000 | |
Nominating & Corporate Governance | $ | 15,000 | |
Audit/Finance | $ | 20,000 | |
Annual committee member retainer (cash) | |||
Compensation | $ | 6,500 | |
Nominating & Corporate Governance | $ | 5,000 | |
Audit/Finance | $ | 10,000 | |
Board Chair retainer | |||
Total annual Board Chair retainer(3)(4) | $ | 250,000 | |
Cash | $ | 120,000 | |
Stock | $ | 130,000 | |
| (1) | Director compensation is payable quarterly at the beginning of each quarter. |
| (2) | Mr. Mezey served as an employee director until his retirement in 2019, at which time Mr. Deitrich was appointed CEO and to the Board. In accordance with the Company’s Corporate Governance Guiding Principles, our employee directors do not receive any compensation for serving on the Board. |
| (3) | In 2014, the Board adopted a policy that permits a director age 65 or older to elect to receive all of his or her retainer in cash, provided they continuously meet the stock ownership guidelines described in the following paragraph. |
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| (4) | The Board Chair receives no additional retainers for serving on any of our committees. |
| † | In 2019 and prior years, new non-employee directors received a grant of restricted stock units (RSUs) equal in value to $32,500, which is 50% of the annual cash retainer for directors other than the Board Chair. Upon election to the Board, the non-employee directors’ RSUs vest in equal installments on each of the first three anniversaries of the date of grant. Shares of our common stock and RSUs granted to non-employee directors are issued under our Second Amended and Restated 2010 Stock Incentive Plan (Second A&R 2010 Plan). |
2019 Director Fees.Ournon-employee directors (other than our Board Chair and Vice Chair, if any) receive an aggregate annual retainer equal to $165,000, with $65,000 paid in cash and $100,000 paid in shares of our common stock. For our Chair, the aggregate annual retainer is equal to $250,000, with $120,000 paid in cash and $130,000 paid in shares of our common stock. For our Vice Chair, if any, the aggregate annual retainer is equal to $200,000, with $100,000 paid in cash and $100,000 paid in shares of our common stock. Members of the Audit/Finance Committee and the Value Enhancement Committee receive an additional annual retainer of $10,000 paid in cash, and members of our Compensation and Corporate Governance Committees receive an additional annual retainer of $6,500 and $5,000, respectively, paid in cash. The committee Chairs for the
Corporate Governance and Compensation Committees receive an additional annual retainer of $15,000, and the Chairs of the Audit/Finance Committee and Value Enhancement Committee receive an additional annual retainer of $20,000,Table (for all paid in cash in quarterly installments. Our Board Chair receives no additional retainers for serving on any of our committees.See“LEADERSHIP STRUCTURE OF THE BOARD OF DIRECTORS”in this proxy statement for more information on the Chair and Vice Chair of the Board.non-employee Directors)
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(12) | Option Awards ($)(13) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||
Thomas Glanville(1) | 85,000 | 99,935 | — | — | — | — | 184,935 | ||||||||||||||
Frank Jaehnert(2)(3) | 86,500 | 99,935 | — | — | — | — | 186,435 | ||||||||||||||
Jerome Lande(4)(5)(6) | 75,000 | — | — | — | — | — | 75,000 | ||||||||||||||
Timothy Leyden(4) | 75,000 | 99,935 | — | — | — | — | 174,935 | ||||||||||||||
Daniel Pelino(2)(7) | 76,500 | 99,935 | — | — | — | — | 176,435 | ||||||||||||||
Gary Pruitt(4)(8) | 175,000 | — | — | — | — | — | 175,000 | ||||||||||||||
Diana Tremblay(9) | 80,000 | 99,935 | — | — | — | — | 179,935 | ||||||||||||||
Lynda Ziegler(10)(11) | 120,000 | 129,919 | — | — | — | — | 249,919 | ||||||||||||||
| (1) | Chair of the Audit/Finance Committee. |
| (2) | Member of the Compensation Committee. |
| (3) | Chair of the Nominating and Corporate Governance Committee. |
| (4) | Member of the Audit/Finance Committee. |
| (5) | Mr. Lande was initially appointed to the Board pursuant to a cooperation agreement with Coppersmith Capital Management, LLC, Scopia Management, Inc., and Jerome J. Lande. |
| (6) | Mr. Lande waived equity grants and his cash retainers were paid directly to Scopia Capital Management LP. |
| (7) | Member of the Nominating and Corporate Governance Committee. |
| (8) | Mr. Pruitt elected to receive his 2019 equity awards in cash. |
| (9) | Chair of the Compensation Committee. |
| (10) | Ms. Ziegler served as a member of the Nominating and Corporate Governance Committee, but was not compensated for her service on that committee. |
| (11) | Board Chair. |
| (12) | The amounts in this column reflect the aggregate grant date fair value of the awards determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (FASB ASC Topic 718). Quarterly retainer grants to directors vest immediately. |
| (13) | No options were granted to non-employee directors in 2019. |
Newnon-employee directors receive a grant of restricted stock units (RSUs) equal in value to $32,500, which is 50% of the annual cash retainer for directors other than the Board Chair and Vice Chair, if any. Upon election to the Board, thenon-employee directors’ RSUs vest in equal installments on each of the first three anniversaries of the date of grant. Shares of our common stock and RSUs granted tonon-employee directors are issued under our Second Amended and Restated 2010 Stock Incentive Plan (Second A&R 2010 Plan).
In 2014, the Board adopted a policy that permits a director age 65 or older to elect to receive all of his or her retainer in cash, provided they continuously meet the stock ownership guidelines described in the following paragraph.
Stock Ownership Guidelines.
Since 2006, we have maintained stock ownership guidelines for ournon-employee directors. We expect our directors to accumulate shares equal to five times their annual cash retainer within five years from their initial appointment or election as a director, or to be making progress towards meeting the guidelines. ForBased on 2019 director compensation, for our Board Chair that equates to a value of $600,000, for our Vice Chair, if any, that equates to a value of $500,000, and for the other directors, it equates to a value of $325,000. All of ournon-employee directors currently comply with these ownership guidelines, with the exception of Peter Mainz who joined the Board within the last three years.guidelines.
Deferred Compensation Plan.
Pursuant to the Company’s Amended and Restated Executive Deferred Compensation Plan dated January 1, 2012, ournon-employee directors are eligible to participate in that plan and may defer into a nonqualified account up to 100% of any director fees and 100% of any shares of common stock that he or she anticipates receiving into a nonqualified account.receiving.
2017 Director Compensation Table (for allnon-employee Directors)
Director Compensation | ||||||||||||||||||||||||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (18) | Option Awards ($) (19) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Kirby Dyess (1)(2)(3) | 74,000 | 99,849 | — | — | — | — | 173,849 | |||||||||||||||||||||
Jon Eliassen (4) | 90,000 | — | — | — | — | — | 90,000 | |||||||||||||||||||||
Charles Gaylord (5) | 40,000 | 49,965 | — | — | — | — | 89,965 | |||||||||||||||||||||
Thomas Glanville (6) | 85,000 | 99,849 | — | — | — | — | 184,849 | |||||||||||||||||||||
Frank M. Jaehnert (1)(7) | 86,500 | 99,849 | — | — | — | — | 186,349 | |||||||||||||||||||||
Jerome Lande (8)(9)(10)(11) | 85,000 | — | — | — | — | — | 85,000 | |||||||||||||||||||||
Timothy Leyden (8)(12)(13) | 97,500 | 99,849 | — | — | — | — | 197,349 | |||||||||||||||||||||
Peter Mainz (1)(9)(10) | 81,500 | 99,849 | — | — | — | — | 181,349 | |||||||||||||||||||||
Daniel Pelino (1)(2)(14) | 74,000 | 99,849 | — | — | — | — | 173,849 | |||||||||||||||||||||
Gary Pruitt (8)(9) | 85,000 | 99,849 | — | — | — | — | 184,849 | |||||||||||||||||||||
Diana D. Tremblay (9)(15) | 90,000 | 99,849 | — | — | — | — | 189,849 | |||||||||||||||||||||
Lynda Ziegler (16)(17) | 115,000 | 124,805 | — | — | — | — | 239,805 | |||||||||||||||||||||
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LEADERSHIP STRUCTURE OF THE BOARD OF DIRECTORSCORPORATE GOVERNANCE
Leadership Structure of the Board of Directors
The leadership of our Board is managed by our Board Chair. Our Corporate Governance Guiding Principles (Governance Principles) generally require the role of Board Chair to be held by an independent director who meets the independence requirements of NASDAQ.the Nasdaq Stock Market. The Board believes having separate roles of Board Chair and CEO allows for a more balanced workload between the Board Chair and the CEO, especially in light of the current duties and responsibilities of the Board Chair, which include the following:
Preside over all meetings of the Board (including executive sessions of the Board) and meetings of the shareholders; |
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Pursuant to the Governance Principles, the Board Chair must be an independent director unless the Board determines that the best interests of shareholders would otherwise be better served. The Board Chair is elected by a majority of the members of the Board following the annual meeting of shareholders (or at such other time as a vacancy for the role of Board Chair may occur). The Board Chair serves for a term of three years (provided such director isre-elected by shareholders if his or her term as a director does not coincide with his or her term as Board Chair). The Board Chair may not serve more than two consecutive terms, unless the Board approves an extended term. Our current Chair, Lynda L. Zeigler, is serving her firstsecond term that will expire at the 20192022 annual meeting.
If the Board determines that it is in the best interests of the shareholders to combine the roles of CEO and Board Chair, the Board will appoint a Lead Independent Director with the duties set forth in the Governance Principles.
Since February 2015, our Governance Principles have provided for the role of Vice Chair, to be held by an independent director who meets the independence requirements of NASDAQ, unless the Board determines that the best interests of shareholders would otherwise be better served. As stated in the Governance Principles, the Vice Chair is appointed by the members of the Board and serves for a term to be determined by the Board (provided such director isre-elected by shareholders if his or her term as a director does not coincide with his or her term as Vice Chair). At the 2016 annual meeting after the elevation of Lynda L. Zeigler from Vice Chair to Chair, the Board chose to leave the position of Vice Chair vacant.
The Vice Chair, who like the Board Chair may serve on Board committees, has the following duties and responsibilities:
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The current Governance Principles, as amended, may be found online atwww.itron.com by selecting “Investors” and then “Corporate Governance.”
See “CORPORATE GOVERNANCE” in this proxy statement for additional information on our Board.
PROPOSAL 2 – ADVISORY APPROVAL OF EXECUTIVE COMPENSATION(Say-on-Pay)
We are asking our shareholders to approve anon-binding advisory resolution on the Company’s executive compensation programs for our Named Executive Officers (NEOs) (commonly known as“say-on-pay”) as we have described them in this proxy statement. Although this advisory vote isnon-binding, the Board and the Compensation Committee will take into account the outcome of the vote when considering future compensation decisions for our executives. As discussed in the Compensation Discussion and Analysis (CD&A) section of this proxy statement, we believe our compensation programs are reasonable, competitive and strongly focused onpay-for-performance principles that will result in the creation of long-term shareholder value. Some of the features of our compensation programs that illustrate our philosophy are:
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We believe our executive compensation policies have enabled us to retain and attract exceptional senior executives whose talent and experience have helped Itron become a leader in our industry. Our Compensation Committee (and the independent members of the Board for CEO compensation), which provides overall direction for our compensation programs, believes the fiscal year 2017 compensation paid to our NEOs is reasonable and appropriate and adequately reflects the Company’s overall performance in 2017.
Shareholders are encouraged to read the full details of our executive compensation programs as described in the Executive Compensation section of this proxy statement.
For the reasons provided above, we recommend that the shareholders vote in favor of the following resolution:
RESOLVED, that the shareholders approve, on anon-binding advisory basis, the compensation of the Company’s NEOs, as disclosed in the Executive Compensation section of the Company’s proxy statement for the 2018 Annual Meeting of Shareholders (which disclosure includes the Compensation Discussion and Analysis (CD&A), the Executive Compensation Tables, and the accompanying footnotes and narratives within the CD&A section of the proxy statement).
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR THE APPROVAL OF THE EXECUTIVE COMPENSATION OF OUR NEOs.
PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
The Board, upon the recommendation of its Audit/Finance Committee, has selected Deloitte & Touche LLP to serve as the Company’s independent registered public accountant for the 2018 fiscal year, subject to ratification by our shareholders. Although not required to do so, the Board is submitting the selection of Deloitte & Touche LLP for ratification by the Company’s shareholders for their views on the Company’s independent registered public accountant and as a matter of good corporate practice. Deloitte & Touche LLP has advised the Company that it has no direct, nor any material indirect, financial interest in the Company or any of its subsidiaries. Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions.
In the event that our shareholders fail to ratify the selection, it will be considered as a direction to the Board and the Audit/Finance Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit/Finance Committee in its discretion may select a different independent registered public accounting firm, subject to ratification by the Board, at any time during the year if it determines that such a change would be in the best interest of the Company and our shareholders.
THE BOARD RECOMMENDS THAT YOU VOTEFOR THE RATIFICATION
OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTANT FOR THE 2018 FISCAL YEAR.
Corporate Governance Guiding Principles
The Company’s Governance Principles are available on the Company’s website,www.itron.com, by selecting “Investors” and then “Corporate Governance.”
Board Matters – Meeting Attendance
Our business, property, and affairs are managed under the directionoversight of our Board. Members of our Board are kept informed of our business through discussions with our CEO and other officers, by reviewing materials provided to them, by visiting our offices, and by participating in meetings of the Board and its committees.
In accordance with our Governance Principles, directors are expected to attend the Company’s annual meeting of shareholders. All but one of our directors attended the 20172019 annual meeting of shareholders in person or by telephone.person. During 2017,2019, the Board met sixteeneleven times. All of the directors attended at least 75% of the meetings of the Board and committees on which he or she served.
Also, in accordance with our Governance Principles, our independent directors meet in an executive session as often as necessary, but no less than fourtwo times annually.
Our common stock is listed on the NASDAQNasdaq Stock Market stock exchange.exchange (Nasdaq). Under the rules of NASDAQ,Nasdaq, independent directors must comprise a majority of a listed company’s board of directors. In addition, the rules of NASDAQNasdaq require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Under the rules of NASDAQ,Nasdaq, a director will only
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qualify as an “independent director” if that company’s board of directors determines that the person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
As recommended by the Nominating and Corporate Governance Committee, the Board has determined that a majority of our Board are independent directors as defined under the rules of NASDAQNasdaq and the SEC, with Mr. MezeyDeitrich serving as the solenon-independent director. As Mr. MezeyDeitrich does not sit on any committees, and as recommended by the Nominating and Corporate Governance Committee, the Board has determined that all members of Itron’s committees are independent under SEC rules and NASDAQNasdaq listing standards.rules. In addition, as recommended by the Nominating and Corporate Governance Committee, the Board has determined that all members of our Audit/Finance Committee are independent under Rule10A-3 of the Securities Exchange Act.Act of 1934, as amended (Exchange Act).
We have fourthree committees to assist the Board in fulfilling its responsibilities: Nominating and Corporate Governance, Audit/Finance, Value Enhancement, and Compensation. Each of the fourthree current committees operates under a written charter that has been approved by the Board. The committee charters are reviewed annually and are updated as necessary to reflect changes in regulatory requirements and evolving oversight practices. In 2017, with the exception of the Value Enhancement Committee,2019, all of the committee charters were amended as described below, and all four of the current committee charters are available on our websitewww.itron.com, by selecting “Investors” and then “Corporate Governance.”
at http://investors.itron.com/corporate-governance-0. The following table shows the currentbelow provides membership of each committee at the end of fiscal 2017:
year 2019, followed by a description of each committee’s responsibilities.
Director | Compensation | Nominating and Corporate Governance | Audit/Finance | |||||
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Thomas S. Glanville |  | |||||||
Frank M. Jaehnert |  | | ||||||
Jerome J. Lande | | |||||||
Timothy M. Leyden | | |||||||
Thomas L. Deitrich | ||||||||
Daniel S. Pelino | | | ||||||
Gary E. Pruitt | | |||||||
Diana D. Tremblay | | |||||||
Lynda L. Ziegler | |
| Committee Member | | Committee Chair |
Our sole employee director, Philip C. Mezey, does not sit on any committees.
Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee (CGC)(NCGC) is primarily responsible for for:
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To assist the committee in its identification of qualified director candidates, it has historically engaged an outside search firm and may do so in the future. The CGCNCGC also reviews the compensation paid to our directors and makes recommendations to the Board on director fees and other compensation payable to the Board members.
The Board amended the CGC’s charter in December 2017 to remove the responsibility of reviewing succession plans for the CEO and key executives as this is done by the full Board. All of the members of the CGCNCGC are independent under SEC rules and NASDAQNasdaq listing standards. The CGC held five meetings during 2017. rules.
The Audit/Finance Committee (AFC) monitorsis primarily responsible for:
The Board has determined that all members of the AFC are independent under SEC rules and NASDAQNasdaq listing standards,rules, including Rule10A-3 of the Exchange Act.
The Board amended the AFC’s charter in 2017 to reorganize current functions to reflect order of importance and added a periodic review of critical accounting policies to the AFC’s responsibilities. The CGCNCGC has determined that all of the current members of the Audit/Finance CommitteeAFC are financially literate in accordance with the Standards of NASDAQNasdaq Rule 5605(c)(2)(A)(iv), and “audit committee financial experts” as defined in Item 407(d)(5) of RegulationS-K. The AFC held eight meetings during 2017.
The Compensation Committee (CC) is primarily responsible for making recommendationsfor:
The CC, when appropriate, may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Board or to Company officers.
The Board amended the CC’s charter in December 2017 to remove the responsibility of reviewing executive and management development plans. The Board has determined that all members of the CC are independent under SEC rules and NASDAQNasdaq listing standards.rules. In addition, all CC members are“non-employee “non-employee directors” underSection 16b-3 of the Exchange Act and “outside directors” for the purposes of Section 162 (m)162(m) of the U.S. Internal Revenue Code. The CC held nine meetings during 2017.See “EXECUTIVE COMPENSATION – CD&A” in this proxy statement for more information on the CC’s responsibilities regarding the compensation of our executives.executive officers.
Value Enhancement Committee. The Value Enhancement Committee (VEC) reviews, studies and develops potential initiatives and transactions designed to create durable, sustainable long-term shareholder value. The VEC is charged with making recommendations to the Board regarding actions to be considered in furtherance of the committee’s purpose. The Board has determined that all members of the VEC are independent under SEC rules and NASDAQ listing standards. The VEC held six meetings in 2017.
Compensation Committee Interlocks and Insider Participation
No member of our Board’s Compensation Committee has served as an officer or employee of the Company. None of our executive officers serve as a member of the compensation committee of any other company that has an executive officer serving as a member of our Board. None of our executive officers serve as a member of the board of directors of any other company that has an executive officer serving as a member of our Board’s Compensation Committee.
Transactions with Related Persons
There were no related person transactions required to be disclosed pursuant to Item 404(a) of RegulationS-K in fiscal year 2017.2019. In order to determine this, the Board requires our executive officers, directors orand director nominees to disclose certain information regarding related person transactions. A “related person transaction” generally is a transaction (including any indebtedness or a guarantee of indebtedness) that involves the Company’s directors, executive officers, director nominees, 5% or more beneficial owners of the Company’s common stock, immediate family members of these persons, or entities in which one of these persons has a direct or indirect
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material interest. The current threshold required to be disclosed under SEC regulations is $120,000. Under its charter, the Corporate GovernanceAudit/Finance Committee of the Board has been delegated with the responsibility of reviewing and approving any related person transactions.
Our Board’s Role in Risk Oversight
The Board has overall responsibility for risk oversight, including, as part of regular Board and committee meetings, general oversight of our executives’ management of risks relevant to the Company. The Board routinely determines, directly or through Board committees, that:whether: (i) there are adequate processes designed and implemented by Company management such that risks have been identified and are being managed; (ii) the risk management processes are intended to ensure that Company risks are taken into account in corporate decision-making; and (iii) the risk management processes and procedures ensure that material risks to the Company are brought to the attention of the Board or an appropriate committee of the Board. Each of the Company’s risk management processes are reviewed periodically (but at least once a year) by either the Board or an appropriate committee to which the Board has delegated specific oversight responsibility, as described below. Throughout the year, the Board and each committee spend a portion of their time reviewing and discussing specific risk topics. Committee Chairs regularly report to the full Board on actions taken at committee meetings. At least annually, the Board conducts a review of our long-term strategic plans, and at each of our quarterly meetings, our General Counsel updates the Board on material legal and regulatory matters.
