UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.DC 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, |
☑ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Under Rule14a-12 |
HAMILTON BEACH BRANDS HOLDING COMPANY
(Name of Registrant as Specified in Itsits Charter)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
☑ | No fee |
required
☐ | Fee paid previously with preliminary |
Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.materials
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
HAMILTON BEACH BRANDS HOLDING COMPANY
4421 WATERFRONT DR.
GLEN ALLEN, VA 23060
NOTICE OF ANNUAL MEETING
The Annual Meeting of stockholders (the “Annual Meeting”) of Hamilton Beach Brands Holding Company (the “Company”) will be held on Tuesday, May 15, 201817, 2022 at 11:12:00 a.m.p.m., at 5875 Landerbrook Drive, Cleveland, Ohio, for the following purposes:
1. | To elect eleven directors, each for a term expiring at the next annual meeting of stockholders and until their respective successors are duly elected and qualified; |
2. | To approve the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan; |
3. | To approve, on an advisory basis, the Company’s Named Executive Officer compensation; |
4. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for |
To transact such other business as may properly come before the |
The Board of Directors has fixed the close of business on March 19, 201825, 2022 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. The 2018 proxy statement2022 Proxy Statement and proxy cardCard are being mailed to stockholders commencing on or about March 26, 2018.April 6, 2022.
Dana B. SykesWe currently intend to hold our Annual Meeting in person; however, we continue to actively monitor the coronavirus (“COVID-19”) pandemic. We are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our Annual Meeting webpage which can be accessed at https://www.hamiltonbeachbrands.com/investors/annual-meeting-materials for updated information.
Lawrence K. Workman, Jr.
Secretary
March 26, 2018April 6, 2022
Your vote is very important. Whether or not you plan to attend the Annual Meeting in person, please promptlyyou are encouraged to vote as soon as possible to ensure that your shares are represented at the meeting. If you are a stockholder of record and received a paper copy of the proxy materials by mail, you may vote your shares by proxy using one of the following methods: (i) vote via the internet (www.investorvote.com/HBB); (ii) vote by telephone(1-800-652-8683); or over(iii) complete, sign, date and return your proxy card in the Internet (www.investorvote.com/HBB) or by completing and mailing the enclosed form of proxy.postage-paid envelope provided. If you hold shares of both Class A Common Stock and Class B Common Stock, you only have to complete the single enclosed form of proxy or vote once via the Internetinternet or telephone. A self-addressed envelope is enclosed and no postage is required if mailed in the United States. If you wish to attend the meeting and vote in person, you may do so. If you hold your shares through an account with a bank, broker or similar organization, please follow the instructions you receive from the stockholder of record to vote your shares.
The Company’s Annual Report for the year ended December 31, 20172021 is being mailed to stockholders with the 20182022 Proxy Statement. The 20172021 Annual Report contains financial and other information about the Company but is not incorporated into the 20182022 Proxy Statement and is not considered part of the proxy soliciting material. You should also note that other information contained on or accessible through our website other than thisthe 2022 Proxy Statement is not incorporated by reference into thisthe 2022 Proxy Statement and you should not consider that information to be part of thisthe 2022 Proxy Statement.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders To Be Held on May 15, 2018 17, 2022:
The 20182022 Proxy Statement and
2017 2021 Annual Report are available, free of charge, at http:
https://www.hamiltonbeachbrands.com by clicking onwww.hamiltonbeachbrands.com/investors/annual-meeting-materials.
the “2018 Annual Meeting Materials” link and then clicking on either the “2018 Proxy Statement” link or the
“2017 Annual Report” link, as appropriate.
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HAMILTON BEACH BRANDS HOLDING COMPANY
4421 WATERFRONT DR.
GLEN ALLEN, VA 23060
PROXY STATEMENT — MARCH 26, 2018APRIL 6, 2022
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Hamilton Beach Brands Holding Company, a Delaware corporation (the “Company,” “Hamilton Beach Holding,” “we,” “our” or “us”), of proxies to be used at the annual meeting of our stockholders to be held on May 15, 201817, 2022 (the “Annual Meeting”). This Proxy Statement and the related form of proxy are being mailed to stockholders commencing on or about March 26, 2018.April 6, 2022.
If the enclosed form of proxy is executed, dated and returned or if you vote electronically, the shares represented by the proxy will be voted as directed on all matters properly coming before the Annual Meeting for a vote. Proxies that are properly signed without any indication of voting instructions will be voted as follows:
Proposal | Description | Board Vote | Page Reference | Description | Board Vote | Page Reference | ||||||
1 | Election of eleven director nominees named in this Proxy Statement | FOR | 9 | Election of eleven director nominees named in this Proxy Statement | FOR | 14 | ||||||
2 | The ratification of the appointment of Ernst & Young LLP (“EY”) as our independent registered public accounting firm for 2018 | FOR | 15 | Approval of the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan | FOR | 20 | ||||||
3 | Approval, on an advisory basis, of the Company’s Named Executive Officer compensation | FOR | 26 | |||||||||
4 | The ratification of the appointment of Ernst & Young LLP (“EY”) as our independent registered public accounting firm for 2022 | FOR | 27 | |||||||||
N/A | Any other matter properly brought before the Board |
As recommended by the Board or, if no recommendation is given, in the proxy holders’ own discretion
| N/A | Any other matter properly brought before the Board | As recommended by the Board or, if no recommendation is given, in the proxy holders’ own discretion | N/A |
The proxies may be revoked at any time prior to their exercise by giving notice to us in writing or by executing and delivering a later-dated proxy. Attendance at the Annual Meeting will not automatically revoke a proxy, but a stockholder of record attending the Annual Meeting may request a ballot and vote in person, thereby revoking a previously granted proxy.
Stockholders of record at the close of business on March 19, 201825, 2022 will be entitled to notice of, and to vote at, the Annual Meeting. On that date, we had 9,163,63610,050,513 outstanding shares of Class A Common Stock, par value $0.01 per share (“Class A Common”), entitled to vote at the Annual Meeting and 4,524,5363,869,173 outstanding shares of Class B Common Stock, par value $0.01 per share (“Class B Common”), entitled to vote at the Annual Meeting. Each share of Class A Common is entitled to one vote for a nominee for each of the eleven directorships to be filled and one vote on each other matter properly brought before the Annual Meeting. Each share of Class B Common is entitled to ten votes for each such nominee and ten votes on each other matter properly brought before the Annual Meeting. Class A Common and Class B Common will vote as a single class on all matters anticipated to be brought before the Annual Meeting.
At the Annual Meeting, in accordance with Delaware law and our Amended and Restated Bylaws (“Bylaws”), the inspectors of election appointed by the Board for the Annual Meeting will determine the presence of a quorum and tabulate the results of stockholder voting. As provided by Delaware law and our Bylaws, the holders of a majority of the outstanding voting power of all classes of our stock, issued and outstanding, and entitled to vote
at the Annual Meeting and present in person or by proxy at the Annual Meeting, will constitute a quorum for the Annual Meeting. The inspectors of election intend to treat (1) treat properly executed proxies marked “abstain” as “present” for purposes of determining whether a quorum has been achieved at the Annual Meeting and (2) treat proxies held in “street name” by brokers that are voted on at least one, but not all, of the proposals to come before the Annual Meeting (the “brokernon-votes”) as “present” for purposes of determining whether a quorum has been achieved at the Annual Meeting.
Proposal 1is to elect eleven directors, each for a term expiring at the next annual meeting of stockholders and until their respective successors are duly elected and qualified. Our Bylaws provide that our directors are elected by a plurality vote. Shares for which authority is withheld to vote for director nominees and brokernon-votes will have no effect on the election of directors except to the extent the failure to vote for a director nominee results in another nominee receiving a largergreater number of votes. In accordance with Delaware law and our Bylaws, the eleven director nominees receiving the greatest number of votes will be elected directors.
In accordance with our Bylaws,Proposal 2 is to approve the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan (amended and restated effective March 1, 2022). We will consider the affirmative vote of the holders of a majority of the votes cast is required to approve all other proposals that are brought before the Annual Meeting, includingas approval of Proposal 2. As a result, abstentions2. Abstentions and brokernon-votes will not be treated as votes cast. Theycast, so they will not affect the outcome of Proposal 2 or any other proposal properly brought before2.
Proposal 3 is an advisory vote on the Board.Company’s Named Executive Officer compensation. Although Proposal 3 is non-binding, the advisory vote allows our stockholders to express their opinions regarding our executive compensation. We will consider the affirmative vote of the holders of a majority of the votes cast as approval of Proposal 3. Abstentions and broker non-votes will not be treated as votes cast, so they will not affect the outcome of Proposal 3.
Proposal 4 is an advisory vote on the ratification of the appointment of EY as our independent registered public accounting firm for 2022. Although Proposal 4 is non-binding, the advisory vote allows our stockholders to express their opinions regarding our appointment of EY as our independent registered public accounting firm for 2022. We will consider the affirmative vote of the holders of a majority of the votes cast as approval of Proposal 4. Abstentions and broker non-votes will not be treated as votes cast, so they will not affect the outcome of Proposal 4.
We are not aware of any business that may properly be brought before the Annual Meeting other than those matters described in this Proxy Statement. If any matters other than those shown on the proxy card are properly brought before the Annual Meeting, the proxy card gives discretionary authority to the persons named on the proxy card to vote the shares represented by such proxy card.
In accordance with Delaware law and our Bylaws, we may, by a vote of the stockholders, in person or by proxy, adjourn the Annual Meeting to a later date(s), without changing the record date. If we were to determine that an adjournment was desirable, the appointed proxies would use the discretionary authority granted pursuant to the proxy cards to vote in favor of such an adjournment.
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PART I –- CORPORATE GOVERNANCE INFORMATION
About Hamilton Beach Holdingthe Company
Hamilton Beach Holding is an operating holding company for two separate businesses: consumer, commercial and specialty small appliances (Hamilton Beach Brands, Inc.) and specialty retail (The Kitchen Collection, LLC).The Company operates through its wholly-owned subsidiary Hamilton Beach Brands, Inc. (“HBB”). HBB is a leading designer, marketer, and distributor of branded, small electric household and specialty housewares appliances as well as commercial products for restaurants, bars, and hotels. HBB markets such products under numerous brand names, includingoperates in the Hamilton Beach®, Proctor Silex®consumer, commercial, and Weston® brands, among others. The Kitchen Collection, LLC (“KC”) is a national specialty retailer of kitchenware in outlet and traditional malls throughout the United States.
Separation of Hamilton Beach Holding from NACCO Industries, Inc.
On September 29, 2017, our Company wasspun-off from NACCO Industries, Inc. (“NACCO”), and became an independent publicly traded company through the distribution of all of the outstanding shares of Hamilton Beach Holding common stock to NACCO stockholders. Our common stock began “regular way” trading under the ticker symbol “HBB” on the New York Stock Exchange (“NYSE”) on September 29, 2017.small appliance markets.
Our Board currently consists of eleven directors. Directors are elected at each annual meeting to serve forone-year terms andor until their respective successors are duly elected and qualified, subject to their earlier death, resignation or removal. Biographical information and qualifications of our directors are included under “Proposal 1 - Election of Directors.” beginning
Under the Company’s current leadership structure, the Company’s roles of Chairman and Chief Executive Officer are separated, enabling Gregory H. Trepp, our President and Chief Executive Officer to focus on page 9.managing the Company and the HBB business and Alfred M. Rankin, Jr., our Non-Executive Chairman, to devote his time and attention to matters of strategic oversight, Board oversight and governance. The Board believes that Mr. Rankin possesses in-depth knowledge of the issues, opportunities and challenges facing the Company and our business. Because of this knowledge and insight, the Board believes that Mr. Rankin is in the best position to effectively identify strategic opportunities and priorities and to lead discussions regarding the execution of the Company’s strategies and achievement of its objectives. As Non-Executive Chairman, Mr. Rankin is able to:
focus our Board on the most significant strategic goals and risks of our business;
utilize the individual qualifications, skills and experience of the other Board members to maximize their contributions to our Board;
ensure that each Board member has sufficient knowledge and understanding of our business to enable such member to make informed judgments;
facilitate the flow of information between our Board and our management;
provide consultation and advice to our management on significant business matters and strategic initiatives;
provide experience regarding public company governance and related public company responsibilities; and
provide the perspective of a long-term stockholder.
We do not assign a lead independent director. For meetings of the independent directors, the presiding director is determined based upon the context and subject matter of the meeting.
In accordance with the Company’s Corporate Governance Guidelines, the Board retains the right to exercise its discretion in combining or separating the offices of Chairman of the Board and Chief Executive Officer. This determination is made after considering relevant factors, including the specific needs of the business and the best interests of the Company and its stockholders. The Board believes that its current leadership structure is appropriate and meets the Company’s current needs. The Board will regularly assess its leadership structure to determine whether the leadership structure is the most appropriate for the Company at the time.
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In making a determination as to the independence of our directors, our Board considered Section 303A of the New York Stock Exchange (“NYSE”) listing standards and broadly considered the materiality of each director’s relationship with us. Based on this criteria, our Board has determined that the following directors are independent:
Mark R. Belgya | Paul D. Furlow | |
Michael S. Miller | John P. Jumper | |
James A. Ratner | Dennis W. LaBarre |
Board Oversight of Risk Management
The Board oversees our risk management. The full Board (as supplemented by the appropriate Board committee in the case of risks that are overseen by a particular committee) regularly reviews information provided by management in order for our Board to oversee our risk identification, risk management and risk mitigation strategies. Our Board committees assist the full Board’s oversight of our material risks by focusing on risks related to the particular area of concentration of the relevant committee. The full Board incorporates the insight provided by these reports into its overall risk management analysis.
Cybersecurity is among our Board’s oversight priorities. While the Audit Review Committee reviews matters regarding our information systems and cybersecurity practices and procedures as they relate to accounting, auditing and financial reporting, our Board oversees the Company’s cybersecurity risks more broadly. We rely heavily on information technology systems and recognize that cyber-attacks are becoming not only more common but also more sophisticated. As a result, we focus on developing and executing strategies to mitigate the risks of disruption of our critical systems and to protect the confidentiality, integrity, and availability of our business data as well as that of our customers, employees, and vendors. To mitigate the risks of cybersecurity incidents, we have established a cross-functional cybersecurity task force and leverage established cybersecurity frameworks and practices, which include regularly updating technology, developing security policies and procedures, monitoring and routine testing of information systems, developing an incident response plan, carrying appropriate levels of cybersecurity insurance, and providing cybersecurity awareness training to employees.
Directors’ Meetings and CommitteesAttendance
Our Board established the following standing committees: an Audit Review Committee, a Compensation Committee, a Nominating and Corporate Governance Committee (“NCG Committee”), and an Executive Committee. The table below shows the current directors, the members of each committee and the number of meetings held since thespin-off from NACCO in September 2017:
Director | Audit Review | Compensation | NCG | Executive | ||||
Alfred M. Rankin, Jr. | Chair | |||||||
Mark R. Belgya | X | X | ||||||
J.C. Butler, Jr. | X | |||||||
John P. Jumper | X | X | X | |||||
Dennis W. LaBarre | X | X | Chair | X | ||||
Michael S. Miller | Chair | X | X | X | ||||
Roger F. Rankin | ||||||||
Thomas T. Rankin | ||||||||
James A. Ratner | X | Chair | X | X | ||||
David F. Taplin | X | |||||||
Gregory H. Trepp | X | |||||||
2017 Meetings | 2 | 2 | 0 | 0 |
Our Board held twosix meetings in 2017 since thespin-off. With the exception of two directors who were not able to attend one committee meeting each,2021. During their tenure in 2021, all of our currentthe directors attended one hundred percent (100%)at least 75% of the total meetings held by our Board and by the committees on which they servedserved.
In accordance with NYSE rules, our non-management directors meet in 2017. executive session, without management, at least once a year. These executive sessions are typically held following each regular Board meeting, with the Non-Executive Chairman presiding. In addition, the independent members of the Board meet at least once a year in separately scheduled sessions, with the presiding director determined based upon the context and subject matter of the meeting. Additional meetings of the independent directors may be scheduled when the independent directors believe such meetings are desirable. A meeting of the independent directors was held on February 23, 2021.
We hold a regularly scheduled meeting of our Board in conjunction with our annual meeting of stockholders. Directors are expected to attend the annual meeting of stockholders absent an appropriate excuse. Because we completedAll of ourspin-off from NACCO in September 2017, we did not hold an directors who were directors on the date of our 2021 annual meeting of stockholders in 2017.
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Our Board has determined that, based primarily onan Audit Review Committee, a Compensation and Human Capital Committee, a Nominating and Corporate Governance Committee (the “NCG Committee”), a Planning Advisory Committee, and an Executive Committee.
The table below shows the ownership of Class A Common and Class B Common bycurrent directors, the members of each committee and the Taplin and Rankin families, we have the characteristicsnumber of and may be, a “controlled company,” as definedmeetings held in Section 303A of the NYSE listing standards. However, the Board has elected not to make use, at the present time, of any of the exceptions to the NYSE listing standards that are available to controlled companies. Accordingly, at least a majority of the members of our Board are independent, as described in the NYSE listing standards, and our Compensation Committee, Audit Review Committee and NCG Committee are composed entirely of independent directors. In making a determination as to the independence of our directors, our Board considered Section 303A of the NYSE listing standards and broadly considered the materiality of each director’s relationship with us. Based on this criteria, our Board has determined that the following current directors are independent:2021:
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In accordance with NYSE rules, ournon-management directors are scheduled to meet in executive session, without management, once a year. The Chairman of the Compensation Committee typically presides at such meetings. Additional meetings of thenon-management directors may be scheduled when thenon-management directors believe such meetings are desirable. The determination of which director should preside at any such additional meetings will be made based on the subject matter to be discussed at each such meeting.
Director | Independent | Audit Review | Compensation and Human Capital | NCG | Planning Advisory | Executive | ||||||||||
Mark R. Belgya | Yes | X | X | X | ||||||||||||
J.C. Butler, Jr. | No | X | X | |||||||||||||
Paul D. Furlow | Yes | X | X | X | ||||||||||||
John P. Jumper | Yes | X | X | X | ||||||||||||
Dennis W. LaBarre | Yes | X | X | Chair | X | |||||||||||
Michael S. Miller | Yes | Chair | X | X | X | |||||||||||
Alfred M. Rankin, Jr. | No | Chair | Chair | |||||||||||||
Thomas T. Rankin | No | |||||||||||||||
James A. Ratner | Yes | X | Chair | X | X | |||||||||||
Gregory H. Trepp | No | X | ||||||||||||||
Clara R. Williams | No | X | ||||||||||||||
2021 Meetings | 7 | 8 | 4 | 4 | 0 |
The responsibilities of the Audit Review Committee, Compensation and Human Capital Committee, and Nominating and Corporate Governance Committee are set forth in each committee’s charter, all of which are available on our website at www.hamiltonbeachbrands.com/investors/corporate-governance.
Audit Review Committee. The Audit Review Committee has responsibilities in its charter with respect to:
the quality and integrity of our consolidated financial statements;
our compliance with legal and regulatory requirements;
the adequacy of our internal controls;
our guidelines and policies to monitor and control our major financial risk exposures;
the qualifications, independence, selection, compensation, retention and retentionoversight of our independent registered public accounting firm;
the performance of our internal audit department and independent registered public accounting firm;
assisting our Board and us in interpreting and applying our Corporate Compliance Program and other issues related to corporate and employee ethics; and
reviewing corporate responsibility disclosures, including environmental, social, and governance disclosures, in the context of SEC requirements;
reviewing matters regarding our information systems and cybersecurity practices and procedures as they relate to accounting, auditing and financial reporting; and
preparing the Annual Report of the Audit Review Committee to be included in our Proxy Statement.
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Our Board has determined that:
each of Messrs. Belgya and Miller qualify as audit committee financial experts as defined in the rules issued by the U.S. Securities and Exchange Commission (“SEC”); and
all members of the Audit Review Committee are independent and financially literate, as described in the listing standards of the NYSE and under the rules of the SEC;SEC.
Compensation and Human Capital Committee. The Compensation and Human Capital Committee has responsibilities in its charter with respect to thestrategic oversight and administration of our policies and programs for compensating our employees, including our executive officers subject to Section 16 under the Securities Exchange Act of 1934 (the “Exchange Act”) and directors.our directors (or any other employees as determined by the Compensation and Human Capital Committee), as well as our policies and practices for developing and investing in the Company’s human capital. Among other things, these responsibilities include:
providing strategic guidance regarding the reviewdevelopment of human capital strategies and approval ofprograms that support our business objectives and promote long-term value creation;
reviewing and approving corporate goals and objectives relevant to executive officer compensation;
evaluating the performance of the Chief Executive Officer (“CEO”) and the other executive officers in light of theseour corporate goals and objectives;
determining and approval ofapproving CEO and other executive officer and senior manager compensation levels;compensation;
considering whether the risks arising from our employee compensation policies are reasonably likely to have a material adverse effect on us;
making of recommendations to our Board, where appropriate or required, and the taking of other actions with respect to all other compensation matters that are subject to Board approval, including incentive plans and equity-based plans;
periodically reviewing director compensation; and
reviewing and approving the extent required, the preparation ofCompensation Discussion and preparing the annual compensation committee report.Compensation Committee Report to be included in our Proxy Statement.
The Compensation and Human Capital Committee may, in its discretion, delegate duties and responsibilities to one or more subcommittees or, in appropriate cases, to our senior managers. The Compensation and Human Capital Committee retains and receives assistance in the performance of its responsibilities from an internationally recognized compensation consulting firm, discussed herein under “Compensation Consultants” on page 20.Consultant.” The Board has determined that each member of the Compensation and Human Capital Committee is independent, as defined in the SEC rules and the NYSE listing standards.
Nominating and Corporate Governance Committee. Among other things, the NCG Committee’s responsibilities contained in its charter include:
reviewing and making of recommendationsrecommending to our Board of the criteria for membership on our Board;
reviewing and making of recommendationsrecommending to our Board of the optimum number and qualifications of directors believed to be desirable;
identifying and making of recommendationsrecommending to our Board of specific candidates for membership on our Board;
reviewing and making recommendations to our Board regarding the roles and responsibilities of the Board’s committees, including the creation of new committees, the modification of existing committees, or other changes to the structure and composition of the Board’s committees;
reviewing and, where appropriate, recommending changes to our Corporate Governance Guidelines;
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overseeing the Company’s policies and practices with respect to corporate responsibility matters, including environmental, social, and governance matters;
overseeing director education on topics relevant to the duties and responsibilities of the directors;
overseeing evaluations of the Board’s effectiveness; and
annually reporting to the Board the NCG Committee’sit’s assessment of our Board’s performance; andperformance.
The NCG Committee will consider director candidates recommended by our stockholders. See “Procedures for Submission and Consideration of Director Candidates” on page 45. The Board has determined that each member of the NCG Committee is independent, as defined in the NYSE listing standards. The NCG Committee will consider director candidates recommended by our stockholders. See the section herein entitled “Procedures for Submission and Consideration of Director Candidates.” The NCG Committee may consult with members of the Taplin and Rankin families, including Alfred M. Rankin, Jr., the Executive Chairman of the Company, regarding the composition of our Board.
Planning Advisory Committee. The Planning Advisory Committee has the responsibilities set forth in its charter, including:
acting as a key participant, resource and advisor on various operational and strategic matters;
reviewing and advising on a preliminary basis possible acquisitions, divestitures or other transactions identified by management for possible consideration by the Board; and
providing general oversight on behalf of the Board with respect to stockholder interests and the Company’s evolving structure and stockholder base.
Executive Committee. The Executive Committee may exercise all of the powers of our Board over the management and control of our business during the intervals between meetings of our Board.
Corporate Responsibility
Together with our predecessors, we have been enriching consumers’ lives for decades with Good Thinking®, which incorporates teamwork and inspired thinking into all areas of our business and allows us to deliver innovative solutions that improve everyday living. We focus on working to create competitive advantage and long-term value, which necessarily means taking into consideration a host of complex factors such as impacts to our customers and consumers, our workforce, our vendors and other business partners, our stockholders, the communities in which we operate, and the environment. We believe that effective governance demands that our management team and Board continue to do the tough and challenging job of exercising sound business judgment—evaluating competing considerations regarding complex issues and appropriately assessing trade-offs so that decisions are well-considered and reflect a reasonable strategy to create sustainable long-term value. We believe that our long-term perspective incorporates corporate responsibility into our governance and, in turn, our strategy, which we believe will maximize the likelihood of long-term value creation.
We believe that taking an integrated approach to issues that impact our business and our stakeholders—including environmental, social and governance (“ESG”) issues—protects the long-term interests of our stockholders by enhancing the health, prospects and sustainability of our business. We are committed to preparing for the future and being a responsible corporate citizen for the benefit of our customers and consumers, our workforce, our vendors and other business partners, our stockholders, the communities in which we operate, and the environment.
In 2021, we established a cross-functional ESG Advisory Committee to evaluate environmental, social and governance topics in order to provide input to our management team. This advisory committee meets regularly to evaluate and share relevant information regarding ESG practices and progress. In addition, the ESG Advisory Committee provides input for our ESG-related disclosures, including the Human Capital Resources summary
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included in the Company’s Annual Report on Form 10-K and this Proxy Statement. We expect the work of our ESG Advisory Committee to continue to enhance our understanding of the impact of our business on our various stakeholders, which we think will strengthen our ability to make well-considered decisions that are in the long-term best interests of our stockholders.
Our Board Leadership Structurehas determined that, based primarily on the ownership of Class A Common and Class B Common by the members of the Taplin and Rankin families, we may qualify as a “controlled company,” as defined in Section 303A of the listing standards of the NYSE. Under the listing standards of the NYSE, a controlled company is not required to comply with certain corporate governance requirements. Such requirements include having a majority of independent directors and having a nominating and corporate governance committee and compensation committee composed entirely of independent directors, each with written charters and annual performance evaluations for each committee.
Although the Company may qualify as a controlled company, our Board evaluates its governance practices annually and has elected not to make use of any of the exceptions to the NYSE listing standards that are available to controlled companies. Accordingly, the majority of the members of our Board are independent, as described in the NYSE listing standards. Our Audit Review Committee, NCG Committee and Compensation and Human Capital Committee are all composed entirely of independent directors. Each committee has a written charter that describes the purpose and responsibilities of the committee, and each committee conducts an annual evaluation of its performance based on the responsibilities set forth in its charter.
Our Board sets the tone for the Company and provides a foundation for strong governance practices. Our Board reflects a balance of longer-tenured members with in-depth knowledge of our business, and newer members who bring valuable attributes, skills and experiences that are relevant to our business and the challenges we face. We believe this combination results in a well-balanced membership that combines a diversity of experience, skill and intellect, enabling the Company to pursue its long-term, strategic objectives effectively.
The NCG Committee oversees and reviews our corporate responsibility programs, including environmental, social and governance matters, while the Compensation and Human Capital Committee oversees compensation programs and provides strategic oversight and guidance regarding our development and execution of human capital strategies and programs.
Environmental Sustainability
We are committed to conducting our business in a manner that not only complies with our environmental obligations, but also is environmentally responsible. Our employee-led Environmental Sustainability Committee provides input to our management team regarding sustainability initiatives. For example, through our recycling and recertification program, we recycle certain electronics and research and development products, as we strive to continue to reduce the amount of waste sent to landfills. We also recognize the importance of sustainability in the everyday lives of our consumers. As a result, we are committed to promoting environmental sustainability by bringing to market appliances that are environmentally friendly and that enable our customers to reduce or eliminate waste. One such example is our water filtration appliances, which help to mitigate the impact of single use plastic bottles.
Social
The Company considers its commitment to people, including its employees, customers and consumers, and the local communities in which it operates as a primary focus of corporate responsibility. The Company’s rolespriority on people focuses on four principal areas: human capital resources, consumer health and safety, engagement with local communities, and supply chain management.
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Human Capital Resources
Our business is dependent upon, and focused on, people—our employees, our customers and the consumers who enjoy our appliances, and the communities in which we live. Our culture is built on and centered around Good Thinking®, which incorporates teamwork, service and inspired thinking into all areas of Executive Chairmanour business. We believe that this values-based culture is a core strength that provides the foundation for our working environment and Chief Executive Officerour employees. Good Thinking® is more than developing new products; it inspires everything we do.
Within this culture, our people are separated,our most valuable resource, and we expect them to remain the key to our success for decades to come. We strive to create an environment that attracts, engages and develops the talent necessary to enable our performance and growth, including by offering competitive compensation and benefits, providing attractive professional growth opportunities, and insisting that everyone be treated with dignity and respect and be afforded equal opportunity. We also recognize the basic human need to feel a sense of inclusion, belonging, and meaning. So, we strive to foster an environment in which our people are passionate about our business and our Good Thinking® culture, have a seat at the table, and genuinely believe that they are doing meaningful work. We believe that employees with diverse backgrounds, experiences and viewpoints bring value to our Company, especially when coupled with a strong culture of trust in which competing ideas are not only allowed but encouraged to emerge. We strongly believe that this type of environment drives discretionary effort, morale, creativity, initiative and retention—and, in turn, long-term competitive advantage and value creation. Within the framework of our Good Thinking® culture, we operate as One Team and strive to enrich the lives of our customers and consumers by delivering innovative solutions that improve everyday living, all while having a positive, lasting impact on our people and the communities in which we operate.
We are committed to achieving the highest standards of legal and ethical conduct, including by protecting the human rights and fair treatment of our employees. Our policies and programs—including our Code of Corporate Conduct and other compliance policies, our employment-related policies, and our Human Rights Policy—are designed to support this effort.
As of December 31, 2021, the Company employed approximately 700 employees in four countries—Canada, China, Mexico, and the United States, of which approximately 685 were full time and 15 were part time. Approximately 1% of our workforce is covered by collecting bargaining agreements, all of whom are based in Canada or Mexico. There are approximately 500 employees in the United States with about half of those based at the Company’s headquarters in Richmond, Virginia, which is home to the Company’s product design, development and marketing teams as well as its state-of-the-art test kitchen and UL-certified test laboratory. Most of the remaining employees in the United States support the operation of our Byhalia, Mississippi distribution centers. We consider employee relations to be good.
Occupational Health and Safety
One of our top priorities is protecting the health and safety of our workforce. We are committed to maintaining a safe work environment and operating in a safe, secure and responsible manner. We require all Company personnel to perform their work in a manner that complies with legal requirements protecting the safety and health of all persons from unreasonable risks. In addition to maintaining property and equipment in safe operating conditions, our occupational health and safety framework includes certain safety training programs and safety-related processes and procedures as we strive to ensure the health and safety of our workforce. Employees are encouraged to initiate safety improvements, participate in safety committees, and always reinforce safe behaviors.
Talent Acquisition, Development and Retention
The long-term success and growth of our business depend in large part on our ability to execute an effective talent strategy that attracts, engages and grows a highly talented and committed workforce capable of enabling Gregory H. Trepp,
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and leading our Presidentperformance. To meet our talent objectives, we utilize key strategies and CEOprocesses related to focusrecruitment while we remain focused on managingcontinuing to strengthen our onboarding and ongoing learning development in the wake of the COVID-19 pandemic. We monitor market compensation and benefits to be able to attract, retain and promote employees and reduce turnover and its associated costs. Through our total rewards programs, we strive to offer competitive compensation, benefits and services to our full-time employees including, incentive plans, recognition plans, defined contribution plans, healthcare benefits, tax-advantaged spending accounts, employee assistance programs and other programs such as sick leave and paid vacation and holidays.
