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Thursday, April 18, 201916, 2020
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250 Vesey Street
New York, New York 10281
UNITED STATES
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Owens Corning
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NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
Thursday, April 18, 201916, 2020
10 a.m. Eastern Daylight Time
At the Offices of Jones Day
250 Vesey Street
New York, New York 10281
HOW TO VOTE
Most stockholders have a choice of voting on the Internet, by telephone or by mail using a traditional proxy card. Please refer to the proxy card or other voting instructions included with these proxy materials for information on the voting methods available to you.If you vote on the Internet or by telephone, you do not need to return your proxy card.
ANNUAL MEETING AND ADMISSION
We are providing these proxy materials in connection with the solicitation by the Board of Directors of Owens Corning on behalf of the Company of proxies to be voted at the 20192020 Annual Meeting and at any adjournment or postponement thereof. On or about March 14, 2019,13, 2020, we began distributing these proxy materials to stockholders. Only stockholders who are eligible to vote at the Annual Meeting will be admitted to the Annual Meeting. Stockholders must present a form of current, government-issued, personal photo identification to be admitted. If your shares are held in the name of a bank, broker or other holder of record, you also must present a brokerage statement or other proof of ownership on the record date to be admitted.
HELP US REDUCE PRINTING AND MAILING COSTS
If you share the same last name with other stockholders living in your household, you may receive only one copy of our Notice of Annual Meeting and Proxy Statement and accompanying documents. Please see the response to the question “What is ‘householding’ and how does it affect me?” in the Questions and Answers About the Annual Meeting and Voting section for more information on this stockholder program that eliminates duplicate mailings.
OWENS CORNING
One Owens Corning Parkway
Toledo, Ohio 43659
Notice of Annual Meeting of Stockholders
| TIME AND DATE: | 10:00 a.m., Eastern | |
| PLACE: | Jones Day 250 Vesey Street New York, New York 10281 | |
| PURPOSE: | 1. To elect the
2. To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for
3. To approve, on an advisory basis,
4. To approve the Amended and Restated Owens Corning
5. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. | |
| RECORD DATE: | You can vote if you were a stockholder of record at the close of business on | |
| ANNUAL REPORT: | Our Annual Report for the Fiscal Year Ended December 31, | |
| PROXY VOTING: | It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares on the Internet, by telephone or by completing and returning your proxy or voting instruction card. See details under the heading “How do I vote?” in the Questions and Answers About the Annual Meeting and Voting section. | |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL | ||
As part of our contingency planning regarding the coronavirus (or COVID-19), we are preparing for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance through a public filing with the Securities and Exchange Commission, and details will be available atwww.owenscorning.com/proxy. | ||
By order of the Board of Directors,
Ava Harter
Secretary
Toledo, Ohio
March 14, 2019
13, 2020
Company OverviewCOMPANY OVERVIEW
19,000 Employees 33 Countries 3 Segments $7.2B Net Sales | Owens Corning is aglobal building and industrial materials leader that manufactures and delivers a broad range of high-quality insulation, roofing, and fiberglass composite materials. Its insulation products conserve energy and improve acoustics, fire resistance and air quality in the spaces where people live, work and play. Its roofing products and systems enhance curb appeal of people’s homes and protect homes and commercial buildings alike. Its fiberglass composites make thousands of products lighter, stronger and more durable. In short, the Company providesinnovative products and solutions that deliver a material difference to its customers and, ultimately, makes the world a better place. Owens Corning is comprised of three integrated businesses –Insulation, Roofing, and Composites – that leverage commercial strength, material science innovation, manufacturing technologies, a global footprint and scale, as well as safety and sustainability expertise across the enterprise. The Company aims to capitalize on its market-leading positions and innovative technologies to deliver substantial free cash flow and sustainable shareholder value. The business is global in scope, with operations in 33 countries, and human in scale, with 19,000 employees and longstanding, local relationships with its customers and communities. Based in Toledo, Ohio, Owens Corning posted 2019 net sales of $7.2 billion. It has been a Fortune 500® company for 65 consecutive years. |
Doing Business in a Sustainable Way
Owens Corning leadership puts sustainability at the heart of the Company’s operations and long-term goals. Its guiding aspiration is to be a global leader in insulation, roofing,net-positive company, where its handprint (the positive impacts of its people and fiberglass composite materials. Its insulation products conserve energy and improve acoustics, fire resistance and air quality in the spaces where people live, work and play. Its roofing products and systems addproducts) exceeds its footprint. This is critical to the curb appeal of people’s homes and protect homes and commercial buildings alike. Its fiberglass composites make thousands of products lighter, stronger and more durable. In short, the Company provides innovative products and solutions that deliver a material difference to its customers and, ultimately, make the world a better place.
The business is global in scope, with operations in 33 countries, and human in scale, with approximately 20,000 employees and longstanding, local relationships with its customers and communities. Based in Toledo, Ohio, Owens Corning posted 2018 net sales of $7.1 billion. It has been a Fortune 500® company for 64 consecutive years.
The Commitment to Building a Sustainable Enterprise
As part of the Company’s long-term strategy and governance model, business success. Recently, the Company issued its 2030 sustainability goals, its most ambitious to date, which will guide its work in the next decade. The Company’s new long-term goals go beyond operations and require the engagement of the entire company. The Company is targeting to double the positive impact of its products, halve the negative impact of its operations, eliminate injuries and improve the quality of life for its employees and their families, advance its inclusion and diversity efforts, and have a positive impact on its communities. Some goals specifically address growing concerns, such as ensuring responsible use of water and reducing greenhouse gas emissions. The goals also focus on identifying needed innovations, like establishing growth-enabling circular economy business models for its products, designing for reuse and recycling, and understanding the full impact of its operations and supply chain on biodiversity.
Owens Corning leadership uses a decision framework that supports managing the Company as a sustainable enterprise, bringing value tobegan its stockholders. The pillarssustainability journey nearly two decades ago and reporting each year on its progress is an important part of its sustainable enterprise framework are: financial strength, high-performance people, customer-inspired innovation, operational excellence,ongoing commitment to transparency and world-class sustainability. These pillars guide management’s evaluation of its businesses, performance criteria, resource allocation,impact. Informed by insights from key stakeholders, the Company’s reporting has evolved over time and is currently prepared in accordance with the Global Reporting Initiative (“GRI”) Standards: Comprehensive option. Additional disclosures address significant issues related to the Carbon Disclosure Project (“CDP”), Dow Jones Sustainability Index, United Nations Sustainable Development Goals, United Nations Communication on Progress, and other strategic choices focusedstakeholders requests. The Company’s 2019 Sustainability Report will include additional key disclosures recommended by the Sustainability Accounting Standards Board (“SASB”) and the Task Force on both short-term and long-term horizons. These pillars also enableClimate-related Financial Disclosures (“TCFD”). This approach enables the Company to better serve key stakeholders, including customers, investors, employees,provide an integrated, comprehensive view of its sustainability and the communities in whichsocial responsibility commitments, progress, and impact.
More information about sustainability at Owens Corning, operates. This sustainable enterprise framework is the foundation for the Company’s strategy of building market-leading businesses and reflects the Company’s purpose: our people and products make the world a better place.
The Company’s approach to enterprise-wide sustainability is widely recognized. Owens Corning has earned placementincluding details on the Dow Jonescomplete set of 2030 Sustainability World Index for nine consecutive years and the number one rating in the ConstructionGoals, can be found at https://www.owenscorning.com/corporate/sustainability.1
| 1 | The information on our website, including our Sustainability Report, is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the SEC. |
Building Materials industry for six consecutive years. Thea Strong Company was recognized as one of the “2019 World’s Most Ethical Companies” by the Ethisphere Institute and ranked 36th in the 2018 list of America’s most JUST companies, leading the Building Materials and Packaging industry. Management is proud to be recognized for the contributions its thousands of employees around the world are making to advance the Company’s goals while positively influencing the world.
Provided below is additional informationFocused on each pillar of the Company’s Sustainable Enterprise Framework.
Financial StrengthKey Operating Priorities
Owens Corning seeksputs shareholders’ interests at the forefront by focusing on three key operating priorities – accelerate organic growth, drive improved operating efficiencies, and generate strong free cash flow – all designed to maximizecreate greater shareholder value. In 2019, the Company made progress against these priorities and is well-positioned to build on its financial strength throughsuccess in 2020.
Accelerate Organic Growth
Owens Corning’s expertise in engineered materials helps create high-quality, valuable products that are relevant to its customers. Customers are demanding products and solutions that are more energy efficient, safer, and easier to install as well as being made from or supporting renewable energy. The Company partners with customers to develop innovative solutions and Owens Corning is well-positioned to capture organic revenue growth and capitalize on positive secular trends, such as energy efficiency, renewable energy and infrastructure investment.
Drive Improved Operating Efficiencies
Owens Corning is committed to improving its productivity and efficiencies at every level of the Company while ensuring the high quality of its products and service to its customers. At the enterprise level, the Company continuously focuses on standardized work practices, automation, and process improvements that have resulted in a disciplined financial strategy focusedmore efficient approach to its operations. Employees are continuously rethinking every aspect of their work to add greater value to shareholders. At the plant level, the Company has adopted advanced manufacturing technologies that impact efficiency, and ultimately, cost structure. The Company is also on long-term shareholder value.a “march to zero” – with a goal of zero accidents, zero defects, and zero losses. To meet this ambition for all its plants, the Company has implemented a systematic management approach called Total Productive Maintenance (“TPM”). TPM is a comprehensive management system that emphasizes proactive and preventative activities to maintain, operate and improve production as well as creates a culture of safety, quality, and productivity. It’s essentially about transforming people, processes and results, including improved operating efficiencies.
Generate Strong Free Cash Flow
Owens Corning is committed to generating strong free cash flow for the benefit of shareholders and other key stakeholders. The Company is focused on improvingstrong working capital management and disciplined capital investments that support organic growth and productivity initiatives. When making capital allocation decisions, the driversCompany has prioritized the repayment of its term loan and payment of dividends, followed by share repurchases.
In 2019, the Company returned $143 million to its shareholders through dividends and share repurchases. The Board of Directors recently declared a quarterly cash dividend of $0.24 per share. This latest quarterly dividend represents an increase of 9% from the previous quarter and a 50% increase since the Company began paying quarterly dividends in 2014.
Financial Results
Through these initiatives and a disciplined financial strategy, the Company strives to capitalize on its financial strength and improve total shareholder return, including profit growth, free cash flow generation, and improvement in the resilience of our performance through the cycle. The Company’s long-term capital allocation strategy also focuses on increasing shareholder return by promotingensuring a strong, investment-grade balance sheet,sheet; maintaining safe, sustainable, and productive operations,operations; investing in targeted growth opportunities; and allocatingreturning excess capital to investmentsshareholders.
Developing High-Performing Teams to Execute on Company Commitments
None of this would be possible without high-performing teams that are diverse, engaged, capable and stockholders.aligned with the Company’s goals in both the short- and long-term.
High-Performance People
The employees of Owens Corning are central to its success. Their ideas, drive and expertise enable the Company to develop, manufacture and market insulation, roofing and composites that make the world a better place.
The Company is committed to helping employees reach their full potential by cultivating talent. It has established extensive training and development programs, learning opportunities, tools and incentive rewards to grow talent. These programs create meaningful opportunities, from interns who are early in their careers to experienced leaders at the highest levels of the organization. In doing so, employees develop leadership capabilities to build market-leading business and grow the Company. As a result, a strong pipeline of internal
talent is available to fill critical roles that drive the Company’s success. Additionally, the Company utilizes a robustbest-in-class performance management program that starts with aligned goals that support the enterprise, followed by ongoing feedback and development, and ultimately, rewards strong performance and aggressively addresses weak performance. This elevates the strength of the Company’s high-performing teams.
The safety and health of employees, at work and in their personal lives, is a top priority. The Company encourages and supports the pursuit of well-being through a strategic and disciplined approach. Owens Corning has developed stringentmaintains safety programs and procedures with the goal of eliminating injuries. It has recently increased its focusfocused on identifying hazards and eliminating risks that can lead to severe injuries going beyond the traditional emphasis on reducing recordable injuries, to help continue progress towardand procedures with the goal of zeroeliminating injuries. WithAnd, with its comprehensive Healthy Living platform, the Company establishedprovides a total employee well-being solution designed to drive sustainable, long-term change, improve the health and lives of employees, and strengthen the culture and work experience locally at its facilities throughout the world.experience.
Management strongly believes that a diverse and inclusive workforce is essential for the long-term success and sustainability of the Company. It’s not just the right thing to do; it adds value to the business by fostering an environment that leads to innovative thinking in the workplace. The CompanyOwens Corning also maintains many programs that foster gender and ethnic diversity as well as equality within its workforce, so its employees canfeel valued and appreciated for the distinct voices they bring their full self to work every day.the team. The Company performs a pay equity review of its workforce every other year with the assistance of a third-party vendor. TheThese reviews include a robust, statistical analysis of pay equity reviews, which collect information on gender, race and age, ensure we are creating a diverse, inclusive and fair workplace. Additionally,across most of its Chief Executive Officer, Mike Thaman, alongglobal salaried workforce. Consistent with more than 450 company leaders around the world, signed the CEO Action for Diversity & Inclusion pledge, the largestCEO-driven businessour commitment to advance diversity“equal pay for equal work,” we remediate all identified and inclusion withinsubstantiated pay gaps through pay increases. Further, the workplace. In this pledge, the CEOs agreeCompany has implemented processes and policies to cultivate a workplace where diverse experiences and perspectives are welcomed and where employees feel comfortable and encouraged to discuss diversity and inclusion. Information on these programs, as well as statistics on employee gender and age, can be found on the Owens Corning website.avoid inheriting unequal pay bias of prior employers.
Lastly, Owens Corning employees contribute service hours to boards, special causes and nonprofit organizations in the communities where they live and operate. Providing the less fortunate with support for basic health and wellness enablesThese programs enable the Company’s employees to connect with the community;community, further improve its reputation locally regionally and globally;globally, and instill a sense of pride in the workforce.
Customer-Inspired InnovationOn the Right Path
Owens Corning’s deep expertise in engineered materials helps create high-quality and valuable products and solutions that are relevant to its customers. Its employees are relentless in their efforts to reimagine and create innovative materials that uncover tomorrow’s possibilities. Merging employees’ ideas with customer feedback drives the innovation process. This, coupled with a clear understanding of market trends and opportunities, supports the Company’s purpose to make the world a better place.
For example, the Company launched the first formaldehyde-free mineral wool insulation in North America and produced the first insulation products to be certified as made with 100% wind-powered electricity and reduced embodied carbon, in accordance with SCS Global Services’ certification protocol.
Operational Excellence
Owens Corning is on a “march to zero” – zero accidents, zero defects, zero losses. To meet this ambitious goal for all its manufacturing plants, the Company adopted a systematic management approach called Total Productive Management (TPM). TPM is a comprehensive management system that emphasizes proactive and preventative activities to maintain, operate and improve production. TPM also creates a culture of safety, quality, and productivity. It’s essentially about transforming people, processes and results.
While every plant is at a different point in its journey, the momentum is growing with more of the Company’s plants committed to TPM. Each is moving forward with purpose, and sharing lessons learned and best practices across the global network. As a team, plant employees are rethinking every aspect of work to add greater value to stakeholders.
World-Class Sustainability
Sustainability is central to the Company’s business, from the materials produced to the way they are produced. Owens Corning aspires to be anet-positive company – a company whose handprint, or the positive impacts of its people and products, far outweighs its footprint, or the negative impacts. With this aspiration and a belief that business must play a leadership role in achieving the priorities established in the United Nations’ Sustainable Development Goals, Owens Corning challenges itself to make greater progress faster. To achieve this, the Company established aggressive science-based goals to measure and report on its progress.
Owens Corning’s 2020 sustainability goals are set forth it its annual Sustainability Report located on the Company’s website atwww.owenscorning.com.1 The Company is now in the process of formulating its next set of long-term goals. For 2030, Owens Corning is setting goals based on a scientific understanding of where the world needs the Company to be as a leader in addressing the most critical local and global issues.
Increasing its Handprint
As a materials company, Owens Corning has the ability to engineer and manufacture products that provide a solution in more energy-efficient, lighter-weight and less material-intensive manners. The Company describes its ability to save resources through the deployment of products and technologies as “Increasing its Handprint.” For example, Owens Corning insulation products save many times more energy through their useful lives than the energy consumed to produce them. The Company makes products like cars and windmill blades lighter, stronger and more durable, reducing the resources required for their fabrication and improving their energy performance throughout their lifecycle. Owens Corning is also engaged in finding recycled solutions for its products and its markets that extend the useful life of materials and reduce the requirement for virgin materials. Its insulation products, for instance, consume significant amounts of recycled material. Energy efficiency, light-weighting, durability and recycling are critical pillars of Owens Corning’s sustainability strategy.
Reducing its Footprint
Owens Corning is dedicated to reducing the Company’s environmental footprint by making products with ever-decreasing environmental impact. The Company expects to accomplish this by reducing its energy and resource use, emissions and waste. Owens Corning is also working to reduce its total life-cycle footprint by improving its supply chain management. Several of the Company’s 2020 sustainability goals are aimed at environmental footprint reduction.
1 The information on our website, including our Sustainability Report, is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the SEC.
Recognition
As a result of strong sustainability, Owens Corning is a recognized leader on environmental, governance and social issues. This record of continued achievement demonstrates a commitment to sustainability that is both long-term and embedded in the Company’s culture. It’s also recognition that the Company is on the right path. Select awards and honors earned by Owens Corning include:
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| Earned the following ISS scores in 2019: Environmental: 1 Social: 1 Governance: 2 | |||||
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| Ranked 1stamong 100 Best Corporate Citizens in 2019 |
| Recognized by Ethisphere as1 of only 4 honorees in the Construction and Building Materials Industry | |||
| Earned “Gold Class” score in 2020 for the 7th consecutive year |
| First company in the U.S. industrials sector to issue agreen bond | |||
*CDP, formerly known as the Carbon Disclosure Project, is a global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts.
ELECTION OF DIRECTORS
Information Concerning Directors
Currently, the Board of Directors (the “Board”) of Owens Corning (“Owens Corning,” the “Company,” “we,” “us,” or “our”), a Delaware corporation, consists of 1011 directors whose terms expire at the 20192020 Annual Meeting of Stockholders (the “Annual Meeting”).
On February 6,December 5, 2019, Cesar Conde, a directorMichael H. Thaman, Executive Chairman of Owens Corning, advised the Board that he will retire from the BoardCompany upon expiration of his term of service at the Annual Meeting, and, as such, he has not been nominated forre-election at the Annual Meeting. Effective as of the Annual Meeting, the then-current size of the Board of Directors will be reduced by one. Our Board has nominated the remaining nineten directors for election at the Annual Meeting.
The Board is fully declassified and all directors stand forre-election forone-year terms; and
The Company’s bylaws provide for majority voting in uncontested director elections, with a resignation requirement for directors not elected by a majority vote. Directors will be elected by a majority of votes cast at the Annual Meeting. Each person elected at the Annual Meeting will serve until the Annual Meeting of Stockholders in 20202021 and until his/her successor is duly elected and qualified.
Your proxy will vote for each of the nineten nominees unless you specifically vote against any of the nominees or abstain from voting with respect to a director’s election. Pursuant to our bylaws, majority of votes cast means that the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. “Votes cast” shall include votes against a director and shall exclude abstentions and brokernon-votes with respect to a director’s election. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board of Directors. We do not know of any nominee of the Board of Directors who would be unable to serve if elected.
Director Qualifications, Skills and Experience
Pursuant to the Corporate Governance Guidelines adopted by our Board of Directors, nominees for director are selected on the basis of, among other things, experience, knowledge, skills, expertise, mature judgment, acumen, character, integrity, diversity, ability to make independent analytical inquiries, understanding of Owens Corning’s business environment, and willingness to devote adequate time and effort to Board responsibilities. The Board of Directors believes that each of the current directors and nominees for director exhibit these characteristics.
Our Director nominees have experience in various roles, and they include current and former CEOs, CFOs, consultants, investment professionals and other executives. Many possess experience as directors, having served on the boards and board committees of public or private companies. The Director nominees have experience in a variety of industries, including manufacturing, financial, professional services, and others. Furthermore, the nominees collectively possess a broad array of skills that the Board has deemed relevant to the Company’s strategy.
Set forth below in the Board of Directors Skill Matrix and with each director’s biographical information is a description of the principal experience, qualifications, attributes or skills that led the Board to the conclusion that such individuals should serve as an Owens Corning director.directors.
Board of Directors Skill Matrix
Provided below in a Board of Directors Skill Matrix is a summary of each Director nominee’s skills and experience. The categories included in the Matrix are tied to the Company’s strategy.strategy, and the goal is that the directors collectively possess qualities that facilitate their effective oversight of the Company’s strategic plans. While the matrix is useful for determining the collective skills of the Board as a whole, it is not a comparative measure of the value of directors; a director with more focused experience could nonetheless contribute broadly and effectively.
The chart below identifies the principal skills that the Governance and Nominating Committee considered for each director when evaluating the director’s experience and qualifications to serve as a director. Each box∎ mark ● indicates an experiential strength that was self-selected by each director. Additional information about the director’s background and business experience is provided below.
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| CHAMBERS | CORDEIRO | ELSNER | FERGUSON | HAKE | LONERGAN | MANNEN | MORRIS | NIMOCKS | WILLIAMS | |||||||||||||||||||||||||
Public Company Management Experience as an executive officer of a public company or a significant subsidiary, division or business unit. | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||
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Financial Would meet definition of audit committee financial expert if serving on Audit Committee. | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||
Manufacturing Experience in or management responsibility for a company that is primarily engaged in the manufacture of goods. | ●
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Global Business Experience working in a globally distributed business and knowledge of different cultural, political and regulatory requirements. | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||
Marketing Experience in or management responsibility for significant marketing and/or sales | ●
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Strategy / Corporate Development Experience in or management responsibility for developing business strategies or pursuing mergers, acquisitions, divestitures or joint ventures. | ●
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Technology / Innovation Experience in or management responsibility for devising, introducing or implementing new technologies, products, services, processes or business models. | ●
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Public Policy / Regulatory Experience in or management responsibility for defining, influencing, or complying with public policy, legislation or regulation. | ●
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Sustainability Experience in or management responsibility for furthering sustainable business practices that address environmental, social or ethical issues. | ●
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Diversity Diverse in terms of gender or ethnicity. | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||||
The Board of Directors recommends that you vote FOR each director nominee named in Proposal 1.
Nominees for Election as Directors for a Term Expiring at the Annual Meeting of Stockholders in 20202021
BRIAN D. CHAMBERS, 53 Director Since 2019 | Mr. Chambers is the President and Chief Executive Officer at Owens Corning. Mr. Chambers was appointed to his current role in April 2019. He previously served in a number of senior leadership roles at the Company, including President and Chief Operating Officer since August 2018, President of the Roofing business since 2014, Vice President and General Manager of Roofing since 2013, and Vice President and Managing Director for engineered solutions in the Composites business from 2011 to 2013. In total, Mr. Chambers has over 16 years of leadership experience with Owens Corning. He also held a number of commercial and operational roles outside Owens Corning at Saint Gobain, Honeywell and BOC Gases. Mr. Chambers is a member of the Business Roundtable and serves on the Policy Advisory Board of the Joint Center for Housing Studies of Harvard University. Director Qualifications: The Board believes that Mr. Chambers’ strong leadership skills, extensive business experience and knowledge of the Company’s products and customers, as well as its risk management processes, are of tremendous value to the Board. This experience and knowledge qualifies Mr. Chambers to provide insight to the Board on Owens Corning’s operations, sales, marketing and business strategy. | |
EDUARDO E. CORDEIRO, 52 Director Since 2019 | Mr. Cordeiro served asExecutive Vice President, Chief Financial Officer at Cabot Corporation, a global specialty chemicals and performance materials company, from 2009 to 2018. He also served as President of the Americas region from 2014 to 2018. During his20-year tenure at Cabot Corporation, he held several corporate, business and executive management positions, including Vice President of Corporate Strategy and General Manager of its Fumed Metal Oxides and Supermetals businesses. Prior to his career at Cabot, Mr. Cordeiro was a consultant with The Boston Consulting Group and a founding partner of The Economics Resource Group. He has also served on the Board of Directors of FMC Corporation since 2011 and chaired its Audit Committee since 2014. Public Company Directorships in the Last Five Years: FMC Corporation (2011 - present) Director Qualifications:Mr. Cordeiro brings to the Board, among other skills and qualifications, experience in a complex global industrial business focused on chemicals and specialty materials. He held corporate, business and executive management roles in a global public company, Cabot Corporation, most recently serving as the Chief Financial Officer and President, Americas. Mr. Cordeiro also has experience in serving as Director and Chair of the Audit Committee for FMC Corporation. Mr. Cordeiro’s experience enables him to provide valuable insights to the Board regarding finance, global business strategy, materials manufacturing and materials markets. |
ADRIENNE D. ELSNER, Director Since 2018 |
Ms. Elsner currently serves as President, Chief Executive Officer and Director of Charlotte’s Web Holdings, Inc., a leader in hemp-derived CBD extract products. From 2015 to 2018, she served as President, U.S. Snacks, Kellogg Company, a manufacturer and marketer of convenience
Public Company Directorships in the Last Five Years: Charlotte’s Web Holdings, Inc. (2019 – present) Director Qualifications: Ms. Elsner brings to the Board, among other skills and qualifications,
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J. BRIAN FERGUSON, Director Since 2011 |
Mr. Ferguson retired from his position as Executive Chairman of Eastman Chemical Company, a global chemical company engaged in the manufacture and sale of a broad portfolio of chemicals, plastics and fibers, at the end of 2010, having retired as Chief Executive Officer of Eastman in May 2009. He became Chairman and Chief Executive Officer of Eastman in January 2002. He joined Eastman in 1977 and led several of its businesses in the U.S. and Asia. He currently serves on the board of Phillips 66. Mr. Ferguson is also the retired chairman of the American Chemistry Council. Mr. Ferguson formerly served on The University of Tennessee Board of Trustees and NextEra Energy, Inc.
Public Company Directorships in the Last Five Years:
Phillips 66 (2014 - present)
Director Qualifications: Mr. Ferguson brings to the Board, among other skills and qualifications,
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RALPH F. HAKE, Director Since 2006 |
Mr. Hake retired as Chairman and Chief Executive Officer of the Maytag Corporation, a manufacturer of home and commercial appliances, in 2006. Prior to joining Maytag, Mr. Hake was Executive Vice President and Chief Financial Officer of Fluor Corporation, a $10 billion engineering and construction company. Mr. Hake also served in executive positions at Whirlpool Corporation. Prior to joining Whirlpool, Mr. Hake served in various corporate strategic and financial positions at the Mead Corporation of Dayton, Ohio. Mr. Hake also served on the Board of Directors of the National Association of Manufacturers and was Chairman of the group’s taxation and economic policy group.
Public Company Directorships in the Last Five Years:
Exelis, Inc. (2011-2015)
Director Qualifications: Mr. Hake brings to the Board, among other skills and qualifications,
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EDWARD F. LONERGAN, Director Since 2013 |
Mr. Lonergan has served as Executive Chairman of Zep Inc., an international provider of maintenance and cleaning solutions to the commercial, industrial, institutional and consumer markets since July 2015. He served as Chairman and interim Chief Executive Officer from August 2016 to March 2017. Prior to joining Zep Inc., Mr. Lonergan served as Director, President and Chief Executive Officer of Chiquita Brands International, Inc., a leading international grower, distributor and marketer of fresh and value-added food products from October 2012 until the privatization of the company in January 2015. He served as Director, President and Chief Executive Officer of Diversey, Inc., a leading global provider of sustainable cleaning, sanitation and hygiene solutions, from February 2006 through the sale of the company to Sealed Air Corporation in October 2011. Prior to Diversey, Mr. Lonergan served as President, Europe for Gillette from May 2002 to January 2006. Between 1981 to April 2002, he held a variety of leadership positions both domestically and internationally at the Procter & Gamble Company, including general management roles in customer business development and in emerging markets. He currently serves as a Senior Advisor at New Mountain Capital, as Chairman of DRB Systems, Inc., and on the board of Socati Corp. He was a Board member of The Schwan Food
Public Company Directorships in the Last Five Years:
Chiquita Brands International, Inc. (2012 - 2015)
Director Qualifications: Mr. Lonergan brings
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MARYANN T. MANNEN, Director Since 2014 |
Maryann T. Mannen has served as Executive Vice President and Chief Financial Officer of TechnipFMC (a successor to FMC Technologies, Inc.), a global leader in subsea, onshore/offshore, and surface projects for the energy industry, since January 2017. From March 2014 to January 2017, she served as Executive Vice President and Chief Financial Officer of FMC Technologies, Inc. As Chief Financial Officer, she is responsible for overall financial management of TechnipFMC, its financial reporting and transparency, and for multiple corporate functions. Before being appointed to her current role, Ms. Mannen served as Senior Vice President and Chief Financial Officer from 2011 to early 2014. She previously served as Treasurer, Vice President and Deputy Chief Financial Officer. Before joining FMC Technologies, Inc. in 1986, Ms. Mannen served as Finance Manager for Sheller-Globe Corporation. She currently serves as Secretary of the Cynthia Woods Mitchell Pavilion Board of Directors and is a member of its Executive and Finance Committees. She is also currently on the Finance Committee of the Board of The Awty International School.
Director Qualifications: Ms. Mannen has
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W. HOWARD MORRIS, Director Since 2007 |
Mr. Morris has been President and Chief Investment Officer of The Prairie & Tireman Group, an investment partnership, since 1998. Mr. Morris was formerly Emergency Financial Manager, Inkster, Michigan Public Schools, from 2002 to 2005, and Chief Financial Officer, Detroit, Michigan Public School District, from 1999 to 2000. He is a Certified Public Accountant and Chartered Financial Analyst.
Director Qualifications: Mr. Morris brings to the Board, among other skills and qualifications,
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SUZANNE P. NIMOCKS, Director Since 2012 |
Ms. Nimocks was formerly a Director (Senior Partner) with McKinsey & Company, a global management consulting firm, from June 1999 to March 2010, and was with the firm in various capacities since 1989, including as leader of the firm’s Global Petroleum Practice, Electric Power & Natural Gas Practice, as well as the Global Organization Practice. Ms. Nimocks served on several of the firm’s worldwide personnel committees for many years and formerly served as the Houston Office Manager.
Ms. Nimocks currently serves on the boards of Ovintiv Inc. (formerly known as Encana
Public Company Directorships in the Last Five Years:
Ovintiv Inc. (formerly known as Encana Valaris plc (formerly known as Ensco Rowan Companies Plc. )(2010 - present) ArcelorMittal (2011 - present)
Director Qualifications: Ms. Nimocks brings to the Board, among other skills and qualifications,
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JOHN D. WILLIAMS, Director Since 2011 |
Mr. Williams has served as President and Chief Executive Officer, and Director of Domtar Corporation, a manufacturer of fiber-based products including communication papers, specialty and packaging papers and absorbent hygiene products, since joining the company in 2009. From 2000 to 2008, Mr. Williams served in senior executive positions with SCA Packaging Ltd. and SCA Packaging Europe, among Europe’s largest producers of containerboard paper used for the manufacturing of corrugated box products. During this period, he served as President of SCA Packaging Europe, from 2005 to 2008, and as regional managing director for the company’s U.K. and Ireland operations from 2000 to 2005. Prior to joining SCA Packaging, Mr. Williams held a number of increasingly senior positions in sales, marketing, management and operations with Rexam PLC; Packaging Resources, Inc.; Huhtamaki; Alberto Culver (U.K.) Ltd.; and MARS Group. Since April 2018, Mr. Williams has been a director of Form Technologies, Inc., a privately-held leading global group of precision component manufacturers, based in Charlotte, North Carolina; he has been alsonon-executive chair of the board of directors since January 2019.
Public Company Directorships in the Last Five Years:
Domtar Corporation (2009 - present)
Director Qualifications: Mr. Williams brings to the Board, among other skills and qualifications, significant leadership experience as President and Chief Executive Officer of Domtar Corporation, a large publicly traded manufacturer and previously as a senior executive in the European packaging industry. He has
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Directors Retiring at the Annual Meeting
Director Since |
Mr.
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Board Structure
90% of the director nominees are independent
100% independent Audit, Compensation, Finance, and Governance and Nominating Committees
Lead Independent Director with robust and defined responsibilities
Board access to senior management and independent advisor
Executive sessions of independent directors at every regular Board and Committee meeting
Board Composition
50% gender and ethnic diversity among director nominees
Additions of six new independent directors since 2012, five of which increased gender or ethnic diversity
Two women occupy Board leadership positions (Chair of Audit Committee and Chair of Finance Committee)
Stockholder Rights and Engagement
Members of the Board of Directors elected annually
Majority vote standard in uncontested director elections with mandatory resignation requirement
Robust stockholder outreach program
No stockholder rights plan
Annual advisory vote on named executive officer compensation
Policies and Practices
Clawback, anti-hedging and anti-pledging policies
Annual Board, Chairman/CEO, Committee evaluation process and review of management succession
Robust stock ownership guidelines:
- Directors: 5 times maximum annual cash retainer
- CEO: 6 times base salary
- Other named executive officers: 3 times base salary1
Overboarding policy
Mandatory director retirement age of 73
Global Code of Conduct for employees, officers and directors
1 Does not include individuals holding an interim position.
Other Highlights
Earned placement in the Dow Jones Sustainability World Index for the tenth year in a row
Ranked #1 for seven years consecutively in the Building Products Group of the DJSI World Index
Earned “Gold Class” score in 2020 from RobecoSAM as one of the world’s most sustainable companies for the seventh consecutive year
Obtained a perfect score on the Human Rights Campaign’s 2020 Corporate Equality Index
Recognized as one of the “2020 World’s Most Ethical Companies” by Ethisphere Institute
• Currently, 90% of the Board is independent (9 of 10 directors)
• 100% independent Audit, Compensation, Finance and Governance and Nominating Committees
• Lead Independent Director with robust and defined responsibilities
• Board access to senior management and independent advisor
• Executive sessions of independent directors at every regular Board and Committee meeting
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Included in CDP’s“A-List” for climate change and water during 2019
• Included in CDP’s“A-List” for climate change, water and supply chain during 2017-2018
Director Retirement, Refreshment and Succession
Pursuant to the Corporate Governance Guidelines, the mandatory retirement age for directors is 73. A director who has attained age 73 may continue to serve as a director until the next succeeding Annual Meeting of Stockholders.
Per its charter, the Governance and Nominating Committee is responsible for reviewing with the Board the appropriate skills and characteristics of Board members in the context of the currentmake-up of the Board. Further, theThe Governance and Nominating Committee makes recommendations to the Board regarding size and composition, reviews the suitability of directors for continued service and is responsible for responding to any concerns of directors relating to the performance of the Board. As part of its refreshment process, the Board seeks to attain a healthy mixture of tenures, including both longer and shorter tenured directors, which can provide a balance of fresh ideas alongside experience through the business cycle.
The Governance and Nominating Committee also makes recommendations to the Board regarding the size, composition and leadership of each standing committee of the Board and recommends individual directors to fill any vacancy that might occur on a committee.
Since 2012, fivesix newnon-management directors have been added to the Board, fourfive of which increased gender or ethnic diversity.
Corporate Governance Guidelines
Our Board of Directors has adopted Corporate Governance Guidelines which, in conjunction with our Certificate of Incorporation, bylaws and Board committee charters, form the framework for our corporate governance. The Governance and Nominating Committee reviews the Corporate Governance Guidelines periodically and makes revisions, as necessary. The Corporate Governance Guidelines are published on our website athttp://www.owenscorning.com and will be made available in print upon request by any stockholder to the Secretary of the Company.
Pursuant to the Corporate Governance Guidelines, the Board has the authority to select its Chairperson based on its collective best judgment as to the candidate best suited to meet the Company’s needs at a given time. Currently, Michael H. Thaman serves as Owens Corning’s Chairman of the Board and Chief Executive Officer (“Chairman and CEO”Chairman”) and John D. Williams, anon-management director, serves as lead independent director (“Lead Independent Director”) of the Board.
On January 3,December 5, 2019, the Company announced the planned transition to a new President and Chief Executive Officer,Chairman, Brian D. Chambers. Mr. Chambers, currently President and Chief OperatingExecutive Officer, will succeed Mr. Thaman, who announced plans to retirehis retirement as Chief Executive OfficerChairman effective after the Annual Meeting.Meeting in 2020.