The Audit/Finance Committee is responsible for reviewing our major financial risk exposures, financial reporting, internal controls, credit and liquidity risk, compliance risk, and key operational risks. It meets regularly with our independent auditors and in executive session to facilitate a full and candid discussion of risk and other issues. Our Compensation Committee is responsible for overseeing compensation risks, including assessing
Board | Compensation | Nominating and Corporate Governance | Audit/Finance | ||||
• | Overall responsibility for risk oversight | • | Responsible for overseeing compensation risks, including assessing possible risks from our compensation plans and policies for our executives and ensuring that our executive compensation is aligned with Company performance | • | Oversees our overall corporate governance, including Board and committee composition, Board size and structure, and our director independence | • | Responsible for reviewing our major financial risk exposures, financial reporting, and monitors our credit and liquidity risk, and compliance risk |
• | Assesses directly, through Board committees or through established processes and procedures, risks relevant to the Company | ||||||
• | Reviews our Governance Principles annually pursuant to its charter | ||||||
• | Meets regularly with our independent auditors and in executive session to facilitate a full and candid discussion of risk and other issues | ||||||
• | Reviews a summary and assessment of such risks annually and in connection with discussions of various compensation elements and benefits throughout the year | ||||||
possible risks from our compensation plans and policies for our executives and ensuring that our executive compensation is aligned with Company performance. The Compensation Committee reviews a summary and assessment of such risks annually and in connection with discussions of various compensation elements and benefits throughout the year. Our Corporate Governance Committee oversees risks related to our overall corporate governance, including Board and committee composition, Board size and structure, and our director independence. The Corporate Governance Committee reviews our Governance Principles annually pursuant to its charter.
Following a review of the Company’s current risk management systems and processes, the Board has concluded that the current allocation of oversight responsibilities between the Board and its committees is adequate, provided that the committees continue to coordinate their risk oversight responsibilities, share information appropriately with the other Board members, and provide timely and adequate reports to the full Board. The Board continually evaluates its risk oversight role.
The Company has adopted a Code of Conduct that applies to all directors, officers, and employees of the Company and any subsidiary of the Company and is available on the Company’s website,www.itron.com, by selecting “Investors” and then “Corporate Governance.” In addition, we have adopted policies and procedures for reporting and investigating suspected violations of the Code of Conduct. The Company intends to satisfy any future
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disclosure requirement under Item 5.05 of Form8-K regarding an amendment to or waiver from application of the code of ethics or provisions of the Code of Conduct, that applies to the CEO or the CFO, by posting such information on our website,www.itron.com.
The Company has adopted an Anti-Hedging Policy that prohibits our directors, officers, and employees from entering into transactions involving our securities that are designed to hedge or offset any decrease in the market value of Itron securities.See “EXECUTIVE COMPENSATION – CD&A – Anti-Hedging Policy” in this proxy statement for more information on this policy.
Incentive Repayment (Clawback) Policy
The Company has adopted a repayment or “clawback” policy, which provides that if a bonus or equity award (Award) is paid that is conditioned on meeting certain financial metrics, and, subsequently, there is a required financial restatement, which, had the correct information been known at the time, would have resulted in a lower Award, then the Board has the right to demand repayment of the excess amount of the Award, net of taxes, from an executive officer who has received an Award. If the Board (or its delegated committee) determines that fraud has resulted in a material financial restatement, it is required that the Board demand repayment from the executive officer engaged in the fraud of the full Award, net of taxes.
Director Nominations by Shareholders
In accordance with the Company’s Amended and Restated Bylaws, in order to nominate a director for election to the Board at an annual meeting of shareholders, a shareholder must deliver written notice of such nomination to the Corporate Secretary of the Company at the Company’s executive offices no fewer than 60 days nor more than 90 days prior to the date of the annual meeting (or if less than 60 days’ notice or prior public disclosure of the date of such annual meeting is given or made to the shareholders, not later than the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure was made). The notice of a shareholder’s intention to nominate a director must include:
the name and address of the shareholder; |
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and the following information with respect to the person nominated by the shareholder:
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Other directors and senior management of the Company may also recommend director nominees for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee evaluates director nominees, including nominees that are submitted to the Company by a shareholder, taking into consideration the qualification criteria set forth under “ELECTION OF DIRECTORS – Director and Director Nominee Qualifications” in this proxy statement. In the event of a shareholder recommendation, the Nominating and Corporate Governance Committee screens and evaluates the person recommended in the same manner as other candidates. In addition, the Nominating and Corporate Governance Committee determines if the proposed
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director nominee will have sufficient time available to effectively carry out his or her Board duties and responsibilities effectively.responsibilities. The Nominating and Corporate Governance Committee may then recommend the director candidate to the Board for its consideration, if deemed appropriate.
Shareholder Communications with the Board
The Company’s Board provides a process whereby shareholders may contact the Board or any committee as a group or any committee Chair or individual director, by email addressed toboardofdirectors@itron.com. Shareholders should clearly specify in each communication the name of the director to whom the communication is addressed. Shareholders may also write to the Board or any committee as a group or any committee Chair or individual director by sending the communication to: Itron, Inc., Attn: Corporate Secretary, 2111 N. Molter Road, Liberty Lake, WA 99019. Communications may also be submitted through our website atwww.itron.com by selecting “Investors,” “Corporate Governance,” and then “Contact the Board.”
Shareholder communications are delivered directly to the Corporate Secretary of the Company, who then determines whether to forward such communications to the specified director addressees. You can access a description of the process that the Corporate Secretary uses for determining whether to forward shareholders’ communications to directors at our website,www.itron.com, by selecting “Investors,” “Corporate Governance,” and then “Contact the Board.”
Shareholders wishing to submit proposals for inclusion in the proxy statement relating to the 20192021 annual shareholders meeting should follow the procedures specified under “SHAREHOLDER PROPOSALS FOR THE 20192021 ANNUAL MEETING”MEETING” in this proxy statement. Shareholders wishing to nominate directors should follow the procedures specified under “CORPORATE GOVERNANCE –Director Nominations by Shareholders”Shareholders” in this proxy statement.
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PROPOSAL 2 – ADVISORY APPROVAL OF EXECUTIVE COMPENSATION (Say-on-Pay)
We are asking our shareholders to approve a non-binding advisory resolution on the Company’s executive compensation programs for our named executive officers (NEOs) (commonly known as “say-on-pay”) as we have described them in this proxy statement. Although this advisory vote is non-binding, the Board and the Compensation Committee will take into account the outcome of the vote when considering future compensation decisions for our executives. As discussed in the Compensation Discussion and Analysis (CD&A) section of this proxy statement, we believe our compensation programs are reasonable, competitive and strongly focused on pay-for-performance principles that will result in the creation of long-term shareholder value. Some of the features of our compensation programs that illustrate our philosophy are:
| • | The compensation of our NEOs varies depending upon the achievement of pre-established performance goals determined by the Compensation Committee (or the independent members of the Board, for the CEO), which are intended to serve as incentives for our NEOs. When performance does not meet the pre-established target goals, as was the case in prior years, then the amount of compensation paid to our executives is correspondingly reduced or eliminated. Conversely, when the Company’s operating and financial performance meets or exceeds the pre-established performance metrics, then the amount of compensation paid to our executives increases. See “The 2019 Executive Compensation Program in Detail” in the CD&A. |
We believe our executive compensation policies have enabled us to retain and attract exceptional senior executives whose talent and experience have helped Itron become a leader in our industry. Our Compensation Committee (and for the CEO compensation, also the independent members of the Board), which provides overall direction for our compensation programs, believes the fiscal year 2019 compensation paid to our NEOs is reasonable and appropriate and adequately reflects the Company’s overall performance in 2019.
Shareholders are encouraged to read the full details of our executive compensation programs as described in the “EXECUTIVE COMPENSATION” section of this proxy statement.
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For the reasons provided above, we recommend that the shareholders vote in favor of the following resolution:
RESOLVED, that the shareholders approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis section of the Company’s proxy statement for the 2020 annual meeting of shareholders, which disclosure includes the Executive Compensation Tables, and the accompanying footnotes and narrative disclosures within the proxy statement.
The Board recommends that shareholders vote “FOR” the approval of the compensation paid to our named executive officers in fiscal year 2019 |
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Executive Compensation Discussion & Analysis (CD&A)
This CD&A explains our executive compensation program for our named executive officers (NEOs) listed below. The CD&A also describes the process followed by the Compensation Committee of the Board (referred to as the Compensation Committee or the Committee in this CD&A) for making pay decisions, as well as its rationale for specific decisions related to 2017.
2019.
Name | Title | |
Thomas L. Deitrich(1) |
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| President and CEO | |
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Joan S. | Senior Vice President and CFO | |
Sarah E. Hlavinka |
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| Senior Vice President, General Counsel and Corporate Secretary | |
Michel C. Cadieux |
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Senior Vice President, | |
Donald L. Reeves III | Senior Vice President, |
Philip C. Mezey(2) | Former President and |
| (1) | Mr. Deitrich was promoted and appointed as President and CEO, and appointed to the Board, effective August 6, 2019. |
| (2) | Mr. Mezey became a non-executive officer employee effective August 6, 2019 through August 31, 2019. Mr. Mezey became a non-employee consultant effective September 1, 2019 through December 31, 2019. |
On January 22, 2019, Philip Mezey, the Company’s President and CEO and a member of the Board of Directors, informed the Board of his intention to retire from his positions. Mr. Mezey continued to lead the Company as President and CEO and served as a member of the Board until his successor was appointed. On August 6, 2019, and after an extensive global search, the Board promoted and appointed Thomas Deitrich to succeed Mr. Mezey as President and CEO, and Mr. Deitrich was appointed to the Board at that time. Upon the appointment of Mr. Deitrich as President and CEO, Mr. Mezey remained with the Company as a non-executive officer employee through August 31, 2019, and then as a non-employee consultant through December 31, 2019, to help facilitate a seamless transition. For more information about the impact of this transition on Messrs. Mezey’s and Deitrich’s 2019 compensation, see “Compensation Highlights” in this CD&A for details.
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In 2017,Itron made solid progress in 2019 on the Company’s strategic and operational initiatives. We expanded our footprint of networked endpoints 10% since 2018; drove backlog to a record high $3.2 billion with a book to bill ratio exceeding 1:1; completed both our 2016 restructuring program and our integration of Silver Spring Networks, Inc., which we improvedacquired in 2018; and focused on our business results compared to 2016 driven by higher salescustomers’ success with innovative new offerings, such as Distributed Intelligent endpoints and enhanced data analytics. Itron’s leadership team remained focused with the appointment of our smart solutionsthen-COO, Mr. Deitrich, as our new President and continued focus onCEO in August of 2019, and we made significant progress across four key metrics that are all strongly embedded in our Company objectives for improved predictability, profitability, and growth. We exceeded Company targets forexecutive compensation program: Revenue, non-GAAP earnings per diluted share(1) (EPS)(non-GAAP EPS), while annual revenue remained roughly the same. We incurred higher costs in the second half of 2017 as we implemented changes in our supply chain, and we fell short on our earnings before interest, tax, depreciation and amortization (Adjusted EBITDA)(1)(2) management target. These measurements are all strongly embedded in, and Free Cash Flow(1), as follows:
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These financial results reflect our continued operational transformation,Networked Solutions segment, which grew 16%;
Management remains committed as we have continued to enhance Itron’s market position. In particular, we continued the expansion of networked endpoints; the development of innovative solutions in the Smart Energy and Smart City space; and the empowerment of our global supply chainemployees to drive operational improvement and efficiencies across our business. The combination of these efforts will providecontribute to long-term flexible capacity and lower costs, while drivingvalue for our core business objectives of predictability, profitability, and growth. During this time, our executive leadership team also remained focused on the Company’s strategic vision to be a leading partner with utilities in the resourceful delivery and use of energy and water. The Company took additional steps to invest in the internet of things (IoT) and networking capabilities to reduce operating expenses and create new revenue opportunities. The 2017 acquisitions of Comverge, Inc. and Silver Spring Networks, Inc. were of significance —
further advancing our strategy of delivering highly-secure, value-generating solutions for utilities, smart cities, and the broader industrial IoT sector. These achievements demonstrate our executive leadership’s balanced approach to driving long-term growth in addition to near-term financial improvements at a time when our industry dynamics are changing.
Our executive compensation program has three primary elements: base salary, annual cash incentives (as part of our Executive Management Incentive Plan (EMIP)), and long-term equity incentives (as part of our Long-Term Incentive Plan (LTIP)). Each of these compensation elements serves a specific purpose in our compensation strategy. Base salary is an essential component to any market-competitive compensation program. Annual incentives reward the achievement of short-term goals, while long-term incentives drive our NEOs to focus on shareholder value creation. Based
In February 2019, after a challenging fiscal 2018, the Compensation Committee took several important actions when setting 2019 EMIP financial goals and 2019 LTIP award values:
Performance Objectives | Performance Metrics & Weightings | EMIP Weighting |
Financial (100%) | Adjusted EBITDA* | 60% |
Revenue | 30% | |
Free Cash Flow | 10% | |
Total | 100% |
| * | If the threshold Adjusted EBITDA goal is not achieved, no portion of the EMIP award will be paid. |
| (1) | A schedule reconciling Adjusted EBITDA to net income, non-GAAP EPS to net income, and Free Cash Flow to GAAP free cash flow is available on page 41 of our 2019 Annual Report on Form 10-K. |
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Adjusted EBITDA focuses on profitable growth, while continuing to provide strong accountability for returns. Revenue ensures we are delivering an appropriate level of top-line growth. Free Cash Flow is a strong indicator of profitability adjusted for non-cash expenses and capital investments. The Committee retains discretion to further adjust the award upward or downward based on its assessment of individual performance, and in fiscal 2019 took the following discretionary actions:
The Compensation Committee believes that these 2019 actions appropriately recognized the performance results from fiscal 2018, while balancing our leadership stability and retention objectives during a time of uncertainty and transition. See “Long-Term Incentives” in this CD&A for details.
At the close of 2019, based on our financial performance and consistent with the design of our program, the Compensation Committee made the following executive compensation payout decisions for fiscal 2017:
2019:
Salary: None of the NEOs received base salary adjustments in |
EMIP: |
LTIP: Under the LTIP, NEOs |
These payouts are aligned with the Company’s business performance in 2017.2019. The Compensation Committee believes that the design and structure of the Company’s incentive program provide a direct link between Company performance and pay outcomes for the executives, as described in greater detail in the following section.
Changes to Mr. Deitrich’s Compensation. In recognition of Mr. Deitrich’s promotion to President and CEO and to bring his compensation up to levels consistent with his experience and new role, the Committee approved the following changes:
2018 | 2019 | |||||
Annualized Base Salary Rate | $ | 550,000 | $ | 800,000 | ||
Target EMIP (as a % of Base Salary)* | 100 | % | 125 | % | ||
Target LTIP Award** | $ | 2,000,000 | $ | 1,500,000 | ||
One-Time Equity Award Upon Promotion*** | — | $ | 3,500,000 | |||
| * | 2019 EMIP award was earned on a prorated basis. See “Annual Cash Incentives: The Executive Management Incentive Plan (EMIP)” in this CD&A for details. |
| ** | 2019 Target LTIP Award was granted on the same basis as the other NEOs prior to Mr. Deitrich’s promotion. |
| *** | See “Long-Term Incentives” in this CD&A for details. |
Changes to Mr. Mezey’s Compensation. As part of his Transition and Retirement Agreement (dated January 21, 2019), Mr. Mezey continued to serve as President and CEO and member of the Company’s Board of Directors until Mr. Deitrich succeeded him in the role effective August 6, 2019. During this time and through August 31, 2019, Mr. Mezey continued to receive the same base salary and benefits and continued to vest in his outstanding equity
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awards in accordance with their existing terms. He was also eligible to receive a pro-rated annual cash bonus for fiscal 2019, will continue to vest in his outstanding equity awards per their terms for terminations due to retirement, and will be eligible to exercise his vested stock options for up to three years following his separation. Mr. Mezey, due to his pending retirement, did not receive an annual LTIP grant in 2019.
Also pursuant to Mr. Mezey’s Transition and Retirement Agreement, upon the appointment of Mr. Deitrich to his new role, Mr. Mezey resigned from his positions. He then served as a non-executive officer employee effective August 6, 2019 through August 31, 2019, and then as a non-employee consultant effective September 1, 2019 through December 31, 2019. In these subsequent roles, Mr. Mezey was responsible for transitioning all duties and responsibilities to our new CEO, assisting as requested by our new CEO, and performing any other duties or responsibilities as reasonably requested by the Board. During his consulting period, Mr. Mezey received a monthly consulting fee of $130,000.
Linking CEO Pay and Performance
A key component of our executive compensation philosophy is the link between compensation and overall business results and shareholder value creation. We strive to clearly communicate this to our shareholders and believe that looking at realizable pay in the following different contexts can illustrate this point effectively:
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CEO Realizable Pay versus Pay Opportunity. Many of the required disclosures concerning CEO compensation discuss pay elements or opportunities that may be earned by the CEO. Realizable pay, on the other hand, more closely considers actual compensation earned (or earnable) based on performance. To illustrate the differences, we compared pay opportunity to realizable pay on ayear-by-year basis over the past three years; for this purpose, we use the following definitions:
Pay opportunityrepresents:
The sum of base salary and target EMIP opportunity for each fiscal year; and |
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Realizable payrepresents:
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The chart below illustrates Mr.Messrs. Mezey’s (for 2017 and 2018) and Deitrich’s (for 2019) realizable pay compared to histheir pay opportunity,opportunities, as well as the correspondingyear-end stock price for the last three years.
CEO Realizable Pay for Performance Relative to Peer Group. To provide another perspective, it is also helpful to understand the degree of alignment between CEO realizable pay andperformance relative to our peer companies.companies. See ““Our Decision MakingDecision-Making Process – The Role of Peer Companies”Companies” in this CD&A for a list of the peer companies. To evaluate this alignment, we analyzed the relationship between realizable total direct compensation (TDC) for the CEO over 2014-20162016-2018 for the peer companies and for the Company, and TSR for the three years ended December 31, 2016.2018. This time period was selected because it was most closely aligned with the compensation information available for our peer group companies for the years that Mr. Mezey has beenwas our CEO.
For this purpose, realizable TDC is defined as the sum of:
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The chart below illustrates the percentile ranking of our three-year TSR and Mr. Mezey’s realizable TDC relative to our peer companies. As the chart indicates, during the three-year period our TSR performance was abovebelow the median of the peer companies and Mr. Mezey’s realizable TDC was also abovebelow the median. Mr. Mezey’s realizable TDC was within an “alignment corridor” representing a strong correlation between compensation and performance.
Best Compensation Practices & Policies
We also believe the followingCompany’s practices and policies promote sound compensation governance and are in the best interests of our shareholders and executives:
What We Do | What We Don’t Do | ||
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Heavy emphasis on variable compensation | ☒ |
No employment agreements | |
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Significant portion of annual long-term incentives are performance based | ☒ |
No “single trigger”change-in-control cash payments | |
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Rigorous stock ownership guidelines | ☒ |
No tax | |
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Incentive Repayment (Clawback) Policy | ☒ |
No option backdating or repricing | |
☑ | |||
Independent compensation consultant | ☒ |
No hedging or pledging | |
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Annual risk assessments | ☒ |
No special perquisites | |
20172019 Say-On-Pay & Shareholder Engagement
Each year, we carefully consider the results of our shareholdersay-on-pay vote from the preceding year. We also take into account the feedback we receive from our major shareholders, which is solicited by the Board Chair, of the Board, and the Chair of the Compensation Committee, either in person or via telephone.
In 2017,2019, approximately 95%94% of the votes cast supported our executive compensation decisions. Since 2012, theThe Board has regularly conductedconducts proactive outreach meetings with the company’sCompany’s largest shareholders. During 2017,2019, the Company offered meetings to shareholders representing 45%approximately 54% of shares outstanding, and directors met with shareholders representing 15%approximately 29% of shares outstanding to discuss topics including Company
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strategy and performance, governance, and executive compensation. Overall, our shareholders are highly supportive of our executive compensation program and its direction. Based on the positive feedback we received from our major shareholders, in addition to the vote result in 2017, we did not make substantive changes to the structure of our program. We will continue to keep an open dialogue with our shareholders to help ensure that we have a regular pulse on investor perspectives.