We are a learning organization committed to the goal of continuous improvement and the development of our workforce. To empower our employees to reach their full potential, we offer certain training, learning experiences and resources, such as “Hamilton Beach University”—a cross-functional learning program designed not only to help employees learn about our Company, our products and our industry but also to stay abreast of emerging trends and to develop job-specific skills.
Diversity and Inclusion
As an equal opportunity employer, we make decisions without regard to race, color, religion, creed, gender, sexual orientation, gender identity, marital status, national origin, age, veteran status, disability, or any other protected class. We strive to cultivate diversity of perspective in our workforce and believe teammates with diverse backgrounds, experiences and viewpoints bring value to our organization and improve our Good Thinking ® and, in turn, our decision-making. We strive to create a workplace in which employee differences are embraced and competing perspectives are encouraged to emerge, allowing robust collaboration and teamwork to drive better decision making and more favorable results for all stakeholders. All employees participate in training intended to enhance our awareness of the benefits of a diverse and inclusive workforce, to encourage more meaningful collaboration, and to strengthen team effectiveness.
COVID-19 Response
In March 2020, we established a cross-functional task force to monitor and respond to the growing health crisis. We established specific strategies for each location that were designed to protect our employees and to comply with applicable legal requirements and local guidelines. In addition, we followed guidelines from the World Health Organization, Occupational Safety and Health Administration and the Centers for Disease Control and Prevention in developing prevention and workplace protocols, including mandating mask wearing, social distancing and remote working where possible.
Throughout the pandemic we have monitored the changing landscape of local requirements and guidelines for all locations and have made changes to our workplace protocols as necessary. We continue to monitor diligently the developments related to COVID-19 and to adjust as needed to perform our business requirements while providing a safe environment for our workforce. We continue to comply with applicable legal requirements and, in anticipation of our return to office in 2022, we have updated and communicated company-wide safety protocols and will continue to offer flexibility for our employees.
We have been impressed by the resiliency and adaptability demonstrated by our employees throughout the pandemic. We believe that their ability to remain flexible and to work productively and collaboratively and, in many cases, remotely during such stressful and unpredictable times is a testament to the strength of our Good Thinking® culture. We also believe that the pandemic-related challenges experienced during the last two years have strengthened us and that we now are better positioned to adjust work locations and patterns if other disruptive events were to occur.
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Consumer Health & Safety
The strength of our brands depends on the trust that we earn from our consumers and, if we are to enrich consumers’ lives with Good Thinking®, our products must be known to be safe. For example, materials and component parts that contact food must be non-toxic and free of heavy metals and, because our products are primarily electrical appliances, the plastics used in them must satisfy very strict flammability, impact and material strength requirements.
We have deep expertise in our products, consumer use of our products, and potential consumer misuse. We develop, test and refine the design of each of our products. We research usage patterns and conduct multiple design and safety reviews. As a result, our detailed specifications meet and often exceed applicable safety standards such as those of Underwriters Laboratories, the Canadian Standards Association and the International Electrotechnical Commission.
We also carefully select our manufacturing partners, developing long-term relationships with organizations committed to our rigorous standards. All products must meet our detailed specifications and performance standards, and we actively monitor supplier performance on an ongoing basis. For example, we generally require our suppliers to submit weekly quality data, which results in feedback through formal corrective action requests. This prompt feedback drives the elimination of defects at the source and improves product quality, which is critical to safety.
Our suppliers must perform inspections of incoming component parts and raw materials, in-process quality control inspections along each assembly line, and end-of-line audits on a specified portion of product that has passed in-process inspections. With approximately 30 employees based in China dedicated to quality assurance, we routinely conduct supplier quality audits, manufacturing process audits, social accountability audits, and U.S. Customs Trade Partnership Against Terrorism audits. Additionally, we perform pre-shipment inspections on every shipment from a supplier, and we routinely audit product after arrival in our U.S. distribution center.
Engagement with Local Communities
We recognize the interdependency among our business and the health of the communities in which we operate. We strive to be a responsible corporate citizen by supporting our local communities and helping them remain safe, healthy and resilient—which we think is not only the right thing to do but also in the long-term best interests of our stockholders.
We are proud of our contributions to the communities where we live and work. We have a focused and active charitable contributions program in which we seek to support not-for profit organizations in our communities, including by providing an employee matching gift program of up to $5,000 per employee per year. We also offer our employees one paid day off per year to volunteer. We are pleased that many of our employees are active in our communities, volunteering or otherwise contributing their time, energy and resources. We encourage this strong engagement and believe that it strengthens our Company, our people and our communities. We also participate in other charitable initiatives, including product donations and programs to enhance employee engagement with charitable organizations. For example, since 2018 we regularly have donated sets of small kitchen appliances to the new owners of homes built by Habitat for Humanity in the communities surrounding Richmond, Virginia, the location of our headquarters office.
Supply Chain Management
We are committed to achieving the highest standards of ethical and legal conduct for our Company and our business partners. We purchase substantially all our finished products from suppliers in China, which we evaluate and select carefully based on a number of important factors, including high quality standards, compliance with law, and compliance with prevailing international standards regarding fair competition and
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human rights. Our supplier agreements require suppliers to comply with our Supplier Code of Conduct, which subjects the suppliers to audit and imposes rigorous requirements regarding human rights and the treatment of workers. These requirements set standards regarding topics such as environmental compliance, conflict minerals, anti-discrimination, compensation and benefits, working hours, working conditions, and worker health and safety, and include zero tolerance provisions relating to child labor, forced labor, harassment, abuse, and compliance with importation laws.
We have adopted a Code of Corporate Conduct that applies to all of our directors and employees and is designed to provide guidance on how to behave legally and ethically while performing work for the Company. We also have adopted Corporate Governance Guidelines that provide a framework for the conduct of our Board. The Code of Corporate Conduct, the Corporate Governance Guidelines and our Independence Standards for Directors are available free of charge on our website at www.hamiltonbeachbrands.com/investors/corporate-governance.
All of our directors and senior management employees annually complete certifications with respect to their compliance with our Code of Corporate Conduct.
Hedging and Speculative Trading Policies
The Company prohibits directors, officers and certain designated employees from purchasing financial instruments, including pre-paid variable forward contracts, equity swaps, collars and exchange funds, or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any change in the market value of equity securities granted by the Company as part of his or her compensation or held, directly or indirectly, by the officer, director or employee. However, the Company does not prohibit employees who are not officers or designated employees from engaging in such transactions.
Shares of Class A Common that are issued to directors and certain senior management employees of the Company for compensatory purposes generally are subject to transfer restrictions beginning on the last day of the applicable performance period. During this time frame, the shares may not be transferred (subject to certain exceptions), hedged or pledged. Directors and the most senior management employees of the Company are required to hold their shares for 10 years while less senior management employees of the Company are required to hold shares for periods of either three years or five years. The Company has a policy that prohibits directors, officers and certain designated employees from pledging shares of non-restricted Class A or Class B Common without the Company’s consent.
Review and Approval of Related-Person Transactions
Alfred M. Rankin, Jr. is the brother of Thomas T. Rankin, the father of Clara R. Williams, and the father-in-law of J.C. Butler, Jr., each of whom is a director. As indicated herein on the Director Compensation Table, Mr. Thomas Rankin received $170,430, Ms. Williams received $174,172 and Mr. Butler received $178,470 in total compensation from the Company for their service as directors in 2021. Mr. Alfred M. Rankin, Jr. received $769,418 in total compensation from the Company for his service as a director and for services rendered pursuant to the consulting agreement between Mr. Rankin and the Company which had been approved by the Audit Review Committee for 2021. For 2022, the Audit Review Committee approved the renewal of the consulting agreement with Mr. Rankin. The Director Compensation Table in Part II contains details about these arrangements.
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The Audit Review Committee reviews all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest in such transactions. Our Law Department is primarily responsible for the processes and controls to obtain information from the directors and executive officers with respect to related person transactions in order to enable the Audit Review Committee to determine whether the related person has a direct or indirect material interest in the transaction. In the course of its review, the Audit Review Committee considers:
the nature of the related person’s interest in the transaction;
the material terms of the transaction, including, without limitation, the amount and type of transaction;
the importance of the transaction to the related person and to us;
whether the transaction would impair the judgment of a director or executive officer to act in our best interest; and
any other matters the Audit Review Committee deems appropriate.
Based on this review, the Audit Review Committee will determine whether to approve any such related-person transaction. The Audit Review Committee will not approve any such related-person transaction if it determines that such related-person transaction is inconsistent with the interests of the Company and its separate HBB and KC businesses and Alfred M. Rankin, Jr., our Executive Chairman, to devote his time and attention to matters of strategic oversight, Board oversight and governance. The Board believes that Mr. Rankin, retired Chairman, President and CEO of NACCO, the Company’s former parent, possessesin-depth knowledge of the issues, opportunities and challenges facing the Company and each of our principal businesses as an independent public company. Because of this knowledge and insight, the Board believes that Mr. Rankin is in the best position to effectively identify strategic opportunities and priorities and to lead the discussion for the execution of the Company’s strategies and achievement of its objectives. As Executive Chairman, Mr. Rankin is able to:stockholders.
This Board leadership structure also enhances the effectiveness of the boards of directors of HBB and KC, which have parallel structures to the Company’s Board and provide oversight at the strategic and operational level. Each director who serves on our Board is also aAny member of the HBB and KC boards of directors. Our Executive Chairman also serves asAudit Review Committee who is a related person with respect to a transaction under review may not participate in the Executive Chairmandeliberations or vote with respect to the approval or ratification of the HBB and KC boardstransaction. However, such director may be counted in determining the presence of directors. This structure provides a common and consistent presencequorum at a meeting of the Audit Review Committee that enablesconsiders the HBB and KC boards of directors to function effectively and efficiently.
We do not assign a lead independent director, but the Chairman of our Compensation Committee presides at the regularly scheduled meetings of independent directors.transaction.
Our stockholders and other interested parties may communicate with our Board as a group, with thenon-management directors as a group, or with any individual director by sending written communications to Hamilton Beach Brands Holding Company, 4421 Waterfront Drive, Glen Allen, Virginia 23060, Attention: Secretary. Complaints regarding accounting, internal accounting controls or auditing matters will be forwarded directly to the Chairman of the Audit Review Committee. All other communications will be provided to the individual director(s) or group of directors to whom they are addressed. Copies of all communications will be provided to all other directors. However, any communications that are considered improper for submission will not be provided to the directors. Examples of communications that would be considered improper include, without limitation, customer complaints, solicitations, communications that do not relate, directly or indirectly, to our business, or communications that relate to improper or irrelevant topics.
Board Oversight of Risk Management
The Board oversees our risk management. The full Board (as supplemented by the appropriate board committee in the case of risks that are overseen by a particular committee) regularly reviews information provided by management in order for our Board to oversee our risk identification, risk management and risk mitigation strategies. Our Board committees assist the full Board’s oversight of our material risks by focusing on risks related
to the particular area of concentration of the relevant committee. The full Board incorporates the insight provided by these reports into its overall risk management analysis.
We have adopted a Code of Corporate Conduct that applies to all of our directors and employees and is designed to provide guidance on how to act legally and ethically while performing work for Hamilton Beach Holding. We have also adopted Corporate Governance Guidelines that provide a framework for the conduct of our Board. The Code of Corporate Conduct, the Corporate Governance Guidelines and our Independence Standards for Directors, as well as the charters of the committees of our Board, are available free of charge on our website at http://www.hamiltonbeachbrands.com, under the heading “Governance.”
All of our directors and senior management employees annually complete certifications with respect to their compliance with our Code of Corporate Conduct.
Review and Approval of Related-Person Transactions
The Audit Review Committee reviews all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest in such transactions. Our legal department is primarily responsible for the processes and controls to obtain information from the directors and executive officers with respect to related person transactions in order to enable the Audit Review Committee to determine whether we or a related person has a direct or indirect material interest in the transaction. In the course of its review, the Audit Review Committee considers:
Based on this review, the Audit Review Committee will determine whether to approve or ratify any transaction that is directly or indirectly material to us or a related person.
Any member of the Audit Review Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote with respect to the approval or ratification of the transaction. However, such director may be counted in determining the presence of a quorum at a meeting of the Audit Review Committee that considers the transaction.
Report of the Audit Review Committee
The Audit Review Committee oversees our financial reporting process on behalf of the Board. The Audit Review Committee is comprised solely of independent directors as defined by the SEC and described in the listing standards of the NYSE. The Audit Review Committee’s responsibilities are listed on page 4above in the section entitled “Description of Committees” and the Audit Review Committee’sits charter is available at www.hamiltonbeachbrands.com under “Governance.”www.hamiltonbeachbrands.com/investors/corporate-governance. In fulfilling its oversight responsibilities, the Audit Review Committee reviewed and discussed with Company management the audited financial statements contained in our Annual Report with Company management.Report.
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The Audit Review Committee reviewed with EY, our independent auditor, which is responsible for expressing an opinion on the conformity of our annual financial statements with U.S. generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Review Committee by the standardsapplicable requirements of the Public Company Accounting Oversight Board (United States) (“PCAOB”), including PCAOB Auditing Standard No. 1301, Communications With Audit Committees, and the rules of the SEC, and other applicable regulations.SEC. In addition, the
Audit Review Committee has discussed with EY the firm’s independence from Company management and the Company, including the matters in the letter from EY required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and considered the compatibility ofnon-audit services with EY’s independence. The Audit Review Committee also reviewed and discussed together with management and EY the Company’s audited financial statements for the year ended December 31, 2017, and2021, the results of management’s assessment of the effectiveness of the Company’s internal control over financial reporting, and EY’s audit of internal control over financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Review Committee recommended to the Board, and the Board has approved, that the audited financial statements and management’s assessment of the effectiveness of the Company’s internal control over financial reporting be included in our Annual Report on Form10-K for the year ended December 31, 2017,2021, filed by the Company with the SEC.
MICHAEL S. MILLER,
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MARK R. BELGYA | PAUL D. FURLOW | JOHN P. JUMPER | |||
DENNIS W. LABARRE | |||||
JAMES A. RATNER |
PART II –- PROPOSALS TO BE VOTED ON AT THE 20182022 ANNUAL MEETING
PROPOSAL 1 –- ELECTION OF DIRECTORS
Director Nominee Information
Our Board has nominatedcurrently consists of eleven members. The directors forwill hold office from election until the next annual meeting or until their successors are elected (or, if applicable, until their death, resignation, or removal). All of the nominees presently serve as our directors and were elected at the Annual Meeting. our 2021 annual meeting of stockholders.
It is intended that shares represented by proxies in the enclosed form will be voted for the election of the nominees named in the following table to serve as directors for a term until the next annual meeting and until their successors are elected,listed below unless contrary instructions are received. AllWe have no reason to believe that any of the nominees listed below presentlywill be unable to serve, as our directors and have served as our directors since at least September 29, 2017, the date on which Hamilton Beach Holding wasspun-off from NACCO, its former parent company. Ifif elected. However, if an unexpected occurrence should make it necessary, in the judgment of the proxy holders, to substitute some other person for any of the nominees, shares represented by proxies will be voted for such other person as the proxy holders may select.
The disclosure below provides biographical information about each director nominee. The informationdisclosure presented is based upon information each director has given us about his or her age, all positions held, principal occupation and business experience for the past five years, and the names of other publicly held companies for which he/shethe nominee currently serves as director or has served as director during the past five years. We have also highlighted certain notable qualifications and skills that led our Board to the conclusionconclude that each of them should serve as a director. We believe that the nomination of each of our director nominees is in the best long-term interests of our stockholders, as each individual possesses the highest personal and professional ethics, integrity and values, and has the judgment, skill, independence and experience required to serve as a member of our Board. Each current director has also demonstrated a strong commitment of service to the Company.
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Mark R. Belgya: Age 57;61; Director Since 2017
Vice Chair of The J.M. Smucker Company since May 2016 and Chief Financial Officer since January 2005, with oversight of the Finance, Information Services, Corporate Strategy and Government Affairs departments for that company. Mr. Belgya has been with The J.M. Smucker Company, since 1985. Mr. Belgya has been a Director of Hamilton Beach Holding since October 2017.
Mr. Belgya’s experience asRetired Vice Chair and Chief Financial Officer of The J.M.J. M. Smucker Company offerssince September 2020. From May 2018 to present, Director of the Fossil Group, Inc.
As Vice Chair and Chief Financial Officer of The J. M. Smucker Company, Mr. Belgya was responsible for oversight of the Finance, Internal Audit, Investor Relations, Information Services, Corporate Operations and Supply Chain functions. As a result of his 35 years of experience with The J. M. Smucker Company, Mr. Belgya brings to our Board a comprehensive perspective for developing corporate strategies and managing risks of a major publicly traded corporation.
J.C. Butler, Jr.: Age 57;61; Director Since 2017
President and Chief Executive Officer of NACCO Industries, Inc. (“NACCO”) since October 2017. President and Chief Executive Officer of NACoal, (aNorth American Coal Corporation (NACoal, a wholly owned subsidiary of NACCO) since July 2015. Senior Vice President – President—Finance, Treasurer and Chief Administrative Officer of NACCO from prior to 20132016 to September 2017. Senior Vice President – ProjectPresident-Project Development and Administration and Mississippi Operations of NACoal from July 2014 to July 2015 and Senior Vice President – Project Development and Administration of NACoal from prior to 2013 to July 2014.2015. Director of Hyster-Yale Materials Handling, Inc. (“Hyster-Yale”) since September 2012prior to 2016 and of NACCO since September 2017. Director of Midwest AgEnergy Group, a developer and operator of ethanol facilities in North Dakota, since January 2014. Serves on the board of the National Mining Association and is a member of the Management Committee of the Lignite Mining Association.
With over 20 years of service as a member of senior management at NACCO while we were its wholly owned subsidiary, Mr. Butler has extensive knowledge of theour operations and strategiesstrategies.
Paul D. Furlow: Age 52; Director Since 2019
Co-Founder/Co-President of our businesses.Dixon Midland Company (a private equity investment firm) since 1998.
With over 20 years of experience as the Co-President of a private equity investment firm and member of the Boards of Directors of several of the companies in which his firm holds investments, Mr. Furlow brings to the Board the unique perspective of a professional investor. In addition, Mr. Furlow’s experience as Co-President of an industrial lighting manufacturing company will allow him to provide valuable insight to the Board on matters related to operations and strategic planning.
John P. Jumper: Age 73;77; Director Since 2017
Retired Director (since 2013),and former Chairman of the Board (from 2013 to 2015) and former CEO (from 2013 to 2014) of Leidos Holdings, Inc. (an applied technology company), and Retired Chief of Staff, United States Air Force. From prior to 20132016 to present, Director of NACCO.NACCO Industries, Inc. From prior to 20132016 to present,
Director of Hyster-Yale. From prior to 2013 until 2013, CEO and Chairman of the Board of Science Applications, International Corporation (a government services company). From prior to 2013 until 2013, Director of Science Applications International Corporation.Hyster-Yale Materials, Handling, Inc.
Through his extensive military career, including as the highest-ranking officer in the U.S. Air Force, General Jumper developed valuable and proven leadership and management skills that make him a significant contributor to our Board. In addition, General Jumper’s service on the boards of other publicly traded corporations and his experience as Chairman and CEO of two major publicly traded companies allow him to provide valuable insight to the Board on matters of corporate governance and executive compensation policies and practices. In addition, General Jumper brings extensive cybersecurity knowledge and expertise to our Board. His cybersecurity experience includes overseeing the creation of the first information warfare squadron in the U.S. Air Force during his tenure leading the U.S. Air Force and also serving as CEO of Leidos, which is a leading federal cybersecurity contractor for the U.S. Department of Defense, U.S. Department of Homeland Security and United States Intelligence Community including the National Security Agency.
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Dennis W. LaBarre: Age 75;79; Director Since 2017
Retired Partner of Jones Day (a law firm). From January 2014 to December 2014, Of Counsel of Jones Day, Partner of Jones Day from prior to 2013 until December 2013. From prior to 20132016 to present, Director of Hyster-Yale.Hyster-Yale Material Handling, Inc. From prior to 20132016 to present, Director of NACCO.NACCO Industries, Inc.
Mr. LaBarre is a lawyer with broad experience counseling boards and senior management of publicly traded and private corporations regarding corporate governance, compliance and other domestic and international business and transactional issues. In addition, he was a member of senior management of a major international law firm for more than 30 years. These experiences enable him to provide our Board with an expansive view of the legal and business issues pertinent to the Company, which is further enhanced by his extensive knowledge of us as a result of his many years of service on the NACCO Board and through his involvement with its committees.
Michael S. Miller: Age 66;70; Director Since 2017
Retired Managing Director of The Vanguard Group. From prior to 20132016 to present, Director of Vanguard’s Irish-domiciled funds and management company. From 2016 to present, Director of NACCO.NACCO Industries, Inc. From March 2021 to present, Board Trustee of Vanguard Charitable.
Mr. Miller’s qualifications to serve on our Board include his experience in senior management of a major financial services and investment management company, his experience as a partner of a major law firm, and his service on the boards of many academic and civic institutions. Mr. Miller provides our Board with financial, legal, compliance/risk management and strategic planning expertise gained through his careers in finance and law and his service on the audit committees of Vanguard’s Irish-domiciled funds and management company and, prior to his retirement, various audit committees of Vanguard’s affiliated companies.
Alfred M. Rankin, Jr.: Age 76;80; Director Since 2017
ExecutiveNon-Executive Chairman of the Company and its principal subsidiary, Hamilton Beach Brands, Inc. From September 2017 to December 2018, Executive Chairman of HBB and KC.the Company. From prior to 20132016 to present, Chairman President, and Chief Executive Officer of Hyster-Yale and Chairman of Hyster Yale Group. From prior to 2016 to February 2021, President of Hyster-Yale. From September 2017 to present,Non-Executive Chairman of NACCO and, from prior to 20132016 to present, Chairman of NACCO’s principal subsidiary, North American Coal.Coal Corporation. From prior to 20132016 to September 2017, Chairman, President, and CEO of NACCO. From prior to 2013 to October 2014, Director of The Vanguard Group.
In over 45 years of service as a Director toof NACCO, our former parent company, and as a Senior Manager at NACCO, Mr. Rankin has amassed extensive knowledge of all of our strategies and operations. In addition to his extensive knowledge of the Company, he also brings to our Board unique insightinsights resulting from his service on the boards of other publicly traded corporations.corporations and the Federal Reserve Bank of Cleveland. Mr. Rankin is also the grandson of the founder of NACCO and additionally brings the perspective of a long-term stockholder to our Board.
Roger F. Rankin: Age 65; Director Since 2017
Self-employed (personal investments). From prior to 2013 to present, Director of Investors Diversified Realty LLC. Mr. Rankin has served, in recent years, as a Director of our principal wholly owned subsidiaries, HBB and KC.
Mr. Rankin is the grandson of the founder of NACCO, our former parent company.
Thomas T. Rankin: Age 71;74; Director Since 2017
Retired Owner and President of Cross Country Marketing (a private food brokerage firm). Mr. Rankin has also served, in recent years, as a Director of our principal wholly owned subsidiaries, HBB and KC.subsidiary, Hamilton Beach Brands, Inc.
Mr. Rankin is the grandson of the founder of NACCO Industries and brings the perspective of a long-term stockholder to our former parent company.Board.
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James A. Ratner: Age 73;77; Director Since 2017
Partner of RMS Investment Group, LLC (a real estate investment company). From December 2016 to December 2018, Non-Executive Chairman of Forest City Realty Trust, Inc. From prior to 20132016 to 2017, Executive Vice President of Forest City Realty Trust, Inc. From prior to 20132016 to September 2017, Director of NACCO.NACCO Industries, Inc.
Mr. Ratner’s experience as Chairman and in senior management of a major publicly traded company provides our Board with valuable insight into corporate governance and strategy.
David F. Taplin: Age 68; Director Since 2017
Self-employed (tree farming). From prior to 2013 to September 2017, Director of NACCO, our former parent company.
Mr. Taplin is the grandson of the founder of the Company and brings the perspective of along-term stockholder to our Board.
Gregory H. Trepp: Age 56;60; Director Since 2017
Director, President and Chief Executive Officer of Hamilton Beach Brands Holding Company from September 2017. From prior to 2013,2016, Director, President and Chief Executive Officer of HBB. From prior to 2013, Director and Chief Executive Officer of KC. From November 2013 to December 2014, Interim President of KC.Hamilton Beach Brands, Inc.
With over 20 years of service in HBB’s senior management, including as the President and CEO, and with over eight years of service as the CEO of KC, Mr. Trepp has extensive knowledge of the operations and strategies of our businesses.businesses and our industry.
Clara R. Williams: Age 51; Director Since 2020
President and founder of the Clara Williams Company (a jewelry manufacturing, marketing, and distribution company) since 2002. Director of the Company’s principal subsidiary, Hamilton Beach Brands, Inc., from September 2017 to present.
Prior to founding the Clara Williams Company, Ms. Williams held senior level positions in sales, marketing and business development with several large technology companies. Ms. Williams has considerable knowledge of our operations and strategies as a result of her service as a director of the Company’s principal subsidiary. As a graduate of Harvard Business School, Ms. Williams’ extensive business experience allows her to provide our Board with valuable insight on matters related to our marketing, sales and operations strategies.
YOUR BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE
DIRECTOR NOMINEES PRESENTED IN PROPOSAL 1.
Director Compensation
The following table sets forth all compensation of each director received for servicestheir 2021 service as our directorsa director of the Company and as directorsa director of our principal subsidiaries for services rendered during 2017,subsidiary, other than Alfred M. Rankin, Jr. and Gregory H. Trepp. In addition to being directors, Mr. Rankin servesserving as Executive Chairman of the Company anda director, during 2021 Mr. Trepp servesalso served as President and CEO of Hamilton Beach Holding and HBB and CEO of KC. Neither Mr. Rankin northe Company. Mr. Trepp receivesdid not receive any compensation for his service as director and their compensation for service as executive officersa director. His compensation for service as CEO is shown inon the Summary Compensation Table on page 18.Table.
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DIRECTOR COMPENSATION
For Fiscal Year Ended December 31, 20172021
Name | (A) Fees Earned or Paid in Cash ($)(1)(2) | (B) Stock Awards ($)(3) | (C) All Other Compensation ($)(2)(4) | Total ($) | (A) Fees Earned or Paid in Cash ($)(1) | (B) Stock Awards ($)(2) | (C) All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||
Mark R. Belgya | $ | 80,038 | $ | 100,172 | $ | 8,220 | $ | 188,430 | ||||||||||||||||||||
J.C. Butler, Jr. | $ | 72,038 | $ | 100,172 | $ | 6,260 | $ | 178,470 | ||||||||||||||||||||
Paul D. Furlow | $ | 80,038 | $ | 100,172 | $ | 8,220 | $ | 188,430 | ||||||||||||||||||||
John P. Jumper
| $102,915 | $18,293 | $5,230 | $126,439 | $ | 80,038 | $ | 100,172 | $ | 6,260 | $ | 186,470 | ||||||||||||||||
Dennis W. LaBarre
| $114,022 | $18,293 | $1,788 | $134,103 | $ | 105,038 | $ | 100,172 | $ | 7,426 | $ | 212,636 | ||||||||||||||||
Michael S. Miller
| $99,909 | $18,293 | $5,251 | $123,453 | $ | 100,038 | $ | 100,172 | $ | 6,260 | $ | 206,470 | ||||||||||||||||
Alfred M. Rankin, Jr. (4) | $ | 120,036 | $ | 143,122 | $ | 506,260 | $ | 769,418 | ||||||||||||||||||||
Thomas T. Rankin | $ | 62,038 | $ | 100,172 | $ | 8,220 | $ | 170,430 | ||||||||||||||||||||
James A. Ratner
| $93,289 | $37,185 | $5,605 | $136,078 | $ | 95,038 | $ | 100,172 | $ | 7,426 | $ | 202,636 | ||||||||||||||||
David F. Taplin
| $86,540 | $18,293 | $1,607 | $106,440 | ||||||||||||||||||||||||
Thomas T. Rankin
| $49,671 | $18,293 | $1,207 | $69,172 | ||||||||||||||||||||||||
Roger F. Rankin
| $49,671 | $18,293 | $1,207 | $69,172 | ||||||||||||||||||||||||
J.C. Butler, Jr.
| $16,255 | $18,293 | $4,124 | $38,672 | ||||||||||||||||||||||||
Mark R. Belgya
| $18,255 | $18,293 | $506 | $37,055 | ||||||||||||||||||||||||
Richard de J. Osborne (5)
| $86,379 | — | $1,056 | $87,435 | ||||||||||||||||||||||||
Britton T. Taplin (5)
| $79,236 | — | $4,574 | $83,810 | ||||||||||||||||||||||||
David B.H. Williams (5) | $73,829 | — | $1,127 | $74,956 | ||||||||||||||||||||||||
Clara R. Williams (5) | $ | 50,288 | $ | 116,971 | $ | 6,913 | $ | 174,172 |
(1) | Amounts in this column reflect the annual retainers and other fees earned by the directors in |
(2) |
|
Under theNon-Employee Directors Plan, the directors are required to receive a portion of their annual retainer in shares of Class A Common (the “Mandatory Shares”). They are also permitted to elect to receive all or part of the remainder of the |
The amount listed |
(4) | Mr. Alfred M. Rankin, Jr. retired from his position as the Executive Chairman of |
(5) | During 2021, Ms. Clara Williams |
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Additional Information Relating to the Director Compensation Table
EachThe compensation program for non-employee directors is established by the Compensation and Human Capital Committee based on recommendations made by Korn Ferry, an independent compensation consultant. Korn Ferry performs an in-depth evaluation of our director compensation program on a triennial basis, which evaluation last occurred in August 2020, and performs interim reviews annually. Korn Ferry utilizes the National Association of Corporate Directors’ survey of director compensation, which survey contains data for 1,455 companies in 25 industries and focuses on small companies with $500 million to $1 billion in annual revenues.
In connection with its review of our director compensation program, Korn Ferry also reviews the compensation structure for our Non-Executive Chairman, which includes an annual retainer of $250,000 to serve as the Non-Executive Chairman and $500,000 for consulting services that are in addition to the responsibilities of Non-Executive Chairman of the Board. Mr. Rankin has extensive executive management experience, including long-tenured service as a public company CEO, and provides valuable advice and insight regarding the Company’s development and implementation of its strategic priorities and risk management programs. Based on Korn Ferry’s most recent review of Mr. Rankin’s total compensation, the Compensation and Human Capital Committee has determined that Mr. Rankin’s compensation is reasonable for his duties and responsibilities and the services he provides and, therefore, made no change for 2022.