Current Leadership Structure
Mr. Thaman’s tenure as Executive Chair allowed for an orderly transition of CEO duties to Mr. Chambers, who assumed the chief executive role from Mr. Thaman will remain within April 2019. Mr. Thaman’s breadth of board management experience and executive knowledge has helped the CompanyBoard meet its responsibilities, and he has served as Executive Chairman,a valuable mentor and advisor to Mr. Chambers. Throughout this transitionary period, Mr. Williams will continuehas remained in his role as Lead Independent Director.Director, providing stability and independent leadership.
Current Leadership Structure
Until the Annual Meeting, Mr. Thaman will remain the Chairman and CEO and Mr. Williams will hold the position of Lead Independent Director. Mr. Thaman served as Chairman of the Board since 2002 prior to being elected the Company’s Chief Executive Officer. Upon assuming the role of Chief Executive Officer in 2007, the Chairman and CEO positions were combined in order to ensure clear and consistent leadership on critical strategic objectives. The Board’s prior experience working with Mr. Thaman in the Chairman position strongly supported its conclusion that the Company and its stockholders would be best served with Mr. Thaman leading Owens Corning as its Chairman and CEO.
The Board of Directors further determined that it was appropriate to have a structure that provided strong leadership among the independent directors of the Board. Mr. Williams has served as Lead Independent Director since April 2015. Mr. Williams has served as director of the Company since 2011 and has experience serving as Chairman of the Audit Committee and Governance and Nominating Committee. Additionally, the Board, which consists entirely of independent directors other than Mr. Thaman, exercises an independent oversight function. Each of the Board committees is comprised entirely of independent directors. Regular executive sessions of the
independent directors are held and each year, an evaluation of the Chairman and CEO in several key areas, is completed by each of the independent directors.
Future Leadership Structure
Following the Annual Meeting, Mr. ThamanChambers will holdserve as Chairman, President and CEO. The Board determined that recombining the Chairman and CEO positions allowed clear and consistent leadership on critical strategic objectives and enabled a consistent flow of information for the Board’s oversight of risk. The Board’s prior experience working with Mr. Chambers as President and CEO strongly supported its conclusion that the Company and its shareholders would be best served with Mr. Chambers leading Owens Corning as its Chairman and CEO. The Board also considered that the combined Chairman and CEO role, complemented by a strong Lead Independent Director position, of Executive Chair, has proven to be an effective leadership structure at Owens Corning.
Mr. Williams will retain the position of Lead Independent Director for anotherafter the Annual Meeting, fulfilling the second year of his currenttwo-year term,term. The Board of Directors has determined that it was appropriate to have a structure that provided strong leadership among the independent directors of the Board. Mr. Williams has served as Lead Independent Director since April 2015. Mr. Williams has served as director of the Company since 2011 and has experience serving as Chairman of the Audit Committee and Governance and Nominating Committee. Additionally, the Board, which would consist entirely of independent directors other than Mr. Chambers, will assume the roleexercises an independent oversight function. Each of President and CEO. Mr. Thaman remaining as Executive Chairman will allow for an orderly transition and lend stability to the CEO succession process. Mr. Thaman’s breadth of board management experience and executive knowledge will continue to help the Board meet its responsibilities, as he also serves as a valuable mentor and advisor to Mr. Chambers in his new CEO role.
Prior to his position as President and Chief Operating Officer, Mr. Chambers served as Presidentcommittees is comprised entirely of independent directors. Regular executive sessions of the Roofing business. Overall, he has 15 yearsindependent directors are held and each year, an evaluation of management experience with Owens Corningthe Chairman and CEO in a varietyseveral key areas, is completed by each of positions, including roles with the Company’s Composites and Building Materials businesses. The Board believes that Mr. Chambers’ depth of experience and positive results will enable his success as Chief Executive Officer and will complement proven Board leadership from Mr. Thaman and Mr. Williams.independent directors.
The Board of Directors has complete access to the Company’s management and believes that its ongoing ability to review the leadership structure of the Board and to make changes as it deems necessary and appropriate gives it the flexibility to meet varying business, personnel and organizational needs over time.
The independent directors on our Board of Directors have elected a Lead Independent Director to serve in a lead capacity to coordinate the activities of the other independent directors and to perform such other duties and responsibilities as the Board of Directors may determine. In February 2019, John D. Williams wasre-elected to serve as Lead Independent Director, effective April 2019, for anothertwo-year term.
The responsibilities of the Lead Independent Director, as provided in the Charter of Lead Independent Director for Owens Corning, include:
presiding at meetings of the Board in the absence of, or upon the request of, the Chairman;
serving as a designated member of the Executive Committee of the Board;
presiding over all executive sessions ofnon-management directors and independent directors and reporting to the Board, as appropriate, concerning such sessions;
reviewing and approving Board meeting agendas and schedules in collaboration with the Chairman to ensure there is sufficient time for discussion, recommending matters for the Board to consider and advising on the information submitted to the Board by management;
serving as a liaison and supplemental channel of communication between thenon-management/independent directors and the Chairman without inhibiting direct communication between the Chairman and other directors;
serving as the principal liaison for consultation and communication between thenon-management/independent directors and stockholders; and
advising the Chairman concerning the retention of advisors and consultants who report directly to the Board.
The Charter of Lead Independent Director for Owens Corning is available on our website athttp://www.owenscorning.com. The Board of Directors evaluates its structure and composition annually and believes that having a strong Lead Independent Director with significant leadership responsibilities, as described above, contributes to effective Board leadership for Owens Corning.
Board, Committee, Chairman and CEO Evaluation Process
Each year, the Governance and Nominating Committee facilitates a process to evaluate the effectiveness of the Board, its committees, the Chairman, and the CEO.
The Board and its committees complete self-assessment questionnaires and have individual discussions with the Lead Independent Director to evaluate effectiveness in several areas including composition, structure and processes. The completed questionnaires are summarized by a third party law firm. Thenon-management directors individually discuss the results with the Lead Independent Director. The Lead Independent Director and
committee chairs then review the evaluation results at the board and committee levels, respectively, in order to discuss and incorporate feedback. The Governance and Nominating Committee utilizes the results of this process to recommend changes to Board processes, to determine critical skills required of prospective director candidates and to make recommendations for committee assignments.
The Governance and Nominating Committee also prepares and circulates evaluations to the independent directors regarding the performance of the Chairman and the CEO in several key performance areas.Non-management directors discuss their feedback on the Chairman and the CEO with the Lead Independent Director. The results of the process are discussed in an executive session of thenon-management directors and are also factored into the Compensation Committee’s performance evaluations of the Chairman and the CEO.
The Board of Directors oversees the Company’s identification and management of enterprise risks. Some of the Board’s responsibilities for risk oversight have been delegated to its relevant committees. A detailed mapping of risk oversight responsibilities of the Board of Directors and its committees is reviewed regularly by the Board.
Responsibilities of the Board’s Committees
In addition to facilitating oversight of financial risks, the Audit Committee of the Board of Directors also has primary responsibility for facilitating the Board’s oversight of the Company’s management of key risks and financial exposures.generally. Pursuant to its charter, the Audit Committee’s responsibilities include:
Reviewinginclude reviewing annually and receiving periodic updates on the Company’s identification of its key risks, major financial exposures and related mitigation plans;plans.
Overseeing the Company’s management of key risks and major financial exposures that fall within the specific purview of theThe Audit Committee;
EnsuringCommittee is tasked with ensuring that the Board and its committees oversee the Company’s management of key risks and major financial exposures within their respective purviews;purviews. The Audit Committee regularly reviews with the Board the mapping of Board and
Evaluating committee responsibilities for risk oversight. The Audit Committee is also responsible for periodically evaluating the effectiveness of the above referenced process ofrisk oversight by the Board and its committees.
The Compensation, Finance and Governance and Nominating Committees of the Board of Directors each review and evaluate risks associated with their respective areas. Each of the Board committees provides reports concerning its respective risk managementoversight activities to the Board and the Board considers and discusses such reports.
Owens Corning also has a management risk committee (the “Risk Committee”) which is responsible for overseeing and monitoring the Company’s risk assessment and mitigation related actions. The Risk Committee’s membership has broad based functional representation, including members from the corporate audit, finance, legal, treasury and business functions. The Risk Committee provides periodic updates to the Company’s executive officers and to the Audit CommitteeOversight of the Board of Directors concerning risk.Cybersecurity Risk
In addition, theThe Audit Committee receives regular updates on cybersecurity risks from the Company’s Vice President, Global Information Services, and Chief Information Officer and reviews how the Company is executing against its comprehensive cybersecurity framework. From time to time, the Audit Committee may receive updates on efforts regarding data loss prevention, regulatory compliance, data privacy, threat and vulnerability management, cyber-crisis management, or other topics, as applicable.
Sustainability Risk Oversight
Both the Audit Committee and the Board of Directors as a whole retain some oversight responsibility for environmental, health and safety risks. In addition, directors are expected to provide oversight, guidance and direction on sustainability issues and opportunities that have potential impact on the reputation and long-term economic viability of the Company.
Risk Management Processes
Owens Corning has a management risk committee (the “Risk Committee”) which is responsible for overseeing and monitoring the Company’s risk assessment and mitigation-related actions. The Risk Committee’s membership has broad-based functional representation, including members from the corporate audit, finance, legal, treasury and business functions. The Risk Committee provides periodic updates to the Company’s executive officers and to the Audit Committee of the Board of Directors concerning risk.
The Board of Directors oversees the Company’s strategy. The Board performs an annual review of the strategic plans for each major business and for the Company as a whole. Furthermore, in evaluating major investments or other significant decisions, the Board generally considers the Company’s long-term strategic plans and the potential impact on long-term shareholder value.
Stockholders and other interested parties may communicate with the Lead Independent Director or any othernon-management director by sending an email tonon-managementdirectors@owenscorning.com. All such communications are promptly reviewed by the Senior Vice President and General Counsel and/or the Vice President, Internal Audit for evaluation and appropriatefollow-up. The Board of Directors has determined that communications considered to be advertisements, or other types of “Spam” or “Junk” messages, unrelated to the duties or responsibilities of the Board, should be discarded without further action. A summary of all other communications is reported to thenon-management directors. Communications alleging fraud or serious misconduct by directors or executive officers are immediately reported to the Lead Independent Director.
Complaints regarding business conduct policies, corporate governance matters, accounting controls or auditing are managed and reported in accordance with Owens Corning’s existing Audit Committee complaint policy or business conduct complaint procedure, as appropriate.
Director Qualification Standards
Pursuant to New York Stock Exchange listing standards, our Board of Directors has adopted Director Qualification Standards with respect to the determination of director independence that incorporate the independence requirements of the New York Stock Exchange corporate governance listing standards. The standards specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate families with respect to past employment or affiliation with the Company or its independent registered public accounting firm. The full text of our Director Qualification Standards is available on our website athttp://www.owenscorning.com. Using these standards, the Board determines whether a director has a material relationship with the Company other than as a director.
With the assistance of legal counsel, the Governance and Nominating Committee reviewed the applicable legal standards for director and Board Committee independence, our Director Qualification Standards, and the criteria applied to determine “audit committee financial expert” status. The Committee also reviewed reports of the answers to annual questionnaires completed by each of the independent directors and of transactions with director affiliated entities. On the basis of this review, the Governance and Nominating Committee delivered recommendations to the Board of Directors and the Board made its independence and “audit committee financial expert” determinations based upon the Committee’s reports and recommendations.
The Board of Directors has determined that 9 of the current 11 directors (amounting to 9 of the 10 directorsdirector nominees) are independent. Specifically, Directors Conde,Cordeiro, Elsner, Ferguson, Hake, Lonergan, Mannen, Morris, Nimocks and Williams are independent under the standards set forth in our Director Qualification Standards and applicable New York Stock Exchange listing standards. The Board of Directors previously determined that Phil Handy and James McMonagle,Cesar Conde, who retired effective as of the 20182019 Annual Meeting of Stockholders, werewas independent under the standards set forth in our Director Qualification Standards and applicable New York Stock Exchange listing standards during theirhis term of service in 2018. Mr.2019. Directors Chambers and Thaman isare not independent. The Board of Directors also has determined that all of the directors serving on the Audit, Compensation, and Governance and Nominating Committees are independent and satisfy relevant requirements of the Securities and Exchange Commission (the “SEC”), the New York Stock Exchange, Owens Corning and the respective charters of such committees.
Executive Sessions of Directors
Our Corporate Governance Guidelines specify that executive sessions or meetings ofnon-management directors without management present must be held regularly (at least three times a year) and at least one such meeting ofnon-management directors must include only independent directors. Currently, all of ournon-management directors are independent. In 2018,2019, thenon-management directors met in executive session five times. Our Lead Independent Director presides over all executive sessions of the Board.
Owens Corning Policies on Business Ethics and Conduct
Code of Business Conduct Policy
All of our employees, including our Chief Executive Officer, Chief Financial Officer and Controller, are required to abide by Owens Corning’s Code of Business Conduct Policy to ensure that our business is conducted in a consistently legal and ethical manner. This Policy forms the foundation of a comprehensive process that includes compliance with all corporate policies and procedures, an open relationship among colleagues that contributes to good business conduct and the high integrity level of our employees. Our policies and procedures cover all areas of professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business.
Ethics Policy for Chief Executive and Senior Financial Officers
The Company also has adopted an Ethics Policy for Chief Executive and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer and Controller (“Senior Financial Officers”), which provides, among other things, that Senior Financial Officers must comply with all laws, rules and regulations that govern the conduct of the Company’s business and that no Senior Financial Officer may participate in a transaction or otherwise act in a manner that creates or appears to create a conflict of interest unless the facts and circumstances are disclosed to and approved by the Governance and Nominating Committee or Audit Committee, as appropriate.
Employees are expected to report any conduct that they believe to be an actual or apparent violation of Owens Corning’s Policies on Business Ethics and Conduct.
The Sarbanes-Oxley Act of 2002 requires audit committees to have procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. We have adopted and comply with such procedures.
Directors’ Code of Conduct
The members of our Board of Directors are required to comply with a Directors’ Code of Conduct (the “Code”). The Code is intended to focus the Board and the individual directors on areas of ethical risk, help directors recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and foster a culture of honesty and accountability. The Code covers all areas of professional conduct relating to service on the Owens Corning Board, including conflicts of interest, unfair or unethical use of corporate opportunities, strict protection of confidential information, compliance with all applicable laws and regulations, sustainability and oversight of ethics and compliance by employees of the Company.
The full texts of our Code of Business Conduct Policy, Ethics Policy for Chief Executive and Senior Financial Officers and Directors’ Code of Conduct are published on our website athttp://www.owenscorning.com and will be made available in print upon request by any stockholder to the Secretary of the Company. To the extent required by applicable SEC rules or New York Stock Exchange listing standards, we intend to post any amendments to or waivers from the Ethics Policy for Chief Executive and Senior Financial Officers to our website in the section titled “Corporate Governance.”
Board and Committee Membership
Our business, property and affairs are managed under the direction of our Board of Directors. Members of our Board are kept informed of our business through discussions with our Chief Executive Officer, Chief Financial Officer and other officers, by reviewing materials provided to them, by visiting our offices and plants, and by participating in meetings of the Board and its committees. Board members are expected to regularly attend Board and committee meetings as well as our Annual Meetings of Stockholders, unless an emergency prevents them from doing so. Each of our current directorsdirector nominnees for the 2019 Annual Meeting of Stockholders was present at the 2018 Annual Meeting of Stockholders.such meeting.
During 2018,2019, the Board of Directors met five times. Each of our directors attended at least 75 percent of the meetings of the Board and Board committees on which he or she served.
| Name | Audit | Compensation | Executive | Finance | Governance and Nominating | |||||||||||||||||||||||||
Mr. Conde* | X | X | ||||||||||||||||||||||||||||
| NAME | AUDIT | COMPENSATION | EXECUTIVE | FINANCE | GOVERNANCE AND NOMINATING | |||||||||||||||||||||||||
Mr. Cordeiro* | X | X | ||||||||||||||||||||||||||||
Ms. Elsner* | X | X | X | X | ||||||||||||||||||||||||||
Mr. Ferguson* | C | X | X | X | X | |||||||||||||||||||||||||
Mr. Hake* | X | X | X | X | ||||||||||||||||||||||||||
Mr. Lonergan* | C | X | X | C | X | X | ||||||||||||||||||||||||
Ms. Mannen* | X | X | C | X | X | |||||||||||||||||||||||||
Mr. Morris* | X | X | X | X | ||||||||||||||||||||||||||
Ms. Nimocks* | X | X | C | X | X | C | ||||||||||||||||||||||||
Mr. Williams*† | X | C | X | C | ||||||||||||||||||||||||||
Mr. Chambers | X | |||||||||||||||||||||||||||||
Mr. Thaman | C | C | ||||||||||||||||||||||||||||
2018 Meetings | 8 | 6 | — | 4 | 4 | |||||||||||||||||||||||||
2019 Meetings | 8 | 5 | 5 | 4 | 5 | |||||||||||||||||||||||||
C = Committee ChairmanX = Committee Member * = Independent † = Lead Independent Director
C = Committee Chairman | X = Committee Member | * = Independent | † = Lead Independent Director |
Each of the standing Committees of our Board of Directors acts pursuant to a charter that has been approved by our Board. These charters are updated periodically and can be found on the Company’s website athttp://www.owenscorning.com and will be made available in print upon request by any stockholder to the Secretary of the Company.
Director Service on Other Public Boards (Overboarding Policy)
The Corporate Governance Guidelines state that directors who are employed full time as executives shall not serve on more than three publicly traded company boards (including service on the Company’s Board) and other directors shall not serve on more than five boards of publicly traded companies (including service on the Company’s Board). This is to ensure that our directors devote adequate time for preparation and attendance at Board and Committee meetings, including the Annual Meeting of Stockholders.
The Company’s Audit Committee Charter states that no director may serve as a member of the Audit Committee if such director serves on the audit committees of more than two other publicly traded companies, unless the Board determines that such simultaneous service would not impair the ability of such director effectively to serve on the Committee. The Corporate Governance Guidelines also state that directors should provide notice prior to assuming new job responsibilities or significant changes in professional affiliation. Changes in professional affiliation may include the joining of a public company board of directors. Directors with new responsibilities or affiliations may then be asked to submit a letter of resignation to be considered by the Governance and Nominating Committee. As such, the Board maintains processes to review and approve directors’ membership on additional public company boards, even if those directors are still within the overboarding limits mentioned above.
Responsibilities
The Audit Committee is responsible for preparing the Audit Committee report required by SEC rules and assisting the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions of the Company, including assisting the Board’s oversight of:
the integrity of the Company’s financial statements;
the Company’s compliance with legal and regulatory requirements;
the Company’s independent registered public accounting firm’s qualifications and independence; and
the performance of the independent registered public accounting firm and the Company’s internal audit function.
The Board of Directors has determined that each memberdirectors Mannen, Elsner, Ferguson and Morris are qualified as audit committee financial experts within the meaning of SEC regulations and are financially literate within the meaning of New York Stock Exchange listing standards. All directors serving on the Audit Committee is an “audit committee financial expert” for purposes of SEC rules.
Audit Committee Report
The Audit Committee has reviewed and discussed the audited financial statements of the Company contained in the Annual Report on Form10-K with management. The Audit Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” as amended, as adopted bythe applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”). and the SEC. The Audit Committee has also received the written disclosures and the letter from PricewaterhouseCoopers LLP per the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP its independence.
Based on the review and discussions referred to in the preceding paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s annual report on Form10-K for the year ended December 31, 2018,2019, for filing with the SEC.
By the Audit Committee:
J. Brian Ferguson, ChairmanMaryann T. Mannen, Chair
Adrienne Elsner
Maryann T. MannenJ. Brian Ferguson
W. Howard Morris
Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for 2019,2020, subject to ratification by our stockholders.
Principal Accounting Fees and Services
The aggregate fees billed and services provided by PricewaterhouseCoopers LLP for the years ended December 31, 20182019 and 20172018 are as follows (in thousands):
| 2018 | 2017 | 2019 | 2018 | |||||||||||||
Audit Fees (1) | $ | 4,982 | $ | 4,845 | $ | 4,814 | $ | 4,982 | ||||||||
Audit-Related Fees (2) | 60 | 75 | - | 60 | ||||||||||||
Tax Fees (3) | 357 | 337 | 106 | 357 | ||||||||||||
All Other Fees (4) | 34 | 34 | 10 | 34 | ||||||||||||
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Total Fees | $5,433 | $ | 5,291 | $ | 4,930 | $ | 5,433 | |||||||||
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| (1) | Fees for the years ended December 31, |
| (2) | Audit-related fees consist of attestation services and assistance with interpretation of accounting standards. |
| (3) | Tax fees consist of compliance, consulting and transfer pricing services. |
| (4) | All other fees consist of accounting research and disclosure software licenses, and a supplier audit. |
It is the Company’s practice that all services provided by its independent registered public accounting firm bepre-approved either by the Audit Committee or by the ChairmanChair of the Audit Committee pursuant to authority delegated by the Audit Committee. No part of the independent registered public accounting firm services related to the Audit-Related Fees, Tax Fees, or All Other Fees listed in the table above was approved by the Audit Committee pursuant to the exemption frompre-approval provided by paragraph (c)(7)(i)(C) of Rule2-01 of RegulationS-X.
Responsibilities
The Compensation Committee is responsible for oversight of the Company’s executive compensation, including authority to determine the compensation of the executive officers, and for producing an annual report on executive compensation in accordance with applicable rules and regulations. The Compensation Committee may delegate power and authority to subcommittees of the Compensation Committee as it deems appropriate. However, the Compensation Committee may not delegate to a subcommittee any power or authority required by any law, regulation or listing standard required to be exercised by the Compensation Committee as a whole. The Compensation Committee has the sole authority to retain or terminate a compensation consultant to assist the Compensation Committee in carrying out its responsibilities, including sole authority to approve the consultant’s fees and other retention terms. The consultant’s fees will be paid by the Company.
In overseeing the Company’s policies concerning executive compensation for officers, the Compensation Committee:
reviews at least annually the goals and objectives of the Company’s executive compensation plans and amends, or recommends that the Board amend, these goals and objectives if the Compensation Committee deems it appropriate;
reviews at least annually the Company’s executive officer compensation plans in light of the Company’s goals and objectives, and, if the Compensation Committee deems it appropriate, adopts or recommends to the Board the adoption of new, or the amendment of existing, executive compensation plans;
evaluates annually the performance of the Chief Executive Officer in light of the goals and objectives of the Company’s executive compensation plans and, either alone as a committee or together with the other independent directors, sets the Chief Executive Officer’s compensation level based on this evaluation;
approves the pay structure, salaries and incentive payments of all other executive officers of the Company, as well as the funding level of the Company’s annual and long-term incentive plans; and
reviews and approves any severance or termination arrangements to be made with any executive officer of the Company.
The Compensation Committee also reviews the Company’s executive compensation programs on a continuing basis to determine that they are properly integrated and that payments and benefits are reasonably related to executive and Company performance and operate in a manner consistent with that contemplated when the programs were established.
The Compensation Committee also reviews the compensation of the Company’s directors, including an evaluation of how such compensation relates to director compensation of companies of comparable size, industry and complexity and, if the Committee deems it appropriate, adopts, or proposes to the Board for consideration, any changes to compensation.
Compensation Consultant
The Senior Vice President, Organization & Administration,Chief Human Resources Officer, along with Owens Corning’s Human Resources staff, support the Compensation Committee in its work. In addition, the Compensation Committee has authority to engage the services of outside advisors, experts and others to assist the Compensation Committee.
The Compensation Committee engaged the services of Meridian Compensation Partners, LLC (“Consultant”) during 20182019 to serve as its independent outside compensation consultant to advise the Compensation Committee on all matters related to Chief Executive Officer and other executive, as well as director, compensation. Specifically, the Consultant provided relevant market data and trend information, advice, alternatives and recommendations to the Compensation Committee, as further described below.
The Governance and Nominating Committee
Responsibilities
The Governance and Nominating Committee is responsible for:
reviewing with the Board the appropriate skills and characteristics required of Board members;
recommending to the Board size and composition of the Board;
identifying, screening and recommending to the Board director nominees for election by the stockholders or appointment by the Board, as the case may be, pursuant to the bylaws, which selections shall be consistent with the Board’s criteria for selecting new directors;
reviewing stockholder nominations for members of the Board;
reviewing the suitability for continued service as director or each Board member when his or her term expires and when he or she has a significant change in status;
developing and reviewing the corporate governance principles adopted by the Board and recommending any desirable changes to the Board;
considering any other corporate governance issues that arise from time to time and developing appropriate recommendations for the Board;
overseeing the annual evaluation of the Board as a whole, Board committees, the Chairman and the Chief Executive Officer;
recommending procedures for reviewing strategic plans of the Company;
advising the Chairman of the Board regarding meeting dates, agendas and the character of information to be presented at Board meetings; and
ensuring that the Board reviews plans and management recommendations for management continuity and development.
Director Nomination Process
The Governance and Nominating Committee evaluates potential candidates for Board membership on an ongoing basis. The Committee is authorized to use any methods it deems appropriate for identifying candidates for Board membership, including recommendations from current Board members, outside search firms and stockholders. Where outside search firms are utilized, they may assist the Committee in both identifying, and evaluating or recruiting potential nominees. An outside search firm was used in the identification, evaluation and recruitment of Mr. Cordeiro, who joined the Board in 2019.
Director Qualifications
Pursuant to the Company’s Corporate Governance Guidelines, nominees for director are selected on the basis of, among other things, experience, knowledge, skills, expertise, mature judgment, acumen, character, integrity, diversity, ability to make independent analytical inquiries, understanding of the Company’s business environment, and willingness to devote adequate time and effort to Board responsibilities.
Consideration of Diversity
Pursuant to its charter, the Governance and Nominating Committee is responsible for identifying and recommending director nominees consistent with the director qualification criteria described above, including diversity, so as to enhance the Board’s ability to manage and direct the affairs and business of the Company. In identifying director nominees, the Committee considers diversity as provided in its charter and the Corporate Governance Guidelines. The Committee considers diversity expansively against the charter standard of enhancing the Board’s ability to manage and direct the affairs and business of the Company. The effectiveness of this process is assessed annually by the full Board as part of the Board self-evaluation process. The Committee believes that its consideration of diversity effectively implements the charter requirements.
Recent additions to the Board demonstrate the Company’s commitment to diversity. FourFive of the last fivesix Directors to join the Board were either female or ethnic minorities. The Board currentlycurrent slate of director nominees features 50% gender and ethnic diversity, which representsrepresenting a nearly threefold increase in gender and ethnic diversity on the Board in the last seveneight years.
Consideration of Director Candidates Recommended by Stockholders
Under its charter, the Governance and Nominating Committee is responsible for reviewing stockholder nominations for director. The Committee does not have a formal policy with respect to the consideration of
director candidates recommended by stockholders. However, its practice is to consider those candidates on the same basis and in the same manner as it considers recommendations from other sources. Such recommendations should be submitted to the Secretary of the Company and should include information about the background and qualifications of the candidate.
The Finance Committee is responsible for exercising oversight responsibility with respect to the Company’s material and strategic financial matters, including those related to investment policies and strategies, merger and acquisition transactions, financings, capital structure, and for advising Company management and the Board with respect to such matters.
The Executive Committee has the authority to act for the Board between meetings of the Board of Directors subject to its charter, applicable law and New York Stock Exchange listing standards.
REVIEW OF TRANSACTIONS WITH RELATED PERSONS
There are no transactions with related persons, as defined in Item 404 of RegulationS-K, to report for the fiscal year ended December 31, 2018.2019.
The Company has various written policies in place pertaining to related party transactions and actual or potential conflicts of interest by directors, officers, employees, and members of their immediate families, including reference in the charter of the Audit Committee.
The Company has a Directors’ Code of Conduct that provides, among other things, that a director who has an actual or potential conflict of interest:
must disclose the existence and nature of such actual or potential conflict to the Chairman of the Board and the Chairman of the Governance and Nominating Committee; and
may proceed with the transaction only after receiving approval from the Governance and Nominating Committee.
EXECUTIVE OFFICERS OF OWENS CORNING
The name, age and business experience during the past five years of Owens Corning’s executive officers as of March 14, 201913, 2020 are set forth below. Each executive officer holds office until his/her successor is elected and qualified or until his/her earlier resignation, retirement or removal. All those listed have been employees of Owens Corning during the past five years except as indicated.
| NAME AND AGE | ||
Brian D. Chambers | President and Chief Executive Officer since April 2019; formerly President and Chief Operating Officer | |
| President, Insulation since | |
Prithvi S. Gandhi (50) | Interim Chief Financial Officer since October 2019; formerly Vice President of Corporate Strategy, Corporate Development, and Financial Planning (2014) | |
Ava Harter | Senior Vice President, General Counsel and Secretary since May 2015; formerly General Counsel, Chief Compliance Officer and Corporate Secretary, Taleris America LLC (2012) | |
| Senior Vice President, | |
Marcio A. Sandri | President, Composites since May 2018; formerly Vice President Global Strategy and Operations, Composites | |
Kelly J. Schmidt | Vice President, Controller since April 2011 | |
Daniel T. Smith | Senior Vice President, Chief Growth Officer since December 2019; formerly Senior Vice President, Organization and Administration | |
Gunner Smith | President, Roofing since August 2018, formerly Vice President of Distribution Sales for Roofing (2012) | |
Michael H. Thaman | Executive | |
| * | Information in parentheses indicates year during the past five years in which service in position began. The last item listed for each individual represents the position held by such individual at the beginning of the five-year period. |
| ** | On |
SECURITYBENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSHARES
The followinginformation in the table contains information,below sets forth those persons (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by Owens Corning to be the beneficial owners of more than 5% of Owens Corning common stock as of February 19, 2019 unless otherwise indicated, about the beneficial ownership of Owens Corning’s common stock for each stockholder known by us to own beneficially 5% or more of our common stock; each of our directors; each of the named executive officers; and all of our directors and executive officers18, 2020 (except as a group.noted below). Beneficial ownership is determined in accordance with the rules of the SEC and, except as otherwise indicated by footnote, the number of shares and percentage ownership indicated in the following table is based on 109,579,002 outstanding shares of Owens Corning common stock as of February 19, 2019.18, 2020. Except as indicated by footnote and subject to community property laws where applicable, to our knowledge, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
| Beneficial Ownership | ||||||||||
| 5% Stockholders, Directors and Executive Officers | Number of Shares | Percent of Total | ||||||||
Beneficial Owners of 5% or More of Our Common Stock | ||||||||||
The Vanguard Group | 9,707,654 | (1) | 8.9% | |||||||
Boston Partners | 7,913,833 | (2) | 7.2% | |||||||
BlackRock, Inc. | 6,439,872 | (3) | 5.9% | |||||||
Directors and Named Executive Officers | ||||||||||
Cesar Conde | 11,293 | (4) | * | |||||||
Adrienne D. Elsner | 2,170 | (4) | * | |||||||
J. Brian Ferguson | 60,735 | (4) | * | |||||||
Ralph F. Hake | 49,421 | (4) | * | |||||||
Edward F. Lonergan | 25,730 | (4) | * | |||||||
Maryann T. Mannen | 11,293 | (4) | * | |||||||
W. Howard Morris | 37,396 | (4)(5) | * | |||||||
Suzanne P. Nimocks | 19,366 | (4) | * | |||||||
John D. Williams | 29,701 | (4) | * | |||||||
Michael H. Thaman | 1,125,697 | (4)(6)(7)(8) | 1.0% | |||||||
Brian D. Chambers | 84,123 | (6)(7)(8) | * | |||||||
Julian Francis | 80,962 | (6)(7)(8) | * | |||||||
Michael C. McMurray | 100,455 | (4)(6)(7)(8) | * | |||||||
Daniel T. Smith | 86,847 | (4)(6)(7)(8) | * | |||||||
Executive officers and directors as a group (18 persons) | 1,904,116 | (4)(5)(6)(7)(8) | 1.7% | |||||||
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Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
Common Stock | BlackRock, Inc.(1) | 11,552,215 | 10.67% | |||||
Common Stock | The Vanguard Group(2) | 10,520,356 | 9.72% | |||||
Common Stock | Boston Partners(3) | 8,356,641 | 7.72% | |||||
| (1) | Based solely upon a Schedule 13G/A filed with the SEC on February |
| (2) | Based solely upon a Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355, beneficially owned |
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| (3) | Based solely upon a Schedule 13G/A filed with the SEC on February |
SECURITY OWNERSHIP OF MANAGEMENT
The following table contains information, as of February 18, 2020, unless otherwise indicated, about the beneficial ownership of Owens Corning’s common stock by the executive officers and directors as a group and each named executive officer and director, individually, in accordance with Rule13d-3 under the Exchange Act, as well as ownership of certain other Owens Corning securities. Beneficial ownership is determined in accordance with the rules of the SEC and, except as otherwise indicated by footnote, the number of shares and percentage ownership indicated in the following table is based on 108,243,893 outstanding shares of Owens Corning common stock as of February 18, 2020. Except as indicated by footnote and subject to community property laws where applicable, to our knowledge, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
DIRECTORS AND EXECUTIVE OFFICERS | BENEFICIAL OWNERSHIP OF COMMON STOCK | PERCENT OF CLASS | OWNERSHIP OF OTHER SECURITIES | TOTAL OWNERSHIP OF COMMON STOCK AND OTHER SECURITIES | ||||||||||||||||||
Eduardo Cordeiro | 1,053 | (1) | * | |||||||||||||||||||
Adrienne D. Elsner | 4,783 | (1) | * | |||||||||||||||||||
J. Brian Ferguson | 65,892 | (1) | * | |||||||||||||||||||
Ralph F. Hake | 52,724 | (1) | * | |||||||||||||||||||
Edward F. Lonergan | 30,673 | (1) | * | |||||||||||||||||||
Maryann T. Mannen | 14,148 | (1) | * | |||||||||||||||||||
W. Howard Morris | 37,886 | (1) | * | |||||||||||||||||||
Suzanne P. Nimocks | 22,401 | (1) | * | |||||||||||||||||||
John D. Williams | 35,194 | (1) | * | |||||||||||||||||||
Michael H. Thaman | 1,036,980 | (1)(2)(3) | 1.0 | % | 28,500 | (4) | 1,065,480 | (1)(2)(3)(4) | ||||||||||||||
Brian D. Chambers | 94,374 | (2)(3) | * | 53,525 | (4) | 147,899 | (2)(3)(4) | |||||||||||||||
Prithvi S. Gandhi | 36,095 | (1)(2)(3) | * | 11,743 | (4) | 47,838 | (1)(2)(3)(4) | |||||||||||||||
Ava Harter | 37,288 | (1)(2) | * | 11,400 | (4) | 48,688 | (1)(2)(4) | |||||||||||||||
Michael C. McMurray | 82,872 | (5) | * | (5) | ||||||||||||||||||
Marcio A. Sandri | 58,326 | (1)(2)(3) | * | 18,951 | (4) | 77,277 | (1)(2)(3)(4) | |||||||||||||||
| Daniel T. Smith | 68,858 | (1)(2)(3) | * | 13,200 | (4) | 82,058 | (1)(2)(3)(4) | |||||||||||||||
| Executive officers and directors as a group (19 persons) | 1,666,601 | (1)(2)(3) | 1.5 | % | 183,415 | (4) | 1,850,016 | (1)(2)(3)(4) | ||||||||||||||
| * | Represents less than 1% |
Includes deferred vested stock over which there is currently no investment or voting power, as follows: Mr. |
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Includes restricted shares over which there is voting power, but no investment power, as follows: Mr. Thaman, |
Includes shares which are not owned but are unissued shares subject to exercise of options, or which will be subject to exercise of options within 60 days after February |
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| (5) | Mr. McMurray resigned as Chief Financial Officer effective October 23, 2019. As information on Mr. McMurray’s beneficial ownership as of the Record Date was unavailable to the Company, the figure reported is based on information known to the Company as of the effective date of his resignation. All unvested securities related to Owens Corning were forfeited as of Mr. McMurray’s resignation. |
COMPENSATION DISCUSSION AND ANALYSIS
Our Performance
In 2018,2019, Owens Corning delivered record revenues, andstrong adjusted earnings before interest and taxes (“adjusted EBIT”)*, and generated double digitdouble-digit operating margins, in all three of its businesses, despite operational headwinds andsome challenging market conditions. Specifically,The Company’s performance was driven by solid commercial and operational execution, strong manufacturing productivity, and disciplined cost management across the Company executed well with strong price realization, solid market share positions, and improved operational performance as the year progressed,organization, but was affected by lower market volumesvolumes. During the year, we renewed our focus on three key operating priorities – accelerate organic growth, drive improved operating efficiencies, and persistent inflation. Owens Corning achieved recordgenerate strong free cash flow – which were reflected in our financial results and made key resource allocation decisionsdecisions. These priorities, coupled with our market-leading businesses in attractive end markets, innovative products and process technologies, and an enterprise model that creates differentiated value for customers, position usthe Company for success in 2019.2020. However, these record2019 results did not meet our high growth expectations in 2018 and our stock price underperformed in comparison to our peer group.for the year.