Our Compensation Philosophy & Objectives
The philosophy underlying our executive compensation program is to employ the best leaders in our industry to ensure we execute on our business goals, promote bothshort-and long-term profitable growth of the Company, and create long-term shareholder value, all grounded in the following guiding principles:
Pay for Performance | A significant portion of an executive’s total compensation should be variable (“ | |
Shareholder Alignment | Executives should be compensated through pay elements (base salaries and annual- and long-term incentives) designed to | |
Competitiveness | Target compensation should be set at the median of market to ensure that compensation is at a level that is competitive with that being offered to individuals holding comparable positions at other companies with which we compete for business and leadership talent. | |
Attraction and Retention | The executive compensation program should enable the Company to attract |
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The Principal Elements of Pay: Total Direct Compensation (TDC)
Our compensation philosophy is supported by the following principal pay elements:
Pay Element | How It’s Paid | What It Does | How It Links to Performance | |||||||
Base Salary | Cash (Fixed) |
| Provides a competitive fixed rate of pay relative to similar positions in the market, and enables the Company to attract and retain critical executive talent | Based on job scope, level of responsibilities, individual performance, experience, and market levels | ||||||
Annual Cash Incentive (EMIP) | Cash (Variable) |
| Focuses executives on achieving annual financial | • |
Payouts: 0% to
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• | If the threshold Adjusted EBITDA goal is not achieved, no portion of the EMIP award will be paid | |||||||||
• | Financial metrics:
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• | The Committee retains discretion to further adjust the award upward or downward based on its assessment of individual performance | |||||||||
Long-Term Incentive Plan (LTIP)** | Equity (Variable) |
| Provides incentives for executives to execute on longer-term financial/strategic growth goals that drive shareholder value creation and support the Company’s retention strategy | See below | ||||||
| Rewards achievement of financial goals measured over a three-year performance period | • |
Payouts: 0% to 200% of a target based on results againstpre-established financial goals and relative TSR performance
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• | Financial metrics:Non-GAAP EPS and relative TSR | |||||||||
Stock | Rewards for stock price appreciation | • |
Exercise price: 100% of fair market value on the grant date
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• | Vesting: 1/3 per year on the anniversary of the grant date
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• | Exercise term: 10 years | |||||||||
Time-Vested Restricted Stock Units (RSUs) | Supports retention | • |
Vesting: 1/3 per year on the anniversary of the grant date
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• | Paid in Itron shares at vesting | |||||||||
| * | Plan design allows for 200%; for fiscal 2019, the maximum payout was set at 150% of target. |
| ** | Mr. Mezey, due to his pending retirement, did not receive an annual LTIP grant in 2019. |
| *** | As described on page 21 of this CD&A, none of the NEOs received stock option grants for 2019, except for Mr. Deitrich who received stock options upon his promotion to President and CEO. |
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The charts below show the target annual TDC of our CEO, Mr. Deitrich, and our other NEOs for fiscal 2017.2019. These charts illustrate that a majority of NEO TDC is variable (84%(75% for our CEO and an average of 71%66% for our other NEOs)..These charts do not include any one-time equity grants or awards outside of target annual TDC.
Our Decision MakingDecision-Making Process
The Role of the Compensation Committee
The Compensation Committee oversees the executive compensation program for our NEOs. The Committee is comprised of independent,non-employee members of the Board. The Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. Details of the Committee’s authority and responsibilities are specified in the Compensation Committee’s charter, which may be accessed at our website,www.itron.com, by clickingselecting “Investors,” and then “Corporate Governance.”
The Committee makes all final compensation and equity award decisions regarding our NEOs, except for the CEO, whose compensation is determined by the independent members of the full Board, based upon recommendations of the Committee.
The Role of Management
Members of our management team attend regular meetings where executive compensation, Company and individual performance, and competitive compensation levels and practices are discussed and evaluated. Only the Committee members are allowed tocan vote on decisions regarding NEO compensation.
The CEO reviews his recommendations pertaining to the compensation of other executives(non-NEO) paynon-NEO executive officers with the Committee providing management input, transparency, and oversight. Decisions onApprovals of non-NEO pay executive officer compensation are made by the CEO.Committee. The CEO does not participate in the deliberations of the Committee regarding his own compensation. Independent members of the Board make all final determinations regarding CEO compensation.
The Role of the Independent Consultant
The Committee engages an independent compensation consultant to provide expertise on competitive pay practices, program design, and an objective assessment of any inherent risks of any programs. Pursuant to authority granted to it under its charter, the Committee has hired F.W. Cook as its independent consultant. F.W. Cook reports directly to the Committee and does not provide any additional services to management. The Committee has conducted an independence assessment of F.W. Cook in accordance with SEC rules.
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The Role of Peer Companies
For some of our direct competitors who are not publicly held, or are smaller business units within a conglomerate, there is limited compensation information available. As a result, our peer companies for purposes
of benchmarking executive compensation (Peer Companies) generally consist of direct competitors for which public information is available, who are part of the same broad Standard & Poor’s (S&P) industry classifications of technology hardware and equipment or in software and services, and who are similar in size and scope of global operations as Itron. The Committee reviews the Peer Companies on an annual basis.
ForAs disclosed in last year’s proxy statement, the purposes ofCommittee approved significant changes to the Peer Companies for setting 2017 compensation during 2018. Given the extensive review during that time, and with the support of F.W. Cook, the Committee did not make anydetermined that no changes to the Peer Companies. Note that due to acquisition by MicroChip technology in April 2016, Atmel Corporation was eliminated.Companies were necessary for the purposes of setting 2019 compensation. The 2019 Peer Companies are listed below:
Peer Companies | Peer Data as of12-31-2016 | |||||||||||||
Ametek Inc. | OSI Systems, Inc | $ Millions | ||||||||||||
Ciber, Inc.* | Roper Technologies Inc. | Percentile | Revenue | Market Cap | ||||||||||
Diebold Nixdorf, Inc. | Teradyne Inc. | 25th | $1,156 | $1,782 | ||||||||||
EPAM Systems, Inc.* | Trimble Inc. | 50th | $2,058 | $3,905 | ||||||||||
ESCO Technologies Inc. | Unisys Corporation* | 75th | $3,623 | $7,887 | ||||||||||
FLIR Systems, Inc. | Watts Water Technologies, Inc | |||||||||||||
Juniper Networks, Inc.* | Xylem Inc. | Itron | $2,013 | $2,405 | ||||||||||
Mueller Water Products, Inc. | Zebra Technologies Corp* | Percentile Rank | 50% | 41% | ||||||||||
Peer Companies | |
Diebold Nixdorf, Inc.* | PTC Inc. |
EPAM Systems, Inc.* | Roper Technologies Inc.* |
F5 Networks, Inc.* | Teradyne Inc. |
FLIR Systems, Inc. | Trimble Inc.* |
ITT Inc. | Unisys Corporation* |
Keysight Technologies, Inc.* | Watts Water Technologies, Inc |
Mueller Water Products, Inc. | Xylem Inc. |
NetScout Systems, Inc.* | Zebra Technologies Corp* |
Peer Data as of 12-31-2018 | ||||||
$Millions | ||||||
Percentile | Revenue | Market Cap | ||||
25th | $ | 1,723 | $ | 2,109 | ||
50th | $ | 2,464 | $ | 6,145 | ||
75th | $ | 3,963 | $ | 9,827 | ||
Itron | $ | 2,376 | $ | 1,864 | ||
Percentile Rank | 49 | % | 21 | % | ||
| * | Software and services included in their business |
For each of the Peer Companies, data regarding base salaries, annual incentives, and long-term incentives was obtained from their annual proxy statements and reviewed by the Committee’s compensation consultant, Pearl Meyer.statements. This data was supplemented with survey data prepared by Radford Survey & Consulting (Radford Survey), which provides compensation market information on more than 700 technology companies, aggregated and presented anonymously. The Radford Survey data was narrowed to those technology companies with revenues between $1 billion and $3 billion, similar to Itron.
With the support of F.W. Cook, the Committee evaluates this data for informational purposes when establishing a range of competitive compensation for our NEOs. For each NEO, the Committee determines the salary range, annual incentive target, and long-term incentive taking into consideration market data for the position being evaluated. However, market data is not the sole determinant of the Company’s practices or executive compensation levels. The Committee also takes into accountconsiders the experience, performance, responsibilities, and contributions to the Company by each NEO when making its decisions. For the CEO, the Committee makes a recommendation to the full Board, and the independent members of the Board review and approve the CEO’s compensation.
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The 20172019 Executive Compensation Program in Detail
Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain executive leadership talent. In making base salary decisions, the Committee considers the CEO’s recommendations, as well as each NEO’s position and level of responsibility within the Company. The Committee takes into accountconsiders factors such as relevant market data as well as individual performance and contributions. The Committee approved the CEO recommended annualapproval of a base salary rate,increase for Mr. Deitrich in connection with his promotion to President and CEO, and the independent members of the Board approved the CEOhis annual base salary rate as follows:
NEO | 2016 | 2017 | % Increase | |||||||
Philip C. Mezey | $ | 800,000 | $ | 800,000 | 0% | |||||
Thomas L. Deitrich | $ | 550,000 | $ | 550,000 | 0% | |||||
Robert H.A. Farrow* | $ | 293,000 | $ | 300,000 | 2.4% | |||||
Joan S. Hooper** | $ | NA | $ | 485,000 | NA | |||||
Michel C. Cadieux | $ | 400,000 | $ | 400,000 | 0% | |||||
Shannon M. Votava | $ | 400,000 | $ | 400,000 | 0% | |||||
W. Mark Schmitz | $ | 475,000 | $ | 475,000 | 0% | |||||
NEO | 2018 | 2019 | % Increase | ||||||
Thomas L. Deitrich* | $ | 550,000 | $ | 800,000 | 45 | % | |||
Joan S. Hooper | $ | 485,000 | $ | 485,000 | 0 | % | |||
Sarah E. Hlavinka | $ | 475,000 | $ | 475,000 | 0 | % | |||
Michel C. Cadieux | $ | 400,000 | $ | 400,000 | 0 | % | |||
Donald L. Reeves III** | $ | ─ | $ | 425,000 | ─ | % | |||
Philip C. Mezey*** | $ | 825,000 | $ | 825,000 | 0 | % | |||
| * | Mr. |
|
| ** | Mr. Reeves’ was not an NEO prior to the Board’s determination of his status as an executive officer on |
| *** | Mr. Mezey was paid his base salary rate as an Itron employee through August 31, 2019 and received his monthly non-employee consulting retainer from September 1, 2019 through December 31, 2019. Please refer to “EXECUTIVE COMPENSATION TABLES—Summary Compensation Table” for details. |
Annual Cash Incentives: The Executive Management Incentive Plan (EMIP)
The 20172019 EMIP provided our NEOs the opportunity to earn a performance-based annual cash bonus. Actual bonus payouts depend on the achievement ofpre-established financial performance objectives and can range from 0% to 180%150% of target award amounts. Target annual bonus opportunities are expressed as a percentage of base salary and were established by the NEO’s level of responsibility and his or her ability to impact overall results. The Committee also considers market data in setting target award amounts. 2017Other than an increase from 100% of base salary to 125% of base salary for Mr. Dietrich in connection with his promotion, 2019 target award opportunities remained unchanged from 20162018 target award opportunities and were as follows:
NEO | ||||
| Target EMIP (as a % of Base Salary) | |||
Thomas L. Deitrich* | 125 | % | ||
| ||||
| ||||
Joan S. Hooper | 75 | % | ||
Sarah E. Hlavinka | 75 | % | ||
Michel C. Cadieux | 75 | % | ||
Donald L. Reeves III | 50 | % | ||
Philip C. Mezey** | 125 | % | ||
| * | Mr. |
| ** | Pursuant to his Transition Agreement, Mr. Mezey was eligible to receive a pro-rated annual cash incentive award for fiscal 2019. His award was based on his base salary |
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20172019 Financial Performance Objectives. An individual NEO’s EMIP award is based on a combinationmix of financial and strategic objectives.
Performance Objectives | Performance Metrics & Weightings | EMIP Weighting |
Financial (100%) | Adjusted EBITDA* | 60% |
Revenue | 30% | |
Free Cash Flow | 10% | |
Total | 100% |
| * | ||||
In 2017,2019, we used total Company consolidated revenueAdjusted EBITDA, Revenue and Adjusted EBITDAFree Cash Flow as the financial performance metrics in the EMIP because we believe it is important to focus on both top line growth, (revenue), as well as profitability. Total Companyprofitability and cash generation. Adjusted EBITDA provides a more useful illustration of our financial performance and the ongoing operations of our business, since the adjustments exclude certain expenses that are not indicative of our recurring core operating results. This facilitates better comparisons to our historical performance and our competitors’ operating results. To continue our focus on profits and sales performance, the weighting of the financial performance objectives (which represent 80% of a NEO’s EMIP award) for 2017 was 70% total Company Adjusted EBITDA and 30% total Company consolidated revenue. A schedule reconciling Adjusted EBITDA to net income andnon-GAAP EPS to GAAP EPS is available on page 41 of our 2017 Annual Report on Form10-K.
Each year, the Committee reviews the financial performance and considers adjustments for items that are not reflective of normal operating performance for that year. These adjustments are items that the Committee believes are fair to both participants and shareholders, encourage appropriate actions that foster the long-term health of the business, and are consistent with the objectives underlying our predetermined performance goals. Such exclusions may consist of the costs and financial effects of restructuring, acquisitions and dispositions, selected legal costs and settlements, and the effects of foreign currency translation. No adjustments were made in 2019.
20172019 Financial Performance Levels & Results. The following table shows the financial performance necessary to achieve threshold target and maximum bonus payout amounts, along with actual results for 2017:2019:
| ||||||||||||||||
| ||||||||||||||||
Threshold ($M) | Maximum ($M) | Actual Results ($M) | |||||||
Adjusted EBITDA | $ | 239 | $ | 350 | $ | 270.0 | |||
Revenue | $ | 2,318 | $ | 2,659 | $ | 2,502.5 | |||
Free Cash Flow | $ | 82 | 135 | $ | 112.5 | ||||
Note: Payouts are linearly interpolated for performance between threshold target and maximum.
2017 Strategic Goals & Achievements. The strategic goals for the NEOs, as determined in consultation with the CEO and reviewed with the Committee, generally encompass objectives as they relate to both the individual business segments and the entire Company. For 2017, they were developed to continue to strengthen our operational results through objectives that align to predictability, profitability, and growth.
Approved strategic goals included meeting return on invested capital targets, growth in Software and Services revenue and margin, cost ofnon-quality targets, improvement in predictability of quarterly financial results, and new hire goals focused on diversifying and broadening our organizational talent capabilities. The Company achieved partial results on goals relating to predictability in results and diversifying and refreshing organizational talent. The Company missed the goal related to growth in Software and Services revenue and margin, but fully achieved specific strategic goals relating to return on invested capital and cost ofnon-quality.
20172019 EMIP Results and Payouts.The following table summarizes the financial and strategic performance results for 2017:2019:
Performance Objectives | Weighting | Percentage of Attainment | Overall Weighted Attainment | ||||||
Adjusted EBITDA | 60 | % | 60.4 | % | 36.3 | % | |||
Revenue | 30 | % | 102.6 | % | 30.8 | % | |||
Free Cash Flow | 10 | % | 105.0 | % | 10.5 | % | |||
Total: | 100 | % | 77.5 | % | |||||
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| Performance Objectives | Weighting | Percentage of Attainment | Overall Weighted Attainment | |||||
| Total Company Consolidated Revenue | 24% | 87.79% | 21.07% | |||||
| Total Company Adjusted EBITDA | 56% | 89.70% | 50.23% | |||||
| Strategic Objectives | 20% | 67.50% | 13.50% | |||||
| Total: | 84.80% | |||||||
Based on the above financial performance results, the funding of the EMIP was set at 77.5% of each NEO’s applicable target. The Committee retains discretion to further adjust the award upward or downward based on its assessment of individual performance. The following table lists the actual awards and bonuses paid toearned by the NEOs in 2017:2019 (and paid in 2020):
NEO | Target (as a % of Base Salary) | Actual Payout (as a % of Salary) | Actual Cash Payout ($) | |||||||||
Philip C. Mezey | 125 | % | 106.01 | % | $ | 848,040 | ||||||
Thomas L. Deitrich | 100 | % | 84.80 | % | $ | 466,422 | ||||||
Robert H.A. Farrow | 50 | % | 42.40 | % | $ | 127,206 | ||||||
Joan S. Hooper* | 75 | % | 36.59 | % | $ | 177,465 | ||||||
Michel C. Cadieux | 75 | % | 63.60 | % | $ | 254,412 | ||||||
Shannon M. Votava | 65 | % | 55.12 | % | $ | 220,490 | ||||||
W. Mark Schmitz** | 75 | % | 0 | % | $ | 0 | ||||||
NEO | Target (as a % of Base Salary) | Target EMIP Payout ($) | Actual Cash Payout* ($) | ||||||
Thomas L. Deitrich** | 125 | % | $ | 732,475 | $ | 567,668 | |||
Joan S. Hooper | 75 | % | $ | 363,750 | $ | 310,097 | |||
Sarah E. Hlavinka | 75 | % | $ | 356,250 | $ | 248,484 | |||
Michel C. Cadieux | 75 | % | $ | 300,000 | $ | 232,500 | |||
Donald L. Reeves III | 50 | % | $ | 212,500 | $ | 164,688 | |||
Philip C. Mezey*** | 125 | % | $ | 686,606 | $ | 532,120 | |||
| * |
|
| ** | Mr. |
| *** | Pursuant to his Transition Agreement, Mr. Mezey was eligible to receive a pro-rated annual cash incentive award for fiscal 2019. His award was based on his base salary through August 31, 2019. |
The NEOs are eligible for long-term incentives, all of which were issued under the terms of our A&R 2010 Plan or Second A&R 2010 Plan. For fiscal year 2017,The Committee considers a mix of equity vehicles when granting long-term incentives wereand has historically granted awards as follows:
The Compensation Committee believes that these 2019 actions appropriately recognized the performance results from fiscal 2018, while balancing its leadership stability and retention objectives during a time of uncertainty and transition. For fiscal 2020, the Compensation Committee approved target long-term incentives using its historic mix of 50% PRSUs, 25% stock options and 25% RSUs.
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20172019 Target Long-Term Incentive Award Grants. The table below shows the target annual long-term incentive award values granted for fiscal 20172019 for each of the NEOs, which remained unchanged from 2016 values, except with respect to Ms. Votava who received an additional $50,000 in value as a result of benchmarking compensation data provided by F.W. Cook:NEOs:
NEO | PRSUs** (at Target) | Stock Options* | RSUs** | Total Value | ||||||||||||
Philip C. Mezey | $ | 1,600,000 | $ | 800,000 | $ | 800,000 | $ | 3,200,000 | ||||||||
Thomas L. Deitrich | $ | 1,000,000 | $ | 500,000 | $ | 500,000 | $ | 2,000,000 | ||||||||
Robert H.A. Farrow† | $ | 70,000 | $ | 35,000 | $ | 35,000 | $ | 140,000 | ||||||||
Joan S. Hooper | $ | 500,000 | $ | 250,000 | $ | 250,000 | $ | 1,000,000 | ||||||||
Michel C. Cadieux | $ | 400,000 | $ | 200,000 | $ | 200,000 | $ | 800,000 | ||||||||
Shannon M. Votava | $ | 300,000 | $ | 150,000 | $ | 150,000 | $ | 600,000 | ||||||||
W. Mark Schmitz†† | $ | 500,000 | $ | 250,000 | $ | 250,000 | $ | 1,000,000 | ||||||||
NEO | PRSUs* (at Target) | RSUs* | Total Value | ||||||
Thomas L. Deitrich | $ | 500,000 | $ | 1,000,000 | $ | 1,500,000 | |||
Joan S. Hooper | $ | 312,500 | $ | 625,000 | $ | 937,500 | |||
Sarah E. Hlavinka | $ | 200,000 | $ | 400,000 | $ | 600,000 | |||
Michel C. Cadieux | $ | 200,000 | $ | 400,000 | $ | 600,000 | |||
Donald L. Reeves III | $ | 106,212 | $ | 212,488 | $ | 318,700 | |||
Philip C. Mezey** | $ | — | $ | — | $ | — | |||
| * |
|
Award amounts for PRSUs and RSUs were determined based on the closing price of our common stock on the date of grant on February |
| ** | Mr. Mezey, due to his pending retirement, did not receive an annual LTIP grant in |
Additional Long-Term Incentive Awards. To align her compensation based on her performance and market competitiveness, Ms. Hooper received an additional equity grant of RSUs on May 17, 2019 with a grant date fair value of $250,000 determined based on the closing price of our common stock on the date |
|
A Closer Look at Performance-Based Restricted Stock Units (PRSUs). The actual number of PRSUs that are earned and vested are based on the achievement of specific financial performance goals and relative TSR results. Specifically, actual awards are linked to a three-year performance period that consists of three annual performance cycles. The performance result used to determine the actual award earned is calculated at the end of the three-year performance period by averaging the results of the three annual performance cycles, then is adjusted based on performance relative to TSR as compared to the Russell 3000 Index.