Under the 2021 non-employee director iscompensation program, each non-employee director, except the Non-Executive Chairman of the Board, was entitled to receive the following compensation in 2021 for service on our Board and on our subsidiaries’ boards of directors following thespin-off:directors:
Type of Compensation | ||
| Amount | |
Annual Board Retainer: | $ | |
Annual Committee Retainer: | $8,000 Audit Review Committee member ($5,000 for members of the other Board Committees except the Executive Committee; $0 for the Executive Committee) | |
Committee Chairman Retainer: | $20,000 Audit Review Committee | |
Annual Retainer for Service on a Subsidiary Board of Directors: | $20,000 |
As the Non-Executive Chairman of the Board, Mr. Alfred M. Rankin, Jr. was entitled to receive an annual retainer of $250,000 ($150,000 of which is required to be paid in transfer-restricted shares of Class A Common). Mr. Rankin was also entitled to receive $5,000 per committee for his service on the Charitable Contributions Committee and the Planning Advisory Committee, and $10,000 for his service as Chair of the Planning Advisory Committee.
The retainers for all of the current directors received for 2017 werepro-rated to reflect their post-spin service only. The retainers are paid quarterly in arrears. No meeting fees are paid, but each director is also reimbursed for expenses incurred as a result of attendance at meetings.
Under theNon-Employee Directors Plan, eachnon-employee director receives $90,000 of his/her $150,000 retainer in the form of restricted shares of Class A Common. AnyCommon that are subject to restrictions generally prohibiting transfer of such shares for a period of 10 years, with any fractional shares are paid in cash. The number of shares of Class A Common issued to a director is determined by the following formula:
the dollar value of the quarterly installment of the portion of the $90,000 retainer that was earnedis required to be paid in transfer-restricted shares of Class A Common divided by the director each quarter
divided by
the average closing price of shares of Class A Common on the NYSE forat the end of each week during such quarter.
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These shares are fully vested on the date of grant,issue, and the director is entitled to all rights of a stockholder, including the right to vote and receive dividends. However, as previously mentioned, the directors are generally required to hold the shares
for a period of up to ten10 years from the last day of the calendar quarter for which the shares were earned and, during thatten-year holding period, the shares cannot be sold, assigned, transferred, exchanged, pledged, hypothecated or encumberedotherwise transferred except by will or by laws of descent and distribution, in the event of divorce pursuant to a qualified domestic relations order or to a trust or partnership for the benefit of the director or his or her spouse, children or grandchildren. The transfer restrictions lapse earlier in the event of:
death, cessation of service due to permanent disability or five years from the date the director is no longer a member ofon the Board;
the date that a director is both no longer a member of our Board and has reached age 70; or
at such other time as determined by the Board in its sole discretion.
In addition, each director may elect to receive shares of Class A Common in lieu of cash for up to 100% of the balance of his/her retainers. However, thesethe retainer. These Voluntary Shares are not subject to the foregoing transfer restrictions. Under the terms of theNon-Employee Directors’Directors Plan, no director may receive more than 30,000 shares of Class A Common in any calendar year under the plan.year.
Beginning in 2018, eachEach director also receives (i)received (1) $50,000 in Company-paid life insurance; (ii)(2) Company-paid accidental death and dismemberment insurance for the director and spouse; (iii) $10 million in(3) reimbursement of insurance premiums for personal excess liability insurance for specified directors; and $3 million in uninsured/underinsured motorist insurance for the director and immediate family members who reside with the director, and (iv) up to(4) $5,000 per year in matching charitable contributions. Refer to Note (4) to the Director Compensation Table for a description of the benefits provided to directors in 2017 following thespin-off.
PROPOSAL 2 – APPROVAL OF THE HAMILTON BEACH BRANDS HOLDING COMPANY EXECUTIVE LONG-TERM EQUITY INCENTIVE PLAN
We are asking our stockholders to approve the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan, further amended and restated effective March 1, 2022 (the “2022 Revised Long-Term Equity Plan”), that was approved by the Company’s Compensation and Human Capital Committee on February 21, 2022 and by the Board on February 22, 2022. The original Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan was approved by the stockholders in 2017, and was last amended and restated effective March 1, 2020 (the “Current Plan”). If approved by our stockholders, the 2022 Revised Long-Term Equity Plan will be effective as of March 1, 2022 and will be used for target awards made on or after March 1, 2022 for performance periods beginning on or after January 1, 2022.
There were originally approved for use under the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan a total of 650,000 shares of Class A Common, subject to adjustment as provided in the Current Plan document. No further shares were requested or approved by the stockholders in 2020 when the Current Plan was last approved. Our primary reasons for requesting stockholder approval of the 2022 Revised Long-Term Equity Plan are to (1) make available for awards under the 2022 Revised Long-Term Equity Plan an additional 600,000 Class A Common shares (as described below and in the 2022 Revised Long-Term Equity Plan document itself) for use for new grants on or after March 1, 2022, with such amount of additional shares subject to adjustment, including under the share counting rules of the 2022 Revised Long-Term Equity Plan, and (2) extend the end of the term of the 2022 Revised Long-Term Equity Plan from September 28, 2027 to March 1, 2032.
In approving the 2022 Revised Long-Term Equity Plan, the Board also made the following changes, along with certain other clarifying revisions and non-substantive changes, to the Current Plan:
• | Eliminated Code 162(m) Deadline Requirements: Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) was amended by December 2017 tax reform legislation (“2017 Tax Reform”) for tax years beginning after December 31, 2017, generally to eliminate the then-available |
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exemption for performance-based compensation. The 2022 Revised Long-Term Equity Plan removes certain remaining Code Section 162(m)-related deadline requirements for the Compensation and Human Capital Committee to take certain actions (such as approving target awards, determining the performance criteria and formula for target awards and the payment breakdown between cash and shares for such awards) both within 90 days of the commencement of an applicable performance period and not later than the completion of 25% of such performance period. These removed deadline requirements are no longer applicable or necessary with the elimination of the performance-based compensation exemption in 2017; and |
• | Expanded List of Performance Objectives: Historically, the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan included a limited list of performance objectives available for award opportunities. Prior to 2017 Tax Reform, Code Section 162(m) required stockholder approval of such a limited list of performance objectives under the then-available exemption for performance-based compensation. With the elimination of the performance-based compensation exemption in 2017, however, there is no longer a tax reason to limit the list of available performance objectives for awards. As a result, the 2022 Revised Long-Term Equity Plan makes the list of performance objectives included in the plan document non-exhaustive. |
Why You Should Vote for Proposal 2
The 2022 Revised Long-Term Equity Plan continues to authorize our Compensation and Human Capital Committee to provide performance-based award opportunities that are payable partly in cash and partly in Class A Common shares for the purpose of providing certain key employees with incentives and rewards for performance.
We believe our future success continues to depend in part on our ability to attract, motivate, and retain high-quality employees, and the ability to provide equity-based and incentive-based awards under the 2022 Revised Long-Term Equity Plan is critical to achieving this goal. We would be at a severe competitive disadvantage if we could not use share-based awards to recruit and compensate our officers and key employees.
The use of Class A Common shares as part of our compensation program is important because it fosters a pay-for-performance culture that is an important element of our overall compensation philosophy. We believe equity compensation provides additional motivation for employees to create stockholder value because the value they realize from their equity compensation is based on our stock price performance.
Equity compensation also aligns the compensation interests of our key employees with the investment interests of our stockholders and promotes a focus on long-term value creation because our equity compensation awards are generally subject to performance criteria and lengthy holding periods.
As of February 28, 2022, 272,630 shares of Class A Common remained available for issuance under the Current Plan, but in March 2022 we issued approximately 150,062 of these remaining shares in settlement of 2021 awards under the Current Plan. If the 2022 Revised Long-Term Equity Plan is not approved, we may be compelled to increase significantly the cash component of employee compensation. This approach may not necessarily align employee compensation interests with the investment interests of our stockholders. Replacing equity awards with cash also would increase cash compensation expenses and consume cash that could be better utilized for other purposes.
The following summary provides our view of (1) aggregated information regarding the dilution associated with the Current Plan and the potential stockholder dilution that would result if the proposed share increase under the 2022 Revised Long-Term Equity Plan is approved and (2) our share burn rate.
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Under the terms of the Current Plan, a maximum of 650,000 shares of Class A Common (subject to adjustment as described in the Current Plan) were originally available for awards, of which 377,370 shares of Class A Common had been issued (which represents approximately 3.80% of our outstanding Class A Common) and 272,630 shares of Class A Common then remained available for issuance as of February 28, 2022. The shares of Class A Common remaining available for issuance represented approximately 2.75% of our outstanding Class A Common shares. In addition, in March 2022, we issued approximately 150,062 of these remaining shares in settlement of 2021 awards under the Current Plan (representing approximately 1.51% of our outstanding Class A Common shares). Upon approval of the 2022 Revised Long-Term Equity Plan requested herein, the total enumerated share pool for the 2022 Revised Long-Term Equity Plan will be 1,250,000 shares (consisting of the 650,000 shares of Class A Common that were initially available under the Current Plan as approved by stockholders in 2017, plus an additional 600,000 shares of Class A Common to be approved by stockholders at the 2022 Annual Meeting (subject to adjustments as described in the 2022 Revised Long-Term Equity Plan)). As a result, approval of the 2022 Revised Long-Term Equity Plan will provide an additional 600,000 shares of Class A Common (subject to adjustments as described in the 2022 Revised Long-Term Equity Plan) for awards under the 2022 Revised Long-Term Equity Plan. This new share request of 600,000 shares represents approximately 6.05% of our outstanding Class A Common shares. This percentage represents our view of the additional potential simple dilution of Class A Common that could occur if the 2022 Revised Long-Term Equity Plan is approved.
Based on the NYSE closing price for our Class A Common on February 28, 2022 ($15.10 per share), the aggregate market value of the new 600,000 shares of Class A Common that will be available for future issuance under the 2022 Revised Long-Term Equity Plan was $9,060,000.
In 2019, 2020 and 2021, we issued Award Shares (as defined in the Current Plan) under the Current Plan in the amounts of 118,688 shares, 94,898 shares and 158,272 shares, respectively. Based on our basic weighted average shares of Class A Common outstanding for those three years of 9,332,213 shares, 9,593,726 shares, and 9,858,541 shares, respectively, for the three-year period 2019-2021, our average burn rate was 1.29% (and our individual years’ burn rates were 1.27% for 2019, 0.99% for 2020, and 1.61% for 2021).
In determining the number of shares to request for approval under the 2022 Revised Long-Term Equity Plan, our management team worked with the Compensation and Human Capital Committee to evaluate a number of factors, including our recent share usage and total potential dilution level.
If the 2022 Revised Long-Term Equity Plan is approved, we intend to utilize the shares authorized under the 2022 Revised Long-Term Equity Plan to continue our practice of incentivizing certain employees through equity grants. We currently anticipate that the new 600,000 shares that would be available under the 2022 Revised Long-Term Equity Plan would last for approximately four years, based on our recent grant rates, the number of expected grantees and the approximate current share price, but the shares authorized could last for a different period of time if actual practice does not match recent grant rates or our share price changes materially. As noted below, our Compensation and Human Capital Committee would retain discretion to determine the number and amount of awards to be granted under the 2022 Revised Long-Term Equity Plan, subject to its terms. Any additional future benefits that may be received by participants under the 2022 Revised Long-Term Equity Plan are not determinable at this time.
We believe we have demonstrated a commitment to sound equity compensation practices. We recognize that equity compensation awards dilute stockholder equity, so we have managed our equity incentive compensation carefully. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of stockholder interests, as previously described.
The following summary of the 2022 Revised Long-Term Equity Plan is qualified in its entirety by reference to the 2022 Revised Long-Term Equity Plan attached to the Proxy Statement as Appendix A.
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Purpose. The purpose of the 2022 Revised Long-Term Equity Plan continues to be to further our long-term interests by enabling the Company and its subsidiaries to attract, retain, and reward executive employees who will be in a position to make contributions to the Company by providing long-term incentive compensation opportunities.
Administration and Eligibility. The 2022 Revised Long-Term Equity Plan will generally continue to be administered by the Compensation and Human Capital Committee. The Compensation and Human Capital Committee has authority to, among other things, interpret the 2022 Revised Long-Term Equity Plan and establish rules for its administration (including the guidelines). The Compensation and Human Capital Committee, subject to approval by the Board and certain securities limitations, may amend the 2022 Revised Long-Term Equity Plan or terminate it entirely. However, any such amendment will be subject to stockholder approval to the extent required under applicable law or stock exchange requirements. Furthermore, no such amendment may adversely affect a participant’s rights with regard to an earned but unpaid award, or with regard to Award Shares that previously were issued to the participant.
Salaried employees of the Company and its subsidiaries on a U.S. payroll who, in the judgment of the Compensation and Human Capital Committee, occupy a senior management position capable of contributing to the interests of the Company and who are not an active participant in another long-term plan of the Company may be designated by the Compensation and Human Capital Committee to participate in the 2022 Revised Long-Term Equity Plan. As of March 1, 2022, there were approximately 355 salaried employees of the Company and its subsidiaries on a U.S. payroll who were technically eligible to participate in the 2022 Revised Long-Term Equity Plan. Of this number, approximately 40 employees are in the class of anticipated participants for the 2022 Revised Long-Term Equity Plan. The Compensation and Human Capital Committee approves 2022 Revised Long-Term Equity Plan participants, the performance period, and applicable performance objectives for each award. The basis for participation in the 2022 Revised Long-Term Equity Plan by eligible persons is the selection of such persons by the Compensation and Human Capital Committee in its discretion.
Performance Factors. The Compensation and Human Capital Committee establishes goals and formulas under the 2022 Revised Long-Term Equity Plan based on specified performance objectives of the participants, the Company and its subsidiaries over the award term. Under the terms of the 2022 Revised Long-Term Equity Plan, performance objectives may be described in terms of Company-wide objectives or objectives related to the performance of the individual participant or one or more of the subsidiaries, divisions, business units, departments, regions, functions, or other organizational units of the Company or its subsidiaries. Performance objectives may be measured on an absolute or relative basis. Different groups of participants may be subject to different performance objectives for the same performance period. Relative performance may be measured against other companies or subsidiaries, divisions, departments, regions, functions, or other organizational units within such other companies, or against an index or one or more of the performance objectives themselves.
Awards. Each year, the Compensation and Human Capital Committee establishes one or more long-term incentive targets for each participant. The awards are expressed in a dollar amount equal to a percentage of the participant’s salary midpoint based on the number of salary points assigned to the participant’s position and the long-term incentive target percentage for that salary point level. This process is explained below under the section entitled “Korn Ferry’s General Industrials Survey — Salary Midpoint.” These amounts are then increased by 15% to account for the immediately taxable nature of the awards. No minimum award levels are established. Maximum award levels, however, will be established for certain performance objectives, even if the maximum performance level is exceeded. Target awards for participants will be pro-rated in the event that they change job levels during the applicable performance period, or otherwise in the discretion of the Compensation and Human Capital Committee, subject to certain limitations as further described in the 2022 Revised Long-Term Equity Plan. Under no circumstances will the amount paid to any participant in a single calendar year as a result of awards under the 2022 Revised Long-Term Equity Plan (including the fair market value of any Award Shares) exceed the greater of (1) $12 million or (2) the fair market value of 500,000 Award Shares, determined at the time of payment.
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The Compensation and Human Capital Committee must certify in writing that the pre-established performance thresholds and any other material terms were met or exceeded prior to payment of any final award. Unless waived, the Compensation and Human Capital Committee retains discretionary authority to (1) increase or decrease the amount of any award that otherwise would be payable to a participant or (2) adjust the allocation between the cash portion of the award and the equity portion of the award (in each case, subject to certain limitations as described in the 2022 Revised Long-Term Equity Plan).
Participants generally must be employed by the Company (or, if applicable, its subsidiary) on the last day of the applicable performance period in order to receive payment of an award for such performance period. However:
In the event of a change in control (as defined in the plan document), participants employed on the date of the change in control (or who die, become disabled or retire during such performance period and prior to the change in control) will be entitled to receive a pro-rata award for the applicable performance period, in an amount equal to 100% of the long-term target award for the performance period, pro-rated to reflect the period of time the participants were employed during such performance period prior to the change in control.
Participants who die, become disabled or retire during an award term will be eligible for an award for the performance period calculated based on actual Company results, prorated to reflect the period of time the participants were employed during the performance period prior to their termination of employment.
Awards for participants who are employed by the Company or one of its subsidiaries on the last day of the performance period but are not employed for the entire performance period will be prorated based on the number of days the participant was actually employed by the Company or one of its subsidiaries during such performance period.
The Compensation and Human Capital Committee has discretion to provide for payment of an award to a participant who does not meet any of the foregoing conditions.
Awards are allocated by the Compensation and Human Capital Committee between a cash component and an equity component which is paid in shares of the Company’s Class A Common. The number of Award Shares issued to a participant in any award is determined by taking the dollar value of the stock portion of the award and dividing it by the “formula price.” The formula price is the lesser of:
the average closing price of Class A Common on the NYSE at the end of each week during the year preceding the commencement of the award year (or such other previous calendar year determined by the Compensation and Human Capital Committee); or
the average closing price of Class A Common on NYSE at the end of each week of the applicable performance period.
Award Shares are immediately vested when earned (as determined by the Compensation and Human Capital Committee). Participants have ownership rights in Award Shares, including the right to vote and receive dividends upon receipt of the Award Shares. However, the Award Shares are subject to certain transfer restrictions for a period of up to 10 years from the last day of the performance period (or such other period determined by the Compensation and Human Capital Committee). The transfer restrictions lapse earlier in the event of (1) the participant’s death or permanent disability; or (2) three years (or earlier with the approval of the Compensation and Human Capital Committee) from the date of retirement. The Compensation and Human Capital Committee has the right to release the restrictions at an earlier date, including for payment of educational and medical expenses, home purchase, or other extraordinary circumstances, as permitted under the terms of the plan (subject to the Compensation and Human Capital Committee’s discretion). Shares issued under the 2022 Revised Long-Term Equity Plan may be shares of original issuance or treasury shares or a combination of the two.
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Adjustments. The Compensation and Human Capital Committee will make or provide for such adjustment in (1) the total number of Award Shares that may be issued under the 2022 Revised Long-Term Equity Plan, (2) outstanding Award Shares, (3) the “formula price,” and (4) other award terms, as the Compensation and Human Capital Committee in its sole discretion, exercised in good faith, may determine is equitably required to reflect (a) any stock dividend, stock split, combination of shares, recapitalization or any other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing (collectively, the “Extraordinary Events”). Further, in the event of any Extraordinary Event or a change in control, the Compensation and Human Capital Committee may provide in substitution for any or all outstanding Award Shares under the 2022 Revised Long-Term Equity Plan such alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and shall require in connection therewith the surrender of all Award Shares so replaced in a manner that complies with or is exempt from Code Section 409A and applicable regulations.
Amendment and Termination. The Compensation and Human Capital Committee, subject to approval by the Board, may amend the 2022 Revised Long-Term Equity Plan from time to time or terminate it in its entirety, provided however that, subject to certain provisions of the 2022 Revised Long-Term Equity Plan, no such action may adversely affect a participant’s rights (without consent) in (1) an outstanding award that was previously approved by the Compensation and Human Capital Committee that has not yet been paid, or (2) any Award Shares that were previously issued or transferred. Notwithstanding the foregoing, without further approval by our stockholders, no amendment to the 2022 Revised Long-Term Equity Plan shall (1) materially increase the number of Award Shares that are to be issued or transferred (except pursuant to the adjustment provisions), (2) cause Rule 16b-3 to become inapplicable to any award, or (3) make any other change for which stockholder approval would be required under applicable law or stock exchange requirements.
Plan Term. No Award Shares will be issued or transferred under the 2022 Revised Long-Term Equity Plan on or after March 1, 2032, but, unless otherwise specified by the Compensation and Human Capital Committee, all Award Shares that were issued prior to the termination of the 2022 Revised Long-Term Equity Plan generally will continue to be subject to the terms of the 2022 Revised Long-Term Equity Plan following termination.
Tax Withholding. To the extent the Company or a subsidiary is required to withhold federal, state, or local income taxes or other amounts in connection with any award paid to a participant under the 2022 Revised Long-Term Equity Plan, and the amounts available for such withholding are insufficient, it will be a condition to the receipt of such award that the participant make arrangements satisfactory to the Company for the payment of the balance of such taxes or other amounts required to be withheld. If a participant’s benefit is to be received in the form of shares of Class A Common, and such participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Compensation and Human Capital Committee, the Company will withhold shares of Class A Common having a value equal to the amount required to be withheld.
Federal Income Tax Consequences. This brief summary of certain Federal income tax consequences under the 2022 Revised Long-Term Equity Plan, based on tax laws currently in effect, is presented for the information of stockholders considering how to vote on this Proposal and not for 2022 Revised Long-Term Equity Plan participants. It is not intended to be complete and does not describe Federal taxes other than income taxes (such as Medicare or Social Security taxes), or state, local, or foreign tax consequences. No income generally will be recognized upon the grant of a target award. Upon payment in respect of the earn-out of an award, the recipient generally will be required to include as taxable ordinary income in the year of receipt an amount equal to the amount of cash received and the fair market value of any Award Shares received (including any Award Shares withheld by the Company to satisfy tax withholding). To the extent a participant recognizes ordinary income in the circumstances described above, the Company or the subsidiary for which the participant performs services will be entitled to a corresponding deduction provided that, among other items, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Code Section 280G and is not disallowed by the $1 million limitation on certain executive compensation under Code Section 162(m).
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Final 2021 Awards and Target 2022 Awards. The NEOs’ final awards under the Current Plan for the 2021 performance period are shown in the Summary Compensation Table. Final awards under the 2022 Revised Long-Term Equity Plan for the 2022 performance period are not currently determinable. In March 2022, the Compensation and Human Capital Committee adopted performance objectives and targets for the awards that may be earned for the one-year performance period ending December 31, 2022. The following chart shows the anticipated target awards for 2022:
New Plan Benefits – 2022 Revised Long-Term Equity Plan
Name and Position (1) | Dollar Value (2) | |||
Gregory H. Trepp – President and CEO | $ | 1,513,952 | ||
R. Scott Tidey – Senior Vice President, Consumer Sales & Marketing of HBB | $ | 438,581 | ||
Michelle O. Mosier – Senior Vice President, Chief Financial Officer and Treasurer | $ | 208,323 | ||
Gregory E. Salyers – Former Senior Vice President, Global Operations | N/A | |||
Executive Group (4 persons) | $ | 2,369,178 | ||
Non-Executive Director Group (0 persons) (3) | N/A | |||
Non-Executive Employee Group (35 persons) | $ | 1,850,482 |
(1) | The Compensation and Human Capital Committee has designated only certain senior management employees of the Company and its subsidiaries on U.S. payrolls as participants in the 2022 Revised Long-Term Equity Plan for 2022. |
(2) | The amounts include a 15% increase from the Korn Ferry recommended long-term target awards that the Compensation and Human Capital Committee applies to account for the immediately taxable nature of awards under the 2022 Revised Long-Term Equity Plan. |
(3) | Non-executive directors are not eligible to participate in the 2022 Revised Long-Term Equity Plan. |
Other Information.Non-employee directors have not participated in the Current Plan, either individually or as a group. As of March 1, 2022, the following persons or groups have previously received transfer-restricted shares under the Current Plan for 2017-2021: Mr. Trepp – 172,187; Mr. Tidey – 45,351; Ms. Mosier – 19,020; Mr. Salyers – 32,441; Mr. Alfred Rankin, Jr. – 23,255; all current executive officers as a group – 239,525; and all employees of the Company, including all current officers who were not executive officers from 2017-2021, as a group – 287,907 (and no one has received 5% or more of the transfer-restricted shares under the Current Plan). We intend to file a Registration Statement on Form S-8 relating to the issuance of the additional shares of Class A Common under the 2022 Revised Long-Term Equity Plan as soon as practicable after approval of the 2022 Revised Long-Term Equity Plan by our stockholders.
YOUR BOARD RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 2 TO APPROVE THE 2022 REVISED LONG-TERM EQUITY PLAN.
PROPOSAL 3 - ADVISORY VOTE TO APPROVE THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION
On a voluntary basis, we are asking our stockholders to cast a non-binding advisory vote on the Company’s Named Executive Officer (“NEO”) compensation, commonly referred to as a “say-on-pay” vote. As an emerging growth company under the Jumpstart our Business Startups Act of 2012 (“JOBS Act”), the Company is not required to request a say-on-pay vote. However, the Board believes requesting it is a sound governance practice. The vote is not intended to address specific items of compensation, but rather the overall compensation of our NEOs and the policies and practices described in this Proxy Statement.
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At our 2021 annual meeting, the compensation of our NEOs received approval from approximately 99% of the stockholder votes cast. We believe that this result demonstrates our stockholders’ endorsement of our Compensation and Human Capital Committee’s executive compensation decisions and policies.
We encourage stockholders to read the Executive Compensation Information section of this Proxy Statement, including the Compensation Discussion and compensation tables, for a more detailed discussion of our compensation programs and policies.
Action Requested
The Board asks stockholders to vote on the following advisory resolution:
“RESOLVED, THAT THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THE COMPENSATION DISCUSSION, THE COMPENSATION TABLES AND RELATED NARRATIVE DISCUSSION IN THE COMPANY’S 2022 PROXY STATEMENT, IS HEREBY APPROVED.”
Nature and Frequency of Stockholder Vote
Although the say-on-pay vote is voluntary for the Company and is advisory and non-binding, the Board and its Compensation and Human Capital Committee value the views of our stockholders and expect to consider the voting results in connection with future compensation policies and decisions. The Board has determined that holding an annual advisory say-on-pay vote is appropriate for the Company at this time. While our compensation programs are designed to promote a long-term connection between pay and performance, our Board believes an annual vote allows stockholders to provide immediate and direct input on our executive compensation plans. We expect the next say-on-pay vote to be held at the 2023 Annual Meeting.
YOUR BOARD RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 3 TO
APPROVE, ON AN ADVISORY BASIS, THE COMPANY’S NAMED EXECUTIVE
OFFICER COMPENSATION.
PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 20182022
The Audit Review Committee selected Ernst & Young LLP has been selected by the Audit Review Committee as the principal independent registered public accounting firm for the current fiscal year for us and our subsidiaries. The Audit Review Committee considered carefully EY’s performance and its independence with respect to the services to be performed. The Audit Review Committee is responsible for the audit fee negotiations associated with the retention of EY.EY’s retention. In connection with the mandated rotation of the lead audit partner, the Audit Review Committee and its Chairman will continue to be directly involved in the selection of EY’s lead audit partner. The Audit Review Committee annually evaluates theEY’s performance of EY and determines whether to reengage the independent registered public accounting firm.
TheWhile we are not required to obtain stockholder ratification of the appointment of EY as our independent registered public accounting firm, is not required to be submitted to a vote of our stockholders for ratification. However, our Board believes that obtaining stockholder ratification is a sound governance practice.
YOUR BOARD AND AUDIT REVIEW COMMITTEE RECOMMENDRECOMMENDS THAT YOU VOTE “FOR”
PROPOSAL 24 TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018.2022.
It is expected that EY representatives of EY will attend the Annual Meeting with theand have an opportunity to make a statement, if they so desire and, if a representative isdesired. If in attendance, the representative will be available to answer appropriate questions.
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If our stockholders fail to vote in favor of the appointment of EY, the Audit Review Committee will take such actions as it deems necessary as a result of such stockholder vote.necessary. Even if the appointment of EY is ratified, the Audit Review Committee may select a different independent registered public accounting firm at any time during fiscal year 20182022 if it determines that such a change would be in the best interests of the Company and its stockholders.
Pre-Approval Policiesof Audit and ProceduresPermitted Non-Audit Services
The Audit Review Committee has determinedcharter requires that the provision ofall audit and permitted non-audit services to us by EY may be generally incompatible with maintaining its independence. As a result, we have adopted policies limiting the services provided by our independent registered public accounting firm that are not audit or audit-related services.
Under ourpre-approval policies and procedures, only audit, audit-related services and limited tax services willmust be performed by EY. All such services must bepre-approved by our Audit Review Committee. These services may include audit services, audit-related services, tax services and, in limited circumstances, other services. For 2017,2021, the Audit Review Committee authorized us to engage EY for specific audit audit-related and taxaudit-related services up to specified fee levels. The Audit Review Committee has delegated to the Chairman of the Audit Review Committee together with one other Audit Review Committee member the authority to approve services other than audit, review or attest services, which approvals are reported to the Audit Review Committee at its next meeting. We provide a summary of authorities and commitments at each general meeting of the Audit Review Committee.
Fee Information
Fees for professional services provided by our auditors in 20172021 and 2020 are included in the table below (in millions). No independent auditors provided any services directly to Hamilton Beach Holding during fiscal year 2016, as we had not yet separated from NACCO.
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2021 | 2020 | |||||||
Audit Fees (1) | $ | 1,484,393 | $ | 2,926,348 | ||||
Audit-Related Fees (2) | 0 | 0 | ||||||
Tax Fees (3) | 25,000 | 0 | ||||||
All Other Fees | 0 | 0 | ||||||
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|
|
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Total | $ | 1,509,393 | $ | 2,926,348 | ||||
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(1) | “Audit Fees” principally include services rendered by EY for the audit of our annual financial statements and internal |
(2) | “Audit-Related Fees” include assurance and related services rendered by EY for accounting advisory matters and audits of certain employee benefit plans. |
(3) | “Tax Fees” include tax consultation related services rendered by EY for tax matters related to The Kitchen Collection, LLC, a former wholly owned subsidiary of the Company. |
PART III –- EXECUTIVE COMPENSATION INFORMATION
AsFollowing are the material elements of our 2021 compensation objectives and policies, as they relate to the NEOs listed in the Summary Compensation Table. This discussion and analysis should be read in conjunction with all accompanying tables, footnotes, and text in the Proxy Statement.
The Company continued to qualify as an emerging growth company in 2021 under the Jumpstart our Business Startups Act of 2012, or the JOBS Act we have optedand also satisfied the requirements to comply withbe a smaller reporting company under the executive compensation disclosure rules applicable toSEC’s amended definition of “smaller reporting companies,company.” which requireAlthough this permits the Company to scale its compensation disclosuredisclosures to reduced levels, we voluntarily chose to provide many of the compensation-related disclosures required for large public companies. The Company is disclosing compensation for four NEOs—our principal executive officer, and the two other most highly compensated executive officers (other than our principal executive officer) serving as executive officers at the end of the fiscal year, and one additional individual who would have been one of the two other most highly compensated executive officers at the end of the fiscal year but for the fact that the individual was not serving as an executive officer at the end of the fiscal year. This section describesThese disclosures contain two years of compensation data in the Summary Compensation Table.
Summary of our Named Executive Officer Compensation Program
Our executive compensation program in placestrongly ties the compensation of our NEOs to our short-term and long-term business objectives and to our stockholder interests. Key elements of compensation include base salary, annual incentive compensation, long-term incentive compensation, and defined contribution retirement benefits.
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Pay for Performance
We align our executive compensation with corporate performance on both a short-term and long-term basis. In 2021, over 70% of the target compensation for Gregory H. Trepp, our President and Chief Executive Officer, was incentive-based and “at risk” and, as a group, over 50% of the target compensation for all of our other NEOs was incentive-based and “at risk.” (See the Total Target Compensation table.) In addition, the long-term awards for our Named Executive Officers, or NEOs for 2017.were paid in the form of a combination of cash and shares of Class A Common, described in more detail below, that are subject to significant transfer restrictions (generally, 10 years). The value of these stock awards is at risk based on future Company performance and aligns the interests of our NEOs with those of our stockholders.