As described in this section, we believe compensation should align with and enhance long-term stockholder value. Given our underlyingpay-for-performance philosophy, a significant portion of compensation for our executives is“at-risk” and reflective ofreflects our business performance. In 2018,2019, this resulted in lower than target payouts for both our short-term and components of our long-term incentive plans.
Our People
At Owens Corning, our leaders are relentlessly focused ongrowth – growth of our Company, our talent, and our communities. This focus permeates everything we do, including our multi-year journey of talent development that has shaped the leaders we invest in and promote. Our leaders are expected to drive results, build connections, and explore new ideas to enable our growth agenda. They must do this while fostering an environment that encourages inclusion and diversity to enable high performing teams, create a more positive work environment and retain outstanding talent.
We provide you with the with following information concerning the objectives, principles, decisions, material elements, processes, amounts and rationale underlying the compensation of our Named Executive Officers (NEOs). For 20182019, our NEOs are:
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Brian D. Chambers | President and Chief Executive Officer (“CEO”) | April 2011 - present July 2000 - August 2007 | ||
Michael H. Thaman | Executive Chairman and Former Chief Executive Officer | August 1992 - present | ||
Prithvi S. Gandhi | Vice President, Interim Chief Financial Officer (“CFO”) | September 2013 - present | ||
Daniel T. Smith | Senior Vice President, Chief Growth Officer | September 2009 - present | ||
Marcio A. Sandri | President, Composites | August 2000 - present | ||
Ava Harter | Senior Vice President, General Counsel and Secretary | May 2015 - present | ||
Michael C. McMurray | Former Senior Vice President and Chief Financial Officer | December | ||
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Effective April 18, 2019, Brian D. Chambers was elected CEO, succeeding Michael H. Thaman will retire as Chief Executive Officer (CEO), but will remain employed aswho became Executive Chairman of the Board of Directors. Brian Chambers has been elected the new CEO as of this date. This significant milestone iswas the successful culmination of a multi-year succession plan to select the best leader to serve as Owens Corning’s next CEO. This iswas the right time for a leadership change as Owens Corning is a more resilient and diversified generator of cash flow, better able to deliver improved results and generate attractive returns for stockholders through the business cycle.
* Reconciliation and further information for certainNon-GAPPnon-GAAP measures may be found for EBIT and adjusted EBIT inon pages 24 and 25 of our 20182019 Form10-K filed with the SEC on February 20, 2019.19, 2020.
Effective October 23, 2019, Prithvi S. Gandhi was appointed interim CFO, succeeding Michael C. McMurray, while the Company conducts a search. Mr. McMurray resigned from his positions effective October 23, 2019.
Our Stockholder Outreach
We remain committed to transparency andtwo-way communication with our investors so that they understand our executive compensation program, including how it aligns the interests of our executives with those of our stockholders, and how it rewards the achievement of our objectives. We also want to understand what our stockholders think about executive compensation.
To this end, we continued our stockholder outreach program under which we provide consistent, periodic opportunities for our investors to provide their perspectives on our executive compensation and governance programs. This outreach program is distinct from our broader investor relations efforts, which are more focused on the Company’s financial performance. Our governance outreach program currently consists of three main pillars, as displayed below.
OUTREACH TYPE | APPROXIMATE TIMEFRAME | PURPOSE | ||
Proxy Off-Season | Fall/Winter | Stockholder feedback more broadly on governance, executive compensation, and environmental and social issues | ||
Proxy Season | After filing proxy statement | Stockholder feedback on proxy statement and pending proposals | ||
Post-Annual Meeting | Fall | Engagement with stockholders to understand their votes at the most recent Annual Meeting of Stockholders | ||
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Since filing our previous proxy statement in March 2018,2019, we carried out two broad communications with investors on governance topics. EachOur most recent communication in the fall of 2019 reached more than 6070 of our top investors collectively holding approximately70-80% 80% of our outstanding shares, with the goal of receiving feedback on governance, executive compensation, and environmental and social issues. The Company held meetings with several of the stockholders who were contacted via these outreach efforts. Stockholder feedback has been positive with regard to the Company’s executive compensation program design and performance criteria, which has been directly influenced by these outreach meetings.
Additionally, at our 20182019 annual meeting we provided our stockholders with the opportunity, on an advisory basis, to approve or vote against the compensation of our NEOs(Say-on-Pay). Approximately 93% of the votes cast approved the NEOs’ compensation. Owens Corning considers stockholder feedback to be critical as it continuously shapes its governance and executive compensation programs and policies, as well as its disclosures. Recent examples of disclosures added after conducting stockholder outreach include a Board of Directors Skill Matrix and additional information on environmental and social initiatives, both of which have been incorporated into the Company’s 2019 Proxy Statement.
20182019 Executive Compensation Program
Considering the effectiveness of our programs and strong stockholder support, as evidenced by theSay-on-Pay vote outcome at our most recent Annual Meeting of Stockholders, the Board’s Compensation Committee (the “Committee”) generally maintained the same program design for 2018.2019. The following table summarizes the major elements of our executive compensation plans:
ELEMENT | PERFORMANCE PERIOD | OBJECTIVE | ||||||||
| Base Salary | Cash | N/A | N/A | Provide a base level of compensation sufficient to attract, retain and motivate executives | ||||||
Annual Incentive Award | Cash | 75% Corporate
| 1 year | Motivate executives to meet and exceed Company and business financial goals as well as individual performance objectives | ||||||
25% Individual performance | ||||||||||
Long-Term Incentive Award |
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| Provide equity-based compensation opportunities that align the interests of executives and stockholders | |||||||||
PSUs (TSR) (25%) |
Performance Share Units (PSUs) |
3 years | ||||||||
PSUs (ROC) (35%) |
PSUs | 3 years | ||||||||
Additional details and rationale for 20182019 compensation decisions are provided in later discussion in this CD&A.Compensation Discussion and Analysis.
How We Make Compensation Decisions
Our Executive Compensation Philosophy
The Committee believes that executive compensation opportunities should align with and enhance long-term stockholder value. This core philosophy is embedded in all aspects of our executive compensation program and is reflected in an important set ofour guiding principles. We believe that the application of these principles enables us to create a meaningful link between compensation outcomes and long-term, sustainable growthvalue for our stockholders.
Guiding Principles
A substantial majority of pay is variable, contingent and directly linked to Company and individual performance. | The financial interests of executives are aligned with the long-term interests of our stockholders through stock-based compensation and performance metrics that correlate with long-term stockholder value. | For our NEOs, long-term stock-based compensation opportunities will significantly outweigh |
Total compensation should be sufficiently competitive to attract, retain, motivate and reward a leadership team capable of maximizing Owens Corning’s performance. Each element | Our compensation program is designed to be challenging, but fair. Executives should have the opportunity to earn market- competitive pay for delivering expected results. As results exceed expectations (both internal and external), pay levels may increase above market median levels. If performance falls below expected levels, actual pay will fall below market median levels. | Feedback from stockholders is |
Role of the Committee
The Committee, which consists of all independent directors, is responsible for overseeing the development and administration of our executive compensation program. In this role, the Committee approves all compensation actions concerning our CEO and the other NEOs. The Committee’s other responsibilities include:
Reviewing and approving executive compensation plans and programs;
Assessing input from Owens Corning’s stockholders regarding executive compensation decisions and policies;
Reviewing and approving incentive plan metrics and targets;
Assessing Owens Corning and each NEO’s performance relative to these metrics and targets;
Evaluating the competitiveness of total compensation for the CEO and the other NEOs; and
Approving changes to each NEO’s compensation, including base salary and annual and long-term incentive opportunities and awards.
The Senior Vice President, Organization and Administration, along with Owens Corning’sChief Human Resources staffOfficer and the independent compensation consultant assist the Committee with these tasks. The Committee’s charter, which sets out the Committee’s responsibilities, can be found on our website at: http://www.owenscorning.com.
Role of the Compensation Consultant
The Committee retained the services of Meridian Compensation Partners, LLC (“Meridian” or the “Consultant”) to serve as its executive compensation consultant for 2018.2019. In this capacity, the Consultant advised the Committee on a variety of subjects consisting of compensation plan design and trends, pay for performance analytics and comparative compensation norms. While the Consultant may make recommendations on the form
and amount of compensation, the Committee continues to make all decisions regarding the compensation of our NEOs.
The Consultant reported directly to the Committee, participated in meetings as requested and communicated with the Committee Chair between meetings as necessary. In 2018,2019, the Consultant attended all of our Committee meetings.
The Committee reviewed the qualifications and assessed the independence of the Consultant during 2018.2019. The Committee also considered and assessed all relevant factors, including those required by the SEC and the New York Stock Exchange, which could give rise to a potential conflict of interest. Based on these reviews, the Committee did not identify any conflicts of interest raised by the work performed by the Consultant. Meridian does not perform other services for or receive other fees from Owens Corning. The Committee has the sole authority to modify or approve the Consultant’s compensation, determine the nature and scope of its services, evaluate its performance, terminate the engagement and hire a replacement or additional consultant at any time.
Competitive Positioning
Peer Group
The Committee utilizes a peer group of 1514 companies when assessing the competitiveness of executive compensation and the appropriateness of compensation program design. These companies are either in the building materials industry, serve related markets, or use manufacturing processes similar to Owens Corning, and have size (measured in annual sales, market capitalization or number of employees) or complexity comparable to Owens Corning. This peer group is reviewed regularly by the Committee to ensure the relevance of the companies to which we compare ourselves.
The peer group for 20182019 compensation decisions was comprised of the following companies:
A.O. Smith Corporation |
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Ball Corporation |
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Celanese Corporation |
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Eastman Chemical Company |
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Fortune Brands Home & Security, Inc. |
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Lennox International Inc. | The Sherwin-Williams Company | |
Louisiana-Pacific Corporation | Stanley Black & Decker, Inc. | |
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Effective January 1, 2018,In 2019, the Committee removed Armstrong World Industries from the peer group based on thespin-off of its flooring division, and removed The ValsparUSG Corporation, which was acquired by The Sherwin-Williams Company. Also, effective January 1, 2018,Knauf KG, from the Committee added A.O. Smith Corporation, Eastman Chemical Company, and Celanese Corporation as peer companies.group. The Committee believes these changesthat the remaining peers continue to maintain a balance between company size/revenue, industry, global scope, manufacturing footprint, and presence as a competitorin our market for executive talent.
While compensation data from the peer group serves as comparison data, the Committee supplements this information with data from compensation surveys covering general industry companies of similar size based on annual sales. This additional data, compiled by the Consultant, enhances the Committee’s knowledge of trends and market practices. Owens Corning did not select the companies that comprise any of these survey groups, and the component companies’ identities were not a material factor in our compensation analysis.
Market Median Compensation
To help ensure that our compensation program is appropriately competitive, the Committee believes the target opportunity of each key compensation element (base salary, annual incentive, and long-term incentive) should generally align with market median practices. As such, the compensation opportunities, when granted, correspond to the market median practices of peer companies with additional performance criteria that awards significant value only when the Company outperforms the targets set by the Committee.
Individual pay opportunities may fall above or below these targets based on the executive’s performance and the Committee’s discretion. In exercising its discretion, the Committee considers Company and individual performance, time in job and experience, job scope, retention risk and any other factors that it determines to be relevant and consistent with program objectives and stockholder interests.
The Committee believes the best way to help ensure that executive pay corresponds to Company performance is to align actual realizable value of equity granted to an executive with the actual performance of the Company for the performance period. As such, the compensation opportunities, when granted, correspond to the market median practices of peer companies with additional performance criteria that awards significant value only when the Company outperforms the targets set by the Committee.
How We Structure Our Compensation
Principal Elements of Compensation
The following principal elements make up our NEOs’ compensation program:
| Base Salary | Annual Incentive | Restricted Stock Units | Performance Share Units | 401(k) Savings Plan
Non-Qualified Deferred Compensation and Restoration Plan | ||||
Cash Compensation
Base Salary
To help Owens Corning attract, retain and motivate the most qualified executive talent, we provide executive base salaries generally targeted at the median of competitive market practices. Each year, the Committee reviews recommendations from the CEO regarding base salary adjustments for his direct reports, including the other NEOs. The Committee has complete discretion to modify or approve the CEO’sCEO���s base salary recommendations and the CEO does not participate in the Committee’s determination of his own base salary. 20182019 base salary increases were driven by job scope and responsibilities, experience, tenure, individual performance, retention risk, gaps to market median pay practices and internal pay equity (individual NEO decisions discussed below).
Annual Incentive
Annual incentives are delivered through the annual Corporate Incentive Plan (CIP). Funding under the 20182019 CIP for all NEO awards was determined based on performance as measured against overall corporate and individual performance goals. Incentive awards for the NEOs are based 75% on overall corporate performance measures and 25% on individual performance measures. Award amounts for each component may be earned from 0% to 200% of targeted levels, based upon performance. The overall corporate component is earned based upon the achievement ofpre-determined financial goals as described below. Awards are paid in the form of alump-sum cash payment.
The individual component (25% of the target award) is funded at maximum if the Company is profitable, with actual award amounts being reduced from maximum based upon a discretionary assessment of individual performance by the Committee. The Committee assesses the individual performance of the CEO, and reviews and approves the CEO’s assessment of individual performance of the other NEOs in determining the individual performance component of CIP amounts.
At the beginning of each year, the Committee selects the overall corporate performance objectives, or funding criteria, that are used to determine the funding of the overall corporate performance component (75% of the target award) for the annual CIP. For 2018,2019, the Committee selected specific levels of adjusted EBIT as the performance metric based on the view that total shareholder return can be produced through sustained earnings growth, which Owens Corning measures through adjusted EBIT performance. Earnings metrics are the most prevalent annual incentive metrics amongst Owens Corning peers. Because of the importance of driving profitable growth, adjusted EBIT is weighted at 75% within the annual incentive payout. Owens Corning adjusted EBIT goals determine 40% of overall corporate funding, and performance of the Composites, Insulation, and Roofing businesses against their respective EBIT goals each contribute 20% to overall corporate funding.
Funding for each of the corporate components of the CIP can independently range, based on consolidated or business performance, from Threshold performance (0% CIP funding), to Target performance (100% CIP funding), to Maximum performance (200% CIP funding). For consolidated or business performance falling between the performance levels, CIP funding would fall proportionately between the corresponding funding levels. For example, for performance fallingtwo-thirds of the way between Threshold performance and Target performance, the resulting CIP funding would falltwo-thirds of the way between Threshold funding and Target funding. This straight-line mathematical interpolation is performed separately for Owens Corning, Composites, Insulation, and Roofing adjusted EBIT performance and the results are aggregated by applying a 40% weight to consolidated funding and 20% weight to the funding of each business.
When establishing 2019 Threshold, Target and Maximum CIP performance levels for the corporate components for 2018,requirements, the Committee used a variety of guiding principles, including:
Target performance levels generally correspond with the results and the business objectives called for in the Board-reviewed operations plan (a comprehensive strategic business plan for the Company) for the year. Whether the Target performance level can be attained is a function of the degree of difficulty associated with the operations plan.
Threshold performance levels will be set at the minimum level of acceptable performance, with minimum acceptable performance yielding below market compensation. CIP performance levels between Threshold and Target are intended to compensate participants below the targeted median, which the Committee believes is appropriate for a performance-based incentive plan.
The Maximum performance level is also determined based on the Committee’s view of the degree of difficulty of the operations plan–the more difficult the operating plan and, therefore, the Target performance level, is to achieve, the less incremental performance (above Target performance) is required to reach the Maximum.
The Maximum performance level will be set so that it is difficult to achieve and would deliver clear outperformance compared to the operating plan, with the mindset that Maximum performance significantly benefits the Company’s stockholders and warrants CIP funding at or near Maximum.
CIP awards between Target and Maximum should reflect a level of performance that distinguishes the Company and its leaders, and translates into increased stockholder value.
The Committee retains discretion to reduce awards or not pay CIP compensation even if the relevant performance targets are met, and to adjust performance targets based on timing and materiality of transactions, charges or accruals.
Based on timing for material transactions, the Committee may exclude the impact of a divestiture/acquisition (for example, not allow the additional EBIT of an acquired business to fund the CIP), or may include the impact of the acquisition (for example, include the acquired business’ EBIT after increasing the performance levels required to fund the CIP), it being the Committee’s intent to avoid funding windfalls and reward acquisition synergy capture.
Individual performance goals for the CEO are established and approved at the beginning of each year (see goal setting discussion below). For the remaining NEOs, the CEO and each officer establish and agree upon performance objectives which serve as the individual performance goals for that officer for the year. At the close of each year, the Committee evaluates the performance of the CEO against the established performance goals, in addition to other factors described below, and determines the level of funding of the individual component of the award. Similarly, the CEO reviews performance of the other NEOs against their individual goals and based on this assessment and other factors described below, the CEO makes a recommendation to the Committee. The Committee then determines the actual payout under the individual component of the CIP based on the recommendations of the CEO and its discretion, all subject to overall CIP funding levels for the CIP award.levels.
Long-Term Incentive
We believe long-term incentive opportunities should align NEO behaviors and results with key enterprise drivers and the interests of stockholders over an extended period. Our long-term incentive program (“LTI”) is an equity-based program that historically has used a combination of Restricted Stock, Restricted Stock Units, Stock Options and Performance Share Units. Performance Share Units use overlapping three-year performance cycles, with a new three-year cycle beginning each year. Stock Option grants were eliminated in 2015 and replaced with Performance Share Units which vest based uponpre-established adjusted return on capital metrics. For 20182019 NEO awards, the mix of LTI vehicles was maintained as follows:
Mix of LTI Equity Vehicles
Restricted Stock Units generally vestsvest at a rate of 25% per year over a four-year period. Employees in certain foreign jurisdictions have historically received Restricted Stock Units, and in 2019, all participants will shift to Restricted Stock Units. Our Return on Capital-based Performance Share Units (“ROC PSUs”) generally vest after the completion of the three-year performance period and deliver shares based on achievement of predetermined adjusted return on capital objectives.metrics. Our total shareholder return-based Performance Share Units (“TSR PSUs”) generally vest after the completion of the three-year performance period and deliver shares based on the Company’s total shareholder return relative to the companies that made up the Dow Jones Construction and Materials Index (the “Index”). The aggregate LTI award’s total value is allocated 40% to Restricted Stock Units, 35% to ROC PSUs, and 25% to TSR PSUs, and then each allocation is divided by the grant date stock price to determine the number of shares of Restricted Stock Units and target Performance Share Units that are granted.
Performance Share Units -– Return on Capital
The ROC PSUs granted in 20182019 will fund from 0% to 200% based upon annual adjusted return on capital achieved during the three-year performance period. For the purpose of funding the 2018 ROC PSUs, we will utilize annual adjusted return on capitalperiod, from 20182019 through 2020 to determine each year’s contribution to overall funding.2021. Each annual funding outcome will be averaged to determine the award payout. Adjusted return on capital for each fiscal year is calculated as adjusted EBIT plus fresh start depletion and amortization and depreciation less adjusted taxes, divided by the sum of average net fixed assets, average working capital, goodwill and intangible assets, less fresh start assetland and alloy adjustments. This formula removes the impact of fresh start accounting and may be adjusted for material transactions, accruals or charges as approved by the Committee, and thus may differ from return on capital that may be discussed in the context of our financial statements and other public disclosures.
For the 2018-20202019-2021 performance cycle, we increased the degree of difficulty associated with the ROC goals for Target and Maximum, to promote enhanced return on capital for our stockholders. Thresholdthreshold performance, which would provide for 50% funding, was set at 7.5% average adjusted return on capital, as a proxy for the Company’s long-term cost of capital. Target performance, which would provide for 100% funding, was set at 12% average adjusted return on capital. Maximum performance, which would provide for 200% funding, was set at 14% average adjusted return on capital. Payout will be interpolated on a straight-line mathematical basis for performance between Threshold and Target, or between Target and Maximum.
Performance Share Units -– Total Shareholder Return
For the 2018-20202019-2021 performance cycle, the TSR PSUs will fund from 0% to 200% based upon the Company’s total shareholder return as a percentile of the companies included in the Index as of the beginning of the performance period. The Index comparator group was selected to deliver payouts proportionate to performance againstas a peer group that is specific to our industry.industry and aligned to our markets and global exposure.
Threshold funding (0% payout) for the TSR PSUs applies up to the 25th percentile of the Index. Target funding (100% payout) is achieved at the 50th percentile. Maximum funding (200% payout) is earned at and above the 75th percentile. Payout is interpolated on a straight-line mathematical basis for performance between Threshold and Target, and between Target and Maximum, and is capped at 100% if our TSR is negative. The following chart depicts the payout opportunity for the 20182019 TSR PSU award:
2018 TSR PSUs - Payout Opportunity
Emphasis on Variable Pay
85%Our CEO and our NEOs have substantial “pay at risk,” with 84% of our CEO’s and 74%69% of our other NEOs’ target compensation (in other words, base salary, targetbeing tied to annual incentives and long-term incentives) is variable compensation directly contingent on performance.incentives (versus base salaries). Actual annual incentives and long-term incentive awards are subject to the achievement ofpre-established performance targetsrequirements and designed to link directlyalign to stockholder value. Base salary and other fixed elements of compensation are essential to any compensation program and relevant toenable the recruitment and retention of top talent. However, we believe that variable compensation for our most senior executives should significantly outweigh base salaries.
Our 20182019 NEO compensation reflects this philosophy. The following charts illustrate the target pay mix for our CEO and other NEOs for 2018.2019. Note the significant portion of compensation that is variableat-risk and performance-based:performance-based. For the purpose of this summary, the CEO pay mix is illustrated as Mr. Chambers’ annualized compensation opportunity as CEO. Mr. Thaman’s compensation and Mr. McMurray’s compensation are not included.
How We Assess Performance
Goal Setting
Annually, the Committee establishes financial, strategic and operational goals for the CEO related to three broad constituencies: stockholders, customers and employees. The CEO’s goals are generally based upon the Company’s operations plan, which is reviewed by the Board. For 2018,2019, the CEO’s individual goals were all qualitative in nature as described below.below and are reflective of the transition between Mr. Thaman and Mr. Chambers.
Stockholder goals may include specific measurements of profitability, cash flow, capital efficiency, expense management, and expense management.outcomes related to environmental, social and governance considerations. Customer goals include new sources of revenue, geographic expansion, customer channel expansion and new product development. Individual goals include succession planning for key roles, improved workplace safety, improved leadership engagementinclusion and diversity, and validation of program efficacy through external recognition.
We also believe it is important to embed compliance and risk management in all our business processes, including objective setting. The framework adopted by the Committee provides that it will considerconsiders compliance and risk management objectives in evaluating overall performance.
CEO Performance Assessment
In December of each year, the CEO prepares a self-review, discussing the progress made toward each of his individual goals, as well as the Company’s overall financial and operating performance. Eachnon-management director participates in an evaluation of CEO performance. The Lead Independent Director, in conjunction with the Compensation Committee Chairman, leadsled the Board’s assessment of Mr. Chambers’ and Mr. Thaman’s performance.performance for their respective tenure as CEO. The following table summarizes Mr. Thaman’sChambers’ goals and achievements for 2018:2019:
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Safety | ||
Continuous improvement in safety performance |
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Financial Performance | ||
Deliver EBIT and top line growth consistent with the internal business plan and investor expectations for earnings and cash
| Owens Corning delivered record revenues and double-digit operating
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Growth | ||
Deliver on key organic and inorganic growth initiatives and further develop leadership capabilities for growth |
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Talent | ||
Execute on talent development and succession plans |
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Maintain investment-grade rating, disciplined cash deployment and good debt financing |
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Board Development | ||
Enable Board oversight of growth initiatives and talent strategies |
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How We View Compensation
The 2018 Summary Compensation Table sets forth annual compensation datafollowing table summarizes Mr. Thaman’s goals and achievements during his tenure as CEO in accordance with SEC requirements. This uniform format is helpful for cross-company comparisons; however, the Committee believes theSEC-mandated format does not fully reflect all of its annual compensation decisions and, in particular, does not provide adequate basis for a holistic pay for performance assessment. Therefore, when reviewing compensation, the Committee also uses an alternative calculation methodology, as described in this section and summarized in the chart below (however, the following information should not be viewed as a replacement for the 2018 Summary Compensation Table or other compensation tables set forth below):
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Summary Compensation Table
The 2018 Summary Compensation Table values include the grant date fair value of long-term incentive award opportunities granted in February 2018, reflecting the Committee’s assessment of 2017 performance. Other elements included in the 2018 Summary Compensation Table (for example, changes in pension values) are outside the scope of the Committee’s annual pay decisions.
CEO Pay- 2018 Summary Compensation Table2019:
OBJECTIVE |
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Execute CEO transition plan | Excellent CEO succession that was well-received by stakeholders. | |
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Deliver EBIT and top line growth consistent with the internal business plan and investor expectations for earnings and cash flow; demonstrate operational flexibility and strong operating margins. | Owens Corning delivered record revenues and double-digit operating margins. Adjusted EBIT fell short of expectations. Cash conversion exceeded expectations and productivity gains and strong cost controls helped to offset the impact of softer markets. | |
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Enable strong, diverse Board composition and transition of Board leadership | ||
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Realizable Compensation
The Committee does not believe that the 2018 Summary Compensation Table values always adequately measure CEO compensation for the purpose of assessing the alignment of pay with performance. The method utilizes estimated values for long-term incentive award opportunities at the time of grant. As might be expected, however, estimated values can differ significantly from the actual value earned.
Therefore, the Committee also takes into consideration “Realizable Compensation”, which measures actual salary and annual incentives earned in a given year, combined with value of equity awards received (vested) over the same period. The examination of Realizable Compensation takes into account short-term corporate and individual performance (as generally measured by the Company’s annual incentive plan) and longer-term performance (as generally measured by changes in the Company’s stock price). Realizable Compensation captures the impact of Owens Corning’s current share price performance on previously granted long-term incentive awards by using the value of the awards vested during the calendar year, rather than a grant date fair value. The value is determined by using the Company’s stock price at the end of each year. The Committee, therefore, views Realizable Compensation as very relevant to its assessment of our compensation program’s alignment with stockholders’ long-term interests.
2018 Overview of CEO Realizable Compensation
| Pay Element | Calculation Methodology | 2018 | ||||
Base Salary | Actual base salary earned in the year shown | $ | 1,175,000 | |||
Annual Incentive | Actual annual incentive earned for the performance year shown | $ | 521,407 | |||
Stock Awards | Actual value of restricted share awards received (vested) for the year shown from prior grants, based upon the share price at the end of the year shown | $ | 2,205,597 | |||
Performance Share Units | Actual value of the performance share units received (vested) based upon the three year period ending in the year shown, based upon the share price at the end of the year shown | $ | 5,607,450 | |||
Total Realizable Compensation | $ | 9,509,454 | ||||
Details Regarding 20182019 Pay Decisions for Named Executive Officers
In this section, we review and explain the specific 20182019 compensation decisions for each of our NEOs.
Corporate Incentive Plan
For 2018,2019, CIP funding for corporate performance was based upon adjusted EBIT. Target performance for the consolidated metric was set at $997$915 million for 2018,2019, which represents an improvement over actual 20172018 adjusted EBIT of $855$861 million. The 2018 target includes expected adjusted EBIT impact from the acquisition of Paroc. The funding targets and outcomes were as follows (dollars displayed in millions):
| CIP Metric | Threshold (0% Funding) | Target (100% Funding) | Maximum (200% Funding) | 2018 Actual | Funding | Weight | ||||||||||||||||||||||||||
Consolidated Adjusted EBIT | $ | 897 | $ | 997 | $ | 1,097 | $ | 861 | 0 | % | 40 | % | ||||||||||||||||||||
Composites EBIT | $ | 280 | $ | 310 | $ | 340 | $ | 251 | 0 | % | 20 | % | ||||||||||||||||||||
Insulation EBIT | $ | 227 | $ | 317 | $ | 362 | $ | 290 | 70 | % | 20 | % | ||||||||||||||||||||
Roofing EBIT | $ | 440 | $ | 515 | $ | 590 | $ | 434 | 0 | % | 20 | % | ||||||||||||||||||||
| | Total Funding | | 14 | % | ||||||||||||||||||||||||||||
| CIP METRIC | THRESHOLD (0% Funding) | TARGET (100% Funding) | MAXIMUM (200% Funding) | 2019 ACTUAL
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Consolidated Adjusted EBIT | $ | 765 | $ | 915 | $ | 1,015 | $ | 828 | 42% | 40% | ||||||||||
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Composites EBIT | $ | 225 | $ | 260 | $ | 295 | $ | 247 | 63% | 20% | ||||||||||
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Insulation EBIT | $ | 245 | $ | 320 | $ | 370 | $ | 230 | 0% | 20% | ||||||||||
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Roofing EBIT | $ | 380 | $ | 480 | $ | 555 | $ | 455 | 75% | 20% | ||||||||||
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| TOTAL FUNDING | 44% | |||||||||||||||||||
The NEOs’ maximum awards for the individual performance component (weighted at 25%) of the CIP are described below and are subject to downward discretion by the Committee based upon its assessment of the individual performance of each NEO for 2018.2019. As described below, the factors considered in assessing individual performance were: the performance of business or functional areas for which the individual is accountable, achievement of predetermined qualitative goals, impact on the organization and talent development.
Individual performance is based on a discretionary holistic assessment of the NEO’s overall performance. The Committee determined theeach CEO’s individual award based upon its assessment of theeach CEO’s performance forduring the year.time in role. For the other NEOs, the assessment was made by the CEO for each NEO on an individual basis and reviewed and approved by the Committee in its discretion. Mr. Thaman was not eligible for CIP during his tenure as Executive Chairman. His compensation as Executive Chairman is described below. When assessing individual performance, the considerations by the CEO and the Committee included those referenced above when determining base salary, as well as a comparison among the NEOs to determine their relative contributions to the Company’s business results, with the goal to differentiate awards based on performance. The Committee received recommendations from the CEO, assessed his performance evaluation for each of the other NEOs and applied its judgment consistent with the factors described above to review and approve the CIP payouts for each
NEO for 2018 in its discretion.2019. The table below summarizes each NEO’s maximum and actual corporate component and maximum and actual individual component payout under the CIP for 2018:2019:
| Corporate Performance (75% Weighting) | Individual Performance (25% Weighting) | |||||||||||||||||||||||||||||||
Target CIP | Max Opportunity @ 200% | Actual Funding @ 14% | Max Opportunity @ 200% | Actual Individual Award | Total 2018 CIP Award | |||||||||||||||||||||||||||
Thaman | 125% | $2,203,125 | $154,219 | $734,375 | $367,188 | $521,407 | ||||||||||||||||||||||||||
McMurray | 80% | $774,000 | $54,180 | $258,000 | $129,000 | $183,180 | ||||||||||||||||||||||||||
Chambers | 80% | $693,288 | $48,530 | $231,096 | $115,548 | $164,078 | ||||||||||||||||||||||||||
Francis | 75% | $601,875 | $42,131 | $200,625 | $100,313 | $142,444 | ||||||||||||||||||||||||||
Smith | 70% | $593,250 | $41,528 | $197,750 | $148,313 | $189,841 | ||||||||||||||||||||||||||
| CORPORATE PERFORMANCE (75% Weighting) | INDIVIDUAL PERFORMANCE (25% Weighting) | |||||||||||||||||||||
TARGET CIP | MAX OPPORTUNITY @ 200% | ACTUAL FUNDING @ 44% | MAX OPPORTUNITY @ 200% | ACTUAL INDIVIDUAL AWARD | TOTAL 2019 CIP AWARD | |||||||||||||||||
Chambers | 80%/125%* | $ | 1,600,387 | $ | 352,085 | $ | 533,462 | $ | 346,751 | $ | 698,836 | |||||||||||
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Thaman (while CEO) | 125% | $ | 645,848 | $ | 142,087 | $ | 215,283 | $ | 139,934 | $ | 282,020 | |||||||||||
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Gandhi | 45% | $ | 247,831 | $ | 54,522 | $ | 82,610 | $ | 53,697 | $ | 108,219 | |||||||||||
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Smith | 70% | $ | 609,000 | $ | 133,980 | $ | 203,000 | $ | 142,100 | $ | 276,080 | |||||||||||
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Sandri | 75% | $ | 585,000 | $ | 128,700 | $ | 195,000 | $ | 146,250 | $ | 274,950 | |||||||||||
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Harter | 70% | $ | 551,250 | $ | 121,275 | $ | 183,750 | $ | 128,625 | $ | 249,900 | |||||||||||
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McMurray** | 80% | $ | 798,000 | N/A | $ | 266,000 | N/A | N/A | ||||||||||||||
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*CIP Target during tenure as COO/CEO during 2019
**Mr. McMurray was not eligible for a CIP payout for 2019
Long-Term Incentive Plan
The value of actual 20182019 LTI grants for the NEOs versus prior year grants are described below. To determine the 20182019 grant levels, the Committee considered a variety of factors including individual performance, prior year awards, market median LTI award levels, total compensation versus market median, and the Company’s year-over-year improvement in performance from 20172018 to 2018.2019. The stock price on the grant date was used to value all LTIP grants. The actual accounting charge for these awards is determined under ASC Topic 718 and may be more or less than the standardized value Owens Corning uses internally for grant size determination.
| 2017 LTI Award | 2018 LTI Award | 2018 LTI AWARD | 2019 LTI AWARD | |||||||||||||||||
Chambers | $ | 1,150,000 | $ | 4,140,000 | ||||||||||||||||
Thaman | $ | 6,500,000 | $ | 6,500,000 | $ | 6,500,000 | $ | 2,000,000 | ||||||||||||
Gandhi | $ | 350,000 | $ | 325,000 | ||||||||||||||||
Smith | $ | 1,100,000 | $ | 1,100,000 | ||||||||||||||||
Sandri | $ | 430,000 | $ | 900,000 | ||||||||||||||||
Harter | $ | 850,000 | $ | 900,000 | ||||||||||||||||
McMurray | $ | 1,400,000 | $ | 1,400,000 | $ | 1,400,000 | $ | 1,450,000 | ||||||||||||
Chambers | $ | 950,000 | $ | 1,150,000 | ||||||||||||||||
Francis | $ | 950,000 | $ | 1,050,000 | ||||||||||||||||
Smith | $ | 1,100,000 | $ | 1,100,000 | ||||||||||||||||
Upon Mr. McMurray’s resignation, 100% of his 2019 LTI award was forfeited, as well as the unvested portion of awards granted in prior years.
For the 2017-2019 LTI performance cycle, beginning in 2016 and ended in 2018, funding criteria for the performance share units were based on the Company’s: (1) adjusted Return on Capital performance;performance and (2) Reportable Revenue; and (3) Total Shareholder Return relative to constituents of the former S&P Building and Construction Select Industry Index.
In 2016, 2017 and 2018, Owens Corning’s adjusted Return on Capital exceeded our maximum performance level of 11.5% resultingresulted in a maximum payout of 200%. An additional target award160% of 100% was earned as the Company exceeded $7 billion in reportable revenue and more than 9% return on capital in 2018.target. As noted above, adjusted Return on Capital reflects adjustments for the impact of fresh start accounting as well as material transactions, accruals or charges as approved by the Committee.
With regard to the Total Shareholder Return metric, Owens Corning’s stock performed at the 20th54th percentile versus companies in the Index, resulting in 0%116% funding. The value of the 2016-20182017-2019 LTI grant is included in the above table summarizing CEO realizable compensation and below in the 20182019 Option Exercises and Stock Vested Table.
In connection with the appointment
Compensation Related to CEO and CFO Transition
As disclosed on Form8-K, Mr. Chambers’ base pay was adjusted to $1,035,000 and his CIP target was adjusted to 125% upon his promotion to CEO. Mr. Chambers’ total CIP target is a weighted average of Brian Chambers80% of his base pay rate as COO and 125% of his base pay rate as CEO, weighted according to the Chief Operating Officeramount of time he spent in each role during 2019. The table above reflects the result of this proration. In addition, in 2019 Mr. Chambers was awarded a long-term incentive award valued at $4,140,000, which is elevated from his prior award level due to his announced succession to the position of CEO.