20172019 Performance Metrics:Non-GAAP EPS & Relative TSR. PRSUs are driven by the achievement ofnon-GAAP EPS and relative TSR performance targets.
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|
Year | Threshold 50% | Target 100% | Maximum 160% | Results | ||||||||||||
2015 | $ | 1.60 | $ | 1.85 | $ | 2.15 | $ | 0.73 | ||||||||
2016 | $ | 1.95 | $ | 2.25 | $ | 2.48 | $ | 2.54 | ||||||||
2017 | $ | 2.58 | $ | 3.00 | $ | 3.30 | $ | 3.06 | ||||||||
PSRUs are earned for performance below the threshold. The following table shows the thresholds, targets and maximums for non-GAAP EPS set by the Committee at the beginning of each annual performance cycle and our actual non-GAAP EPS results used for calculating PRSUs earned for 2017, 2018 and 2019:
Year | Threshold 50% | Target 100% | Maximum 160% | Results | ||||||||
2017 | $ | 2.58 | $ | 3.00 | $ | 3.30 | $ | 3.06 | ||||
2018 | $ | 2.86 | $ | 3.33 | $ | 3.66 | $ | 2.65 | ||||
2019 | $ | 2.46 | $ | 2.74 | $ | 3.58 | $ | 3.32 | ||||
Note: Thenon-GAAP EPS results shown are based on financial results as reported for 2015, 2016,2017, 2018, and 20172019 (as reported in our Annual Report on Form10-K for the year ended December 31, 2017)2019). Performance for levels achieved between threshold, target, and maximum are linearly interpolated.
|
If relative TSR attainment | Then the average EPS attainment | |
At or below the 25th percentile | Adjusted down by 25% | |
At 50th percentile | No adjustment | |
At or above the 75th Percentile | Increased by 25% |
Note: Adjustments for levels achieved between the 25th, 50th,25th, 50th, and 75th75th percentiles are linearly interpolated.
For the 20172019 PRSUs, the TSR targets and point multipliers were all established in February 20172019 by the Committee and by the independent members of the full Board for the CEO.
PRSUs Earned and Vested In 2019 (1/1/2017 (1/1/2015 – 12/–12/31/2017)2019). In 2015,2017, the NEOs at that time were granted their target PRSUs with vesting based on achievement of thenon-GAAP EPS and relative TSR performance targets for 2015, 2016,2017, 2018, and 20172019 as outlined above. The actual award earned was calculated at the end of the three-year performance period by averaging the results of the three annual performance cycles:
Year | Percentage of Attainment | |
2015 | 0% | |
2016 | 160% | |
2017 | 112% | |
2015-2017 Average | 90.67% |
Year | Percentage of Attainment | ||
2017 | 112 | % | |
2018 | 0 | % | |
2019 | 141 | % | |
2017-2019 Average | 84.5 | % | |
Consistent with the terms of the LTIP, the average performance attainment for the 2015-20172017-2019 PRSUs was then adjusted upward by 123%a factor of 1.08 since our TSR was at the 7258ndth percentile of the Russell 3000 index. As a result, the NEOs (other than those who waswere not employed at Itrongranted PRSUs in 2015)2017) earned 111.07%91.2% of their target PRSUs for the 2015-20172017-2019 performance cycle, as follows:
NEO | Target PRSUs Granted | Actual PRSUs Earned | ||
Philip C. Mezey | 45,338 | 50,356 | ||
Robert H.A. Farrow | 2,083 | 2,313 | ||
Michel C. Cadieux | 11,334 | 12,588 | ||
Shannon M. Votava | 7,084 | 7,868 | ||
W. Mark Schmitz† | 14,168 | 0 |
NEO | Target PRSUs Granted | Actual PRSUs Earned | ||||
Philip C. Mezey | 24,408 | 22,268 | ||||
Thomas L. Deitrich | 15,255 | 13,917 | ||||
Joan S. Hooper | 7,304 | 6,663 | ||||
Michel C. Cadieux | 6,102 | 5,567 | ||||
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Other Practices, Policies and Guidelines
We believe that when our executivesNEOs hold an equity interest in the Company, they will be less inclined to take excessive business risks. We maintain stock ownership guidelines to encourage our key executivesNEOs to own stock at least equal in value to:
Title | Multiple of Base Salary | |||
CEO | 6.0x | |||
CFO | 3.0x | |||
| ||||
Senior Vice Presidents | 2.0x | |||
Common stock, vested and unvested restricted shares, the netafter-tax value of unexercised vested and unvested stock options, and stock held in the deferred compensation, 401(k) and the Employee Stock Purchase plans all
count towards satisfaction of the guidelines. Additionally, participants are required to retain 50% of net profit shares from all stock acquired upon exercise or vesting unless the guideline level is achieved. Net profit shares are defined as the number of shares of stock acquired after payment of (i) in the case of options, any exercise price and tax withholding upon exercise, or (ii) in the case of restricted stock or restricted stock units, tax withholding upon vesting. We annually review the levels of stock ownership of our executives,NEOs, and, based on a rolling12-month average of our stock price as of the end of 2017,2019, all of our NEOs have met the guidelines, with the exception of Ms. Hooper who joined the Company within the last year and is making progress towards her goal.guidelines. We also have stock ownership guidelines for the members of our Board.
We prohibit the NEOs, other executive officers, directors and other executivesemployees from engaging in transactions designed to insulate them from changes in the Company’s stock price. Therefore, the Company has an Anti-Hedging Policy that prohibits our NEOs from entering into transactions that include (without limitation) equity swaps or short sales of our securities, margin accounts or pledges of our securities, and hedges or monetization transactions involving our securities that are designed to hedge or offset any decrease in the market value of Itron securities. In addition, the purchase or sale of puts, calls, options, or other derivative securities based on the Company’s securities is prohibited under this policy, and borrowing against any account in which our securities are held is prohibited.
We have entered intochange-in-control agreements with certain of our executivesexecutive officers to encourage their full attention and dedication to the Company in the event of achange-in-control of the Company, and to provide them with reasonable compensation and benefits in the event of achange-in-control and a subsequent loss of employment. All equity awards granted have “double trigger” requirements before vesting upon achange-in-control.See “EXECUTIVE“EXECUTIVE COMPENSATION TABLES – Potential Payments uponChange-in-Control” Change-in-Control in this CD&A” for descriptions of the benefits provided under thechange-in-control agreements.
Employment Agreements; Severance Policy
We do not have formal employment agreements with our executives.executive officers. However, we do have an Executive Severance Policy for our executivesexecutive officers that provides severance pay equal to one year’s base salary, employer benefit premium payments or reimbursements for one year, and outplacement assistance provided there is a release of claims,non-disparagement, and confidentiality agreement with the executive.executive officer. In addition, the executive officer must enter into aone-yearnon-compete one-year non-compete agreement, where enforceable.
In 2017, in connection with their roles, both Ms. Hooper and Mr. Farrow became participants underTemporary Plan Modification(s). Due to the Company’sCEO transition during 2019, effective February 20, 2019, the Compensation Committee approved a temporary enhancement to the Executive Severance Policy and also entered into indemnification agreementsfor the NEOs, except for Mr. Reeves who was not an NEO on that date. Under the temporary enhancement, in the form customaryevent an NEO is terminated not for cause within twelve (12) months of the Company’s officersnew CEO start date in 2019 or 2020, the executive will be provided eighteen (18) months of base salary and directors.employer benefit premium payments/reimbursement, and outplacement assistance provided that (1) the executive releases all claims that he or she may have against the Company, (2) enters into a one year non-compete agreement (where enforceable), (3) agrees not to solicit
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employees for a period of one year, and (4) agrees not to disparage the Company. The Company, at its sole discretion, may elect to make the severance payment under the temporary enhancement in equal payments over an 18-month period or in a lump sum. In addition, in the event an NEO is terminated not for cause within twelve (12) months of the new CEO start date in 2019 or 2020, PRSUs and RSUs granted in 2019 will continue to vest.
Incentive Repayment (Clawback) Policy
Under our Incentive Repayment (Clawback) Policy, in the event of a restatement of the Company’s financial results, the Compensation Committee, as designated by the Board, may review all cash or equity incentive awards that were based in whole or in part on the achievement of certain financial results.
Where award(s) were predicated, in part or in whole, upon the achievement of certain financial results that were subsequently the subject of a material financial restatement and, as determined by the Compensation Committee, the executive(s) engaged in fraud that caused or partially caused the need for the restatement, the Compensation Committee will seek forfeiture or reimbursement to the Company of the award(s) from the executive(s)executive officer(s) engaged in fraud in full, net of tax. If a material financial restatement was not due to fraud, the Compensation Committee may review the circumstances and, in its discretion to the extent practicable and allowable under applicable laws, determine to require forfeiture or reimbursement to the Company of the amount of the award(s) that exceeded the lower amount, payment or value that would have been made based on the restated financial results, net of tax.
Any recoupment under this policy may be in addition to, and shall not otherwise limit, any other remedies that may be available to the Company under applicable law, including disciplinary actions up to and including termination of employment.
Executive Deferred Compensation
ExecutivesExecutive officers located in the U.S. are eligible to participate in our Executive Deferred Compensation Plan (EDCP). We offer the EDCP to our highly-compensated employees to give them the benefit of being able to defer some of their taxable income, which also encourages their retention with the Company. Participants may defer up to 50% of their base salary and annual cash incentive into a nonqualified account.
ExecutivesExecutive officers are also permitted to elect to defer an additional portion of their base salary under the EDCP equal to the amount of any contributions returned to them during the year from the Company’s 401(k) Plan. In 2017,2019, the Company made matching contributions to the account of each participating executive at the rate of 75% of the first 6% of base salary and annual incentive deferred by the executive officer during that year, which is the same matching formula as the Company’s 401(k) Plan. The employer match into the EDCP startsafter the employee reaches IRS limits on the 401(k) Plan and is no longer eligible for the 401(k) match. The executives’executive officers’ account balances are adjusted for hypothetical investment earnings or losses according to the returns of the specified “measurement funds” selected by the executives. The measurement funds correspond to the mutual funds available for investment under the 401(k) Plan (but currently do not include a Company stock fund).
See ““EXECUTIVE COMPENSATION TABLES – 20172019 Nonqualified Deferred Compensation Table”Table in this CD&A” for more details.
General Benefits and Perquisites
Our NEOs receive the same benefits as our U.S. based salaried employees generally, including medical and dental benefits, group term life insurance, and short- and long-term disability protection. Itron also has relocation policies and benefits in place that may be applicable if an employee is required to move or has long termlong-term extended business travel to a new location.
401(k) Plan and Employee Stock Purchase Plan
ExecutivesExecutive officers located in the U.S. are eligible to participate in our 401(k) Plan which provides our employees, including executives,the NEOs, with a 75% Company match on the first 6% of compensation deferred, subject to qualified plan limits. Similarly, executivesexecutive officers located in the U.S. may participate in the Company’s Employee Stock Purchase Plan, along with our other U.S. employees.
We do not maintain any defined benefit or supplemental retirement programs for our NEOs.
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It is our belief that a majority of an executive’sNEO’s total compensation should be variable “at risk” compensation, meaning it is tied to the Company’s financial performance. However, because performance-based incentives play a large role in our compensation program, we strive to ensure that incentives do not result in actions that may conflict with the long-term best interests of the Company and our shareholders. Therefore, the Committee evaluated all of our plans and policies (applicable to executivesexecutive officers and employees below the executive level) in December 20172019 for attributes that could cause excessive risk-taking. We concluded that our programs and policies do not encourage excessive risk-taking because: (a) the salary component of our program is a fixed amount; (b) the majority of the average compensation paid to our executive officers is delivered in the form of equity ownership, which aligns the interest of our executivesexecutive officers with those of our shareholders; (c) executive officersNEOs are subject to our executive stock ownership guidelines; and (d) the annual cash-based incentive plan and long-term incentive plans are designed with risk-mitigating characteristics such as (i) maximum award payouts based on the attainment of various and continually evolving Company financial objectives which diversify risks
associated with a single indicator of performance, (ii) our equity-based incentives encourage a longer-term focus through multi-year performance periods, (iii) our risk-mitigating policies in place such as insider trading and hedging prohibitions and clawbacks, and (iv) review and approval of final awards by our Committee (and the independent members of the full Board in the case of the CEO), which is composed entirely of independent directors who have discretion under our plans to approve, modify, or eliminate any award earned.
For 2017,We are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO:
For 2019, our last completed fiscal year:
In 2019, two individuals held the position of CEO of the Company: Mr. Mezey from January 1, 2019 until August 6, 2019, when Mr. Mezey resigned his position, and Mr. Deitrich from August 6, 2019 through December 31, 2019. For the purposes of this calculation, their compensation for the period when they each served as CEO during 2019 was combined and calculated in a manner consistent with that used for the Summary Compensation Table. We pro-rated Mr. Deitrich’s salary, bonus, and 401(k) plan matching contribution, and his equity-based incentive compensation includes a promotional award that is described under “Long Term Incentives” in this CD&A. Due to the promotional award, the CEO’s total compensation and accompanying pay ratio as disclosed here is not reflective of what we would expect CEO compensation to be in future years.
For 2019, the aggregated annual total compensation of our CEOs was 145 times that of the median of the annual total compensation of all employees, based on annual total compensation of $5,884,658 for the CEO and $47,538 for the median employee.employees. This calculation is based on our employee population of 6,9226,799, as of October 1, 2017.December 31, 2019. The median employee was identified using base pay, overtime pay, short-term incentives, and long-term incentive grant date fair values, using data for the twelve months ended September 30, 2017.December 31, 2019. Our median employee is located in France. For purposes of this disclosure, we applied a Euro to U.S. dollars exchange rate of $1.116 using a period-end rate of twelve months as of December 2019.
Annual total compensation for both the CEOCEOs and the median employee was calculated in accordance with Item 402(c)(2)(x) of RegulationS-K. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
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We regularly consider the various tax and accounting implications of our compensation plans. When determining the amount of long-term incentives and equity grants to executives and employees, the compensation costs associated with the grants are reviewed, as required by FASB ASC Topic 718.
Section 162(m) of the Code generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the CEO and the other “covered employees” as defined in the rule. Under the tax laws in effect before 2018, compensation that qualified as “performance-based compensation” under Section 162(m) of the Code was deductible without regard to this limitation. Effective for 2017, there was an exception for qualified performance-based compensation and the Committee had the flexibility to structure certain compensation programs in a manner intended to be deductible as qualified performance-based compensation. However, as a result of new tax legislation that went into effect on December 22, 2017, this performance-based exception will not be available for taxable years beginning after December 31, 2017, unless the compensation qualifies forTax Cuts and Jobs Act of 2017 generally eliminated the performance-based exemption, subject to a special rule that grandfathers certain transition reliefawards and agreements that were in the new legislation. Therefore, whileeffect on November 2, 2017. While considering tax deductibility as a factoronly one of several considerations in determining compensation, the Committee may not limit compensation to those levels or types of compensation that will be deductible if it believes that the tax deduction limitation should not compromise its ability to structure compensation programs that provide benefits to the Company that outweigh the potential benefit of a tax deduction and, therefore, may approve compensation that is commensurate with the performance of the covered employee.not deductible for tax purposes.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with Itron’s management. Based on the review and discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 20172019 Annual Report on Form10-K and the Company’s 20182020 proxy statement.
Compensation Committee
Diana D. Tremblay, Chair
Peter Mainz
Daniel S. Pelino
Frank M. Jaehnert
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Kirby A. Dyess
The following table provides information regarding compensation of the Company’s NEOs. The amounts shown include amounts deferred at the executives’ election. All numbers are rounded to the nearest dollar.
Summary Compensation Table | ||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1)(2) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||
Philip Mezey | 2017 | 800,000 | — | 3,345,686 | 800,001 | 848,040 | 90,931 | (4) | 5,884,658 | |||||||||||||||||||||||
President and CEO | 2016 | 800,000 | — | 2,805,949 | 799,987 | 1,292,480 | 24,000 | 5,722,416 | ||||||||||||||||||||||||
| 2015 | 830,769 | — | 2,183,565 | 799,998 | — | 45,236 | 3,859,568 | |||||||||||||||||||||||||
Thomas Deitrich | 2017 | 550,000 | — | 1,471,377 | 499,995 | 466,422 | 12,150 | (4) | 2,999,944 | |||||||||||||||||||||||
Executive Vice President and COO | 2016 | 550,000 | — | 995,073 | 500,000 | 710,864 | 7,950 | 2,763,887 | ||||||||||||||||||||||||
| 2015 | 126,923 | 424,375 | 2,999,997 | 999,992 | — | — | 4,551,287 | |||||||||||||||||||||||||
Michel Cadieux | 2017 | 400,000 | — | 836,225 | 199,989 | 254,412 | 14,562 | (4) | 1,705,188 | |||||||||||||||||||||||
Senior Vice President, Human Resources | 2016 | 400,000 | — | 634,427 | 199,989 | 387,744 | 11,769 | 1,633,929 | ||||||||||||||||||||||||
| 2015 | 415,384 | — | 414,312 | 199,996 | — | 30,403 | 1,060,095 | |||||||||||||||||||||||||
Shannon Votava | 2017 | 400,000 | — | 582,526 | 149,992 | 220,490 | 30,763 | (4) | 1,383,771 | |||||||||||||||||||||||
Senior Vice President, General Counsel and Corporate Secretary | 2016 | 397,467 | — | 443,830 | 137,498 | 336,045 | 7,950 | 1,322,790 | ||||||||||||||||||||||||
| 2015 | 377,300 | — | 315,789 | 124,992 | — | 7,950 | 826,031 | |||||||||||||||||||||||||
Joan Hooper (5) (6) | 2017 | 279,808 | — | 468,664 | 250,044 | 177,465 | 4,757 | (4) | 1,180,738 | |||||||||||||||||||||||
Senior Vice President and CFO | ||||||||||||||||||||||||||||||||
Robert Farrow (6) (7) | 2017 | 312,804 | — | 291,102 | 34,998 | 127,206 | 12,017 | (4) | 778,127 | |||||||||||||||||||||||
Vice President, Strategic Planning and Treasury; Former Interim CFO | ||||||||||||||||||||||||||||||||
W. Mark Schmitz (8) | 2017 | 172,788 | — | 1,045,278 | 249,986 | — | 504,650 | (4) | 1,972,702 | |||||||||||||||||||||||
Former Executive Vice President and CFO | 2016 | 475,000 | — | 810,007 | 249,993 | 460,446 | 7,950 | 2,003,396 | ||||||||||||||||||||||||
| 2015 | 479,808 | — | 532,801 | 249,996 | — | 44,005 | 1,306,610 | |||||||||||||||||||||||||
Summary Compensation Table | ||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||||
Thomas Deitrich(5) President and CEO | 2019 | 650,000 | — | 3,333,990 | 1,999,984 | 567,668 | 12,600 | (4) | 6,564,242 | |||||||||||||
2018 | 550,000 | — | 1,867,771 | 499,518 | — | 12,375 | 2,929,664 | |||||||||||||||
2017 | 550,000 | — | 1,471,377 | 499,995 | 466,422 | 12,150 | 2,999,944 | |||||||||||||||
Joan Hooper Senior Vice President and CFO | 2019 | 485,000 | — | 1,314,265 | — | 310,097 | 19,634 | (4) | 2,128,996 | |||||||||||||
2018 | 485,000 | — | 887,873 | 249,759 | — | 29,041 | 1,651,674 | |||||||||||||||
2017 | 279,808 | — | 468,664 | 250,044 | 177,465 | 4,757 | 1,180,738 | |||||||||||||||
Sarah Hlavinka Senior Vice President, General Counsel and Corporate Secretary | 2019 | 475,000 | — | 614,992 | — | 248,484 | 23,809 | (4) | 1,362,284 | |||||||||||||
2018 | 190,865 | 650,000 | 875,335 | 199,994 | — | 241,796 | 2,157,990 | |||||||||||||||
Michel Cadieux Senior Vice President, Human Resources | 2019 | 400,000 | — | 733,583 | — | 232,500 | 9,000 | (4) | 1,375,083 | |||||||||||||
2018 | 400,000 | — | 747,067 | 199,797 | — | 12,375 | 1,359,239 | |||||||||||||||
2017 | 400,000 | — | 836,225 | 199,989 | 254,412 | 14,562 | 1,705,188 | |||||||||||||||
Donald Reeves Senior Vice President, Outcomes | 2019 | 425,000 | — | 308,104 | — | 164,688 | 18,110 | (4) | 915,901 | |||||||||||||
Philip Mezey(6) Former President and CEO | 2019 | 555,288 | — | 1,022,923 | — | 532,120 | 558,170 | (4) | 2,668,501 | |||||||||||||
2018 | 821,154 | — | 3,176,804 | 899,113 | — | 74,816 | 4,971,887 | |||||||||||||||
2017 | 800,000 | — | 3,345,686 | 800,001 | 848,040 | 90,931 | 5,884,658 | |||||||||||||||
| (1) | These columns reflect the aggregate grant date fair value of awards granted under our Long-Term Incentive Plan (LTIP) and |
| (2) | Includes the grant date fair value of Performance RSUs (PRSUs) assuming target performance achievement. As the performance-contingent awards are based on separate measurements of the |
The grant date fair value of the performance related component is based upon the probable outcome for the award and is consistent with the estimate of aggregate compensation cost to be recognized over the performance period determined as of the grant date under FASB ASC Topic 718. As required under FASB ASC Topic 718, the full grant date fair value for the TSR multiplier for the entire three-year performance cycle is included in the amounts shown for the initial year of each performance cycle and was determined using a Monte Carlo valuation model on the date the PRSUs were awarded. Grant date fair values assuming maximum performance achievement for the 2019 PRSUs for the full performance cycle (2019-2021) would be: T. Deitrich - $1,064,578; J. Hooper - $665,361; S. Hlavinka - $425,805; M. Cadieux - $425,805; D. Reeves - $226,753.