Named Executive Officers for 2017
The NEOs for 2017 are listed below:Additional information about our named executive officer compensation program:
What We Do | What We Do Not Do | |||||
Equity compensation awards for NEOs generally must be held for 10 years (equity awards cannot be pledged, hedged, or transferred during this time) | We do not provide our NEOs with employment agreements | |||||
We set our target compensation at the 50th percentile of our chosen benchmark and deliver compensation above or below this level based on performance | ||||||
We use an independent compensation consultant | ||||||
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We provide a modest level of perquisites to NEOs (paid in cash) that are determined based on market reasonableness |
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Hamilton Beach HoldingSpin-Off
Prior to September 29, 2017, Hamilton Beach Holding was a wholly owned subsidiary of NACCO. On September 29, 2017, NACCOspun-off Hamilton Beach Holding, including its operating subsidiaries, HBB and KC, to the NACCO stockholders.
Although the information below focuses primarily on compensation provided by Hamilton Beach Holding and HBB, it includes information regardingpre-spin compensation provided by NACCO where required. SEC rules require that NACCO also disclose in its 2018 proxy statement compensation earned by Messrs. Trepp, Rankin, and Tidey during the first nine months of 2017 prior to thespin-off date. As a result, the disclosure ofpre-spin compensation contained in this Proxy Statement is duplicative of thepre-spin compensation shown in NACCO’s 2018 proxy statement. Hamilton Beach Holding and NACCO did not each pay Messrs. Trepp, Rankin, and Tidey for services provided prior to thespin-off, and Messrs. Trepp, Rankin, and Tidey were not compensated twice for the same duties. As a result, the information contained in this Proxy Statement and NACCO’s 2018 proxy statement should be read carefully to avoid double-counting of such amounts.
2017 Summary Compensation Table
The following table sets forth the compensation for services of our NEOs in all capacities to the Company and its subsidiaries. For 2017, in addition to including post-spin compensation that was paid to Mr. Rankin by Hamilton Beach Holding, the table includespre-spin compensation that was earned by Mr. Rankin under NACCO’s compensation programs for the first nine months of 2017 while Hamilton Beach Holding was a subsidiary of NACCO and Mr. Rankin served as Chairman, President and CEO of NACCO.
For Fiscal Year Ended December 31, 2017
Name and Principal Position (1) | Year | Salary ($)(2) | Stock Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||
Gregory H. Trepp; President and CEO of Hamilton Beach Holding and HBB and CEO of KC(6) | 2017 | $693,250 | — | $1,419,666 | (8) | $163,420 | $191,418 | $2,467,754 | ||||||||||||||||||
2016 | $624,852 | — | $1,453,696 | $251,868 | $153,394 | $2,483,810 | ||||||||||||||||||||
Alfred M. Rankin, Jr.; Executive Chairman of Hamilton Beach Holding(7) | 2017 (paid in part by NACCO and in part by Hamilton Beach Holding) | $574,627 | $1,798,031 | $1,252,672 | (9) | $1,824,567 | $317,367 | $5,767,264 | ||||||||||||||||||
2016 (all paid by NACCO) | $604,034 | $2,442,736 | $1,761,910 | (9) | $1,234,283 | $345,683 | $6,388,646 | |||||||||||||||||||
R. Scott Tidey; Senior Vice President North American Sales & Marketing of HBB | 2017 | $419,692 | — | $465,490 | (8) | $48,935 | $87,603 | $1,021,720 | ||||||||||||||||||
2016 | $366,583 | — | $520,749 | $65,385 | $77,551 | $1,030,731 |
Salary | Stock Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||
NACCO Compensation (forpre-spin services) | $474,627 | $1,651,936 | $1,196,884 | $1,824,567 | $315,837 | $5,463,851 | ||||||||
Hamilton Beach Holding Compensation (for post-spin services) | $100,000 | $146,095 | $55,788 | $0 | $1,530 | $303,413 | ||||||||
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Total Compensation disclosed on Hamilton Beach Holding 2017 Summary Compensation Table | $574,627 | $1,798,031 | $1,252,672 | $1,824,567 | $317,367 | $5,767,264 |
As stated above, SEC disclosure rules require that the compensation earned by Mr. Rankin in 2017 prior to thespin-off be included in our Proxy Statement and NACCO’s 2018 proxy statement. This disclosure is duplicative, and he was not compensated twice for the same duties.
Gregory H. Trepp | Alfred M. Rankin, Jr. | R. Scott Tidey | ||||||||||
Employer Excess Plan Matching Contributions
| $0 | $62,175 | $0 | |||||||||
Employer Qualified Profit Sharing Contributions
| $13,499 | $0 | $13,499 | |||||||||
Employer Excess Plan Profit Sharing Contributions
| $152,253 | $221,468 | $60,243 | |||||||||
Other Qualified Employer Retirement Contributions
| $8,100 | $0 | $8,100 | |||||||||
Other Excess Plan Employer Retirement Contributions
| $12,697 | $18,855 | $4,491 | |||||||||
Employer Paid Life Insurance Premiums
| $1,612 | $11,927 | $955 | |||||||||
Perquisites and Other Personal Benefits
| $0 | $0 | $0 | |||||||||
TaxGross-Ups
| $0 | $0 | $0 | |||||||||
Other
| $3,257 | $2,942 | $315 | |||||||||
Total
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| $191,418
|
|
| $317,367
|
|
| $87,603
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The Company does not provide Mr. Rankin with any retirement benefits. Of the amount shown above for Mr. Rankin, $302,498 represents benefits earned from NACCO in 2017 under NACCO’snon-qualified defined contribution retirement plans.
Amounts listed in “Other” include employer-paid premiums for personal excess liability insurance, executive travel accident insurance premiums and wellness subsidies.
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Discussion of the Executive Compensation ProgramDiscussion
Executive Compensation Governance
For the portion of 2017 preceding thespin-off, the NACCO compensation committee was responsible for determining compensation policy for employees of NACCO, including Mr. Rankin,The Compensation and the HBB compensation committee was responsible for determining compensation policy for employees of HBB and its subsidiaries, including Messrs. Trepp and Tidey. The Hamilton Beach Holding compensation committeeHuman Capital Committee establishes and oversees the administration of the policies, programs and procedures for compensating our NEOs following thespin-off.NEOs. The members of the NACCO compensation committee, the HBB compensation committee,Compensation and the Hamilton Beach Holding compensation committee, referred to collectively as the “Compensation Committee” unless the context requires otherwise,Human Capital Committee consist solely of independent directors. The Hamilton Beach Holding Compensation and Human Capital Committee’s responsibilities are listed on page 5.in the Corporate Governance Information section, under the heading entitled “Description of Committees.”
Role of Executive Officers in Compensation DecisionsCommittee Interlocks and Insider Participation
Our management, in particular the CEO of Hamilton Beach Holding and, prior to thespin-off, the CEO of NACCO and the CEO of each applicable subsidiary, reviews company goals and objectives relevant to the compensationNone of our executive officers. Mr. Trepp, for periods afterofficers serves (or has served) on thespin-off, and Mr. Rankin, for periods prior to thespin-off, annually review the performance of each executive officer and make recommendations based on these reviews, including with respect to salary adjustments and incentive compensation award amounts, to the Compensation Committee, except that Mr. Trepp’s performance after thespin-off is reviewed by the Hamilton Beach Holding compensation committee and Mr. Rankin’s performance prior to thespin-off was reviewed by the NACCO compensation committee. In addition to the CEO recommendations, the Compensation Committee considers recommendations made by the Korn Ferry Hay Group, referred toof any entity that has one or more of its executive officers serving as the “Hay Group,” which bases its recommendations upon an analysis of similar positions at a broad range of domestic industries, as well as an understandingmember of our policiesCompensation and objectives, as described below. Human Capital Committee.
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Named Executive Officers for 2021
The NEOs for 2021 are listed below:
Name | Titles | Employer | ||
Gregory H. Trepp | President and Chief Executive Officer | HBB | ||
R. Scott Tidey (1) | Senior Vice President, Consumer Sales & Marketing of HBB | HBB | ||
Michelle O. Mosier | Senior Vice President, Chief Financial Officer and Treasurer | HBB | ||
Gregory E. Salyers (2) | Former Senior Vice President, Global Operations | HBB |
(1) | Mr. Tidey served as Senior Vice President, North America Sales & Marketing until March 1, 2021. |
(2) | Mr. Salyers retired as Senior Vice President, Global Operations, effective December 1, 2021. |
Compensation Committee may exercise its discretion in modifying any recommended adjustments or awards to executive officers. After considering these recommendations, the Compensation Committee determines the base salary and incentive compensation levels for the executive officers, including each NEO, and any additional discretionary payments.
Compensation ConsultantsConsultant
The Compensation and Human Capital Committee receives assistance and advice from the Hay Group.Korn Ferry, an internationally-recognized compensation consulting firm. The Hay Group isCompensation and Human Capital Committee engaged byKorn Ferry, and Korn Ferry reports to the Compensation Committee and Human Capital Committee. Korn Ferry also provides advice to and discusses compensation issues directly with management.
Throughout 2017, the Hay Group madeKorn Ferry makes recommendations regarding substantially all aspects of compensation for theour directors and senior management employees, including the NEOs. Korn Ferry, however, does not design (or provide any advice concerning the design of) the Company’s compensation programs. For 2017, the Hay Group2021, Korn Ferry was engaged, in general, to make recommendations regarding:
Director compensation levels;
Salary midpoints, incentive compensation targets (calculated as a percentage of salary midpoint), and total target total compensation for senior management positions;
Salary point levels, salary midpoints, and incentive targets for all new senior management positions and/or changes to current senior management positions.positions; and
In addition, in August 2017, the Hay Group made recommendations regardingpost-spin-off salary and salary midpoint levels
Salary midpoints and/or range movement for Messrs. Trepp and Rankin.all other employee positions.
All Haysalary point recommendations are determined by the Hay Group through the consistent application of the HayKorn Ferry salary point methodology, which is a proprietary method that takes into account theknow-how, problem solving and accountability requirements of the position.
RepresentativesA Korn Ferry representative attended one of the Hay Group attended two Compensation and Human Capital Committee meetings in 20172021 and, during one of those meetings,that meeting, consulted with the Compensation and Human Capital Committee in executive session without management present. The Hay Group did not provide any otherKorn Ferry also provided limited non-executive compensation consulting services to us or the Compensation CommitteeCompany in 2017.2021. The Compensation and Human Capital Committee considered and assessed the independence of the Hay GroupKorn Ferry and considered all relevant factors, including the six factors set forth in Rule10c-1(b)10C-1(b)(4)(i)-(vi) under the Securities Exchange Act, of 1934, referred to as the “Exchange Act,” that could give rise to a potential conflict of interest with respect to the Hay Group.Korn Ferry. Based on this review, we are not aware of any conflict of interest that has been raised by the work performed by the Hay Group.Korn Ferry’s services.
Hay Group’s AllKorn Ferry’s General Industrials Survey — Salary Midpoint
As a starting point for setting target total compensation, the Compensation Committee directed the Hay Group to useFor 2021, Korn Ferry used its proprietary survey ofGeneral Industrials Survey as the basis for recommendations concerning total target compensation for our senior management employees, including the NEOs. The General Industrials Survey contains data from a broad group of domestic industrial organizations, ranging in size from approximately $150$500 million to approximately $5$1 billion in annual revenues (the “All Industrials survey”). For 2017, participantsrevenue, which reflects the Company’s size. As part of the analysis, the Compensation and Human Capital Committee asked Korn Ferry to exclude retail and finance segments from the data results. We did not select the entities that comprise this Survey group, and the component entities’ identities were not a material factor in this analysis.
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The Compensation and Human Capital Committee chose this Survey as its benchmark because it provides relevant information regarding compensation paid to employees (including senior management employees) with similar skill sets used in our industry and represents the All Industrials survey included 359 parent organizationstalent pool from which we recruit. In addition, the use of a broad-based Survey reduces volatility and 460 independent operating unitslessens the impact of cyclical upswings or downturns in any one industry that satisfiedcould otherwise skew the Hay Group’s quality assurance controls and represented almost all segments of industry, including consumer products and mining.Survey results in any particular year. The Survey provides a competitive framework for recruiting employees from outside our industry.
Using its proprietary Hay pointsalary midpoint methodology, the Hay GroupKorn Ferry compares positions of similar scope and complexity with the data contained in the AllGeneral Industrials survey. The Compensation Committee directed the Hay Group to deriveSurvey. Korn Ferry then derives a median salary level for each Haysalary point level targeted at the 50th percentile of the AllGeneral Industrials surveySurvey (the “salary midpoint”). The Compensation and Human Capital Committee settypically sets target compensation levels at (or slightly below) the salary midpoint determined by Korn Ferry because it believes the Hay Group.
use of salary midpoints (1) helps ensure our compensation program provides sufficient compensation to attract and retain talented executives and (2) maintains internal pay equity, without overcompensating our employees. Because salary midpoints are based on each Haysalary point level, all of the employees at a particular Haysalary point level at a particular company generally have the same salary midpoint. The salary midpoint provided by the Hay GroupKorn Ferry then is then used to calculate the total target compensation of senior management, including the NEOs.
Compensation Policy, Objectives, and Methodology
The guiding principle of our compensation program is the maintenance of a strong link among an employee’s compensation, individual performance and the performance of the Company or the subsidiary or business unit for which the employee performs services. The structure of our compensation program was adaptable to the circumstances impacting the business in 2021, including COVID-19. Our program is designed to drive short- and long-term performance and is crafted carefully to consider a mixture of multi-year financial and non-financial factors, as well as economic and environmental disruption of relatively short duration, which helped the Company adequately withstand 2021 COVID-19-related challenges.
The primary objectives of our program are to:
attract, retain, and motivate talented management;
reward management with competitive total compensation for achievement of all seniorspecific corporate and individual goals;
make management employees, includinglong-term stakeholders in the NEOs. Company;
help ensure management’s interests are closely aligned with those of our stockholders; and
maintain consistency in compensation.
The Compensation Committee applied special rules when setting Mr. Rankin’s salary midpoint and target total compensation — refer to Note (3) on page 22.
Compensation Policy and Methodology — Target Total Compensation
The CompensationHuman Capital Committee establishes a comprehensively defined “target total“total target compensation” amount for each senior management employee (including each NEO) following rigorous evaluation standards that help to ensuremaintain internal equity. In this process, the Compensation and Human Capital Committee reviews “tally sheets” for the NEOs and other senior management employees that list each employee’s title, Haysalary points, and the following information for the current year, as well as that being proposedthe proposal for the subsequent year:
salary midpoint, as determined by the Hay GroupKorn Ferry from the AllGeneral Industrials survey;Survey;
cash in lieu of perquisites (if applicable);
short-term incentive target dollar amount (determined by multiplying the salary midpoint by a specified percentage of that midpoint, as determined by the Compensation and Human Capital Committee, with advice from the Hay Group,Korn Ferry, for each salary grade);
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long-term incentive target dollar amount (determined in the same manner as the short-term incentive target);
total target compensation, which is the sum of the foregoing amounts; and
base salary (a defined amount related to the salary midpoint).
In November 2016,2020, the Compensation and Human Capital Committee reviewed the tally sheetscompensation information for each of our NEOsNEO to decide whether it shouldto make changes to the 20172021 compensation program. The Compensation and Human Capital Committee determined that the overall program continued to bewas consistent with its compensation objectives and did not make any material changes for 2017, other than changes made in the course of 2017 in connection with thespin-off.2021.
The Compensation and Human Capital Committee views the various components of compensation as related but distinct. While the Compensation and Human Capital Committee determines the salary midpoint based on the information provided from the AllGeneral Industrials survey,Survey, it generally sets base salary levels between 80% and 120% of salary midpoint (up to 130% for Mr. Rankin prior to thespin-off).midpoint. The Compensation and Human Capital Committee also obtains the total target incentive compensation amounts from the AllGeneral Industrials surveySurvey but determines the mix of short-term and long-term incentives in its discretion, based on its decision regarding how best to motivate employees.
The following table sets forth each component of total target compensation in dollars and as a percentage of the target total compensation for the NEOs,each NEO, as recommended by the Hay GroupKorn Ferry and approved by the Compensation and Human Capital Committee for 2017:2021:
TOTAL TARGET COMPENSATION FOR 2021
Named Executive Officers | (A) Salary Midpoint ($)(%) | (B) Cash in Lieu of Perquisites ($)(%)(1) | (C) Short-Term Plan | (D) Long-Term Plan Target | (A)+(B)+(C)+(D) Target Total | |||||||||||||||||||||||||||||||
Gregory H. Trepp | $672,700 | 30.8 | % | $34,992 | 1.6 | % | $470,890 | 21.5 | % | $1,009,050 | 46.1 | % | $2,187,632 | |||||||||||||||||||||||
Alfred M. Rankin, Jr.(3) | $400,000 | 36.7 | % | $0 | 0.0 | % | $0 | 0.0 | % | $690,000 | 63.3 | % | $1,090,000 | |||||||||||||||||||||||
R. Scott Tidey | $399,700 | 44.5 | % | $19,992 | 2.2 | % | $199,850 | 22.2 | % | $279,790 | 31.1 | % | $899,332 |
Named Executive Officers | (A) Salary Midpoint ($)(%) | (B) Cash in Lieu of Perquisites ($)(%)(1) | (C) Short-Term Plan Target ($)(%) | (D) Long-Term Plan Target ($)(%)(2) | (A)+(B)+(C)+(D) Target Total Compensation ($) | |||||||||||||||||||||||||||||||
Gregory H. Trepp | $ | 798,600 | 26.4 | % | $ | 34,992 | 1.2 | % | $ | 718,740 | 23.8 | % | $ | 1,469,424 | 48.6 | % | $ | 3,021,756 | ||||||||||||||||||
R. Scott Tidey(3) | $ | 490,250 | 40.8 | % | $ | 19,992 | 1.7 | % | $ | 269,638 | 22.4 | % | $ | 422,841 | 35.2 | % | $ | 1,202,720 | ||||||||||||||||||
Michelle O. Mosier | $ | 353,500 | 48.3 | % | $ | 15,996 | 2.2 | % | $ | 159,075 | 21.7 | % | $ | 203,263 | 27.8 | % | $ | 731,834 | ||||||||||||||||||
Gregory E. Salyers(4) | $ | 414,700 | 44.7 | % | $ | 19,992 | 2.2 | % | $ | 207,350 | 22.3 | % | $ | 286,143 | 30.8 | % | $ | 928,185 |
(1) | NEOs are paid a fixed dollar amount of cash in lieu of perquisites. These amounts are paid ratably throughout the year. The dollar amounts provided to |
(2) | The |
(3) | Mr. Tidey’s salary midpoint, Short-Term Plan target and Long-Term Equity Plan target were increased effective March 1, 2021 in connection with his promotion to Senior Vice President, Consumer Sales and Marketing. The amounts shown |
(4) | Mr. Salyers retired as an active employee effective December 1, 2021. All amounts shown on the above table |
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Target total compensation is supplemented by health and welfare benefits and retirement benefits, which consist of both (i) qualified(1) the Hamilton Beach Brands, Inc. Employees’ Retirement Savings Plan (401(k)) (or “HBB 401(k)”), a tax-qualified defined contribution plansplan; and (ii) nonqualified(2) the Hamilton Beach Brands, Inc. Excess Retirement Plan (“HBB Excess Plan”), a non-qualified defined contribution plans (the “Excess Plans”).plan. Certain NEOs and other employees also are also entitled to various frozen retirement benefits. However, while Mr. Rankin participated in health and welfarepension benefits and retirement benefit plans of NACCO prior tounder thespin-off, he received a more limited set of health and welfare benefits, and no retirement benefits, from Hamilton Beach Holding following thespin-off in 2017.Brands, Inc. Pension Plan (“HBB Pension Plan”). In addition, the Compensation and Human Capital Committee may award discretionary cash and equity bonuses to employees, including the NEOs, although it rarely does soNEOs.
Base Salary
The Compensation and did not do so forHuman Capital Committee sets annual base salaries intended to be competitive in the NEOsmarketplace to recruit and retain talented senior management employees. Base salaries provide employees with a set amount of cash during the year with the expectation that they will perform their responsibilities to the best of their abilities and in 2017.
Impact of Hamilton Beach HoldingSpin-Off on 2017 Compensation
Base Salaryaccordance with our best interests.
For 2017,2021, the Compensation and Human Capital Committee determined the base salary for the NEOs by generally taking into account their individual performance for 20162020 and the relationship of their 20162020 base salary to the new 20172021 salary midpoint for their Haythe salary point level. In general, base salariesSalaries generally are set between 80% and 120% of an employee’s salary midpoint. The Compensation and Human Capital Committee also took into account other relevant information, including:
general inflation, salary trends and economic forecasts provided by Korn Ferry;
general budget considerations and business forecasts provided by management; and
any extraordinary personal accomplishments or corporate events that occurred during 2020.
Employees with lower base salaries compared to their salary midpoint (upand/or superior performance have the potential for larger salary increases. Employees with higher base salaries compared to 130%their salary midpoint and/or who have performed less effectively during the performance period have the potential for Mr. Rankin prior to thespin-off).smaller or no salary increases.
The following table sets forth the salary midpoint, base salary andfor each NEO for 2021, including cash paid in lieu of perquisites determined for each NEO for 2017:perquisites:
BASE SALARY FOR 2021
Named Executive Officer | 2017 Salary Midpoint ($) | Base Salary for 2017 and as a Percentage of Salary Midpoint ($)(%) | Increase Compared to 2016 Base Salary (%) | Cash in Lieu of Perquisites ($) | Salary Midpoint ($) | Base Salary ($) and as a Percentage of Salary Midpoint (%) | Salary Increase (%) Compared to 2020 Base Salary | Cash in Lieu of Perquisites ($) | ||||||||||||||||||||||||||
Gregory H. Trepp | $672,700 | $700,000 | 104% | 19% | $34,992 | $ | 798,600 | $ | 755,000 | 94.5 | % | 3.4 | % | $ | 34,992 | |||||||||||||||||||
Alfred M. Rankin, Jr.(2) | $400,000 | $400,000 | 100% | — | $0 | |||||||||||||||||||||||||||||
R. Scott Tidey | $399,700 | $399,700 | 100% | 15% | $19,992 | |||||||||||||||||||||||||||||
R. Scott Tidey(1) | $ | 490,250 | $ | 479,688 | 97.9 | % | 8.7 | % | $ | 19,992 | ||||||||||||||||||||||||
Michelle O. Mosier | $ | 353,500 | $ | 395,597 | 111.9 | % | 9.3 | % | $ | 15,996 | ||||||||||||||||||||||||
Gregory E. Salyers(2) | $ | 414,700 | $ | 404,481 | 97.5 | % | 4.2 | % | $ | 19,992 |
(1) | Mr. |
(2) |
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For 2021, the Compensation and Human Capital Committee approved the base salary increases for the NEOs primarily to align their salaries more closely to the market for their respective roles. The Committee approved an additional portion of the base salary increase for Mr. Tidey in order to reflect his increased responsibilities as Senior Vice President, Consumer Sales and Marketing, with an expanded scope including Mexican and Latin American markets.
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Incentive Compensation
Applicable Incentive Compensation Plans. One of the principles of our compensation program is that senior management employees, including the NEOs, generally are compensated based on the performance of the Company and/or the business unit for which the employee has responsibility. As a result, for 2017, (i)performed services. In 2021, all of the incentive compensation of Mr. Rankin was based onNEOs participated in (1) the performance of The North American Coal Corporation, referred to as “NACoal,” and HBB forpre-spin services and the performance of Hamilton Beach Holding for post-spin services,Brands, Inc. Annual Incentive Compensation Plan (“Short-Term Plan”) and (ii)(2) the incentive compensationLong-Term Equity Plan. In 2021, non-U.S. senior management employees participated in the Hamilton Beach Brands, Inc. Long-Term Incentive Compensation Plan (“Long-Term Cash Plan”) and none of Messrs. Trepp and Tidey was based on the performanceNEOs participated in the Long-Term Cash Plan. All of HBB. The Compensation Committees did not take the performance of KC into account when determiningNEOs (other than Ms. Mosier) had outstanding awards previously granted under the incentive compensation benefits of NACCO employees or any of our NEOs for 2017. The table below identifies theLong-Term Cash Plan that were paid in 2021.
Overview. Our incentive compensation plans in whichare designed to align the NEOs participated during 2017:
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Overview.compensation interests of senior management with our short-term and long-term interests. As such, a significant portion of the NEOs’ compensation is linked directly to the attainment of specific financial and operating targets. The Compensation and Human Capital Committee believes that a material percentage of the NEOs’ compensation should be contingent on the performance of Hamilton Beach Holding and/the Company and its subsidiaries. As illustrated on the Total Target Compensation table above, over 70% of Mr. Trepp’s 2021 target compensation was variable or “at risk” and tied to Company performance and, as a group, over 50% of the subsidiaryother NEOs’ target compensation was tied to Company performance. For 2021, the CEO’s incentive compensation payouts exceeded the sum of his fixed payments (base salary plus perquisites) for which they are responsible. the year.
The performance criteria and target performance levels for the incentive plans are established within the Compensation and Human Capital Committee’s discretion, and generally are generally based uponon management’s recommendations as to the performance objectives of the Company or the particular business unit for the year. TwoThree types of performance targets are used in the incentive compensation plans:Incentive Plans:
• | Targets Based on Annual Operating Plans. Certain performance targets are based on forecasts contained in the |
• | Targets Based on Long-Term Goals. Other performance targets are not based on the |
Design of Incentive Program: Use of ROTCE to Establish Maximum Payment Pools. Historically, Code Section 162(m) provided generally that a publicly traded company could not deduct compensation of more than $1 million that was paid to certain named executive officers for federal income tax purposes unless that compensation was “qualified performance-based compensation.” Among other requirements, prior to thespin-off the performance-based exception to Code Section 162(m) required that deductible compensation be paid under a plan that has been approved by NACCO’s stockholders.
NACCO previously obtained stockholder approval of the following incentive plans that provide benefits to the NEOs (the “162(m) Plans”):
References to “162(m) Plans” also include the Hamilton Beach Holding Long-Term Equity Plan, which was not approved by NACCO’s stockholders, but which may qualify for the qualified performance-based exception for 2017 awards paid in 2018 under Code Section 162(m) transitional rules if the other applicable requirements are met.
Under tax reform legislation, the qualified performance-based compensation exception described above generally ceased to be available effective January 1, 2018, except that certain grandfathered arrangements in effect on November 2, 2017 may continue to qualify for the qualified performance-based compensation exception. Our intent prior to the enactment of tax reform legislation was to seek post-spin stockholder approval (by our public stockholders) of the Hamilton Beach Holding Long-Term Equity Plan and of the amended HBB Short-Term Plan and HBB Long-Term Cash Plan for purposes of approving the performance goals thereunder in order to qualify for the qualified performance-based compensation exception under Section 162(m) for future awards. However, such approval is no longer relevant or necessary due to the effect of tax reform, and we therefore have decided not to seek such stockholder approval.
For each 162(m) Plan, the Compensation Committee historically established a payment pool based on actual results against apre-established return on total capital employed (“ROTCE”) performance target that was designed to potentially meet the requirements for qualified performance-based compensation under Code Section 162(m). The Compensation Committee has believed that use of ROTCE performance measures align the executives’ interests with those of our stockholders.
For 2017, a minimum ROTCE target had to be met for any payment to be permitted, and any payment pool to be created, under a particular 162(m) Plan. A maximum ROTCE target established the maximum limit, and a maximum payment pool, for awards that can be paid to each covered employee under Code Section 162(m) under a particular 162(m) Plan for the 2017 performance period. ROTCE is calculated as follows:
Earnings Before InterestAfter-Tax after adjustments
divided by
Total Capital Employed after adjustments
Earnings Before InterestAfter-Tax is equal to the sum of interest expense, net of interest income, less 38% for taxes (23% for taxes incurred in a legal entity that is eligible to claim percentage depletion or the applicable foreign tax rate fornon-U.S. entities), plus consolidated net income from continuing operations. Total Capital Employed is equal to (i) the sum of the average debt and average stockholders’ equity less (ii) average consolidated cash. For purposes of the HBB Short-Term Plan and the HBB Long-Term Cash Plan, average debt, stockholders’ equity and consolidated cash are calculated by taking the sum of the balance at the beginning of the year and the balance at the end of each of the next twelve months divided by thirteen. ROTCE is calculated from the NACCO or subsidiary financial statements using average debt, average stockholders’ equity and average cash based on the sum of the balance at the beginning of the year and the balance at the end of each quarter divided by five, which is then adjusted for anynon-recurring or special items.
Following (dollar amounts in thousands) is the calculation of HBB’s 2017 consolidated ROTCE for purposes of determining the maximum payment pool under the HBB Short-Term Plan and HBB Long-Term Cash Plan for 2017:
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Following (dollar amounts in thousands) is the calculation of Hamilton Beach Holding’s post-spin 2017 consolidated ROTCE for purposes of determining the maximum payment pool under the Hamilton Beach Holding Long-Term Equity Plan for 2017:
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The results of KC were excluded from the calculation of Hamilton Beach Holding’s post-spin 2017 consolidated ROTCE. Similar calculations of NACCO’s 2017 consolidated ROTCE were made for purposes of determining the maximum payment pool under the NACCO Short-Term Plan and NACCO Long-Term Equity Plan for 2017.
Adjustments to the ROTCE calculation under our incentive plans are fornon-recurring or special items that were established by the Compensation Committee at the time the ROTCE targets were set, including eliminating from all amounts used in the calculation theafter-tax expenses relating to any acquisition or disposition, whether in progress or successful. For 2017, the ROTCE adjustments related to (i) the effect of the Hamilton Beach Holdingspin-off; (ii) the effect of the Tax Cuts and Jobs Act tax reform legislation; and (iii) theafter-tax impact of the following costs or expenses, only if they were in excess of the amounts included in the 2017 AOPs:
The Compensation Committee determined that these items were incurred in connection with improving our operations and, as a result, these items should not adversely affect incentive payments, as the actions or events were beneficial or were generally not within the employees’ control.
For 2017, final ROTCE results under the 162(m) Plans resulted in the following maximum payment pools being available under the 162(m) Plans:
162(m) Plan | 2017 Consolidated ROTCE Target for 100% Payout (1) | 2017 Adjusted ROTCE Result | 2017 Maximum Permitted Payment (% of Target Award) | |||
NACCO Short-Term Plan | 3.5% | 87.8% | 150.0% | |||
NACCO Long-Term Equity Plan (2) | 3.5% | 87.8% | 350.0% | |||
HBB Short-Term Plan | 8% | 32.3% | 150% | |||
HBB Long-Term Cash Plan | 8% | 32.3% | 150% | |||
Hamilton Beach Holding Long-Term Equity Plan | 3% | 18.6% | 150% |
Operating Profit Over-Ride. The |
The Compensation Committee then exercises “negative discretion” under the 162(m) Plans by considering the results of underlying financialEach NEO is eligible to receive a short-term incentive award and operating performance measures to determine the finala long-term incentive compensation payment for each participant. These underlying financial and operating performance measures are listed in the incentive compensation tables beginning on page 28 and reflect the achievement of specified business goals for 2017 (for those targets that areaward based on a target incentive amount that is equal to a percentage of the AOPs)NEO’s salary midpoint. The final payout, however, may be higher or for future years (for those targets that are basedlower than the target amount, depending on long-term goals).actual Company performance.