Also, as disclosed on Formone-time8-K, Mr. Thaman’s base pay was adjusted to $875,000 upon his transition to Executive Chairman. Mr. Thaman’s CIP target for 2019 was equal to 125% of his base pay rate as CEO for the proportion of time he spent in that role in 2019. The table above reflects the result of this proration. In lieu of continued participation in the annual CIP following his transition to Executive Chairman, he instead is eligible for a bonus equal to 100% of base salary based on the Committee and Lead Independent Director’s twelve-month assessment of Mr. Thaman’s impact on the success of the Company’s new CEO. In addition, in 2019 Mr. Thaman was awarded a restricted stock unit award valued as $2,000,000, which is proportional to the time he spent as CEO during 2019 and will vest 25% per year over four years.
During 2019, Mr. Gandhi received a retention award of Restricted Stock Units valued at $200,000 with three-year cliff vesting, which is reflected in the Summary Compensation Table. Upon appointment to Interim CFO Mr. Gandhi’s compensation structure was not changed, and instead he was granted a cash bonus of $150,000 which will be paid at the time a CFO is named, and an additional grant with a three-year “cliff” vesting, was awarded as follows:
| NEO | COO Appointment Award as Percent of Base Salary | Number of Shares | ||||||
Chambers | 100% | 10,339 | ||||||
In connection with Brian Chambers’ appointment described above, certain other NEOs received aone-timeof Restricted Stock grant designed to retain them during the Company’s multi-year periodUnits valued at $200,000 as of leadership transition. These grants were awarded as follows:February 5, 2020, which will vest 50% on February 5, 2021 and 50% on February 5, 2022.
| NEO | Retention Award as a Percent of Base Salary | Vesting Period | Number of Shares | |||||||
McMurray | 100 | % | Two-year cliff | 10,259 | ||||||
Smith | 100 | % | Two-year cliff | 8,987 | ||||||
Francis | 200 | % | 50% year two/50% year three | 17,019 | ||||||
CEO and Other NEO Total Direct Compensation Decisions
The following tables summarize the Committee’s decisions for the 20182019 performance year. Unlike the 20182019 Summary Compensation Table, which includes the long-term incentive awards granted in calendar year 2018,2019, Total Direct Compensation shown in the following table instead includes long-term incentive awards granted in February 2019, reflecting a more appropriate2020, which reflects an assessment of 20182019 performance. However, thisThe 2020 grant of performance share units includes a new metric related to achievement of free cash flow objectives, in addition to continued use of total shareholder return and return on capital metrics. This table should not be viewed as a replacement for the 20182019 Summary Compensation Table or other compensation tables set forth below.below, as details of 2020 long-term incentive awards are not material to understanding compensation that was delivered in 2019.
Michael H. Thaman,Brian D. Chambers, President and Chief Executive Officer
| Compensation Element | 2018 | |||
2018 Base Salary | $ | 1,175,000 | ||
2018 Annual Incentive | $ | 521,407 | ||
2019 Grant of Restricted Stock Units | $ | 2,000,000 | ||
2019 Grant of Performance Share Units | $ | - | ||
Total Direct Compensation | $ | 3,696,407 | ||
COMPENSATION ELEMENT | 2019 | |||
2019 Base Salary (effective April 18, 2019) | $ | 1,035,000 | ||
2019 Annual Incentive (CIP paid in 2020) | $ | 698,836 | ||
2020 Grant of Restricted Stock Units | $ | 1,900,000 | ||
2020 Grant of Performance Share Units | $ | 2,850,000 | ||
Total Direct Compensation | $ | 6,483,836 |
2018
Michael H. Thaman, Executive Chairman and Former Chief Executive Officer
COMPENSATION ELEMENT | 2019 | |||
2019 Base Salary (effective April 18, 2019) | $ | 875,000 | ||
2019 Annual Incentive (CIP paid in 2020) | $ | 282,020 | ||
2020 Grant of Restricted Stock Units | $ | — | ||
2020 Grant of Performance Share Units | $ | — | ||
Total Direct Compensation | $ | 1,157,020 |
2019 Other NEO Total Direct Compensation
| Compensation Element | McMurray | Chambers | Francis | Smith | ||||||||||||
2018 Base Salary | $ 645,000 | $ 650,000 | $ 535,000 | $ 565,000 | ||||||||||||
2018 Annual Incentive | $ 183,180 | $ 164,078 | $ 142,444 | $ 189,841 | ||||||||||||
2019 Grant of Restricted Stock Units | $ 580,000 | $ 1,656,000 | $ 449,400 | $ 440,000 | ||||||||||||
2019 Grant of Performance Share Units | $ 870,000 | $ 2,484,000 | $ 674,100 | $ 660,000 | ||||||||||||
Total Direct Compensation | $ | 2,278,180 | $ | 4,954,078 | $ | 1,800,944 | $ | 1,854,841 | ||||||||
| COMPENSATION ELEMENT | GANDHI | SMITH | SANDRI | HARTER | ||||||||||||
2019 Base Salary | $ | 367,156 | $ | 580,000 | $ | 520,000 | $ | 525,000 | ||||||||
2019 Annual Incentive (CIP paid in 2020) | $ | 108,219 | $ | 276,080 | $ | 274,950 | $ | 249,900 | ||||||||
2020 Grant of Restricted Stock Units | $ | 200,000 | $ | 440,000 | $ | 400,000 | $ | 400,000 | ||||||||
2020 Grant of Performance Share Units | $ | 200,000 | $ | 660,000 | $ | 600,000 | $ | 600,000 | ||||||||
Total Direct Compensation | $ | 875,375 | $ | 1,956,080 | $ | 1,794,950 | $ | 1,774,900 | ||||||||
Michael C. McMurray, SeniorPrithvi S. Gandhi, Vice President, andInterim Chief Financial Officer (“CFO”)
Key 20182019 measurement criteria for Mr. McMurrayGandhi included:
Effective capital allocation and access to capital markets;
DevelopmentBalance sheet management, capital adequacy, cash flow conversion, forecasting and coaching of key roles within the Finance, Sourcing and Supply Chain organizations;external guidance;
Successfully identifySuccessful identification and executeexecution of organic and inorganic growth opportunities;
Balance sheet management, capital adequacy, forecastingTalent development, retention and external guidance; andsuccession management;
Effective financial controls and systems.
As a result of his assessment of Mr. McMurray’sGandhi’s performance, Mr. ThamanChambers recommended the Committee approve a 36% payout of 66% of Target under the annual CIP for him. This is comprised of 14%44% funding for the corporate component of the award opportunity and 100%130% funding of the individual component. The Committee approved this award of $183,180.$108,219. In addition, the Committee approved an aggregate long-term incentive award of $1,450,000,$400,000, granted in February 2019.2020.
Brian D. Chambers,Daniel T. Smith, as Senior Vice President, Organization and Chief Operating OfficerAdministration
Key 20182019 measurement criteria for Mr. ChambersSmith included:
Enterprise-wide safety evaluationGrowth management system design, resourcing and action planexecution;
Deliver second-half financial results for Owens CorningOrganization design optimizing overall structure including acquisition integrations;
OngoingTalent management, retention and development of organizational capabilities to execute organic growth opportunities;key leadership roles, and succession planning;
Successful transitionEmphasis and onboarding of new President, Roofing
Operational Excellence across all three businessesprogress on diversity objectives.
As a result of his assessment of Mr. Chambers’Smith’s performance, Mr. ThamanChambers recommended the Committee approve a 36% payout of 68% of Target under the annual CIP for him. This is comprised of 14%44% funding for the corporate component of the award opportunity and 100%140% funding of the individual component. The Committee approved this award of $164,078.$276,080. In addition, the Committee approved an aggregate long-term incentive award of $4,140,000,$1,100,000, granted in February 2019, to recognize Mr. Chambers’ transition to CEO.2020.
Julian Francis,
Marcio A. Sandri, President, InsulationComposites
Key 20182019 measurement criteria for Mr. FrancisSandri included:
Improvement in safety performance for the Composites business;
Deliver financial results for the InsulationComposites business;
Integration of Paroc and acceleration of growth in key market segments;
Talent development and succession management;
Manufacturing excellence; and
Execution of commercial growth initiatives.initiatives
As a result of his assessment of Mr. Francis’Sandri’s performance, Mr. ThamanChambers recommended the Committee approve a 36%71% payout under the annual CIP for him. This is comprised of 14% funding for the corporate component of the award opportunity and 100% funding of the individual component. The Committee approved this award of $142,444. In addition, the Committee approved an aggregate long-term incentive award of $1,123,500, granted in February 2019.
Daniel T. Smith, Senior Vice President, Organization and Administration
Key 2018 measurement criteria for Mr. Smith included:
Talent management, retention and development of key leadership roles, and succession planning;
Organization design optimizing overall structure including acquisition integrations;
Continuous improvement in digital technology experience and communications;
Enhancing marketing capability; and
Emphasis and progress on diversity objectives.
As a result of his assessment of Mr. Smith’s performance, Mr. Thaman recommended the Committee approve a 48% payout under the annual CIP for him. This is comprised of 14%44% funding for the corporate component of the award opportunity and 150% funding of the individual component. The Committee approved this award of $189,841.$274,950. In addition, the Committee approved an aggregate long-term incentive award of $1,100,000,$1,000,000, granted in February 2019.2020.
Ava Harter, Senior Vice President, General Counsel and Secretary
Key 2019 measurement criteria for Ms. Harter included:
Enable growth initiatives and manage enterprise risk as a trusted business partner;
Successful execution of intellectual property strategies and protections;
Continued evolution of corporate governance structure and processes;
Talent development and succession management;
Maintain a strong ethical corporate culture.
As a result of his assessment of Ms. Harter’s performance, Mr. Chambers recommended the Committee approve a 68% payout under the annual CIP for her. This is comprised of 44% funding for the corporate component of the award opportunity and 140% funding of the individual component. The Committee approved this award of $249,900. In addition, the Committee approved an aggregate long-term incentive award of $1,000,000, granted in February 2020.
Additional Compensation Practices
Stock Ownership Guidelines and Holding Requirements
Stock ownership guidelines for our officers and directors are designed to closely link their interests with those of our stockholders. These stock ownership guidelines provide that the CEO must own stock with a value of six times his base salary and each other NEO must own stock with a value of three times his or her base salary.salary, excluding individuals in interim positions. All other Vice Presidents must retain 100%outside directors with more than three years ofafter-tax shares received through LTI grants until their tenure on the Board hold stock in excess of the ownership guideline is met.guidelines applicable to our directors. Outside directors are required to own shares with a value of five times the maximum annual cash retainer. As of the date of this Proxy Statement, all NEOs hold stock in excess of the applicable ownership guidelines. All outside directors with more than three years of tenure on the Board hold stock in excess of the ownership guidelines applicable to our directors. For further details on actual ownership, please refer to the Security Ownership of Certain Beneficial Owners and Management table provided earlier in this Proxy Statement.
Compensation-Based Risk Assessment
The Committee believes that although the majority of compensation provided to the NEOs is performance-based, our compensation programs for all employees do not encourage behaviors that pose a material risk to the Company. The design of our employee compensation programs encourages balanced focus on both the short-term and the long-term operational and financial goals of the Company. The Company reviewed the risks associated with its global compensation program and reviewed the results with the Committee during 2018.2019. As a result, the Committee continues to believe that there are no risks arising from employee compensation programs that are reasonably likely to have a material adverse effect on the Company.
Timing of Equity Awards
The Company does not have any program, plan or practice to time equity grants in coordination with the release of material,non-public information. Annual awards of restricted stock units and Performance Share Unitsperformance share units are granted on the date of the Committee’s annual first quarter meeting. The Company may also grant equity awards to newly-hired or promoted executives, effective on the start or promotion date.
Perquisites
The NEOs participate in the same health care and other employee benefit programs that are generally available for all salaried employees. The Committee has eliminated executive perquisites.
Deferred Compensation Plan
The Company maintains a nonqualified deferred compensation plan under which certain employees, including the NEOs, are permitted to defer receipt of some or all of their base salary and cash incentive awards under the CIP. Deferred amounts are credited with earnings or losses based on the rate of return of specified mutual funds and/or Owens Corning stock. The deferred compensation plan is not funded, and participants have an unsecured commitment from the Company to pay the amounts due under the plan. When such payments become distributable, the cash will be distributed from general assets.
The Company also provides a 401(k) Restoration Match to restore benefits that are limited in the qualified 401(k) Savings Plan due to IRS rules. The benefit is calculated as the Company contribution the employee would have received absent IRS pay limits and nonqualified deferrals, less the actual Company contribution to the 401(k) Savings Plan. Eligible participants must be employed at the end of the calendar year to receive this benefit, which is added to unfunded deferred compensation accounts annually and administered to comply with Section 409A of the Internal Revenue Code.
In addition, certain employees, including NEOs, may voluntarily defer receipt of some or all of their stock-based awards granted under the LTI program.
We provide the opportunity to defer compensation in an effort to maximize the tax efficiency of our compensation program. We believe that this benefit, along with the 401(k) Restoration Match, is an important retention and recruitment tool as many of the companies with which we compete for executive talent provide similar plans to their executive employees.
Post-Termination Compensation
We have entered into severance agreements with our Vice Presidents, including the NEOs. These agreements were approved by the Committee. The severance agreements were adopted for the purpose of providing for payments and other benefits if the officer’s employment terminates for a qualifying event or circumstance, such as being terminated without cause as this term is defined in the severance agreements. We believe that these agreements are important to recruiting and retaining our officers, as many of the companies with which we compete for executive talent have similar agreements in place for their executive employees. Based on practices among peer companies and consistent with the interests and needs of the Company, the Committee determined an appropriate level of severance payments and the circumstances that should trigger such payments. Therefore, the severance agreements with the NEOs provide, under certain termination scenarios, up to two years of pay and benefits. The severance agreements provide for payments upon a change in control only if the individual is also terminated for reasons other than cause in connection with the change in control. Payments under the severance agreements are made in cash and are paid depending on the terms of the individual executive’s agreement, either in the form of aone-timelump-sum payment or in the same manner as the regular payroll over a24-month period. Health care coverage provided under the severance agreements is provided in kind. Additional specific information regarding potential payments under these severance agreements is found under the heading, “Potential Payments upon Termination orChange-in-Control.”
Tax Deductibility of Pay
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Tax Code”), generally places a limit of $1 million on the amount of compensation we may deduct in any one year with respect to any covered
employee under Section 162(m). The historic exception to the $1 million limitation for performance-based compensation meeting certain requirements was eliminated in recent changes to the Tax Code, subject to certain grandfathering for arrangements in place prior to November 2, 2017.
Awards pursuant to our CIP and grantsGrants of Performance Share Units and stock options prior to November 2, 2017 were designed and intended to potentially qualify as performance-based compensation so that they might be tax deductible. Restricted stock that is subject only to time-based vesting was not generally considered performance-based under Section 162(m) of the Tax Code.
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 Committee believes that the tax deduction limitation should not be permitted to compromise our ability to design and maintain executive compensation arrangements that will attract and retain executive talent. Moreover, even if the Committee intended to grant compensation that qualifies as performance-based compensation for purposes of Section 162(m) of the Tax Code, we cannot guarantee that such compensation will so qualify or ultimately is or will be deductible.
Disclosure of Specific Incentive Targets
With respect to both the CIP and LTI, detail on the specific financial performance targets under these criteria for performance periods completed during the reporting period has been disclosed above. However, certain performance targets for ongoing and future performance periods are not disclosed because they are substantially based on the prospective strategic plans and corporate objectives of the Company, and disclosure of these prospective specific performance targets is not material to an understanding of our NEO compensation for 2018.2019. Such performance goals do not have a material impact on the compensation actually received in, or attributable to, the 20182019 reported period. As described above, and as evidenced by the targets and outcomes described for the
completed performance periods for the incentive compensation plans, the performance targets selected have a degree of difficulty which the Committee considers to be challenging but achievable. The Committee establishes the goals at the beginning of the performance period at levels that reflect our internal, confidential operations plan. These goals are within the ranges of what we have publicly disclosed for completed performance periods, and accordingly require a high level of financial performance in the context of the current business climate and over the performance periods to be achieved.
Compensation Governance Practices
We consider it to be good governance to continually monitor the evolution of compensation best practices. Some of the most important practices incorporated into our program include the following:
Review of Pay versus Performance. The Committee continually reviews the relationship between compensation and Company performance.
Median Compensation Targets. All compensation elements for our executives are initially targeted at the median of our competitive marketplace for talent and positioned within a reasonable range based on actual experience and performance.
Performance Metrics. The Committee annually reviews performance goals for our annual and long-term incentive plans to assure the use of challenging, but fair metrics and targets. Additionally, the Committee reviews the cost of our plans at various performance levels to ensure that stockholders are appropriately benefiting from performance outcomes.
Clawback of Compensation. If the Board of Directors determines that a NEOan Executive Officer has engaged in fraud, willful misconduct, or a violation of Company policy, or an error was committed, that caused or otherwise contributed to the need for a material restatement of the Company’s financial results, the Committee will review all performance-based compensation, including cash incentive awards and all forms of equity-based compensation, awarded to or earned by the NEOExecutive Officers during the respective fiscal periods affected by the restatement. If the Committee determines that performance-based compensation would have been materially lower if it had been based on the restated results, the Committee willmay seek recoupment from the NEOExecutive Officers as it deems appropriate based on a consideration of the facts and circumstances and applicable laws and policies.
Meaningful Stock Ownership Guidelines. Our stock ownership requirements are rigorous: six times base salary for the CEO, three times base salary for other NEOs, and five times maximum annual cash retainer for Board members.
No Hedging. Owens Corning does not allowhas adopted a “Policy Prohibiting Hedging or Pledging Owens Corning Securities.” Pursuant to this Policy,non-employee directors, officers, company insiders and NEOs to enter into short sales ofall other employees who hold Owens Corning common stock or similar transactions where potential gains are linked toas a declineresult of their participation in the priceOwens Corning Stock Plan are prohibited from engaging in any transaction in which they profit if the value of our stock. Recipients of equity awards also may not enterOwens Corning common stock falls. This includes trading and/or entering into hedging transactions at any agreement that has the effect of transferringtime in publicly traded options, puts, calls, straddles, strips or exchanging any economic interest in an award for any other consideration.securities derived from or relating to Owens Corning securities.
No Pledging. Directors and NEOs, as well as all officers of the Company, are prohibited from pledging Company securities as collateral for a loan or holding Company securities in a margin account.
No Repricing Without Stockholder Approval. Stock option exercise prices are set to equal the grant date market price and may not be reduced or replaced with stock options with a lower exercise price without stockholder approval.
Market-Competitive Retirement Programs. We eliminated defined benefit pension benefits for salaried employees hired after January 1, 2010 and froze existing salaried pension benefits to future accruals at the same time. Our NEOs participate in the Company’s 401(k) plan and are eligible for a Company match on amounts in excess of statutory limits.
Restrictive Covenants. Our NEOs must adhere to restrictive covenants upon separation from Owens Corning, includingnon-compete,non-solicitation andnon-disclosure obligations.
No Excise TaxGross-Ups. Parachute excise tax reimbursements andgross-ups will not be provided in the event of achange-in-control.
Review of Compensation Peer Group. Our compensation peer group is reviewed regularly by the Committee and adjusted, when necessary, to ensure that its composition remains a relevant and appropriate comparison for our executive compensation program.
Review of Committee Charter. The Committee reviews its charter annually to consider the incorporation ofbest-in-class governance practices.
Stockholder Outreach. We regularly solicit feedback from our stockholders on our executive compensation programs and corporate governance.governance, and in corporate such feedback into our compensation structure going forward.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis appearing in this Proxy Statement with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form10-K for the year ended December 31, 2018.2019.
By the Compensation Committee:
Edward F. Lonergan, Chairman
Cesar CondeEduardo Cordeiro
Ralph F. Hake
Suzanne P. Nimocks
NAMED EXECUTIVE OFFICER COMPENSATION
20182019 Summary Compensation Table
The following tables provide information on total compensation paid to the Chief Executive Officer, the Chief Financial Officer and certain other officers of Owens Corning (the “NEOs”).
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | Non- Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Michael H. Thaman | 2018 | 1,175,000 | — | 6,649,473 | — | 521,407 | 38,000 | 353,580 | 8,737,460 | |||||||||||||||||||||||||||
President, Chief Executive Officer and Chairman of the Board | 2017 | 1,169,250 | — | 6,785,997 | — | 2,111,475 | 118,000 | 108,469 | 10,293,191 | |||||||||||||||||||||||||||
| 2016
| 1,140,500
| —
| 5,723,522
| —
| 1,960,520
| 5,000
| 116,726
| 8,946,267
| ||||||||||||||||||||||||||||
Michael C. McMurray | 2018 | 641,667 | — | 2,070,838 | — | 183,180 | — | 97,653 | 2,993,338 | |||||||||||||||||||||||||||
Senior Vice President and Chief Financial Officer | 2017 | 620,833 | — | 1,465,939 | — | 742,500 | 2,000 | 90,878 | 2,922,150 | |||||||||||||||||||||||||||
| 2016 | 589,167 | — | 1,352,288 | — | 616,500 | 1,000 | 56,745 | 2,615,699 | ||||||||||||||||||||||||||||
Brian D. Chambers | 2018 | 587,500 | — | 1,824,045 | — | 164,078 | — | 74,767 | 2,650,390 | |||||||||||||||||||||||||||
President and Chief Operating Officer | 2017 | 493,333 | — | 993,516 | — | 575,625 | — | 68,704 | 2,131,178 | |||||||||||||||||||||||||||
| 2016 | 450,000 | — | 833,885 | — | 537,338 | — | 39,863 | 1,861,086 | ||||||||||||||||||||||||||||
Julian Francis | 2018 | 529,167 | — | 2,139,193 | — | 142,444 | — | 69,127 | 2,879,931 | |||||||||||||||||||||||||||
President, Insulation | 2017 | |||||||||||||||||||||||||||||||||||
| 2016 | ||||||||||||||||||||||||||||||||||||
Daniel T. Smith | 2018 | 562,500 | — | 1,686,633 | — | 189,841 | — | 95,648 | 2,534,622 | |||||||||||||||||||||||||||
Senior Vice President, Organization and Administration | 2017 | 546,667 | — | 1,152,130 | — | 590,975 | 1,000 | 81,013 | 2,371,785 | |||||||||||||||||||||||||||
| 2016
| 527,500
| —
| 1,036,805
| —
| 531,458
| —
| 53,256
| 2,149,019
|
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($) | BONUS ($) | STOCK AWARDS ($)(1) | OPTION AWARDS ($) | NON- EQUITY INCENTIVE COMPENSATION ($)(2) | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(3) | ALL OTHER COMPENSATION ($)(4) | TOTAL ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian D. Chambers | 2019 | 918,333 | — | 4,385,152 | — | 698,836 | — | 84,008 | 6,086,329 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President and CEO | 2018 | 587,500 | — | 1,824,045 | — | 164,078 | — | 74,767 | 2,650,390 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 493,333 | — | 993,516 | — | 575,625 | — | 68,704 | 2,131,178 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael H. Thaman | 2019 | 965,909 | — | 1,998,800 | — | 282,020 | 25,000 | 88,933 | 3,360,662 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Chairman and Former CEO | 2018 | 1,175,000 | — | 6,649,473 | — | 521,407 | 38,000 | 353,580 | 8,737,460 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 1,169,250 | — | 6,785,997 | — | 2,111,475 | 118,000 | 108,469 | 10,293,191 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prithvi S. Gandhi | 2019 | 364,242 | — | 546,903 | — | 108,219 | — | 43,972 | 1,063,336 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice President, Interim, CFO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel T. Smith | 2019 | 577,500 | — | 1,166,815 | — | 276,080 | — | 83,244 | 2,103,639 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President, | 2018 | 562,500 | — | 1,686,633 | — | 189,841 | — | 95,648 | 2,534,622 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Growth Officer | 2017 | 546,667 | — | 1,152,130 | — | 590,975 | 1,000 | 81,013 | 2,371,785 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marcio A. Sandri | 2019 | 516,667 | — | 952,515 | — | 274,950 | — | 60,649 | 1,804,781 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President, Composites | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ava Harter | 2019 | 520,833 | — | 952,515 | — | 249,900 | — | 72,828 | 1,796,076 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President, General Counsel and Secretary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael C. McMurray | 2019 | 536,979 | — | 1,534,206 | — | — | — | 99,342 | 2,170,527 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Senior Vice President and CFO | 2018 | 641,667 | — | 2,070,838 | — | 183,180 | — | 97,653 | 2,993,338 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 620,833 | — | 1,465,939 | — | 742,500 | 2,000 | 90,878 | 2,922,150 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The amounts reflected in this column for |
| (2) | The amounts reflected in this column for |
| (3) | The amounts reflected in this column for |
| (4) | For |
The following table provides more detail behind the 20182019 amounts reported in column (i) above:
| Name | Accrued Cash Dividends ($) | Qualified Savings Plan Company Contribution | Nonqualified Deferred Compensation Plan Company Contribution ($) | Total: All Other Compensation ($) | ||||||||||||||||||||||||||||||||||||||||||||
| NAME | QUALIFIED SAVINGS PLAN COMPANY CONTRIBUTION ($) | NONQUALIFIED DEFERRED COMPENSATION PLAN CONTRIBUTION ($) | TOTAL: ALL OTHER COMPENSATION ($) | |||||||||||||||||||||||||||||||||||||||||||||
Brian D. Chambers | 22,400 | 61,608 | 84,008 | |||||||||||||||||||||||||||||||||||||||||||||
Michael H. Thaman | 267,938 | 22,000 | �� | 63,642 | 353,580 | 22,400 | 66,533 | 88,933 | ||||||||||||||||||||||||||||||||||||||||
Prithvi S. Gandhi | 22,400 | 21,572 | 43,972 | |||||||||||||||||||||||||||||||||||||||||||||
Daniel T. Smith | 22,400 | 60,844 | 83,244 | |||||||||||||||||||||||||||||||||||||||||||||
Marico A. Sandri | 22,400 | 38,249 | 60,649 | |||||||||||||||||||||||||||||||||||||||||||||
Ava Harter | 22,400 | 50,428 | 72,828 | |||||||||||||||||||||||||||||||||||||||||||||
Michael C. McMurray | 8,550 | 22,000 | 67,103 | 97,653 | 22,400 | 76,942 | 99,342 | |||||||||||||||||||||||||||||||||||||||||
Brian D. Chambers | — | 22,000 | 52,767 | 74,767 | ||||||||||||||||||||||||||||||||||||||||||||
Julian Francis | — | 22,000 | 47,127 | 69,127 | ||||||||||||||||||||||||||||||||||||||||||||
Daniel T. Smith | 17,677 | 22,000 | 55,971 | 95,648 | ||||||||||||||||||||||||||||||||||||||||||||
20182019 Grants of Plan-Based Awards Table
The following table provides information regarding threshold, target and maximum award levels or full grant amounts under various compensation and incentive plans applicable to the NEOs. The narrative that follows describes such programs as reflected in the table. Actual payouts for the 20182019 CIP are reflected in column (g) of the 20182019 Summary Compensation Table. Funding and individual award amounts are determined as described in the narrative to these tables.
Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant Date
| Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| All Other Stock Awards: Number of Shares of Stock
| Grant Date Value of Stock Option
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NAME | GRANT DATE | THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brian D. Chambers | 2019 CIP (1) | — | 1,066,925 | 2,133,849 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 RSU (2) | — | — | — | — | — | — | 31,500 | 1,656,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 ROC PSU (3) | — | — | — | 13,775 | 27,550 | 55,100 | — | 1,375,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 TSR PSU (3) | — | — | — | — | 19,700 | 39,400 | — | 1,352,405 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael H. Thaman | 2018 CIP (1) | — | 1,468,750 | 2,937,500 | — | — | — | — | — | 2019 CIP (1) | — | 430,565 | 861,130 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 RS (2) | — | — | — | — | — | — | 28,000 | 2,603,160 | 2019 RSU (2) | — | — | — | — | — | — | 38,000 | 1,998,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 ROC PSU (3) | — | — | — | 12,225 | 24,450 | 48,900 | — | 2,208,813 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prithvi S. Gandhi | 2019 CIP (1) | — | 165,220 | 330,441 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 TSR PSU (3) | — | — | — | — | 17,500 | 35,000 | — | 1,837,500 | 2019 RSU (2) | — | — | — | — | — | — | 3,100 | 163,060 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael C. McMurray | 2018 CIP (1) | — | 516,000 | 1,032,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 RS (2) | — | — | — | — | — | — | 6,000 | 557,820 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 ROC PSU (3) | — | — | — | 2,625 | 5,250 | 10,500 | — | 474,285 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 TSR PSU (3) | — | — | — | — | 3,750 | 7,500 | — | 393,750 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 Retention (4) | — | — | — | — | — | — | 10,259 | 644,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian D. Chambers | 2018 CIP (1) | — | 462,192 | 924,384 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 RS (2) | — | — | — | — | — | — | 4,900 | 455,553 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 ROC PSU (3) | — | — | — | 2,175 | 4,350 | 8,700 | — | 392,979 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 TSR PSU (3) | — | — | — | — | 3,100 | 6,200 | — | 325,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 Appointment (4) | — | — | — | — | — | — | 10,339 | 650,013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Julian Francis | 2018 CIP (1) | — | 401,250 | 802,500 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 RS (2) | — | — | — | — | — | — | 4,500 | 418,365 | 2019 ROC PSU (3) | — | — | — | 775 | 1,550 | 3,100 | — | 77,407 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 ROC PSU (3) | — | — | — | 1,975 | 3,950 | 7,900 | — | 356,843 | 2019 TSR PSU (3) | — | — | — | — | 1,550 | 3,100 | — | 106,408 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 TSR PSU (3) | — | — | — | — | 2,800 | 5,600 | — | 294,000 | 2019 Retention (4) | — | — | — | — | — | — | 3,165 | 200,028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 Retention (4) | — | — | — | — | — | — | 17,019 | 1,069,985 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel T. Smith | 2018 CIP (1) | — | 395,500 | 791,000 | — | — | — | — | — | 2019 CIP (1) | — | 406,000 | 812,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 RS (2) | — | — | — | — | — | — | 4,700 | 436,959 | 2019 RSU (2) | — | — | — | — | — | — | 8,400 | 441,840 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 ROC PSU (3) | — | — | — | 2,075 | 4,150 | 8,300 | — | 374,911 | 2019 ROC PSU (3) | — | — | — | 3,650 | 7,300 | 14,600 | — | 364,562 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 TSR PSU (3) | — | — | — | — | 2,950 | 5,900 | — | 309,750 | 2019 TSR PSU (3) | — | — | — | — | 5,250 | 10,500 | — | 360,413 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 Retention (4) | — | — | — | — | — | — | 8,987 | 565,013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marcio A. Sandri | 2019 CIP (1) | — | 390,000 | 780,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 RSU (2) | — | — | — | — | — | — | 6,800 | 357,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 ROC PSU (3) | — | — | — | 3,000 | 6,000 | 12,000 | — | 299,640 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 TSR PSU (3) | — | — | — | — | 4,300 | 8,600 | — | 295,195 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ava Harter | 2019 CIP (1) | — | 367,500 | 735,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 RSU (2) | — | — | — | — | — | — | 6,800 | 357,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 ROC PSU (3) | — | — | — | 3,000 | 6,000 | 12,000 | — | 299,640 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 TSR PSU (3) | — | — | — | — | 4,300 | 8,600 | — | 295,195 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael C. McMurray | 2019 CIP (1) | — | 532,000 | 1,064,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 RSU (2) | — | — | — | — | — | — | 11,000 | 578,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 ROC PSU (3) | — | — | — | 4,825 | 9,650 | 19,300 | — | 481,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 TSR PSU (3) | — | — | — | — | 6,900 | 13,800 | — | 473,685 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Reflects the NEO’s annual incentive opportunity under the CIP for the annual performance period commencing in |
| (2) | Reflects the restricted stock units award granted to each NEO on |
| (3) | Reflects the long-term incentive opportunity granted to the NEO under the 2016 Stock Plan for the performance period commencing in |
| (4) | Reflects the |
Narrative to 20182019 Summary Compensation Table and 20182019 Grants of Plan-Based Awards Table
Base Salary, Severance and Certain Other Arrangements
During 2018,2019, each of the NEOs participated in the Company’s compensation and benefits programs for salaried employees as described here and reflected in the tables and accompanying footnotes. Each NEO receives an annual base salary as reflected in the 20182019 Summary Compensation Table above. The amount of such base salary as a component of the total compensation is established and reviewed each year by the Compensation Committee, and is described above in the Compensation Discussion and Analysis. Severance arrangements with each of the NEOs are as described below in thePotential Payments Upon Termination orChange-In-Control section.
Annual Corporate Incentive Plan (“CIP”)
Owens Corning maintains the CIP, in which all salaried employees participate, with specific Company performance criteria adopted annually. Each of the NEOs is eligible to receive annual cash incentive awards based on his individual performance and corporate performance against annual performance goals set by the Compensation Committee. Under the CIP for the 20182019 annual performance period, the funding measures set by the Compensation Committee were based on consolidated adjusted EBIT and EBIT for the Composites, Insulation, and Roofing businesses respectively. Cash awards paid to the NEOs under the CIP for the 20182019 performance period are reflected in column (g) of the 20182019 Summary Compensation Table above and the range of award opportunities under the 20182019 CIP is reflected in the 20182019 Grants of Plan-Based Awards Table above.
Long-Term Incentive Program (“LTIP”)
Owens Corning maintains a LTIP applicable to certain salaried employees as selected by the Compensation Committee, including each of the NEOs. The plan is designed to align participant compensation with the attainment of certain longer-term business goals established by the Compensation Committee.
In 2016,2019, the Company’s stockholders approved the Owens Corning 20162019 Stock Plan, which replaced the Owens Corning 20132016 Stock Plan. In this Proxy Statement, we refer to the stock plan in place at the relevant time as the “Stock Plan.” The Stock Plan provides for participation by employees, management and directors and authorizes grants of stock options, stock appreciation rights, stock awards, restricted stock awards, restricted stock units, bonus stock awards, performance stock awards and performance share units. The 20132016 Stock Plan
document was filed with the SEC in connection with the 2016 Proxy Statement. The 2019 Stock Plan document was filed with the SEC in connection with the 2013 Proxy Statement. The 2016 Stock Plan document was filed with the SEC in connection with the 20162019 Proxy Statement.
The planLTIP utilizes PSUs with three-year performance cycles, adopted annually, with payouts under the program dependent upon corporate performance against performance goals set by the Compensation Committee for each cycle. The outstanding three-year cycles as of December 31, 20182019 include: January 1, 2016 through December 31, 2018; January 1, 2017 through December 31, 2019; and January 1, 2018 through December 31, 2020.2020; and January 1, 2019 through December 31, 2021. Estimated future payouts of awards under the 2018-20202019-2021 cycle are reflected in the 20182019 Grants of Plan-Based Awards Table above.
The award shown in the 20182019 Grants of Plan-Based Awards Table represents the NEO’s opportunity to earn the amount shown in the “maximum” column of the table if the maximum performance goal established by the Compensation Committee at the beginning of the performance period are attained or exceeded during the performance period. In the event the maximum performance goal is not attained, then the NEOs may earn the amounts shown in the “target” column if the target level of performance is attained, or amounts below the “target” level if lower level of performance is attained. Participants will earn intermediate amounts for performance between the maximum and target levels, or between the target and threshold levels.
For the performance period commencing in 2018,2019, the LTIP award provides an award under the Owens Corning Stock Plan in three separate components: (1) Restricted Stock AwardsUnit awards granted under the Stock Plan as described below: awardsLTIP generally vest and restrictions generally lapse on these restricted stock awards 25% per year over four years, based uponon continued tenureemployment during the vesting period; (2) Return on Capital (“ROC”) PSUs awardedawards granted under the Stock Plan as described below: awardsLTIP generally vest in these PSUs at the completion
end of the three-year performance period, and receive a settlement of the awardare settled in shares based on the performance of the Company againstpre-established performance criteria–the ROC PSUs are settled in Company common stock;criteria; and (3) Relative Total Shareholder Return (“TSR”) PSUs awardedawards granted under the Stock Plan as described below: awardsLTIP generally vest in these PSUs at the completionend of the three-year performance period, and receive a settlement of the awardare settled in shares based on the performance of the Company againstpre-established relative TSR performance criteria – the TSR PSUs are settled in Company common stock.criteria.