|
| (3) | This column reflects the cash awards earned by the NEOs under our annual incentive program. |
| (4) | We value these benefits based on the actual costs or charges incurred by us for the benefits. |
| (5) |
|
| (6) | Mr. Mezey resigned as President and CEO effective August 6, 2019. He served in a non-executive officer employee role with Itron through August 31, 2019, and then as a non-employee consultant through December 31, 2019 to provide certain transition services. |
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|
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20172019 Grants of Plan-Based Awards Table
The following table provides information regarding grants of plan-based awards to the NEOs during 2017.2019.
Grants of Plan – Based Awards | ||||||||||||||||||||||||||||||||||||||||||||||||
| Grant Date | Board or Committee Action Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | All Other Option Awards: Number of Securities Underlying Options (#) (4) |
Exercise ($/Sh) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||||||||||||||
Name | Threshold ($) (1) | Target ($) (1) | Maximum ($) (1) | Threshold (#) (2) | Target (#) (2) | Maximum (#) (2) | ||||||||||||||||||||||||||||||||||||||||||
Philip Mezey | — | — | $ | 250,000 | $ | 1,000,000 | $ | 1,800,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | 12,204 | — | — | $ | 799,972 | ||||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | — | 36,322 | $ | 65.55 | $ | 800,001 | |||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | 9,153 | 24,408 | 48,816 | — | — | — | $ | 681,471 | (5) | |||||||||||||||||||||||||||||||||||
Thomas Deitrich | — | $ | 137,500 | $ | 550,000 | $ | 990,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | 7,627 | — | — | $ | 499,950 | ||||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | — | 22,701 | $ | 65.55 | $ | 499,995 | |||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | 5,721 | 15,255 | 30,510 | — | — | — | $ | 425,920 | (5) | |||||||||||||||||||||||||||||||||||
Michel Cadieux | — | $ | 75,000 | $ | 300,000 | $ | 540,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | 3,051 | — | — | $ | 199,993 | ||||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | — | 9,080 | $ | 65.55 | $ | 199,989 | |||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | 2,288 | 6,102 | 12,204 | — | — | — | $ | 170,368 | (5) | |||||||||||||||||||||||||||||||||||
Shannon Votava | — | $ | 65,000 | $ | 260,000 | $ | 468,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | 2,288 | — | — | $ | 149,978 | ||||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | — | 6,810 | $ | 65.55 | $ | 149,992 | |||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | 1,716 | 4,576 | 9,152 | — | — | — | $ | 127,740 | (5) | |||||||||||||||||||||||||||||||||||
Joan Hooper | — | — | $ | 52,316 | $ | 209,265 | $ | 376,677 | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| 6/20/2017 | 6/20/2017 | — | — | — | — | — | — | 3,652 | — | — | $ | 249,979 | ||||||||||||||||||||||||||||||||||||
| 6/20/2017 | 6/20/2017 | — | — | — | — | — | — | — | 11,515 | $ | 68.45 | $ | 250,044 | |||||||||||||||||||||||||||||||||||
| 6/20/2017 | 6/20/2017 | — | — | — | 2,739 | 7,304 | 14,608 | — | — | — | $ | 218,685 | (5) | |||||||||||||||||||||||||||||||||||
Robert Farrow | — | — | $ | 37,500 | $ | 150,000 | $ | 270,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | 533 | $ | 34,938 | ||||||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | — | 1,589 | $ | 65.55 | $ | 34,998 | |||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | 400 | 1,067 | 2,134 | — | — | — | $ | 29,747 | ||||||||||||||||||||||||||||||||||||
| 3/28/2017 | 3/28/2017 | — | — | — | — | — | — | 2,321 | — | — | $ | 139,956 | ||||||||||||||||||||||||||||||||||||
W. Mark Schmitz | — | — | $ | 89,063 | $ | 356,250 | $ | 641,250 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | 3,813 | — | — | $ | 249,942 | ||||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | — | — | — | — | 11,350 | $ | 65.55 | $ | 249,986 | |||||||||||||||||||||||||||||||||||
| 2/23/2017 | 2/23/2017 | — | — | — | 2,860 | 7,627 | 15,254 | — | — | — | $ | 212,924 | (5) | |||||||||||||||||||||||||||||||||||
Grants of Plan - Based Awards | |||||||||||||||||||||||||||||||||
Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||
Name | Threshold ($)(1) | Target ($)(1) | Maximum ($)(1) | Threshold (#)(2) | Target (#)(2) | Maximum (#)(2) | |||||||||||||||||||||||||||
Thomas Deitrich | — | $ | 183,119 | $ | 732,475 | $ | 1,098,713 | — | — | — | — | — | — | — | |||||||||||||||||||
2/21/2019 | — | — | — | — | — | — | 16,417 | — | — | $ | 999,959 | ||||||||||||||||||||||
2/21/2019 | — | — | — | 3,078 | 8,208 | 16,416 | — | — | — | $ | 231,329 | (5) | |||||||||||||||||||||
9/19/2019 | — | — | — | — | — | — | 19,595 | — | — | $ | 1,499,997 | ||||||||||||||||||||||
9/19/2019 | — | — | — | — | — | — | — | 76,337 | $ | 76.55 | $ | 1,999,984 | |||||||||||||||||||||
Joan Hooper | — | $ | 90,938 | $ | 363,750 | $ | 545,625 | — | — | — | — | — | — | — | |||||||||||||||||||
2/21/2019 | — | — | — | — | — | — | 10,261 | — | — | $ | 624,998 | ||||||||||||||||||||||
2/21/2019 | — | — | — | 1,924 | 5,130 | 10,260 | — | — | — | $ | 144,581 | (5) | |||||||||||||||||||||
5/17/2019 | — | — | — | — | — | — | 4,395 | — | — | $ | 249,944 | ||||||||||||||||||||||
Sarah Hlavinka | — | $ | 89,063 | $ | 356,250 | $ | 534,375 | — | — | — | — | — | — | — | |||||||||||||||||||
2/21/2019 | — | — | — | — | — | — | 6,567 | — | — | $ | 399,996 | ||||||||||||||||||||||
2/21/2019 | — | — | — | 1,231 | 3,283 | 6,566 | — | — | — | $ | 92,506 | (5) | |||||||||||||||||||||
Michel Cadieux | — | $ | 75,000 | $ | 300,000 | $ | 450,000 | — | — | — | — | — | — | — | |||||||||||||||||||
2/21/2019 | — | — | — | — | — | — | 6,567 | — | — | $ | 399,996 | ||||||||||||||||||||||
2/21/2019 | — | — | — | 1,231 | 3,283 | 6,566 | — | — | — | $ | 92,506 | (5) | |||||||||||||||||||||
Donald Reeves | — | $ | 53,125 | $ | 212,500 | $ | 318,750 | — | — | — | — | — | — | — | |||||||||||||||||||
7/1/2019 | — | — | — | — | — | — | 3,341 | — | — | $ | 212,488 | ||||||||||||||||||||||
7/1/2019 | — | — | — | 626 | 1,670 | 3,340 | — | — | — | $ | 49,690 | (5) | |||||||||||||||||||||
Philip Mezey | — | $ | 171,652 | $ | 686,606 | $ | 1,029,909 | — | — | — | — | — | — | — | |||||||||||||||||||
| (1) | Represents threshold, target and maximum opportunity under the |
| (2) | Represents range of possible PRSU payouts for the three-year performance cycle beginning in |
| (3) | Amounts shown in this column reflect the number of time-vested RSUs granted under our |
| (4) | Amounts shown in this column reflect the number of options granted under our |
| (5) | Amounts shown are based on target performance achievement for the |
Thenon-equity incentive awards included in this table and also set forth in the Summary Compensation Table represent the annual incentive component of our executives’NEO’s compensation. These potential payout awards are
paid in cash as a percentage of each of the NEO’s salary, based upon achievement of certainpre-determined financial performance criteria and strategic objectives. For more details, refer to the “EXECUTIVECOMPENSATION – 2017 2019 Executive Compensation Program in Detail”Detail” section of the CD&A.
The equity incentive plan awards included in this table represent PRSUs granted in 20172019 for the 2017-20192019-2021 performance period, which were issued under the Company’s A&R 2010 Plan or Second A&R 2010 Plan, as applicable. For further details on these awards, see ““EXECUTIVECOMPENSATION – 20172019 Executive Compensation Program in Detail”Detail” in the CD&A.
The amounts included in the “All Other Stock Awards” column and in the “All Other Option Awards” column represent time-vested RSUs and stock options, respectively, both of which were issued under the A&R 2010 Plan or Second A&R 2010 Plan, as applicable. For further details on these awards,see ““EXECUTIVE COMPENSATION COMPENSATION – 20172019 Executive Compensation Program in Detail”Detail” in the CD&A.
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2017 Outstanding Equity Awards at FiscalYear-End Table
The following table provides information regarding outstanding equity awards held by each NEO as of December 31, 2017. Mr. Schmitz is not included in the table, because he did not hold any equity awards as of such date.2019.
Outstanding Equity Awards At Fiscal Year End | |||||||||||||||||||||||||||
Option Awards | Stock Awards | ||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | ||||||||||||||||||
Thomas Deitrich | 12/10/2015 | 83,779 | $ | 35.13 | 12/10/2025 | ||||||||||||||||||||||
2/24/2016 | 37,957 | $ | 40.05 | 2/24/2026 | |||||||||||||||||||||||
2/23/2017 | 15,134 | 7,567 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||
2/23/2017 | 2,543 | $ | 213,485 | ||||||||||||||||||||||||
2/22/2018 | 6,705 | 13,411 | $ | 69.30 | 2/22/2028 | ||||||||||||||||||||||
2/22/2018 | 4,810 | $ | 403,800 | ||||||||||||||||||||||||
2/22/2018 | 14,430 | (3) | $ | 1,211,399 | |||||||||||||||||||||||
2/21/2019 | 16,417 | $ | 1,378,207 | ||||||||||||||||||||||||
2/21/2019 | 16,416 | (4) | $ | 1,378,123 | |||||||||||||||||||||||
9/19/2019 | 76,337 | $ | 76.55 | 9/19/2029 | |||||||||||||||||||||||
9/19/2019 | 19,595 | $ | 1,645,000 | ||||||||||||||||||||||||
Joan Hooper | 6/20/2017 | 7,676 | 3,839 | $ | 68.45 | 6/20/2027 | |||||||||||||||||||||
6/20/2017 | 1,218 | $ | 102,251 | ||||||||||||||||||||||||
2/22/2018 | 3,352 | 6,706 | $ | 69.30 | 2/22/2028 | ||||||||||||||||||||||
2/22/2018 | 2,405 | $ | 201,900 | ||||||||||||||||||||||||
2/22/2018 | 7,215 | (3) | $ | 605,699 | |||||||||||||||||||||||
5/9/2018 | 2,478 | $ | 208,028 | ||||||||||||||||||||||||
2/21/2019 | 10,261 | $ | 861,411 | ||||||||||||||||||||||||
2/21/2019 | 10,260 | (4) | $ | 861,327 | |||||||||||||||||||||||
5/17/2019 | 4,395 | $ | 368,960 | ||||||||||||||||||||||||
Sarah Hlavinka | 9/12/2018 | 2,933 | 5,867 | $ | 66.30 | 9/12/2028 | |||||||||||||||||||||
9/12/2018 | 2,011 | $ | 168,823 | ||||||||||||||||||||||||
9/12/2018 | 6,033 | (3) | $ | 506,470 | |||||||||||||||||||||||
2/21/2019 | 6,567 | $ | 551,300 | ||||||||||||||||||||||||
2/21/2019 | 6,566 | (4) | $ | 551,216 | |||||||||||||||||||||||
Michel Cadieux | 2/24/2016 | 15,182 | $ | 40.05 | 2/24/2026 | ||||||||||||||||||||||
2/23/2017 | 6,053 | 3,027 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||
2/23/2017 | 1,017 | $ | 85,377 | ||||||||||||||||||||||||
2/22/2018 | 2,682 | 5,364 | $ | 69.30 | 2/22/2028 | ||||||||||||||||||||||
2/22/2018 | 1,924 | $ | 161,520 | ||||||||||||||||||||||||
2/22/2018 | 5,772 | (3) | $ | 484,559 | |||||||||||||||||||||||
2/21/2019 | 6,567 | $ | 551,300 | ||||||||||||||||||||||||
2/21/2019 | 6,566 | (4) | $ | 551,216 | |||||||||||||||||||||||
Donald Reeves | 4/10/2014 | 983 | $ | 63.16 | 4/10/2024 | ||||||||||||||||||||||
5/10/2016 | 2,944 | 1,858 | $ | 55.49 | 5/10/2026 | ||||||||||||||||||||||
5/10/2016 | 1,000 | $ | 83,950 | ||||||||||||||||||||||||
8/10/2016 | 1,329 | $ | 111,570 | ||||||||||||||||||||||||
5/10/2017 | 1,876 | $ | 157,490 | ||||||||||||||||||||||||
9/12/2018 | 1,100 | 2,200 | $ | 66.30 | 9/12/2028 | ||||||||||||||||||||||
9/12/2018 | 754 | $ | 63,298 | ||||||||||||||||||||||||
9/12/2018 | 2,262 | (3) | $ | 189,895 | |||||||||||||||||||||||
7/1/2019 | 3,341 | $ | 280,477 | ||||||||||||||||||||||||
7/1/2019 | 3,340 | (4) | $ | 280,393 | |||||||||||||||||||||||
Philip Mezey | 2/23/2017 | 12,108 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||
2/23/2017 | 4,068 | $ | 341,509 | ||||||||||||||||||||||||
2/22/2018 | 24,139 | $ | 69.30 | 2/22/2028 | |||||||||||||||||||||||
2/22/2018 | 8,658 | $ | 726,839 | ||||||||||||||||||||||||
2/22/2018 | 25,974 | (3) | $ | 2,180,517 | |||||||||||||||||||||||
-40- |
Outstanding Equity Awards At Fiscal Year End | ||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (5) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (5) | |||||||||||||||||||||||||||
Philip Mezey | 5/5/2008 | 20,000 | $ | 95.78 | 5/5/2018 | |||||||||||||||||||||||||||||||
| 2/11/2010 | 8,610 | $ | 61.56 | 2/11/2020 | ||||||||||||||||||||||||||||||||
| 2/24/2011 | 8,810 | $ | 56.65 | 2/24/2021 | ||||||||||||||||||||||||||||||||
| 2/16/2012 | 11,398 | $ | 48.23 | 2/16/2022 | ||||||||||||||||||||||||||||||||
| 11/15/2012 | 140,570 | $ | 41.36 | 11/15/2022 | ||||||||||||||||||||||||||||||||
| 2/22/2013 | 51,270 | $ | 43.38 | 2/22/2023 | ||||||||||||||||||||||||||||||||
| 2/21/2014 | 58,957 | $ | 35.05 | 2/21/2024 | ||||||||||||||||||||||||||||||||
| 2/19/2015 | 43,894 | 21,947 | $ | 35.29 | 2/19/2025 | |||||||||||||||||||||||||||||||
| 2/19/2015 | 7,557 | (2) | $ | 515,387 | ||||||||||||||||||||||||||||||||
| 2/25/2016 | 20,341 | 40,682 | $ | 40.02 | 2/25/2026 | |||||||||||||||||||||||||||||||
| 2/25/2016 | 13,327 | (2) | $ | 908,901 | ||||||||||||||||||||||||||||||||
| 2/25/2016 | 79,960 | (3) | $ | 5,453,272 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 36,322 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 12,204 | (2) | $ | 832,313 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 48,816 | (4) | $ | 3,329,251 | ||||||||||||||||||||||||||||||||
Thomas Deitrich | 12/10/2015 | 55,852 | 27,927 | $ | 35.13 | 12/10/2025 | ||||||||||||||||||||||||||||||
| 12/10/2015 | 28,466 | (2) | $ | 1,941,381 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 12,652 | 25,305 | $ | 40.05 | 2/24/2026 | |||||||||||||||||||||||||||||||
| 2/24/2016 | 8,323 | (2) | $ | 567,629 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 49,936 | (3) | $ | 3,405,635 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 22,701 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 7,627 | (2) | $ | 520,161 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 30,510 | (4) | $ | 2,080,782 | ||||||||||||||||||||||||||||||||
Michel Cadieux | 2/19/2014 | 8,223 | $ | 35.29 | 2/19/2024 | |||||||||||||||||||||||||||||||
| 2/19/2015 | 10,973 | 5,667 | $ | 35.29 | 2/19/2025 | |||||||||||||||||||||||||||||||
| 2/19/2015 | 1,889 | (2) | $ | 128,830 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 5,060 | 10,122 | $ | 40.05 | 2/24/2026 | |||||||||||||||||||||||||||||||
| 2/24/2016 | 3,329 | (2) | $ | 227,038 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 19,974 | (3) | $ | 1,362,227 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 9,080 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 3,051 | (2) | $ | 208,078 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 12,204 | (4) | $ | 832,313 | ||||||||||||||||||||||||||||||||
Shannon Votava | 12/12/2011 | 10,000 | $ | 35.65 | 12/12/2021 | |||||||||||||||||||||||||||||||
| 2/16/2012 | 4,023 | $ | 48.23 | 2/16/2022 | ||||||||||||||||||||||||||||||||
| 2/21/2013 | 6,521 | $ | 42.35 | 2/21/2023 | ||||||||||||||||||||||||||||||||
| 2/19/2014 | 7,309 | $ | 35.29 | 2/19/2024 | ||||||||||||||||||||||||||||||||
| 2/19/2015 | 6,858 | 3,429 | $ | 35.29 | 2/19/2025 | |||||||||||||||||||||||||||||||
| 2/19/2015 | 1,181 | (2) | $ | 80,544 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 3,479 | 6,959 | $ | 40.05 | 2/24/2026 | |||||||||||||||||||||||||||||||
| 2/24/2016 | 2,289 | (2) | $ | 156,110 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 13,732 | (3) | $ | 936,522 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 6,810 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 2,288 | (2) | $ | 156,042 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 9,152 | (4) | $ | 624,166 | ||||||||||||||||||||||||||||||||
Joan Hooper | 6/20/2017 | 11,515 | $ | 68.45 | 6/20/2027 | |||||||||||||||||||||||||||||||
| 6/20/2017 | 3,652 | (2) | $ | 249,066 | ||||||||||||||||||||||||||||||||
| 6/20/2017 | 14,608 | (4) | $ | 996,266 | ||||||||||||||||||||||||||||||||
Robert Farrow | 5/7/2015 | 1,024 | 1,024 | $ | 35.99 | 5/7/2025 | ||||||||||||||||||||||||||||||
| 5/7/2015 | 347 | (2) | $ | 23,665 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 948 | 1,898 | $ | 40.05 | 2/24/2026 | |||||||||||||||||||||||||||||||
| 2/24/2016 | 624 | (2) | $ | 42,557 | ||||||||||||||||||||||||||||||||
| 2/24/2016 | 3,744 | (3) | $ | 255,341 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 1,589 | $ | 65.55 | 2/23/2027 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 533 | (2) | $ | 36,351 | ||||||||||||||||||||||||||||||||
| 2/23/2017 | 2,134 | (4) | $ | 145,539 | ||||||||||||||||||||||||||||||||
| 3/28/2017 | 2,321 | (2) | $ | 158,292 | ||||||||||||||||||||||||||||||||
| (1) |
|
Vesting information for each outstanding option award for the NEOs is described in the table below.