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Incentive Compensation Tables. WhenThe following factors should be considered when reviewing the incentive compensation tables beginning on page 28, the following factors should be considered:tables:
• | The Compensation and Human Capital Committee considered the factors described in the Overview above to set the performance criteria and target performance levels for the 2021 incentive compensation awards. The particular performance criteria for 2021 were chosen because they were believed to have a positive correlation with long-term stockholder returns. |
For 2021, the maximum awards under the Short-Term Plan could not exceed 150% of the target award level (or $2,500,000 per participant per year). The applicable incentive compensation plan, performance objectivescash-denominated awards under the Long-Term Equity Plan could not exceed 150% of the target award level (or the greater of $12,000,000 and targets and payout percentages are different for each NEO, depending on his employer.the fair market value of 500,000 shares of Class A Common, determined at the time of payment, per participant per year).
Target awards for each executive are equal to a specified percentage of the executive’s 20172021 salary midpoint, based on the number of Haysalary points assigned to the position and the appropriate level of incentive compensation targets recommended by the Hay GroupKorn Ferry and adopted by the Compensation and Human Capital Committee at that level. The Compensation and Human Capital Committee then increases the target awardsaward amounts under the NACCO Long-Term Equity Plan and the Hamilton Beach Holding Long-Term Equity Plan by 15% to account for the immediately taxable nature of the award.
The Compensation and Human Capital Committee, in its discretion, may decrease or eliminate awards. The Compensation and Human Capital Committee, in its discretion, also may also increase awards and may approve the payment of awards where business unit performance otherwise would otherwise not meet the minimum criteria set for payment of awards, although it rarely does so and, in the case of the NEOs, was prohibited from doing so under the 162(m) Plans for 2017.awards.
Short-Term Plan awards are paid annually in cash. Except for earlier payments in the case of retirement, death, disability and other limited circumstances, HBB Long-Term Cash Plan awards are paid in cash after a three-year holding period. NACCO Long-Term Equity Plan awards are paid annually in a combination of cash and restrictedtransfer-restricted shares of NACCO Class A Common, and Hamilton Beach Holding Long-Term Equity Plan awards are paid annually in a combination of cash and restricted shares of Hamilton Beach Holding Class A Common. Historically, the restricted sharesShares issued to NEOs under the NACCO Long-Term Equity Plan are generally subject to aten-year holding period. Restricted shares issuedperiod to our NEOs underprovide an incentive over the Hamilton Beach Holding Long-Term Equity Plan are also subject to aten-year holding period.period to increase the value of the Company, which in turn increases the value of the stock awards.
All NEO incentive awards are fully vested when granted.issued.
Short-Term Incentive Compensation
Depending on the NEO’s position, the short-term plans wereShort-Term Plan was designed to provide target short-term incentive compensation of between 50%45% and 100%90% of each participant’s 2017NEO’s 2021 salary midpoint. The following table shows the short-term target awards and payouts approved by the Compensation and Human Capital Committee for each NEO for 2017:2021:
TARGET SHORT-TERM COMPENSATION FOR 2021
Named Executive Officer and Short-Term Plan | (A) 2017 Salary Midpoint ($) | (B) Short-Term Plan Target as a % of Salary Midpoint (%) | (C) = (A) x (B) Short-Term Plan Target ($) | (D) Short-Term Plan Payout as % of Target (%) | (E) = (C) x (D) Short-Term Plan Payout ($) | |||||||||||
Gregory H. Trepp (HBB Short-Term Plan) | $672,700 | 70% | $470,890 | 103.7% | $488,313 | |||||||||||
Alfred M. Rankin, Jr.(1) | $400,000 | — | — | — | — | |||||||||||
R. Scott Tidey (HBB Short-Term Plan) | $399,700 | 50% | $199,850 | 103.7% | $207,244 |
Named Executive Officer | (A) 2021 Salary Midpoint | (B) Short-Term Plan Target as a % of Salary Midpoint | (C) = (A) x (B) Short-Term Plan Target ($) | (D) Short-Term Plan Payout as % of Target (%) | (E)= (C) x (D) Short-Term Plan Payout ($) | |||||||||||||||
Gregory H. Trepp | $ | 798,600 | 90 | % | $ | 718,740 | 74.8 | % | $ | 537,618 | ||||||||||
R. Scott Tidey(1) | $ | 490,250 | 55 | % | $ | 269,638 | 74.8 | % | $ | 201,689 | ||||||||||
Michelle O. Mosier | $ | 353,500 | 45 | % | $ | 159,075 | 74.8 | % | $ | 118,988 | ||||||||||
Gregory E. Salyers(2) | $ | 414,700 | 50 | % | $ | 207,350 | 74.8 | % | $ | 155,098 |
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(1) | Mr. Tidey’s salary midpoint and Short-Term Plan target were increased effective March 1, 2021 when he was promoted to Senior Vice President, Consumer Sales and Marketing. The amounts shown above reflect the annualized post-promotion amounts, but a blended amount was used to calculate Mr. Tidey’s actual payout amount shown on the Summary Compensation Table. |
(2) | Mr. |
HBB Short-Term Plan for Messrs. Trepp and Tidey.The following table shows the performance criteria established by the Compensation and Human Capital Committee for 2017 under the HBB Short-Term Plan to determine the final incentive compensation payments for Messrs. Trepp and Tidey.2021 under the Short-Term Plan:
Performance Criteria | (A) Weighting | Performance Target | Performance Result | (B) Achievement Percentage | (A) x (B) Payout Percentage | |||||||||||||||
HBB Adjusted Net Income | 20% | $27,229,063 | $28,060,706 | 124.3 | % | 24.9% | ||||||||||||||
HBB Adjusted Net Sales | 40% | $621,263,867 | $612,915,929 | 87.5 | % | 35.0% | ||||||||||||||
HBB Adjusted ROTCE | 20% | 31.4% | 32.2% | 108.0 | % | 21.6% | ||||||||||||||
HBB Adjusted Operating Profit Margin | 20% | 7.1% | 7.3% | 111.1 | % | 22.2% | ||||||||||||||
Final Payout Percentage – HBB | 103.7% (1) |
Performance Criteria | (A) Weighting | Performance Target | Performance Result | (B) Achievement Percentage | (A)��x (B) Payout Percentage | |||||||||||||||
Adjusted ROTCE (1) | 30 | % | 19.0 | % | 13.1 | % | 26.3 | % | 7.9 | % | ||||||||||
Adjusted Net Sales | 40 | % | $ | 651,867,813 | $ | 656,866,800 | 103.8 | % | 41.5 | % | ||||||||||
Adjusted Operating Profit (2) | 30 | % | $ | 41,394,108 | $ | 33,456,567 | 52.1 | % | 15.6 | % | ||||||||||
Initial Payout | 65.0 | % | ||||||||||||||||||
Positive Payout Adjustment (3) | 9.8 | % | ||||||||||||||||||
Final Payout Percentage (4) | 74.8 | % |
(1) | Return on Total Capital Employed (“ROTCE”) is defined in the Short-Term Plan as (a) Earnings Before Interest After-Tax after adjustments divided by (b) Average Total Capital Employed after adjustments. Earnings Before Interest After-Tax is the sum of net income from continuing operations plus after-tax net interest expense. Average Total Capital Employed is equal to (x) the sum of Average Debt and Average Stockholders’ Equity less (y) Average Cash. Average Debt, Average Stockholders’ Equity and Average Cash are calculated taking the sum of the balance at the start of the year and the balance at the end of each of the next twelve months divided by thirteen. The following amounts show the adjusted 2021 ROTCE for purposes of determining 2021 Short-Term Plan payouts: |
(Amounts in thousands) | ||||
2021 Net Income from Continuing Operations | $ | 21,306 | ||
Plus: Adjustments to Net Income from Continuing Operations | $ | 1,567 | ||
Plus: 2021 Interest Expense, Net | $ | 2,915 | ||
Less: Income Taxes on 2021 Interest Expense | ($729 | ) | ||
Adjusted Earnings Before Interest After-Tax | $ | 25,059 | ||
2021 Average Stockholders’ Equity | $ | 85,392 | ||
2021 Average Debt | $ | 107,784 | ||
Less: 2021 Average Cash | ($1,696 | ) | ||
Plus: Adjustments to Average Total Capital Employed | $ | 298 | ||
Adjusted Average Total Capital Employed | $ | 191,778 | ||
Adjusted ROTCE | 13.1 | % |
Adjustments to Earnings Before Interest After-Tax and Average Total Capital Employed are for non-recurring or special items established by the Compensation and Human Capital Committee at the time the ROTCE target was set. Adjustments related to the after-tax impact of the following types of items as compared to the amounts included in the AOP are made, if applicable:
tangible or intangible asset impairments;
restructuring costs including reduction in force and disposal of a subsidiary;
loss related to, and investment in, a subsidiary accounted for as discontinued operations, held for sale, or in bankruptcy, liquidation or a similar process;
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certain patent infringement and other litigation and settlement costs;
environmental expenses, asset retirement obligations, and early lease termination expenses;
costs relating to valuation allowances against deferred tax assets; and
costs relating to changes in laws and regulations.
(2) | In calculating the final performance results, adjustments were made for various items, consistent with the adjustments listed in Note (1). |
(3) | To maintain employee motivation and continued execution of the Company’s strategic initiatives during 2021, when certain unexpected supply chain-related impacts caused operating results to deviate from plan, the Committee applied an additional |
(4) | Had Adjusted Operating Profit |
NACCO Short-Term Plan for Mr. Rankin.For 2017, incentive compensation for Mr. Rankin under the NACCO Short-Term Plan was based on performance against specific business objectives of HBB and NACoal for the year, as identified in each subsidiary’s short-term plan, adjusted to exclude HBB and KC following thespin-off, which resulted in a final payout percentage of 112.3%. Mr. Rankin’s final payment for 2017 under the NACCO Short-Term Plan waspro-rated based on hispre-spin service with the NACCO-wide group, and he did not participate in the NACCO Short-Term Plan or the HBB Short-Term Plan following thespin-off.
Long-Term Incentive Compensation
In General.The purpose of our long-term incentive compensation plansprogram is to enable senior management employees, including NEOs, to accumulate capital through managerial performance, which the Compensation and Human Capital Committee believes contributes to the future success. Thesuccess of our business. Our long-term incentive plans require a significant long-term commitment on the part of our senior management, employees, and cash withdrawals or(under the Long-Term Cash Plan) and stock sales (under the Long-Term Equity Plan) generally are generally not permitted for a number of years. Rather, the awarded amount is effectively invested in the companyCompany for an extended period which encourages executives to focus on our long-term profitability and which strengthens the tie between stockholders’ and the NEOs’ long-term interests.
Those individual NEOs who have a greater impact on our long-term strategy receive a higher percentage of their compensation as long-term compensation. In general, the Compensation and Human Capital Committee does not consider an NEO’s long-term incentive award for prior periods when determining the value of a long-term incentive award for the current period because it considers those prior awards to represent compensation for past services.
Long-Term Cash Plan. In 2017,2021, only certain executives who performed services at NACCO’s global headquarters, including Mr. Rankin, were entitled to receive equity-based compensation from NACCO. Mr. Rankin received equity-based compensation from Hamilton Beach Holding fornon-U.S. senior management employees participated in the post-spin portion of 2017 that replaced partLong-Term Cash Plan and none of the 2017 target award that wasNEOs participated in the Long-Term Cash Plan. All of the NEOs (other than Ms. Mosier) had outstanding awards previously granted under the NACCO Long-Term Equity Plan.
Depending onCash Plan that were paid in 2021. Awards under the NEO’s position, the long-term plans were designed to provide target long-term incentive compensation between 70% and 250% of the NEO’s 2017 salary midpoint (increased by 15%Long-Term Cash Plan are paid in cash after a three-year holding period, except for participants in the NACCO Long-Term Equity Plan and Hamilton Beach Holding Long-Term Equity Plan as described below). The table below shows the long-term target awards and payouts approvedearlier payments (approved by the Compensation Committee for each NEO for 2017:
Named Executive Officer and Long-Term Plan | (A) 2017 Salary Midpoint ($) | (B) Long-Term Plan Target as a % of Salary Midpoint (%)(1) | (C) = (A) x (B) Long-Term Plan Target ($) | (D) Long-Term Plan Payout as % of Target (%)(2) | (E) = (C) x (D) Cash Denominated Long-Term Plan Payout ($)(3)(4) | (F) Fair Market Value of Long- Term Plan Payout ($)(3)(4) | ||||||||||||||
Gregory H. Trepp (HBB Long-Term Cash Plan) | $672,700 | 150% | $1,009,050 | 92.3% | $931,353 | N/A | ||||||||||||||
Alfred M. Rankin, Jr. (Hamilton Beach Holding Long-Term Equity Plan)(5) | $100,000 | 172.5% | $172,500 | 92.3% | $159,218 | $201,883 | ||||||||||||||
R. Scott Tidey (HBB Long-Term Cash Plan) | $399,700 | 70% | $279,790 | 92.3% | $258,246 | N/A |
The terms of, and 2017 payout calculations for, each long-term plan are described below.
HBB Long-Term Cash Plan for Messrs. TreppHuman Capital Committee) due to retirement, death, disability, and Tidey.HBB Long-Term Cash Plan awards are subject to the following rules:
other limited circumstances. Awards approved by the Compensation Committee are credited to separatesub-accounts established for each participant for each award year. Theyear, and the sub-accounts are credited with a minimum of 2% interest each year. Afteryear-end, whileyear (up to a participant remains actively employed, additional interestmaximum of 14%).
Long-Term Equity Plan. In 2021, all senior executives in the U.S., including our NEOs, participated in the Long-Term Equity Plan which provides awards in the form of 65% transfer-restricted Class A Common and 35% cash to approximate income tax withholding obligations. Class A Common is credited based onthe only type of equity available under the Long-Term Equity Plan. The Company does not sponsor a
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The following table shows the information for awards grantedequity. Shares awarded to NEOs under the HBB Long-Term Cash Plan for 2017:
Performance Criteria | (A) Weighting | Performance Target(1) | Performance Result(1) | (B) Achievement Percentage | (A) x (B) Payout Percentage | |||||||||||||
HBB Adjusted Long-Term Net Sales | 50% | — | — | 109.6% | 54.8% | |||||||||||||
HBB Adjusted Long-Term Operating Profit Margin | 50% | — | — | 75.0% | 37.5% | |||||||||||||
Final Payout Percentage --- HBB | 92.3% (2) |
Long-Term Equity Plans.
We adopted the Hamilton Beach Holding Long-Term Equity Plan effective asgenerally may not be transferred for 10 years following the last day of thespin-off date, and award year. During the Compensation Committee designated Mr. Rankinholding period, the value of the awards is subject to
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change based on the value of the shares. In other words, the award’s value is enhanced as the sole participant invalue of the Hamilton Beach Holdingstock increases (or is reduced as the value of the stock decreases). As a result of annual grants under the Long-Term Equity Plan forand the final three monthscorresponding transfer restrictions, the number of 2017 followingshares an NEO holds increases each year and, consequently, our executives accumulate exposure to long-term Company performance which strongly aligns thespin-off date. Prior to thespin-off, Mr. Rankin participated in the NACCO Long-Term Equity Plan. interests of NEOs with those of other stockholders.
Target awards under the Hamilton Beach Holding Long-Term Equity Plan and the NACCO Long-Term Equity Plan are expressed initially expressed inas a dollar amount equal to a percentage of the participant’s salary midpoint based on the number of Hay points assigned to the executive’s position and the long-term incentive compensation targets for that Haysalary point level recommended by the Hay GroupKorn Ferry (increased by 15%) and adopted by the Compensation and Human Capital Committee. The Compensation Committee then increases these amounts by 15% to account forWhen paid, the immediately taxable naturefull amount of the equity awards.
Approximately 65%award, including the fair market value of the awards are distributed in shares on the date of restricted stock andpayment, is fully taxable to the remaining 35% is distributed in cash to approximate initially the income tax withholding obligation for the stock.participant. The actual number of shares of stock issued to a participant is determined by taking the dollar value of the stock component of the award and dividing it by a formula share price. For this purpose, the formula share price is calculated as the lesser of:
the average closing price of a share of our Class A Common stock on the NYSE at the end of each week during the 2020 calendar year preceding the performance year (or such other previous calendar year as determined by the Compensation and Human Capital Committee no later than the 90th day of the performance period);award year), which price was $15.407; or
the average closing price of a share of our Class A Common stock on the NYSE at the end of each week during the performance period.
However, for 2017 and 2018 awards, a modified formula share2021 award year, which price was established as a result of the impact of the Hamilton Beach Holdingspin-off on the price of NACCO and Hamilton Beach Holding stock following thespin-off. See Note (4) to the Long-Term Incentive Compensation table on page 30 above.$18.334.
Award shares under the long-term equity plans are fully vested when granted, and the participantsParticipants have all of the rights of a stockholder, including the right to vote, and receive dividends upon receipt of the shares. The full amount ofparticipants also have the right to receive dividends that are declared and paid after they receive the award including the fair market value of the restrictedshares. The award shares on the date of grant, is fully taxable to the participant. However, the award sharesissued are subject to transfer restrictions for a periodthat generally lapse the earlier of up to ten(1) 10 years fromafter the last day of the performance period. Historically, award shares issued under the NACCO Long-Term Equity Plan generally have a holding period of up to ten years. Award shares issued under the Hamilton Beach Holding Long-Term Equity Plan have a holding period of(for senior management other than NEOs, three or five or ten years as determined by the Compensation Committee. Theten-year holding period applies to award shares issued to our NEOs. The transfer restrictions lapse earlier in the event of (i)depending on salary point level); (2) the participant’s death or permanent disability; or (ii) a period of(3) three years under the Hamilton Beach Holding Long-Term Equity Plan and a period of five years under the NACCO Long-Term Equity Plan from the date of retirement (or earlier with the approval of the Compensation and Human Capital Committee). The Compensation and Human Capital Committee has the right to release the restrictions at an earlier date, but rarely does so except in the case of the release of a limited number of shares for the payment of educational and medical expenses or home purchases, as permitted under the terms of the plan. No early release requests were maderequested by or granted to the NEOs in 2017.
Any gain participants realize in thelong-run from awards that are issued under the long-term equity plans depends on what management does to drive the financial performance of the company and increase the stock price. This is because the restricted shares that are awarded under the plans generally may not be transferred for a period of up to ten years, as determined by the Compensation Committee, following the last day of the award year. During the holding period, the ultimate value of the shares is subject to change based on the value of the shares of NACCO Class A Common or Hamilton Beach Holding Class A Common, as applicable. The value of the award is enhanced as the value of the stock increases or is reduced as the value of the stock decreases. Thus, the awards provide the executives with an incentive over the holding period to increase the value of the company, which is expected to lead to long-term return to stockholders. The Compensation Committee believes that this encourages our executives to maintain a long-term focus on company profitability, which is also in the Company’s best interests.
As a result of the annual equity grants under the Hamilton Beach Holding Long-Term Equity Plan and the corresponding transfer restrictions, the number of shares of Hamilton Beach Holding Class A Common that an executive holds generally increases each year. Consequently, these executives will continue to have or accumulate exposure to long-term performance notwithstanding any short-term changes in the price of shares of Hamilton Beach Holding Class A Common. This increased exposure strongly aligns the long-term interests of the NEOs with those of other Hamilton Beach Holding stockholders.
NACCO Long-Term Equity Plan award for Mr. Rankin:2021.
For 2017,2021, the incentive compensation for Mr. Rankin under the NACCO Long-Term Equity Plan was based on performance against specific business objectives of HBB and NACoal for the year, as identified in each subsidiary’sdesigned to provide target long-term plan, adjusted to exclude HBB and KC following thespin-off, which resulted in a final payout percentage of 125.8%. Mr. Rankin’s final award under the NACCO Long-Term Equity Plan for 2017 was based on performance against business objectives for the full 2017 performance year, and his payout waspro-rated based on hispre-spin service with the NACCO-wide group.
Hamilton Beach Holding Long-Term Equity Plan award for Mr. Rankin:For 2017 following thespin-off, the incentive compensation for Mr. Rankin underbetween 50% and 160% of the Hamilton Beach Holding Long-Term Equity Plan was basedNEO’s 2021 salary midpoint, depending on performance against specific business objectives of HBB for 2017, as identifiedthe NEO’s position. The table below shows the long-term target awards (including a 15% increase in the HBB Long-Term Cash Plan.
Performance Criteria | (A) Weighting | Performance Target | Performance Result | (B) Achievement Percentage | (A) x (B) Payout Percentage | |||||||||||
HBB Adjusted Long-Term Net Sales(1) | 50% | — | — | 109.6% | 54.8% | |||||||||||
HBB Adjusted Long-Term Operating Profit Margin(1) | 50% | — | — | 75% | 37.5% | |||||||||||
Final Payout Percentage | 92.3% (2) |
Discretionary Restricted Stock Awards.Hamilton Beach Holdingalso maintainstarget percentages to reflect the Hamilton Beach Brands Holding Company Supplemental Executive Long-Term Incentive Bonus Plan, referred to as the “Supplemental Equity Plan,” which gives the Compensation Committee the flexibility to provide additional discretionary equity compensation. The Compensation Committee did not grant any awards under this plan for services performed in 2017.
Treatment of Restricted Stock Awards inSpin-Off. Following the Hamilton Beach Holdingspin-off, the restricted shares of NACCO class A common that were previously issued under NACCO equity plans remained subject to the transfer restrictions on such shares for the time period remaining on the transfer restrictions. In connection with the distribution of shares of Hamilton Beach Holding by NACCO in thespin-off, employees and directors of NACCO who held restricted shares of NACCO Class A Common that were issued under the NACCO equity plans also received restricted shares of Hamilton Beach Holding Class A Common and Hamilton Beach Holding Class B Common that remained subject to the same terms and conditions applicable to the restricted shares of NACCO Class A Common, including, but not limited to the time period remaining on the restrictions on transfer. Those restricted shares of Hamilton Beach Holding common stock received on thespin-off distribution date are governed by the termsimmediately taxable nature of the applicable NACCO plan.
Outstanding Equity Awards at 2017 FiscalYear-End
Messrs. Treppequity awards) and Tidey did not participate in any equity-based compensation plans for 2017. In 2017, Mr. Rankin participated in the NACCO Long-Term Equity Plan for periods prior to thespin-off and in the Hamilton Beach Holding Long-Term Equity Plan for periods following thespin-off. Awards are based onone-year performance periods (or a partial year performance period in the case of Mr. Rankin’s 2017 award under the Hamilton Beach Holding Long-Term Equity Plan) and are immediately vested and paid whenpayouts approved by the Compensation Committee. Therefore, no equity awards remained outstanding atyear-endand Human Capital Committee for each NEO for 2021:
TARGET LONG-TERM COMPENSATION FOR 2021
Named Executive Officer | (A) 2021 Salary Midpoint ($) | (B) Long-Term Plan Target as % of Salary Midpoint (1) | (C)=(A) x (B) Long-Term Plan Target ($)(1) | (D) Long-Term Plan Payout as (%) of Plan Target (2) | (E)=(C) x (D) Total Long- Term Award ($) | (F) Shares Issued (#)(3) | (G) Grant Date Fair Value of Shares Awarded ($)(4) | (H) Fair Value of Long- Term Plan Payout ($)(5) | ||||||||||||||||||||||||
Gregory H. Trepp | $ | 798,600 | 184.0 | % | $ | 1,469,424 | 81.5 | % | $ | 1,197,581 | 50,523 | $ | 733,847 | $ | 1,153,003 | |||||||||||||||||
R. Scott Tidey(6) | $ | 490,250 | 86.3 | % | $ | 422,841 | 81.5 | % | $ | 344,615 | 14,405 | $ | 209,233 | $ | 328,750 | |||||||||||||||||
Michelle O. Mosier | $ | 353,500 | 57.5 | % | $ | 203,263 | 81.5 | % | $ | 165,659 | 6,988 | $ | 101,501 | $ | 159,490 | |||||||||||||||||
Gregory E. Salyers(7) | $ | 414,700 | 69.0 | % | $ | 286,143 | 81.5 | % | $ | 233,207 | 9,029 | $ | 131,146 | $ | 206,069 |
(1) | The target percentages include a 15% increase in the target awards which will be granted to Long-Term Equity Plan participants to account for the immediately taxable nature of the equity awards. This is the amount that is used by the Compensation and Human Capital Committee when analyzing the total compensation of the NEOs. |
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(2) | Refer to table below for detailed calculations of the 2021 payout percentage for the Long-Term Equity Plan. |
(3) | Awards under the Long-Term Equity Plan are initially denominated in dollars. The amounts shown in columns (C) and (E) reflect the dollar-denominated target and actual awards. This is the amount that is used by the Compensation and Human Capital Committee when analyzing the total compensation of the NEOs. The dollar-denominated awards are then paid to the participants in a combination of cash (approximately 35%) and transfer-restricted shares (approximately 65%). The number of shares issued to a participant for an award and shown in Column (F) is determined by taking the dollar amount of the stock component of the award and dividing it by the formula share price (fractional shares are paid in cash). The Long-Term Equity Plan defines the formula share price for 2021 awards as the lower of (a) the average share price of our Class A Common for 2021, which was $18.334, or (b) the average share price of our Class A Common for 2020, which was $15.407. |
(4) | Column (G) represents the grant date fair value of the shares awarded computed in accordance with FASB ASC Topic 718, which was $14.525 per share. This is the same amount that is disclosed in the Summary Compensation Table. |
(5) | The amount shown in column (H) is the sum of (a) the cash distributed, and (b) the amount shown in Column (G). |
(6) | Mr. Tidey’s salary midpoint and Long-Term Equity Plan target were increased effective March 1, 2021 when he was promoted to Senior Vice President, Consumer Sales and Marketing. The amounts shown in columns (A), (B), (C), (D) and (E) above reflect the annualized post-promotion amounts, but a blended amount was used to calculate Mr. Tidey’s actual payout amount shown on the Summary Compensation Table. The amounts in columns (F), (G) and (H) reflect the actual, blended amounts. |
(7) | Mr. Salyers retired as an active employee effective December 1, 2021. The amounts shown in columns (A), (B), (C), (D) and (E) above are the annualized amounts for the entire year. Under the terms of the Long-Term Equity Plan, Mr. Salyers received a pro-rata award for the period of time worked during 2021. The amounts in columns (F), (G) and (H) reflect Mr. Salyers actual, pro-rata amounts. |
The following table shows the fiscal year ended December 31, 2017.performance criteria established by the Compensation and Human Capital Committee to determine final incentive compensation payments for 2021 under the Long-Term Equity Plan:
Performance Criteria | (A) Weighting | Performance Target | Performance Result | (B) Achievement Percentage | (A) x (B) Payout Percentage | |||||||||||||||
Adjusted Net Sales (1) | 30 | % | — | — | 92.2 | % | 27.7 | % | ||||||||||||
Adjusted Operating Profit (1) | 30 | % | — | — | 44.6 | % | 13.4 | % | ||||||||||||
Project Focus List (2) | 40 | % | 100.0 | % | 101.0 | % | 101.0 | % | 40.4 | % | ||||||||||
Final Payout Percentage (3) | 81.5 | % |
(1) | In 2021, the Compensation and Human Capital Committee used three metrics under the Long-Term Equity Plan—net sales, operating profit, and achievement versus a Project Focus List. The use of these metrics reflects our focus on increasing profitability over the long-term. We do not disclose the net sales or operating profit targets or results because they would reveal competitively sensitive financial information to our competitors. The Compensation and Human Capital Committee believed HBB could meet both the sales target and operating profit target, which were established in such a manner that the Compensation and Human Capital Committee believed to be challenging but achievable with extensive effort by HBB employees. In calculating the final operating profit performance results, adjustments were made for various items consistent with the adjustments listed in Note (1) to the Short-Term Plan performance criteria table. |
(2) | We do not disclose the Project Focus List targets or results due to their competitively sensitive nature. Among other items, they identify specific future projects, customers and strategic activities that enhance shareholder value over time. The Compensation and Human Capital Committee believed HBB could meet |
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the Project Focus List targets, which were established in such a manner that the Compensation and Human Capital Committee believed to be challenging but achievable with extensive effort by HBB employees. The Board monitored progress throughout 2021 and the Compensation and Human Capital Committee completed a full year review of progress. For 2021, the Compensation and Human Capital Committee determined that the NEOs earned 101% of the Project Focus List target amounts based on a review of Company achievement against the Project Focus List elements. |
(3) | Had Adjusted Operating Profit not exceeded a specified target for the year, the final payout percentage would be reduced by up to 40% from the amount otherwise determined under the above formula. This target acts as an additional control which reflects the Compensation and Human Capital Committee’s view that full incentive compensation payments should not be paid if HBB does not meet a minimum Operating Profit threshold for the year. Because Adjusted Operating Profit exceeded the target in 2021, no reduction occurred. |
Other Compensation of Named Executive Officers
Discretionary Transfer-Restricted Stock Awards. The Company also maintains the Hamilton Beach Brands Holding Company Supplemental Executive Long-Term Incentive Bonus Plan (“Supplemental Equity Plan”), which gives the Compensation and Human Capital Committee flexibility to award additional discretionary equity compensation. Supplemental Equity Plan awards generally may not be sold or transferred for 10 years. The Compensation and Human Capital Committee did not grant any awards under the Supplemental Equity Plan for services performed in 2021.
Discretionary Cash Bonuses.Bonuses. The Compensation and Human Capital Committee has the authority to grant, and has from time to time has granted, discretionary cash bonuses to employees including the NEOs,(including NEOs), in addition to the incentive compensation described above. The Compensation and Human Capital Committee uses discretionary cash bonuses to reward substantial achievement or superior service to the Company and/or its subsidiaries, particularly when such achievement or service is not reflected in the performance criteria established under the incentive plans. No discretionary cash bonuses were awarded to the NEOs for 20172021 performance.
Retirement Plans.Plans. The material terms of the various retirement plans are described below.below and in the footnotes to the Pension Benefit Table and the Nonqualified Deferred Compensation Table.
Defined Benefit Plan. We no longer provide any defined benefit pensions to any employees, including the NEOs. As of January 1, 1997, the HBB Pension Plan was frozen to new participants and benefit accruals (other than interest credits required by law for frozen cash balance accounts). Prior to 1997, Mr.Messrs. Tidey and Salyers earned a cash balance pension benefit under the Hamilton Beach Brands, Inc. Pension Plan (the “HBB Pension Plan”). Benefitsbenefits under the HBB Pension PlanPlan. Both currently are now frozen, except that frozen cash balance accounts continue to earn interest. Mr. Tidey is 100% vested in histheir pension benefits and may take a distribution of his cash balance benefits atdistributions any time following hisafter termination of employment. Messrs. RankinMr. Trepp and TreppMs. Mosier never participated in any of our frozen pension plans.the HBB Pension Plan.