For 2018,2019, Mr. Chambers received aone-time Restricted Share award with three-year cliff vesting in relation to his appointment as Chief Operating Officer. In connection with the Company’s leadership transition, Mr. McMurray and Mr. Smith eachGandhi received aone-time retention award withtwo-year cliff vesting and Mr. Francis received aone-time retention award that vests 50% after year two and 50% after year three. three-year “cliff” vesting.
CEO Pay Ratio
The SECSecurities and Exchange Commission (“SEC”) has adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the annual total compensation of the Chief Executive Officer. The following pay ratio disclosure is the Company’s reasonable, good faith estimate based upon the permitted methodology described below, pursuant to the SEC’s guidance under Item 402(u) of RegulationS-K:
| 2019 TOTAL COMPENSATION | ||||||||
1) As of October 1,
2) We excluded
3)
5) Based on each employee’s total cash compensation, we then identified the median employee from our adjusted Global Population. | 1) Eachnon-U.S. employee’s total cash compensation was converted from local currency to U.S. dollars using the closing spot foreign exchange rate on September 30,
2) The annual total compensation for our CEO is an annualized estimate of base salary and bonus plus the actual stock and other compensation reported on the 2019 Summary Compensation Table, which represents the
3) The annual total compensation for our median employee represents the amount of such employee’s compensation for | The annual total compensation of our CEO as of October 1, 2019, Mr.
Median of the annual total compensation of all employees (except the CEO):
Based on the above information, for | ||||||
|
* Breakdown of our total Global Population: USA (8,520 employees),non-U.S. (11,378 employees). Countries (number of employees) excluded were as follows: Austria (3), Belarus (5), Czech Republic (248), Denmark (8), Estonia (10), Germany (96), Hong Kong (2), Japan (20), Latvia (9), Netherlands (172), Norway (9), Singapore (45), Slovakia (2), Spain (83), Switzerland (17), United Arab Emirates (1), and United Kingdom (112). |
The following table sets forth information concerning unexercised options, stock awards that have not vested, and equity incentive plan awards for each NEO that were outstanding at the end of 2018.2019.
Outstanding Equity Awards at 20182019 FiscalYear-End Table
| Option Awards | Stock Awards | OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NAME | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b)(1) | (c) | (d) | (e) | (f)(2) | (g)(3) | (h)(4) | (i)(3) | (b)(1) | (c) | (d) | (e) | (f)(2) | (g)(3) | (h)(4) | (i)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brian D. Chambers | — | — | — | — | 50,739 | 3,304,124 | 54,700 | 3,562,064 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,600 | — | 42.16 | 2/6/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,100 | — | 37.65 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael H. Thaman | 98,900 | 4,349,622 | 112,650 | 4,954,347 | — | — | — | — | 94,700 | 6,166,864 | 41,950 | 2,731,784 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 102,400 | — | 33.73 | 2/1/2022 | 102,400 | — | 33.73 | 2/1/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 86,000 | — | 42.16 | 2/6/2023 | 86,000 | — | 42.16 | 2/6/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 90,500 | — | 37.65 | 2/5/2024 | 90,500 | — | 37.65 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael C. McMurray | 32,459 | 1,427,547 | 24,250 | 1,066,515 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,100 | — | 37.65 | 2/5/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian D. Chambers | 25,739 | 1,132,001 | 17,800 | 782,844 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,600 | — | 42.16 | 2/6/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,100 | — | 37.65 | 2/5/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Julian Francis | 32,219 | 1,416,992 | 17,100 | 752,058 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,400 | — | 42.16 | 2/6/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prithvi S. Gandhi | — | — | — | — | 11,990 | 780,789 | 5,000 | 325,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,800 | — | 37.65 | 2/5/2024 | 1,025 | — | 37.65 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel T. Smith | 26,362 | 1,159,401 | 19,100 | 840,018 | — | — | — | — | 27,112 | 1,765,533 | 19,650 | 1,279,608 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,775 | — | 37.65 | 2/5/2024 | 3,775 | — | 37.65 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marcio A. Sandri | — | — | — | — | 18,895 | 1,230,442 | 12,600 | 820,512 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,700 | — | 33.96 | 2/2/2021 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,400 | — | 33.73 | 2/1/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,200 | — | 42.16 | 2/6/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,000 | — | 37.65 | 2/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ava Harter | — | — | — | — | 26,778 | 1,743,783 | 15,800 | 1,028,896 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Michael C. McMurray | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Vested options expire on the tenth anniversary of the grant date. |
| (2) | Restricted Stock and Restricted Stock Units granted on |
| (3) | Market value reflects the closing price of the Company’s common stock as of the last trading day of |
| (4) | Reflects unvested stock-settled PSUs under the LTIP, at target performance. |
20182019 Option Exercises and Stock Vested Table
The following table sets forth the required information on NEO stock awards that vested and stock options that were exercised during 2018.2019.
| Option Awards | Stock Awards | OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | ||||||||||||||||||||||||||||||||
| NAME | NUMBER OF ACQUIRED ON EXERCISE (#) | VALUE ON EXERCISE ($) (1) | NUMBER OF SHARES ACQUIRED ON VESTING (#) | VALUE REALIZED ($) (2) | ||||||||||||||||||||||||||||||||
Brian D. Chambers | — | — | 25,100 | 1,308,122 | ||||||||||||||||||||||||||||||||
Michael H. Thaman | — | — | 177,650 | 11,022,533 | — | — | 169,700 | 8,843,096 | ||||||||||||||||||||||||||||
Michael C. McMurray | — | — | 39,500 | 2,593,999 | ||||||||||||||||||||||||||||||||
Brian D. Chambers | — | — | 25,375 | 1,561,347 | ||||||||||||||||||||||||||||||||
Julian Francis | — | — | 26,150 | 1,592,183 | ||||||||||||||||||||||||||||||||
Prithvi S. Gandhi (3) | — | — | 7,046 | 377,796 | ||||||||||||||||||||||||||||||||
Daniel T. Smith | — | — | 32,075 | 1,986,670 | — | — | 30,750 | 1,602,559 | ||||||||||||||||||||||||||||
Marico A. Sandri (4) | 9,000 | 278,340 | 7,218 | 579,098 | ||||||||||||||||||||||||||||||||
Ava Harter (5) | — | — | 12,580 | 1,099,559 | ||||||||||||||||||||||||||||||||
Michael C. McMurray (6) | 21,100 | 534,991 | 37,527 | 2,080,830 | ||||||||||||||||||||||||||||||||
| (1) |
|
| (2) | Represents thepre-tax value realized on stock awards that vested during the fiscal year, computed by multiplying the number of shares acquired upon vesting by the closing market price of Owens Corning common stock on the vesting date. |
| (3) | Mr. Gandhi elected to defer 232 shares from the stock awards that vested during the fiscal year. He elected to receive these shares as a lump sum following termination, subject to the requirements of 409A of the Internal Revenue Code. |
| (4) | Mr. Sandri elected to defer 4,136 shares from the stock awards that vested during the fiscal year. He elected to receive these shares as a lump sum following termination, subject to the requirements of 409A of the Internal Revenue Code. |
| (5) | Ms. Harter elected to defer 9,230 shares from the stock awards that vested during the fiscal year. She elected to receive these shares as a lump sum two years after the vesting, subject to the requirements of 409A of the Internal Revenue Code. |
| (6) | Mr. McMurray elected to defer 2,605 shares from the stock awards that vested during the fiscal year. He elected to receive these shares as a lump sum two years after the vesting, subject to the requirements of 409A of the Internal Revenue Code. |
20182019 Pension Benefits Table
The following table sets forth the required information regarding pension benefits, as applicable, for the NEOs for 2018.2019.
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (1) | Payments During Last Fiscal Year ($) | ||||||||||||||||||||||||
| NAME | PLAN NAME | NUMBER OF CREDITED SERVICE (#) | PRESENT VALUE BENEFIT ($) (1) | PAYMENTS DURING LAST FISCAL YEAR ($) | ||||||||||||||||||||||||
Brian D. Chambers | Qualified Plan (2) | — | — | — | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Top-Hat Plan (3) | — | — | — | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Total | — | — | ||||||||||||||||||||||||||
Michael H. Thaman | Qualified Plan (2) | 17.37 | 147,000 | — | Qualified Plan (2) | 17.37 | 152,000 | — | ||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Top-Hat Plan (3) | 17.37 | 620,000 | — | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Total | 772,000 | — | ||||||||||||||||||||||||||
Prithvi S. Gandhi | Qualified Plan (2) | — | — | — | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Top-Hat Plan (3) | — | — | — | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Total | — | — | ||||||||||||||||||||||||||
Daniel T. Smith | Qualified Plan (2) | 0.30 | 5,000 | — | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Top-Hat Plan (3) | — | — | — | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Total | 5,000 | — | ||||||||||||||||||||||||||
Marcio A Sandri | Qualified Plan (2) | 9.42 | 20,000 | — | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Top-Hat Plan (3) | 9.42 | 5,000 | — | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Total | 25,000 | — | ||||||||||||||||||||||||||
Ava Harter | Qualified Plan (2) | — | — | — | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Top-Hat Plan (3) | — | — | — | |||||||||||||||||||||||||
| Top-Hat Plan (3) | 17.37 | 600,000 | — |
| ||||||||||||||||||||||||
| Total | 747,000 | — | Total | — | — | |||||||||||||||||||||||
Michael C. McMurray | Qualified Plan (2) | 1.08 | 11,000 | — | Qualified Plan (2) | 1.08 | 11,000 | — | ||||||||||||||||||||
| Top-Hat Plan (3) | 1.08 | 1,000 | — |
| ||||||||||||||||||||||||
| Total | 12,000 | — | Top-Hat Plan (3) | 1.08 | 1,000 | — | ||||||||||||||||||||||
Brian D. Chambers | Qualified Plan (2) | — | — | — | ||||||||||||||||||||||||
| Top-Hat Plan (3) | — | — | — |
| ||||||||||||||||||||||||
| Total | — | — | Total | 12,000 | — | |||||||||||||||||||||||
Julian Francis | Qualified Plan (2) | — | — | — | ||||||||||||||||||||||||
| Top-Hat Plan (3) | — | — | — | |||||||||||||||||||||||||
| Total | — | — | ||||||||||||||||||||||||||
Daniel T. Smith | Qualified Plan (2) | 0.30 | 5,000 | — | ||||||||||||||||||||||||
| Top-Hat Plan (3) | N/A | — | — | |||||||||||||||||||||||||
| Total | 5,000 | — | ||||||||||||||||||||||||||
| (1) | These values are calculated in accordance with requirements of the |
| (2) | Refers to benefits under the Company’s Cash Balance Plan or, if greater, under the Owens Corning Salaried Employees’ Retirement Plan maintained prior to 1996, as discussed below. |
| (3) | Refers to benefits under the Company’snon-qualified Supplemental Plan. |
Owens Corning maintains atax-qualified noncontributory defined benefit cash balance pension plan (the “Cash Balance Plan”) covering certain salaried and hourly employees in the United States, including certain NEOs. The Cash Balance Plan was adopted by Owens Corning in replacement of the qualified Salaried Employees’ Retirement Plan maintained prior to 1996, which we refer to as the “Prior Plan.” The Prior Plan provided retirement benefits primarily on the basis of age at retirement, years of service and average earnings from the highest three consecutive years of service. Under the Cash Balance Plan, for each year prior to January 1, 2010, eligible employees generally earned a benefit of 4% of such employee’s covered pay. This was referred to under the Cash Balance Plan as a “Pay Credit.” Covered pay was defined generally as base pay and certain annual incentive compensation amounts payable during the year. Effective January 1, 2010, the Cash Balance Plan was amended to eliminate Pay Credit accruals and was closed to new participation. Accrued benefits continue to earn monthly interest based on the average interest rate for five-year United States treasury
securities. Employees with an accrued benefit under the Cash Balance Plan vest in that benefit once they have completed three years of service. Vested employees may receive their benefit under the Cash Balance Plan as a lump sum or as a monthly payment when they leave the Company.
As the Company transitioned from the Prior Plan to the current Cash Balance Plan, participating employees who were at least age 40 with 10 years of service as of December 31, 1995 became entitled to receive the greater of their benefit under the Prior Plan frozen as of December 31, 2000, or under the Cash Balance Plan.
Each participating NEO would have been entitled to payment of their vested accrued benefit under thetax-qualified plan in the event of a termination occurring on December 31, 2018,2019, valued as alump-sum payable as of that date as follows: Mr. Thaman, $163,739;$168,471; Mr. Smith, $5,670; Mr. Sandri, $22,369; and Mr. McMurray, $12,469; and Mr. Smith, $5,511.$12,830. Mr. Chambers, Mr. Gandhi and Mr. FrancisMs. Harter do not participate in the Cash Balance Plan.
In addition to thetax-qualified pension plan, Owens Corning maintains supplemental pension benefits, including the Supplemental Plan that pays eligible employees leaving the Company the difference between the benefits payable under Owens Corning’stax-qualified pension plan and those benefits that would have been payable except for limitations imposed by the Internal Revenue Code. The Supplemental Plan was amended to eliminate future accruals and was closed to new participation effective January 1, 2010. Some NEOs participate in both thetax-qualified pension plan and the Supplemental Plan.
Each eligible NEO would have been entitled to payment of their vested accrued benefit under the Supplemental Plan in the event of a termination occurring on December 31, 2018,2019, valued as alump-sum payable as of that date as follows: Mr. Thaman, $703,965;$694,691; Mr. Sandri, $5,769; and Mr. McMurray, $1,595.$1,641. Mr. Chambers, Mr. FrancisGandhi, Mr. Smith and Mr. SmithMs. Harter do not participate in the Supplemental Plan.
NONQUALIFIED DEFERRED COMPENSATION
The Company has established an unfunded Deferred Compensation Plan under which eligible officers, including several of the NEOs, are permitted to defer some or all of their cash incentive compensation and up to 80% of their base salary. Officers may defer compensation until their separation from the Company, or may designate a set deferral period between two and ten years. They may elect to take their distribution as a lump sum, five annual installments, ten annual installments, or a set dollar amount.
In 2018,2019, Owens Corning provided Company contributions to the accounts of eligible Vice Presidents,officers, including several of the NEOs, to restore Company contributions and matching contributions that were limited in the 401(k) Plan by the IRS. These contributions are deferred until separation, and officers may elect to defer payments for an additional two to ten years after separation. They may elect to take their distribution as a lump sum, five annual installments, ten annual installments, or a set dollar amount.
Vice PresidentsOfficers may choose among mutual funds offered in the 401(k) Plan, as well as Owens Corning stock, for hypothetical investment of their account. Deferred amounts are credited with earnings or losses based on the rate of return of specified mutual funds and/or the value of Owens Corning stock. This plan is unfunded and unsecured, and all investments are hypothetical.
20182019 Nonqualified Deferred Compensation Table
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($)(3) | |||||||||||||||
Michael H. Thaman | — | 63,642 | (49,793) | — | 634,170 | |||||||||||||||
Michael C. McMurray (4) | 101,292 | 67,103 | 17,385 | — | 584,072 | |||||||||||||||
Brian D. Chambers (5) | 47,000 | 52,767 | (9,913) | — | 265,238 | |||||||||||||||
Julian Francis (6) | 58,746 | 47,127 | (20,413) | — | 243,250 | |||||||||||||||
Daniel T. Smith (7) | 70,347 | 55,971 | (4,869) | — | 593,243 | |||||||||||||||
| NAME | EXECUTIVE CONTRIBUTIONS IN LAST FISCAL YEAR ($) | REGISTRANT CONTRIBUTIONS IN LAST FISCAL YEAR ($)(1) | AGGREGATE EARNINGS IN LAST FISCAL YEAR ($)(2) | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | AGGREGATE BALANCE LAST YEAR END ($)(3) | |||||||||||||||
Brian D. Chambers (4) | 73,467 | 61,608 | 50,573 | — | 450,886 | |||||||||||||||
Michael H. Thaman | — | 66,533 | 150,122 | — | 850,825 | |||||||||||||||
Prithvi S. Gandhi (5) | 18,212 | 21,572 | 44,552 | — | 235,359 | |||||||||||||||
Daniel T. Smith (6) | 47,859 | 60,844 | 28,429 | (12,302 | ) | 718,073 | ||||||||||||||
Marcio A. Sandri (7) | 108,053 | 38,249 | 53,205 | — | 404,672 | |||||||||||||||
Ava Harter (8) | 8,768 | 50,428 | 40,121 | 210,768 | ||||||||||||||||
Michael C. McMurray (9) | 62,857 | 76,942 | 47,505 | — | 771,376 | |||||||||||||||
| (1) | This amount reflects the unfunded Company contribution to each account, to restore 401(k) Plan Company contributions and matching contributions that are limited by the IRS; this amount is included in “All Other Compensation” in the |
| (2) | The amounts do not reflect above-market or preferential earnings and are therefore not reported in the |
| (3) | The aggregate balance includes the following amounts that were reported in the Summary Compensation Table for each NEO in previous years: Mr. Thaman: |
| (4) | The amount in the first column reflects the deferral of a portion of Mr. |
| (5) | The amount in the first column reflects the deferral of a portion of Mr. |
| (6) | The amount in the first column reflects the deferral of a portion of Mr. |
| (7) | The amount in the first column reflects the deferral of a portion of Mr. |
| (8) | The amount in the first column reflects the deferral of a portion of Ms. Harter’s 2018 CIP paid in 2019, which is not reflected in“Non-Equity Incentive Plan Compensation” in the 2019 Summary Compensation Table for 2018. |
| (9) | The amount in the first column reflects the deferral of a portion of Mr. McMurray’s 2019 base salary, which is reflected as “Salary” in the 2019 Summary Compensation Table and 2018 CIP paid in 2019, which is reflected in“Non-Equity Incentive Plan Compensation” in the |
POTENTIAL PAYMENTS UPON TERMINATION ORCHANGE-IN-CONTROL
The Company has entered into certain agreements and maintains certain plans under which the Company would provide compensation to NEOs in the event of a termination of employment or achange-in-control of the Company. The payment and benefit levels disclosed in the table below are determined under the various triggering events pursuant to these agreements that both define what constitutes the triggering event and provides those payments that would be due upon the occurrence of such events.
Severance agreements have been executed with and are in effect for Messrs. Thaman, McMurray, Chambers, FrancisGandhi, Smith, Sandri and Smith. The severance agreements in placeMs. Harter which provide, under certain termination scenarios as reflected in the table below, for the payment of an amount equal to two times base salary and annual incentive compensation amounts plus continuation of health insurance coverage for a maximum period of one year. Mr. Thaman’s previous eligibility for reimbursement with respect to certain taxes if applicable to the severance payments has been discontinued. The severance agreements provide for payments upon achange-in-control only if the individual is also terminated for reasons other than cause in connection with thechange-in-control. Payments under the severance agreements are made in cash and are paid depending upon the terms of the individual NEO’s agreement, either in the form of aone-timelump-sum payment or in the same manner as the regular payroll payments over a24-month period. Health care coverage provided under the severance agreements is providedin-kind.
The CIP and the LTIPPSU awards each contain provisions that require continued employment during the performance period in order to be eligible to receive a payout under the plans, absent achange-in-control. However, for death or disability which occurs during the performance period, the NEO may receive an award for that performance period; and in the case of retirement which occurs within the performance period the NEO may receive apro-rated CIP award for that performance period. CIP payments are made inone-time,lump-sum payments of cash.cash following the performance period.
The Stock Plan provides, under certain circumstances as described above, for acceleration of vesting of restricted stock, restricted stock units, performance share units and option awards. Accelerated vesting of outstanding restricted stock, restricted stock units, performance share units and option awards may only occur upon death, disability or achange-in-control. In addition, prior stock option grants provide for two years to exercise the award, but no later than original expiration, in the event of retirement at age 55 and 5 years of service.
The NEOs are entitled, upon or following their termination, to their accrued benefits under the Supplemental Plan arrangements as described above. NEOs would also be entitled to the normal vested pension benefits and other vested benefits which are generally available to all salaried employees who terminate employment with the Company under various circumstances.
Upon the occurrence of any triggering event, the payment and benefit levels would be determined under the terms of the agreement. The specific definitions of the triggering events are set forth in detail in the agreements which have been filed as exhibits to prior disclosures. In addition, severance payments are paid contingent upon confidentiality, a mutual release and an agreement not to compete. Each of the retirement payments of vested accrued benefits that would have occurred upon a termination event described herein are set forth in the narrative to the 20182019 Pension Benefits Table above.
PAYMENTS UPON TERMINATION ORCHANGE-IN-CONTROL TABLE
(assumes termination orchange-in-control as of December 31, 2018)2019)
($ in thousands)
| Event and Amounts | Michael H. Thaman | Michael C. McMurray | Brian D. Chambers | Julian Francis | Daniel T. Smith | |||||||||||||||||||||||||||||||||||||||
| EVENT AND AMOUNTS | BRIAN D. CHAMBERS | MICHAEL H. THAMAN | PRITHVI S. GHANDI | DANIEL T. SMITH | MARCIO A. SANDRI | AVA A. HARTER | ||||||||||||||||||||||||||||||||||||||
Voluntary Termination | ||||||||||||||||||||||||||||||||||||||||||||
No other payments due | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| No other payments due (as was the case for Mr. McMurray) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Retirement | ||||||||||||||||||||||||||||||||||||||||||||
No other payments due | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Involuntary Termination for Cause | ||||||||||||||||||||||||||||||||||||||||||||
Outplacement Services (1) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
No other payments due | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
InvoluntaryNot-For-Cause Termination | ||||||||||||||||||||||||||||||||||||||||||||
CIP | 521 | 183 | 164 | 142 | 140 | 619 | 250 | 96 | 235 | 226 | 213 | |||||||||||||||||||||||||||||||||
Restricted Stock Awards (2) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Option Awards (2) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Performance Share Units (3) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Cash Severance | 6,479 | 2,322 | 2,224 | 1,873 | 1,921 | 4,204 | 255 | 1,065 | 1,972 | 1,820 | 1,785 | |||||||||||||||||||||||||||||||||
Health Care Continuation (1) | 28 | 10 | 14 | 15 | 14 | 16 | 5 | 6 | 11 | 16 | 15 | |||||||||||||||||||||||||||||||||
Outplacement Services (1) | 22 | 22 | 22 | 22 | 22 | 22 | — | 22 | 22 | 22 | 22 | |||||||||||||||||||||||||||||||||
Termination Upon aChange-in-Control | ||||||||||||||||||||||||||||||||||||||||||||
CIP | 521 | 183 | 164 | 142 | 140 | 619 | 250 | 96 | 235 | 226 | 213 | |||||||||||||||||||||||||||||||||
Restricted Stock Awards (2) | 4,350 | 1,428 | 1,132 | 1,417 | 1,159 | 3,304 | 6,167 | 781 | 1,766 | 1,230 | 1,744 | |||||||||||||||||||||||||||||||||
Option Awards (2) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Performance Share Units (3) | 9,909 | 2,133 | 1,566 | 1,504 | 1,680 | 7,124 | 5,464 | 651 | 2,559 | 1,641 | 2,058 | |||||||||||||||||||||||||||||||||
Cash Severance | 6,479 | 2,322 | 2,224 | 1,873 | 1,921 | 4,204 | 255 | 1,065 | 1,972 | 1,820 | 1,785 | |||||||||||||||||||||||||||||||||
Health Care Continuation (1) | 28 | 10 | 14 | 15 | 14 | 16 | 5 | 6 | 11 | 16 | 15 | |||||||||||||||||||||||||||||||||
Outplacement Services (1) | 22 | 22 | 22 | 22 | 22 | 22 | — | 22 | 22 | 22 | 22 | |||||||||||||||||||||||||||||||||
Change-in-Control with No Termination | ||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Awards (2) | 4,350 | 1,428 | 1,132 | 1,417 | 1,159 | 3,304 | 6,167 | 781 | 1,766 | 1,230 | 1,744 | |||||||||||||||||||||||||||||||||
Option Awards (2) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Performance Share Units (3) | 9,909 | 2,133 | 1,566 | 1,504 | 1,680 | 7,124 | 5,464 | 651 | 2,559 | 1,641 | 2,058 | |||||||||||||||||||||||||||||||||
Pre-Retirement Death | ||||||||||||||||||||||||||||||||||||||||||||
CIP | 521 | 183 | 164 | 142 | 140 | 619 | 250 | 96 | 235 | 226 | 213 | |||||||||||||||||||||||||||||||||
Restricted Stock Awards (2) | 4,350 | 1,428 | 1,132 | 1,417 | 1,159 | 3,304 | 6,167 | 781 | 1,766 | 1,230 | 1,744 | |||||||||||||||||||||||||||||||||
Option Awards (2) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| (1) | Where eligible for such benefits, the amount includes both health care continuation coverage and/or outplacement services. The value of health care continuation is based on the Company’s net plan cost and the coverage category in which the executive is enrolled; this value assumes that the executive continues to pay the employee portion of the premium. The value of outplacement services assumes the maximum services available under the severance agreement. As a practical matter the actual value of such services is typically substantially less than the maximum. |
| (2) | For stock awards, |
| (3) | Performance Share Unit awards are not forfeited upon death or disability, but would vest in full as of the date of death or disability and payout would be determined consistent with performance only at the end of the performance period. The value of awards at the end of the performance period is uncertain and would reflect the performance against the established performance targets. For involuntary termination, voluntary termination, or for termination for cause occurring before vesting, these awards would be forfeited. As of December 31, |
20182019NON-MANAGEMENT DIRECTOR COMPENSATION
The following table sets forth the compensation for 20182019 of thenon-management members of the Board of Directors. Employee directors do not receive additional compensation for such service. The narrative that follows the table describes the compensation programs applicable to thenon-management directors during 2018.2019.
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | |||||||||||||||||||||
| NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS | TOTAL ($) | |||||||||||||||||||||
Cesar Conde | 94,000 | 141,000 | 235,000 | 28,148 | 42,267 | 70,415 | ||||||||||||||||||
Adrienne Elsner | 85,906 | 128,858 | 214,764 | |||||||||||||||||||||
J. Brian Ferguson | — | 255,000 | 255,000 | |||||||||||||||||||||
Eduardo E. Cordeiro | — | 65,296 | 65,296 | |||||||||||||||||||||
Adrienne D. Elsner | 94,000 | 141,039 | 235,039 | |||||||||||||||||||||
Brian J. Ferguson | — | 244,972 | 244,972 | |||||||||||||||||||||
Ralph F. Hake | 94,000 | 141,000 | 235,000 | 94,000 | 141,039 | 235,039 | ||||||||||||||||||
F. Philip Handy (3) | 28,407 | 42,609 | 71,016 | |||||||||||||||||||||
Edward F. Lonergan | — | 250,000 | 250,000 | — | 250,016 | 250,016 | ||||||||||||||||||
Maryann T. Mannen | 94,000 | 141,000 | 235,000 | 98,000 | 147,011 | 245,011 | ||||||||||||||||||
James J. McMonagle (3) | 28,407 | 42,609 | 71,016 | |||||||||||||||||||||
W. Howard Morris | 94,000 | 141,000 | 235,000 | 94,000 | 141,039 | 235,039 | ||||||||||||||||||
Suzanne P. Nimocks | 75,000 | 175,000 | 250,000 | 100,000 | 149,982 | 249,982 | ||||||||||||||||||
John D. Williams | — | 275,000 | 275,000 | — | 275,021 | 275,021 | ||||||||||||||||||
| (1) | Includes the cash amount of the annual retainers for service on the Board and in certain Board leadership positions for |
| (2) | The amounts shown in this column relate to stock granted as the equity component of the directors’ retainers under the Stock Plan. The amounts shown reflect the aggregate grant date fair value with respect to all stock granted during |
| (3) | Mr. |
Non-Employee Director Compensation
We have designed ourNon-Employee Director Compensation program to: (i) align directors’ interests with the long-term interests of our stockholders; (ii) attract and retain outstanding director candidates with diverse backgrounds and experiences; and (iii) recognize the substantial time commitment required to serve as an Owens Corning director. At least every two years, the Compensation Committee reviews the Company’s director compensation program to determine whether it remains consistent with these objectives as well market median positioning. When making its recommendations, the Compensation Committee considers director compensation levels at the same group of companies used to benchmark the NEOs’ compensation, and takes advice from and reviews data compiled by Consultant. See “Competitive Positioning” on page 25. Finally, as part of the proposal to approve a 2019 Stock Plan, we are introducing a maximum annual compensation limit of $500,000 forNon-Employee Directors.28.
During 2018,2019, the Company compensated eachnon-management director pursuant to a standard annual retainer arrangement that does not involve the payment of meeting fees. This arrangement provides for an annual retainer and annual chair retainer as approved by the Compensation Committee. Eachnon-management director received an annual Board retainer of $235,000. The Chair of Compensation, Governance and Finance Committees received an additional annual retainer of $15,000, prorated if only part of the year was served in the Chair position. The Chair of the Audit Committee received an additional annual retainer of $20,000, and the Lead Independent Director received an additional annual retainer in the amount of $25,000. All retainers were paid in a combination of stock and cash based on the director’s election (subject to a minimum 60% stock requirement). Stock compensation for annual retainers may be deferred for issuance to the director uponbeyond the distribution date elected in writingpursuant to a written election executed prior to the start of the year. The annual retainers are otherwise paid on a quarterly basis.Non-management directors receive no perquisites.
Our stock ownership guidelines currently provide that eachnon-management director must own stock with a value of five times the maximum cash retainer. As of the date of this Proxy Statement, allnon-management directors with more than three years of tenure on the Board hold stock in excess of the ownership guidelines.
Owens Corning established a Deferred Compensation Plan, effective January 1, 2007, under whichnon-management directors have been permitted to defer some or all of their cash compensation for annual retainer, annual chair retainer and meeting fees. Such deferred cash compensation will be credited to an individual account and will accrue gains or losses under notional investment funds available under the plan and as selected by the director (the available fund options include a fund indexed to Company common stock). The Company does not contribute, nor does it match, any amounts deferred by directors.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANSPLAN INFORMATION
Information regarding Owens Corning’s equity compensation plans as of December 31, 2018,2019, is as follows:
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| Plan Category | Number of securities to issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
Equity compensation plans approved by security holders (1) | 478,875 | $37.18 | 2,494,789 | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | 478,875 | $37.18 | 2,494,789 | |||||||
| (a) | (b) | (c) | ||||
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| 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 (2) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (excluding securities reflected in column (a)) | |||
Equity compensation plans approved by | 414,800 | $37.79 | 4,103,046 | |||
Equity compensation plans not approved by | — | — | — | |||
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Total | 414,800 | $37.79 | 4,103,046 | |||
| (1) | Relates to the Owens Corning |
| (2) | Restricted stock units and performance share units are not taken into account in the weighted-average exercise price as such awards have no exercise price. |
RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for 2019,2020, subject to ratification by our stockholders.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual Meeting to answer questions. They also have the opportunity to make a statement if they desire to do so.
We are asking our stockholders to ratify the Audit Committee’s selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019.2020. Although ratification is not required by our bylaws or otherwise, the Board has submitted the selection of PricewaterhouseCoopers LLP to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm and as a matter of good corporate practice. In the event that our stockholders fail to ratify the selection, it will be considered a direction to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
The Board of Directors and the Audit Committee recommend a vote FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019.2020.
APPROVAL, ON AN ADVISORY BASIS, OF NAMED EXECUTIVE OFFICER COMPENSATION
The Company is presenting the following proposal, which gives stockholders the opportunity to cast anon-binding vote to approve the 20182019 compensation of our named executive officers by voting for or against the resolution below. This resolution is required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Consistent with the preference expressed by our stockholders, the Company will hold this advisory vote on an annual basis (the next vote is anticipated to be held at the 20202021 Annual Meeting) until the nextnon-binding vote on the frequency with which advisory votes to approve named executive officer compensation should be held.
In considering your vote, we encourage you to review the Compensation Discussion and Analysis section and the compensation tables and narratives in this Proxy Statement. The Company believes its compensation philosophy and programs are strongly linked to performance and results and appropriately aligned with the interests of stockholders.
Compensation opportunities are generally competitive with market median practices. Actual compensation levels may exceed target levels to the extent Company and individual performance exceeds expectations. In the event performance is below targeted levels, actual pay levels may be below target levels.
A significant majority of total compensation is performance-based.
Executives are appropriately focused on achieving annual financial and operational goals through the Company’s annual Corporate Incentive Plan and on maximizing stockholder value over the long term, through grants of restricted stock units and performance share units.
Accordingly, the Company is asking stockholders to vote FOR the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Proxy Statement pursuant to the compensation disclosure rules of the U.S. Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narratives and any related disclosure in the Proxy Statement.”
While our Board of Directors and Compensation Committee intend to consider carefully the stockholder vote resulting from the proposal, the final vote will not be binding and is advisory in nature.
The affirmative vote of a majority of the votes that could be cast by the holders of all stock entitled to vote that are present in person or by proxy at the Annual Meeting is required to approve, on an advisory basis, the compensation of our named executive officers.
The Board of Directors recommends that you vote FOR approval, on an advisory basis, of the compensation of our named executive officers.
APPROVAL OF THE AMENDED AND RESTATED OWENS CORNING 2019EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting,We are asking our stockholders will be asked to approve the Amended and Restated Owens Corning 2019Employee Stock Purchase Plan, as set forthamended and restated effective April 16, 2020 (referred to in Annex Athis Proposal 4 as the ESPP) to increase the number of this proxy statement (the “Proposed Plan”).
The Compensation Committee has adopted, and the Board of Directors has approved, subject to the approval of the Company’s stockholders, the Proposed Plan. If the Proposed Plan is approved by stockholders, it will replace the Owens Corning 2016 Stock Plan, which was approved by stockholders in April 2016 (the “2016 Plan”). Upon approval of the Proposed Plan by stockholders, shares of Company common stock, par value $0.01 per share, remaining available under the 2016 Plan will be rolled into and become available for grant under the Proposed Plan, and no future grants will be made under the 2016 Plan. As of February 19, 2019, approximately 1,688,069 shares of Company common stock remained available under the 2016 Plan. If the Proposed Plan is approved by stockholders, the number of shares of common stock which may be granted under the Proposed Plan is 2,300,000 plus the number of available shares rolled into the Proposed Plan from the 2016 Plan. If the Proposed Plan is not approved by stockholders, the 2016 Plan will remain in effect and no awards will be granted under the Proposed Plan.
The Proposed Plan provides for participation by employees, management andnon-employee directors and authorizes grants of stock options, stock appreciation rights (“SARs”), stock awards (including restricted stock awards, restricted stock units and bonus stock awards), performance share awards and performance share units. The Board of Directors believes that share-based incentives are important factors in attracting and retaining highly qualified executives and directors, and that they help to align the interests of those executives and directors with the interests of our stockholders. The Board believes that our stockholder-approved 2016 Plan has been an instrumental component of the Company’s total compensation programs.
The Board of Directors believes that approval of the Proposed Plan is necessary and desirable and will enable the Company to continue to provide market competitive total compensation opportunities to its key employees.
Why We Believe You Should Vote for the Proposed Plan
The purposes of the Proposed Plan are to help promote the long-term financial success of the Company through the grant of awards that attract and help retain executives, strengthen the Company’s capability to develop, maintain and direct its management team, motivate employees through performance-related incentives in support of longer-range performance goals, provide competitive incentive compensation opportunities, enable participation in the long-term growth and financial success of the Company and attract, retain and compensatenon-employee directors. Some of the key features of the Proposed Plan that reflect our commitment to effective management of equity and incentive compensation are set forth below.
We believe our future success depends in part on our ability to attract, motivate and retain highly qualified employees. The ability to provide equity-based awards under the Proposed Plan is a critical component to achieving this success. We would be at a distinct competitive disadvantage if we could not use equity-based awards to recruit, motivate and retain our officers and other employees.
The use of our common stock as part of our compensation program fosters apay-for-performance culture that is an important element of our overall compensation philosophy. We believe that equity compensation motivates employees to appropriately focus on actions that enhance stockholder value because they will share in that value enhancement through improved stock price performance. Our equity compensation also helps effectively retain our officers and other employees and promotes a focus on sustained enhancement of stockholder value because our equity compensation awards can be subject to vesting and/or performance criteria.