Vesting Date | Exercise Price | Thomas Deitrich | Joan Hooper | Sarah Hlavinka | Michel Cadieux | Donald Reeves | Philip Mezey | ||||||||||||||
2020 | |||||||||||||||||||||
1/10/2020 | $ | 55.49 | 368 | ||||||||||||||||||
2/10/2020 | $ | 55.49 | 368 | ||||||||||||||||||
2/22/2020 | $ | 69.30 | 6,705 | 3,353 | 2,682 | 12,069 | |||||||||||||||
2/23/2020 | $ | 65.55 | 7,567 | 3,027 | 12,108 | ||||||||||||||||
3/10/2020 | $ | 55.49 | 368 | ||||||||||||||||||
4/10/2020 | $ | 55.49 | 368 | ||||||||||||||||||
5/10/2020 | $ | 55.49 | 386 | ||||||||||||||||||
6/20/2020 | $ | 68.45 | 3,839 | ||||||||||||||||||
9/12/2020 | 2,933 | 1,100 | |||||||||||||||||||
9/19/2020 | $ | 76.55 | 25,445 | ||||||||||||||||||
2021 | |||||||||||||||||||||
2/22/2021 | $ | 69.30 | 6,706 | 3,353 | 2,682 | 12,070 | |||||||||||||||
9/12/2021 | 2,934 | 1,100 | |||||||||||||||||||
9/19/2021 | $ | 76.55 | 25,446 | ||||||||||||||||||
2022 | |||||||||||||||||||||
9/19/2022 | $ | 76.55 | 25,446 | ||||||||||||||||||
| (2) | Represents time-vested RSUs granted under the |
Vesting information for each restricted stock unit award for the NEOs is described in the table below.
Vesting Date | Thomas Deitrich | Joan Hooper | Sarah Hlavinka | Michel Cadieux | Donald Reeves | Philip Mezey | |||||||||||||||
2020 | |||||||||||||||||||||
2/10/2020 | 939 | ||||||||||||||||||||
2/21/2020 | 5,472 | 3,420 | 2,189 | 2,189 | |||||||||||||||||
2/22/2020 | 2,405 | 1,202 | 962 | 4,329 | |||||||||||||||||
2/23/2020 | 2,543 | 1,017 | 4,068 | ||||||||||||||||||
5/9/2020 | 1,239 | ||||||||||||||||||||
5/10/2020 | 2,821 | ||||||||||||||||||||
5/17/2020 | 1,465 | ||||||||||||||||||||
6/20/2020 | 1,218 | ||||||||||||||||||||
7/1/2020 | 1,113 | ||||||||||||||||||||
8/10/2020 | 445 | ||||||||||||||||||||
9/12/2020 | 1,005 | 377 | |||||||||||||||||||
9/19/2020 | 6,531 | ||||||||||||||||||||
2021 | |||||||||||||||||||||
2/21/2021 | 5,472 | 3,420 | 2,189 | 2,189 | |||||||||||||||||
2/22/2021 | 2,405 | 1,203 | 962 | 4,329 | |||||||||||||||||
5/9/2021 | 1,239 | ||||||||||||||||||||
5/17/2021 | 1,465 | ||||||||||||||||||||
7/1/2021 | 1,114 | ||||||||||||||||||||
9/12/2021 | 1,006 | 377 | |||||||||||||||||||
9/19/2021 | 6,532 | ||||||||||||||||||||
-41- |
Vesting Date | Thomas Deitrich | Joan Hooper | Sarah Hlavinka | Michel Cadieux | Donald Reeves | Philip Mezey | |||||||||||||||
2022 | |||||||||||||||||||||
2/21/2022 | 5,473 | 3,421 | 2,189 | 2,189 | |||||||||||||||||
5/17/2022 | 1,465 | ||||||||||||||||||||
7/1/2022 | 1,114 | ||||||||||||||||||||
9/19/2022 | 6,532 | ||||||||||||||||||||
| (3) | Represents PRSUs granted for the three-year performance cycle beginning in |
| (4) | Represents PRSUs granted for the three-year performance cycle beginning in |
| (5) | Based on the closing price of our common stock on December |
20172019 Option Exercises and Stock Vested Table
The following table provides information regarding stock option exercises and shares acquired upon the vesting of stock awards by the NEOs during the 20172019 fiscal year.
Option Exercises and Stock Vested | ||||||||||||||
| Option Awards | Stock Awards | |||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($) (1) | Number of Shares Acquired on Vesting (#) (2) | Value Realized on Vesting ($) (2)(3) | ||||||||||
Philip Mezey | 72,183 | 4,842,728 | ||||||||||||
Thomas Deitrich | 32,627 | 2,244,057 | ||||||||||||
Michel Cadieux | 17,204 | 1,156,940 | ||||||||||||
Shannon Votava | 11,138 | 747,945 | ||||||||||||
Joan Hooper | — | — | ||||||||||||
Robert Farrow | 2,972 | 200,758 | ||||||||||||
W. Mark Schmitz | 29,060 | 813,762 | 4,441 | 288,058 | ||||||||||
Option Exercises and Stock Vested | ||||||||||||
Option Awards | Stock Awards | |||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(2)(3) | ||||||||
Thomas Deitrich | 23,026 | 1,728,262 | ||||||||||
Joan Hooper | 10,321 | 784,912 | ||||||||||
Sarah Hlavinka | 8,546 | 627,020 | ||||||||||
Michel Cadieux | 24,683 | 884,691 | 9,211 | 691,346 | ||||||||
Donald Reeves | 5,888 | 30,757 | 6,007 | 390,556 | ||||||||
Philip Mezey | 409,374 | 14,108,570 | 37,329 | 2,789,734 | ||||||||
| (1) | Represents the difference between the exercise price and the fair market value of our common stock on the date of exercise. |
| (2) | Except for |
| (3) | Based on the fair market value of our common stock on the vest date. |
20172019 Nonqualified Deferred Compensation Table
The following table provides information regarding the nonqualified deferred compensation of each of the NEOs for the 20172019 fiscal year.
Nonqualified Deferred Compensation | Nonqualified Deferred Compensation | Nonqualified Deferred Compensation | |||||||||||||||||||||||||||||||
Name | Executive Contributions in Last Fiscal Year ($) (1) | Registrant Contributions in Last Fiscal Year ($) (2) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($)(2) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Fiscal Year End ($) | |||||||||||||||||||||||
Thomas Deitrich | — | — | — | — | — | ||||||||||||||||||||||||||||
Joan Hooper | 121,250 | 9,666 | 62,131 | — | 372,846 | ||||||||||||||||||||||||||||
Sarah Hlavinka | 28,500 | 3,020 | 5,447 | — | 46,351 | ||||||||||||||||||||||||||||
Michel Cadieux | — | — | — | — | — | ||||||||||||||||||||||||||||
Donald Reeves | — | — | — | — | — | ||||||||||||||||||||||||||||
Philip Mezey | 123,703 | 78,781 | 317,050 | — | 2,026,844 | 37,841 | 25,570 | 288,297 | — | 2,332,977 | |||||||||||||||||||||||
Thomas Deitrich | — | — | — | — | — | ||||||||||||||||||||||||||||
Michel Cadieux | — | — | — | — | — | ||||||||||||||||||||||||||||
Shannon Votava | 43,240 | 16,126 | 4,168 | — | 63,534 | ||||||||||||||||||||||||||||
Joan Hooper | 55,962 | — | 2,998 | — | 58,960 | ||||||||||||||||||||||||||||
Robert Farrow | — | — | — | — | — | ||||||||||||||||||||||||||||
W. Mark Schmitz | — | — | — | — | — | ||||||||||||||||||||||||||||
| (1) | This deferred compensation represents amounts that are reported as compensation earned in |
| (2) | This amount has been included in the “All Other Compensation” column of theSummary Compensation Table. |
-42- |
Executive Deferred Compensation Plan
ExecutivesExecutive officers located in the U.S. are eligible to participate in the Company’s Executive Deferred Compensation Plan (EDCP). Under this plan, participantsWe offer the EDCP to our highly-compensated employees to give them the benefit of being able to defer some of their taxable income, which also encourages their retention with the Company. Participants may defer up to 50% of their base salary and 50% of their annual cash incentive bonusinto a nonqualified account.
Executive officers are also permitted to anon-qualified account. Participants may alsoelect to defer an additional portion of their base salary under the EDCP equal to the amount of any contributions returned to them during the year from the Company’s 401(k) plan so that the 401(k) plan can satisfy the nondiscrimination requirements applicable to it. Annually,Plan. In 2019, the Company makesmade matching contributions to the account of each participating executive at the rate of 75% of the first 6% of base salary and annual incentive deferred by the executive officer during that year.year, which is the same matching formula as the Company’s 401(k) Plan. The employer match into the EDCP only commencesstarts after the employee reaches IRS limits on the 401(k) planPlan and is no longer eligible for the 401(k) match.
Each participant’s The executive officers’ account isbalances are adjusted for hypothetical investment earnings or losses based onaccording to the performancereturns of the “measurement funds” in whichselected by the account is deemed to be invested. Participants allocate their accounts among theexecutives. The measurement funds available under the plan and can change their allocation at any time. These measurement funds are the same ascorrespond to the mutual funds offeredavailable for investment purposes under the Company’s 401(k) plan. Measurement funds are used solely to determine the amount of the hypothetical investment earnings or losses to be allocated to the participant’s account. Theplan (but currently do not include a Company is not obligated to invest any assets in these funds.stock fund).
Accounts are distributed (or commence to be distributed) to participants either based onpre-selected,in-service distribution dates or upon termination of employment with the Company and its affiliates. Distribution made after termination of employment will be made six months after termination to comply with the requirements of Internal Revenue Code Section 409A.
A participant’s account will be distributed in a lump sum, unless the participant elects to have it distributed in substantially equal annual installments over a period of not more than 10 years. This election must be made at the time the participant is first eligible to participate in the plan.
Potential Payments upon Termination
The following describes certain actions and payments upon termination in accordance with Company policies and the provisions of our current Second A&R 2010 Plan, pursuant to which all of our equity awards are granted.
Upon any termination of employment, our NEOs are entitled to receive any accrued and unpaid base salary through the date of termination.
Termination for Cause
The executive is entitled to receive any accrued and unpaid base salary through the date of termination. All options granted automatically expire when terminated for cause and all unvested time-vested RSUs and all unvested awards under the LTIP and the EMIP are forfeited in the event of termination for cause.
-43- |
Termination Due to Death, Disability, or Retirement
What happens if termination is due to:
| ||||||||
Death or Disability | Retirement(1) | |||||||
2017 Awards | 2018 Awards | 2019 Awards | ||||||
Annual Incentive Plan(2) | Prorated | Prorated | Prorated | Prorated |
| |||
Time-vested RSUs(3) | Fully accelerated | If retire after following grant date, continued vesting subject to completion of new non-compete/non-solicit agreement | ||||||
| and reasonable notice | ||||||||
|
| If retire after following grant date, continued vesting subject to completion of new non-compete/non-solicit agreement and reasonable notice | If retire after 12 months following grant date, continued vesting subject to completion of new non-compete/non-solicit agreement and reasonable notice | |||||
Stock Options(4) | Fully accelerated | Unvested Options If retire after 24 months following grant date, continued vesting subject to completion of new non-compete/non-solicit agreement and reasonable notice Vested Options Remain exercisable until the original expiration date of the grant | Unvested Options If retire after 18 months following grant date, continued vesting subject to completion of new non-compete/non-solicit agreement and reasonable notice Vested Options Remain exercisable until the original expiration date of the grant | Unvested Options If retire after 12 months following grant date, continued vesting subject to completion of new non-compete/non-solicit agreement and reasonable notice Vested Options Remain exercisable until the original expiration date of the grant | ||||
Performance-Based RSUs (PRSUs)(5) |
2017, 2018 & Awards
| If retire after 24 months following grant date, shares awarded at the end of the performance period based on actual attainment of performance results as measured at the end of the performance period. Number of shares awarded is not pro-rated for partial employment during the performance period. | If retire after following grant date, awarded at the end of the performance period on actual attainment of performance results as measured at the end of the performance period. Number of shares awarded is not pro-rated for employment during the performance period. | If retire after 12 months following grant date, shares awarded at the end of the performance period based on actual attainment of performance results as measured at the end of the performance period. Number of shares awarded is not pro-rated for partial employment during the performance period. | ||||
| (1) | Definition of Retirement:For purposes of all awards granted under the Second A&R 2010 Plan to NEOs located in the U.S., “retirement” means voluntary termination of employment after the date on which the award recipient has reached (i) the age of 55 and has a total of at least 10 years of continuous employment with Itron or (ii) the age of 60 and has a total of at least 5 years of continuous employment with Itron. For stock options granted in fiscal 2016 or prior, “retirement” means the earlier of age 65 or age 55 with at least 10 years of service with Itron. |
| (2) | Annual Incentive Plan: For awards under the EMIP, participants would receive a prorated award (assuming an award is earned) based on the number of calendar days employed during the performance period and such payout, if any, will be made at the same time as the other participants. |
| (3) | Time-vested RSUs: |
| (4) | Stock Options:Upon retirement, all unvested options automatically expire. Vested options granted in 2016 or prior would remain exercisable until the earlier of three years following retirement or the option expiration date. However, for the awards granted in fiscal |
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2017, if a retirement occurs after 24 months following the second anniversary of the grant date, options will continue to vest subject to non-compete/non-solicit and reasonable notice restrictions. For the awards granted in fiscal 2018, if a retirement occurs after 18 months following the grant date, options will continue to vest subject to non-compete/non-solicit and reasonable notice restrictions. For the awards granted in fiscal 2019, if a retirement occurs after 12 months following the grant date, options will continue to vest subject to vest subject tonon-compete/non-solicit and reasonable notice restrictions. If termination is due to death or disability, all unvested options become exercisable and remain exercisable until the earlier of one year following the date of death or disability, or the date on which the options expire by their terms.
| (5) | Performance-Based RSUs (PRSUs): If termination occurs due to death or disability during the performance period, for the awards granted in fiscal 2017, 2018, and 2019, shares will be |
Voluntary Termination or Termination without Cause
Stock Options:All unvested options automatically expire due to voluntary termination or termination by the Company without cause. Any vested options would remain exercisable until the earlier of 90 days following termination of employment or the date on which the options expire by their terms. |
Time-vested RSUs:All unvested RSUs are forfeited upon voluntary termination or termination without cause. |
Performance-Based RSUs (PRSUs):All unvested PRSUs are forfeited upon voluntary termination or termination without cause. Vested units will be settled in accordance with the provisions of Section 409A of the Code. |
Annual Incentive Plan:The bonus under the EMIP would be forfeited in its entirety if the NEO is not employed by the Company or working as a service contractor for the Company at the time of the payout. |
For Mr. Reeves, pursuant to his offer letter from the Company, if he is terminated involuntarily without cause on or before May 10, 2020, in addition to his entitlement to the Company’s standard severance policy more fully described in “Executive Officer Severance Policy” below, and provided he enters into the Company’s standard form of agreement providing that he (1) releases all claims that he may have against the Company, (2) enters into a one year non-compete agreement (where enforceable), (3) agrees not to solicit employees for a period of one year, and (4) agrees not to disparage the Company, he will be entitled to become vested in 100% of any then-unvested shares subject to the equity awards that were assumed by the Company pursuant to the acquisition of Silver Spring Networks, Inc. by the Company.
Potential Payments uponChange-in-Control
The following describes the material provisions of thechange-in-control agreements that we have entered into with our NEOs except for Mr. FarrowReeves, who doesis not haveparty to achange-in-control agreement. Thechange-in-control agreements provide for the following benefits if there is achange-in-control and the NEO’s employment is terminated within 24 months by the Company without cause or by the NEO for “good reason”:
Severance Benefit:Thechange-in-control agreements provide |
Pro-Rata Annual Incentive for Year of |
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• | Welfare Benefit Continuation:Thechange-in-control agreements provide |
Equity Award Vesting and Acceleration (Double Trigger):Thechange-in-control agreements provide that any acceleration for equity awards is “double trigger” and thus will occur only upon achange-in-control and a qualifying termination (a termination without cause or for good reason). All vesting acceleration is subject to consummation of thechange-in-control transaction. |
Excise TaxGross-Up: There are no effective provisions for an excise taxgross-up. |
Legal Fees:Thechange-in-control agreements provide that NEOs will be reimbursed for legal fees and expenses incurred in seeking to enforce thechange-in-control agreement. |
Restrictive Covenants: Thechange-in-control agreements include restrictive covenants relating to |
Definition ofChange-in-Control:For purposes of thechange-in-control agreements, a |
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Definition of Good Reason:For purposes of thechange-in-control agreements, “good reason” for termination by the NEO of his or her employment generally means any one of the following acts by the Company following achange-in-control: |
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See also “Termination Payment Tables for NEOs” in this CD&A.below.
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Second A&R 2010 PlanChange-in-Control Provisions
Our Second A&R 2010 Plan provides that in the event of achange-in-control, as defined in ourchange-in-control agreements described above, unless otherwise provided in the award agreement, generally awards will be assumed or substituted for by the surviving corporation, and will accelerate only if not so assumed or substituted. The vesting and payout of PRSUs will be governed by the award agreement, as described below.
Performance-Based (PRSU)Change-in-Control Provisions
If achange-in-control occurs during the following performance periods; (2015-2017) under the 2015 grant, (2016-2018) under the 2016 grant, or (2017-2019) under the 2017 grant, (2018-2020) under the 2018 grant, or (2019-2021) under the 2019 grant, the PRSU awards will be vested at the greater of target or actual performance for the year, andpro-rated based on the number of calendar days between
the beginning of the performance period and thechange-in-control (i) in the event the awards are not assumed by the acquiring entity, or (ii) the beginning of the performance period and the date of termination of employment in the event the awards are assumed by the acquiring entity.
Executive Officer Severance Policy
The Company recognizes that it is usually difficult for executive officers whose employment is terminated involuntarily to obtain a position comparable to the one he or she has with the Company. In view of this, any executive officer who is terminated involuntarily, except if terminated for disciplinary reasons, will be entitled to receive severance pay equal to one year’s base salary, employer benefit premium payments/reimbursement for one year and outplacement assistance provided that (1) the executive (1) releases all claims that he or she may have against the Company, (2) enters into a one yearnon-compete agreement (where enforceable), (3) agrees not to solicit employees for a period of one year, and (4) agrees not to disparage the Company.