Mr. Rankin received defined contribution retirement benefits from NACCO prior to thespin-off, but he does not participate in any of our retirement plans. Defined Contribution Plans. We provide Messrs. Trepp and Tidey and our otherall full-time employees (including, the NEOs) with defined contribution retirement benefits. Messrs. Trepp and TideyEmployer contributions are calculated under formulas designed to provide employees with competitive retirement income. In general, the NEOs and other senior management employeesexecutive officers receive the same retirement benefits as all other employees who are employed by the same company. However, the benefits that are provided to thesimilarly-situated employees. NEOs and other executive officers are providedof the Company, however, receive their benefits under a combination of qualifiedthe tax-qualified HBB 401(k) and the non-qualified HBB Excess Plans, while the benefits that are provided to other employees are provided only under
qualified plans.Plan. The HBB Excess Plans providePlan provides certain retirement benefits that would have been provided under the qualified plans,plan, but that cannot be provided due to federal tax law limits andnon-discrimination requirements. IRS compliance testing rules.
The active retirementOur defined contribution plans of NACCO and HBB containedprovide the following three types of benefits for 2017: (i)benefits: (1) employee deferrals; (ii) matching (or substitute matching) benefits ordeferrals of up to 25% of compensation; (2) “safe harbor” employer contributions;nonelective contributions equal to 3% of compensation; and (iii) profit sharing(3) profit-sharing benefits. The compensation that is taken into account under theour plans generally includes base salary,
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overtime and short-term incentive payments,other similar items of compensation required to be reported on a Form W-2 but excludes most other forms of compensation including long-term incentive compensation and other bonus or discretionary payments. However, short-termShort-term incentive payments and other annual bonuses are excluded under the HBB plans, exceptincluded solely for purposes of calculating profit sharingprofit-sharing benefits.
Under the plans, eligible employees other than Mr. Rankin may elect to defer up to 25% of compensation. Mr. Rankin no longer defers any compensation under the NACCO retirement plans. The NEOs received employer matching contributions under the following formulas for 2017:
Eligible employees also receive a profit sharing contribution equal toHBB 401(k) profit-sharing formula is based on a specified percentage of compensation. Mr. Rankin’s formula and the HBB formulacompensation that also taketakes into account the employee’s age and companyCompany performance for the year. If the companyCompany performs well, the amount of the profit sharingprofit-sharing contribution increases. As applied to the NEOs in 2017,2021, the range of profit-sharing contributions attributable to all eligible compensation were: (1) between 5.3% and 13.2% for all of our NEOs; plus (2) 5.7% of eligible compensation in excess of the Social Security Wage Base for the year.
HBB 401(k) profit sharing contributions under each applicable formula were:
Theare subject to a five-year graded vesting schedule and all of our NEOs are each 100% vested in their retirement benefits. Benefits underbenefits due to their tenure with the qualified plans are payable at any time following a termination of employment.Company or their age. Participants have the right to invest their qualified plan account balances among various investment options thatoffered through the HBB 401(k) plan trustee. The HBB 401(k) allows participants who are offered byage 59-1/2 to request withdrawals, as permitted under the plans’ trustee. Participants cantax rules. Benefits otherwise are payable at any time following a termination of employment, and participants may elect various forms of payment including lump sum distributions and installments.
UnderExcess Benefit Plan. The HBB Excess Plan is an excess benefit plan that is exempt from the requirements of Code Section 409A. This means that the employer contributions the Company was unable to contribute to the HBB 401(k) plan on behalf of the NEOs due to tax code and other limitations were instead credited to each person’s accounts under the HBB Excess Plans:Plan, generally consisting of excess employer nonelective and other profit sharing contributions. Additionally, under the HBB Excess Plan:
except for amounts attributable to excess profit sharing benefits, account balances are credited with interest during the year based on the rate of return of the Vanguard RSTRetirement Savings Trust fixed income fund, which is one of thean investment fundsfund under the HBB 401(k), the qualified plansplan (14% maximum); however, no interest is credited on excess profit sharing benefits;
amounts credited under the Excess Plans each year generally are paid prior toby March 15th of the following year to avoid regulatory complexities and eliminate the risk ofnon-payment to the executives based on the unfunded nature of the HBB Excess Plans;Plan; and
the amounts credited under the Excess Plans (other than the portion of the employee deferrals that are in excess of the amount needed to obtain a full employer matching contribution) are increased by 15% to reflect the immediately taxable nature of the payments.
Mr. Rankin is also eligible for benefits under certain frozennon-qualified deferred compensation plans of NACCO, as described in more detail in our Registration Statement on FormS-1 filed with the SEC on September 26, 2017. Certainsub-accounts under those plans are credited with interest under a ROTCE-based formula, with a minimum of 2% and a maximum of 14%Other Benefits. The amount of the annual interest credits, increased by 15% to reflect the immediately taxable nature of the payments, is paid by NACCO before March 15th of the following year.
Other Benefits.All salaried U.S. employees, including the NEOs, (other than Mr. Rankin, who participates in a more limited set of welfare benefit plans), generally participate in a variety of health and welfare benefit plans that are designed to enable us to attract and retain our workforce in a competitive marketplace.
Perquisites and Other Personal Benefits.Benefits. Although we provide limited perquisites and other personal benefitsin the form of cash payments to certain executives,NEOs, we do not believe these perquisites and other personal benefits constitute a material component of the executive officer’s compensation package. The modest amount of cash paid to the NEOs in lieu of perquisites in 20172021 is separately disclosed in the table on page 22 and the limitednon-cash perquisites are disclosed in Note (5) to the SummaryTotal Target Compensation Table on page 19.table.
No Individual Employment or Severance Agreements.AgreementsNone of the NEOs has. During 2021, no NEO had an employment agreement that provides for a fixed period of employment, fixed positionsposition or duties, or for a fixed base salary, or actual, or target incentive bonus.
Upon an NEO’s termination of employment for any reason, the NEOs (and allNEO (as other employees) are entitled to:will receive:
amounts earned during theirthe term of employment, including earned but unpaid salary and accrued but unused vacation and holiday pay; and
benefits that are provided under the retirement plans, incentive plans, and the HBB Excess Plans that are further described in this Proxy Statement.Plan.
There are no individual severance contracts with any of the NEOs.NEO. Upon termination of employment in certain circumstances and in accordance with the terms of the plans, the NEOs are only entitled to severance pay and continuation of certain health benefits provided under
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broad-based severance pay plans that generally are generally available to all salaried employees that provide benefits for a stated period of time based on the length of service, with various maximum time periods. The Compensation and Human Capital Committee will consider the facts and circumstances of aan NEO’s separation to determine whether any material severance payment that is in excess of the amount the NEO is otherwise entitled to receive under the broad-based severance plans is appropriate.
Limited Change in Control Benefits for All Employees.EmployeesIn order to. To advance the compensation objective of attracting, retaining and motivating qualified management, the Compensation and Human Capital Committee believes that it is appropriate to provide limited change in control protections to the NEOs and other employees. NEOs have the same protections as other senior management employees. In the event of a change in control, employees are provided:
the payment of accrued benefits under certain of our retirement plans;
the payment of apro-rata target award under the current year’s incentive plans.
Importantly, these change in control provisions are not employment agreements and do not guarantee employment for any of the executives for any period of time. In addition, none of theno change in control paymentspayment will be “grossed up” for any excise taxestax imposed on the executivesan executive as a result of the receipt of payments upon a change in control.
Tax Implications
Deductibility of Executive Compensation. Section 162(m) of the Code (“Section 162(m)”) generally provides that, subject to certain exceptions, we may not deduct compensation of more than $1 million in any taxable year that is paid to certain current or former executive officers.
While the Compensation and Human Capital Committee may consider in very general terms the deductibility of the compensation it awards, the Committee retains the flexibility to award compensation that is consistent with our objectives and philosophy even if it does not qualify for a tax deduction. The Hamilton Beach Holdingspin-off didCompensation and Human Capital Committee believes that the tax deduction limitation should not compromise the ability to design and maintain executive compensation arrangements that attract and retain the executive talent the Company needs to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.
Other Policies and Considerations
Assessment of Risks in our Compensation Program. As part of its oversight, the Compensation and Human Capital Committee considers the impact of the Company’s compensation program on the Company’s risk profile. The Committee directed management to undertake an annual detailed risk assessment of our compensation programs. Each year, management reviews our pay practices and incentive programs to identify potential risks to the Company. Our pay philosophy provides an effective balance of base salary and incentive compensation; short-term and long-term performance measures; and financial and non-financial performance measures; and allows for use of Compensation and Human Capital Committee discretion. Further, the Company has policies to mitigate compensation-related risk, including lengthy holding periods for long-term equity awards granted to our NEOs; stated payment caps; insider trading prohibitions; independent Compensation and Human Capital Committee oversight; and, as of January 1, 2021, a new compensation recoupment policy. The Compensation and Human Capital Committee agreed with the findings of management’s assessment for 2021 that (1) our compensation programs are designed effectively to help mitigate conduct that is inconsistent with building long-term value of the Company and (2) the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Compensation Recoupment Policy. Pursuant to our Compensation Recoupment Policy adopted effective January 1, 2021, upon recommendation of the Compensation and Human Capital Committee, the Board may recoup all or part of certain incentive compensation paid to an executive in the event of a material restatement of the Company’s financial results.
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Stock Ownership Guidelines. While the Company encourages the executive officers to own shares of Class A Common, it does not have any formal policy requiring the executive officers to own any specified amount of Class A Common. However, the executive officers generally must hold the shares of Class A Common granted under the Long-Term Equity Plan for 10 years, which can result in the executive officers holding a significant accumulation of Class A Common during their careers.
Role of Executive Officers in Compensation Decisions. Our management, specifically the President and CEO of the Company, reviews our goals and objectives relevant to the compensation of executive officers. Mr. Trepp annually reviews the performance of each executive officer and makes recommendations based on those reviews to the Compensation and Human Capital Committee, including recommendations regarding salary adjustment and incentive compensation awards. The Compensation and Human Capital Committee separately reviews Mr. Trepp’s performance. In addition to CEO recommendations, the Compensation and Human Capital Committee considers recommendations from its independent compensation consultant (Korn Ferry) who provides advice based on an analysis of similar positions at a broad range of domestic industries and on its understanding of our policies and objectives. The Compensation and Human Capital Committee may exercise its discretion in modifying any recommended adjustments or awards to executive officers. After considering all recommendations, the Compensation and Human Capital Committee determines the base salary and incentive compensation levels for the executive officers, including each NEO, and any additional discretionary payments.
“Say on Pay” Stockholder Vote
When setting executive compensation for 2022, the Compensation and Human Capital Committee took into account the results of the stockholder advisory vote to approve NEO compensation that occurred at our 2021 annual meeting of stockholders. At that meeting, we received strong support for our NEO compensation program, with approximately 99% of the votes cast approving our NEO compensation. The Board values the views of our stockholders and has determined that an annual advisory say-on-pay vote is a sound governance practice. While our compensation programs are designed to promote a long-term connection between pay and performance, our Board believes an annual vote allows stockholders to provide immediate and direct input on our executive compensation plans. We will request another stockholder advisory vote on NEO compensation at our 2023 annual meeting.
The Compensation and Human Capital Committee has reviewed and discussed the Compensation Discussion with the Company’s management. Based on these reviews and discussions, the Compensation and Human Capital Committee recommended to the Board that the Compensation Discussion be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.
JAMES A. RATNER, Chairman | ||||
MARK R. BELGYA | JOHN P. JUMPER | DENNIS W. LABARRE | ||
MICHAEL S. MILLER |
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Compensation Tables
The following tables disclose the compensation of our NEOs for services rendered in 2021.
The following table sets forth NEO compensation in 2020 and 2021:
SUMMARY COMPENSATION TABLE
For Fiscal Year Ended December 31, 2021
Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||
Gregory H. Trepp, President and Chief Executive Officer | ||||||||||||||||||||||||||||
2021 | $ | 789,992 | $ | 733,847 | $ | 956,775 | $ | 22,277 | $ | 195,920 | $ | 2,698,811 | ||||||||||||||||
2020 | $ | 764,992 | $ | 974,199 | $ | 1,115,844 | $ | 85,733 | $ | 178,386 | $ | 3,119,154 | ||||||||||||||||
R. Scott Tidey, Senior Vice President, Consumer Sales & Marketing of HBB | ||||||||||||||||||||||||||||
2021 | $ | 499,680 | $ | 209,233 | $ | 316,566 | $ | 8,818 | $ | 94,293 | $ | 1,128,590 | ||||||||||||||||
2020 | $ | 461,085 | $ | 258,738 | $ | 328,714 | $ | 26,718 | $ | 87,667 | $ | 1,162,923 | ||||||||||||||||
Michelle O. Mosier, Senior Vice President, Chief Financial Officer and Treasurer(6) | 2021 | $ | 411,593 | $ | 101,501 | $ | 176,980 | $ | 6,776 | $ | 75,218 | $ | 772,068 | |||||||||||||||
Gregory E. Salyers, Former Senior Vice President, Global Operations(7) | ||||||||||||||||||||||||||||
2021 | $ | 390,708 | $ | 131,146 | $ | 217,276 | $ | 6,305 | $ | 85,590 | $ | 831,025 | ||||||||||||||||
2020 | $ | 408,169 | $ | 189,910 | $ | 279,264 | $ | 22,586 | $ | 86,636 | $ | 986,585 |
(1) | The amounts reported under the “Salary” column include both base salary and the perquisite allowance. As previously mentioned, Hamilton Beach provides a defined limited cash perquisite allowance to each senior management employee based on salary point levels, pursuant to advice received from Korn Ferry. These amounts are reported above in the table entitled “Base Salary for 2021.” |
(2) | The amounts reported in the “Stock Awards” column represent the grant date fair value of the shares of stock that were granted to NEOs for awards under the Long-Term Equity Plan. The grant date fair value of the shares awarded to each NEO for 2021 was determined in accordance with FASB ASC Topic 718. See Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the years ended December 31, 2021 and December 31, 2020 for more information regarding the accounting treatment for our equity awards. Refer to the table under “Long-Term Incentive Compensation” for detailed information regarding the target long-term awards, as well as the cash-denominated long-term award payouts, under the Long-Term Equity Plan. |
(3) | The amounts listed are comprised of (a) the cash payments under the Short-Term Plan, and (b) the cash portion (approximately 35%) of the awards to the NEOs under the Long-Term Equity Plan. |
(4) | Amounts listed in this column reflect only the interest that is in excess of 120% of the long-term applicable federal rate, compounded monthly, referred to as “Above-Market Interest,” that was credited to the NEO’s accounts under (a) the Long-Term Cash Plan, and (b) the HBB Excess Plan. We have omitted the changes in the actuarial present value of accumulated benefits under the frozen HBB Pension Plan for the NEOs, which we are not required to report due to the different disclosure rules that apply to emerging growth companies. |
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(5) | All other compensation earned during 2021 for each of the NEOs is as follows: |
Gregory H. Trepp | R. Scott Tidey | Michelle O. Mosier | Gregory E. Salyers | |||||||||||||
Employer Qualified Profit Sharing Contributions | $ | 11,105 | $ | 11,105 | $ | 11,105 | $ | 11,105 | ||||||||
Employer Excess Plan Profit Sharing Contributions | $ | 156,292 | $ | 66,584 | $ | 48,570 | $ | 60,469 | ||||||||
Other Qualified Employer Retirement Contributions | $ | 8,700 | $ | 8,700 | $ | 8,700 | $ | 8,700 | ||||||||
Other Excess Plan Employer Retirement Contributions | $ | 15,000 | $ | 6,290 | $ | 3,647 | $ | 2,582 | ||||||||
Employer Paid Life Insurance Premiums | $ | 1,782 | $ | 1,199 | $ | 1,046 | $ | 1,069 | ||||||||
Other | $ | 3,041 | $ | 415 | $ | 2,150 | $ | 1,665 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 195,920 | $ | 94,293 | $ | 75,218 | $ | 85,590 | ||||||||
|
|
|
|
|
|
|
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Amounts listed in “Other” include (a) employer-paid premiums for the NEOs’ personal excess liability insurance, (b) executive travel accident insurance premiums and wellness subsidies, and (c) the value of service award gift cards.
(6) Ms. Mosier was not an NEO for 2020.
(7) Mr. Salyers retired as an active employee effective December 1, 2021.
The following table sets forth information concerning all awards granted to the NEOs for 2021 and estimated payouts under our incentive plans.
GRANTS OF PLAN-BASED AWARDS
For Fiscal Year Ended December 31, 2021
(A) Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | (B) Estimated Possible Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value of Stock and Option Awards ($) (2) | ||||||||||||||||||||||||||
Name | Grant Date | Plan Name (1) | Target ($) | Maximum ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||
Gregory H. Trepp | N/A | Short-Term Plan | (3) | $ | 718,740 | $ | 1,078,110 | N/A | N/A | N/A | ||||||||||||||||||
12/31/2021 | Long-Term | (4) | $ | 514,298 | $ | 771,448 | $ | 955,126 | $ | 1,432,688 | $ | 733,847 | ||||||||||||||||
Equity Plan | ||||||||||||||||||||||||||||
R. Scott Tidey | N/A | Short-Term Plan | (3) | $ | 269,638 | $ | 404,456 | N/A | N/A | N/A | ||||||||||||||||||
12/31/2021 | Long-Term | (4) | $ | 147,994 | $ | 221,991 | $ | 274,846 | $ | 412,270 | $ | 209,233 | ||||||||||||||||
Equity Plan | ||||||||||||||||||||||||||||
Michelle O. Mosier | N/A | Short-Term Plan | (3) | $ | 159,075 | $ | 238,613 | N/A | N/A | N/A | ||||||||||||||||||
12/31/2021 | Long-Term | (4) | $ | 71,142 | $ | 106,713 | $ | 132,121 | $ | 198,181 | $ | 101,501 | ||||||||||||||||
Equity Plan | ||||||||||||||||||||||||||||
Gregory E. Salyers | N/A | Short-Term Plan | (3) | $ | 207,350 | $ | 311,025 | N/A | N/A | N/A | ||||||||||||||||||
12/31/2021 | Long-Term | (4) | $ | 100,150 | $ | 150,225 | $ | 185,993 | $ | 278,989 | $ | 131,146 | ||||||||||||||||
Equity Plan |
(1) | There are no minimum or threshold payouts under any of our incentive plans. |
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(2) | These amounts reflect the grant date fair value of the shares, determined in accordance with FASB ASC Topic 718. These amounts also are reflected in the Summary Compensation Table. |
(3) | Awards under the Short-Term Plan are based on a one-year performance period that consists solely of the 2021 calendar year. Awards are paid in cash (not equity) as soon as practicable after approval by the Compensation and Human Capital Committee. There is no post-2021 payout opportunity under this plan. Amounts disclosed are the target and maximum awards established by the Compensation and Human Capital Committee in early 2021. The amounts the NEOs actually received after the final payout are disclosed in the Summary Compensation Table. |
(4) | Awards under the Long-Term Equity Plan are based on a one-year performance period that consists solely of the 2021 calendar year. Awards are paid, partially in transfer-restricted stock (approximately 65%) and partially in cash (approximately 35%), as soon as practicable after approval by the Compensation and Human Capital Committee. Therefore, there is no post-2021 payout opportunity under the plan. Stock awarded under the Long-Term Equity Plan generally may not be sold or transferred for 10 years, beginning on the last day of the performance period. The dollar amounts disclosed are the dollar values of the target and maximum awards established by the Compensation and Human Capital Committee in early 2021. These amounts include a 15% increase to account for the immediate taxation of the equity awards using a 150% maximum award value. The 35% cash portion of the award is listed in column (A) of this table. The 65% stock portion of the award is listed in column (B). The amounts the NEOs actually received are disclosed in the Summary Compensation Table. |
In 2021 all U.S.-based salaried employees in salary grades 17 and above, including the NEOs, participated in the Long-Term Equity Plan. These employees also are eligible to receive discretionary equity awards under the Supplemental Equity Plan. All awards are based on one-year performance periods and are immediately vested and paid when approved by the Compensation and Human Capital Committee. Therefore, no equity awards remain outstanding for the year ended December 31, 2021.
Awards under the Long-Term Equity Plan are paid partially in cash and partially in the form of fully vested shares of stock subject to transfer restrictions generally for a period of 10 years for NEOs, from the last day of the performance period. Refer to the section above entitled “Long-Term Incentive Compensation” for additional information regarding our equity awards.
The following table reflects the stock awards issued under the Long-Term Equity Plan for 2021 performance. No stock awards were issued under the Supplemental Equity Plan for services in 2021.
OPTION EXERCISES AND STOCK VESTED
For Fiscal Year Ended December 31, 2021
Name | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) (2) | ||||||
Gregory H. Trepp | 50,523 | $ | 552,216 | |||||
R. Scott Tidey | 14,405 | $ | 157,447 | |||||
Michelle O. Mosier | 6,988 | $ | 76,379 | |||||
Gregory E. Salyers | 9,029 | $ | 98,687 |
(1) | The amounts shown in this table represent the number of shares received by the NEOs. Their awards were granted pursuant to a net exercise, whereby if the amount of the tax liability associated with the stock portion of the awards exceeds the cash awards under the Long-Term Equity Plan then a portion of the shares issued on the date of issuance would be subject to immediate surrender to the Company to pay taxes associated with the stock portion of the awards. |
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(2) | The value realized on vesting is the average of the high and low price of Class A Common (which average price was $10.93) on the March 16, 2022 payout date under the Long-Term Equity Plan for the 2021 awards, which also is the vesting date, multiplied by the number of award shares received. |
Stock Options
The Company does not sponsor and never sponsored a stock option plan.
The following table sets forth information concerning defined benefit pension benefits earned by, and paid to, the NEOs under the frozen HBB Pension Plan:
PENSION BENEFITS
For Fiscal Year Ended December 31, 2021
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | ||||||||||
Gregory H. Trepp | N/A (2) | N/A | N/A | N/A | ||||||||||
R. Scott Tidey (3) | HBB Pension Plan | 3 | $ | 16,524 | $ | 0 | ||||||||
Michelle O. Mosier | N/A (2) | N/A | N/A | N/A | ||||||||||
Gregory E. Salyers (4) | HBB Pension Plan | 7.67 | $ | 46,752 | $ | 0 |
(1) | The amounts shown above were determined as of December 31, 2021, which is the measurement date for pension benefits used in our financial statements. In determining the amounts shown, the following material assumptions were used: |
a discount rate of 2.46%;
the RP2022 mortality table, projected generationally with scale MP2021 and no adjustments; and
the assumed retirement age is the earlier of (a) the plan’s stated normal retirement age or (b) the earliest age at which retirement benefits are available without reduction for age, and no pre-retirement decrement.
(2) | Mr. Trepp and Ms. Mosier never participated in our frozen HBB Pension Plan. |
(3) | Mr. Tidey earned a benefit under the cash balance portion of the HBB Pension Plan from January 1, 1994 through December 31, 1996, after which all cash benefits were frozen. His cash balance benefits were computed based on a percentage of pensionable earnings, using an age-based formula. His frozen cash balance account balance continues to earn interest credits based on the one-year U.S. Treasury Bill rate as of the last business day of the prior plan year plus 1%, up to maximum rate of 12%. Mr. Tidey is 100% vested in his cash balance benefits and may take a distribution of his benefits at any time following his termination of employment. Pensionable earnings included only base salary, cash in lieu of perquisites and short-term incentive compensation payments. Available forms of payment include annuities and a lump sum. As he is age 57, Mr. Tidey may commence distribution of his entire pension at any time following his termination of employment. |
(4) | Mr. Salyers earned a combination of traditional defined benefits, as well as the cash balance benefit described above under the HBB Pension Plan. His traditional pension was computed under the following formula: 1.5% of “final average pay” multiplied by applicable years of credited service, reduced by a portion of his Social Security benefits. “Final average pay” is his average annual earnings for the highest five years during the last 10 years prior to the date on which traditional defined benefits were frozen. |
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Mr. Salyers is 100% vested in his pension benefits. As he is over age 55, Mr. Salyers may commence distribution of his entire pension at any time following his termination of employment, although his traditional benefits will be reduced for early commencement prior to age 65. |
Nonqualified Deferred Compensation Benefits
Refer to the sections above entitled “Retirement Plans” and “Long-Term Incentive Compensation” for a detailed description of our nonqualified deferred compensation plans. The following table sets forth information concerning benefits earned by, and paid to, the NEOs under our HBB Excess Plan and Long-Term Cash Plan:
NONQUALIFIED DEFERRED COMPENSATION
For Fiscal Year Ended December 31, 2021
Name | Applicable Plan | Executive Contributions in 2021 ($) (1) | Employer Contributions in 2021 ($) (2) | Aggregate Earnings in 2021 ($) (2) | Aggregate Withdrawals/ Distributions in 2021 ($) | Aggregate Balance at December 31, 2021 ($) (3) | ||||||||||||||||
Gregory H. Trepp | HBB Excess Plan | N/A | $ | 171,292 | $ | 25,711 | $ | 175,234 | $ | 197,003 | ||||||||||||
Long-Term Cash Plan (4) | N/A | $ | 0 | $ | 85,446 | $ | 1,149,690 | $ | 0 | |||||||||||||
R. Scott Tidey | HBB Excess Plan | N/A | $ | 72,874 | $ | 10,937 | $ | 73,738 | $ | 83,811 | ||||||||||||
Long-Term Cash Plan (4) | N/A | $ | 0 | $ | 23,693 | $ | 368,016 | $ | 0 | |||||||||||||
Michelle O. Mosier | HBB Excess Plan | N/A | $ | 52,217 | $ | 7,840 | $ | 51,221 | $ | 60,057 | ||||||||||||
Long-Term Cash Plan (4) | N/A | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Gregory E. Salyers | HBB Excess Plan | N/A | $ | 63,051 | $ | 9,463 | $ | 73,071 | $ | 72,514 | ||||||||||||
Long-Term Cash Plan (4) | N/A | $ | 0 | $ | 18,398 | $ | 261,963 | $ | 0 |
(1) | Neither the HBB Excess Plan nor the Long-Term Cash Plan permits employee contributions. |
(2) | The employer contributions shown in this table are also reflected in the “All Other Compensation” column of the 2021 Summary Compensation Table. The “above-market earnings” portion (in other words, the interest earned in excess of 120% of the long-term applicable federal rate) of the amounts shown in the Aggregate Earnings column of this table also are included in the Nonqualified Deferred Compensation Earnings column of the 2021 Summary Compensation Table. |
(3) | Because the entire account balance under the HBB Excess Plan is paid out each year, no portion of the account balances under that plan as of December 31, 2021 were previously reported in prior Summary Compensation Tables. |
(4) | Effective January 1, 2018, the Long-Term Cash Plan closed to U.S. employees, including the NEOs, although certain NEOs had outstanding awards previously granted before 2018. Except for earlier payments in the case of retirement, death, disability and other limited circumstances, Long-Term Cash Plan awards are paid in cash after a three-year holding period. Awards are credited to separate sub-accounts for each award year. The sub-accounts are credited annually with 2% interest. After year-end, while a participant remains actively employed, additional interest is credited based on a formula that takes into account the final payout percentage under the Long-Term Cash Plan for the year, with a maximum of 14%. |
Potential Payments Upon Termination/Change In Control
As previously discussed above in the section entitled “Limited Change in Control Benefits for All Employees,” the following change in control provisions apply to NEOs during their service:
the account balances as of the date of the change in control in the Long-Term Cash Plan will be paid in a lump sum payment in the event of a change in control of the Company or the participant’s employer; and
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participants also will receive a pro-rated target award for the year of the change in control under the incentive plans.
A “change in control” for purposes of these plans generally consists of any of the following provided that the event otherwise qualifies as a change in control under the regulations issued pursuant to Code Section 409A:
an acquisition of more than 50% of the voting securities of the Company or the voting securities of the subsidiary (for those employees of that particular subsidiary) other than acquisitions directly from the Company or the subsidiary, as applicable involving: (1) any employee benefit plan; (2) the Company; (3) the applicable subsidiary or one of its affiliates; or (4) the parties to the stockholders’ agreement discussed under the section entitled “Amount and Nature of Beneficial Ownership;”
the members of the Company’s current Board (and their approved successors) ceasing to constitute a majority of the Company’s Board or, if applicable, the board of directors of a successor of the Company;
for those plans that cover the employees of a subsidiary, the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the subsidiary and its affiliates, excluding a business combination pursuant to which the individuals and entities who beneficially owned, directly or indirectly, more than 50% of the combined voting power of the applicable entity immediately prior to such business combination continue to hold at least 50% of the voting securities of the successor; and
for all plans, the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation, or other transaction involving the Company excluding, however, a business combination pursuant to which both of the following apply: (1) the individuals and entities who beneficially owned, directly or indirectly, more than 50% of the combined voting power of the Company immediately prior to such business combination continue to hold at least 50% of the voting securities of the successor; and (2) at the time of the execution of the initial agreement, or of the action of the Board providing such business combination, at least a majority of the members of the Board were incumbent directors.
For purposes of calculating the amount of any potential payments to the continuing NEOs under the table provided below, we assumed that a change in control occurred on December 31, 2021. We believe that the remaining assumptions listed below, which are necessary to produce these estimates, are reasonable individually and in the aggregate. There can be no assurance, however, that a change in control would produce the same or similar results as those described if it occurs on any other date or if any assumption is not correct in fact.
POTENTIAL PAYMENTS UPON TERMINATION/CHANGE IN CONTROL
For Fiscal Year Ended December 31, 2021
Name | Estimated Total Value of Payments Based on Incentive Plan Award Targets in Year of Change in Control ($) (1) (2) | |||
Gregory H. Trepp | $ | 2,188,164 | ||
R. Scott Tidey | $ | 692,478 | ||
Michelle O. Mosier | $ | 362,338 |
(1) | This column reflects the award targets under the 2021 incentive plans for the NEOs. Under the change in control provisions of the plans, the NEOs would be entitled to receive their award targets for 2021 if a change in control had occurred on December 31, 2021. Awards under the Long-Term Equity Plan are denominated in dollars and the amounts shown in the above-table reflect the dollar-denominated 2021 target awards, which includes the 15% increase to account for the immediate taxation of Long-Term Equity Plan |
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awards. As described in Note 4 to the Grants of Plan-Based Awards Table, the NEOs would receive approximately 35% of the value of the award in cash, and the remainder in shares of transfer-restricted Class A Common. |
(2) | Under the change in control provisions of the Long-Term Cash Plan, the NEOs would be entitled to accelerate payment of their account balances under that plan upon a change in control; however, none of the NEOs had any remaining account balance under the Long-Term Cash Plan on December 31, 2021. Final payments to the participating NEOs under the Long-Term Cash Plan, earned for services performed in years prior to 2018, were paid earlier in 2021. |
Named Executive Officer Departure
On December 1, 2021, Mr. Salyers retired as an active employee. In connection with Mr. Salyers’ retirement, Mr. Salyers received already-vested retirement benefits totaling an estimated $55,266.43 in accordance with the existing terms of the governing compensation and benefit program documents, as described further in the Compensation Disclosure and above under the Nonqualified Deferred Compensation Benefits and Defined Benefit Pension Plans disclosures.
As an emerging growth company, the Company is exempt from the requirement to disclose the ratio of our CEO’s annual total compensation to that of our median employee. We, nevertheless, have chosen to provide the ratio of Mr. Trepp’s annual total compensation to the annual total compensation of our median employee (“Median Employee”) for 2021.