As of February 19, 2019, only 1,688,069 shares remained available for issuance under the 2016 Plan. IfESPP by 4,200,000 shares (which amount is in addition to the Proposed Plan is not approved, we may be compelled2,000,000 shares previously authorized for issuance under the ESPP, bringing the total number of authorized shares under the ESPP document to significantly6,200,000), with the share increase the cash componentrepresenting approximately 4% of our employee compensation, which may not necessarilyshares of common stock outstanding as of February 14, 2020. We adopted the ESPP so we could offer employees of Owens Corning and eligible subsidiaries the opportunity to purchase Owens Corning common stock at a discounted price as an incentive for continued employment and to help align employee compensationtheir interests with the investment intereststhose of our stockholders as well as the alignment provided by equity-based awards. Replacing equity awards with cash would alsostockholders. We are proposing an increase cash compensation expense and divert cash away from more impactful uses, such as investment in our business operations.
In determining the number of shares to requestavailable for approvalissuance under the Proposed Plan, our management team worked with Meridian Compensation Partners and the Compensation CommitteeESPP to evaluate a number of factors including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating our proposal for the Proposed Plan. The tables below summarize our view, as of February 19, 2019, of potential dilution under our 2016 Plan and Proposed Plan, as well as our recent burn rates, which we believe continue to be within industry standards:
Potential Dilution | Shares | % of Common Shares Outstanding | ||||||
A. Outstanding Stock Options* | 471,075 | 0.4 | % | |||||
B. Unvested Restricted Shares | 1,069,057 | 1.0 | % | |||||
C. Unvested Performance Share Units ** | 565,227 | 0.5 | % | |||||
D. Total Equity Awards Outstanding/Unvested (A+B+C) | 2,105,359 | 1.9 | % | |||||
E. 2016 Plan shares available | 1,688,069 | 1.5 | % | |||||
F. Potential Dilution: 2016 Plan (D + E) | 3,793,428 | 3.5 | % | |||||
G. Proposed Plan additional shares | 2,300,000 | 2.1 | % | |||||
H. Proposed Plan shares available for issuance (E + G) *** | 3,988,069 | 3.6 | % | |||||
I. Potential Dilution: Proposed Plan (F + G) | 6,093,428 | 5.6 | % | |||||
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Burn Rate
| Year | Shares Granted | Weighted Average | Burn Rate | |||||||
| 2016 | 788,877 | 114.4 | 0.69 % | |||||||
| 2017 | 717,071 | 111.5 | 0.64 % | |||||||
| 2018 | 537,088 | 110.4 | 0.49 % | |||||||
Average Burn Rate 2016-2018: | 0.61 % | |||||||||
If the Proposed Plan is approved, we intend to utilize the shares authorized under the Proposed Planhelp us to continue our practice of providing incentivesthis benefit to key individuals through annual equity grants. We currently anticipate that the shares requested in connection with thenew and current employees. Stockholder approval of the Proposed PlanESPP is also being sought for the purpose of qualifying certain shares of common stock issued under the ESPP for special tax treatment under Section 423 of the U.S. Internal Revenue Code (referred to in this Proposal 4 as the Code).
If the ESPP, as amended and restated, is approved, it is expected that there will last about 3be sufficient shares available under the ESPP to satisfy our needs under the ESPP for approximately 10 more years, based on our historic grant rates andbut the approximate current stock price, butshares available under the ESPP could last for a different period of time if actual practice does not match historic ratescurrent expectations or our stockshare price changes materially. As noted below, our
Our Compensation Committee would retain full discretion(“Committee”) approved the ESPP on February 5, 2020 and our Board of Directors adopted the ESPP on February 6, 2020, subject to stockholder approval. The ESPP, as amended and restated, is effective as of such date, subject to stockholder approval on or before the12-month anniversary of the effective date. If the ESPP, as amended and restated, is not approved by stockholders by such12-month anniversary, then it will cease to be effective, and the ESPP as in effect prior to such amendment will continue in effect in accordance with its terms.
As of the close of enrollment for our most recent offering period under the Proposed PlanESPP, November 24, 2019, there were 2,451 employees participating in the ESPP, representing approximately 29% of our employees who are eligible to determineparticipate in the ESPP.
As of February 19, 2020, an aggregate of 297,311 shares of common stock remained available for future issuance under the ESPP. Our Board of Directors has, subject to stockholder approval of this Proposal 4, increased the aggregate number of shares of our common stock issuable under the ESPP by 4,200,000 shares. The number of employees eligible to participate in the ESPP has increased by approximately 1,050 people since the last time our stockholders approved shares issuable under the ESPP. Our Board of Directors believes the proposed share increase is in the best interests of Owens Corning and amountits stockholders and will help us continue to provide our employees with the opportunity to acquire an ownership interest in Owens Corning through their participation in the ESPP.
Description of awardsthe ESPP
The material terms and provisions of the ESPP, as amended and restated, are summarized below. This summary, however, does not purport to be granted under the Proposed Plan, subject to the termsa complete description of the Proposed Plan,ESPP, as amended and future benefits that may be received by participants under the Proposed Plan are not determinable at this time.
We believe that we have demonstrated a commitment to thoughtful and responsible equity compensation practices. We recognize that equity compensation awards dilute stockholder equity, so we have carefully managed our equity incentive compensation. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been disciplined and mindful of stockholder interests.
Summary of the Proposed Plan
restated. The following is a summary of the essential terms of the Proposed Plan, andESPP is qualified in its entirety by reference to the fullcomplete text of the Proposed Plan attachedESPP, as amended and restated, a copy of which is included as Annex A to this Proxy Statement as Annex A. Please referStatement. Any stockholder that wishes to AnnexA forobtain a more complete descriptionpaper copy of the termsplan document may do so by written request to: Corporate Secretary, Owens Corning, One Owens Corning Parkway, Toledo, Ohio 43659.
As further described in this Proposal 4, the ESPP has been amended and restated to provide for:
an increase in the ESPP’s share reserve by 4,200,000 shares; and
certain clarifying amendments to ease administration and eliminate potential ambiguities in ESPP interpretation.
Purpose of the Proposed Plan.
Types of AwardsESPP
The Proposed Plan permits the grantingpurpose of the same typesESPP is to offer employees an opportunity to purchase stock directly from Owens Corning at a discounted price, and align wealth creation opportunities with those of awards as understockholders. The ESPP will broaden employee access to Owens Corning stock, by offering all employees the 2016 Plan:
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Eligible Participantsopportunity to purchase through convenient payroll deductions.
The Proposed Plan generallyESPP will be administered byoffered initially in the Compensation Committee, which consists entirely of independent directors, subject to the termsUnited States, and may be offered outside of the Proposed Plan, including its delegation provisions. The Compensation Committee hasUnited States in the authority to identify thosefuture based on demand and local regulatory constraints.
Eligibility
All employees andnon-employee directors to whom awardsof the United States’ subsidiaries of Owens Corning will be granted andeligible to participate in the type, amount and other termsESPP, except for temporary employees who work less than five months per year. A new hire will be eligible to enroll during the next enrollment window following his or her date of each award. Although the Proposed Plan allows the Compensation Committee to make awards generally to any Companynon-employee director, and anyhire. A terminating employee of the Company and its subsidiaries, it is anticipated that awards will generally be withdrawn from the plan and refunded any contributions made as of their date of termination.
The Committee may delegate the determination of eligibility requirements and participating subsidiaries to approximately 400 management employeesthe Company.Non-United States subsidiaries are currently excluded from participation, but may be added in the future.
As of the Company and its subsidiaries (outclose of enrollment for our most recent offering period under the ESPP, November 24, 2019, Owens Corning had approximately 20,000 total employees) and 9non-employee directors annually.8,427 employees who were eligible to participate in the ESPP. The basis for participation in the Proposed PlanESPP is meeting the eligibility requirements and electing to participate.
Offering Periods
The first offering period under the amended and restated ESPP will commence on June 1, 2020 and will have asix-month duration, closing on November 30, 2020. Subsequentnon-overlapping offering periods will follow every six months, with stock purchases occurring at the end of each offering. The Committee has the authority to change the timing and duration of future offering periods.
Participation
Eligible employees may elect to participate in the plan by eligible personsmaking an election to contribute a percentage of theirafter-tax compensation through payroll deduction. Elections must be made in whole percentages with a minimum of 1% and a maximum of 15%. The contribution election will generally be taken during an enrollment period in the month preceding the opening of the offering period. Contribution elections will generally be maintained for future offerings unless the employee elects to change the rate of contribution during an enrollment period or elects to withdraw from the plan. Increases to the contribution rate, or decreases to the contribution rate (other than to suspend future contributions) are not permitted outside of enrollment windows.
Eligible Compensation
Compensation under the ESPP is defined as all base straight time salary and wages, but excludes all other forms of compensation. Cash-based incentive compensation and sales commissions are excluded from Compensation under the selectionESPP.
Participant Accounts
Unfunded accounts will be established for each participant to accumulate payroll deductions. No interest shall accrue on a participant’s payroll deductions or any other amount credited to the account. Participants will be provided with information related to account activity, including balances, payroll deductions, purchase prices and shares purchased.
Purchase of Common Stock
At the end of an offering period, the balance of the participants’ accounts will be used to purchase full shares of Owens Corning common stock, subject to a limit of 4,000 shares in any single offering. The purchase price will be no less than 85% of the lower of the fair market value of Owens Corning common stock at the beginning and ending of the offering period. Fractional shares may not be purchased, and any remaining contributions that are not sufficient to purchase a full share will be retained in the participant’s account for the subsequent offering period.
No employee shall be authorized to purchase common stock through this program if, immediately after the purchase, such personsemployee (or any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any parent of the Company or any Subsidiary, and (ii) no participant shall be entitled to purchase stock under this plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Company or any participating subsidiary, exceeds $25,000 in fair market value, determined as of the grant date (or such other limit as may be imposed by the Compensation CommitteeCode) for each calendar year in its discretion.which any option granted to the participant under any such plans is outstanding at any time.
Shares of common stock will be issued to participants as promptly as administratively feasible after each purchase date.
As of February 14, 2020, the closing price of our common stock as reported on the New York Stock Exchange was $63.82 per share.
Transferability
Shares may not be transferred out of the participant account until the later of (a) 2 years from the beginning of the applicable offering period and (b) 1 year from the applicable purchase date. However, shares may be sold during this period.
Withdrawal and Termination of Employment
During an offering period, an employee may elect to reduce their contribution to 0% or may elect to fully withdraw from the plan at any time up to 30 days prior to the end of the offering period. If a participant requests to withdraw from the plan, contributions made during the current offering period will be refunded in full. Partial withdrawals are not permitted.
Upon termination of a participant’s employment for any reason more than 30 days prior to the purchase date, the employee will be withdrawn from the plan and contributions will be refunded. The purchase will proceed for participants who terminate within 30 days prior to the purchase date.
Authorized Shares
The identity of the employees andnon-employee directors to receive awards, and the amounts of awards, under the Proposed Plan are not yet determinable. For information about certain awards under the 2016 Plan during 2018 to ournon-employee directors, our Chief Executive Officer and certain other officers, see “Executive Officer Compensation” and “2018Non-Management Director Compensation” above.
Shares Available Under the Proposed Plan
Subject to certain adjustments permitted under the Proposed Plan, thetotal number of shares of common stock availablecurrently reserved for issuance over the term of the ESPP is 2,000,000. As of February 19, 2020, an aggregate of 1,702,689 shares of common stock have been issued to employees under the Proposed PlanESPP, and 297,311 shares of common stock remained available for future issuance. Assuming that this Proposal 4 is 2,300,000 plusapproved by the stockholders, the total number of shares remaining availableof common stock reserved for issuance under the 2016 PlanESPP, as amended and restated, will be increased by 4,200,000 to 6,200,000 shares, 4,497,311 shares would remain available to be used pursuant to Section 423 purchase rights. The shares of the effective date of the Proposed Plan, all of which shall be available for any type of awardscommon stock issuable under the Proposed Plan including full-value awards. These amounts are subject to adjustment for, among other things, stock splits, stock dividends and other changes in the Company’s capital structure, as further described in the Proposed Plan. The CompanyESPP may usebe made available from authorized andbut unissued shares of common stock or treasuryfrom shares in connection with grants under the Proposed Plan. Shares underlying the unexercised or undistributed portion of any terminated, expired, cancelled, forfeited or unearned award (under the Proposed Plan or the 2016 Plan), or award settled in cash, are generally available for further awards under the Proposed Plan. Shares withheld or otherwise used for tax withholding or as the exercise pricecommon stock we reacquire, including shares of acommon stock option are not available for future awards. Shares repurchased on the open market withmarket. If any right to purchase shares of common stock option exercise proceeds, andgranted under the ESPP terminates for any reason without having been exercised, the shares subject to stock-settled SARs that areof common stock not issued upon exercise of the SARspurchased under such right will not beagain become available for useissuance under the Proposed Plan. In addition, certain awards may be payable in cash.ESPP.
Not more than 5% of the shares authorized under the Proposed PlanAdministration
The ESPP shall be subject to bonus stock awards or other awards that vest over a period (or have a performance period) shorter than one year. This limit will not apply tonon-employee director awards.
No awards may be made under the Proposed Plan on or after the tenth anniversary of the effective date of the Proposed Plan in 2029.
In no event will anynon-employee director in any one calendar year be granted compensation for such service having an aggregate maximum value in excess of $500,000.
Stock Options and Stock Appreciation Rights
Stock options and SARs granted under the Proposed Plan may vest on the basis of the satisfaction of performance conditions establishedadministered by the Compensation Committee or on the basis of the passage of time and continued employment.Committee. Subject to the terms of the Proposed Plan, options and SARs will have no more than aten-year term and generally will have aone-year minimum vesting period. All options and SARs (except with respect to converted, assumed or substituted awards as described in the Proposed Plan) generally will have an exercise price equal to the fair market value of our common stock on the date of grant, and option or SARre-pricing without stockholder approval is expressly prohibited as described in the Proposed Plan.
The Proposed Plan permits the grant of either incentive stock options or options not qualifying as incentive stock options under the Internal Revenue Code. For purposes of grants of incentive stock options under the Proposed Plan, the maximum number of shares available for such grants shall be no more than 2,300,000 shares, subject to certain adjustments as described in the Proposed Plan. Certain exceptions to the requirements in the prior paragraph apply in the case of incentive stock options, as described in the Proposed Plan. Dividends or dividend equivalents on stock options or SARs are not permitted. Award agreements for options and SARs will set forth the applicable terms relating to treatment of the award upon participants’ termination of employment or service with the Company. The method of exercise of options and SARs will be determined byESPP, the Committee as established under the Proposed Plan or in the applicable award agreements, as described in the Proposed Plan.
The Proposed Plan authorizes grants of SARs either alone or in conjunction with a stock option. SARs entitle recipients to receive payments in cash, shares or a combination, of an amount representing the appreciation in the market value of a specified number of shares from the date of grant until the date of exercise. To the extent an option is exercised, any SAR granted in respect of such option is canceled. To the extent a SAR is exercised, its related option is canceled.
Performance Share Awards
The Compensation Committee may grant performance share awards under the Proposed Plan. Performance share awards under the Proposed Plan may be made in the form of performance share units (“PSUs”), which can be settled either in cash or shares of our common stock at the end of a performance period, or performance shares. The amount of performance shares or PSUs received by a participant at, above or below their target grant is in general determined by whether the performance goals set by the Committee are met, exceeded or missed, respectively.
Performance criteria (including for other performance-based awards) may be selected by the Compensation Committee as set forth in the Proposed Plan. The Compensation Committee may amend or adjust the performance goals, including to take into account changes in law and accounting and tax rules and to make adjustments that it decides are necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances. The Compensation Committee also designates the period over which the performance criteria are measured.
Performance share awards may be subject to being partially or fully forfeited if the participant terminates employment prior to the end of the performance period as determined by the Compensation Committee. While
performance share holders generallyshall have the rights of stockholders with respect to such awards, performance share and PSU holders may not receive current dividends or dividend equivalents on any unearned shares or units, and recipients of PSUs may not vote the units in stockholder votes. Award agreements for performance shares and PSUs will set forth the applicable terms relating to treatment of the award upon participants’ termination of employment or service with the Company.
Restricted Stock or Restricted Stock Units
The Compensation Committee may award shares of common stock that are subject to restrictions and conditions as determined by the Compensation Committee. Restricted stock awards may vest on the basis of the satisfaction of performance goals established by the Committee or on the basis of the passage of time and continued employment. Generally, recipients of restricted stock receive contingent dividends on, and may vote, the shares subject to a grant. Shares of restricted stock may not, however, be sold or otherwise transferred prior to the lapse of the restrictions.
The Compensation Committee may also award restricted stock units with conditions and restrictions determined by the Compensation Committee. Restricted stock units convert into shares of our common stock if the recipient is still employed on the date that specified restrictions lapse. Restricted stock units may vest on the basis of the satisfaction of performance conditions established by the Committee or on the basis of the passage of time and continued employment. Recipients of restricted stock units may not vote the units in stockholder votes, but they may receive payments equal to the amount of dividends that would be paid on an equivalent number of shares of common stock, subject to the same restrictions as the underlying shares. Award agreements for restricted stock or restricted stock units will set forth the applicable terms relating to treatment of the award upon participants’ termination of employment or service with the Company.
Other Stock-Based Awards
The Compensation Committee may grant certain other awards under the Proposed Plan, consisting of bonus stock awards and, fornon-employee directors, equity awards in lieu of their director fees.
Change in Control
In the event of a change in control of the Company, stock options and stock appreciation rights that are not exercisable will become immediately exercisable, the restriction period applicable to any outstanding restricted stock or restricted stock unit award will lapse and the performance period applicable to any outstanding performance share or PSU shall lapse (unless otherwise provided for in the applicable award agreement subject to the discretion of the Compensation Committee).
Performance awards, restricted stock awards, and other stock-based awards will be fully vested, with performance goals deemed to have been achieved at the maximum level, at the date of change in control.
In the event of a change in control, the Board may require that stock of the corporation surviving the change in control (or its parent) be substituted for the stock subject to outstanding awards, as equitably adjusted to reflect the change in control, and/or require thecash-out of outstanding awards or the payment for outstanding awards in shares of the corporation surviving the change in control (or its parent), as described in the Proposed Plan.
Unless otherwise defined in an applicable award agreement, a change in control is generally defined in the Proposed Plan as:
the acquisition by a person or group of beneficial ownership of 50% or more of the outstanding stock or combined voting power of securities entitled to vote in the election of directors, subject to certain exceptions as described in the Proposed Plan;
a change in the composition of the Board over atwo-year period that results in a majority of incumbent directors (or successor directors approved by our incumbent directors) not being continuing directors, subject to certain exceptions described in the Proposed Plan;
the consummation of a merger, consolidation or sale of all or substantially all the assets of the Company in a transaction in which our stockholders immediately prior to the transaction do not own at least 50% of the voting power of the surviving, resulting or transferee entity, subject to certain exceptions described in the Proposed Plan; or
the consummation of a plan of complete liquidation or dissolution of the Company.
Amendment and Termination
The Compensation Committee has the power to amendconstrue the Proposed Plan, subject to the limitations of Section 422provisions of the Internal Revenue Code. However,ESPP, to determine all questions arising hereunder, and to adopt and amend such rules and regulations for administering the CompensationESPP as the Committee deems desirable. The Committee may not, without stockholder approval, amend the Proposed Plan to:
increase the maximum number of shares authorized for issuance pursuantdelegate to the Proposed Plan (subject to the Proposed Plan adjustment provisions);
extend the term of the Proposed Plan;
reduce the minimum purchase price of a share of common stock subject to an option;any committee, person (whether or
effect any change inconsistent with Section 422 of the Internal Revenue Code.
The Board may otherwise suspend or terminate the Proposed Plan (which generally has a10-year term) at any time. No such suspension or termination, however, shall impair the rights of a holder as to the terms or conditions of any award granted prior to termination.
Adjustment
The Compensation Committee will provide for anti-dilution adjustments to the terms of outstanding awards in the event of the occurrence of certain corporate transactions or events as described in the Proposed Plan. In addition, for each stock option or SAR with an option price or base price greater than the consideration offered in connection with any such transaction or event, the Compensation Committee may in its discretion elect to cancel such stock option or SAR without any payment to the person holding such stock option or SAR.
Other Terms
Awards under the Proposed Plan will be evidenced by award agreements subject to the terms of the Proposed Plan. The Proposed Plan provides generally that no award shall be transferable by a participant other than by will or the laws of descent and distribution (or pursuant to approved beneficiary designations), and that no award will be transferred for value. Nothing in the Proposed Plan precludes the Compensation Committee, in its sole discretion, from providing for continued vesting or accelerated vesting for any award under the Proposed Plan upon certain events, including in connection with or following a Participant’s death, disability, retirement, or other termination of service or a change in control. Awards will be subject to withholding taxes and clawback requirements as further described in the Proposed Plan.
Awards may be granted under the Proposed Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, SARs, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with us or any of our subsidiaries, subject to the terms of the Proposed Plan. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Internal Revenue Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of the Proposed Plan, and may account for common shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
In the event that a company acquired by us or any of our subsidiaries or with which we or any subsidiary merges has shares available under apre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Proposed Plan, subject to the terms of the Proposed Plan. However, awards using such available shares may not be made after the date awards or grants could have been made under the terms of thepre-existing plan absent the acquisition or merger, and may only be made to individuals who were not our employees or directors or employees or directors of any of our subsidiaries prior to the acquisition or merger.
Federal Income Tax Consequences
The following is a brief summary of certain federal income tax consequences of certain transactions under the Proposed Plan based on federal income tax laws in effect. This summary, which is presented for the information of stockholders considering how to vote on this proposal and not for Proposed Plan participants, is not intended to be complete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes), state local or foreign tax consequences.
Incentive Stock Options
An incentive stock option grant will not result in any immediate tax consequences to the Company or to the participant. A participant will not realize taxable income upon the exercise of an incentive stock option, provided the participant was an employee of the Company or onea participating subsidiary) or entity any of our subsidiariesits responsibilities or duties hereunder.
Amendment or Termination
The Board of Directors or Committee may at all timesany time and for any reason terminate or amend the ESPP. Except as specifically provided for in the ESPP, no amendment or termination may make any change in any option previously granted under the ESPP that adversely affects the rights of any participant. Without shareholder consent and without regard to whether any participant’s rights may be considered to have been “adversely affected,” the Committee may change the offering periods, limit the frequency and/or number of changes in the amount withheld during an offering period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of common stock for each participant properly correspond with amounts withheld from the dateparticipant’s compensation, and establish other limitations or procedures as the option was grantedCommittee determines in its sole discretion are advisable and consistent with the ESPP. The Company will obtain shareholder approval of any ESPP amendment to the date three months (inextent necessary and desirable to comply with Section 423 of the caseCode, or any successor rule or statute, or other applicable law, rule or regulation, including the requirements of any exchange or quotation system on which the common stock is listed or quoted. Such shareholder approval, if required, will be obtained in a disabled employee, one year) beforemanner and to a degree as may be required by applicable law, rule or regulation.
Federal Tax Consequences
The ESPP is intended to qualify as an “employee stock purchase plan” within the datemeaning of Section 423 of the optionCode. Under the Code, no taxable income is exercised, and we will not be entitled to any deduction. Ifrecognized by the participant does not disposewith respect to shares purchased under the ESPP either at the time of the stock acquiredenrollment or at any purchase date within one year of receiving it (and two years after such option was granted), gain or loss realized on the subsequent disposition of the stock will be treated as long-term capital gain or loss.an offering period.
If the participant disposes of shares purchased pursuant to the stock prior to those times,ESPP more than two years from the applicable grant date, more than one year from the applicable purchase date, the participant will realizerecognize ordinary income in an amount equal to the lesser of (i)(1) the excess of the fair market value of the shares at the time of disposition over the purchase price, or (2) 15% of the fair market value of the shares on the Grant Date. Any gain on the disposition in excess of the amount treated as ordinary income will be long-term capital gain. The Company is not entitled to take a deduction for the amount of the discount in the circumstances indicated above.
If the participant disposes of shares purchased pursuant to the ESPP within two years after the Grant Date or one year after the purchase date, the employee will recognize ordinary income on the excess of the fair market value of the stock on the purchase date of exercise over the option price; or (ii) ifpurchase price. Any difference between the disposition is a taxable sale or exchange,price of the amount of gain realized. Any gain recognized byshares and the participantfair market value on the disposition in excess of the amount taxable as ordinary incomepurchase date will be treated as capital gain long or short term depending on whether the stock has been held for more than one year. Upon such a disposition, theloss. The Company will generally beis entitled to a deduction in the same amount and at the same time as the participant realizes such ordinary income.
Nonqualified Stock Options
The grant of a nonqualified stock option will not result in any immediate tax consequence to the Company or the participant. Upon exercise of a nonqualified stock option, the participant will realize ordinaryfrom income in an amount equal to the market valueamount the employee is required to report as ordinary compensation income.
The federal income tax rules relating to employee stock purchase plans qualifying under Section 423 of the Code are complex. Therefore, the foregoing outline is intended to summarize only certain major federal income tax rules concerning qualified employee stock at the time of exercise over the option price, and the Company will generally be entitled to a deductionpurchase plans.
New Plan Benefits
Participation in the same amount.
Stock Appreciation Rights
The grant of a stock appreciation right will not result in any immediate tax consequenceESPP is voluntary and each eligible employee makes his or her own decision whether and to the Company orwhat extent to the participant. Upon the exercise of a stock appreciation right, any cash received and the market value of any stock received will constitute ordinary income to the participant. The Company will generally be entitled to a deductionparticipate in the same amount and at the same time as the participant realizes such income.
Restricted Stock
A participant who receives restricted stock will in most cases be subject to tax at ordinary income ratesESPP. In addition, our Board of Directors has not approved any grants of purchase rights that are conditioned on the market valuestockholder approval of the restricted stock atamendment to our ESPP. Accordingly, we cannot currently determine the timebenefits or number of shares that will be received in the restrictions lapse. However, participants instead may elect within 30 days after the grant date to recognize the market value of the restricted stock as taxable income as of the grant date.future by individual
A participant receiving dividends with respectemployees or groups of employees under the ESPP. Ournon-employee directors are not eligible to restricted stock for whichparticipate in the above-described election has not been made and priorESPP.
The table below shows, as to the time restrictions lapse will recognize compensation taxable as ordinary income, rather than dividend income, in an amount equal tolisted individuals and specified groups, the dividends paid.
In the casenumber of a sale of shares after the expiration of the restriction period, the holding period to determine whether the participant has long-term or short-term capital gain or loss begins upon such expiration or, in the case of a participant who makes an election as described above, the grant date, and the tax basis for such shares will be equal to the market value thereof on such date. In most instances, the Company will be entitled to a deduction equal to the amount treated as compensation to the participant.
Restricted Stock Units
No income generally will be recognized upon the award of restricted stock units. A participant who receives a restricted stock unit award generally will be subject to tax at ordinary income rates on the fair market value of unrestricted common stock on the date that such shares are transferred to the participant under the award (reduced by any amount paid by the participant for such restricted stock units), and the capital gains/loss holding period for such shares will also commence on such date.
Performance Share Awards and Other Stock-Based Awards
A participant who receives any performance award or other stock-based award will recognize income, and the Company will generally be allowed a deduction, when the award is paid. The amount of cash and the market value of the shares of common stock purchased under the ESPP during 2019:
OWENS CORNING EMPLOYEE STOCK PURCHASE PLAN
| Name and Position | Number of Shares of Common Stock Purchased in 2019(1) | |||
Brian D. Chambers | None | |||
Michael H. Thaman | None | |||
Prithvi S. Gandhi | None | |||
Daniel T. Smith | 490 | |||
Marcio A. Sandri | 474 | |||
Ava Harter | 376 | |||
Michael C. McMurray | None | |||
All executive officers as a group (10 persons) | 3,220 | |||
All directors who are not executive officers as a group(2) | — | |||
All employees, excluding executive officers, as a group | 390,010 | |||
(1) The aggregate numbers of shares of common stock purchased through options under the ESPP since its adoption through February 19, 2020, by Mr. Chambers, Mr. Thaman, Mr. Gandhi, Mr. Smith, Mr. Sandri, Ms. Harter and Mr. McMurray, all current executive officers as a group, all directors who are not executive officers as a group, each director nominee (other than Mr. Thaman), the associates of such directors, executive officers or nominees, and all employees (excluding executive officers) as a group (no one person received will be ordinary income to the participant and the Company will generally be entitled to a tax deduction for the same amount.
Code Section 162(m)
Section 162(m)5% of the Internal Revenue Code (“Section 162(m)”) generally disallows a deduction for certain compensation paid to certain executive officers (and, beginning in 2018, certain former executive officers) to the extent that compensation to a covered employee exceeds $1 million for such year. Compensation qualifying for a performance-based exception as “qualified performance-based compensation” under Section 162(m) has historically not been subject to the deduction limit if the compensation satisfies the requirements of Section 162(m). This exception has now been repealed, effective for taxable years beginning after December 31, 2017, unless certain transition relief for certain compensation arrangements in place as of November 2, 2017 is available. Currently, the Company does not anticipate that it will be able to make any future grantsoptions available under the Proposed Plan that will be intended to qualify for the performance-based exception. To be clear, stockholdersESPP), were 457; none; none; 3,265; 2,409; 1,012; none; 15,840; none; none; none; and 1,686,849, respectively.
(2) Non-employee directors are not being askedeligible to approve the Proposed Plan (or any of its provisions) for purposes of Section 162(m) or the performance-based exception.
Tax Consequences to the Company or its Subsidiaries
To the extent that a participant recognizes ordinary incomeparticipate 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 things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an ���excess parachute payment” within the meaning of Section 280G of the Code and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) as described above.
New Plan Benefits
It is not possible to determine specific amounts and types of awards that may be granted in the future under the Proposed Plan because the grant and actual settlement of awards under the Proposed Plan will be discretionary. The Proposed Plan does not mandate set benefits or amounts, and no awards have been granted under the Proposed Plan that are contingent upon stockholder approval.
Registration with the SEC
We intend to file a Registration Statement on FormS-8 relating to the issuance of shares under the Proposed Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable after the approval of the Proposed Plan by our stockholders.ESPP.
The Board of Directors unanimously recommends a vote FOR approval of the Owens Corning 2019Employee Stock PlanPurchase Plan.
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, and SEC regulations require Owens Corning’s directors, certain officers and greater than ten percent stockholders to file reports of ownership on Form 3 and changes in ownership on Forms 4 or 5 with the SEC. Owens Corning undertakes to file such forms on behalf of our current reporting directors and officers pursuant to a power of attorney given to certainattorneys-in-fact. Reporting directors, officers and greater than ten percent stockholders are also required by the SEC rules to furnish Owens Corning with copies of all Section 16(a) reports they file.
Based solely on our review of copies of such reports received and/or written representations from such reporting directors, officers and greater than ten percent stockholders, Owens Corning believes that all Section 16(a) filing requirements applicable to its reporting directors, officers and greater than ten percent stockholders were complied with during fiscal year 2018.2019, except for one Form 4 reporting an acquisition through inheritance of 200 shares of Owens Corning common stock by Mr. W. Howard Morris in 2015 that was inadvertently not timely filed. This transaction was reported with the filing of a Form 4 on July 30, 2019.
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF STOCKHOLDERS
Under the rules of the SEC, if a stockholder wants us to include a proposal in our Proxy Statement and form of proxy for presentation at our 20202021 Annual Meeting of Stockholders, the proposal must be received by us at our principal executive offices at One Owens Corning Parkway, Toledo, Ohio 43659 by November 15, 2019.12, 2020. However, in the event that we hold our 20202021 Annual Meeting of Stockholders more than 30 days before or 30 days after theone-year anniversary date of the 20192020 Annual Meeting, we will disclose the new deadline by which stockholder proposals must be received under Item 5 of our earliest possible Quarterly Report onForm 10-Q or, if impracticable, by any means reasonably calculated to inform stockholders. The proposal should be sent to the attention of the Secretary of the Company.
Under our bylaws, and as permitted by the rules of the SEC, certain procedures are provided that a stockholder must follow to nominate persons for election as directors or to introduce an item of business at an Annual Meeting of Stockholders. These procedures provide that for nominations of director nominees and/or another item of business to be properly brought before an Annual Meeting of Stockholders, a stockholder must give timely notice of such nomination or other item of business in writing to the Secretary of the Company at our principal executive offices and such other item of business must otherwise be a proper matter for stockholder action. If you are a stockholder and desire to introduce a nomination or propose an item of business at our 20202021 Annual Meeting of Stockholders, you must deliver the notice of your intention to do so:
not earlier than December 20, 201917, 2020 and not later than January 19, 202016, 2021 if the date of the 20202021 Annual Meeting is held within 30 days before or 60 days after the first anniversary of this year’s Annual Meeting;
not earlier than the 120th day prior to the date of the 20202021 Annual Meeting and not later than the later of the 90th day prior to the date of the 20202021 Annual Meeting and the 10th day following the day on which a public announcement of the date of the 20202021 Annual Meeting is first made by the Company if the date of the 20202021 Annual Meeting is more than 30 days before or more than 60 days after the first anniversary of the date of this year’s Annual Meeting; or
in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased Board of Directors by January 9, 20206, 2021 only with respect to nominees for any new positions created by such increase, not later than the 10th day following the day on which such public announcement is made by the Company.
These time limits also apply in determining whether notice is timely for purposes of SEC rules relating to the exercise of discretionary voting authority. If we do not receive timely notice, or if we meet other SEC requirements, the persons named as proxies in the proxy materials relating to the meeting will use their discretion in voting at the meeting.
The Board is not aware of any matters that are expected to come before the 20192020 Annual Meeting other than those referred to in this Proxy Statement. If any other matter should come before the Annual Meeting, the persons named as proxies intend to vote the proxies in accordance with their best judgment.
The chairman of the Annual Meeting may refuse to allow the transaction of any business, or to acknowledge the nomination of any person, not made in compliance with the foregoing procedures.
Whether or not you plan to attend the Annual Meeting, your vote is important. Please vote on the Internet, by telephone or by mail.
If you vote by telephone, the call is toll-free. No postage is required for mailing in the United States if you vote by mail using the enclosed prepaid envelope.
Secretary
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why did I receive these proxy materials?
We are providing these proxy materials in connection with the solicitation by the Board of Directors of Owens Corning on behalf of the Company of proxies to be voted at the 20192020 Annual Meeting and at any adjournment or postponement thereof. On or about March 14, 2019,13, 2020, we began distributing these proxy materials to stockholders.
How can I attend the Annual Meeting?
You are invited to attend the Annual Meeting on April 18, 2019,16, 2020, beginning at 10:00 a.m., Eastern Daylight Time. The Annual Meeting will be held at the offices of Jones Day, 250 Vesey Street, New York, New York 10281. For admission to the Annual Meeting, you must have been a shareholder at the close of business on February 18, 2020 (“Record Date”). Only stockholders who are eligible to vote at the Annual Meeting or their authorized representatives will be admitted. Stockholders must present one form of current, government-issued, personal photo identification to be admitted to the Annual Meeting. If you are a beneficial owner of shares, you also must present a brokerage statement or other proof of ownership on the record date to be admitted. We reserve the right to prohibit cameras, recording equipment, electronic devices, large bags, briefcases or packages to be carried into the Annual Meeting. Seating will be limited.
As part of our contingency planning regarding the coronavirus (or COVID-19), we are preparing for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance through a public filing with the Securities and Exchange Commission, and details will be available atwww.owenscorning.com/proxy.
Who is entitled to vote at the Annual Meeting?
Holders of Owens Corning common stock at the close of business on February 19, 2019,18, 2020, the record date for the Annual Meeting, are entitled to receive this Proxy Statement and to vote their shares at the Annual Meeting. As of that date, there were 109,579,002108,243,893 shares of common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting. All stockholders of record may vote in person at the Annual Meeting. Stockholders of record may also be represented by another person by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspector of election with your ballot in order to vote at the Annual Meeting.
The names of stockholders of record entitled to vote at the Annual Meeting will be available for any purpose germane to the meeting at the Annual Meeting and for ten days prior to the Annual Meeting between the hours of 9:00 a.m. and 4:30 p.m., at our principal executive offices at One Owens Corning Parkway, Toledo, Ohio, 43659 by contacting the Secretary of the Company.
How do I vote?
You may vote using one of the following methods:
| • | vote through the Internet atwww.proxyvote.com using the instructions included on the proxy card or voting instruction card; |
vote by telephone using the instructions on the proxy card or voting instruction card;
complete and return a written proxy or voting instruction card;
smart QR Code; or
attend and vote at the Annual Meeting. (See “Who is entitled to vote at the Annual Meeting?”)
Your vote is important. Please vote promptly.