Temporary Plan Modification(s). Due to the CEO transition during 2019, effective February 20, 2019, the Compensation Committee approved a temporary enhancement to the Executive Severance Policy for the NEOs, except for Mr. Reeves who was not an NEO on that date. See “Other Practices, Policies and Guidelines -Employment Agreements; Severance Policy” in the CD&A for a more detailed description.
Termination Payment Tables for NEOs
The tables below reflect the estimated amount of incremental compensation payable to each of our NEOs (other than Mr. Mezey) in the event of termination of employment orchange-in-control. The tables do not include benefits generally available to all employees on anon-discriminatory basis or payments and benefits that the NEOs would have already earned during their employment with us, whether or not a termination orchange-in-control event had occurred. The amounts shown assume that such termination orchange-in-control was effective as of December 31, 2017.2019. The actual amounts to be paid out can only be determined at the time of such executive’s termination or upon achange-in-control, as applicable.
Mr. Mezey is not included in the following tables because he retired on August 31, 2019. As part of his Transition and Retirement Agreement, Mr. Mezey continued to serve as President and CEO and member of the Company’s Board of Directors until August 6, 2019. During this time and through August 31, 2019, Mr. Mezey continued to receive the same base salary and benefits and continued to vest in his outstanding equity awards in accordance with their existing terms. He was also eligible to receive a pro-rated annual cash bonus for fiscal 2019, continues to vest in his outstanding equity awards per their terms for terminations due to retirement, and will be eligible to exercise his vested stock options for up to three years following his retirement. He also received post-employment consulting pay through December 31, 2019. See Summary Compensation Table, Nonqualified Deferred Compensation Table, and Outstanding Equity Awards Table for additional quantified elements of Mr. Mezey’s pay in connection with his retirement.
Summary of Termination Payments Philip Mezey | ||||||||||||||||||||||||||||||||
Executive Benefits (1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in-Control | ||||||||||||||||||||||||
Annual Incentive (2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 151,960 | $ | 151,960 | ||||||||||||||||
Accelerated Stock Options (3) | $ | — | $ | — | $ | 1,964,948 | $ | 1,964,948 | $ | — | $ | — | $ | — | $ | 1,964,948 | ||||||||||||||||
Severance (4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 832,667 | $ | — | $ | 4,500,000 | ||||||||||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 59,167 | ||||||||||||||||
Accelerated RSUs (5) | $ | — | $ | — | $ | 2,256,602 | $ | 2,256,602 | $ | — | $ | — | $ | — | $ | 2,256,602 | ||||||||||||||||
Accelerated Performance RSUs (PRSUs) (6) | $ | — | $ | — | $ | 6,715,790 | $ | 6,715,790 | $ | 5,252,866 | $ | — | $ | — | $ | 2,373,462 | ||||||||||||||||
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Summary of Termination Payments | ||||||||||||||||||||||||
Thomas Deitrich | ||||||||||||||||||||||||
Executive Benefits(1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||
Annual Incentive(2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 164,807 | $ | 164,807 | ||||||||
Accelerated Stock Options(3) | $ | — | $ | — | $ | 900,598 | $ | 900,598 | $ | 335,704 | $ | — | $ | — | $ | 900,598 | ||||||||
Severance(4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,255,157 | $ | — | $ | 4,500,000 | ||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 69,428 | ||||||||
Accelerated RSUs(5) | $ | — | $ | — | $ | 3,640,492 | $ | 3,640,492 | $ | 617,284 | $ | 3,023,207 | $ | — | $ | 3,640,492 | ||||||||
Accelerated Performance RSUs (PRSUs)(6) | $ | — | $ | — | $ | 3,757,854 | $ | 3,757,854 | $ | 2,379,731 | $ | 1,378,123 | $ | — | $ | 112,325 | ||||||||
| (1) | The above table does not include amounts under our Executive Deferred Compensation Plan, stock option awards that are fully vested, earned salary, and accrued vacation as those items are earned and due to the employee regardless of such termination orchange-in-control events. It also does not include amounts payable under life insurance coverage, our accidental death & dismemberment coverage or our business travel accident coverage, which are programs available to all employees. Under thechange-in-control agreement with this executive the term is 24 months following achange-in-control and the severance payment is equal to 2.5 times the sum of the |
(2) | Pursuant to ourchange-in-control agreement with this executive, the annual bonus payable in the event of termination following achange-in-control is the greater of target or the actual amount earned. |
(3) | Representsin-the-money value of accelerated stock options based on the closing price of our common stock on December |
(4) | Effective April 29, 2014, the Executive Officer Severance Pay Policy provides an executive officer, who is terminated involuntarily, a severance payment equal to 1 times base salary plus one year of continued benefits and outplacement. In 2019, the Compensation Committee approved a temporary modification to the plan. This modification states that if an executive is terminated involuntarily within twelve months of the new CEO hire date, severance payment equal to 1.5 times base salary plus 18 months of continued benefits and outplacement will be made. Thechange-in-control |
(5) | For the time-vested RSUs, upon termination due to death or disability, represents the accelerated value of the RSUs based on the closing price of our common stock on December |
(6) | Upon a termination due to death or disability, awards will vest based on actual performance at the conclusion of the performance periods. |
Summary of Termination Payments Thomas Deitrich | ||||||||||||||||||||||||||||||||
Executive Benefits (1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in-Control | ||||||||||||||||||||||||
Annual Incentive (2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 83,578 | $ | 83,578 | ||||||||||||||||
Accelerated Stock Options (3) | $ | — | $ | — | $ | 1,696,039 | $ | 1,696,039 | $ | — | $ | — | $ | — | $ | 1,696,039 | ||||||||||||||||
Severance (4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 583,104 | $ | — | $ | 2,750,000 | ||||||||||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 60,260 | ||||||||||||||||
Accelerated RSUs(5) | $ | — | $ | — | $ | 3,029,171 | $ | 3,029,171 | $ | — | $ | — | $ | — | $ | 3,029,171 | ||||||||||||||||
Accelerated Performance RSUs (PRSUs) (6) | $ | — | $ | — | $ | 2,049,615 | $ | 2,049,615 | $ | 1,135,730 | $ | — | $ | — | $ | 1,482,527 | ||||||||||||||||
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Summary of Termination Payments | ||||||||||||||||||||||||
Joan Hooper | ||||||||||||||||||||||||
Executive Benefits(1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||
Annual Incentive(2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 53,653 | $ | 53,653 | ||||||||
Accelerated Stock Options(3) | $ | — | $ | — | $ | 157,747 | $ | 157,747 | $ | 157,747 | $ | — | $ | — | $ | 157,747 | ||||||||
Severance(4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 768,786 | $ | — | $ | 1,697,500 | ||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 37,048 | ||||||||
Accelerated RSUs(5) | $ | — | $ | — | $ | 1,742,550 | $ | 1,742,550 | $ | 512,179 | $ | 1,230,371 | $ | — | $ | 1,742,550 | ||||||||
Accelerated Performance RSUs (PRSUs)(6) | $ | — | $ | — | $ | 2,026,385 | $ | 2,026,385 | $ | — | $ | 861,327 | $ | — | $ | 53,812 | ||||||||
| (1) | The above table does not include amounts under our Executive Deferred Compensation Plan, stock option awards that are fully vested, earned salary, and accrued vacation as those items are earned and due to the employee regardless of such termination orchange-in-control events. It also does not include amounts payable under life insurance coverage, our accidental death & dismemberment coverage or our business travel accident coverage, which are programs available to all employees. Under thechange-in-control agreement with this executive the term is 24 months following achange-in-control and the severance payment is equal to |
(2) | Pursuant to ourchange-in-control agreement with this executive, the annual bonus payable in the event of termination following achange-in-control is the greater of target or the actual amount earned. |
(3) | Representsin-the-money value of accelerated stock options based on the closing price of our common stock on December |
(4) | Effective April 29, 2014, the Executive Officer Severance Pay Policy provides an executive officer, who is terminated involuntarily, a severance payment equal to 1 times base salary plus one year of continued benefits and outplacement. In 2019, the Compensation Committee approved a temporary modification to the plan. This modification states that if an executive is terminated involuntarily within twelve months of the new CEO hire date, severance payment equal to 1.5 times base salary plus 18 months of continued benefits and outplacement will be made. Thechange-in-control |
(5) | For the time-vested RSUs, upon termination due to death or disability, represents the accelerated value of the RSUs based on the closing price of our common stock on December |
(6) | Upon a termination due to death or disability, awards will vest based on actual performance at the conclusion of the performance periods. |
Summary of Termination Payments Michel Cadieux | ||||||||||||||||||||||||||||||||
Executive Benefits (1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in-Control | ||||||||||||||||||||||||
Annual Incentive (2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 45,588 | $ | 45,588 | ||||||||||||||||
Accelerated Stock Options (3) | $ | — | $ | — | $ | 495,497 | $ | 495,497 | $ | — | $ | — | $ | — | $ | 495,497 | ||||||||||||||||
Severance (4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 432,912 | $ | — | $ | 1,400,000 | ||||||||||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 47,824 | ||||||||||||||||
Accelerated RSUs (5) | $ | — | $ | — | $ | 563,946 | $ | 563,946 | $ | — | $ | — | $ | — | $ | 563,946 | ||||||||||||||||
Accelerated Performance RSUs (PRSUs) (6) | $ | — | $ | — | $ | 1,678,334 | $ | 1,678,334 | $ | 1,312,784 | $ | — | $ | — | $ | 593,002 | ||||||||||||||||
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Summary of Termination Payments | ||||||||||||||||||||||||
Sarah Hlavinka | ||||||||||||||||||||||||
Executive Benefits(1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||
Annual Incentive(2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 107,766 | $ | 107,766 | ||||||||
Accelerated Stock Options(3) | $ | — | $ | — | $ | 103,553 | $ | 103,553 | $ | — | $ | — | $ | — | $ | 103,553 | ||||||||
Severance (4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 740,717 | $ | — | $ | 1,662,500 | ||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,623 | ||||||||
Accelerated RSUs(5) | $ | — | $ | — | $ | 720,123 | $ | 720,123 | $ | — | $ | 551,300 | $ | — | $ | 720,123 | ||||||||
Accelerated Performance RSUs (PRSUs)(6) | $ | — | $ | — | $ | 1,156,915 | $ | 1,156,915 | $ | — | $ | 551,216 | $ | — | $ | — | ||||||||
| (1) | The above table does not include amounts under our Executive Deferred Compensation Plan, stock option awards that are fully vested, earned salary, and accrued vacation as those items are earned and due to the employee regardless of such termination orchange-in-control events. It also does not include amounts payable under life insurance coverage, our accidental death & dismemberment coverage or our business travel accident coverage, which are programs available to all employees. Under thechange-in-control agreement with this executive the term is 24 months following achange-in-control and the severance payment is equal to 2 times the sum of the |
(2) | Pursuant to ourchange-in-control agreement with this executive, the annual bonus payable in the event of termination following achange-in-control is the greater of target or the actual amount earned. |
(3) | Representsin-the-money value of accelerated stock options based on the closing price of our common stock on December |
(4) | Effective April 29, 2014, the Executive Officer Severance Pay Policy provides an executive officer, who is terminated involuntarily, a severance payment equal to 1 times base salary plus one year of continued benefits and outplacement. In 2019, the Compensation Committee approved a temporary modification to the plan. This modification states that if an executive is terminated involuntarily within twelve months of the new CEO hire date, severance payment equal to 1.5 times base salary plus 18 months of continued benefits and outplacement will be made. Thechange-in-control |
(5) | For the time-vested RSUs, upon termination due to death or disability, represents the accelerated value of the RSUs based on the closing price of our common stock on December |
(6) | Upon a termination due to death or disability, awards will vest based on actual performance at the conclusion of the performance periods. |
December 31, |
Summary of Termination Payments Shannon Votava | ||||||||||||||||||||||||||||||||
Executive Benefits (1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||||||||||
Annual Incentive (2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 39,510 | $ | 39,510 | ||||||||||||||||
Accelerated Stock Options (3) | $ | — | $ | — | $ | 326,791 | $ | 326,791 | $ | — | $ | — | $ | — | $ | 326,791 | ||||||||||||||||
Severance (4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 417,308 | $ | — | $ | 1,320,000 | ||||||||||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16,615 | ||||||||||||||||
Accelerated RSUs (5) | $ | — | $ | — | $ | 392,696 | $ | 392,696 | $ | — | $ | — | $ | — | $ | 392,696 | ||||||||||||||||
Accelerated Performance RSUs (PRSUs) (6) | $ | — | $ | — | $ | 1,108,887 | $ | 1,108,887 | $ | 848,914 | $ | — | $ | — | $ | 416,344 | ||||||||||||||||
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Summary of Termination Payments | ||||||||||||||||||||||||
Michel Cadieux | ||||||||||||||||||||||||
Executive Benefits(1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||
Annual Incentive(2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 67,500 | $ | 67,500 | ||||||||
Accelerated Stock Options(3) | $ | — | $ | — | $ | 134,279 | $ | 134,279 | $ | 55,697 | $ | — | $ | — | $ | 134,279 | ||||||||
Severance(4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 640,997 | $ | — | $ | 1,400,000 | ||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 36,662 | ||||||||
Accelerated RSUs(5) | $ | — | $ | — | $ | 798,197 | $ | 798,197 | $ | 246,897 | $ | 551,300 | $ | — | $ | 798,197 | ||||||||
Accelerated Performance RSUs (PRSUs)(6) | $ | — | $ | — | $ | 1,503,125 | $ | 1,503,125 | $ | 951,909 | $ | 551,216 | $ | — | $ | 44,913 | ||||||||
| (1) | The above table does not include amounts under our Executive Deferred Compensation Plan, stock option awards that are fully vested, earned salary, and accrued vacation as those items are earned and due to the employee regardless of such termination orchange-in-control events. It also does not include amounts payable under life insurance coverage, our accidental death & dismemberment coverage or our business travel accident coverage, which are programs available to all employees. Under thechange-in-control agreement with this executive the term is 24 months following achange-in-control and the severance payment is equal to 2 times the sum of the |
(2) | Pursuant to ourchange-in-control agreement with this executive, the annual bonus payable in the event of termination following achange-in-control is the greater of target or the actual amount earned. |
(3) | Representsin-the-money value of accelerated stock options based on the closing price of our common stock on December |
(4) | Effective April 29, 2014, the Executive Officer Severance Pay Policy provides an executive officer, who is terminated involuntarily, a severance payment equal to 1 times base salary plus one year of continued benefits and outplacement. In 2019, the Compensation Committee approved a temporary modification to the plan. This modification states that if an executive is terminated involuntarily within twelve months of the new CEO hire date, severance payment equal to 1.5 times base salary plus 18 months of continued benefits and outplacement will be made. Thechange-in-control |
(5) | For the time-vested RSUs, upon termination due to death or disability, represents the accelerated value of the RSUs based on the closing price of our common stock on December |
(6) | Upon a termination due to death or disability, awards will vest based on actual performance at the conclusion of the performance periods. |
complete; target payouts are |
Summary of Termination Payments Joan Hooper | ||||||||||||||||||||||||||||||||
Executive Benefits (1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||||||||||
Annual Incentive (2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 31,800 | $ | 31,800 | ||||||||||||||||
Accelerated Stock Options (3) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Severance (4) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 501,235 | $ | — | $ | 1,697,500 | ||||||||||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 14,470 | ||||||||||||||||
Accelerated RSUs (5) | $ | — | $ | — | $ | 249,066 | $ | 249,066 | $ | — | $ | — | $ | — | $ | 249,066 | ||||||||||||||||
Accelerated Performance RSUs (PRSUs) (6) | $ | — | $ | — | $ | 166,044 | $ | 166,044 | $ | — | $ | — | $ | — | $ | 105,012 | ||||||||||||||||
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Summary of Termination Payments | ||||||||||||||||||||||||
Donald Reeves | ||||||||||||||||||||||||
Executive Benefits(1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||
Annual Incentive | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
Accelerated Stock Options(2) | $ | — | $ | — | $ | 38,830 | $ | 38,830 | $ | — | $ | 52,886 | $ | — | $ | 52,886 | ||||||||
Severance(3) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 445,074 | $ | — | $ | 445,074 | ||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
Accelerated RSUs(4) | $ | — | $ | — | $ | 343,775 | $ | 343,775 | $ | — | $ | 353,010 | $ | — | $ | 353,010 | ||||||||
Accelerated Performance RSUs (PRSUs)(5) | $ | — | $ | — | $ | 470,288 | $ | 470,288 | $ | — | $ | — | $ | — | $ | — | ||||||||
| (1) | The above table does not include amounts under our Executive Deferred Compensation Plan, stock option awards that are fully vested, earned salary, and accrued vacation as those items are earned and due to the employee regardless of such termination orchange-in-control |
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Summary of Termination Payments Robert Farrow | ||||||||||||||||||||||||||||||||
Executive Benefits (1) | Termination for Cause | Voluntary Termination | Death | Disability | Retirement | Termination Without Cause | Change-in- Control | Termination Without Cause or by Executive for Good Reason Following a Change-in- Control | ||||||||||||||||||||||||
Annual Incentive | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Accelerated Stock Options (2) | $ | — | $ | — | $ | 90,623 | $ | 90,623 | $ | — | $ | — | $ | — | $ | 90,623 | ||||||||||||||||
Severance (3) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 317,868 | $ | — | $ | 317,868 | ||||||||||||||||
Benefit Continuation | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Accelerated RSUs (4) | $ | — | $ | — | $ | 260,865 | $ | 260,865 | $ | — | $ | — | $ | — | $ | 260,865 | ||||||||||||||||
Accelerated Performance RSUs (PRSUs) (5) | $ | — | $ | — | $ | 309,673 | $ | 309,673 | $ | 242,899 | $ | — | $ | — | $ | 109,409 | ||||||||||||||||
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(2) | Representsin-the-money value of accelerated stock options based on the closing price of our common stock on December |
| In December 2019, Mr. Reeves became entitled to the Executive Officer Severance Pay Policy which provides an executive officer, who is terminated involuntarily, a severance payment equal to 1 times base salary plus one year of continued benefits and outplacement. The Company does not maintain any change-in-control agreement with the executive. |
(4) | For the time-vested RSUs, upon termination due to death or disability, represents the accelerated value of the RSUs based on the closing price of our common stock on December |
(5) | Upon a termination due to death or disability, awards will vest based on actual performance at the conclusion of the performance periods. |
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PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
In the event that our shareholders fail to ratify the selection, it will be considered as a direction to the Board and the Audit/Finance Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit/Finance Committee in its discretion may select a different independent registered public accounting firm, subject to ratification by the Board, at any time during the year if it determines that such a change would be in the best interest of the Company and our shareholders.
The Board recommends that shareholders vote “FOR” the ratification of Deloitte & Touche LLP as our independent registered public accountant for fiscal year 2020. |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S AUDIT FEES AND SERVICES
For the years ended December 31, 2018 and 2019, professional services were performed by Deloitte & Touche LLP and their respective affiliates (collectively, Deloitte). The aggregate fees billed by Deloitte for the years ended December 31, 2018 and 2019 were as follows:
Services Rendered | 2018 | 2019 | ||||
Audit Fees(1) | $ | 11,488,189 | $ | 7,684,560 | ||
Audit-Related Fees(2) | — | — | ||||
Total Audit and Audit-Related Fees | 11,488,189 | 7,684,560 | ||||
Tax Fees(3) | 1,912,439 | 1,965,159 | ||||
Other Fees(4) | 41,712 | 2,064 | ||||
Total Fees | $ | 13,442,340 | $ | 9,651,782 | ||
| (1) | Audit services include fees for professional services rendered for the audit of the Company’s annual financial statements and internal controls over financial reporting for the years ended December 31, 2018 and 2019, including out of pocket expenses, and reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q. In addition, services include statutory audits required, and accounting consultations on matters related to the annual audits or interim reviews. |
| (2) | Audit-related services are disclosed in the year incurred, based on when the work is performed. These services typically include due diligence in connection with acquisitions, accounting process advice, and agreed-upon procedures. We did not engage any such services during the years ended December 31, 2018 and 2019. |
| (3) | Tax services are disclosed in the year incurred, based on when the work is performed. These services include tax compliance, tax advice, and tax planning during the years ended December 31, 2018 and 2019. |
| (4) | Services performed by Deloitte qualifying as “Other” for the years ended December 31, 2018 and 2019, are related to accounting research tools and permitted consultation services. |
The Audit/Finance Committee has adopted policies and procedures that require the Company to obtain the Committee’s pre-approval of all audit and permissible non-audit services to be provided by the Company’s independent registered public accounting firm. Pre-approval is generally granted on a quarterly basis, is detailed as to the particular service or category of services to be provided and is granted after consideration of the estimated fees for each service or category of service. Actual fees and any changes to estimated fees for pre-approved services are reported to the Committee on a quarterly basis. In 2018 and 2019, all services were pre-approved in accordance with the charter of the Audit/Finance Committee.