We chose a median employee in connection with last year’s proxy statement. For purposes of this year’s disclosure relating to 2021 pay, we did not repeat the process described below for selecting the new Median Employee because there has been no change in our employee population or employee compensation arrangements that we reasonably believe would significantly impact our pay ratio disclosure. As a result, under SEC rules, we are allowed to again use last year’s median employee for purposes of this year’s pay ratio calculation and disclosure. However, due to the departure of last year’s median employee during 2021, we have selected a different individual from the group identified last year to serve as this year’s Median Employee. This year’s Median Employee was the employee listed immediately below last year’s median employee in the group of employees produced by last year’s analysis and process. Our analysis in last year’s process included 827 individuals employed at any time during 2020 by the Company and its subsidiaries, excluding Mr. Trepp, in full-time, part-time, and seasonal roles (including individuals working outside of the United States).
We chose December 31, 2020 as the date for identifying the Median Employee (“Determination Date”) and used taxable wages as our consistently applied compensation measure. We reviewed total compensation for the period beginning January 1, 2020 and ending December 31, 2020. We did not make any assumptions, adjustments, or estimates with respect to total taxable compensation and did not annualize compensation for any of the employees who were not employed for all of 2020. Notwithstanding this, our incentive compensation plans or retirement plans.
Executive Compensation Program for 2018
Our executive compensation program for 2018 will be structureddisclosure is a reasonable estimate that involves a degree of imprecision although we calculated it in a manner similar toconsistent with Item 402(u) of Regulation S-K.
We calculated annual total compensation for 2021 for the new Median Employee (a Hamilton Beach Brands, Inc. employee) using the same methodology we use for our post-spin 2017 program. The following changes have been made to our program for 2018:
For 2018, the Compensation Committee designated eligible senior management employeesNEOs as set forth in the U.S., including the NEOs,2021 Summary Compensation Table. The Median Employee’s annual total compensation was $63,704. Mr. Trepp served as participantsour President and CEO throughout 2021 and, as reflected in the Hamilton Beach Holding Long-Term Equity Plan, beginning with2021 Summary Compensation Table, his total compensation in 2021 was $2,698,811. Based on this, our estimate of the 2018 performance year. For 2018, eligible senior management employees outsideratio of CEO compensation to the U.S. will remain participants in the HBB Long-Term Cash Plan.
Historically, certain performance targets for HBB long-term incentive awards were based on long-term goals that correlated with NACCO’s five-year long-range business plan. Beginning in 2018, certaincompensation of our performance targetsMedian Employee for long-term incentive awards will be based on a three-year (20182021 was 42 to 2020) long-range business plan.1.
The Hay Group, upon request from the Compensation Committee, evaluated and recommended changes to Mr. Trepp’s compensation in connection with thespin-off in 2017. Based on that review, the Compensation Committee approved an increase in Mr. Trepp’s salary from $644,344 to $700,000 effective upon thespin-off, and approved the following additional changes effective January 1, 2018: (i) base salary midpoint increase from $672,700 to $700,000, (ii) short-term incentive target percentage increase from 70% to 90% of salary midpoint, and (iii) long-term incentive target percentage increase from 150% to 170% of salary midpoint.
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PART IV - OTHER IMPORTANT INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership of such securities with the SEC and the NYSE. Officers, directors and greater than ten percent beneficial owners are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file.
Based upon the review of the copies of Section 16(a) forms received by us, and upon written representations from reporting persons concerning the necessity of filing a Form 5 Annual Statement of Changes in Beneficial Ownership, we believe that, during 2017, all filing requirements applicable for reporting persons were met.
EQUITY COMPENSATION PLAN INFORMATIONEquity Compensation Plan Information
The following table sets forth the information as of December 31, 20172021 with respect to our compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance:
Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | ||||||||||||
Class A Shares: | (a) | (b) | (c) | (a | ) | (b | ) | (c | ) | |||||||||
Equity compensation plans approved by security holders | 0 | N/A | 950,000 | 0 | N/A | 656,499 | (1) | |||||||||||
Equity compensation plans not approved by security holders | 0 | N/A | 0 | 0 | N/A | 0 | ||||||||||||
|
|
|
| |||||||||||||||
Total | 0 | N/A | 950,000 | 0 | N/A | 656,499 | (1) | |||||||||||
|
|
|
| |||||||||||||||
Class B Shares: | ||||||||||||||||||
Equity compensation plans approved by security holders | 0 | N/A | 0 | 0 | N/A | 0 | ||||||||||||
Equity compensation plans not approved by security holders | 0 | N/A | 0 | 0 | N/A | 0 | ||||||||||||
|
|
|
| |||||||||||||||
Total | 0 | N/A | 0 | 0 | N/A | 0 | ||||||||||||
|
|
|
|
(1) | The share amount in column (c) includes 283,869 shares available under our Non-Employee Directors Plan, 100,000 shares available under our Supplemental Equity Plan, and 272,630 shares available under our Long-Term Equity Plan. Of these shares, 17,646 shares were issued to directors in January 2022, and 150,062 shares were issued under the Long-Term Equity Plan in March 2022. |
BENEFICIAL OWNERSHIP OF CLASSBeneficial Ownership Of Class A COMMON AND CLASSCommon And Class B COMMON STOCKCommon Stock
Set forth in the following tables is the indicated information as of February 28, 2018March 18, 2022 (except as otherwise indicated) with respect to (1) each person who is known to us to be the beneficial owner of more than five percent of the Class A Common, (2) each person who is known to us to be the beneficial owner of more than five percent of the Class B Common, and (3) the beneficial ownership of Class A Common and Class B Common by our directors, director nominees, NEOs and all of our executive officers, directors and directorsdirector nominees as a group. Beneficial ownership of Class A Common and Class B Common has been determined for this purpose in accordance withRules 13d-3 and13d-5 under the Exchange Act. Accordingly, the amounts shown in the tables do not purport to represent beneficial ownership for any purpose other than compliance with SEC reporting requirements. Further, beneficial ownership as determined in this manner does not necessarily bear on the economic incidence of ownership of Class A Common or Class B Common.
Holders of shares of Class A Common and Class B Common are entitled to different voting rights with respect to each class of stock. Each share of Class A Common is entitled to one vote per share. Each share of Class B Common is entitled to ten votes per share. Holders of Class A Common and holders of Class B Common generally vote together as a single class on matters submitted to a vote of our stockholders. Shares of Class B Common are convertible into shares of Class A Common on aone-for-one basis, without cost, at any time at the option of the holder of the Class B Common.
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Amount and Nature of Beneficial Ownership
Class A Common Stock
Name | Title of Class | Sole Voting or Investment Power | Shared Voting or Investment Power | Aggregate Amount | Percent of Class | |||||||||||||||||
Dimensional Fund Advisors LP (1) 6300 Bee Cave Road Austin, Texas 78746
| Class A | 880,017 | — | 880,017 | 9.61% | |||||||||||||||||
Zuckerman Investment Group, LLC (2) Suite 1700 Chicago, IL 60606 | Class A | — | 590,141 | 590,141 | 6.45% | |||||||||||||||||
Beatrice B. Taplin (3) Suite 300 5875 Landerbrook Drive Cleveland, OH 44124-4069 | Class A | 102,822 | 455,338 | (3) | 558,160 | (3) | 6.10% | |||||||||||||||
Rankin Associates I, L.P. (4) Suite 300 5875 Landerbrook Drive Cleveland, OH 44124 | Class A | — | — | 472,371 | 5.16% | |||||||||||||||||
Mark R. Belgya (5)
| Class A | 704 | — | 704 | ** | |||||||||||||||||
J.C. Butler, Jr. (5) | Class A | 75,152 | 1,287,955 | (6) | 1,363,107 | (6) | 14.89% | |||||||||||||||
John P. Jumper (5) | Class A | 7,672 | — | 7,672 | ** | |||||||||||||||||
Dennis W. LaBarre (5) | Class A | 18,373 | — | 18,373 | ** | |||||||||||||||||
Michael S. Miller (5) | Class A | 1,741 | — | 1,741 | ** | |||||||||||||||||
Alfred M. Rankin, Jr. (7) | Class A | 364,525 | 1,290,801 | (7) | 1,655,326 | (7) | 18.08% | |||||||||||||||
Roger F. Rankin (5) | Class A | 194,290 | 1,223,658 | (8) | 1,417,948 | (8) | 15.49% | |||||||||||||||
Thomas T. Rankin (5) | Class A | 146,669 | 1,214,288 | (9) | 1,360,957 | (9) | 14.87% | |||||||||||||||
James A. Ratner (5) | Class A | 13,703 | — | 13,703 | ** | |||||||||||||||||
David F. Taplin (5) | Class A | 35,569 | 100 | 35,669 | ** | |||||||||||||||||
Gregory H. Trepp | Class A | — | — | — | — | |||||||||||||||||
R. Scott Tidey | Class A | — | — | — | — | |||||||||||||||||
All executive officers and directors as a group (17 persons)
| Class A | 858,399 | 1,384,805 | (10) | 2,243,204 | (10) | 24.50% |
** Less than 1.0%.
Name | Title of Class | Sole Voting or Investment Power | Shared Voting or Investment Power | Aggregate Amount | Percent of Class | |||||||||||||||
FMR LLC (1) 245 Summer Street Boston, MA 02210 | Class A | 62,575 | (1) | — | (1) | 743,603 | (1) | 7.49 | % | |||||||||||
BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 | Class A | 495,369 | (2) | — | (2) | 505,541 | (2) | 5.09 | % | |||||||||||
Mark R. Belgya (3) | Class A | 22,069 | — | 22,069 | * | * | ||||||||||||||
J.C. Butler, Jr. (3) | Class A | 96,517 | (4) | 1,289,386 | (4) | 1,385,903 | (4) | 13.96 | % | |||||||||||
Paul D. Furlow (3) | Class A | 40,192 | — | 40,192 | * | * | ||||||||||||||
John P. Jumper (3) | Class A | 29,037 | — | 29,037 | * | * | ||||||||||||||
Dennis W. LaBarre (3) | Class A | 39,738 | — | 39,738 | * | * | ||||||||||||||
Michael S. Miller (3) | Class A | 24,143 | — | 24,143 | * | * | ||||||||||||||
Michelle Mosier | Class A | 19,020 | — | 19,020 | * | * | ||||||||||||||
Alfred M. Rankin, Jr. (3) | Class A | 443,680 | (5) | 1,236,230 | (5) | 1,679,910 | (5) | 16.93 | % | |||||||||||
Thomas T. Rankin (3) | Class A | 169,402 | (6) | 1,213,888 | (6) | 1,383,290 | (6) | 13.94 | % | |||||||||||
James A. Ratner (3) | Class A | 38,898 | — | 38,898 | * | * | ||||||||||||||
Gregory E. Salyers (7) | Class A | 34,941 | — | 34,941 | * | * | ||||||||||||||
R. Scott Tidey | Class A | 47,712 | — | 47,712 | * | * | ||||||||||||||
Gregory H. Trepp | Class A | 183,187 | — | 183,187 | 1.85 | % | ||||||||||||||
Clara R. Williams (3) | Class A | 94,640 | (8) | 1,226,048 | (8) | 1,320,688 | (8) | 13.31 | % | |||||||||||
All executive officers, directors and director nominees as a group (14 persons) | Class A | 1,251,202 | (9) | 1,333,554 | (9) | 2,584,756 | (9) | 26.04 | % |
** | Less than 1.0%. |
(1) | A Schedule 13G/A filed with the SEC with respect to Class A Common on February |
A Schedule |
Pursuant to ourNon-Employee Directors’ Plan, each current non-employee director has the right to acquire additional shares of Class A Common within 60 days after |
Mr. Butler’s spouse is a |
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beneficial ownership of |
|
Thomas T. Rankin may be deemed to be a member of |
Gregory E. Salyers retired as the Senior Vice President, Global Operations of HBB effective December 1, 2021. Based on available information, as of March 18, 2022, Mr. Salyers beneficially owned 34,941 shares of Class A Common. |
(8) | Clara R. Williams may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through her trust, of which she is trustee, partnership interests in Rankin I. Ms. Williams may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through her trust, of which she is trustee, partnership interests in Rankin II. In addition, Ms. Williams may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through her trust, of which she is trustee, partnership interests in Rankin IV. Ms. Williams, therefore, may be deemed to beneficially own, and shares the power to vote and dispose of, 472,371 shares of Class A Common held by Rankin I, 338,295 shares of Class A Common held by Rankin II and 400,000 shares of Class A Common held by Rankin IV. Included in the table above for Ms. Williams are 1,226,048 shares of Class A Common held by (a) members of Ms. Williams’ family, (b) trusts for the benefit of members of Ms. Williams’ family, and (c) Rankin I, Rankin II and Rankin IV. Ms. Williams disclaims beneficial ownership of such shares to the extent in excess of her pecuniary interest in each such entity. |
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(9) | The aggregate amount of Class A Common beneficially owned by all executive officers, directors and |
Class B Common Stock
Name | Title of Class | Sole Voting or Investment Power | Shared Voting or Investment Power | Aggregate Amount | Percent of Class | |||||||||||||||||||||||||||
Clara Taplin Rankin, et al. (1) Suite 300 5875 Landerbrook Drive Cleveland, OH 44124-4069 | Class B | — | — | 3,365,442 | 74.23% | |||||||||||||||||||||||||||
Beatrice B. Taplin Suite 300 5875 Landerbrook Drive Cleveland, OH 44124-4069 | Class B | 102,822 | 455,338 | (2) | 558,160 | (2) | 12.31% | |||||||||||||||||||||||||
Rankin Associates I, L.P. 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124 (3) | Class B | — | — | 472,371 | (3) | 10.42% | ||||||||||||||||||||||||||
Rankin Associates IV, L.P. 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124 (4) | Class B | — | — | 400,000 | (4) | 8.82% | ||||||||||||||||||||||||||
Zuckerman Investment Group, LLC (5) 155 N. Wacker Drive Suite 1700 Chicago, IL 60606 | Class B | — | 361,337 | 361,337 | 7.97% | |||||||||||||||||||||||||||
Rankin Associates II, L.P. 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124 (6) | Class B | — | — | 338,295 | (6) | 7.46% | ||||||||||||||||||||||||||
Mark R. Belgya | Class B | — | — | — | — | |||||||||||||||||||||||||||
J.C. Butler, Jr. | Class B | 74,448 | 1,287,955 | (7) | 1,362,403 | (7) | 30.05% | |||||||||||||||||||||||||
John P. Jumper | Class B | 6,968 | — | 6,968 | ** | |||||||||||||||||||||||||||
Dennis W. LaBarre | Class B | 17,669 | — | 17,669 | ** | |||||||||||||||||||||||||||
Michael S. Miller | Class B | 1,037 | — | 1,037 | ** | |||||||||||||||||||||||||||
Alfred M. Rankin, Jr. | Class B | 359,013 | 1,290,801 | (8) | 1,649,814 | (8) | 36.39% | |||||||||||||||||||||||||
Roger F. Rankin | Class B | 193,586 | 1,223,658 | (9) | 1,417,244 | (9) | 31.26% | |||||||||||||||||||||||||
Thomas T. Rankin | Class B | 145,965 | 1,214,288 | (10) | 1,360,253 | (10) | 30.00% | |||||||||||||||||||||||||
James A. Ratner | Class B | 12,272 | — | 12,272 | ** | |||||||||||||||||||||||||||
David F. Taplin | Class B | 34,865 | 100 | 34,965 | ** | |||||||||||||||||||||||||||
Gregory H. Trepp | Class B | — | — | — | — | |||||||||||||||||||||||||||
R. Scott Tidey
| Class B | — | — | — | — | |||||||||||||||||||||||||||
All executive officers and directors as a group (17 persons)
| Class B | 845,824 | 1,384,805 | (11) | 2,230,629 | (11) | 49.20% |
** Less than 1.0%.
Name | Title of Class | Sole Voting or Investment Power | Shared Voting or Investment Power | Aggregate Amount | Percent of Class | |||||||||||||||
Clara Taplin Rankin, et al. (1) 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124-4069 | Class B | — | — | 3,265,936 | (1) | 81.77 | % | |||||||||||||
Abigail II LLC (2) 5910 South University Blvd. Unit C-18 Greenwood Village, CO 80121-2879 | Class B | — | 349,100 | (2) | 349,100 | (2) | 8.74 | % | ||||||||||||
Rankin Associates I, L.P. (3) 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124 | Class B | — | — | 472,371 | (3) | 11.83 | % | |||||||||||||
Rankin Associates IV, L.P. (4) 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124 | Class B | — | — | 400,000 | (4) | 10.01 | % | |||||||||||||
Rankin Associates II, L.P. (5) 5875 Landerbrook Drive Suite 300 Cleveland, OH 44124 | Class B | — | — | 338,295 | (5) | 8.47 | % | |||||||||||||
Mark R. Belgya | Class B | — | — | — | — | |||||||||||||||
J.C. Butler, Jr. | Class B | 74,448 | (6) | 1,288,279 | (6) | 1,362,727 | (6) | 34.12 | % | |||||||||||
Paul D. Furlow | Class B | — | — | — | — | |||||||||||||||
John P. Jumper | Class B | 6,968 | — | 6,968 | * | * | ||||||||||||||
Dennis W. LaBarre | Class B | 17,669 | — | 17,669 | * | * | ||||||||||||||
Michael S. Miller | Class B | — | — | — | — | |||||||||||||||
Michelle Mosier | Class B | — | — | — | — | |||||||||||||||
Alfred M. Rankin, Jr. | Class B | 393,949 | (7) | 1,249,967 | (7) | 1,643,916 | (7) | 41.16 | % | |||||||||||
Thomas T. Rankin | Class B | 146,937 | (8) | 1,213,888 | (8) | 1,360,825 | (8) | 34.07 | % | |||||||||||
James A. Ratner | Class B | 12,272 | — | 12,272 | * | * | ||||||||||||||
Gregory E. Salyers (9) | Class B | — | — | — | — | |||||||||||||||
R. Scott Tidey | Class B | — | — | — | — | |||||||||||||||
Gregory H. Trepp | Class B | — | — | — | — | |||||||||||||||
Clara R. Williams | Class B | 77,613 | (10) | 1,226,048 | (10) | 1,303,661 | (10) | 32.64 | % | |||||||||||
All executive officers, directors and director nominees as a group (14 persons) | Class B | 729,856 | (11) | 1,346,184 | (11) | 2,076,040 | (11) | 51.98 | % |
** | Less than 1.0%. |
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(1) | A Schedule 13D/A filed with the SEC with respect to Class B Common on February |
converted into Class A Common prior to their sale or transfer. The shares of Class B Common subject to the stockholders’ agreement constituted |
(2) |
A Schedule 13D filed with the SEC with respect to Class B Common on |
(3) | A Schedule 13D/A filed with the SEC with respect to Class B Common on February 11, 2022 reported that Rankin I and the trusts holding limited partnership interests in Rankin I may be deemed to be a “group” as defined under the Exchange Act and therefore may be deemed as a group to beneficially own 472,371 shares of Class B Common held by Rankin I. Although Rankin I holds the 472,371 shares of Class B Common, it does not have any power to vote or dispose of such shares of Class B Common. Alfred M. Rankin, Jr., Thomas T. Rankin, Claiborne R. Rankin and Roger F. Rankin, as trustees and primary beneficiaries of trusts acting as general partners of Rankin I, share the power to vote such shares of Class B Common. Voting actions are determined by the general partners owning at least a majority of the general partnership interests of Rankin I. Each of the trusts holding general and limited partnership interests in Rankin I share with each other the power to dispose of such shares. Under the terms of the Second Amended and Restated Limited Partnership Agreement of Rankin I, Rankin I may not dispose of Class B Common or convert Class B Common into Class A Common without the consent of the general partners owning more than 75% of the general partnership interests of Rankin I and the consent of the holders of more than 75% of all of the partnership interests of Rankin I. The |
(4) | A Schedule |
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general partnership interests of Rankin IV. Each of the trusts holding general and limited partnership interests in Rankin IV share with each other the power to dispose of such shares. Under the terms of the Amended and Restated Limited Partnership Agreement of Rankin IV, Rankin IV may not dispose of Class B Common or convert Class B Common into Class A Common without the consent of the general partners owning more than 75% of the general partnership interests of Rankin IV and the consent of the holders of more than 75% of all of the partnership interests of Rankin IV. The |
(5) |
A Schedule 13D filed with the SEC with respect to Class B Common on February |
Class B Common held by Rankin II. Although Rankin II holds the 338,295 shares of Class B Common, it does not have any power to vote or dispose of such shares of Class B Common. Alfred M. Rankin, Jr., Thomas T. Rankin, Claiborne R. Rankin and Roger F. Rankin, as trustees and primary beneficiaries of trusts acting as general partners of Rankin II, share the power to vote such shares of Class B Common. Voting actions are determined by the general partners owning at least a majority of the general partnership interests of Rankin II. Each of the trusts holding general and limited partnership interests in Rankin II share with each other the power to dispose of such shares. Under the terms of the Limited Partnership Agreement of Rankin II, Rankin II may not dispose of Class B Common or convert Class B Common into Class A Common without the consent of the general partners owning more than 75% of the general partnership interests of Rankin II and the consent of the holders of more than 75% of all of the partnership interests of Rankin II. The |
Mr. Butler’s spouse is a member of Rankin I, Rankin II and Rankin IV; therefore, Mr. Butler may be deemed to share beneficial ownership of |
As a result of Alfred M. Rankin, Jr. holding through his trust, of which he is trustee, partnership interests in Rankin I, Mr. Rankin may be deemed to beneficially own, and share the power to dispose of, 472,371 shares of Class B Common held by Rankin I. Mr. Rankin may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through his trust, of which he is trustee, partnership interests in Rankin II. As a result, the group consisting of Mr. Rankin, the other general and limited partners of Rankin II and Rankin II may be deemed to beneficially own, and share the power to vote and dispose of, 338,295 shares of Class B Common held by Rankin II. In addition, Mr. Rankin may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through his trust, of which he is trustee, partnership interests in Rankin IV. As a result, the group consisting of Mr. Rankin, the other general and limited partners of Rankin IV and Rankin IV may be deemed to beneficially own, and share the power to vote and dispose of, 400,000 shares of Class B Common held by Rankin IV. |
As a result of Thomas T. Rankin’s holding through his trust, of which he is trustee, partnership interests in Rankin I, Mr. Thomas Rankin may be deemed to beneficially own, and share the power to dispose of, |
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472,371 shares of Class B Common held by Rankin I. Mr. Thomas Rankin may be deemed to be a member of |
II. |
(9) | Gregory E. Salyers retired as the Senior Vice President, Global Operations of the Company’s principal subsidiary, Hamilton Beach Brands, Inc., effective December 1, 2021. Based on available information, as of March 18, 2022, Mr. Salyers beneficially owned zero shares of Class B Common. |
(10) | As a result of Clara R. Williams holding through her trust, of which she is trustee, partnership interests in Rankin I, Ms. Williams may be deemed to beneficially own, and share the power to dispose of, 472,371 shares of Class B Common held by Rankin I. Ms. Williams may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through her trust, of which she is trustee, partnership interests in Rankin II. As a result, the group consisting of Ms. Williams, the other general and limited partners of Rankin II and Rankin II may be deemed to beneficially own, and share the power to vote and dispose of, 338,295 shares of Class B Common held by Rankin II. In addition, Ms. Williams may be deemed to be a member of a group, as defined under the Exchange Act, as a result of holding through her trust, of which she is trustee, partnership interests in Rankin IV. As a result, the group consisting of Ms. Williams, the other general and limited partners of Rankin IV and Rankin IV may be deemed to beneficially own, and share the power to vote and dispose of, 400,000 shares of Class B Common held by Rankin IV. Included in the table above for Ms. Williams are 1,226,048 shares of Class B Common held by (a) members of Ms. Williams’ family, (b) trusts for the benefit of members of Ms. Williams’ family and (c) Rankin I, Rankin II and Rankin IV. Ms. Williams disclaims beneficial ownership of such shares to the extent in excess of her pecuniary interest in each such entity. The Stockholders’ 13D/A reported that the Class B Common beneficially owned by Clara R. Williams is subject to the stockholders’ agreement. |
(11) | The aggregate amount of Class B Common beneficially owned by all executive officers, directors and |
Beatrice B. TaplinAlfred M. Rankin, Jr. and Thomas T. Rankin are brothers. J.C. Butler, Jr. is the sister-in-law of Clara Taplin Rankin. David F. Taplin is a nephew of Beatrice B. Taplin and Clara Taplin Rankin. Clara Taplin Rankin is the motherson-in-law of Alfred M. Rankin, Jr., Roger F. Rankin and Thomas T. Rankin. J.C. Butler, Jr., an executive officer of NACCO, Clara R. Williams is theson-in-law daughter of Alfred M. Rankin, Jr. The combined beneficial ownership of such foregoing persons equals 2,759,1692,137,793 shares, or 30.14%21.54%, of the Class A Common and 2,750,8412,039,131 shares, or 60.67%51.05%, of the Class B Common outstanding on February 28, 2018.March 18, 2022. The combined beneficial ownership of all our directors together with Beatrice B. Taplin, and all of our executive officers whose beneficial ownership of Class A Common and Class B Common must be disclosed in the foregoing tables in accordance with Rule 13d-3 under the Exchange Act, equals 2,801,364
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2,584,756 shares, or 30.60%26.04%, of the Class A Common and 2,788,7892,076,040 shares, or 61.5%51.98%, of the Class B Common outstanding on February 28, 2018.March 18, 2022. Such shares of Class A Common and Class B Common together represent 56.32%46.81% of the combined voting power of all Class A Common and Class B Common outstanding on such date.
PROCEDURES FOR SUBMISSION AND CONSIDERATION OF DIRECTOR CANDIDATESDelinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership of such securities with the SEC and the NYSE. Officers, directors and greater than ten percent beneficial owners are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file.
Based upon the review of the copies of Section 16(a) forms received by us, and upon written representations from reporting persons concerning the necessity of filing a Form 5 Annual Statement of Changes in Beneficial Ownership, we believe that, during 2021, all filing requirements applicable for reporting persons were met, except for (i) Alison A. Rankin who, due to administrative error, failed to timely report four transactions which were subsequently reported on a Form 4/A filed on July 2, 2021, and (ii) Bruce T. Rankin who, due to administrative error, failed to timely report, on behalf of his trust, six transactions which were subsequently reported on a Form 5 filed on January 20, 2022.
Procedures For Submission And Consideration Of Director Candidates
Stockholder recommendations for nominees for election to our Board must be submitted in writing to Hamilton Beach Brands Holding Company, 4421 Waterfront Drive, Glen Allen, Virginia 23060, Attention: Secretary, and must be received at our offices on or before December 31 of each year in anticipation of the following year’s Annual Meeting.annual meeting of stockholders. All stockholder recommendations for director nominees must set forth the following information:
1. | the name and address of the stockholder recommending the candidate for consideration as such information appears on the records of the Company, the telephone number where such stockholder can be reached during normal business hours, the number of shares of Class A Common and Class B Common owned by such stockholder and the length of time such shares have been owned by the stockholder; if such person is not a stockholder of record or if such shares are owned by an entity, reasonable evidence of such person’s beneficial ownership of such shares or such person’s authority to act on behalf of such entity; |
2. | complete information as to the identity and qualifications of the proposed nominee, including the full legal name, age, business and residence addresses and telephone numbers and other contact information, and the principal occupation and employment of the candidate recommended for consideration, including his or her occupation for at least the past five years, with a reasonably detailed description of the background, education, professional affiliations and business and other relevant experience (including directorships, employment and civic activities) and qualifications of the candidate; |
3. | the reasons why, in the opinion of the recommending stockholder, the proposed nominee is qualified and suited to be a director of the Company; |
4. | the disclosure of any relationship of the candidate being recommended with the Company or any of its subsidiaries or affiliates, or its independent public accountants, whether direct or indirect; |
5. | the disclosure of any relationship of the candidate being recommended or any immediate family member of the candidate being recommended with the independent registered public |
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6. | a description of all relationships, arrangements and understandings between the proposing stockholder and the candidate and any other person(s) (naming such person(s)) pursuant to which the candidate is being proposed or would serve as a director, if elected; and |
7. | a written acknowledgement by the candidate being recommended that he or she has consented to being considered as a candidate, has consented to the Company’s undertaking of an investigation into that individual’s background, credit history, education, experience and other qualifications in the event that the NCG Committee desires to do so, has consented to be named in the Company’s proxy statement and has consented to serve as a director of the Company, if elected. |
The NCG Committee has not specifically identified or published qualifications, qualities or skills that our directors must possess. In evaluating director nominees, the NCG Committee will consider such factors as it deems appropriate and other factors identified from time to time by the Board. The NCG Committee will consider factors such as judgment, skill, integrity, independence, possible conflicts of interest, experience with businesses and other organizations of comparable size or character, and the interplay of the candidate’s experience and approach to addressing business issues with the experience and approach of incumbent members of the Board and other new director candidates. The NCG Committee’s goal in selecting directors for nomination to the Board is generally to seek a well-balanced membership that combines a variety of experience, skill and intellect in order to enable the Company to pursue its strategic objectives.
The NCG Committee will consider all information provided to it that is relevant to a candidate’s nomination as a director of the Company. Following such consideration, the NCG Committee may seek additional information regarding, and may request an interview with, any candidate whom it wishes to continue to consider.
Based upon all information available to it and any interviews it may have conducted, the NCG Committee will meet to determine whether to recommend the candidate to the Board. The NCG Committee will consider candidates recommended by stockholders on the same basis as candidates from other sources.
The NCG Committee utilizes a variety of methods for identifying and evaluating nominees for directors. The NCG Committee regularly reviews the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event vacancies are anticipated, or otherwise arise, the NCG Committee will consider various potential candidates. Candidates may be recommended by current members of the Board, third-party search firms or stockholders. No search firm was retained by the NCG Committee during the past fiscal year. The NCG Committee generally does not consider recommendations for director nominees submitted by individuals who are not affiliated with the Company. In order to preserve its impartiality, the NCG Committee may not consider a recommendation that is not submitted in accordance with the procedures set forth above.
SUBMISSION OF STOCKHOLDER PROPOSALSSubmission Of Stockholder Proposals
Proposals of stockholders intended to be eligible for inclusion in our Proxy Statement and form of proxy relating to our next annual meeting must be received on or before November 26, 2018.December 7, 2022. Such proposals must be addressed to the Company, 4421 Waterfront Drive, Glen Allen, Virginia 23060, Attention: Secretary. AnyA stockholder intending to propose any matter at the next annual meeting but not intending for us to include the matter in our Proxy Statement and proxy related to the next annual meeting must notify us on or after December 26, 2018January 6, 2023 but on or before January 25, 2019February 5, 2023 of such intention in accordance with the procedures set forth in our Bylaws. If we do not receive such notice within that time frame, the notice will be considered untimely. Our proxy for the next annual meeting will grant authority to the persons named therein to exercise their voting discretion with respect to any matter of which we did not receive notice between December 26, 2018January 6, 2023 and January 25, 2019. February 5, 2023.
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In addition to satisfying the requirements under our Bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act, which notice must be postmarked or transmitted electronically to the Company no later than 60 calendar days prior to the first anniversary of this year’s Annual Meeting. If the date of the next annual meeting is changed by more than 30 calendar days from the first anniversary of this year’s Annual Meeting, then notice must be provided by the later of 60 calendar days prior to the date of the next annual meeting or the 10th calendar day following the day on which public announcement of the date of the next annual meeting is first made. Accordingly, for the next annual meeting, stockholders must deliver such notice no later than March 20, 2023.