Will my shares be voted if I do not provide instructions to my broker?
If you are the beneficial owner of shares held in “street name” by a broker, the broker (as the record holder of the shares) is required to vote those shares in accordance with your instructions. If you do not provide instructions, your broker will not be able to vote your shares on“non-discretionary” proposals. The only item at
the Annual Meeting that is “discretionary” is ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Accordingly, if you are a beneficial owner, your broker or other holder of record is permitted to vote your shares on the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm even if the stockholder of record does not receive voting instructions from you.
What can I do if I change my mind after I vote my shares?
If you are a stockholder of record, you can revoke your proxy before it is exercised by:
written notice to the Secretary of the Company;
| • | �� | written notice to the Secretary of the Company; |
timely delivery of a valid, later-dated proxy or a later-dated vote by telephone or on the Internet; or
voting by ballot at the Annual Meeting.
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker or other holder of record.
All shares that have been properly voted and not revoked will be voted at the Annual Meeting.
What are the voting requirements to elect the directors and to approve the proposals discussed in this Proxy Statement?
The presence of the holders of a majority of the shares of common stock entitled to vote at the Annual Meeting, present in person or represented by proxy, is necessary to constitute a quorum.
| • | Election of Directors |
Your proxy will vote for each of the nineten nominees unless you specifically vote against any of the nominees or abstain from voting with respect to a director’s election. Director nominees are elected to the Board at the Annual Meeting by a majority of votes cast. Pursuant to our bylaws, majority of votes cast means that the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. “Votes cast” shall include votes against a director and shall exclude abstentions and brokernon-votes with respect to a director’s election. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board of Directors. We do not know of any nominee for the Board of Directors who would be unable to serve if elected.
| • | Ratification of the Selection of PricewaterhouseCoopers LLP |
Although ratification is not required by our bylaws or otherwise, we are asking our stockholders to ratify the Audit Committee’s selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019.2020. The affirmative vote of a majority of the votes which could be cast by the holders of all stock entitled to vote which are present in person or by proxy at the Annual Meeting is required to approve the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019.2020. Abstentions will count as present and entitled to vote for purposes of this proposal and will have the effect of a vote against this proposal. This proposal is considered a “discretionary” proposal and, as a result, we do not expect brokernon-votes on this proposal.
| • | Say on Pay |
The affirmative vote of a majority of the votes which could be cast by the holders of all stock entitled to vote which are present in person or by proxy at the Annual Meeting is required to approve, on an advisory basis, the compensation of our named executive officers. Abstentions will count as present and entitled to vote for purposes of this proposal and will have the effect of a vote against this proposal. Brokernon-votes are not considered entitled to vote on this proposal and, as a result, brokernon-votes will not have any effect on this proposal.
| • | Approval of the Amended and Restated Owens Corning |
The affirmative vote of a majority of the votes which could be cast by the holders of all stock entitled to vote which are present in person or by proxy at the Annual Meeting is required to approve the amendment and restatement of the Owens Corning 2019Employee Stock Purchase Plan. Abstentions will count as present and entitled to vote for purposes of this proposal and will have the effect of a vote against this proposal. Brokernon-votes are not considered entitled to vote on this proposal and, as a result, brokernon-votes will not have any effect on this proposal.
Could other matters be decided at the Annual Meeting?
At the time this Proxy Statement went to press, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. However, if other matters should be properly
presented at the meeting, the proxy holders will have the discretion to vote your shares in accordance with their best judgment.
Who will tabulate the votes?
Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspector of election. Ava Harter and Omar Chaudhary have been appointed to serve as alternate inspectors of election in the event Broadridge is unable to serve.
Who will pay the cost of this proxy solicitation?
The Company will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees in person or by telephone, electronic transmission or facsimile transmission, and such persons will not receive additional compensation for their solicitation efforts. We have hired Alliance Advisors, LLCInnisFree M&A Incorporated to assist in the distribution and solicitation of proxies for a fee of $22,000,$25,000, plus reasonable expenses, for these services.
What is “householding” and how does it affect me?
We have adopted a procedure approved by the SEC called “householding.” This procedure is designed to reduce the volume of duplicate information received at your household and helps us reduce our printing and mailing costs. Under this procedure, stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our Notice of Annual Meeting and Proxy Statement and accompanying documents, unless one or more of these stockholders notifies us otherwise.
Stockholders who participate in householding will continue to receive separate proxy cards.
If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of the Notice of Annual Meeting and Proxy Statement and accompanying documents, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, contact Broadridge Financial Solutions, Inc. at1-866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you participate in householding and wish to receive a separate copy of this Notice of Annual Meeting and Proxy Statement and the accompanying documents, or if you do not wish to participate in householding and prefer to receive separate copies of these documents in the future, please contact Broadridge as indicated above. Broadridge will, upon written or oral request, promptly deliver a separate copy of the Notice of Annual Meeting and Proxy Statement and the accompanying documents to a stockholder at a shared address to which a single copy of the annual report or proxy statement was delivered.
Beneficial owners can request information about householding from their brokers or other holders of record.
OWENS CORNING
2019EMPLOYEE STOCK PURCHASE PLAN
I. INTRODUCTION(Amendment and Restatement Effective April 16, 2020)
1.11.Purpose. The purpose of the Owens Corning 2019 Stockthis Plan (the “Plan”) is to promote the long-term financial success of Owens Corning (the “Company”) by permitting the grant of awards capable of (a) establishing an equity compensation program forNon-Employee Directors and certainprovide eligible employees of the Company and its Subsidiaries; (b) attracting and retaining executive personnel of outstanding ability; (c) strengthening the Company’s capabilityParticipating Subsidiaries with an opportunity to develop, maintain and direct a competent management team; (d) motivating executive personnel by means of performance-related incentives to achieve longer-range performance goals; (e) providing incentive compensation opportunities which are competitive with those of other major corporations; (f) enabling Company employees and executive personnel to participate in the long-term growth and financial successpurchase Common Stock of the Company through increased stock ownershipaccumulated payroll deductions or other permitted contributions. Except as provided in Section 27, the Company intends that the Plan will qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code, and (g) serving as a mechanism to attract, retain and properly compensateNon-Employee Directors. Whereaccordingly the grant of shares of stock under this Plan is restricted or rendered impracticable by foreign local laws and/or regulations, the foregoing purposes willshall be promoted through some alternative arrangement (or in some cases cash equivalents) as applicable.construed consistently with such intent.
1.22.Certain Definitions.In addition to the defined terms set forth elsewhere in this Plan, the terms set forth below, shall, when capitalized, have the following respective meanings.
2.1 “AgreementAccount” shall mean each separate account maintained for a Participant under the written agreementPlan, collectively or other typesingly as the context requires. Each Account shall be credited with a Participant’s contributions, and shall be charged for the purchase of Common Stock. A Participant shall be fully vested in his or formher Account at all times. The Committee may create special types of writing or other evidence (including in an electronic medium) approved by the CommitteeAccounts and evidencing an award hereunder between the Company and the recipient of such award.subaccounts for administrative reasons.
2.2 “Board” shall mean the Board of Directors of the Company.
“Bonus Stock” shall mean shares of Common Stock that are not subject to a Restriction Period or Performance Measures.
“Cause” shall mean, unless otherwise defined in an applicable Agreement, the willful and continued failure to substantially perform the duties assigned by the Company (other than a failure resulting from the optionee’s Disability), the willful engaging in conduct which is demonstrably injurious to the Company or any Subsidiary, monetarily or otherwise, including conduct that, in the reasonable judgment of the Committee, no longer conforms to the standard of the Company’s employees or executives, any act of dishonesty, commission of a felony, or a significant violation of any statutory or common law duty of loyalty to the Company.
“Change in Control” shall have the meaning set forth in Section 6.8(c).
2.3 “Code” shall mean the Internal Revenue Code of 1986, as amended.
2.4 “Committee” shall mean the Compensation Committee of the Board, or a subcommittee thereof,any person or any other committee designatedauthorized by the BoardCompensation Committee to administer thisthe Plan consisting of two or more members of the Board, each of whom is intendedpursuant to be (i) a“Non-Employee Director” within the meaning of Rule16b-3 under the Exchange Act and (ii) an “Independent Director” within the meaning of the rules of the New York Stock Exchange.Section 16.
2.5 “Common Stock” shall mean the common stock $.01of the Company, par value $0.01 per share.
2.6 “Company” shall mean Owens Corning, a Delaware corporation.
2.7 “Compensation” shall mean all base straight time salary and wages, but excluding all other forms of compensation, such as overtime premiums, annual incentives, commissions and bonuses.
2.8 “Employee” shall mean an individual who renders services to the Company or to a Participating Subsidiary pursuant to an employment relationship with such employer. A person rendering services to the Company or to a Participating Subsidiary purportedly as an independent consultant or contractor, a leased employee or a temporary worker engaged through an employment agency shall not be an Employee for purposes of the Company.Plan.
“Disability” shall mean, unless otherwise defined in an applicable Agreement, the inability of the holder of an award to perform substantially such holder’s duties and responsibilities for a continuous period of at least six months, as determined solely by the Committee. To the extent that Code Section 409A is applicable to a particular award, the term “Disability” shall have the meaning as defined under that Section.
2.9 “Exchange ActEnrollment Period” shall mean the Securities Exchange Act of 1934, as amended.period prescribed by the Committee preceding an Offering Period during which the Participant may elect to participate in such Offering Period.
2.10 “Fair Market Value” of a share of Common Stock on a given day shall meanbe the closing transaction price of a share of Common Stock as reported on the New York Stock Exchange (or such other exchange on the date as of which such value is being determined or, if the Common Stock is not listed on the New York Stock Exchange, the closing transaction price of a shareshares of Common Stock on the principal national stock exchange on which the Common Stock is tradedare listed) on the date as of which such value is being determined or, if there shall be no reported transactions foron such date, on the next preceding date for which transactions were reported; provided further, that Fair Market Value may bea transaction was reported.
2.11 “Grant Date” means the first Trading Day of each Offering Period, as determined by the Committee by whatever otherand announced to eligible Employees.
2.12 “Offering Period” means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate. Notwithstanding the foregoing, for any purposes under this Plan including for Plan administrative purposes,six consecutive month period commencing on each Grant Date; provided, however, that the Committee may declare, as it deems appropriate and in its discretion, apply any other definition of Fair Market Value which is reasonable and consistent with applicable tax, accounting and other rules.
“Free-Standing SAR” shall mean an SAR which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof, as set forth in the Agreement, with an aggregate value equal to the excessadvance of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.applicable Offering Period, a shorter or longer Offering Period, not to exceed 27 months in duration.
“Incentive Stock Option” shall mean an option to purchase shares of Common Stock which meets the requirements of Section 422 of the Code, or any successor provision, and which is intended by the Committee to constitute an Incentive Stock Option.
“Non-Employee Director” shall mean any director of the Company who is not an officer or employee of the Company or any Subsidiary.
“Non-Qualified Stock Option” shall mean an option to purchase shares of Common Stock that is not an Incentive Stock Option.
2.13 “Participant” shall mean an individualEmployee who has been granted an Incentive Stock Option, aNon-Qualified Stock Option, an SAR, a Bonus Stock Award, a Performance Share Award, a Restricted Stock Award or a Restricted Stock Unit Award.is participating in this Plan by meeting the eligibility requirements of Section 3 and electing to participate in the Plan in accordance with procedures prescribed by the Company.
2.14 “Performance MeasuresParticipating Subsidiary” shall mean each Subsidiary of the Company which the Committee designates to participate in the Plan from time to time.
2.15 “Plan” shall mean this Owens Corning Employee Stock Purchase Plan, as amended or amended and restated from time to time.
2.16 “Purchase Date” shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met (i) as a condition to the grant, vesting or exercisabilitylast Trading Day of all or a portion of an option or SAR, (ii) as a condition to the grant or vesting of a Stock Award or (iii) during the applicable Restriction Period or Performance Period as a condition to the holder’s receipt of Common Stock subject to a Restricted Stock Award, Restricted Stock Unit Award, or a Performance Share Award and/or of payment with respect to such award. The Committee may amend or adjust the Performance Measures or other terms and conditions of an outstanding award in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in law or accounting.each Offering Period.
2.17 “Performance Period” shall mean any period designated by the Committee during which the Performance Measures applicable to a Performance Share Award shall be measured.
“Performance Share” shall mean shares of Common Stock that are subject to forfeiture upon failure to attain specified Performance Measures within a specified Performance Period.
“Performance Share Unit” shall mean a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive one share of Common Stock, which may be Restricted Stock, or in lieu of all or a portion thereof, at the Committee’s discretion, a cash payment based on the Fair Market Value of one share of Common Stock.
“Performance Share AwardPurchase Price” shall mean an award of Performance Shares or Performance Share Units under this Plan.
“Permanent and Total Disability” shall, unless otherwise defined in an applicable Agreement, have the meaning set forth in Section 22(e) (3) of the Code or any successor thereto.
“Prior Plan” shall mean the Owens Corning 2016 Stock Plan, or any other equity compensation plan maintained by the Company prior to the effective date of this Plan.
“Restricted Stock” shall mean shares of Common Stock that are subject to a Restriction Period.
“Restricted Stock Unit” shall mean the right to receive one share of Common Stock which shall be contingent upon the expiration of a specified Restriction Period and subject to such additional restrictions as may be contained in the Agreement relating thereto.
“Restriction Period” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award or (ii) the conditions to vesting applicable to a Restricted Stock Unit Award shall remain in effect.
“Retirement” unless otherwise specifically set forth under the terms of an Agreement, for purposes of this Plan shall mean termination of employment for a reason other than Cause by an employee who is at least 55 years of age and who has at least 10 years of Service with the Company.
“SAR” shall mean a stock appreciation right which may be a Free Standing SAR or a Tandem SAR.
“Service” shall mean any period of service or employment with the Company or a Subsidiary. This shall include either or both employment as an employee of the Company or a Subsidiary or service on the Board as aNon-Employee Director. Service shall include any such Service with the Company or a Subsidiary or any predecessor of the Company or a Subsidiary. Nothing in the Plan, in the grant of any award or in any award Agreement shall confer upon any Participant any right to continue in the Service of the Company or any of its Subsidiaries, or interfere in any way with the right of the Company or any of its Subsidiaries to terminate the Participant’s employment or other service relationship for any reason at any time.
“Stock Award” shall mean a Restricted Stock Award, a Restricted Stock Unit Award or a Bonus Stock Award.
“Subsidiary” and “Subsidiaries” shall have the meanings set forth in Section 1.4.
“Tandem SAR” shall mean an SAR which is granted in tandem with, or by reference to, an option (including aNon-Qualified Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate valueamount equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered.
1.3Administration. This Plan shall be administered by the Committee. The Committee shall have the authority to determine eligibility for awards hereunder and to determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock, and the number of Performance Shares or Performance Share Units subject to such an award, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, take action such that (a) any or all outstanding options, Stock Awards, and/or SARs shall become exercisable in part or in full, (b) all or a portion of the Restriction Period applicable to any outstanding award shall lapse, (c) all or a portion of the Performance Period applicable to any outstanding Performance Share Award shall lapse, or (d) the Performance Measures applicable to any outstanding award (if any) shall be deemed to be satisfied at the maximum or any other level.
The Committee shall, subject to the terms of this Plan, have the discretionary authority to interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive. The Committee delegates the authority for ministerial administration of the Plan and awards made under the Plan to the Company.
Notwithstanding anything in the Plan to the contrary, in accordance with Section 157 (or any other applicable section) of the Delaware General Corporation Law, the Committee may, by resolution, authorize one or more executive officers of the Company to do one or both of the following: (x) designatenon-director andnon-executive officer employees of the Company or any of its Subsidiaries to be recipients of awards hereunder; and (y) determine the number of shares of Common Stock subject to awards to be received by suchnon-director andnon-executive officer employees; provided, however, that the resolution so authorizing such executive officer or officers shall specify the total number of shares of Common Stock that such executive officer or officers may so award. The Committee may not delegate its power and authority with regard to the selection for participation in this Plan of an officer, director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer, director or other person.
Notwithstanding anything in the Plan to the contrary, to the extent an award granted hereunder would be subject to the requirements of Section 409A of the Code and the regulations thereunder, then the Agreement for such award and the Plan shall be construed and administered so as the award complies with Section 409A of the Code and the regulations thereunder. Consistent with the foregoing, if the holder of an award granted under this Plan is a “specified employee,” as defined in Section 409A of the Code, as of the date of the holder’s “separation from service,” as defined in Section 409A of the Code, then to the extent any amount payable under such award (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the holder’s separation from service and (iii) under the terms of the Agreement for such award and this Plan would be payable prior to thesix-month anniversary of the holder’s separation from service, such payment shall be delayed until the earlier to occur of (A) thesix-month anniversary of the holder’s separation from service or (B) the date of the holder’s death. Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.
Awards may be granted to Participants in jurisdictions outside the United States (including, as appropriate, undersub-plans (to be considered part of this Plan)). To the extent necessary or advisable to comply with applicable local laws while concurrently aiming to achieve the purposes of the Plan it may be determined by the Committee that the terms and conditions applicable to those awards granted to Participants outside the United States are different from those under the Plan.
1.4Eligibility. Participants in this Plan shall consist of suchNon-Employee Directors, officers, and employees of the Company, its subsidiaries and any other entity designated by the Board or the Committee (individually a “Subsidiary” and collectively the “Subsidiaries”) as the Committee, in its sole discretion, may select from time to time; provided, however, that aNon-Employee Director, officer or employee of a Subsidiary shall be designated a recipient of an option or SAR only if Common Stock qualifies, with respect to such recipient, as “service recipient stock” within the meaning set forth in Section 409A of the Code, and that each Participant satisfies the FormS-8 definition of an “employee.” For purposes of this Plan, reference to employment by the Company shall also mean employment by a Subsidiary, and references to employment shall also mean services as aNon-Employee Director.
1.5Shares Available. Subject to adjustment as provided in Section 6.7, the number of shares of Common Stock available under the Plan shall be 2,300,000, plus the number of shares of Common Stock available under the Prior Plan as of the effective date of the Plan. As of the effective date of the Plan, no further grants may be made under the Prior Plan. To the extent that shares of Common Stock subject to an award (except to the extent shares of Common Stock are issued or delivered by the Company in connection with the exercise of a Tandem SAR) under the Plan or the Prior Plan are not issued or delivered by reason of the expiration, termination, cancellation, forfeiture or unearned nature of such award or the settlement of such award in cash, then such shares of Common Stock shall again be available under the Plan. Notwithstanding any other provision of the Plan to the contrary, any and all of the shares of Common Stock available under this paragraph shall be available for any or all types of awards, including full value stock awards, which are available under the terms of the Plan.
Notwithstanding anything in this Section 1.5 to the contrary, shares of Common Stock subject to an award under this Plan may not be made available for further issuance under this Plan if such shares are: (a) shares that were subject to a stock-settled SAR and were not issued upon the net settlement or net exercise of such SAR, (b) shares used to pay the exercise price of an Incentive Stock Option orNon-Qualified Stock Option, (c) shares delivered to or withheld (or otherwise used) by the Company to pay withholding taxes related to an award under this Plan, or (d) shares repurchased on the open market with the proceeds of an option exercise.
Shares of Common Stock shall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof, including shares acquired on the open market in Canada.
For purposes of grants of Incentive Stock Options under this Plan, the maximum number of shares available for such grant(s) shall be no more than 2,300,000 shares, subject to adjustment as provided in Section 6.7.
Not more than 5% of the shares of Common Stock authorized under the Plan shall be subject to Bonus Stock awards or other awards that vest over a period (or, as applicable, have a Performance Period) shorter than twelve (12) months; provided that such limitation shall not apply to awards granted toNon-Employee Directors. Nothing in this paragraph or otherwise in this Plan, however, shall preclude the Committee, in its sole discretion, from providing for continued vesting or accelerated vesting for any award under the Plan upon certain events, including in connection with or following a Participant’s death, Disability, Retirement, other termination of Service or a Change in Control.
Notwithstanding anything to the contrary contained in this Plan, in no event will anyNon-Employee Director in any one calendar year be granted compensation for such service having an aggregate maximum value (measured at the date of grant as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $500,000.
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2.1Stock Options. The Committee may, in its discretion, grant Incentive Stock Options orNon-Qualified Stock Options to such eligible persons under Section 1.4 as may be selected by the Committee.
Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares and the purchase price per share of Common Stock subject to an option shall be determined by the Committee, provided, however, that (except with respect to awards under Section 6.15 of this Plan) the purchase price per share of Common Stock shall not be less than 100%85% of the Fair Market Value of a share of Common Stock (i) on the date of grantGrant Date or (ii) on the Purchase Date, whichever is lower; provided, however , that the Committee may modify the manner in which the Purchase Price is determined by notifying Participants of such option,modification prior to the beginning of the Offering Period to which such modification relates, and provided further, that if an Incentive Stock Optionin no event shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary as defined in Section 424 of the Code) (a “Ten Percent Holder”), the purchase price per share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.
(b) Option Period and Exercisability. The period during which an option may be exercised shall be determined by the Committee; provided, however, that no Incentive Stock Option norNon-Qualified Stock Option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. Once determined and stated in an Agreement with respect to an option, the period during which an option can be exercised shall not be further extended. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. Subject to the vesting provisions in Section 1.5, the Committee shall determine whether an option shall become exercisable in cumulative ornon-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only for whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) by the delivery of cash in the amount of the aggregate purchase price payable by reason of such exercise, (B) for employees other than Canadian employees, by delivery (either actual delivery or by attestation procedures established by the Company) of previously acquired shares of Common Stock that have an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (D) subject to applicable law, by the delivery of cash in the amount of the aggregate purchase price payable by reason of such exercise by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No shares of Common Stock shall be issued and no certificate representing Common Stock shall be delivered until the full purchase price therefore has been paid (or arrangement made for such payment to the Company’s satisfaction). Options may not provide for any dividends or dividend equivalents thereon.
Notwithstanding the foregoing, permitted exercise methods may be limited by the terms of the individual Agreement.
2.2Stock Appreciation Rights. The Committee may, in its discretion, grant SARs to such eligible persons under Section 1.4 as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of SARs and BasePurchase Price. The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that (except with respect to awards under Section 6.15 of this Plan) such base price shall not be less than 100%the lesser of 85% of the Fair Market Value of a share of Common Stock (i) on the date of grant of such SAR.
(b) Exercise Period and Exercisability. The Agreement relating to an award of SARs shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock)Grant Date or cash or a combination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no SAR may be exercised later than 10 years after its date of grant; provided further, that no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option. Once determined and stated in an Agreement with respect to an SAR, the period during which an SAR can be exercised shall not be further extended. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. Subject to the vesting provisions in Section 1.5, the Committee shall determine whether an SAR may be exercised in cumulative ornon-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c), or such shares shall be transferred to the holder in book entry form with restrictions(ii) on the Shares duly noted, and the holder of such Restricted StockPurchase Date.
2.18 “Reserves” shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR, and SARs may not provide for any dividends or dividend equivalents thereon.
(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (i) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request.
2.3Termination of Employment or Service.
(a) Non-Qualified Stock Options and SARs. All of the terms relating to the exercise period or to the vesting, in whole or in part, or forfeiture and cancellation of such option or SAR award upon a termination of employment or service with the Company of the holder, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee and as set forth
in the Agreement. Notwithstanding the foregoing, age and service requirements set forth in any individual Agreement will be inapplicable in jurisdictions where they are in conflict with implementation of the European Union Age Discrimination Directive.
(b) Incentive Stock Options. All of the terms relating to the exercise period or to the vesting, in whole or in part, or forfeiture and cancellation of such Incentive Stock Option award upon a termination of employment or service with the Company of the holder, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee and as set forth in the Agreement. Notwithstanding the foregoing, age and service requirements set forth in any individual award Agreement will be inapplicable in jurisdictions where they are in conflict with implementation of the European Union Age Discrimination Directive.
(c) Continuation of Service as aNon-Employee Director. Unless otherwise set forth in the Agreement, a holder’s employment with the Company will not be deemed to have terminated for purposes of this Section 2.3 if the holder continues to provide services to the Company as aNon-Employee Director. Similarly, a holder’s directorship will not be deemed to have terminated for purposes of awards under this Plan or for purposes of this Section 2.3 if the holder continues to provide services to the Company as an employee of the Company.
2.4No Repricing. Notwithstanding anything in this Plan to the contrary and subject to Section 6.7, without the approval of the stockholders of the Company the Committee will not amend or replace any previously granted option or SAR in a transaction that constitutes a “repricing,” as such term is used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange. Further, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation,split-up,spin-off, combination, or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding Incentive Stock Options,Non-Qualified Stock Options or SARs or cancel outstanding Incentive Stock Options,Non-Qualified Stock Options or SARs in exchange for cash, other awards or Incentive Stock Options,Non-Qualified Stock Options or SARs with an exercise price that is less than the exercise price of the original Incentive Stock Options,Non-Qualified Stock Options or SARs without stockholder approval.
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3.1Stock Awards. The Committee may, in its discretion, grant Stock Awards to such eligible persons under Section 1.4 as may be selected by the Committee. The Agreement relating to the Stock Award shall specify whether the Stock Award is a Restricted Stock Award, a Restricted Stock Unit Award or Bonus Stock Award.
3.2Terms of Stock Awards.Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Award, Restricted Stock Unit Award or Bonus Stock Award and the Performance Measures (if any) and Restriction Period applicable to a Restricted Stock Award or Restricted Stock Unit Award shall be determined by the Committee and set forth in the individual award Agreement.
(b) Vesting and Forfeiture. Subject to the vesting provisions in Section 1.5, the Agreement relating to a Restricted Stock Award or Restricted Stock Unit Award shall provide, in the manner determined by the Committee in its discretion, and subject to the provisions of this Plan, for the vesting, in whole or in part, of the shares of Common Stock subject to such award, in the case of a Restricted Stock Award, or the vesting of the Restricted Stock Unit Award itself, in the case of Restricted Stock Unit Award, (i) if specified Performance Measures are satisfied or met during the specified Restriction Period or (ii) if the holder of such award remains continuously in the employment
of or service to the Company during the specified Restriction Period, and for the forfeiture of the shares of Common Stock subject to such award in the case of a Restricted Stock Award, or the forfeiture of the Restricted Stock Unit Award itself, in the case of a Restricted Stock Unit Award, (x) if specified Performance Measures are not satisfied or met during the specified Performance Period or (y) if the holder of such award does not remain continuously in the employment of or service to the Company during the specified Restriction Period. Bonus Stock Awards shall not be subject to any Performance Measures or Restriction Periods.
(c) Stock Issuance. During the Restriction Period, the shares of Restricted Stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing a Restricted Stock award shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), subject to the payment of any taxes in accordance with Section 6.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set forth in the Agreement relating to a Restricted Stock award, and subject to the terms and conditions of a Restricted Stock award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.
(e) Rights and Provisions Applicable to Restricted Stock Unit Awards. The Agreement relating to a Restricted Stock Unit award shall specify whether the holder thereof shall be entitled to receive, on a deferred basis, dividend equivalents, or the deemed reinvestment of, any deferred dividend equivalents, with respect tomean the number of shares of Common Stock subjectwhich have been authorized for issuance under the Plan but not yet purchased pursuant to the Plan.
2.19 “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary, as defined in Section 424(f) of the Code.
2.20 “Trading Day” shall mean a day on which national stock exchanges are open for trading.
3.Eligibility.
3.1 An Employee shall become eligible to participate in the Plan as of the first Grant Date on which he or she first meets all of the following requirements:
3.1.1. The Employee’s customary period of employment with the Company or a Participating Subsidiary is for more than five (5) months in any calendar year together with other eligibility requirements the Committee may establish consistent with Section 423 of the Code.
3.2 Notwithstanding any provisions of the Plan to the contrary, (i) no Employee shall be granted an option under the Plan if, immediately after the grant, such Employee (or any other person whose stock would be attributed to such award. PriorEmployee pursuant to Section 424(d) of the settlementCode) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of a Restricted Stock Unit award, the holder thereof shall not have any rights as a stockholdertotal combined voting power or value of all classes of stock of the Company or of any parent of the Company or any Subsidiary, and (ii) no Participant shall be entitled to purchase stock under this Plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Company or any Participating Subsidiary, exceeds $25,000 in Fair Market Value, determined as of the Grant Date (or such other limit as may be imposed by the Code) for each calendar year in which any option granted to the Participant under any such plans is outstanding at any time.
3.3 For purposes of the Plan, eligibility shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or the Participating Subsidiary, to the extent permitted under Section 423 of the Code.
4.Offering Periods. The Plan shall be implemented by consecutive Offering Periods, each beginning on a Grant Date specified by the Committee, until suspended or terminated in accordance with Section 19 hereof. The Committee shall have the power to change the duration of Offering Periods (including the Grant Dates applicable thereto) with respect to future offerings without stockholder approval if Participants are notified of such change prior to the sharesscheduled Grant Date. The Committee will have the authority to establish additional or alternative sequential or overlapping Offering Periods, a different duration for one or more Offerings or Offering Periods or different commencement or ending dates for such Offering Periods with respect to future offerings without stockholder approval if such change is announced prior to the scheduled beginning of Common Stock subjectthe first Offering Period to be affected thereafter, provided, however, that no Offering Period may have a duration exceeding twenty-seven (27) months.
5.Participation.
5.1 An eligible Employee may become a Participant in the Plan by making an election, in the manner prescribed by the Company and during the applicable Enrollment Period, to contribute a percentage of such Employee’s Compensation to his or her Account through payroll deductions or other contributions permitted by the Committee.
5.2 Payroll deductions for a Participant with respect to an Offering Period shall commence on the first pay date in the applicable Offering Period and shall end on the last pay date in such Offering Period unless sooner terminated by the Participant as provided in Section 10 hereof.
6.Payroll Deductions.
6.1 At the time a Participant elects to participate in the Plan with respect to an Offering Period, he or she shall elect to have payroll deductions made on each payday during the Offering Period in an amount, designated as a whole percentage not less than 1% and not exceeding 15%, of the Compensation which he or she receives on each payday during the Offering Period. During the Enrollment Period and in accordance with procedures prescribed by the Company, the Participant may increase or decrease the rate of his or her payroll deductions for the Offering Period commencing immediately following the end of such Enrollment Period. During an Offering Period, a Participant may reduce his or her payroll deductions to 0%, but otherwise may not increase or decrease his or her payroll deductions applicable to such award,Offering Period. Except for reductions in payroll deductions to 0%, as provided in this Section 6.1, or a Participant’s discontinuation of participation in accordance with Section 10 hereof, the latest payroll deduction election made by the Participant during an Enrollment Period shall remain in effect through the duration of the following Offering Period. The maximum number of Shares that can be purchased by a Participant during an Offering Period shall not exceed 4,000. Subject to the limitations set forth herein, the Committee may allow Participants to make contributions under the Plan in a form other than payroll deductions if payroll deductions are not permitted under applicable local law and, with respect to an offering intended to comply with Section 423 of the Code, the Committee determines that such other contributions are permissible under Section 423 of the Code.
6.2 All payroll deductions and other permitted contributions made by a Participant shall be credited to his or her Account under the Plan. A Participant may not make any contributions or payments to such Account other than through payroll deductions except to the extent thatexpressly permitted by the Committee,Committee.
6.3 A Participant’s election under the Plan which is in its sole discretion,effect as of the last day of an Offering Period shall continue in effect for the next following Offering Period unless the Participant affirmatively increases or decreases the rate of his or her payroll deductions or other permitted contributions for such subsequent Offering Period pursuant to Section 6.1 or terminates his or her participation for such Offering Period pursuant to Section 10.
6.4 Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3.2 hereof, a Participant’s payroll deductions or other permitted contributions may grant dividend equivalents on Restricted Stock Unit awards as provided above (provided, that dividend equivalents onbe suspended at any time during any Offering Period. In such case, payroll deductions or other permitted contributions for the next following Offering Period in which the Participant complies with Section 423(b)(8) of the Code and Section 3.2 hereof, shall resume at the rate most recently elected by such Participant, unless changed by the Participant with respect to such Offering Period pursuant to Section 6.1 or terminated by the Participant pursuant to Section 10.
6.5 At the time Common Stock underlying Restrictedis purchased under the Plan pursuant to the exercise of an option, or at the time some or all of the Common Stock Units will be deferred until and paid contingentissued under the Plan is disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the vestingexercise of such Restrictedthe option or the disposition of the Common Stock Units). No sharesacquired upon the exercise of an option. At any time, the Company may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefit attributable to the sale or early disposition of Common Stock and no certificates representing shares of Common Stock that are subject to a Restricted Stock Unit award shall be issued upon the grant of a Restricted Stock Unit award. Instead, shares of Common Stock subject to Restricted Stock Unit awards and the certificates representing such shares of Common Stock shall only be distributed at the time of settlement of such Restricted Stock Unit awards in accordance with the terms and conditions of this Plan and the Agreement relating to such Restricted Stock Unit award.
3.3Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period or Performance Period relating to a Stock Award, or any vesting, in whole or in part, or forfeiture and cancellation of such award upon a termination of employment or service with the Company of the holder of such award, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee and as set forth in the Agreement.Participant.
Notwithstanding7.Option to Purchase Common Stock. On the foregoing, age and service requirements set forthGrant Date of each Offering Period, each eligible Employee participating in any individual award Agreement will be inapplicable in jurisdictions where they are in conflict with implementation of the European Union Age Discrimination Directive.
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4.1Performance Share Awards. The Committee may, in its discretion, grant Performance Share Awards to such eligible persons under Section 1.4 as may be selected by the Committee.
4.2Terms of Performance Share Awards. Performance Share AwardsOffering Period shall be subjectgranted an option to purchase on the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Performance Shares, Performance Share Units and Performance Measures. The number of Performance Shares or Performance Share Units subject to any award and the Performance Measures and Performance Period applicable to such award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance Share Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vestingPurchase Date of such award, if specified Performance Measures are satisfied or met duringOffering Period, at the specified Performance Period, and for the forfeiture of such award, if specified Performance Measures are not satisfied or met during the specified Performance Period.
(c) Stock Issuance. During the Performance Period, Performance Shares shall be held byapplicable Purchase Price, up to a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing Performance Shares shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Performance Shares. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Performance Share Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Performance Period (and the satisfaction or attainment of applicable Performance Measures), subject to the payment of any taxes in accordance with Section 6.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock determined by dividing such Employee’s payroll deductions and other permitted contributions accumulated during such Offering Period and retained in the Participant’s Account as of the Purchase Date by the applicable Purchase Price; provided that such purchase shall be deliveredsubject to the holder of such award.
(d) Rights with Respect to Performance Shares. Unless otherwiselimitations set forth in Sections 3.2, 6.1 and 12 hereof. The purchase of Common Stock shall occur as provided in Section 8, unless the Agreement relatingParticipant has withdrawn from the Plan pursuant to an awardSection 10, and the option shall expire on the last day of Performance Shares,the Offering Period.
8.Purchase of Common Stock. Unless a Participant withdraws from the Plan as provided in Section 10.1 below, his or her option for the purchase of Common Stock shall be exercised automatically on the Purchase Date, and the maximum number of full shares subject to the terms and conditions ofoption shall be purchased for such Participant at the applicable Performance Share Award,Purchase Price with the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividendsaccumulated payroll deductions and the right to participateother permitted contributions in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect tohis or her Account. No fractional shares of Common Stock shall be deposited with the Companypurchased, and any payroll deductions or other permitted contributions accumulated in a Participant’s Account which are not sufficient to purchase a full share shall be retained in the Participant’s account for the subsequent Offering Period, subject to earlier withdrawal by the same restrictionsParticipant as provided in Section 10 hereof. Any other monies left over in a Participant’s Account after the Purchase Date shall be returned to the Participant. During a Participant’s lifetime, a Participant’s option to purchase shares of Common Stock with respecthereunder is exercisable only by him or her.
9.Issuance or Transfer of Shares. As promptly as practicable after each Purchase Date on which a purchase of shares occurs, the Company shall deliver the shares purchased by the Participant to which such distribution was made.