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20172019 AUDIT/FINANCE COMMITTEE REPORT
The Audit/Finance Committee is composed of independent directors as defined by Rule 5605(a)(2) of the NASDAQNasdaq rules and acts under a written charter developed by the Committee and approved by the Board. Management is responsible for the Company’s internal controls and the financial reporting process. Deloitte & Touche LLP, the Company’s independent registered public accounting firm in 2017,2019, is responsible for performing an independent audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with auditing standards of the Public Company Accounting Oversight Board (United States) (the PCAOB) and for issuing a report thereon. The Committee’s responsibility is to monitor and oversee these processes on behalf of our Board of Directors.
In connection with the December 31, 20172019 financial statements, the Audit/Finance Committee hereby reports as follows:
| (1) | The Audit/Finance Committee has reviewed and discussed the audited financial statements and report on internal control over financial reporting with management. |
| (2) | The Audit/Finance Committee has discussed with the independent auditors the matters required by PCAOB Auditing Standard No. 1301,Communications with Audit Committees. |
| (3) | The Audit/Finance Committee has received the written disclosures and the letter from the auditors, as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit/Finance Committee concerning independence, and discussed with the auditors the auditors’ independence. |
| (4) | Based upon these reviews and discussions, the Audit/Finance Committee has recommended to the Board of Directors and the Board has approved, that the Company’s audited financial statements be included in |
Audit/Finance Committee
Thomas S. Glanville, Chairman
Jerome J. Lande
Timothy M. Leyden
Gary E. Pruitt
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S AUDIT FEES AND SERVICES
For the years ended December 31, 2016 and December 31, 2017, professional services were performed by Deloitte & Touche LLP and their respective affiliates (collectively, Deloitte). The aggregate fees billed by Deloitte for the years ended December 31, 2016 and 2017, respectively, were as follows:
Services Rendered | 2016 | 2017 | ||||||
Audit Fees (1) | $ | 5,165,145 | $ | 6,115,322 | ||||
Audit-Related Fees (2) | 981,885 | |||||||
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Total Audit and Audit-Related Fees | 5,165,145 | 7,097,207 | ||||||
Tax Fees (3) | 2,326,547 | 1,492,516 | ||||||
Other Fees (4) | 2,174 | 2,060 | ||||||
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Total Fees | $ | 7,493,866 | $ | 8,591,783 | ||||
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Audit/Finance Committee | |
Thomas S. Glanville, Chair Jerome J. Lande Timothy M. Leyden Gary E. Pruitt |
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The Audit/Finance Committee has adopted policies and procedures that require the Company to obtain the Committee’spre-approval of all audit and permissiblenon-audit services to be provided by the Company’s independent registered public accounting firm.Pre-approval is generally granted on a quarterly basis, is detailed as to the particular service or category of services to be provided, and is granted after consideration of the estimated fees for each service or category of service. Actual fees and any changes to estimated fees forpre-approved services are reported to the Committee on a quarterly basis. In 2016 and 2017, all services werepre-approved in accordance with the charter of the Audit/Finance Committee.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives certain information about our equity compensation plans in effect as of December 31, 2017.2019.
Plan Category | Number of Shares to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Shares Remaining Available for Issuance Under Equity Compensation Plans (excluding shares reflected in column (a)) (c) | |||||||||
Equity Compensation Plans Approved by Shareholders (1) | 1,511,863 | $ | 47.10(2) | 4,996,046(3) | ||||||||
Equity Compensation Plans Not Approved by Shareholders | — | — | — | |||||||||
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Total | 1,511,863 | $ | 47.10(2) | 4,996,046(3) | ||||||||
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Plan Category | Number of Shares to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Shares Remaining Available for Issuance Under Equity Compensation Plans (excluding shares reflected in column (a)) (c) | ||||||
Equity Compensation Plans Approved by Shareholders(1) | 1,142,420 | $ | 56.38 | (2) | 6,210,553 | (3) | |||
Equity Compensation Plans Not Approved by Shareholders | — | — | — | ||||||
Total | 1,142,420 | $ | 56.38 | (2) | 6,210,553 | (3) | |||
| (1) | Under the provisions of the Second A&R 2010 Plan, the Company may grant stock awards, stock units, performance shares, stock appreciation rights, and performance units (collectively Awards) in addition to stock options. For purposes of this table, the number of |
| (2) | The weighted-average exercise price pertains only to outstanding options and excludes |
| (3) | This number includes |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Directors and Executive Officers
The following table provides information with respect to the beneficial ownership of our common stock as of March 1, 2018 by:
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2, 2020 by each of our directors, each of our named executive officers listed in the Summary Compensation Table, and all of our director nominees, directors, and executive officers as a group. The percentage ownership data is based on 39,121,723shares40,160,958 shares of our common stock outstanding as of March 1, 2018.2, 2020. Under SEC rules, beneficial ownership includes shares over that which the indicated beneficial owner exercises voting and/or investment power. Shares of common stock subject to options that are currently exercisable or will become exercisable within 60 days or shares of restricted stock unitesunits vested or that will vest within 60 days are deemed outstanding for computing the number of shares and the percentage ownership of the person holding the option, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. Except as otherwise noted, we believe that the beneficial owners of the shares of common stock listed below have sole voting and investment power with respect to all shares beneficially owned, subject to applicable community property laws.
| Shares Beneficially Owned | ||||||||
Name | Number | Percent | ||||||
Directors and Executive Officers: | ||||||||
Philip C. Mezey (1) | 520,459 | 1.32 | % | |||||
Thomas L. Deitrich (2) | 131,246 | * | ||||||
W. Mark Schmitz (3) | 0 | 0 | ||||||
Michel C. Cadieux (4) | 60,419 | * | ||||||
Shannon M. Votava (5) | 55,924 | * | ||||||
Joan S. Hooper (6) | 3,652 | * | ||||||
Robert H.A. Farrow (7) | 5,783 | * | ||||||
Kirby A. Dyess (8) | 17,686 | * | ||||||
Thomas S. Glanville (9) | 16,192 | * | ||||||
Frank M. Jaehnert (10) | 6,433 | * | ||||||
Jerome J. Lande (11) | 11,922 | * | ||||||
Timothy M. Leyden (12) | 7,368 | * | ||||||
Peter Mainz (13) | 4,677 | * | ||||||
Daniel S. Pelino (14) | 10,411 | * | ||||||
Gary E. Pruitt (15) | 23,791 | * | ||||||
Diana D. Tremblay (16) | 6,433 | * | ||||||
Lynda L. Ziegler (17) | 12,882 | * | ||||||
All directors and executive officers as a group (17 persons) (18) | 921,249 | 2.32 | % | |||||
Greater-Than-5% Beneficial Owners: | ||||||||
Scopia Capital Management LP (19) 152 West 57th Street, 33rd Floor New York, New York 10019 | 5,222,140 | 13.35 | % | |||||
BlackRock, Inc. (20) 40 East 52nd Street New York, NY 10022 | 4,620,250 | 11.81 | % | |||||
Vanguard Group (21) 100 Vanguard Blvd. Malvern, PA 19355 | 3,419,813 | 8.74 | % | |||||
Name | Shares Beneficially Owned | |||||
Number | Percent | |||||
Directors and Executive Officers: | ||||||
Philip C. Mezey(1) | 137,017 | * | ||||
Thomas L. Deitrich(2) | 294,932 | * | ||||
Joan S. Hooper(3) | 44,944 | * | ||||
Michel C. Cadieux(4) | 65,544 | * | ||||
Sarah E. Hlavinka(5) | 16,125 | * | ||||
Donald L. Reeves(6) | 15,149 | * | ||||
Thomas S. Glanville(7) | 11,441 | * | ||||
Frank M. Jaehnert(8) | 10,088 | * | ||||
Jerome J. Lande(9) | 12,235 | * | ||||
Timothy M. Leyden(10) | 10,719 | * | ||||
Daniel S. Pelino(11) | 13,762 | * | ||||
Gary E. Pruitt(12) | 43,791 | * | ||||
Diana D. Tremblay(13) | 10,088 | * | ||||
Lynda L. Ziegler(14) | 12,211 | * | ||||
All directors and executive officers as a group (15 persons)(15) | 694,439 | 1.72 | % | |||
| * | Less than 1%. |
| (1) | Mr. Mezey resigned as an executive officer and director on August 6, 2019, and became a non-executive officer employee until his retirement from Itron on August 31, 2019. Represents Mr. Mezey’s holdings, including the number of shares subject to RSU’s and stock options that became exercisable or vested within 60 days, as of August 6, 2019, his last day of employment as an executive officer and director of Itron. Includes |
| (2) | Includes |
| (3) |
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(4) | Includes |
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Includes |
(6) | Includes |
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Represents shares owned as of March |
| (8) | Represents shares owned as of March 2, 2020. |
| (9) | Represents shares owned as of March 2, 2020. Mr. Lande was appointed to our Board through an agreement with Scopia. Mr. Lande is an employee of Scopia but does not have voting or investment power over and disclaims beneficial ownership of the shares of the Company owned by Scopia. |
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Represents shares owned as of March |
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Represents shares owned as of March |
(12) | Represents shares owned as of March |
(13) | Represents shares owned as of March 2, 2020. |
| (14) | Represents shares owned as of March 2, 2020. |
| (15) | Includes |
Principal Shareholders
The following table provides information with respect to the beneficial ownership of our common stock as of March 2, 2020 by each person that we know beneficially owns more than five percent (5%) of our common stock.
Shares Beneficially Owned | ||||||
Name and Address | Number | Percent | ||||
BlackRock, Inc.(1) 40 East 52nd Street New York, NY 10055 | 5,201,473 | 12.95 | % | |||
Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 3,968,442 | 9.88 | % | |||
Wellington Management Group LLP(3) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | 2,381,161 | 5.93 | % | |||
(1) | Information is based on Amendment No. |
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(2) | Information is based on Amendment No. |
| (3) | Information is based on Amendment No. 1 to a Schedule 13G filed with the SEC on January 27, 2020 jointly by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company, reporting beneficial ownership as of December 31, 2019. The shares reflected in the table are owned of record by clients of one or more of Wellington Management Company LLP, Wellington Management Canada LLC, Wellington Management Singapore Pte Ltd, Wellington Management Hong Kong Ltd, Wellington Management International Ltd, Wellington Management Japan Pte Ltd and Wellington Management Australia Pty Ltd, each registered investment advisers (the “Wellington Investment Advisers”). Those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such shares. No such client is known to have such right or power with respect to more than 5% of this class of securities. Wellington Management Group LLP is the parent holding company of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. |
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. SEC regulations require our executive officers, directors, and greater than 10% shareholders to provide us with copies of all Section 16(a) forms they file.
Based solely on our review of these forms and written representations received from certain reporting persons, we believe that during 20172019 all of our executive officers, directors, and greater than 10% shareholders complied with all Section 16(a) filing requirements applicable to them.
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LIST OF SHAREHOLDERS OF RECORD
A list of shareholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and will also be available ten days prior to the annual meeting between the hours of 9:00 a.m. and 4:00 p.m., Pacific time, at the office of the Corporate Secretary, Itron, Inc., 2111 N. Molter Road, Liberty Lake, Washington 99019. A shareholder may examine the list for any legally valid purpose related to the annual meeting.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of our 20172019 Annual Report to Shareholders, which includes our financial statements for the year ended December 31, 2017,2019, accompanies this proxy statement. In addition, you may view the Annual Report and this proxy statement on our Company website,www.itron.com, by selecting “Investors” and then “Financials and Filings.”
SHAREHOLDER PROPOSALS FOR THE 20192021 ANNUAL MEETING
Under the SEC’s proxy rules, shareholder proposals that meet specified conditions must be included in our proxy statement and proxy for the 20192021 annual meeting. Under Exchange Act Rules14a-5(e) and14a-8(e), shareholders that intend to present a proposal at our 20192021 annual meeting must give us written notice of the proposal not later than November 29, 201827, 2020 for the proposal to be considered for inclusion in our proxy materials for that meeting. In addition, shareholders who wish to submit nominations for the election of directors or proposals that will not be included in our proxy materials must do so in accordance with the advance notice provisions and other applicable requirements set forth in our Amended and Restated Bylaws. Our Amended and Restated Bylaws provide that the notice of proposals to be considered at our annual meeting must be received by Itron at least 90 days and not more than 120 days prior to the anniversary date of the prior year’s annual meeting, and that the notice of nominations for election of directors must be received at least 60 days and not more than 90 days prior to the date of our annual meeting (or if less than 60 days’ notice or prior public disclosure of the date of such annual meeting is given or made to the shareholders, not later than the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure was made). Shareholders who intend to present proposals at the 20192021 annual meeting that will not be included in our proxy materials must provide to our Corporate Secretary written notice of the business they wish to propose not later than February 9, 20196, 2021 and no sooner than January 10, 2019, assuming the annual meeting is scheduled for May 9, 2019.7, 2021. Our timely receipt of a proposal by a qualified shareholder will not guarantee the proposal’s inclusion in our proxy materials or presentation at the 20192021 annual meeting, because there are other requirements in the proxy rules. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with all applicable requirements of the SEC’s proxy rules, state law, and our Amended and Restated Bylaws.
Shareholder proposals should be directed to the attention of our Corporate Secretary, Itron, Inc., 2111 N. Molter Road, Liberty Lake, Washington 99019.
We make available, free of charge, copies of our filings with the SEC, including this proxy statement and our Annual Report to Shareholders, upon the request of shareholders. The documents are also available for downloading or printing by going to our website atwww.itron.com, and selecting “Investors” and then “Investor Relations - Financial Information.” Shareholders may submit a request for printed copies bye-mail through our website atwww.itron.com, by selecting “Investors” and then “Contact Investor Relations” or by mail to the following address:
Itron, Inc. – Attention: Investor Relations
2111 N. Molter Road
Liberty Lake, Washington 99019
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X Itron, Inc. 02SC4B 1 U P X + Annual Meeting Proxy Card . C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + B Non-Voting Items A Proposals — The Board of Directors recommends a vote FOR all the nominees listed. IMPORTANT ANNUAL MEETING INFORMATION Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. 1.1 - Philip C. Mezey 1.2 - Daniel S. Pelino 1. Election of Directors: For Against Abstain For Against Abstain The Board of Directors recommends a vote FOR Proposals 2 and 3, both of which are Company Proposals. 1.3 - Timothy M. Leyden For Against Abstain For Against Abstain 2. Proposal to approve the advisory (non-binding) resolution relating to executive compensation. For Against Abstain 3. Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountant for 2018. MMMMMMMMMMMM MMMMMMMMMMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE SACKPACK 1234 5678 9012 345 MMMMMMM 3 7 0 8 9 6 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMMMM C 1234567890 J N T C123456789 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 PM, Eastern Time, on May 9, 2018. Vote by Internet • Go to www.envisionreports.com/ITRI • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message
This Proxy is Solicited by Itron’s Board of Directors for the Annual Meeting of Shareholders to be held on May 10, 2018 The undersigned hereby appoint(s) Philip C. Mezey and Shannon M. Votava and each of them, as proxies, with full power of substitution, to represent and vote as designated all shares of common stock of Itron, Inc. held of record by the undersigned on March 5, 2018, at the Annual Meeting of Shareholders of Itron to be held at the Houston Marriott Marquis Hotel in the Kingwood Room at 1777 Walker Street, Houston, Texas, 77010, at 4:00 p.m., local time, on Thursday, May 10, 2018, with authority to vote upon the matters listed in this proxy and with discretionary authority as to any other matters that may properly come before the meeting or any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTIONTABLE OF ALL NOMINEES NAMED AND FOR THE OTHER PROPOSALS OR OTHERWISE IN ACCORDANCE WITH THE RECOMMENDATIONCONTENTS
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X Itron, Inc. 02SC5B 1 U P X + PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Annual Meeting Proxy Card . B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + A Proposals — The Board of Directors recommends a vote FOR all the nominees listed. IMPORTANT ANNUAL MEETING INFORMATION 1.1 - Philip C. Mezey 1.2 - Daniel S. Pelino 1. Election of Directors: For Against Abstain For Against Abstain 1.3 - Timothy M. Leyden For Against Abstain The Board of Directors recommends a vote FOR Proposals 2 and 3, both of which are Company Proposals. For Against Abstain 2. Proposal to approve the advisory (non-binding) resolution relating to executive compensation. For Against Abstain 3. Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountant for 2018. MMMMMMMMMMMM 3 7 0 8 9 6 2 MMMMMMMMM
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. . This Proxy is Solicited by Itron’s Board of Directors for the Annual Meeting of Shareholders to be held on May 10, 2018 The undersigned hereby appoint(s) Philip C. Mezey and Shannon M. Votava and each of them, as proxies, with full power of substitution, to represent and vote as designated all shares of common stock of Itron, Inc. held of record by the undersigned on March 5, 2018, at the Annual Meeting of Shareholders of Itron to be held at the Houston Marriott Marquis Hotel in the Kingwood Room at 1777 Walker Street, Houston, Texas, 77010, at 4:00 p.m., local time, on Thursday, May 10, 2018, with authority to vote upon the matters listed in this proxy and with discretionary authority as to any other matters that may properly come before the meeting or any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES NAMED AND FOR THE OTHER PROPOSALS OR OTHERWISE IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE. (Continued and to be marked, dated and signed, on the other side) Proxy — Itron, Inc. Important Notice regarding Internet availability of proxy materials for the Shareholder Meeting to be held on May 10, 2018. The Proxy Statement and the Annual Report to security holders are available at: http://www.edocumentview.com/ITRI
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X Itron, Inc. 02SC7B 1 U P X + Annual Meeting Proxy Card . C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. B Non-Voting Items IMPORTANT ANNUAL MEETING INFORMATION Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. + A Proposals — The Board of Directors recommends a vote FOR all the nominees listed. 1.1 - Philip C. Mezey 1.2 - Daniel S. Pelino 1. Election of Directors: For Against Abstain For Against Abstain 1.3 - Timothy M. Leyden For Against Abstain The Board of Directors recommends a vote FOR Proposals 2 and 3, both of which are Company Proposals. For Against Abstain 2. Proposal to approve the advisory (non-binding) resolution relating to executive compensation. For Against Abstain 3. Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountant for 2018. MMMMMMMMMMMM MMMMMMMMMMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE SACKPACK 1234 5678 9012 345 MMMMMMM 3 7 0 8 9 6 4 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMMMM C 1234567890 J N T C123456789 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 PM, Eastern Time, on May 7, 2018. Vote by Internet • Go to www.envisionreports.com/ITRI • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message
Proxy — Itron, Inc. Important Notice regarding Internet availability of proxy materials for the Shareholder Meeting to be held on May 10, 2018. The Proxy Statement and the Annual Report to security holders are available at: http://www.envisionreports.com/ITRI Annual Meeting May 10, 2018 Fidelity Management Trust Company (“Fidelity”), as Trustee of the Itron, Inc. Incentive Savings Plan, has been requested to forward to you the enclosed proxy material relative to the securities held by us in your account but not registered in your name. Such securities can be voted only by Fidelity as holder of record. Fidelity will vote your securities in accordance with your wishes if you execute this form and return it promptly in the enclosed business reply envelope, or provide directions via the telephone or internet, as described elsewhere in this form. It is understood that, if you sign without otherwise marking the form, the securities will be voted as recommended by the Board of Directors on all matters to be considered at the meeting. For this meeting, to the extent of its authority to vote securities in the absence of participant instructions, unless otherwise required by law, Fidelity will not vote any allocated shares with respect to which Fidelity does not receive timely voting directions. In order to ensure that your securities are voted as you wish, please provide your vote directions by May 7, 2018. Fidelity Management Trust Company (Continued and to be marked, dated and signed, on the other side) IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.