Notices should be submitted to the address set forth above.
SOLICITATION OF PROXIESSolicitation Of Proxies
We will bear the costs of soliciting proxies from our stockholders. In addition to the use of the mails,mail, proxies may be solicited by our directors, officers and employees byin-person meeting, telephone or other forms of communication. Such persons will not be additionally compensated for such solicitation, but may be reimbursed forout-of-pocket expenses incurred in connection therewith. Arrangements will also be made with, and reimbursement of reasonableout-of-pocket expenses will be paid to, brokerage houses and other custodians, nominees and fiduciaries for forwarding solicitation materials to the beneficial owners of Class A Common and Class B Common held of record by such persons.
The directors know of no other matters that are likely to be brought before the meeting. The enclosed proxy card grants to the persons named in the proxy card the authority to vote in their best judgment regarding all other matters properly raised at the Annual Meeting.
Dana B. SykesLawrence K. Workman, Jr.
Secretary
Glen Allen, Virginia
March 26, 2018April 6, 2022
It is important that the proxies be returned promptly. Stockholders of record who do not expect to attend the meeting are urgedencouraged to fill out, sign, date and mail the enclosed form of proxy in the enclosed postage-paid envelope which requires no postage if mailed in the United States, or in the alternative, to vote your shares electronically either over the internet (www.investorvote.com/HBB) or by touch-tone telephone(1-800-652-8683). Stockholders who hold both Class A Common and Class B Common only have to complete the single enclosed form of proxy or vote once via the internet or telephone. For information on how to obtain directionsIf you wish to attend the Annual Meetingmeeting and vote in person, please contact our Secretary at 4421 Waterfront Drive, Glen Allen, Virginia 23060, or call (804)273-9777 or emailyou may do so.
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ir@hamiltonbeachbrands.com.APPENDIX A
HAMILTON BEACH BRANDS HOLDING COMPANY
EXECUTIVE LONG-TERM EQUITY INCENTIVE PLAN
(Amended and Restated Effective March 1, 2022)
Hamilton Beach Brands Holding Company (“Company”) hereby amends and restates the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan (“Plan”), effective March 1, 2022.
1. | Purpose of the Plan |
The purpose of this Plan is to help further the long-term profits and growth of the Company by enabling the Company and/or its subsidiaries (together with the Company, the “Employers”) to attract, retain and reward executive employees of the Employers by offering long-term incentive compensation to those who will be in a position to make contributions to such profits and growth. This incentive compensation is in addition to annual compensation and is intended to encourage enhancement of the Company’s stockholder value.
2. | Definitions |
(a) “Average Award Share Price” means the lesser of (i) the average of the closing price per share of Class A Common Stock on the New York Stock Exchange, or, if not listed on such exchange, on any other national securities exchange on which the shares of Class A Common Stock are listed, on the Friday (or if Friday is not a trading day, the last trading day before such Friday) for each week during the calendar year preceding the commencement of the Performance Period (or such other previous period as determined by the Committee and specified in the Guidelines), or (ii) the average of the closing price per share of Class A Common Stock on the New York Stock Exchange, or, if not listed on such exchange, on any other national securities exchange on which the shares of Class A Common Stock are listed, on the Friday (or if Friday is not a trading day, the last trading day before such Friday) for each week of the applicable Performance Period.
(b) “Award” means an award paid to a Participant under this Plan for a Performance Period (or portion thereof), the actual payout of which is determined pursuant to a formula based upon the achievement of Performance Objectives which is established by the Committee. The Committee shall allocate the amount of an Award between the cash component, to be paid in cash, and the equity component, to be paid in Award Shares, pursuant to a formula which is established by the Committee.
(c) “Award Shares” means fully paid, non-assessable shares of Class A Common Stock that are issued or transferred pursuant to, and with such restrictions as are imposed by, the terms of this Plan and the Guidelines. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing and, in the discretion of the Company, may be issued as certificated or uncertificated shares.
(d) “Change in Control” means the occurrence of an event described herein Section 7.
(e) “Class A Common Stock” means the Company’s Class A Common Stock, par value $0.01 per share, or any security into which such Class A Common Stock may be changed by reason of any transaction or event of the type referred to in Section 9(b) of this Plan.
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Committee” means the Compensation and Human Capital Committee of the Company’s Board of Directors or any other committee appointed by the Company’s Board of Directors to administer this Plan in accordance with Section 3.
(h) “Disability” or “Disabled” means a condition approved for disability benefits under an Employer’s long-term disability insurance policy.
(i) “Guidelines” means the guidelines that are approved by the Committee for the administration of the awards granted under this Plan. To the extent that there is any inconsistency between the Guidelines and this Plan on matters other than the time and form of payment of the Awards, the Guidelines will control, so long as this Plan could have been amended to resolve such inconsistency without the need for further stockholder approval.
(j) “Participant” means any person who is classified as a salaried employee of the Employers on a U.S. payroll (including directors of the Employers who are also salaried employees of the Employers) who, in the judgment of the Committee, occupies an executive position in which his or her efforts may contribute to the interests of the Company and who is designated by the Committee as a Participant in the Plan for a particular Performance Period. Notwithstanding the foregoing, (i) leased employees (as defined in Code Section 414) shall not be eligible to participate in this Plan and (ii) persons who are participants in the Hamilton Beach Brands, Inc. Long-Term Incentive Compensation Plan (or any successor plan) for a particular Performance Period shall not be eligible to participate in this Plan for the same Performance Period.
(k) “Payment Period” means, with respect to any Performance Period, the period from January 1 to March 15 of the calendar year immediately following the calendar year in which such Performance Period ends.
(l) “Performance Objectives” shall mean the measurable performance objectives established pursuant to this Plan for Participants. Performance Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or one or more of the subsidiaries, divisions, business units, departments, regions, functions or other organizational units of the Company or its subsidiaries. Performance Objectives may be measured on an absolute or relative basis. Different groups of Participants may be subject to different Performance Objectives for the same Performance Period. Relative performance may be measured against other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, or against an index or one or more of the Performance Objectives themselves. Any Performance Objectives applicable to an Award may be based on one or more, or a combination, of the following criteria, or the attainment of specified levels of growth or improvement in one or more, or a combination, of the following criteria, or such other criteria as may be determined by the Committee (which criteria may be applied to the Company and all of its subsidiaries, divisions, business units, departments, regions, functions or other organizational units or to only one or any combination of the Company and its subsidiaries, divisions, business units, departments, regions, functions or other organizational units): return on equity, return on total capital employed, diluted earnings per share, total earnings, earnings growth, return on capital, return on assets, return on sales, earnings before interest and taxes, revenue, revenue growth, gross margin, net or standard margin, return on investment, increase in the fair market value of shares, share price (including, but not limited to, growth measures and total stockholder return), profit, net earnings, cash flow (including, but not limited to, operating cash flow and free cash flow), inventory turns, financial return ratios, market share, earnings measures/ratios, economic value added, balance sheet measurements (such as receivable turnover), internal rate of return, customer satisfaction surveys or productivity, net income, operating profit or increase in operating profit, market share, increase in market share, sales value increase over time, economic value income, economic value increase over time, expected value of new projects or extensions of new or existing projects, development of new or existing projects, adjusted standard margin or net sales, safety, and compliance with regulatory/environmental requirements.
(m) “Performance Period” means any period of one or more years (or portion thereof) on which an Award is based, as established by the Committee and specified in the Guidelines.
(n) “Retire” means either:
(i) to terminate employment under circumstances that entitle the Participant to immediate commencement of his pension benefits under any of the qualified defined benefit pension plans sponsored by the Employers; or
(ii) for Participants who are not members of such a plan, to terminate employment after reaching: (A) age 65; or (B) age 60 with at least 5 years of service.
(o) “Rule 16b-3” means Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (or any successor rule to the same effect), as in effect from time to time.
(p) “Salary Points” means the salary points assigned to a Participant by the Committee for the applicable Performance Period pursuant to the Korn Ferry salary point system, or any successor salary point system adopted by the Committee.
(q) “Target Award” means a dollar amount calculated by multiplying (i) the designated salary midpoint that corresponds to a Participant’s Salary Points by (ii) the long-term incentive compensation target percent for those Salary Points for the applicable Performance Period, as determined by the Committee. The Target Award is the amount that would be paid to a Participant under this Plan if each Performance Objective is met exactly at target.
3. | Administration |
This Plan shall be administered by the Committee. The Committee shall have complete authority to interpret all provisions of this Plan consistent with applicable law, to prescribe the form of any instrument evidencing any Award granted under this Plan, to adopt, amend and rescind general and special rules and regulations for its administration (including, without limitation, the Guidelines), and to make all other determinations necessary or advisable for the administration of this Plan. A majority of the Committee shall constitute a quorum, and the act of a majority of the members of the Committee present at any meeting at which a quorum is present, unless a greater number is required by law, the Company’s Certificate of Incorporation or its Bylaws, or acts unanimously approved in writing, shall be the act of the Committee. All acts and decisions of the Committee with respect to any questions arising in connection with the administration and interpretation of this Plan or of any documents evidencing Awards under this Plan, including the severability of any or all of the provisions hereof or thereof, shall be conclusive, final and binding upon the Employers and all present and former Participants, all other employees of the Employers, and their respective descendants, successors and assigns. No member of the Committee shall be liable for any such act or decision made in good faith. In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.
4. | Eligibility |
Except as otherwise determined by the Committee or provided in Section 7, to be eligible to participate in this Plan and receive a Target Award in accordance with Section 5 the Participant either must: (a) be employed by an Employer on the last day of the Performance Period; (b) die during the Performance Period; (c) become permanently Disabled during the Performance Period; or (d) Retire during the Performance Period. Notwithstanding the foregoing or any other provision in the Plan, the Award of a Participant who is described in the preceding sentence or who is employed on the last day of the Performance Period but was not employed during the entire Performance Period shall be pro-rated based on the number of days the Participant actually was employed during the Performance Period.
5. | Awards |
The Committee may, from time to time and upon such conditions as it may determine, authorize grants of Awards to Participants, which shall be consistent with, and shall be subject to all of the requirements of, the following provisions:
(a) The Committee shall approve (i) a Target Award to be granted to each Participant and (ii) a formula for determining the payout of each Award, which formula is based upon the Company’s achievement of Performance Objectives as set forth in the Guidelines. Each grant shall specify an initial allocation between the
cash portion of the Award and the equity portion of the Award. Calculations of Target Awards for a Performance Period shall initially be based on a Participant’s Salary Points as of January 1st of the first year of the Performance Period. However, such Target Awards may be changed during or after the Performance Period under the following circumstances: (i) if a Participant receives a change in Salary Points, salary midpoint and/or long-term incentive compensation target percentage during a Performance Period, such change will be reflected in a pro-rata Target Award; (ii) employees hired into or promoted to a position eligible to become a Plan Participant during a Performance Period will, if designated as a Plan Participant by the Committee, be assigned a pro-rated Target Award based on their length of service during a Performance Period; and (iii) the Committee may increase or decrease the amount of a Target Award at any time, in its sole and absolute discretion; provided, however, that no such decrease described in clause (iii) may occur in connection with or following a Change in Control that occurs during or after the applicable Performance Period.
(b) Prior to the end of the Payment Period, the Committee shall approve: (i) a preliminary calculation of the amount of the payout of each Award based upon the application of the formula and actual performance to the Target Awards previously determined in accordance with Section 5(a); and (ii) a final calculation of the amount of each Award to be paid to each Participant for the Performance Period. Such approval shall be certified in writing by the Committee before any amount is paid under any Award with respect to that Performance Period. Notwithstanding the foregoing, the Committee shall have the power to: (1) decrease the amount of the payout of any Award below the amount determined in accordance with Section 5(b)(i); (2) increase the amount of the payout of any Award above the amount determined in accordance with Section 5(b)(i); and/or (3) adjust the allocation between the cash portion of the Award and the equity portion of the Award; provided, however, that no such decrease described in clause (1) may occur in connection with or following a Change in Control that occurs during or after the applicable Performance Period. No Award, including any Award equal to the Target Award, shall be payable under this Plan to any Participant except as determined and approved by the Committee.
(c) Each Award shall be 100% vested when and to the extent the Committee determines that it has been earned pursuant to Subsection (b) and shall be fully paid to the Participants no later than the last day of the Payment Period, partly in cash and partly in Award Shares. The whole number of Award Shares to be issued or transferred to a Participant shall be determined by dividing the equity portion of the Award payout by the Average Award Share Price (subject to adjustment as described in Subsection (b) above), with any fractional Award Shares resulting from such calculation payable in cash as provided under the Guidelines. The Company shall pay any and all brokerage fees and commissions incurred in connection with any purchase by the Company of shares which are to be issued or transferred as Award Shares and the transfer thereto to Participants. Awards shall be paid subject to all withholdings and deductions pursuant to Section 6. Notwithstanding any other provision of this Plan, the maximum amount paid to a Participant in a single calendar year as a result of Awards under this Plan (including the fair market value of any Award Shares paid to the Participant) shall not exceed the greater of (i) $12,000,000 or (ii) the fair market value of 500,000 Award Shares, determined at the time of payment.
6. | Withholding Taxes/Offsets |
(a) To the extent that an Employer is required to withhold federal, state or local income taxes or other amounts in connection with any Award paid to a Participant under this Plan, and the amounts available to the Employer for such withholding are insufficient, it shall be a condition to the receipt of such Award that the Participant make arrangements satisfactory to the Company for the payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such Award. If a Participant’s benefit is to be received in the form of shares of Class A Common Stock, and such Participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Committee, the Company will withhold shares of Class A Common Stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income tax or other laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the obligation, in
whole or in part, by having withheld, from the shares of Class A Common Stock required to be delivered to the Participant, shares of Class A Common Stock having a value equal to the amount required to be withheld or by delivering to the Company other shares of Class A Common Stock held by such Participant. The shares of Class A Common Stock used for tax or other withholding will be valued at an amount equal to the fair market value of such shares of Class A Common Stock on the date the benefit is to be included in Participant’s income. In no event will the fair market value of the shares of Class A Common Stock to be withheld and delivered pursuant to this Section 6(a) to satisfy applicable withholding taxes or other amounts in connection with the benefit exceed the maximum amount that could be required to be withheld. The Company and a Participant may also make similar arrangements with respect to the payment of any other taxes derived from or related to the Award with respect to which withholding is not required.
(b) If, prior to the payment of any Award, it is determined by an Employer, in its sole and absolute discretion, that an amount of money is owed by the Participant to the Employer, the Award otherwise payable to the Participant may be reduced (to the extent permitted under Section 409A of the Code) in satisfaction of the Participant’s debt to such Employer. Such amount(s) owed by the Participant to the Employer may include, but is not limited to, the unused balance of any cash advances previously obtained by the Participant, or any outstanding credit card debt incurred by the Participant.
(c) Notwithstanding the foregoing, nothing in the Plan or an Award shall affect the Committee’s ability (subject to approval by the Board of Directors) to recover all or part of any previously granted Award pursuant to an existing or future policy established by the Committee in accordance with the requirements of an applicable national securities exchange, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable law.
7. | Change in Control |
This Section shall apply notwithstanding any other provision of the Plan to the contrary.
(a) Amount of Award for Year of Change In Control. In the event of a Change in Control during a Performance Period, the amount of the Award shall be equal to the Participant’s Target Award for such Performance Period, multiplied by a fraction, the numerator of which is the number of days during the Performance Period during which the Participant was employed by the Employers prior to the Change in Control and the denominator of which is the number of days in the Performance Period. Notwithstanding the foregoing, no Award shall be payable to a Participant pursuant to this Section 7 unless the Participant either: (i) is employed by an Employer on the date of the Change in Control; (ii) died during the applicable Performance Period and before the Change in Control; (iii) became permanently Disabled during the applicable Performance Period and before the Change in Control; or (iv) Retired during such Performance Period and before the Change in Control.
(b) Time of Payment. Upon a Change in Control, the payment date of all outstanding Awards (including, without limitation, the pro-rata Target Award for the Performance Period during which the Change in Control occurred) shall be a date that is between two days prior to and 30 days after the date of the Change in Control, as determined by the Committee in its sole and absolute discretion.
(c) Applicability of Change In Control Provision. The term “Change in Control” shall mean the occurrence of (i)(A), (i)(B), or (i)(C), below; provided that such event occurs on or after March 1, 2022 and meets the requirements of Treasury Regulations Section 1.409A-3(i)(5) (or any successor or replacement thereto) with respect to a Participant:
(i) Change in Control Events.
(A) Any “Person” (as such term is used in Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than one or more Permitted Holders (as defined
below), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, of more than 50% of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”), other than any direct or indirect acquisition, including but not limited to an acquisition by purchase, distribution or otherwise, of voting securities:
(1) directly from the Company that is approved by a majority of the Incumbent Directors (as defined below); or
(2) by any Person pursuant to an Excluded HBBHC Business Combination (as defined below);
provided, that if at least a majority of the individuals who constitute Incumbent Directors determine in good faith that a Person has become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of more than 50% of the combined voting power of the Outstanding Voting Securities of the Company inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person is the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of 50% or less of the combined voting power of the Outstanding Voting Securities of the Company, then no Change in Control shall have occurred as a result of such Person’s acquisition; or
(B) a majority of the Board of Directors of the Company ceases to be comprised of Incumbent Directors; or
(C) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation, or other similar transaction involving the Company (“HBBHC Business Combination”) excluding, however, any HBBHC Business Combination pursuant to which both of the following apply (either such HBBHC Business Combination, an “Excluded HBBHC Business Combination”):
(1) the individuals and entities who beneficially owned, directly or indirectly, the Company immediately prior to such HBBHC Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then Outstanding Voting Securities of the entity resulting from such HBBHC Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company or all or substantially all of the assets of the Company, either directly or through one or more subsidiaries); and
(2) at the time of the execution of the initial agreement, or of the action of the Board of Directors of the Company, providing for such HBBHC Business Combination, at least a majority of the members of the Board of Directors of the Company were Incumbent Directors.
(ii) Additional Definitions. For purposes of this Section, the following terms apply:
(A) “Incumbent Directors” means the individuals who, as of September 29, 2017, are members of the Board of Directors of the Company and any individual becoming a member of the Board of Directors of the Company subsequent to such date whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least a majority of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board of Directors of the Company occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors of the Company.
(B) “Permitted Holders” shall mean, collectively, (i) the parties to the Stockholders’ Agreement dated September 29, 2017, as amended from time to time, by and among the Participating Stockholders (as defined therein), the Company and other signatories thereto; provided, however, that for purposes of this definition only, the definition of Participating Stockholders contained in the Stockholders’ Agreement shall be such definition in effect as of the date of the Change in Control, (ii) any direct or indirect subsidiary of the Company, and (iii) any employee benefit plan (or related trust) sponsored or maintained by the Company or any direct or indirect subsidiary of the Company.
8. | Award Shares Terms and Restrictions |
(a) Award Shares issued or transferred to a Participant shall entitle such Participant to voting, dividend and other ownership rights. Each payment of Award Shares shall be evidenced by an agreement between the Company and the Participant. Each such agreement shall contain such terms and provisions, consistent with this Plan, as the Committee may approve, including, without limitation, prohibitions and restrictions regarding the transferability of Award Shares.
(b) Except as otherwise set forth in this Section 8, Award Shares shall not be sold, assigned, transferred, exchanged, pledged, hypothecated or encumbered (collectively, a “Transfer”) by a Participant or any other person, voluntarily or involuntarily, other than a Transfer of Award Shares (i) by will or the laws of descent and distribution, (ii) pursuant to a domestic relations order that would meet the definition of a qualified domestic relations order under Section 206(d)(3)(B) of the Employee Retirement Income Security Act of 1974, as amended, if such provisions applied to the Plan, or a similar binding judicial order, (iii) directly or indirectly to a trust or partnership for the benefit of a Participant or his spouse, children or grandchildren (provided that Award Shares transferred to such trust or partnership shall continue to be Award Shares subject to the terms of this Plan), or (iv) with the consent of the Committee, after the substitution by a Participant of a number of shares of Class A or Class B Common Stock par value $0.01 per share (the “New Shares”) for an equal number of Award Shares, whereupon the New Shares shall become and be deemed for all purposes to be Award Shares, subject to all of the terms and conditions imposed by this Plan and the Guidelines on the shares for which they are substituted, including the restrictions on Transfer, and the restrictions hereby imposed on the shares for which the New Shares are substituted shall lapse and such shares shall no longer be subject to this Plan or the Guidelines. The Company shall not honor, and shall instruct the Company’s transfer agent not to honor, any attempted Transfer and any attempted Transfer shall be invalid, other than Transfers described in clauses (i) through (iv) above. In no event will any Award Shares granted under this Plan be transferred for value.
(c) Each Award shall provide that a Transfer of the Award Shares shall be prohibited or restricted for a period of three, five or ten years from the last day of the Performance Period. The length of the restricted period shall be determined by the Committee in its sole and absolute discretion. Further, the Committee may provide for any other shorter or longer restricted period as may be determined by the Committee (in its sole and absolute discretion) from time to time. Notwithstanding the foregoing, such restrictions shall automatically lapse on the earliest of: (i) the date the Participant dies or becomes permanently Disabled; (ii) three years (or earlier with the approval of the Committee) after the Participant Retires; (iii) an extraordinary release of restrictions pursuant to Subsection (d) below; or (iv) a release of restrictions as determined by the Committee in its sole discretion and absolute (including, without limitation, a release caused by a termination of this Plan). Following the lapse of restrictions pursuant to this Subsection or Subsection (d) below, the shares shall no longer be “Award Shares” and, at the Participant’s request, the Company shall take all such action as may be necessary to remove such restrictions from the stock certificates, or other applicable records with respect to uncertificated shares, representing the Award Shares, such that the resulting shares shall be fully paid, nonassessable, and unrestricted by the terms of this Plan.
(d) Extraordinary Release of Restrictions.
(i) A Participant may request in writing that a Committee member authorize the lapse of restrictions on a Transfer of such Award Shares if the Participant desires to dispose of such Award Shares for (A) the
purchase of a principal residence for the Participant, (B) payment of medical expenses for the Participant, his spouse or his dependents, (C) payment of educational expenses for the Participant, his spouse or his dependents, or (D) any other extraordinary reason the Committee previously approved in writing. The Committee shall have the sole power to grant or deny any such request. Upon the granting of any such request, the Company shall cause the release of restrictions in the manner described in Subsection (c) of such number of Award Shares as the Committee shall authorize.
(ii) A Participant who is employed by the Employers may request such a release at any time following the third anniversary of the date the Award Shares were issued or transferred; provided that the restrictions on no more than 20% of such Award Shares may be released pursuant to this Subsection (d) for such a Participant. A Participant who is no longer employed by the Employers may request such a release at any time following the second anniversary of the date the Award Shares were issued or transferred; provided that the restrictions on no more than 35% of such Award Shares may be released pursuant to this Subsection (d) for such a Participant.
(e) Legend. The Company shall cause an appropriate legend reflecting the restrictions to be placed on each Award Shares certificate or, for uncertificated shares, another applicable record.
9. | Amendment, Termination, and Adjustments |
(a) The Committee, subject to approval by the Board of Directors, may alter or amend this Plan from time to time or terminate it in its entirety; provided that, except as set forth in Section 6, no such action shall adversely affect the rights, without the Participant’s consent, in (i) an outstanding Award that was previously approved by the Committee for a Performance Period but has not yet been paid or (ii) any Award Shares that were previously issued or transferred under this Plan. In any event, no Award Shares will be issued or transferred under this Plan on or after March 1, 2032. Unless otherwise specified by the Committee, all Award Shares that were issued or transferred prior to the termination of this Plan shall continue to be subject to the terms of this Plan following such termination; provided that the transfer restrictions on such Award Shares shall lapse as otherwise provided in Section 8.
(b) The Committee shall make or provide for such adjustment (A) in the total number of Award Shares that may be issued or transferred under this Plan as specified in Section 10, (B) in outstanding Award Shares, (C) in the definition of Average Award Share Price, and (D) in other Award terms, as the Committee in its sole discretion, exercised in good faith, may determine is equitably required to reflect: (i) any stock dividend, stock split, combination of shares, recapitalization or any other change in the capital structure of the Company; (ii) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, or issuance of rights or warrants to purchase securities; or (iii) any other corporate transaction or event having an effect similar to any of the foregoing (collectively, the “Extraordinary Events”). Moreover, in the event of any such Extraordinary Event or a Change in Control, the Committee may provide in substitution for any or all outstanding Awards or Award Shares such alternative consideration (including, cash), if any, as it, in good faith, may determine to be equitable in the circumstances and shall require in connection therewith the surrender of all Awards or Award Shares so replaced in a manner that complies with or is exempt from Section 409A of the Code and applicable Treasury Regulations issued thereunder.Any securities that are distributed in respect of Award Shares in connection with any of the Extraordinary Events shall be deemed to be Award Shares and shall be subject to the transfer restrictions set forth herein to the same extent and for the same period as if such securities were the original Award Shares with respect to which they were issued, unless such restrictions are waived or otherwise altered by the Committee.
(c) Notwithstanding the provisions of Subsection (a), without further approval by the stockholders of the Company, no amendment to this Plan shall: (i) materially increase the maximum number of Award Shares to be issued or transferred under this Plan specified in Section 10 (except that adjustments expressly authorized by Subsection (b) shall not be limited by this clause (i)); (ii) cause Rule 16b-3 to become inapplicable to any Award; or (iii) make any other change for which stockholder approval would be required under applicable law or stock exchange requirements.
10. | Award Shares Subject to Plan |
(a) Subject to adjustment as provided in this Plan, the total number of shares of Class A Common Stock that may be issued or transferred as Award Shares under the Plan will not exceed in the aggregate 1,250,000 shares (consisting of (i) the 650,000 shares of Class A Common Stock that were initially available under the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan as approved by stockholders in 2017, plus (ii) an additional 600,000 shares of Class A Common Stock to be approved by stockholders for this amendment and restatement in 2022).
(b) Notwithstanding anything to the contrary contained in this Plan, shares of Class A Common Stock withheld by the Company, tendered or otherwise used to satisfy tax withholding will count against the aggregate number of shares of Class A Common Stock available under this Section 10.
11. | Approval by Stockholders |
This amended and restated Plan will be submitted for approval by the stockholders of the Company. If such approval has not been obtained by July 1, 2022, all grants of Target Awards made on or after March 1, 2022 for Performance Periods beginning on or after January 1, 2022 will be rescinded.
12. | General Provisions |
(a) No Right of Employment. Neither the adoption or operation of this Plan, nor any document describing or referring to this Plan, or any part thereof, shall confer upon any employee any right to continue in the employ of the Employers, or shall in any way affect the right and power of the Employers to terminate the employment of any employee at any time with or without assigning a reason therefor to the same extent as the Employers might have done if this Plan had not been adopted.
(b) Governing Law. The provisions of this Plan shall be governed by and construed in accordance with the laws of the State of Delaware.
(c) Sections and Gender References. Headings are given to the sections of this Plan solely as a convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any case be deemed in any way material or relevant to the construction of this Plan or any provisions thereof. The use of the masculine gender shall also include within its meaning the feminine. The use of the singular shall also include within its meaning the plural, and vice versa.
(d) Limitation on Rights of Employees; No Trust. No trust has been created for the payment of Awards under this Plan, nor have the employees been granted any lien on any assets of the Employers to secure payment of such benefits. This Plan represents only an unfunded, unsecured promise to pay by the Company and a participant hereunder is a mere unsecured creditor of the Company.
(e) Non-transferability of Awards. Target Awards shall not be transferable by a Participant. Award Shares shall be transferable, subject to the restrictions described in Section 8.
(f) Section 409A of the Internal Revenue Code. This Plan is intended to be exempt from the requirements of Section 409A of the Code and applicable Treasury Regulations issued thereunder, and shall be administered in a manner consistent with such intent. Notwithstanding any provision of this Plan and Awards hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and Awards hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code without the consent of any Participant. In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have an obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.
Hamilton Beach Brands Holding Company
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Votes submitted electronically must be received by 12:00 p.m. ET on May 17, 2022. Online Go to www.investorvote.com/HBB or scan the QR code – login details are located in the shaded bar below. | ||||||||||||||
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A
| Proposals |
1. Election of | Directors 01 - Mark R. Belgya
| 02 - J.C. Butler, Jr.
| 03 -
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04 - John P. Jumper 08 - Thomas T. Rankin | ||||||||||||
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For AllEXCEPT- To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. |
Mark here to vote FOR all nominees
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For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. |
For | Against | Abstain | For | Against | Abstain | |||||||||||||
2. Proposal to approve the Hamilton Beach Brands Holding Company Executive Long-Term Equity Incentive Plan (amended and restated effective March 1, 2022). | 3. Proposal to approve, on an advisory basis, the Company’s Named Executive Officer compensation. | |||||||||||||||||
4. Proposal to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for |
B
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| Authorized Signatures |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy)
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20182022 Annual Meeting Admission Ticket
20182022 Annual Meeting of
Hamilton Beach Brands Holding Company Stockholders
May 15, 2018, 11:17, 2022, 12:00 a.m. Localp.m. Eastern Time
5875 Landerbrook Dr., Cleveland OH 4421444124
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
Important Notice Regardingnotice regarding the AvailabilityInternet availability of Proxy Materialsproxy materials for the
Annual Meeting of Stockholders To Be Held on May 15, 2018Stockholders.
The 20182022 Proxy Statement and 20172021 Annual Report are available, free of charge, at http:https://www.hamiltonbeachbrands.com by clicking on the “2018 Annual Meeting Materials” link and then clicking on either the “2018 Proxy Statement” link or the “2017 Annual Report” link, as appropriate.www.hamiltonbeachbrands.com/investors/annual-meeting-materials.
The Company’s Annual Report for the year ended December 31, 20172021 is being mailed to stockholders concurrently with the 20182022 Proxy Statement. The Annual Report contains financial and other information about the Company, but is not incorporated into the Proxy Statement and is not considered part of the proxy soliciting material.
If you do not expect to be present at the Annual Meeting, please promptly fill out, sign, date and mail the enclosed form of proxy or, in the alternative, vote your shares electronically either over the internet (www.investorvote.com/HBB) or by touch-tone telephone(1-800-652-8683). If you hold shares of both Class A Common Stock and Class B Common Stock, you only have to complete the single enclosed form of proxy or vote once via the internet or telephone. A self-addressed envelope is enclosed for your convenience. No postage is required if mailed in the United States.
Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/HBB |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — Hamilton Beach Brands Holding Company
Notice of 20182022 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting – May 15, 201817, 2022
Dennis W. LaBarre and Alfred M. Rankin, Jr., or anyeither of them, each with the power of substitution, are hereby authorized to represent and vote all of the shares of Class A Common Stock and Class B Common Stock of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Hamilton Beach Brands Holding Company to be held on May 15, 201817, 2022 or at any postponement or adjournment thereof.
SharesWhen properly executed, shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all the nominees listed and FOR Proposal 2.Proposals 2-4.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any postponement or adjournment thereof.
(Items to be voted appear on reverse side.)side)
C | Non-Voting Items |
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