(e) Settlement of Vested Performance Share Unit Awardsa brokerage account established for the Participant at a Company-designated brokerage firm (a “Brokerage Account”). The Agreement relatingCompany may require that, except as otherwise provided below, the deposited shares may not be transferred (either electronically or in certificate form) from the Brokerage Account until the later of the following two periods: (i) the end of thetwo-year period measured from the Grant Date for the Offering Period in which the shares were purchased and (ii) the end of theone-year measured from the Purchase Date for that Offering Period. Such limitation shall apply both to a Performance Share Unit award (i) shall specify whether such awardtransfers to different accounts with the same broker and to transfers to other brokerage firms. Any shares held for the required holding period may be settledtransferred (either electronically or in certificate form) to other accounts or to other brokerage firms. The foregoing procedures shall not limit in any way the Participant’s right to sell or dispose of the shares deposited to his or her Brokerage Account. Such procedures are designed solely to ensure that any sale of shares prior to the satisfaction of the required holding period is made through the Brokerage Account. However, shares may not be transferred (either electronically or in certificate form) from the Brokerage Account for use as collateral for a loan, unless those shares have been held for the required holding period. The foregoing procedures shall apply to all shares purchased by the participant under the Plan, whether or not the participant continues in Employee status.
10.Withdrawal; Termination of Employment.
10.1 During an Offering Period, a Participant may withdraw all but not less than all of the payroll deductions and other contributions credited to his or her Account and not yet used to purchase shares of Common Stock (including sharesunder the Plan by making a withdrawal election in the manner prescribed by the Company; provided, however, that except as provided for in Section 18.3, a Participant may not make such withdrawal election later than 30 days prior to the applicable Purchase Date. Except as provided for in the foregoing sentence, any such withdrawal election shall take effect as soon as administratively practicable after the date of Restricted Stock)such election. All of the Participant’s payroll deductions and other permitted contributions credited to his or cash or a combination thereof and (ii) may specify whether the holder thereofher Account shall be entitledpaid to receive, onsuch Participant as soon as administratively practicable after the date of a deferred basis, dividend equivalents,withdrawal election and if determined bysuch Participant’s option for the Committee, interest onOffering Period shall be automatically terminated, and no further payroll deductions or other contributions for the deemed reinvestmentpurchase of any deferred dividendshares shall be made during the Offering Period. If a Participant withdraws from an Offering Period, payroll deductions or other permitted contributions shall not resume at the beginning of the succeeding Offering Period unless the Participant makes a new enrollment election pursuant to Section 5 of the Plan.
equivalents, with respect10.2 Upon termination of a Participant’s employment for any reason, including death, disability or retirement, or a change in the Participant’s employment status following which the Participant is no longer eligible to participate in the Plan pursuant to Section 3.1, which in either case occurs at least 30 days prior to a Purchase Date, the Participant will be deemed to have elected to withdraw from the Plan and the payroll deductions and other permitted contributions credited to such Participant’s Account shall be returned to the Participant or, in the case of death, to the persons entitled thereto under Section 14, and such Participant’s option shall be automatically terminated. If such termination of employment or change in employment status occurs less than 30 days prior to the Purchase Date, the Participant’s accumulated payroll deductions and other permitted contributions shall remain in the Participant’s Account and shall be applied to purchase shares of Common Stock on the next Purchase Date.
11.Interest. No interest shall accrue on the payroll deductions or other permitted contributions of a Participant in the Plan or on any other amount credited to a Participant’s Account.
12.Stock.
12.1 The maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan shall be 6,200,000 shares (consisting of 2,000,000 shares as approved in 2013 and 4,200,000 additional shares as approved in 2020), subject to adjustment upon changes in capitalization of the Company as provided in Section 18. If on a given Purchase Date the number of shares of Common Stock subjecteligible to such award. Ifbe purchased exceeds the number of shares then available under the Plan, the Company shall make a Performance Share Unit award is settledpro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.
12.2 The Participant shall have no interest or voting right in shares of Restricted Stock,covered by his or her option until such shares of Restricted Stock shall be issued to the holder in book entry form or a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Share Unit award in shares of Common Stock including Restrictedhave been purchased and are issued to the Participant.
12.3 Subject to Section 9, Common Stock to be delivered to a Participant under the holderPlan shall be registered in the name of such awardthe Participant.
13.Administrative Body. The Plan shall be administered by the Committee. Subject to the terms of the Plan, the Committee shall have no rightsthe power to construe the provisions of the Plan, to determine all questions arising hereunder, and to adopt and amend such rules and regulations for administering the Plan as a stockholderthe Committee deems desirable. The Committee may delegate to any committee, person (whether or not an employee of the Company or a Participating Subsidiary) or entity any of its responsibilities or duties hereunder.
14.Payment Upon Participant’s Death. A Participant may designate a beneficiary who is to receive any shares of Common Stock, payroll deductions or other permitted contributions, if any, in the Participant’s Account in the event of such Participant’s death. Beneficiary designations shall be made in accordance with respect toprocedures prescribed by the Committee. If no properly designated beneficiary survives the Participant, the shares of Common Stock, subject to such award.
4.3Termination of Employment or Service. All of the terms relatingpayroll deductions and other permitted contributions, if any, shall be distributed to the satisfaction of Performance Measures and the termination of the Performance Period relatingParticipant’s estate.
15.Transferability. Neither payroll deductions or other permitted contributions credited to a Performance Share Award,Participant’s Account nor any rights with regard to the exercise of an option or any forfeiture and cancellation of such award upon a termination of employment or service with the Company of the holder of such award, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee.
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5.1Equity Awards Granted toNon-Employee Directors. EachNon-Employee Director is eligible to receive awards consisting of Restricted Stock, Restricted Stock Units, options to purchase shares of Common Stock, SARs, Bonus Stock, Performance Shares and/or Performance Share Units in accordance with this Article V and subject to such terms and conditions as shallunder the Plan may be established by the Committee consistent with Articles II, III and IV and as set forth in an individual agreement regarding each such award. All options granted under this Article V shall constituteNon-Qualified Stock Options.
5.2Non-Employee Director Equity Awards in Lieu of Director Fees. In addition to any award received under Section 5.1 of this Plan, eachNon-Employee Director may also from time to time elect, in accordance with procedures to be specified by the Committee and subject to approval of the Committee, to receive in lieu of all or part of a specified percentage of the cash retainer and any meeting fees that would otherwise be payable to suchNon-Employee Director (a) shares or deferred units of Common Stock having a Fair Market Value equal to the amount of the forgone retainer and meeting fees, determined as of the date such retainer and meeting fees are payable, (b) Restricted Stock or Restricted Stock Units granted pursuant to Article III having a Fair Market Value equal to the amount of the forgone retainer and meeting fees, determined as of the date on which such retainer or meeting fees otherwise would have been paid to suchNon-Employee Director; or (c) options granted pursuant to Article II having a value equal to the amount of the forgone retainer and meeting fees, based on such valuation methodology specified by the Committee. Any election under this paragraph 5.2 shall be made under an appropriate election form and appropriate individual award agreement or agreements and shall have terms and conditions set forth in such agreement and as approved by the Committee.To the extent provided by the Committee from time to time,Non-Employee Directors may elect to defer the receipt of any award granted pursuant to this Section 5.2, other than options, through an appropriate deferral election by theNon-Employee Director. Any election made under this Section 5.2 must be made prior to the year in which such cash retainer and meeting fees are earned, and shall otherwise be in accordance with the requirements of Section 409A of the Code.
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6.1Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Company for approval and, if approved at the 2016 annual meeting of stockholders, shall become effective on the date of such approval. This Plan shall terminate on the date which is 10 years from the effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. For clarification purposes, the terms and conditions of this Plan will not apply toassigned, transferred, pledged or otherwise impact previously granted and outstanding awards under the Prior Plan, as applicable.
6.2Amendments. The Committee may amend this Plan as it shall deem advisable, subject todisposed of in any requirement of stockholder approval required by applicable law, rule or regulation, including Section 422 of the
Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would (a) increase the maximum number of shares of Common Stock available under this Plan (subject to Section 6.7), (b) effect any change inconsistent with Section 422 of the Code, (c) extend the term of this Plan or (d) reduce the minimum purchase price of a share of Common Stock subject to an option in accordance with Section 2.4. No amendment may impair the rights of a holder of an outstanding award without the consent of such holder.
Awards may be granted to Participants in jurisdictions outside the United States. To the extent necessary or advisable to comply with applicable local laws while concurrently aiming to achieve the purposes of the Plan, it may be determined by the Committee that the terms and conditions applicable to those awards granted to Participants outside the United States are different from those under (but considered part of) the Plan.
6.3Agreement. Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and the recipient of such award and, upon execution by each party and delivery of the Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement. All Agreements are subject to the terms of this Plan and shall be interpreted in accordance with the discretionary authority of the Committee under this Plan.
6.4Non-Transferability of Awards. Unless otherwise specified in the Agreement relating to an award, no award shall be transferable otherway (other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approvedas provided in Section 14 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void ab initio and without effect.
16.Use of Funds. All payroll deductions and other permitted contributions received or held by the Company and in no event will any award granted under the Plan may be transferredused by the Company for value to any third party, including third party financial institutions. Exceptcorporate purpose to the extent permitted by applicable law, and the foregoing sentenceCompany shall not be obligated to segregate such payroll deductions or the Agreement relating to an award, each award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except to the extent permitted by the second preceding sentence or the Agreement relating to an award, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become null and void.contributions.
6.517.Tax WithholdingAccount Information. Individual Accounts shall be maintained for each Participant in the Plan. The Company shall have the rightmake available to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (a) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (b) subject to applicable law, the holder may satisfy any such obligation by any of the following means: (i) a cash payment to the Company in the amount necessary to satisfy any such obligation, (ii) except for Canadian employees, delivery (either actual delivery or by attestation procedures established by the Company) to the Company of shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (iii) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (iv) in the case of the exercise of an Incentive Stock Option orNon-Qualified Stock Option, a cash payment in the amount necessary to satisfy any such obligation by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (v) any combination of (i), (ii) and (iii), in each case to the extent set forth in the AgreementParticipant information relating to the award. Sharesactivity of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate unless (x) an additional amount can be withheld and not result in adverse accounting consequences, (y) such additional withholding amount is authorized by the Committee, and (z) the total amountParticipant’s
withheld does not exceedAccount, including the Participant’s estimated tax obligations attributableamounts of payroll deductions or other permitted contributions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any, with respect to the applicable transaction. Notwithstanding any provision of this Plan or any agreement to the contrary, any fraction of a share of Common Stock which would be required to satisfy the tax withholding obligation may be rounded up to the next whole share.such Account.
6.618.Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.
Restrictions on Shares18.1Changes in Capitalization.Each award made hereunder shall be subject Subject to any required action by the requirement that if at any time the Company determines that the listing, registration or qualificationstockholders of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, orCompany, in connection with the exercise or settlementoccurrence of such award oran Equity Restructuring, the delivery of shares thereunder, such award shall not be exercised or settled and such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.
6.7Adjustment.In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation,spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, or any other corporate transaction or event having an effect similar to any of the foregoing,Reserves, the number and class of securities available under this Plan, the maximum number of shares of Common Stock with respect to which options, SARs, Stock Awards or Performance Share Awards or a combination thereof may be awarded during any calendar year to any one person, the maximum number of shares of Common Stock that may be issued pursuant to awards in the form of Incentive Stock Options, the number and classtype of securities subject to each outstanding option and the purchase price per security, the terms of each outstanding SAR, the number and class of securities subject to each outstanding Stock Award, and the terms of each outstanding Performance Share or Performance Share Unit, plus the other terms of outstanding awards,Purchase Price thereof shall be appropriately adjustedequitably adjusted. Such adjustment shall be made by the Committee, such adjustments to be madewhose determination in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price and in accordance with Section 409A of the Code. Moreover, in the event of any such transaction or event, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each option or SAR with a purchase price or base price, as applicable, greater than the consideration offered in connection with any such transaction or event, the Committee may in its discretion elect to cancel such option or SAR without any payment to the person holding such option or SAR. The decision of the Committee regarding any such adjustmentrespect shall be final, binding and conclusive. “Equity Restructuring” means anon-reciprocal transaction (i.e. a transaction in which the Company does not receive consideration or other resources in respect of the transaction approximately equal to and in exchange for the consideration or resources the Company is relinquishing in such transaction) between the Company and its stockholders, such as a stock split,spin-off, rights offering, nonrecurring stock dividend or recapitalization through a large, nonrecurring cash dividend, that affects the shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding options.
6.8 Change in Control.18.2
(a) Notwithstanding any provision in this PlanDissolution or any Agreement, inLiquidation. In the event of a Change in Control, (i) all outstanding options and SARs shallthe proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately become exercisable in full, (ii)prior to the Restriction Period applicable to any outstanding Stock Award shall lapse, (iii) the Performance Period applicable to any outstanding Performance Share Award shall lapse,consummation of such proposed action, unless otherwise provided inby the award Agreement and subject to the discretion of the Committee and (iv) the Performance Measures applicable to any outstanding award shall be deemed to be satisfied at the maximum level.Committee.
(b)18.3Merger or Asset Sale. In the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:
(i) require that shares of stock of the corporation resulting from such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of
Common Stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as shall be determined by the Board in accordance with Section 6.7; and/or
(ii) require outstanding awards, in whole or in part, to be surrendered to the Company by the Participant, and to be immediately cancelled by the Company, and to provide for the Participant to receive (A) a cash payment in an amount equal to (1) in the case of an option or an SAR, the aggregate number of shares of Common Stock then subject to the portion of such option or SAR surrendered multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the purchase price or base price per share of Common Stock subject to such option or SAR, and (2) in the case of a Stock Award or a Performance Share Award, the aggregate number of shares of Common Stock then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 6.8(a), multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control; (B) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above.
(c) Unless otherwise defined in an applicable Agreement, “Change in Control” shall mean:
(i) the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule13d-3 promulgated under the Exchange Act, of more than 50% of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (2) any acquisition by the Company, (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 6.8(c); provided further, that for purposes of clause (2), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of more than 50% of the Outstanding Common Stock or more than 50% of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;
(ii) individuals who, as of the beginning of any consecutive2-year period constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who subsequently becomes a director of the Company and whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the
purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(iii) the consummation of a reorganization, merger or consolidation of the Company orproposed sale or other disposition of all or substantially all of the assets of the Company, (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (A) all or substantially allthe merger of the individualsCompany with or entities who areinto another corporation, each option under the beneficial owners, respectively,Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Outstanding Common StockBoard or Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Outstanding Voting SecuritiesOffering Period then in progress by setting a new Purchase Date (the “New Purchase Date”) or to cancel each outstanding option and refund all sums collected from Participants during the Offering Period then in progress. If the Board or Committee shortens the Offering Period then in progress in lieu of assumption or substitution in the event of a merger or sale of assets, the Company shall notify each Participant in writing, at least ten (10) business days prior to the New Purchase Date, that the Purchase Date for such Participant’s option has been changed to the New Purchase Date and that such Participant’s option will be exercised automatically on the New Purchase Date, unless prior to such date such Participant has withdrawn from the Offering Period as provided in Section 10 hereof. For purposes of this Section, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger, the option confers the right to purchase, for each share of option stock subject to the option immediately prior to the sale of assets or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such Corporate Transaction will beneficially own, directly or indirectly, more than 50%holders were offered a choice of respectively,consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock and the combined voting power of the outstanding securitiessuccessor corporation or its parent (as defined in Section 424(e) of suchthe Code), the Board or Committee may, with the consent of the successor corporation, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the sale of assets or merger.
19.Amendment or Termination.
19.1 The Board or Committee may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18, no amendment or termination may make any change in any option theretofore granted which adversely affects the rights of any Participant.
19.2 Without shareholder consent and without regard to whether any Participant’s rights may be considered to have been “adversely affected,” the Committee shall be entitled to vote generallychange the Offering Periods, limit the frequency and/or number of changes in the electionamount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of directors,the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s
processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the case may be,Committee determines in its sole discretion advisable which are consistent with the Plan.
19.3 The Company shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Section 423 of the corporation resulting fromCode, or any successor rule or statute, or other applicable law, rule or regulation, including the requirements of any exchange or quotation system on which the Common Stock is listed or quoted. Such shareholder approval, if required, shall be obtained in such Corporate Transaction (including, without limitation,manner and to such a corporation whichdegree as a resultis required by applicable law, rule or regulation.
20.Notice of such transaction ownsDisposition. Each Participant shall notify the Company or all or substantially allin writing if the Participant disposes of any of the shares purchased in any Offering Period pursuant to this Plan if such disposition occurs within two (2) years from the Grant Date or within one (1) year from the Purchase Date on which such shares were purchased (the “Notice Period”). The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to this Plan requesting the Company’s assets either directly or indirectly) in substantiallytransfer agent to notify the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction,Company of any transfer of the Outstanding Common Stock andshares. The obligation of the Outstanding Voting Securities, asparticipant to provide such notice shall continue notwithstanding the case may be, (B) no Person (other than:placement of any such legend on the Company;certificates.
21.No Rights to Continued Employment. Neither this Plan nor the grant of any employee benefit plan (or related trust) sponsored or maintained byoption hereunder shall confer any right on any Employee to remain in the employ of the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, more than 50% of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or
(iv) the consummation of a plan of complete liquidation or dissolution of the Company.
(v) To the extent an award is considered deferred compensation that is subject to the requirements of Section 409A of the Code, a Change in Control under the Plan shall not be deemed to have occurred unless such Change in Control is also a “change in control event,” within the meaning of Section 409A of the Code.
6.9No Right of Participation or Employment.No person shall have any right to participate in this Plan. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, anyParticipating Subsidiary, or any affiliate of the Company or affect in any mannerrestrict the right of the Company any Subsidiary or any affiliate of the CompanyParticipating Subsidiary to terminate the employment of any person at any time without liability hereunder.such Employee’s employment.
6.1022.Equal Rights as StockholderAnd Privileges.No person All Employees who participate in an Offering Period shall have the same rights and privileges with respect to the offering under such Offering Period except for differences which may be mandated by local law and which are consistent with Section 423(b)(5) of the Plan; provided, however, that Employees participating in a subplan adopted pursuant to Section 27 which is not designed to qualify under Section 423 of the Code need not have the same rights and privileges as Employees participating in the Plan generally. The Board or the Committee may impose restrictions on eligibility and participation of Employees who are officers and directors to facilitate compliance with federal or state securities laws or foreign laws.
23.Notices. All notices or other communications by a Participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
24.Conditions Upon Issuance of Shares of Common Stock. Common Stock shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any right as a stockholderstock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to any sharessuch compliance. As a condition to the purchase of Common Stock, the Company may require the person purchasing such Common Stock to represent and warrant at the time of any such purchase that the shares are being purchased only for investment and without any present intention to sell or other equity securitydistribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
25.Term of Plan.
25.1 The amendment and restatement of the Plan shall become effective as of April 16, 2020, subject to approval by the stockholders of the Company. It shall continue in effect until terminated pursuant to Section 19.
25.2 Notwithstanding the above, the amendment and restatement of the Plan is expressly made subject to the approval of the stockholders of the Company whichwithin 12 months after the date the amendment and restatement of the Plan is subjectadopted by the Board. Such stockholder approval shall be obtained in the manner and to an award hereunder unlessthe degree required under applicable federal and until such person becomes a stockholderstate law. If the amendment and restatement of record with respect to such sharesthe Plan is not so approved
by the stockholders within 12 months after the date the Plan is adopted, this amendment and restatement of Common Stock or equity security.the Plan shall not come into effect.
6.1126.Applicable Law. The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Delaware.
27.Stock CertificatesNon-U.S. Participants. To the extent that this Plan provides for issuance of certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on anon-certificated basis, to the extent not prohibited by applicable law or the rulespermitted under Section 423 of the New York Stock Exchange.
6.12Governing Law.ThisCode, without the amendment of the Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto,Company may provide for the participation in the Plan by Employees who are subject to the extent not otherwise governed by the Code or the laws of foreign countries or jurisdictions on such terms and conditions different from those specified in the United States, shallPlan as may in the judgment of the Company be governed bynecessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes the Company may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws of other countries or jurisdictions in which the State of Delaware and construedCompany or the Participating Subsidiaries operate or have employees. Each subplan shall constitute a separate “offering” under this Plan in accordance therewith without giving effect to principleswith Treas. Reg.§1.423-2(a), and may contain terms that do not satisfy the requirements of conflictsSection 423 of laws.the Code.
6.13Deferral of Awards Under the Plan. Subject to the requirements of Section 409A of the Code, the Committee or, to the extent delegated by the Committee, the Company may permit all or any portion of any award under this Plan to be deferred consistent with the requirements and restrictions in the applicable jurisdiction. Notwithstanding any other provision of the Plan or any Agreement to the contrary, any such award which is deferred and which would otherwise consists of shares of Restricted Stock may be converted, as required to permit the deferral of taxation, to Restricted Stock Units immediately prior to their becoming granted and such Restricted Stock Units shall be settled in shares as of the specified distribution date. Also, notwithstanding any other provision of the Plan or any Agreement to the contrary, to the extent that a Participant is eligible for Retirement and therefore would be eligible for accelerated, continued orpro-rated vesting upon termination under his or her individual Agreement, any such award which consists of shares of Restricted Stock may be converted, as required to permit the deferral of taxation, to Restricted Stock Units immediately prior to the Participant becoming eligible for Retirement and such Restricted Stock Units shall be settled in shares as of the specified distribution date.
6.14Awards Subject to Clawback.The awards granted under this Plan and any cash payment or shares of Common Stock delivered pursuant to an award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
6.15Stock-Based Awards in Substitution for Awards Granted by Other Company. Notwithstanding anything in this Plan to the contrary:
(a) Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
(b) In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under apre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of thepre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.
(c) Any Common Stock that is issued or transferred by, or that is subject to any awards that are granted by, or become obligations of, the Company under this Section 6.15 will not reduce the Common Stock available for issuance or transfer under the Plan or otherwise count against the limits contained in Section 1.5 of the Plan. In addition, no Common Stock that is issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under this Section 6.15 will be added to the aggregate plan limit contained in Section 1.5 of this Plan.
2019 STOCK PLAN
FOR THE GRANT OF RESTRICTED STOCK UNITS TO
EMPLOYEES IN FRANCE
Dated April 18, 2019
1.Introduction.
The Board of Directors (the “Board”) of Owens Corning (the “Company”) has established the Owens Corning 2019 Stock Plan as (the “U.S. Plan”), for the benefit of certain employees of the Company, its parent and subsidiary companies, including its French subsidiaries for which it holds directly or indirectly at least 10% of the share capital (the “French Entities”).
Sections 1.3 of the U.S. Plan specifically authorizes the committee of Directors who administers the U.S. Plan (the “Administrator”) to adopt, amend, suspend, and revoke rules applicable to stock awards granted under the U.S. Plan (including those in France) as it deems necessary or advisable to administer the U.S. Plan for the purposes of satisfying applicablenon-U.S. laws. The Administrator has determined that it is necessary and advisable to establish asub-plan for the purpose of permitting restricted stock units to qualify for favorable tax and social security treatment in France. The Administrator, therefore, intends to establish asub-plan of the U.S. Plan for the purpose of granting restricted stock units which qualify for the favorable tax and social security treatment in France applicable to shares granted for no consideration under Sections L.225-197-1 toL. 225-197-6 of the French Commercial Code, as amended, to qualifying employees who are resident in France for French tax purposes and/or subject to the French social security regime (the “French Participants”). The terms of the U.S. Plan, as set out in Appendix 1 hereto, shall, subject to the limitations in the following rules, constitute the Rules of the Owens Corning 2019 Stock Plan for the Grant of Restricted Stock Units to employees in France (the “French Stock Unit Plan”).
Under the French Restricted Stock Unit Plan, the qualifying employees will be granted only restricted stock units as defined in Section 3 hereunder. The provisions of Section 2 of the U.S. Plan permitting the grant of options, incentive stock options, and stock appreciation rights are not applicable to grants made under this French Restricted Stock Unit Plan. The grant of restricted stock units is authorized under the Section 3 of the U.S. Plan.
2.Definitions.
Capitalized terms not otherwise defined herein used in the French Restricted Stock Unit Plan shall have the same meanings as set forth in the U.S. Plan. The terms set out below will have the following meanings:
(a)Restricted Stock Units.
The term “Restricted Stock Units” shall mean a promise by the Company to a future issuance at the Vesting Date provided the individual remains employed as of the Vesting Date, of one Share of the Company for each unit granted to the French Participant, and subject to specific terms and conditions. Notwithstanding any provisions of the U.S. Plan, Restricted Stock Units granted under the French Restricted Stock Unit Plan will not give rise to dividend equivalent payments prior to the Vesting Date nor shall a French Participant be entitled to receive on vesting an amount in cash in lieu of Shares.
(b)Grant Date.
The term “Grant Date” shall be the date on which the Administrator both (1) designates the French Participants and (2) specifies the terms and conditions of the Restricted Stock Units, including the number of Shares to be issued at a future date, the conditions for the vesting of the Restricted Stock Units, and the conditions of the transferability of the Shares once issued.
(c)Vesting Date.
The term “Vesting Date” shall mean the date on which the Restricted Stock Units become vested, as specified by the Administrator. In principle, the Shares underlying the Restricted Stock Units are issued upon vesting. To qualify for the French favorable tax and social security regime, such Vesting Date shall not occur prior to the first anniversary of the Grant Date, as required under Section L.225-197-1 of the French Commercial Code, as amended, or in the French Tax Code or in the French Social Security Code, as amended.
(d)Closed Period.
The term “Closed Period” means:
(i) Ten stock exchange trading days preceding and following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or
(ii) Any period during which the corporate management of the Company possess confidential information which could, if disclosed to the public, significantly impact the quotation price of the Shares, until the end of ten trading days following the date upon which the price information is made public.
If the French Commercial Code is amended after adoption of this French Restricted Stock Units Plan to modify the definition and/or applicability of the Closed Periods to French-qualified Restricted Stock Units, such amendments shall become applicable to any French-qualified Restricted Stock Units granted under this French Restricted Stock Units Plan, to the extent required by French law.
(e)Disability.
The term “Disability” means disability as determined in categories 2 and 3 under Section L.341-4 of the French Social Security Code as amended.
(f)Filing requirements
The French Participants and their employer shall comply with the filing requirements provided for by French tax law.
3.Entitlement to Participate.
(a) Subject to Sections 3 (b), (c) and (d) below, any French Participant who, on the Grant Date of the Restricted Stock Units and to the extent required under French law, is either employed under the terms and conditions of an employment contract with the Company or a French Entity (“contrat de travail”) or who is a corporate officer of the Company (or of the French entity if the Company is listed on a regulated market), shall be eligible to receive Restricted Stock Units under the French Restricted Stock Unit Plan, provided that he or she also satisfies the eligibility conditions of Section 5.1 of the U.S. Plan.
Stock Units may not be issued to corporate officers of the French Entities, other than the managing directors (e.g ., Président du Conseil d’Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant de Sociétés par actions), unless the corporate officer is an employee of a French Entity as defined by French law and is otherwise eligible to receive awards under Section 5.1 of the U.S. Plan.
(b) Notwithstanding any provisions in the U.S. Plan to the contrary, Restricted Stock Units may not be issued under the French Restricted Stock Unit Plan to employees or corporate officers owning more than ten percent (10%) of the Company’s share capital.
(c) Notwithstanding any provisions in the U.S. Plan to the contrary, a grant of Restricted Stock Units may not result in a Company’s employee or officer holding more than ten percent (10%) of the Company’s Shares.
(d) Notwithstanding any provisions in the U.S. Plan to the contrary, the number of shares granted pursuant to Restricted Stock Units may not exceed 10% of the Company’s share capital at any time.
(e) Notwithstanding any provisions in the U.S. Plan to the contrary, Restricted Stock Units may not be granted to corporate officers under the French Restricted Stock Unit Plan, unless employee share plans or profit sharing plans are implemented to the benefit of all employees of the French branch of the Company, if any, and at least 90% of the employees of the French Entities, in the conditions described under Section L.225-197-6 of the French Commercial Code.
4.Conditions of the Restricted Stock Units.
(a)Grant of Restricted Stock Units.
To the extent the French requirement is applicable to the Company, the Restricted Stock Units may be granted for 38 months following the approval of the U.S. Plan by the shareholders of the Company (or any other period stated in the U.S. Plan pursuant to the U.S. law). To the extent the provision does not apply to the Company, the U.S. Plan provision shall apply.
(b)Vesting of Stock Units.
Stock Units will not vest prior to the relevant anniversary of the Grant Date specified by the Administrator and in any case will not vest prior to the first anniversary of the Grant Date as defined under Section 2 above. However, notwithstanding the above, in the event of the death or Disability of a French Participant, all of his or her outstanding Restricted Stock Units shall vest and Shares shall be issued as set forth in Sections 7 and/or 8 of this French Restricted Stock Unit Plan.
(c)Holding of Shares.
The French Participants must hold the Shares issued pursuant to the Restricted Stock Units until the relevant anniversary of the Vesting Date specified by the Administrator, if any, and in any case until the second anniversary of the Grant Date, or such other period as is required to comply with the minimum mandatory holding period applicable to shares underlying French-qualified restricted stock units under Section L.225-197-1 of the French Commercial Code, as amended or under the French Tax Code or French Social Security Code as amended. This holding period will continue to apply even after the French Participant is no longer an employee or corporate officer of a French Entity.
In addition, notwithstanding any provisions in the U.S. Plan to the contrary, Shares delivered upon the vesting date shall not be sold during certain Closed Periods as provided for by Section L.225-197-1 of the French Commercial Code, so long as those Closed Periods are applicable to shares underlying French-qualified restricted stock units.
(d)French Participant’s Account.
The Shares issued to a French Participant shall be recorded in an account in the name of the French Participant with the Company or a broker or in such other manner as the Company may otherwise determine to ensure compliance with applicable restrictions provided by law.
(e)Cash Dividends.
French Participants shall not be granted any cash dividends with respect to a Restricted Stock Unit, applicable to the period commencing on the Grant Date and terminating on the Vesting Date.
5.Non-transferability of Stock Units.
Notwithstanding any provision in the U.S. Plan to the contrary, the Restricted Stock Unit is not transferable, except by will or by the laws of descent and distribution, and the granting of the Company’s Shares may be claimed during the life of the French Participant by the French Participant.
6.Adjustments and Change of Control.
In the event of adjustment or a Change of Control, adjustment to the terms and conditions of the Restricted Stock Units or underlying Shares may be made in accordance with the U.S. Plan. To the extent that such adjustments would violate applicable French rules, it may result in the disqualification of the Restricted Stock Units for purposes of the French favorable tax and social security regime. In this case, the Administrator may decide at its discretion to lift the restriction on sale of the underlying Shares.
7.Death.
Notwithstanding the provisions set forth in Section 5 above, in the event of the death of a French Participant, the Restricted Stock Units held by the French Participants at the time of death are transferable to the French Participant’s heirs. The Company shall issue the underlying Shares to the French Participant’s heirs, at their request, if such request occurs within six months following the death of the French Participant, as provided for in the Restricted Stock Unit Agreement. If the French Participant’s heirs do not request the issuance of the Shares underlying the Restricted Stock Units within six months following the French Participant’s death, the Restricted Stock Units will be forfeited.
The French Participant’s heirs may freely sell the Shares notwithstanding the restriction on the sale of Shares set forth in Section 4(c) above to the extent and as long as applicable under French law.
8.Disability.
In the event of the Disability of a French Participant, the Company shall issue the underlying Shares to the French Participant at his/her request as provided for in the Restricted Stock Unit Agreement.
The French Participant may freely sell the shares notwithstanding the restriction on the sale of Shares set forth in Section 4(c) above.
9.Disqualification of French-qualified Restricted Stock Units.
If the Restricted Stock Units are otherwise modified or adjusted in a manner in keeping with the terms of the U.S. Plan or as mandated as a matter of law and the modification or adjustment is contrary to the terms and conditions of this French Restricted Stock Unit Plan, the Restricted Stock Units may no longer qualify as French-qualified Restricted Stock Units. If the Restricted Stock Units no longer qualify as French-qualified Restricted Stock Units, the Administrator may, provided it is authorized to do so under the U.S. Plan, determine to lift, shorten or terminate certain restrictions applicable to the vesting of the Restricted Stock Units or the sale of the Shares which may have been imposed under this French Restricted Stock Unit Plan or in the Restricted Stock Unit Agreement delivered to the French Participant.
10.Interpretation.
It is intended that Restricted Stock Units granted under the French Restricted Stock Unit Plan shall qualify for the favorable tax and social security treatment applicable to Restricted Stock Units granted under SectionsL. 225-197-1 to L.225-197-6 of the French Commercial Code as amended, or under the French Tax Code and the French Social Security Code as amended.
The terms of the French Restricted Stock Unit Plan shall be interpreted accordingly and in accordance with the relevant provisions set forth by French tax and social security laws, as well as the French tax and social
security administrations and the relevant guidelines released by the French tax and social insurance authorities and subject to the fulfillment of legal, tax and reporting obligations.
In the event of any conflict between the provisions of the French Restricted Stock Unit Plan and the U.S. Plan, the provisions of the French Restricted Stock Unit Plan shall control for any grants made to the French Participants under this French Restricted Stock Unit Plan.
Should the Restricted Stock Units not benefit from the French tax and social security favorable regime due to the French Participants’ failure to comply with the provisions of this French Restricted Stock Unit Plan, the French Participant shall be liable for the payment of resulting taxes and social security charges.
11.Employment Rights.
The adoption of this French Restricted Stock Unit Plan shall not confer upon the French Participants or any employees of a French Entity, any employment rights and shall not be construed as part of any employment contracts that a French Entity has with its employees.
12.Amendments.
Subject to the terms of the U.S. Plan, the board reserves the right to amend or terminate this French Stock Unit Plan at any time. Such amendments would only apply to future grants and would not be retroactive.
13.Effective Date.
The French Restricted Stock Unit Plan is adopted and effective as of April 18, 2019.
OWENS CORNING WORLD HEADQUARTERS
ONE OWENS CORNING PARKWAY
TOLEDO, OHIO, U.S.A. 43659
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THE PINK PANTHER™ &© 1964–20192020 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved.© 20192020 Owens Corning. All Rights Reserved.
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OWENS CORNING ONE OWENS CORNING PARKWAY TOLEDO, OH 43659 | VOTE BY INTERNET -www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information until 11:59 P.M. ET on April 15, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE -1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 P.M. ET on April 15, 2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | |||||
OWENS CORNING ONE OWENS CORNING PARKWAY TOLEDO, OH 43659 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPANY NAME INC. - 401 K TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information until 11:59 P.M. EDT on April 17, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 P.M. EDT on April 17, 2019. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. CONTROL # SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 PAGE 1 OF 2 KEEP THIS PORTION FOR YOUR RECORDS
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OWENS CORNING |
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The Board of Directors recommends you vote FOR the following:
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| 1. | Election of Directors | |||||||||||||||||||||||||||||||||||||||||
Nominees: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||
| Brian D. Chambers | ☐ | ☐ | ☐ | The Board of Directors recommends youvote FOR proposals 2, 3 and 4. | |||||||||||||||||||||||||||||||||||||
1b. | Eduardo E. Cordeiro | ☐ | ☐ | ☐ | For | Against | Abstain | |||||||||||||||||||||||||||||||||||
1c. |
Adrienne D. Elsner | ☐ | ☐ | ☐ | 2. |
| ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||
1d. |
J. Brian Ferguson | ☐ | ☐ | ☐ | | |||||||||||||||||||||||||||||||||||||
1e. |
Ralph F. Hake | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
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| 3. | To approve, on an advisory basis, |
☐ |
☐ |
☐ | ||||||||||||||||||||||||||||||||||||
1f. |
| ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
1g. |
| ☐ | ☐ | ☐ | 4. | To approve the Amended and Restated Owens Corning | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||
1h. |
| ☐ | ☐ | ☐ |
NOTE:The proxies are authorized to vote, at their discretion, upon such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. | |||||||||||||||||||||||||||||||||||||
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1i. | �� | Suzanne P. Nimocks | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
1j. |
John D. Williams | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||||||||||||
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| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report, Notice and Proxy Statement and Annual Report are available atwww.proxyvote.com www.proxyvote.com.
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E96063-P31750
| OWENS CORNING | ||||||||||
Annual Meeting of Stockholders | ||||||||||
| April ET | ||||||||||
| This proxy is solicited by the Board of Directors | ||||||||||
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As to the undersigned’s stockholdings: The undersigned hereby appoints Ava Harter and Omar Chaudhary as proxies, each with full power of substitution, to represent and vote as designated on the reverse side all the shares of Common Stock of Owens Corning held of record by the undersigned on February | ||||||||||
This proxy when properly executed and timely received prior to the meeting will be voted in the manner directed herein by the undersigned stockholder.If no direction is made, this proxy will be voted FOR each of the | ||||||||||
Continued and to be signed on reverse side
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